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Want To Be Debt Free? Be A Minimalist

woman with arms stretchedThe US economy is 70% driven by consumers who are all looking for ways to be debt free. The more people spend and buy, the better the economy will be. A survey revealed that as the consumer spending in the country goes up (currently at $98 as a daily average), that is good news for the economy. It shows that Americans are confident about their finances – more than they had been in the past few years.

However, that does not mean the economy is asking consumers to throw caution in the air and buy items left and right. It will not help the economy in the long run if people purchase a lot of items and and are unable to meet the payments. Getting in debt is a big possibility if purchases are made on a whim.

Some people say it is better to spend two dollars for a one dollar item that you need rather than spend one dollar for a two dollar item you do not need. Smart spending is at the core of US economy. Stopping altogether with consumption could be the end of the economy. But at the same time, smart spending and careful expense budgeting is the key in moving forward.

This is where minimalism comes in. Sometimes referred to as life hacking, frugality or simple living, being a minimalist comes down to being able to focus on what is important. But this is not about eating on the floor and dumpster diving. Even a frugal lifestyle can be fun and minimalism can be just the same. It is also a very real solution to a very real problem. There are successful people who took on a minimalist lifestyle and became debt free.

Finding debt freedom through minimalism

There are people who took on being a minimalist and even has the results to show that it is possible to pay down debt with this particular mindset. One such story is of an olympic rower Rachel Jonat who was staring down at $82,000 in debt with her husband. Using a minimalist approach, they were able to pay everything down in just one year and seven months after they started. Below are their learnings from the experience as shared by

Recognizing the problem

The number one point in trying to be debt free is recognizing the problem and the source of it. For Rachel, she admits that debt has been a way of life from the time she was 17 and got her credit tool. She has been charging expenses and as an olympian, she racked up these items quickly. She had a dream of going into the olympics and participating as a rower.

Rachel was able to pursue her dream while the financial obligations that came with it was left for the credit cards to handle. She was charging items to her card and at one point, her mom even took out a second mortgage on their house just to help out. This is not the usual circumstances where you take out a second mortgage but they did it just the same and debt just became a part of their life.

Even after Rachel got married, they all charged the expenses on their credit card. This will take them back in their attempt to be debt free but it was already done. It was only when they had to renovate their home where they able to sit down and look at their expenses and debt. This is when they realized that they have racked up debt that they do not know what to do.

Minimalism can be a debt solution

Among the other debt solutions out there, the family opted to makeover their lifestyle entirely by letting go of consumerism and becoming minimalists. Here are the reasons why this lifestyle helped them get rid of their debts.

  • It opened their eyes about the role of “stuff” in their lives. Rachel initially got into the idea of minimalism when her sister sent her links to articles about it. She was skeptical at first but she soon realized that it is not about the number of stuff – it is about the idea of the stuff “owning” you. When they own you, the compulsion to have a lot of “stuff” becomes a measurement of your success.
  • It promotes frugality. Frugality can help change lifestyles just as minimalism can be a great help in reaching your objective of being debt free. Being frugal is similar to minimalism in the sense that it encourages you to to focus on the important things. It is not about the quantity but the quality of what you own.
  • It taught them how to choose the things they need to sacrifice. When the couple decided to change their lifestyle, they just had their first child. They were honest enough to admit that it was not an easy adjustment but it made them more determined to identify the things in their lives that they can sacrifice. For instance, Rachel decided to sell her wedding gown. It was very painful but when she found the perfect buyer and glimpsed how happy the bride-to-be was, she realized it was easier to let it go. When she did that, it became very liberating. It became easy to let go of the other stuff as well.

All of these helped the family break free from the clutches of material possessions – especially the need to amass a whole lot of them. Since the compulsion to buy is no longer there, you are able to free funds to help you pay off your debts a lot faster.

Do you have what it takes to eliminate debt and be a minimalist

Towards the end of the article, the Jonat family revealed that although they credit minimalism in being debt free, it was not without any challenges. This is why you need to understand minimalism completely so the changes that will happen to your life will be more acceptable.

There are three important truths about being a minimalist.

  • You have to change your perspective. It is on how we see things that can propel how far we can go. We need to change our outlook on life and see that minimalism isn’t deprivation of material possessions, it is discerning what is essential in your life and leaving behind those that serves no purpose.
  • You need to find what is important. Having focus and knowing your goal is an important aspect of minimalism. You need to put your goal on top of mind and everything you do should push you towards that direction. In this process, you get to appreciate the more important things in life. It can be more time to pursue your passion of reading and writing rather than being glued to the TV. Eliminating the clutter gives you focus and clarity.
  • You learn to put money in its rightful place and role in your life. You start to see money as a tool and not as a master. Minimalism makes you realize that you need to be in control of your money – not the other way around. Once you do that, you will find yourself more in control of your financial decisions. It will give you that initiative to spend not based on what you can afford, but what you really need in life.

Here is a video of Graham Hill as he talks about how less makes you more happy. He gives three important steps to help you achieve a minimalist lifestyle. It is not about how much you own but how much room you have for the important stuff.

4 Extreme Measures To Increase Your Debt Payment Fund

get out of debtAre you one of the millions who are constantly trying to get relief from credit problems? Millions of Americans are still in debt and it seems like they are bound to stay that way for a very long time. It seems that all of our budgets will always include a debt payment fund entry. Will we ever be free from credit obligations?

