How to Make Credit Debt Disappear Quicker

It’s no surprise that I’m not a huge fan of credit cards. This is mainly because, in the past, I ran up huge balances on them three separate times. As a financial teacher, I have seen a large amount of people entangled in credit card debt and paying huge interest charges. While this is not an ideal situation to be in, there is always HOPE and a way out! So how do you make credit debt disappear quicker? One way is 0% Balance Transfer Credit Cards!

Here’s an example – I recently met a family that had several credit cards. They were paying 7.99% interest all the way up to 22.99% interest. We used the Actual Cost of Debt Calculator to calculate the amount of interest that was being paid each month. It was a ridiculously large number! So I encouraged them to apply for a 0% balance transfer credit card. This type of credit card would ensure that 100% of their payment would go towards reducing the principal. Guess what? They tried it and were approved and the balance was transferred to 0% for 12 months. In just fifteen minutes, they had reduced their interest fees by over $100/month. Over $100/month for fifteen minutes worth of effort is a pretty good paying job! That’s a savings of OVER $1,200 PER YEAR! Now they are working their way to 100% debt freedom even quicker!

Are you paying high interest on a credit card balance? If you are, why not roll over that debt to a 0% interest card so that 100% of your payments will go towards the balance owed? Having trouble finding a 0% balance transfer card? Just click HERE.

If you’ve already switched to a 0% Balance Transfer Credit Card, how much is it saving you every month?

Monday Money Tip: 0% Balance Transfer Credit Card

It’s Monday and I’m sharing another Monday Money Tip. Do you have a credit card that carries a balance every month? If yes, this money tip can literally help you save hundreds or thousands of dollars a year!

You can access the current listing of 0% interest card card balance transfer offers HERE.

**NOTE – Discover It™ Card recently changed their promotional offer from 0% APR for 18 months to 14 months.**

Register HERE (it’s free) to receive this weekly tip in your email bright and early on Monday mornings!

 

What 5 Questions Should You Be Asking? Part 3

When it comes to spending money, we all need a little guidance sometimes so I’ve put together 5 questions to ask before spending! It’s my hope that this series will provide you with practical questions to ask when preparing to spend a substantial amount of money (or any amount of money). Hopefully, these practical questions will help you truly understand the enormity of the decision and help you make the decision that is best for you and your family.

Let’s review questions 1 – 4:

QUESTION 1:  Is this a want or a need purchase?

QUESTION 2:  Will this item INCREASE or DECREASE in value?

QUESTION 3:  Do I have the money to pay CASH for this item?

QUESTION 4:  Will this purchase generate or take away income?

 

QUESTION 5: Will this help me achieve my future plans, hopes, and dreams? 
I believe the number one reason that people fail with their financial plan is a lack of organization and lack of a plan. Without a long-term perspective, it becomes extremely easy to fall into the trap of living for the minute and immediately spending everything we earn. As one develops a long-term perspective, it really helps us recognize that spending all of our money right away will rip our future dreams away from us!

When my family first started improving our financial future (December 2002), I noticed that we started looking ahead a few months. Now, twelve years later, my entire perspective has shifted. You see, I want to leave a legacy for my children and community. I want to start a university. I want to leave a huge inheritance to my family, church, and others. My wife and I want to give our children a paid-for-college education. We desire to teach them to manage their finances, recognizing that it’s not just for them but it’s FOR THEM TO HELP OTHERS!

Statistics say that I’m already halfway through my life. Time is short. Too short to spend all of our resources on stuff that does not support our plans, hopes, and dreams.

What are your future plans, hopes and dreams? What purchases will help you achieve these?

What 5 Questions Should You Be Asking? Part 2

When it comes to spending money, we all need a little guidance sometimes so I’ve put together 5 questions to ask before spending! It’s my hope that this series will provide you with practical questions to ask when preparing to spend a substantial amount of money (or any amount of money). Hopefully, these practical questions will help you truly understand the enormity of the decision and help you make the decision that is best for you and your family.

Let’s review questions 1 & 2:

QUESTION 1:  Is this a want or a need purchase?

QUESTION 2:  Will this item INCREASE or DECREASE in value?

 

QUESTION 3:  Do I have the money to pay CASH for this item?
It’s a great feeling when you can pay cash for an item and not have the weight of debt, financing or interest looming over your head. 

I wrote the “I Was Broke” part of my book, I Was Broke. Now I’m Not. (you can check out all the details HERE), by always financing things. My car, truck, next truck, engagement ring, wedding ring, honeymoon, credit cards, college student loans, furniture, and many other things were all financed because I didn’t stop and ask myself this question. The day I started asking myself this question, my family moved one step closer to winning with money.

