Posts Tagged ‘credit card debt’

How to Finish the Year With a Flourish

In the final weeks of December, it’s important to take one last look back at the year. How’s your plan coming? If it’s like mine, there are still some items on the “to do” list that you’ve yet to mark off. We’re down to only a few weeks to finish up our goals for 2015.2015 to 2016

I was listening to a podcast recently with Hal Elrod (of Miracle Morning fame). He was sharing with the host that he sleeps very few hours most nights, but that it doesn’t seem to affect his day. He noticed that on short rest, everything hinged on his attitude. If he woke up and said, “Man, I’m tired. Today’s going to be awful,” the day stunk. If he said, “Alright! I’ve got a huge day today, no more time to sleep!” he became a powerful force in the universe.

I’m certainly not advocating that we give up sleep. More sleep AND a good attitude are probably the optimal one-two punch. However, if you’re in a situation where less sleep is the reality, attitude can change the game.

It’s the same with our money, isn’t it? Our attitude changes everything.

  • If I believe my debt’s killing me, it is.
  • If I think saving money is difficult, it is.
  • If I decide that I’m stuck in a rotten financial place, I am.

As creatives, we know from literature, film, plays, and even poetry, that the hero largely decides her fate. In the beginning of a three-act play, the character faces a problem. By the end of the work, the character has formed a plan, and for better or worse, they’re working through their plan to find a resolution. (more…)

Getting Out Of Debt

Attacking Your Debt: What’s the Best Approach?

You may know the feeling: You’re at the bookstore and spy a wonderful new reference book that’ll help with your art….or you’re at the clothing store to pick out an outfit for an audition, and the perfect fit is just outside of your price range.

What’s a little credit card debt, right? You’ll be able to pay it off later. Hopefully.

Whether you took on debt by overspending on your craft, or your job doesn’t pay enough, debt is a weight that’s hard to relieve. That said, getting rid of debt is the first step when creating the Abundance Bound mentality. According to financial site NerdWallet, the average household in the U.S. carries $15,422 in debt. Ouch. More meaningful is the fact that once people have debt, they’re likely to use credit more and more often. The flip side? 53.3% of the American population carries no debt at all.

We can’t solve the American debt problem, but we certainly can help add you to the 53% without debt, can’t we? How should you pay it down?

Much has been made in the financial press lately about how you should attack your debt. Researchers recently concluded that often what people think of as the smartest option hasn’t been the most effective way to pay down debt. Let’s look at two popular methods and review why you might want to choose the sub-optimal method to pay down your debt.

The Mathematically Sound Method To Pay Debt

If you want to take the fastest path to debt relief, and can stay on it, here’s the obvious solution: (more…)

Daily ProsperiTIP

 

Here’s a trick I like: round your debt (including your mortgage) to the next round number. If your minimum payment is $45 on a credit card bill and you can’t pay more toward the balance, just round the bill to $50. Sure, it isn’t much, but most people can afford a few dollars extra toward debt repayment. What feels like a small amount can add up to much quicker payoffs.

From the Mailbag

Miata,

Should I pay extra on my mortgage? I’m making a little extra money right now and I’m thinking paying off my house is a good idea.

 

– Jon

Hi Jon,

This is an intensely personal question. Certainly, less debt is always a step in the right direction, but there might be better choices to grow your net worth more quickly.

Here are a few areas to think about before tackling extra mortgage payments:

  • Is your credit card debt paid down? If not, this is a greater priority. Credit card debt is more harmful to your credit score and is usually at a higher interest rate.
  • Do you have an emergency fund? If not, put extra money into a savings account so that if you have financial trouble down the road, you’ll have funds available.
  • Are your long term goals met? If you’re saving enough for retirement, college or other priorities, then pay down your mortgage.

A mortgage is tax deductible, low interest debt in most cases. Because money paid into a mortgage can’t be used for other goals, I usually look toward other options before paying it down.

