How to Manage Money and Eliminate Debt

Monday, December 7th, 2009 at 8:03 am Edit

The 12 Debts of Christmas Part Two

Dashing through the malls

with credit card in hand

buying big and small

I don’t understand

I wish I had more cash

but my credit card I’ll use

I spend it in a flash

Oh, I have the holiday blues

Oh, Jingle Bells my credit smells

and I think I broke the bank

Oh, I wish I was debt free

but I have myself to thank

Oh, Jingle Bells I’m penniless

and I have some bills to pay

I still have some things to buy

what else can I say

How to Manage Money and Eliminate Debt

Debt and the holidays don’t have to go hand in hand. Here are a few tips for how to manage money in this holiday season and how to start tackling your debt before it becomes too much.

HOLIDAY DEBT TIP 3: How to Avoid More Debt

Spend Less – In my family Christmas was a time for sharing laughter, playing games and breaking the bank. We all spent more than we should. When we realized that it was the company and not the gifts that were important, Christmas changed for the better. Rather than buying one gift for each person, we started to draw names and bought just one gift for one person and had a spending limit. Our limit was $100 but it doesn’t have to be that high. The thought really does count and sometimes a $25 gift or a homemade gift means more to a person then a new PS3 or I-POD.

Turn Off Those Lights! – You may be in the Christmas spirit and want to tell the world how wonderful this time of the year is, but for heavens sake turn off those Christmas lights. Those little suckers zap so much money out of your wallet. Try only having them on from 7 until 10 and wait until the middle of December before you start lighting up.

Share The Duties – Rather than preparing an entire meal for the whole family of aunts, uncles, in-laws, cousins and friends share the responsibilities. Have Aunt Julie bring her world famous mashed potatoes, your in-laws can bring their favourite bottle of wine, mom and dad can take care of dessert and your crazy cousin Johnny can supply the rum and egg nog. Don’t put the entire dinner on your shoulders and on your wallet. Sharing responsibilities will help show you how to manage money and take away some of that financial burden.

Exchange Presents on the 29th – Before you go out and hit the malls maybe you can wait. Boxing Day is the perfect time to go shopping. The malls may be insane but the money you can save is almost worth that extra time and frustration.

HOLIDAY DEBT TIP 4: Start Tackling Debt Now

You have to start paying more than the minimum. Use the debt stacking approach I have mentioned in some of my previous posts. Tackle your lowest debt first and wipe it off the map. Use any extra money you have to get rid of that balance. I can’t stress enough how important and how valuable a tool debt stack actually is. It’s more important that you take your finances into consideration than it is to rack up even more credit card debt.

For my next post there will be a heart warming song you can sing and I will include two more tips on how to manage money and remain debt free this holiday season!

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How to Manage Money and Make it Grow

Wednesday, December 2nd, 2009 at 8:12 am

The 12 Debts of Christmas Part One

Oh the weather outside is frightful

But the fire is so delightful

My credit card is maxed out so

Let it Grow! Let it Grow! Let it Grow!

Tis the Season for too much spending

And there’s just no comprehending

How will I pay my bills next year?

Let em Grow! Let em Grow! Let em Grow!

My debt is as deep as the snow

Oh what a terrible fright

And I know it will continue to grow

How will I sleep through the night?

Now the presents have all been given

To the poor house I have been driven

And my credit scores are way down low

Help it Grow! Help it Grow! Help it Grow!

How to Manage Money and Make it Grow

The holidays are just around the corner and you have two things on your mind. How am I going to avoid the in-laws as much as possible and how am I going to be able to afford this come January? Over the next couple of weeks I am going to go over 12 tips for holiday debt relief. Each one will teach you little by little how to manage money and make this new year a debt free one!

HOLIDAY DEBT TIP 1: Don’t Add More Debt

Did you know that every $50 you add to your credit card balance will add another month to the time you will be able to pay it off? Don’t worry, Christmas isn’t cancelled! You don’t have to tell the kids that Santa isn’t coming this year. You do however, have to keep an eye on your budget. Now is the time to really sit down and crunch the numbers. Decide what you must have and what you can afford to lose. Do you really need a stocking stuffer for the dog or a brand new outfit to show off for Christmas day? Decide on what is really important and what can be missed. You will surprise yourself with how much you can actually save. Christmas is a great time to learn how to manage money.

