How to Get Out of Debt With the Get Out of Debt Guy » budgets

It Takes Two (Creating a Family Financial Battleplan-Part 1)

Elle — Mon, 23 Jan 2012 00:06:55 +0000

Two years ago I wrote about creating a financial game plan. It’s been a popular post and I think it’s due to couples looking for a solution that they can create together. Though most of the advice still hold up, I wanted to break down the steps for couples just starting out with getting their finances together.

The first topic I wanted to tackle was getting the two of you on the same page financially.

Getting on the Same Page

Before you can figure out where you’re going it’s vital for the two of you to have a completely accurate picture of where you’re currently at in terms of finances. That means you need to share with each other all your debts and assets.

If you’re not sure how much debt or assets you have, take a moment to go through your mail. Grab your bills and write down any balances you have on your credit card(s), car loan(s), and student loan(s). Do the same for your bank account(s), property (auto and real estate), and investments.

Build a Spending Plan Together

Whether you call it a budget or spending plan, the two of you need to have a way to decide where your hard earned money goes. Some wonderful tools to help you create a budget include free options like Mint and Manilla. They allow users to quickly set a budget and organize your bills painlessly. It took us 15 minutes to set up all of our accounts. We’re now able to get an accurate snapshot of our finances pretty much at any time. I also love Mint because I can set a monthly goal and when I get close to my spending limit I get an email.

If you two can’t seem to agree on the whole plan, then start off with one category. Set a goal to cut back on eating out for a limited time. It doesn’t matter if it’s a big or small goal, the point is that two of you need to learn to work out your differences for a common goal.

Unfortunately when couples have money problems that won’t resolve, it’s usually not due to the money. We each have our own mental script when it comes to handling money and relationships. If the two of you are stuck at this stage it may be helpful to get a neutral 3rd party to assist such as a certified planner or a marriage counselor.

Pay Your Bills from a Joint Account

I know some couples have separate accounts, but having at least some money jointly held encourages the two of you to talk. Our favorite bank right now is ING Direct. They offer free checking and saving accounts plus they earn a bit of interest. Their bill pay system is extremely easy to use.

Whatever bank you choose, spend just a bit of time setting up your free online bill pay with your bills, account numbers, due dates, and amounts. The great things is you’ll only need a few minutes a month to keep it up; automation takes the stress out of bill pay.

Thoughts on Moving Forward Financially as a Couple

My next post will focus on creating goals that fit your family’s own financial situation. I’d love to have your input on some of your goals, so please share them in the comments and I’ll do my best to include them. How many of you are starting to build your finances as a couple? What are some of your biggest concerns?

Elle helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second.

Personal Finance Struggle Universal. Many Dealing With Trying to Make Ends Meet.

Steve Rhode — Wed, 18 Jan 2012 19:08:04 +0000

From How to Get Out of Debt

When you are struggling to find enough money to get through the month or make ends meet, it an feel as if you are all alone in that effort.

Money troubles are internationally universal and experienced by people around the world. Just yesterday I wrote about consumer debt levels increasing in Australia and Canada.

The reality is that since the beginning of a credit and debt societies there was always a segment of the population that found it difficult to survive.

Recently a conference was help in Canada and examined financial literacy in many different countries. – Source

Aleksander Rychwalski, Department of Education with the Polish Financial Supervision Authority presented information that said:

55 percent of Poles do not have a household budget even though 77 percent say they watch their financial situation
73 percent note that they pay their bills on time
38 percent said their income did not meet costs in the last 12 months and 40 percent borrowed money or food from friends and relatives in order to make ends meet
Only one in 10 respondents would be able to cover their living costs for longer than six months if they lost their main source of income
Nearly half (46 percent) of respondents preferred to spend money rather than to save it for the long-term
The use of financial products is also low compared to other developed market countries. Just 63 percent have a bank account while 36 percent have insurance, 25 percent have credit cards, 26 percent have a pension fund and only 18 percent have a savings account.

