Helping You Avoid Life's Financial Mistakes

10 Bad Money Habits You Should Ditch Immediately

December 8, 2008 By 3 Comments


This week starts a article series on money habits.  I recently wrote a post on how your financial education has a lot to do with making and saving money.  In this two part series I will be showing some of the bad and good habits to ditch or live by.

Today’s post is about 10 money habits that you may or may not have and how to fix them.

  1. Don’t use your credit cards as an emergency fund.  I believe this has always been a misunderstood use of credit cards.  The reason being it’s to easy to have access to.  Instead setup an account on a monthly draft payment.  This way it’s out of site and out of mind.  Here is a great post to check out where to set up your emergency fund at.

  2. Missing payments on your bills and debts.  This is literally the kiss of death when it comes to keeping a good credit standing.  Missing payments shows distrust to financial lending institutions, bank, or any other places that may look at your credit score.  Instead pay off debts that have to be paid first before you spend on extra things.
  3. Pay more than the minimum payment on your credit cards.  When your balance is high on your credit cards it’s easy to just pay the minimum so you can get by.  The reason you shouldn’t pay the minimum is because it will take a lot of time and interest to pay off those credit cards.  In fact if you are constantly adding to them the likelihood of you paying them off in never.  Instead put a debt plan together and get out of debt the right way.  Check this post out to learn how.
  4. Bouncing checks.  This is a good way to upset a lot of people including your bank.  If you can’t afford to pay someone don’t write a bad check and let them find out when it bounces.  Instead talk to them and be up front and let them know you can’t pay them and that you will work with them so they get paid.  It’s not worth destroying a relationship and your credit over a check.
  5. Pulling money out of your retirement accounts.  Pulling money out of your retirement accounts to pay off debts or worse buy something you really don’t need can have a huge effect on your financial future.  Instead leave it where it is and read this post on how it could effect your money if you took it out to early.
  6. Buying things on impulse.  This can happen real easy.   Someone you know tells you to buy something that has worked great for them and tell you to by it right now or you have the sales man at a local retail store who is telling you to buy now or you won’t get it at are new lower price.  Instead take time to think it through.  Research the product and decide if you really need it.  Here is a great post about impulse buying.
  7. Buying what you can’t afford.  Today people are buying bigger houses, bigger cars, and some are just trying to out do the other person.  This is more commonly known as Keeping up with the Jones.  Instead of buying the best stuff focus on buying the stuff you need and for the best value.  In the end you will have something that everyone else doesn’t, MONEY!
  8. Keeping money to accessible.  Having ways to access money for those just in case moments is one thing but having money easily accessible for those anytime moments is not O.K.  Instead of using debit and credit cards for those times keep yourself a spending cash budget.  For me I keep $50 a week back for spending cash.  Set a specific amount back every week and spend wisely.
  9. Not looking at statements and bills.  This one I’m sad to say I’ve even fallen prey to.  You could be spending money you don’t even realize.  Instead review all bills and statements to make sure you aren’t paying for thing you don’t want.  Since I’ve been doing this I’ve saved myself around $160 a month. 
  10. Buying things you don’t need.  I saved this one for last because almost all of us do this.  I know there are things that I would like to have but just don’t need.  Instead place value between wants and needs buying only what you need to save money.  Now you might be saying, what if I want to splurge just this once?  Every once in a while is fine, all the time is not. 

Know any other bad spending habits?

These are the bad spending habits I’ve dealt with in the past.  Do you know of any others?  Take time now and share them with everyone and leave a comment below.

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5 More Tips To Help You Stay Locked In Your Debt Plan

October 29, 2008 By 2 Comments

Staying focus isn’t easy

In the last post I gave 5 reasons on helping you stay focused on your debt plan.  In this post I hope to advance on this subject a bit and give a few more reason to help you along the way.

Also if you know of a few more ways to keep focused that I haven’t thought of you can leave a comment at the bottom of this post and let me know about it.

