Improving Your Finances While Maintaining Your Lifestyle

Have you ever gotten a raise? What about an unexpected bonus? A refund check from the IRS? Found a surplus in your checking account?

Many people have financial challenges and today, I am going to talk about one very big tip that will help improve your financial situation for years to come.

Did you know that many people making six figures but are in debt and not on track for retirement? Yet, they can survive and pay their month to month expenses. Did you know that there are also people who are surviving and paying their month to month expenses, making half of what the six figure salary earners are making? And still, there are people living off of half of that.

How does this happen? Isn't it true that when our income rises, our expenses tend to grow to match the level of income? Today, I'm here to teach you how to stop the madness.

When you get a raise, be purposeful about how you are going to spend the raise. Since you were already living just fine without the raise, take 80% of the raise and implement a pay yourself first program. This means, that you apply this money towards your debt elimination program or your retirement savings, before you use it for monthly expenses. After you have done this, you can take the other 20% and spend it however you like. Go ahead, you deserve it for your hard work.

Remember, by choosing to keep the same standard of living, you are also choosing to improve your finances.

This post was reposted from http://finlit.biz/retirement-2/improving-your-finances-while-maintaining-your-lifestyle/, originally written on September 12th, 2013.

5 Simple Tips to Decrease Debt: Part I

In Suze Orman's "The Nine Steps to Financial Freedom", she introduces the idea that respecting money will naturally improve your own financial situation.

Creating habits which require you to think about money on a weekly basis, even if for a brief moment, are very beneficial for your financial future. Here are five different ways to respect money.

1. Keep your credit card statements.

Each time you get a new bill, write down the interest rate along with your payment amount on the statement. Then, slip the bill into a small folder.

Most people simple throw the statement away or use online statements. This leads to neglecting your situation and the inability to answer simple questions regarding your personal finances.

2. Neatly stack your bills.

Just taking the time to put your money into an organized wallet.  Each time you pay for something, you will probably take note of how much you have spent, keeping a better eye on your money.

Some people just crumple bills or throw them into their pocket.  This leads to inaccurate accounting and the feeling of "What happened to all my money?"

  This article continues with 5 Simple Tips to Decrease Debt: Part II.

This post was reposted from http://finlit.biz/uncategorized/5-simple-tips-to-decrease-debt-part-i/, originally written on August 20th, 2013.

5 Simple Tips to Decrease Debt: Part II

This article is continued from 5 Simple Tips to Decrease Debt: Part I.

3. Don't improve your credit score.

If you monitor your credit score and have achieved a great score, why spend any additional effort to improve your score?  Remember, your credit score only affects you if you ever get denied something based on your credit score and in some cases, getting denied might be a good thing for you.

Some people keep balances on their credit cards and keep loans just to build their credit score.  This leads to paying larges amounts of fees and lots of extra worry.

4.  Don't finance anything that depreciates.

Anything that depreciates is a want, not a need.  If you keep focused on using the cash that you have, rather than cash you will earn in the future, you will save yourself a lot of headache.

Most people finance everything they want in life.  When unexpected emergencies come up, they are left stranded and strapped for cash.

5.  Track your spending through a check register.

Before we had the ability to spend effortlessly and on a whim, there were people that actually wrote down everything the spent, whenever they spent a dime.  This allowed them to constantly look through their spending habits and readjust accordingly.  While you may not use an actual check register, you should find some way to track your daily spending.

Most people quickly glance at their statements and don't even know their current checking account balance.  This can lead to overdraft fees and running out of money before the month is over.

This post was reposted from http://finlit.biz/uncategorized/5-simple-tips-to-decrease-debt-part-ii/, originally written on August 20th, 2013.

Debt Freedom versus Paying Yourself First

Do you want to get out of debt? Do you want to make sure you have a sufficient nest egg for retirement? If you answered yes to both questions, congratulate yourself because you are like most people.

This article will discuss practical advice for upholding your integrity by paying back those you owe while at the same time, planning appropriately for your own future so that you can provide security to yourself and those you love.

Unfortunately, many people focus too much on paying down their debts. They start taking actions to knock down their debt and make some great progress. However, after a short period of time, something happens that stops them in their tracks. They get busy with other things or an emergency comes up. Just like the weight after a crash diet, the debt comes back, sometimes even worse than before. Sound familiar?

