How to Make Christmas Last All Year Long

Loan Featured

Loan 1Loan FeaturedLoan 3Loan 4If your holiday season is anything like ours, it usually involves putting up holiday decorations, trying to figure out what to get people, and running all over to our different Christmas obligations. It seems crazy at the time, but then the day after Christmas life kind of goes back to normal and it’s a little sad that it’s all over. Well, if you want to be reminded of Christmas all year long, I’ve got the perfect solution!

You can now walk on down to your friendly neighborhood banking institution and get a holiday loan. For the low, low interest rate of 12%, you can be reminded of the times you had and the things you bought during the Christmas season every month when you write your check to the bank or credit union.

Maybe you thought you just stepped into the twilight zone. This blog is still about saving money and getting a loan of any kind is NOT the best way to save for anything. Just about the time you would get this wonderful holiday loan paid off, it will be time for Christmas once again. Since you won’t have any money next year since you used it to pay back the loan, you’ll be stuck in the same situation next year. Never fear, holiday loan to the rescue!

I’ve got a better plan and it will work even if you haven’t been saving all year. Although it may require some…wait for it…SACRIFICE! If money is tight this year, try out the tips below.

  • Determine who you need to buy gifts for. Sorry, but this year, the postman, hairdresser, and the neighbor’s kids won’t be getting anything from you. You might even want to cut out nephews, nieces, cousins, brothers and sisters. If you have kids of your own, you’re siblings might welcome not having to purchase anything for them if you don’t purchase anything for their kids in exchange. Just tell them “instead of buying stuff for each other’s kids, why don’t you take the money and spend it on your kids since you probably know what they like better anyhow.”
  • Are you crafty? Ever heard of Pinterest? This could save you quite a bit and the gift will probably mean a lot more since you put your time into it.
  • Create a Christmas budget. It doesn’t have to be complicated. Just determine how much you can safely spend on Christmas this year without throwing your financial world into chaos or causing you to accrue debt. Then write down how you’ll divide that money between everyone on your list. This might be a good opportunity to find additional people you won’t be shopping for.
  • Don’t buy things for yourself when you see a deal! Pretty easy to say, not always as easy to do.
  • If things are really tight, just be honest with family and friends. They will most likely be understanding and may even be grateful that they don’t have to shop for you. You might even find that others are in the same situation, but were just afraid to say it. If nothing else, just going to Christmas events with family and friends is oftentimes all they’re really hoping for.
  • Start saving for next year! If you thought you could afford paying back that Christmas loan (which has a payment of a little over $106 a month), then you should be able to stash that money in a savings account so you’re ready for next year. You won’t just have $1200, but more like $1280. It might take some discipline, but if you can schedule it to come out of each paycheck, then you can make your discipline automatic.

The holiday season can be stressful enough as it is, don’t add to it by doing something you’ll regret the rest of the year.

Dave Ramsey’s Financial Peace University – Week 9

Helping Hand

The final week of Dave Ramsey’s Financial Peace University  is all about baby step 7 – build wealth and give a lot of it away.

If you go through Financial Peace University and miss this lesson, you may set yourself up to win financially, but you won’t feel complete until you give. We have a tendency to want to hold onto our money as we accumulate it, but we have to remember that none of it is ours. Without the abilities and gifts we’ve been given by God, we wouldn’t have any of it. It is our responsibility to manage the resources that we’ve been given since they’re not ours to begin with.

By giving, it makes us more like Christ-like since he gave his life for us. Besides that, giving to others teaches us to be less selfish and people who are less selfish are generally more successful in different areas of their life. We also feel our best when we serve and give to others. I can attest to this personally in my life. Some of the best times of my life were when I’ve been on a mission trip or serving others.

After covering the reasons why we should give, Dave covers the difference between tithes and offerings in the church. According to the Bible, a tithe is a tenth of our income and it is supposed to be given to the local church. It’s the job of the local church to take care of those in need. Offerings are different because they are supposed to be given out of what we have extra.

I think a lot of people get confused when it comes to giving at their church. When the church starts asking for money to do a major project or something like that, they feel an obligation to be a part of it and give. However, if they are giving at the expense of being able to take care of their household then they really should reconsider.

