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Her Story

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Her Story
By Dwight Harshaw, BBA, Personal Finance Counselor

Dwight Harshaw, BBA

Dwight Harshaw, BBA

Recently, a story came to light in my hometown about a 27 year old woman who was cited for a misdemeanor sex charge. She was caught by an undercover detective in a sting operation targeting escort services. It was her first night on the job. How did she get there? She said she lost a second job, she was going through a bankruptcy, and her wages were being garnished. Her financial problems overwhelmed her and drove her to making an unfortunate decision, which destroyed her young career. I don’t know her and this is not a condemnation. I have great empathy for her. I am captivated by her story because-before she resigned-she was a high school algebra teacher, with a master’s degree, in her fifth year of service. What happened?

I don’t know any more than what has been publicized but in looking and speculating about her situation through a personal finance lens, I think she may have found herself in the circumstance that a lot of young people and people in general are in; they are besieged with debt. The average college graduate is nearly $20,000 in debt. (Source: Demos.org, “The Economic State of Young America,” May 2008) Many have fallen prey to the constant stream of messages (advertising) that are designed to persuade people to value things (depreciating assets, junk) more than money (financial security). Once young graduates get their credentials and jobs, they want the material accoutrements that they believe they should have. On top of school loans and credit card debt, they pile on more debt. And then, there are the ordinary living expenses of life to contend with. Before they know it, they find themselves in unsustainable financial predicaments. More attention needs to be given to the importance of wealth building, especially at the start of a career.

 

Stylish Woman Dancing with Martini in Hand

 

Wealth Building

Wealth building is simply being knowledgeable about money and making it work for you more than it works for others. To become a wealth builder, there are 4 things you should do. You should steer clear of new debt, establish an emergency fund, pay off your student loan debt early-if you have any, and save for your long term future.

 

Avoid Debt

The young lady is bankrupt and suffering wage garnishment. When credit is so easy to obtain, it is hard to be responsible. We use it to buy non-financial things that give us temporary pleasure. We buy expensive wardrobes of which the styles come and go; we buy new cars which lose value as soon as the deal is done; and we purchase things that we simply don’t need, but the debt on those things goes on, long after the usefulness and excitement is over. Credit should be used responsibly-never! Okay rarely. Debt avoidance is a virtue.

 

Emergency Fund

If she had an emergency fund, she might not have been faced with a decision that put her career in jeopardy. An emergency fund is a fund dedicated specifically for extraordinary immediate crisis needs; it smoothes out a rough financial time. Car repairs, job lost, medical bills, household maintenance problems or things that cannot be paid for with out-of-pocket cash qualify as emergencies. It should be a priority to fund it with at least 1 to 2 thousand dollars initially and with 3 to 6 months of your take home pay ultimately.

 

Pay off student loan debt

Some are fortunate to not have student loan debt when college life is over. If that is not your fate, I have this advice; pay your loans off as soon as possible. Double your payments or add an extra amount to reduce the total interest and time that you will pay on your loan(s). Be sure to follow the protocol of the lender for early payoff. The sooner you pay off your student loan debt, the sooner you can get on with building wealth.

 

Retirement

The money you save early on in your career will be the most valuable when you retire. The elements of time, dollar cost averaging, and compounding are a wealth builder’s best friend. Save to the maximum level in tax advantaged retirement plans offered by your employer. If nothing is offered or you can afford to save more, establish a traditional or Roth IRA and fund it to the max or with as much as you can. Ultimately you want to save at least 15% of your annual income for the future because the burden of providing for your retirement is on your shoulders. The money you save early will be worth more and be more useful in the years to come than the value of any consumer item you may buy today.

Her story is all of our stories. All of us have made unwise financial decisions. On a positive note she is young, smart, and hopefully ambitious. She will recover over time and this will all be a distant memory. Time heals. When you find yourself off track financially, get back on. To be a wealth builder, remember this; it is wise to pay with cash rather than with credit, have money set aside for a crisis, pay your debt off early, and save for your long term future.

 

About Dwight Harshaw: Dwight Harshaw is a personal finance counselor, realtor and writer. He has a BBA from the University of Arkansas at Little Rock in Finance with an emphasis on financial planning.