In an article published on The Wall Street journal website, consumer debt continues to rise. Although it was the slowest in 6 months, fact remains that it continues to grow. As the article on reveals, the non mortgage debts of Americans grew by 4.8% in November. It was slower than the 7% back in October. The statistical information mentions that the slow growth in caused by the lower credit card spending.

Despite this slow growth, you need to remember that even if it is smaller than the past, it is still an increase. It still means we need to pay off more than what we owe in the past.

That being said, getting a foothold on your finances means growing your debt payment fund significantly. But what can you do to give it an increase that is enough to put a huge dent on your debt balance?

4 ways that you can significantly boost your debt payment fund

Although people would increase their income to pay off debt, there are extreme ways that you can cut back on spending to grow your debt payments. We have 4 suggestions for you that will require a huge sacrifice from you and your family. If you want to get out of debt fast, no sacrifice should be too great to get what you want to happen.

Live on one income.

You know how couples decide to have a child and they have to make huge adjustments so they can survive on one income? After all, being their for your child is the greatest gift that you can give them. This is also something that you can do. You can discuss with your spouse or partner how you plan to do this but make a commitment to cut back on your spending so you can afford to live on one income. You can choose to live on the income of the one who earns the most. That should give you more room in your budget.

If you think that this is too extreme, you can try to adjust to it slowly. During the first month, you can allocate 25% of one income entirely for debt payments. As each month passes by, increase that by 25%. By the fourth month, you should be able to put the whole income into your debt payment fund.

Get rid of your car.

This is another extreme measure that you may want to seriously consider. If you think that you cannot live on one income alone, what about giving up your car? Did you know that the average annual expense that a person spends on a car is more than $9,000 a year? At least, this is what reports back in April 2013. If you gave up your car, you will have to deal with the hassles of commute but you get to add $9,000 in your debt payments. You don’t have to worry about car maintenance/repair, insurance, rising gas prices and other expenses associated with owning a car. You can opt to join the commuters or you can ride your bike to work – whatever is applicable. If you opt for the latter, you get to exercise as you go to work and back.

If you have two cars, you can opt to give up just one car and carpool with your spouse/partner. Or you can give up both cars. That will mean an additional $18,000 a year to be sent to your debt payment fund. Do not worry because you really do not have to give up on a vehicle forever. This is only until you pay off all of your debts.

Downsize your home.

Another extreme adjustment that you can do to pay off your debts is to downsize your home. Mortgage loans are still the biggest debt that the average American household owes. If you can get rid of this, you can really put a lot of breathing space into your budget. We are not saying that you give up home ownership like our suggestion with your car. But what we are trying to say is to just live in a smaller house. This will really benefit you in more ways than you know. Instead of having all the extra rooms, just live in a home that has one room for the couple and one for each kid. Or have them share. One dining room and living room should be enough too. You do not really need a big backyard or front yard. You can sell your big house and buy a smaller one in cash. Settle your other debts and live debt free. The upkeep on a bigger home is more costly. Not only will you solve your mortgage problems, you can significantly lower your monthly expenses.

Stop using your credit cards.

Lastly, you can increase your debt payment fund if you stop using your credit cards. These card purchases can be quite a burden if you end up letting them grow. If you are used to making purchases with your card, you have to stop doing that. At least, you can give it up until you have full control of your finances. Buy things in cash for now. It is one of the most effective ways to make sure that you will live within your means.

If you do not want to close cards, you can use it every now and then – like once or twice every six months but only for small purchases. And make sure that you will pay them off immediately. What you are paying on interest can be added to your debt payment fund instead.

How to make paying off debt successful

Doing these extreme measures will really help you solve your debt problems. Increasing your budget for debt payments is one way that you can quickly get out of debt. As you diligently send in your monthly contributions, you can go on your way to achieve a life of financial freedom.

But before you can really achieve that, you have to completely pay off your debts first. Here are some tips that will help you pay off what you owe.

  • Get the support of the whole family. Everyone in the household should do their part as you try to grow your debt payment fund. Even your kids should be in on the effort. If anything it will help them understand the repercussions of irresponsible financial behavior.

  • Put off major purchases. It is not a good idea to make expensive purchases while you are still paying off your credit obligations. If it is not a matter of life and death, opt to use the money to get rid of your balance first.

  • Be very frugal with wants. We are not saying that you should completely eliminate your entertainment activities but you may want to be very frugal about it. Look for cheap alternatives that will help you enjoy your favorite activities without compromising your debt payments.

Getting out of debt can be as fast as you want – but that means you need to make some sacrifices. It doesn’t matter how you choose to get out of debt. There will always be changes in your life that has to be implemented. You cannot live the way you used to because that got you in debt. And if you have to make changes, why not make it as drastic as you can. The more you can sacrifice, the faster you can get out of debt.

Be Careful Of Debt Relief Scams: Tips To Protect Yourself

scammer surrounded by billsIn September of 2013, the federal court in the State of Florida helped the Federal Trade Commission (FTC) in their quest to crack down the lingering debt relief scams that are trying to prey on struggling American consumers.

According the the press release found on the site, the court found the defendants to be guilty of violating the FTC Act by doing the following:

  • Misrepresenting the interest rate reduction services on credit card debts.

  • Misrepresenting policies about refunds.

  • Sending unauthorized billing to consumers.

  • Direct violation of the Telemarketing Sales Rule.