There aren’t a lot of details to go over this week. The main lesson is that part of your financial plan should include giving, despite what your religious beliefs might be. Give it a try this holiday season and see what kind of a difference it makes in your life.

If you’re interested in attending Financial Peace University, you can find a class near you by going here. There are new classes starting all the time. If you don’t think you can make it to a class, you can always take the course online. I think it’s best when you can attend it in person and hear other people’s stories, but the online option is great for families who are geographically separated for one reason or another (truck drivers, military, that kind of thing).

If you have any questions about Financial Peace University, please post them in the comments section. If you have a giving story that you’d like to share, you can post that in the comments as well.

Featured Image courtesy of Naypong / FreeDigitalPhotos.net

Republic Wireless – The future of mobile phones?

Republic Wireless Logo

I had stumbled across Republic Wireless a couple years ago. I have to admit that their service was tempting. I mean, how can anyone resist $19/month for unlimited cell phone service with a smartphone. However, at the time, I just couldn’t make the jump to something that was still “beta”. Besides, things that I had grown used to weren’t yet available, like picture messaging.

Their original smartphone was not great. In fact it was almost the same as what I had and I was ready to ditch it (the LG Optimus). They later upgraded to another smartphone, the Motorola Defy XT. It was kind of cool with it’s water, dust, and scratch proof nature, but it still ran an old version of Android, the screen size was small, and it had been surpassed long ago by other smartphones when they announced it.

You might be wondering why a cellular company would only offer one phone. Well, Republic Wireless’s service is unique. In order to offer you such a low price, they offload many of the functions of a cell phone to available wireless networks around them when it’s available. They only rely on cell networks when they can’t connect to wireless. When you think about it, you’re likely surrounded by wireless at home and at work. In fact, I would venture to say that most of the time that you are stationary, there is a wireless access point that you could connect to. In order to offer this unique setup, Republic has to run custom software on the phone and get it approved by the cell phone manufacturer. In other words, it’s not a quick and easy process.

So, why even present you with a cell phone company that only offers one phone and seems to be so limited? Because this week, they finally opened up their service to make it worth another look again. A good long look. A look where you might be busting out the calculator to determine how much money you could save over time. Then you’ll start dreaming about how you could take that savings and take that trip through Europe you’ve always been dreaming of. Okay, maybe I’m getting ahead of myself.

On Wednesday of this last week, Republic Wireless made their new phone available to buy, the Moto X. I guess the best way to put it is that they jumped from a Dodge Neon to a Lexus (any Lexus, you decide). This phone is a flagship phone, a phone that any smartphone user would be happy to have (unless you’re addicted to your iPhone). The best part, it’s only $299. That may sound like a lot of money, but consider the fact that a new unlocked one on Amazon is currently $529.99.

In addition to a new fancy phone, they’ve also released brand new plans. You can now pick between 4 different plans and are no longer locked into one unlimited plan.

  • $5/month – Unlimited everything over wireless only. This is for those who want to do some extreme savings or maybe want to replace their home phone and plan on keeping it at home all the time.
  • $10/month – Unlimited calls and texts over cellular and wireless, but data is over wireless only.
  • $25/month – Unlimited calls, texts, and 3G data over cellular.
  • $40/month – Unlimited calls, texts, and 4G data over cellular.

You can also change your plan up to twice a month. So if you don’t need the data, but plan on going on a trip somewhere for the weekend, you can change your plan to one that includes data for a couple days and change back when you get home. It’s also important to note that if you use a lot of data over cellular, they will throttle it. It appears that the throttle limit is currently 5GB, which is a TON of data if you don’t stream videos and music all the time. My wife and I together use less than 500MB every month.

They’ve also made some additional improvements to the service. Supposedly, calls can now be handed off from wireless to cellular. That means when you’re at home and you make a call over wireless, and then hop in the car and drive away, it should continue to work even though you are no longer connected to wireless. I’m not sure how they did this, but one review I read said they couldn’t get it to work, while another one said they did. The other improvement is MMS (picture/video message) support.

