Grand Opening Giveaway!
Filed Under Books, Debt | 16 Comments
I’m very excited to get my new website off the ground! To celebrate, I’m giving away two of Dave Ramsey’s book, The Total Money Makeover. All you have to do is leave a comment to let me know you stopped by. I’ll select the winners on Sunday night, January 18. Good luck and thanks for stopping by!
Oprah’s Debt Information
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Whether you are an Oprah fan or not, you should really take a look at the advice she has to offer on her website. She has a whole section dedicated to money issues, such as this section on debt. I encourage you to take a look.
Free Financial Book Download
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I watched just a few minutes of Larry King the other night and he was interviewing Suze Orman. She was taking calls and one woman asked Suze, “I’m spending more money than I make each month. What do I do about that?” Basically, Suze freaked. And she should have. She replied, “You don’t need to call in here and ask me how to do that! Write down all of your income then write down all of your expenses. If there are too many expenses, start cutting things.” Even though I gasped at the question and Suze freaked at the question, unfortunately this is probably a question a lot of people have. Some people simply don’t know what to do.
Suze Orman revealed her 2009 Action Plan on Oprah recently. She is offering a free download of her book. While I don’t agree with everything Orman recommends, this download is certain to be full of helpful information.
Life Insurance Amounts
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One day I stopped by a cemetery to pay respects to my great-grandparents. As I was walking up to their spot, my attention was drawn to the headstone next to it. “Oh my gosh,” I said to my husband. “THAT is not what I came to see today.” Apparently my grandparents, who are very much alive, had already purchased their headstone and it was already placed, just like it was waiting for them to die. Smart, I suppose, but it’s still not fun to think about death before it actually happens.
Same goes for life insurance. Smart, but not fun to talk about your death while you are alive and health. But much different from a headstone, it’s too late to talk about it after you’re dead. So we better talk about it now.
How much do you need? If you were to not wake up tomorrow, how much money would your survivors need? Experts say you should have a life insurance policy that is 8 – 10 times your current salary. Even if you don’t have an official salary, such as a stay-at-home parent, you will need to calculate how much money will be necessary if you are gone because there may be more childcare expenses and such.
Think about all the expenses your spouse will be left with when you are gone:
- Funeral expenses
- Mortgage
- Unpaid debts
- College tuition for kids
- Any other expenses that you currently have
For generally healthy people, term life insurance is dirt cheap. You should make sure you are healthy anyway, but here is another good reason to be healthy. For example, my husband and I got quotes for term life insurance recently. They took our blood before giving us a quote. My husband’s cholesterol came back in the “high” range, which automatically jumps his rates up to the “high” range. We paid that rate for a few months while he worked to get his cholesterol down. He did, and is now paying a much more reasonable rate for his life insurance.
Make sure to shop around for the best rates. Also make sure you understand exactly what you are signing up for. Get out your glasses and read all of the small print – and understand it.
Lastly, make sure your survivors know how to access the life insurance when you are gone. They should know the amount of the policy and who to contact after you die. After you death the last thing they want to do is dig through a bunch of paperwork so make sure it’s all laid out for them.
Debtors Anonymous
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Addiction is a horrible thing, whether it’s drugs, alcohol, prescription medications, shopping or debt. Yes there is such as thing as Debt Addiction. Debtors Anonymous was started to help peolpe deal with their addiction to debt and they have a 12-step program similar to other “anonymous” programs. Here are a few of their but there is a 12-step program for those who use debt - Debtors Anonymous. Here are a few of the questions they list on their website for you to see if you could benefit from their help:
- Are your debts making your home life unhappy?
- Does the pressure from your debts distract you from your daily work?
- Do your debts cause you to think less of yourself?
- When faced with a difficult financial situation, do you feel relief when you think, “I can just borrow some money”?
- Do you justify your debts by telling yourself that you are superior to the other people, and when you get your “break” you’ll be out of debt overnight?
Retirement Is Not That Far Away
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Retirement seems like such a long ways away. I’m aware that it’s hard to put away money when there is so much “cool stuff” to spend it on right now. But unfortunately, the cash won’t suddenly appear the day you walk out of your job. You need to work on it…NOW.
How much do you need?
Experts say you should have enough put away so that you can live on 8% of the money that you have the day you retire. So you need to figure out how much you think you’ll need. Keep in mind that most of us plan to have a whole lot of fun at retirement, rather than being stuck at home or *gasp* still working because we haven’t saved enough money.
Let’s say that you retire with $500,000. Sounds like a lot, right? But in order for that money to last you until you die, that would only give you $40,000 per year to live on. Hopefully you’ll be done with mortgages and car payments and debt but then so you won’t need as much. But realistically, that probably isn’t going to be enough.
