Kick Debt Off!!

Getting Out Of Debt – What Motivates You?

Joe — Wed, 10 Mar 2010 16:09:59 +0000

Motivation is defined as -

giving an incentive for action; to cause, or to prompt; Example: “This moved me to sacrifice my career”

When we began the journey and the process to be debt free, we knew that it was going to be a long steep journey. We were prepared for the walk to become debt free (or so we thought). Like first time marathon runners we started fast, we budgeted diligently, cutting back here and there we were furious and intense, we paid the first credit card, then the next. Soon after, my wife’s old Mazda’s engine and transmission quit. She had to travel long distance for work assignments, so we got a car note. It felt like going back to where we began, both our intensity and pace were affected. We wondered if we will ever pay off any of our debt.

I know we are not the only ones who have felt this way, after the signs of coming out of a one hole, then you are pushed back into another. Perhaps, the finances become tight or an emergency wipes out your fund. Becoming debt free is an upstream swim.

Getting out of debt Motivators

Start with a goal
We started out with debt snowball plan and we knocked out all six credit cards to the tune of $15,000.00. This was like a dose of new energy to kick debt off. Although we are far from becoming debt free setting financial goals has been a key success factor.

Review your budget.
We review and adjust out budget at least once every two weeks. This gives us an opportunity to talk about our finances.

Reward yourself.
If you have ever been in debt, you know that getting out can be very draining and a long process. We reward ourselves after hitting set milestones. We take a vacation, and pay for it cash.

Get an accountability partner.
My wife Esther and I are each other’s accountability partners. We hold each other accountable for our decisions and it keeps us focused.

Pray about your finances.
It is still true that “the family that prays together stays together”

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What are your motivators?

Is God In Your Financial Equation?

Joe — Tue, 09 Mar 2010 15:42:32 +0000

I read this funny quote by Woody Allen that

If you want to make God laugh, tell him about your plans

I thought it was an interesting quote while i reflected on how busy life can be as we pursue it – looking for deals, discount, another job, a better job, paying off debts, buying a business, buying a house, starting a family, relationships, and all other things that life has to offer.

Then i thought about my life, my finances ,my dreams, and my goals – and i had to pause and ask myself…are my plans in sync with His plans for me?

As the heavens are higher than the earth, so are my ways higher than your ways and my thoughts than your thoughts.(Isaiah 59:9)

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Things Money Can’t Buy

Joe — Mon, 08 Mar 2010 18:13:23 +0000

There are a lot of things that we can by with money but certainly not all that life has to offer can be traded for money. A general assumption is that we all want money; in fact, we use it to cater for our human basic needs, we feel good (at least i do) when we put some money into savings account, and when we save some money for emergency. The pursuit of money is chase of a lifetime more like chasing after the wind. The more you get the more you want. Solomon the wisest man who ever lived chased after riches, women, luxury, knowledge and he had a lot of it. However, he concluded:

Meaningless! Meaningless! says the Teacher. Utterly meaningless! Everything is meaningless. (Ecclesiastes: 1:2 NIV)

Some things money can’t buy

1. Money can’t buy life
You can buy a lot of good health insurance, life insurance, and the best healthcare there is, and i am all for these items but, money can only take you so far….. along this journey of life. When it is over! It’s OVER!

2. Money can’t buy respect
Money seems to have energy and it draws people to you when you have a lot. (The opposite is true too, when you lose it all you lose your followers as well). You can command influence because of great stuff that you can do with money. However, you cannot buy respect from others with money.

3. Money can’t buy time
We all get 24 hours a day, some people use it wisely and others waste it. Consequently, even if you own all the money there is, you cannot buy an extra hour in a day.

4. Money can’t buy joy
It takes money to buy homes/houses, cars, boats, clothes, food and most of the good things in life that brings “happiness”, but true joy cannot be bought or traded for money.

5. Money can’t buy a family
As mentioned above, you can buy great house/home, you can even be influential enough to attract beautiful women and handsome men. Needless to say, money will never buy you a healthy relationship, or a good family.

Wise people know what money can buy and what it cannot. They use the money to buy the most that it can, and invest their time on what money cannot buy.

What are other things that money cannot buy?

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A New Car or A Used Car?

Joe — Wed, 03 Mar 2010 16:35:00 +0000

I drive a 1993 Honda accord and it is nearing the end of its useful life. So replacing it is in my mind possibly sooner than later. Interestingly, the more I think about replacing it, the stronger the feeling of attachment, and the more cars on sale I see in the streets. We have already decided that a new car will not be an option, and also we will pay cash for it. Therefore I will keep driving my old clunker as long as it can; until I save enough or my wife cannot stand it anymore and I get an ultimatum to replace the car. If you are in the same boat as I am, and have not decided whether you want to finance a new car or save for a used here are some things to consider.