I have not yet used their service, but with the new plans, it is definitely tempting. I do want to warn everyone that choosing Republic Wireless is not for the faint of heart. They don’t have a number you can call if you run into issues. You’ll have to resort to emailing them or searching through the forums for other people who have had the same issue. Also, if you don’t like the service, you can’t use the phone with Sprint, Verizon or any other carriers. It’s locked into Republic Wireless. Finally, the cell network they fall back to is the Sprint network, which doesn’t have great coverage for everyone. From what I had read though, the phone should be able to roam onto other networks and it even looks like they include 100MB of roaming data.

Should you switch? I guess that depends on how extreme you want to get with your mobile phone savings. We’re planning on trying it when we replace one of our phones. If you’re not ready to go to such extremes. You may want to check out Ting. (You can read my post about them here.)

Potential Savings: If you’ve got one line on Verizon, it looks like you would be paying $80/month for the lowest amount of data possible (500MB). You could get 3G unlimited data through Republic for $25/month or $40/month for 4G data. That’s a potential savings of $55 or $40/month respectively. That comes to a total yearly savings of $660 for 3G or $480 for 4G. Even with the cost of a new phone, you would still be saving quite a bit.

Dave Ramsey’s Financial Peace University – Week 8

House

This week’s lesson covered real estate and mortgages. There is only one more lesson and then I’ll be back to “regular scheduled blogging”. I think the first topic I’ll cover might be about car buying, or deal web sites, or another mobile phone carrier. Who knows?!?!? The possibilities are endless! Anyhow, let’s dig in.

Renting is not a dirty word. Despite what your friends, family, and the guy behind you at the grocery store tells you, it is perfectly okay to rent. This is especially true while you’re paying off debt, building your emergency fund, and saving up a down payment. It may appear that renting is more expensive, but it removes a lot of the risk that home ownership has. When there is a roof leak, the water heater breaks, or the stove stops working, you don’t have to worry about coming up with the cash to fix it.

Owning a home has some advantages that Dave covers. First, you are building equity as you make payments which technically forces you to save money. It also helps protect you against inflation (assuming your home value goes up over time). Finally, any money you make when you sell your house is usually tax free.

What kind of homes should you be looking at when you’re ready to buy? Buy a house that is in the middle to bottom price range of the neighborhood. It’s easier for it to go up in value that way than to try to sell the most expensive house in the neighborhood. Always consider the location that you’re buying in. You can’t move your house to a better location. If you want to find a deal, you need to be able to look over some of the ugly things you might find in the houses you’re looking at. It’s relatively easy and cheap to paint walls and replace carpet and other flooring. It’s not quite so easy to rearrange the floor plan or make it look better on the outside if it’s just plain ugly.

Some of the more important tips that I think many people may overlook when buying a home: You need to get an inspection, even if you’re buying from someone you know really well. The same is true when getting an appraisal, even though it is only an opinion. Finally, get title insurance. We always did, but I never realized how much it can potentially save you if you run into a situation where the title isn’t clean.

Dave had Chris Hogan, one of the people on his speaker team, come out to talk about mortgages. It’s important when considering your mortgage to remember that the goal is to be debt free, so you don’t want to buy the most expensive house you can afford. If possible, save up 100% and pay cash for the house. If you’re going to get a mortgage, Dave’s rule has always been to not get a payment that is more than 25% of your take home pay, on a 15 year mortgage, and put at least 10% down. Twenty percent will make sure that you don’t have to pay PMI, or private mortgage insurance.

I can sum up the next section by saying “only get conventional mortgages”. Stay away from adjustable rate, interest only, reverse mortgages, and other gimmicks out there. If you don’t have a credit score when shopping for a mortgage, you will need to look for someone who does manual underwriting and doesn’t rely on FICO. A local credit union or small bank might be your best bet.

The final thing that Dave covers is selling your home. You need to think about what other people will be looking at when they come through your house. You know how when you are in an environment for so long that you don’t notice certain things like smells? It might be a good idea to invite some friends over who can be honest with you so you can get a clear picture as to how other people will see (or smell) your house when they come through it for a viewing. You need to get your house listed on the internet, with good pictures, and in the multiple listing service or MLS. That will get you the most exposure. Dave highly recommends using a realtor because they can usually take care of these things and reach more people. We had a great experience with the realtor we had when buying our home, but when we had tried to sell it once, I really wish we didn’t use one. I guess everyone has a different experience.

