Debt Dunk

How many times have you looked at your wallet and your checkbook just to say I am broke? If this has never happened to you, congratulations! For almost every else, including me, it has happened. It is not a good feeling to have no money. That is the main reason you need to be prepared for everything. Preparing means knowing where the money comes from and where the money goes.

This is the first of a two part post about the in and the outs of money. Money comes from many sources. You can earn money through a job, you can get money through investment returns, government entitlements, you can win money, inherit money, or just be given money as a gift. No matter what way you get money, you have to understand that money is never unlimited; even for Bill Gates. Understanding that mere fact will start you on the road to financial freedom.

Most people are not so lucky to get money handed to them so we work for a living and earn a paycheck. You can either work for yourself by owning your own business or you can be employed by someone else. Either way, you are still working for a paycheck. It does not matter if you earn a million dollars a year or twenty thousand dollars a year, the concept is the same. We have what we earn and that is all we have. When deciding what to spend, we need to look at our earnings and compare that to what we want to see if they match up. If they do not, you can not afford what you wanted. It is so clear but many fail to see the facts.

What to do if you want something you can not afford. You must either borrow the money (bad plan) or save up for it. The other way is to increase the money coming in. This can be done by taking on more work or selling something you already own. Yard sales and Craigslist are two great ways to sell stuff to earn extra money. However, this is limited to what you have on hand. The best way to get extra money is to get a part time job. There are many simple part time jobs that can bring in extra income. Currently, working for the Unites States Census is a flexible good paying job for many people to earn extra cash. Other jobs, include newspaper delivery, Internet business, lawn care, pizza delivery, and many more. Most of these offer flexible hours that can be arranged around your full time job.

The next option is to find a better paying fulltime job. This can be done by better educating yourself, learn new skills, or moving to an area that is better paying.

The main point is that you need to know where your money is coming from and if you want a better lifestyle, you have to increase your money coming in. Credit cards is not another source of income. Because the local car dealer will give you a loan to buy a new car, it does not mean you can afford the car. Even if you can afford the car, you have to understand that the money must come from somewhere. Increasing the money going out means you need to increase the money coming in. Once you build a realization of where money comes from, you will better be able to understand the limits of your money.

Check back soon for part two “Where does the money go?”

I have written before about Dave Ramsey and the fact that I like his program. Though I am not a huge religious person, Dave’s debt plan is solid and helps people to rid themselves of debt. I have always followed the same principles and I just needed a little reminder of being a good money manager. I have been watching Dave for a while now and my wife and I have become hitting our debt with all we can.

Since I love to learn and any new knowledge can help, we signed up for Dave Ramsey’s Financial Peace University at one of the local churches. We had our first of thirteen classes last Thursday. The program cost $100-$129 for the kit and you become a lifetime member. As a member, you can take the course as much as you want for free. It also includes access to a member only website with some of Dave’s budgeting tools and forms. You also get to meet, interact and both encourage and be encouraged by others wanting to get out of debt.

The classes consist of about an hour of watching DVDs featuring Dave Ramsey. The program is centered around his seven baby steps. Once you watch the video, there is a class discussion and homework is assigned which is geared toward getting your money in order so you know where you are and where you are going financially.

Karen and i found this class interesting and it was great to interact with others from various backgrounds. Since we have applied the basic core of Dave Ramsey and starting really budgeting in September 2007, we have paid almost $11,000 towards our debt.

All of Ramsey’s program is good old fashion common sense but it is nice to have some reminders of these things. I highly recommend this course to anyone who wants to get control of their money and become debt free. I do not believe in bull when it comes to getting out of debt. I am dedicated to provided sound information to my readers and not some scheme. There are no short cuts and I believe if you owe it, you should pay it.

I will keep you updated on my course and if you have taken the class, please feel free to share your own opinion here on the blog.

I have heard in the past where if you are prudent with your money, you will attract more money. My wife and I have noticed this since we have started to really stick to a budget. Honestly, we have always had the money coming in but now we have a set budget we can put any extra coming in can go toward debt.

We seem to be getting a lot of extra income coming from new sources that we did not have before. This makes us feel wealthier now because before we would have found things to spend it on. Being on a reasonable budget makes it easier to apply any raises and extras to debt instead of extra spending.

This is a great way to live and if you decide to follow a plan like ours, you too will see life looking better. It will look like money is coming to you instead of you seeking money. You will start to be a money magnet. As you pay off your debt, things will start to look better. You may not fit in with your free spending coworkers and friends but someday, you will be free spending with honest cash. It is no longer about keeping up with the broke people who live paycheck to paycheck. This is a new way of living that will take you to a whole new level in life.