South Africa is a country I’m very familiar with in their struggles with debt. Ever since they’ve been on my radar there has been a tremendous disparity in the ability to service consumer indebtedness.

According to Olivia Davids, Head of Consumer Education with the Financial Services Board in South Africa people are still dealing with debt issues.

44 percent of respondents noted they were short of income during the previous year, and the greatest income shortfalls were among those with little education or who were unable to work or who were part-time or job seekers
Nearly half (47 percent) prefer to save rather than spend money, while 59 percent plan for the future
55 percent always, or often make financial plans for the long-term. Only 22 percent say they never plan
91 percent say they are aware of bank accounts as a product, but only 66 percent know about credit cards and 20 percent do not own any of the 14 products listed on the survey
Knowledge and understanding of mathematical concepts related to finance is quite low, with only 26 percent of respondents showing basic understanding of the impact of inflation, and high numbers reporting they do not know the answers for questions about simple and compound interest.

In Canada Jennifer Robson, Senior policy research officer, with Policy Research Initiative in Canada presented a snapshot of how Canadians are doing.

49 percent of all Canadian adults say they do not have a budget at all
57 percent of Canadians between the ages of 18 and 29 do not have a budget, while 47 percent of Canadians between the ages of 60 and 69 don’t have one
Among the lowest earning Canadians, 48 percent say they struggle financially sometimes, and 11 percent say they experience real problems
Among the highest earning Canadians, 15 percent say they sometimes struggle and one percent say they have real problems
When asked how they would cover a $500 expense, 45 percent say they would use credit or debt, while 56 percent say they would tap into their savings
2.2 percent of the lowest net worth Canadians say they do not have a bank account and 4.2 percent of Aboriginal respondents noted the same.

While I don’t have any current United States comparisons, some results from 2007 showed that American’s are not fairing much better.

40 percent say they have a budget
20 percent said they don’t keep any track at all of their income and expenses
40 percent say they can’t pay their credit cards in full each month
30 percent don’t know what their interest rates are on their credit cards
Less than 50 percent check their credit histories
Only 30 percent said they were interested in more financial education.

The bottom line is that the ongoing fight with money, credit, and debt is a daily battle faced by citizens of many countries. It’s almost the most universal language in the world.

@GetOutOfDebtGuy

I Need Someone to Put Me on Budget. – Sharon

Steve Rhode — Thu, 15 Dec 2011 15:36:34 +0000

From How to Get Out of Debt

“Dear Steve,

Working full time and also an adjunct college instructor-made some terrrible money mistakes and I don’t know how to fix! Make enough money to pay bills, but that is it. Not getting anywhere

I need someone to put me on a budget, and help me figure out how to get out of debt-scared

Sharon”

The Answer:

Dear Sharon,

For the most part, budgets feel restrictive and fail. Frankly that’s because people make budgets the wrong way. Rather than tracking their cash and figuring out how they spend their money, they make a list on how they wish to spend their money and then give up when it doesn’t work out.

Not everyone is cut out for budgets either. I personally hate them. Others are addicted to tracking every penny. I think my parents would have withdrawals if they could not enter their daily spending in their tracking program.

I would suggest we start with an online tracking program many love. It’s called Mvelopes*. Take a look at it and see if it’s something you might use. If so you don’t need to use it forever, but at least a few months to figure out where you cash is going.

Once we have good data we can then make good decisions. You can then use a free service like ReadyForZero to automate your debt reduction.

Based on what you’ve said I think that will do the trick to get you headed in the right direction.

Just don’t beat yourself up over this. Not everyone is a penny tracker and not everyone is an artist. We are unique and special in our own ways.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

How to Budget Your Money – Video – 1948

Steve Rhode — Thu, 19 Aug 2010 22:32:29 +0000

From How to Get Out of Debt

Budgeting, its a topic that has not changed much from the time some dude had two cows to spend. “Where did that other cow go?”

Today we have all sorts of fancy products and systems to help us budget our money, but does budgeting have to be so hard?

For the record, I hate to budget. I hate to track my spending and I hate to use any of those fancy systems. I don’t even despise it, I literally hate it.

