If you have debt, chances are that one of your financial goals is to get rid of it. Debt can be overwhelming, especially since you pay so much in interest that it reduces the effectiveness of your payments. As a result, it can become disheartening as you try to pay it all off.
A plan can help your efforts, though. When you have a plan to reduce your debt, you have a direction and a purpose. That can make a big difference. Map out what you want to accomplish, and as you follow your plan, you will see your debt begin to disappear.
Two approaches you can take to paying down your debt are the debt siege and the debt assault.
The Debt Siege
A siege is all about wearing down your opponent. It may take a little bit of time, but eventually, if you keep at it, you are likely to be victorious. The debt siege works the same way. You wear down your debt over time.
With the debt siege, you figure out how much money you can put toward paying down your debt, and then pay that money each month until your debt is gone. You will need to figure out how much money you can put toward your debts each month in order for this to work. Here are the steps to follow as you prepare for your debt siege:
- Look at your income.
- List your expenses.
- Figure out which expenses can be cut (hint: the average household wastes 10% to 15% of its income).
- Decide how much extra money is available to put toward your debt each month.
Once you know how much money you can put toward your debt every month, budget that in. This becomes a non-negotiable expense. You pay off your debt before you spend money on “fun” items. If you want to speed up the effectiveness of the debt siege, you can do so by looking for ways to earn more money with a side hustle, or through a part-time job.
The Debt Assault
If you think that the debt siege technique is going to take too long, you might consider the debt assault! This method of debt reduction involves taking a very aggressive approach toward paying down your debt and it requires more sacrifice up front.
In the debt assault, you decide when you want to have your debt paid off by. You choose a realistic date, based on how large your debt load is. You can even make a stretch goal if you want. There are stories of people who have paid of tens of thousands of dollars of debt in less than two years.
Once you figure out when you want your debt paid off by, it’s time to go to work on your goal. The debt assault requires that you do whatever it takes to reduce your debt in the specified amount of time. Sell most of your stuff (and maybe even your house). Get a second job. Cut out every unnecessary expenditures. Reuse as much as you can.
The debt assault can be one of the fastest ways to pay off debt because you pull no punches. You make paying down your debt top priority, and then sacrifice until you have no more debt. The process can be more painful – at first – than the gentler debt siege, but if you can stick with it for between one and three years, the results are amazing. Plus, the faster you pay off debt, the less you pay, over time, in interest.
Which Should You Choose?
Consider your situation and decide what method of debt reduction would work best for you. For many people, making a big change and attacking debt head on to get rid of it as soon as possible is preferable. In some cases (especially if you have children or other obligations) the debt assault in its most extreme form may not be practical. The debt siege is easier to handle, and doesn’t require major lifestyle adjustments. Either of these methods can be tweaked to fit your circumstances.
Which debt elimination method will you choose? Explain in the comments!
This article was originally published October 9th, 2012.
One of the advantages of having a real estate agent sell your home is that you have access to their expertise. In addition the agent is working on your behalf so that you don’t have to do as much with the nuts and bolts of selling your home. The biggest downside is the fact that you have to pay a commission.
Many real estate agents take a 5% to 6% commission on a home. On a $180,000 sale, 5% is $9,000 – that’s money not going into your pocket. Whether realtors are worth it is a topic we’ve discussed before and it really depends on your personal situation.
However, if you’ve decided not to use a real estate agent to sell your house, here are some things to consider.
1. Understand the market.
Research your area and understand the local market. Find out what comparable homes in your neighborhood are selling for. You can also ask a couple of real estate agents to come by and give you some analysis. If you are up front about your desire to sell the home on your own, some may pay you a visit. They want to leave a good impression just in case you get tired of trying to go it alone. Get a realistic idea of what you can expect for your home and try to avoid pricing it too high.
2. Advertise your home.
You can’t sell your home if no one knows it’s for sale. To spread the word, you’ll need to advertise your property.
You can do this with ads in the local classifieds, which can be quite reasonable. You can also list online with a service like For Sale By Owner. These cost anywhere between $200 and $1,000, depending on the service and what is included. Some sort of listing is a good idea, since it will make your home more searchable in databases used by real estate agents and buyers when they are looking for homes.
