Graduated And Clueless » Finances

Get Paid for Tutoring College Students Online

Jeff — Thu, 10 Jun 2010 14:44:23 +0000

Photo Courtesy of IrishViews.com

I was recently introduced to an online service that I wish I had known about in school. It’s called Student of Fortune and it’s a web-based tutoring service for college students to get help with their homework. Anyone can join the site as a tutor and then as you answer questions for the students you get paid. Here’s the description from the company:

“If you’re a student, just post a question you’re struggling with. We’ll send your question to all of the tutors on Student of Fortune, and those expert in the subject will write custom tutorials to teach you how to answer your difficult homework assignment (and others like it). Pick a tutorial that looks good, buy it, follow up with questions until your aha! moment, learn the material, and ace all of your classes! If you’re expert on a subject, write great tutorials to earn lots of money, even thousands of dollars… all for helping students to learn!” – StudentofFortune.com

This business model is very fascinating and seems to be very helpful for both the students and the tutors. If you’re a recent college grad looking to make some extra cash, you could use your knowledge from school to help other students. The top tutors on the site have made more than $70,0000 in the last few years answering questions for students in their free time. Every question you answer has a different dollar amount associated with it, based on what the student is willing to pay. You can search for higher priced questions to answer but you are competing with the other tutors to win the student over. In other words, you will have to market yourself a little and provide quality content in order to make a name for yourself in this niche market to make more money. As a beginning entrepreneur, or simply someone looking to make some part-time cash, it seems to be a viable solution. I wouldn’t bank on this being a full-time tutoring gig, but it takes very little effort to get started and you could add tutoring to your resume.

As a tutor you can pick any question to answer and the questions are divided into relevant categories, similar to college majors. For example, if you have a degree in political science you could help current poli sci students. The best part is that the content you create can be purchased from many students over time, which increases your opportunity to earn more.

If you’re interested in getting started just visit StudentofFortune.com, sign up for a free account, and start answering questions. Who knows, this could be the beginning of a new career path for you.

The Clueless Graduate,

Jeff Sanders
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How to Survive Unexpected Expenses

Jeff — Thu, 13 May 2010 02:22:38 +0000

Photo Courtesy of pedrosimoes7 (flickr)

My wife and I were recently smacked with a $3,000 dental bill. We never saw it coming. One routine dental check-up turned into a near catastrophe that could have completely wiped out our monthly budget and lifestyle. Fortunately, we were blessed with a larger than normal tax refund this year and managed to cover the bill in full without too much hassle. If it wasn’t for the tax refund, we may have faced some difficult decisions. In the past we have faced similar experiences, some we overcame and others we’re still dealing with.

Last summer, just a short time before moving to Nashville from Boston, I quit my job under bad circumstances and found myself unemployed for the fourth time in two years. Not a great track record, I know. This time was different because I was only a few short months from getting married and I was responsible for more than myself. I had debt from Boston I was still trying to pay, new bills from the new apartment, and a savings account that wouldn’t last me more than a couple weeks. At that point, every bill seemed unwanted and unexpected, and I was unable to pay. Needless to say, times were tight. I managed to delay some payments by applying for a hardship deferral, my parents kicked in some, my wife’s parents kicked in some more, and I searched for jobs faster than ever. Within six weeks I was working again and had narrowly escaped major financial turmoil.

How do you respond to bills that come out of nowhere? As a recent grad or someone who recently acquired more responsibility than you’re used to it can be insanely shocking to have bills laying on your desk that are asking for more than your college tuition. Take a look at the advice below and let me know what you think. What shocking financial experiences have you dealt with recently? Tell your story in the comments below.

What to do

1. Smile! This is a Great Opportunity

It may not look like a time to smile, but believe me, if you don’t, you will only drive yourself crazy. Money is obnoxious. It’s essential, but can be very obnoxious much of the time. Don’t get your panties in a twist over a bill. It’s just not worth it. Even if it looks like you might go bankrupt because of the crazy amount of money you now owe, don’t forget to breathe and enjoy the experience. People who go bankrupt survive and usually bounce back smarter than ever before. You’ll have to find the silver lining in the experience and look for every chance to learn a stellar financial lesson you can pass on to others. Donald Trump, Dave Ramsey, Steve Pavlina, George Forman, Willie Nelson, and Thomas Jefferson are just a few successful people who went bankrupt on their way to wealth.

