How to Manage Money Tips

How to Manage Money and Eliminate Debt

2009-12-08T12:31:00.000-08:00

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!

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS!

How to Manage Money and Make it Grow

2009-12-04T15:12:00.000-08:00

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!

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS!

Understand Money – How to Manage Money

2009-11-30T16:35:00.001-08:00

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!

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

Quizzes and Calculators – Personal Finance Help

2009-11-24T16:44:00.000-08:00

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!

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

Money Pros and Cons – Personal Finance Basics

2009-11-22T09:47:00.000-08:00

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.

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

Money Saving Tips – How to Manage Money

2009-11-22T09:45:00.000-08:00

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.

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

What are you willing to sacrifice?

2009-11-22T09:44:00.000-08:00

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.

DID YOU LIKE THIS ARTICLE? SHARE IT WITH YOUR FRIENDS!

Banking Tools – How to Manage Money

2009-11-14T12:15:00.000-08:00

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.

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

Tips From The Rich – How to Manage Money

2009-11-14T12:14:00.000-08:00

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.

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

False Sense of Financial Security – How to Manage Money

2009-11-08T11:07:00.000-08:00

Friday, November 6th, 2009 at 12:46 pm

You are currently living the ‘American Dream’. You are happily married, have two and a half kids, a dog, the house with the white picket fence, you drive an SUV and a mini van and you are in debt. Your story is the same as millions of other people out there. Okay, so your story isn’t exactly as I just described but close. In fact the debt part is probably the only absolute truth. You are able to make all of your minimum monthly payments and are getting by just fine – or so you think. You have been lulled into the false sense of financial securityand think you know how to manage money. The truth to be told is you may be in too much debt. Here is a list of ten warning signs indicating that you may be in over your head.

1. You have little to no savings

2. You can only make the minimum payment on your credit cards or other bills

3. You’ve been denied credit

4. You use cash advances from your credit cards to pay other bills like heat and hydro

5. You are sometimes late with your bill payments

6. You keep making purchases with your credit card adding to the balance

7. You don’t even know how much debt you have

8. Your bank accounts are overdrawn and sometimes you bounce checks

9. You have one or more credit cards that are close to the limit or are maxed out

10. You have lied to family and friends about your debt and over spending

Do any or all of these statements sound familiar? Even if just one of those is true you are probably in some sort of financial trouble and may need to learn how to manage money all over again. The good part is you can. The bad part is you need to start taking control of your finances right now. The longer you wait, the worse the problem will get. Finances are one thing that can’t be swept under the rug and forgotten about.

STEP 1: Now is the time to make a check list and go through it. Sift through these 10 items and find out what ones correspond with your life.

STEP 2: Find a way to fix those problems. You have no savings? Start creating your emergency fund. Add $25 a week or whatever amount is possible to build that balance to $1000. You keep adding to your credit card balance? Start buying things with cash and start paying off your credit card. The list goes on and on but you have to fix those problems.

STEP 3: Set goals and start making them happen. Tomorrow isn’t a good time to start setting goals. Start today – better yet start right now. Don’t set your goals too high, create financial goalsthat can work such as cutting your hydro bill by 5% or 10% or saving money by quitting smoking. Baby steps are key to goal setting and learning how to manage money.

Being lured into a false sense of financial security is easy when you don’t know the signs of serious financial problems. If you have gone through this list and discovered any matches it may be time to start fixing those problems before your security turns into a major issue. Knowing how to manage money is easy and anyone can do it.

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS!

How To Improve Your Credit Score – Personal Finance Basics

2009-11-08T11:06:00.000-08:00

Wednesday, November 4th, 2009 at 9:14 am

The health of your credit score is incredibly important to your finances for a number of reasons. For starters goodcredit scores are what lenders are looking for when determining whether or not they will lend you money. In a number of cases insurance company’s and landlords often look into your credit when determining whether or not to have you as a client or tenant. This article will show you a number of ways of how to improve your credit score and will help with your personal finance basics.

1. Pay Your Bills On Time

The reason why this is first on the list is because this is probably the most important rule to follow when attempting to boost your credit score. If you go to a bank and are applying for a homemortgage the first thing the bank will look at is if you pay your bills on time. This includes everything from your cable, telephone, credit card or internet bills. Your credit score will directly reflect if you make, miss or are late on your bills. If they see that you religiously miss or are late for payments, chances are you will not be approved.

Some tips so you will never miss another bill payment:

-Open a separate checking account and allocate enough money at the beginning of each month for your bills so you always have enough.

-Set up email reminders for when your bills a re due.

-Set up automatic payments through your online banking.

-Keep a written calendar of when each bill is due. Review it regularly.

-Buy everything you can with cash. No credit card means one less bill to worry about.

2. Never Let Bills Go To Collections

This seems like a no brainer but these collection agency’s exist because thousands of people allow their unpaid bills to go this far. You can’t ignore your bills. They won’t just go away. If any of your unpaid balances goes to collections you are going to pay surcharges, major interest and your credit score will be shot.