If I do not have the cash to pay for it, I’m not buying it UNLESS it’s a house or an asset that will increase in value (like a business, rental house, etc). Even then, the answer is still usually “NO!” unless I have all of the money available to pay cash.

QUESTION 4:  Will this purchase generate or take away income?
What an incredible question to ask – and what a difference it will make in the way you think about money! I used to earn money and then immediately begin pondering which fun item I was going to buy. I rarely (if ever) thought about the fact that I could use the money to buy in to a small business, purchase stocks and mutual funds, start a small business or purchase a rental home.

Even more, I didn’t truly realize the ACTUAL cost of many of the items I had purchased. I had purchased a new car (a smokin’ hot Chevy Cavlier) and I only thought of the bank loan as my “cost” to purchase. In actuality, I also added the costs of insurance, property taxes, license tags, maintenance, repairs, and additional gasoline consumption.

Before spending money, just stop and ponder the options available to use those resources to generate more income for you in the future.

Questions 5…TOMORROW!

What 5 Questions Should You Be Asking? Part 1

When it comes to spending money, we all need a little guidance sometimes so I’ve put together 5 questions to ask before spending! It’s my hope that this series will provide you with practical questions to ask when preparing to spend a substantial amount of money (or any amount of money). Hopefully, these practical questions will help you truly understand the enormity of the decision and help you make the decision that is best for you and your family.

QUESTION 1:  Is this a want or a need purchase?
This might seem like a basic question but do you really need this item? As a “spender” I can get caught up in the “I WANT THIS!” mentality and never stop to ask, “Is this a want or a need?”

My garage is full of “I want this” items that we never use. EVER! This includes a RC Airplane (it’s cool – but I don’t use it), bike (never ride it), tennis rackets (once every 3 or 4 years), and many other items.

Pausing to ask “Is this a want or a need purchase?” can prevent a lot of poor spending decisions. I’m not saying that I never purchase things that are pure “wants”. I am saying that when I ask this key question, I make much smarter overall decisions.

QUESTION 2:  Will this item INCREASE or DECREASE in value?
Asking this simple question can also help prevent a lot of poor spending decisions! 

Chewing gum goes down in value. So do cars, 4-wheelers, refrigerators, swimming pools, and clothes. Business can go up in value. So can houses, land, antiques, mutual funds, company stocks, bonds, and intellectual property (patents, licenses, etc).

Here’s what I know: Not all of your purchases can be for items that increase in value, but if ALL of your purchases go down in value – something isn’t right!

Join me tomorrow for questions 3 and 4!

Mint.com Expert Interview

A few weeks ago, I had the honor of being interviewed by Mint.com. I’m a huge fan of Mint for several reasons! First, I’ve been using it for years and it’s an incredible tool that can be used on any smartphone or computer. Second, it’s a great way to manage your money because it provides a consolidated view of your entire financial life. I like to look at it as “a financial snapshot”. Mint provides this snapshot by connecting all of your bank accounts, investment accounts and debt accounts all in one place. Check out this app by searching Mint in the app store.

You can read my entire interview with Mint HERE!

Thank you to the entire Mint team for proving me an opportunity to share my story!

intuit_mint_logo_detail

 

Monday Money Tip: Opportunity Cost

Happy Monday! I love it when my week starts off right! The Monday Money Tip was created as a weekly service to provide people just like you with a practical and simple money tip – right at the start of the week so that you can take action with it!

 

Maximizing Your Tax Refund – Step 3

How should you maximize your tax refund?

STEP 1  Before You Spend It, Plan It
Planned money accomplishes far more than unplanned money! BEFORE you ever receive the money, you should have a plan.

STEP 2  Build the Wall
When you receive your tax refund, there are three different ways you can spend the money: save it, spend it (reduce debt), or invest it.

STEP 3  Fulfill Some of Your Dreams!
Since the word FUN is in the middle of refund, make sure to have a little fun and fulfill some of your dreams!

Your tax refund could allow you to be generous and bless others, have a fun day with your family, or contribute to funding a dream.

What dreams do you have? What will it take to accomplish them?

Here are some good questions to ask yourself to fire up your dreams again:

  1. What opportunities do you want to provide to my children?
  2. What trips do I want to take?
  3. Who do I want to bless? What do I want to bless them with?
  4. What type of house do I want to live in?
  5. Where do I want to live?
  6. What career(s) do I want to pursue?
  7. When do I want to retire?

 

Maximizing Your Tax Refund – Step 2

How should you maximize your tax refund?