HOLIDAY DEBT TIP 2: Make a List and Check it Twice

It may be easy to overlook your finances during this busy holiday time but you can’t forget the big picture. It’s time to set goals and stick with them.

Goal #1: Start an Emergency Fund – Any amount helps. Even if you can you spare $10 or $25 a week it’s time to start now and it will help. The goal is to have at least $1000 saved up and the sooner the better.

Goal #2: Start Debt Stacking – You’re credit card bills are probably starting to role in right about now. This is the perfect time to start snowballing your debt. Check my previous posts for debt stacking tips.

Goal #3: Cut the Cost of Living – There are all sorts of ways to cut your expenses. Turn down the heat a couple degrees when you are at work or when you go to bed. Turn off any lights when you aren’t in a room. Check any windows or door ways where hot air may be escaping and seal it up. The amount of money you will save will amaze you.

Goal #4: Clip Coupons – Every store wants your business. Look online or in the newspaper for deals. The more time you spend shopping around for those amazing bargains the more money you will save with your holiday purchases.

Try creating six other goals for yourself. If you don’t know the answer, there are some resources on this blog that can help. If you have some questions let me know and I will try to help!

For my next post there will be another delightful song you can break out around the dinner table with family and friends and a couple more tips on how to manage money and remain debt free this holiday season!

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Understand Money – How to Manage Money

Monday, November 30th, 2009 at 10:31 am

It always amazed me growing up how much my father knew about money and finances. Even to this day when he is nearing retirement, he knows more than almost every person I’ve met. He is still planning and evaluating his portfolio, always tweaking and always adjusting. He’s continues to make regular contributions to his retirement fund and never misses or is late with paying his bills. He knows how to manage money.

Part of me thinks that my interest in proper money management stems from his passion for it. When I was younger I would continually probe him for information from his past. I asked him how he knew when to change certain funds from low risk to high risk and vise versa. Before the market crash in the late 1980’s he successfully avoided a loss by adjusting his portfolio a few months before everything hit the fan. He did so in early 2000 and again before this most recent downslide. When tens of thousands of people were losing half of their savings and losing their homes he managed to protect all of his portfolio and pay off his mortgage in 15 years.

Is it luck that my father has always avoided losing money during these tough times? He isn’t an investment advisor or a banker nor does he work as a stock broker. In fact his career for close to 40 years was as a manager for a department store. How has he always known when to make changes at the right time? He has either been going to the only fortune teller that isn’t lying or he knows more than the average Joe. I’m guessing the later.

My father’s financial interests began when he worked as a teller at a bank when he was a teenager. The job required him to read enough about how to manage money so he could properly answer any questions that customers would have. He only worked there for about five years before changing careers. What he learned in that short amount of time he carried with him for the rest of his life. He made some mistakes along the way but because of what he knew, he understood how to fix those mistakes and minimize the damages.

Since the time that my father changed careers over 40 years ago, I don’t think he has picked up a book on finances. Having said that I’m certain he read more in that half decade than most people read in 20 years. The beauty about personal finance basics is that they really don’t change. The simple formula’s involved with interest or inflation or the dividends have remained the same for ages. The more you read the more you will know how to manage money.

Knowledge is everything. By reading as much as you can or even just a little you will learn how to manage money. If you spend a couple hours a week informing yourself with this blog and by reading some recommended books you will understand the trends involved with investing and will avoid the devastating losses. There aren’t too many things more important than making sure your finances are always in order. The more you know the more you will save.

Check out these books. I would highly recommend them to apply to your financial life.

“The Wealthy Barber” – Written By: David Chilton

“Automatic Wealth” – Written By: Michael Masterson

“Think and Grow Rich” – Written By: Napoleon Hill

“The Automatic Millionaire” – Written By: David Bach

Happy Reading!