For the best exposure you can have your home included in the Multiple Listing Service (MLS) by agreeing to pay the commission of the buyer’s agent when your house sells. This is typically about 3% of the sale price – which is still a lot of money but better than 6%.
If you have some free time and want to be creative, you can take pictures of your home, and put them online on a website or blog of your own. Getting people to your site will be the trick but if you’re creative enough you might be able to draw attention from local media or local bloggers.
3. Know the paperwork.
Perhaps the most difficult portion of selling your home without a real estate agent is making sure that the paperwork is in order. You can get help on this from a trusted attorney, preferrably one with experience dealing in real estate.
The legal fees you’ll pay won’t be cheap but will be less than what you would pay in commission. You can do the paperwork yourself, but you need to make sure that you are in compliance with all the state and federal laws that apply. Take some time to educate yourself about these things before you begin.
4. Prepare to work hard.
Selling your home is hard work. Be prepared to show the home, negotiate, and keep it clean. You may need to stage your house or enhance its curb appeal. You also need to be ready to put in the hours necessary to educate yourself and properly advertise your home. If you are prepared, you can sell your home on your own – and save yourself the commission fee.
Are you thinking about selling your house on your own? What questions might you have? Leave a comment!
This article was originally published May 6th, 2011.
You probably understand how important your credit report is. You know that it’s a record of your credit activities, and that it’s used to establish your credit score, and that others look to your credit report for information about how fiscally responsible you are likely to be.
However, even if you understand the importance of your credit report, you might not be keeping tabs on it as often as you should. Here are some good reasons to check your credit report on a regular basis:
1. Catch identity theft.
One of the first indications that your identity has been stolen might appear in your credit report. If someone is using your name and Social Security number to open new accounts, you might not know, since the statements could be going to a different address.
If you check your credit report regularly, you can see when new accounts – accounts that you know you didn’t open – appear. You’ll catch identity theft sooner, and be able to address the problem.
2. Fix mistakes.
Studies indicate that a somewhat substantial number of credit reports contain errors that can impact consumer credit scores. Certain errors on your credit report can result in you not getting a loan, or not getting the interest rate that you want.
Check your credit report regularly to figure out whether or not something is inaccurate. Fix mistakes as soon as possible so that you don’t end up being held accountable for problems you didn’t cause.
3. Prepare for a major loan.
There are some very large loans that require good credit – at least if you want the best possible terms. Before you apply for a large loan, especially if that large loan is a mortgage, you should check your credit history. You want to make sure that everything is in order, and you need to identify problem spots and fix them before they hinder your efforts.
Checking your credit, and then making sure that you have as good credit as possible, you can ensure that you are getting the best deal for your loan. Good credit can mean savings as large as thousands of dollars over the life of the loan when you get the best possible interest rate.
4. Track your financial progress.
Checking your credit report can also help you track your financial progress over time. If you have fair credit, you can check your credit report regularly as a way to keep you motivated to make positive changes in your financial life. Watch as your payment history improves, and as sketchy loans from your past drop off. This can offer you a bit of encouragement to keep making positive changes with your finances.
Remember to check your credit report regularly. You are entitled to a free report from each of the major credit bureaus once a year via annualcreditreport.com. If you aren’t too worried about your report, you can stagger when you get your free reports so that you get one report every four months from a different bureau. However, if you want to check more often, you might need to be prepared to pay a little more.
Are you keeping tabs on your credit report? Why or why not? What are some other reasons one might want to track their credit report? Leave a comment!
There are plenty of people who think that social media is only for playing annoying games and sharing the meaningless minutiae of life. When used properly, social media can actually help you advance your career. It’s just one more way you can get ahead at work!
Social media is not only a way for you to keep in touch; it’s also a way for you to make connections and find others who can help you with your career. When you leverage your social media accounts properly, you can improve your career.
Here are a few ideas for using social media as an effective tool for career advancement:
1. Be consistent in your social media profiles.
Make sure that your profiles are consistent across social media accounts. You should use the same avatar and handle for Twitter, Facebook, LinkedIn and other social media accounts. Make sure that what you use sounds professional.
Also, be consistent in the voice you use. Make sure that it is yours! You want the articles, blog posts, and comments you make on your social media networks to be sincere and to “sound” like you.