5 more tips to help you stay locked in your debt plan

  • Have Goals. Having goals will help you stay focused by giving you something to focus on.  In most cases though most people will just say that getting debt free is my goal.  Don’t do this.  Instead have a goal for every time you pay off a debt like taking the family out someplace nice to eat.  Then once you have all of your debt paid off do something a little bigger like going on a vacation.  Getting debt free doesn’t have to be boring.  Make it fun and add goals.
  • Budget your money. Knowing how much money you have coming and going will let you know if you are spending more than you make and letting you know how much money you have left to put toward your debt plan.  Here is a great article on fixing leaks in your budget. Put a budget together and you will never have to worry about having enough money.
  • Build an emergency fund. An emergency fund will take the stress off your back especially if times are tough.  But when times do get tough you may decide not follow your plan for just one month thinking I’ll catch up next month.  Then one month becomes two and two becomes four and so on…  You get the picture.  Without an emergency fund it will be real easy to quit your plan.  Start a plan to save money back for emergencies even if it’s just a few buck a week.
  • Educate yourself. Educate yourself on ways to cut cost on your bills, budgeting better, and saving more.  There is constantly new information coming out on how to do your personal finances better.  Stumble Forward is a great place to start.  Sign up to are RSS to get more info on how to do these types of things.  Being educated on your finances will also help you from falling into traps with you money and making things worse.  Stay educated and you may come up with ways to improve your plan and apply more money to it to get debt free faster.
  • Revise your plan. Revising your plan will allow you to update it in case you have any changes that may happen and they will.  I’ve personally never had my original plan run the way it was suppose to.  There always seems to be something getting in the way.  This is a good time to rerun your plan and update it.   Also once you pay off a debt it’s good time to redo your plan again as well.

Would you add anything else?  If you have an idea that you would like to share please feel free to explain below in the comments.  If I get a few more great ideas on how to stay locked in a debt plan I may add them into a future article.

Filed Under: Debt Managment Tagged With: , , ,

Free Debt Managment Tools For You

October 15, 2008 By 2 Comments


A Great Tool For Anyone Who Wants To Get Out Of Debt

I recently came across this wonderful new tool to help those that would like to put there own debt plan together.  I’ve been playing around with it and found some very useful functionality.  This tool comes thanks to Vertex42.

First off you will want to download the tool which when downloaded can easily be opened in excel.  To download the file you can click here and you can download the spread sheet.

The tool itself

Once inside the spreadsheet you will see a few things.  Bear with me though I am going to give you a bit a detailed version of this tool but if you have already dealt with this before you can skip this part.

  • First, you will see a balance date.  Enter in the most recent date of the balances you have.  This way they can calculate how long it will take you to get out of debt.
  • Second, enter in the creditor information, balance, interest rate, minimum payment you are making, and then you can customize it to pay it off the way you prefer.  1 being first to be paid.
  • At the bottom of that chart you will see the total balance and the total payments you art making.
  • Below that you will see the total monthly payment.  This is the payment that will have the extra payment along with the minimum payments.
  • Then there is the Initial snowball payment.  This is the amount you would like to throw towards the minimum payment.  I recommend that you do at least $50.
  • Next, choose your strategy.  There are six to choose from.


  1. Snowball ( Lowest Balance First) This is my personal preferred way to setup the plan because by paying the lowest balance first you will see the quickest results.
  2. Highest Interest Rate. Depending on if you have a lot of credit cards with high interest rates or loans with higher rates this may be a better option.
  3. No Snowball. In this option it will show you what would happen if you didn’t apply any extra payment towards your debt.  I like to use this option as way to compare myself against the actual snowball plan.  This way I can see how much sooner I will be debt free.  However I will suggest this do not use this as a way to do you debt plan.  Use this option only to review your differences between options.
  4. Order Entered In Table. This is just how you entered them into the spreadsheet.  You may have one debt you would prefer to pay off before another.
  5. Custom High and Low. This allows you to pay off the debt with either the highest balance or the lowest balance.
  • Lastly you will see a chart that will tell you what the result will be if you would pay off this debt with the strategy and methods you have chosen.  It will even show you the month and year you will have this debt paid off.



Payment Schedule

This is my favorite part.  If you click on the tab in the lower left hand corner that says “payment schedule”  you will see a list of all the creditors that you have there payment and even the total interest you will pay to them once you have paid off those debts.

You can also customize the way you would prefer to pay off your debt on this page as well.

On the bottom half of this page you will see your entire payment schedule if you would decide to pay off your debt with the strategy you prefer.

If you have used this tool let me know what think about it?  Has it helped you?  Any ways to improve it?  Leave a comment and let me know.

Filed Under: Debt Managment Tagged With: , , , , , ,

The REAL Reason You Can’t Get Out Of Debt

October 8, 2008 By 1 Comment

The Real Reason

If you have been in debt for some time you will understand what I am about to discuss.  If you have been trying to build up your emergency fund you will understand what I am talking about. If you are trying to achieve financial independence then you will understand what I am about to relay to you.

In this article I am going to hopefully point out some reasons why you may not be out of debt or achieved much of anything else.  Giving you the REAL reason you can’t get out of debt.  My outcome in this post is to show you that it’s not any one thing that is stopping you for getting debt free…

It’s YOU!

Let me explain.

In life there is a certain area where you feel comfortable at.  For example there are certain financial debts you are comfortable with say your mortgage, car loan, and credit cards.  Certain amounts of income you are comfortable with and use to, and in general certain ways you just like to do things. 

