Living Without a Salary

How to reduce your expenses, so you can live without a salary!

Credit Card Debt-itis June 24, 2010

In medicine, many illnesses and diseases tend to have “itis” attached to the end of a word. Dermatitis–a condition affecting the skin…appendicitis–an inflamed appendix…debtitis–a condition that affects the mind in that the victim must spend too much money and get into debt. When attached to a common word like debt, it then indicates that there is a sickness present. And let me say that there is a sickness present with credit card debts! While many experts think that there are ways to cope with credit card debt-itis, the only way to get rid of this condition is to get rid of the credit cards. Only then can the victim really start the healing process. Get rid of the credit cards, and then follow the 3 step plan to curing yourself of credit card debt-itis.

Planning

The first part of planning is to make a list of the charges you incurred while afflicted with credit card debt-itis. At the very least, if you are in too deep because of your illness, just write down the name of the credit card and the amount you owe on that card.

Next, write down how much income you have each month. Include your salary and any other side income you get. On the other part of the paper, write down all your expenses for the month, excluding your debts from credit card debt-itis. Look at where you can fit in payments on your debt, and work these payments in. Then re-work your expenses to include your debt repayment plan.

Executing

This next step is the most painful to complete. Cures are never easy, but getting over credit card debt-itis and staying cured is very worth the pain. After the planning phase of your cure is complete, then you must actually write the checks and pay down these debts. Cures take action, and you must take action. If you stop paying down these debts, your debt-itis will come back even stronger. It is in your best interest to continue with the cure.

Evaluating

Completing the first two phases of your cure are the hardest part of the healing process. After you have made significant progress in paying down your debts, evaluate your accomplishments. Have you paid down many of your debts? Are the balances going down significantly every month? If they are, then consider the cure effective and finish up with your cure. If not, look at where else you can take money from to pay on your debts. Go back to the planning phase and start again. Credit card debt-itis will not go away on its own, and must be treated for you to get better.

Freedom At Last

You may not realize how much you are suffering from credit card debt-itis until you get free from its grasp. Tossing and turning every night, worried about your debts is a sure sign that you are suffering from credit card debt-itis, and when you are finally cured, you will find that sleep comes easily. Also, when you are free, you will also be able to breathe easier…so take the first steps today to cure yourself of the dreaded credit card debt-itis. It can only get better from here.

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Spending Money is Good for the Economy June 22, 2010

Yes, this goes against what everyone is telling you these days–“Stop spending money”, or “Save your money”. But spending money can be good for the economy. There are the obvious reasons why this is true, such as it create jobs, helps small businesses stay in business, and other things like that. However, no one really talks about the real reason why spending money is good for the economy.

Money Goes ‘Round and ‘Round

Have you heard the expression, “Money makes the world go round”? You may have thought this meant that we need money to live on or survive. While this interpretation is true, it is not the entire story. The myth of money is that there is only a “fixed” amount of money in the world. Physically, this is true. However, this is not exactly the way things work. Money must circulate on a daily basis for the economy to be healthy. This is similar to the way blood must circulate constantly for the body and mind to be healthy. In fact, the body needs several thousand quarts of blood every day, but on any given day, there is only 5 quarts of blood in a body. How do we get what we need? It is circulated.

Money circulates in the same way. It changes hands from one person to another, creating a healthy economy. What one person’s extravagant spending is another person’s amazing successful income. Eventually, that money comes back again as income for you. If the circulation slows or stops, everything falls apart and we have a sick or dead economy.

Spending Responsibly

While spending money may be good for the economy, it may not always be good for your economy. What this means is that, while it is okay to spend money every so often for more than just your needs, it’s not always prudent to do so. You must prepare for your needs and some wants, but you do not want to spend so much that you are in debt and stressing out about your finances. If you strike a nice balance, then you do not have to feel bad about spending money on yourself every so often.

 

Debt Repayment Plan June 10, 2010

Filed under: Getting out of debt — joetb @ 3:42 PM
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Paying back debts is a very popular subject these days. For instance, look at the many debt consolidation companies that exist today compared to 30 years ago. There was not a need for them like there is now. Considering the state of the economy for the past few years, is it any wonder debt repayment is a hot topic? However, there are several confusing messages when it comes to debts and debt repayment plans. If you are in a similar situation, how do you know what will work and what will not? If you use common sense, you may be able to figure it out on your own. In the meantime, here are some common sense ideas to speed your process along.

Where to Start

Often, when people are trying to get a grip on their finances, they get lost not knowing where to start. Like a song from a popular movie, “Start at the very beginning; a very good place to start…” Where is the beginning? Analyzing your situation, of course. This will involve getting real about how much you owe, to whom you owe it to, what your monthly bills come to, and what your total income looks like. When you have done that, you can then begin creating a plan.

