Month: January 2017

5 Bad Financial Habits You Need to Break to Get Out of Debt

5 Bad Financial Habits You Need to Break to Get Out of Debt

This year, let’s focus on becoming smarter with our money. Make this the year that you become debt free! If you are looking to come out of debt then there are some habit’s that you will have to break to achieve that goal. I know we all have our creature comforts – those habits that, for better or worse, we indulge on a daily basis. However, while a regular morning latte or a new pair of shoes might seem harmless at the moment, you should consider their effect on your bottom line. A dollar here and there adds up over time – despite your efforts in other areas, they could be one of many reasons you’re still mired in debt.

Those of us who find ourselves experiencing chronic debt problems often share similar behaviors and financial habits. If you catch them early enough, you can avoid trouble. Even if you’re already in the red, recognizing and adjusting these behaviors can help you get back on track.

Bad Habits of Perpetual Debtors

According to data compiled by the U.S Census Bureau and the Federal Reserve,the average household credit card debt in 2014 was a whopping $15,191, with Americans owing more than $854 billion to their credit card providers. It’s a set of consistent habits that sets those prone to debt apart from those who stay in the black. By watching out for the following behaviors, you might be able to stop some of those bad habits in their tracks and reassess the way you think about and approach debt.

1. Impulse Buying

Those who are constantly in debt are often the type to snatch up something whether it’s on sale or not – even if the purchase wasn’t exactly planned. However, impulse buying can lead to a series of dangerous spending behaviors:

  • Justifying Unplanned and Poor Purchasing Decisions. By justifying a “need” for an expensive bag or new gadget, you allow yourself to overspend and find reasons why it makes sense.
  • Using Your Credit Card for Impulse Purchases. Because impulse shopping is unplanned, you may not actually have the funds to cover costs. That means you’re using credit to purchase items you can’t afford.
  • Losing Track of Your Budget. Even the most diligent budgeter can mess up every now and again. Impulse spending causes you to lose sight of your budget and your financial goals. When you decide your budget is already blown, you might just keep swiping that card – and that’s a slippery slope.

While an impulse buy here or there may not leave a lasting impression on your finances, making it a habit can seriously derail your goals. Develop a plan that helps you cope with that irritating itch to spend without thinking.

2. Using Credit Cards for the Points

Not all rewards credit cards are bad. In fact, when used responsibly, some definitely have their place in your wallet. However, there’s a reason credit card companies offer those rewards, and it’s definitely not out of the goodness of their hearts. Rewards encourage you to spend more, plain and simple.

A 2010 study presented at a meeting of the American Economic Association found that simply using a reward or point-based credit card with a 1% return actually increased monthly spending by $68, and overall credit card debt by $115 per month. Suddenly, that pursuit of points doesn’t seem so savvy.

While you might score a little cash back on that purchase, many cards impose heavy restrictions. From annual caps, to higher cash-back rates only for limited purchases (such as gas and groceries), you might not be getting back as much as you think. Going deeper into debt in pursuit of the almighty credit card point is simply not worth it.

3. Keeping Up With the Joneses

Real estate agents often say that it’s better to be the worst house on the best street than the best house on the worst street. However, when your neighbors seem to have it all, the drive to be the best house on the best street can overshadow your spending savvy. Competition is a psychological trigger that can cause spending. Keeping up with the Joneses – or competing against others can lead you to overspend.

While some people simply don’t care about measuring up to others, it can be a real challenge for certain families. When a friend purchases a new vehicle or home, takes a pricey vacation, or even wears expensive jewelry, it can trigger competitive behavior that leads to poor spending decisions.

It’s important to remember that success is hard to measure from the outside. When you see a neighbor pull up in a shiny new car, remind yourself of your priorities and goals. No one can see your retirement account balance, but you know that you’re working to secure a comfortable future by contributing to it, instead of that new watch.

4. Excessive Lifestyle Inflation

As you get older, you probably expect to achieve a better financial status than you had as a young adult. A better job, a raise, and even natural economic inflation can all affect your earning power. However, the difference between those who are always in debt and those who stay in control of their own finances is that the perpetual debtors buy more than they can afford.

It’s tempting to put that raise to work to increase your living expenses. This could land you back at square one. For example: If Bill earns $60,000 per year and spends $45,000, but Jeff earns $150,000 and spends $175,000, who is truly in a better financial position? Although Bill earns less, earnings aren’t the only factor when it comes to staying out of debt. It’s how you manage your money.

Lifestyle inflation is a natural part of earning more and moving up the chain at work. This is only acceptable if you’re spending within your means. As soon as you start going into debt to afford a certain way of living, it becomes problematic. Make sure you only spend what you can afford, and maintain your valuable financial freedom.

