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Debt Management

The One-Page Financial Plan Book Review

By //  by Sherrian Crumbley

I enjoy learning and discussing personal finance. The day-to-day things like budgeting, credit decisions, debt repayment. Where I start to get a bit intimidated is matters of investing. So, I admit, when I learned that The One-Page Financial Plan was written by financial planner, Carl Richards, I was a bit apprehensive about reading it.

Once people start talking stocks, bonds, derivatives (blah blah blah), I totally shut down, and I had no clue how to avoid the ‘shut down’ when I have to review the book!

I think I spent a few days just poking it with a stick. Once I finally got over my fear of touching it, upon a quick glance, the first thing that stood out to me was that One-Page Financial Plan was around 200 pages long. That alone made me feel a little less intimidated.

Also, as I flipped through the pages, I noticed there were a lot of very simple sketches and some on napkins (Yes – even less reading) and I felt even a little more comfortable taking it on.

One-Page Financial Plan Book

What was really helpful was actually reading the books tagline: A Simple Way to Be Smart About Your Money. As I read through the pages, the one thing I felt very confident about, is that the author delivered on the tagline.

The author says:

My goal in writing this book is to pull the curtain back a bit: to show you how real financial planning works, to give you an experience of what it’s like to work with a real financial advisor. Whether you’re working with an advisor or on your own, this book will help you understand the basic steps for creating a personalized plan that takes into your account your unique values and goals.

One-Page Financial Plan Review

Boy was I pleasantly surprised and never more happy to be wrong! It is evident from my fear that I had no idea how real financial planning works … I mean, they don’t just start talking about stock options? Firstly, I really like the author’s writing style. It is very simple, making the subject matter approachable.

Secondly, he does a great job of walking the reader through the steps of making an individualized  financial plan without making it seem like a rudimentary to-do list. Each step is wrapped in relevant stories and makes sure to delve into the reasoning behind making choices.

In One-Page Financial Plan, the author talks about his own financial missteps, and I really appreciated the humility and openness. And I have to tell you, he does eventually get to the bad ‘i’ word – investments, and it wasn’t painful! I didn’t scratch my eyes out and I didn’t just close the book and figure I’d ignore writing about it in this review.

Just like the rest of the book, what he does share is done in such a way that anyone can understand. It wasn’t bogged down with jargon and really helped me to feel more confident with investments going forward. Also, he doesn’t tell you what to do, but he does give the reader really good guidelines to do what’s best for their unique situation.

One-Page Financial Plan – Takeaways

A couple of things I learned:

1. It is important to know why money is important to me. (And not in a generic way, but to really get to the root of it)

2. I want to make sure my values and my goals align. It’s clear to me know how those bump up against each other in my life.

3. As with everything else … as we’ve always known … discipline is key.

If You Need Some Guidance

A lot of times, in areas like finances, the problem is that we know we need to get to point B but we just need some guidance to get there. For anyone, in any financial state, One-Page Financial Plan will help you to do that. After reading it, I felt like some of the jumbles in my mind got sorted out. I guess that’s what a financial advisor is supposed to be able to do for a client. Mission accomplished.

 

Carl Richards Carl Richards is a CERTIFIED FINANCIAL PLANNER™ and the director of investor education for the BAM ALLIANCE, a community of over 130 independent wealth management firms throughout the United States. He is the creator of the weekly Sketch Guy column in the The NY Times, and a columnist for Morningstar Advisor. Carl has also been featured on Marketplace Money, The Leonard Lopate Show, Oprah.com and Forbes.com.

Filed Under: Reviews Tagged With: book review, Debt Management, money, Personal Finance, retirement

Debt Is Not Forever

By //  by Khaleef Crumbley

I have talked to hundreds of people about the topic of debt and their plans to pay it off. The one thing that I have found is common among most of them (probably 95%) is the belief that they will be in debt until they die, and all they can do for now is manage it.

I cringe every time I hear that type of thinking, because it implies that you are fine with living as a slave to your creditors with no hope of escape!

Debt Is Not Forever

My wife and I have been greatly impacted by our debt. I know what it’s like to feel like this is a normal part of life, but it isn’t. There are many reasons why I hate the attitude that our lives should be funded by debt and we shouldn’t work to get out of it, but here are three that really hit home for me.