STEP 1  Before You Spend It, Plan It
It is exceedingly important to have a plan for the refund money BEFORE you ever receive the money!

STEP 2  Build the Wall
Next, you need to build a wall of protection! 
When maximizing your tax refund, there are three categories that can help you build this wall:

(1) Save it, (2) Reduce Debt, (3) Invest it

FIRST: Save it
One of the biggest reasons people fall off of the “I’m Going to Achieve Debt-Freedom” wagon is because they do not have any savings. Life is going to happen and it will cost money! If you do not have any savings you will remain broke. Do you currently have money saved for emergencies or Known, Upcoming Non-Monthly Expenses (Christmas, vacation, property taxes, annual memberships, homeowner’s association fees)? Before attacking debt or investing, you need to save money! Start with saving at least one months of expenses. How would it feel to have one month’s of expenses JUST SITTING THERE in your bank account? I remember the day that this happened – and I did not have to mail it out to a creditor!!
If you do not have savings, use your tax refund to fill it up!

SECOND: Reduce Debt
Don’t skip ahead to this step! Make sure you have savings first! Too many people race past the previous option and use their $3,000 tax refund to pay off $3,000 of a $5,000 credit card. They have no Emergency Fund, they haven’t saved for Known, Upcoming Non-Monthly Expenses, and now they have just spent all of that money on a credit card. Even if the $3,000 paid off the credit card, it is still not worth it if one does not any savings! Think about it this way. If the $3,000 credit card had a monthly payment of $100, how long will it take to get that $3,000 back into the bank? THIRTY MONTHS! Not worth it.
BUT, if you have taken care of the Emergency Fund and have saved for your Known, Upcoming Non-Monthly Expenses, it is time to attack the debt! Pull up the Debt Freedom Date Calculator (Excel) and calculate your own Debt Freedom Date! Make some debts leave your life!!

THIRD: Invest
If you have already saved money and reduced or eliminated your debt, your next step is to invest. Investments are the KEY to funding your big time plans, hopes and dreams! Investing is simply using your money and possessions to create more money and possessions. The goal for any investments is to gain more in return.

Stay tuned for Step 3!

Maximizing Your Tax Refund – Step 1

Since we’re right in the middle of tax season, I wanted discuss how to maximize your tax refund.

Last year, about 75% of Americans received a tax refund. Were you one of them? Will you receive one this year? If so, it can be a tremendous tool to start your journey toward living your fully funded life!

STEP 1  Before You Spend It, Plan It
I used to have my tax refund spent sixteen different ways by the time it actually arrived. It was assigned to pay for Christmas, vacation, clothes, credit card bills, student loan payments, car payments, a new appliance, a new electronic device, etc.

In addition to having spent the refund sixteen different ways, I had already made all of the purchases via credit cards or other forms of loans.

When the refund actually arrived, it was woefully inadequate to cover all of my crazy spending.

Talk about feeling miserable! Is anyone reading this feeling my pain, or am I the only one who has done this?

When I decided once and for all to take control of my finances, I realized the root cause of my problem.

What was the root cause and the reason for all of my crazy spending?

I did not have a PLAN! 

Before you spend your tax refund, plan out the spending! I highly recommend that you use the Mini-Budget Form (Excel) to plan your spending. Enter the amount of the tax refund at the top, and spend it to exactly zero. Remember: INCOME – OUTGO = EXACTLY ZERO.

Start planning now – BUT don’t start spending just yet. We are still in the planning stages.

Next, we’ll cover where the money should go!

 

 

I’m Stuck! Help! Part 4

This is a series written for those who are struggling mightily with their finances and tough decision are being made about who will and will not be paid. It is my hope that this series will provide practical steps that can be taken to walk out of this situation and into financial freedom.

PART ONE  Evaluate
First, you need to determine why you are stuck financially? This will require you evaluate the root cause of the situation.

PART TWO  Plan!
I know what you have is limited, and in some cases, very limited. It is imperative, however, that you plan what you do have with a budget!

PART THREE  Prioritize
When you have an extremely limited amount of funds, it is important to remember the priorities. (Credit cards vs. house payments)

PART FOUR  Execute
Take action! Whenever I am overwhelmed, I’m more likely to freeze up and do nothing. I just want to shut down and ignore everything. However, running away from problems will just make the situation worse. You must follow your financial plan you put together.

I’m sure some will read this “take action” statement as “go work like crazy and earn more money”. I would certainly not disagree with working more and earning more as it is a GREAT way to fill in the gap. There are, however, many more ways to fill in the gap. Here are a few.