2. Use keywords in your social media statuses.
Chances are, you have a pretty good idea of the keywords associated with your profession. What words are likely to be searched in relation to your industry? What are the topics of interest? Create a plan that allows you to use keywords on occasion (without being spammy). Naturally include them when you make observations about the current state of things in your industry.
What you share on Twitter and LinkedIn shouldn’t just be about what you had for lunch or what you plan to do with the kids this weekend. Think about what is happening in your industry and make thoughtful, articulate comments that show your insight. It’s important to have these comments out there, including in articles and blog posts you write, so that someone searching for this information, or running background checks on you, can see that you are competent and knowledgeable in your field.
3. Network with others.
The whole point of social media is to network. Use social media to your advantage by networking with people who have similar interests. You can not only write articles on your own blog regarding a relevant topic, but you can also offer guest posts to peers.
Join LinkedIn groups that are related to your industry and participate! You can connect directly with other group members without the need for intervening second and third connections. This can be a great way to make new connections that might be able to help you later. You can also look for Facebook pages with similar interests, or follow someone you want to connect with on Twitter retweeting what they share on occasion (try not to become a social media stalker).
4. Be sure to give.
Remember, though, that you have to give as well as receive. If you want people to share your blog posts and participate with your content, you need to participate with other’s content. You should also share good information for free. Don’t ask for a lot, but give. Eventually it will come back to you in a positive way, allowing you to make good connections, and even improve your career.
You never know: That hiring manager on LinkedIn could decide that you are just what they are looking for due to the professionalism of your online resume and the insights you share during group discussions.
Have you used social media to advance your career? How so? Leave a comment!
This article was originally published September 25th, 2012.
When you feel overwhelmed, it is often difficult to become motivated to take action. This is especially true when you feel as though your finances are a mess. Disorderly finances cause problems, and can cost you more in the long run.
Even though it seems an insurmountable task, it is best to get your finances together as quickly as you can. Organize your finances now, and you can begin digging out of debt sooner, or get on the right financial path for a successful future.
Importance of Organizing Your Finances
One of the biggest reasons that people overrun their incomes, and find themselves paying overdraft fees or getting into debt is that they don’t know what is happening with their finances. When you don’t know where your money comes from, and how it moves through your personal economy, you set yourself up for failure.
Without the knowledge of where your money has been – and where it is going – it becomes easy to spend more than you earn. Plus, without the proper organization and planning, you could easily spend money on things that you don’t need (and perhaps don’t even want).
When you organize your finances, you can see your fixed expenses, track your spending, and make plans for a more successful financial future. Putting off getting your finances in order can lead to a future of indebtedness and an inability to meet your money objectives for important milestones like retirement.
Take the Time to Organize Your Finances
Once you realize that your financial situation needs help, start by organizing your finances. If you haven’t done much in terms of planning your finances in the past, this might actually take some time. It’s worth it to block out two or three hours (or more) to get the basic organizational structure of your financial life in place.
In order to make things easier, set up a budget app on your computer. You can use software that is meant for your computer, or you can sign up for a free account with some sort of web application. It is possible to find a number of free and freemium money management programs that can help you keep track of your money, create budgets and even plan for the future.
Keep track of your checking account(s), of course, but you should also set up a way to track your savings, and your credit cards. You can also track your investments if you want (although you may want to set those up on another day).
Start by figuring out where you stand. Set up your software to show you where your money is right now, and then, from this point forward, begin tracking all of your spending. Even on your credit cards. Go back through bank statements and credit card statements to see what you have been spending your money on.
Look for money leaks; most of us waste money on items of little importance. Once your identify these leaks, you can try to avoid spending on those things in the future. And, of course, keeping track of your spending in your personal finance software will help you cut back on the spending that leads you to overrun your income regularly.
The longer you wait to organize your finances, the worse your situation will become. The costs in fees – as well as the lost opportunity costs for saving and investing – will add up to quite a bit. Take the time now to get your finances in order, and you will be better equipped to plan for success with your money.
What do you need to get in order? What are your financial goals, and how do you plan on achieving them? Leave a comment!
This article was originally published on February 16, 2012.