Debt is not Forever

The Purpose Of Debt

The main purpose of debt is generally to buy something that you can afford, but don’t have the money at the moment. For example, let’s say that you have to buy groceries on Monday but you don’t get paid until Friday. A “good” (obviously, this is somewhat subjective) use of debt would be to buy your normal groceries on Monday using a credit card, and then paying that amount back on Friday when you get paid. Of course, there are other ways to handle this (moving money from savings would be ideal), but you get my point.

Another responsible reason that people go into debt is for an investment. If you are fairly certain that the rate of return on an investment will be greater than the rate of borrowing, then taking on debt in order to make or increase an investment may make sense.

The idea of investment doesn’t just mean stocks and bonds, but it also can mean an education, healthcare, or anything else where the return is greater than the cost of the debt.

Because of the short-term and strategic nature of debt, it is inconsistent with sound financial living to stay in debt for life, being satisfied with losing money month after month. Therefore, debt is not forever!

[Learn 4 benefits of using credit cards!]

The Bondage Of Debt

I’ve written before about the terrible bondage/slavery associated with debt. I am not able to do most things that I want to because of the cloud of debt which hangs over my head. Because so much of our paycheck goes toward debt repayment, we can’t just fly down to visit my wife’s parents whenever we want, for instance.

We would love to have a 2nd car so that my wife could take care of things and/or visit people during the day, but our master (debt) won’t let us. The same is true about our giving to church, investing, and even building up our business – we want to be free to pursue our ambitions/convictions in these areas, but then ‘Massa Debt’ tells us NO!

Because being in debt can, in many ways, be compared to being imprisoned or enslaved, it is unwise to take a cavalier approach to borrowing and owing money. To go through life never knowing the joy of financial freedom is a fate that many people accept, but you don’t have to be one of them! Tell yourself that debt is not forever!

The Testimony Of Debt

Even though a large amount of Americans have debt and many accept it as a normal, unavoidable part of life, they still look down on someone who has it. A person with massive debt often appears to be irresponsible, lazy, and undisciplined.

Oftentimes, it isn’t even a deliberate association, but more of a deep-rooted subconscious thought. Having debt – especially for a long period of time – makes it seem as though you are immature, and unable to fight the impulse to spend money that you don’t have.

Because of this, people with long-term (or excessive when compared to income) debt are turned down for financial opportunities, employment, and even places to live. You don’t want to live your life with that stigma hanging over your head. That’s why we have to live life as if debt is not forever!

What About You?

  1. What is your attitude concerning debt? Can you honestly say that debt is not forever?
  2. Are you prepared to live the rest of your life in debt or are you fighting to pay it off?
  3. If you have paid off your debt, what were some of the things you did to change your mindset?

This post is part of the debt is not forever movement started by Jackie at the Debt Myth. She is also holding a giveaway through the end of the month, so make sure you head over and tell her why you want to get out of debt, for a chance to win!

Filed Under: Debt Management Tagged With: debt, Debt Management, Personal Finance, personal finance advice

This Is Why I Hate Debt and Sher’s Blog Medley #2

By //  by Sherrian Crumbley

It’s my fault. I am the one who relied on credit in the first place, therefore giving my lenders the power to determine my “worthiness”.

The other day, I got a letter in the mail saying that one of my creditors lowered my credit limit. They didn’t do it because I have been paying late (I have never ONCE in my adult life had a negative item on my credit report), and it’s not because something changed drastically regarding my credit.

They decided that I have too many cards that are close to the limit, so their solution is to lower my limit to right above what I owe them 😯 .

As a result, my credit score will be lowered.

I am upset about it, but as I stated in the first place, I am the one that put myself in this position. That’s why we are fighting so hard now.

The hard part about it is the emotional side. When I first opened the letter I was fuming, and Khaleef had to calm me down. I hate feeling de-valued. I hate feeling unworthy. Most of all, I hate giving someone/something else the ability to make me feel like that!

Debt Slave

When it comes down to it, I am striving to get to the point where my credit-worthiness will be the least of my concerns. Right now, it isn’t a big deal because we aren’t relying on a score for anything; but in the back of my mind is the idea that I could need a good score for some reason, and I want to make sure it is there.

