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Control Credit Card Debt

10.10.2011 by Miles Williams //

For many Americans paying with credit cards is now commonplace. Once the monthly balance cannot be paid in full credit card debt creeps in like a homewrecker – and this is where many people find themselves today, in credit card debt.  In some cases, people are filing for bankruptcy due to their excessive credit card debt.  With so many different things dependent on a person’s credit score, this can be devastating to young families, leaving them without the means to make big-ticket purchases like replacing a refrigerator or stove.

Credit card debt in America

45% of Americans have credit card debt.  8.3% have a balance of over $9,000 on their card accounts.  The average credit card debt is $2,000.  Surprisingly, 23% of Americans do not even have a credit card.

Matt’s note: Betsy and I belong to that surprising 23%. 🙂

These statistics are compiled in part from the Federal Reserve’s Survey of Consumer Finances taken every three years.  The 2007 survey showed that revolving debt, which includes credit cards was $904 billion out the total consumer debt of $2.6 trillion.  This figure includes student loans, auto loans, mortgages, and other non-revolving debt.

The numbers may not mean much to you, but if you’re part of that 8.3% perhaps you should take notice.

8.3% may seem like a small number, but the average income for those people is only $48,600 per year.  That $9,000 along with other living expenses and non-revolving debt is usually a lot of money.  On top of the large debt amount are the interest rates credit card companies charge each month for the “privilege” of using their money.  The average credit card interest rate is 16.80%, so if you are paying only minimum payments each month a lot of your debt could be interest charges rather than the principle on the account.

So the general idea – and necessity for some people – is to be part of that 32% or even the 23% in some cases rather than the 8.3%.  This may not be easy to accomplish, given the rising cost of food, fuel, and other necessities, but it can be done.  You have to develop a plan and stick to it, resolving to control your credit card debt, or eliminate it altogether.

Build your debt reduction plan

The key to controlling your credit card debt is in controlling your spending overall.  Of course, American society does not make this easy since our economy relies on spending.  However, in this case, you can’t think of the Country’s economy, but rather your personal economy.  If you have the willpower, you can get a grip on your finances rather quickly.

  • Put your credit cards away for one month.  Instead of pulling out the plastic to make purchases, use cold, hard cash.  This does not include a check.  It’s important for you to see where the money goes, and how fast it can disappear from your pocket.  The only exception to this rule is in paying bills that require a check, like your mortgage or the rent.  Write out the checks and deduct them from your bank account before you withdraw any money to spend.  In using cash instead of your credit card or checking account, you will have a better idea of your spending habits.
  • Free up more cash by reducing other expenses.  Take a closer look at some of the amenities you have.  You may consider changing your cell phone plan to a less expensive one, cancelling or changing your cable/satellite plan, and buying less expensive brands for groceries.  Conserving energy will also put a few more dollars in your pocket.  Take that money you are saving, and use it to pay off debt – especially those high interest credit cards.
  • Buy only what you need, not what you want.  Knowing the difference between your needs and your wants is important.  For example, you need food, but you don’t need dinner in an expensive restaurant.  Transportation is a need, but not in a $50,000 BMW.  Clothing for your children is a need, but not the $100 designer jeans for your 10-year-old that is still growing.

Impulse buying is the biggest culprit in creating credit card debt.  Those purchases are usually wants, not needs.  If there is something you need, then buy it.  But if it’s something you can do without, keep your money in your wallet.  If it is something that you really want, only buy it if you can pay cash for it without compromising your ability to save for retirement or pay off debt; but until you have no credit card debt you should avoid those purchases, no matter how much you want them.  If you stick with your plan, you can be a member of that 32% that does not contribute a single penny to the $904 billion in revolving debt, and you’ll have more money in your pocket to boot!

Categories // Debt, Money Management Tags // credit cards, Debt, Finances, frugal, goals, interest, Reduce Expenses

Make Progress Every Day [Part 1]

08.29.2011 by Dallon Christensen //

Unless you are very adventurous or have money to burn, starting a business means building slowly sacrificing short-term satisfaction for long-term opportunity. Starting a business takes a tremendous amount of energy, and it can sometimes be overwhelming to face this challenge. Over the next two weeks, I’ll provide five ways to help you focus on your goals and make progress every day as you work toward more meaningful and fulfilling opportunities.

Work toward small victories

Creating short-term goals and achieving them gives you the momentum to start thinking bigger and facing the challenge ahead with confidence. This philosophy closely follows Dave Ramsey’s “Debt Snowball” approach, where a person escaping debt pays off the smallest debt first. When you start with a small goal and achieve it, you naturally feel good about what you did. You tell your friends, and you receive encouragement from your friends. You eagerly focus on the next, slightly larger goal and quickly develop a plan to achieve that goal.

When I created the Whiteboard Business Partners blog, my first goal was to create five blog posts and schedule them on my site. I enjoy writing and wanted a library of posts so I didn’t always feel pressured to create something at the last minute. When I created those posts, I felt great. I had developed two weeks’ worth of content for the site, and I gained a lot of confidence in how I develop my posts. Writing continues to become easier for me now. The weekend I wrote this post, I blocked time in the morning to write blog posts and articles and time in the afternoon to build my podcasting studio. I set calendar time to hold myself accountable to finishing these tasks, and I followed through. You must determine how to best hold yourself accountable as I have.

