If you're one of the many many people out there who has debt in a lot of different forms (a credit card or two, student loans, car loan, home equity line, etc.), when's the last time you added up the balances?  I bet not recently.  Take a moment, collect info about all of your debts.  Gather bills, statements, go online, whatever.  And add up the balances of all that you owe.  This number is probably bigger than you think.

I suggest this not to depress you but to inform.   Reality sucks sometimes, right?  But that doesn't mean you shouldn't face it.  When money is concerned, debt especially, it's so vital to live in the real world.  It's too too easy to just stick your head in the sand and ignore it all.  And that won't end well.

Figure out the total amount you owe.  Face it.  Reckon with it.  Start thinking of a plan for what you're gonna do about it.  Over time, you can get out of debt.  You can.  If you make a plan and follow it.  It might take a while, might take years.  But if you get there, you will be damn proud of yourself.  

Please do this.  Care for yourself.  None of your lenders will.

Good luck and peace!

I had a conversation with someone the other day who had what I think is a pretty common misperception about store loyalty cards.  You know those cards, right?  You're about to buy something from some department store or other big box retailer and they give you a 10% discount if you sign up for their card.  Sounds like a great program, right?  Sign up and you save all sorts of money.

Of course you know they are trying to get you to shop more at that store.  But what a lot of people don't seem to understand is that those cards are debt, just like a credit card.  Every time you use it, you are increasing your overall debt load.  Problem is, sometimes when people carry very small balances on these different cards, they don't think of them as important.  Or at least not as important as say their Amex or MasterCard.  But you need to pay these off just as regularly as any other debt.  If you don't pay these cards, even if it's only a few bucks a month, they go into default and you trash your credit score.

Many of you probably already know this.  But I know for a fact that some of you don't.  Your best bet?  Get rid of all these cards over time by paying them off.  Look through prior blog posts here for strategies to pay down debt.

Good luck, and peace!

Sometimes we get a chance to take a big step forward, financially.  Sometimes something goes right for us in terms of money.  Examples include: finally getting a job after a long time laid off,  getting a better job with higher pay,  refinancing to a super low rate,  selling a house and moving to a better one.

When (not if) these things happen to you, bravo and congratulations.  You've worked through enough hard times, you deserve some good news.  But, make sure to hold the line!

What I mean by this is, don't spend all your new found money and end up worse off than you were before.  Before the positive step forward came, I bet you had all sorts of great ways to save money, keep expenses low, make ends meet.  And you just knew that if fortune ever came your way again, you'd make sure to never get into money trouble again.  Well, now you have to follow through on that.

You'll have to fight against many urges when you come into some money.  You'll want to just relax a bit, take the pressure off and treat yourself.  That's just fine, but be careful.  Perhaps the biggest risk you'll face is that you'll just start spending your money at a faster rate than ever before.  And you'll blow through whatever windfall you've achieved.  I've seen this happen all too often.

Best thing to do is make a budget, and stick to it.  I don't mean to throw cold water on the celebration party.  But be careful, be deliberate, follow your budget.  Still treat yourself, but just a little, for a little while.  Then get back to business.

Good luck, and peace!

If you are lucky enough to own a home or condo, and haven't refinanced your mortgage yet, don't worry - there are still great rates out there.  But, make sure to keep it simple!  I too often come across people who want to refinance and get tripped up by the sales people involved in the process.  Here are some key points to keep in mind:

• A simple mortgage will be best.  Go with a fixed term (like 30 years), fixed rate (an interest rate that is locked in forever), and pay no points (mortgage brokers confuse people with these).   In other words, a 30 year, fixed rate mortgage with no points.
  
• Don't let the process cause you to borrow more.  People usually set out to refinance their existing balance and then end up borrowing even more, at the lower rate.  This can wipe out any benefit that you're seeking to gain from the refinance!   Hold the line.  Borrow only enough to pay off your existing balance.
• Be ware of online lenders.  If anyone asks you to pay closing costs or other fees up front, then walk away.  You should be able to go through the whole process and pay at the very end, when your refinance is approved and closing.  There may be some nonrefundable fees, but these should be a small part of the whole and should be clearly explained to you.
• Work with a small local credit union or local bank branch, with someone that seems like they are taking the time you need in this process.  They should be patient and should work with you closely.
• Remember that mortgage people (brokers, orginators, etc.) are paid commission on the size of the mortgage they get you to take.  This puts their needs at odds with yours.  You're trying to reduce your costs with the lower rate.  They are trying to get you to borrow as much as possible.  You are the boss.  Do what is best for you, and don't worry about them.

Good luck!

