Debt Archives - Page 2 of 2

The Debt Rules

How serious are you about getting out of debt? Well if you follow the debt rules you will hopefully kick American Express to the curb and drown discover card in the fish tank. The secret to the debt rules I will share with all of you today is first a disgusting desire to be free from all of these imaginary bosses telling you where to send those fabulous green dollars.

Do you want to continuously fund the credit card companies profit margin or would you rather increase your household profit margin? I think we all know the answer to that question, but it will take a long time coupled with an intense commitment to complete your debt repayment journey. If you are willing to step up and live life far from the average person then follow the debt rules below I will lay out for all of you. I will tell you a few strategies and far from average methods, but ultimately it will all be worthwhile.

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The Basics of Financial Management- School Debt

School Debt is the topic in everybody’s mind currently, including the media overhype about student loan debt being the next trillion dollar bubble to pop. I will give you my two cents on this topic and it should help you decipher how to avoid being a victim to the student debt crisis. I think everybody that has dreams of getting a degree should do it with the expectation that taking out loans is not smart money management.

Why do I say this with a straight face and serious demeanor? Because recent college graduates cannot get a sufficient paying job straight out of college to cover loans and all the expenses of life. If you are lucky to land something immediately after your educational stint, then it will serve you best to not have the burden of student loans because in the early years of employment your wages will be lower than somebody with a few years of work experience. See below for the basics about how to avoid educational debt:

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7 Steps to Eliminate Credit Card Debt

I wanted to share with you a story of how a young financially smart person got into and out of about 14 thousand in credit card debt. I thought I was doing good with my money by saving a lot during my young days, while accumulating debt on the flip side of the coin. The year is 2007 and I had just been laid off from a great paying job, subprime mortgages. Now I can’t even recall how I got into so much debt, but I believe it had to do with unhappiness in a previous life situation plus the fact that America was in a credit card spending frenzy.

I was spending without any concern between years 2002 through 2007 just to get rewarded for credit card points. I am hoping that all of you can take this advice to heart and realize that those credit card points are not worth it. One of my overall goals with this site is to attempt to help others avoid the same mistakes I made. Why you ask? Because the younger you are, the greater the chance you will do well financially with some guidance. See Below for the tips.

7 Steps to Eliminate Credit Card Debt:
1. Never use debt to accumulate points for useless exorbitantly high rewards
2. Do not charge daily living expenses on credit cards
3. Do not save up money until after you have paid off you’re debt
4. Use all savings to help pay down debt faster (keep only 1-2K in savings for emergencies)
5. If your interest rate is high, do a balance transfer to a lower rate
6. Avoid cards with annual card fees
7. Do not pay only the minimum

This is what I did to eliminate the 14 thousand dollar debt monster. What did I charge through out the years to accumulate all that debt. Honestly I can not recall, but I would assume the bulk of it was spent on watches, sneakers, car accessories, gifts and every day life expenses. I had the mentality that the more I charged the faster I would be rewarded with those powerful credit card points. Which in turn rewarded me with useless products from their rewards shopping catalog. Always remember that credit card companies use all the tactics possible to bait you to spend more. They want you to eventually live life cash strapped by paying the minimum for life and extending the interest you pay them. If you fall for their game you will lose and possibly be in a paycheck to paycheck scenario for a long while.

Sometimes we get carried away in getting things that we do not see the damage that is being done on a daily basis. Keeping careful track of budget categories expenses will solve that problem. Another thing that really helped me improve on my spending habits, is to simply avoid the malls and superstores. By 2010 I was done with paying it all off and a big monkey was lifted off my back.

So please do your best to take the advice above and delay gratification with immediate wants. Credit card companies want you to fail at life. Being in debt for me is failing at life.

Comment if you have slashed debt from your life?

Rich Uncle EL

Debt Freedom Done Right

How do you get the monkey off your back you ask? Well it is simple and easy to explain; first and foremost you have to stop spending aka adding more debt. Second thing you have to do is really feel an urge to be free while at the same time get the mindset ready for many months of cutting back with slicing debt here and slicing debt there. I want you to think about that for a second because when all your friends are going out clubbing every other weekend you might have to go every other month for a year or two. It will be hard and your emotions will test the heck out of you. But you can do it, because if a desire is present then anything is possible. Getting out of debt is the initial feeling, but the real underlining urge is to build a great financial foundation. Where you can have surplus cash flow and invest here and there without the worries behind bill paying all bottled up inside.

