Archive for the ‘Debt Reduction’ Category

How to Cope with Spending Addiction

By: Green Panda | Date posted: May 25, 2009 (6:00 am)

What Is Spending Addiction?

Indiana has a great resource on spending addiction. Here’s how they describe it:

People who “shop ’till they drop” and run their credit cards up to the limit often have a shopping addiction. They believe that if they shop they will feel better. Compulsive shopping and spending generally makes a person feel worse. It is similar to other addictive behaviors and has some of the same characteristics as as problem drinking (alcoholism), gambling and overeating addictions.

Compulsive shopping or spending can be a seasonal balm for the depression, anxiety and loneliness during the December holiday season. It also can occur when a person feels depressed, lonely and angry. Shopping and spending will not assure more love, bolster self-esteem, or heal the hurts, regrets, stress, and the problems of daily living. It generally makes these feelings worse because of the increased financial debt the person has obtained from compulsive shopping.

If you have a serious time keeping a budget, you may have an addiction.

TheSimple Dollar offers some steps to defeating an addiction to spending. 

I think that is the first step to fixing any problem: acknowledging its existence.

Where can I find help for a spending addiction?

If you or aloved one has a spending addiction, here are some resources to check out:

Real Life Stories of People Climbing out of Debt

Having a spending addiction can be overwhelming with all your debt. However it is possble to get out of debt. 

These are real people who made mistakes and are learning.

I’ve improved with my spending habits, but I have plenty to work on. This blog is a online diary of my journey to living a  debt free life. 

Has anyone dealt with this issue? How did you work through it?

If you’re a blogger and have a post about it, please email me and I’ll update my post with your story.

How Do You Do Get Rid of Credit Card Debt?

By: Green Panda | Date posted: May 04, 2009 (9:34 pm)

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If you’re looking to reduce your debts without getting into a debt consolidation program, there are things you need to consider.

  1. Stop using credit cards. Hide them, freeze them, or perform a plasticomy. Use either a physical envelope budgeting method and take out money you need to eat, tolls, etc. If you run out of money, then make a peanut butter and jelly sandwich or bring leftovers for lunch.  If you want a more electronic method, keep track with your spending using a program like Mint.
  2. Discover the exact amount of debt you’re in. You can’t come up with a plan until you know what you owe. List all your creditors, the interest rates, and the total amount you owe.
  3. Work to see if you can lower your interest rates. If you can’t negotiate a lower interest rate, you may consider choosing a 0% card to transfer your balance. Please remember, balance transfers are a temporary fix and do not address the root problem.
  4. Control your spending and write a simple budget. Track what you spend in 2 to 4 weeks. It’s hard to cut back if you don’t what your weak points are, so grab a little notepad and write everything you spend.
  5. Automate your bills and put aside some money for savings. Protect yourself from yourself and automate your debt payments. Try to pay the minimum on all but one of your debts.  Put the rest of your debt reduction money into either your debt with the highest interest rate or the lowest balance. Highest interest rate method is the financially sound decision and lowest debt is the psychologically empowering decision. If you’re looking for money to reduce debt, try cutting unnecessary expenses or get a part time job exclusively for your debt repayment.
  6. YOU have to be committed to a plan and stick to it. Have your spouse, friends, family, etc. support you as you reduce your debt.

Your Take

What tips do you have on keeping your finances in check?

Photo Credit: quaziefoto

¤Free Excel Spreadsheets for Managing Your Personal Finances ¤

By: Green Panda | Date posted: April 23, 2009 (7:00 am)

Not so long ago, managing personal finances involved sitting down with a paper, pen, calculator and a checkbook. All the important financial information was either written down on slips of paper meant to be stored in files and any financial planning that took place was mostly in one’s head.

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Excel Spreadsheets Can Help You With Your Finances

Today many of us use Excel spreadsheets to jot down our everyday expenses or to balance our checkbook. The more computer savvy amongst us may go a step further and actually plan monthly budgets using Excel spreadsheets. However, not many are aware that Excel spreadsheets are extremely powerful tools that can help one not only in managing money but also in handling all aspects of personal finance. And even those who would like to use Excel spreadsheets for a more long-term financial planning may not have the time to first understand and then implement the full range of functions and features that Excel has to offer.

Excel Templates are thus an excellent solution – these are well-designed comprehensive spreadsheet templates offering features and tools that make it easy to manage all aspects of personal finance. Even a mere beginner will find it easy to personalize and use these templates. You can find Excel Templates for various purposes, from balancing checkbooks to working out home budgets right up to debt reduction or credit card payoff calculators.

And the best part is, many of these are available free of charge for personal use! Here are some of the more popular and free Excel Templates for managing your personal finances.

Free financial spreadsheets can save you a lot of money and time.

Free financial spreadsheets can save you a lot of money and time.

Personal Monthly Budget and Personal Budget Spreadsheets

(http://www.vertex42.com/ExcelTemplates/personal-budget-spreadsheet.html)
(http://www.vertex42.com/ExcelTemplates/personal-monthly-budget.html)

The personal monthly budget spreadsheet helps you track your income and your expenses. This helps you understand what you are actually saving every month and quickly identify areas where you may be overspending.

