Thursday, January 29, 2009
The first step to building a snowman is gathering up that chunk of snow that you can start rolling across the ground. The more you roll, the bigger the ball gets. Before you know it, there’s a real-life Frosty keeping watch over your home. Those kids were rolling snowballs all over the ground, delighted to see them grow larger and larger.
Being a financial coach and certified nerd, I immediately linked the snowman process to dumping debt for good. I teach clients a process called The Debt Snowball for completely eliminating their consumer debt – typically in 24 months or less. Here’s how it works:
With the debt snowball, you list the debts from smallest payoff to largest. While paying minimums on everything else, you attack the smallest debt with such a vengeance that it can do nothing but hit the bricks. I’m talking about selling stuff, tightening the budget to free up cash, and doing whatever else you can to kick that first debt out of your life for good.
Once the smallest debt is gone, you take the minimum amount you used to pay on it and roll it into the payment on the next debt – along with any other funds you can free up. Remember, we’ve already discussed putting your foot down and being done with debt; your ferociousness can shine in all its glory now. Once that second debt is paid off, you roll its payment, the first debt’s payment, and any other cash you can scrape together into the third debt. Just like a snowball for a snowman, as you pay off a debt and roll the funds into the next, your payments get larger and larger.
But, why wouldn’t you pay off the debts in order of interest rate – from highest to lowest? I get this question all the time. Personal finance is much bigger than numbers and interest rates. We’re talking about emotions and behaviors here. It’s personal. If the debt with the highest interest rate has a huge balance, it’s going to take a while to pay it off. It won’t take long before you lose your enthusiasm and motivation. But when you taste some victory by paying off a small debt you’ll be invigorated to push forward and kick that next one out of your life.
I’ve worked with people who were able to throw thousands of dollars each month at their largest debts after they’ve gotten rid of smaller ones. That’s a huge snowball rolling downhill, destroying every debt in its path! Thousands of others across the country have used this process to achieve debt freedom, so what do you have to lose? Debt.
Monday, January 26, 2009
This may sound backwards, but what if you could replace that 15% that's working with something that would work even better for you.
I have a business group that I'm a member of that helps my business. Even though it works well for me, I've decided that I'll stop doing that this year and replace it with something that should help even more.
So it's not all about putting the right things in. Sometimes you have to quit something, even if it's working for you.
Here's a short article I wrote on this over a year ago.
What are you going to quit?
Tuesday, January 20, 2009
Campbell’s Chicken Noodle soup, McDonald’s, the Hula Hoop, UPC codes, Diet Coke and Apple Computer; these companies and products are so ingrained in our minds that we fail to think of them as brand new ideas that could either make it or break it. At one time people and companies bet their livelihoods on bringing all of them to market and all were introduced in bad economies.
There is a lesson to be learned here. You can either bury your head in the sand when times are tough or you can take your great idea, use it to change people’s lives and make a fortune doing it. The choice is yours.
Here are a few tips if you truly do want to bring your great idea to market.
- Take a chance. The bigger the chance the greater the rewards.
- Once you make a decision be confident about it and don’t look back. Hindsight is 20/20. You are where you are now because of the decisions you’ve made. Right or wrong, deal with it and move on.
- Quit worrying. Matthew says “So don’t worry about tomorrow, for tomorrow will bring its own worries. Today’s trouble is enough for today.”
- There are no mistakes. The lessons you learn by doing are invaluable and usually less costly than going to college.
- Ask yourself “What’s the worst that can happen?” It’s usually not that bad so why worry?
- Step out of your comfort zone. Nothing great is ever accomplished with taking a risk.
- Do. What’s holding you back? The missing ingredient between a great idea and the money it could bring you and your family is action.
"All men dream, but not equally. Those who dream by night in the dusty recesses of their minds wake in the day to find that it was vanity: but the dreamers of the day are dangerous men, for they may act their dream with open eyes, to make it possible." – T. E. Lawrence (of
Monday, January 19, 2009
Thursday, January 15, 2009
Sorry, no Magic 8-Ball here. Money magazine says that 78% of us will experience a major negative event in any given 10-year period. Now, busting up my tire and wheel don't qualify as "major" in my book, but because we know that life happens - usually unexpectedly - my wife and I have an emergency fund in place for when the rain comes.
