debt

Money Management Tips For Your Finances

Money Management Tips For Your Finances

Money management for your financial dreams

Money management is so much more than a few simple math equations and then you’re done. Math does play a part in money management but also does discipline and emotion and goal setting. The simple rule of money management is to spend less money than you bring home and to invest the leftover money wisely. If everyone lived by this simple rule then there would be no financial issues in families.

I remember when I was young (a long time ago) some of the greatest advice that I received was, take $20.00 a week and put it into some investment that compounded interest and forget about it till you’re ready to retire. At the time I thought wow $20.00 is a lot of money, this is money that I play with I cannot do that. To this day I kick myself in the rear-end for not taking that advice to heart. If I would have followed this simple piece of knowledge at the time I would have over $50,000 plus interest in my nest egg.

Of course I was a lot like other young people in my generation, I did not listen to wise old men and I took every penny I made and wasted it on foolish items. Today I wish I would have listened to people that were wiser than I was at the time and not have followed my emotions and wasted my hard earned money on foolish items.

The past is the past and I need to only look at the future now since I am fifty plus years old and I want to retire in ten years.


Obstacles get in our way.

About twelve years ago I had a major setback in my financial situation that was a wake-up call for me. My wife at the time wanted to have a new life and asked me for a divorce. Going through a divorce is a life and financial changing experience that I wish on no one. If you are not psychologically, emotionally and financially prepared then it will be like getting hit over the head with a baseball bat. Divorce can put you in such a financial tailspin that it can ruin your life for many years.

This was a difficult time for me, but God had other plans for my life and he took me out of that situation and today I am able to help others that are in that same boat that I was in. Since that life changing curve ball that I was given, today I am writing and teaching others how to reset you’re financial goals and take steps to get you back on the right path to financial freedom. Let’s now take a look at a couple of steps that you can start with to get you started.

Be Content.

First you need to understand that you will not find happiness in materialism and spending money on things you do not need. You must stop believing that money buys happiness. I remember the days of bringing home $25,000 a year and how I wished I could bring home $50,000 a year, I would so much happier. Well when I did hit that goal of making $50,000 I was no happier than when I brought home $25,000.

 

You need to learn to be happy with what you are given each day, when you make more money and you are not content you will not find happiness. There are no shortcuts and secrets to be financially set. What you need to do is learn how to mentally be happy with what has been given to you and learn to live within your means.

Learn to say no.

Learn to say no, every parent has problems with saying no to their kids, especially when it comes to purchasing back to school items and when it comes to the holidays. Right now is the time of year when families are running around and purchasing items for their kids to go back to school and I am hearing horror stories of families spending hundreds of dollars for new clothes and equipment like tablets, computers and new cell phones to go back to school with This is absolutely crazy. There is no need to purchase these items and go deeper in debt just to make your kids happy. You need to learn to say no, our parents did and we survived and so will your kids.

And It is not just kids that we need to be saying no too, it is us adults also. Many of us want to purchase new adult toys even when there is nothing wrong with what we have now. We need to be looking at cutting expenses and not getting deeper into debt just because we want something new. If you have the cash and you really feel the need to purchase that item them go for it, but do not purchase the item on a credit card or use money that will be going for another bill, only purchase the item if you have spare money laying around.

Use technology to your financial advantage.

When it comes to saving for your retirement use technology to help you stay on track. Computerize you savings and retirement accounts, when you set up monthly payments to come out of your check to go directly into a 401k account or some other savings account you will not miss the money since you don’t see it come from your paycheck. I set my retirement account to come directly out of my earnings and I was amazed at how quickly that account grew over time.

Computerize your spending habits in order to keep track of where you are spending money. Using software like bill pay will help identify where you are spending your money. At the end of the month take your statement and look it over to see where you have wasted money. Take for example, how many times did you go to Starbucks to purchase coffee, how many times did you purchase fast food during the month, and etc. Software like bill pay can shine a light on where you may be wasting money.

Take action now!

Nobody cares about your money and your future more that you do, so don’t procrastinate on getting your retirement started or work to get out of debt. Another thing is; don’t make excuses and blame other for your financial situation. Your financial condition may not be entirely your fault, but stop complaining and fix your situation now. You have the brains and no-how, take your expertise and fix what needs fixing with your finances.

Passion

Make money management a passion, when you do this it will give you the motivation to keep working harder to save and get out of debt. A wise person once said “”I like entrepreneurs who decided to solve a pain point that affected them personally,” says Vasu Kulkarni, Courtside Ventures. “The conviction to solve a problem is always stronger when you are passionate about it, and generally that tends to stem from issues that you can relate to personally.”

