5 Steps You Can Take To Pay Off Your Debt

Whether you have some student loans, have been unfortunately living on your credit cards, or have just made a mistake or two along the way, you deserve a debt free life. You’re just going to have to work for it. That’s ok, though- work means goals and goals feel great to get to. You can get motivated by this process and actually use it to start taking real control over your financial life.

Every process begins with step one, and we will start there too. Take deep breaths and tell yourself you can do this, because you can! A few small changes will make way for bigger ones and you’ll start to see your debt number shrink.

Budget, Budget, Budget

You knew this was coming. You need to have a budget, you need to read it and you need to stick to it. If this feels painful, remind yourself that it feels worse to overspend and end up in a bad position. It also feels worse to have the uncertainty looming over you of not having any idea what is going on with your finances.

Figure out all of your expenses for the month (break them down weekly if that works best for you) and subtract that from the total amount of money you bring home every month. This clearly shows you your ‘wiggle room’ or ‘fun money’ but it also shows you the potential you have to put funds away. You don’t have to always spend it all.

Calculate your debt so you know what that figure looks like. Knowledge is power and the first key to your financial freedom.  How much of your ‘fun money’ can you spend to pay off your debt? Can you make other sacrifices in other areas of your budget to free up more funds? We will talk about tips for that a little later.

Conventional wisdom is to pay off the largest debt first so concentrate your money there as much as you can. How long will it take you to clear that debt? Now you have a goal and a date to motivate you. Once the first debt is done with, apply that money to the next largest debt and so on.

Cash Is King

It is often the best idea to make cash transactions when you are on a budget. There is nothing like a real time, physical representation of what you are spending to keep you focused on your goals. If you want, you can even use the envelope method of saving, where you set aside cash on a weekly basis in labeled envelopes to cover the cost of your bills and keep your spending money separately, also as cash.

Avoid the temptation to borrow from the envelopes, though! For some it is easier to open a separate checking account for only bill funds and transfer those monies on a weekly basis. You may not even want a debit card for that account. Understand your shortcomings and don’t berate yourself for them, just figure out a way to outsmart yourself for your financial protection.

Eliminate the Fluff

As you work your budget, you may find you’d rather spend an extra $20.00 a month on food than on streaming services for entertainment. You could get by with one instead of the three you have. Maybe you pay for lawn services even though you have a lawnmower. Why not get out and get some exercise and DIY to save some funds? The same goes for some luxuries like pedicures or some hair salon services. By doing these things yourself, you can build more room in your budget.

This is a good time to talk about coupons and discounts too. Talk to all of your service providers to be sure you have the best and most current deal they can offer. Be firm and ask for what you want. When it comes time for the grocery store, think about shopping at a discount or wholesale store and buying items you frequently use in bulk. Pick up the Sunday paper and plan your meals around what is on sale. You can save significantly by doing this.

Coupon are available for many goods and services on various online coupon websites. Frugaa.com is one of those sites and has grouped discounts and deals together to make finding them easier. Before you buy an item of clothing or a gift for someone, see if you can spend less with a discount code.

Saving As A Student

If you’re enrolled in a degree program, talk with your financial advisor to be sure you have availed yourself of all possible scholarships and grants to help pay for your education. A professional can help steer you in the right direction.

Try to buy your books used whenever possible or shop online to see if there is a better deal to be had than in your university’s bookstore. See if you can befriend anyone who is in a class you know you’ll be taking next year and offer to buy their books from them.

More DIY, In The Kitchen

Grabbing food on the go is a great way to watch funds stream out of your wallet and into someone else’s. It is fun and entertaining to go out to eat, but your budget may not allow many splurges like this if you goal is to be debt free. Once you are, you’ll have more extra spending money than ever before, so this is’t a life sentence, just a temporary tweak.

Slow cookers are a huge asset to apartment dwellers or people who don’t fancy cooking. You can load economical food choices like rice, beans and cheaper cuts of meat into the slow cooker and let it do the work for you.

If you want to simulate the experience of going out with friends, try a night of co-cooking once a week. You and your friends can each bring a dish to pass or bring ingredients to the host’s home and everyone can cook together before sharing the benefits of companionship and a great meal.

Get Started!

If you can employ these ideas and get excited enough about them to believe in them, they will work for you. If you have a little money stashed, call your creditors and try to negotiate the debt. If you can do this with even your first, biggest debt, you’ll be well on your way to ridding yourself of the rest. The plan works, so just work the plan and stay positive about the steps you are taking to master your financial future.