Remember that the first part of getting out of debt is changing the way we view debt and making the choice not to go into debt any more. If you have an emergency, you have to cover it with your emergency fund - not your VISA. Putting emergencies on credit cards will keep you locked in the vicious cycle of debt.
For most of us, having $1,000 in a savings or money market account is the First Step on the road to freedom!
There aren't any magic pills that make debt go away. If someone on a late-night TV ad or on the radio tells you they have the secret to eliminating your debt without any effort, they're lying. To start getting out of debt you have to do one simple thing: stop going into debt. It's crazy, I know!
I think about it like this: when I was a boy, I joked with my friends about "digging a hole to China." Imagine digging a hole - a big hole - so deep that you'd need a ladder to climb out of it...but you don't have a ladder. So you're stuck in your hole with a shovel. If you want to get out of that hole, obviously the first thing you're going to do is stop all that digging, right?
Proverbs 22:7 says "The rich rule over the poor and the borrower is slave to the lender." If you want to get out of debt, you must stop going into debt and allow for a paradigm shift in your way of thinking. Debt doesn't build the prosperity we've all been led to believe by our culture. When surveyed, 75% of the Forbes 400 (the 400 richest Americans) said they got there by becoming debt free. So, instead of putting the cart before the horse by talking about how to actually go about eliminating debt, we first have to change the way we think about debt altogether - otherwise, we'll wind up right back where started...in that hole.
Richard discovered the two ladies had a problem however; by Tuesday the puzzle was usually solved. After thinking for a moment, Richard asked the two women if they would like to have an entire book of crossword puzzles. I’m sure you can imagine the excitement between the two friends when the idea was proposed.
A friend, nicknamed Linc, was persuaded to join Richard in creating and publishing a book consisting of nothing but crossword puzzles. The subsequent Crossword Puzzle Book later became the foundation of the publishing empire Simon & Schuster, which today has annual revenues upwards of $14 billion.
There are a few things to point out here; the first being that you do not need to have an incredibly brilliant idea in order to make money. Two boys from New York identified a problem and set out to find a resolution in order to make someone’s life better. I don’t think either of these men realized they would create an empire; they just wanted to have some fun and help a sweet grandmother.
This leads me to my second point; these guys were having fun! They did not sit around brainstorming ideas to make a quick buck. They did it for the fun of it. Crossword puzzles were all the craze in the mid-20s and they capitalized on people’s enjoyment.
What ideas do you have resonating in your mind that could not only improve another person’s life, but that could also make you money? What is preventing you from turning your ideas into income? My advice to you is don’t get stuck on the “how”. Instead, focus on the “what” and then develop a plan to make that a reality.
If you are short of ideas there is a wonderful discussion going on right now at BeyondPastDue.com. Join in and add your ideas or take one already there and turn it into income.
Thursday, January 8, 2009
There is absolutely no shame in being poor. But is that really how you want to live your life? Broke, always scraping by, never being able to help anyone because you only have enough for you?
Is there something wrong with desiring more income; to increase your standard of living beyond your current level?
Many people get stuck here. After all, it was Paul who stated that “It is the love of money that is the root of all evil.” 1 Timothy 6:10 But notice here what Paul does not say in this passage. Paul does not say that money is evil, but rather the love of it. Simply put, if your motivation for more money is to worship it and make it the main thing in your life that is completely the wrong reason. King Solomon wrote that wealth is a crown for the wise.
But the desire to make more money is good. I want to surround myself with people that are making money. The more money we all make the better off our society is. The government actually had this right when they decided to send refund checks to stimulate the economy in 2008.
As long as we spend our money wisely, we all benefit when we all make great incomes. The world benefits when you make a greater income. Think of all of the organizations you could support. The ones you have yearned to support but never had the resources.
What is stopping you from increasing your income? Once you wrap your mind around this singular idea, not only does your life and that of your families change, but so does mine, the rest of America and the entire world.