Graduate school presents the opportunity for many to advance in a particular skill or specialize in a specific area of knowledge. In some cases, a master’s degree is a career move, landing you a better job, or a raise at your current job. Depending on what you want to do, there are situations in which attending graduate school can be worth it. I know my stint at graduate school has more than paid off, even though it got expensive, so today we’ll look at how to pay for graduate school.
The good news is that I had help paying for graduate school. I received a scholarship for a portion of my tuition, and there were subsidized federal loans available for my use. If you are contemplating graduate school, here are some options for helping you pay for it:
One of the best ways to pay for graduate school is through an assistantship. My husband has been on an assistantship since he began his Ph.D. program. This has been quite helpful, since it has resulted in a tuition waiver, and in a modest stipend.
The only costs we have for his graduate schooling are student fees and books. Programs vary, but many assistantships will at at least waive tuition, or pay enough for you to cover a significant portion of your tuition. There are two main types of assistantship:
1. Teaching Assistantship: With this type of assistantship, you teach at least one class a semester. You either follow a curriculum created for you, or create your own.
2) Research Assistantship: If you are interested in research, and not in teaching, one of these assistantships might be a possibility. You assist professors in their research work, gather and analyze data and may even write portions of papers.
Graduate School Scholarships and Fellowships
Even though you won’t find as many scholarships for graduate students as you do for undergraduate students, they are still available. Check with the school to see if there are any scholarships offered, this may be one thing to consider when choosing an MBA program. You can also look online and in your community for graduate scholarships. Many professional organizations offer scholarships, and there are scholarships aimed at specific groups of people, such as different ethnic groups or military personnel.
Fellowships can also help pay for graduate school. These are programs in which you are sponsored to work on your graduate degree. These can be offered by schools, or by outside organizations. Normally, a fellowship will pay for your tuition, as well as provide an income that allows you to cover living expenses. These are often competitive, and you may be required to teach or perform research as one of the requirements.
Special Programs and Loans
There are also a number of special programs that provide funds that can be used toward graduate school. AmeriCorps, PeaceCorp and the military all have programs aimed helping you pay for school after you complete a certain amount of service. Additionally, you might have an employer with a program that will help you pay for your graduate education. Find out the requirements, and take advantage of these opportunities.
Finally, there are loan programs that can help you pay for graduate school. You can get federal student loans to help you pay, as well as private loans. There are private loans through banks, organizations like TERI.org, and using the P2P model, as at TuitionU.com. You can also look on sites like Lending Club and Prosper to see about your peer lending options.
Of course, you can always save up for graduate school. You can work, and you can set aside money to pay for your schooling. You can also use investments to help you pay for your schooling. There is no one way to pay for graduate school, and with some careful planning, you can get your funding from more than one source.
Are you in graduate school? How are you choosing to pay for it? Leave a comment!
This article was originally published November 4th, 2010.
Our retirement plan administator sent us a list of steps to follow to help us save our money. They point out that contributing to our 401(k) should be just one part of a more comprehensive savings plan.
Here are those steps that can also help you save some money!
4 Must-Do Savings Steps
According to them, the first four steps below are a “must-do” and should be done in the order listed.
1. Contribute to employer-sponsored retirement plans at least to the maximum company match. This ensures you’re not leaving free money on the table each year.
2. Pay off non-deductible, high-interest-rate debt, like credit cards. Interest paid on these accounts can easily equal any interest gained in a savings plan.
3. Create and maintain an emergency fund equal to three months of living expenses. In uncertain economic times, almost anything can happen. Having an emergency reserve is critical for those who experience a reduction to their income.
4. Contribute at least to the maximum allowed to tax-advantaged retirement or health savings accounts. This helps you save more for retirement or healthcare expenses while reducing your tax liability each year.
4 More Savings Tasks
Then they list the following four things to be considered based on your household needs. These are to be done in the order that makes the most sense for your family:
5. Establish and contribute to a child’s education savings account. Paying for tuition while the child is young is easier than with loans later. An education savings fund allows you to spread out the costs over a longer period of time while earning interest, enjoying a tax savings, or both.
6. Save for a down payment on a home.
7. Pay down deductible, high-rate debt. Debt payments are funds you could be investing or saving for other purposes or cash purposes.