2. Lay out Your Options

What can you do? Get out a piece of paper and write every idea down. Seriously. It helps to get your anguish out of your head and onto something tangible you can rip to shreds later. Why do you think I wrote this blog post? It’s therapeutic. The visual of seeing your options laid out before you will allow you to set aside some of the emotion for a second and actually make logical decisions. That’s the goal. Remove the emotions as much as possible and look at what you can do. Chances are that you know what you have to do and it’s simply difficult to admit it. Writing down your options will allow you to cross everything else off, narrowing your vision to that one option, and forcing you into action. Don’t worry, this is a good thing.

3. Talk to the Right People

Analyze your situation from the perspective of someone who doesn’t care, which will probably be someone you don’t know very well. Find an expert: an accountant, a parent, a friend with a brain, a stranger who has experienced this sort of thing before. Speaking of that, if you would like to email me with your current problem I can take a crack at it. I’m not claiming to be an expert but I do like solving financial puzzles every now and then. The goal is to get a second opinion and some fresh eyes on a problem you may not be able to solve alone.

4. Get Analytical for a Second

Get out the calculator, a pencil, and a spreadsheet: it’s time to do math! More often than not, you will be able to find the money in your budget somewhere to cover what you think you can’t afford. Start cutting the excess out of your life and focus only on the essentials. Things like food, water, shelter, electricity, clothing, and transportation are good expenses that you should keep. Outside of those areas there aren’t too many expenses you simply can’t live without. Also, don’t forget to brainstorm some snazzy ways to make a little extra cash on the side. This may involve a part-time job, a quick business idea, or begging on the exit ramp of a highway. Do whatever matches best with your skill set and time.

5. Switch Your Habits

Bad habits are the result of consistent bad decisions. Bad decisions may not be the cause of your recent financial stress, but they may be hindering your ability to overcome the obvious. Wealthy people faced obstacles, just like the one you’re in, to get where they are. There are countless millionaires who began as beggars, so to speak. Altering your behavior on a daily basis will make the difference between you and the millionaire. Making great choices about your money today will result in you creating wealth tomorrow. Find the spending habits that are weighing you down and cut them. Create positive habits that will draw your closer to the financial success you are pining over.

6. Re-examine the Value of Money in Your Life

The unexpected expense in your life may be the cause of bad luck, random circumstance, or fate. However, many, if not most, challenging financial debacles are caused by poor choices that lead to more poor choices. If the money issue is causing stress, ask yourself why? Why do you care so much? What is it about the money that is making you freak out? Do you have a realistic perspective on money? Do you understand how it works? Could you benefit from educating yourself on money before reacting to the current scenario? Money is simply a tool to barter for goods and services your desire. Find other ways to barter for what you want. Find creative alternatives to attract more wealth in your life. Look for methods to contribute and add value to society that provides a financial windfall for you in return.

7. Plan to be Shocked Again and Again

Yes, you need an Emergency Fund. The reality is that what has happened to you may never happen again, but something else will. It’s a guarantee. You will face unexpected financial burdens over and over in your life, but there is plenty you can do about it. Expect the unexpected. Start a savings account, put cash in an envelope under your bed, pan for gold in California, just create a way to have something on hand to protect against the things you can’t see coming. You won’t be able to save enough for everything, but just save something. As you build your savings you can spend more time finding ways to boost your income and increase the Emergency Fund year after year. The unexpected usually challenging, but it’s always an opportunity for growth.

