I know that it is incredible hard to get out of a debt situation. I am trying to give some tips, but the most important advice is “You need to be a control freak with your money”.
It is a good choice to buy a book or even a software that helps you with advices and the controlling part of your incomings and expenses.
The most known software is the Microsoft Money, but there is a good free alternative called GnuCash. http://www.gnucash.org/download.phtml
You only will achieve your goals if you redirect your money to pay the bills.
1) Again, put your credit cards in a safe place and stop using them
2) Contact every company that you are in debt. Start to negotiate with the highest rates debt and the greater values
3) Negotiate your loans again, contact the companies, try to make a plan that you could pay. Ask for a new schedule with a lower interest rate.
4) When you paid off one credit card, redirect this amount of money to pay another card or loan
5) Never pay the minimum when we talk about credit cards. You will pay forever!
6) Borrow against your life insurance. The rate is below compared with loans or credit cards
7) Borrow from your 401(K) retirement plan. The rates are cheaper than credit cards.
8) Again, renegotiate with your creditors! Tell them that if you can not renegotiate your debt, you will declare bankruptcy (We will talk about this later)
9) Again, cut your luxuries. Stop to eat out, bring your lunch from home, take a bus, walk, cut everything that it is not necessary
Finance on track
Tips that will help you learn how to deal with money issues, bills, debt, goals, investment, plan, insurance, safeguards, retirement, education, loans, assets, income, expenses, cash, credit, bonds, stocks, rules, bank, treasury securities, lower risk, mutual funds, taxes, health, medical, 401(K), IRAS, Roth IRA, Annuities, mortgage, borrow, leasing, buying and much more!
Credit Counseling is an option
It is a good idea to get help from a nonprofit agency. They will help you to understand and to solve your debt situation.
- The Nation Foundation for Credit Counseling, Silver Spring, Maryland, www.nfcc.org, phone 800-388-2227
- The Association of Independent Consumer Credit Counseling Agencies AICCCA, Fairfax, Virginia, www.aiccca.org, phone 800-450-1794
Contact the Debtors Anonymous to participate of groups and meetings. They help people to solve their debts problems. www.debtorsanonymous.org
Get a copy of your credit score with www.equifax.com, www.experian.com or www.transunion.com
Tips:
- Pay attention that if you contact one of those agencies, it could affect your chances of qualifying for a loan. Check first if your initial counseling session will not be reported to a consumer reporting agency or credit bureau.
- If you are being contacted by debt collectors too much, remember that you have rights under the Fair Debt Collection Practices Act (www.ftc.gov). If you write letters asking them to stop contact you, they may only contact you again to inform that they will stop to contact, but you still could be sued for the debt.
- If you have problems with loans or credit cards, automatically your others credit cards would be affected with higher rates.
- Try to contact every person or company that you are in debt to negotiate. They want to receive and you want to pay, try to make a good deal for both.
- Start paying the highest rate credit card or loan. They are consuming your money more than others debts.
- The Nation Foundation for Credit Counseling, Silver Spring, Maryland, www.nfcc.org, phone 800-388-2227
- The Association of Independent Consumer Credit Counseling Agencies AICCCA, Fairfax, Virginia, www.aiccca.org, phone 800-450-1794
Contact the Debtors Anonymous to participate of groups and meetings. They help people to solve their debts problems. www.debtorsanonymous.org
Get a copy of your credit score with www.equifax.com, www.experian.com or www.transunion.com
Tips:
- Pay attention that if you contact one of those agencies, it could affect your chances of qualifying for a loan. Check first if your initial counseling session will not be reported to a consumer reporting agency or credit bureau.
- If you are being contacted by debt collectors too much, remember that you have rights under the Fair Debt Collection Practices Act (www.ftc.gov). If you write letters asking them to stop contact you, they may only contact you again to inform that they will stop to contact, but you still could be sued for the debt.
- If you have problems with loans or credit cards, automatically your others credit cards would be affected with higher rates.
- Try to contact every person or company that you are in debt to negotiate. They want to receive and you want to pay, try to make a good deal for both.
- Start paying the highest rate credit card or loan. They are consuming your money more than others debts.