5. Taking Interest-Free Loans

You know how credit cards that offer points and rewards? Stores offering no-interest loans are luring in potential debtors and enticing them to spend more than they can afford. The sad part is many who bite on such offers won’t pay off their loans before the interest-free period ends. Afterward, they’re often slammed with fees and even retroactive interest from that so-called “interest-free” period.

Remember. ALWAYS read the fine print! Unless you’re certain you can pay it off before the grace period ends, interest-free loans are anything but.

If you are ready to ditch your debt for good, then register for the Death to Debt masterclass.

You will learn:

  • Why breaking free of debt is the most powerful wealth creation strategy
  • The biggest mistake people make when trying to get out of debt that actually keeps them in debt, and how you can avoid it
  • How to save thousands on your debt repayment so you can pay it off even faster
  • What type of debt is worse for your wealth
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8 Ineffective Ways To Eliminate Debt

Many of my clients have come to me after trying some if not all of these 8 ineffective way's to eliminate their debt. Don't fall into the trap of these way's. Eliminate your debt the right way from the start

 

Do you ever feel like you’re being misled every time you try to reduce or eliminate your debt?  Many of my clients come to me for help after trying a few of these 8 ineffective way’s to eliminate debt, that actually cause more problems than solutions. So take heed or you could end up throwing additional time and money at the problem.

1. Looking the other way

Unfortunately, this one is very common among people who can’t seem to keep up with their monthly payments. As the bills roll in, they either stack up unopened, or being tossed in the trash without opening. It’s as if a miracle solution is going to pop up in time to make it all go away. It may feel less stressful, but the reality is the debts grow even faster due to penalties. The whole situation becomes even worse!

2. Asking your boss for an advance

The truth is getting an advance on your paycheck is like borrowing against your future. Although it may seem like a smart move at the time, it is likely you will never be able to catch up… much like the credit card debt that got you into this situation in the first place. It gives your employer too much information about your personal financial life. Think about it… would you trust an employee to make smart decisions on your company’s behalf if they can’t manage their own money?

3. Getting a payday or benefits loan

This is one of the most expensive methods to increase your cash flow. Companies that are in this business are basically attaching liens to your future income. Most will require access to your checking account so they can withdraw the owed amount on the day of your next paycheck. I don’t know about you, but I don’t want anyone with that much control over my checking account. Unless it is an automatic payment, that I personally set up myself.  Worse of all, even though the finance charge sounds small ($10-30 for every $100) the annual percentage rate nets out at a whopping 300-400 percent, so if the loan is not paid back in time, you are basically increasing your total debt amount.

4. Beware of pawn shop loans

If you’re thinking it’s a no-brainer to trade in a few valuables in exchange for fast cash, think about this. The truth is if you ever want to see your valuables again, you’ll have to come up with the cash in a very short period of time. Pawn shops are in the business to get their money one way another and aren’t interested in a long term relationship!

5. Credit card advances are costly

Credit card companies look as if they are giving away free money by way of sending you a set of blank checks. Some of my clients were under the impression they would receive extra bonus points for using those as cash advances. That is not the case. Be smart and understand credit card companies are marketing experts that have developed different ways to fool you into getting more in debt. That means a payback interest rate that is much higher than the standard rate – often 10 percent or more!

6. Taking out or refinancing a home equity loan

Mortgage companies make equity loans look very attractive. They offer lower interest rates and lower monthly payments, but did you know the payments are extended over a longer period of time? So guess what? You end up paying more over the life of the loan. Add to that; loan origination fees, prepayment penalties and the chance of a future foreclosure if you lose your job or come across periods of financial instability. Risky business.

7. Bankruptcy is rarely the right answer

Sure, there are times when bankruptcy is necessary. It was my only choice. If at all possible, this avenue should be reserved for exceptional situations. Did you know you will lose all of your credit cards and other unsecured avenues for credit once you file? Plus, the laws have gotten more stringent, so you may go through the whole process and ultimately be denied. If that isn’t bad enough, the bankruptcy will stay on your record for ten long years, which means you won’t get the time of day from a financial institution should you need extra money for medical expenses or emergencies.

8. Debt settlement – ouch!

Debt settlement companies are those that negotiate with your creditors on your behalf. The object of this process is to reduce the debt amount by paying a percentage of the total. Here are some of the horrors you would encounter: Not only does your credit rating wind up worse than it was when you started, but you are liable for income tax on the difference between what you would have paid and what you actually pay. The IRS counts the money you saved as income! Additionally, these companies charge as much as 25 percent of what you owe or 40 percent on what you’ve saved. On a $5,000 debt, you could be paying as much as $1,000.