This is just one of the many stories of fraudulent companies that the government is trying to track and shut down to protect the unsuspecting consumers. They are actively campaigning to help consumers learn how to avoid debt relief scams so they will not be swindled out of their hard earned money.

Illegitimate debt relief companies prey on the desperate

The thing about debt problems is it will really cause you to go for desperate measures just to save what little money that you have left. Some people are attracted by “too good to be true” campaigns that are simply just that – too good that it ends up being a fraud.

The Better Business Bureau ( reports that in 2011, the FTC reported that 10.8% of Americans are a victim of fraud. That is equivalent to 25.6 million. The survey from the FTC that was discussed in the BBB article mentioned how most fraud cases happen online. Although the convenience of transacting on the Internet is there, you need to be very careful because a lot of people are easily victimized by all sorts of scams. One of them are debt relief scams.

Among the type of scams on the survey, Credit Repair rank 6th place with 1.7 million victims. On 7th place are debt relief scams that victimized 1.5 million consumers. Mortgage relief scams rank number 10 with 800,000 victims.

According to the FTC survey, a high percentage of the victims did not finish high school or have had a recent negative experience like divorce, illness or a job loss. Those who admit to having a lot of debt are also among the people who are most likely to be a victim of these fraudsters.

Obviously, nobody wants to be a part of this statistic. And since these people are really very sneaky, all you can really do is to do your research and find out how they go about scamming people. Here are 5 signs that you are about to be a victim of debt relief scams:

  • Upfront fees. One defining characteristic of legitimate debt relief companies is the fact that they are able to provide services without asking for upfront fees. This is one quick way of knowing if you are dealing with a fly-by-night company or an established one. The legitimate ones try to earn your trust by showing you that they mean business and they are not collecting anything before they have done their job.

  • Fraudulent practices. There are fine lines in debt relief and even in credit repair that scammers are not too scared to cross over. This is a perfect example of the means not justifying the end. One glaring example is being advised to secure new social security numbers. This is a wrong practice and should not be tolerated. Illegitimate companies would be the type to ask those in debt to consider this to start over a clean slate.

  • Absolute promises. Debt is a case to case basis and there are varying degrees of work that is needed to be debt free. But this knowledge comes only after knowing and assessing every situation carefully and looking at different scenarios and debt relief programs. Scammers will most likely skip this critical step and give big promises of eliminating your debt is given at the start

  • Leaving everything to chance. Debt brings an overwhelming emotion of fear and stress. This is a bad combination and we usually jump on the first “lifeline” thrown our way without thinking it through. Debt relief scams know this and exploit this very weakness debtors have. It is tough but composing oneself and checking emotions outside the door before making decisions will go a long way.  It is important to know the background of the companies by researching first and dealing with them after.

  • Foregoing the fine print. There are people with a knack for reading between the lines. But this should not be the case with debt relief companies. The fine print explains all the general and vague clauses in the agreement. This explains all the details of the contract between debtor and debt relief company. Once you are forced to sign right there and then without being given time to read the fine print, better think twice about the company you are transacting with.

When faced with the decision of choosing a debt relief company to work with, keep in mind these  tips to avoid falling into the trap of scammers.

The TSR: how to spot the illegal ones

The Telemarketing Sales Rule (TSR) is a law that provide consumers with the protection they need against malicious companies that offer debt relief scams. According to the release about the TSR, companies who do not follow these rules are most likely operated by scammers. One of the latest addition to this law is covering not only outbound calls but it includes inbound calls as well.

Here are the important points in this debt relief law that will help you determine the legal companies from the not.

Illegal upfront fees. TSR has made it illegal for debt relief companies to front-load their fees. This is meant to protect the consumers because illegal companies will just collect fees and just prolong your debt problems or worse, disappear without a trace.

If the debt relief company is doing multiple settlements for you one after the other, they are allowed to collect after every successful negotiation with your creditors. Another option is similar to an escrow account where you deposit money to a separate account meant to pay the debt relief company after the transaction is done.

Disclosing information prior to closing. Being an advocate of consumers, the TSR compels all debt relief companies to disclose all basic and pertinent information to their potential clients before signing them into a contract. This protects the consumers by ensuring they are well aware of all aspects of the contract before signing.

This could include the timeline on when the debt relief company could deliver on their promise. It could also be about the costs involved and how much all the fees would be paid at the end. Another would be the negative effects of employing their services in terms of credit standing. These and more are important to be reminded of before signing any contract.

Misrepresentation. Illegal debt relief companies will promise you the stars and the moon just to get you to sign. This is in violation of the TSR too. Debt relief scams will promise you a huge reduction on your debt and most probably in a short span of time. These are too good to be true and they might be. Ensure that the services being offered by your debt relief company are legitimate and something they will be able to accomplish for you.

If you want to file a complaint on debt relief companies that scam people, visiting the FTC website at or calling 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261 can get you talking to the right people in no time.

Learn what you can about these laws and your rights as a consumer. That way, you will be protected from debt relief scams. They always come up with new ways to trick you out of your money so make sure you will stay vigilant.

When Debt Freedom Is Not Necessarily A Prerequisite To Financial Success

stressed woman with stacks of documents on a tableDebt freedom is an overrated financial situation. It is true that there is nothing better than being debt free. Not having to worry about wasting money on interest and knowing that creditors can never come after you is a dream.

