Why Saying ‘No’ Can Keep You Out of Debt

Are you one of those people who just can’t seem to say no to anything or anyone? If you are you may not realize the impact it is having on your finances, not to mention your health. As parents, it can be particularly demanding to have children involved in recreation activities and organizations that beg for your help. As a single person or married couple without kids, people may often assume since you ‘have nothing better to do” you’ll have plenty of time to volunteer or plenty of money to donate. Guilt may guide you into to doing more or paying more than you really wanted but perfecting the art of saying nope may save you both time and money.

How so, you ask? Well, let me tell you why:

Saying No To Others

Guilt is the driving force behind people’s inability to say no to others. In our lifetime, we will likely be asked to do a number of things we feel obligated to do. While we may always feel obligated, we might also feel uncomfortable doing the things we can’t say no to, especially when it comes to finances.

Have you ever been asked by a friend or family member for a loan? Do you regularly donate more money than you have for your kid’s fundraising efforts? Have you spent money you didn’t have because of peer pressure? Situations like these may seem out of your control but if you begin to practice the art of saying no, it will get easier.

Many people spend more than they can afford because they want to please others and be helpful. However, with the current state of the economy it is becoming more socially acceptable to say no. It has become necessary for people to really take stock of their financial situation, their time management skills, and their stress levels and more often people are finding that no is not a four letter word.

The only way to perfect your ‘no’ is to know when to use it. If you are being pursued to volunteer time or donate money that you just don’t have, be polite but strong in your decline. Let people know you appreciate the opportunity to help but be upfront about the fact you just can’t do it. It can be uncomfortable for awhile and people may at first be put off, but you must respect yourself and take on only what you can handle. Set limits to what you can do with your time and how much you can donate and adhere to these limits. You might be surprised to find yourself back in control of your finances and your time.

Saying No to Yourself
After the debt crisis of the last few years, people have begun to realize the consequences of not being able to say ‘no’ to themselves. Careless buying habits, not creating reasonable budgets, and spending more than they earn are the main causes of the consumer credit issues people are just now beginning to deal with. So many consumers are overwhelmed with debt, filing for bankruptcy, and not being able to make ends meet because they ere unable to say no to themselves.

‘No’ is not a word anyone really wants to hear but it is necessary for people to be able to control their finances. Consumers need to learn how to budget their income and expenses. Living within your means requires that you change your spending habits and learn to say no to yourself. Set savings goals for big purchases and work to establish a savings account. Eliminating debt will also help to build your financial knowledge and confidence that will make saying no even easier as time goes on.

It does take a strong person to fully understand their capabilities. Over-committing yourself financially and personally will no doubt lead to debt, stress, and general unhappiness so make a commitment to lead a more stable, more effective life just by saying ‘no’.

Money Lessons from the Local Movie Theater

A cool economy and hot movie sales went well together last year as Americans found ways to temporarily escape the financial down turn and mounting job losses.  According to a report released by Adams Media Research, Americans spent $9.87 billion going to the movies in 2009. Many of these movies were nominated by the Hollywood Foreign Press Associate for outstanding achievements in motion pictures.  This year’s Golden Globe nominee’s movie titles can give you some tips on becoming debt free, or staying debt free this year.

Up in the Air (nominee: best picture, drama)
Do you know where your money goes, or is it up in the air?  This year make a concrete resolution that you will get a firm grip on your finances by setting up a budget to track out of control spending. It’s not enough to say “I won’t spend as much on clothes this year.”  Take the time to find a budgeting system that works for you.  Setting a budget will help keep your finances on solid ground.

An Education (nominee: best actress in a drama, Carey Mulligan)
The beginning of the year is a great time to take some financial education classes.  Perhaps you want to learn about online banking, are looking to buy a house, start investing, or simply want to enhance your money knowledge.  There are free and convenient courses available. The Federal Deposit Insurance Corporation offers a no cost computer based financial education program called Money Smart.   The National Foundation for Credit Counseling offers a plethora of free courses to help with budgeting, savings, dealing with debt and other financial education topics. 

