Monthly expenses and recurrent debts – mortgage, car loan, student loans, credit cards, medical bills, among others – can get so out of control that you live paycheck to paycheck without any extra money at the end of the month. In fact, your service provider may be ‘kind’ enough to keep your services turned on even if you are unable to pay. You know the effect? Accumulated debts!

Your debt may be as a result of a job loss, unexpected expenses, dwindling business income, or even overspending. Debt, when not properly managed, can affect not only your financial life but also your overall health. Think of being in debt as navigating a mud-filled field with rain boots on. Can you relate?

Have you ever thought of the possibility of being relieved of your debt burden? In case you don’t know, you can negotiate reduced payments with your creditors. This blog intends to expose you to tips on lowering your monthly expenses and eliminating debts by negotiating interest rates, financial obligations, consolidation loans, among others. 

How easy is it to negotiate a debt settlement? 

Negotiating a debt settlement is not an easy task, especially when you have to consider the best strategy to adopt. Since you are not financially buoyant to settle your bills, it might also be counterintuitive to attempt hiring a debt settlement company. By negotiating directly with your creditors, you not only save time but also money. 

You need to prove to your creditors that you cannot afford the current payments. They will seek to see your household budget, which should show your monthly income and essential running costs. Through this, they would be able to know how much of your monthly income you can afford to use in settling your debt.

Mistakes Some Individuals Make

Some individuals, probably out of shame or fear, avoid calls and late notices from their debt collectors. This is a great mistake and clearly suggests gross financial irresponsibility. Rather than avoid your collectors, it is important that you reach out to them early, intimating them on the reasons why you are finding it difficult to keep up with your payments. It will surprise you to know how some collectors are lenient and understanding. Remember, they are also humans and have feelings. 

Phases of Negotiation 

Negotiation is a dialogue process between a minimum of two parties, often with the intention of resolving a conflict, in this case, a financial one. The process involves four phases, namely discussion, clarification, negotiating an outcome, and agreement. Prior to the process, you should be able to clarify what you intend to see out of it. 

The first phase, discussion, involves communicating what you seek in the dialogue. At this stage, it is important that you maintain active listening and ask questions where necessary. However, avoid divulging too much information. 

At the clarification phase, you and the other party establish a common ground on which to start the negotiation process. 

The negotiation process is where you seek a win-win outcome. At this stage, alternatives should be provided and considered by both parties. There is the possibility of having to compromise, especially when the process is getting longer than usual. 

It is expected that both parties would have arrived at a mutual ground. The agreement and its terms should, therefore, be devoid of ambiguity. 

What You Need, to Negotiate Your Debts

Negotiating your debts requires that you exhibit certain traits. They include strong communication skills, flexibility, creativity, honesty, self-awareness and awareness of others.

Of all the communication styles, assertive style should be adopted. This is because being assertive makes you appear both confident and thoughtful, thereby decreasing your chances of giving in to demands easily as well as increasing your chances of having a successful outcome.

Forms of Negotiation

In negotiating with your creditors, you can adopt the debt settlement strategy, which involves asking your creditors to accept a one-time or lump-sum payment that is lower than the full balance to fulfill your debt obligations in full. The only downside is the negative impact it may have on your credit score in the future. 

Alternatively, you can speak to your creditor, requesting for a lower interest rate. When you take loans with excessively high interest rates, you are kept in debt for an extended period. This is because, rather than paying the actual balance alone, you’re also paying monthly interest charges. 

The good news is that there is the possibility of negotiating interest rates, especially when you have good payment histories. You can, for instance, talk your credit card issuers into lowering your interest rate. They are more likely to have a negotiating process with you, which may result in reduced rates. 

There is also the place of seeking out promotions. It has been revealed that using a balance transfer to get a lower rate requires that you clear off your debt before the expiration of the promotional period to avoid your balance being subjected to higher interest rates.

Do’s and Don’ts of Negotiation

Do’s

• State your position and what you seek clearly
• Understand the other party’s position too
• Be calm and professional in your approach 
• Be reasonable with the position of the other party. There may be a need to compromise. It is not always a sign of weakness. 
• Whatever your position is, be confident and consistent. Don’t shift position; it shows you are not coordinated. 
• Seek ways through which you can leverage over the other party 
• When both parties have reached a compromise, get the terms of the settlement in writing. It is a way of holding both parties accountable. 

Don’ts

• Avoid being confrontational throughout the negotiation process. Remember it is not a heated debate. 
• Avoid being emotional. Of course, the other party also wants an outcome that will favor them. 
• Avoid prolonging the negotiation process. Know when to keep making your position known or compromise your position and walk away.
• Don’t accept an offer of paying over 50% of your outstanding account balance. If this happens, consider settling with a different creditor. 

Other Helpful Tips

• In the negotiation process, always maintain silence after asking for a lower rate, as advised by experts. Based on their experience, waiting for the representative to speak next tends to get the seeking party a better offer.
• Never accept the first offer. Rather, ask for more – incentives and deals that can lower your bill. 
• Create the impression that you run multiple credit cards and are willing to settle one of your accounts before you divert the money for other purposes. This tends to get you a competitive offer. 

Key Takeaway

To avoid a vicious debt cycle, avoid taking new loans and build an emergency fund to rescue you from emergency situations that can lead you into taking loans while also helping you in clearing your debt. Remember, building a solid financial foundation is critical to attaining your debt payoff goal.

Seek ways to increase your monthly income. Through the process, you get extra money for debt settlement. For instance, think of items of value you own but do not use. You can earn extra money by selling them off. If you are unable to get a side job, ask for a pay raise or negotiate extra working hours for more cash. 

Free Gift

Check out the FREE video series on my 3 Keys to Unlocking Your Financial Freedom! This video series touches on Budgets, Tackling Debt, and Ways to Increase Income TODAY! I created this series for those of you who have been hit hard by COVID-19. I want you to know there is nothing you can’t accomplish and creating a plan of action is always a great starting point.