The personal budget spreadsheet on the other hand will allow you to plan for an entire year. If you are anticipating any major changes like purchasing a home, changing jobs, or if you are moving, you may need to make financial plans many months before. This spreadsheet will allow you to make a realistic assessment of what your financial status may be in the future.

Household Monthly Budget and Household Budget Spreadsheets

(http://www.vertex42.com/ExcelTemplates/monthly-household-budget.html)
(http://www.vertex42.com/ExcelTemplates/home-budget-worksheet.html)

With a family, the number and nature of expenses changes. You may have to budget for children’s expenses, pets, vacations as also make more long-term planning. The above spreadsheets will help you set goals for yourself, note down your income and expenses, and understand whether you are achieving the financial goals you had set for yourself.

Debt Reduction Calculator

(http://www.vertex42.com/Calculators/debt-reduction-calculator.html)

This spreadsheet will help you eliminate various kinds of debt more systematically. You can use it to eliminate credit card debt, auto loans or student loans. In the first worksheet, you will be asked to enter details of the various loans you have to repay, choose the amount you are able to repay every month and then see a comprehensive summary of the results. You can analyze the best way monthly credit card payment plan for you.

In the next worksheet, you will be provided with a detailed payment schedule that you can take a printout of and keep it for ready reference. By using this payment schedule to make payments and to keep track of your progress, you will manage to pay off your debts in a more disciplined manner.

Loan Amortization Schedule

(http://office.microsoft.com/en-us/templates/TC010197771033.aspx?pid=CT101172751033)

You will be able to keep track of when and what payments you need to make towards your home mortgage by using the loan amortization schedule. You will need to enter some basic details like loan amount, the period of loan, the interest rate, date of first payment and how often the payments have to be made. You can use the spreadsheet to keep track of all the payments made so far and know at any point of time what the outstanding amount is. Further, you will also be able to calculate what kind of effect making additional payments will have on the interest to be paid and how quickly you will be able to pay off the loan.

Retirement Spreadsheets

(http://www.retireearlyhomepage.com/softlist.html)

These retirement spreadsheets allow you to calculate the amount needed to retire in comfort and also what you will need to save if you are planning on an early retirement.

Photo Credt:  Life in LDN & Menage a Moi

This guest post was written by Hadar Kadar. Hadar works for Cogniview, the _PDF to excel converter people_ [http://cogniview.com]

The Stigma of Debt Is Gone, But Not The Sting

By: Green Panda | Date posted: September 10, 2008 (12:27 pm)

 

 

 

Browsing across the web, you stumble upon interesting things, some of which are quite informative. Dave Ramsey and others point out that early in the 20th century buying on credit was frowned upon:

History also teaches us that debt wasn’t always a way of life. In fact, three of the biggest lenders today were founded by people who hated debt. Sears now makes more money on credit than on the sale of merchandise. They are not a store; they are a lender with some stuff out front. However, in 1910 the Sears catalog stated, “Buying on Credit is Folly.” J. C. Penney department stores make millions annually on their plastic, but their founder was nicknamed James “Cash” Penney because he detested the use of debt.

Henry Ford thought debt was a lazy man’s method to purchase items, and his philosophy was so ingrained in Ford Motor Company that Ford didn’t offer financing until 10 years after General Motors did. Now, of course, Ford Motor credit is one of the most profitable of Ford Motor’s operations. The old school saw the folly of debt; the new school saw the opportunity to take advantage of the consumer with debt.

Now it seems as many people have debt in their lives and unfortunately it’s the high interest kind. Car payments, credit card debts, 2nd mortgages, and regular mortgages take a chunk of, if not your whole paycheck. It’s a struggle that many deal with, but few are willing to change.

Does that mean that having debt is ok? Not necessarily. Having a mortgage is debt, but it is a way for

USA Today points out the average credit card debt for an American household is $8,565. How does translate to monthly payments?

Using a typical interest rate and the standard minimum payment, here’s how it breaks down:

If you paid the minimum payment every month, it would take you 249 months to pay off your debt and you would pay $7,486.48 in interest.

It will take you 46 months to be rid of your debt if you pay $256/month. In that time, you will pay $3,108.88 in interest.

Source: Bankrate.com

Can you imagine having credit card debt that can take longer than many student loans?! What do you have to show after 249 payments (20 years)? Most likely, nothing that you originally purchased will be around. We live in a consumer society, which can include disposing of things on a regular basis.

Don’t let the ‘normalcy’ of debt convince you to keep the cycle going. Make it your goal to get rid of your high interest debt as soon as possible.

How do you do get rid of debt?

  1. Stop using credit cards. Hide them or perform a plasticomy.
  2. Discover the exact amount of debt you’re in. You can’t come up with a plan until you know what you owe.
  3. Work to see if you can lower your interest rates. If you can’t, you may consider choosing a 0% card to transfer your balance. Balance transfers are a temporary fix and do not address the root problem.
  4. Control your spending and write a simple budget.
  5. Automate your bills and put aside some money for savings.

It’s not easy, but the steps are simple. Here are some articles that can help you plan your escape from debt.