Emergency fund plan
Your next priority is an emergency saving fund that can support you in case of a job loss, car repair, medical expenses or even a disaster.
So, put in your mind that an emergency fund is your first priority.
If you don’t have a health insurance or a life insurance, you are in trouble! Both are very important for you and your family.
Now you know how much money you need to support yourself and your family every month.
With this formula below, in three years you will have an emergency fund that can support you and your family for six months.
There are studies that have concluded that health and job issues usually can be solved in sixth months.
You need to save every month = Your month expenses * 6 / 36
This is very important. It is hard to save this amount of money every month, but you will sleep much better when you know that you have this fund in the bank. After three years you can stop saving for this emergency fund, and maybe you can think in other dreams.
It is rare to find someone that has this emergency fund. A tip to save this money every month is an automatic deposit that you can program in your bank website. Every month this amount will be transferred from your regular account to a savings account.
If you are able to save more money, modify the formula replacing 36 for 24, or even for 12. You can achieve this emergency fund quicker. (two or one year)
Again, avoiding credit cards is the better way to achieve this emergency fund plan. If you pay in cash for everything, you will buy less, just because it is hard and not safe to carry a lot of money with you.
More tips:
- Forget the ads about airline miles or points that you earn using credit cards! Don’t use credit cards.
- Bring your lunch to work. You can save more than $200 a month.
- Reduce the channels in your cable TV
- Reduce the speed of your internet plan
- Buy a recipe book to practice and eat more in your house
- Try to contact your previous employers to check if there are no health benefits, pensions or profit-sharing plans that you left behind
- Ask your employer for a hard-earned raise
- Research in your job area for a most and seek higher paying job
- Try to find out an additional part-time job
A great way to make money faster is selling everything that you are not using in your home on ebay. (Books, magazines, DVD’s, CD’s, devices, toys, a lot of crap that you bought some day and now are useless)
So, put in your mind that an emergency fund is your first priority.
If you don’t have a health insurance or a life insurance, you are in trouble! Both are very important for you and your family.
Now you know how much money you need to support yourself and your family every month.
With this formula below, in three years you will have an emergency fund that can support you and your family for six months.
There are studies that have concluded that health and job issues usually can be solved in sixth months.
You need to save every month = Your month expenses * 6 / 36
This is very important. It is hard to save this amount of money every month, but you will sleep much better when you know that you have this fund in the bank. After three years you can stop saving for this emergency fund, and maybe you can think in other dreams.
It is rare to find someone that has this emergency fund. A tip to save this money every month is an automatic deposit that you can program in your bank website. Every month this amount will be transferred from your regular account to a savings account.
If you are able to save more money, modify the formula replacing 36 for 24, or even for 12. You can achieve this emergency fund quicker. (two or one year)
Again, avoiding credit cards is the better way to achieve this emergency fund plan. If you pay in cash for everything, you will buy less, just because it is hard and not safe to carry a lot of money with you.
More tips:
- Forget the ads about airline miles or points that you earn using credit cards! Don’t use credit cards.
- Bring your lunch to work. You can save more than $200 a month.
- Reduce the channels in your cable TV
- Reduce the speed of your internet plan
- Buy a recipe book to practice and eat more in your house
- Try to contact your previous employers to check if there are no health benefits, pensions or profit-sharing plans that you left behind
- Ask your employer for a hard-earned raise
- Research in your job area for a most and seek higher paying job
- Try to find out an additional part-time job
A great way to make money faster is selling everything that you are not using in your home on ebay. (Books, magazines, DVD’s, CD’s, devices, toys, a lot of crap that you bought some day and now are useless)
Tips to control your debt
Ok, now you will show your expenses worksheet to your family.
All of your family needs to know when you are in trouble. Show the numbers, even for your kids.
Remember to be very clear in all of your points, explain every single bill to every family member.
This meeting needs to be periodically (a month is a good idea to start), and your family needs to solve some questions:
- How to lower debt?
- How to cut expenses?
- How to bring more money to home?
Now I will show some tips to decrease the bleeding: (in the next post we will talk about goals, but first it is very important to cut debts)
You need to be committed! All the sections below that are in bold are not optional! They are mandatory!
