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Tuesday, March 16, 2010
Here are some helpful yet simple tips that can help anyone who is in debt to get out of it.
* Spend less than you earn.Use cash for better budgeting, and stop using debit cards and credit cards.
* Create a plan to get out of debt for better results than just sending money to your accounts randomly.
* Know exactly how much you owe, keep track of it in a spreadsheet or notebook and update it each time you make a payment.
* Establish an emergency fund as soon as possible to avoid relying on debt when an unexpected expense occurs.
* Shred your credit cards but keep accounts open (closing accounts lowers your credit score).
* Consider a non-profit debt counseling service to help you develop a plan for getting out of debt faster.
* Contact creditors to request lower interest rates or easier repayment plans.
* Get a free copy of your credit report to see if there are any errors that need to be corrected.
* Don't go into more debt trying to pay off your debts! You can't send so much to your debt repayments that you can't keep up with your living expenses.
* Look for ways to reduce expenses – the more you reduce, the more money you can pay toward debt and the faster you can become debt free. You don't have to live like a monk, but there are many living expenses and unnecessary expenses you can reduce or eliminate (even if only temporarily) to get out of debt faster.
* Learn how to entertain yourself for free.
* Plan for upcoming expenses and non-monthly expenses so you don't have to scramble to get the money all at once (car insurance premiums, property or school taxes, car maintenance, etc).
* Create and stick to a budget.
* Consider the debt snowball. Once you start rolling, it keeps on rolling unless you put it into a stop.
* Consider the highest-interest-first method of paying off debt.
* Consider the debt avalanche. Once your buried in debt, it's hard to get out of it.
* Avoid relationship problems by keeping open communication regarding finances.
* If you fall off the debt repayment wagon, get back on. It takes discipline and hard work to get out of debt.
* Learn how to reward yourself for sticking to the budget, or paying off debt, without spending a lot of money for the reward.
* You didn't get into debt overnight, understand it will take longer than a day to get out of debt, too. You have to break the cycle of debt.
* Stop borrowing or applying for credit. If you can't save for the purchase or the expense, then you can't afford to buy it.
* Don't forget the importance in saving for the future (retirement, college, etc) while repaying your debts.
* Increase your income with a part time job, a home business, programming, design, or with freelance writing jobs.
The bottomline is live frugally, live within your means . Life and succes in not about how much money your bank account has. It is not about how many cars you have, how many shoes are stuck inside your closet. It is about how you have lived your life. You're rich but you're not happy. You're rich but you're sick. You're rich but you're alone. I would rather live a happy simple life. But money is always welcome.
The bottomline is live frugally, live within your means . Life and succes in not about how much money your bank account has. It is not about how many cars you have, how many shoes are stuck inside your closet. It is about how you have lived your life. You're rich but you're not happy. You're rich but you're sick. You're rich but you're alone. I would rather live a happy simple life. But money is always welcome.
Saturday, March 13, 2010
Remember the good old days when Mom and Dad would remind us to drop a coin or two in our piggy banks?
Gone are those days right?
Today, we are in a continious and viscious cycle of borrowing money and then working our way to be able to pay for our debts. This should not be the case. After receiving our salaries,we pay our bills, watch a movie, buy stuffs, dine out and save whatever is left. This should not be the case.
Remember how the Egyptians survived the seven long years of drought? God told, Jose, Abraham's son and adviser of the Pharaoh, to save 20 percent of their harvest. The Egyptians followed and cautiously saved one fitfh of their harvest for seven years. Those seven years proved to be the most bountiful years in Egypt and its neighboring countries, but still, Egypt was very tolerant in following Jose's advice. After the seven years of bountiful harvest, drought came. People around Egypt managed to survive for the first year of drought. But the great drought was bound to last for seven years. Famine was already killing people, but ot in Egypt. Egypt was consuming their saved harvest. Egypt managed to survive the seven year drought and had also managed to sell and trade food with other neighboring countries.
We should follow this rule, after receiving our salaries, we should take away 10-20% from it and live with what is left. But how can we survive with the remaining 80%? We should find other sources of income and we can start living simply. We should atleast save six time our monthly salaries for our emergeny fund. The recession is still around the corner, so we can never be confident with our jobs. We may get sick, relocate or may have unplanned expenses. It is but better to have an emergency fund for this reasons. After providing an emergency fund, we should start saving for our retirement fund.