Remember that once you drive a new car out of the dealership lot, the value of that car drops significantly by almost 20% depending on the type of the car.

Before buying the car

1. The choice often boils down to money.
While some dealership might let you buy a car with no money down, they will slap you with high interests for financing your car. I am a proponent of paying with cash; but if you cannot reach your budget goal before your clunker dies on you, consider using your local credit union. Bottom line – you will need to have the money for the car or someone will finance it for you.

2. Do your research and set your target price.
The Internet has made it easier to find out the dealer’s cost for each vehicle and its options. This is the first step to getting the best possible deals. Check the dealership near you; at this time of the year many people use their tax refunds to replace their cars, you might get a great deal or a very bad deal. Do some extensive research. Check the prices of the vehicles that interest you on Edmunds.com ,Kelley Blue Book’s , and NADA.com

3. Know how much your old car is worth.
If you are not planning to give your car away, check the fair amount that you can sell it or trade in value at Edmunds.com, Kelley Blue Book’s , and NADA.com because that figure might be an important factor in your budget.

4. Negotiate your purchase.
This gene either died when I was growing or it never was in me, but my other siblings are good at this. I hate haggling that is why I tell a seller my budget upfront. I know this is not the best way but you’ve got to start somewhere.

5. Have the car inspected
For any used car, you want to be sure that the car you are about to buy is what you think it is (a good car). Some dealerships do not allow you to bring in an external mechanic to check their cars. I find this very strange and I would not deal with such.

On top of having your mechanic check the car, if you still like it; for the peace of mind consider getting the car history from place like carfax.com. From these reports you can tell if the car has ever been sent to a junkyard, if there is odometer discrepancy, and even the maintenance report. It is a good $35.00 investment before committing to buy the car if the seller does not provide it.

6. Understand the terms of sale.
If you have found what you want, done your homework good enough; saved enough to pay for your car, be sure to ask about warranty and service. Most dealers will have “As Is –No Warranty” on buyer’s guide. According to federal trade commission:

When the dealer offers a vehicle “as is,” the box next to the “As Is – No Warranty” disclosure on the Buyers Guide must be checked. If the box is checked but the dealer promises to repair the vehicle or cancel the sale if you’re not satisfied, make sure the promise is written on the Buyers Guide. Otherwise, you may have a hard time getting the dealer to make good on his word.

Did you finance your car or paid it cash?

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Financial Fear

Joe — Tue, 02 Mar 2010 13:31:33 +0000

Fear is one of the strongest emotions that most people express about their financial circumstances.
Some of the fear is unjustified; but we all do experience these emotions at a point in life. Sometimes it is triggered by a thought of losing a job, panic when the stock market is plunging or other factors.

I have caught myself on several occasions letting my mind wonder and worry about what might happen; like what would i do if i was unable to provide for my family? I have also discovered that fear robs us the opportunity of enjoying today’s life to its utmost.

As Christians though, we are called to resist the natural urge to fear by committing those worries to God.

“Therefore I tell you, do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life more important than food, and the body more important than clothes? Look at the birds of the air; they do not sow or reap or store away in barns, and yet your heavenly Father feeds them. Are you not much more valuable than they? Who of you by worrying can add a single hour to his life?” (Mathew 6:25-27NIV)

This is our confidence even when times seem hard. We have a father in heaven

What is your greatest Financial Fear?

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Retirement without Social Security Benefits

Joe — Mon, 01 Mar 2010 14:30:11 +0000

Last week i received on the mail my annual social security statement detailing how many years i have contributed, how much Social Security taxes i have contributed, earnings that i may receive … and lot more other details. Out of curiosity i checked the Social security website and these are some details i read from the site.

The current Social Security system works like this:

When you work, you pay taxes into Social Security. The tax money is used to pay benefits to:

People who already have retired

People who are disabled

Survivors of workers who have died

Dependents of beneficiaries

The money you pay in taxes is not held in a personal account for you to use when you get benefits. Your taxes are being used right now to pay people who now are getting benefits. Any unused money goes to the Social Security trust funds, not a personal account with your name on it.

This is not news but again according to the social security unless action is taken to strengthen Social Security, in just 13 years we will begin paying more in benefits than we collect in taxes. Without changes, by 2042 the Social Security trust funds will be exhausted.

It’s evident even from Social Security administration that – it may not be there for some of you reading this and most of your children and grandchildren!

How to prepare for retirement without social security

Get out of debt:- from my experience it’s almost impossible to save when you are in debt because the lenders will come knocking for their dues. Getting out of debt is not only a healthy financial plan but it also prepares you to start saving.