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Quizzes and Calculators – Personal Finance Help

Tuesday, November 24th, 2009 at 11:52 am

I think it’s time to go back to school. Okay, you don’t actually have to jump on the bus, buy a new school bag and lug around a few pounds of paper and pens and dodge spit balls, but It’s time for a little personal finance help. Here is a fun quiz for you to go through to find out how well you know your finances.

1. It’s always better to choose the longest amortization period with your mortgage because you will have a lower monthly payment.

a: True

b: False

2. There is no difference on the amount of interest you pay over the term of your mortgage if you pay monthly or bi-monthly.

a. True

b. False

3. What is a dividend?

a. A cash payment distributed among creditors

b. A payment of additional shares of stock to stockholders

c. A monetary bonus to employees

d. A division of an international corporation

4. What is the most important financial tool you should use?

a. Planning a household budget

b. Using tax preparation software

c. Balancing your checkbook

d. Seeking personal finance help for a professional

5. What is an Asset?

a. A Vehicle, computer or clothes

b. Is cash, property or stocks

c. Anything owned that has exchange value

d. All of the above

ANSWERS:

1. b – False

It’s incredible how much money you can save if you lower the amount of time over which you are paying a mortgage. Try to make as much of a financial contribution as you comfortably can in order to save thousands upon thousands of dollars. The more quickly you can pay it off, the better.

Amortization period Monthly payment Total interest over the lifetime of the mortgage

35 years $565.25 $137,408

25 years $639.81 $91,940

20 years $712.19 $70,925

Amount saved with a shorter amortization period – $66,483

2. b- False

If you make your mortgage payment every two weeks you will pay off your mortgage much faster. In fact it works out to be one extra payment per year. If you are more of a number person, this chart will provide a little better understanding and provide a little personal finance help.

Frequency of Payment Number of payments Amount paid off Number of years to payments made per year off in one year pay off mortgage

Monthly $639.81 12 12 × $639.81 = $7,677.72 25

Accelerated bi-weekly $319.90 26 26 × $319.90 = $8,317.40 20.89 (every 2 weeks)

3. b – A payment of additional shares of stock to stockholders

A lot of people who play with the stock market only choose stocks that offer a payment of additional shares to stockholders. Imagine you had taken dividends as a stock option when Microsoft or Apple were in their infancy? Many people did and made a fortune.

4. a – Planning a household budget

All of the options in question number 4 are important financial tools to use but the most important one is to plan a household budget. It’s important to know where all of the money is going and how much you have left over for saving and spending. Always make a household budget if you want to stay on top of your finances.

5. d – All of the above

This one may have fooled you but an asset by definition is ‘anything owned that has exchange value’. Essentially an asset can be anything. Certainly some assets are wiser investments than others (such as property or stock options) but even the dusty old PC that you got when you went to college is an asset.

I hope this quiz was fun and provided you with some of the personal finance help you deserve. It’s important to stay on top of your money and learn as much about your finances as possible. The more informed you are the more likely you will achieve your financial goals. By now you should have created a number of personal goals. I found a free calculator that will show you how long it will take to reach them. CLICK HERE to try it out.

Cheers until next time!

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Money Pros and Cons – Personal Finance Basics

Friday, November 20th, 2009 at 8:12 pm

The great debate about money rages on. Depending how you view it, money can a good thing but it has the potential to be a bad thing as well. Money is good because it allows you any type of lifestyle you want. It can fund your goals such as going on vacation or allow you to retire early. Money provides the chance to have a family, live in the neighborhood you want and do just about anything you desire. Proper money management is the simplest form of personal finance basics.

The down side to money is if you live for it. If you spend the majority of your life slaving away at a job that you don’t like to earn money that makes it bad. Money misguides people enough to become workaholics and desert their friends and family.

Without question money has more pros than it does cons. The bad things that are associated with money are usually tied with misuse and greed.

What is Money to you?

Do you think that earning lots of money to live the life of luxury is important to you or would you like to work just enough so you can kick back and enjoy a modest lifestyle. It’s a pretty simple choice with little grey area and we all make it when we deal with the personal finance basics in our lives.

