Life based on reality

Live your financial life based on reality. You can fool everyone else with “stuff” but you can’t fool yourself or your calculator.

Following the rule that income minus outgo is what you have to spend. Writing down what you spend. Planning what you are going to spend. Owning all you have outright.

These are status symbols that matter. Don't get caught up in the fake symbols others see.
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Life insurance

Life insurance needs to cover only your individual situation. Don’t be talked into buying more than you really need should something happen to you.

If you live your life using good financial sense, by the time you reach your 50’s you won’t need life insurance at all. You will be self-insured by then.
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No they weren’t

How often do you say to yourself, “Things were different moneywise way back when?” No they weren’t.

I get my advice from Grayhairs and Millionaires, neither of which talk about getting rich from credit card company schemes, from leased cars, or from interest-only mortgages that work out only if the house goes up in value.

No, Grayhairs and Millionaires talk about not spending what you don't have. Pretty simple, really.
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Home and student loan

I didn't say never get a home or student loan. What I said was neither loan needs to be around forever.

Too many people put off owning their education or homes. Maybe it is because no one ever told them it's ok to own both outright.

Attack the student loan right after graduation and be sensible when buying a house. Neither loan was designed to be with you forever.
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Christmas is 10 months away

Christmas is 10 months away. It happens the same time every year.

If you start today putting $30 a month into a savings account you will have $300 to spend for Christmas. If you need more than that you put aside more.

Remember that Christmas is not about how much money you spend on each person. Next December it is not okay to use a credit card just because it's Christmas. Start planning today!
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Health insurance

The last thing you need on your mind in a doctor’s waiting room is how to pay for whatever comes next.

Health insurance is a must have, and having money set aside for services not covered by insurance allows you to focus on your health, not the cost of getting well.

Health worries combined with money worries only impede the healing process.
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Profit

The whole purpose of lending money is to make a profit from that act. It takes someone like you borrowing money to make this business plan effective.

Refuse to participate in this business model. Credit cards, car loans, store cards are the tools businesses use to get you to overpay for things. Don’t play into their hands.

It's the game of business trying to get your money. Who is winning in your life?
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Paying cash

You should set the best example possible for your kids. Paying cash in front of them is a good start.

Teach your children early that money really is something that takes work to acquire and work to keep, and that once it is spent that particular dollar is gone.

It's hard to reinforce this belief, however, if the kids see the same old credit card being pulled out again and again.
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Missing the days

I have yet to hear a debt-free person talk about missing the days of being in debt or talk about wanting to get back into debt.

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A little bit of effort

Don’t ever pay for something you can get for free or with a little bit of effort. Scholarship lists come to mind.

Be very wary of those soliciting your business. Many times they are selling information that is available to you if you put forth an effort to look.
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Cash out and pay down

Don’t cash in a 401K, or any other retirement fund, early. You can kiss 40% of your money goodbye.

However, it makes little sense to keep a non-retirement account around if you have debt. Cash out the non-retirement account and pay down your debt. Any loss you take by doing so will be negated by the gain you make by paying on your debt.
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You are responsible

You are responsible for showing your kids how to have it better than you had it. You are not responsible for financing their over-the-top lifestyles or buying them out of their problems. You aren't helping them if you do.

What lesson will they learn if Mom and Dad keep rescuing them? They'll learn that Mom and Dad will keep rescuing them and milk it for all it's worth.
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Promise yourself

Promise yourself that you will never use a credit card again. After that it’s pretty easy to take a pair of scissors to them.

Cash is your best defense against what life throws at you, not a piece of plastic. Build an emergency fund to ward off life's problems and remove those credit cards from your life.

Make a vow to never borrow money again . . . ever!
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I cannot tell a lie

I cannot tell a lie. Debt is dumb!

Happy Presidents Day!
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Stop being selfish

Keeping your family in debt is not a good Valentine's Day gift. Show them how you really feel and begin to get them out of debt today.

Stop being selfish. If you and yours are in debt, you are limiting your family's options and putting their future in danger. Change your behavior toward debt and your family will be changed forever.



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Do it today

If you pay down a 20% credit card you make immediately 20% on that investment. Do it today.

