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All around the country, newly-minted high school graduates will soon be heading off to college. They’ll be taking a lot of things with them, but statistics tell us that financial literacy is not likely to be one of them. If I could spend a little time with these awesome students, I’d attempt to cram the basics for how to manage money into their heads, then pray that it penetrates their hearts.

 

A diverse group of college freshmen who need to learn how to manage money

A budget is your friend

That means …

  1. You have a written plan for how you are going to spend and manage money
  2. You use that written plan like you would a road map, consulting it often and
  3. You use a site like Mint.com or a pencil and paper to record how you spend every nickel.

Sallie Mae has a monthly budget worksheet you can print out to help you estimate your costs and keep expenses under control. Do not attempt to do this “keeping track” thing in your head. You are amazing, but don’t push it.

Live with cash

Your generation has been somewhat brainwashed to believe that plastic is the only safe way to pay for things. That may be true if you buy things online, but overall it is just not true. Even then, there is a really cool way that you can shop on Amazon with cash. Let me show you here.

I don’t have the time or space to get into a long dissertation on the subject, just believe me when I tell you that using cash—currency, greenbacks, dollars, coins—will simplify your life and it will keep you from overspending.

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If you’ve ever been in serious debt or are right now you know the feeling that your creditors own you lock, stock and bank account. I’ve been there, I know.

Debt steals your freedom one option at a time until you become its prisoner.

woman-with-debt-worried-about-bills-to-pay

 

Debt keeps you chained to a job you hate. It keeps you stuck in the past, unable to move forward in life. And big debt causes terrible stress that makes it hard to breathe, keeps you awake, spoils relationships and zaps the joy out of living.

It makes sense that if debt steals your options, then repaying debt creates financial freedom. But that’s not necessarily true.


RELATED: The Difference Between Safe Debt and Stupid Debt is Huge


If you spend just the amount you earn, you won’t be living beyond your means or creating new debt to bridge the shortfall, but you will be broke at the end of every month spinning your wheels, living from one paycheck to the next.

The first rule of sound money management is to live below your means—spend less than you earn. This means creating a margin between what you earn and what you spend. The secret to finding financial freedom—freedom from financial worry, fear and want—is in the gap between the amount you earn and what you spend.

The bigger the gap, the more freedom you will enjoy. It’s the money you don’t spend that gives you the freedom to grow your dreams and prepare for the future.

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When I was young and stupid, I accumulated more than $100,000 in unsecured, credit-card debt. And you think you’ve got troubles?!

I didn’t get into that mess overnight. It took me 12 years and myriad terrible financial mistakes to do that and in the process, nearly ruin my life.

During the 13 years it took to get out of the mess (paid back every nickel with no concessions, settlements, negotiations—or bankruptcy) I learned how important it is to deal with mistakes as they happen so they don’t turn into major setbacks.

No one is perfect. You’re going to make mistakes, and when you do, you need to know how to react and what to do to minimize the damage.

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Paying off credit-card debt is an uphill battle. If the majority of your minimum monthly payment is going toward interest, that makes the climb even more difficult.

Getting out from under double-digit interest rates with a zero-interest balance transfer can make a big difference provided you understand the risks.

Woman dealing with credit-card debt and in despair

 

Dear Mary: May I ask your advice?  I have a credit-card balance of $4,500 at 18 percent interest. My FICO score is 700. I’ve been paying just the minimum monthly payment for too many years but I am determined to pay this off in the coming 12 months.

Would it be wise for me to transfer this to a new CHASE Slate credit card that offers zero-percent interest with no fees for 15 months? Or should I keep what I have, bite the bullet and just pay it off over the next year? Mary Beth

Dear Mary Beth: Let’s look at the numbers. If you keep what you have and pay off the $4,500 at 18 percent interest over 12 months, you will make 12 payments of $412.56 each, for a total of about $4,950, of which $450 will be interest.

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If you are or have ever been, plagued by credit-card debt, I can nearly guarantee that revolving expenses related to Christmas have contributed greatly to that miserable situation. The problem? Procrastination.

woman upset by Christmas credit-card debt

Face it, when it comes to Christmas, the longer you wait, the more you’ll spend. The opposite is also true: The sooner you get started the less you’ll spend.

Everyone procrastinates in some area. And some people procrastinate about everything. Why do we do it?

We feel overwhelmed. The holiday expectations we place on ourselves plus those that come from our families, the community, even the church can be so great we feel paralyzed. So we do nothing until the only choice we have is to spend as much money as it takes to get by.

We overestimate how much time we have. From where we sit here in July, Christmas seems so far away. We tell ourselves we have “plenty of time!”

We have to do it perfectly. Experts tell us that at the root of procrastination is perfectionism. Because we feel we have to do everything perfectly—and fear that we might not—we do nothing rather than run the risk of failing.

We say we work better under pressure. Waiting until the last minute can provide quite an adrenaline rush. Procrastinators believe they cannot operate without that creative surge, so they sit back and wait for it to happen.

The way to deal with procrastination is to identify why you do it. Ask yourself: What price have I paid in the past for the delay? Do I really want to pay that price, or even more, again this year?

If the answer to the last question is yes, you have lots of time; you don’t need to be thinking about the holidays yet.

If on the other hand, you are not willing to go into debt to measure up to others’ expectations, get started. Do something now even if all you do is stash $25 a week for Christmas shopping in December. Once you are in motion it will be easier to keep going.

1. FAMILY PHOTO

Whether it’s for your family Christmas card or to frame for a gift to friends and family, get that picture taken now. Then shop around for the best price on high-quality prints.

Costco. It’s hard to beat Costco’s prices and service, but you need to be a member. However, right now it doesn’t appear you can order holiday photo cards—if you want to go this route. You’ll have to check back in a few months to see if their holiday templates are available.

Snapfish. You can get 5×7-inch photo cards printed for as little as $1 each when you order a package of 20—and the price goes down if you order more. Even though it’s July, Snapfish has its holiday templates available for you to order and print.

Vista Print. A great source for a postcard with your photos, plus many other options. VistaPrint has frequent specials and sales throughout the summer, so check back to see if you can get a deal at VistaPrint.com. Caution: You will be hounded throughout the order process to buy all kinds of “add-ons.” Don’t waste your money. Buy only what you came to buy.

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