Budget the Luxuries First!
November 20, 2008
Strictly speaking, his advice was preceded by another Heinlein maxim as well. “Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity.” Today, that advice gets abused eight ways to Sunday, as the average household is currently carrying credit card debt to the tune of over $10,000. Assuming an interest rate of 18%, this works out to about 150 bucks a month going to the credit card company. That’s money NOT available for things like fresh flowers on your desk… new skis… upgrading to gourmet coffees and wines for daily consumption, or dinner out (including tips and babysitter).
Luxury item #1: Get out of consumer debt
Being debt-free is an incredible luxury! There are a ton of books and articles out there already on how to budget and avoid debt, so I won’t hold forth on how to do it. The important issue is WHY to do it. And the answer is simple. Peace of mind is the ultimate luxury!
Luxury item #2: Make some time to make a wish list!
Debt Elimination Is The Key to Financial Freedom
November 10, 2008
If you want financial freedom, the first thing that you will need to do is to get rid of your debts. After all, as long as you owe money, you can’t consider yourself to be financially free. This is due to the fact that the money you will earn in the future won’t actually belong to you, as you’ll have to put it toward paying off debts in the past.
While there are plenty of other issues involved in becoming financially free, you’re going to need to work hard to get out of debt first if you want to be successful at achieving financial freedom.
There are a few things that you need to do in order to eliminate your debts. The first, of course, is just to make sure that you have a budget set up. Even if you are still a student, you should start now to make sure that you are not spending beyond your means - once debt starts to really pile up, it can be a daunting task to eliminate it entirely.
Take Careful Consideration Before Filing Bankruptcy
November 4, 2008
Filing bankruptcy is not fun! It is a last resort if you are interested in keeping an active and acceptable credit report. Bankruptcy is the condition of bringing all your assets and deficiencies into an insolvent state. It is a state of financial loss, where your debts are canceled and it will remain on you credit report for seven years. A creditor or mortgage company will generally not lend money with an active bankruptcy on your report.
A bankruptcy will pay your secured and unsecured debts; this includes credit cards, car payments, and other payments "on time". It will not pay off Federal or State loans, such as student loans or IRS debts. These will remain on your credit report. Because the bankruptcy is reported to the credit bureaus, any authorized business can see it. Seven years is a long time to be prohibited from making any major purchases on credit! So consider it carefully and try to avoid having to file bankruptcy..
But, if you evaluate your situation and it does appear that you will need to file bankruptcy ? DON’T FEEL GUILTY!
Never forget that bankruptcy is your right as an American citizen, and it may be something worth pursuing.
Personal Debt Reduction Practices
October 27, 2008
Personal debt reduction practices, the steps people take to relieve the debt in their lives and to become more financially free, are a hot topic among financial circles. American spending habits are producing more people who are deeper in debt rather than people trying to achieve financial freedom.
The amount of debt Americans go into each year is mounting as most people strive to keep up with the Jones’ rather than to live within their means. The phrase “living beyond your means” means spending more money that you make, and occurs when the money that is outgoing exceeds the money that is incoming.
While there will be times in a person’s life when they cannot save and may spend beyond what they make, such as when buying a house or a car, or in times of crisis, everyday personal debt reduction practices make sense to reduce debt and can then be applied to ward debt off forever.
Personal debt reduction practices begin with a reevaluation of the money you spend and the money you make, and require a commitment to stop the debt cycle.
Debt Free and Carefree
October 19, 2008
Are you still clearing a mountain of debt amassed last Christmas or even during last year’s summer holiday?
For those of you who make financial plans, who budget and save, you can skip this article. For those who get a little carried away, who regularly spend more than they can afford, this article is for you.
Money worries affect us to the core of our beings - especially when such worries are generated by a lack of this resource. (Yes, having money also brings worries albeit of a different kind).
It is so very easy to spend more than we have, indeed it has become a way of life to many. Each month Peter is robbed to pay Paul. Our salary cheques are spoken for as soon as they hit our banks. People find themselves unable to clear their credit cards each month and then are forever playing catch up with high interest payments.
What can be done? The first thing is to face the situation. A full financial inventory is required listing everything you own of value, savings, bank accounts and other assets and matching that against everything you owe. Make sure you know what your monthly income is against your monthly outgoings. It is essential that you have the full picture before planning your next move.