I have considered calling the company and venting my frustrations, but the fact is they don’t OWE me anything. I am the one that became a slave to them, and now I am bound by what they say.

If you’ve ever let your debt affect you on a mental or emotional level like this, it’s time for us to liberate ourselves. Let’s work hard, fight hard, sacrifice, and stay committed so we can be free.

Now unto the great posts that hit the right notes throughout the past week!

Blog Medley

Lisha from UpGusto explains how our beliefs control our circumstances. This is a really motivating post that will get you up and moving on some of the goals you haven’t been actively pursuing.

Barbara gives us some tools and insights so you can decide if working part-time is best for your situation. A lot of my friends have small children, and this article hits many of the points they’ve considered.

Travis from Enemy of Debt writes about combining finances successfully after getting some flack feedback because he checked with his wife before a purchase. I always appreciate what Travis shares about marriage and finances since he seriously rocks in both areas!

H.D. Carver from Your Finances Simplified addresses the challenges Millenials face in saving for retirement. Social Security may not exist by the time they reach retirement age, and it is important to put a plan in place.

Eva from Teens Got Cents navigates the differences between a credit union and a bank. I agree with her that credit unions do offer benefits you won’t get at a larger bank.

 

I hope you enjoy the posts and the rest of your week 🙂 !

 

 

 

 

 

Filed Under: Debt Management, roundup Tagged With: Credit Cards, credit limit, credit score, credit worthiness, debt, Debt Management, roundup

Extreme Ways to Clear Your Debt Quickly

By //  by guest

[The following is a guest post discussing a few extreme ways to pay off your debt.]

Skipping your morning Starbucks and quitting eating at restaurants won’t clear your hefty amount of debt. It is possible, even if you owe tens of thousands in debt repayments, to get out of debt within a year or two, but it will require some life-changing sacrifices.

Here are some of the most extreme yet effective things you can do if you’re serious about clearing your debt quickly.

Debt Extreme

Sell family heirlooms

If you’ve inherited valuable family heirlooms, such as jewelery, now is the time to cut your sentimental ties. It may be harsh and ruthless, but imagine what your late grandmother would make of your current financial situation.

She would probably advise you to sell that old jewelery box full of her past treasures and clear your debt so you and your family can live happy and stress-free lives.

Get rid of your second car

Or both cars, if you’re really serious. If you absolutely need a car, then sell yours for a model with a smaller engine so you can save on fuel and insurance. If you have two cars, then you should at the very least get rid of one. Seriously consider whether you really need them both. Are there ways you can get around having just one car, or not even owning one at all?

If you live in an area that’s well connected in terms of public transport, or has a lot of amenities within walking distance, now is the time to sell your car. It’ll take a huge chunk out of your debt and dramatically reduce the time it takes you to clear it, so it’s something you really need to consider.

Downsize your home

Moving house into something much smaller and cheaper is perhaps the most extreme step you can take towards getting out of debt. A quick sell will provide you with cash, so you can buy a much smaller house outright with money to spare. The spare money can be used to repay some of your debt, whilst the money you’ll save on monthly mortgage repayments will also contribute to paying it off.

If you’re not quite at the stage of desperation to consider these extreme methods, then you need to take steps to ensure your debt doesn’t spiral out of control to the extent that you end up having to implement our tips. To find out how you can start managing your debts, check out this website for some expert advice.

photo credit: Freedigitalphotos.net

Filed Under: Debt Management Tagged With: debt, Debt Management, debt repayment, extreme, sell house, sell second car

How to Negotiate With Collection Agencies

By //  by Kevin M

If you have one or more outstanding collection accounts you’re not alone. With unpaid medical balances becoming more common (higher deductibles, uncovered expenses, etc), and bankruptcy more difficult to file since the 2005 Bankruptcy Reform Act, more accounts are slipping into collection than ever. Can you learn how to negotiate with collection agencies?

You can’t make them go away – not until you pay off the accounts they’re collecting on – but you can keep them at a reasonable distance. You’ll need to do this for a while, at least until you are in a position to settle the accounts once an for all. Here are some ways to do this.

Collection Agencies: Don’t Engage Them!

