Debt Dunk

I have written in the past on how it is so important to be as debt free as possible and be prepared for those bumps in the road of life. Well since those post, I have built a beautiful new house. In the process, I took a 15 years mortgage and added extra payments when I can. If you followed my other post, you know that I lived in old farm house which was in rough shape. This being said, I lived there until my wife and I could afford a nice house without putting our financial security on the line. I live what I write and I prepared for any possibility.

Well guess what? As life happens, we moved in our nice house, both of us had good jobs and the extra payments were tacking away at the mortgage. We was living the dream and feeling the joy. That was until the rug got pulled out from under us. I worked a ten month job during the school year and on the second day of the school year, I got the dreaded call. My job was being cut and I was being laid off in one of the worse job markets ever. I worked for a non profit and we knew it could be possible at some point but not quite this quick.

This could have wiped us out of we had bought our new house before we got our financial house in order. However, we are OK. I paid off almost everything we owed prior to buying the house. I prepared a budget that would allow us to live on one salary if needed. When my wife’s car was demolished in a car wreak, we paid cash for a used mini-van. The only debt we have is my student loan and the new mortgage. I was able to sell my old farmhouse with owner finance so we have a little income from that coming in. Everything else we pay cash for. Would I like to have another good paying job? Yes, that would be great. Before the lay off, we were on track to have our house paid off in 7 years. However, we are still living good. We have a nice house, reliable (not fancy) automobiles, and food on the table. We have a little entertainment money and good family and friends. This could not have been possible without one thing!

Getting your financial house in order is the biggest key to surviving a disaster. Do you really need a brand new car with big payments? Do you need a new house or can you wait until you can afford it? Is that credit really a need or is it a stone weighing you down? How many homeless people have you personal heard about because of a sudden job loss? Are you prepared?

I have done some stupid things with money in the past. I tell everyone that if I knew then what I know now, I would be much better off. We can not turn back time, forget about the past! It is time for you to live in the now and this is where you start. If you are overwhelmed and think there is no way out, there is! You need to first sit down and do a budget. It can be very basic but you need to know where your money is going. Most people have learned that we deserve the good life and we deserve it now. You know, we do deserve it, however; we need to be able to afford it first.

Start right now by sitting down and looking at what comes in and what goes out. Food, shelter, transportation, power, and heat are first out. Then you need to see what is left and start paying down your debt. If you can’t afford that big car payment, you should not have that car. Buy a beater until you can upgrade. Cars and trucks are what of the biggest traps of buying new. They appreciate the minute you drive off the lot and lose most of the value with in two years. I drive an eleven year old SUV. It gets me from point A to point B. Is it beautiful? Nope, it has rust, a dent, A/C doesn’t work, and it squeaks like crazy. Would I like a brand new truck? Of course I would but not at the cost of the stress involved in the extra payments and the fear of financial ruin.

Look at your life, see where you have done stupid things with money and start fixing it. You are not alone, millions of people share your fate. Does that make you feel better? I hope not! I want you to be above that. I want you to take hold of your finances and rise above. Start now and start with a basic budget. I am here to answer any questions if you need help. I am still fixing one mistake; a student loan. However, the others are gone and a valuable lesson was learned. I paid all my debt, screwed no one including the credit card blood suckers and I am in a position to survive a major life downturn. My hope is that you too can get in that position.

Feel free to leave your comments. If you really want advice personally geared to your life, please use the contact form and I will get back to you to answer any of your questions. The time is now, prepare, fix, and live a more fulfilling life!

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.

The economy is tough and for a while I have been trying to find a source of increasing my income. My current job is basically per Diem or when needed. I have not had any work for about a month. The good news is, my job just picked up to the point that I will have a descent salary for at least a few months. This brings me to a good point when paying off debt.

I have talked about the two equations of a budget. One is the income side and the other is is the expense side. If expense out weighs the income, you are in trouble and either have to cut expenses or increase income. In a weak economy it is harder but not impossible to increase your income.