3. Keep Credit Card Balances Low

The most simple of personal finance basics is if you must use a credit card, keep the balance at zero or as low as possible. The less of your available credit you use the better. The number that most reflects your credit score the most recent balance on your statement. Even if you pay your bill in full every month you should never exceed more than 30% of your available credit. The less you use the better.

4. Use Your Old Credit Cards

This may sound strange but don’t switch from one credit card company to another. If you hop-scotch around and continually close or cancel credit cards your credit score can be adversely affected. Try to use the credit card you got when you were 20 and stick with it. If you primarily use a different credit card attempt to keep that old card active and use it once in a blue moon. Be sure to pay it off in full every time.

5. Check Your Scores Once A Year

Your credit can get into trouble in a hurry. One day everything may be fine and the next your credit score could be awful. Checking your score annually is a personal finance basic we should all follow. This allows the opportunity to correct any errors that the banks or you may have made. Be careful though. If you check your credit score too often it could also affect your scores. Checking once a year is your best option. Be sure to dispute any inaccuracies such as missed or late payments when you paid on time or any other issues that may come up.

High credit scores create the opportunity for lower interest rates on mortgages, car loans personalloans and credit cards. One of the earliest personal finance basics you should follow is to maintain the health of your credit score so you will be able to take advantage of many different financial opportunities. The sooner you rectify any problems with your credit, the sooner you will be back on track with it. If you follow these tips you will be well on your way to improving the health of your credit score.

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

Guest Post - A Spending Plan

2009-11-08T11:04:00.000-08:00

Written by Gary Foreman

The Dollar Stretcher Blog

Dear Dollar Stretcher,

From the total salary what percentage is ideal to spend for various needs, and how much to be saved for future?

Dee

It’s a question that we all must answer. Even if some of us would prefer to ignore it! Because, with rare exceptions, we all have to deal with having just so much money to cover all our expenses. And, if we spend more than we take in for very long we get into trouble.

Let’s look at a “typical” spending plan. Then we’ll discuss it.

housing 35%

food 15

auto 15

insurance 5

entertainment 5

clothing 5

medical 5

everything else 5

Savings 10

The first thing you’ll notice is that I didn’t include any taxes (either income or Social Security). You can choose to do that if you like (in fact, it’s a real eye opener). But for our purposes it’s easier just to deal with your ‘take home’ pay.

The second thing to notice is that this is a guideline, not a straightjacket. The truth is that very few of us will fit into this exact framework.

So if your spending doesn’t match, don’t despair! Analyze the situation before you panic!

For instance maybe your entertainment spending is closer to 10%. Is that a problem? Maybe not, if you’re young, single and sharing an apartment with 3 friends. In that case what you save on housing is going for entertainment. So overall you’re not spending more than you’re making.

Or you may be a city-dweller where housing is very expensive (think NYC). But because of public transportation you don’t own a car. So the extra you spend on housing is offset by the reduced spending on transportation.

You get the idea. Tailor your spending plan to your needs. And, adjust it as you go through life and your needs change.

One other thing to notice is that housing, food and auto make up the lion’s share of the expenses. That’s true for almost everyone.

It’s in those three areas that most families get into trouble. Most often by buying a home or vehicle that they cannot afford. But once the commitment is made it’s very hard to undo.

You might wonder where a certain expense goes. For instance, household cleaning supplies. Many people buy them at the grocery store. So are they a housing or food expense? The answer is: it doesn’t much matter. Put them whever it seems best to you. The key is always putting them in the same place, so you can compare results from month to month.

Another common question is what should I do with charitiable contributions. You can either take it off the top (like taxes) or create a separate category for it. If you believe that contributions should come before your expenses you’ll want to take it off the top. If you think that it’s part of your regular spending then include it as another expense category.

Finally, let’s look at Dee’s question about saving. There probably isn’t any single right answer. Because saving isn’t really an expense. It’s an investment for a better future.

So I prefer to think of savings in terms of priorities. Before I can put money aside for savings I need food and a reasonable shelter. Probably also need dependable transportation to get to my job.

But after those basic needs are met, it’s time to begin saving some money. Not necessarily the 10% in our guidelines, but 2, 3 or 4%. Enough so that there’s some money set aside for the so-called unexpected expenses that happen to us all (dead appliances, home and auto repairs, unexpected sickness, temporary lack of work).

One other comment about savings. Paying off debt (especially credit card debt) is a little like savings. Consider payments used to reduce the amount owed as if they were savings.

Finally, for those of you who don’t want to bother with any of this. I know what you’re thinking: I’m fine and don’t need any help monitoring my money. Just remember that most people who are in trouble today said the same thing when everything looked good to them.