But here is the truth: society, specifically our financial industry will not give you access to a lot of financial opportunities lest you use some form of credit to your name. That is just how things are. Although you may choose to live without your credit card or not, you have to deal with the truth that it will make your credit score suffer. And when you have a low credit score, that will keep you from a lot of financial opportunities.

So regardless of what you think about successful people and debt freedom, it seems that lack of credit is not really a prerequisite of being a financial success. In fact, a lot of millionaires and billionaires are not exactly debt free.

How can you use credit and still be financially successful

But how can you use credit and still consider yourself financially successful? Is this really possible?

Believe it or not, it is very much possible. We’ve mentioned it time and again that the key to be a financial success does not necessarily lie on eliminating debt. The key is to educate yourself about debt so you can use it properly. It can be a tool that you can use to aid in your financial growth.

Sure you can always save up for a business start up or a home – but that will take ages! Instead to fearing debt, you need to learn how to master its use. It all boils down to how you choose to use so it will reflects well in your credit score. If not for these credit reports and the importance of having a credit history, we will not really bother with debt at all.

Here are a few facts that you need to know.

  • A good credit score does not necessarily mean being in debt. If you use your credit card pay your dues on time and in full at the end of the billing cycle, you do not have to worry about debt. The use of your card and your timely payment is enough to reflect well on your credit history.

  • You can have a good credit history if you pay within the grace period of your billing statement. You do not have to pay more than what you purchased. A lot of us think that credit means we have to pay interest on top of the purchase price of our transaction. This is not always true. If you pay within the grace period of your credit card, you do not have to worry about paying more money towards your creditors. No finance charge will be put upon you.

  • Your credit score will not suffer if you keep the activity low. You can even use your card just once a month or once every two months and that should be enough to satisfy the needs of your credit history.

  • You don’t even have to rely on credit cards. Your credit report also takes into consideration other loans like your mortgage, student loans and other personal loans. If you have these, then by all means you can keep your credit cards. As long as you can maintain the payments on these credit accounts, you should be able to keep your credit score high.

  • Monitoring your credit report is also a must to protect your credit score. Sometimes, people are very careful of credit and how they use their money but they fail to monitor their credit report. This is a mistake. You need to keep on monitoring your credit because identity theft can ruin even the best efforts to keep your credit in good condition. It does not even have to cost you a thing because you are entitled to one free credit report from each of the three major credit bureaus (Equifax, TransUnion and Experian) every year. That makes three free credit reports annually. Just visit to download your free copy.

Although our main goal is to be a financial success, you need to understand that role that your credit score will play in your plan. The reason why we are making so much fuss about credit scores is because you will get a lot of financial opportunities with a high score. In case you do have to get a loan for your business or a property investment, you can benefit from a low interest rate that will greatly increase your personal wealth’s growth possibility.

Not only that, your credit score is one of the factors that employers look into when trying to figure out if they will accept an applicant into their company. It is also one of the requirements that help insurance companies compute for your premiums. Even utility companies will take a look at this to determine how much rate they will impose on your bill. The same is true for cellphone companies. And if you want to lease a place in an affluent neighborhood, some landlords will require a good credit score for that.

These are all important in the overall plan of your financial success and no small detail should be left unattended if you want to pave your way clear towards a financially rewarding life.

Key ingredients of your personal finances that will make it a success

What we have just discussed is the answer to why debt freedom is not a prerequisite to being financially successful. However, that is not the whole picture. A major mistake that people make is assuming that the amount that you earn every month is the main factor that defines your success. The truth is, it is not only about how much money you have in the bank. It is how you utilize that money that will define if you are successful in the monetary aspect of your life.

While the money that you make is the catalyst that will make you a financial success, there are other key ingredients that is also needed.

High credit score

Let us begin with the topic that we had been discussing so far: credit scores. You need to have a high credit score because that will enable you to take advantage of opportunities as they come by. If anything, this is one of the best reasons why your credit score needs attention. So keep your credit rating high by practicing the right money management skills.

Have a 9-12 month emergency fund

Your emergency fund will obviously be for unexpected expenses that you could encounter in the future. There is no way that you can predict what will happen in the future and that means you have to be prepared for any event. We strongly encourage you to build up 9-12 months worth of emergency funds. 9 is the average number of months that a person is unemployed so it should be a safe reserve fund just in case you lose your job.

Updated retirement fund

By updated, we mean your current retirement fund contributions should be going along a pace that will enable you to get what you need when you retire on time -or even earlier. When financial experts say that you should pay yourself first, that does not mean buying yourself a new pair of shoes or designer clothing. It simply means you have to pay yourself in the future. Invest in your older self because they deserve to be rewards for all the hard work that they will be doing from hereon.

More than one source of income

Lastly, to be a financial success means you have to set up more than one source of income. This is how you become financially secure. If there is no security, your success could be fleeting. Do not let this happen. You have to try to cover your bases and make sure that if something happens to one income, you will not be left incapacitated.

3 Important Rules To Maintain Debt Freedom

man behind dollar signBecoming debt free is a great experience. You must have gone through a lot to reach this stage in your life. Looking back, you think about the sacrifices that you had to make and the various temptations that you had to overcome. But while you have gone through highs and lows just to become debt free, you need to know that your journey is far from over.

You know how people has to continue dieting and exercising to keep their ideal weight? The same is true to maintain debt freedom. It will not be as tough as losing weight but there is still effort to be exerted.