8. Keep investing. Disciplined, regular investing is the key to ensuring you have enough funds so you can retire. This can easily be done through payroll deduction or automatic withdrawal from salary deposits.
Which do you think is the most important of their last four steps? Which of them are you working on for your family? Leave a comment!
This article was originally published on September 18, 2010.
One of the most difficult things to do is to figure out whether or not you are getting a good deal while on vacation. If you are in another country, it is difficult to tell whether you or not you are getting gouged.
As you travel, pay attention. And do what you can to avoid getting taken advantage of. Here are some tips for avoiding getting ripped off while you are on vacation:
1. Stay away from tourist traps.
One of the best ways to avoid high prices is to stay away from tourist traps. If you go to the easiest locations, or stick with the sight-seeing route, you are likely to fall prey to higher prices. Restaurants, pubs, hotels, and other services and products along well-traveled tourist routes are going to cost more. When I was in Bratislava, I took the tram to a shopping area that was a little off the beaten path. There I found inexpensive trinkets for purchase. The prices were much lower than what was available along the main sight-seeing routes.
2. Book through a reputable travel agent.
Depending on where you go, and what your situation is, it can help to book through a reputable travel agent who can help you stay at a reasonably priced hotel where the staff is unlikely to take advantage of you.
It’s one thing to be on your own, staying at cheap youth hostels, and quite another if you are older and traveling with your family. In some cases, if you try to book on your own, and then use your own currency to pay, the hotel workers will figure the exchange rate for you – to the advantage of the hotel workers.
This is actually a common tactic. Many vendors along tourist routes will accept your currency, and fudge the numbers while giving you change in the local currency.
3. Bring local currency.
If you want to be able to negotiate on fairer terms, and avoid exchange rate scams, you should bring local currency ahead of time. Look for a reputable place to exchange your currency for the local currency. Know the exchange rate, and look for a location that offers the exchange service for a relative low fee (every exchange will cost commission). Then, armed with the local currency, you can negotiate on better terms.
Even if you pay in your own currency, know the exchange rate. Understanding the rate of exchange ahead of time can help you calculate accurate costs so that you aren’t taken advantage of. If you know the exchange rate, you can spot when someone is trying to fudge the numbers a bit, and you can make sure the change you get back in a local currency is accurate.
4. Practice negotiation ahead of time.
One of the best things to do is to be prepared to negotiate. Negotiation is expected in many other countries. As Americans, we tend to get out of the habit of bargaining, and tend to dislike negotiation. However, in other countries, it is often part of the process. Find out ahead of time what is appropriate for bargaining in the country you plan to visit. Then, practice negotiation ahead of time. It can also help you learn a bit of the language so that you are able to understand a little more of what is happening around you.
What do you think? How do you avoid paying high tourist prices while on vacation? Leave a comment!
“Do you owe thousands in credit card debt? We can help you reduce your debt so that you pay just pennies on the dollar!” Chances are that you have heard something similar on the radio (or seen an ad in print or online) with a similar promise. While it may seem too good to be true, many of these ads are actually advertising a legitimate service: debt settlement.
What is Debt Settlement?
Debt settlement is a process by which creditors accept an amount of money from you that is less than you owe. Rather than waiting for you to go through a payment plan where you pay off the entire debt (including interest and other accrued fees), the creditor agrees to let you pay less than you owe over time.
Your debt is considered done and over with when you settle your debt. It is possible to attempt to settle your debt on your own, but many people who go this route work with a debt settlement company that helps them.
Why Would the Creditor Accept Less Than You Owe?
Debt settlement works on the principle that the creditor is convinced that you won’t be paying the whole amount anyway, so some money is better than no money. Rather than risk being left with nothing because you just don’t pay, or even file for bankruptcy, the creditor (usually those who have made unsecured loans to you) agrees to settle with you for a lesser amount paid at once.
Of course, since the point is to convince your creditor that you won’t be able to make payments, you have to, in fact, stop making payments. Most creditors won’t consider settling until you are at least 90 days behind on your payments. When you do this on your own, you can set aside money in an account, allowing it to build up over time, while you stop making payments. When you settle debts with the help of a company, you actually make monthly payments to the service provider. The debt settlement company takes a fee off the top, and then puts your money in an account.