The world of business is characterized by a varying degree of highs and lows. Even if you have gathered enough pieces of advice from successful entrepreneurs, carried out in-depth research about your market or industry, or even visited some websites for a checklist of what you require to start a business, your chances of success aren’t guaranteed.

Though it is important that you arm yourself with adequate knowledge before hitting the ground running, it is more important that you get acquainted with tips that can help your business succeed. Remember that you will be investing your energy, time, and money. I have gathered the following tips to help you succeed in your business-starting goal, irrespective of the business type.

Do Your Research Well

It is important that you carry out adequate research before deciding to start a business. One of the most important aspects is market research. It involves identifying your target customer base, that is, those that will be buying your product or service as well as understanding their needs, preferences, and behaviors. In fact, you should already have a brand as well as followers that are ready to patronize you when you eventually start your business.

The research also extends to conducting a competitive analysis. With this, you are able to understand opportunities and limitations that exist within your industry and market while also differentiating your products or services from the competition.

After the market research, you can then consider naming your business. You should also know all relevant rules and regulations to ascertain your responsibilities, which may include getting your business registered, joining related industry or professional associations to get new information within the market, procedures in getting VAT or Professional Indemnity Insurance, if necessary, among others.

Start Your Business While You Are Still Working

One of the most essential resources you need before starting a business is startup capital. Do you plan to borrow some money or do you have other means of getting the required funds? It is common for people to resign from their current nine-to-five job to enable them to focus on their business. This isn’t a good idea. Usually, businesses struggle to make tons of money, especially at the early stage of operation.

This is because the starting stage often gulps a huge amount of money. For example, the cost of setting up a physical shop (or building an online store), getting your business registered, acquisition of necessary legal documents, hiring an accountant or financial advisor, to name a few startup fees. Besides, there could be a time when you will have to invest more money in your business and if you already resigned your job, you may not have the required financial backup for your business while also keeping up with your monthly expenses. You may also not qualify for a loan if you choose to go in that direction.

The best approach to this is to build your business gradually. Once you have built a decent number of clients that are consistent in paying you enough money for your survival and that of your business, you can transition from being an employee to a self-employed individual.

Be Passionate About the Business

It might be difficult to sustain one’s interest on a long term basis, especially if one engages in an activity that one doesn’t love or enjoy doing. The same thing applies to business. If you don’t love the business you are doing, how can you be motivated to continuously commit your entire money, time, and energy into it? Always ask yourself if you feel excited anytime you think of the business. Is it worth every sacrifice you make? If your answer is “no,” then it isn’t the right business for you.

If you identify a need or gap and your product or service successfully fills it, it is expected that it will produce good results, serving as good motivation. Of course, you don’t have to love every aspect of your business as you can always get some of it done by someone else. The goal is to get every necessary work done and keep the business moving. While passion keeps you focused, financial knowledge and good decisions keep your business on track.

Keep Your Idea Simple

Successful entrepreneurs often keep their business idea simple to avoid ending up with an elaborate end-product that prospective consumers may not be able to afford. As a new business starter, narrow your focus by creating a simple good or service without compromising its quality.

What are your customers’ needs and expectations? How can you fulfill the needs and exceed their expectations? If you are able to offer a product or service that does justice to the questions, your business tends to succeed. Get rid of features that cost you money and can make your product or service expensive. You are a small business and not yet a large corporation. You have a better chance to grow as long as your offerings appeal to the masses.

Adopt a Support System

It is almost impossible for businesses to succeed without a support system. You may want to run a business solo to prevent your idea from being stolen. Some may not even try to consider the idea of seeking help at all. When starting a business, you will need the support of a friend or family member, for instance, to help fine-tune your business idea. Their pieces of advice may go a long way in helping you attain speedy growth.

Another support system to consider is an experienced mentor within your industry. Such an individual is usually experienced and has a wealth of wisdom to share. They would know about possible challenges you may face and how to overcome them. They can also provide you with more effective marketing strategies as well as open your eyes to growth opportunities.

Also, professional help from lawyers, financial planners, and accountants could help your business attain long-term success. For instance, you may need to write up a contract and you are not a lawyer. You may also lack the expertise to perform accounting or bookkeeping tasks. If you try to do things and you lack the required expertise, you may end up wasting more time and even money in the long term. By employing their services, you save on time, thus enabling you to concentrate on other significant aspects of your business.

Key Takeaway

According to various research results, including those from the US Bureau of Statistics, an average of 20% of new businesses fail within the first two years of operation. While 25% fail within the first 10 years, only 25% make it to a period of 15 years and above. To fall within the range of those that make it far in business, it is important that you prepare your mind with the helpful tips provided here.

It should be noted that there is no rule of thumb about the right way to start a business; however, there are some tips that can put you on the track to success. These include, among others, conducting adequate (market) research, starting your business while you are still employed, being passionate about your business, keeping your business idea as simple as possible, and adopting a support system.

Free Gift

Check out the FREE video series on my 3 Keys to Unlocking Your Financial Freedom! This video series touches on Budgets, Tackling Debt, and Ways to Increase Income TODAY! I created this series for those of you who have been hit hard by COVID-19. I want you to know there is nothing you can’t accomplish and creating a plan of action is always a great starting point.

To many people, the strike of the COVID-19 pandemic made them feel like their world was coming to an end. The pandemic came so suddenly and unexpectedly that the world got thrown into a state of panic. We tend to be uncertain about the coming months. Thus, the present moment, when the world is yet to recover from the pandemic, became a difficult time to make certain financial decisions.

It is normal to have some financial questions. However, I’ve come with the most frequently asked financial questions that are related to the period where social distancing, the use of face masks/shields, among others constitute the new order. Check them out!

