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Do You Remember Your First?

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Do you remember when you got your first credit card? The excitement you felt? The urge to go out and buy something on it right away? Did you take your friends or family out for dinner to celebrate or was your first card a store card, like mine was. When you got your first statement in, did you casually look over the amount owing and just fixate on the minimum payment required? Hey that isn’t too bad, is it? I can afford that! So did you do like I did and keep spending? Then one day you realized that casually looking at the amount owing wasn’t going to work anymore – you can’t ignore it any longer. But what happened? You have been making the minimum payments, haven’t missed one, and you aren’t using the card that much so why doesn’t the amount owing get smaller? That’s an easy question to answer. Very little of the minimum payment goes towards the principal debt; it is eaten up by interest. Interest is how the lending institutions make money and they are going to make sur
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Up and Down

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Interest rates go up and down, depending on what is happening in the economy.   When times are tough, interest rates go down to entice people who are apprehensive about borrowing money to get in debt. When times are good, the rates go up since people are more open to taking on additional liabilities to get the things they want. Rising interest rates can be good and bad. Especially if you have consumer debt. Credit cards take a beating – or a I should, you, the credit card holder – takes a beating. A card with a $10,000.00 balance and an interest rate of 16.83% could see an increase of $25 a month just on a quarter-point rise in interest rates. That’s $300 in a year all thanks to interest. Auto and student loans and mortgages on a fixed rate will not have a noticeable increase. Or at least they shouldn’t.   When the loans were taken out,   the rate of interest was fixed at that time. However, if you take out a loan when the interest rates are high, you are locked in to
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Percentages

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I know I have written on budgets before but because it is such an important topic, here are some more tips. When creating a budget, there are a few rules you may want to use. One of them is the 50/30/20 format. The theory behind the 50/30/20 is that 50% of your income is applied to housing and bills. 30% is allocated for wants and entertainment and 20% goes to savings, investments and paying off debt. There is also the 80-20 rule: 20% for financial goals as in savings etc. and 80% for everything else. That is the ideal. Sadly, many of us can’t adhere to those rules. I live in Vancouver, BC, which is a very expensive city to live in. Property is expensive and so are rents.   50% of income going to pay rent or a mortgage is not unheard of. Too often, people don’t have the funds to be able to put away 20% of income. So what do we do? The best we can. Personally, I would feel hopeless whenever I read some of these budgeting rules. I would feel desperate – with my
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How to Find Fulfillment - The Secret to Happiness | Karen McGregor | TED...

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Why Journal?

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Why do I, and other debt coaches like me, advise you to keep a spending journal? What is the benefit of that? It isn’t only for you to see where your money is going but also so you will start to think before you spend. If you know that there is a record of every cent you spend, somewhere it is going to be listed that you spent money you didn’t have on something foolish, you may stop yourself. Even if you are the only one who sees it, you may stop. Or course, you   could just not record it but that would be lying and you don’t want to lie to yourself. Another advantage of keeping a spending journal is when you also record how you are feeling when you want to spend money (or do) you may be able to find your triggers. Did you just get into a fight with your significant other and now want to go out and spend a lot of money? If you have sat down and wrote in your spending journal about this experience – the fight, the feelings it brought up and the desire to buy som
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Tomorrow Never Comes

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Have you ever said to yourself, ‘I will start the new diet... tomorrow’; ‘I will start my exercise routine ... tomorrow’; ‘I will look for a better job...   tomorrow’; ‘I will take action on paying off my debt... tomorrow’. And guess what? Tomorrow never comes! The consequence of this is that we get fatter, less fit, more miserable at our jobs and deeper in debt. I know how this works, I have been there and done it. Until you decide that the pain of staying where you are in life is greater than the pain of making changes, your tomorrow will never come. I have talked before about taking action and deciding to do something is taking action. You could say that making the decision to do something is the first step. The next one is to create a plan, set a definite date to start and stick with it! Don’t get to your start date and push it until later. Start on your start date and even when the road to your goal gets difficult, stay with it. Humans are great procrastinators a
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To Save or Not To Save

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I posed the question in my Facebook group, Reduce Debt, Revive Dreams, of whether you should pay your debt off first or save money. Most of the people who responded were in favour of paying the debt off first. And that is a good strategy. After all, with debt you are paying interest, you are paying more money so paying the debt off faster makes sense. Right? Yes and no. Paying your debt off faster will save you money in interest payments. But what happens if you have an unexpected expense and don’t have funds available to pay for that expense? Whatever are you going to do? Delay paying for the expense until you save the money? Alternatively, put the expense on a credit card? Probably the latter, right?   Now if you had savings, you would be able to take some of that money to pay for the unexpected expense. Then you would just have to work to replace the money taken from savings. In fact, Dave Ramsey advises you have a savings of $1,000.00 before taking drasti
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