The Proposal (nominee: best performance by an actress in a musical or comedy: Sandra Bullock)
Getting married can be one of the most stressful financial times in a person’s life.  Merging two lives, two bank accounts, and two different money attitudes can be an adjustment.  Money problems are one of the leading causes for divorce.  It does not have to be that way.  Before saying I do, make sure you are on the same page financially. 

The National Foundation for Credit Counseling offers money tips to consider before tying the knot:
• Be honest about where you are financially.
• Acknowledge one may be a saver, one a spender; agree to learn from each other’s tendencies.
• Work to understand each others long held beliefs about money.
• Decide which person will pay monthly bills.
• Allow each person to have independence by setting aside money to be spent at his or her discretion.

Best Performance-Staying out of Debt
Getting out of debt or staying debt free does not have to be dramatic or a comedy of errors.  Practice smart money habits and this could be the year you win the best award of all-a debt free life.   

What He Said: Inspiring Quotes to Help You Get and Stay out of Debt

Getting into debt is easy-spend more than you make.  Staying out of debt requires more discipline and thought.  If you are in debt and trying to get out, or you are debt free and want to stay that way, perhaps instead of the same facts that you know so well, you could use some fresh insight into finances by some inspired writers who have famous sayings about money.  Seeing things from their perspective might deepen your commitment to your financial journey.

“If One Wants to get out of Debt and Stay of out of Debt He Should Act His Wage”-Unknown Author
The first rule of getting out of and staying out of debt is to live within your means.  Problems come when we act (and spend) like we make more money that we actually do. 

“Interest Works Night and Day, in Fair Weather and in Foul.  It Gnaws at a Man’s Substance with Invisible Teeth”- Henry Ward Beecher
Pay off high interest loans as quickly as possible.  Making only the minimum monthly payment will get you nowhere.

“If You Would be Wealthy, Save as Well as Getting”- Benjamin Franklin
Since we never know when an emergency might happen, it’s important to plan for one.  Have 3 months worth of expenses saved.  Start building your emergency fund and add to it monthly.

“We Didn’t Actually Over Spend our Budget.  The Allocation Simply Fell Short of our Expenditures”-Keith Davis
Whether you use a simple pencil and paper or a complex computer software system, you must set some sort of budget and stick to it. It’s the best way to stay out of debt.

“Beware of Little Expenses-A Small Leak will Sink a Great Ship”-Benjamin Franklin 
Tracking expenses is one of the disciplines needed to get and stay out of debt.  A $5 coffee here, a $4 magazine there can really add up with nothing much to show for it.  Pay attention to where your money is going and stop the leaks. 

“He Looks the Whole World in the Face, For He Owes Not Any Man”- Henry Wadsworth Longfellow
If your goal is to become debt free, or to remain debt free, there is sage wisdom available to help you achieve your dream.  Take the time to make a budget, track your spending and be honest about what you make and can afford.  Before you know it you too will not owe any man (or woman!). 

Moving Forward Financially into the New Year

One of the few positive things to come out of the recession is that it’s forced people to take a long, hard look at their spending habits and keep tighter control over their finances.  Most families do have a certain amount of debt, with car, home, and education loans topping the list, but it’s important to keep your spending at a manageable level. Since there will be no money trees sprouting in our yards any time soon, we need to find better control over our finances.

Here are a few tips to follow in order to keep your financial well-being intact as you welcome in a new year:

Know what’s in your bank account(s). If you have no idea how much money you have, you have no idea how much you can spend.  If you have a bank account, you receive a statement each month, and with most financial institutions offering online banking, there’s no excuse not to know what’s in your bank accounts. Consolidate some of your accounts if it’s too difficult to keep track of them all. Read those statements and balance that checkbook every month to make sure the numbers work out.

Create budgets and stick to them. Once you know how much money you have, sit down and develop a budget. Factor in everything your family spends money on—not just the regular household expenses, but things like eating out, entertainment, gym memberships, and all of those other expenses that may not seem like much, but can quickly add up. Take a realistic look at each item and see what can be reduced or cut altogether. Ask for the kids’ input and make it a project so everyone understands how the family’s spending habits will change.