You do not have to live as a debtor your whole life to have the things you want. Yes, you may have to skip a few fancy restaurant dinners and a few extra trips to Starbucks; however, you will have a future of anything you want if you get out and stay out of debt. Can you imagine a life where you pay yourself instead paying creditors? Life would be easier with less stress.

This can be done and as you progress, you will see what we have, money will come to you. Be prudent and smart about your finances now! Sit down now and get a budget written out. Make sure every dollar you make is written down along with all expenses. Be honest with what you need and allow a little fun. If you get on a plan and stick to it, you will stop being one of those people waiting for the paycheck to save you and then run out of money way before your next pay.

Start now no matter where you are at or how old you are. When you get done reading this, sit down by yourself if single, with your wife if married, and your whole family if you have kids and write out your budget. If you have questions or need help, I will be happy to guide you with any help I can.

How would you like to go through life with fear everyday? Waking up and going to sleep can be scary. This is not so far from reality for many people. They are burdened by their Debt. This type of fear can creep into every part of your life until all things good become bad. Many divorces are caused by debt. Families are devastated by debt. The world does not need debt.

I see a future where men, women, and children live in harmony with their money. To get to that point, we all need to look fear in the face and say you will not conquer me! I am doing it and you can too. The only things you should fear in life is those things you have no control over. Debt is not one of those things. It really is your choice to not go into debt. If you live paycheck to paycheck, debt will find you. If you take control and say enough is enough, debt will run like the coward that it is.

Have you done a budget yet? Have you stopped using your credit cards? Do you have at least a $1000 put away for an emergency? These things are important and tomorrow is not the day to do these things. Gather the whole family around you and start today by making a plan. If you are single, it is all up to you. If you are married call in the managing partner (your spouse) and together set your life on a whole new path. If you have kids, they are never too young to teach them and let them be part of the finances.

I can hear little voices of some of you reading this saying, “but Tom, you just don’t understand, we have no money to pay everything.” My answer to that is, “I have been there at one point or another.” By ignoring your personal finances, you create bigger problems in the future. It is time now to stand up and be an adult and say I can no longer live like this. Citibank is not my friend! Chase does not love me! If you say that, you will start to wonder why you are sleeping, eating, and entertaining with the enemies.

I want you to take an hour sometime the day you read this and review your finances. Then I want you to create a budget and I want you write down everything you make and everything you have in expenses. If your expenses are too high, you have two choices, increase the income or lower the expenses. You should have food, a place to call home, utilities, and a car to get you where you need to be. If you are behind on any of these things, stop everything else until you get caught up. Credit cards and unsecured debt is on the bottom of your expenses. Pay the needs first and then you can tackle the unsecured debt.

I am willing to help for free. If you think you are hopeless and need some help, I am just an email away. Just go to to the contact page and send me an email explaining what advice you need and I will do my best to help. Once you do that, come back and leave a comment to let me know you made the first step. This could be the first step in a whole new life!

Holidays can be a big strain on a budget. We all want to buy the best for are families. It is a time when money seems less important than buying gifts for everyone we know. However, it is one of the biggest times of the year to prove that you have changed your spending habits.

If you do not have the money saved up for Christmas, it is time that reality will slap you in the face. This is not the time to run to Bank of America or Capitol One. If you have to buy your kid a $20 gift instead of that $100 video game, guess what? You kid will have to learn to enjoy that $20 gift. The important thing is that you are working on getting out of debt.

My wife and I set a budget of $300 for everyone this year. This included my mother, her parents, some nieces and nephews, her two brothers, and us. We stuck pretty close to the budget except we went a little over for unexpected gifts that arose where people needed a helping hand. However, we paid cash for everything and we spent a lot of time online earning free gift cards and such to add a little extra to the mix. We also cut a little out of our regular monthly budget to cover the overage. The key factor is, we stayed with in our means and paid cash for everything.

It is not a good thing to wake up in January wondering how you are going to pay for the gifts that you bought in December. Christmas is a time for sharing, caring and giving. It is not the time to spend till you drop and sink your family’s finances. You will start to enjoy the holidays again when debt is wiped out and you will not have to struggle all year to pay for the gifts.

Unless you are a multimillionaire or the United States Government, you must live within the boundaries of what you earn. If you do not, at some point, the creditors will come knocking and you will lose sleep and the financial security you and your family needs. Once you are debt free, you can put a little more towards Christmas and holiday gifts. Until that point, spend as little as possible and stay within your budget and you will start to put the joy back in the holidays.

Merry Christmas to Your Families and may you spend your New Year cutting up credit cards and dunking your debt!