The most simplest form of increasing your income is to get a better job with higher pay. This is easy if you have the skills and are in a an area where the job market is booming. I for one am not in that type of area. The next method is to take on an additional job. You could deliver pizza, wait tables, work fast food, or any other job that will boost your income. This is not always desired but you have to look that it is to get rid of your debt so it should only be short term. It will boost your debt paying and get you out of debt faster.

If either changing jobs or getting a better job is not an option, it is time to look at alternative ways to make extra money. With the Internet, it is easier than ever. Many people have found a lot of stuff in their basement, attic, or garage and have made a few thousand dollars selling them on eBay. You could also have a yard sale or find a resale shop that will buy the stuff or sell it on consignment. This is short term income but it could be a quick reduction in your debt.

Once you have done the above, you can look at the various at home ways of earning money. If you have good typing skills, there are doctor offices and medical companies that pay you to do medical related transcripts and billing. If you are a good writer, you could find freelance jobs on the Internet to earn extra income. Some companies people to do customer service work from home. These are just a few suggestions to up your income at home, there are many more. Just be careful not to fall for scams and never pay someone to work for them.

One way my wife and I use to earn extra money was to do mystery shops. Many of these companies reimburse you to eat at nice restaurants and also throw in a few dollars to cover your expenses. Though this is not big cash, it does give you free meals, and products with just a little bit of time. When we lived in a bigger area, we were going out once a week to steak houses and having $40 meals and we got reimbursed for filling out a survey about how the place looked and how the staff performed. It sure did help with the budget. As I advised for the home work stuff, never pay to do these types of shops. If you have pay a fee, it is scam and all you are buying is a list of sites you can find on your own.

The final way I will mention is bartering for things you need. Even though this is not cash, you will get something of value which you would buy otherwise with your income. If someone else has something you need, find something that you can do to get it for free. I have exchanged many things before to get things I need. These could be skill work or physical products. Anything you can get for free that is moral and not against any law is a good thing.

The ways I mention here are just suggestions to get your mind working. Increasing your income is a great way to speed up your debt payoff. However, be aware that it will not help if you continue to use credit cards and just increase your expenses to meet your new income. The main key is to spend less than you make and pay off your debt as soon as you can.

Have a great way that you have increased your income? Please share by leasing a comment to help or inspire others.

Many so called finance experts recommend that you should carry a mortgage because you will have a write off for your taxes. This is bad advice! I am not saying you should never have a mortgage. Most people at some point or another have a mortgage. What I am saying is that if you can afford to pay off the home with cash, you should not continue to carry a mortgage.

If you itemize, mortgages could lower your taxes. However, that amount will be a small part of what you end up paying for interest. So you are paying $10 to save $3. This so called logic is not smart or even financially responsible. If you have to carry a mortgage, by all means take the tax write-off. However, if you can pay it off, do so as soon as possible.

The amount of people in the world who are waiting to buy a home until they can pay cash is growing. If you can do so, you will be a step ahead of the so called normal family. If you can’t save to pay cash, make sure you are otherwise debt free and that you have saved at least twenty to twenty-five percent to place a down payment and do not take a mortgage for longer than 15 years. .

Being a smart home owner will fit into the rest of your plan as being the CEO of your own personal finances. Though mortgages are acceptable debt when required, they should also be paid off as soon as possible.

There are many people who have been burned financially and still never learn from their mistakes. Credit card companies are not your friends no matter how nice they are. These people do not lend you money just because they like you. It is not an act of kindness. You will pay and pay and pay! Why then do people repeat the same money mistakes over and over? The answer is, somewhere along the line, you were taught stupid people tricks.

Society teaches us that if we want something, first we have to borrow money. If we ever want to be a success, we have to establish our credit. Even people who have gone the ultimate financial crisis, bankruptcy, start right away thinking of ways to rebuild their credit. Believe it or not, there are people who do not use credit. Take a moment and sit down, because yes, there are debt free and cash paying people in the world.