______________

Gary Foreman is the editor of The Dollar Stretcher.com website and various enewsletters including Financial Independence. FI is a daily message designed to help people take control of their financial lives through achieving small daily goals. To find out more check out the Financial Independence page .

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS!

Biggest Money Mistakes – Personal Finance Basics

2009-11-08T11:02:00.000-08:00

Wednesday, October 28th, 2009 at 9:13 am

Mistakes are made with money everyday by everyone when it comes to personal finances basics. The wealthiest people in the world make mistakes, the middle class makes mistakes and the poor make money mistakes. Therein lies the biggest problem. When the less money you have, the more damaging those mistakes are. What are the biggest money mistakes people make? Let’s find out.

1. Neglecting Your Credit Scores

These three-digit numbers are more important today than ever, specially today with more and more people defaulting on their debts. Money lenders are extremely cautious about to whom they will lend money.

Lenders are looking for low-risk customers. If you have a great credit score of 750 or above, banks will fall all over themselves for your business. A high credit score also means that they will give your great rates on mortgages, car loans, personal loans and credit cards. Insurance company’s and landlords also use credit scores to determine quality applicants, that’s why it is important to keep your credit in good shape.

Do you know your credit? There are many resources that can show you. Click here for a free credit score estimator.

In my next post I will show you how to improve your credit scores when it comes to personal finances basics.

2. Carrying Credit Card Debt

If you carry a balance on your credit card not only are you paying exorbitant interest rates but your may also be affecting your opportunity to get a mortgage or other type of loan and you are damaging your credit score. If you want to fix your personal finances you need to eliminate yourcredit card debt. If you need help in eliminating your credit card debt get it. You won’t have any leverage with lenders if your credit is in poor shape and the sooner your get rid of your credit cards the better you will be.

3. Too Much Home or Auto Debt

In an ideal world you should not exceed 30% of your gross income when it comes to how much you are paying for your mortgage. On that same line of thinking, your transportation expenses should not be more than 10% of your income (that includes insurance, fuel and maintenance). If you are higher in one or both of those categories, you are in over your head when it comes to home or auto debt.

What to do? It may be time to rethink where you are living. If you can’t afford a house with a 30 year fixed rate mortgage, you can’t afford the house. If you can’t afford a 60 month loan for a vehicle, you can’t afford that car. These are simple personal finance basics you should know.

4. You Tapped Into Your Emergency Fund or You Don’t Have an Emergency Fund.

The value of having cash in hand is becoming more and more valuable every day. An emergency fund is exactly what it sounds like. It can help pay for unexpected expenses such as car repairs and it could cover your bills if you lose your job. Most people aim to have an amount that is equal to three months living expenses. For families it is wise to be able to cover six months. Obviously the more you can afford, the better. If you don’t have an emergency fund, you should start creating one. Start by setting a goal of creating a balance of $1,000 and then go from there.

Making mistakes with your finances is often inevitable. The less often you make those mistakes the better off you will be. If you are able to avoid these four crucial errors, you will start to enjoy thefinancial freedom you deserve. Trying to live within your means and staying on top of your debts and your credit are the personal finance basics we should all take care of. If you start to set goals and tackle one of these things each month you will be rewarded financially more quickly then you think.

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

5 Ways to Make Finances Easier – Personal Finance Basics

2009-11-08T11:01:00.000-08:00

Friday, October 23rd, 2009 at 8:42 am

Wouldn’t it be nice if you could make your finances easier to deal with? I’ve compiled a list of 5 ways to makefinances easier to help with personal finance basics. The nice thing about making your banking easier is you can usually save money and create more free time for yourself. Banking can be easy.

1. Use Direct Deposit: This is the first and easiest way to make your financial situation a lot easier. Amazingly many people don’t take advantage of this opportunity and still venture to the bank every week to deposit their paycheck. Your place of employment probably offers the option for direct deposit and it will save your time and in some cases money.

2. Create Two Checking Accounts: This is truly helpful and helps you to analyze how much money you can spend each month and how much money must be allocated for bills. One way to make this work is to have one account into which your paycheck is deposited and the other used for bill payments. By doing this you are less likely to over spend and will always have enough to pay all of your bills.

3. Create a High Rate Savings Account: Many financial institutions offer a high rate savings account and you should really consider taking advantage of this. A high rate savings account is a wonderful place to store money for your emergency fund and often offers saving rates of 3% or more. It’s easy to make small contributions from one of your checking accounts to quickly build up the balance and it builds up your savings better than most other types of accounts.

4. Automate Your Banking: Every bank has the online option and it makes life incredibly easy. Online banking is personal finance basics at their best. You can check your account from anywhere in the world and schedule monthly bill payments. The options are limitless, onlinebanking is perfectly safe and banking can be done from the comfort of your own home.

5. Create a Bill Calendar: Even if you have email alerts or automated bill payments you should consider making a calendar for yourself, just in case. It’s good to write down when your bills are due in a journal or on a personal organizer as a regular reminder. Make sure it is written in a place you will look at around once a week. Have a written reminder will help prevent over spending and is a just a great way to prioritize your finances.

