Your First Step to Erase Debt 

Posted on August 24, 2010 by

Getting into debt is so easy it’s frightening.  How to erase debt takes a little more time
and effort, but it is possible. erase credit card debt 300x189 150x150 Your First Step to Erase Debt 

Let’s firstly look at how easy it is to create debt and at the
myth of the magic money machine.  From an
early age kids watch their parents taking money from the hole in the wall (ATM)
and their perception is that the money is constantly available.  Unless the ATM refuses you money is this also
your perception?

The easy use of credit cards is one of the main problems in
building debt.  What you have to remember
is that the use of money on credit cards is a loan.  It is not money that is readily available….just
as the hole in the wall is not the magic money machine. 

Out to lunch and no cash available – out comes the credit
card. 

Walking past the clothing store and they have a sale…”I’ll
save money if I buy that.”

Sound familiar?

Unfortunately buying that sale item is not saving money
unless it was a needed item.  All too
often we have given into our desire for instant gratification.  The little things add up and this false

feeling of wealth is dangerous, before we know it our debt has taken hold.

The recession has made everyone more aware of these pitfalls
and attitudes are changing to one of frugality for many.  There is a desire to control and get out of debt.

One of the first steps on how to erase debt is to recognise
your situation, acknowledge it and decide to do something about it.  This is the start of your journey to be debt
free.

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Keep Positive When Paying Off Debt

Posted on October 31, 2011 by

It can be hard going paying off debt and you need to keep positive and celebrate your successes. Emergencies seem to get in the way so you need to have the right frame of mind to cope. Plan your progress: you’ve heard it all before, set the budget. Develop some good habits that keep you focused and in that positive frame of mind.

Part of getting out of debt is having the passion and mind to do it…and you can.

  • Every night before going to bed, write down three things you accomplished that day.  It may be that you did not buy the ‘bargain’ at the sale.
  • Keep a Success Journal and write down what you did and how you did it. This will focus you on what you’ve done.  The more you focus on your successes, the more you will understand that you CAN do what you set out to do.
  • If you made a mistake and blew the budget it doesn’t mean you are a failure it means you are human but make a note of what happened that affected you.  Don’t make this an excuse for other budget blowouts but learn from the experience.


  • Make positive behavioral changes. Think about the habits that got you into debt and identify ways to change those behaviors. Were your purchases were impulse buys? Leave your credit cards at home so that if you really want to purchase something, you have to drive home to get a credit card. It’ll make you think twice.
  • Focusing on your debt is not pleasant and if you are constantly thinking about your debt then you will always feel discouraged. It does not make you feel inspired and makes you feel pretty lousy. Start thinking about being free from debt and picture yourself long after your finances have recovered. Imagine yourself always having more money than you need and enjoying the good life. Picture the life you want to have and you will feel inspired.
  • Celebrate your successes with a low cost activity.  Think of ways you can reward yourself.

Keep positive and keep on paying off debt. Yes, you CAN do it!

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How to Manage Money: Tip #5

Posted on August 17, 2011 by

 

This tip on how to manage money is a joint effort.  Get together with your partner and talk about your finances…honestly.

Everyone has different views on money and how to handle cash.  Think about it…we are all brought up in different homes with different families.   Each will bring their own preconceived ideas to the table.  Each has their own money personality.  If you can’t understand what makes your partner ‘tick’ financially it can be the cause of a lot of arguments, bitterness and disharmony.  

Work your budget together and discuss your goals.  Do they match?  Do you need to compromise?  Be respectful of each other and try to moderate excessive habits.  Have a read of this article on relationships, marriage and money problems for some ideas.  Whether you are married or living together your finances count especially if you consider your finances jointly.  How you manage your money together can help save your relationship

.4b471ad112f4d35 How to Manage Money: Tip #5

 

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How to Manage Money: Tip #4

Posted on August 16, 2011 by

Your fourth tip on how to manage money is to start an emergency fund.  This fund is ideally three to six months worth of your income and is part of your saving regime, which of course all ties back to your budget!  It is generally accepted that you should ‘pay yourself first’ with 10% of your earnings so this is your goal in this instance.  You may be thinking that 10% is too high but whatever you can put away is a good idea.  Once you have your emergency fund set up you can channel your savings into other areas of investment and for other goals.

An emergency fund is just that – for emergencies.  It is not there to buy the car I talked about yesterday but it IS there if the car packs up and you need to get it repaired.  Yes, that’s the idea – emergencies and not everyday expenses!

If you lost your job this fund would need to help you through.  If you were ill and unable to work your emergency fund would help until your income protection policy kicks in. 

Tips on how to manage your money continue tomorrow.

c4fdcc130dee861 How to Manage Money: Tip #4

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How to Manage Money: Tip #3

Posted on August 15, 2011 by

This tip on how to manage money goes hand in hand with budgeting and it just shows how important a budget is.  Here we will look at saving for large ticket items.

Whether your goal is to buy a new car or a new fridge the strategy is the same.  Consider the amount you require for your purchase and when you intend to buy it.  Divide that amount by the number of pay days until your set goal date.  This will give you the sum you must save each pay day to have enough money to buy the goods.  If the sum you need to save each pay day is too large you must make a choice of whether to extend the purchase date or earn some extra money.

The important thing to remember is that you should only borrow for items that appreciate in value and not those that depreciate.  Do not use your credit card for the purchase unless you have saved the funds and have it available to repay when the credit card is due.