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The Seven Enemies of Change

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

 

 

Know Your Money
Tuesday – May 27, 2014

Knowing Your Personal Finances
The Seven Enemies of Change
By Donell Edwards

 

Today’s topic is the seven enemies of change.  For most readers of this blog who are genuinely interested in improving their personal money management skills, it will be necessary to make some changes in your life and habits.  We have mentioned this before and have repeated the necessity to make changes because it is so important to understand that deeply ingrained habits that were learned over a number of years, or perhaps a lifetime, are not easily changed.  One of the major problems for many people is the lack of the willingness to change.  There may be a number of reasons for a person having this attitude.  Because change is not easy.  So today, we will discuss seven of the enemies of change.  These are by no means all of the enemies of change, but these are seven that we feel are of particular importance.

Doubt – Some have doubts about their ability to make changes.  They have grown so accustomed to managing their financial affairs a certain way for so long, they do not feel that they can make any changes.  Or, they doubt that making changes will be beneficial.  So, doubt prevents them from having the willingness to change, or to see any advantages in making changes.

 

Fear – A powerful enemy of change is fear.  Fear is much stronger than doubt and is much more difficult to overcome.  One of the greatest fears many have is the fear of losing control.  When it comes to managing personal finances, it may be necessary to relinquish some control to a mate, a relative, or a professional counselor or adviser. This is a scary scenario for some to contemplate.   Then, there is the fear of change itself.  Most people are comfortable with their own way of doing things and fear the impact that changes may have on their life.  They fear the sacrifices they may have to make.  They fear the effect it may have on lifestyle and relationships.  So, fear not only prevents them from having the willingness to change, it prevents them from making changes.

 

Weakness – It takes a lot of inner strength to make changes.  When it comes to managing money some are weak when it comes to resisting the temptation to buy things they don’t need, they are too weak to make the sacrifices they must make in order to live within their budget,  they are too weak to implement any changes in life that require willpower and determination.  So, weakness prevents them from making changes, or if they attempt to make changes, weakness prevents them from following through on their decision to change.  

 

Laziness – Making changes requires great effort.  When it comes to managing money it takes effort to monitor and control spending.  It takes effort to develop a realistic budget and to follow it rigidly.  It takes effort to resist temptation, to make sacrifices, and to communicate with others who may be involved or affected by personal money management decisions.  Some people just do not want to take the time and energy to take control of their personal money management, so they allow laziness to prevent them from making beneficial changes.

 

 

Jump Through Hoop --- Image by © Royalty-Free/Corbis

Jump Through Hoop — Image by © Royalty-Free/Corbis

 

Denial –  Alcoholics will tell you that they do not have a drinking problem.  In spite of all of the evidence, they will vehemently deny that they have a problem.  Some who live from paycheck-to-paycheck tell themselves that if they can just make it one more paycheck, or one more month, they will be able to get over the proverbial hump.  But it seldom happens.  Bills go unpaid, or get paid late, ultimately resulting in some bills going into collection.  In spite of all of the evidence, many people in this situation are in denial.  They cannot accept the fact that they need to make changes in the manner in which they manage their money, they need help.  Denial is one of the most powerful of all enemies to change.

 

Delusion – Delusion and denial are closely related enemies of change.  Whereas denial is the refusal to accept the obvious facts, delusion is usually the catalyst that causes the denial; it is a false belief or manner of thinking that a person deceives themselves into believing is truth.  So, a person is deluded into denying the reality of their situation, and thus has an aversion to change.

 

Complacency – As creatures of habit it is a lot easier to remain in our comfort zone and be content with the status quo, rather than to embrace change, even beneficial change.  This complacent attitude is another one of the enemies of change.  Again, some delude themselves into thinking that everything is just fine the way it is, and they ignore warning signs that finances are getting out of control, or that they are already in trouble with the way they are managing their personal finances.  They see no need for change.   

 

So avoid these seven enemies of change, as well as all other enemies of change, because change is essential to your success in managing your personal finances and in all aspects of life.

