What could you do if you didn't have any monthly payments? What if all of your monthly obligations were gone? All paid for! What if the only bills that you received each month were for for your utilities, cable tv and your cell phones? What would that feel like?
As Americans, we usually determine if we can afford something based upon the payment amount instead of the purchase price. We see if we can work that monthly payment into our "already tight" checkbook and see if we can make it work. We normally celebrate a $200 per month raise with a new $300 per month car payment!
My challenge to you is to see if you can go crazy for a while....I mean totally insane! Bust it! Be extra weird and do WHATEVER is necessary to eliminate your debt. Quit spending money and putting more on your credit cards and do EVERYTHING possible to eliminate all of your existing debt! Sell all of the junk you have in the basement! Dave Ramsey says, "Sell so much stuff that the kids think they are next!" What if you spent the next 12 months "busting it" and putting every extra dime toward your credit card payments, your car notes and your home equity line?? Buy a loaf of bread and a jar of peanut butter instead of hitting Applebee's for dinner...
I guarantee you that it will not be a fun 12 months but it could COMPLETELY change your life!
What could you do if you didn't have any monthly payments? Almost anything you want!
Wednesday, May 5, 2010
Monday, May 3, 2010
Myths and Truths about Debt!
Myths & Truths about Debt!
Myth - If I loan money to a friend or relative, I will be helping them.
Truth - The relationship will be strained or destroyed.
Myth - By co-signing a loan, I am helping out a friend or relative.
Truth - The bank requires a co-signer because the person isn't likely to repay. Be ready to pay the loan back and have your credit damaged because you are on this loan.
Myth - Cash advance, rent-to-own, title pawning, and tote-the-note care lots are needed services for the lower income people to get ahead.
Truth - These are horrible, greedy rip-offs that aren't needed and benefit no one but the owners of these companies.
Myth - Playing the lottery and other forms of gambling will help make me rich.
Truth - The lottery is a tax on the poor and on people who can't do math.
Myth - Car payments are a way of life, and you'll always have one.
Truth - Staying away from car payments by driving reliable used cars is what the typical millionaire does. That is how they become millionaires.
Myth - Leasing your car is what sophisticated financial people do. You should always lease things that go down in value because there are tax advantages.
Truth - Consumer Reports, Smart Money Magazine and a good calculator will tell you that the care lease is the most expensive way to finance and operate a vehicle. The best way to minimize the money lost on things that go down in value is to buy slightly used!
Myth - You can get a good deal on a new car.
Truth - A new car loses 70% of its value in the first four years. This is the largest purchase most consumers make that goes down in value.
Myth - I'll take out a 30-year mortgage and pay extra.
Truth - Life happens! Something else will always seem more important so almost no one pays extra every month. Always take a 15 year fixed rate mortgage!
Myth - It is wise to take out an ARM or a balloon mortgage if "I know I'll be moving".
Truth - You will be moving when they foreclose on your house!
Myth - You need a credit card to rent a core or to make a purchase online or by phone.
Truth - A debit card will do all of that, except for a few major rental companies. Check in advance.
Myth - "I pay mine off every month with no annual fee. I get brownie points, air miles and a free hat."
Truth - A recent Dun and Bradstreet study found that when you use plastic instead of cash, you spend 12-18% more because spending cash hurts. What what if you get 1% back and a free pizza?
Myth - I'll make sure my teenager gets a credit card so he/she can learn to be responsible with money.
Truth - Teens are a huge target of credit card companies today. Half of college undergraduates have 4 or more credit cards in 2008. An increase from 43% in 04 and 32% in 2000!
Myth - The home equity loan is good for consolidation and is a substitute for an emergency fund.
Truth - Don't go into debt for emergencies! Most families who use a home equity loan to consolidate their credit cards won't change their behaviors and go right back out and put more on their credit cards!
Smaller payments equal more time in debt.
Myth - Debt is a tool and should be use to create prosperity.
Truth - When surveyed, the Forbes 400 were asked "What is the most important key to building wealth?. 75% replied that becoming and staying debt free was the number one key to wealth building.
How much could you save, invest, blow and give away if you had no payments??
Myth - If I loan money to a friend or relative, I will be helping them.
Truth - The relationship will be strained or destroyed.