Banking doesn’t have to be difficult. The more you simplify the personal finance basics in your life the more likely you are to save more money and make all of your regular payments. Although you will have to make a little effort to start out it should be smooth sailing from that point on.

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

Debt Stacking – How to Manage Money

2009-11-08T11:00:00.000-08:00

Tuesday, October 20th, 2009 at 10:22 am

Do you have a plan in trying to eliminate your debt? Are you tired of making the minimum payments on each bill and never being able to get ahead?I want to go through what debt stack is and how to manage money and eliminate your debt as quickly and realistically as possible. What’s even more exciting is that you can even use the debt stacking formula to help create the retirement you’ve always dreamed of!

What is Debt Stacking?

I have discussed this in one of my previous post buts perhaps this is worth another look. Debt stacking is a simple principle of paying off all debts in a pyramid type formula. It works and it can be easy and you can eliminate your debt 2 to 3 times more quickly then you would have imagined.

STEP BY STEP PROCESS:

STEP 1: Make a list of all of your current debt. Rank each item from the lowest amount to the highest.

STEP 2: Establish an emergency fund in a savings account. The lowest amount you should have is $1,000. You just never know if or when you may need it.

STEP 3: Always pay the minimum amount each month that is required on all of your debt until the first one is paid off.

NOTE: If you typically pay extra on some of your debt each month, apply that extra amount to first item (of the lowest balance) on your list. (ie if you pay $200 extra each month on item number 3 switch that amount, regardless of interest to the lowest balance)

STEP 4: Once the lowest debt has been paid, apply that minimum monthly payment from the first debt and use it against the next lowest balance (the second one on your list). This will help speed up the amount of time it will take to pay off the second balance.

STEP 5: Repeat that same process to the next debt or until all have been eliminated. Remember you are not spending any more money and it will accelerate the process.

REMEMBER: For this to work effectively you must not create any new debt.

Let’s look at a typical example:

TYPE: AMOUNT: REQUIRED PAYMENT: INTEREST RATE:

Credit Card $7,500 $150 16%

Car Loan $10,800 $350 8.5%

Student Loan $14,600 $365 7.25%

Mortgage $139,000 $940 7%

TOTALS $171,900 $1,805 —–

If you only made the minimum required payments:

It would take 32 years to be completely out of debt.

In those 32 years you would have paid $205,485 in INTEREST for a total of $377,385.

If you apply the Debt Stacking Formula:

It would take just 12 years to pay off that same debt.

In those 12 years you would have paid just $86,343 in interest for a total of $205,485.

It may seem too good to be true but this is a relatively simple process that works. You are not making any changes to your monthly payments just taking a different approach. With this formula, by the time the first three amounts have been paid, the regular mortgage payment has now doubled! Every situation is different but debt stacking works for anyone.

How Debt Stacking would help with retirement:

Once all of your debt has been eliminated, take the same total minimum required monthly payment of $1,805 and invest it. Do that every month for the next 20 years. You would have been paying that amount for 20 years anyway. If its invested at 8% you will have $1,179,533 in 20 years. Nothing in your lifestyle has changed.

In a nutshell debt stacking will dramatically reduce the amount of time it will take to pay off your debt and it will also reduce the total amount of interest you will pay AND it will help create the nest egg you have always wanted. That sounds pretty great doesn’t it?

The problem with debt is that you often don’t see results right away. It’s hard to stay focused and keep up hope when those large balances don’t seem to go away until the final few years. The key is to pay as little interest as possible so you will have more of your money in your bank account down the road. I hope this post helped you understand debt stack and showed you a little more about how to manage money.

Until next time,

Brandon

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

Guest Post - What You Should Do Now

2009-11-08T10:59:00.000-08:00

Thursday, October 15th, 2009 at 8:00 am

Written by Gary Foreman

“Never make predictions, especially about the future.” – Casey Stengel

For years Casey Stengel managed in baseball’s big leagues. Some of his quotes are legendary. But, given our current economy, I’d have to take exception to his advice. At least as it applies to our personal finances.

Let’s look at some current information. Unemployment is at 9.8%. Nearly double what it was at the beginning of 2009. Hiring remains anemic.

The Congressional Budget Office (CBO) estimates that the fiscal year 2009 U.S. deficit will be $1.4 trillion. That’s just under 10% of gross domestic product. Or to put it into perspective, during the last year the government borrowed the equivalent of 10% of every good and service the whole country produced.

There were over 1 million bankruptcies through September, 2009 according to U.S. Bankrtupcy Court. At that pace we’ll see 1.4 million this year.

Forecasts for the economic future vary widely. Despite old Casey’s advice you can find reputable economists who are willing to predict both recovery and a more serious recession.