Remember the stupid tricks you have seen people teach their dog? I have seen dogs do just about anything to please their master and get a small treat. Well, I hate to be the one to break it to you but you are like a dog being trained by a society that believes you can not live without going into debt. It is the number one stupid people trick taught to most people as they grow up. If you want to get out and stay out of debt, you need to be reprogrammed. Debt is not a way of life, it is a roadblock in the road to freedom.

I know now you are thinking. I need a new car, a new house, or something else. The one and only debt I now see as ever legit is a home mortgage. That debt should only be obtained if and only if you are debt free and you have an emergency fund in place. You also must have at least 20-25% down, take a loan for no more than fifteen years, and pay it off as quickly as possible.

Yes, I want a $300,000 house with all the amenities! It would be great and I would love the feel of inviting people into my home. Now back to reality. I live in an old farm house that at times I feel like calling in the bulldozer. I am planning on someday getting a nicer house but reality is, I can not afford it until I become debt free and have a savings and a good down payment. Am I deprived? No, I live in my house and enjoy what I have. Honestly, we could go out tomorrow and get the new mortgage and worry later how to pay for it. That is what society has taught us. However, I no longer perform that stupid people trick.

Break out of your programing and take control of your own life. You are now the CEO of your personal finances! Bank of America is not your buddy and banks are used to manage your cash not to finance your fancy toys. Be smart and you could find yourself richer than you ever thought possible.

One key point I have spoken of before and I am a big proponent of is doing a budget. When you do a budget, your eyes become wide open on how much money you really have. Sometimes this is good news and other times it is not. For most though, it is like finding money you never knew you had.

There are many ways to find money that you thought you didn’t have. First, take a look at what you are spending your money on. Eating at restaurants and fast food places can be one of the biggest expenses in many budgets. I would like to say I never eat out but that would be a lie. There are ways to cheapen the bill though. Buying a soda or other beverage now can cost up from $1.25 to $3.00. This is not good for your budget or your waistline. Ask for ice water and you could save $5-$15 a week on average. That adds up to between $260 and $780 a year. Not a bad little find is it?

What about desert? Do you eat desert at most meals out? They can range from $1.25 up to $6 or more. Some deserts cost as much as the meal. Say you only have desert out three times a week. That is between $195 and $936 a year. Now that is nothing to sneeze at. try to eliminate the deserts or splitting with a partner and you could see you waist line shrink and your wallet grow. These are just a couple of examples that you can save from eating out. There are so many that you could find that will help you find money.

Alright, maybe you are more disciplined than I am. Maybe you do not eat out at all or very rarely. Let’s take a look at other ways to save. How many of you still pay your bills by mailing a check each month? If you only send out seven bills a month, you overspend by $30.24 a year plus the extra costs for buying checks. If you pay bills online, it is easier, cheaper, and you can pay instantly. Better yet, automate the ones you can and save more time and leave no chance of forgetting a bill.

So are you seeing a trend in how the small things add up? Look at your utility bills and cable bills. Can you cut out extra features you don’t need? The phone company is one who loves to add the extra charges. Make sure you are not paying for features or services you do not need. Do you have HBO or Showtime? How often do you really watch them? If you do not use, ditch them and save $100 or more a year. Does your cable or satellite company offer smaller packages? Sometimes they also offer discounts for loyal customers. It does not hurt to ask.

When trying to become debt free, you need to reevaluate everything in your life and see of it can be cut, eliminated, or reduced. Baby steps in reducing your expenses can be like finding money you never knew you had. Be a pauper now and you will live like a king later.

The holidays are winding down and the Christmas season is over. Now as the New year emerges, I have a question to my readers. Do you have financial regrets over you holiday spending? Many people spent reasonably for the holidays. Some did so because they are tired of being indebted to the credit moguls. Many more did so because they could not get any more credit or they feared the current economic situation.

Hopefully, you are one of the ones who are sick and tired of owing credit card companies your paycheck. If you over spent and now are overwhelmed, it is time to slap yourself a little, admit to your mistakes, and take the bull by the horn. Make 2009 the year you bust loose from the credit trap that you were lead to believe was the normal way of life. Wake up call! You do not have to live in debt to live. By delaying pleasure now, you can be debt free and live a whole new life where you are in control of your personal finances and not the other way around.

