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10 Signs You Need Help With Money

Posted Apr.21, 2012 under Debt

Can a one-month financial makeover solve all your money problems? Probably not. Money is one of those subjects that requires our constant monitoring and adjusting. Even when on auto mode, some money management is necessary. Many young couples and singletons from across the country are finding themselves struggling financially. They have a job, earn a paycheck, and after all bills are paid there is very little leftover for life, savings and larger purchases.

Most people have dreams of one day owning a home and are threatened by taking on debt. Most of us do carry some form of debt, but how much debt is too much before you need help with money? Like many people, we all make some questionable financial decisions. And other times our lives get the better of us.

One thing is certain with money is that it’s never too late to make a turn around and admit that you need help with money. So, stop what you’re doing and pay a little attention to your money – it needs you. Here are 10 signs you need help with money.

1. You live paycheck to paycheck – This is the #1 sign you need help with money, hands down. Living paycheck to paycheck is a recipe for disaster, and I’m certain that some of you reading this are in this boat. And trust me I was too!!! It’s never too late to start making a change and hit the road to recovery. Start by tracking your money, see where it goes and create a budget to help you better manage your money. I’m living proof that it can be done, and if you read my story when I started this blog you’d realize that I was in deep deep shit. Fast-forward 18 months and today I’m in total control of my money and most importantly don’t live paycheck to paycheck. Another think I’ll share with you, is that there’s a pretty cool website called debt.ca that offers help if you get in to debt. They have some pretty neat information too.

2. You pay one credit card with another – I remember the times when I did this and looking back at it now, I wonder what cool-aid was I drinking back then? Avoid balance transfers at all costs.

3. You pay for group dinners/outings on your credit-card and keep your friends cash – This one made me laugh. Here’s a very recent and true story. I was out for beers & wings with my soccer team, and once the bill came, we all threw in some money to pay for our portions…except one guy. He took the cash and paid the whole bill with his credit-card. I couldn’t help and think in that moment; What are the chances he’ll pay that $175 charge on his credit card on time and/or in full?

4. You live in overdraft – This was one of my past downfalls as I used to live in overdraft. No wonder I had revolving debt, because the pay-check would arrive and part of it would cover the negative overdraft balance.

5. You’re afraid of your credit-card statement – And you don’t open it. Absolutely not a good sign. You MUST KNOW what you’re dealing with so that you can fix it and get right back on track! Problems don’t just disappear. If you never DON’T KNOW what’s going on you’ll just keep sinking and sinking until it takes something tragic to snap you out of it, like a court order or bankruptcy. If it goes as far that you need a debt settlement, there are a few great websites that offer debt settlement information. Just look around.

6. You shop weekly ONLINE – If you shop weekly online at places such as Amazon, eBay or any other online retail outlet – you seriously have problems.

7. 0% of your money goes towards savings and/or retirement – You seriously need help. Saving zero for the future doesn’t spell a very bright future for you.

8. You frequently withdraw cash – We all know that money can be hard to manage, but managing cash is next to impossible. You’d virtually need to be carrying a note pad and write down every purchase you make upon payment with cash at the register. And unless you’re doing that, you certainly don’t know where your hard earned cash is going.

9. You don’t like keeping receipts – This must be because they remind you where you spent your money, right? If you’re afraid to look back at your receipts….well I think you have a serious problem. Go get some help. :)

10. You have five or more credit cards – Sometimes I have enough trouble managing one credit card, how do you possibly manage five or more? It’s simply becomes a big mess after a while, and one that is very hard to manage.

Some of these were pretty crazy and more entertaining than anything, but hopefully it got you thinking and will prompt you to start researching any areas that may need improvement. Like I said earlier, money is always a work in progress.

Could you add any other signs to the list?

Eddie

Tags: 10 Signs, Credit Card, Debt, Debt Problem, Help With Money, Money Problems, Paycheck

10 Comments

What’s Up With The Debt Settlement Ads?

Posted Jan.12, 2012 under Debt

Everyone enjoys getting out and spending a buck or two. Some of us spend responsibly and others spend their money as if it grows on trees. Money actually does grow on trees for some, others imagine that it does and for some, like my self, I know my money does not grow on trees. I don’t even own a money tree. Truly I didn’t even know they existed, sometimes I wish that I had a money tree, but that’s a story for another time.