Don’t live off credit cards. One of the single worst things people do is pay expenses almost entirely with credit cards. Have a credit card for one or two big purchases and for emergencies, but don’t use it every time you make a purchase. Credit card interest rates show no mercy, so a small amount of debt can turn into a big problem in no time. 

Live at, or below, your means. “Bigger”, “better”, “faster”, and “more expensive” isn’t so trendy anymore.  “Practical”, “long-lasting”, and “affordable” are the buzzwords in this new economy. Look for second-hand or sales items, and shop around for deals.   

Pay bills on time. Carrying a balance is one of the easiest ways to accumulate debt. When developing a budget, factor in your household expenses first so your bill payments get top priority.  

Dealing With the Stress of Debt

When you are juggling the bills, credit card debts, mortgage payments, and daily life expenses, your patience and health can wear thin. Sadly many people at the brink of illness don’t even realize they are headed for disaster outside of a financial one.

Stresses of debt can take a large toll on your life and relationships and can actually lead to more debt. When you are depressed or worn thin, you may be prone to making decisions that are not in your best interest. You can also wind up owing high medical bills you can not pay because your debt stress ended you in the hospital.

There are ways to conquer the stress that accompanies debt and you can start to get back on track and relieve the depression debt causes by making these moves:

Step Up to the Plate
Face it, there is no way to get rid of debt except to deal with debt. Gather your bills and spend the time it takes to find out exactly how much you owe and who you owe it to. Calculate your available income and start working on a budget where you devote as much money as possible to paying down debts. Immediately stop spending more than you earn and make a commitment to finding ways to save more each month.

Seek Professional Help
Sometimes the burden of debt can leave you feeling very alone and ashamed. There are many new options for debt counseling and consolidation companies out there. Do some internet research about which kind of program you qualify for and get on the phone for an appointment. Talking with an experienced debt counselor can take some of the weight off of your shoulders simply because you no longer have to be alone in the situation and because help is on the way.

Do Something Extra
Psychologically it can help to go the extra mile to solve your debt problems in a shorter period of time. For instance, take on a part time job or do odd jobs for others to earn additional cash earmarked for your debts. It may be difficult to do the extra work but as you begin to see your debts decline, you will feel better that you have been working to do their right thing.

Ask for Help
Again, as embarrassing as it can be to have money issues, understand you are not the only one. About 43% of American families spend more than they earn. In light of the recent foreclosure crisis, people are starting to see that debt is becoming all too common a theme in families. Let family and close friends know that you can not afford to go out to eat regularly or buy expensive gifts. You may be surprised at the outpouring of help you receive from those who love you.

Take Care of You
Regular exercise and eating right is necessary for all human beings. When things seem too overwhelming, learn to take a brisk walk to clear your head. Don’t wallow in front of the television thinking life as you know it is over. In fact, consider that a new life has just begun as you emerge from debt and find a better way to deal with your finances and avoid all financial stressors in the future.

Debt And Divorce

Two words that no one ever wants to deal with, yet often go hand-in-hand are debt and divorce. Both can have a devastating effect on a person’s personal and financial health. Not surprisingly, debt can often play a big role in the failure of a marital relationship. In fact, it is credited as one of the top three reasons given by couples who have divorced. Trying to deal with the end of a committed relationship and handle the separation of both assets and debts can be a trying period for both partners. Here we will discuss a few tips to better handle debt and divorce.

• Understand the law- There are many misconceptions about how debt is handled in a divorce. People who fail to educate themselves on both their rights and obligations are bound to face a more difficult future than those who invest the time to learn who is responsible for what when the marriage ends. The laws may vary from state to state, therefore it is your responsibility to learn how the law is applied in the state in which you reside.

