I just wanted to bring you a quick tip about using your gas savings to payoff debt.  It may not seem like the funnest way to use your gas savings, but it will be the most beneficial for you in the long run.  I like to try to bring you an example, so here it is. 

Just a few months ago, I filled up my Jeep Cherokee and the average fillup for that tank was $52.00.  Well, just last week I filled up my Jeep and I was only out $29.00.  That is an awesome difference and, simple math tells me that I am saving $23.00 per tank on average.  If I fill up an average of 50 times per year then that is a savings of $1,150 for the entire year, just on my Jeep. 

So, evaluate your own vehicle, and maybe your family has multiple vehicles.  Make a concious effort to take that savings and immediately put it toward your debt.  Here is a tip on how to discipline yourself to do this:

When you fill up your tank with gas, you probably use a debit card.  Well, after you fill up, go immediately to your online bank account or to your physical bank and place the gas savings amount (i.e. $23.00) into your savings account.  At the end of the month take that savings and make one lump sum payment on your debt.  You may just have an extra $1K or $2K paid off after a year! 

You can either continue to stay on your current path, or choose to make your life better and take control of your money and debt.  Yes, the government is struggling to find a way to spend the $750 billion bailout money and now it is trying to figure out the best way to aid the dying auto industry to the tune of $25 billion.  But, why don't you think about yourself for a while? 

Do this.  Focus on your bills, your debts, your income and everything that is relevant to your personal finances.  Watch your personal expenditures.  Lessen your holiday spending.  Increase your family time and really focus on where the true joys are in life.  Try really hard to beat the economy.  No, I do not mean by investing in stock and playing to market.  I mean personally.  You can beat the economy.  The news is publicizing everything as so bad right now and in fact, it is.  But you can beat it.

Just continue to cut your expenses, and pay of your debt.  If you can get your family out of debt, you can and will have complete control of all your personal finances.  You can come out of this poor economic time on top, with more money in your pockets.  Just don't let yourself fall victim to all the bad news.  If you still have a job be thankful and continue your path to debt freedom and just take care of yourself first!

Congratulations to President-Elect Barack Obama.  And, whether you voted for him or not, we are transitioning into a new era and change is positive.  So, with the new year approaching and the new President taking office, you should get busy and develop a new way of thinking when it comes to getting out of debt. 

You have the remainder of November and all of December to develop an effective goal for 2009.  You should make 2009 a priority for you to start paying off debt.  Start writing down and tracking your personal and financial spending right now.  Over the next two months, analyze your findings and evaluate yourself to see where you can realistically cut expenses. 

You may find that that morning stop at the coffee shop for your java and muffin is actually costing you $300 per month.  You need to ask yourself if you can do without that and can you eat breakfast at home.  However, that may be the highlight of your day and it may be the only real thing you do for yourself on a regular basis.  If this is the case, then keep it in your budget and find other places to cut expenses. 

The key is to stay happy and still pay off your debt.  So, really dig in and start developing your own personal debt free plan for 2009.  You are a smart person, and nobody knows your own finances like you.  Be honest with yourself, and you will be surprised at how much unnecessary money you spend on a monthly basis.  Use that money and pay it towards your debt.  Before long, you will be debt free and in much better shape than anyone around you!   

Don't forget or neglect your right to vote tomorrow (11/4/2008).  By now, you may not even know who you are voting for, but just because you are still unsure does not mean you should not vote.  Also, maybe you do know, but you just do not want to stand in line for hours to vote.  Suck it up and go vote.  It is one of our most precious rights as a democracy and you should exercise that right to choose those you want representing our great country.  So, please go vote tomorrow and then come back to the blog and keep reading my tips on how to get out of debt!  

For a long time it has been popular to get credit cards and everyone around you has said, "you must build your credit".  But, now I think that thought process is being heavily challenged.  Not only are individuals filing bankruptcy, but so are large financial institutions that have been in business for decades.  And you know what, those large companies are filing bankruptcy for the very same reason consumers do; they are out of cash and have too much debt.  

Many people are equating the current state of our economy to that of the Great Depression.  Even members of the fed are uttering the word "recession", which is extremely rare to here from any member of the Federal Reserve.  With all this said, it is time we heed to the advice of those that lived through the depression.  If you don't have cash, you can't afford it!  

If you live your life by that principle and go ahead and make it your top personal financial goal to get out of debt, you will be just fine.  So, don't worry about the market or the economy and don't let yourself become discouraged by all the bad financial news around the world.  Just focus on your personal financial well-being and you will be great!  Let the free market and capitalism take care of itself.  It will in due time.  