But when needed, budgeting or tracking where you spend your money is a critical tool to use to figure out where your money goes and what you can really afford.

Below is a movie from 1948 that shows two ladies men planning how they are going to gather together enough coin to eat ice cream and buy a camera. Boy, these instructional films don’t age well.

I hope you enjoy “Your Thrift Habits” and you don’t start uncontrollably salivating over a peach super-delite, you’ll see.

*Video:below is a movie from 1948 that shows two ladies men planning how they are going to gather together enough coin to eat ice cream and buy a camera. boy, these instructional films don’t age well. i hope you enjoy “your thrift habits” and you don’t start uncontrollably salivating over a peach super-delite, you’ll see.

The lessons taught are basic, but then again, budgeting is pretty basic in its simplest form.

Enjoy.

@GetOutOfDebtGuy

Lowen Wants to Know “Can I Budget My Way Out Of Debt?”

Steve Rhode — Thu, 20 May 2010 20:28:27 +0000

From How to Get Out of Debt

Lowen

“Dear Steve,

I have $102,000.00 in student loans, $21,000 in credit debt, and can’t budget my way out of a wet paper bag. I make $21.40 per hr and work 36 hrs a week, my wife works and makes $11.50 per hr and works 30 hrs per week. I own nothing of value, no homes, my cars are at least 20 years old. and i pay rent.

Please help me budget my way out of this hole I’m about to bury myself in.

Lowen”

The Answer:

Dear Lowen,

The first time I read your question I felt like I was right back in the middle of one of those school math problems. You know the ones, if a train leaves Chicago at noon… LOL.

Here is some good, honest and free advice to help you get out of debt and develop a budget that can work for you.

More information about how to create a budget can be found in my book, “Eliminate Your Debt Like a Pro” that you can download here for free. After you download the book, go to chapter 4, How to start doing what you need to do to get out of debt.

For some, budgeting is almost like an orgasm. They find the experience pleasurable and enjoy the feeling it gives them. For the rest of us, the majority of us, it is a colossal pain in the ass.

Even the word budget is horrible and budgets are nothing more than a page of lies or a wish list on how you would like to spend your money. A budget can defeat your attempts to storm your financial castle and cause you to lose both the battle and the war. The reason? Most budgets are not based in fact, but guesses and dreams.

Before you can create a plan on how to spend your money, a spending plan, you first need to take the time to track where you money is going. Once you can figure that out you can then make some good and informed decisions about how to change your spending habits to meet your needs.

If you don’t want to track your spending forever, just do it for the next 30 days and at the end of that time you’ll have a much better idea of where your hard earned money is actually vanishing to.

Properly spending your money isn’t about what percentage you spend on this or that. It’s about how you spread it around and the total of those expenditures that counts.

Frankly I don’t care how you spend your money as long as you can live within what you make and can save a bit for your future goals.

A spending plan will accomplish two things. First, simply by tracking where you spend your money you will reduce your spending by 10%. Second, the reason you reduce your spending is because you are more self-aware about where your money is actually going. That knowledge helps you to make choices about what you want to spend. And good information about where your money is going and good choices about how to spend what you can afford are the best building blocks to getting control over your money.

Now the easiest way to save is to make it automatic. Use a savings account that is not tied to your local bank account, one that you can drain with an ATM card. There are some really good savings accounts out there. Follow this savings account link.

With your new savings account, setup an automatic withdrawal from your primary checking account into your saving account. Start with maybe $50 a month and then move to $50 twice a month and then $50 a week. This money will be taken out without you having to do anything and will be saved automatically for you. As long as you leave that account alone you will accumulate and grow your cash savings.

I truly think that the secret to your overcoming this financial hurdle lies in automatic investment and savings and awareness about where the rest of your money goes.

Big Hug!