1. COVID-19 made me unemployed. How do I survive?

The economic impact of the global pandemic forced many organizations into relieving some of the workers of their duties and responsibilities. This is to save costs and other expenses. If you are a victim of this ugly situation, you may have to check your eligibility for unemployment insurance for your state. This is one of the measures put in place by the government to cushion the effect of the global pandemic. However, due to the fact that many people were affected by the pandemic, unemployment applications tend to be on the high at the moment.

The implication of this is that you may have to exercise great patience, especially in waiting for your application to be granted. Check your unemployment application and portal regularly. If there is any provision for you to make calls, do that to push your application along. While you await the confirmation of your application, you may also have to check how you can cut down your expenses. Get rid of unnecessary expenses from your budget. Call creditors or service providers to see if they can lower your credit card’s interest rates. You may also check out job applications for which you are eligible.

2. I am financially stable but how can I safeguard my future?

To secure your financial future, it is important that you develop a good financial plan. This is because a good financial plan will keep you stable during market or economic downturns. It is important to note that your financial position is susceptible to external forces that are usually out of your control. However, with a comprehensive financial plan, you can plan for both contingencies and overvalued markets, thus putting your mind at ease. In other words, you already have clues on what you can do to overcome market volatility and future crises; likewise, you have a good plan to support the upturn of the market.

You may also consider having an investment policy statement. It serves as a roadmap to help you manage your assets. It also states your investment goals, target asset allocation, and asset location. With the help of a wealth manager, you can develop a disciplined approach to help keep your investment goals in check, irrespective of any volatility in the market. Investing is also a great choice for you if you have a steady stream of monthly income, have paid most of your consumer debt, and have an emergency fund that is fully funded.

3. Is it the right time to buy a home?

Buying a home is a long-term goal for many people. They may have to save for it for years before getting enough money to acquire it. Besides, home buying is a very big investment and financial decision. Before you decide to buy a home, it is expected that your emergency fund is in good shape. Now might be a good time to consider buying a home if you have planned well for it. This is because the hit on the economy might force some people into distressed selling of their real estate properties. You might just be lucky to get a good offer.

Alternatively, you may also take out a mortgage. During crises like this, interest rates are always low and lenders tend to show great flexibility. However, it may be a financially wrong decision to buy a home simply because interest rates are low if you never intended to buy a home prior to the strike of the pandemic. Remember that beyond buying a home, you will be looking forward to some unexpected expenses, such as home repairs, etc. and you will want to make sure you have extra funds to cater for that.

4. When will the financial market get back to normal?

It is very difficult to predict when the financial market will become stable. It is natural to panic during times of market volatility. Notwithstanding, looking back to the old times makes it possible for the globe to ride out of the waves. While nobody seems to have an edge in terms of a better model in getting out of the pandemic, there are a few indices that can help determine the proximity of an end to the bear market.

The first index revolves around the management of the virus. We may be looking towards new dawn if the curve flattens and normalcy is restored to life. Also, the market will react positively to the creation of a vaccine, even though it will take time. The disbursement of stimulus funds also creates a ray of hope and optimism. This can help the market to recover. When an effective cure is discovered, everyone returns to work and employment improves.

On the flip side, there has been a form of rebound, especially among technology and consumer companies while other companies, such as airlines and oil producers, continue to suffer. If the government fails to come up with an effective vaccine, another spike in the pandemic will further shrink the economy, thus making people lose confidence in the government and equity markets creates great disappointment.

5. How can I start saving?

This is undoubtedly a good time to start saving for the future. Before you start saving, take an inventory of your income and expenses every month. Identify the expenses without which you cannot live. These may include rent/mortgage, utilities, and daycare/child care. Deduct these expenses from your monthly income and decide the amount that can be automatically put into a saving account. It is after this that you can spend on other things. Ideally, the amount you should aim to save may range between 10%-20% of your gross income.

If you start with as low as $2 per day, for instance, it might seem insignificant. However, the power of compounded savings will leave you surprised at how much you would have after about three months.  

Conclusion

There is no doubt that the crisis the globe is currently experience constitutes a part of the tough times many nations will always face. However, with the knowledge of how nations have survived global recession, we are left with enough confidence that financial recoveries are certain. Even with this hope, it is important for us to avoid making wrong financial decisions that we tend to regret in a few years’ time.

Even if you may have to get yourself a financial coach to help you make financial decisions that align with your goals, you shouldn’t hesitate to do that. We sincerely hope that some of the questions that you may be seeking answer to have been answered here.

Free Gift

Check out the FREE video series on my 3 Keys to Unlocking Your Financial Freedom! This video series touches on Budgets, Tackling Debt, and Ways to Increase Income TODAY! I created this series for those of you who have been hit hard by COVID-19. I want you to know there is nothing you can’t accomplish and creating a plan of action is always a great starting point.

Change the way you handle your money.

Do you often feel you don’t have enough money to support all of your needs? Or do you feel inadequate in your finances so you get too scared to spend or rather spend everything conversely? Despite your resistance to spending, do you still have enough? Usually, the relationship that exists between an individual who is successful with money and another who gives up easily on their financial goals revolves around their attitude towards money. 

Personal finance books, articles, or podcasts will teach you money goals, such as spending less than you earn, saving or investing for the future, and avoiding buying things you don’t need. Well, while these may be critical to achieving financial freedom, it is often difficult to implement those rules.

It is not impossible to have a financial breakthrough from a paycheck-to-paycheck lifestyle. The problem lies in your beliefs and attitudes about money or finances, otherwise regarded as a money mindset. There are two types of money mindset: scarcity and abundance. While the former believes there is never enough, the latter believes in always having enough even if the prevailing circumstances negate the belief.

