Face It To Erase It!
I think Suze Orman has been reading this blog. Don’t believe me? Seriously
, I think she lifted the tagline for one of her episodes from my site. 
Just kidding. But her newest series on the OWN network just started this past Sunday, January 9th. It is called America’s Money Class and is Suze’s and Oprah’s latest series of shows on debt and money.
The first episode or class is titled, “Class 1: Money Secrets Revealed.” And the tag-line is:
” Face it to erase it!
Stand in your truth and
take the first step in
eliminating your debt forever. ”
Face it to erase it. What does she mean? It’s pretty simple. That to erase debt you must actually face up to it and take ownership of exactly how much debt you really have. No more denial about how much debt you are in. No more ignoring any bill or bills in the hopes that it will just go away. What ever amount of debt you are in is yours and no one elses. Own it so that you can deal with it. But don’t dwell on it so that it defines you. You need to attack it from a stance of truth in yourself and what you owe.
Face your own debt so that you can erase debt.
Saving for a Rainy Day – It’s Been a Monsoon This Summer
Many of you can relate to this. This summer money has been just flying out the door. Where we had been saving money in our emergency fund consistently over the past year and a half, this summer arrived and our savings rate dramatically declined due to a bunch of unexpected expenses.
$2000 Tutor for daughter to get extra help in Math
$900 Wife got flat, and tire was too far gone to repair. AND due to all-wheel drive you have to replace all 4 tires at the same time or you can damage the drivetrain. (ugh)
$120 HOA sent us a letter (and entire neighborhood) to repaint the fence because it was faded.
$260 2 summer volleyball sessions for daughter (ok, not so unexpected, but an expense)
$600 Horseback riding lessons for daughter (again, not unexpected, but a new expense)
Thanks to the fact that we erased debt and saved up a good emergency fund. And budgeted well. All of the above expenses were paid with cash. No credit cards. A few years ago we would have whipped out the credit card. But now we are smart with our money. Or at least “smarter.” And each rainy day was just an inconvenience and not a huge emergency. Though it hurt to have to dip into my emergency fund for TIRES!!!
But at least I can say my plan is still working and no new debt.
Do you have a plan?
Do you have a budget?
Do you have 3-6 months of expenses saved in an emergency fund?
No? Then why not start now to erase debt.
A Credit Card For Teens
So I get this marketing email and I click on the link and I see: BILL MY PARENTS!
Say What?!?
Yes, bill my parents .com. A site where you can apply for a credit card for your teenager.
“Get a reloadable prepaid MasterCard for your teen. No activation fee, no overdraft fees, accepted at millions of locations worldwide.”
Just want I want to do. Obtain a credit card for my teen so that they can learn how to rack up debt. Oh, and what a “take no responsibility” opportunity for young teens because you can BILL MY PARENTS!
Obviously I’m being very sarcastic but this just seems nuts to me. You are trying to erase debt. Heck, the federal government is trying to erase debt. Well, at minimum they are paying it lip service. And you can now teach your teenager how to get into credit card debt.
Granted, it is a sort or reloadable debit card. But it will establish bad habits.
Teach your teenagers how to use cash. At 14, 15, 16, 17, 18-years of age, they do not need to be building credit. They should be learning how to responsibly handle money.
Teach them how to save money so that they don’t ever go into debt. And not pawn off their bills on their parents.
Vacation and Erasing Debt – Can it Work
It’s the height of summer and therefore the height of summer vacations. Did you budget for your summer vacation?
If not make sure when you get back from your vacation that you add all of your vacation expenses to your debt snowball payoff plan. Don’t let a vacation – planned or otherwise – derail your efforts for getting out of debt.
Better yet, if you haven’t gone on the vacation yet, but the plans are already made or in motion, make sure to add the expenses to your current budget and start planning to pay it off.
The best way to plan for a vacation is to actually plan for it way in advance so that you can save up the needed money to pay for airfare, hotels, meals, and entertainment.
Do I hear some of you saying that your vacation costs too much money to save up in advance? Well then in that case …. YOU CANNOT AFFORD IT! So maybe change your plans or go for a staycation close to home.