When you focus on small goals, the final goal does not seem so overwhelming. As the well-known cliche goes, “What is the best way to eat an elephant? One bite at a time!”

Create focused blocks of time to work on specific activities

Starting a business is a lot like being a circus juggler. There are plenty of objects in the air, and your job is to not let something crash to the floor. When you look in the air, those objects can appear daunting. How do you focus on just one?

You must commit to spending large blocks of time on focused activities. If you attempt to spend just a little time on a lot of different tasks, you will never accomplish anything. Intentional, focused effort for an extended period of time will make you more productive and allow you to accomplish more in that time frame.

My friend Justin Lukasavige from CoachRadio is a master at this process. In a recent CoachRadio blog post, Justin gives a sneak peek into how he is accomplishing a three-day work week. I looked at this post with a lot of amazement and respect. Justin knows exactly what he is doing every hour of each day, and he maximizes his limited time.

I freely admit that I am not the best person at focusing and maximizing my time. I’m sure many of you share my concerns. After reading Justin’s post, I am spending time organizing my schedule and ensuring I MAKE time to focus on important tasks. For me, I’m using my calendar to block chunks of time to work on specific projects. I keep my calendar through Google Apps and link it to my iPad and iPod Touch, so I always have access to how I want to spend my days.

Focusing also means removing distractions from your time. For many of us, the siren song of the Internet and social networks continue to pull us toward time-wasting activities and away from what we really need to do. I am currently testing a system called Freedom, which is $10 and allows me to set a time frame for which I cannot access the Internet. If I try to click on a web browser, I receive the “Unable to access the network” message. I have found this tool invaluable so far and fully plan to purchase the full version. If you tend to lose discipline in your work, this tool is worth the investment.

My next post will offer two additional tips to help you make progress every day in your quest to find work you love to do. In the meantime, work on those goals and focus!

Categories // Earn Money Tags // entrepreneur, goals

You Always Have Options

09.29.2010 by Matt Jabs //

Even if it doesn’t feel like it, you always have options.  Trust me.

Options are all around you

Right now some of you may be feeling as though you need a change.  Shoot, chances are you’re not even sure what that change should be.  Further yet, you may even be laboring over whether or not your strong feelings of wanting change are “okay”.  Don’t worry, in my experience this is all pretty normal.

That said, I have one question for you: do you feel this way because you are living a life out of line with your purpose?  Have you ever defined what your purpose is?  Are you actively working to do something to affect change, or are you just sitting around complaining about it?

Don’t be afraid to challenge yourself

Why do you think you are having these feelings?  Can you key in on some of the main sources of displeasure in your life?  If you haven’t yet, sit down and make a list of what you like and dislike about your situation.  About where you are and where you’d like to be.  About what went wrong, and what needs to go right from here forward.

Perhaps you feel as though you’re a poster child for the sin of discontentment.  Been there.

Maybe it’s worse.  Perhaps you feel abandoned, alone, misunderstood, over worked, under appreciated, under valued.  Sound familiar?  I’ve been there too.  Heck, in a lot of ways, I’m there now.  Sure, some things are good, and I should probably be focusing on those things rather than the things that exacerbate discontent… but, whatever… sometimes I just want to wallow in my own self pity for awhile.  And that’s okay too – as long as I don’t stay there.

To help ourselves out of places like this we need to analyze our situation unbiasedly, examine what went wrong, then humbly accept fault for past improper decisions, and forge ahead with purpose, strength of resolve, and character.

It is easy to become fearful at this point, to be afraid of the course we know to be right, to sink back into a corner and carry on with the daily routine that got us here in the first place.  But that’s not the right thing to do.

“Take care to get what you like or you will be forced to like what you get.”  – George Bernard Shaw

Be patient

Many times, overcoming an undesirable situation takes longer than we wished it would take.  Much longer.  This is okay, patiently working our way out of bad situations builds the character we’ll need as we move on to pursue future plans.

Just make sure you do something to affect change in your life.  Analyze, plan, then act… and do it all with patience.

Remember… you always have options.

This is worth repeating.

If you don’t like your debt, you can always make changes.  Save money, sell stuff, rent out your home and live in a mobile home.  Whatever you do, don’t be too proud to lower your standard of living as a way to free up resources. Dave Ramsey’s Financial Peace University is well worth the $100, perhaps you should enroll.

If you don’t like your job, you can always walk away from it.  You’re not an idiot, you can get a different job while putting your plan in place.  Better yet… stick it out a little longer while formulating your next moves.  Just be sure you do something.

You always have options… it’s just a matter of doing something to create change rather than wallowing in the piggy mud puddle of discontent while doing nothing to change it.

“These things I have spoken unto you, that in me ye might have peace. In the world ye shall have tribulation: but be of good cheer; I have overcome the world.”  John 16:33

Categories // Debt, Spirituality Tags // Debt, goals, save, wisdom, Work

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Content on Debt Free Adventure is for entertainment purposes only. Rates & offers from advertisers shown on this website may change without notice: please visit referenced sites for current information. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. We respect your privacy. Privacy policy.

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Disclaimer

Content on Debt Free Adventure is for entertainment purposes only. Rates & offers from advertisers shown on this website may change without notice: please visit referenced sites for current information. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. We respect your privacy. Privacy policy.

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