*Please Don’t Borrow Money

That’s right. I hate debt. I even wrote an entire blog post about it. In the course of you fixing your finances you will not build new positive habits, improve your long-term success, or even allow personal growth if you jump straight to the plastic. Find a way to pay for the bill with CASH. This will sound backwards, but it is better for you to NOT pay the bill on time and work the debt down with cash than to borrow the difference on a credit card and try to make it work sometime in the future when you “figure it out.” The time for figuring it out is NOW. You will not grow unless you make difficult decisions. You will not improve unless you learn something and take action with that knowledge. Borrowing money inhibits your ability to think and completely bulldozes your self-worth because you end up borrowing from Peter to pay Paul. Stop the bleeding as quickly as possible. There. My rant is done. If you completely disagree feel free to throw your opinion in the comments below. I will personally read every one.

Ambitious Goals: What it Takes to Get Rich

Jeff — Thu, 04 Mar 2010 03:51:46 +0000

Courtesy of AMagill (flickr)

I love the fact that many challenges in life have very simple solutions. Becoming wealthy is one of those challenges. I’ll break down the basics of what it takes to get rich and you’ll see very quickly that it’s not as complicated as you thought. It will be hard to achieve, but it’s easy to understand the process.

How to Become Wealthy

1. Maximize Your Income
2. Minimize Your Expenses

Seems simple enough, make a lot of money and don’t spend a bunch of money. You’re probably thinking that spending less seems easier than making a lot. I’d agree with you at first, but most people I know are very talented spenders, including myself. I don’t keep cash in my wallet for one reason, I’ll spend it. It’s harder for me personally to spend money on my debit card but for whatever reason I throw cash around like I have an endless supply. You may struggle with making cash or even with spending it, but let’s explore how to get rich in the most simplistic way.

1. Maximize Your Income

If you’ve ever read a great book about money or talked to a knowledgeable financial advisor they will generally give the same advice: if you want to be wealthy, find a wealthy person and do what they do. Well, I read a great book where I came across a startling statistic. In the book No More Mondays by Dan Miller, there is a breakdown of the millionaires in America and how they reached their millionaire status. I was shocked to learn that less than 1% of all millionaires in the US consisted of movie stars, politicians, pro athletes, and lottery winners combined! About 5% were salespeople and consultants, 10% were doctors, lawyers, or other professionals, and 10% were senior executives in large corporations. However, the stat that really gave me hope was that 74% of the millionaires were entrepreneurs. It didn’t take long for me to realize what my next goal in life would be. I immediately took my business ideas more seriously.

If three-fourths of the millionaires own a business, then I will too. Think about it. If you want to get an A in your class then you cheat off the guy who aces every test, not your friend with the 1.5 GPA. If your goal is to get rich and most of the rich people are business owners, it’s time to work smart and cheat off the rich guy. If you want to take it a step further you can continue to research which types of businesses make the most money, or which ones are easiest to get started with the smallest capital, or which businesses in your area are the most successful, etc. The goal here is to identify what works well for the wealthy and find an easy way to incorporate their success into your own life.

2. Minimize Your Expenses

Not surprisingly, the strategy for minimizing your expenses is closely related to the strategy for maximizing your income. Once again, I read a great book that enlightened me to this perspective. In the book Rich Dad, Poor Dad, the author, Robert Kiyosaki, discusses personal corporations and the tax implications of the rich. He explains how wealthy people own businesses and store their personal assets under the umbrella of their business. Why would someone want their business to be the official owner of their car, house, or other property? One reason is liability protection. If you get personally sued, your property that is owned by the business is almost untouchable.

The better reason is taxes. If you’ve ever created a budget, even a very simple personal budget and listed your expenses from largest to smallest you will almost always see taxes at the very top. This becomes even more apparent as you earn more because you will jump up to the higher tax brackets and owe the government even more money. Knowing that taxes will be your greatest expense means you have one mission, minimize your taxes. The great news here is that there are significantly more tax breaks for businesses than citizens. This is why hiring a CPA to file your end of the year tax return is a must for everyone, especially business owners. A smart CPA may be able to find thousands of dollars of deductions you might have missed because they know the tax codes and how to manipulate the dollars you’ve spent to get some cash back. This is way more profitable than trying to save a few bucks with a credit card cash back offer (read my blog: Finances 101: The Truth About Debt to learn more).