3 habits that will keep debt problems away

You must understand that staying debt free will entail some work. There is a conscious effort to correct the mistakes that you made in the past. Obviously, your old life is no longer something that you can follow. There are changes that you have to make in order to ensure that you will keep your debt freedom.

There may be any changes but there are 3 important personal finance rules that you need to follow to keep your new found financial freedom. These three are vital because they result in several other habits that will all contribute to making you a smarter manager of your personal finances.


First is budgeting. You want to make sure that you will live within or below your means and the best tool for this is a budget plan. This habit basically encourages you to consult your budget at all times. You have to know when a purchase is to be made or when it shouldn’t. This plan will identify your income and the various expenses that it finances. If you always consult your budget plan, you will never be in danger of overspending. That means you will not have to resort to credit for the important expenses that you have to make. In case you are unsure of how you can do this, you can always go to to find the right template that you can follow. You can start with this and slowly revise your budget as you see fit. Take note that this is not something that you do only once. Your plan should continue to change as time goes by.

Smart spending

The next important rule to maintain debt freedom is smart spending. This can be easily done if you have a budget plan. You simply have to stick to your budget and decide which expenses must be prioritized. But beyond that, it is important for you to remember that smart spending is not just about saying no when you cannot afford a purchase. The real test is saying no when you can afford to buy something. Being smart is prioritizing savings before you purchase unnecessary expenses that you can live without.


Speaking of saving, that caps off the three rules that you have to follow while living a debt free life. It may surprise you but there are actually consumers who never spent more than their income but ended up in debt when an emergency struck. They were not prepared for the unexpected expenses and that pushed them to borrow money to help tide over that immediate cost. If you have your emergency fund, you can avoid this possibility. Another reason to save is for your financial goals. You want to retire in comfort and that means you have to save up for it. If you want to buy a home and you don’t want your mortgage payments to end up ruling your future finances, save up for a portion of home buying price.

All these three will help you reach the personal goals that you have for yourself and your family (or future family). Now that you have reached this stage in your life, it pays to take the effort to make sure you will experience it for a very long time.

Being debt free does not necessarily mean zero debt

There is a popular misconception about debt freedom that you also need to revise. Being debt free does not necessarily mean you will be completely out of debt. When you do not have any debt, you will keep your credit history thin. That will not bode well for your credit score. When the time comes for you to borrow money for your mortgage, you might be given a high interest simply because you have a low score on your credit rating.

Some people are quick to implement credit card debt elimination and while this is helpful, it does not solve the problem. What we suggest that you do is this: eliminate debt but not the credit card. You can continue using your card while keeping yourself free from debt. You just have to make sure that purchases made with your card are budgeted so you can pay for it immediately. Not only that, you want to make sure that you understand the features of your card. That means familiarizing yourself when it comes to finance charges, interest rates and grace periods. Knowing what these are all about will help you make better spending choices when it comes to your credit cards.

Going beyond credit card debt, you also have to identify the type of debts that are actually good for you. These are the debts that will help put money in your pocket like home loans, business loans and student loans. These all contribute to your personal wealth.

How To Find Your Way Towards A Successful Debt Freedom

debt pit with ladderPeople in debt are not just after paying off their debts, they want a successful debt freedom. But what does that mean?

Being debt free is one thing. Unfortunately, if you are not careful, there is a possibility that it will be short lived. You need to go through the right process in order to really learn your lesson. While we all want to get out of debt fast, you need to take it as slow as you can in order to drive the lesson firmly in your head. Just like someone who lost weight needs to continue regulating their meals, you also need to be vigilant about your monetary transactions. That is the only way that you can be assured that you will make your debt freedom last forever.

Steps to a life free from credit obligations

Anyone in debt will tell you that the road towards debt freedom is not easy. While the concepts are simple, they are not without hardships. You will be tempted left and right, you will be asked to restrict your lifestyle and you will have to go through some sacrifices that are necessary to achieve freedom from credit.

There are many ways to become debt free and if you want to be successful in your efforts, you have to accomplish at least the following tasks.

  • Define the mistake that led you in debt. The first step is vital to maintain debt freedom – it is knowing what caused you to be in debt in the first place. While people usually blame bad spending habits, that is not the only cause for debt. Sometimes, people pay their dues and make smart spending choices but since they lack in savings, they got themselves in debt when an emergency struck.

  • Find out how much you owe. When you have an idea about the cause of your debt, only then can you find out the gravity of the problem. Know how much you owe and also, determine if you can stop acquiring debt. In some cases, debt is brought about by an illness and if you haven’t stopped incurring debt because of an on-going medical treatment, that will affect your choice of debt solution.

  • Calculate how much you can afford to pay. Another factor that determines the debt relief program that you will use is your ability to pay off the debt on a monthly basis. If you are able to pay your debts without a problem, debt consolidation will suffice. But if you need a debt reduction, you will require debt settlement.

  • Decide on the debt relief program that you will use. Based on the information that you have determined so far, you should have an idea regarding the type of program that will best suit your financial condition. Choose depending on your ability to pay and what you are willing to sacrifice. Sometimes, you may be able to afford the payment but you cannot stand the long wait or the credit damage that the program will require from you.

  • Follow the payment schedule. Once you have made your choice, you have to ensure that you will stick to it and follow it to the end. Given the circumstances, you do not want to to waste your time, effort and the little money that you have set aside for your debt payments.