So what if you have $1 million at retirement. Technically you’d be a millionaire, and you’d have $80,000 to live on each year. Depending on what you wanted to do in your retirement, that could be enough money. But really – are you on track to have a million dollars at retirement? I can promise you that just relying on your 401K/pension is not going to get you anywhere near that. And Social Security? Don’t kid yourself.
So get out of debt now so that you can have a great retirement!
Causes of Personal Failure
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I have a large collection of financial and personal development books in my home library. One of my favorites is Napoleon Hill’s Keys to Success. In this book he lists his “Major Causes of Personal Failure.” I pulled a few out of his list to share with you. As you read this list, make note of which things are holding you back — and make a plan to do something about them!
- The habit of drifting through life without a definite major purpose
- Meddlesome curiousity about other people’s affairs
- Inadequate education - **Personally I don’t take this to mean that you need a college degree in order to be successful. I just think you need to be always learning, reading, studying up on whatever topic needs to be studied to make yourself successful.
- Lack of self-discipline
- Lack of ambition
- Lack of persistence and follow-through
- Negative mental attitude
- Lack of emotional control
- The desire to get something for nothing
- Failure to reach decisions promptly and firmly when all the facts needed for the decision are available
- Overcaution or the lack of caution - **I think being overly cautious can paralyze you. You’ll never make a decision and therefore be stuck in your situation forever.
- Indiscriminate spending of time and money
- Intolerance
- Failure to cooperate with others in a spirit of harmony
- Lack of vision or imagination
- Egotism and vanity
- Desire for revenge
- Unwillingness to go the extra mile
I hope you read that list carefully. Read it again if needed. Any changes you should be making?
How Money Disappears
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When I was in college, I was in a pretty bad car accident. A passenger in the other car did not survive so I felt lucky to walk away with only a broken jaw and a body full of sore muscles.
After all medical bills were paid I was left with an insurance amount of around $12,000. To a kid who usually had about $5.00 to her name, this was a ton of money. I opened a new bank account and threw the money in there. I made sure I had an ATM card so I had easy access to that money, of course.
My first big purchase was a set of burgundy furniture. Because what college student doesn’t need brand new furniture? The rest of the money most likely went to clothes, fast food places and entertainment. Back in those days I was always carrying expensive purses, wearing designer clothes, and participating in every entertainment opportunity that presented itself. I worked part-time but I’m pretty sure those slim paycheck did not contribute to my extravagant lifestyle. Well, extravagant by college student standards anyway.
Now that I’m much older and wiser, I hate thinking back to that $12,000. If I had invested that amount in a mutual fund that averaged a rate of return around 10%, that would be worth around $55,000 today. If I left in there untouched until I reached age 60, the balance would be around $543,000. I could have a paid for vacation home, tuition for my kids, a car without a crack in the windshield, or even early retirement. And if I had added money to that account as the years went along, that balance would be considerably higher.
Instead, I only have memories of burgundy furniture and Liz Claiborne purses.
Tips For Paying Down Debt
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Payroll Changes – As your paycheck amount is adjusted because of tax changes or pay raises, don’t let this extra money magically “disappear”. Do something with it! When you get a raise, calculate the difference between the new check amount and previous check amount and send the difference directly to debt! If you don’t purposely do something with the extra money, then why are you so excited to get a raise?
Spare Change – All spare change should go toward debt. In my state, we have deposits on cans and bottles so we always return those for the cash. It may not amount to much, but every dollar counts! Send this money to debt. Oh yes I have been known to make $4.00 principal payments on a loan. You may also want to keep a small bag on the kitchen counter or somewhere handy where all your spare change can go. Cash this in once per week and apply that directly to your debt.
Work, silly! Sometimes your main job just isn’t enough. Extra jobs here and there will make a difference in your bottom line. My husband loves sports, so he referees/umpires throughout the year. It’s something fun he likes to do and it contributes to our family’s income.
Sell Some Stuff: If you are new to “getting out of debt”, most likely you have a lot of stuff that you should be getting rid of. Go through your house and garage. Brand new lawn mower, when your old one will work just fine? Motorcycle that you are making payments on? Boat? Snowmobile? How about some home décor items that are totally unnecessary? Believe me, you have stuff. You just have to be willing to part with it. It will only hurt for a little while – I promise.
Interest on Savings: If you happen to have a savings account, it should be in a place where it’s earning interested. In fact, sometimes checking accounts offer great deals on interest rates. See checkingfinder.com. Any interest you make each money is extra, so send it directly to debt!
And of course, your monthly income. This is the most important part of your financial plan. You work very hard for this monthly income, so keep an eye on it! Live on a budget that is well below your means and send the rest to debt!
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Quote of the Day
Another way to solve the traffic problems of this country is to pass a law that only paid-for cars be allowed to use the highways. Will Rogers