Save for emergencies: Because life happens with an emergency fund built, you will avoid going back to borrow money to cover for unexpected.

Invest your savings -understand the power of compound interest
Take advantage of all pre tax retirement benefits.

Roth IRA for you and your spouse
Company 401k or other plan that matches your contributions

Are you getting ready to retire without any social security benefits, or do you think it will still be there?

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Personal Finance Weekly

Joe — Fri, 26 Feb 2010 16:15:57 +0000

It has been a great and busy week, glad the weekend is knocking. On personal finance, here are some articles for this week round-up.

Bargaineering List of Free Specialty Consumer Reports
A comprehensive list of reports with your personal data that you are entitled to receive.

Cashmoneylife Analysis Paralysis: The Cost of Inaction
Patrick bring the discussion – what do you do when there are too many options?

Bible Money matters Leave An Inheritance For Your Children
Jason opens up a discussion about leaving an inheritance for our children. A thought provoking discussion.

Debt Free Adventure Is It Better to Buy or Rent?
Matt brings a heated discussion that we have also been having with my wife. Buy house now and enjoy the freedom of owning your own home, or rent and save to buy what you can afford?

Christianpf How To Turn Your Failures Into Opportunities
Joe reminds us that life will still happen; but when the going gets tough those who have a different perspective of failure keep going.

Pfjourney How NOT to Dispute a Credit Card Charge
Lakitta takes the unpopular approach of ‘How Not’. A home run for understanding the terms before committing your money.

Alcoholic millionaire Be Determined to Finish What You Start !!!
This is a reminder to stick to what we commit to do. For me it is about getting out of debt what have you started?

PF By the Book When Does Saving Turn To Hoarding?
Once again Joe reminds us about having the balance in life. Being responsible financially but realizing that our real treasures should be laid up in heaven.

Frugaldad The Art Of Saying No
Frugal dad writes about how our society has shifted, and brings out the importance of saying no now, to succeed later.

Have a great weekend

Time to write your will

Joe — Wed, 24 Feb 2010 17:21:21 +0000

When a will is mentioned, many people think millionaires, celebrities’, and huge estates; yet others think about death. The reality is, people who prepare the will actually acknowledge their mortality. They put their ‘earthly house’ in order, so that when they die, or become incapacitated, life will not stop for those who rely on them. Generally, though, if you die without a written will and leave a spouse and children, your assets will be split between your surviving mate and children depending on the state laws. If you are single with no children, then the state decides who among your blood relatives will inherit your estate.

What is a will?
A will is a legal document that specifies what somebody wants to happen to his or her property after he or she dies.

Types of Wills
This may vary from state to state but generally, these are the major types of acceptable wills

A –DIY handwritten or holographic will. This will must be completely written in your own handwriting. It must be dated and signed. (Check your state to find out if it is acceptable)
Joint Will- A Joint will is one that two people make together, each leaving all of their property and assets to the other. A Joint Will also stipulates how the assets will be distributed when the second person dies.
A statutory will – is a “fill-in-the-blanks” will form usually provided by the state. It is designed for people with relatively small estates.
A will prepared by a lawyer. A qualified estate planning lawyer can make sure that your will conforms to the sate law.
A living will is a statement that is typically signed in advance while in good health, that specifies the decisions somebody wishes to be taken or not to be taken about his or her medical treatment in the event of becoming so ill and incapable of communicating.

Who needs a will?
70% of Americans do not have a will. It speaks out about the stigma associated with death.

You need a will -

If you have young children child because wills are the best way to transfer guardianship of minors.
If you have assets and dependents you need a will
If there are things you want done a certain way after you die- you need a will
You must be at least 18 years of age to sign a will.

Beginning the process
If you are married both spouses should sit down and talk it through. I understand that it is hard to talk about death especially to your family. In fact it is a taboo in some cultures around the world to talk about death rest you be blamed for inviting death into the community. You will need to talk about what happens if one spouse dies, and what happens (God forbid) if both dies.

You’ll need to nominate or pick a guardian for your child or children. The person that you pick will commit to care for your child or children
Choose an alternate legal guardian to include in your will. He or she will take care of your child in the event that your primary choice is unable to do the job.
Appoint an executor to administer your will when you die, and spell out specifically how you want your property distributed.

Personal information you need to prepare a will
List the amounts of all debts, may include but not limited to:

Mortgages,
Car loans,
Student loans,
Business loans,
Promissory notes,

A list of assets, with detailed information – may include but not limited to:

Real estate
Savings (bank accounts, CDs, money markets)
Investments (stocks, bonds, mutual funds, CDs)
Life insurance policies and annuities
401(k), and IRA retirement accounts
Life insurance policies

Copies of related legal documents- may include but not limited to:

Existing wills,
Trusts,
Divorce decrees,
Prenuptial agreements
Other legal documents that might affect a will.
Cars, boats, planes and other vehicles

Items not covered by the will
According to California state bar, your will affects only those assets that are titled in your name at your death. Those assets that are not affected by your will include:

Life insurance. The cash proceeds from an insurance policy on your life are paid to whomever you have designated as beneficiary of the policy.