A Quick Introduction To Online CFD Trading

Contract for Difference trading requires a contract between a broker and an investor in which profits can be made when the asset moves in the same direction as the position that is taken. The asset itself is never owned. However, these contracts are tradable instruments and there are many benefits in online CFD trading.

How Contract For Difference Trading Works

CFDs allow speculation on the direction that the price of an asset is expected to go. It is the difference in the price of the asset when the contract is purchased and the actual price of the asset at the end of the contract that holds the potential for profit. The contracts can be completed on currency, commodity shares, or an index.

Online CFD Trading – The Long And The Short

Online CFD trading allows you to go either long or short. When you go long, you are betting that the price of the underlying share will increase over the term of the contract. In order to close your position at a profit, you must enter a sell order.

On the other hand, going on the short side means that your CFD trade opened with a sell order. The idea is that you plan to profit when the price of the underlying share drops in the larger market. To close your position, you will buy when the price falls to a lower level and you expect that it will soon increase again. Contracts for difference are one of the few ways that investors can profit when the price of an asset drops.

What To Expect When You Trade CFDs

Leverage is used to properly conduct online CFD trading. This means that you will only pay a percentage of the total cost. There is a considerable magnification of the total available profits as well as losses. Expect to pay 1% on indices trades and from 5-10% on shares.

There is no expiration date on CFDs. Until there is enough margin to support closing the trade, they can be moved forward indefinitely. Of course, at the end of each day, the broker will charge or credit your account to reflect any dividends or the daily cost of financing the trade.

The only way to close your Contract for Difference trade is to go in the reverse position. For example, if you started your trade by going short, you must then go long. At any point during regular market hours, you can close your position.

Contract for Difference trades have been rapidly rising in popularity, in large part because they can be traded online in real time. Each day, the cash flows will be calculated and you will immediately know where you stand. In addition, they can be traded on almost every asset in the market including currencies, indices, shares, commodities, and sectors.

Many investors are using brokerage firms that are located online and are engaged in online CFD trading from the comfort of their own homes. While you never actually own any of the underlying assets, there is considerable potential for profit.

WTF is a budget?

There is one thing that always reigns true in the world of personal finance: Everyone does things differently, especially when it comes to budgeting. I’m convinced, no two budgets are the same. Here are a few of the different budgeting methods I’ve observed…

The anal envelope:

This method is no joke. It’s not for the faint of heart as it requires some serious discipline. Essentially you create a different envelope for all of your various expenses (rent, food, car, etc). After you’ve categorized your expenses, you put in a predetermined amount of cash in to each envelope every pay period. For example, if you allow $50/month for entertainment, you’d put $50 in cash in your entertainment envelope. Pretty straightforward. The hard part is not wanting to spend more than what you put in the envelope. Once you’ve spent the $50, it’s gone. No going to the ATM or using your credit card. Not even if that camera you really want is on sale. There is very little flexibility in the envelope system. Let’s just say it’s not for me.

The guess and check budget:

Ahh, this is my kind of budget. All you have to do is get out a piece of paper (or use excel) and itemize all of your monthly expenses. Instead of putting the budgeted allotments in envelopes each month, I use a guess and check method as I go about my spending. For example, if I feel like I’ve spent a lot more on dining out than I normally would, I cut back for the rest of the month and survive on PB&Js. This method is definitely more flexible than the envelope system, but it also allows for overspending if you aren’t careful. I generally stay within my allotments for each category, but every now and again I’ll get a little crazy and spend some money I probably shouldn’t have. If you don’t have some solid discipline I would not subscribe to this method.

The “WTF is a budget” budget:

Unfortunately, this is probably the most popular budgeting method in our culture. The people who use this method couldn’t spell budget, let alone live on one. They are usually broke, stupid, and stupidly broke…. but hey, at least they have 786 pairs of shoes they never wear. They don’t keep track of their money at all. They often don’t know how much they make and they definitely don’t know how much they spend. This is not a good plan. It’s financial suicide. If you’re a member of the “WTF is a budget” club, you better figure something out quick ’cause a financial disaster is brewing.

What kind of budget are you rockin’? Do you set aside a predetermined amount each month and stick to it religiously? Do you have an idea of what you’d like to spend, but don’t follow it to the “T”? How do you budget for the irregular expenses like car maintenance or haircuts? I’ve never really figured out a good way to set aside money for things that don’t occur on a monthly basis. Any budget tips, tricks, and helpful hints are always appreciated.