I encourage you to be smart about your debt. It’s not about getting out of paying that which you have borrowed, as those methods come with fees and penalties that make the situation worse. It’s about making your repayment as painless as possible and without having to tighten your belt, move to the boondocks or eat cheese sandwiches for every meal.

The best way to obtain financial freedom is by setting up a process that pays down your debt in a systematic way that is based on the most sophisticated, but not complicated, mathematical formula. It gives you the freedom to focus on the rest of your life. If you are ready to develop that plan then join my FREE Death to Debt Masterclass.

In this class, I will give you a proven method to eliminate your debt, and show you the biggest mistake people make when they are eliminating debt. All you have to do is click the link below and you are in.

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4 Advanced Debt Strategies

If you are ready to move forward and get out of the debilitating financial situation you are in, then it is time to learn a few advanced debt strategies. I would like to share concepts that will definitely help you understand how to create financial freedom and end the struggle. These 4 advanced debt strategies are proven to work.

“I feel like I’m finally ready to get on top of my debt. It’s just getting worse, the more I ignore it.” This was me years ago. I knew I needed to do something, I just didn’t know what. I was in so deep there was no way I could really climb out. I ended up filing bankruptcy. Since that time, I have learned better and helped many of my clients with these 4 advanced debt strategies.

If you feel like this, you are not alone. The majority of people who are in debt have never been taught how to stay ahead of the interest game. Every day,  we are exposed to easy ways to get into debt via advertising messages and credit card promotions. But rarely are we informed or aware of the struggles being in debt can cause.

In fact, Americans have become so used to pulling out their credit cards that it has become second nature. In some countries, like France, the average person charges less than $300 per year, versus the $4,200 a year Americans charge. Statistically, the average French adult saves roughly 10 percent of his/her income, while the average American saves around 4 percent.

If you are ready to move forward and get out of the debilitating financial situation you are in, then it is time to learn a few advanced debt strategies.

I would like to share concepts that will definitely help you understand how to create financial freedom and end the struggle.

Advance Strategy #1: Prioritize for payoff

Some financial pundits would tell you to pay off your highest interest debts first. But in order to get out of debt the fastest, I would suggest you prioritize your debts by their total balances, from lowest to highest.

If there are similar balance amounts, then do use the second tier prioritization method by listing them in order of highest interest rates first. For example, if you have two credit cards with balances that are nearly equal, but one has a 22.9 percent interest rate while the other has an 18.5 percent rate, then the list the debt with the 22.9 percent first. This is the debt you will focus on completely paying off first. When that is paid off, move on to the next smallest debt. Rather than spend the extra money that was saved, use it to pay a higher amount to eradicate that next debt… and so on.

I’m going to get you out of the mindset that you can reduce your debt by paying off all debts at the same time. Instead, focus on prioritizing and paying off your debts in that order.

Advance Strategy #2: Reduce your discretionary spending

There are few people on this planet that do not waste money on something or other each month. Some might pay a higher amount for gas rather than going to their local membership club, while others opt for buying expensive coffee rather than brewing it at home. When buying anything online, check for promotional codes to reduce the cost or spend a few extra minutes pricing out the item before buying. Then there is also the brand name syndrome, which is when people buy into the belief that only top brands provide quality, so paying a higher cost feels justified. Buying electronics with all the bells and whistles, only to discover they are never used, is also a waste of money.

Look at your buying habits and discover where you can find the extra money to pay more on your debt balances.

Advance Strategy #3: Reduce interest rate spending

Most people who are in debt don’t believe they have choices over how much interest they are paying monthly. They either don’t shop around for the best rates, or pay the minimum on credit card balances not realizing they are paying double and triple the amount for the goods or services that were purchased.

Do yourself a favor and make a list of your purchases and what you are actually paying for them after interest is added. Most people don’t even realize they are paying double and triple the purchase price for their homes!

Advance Strategy #4: Build your wealth

Once you follow strategies one, two and three, you will have plenty of extra cash on hand. That is the time to start building your wealth and looking for investments that pay compound interest. In order to do this, you will still have to spend wisely, cash and carry and watch your wealth grow!

 

If you are ready to blitz your debt and live the life you desire, I invite you to my free live DEATH TO DEBT MASTERCLASS January 31, 2017 7:00 PM CST.

