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Posts Tagged ‘Debt’

Revisiting Credit Card Debt

Friday, May 1st, 2009

A lot of what we talk about here has to do with debt and in particular, credit card debt. This is because it is a huge issue that deserves to have as much time spent on it as possible, without sounding like a completely broken record.

Today I want to focus specifically on how to avoid getting into credit card debt, and if you are in credit card debt how to start getting yourself out of it. I have written a lot about this in the past, so you will see references to previous articles here on our site.

We will first start with getting out of debt and then hone in on how to stay out of credit card debt.

The Snowball Effect

I have read numerous articles, books, and heard people speak on where to start paying down on your debt. There are many “theories” out there but when you really get down to it, they are just one persons idea up against another person’s. Here is what I have filtered out to be the best way to eliminate your debt:

On a piece of paper or in an Excel spreadsheet, list all of your debts (consumer and credit) starting with the lowest BALANCE (lowest to highest). Then, next to those amounts write who it is owed to and their minimum payments. That is your game plan on paper. You are going to, in the word’s of Dave Ramsey, get “gazelle intent” on eliminating the lowest balance while making minimum payments on all the rest. Once you knock out the smallest balance you roll the cash you were throwing at that right into the next balance. Defeat that one, roll that cash right on to the next. This is why they call it the “snow ball effect”.

Why pay the lowest first? Because you will get it done quick which will accomplish two things: 1) boost your ego. You now KNOW that you can do this. If you tried to tackle the highest first you would most likely fail and not finish it. This ensures that you will stick with it and move on to the next one, because you did the lowest one!! 2) it frees up cash quicker which can be thrown into the next debt. If you tried to tackle the big one first you would not free up cash for a VERY long time, which would keep your debt around longer. You want to free up as much cash as possible (and as quick as possible) and a very good way to do this is to get rid of the ankle biters, the little balances that are a nuisances.

[source]

What to do to stay out of credit card debt

This article states that some 7.3 million consumers use credit cards to take cash advances. It also states that these interest rates can be as high as 29.97% for cash withdraws. This, my friends, is not a good way to stay out of debt and is not a good way to use a credit card. Period. I personally do not use a credit card for anything. I am a cash man and I intend to stay this way. You should too. Especially when you get out of debt. Cut up the credit cards and start to depend on cold, hard, cash. There is no better way to spend (and save!).

From the same article quoted above:

Once you have eliminated your credit card debt start SAVING your money. If you don’t have one already, get an emergency fund with no less than $1,000 in it. From there move onto getting 3-6 months of what it takes to meet your budget each month into savings. The idea here is to GET RID of debt and BUILD UP SOME CUSHION. Because here is the problem, an emergency is going to happen (I will personally guarantee this) and in order to stay out of debt, you need to have the CASH to meet the financial needs of that emergency.

Without the cash saved guess where you go…right back into debt.

Tags: credit card, Dave Ramsey, Debt, Finance, Money, Personal Finance, Saving
Posted in Debt | 7 Comments »

Plastic Surgery

Friday, April 10th, 2009

This horse has been beaten to death, I know, but I must continue talking about debt. It is such a huge problem in our culture today and I am afraid that it is only going to get worse as the years go by.

Even after the global economy going into a recession, and even after millions of families having to foreclose on their homes, the vast majority of people will still be dependent on credit cards and other loans in order to meet the expenses that are associated with living life.

That’s right, living life. Paying the bills, putting food on the table, gas in the car, and even taking vacations. I know that you already know what my advice is but I have to give it to you anyway: do not rely on debt. Do not use debt. Do not get into debt. And if you are in debt get OUT as quickly as possible; especially if the debt is credit card debt.

If you have credit card debt, if you carry a balance on ANY of your credit cards, the best way to deal with that debt is to CUT THE CARD! Do not leave the card intact and available for use, because all that does is keep you deeper in debt and farther from getting out of debt. Cut up any and all cards that carry a balance and focus solely on paying them off! I outline the steps you can take, after cutting up your card, here.