I'm young, I won't be retiring anytime soon. Take this example. Say you retire at 50. You would be spending atleast $5 for food, $10 for medications and supplements, another $10 for water and electricity and another $5 for unplanned and unexpected expenses everyday of the ramaining days of your life. Say you live until the glorious age of 75. Thirty dollars per day multiplied by 365 days multiplied by 25 years would be equal to $240,900 or 10,840,500 Philippine peso. How and where would you get this amount of money? That's why we really need to save for our retirement fund, unless you would and could could still work to earn a living at that age.
Did you guys get the picture?
Savings are really important. So start saving now.
Thursday, March 11, 2010
What is good debt? What is bad debt? Good debt is loaning money from the bank to start up a business. With proper management and focus, money invested would likely grow and multiply. Bad debt is purchasing the latest 3D plasma television when you just bought a new television last month.
Debt is ineveitable. Even the richest man on earth had debt once in their life. Getting in bad debt depends on the manner on how we use this owed resources.
Today debt and instant credit are part of our everyday lives. Many individuals use credit cards to spend more than they earn, and a few of these people actually build themselves a debt prison from which some never emerge. On the other hand, those who never use credit can be denied a loan or credit when they have a justifiable need or use for it. Using credit establishes a history of financial responsibility: Until you establish a credit history, your chances of qualifying for an important loan, such as a mortgage, are greatly reduced. So as I have said, credit is inevitable.
We should learn to use credit wisely. Here are some points to consider to be able to start managing our credits and debt wisely.
1. Gather recent account statements from your credit cards and other debts.- Doing this will help you identify purchases you shouldn't have made. Going over all your account statements makes you rethink. Did I really spent over 500$ at the spa last month? Cross out purchases and transactions that you think you can live without.
2. Review the interest rates and finance charges you currently pay on each account. - Owning 2 or more credit cards is not normal, but it does happen. Identify which credit cards charge you the most. Cutting of one or two of your credit cards gives you a feeling of being in control.
3. Take a fresh look at your household budget (or spending habits if you don't have a budget yet). Did you spent 300$ on ice cream last month? Know your needs and wants. Cross out grocery items you can live without. If you can't help but buy things that you want, buy them in moderation.
4. Think about your ability to stop using credit on a regular basis and what changes you might be willing to make to improve your financial outlook.
Just like what I said, bad credit and good credit depends on you. So better stop blaming the high interests your credit card has or even your underpaid job. You control your money. Do not let it control you.
If you want to make any improvement in your life, change your behavior. The second law of motion states, for every action, there is always an equal and opposite reaction. Thus we can easily conclude that changing your behavior positively will create an equal positive result.
All steps to financial independence will be useless unless you change your beliefs about money. Money does not make the world go round, the person who controls the money does.
We sometimes confuse money with what is actually more important. Choose. Your son’s first birthday celebration, or a product presentation with one of the major clients of your company? You can never choose both. You may sacrifice your work for your family or the other way around. If work is consuming and eating up mist of your time, specifically your time for yourself and your family, you are starting to be controlled by money. Money is not the most important thing in our lives but it affects everything that is important in our lives. You need money to provide your family with a comfortable life. There is a thin line between being concerned about money so you can be a good provider versus being obsessed with it.
Do not let money control you. Do you work to make a living or do you live to work? Believe it or not but neither one of them is correct. Man should work because he wants to. He works because he gains personal satisfaction in what he does. He also gets monetary compensations for the things he do, but still, money comes second. This is how we should approach our jobs. Why waste our precious time and knowledge in a company that stresses us out, makes us neglect ourselves, our health and our family? Personal satisfaction will definitely feed our families. True. But we should also remember that if we are not happy in what we do, we tend to slack at work, becomes less productive and thus becomes a liability to the company.
Make money work for you. You don’t need to spend all your life working your head of for such material things. Here are some simple and easy tips on how you can control money.
1. Do not be a workaholic. Designate. Let other people do their jobs. Being the reliable employee is only good for the company but is unhealthy for you. Do not abuse your self.
2. Invest. Let your money grow while you sleep.
3. Create multiple income streams. Run a business, sell stuffs or offer services. Have a talent in painting? Bakes delicious cakes? Do not let it go to waste. Make money from the things you enjoy doing.
4. Know what you need and what you want. Do not buy things you do not need. Money is always enough, sometimes it is even more. Money becomes insufficient when your wants increases.
5. Save. Save. Save. Do I need to say it again?
6. Prioritize life. Value you health, your friends, the people around you and the people you love. You will definitely see that they are far more important than money.
