Posts Tagged ‘Money’

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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.

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If You Lose Your Job, Create One

Monday, April 27th, 2009

You know that nice paying, comfortable job you’ve had for the past several years? Yeah, that one. It can be taken from you in the blink of an eye. As long as their is someone above you (management, VP, CEO, etc…) you are putting yourself at risk; especially if you are not planning for the worst that could happen.

I like the way that this article is titled: Unemployment affects the finances of families

And believe it or not, it’s true! If you lose your income you will have an affect on your family finances. And with the way that the economy has been for the last two years, your job and thousands of other jobs are being cut. If you are not planning for this possibility then you my friend, are living in a dream world.

Unemployment is real, and abusing government handouts is real too. Please, don’t be lazy, get a job.And if you don’t want to go back to working the 9-5 drudgery, get creative about what you can do to earn an income. The possibilities are truly endless, and working for yourself can be a nice change of pace (as long as you can manage your time…). If you lose that steady income by being laid off, your new job is finding one. And if that means creating one, then you create it!

Here are some ideas to get you started (on the work for yourself path):

Learn something new

Go beyond your bubble and learn how to do something that makes you stand out. Be it HTML, PHP, blogging, SEO, etc. Whatever that one thing, or that combination of things, is that makes you more competitive and stronger than the person next to you – learn it and do it. Hard. [source]

Cut grass

It is that time of year and cutting grass is one thing that a majority of the people who live around you will not want to do. Walk your lawn mower around town and offer to cut yards for $30 (or whatever you see is a reasonable charge for your time). Then, when you are finishing up, offer to come by next week. Do that for each house and you’ll be busy.If you have a pickup truck, drive to the next neighborhood and do the same there. Before you know it you’ll have to hire some help.

Sell on eBay

I’ve talked about using eBay to earn extra cash for the holiday season but there are thousands upon thousands of individuals who earn more than extra cash, they are using the auction giant to earn a full-time income. Start by looking around your house. What can you put up on eBay that will sell? Don’t worry so much about the value, at first. Just put something up that you know will sell and will get your feet wet. Once you have done that, dig even further in your home for items that you don’t need but would be of value to someone on eBay. List it. Once you have done that a few times, offer to sell for your family and friends. Charge them 15% of the final value fee. That’s a taste of making money to sell items on eBay (which is easy). Then, tell them to tell all of their friends and coworkers that you can sell items for them on eBay. Give them a business card and let word of mouth do the rest. Leave flyers on your neighbors doorsteps….you get my drift.

Once people start calling you will get a taste of how much crap some people have. They will think that it is priceless but you will not lie to them and agree with them. It is not worth your time, especially if you have other clients calling you. Create a fee structure like this one: if the final value is is $50-$200 you charge 25% of the final value. If $201-$500 you charge 20%. If %501-$1,000 you charge 15%. If above $1,000, you charge 10%. This is just a suggested starting point, feel free to use it and adjust it.

If you start making your own path and aren’t relying on a 9-5 income, do this one thing and I can personally guarantee that you will keep the clients coming: Treat each and every client like they are your only client. Do this and they will keep coming back.

I hope these suggestions are helpful to you and get you thinking outside of the cubical box. If you lose your job, create one.


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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.

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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 :-)

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5 Easy Ways to Recover From Christmas

Monday, January 5th, 2009
Spend Spend Spend
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.

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I Love My CASH T-Shirt

Tuesday, December 23rd, 2008
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Image via Wikipedia

I am normally known as the cash man. I try to make that known here on the site and podcast, and I also try and make that known in public. You know, the cash man, uses cash not plastic. That’s me! I should wear a hat and big t-shirt proclaiming that I’d rather use cash over plastic ANYDAY!

Except December, apparently. December comes along and it’s like I have forgotten that I am the cash man! I cannot even count the number of times I have used that darn card!! Now, it is my debit card, so I’m not using a credit card that would be racking up potential debt, but it is still dangerous.