“The borrower is servant to the lender” – Proverbs 22:7

Not only is debt a hole that some folks never get out off, but it is a hole that some folks don’t want to get out of. They get comfortable in their debt and believe that it is a part of life, a natural occurance that is inevitable. This is a lie and they are doing nothing but hurting themselves.

The verse above, Proverbs 22:7, is a verse that I absolutely love. It is a painfully true statement. I talk here about how I was indebted to my father in-law and how I wanted nothing but to get out of that debt! It had nothing to do with the fact that he was my father in-law or that he was using the debt against me. Debt chains you down, it does not give you the freedom to do as you please. In the article linked above, I mention that while indebted to my father in-law it would have been foolish of me to make any large purchases, and if I would have, I would have given my father in-law, my lender, every right to be upset with me. And while some will argue that it would not be his place, I would have made it his place because I was indebted to him, I was his servant.

When you are not indebted to someone, or some company, you have a freedom that comes only when you are free from the burden of debt. You can spend as you wish, save as you wish, and do anything you would like without having to answer to anyone. Essentially.

Please, do yourself a favor, stop spending yourself further into debt. Get serious about getting out of debt. You will not regret the decision to make sacrifices now so that you won’t have to in the future. In the word’s of Dave Ramsey: “Live like no one else [today], so later you can live like no one else.”

Tags: Borrower, credit card, Dave Ramsey, Debt, Loan, Personal Finance, Recession
Posted in Debt, Featured | 2 Comments »

A Glimmer of Hope

Thursday, April 2nd, 2009

While banks, insurance companies, and automakers, are all failing, a company in the UK that provides debt advice and support is growing. Debt Free Direct bought consumer debt advice group Clear Start UK. While banks are failing, a debt management company is growing. I love that.

This is encouraging to me!! This provides me with a glimmer of hope that we are not all lost, that not everyone out there is giving up and settling with the MYTH that debt is a part of life.

We all know that debt has become a fact of every day life. Some people believe that debt is inevitable and there is no other way to do things. But on the flip side of this coin, there are some of us who know that there is another way and a better way to handle money and life. For me, CASH is the name of the game. Paying with cash and having a lot of money piled up in my money market account incase of emergencies is what helps me sleep at night. It could be different for you, but as long as you know that debt is not a way to do anything, you are good.

For some, this realization may not come as easy. For most debt has not only been a part of their lives, but their parents lives as well. Some families are absolutely torn apart by debt. It is at this point, at the point where DEBT starts to control their life, that people start to think. They think about everything they have but don’t own and they think of all of the arguments they have had with their spouses or significant others over money. The thought process may take some time, but eventually they will get to the point where they know what they need to do. They need to change and they need to learn how to manage the debt they have, get rid of it, and start over.

This is where a company like Debt Free Direct comes in, and thankfully they are going to be sticking around. They offer free advice to their clients and provide them with debt solutions to help them get out of debt. With people slowly coming to the realization that living with debt does not have to be them, I see companies like this doing nothing but growing. And this makes me happy!

If you have been buried with debt and can not imagine where to start, do some research and find a debt solution company that can truly help you. Be careful, some will be nothing but a scam, but not every debt solution company is. Do your research, call a lot of people, and make an informed decision.

Asking for help is not a bad thing.

Tags: advice, cash, Consumer, Consumer debt, Debt, Debt Free Direct, Financial Services, hope, Insurance, Money, money market, Personal Finance, Saving, United Kingdom
Posted in Debt, Featured, Service Reviews | 1 Comment »

Don't be Lazy, Get a Job

Tuesday, March 31st, 2009

While unemployment rates are rising (in the US and the UK), more and more people are turning to debt to make it by. Using credit cards to pay bills, borrowing money from friends and family, and even taking out loans. I’m sorry, but this is not the answer to the problem.