If you feel that working 60 hours a week so you can afford to drive a high end luxury vehicle and live in a 3500 square foot home is how you want to live then more power to you. Unfortunately you have become a slave to money if you must work that much to drive that car or live in that home.

On the other hand if you want to have 100% freedom and 0% responsibility then you have become a slave to your lifestyle. Money probably has little value to you and you make just enough to make ends meet. Is that a bad thing? Who am I to say.

I believe there is a happy medium when it comes to money. You can have all of the pros and none of the cons. Hard work is always important but you should never work for money. The better you understand personal finance basics, the more money will actually give back to you and the less you will be a slave to it.

The best case scenario is to work at a place that you love and would probably do it for free anyway. If you are unhappy where you are working its likely because you only see the dollar signs associated with the job. The way to make money a positive factor in your life is to change your attitude and love where you are. Ironically the more passion you put into your life, the more the money will actually flow in. You will work less and make more.

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Money Saving Tips – How to Manage Money

Wednesday, November 18th, 2009 at 11:43 am

What should you do with your hard earned money? There are many choices we face on a daily basis that can confuse as well as sway us in any given direction at any time. There are many things that we should and should not do when it comes to our finances and how to manage money. Let’s go through a few of the most important ways you can start saving and put your money where it belongs.

1. Know when you should stop

The problem many of us face when knowing how to manage money is knowing when it is time to stop. This may be a somewhat vague statement but I’ll help clear that up. Knowing when to stop can pertain to many different areas of you finances. You should know when to stop spending on a daily, weekly or monthly basis and that all comes down to budgeting. You should know when to stop investing in one part of your financial portfolio and start in another. You should know when to stop using your credit card and start using cash. All of these are vital for our financial success and there are many more. Every situation is unique and you should go through some of the trouble areas in you financial life to discover where you need to stop. It could be you are paying too much for internet or phone service. You need to know when enough is enough and put a stop to money wasting services and purchases. The amount of money you will save if you know when to the draw the line will amaze you.

2. Eliminate Impulse Buys

Retail outlets depend on impulse buys more than any other type of purchase. The store will lure you in with a great deal on a few items in their flyer. You pick those items up but along the way you buy several other things that aren’t on your list. All of us can be sucked into those impulse buys any time we go to the mall, gas station or the grocery store. Most of the time we don’t even realize we’ve made an impulse buy. If you chew gum, have an issue of ‘People’ magazine on the coffee table or have fuzzy dice hanging from your car mirror chances are you have made an impulse buy. We make impulse buys on an almost daily basis. Those purchases can be credited with draining our wallet and bank account of more money than we realize. For example If you chew one package of gum per week you are spending about $78 a year. Add in one magazine a week, a Starbucks coffee a day, a chocolate bar every two weeks etc. It’s not hard to do the math to figure out that we spend thousands of dollars each year on these items we had no intention of buying. If you avoid them you will easily save thousands of dollars for your retirement and you understand the basics of how to manage money.

3. Plan Ahead

Planning is everything when it comes to your finances. If we run around without having put any thought to where our money is going chances are it will all be gone after a couple of weeks. They key to solid financial planning is planning ahead.

My Step by Step Advice:

1st: Know what your guaranteed monthly expenses will be and set aside that amount from your paycheck. Those items include hydro, cable, car payment etc.

2nd: Set aside $25 (or more) per week that will go into your emergency fund.

3rd: Create a meal plan and do your weekly grocery shopping. By having everything you need in the house it will prevent you from going to the corner store to buy a loaf of bread for $4.

4th: Set aside weekly spending budget of no more than 10% of your paycheck. If you spend that 10% by Monday that’s all you get. Don’t tap into next weeks budget and don’t let last weeks budget roll over into this week.

5th: Create a financial goal at least once every week. If you want to go south this March, create a goal to make that dream come true. If you want to buy a house next year, start making that goal happen. If you want to save an extra $10 a week, figure out a way to make it happen. This will show you how to manage money and get you on the right track to your financial freedom.