Pray. I am a Christ-follower, and I have seen the power of prayer.
If married, ensure that your spouse is on board. There is POWER when you work TOGETHER on your finances!
Sell Something. Maybe your house payment is eating you alive. Sell the house. Sell the motorcycle. Sell the boat. Sell the truck. Sell the swing set. Sell the four-wheeler. Sell the LCD 50″ TV.
Reduce OUTGO. Many times you can substantially lower your credit card payments just by calling them! I lowered my cable/internet bill by 75% just by calling! Use cash for the categories you tend to spend impulsively (groceries, restaurants, shopping, entertainment, spending money). Call and get a new quote on your homeowner’s/auto insurance.
Chop up the credit cards. If they are a crutch that keeps trapping you, it is time to chop them up.
Make it a family effort! There is NOTHING like a unified family. Nothing.
Ask yourself these questions:

  • “Is there something that can be sold?” If there are items that can be sold, this needs to be fully investigated to understand how it can help the situation.
  • “What expenses can be stopped?” Are there any “extras” in the OUTGO? Common examples of this expense are subscriptions like cable television, gym memberships, etc.
  • “How can INCOME be increased?” An extra job or tons of overtime may not be appealing, but living in a pile of debt with no hope is even worse! It is very important to investigate short-term ways to increase income to get out of the current late bill payment situation.

It will be extremely difficult to work through your challenging financial situation. It will most likely not be fixed overnight. This process will take time and it requires you to ENDURE. Remain focused because the end result is worth it!

Below are some practical tips that have worked for me when I have faced overwhelming situations.

  • Establish accountability.
  • Ask for help.
  • Seek wisdom. 

These three tips can be summed up with “get a financial coach!” A financial coach will hold you accountable to key decisions you need to make. They will also provide helpful encouragement that will help you endure to the finish.

Remember…YOU CAN DO THIS!

I’m Stuck! Help! Part 3

This is a series written for those who are struggling mightily with their finances and tough decision are being made about who will and will not be paid. It is my hope that this series will provide practical steps that can be taken to walk out of this situation and into financial freedom.

PART ONE  Evaluate
Why are you stuck? It’s important to understand why and evaluate the root cause of the situation.

PART TWO  Plan!
Planned money accomplishes far more than unplanned money. There is so much power in a written spending plan – a budget!

PART THREE  Prioritize
When you have an extremely limited amount of funds, it is important to remember the priorities. I have met a lot of people who have been tricked, guilted and shamed by credit card companies into paying the credit card bill instead of their house payment.

Here is my suggested order of priority for spending when there just is not enough to pay everything.

  1. Housing – Must take care of the mortgage and utilities first. Now if the mortgage payment has run out of control and it is 60% of one’s take home pay, then it is high time that the house be sold or income be tripled within a couple of months.
  2. Food/Prescription Medicine – I am going to eat before one single bill is paid! We must be able to eat. I am not talking about Olive Garden or fast food. I am talking about groceries bought with coupons and attention to frugality.
  3. Transportation – If transportation is required to produce income, then it is imperative that the vehicle payments, insurance, taxes, gasoline and maintenance be funded.
  4. Back Taxes – Owing the government back taxes is a terrible thing, and it must be addressed. I would rather owe anyone besides owing Uncle Sam!
  5. Secured Debts – If there is additional money remaining after housing, food, and transportation are taken care of, it is time to pay the secured debt payments. This is debt where the lender can come take something – like a car, boat, motorcycle, tractor, etc. If the lender repossesses the item, they will sell it at a wholesale auction and come after you for the difference.
  6. Family & Friends Debts – If you owe family and friends and you still have some money left, it is essential to pay on debts owed to family and friends. Unpaid debts to family and friends have been the cause of untold relationship issues since time began. Avoid this!
  7. Unsecured Debts – It is time to address the unsecured debts – credit cards, student loans, signature loans, etc. One thing to note is that unsecured debt holders will be screaming and hollering the loudest because there is nothing they can come take from you. As a result, they will try to play upon your emotions to get you to pay them before you pay anyone else. And it works! I have met with a lot of people who have kept their credit cards current while letting the house payment fall behind. Not good!

Who is the manager of YOUR money? It should be YOU! Not your creditors! YOU choose where it goes.

Go back to your spending plan you have prepared and ensure your priorities are in order.

Even if you don’t have enough money to pay all of the bills, go ahead and put all of the bills into your spending plan. This is a KEY step! You need to clearly understand how large the gap is between you INCOME and your OUTGO. We will address this in Part Four.

I’m Stuck! Help! Part 2

This is a series written for those who are struggling mightily with their finances and tough decision are being made about who will and will not be paid. It is my hope that this series will provide practical steps that can be taken to walk out of this situation and into financial freedom.