Since a very small percentage of consumers spend their money wisely. The majority of the spenders, throw their hard earned money around without much thought for the future. There are new deals everyday of the year. Everywhere businesses are competing for the money in our wallets. And by now we’re used to it. Sale after sale on everything.

Everyone is doing their part to help us part with our money – businesses, online tools, personal shoppers, stylists and everyone in between. So, what happens when shit hits the fan and you get into debt? You’re on your own for the most part to find your way out of debt. Don’t loose sleep though, after all you’re not on your own.

There are new players on the scene. We have all the businesses competing for your money. And now we also have businesses competing for your debt as well – Debt Settlement Agencies.

The ads are pretty good and it’s hard to look away, because the advertising is directly targeted at those who are in debt. The ads are fairly aggressive and to the point. These ads promise to help you get out of debt in 36 months, all the phone calls from the creditors will stop, you don’t need to file for bankruptcy and you can even wipe some of your debt away without ever having to pay it back. These ads are quite inviting and sound too good to be true.

Every morning on my drive into work, as I flip back and forth on the radio, I hear the same commercial at least five times in a span of half hour. Same message is repeated over and over, “there is a new government program to help Canadians get out of debt!” A phone number is repeated over and over and it asks for those who are in debt to call in and see if they qualify.

So, just who are these new businesses willing to work on your behalf to reduce the amount you owe? They are offering a service. Debt is such emotionally charged topic though, that a lot of people don’t stop to really analyze what is being offered. Instead, most only see the promise, sometimes a very empty promise, of a solution to their financial woes.

I am not here to judge and I firmly believe that there is something good in everything.

Not all of these debt settlement companies are out to get us. It is up to the individual to do their homework and find a debt settlement company that has their best interest at hand. Like in any other industry, not all businesses are reputable. There are a lot of honest businesses and there are equally as many businesses who carry on doing shady business.

Trying to break it all down, it seems to come to this: If you simply want to make your debt go away and you’re willing to entertain some (maybe you will never get any) phone calls from your creditors to get there, debt settlement might be the way to go.

So, what exactly is debt settlement?

Debt settlement is having a company work to discharge your debts over a shorter period of time (three years or short as 90 days if you have a lump sum). Typically it is unprofitable for these companies to keep clients longer than three years.

Furthermore, they will help clients create a budget and some (the good ones) will coach their clients about how to respond calls from the creditors and staying within their budget. However, the majority of their time is not spent on the immediate task at hand – eliminating debt.

Each debt settlement company works differently, yet their overall goal is the same. Generally they will set up a payment schedule for clients who enroll. Every client sets up a monthly payment and every monthly payment is added into a trust account. Once there is enough accumulated in the trust account, the company will negotiate with creditors, in the hopes they can arrange a lump-sum payoff for less than the amount owed. In some cases the client stops making payments to their creditors altogether.

How do the debt settlement companies get paid?

The fees are earmarked and taken from the amount accumulated in trust. Other times clients need to pay the debt settlement company fees up front before this service is rendered.

In most cases though, some fee needs to be paid upfront to the debt settlement company, before any service is performed.

So, if you’re thinking about using a debt settlement company, here are a few tips to keep in mind when doing your research for a reputable company:

There is a difference between debt settlement companies and non-profit credit counseling agencies.
Check with your local better business bureau (BBB) to gain some history on the potential debt settlement company.
Prepare a list of potential questions to ask and never be afraid to ask something if you’re unsure. Keep in mind, they need your business, just as much as you need their services.
There’s no debt relief program that’s beneficial to the clients credit score rating. This includes debt settlement companies and non-profit credit counseling agencies.
There may be upfront fees associated with the services, many times with no guaranteed return.
Remember: As a consumer, you can take the same steps a credit counseling service will.
If you are told to stop paying your creditors, do some hard thinking before you do so.

Take your time and do your research right. I am by no means bashing debt settlement services. These services are right for some people and not for others. Find out what’s right for you. And for Pete’s sake, please don’t sign anything right away. Sleep on it. Read any contracts you are given carefully.

Education is everything and understanding what you are getting in exchange for the fees being charged is a must, and understand that there are always alternatives to consider as well. Credit counseling and bankruptcy trustees are just two alternate sources.

In the end, I guess you can say I’m not surprised with all the debt settlement ads everywhere. On the radio, TV, newspaper, Facebook and even in the mail. It’s January after all, the month after the holidays, and the month of truth as I call it. January is the month that a lot of people discover how much and how deep in debt they truly are.