So, while there is much uncertainty, there are still some things that you can reasonably predict about your personal finances.

First, you can expect some inflation. Over the long term there’s only two things that can be done with the deficit. Congress can adjust future budgets to repay it quickly. Or they can devalue the dollar to pay it back with cheaper dollars later. Based on past experience, I’d say that they won’t vote to repay it soon. So we better be prepared for some inflation (i.e. devaluation of the dollar).

What will that inflation mean to you? It will mean that it will take more dollars to buy things. Bread that cost $2 today will cost $3 tomorrow. If your income does not keep pace with inflation you’ll suffer. Those on fixed incomes will be hit hardest.

Inflation can also devalue your savings. Whatever amount you planned for an emergency fund, college savings or your retirement won’t be enough. You’ll need to adjust your savings goals upward.

You’ll also want to change the way you invest your savings. Reduce the amount that you have in CD’s and money funds. Look to increase the portion in assets with prices that can increase. For instance natural resources (oil, gold, etc.) and housing.

Look for ways to increase your income. That may mean creating a second income source. It will be hard for many employers to raise your wages to keep up with inflation. Your pay could lag behind increasing prices.

Expect interest rates to increase. The government is borrowing more than ever before. You’ll be competing with them for loans.

That means that you should pay off any debt where rates change with the market. A homeowner’s line of credit is a great example. As rates go up, so will the cost of your HELOC.

Expect credit card rates to rise. First, because of generally higher interest rates.

Secondly, because the credit card reform bill of 2009 is forcing issuers to try to make more moneyfrom people who pay their bills on time. So instead of clobbering those who fall behind, card issuers will expect everyone to pay a little higher interest.

They’ll also increase fees and reduce rewards. Much of that has already started. A good response is to slowly cancel cards you don’t use. Especially recently opened accounts. Do this cautiously. Closing too many accounts too quicky could reduce your credit score.

If you have any other variable short-term debt pay it off as quickly as possible. If the rates are adjustable be prepared for them to go up.

Now might be a good time to consider refinancing your house. Locking in lower rates today is a good idea. Especially if you plan on being in your home for more than a couple of years. Bankrate.com has a good tool for comparing mortgage rates

Think about what you would do if you lost your job. You may be fortunate and have a job that’s secure. But most of us need to be prepared for either a pay cut, unpaid days off or even a layoff.

For instance, training for additional skills while you’re still employed could be helpful. You’ll find a whole list of things to do if your job is uncertain here .

Old Casey was right when he said it was hard to predict the future. No one knows for sure how long or rough this economic storm will be. But don’t let that keep you from taking the appropriate steps now.

One other thing I should mention. We have an affiliate program for our Tips ebook. You make a 50% commission on every one that you sell.

All the Best!

Gary Foreman

The Dollar Stretcher.com

941.761.7805 v

941.761.8301 f

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

9 Tips to Save Money – Personal Finance Basics

2009-11-08T10:58:00.000-08:00

Tuesday, October 13th, 2009 at 6:49 pm

There are many simple tips to save money when it comes to personal finance basics. Some are a little more time consuming than others but in the end it is well worth the time it takes. Even if you follow one or two of these tips you could save hundreds of dollars each year.

REQUEST FREE SAMPLES:

There are plenty of websites that offer free samples for everyday items. Even the big stores like WalMart or Home Depot have great opportunities for you and I to get free products. These products range from skin lotions and personal hygiene products to pet food or cleaning products. Another option is to go directly to a manufacturer’s website to find those free samples on brand new products. If you need something, type ‘free sample’ into google before you go to the store to buy it. This is the beginning of mastering personal finance basics.

CHANGE CREDIT CARD SPENDING AND HABITS:

Credit cards are great but also dangerous. With high interest rates and monthly fees, credit cardsmay end up costing you more down the road than you expected.

My rules of thumb:

- always use cash unless its for a major purchase

- always make sure you can afford the item before you use a credit card

- always pay the balance of your credit card

AVOID IMPULSE BUYS:

We all know what it’s like to push a shopping cart through the aisles of the grocery store and when we arrive at the check out we have twice as much as we planned to buy. Always, always, always make a shopping list, follow it and don’t buy anything that’s not on that list. This goes for any type of shopping including clothes, books or entertainment. Stores are designed specifically for impulse buys with magazine racks and gum within easy reach. Make your list, check it twice, and follow it.

SHOP THE SALE RACK:

Don’t confuse this with an impulse buy. If you made your list and know that you need a pair of pants and a shirt check the sale rack first. Chances are you will find exactly what you are looking for on sale and pay half the regular price. Grocery stores operate the same way. They often over order products and are forced to run unadvertised specials on overstock items. Just make sure the item is on your list.

SAVE YOUR HARD EARNED MONEY:

This is sometimes the hardest thing to do when money is tight, but it is the most important of these steps. According to the book ‘The Wealthy Barber’ you should save 10% of your paycheck every week. That doesn’t sound like much but it will add up very fast and if properly invested it will go a long way towards your retirement down the road.