Refinancing Your House, Car, or Credit Cards

Interest rates are low. Most of the time it’s wise to ignore anyone who tells you “you really need to….”, but believe me, you should check the interest rates of all your debt before interest rates rise.

…and when are interest rates going to rise? That’s the problem; I don’t know. Therefore, I recommend you do it right now.

Before We Begin

Make sure you read my post from two weeks ago: How to Take Advantage of Low Interest Rates. It lays out the simple steps to check your credit. You don’t want any surprises if you end up filling out applications to lower your interest rate.

Today, we’ll focus on three areas: your home, auto and credit cards.

How to Refinance Your Home

1) Compare rates through several lenders. This is done easily through a mortgage broker or an online comparison site. While many lenders appear to have different rates, you’ll find those with lower rates generally have higher fees. On the inverse, those with higher rates often have lower refinance costs. Generally, I prefer lower cost mortgages (which often means a slightly higher rate).

2) Gather information about each type of mortgage. Home lenders offer two basic types of mortgages: fixed or adjustable. While there are many iterations of each type, here are some you’ll see regularly during your search:

a) A basic fixed rate mortgage comes in a 15-year and 30-year variety. Usually, a 15-year mortgage will have a slightly lower interest rate than a 30-year option.

b) Adjustable rate mortgages often keep the rate stable for 1, 3, 5, or 7 years, before changing. Usually the rate will change annually after the short fixed period.

(more…)

How to Cure a Credit Card Hangover

Ah, late January… a time of colder temperatures, snuggling around a warm fireplace…and December’s credit card bill waiting like a bomb in your mailbox.

Nightmare!

Did you overspend during the holiday season? If not, many people you know made up for you. According to this Bloomberg Businessweek article, consumer debt rose more in November of last year than it had in 10 years.

Although analysts call this a “good sign” for the economy, doesn’t this statistic frighten you? Weren’t we just talking recently about many people losing their homes because of too much debt? People in the arts, especially, shouldn’t take on debt they can’t afford. In many cases, our income streams bounce around enough that we shouldn’t be spending next month’s paycheck that may never arrive.

But, if you overspent over the holiday season, there’s nothing to do now but clean up the mess. It won’t be easy, but with a good plan and the right tools, you’ll be back on your financial feet in no time. Here are my four steps to curing your credit card hangover: (more…)

5 Steps To Protect Your Sanity This Fall

 

Ah, September…the month leaves begin to change from green to shades of red and yellow. Sounds of fall sports and school buses fill the chilled autumn air.  And my thoughts turn to the holiday season and the pageantry, colored lights, office parties, family and a new year upon us.

Huh?  Are we still talking about September?

Getting your financial house in order is about planning for the future. One single month of the year causes my clients more financial pain than any other.  More money is spent, more credit card debt is created, and more savings take a big hit. That month is December.

But NOW is the time you can do something about it. (more…)

The REAL Road to Wealth…

Last week, an old friend called to meet for lunch. I suggested we try a comfortable mid-priced place with a patio, but she insisted on one of the nicest restaurants in town. Arriving, I couldn’t help but notice that her car was worth about double mine. She was dressed from head to toe in designer clothes and sported a pair of sunglasses I suspected cost so much that I’d be far too nervous to wear them. I was surprised to see how much money she’d apparently made, and mentioned it when we sat down.

“My students would love to know your secret,” I said. “You’re obviously doing really well. That’s fantastic.”

She sat back and sighed. For the first time since we’d met, I saw how tired she appeared.

“My secret,” she laughed, “is that I’m in over my head. That’s why I wanted to meet you. I’ve got to get my sanity back. The credit card debt is killing me.”

Needless to say, I was shocked. Nothing that I saw in front of me was the truth.

I understand the desire to appear successful. It’s important to project a confident image with our peers and potential clients. But spending money that we don’t have only makes things worse. Here’s how: (more…)