That’s a rough summary of the real estate and mortgage lesson. Next week will be the final lesson!

Featured Image courtesy of luigi diamanti / FreeDigitalPhotos.net

Dave Ramsey’s Financial Peace University – Week 7

Investing

Week 7, only two more weeks left in class! Everything that has been taught in the classes so far leads up to this one. Some students may not be ready for it, while others may have been waiting for it a while. This lesson is the Retirement and College Planning lesson.

There can be a lot of fear around investing, but Dave makes it incredibly simple and breaks it all down. He starts off with a simple example of a 30 year old couple who invests $600 a month for 40 years. At 12% interest, they would have over $7 million! If they could manage to invest $833/month they would have $9.8 million.

If that doesn’t motivate you to start saving, I’m not sure what will. Even if you don’t get 12% on your investments, you’d still have a huge pile of money!

After the $1000 emergency fund, paying off all your debts but your mortgage, and building up a 3-6 month emergency fund, baby step 4 is to invest 15% of your income for retirement. Dave recommends the use of mutual funds since it helps take some of the risk out of investing by spreading your money across several different companies. He recommends splitting up your investments equally among growth and income funds (sometimes called large cap), growth funds (sometimes called mid cap), international funds, and aggressive growth (sometimes called small cap).

When you purchase mutual funds, you can purchase them through several tax favored accounts such as 401k’s and Roth IRAs. A 401k or Roth IRA holds mutual funds and other investments, it is not the investment itself. The type of account tells the government how to treat it when it comes to taxes. For example, with a 401k, you put all of the money in pretax, but when you withdrawal from it in retirement, you will pay taxes on everything you withdrawal. With a Roth IRA, money is put in after taxes have been paid, so all of the money grows tax free and you don’t pay any taxes on it when you withdrawal from it in retirement. You can read more about it here.

To maximize your investments, Dave recommends funding your company’s 401k (or Roth 401k if they offer it) to get all of the match that they offer. You don’t want to leave free money on the table. After that, you should put money into your Roth IRAs until you reach 15% of your income. If you still haven’t reached 15% but have maxed out the Roth IRA, then go back and fund your 401k until you reach 15% of your income.

After covering investing for a while, Dave’s daughter Rachel Cruze comes out to talk about saving for college (Baby Step 5). They recommend saving in an Education Savings Account first, and then using a 529 after the ESA is maxed out. Personally, I’m not sure why Dave hasn’t completely adopted the 529 as the primary choice. The only thing I can think of is that there are so many 529s out there and they are different in each state. For example, in Ohio where I live, any money we put in up to $2000 per child is tax deductible from our state income taxes. I wouldn’t get that benefit from an ESA. Look at your 529 options closely. You don’t have to invest in the 529 for your state if you like another state’s options better.

Rachel warns against using insurance, savings bonds, or prepaid tuition to save for college. They don’t get the same returns as using mutual funds. Always look for something that allows you to control what you’re invested in and doesn’t change with age. Finally, they stress the importance of graduating from college debt-free. Some of their money saving tips are to go to an in-state school or community college, look at all your living options (including living at home), get tutoring for the ACT/SAT to improve your scores and get more scholarships, and finally WORK while you’re in school!

I agree with graduating without student loan debt. Personally, my wife and I were able to do it because of the work we put in while in high school and the scholarships we got. When a student graduates with debt, they don’t have the freedom to find the job they really want and instead are sometimes forced into a less than ideal position so they can pay their student loan payments. This makes no sense to me really. Parents and students spend all of this money on college so that they can have the “experience”. If they do it right, a person will be spending a lot more time in the working world than in college and the last thing they need to do is start off in a position that they despise and have student loans hanging off their back.

Next week’s lesson will be covering real estate and mortgages.