SAVE YOUR CHANGE:

This may sound a little silly but this little tip is a great one. Why? Because in some way’s it’s like found money. After you come home from the store put all of your loose change into a jar. Once a month or every few months count up the change, roll it up and deposit it into your bank account or treat yourself to a well deserved evening out. These are the personal finance basics you learned when you were very young.

BUY IN BULK:

We’ve already touched on shopping but here’s another shopping tips that mostly applies to grocery shopping. Buy in bulk. If you drink a lot of orange juice and its on sale at half price, buy 4 instead of 2 or buy the 24 pack of water instead of the 12 pack. It seems to make sense but many people don’t take advantage of bulk buys on every day items.

CLIP COUPONS:

I know this may make you feel like your grand mother but this is another great way to save lots of money. It only takes a few minutes each week and you can end up saving hundreds of dollars every year on things you were already planning to buy. Go through your local newspaper orcheck online for some amazing coupons.

RECYCLE PLASTIC BAGS:

Not only is this great for the environment but it will save you money too! Many retail outlets are now charging as much as 10 cents for plastic bags. You probably have about 1,000 hidden away in your closest already. Why not bring them to the store and re-use them? Another way to recycle and save money is to use those plastic bags from the store for the garbage under your kitchen sink or in the bathroom. Don’t spend $5 every month on a pack of kitchen garbage bags when you already have them at home.

These simple ideas will not only save you hundreds of dollars every year but they are easy and can also be fun. It’s always rewarding to know that you are taking the right steps to becoming debtfree. If you follow these tips to save money you are one your way to understanding the personal finance basics everyone should know.

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

Common Debt Mistakes – Personal Finance Help

2009-11-08T10:57:00.000-08:00

Friday, October 9th, 2009 at 12:42 pm

No one likes the idea of being in debt. Debt often creates emotional distress, relationship strains and a general feeling of disappointment and failure. Unfortunately most people who are in debt make similar errors that can be avoided. If you carefully read this article you can avoid these common debt mistakes and get the personal finance help you need.

Lack of a Financial Plan:

If you want to reduce your debt you need a plan. As I have mentioned in previous posts you should probably eliminate the debt that carries the lowest balance first. For starters it gives you the satisfaction of achieving a goal and will help you move on to the next outstanding balance. This method also reduces the amount of different bills you have to pay, eliminating confusion. If you make a plan and follow it you have already prevented one of the most common debt mistakes.

Spending Too Much:

It sounds obvious but spending too much is the main cause for debt and more and more people live beyond their means everyday. It’s always wise to eliminate unnecessary expenses and avoid purchasing those items you can’t afford. If you discover that you are unable to stay on top of your spending it may be time to seek a financial adviser. They can help you avoid those common debt mistakes and provide the personal finance help you may need.

Hiring the Wrong Debt Consolidation Agency:

Everyday we are bombarded with television and radio advertisements that offer debtconsolidation services. Some are legitimate and others aren’t. The only way to know if a particular agency is right for you is to investigate the company thoroughly. I have heard some company’s state that they can lower monthly payments by more than 50% or eliminate debt in under five years. If it sounds too good to be true it probably is. Do a lot of research before you entertain the idea of hiring a debt consolidation agency. Personally I would not recommend seeking this service at all but if you choose to go this route, choose wisely.

Not Understanding Why You Are In Debt:

This without a doubt is the most common debt mistake when seeking personal finance help. If you don’t know why you are in debt or don’t understand how you got into debt in the first place then how can you solve the problem? If you use credit cards for non-essential spending and continually spend money you don’t have you should rectify that problem immediately. It’s okay to carry a home mortgage or student loan but you must prevent unnecessary spending. The sooner you understand why you are in debt, the sooner you will start to eliminate it.

Making The Same Mistakes:

I heard an interesting fact that 80% of people who win the lottery are worse off financially 2 years later. Why? Because they repeat the mistakes they used to make. If you begin to solve your financial troubles and then slip back into previous spending habits you will be right back at square one. Understanding your debt, putting those solutions into place and sticking to your plans will help you stay out of debt. Don’t repeat what got you into trouble in the first place.

Debt is easy to fall into and hard to get out of. If you avoid these common debt mistakes and seek proper personal finance help you can become debt free faster than you ever thought possible. Thousands of people are able to work their way out of debt and you can too. Stick to your goals.

Happy Thanksgiving to our Canadian friends!

Best regards,

Brandon

DID YOU LIKE THIS ARTICLE? SHARE IT WITH FRIENDS
!

Good Debt and Bad Debt – How to Manage Money

2009-11-08T10:56:00.000-08:00

Tuesday, October 6th, 2009 at 4:08 pm

For most people debt is unavoidable. Even some of the wealthiest people in the world struggle with their finances. The important thing to understand is that there is a difference between good debt and bad debt. This article will help you discover how to manage money and ease your way into becoming debt free.