Behavioral change is very difficult, so in today’s Must Reads we present a series of very short articles on behavior change written by Kendra Cherry, who is a licensed psychologist and also the psychology expert at about.com.  In her articles Dr. Cherry discusses how to get started in making behavioral changes, the essentials of change, and the different stages of change.  I highly recommend that you read these articles to help you recognize and defeat the enemies of change. 

 

Must Reads:

Behavior Change:  Getting Started

The Elements of Change

Stage 1 – Precontemplation

Stage 2 – Contemplation

Stage 3 – Preparation

Stage 4 – Action

Stage 5 – Maintenance

Stage 6 – Relapse

 

 

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2014 CWR Media – All Rights Reserved

 

 

The Real Value of Money

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

 

Know Your Money
Thursday – May 22, 2014

Knowing Your Personal Finances
The Real Value of Money
By Donell Edwards

 

I am writing today’s post as the result of a response that I got to a post to one of the groups that I belong to on LinkedIn.  I recently submitted a post to all of my LinkedIn groups to inform them about this blog and to invite them to visit the blog.  I cited a Harris Poll which shows that many Americans have serious problems managing money to emphasize the need for a blog of this nature.

Here is one of the comments that I received which shows why so many people are in trouble with money management, and why they don’t get the point:  If you don’t have money, then there is nothing to worry about. Make your money and then you will know your money.

The person who made this comment may have been well meaning, or they may have been a little facetious, whatever the case, they totally missed the point.  This blog discusses money but it is not about materialism or getting rich, it is about managing money more wisely and building wealth, the blog is about life and the role money plays in life.  It is about understanding the real value of money.  It is about using what money one has in the best way to live a fulfilled and enjoyable life, to help others, and to make the world a better place.  It is about learning to budget and not overspend, it is about paying off debt, saving, and accumulating wealth.

Now allow me to explain.  Most people associate wealth with money, however, as I learned from my college Economics instructor, the late Mr. Herbert Benjamin, Wealth is all of the material things produced by labor for the satisfaction of human desires and having exchange value.  The factors in the production of wealth are land, labor, and capital.  Wealth includes all of the factors of production, and must also be material (matter from which something can be made; raw or processed material), capable of satisfying human desire, and have exchange value.  Therefore, money is not wealth, medium of exchange.  Neither are shares of stock, bonds, or other securities, they are only evidence of ownership.  True wealth, from an economic standpoint,  is possessing all of the factors of production, land, labor, and capital.  So accumulating wealth involves more than possessing money.

I am a Christian, and I respect those of you reading this blog who may not be Christians or who have no faith, that is your right.  However, I am a Christian and I am not ashamed of my faith.  The Bible helps understand the real value of money, and it says at Ecclesiastes 7:12,  For wisdom is for a protection [the same as] money is for a protection; but the advantage of knowledge is that wisdom itself preserves alive its owners.  I always like to compare Bible translations to get a better understanding and the Kings James Bible translates this scripture as, Wisdom is a defence, and money is a defence.  The Bible In Basic English translates, Wisdom keeps a man from danger even as money does.

So, the true value of money is to protect us from calamity, to defend us against the unexpected, and to keep us from danger.  Now, before some of you go to one of the most misquoted scriptures in the Bible to show that money is evil, 1 Timothy 6:10, that scripture does not say that money is the root of all evil, it says that the LOVE of money is a source of all kinds of evil (Good News Bible).

How is money a defence and protector?  If you should lose your job, and that happens frequently in today’s world, the mortgage or rent continues, the bills keep coming, the utilities must be paid, the car note is still due, the family still needs grocery, and the list goes on and on.  It is not uncommon for people to be unemployed for months or longer before finding work, and then in many instances their income is much less than it was on their former job.  That’s how money is a protection.  If you have used your money wisely over the years and you have an emergency fund, if you have an additional savings account, perhaps you have investments, that wise use of money will serve as a protection for you and keep you from the danger of a severe financial reversal.  So, unlike the comment to my LinkedIn post putting the emphasis on making money, the real issue is what you do with the money you make.