What are your financial commandments

As I mentioned before, Girl Ninja and I are going through premarital counseling. We are three weeks in and it has been totally awesome. We meet with a local couple that has been married for 25 years. At the end of each counseling session GN and myself are usually tasked with homework assignments. One of Girl Ninja’s  assignments, this last week, was to initiate a conversation about finances. Girl Ninja is not the biggest fan of talking money, so this was a GREAT exercise for her.

A few nights ago we had that talk, and it was absolutely wonderful. We shared with each other what financial commandments were most important to us. That’s right, financial commandments, kinda like the biblical ones (thou shalt not steal, thou shalt not murder, thou shalt not eat pop rocks and drink soda at the same time).

We each came up with a few of our own….

Girl Ninja’s Commandments:

  • Thou shalt tithe 10% of gross income before any spending occurs.
  • Thou shalt not take on any debt, except to purchase a home
  • Thou shalt let me take yoga classes even though the membership is $80/month

My Commandments:

  • Thou shalt not take on any debt besides a mortgage
  • Thou shalt put 15% of gross income in to retirement
  • Thou shalt talk about money together at least once a quarter

It was really cool to hear Girl Ninja’s commandments. Obviously there are other things that we think are important, but these commandments are CORE to our financial principles. The best thing about our commandments is that we are more than happy to embrace each others.

Girl Ninja is a dedicated tither. I, however, have always struggled letting go of ‘my’ money. I’m excited to learn from Girl Ninja how to become less emotionally attached to cash. She is going to encourage and model to me what a faithful giver really looks like and I can’t wait to delight in that with her.

I can’t tell you how sexy it was to hear her say that debt was not an option….purrrrr. Knowing that she hates debt just as much as I do, allows me to sleep easy at night. I don’t have to worry about her pressuring me to finance our next car or worry about her charging up a ton of money on the credit cards behind my back.

Lastly, she really wants to stay involved in yoga class, even though she knows it’s kind of pricey. Umm excuse me Girl Ninja….what’s that…. you want to know if I’m okay with you taking a class that is going to give you buns of steel and rock hard abs? Let me think about it…. YES PLEASE! If you want to spend a little money so you can get your sexy on, by all means GO FOR IT. It will be a cold day in hell before you see me take sexification away from the wifey 🙂

Like I said before, it was totally awesome getting to listen to GN as she shared her fundamental financial beliefs. I’m going to give those of you with significant others a task. I want you to ask your partner what their HONEST financial commandments would be, even if you weren’t a part of their life (I don’t want them feeling pressured to say things they think you want to hear, but only things they truly believe). You might be surprised by some of the things that come out of their mouth. I sure was.

So, reader, what are you financial commandments???

What was your epihpany?

I think it’s safe to assume all PDITF readers have two things in common…

1) At some point in your life, you decided to get your financial situation figured out

2) You’re all wearing leopard print underwear. (you followed my pictures instructions, right?)

Seriously though, you probably had a financial epiphany at some point… right? You know, a point where you suddenly went from “I don’t give a crap about my money” to “Oh crap, I did what with my money?”. If you are yet to realize the importance of getting your financial act together, I recommend you stop reading my blog and go visit this website…

www.imabigdumbhead.com

I had my epiphany at the ripe age of 22. I had no interest in personal finance, but had a close friend who worked as a financial analyst. He was totally obsessed with his money. It was weird to me. I didn’t understand how he could spend so much time learning about boring financial mumbo jumbo.

But one night, while we were watching TV, he started talking about the wonders of a Roth IRA. I was intrigued, but way over my head. I couldn’t spell compuond intrist, let alone tell you what it was. Over the course of a couple hours I became more and more curious. This curiosity soon snowballed in to an obsession with personal finance.

Realizing that I already had decent financial habits, I decided it was time I maximized my potential. It’s an ongoing process and I am definitely not the smartest kid in the room, but I’m excited I got the ball rolling at 22 and not later. I don’t even want to know what my finances would be like had I not had that conversation. It wouldn’t be pretty, I know that for sure.

Now that you’ve heard my story, I’d love to know…

When did your financial epiphany occur?

How old were you?

What prompted it?

And what means do you take to financially educate yourself?

The real issue with money

Last night, Girl Ninja and I completed another pre-marital counseling session (which I would recommend all couples do) and dabbled a little bit in the financial aspects of marriage. We have not yet gotten to the ‘finances’ section yet, so the BIG “money talk” is still looming.

