Posted in Building Wealth, Credit Cards, Debt Free, Financial Freedom, Saving for Your Future, You and Your Money

I Plan to Get Out of Debt

Anyone who has debt says this all the time.  Nobody wants to stay in debt.  However, getting out of debt takes more than just words and intentions.  It takes action and a plan. In my podcast this week, I go in depth about how to take action and how to develop a plan yourself to get out of debt starting today.  In my last blog post, we talked about how planning is something you can do immediately to begin the journey to wealth and financial freedom.  So let’s look at how to plan to get out of debt successfully and as quickly as possible.

No one would ever build a house without a blueprint – a visual of every aspect of the house and a plan on how to build it successfully.  And that’s what you need to get out of debt – the first step is to develop a blueprint.  This is a visual of your finances – your real finances.  This first step is actually what keeps most people from ever getting out of debt. They don’t want to walk in their truth, so they stay right where they are.  If you are ever going to successfully get out of debt, you are going to need to be honest about your financial situation and be true to what you are willing to do to change it.  You need a list of all of your income and all of your expenses – this includes accounts in collections.  You need to know exactly what you owe in order to develop the best plan to pay it off.

Once you have your blueprint in place, you need to figure out the best plan for you to pay everything off.  I want to caution you about paying for this.  Most of the “debt consolidation” programs charge thousands of dollars and basically all they do is get you behind on every bill so they can get you a settlement offer.  Doing this will make your credit score even worse than it probably already is.  Once your score is damaged, it takes a long time to build it back up and even though you hopefully aren’t going into debt again, your score is your financial reputation and should be kept at a good number.  We offer a coaching service and something like that is okay – getting advice from someone who’s been there to support you is one thing, but you don’t want to pay thousands to a company for something you can do yourself.

So now you know what you owe – next, you need to figure out how to pay it off.  Using either the debt avalanche or the debt snowball method, you want to arrange your items in the order you want to pay them off.  I always recommend the snowball method because of how quickly you can pay off items in full, but pick the method that will work best for you and keep you motivated.  Once you start seeing debts being paid, you will continue to be motivated resulting in more sacrifice and more ideas on how to bring in more income.  Developing a plan and actually starting the process are the keys to success when it comes to paying off debt.

I hope after today you will stop saying “I plan to get out of debt” and you will start getting out of debt by developing a plan and taking the actions required to finish the plan as quickly as possible.  Even without any extra money, if you stop using debt and continue to make all of your debt payments, you will eventually be debt free.  But your goal should be to take actions that get you there as quickly as possible so that you can truly begin your journey to wealth and financial freedom.

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Posted in Budgeting for Everyone, Credit Cards, Debt Free, Financial Freedom, Winning with Your Money, You and Your Money

Awesome Budget Tips – Carrie Wilkerson

As promised on this week’s broadcast/podcast, I am sharing these great budget tips from @CarrieWilkerson.  She is a fellow motivational speaker and author and when I read this, I knew you needed it, even as a reminder, because I did.  What I loved about it is she, like me, didn’t sugar coat it.  Sometimes we share dessert with you, making what we have to say go do smooth.  But every so often we need to give you meat & vegetables to keep you healthy in your life and in your finances.  I hope you will read this the way it was intended – with lots of love and support.

You can win in your finances – you will win in your finances!  But the decision is yours.  You are the author of your own story!  Write a best seller!

Some budget tips…

[SPEND LESS]

+ If you want to make more, spend less. #truestory
+ If you’re complaining about being broke, spend less.
+ If you’re stressed about minimum payments or juggling dollars, spend less.
+ If you’re mad at yourself or your spouse or fighting about money, spend less.
+ If you’re jealous of other folks because of ______ then spend less.
+ If you want more choices about where to live, what to drive, where the kids go to school, quitting your job or having some options… SPEND LESS.

This is where it STARTS. YES – you can make more with your business. YES – you can still work to change your circumstance- but first SPEND LESS.

[BE AWARE]

Evaluate EVERY expense. Is is NECESSARY or just something you ‘deserve’?

What if you did ‘without it’ for a few weeks/months? Would it change your quality of life?

Print out 3-6 months of credit card and debit card statements.

+ Highlight EVERY recurring charge.
+ Highlight EVERY disposable thing.
+ Highlight EVERY spontaneous purchase.
+ Highlight EVERY expense for something you don’t wear/play with/use/cook with/read or watch anymore.
+ Highlight EVERY unlicensed therapy expense (meaning you were self medicating with food/shopping/movies/girl time/drinks/etc.

Then… (here’s the hard part) – STOP THOSE THINGS.

Also – evaluate insurance, credit card rates, cable plans (unplug it), phone plans (downgrade) and new clothes (seriously. stop)

When I’m getting ahold of my sloppy financial habits again (this is a process, you know I’ve paid off boatloads of debt MORE THAN ONCE #slowlearner) —-

I ALSO DO THESE THINGS….

[BLINDERS ON]

I UNSUBSCRIBE from email ‘sales and newsletters’ – can’t buy what I don’t see!

I THROW AWAY catalogs that come in the mail – they don’t even come INTO THE HOUSE. Do NOT fool yourself ‘I’m just getting ideas, I’m making a wishlist, I’m just planning for when I can afford it.’ – NO NO NO NO – THROW IT AWAY. It will still be available for purchase when you can afford it. THERE WILL BE ANOTHER SALE.

I do NOT click on Facebook ads (those things follow you around and wear you down until you cannot help but buy. STOP IT)!

I do NOT attend home parties or demonstrations or trade shows or craft fairs or open houses or garage sales or ANYTHING WITH THE CHANCE TO BUY. Not when I’m reining it in. NOPE.