Good Luck!

Eddie

Tags: Chrstmas, Credit Card Debt, Credit Counseling, Credit Score, Debt, Debt Settlement, Get Out of Debt

6 Comments

Do You Have A Debt Problem?

Posted Oct.27, 2011 under Debt

We all have some form of debt. We have different forms of debt in different parts of our lives. Some of us work hard at eliminating this debt. Others are content with debt and continue to incur it. By no means am I Dr. Debt, but I’ve lived and learned the hard way of debt. I’ve been in and out of debt ever since I entered adulthood. Racking up credit-cards and lines of credits to being debt free and than back into debt. They say third time is the charm. Sure sounds sweet and I’m definitely on road to redemption or should I say; on the road out of debt (again). It’s no secret that Canadians owe money and are swimming in debt. Household debt has doubled and household debt to income ratio reached 148% in the third quarter of 2010. In simple English terms, this means that the average household owes almost 1.5 times its annual net income. One dollar and fifty cents for every dollar they earn.

Despite these scary statistics, Canadians continue to remain in debt. The thing about debt is that it’s scary. Overwhelming. Overpowering. And it just sort of creeps up on you. You think you got it under control and BOOM; you can’t manage anymore.

Fortunately there are signs that point you have a debt problem. Much like signs point that you are going to be over-weight or have a drinking problem or maybe even addicted to porn. Yup, there are signs that point you will be swimming in debt sooner than later. Key to it all is to keep a lookout and look for these five signs:

1. Mr. & Mrs. Secret

If you ever seen the movie Mr. & Mrs. Smith, with Angelina Jolie and Brad Pitt, you know where I’m going with this. One word: Secrets. You are keeping secrets about your money. Your spending habits and income. You simply don’t talk about money to anyone, including your own partner and/or family. If your partner is in debt or you suspect that they are in debt, you avoid discussing it in order to preserve peace in the household.

2. Relying on Credit

If you rely on credit to pay your monthly bills, you got a problem. Somewhere there is a black hole that’s sucking all your money. Maybe you are spending too much on something (shopping or owning more home than you can afford are just two examples). Maybe you got more debt than you can afford. Or maybe you simply don’t have a budget and don’t know where your money is going. More than likely it’s a combo of all three.

3. Ignorance

You play ignorance. You don’t open your bills or look at your financial statements. If you run out of money, you are content with it, because you got overdraft, line of credit or credit-card to back you up. You don’t allow money to hold you back from living life. Other signs of ignorance are paying only the minimum balance every month. You are well aware that you owe $5,000 on your credit-card, but the minimum is $75 and that’s what you’ll pay. Only because you believe that you need the rest of the money for your everyday life. Sadly debt does not go away. Instead it keeps revolving.

4. Can’t Afford to Save

All your money is being spent between life and bills. You have no savings or emergency fund. Everyone needs a rainy day fund. For the tough times, such as loosing your job, illness or any other unexpected emergency. You want to save, but simply have no left over money to save. This is a very early sign of entering into the dark: debt.

5. Overdraft Problem

Using the overdraft frequently is another problem. Overdraft should only be used in totally unexpected emergencies. It is not meant to be dipped into when one mismanages their money. If all the money is gone from this pay-check, be patient and wait for the next pay period. Borrowing money now, with the promise to payback later is a vicious cycle. It’s hard to get out of and on top of it your financial institution more than likely charges you $5.00 per withdraw from your over-draft.

Debt is avoidable and if it can be avoided it should be done on time. Once you accur debt, you either sink (default on your debt) or swim (long journey to repaying your debt). Defaulting on your debt is the easy way out, which will cost you a lot of time, patience and nerves. Journey out of debt is painful. It is long and filled with determination, frustartion and agony. Debt problem can be avoided by keeping a lookout on these signs.

Readers; Have you ever experienced any of the above signs, which lead you into some form of debt?

Eddie

Tags: Canada, Debt, Debt Ratio, Household Debt, Signs of Debt

My Mid-Year Financial Review 2011

Posted Jul.30, 2011 under Debt

Photo Credit - Paulus Nugroho R - Fotolia.com

It’s easy to lose focus on personal finances. Sorta like walking into an all you can eat restaurant, while you are on a diet. It all looks tempting, so you lose focus of your diet. So far, at the mid-point of 2011, my focus has been the same; Eliminate my debt, while saving some money. I promised to family & friends, close to me, to forget about me when it comes to going out, vacations and shopping for some foreseeable time, while I focused on my goals and in order to spend less money. I was very honest about my goal (to eliminate my debt), even though I did not disclose the amount of debt to everyone.