@GetOutOfDebtGuy

The Answer:

Any Suggestions for Good Budgeting Tools to Dig Out of Debt? – Scott

Steve Rhode — Fri, 06 Nov 2009 20:48:04 +0000

From How to Get Out of Debt

“Dear Steve,

My wife and I currently have credit card debt of about $60,000. In addition to that we have 2 mortgages and 1 car payment with about 1 year remaining. We both have incomes, and are barely able to make the minimum payments.

We aren’t behind on any of our debts, but continue to live a lifestyle where we are putting groceries and gas on a credit card and not cutting down to the bare minimum on expenses. We are not friviolously spending money all the time, but probably spend at least 100 bucks a month on stuff we don’t need (daily purchases) and probably about 200-250 bucks a month on monthly things that we feel we need to maintain a certain lifestyle (maid/cable, etc). I am just overwhelmed with our debt number.

I have been a little more worried than my wife has been, and she manages paying the bills. Should we seek credit counseling or debt management before we start falling behind? Any ideas for good budgeting tools to help us look at how much money we waste monthly? I don’t want to file for bankrupcy, but with the amount of debt we have, and no real emergency fund right now, I know that we are just a blink away from having to consider it. We can’t even start a family because of the situation we have put ourselves in.

Scott”

The Answer:

Dear Scott,

It seems like I’m always suggesting bankruptcy, but here is a new one, not in your case.

First, let’s look at what is driving your concern, financial panic. It’s totally normal and natural. But before we wheel out the big legal cannon to deal with your debt, let’s take some baby steps.

Right now you are earning good money but operating in a fog. I seriously doubt you are tracking all your expenses and totally aware where the money is going. The first thing we need in your situation is clarity. And how do we get that? Tracking.

There are a couple of ways to track and budget. They range from traditional approaches like writing down when you spend any money on a pad a paper and what it was for. Or you can use more modern tools like the online service Mvelopes. The best solution is going to be the one that works for both of you. The Mvelopes approach may work better for you if you both have access to the web during the day and can quickly login and enter what you spent.

Simply tracking your cash will cut your spending by about 20%. This is because once you start tracking spending you become more aware what you are spending on and then make decisions to alter your spending habits.

Now tracking the cash can sound like a painful and boring exercise. Personally, I hate doing it but you don’t have to do it for ever if you don’t want to. Just promise me you’ll do it for at least three months.

Now the benefit of the tracking is awareness but it is also clarity. Once you know where you money is going you can then make conscious and educated decisions based on facts about what you might want to cut back or cut out.

This approach works so much better than the traditional budget approach. A budget is a wish list on how you’d like to spend your money and tracking the cash is a measurement of where you actually spend your money.

Try this approach first and build in some immediate savings. Just open a savings account at your local bank and transfer $25 a week into ti. You should be able to easily do this once you start handling your cash with clarity.

After you track the cash for three months, if you are still in trouble, come back and we can talk about the path forward. Does this sound like a reasonable and responsible path forward to you?

Oh yes, to reduce your debt with the most motivation, use the debt snowball approach. Trust me, it works.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Does Money And Things Alone Bring You Happiness?

Steve Rhode — Tue, 11 Nov 2008 18:30:31 +0000

From How to Get Out of Debt

I’m not quite sure what really resonated with me about this video. I guess it is the fact that it is a message that I have heard before from other doctors when I was in the medical community. And it is a realization that I experienced myself in my life.

The lessons about material wealth and happiness are ones that many will learn as budgets become tight and financial worries interrupt disturbing volcanic dreams.

In the face of a potentially really bad economy in the United States, we are going to have to revaluate our lives and determine what it is that truly brings us happiness if money is not going to be freely available to buy us happiness.

What do you do to find happiness for little or no money?

*Video:a look at money and happiness and the connection between them. can money buy you happiness.

I’m confident that people today in Mountain House, California are not feeling very happy.

Mountain House, CA

According to the Wall Street Journal article, A Town Drowns in Debt as Home Values Plunge, the residents of this town have the distinction of being the most upside down of any community in America.

Apparently 90 percent of homeowners in this town owe much more than their homes are worth. The average amount people are “upside down” on their homes is $122,000.