For 2013, try being more intentional.  What I mean is this: try to slow things down and act with a sense of control.  You could do this in many areas of your life of course:  you could be more careful with your eating, your exercise, the way you treat others.  But for our purposes here, let's focus on being more intentional financially.  Don't shoot for changing everything all at once.  But take a step, take two steps, toward taking charge of your money.  Here are two ideas:

1.)  Shop with cash.  Whenever you go out to buy something, whether it's groceries, clothes, a cup of coffee, whatever, plan what you're going to buy, and use cash to buy it.  You will spend less than if you use a debit or credit card. There have been studies that show that shoppers who use cash spend much less than those who use plastic.  And, you won't be tricked into those last minute impulse purchases - you know, those things you don't need at all, but buy anyway.  Do this, and I bet you will spend less and feel more in command of your money.

2.)  Pay off the smallest loan first.   I've spoken of this in an earlier post, but it's worth repeating.  If you have a lot of debt, spread over many things: car loan, credit cards, mortgage, and so on, a good way to make progress is to focus on paying off the smallest one first.  Each month, you continue to pay all of your debts - paying the required amount, on time.  Now, focus as much extra cash flow as you can onto the smallest of your debts (by smallest I mean the one with the smallest principal balance).  Keep doing this until you pay that smallest debt off.  This frees up some cash flow.  Now, focus on the next smallest debt and try to pay that one off as quickly as you can.  And so on until you're out of debt.  This process might take time, several years even.  But it works.  By focusing on the smallest debt first, you will see your progress.  And that will encourage you to continue.  And, you will make an impact on your cash flow situation in the near term future.  

Well, I hope these tips help.  Here's to a happy, blessed, and intentional new year!

Peace!   

Have you heard about this program from the US Dept of Education?  The Income Based Repayment plan could be very helpful to some of you!  Check this out! 

Some people out there can claim to have things all under control: no debt, a nice working budget, all their ducks in a row.  Well good for them.  They are rare.  Most people in America, middle class people, have way too much debt.  We have car-loans-credit-cards-department-store-cards-home-equity-lines-mortgages-student-loans-and-on-and-on-and-on.

Here is my fondest wish, prayer, and challenge for anyone who reads this: let's set goals to be completely DEBT FREE within (pick the time frame that realistically will work for you): 5  to 10 years.  This will mean you have to pay down things faster than you might want to.  You might have to scrimp and save.  You might have to forego things like vacation or that big new whatever it is.  

But your life will be better.  If you get out of debt, your life will be better.

Don't worry about your credit score.  You'll be better off.

And, most importantly, you will have inoculated yourself against the influence of the banks.  You may not be able to completely avoid all influence by the financial behemoths, they will still have influence in your community.  But, if you have no debt, they don't have control over you.  

Think about it.  If you have no debt, then when interest rates go up, it won't matter to you.  If there's another financial collapse and your income goes down, you can't be foreclosed on or repossessed or otherwise worked over.

And, your life will be simpler, cheaper, better.

Maybe this approach will help.  Click here.

This is my wish for you.  Make a plan.  Follow though.  It will take some time, but hang in there for as long as it takes, hang in there.  Good luck! 

You can do it.  

Get Out of Debt, slow and steady:  
For those of you who haven't seen this yet (and for those who want to refresh their memories) here's a Debt Repayment Plan that is simple and will work if you stick with it!
 
Unless you come into a big chunk of money (inheritance, lottery, mana from heaven), there is no easy way to get out of debt. Debt works that way: it’s really easy to get into debt, and hard as heck to pay your way back out.

So if you have a situation like many many other Americans, where you have different debts spread about on various accounts and cards, here’s a good way to pay it off.  To be sure, this approach takes time (as in years), but if you’re diligent, it will work.

1. First, get current on all of your payments and stay current.
2. Pay the minimum balance on all of your debts, except for the smallest debt (lowest principal balance).
3. For the smallest one, pay as much more per month as you can reasonably afford.
4. Make sure that extra amount is applied to principal (not to future payments).
5. Keep focusing your extra payment energy on that smallest debt each month until that one is paid off (bravo, now you have one less monthly bill!).
6. Then, take that extra cash flow and focus in the same way on the next smallest debt.
7. Keep that up until it is paid off (now you’ll have more cash flow, again).
8. Focus on the next smallest, and then the next. And so on.

Again, this is not a fast process but it works. This means you won’t be focusing on paying down the one with the highest interest or the largest outstanding balance. The point is to try to focus on cash flow. You want to pay down debts that you can get rid of quickly, freeing up cash flow that you can use.

Good luck and hang in there!