I have recently been reading even more horror stories about how non profit debt consol. companies are being negatively reported to the BBB and other regulatory agencies and attorneys for poor business practices.  So many of these companies take your contributions and call it 'donations' (i.e. that helps with the non-profit title) and will hold them for up to a year or more before they even begin paying off your debt and negotiating with your creditors.  Please just be aware of this and thoroughly do your homework before considering hiring one of these debt non profit agencies.  Also note that a recent investigation by Business Week found that two of these companies had paid their executives over $300,000 per year. 

What is your debt bill?  What do I mean by this, right?  Well, I was just sitting here thinking, and I figured something out that is quite simple.  You should sit down at your kitchen table with all your bills.  Sort through them and categorize all your debt into the same pile.

Then, total up all your debt to come up with your "debt bill".  Your debt bill will be one big bill to which you can attach a definitive dollar amount. 

For example, list your amounts owed on each of your debts like this:

1. Credit card 1 - $1,300

2. Credit card 2 - $2,800

3. Car 1 - $12,000

4. Car 2 - $8,000

5. Student Loan - $14,000

6. Home - $138,000

TOTAL DEBT BILL: $176,100.00

So, that is a large bill right.  Well, if you take away the home it cuts it down to $38,100.00

The point:  Coming up with a debt bill puts a number in your head to strive for.  If you carry around $38,100 in your head while you are agressively paying off your debt, then you always are reaching for that goal.  Then, go re-evaluate your debt bill in one year and what if the number has dropped to $24,000.  Now, even though you may not have paid off individual debts, your total debt bill is much smaller and you fell great about your accomplishment.  Good Luck and figure out your debt bill today! 

What in the world does consolidate consolidation debt loan mean?  Well, I have happened upon that exact terminology more than once recently and the only thing I can figure out is exactly what it says.  People want to consolidate their debt consolidation loans.  What?  That is just stupid!  First of all, debt consolidation loans are a bad idea simply because you are just transferring debt and spreading it out over time.  I've blogged about that before and will blog about it again soon, but that is beside the point.

So basically, here is what these jokers have done and want to continue to do:

1.  They have consolidated (a.k.a transferred) their debt (credit cards, cars, personal lines, lines of credit, etc.) all into one debt consolidation loan already, which may have resulted in lower over all payments over a much longer period of time (that is bad enough).

2.  Now, they have not learned their lesson, so they have obviously taken on additional credit card debt, just as I had predicted in an earlier blog.  Now, they want to roll that in with their existent debt consolidation loan into a new debt consolidation loan.

If you are one of these people just stop it right now!  I am not trying to be a jerk, but you need some tough love and to be frank you are absolutely wasting your life and drowning in debt.  Go ahead and download my free guide right from this site.  You can find the link above.  Take an hour and read it and get yourself out of this mess.

Absolutely do not even attempt another debt consolidation loan because your cycle will continue and you will eventually file bankruptcy.

So, is a debt consolidation loan bad?  First, let me start by quickly defining debt consolidation loan.  This is a single loan that pays off many of your existing debts, and it sometimes results in lower monthly payments over a longer period of time (longer repayment schedule).  Keep in mind, however that this loan does not eliminate your debt, it simply transfers it.

In my opinion, these loans are bad for the most part.  The loan may not be bad for everyone and may in fact benefit some folks, but for the majority of people really deep in debt, these loans are bad and this is why:

People in general do not change their financial bad habits.  Therefore, if a person gets a debt consolidation loan and does in fact lower his monthly payments, then in his mind, he has all that extra money now per month.  He will then get even more credit cards and other unsecured debt, resulting in even more bottom line debt to pay off.  The debt consolidation loan simply transferred money and drew out the payments over a long period of time, and then this guy takes on more debt, which just ends up resulting in a much worse personal financial position over time. 

For this very simple reason, debt consolidation loans are bad.

Yes, you just read that eating out can save you money and here's how. 

I generally do not promote eating out on this site as it is often not an affordable option for those in severe or minor debt.  However, I am feeling generous today, so I will share with you a very practical, yet seldomly practiced tip on how to save money by eating out.

SHARE YOUR FOOD.  That's it.  Whether you are going to lunch with a friend, spouse, work buddy, or child.  You should find someone who is willing to practice the "art" of sharing food.  And here's what you could potentially save everyday; if you eat out at least once per day.