The ONE Law You Should Be Breaking
October 11, 2008
There is a law all smart people break.
Parkinson’s law.
Parkinson’s law states that “work expands so as to fill the time available for its completion.” It was first coined by C. Northcote Parkinson in the book Parkinson’s Law: The Pursuit of Progress.
A common derivation of that is “expenses rise to meet your level of income.” Has that happened to you? It happened to me in 1991 and I’m particularly aware that it could happen to me again in 2005.
In 1991 I took my BS in finance and started a carpet cleaning business…like most finance majors, of course! I learned the business for a couple months and was earning a whopping $200-$300 per week working for someone else.
When I left that company and went out on my own, the ad I used FLOODED me with business. I had 15 calls by 10:30AM the day the small ad first ran. The answering service told me every “little old lady in Saratoga was calling”.
So almost immediately I went from making $200-$300 a week to making upwards of $1000 per week. WOW…23 years old and making that much money WORKING FOR MYSELF was great fun…had a great boss!
Whatever You Do….Dont Save Money!
October 2, 2008
No, that’s not a misprint. Even though falling interest rates are good when you want to get a loan, they are bad for people with savings accounts.
In this economy your best investment, the best place to put your money is into paying off debts. Think of it as investing in your debt because that is exactly what you are doing.
If you put $1,000 into a bank savings account earning 2%, at the end of a year you will have $1,020.
If you carry a $1,000 balance on a credit card with a 19% interest rate, and you pay the minimum monthly payments, at the end of one year you will have paid $190 in interest.
If you get $1,000 in a tax refund, small inheritance or from somewhere else you now have a choice to make. You can earn 20 bucks in a savings account or save $190 by paying off that credit card. Keep in mind that your 20 bucks is taxable income so you’ll be left with $15 or so after taxes.
Do you need a savings account for emergencies? That savings account may be causing those emergencies! Think about it this way…
Are You SURE Your A Bad Debt?
September 24, 2008
Many people who seek the advice and guidance of debt counsellors are driven to them in the first place by fear and ignorance ? two powerful emotions which often mask the real scale of the problems.
In many cases, what you made have been led to believe is a ‘bad’ level of debt, may instead need only some careful reorganisation and a new set of mortgage priorities.
Most adults have some experience with debt - and most of us receive (often painful) monthly reminders of the debts we owe courtesy of creditors and the postman.
Needless to say, debts can be large (mortgage or loan payments) or comparatively small (telephone or credit card bills).
Although the word debt typically carries negative connotations, there are some positives. For example, few people have the total asking price outright to purchase the home or car of their dreams. There are limited options for acquiring these big ticket items without incurring some debt. Also, assuming some debt makes it possible to pay your electricity and gas bills based on usage. You pay for the service after, rather than before, each month’s use.
Bouncing Back from a CCJ
September 17, 2008
Should you be unfortunate enough to face a CCJ ? but subsequently succeed in having it either set aside or reversed - the court will automatically remove the entry from the Register of County Court Judgments.
The court must send notification of cancellation to the Registry Trust within three days of the date of the order. The entry should be removed from the Register and from the credit reference agencies’ databases within three to four weeks.
If you show you have paid the debt in full within one month of it being entered on the Register, you can have the entry cancelled. Otherwise, once the debt has been paid, you can apply to have the entry amended to show the debt has been paid.
Bear in mind that this does not remove the entry, it only marks it as paid or “satisfied”. Whether or not a Judgment has been paid it will remain on your file for 6 years. After that time the records are deleted.
Debt: Dont Pay Your Minimum Balance
September 9, 2008
Almost all Americans carry credit card debt. Actually, over 40% of US families spend more than they earn. If you’re like most of us, you try not to think about how much money you owe and what that debt is really costing you. If you did, you might not sleep too well. However, by not fully understanding your current financial situation you are only prolonging the problem. In order to rid yourself of unsecured debt, you need to face the uncomfortable and often painful fact: it is very possible that your current debts may take you 30 years to pay off.
That can’t be possible you say! I only owe $6,000. This should be paid off a couple of years. My credit card company would not do something so unethical to me, would they?
As a matter a fact, they would. In fact, if you took 30 years to repay your debts, you are an ideal credit card customer. It’s important to realize that the credit card companies only allow you to make minimum payments because it benefits them. This is not a good thing for the credit card holder. They do not do this out of generosity; this is how they make money.