Conclusion

1. Maximize Your Income by Starting a Profitable Business
2. Minimize Your Expenses by Hiring a Great CPA to Do Your Taxes

Obviously, this is a very simplistic view of wealth, but trying to over complicate your finances is never helpful. Do yourself a favor, make a list of your financial goals and brainstorm the easiest solutions to make those happen. Let simplicity be your guide. As always, feel free to shoot me an email if you have any questions or leave a comment below. Thanks!

Disclaimer: I do not have any formal financial education and I am not a certified financial advisor. Every bit of information I have is from personal experience and extensive research on the subject. If you are looking for professional financial advice you should seek a qualified CPA or your own financial advisor. This information is intended to educate and entertain, but is not the final word on the subject.

How to Survive on a Low Budget

Jeff — Wed, 28 Oct 2009 17:39:50 +0000

Photo Courtesy of chego101 (flickr)

What you’re doing now isn’t working. Presumably, you already have some sort of a financial plan in place, but something isn’t right. Maybe you’ve overdrawn your checking account, or racked up a huge bill on your credit card, or you constantly find yourself needing to buy stuff, but you’re broke. You don’t think there’s enough money coming in to cover the expenses that are going out. But how do you know for sure? Is it possible to live on a tiny income right out of school? Can you afford to even make the minimum payments on your credit cards?

If you’re reading this article in search of a solution to actually survive on a low budget, you’ve come to the right place. By following the action steps below, in order, you will be able to accurately calculate how much money you actually have and if you can afford to continue to live your current lifestyle. Take these steps seriously and make a plan today to start on number 1. Every step is important and all of them add up to a life of financial intelligence. You’re going to need it. If you’ve ever tried to pay your own taxes, start a business, or even understand what your insurance bill actually says, it’s complicated. Start the learning process now to ensure a life filled with financial blessings, instead of annoying burdens that ruin your day. Let’s get started!

How to Survive on a Low Budget

1. Stop Borrowing Money

This is the most important step! Seriously, stop borrowing money and slow down on excessive spending. Digging yourself deeper into a financial pit will only make the rest of your efforts futile. If you haven’t already, read my post, Finances 101: The Truth About Debt. This article outlines why debt sucks and how you can live with the cash you earn. Surviving on a low budget means spending less than your make every month, not justifying unnecessary expenses to yourself so you don’t feel guilty. Taking an honest look at your spending habits is painful, so be prepared to make sacrifices.

2. Calculate Your Exact Monthly Income

This should be simple if you have a typical 9-5 job. It gets more complicated with irregular incomes, so let’s do the easy one first. Most paychecks are dispersed about two times per month. Meaning, you can simply add two paychecks together and you’ll have your number. However, be sure to notice what is withdrawn from you paycheck including taxes, 401(k)s, health insurance, etc. You’ll be using these figures later in the budget.

If you’re income varies, meaning you’re in sales, work odd hours, have your own business, work multiple jobs, etc., you will need to calculate your income very closely and use wise future estimates to ensure accurracy. You will definitely need a savings account to use as a backup whenever your income dips too low.

3. List ALL Planned Expenses

This list will be long, and it is very important to be accurate and comprehensive. Make a complete list of every expense you typically have every month. List everything from rent and utilities, to magazine subscriptions and haircuts. This list is especially important for those with really tight budgets or tend to be big spenders. For those with irregular incomes, make a prioritized spending list that you will simply pay in order as the money comes in. At the top should be things like rent, electricity, food, and clothes.

4. Create a Budget (or Download Mine)

Now you’ll get to combine the information from steps 2 and 3, into a comprehensive spreadsheet. You can find examples of budgets everywhere online, but the most basic, which is where you should start, simply lists your income on one side and expenses on the other. At the bottom will be a number that tells you how much money is leftover. You can create your own from scratch, but I recommend using a template or at least doing some research to find one you like and understand. I’ve placed a link above to the template I’ve created. It’s free for you to download and use. If you find it helpful or if you hate it, please let me know. The trick to the budget is actually having one. Most people don’t. If you have one and you actually use it every month, you’ve given yourself a huge head start over most people.