As much as money is a veritable tool to solve problems and live comfortably, it can also serve as a source of worry, concern, and limitation. Your thoughts toward it drive your financial decision-making processes, such as spending, saving, investing, and handling of money. With a positive money mindset, you tend to make better financial decisions that can help you overcome challenges associated with money paucity.

Formation of Money Mindset

As the name implies, our attitudes toward money are formed by different factors, usually psychological. Your experiences with money surely have a role to play in how you perceive it. Someone who has always lived on the generosity of their loved ones will perceive money differently from someone who had to take up a part-time job in school to make ends meet. One enjoyed free income while the other had to work to earn.

Regarding our family background, kids who had their parents openly talk about or fight over money while they are growing up will end up having a deeper understanding of money than those kids whose parents never created an open discussion about money probably for fears of igniting certain emotions. 

It is common to have heard the phrase “money doesn’t grow on trees” from our parents. Such a saying affects our perception of money. It tends to make us spend within our limits, avoid buying unnecessary things, withdraw from giving financial aids, etc., thus limiting what we can do and achieve with money. However, this can never make us richer or wealthier.

The lessons we learn about money – from our parents, friends, and community at large – are mostly indirect. You may not be taught how checkbooks or paychecks work. However, when you watch your mom or dad switch off every light, don’t you think there is a certain lesson embedded in the action? Do they pay tax willingly? 

The reality is that you don’t need more money to live well or stay happy. In fact, there is a virtue in living with fewer things. The reality is that money is never enough. As long as people live, they will continue to chase more money than they need.

What You Gain by Understanding Your Money Mindset

There is a strong connection between what you believe and what comes out of the belief. Your relationship with money and attitude towards money determine what you will make of your money mindset. Research conducted by Thomas Corley of Rich Habits discovered that 53 percent of self-made millionaires were obsessed with becoming rich before they were rich. 

In another study conducted by Ramsey Solutions, of the over 10,000 millionaires studied, a whopping 97% of millionaires believed that they have the keys to become millionaires within their control. And that mindset was the reason behind their success.

Henry Ford said, “Whether you believe you can do a thing or not, you are right.” This is true to a large extent. By understanding your money mindset, you get a mindset shift. In other words, you are able to get on the path of a positive money mindset, which is the right attitude to succeed.

Changing Your Money Mindset 

If you still believe that only lucky people have money, then you are still trapped in the mindset of scarcity. It is time to extricate yourself from the long-standing myth that you need a big-income family to become wealthy, and it starts with your awareness of this self-limiting belief. Your belief, in turn, shapes your behavior. 

The following tips will help you change your money mindset from scarcity to abundance.

1. Make positive money affirmations

The problem with a negative money mindset starts with limiting beliefs that impact the way you perceive and handle your money. These have to be written off if you want to develop an abundance mindset. You need to create a new reality for yourself. For instance, affirm yourself as a successful money manager who has what it takes to transform the age-old family pattern of money scarcity. State that you invest your money responsibly and support others financially, no matter the situation. When you understand the “why” of your money, it gives you the motivation and commitment to set positive and healthy financial goals that will transform you completely.

2. Be grateful for what you have

Oprah once said, “Be thankful for what you have. You’ll end up having more. If you concentrate on what you don’t have, you will never ever have enough.” 

This is the reality of the world in which we live. Wealth is not distributed equally. Notwithstanding, there are lots of things to be grateful for, and spending more time to be grateful for those things rather than worrying over what we don’t have makes us feel abundant. Be grateful for having a roof over your head, good health, food to eat, access to clean water, and clothes to wear.

When you are grateful for what you have, you tend to be content and less tempted to spend on less important things, creating more room to spend or invest in more reasonable things. 

3. Expand your knowledge base

The books we read are instrumental to the changes and progresses we make. Leadership speaker Charles Jones once said, “You’ll be the same person in a year as you are today except for the people you meet and the books you read.” Learning about money management and money psychology will go a long way in setting you up for success, not considering the amount of money you spend.

It is through books that you can learn how to move out of debt so you can live your ideal life, understand the need to have an emergency fund, and design a game plan for your financial future. You can try out the following books: Worth It: Your Life, Your Money, Your Terms by Amanda Steinberg, MONEY Master the Game: 7 Simple Steps to Financial Freedom by Tony Robbins, Secrets of a Millionaire Mind by Harv T Eker, among others.

Key Takeaway

A mindset shift will give you freedom from overspending, paycheck-to-paycheck lifestyle, and debt. It also helps you to develop a good savings attitude and set yourself up for success. All of these tips are critical to the ultimate goal of achieving complete financial freedom. When you are grateful for what you have, you tend to be content and less tempted to spend on less important things, creating more room to spend or invest in more reasonable things. Remember that.

Free Gift

Check out the FREE video series on my 3 Keys to Unlocking Your Financial Freedom! This video series touches on Budgets, Tackling Debt, and Ways to Increase Income TODAY! I created this series for those of you who have been hit hard by COVID-19. I want you to know there is nothing you can’t accomplish and creating a plan of action is always a great starting point.

Real Goals: Being financially, mentally, academically, physically, spiritually, and emotionally stable.

Stability is everything.

Being it emotional or physical. You need a solid ground to build anything on. I tell my clients all the time that they need a solid foundation to build on and in financial terms that would be your budget. Your budget is that solid map that tells you what direction to go in. I fully believe that I am more stable in all areas of my life because I am so stable in my finances. Money connects to everything whether we like it or not. It is on the strength of observation and reflection that one finds a way. So we must dig and delve unceasingly into our own selves.

There are so many emotions around money that turn into blocks. Sometimes people don’t even realize that they are subconsciously blocking themselves from wealth. It is a mindset for sure. Diving into those blocks and negative feelings around money will only help you break through those barriers and into your new life. Stability in finances requires Balance, Consistency and Discipline which I say ALL THE TIME. When stability becomes a habit, maturity and clarity follow. Strength and growth come only through continuous effort and struggle. The struggle is real when you are trying to stay disciplined and stick with your budget. I get it.