Money is also a defence in other ways.  If for some reason a child is arrested and charged with a felony and bail must be posted, and an attorney must be hired to defend him, money is a protection.  What do you do as a parent in that situation if you do not have the money to help your child, or you have not handled your financial affairs in such a way that you can get access to the money you need.  That is a helpless feeling for a parent.  This is the real value of money, helping you to keep your family from danger.

Another major way that money is a protection is in retirement.  Many young people believe they are invincible and give no thought to getting old one day and how they will take care of themselves.  So they do not plan, they do not save, they have not set aside anything for retirement, or they started late in life and they do not have enough set aside to take care of all of the expenses of old age.  This is why it is so important to learn at a young age how to manage money effectively and to plan for your future, because you will not always be young.  One day, much sooner than you think you will be old.  Money is a protection, and is a defence against the burdens and expenses of old age if we have learned and applied good money management practices during our life.

We live in an economy in this country that requires money, so there is nothing wrong with having money, there is nothing wrong with riches or wealth, what is wrong is for one to make the pursuit of riches their main goal in life.  So, it is very, very important to understand the purpose, the real value of money, and to learn how to manage money effectively.  The real value of money is to serve as a protection.

 

 

 

 

Must Reads:

How Our Money Beliefs Hold Us Back

 

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2014 CWR Media – All Rights Reserved

 

 

Special Savings Series: Getting Started – Do You Have What It Takes?

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

Know Your Money
Monday – May 12, 2014

Knowing Your Personal Finances
Special Savings Series:  Getting Started – Do You Have What It Takes?
By Donell Edwards

 

Good morning everyone!  This week we zero in on saving, following up on our special series last week on managing debt.  Hopefully, you are at a point in the process where you have begun to carefully monitor your spending on a regular basis, you are evaluating your spending and eliminating wasteful spending and overcoming bad habits, you have prepared and are rigidly following a realistic budget, and you have gotten your debt under control, or you are in the process of doing so.  These are all steps that must be in place and should be accomplished before seriously working to have a successful savings plan.  One other important step in the process is implementing an emergency fund, which we have discussed briefly in previous posts.

 

Our special series this week will discuss saving directly, as well as other aspects related to your success in establishing and maintaining a successful savings plan.

 

So, are you really ready to start saving?  Over the past two months we have talked about the importance of controlling spending, and the fact that in addition to having a realistic budget and doing the proper planning, it takes sacrifice, willpower, determination, and a willingness to change in order to successfully control spending.  Obviously, in order to save there must be funds to save.  Those funds should come from effectively managing the income that you have, implementing and closely following your budget, and paying down your debt.  As you pay down your debt or receive income occasionally from other sources, use that money for your savings.

 

The first savings project you should have is your emergency fund.  One of today’s Must Reads, Before You Start to Pay Off Debt…Do This,  discusses the importance of an emergency fund.  It is important that you have planned so that once you start saving there will not be anything to interrupt your regular contributions to your savings.  That is where your emergency fund comes in.  There will be unscheduled expenses like vehicle repairs, appliance repairs, home repairs, paying for insurance co-pays or deductibles, and a variety of other things.  An emergency fund allows you to continue to follow your budget and continue to save and care for those expenses.

 

 

Smiling African American businessman

 

 

Most experts recommend having an amount equal to six months living expenses in your emergency fund.  It is a good idea to do this in stages.  First set a goal to accumulate at least $1,000 in your emergency fund.  Do not spend this money for vacations or anything other than real emergencies.  Then as your next goal build that amount to 3 months living expenses.  Once you achieve that goal, then continue until you have 6 months living expenses.  After you reach 6 months living expenses continue to add to the fund until you feel comfortable that you have enough breathing room in case of a severe emergency.  And again, do not spend this money for anything other than emergencies.

 

As mentioned earlier, it will take sacrifice, willpower, and determination to stay with your savings plan.  But, if you are not a person who understands the importance of making sacrifices, if you do not already have willpower, and if you are not determined, how do you acquire these qualities.   In our other Must Read for today, 9 Ways to Harness Your Willpower to Save Money, writer Marilyn Lewis cites a comment from a book review in Mother Nature News from The Power of Habit by Charles Duhigg showing how habits begin with conscious choices, “Then we stopped making a choice, and the behavior became automatic. It’s a natural consequence of our neurology. And by understanding how it happens, you can rebuild those patterns in whichever way you choose.”  So, by repeatedly exercising self-restraint, resisting temptation, and making sacrifice, these choices become habits.  These qualities can be learned with time and effort.