If you are fired, or laid off, or out of work, you have a new job. That’s right, a new job. You don’t get to “take the day” and mosey around your house or apartment. You have a new FULL TIME job. This job requires 8 hours of your attention every day and does not include a paid lunch. It should start promptly at 8am and end 8 hours later. Monday through Friday, this is your new job: LOOKING FOR A JOB.

I know, easy, right? Well apparently not if the unemployment rate keeps going up. But let me encourage you: you are better than that. You do not need to stay in that number. You do not need to settle for government hand outs and you do not need to NOT WORK because that is what other unemployed people are doing.

If you are laid off, your new job is finding a job. If it takes two full weeks (80 hours) to land the next job then that is what it takes. Call every person you know, or knew, and get your feelers out there! Look online. Call temp agencies. Settle for SOMETHING. Dig ditches for all I care. As long as you are being paid and are not relying on DEBT to live then I’m happy, and you should be too.

The worst thing you can do for yourself, and your family (or future family), is sit on your butt all day after being laid off. Some may look at losing a job as a terrible thing, and some make it into a terrible thing by not doing anything about it, but it can be used for good. Start your own business. Change careers. Etc. JUST DON’T SIT AROUND DOING NOTHING!! Get creative and do what it takes to stay out of using debt to live. Because, my friend, you are better than that, and you know it as well as I do.

Tags: bills, credit card, Debt, Loan, new career, start a business, UK, unemployment, unemployment rate
Posted in Featured, Life | 1 Comment »

WYAN Radio Ep 13 – Credit Cards Are Not Your Friends

Thursday, March 19th, 2009

Through a discussion with a co-worker my distrust of credit cards was further cemented. They are not to be trusted and are not to be relied on! Don’t make the mistake that millions of people have, DO NOT THINK THAT A CREDIT CARD IS YOUR FRIEND!

[display_podcast]

Subscribe in iTunes

WATCH this show!!

Show notes:

Transferring a balance to your credit card is risky
Understand what you are getting into when you sign up for a credit card
Credit card companies apply payments to the balance with the lowest interest rate
There are other ways to build credit (future podcast episode)
In a band? Send me your music and I’ll consider it for the podcast (send to wyanradio@gmail.com)
The French Revolution – For The Money (visit their Myspace page)

Thanks for listening! Have any comments on the show or want to suggest a topic? Send me a note at wyanradio@gmail.com.

What are your thoughts on today’s topic? Send a voice recording to the email address above to have your thoughts included on the next podcast

Tags: balance transfer, credit card, Debt, fine print, Money, risk, The French Revolution
Posted in Featured, Podcast | 2 Comments »

10 Easy Ways to Make Your Financial Future Better than Yesterday

Wednesday, February 18th, 2009

Look to Tomorrow

Everywhere you turn there is nothing but bad news about the economy, bad news about the housing market, interest rates, bail-outs, the stock market, bankruptcy, and gas prices, just to name a few. TV, radio, newspaper, blogs, magazines, books, your family all they do is focus on the past and how we got to where we are today. There does not seem to be anyone who is looking to the future and what can be done to ensure that it is better than the past.

Today is a new day, and you better not be dwelling on your financial status of yesterday!

Look for ways that you can change. There is no change that is too small and I encourage you to think outside of the box and not be satisfied with what everyone else is doing. To get your brain thinking, I’ve included a basic list below that will help you have a better future with your finances.

Cut up all credit cards
Stop borrowing money from banks/family members
Begin to live on a budget
Save money each and every month
Build up an emergency fund
Curb impulse spending
Pay all of your bills on time
Pay more than the minimum payment on credit card bills/other loans
Get a second job
Live well below your means

It is a very basic, common sense, list, but it should be a good starting point for you. The most basic piece of advice I can give you if you are struggling with your finances and are toying with the idea of bankruptcy, or some sort of negative action, is to DO WHAT YOU HAVE TO DO. If you got yourself into this mess, then you can get yourself out of it. The list above is all about looking to the future, thinking of what you can do NOW and TOMORROW so that you are not in the same mess you were in YESTERDAY!