Stability is necessary for your future economic success. Finances are not stable by any means but you have the upper hand when you are in control of your finances. You want to make your money work for you. Investing is a great tool but way less stable than your average 9-5pm job. Investing is about trends and sadly politics/media but once you figure that out its so easy. I used to think there were major calculations that I had to do in order to figure out my best investing opportunity. WRONG. You just have to know the trends and current events plus be less attached to your money. Investing requires some gambling and you have to be OKAY with that.

Stability Within Your Finances 

It is almost year-end and you tend to reflect on how much you have been able to achieve in regards to your previously-set financial goals. Are you satisfied with the current state of your finances? 

Imagine a world where you don’t have to worry about money to live the kind of life you have always craved for. You have enough to enjoy that vacation, buy a new home, pay your bills consistently and on time, and live comfortably at retirement. Of course, these are possible, however, only with financial stability.

Financial stability is not only possible when you are stupendously rich. In fact, it is not measured by the amount of money you have. Rather, it is all about being confident that your everyday finances are enough to help you reach your financial goals involving zero-debt, savings, and insurance. Only individuals with stability within their finances can cover their basic needs as well as enjoy a comfortable lifestyle.

Achieving stability with your finances is, of course, possible, even in this ever-changing world. It isn’t rocket science. However, it is not as easy as being portrayed. You need to develop good financial habits including planning, organizing, commitment, discipline, and resilience. Financial stability leads to peace of mind, happiness, and long-term satisfaction.

How Do You Achieve Financial Stability?

On the path to financial stability, accepting the addictions that often cause financial instability is a good way to start. These addictions include overspending or impulse spending, gambling, materialism, and paying bills late. With these taken care of, you are on track to making a good headway with your finances. 

It is important to note that there are no shortcuts to achieving financial stability. The steps involved require time, effort, and consistency. The following actions will help you achieve stability within your finances.

1. Create a Financial Plan

Every decision, especially involving finances, should be hinged on a plan. Otherwise, you tend to make the wrong financial decisions. A financial plan helps you gain control over your spending. Usually, a financial plan considers your income, spending, savings, debt, and insurance. In other words, a financial plan gives you an idea about what you earn as against what you owe, thus serving as a blueprint to help you develop a financial budget. 

2. Create a Financial Budget

Once you have good knowledge about your self-worth, then you need a personal budget to help you have absolute control over your spending. The way you spend has a great impact on other financial decisions you make. A budget is organized based on cash inflow (income) and cash outflow (expenses). You may also want to break down your expenses into needs and wants. 

Definitely, there are some basic expenses or fixed expenses you cannot avoid every month. Some of them include food, rent, and water or electricity bills. Others, such as cable subscriptions, can come under not-too-important bills or variable expenses, especially if your income cannot conveniently cater for it.

A financial budget, when you stick to it, helps you to prioritize spending and saving, reduce or eliminate expenses, spend wisely, and make wise financial decisions that can help you achieve financial stability. Nevertheless, a budget must be flexible to allow for modifications in case of unforeseen circumstances.

3. Control Your Impulse Spending

This is apparently a major problem that is common with almost everyone. Money has a way of controlling us so much that we get easily carried away when we have some funds in our wallet. We always want to show we can afford certain things. Impulse spending, especially on such activities as eating out and extensive shopping, drains our finances, thus resulting in financial instability. To avoid this, it is important to control and monitor our impulse spending. Have a second thought before deciding to make any purchase.

4. Spend and Live Frugally

One wrong financial decision is to live above one’s income. The result is often disastrous. Before making the decision to make any purchase or initiate any spending, you may have to ask yourself this question: How easy can I get back each dollar I spend? If you are able to think deeply about this, then you will be careful with your spending.

Do you need a new home or car now? Is that vacation important now or you can still have it some other time? Living or spending frugally doesn’t imply that you don’t want to enjoy the comfort life has got to offer. However, it helps you to be disciplined as well as identify spending areas that are not necessary, at least, at the moment.

5. Pay Off Your Debt On Time

If you have some debts to settle, it might be necessary for you to develop a debt payment plan. List out your debts (personal loans, credit cards, etc.) and organize them in either ascending or descending order. In your budget, make allocations for debt settlement, even if you have to deny yourself of certain benefits. Remember, late payment of debts can lead to increased interests, and this means more debts.

Once this process continues, you will be surprised at how “easy” it is to get out of debt. If you have credit card debt, you may have to consider using cash to make purchases. This prevents you from spending more than you have. Debt elimination process often takes a long time. However, it is a rewarding process. When you are out of debt, you will be able to make other financial decisions.

6. Create an Emergency Fund

Who ever thought they would get sick at a time they are down financially? Or get involved in an accident that will necessitate treatment? The reality is that life comes with unexpected occurrences that will require your attention. How do you factor this in your budget when you barely have enough money after your expenses?

Your best bet is to create an emergency fund. Emergencies could involve a major car repair or having to take an unplanned trip. An emergency fund not only serves as a backup plan, but it also helps you to navigate through a tough time with little or no financial stress.

7. Make Plans for Retirement

You are 25 and you feel you still have a whopping 35 years before you attain retirement. You will be surprised at how fast time flies. Remember that your salary will stop someday, as a salary earner. There is no better time to start saving or investing for your retirement than now. Otherwise, you may be jeopardizing your future with uncontrolled spending in the present. Little money snowballs into a large amount in no time.

Check if your company has a 401(k) plan for its employees. The plan becomes more necessary if your employer will match some of or all your contributions to your company retirement plan. You can also consider a Roth IRA.

