10 steps To reduce Your Debts Quickly.

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Our greatest is not never falling but rising every time we fall .

The first thing to remember here is that you are not alone .

Around 73% of North American consumers have debt. Around 68% have credit card balances. Most people have debt of some sort , its how our Western society functions today. Mortgages, credit cards,auto loans,personal loans,student loans, pay-day loans………… so on and so on .

When dealing with any personal issue, you have to first recognize there is a problem and you have to want to solve it .

If you are one of those people who are ok with their levels of debt and managing it correctly, then great. stop reading here and have a great day.

The fact that you are reading this article ,tells me you are likely to have an issue with your levels of debt and are looking to solve them .That leads us into the first stage:

1/ Record your spending for a 3 month period.

For this period of time, record all your income and all your spending. Make yourself a spread sheet or even just record it in a book. Separate into areas of spending, such as Household bills Motoring, Groceries, Entertainment, Insurances and most importantly, how much your debt is costing you each month?

In other words what interest are you paying on each debt, each month ?

2/ Target the Most expensive debts.

Once you have recorded your spending for 3 months, you will be able to understand which of your debts is costing you the most money in interest. Now I am not talking about mortgage debt here. Lets focus on the unsecured loans, likely to be your credit cards that have most interest ( APR %) Use this information to make a “hit list” of debts. Make sure you pay each one on time, but focus every available spare cash onto the most expensive one. Once this one is paid off in full, these funds should then be transferred onto the second most expensive debt and so on. This is the reversal of the  “snowball” effect of how they got to be out of control in the first place.

3/ Reduce all  Un-necessary expenditure

Your  3 month  record of spending will show Where your hard earned cash was going? I was amazed how much I spent on things I didn’t really need. Not just larger ” one off” purchases, but multiple small purchases that go unnoticed until the monthly totals are added up. Once these are stopped the extra money can be allocated to your debt management.

4/ Set up an emergency cash fund

 This  will not directly reduce your debt, but will stop any credit card debt increasing . Stuff happens. That”s a fact. In order for you to stop dipping into your credit limit every time some un planned event happens , set up a cash fund to help when stuff goes sideways.

5/ Spend Smarter.

Everyone has to spend money at some point. Price check, coupons, internet shopping, sales there are many ways to find what you need at a reduced cost. Stick to buying what you need and not emotional purchases, i.e wants!

You will feel better at the end of the month when you add up the cash you saved by doing this.

6/ Improve your credit rating

There are ways you actually improve your credit rating. When your borrowing is reduced to a reasonable level, lenders will be keen for you to take up their services once again. This time use it to your advantage. Contact your existing lenders and try to get better terms by lowering your interests rates. Failing that, go to an alternative company and transfer your debt at a better interest rate. It may seem like a lot of hassle at the time, but even a small decrease in interest rates will reduce your costs over a  period of time.

7/ Increase Your Income

Change jobs, negociate a pay rise,work extra overtime, get a side hussle, rent out a spare room or even buy and sell items for a profit . Use your imagination, but obviously the extra money you generate must go to your debts.

8/Sell unwanted items for cash.

We all have have things we don”t use or need anymore. Find them , clean up and advertise them locally. Put the cash down on to your debt . Simple.

9/ Set a time scale and a  realistic goal

Progress maybe slow to start with but as debts are reduced the speed of progress should increase. You are more likely to succeed ,if you give yourself a realistic time scale and monitor your progress to keep yourself motivated.

10/ Set a future Budget

Hopefully by the time you have reached this stage your debts are under control and life is easier. Time now to prevent it happening again. Set yourself a budget and keep monitoring your income and expenditure. to prevent a build up of debt in the future.

Never underestimate the importance of abandoning crap you don”t need!

Setting Up A Budget

A negative mind will never give you a positive life.

I think in my case , better late than never….

As part of my programme to change my lifestyle around, I needed to know how much money my family required to live?

Seems a simple question. But one that I could not answer .Now I am not alone in this. Recent polls suggest that only 30% of North Americans actually have a budget. That means the vast majority of people have no idea what they spend their money on and my household definitely fell into this category.

Now in order to change, you first have to establish where you are?

I”m not a financial expert in any way and my aim here is not to become a financial expert.I am finding out what works for me and maybe it would work for you.

My aim here is to change my lifestyle from working in jobs I hated just to make money to pay the bills, to working at things I love to make a living.My trusted method in the past was , ‘We need more money! ” I  would go and earn some more money, in a job that I hated, next stage? buy some “crap” I did not need, as a mental reward. ( for example, my house has five televisions of which only two are used ???)

Result? “We need more money!!”……So the cycle continued.