This post was included in the Carnival of Personal Finance #170 @ The Personal Financier.

Photo Credit: aussiegall


Extra Car Loan Payments

By: admin | Date posted: February 22, 2008 (1:45 pm)

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I’ve been trying to pay down my car loan faster, so I’ve been making extra payments. I use my local credit union’s online bill pay which let’s me put a memo on my ‘checks’. I write that the extra payment is supposed to all go into the principal. Apparently that is not the case.

I called customer service and I was informed that I couldn’t make a payment directly towards principal.

Every payment I make goes towards the interest accrued from the last payment and the principal.  She suggested that I just put the extra money with my regular payments. I don’t want to do this for a couple reasons:

  • The extra $40-50/week (snowflake money) that I save I want to immediately put it towards the loan to make sure I don’t spend it.
  • I’m worried about the interest accruing between monthly payments.

I guess I’ll spend this weekend and see if I can find the cheapest route with this. I’ll being digging around Paid Twice to learn more about snowflaking.

Photo Credit: Rojer

5 Ways to Get Out of Debt

By: Green Panda | Date posted: December 17, 2007 (11:43 am)

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It’s possible to overcome debt, but you have to be diligent. Try to make a commitment to yourself to get high interest debt out of your life as soon as possible.  Here is a basic 5 step plan to get your started.educ

Little by little, you can win against debt.


1.Hide your credit cards. Some people suggest cutting up cards to avoid using them, but if you do that, try to keep one intact. Another one is freezing your credit cards, same effect, but no permenent destruction. The goal if this step is to get you to stop digging a deeper hole. All the other steps are invalid unless you do this one.
2.Have an emergency fund. Try to get one month’s expeneses saved. This will be a cushion to keep you from going back to credit cards if something comes up.
3. Tier Your Debt. Look at your debts and examine both interest rates and balances. Usually student loans and mortgages have the lowest rates, so just pay your regular payments. Decide if your going for psychological wins by attacking the smallest balance or if you’re looking for a financial win by attacking the one with the highest interest.

I kind of did a 50/50 with a tax refund and paid a small debt off and put the rest toward a high interest debt. It gave me peace of mind with is worth more than a few extra dollars saved.
4. Lower your interest rates. Call your credit card company or bank and see if you can get a lower rate. If possible, move them to a card with 0% transfer balance. Keep making payments on these cards as you try to get the balance as low as possible at 0%.
5. Keep jabbing and throw in a hook. My husband told me and I love the philosophy behind it. Just keep working at paying your debt month to month and once in awhile put a big chunk down to keep the momentum (like a tax refund semester refund).

Photo Credit:  hendimion / • puntodivergente.com

Rich College Student: Debt Repayment

By: Green Panda | Date posted: November 05, 2007 (3:27 pm)


Welcome carnival visitors! If this is your first time here, please look around and leave your feed back. If you like what you see, please add this site to your feed. Monday is when I post my Rich College Student Series. Please check my archives in the BEST OF page of the blog. Thanks!

Handling Credit Card Debt

Last week, the idea or deciding to pay off debt or save for a full emergency fund came up. It seemed that having a barebones emergency fund to keep you afloat while you payoff your high interest debts (i.e. credit cards). According to Nellie Mae, the average college student has $2200 in credit card debt. We’ll use it as an example for today.

Using a Debt Snowball to Pay Down Credit Cards

We have a student (we’ll call him Ed) who has $2220 on two credit cards. Ed saved $500 from his semester’s refund for his barebones savings. He got a 2nd job delivering pizza, which gives him an extra $50/week to play with. This money is devoted to paying off his credit card debts.

Ed puts $150 on the higher interest card and $50 on the other (that’s minimum payment). Let’s see how his net worth changes.

Account Savings Credit Card 1 Credit Card 2 Net Worth
Interest Rate 4.00% 23.99% 18.99%
Jan $500.00 $1,200.00 $1,000.00 ($1,700.00)
Feb $501.67 $1,070.99 $965.03 ($1,534.36)
Mar $503.34 $939.40 $929.51 ($1,365.58)
Apr $505.02 $805.18 $893.43 ($1,193.60)
May $506.70 $668.28 $856.78 ($1,018.36)
Jun $508.39 $528.64 $819.55 ($839.80)
Jul $510.08 $386.21 $781.73 ($657.86)
Aug $511.78 $240.94 $743.30 ($472.46)
Sep $513.49 $92.75 $646.12 ($225.38)
Oct $515.20 $0.00 $453.18 $62.02
Nov $516.92 $0.00 $257.19 $259.73
Dec $518.64 $0.00 $58.09 $460.55
Jan $662.75 $0.00 $0.00 $662.75

Ed is very excited with this plan. He notices he can be debt free from credit cards in 13 months. He had this card for the past 3 years and now he can finally be in control of his debt. Plus he now has an extra $200 month he can use to save. An important fact that hits him is how much money he could have had if he didn’t have credit card debt. He uses it as motivation not to carry a balance again.

Your Take

Has anybody had success with paying off their credit card debt? Any tip is that they can offer those in the trenches?

Photo Credit: edwin11 79

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