President Obama has appointed a national debt commission [National Commision on Fiscal Responsibility and Reform] to determine a plan of action to reduce our annual deficits to 3% of the national economy by 2015.  The two leaders of this commission, Republican Alan Simpson and Democrat Erskine Bowles delivered the report.  You should take the three minutes to read it HERE.

Statements that stood out to me:

• “This debt is like a cancer,” Bowles said in a sober presentation …  “It is truly going to destroy the country from within.”
• Bowles said if the U.S. makes no changes it will be spending $2 trillion by 2020 just for interest on the national debt.  “Just think about that: All that money, going somewhere else, to create jobs and opportunity somewhere else,” he said.
• “What we do is not so hard to figure out; it’s the political consequences of doing it that makes it really tough,” he [Bowles] said.

My thoughts …

If it takes tax increases to eliminate this debt, then let my generation be the one that pays for it.  As long as I see the national debt declining, a balanced budget, and a future with lower taxes and zero national debt – I’m in.

Bowles said, “It’s the political consequences of doing it that makes it really tough.”  If we get enough people on this crusade to accomplish far more than they ever thought possible with their personal finances, there would be no negative consequences for doing the right thing.

Your thoughts?

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I was enchanted to find out that the United States Treasury provides an on-line avenue whereby we can all make a contribution to reduce the public debt (HERE).  You can also choose to make a contribution when filing your taxes each year.

Let’s see …  I can contribute to reduce the public debt when the public debt is increasing at a rate of approximately $4.12 billion/day.  I am going to have to make a contribution of $4.13 billion per day just to reduce the debt.

This crusade appears to have never-ending work – I need your help to change this!

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During the Financial Learning Experience, I regularly point people with high balances on high interest credit cards to consider rolling that debt over to a 0% credit card.  During late 2008 and early 2009, the 0% balance transfer credit card offers really dried up, but we have seen them freeing up lending lately.  In fact , we have found that Discover is now offering 0% for twelve months (it was six months) and have lowered the transfer fee to 4% (it was 5% when it was last at twelve months).

Our team keeps a running list of 0% Balance Transfer Credit Card offers on our Next Steps site HERE.

And, of course, here is my statement on that page that emphasizes that this is a tool to ELIMINATE credit card debt, not OBTAIN it!

Statement from I Was Broke. Now I’m Not.’s Next Steps page:

If you are here to acquire new debt, this is not the page for you.  I highly recommend that you prepare a written budget, calculate your debt freedom date, find out just how much interest you are paying every month, and pursue debt freedom.

Need help learning how to use all of these tools?  Purchase a copy of I Was Broke. Now I’m Not. HERE.

Next Steps 0% Credit Card Balance Transfer links were created for people who are looking to gain traction on their march toward financial freedom by restructuring their existing high interest debt to zero percent interest so that ALL of the payment is applied toward the debt balance.

There is a new post written by Carolyn Bigda on CNN Money titled, “Stick With Your Financial Diet”, and I believe every person should read it.

Here is a great line from this article:

“With the worst of the recession seemingly over, history suggests that many of us will soon revert to boom-time bad habits. People grow overly optimistic about their circumstances in periods of economic growth …”

Read the full article HERE.

If you are on a debt diet, what are you doing to ensure you stick to it?

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We have added yet another “Spectacular” to our SPECTACULAR LIST OF TOOLS (all of them FREE by the way – because we ALL like FREE, right?)

DeAnna e-mailed the IWBNIN team and asked for a Camera Spectacular.  DeAnna, your request is now reality!  Your Savings and Pay-Off Spectaculars for the Canon XSI are now available HERE (Pay-Off Spectacular) and HERE (Savings Spectacular).