Myth - By co-signing a loan, I am helping out a friend or relative.
Truth - The bank requires a co-signer because the person isn't likely to repay. Be ready to pay the loan back and have your credit damaged because you are on this loan.
Myth - Cash advance, rent-to-own, title pawning, and tote-the-note care lots are needed services for the lower income people to get ahead.
Truth - These are horrible, greedy rip-offs that aren't needed and benefit no one but the owners of these companies.
Myth - Playing the lottery and other forms of gambling will help make me rich.
Truth - The lottery is a tax on the poor and on people who can't do math.
Myth - Car payments are a way of life, and you'll always have one.
Truth - Staying away from car payments by driving reliable used cars is what the typical millionaire does. That is how they become millionaires.
Myth - Leasing your car is what sophisticated financial people do. You should always lease things that go down in value because there are tax advantages.
Truth - Consumer Reports, Smart Money Magazine and a good calculator will tell you that the care lease is the most expensive way to finance and operate a vehicle. The best way to minimize the money lost on things that go down in value is to buy slightly used!
Myth - You can get a good deal on a new car.
Truth - A new car loses 70% of its value in the first four years. This is the largest purchase most consumers make that goes down in value.
Myth - I'll take out a 30-year mortgage and pay extra.
Truth - Life happens! Something else will always seem more important so almost no one pays extra every month. Always take a 15 year fixed rate mortgage!
Myth - It is wise to take out an ARM or a balloon mortgage if "I know I'll be moving".
Truth - You will be moving when they foreclose on your house!
Myth - You need a credit card to rent a core or to make a purchase online or by phone.
Truth - A debit card will do all of that, except for a few major rental companies. Check in advance.
Myth - "I pay mine off every month with no annual fee. I get brownie points, air miles and a free hat."
Truth - A recent Dun and Bradstreet study found that when you use plastic instead of cash, you spend 12-18% more because spending cash hurts. What what if you get 1% back and a free pizza?
Myth - I'll make sure my teenager gets a credit card so he/she can learn to be responsible with money.
Truth - Teens are a huge target of credit card companies today. Half of college undergraduates have 4 or more credit cards in 2008. An increase from 43% in 04 and 32% in 2000!
Myth - The home equity loan is good for consolidation and is a substitute for an emergency fund.
Truth - Don't go into debt for emergencies! Most families who use a home equity loan to consolidate their credit cards won't change their behaviors and go right back out and put more on their credit cards!
Smaller payments equal more time in debt.
Myth - Debt is a tool and should be use to create prosperity.
Truth - When surveyed, the Forbes 400 were asked "What is the most important key to building wealth?. 75% replied that becoming and staying debt free was the number one key to wealth building.
How much could you save, invest, blow and give away if you had no payments??
Wednesday, April 28, 2010
Love or Hate "Bear" Bryant and Alabama, you gotta love this motivational poster! I'm not usually big into "motivational words" just to get people feeling good about themselves...but realizing the work that people put into changing their lives and improving their financial situation, there is a lot of blood, sweat and guts left laying on that field! HUSTLE and KEEP PUSHING FORWARD!
Tuesday, April 27, 2010
Grandma's Envelope System
Did you ever go over to your Grandma's house when you were little and when she needed to give you a little money, she would go over to the drawer and pull out her envelopes? She would put her grocery money into one envelope and keep some "other" cash available for fun stuff.
Why don't we use Grandma's Envelope System anymore? Are we too sophisticated now and need to use our debit and credit cards? Online banking is the rage so why in the world would we want to revert back and start using cash??
Maybe you are finally on a budget but are still be tempted to overspend. Spending with cash – instead of a debit card or credit card – is one of the best ways to stop overspending. Getting used to the cash envelope system can take a few months, so try these tips to make the transition from plastic to cash smoother.
Budget each paycheck.
Budgeting and knowing where every single dime is going this month is essential to implementing the envelope system.
Decide and categorize.
Of course, there will be budget items that you cannot include in your envelope system like bills paid by check or automatic withdrawal. However, categories like food, gas, clothing and entertainment – areas where you’re particularly tempted to overspend – work well in the envelope system. Just decide how much will go in each envelope based on your budget and watch your spending habits shape up.
When it’s gone, it’s gone.