 

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2017 Financial Goals Manifesto

 

When you think about your financial goals, I'm sure you don't think about writing out a manifesto. Well, I am a little different, I like to do things in a grandeur fashion. What I do is make not just my financial goals, but ALL of my goals into a manifesto of sorts. That just ensures that I strive extremely hard to make them happen. It shows my financial view of actively making sure my family is financially secure even after I am gone. Today, I would like to share mine and my husbands 2017 Financial Goals Manifesto with you and encourage you to craft your own.

When you think about your financial goals, I’m sure you don’t think about writing out a manifesto. Well, I am a little different, I like to do things in a grandeur fashion. What I do is make not just my financial goals, but ALL of my goals into a manifesto of sorts. That just ensures that I strive extremely hard to make them happen. It shows my financial view of actively making sure my family is financially secure even after I am gone.   Today, I would like to share mine and my husbands 2017 Financial Goals Manifesto with you and encourage you to craft your own.

When you think about your financial goals, I'm sure you don't think about writing out a manifesto. Well, I am a little different, I like to do things in a grandeur fashion. What I do is make not just my financial goals, but ALL of my goals into a manifesto of sorts. That just ensures that I strive extremely hard to make them happen. It shows my financial view of actively making sure my family is financially secure even after I am gone. Today, I would like to share mine and my husbands 2017 Financial Goals Manifesto with you and encourage you to craft your own.

  1. Continue to save for our grandchildren’s education

    The cost of education continues to climb, and students are graduating college facing mounds of debt. If college is a choice for our grand children, we vow that our fourteen and counting grands will not have debt upon graduation. As education is important to us, the patriarch and matriarch of this family, we will use strategic, necessary financial finesse to ensure that any of our grandchildren who choose college as their path, will have the means to attend the college of their choice, without financial worry, stress and strain. Do you have any loved ones that may want to attend college? Are you saving for them? If not, now would be the time to start. Saving $50 per month from the day a child’s born could give you $20,000 by the time he or she turns 17, assuming a 7% return on investment. However old your loved one is, if you want to help fund their college education, start saving. It is never too early, or too late, to start saving for your child’s college.

  2. Plan for early retirement.

    My husband and I don’t plan to work until death. We would like to retire early and enjoy many years of fun, travel and relaxation. We are retirement conscious and we know  what it will take for us annually and have given account for inflation. Our children will not have to fund our retirement. All unnecessary spending has been eliminated. No manicures and pedicures for me, unless it is a special occasion, I do my own mani pedis. I have began sewing in order to revamp my wardrobe, so that, shopping is not necessary. Have you begun thinking about retirement? Your place of employment does not offer retirement savings? Why not open an IRA or a Roth IRA?

  3. Create two more streams of income.

    Generating multiple streams of income can have a major impact on your finances. Even an extra income of $500 each month could go a long way to paying down debt or increasing your investments. We often hear about the importance of diversifying our investments, but diversifying our income streams is just as important, particularly in difficult economic times. We both have an extra stream of income, but this year we vow to create two more. While increasing our income and contining to curb our spending, therefore, living like others won’t now affords us the opportunity to live like others can’t later. Do you have a gift or talent that you can turn into extra income? If so start now and watch your savings grow.

  4. Prepare for our demise.When you think about your financial goals, I'm sure you don't think about writing out a manifesto. Well, I am a little different, I like to do things in a grandeur fashion. What I do is make not just my financial goals, but ALL of my goals into a manifesto of sorts. That just ensures that I strive extremely hard to make them happen. It shows my financial view of actively making sure my family is financially secure even after I am gone. Today, I would like to share mine and my husbands 2017 Financial Goals Manifesto with you and encourage you to craft your own.

    It is inevitable, we will all ride the lighting bolt one day. Last year, our family suffered great loss and it made my husband and I look at our own mortality. My husband and I questioned if we have enough to do what needs to be done when the time comes. We don’t want our loved ones grief compounded by us not being prepared for something we know is coming. It is imperative to us that even though we are gone to the great beyond, their financial well-being was thought of. This year we will review and increase, if need be, our stock portfolio and life insurance. This will ensure that our financial house is in order upon our demise.  While we were fortunate that our loved ones made the necessary preparations, in today’s society more are not prepared than are prepared. This is evident in the number of go fund me accounts seen to help raise money to bury someone. It is important to us that we leave wealth behind for the next generations. Have you thought about what your family will do in the event of your demise? Plan today so they won’t be left with grief and empty pockets to remember you by.

What are your financial goals this year? Share them below, you never know who you may be able to inspire by doing so.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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3 Habits You Should Retain After Paying Off Your Debts

To get out of debt, you need to develop a couple of habits. Debt freedom is not something that happens overnight. It is also, admittedly, not an easy feat to accomplish. You will go through a lot of sacrifices and temptations. You need to hold steady to your commitment to pay off all your credit obligations so you can maximize your financial position.

