June 30, 2024 • 28 mins
Having a debt problem not sure what to do to solve. It starts with identify what the cause then work to solve.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Charles McDonald (00:03):
Hello, I'm your host, Mr. Chuck, a retired
accountant turned truck driver,I reduce my debt in a relatively
short period of time, debtreduction to achieve financial
freedom takes commitment,confidence, determination,
solving problem, having a depthproblem and not sure what to
(00:26):
solve or what to do, it startswith identifying the cause and
then work to solve. I'm gonnastart out what were your goals
in life, either now, or when youfirst got out of high school,
college, trade, school, whateveryou are doing, or you had goals
(00:50):
to get a job in your chosencareer, and then work up and
tried to be the best she can tobuy a nice place to live and
have some transportation thatnobody else has. Maybe that was
(01:12):
your goals in life, when youwere looking at graduating from
your last level of school ofwhatever that was, whether it's
college, or trade school, orjust high school, it doesn't
matter. Whatever you decide todo, what were your goals in
life? And where are you today?
And how long has it been. Butthe reality of most likely was,
(01:38):
what is something along theselines is a career that you
chosen to go into, eitherdoesn't pay a whole lot, or
there is no job openings in thefield, or a combination of both.
So you end up creating moredebt, because you you had school
(02:02):
loan debt to start with, thenyour field that you chose didn't
pay as well as you hoped. Or hewas unable to get that higher
paying job for whatever reason.
And you end up living off somecredit cards, or use credit
(02:24):
cards more often than what youshould have. And now you got
yourself into a debt problem. Soyou can't finance nothing. It's
hard to get loans, you're payingmore for insurance because you
got a lot of debt. Andeverything is not looking so
good. So what do you do? I'mgonna start out by lists
(02:50):
identify the problem first, youcannot solve a problem. Until
you know what the problem is.
You identify the problem, thenyou figure out ways to solve it.
There may be more than one way.
(03:10):
And then you take action to dowhatever your plan. So let's
give you an example of somethingnot financial. But you live in
an apartment and you pay rent,you notice that your sink, he
got a leak underneath your sink.
So what'd you do? You looked onthe sink and figured out where
(03:31):
the leak was coming from? Andyou probably put something under
it to catch the water. What'sthe next step? That is
identifying a problem andfinding out where it was? But
how do you fix it? Well, ifyou're a rent, it's you got to
you can either fix it yourselfis something simple you can take
(03:53):
care of. Or maybe you make aphone call and call a landlord
who sends a plumber in to fixthe problem. That's a problem
was the leaky leaking plumbing.
He identified where it was andyou took action calling the
(04:14):
landlord to have come in and geta fixed. It's the same thing
with personal finance. What isthe problem? What is holding you
back from achieving your goalstoday? Maybe your goal is to
build up a downpayment so youcan afford a home and an area
(04:37):
that you want to live maybe yourfamily lives in that area. Or
it's just an area you like forwhatever reason. And you've been
struggling for 10 years and youyet to get even 5% saved up. So
what's the problem? The problemis you're not saving enough And
(05:00):
that could be either your incomeis not high enough, or you have
too much debt. Too much debt iseaten up your monthly income so
you're not able to set someaside. Well, how do you go about
solving that? And that's whatwe're here to help you with. But
(05:24):
let before we get into that, forthe 10 common financial
challenges that most peoplehave, few people are lucky
enough have no experience for usfinancial issues, I have had
financial issues most of mylife. In fact, many, many of us
face the same struggles andchallenges when it comes to
(05:47):
building financial security,saving money and adjusting to
major life events. Whether yourpersonal finances are temporary
worry are a constant source ofstress. The good news, the good
news is that you don't have toface these issues forever. For
every financial problem, thereare solutions that can help you
(06:08):
adjust your financial strategyand improve your ability to save
for the future. Here are the top10 Problems US consumers face,
and expert approved ways toovercome these obstacles,
monthly spending exceeds incomeand number one, how can you
(06:29):
spend more money than what youmake is called credit cards. As
Carl borrowing money you don'thave many consumers struggle
with the basic challenge ofhaving an income that doesn't
cover their expenses. The firststep to overcome this obstacle
is to set a monthly budget thatcategorize expenses to rein in
(06:52):
excess spending. That's yourproblem excess spending. But
depending on the gap betweenyour monthly income and your
financial costs, you may need toconsider getting a second job
requesting to work overtime, orseeing if your employer can give
you a raise or which is not inthe article, find a better job
(07:16):
in your career field changeemployers. Number two, he can't
get out from under car payments.