Some quick facts about debt are just downright scary:

About half of all Americans spend more than they earn each year.

The average household carries more than $10,000 incredit card debt.

In the past decade, personal bankruptcies have doubled.

What is Good Debt?

Good debt is an investment. Good debt such as homemortgages, student or business loans are almost always a wise decision. Why? Because they generally do not lose money. Clearly the housing market crash in the U.S. does not back up that statement, but if you think about it, many people were eyeballs deep into ‘bad debt’ before the crash and could no longer afford that ‘good debt’. Without a doubt, in 5 years most homes will be way up in value.

Student and Business loans are also a form of good debt. They are an investment on the future and if properly researched they will pay for themselves many times over. Understanding good debt and bad debt will teach you how to manage money.

Good debt also includes things that you NEED but are unable to afford up front. In these cases be sure you are able to afford the monthly payments before you take on this type of debt.

What is Bad Debt?

Bad debt is buying something that loses value or will cost you more money down the road.

“When you buy something that goes down in value immediately, that’s bad debt. If it has no potential to increase in value, that’s bad debt.” (Eric Gelb, CEO of Gateway Financial Advisors and author of “Getting Started in Asset Allocation”).

Other forms of bad debt are buying things you don’t need and can’t afford. To make matters worse, many people make these purchases on their credit cards and end up not being able to pay off the balance in full. If you borrow money to pay for items such as vacations, clothes and entertainment and are unable to pay the balance of the credit card you will end up paying A LOT more for that item than it is actually worth.

How Do I Eliminate Debt?

Good debt and bad debt don’t need to co-exist when you know how to manage money. There is a pretty simple way to eliminate bad debt fast so you can start to chip away at the good debt. This may seem like it goes against all logic but try this: pay off your smallest debt first. This is a great way to set goals, see the results and become more motivated to paying off the larger debts. Keep in mind you must maintain the minimum payments on everything else. You will see the results and be that much closer to being debt free.

A common phrase heard throughout the world is: ‘I wish I could become debt free.” For most that statement is merely a wish. For others it feels like an unachievable dream. For some people being debt free is a reality. You can be that person. It is important to understand what causes debt, what solutions exists in managing debt as well as understand good debt versus bad debt. There is a way to start making that debt free wish into a debt free reality.

I referenced moneycentral.msn.com for some information and quotes for this article.

Did you like this article? Share it with your friends
!

Guest Post - Keep the Holidays, Lose the Expense

2009-11-08T10:55:00.001-08:00

Friday, October 2nd, 2009 at 11:54 am

Written by Gary Foreman

Are you dreading this holiday season? Especially with your already overstressed budget? Don’t despair! Controlling your holiday expenses could actually mean a better holiday for you and your family!

Begin by forgetting the bling. It’s not about how many of the new LED lights you can display. Rather take the time to enjoy the decorations you already have. Show Junior the ornament that marks his first Christmas and talk about what that holiday was like.

Move holiday communication into the 21st century. Christmas cards and the ‘annual
report on the Jones family’ are outdated and expensive. Move to online
communications. With the exception of those who would be hurt by not getting a
Christmas card (think Granny), use email for your annual family update. Better
still, post a video on YouTube. It’s more fun and does a better job communicating.

Shift the focus from the food to family. If your family is used to an overflowing
table remove a few items from the menu. Add some family fun in it’s place. Passing
around old family photos during dinner can trigger wonderful family memories. Spend
some time after watching old family videos. If the highlight of your family
gathering is the food, you’re missing the meaning of the holidays.

Get real about gifts. Even kids can understand that fancy toys are expensive. And,
that family needs come before wants. If they don’t already know it, that lesson
could be the most valuable gift that you could give them. Besides, despite what they
put on their Christmas list, what kids really want is you. So take some of that
shopping time and spend it with them.

Party responsibly. If the purpose of your gathering is to show off then this won’t
work for you. But, if you just want to enjoy time with friends and family then
entertaining shouldn’t be a problem. Ditch formality for casual. Instead of a lavish
buffet have a cookie exchange. Gather around the fireplace for some eggnog. The
sound of laughter in your home is the sign of a good party.

Share with a needy family. There’s something about helping others that makes both
you and the person you’re helping feel better about yourself. You may want to act
anonymously so you don’t embarrass them. I know of families where one of the biggest
parts of the holiday season is deciding who to help and how they’ll do it.

So don’t let a lack of money spoil your holidays. The very fact that money is tight
could be the spark that creates the best holiday you’ve ever had!