Should you go out and spend your money with reckless abandon or save wisely? I’m pretty sure you know the answer to that question. Managing money isn’t impossible and you don’t have to be the most frugal person in the world to be able to save for the retirement, home or vacation you’ve always wanted. You simply need to understand when enough is enough when it comes to spending. You also need to stop impulse buys. The final thing is sound financial planning. If you make an honest effort at making those three things happen, you will be on your way to knowing how to manage money wisely.

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What are you willing to sacrifice?

Tuesday, November 17th, 2009 at 2:07 am

Its 10:00 am. The loud hum of the vacuum cleaner quickly lifts my head off of my pillow, which unfortunately is only mildly warm right now. I struggle through the typical waking questions, like “where am I?” and “what the hell is that noise?”, and as I piece together the complex events of what is going on, I come to the realization that my wife is not even home. It also dawns on me that despite the fact that it is past 10 a.m. I have only been asleep for just over 2 hours. Is this some kind of joke? Am I really awake? And what the heck is that noise?

We all have goals and dreams that we would like to accomplish. I, like many people, have goals in life that require freedom of time and money. So, naturally my main goal is to become financially independent. To do this requires sacrifices along the way, one of which is living with other people.

The story at the beginning illustrates what literally happened to me this morning. I currently work for the government as a water/wastewater operator.With this job comes the lovely bonus of working shift work. 12 hour days are great for a compressed work- week, however, not so nice when I work 6:30 p.m. to 6:30 a.m. as was the case yesterday. After the commute I finally stumbled into bed just after 8:00 a.m. To my surprise I awoke at 10 a.m. to find that my downstairs tenants decided that Monday morning would be a great time to clean their entire apartment. I was not impressed to say the least.

After a half an hour of listening to furniture moving, cupboards slamming and the sound of the vacuum turning on and off what felt like 100 times, I realized any efforts to fall back asleep were in vein. Once my initial feelings of anger and frustration wore off, I decided to do something different. Something I should have done from the beginning. I decided to said “thank you”.

Now, I didn’t go downstairs and physically say thank you to the tenants. Instead I said thank you to the universe. Why? Well these people are paying my mortgage, literally. Because my wife and I own a duplex our mortgage is literally covered by the rent from the downstairs apartment. This is the way I looked at the situation:

1) Sure, being woken up sucks but it is better than getting a nice sleep because its vacant downstairs.

2) The tenants care about their place. How many renters do you know that would take apart their entire apartment and clean it on almost a weekly basis?

3) This is the price I am willing to pay to get ahead financially.

How would you react if this situation happened to you? Would you be grateful? Or would you curse the fact that you are living with these people? I believe it all comes down to what are you willing to do to achieve your financial goals? Sacrifices are going to have to be made. It could be time, money, energy or even the odd lost sleep. Remember, the bigger the financial goal, the bigger the sacrifice that is needed to achieve it. Nothing in this world comes for free and the attainment of your goals is certainly not exempt from this.

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Banking Tools – How to Manage Money

Friday, November 13th, 2009 at 6:40 pm

Sometimes its hard to make sense of it all when it comes to your personal finances. Do you know what type of bank accounts are right for you, how long of a mortgage you should have or what type of credit card is right for you? There are plenty of decisions you are forced to make and the more informed you are the better you will know how to manage money.

Here are a bunch of FREE banking tools that can help you make the right decisions:

What Type of Bank Account should you have?

There are a number of different factors your should consider when you are choosing what type of bank account you should use. The two most popular options are obviously chequing and savings. Other options are opening foreign accounts or investing in bonds. There are numerous banks that offer different services or interest rates and maybe you are at the wrong one. If you want to determine what bank is right for you and what type of account best suits your needs I have discovered two links that will be helpful.

CLICK HERE for High Yield Rates for MMA and Savings Accounts.

CLICK HERE to determine what Type of Checking account would be best for how to mange money.

For our Canadian friends, this quick Q&A will help you determine what type of bank account you should have, what branch you should go with and it breaks down interest rates, transaction fees and balance requirements.

CLICK HERE to discover which chequing account best suits your needs.

CLICK HERE to compare interest rates or features are offered with different savings accounts,

What Credit Card is right for you?