5. Create an Account on Mint.com

I’ve mentioned Mint before and I’ll mention this site again. It’s awesome. Technologically, it’s the coolest money management site in existence. Recently, Mint was bought by Intuit, the creator of Quicken. This means that Mint will only continue to be more comprehensive and capable of handling even the most complicated financial portfolios. You can setup nearly every financial account you have to automatically update with you most recent balances. The financial institutions that Mint doesn’t have yet, which is few, can be manually added as well. In other words, you can get your complete big picture perspective over all of your finances. Mint also added a budgeting section recently, but until it becomes more advanced, you will still need a spreadsheet budget of your own.

6. Download a Digital Checkbook

Old school hand-written checkbooks are out. Digital checkbooks and websites that allow you to predict future expenses are the way to go. If you own a Mac, which I am prone to recommending every day of the week, you should get MoneyWell. It’s the one I use over Quicken or any other more advanced checkbook because it’s simple. That’s the point. If you overcomplicate your money you will only confuse yourself. Don’t upgrade to advanced financial software unless you have to, which most people don’t. If you own a PC, resist buying Quicken, unless you’re over 40. Otherwise, check out this website for a list of a bunch of great choices.

7. Organize Your Bank Accounts

For ease of use and to help automate your money, there is a simple way to organize your bank accounts that will help keep you on top of your money without having to monitor every transaction like a cracked-out accountant. First, find a bank you don’t hate. Big banks are good for online banking, which is why I recommend them, but they are prone to terrible customer service. Smaller banks are usually very easy to work with, but are so behind technologically that it’s very difficult to keep up with the latest financial trends. Pick your bank and then open 2 checking accounts and at least 2 savings accounts. The first checking account will be your main checking, the one you carry a debit card for and spend from daily. The second checking account will be your Bill Pay account, where every regular expense will be automated from (more on this in step 8). The first savings account will be your emergency fund where you should have at least $1,000 and this money will ONLY be spent in the instance of actual major emergencies. The second, third, and other savings accounts will be for specific items you want to buy (house, car, iPhone, etc.). I also recommend HSA’s, health savings accounts, because you can make pre-tax deposits and use the money for all your doctor’s bills and prescriptions.

8. Automate 80% of Your Money

Here’s where your work will really start to pay off. Automation is the name of the game when it comes to making money management easier. Using your Bill Pay checking account, you should have every regular income and expense automatically deposited or withdrawn from that account. This includes direct deposit from paychecks, savings, tithing, giving, rent, utilities, cell phone bill, loan payments, credit card payments, 401(k)s, insurance, subscriptions, and any other payment you make throughout the year that could be paid without you having to manually write a check or make an online payment. Then, the money leftover should automatically be transferred to your Main Checking account, for you to spend on stuff you can’t automate, like gas for your car. With this system in place, you will have fewer decisions to make and you will literally be telling your money where to go.

DANGER: make sure you’ve made every effort to be accurate – if you automate your account with too many expenses, you will inevitably overdraw your account every month. Be careful and have someone else check your figures if you need it.

9. Find Cheaper Ways to Live

At this point you should have made many discoveries about where you’re money has been going and where it ought to go. If you haven’t already, you should find expenses in your budget you can cut completely, forever. Other items you should be able to make cheaper, like groceries or shopping sprees. Learning to tell yourself NO! will be the hardest lesson you’ll have to learn. It sucks, but it has to be done. Otherwise, you’ll find yourself spending more than you earn, digging your hole deeper and deeper, and not realizing until it’s too late. The greatest benefit of going through this process is learning to change your habits. Learning to think differently. Go through the motions and you will certainly make a positive impact on your life very quickly.

10. Live on the Money that’s Leftover

Assuming you have set up the automatic transfer to your Main Checking account, there should be a small amount of money you get to live off of. The coolest part about this account is that there is a finite amount of money, meaning you don’t have an endless supply like most people think when they use credit cards. Throughout each month you will be spending your money, knowing where your balance is on any given day, and only spending your money on the items you’ve pre-determined to be acceptable. Now, don’t forget to include some flexible spending money so you can go crazy once in a while. You need to have flexibility because money is always moving and you need to break from the structure occasionally to stay sane.