When Will The Banks Make Me An Offer I Can’t Refuse?
So it happened to me again. I was at my Wells Fargo bank this past Friday depositing money into one account and taking out my weekly envelope money from my checking account (I got paid Friday). And like a broken record the teller, Annette, said to me, “Oh do you know they are offering you a 0% interest credit card for 6-months?” It was more of a statement than a question. But you could tell she really thought this was a great deal. It seems like every time I go into this bank they want me to get their credit card. Over and over again I tell them that I don’t use cards.
So I said to her, “No thanks I have gotten rid of all of my cards (not exactly true as I still have 2 active cards that I don’t use but haven’t gotten around to cancelling yet) and I don’t apply for new cards (which is completely true).”
She looks puzzled and then asks, “Well, what do you use for an emergency?”
I couldn’t resist rubbing it in. I smiled and said, “Look at my main savings account … that’s what I use … cash.” I could see she glanced at the screen and saw my balance (I have six months savings cushion just in that one account) and she says, “Oh.”
Oh? Is that all she could say? Was that a “oh, you’re one of them with an emergency fund.” Or “oh, you are doing great.” Or “oh, damnit, there’s no way I’m going to be able to convince you to take our credit card, go into debt, so that my bank can extract double-digit interest rates from you.
The truth is banks, at least the LARGE banks, are not interested in helping you save money. They are always on the lookout for how they can separate you from your hard-earned cash. And as we’ve come to realize from this economic downturn of the past 3 years, many folks are in deep credit card debt.
So why has no teller offered me a better interest vehicle like a CD or money market account or something that will earn me more than the measly 0.3% interest I’m earning on my savings? Because there is no huge profit in it for them that’s why. Credit cards and loans are their big money makers. And if you’re not willing to use those services don’t expect any other offers. They won’t come.
So when will the banks make me an offer I can’t refuse? That is an offer that will make me money or at least a decent interest on my money? I won’t hold my breath.
What “offers” or advice have bank tellers given you? Tell me your experience below.
To erasing debt and building wealth,
Shawn
Erase Debt by Becoming a Budget Cutting Machine
Today on the CNN Money website (money.cnn.com) there was an article about House Rep. Paul Ryan was called a “budget cutting machine.” He is described as being aggressive on erasing debt and getting the United States out of control budget under control.
I don’t have great faith that Congress grasps the concept of a balance budget and working with real figures. They are so accustomed to smoke and mirrors when it comes to our tax dollars that it is no wonder our own personal finances are in such dire shape. If Congress can play shell games with our money then why can’t we in our personal finances?
Because if we mess up our money so badly it could take a lifetime to fix it. Congress doesn’t have to worry about personal finance. They are playing a bigger game, granted one affects us all when it comes to taxes and the worth of the dollar. But in the end Congress doesn’t feel the pain. Not like we do when our personal finances are a mess.
The article mentioned how the congressman is proposing steep cuts in spending. Paying back debt. And how there could be pain involved for the average American. The truth is even in personal finance there may be the need for some excesssive financial pain as you try to erase debt and build wealth.
The same steps to get out of personal debt apply also on a larger scale. Congress needs to go through the same analysis and pain to get out of debt. Maybe if we can all do it with our personal finances then Congress can learn from us and do it on a larger scale. At least then we the people would be more accepting of any short-term pain since we would be familiar with it on a more local, personal level.
So set the example, erase debt, and build wealth!
My Measly Emergency Fund Is Setting the Example
I was in my bank a few weeks ago and taking out our bi-weekly allowance of money for our grocery envelope. For the past year I’ve been saving money every month towards our emergency fund. We have almost 5 months of expenses put away. It’s sitting in a savings account.
I decided to ask about current options for a money market account. Figuring it would still be very liquid as an emergency fund but might earn a bit more interest. The teller at the window had me sit down with a bank manager.
When I asked the bank manager about a money market account she made the comment that she’d have to check and that they don’t have many people inquire about these accounts. I said, “Oh? Something wrong with the account options?”
She replied no, that no one has money anymore. She then told me, “Honestly, you have more money saved than most people. You should be proud of that!”