Key Takeaway

The actions discussed above are the right steps towards achieving stability within your finances. You should have started yesterday. However, another opportunity is NOW. Remember, you shouldn’t get too focused on saving and investing that you forget to enjoy life. Sure, it costs money too. However, it also contributes to a healthy and happy life. You may only have to consider cheap options, such as going for a show, having a massage once in a while, or inviting a few friends for a game night.

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Habits That Put you in Debt

If people had the opportunity to change something about their lives, a lot of them would be swift to correct mistakes that denied them financial freedom, especially debt. Unless you’ve ever been in debt, you wouldn’t be able to relate with the stress and emotional trauma that often accompany it. Being in debt requires you to model your life around it. You may even have to give up some financial goals to keep up with your monthly (re)payments. 

Debt doesn’t just happen; it is often a result of certain spending habits and making poor money choices that have accumulated over some months or even years. Though some people get into debt with no fault traceable to them, a vast majority of those in debt dug their own debt hole. Most of these debt-leading habits often come in the guise of serving as smart financial moves, and a lot of people fall prey to it.

The following habits are capable of putting you in debt if you keep on with them:

Lack of Financial Budget

A budget gives you control over your spending in relation to your income. It helps you to set spending limits while also working within the plan. Without a financial budget, you tend to get into impulse spending – that is, spending uncontrollably, especially when you are excited, angry, or bored. When this happens, you will overspend and may end up knee-deep in debt. 

To break this habit, create a budget that shows your monthly income as well as fixed monthly expenses. When you subtract your monthly expenses from your monthly income, you know what you have left to spend on food, transportation, entertainment, and other expenses.

Paying Your Bills Late

Though it can happen to anyone, late payment of bills isn’t a good habit. When you pay your bills late, it leads to increased interest charges, thus hitting your credit score hard. Make it a habit to pay your bills on time.

If you are the type of person that procrastinates with this kind of task – or even forgets it – you may have to consider enrolling in auto-pay. At least, it will help you stay organized while also saving you the need for late fees and high-interest charges. Your finances should be organized in a way that prevents you from missing your bills.

Eating Out All The Time

Yes, you may run out of time to cook sometimes, and picking up food from or eating at a restaurant becomes the next option, especially after a hectic workday. That’s acceptable! However, if you are fond of visiting the restaurant and grocery stores, it may take a tole on your pocketbook. The situation becomes worse if you place the restaurant meal on a credit card. 

Dining out for lunch, especially with friends or coworkers, is a sociable event. However, doing this all the time can cause you to live beyond your means. Remember you will also have to spend additional money on tips if you order in a sit-down restaurant.

Lack of Emergency Fund

Life is full of unexpected occurrences which usually come at various costs. A number of surveys indicate that a significant number of Americans live paycheck to paycheck each month. With that being said, when unplanned expenses arise, most people will have to borrow money to meet the obligation. Emergency situations that may warrant unplanned expenses include health or medical issues, accidents, etc. The inability to meet up with these expenses portends the beginning of a vicious cycle of debts.

To avoid this, set up an emergency account which you fund with a certain amount (Whatever you can or makes sense within your budget) from your paychecks every month. You will be surprised at how fast little money adds up. This will help to cushion any financial pressure that may arise as a result of emergencies. You may also have to resist every urge to dip your hands into this fund unless it is of huge necessity.

Spending Based on Speculation

Some people often spend money based on the expectation of finding a way to get more money in the future, probably in the form of a promised financial gift. This is a recipe for financial disaster. There is no need to increase your budget or spending based on optimism if your income this month will not increase the next month.  Never factor an expected increase into your budget until it appears in your checking account. A lot of students with this habit graduate with massive student loan debt.

Let your budget be based on reality rather than hope. With this, you may have to continue saving for any item you want to purchase until you can afford it rather than buying it now with the hope of getting “imaginary” money to pay it back in the future.

Using Credit Card Rather Than Cash

How you use credit cards determine the benefits you will get from them. Rather than use credit cards for ordinary purchases, such as groceries, gas, or clothes, you should embrace the use of cash at hand or the one you have in your checking account. If you are unable to pay your credit card bills in full every month, it is an unwise spending habit to continue using it instead of cash. 

When you have credit cards in your wallet, you tend to fall into the temptation of using them at will, thus making you spend uncontrollably. At least, you wouldn’t be paying it back immediately. To avoid plunging yourself into debt, you may have to determine the amount of credit card you need to prevent you from exceeding your limit financially. Also, you may want to maximize your reward earnings through reward programs that allow you to earn cash by charging more on your credit card. In this case, only charge what you would have purchased with cash, and be sure to pay off the purchase immediately.

Trying to Keep Up With Others

We are in a society where people are under pressure to purchase material items they can’t afford just to impress those around them. Such people wouldn’t want to miss out on the latest fashion item or technological gadgets. They are always aiming for things they can’t afford. They take pricey trips or visit restaurants that have highly-priced foot items.

While attempting to maintain a certain lifestyle of luxury can cause you stress and anxiety, it further plunges you into debt and more debts. This habit is a bad one. If you find yourself in a circle where you are judged based on what you earn or the kind of luxurious lifestyle you are living, it might be time to break away from the circle. Do only what makes you feel happy. Don’t live your life to impress others.

Key Takeaway

The habits discussed above are capable of taking you off the path of financial freedom. Remember the goal is to live a life that is free of debts and to have good financial habits, such as creating and sticking with a financial budget, spending based on your earnings, minimizing your visits to restaurants, using cash more than you use credit cards to pay for regular purchases, paying your bills early, and avoiding the urge to live your life to impress others, can help you avoid debt. We want to BE rich, not LOOK rich.

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I don’t know about you but this year feels like the longest year ever. However, I realized the other day just how quickly tax season is approaching.