• Sever joint accounts- When going through a divorce you want to avoid leaving the union with shared debts. You and your partner can either jointly pay off the debts leaving no debt to be shared or divide and transfer the amount the other person is responsible for to an account in their name. Regardless of how you choose to handle your debt it must be addressed or somewhere down the road one person runs the risk of being responsible for all debt held on a joint account.

• Emotions can be costly- In many situations one or both parties are so emotionally distraught that they are unable to think clearly. A divorce is an emotionally charged event and with good reason, it signifies the end of a relationship that was meant to last a lifetime. If you are unable to discuss and handle debt issues with your partner, you should consider help from a financial planner or mediator to guide both of you through the process. Not dealing with debt or worse, racking up new charges out of anger or resentment will eventually harm both parties in one way or another.

• Keep accurate records- While going through the divorce process, keep accurate records on what debt you incur or pay off in the event you should need proof of these transactions at a later date.

• Protect your credit- Moving forward as a newly single person, it is important to protect your credit at all costs. If your credit is poor you will no longer be able to rely on a partner who has better credit for future financing. You now have only your own income to rely on therefore avoiding debt all together or paying off any remaining debt should be a top priority. If you have debt that you feel is not your responsibility, yet bill collectors keep calling, take action to resolve the situation versus simply ignoring the requests for payment.

Moving on after a divorce is difficult enough in most situations. By addressing any joint debt that was incurred during the marriage before your divorce is final, you are one step closer to a future without painful financial reminders of the past.

Breaking Free From The Debt Trap

Many people have faced the unpleasant realization that they are living with entirely too much debt in their lives. The recession toppled many long standing myths about personal finance. Consumers are now emerging from the rubble, shaking the dust from their eyes and facing a new world where what you have isn’t really important if you are in over your head with debt.

The good news is that debt can only hold you back if you refuse to do something about the problem. Getting out of debt is far from easy and in most cases it is a long drawn out battle that few people want to engage in, however it must be done to find financial security. If you are feeling trapped by debt, here are some tips to help you get back on track financially.

• Evaluate the situation- The time to address debt is now. If you have been wearing blinders or avoiding the reality of your financial situation, it is time to face the music and devise a plan to eliminate your debt before you waste any more time and money fighting a losing battle. In order to find out what strategy will work best for your situation you have to sit down with the ever growing pile of bills and determine where exactly you stand in terms of debt and available income. Without taking this first step you cannot move forward toward debt free living.

• Change your habits- Unless you found yourself in debt due to situations beyond your control (sudden job loss, medical issues, divorce, etc) you are probably to blame for your current indebtedness. There is no point in beating yourself up over past mistakes, but you must acknowledge where you went wrong and make a committed effort to change your spending habits and how you manage your finances in the future.

• Compare debt elimination methods- Depending on your current level of debt and resources available to pay off that debt, you have several options to eliminate your debt moving forward. Whether you opt for aggressive repayment on your own, debt consolidation, debt negotiation or even the dreaded bankruptcy will all depend on your unique situation. Compare the different methods carefully to find out which is right for you.

• Take action today- Once you have carefully examined all the options available to you, pick a method and get started today. Each day spent agonizing over what you will do about your debt is another opportunity lost to begin paying it off- on way or another. Do not delay the inevitable any longer and get started as soon as possible.

Getting out of debt is something that each person dreams of, yet many people do not take the necessary steps to achieve. Having too much debt will trap you in a cycle of financial struggle that will never end until you take charge and address the situation. Avoid repeating this cycle indefinitely by facing the debt head-on and working toward eliminating debt from your life forever.

To Buy or To Rent: Answer Your Own Questions

With increased tax incentives and simply the American dream of home ownership, it can be very tempting for individuals and families to want to get into a home of there own as soon as possible. For some, buying a home is the right next step. For others, renting isn’t such a bad deal.

Here are some questions you need to ask yourself and of your family before you make the jump into buying a home or deciding to continue renting where you live:

How Long Will You Live There?
When you rent, you essentially have the freedom to move around at will (in accordance with your rental agreement). When you own a home, the longevity of your stay will be a critical financial decision. Some experts say if you plan to stay at least 4 years or more, it will be worth the time and expense to purchase a home. It may be next to impossible to determine how long you will stay in the area for those with changing jobs or other plans for the future. For those who are more settled in one location because of kids or work commitments, it may be time to start looking to own.