If you goal is to build for your retirement or get you and your family out of debt, take time right now to light the passion in your home with your family to be as passionate about this as you are. The larger the support group you have the stronger you will be to break your goal.

 

Posted by Tom in Finance, 0 comments
11 Ways To Save Money

11 Ways To Save Money

11 Ways for Saving Money

Are you new at budgeting your finances? Do you really need to start saving up for a new vehicle, plan a vacation, save for retirement, pay on some medical bills? Here are some thoughts of how you can say for these items.

1. Make a total of all your monthly bills. Monthly bills are ones that occur every month, usually on the same day. Insurances, house payments, cell phone bills, and car/school loans are all considered routine monthly expenses. Don’t include things like grocery shopping, clothing, or eating out, these are flexible and can change from month to month.

2. Make a list of net income after taxes you receive each month. This would also include rental income, child support, interest you receive from investment, and etc.

3. Subtract your monthly bills from your income and what is left over is your true free income.

4. Take a look at your credit cards. Put your highest interest cards at the top of the list to pay off first. We need to get rid of these first and only keep the one with the lowest interest rate in your wallet. The ones in your wallet should only be used for emergencies only, like car repairs, medical emergencies, and home repairs that are a must!

5. Think about all the money you need to spend to SURVIVE. Not on dinners out, new toys, or clothing. Things you need to keep your family fed and healthy. Subtract this money from your free income, it should only be half or less of your free income money.

6. Use the rest of your free income to start paying down your credit cards. If you just pay the minimum each month you will not see your credit card debt drop. You must make a diligent effort to pay more than the minimum.

7. Repeat these steps until your credit card debt is under control. This doesn’t mean having absolutely no debt, but I would recommend an amount you can pay off in 3 months or less.

8. Congratulations on making it to step eight and getting your debt somewhat under control! Now let’s start saving. If you like to see what you need to save to retire, here is a free retirement calculator for helping figure our what you may need. Retirement Calculator

9. If your company has a 401k and they offer any sort of match (any percentage), start the 401k. This is free money that your company is giving you, if you do not take advantage of this you are losing out.

10. With you car loans, mortgage companies, and credit cards you may want to try and connect with the lenders and ask if they would consider lowering your interest rates. Even if you only get one yes, it is better than not asking at all and continue to pay high interest rates.

11. If your employer directly deposits money into your bank account, set up an extra account to add money into. Since you don’t ever see it, you won’t think about it. If you deposit your checks yourself, take advantage of a savings account or do what I did and set up an account at another bank and then on my bill pay each month I automatically transfer funds from my working account to my other bank account, what do they say, out of sight out of mind.

As hard as it sounds, try not to indulge. Cut back your cable package, go out to eat once a month, and instead of seeing movies on the big screen with your entire family, wait until you can rent the movie. Chances are you can rent movies through red box for less than $2.00! You can save a lot of money if you just put some effort into it. Our family had to make adjustments, but now we can sleep at night and don’t have get scared if the phone rings thinking what collection agency is after me now.

Posted by Tom in Budgeting
7 Items That Can Ruin Your Credit

7 Items That Can Ruin Your Credit

7 Easy Ways To Ruin Your Credit

Some the biggest financial mistakes I made were when I was in my 20’s and 30’ that set me on the road to financial disaster. I was young and dumb and I had a good paying job, credit was no problem. I was receiving credit cards daily in the mail so it was no big deal filling my wallet with these cards. If I wanted something I would go out and purchase it or if I did not have the cash I had the plastic card to pay for the item.

After I matured and received a job handling loans for lenders I got a great education in how credit and loans worked. There are many items that will affect your credit, there are a few things that can have a positive effect on your credit score but there many things that have a negative effect and many things that you have no control over.

Having Good Credit

In today’s world your credit is so important. I am an employer for a large service based company and one of the hiring criteria is having good credit. We will take an application that looks good and if the person has bad credit we will not hire the person. This is just one issue that can hinder your life if you have bad credit. Many things in life revolve around your credit score, one would be amazed at how your life is judge by just your credit score.

There are many things that affect your credit score. Let’s take a little walk down the path and take a look at a few of these simple things that will ruin your life when it comes to your credit score.

Too many credit cards

Everybody is giving away credit cards, these cards are a huge money maker for companies. The last time I was at my dentist and took my dog to the vet they both were trying to get me to take out a credit card with them. Any department store, home improvement store, airlines you fly on and etc have credit cards that they want you to sign up for. Before you sign up for these cards read all the fine print on the contracts. Also take some time and do some research, some of these cards offer some great point reward programs.