Featured Image courtesy of ddpavumba / FreeDigitalPhotos.net

Dave Ramsey’s Financial Peace University – Week 6

Car Accident

Insurance. One of those things that you don’t want to think about, but when you need it, you’re glad you have it. Do you have the right kinds of insurance? Are you spending money on insurance that isn’t necessary? That’s what Dave Ramsey covers in lesson 6 of Financial Peace University, called “The Role of Insurance”.

The purpose of insurance is to transfer the risk from you to the insurance company. It helps to protect what you have, and any money you’ve accumulated. Without going into too much detail, I’ll quickly cover the types of insurance you need and the types of insurance you don’t, as taught in this lesson.

Insurance you need:

  • Car Insurance – In most states I think it’s illegal if you don’t have it, but you want to make sure that you’ve got an adequate amount. There are companies that sell the minimum legal amount, but if you’re in a bad accident, they will only pay out until the maximum is reached. If it ends up costing more than that, you’re on the hook and it could force you into bankruptcy.
  • Homeowner’s Insurance – Make sure you have enough to cover the rebuilding of your house. Personally, I know that the amount they cover you for seems crazy since it’s a lot more than you could sell your house for. But they aren’t giving you money to buy the house all over again, but to rebuild what you had, and that can be expensive.
  • Renter’s Insurance – Renter’s insurance is cheap and if something happens to your stuff while you live in an apartment or rental, you’re responsible for insuring it.
  • Umbrella Insurance – This is helpful if you start to build wealth and look like a target for crazy people.
  • Health Insurance – This one is kind of a no brainer. With the laws changing, you’ll have to get it. A Health Savings Account might be a good option for saving money, but it may not be for everyone. I’ll try to write another post about HSAs at a later time.
  • Long Term Disability Insurance – If something were to happen to you and you became permanently disabled, you’ll want some income to pay the bills. This one takes care of should that horrible thing ever happen.
  • Long Term Care Insurance – Dave says if you’re over 60, you need to purchase one of these plans. If you or your spouse needs long-term care, it could wipe out your nest egg.
  • Identity Theft Protection – This is probably the newest recommendation from Dave. He suggests you get a policy where they will assign someone to clean up the mess should your identity be stolen.
  • Term Life Insurance – You need to get a term that will cover you getting out of debt and paying off the house. It should be 8-10 times your income.

Insurance you don’t need:

  • Whole Life Insurance – It’s incredibly overpriced and you would be better buying term and investing the difference or using it pay down your debt snowball.
  • Credit Life and Disability
  • Cancer and Hospital Indemnity – Your health insurance should take care of this.
  • Accidental Death – Remember term life insurance?
  • Pre-paid Burial Policies – You would be better off setting aside the money and investing it.
  • Mortgage Life Insurance – So, they will pay off your mortgage if you die, but as you pay down your mortgage, the amount of coverage your paying for is decreasing. You’d be better off buying extra term insurance until the house is paid for.

That pretty much covers them all, but not in nearly as much detail as when you attend the class. Dave goes into much more detail about the levels of coverage you should get and other things to look for and avoid. Next week’s lesson is about retirement and college planning!!!

Featured Image courtesy of Bill Longshaw / FreeDigitalPhotos.net

Dave Ramsey’s Financial Peace University – Week 5

Marketing

Unfortunately, this week I wasn’t able to help out at FPU due to family illness. However, I’ve heard the lesson before and I grabbed some notes, so you’re in luck!

This week’s lesson is called Buyer Beware and Dave talks about all of the ways we are marketed to. He’s taught the class to save money, pay off debt, and control where their money goes. This lesson is all about protecting yourself from the marketing gimmicks that can mess up your plan.

We’re  being bombarded on a daily basis with ads and marketing. It starts when your alarm clock wakes you up with your favorite radio station. Then you turn on your TV while eating breakfast and get hit with commercials. When you get to work and check your email, you’ve got a bunch of marketing emails waiting in your inbox. You might as well forget about browsing the internet without seeing an advertisement.

It’s important for us to recognize that this is happening to us so that we don’t get tricked into making a purchase and mess up our budget.

Dave then covers different ways that we can keep ourselves from making a bad purchase decision, such as waiting overnight since you may feel different in the morning. A couple other good ones are to consider why you want to buy the item, whether or not you understand what you’re buying, and to think about what else you could be using the money for (like saving or investing it).