Gary Foreman is the editor of The Dollar Stretcher.com
website and various enewsletters including
Financial Independence. FI is a daily message designed to help people take control
of their financial lives through achieving small daily goals. To find out more check
out the Financial Independence page

Did you like this article? Share it with your friends
:

How To Manage Money: Eliminate Debt Step by Step Part 2

2009-11-08T10:54:00.001-08:00

Tuesday, September 29th, 2009 at 10:17 am

In my last post I discussed 4 simple ways how to manage money andeliminate debt step by step. Each step suggested ways you can help eliminate your debt all together. Those first 4 steps were to:

Access your current financial situation – Know how much money you are spending and saving each month.

Analyze your spending habits – Go through your purchases and discover the ‘mistakes’ you tend to make when you spend your money.

Budget – If you want to have financial goals you need to plan them first.

Eliminate those ‘Red Flagged’ purchases – Limit or prevent any unnecessary purchases. If you don’t need something don’t buy it plain and simple.

It’s not always easy to get your spending habits under control if you have not followed specific guidelines before. One of the biggest challenges you will discover is how much of your lifestyle you may need to change. Unfortunately that change is crucial if you want to start saving for your future. Fortunately those first 4 steps will help with that change. You should also take these next 4 steps if you want to learn how to manage money and eliminate your debt step by step.

The Fifth Step: Find a low or no cost credit card.

You may have to search around to different companies but this is a very important step to take. The key to this is if you carry a balance or if you regularly pay it off each month. If you carry a balance that carries over you need to find a credit card with a low interest rate. It is extremely difficult to pay a balance if you are paying 18% interest or more. That money adds up quickly. If you are lucky enough to be able to make your payments, use a credit card with low or no fees. The best solution is to eliminate your credit card altogether and only use it for emergencies.

The Sixth Step: Consolidate your debts.

This is one step you need to be careful with. The plus side is that debt consolidation offers the opportunity to lower your monthly payments, save on interest and can even help you get out of debt faster. But there are downsides that must be taken into consideration such as not solving the root of your debt problem and stopping the tendencies that started the debt to begin with. You may end up paying more in the long run with debt consolidation if you aren’t careful.

Try using this free calculator that can show you how to manage money through debt consolidation.

http://moneycentral.msn.com/personal-finance/calculators/Consolidate_Your_Debt_Payment_calculator/home.aspx

The Seventh Step: Seek financial advice.

This is simple and clear. You aren’t going to be able to know everything you need to about debt and how to eliminate it. These steps will help but it is still wise to seek face to face advice from a professional.

The Eighth Step: Fix your credit.

Having bad credit is, well, not good. There are many major purchases you are going to make in your lifetime and you need a good credit rating to do. You can check your credit at your financial institution or even do it online with a company like Equifax. The more quickly you repair your credit the better.

Is there a way to manage my money and eliminate debt step by step? I truly believe that if you follow these eight steps you will have the right tools to eliminate. Good luck and I look forward to any success stories that you may have!

Did You Like This Article? Share It With Your Friends
:

Guest Post - What Do Costume Parties and Shopping Have In Common?

2009-11-08T10:52:00.000-08:00

Thursday, September 24th, 2009 at 8:17

Written by: Gary Foreman

Are you among those who enjoy costume parties? Seems like a lot of us do. Not only are they a staple at Halloween-time, but you’ll find various theme dress parties throughout the year.

Ever wonder why that is? I think that I have an idea (not that it’s terribly unique). For a few hours we get to be someone that we’d like to be, but are not in real life. You can be that swashbuckling pirate or the beautiful movie starlett. I get to be the daring race car driver!

It’s a lot of fun. It’s an accepted way for adults to play let’s pretend without being embarrassed.

One reason it’s so much fun is that we get the ‘good’ without the ‘bad’. What do I mean? Well, the pirate isn’t likely to really lose an eye or limb (”arrgh me pegleg matey!”), the starlett doesn’t face 5am wake-up calls and I can avoid hospital stays after a serious high speed car crash.

The other advantage is that it’s only for a few hours. We get to ‘try on’ the role without being stuck in it forever. For those of us who are limited adventurers, that’s a good thing.

Ok, so what does all this have to do with shopping? More than you might think.

Let’s take a little test. Try to remember your last 4 or 5 purchases. What were you thinking at the time? Was your only concern practicality? Or was there some part of you playing the starlett or race car driver? It’s ok to admit it. We’re all human and want to experience things beyond our normal boundaries.

The danger is that we tend to forget about the other aspects of the purchase: how much extra are we spending? will we be able to handle the payments? what if our income is cut??? And, unlike the costume party, those downsides don’t disappear when we take off the costume. We’re stuck with them. Whether we like it or not.

So I think that I’m going to try something different before my next major purchase. I’m going to delay the purchase long enough to mentally dress up as a race car driver. I’ll spend about 4 or 5 hours in costume. Feel the thrill of victory (isn’t the roar of the crowd great!).

But, then I’m going to take off the costume and consider the potential downside of any purchase I might make. Got a funny feeling that I’ll avoid more than one high speed crash this way.

_______________________