That certainty is what may be holding you back from going on to the next level in your life.  Wether it’s your debt or anything else you are trying to achieve.

Your Comfort Zone 

Your comfort zone is the area where you feel certain the most.  When you step out of your comfort zone you start to feel uncomfortable.  Maybe your late on a payment or taking on a new debt say buying a new car.

You know what I’m talking about.  You’ve had those butterflies in your stomach.  If you have a story about stepping out of your comfort zone I would love to hear it in the comments.

When I started my first business I had those butterflys in my stomach as well, but there is one very important quote that I will never forget.

You must step out of you comfort zone in order to achieve success.

Think about that once.  Anything you have ever want to achieve that took some sort of effort such as getting debt free or being a financial success you had to get uncomfortable in order get there. 

For example when I start this blog I had to step out of my comfort zone.  A million thoughts raced through my head such as what will people think, how will this work, or can I actually do this.  I’m sure you’ve been there.

Why you aren’t moving to the next level?

Think about it this way.  If you were a thermometer and you were always comfortable at say 80 degrees and this is where you see yourself the most comfortable.  Then all of a sudden something happens and life has given you 50 degrees.  Your boss is getting on you at work, your debt is piling up, you missed a payment on your mortgage.  Things seem uncomfortable.  Then several weeks pass and things seem to get better.

Have you ever wondered why this happens?

It’s because your identity is to stay consistent with the way you see yourself.  If you are at 50 degrees and you’re comfortable at 80 degrees a subconscious alarm goes off in your head telling you that you need to correct this.

However the same it true the other way.  If life has given you 95 degrees and  you got a promotion at work, you paid off your credit cards, your emergency fund is fully funded you will subconsciously bring yourself back down to 80 degrees.  You’ll let things slip and fall apart.  You won’t even know you are doing it to yourself. 

Ever done this before.  I know I have on many of occasion’s.  If you got a good story to share here leave a comment.

How can you stop this cycle?

Stopping this cycle is not going to be easy to do but you can do it. 

  • Don’t ignore the situation.  Telling yourself that you don’t do that will only take you longer to climb out of that hole you may be in.  Recognize your situation and look for a solution.
  • Get a mentor.  This is my best advice to you.  They can help you from seeing 80 degrees all the time to helping you crank up the heat a bit and putting you at 105 degrees. 
  • Educate yourself.   Education is the reason why we have more consumers in debt than ever.  Start reading some books, listen to some inspirational speakers, sign up to the Stumble Forward RSS.  The education is worth it.

Are you facing some of these situations?  Feel free to tell us your story and leave a comment.

Filed Under: Debt Managment Tagged With: , , , , ,

Are Payday Lenders Good For Consumers – Revisited

October 6, 2008 By 7 Comments

 Why I Am Revisiting?

A month ago I did an article called Are payday lenders good for consumers.  It was meant just to be a smaller article talking about some the issues that Ohioans will be facing this November. 

Or so I thought.

The article ended you becoming very popular and controversial.  With 17 comment left by readers who all had different opinions about the situation.  So I decide to revisit the issue read over all the comments again and meditate on which may be the right decision.

I have received many comments from Donnie who explained that 391% interest is to much for anyone to pay on a loan and repeated that this is a trap to Ohioans.  He explains that this is more or less predatory lending tactics that they are using to bring in customers and lock them in with high interest rates.

However Casey and Tara believed that the fee was only $15 for a two week loan which was better that paying an over draft fee.  They also believe that there would be 6000 jobs lost as a result.  They believe in the freedom of choice should be preserved to the consumers.

So in this article I have decide to go through all the facts and see how this might relate to you as the consumer and let you decide from there.  If you feel these fact differ from what you know let a comment at the bottom of this article.

The Facts ( or at least what I have read)

  • If the issue passes the maximum loan amount will go from $800 to $500.
  • If the issue passes the borrowers would have 30 days to repay the loan otherwise if it doesn’t there will be no time period.  (Not sure on this one let me know what you think?)
  • If the issue passes the maximum interest rate would be 28% and if it didn’t it would be much greater than that.
  • If the issue passes the government will be able to look at your financial records and decide if you will be able to have a loan or not. ( not sure if this true either.)

What’s true and what’s not

  • Here are some video I came across.  I couldn’t find any on you tube saying vote No on issue 5 so here is a link to those videos.
  • The next video here is from those that are getting the raw end of the deal from payday lenders watch it and see what you think.  You can also check out the vote Yes on website.

 

  • This next video is from the CBS Evening News talking about the payday lending as a whole across the country.  This is a disturbing video.  Check it out and let me know what you think.  Leave me a comment on how you feel about this.

