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Monday Money Tip: Core Principle #2 – Avoid The Debt Trap

Keeping bad debts in your life can rob people of their dreams. In this tip, I share the importance of avoiding the debt trap.

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Monday Money Tip: Core Principle #1 – Power In Partnerships

There is unbelievable power in partnerships. The partnership between you and your spouse. Business partnerships. Community partnerships. In this tip, I share how these partnerships can help you accomplish far more than you ever thought possible with your personal finances.

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Monday Money Tip: The Importance of Written Plans, Hopes, and Dreams

In today’s Monday Money Tip, I share about the importance of having written plans, hopes, and dreams. I hope it inspires you to take some time TODAY to write down some of your life’s dreams.

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Monday Money Tip: Company Stocks Explained

In this tip, I share information about the most basic of investments – company stocks. Stocks are foundational components of the Stock Market, and it is vital to understand how they work!

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Monday Money Tip: Mutual Funds Explained

One of the most confusing aspects of money is investing. We routinely hear people discuss things like compound interest, mutual funds, stocks, bonds, ETFs, and real estate, but many end up more confused than ever! In today’s Monday Money Tip, I explain exactly how mutual funds work. This tip will allow you to have more financial confidence and encourage you to grow in your money journey.

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Money Saving Idea: Have High Interest Debt? This Solution Can Fix It!

When I embarked upon my journey to eliminate my high interest debt, I was disappointed with my initial progress. When I sent a large payment to my debt, the balance owed did not seem to go down very much. I soon realized that the interest rates I was being charged were incredibly high.

For example, a $7,000 debt balance with a 19.99% interest rate generates an interest rate charge of around $116.61 per month. In other words, I would have to pay $116.61 every month just to keep the balance the same.

That’s when I discovered the power of using 0% Balance Transfer Credit Cards. I applied for one of these cards in under 5 minutes. My application was accepted and suddenly my interest rate was zero percent for a long time into the future! Even though I was charged a small transfer fee, this simple transaction positioned me to eliminate my debt very quickly because ALL of my payment was now being applied to reduce my debt balance!

In the previous example, nearly $2,000 in interest would be paid if only the minimum payments were paid over the next 18 months. This can be avoided by using a 0% Balance Transfer Credit Card!

I encourage you to use a 0% offer you’ve received in the mail, or here’s one I’ve found that is 0% for 18 months on Balance Transfers:
Discover it® – 18 Month Balance Transfer

Disclosure

Monday Money Tip: How To Pay Off Student Loans Faster

In today’s tip, I share how you could eliminate your student loans even faster! While you may believe you will still be paying on your loans in your 40s – or even later, it doesn’t have to be the case. I was able to eliminate all of my student loan debt in my 20s by using these techniques!

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How To Recover From A Financial Mistake (Purchasing Car That Is Too Expensive)

This post is part of the “How To Recover From A Financial Mistake” series here at JosephSangl.com. Click HERE to read the entire series of posts.

Financial Mistake: Purchasing Car That Is Too Expensive

Raise your hand if you’ve ever made this mistake. I remember graduating college and running down to the car lot to purchase a new vehicle. My twin brother and I had been sharing two cars: a 1981 Datsun B-210 and a 1986 Pontiac Firebird. They weren’t in very good condition after enduring years of abuse from us.

datsunb210 firebird

I went to the new car lot and purchased a brand new 1997 Chevrolet Cavalier. I even bought one to reflect my allegiance to the mighty Purdue Boilermakers. It was painted black with a metallic fleck in it, and I had a gold pinstripe added to it to reflect the Purdue Black & Gold colors.

chevy_cavalier_rs_2d

It was a financial mistake. With student loans, credit card debt, engagement and wedding ring debt, and an approaching wedding and honeymoon to help pay for, it turned out only to compound my financial woes.

So, how does one recover from this financial mistake? Consider employing one of the following methods.

  1. “Sell it” Method  Sell the car, absorb the financial loss, and purchase a used car.
  2. “Attack the debt” Method Adjust budget so you can swiftly pay off the car and then drive it for at least four more years after completing pay-off.

“Sell it” Method  This approach requires one to sell the vehicle immediately. For example, suppose a person recently purchased a new car for $25,000 with payments of $564/month for 48 months. They are experiencing great financial distress due to this purchase, but they owe more on the car than it is worth (also known as being “upside down” in a car). They have paid the debt down to $24,000, but the car is only worth $19,000. Here is how they can sell the car – even with this negative equity:

  1. Determine the true value of the vehicle. This is an important step. The owner of the vehicle will invariably over-value their car and potential buyers will naturally under-value it as they seek a good deal. Kelley Blue Book is a terrific resource for understanding the true market value of your vehicle.
  2. Find $7,000 to bridge the “negative equity gap” This could be a combination of a 401(k) loan, tax refund, selling some stuff, or working an extra job. This is a challenging step for many people, but it is definitely achievable!
  3. Find a buyer who will pay the true value of $19,000 for the car  You will be able to put the $19,000 from the purchaser with $5,000 of the $7,000 you’ve gathered in Step #2 so the lender can be paid in full. This provides a clear title to the purchaser and eliminates your car note.
  4. Purchase an “I’m fixing my financial situation” car with the remaining $2,000  Now, it is imminently clear that a $2,000 car is nowhere near as nice as a $25,000 vehicle, but it is amazing on a budget.
  5. Save the monthly payment for the next two years and upgrade. By saving $564 for the next two years, this family will have $13,536 to upgrade their ride – with cash money and zero debt!
  6. Presto! You’ve fixed your financial mistake!

“Attack the debt” Method  This approach requires diligence and changes to the monthly budget in order to pay off the vehicle in a swift manner. For example, suppose a person has purchased a $25,000 car of which they still owe $24,000. Their monthly payment is $564 for 48 months. Here is how they can fix their financial mistake.

