Home equity lines of credit have been an attractive loan in the past few years due to the obscene housing boom that left homeowners sitting on gobs of equity in their homes. So, instead of sitting on their profits, homeowners borrowed against a “theoretical” amount of money. Why do I say that this is a theoretical amount of money? Well, if you owe $80,000 on your home, and you can sell it for $100,000 on the market today, then you have $20,000 in equity. Banks are allowing people to borrow $20,000 at a decent interest rate, then if you sell the house, you can break even after paying back both loans.
Many of us do not have a ton of disposable income, because our debt payments suck up all of our money. It would be nice to think that I could find an extra $1,000 per month to put towards paying off debt if I tightened up my budget. But in reality, there is only so much money that one can squeeze out of their budget to put towards savings or paying off debt. So what if you only have an extra $100 per month to put towards paying off debt? Do not use that as an excuse for living in debt the rest of your life.
This is a reminder for all soon-to-be college graduates: CONSOLIDATE YOUR STUDENT LOANS! It may seem hard to do since you are being bombarded with direct mailings from 100 different student loan consolidation companies. However, many students forget to do the consolidation before they graduate, and this can be a very costly lapse of memory. Find a reputable company and consolidate all of your loans into one large loan. If you do so before you graduate, many companies are offering a fixed interest rate of 4.75%. If you wait until after July 1st, the interest rate will be variable and it could rise past 7%!
Step #3: List your debts smallest to largest, and start aggressively paying off the smallest debt, and working your way up to the largest debt.
This method of debt elimination is contrary to how many people believe that debt should be paid off. The most popular way to set up a debt elimination program is by listing the debts from smallest interest rate to largest interest rate and then paying off the smallest rate first. First, I will explain the method that I use, and then I will show you why I disagree with the smallest to largest interest rate method.
The second step is drafting and sticking to a written budget. The reason that this is the second step is because you will never know how much money you can contribute to getting rid of your debt without writing out your projected budget. There are two kinds of budgets. One kind of budget is merely just a tracking budget. You keep track of what you are spending and where you are spending it, and then you try to make adjustments at the end of the month to areas where you spent too much money. The other kind of budget method is when you project your monthly expenses and stick to that projection. This is the method that I like to use. It is very simple.
A huge debate arises when it comes to marriage and money about whether or not spouses should have a joint checking account or separate checking accounts. One popular thing that people do nowadays is they keep one joint account to pay the bills from and then they keep a separate account for each of them to spend money on “personal” things. This is a total cop-out when it comes to managing money with your spouse. A marriage is not a joint venture. You cannot pick and choose which things that you want to share as a couple and which things not to share. You must be handling money as a team.
Someone sent this to me in an email, and I had to post it for all to see. This picture has “we smoked pot” written all over it.
Passwird.com has a link and promo code posted that allows you to buy a 3 year subscription to Kiplinger’s magazine for only $4.91! I am not a huge fan of Kiplinger’s Magazine, because there are times when they encourage readers to go into more debt, but this was an offer that I could not pass up. I signed up today for it, and I did not believe it until I checked out. The trick is that you have to type in the promo code that passwird.com provides. And NO, I do not get any kickbacks for this plug, i just thought that many of you would be interested in this offer.
Let’s face it, gas prices are not going down any time soon. I am starting to think that oil companies are going to leave the prices where they are at because we have already become used to paying $2.50 to $3.00 for a gallon of gas. In the grand scheme of things, I wonder if that is truly is expensive. In Florida, I pay up to $3.50 a gallon for milk. Although, I don’t drink 14 gallons of gas per week, either.
If you are like me, then you may have started out with a very formal way of thinking when it comes to entrepreneurial ventures. The traditional school of thought is that you must have a business plan, have a substantial amount of capital, and be extremely organized and planned with your marketing plan. I thought that all of these things were essential to starting and being successful with a new business, but then I listened to Steve Pavlina’s podcast about kick starting your own business.