Retirement plans. Assets held in retirement plans, such as a 401(k) or an IRA, are transferred to whomever you have named as beneficiary in the plan documents

Assets owned as a joint tenant with right of survivorship

“Transfer on death” or “pay on death.” Certain securities and brokerage accounts include a designation of one or more beneficiaries to receive the assets in that account when the account owner dies. The names of the beneficiaries are preceded by the words “transfer on death” or “TOD.” Other assets, such as bank accounts and U.S. savings bonds, may be held in a similar form using the owner’s name and the beneficiaries’ names preceded by the words “paid on death” or “POD.”

Living trusts. Generally, assets held in a revocable living trust are distributed according to the instructions in the trust regardless of the instructions in your will-with no need for court supervision.

Things to remember know

You can edit and change your will. In fact you should review your will periodically. If it is not up to date when you die, the last valid copy holds true.
You may also establish a new will and, in doing so, revoke your old will.
If you do not appoint an executor of your will, the state will have to appoint one when you die.
Find about the tax liability for your beneficiaries and make informed decisions

Death Wisdom
“…. It is appointed for man to die once and after that to face judgment” (Hebrews 9:27)

The big question is not when you will die- but are you ready to face your maker when you die?

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Consumer Debt

Joe — Tue, 23 Feb 2010 15:16:46 +0000

I was looking over some debt statistics and i was surprised at what i found.

Over 40% of US families spend more than they earn.
Only 2% of homes in America are paid for.
Nearly 1 in every 35 households in the United States will file for bankruptcy.
96%of all Americans will be financially dependent on the government, family, or charity at retirement.
Over 1.5 trillion dollars worth of purchases annually is made using credit cards.
Americans carry, on average, $8400 in credit card debt.
The average U.S household pays $950 in interest each year.
More than four out of ten young consumers between the ages of 18 and 21 who surf the Web now own a credit card, and 65% of these young consumers used the Web to apply for a credit card.
In September 2008 credit card debt hit an all-time high of $975 billion.

Credit cards debt distribution statistics around the U.S as of August 2009.

Highest state average credit card debt:
- Alaska at $7,665
- Tennessee at $7,054
- Nevada at $6,517.
Lowest state average credit card debt:
- Iowa at $4,247
- North Dakota at $4,417
- South Dakota at $4,633
The steepest increases in average credit card debt over the previous quarter:
- District of Columbia +6.3%
- Tennessee +2.7%
- Alaska +2.5%
The largest drop in average credit card debt over the previous quarter:
- Hawaii -2.7%
- Utah -2.6%
- Nevada -2.4%

This leaves you to think about this question – Are we out of control on personal spending in America?

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Earn Money while sleeping?

Joe — Mon, 22 Feb 2010 19:10:02 +0000

I do not know about you, but this statement seems very appealing. It speaks about convenience and a worry free life. However, I asked myself is this the real financial freedom, or is this a mindset issue? So i did a Google search for this query and the results were astounding.

Results 1 – 10 of about 837,000 for earn while sleeping. (0.30 seconds)

Can you really make money while sleeping?

My answer-
No with a big N. But you may ask – what about those rich folks who get paid huge dividends every year and are always taking expensive vacation? My answer is – for you to earn dividends you must have invested in something. (I am talking about honest investments)

What you need to know.

People who have invested and are earning from their investments do not sleep and expect money to flow; they continue to tend their investments.
The principle of sowing and reaping hold true- you cannot sow a seed into the ground – sleep and expect a harvest. You have to water, weed, and prune before the harvest time.
In all possibilities, any plan that promises you that you can earn while you sleep is a scam. They know that hard work is not human being’s first impulse; that many people enjoy instant gratification, and people will pay anything for convenience.

Elbert Hubbard said:

Folks who never do any more than they get paid for, never get paid for any more than they do.

My conclusions is drawn from Proverbs 30:25; 6:6.

“The ants are not a strong people, yet they prepare their meat in the summer… … Go to the ant, thou sluggard; consider her ways, and be wise”

What lesson can humans learn from these tiny creatures?

They are faithful and persistent in the execution of their duties.
They work without an overseer.
They work hard.
They understand the seasons.
They have an emergency food savings for winter.

Napoleon Hill said

Do not wait; the time will never be “just right’. Start where you stand, and work with whatever tools you may have at your command, and better tools will be found as you go along.

What Lessons have you learnt?

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