If you are holiday blues because of overspending, I am here to tell you that I have been there and done that. It is time to step up and work like a tornado to pay off those debts and swear off on living beyond your paycheck. Sit down and write out a budget and start paying off debts from smallest to largest. Cut everything out that is not a need and see where you stand. You should spend everything you make on paper. Starbucks is out, home cooking is in. You can do it and I am here to guide you. If you have a question, I am here to help. If you need a little guidance, ask and i will do my best to answer. I am still fighting the debt monster and together, we can send the leaches who feed on society packing.

Happy New Year and may 2009 be the year you take your money back and become the CEO of your personal finances.

Debt free does not mean dishonest. You made the mistakes and it is your job to fix it. If you honestly borrowed the money, you should do everything you can to pay it back. However, there are times that it may not be possible at the moment so you need to prioritize your finances.

The first key is to take care of your basic needs. These include eating, shelter, transportation, and household needs. I am talking about needs! This does not include the top brand steak, cigarettes, and other wants. You should feed you and your family on what you can afford. If you are deep in debt, you can not afford New York Strip and other more luxury items. Once you cover your basic needs, it is then time to tackle your debt.

There are many schools of thought when it comes to debt. The best plan I have found is Dave Ramsey’s Baby Steps. You save up a $1000 for emergencies and then start paying off debt from smallest to largest while paying minimum on the rest. If you do not have enough income left over to pay even minimum, you need to find ways to earn extra money or stop paying.

If your income is too low at the time, I would pay the secured debts first and stop paying the credit cards and other unsecured until you can get your income up or sell something to free up money. You can come back later and settle with the credit card companies. If you can afford, pay everyone now!

You need to have a clearly written budget laying out where all your money is going. Income and expenses should be equal. If you have more expenses than income, sell something, get a second job, or lower your expenses. You need to live with in your income or change something. Many people, including me, realize that you have more money than you think if you write it all down and stick to a budget.

The key is, nobody is going to fix you debt mess for you. You borrowed the money and you went into debt. It was partially the fault of the leeches who feed on society by pushing easy credit. However, you and I made our own debt bed. It is up to you to tackle it with all the energy you can muster in order to clear up and dunk all the debt. Cut up the credit cards, borrow nothing else, and pay off what you owe as quickly as possible. I am in the boat with you and I know it is tough but it can be done.

If you find this post useful, please share it with your friends and book mark it your favorite social bookmarking site. Also leave a comment and join in by sharing your own ideas or asking questions.

This blog is here strictly for one reason. I hate DEBT! It is the biggest misconception placed on society. Did I buy into it? Of course I did. I was raised on the great concept that to get credit, you have to have credit. So at age 18 I was working for Sears and applied and got my first credit card from them.

I went out and purchased a VCR and then a new television. This was great; it was instant gratification at its finest. Buy now pay later. It was the American way right? Who cares that I was paying minimum payments at 24% interest. I had the great entertainment. It only cost me $22 a month. Well I learned that at that rate. I little $1000 I borrowed would only take 111 months. Holy cow! That was almost ten years. That great TV and VCR would be all at age 28. That was a huge wake up call. It was going to cost me $2442 for that TV and VCR. Worst part was, the VCR was refurbished because when I was 18, VCR were almost $1000 new.

I paid off that credit card as fast as I could and would love to tell you that the story of my credit cards ended there. Even with my new found knowledge at 18 of interest rates, I followed the normal society and charged and borrowed. That is what normal people do right. No that is what creditors want you to believe. I learned more and more as I grew older and made tons of stupid mistakes but all that has changed and that leads me to this point.

This blog will hopefully inspire you, kick your butt a little, and educate you in the matters of debt. My mistakes and my education will hopefully save you before you make the mistakes or help you if you are sinking in debt. Feel free to jump in and be part of my journey to wipe out all debt!