Do not be like everyone else out there who is looking to the past to guide them into the ditch of excuses for their actions. Be a new person, be a different person who is concerned about the future and what they are going to do about it!

What have you done to plan for your future? What have you done to protect yourself from all of the negative news out there, if anything?

Tags: Bankruptcy, credit card, Debt, financial planning, future, money management, Stock market
Posted in Strategy | 4 Comments »

Realize That There Are Consequences for your Actions

Tuesday, February 10th, 2009

Image by respres via Flickr

There are some things in life that do not make any sense to me. There are also things that sadden me. And there are even more things that get me “heated up”.

All of the things that I could list for the items above would amount to a few pages, or a really long article. But I am not going to do this. Instead, I am going to tell you the one thing that I am thinking about that touches on all three of these categories (makes no sense, saddens, heated up):

FORECLOSURES

Why would you go into a mortgage that you could not afford? Why would you think that you are going to get that loan at 0% for so many months, and not run into any problems when they start charging you interest? Why, please tell me, because this just does not make any sense to me.

If homes are being foreclosed on, that means one of two things: 1) the buyers were duped into a shady deal, or 2) the buyers did not educate themselves with their own PERSONAL fiances. Or 3) a combination of both. Whatever the reason, it saddens me to think that there are people out there scrambling for some place to live because they fell for a deal that was too good to be true.

And it gets me heated up to think that so many people skipped out on their mortgage payments for so long. What were they thinking?

This quote sums it up best (simple but so true):

“[there are] consequences that come with not keeping up with mortgage payments.” (Source)

Take out “mortgage” and it applies to any and everyone. If you do not keep up with bills, with making payments on those bills, you will suffer consequences. The same article that the quote above is taken from also states that this is a “harsh reality”, and that is true as well!

Not paying bills, and not paying your mortgage, will eventually catch up with you. Please, do yourself a favor and don’t let what has happened to thousands upon thousands of families around the globe happen to you and yours. If you are behind on any of your payments, RUN to your lender(s), explain to them whatever your situation is, and tell them that you are going to get back on track! Then do so!! Swallowing your pride is better than them taking your home away.

New Page, Our Goals and Debts Live

Sunday, February 8th, 2009

On our weekly podcast we have a segment of the show that we have titled the “Coffee Break”. In this segment

Coffee Break

we update you on our exciting lives and give you the dirty details of our debt payments and other goals that we are trying to reach.

And now we have a page on our website dedicated to these topics! Not the boring stuff that we do, but the progress towards reaching our goals! All contained in one page!! Three easy to read spreadsheets embedded right on our website with actual numbers. And a cool part is that you can comment on each one.

We want you to encourage us, tell us to kick it into high gear, and share your stories of reaching your goals! We are excited about sharing our progress with you and we look forward to the conversations that it will spark!

Head over and tell us what you think!

Tags: Coffee break, Debt, Podcast, Saving, Spreadsheet
Posted in Newsy News | No Comments »

WYAN Radio Podcast Ep. #7 – Obama Will Not Pay Your Debt

Friday, January 9th, 2009

WYAN Radio Podcast Episode #7 – Obama Will Not Pay Your Debt

Show Notes below: Subscribe in iTunes, grab the RSS feed, vote for us at Podcast Pup and Podcast Alley!!

Intro
We had a great radio show on Saturday. 5 callers will all receive Strands.com t-shirts. If you want to hear the archive show go to our website, links to RSS and iTunes on the sidebar. You can also stream from our blog.

Today’s show: Lindsay can read, Aaron got his gmail stickers, big progress on debt, and simple things you can do to have a better 2009 with your money.

Coffee Break
Starbucks – Cafe Verona french press
Lindsay – Nice break. Started reading (gasp!) a book. Packed up Christmas things. Put extra cash towards secret saving goal. Still getting little gifts, even after Christmas.
Aaron – Gmail Stickers arrived

Our Debt
Aaron – made payment of $771.68 bringing balance due to $1,751.07.