  • Learn the habits that will correct the mistake you made. Since you have defined the mistake that got you in debt, you should find out the habits that will correct that. If it is lack of an emergency fund, you should start building that up. If it is overspending, you need to start practicing smart spending habits.

Follow all of these steps and you should have the things that you will need to keep yourself out of debt.

Key to make your debt free life last

The key to make your new found debt free life last is to practice proper financial management. In the end, you will realize that it is the one thing where you failed at. Debt is caused by several mistakes that you made in the past. You want to make sure that you can eliminate the wrong financial decisions – if not limit them.

Here are some tips that will help you practice financial management skills that will keep you from committing the mistakes of the past.

  • Live below your means. You have to make sure that you start living not just within your means, but below your means. By doing the latter, you will free up some money to be spent on either debt payments or your savings.

  • Create a budget. The only way that you can do that is when you use a budget to help monitor your financial activities. Know your income and list the expenses that you will spend with it.

  • Make smarter spending choices. You have to understand that even if you can afford to buy something, it does not mean you have to buy it. Sometimes, it is better to just put it in your savings.

  • Grow your savings. In the end, your savings will help you out of the unexpected expenses that will come your way. That will keep you from borrowing money just to help yourself out of those tight spots.

  • Equip yourself with the knowledge that will influence your decision making. There are many online resource sites that can give you the education that you need. You have that is a government sponsored website that holds relevant personal finance information.

Here is a video that we created for you to help you understand the emotional process that you have to go through in order to solidify the debt freedom that you want to achieve.

How Budgeting Converts Life Goals Into A Reality

budget and calculatorBudgeting is an important aspect of your finances that will help keep yourself from making a lot of mistakes in your life. We all have goals and dreams and when you know how to budget, you can plan your finances so that it can support their fulfillment.

All budgets must contain your income and your expenses to determine their activities over a specific period. However, you need to be careful about the type of budget that you will implement in your life. provides three different types of budget.

  • Surplus budget – this is the budget that have enough left after all the priority expenses are satisfied.

  • Balanced budget – this implies that the income and expenses are equal – leaving you with no extra money at the end of the budget period.

  • Deficit budget – this is the type of budget wherein your expenses exceed your income. This type of financial condition usually result in debt.

Obviously, you want to have at least a balanced budget in order to keep your monetary activities from ruining your financial standing. However, if you want to ensure that you can reach your life goals, you need a surplus budget to have enough money to save for that goal.

Life goals you need to include in your budget

We all have various life goals and it varies depending on our priorities. Sometimes, we all have the same items on our list but in most cases, the ranking of priority is different. Here are three different life goals that most people usually have on our list of goals.

Debt freedom

When you are in debt, it becomes one of your priorities in life. Debt is one of the things that can really destroy your life and if you don’t do something about it, that can really compromise your future. Although there are various ways to get out of debt, a budget plan should be among one of them. It is the first that you will create in order to help choose the right debt relief program that will get you out of debt. It is important that you can define how much you can contribute towards your debts on a monthly basis. You need to choose based on what program you can afford. When you have your debt payments in your budget, you can ensure that it will always be funded.


Another life goal that we usually want to reach is having our own home. Again, the main role of budgeting is to ensure that you can save up for your home. Just as this plan can help you put aside an amount that will grow your funds to afford at least the down payment of your home. Your budget will help you calculate how much you can afford to put aside for your monthly mortgage payment. That will help determine the value of the home that you can afford to pay for. You can shift your expenses and determine how much you can sacrifice in order to afford the home that you want buy.


The last life goal that we will discuss is your retirement. This mostly involves growing your savings. Just like in your home goal, you can include in your budget the amount of money that you need to put aside for your retirement. The amount actually depends on the age that you want to retire and when you started to save up for your retirement. If you need a big retirement contribution because you started late, your budget will allow you to easily choose which expense you can let go to make room for this savings.

Tips to create a long term budget plan

The thing about this entry in your budget is it will be a long term budget plan. Although it will be part of your overall budget, it will be different from your daily expenses because the culmination of the goal will not come immediately. If you are confused about how you can do this, we suggest that you get an online budget planner that will serve as your template as you create your budget plan. We have a free budget planner worksheet on this site that will help you get started on budgeting.

To help you further, here are some of the things that you can do to make a long term budget plan.

  • Consider your short term goals. Your long term will be supported by the short term so make sure that they are aligned properly. Once you have an idea about what you spend daily, you will have a hard time determining the amount of money that you can afford to put aside for the long term.

  • Consider the lump sum payments that you make. Sometimes, we only focus on the monthly amount and forget about the annual or quarterly expenses. Do not ignore the once a year costs that you make like your property taxes or other things that you have to contribute on.

  • Include the daily and pro-rated annual expenses, add them and subtract the sum from your income. Whatever is left will be the amount that you can put aside for your life goals.

  • Plot all of these detail in your budget plan to ensure that all of them will be funded consistently and regularly.

Of course, you need to ensure that you are not forgetting your emergency fund. While your life goals are important, make room for the unexpected expenses. Otherwise, you will end up spending what you saved up for your life goals when an emergency strikes. If you do not have this, make sure you save up for it first before you really concentrate on your other goals. When you have saved up enough amount, that is when you can pool in your resources for your life goals.

Here is a video that we created to help you learn how to budget for your household.