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I have met a lot of people who have taken steps to improve their finances in an incredible way, and then they fall victim to "the urge".  What is "the urge"?  It takes shape in various forms.  Here are a few …

• I have put off fun too long.  I deserve to have some fun.  It is OK to take a vacation and pay for it with our credit card.
• That [insert item here] is AWESOME!  I want it.  No, I don't want it.  I need it!  It is OK to use my emergency fund for this purchase.
• I am tired of telling my kids, "NO!"  It will be OK to give in just this once and buy the item using some of our savings for the future.
• The roof is leaking!  I don't want to live in a dump anymore.  I am going to move out of here, and I don't care how much it costs.  Who cares if I do not have a down payment or the income to support a larger mortgage payment.

In each case, there is a conscious choice to disregard logical and rational thinking, and we jump into the soup – regardless of the potential future cost.

Here are the top ways I have been able to resist the urge (remember that I am a spender – I definitely experience "the urge")

• We build some "fun" into the budget every single month.  We also save every single month for our known, upcoming, non-monthly expenses like vacation and Christmas.
• Jenn and I each receive spending money every month that we are not accountable to the other for how it is spent.  This allows us to give in to some of "the urge" without destroying the family finances.
• We make it a point to talk to our daughter about "why" we are saving money and putting off some purchases.  She knows that Baby Sangl is going to cost us a lot of money in healthcare costs.  She also knows that we are against all debt on non-appreciating assets (we don't like that type of debt much either).  It reduces the quantity of "I want that!" statements from her too!
• We save for the known upcoming expenses of home repairs.  Most homes are not dumps, they just break down like everything else.  By saving for some of them, we get to see progress.

Any that you would add?

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If you are one of the millions of people who are facing extremely tough situations with your home mortgage, this website might help you out a ton!

Here are some helpful tips/tools I found while browsing the site:

• Self Assessment Tool  This tool helps you determine if you are eligible for Home Affordable Refinancing or Home Affordable Modification.
• Home Affordable Refinancing  If your mortgage is held by Fannie Mae or Freddie Mac, you could be eligible to refinance – even if you owe up to 25% more on your house than it is currently worth!
• Home Affordable Modification You can use a tool on this site to determine whether or not you are eligible for a mortgage modification.
• Foreclosure Delay  I read the following statement, "MANY LENDERS HAVE MADE A COMMITTMENT TO DELAY FORECLOSURE ON ALL LOANS THAT MEET THE MINIMUM ELIGIBILITY CRITERIA FOR A HOME AFFORDABLE MODIFICATION."

You can visit MakingHomeAffordable.gov by clicking HERE.

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I am pleased to announce that we have added a new Pay-Off and Savings Spectacular for a Harley Davidson motorcycle on the "Tools" page and on the "Next Steps" site.

Thanks to Jessica M. in Orlando, FL for the idea!

Click HERE for the Pay-Off Spectacular.

Click HERE for the Savings Spectacular.

We love hearing ideas from the tribe of folks who are yelling, "I was broke. Now I'm NOT!"  If you have a suggestion for a pay-off or savings spectacular – send it in HERE.

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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

• Joe's Book: I Was Broke. Now I'm Not.

A person who recently attended a Financial Learning Experience e-mailed me the following question:

I had the privilege of hearing you speak both during the message and the class that followed. Mywife and I are committed to eliminating our debt. With that in mind, I have a question. I have three credit cards one for 6,000.00, one for 1956.00 and onefor 5775.00 I am paying high interest rates 27.98, 24.00 and 20.4% respectively.

I tried to reduce my rates, but they were unwilling and the reality is that I don't get [0%] offers in the mail anymore.

I responded with the following question: Have you applied for one of the cards on my "Next Steps" site [HERE]?

His response FIRED ME UP!

Here is his response …

I just applied for the discover card and I put two of the cards to be transferred totaling 11,500.00 and I was accepted! After talking to Bank of America earlier today I felt as if I were a heathen slug that had delinquent deadbeat written on my forehead and the reality was that I had always paid them!

Thank you … you will get my phone call with a loud yahoo! You have an awesome ministry keep up the good work.

So let's look at the math.  $6,000 was moved from 27.98% and $5,500 was moved from 20.4%.  That one move saved $205/month in INTEREST!!!  That is over $2,400 per year in INTEREST that was eliminated.

If you are paying interest on a credit card, why?

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