7 things you can do to have a better 2009 with your money:

Spend less than you earn
Avoid impulse spending
Budget your money
Use cash instead of plastic
Save money each month
Have goals
Pay off debt

Outro Music
“To Be An Angel” – Uncle Seth
http://www.musicface.com/uncleseth

Tags: Barack Obama, budget, cash, credit card, Debt, gmail, impulse spending, ITunes, Obama, Podcast, reading, Saving, strands.com, Uncle Seth
Posted in Podcast | 2 Comments »

5 Easy Ways to Recover From Christmas

Monday, January 5th, 2009

: Image via Wikipedia

November and December are crazy months and a crazy way to end a year. Lots of food, family, and money being spent. Lots of money being spent is where I want to focus this, obviously.

For me, December was a ridiculously hard month to keep up with. Money in and money out. I had a budget for my Christmas gift shopping, but as the saying goes sometimes, “Budgets are meant to break”. And I am ashamed to say that I broke my Christmas shopping budget.

Let me tell you what happened and how it can ruin you in the new year if you don’t recognize the danger. December is a busy month. Busy busy busy and you need to shop. So you shop shop shop. You are also working full-time and bringing in money. But you are so busy that you don’t sit down and put the money where it needs to go. You don’t do your budget the way you normally do it (organized) and all of the income just stays in your checking account. While you are shopping. Dangerous.

So you are shopping from your checking account and not really keeping track of things because you are too busy to do so. Then, the season is so happy and joyous that you don’t even think twice about going out to eat more than usual or going to the theater one too many times, or just spending money on things you normally would not spend money on. But the time of year is so happy you don’t want to ruin it (the feeling) for you or the people you are with. So you spend spend spend and don’t keep track.

If you are like me, this will drive you crazy and can really only last for one month. Not more and definitely not into the new year.

As you may have guessed, in the above “example” you can replace all of the “you”s with “me” and you have my December and Christmas season. It drove me nuts but I was too busy to do anything about it. I hope this was not what your December looked like, but if it is, here is how you can get back to the real world of making money and budgeting that money.

Paper and Pencil

No. I’m serious. Get back to the basics. Write your budget out on paper and use a pen or pencil. Do not use the computer or whatever method you were using. Get back to the basics. Write out how much you normally budget for a month. Write out all of your bills, categories, and saving goals that you are going to throw money at. Write it all out on paper and track it on paper. Sometimes using the computer just makes it too complicated and things just need to go back to the basics. Don’t think this is a bad thing. Do what you have to do to get your spending under control and your budget back on track.

Use Cash

Most Christmas shopping for me was done online and therefore I used my debit card A LOT. Get back to cash. Don’t use your card except for for paying bills online. Everything else, use cash. It may be inconvenient, but you need to take it back to the basics. Get back to using cash as quickly as you can. The card can become a habit and a REALLY bad one if you don’t get it under control. Make a stop to the ATM or bank today and take out the cash you will need for the month and organize it. No card in January!! Are you with me?

Revisit your Goals

Lindsay and I sat down last week and took a look at our goals. Where were we at? How far have we come, how far did we need to go? What could we do to speed things up? The point is to revisit your goals. Re-energize yourself to meet your goals in the new year. It is easy to forget what you want to accomplish, so a quick visit is a very good thing to do. If you have not done so already, this fund raiser is a great way to reach your goals in the new year.

Don’t Lie to Yourself

This is the worst thing you could do and exactly what most people do. They say it will be okay, things have been going good and easy this way so I’ll just keep on this path. Don’t do it. Do not lie to yourself and talk yourself into thinking that you can continue this way and keep above water for any length of time. You must change. And now is the perfect time to do so.

Restarts Are Good

The second worst thing you could do is think that starting fresh is bad. Rewrite your budget, rework your spending and revisit your goals. These are all good things and do not need to be frowned upon by you or your inner critic. Be afraid of quitting but not of starting over. I encourage you to do so.

Tags: budget, Christmas, Debit card, Debt, fund raiser, goals, Money, Saving, Spending
Posted in Budgeting | 2 Comments »

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