There used to be an entire lesson on getting a deal when purchasing big items, but that is now condensed into a shorter part at the end. If I remember correctly, Jon Acuff is brought out to do this part. (For what it’s worth, Jon has decided to go out on his own and no longer works for Dave Ramsey’s organization.) I love these tips a lot. I remember after seeing the full lesson in the old version of FPU, I wanted to go out and negotiate on something, but I couldn’t think of what that something might be.

Anyhow, the tips (in my own language) are below:

  • Be completely honest.
  • Flash the cash (it’s hard for the other party to say no when they see the Benjamins in front of them).
  • Walk away when the time is right and you may be surprised by what can happen.
  • When negotiating, keep quiet. Silence is very powerful when negotiating.
  • Tell the other party “That’s not good enough.” (Ironically, that’s the name of the old lesson.)
  • Learn to recognize when there is a good guy, bad guy tactic being used against you. Car dealerships are notorious for this.
  • The final piece is the “If I Take Away” tool. This one is hard to explain, but I’ll do my best. Let’s say you’re going over to someone’s house to look at a used truck they’ve got. When you get there, you see that they’ve got a trailer that was obviously used with the truck but they’re not likely to want to part with. At this point, you would ask them to throw the trailer in as part of the deal. When they tell you they can’t, you then ask “if we take the trailer out, what kind of deal can you make me on the truck.” Sounds kind of tricky, but if it works it could save you some serious cash.

Featured Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Life without credit cards

Credit Card

Can it be done? Can someone really live without credit cards? I mean, you need one to build credit right? What about when you’re in an emergency?

Let me start by telling you that credit cards are not your friend. Even though we ALWAYS paid them off on time and never paid interest, we decided not to keep them around. When I was in high school I got a credit card with a small limit to pay for gas and other stuff. It was to “build credit”. Then before my wife and I got married, we got another credit card to earn cash back on all of our big purchases we were going to have for the wedding. I remember that we used it to buy our rings.

So in 2007, our eyes were opened and we learned that we could live life without credit cards. We decided that we were going to pay off all of our debt and there really was no reason to have the plastic there as a temptation. So we ended up calling up the credit card companies and cancelled both of the cards that we had. They really turned on the charm with the cash back card. “Why do you want to cancel when you’re making money off of us since you always pay it off on time?” The truth is, you tend to spend a bit more when you use a credit card, and we had occasionally fell into the we can pay it off with our next paycheck routine. Yeah, well what if an emergency pops up that we need to use that next paycheck for.

I guess it’s probably a good idea to dispel some of the rumors that fly around about why you NEED a credit card.

  1. It will help you build credit. Credit is only necessary if you plan on going into debt for things. You can get a mortgage without every having a credit score.
  2. What about refinancing my home to get a better rate? We refinanced our house twice since canceling both cards. I think the bank liked the fact that we had money in the bank, jobs, and no late payments on our credit report more than anything.
  3. The discounts are just too good to pass up. Seriously? I already told you that you’ll spend more on a credit card because you don’t feel it the same way when it doesn’t affect you at that moment. When the cashier checks you out next time and asks you if you’d like to save more money by signing up with a credit card, try telling them that you don’t believe in credit cards but you’d like to know if you could still get the discount anyhow. It may not always work, but their reaction is sometimes priceless.
  4. Some bills like car insurance give me a better deal because of my good credit. Hmmm, we pay about $650 a year for our car insurance for two cars. Yep, I said for the whole year. If a place you do business with does check credit to get you a better deal, chances are they are looking for late payments more than anything.
  5. Yeah, but your credit score was already high from having a credit card. True, because we did the responsible thing and always paid our bills on time. However, our credit score has dropped from being in the 700’s to being somewhere in the 600’s since we’ve closed the cards, and honestly, we don’t care.
  6. How will I pay for stuff? If you decide not to use a credit card, then you’ll know that anything you buy, you can afford. If you don’t have the money for it, you can’t buy it. It’s pretty simple. I know there are some people who are in a cycle of using credit cards and then paying them off and they may not have the money at the beginning of the month to make the transition. If that’s you, you may have to make the transition over the course of a few months. As you can, try to purchase less so you’ve got some extra cash at the end of the month and can put even less on the card the next month.
  7. What if I have an emergency? Using a credit card in an emergency is like chopping your finger off to take care of a paper cut. You solve the immediate problem and exchange it for another one later on down the road. If you didn’t have the money for the emergency in the first place, when you’re bill comes you probably won’t have the money then either. Then you’re paying interest on it for who knows how long. Getting rid of your credit cards causes two things to happen. First, you save money for emergencies. Second, if you don’t have the money, you come up with creative solutions you wouldn’t have thought of if you had the credit card as a crutch.