It’s hard to decide what credit card you should have. I honestly recommend that you only use one for emergency purchases such as car repairs. If you think that you need one this website will help you decide what type of credit card is right for you. CLICK HERE to find out.

For our Canadian friends here is a site that will help you determine what credit card is right for you. This tool is a great resource and even breaks it down province by province and even lists the name of several company’s, their interest rates and the benefits and rewards provided by each one. CLICK HERE to find out

As I mentioned earlier in this post I don’t think you should use your credit card on a daily basis but if it is a habit you find difficult to break then I have a great tool for you to learn how to manage money. If you carry credit card debt here is a great Credit Card Payment Calculator. It is designed to help you determine how long it will take to get rid of your balance and you can play around with it to find out what kind of extra payments you will be able to afford. CLICK HERE.

Money is difficult to deal with if you are missing some of the tools that are necessary for successful financial planning. This post was designed with your finances in mind. You may currently be at a bank that offers one or two percent less interest than the one across the road. It’s impossible to visit every bank in your state or province but these links allow you to do that in a few simple clicks. You may also be using a credit card that offers no benefits or rewards and can easily switch company’s to get free travel insurance or travel points. I trust that these links will help you learn more about how to manage money.

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Tips From The Rich – How to Manage Money

Tuesday, November 10th, 2009 at 9:46 am

If you are like most people you probably feel as though you don’t make enough money and don’t know what to do with the money you have. The ultra rich know how to manage money and are able to manage they lifestyle we all dream of. Here are several tips that you can turn your finances around and make you far more wealthy than you imagined.

Better Time Management at Work

There are ways to use your time more wisely at work. Many of us love the water ‘cooler meetings’ but are they the most productive use of your time? Probably not. Rather than gossiping about the latest episode of ‘Lost’, spend your time trying to become an expert on a specific part of your job, or find ways to cut expenses. The more you put into your job the more you will get out of it. Make yourself stand out as the best candidate for any promotion or salary increase. If you are motivated enough you may find yourself in your bosses chair.

Negotiate Your Salary

When most people start at a new job they are often afraid to negotiate their salary and take whatever is offered. Statistics show that people who negotiated their salary increased their pay by nearly 8%versus those who did not. What’s the worst that could happen? You might just get the big fat pay increase that you want and find new ways of how to manage money.

Be More Charitable

It’s amazing how well the ‘pay it forward’ mentality works for the wealthy. The average household with an income of over $500,000 gave away over 6% of their income to charities or special causes. Not only does giving back to those in need give you great satisfaction but you are also able to write off donations at tax time. If you are really on top of things you may even be able to put yourself into a lower tax bracket.

Own Your Own Business

As the old adage goes ‘you can never get rich by working for someone else.’ It takes a lot of work, determination, frustration and sleepless nights to own your own business. On the other hand, the sense of accomplishment, satisfaction and financial rewards of having your own business are immense. Before you quit your job and open a franchise that sells chocolate covered bananas, do a lot of research and create something that will be able to sustain you and your family. The more preplanning you do and learn how to manage money properly, the more successful you will be. Entrepreneurs don’t become wealthy by mistake.

Strategize Borrowed Money

The wealthy often borrow as much money or more than the average person but they way theyborrow money is very different. The wealthiest people in the world are half as likely to have creditcard debt and they are also less likely to have auto loans. Most of the wealthy carry mortgages much like the average person and they are three times more likely to have loans on real estateinvestments. The rich know how to manage money better than most people because they wisely borrow.

Buy Into Real Estate

Do you think Oprah or Donald Trump rent their homes? If you want to get ahead with your finances and stay ahead you must buy real estate. Don’t go beyond your means. Try to purchase something that you are able to afford and can even fix up and sell in a few years for a major profit. If you rent, your money is going down the drain. More often than not your mortgage payment will be as much as you are currently paying in rent.

It may take baby steps but if you want to get ahead with your finances follow these tips of how to manage money. The wealthy didn’t get that way by mistake. They often take calculated risks and are rewarded financially in the end. You have it in you to make the same kind of decisions and start making the money you’ve always wanted.

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