Here’s a tip that will save you a lot of time and anxiety, even if it won’t make the collection agents go away entirely: don’t engage them at all! That means that you don’t accept or open any mail from them, nor do you speak with them on the phone. A collection agent’s job is to harass you into paying your debt, and they will not leave you alone until you do. Anytime you open a letter or accept a phone call, you are inviting harassment into your life. But you are under no legal obligation to do so.

You already know that you owe the debt – the collection agent’s barrage of phone calls isn’t going to make you pay it any sooner. In fact, it could very well have the opposite effect. At some point, they will almost certainly threaten you with legal action – most of which is an empty threat. But they will do it because they know that some people succumb to it.

By “getting under your skin” – and doing it constantly – collection agencies only succeed in wearing you down, sapping your ability to come up with the money to pay the bill at all.

Your job in the arrangement is to make sure that that doesn’t happen. You need to keep your head clear – and clear of the collection agent – so that you can concentrate your full efforts on saving up the money that will make them finally go away.

Don’t Talk To Them Unless You Are Ready To Settle

The only time that you should consider taking a phone call from a collection agent, or even opening up a letter from one, is when you are finally in a position to settle the account. Any discussions that you will have with them before you’re in this position will be completely meaningless.

When you are in a position to settle, you’ll need to go on the offensive. The collection agent will attempt to get every dollar out of you that he possibly can, so the threats may continue even as you attempt to settle. Ignore the threats, and familiarize yourself with the Federal Trade Commission’s Federal Debt Collection Practices Act, or FDCPA. Your knowledge of federal law will force the collection agent to behave, as their ability to collect on a debt is specifically limited by the law.

By the time you are ready to settle, you should make sure that the exchange proceeds as a negotiation between equals. Never allow yourself to be intimidated by the collection agent. If you are, the entire process will only go worse for you.

Be Ready To Make A Partial Settlement

Part of the reason why you will avoid any contact with the collection agent until you’re ready to settle is so that you can allow some time to pass between the time the collection agent gets the account and the time you actually settle.

The longer that a debt is outstanding, the more negotiable the collection agent is likely to be. This is because collection agents are essentially commissioned salesman. They don’t make any money on a collection until the account is paid (which should help you to see why they like to harass people).

If months or years pass, the collection agent is likely to greet any offer by you with enthusiasm. You can use this to your advantage and offer to settle the account for less than the full amount. If the amount of the collection is $10,000, and you have $5,000 to settle the account, you start by offering very low number, such as $2,000.

The collection agent will always scoff and declare the first offer to be “impossible“. That is part of the negotiation game, and since you are prepared to go higher you’re in an excellent position to press your case. It is entirely possible that by starting at a lowball number, you might end up settling for say $4,000, even though you are prepared to pay $5,000.

Why would the collection agent accept 50% or less of the debt? It’s the old saying, half a loaf is better than none. No where is that saying more in play than the collection business. The original creditor has already pulled out of the process – that’s why the collection agent is there in the first place. But many debts placed for collection never settle and simply go cold and disappear. Collection agents are aware this, which is why they are usually settled for less than the full amount.

Never Send Money Unless You Get An Agreement In Writing First

This point is absolutely critical – never sent any money to a collection agent unless you have a written agreement that the payment settles the account in full, or that it represents your complete understanding that an agreed-upon payment plan will in fact settle the account in full.

Don’t drop the ball on this step! Collection agents will use every tactic available – ethical or unethical – to get as much money out of you as possible. Never accept a collection agents verbal agreement as it is not legally enforceable. Have the agent email, fax or mail (preferred method) the written agreement before you send any money. The written agreement should not only spell out the terms of the settlement, but it should also specifically reference the debt in question as well as any account numbers connected with it, and be signed by the agent or his superior.

Also get an agreement from the collection agency that it will remove the collection from your credit report from all three credit repositories. You’ll want to get this agreement in writing as well, so that you can send it to the three credit repositories (Trans Union, Experian, and Equifax) in the event that the collection agency fails to do so.

Have you ever settled with a collection agency? How did work out for you?

Filed Under: Debt Management Tagged With: collection agencies, collection agency, Collection Agent, Collection Practice Act, collections, credit history, debt, Debt Collection Practices Act, Debt Management, debt negotiation, Fair Debt Collection Practices Act, Federal Debt Collection Practices Act, law, Negotiating With Collection Agencies, Personal Finance, Settle, Settle Your Debt

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