How to break this cycle? I decided to basically record all of our spending habits over a three-month period. I felt this was a good period of time. Long enough to give me a reasonable level of understanding as to where the moola went?

Your Budget should not only contain all the areas that you spend your “miserable” cash, but also include all of  your income. I am no computer tech, so decided to record ours the old fashion way and purchased a simple accounts book, in which I wrote my own headings.( long live paper)

1/ Food – simple enough . All groceries but not including take-out or restaurant meals.

2/ Household – Mortgage or Rent and all utility bills.

3/ Insurance- House/ Motor and personal.

4/ Motoring expenses. – Gas , repairs etc.

5/ Debt management.- Interest paid on Loans,Credit cards bank charges etc.( Shocking!!!)

6/ Entertainments_ Coffee, pub, take out, restaurants, pub , pub ,pub ……

7/Clothing- Obvious, no explanations required

8/ One off expenditures.- Every month there”s something. Birthdays, school trips etc

9/ Other – everything else, just write what it was when entering the amount .

 

Now your budget may look different to this. For example, if you did”t own a vehicle , you are not going to have motoring expenses, however you may have public  transport costs or taxi fares instead. Where”s your investments? you may ask. Quite simply at this stage, apart from some Mutual funds for my kids college education, there are no investments!

Keep it simple stupid ( Love this saying, my first boss used it all the time )

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It is very easy to get carried away and make your budget way too detailed and complicated. In my case, if I am going to carry it through, I have to make it simple to use and  simple to understand. Otherwise, I would get “fed up” with it very quickly and not bother with it . Again, make it personal to you and/or your family. This is the one that worked for us .

The point of this exercise was to clearly identify where our money was being spent and how much we actually spent. I did not want to change anything at this stage, however I did find that after recording our spending in the first few weeks, our spending habits started to change, as the shocking numbers sank in .

After the three-month period was finished, the results were amazing.

Spending money wisely on “needs” rather than “wants” in order to be able to work less and have more time to do things I love.

Its worth while reminding yourself of why you are doing this? Like most things in life, if you don”t have a target or aim that is measurable , in time, you will wonder from your path and not get the results you were looking for.

Again, this was my aim. Yours will be different . Maybe you want to save for a particular trip to the sun or a big box item? Instead of following the modern disease of putting everything on credit.

It is worth noting, American”s credit and store card debt hit over a trillion dollars in March of 2018, according to figures released by the Federal Reserve. An average of over five thousand dollars per card holder.That”s a lot !!Just saying .Not to judge anyone. I don”t want to be like those reformed smokers who don”t shut up about giving up smoking.( used to have to listen to those “muppets” when I smoked).

The important thing here is to be able to recognize your current situation. If you are happy with it the way it is, great! Bully for you and move on . For me, this was not the case and change is required.

By recording our expenditure over the three-month period, the first and most important question was answered .

1/Do you earn more than you spend ?

This has to be the starting point for everyone. You don”t have to be a  genius ( luckily for me) to work out that if you spend more than you earn over a period of time then the likely outcome is going to be…….DEBT! . The debt you incur will then cost you money every month and so your expenditure increases etc etc etc. If  you are like me you have no idea how much your  debt  is costing you each month? ( Bet you can”t give me an explanation for APR? ) Surprisingly, we were on the right side and our earnings were more than our spending, which begged the question…..

2/ Where are you spending your Money?

The fact that we earned more than we spent was an encouraging start. However, the answers to where are money went? was, to put it bluntly, bloody scary. Small, regular amounts go un-noticed especially when you pay by debit or credit card, instead of physically handing over the cash. When you see it being spent over a three-month period, then multiply it up to what it is costing you over a whole year, it can be quite shocking.

A good example of this. One of my sons is a competitive swimmer. After each early morning practice, we would get him breakfast from an extremely well-known fast food chain. Not expensive right? Well, when I did the calculations from my three months of records , it worked out to be over eighteen hundred dollars a year. For a lot of people that’s one whole pay check per year! Needles to say , my son now takes breakfast from home. He”s not happy about it , but it teaches him a valuable lesson and I”m happy because he is now having a healthy breakfast and we are saving money. Win, win.

3/ Prioritize which debts to pay off

Finally, the exercise showed which debts cost us the most each month. This automatically gave us the order of which we should reduce our debt . Next stage.

Anyone want to buy a TV ?

 

To be Continued……..

 

 

 

 

 

 

 

 

 

 

Re- Thinking Middle Age Finances

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Study Hard. ( I did not do this ) Get a good job. Buy a big house . Be a good parent.( I do my best at this one ) Save for retirement. DIE !!.