PART ONE  Evaluate
It’s extremely important to understand why you are stuck.

PART TWO  Plan!
Now that you have identified the reasons you are stuck, it is time to prepare a written spending plan. That’s right, a budget.

Here is something I have learned – planned money accomplishes far more than unplanned money. There is so much power in a written spending plan! I never realized where all of my money was going until the day I began planning my spending.

A spending plan will ensure you know the actual situation instead of the imagined situation.

I know what you have is limited, and in some cases, very limited. It is imperative, however, that you plan what you do have.

There are free tools available on the I Was Broke. Now I’m Not. website (just click on TOOLS). 

Monthly Budget Form (Excel) If you are paid once per month, this is the budget tool for you.

Weekly Budget Form (Excel) If you are paid multiple times per month (twice/month, bi-weekly, bi-monthly, weekly, etc), this is the budget tool for you.

My newly revised book, I Was Broke. Now I’m Not., has four chapters devoted specifically to teaching you how to use a budget to thrive financially.

I’m Stuck! Help! Part 1

Have you ever been stuck financially? I mean STUCK. Do you feel so stuck that you can’t gain traction to get control of your finances?

Perhaps you have no income because you have lost your job. Maybe you’re in college and accumulating debt to pay for it. Perhaps your spouse spends money faster than you can make it. Or maybe you’re just lost when it comes to managing money. It might even be the fact that you have so much unsecured debt that you feel completely helpless. Maybe you’re disabled, and can’t figure out what to do to earn more money.

This series is written for those who are struggling with their finances. You might even be making tough decisions about what will and will not be paid this month. It is my hope to provide practical steps you can take to walk out of this situation and into a fully funded life.

Let’s get started on the journey and get unstuck!

PART ONE  Evaluate
It is extremely important to understand why you are stuck. You must ask yourself challenging questions. There are some situations that have definite ends to them (college) and other situations that may continue on indefinitely (job loss, disability, and overwhelming debt).

When I’m coaching a person who says, “Help! I can not pay my bills!” my immediate response is to evaluate the root cause of their situation. I ask questions to grasp the real issues. Here are some of the questions I ask to help move you along in your financial journey. These are not in any particular order.

“What was the cause of this situation?” Is your financial situation the result of a long series of poor financial decisions or the result of a catastrophic event like a job loss, medical issue without insurance, death of income provider, etc.? Can you point to a particular poor financial decision that has led to your financial challenges?
“Is this an INCOME or an OUTGO issue?” Prepare a budget to help you more clearly determine the answer to this question. Identify where your money is going using your credit card and bank statements. As you identify you monthly income and total expenses from the previous month, it is important to challenge each expense with the question, “Was this expense absolutely necessary?” While most people in financial challenges believe their issue is an income problem, I’ve learned from experience that in most cases, it is an OUTGO issue.
“What are the required debt payments?” As you identify all of your debt payments, determine if each one is unsecured revolving debt (credit cards) or installment debt on an asset (car, boat, motorcycle, etc)?

As you identify why you are stuck, write the reasons down on paper.

Do you have other questions that you would add to this list?

4 Budgeting Steps for Irregular Income – Step 4

This series of post has been focused on how to manage your budget when it is powered by irregular income. It is my goal to help you eliminate the feast/famine lifestyle (especially the famine part!!). Before we focus on today’s step, let’s review the previous steps.

STEP ONE  Recognize it!
To avoid living the feast/famine lifestyle, you need to recognize that you are earning irregular income.

STEP TWO  Determine monthly  expenses
It is important to understand how much income is necessary each month to ensure that the household operates smoothly and free from the feast/famine lifestyle.

STEP THREE  Save up at least three months worth of expenses
This is your buffer that absorbs the wild patterns of your customers! It allows you to live life smoothly without the feast/famine episodes!

STEP FOUR  Become personally debt-free and operate your business debt-free
What are the advantages of operating a business debt-free?

  1. Monthly expense load drops! there are no interest payments to make!
  2. Your business can absorb dips in revenue much more effectively. Again, there are no interest payments to absorb!
  3. Breathing room. It is amazing how much stress a pile of debt brings on.
  4. When you spend your own real money, you will manage it better. I don’t know why it is, but if I am spending someone else’s money (i.e. the banks) I am much more susceptible to make a riskier decision! When I am spending my money, I am much more likely to do thorough due diligence before doing a deal!

Interested in learning more about irregular, seasonal and cyclical income? Check out my newly revised book, I Was Broke. Now I’m Not. Just click HERE!

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