- Take your credit cards out of your wallet now! (without money it is impossible to buy for impulse)
- Keep less money in your wallet
- Start to eat more in home
- Bring your lunch from home
- Stop to buy brand clothes
- Stop to buy brand foods, there are alternatives
- Go to supermarket with a limited amount of money in your wallet, and always with a list! Don’t buy anything that it is not in your list!
- Cut your expensive entertainments
- Buy used books, DVDs, games
- Start to use internet to communicate with friends, stop to use phone and avoid cell phones. Be objective in your calls.
- Eat before to go to the supermarket
- Drink water, not soda or coffee (it is good for your health)
- Check banks with lowest fees
- Switch to fluorescent light bulbs and switch off every device that is not in using
- Buy generic drugs
- Sell a second car (pay less insurance, repairs, fuel)
- Move to a lower-cost region
- How long do you stay in the shower?
- Take a bus to go to work and school
- Bargain and research before to buy
- Make a huge garage sale once a six months
- It is possible to rent out a room of your home or get a roommate?
- Work with only one bank
I am sure that it is perfectly possible to save a huge amount of money doing the list above.
Remember:
- You need to be a control freak!
- You need to have discipline and follow this list!
All of your family needs to know when you are in trouble. Show the numbers, even for your kids.
Remember to be very clear in all of your points, explain every single bill to every family member.
This meeting needs to be periodically (a month is a good idea to start), and your family needs to solve some questions:
- How to lower debt?
- How to cut expenses?
- How to bring more money to home?
Now I will show some tips to decrease the bleeding: (in the next post we will talk about goals, but first it is very important to cut debts)
You need to be committed! All the sections below that are in bold are not optional! They are mandatory!
- Take your credit cards out of your wallet now! (without money it is impossible to buy for impulse)
- Keep less money in your wallet
- Start to eat more in home
- Bring your lunch from home
- Stop to buy brand clothes
- Stop to buy brand foods, there are alternatives
- Go to supermarket with a limited amount of money in your wallet, and always with a list! Don’t buy anything that it is not in your list!
- Cut your expensive entertainments
- Buy used books, DVDs, games
- Start to use internet to communicate with friends, stop to use phone and avoid cell phones. Be objective in your calls.
- Eat before to go to the supermarket
- Drink water, not soda or coffee (it is good for your health)
- Check banks with lowest fees
- Switch to fluorescent light bulbs and switch off every device that is not in using
- Buy generic drugs
- Sell a second car (pay less insurance, repairs, fuel)
- Move to a lower-cost region
- How long do you stay in the shower?
- Take a bus to go to work and school
- Bargain and research before to buy
- Make a huge garage sale once a six months
- It is possible to rent out a room of your home or get a roommate?
- Work with only one bank
I am sure that it is perfectly possible to save a huge amount of money doing the list above.
Remember:
- You need to be a control freak!
- You need to have discipline and follow this list!
Money coming and going
Now you know you net worth. The next step is to find out how much money you earn and where are the black holes that make your money disappear every month.
My advice and I will repeat this phrase forever is: “You need to be a control freak”
Every cent that you spend needs to be registered!
But we will start with our month income worksheet. (again, that is the easy part)
Income
Salary
Rental income
Investment income
Back account income
Alimony
Social security
Other(s)
Total income
Now is the hardest step ever! You need to register all your expenses.
You should build a huge worksheet with 31 columns and note every cent spend in the proper column (a day column in the right line that indicates the type of expense)
Expenses Day 1, Day 2, Day 3 …. Day 31
Rent
Mortgage
Electricity
Gas
Water
Garbage
Sewer
Food
Clothing
Personal Care
Auto repairs
Auto fuel
Doctor
Dental
Eye care
Drugs
Other Medical Expenses
Auto insurance
Health insurance
Home insurance
Life insurance
Disability insurance
Other insurance
Vacation and travel
Dining out
Entertainment
Child care
Child support
Donations
Education
Hobbies
Dues
Newspaper
Books
Subscriptions
Pets
Allowances
Bank investments
Mutual funds investments
Brokerage investments
IRA or pension
Other
Total
Be honest with you and follow my advice: I need to be a control freak! I need to know where my money is going out…
After a full month cycle, you will have a complete worksheet with all of your expenses.