This is the traditional view of life that formed my up bringing . Now I realize that this is not for me.  Shame it took me so long to figure it out, but as they say “better late than never”.
At my age, with my children getting older,the traditional financial suits  would be telling me to maximize my earnings to “top-up’ my investments to boost my retirement income.

There is a couple of issues with this view . Firstly, I don’t have a great deal of investments. Life ( 4 kids and 2 marriages) happened to me , instead of a stable investment plan . Secondly, retirement doesn’t seem that appealing either . ( I suck at golf)

How many people earn money doing something they love?  Well not me. Not for the past thirty years. Apart from a few remote occasions, I have done jobs for one reason only, Money.

At times I have earned decent money, but would then purchase items unnecessarily as a self reward for working hard at a job I hated. Work more.Spend More. The cycle that has dominated my life since entering the work place. This is a common feature of modern society, in fact recently it has been reported that 50% of north Americans spend the same or more than they earn on a weekly basis.  Aimlessly working hours, days, weeks, months, into years at jobs that were not enjoyable or satisfying in any way .

I am now approaching the age at which my father passed away, and determined not to waste anymore of my life. Time to change things up. So, instead of working harder, I want to spend my money smarter on things my family actually need, rather than what I  want as compensation. By doing this I am hoping to create enough time and more importantly, the energy to do things I love to do.

I have always loved metal work . In particular sculptures and figurines made from metal. Never had the mental energy to start producing my ideas.

This  has not  been exactly a “Eureka!” moment and I don’t really have a master plan.  In fact I have no bloody idea how I”m going to do this.  I guess like most problems that seem insurmountable, you pick a point to start and do just that, start.

Stage 1: Identify what was wrong

Stage 2: Prioritize the order of which I would change it.

Now time for a reality check . There are some areas of my life  I cannot change immediately. For example, as I have previously mentioned, I no longer like to live in Calgary AB.  Living in this city is not the reason why I moved to Canada and I would leave here in a heartbeat. However I can’t. My two remaining sons living at home are both at critical times in their schooling.  Schools here are good and well-funded (although this is getting less so with the decline in the oil industry and incompetent politicians) So being  the responsible parent, I am stuck living  here until the time is right.

I think its important to start at where you can make quick changes, to gain some mental momentum.

With that in mind I started to look at the obvious. Like most people of my generation, work seemed to occupy my whole life. Not at anytime could I say I have enjoyed work. Some people say they love their work , but when asked if they would still do it if they won the lottery, most reply with a confident “NO!!!”.  So to me, they are not being honest with themselves.

My end goal here is to make a living doing something that I would actually do for free . I think there are a lucky few that manage this, sports stars, musicians, actors etc. But even these are only a small percentage of people who actually play sport or music.  So, I realize this is not going to be an easy task.

How do you eat an elephant?

One fork at a time .

Having worked in the construction industry for most of the my time here in Calgary, I had earned a fair living from it.  Long hours, especially in the summers, increasing levels of incompetence and stupidity, combined with workers who cannot show up every day, customers who want top dollar work done for bottom dollar prices, delays in payment, as well as decreasing profit margins, has taken the shine off working in the industry in recent years.

Over the last year I have slowly moved away from my line of work. Firstly, I picked up part-time work with a local contractor who transported cars for a well-known car rental company. This enabled me to actually have a summer this year. A visit from my family in England,my eldest sons wedding and the birth of my second grandson made for an eventful and memorable time .

At the same time I started making some metal sculptures and selling them through an online store and even made a few sales.

Problem with the part-time work is that it didn’t provide enough income to keep my,  family. What it did though was to show me what I was missing. I really enjoyed trucking again. With the shortage of truck drivers in western Canada I started to look for work.

At the end of the summer an opportunity arose for me to take a load from Calgary down to Los Angeles. I took it.

Over the next eight days I drove down and back and really enjoyed myself ( see my other blogs on this adventure)and as if confirmation was required, I had definitely made the right decision .

The right decision to go back into trucking was confirmed, however the type of trucking work was not the perfect fit.  Long distance work by its nature meant I would be away from home for long periods of time.

Looking at the big picture and with my target to make a living out of metal art and sculpture, long distance trucking would not allow the time to develop this area.

Now sometimes things happen for a reason.  Not sure why this happens, but sometimes things just work out that way.  It was at the exact time I was preparing to go back out on my second  trip south, when I received an unexpected call from the car rental company. It appeared that their contractor had quit his position and they offered me the work .

There we have it.  Times are a changing. I am now working on hauling cars on a full-time basis, but with enough time for metal work and I even recently managed to find a retail outlet locally that have agreed to stock my work.

Little steps, but in the right direction.  I have along way to go but I believe I can do it.

Next step. Setting up a Budget!!!!

To be continued…….P1030631