A few people take the opposite approach. They save and invest for their future. Once they get comfortable with their progress, they loosen up a little. Soon, they are either borrowing money to invest more or they are just plain disregarding their debts, allowing them to grow out of control. Sound familiar?

Just like with weight and nutrition, the changes you implement to get rid of your debt, will need to be long term changes. You need to incorporate paying yourself first as a life long habit. Then, with the money that remains, you should create a plan to payoff your debts and pay back your creditors.  This plan should include actual milestones and timelines to hit those objectives.

Paying yourself first should be a priority over paying off your debts. In a sense, if a creditor gives you a predatory loan, that you cannot pay back, their consequence for greed is a loss of their investment. "Pigs get fed and hogs get slaughtered." If you cannot afford to pay yourself first 10% of your income, creditors should not be loaning you money. Remember, you can always negotiate with creditors to reduce your debt but you will never be able to negotiate with custodians to increase your nest egg.

Some related articles are:

• What is John D. Rockefellers 10/10/80 Rule?
• 3 Parts to Jim Rohn's 70/30 Financial Independence Rule
• Should you pay off your home?
• Three Debts Which Will Kill Your Finances
• Isn't it Time You Joined the Debt Freedom Movement

This post was reposted from http://finlit.biz/retirement-2/debt-freedom-versus-paying-yourself-first/, originally written on July 23rd, 2013.

From Leah

Interesting reading. I think heard it somewhere before during a conversation I had. I this life is all we have and we should remember to place our value in people. Especially the ones that live and care for us whether we are rich or poor.

From Hannah

I agree except I worry that the whole system is gamed…the plutocracy has it all set up to work for them, and they throw us bones to worry about immigration or racism or sexism or abortion…anything other than rich peoples’ tax breaks. Those other issues are real. What should we regular people do?

From Scott Izu

The key to change is education. With better information, you can make better decisions. And believe it or not, if you want something different, it starts with you. Whether through reformation (internal change) or revolution (external change), you cannot change anything by yourself. For, united we stand, divided we fall.

Everyone can point out a problem, but a successful person sees a problem as an opportunity and focuses on not only pointing out the problem, but also providing a solution. Everyone can say they want change, but a successful person not only talks about change but actually takes action towards making a change. So my questions to you are: 1) What is your recommended solution? 2) What actions are you taking to get the result you want?

From Hannah

“What is your recommended solution?”

Education. Logic. Ethics.

Education: study and understand history. Yeah, it’s complicated. Get over that. Study. Plutocrats will win. Look at Rome. Be realistic. And remember that religion is about someone else’s power, not yours. It’s a bait and switch. Be generous and always, always care for the less fortunate.

Logic: whenever someone tells you to pay homage to something unproven or faith-based or the like, they want you thinking about something other than what they’re doing while you’re bowing down. Wake the fuck up.

Ethics: would you want someone doing to you what you’re doing to them? Why are you thinking about someone else at all? Be good. Be kind. Think about whether any choice you make is something that you wouldn’t mind someone doing to you.

I became a vegetarian about 20 years ago. I would never require that someone else to do what I chose. But as I get older, I am not sure I shouldn’t….

Above all, be kind. I experience this rarely, and I wish that what doesn’t kill me makes me stronger. But what experience actually tells me is that people are hypocrites. I want to be better than that, and I wish everyone felt that way. Am I alone? I hope not…

I hope that someone envisions a future as I do, with love and understanding and the concept that despite differences, we can find a better place and finally be happy.

Do You Like Dave Ramsey's Snowball Approach?

At www.daveramsey.com, Dave Ramsey has listed seven steps towards getting out of debt. The second step is called the snowball approach to quickly and aggressively attack debt. Do you like this approach? Have you personally had any success?

This approach is also known as Debt Stacking or a Fast Pay Plan. There is one thing for sure. If you are in debt, something you have been doing is not right and you need to change that. The sooner the better. If you have any other tips, please share as people in America are burdened with debt.

According to useconomy.about.com, in 2012, "Revolving credit card debt dropped to $862.3 billion, or $7,246 per household. This is down substantially from the record $1 trillion owed in 2008."

The snowball approach allows one to continue the same payments and drastically reduce the amount of interest paid. The goal is to become completely debt free. In general, if you want to be debt free and have retirement savings, you should try to cap your spending, even as you get raises or have debts paid off.

For more on spending habits, check out this earlier post.

This post was reposted from http://finlit.biz/debt/do-you-like-dave-ramseys-snowball-approach/, originally written on January 22nd, 2013.