We all need Plastic Surgery

February 25, 2010 No Comments

Summary on Getting Debt Free, a 3 minute read.

This weekend a group of people introduced a video on Debt to me. The resources in the video were Joyce Meyers, Bob Catz and Dave Ramsey. True to our style I am giving you the basic facts we can all use from time to time.

*Very few parents teach their kids proper financial habits – schools do not teach good financial habits – churches talk about giving money but rarely, if at all, teach on how to handle money even though the Bible mentions money 2000 times. Proverbs 28 is a starting point for those who read the Bible.

*71% say that home life is unhappy due to debt pressure.

*56% of marriages end in divorce over money.

*Debt is connected to greed – too many believe they should have now what took other generations 50 years to get.

*70% of Americans live paycheck to paycheck – Prov. 22:7 In short says “debt means a loss of freedom.”

*Out of 100 neighbors 4-7 are 3 months behind on their mortgage payments.

*Very few have emergency funds.

*Foreclosed homes have increased 200% since 1980.

*It takes apx. 5 years of over spending before it comes back to bite you.

*Most Americans have 7 credit cards while some have 15-20.

In my opinion attempting to immediately get rid of debt that’s been built up over the years is kind of like over eating for a year and then desperately searching for the nearest liposuction clinic…it is only a temporary fix. The sign that says “You can borrow enough money to get completely out of debt.”, supports my theory.

Here are some tried and true long lasting fixes.

*Hold yourself accountable before another entity does. Others holding you accountable can not only be painful but depressing.

*Stop the excuses, blaming and self pity. You can’t successfully use tried and true financial tools until you buck up.

*Get plastic surgery – limit the amount of credit cards you have, if you’re a “wantaholic or deservaholic” (my words) cut them up. If you can handle credit cards then pay the monthly balance off every month.

*Most Americans are used to living beyond their means. It is time to live within your financial borders. The longer you live within your financial borders the larger your borders grow.

_ Prov. says “know your flocks.” You should write down when your payments are due. Know what you owe. Know what is coming in monthly and quarterly.

_ These 4 things create stability: Work – Give – Save – then Spend. For example let’s say you have 7 bills, after you have written down those debts you should pay off the smallest bill first then take the payment of the smallest bill and apply it to the next smallest bill. Then apply the money of both payments toward your next smallest debt and continue until you eventually have the house and car payment left. You can then apply a larger payment toward those debts in order for them to be paid off. Do all this while giving to a needy cause.

*You should have at least a $1000 emergency fund for back up

*Work toward and have 6 months of living expenses in the bank incase of emergencies.

*Have a savings account that you won’t touch. Example, put aside an allotted amount every month. Treat it like a bill and promise yourself you won’t touch it until well into retirement.

*Now let’s explain 90 days same as cash.

70% of people do not pay off the purchase within 90 days.

The lender who buys your contract is counting on you to not pay it off in 90 days.

The interest of the product is already built into the purchase price of the product.

If you don’t pay it off in 90 days the lender will charge you interest starting with the first day you made the purchase. You signed a contract allowing them to do that.

The gist here is you initially paid more than the product was originally worth and you get to pay interest on the built in interest of the product. You spent more than necessary.

*Did you know that most credit cards have a variable interest rate which means your debt will go up if interest rates go up? The contract you signed allows them to do that.

*To limit your debt load do the following, when it comes to big purchases wait 24 hours before you pull the trigger and put yourself into debt.

*Finally, keep a running tally on: current assets, meaning readily available money. – Fixed assets, meaning things that you can sell. (remember they are only worth what you can sell them for) List of everything you own. Then run a sheet on what you owe, what can be paid off in the short term and the long term. Once you know where you are realistically sitting you will better be able to control yourself and your finances.

To close here is a poem that was on the video. It is somewhat abbreviated.

Money came by the house the other day and we had a conversation it said, “I’m depressed and sad because of people abusing me. I’m tired of people using me for wrong purposes, fighting over me, stealing me, lying, cheating and committing crimes to get me. .I get blamed in some way for almost every divorce. I am tired of fighting with greed all the time. I’m horded, stolen and wasted most of the time. People think I am their security and I am not. They act like I am God which I certainly am not. I just wish people knew how much good they can do with me, if they treated me right they would be blessed.”

People perish because of lack of knowledge.

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