I TAKE THE APPS off my phone… Amazon, Starbucks, Instacart, ZigZag, Macys – ALL OF IT — OFF THE PHONE. Y’all – they have us figured out… if we can purchase with a click and without a brain, they WANT THAT. STOP THAT MESS. TAKE OFF THE APPS.

During commercials on TV I pick a project. I might tidy the sink or move a load from washer to dryer or go outside with the dogs – I AVOID MARKETING MESSAGES. YES – this is extreme. So is debt. So is financial stress. So is bankruptcy. So is NOT PAYING YOUR BILLS.

I SHOP in my CLOSET. IF I see an outfit I like on someone else or on FB — I go into my closet and drawers and put together something similar. Or do without.

I grocery shop ONCE a week and plan meals ahead of time to avoid mealtime meltdown and drive through overspends.

I use cash instead of cards.
I think in terms of effort… “how many xx do I have to sell or hours do I have to work to pay for this delivery pizza instead of doing a frozen pizza?”

YES DELIVERY TASTES BETTER… but debt free tastes BEST. #TrustMe

Don’t be a victim to marketing messages, bad habits, lack of will power and deserve levels.

Think of what you what MOST (financial stress-lessness and freedom) instead of what you want NOW (cute shoes or a top).

Think of WHY you’re so quick to spend and what you are self-medicating about or delaying…

You can do this.
I do a spending freeze at least once a year. It’s not fun but it keeps me in check.

This is a TOUGH time of year to do it – but HONESTLY… the MOST EFFECTIVE time of year! If you wait until JANUARY… how many more THOUSANDS OF DOLLARS will you have overspent??

Change your habits. Change your life. #DareYa

#1 — SPEND LESS
#2 — BE AWARE
#3 — BLINDERS ON!

 

Have a blessed day and please share this great information with your friends and followers!

Look out for Debbi’s new book, “50 Shades of Money”, in a few months.  Until then, check out her best selling , award winning book “The ABC’s of Personal Finance” on her website, http://www.debbiking.com or anywhere books are sold!

Posted in Budgeting for Everyone, Credit Cards, Debt Free, Financial Freedom, Saving for Your Future, Winning with Your Money, You and Your Money

The Credit Score Game – Part 2

lg_understanding-credit-score

Your credit score is your financial reputation.  It is the only accurate picture the world – and you – has of how you handle your money.  And we all know a picture is worth a thousand words.  We should never become obsessed about our score, but we should all understand what it means so that we can make good financial decisions that will move us forward and not backwards in the area of our finances.

Last week, we talked about the biggest part of the pie – your payment history which makes up 35% of your score.  Today’s factor makes up 30% – which means that just these two things make up almost 2/3 of your score.  In my mind, that means that they are pretty important.  These two things show us very quickly how we handle our finances.  The first factor shows whether we honor our commitments and use tools such as budgets and spending journals to make sure we can follow through on our promises.  It also shows whether we are prepared for emergencies when they arise.  The next factor shows us how much we rely on debt in our finances.  Let’s take a look at factor number two!

Part 2 – 30% of your score is your credit utilization.  This is the percentage of your credit limits you use.  For example, if a credit card has a limit of $5000 and you have a balance of $1000, your utilization is 20%.  Here is a huge factor when it comes to the utilization percentage – it is the balance as of the statement date.  This means that even if you pay your cards in full every month, your utilization can be high.  In a minute, I will share a tip on how to avoid this.

The ideal percentage to keep a good score is 30% and below.  However, if you stay below 10%, your score will get a boost as that is considered excellent.  If you are a person who relies on debt to buy stuff, it may take a while to get this into a good position.  The only way to do this is to pay off your debt.  Unlike part one where you could start today and see results pretty quickly, this will take a little longer based on where you are and how much credit you have access to.  If you owe $400 on a $500 limit, you can knock that 80% down in one month.  But if you owe $5000 on a $10,000 limit, it may take months to get that 50% down.  This factor isn’t about timing so much as it is about the math.  And depending on where you are getting your score from, your percentage can be based on each individual account or can be an overall average of accounts.

There are two keys to helping this as soon as possible – one if you are a pay in full person and one if you are a debt person.  If you pay your card in full every month, the key is to make sure that your payment post before the statement date.  Paying it off then can be the difference in an 80% utilization and a 0% utilization.  Big difference!  If you are a debt person, the best thing you can do is start attacking your debt smallest to largest.  This will start to show zero percentages on cards and will lower your average utilization.  This will weigh heavy on the positive side especially the more you pay down.

The one thing you need to know about all of the parts of your credit score is that what is done is done.  You can’t go back and change it.  However, you can make better decisions going forward which will begin to outweigh the bad ones.  Trying to do it all can seem very overwhelming which is why I wanted to talk about the top 3 factors so that you can begin there.  You may not be able to start paying everything on time immediately if you have struggled with this for a while, but there is no better time than today to sit down, list out all of your bills with their minimums, set up a budget and begin to make it happen.  Doing this will automatically improve your utilization – lower debt = lower utilization.  You can do it!  I was $200,000 in debt making just $10,000/year with a 560 credit score when I started the process.  And look at me now – debt free, making way more than 10 grand, and my score is over 800.  It is not impossible and I hope that these small tips that I will be sharing will help you to start the journey now.

Credit is a part of life – we need it for things other than debt in today’s world.  It is your financial reputation.  And it’s okay if your reputation is scared a little right now.  Just make the decision to start over – start today making one better financial decision, pay one bill on time, pay one debt off, anything!  Today is your day!