Beginner’s Guide To Debt Relief Part 2: Stay Out Of Debt

girl in the midst of falling moneyIf you experienced debt before or you are still going through debt relief, you know that it is one endeavor that you do not want to go through again. Debt can dictate how you live your life and you can expect that it is a lifestyle that you would not choose for yourself.

Those of you who are about to go through debt relief, this article will contain what you need to do after you have completed your debt relief program. In a previous article (Part 1), we discussed how you can gain debt freedom. The tips contained here describes your next step.

In case you are reading this because you just completed your debt relief program, congratulations are in order. You have done what most of us dream about and striving to achieve. You are finally debt free! But what do you do next? Will you relax and go back to your old ways?

Necessary changes that will maintain debt freedom

Unfortunately for you, it is not possible to go back living to the way you were before. If you do, you can expect that you will end up in the same debt situation again. We do not want that and we will focus on how you can stay out of debt.

Your debt is proof that something was wrong before. That means you need to apply some changes that will solidify the financial freedom that you are enjoying right now.


When you got yourself in debt, that only signifies that you had been living a lifestyle that is susceptible to debt problems. If you don’t want to go through all of the hardships again, you need to adapt a debt free lifestyle. It can be a frugal lifestyle if you want but it is not a requirement. The important changes that you need to focus on should lead you to live below your means. If that means you have to move to a smaller home or you have to give up your expensive toys – then that is what you need to implement.


The only way that you can successfully change your lifestyle is when you alter your state of mind. Our mentality is in tuned with consumerism. This socio-economic order teaches us to buy things in excess of what we really need. We think that this will paint us as a successful individual but it helps no one but the corporations who sell these products and services. Contrary to what society dictates or what you got accustomed to, you don’t need most of what you have right now – or more than half of what you see on advertisements. Change your mentality about buying products and availing of services and you will free yourself from the bondage of materialism.


Lastly, you have to change your attitude about how you will spend your money. Whatever you change in your lifestyle and mentality will be reflected in your attitude towards your finances. It is all connected and if you are successful, then you can find it easier to implement proper financial management skills. Instead of buying the things you see in the store, you will think twice before doing so. You will learn how to skip the purchase even when you know that you can afford it. Instead, you will opt to save your money.

Factors that will make debt relief last

We mentioned proper financial management skills and this is something that will really help you stay out of debt. There are many things that you can do – most of them will help you live below your means. While the usual advice is to live within your means, that is no longer enough to achieve financial security. If you really want to protect your family from another financial ruin, you should aim to live below your means. That means having your expenses lower than your income so you have extra to put aside for savings.

Here are three important factors that will make your debt relief last – even forever.

  • Budgeting. You need to control where your money is going and this is only possible if you learn how to budget. This will keep you from overspending because you know how much you have coming in and how much of it can be spent of certain expense categories. If you find it hard to start budgeting, you can use software programs that promises to make it easier to create and implement. has a list of budgeting software programs that you can look through.

  • Saving. When you strive to live below your means, you will have enough money to put aside for your reserve fund. This is very important because your savings will help you ride out any emergency situation and will keep you from borrowing money. It will also allow you to buy things in cash – thus keep you from wasting your money on interest.

  • Smart spending. The last factor is learning how to use your money wisely. You don’t buy things just because you can afford it. You have to learn how to say no despite that affordability because it is more beneficial to just put aside the money for your savings or investment.

What you need to understand is that staying out of debt is a constant struggle. This is why you need to change your lifestyle, mentality and attitude to make that transition bearable. Despite the material things that you will lose along the way, the contentment and peace of mind that debt freedom brings will make it all worthwhile.

Here is a video that you can watch to get more tips in being debt free.

Is It Better To Earn More Or Spend Less During A Debt Crisis?

woman hammering a dollar signIf you think that we are out of the debt crisis, think again. This is not to scare you or anything but you should not allow yourself to be lulled into a false sense of comfort because we are not out of the debt pit. It is probably true when the government tells us that the employment rate is getting better but you have to know that we are not yet out of the danger zone. If you look at the US Debt Clock website, you will see just how much our debts are still rising.

Of course, there are several sources that contributed to the figures but the point in fact is, we still have a long way to go.

In our own personal lives, we each have our own financial difficulties and if you are still going through a debt crisis, you are probably looking for a way out of it. Well here are two things that you can do: earn more or spend less.

The logic for this is to grow your debt payment fund so you can get out of debt a lot faster. You want to keep the interest amount on your debt low and that can be achieved if you pay off the debt quickly. It can save you a lot of money especially when you are dealing with credit cards.

However, the question on people’s mind is this: should you concentrate on earning more or spending less?

Why increasing your income helps in debt relief?

Some people think that earning more is a lot better than spending less because of the following reasons:

  • There is no limit to the amount that you can add to your funds.

  • You don’t have to change your current lifestyle.

  • The children are shielded from the debt crisis as you are absorbing the burden by doing more work.

  • You can build up your funds not only for debt payments, but also for your savings and even some investments that will grow your personal wealth.

There are so many options to earn more money so you can pay your dues. If this is where you want to concentrate, it helps to find a way to do so without exhausting your physical and mental self in the process. That is the drawback in choosing to increase your income. You will have to exert more effort just to supply the needs of your family and the debts that you have accumulated over time.

Another drawback is that you most likely will not learn your lesson. Since you  are not changing your lifestyle, you will continue with the extravagant way of living that got you in debt in the first place. If you are not careful, you could end up in the same situation even after you have gone through all the debt relief efforts in the past.