Remember that every card you apply for is a loan program. When you apply for these cards your credit report is run and it is scrutinized which affects your credit score. Every ding against your credit drives down your credit score.

Pay your credit card payment on time

While we are on the subject of credit cards remember you MUST pay your credit card payment on time. Do not miss a payment even if it is a one off and say I will pay it next month. If you do this you will be charged a expensive late fee, plus you will rack up more interest. But what is worse is that your credit score will take a major hit and it will show all the times that you made late payments.

Read your email and open all your mail

This just happened last night to my wife and I, my wife was scanning her email and found that our cell phone invoice was due the These companies are saving on postage and administrative fees by sending the invoices by email. If you were to be late with your cell phone bill or utility payments this may show up on credit score and possibly lower your score. Make sure you read all your mail and catch those bills that come in a plain white envelope, read all your email and junk email because with technology these days your bill may be sitting in your email box.

Cosigning for a loan

I highly frown at people that co-sign for loans. First if the person is needing a loan cosigned for then they probably have bad credit for not paying their bills on time. If your child is needing a loan for a car and they have no money for a large down payment then I would wait and make them save their money until they have a good enough down payment for a car loan where they do not need me to cosign for it. I have two daughters that I have turned down cosigning for loans for them, they both have bad credit and it is due to the fact that they cannot manage their finances. It may sound bad, but I am not going to ruin my credit because they cannot manage what they have.

Getting buried in debt

It is getting easy again to finance just about anything. Home and car loans are flying out the door again and money is being lent to people are such cheap rates. Although you may qualify for a home loan and it is not in your budget don’t go out and purchase a home that you know will not fit into your monthly budget. If your debt to income ratio are not inline this will affect your credit very negatively. This negative score will stay with you until you have paid down some of the debt and get your income to debt ratio straightened out.

Large ticket purchases

If you are in the process of purchasing a home while the loan is being processed by the lending institution do not purchase anything on credit until you have closed on the home. Many people while purchasing a home will go and purchase all new furniture and supplies for the home on credit which will have a terrible effect on your credit score. If the hit on your credit score is bad enough you may lose out on the loan for the home. Be extremely careful if you are having a large loan processed, there are many things that can affect the loan, do not add to it with materialistic purchases.

 

Posted by Tom in Finance
Mistakes To Avoid When Trying To Get Out Of Debt

Mistakes To Avoid When Trying To Get Out Of Debt

Getting out of debt

Everyone has horror stories when it comes to debt, for me paying off debt is like losing weight. We all have great enthusiasm to get out of debt and to lose weight but most of us never follow through and succeed at either. We all make mistakes, and I have my story book full of mistakes that I made while trying to get out of debt. The one good thing about mistakes is that you learn some valuable lessons that you can share with others so they do not get into the same trap.

Mistake number one

This mistake is always number one with everyone I talk to about getting out of debt, and that is having a plan. Just like losing weight you must have a plan and you must stick to the plan. If you have a spouse both you and your spouse need to follow the plan and don’t deviate from it.

Mistake number two

Do not try to get out of debt without goals or have goals that are impossible to accomplish. Here is what you will want to do instead. First put together a plan with your spouse you both need to establish some creative goals for the family. First you need to setup small goals. These goals need to be something that you feel you can accomplish in a month or two. Then setup some medium goals that might take six to eight months to accomplish and then you need to setup some long range goals that will take one to five years to accomplish. An example of long range goals would be like paying off your mortgage early.

Mistake number three

Do not try to get out of debt without a solid documented budget in place. Most people hate budgeting, but this is a must when you’re trying to pay off debt and become debt free. Again just like losing weight, if you do not plan and setup meals correctly you will not lose the weight. Same with budgeting, if you do not have a detailed budget then you will spend money on items that don’t fit into a budget category and you will find yourself getting deeper into debt. You must have a budget no question about it.

Mistake number four

This mistake I really kick myself over, I took my bonus and raise from work and wasted the money on foolishness instead of paying down my debt. When coming into money either by work or other means you must apply this extra income toward your debt and not increase your spending lifestyle. Take the extra money and apply it towards your mortgage principle or your principle on your high interest credit cards. By doing this it will drive down your debt ratio.