Let’s say that you do want to try life without credit cards, but you’re not ready to chop them up yet. I’ve got just the plan for you. Take a plastic cup, fill it with water, drop the cards in, and then put it in the freezer overnight. Your credit cards will not longer be available for easy access. When you see that “gotta have” item at the store, you’ll have to run home, and thaw the cards. Hopefully, in the time it takes for them to thaw, even under hot water, you can really think the purchase over before you buy something you don’t need or can’t afford.

Have we regretted getting rid of our credit cards? Not in the least.

Finally, I want to leave you with this classic Saturday Night Live video. It’s always been a favorite of mine.

I have to wonder how many people watched this on a TV they were making monthly payments on, while sitting on their 90 days same as cash couch.

Featured Image courtesy of sixninepixels / FreeDigitalPhotos.net

Dave Ramsey’s Financial Peace University – Week 4

Debt

Dumping debt. Not only is that the name of the lesson for week 4 of Financial Peace University, but I think it’s something many Americans wish they could do (or convince Congress to do). In order to do it though, many need to be convinced that living in debt doesn’t have to be a way of life. Dave starts with a bit of history about debt in our culture. Living with debt is actually a relatively new frame of mind that wouldn’t have been considered by many in the first half of the century. However, we’ve been so trained and marketed to that we now accept it as a way of life.

In order to change our way of thinking, Dave debunks several debt myths. I’ll cover some of my favorites here.

  • If I pay it off my credit card every month, what’s the harm? The truth is that people spend more when they use a credit card (and even a debit card) than they do with cash. Why do you think almost every fast food restaurant accepts them now.
  • Car payments are a way of life. I can speak from experience that this isn’t the truth. We haven’t had a car payment in probably 5 years. The wise thing to do is to purchase a reliable used car. You can find a reliable used car in just about every budget range. If you need help finding one, post in the comments and I’ll do my best to help you out. If you want to find out one way to have free cars for life, check out this page.
  • Cosigning is a great way to help out a friend of family member. The reason that the bank requires a cosigner is because they don’t think the person can pay the bill on their own. They want to have an extra person to go after when the friend or family member defaults on the loan.
  • You’ve got to build up your credit score. You only need a good credit score if you plan to borrow more money and go into debt.
  • Debt is a financial tool. To make your money work for you, you’ve got to have some, and you won’t have much if you’re paying it all to the bank. Sure, you may have stumbled across a circumstance where it worked out to your benefit to borrow money in the past, but increased debt means increased risk in your life. They can’t take your car if you don’t have a loan on it. They can’t take your house without a mortgage. They can’t garnish your paycheck if you don’t have any credit cards or student loans.

I’ve kind of summarized my own answers to the myths, but you get the point. There are a lot more covered in the lesson.

So how can you get out of debt? It’s a lot easier than you think for most people. First, stop getting into more debt, find ways to get more money, like work more or sell stuff, and of course use the debt snowball. The debt snowball simply means paying off your debts smallest to largest, and taking what you were paying on the ones you pay off and put it against the next debt. Sure, you may think going after the one with the biggest interest rate would be best, but as Dave would say “if you were good at math, you wouldn’t be in debt in the first place.” Check out Dave’s answer to paying off the higher interest rate debt myth here.

Featured Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Recovering From Unemployment Part 3: Cutting Corners

Planning

Skimping and cutting corners doesn’t usually have a positive ring to it…unless it’s on your budget.  These are helpful tips even if your budget is rock solid and your main concern is de-cluttering or breaking material accumulation habits!  But listen: read through these and pick out ONE thing to try first.  Completely re-vamping your lifestyle takes slow change, it’s not an overnight accomplishment and will end up feeling stressful and overwhelming if you try everything all at once!