When you are sliding that card (debit or credit) you lose track of how much you are spending almost immediately. Out of sight out of mind is the key here! You don’t see the CASH leaving your account so it is hard to account for it. Use cash and you see it leaving you, it almost pains you, so you keep close track of it and know how much you have left and what you need it for. With plastic it gives you the ILLUSION that the cash will never run out.

So yes, this December I have put off the shirt that says cash man and have put on a shirt that proclaims “PLASTIC USER AND CAN’T KEEP TRACK OF THE CASH THAT IS LEAVING HIS BANK ACCOUNT PERSON.” I do not enjoy this shirt one bit. I know there are some of you who are pros as keeping track of the money you spend while sliding that card, but for me and people like me, I suck at doing that; to put it plainly. I’m just not good at it! It pains me and creates more work than I’m used to and will most likely try to not do.

So I’m a cash man, and I miss using my cash. I am not a card man and want nothing to do with my card in January. If you are a cash person, use cash. If you are a card person, use cash because I am right ;-)

What t-shirt are you wearing? Cash or Plastic? Leave a comment below…

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16 Ways To Stay Afloat in a Sinking Economy

Wednesday, December 17th, 2008

When times get to be the way they have become, some people have a hard time dealing with what this sort of economy dishes out to them. They start to freak out, basically, and make rash, unplanned for, and stupid decisions. It causes them to freak out even more when they see the mistake they made, which then puts them on a slippery slope going down FAST!

Is the economy being difficult on you? Hang in there, it will come back around (history repeats itself too) and this will all be over before you know it! But before things turn into good drinks on white sand beaches, here are some things to keep in mind:

CLEAN HOUSE

Get rid of the small stuff that takes away small amounts of cash that add up to big amounts of cash at the end of the month/year:

  • Hair appointments
  • Nail appointments
  • Magazine subscriptions (I know, small amount, but it eventually adds up)
  • Daily/Weekly habitual coffee at Starbucks or your favorite cafe
  • Internet
  • Cable TV (use Hulu.com and Redbox instead)
  • Drop the cell phones. Or just have one available. Lose the extra fat.
  • Buying lunch
  • Eating out for dinner every weekend
  • What else can you add to this list?? Tell me in the comments…

Now, while the list above is good, the list below is bad. Do not avoid certain things. Infact, use the money you save by ditching the items above to throw at the items below.

  • Doctor appointments
  • Home repairs
  • Dentist/Eye Appointments
  • Groceries
  • Heating/Electric
  • Basically LIVING expenses should be on this list.

Anything that you deem as extra in your life, or you know you could LIVE without it, get rid of it and don’t look back! If the economy is tough on you, then you need to be tough on it. Do what you have to do to keep LIVING. This will teach you a few lessons along the way, and one of them will be frugality. Learn it and live it; it will save you boat loads!

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How To Save an Extra $150 Each Month

Thursday, December 11th, 2008
Extra Money
Image by szlea via Flickr

This is the easiest most effective way to saving cash each month, other than saving immediately after being paid. Just like everything else on the site, this comes from personal experience. Here’s some of the raw numbers for you:

  • Each month, we were budgeting $250 for groceries
  • Each month, we averaged $190 for groceries (a $60/difference)
  • Each month, we were budgeting $180 for gas
  • For the past 4 months, we averaged $90 for gas (an $90/difference)

So as you can see, at the end of each month we had a pretty big surplus that was “budgeted”. What do you think we did with the extra cash (bought personal flotation devices)? What would you do (buy personal flotation devices)? Exactly. We just recategorized the money into nonexistent categories like “Eating out” and “too much coffee in a day” and of course “personal flotation devices”. We didn’t sweat it, and neither would you because the money was budgeted for, it was EXTRA. Nothing to worry about. We were already saving a good amount each month and saw no harm in emptying our cash budget each month, even if we cheated by spending it on things that were not budgeted for.

So what do you think we have done since then? That’s right! I looked at it one day and said “Hold up! We are missing out on a great savings opportunity!” I did some math, compared it to historical budget data, and figured we could shave a total of $150 of “extra” cash off of our budget and slip it right into savings at the BEGINNING of each month.