11. *Don’t Stop There* – Keep Reading!

Seriously, start or continue to read about money. If this is the first article you’ve ever read about money management, you’ve just begun a lifetime of learning that should include many more blogs, books, seminars, classes, discussions, and other forms of learning that will teach you about money. If you’ve ever dreamed about becoming a millionaire, or even just being financially stable, you need to teach yourself how money works and how you can best use it to reach your goals. Money is a tool to be used to accomplish the things you want in life and if no one has ever taught you about it before, the responsibility is now on your shoulders.

ACTION STEPS

After you finish reading this blog I want you to do 2 things. First, start on step 1: Stop Borrowing Money! Second, buy a book about money and begin to teach yourself how to live differently. I recommend reading The Total Money Makeover by Dave Ramsey and Rich Dad, Poor Dad by Robert Kiyosaki. There are thousands of other financial books out there, but these two can give you the foundation you need to get started today. You’ll also notice that most of the lessons I taught in this blog come directly from these two authors. If you have any questions about what I mentioned here please feel free to contact me. I’d be happy to answer any questions or field any comments you may have. Good luck with your budgeting and stay positive!

Finances 101: The Truth About Debt

Jeff — Mon, 28 Sep 2009 14:52:50 +0000

Photo Courtesy of Andres Rueda (Flickr)

I’ll be as transparent as possible in this article and state my position right up front: I hate debt. (I’m usually a very positive person so this is kind of difficult to be so negative – Please bear with me!)

I don’t like paying interest. I don’t like borrowing money. I don’t like the idea of creditors calling me asking for money. I don’t like tailoring my spending habits to increase my credit score. I don’t like pay-day check-cashing businesses. I don’t like excessive credit cards offers in my mailbox. I don’t like borrowing $100k to go to grad school . . . you get the idea.

So what’s the deal with debt?

To put it simply, debt is dumb. You can thank Dave Ramsey for that statement. Now, to back it up, I have 7 truths about debt that should shed some light on why I’m so passionate about this subject. If you can’t tell already, this is one my hot buttons. I don’t have many, but when it comes to talking about debt, I really can talk about this stuff for hours. So let’s get started!

Disclaimer: I do not have any formal financial education and I am not a certified financial advisor. Every bit of information I have is from personal experience and extensive research on the subject. If you are looking for professional financial advice you should seek a qualified CPA or your own financial advisor. This information is intended to educate and entertain, but is not the final word on the subject.

Truth #1: Debt is a Liability, not an Asset

There is no such thing as good debt. ALL debts are liabilities, meaning you are responsible for paying back all of them, in full, on time, every time. Assets on the other hand, are valuable possessions that you own, in full, all the time. If you’ve ever read the book Rich Dad, Poor Dad, or heard the author, Robert Kiyosaki, speak about finances, he breaks down our economic classes in a very interesting way. He states that the poor have bills, the middle class have debts they think are assets, and the rich have investments. The differences here really are astonishing. The poor tend to stay poor because they believe they will always be poor. The middle class tend to stay middle class because they can never break the cycle of debt they continually spiral themselves into. The rich tend to stay rich, for the most part, because they own property, real estate, investments, stocks, and businesses that provide them with passive income to supplement their lifestyle. To put it simply, debt is not valuable, it is a deterrent to wealth.

Truth #2: Wealthy People Don’t Have Debt

As I mentioned, the middle class tend to be the ones carrying the bulk of the weight when it comes to excessive debt. The problem here is that individuals tend to borrow in extreme excess of what they can actually afford. Wealthy people don’t have debt because they know that spending beyond their means will drag them down. Their ability invest wisely is jeopardized if they have a bill hanging over their heads that they’re struggling to pay off. Bottom line: if you want to be wealthy, you have to act like a wealthy person. Check out This Article on the spending habits of millionaires if you’re curious as to what I mean. To break it down, don’t spend money on something you can’t afford to pay for in cash, right now.