 

My thoughts on the subject

I have been thinking about this issue a lot recently and have tried to put myself in the shoes of the consumer.  My thought is if I were a consumer going to a payday lender to get a loan would I want to pay 300% interest or would I rather pay 28% interest.  Sounds like a pretty simple decision to me.

The other things that I don’t understand is that they say that 6000 jobs will be lost.  All they are doing is limiting the interest rate, loan amount, and time frame for the repayment.  How will this lose jobs for us in Ohio? 

Finally, if you would care to share your thoughts on the subject please leave me a comment.  I also plan on doing a follow up article again in a few more weeks to display and discuss the comments that were made.

Filed Under: Market Updates Tagged With: , , ,

The Decision That Could Hurt You

October 1, 2008 By 2 Comments

Savings or debt?

Recently I was reading in a couple forums and I’ve found a few people asking what would be better, to save money or concentrate on paying off your debt first? 

While I’m not going to say which one is better my outcome here is not to give you a direct answer to that question but to help you make the decision which would be better for you to do first.

Which would you do first?

Depending on your situation this question can have a multitude of answers.  If there is a preferred way you would go about this leave me comment.  If it’s hard for you to decide on which would be the option to place the most importance on don’t worry your not the only one.  But I do want to make one thing clear first.

Making a decision is better than making none at all.  Even if it may be the wrong decision.

I’ve seen this many times sometimes we just can’t make up are minds about which way to handle things.

And then it happens.  NOTHING!

We literally lock up and do nothing.  The worst part about that is we allow ourselves to stop simply because we may not like the outcome we are going to face.  Don’t worry about whether it is wrong right.  Sometimes just taking action is all you need to do to get the ball rolling. 

In fact you may be saying to yourself that you want to take some time to review your options.  Thinking this will give you a clearer path to follow.  Though what I have found is that taking action clarifies your thought process and helps you make better decisions. 

If you don’t believe me try it once.

So here is a simple exercise I want you to do to help you consider what may be the best option for you.

Compare and Contrast

Take out a sheet of paper and write savings on one side and pay debt on the other.  Now on the savings side write all the great things that would happen if you saved more money than pay off your debt.  List as many as you can.  Then do the same on the other side with the pay off debt option.

For example,  on the saving side you might put:

  • Build up an emergency fund
  • Have extra spending cash
  • Save for retirement
  • Save money for kids college funds

Then for the paying off debt side you might put:

  • Pay off credit cards
  • Frees up $80 a month from credit cards
  • Pay down mortgage balance
  • Creates more equity in my home

You get the idea. 

Once you are finished simply see which side has the most points that you would agree with.  Not just the ones with the most points but the ones you feel hold the most weight in your oppinion.  Which would you weigh heavily in?  Leave me a comment how you feel about this.

Everyone’s situation is always different.

Nobody has the same exact situation.  So in order for you to decide there are some key factors you may also want to think about.

  • How much debt do you have?
  • How long would it take you to pay off your debts?
  • What debts do you have to pay off?
  • How old are you?
  • How much do you have saved up?
  • How long would it take you save that money up?
  • What are you saving for?

Is debt the right answer?

In reviewing the questions above if you have a lot of debt and it will take a long time to pay it off you may want to start here.  However it also depends on what type of debts you have and your age.  The reason you need to consider is at what age do you stop paying debt and save for retirement.  If you pay off all your debt your entire life but never save any money to retire on you may end up facing some tough decisions.

If you want to put your own debt plan together read this first.

Age has a big weight in this issue. 

The sooner you start saving money the better and the easier it will be to fund your retirement, save for college funding, and save for an emergency fund of all things. 

If you are older and close to retirement and haven’t saved any money yet it may be to late.  There may be some other options here but saving money is not one of them.  I’ll talk about this in future articles.

To learn more about why saving now is better read this article.

Is saving the right answer?

Again it all depends on how much money you have, what you are saving for, and of course how long it will take.   If you are 60 and just starting to save for retirement you aren’t going to get to far.  On the other hand if you were 25 you may want to start saving now.  At least in your 401k program to start.  When it comes to saving it’s never to early to start.

Compromise

In most cases though you just won’t do one or the other unless it’s the only way to handle the situation.  Most of the time you will be doing both but placing emphasis on one more than the other. 

For example,  you may be deep in debt but at the same time you may be saving money in your 401k program at your job if they offer one.  This could be a possibility.  That’s what this is all about the options you have avaliable.

Finally, think about the different opportunities available.  Make sure you take the time to come up with a few ideas to handle the situation don’t just do the one that sounds best to you.  Then do the most important step.

Take Action!

So?  How do you handle this situation?  Would you pay off you debt first or would you save the money or would you compromise on the situation?  Leave a comment and let me know.

Filed Under: Debt Managment Tagged With: , , , , ,