Jerry Martinez, a general contractor, and his wife, Marcie, an accounts clerk, are among the struggling owners in Mountain House. Burdened with credit card debt and a house losing value by the day, they are learning the necessity of self-denial for themselves and their three children.

The cutbacks by the Martinezes and their neighbors are reflected in a modest strip of about a dozen stores in nearby Tracy. Three are empty while a fourth has only a temporary tenant. Some of those that remain say they are just hanging on.

“Before summer, things were O.K. Not now,” said My Phan of Hailey Nails and Spa. “Customers say they cannot afford to do their nails.” She estimated her business had fallen by half.

The Martinezes bought their house in early 2005 for $630,000. It is now worth about $420,000. They have an interest-only mortgage, a popular loan during the boom that allows owners to forgo principal payments for a time.

But these loans eventually become unmanageable. In 2015, Mr. Martinez said, his monthly payments will be $12,000 a month. He laughed and shook his head at the absurdity of it.

People deciding to do without are hurting a second mall close to Mountain House. There is a shuttered Linens ’n Things, part of a chain that went bankrupt. Another empty storefront used to be a Fashion Bug. Soccer World could not make it. Shoe Pavilion is festooned with going-out-of-business signs.

Can’t see the video? Watch it here: Does Money And Things Alone Bring You Happiness?

Do You Think You Are A Failure When You Break Your Budget?

Steve Rhode — Mon, 10 Nov 2008 21:15:16 +0000

From How to Get Out of Debt

I’m always sad when someone says to me that they feel like a failure when they break their budget. Just by it’s very nature, a budget is a self-defeating document that will most likely lead to failure.

You see most budgets are not based in truth, they are based in wishes. Here is how I would like to spend my money or here is how I think I remember spending my money is the approach most people take.

If you created a budget for yourself that you were not able to live by, I would not call you a failure, I’d say you were completely normal.

Let’s look at what a budget should be:

A plan based in fact not guesses.
A guide that accounts for unusual events and life surprises.
A flexible guide to allow you to ‘estimate’ how your money will flow.

You will notice that none of those statements say anything about being set in stone or made up out of thin air. Call it what you will, a spending plan, a budget, or even a financial manifesto, it is all the same thing, a plan.

Before I get further into this I want to say one thing if you made a previous budget that you could not stick to and you felt you failed. So what? Failure is part of life and it’s not how many times you might not succeed that is important, it is how many times that you try.

So Let’s Just Take a Look At Famous Failure – Abraham Lincoln

1816: His family was forced out of their home. He had to work to support them.

1818: His mother died.

1831: Failed in business.

1832: Ran for state legislature – lost.

1832: Also lost his job – wanted to go to law school but couldn’t get in.

1833: Borrowed some money from a friend to begin a business and by the end of the year he was bankrupt. He spent the next 17 years of his life paying off this debt.

1835: Was engaged to be married, sweetheart died and his heart was broken.

1836: Had a total nervous breakdown and was in bed for six months.

1838: Sought to become speaker of the state legislature – defeated.

1840: Sought to become elector – defeated.

1843: Ran for Congress – lost.

1846: Ran for Congress again – this time he won – went to Washington and did a good job.

1848: Ran for re-election to Congress – lost.

1849 Sought the job of land officer in his home state – rejected.

1854: Ran for Senate of the United States – lost.

1856: Sought the Vice-Presidential nomination at his party’s national convention – got less than 100 votes.

1858: Ran for U.S. Senate again – again he lost.

1860: Elected president of the United States.

You only fail if you quit. What if Abraham Lincoln had given up when he failed? You feel like you budgeting attempts have failed you but it’s not the budget that has failed, it is the process you are following.

Before you can develop a good plan on how to get your life to live within your money you really need to know how you spend your money, all your money, And from that good data, you can make good choices about what to cur back or eliminate to achieve your financial goals.

I like to call this document a spending plan, rather than a budget. You can read more about how to develop your personal spending plan and tools you can use to do that by clicking here.