Mistake number five

I kept charging on my high interest credit cards even though I knew I shouldn’t. Some families make the mistake of paying their bills with their credit cards in order to earn points from the credit card companies. This is fine if you are dedicated in paying off the credit cards when the bill comes do. I find a lot of people take the spare cash that they have in their account because they paid their bills with a credit card and they blow the cash. When the credit card bill comes in they do not have any money left to pay off the credit card then you start racking up high interest charges and getting yourself deeper into debt. Be extremely careful of falling into this trap with credit card points.

Mistake number six

I did not setup an emergency fund, this was a huge mistake that took me years to recover from. Every household needs to have an emergency fund for those unexpected home or car repairs or life changing disasters. A family should have six months’ salary set aside in a special account that you do not touch. One never know when disaster is going to hit, disaster could be illness, getting fired, your main source of transportation dies, or you have a major home repair that has to be done. Without an emergency fund you could find yourself in a world of hurt. Start today if you do not have one and keep building to it.

Mistake number seven

Do not keep the same lifestyle you are living today. I tried this and found myself not making any headway in getting out of debt. You must change your lifestyle and cut foolish spending. There are many ways to do this, here are just a few that I found I had to change. Stop going out to eat, wash your car at home instead of spending ten plus dollars taking it to a car wash, drink your coffee at home or work instead of stopping at expensive coffee shops. The list can go but I think you get the picture.

Conclusion

As you read this you will see that most of this is common sense items and mistakes. I just learnt over the years of what to do and what not to do. If someone would have shared these with me I probably would not have stayed over my head in debt as long as I did.

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Posted by Tom in Budgeting
Ideas To Help Pay Off Your Mortgage Early

Ideas To Help Pay Off Your Mortgage Early

Mortgage and automobile debt

For many people that are trying to homestead the one problem that many people have is debt. Two of the largest debt’s that families have hanging over their heads are mortgage debt and automobile financing. Today let’s take a look at ways to help pay off your mortgage and get this number one debt off your back. In future post we will talk about ways to pay off your auto loans and work on ways to be debt free.

Tip number one

Automate an extra payment to your principle along with your regular monthly mortgage payment. What I mean by this is when making your regular monthly mortgage payment add an extra $25 a month towards your mortgage principle. The reason I pick $25 a month is this is a nice low dollar amount that I am sure most people can find just by cutting back a few bad habits. If you set this up to automatically come out of your account and go straight to your principle you more than likely will not even notice the money being gone. After you are comfortable with $25 dollars a month then step out and increase it to $50 dollars a month. You will not believe how many years you will cut off your mortgage by paying the principle down monthly with just a few added dollars.

Tip number two

Many Americans are paid on a bi-weekly paycheck principle. If you were to set-up your mortgage payment to be paid bi-weekly instead of monthly. By paying half of your monthly mortgage payment ever two weeks you will shave off many years off the term of your mortgage. The reason for this is when you pay bi-weekly you will be making an additional monthly mortgage payment which will go directly towards your principle thus reducing the loan amount of the mortgage and saving you years of mortgage payments.

Tip number three

The whole idea of paying off your mortgage early is by cutting years off of the term of your loan and the easiest way to do this is reduce the principle. What my family and I have done is to deposit large chunks of money periodically towards the principle. Some ways that we have come up with these deposits is by thinking outside the box. A couple ways that we came up with the extra money to put towards the principle was to have a garage sale twice a year. Instead of taking the profits from the sale we took the money and put it towards the principle on the mortgage. Another suggestion that we did was to take our tax return and put this towards the principle. Whatever way you can find to take extra money and apply it towards the principle, do it! You will save thousands of dollars in interest by lowering the principle of your mortgage.

Tip number four

Most people have no clue about tip number four.  I love tip number four since we use credit cards that offers points for all our purchases. Disclaimer – we pay off the credit card at the end of the month so we do not add up debt.

Many people like us use our credit cards to pay for everything in order earn points for vacations or other frilly things. But there are some cards that you can have the points convert automatically to mortgage interest payments. So every time use this type of credit card you earn points which automatically get converted over to paying down your mortgage principle. This is a great tool that takes the guess work out of paying off your mortgage early.

Tip number five

Pretty much everybody can think of a way to adjust your lifestyle in order to save money to put towards your mortgage principle but tip number five is near and dear to my heart which is starting a side income. Making money on the side either by having a hobby or offering a service for people that you can do in your spare time is very rewarding and there is no limit how much money you can earn. There are many ways to earn extra income without taking on a second job that you may hate and regret. Just keep your eye on the goal and that is to pay off your mortgage and get out of debt in order to free up your income in order to be a happy homesteader.

Here are some resources for guidance on earning extra income

 

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Posted by Tom in Budgeting, Homestead