I started my journey out of debt, the same time I started this blog – November 2010. The About Me page talks about my debt total and How I got into $9,000 debt talks about how I got into this ordeal in the first place. Thus far, its been an amazing journey. I have eliminated a chunk of my debt, saved money, did not incur new debt, have my own custom budget and overall I’m wiser when it comes to money.

Eliminated 40% of my Debt

That’s right! I eliminated 40% of my debt so far this year. That works out to $3,600 eliminated out of $9,000 total debt, in a span of about 9 months. That works out to roughly $400 in debt payments per month. It may not sound like a lot to some of you, but let’s not forget, I do have other expenses to pay for as well, such as a roof over my head, food, car maintenance, gas and everyday life expenses. Even when I started this journey, I was not expecting to be debt free by the end of the year. I knew this was a journey, that may take years, but I was determined then and still am.I will continue to work hard towards eliminating as much as possible of my debt by the end of the year. Keep y’all posted!

Here’s how the remaining of my $5,400 debt breaks down:

$2,800 – Line of Credit

$900 – Credit Card

$1,700 – Student Loan

Savings & Paying My Self First…Finally!

I’ve finally got to understand the feeling of paying my self first. And let me tell you, it feels really good. I used to get overwhelmed at times from all the different bills every-month, while trying to figure out how to save. I simply skipped all of it and don’t get overwhelmed anymore. I made one necessary change – move my self to the front of the line. I get paid first and foremost, before anyone else does. After all, I’m the one who worked hard for the money.

Here’s how my savings breakdown for 2011:

General Saving – $2,100

Emergency Fund – $1,000

RRSP – $1,200

TFSA (Future Investment Acct.) -$900

12% Salary Increase

After 54 working days of salary negotiations, I finally got what I negotiated for. It took roughly 5 meeting of back and forth, before we finally came to the decision. All along, my goal remained the same, the rest of the days was just the waiting game. I was patient, came prepared and stuck to my guns. In the end it paid off and it was well worth it. Not only, did I get the raise I felt I deserved, but we managed to get a better understanding of the overall goal. What my employer wanted out of me and the true value I brought to the company. I know I did not talk much about here, but for obvious reasons. I don’t know who’s reading this blog and I did not want to get ahead of my self. In the end, I’m extremely happy with the result, yet pretty proud of my self for the negotiation, self understanding and patience.

Side Income

I’ve continued to work hard outside of my regular job. Thus far, I’ve earned roughly $5,000 in side income, broken down between Finance Fox, my computer sales/repair business and office cleaning job. I am pretty proud of my side income at the half way point of the year. There still is another 5 months remaining in 2011, so I will continue to work hard towards my goal of earning over $6,000 in side income for this year.

Opportunities are there for the taking. I’m in the process of opening a cleaning business, because other opportunities present them selves, so I figured why not. Keep everyone posted on this in a future post.

Here’s how my side income breaks down:

Office Cleaning – $2,400

Computer Business – $1,500

Finance Fox – $1,100

The Rest of the Year

There are full five months remaining in 2011, which is ample time to do even more damage. Will I eliminate my debt by year end? I doubt it! That being said, whatever my debt amount at year end, I will be proud of my results. This year, there were so many changes, ups & downs so far. I did not solely focus on eliminating my debt this year, but also to become more frugal and wiser with money. I wanted to earn more money and opportunities came knocking. From getting a salary increase, opportunities via Finance Fox and other extra income avenues, they all presented them selves and I’ve taken on each opportunity wholeheartedly.

I plan to eliminate my credit-card debt ($1,200 remaining) by the end of August and my new business venture will give me even a greater opportunity to earn more. It’s been a lot of work so far, the second half will be even more work, but I am ready. I’m not going to lie, this journey has been tough, yet exhausting at times. All the debt trimming, budgeting, virtually no life and working extra jobs, can get the best of any of us. On the other side, this journey out of debt has been nothing short of fulfilling and educating. I feel like a reborn person, in a different state of mind. I can’t imagine who I was 9 months ago, when this all started, but I am totally liking the new me.