Is it possible to earn millions at your own backyard? Initially it would be a no, but the truth is, it is possible. The better answer for the above question is, NOT AT FIRST.
Great things start from small beginnings. Believe it or not, many of the prominent names in the business world today started out operating inside their very own homes.
The Binalot Fiesta Foods, a fast-food business owned by Rommel Juan started out in their own home kitchen. Together with a friend and his brother, they would cook food in their kitchen, wrap them in banana leaves and would later on deliver them to friend who lived and work in Makati City Philippines. At present, there are over 30 Binalot stores all over Metro Manila and the brand became synonymous with good Filipino fast-food.
Happy David of the Get Happy line of accessories started out making her creations at home. Friends in college loved them and began buying and ordering from her. Today, Get Happy items can be found in upscale establishments in leading department stores here in Manila, Philippines.
In short, a business success does not depend on where it all started. It depends on you. Excelling in a specific business depends on your idea, how you executed and made the idea into reality, and how determined you are in making this idea a success.
Like every start-up venture, a home-based business has its pros and cons.
Advantages
1. Minimal or zero overhead – This is the most obvious advantage of businesses conducted at home. When you work at home, you do not pay for rent, electricity, water and other necessities. It is most advisable to contribute a small amount to the household expenses once your business starts earning.
2. Less time on the road – Though sometimes, home-based business still requires traveling (i.e. deliveries), you no longer have to deal with traffic, car problems or the number coding scheme. Thanks to the fax machine, the internet and cellular phones, communication with your clients and customers is now a breeze.
3. An extra helping hand – You can always ask a family member for an extra hand with minimal cost or no cost at all.
4. More time with the family – Home-based businesses are ideal for mothers or parents who wants to be financially independent but at the same time, capable of taking care of the needs of the family.
Disadvantages
1. Getting motivated – Home-based business is sometimes frustrating. This is especially true for those who are just starting out, or for those who are already making money from it. There are too many distractions around. Dog barks while you are on the phone with a client, children playing or asking for attention on times when you need to concentrate, your favorite television show or a nap on your favorite sofa. Self-discipline and making a schedule is the key. Set a time for work and relaxation, inform people in the house about it, and stick to it.
2. Labor does not come easy – Admit it, your family will not always be there when you need an extra hand. Kids go to school and our partner goes to work. Considering hiring an assistant especially when your business is starting to rise is acceptable. But this will definitely bring additional cost.
In conclusion, home-based business is profitable and feasible. With the right attitude, success is not far from reality. We just need to exert an extra level of commitment to yourself and your work. Setting goals for yourself and the business is also advisable. These keeps you focus, motivated and driven to achieve an even higher goals.
Financial Freedom is a state of mind. It is a condition wherein a person feels that his future as well as his family is secure. He can travel, spend time with his family, engage into sports and enjoy life and its beauty without worrying about his financial responsibilities for tomorrow.
The truth is, financial freedom is something one can easily achieve. What makes it hard to attain is the lack of focus and discipline. A person with a "close" mind also finds it hard to achieve financial nirvana. The world is a place full of ideas and opportunities. We just need to seek and seize these opportunities and make them work for us.
Half of our lives are spent studying and the other half is spent working. We look for a job and then we work to have money. This should not be the case. We should make money work for us. Money is a commodity. It does not think nor feel, so working FOR money is really a very wrong concept. But how do we make money work for us? We should learn how to control money and not the other way around. Controlling money is the first step to financial freedom. But how can we control money if we do not have enough of it? This concept is also wrong. Money is enough, our wants and needs are the things we often consume above the limit. Living a frugal life is the second step to financial freedom. We suffer from credit card debts because of over spending. Over spending is brought about by greediness.I know the word seems to be a harsh word to be used as an adjective, but admit it, we spend to much on things we can practically live without. Living a healthy life is the third step to financial freedom. We only live once and we only have one body to take care of. A sound mind and body is needed in making right decisions on how we control our money and resources.
CONTROLLING MONEY + LIVING A FRUGAL LIFE + LIVING A HEALTHY LIFE
= FINANCIAL FREEDOM
Pretty easy right?
Financial freedom is a matter of choice. Every one has different needs. Financial freedom does not depend on our banks balance, vehicles we own or how large our houses are. Though we never should equate financial freedom to contentment. These are two different ideas. Financial freedom is possible, if we really want it.
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