Now you will calculate the most important equation of your life:
This is me = Incoming – expenses
If you are spending more money that you earn, obviously it is the main problem, but this is only the begin of your financial journey.
From now on, you should put in this worksheet every cent spent.
Remember, you need to be a control freak!
My advice and I will repeat this phrase forever is: “You need to be a control freak”
Every cent that you spend needs to be registered!
But we will start with our month income worksheet. (again, that is the easy part)
Income
Salary
Rental income
Investment income
Back account income
Alimony
Social security
Other(s)
Total income
Now is the hardest step ever! You need to register all your expenses.
You should build a huge worksheet with 31 columns and note every cent spend in the proper column (a day column in the right line that indicates the type of expense)
Expenses Day 1, Day 2, Day 3 …. Day 31
Rent
Mortgage
Electricity
Gas
Water
Garbage
Sewer
Food
Clothing
Personal Care
Auto repairs
Auto fuel
Doctor
Dental
Eye care
Drugs
Other Medical Expenses
Auto insurance
Health insurance
Home insurance
Life insurance
Disability insurance
Other insurance
Vacation and travel
Dining out
Entertainment
Child care
Child support
Donations
Education
Hobbies
Dues
Newspaper
Books
Subscriptions
Pets
Allowances
Bank investments
Mutual funds investments
Brokerage investments
IRA or pension
Other
Total
Be honest with you and follow my advice: I need to be a control freak! I need to know where my money is going out…
After a full month cycle, you will have a complete worksheet with all of your expenses.
Now you will calculate the most important equation of your life:
This is me = Incoming – expenses
If you are spending more money that you earn, obviously it is the main problem, but this is only the begin of your financial journey.
From now on, you should put in this worksheet every cent spent.
Remember, you need to be a control freak!
Finding your Net Worth
This blog will explain to you, using simple terms, how to put your financial life on track. Everybody has problems with money, and the lack of time, and maybe the lack of simple tools and knowledge will result in a totally life disaster.
We will start checking in depth your financial condition. This blog will always explain with a lot of details and without technical terms, relax …
Let’s check your net worth. What is the value of your assets and your debts?
So, in a simple way, your net worth = your assets – your liabilities
So, using a piece o paper, or if you know how to use a computer worksheet like Excel, Open Office Calc, or even the excellent online google Docs (http://docs.google.com), lets start:
Checking your Assets: (that is easy)
Asset Value
Home(s)
Auto(s)
Jewelry(s)
Other properties
Retirement accounts
Total Assets
Checking your liabilities: (that will take a long time, maybe days)
Liability Value
Credit card debt
Other charge card debt
Income taxes payable
Bank loans
Insurance policy loans
Car loans
Student loans
Home mortgage
Other property mortgage
Other loans
Total Liabilities
If you are ready, now this formula below will determine your net worth:
Your net worth = your assets – your liabilities
If your net worth is negative, don’t worry, it is absolute normal and this blog will help you put your finance on track.
Congratulations, you completed the first step, now you know your NET WORTH.
We will start checking in depth your financial condition. This blog will always explain with a lot of details and without technical terms, relax …
Let’s check your net worth. What is the value of your assets and your debts?
So, in a simple way, your net worth = your assets – your liabilities
So, using a piece o paper, or if you know how to use a computer worksheet like Excel, Open Office Calc, or even the excellent online google Docs (http://docs.google.com), lets start:
Checking your Assets: (that is easy)
Asset Value
Home(s)
Auto(s)
Jewelry(s)
Other properties
Retirement accounts
Total Assets
Checking your liabilities: (that will take a long time, maybe days)
Liability Value
Credit card debt
Other charge card debt
Income taxes payable
Bank loans
Insurance policy loans
Car loans
Student loans
Home mortgage
Other property mortgage
Other loans
Total Liabilities
You really need to know all of your debts, don’t try to do this task quickly!
If you are ready, now this formula below will determine your net worth:
Your net worth = your assets – your liabilities
If your net worth is negative, don’t worry, it is absolute normal and this blog will help you put your finance on track.
Congratulations, you completed the first step, now you know your NET WORTH.
Subscribe to:
Posts (Atom)