Once you’ve spent all the money in a given envelope, you’re done spending for that category. If you go on a shopping spree and spend the $100 in your clothing envelope, you can’t spend any more on clothes until you budget for that category again. That means no visits to the ATM to withdrawal more money! And definitely no credit cards!
Don’t be tempted.
While debit cards can’t get you directly into debt, if used carelessly they can cause you to overspend. There’s something psychological about spending cash that registers more than simply swiping a piece of plastic. When spending cash becomes a habit, patterns of overspending will be broken.
Give it time.
It will take a few months to perfect your envelope system. Don’t give up after a month or two if it’s not clicking. You’ll get the hang of it and see how beneficial the envelope system is as you dump debt, build wealth and achieve financial peace!
A real budget will take about 90 days to perfect...don't get frustrated and quit. Work hard during these first couple of months and you will get used to some new spending habits!
Thank you, Dave Ramsey!
Why don't we use Grandma's Envelope System anymore? Are we too sophisticated now and need to use our debit and credit cards? Online banking is the rage so why in the world would we want to revert back and start using cash??
Maybe you are finally on a budget but are still be tempted to overspend. Spending with cash – instead of a debit card or credit card – is one of the best ways to stop overspending. Getting used to the cash envelope system can take a few months, so try these tips to make the transition from plastic to cash smoother.
Budget each paycheck.
Budgeting and knowing where every single dime is going this month is essential to implementing the envelope system.
Decide and categorize.
Of course, there will be budget items that you cannot include in your envelope system like bills paid by check or automatic withdrawal. However, categories like food, gas, clothing and entertainment – areas where you’re particularly tempted to overspend – work well in the envelope system. Just decide how much will go in each envelope based on your budget and watch your spending habits shape up.
When it’s gone, it’s gone.
Once you’ve spent all the money in a given envelope, you’re done spending for that category. If you go on a shopping spree and spend the $100 in your clothing envelope, you can’t spend any more on clothes until you budget for that category again. That means no visits to the ATM to withdrawal more money! And definitely no credit cards!
Don’t be tempted.
While debit cards can’t get you directly into debt, if used carelessly they can cause you to overspend. There’s something psychological about spending cash that registers more than simply swiping a piece of plastic. When spending cash becomes a habit, patterns of overspending will be broken.
Give it time.
It will take a few months to perfect your envelope system. Don’t give up after a month or two if it’s not clicking. You’ll get the hang of it and see how beneficial the envelope system is as you dump debt, build wealth and achieve financial peace!
A real budget will take about 90 days to perfect...don't get frustrated and quit. Work hard during these first couple of months and you will get used to some new spending habits!
Thank you, Dave Ramsey!
Thursday, April 22, 2010
Differences
Some of us are on time and some of us are always late. Some of us are always cold while others are constantly burning up. There are some people that are natural savers while some spend like there is no tomorrow.
The number one cause of divorce in America is money fights. Most husbands and wives have NEVER sat across the table from one another to rationally discuss a budget - th establish a plan for their family's financial future. The checkbook turns into a battlefield where no one ever wins.
How many marriages would be better if the husband and wife understood that they're actually on the same side? Understanding that men and women approach money in completely different ways would go a long way to heal those battle wounds!
Men lose self-esteem when they have financial problems. Men want to "win" and money usually represents a scorecard to them. Women face fear or even terror because, with them, money usually represents security.
Who should make the financial decisions in a family? BOTH OF YOU! The partner with the natural gift can prepare the details of the budget but the decision-making must be done by both parties! When you agree on your value system, you will reach a unity in your marriage that you can experience in no other way!
Understand that you are different from each other BUT, make sure that you work together to put your plan together! You will see amazing results!
The number one cause of divorce in America is money fights. Most husbands and wives have NEVER sat across the table from one another to rationally discuss a budget - th establish a plan for their family's financial future. The checkbook turns into a battlefield where no one ever wins.
How many marriages would be better if the husband and wife understood that they're actually on the same side? Understanding that men and women approach money in completely different ways would go a long way to heal those battle wounds!
Men lose self-esteem when they have financial problems. Men want to "win" and money usually represents a scorecard to them. Women face fear or even terror because, with them, money usually represents security.