 

So, do you have what it takes to become a saver?  If you don’t, now you know how to get it. 

 

Must Reads:

Before You Start to Pay Off Debt… Do This
http://www.enemyofdebt.com/2014/01/before-you-start-to-pay-off-debt-do-this/

 

9 Ways to Harness Your Willpower to Save Money
http://blog.credit.com/2014/02/9-ways-to-harness-your-willpower-to-save-money-75365/

 

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2014 CWR Media – All Rights Reserved

 

 

KYM Special Series: The Debt Factor – It’s All About You

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

Know Your Money
Friday – May 9, 2014

Knowing Your Personal Finances
The Debt Factor:  It’s All About You
By Donell Edwards

One thing should have become crystal clear from all of this week’s posts about debt, and the fantastic articles that have been shared to help underscore the serious nature of controlling and eliminating debt, and that is that the solution lies with each one of us as individuals.  Each of us must decide what actions we will take, or choose to do nothing because that is the course of least effort.

Some years ago I heard world renowned speaker Les Brown discuss his frustration and feelings of helplessness because he was not able to help his sister who had become addicted to drugs.  Mr. Brown had done everything he could to try to help his sister, but felt that he had failed and didn’t know what to do.  He could not understand why he had been successful helping and motivating millions of people around the world in all kinds of situations and circumstances through his lectures, books, and seminars, and  he could not help his own sister.     He was utterly frustrated.  

One day he was giving a lecture and during the course of the lecture he happened to look in the back of the auditorium, and from a distance saw someone who looked very familiar, and soon realized it was his sister.  He stopped his lecture and began to speak directly to his sister.  He later discovered that she had sought him out to help her because that day she had awakened in a dumpster and had finally realized that she needed help and wanted to change her life.

The reason that I shared Mr. Brown’s experience about his sister is that it powerfully demonstrates that it makes no difference what anyone says, it makes no difference how logical and reasonable the solutions are, it makes no difference how much someone may need help, until that individual realizes that he or she needs help and is willing to accept help and make the necessary changes in their life, nobody can help them. 

 

 

Young Woman with Her Hand on Her Belly and Man Beside Her Writing

 

 

I know that by writing a blog I cannot change anyone, I won’t make anyone change, and that has never been my intention.  But as I have mentioned before, there is an army of us who have had bad financial experiences and who have learned from them and who now want to share what we have learned to help others.  

Those who live near the ocean are familiar with lighthouses that provide light and to help ships to navigate safely through the waters.  Those of us who share our experiences view ourselves like those lighthouses.  We are here to help those who follow us guide their financial vessels safely through the turbulent waters of wasteful spending, mountains of debt, and bad habits.  We just want you to know that we care and we are here to support you, just like a lighthouse helps the captains and crews of ships.  When you are ready, your army awaits.

For those of you who are ready to do something about your debt, we have two outstanding articles in our Must Reads section below that will help you get off to a good start.  One is 50 Ways to Become Debt Free and covers a wide range of things that can be done to progressively eliminate debt.  The other article is a personal challenge, Have You Got What It Takes to Pay Off Your Debt?  We very strongly recommend that you read both articles. 

Have a happy money wise weekend.  Here is our musical selection to kick off your weekend.  It is one of our favorites from one of the greatest bands of all time, Blood, Sweat, and Tears, and their sensational hit, Spinning Wheel, which is very appropriate when thinking about how debt can spiral out of control.