Using this spending plan approach based in fact rather than a budget approach based in wishes, you will be able to get your money under control, develop financial clarity and have a much better chance of achieving your financial goals.

Bankruptcy Rates To Significantly Increase Next Spring From Ho-Ho-Ho Hangover

Steve Rhode — Thu, 30 Oct 2008 20:52:12 +0000

From How to Get Out of Debt

I just did an interview with the Christian Science Monitor and we were talking about holiday shopping. The question was if I thought people were going to significantly cut back on holiday shopping to live within their budgets. Sadly, I don’t think they will.

Gift giving and shopping at this time of year are ingrained in our consumer DNA. While we have the best of intentions of spending within our budgets, the runaway shopping fever sweeps many up and leaves them with a regrettable January credit card hangover.

The reason I don’t think there will be a significant change this holiday season is that financial pain has not manifested itself in a large number of homes yet. While retail predictions are down, they are only down by 2% or so and that still leaves holiday spending at 98% of last year’s levels. That’s a lot of money.

So what will happen? My prediction is that with income dropping people will rely more this year on credit cards to purchase gifts. Those bills will hit around the middle of January and while people will make the promises to get the debt under control, continued reduced income or joblessness will make that impossible. As a result, bankruptcy rates should increase in the spring of 2009.

So much of why we buy and overspend at the holiday time is driven by marketing messages, guilt, the feelings that we need to buy stuff to show we care or show our love. It is what we do, we’ve always done that.

This year we are not going to have the home loans available to consolidate debt or as many home equity loans to tap to pay off bills. The home ATM is broken right now with lenders hesitant and economic prospects looking darker.

If you can, if it is possible, I urge you to please spend only that money that you have on hand for holiday gifts this year. Do whatever you can to emerge in 2009 with no carryover holiday debt. Now is not the time to dig a deeper financial hole. Now is the time to start filling it in.

Consumers Feel the Next Crisis: It’s Credit Cards

Steve Rhode — Wed, 29 Oct 2008 19:14:29 +0000

From How to Get Out of Debt

Lenders are shunning consumers already in debt and cutting credit limits for existing cardholders, especially those who live in areas ravaged by the housing crisis or who work in troubled industries. In some cases, lenders are even reining in credit lines after monitoring cardholders who shop at the same stores as other risky borrowers or who have mortgages from certain companies.

While such changes protect lenders, some can come back to haunt consumers. The result can be a lower credit score, which forces a borrower to pay higher interest rates and makes it harder to obtain loans. A reduced line of credit can also make it harder for consumers to manage their budgets, because lenders have 30 days to notify their customers, and they often wait to do so after taking action.

Indeed it is. If you’re not in top shape for the credit card shakeout that’s already taking place, there isn’t much you’ll be able to do about it. It’s probably already too late. After years of flooding the market with credit cards (and generous limits), banks are finally starting to take it back. Eric Dash, a New York Times reporter, does an excellent job of distilling the situation. From

Click Here for totally free debt help, advice and answers.

Read the rest here: Consumers Feel the Next Crisis: It’s Credit Cards

How to Get Out of Debt With the Get Out of Debt Guy » budgets

It Takes Two (Creating a Family Financial Battleplan-Part 1)

Getting on the Same Page

Build a Spending Plan Together

Pay Your Bills from a Joint Account

Thoughts on Moving Forward Financially as a Couple

Other Related Articles to Read

Personal Finance Struggle Universal. Many Dealing With Trying to Make Ends Meet.

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I Need Someone to Put Me on Budget. – Sharon

The Answer:

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How to Budget Your Money – Video – 1948

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Lowen Wants to Know “Can I Budget My Way Out Of Debt?”

The Answer:

The Answer:

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Any Suggestions for Good Budgeting Tools to Dig Out of Debt? – Scott

The Answer:

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Does Money And Things Alone Bring You Happiness?

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Do You Think You Are A Failure When You Break Your Budget?

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Bankruptcy Rates To Significantly Increase Next Spring From Ho-Ho-Ho Hangover

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Consumers Feel the Next Crisis: It’s Credit Cards

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