Too many worry about returns on investments when they have debt. If you have debt every dollar you pay against that debt is an immediate return on that dollar equal to the interest rate of that debt.

This is the only investing you should be doing if you're in debt.
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Paycheck to paycheck

Remember, seven out of 10 households live paycheck to paycheck so you probably won’t find many people who agree with this calendar’s intent.

I'm struck by the fact most people want to be debt-free and talk a lot about getting there. Yet studies show that 70% of the population lives check to check, carries an average of $9,000 in credit card debt, and doesn't budget.

Which are you going to be from this day forward?
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Debt is debt

There is no such thing as good or bad financial debt. Debt is debt. While deducting loan interest may help a bit come tax time, you are still slave to the lender until you pay it off.

Home loans and student loans are the only acceptable loans as both are taken on assets, a home or you, that will appreciate in time. However, don't be lulled by the interest rate deduction or keep either of these debts forever.
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Emergency fund

An emergency fund is three to six months of living expenses in a separate never-to-be-used account. This isn't a credit card nor is this money to be mixed in with other accounts.

Having an emergency fund is critical to a financial plan. Don't be lulled into thinking a credit card with a high limit can suffice as this fund.

If a true emergency occurs you don't want to be taking on more debt do you?
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Paying to use someone else’s money

Writing off loan interest at tax time takes the sting out of debt but it's still paying to use someone else’s money. Pay off the loan and if you still need a deduction that badly, give to charity.

Think about it. $10,000 in home mortgage interest times your taxable rate equals a number. Using 30% as the tax rate, the scenario above means you pay in $10,000 to get $3,000 back. But, you're still out $7,000!
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Spend less than you make

The only way to have money left over every month is to spend less than you make. You don’t need software programs or financial advisors to achieve this.

Don't fall for slick commercials promising to show you how to pay off debt faster with their "program." These companies just want your money.

You bring home $3,000 a month, but need an extra $1,000? Live on $2,000. You don't need software to tell you this.
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Debt breeds fear

Debt breeds fear and limits your options. Is this how you want to live?

If you have debt you become fearful of losing your job and aren't mindful of opportunities that may present themselves.

It's hard to reach for opportunities when you are weighed down by debt and the worry and frustration that comes with it.

Get out of debt and rid yourself of fear.
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Seven out of 10 don’t budget

Seven out of 10 people don’t budget, think debt is normal, and live paycheck to paycheck. Why follow the crowd? Come on over here, there is plenty of room and we are easy to spot. We are the ones smiling.

Having a financial plan sets you apart. Don't be like the majority. Tell your money where to go, give each dollar a job, and rid yourself of all debt.
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Put it on paper

You can’t know how much you have, or don’t have, until you put it on paper. Make that budget, don’t leave it to guesswork.

You must figure out how much money you are bringing home and how much is going out the door.

You must write down for a month everything you spend money on. I think you are going to be surprised.
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Rent it at ridiculous rates

Unless you pay in full you don’t own anything. It can't be said more simply.

If you drive a car off a lot and show your family the new vehicle you just bought with a loan, you basically are showing them someone else's car.

Do you want to own your property or do you want to rent it at ridiculous rates?
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Your agreement to overpay

Using credit is your agreement to overpay.

A $1,000 item paid for in cash costs at most $1,000 and you own the item then and there.

A $1,000 item purchased with an 18% credit card will cost you $2,114.41 ($1,115.41 in interest) and you will not own the item for 153 months.

Are $1000 things worth $1,000 or $2,114.51 in your world?
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The solution is in your mirror

The solution is in your mirror. Go have a heart to heart with that person.

I can tell you. Others can tell you. You can read it. You can hear it. But, until you want to be debt-free, beholden to no one financially, and truly in control of your personal financial life, all the facts, figures, and feel good motivation in the world will not mean a thing or help in any way.

Only you can fix you, no one else.
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The first piece

Being debt-free” is the first piece of any “investment strategy.”

Investing is risk-based, but paying off debt is a no-brainer. Many think they should do both, when, in effect, they are paying out more money than they can ever hope to gain.

Investments are often at risk of being lost completely. Don't complicate personal finance. Get out of debt, then invest. Gains then are truly gains.
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