Can We Afford to Move?
Sure you may have enough for the down payment and the monthly mortgage but moving into a home costs a lot of money too. First the expenses of actually moving are substantial. Everything from renting a moving truck, hiring help, or taking off work to pack costs money all at once. Additionally, you will need to consider the other expenses involved like making deposits on utilities, purchasing new household things you don’t already have, and restocking the pantry. There is a lot of little things associated with moving that can add up fast. Plus the excitement of a new place can help sway your judgment when it comes to budgetary concerns.

Is Owning Cheaper than Rent?
People often talk about how much less they are paying on a mortgage each month than friends and family who rent pay but there is a lot more to consider. Besides the interest and principal, there are other costs associated with owning a home such as property taxes and insurance on the house. Experts estimate that no more than 30% of pre-tax income should go toward an all-inclusive house payment (including taxes, interest, insurance, and any homeowner association dues and the like) If your personal financial numbers do not add up for home ownership, it may be best to rent and stash cash for purchase later.

Can I Afford to Maintain a Home?
If you have been accustom to renting for awhile, the responsibilities as a homeowner can be overwhelming and expensive. There are repairs and upkeep that may not have been required as a renter including caring for the lawn, plumbing, and structural issues. You may have to make large-ticket purchases such as lawn mowers or hire professionals to maintain your new home if you are not especially handy around the home.

While these are important questions to ask yourself when debating buying a home, consider also your credit score and other financial responsibilities when making your decision. If your credit is less-than-perfect, you will spend more time and money financing a home. If you can’t answer these questions comfortably, it may be time to stay put, trump up your savings plan, and work on improving your credit scores for another year or two.

How Much Can You Afford To Spend on a House?

Deciding just how much to spend on housing can leave you feeling like Goldilocks and her porridge… too much house can use up all your disposable income leaving you house poor and too little house may leave you feeling cramped after just moving in. Finding a happy medium on how much to spend on a house can be confusing and frustrating, especially for a first time buyer, but it doesn’t have to be. There are several factors to consider that will make the decision much easier.

• How much can you borrow?
• Do you have a down payment?
• Do you really want a 30 year mortgage?
• What about your other goals?
• Can you handle the monthly commitment?

How Much Can You Borrow?
It is probably in the DNA of financial analysts to quantify everything to the nearest percentage point and they normally advise that housing should not exceed more than 33% of your income, although they are far more comfortable with a figure that is closer to 28%. The difference in the mortgage bracket between the two is actually quite significant, although the gap may seem fairly narrow. This fact alone may seduce you into accepting a larger mortgage because it may just be little more monthly, but beware of over committing in the excitement of buying a new home and then ending up struggling to make ends meet.

Do You Have a Down Payment?
A down payment makes a huge difference in the type of mortgage rate you are able to secure and it also bumps up the total amount you are able to spend. Generally the more you can save towards a down payment for your house the better off you will be financially, because it means that you will most likely borrow less.

Do You Really Want a 30 Year Mortgage?
30 year mortgages are convenient because they allow you to stretch the repayment period over a longer time and so bring down your monthly payment. Unfortunately they also lengthen the number of years you pay interest to the mortgage lender. You can check online for a mortgage calculator that tells you how much interest you will save by opting for a 25 year mortgage term instead of a 30 year… the savings are bound to shock you into choosing the shorter term. This affects how much you can spend though, because something has got to give. If you choose a shorter term, and you want a reasonable monthly payment you will have to borrow less. It’s just the way mathematics works.

What About Your Other Goals?
If your only goal in life was to buy a house then it would be reasonably simple. You could devote all your energy towards finding the perfect house and then work all day towards the singular goal of paying it off. We all know that life is not that simple. There are always several things to consider. You may plan to expand your family, or pay for your children to go to college, save for retirement or take an annual vacation. Since you probably have a finite supply of money, it is safe to assume that you must not spend every last dollar on a house, so that you can leave something over for your other goals.