Truth #3: You CAN Live Without ANY Debt (And You Should)

So far I haven’t told you to never have any debt, but I will say it now. Don’t borrow money ever again. Whooo! That’s a bold statement. For most of you reading this you probably have at least one credit card in your pocket, a student loan or two, maybe even a car payment or mortgage. Even worse, you may have all these things. I’m here to tell you that IT IS POSSIBLE to live without any debt, ever. What this means is that after 7-10 years your credit score (FICO score) will become zero. This is a great thing, because a credit score measures how much debt you have and how well you pay it off. Without any debt, your score will be zero and you could quickly become one of the wealthiest people in the world. You will become wealthy because you will have the opportunity to build up massive amounts of money without having to stop and pay a fee to your bank every step of the way. I’m sure I raised more questions here than I answered, so for more information about living debt free check out my greatest influence, Dave Ramsey.

Truth #4: Funding 401(k)’s While Paying Off Debt is Counterproductive

Retirement savings is a good thing. Putting money in a simple savings account for future purchases is a wise decision. However, if your goal is to put money away for future use and you’re making small monthly payments on all those debts you’re carrying around, you’re really getting no where. The trick here is to pause your investing, and focus that money on paying off your debt quickly. This will reduce your monthly payments, the total interest you would have paid, and your overall balance. After you’re debt free, you can resume investing, and this time around you will have a lot more money available to save up because all the debt payments are gone. Add up all the money you spend every month on house payments, car payments, credit cards, and student loans. Now imagine if that total was being transferred to your savings, and not to the bank. It’s a bigger number than you think.

Truth #5: Student Loan Debt is Not Bankrupt-able

I mentioned this fact in a previous blog post, but it’s true. If you run into massive financial trouble in the future and you make the decision to file for bankruptcy, you will still owe every penny on your student loans. This may not be so bad if you borrowed a small amount for your public undergrad education, but it’s a mountain to climb if you went to a pricy private or graduate school. My point here is that debt is a liability. It follows you around and haunts you until you get rid of it. In many cases, you could find yourself getting behind in your payments and wind up with creditors calling you every night and harassing you for the money. Don’t go there. Just pounce on the debt today and avoid the hassle.

Truth #6: Debt Consolidation Does Not Equal Debt Elimination

Some of you may find yourselves wanting to tackle your many debts by simplifying the mess. With debts owed to multiple credit cards, cars, houses, etc., you might consider a debt consolidation, which would give you one large debt and one monthly payment. Though financially this is a simple solution, and may actually lower your monthly payments, it does not change the core of the problem, which is your spending habits. You have to change your daily behavior to change your future. This is true for many parts of life, but it’s especially true for your financial health. Learning to control your impulse purchases, saying no to dessert, buying a $2 coffee instead of a $7 latte, and many other small steps will get you started. You then can upgrade to larger decisions, like saving $2,000 in cash to buy the computer of your dreams instead of just throwing it on the credit card because you have to have it today! At this point I probably sound like a nagging parent, which is not my goal. However, it is my goal to help you make smarter choices and accomplish great things. These steps can help lead you there.

Truth #7: You CAN Get Out of Debt, No Matter How Much You Owe

Paying off debt is like training for a marathon. Sound familiar? It requires discipline, a thorough plan of action, and extreme persistence through every obstacle. What will inevitably happen is you will run into financial hurdles that will hinder your ability to pay off what you planned. That’s why it’s important to plan for the worst and hope for the best. Create a savings account that will act as your buffer to tackle those unexpected expenses. Personally, I’ve been working off my debt for 2 years, and I still have a long way to go. It’s a hard road, but because I’ve completely stopped borrowing money, and I have a plan in action, I’m making significant progress that otherwise would not exist. I will end up like the wealthy people I described earlier because I have a plan I know will work. It takes some guts to set goals that sound that far-fetched, like being a millionaire before I’m 30. But that is seriously one of my goals. The best part is, even if I don’t actually get to the million marker, I will be incredibly closer than if I had never tried. Financial goals are no different than any other goal in life. Make a plan, get serious about it, ignore the critics (they are always there), and just make it happen! It doesn’t get any simpler than that. Well, you could take some advice from Nike, Just Do it!