Typical expense for a married couple going to quick set down lunch eating off the lunch menu (tax not factored):
2 Sodas - $4
2 Meals (lunch prices) - $13
Tip - $3
Total - $20

Now, the same married couple goes to the same restaurant, but shares a dinner portion of the meal and they drink water.  Here's the cost:
2 Waters - $0
1 Meal (dinner price) - $9
Tip - $1.50
Total - $10.50

YOU HAVE JUST SAVED $9.50.  Now, calculate that over the period of 1 year, and let's say you eat out once per day with your friends, spouse, or someone for 5 days per week, 50 weeks per year.  That is a grand total savings for the both of you of $9.50 per day for 250 days.

TOTAL SAVINGS:  $2,375.00

So, if you have to eat out, then do it like this and seriously save yourself thousands of dollars per year.

Well, by now you probably know that in my opinion, budgeting is a key ingredient to financial security.  But, how do you budget your money when your income is different every month?  Well, it is quite simple and here is the formula:

Look at your past year of income and write down your best month and worst month, income wise.  For example, if you are a sales person then one month you may make $10,000 and the next you may make $1,000.  So, it is obviously hard to set a budget.  But do this.  Take the averages.  Simply take your best month plus your worst month for the year and then average the two.  

So, in this example 10K plus 1K is 11K, and then averaged out (divide 11K by 2) makes it:  $5500.  So you should set your budget at $5,500 per month, and live on that.  Therefore, when you have a large month (i.e. 10K), then that money will automatically carry over for when you may have that skinny month (1K).  

Really, this is simple math, and is a great tool to use for those of you with volatile incomes, but you want to be on a consistent monthly budget. 

Keep in mind, there is a concept that stock traders use called "sell the news".  What this means is that people watch what the news is reporting and either buy or sell stocks based on those news reports.  These trades often have nothing to do with the companies performance financially.  Right now our society is experiencing a "sell the news" type mentality with personal finance.  The news often reports the really bad conditions of the markets, housing and all things financial, and it scares us to death. 

I simply caution you to be careful not to put all your faith in the news, and allow yourself to examine your own personal finances, as you have a much better idea of what is going on with you than the news.  This is just a note of caution. 

So, are you addicted to spending money?  With the economy in a bit of a slump right now, I have personally noticed a big change in society just through observation.  I enjoy an occasional lunch date with my beautiful wife, but there seems to be a different feeling in the air at the restaurants right now.  To be frank, people look miserable.  Next time you are out just look around and see.  I believe it is because they are broke or maybe they have been told they are going to go broke by the news, but yet they spend anyway. 

I could be off base here, but it seems people have a hard time giving up the spending habit, even during "hard times".  They keep going out to eat, yet they do it with a sour look on the face.  If you are going to regret that $30 lunch, then don't do it!  Easier said than done, I know.  But next time you feel bad about it, just set back and really analyze your own situation and if you really have it in your budget to spend, then enjoy your meal and relax.  If you do not, then don't make the same mistake twice.

Well, colleges are back in session again with students going back for Fall Semester.  There are a mixture of emotions, from excitement to anxiety when a new semester starts.  There are also many expenses that must be covered in order for the college student to get settled. 

Financial aid money, grants, and student loans are often used when kicking off the semester.  However, too many times the average student spends too much up front and then struggles for the remainder of the semster.

This is just a reminder to keep your costs low up front.  I know books are crazy expensive, but maybe you know a friend who can lend you the book if they had the class before, or perhaps the Professor will allow you to share a book with someone. 

Just look for clever little ways to save money (i.e. make sure all roomates share in grocery expenses), which will ultimately allow you to stretch your dollar throughout the semester. 

And for crying out loud, do not go buy a designer purse or new set of golf clubs with your student aid.  That is just silly!

So who exactly are Debt Recovery Tradesmen?  Well, I'm not even 100 percent sure, but I will try to break it down for you.  I have recently heard this title used and wanted to just explore it further to find out who these folks are.

Dictionary dot com defines tradesman (or tradesmen - plural) to mean a worker engaged in a trade or a person skilled in a particular craft. 

Therefore, from that meaning we can derive this defintion of Debt Recovery Tradesmen to mean people skilled in recovering debt. 

However, do these people actually help you payoff your personal debt or are they actually debt collectors?  To be honest, I belive both could be defined as debt recovery tradesmen, but for the most part I believe they are service providers out to help companies recover outstanding debt. 

So in a nutshell, this is a fancy word for a debt collector.  I just thought you may want to know.

So you need to "get out of debt fast" right?  Well, actually that phrase reminds me of another common phrase which you have probably heard quite often: "get rich quick".