Watch out for more tips on how to manage your money tomorrow.

ec01edf030df0ca How to Manage Money: Tip #3

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How to Manage Money: Tip #2

Posted on August 14, 2011 by

Yesterday I began writing some tips on how to manage money and started with budgeting.  Today let us look at credit cards.

Use credit cards wisely – or not at all.  If you cannot pay your account in full each month you are not making wise use of your card.  It is well known that credit cards carry the highest interest rates and your purchase will end up being double in no time at all if you only pay the minimum required.  And, there will be a time when the balance will be way out of control.

This strategy goes hand in hand with doing your budget.  By all means spend on your ‘plastic’ if you have budgeted for the purchase.  Here I mean purchases such as your gas bill, your food and groceries.  But do not go over the limit you set in your budget because you will still have to make the payment on due date.  If you find you can’t stick to your budget leave your card at home and take cash to the store. There is a different mindset when you use cash and you are more likely to spend more conservatively and thriftily.

Let’s recap: use your budget to work out your expenses and when using a credit card for that item.  Stick to your budget and always pay your credit card in full.

 Look out for more tips on how to manage your money tomorrow.

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How to Manage Money

Posted on August 13, 2011 by

Many believe that money is the root of all evil. And in certain circumstance it could very well be true but…we all need money to survive and how you manage money is all important.

If used wisely money is the greatest material asset you could have. It is the improper use of money that leads to negative outcomes. 

Having enough can give you a life of comfort and of convenience and relieve you of financial worries. Used wisely you can also help others less fortunate such as giving to charities and the poor. 

How to manage money starts with knowing what you have coming in and what you have as your expenses – your money going out.  In other words it starts with budgeting.  Yes, that B word budgeting!

Take a look at the article I wrote earlier in the year.  It has some good stuff on how to manage money particularly when you are in debt.

47ce660fa2c3704 How to Manage Money

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A Problem Called ‘Credit Card Debt ‘

Posted on July 25, 2011 by

 

fda8abb2218cbd4 A Problem Called ‘Credit Card Debt ‘Credit cards are no longer just a luxury – they can almost be considered a necessity. However, this has left the credit card industry and credit card holders with a big problem called ‘Credit Card Debt’. To understand what ‘credit card debt’ actually means, we need to understand the workflow associated with the use of credit cards.

Credit cards, as the name suggests, are cards on which you can get credit i.e. make borrowings (your credit card debt). Your credit card is a representative of the credit account that you hold with the credit card supplier. Whatever purchases you make using your credit card are actually your borrowings that contribute towards your credit card debt. This is in fact a debt owed to the credit card supplier – it is not money available to you to spend.

You must settle your credit card debt on a monthly basis and will receive a monthly statement of your credit card bill which shows your total debt. You must pay off this debt by the due date to avoid incurring late fees and interest charges.  You do have the option of making a partial (minimum) payment too, and you won’t incur late fees but you will be liable for interest charges.  If you opt to pay a lesser amount the interest charges are then added to the outstanding balance. Your credit card debt keeps on increasing, particularly as the interest rates on credit card debt are generally higher than other kind of loans and borrowings.

If you continue making only the partial payments (or no payments) the interest charges are calculated afresh on the new credit card debt…and you end up paying interest on the last month’s interest too.  In this way your credit card debt accumulates rapidly and soon you find that what was once a relatively small credit card debt has ballooned into a large amount that has become almost impossible to pay.

If you don’t take control of your spending habits, your credit card debt rises even faster. And this is how the vicious circle of   works.

 

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Devise a Plan to Get Out of Debt and Improve Your Credit

Posted on July 24, 2011 by

 

9285cf07c85197f Devise a Plan to Get Out of Debt and Improve Your CreditWork out a plan for the payment of your debt.  Whether you pay your bills a little at a time, take a second job, go to credit counselling, or file for bankruptcy, you need to make a plan and stick to it. To improve your credit, you must have to have a plan and then take action – and stick to it!

Don’t run from your creditors – talk with them.  Creditors want their money and do not want you to default (stop paying). In fact, most creditors will work with you to get a reduced payment schedule. If you are able to keep them from reporting you to the credit bureau, then your credit will not be harmed. The catch here is: be sure to stick to your newly negotiated plan – creditors won’t want to renegotiate if you fail to comply.

Get out of debt with a plan…

 

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Credit Cards: A Warning

Posted on July 16, 2011 by

 

bcdd60cd96ef2e7 Credit Cards: A WarningDo credit cards work for you or do you work for your credit card? Most people’s answer to that question will depend on how they treat their “plastic” – as credit cards are known.

Many people who have got burned will tell you they didn’t realize that things were so bad until very late, because most credit card offers try much to sound like they are actually running a charity and helping you out. Well, they aren’t.

This does not mean I hate campaign credit cards.  They certainly have their place…after all you need to have a (major) credit card for many purchases or services.

But, consider this scenario:

You receive an offer in your mail that sounds good – maybe a new generation TV or a fridge. But it costs $2000. Oh, but you have a credit card with a $5000 limit, so you immediately purchase your merchandise! Typically, here is how your repayment schedule will play out. Most credit cards expect a payment of a minimum of the total balance (usually 2 percent) each month. Assuming the interest rate is 18 percent and you choose to repay the minimum amount of $40, $30 of that will go towards interest and only 10 percent towards the principle. As a result, you will take 30 years to repay and end up paying over $5000 interest.  NOT such a good deal after all!

Sounds scary, doesn’t it?  But it doesn’t have to be. The moral of the illustration is:

Use credit cards the same way porcupines make love; very, very carefully.

 

 

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