Good luck on all your financial goals and stay positive! Don’t forget you can always contact me with ANY of your questions, comments, or feedback. I’d love to help wherever I can. Thanks!

Resources

Basic Budgeting

Jeff — Tue, 30 Jun 2009 22:27:47 +0000

Photo by Jeff Sanders

Salad dressing is not necessary. Grocery stores carry dozens of varieties of salad dressing and probably a thousand different flavor combinations within each variety. Why do we eat salad dressing? Simple. Because eating dry green leaves off our plate is basically the same as eating it right off the plant. Salad dressing is a buffer between people and nature, and we like it. We like it because it soaks our taste buds with fats, salts, and sugars in extreme excess, far beyond what a boring dry plant can provide. But the question remains, is salad dressing necessary? I say no. Like most things we buy, salad dressing is frivolous, yet we justify paying for it all the time. Most people would never consider salad dressing excessive or unnecessary, because it’s standard, it’s tradition. However, when it comes to managing a tight budget, eating a dry plant may become your new tradition.

The Basics

It breaks down to one simple statement: live on less than you earn. It can’t be an easier than that. If you can’t afford to pay for it today, than you can’t afford it. Now, some may argue that last statement. Some may try to find loopholes, such as, “I get paid on Friday, so if I charge this TV on my credit card today, I can pay it off when the paycheck arrives.” WRONG. You don’t need the TV and you don’t have any money. It’s a double wammy. Think of the TV as a huge 10-gallon jug of salad dressing. Why would anyone ever need that much dressing? No one ever would. But let ‘s imagine how someone could justify this kind of purchase. “I love salad dressing and I use it at every meal. I have a huge refrigerator that can hold my 10-gallon jug and I plan on consuming so much salad dressing that it’s way cheaper to buy this than to buy small bottles every week. And hey, it’s organic, so it’s healthy, right?” Excuses are easy and rationalizing or justifying purchases can make us feel a lot better about poor decisions, but it doesn’t mean it’s the right choice. Most of the time, doing what’s easy is not the same as doing what’s right. Now, I’m not saying that buying salad dressing is evil or a waste of money. It’s an example of the human brain in action. So, how can you live on less than you earn and make great decisions along the way? Read on.

The Budget

It all comes down to income and expenses. Even if you live with your parents, a roommate, a bunch of roommates, or completely on your own, budgeting is as simple as keeping your income greater than your expenses every month. If you don’t already live on a budget than now is a great time to start because you will see immediately where changes can occur in your spending habits. One great tool for this is Mint.com. I highly recommend this site because they monitor ALL of your accounts automatically and let you set up a digital budget on their site that stays up-to-date based on where your money went. However, don’t rely solely on their site to keep yourself in-the-know because you can’t predict future transactions to see if you’ll have enough money for bills before your next payday. You’re going to have to set up a budget and a checkbook on your own to get the complete picture. You don’t have to use the old school checkbooks you get from your bank. I recommend using a digital checkbook system such as MoneyWell or Quicken. These software packages allow you to see all of your money, where it’s gone, where it is today, and where it will be tomorrow. This way you can actually see the exact day your account goes below zero. Or, on the flip side, when you make your first million.

Get Started Now

The process of figuring out your money begins today. You can set up an account on Mint in 5 minutes, you can start a checkbook in 30 seconds, and you can setup a budget tonight after dinner. All you’ll need to know is how much you bring in, and EXACTLY how much you let go. Living on a tight budget is hard, because it forces you to tell yourself no. You’ll most likely realize very quickly that you can’t afford to go the bars as often, or buy new clothes, or take vacations, or even buy expensive salad dressings. Your tendency may be to borrow the difference in the beginning, but I urge you not to. Don’t rely on plastic to save you. Take a good hard look at the budget and find expenses you can cut, to make room for the stuff you really want, or need. Either way, get started today and let the numbers guide you to a more successful future!