The Next Step

Once you have analyzed your situation, it is time to create possible scenarios of what your debt repayment plan will look like. A possible scenario may be that you aggressively pay back your debts, while cutting back on other, non-essential, expenses. Another one might be to pay a little less on your debts while keeping some non-essential expenses in your budget. With each scenario, project out how long it will take you to pay off each debt. Doing this will help you to choose which scenario you want to go with.

Follow Through

Choosing a plan will not be that easy, but is a very essential step in the debt repayment process. After committing to a plan, you must follow through with it. Otherwise, a debt repayment plan will remain a plan on paper only, and you will not reap the benefits of it. On your very next paycheck, make the necessary payments according to your plan. Theoretically, this should get you out of debt pretty easily. However, life does not always work that way.

Evaluate and Adjust

After about 6 months, look at your plan and the actions you took. Did you make any headway on clearing your debts? More importantly, was the plan workable? Were you able to make the payments on time, and still lived comfortably? If you answered negatively, then you need to readjust your plan so that you can handle all expenses comfortably. Of course, if your plan is working well, there is no need to adjust it. A plan that allows you to pay off your debts within two years and still live comfortably is a plan that will work in the long term. Just as with weight loss, any eating plan that allows you to indulge once in a great while, while still losing weight is one that will work in the long term.

 

When Proper Budgeting is Not Enough June 9, 2010

For years, experts have warned us that if we do not budget properly, we will all go into debt and nothing we do besides budgeting can help us get out of it. But what if you budget carefully, watch where your money goes, and you are still having financial difficulties? Debts can add up for the best of us, no matter what we do. Medical expenses, car repairs, or a multitude of other repairs can put your carefully laid plans in an early grave, creating a serious problem for your finances.

Alternatives

When you find yourself buried in debt, with no way out, it can be difficult to see that there are other alternatives besides taking out a loan or defaulting on your debts.  But there are other ways to pay off your debts and repair your credit along the way. Taking on a second job can help you find the extra cash you need, which may be just a temporary solution. Once you have earned the money needed to pay off your debts, there would be no reason for you to continue working a second job.

Another alternative may be to earn money from doing odd jobs for people, such as babysitting or yard work. If you are good with a needle or thread, doing repairs or alterations can help you earn money. Or, if you are proficient in accounting or bookkeeping, advertise your services to help others with their finances.

Snowball Effect

Of course, you could just re-work your budget to include extra money to pay down your debts. One of the finance writers that I really like suggests using a “snowball effect” with your debts. ┬áMake a list of all your debts, ranging from the smallest balance to the largest balance. In your budget, plan to make payments on the smallest amount first and pay that off. Then, take that amount of money next month to begin paying off the next smallest amount. Continue doing this until it creates a rolling ball of snow effect, saving the largest amount for the last. By that time, you should have enough leftover money to make substantial payments on the last debt, paying it off in no time. The point is to get out of debt as soon as possible, so that you do not end up paying extra fees.

Last Resort

Once you have exhausted all possible options and you see no other way out of your situation, maybe a short term or even a traditional loan may be what will help you find temporary relief. Notice that I said, “temporary”. Because of the very nature of any loan, it will eventually get you further into debt. But if having money when you need it will keep you from being homeless, then it can be a good idea.

With traditional loans, interest rates may be low, but they may be harder to be approved for. Especially if your credit score is not as high as it should be. However, this may be a good option if you need a large loan at a low rate. Another loan option is a short term, or payday loan. These loans essentially work like an advance on your salary, and are small loans. The most you can really take out is about $ 1,500 due to the nature of how they work. When you apply online for a cash advance, you will give the essential information on a secure form. After submitting your information, you should hear back from them in a few minutes, and upon approval, have the money to pay your debts in a few hours.

But be very careful with this option! The reason is that if you do not pay back your loan on time, it will be rolled over, making it much more difficult to pay back. The rollover fees, if left for an entire year, can equal to at least a 100% interest rate! Having a plan before even applying for a payday loan will help you stay out of this situation.

Bottom Line

If you came to this blog from a search engine, chances are you are responsible with money. Or at least, you are looking to get responsible with your finances. The last thing you want to do is get further into debt, right? Then get a grip and take charge of your finances. If you must use loans, make sure you are using them responsibly. If instead, you want to earn money to pay off your debts, then by all means, do it! Your financial future is your responsibility and no one else’s. The government is not in control of your finances, and neither is anyone else. If you think you can, then you can. If you think you can’t, then you can’t. It’s your choice.