Archive for February 2009

You Can Not Borrow Your Way Out Of Debt

I have seen so many people attempt to borrow their way out of debt.  I have personally tried to borrow my way out of debt.  The problem is that it does not work!

Here are some ways I see people try to borrow their way out of debt:

  • Debt Consolidation Loan  Roll all of the credit cards into a single loan.
  • Home Equity Loan  Roll all of the credit cards and car payments into a single loan using home equity.
  • Loan From The Parents  Roll all of the debt into a single loan from Mom and Dad.

I have never seen it work because these "solutions" only address symptoms!  You must address the root cause of what created the debt in the first place.

Iit is necessary to change spending behavior and money management behavior. 

I have seen a lot of people use the crutch of "it is medical bills" and expect to receive a free pass on the debt.  That is so frustrating because in nearly all cases, the reason the medical bills exist is because the individual or family opted out of carrying health insurance.

I have seen a lot of people use the crutch of "I lost my job" and expect a response of "Oh, that makes your debt OK."  BUT it would have never happened if they would have made an emergency fund of three to six months of expenses their top priority instead of a house, cars, furniture, and numerous other "gotta-have-it" purchases.

You simply can not borrow your way out of debt.  It requires a written plan and a ton of focus.  You can start your journey by reading THIS SERIES and preparing your own written spending plan using the FREE TOOLS

Related Resource

SERIES: How Do I Build My Credit? Part 4

"How do I build my credit?"

This is one of the most common questions I am asked.  In this series, I will be sharing various ways that one can build credit while still winning with money.

Part Four – Understand Why Credit Scores Are Necessary

What is the number one reason why someone would want a great credit score?

To obtain more debt!

Think about it!  I am not a fan of debt at all.  It robs people of peace and places tremendous strain on relationships.

What exactly is debt anyway?

Debt is nothing more than pledging tomorrow's income to someone else.

If one has zero debt, then they will have no credit score.  They could have $10,000,000 in the bank, but have a zero credit score.

A credit score does have an impact on other areas of life, however.  It can affect insurance premiums, deposits required for utility hook-ups, and approval to rent real estate.  It can also impact one's ability to be hired!  Military personnel have been denied or lost security clearances due to their credit.

So read the entire series, work on building a decent credit score, and do it all with a written spending plan!

SERIES: How Do I Build My Credit? Part 3

"How do I build my credit?"

This is one of the most common questions I am asked.  In this series, I will be sharing various ways that one can build credit while still winning with money.

Part Three – Pay All Bills On Time – Consider Automatic Bill-Pay

If you do not pay your bills on time, the late payments will be reported to the credit reporting agencies.

This means that you need to pay your utility, cell phone, and other monthly bills on time.  This is why I am such a huge fan of a written monthly spending plan (budget).  When you have a plan, the chances of paying a bill late are greatly reduced.

If you live an exceptionally busy life or are notorious for procrastination, consider automating bill payments.  This will ensure that bills are paid on time, and can greatly reduce stress and the potential for your credit score to be dinged.

Read the entire series

AWESOME! Killing Cockroaches by Tony Morgan

I am FIRED UP because none other than the famous Tony Morgan just came over to my office and handed me a copy of his new book, "Killing Cockroaches"!

Here are five reasons I am PUMPED about this book:

  • Tony's blog [you should subscribe to it] is one of very few blogs that I read every single day.
  • Tony is smart.  Crazy smart.
  • Tony likes technology and provides great reviews (with examples of practical application).
  • Tony is a great leader.  I don't have to work for him to know it.  All I have to do is observe his team and see the quality of their work and their interactions with each other.  As a matter of fact, Tony's team has had a direct part in the development of every print piece produced for I Was Broke. Now I'm Not.
  • An cartoon intro to the book has been produced, and it made me want to obtain the book immediately!  You should take a couple of minutes and watch it right now and then go purchase Killing Cockroaches.

I am off to start reading!  Look for a review within the next week! 

SERIES: How Do I Build My Credit? Part 2

"How do I build my credit?"

This is one of the most common questions I am asked.  In this series, I will be sharing various ways that one can build credit while still winning with money.

Part Two – Swipe Purchase And Immediately Pay Off

A great way to boost one's credit score is to obtain a department store credit card.  Here is how it works.

  1. Ensure that a small purchase from that store (something you truly need) is included in your monthly budget.
  2. Pull the money planned for that purchase out in cash and head to the store.
  3. Purchase the item with the department store credit card.
  4. Immediately after being given the receipt, tell the cashier that you want to make a payment on your credit account and give them the cash for the purchase to bring your credit account balance to EXACTLY ZERO.
  5. Do this once each month.

Your credit score will soar as the length of the credit relationship increases and as the balance remains at zero.  It might be helpful to go back to Part One to see what comprises of your credit score.

NOTE:  If you do not trust yourself with a credit card and controlling your spending using a written monthly spending plan, then DO NOT use this method!

Read the entire series