None of the money goes to your creditors. Instead, it grows until the creditor is ready to settle. Then, when the creditor is ready, the settlement company negotiates the amount you will pay, and uses the money from your account to pay the creditor.
Debt Settlement Will Destroy Your Credit Score
The first thing you have to understand about debt settlement is that it can harm your credit score. Obviously, since debt settlement doesn’t work unless you haven’t been making payments, your credit score will plummet because you are behind on your accounts. Next, you will receive a negative entry on your credit report regarding the settlement.
Normally, you want a loan account marked paid as agreed or paid in full. This indicates that you fulfilled the terms of the loan. If you go through debt settlement, your account will be marked as paid but it will be missing that crucial as agreed. In some cases, it might even be noted as settled. This lets future lenders know that you have settled your debts before – and that you might do so again. Some lenders are quite reluctant to let you borrow if they suspect you won’t repay the loan according to the original terms.
If you are already struggling, and already behind on your debts, debt settlement might be an option. Make sure that you are working with a legitimate company with certified debt arbitrators, and that is accredited by The Association of Settlement Companies. Also, shop around for lower fees and look for a service guarantee. If you are current on your accounts, though, you should think twice before ruining your credit with a debt settlement.
Have you used a debt settlement company? How did it go? Leave your thoughts in the comments section!
This article was originally published October 3rd, 2012.
As business owners and managers, one of the main responsibilities is staffing. Trying to find the right mix of people in terms of experience, knowledge, ambition, commitment and loyalty is a never-ending and exhausting task. It’s one of those tasks that never seems to go away, and that is precisely why those personnel changes that would greatly benefit the company or department in the long run, are avoided short-term.
Very few people actually enjoy firing or demoting employees. It is one of those truly unpleasant tasks that come with authority. The decision maker would rather spend their time rationalizing why that employee should stay in that position rather than focusing on the realization that the business is suffering because of their inability to act.
Here are some reasons why the ability to pull the trigger is always difficult:
1. There are costs associated with firing and hiring.
When dealing with employee turnover, the cost can be astronomical. You have recruiting, screening of applicants, the man-hours it takes to interview candidates, training and the lower productivity through the transition with other employees taking on more work to pick up the slack. Studies show that the expense of replacing an employee can cost up to 18 months’ salary of the position being filled. That is a very difficult pill to swallow.
2. The situation could be worse.
This particular employee is not carrying their weight, but they get along with everybody, show up on time and don’t cause any issues. Compared to previous employees, the problem could be much more magnified. It’s not the best situation, but it’s “not that bad.”
3. The boss or company could be afraid of retaliation.
Depending on the employee, there could be a concern that any personnel move could result in anything from physical violence or bad publicity to legal action. Issues of age, race, gender, sexual preference or even physical handicap can come back to bite the owner or manager if there is no perceived reason for disciplinary action or removal.
4. The employee might be a linchpin in the company, but horrible to the staff.
Maybe it’s a salesperson who spends their free time sexually harassing other employees. It could be that the salesperson knows the intricate details of a specific process or software program, but is incredibly nasty to the rest of the staff or has little value elsewhere in the company. It might be too tempting for the boss to keep that person on board since they are important to the company, when they should really be fired for sexual harassment.
5. The employee might be pulling on heartstrings.
This employee is a single mother struggling to get by. That one has health issues and needs the medical benefits. The one that is now caring for their elderly father. These issues are real, they are everywhere, and they are affecting business productivity and revenues in just about every company regardless of industry.
None of us live in a bubble, nor are we heartless. The above listed issues are real and there must be serious thought put into each situation, because they are all different. However, if as a manager or business owner, these are just being used as an excuse to not pull the trigger on something that should have happened long ago, it is time to get going and move forward.
As the decision-maker in a company or department, it is you that is being continuously scrutinized by colleagues, clients, competitors and even the general public. Especially as a business owner, it is your belief system and ideas that have helped you take your company to the level you are at now. Failing to continue with those beliefs or to follow through with them can and will have a direct effect on the company’s bottom line.
Again, nobody lives in a vacuum. We all have outside pressures to deal with. Now is the time to look at the ones affecting you and your company and reevaluate each of them.
Are you thinking of firing or laying off an employee? What kinds of things hold you back? Leave a non-specific, general comment!