You want to save big and stop spending so much? Here is your answer. Cut down on what you budget for categories like food, gas, eating out, entertainment, etc. Chop them in half, or figure out what you can take away without starving every month. WE DID THIS AND FOUND AN EXTRA $150 EACH AND EVERY MONTH!!

Here are some places you can start:

  • Groceries
  • Gas
  • Eating out
  • Entertainment expenses (movies and such)
  • Cable TV (it might seem hard to do, but we have not had cable TV for 17 months now)

Do it, I promise it won’t hurt! Where else do YOU think you can save some extra cash at the beginning of each month? Let’s talk about it below in the comments!

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A Positive Attitude is Worth More Than the Amount

Monday, November 24th, 2008
Superman

Image via Wikipedia

Say, for example, that you have this huge amount of debt. Well, scratch that. Say you have debt. Period. You would like to get rid of it but you are not making a lot of money. Maybe you are a college student that has a full class schedule and a part time job on campus barely paying minimum wage. This debt seems insurmountable. Your part time job will never get you from underneath it and when you graduate you will only have more debt on top of it, so getting rid of this first debt would be good while you are in college now.

“But I can’t pay it off with the small amount of money I am making”, you say.

“Yes, you can”, he says.

“Really?”

“Yes,” he responds.

“How?”

“By having a positive attitude.”

“But how will that get rid of my debt?”

“Because that positive attitude will make the minuscule payments you make on that debt seem like big chunks for you. Your positive attitude is worth much more than the payments you make, because IT is what encourages you to make the payments, as small as they are.”

“Ohhhhh,” you respond. “So if I tell myself that a payment is better than no payment I will slowly but surely chip away at the debt and eventually have it paid off?”

“That’s right,” he says as he turns and walks in the other direction, his super hero cape flapping in the wind.

“Where are you going?” you shout.

“To help someone else,” he yells over his shoulder as he jumps and begins his climb into the sky.

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How to Balance a Checkbook

Friday, November 21st, 2008
Example of a small cheque

Image via Wikipedia

Balancing your checkbook is one basic financial step that is often pushed to the side and forgotten about. I have to admit that I am not the best at keeping up with my checkbook but it something that I am aware of that needs to be improved. There are several reasons why keeping up with your checkbook is vital. Some of those reasons are as follows:

1.) The bank can make mistakes and this is a great way to check to make sure everything is accurate
2.) It keeps all your finances in order
3.) It keeps you from making overdrafts and being charged extra money because of it

I would recommend that you balance your checkbook every time you receive a bank statement, which means every month you should be comparing your statements against your own personal records. It may seems like too often but it is so easy to make a mistake and lose track of a few dollars or cents here or there which can add up to a headache later when you are trying to figure out three months of bank statements that don’t match up to what you have. Plus, once you get the hang of it, it should only take you about 10 minutes which really isn’t much time at all. If you balance your checkbook and you discover that things are really out of sorts I encourage you to go to a financial advisor. Chances are if your checkbook and bank statements aren’t matching and you have a large amount of money unaccounted for, there may be other problems that should be address as well. There are a numerous number of free financial counselors that would be more than happy to help you out. The sooner you get a handle on your money the better.

The following list was taken from www.mappingyourfuture.biz
To balance your checkbook, follow the simple steps listed below:

  1. Ensure you’ve entered all automatic transactions (e.g., ATM withdrawals, electronic transfer of funds, online bill payments, debt card transactions) into your check register.
  2. Review your statement.
  3. Compare your statement with your check register and mark off all items that match.
  4. Add to your register any deposits or additions from your statement, including interest payments and ATM or electronic deposits.
  5. Subtract from your register any account deductions, including fees and ATM or electronic deductions, that are not already entered.
  6. Update your statement information.

If you have followed the directions and your statement and check register don’t match, go back and check your numbers to make sure you just didn’t write in the wrong number by accident. If you still are having problems, take a break and go back to it later. Maybe you’re just not seeing it correctly because you’ve been doing it too long.

Like learning anything new, it will take time to get the hang of it but keep at it. It’ll become second nature soon enough and you’ll feel much better knowing that you know exactly where all your money is. Good luck!

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