 

 

 

 

 

Must Reads:

50 Ways to Become Debt Free
http://www.monicaonmoney.com/50-ways-to-become-debt-free/

 

Have You Got What It Takes to Pay Off Your Debt?
http://debtadviceblog.co.uk/pay-off-your-debt/

 

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2014 CWR Media – All Rights Reserved

 

KYM Special Series: The Debt Factor – Causes and Cures

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

Know Your Money
Thursday – May 8, 2014

Knowing Your Personal Finances
KYM Special Series:  The Debt Factor – Causes and Cures
By Donell Edwards

 

Today we discuss more causes of getting deeply into debt, as well as some of the cures.  In my post on Monday, How Did I Get All This Debt?, I referred to an article written by Christina Lavingia, 10 Reasons Why You’re Still Living Paycheck to Paycheck.   Here is the list of reasons from that article:

  1. Paying the minimum on debts
  2. Trying to keep up with others (the proverbial Joneses)
  3. Failure to plan for irregular expenses
  4. Failure to plan. Period.
  5. Not realizing how handy you are or can be
  6. Spending impulsively
  7. Paying for unused memberships
  8. Avoiding bank account and credit card statements
  9. Viewing your credit limit as an asset rather than a liability
  10. Failure to think like an investor

 

This list includes many of the major causes of people getting deeply into debt.  Today, we look at similar list for comparison from our Must Read for today, 10 Reasons You’re Still Broke, from Kiplinger online written by Cameron Huddleston, shown below:  

 

  1. Failure to attend or complete college
  2. Trying to keep up with the Joneses
  3. Poor work ethic
  4. Bad habits that are costly:  Smoking and drinking too much
  5. Impulse buying
  6. Playing the lottery; gambling
  7. Making minimum payments
  8. Lack of goals
  9. Hanging out with the wrong crowd; they have bad habits too
  10. Being a couch potato; mismanagement of time

When these two lists are compared, surprisingly, there are only three items included on both lists:  (1.)  Paying the minimum on debts, (2.)  Trying to keep up with the Joneses, and (3.)  Spending impulsively.  So, what this helps us appreciate is that there are many factors that contribute to a person getting deeply into debt.   The Kiplinger article is very well written and is a short easy to read article that I strongly suggest that you read.  So, I am not going to say much about it other than some of the things included on the list are really noteworthy.  Those are the importance of a college education or post secondary training, poor work ethic, bad and costly habits, gambling and playing the lottery, and hanging out with the wrong crowd.

If you take a close look at both lists it becomes obvious that a major cause of getting deeply into debt is lack of attention to spending.  That is why in The Know Your Money Personal Money Management Plan we spend so much time discussing carefully and regularly monitoring spending, evaluating spending, and learning to eliminate wasteful spending.  

 

 

A woman hand carrying a bunch of colorful shopping bags

 

 

Most of the related points on these lists, like paying the minimum on debts, avoiding bank accounts and credit card statements, viewing your credit line as an asset rather than a liability, failing to plan, trying to keep up with the Joneses, bad habits that are costly, and playing the lottery and gambling are all indirectly the result of poor spending habits.

Take a real close look at both of the lists above and see if any of the things listed describes you.  If you are deeply in debt or you are headed in that direction, the first thing you must do is examine how you are managing your personal finances.  These lists are a start that can be used as a guide to help you identify self-destructive behavior on your part, and help you recognize that you need to change.  But, that is up to you.  If you are drowning in a the sea of debt and someone throws you a lifeline and you refuse to reach for it, who is to blame if you drown.  Suffocating in debt is no fun, and it is possible to get out from under that burden, but it takes an individual’s willingness and commitment to make the sacrifices that are necessary to get out of debt.   You should start by eliminating any of the practices listed above that apply to you and learning to engage in activities that enhance your personal finances.

Another related cause of out uncontrolled debt which we also talk about a lot is credit cards.  In our other Must Read for today, The Dangers of Credit Cards, by Jon Dunlin from Money$martGuides, Mr. Dulin discusses an interesting concept to help avoid wasteful spending and to help prevent getting deeply in debt, that is The Envelope Budget System.  This is a very interesting article and if you are addicted to credit cards or just would like to learn about a helpful alternative budget system this is a great article to read.