 

To get out of debt, you need to develop a couple of habits. Debt freedom is not something that happens overnight. It is also, admittedly, not an easy feat to accomplish. You will go through a lot of sacrifices and temptations. You need to hold steady to your commitment to pay off all your credit obligations so you can maximize your financial position.

As with any endeavor, your journey to get out of your debt situation will be filled with lessons. These lessons come with an opportunity to develop habits that will allow you to change your behavior when it comes to managing your money. If you want to make debt freedom last long, you need to change the habits that you had prior to getting into debt.

This is easier said than done. Americans are notorious for their preference to get into debt. 8 out of 10 Americans are in debt. Don’t think this is limited to young people with student loan debt and those with mortgages. Believe it or not, a lot of people are starting to carry debt right into their retirement. Debt is not choosing an age. All generations alive today have some form of debt to their name. What makes all of this scary is the fact that almost 7 out of 10 Americans think being in debt is a necessity. Although they would prefer to not be in debt, they believe  it is something they cannot avoid. For instance, if you want to own a home, you need to borrow money in order to afford it. The cost is just too high for you to wait and save up for it.

3 Habits You Should Retain After Paying Off Your Debts

It may be true that the majority believe that being in debt is a necessity, but that does not mean you should not try to stay out of debt. If you have just achieved debt freedom and you want to stay that way, that is an admirable decision. But you have to be warned that staying debt free is a feat that not everyone is capable of maintaining. With a society that views debt as a necessity, this can be as difficult as being forced to attend an eat-all-you-can party while on a strict diet.

29% of Americans have admitted that they are ashamed of their finances. They wouldn’t let family and friends know their specific financial condition if they can help it. This feeling of embarrassment gets worse as the generation gets younger. That means Millennials are the most embarrassed when it comes to their financial position.

If you want to stop being ashamed of your current financial situation, you may want to stick to the habits that got you out of debt. Although it is difficult, I am not saying that maintaining debt freedom is impossible. You just have to make sure that you will retain the habits that you followed while you were trying to get out of debt.

Here are the three habits that will prove to be useful in improving your financial position even further.

Habit 1: Stick to your budget.

A budget is one of the basic tools that you used to help you achieve debt freedom. Most of the time, people got into debt because their expenses were greater than their income. While you were getting out of debt, you had to either lower your expenses or increase your income. Usually, those going through debt relief change both – they lower their expenses and find ways to increase their monthly income. Whatever changes you did in your budget, if it helped you get out of debt, you need to continue using it. Do not change your plan just because you made that final debt payment. Make a commitment to stick to your budget so you can continue practicing the next two habits that you still need after debt freedom.

Habit 2: Save what used to be for debt payments.

Since you will be sticking to your budget while getting out of debt, you have a huge opportunity to increase your savings. What used to be allocated for your debt payments should now be directed towards your savings accounts. There are many ways you can use that money wisely. For starters, you can use it to increase your emergency fund.  One-third of American consumers do not have money put aside for emergencies. If you do not want to go through what you did in the past, stick to your budget and save what used to be your debt payments. Once your emergency fund is enough, you can direct this extra money towards an investment account that can help improve your financial situation.

Habit 3: Maintain constant vigilance when spending.

The final habit that you need to implement even after debt freedom is maintaining caution whenever you spend. That extra money that you are putting into your savings can be very tempting. Keep yourself from splurging just because you have a lot of money in your hands. Just as you were very cautious of your spending while you were trying to get out of debt, you need to do the same even after. Sure it is okay to spend some money to celebrate that last debt payment. But do not overdo it. Continue to be wise about your spending choices.

If you developed other habits while getting out of debt, feel free to keep on doing them. Share those habits with the rest of us by commenting below.

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10 Steps To Getting Out Of Debt

Being in debt can be stressful, I know, I have been there and done that. No matter what your circumstance is, if you signed for a loan, you are obligated to pay it back even if you have a life altering experience like losing a job, getting into an accident, or even if you have increased expenses due to having a child.

Sometimes debt can just be an unintended consequence of too much holiday spending — or overspending any time of year. Many people try to get out of debt, but life slaps them in the face so hard that they give up. But that doesn’t have to be the case. There are so many people who are getting out of debt every single day, and not only that, but they are getting out of debt in a short period of time.

So if you’re ready to get on a path to financial freedom, it’s important to have a plan for how you’re going to tackle that debt! Follow these 10 steps to getting out of debt, and you will be free in no time.

 

If your bills give you anxiety and your debts are getting in the way of other dreams, it may be time for you to follow the path of these 10 steps to getting out of debt

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