Who should make the financial decisions in a family? BOTH OF YOU! The partner with the natural gift can prepare the details of the budget but the decision-making must be done by both parties! When you agree on your value system, you will reach a unity in your marriage that you can experience in no other way!
Understand that you are different from each other BUT, make sure that you work together to put your plan together! You will see amazing results!
Tuesday, April 13, 2010
Just Do It - Get an Emergency Fund NOW!
How would your life change if you had $1,000 in the bank as an emergency fund? Not a leather couch fund or vacation fund - but, an EMERGENCY FUND! How much comfort would that give to you and your family?
Think about being able to use those funds instead of pulling out the VISA Card to pay for a car repair. Wouldn't it be nice to take care of a car problem with YOUR money instead of creating a credit problem by using VISA's money? How much peace and comfort would it give your family if you had that money immediately available to help out in an emergency?
We work with our clients every day to get $1,000 in the bank AS QUICKLY AS POSSIBLE. Sell some stuff out of your basement...Have a garage sale...And, as Dave Ramsey says, "Sell so much stuff that the kids think they are next!"
Establish an Emergency Fund quickly and provide some stress relief for your family!
Think about being able to use those funds instead of pulling out the VISA Card to pay for a car repair. Wouldn't it be nice to take care of a car problem with YOUR money instead of creating a credit problem by using VISA's money? How much peace and comfort would it give your family if you had that money immediately available to help out in an emergency?
We work with our clients every day to get $1,000 in the bank AS QUICKLY AS POSSIBLE. Sell some stuff out of your basement...Have a garage sale...And, as Dave Ramsey says, "Sell so much stuff that the kids think they are next!"
Establish an Emergency Fund quickly and provide some stress relief for your family!
Wednesday, April 7, 2010
Four Walls
If you get to the end of the month and you have more bills than money, how do you decide which ones get paid and which ones wait?
Do you shuffle and pay the little ones first so that "more" bills get paid? Or, do you have a better method?
I would propose to you that you ALWAYS take care of your four walls - FIRST! Food, Clothing, Shelter and Transportation! Everything else can wait a month if it has to!
Food is a necessity. I didn't say "eating out at restaurants" but FOOD! Make a plan before you head into the grocery store and buy necessary items.
Pay your housepayment (without exception!) and all bills associated with keeping your home (water, gas, electric). Notice that this listing did not include cable TV or Dish! TV is not a necessary item - even though some of us can not live without TV! If needed, Pay-For-TV has to be cut and eliminated for a while in order to get back on your feet.
Transportation is next on the list. Make your Car Payments and pay all bills associated with keeping the car running (ie., Gasoline!) This is a priority because you need it to get back and forth to work OR to look for more work!
Clothing is last on the list. Gently used clothing is OK for a while. I have some nice things that my wife picked up at Goodwill or at the Thrift Store.
Cell Phones, Land Lines, Credit Cards, Pay-For-TV are all on the "Secondary" list and should be canceled or eliminated in order to balance the budget. I know it is hard but you have to survive and making sure that your "Four Walls" are maintained is the best way to prioritize your budget!
Do you shuffle and pay the little ones first so that "more" bills get paid? Or, do you have a better method?
I would propose to you that you ALWAYS take care of your four walls - FIRST! Food, Clothing, Shelter and Transportation! Everything else can wait a month if it has to!
Food is a necessity. I didn't say "eating out at restaurants" but FOOD! Make a plan before you head into the grocery store and buy necessary items.
Pay your housepayment (without exception!) and all bills associated with keeping your home (water, gas, electric). Notice that this listing did not include cable TV or Dish! TV is not a necessary item - even though some of us can not live without TV! If needed, Pay-For-TV has to be cut and eliminated for a while in order to get back on your feet.
Transportation is next on the list. Make your Car Payments and pay all bills associated with keeping the car running (ie., Gasoline!) This is a priority because you need it to get back and forth to work OR to look for more work!
Clothing is last on the list. Gently used clothing is OK for a while. I have some nice things that my wife picked up at Goodwill or at the Thrift Store.
Cell Phones, Land Lines, Credit Cards, Pay-For-TV are all on the "Secondary" list and should be canceled or eliminated in order to balance the budget. I know it is hard but you have to survive and making sure that your "Four Walls" are maintained is the best way to prioritize your budget!
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