 

Must Reads:

10 Reasons You’re Still Broke

http://tinyurl.com/kymwhystillbroke

 

The Dangers of Credit Cards

http://www.moneysmartguides.com/dangers-credit-cards

 

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2014 CWR Media – All Rights Reserved

 

 

KYM Special Series: The Debt Factor – Cash Is King! So Turn Off The Credit Machine

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

Know Your Money
Wednesday – May 7, 2014

Knowing Your Personal Finances
The Debt Factor:  Cash Is King! So Turn Off The Credit Machine
By Donell Edwards

 

Bad decisions, lack of willpower, seeking prestige, impulse buying, lack of planning, are all factors that contribute to getting bogged down in debt.  However, the greatest culprit is the credit machine.  This colossus that was given birth by the commercial system and is fed and maintained by all of us is the major reason so many find themselves burdened with what seems like, and in some instances is, insurmountable debt.  How do we fix this problem?  There is no quick remedy, but we are going to provide you with a starting point.

First, turn off the credit machine and stop using credit.  I know that you may be in a position where you feel that it is impossible for you to survive without using your credit cards until your cash flow improves.  That is why we emphasize learning to have willpower, and being willing to make sacrifices.  It takes willpower and sacrifice to forgo some of the things that you plan to do, purchasing some of the things you plan to buy, and enjoying some of the things that you now enjoy, so that you can pay down your existing credit, and pay cash for everything else that you MUST buy.

 

 

Credit Card Locked

 

 

Cash is king!  Converting from a credit budget to a cash budget may not be easy, but it will help you to progressively whittle down your debt, while at the same time teach you to have the discipline to spend more wisely, because unlike with credit cards, if you don’t have the cash available you can’t spend anything.  So, you learn to do without anything that is not essential.   This is just one of the many advantages of using a cash budget.  Learn more about using a cash spending plan in today’s Must Read, 10 Reasons to Use A Cash-Only Spending Plan.

Another way to get out of debt is to find ways to earn more.  In our other Must Read for today from Money$martGuides, writer Jon Dulin discusses the importance of recognizing your greatest asset, yourself.  Mr. Dulin discusses many ways that we are all assets to ourselves, and how we can become greater assets.  This is really a must read for anyone who is serious about wanting to improve their financial situation and eliminate their debt.

Here are some other ways to capitalize on your greatest asset, yourself, and earn more money:

Check with your company’s Human Resource Department to investigate your opportunities for career advancement.

Find and attend career development workshops in your area.  Sometimes your employer will pay for these, or community colleges or government agencies will offer them for free or for a very minimal fee.

Read trade publications related to your specific position and industry, and keep up with the latest techniques, procedures, and practices.  Become the company expert in your area.  Get noticed.

Consider going to college, or going back to college for additional education.  There are also some great and reputable online colleges if time and scheduling is a consideration.  See if your employer offers tuition assistance to lessen the cost.

Utilize the skills and experience you already have to create additional income streams.  There are lots of things that can generate additional income such as becoming a virtual assistant (VA).  If you have experience or training for bookkeeping, doing online research, data entry, developing PowerPoint presentations, managing email, coordinating social tasks, conducting travel research, scheduling and managing clients’ calendars, conducting industry research to keep clients’ up to date, and much more, you may be able to earn a considerable second income as a virtual assistant.  

If you are interested in learning more about starting a virtual assistant business, read the article,  Starting A Virtual Assistant Business , from Entrepreneur online.  Also, get additional information from The Virtual Assistant Networking Group, or from The International Virtual Assistants Association.  If you have skills and experience, becoming a virtual assistant may open doors for you to increase your income and help reduce your debt.  It may also help you discover a new found love for getting paid for doing something you enjoy.  Of course there are many other ways to create additional income streams, this is just one that provides opportunities for people with a wide range of experience and abilities.  We will dedicate a post to discovering ways to generate additional income streams in coming weeks.

So, getting back to our main discussion for today, recognize the need to turn off the credit machine and use a cash budget, and also to find ways to utilize your greatest resource, yourself, so that you can earn more.   

 

Must Reads:

10 Reasons to Use A Cash-Only Spending Plan

http://ht.ly/uZyDX

 

You Are Your Greatest Asset

http://www.moneysmartguides.com/you-are-your-greatest-asset

 

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2014 CWR Media – All Rights Reserved