Can You Handle the Monthly Commitment?
You can forget what the bank says for the moment and tune down the voice of your realtor. You may be getting advice from several different directions, but what is most important is how you feel about your decision. If you know that it will be difficult to come up with the monthly payment because you have some expensive hobbies, or you love eating out and you don’t have a clue how to cook, take a moment to assess the situation for yourself. Come up with a realistic budget of what you can spend and then ask the lender to work backwards from there. You can even plug the figures into an online calculator yourself and come up with a good enough estimate.

The decision of how much to spend on a house incorporates several factors, but the most important thing is that you are comfortable with the figure you settle on. Lenders can give you a ceiling on what they will allow you to borrow, but you can supplement that with a down payment to get a larger house, or scale it back to leave some over for other areas of your life. The choice is yours and you are sure to make the right decision if you consider all angles.

Should I Pay Off My Fiance’s Debt?

Taking responsibility for someone else’ debts is a huge deal. It is also a personal decision that can not be taken lightly due to the potential consequences. When that someone is a person you intend to marry, the questions become even more difficult to answer. By law, when two people get married, the other person is not responsible for their partner’s existing debt legally. Any debt incurred after a couple becomes husband and wife however is a different story, depending on what state you live in. But prior to the wedding, a debtor’s responsibility is their own.

Deciding to pay off someone else’s debts before marriage should be well thought out. Consider the following information:

While new relationships can seemingly last forever, the reality is relationships are complex. Discussing money issues upfront before marriage is a good start to a good foundation but the conversation must incorporate a level of reality. Consider what would happen if one half of the couple were to commit to paying off the debts of the other. What happens if the relationship fails prior to the marriage? What then happens to the agreement?

Paying for someone else’s debt is a nice thought but it could take a significant amount of money to meet the obligation, depending on the amount of debt. If one party is independently wealthy and can easily manage to pay down the debts, only do so if it is mutually agreed upon and repayment terms, if any, have been legally documented.

While it may seem to some to be an issue of trust, it is always best to check with a legal professional such as a family law attorney about your options prior to making an agreement as a couple. Many people completely avoid this resource in order to not offend the other party but in the end, when things go wrong, the legal factor becomes even more frustrating and expensive.

Couples need to take a look at the big picture when it comes to finances. Is the other party incapable of handling their own debts? Are they willing to help repay the debts along with your help? Or is the debtor happy to have someone else shoulder the responsibility for their money problems without any thought to assisting in the process?

For the debtor, questions need to be asked as well. Is the person who is willing to take on your debt doing it for the right reasons? Some people will use money assistance as a way to essentially trap the other half of the couple into a relationship they do not want. Is the person you plan to marry helping you simply because they want to help you? Are you willing to take some responsibility for your own debts?

If paying another’s debt will be a financial burden to the relationship, it may not be a wise idea to agree to pay the debts in full. A plan for repayment using both parties income may be arranged prior to the marriage that can be carried over after saying “I Do”.

Once a couple is married, each individual party is not responsible for the existing debts of the other, provided they are not already joint account holders. Married couples do not have a joint credit report and maintain separate credit histories. Each credit report will include the accounts where the individual is an account holder or authorized user on the account. If a couple lives in a community property state, debts taen on within the marriage are considered joint obligations, even if only one party applies for credit. There are currently nine states considered to be community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

After a couple is married, the old debts may not be legal issue but on some level, both parties are still going to be responsible for paying the debts with the shared income. Depending on the progression of the relationship, one party can become resentful about having to allocate the large amount of money necessary to pay the obligations. If the married couple is able to keep an open line of communication about their finances, it can be an excellent start to a good financial future.

Ultimately, choosing to pay for someone else’s debts, even someone you love dearly, is a big decision that requires some serious financial as well as emotional considerations. It can be a good plan to work on paying off debts prior to a marriage but it is not a requirement for one party to take full responsibility while the debtor is not.

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