One thing, though, did stand out to me during our conversation with the couple mentoring us. The husband said “Money is the number one cause of divorce in America.” Nothing shocking right? If you listen to Dave Ramsey, he spits that statistic out all the time. Call me crazy, but I’m going to have to disagree with Mr. Ramsey. I don’t believe “money” is the number one cause of divorce. I’m willing to bet behavioral issues, tied to money, are the real root of the problem.

I did a little internet research (I know the internet is not always the most reliable source) and here were a few of the most common reasons people have money issues….

Access: one family member feels another won’t allow enough access to shared financial assets and/or financial records.

Ownership: family members fight over ‘my money’ or ‘your money’ instead of ‘our money’. Variations are… who manages the family checkbooks and savings accounts, who’s responsible for paying bills

Incomes and earnings: a family member resents that another isn’t earning enough (or anything), and should ask for a raise, change jobs, or get a job. A variation is someone feeling chronically inferior (ashamed) and/or guilty because they’re earning or contributing less than a mate or other relative.

Lack of compromise: One person handles money one way, the other handles money differently. Instead of discuss things and meet in the middle, all anyone is concerned about is having things done THEIR way. The money discussions they have are not discussions, but debates. Where one person is trying to convince the other “My way is better.” Neither person is willing to sacrifice their financial preferences for the sake of a healthy relationship.

I don’t buy for one minute that money causes divorce. In fact, it’s impossible. Money is an inanimate object. It has no capacity to cause controversy. Instead, it is the differences in financial perspective, honesty, compromise, communication, and a whole slew of relational issues that are the real cause of divorce. I believe money is the symptom of divorce, but it’s definitely not the problem.

For those of you that are married, or in serious relationships, what have been the sources of your money fights? What means have you taken to work through those issues? Did you use LegalZoom for prenuptial expectations? Are there any freaks out there, that are in relationships, but have ZERO money issues? If you want to check out some of the most honest money problems I’ve ever heard, check out the comments on this post I did on financial secrets.

The proverbial umbilical cord

I’m not scared to admit my umbilical cord has not been fully cut. Now don’t be confused. I’m in no way financially dependent upon my parents. I can support myself, but there is definitely comfort in knowing my family will always have my back. I like my parents a lot, and I’m pretty sure they at least kind of like me too. You do like me mom… right?!

My parents are pretty generous folks and they still like to “spoil” me occasionally. Sometimes I feel a sense of bitterness from my peers when I mention my mom will give me money to put towards my student loan. Look I understand, you think I’m a spoiled brat who never has to work for anything. Spare me your jealousy. Is there really something wrong with letting my parents (who are in a way better financial position than myself) help me out from time to time? Should I be prideful and refuse any help or support from them? If you’re too macho to accept generosity, good for you. That’s not the way I roll. I’m a momma’s boy for life.

I’ve mentioned in past posts, Mom Ninja occasionally surprises me with a couple hundred dollar deposit in to my checking account. This money is only to be used towards my student loan. Does my mom have to give me the money for the loan? No. Have I ever asked her “Hey mom can I have some money to pay down my debt?” No. She does it because she is weird loves me, and is in a position where she can help me.

Not only do the parental units hook me up with the occasional b*tch slap to Sallie Mae, but sometimes they just like to give me a random gift. A few years ago I came home to a package from UPS. “Funny” I thought to myself. I didn’t order anything, did I? Open it up and blammo, a brand spankin’ new iPod touch from the rents. Or just this last weekend I got a picture text message of a pair of shoes mom ninja wanted to know if she could get for me (she knows I have a shoe fetish). The random gifts really make my day. It may sound petty, but getting gifts for absolutely no reason at all, really makes me feel loved. Does that make me materilistic or shallow?

More important than any tangible gift they could give, I most appreciate their support. I know they will always be my cheerleaders. They want to see me achieve my goals. They have spent a great deal of their love, money, and time on my personal development. The least I could do is try and make them proud, right? After all, I don’t want to be the worst investment they’ve ever made.

Yes, the umbilical still remains, but I don’t think that is necessarily a bad thing. If I was begging for mom to bail me out of jail, stealing money from their bank account, or was mooching off them in any capacity, it would be a different story. Thankfully, my parents raised me better than that.

So bloggers, do you still have an imaginary umbilical cord linking you to your parents? Do they help you out financially from time to time?  Do you ever feel like some people think you are spoiled or maybe even babied? If you completely cut the cord, at what age did you do so and why?