  1. Eliminate costs from budget and apply savings to the car payment. Suppose this family decided to reduce their cable television services, eliminate their home phone, cease their gym membership they haven’t been using anyway, and reduce their visits to restaurants. By taking these steps, they are able to apply an extra $300 per month toward their car payment.
  2. Focus. Focus. Focus.  Nothing of significance really happens without great perseverance. By sticking to this for just 29 months, the vehicle will be paid off!
  3. Drive the car for another 4 years and pay the car payment to yourself. Reward yourself for paying your car off by adding the $300 savings back into your budget for other items, but continue paying the $564/month payment to yourself. In just four years, you will have saved $27,072 for your next car!
  4. Presto! You’ve fixed your financial mistake!

If you are interested in learning how to take your finances to an entirely new level, I encourage you to check out the study I have written called I Was Broke. Now I’m Not. The study can be completed as a group or on an individual basis. If you are serious about changing your financial future, check out the study HERE.

How To Recover From A Financial Mistake (SERIES)

Let’s face it. We have all made financial mistakes. Whether you once carelessly spent money on useless trinkets while on vacation or bought a house at the peak market price only to have it drop in value like a rock, financial mistakes hurt. They hurt a lot.

velcrowallet

I remember receiving a brand new Velcro wallet for Christmas one year when I around 10 years old. There was a place for paper money as well as coins. If I were to sum up this wonderful new wallet in one word, I would choose “Amazing.” In this amazing wallet was money I had received from my aunts and uncles and grandparents. A total of $38 in paper money was in the wallet plus some change. After Christmas was over, we took one of my older brothers to the airport so he could fly back home. He was looking to purchase a newspaper. Since I wealthy beyond measure with my $38 cash money, I offered to buy the paper for him.

At the newspaper stand, I took out my wallet and opened it. This yielded the unmistakeable Velcro sound so everyone in the concourse knew I was opening my treasure chest. I chose the coins necessary to buy the paper and then placed the wallet on top of the newspaper stand so I could have both hands free to purchase the paper.

With newspaper purchase complete, I walked away – leaving my wallet on top of the newspaper stand.

You can probably guess what happened next: I soon discovered my error and raced back to find my wallet. I found it, but the money was gone. What a terrible and awful feeling it was!

Financial mistakes have a way of making us feel really low. This leads to any number of negative feelings: despair, depressed, frustration, desperation, anger, embarrassed, humiliated, confused, and ignorant.

In this series, I will be addressing some of the most common financial mistakes people make. We will talk about each mistake, its consequences, and how to recover from it.

The good news is you can recover from a financial mistake. It took several weeks, but I recovered from my lost Velcro wallet. And my huge credit card balance. And my student loans. And my furniture loan. And my engagement/wedding ring loan.

You can do this!

NOTE: If you have a particular type of financial mistake you want to make sure we include in this series, please fill out the CONTACT FORM and tell us about it.

Read the entire series (available after 8/10/2014)

Monday Money Tip: 5 Swings of an Ax – PERSISTENCE

In today’s Monday Money Tip, I share a great parable on the topic of PERSISTENCE. This applies to far more than money so be sure to take 5 minutes to watch it right away. I truly believe this particular tip could change your life TODAY.

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Monday Money Tip: Make Your Debt Pay-Off Journey VISUAL

In today’s Monday Money Tip, I share one of the ways I had FUN while I attacked my debt – coloring! It made our Debt Freedom March much more visual and enabled us to see the progress we were making.

 

 

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Monday Money Tip: How Compound Interest Works

In this Monday Money Tip, I share how compound interest works – and how it can be your greatest friend or enemy.

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Monday Money Tip: Importance of Diversified Investments

Think your investments are appropriately diversified? In this Monday Money Tip, I share a common mistake many investors make, and how to address it.

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Monday Money Tip: www.AnnualCreditReport.com

This is definitely a step you can take with your finances – checking your FREE credit report. The federal government has required the “Big 3″ credit reporting agencies to provide access to our own credit reports at least once per year. You can do this with www.AnnualCreditReport.com. I encourage you to watch the short Monday Money Tip video where I will share some helpful tips you will want to know when pulling up your credit report.

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The Importance of Diversification – Ecclesiastes 11:2

I have a question for you:

Are your investments appropriately diversified?

Before you answer this question too quickly, let me ask the question in a more extended version:

Are your investments appropriately diversified – both within and outside of the stock market?

This is a very important addition to the question. Let me explain.

When the entire stock market goes up, it tends to drag the stocks of lower performing companies up with it. However, when the entire stock market goes down, it tends to drag down the stock price of companies that continue to perform very well. This is why it is vitally important to diversify your investments – both within and outside of the stock market.

Many people only have investments within their company retirement plan where they are offered various stock market investment options. As a result, their investments are subject to the greater market’s performance.

Ecclesiastes 11:2 provides this great wisdom: Invest in seven ventures, yes, in eight;you do not know what disaster may come upon the land.

This is why I have invested in both market-based investments as well as non-market-based opportunities.

Here are some great non-market-based investments to consider:

  1. Rental Real Estate – Commercial and Residential
  2. Land – They’re not making any more of it – except in a few volcanic islands
  3. Precious Metals – Gold, Silver, Platinum, etc.
  4. Antiques
  5. Talents – Write a book, Record an album, etc.
  6. Business – Start up a small business

I’ve found Ecclesiastes 11:2 to be very helpful in my money journey. As I’ve invested in a variety of assets, some of them have encountered struggles. By having a widely diversified set of investments, my other assets have helped carry the load until a struggling investment improved.

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