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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Welcome to 2011 and let’s make some resolutions together!
I’m always keeping lists of things to do. I like to use them to stay organized and prioritize my life. As we enter the new year I think it is important that each of us make a list of resolutions and track them throughout the year. As we know, most resolutions are tossed aside within the first month of the year so let’s make sure we make lists that are realistic and impactful. My challenge to you is to publicly share your list on this blog message so we can discuss our goals and keep each other accountable to following through.
Let me start!
- Eat smarter and lose 30 more pounds. (In 2010 I lost just over 30 pounds and still need to keep it going)
- Do my annual credit report check-up. Fix any errors.
- Start another savings account for Christmas 2011. Saving $50 per month will give me about $600 cash to buy gifts etc. A cash only Christmas is a smart thing.
- Read one book a month for pleasure. I read for information but not enough for entertainment.
- Take a meaningful trip with my wife.
Well there you have it. It is simple and easy to track. Now it’s your turn! Share your list by commenting on this post.
Happy New Year! -Barry
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Prepare your list and start with your credit report.
One thing I would like you to consider is your financial life. What will you keep doing in 2011? What will you stop? How is your credit history? Is your debt to income out of control? Just a couple things to ponder over the next few days and weeks.
I prepping for the new year and your resolutions please get your free copy of your credit report. If you have not received yours yet do so now. If you need to wait to first week of 2011 that is okay as well. Either way it is a good tool to use to see where you are credit wise. Once you have a copy please resolve to address improving your score and lowering your debt portfolio.
If you are not sure how to address errors on your credit file or outdated information you can find all strategies and tools here in this blog or on the CreditMania.com website. Everything you need to raise your credit score in the coming year is available to you in easy to use format.
Prepare to make 2011 the best year ever! Start with your financial life so you may live life richly!
Resources:
Free Annual Credit Report
Search Engine Submission – AddMe
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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.
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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Savings Accounts Growing
Are you saving more money than you did last year?
Recent statistics show that the amount of money Americans have in basic savings accounts at banks and thrifts rose to a record $5.06 trillion at the end of May, a jump of $215 billion just since the start of the year. This is actually a good thing for our country and is motivation for all of us.
As we try to address our credit and debt issues it is equally important to be putting aside a certain percentage of your wages into liquid savings vehicles. A simple savings or passbook account is a great example even though the yields on interest is very low, they are actually quite safe. You money is easily accessed and will not be exposed to potential loss because of stock market forces that impact the mutual fund and stock investments. We are still in the midst of economic uncertainly so it is wise to build up easy to access reserves.
A good rule of thumb is to set aside 10% of your paycheck into the savings account. Many ask when you should stop. I suggest once you get reserves equal to three months’ worth of salary in the account you are in a wonderful place. At that point it is time to move more money into a retirement fund or other such investment vehicle like certificates of deposit.
No matter the case we all need to get back into the habit of saving money vs. spending money!
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