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Rice and Beans, Beans and Rice

There is bad debt.

There is also good debt.

In today’s media laden world there are more and more financial experts proclaiming the only way to live life in this economy is to be debt free.  Hey, don’t get me wrong I happen to like much of what Dave Ramsey preaches about credit and debt but I disagree about totally wiping out all of your debt, painfully living below your means, and eating beans and rice until you can afford the steak.   That’s no way to live life richly!  Rather it’s my belief each of us to adopt proper personal finance skills in order to keep the bad debt from taking over your life.

In this world there are good forms of debt that we all must use to make life’s freedom possible.   An example of a good debt is the home mortgage which can be leveraged to build equity or for investing in a property that creates you a form of income through rent.  We’ve failed in America in teaching which debt is good and which is bad.  Even consumer credit such as credit cards can be good if properly used.  We need to educate about the differences.

It’s my premise that bad debt is really just bad behavior by the consumer.  We need to be aware of our behavior which is causing damage to our personal finances, credit reports, and scores.  We need to be vigilant about correcting wrongs in the way we handle money and in our credit reports.  We need to educate ourselves about the good forms of credit that add asset value to our personal worths!  We will be discussing and learning strategies in future blog posts!

Until then I want you to reflect on this… living life richly in America today probably includes:

  • Earned Income (Job)
  • Capital Gains (From Investments)
  • Passive Income (From Rental Investments)
  • Credit Cards
  • Other lines of credit
  • Cash

On your journey towards a high personal worth, please order a juicy steak to celebrate the small wins!

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Holiday Credit Trap – Don’t Spend What Isn’t Real

This weekend I was sitting in a local restaurant enjoying a quick lunch with my wife. As we were waiting for our food to arrive I couldn’t help but over hear what the couple behind us was talking about. It was obvious they were planning out their holiday shopping strategy and it was clear they were planning on spending more than they had.

Using Credit Cards for Gifts

Christmas Credit Trap

During their conversation the wife pulled out her wallet and laid out a stack of credit cards. She took one in particular and called the customer service number on the back. So while she was eating she was also having a desperate conversation on her cell phone about how much her line of credit was and how much was available versus what was needed. She told the rep on the other end that she has some special gifts to purchase and anything they could do would be great. In the end the wife received the good news, credit limit was raised, great gifts would be had. But from my perspective the only thing being had was the middle aged couple that was leveraging their future in order to have a great Christmas in the family!

Granted I don’t know the whole story and may be judging without cause but at this time of year I fear that the meaning of Christmas has become how big, expensive, or cool a gifts we can get our families. And given the continued state of the economy we all ought to be more realistic about our gift giving and expect to receive less at the same time. The gift of yourself is always the best way to express gratitude and it’s free.

My gift to each of you is to ask you give yourself a gift of a savings account for next Christmas’ budget. If you already back online or need to sign-up for a savings account it is very easy. I recently opened an account at AMEX Savings just for this purpose. Think about putting 50 to 100 dollars in your account every month. And for next year you’ll have over $600 saved for purchasing gifts with cash or even give cash as a gift. How powerful is that?!?

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Lowest Credit Scores in History?

Mid-Week Quickie

According to the associated press…

“More than one in four Americans now has a FICO credit score below 600, which is considered low, and could have difficulty getting credit cards, car loans and mortgages.

Statistics released from FICO Inc. show that 25.5 percent of the 170 million Americans with active credit accounts have scores of 599 or below on the 300 to 850 scale, based on data from April consumer credit reports. The median score is 723.

The data also showed that 2.4 million more people have fallen into the lowest FICO categories in the past two years. Historically the rate of people with scores of 599 or lower has been around 15 percent.”

Folks reading this should be alarmed. It is very important that we all take ownership of our credit and debt lives. Most likely we are one of the consumers whose credit score has fallen into the low range.

If you are serious about making changes it is suggested you start doing something about it by reading all present and past blog posts of mine as well as visit my website

Stay tuned to a series of posts related to credit scores and credit scoring.

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Credit Disaster Plan

Avoid a major credit and debt disaster

Don't Let Credit or Debt Ruin Things

Avoiding a credit disaster is one of the most important things you can do as a consumer. Especially if you are a married couple. Many times we ignore the signs of impending danger and assume the spouse will take care of things. It’s best if everyone is on the same page.

Have you missed a credit card or mortgage payment? Or are you afraid of missing one down the road? Are the payment deadlines getting harder and harder to make on schedule? You must exhaust all options to avoid late fees, charge-offs, or foreclosure! The impact on your credit report can be lasting for up to 10 years in some cases.

Tips to avoid disaster:

  • Don’t ignore the problem.
  • Contact the creditor once you realize there is a problem.
  • Keep open communication with them and DO NOT IGNORE mail and phone calls from them.
  • Learn about options for help with mortgage and credit card trouble.
  • Prioritize and re-evaluate your spending habits.
  • Use your assets to create additional income.
  • Avoid debt consolidation programs and or foreclosure prevention companies.
  • Beware of scams. Does it sound too good to be true?

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Matters of the Wallet and Sleep Aids

According to research firm GFK Roper, more than 2 out 3 Americans are losing sleep worrying about their finances. And more than 1 in 5 over credit card bills alone.

This is staggering data and yet it is so true! Isn’t it scary how much or health issues are related to financial woes? If we would simply address our matters of the wallet head on and stop avoiding solutions we could all live life more richly. We could get more rest which our bodies require on a daily basis.

If you are losing sleep because of worry about personal finances please resolve to adopt an action plan to solve the problem. If you need help there are plenty of resources available. You can seek help online in various venues including right here or at our sister website CreditMania where we have solutions for most debt and credit problems.

I firmly believe if you take control of the matters of wallet you will have discovered a powerful sleep aid!

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