What can you learn by lowering your expenses while in debt?

On the other hand, trying to lower your expenses instead of earning more will provide you with the following benefits:

  • You are forced to live below your means – which will decrease the chances of you getting yourself in debt again.

  • You will learn how to budget.

  • You learn how to choose where you spend you money on – thus eliminating all your bad spending habits.

  • You create a new lifestyle for the family that will teach all of you how to value your money.

If you choose to focus on decreasing your spending, that will give you a limited increase in your debt payment fund. That is the drawback for this option. There is only so much that you can cut back on and this will keep you from getting out of debt a faster. Not only that, you may lose the chance of putting some money into your savings.

Which of the two gives better results to help with debt?

At this point, you can probably figure out what the solution is right? The answer to the question, which of the two: earning more or spending less, can help you best with debt relief is already irrelevant. You need to combine the two so you can become debt free.

If you use both, you don’t have to work too long in order to meet your payment obligations. The savings that you will get by cutting back on your usual expenses will add to what you can send towards your debt. More importantly, spending less will help you (or force you) to practice the right habits that will not only get you out of debt faster but also keep you from landing in that spot again.

In the end, what is important is what you will learn out of this situation. Given that, you know that spending less is the better option. However, to keep your life from being too miserable, you need to increase your income so you can still afford to enjoy the finer things in life.

The bottom line is, if you really want to keep your debts from getting worse, you need to spend less than what you are earning. Here is a video that you can watch to help you understand how to accomplish that.

What To Do After Debt Settlement

woman experiencing freedomDebt settlement is effective. Those who have gone through the program and was able to successfully negotiate a debt reduction can attest to this. While it cannot be denied that there are many risks to this program, the fact that people have achieved debt freedom from it, proves that it can solve your debt problems.

This debt relief program aims to give consumers a debt reduction. To do that, you have to convince your creditor or the collector handling your account that you are in a financial crisis. And to make them believe it, you have to start defaulting on your payments. You will negotiate with them to allow you to pay only a portion of your debts. Once you agree on an amount that is often times lower than your current, you will pay that off and whatever is left of your debt will be forgiven by the creditor/collector.

But once you have achieved your debt freedom, there are still some things that you need to do. Settling your credit card debt is not the end of the journey.

It is just the same as dieting. When you have achieved your ideal weight, you don’t stop there. You change some things in your life permanently to help you avoid gaining what you lost. The same is true after you get your freedom from debt. There are a couple of tasks that needs to be accomplished to solidify your current financial situation.

How to clean up the pieces after settling your debts

So what are the things that you have to do? Well most of the things that you will do at first involves cleaning up the pieces of your financial life.

  • Keep the signed settlement document. This is your proof that after you have paid off the agreed settlement amount, you will no longer be pursued for this type of debts. You have to know that there are some collection agencies who buy old debts and come after the debtor – even when the debt is paid. If that happens to you, this is the document that you will show them.

  • Get a copy of your credit report. A few weeks after your payment is cleared, get a copy of your credit report and see if your file had been updated. You can get a free copy from the Annual Credit Report website. Check if the debt is still reflected there. If yes, then you can call your creditor/collector and remind them to file the update already.

  • Start increasing your credit score. There are many ways to fix your credit score and that begins by using your credit card now and then and paying off the purchase immediately. If you send the payment within the grace period, you don’t have to worry about any interest.

  • Reassess and revise your budget plan. Now that you have your debt out of the way, you can revise your budget plan to remove it from your expense list. It is highly advised that whatever you have saved from the debt payments be transferred to your savings account.

These are the tasks that you need to accomplish immediately after you have paid off your debt (except for the credit report). By doing so, you can arrange your life in such a way that will suit your new found debt freedom.

Tips to live a debt free life after debt settlement

But even as a person who lost weight continues watching what they eat, there are still some things that you have to continue doing so you can stay debt free. Just as you can gain weight almost immediately, you can also put yourself in debt easily if you are not careful.

Just think about what debt free people do with their lives. They display certain traits and apply practices that ensure they will not be put in a debt situation. If you want to be like them, here are the things that you must do.

  • Live within your means. Debt signifies that you had been spending more than what you actually make and that is one change that you have to implement. Stop overspending and just keep to the limits of your income. If you cannot afford to buy something, do not buy it.

  • Analyze every purchase. Smart spending is a must to keep to a debt free life. Here’s the thing, even if you can afford it, it doesn’t mean you should have it. Like that luxury car that you want to buy. Even if it looks good and you know that you can afford the monthly payment on a car loan, it doesn’t mean it should be bought. Think about the gas consumption and the money wasted on the interest of the loan. Even if you can pay for the car in cash, you still need to think whether it is the right thing to do.

  • Save for the rainy day. Another important habit that you need to develop is saving. This is one of those that will also keep you from incurring debt ever again. You can make the right choices and live within your means but if you do not have enough money for emergencies, you can end up in debt as well.

  • Grow your money. After all of this, you may want to think about growing your income. Remember that the cost of living continues to rise and you need to make a way to have your income grow too. You can invest some of your savings or you can find another source of income.

Debt freedom does not really mean you have to sit back and relax. You will not be as stressed as before but you still need to keep a close eye on your expenses to make sure that you will never land in the same position again. That is the smart way to do it after you have gone through the damaging effects of debt settlement.

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