During tax season I meet all types of personalities and I really love that about my job. No one has the same situation and every person’s financial circumstances are unique. One thing that I notice each year is that the people who believe they might owe end up filing in April and the ones who think they will receive a refund want to book with me the first week of January. In my opinion, it would be smarter to prepare taxes regardless if you owe or not at the beginning of the year just so you have more time to save money if you do owe. Here are 4 ways to prepare for filing your taxes so you have a better chance of getting them prepared sooner rather than later. 

#1 Get Organized

It is in your best interest to get organized and stay that way all year long so you don’t have to take the time to prepare your documents each tax season in a rush. If all of your documents are scattered throughout your house you will most likely put off getting them prepared. Instead of procrastinating, start by getting organized TODAY. Get all of your receipts together, tally up your mileage, and put everything in a folder specifically for documents you may need for taxes.

#2 Decide Where You Want to File

You have so many options. Do you want to use a free option like TurboTax? Do you think you need a CPA this year? If you started a side hustle over this pandemic you might want to seek the guidance of a professional. Maybe nothing has changed and you don’t have any new streams of income, filing through TurboTax could definitely save you time and money. If you choose to file through TurboTax you will need to make sure you aren’t missing anything before you do so. Nothing is worse than receiving a letter from the IRS stating you missed something and need to file an amendment. 

#3 Set Up a Reminder

After you have gotten everything organized and you have decided where you are going to get your taxes prepared you need to set up a reminder for when you want to file. If you are doing them yourself, I would schedule a few hours depending on the complexity of your situation and knock it out. You will also need to make sure you order any online software you need in order to file.

Don’t Wait!

If you are going with a CPA or Certified Tax Preparer, put a reminder on your phone or calendar to set up your tax appointment. I have a “Tax Appointment Checklist” that I send to my clients right after they book with me so they feel more prepared for their appointment when they come in. Make sure you know exactly what you need to bring so you’re not scrambling around last minute.

#4 Plan Out Your Refund (or Repayment)

If you are receiving a refund, you should be really specific as to where this money is going to go. Most people who are receiving a tax refund blow it and make it rain when they should be putting it towards their goals. This is a great opportunity to pay towards your debt as well.

Don’t Wait!

If you end up owing, hopefully you had them prepared well before April 15th so you have time to gather the funds if you haven’t been saving for this instance. If you waited until April 14th and you owe, I would recommend filing an Installment Agreement with Federal to buy yourself some time and set up a payment arrangement until you can pay in full. There are interest and penalties if you go that route. Bottom line, file sooner rather than later and you won’t be stressing over it.

Filing for taxes can be a breeze if you prepare early enough. Follow the tips above to ensure smooth sailing this upcoming tax season.

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The Reason for Financial Problems

The primary reason for financial problems in life is lack of self discipline, self mastery, and self control. It is the inability to delay gratification in the short term. It is the tendency for people to spend everything they earn. Today, the savings rate in America is too low to achieve financial independence. After a lifetime of work, the average American family has a 200 net worth of only about $8,000. People continue to spend and borrow as if theres no tomorrow.

The lack of self discipline and the inability to delay gratification is a weakness in character. This is prevalent among the majority of adults in society today. It goes back to early childhood and the fact that when you were a child and you received money, the first thing you thought of doing was to spend that money on candy or something you wanted. Did you have anyone telling you a better idea was to save it?

Spending Makes You Happy

As you grew older, you developed what psychologists call a “conditioned response” to receiving money from any source. When you receive money, you mentally salivate at the thought of spending this money on something that makes you happy, at least temporarily. When you become an adult and you earn or receive money, this automatic reaction continues. It is very common for many people, when they are feeling unhappy or frustrated for any reason, to go shopping whether online or in a store. People unconsciously associate buying something with being happy. I used to do this very thing to generate temporary pleasure.

Rewire Your Way of Thinking

Shift your thinking from, spending equals happiness to happiness is saving and investing. This is changing your money mindset and creating the starting point for eliminating your financial problems and making room for financial freedom. Self discipline is a must when saving for your future and trying to reach financial independence. When you begin thinking this way, something amazing starts to happen. You start to feel happy about the idea of having money in the bank. I used to hate looking at my bank account but now I am excited to check it every day.

Money being in your bank account is emotionalized by your own thoughts and feelings. It sets up a force field of energy that begins to attract more money into it. It takes money to make money. As you begin to save and accumulate money, the universe begins to direct more and more money towards you, to save and accumulate.

Here are a few ways to stay disciplined in the new year:

• Set some financial goals
• Use automation for your bills
• Give yourself a challenge
• Change your money habits
• Get an accountability partner or financial coach

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Consistency is the key to unlocking life-changing financial habits. Those of us who dream of saving more in our sleep can’t imagine not putting money aside for an emergency. For others, it’s a struggle for a number of reasons:

• They never learned from their parents how to manage money.
• They don’t have enough income to cover their major expenses.
• They are taking care of other members of their family and that doesn’t leave room for them to save.
• They care too much about what people think, so they overspend to impress.
• They don’t see the point of denying what they want in the present to save for the future since tomorrow isn’t promised.

Financial Literacy

The ability to understand and effectively use various financial skills, including personal finance management, budgeting, and investing. It is unfortunate that these skills weren’t taught to us in school. I just so happen to have grown up around my family’s business where they all do taxes. These things come naturally to me. If you never learned how to create a budget, learn. It is never too late to learn a new skill.

Here are some books I recommend reading:

• Rich Dad, Poor Dad by Robert Kiyosaki and Sharon Lechter
• The Total Money Makeover by Dave Ramsey
• Transforming Your Relationship With Money by Joseph R. Dominguez, Monique Tilford, and Vicki Robin

Income

It is crucial to review the previous month’s budget to stay consistent with it. You need a solid monthly/weekly routine so you can be the most consistent with your financial wellness. Every month brings new expenses and a different set of priorities on where to spend your money. Checking in with your budget allows you to project any new expenses for the coming month and reallocate your income if necessary.