If you have doubt then you are not ready as the journey will go from tough to tougher every day. I want you to be prepared with the strength of all your ancestors because this stuff is not easy. (Depending how deeply indebted one is)

Debt Freedom Done Right:

Do not add more debt

Feel and desire to be free

Cut back on anything that is not a need

Add up the daily and weekly interest fees for each loan

For the smallest balance loan, pay as much as you possibly can

For the rest of the loans pay the minimum

Pay double the weekly interest fee plus the monthly payment amount (Smallest Balance) (Per Week)

Keep the cycle going, with every loan until you can yell, BE GONE DEBT!

This simple advice can help you achieve great momentum with debt freedom. Why you ask?

You are paying more than the minimum on the smallest balance loan until it is paid off
You are paying double the interest fee weekly thus reducing the principle dramatically
You will see results monthly and will save yourself money with interest payments
You will see the debt shave off with every balance that is paid off and get one step closer to freedom

The Total Money Makeover: A Proven Plan for Financial Fitness

Comment if you agree with the, debt freedom done right revolution coming soon to a bank near you?

PS: The books above are all debt freedom books from respectable financial gurus. This post is not a review of the books but are offered here as an additional resource for you to use if more information is required.

Rich Uncle EL

Debt Free Living

I like giving my readers the tools they need to live life debt free. I feel that you can really put to use some of the tips I mentioned below as a way to get ahead with your financial goals. It all comes down to the choices you make in life. Would you be willing to pass on your goals because you just had to upgrade your PC to the new Mac Book laptop. Granted that new Mac book might only cost you $60 dollars a month with interest free financing.

But that $60 dollars could have gottten you one step closer to realizing a financial goal you keep postponing month after month and year after year. Why is that we always need or want something? Why is it that those things have to be purchased on credit? Well if you keep reading you will enjoy another great post on how you can avoid debt.

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Attend College for a Profession minus the Debt

Do you how many people are college graduates that are working in an industry unrelated to what they studied in school? I hear stories all the time, how a student who majored in sociology is currently working in a mail room or sitting as a customer service representative somewhere in corporate America. Have not heard an example like this? Well maybe you have heard of IT majors being hired by financial companies to do budgets and bookkeeping. This is the trend we are facing now educational majors that are being offered with no possibility of having a demand for graduates. If a specific industry faces less than 10% growth in demand why offer the major in the university? (Just my own reasoning behind solving a piece of the unemployment porblem facing the U.S.)

I hope you do not misinterpret my thinking behind the title above, but what I am trying to convey to all those students who are unsure of what to do once they graduate keep reading. Point blank if you are unsure you can land a career then do not go to college until you know exactly what you see yourself doing in the future or can get some real world experience while attending school. Why burden yourself with debt and regrets by taking the traditional route for a school system that is practically broken.

This is why I am all for high school graduates taking some time off after high school to explore what they may want to do in life later by doing research, mentoring, or apprenticeship opportunities.

Tuition now a day’s is ridiculous and continues to worsen everyday by charging students 700 dollars a credit. This is just immoral and scary at the same time. Tuition has increased at least 30% as compared to inflation in the last decade. But guess what no one is complaining or at least nobody with enough clout to change the ridiculous mindset of university administrators. Obviously their argument will be how do we pay our staff and keep the universities open if we do not increase tuition? I think it can be done a different way instead of feeding off the students who are unaware of the problems they will incur by taking on 100K in student loans.

I recently read an article in Reuters, that stated the reasoning behind the rise in tuition is based on government cutting subsidiary funding to those colleges. My thinking behind this is if the government can cut school funds then the college should make similar cuts to its budget and not exploit the students with a heavier burden. If I understand the article correctly with my own two cents thinking behind it, the government is saving money with cuts to funding and making money by charging students astronomical interest rates on very large student loan balances. The average student loan debt in 2012 is 30 grand per graduating student.

See Article: Student Loan Debt

In conclusion think long and think wisely about what you would like to do when you graduate from school because the road to repay errors made by switching majors or wasting time by being undecided can be very significant. Times are changing and we have to evolve with the times to take advantage of the collegiate system we are dealt, by being conscience of the monetary issues in our educational lives.

That is why I say; only go to college if you know exactly what you want to do and when you are ready for the long road to graduate with a profession and not just a job.

RichUncle EL