And to be frank, the true fact about both phrases is simply that it is not possible.  However, just because you cannot get out of debt overnight does not mean it is an entirely slow process.  Let me share with you an example:

John is 28 and has recently borrowed money from the bank to purchase a truck.  Here are the numbers:

- $7,000 borrowed
- 6.5% interest rate
- 60 months (or five years)
- $136.96 monthly payment

So, when all is said and done, John will pay a total of $8,216.60 (principal and interest) for his truck.  This will take him 5 years.  

What if John decided he wanted to get out of debt quickly.  Well, unless a rich uncle gives him the $7,000 to payoff the truck, John is going to pay more monthly for his truck.

With efficient budgeting, John could pay $300 per month on the truck and have it completely paid off in 2 years or less, instead of the original five.  With this example, John did get out of debt fast as he will be able to live for three additional years debt free! 

By the way, once John pays off his truck at age 30 he should put that $300 into a growth stock mutual fund every month until he retires at 65 and here is how much money he will have thanks to the power of a 12% compound interest rate:

$1,929,287.84

Yes that is almost $2 million, so stay tuned to more blog posts on how compound interest works or simply check out my 3 step guide below for more info!

HBOT Defined:

HBOT is a Household Bill Organizing Template.  I personally made up this term to define a spreadsheet I built to manage my personal household expenses.  The template that I created is included in my PeskyDebt 3 Step Guide, but here is the basic principle of what I created:

A list of all my household bills including:

Mortgage, Cars, Groceries, Eating Out, Medicine, Car Insurance, Life Insurance, Water, Electric, Gas, Phones, Trash pickup service, mowing service, Gasoline, Credit card(s), Student loan(s), Savings, Tithes/Gifts, Clothing, Entertainment, Debt payoff amount monthly. 

Those are just a few of the categories that I have used in the past.  However, I have since paid off lots of debt, so those are not all relevant for me, but of course you can make your own.  Beside each category, which should be listed down the page, here is what you should breakdown for an effective houshold bills tool. 

Ideal % - This is the ideal percentage you should pay for each of those categories every month.  I defined these number in my HBOT from the guide.

Payment - This is actually how much you pay each month for those categories.

Our % - This is the percentage that you actually pay out of your total income every month for each category.

Difference - this is the calculated difference of the ideal % and your % to show you how good or bad you are doing compared to where you should ideally be with your personal finances.

Date to pay - This is the general date of the month that you pay each of those bills.  For example, if you are paid every 2 weeks, then you will likely allocate funds for each category only on 2 days of each month (15th and 30th).  This is your discretion, but don't make it hard.

Beginning Amount and End Amount - This is an automatic calcualtion built into my spreadsheet which calculates the money taken out of my budget for each of my categories.  It is best to try to zero out your account, or rather, know exactly where every dollar is going on paper before you actually spend it. 

So, you need to defer your student loans.  Let's start by creating a simple definition for:

Student Loan Deferment:

A way to pay back your student loans at a later date.  In a way, you will be pushing back your payback for some specific reason.  Those reasons and a few types of student loan deferments may include:

• Education Deferments - this type of deferment usually means that the student is still in school, or returning to school for a graduate program or another degree after graduation.  As long as the student is enrolled half-time as defined by the school, he/she will usually qualify for "in school" or this education deferment.
• Hardship Deferment - this is often referred to as economic deferment and means that if someone is in a financial bind due to unemployment or a lost job (layoff), he/she may qualify for hardship deferment.  Contact your lender to learn of the qualification necessary for this deferment. 
• Disability Deferment - This deferment applies to those students with disabilities, or those unabled to work due to injury or illness.  It can even be for those that may be caring for a spouse with a disability.   

August is a big vacation month; and with the lure of beaches, mountain resorts, golf courses and the countless other vacation destinations that fill your mind, please be aware of your money.  It is so easy to be tempted to use your credit card to take that vacation.

It is one thing to have an emergency credit card (though I do not recommend it for everyone) to book vacations and tickets and all that fun stuff.  However, it is a completely different situation if you actually depend on your credit card money to pay for the vacation.  If you book a condo, for example, on your credit card, then you should have the cash to immediately pay off that reservation when the bill comes due, or even go online and pay it immediately.  

Do not use a credit card to go on vacation.  It may be fun for a week, but you will soon return home and have an extra $3,000 in debt and more monthly payments.  You could be paying for that single week of pleasure for years.  

It is better to just have cash available to go on vacation.  It will force you to budget your vacation wisely and you will not have to worry about added debt or higher monthly payments when you return from your vacation.  Vacations are supposed to release stress and tension.  Going on vacation by way of a credit card will simply increase your stress and tension.  So, if you do not have cash for vacation, just don't go.