Posted by: Brian | April 25, 2010

Recession Proof Debt Snowball

I recently read an article from Frugal Dad that addressed a very sensible debt snowball plan that works in today’s recession atmosphere. I won’t go into details because the article is a really good read, as are many other of his articles. Basically, to help with unexpected expenses you would save an emergency fund of $1,000, and then save your balance amount plus $1,000. when you have accumulated the needed amount, you pay off the debt.

I like this because in the very near future I might have to start supporting my parents and I don’t want to be stuck with my pants down. I think it will work great for small debts (under $5,000) because the amount is quickly obtained. If the balance is larger than $5,000, I know for myself it will be difficult to see all that money sitting there and not being able to spend it. I haven’t conquered my spending habits completely, so that would be way too much temptation.

Posted by: Brian | April 22, 2010

Bottom On Up: Getting a Clear Picture

In order for you to start getting out of debt, you need to get a clear picture of where you are now. This will be hard. It will not be a smooth and simple thing to do, but it must be done. Trust me, when you are finished with getting your clear picture you will be relieved (and probably feel like you just fought Joe Lewis for 9 rounds!) I spent almost 3 days trying to get my clear picture but in the end, all it took was a long plane ride.

For starters, you need to ask yourself, “What do you want to accomplish?” If you have no direction, you have no focus and will fail. Now, start jotting down ideas on how to get what you want. I wanted to be out of debt, so will use that as our example. I wrote down things like: save money, pay off loans, research personal finance, etc. You are probably asking how this will help you get a clear picture of your situation. You need focused tasks to achieve your goals and now you have a direction in which to travel. But where do I start from?

This next part is the hard part, so take your time in this endeavor and make sure you write everything down. I am a fan of pencil & paper, but you can use a spreadsheet if you want. Write down on a pad of paper every credit card, auto loan, home equity line of credit, mortgage, student loan, personal debt, and any other account you owe something to someone. Mark the balances on each and add them all up. This is your starting point.

I repeat, this is your starting point. No one else is in the exact same situation that you are. A lot of people might be in a similar situation but not the exact same one, so ignore everyone else. J.D. Roth, author of Get Rich Slowly, wrote about how traditional financial advice might be good for some but each must look at their own situation before using it. Look at the clear picture you just created of your personal finances. Look at what you wrote down as the thing you want to accomplish. Connect A to B

Posted by: Brian | April 15, 2010

Free Consumer Action Handbook

Every year the government prints and upon request wills end you a free copy of the Consumer Action Handbook. This book has loads of good information about basically everything to do with personal finance. I am only a little of the ways through but there are topics like: avoiding scams, how to buy a car, what to do in retirement, and information resources on various federal agencies that can help you at no extra cost to you. Along with the handbook, I received a small publications guide that lists all of the publications currently available to the public. Most of them are for a small fee (less than $3) and all can be downloaded from the General Service Administration (GSA) website. I plan to download a few of the free ones myself, especially Saving Fitness: A Guide to Your Money and Your Financial Future (585V).

Posted by: Brian | April 12, 2010

Small Steps can turn into Big Changes

Over the past year I have tried to make changes in my life that have crashed and burned a few weeks after I started. I would tell myself on Sunday, “Today I am going to bring my lunch to work everyday and start saving money doing it.” I break out the collapsible cooler, the re-freezable ice, and start dreaming about the lunches I’m going to bring and the $50 per week I’ll save. Monday comes and I pack my lunch, Tuesday is the same as Monday, and cycle goes good for a while. Then I hit a bump around workday 8: I brought my lunch in my nice collapsible cooler but its in the office fridge and I am in the field, so I buy my lunch. no biggie, right? What’s one day? Well one day turns into another a few days later, and another, and another, and soon I no longer even bother packing my lunch anymore. This is my problem and it wasn’t until a few weeks ago that I finally realized an answer.

I have posted before on refocusing your goals as life changes, and there are others talking about making changes for the better. I was looking to change something I didn’t like (spending money on buying lunch) by doing a new activity (brining my lunch to work) that yielded the desired results (saved money). Right off the bat, I was designing a failed system because I was expecting too much too soon. I relied on my will power to get me through and my will power is only good for short bursts not prolonged sustainability.

I like to think of a soccer player when it comes to changes. The soccer player will sprint after the ball (will power) but he can only keep that up for a short bit before he has to pass the ball. But a good soccer player doesn’t stop running after that, he keeps running just not at a sprint. He might jog a little, walk a little, run a little, or even stop completely for a little bit. These little steps are what helps the soccer player become a good player because when needed he can apply his will power and sprint after the ball. I hope this makes as much sense to you as it does in my head. (I’m still working on this writing clearly thing)

My point is that in order to make a big change in your life, whether it be paying off debt or bringing your lunch to work everyday, it’s the small steps that matter. Whatever you aim to do, no matter how big or small, break the task up into obtainable steps and do one at a time. Like Dave Ramsey says, “It’s all in the baby steps.”

Posted by: Brian | April 8, 2010

the Key to Being un-Bored

Last week I got my wisdom teeth pulled. All four at once. The interesting thing was that there wasn’t that much pain with it and the hardest part was occupying my time. I realized that the many hours of laying on the couch wrapped in an ice pack were going to be my downfall. Like I have said before, I love to learn and read and do anything that activates my brain. The problem was I had too many things to choose from and not one of them stood out among the rest. After the first 24 hours of being couch-ridden, I came up with a solution or a key to being un-bored.

It was pretty simple. I would use the timer feature on my iPhone and set it for an hour or how ever long I felt I could keep an interest in what I wanted to do. The timer served two purposes: 1) it caused my ADD brain to focus more because now I was on the clock, and 2) kept my occupied long enough on one topic that it held my interest but not too long that I got bored. I would time myself for an hour of reading Your Money: the Missing Manual and as soon as that buzzer went off I would finish whatever page I was on and put the book down. Next I would move on to video games, movie watching, eating pudding with a baby spoon (you try to eat when you can only open your mouth 1/8th of an inch!), or reading another book. By continuously restarting the timer, I accomplished a great deal but also I was un-bored.

This can be applied to personal finance as well. When you are researching a new idea, such as “How do I earn interest on my IRA?” or completing the absolutely wonderful task of monthly budgeting (throw on a lot of sarcasm for that last bit), limit yourself to a given amount of time, like 30 minutes. After the timer goes off, reset the clock for 30 minutes, but now you are taking what you just learned and applying it. In this case, I would go through my IRA and see if I had the right mix, adjust if I need to, make notes on things that I could do better to earn interest, and goals for the future. When completing a specific task such as monthly budgeting, you know you only have a limited amount of time so you need to stay focused and finish your task on time.

If you finish early, that’s okay. Just restart the timer on the next topic or task you have in mind. If the timer runs out, stop and take a break for a few minutes. Last week, I would get off the couch and walk around the apartment to loosen up my legs. Since I didn’t finish my task, I restart the timer and continue working. Before you know it, you have completed a laundry list of to-dos and you never got bored.

I find this method to work wonders for me because most of my personal finance is on my computer and there are a lot of distractions, like Facebook, blogging, online games, emails, etc. With a simple timer, I am focused on my task and occupying my time efficiently so that I am never at a point saying “What to do next? I’m bored.” It works great with “honey do” lists and yard work, which you married folk know what I’m talking about.

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