I was shocked. Yes, I know the economy has sucked for the past 3 years. But I live in a county that is supposedly one of the wealthiest in the state. I’m definitely middle-class, but, I was surprised my measly emergency fund represented one of the best in my area.
I didn’t open the account. The interest rate was not much better than my savings account and didn’t seem worth the effort to move it.
But I did leave the bank with a feeling of pride.
The thing is, anyone can do what I did. Save some money out of every paycheck. Or every month. Start small. Even if it is only $25. It will add up. Continue to erase debt and save money. And you too can have your bank heaping their praises on you.
Only Shot to Erase Debt is a Game Show?
I was flipping through the channels the other night and stopped on the Game Show Network. As whatever show was on went to commercial I noticed it was one for “Deal or No Deal.” And various winners were giving sound bites around their experiences. One of them was Tomorrow Rodriguez, one of the few contestants on Deal or No Deal who actually won the million dollar prize. And she says, “My main goal is to get my husband and I out of debt. This is our only shot.“
Really? Being one of the few who actually gets on the game show and then winning the grand prize of $1,000,000 is your only shot at erasing debt? That’s pathetic. That’s a victim of circumstance’s mentality.
How about having a plan! Get on a budget! More importantly spend less than you make! Erase debt with some conscientious spending and saving.
But instead too many people have this same mind-set as Mrs. Rodriquez. They’ll buy lottery tickets hoping to win the money they need to get out of debt. They’ll gamble it away in Atlantic City or Vegas hoping to hit it big. And let’s face it, it has been proven over and over again that most people who come into money via a lottery or game show or even an inheritance, and without a plan, just end up blowing through all of the money and find themselves back in debt again.
Stop thinking the lottery or a game show will be your financial salvation. Come up with a plan, create a budget, save some money, and erase debt the right way!
Here’s One Reason Why Folks Can’t Erase Debt
So I went onto the website of the bank that holds our mortgage to check on whether our check posted and before logging in, the above image is what greeted me. Basically it is asking, “how would you pay for an emergency?” Dip into your change jar if the furnace goes or use a home equity line of credit instead (HELOC). Of course this bank is pushing their own HELOC which is a loan backed by the equity in your house.
What the hell?
NO! You DO NOT use the equity in your house for emergencies. The whole purpose of getting out of debt is to save cash for the things you need including an emergency fund. The bank actually has it backwards. You should be using your spare change and your emergency fund to pay for the furnace. But of course the bank wouldn’t make any money if you did that.
Don’t fall for it. Avoid taking out a HELOC. Save your money and pay cash for emergencies. Your budget will thank you and you’ll erase debt faster.
I Used My Emergency Fund
Well, it just happened to me. A rainy day. An emergency. Emergency might be too strong a word. But I did have something break that required repairing. Two days ago the main spring on my garage door snapped. I didn’t realize it at first. Every time I hit the button for the garage door opener to raise the door, the door would go up about 3 inches and then close. I couldn’t open the door or get my car out. Eventually I was able to release the door from the opener but I could see that the master spring was broken.
I called Ankmar Door yesterday morning and they had someone out by afternoon to work on it and replace the spring. They quoted me $219 over the phone and asked if I wanted to place it on credit card right then or pay on site when the repairman gets there. Of course I chose the latter and paid by check from my emergency fund.
But it was because I had erased my debt and built up an emergency fund that I was able to deal with this in a calm state of mind and not worry about where was the money going to come from to make this repair. I didn’t panic and place the payment on a credit card. I had the cash in reserve and I used it. Of course my wife and daughter laughed at me because they kept joking how it “hurt” me to part with the cash. And they were right – I hate parting with my hard earned money and savings. But better that than to go back into debt.
Granted $219 may not seem a big deal to some folks. But to others it could be the source of great stress if they don’t know where the money will come from. Others may feel self-defeated and think, “stuff always breaks and I have to put it on credit card. I’ll never get out of debt.” But with a plan to erase debt and build an emergency fund, an emergency will just be an inconvenience and not a nightmare of falling further into debt.
Erase your debt and you too will have the money to take on life’s surprises.