  1. DIY Cleaners.  There’s plenty of ways to cut back on household needs simply by making them yourself if you have the time.  Laundry soap is one of the easiest things to replace, and once you start making it yourself you’ll never buy the commercial stuff again!  I’ve tried a few different “recipes” and this is the one I like the best.  (The recipe calls for Dawn, but I actually use Gain dish soap though to make it smell like apples.) For those of you who dally in skincare, I highly recommend switching to the oil-cleansing method.  It costs less than your fancy 5-step regime and is so easy to make!  Click here to learn about the method, then click here to fine-tune it.  If you want to experiment with more DIY cleaners, check out this website.
  2. Drink water.  Quit spending money on beverages!  Juice and pop are expensive initially, and expensive in the long run with dental work!  (*Sigh*   It cost me $1300 to learn this lesson.)  Buy a decent water pitcher with a filter instead and learn to enjoy the taste of water.  It takes a withdrawal period, but eventually you’ll prefer water to anything else and begin to treat sugary or carbonated drinks as, well, treats.
  3. Go Without.  When appliances break down, consider if they REALLY need to be replaced.  Obviously some appliances are pretty crucial to modern society, but others are actually dispensable, despite what the Joneses think!  When we moved into our house the dishwasher didn’t work at all.  We assumed we’d replace it as soon as we could afford to, but once I got used to washing dishes by hand I realized I preferred to do so.  I’d always hated emptying the dishwasher, and now I find that I stay on top of the dishes so much better without a dishwasher!  Other appliances that you could probably learn to live without and still feel happy: dryer, stand mixer, garbage disposal, bread machine, toaster oven, food processor, food sealer, and…the microwave.  (Although admittedly, not having that first and last one would add more work to my day!)  The point is, you don’t NEED these things.  They don’t need to come out of your budget, anyway.  Put them on your Christmas list!
  4. Buy Used.  Cars aren’t the only thing that lose a good chunk of value the minute you drive them off the lot!  Checking out craigslist.com for gently used appliances is a great way to replace the ones that you DO need.  (And some would even argue that buying older appliances is smarter anyway, since they seem to be making them pretty sloppily nowadays…)
  5. Re-purpose clothing.  If you are even remotely handy with a sewing machine, an entire world of thriftiness is opened up to you!  Pinterest will teach you how to re-purpose just about anything into anything!  Have a tear in your shirt?  Sew a fabric flower or a skull patch over the top and now you have a custom shirt!
  6. Move past the brand name.  Chances are good that you’re already doing this, but see if there are any items that you’ve been holding onto brand names with and give the store brand a chance.  (Obviously not toilet paper… some things are sacred, right?)
  7. Use coupons.  Extreme couponing is intense, I can tell you!  Read up on it to learn how to match up coupons with store deals to get the best savings.
  8. Start a garden!  You can save a lot of money by growing your own vegetables and preserving the harvest for the winter.  This one is closest to my heart, obviously.  You can follow my blog to learn more about canning, freezing and dehydrating!  (How’s that for a shameless plug?)
  9. Walk, bike, take a bus or carpool.  By reducing your dependence on your car, you also save money on gas, maintenance and insurance!
  10. Create your own art.  Obviously if you are unemployed or just on a tight budget, you aren’t going to be spending money on decorations for the home.  But there’s still ways for you to add to the color and mood of your home without spending much, if any, money.  If you have young children, let their artwork adorn your walls!  It’s cheaper AND morale-boosting.  Win!  Even if you aren’t artsy, there are clever and inexpensive ways to decorate your home.  Here’s some images for DIY fall decorations to get you started!  ****Keep in mind though that the trick with keeping homemade decorations truly inexpensive is ideally to use things you already have, rather than hitting up the craft store and buying ten shopping bags full of stuff.****

What do you think?  Anything else that you can add from experience?  I know I’m still always looking for ways to cut back on the clutter and expenses!

Featured Image courtesy of Stuart Miles / FreeDigitalPhotos.net