If your income is too low to cover your expenses then I suggest digging deep and finding a new side hustle or turning a hobby into a job where you can earn some money off of doing something you love. You can really get creative when it comes to increasing income.

Here are a few examples:

• Sell Stuff Online
• Drive people around
• Become a virtual assistant
• Negotiate Salary

Change Your Money Habits

Consistency plays such a huge role when it comes to achieving any type of success. I’m sure you can imagine that consistency is a key factor in the area of your finances too. Your money habits are formed based on how you constantly handle your money from saving to spending. As simple as that sounds, you might not have considered how consistency affects different parts of your life.

With any habits, money habits can also be good or bad, so in order for you to achieve financial freedom you obviously need to be consistent with good money habits. Good money habits have to do with both saving money but also how you spend it. If you’re not consistently saving money then you are probably consistently spending it. It’s the consistency you have with both of those things that will determine your financial success.

Be Rich, Don’t Look Rich

Trying to impress people is pointless. Most people never become wealthy because they waste too much money on buying symbols of success. They are more focused on looking rich instead of becoming rich. Living below your means and investing your extra income is how you build wealth. No matter how much money you make, you must spend less than you earn. Don’t be in a rush to look successful. Don’t fall into the trap of pretending to be rich.

The longer you practice consistency, the more automatic it becomes. You need to build good money habits and ask yourself if you are consistently frugal or consistently careless.

Here are some ways to stay consistent with your finances:

• Automation- Auto payments for bills is a super easy way to achieve consistency in your personal finance life
• Calendar reminders- Setting a simple reminder on your phone’s calendar can help provide consistency in tasks as well
• Budget apps- Utilizing an app for your budget can help you stay consistent with checking your budget monthly

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Many of us have struggled to juggle our financial commitments and goals at some point. It’s all about how you adapt and balance it all. Balance is so important within your finances. You have to have a happy medium between spending and saving you money.

Goal Setting

Goal setting is one of my favorite things to do because I am a very goal driven person. Setting goals means discipline. You have to stick with your budget in order to meet your goals on time. Saving money tends to be easier when you have a certain purpose in mind. To develop a clear plan, these goals must have both a time frame and a dollar amount. Once you have listed and quantified your goals, you need to prioritize them. You may find, for example, that saving for a new home is more important than buying a new car. Be specific with your goals.

Pay Yourself

Save and invest 5-10% of your gross annual income. Of course, this can be much harder than it sounds. If you’re currently living from paycheck to paycheck, begin by creating a solid budget after tracking all monthly expenses. Once you figure out how you can control your discretionary spending, you can then redirect the money into a savings account. For many people, a good way to start saving regularly is to have a small amount transferred automatically from their paycheck to a savings account or mutual fund. The idea: If you don’t see it, you don’t miss it.

Have An Emergency Fund

Before you commit your savings to investments, make sure you have at least three to six months’ worth of expenses saved in an emergency fund to see yourself through difficult times. Keeping it liquid will ensure that you don’t have to sell investments when their prices are down, and guarantee that you can always get to your money quickly. If you have trouble deciding how much you need to keep on hand, begin by considering the standard expenses you have in a month, and then estimate all the expenses you might have in the future (possible insurance deductibles and other emergencies).

Generally, if you spend a larger portion of your income on irregular expenses that you could cut easily in a financial crisis, the less money you need to keep on hand in your emergency account. If you have dependents, you’d want to keep more money in your emergency fund to offset the greater risk.

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Have a Debt Repayment Plan

If you’re trying to save while carrying a large credit card balance at, say, 19.8%, realize that paying off the debt is a guaranteed return of nearly 20%. Once you pay off your credit cards, use them only for convenience, and pay off the balance each month. If you tend to run up credit card charges, get rid of the plastic and go back to using cash. Don’t buy it unless you can pay with cash. You never want to increase your bad debt unless absolutely necessary. It’s easiest to create this plan after you have figured out your monthly expenses and how much you can potentially put towards your debt each month.

Utilize Tax-Deferred Investments

If your employer has a tax-deferred investment plan like a 401(k) or 403(b), use it. Often, employers will match your investment. Even if they don’t, no taxes are due on your contributions or earnings until you retire and begin withdrawing the funds. Tax-deferred savings means that your investments can grow much faster than they would otherwise.

The same is true of IRAs, although the maximum amount you can invest annually in an IRA is substantially less than what you can put in a 401(k) or 403(b). You should also consider diversifying your investments. All investments involve some trade-off between risk and return. Diversification reduces unnecessary risk by spreading your money among a variety of investments. Aside from diversification, the single most effective strategy is to invest continuously over time, with a long-term perspective.

Create a Will

The simplest way to ensure that your funds, property and personal effects will be distributed according to your wishes is to prepare a will. A will is a legal document that ensures that your assets will be given to family members or other beneficiaries you designate. Having a will is especially important if you have young children because it gives you the opportunity to designate a guardian for them in the event of your death. Although wills are simple to create, about half of all Americans die without a will. With no will to indicate your wishes, the court steps in and distributes your property according to the laws of your state. If you have no children and die without a will, it’s even possible that the state may claim your estate.

To begin, take an inventory of your assets, outline your objectives and determine to which friends and family you wish to distribute your belongings. Then, when drafting a will, be sure to include the following: name a guardian for your children, name an executor, specify an alternate beneficiary and use a residuary clause which typically reads “I give the remainder of my estate to …” Once your will is drafted, you won’t have to think about it again unless your wishes or your financial situation change substantially. I intend on re-evaluating my will every ten years.

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Check out the FREE video series on my 3 Keys to Unlocking Your Financial Freedom! This video series touches on Budgets, Tackling Debt, and Ways to Increase Income TODAY! I created this series for those of you who have been hit hard by COVID-19. I want you to know there is nothing you can’t accomplish and creating a plan of action is always a great starting point.