Car payments, eat up spareincome every month. If you're
reasonably upgrade your vehicle,you might feel like you're
always making car payments butnever make but now are paying
your vehicles off. By changingthe way you approach your car
(07:40):
purchase, he can reduce yourlosses and minimize the cost of
car payments. One way to reducepain car payment that is to buy
a used car, which comes in at alower price and depreciate
slower than new vehicles, thenwhen you go to trade in that
(08:01):
car, you have a greater trade invalue, and your new car payment
will be smaller as a result. Soif you buy a used car, generally
you're not going to pay new carprice. So you finance less
money. And if you have any typeof down payment, it will be a
(08:23):
larger down payment. So eventhough the interest rate is
higher on a used car loan, witha bigger down payment, you will
be better off in the long run.
Because that car if you're gonnakeep it for two years, and it's
gonna lose less value over thetwo year period because you
(08:44):
already lost most of the valuebefore you purchase the car.
Then when you trade it in,you're gonna owe less on it. So
the payoff will be less,which gives you a larger down
payment on the next use vehicleyou buy. Stay away from buying a
new car brand new car because itis a depreciating asset and it's
(09:08):
not a good investment over thelong term. It will cost you
money in you will lose a lot ofmoney. Number three, he carry a
credit card balance every month.
Credit cards charge highinterest fees on any bounce
(09:28):
carried over from one month tothe next. As you reevaluate your
budget and rent work to reduceexpenses. Make sure your income
is also to pay off the creditcard balances every month,
saving yourself from fees thatpush you further into debt.
Additionally, consider exploringoptions to transfer high
(09:50):
interest credit balance to cardsor as lower rates or explore
debt consolidation plans tostreamline your payments.
Building Have it a responsiblecredit card use and timely
payments can significantlyimprove your overall financial
health in the long run. Whenthey say timely payments or
(10:12):
meaning timely payments that payoff the balance, any credit card
you carry a balance on is a nono, and it's gonna cost you a
lot of money, and it's going toeat into your budget, thus,
getting you to the point you arespending more than what you
make. Number four, you don'thave an emergency fund. Life
(10:35):
events like loss of income carbreakdown, hospital visit, or
other unforeseen events can putconsumers into a hole if they
don't have an emergency fund attheir disposal. Even a font of
$1,000 can save and can save youfrom having to take a credit
card interest, or open apersonal loan, dedicate part of
(10:58):
your monthly budget to save forthis emergency fund. Even as
even contributions of $50 amonth can add up quickly,
creating a buffer that will comein handy when a rainy day hits.
That is very important to havean emergency fund. And all your
plans have life financial plans.
That is, and I've talked aboutit extensively in the past, your
(11:23):
rank keeps going up. risingrents across America pension
consumers budgets and manyconsumers find themselves
wondering if it takes makes moresense to buy instead of rent.
Well, there are a number ofthings to consider including
your household income, and yourwillingness to stay in a
purchase home for at least fiveyears. It's worth looking at,
(11:44):
for rent versus buy calculatoror talking to a financial
advisor to determine whetherbuying can save you money and
start building equity in a realestate property. This depends on
where you live. If you live in abig city, say New York City,
you're not going to be able toafford to buy anything most
(12:07):
likely. So you've got to berent. There are some areas where
renting is actually cheaper thanbuying because the cost of the
homes. So that has to be takeninto consideration. But as a
general rule, when you're buyingyour home, you're building
equity, you're paying rent toyourself, think of as this you
(12:31):
got a mortgage payment, you'repaying that mortgage payment.
And as you pay it, what you oweis going down over time the
value of the house is going upbecause it's real estate. So
you're building equity, I callthat paying rent to yourself.
And one day down the road,you're gonna sell that home and
(12:52):
get your money back and whyyou're paying their mortgage,
especially early in the mortgagelife. You've got mortgage
interest and real estate taxes,which are a income of federal
income tax deduction, where it'sgoing to lower your income tax
and how to offset some of thatcost. Six new baby brings
(13:14):
unexpected costs well now thatcould be expected. Children are
expensive. Every day. Allieditems like diapers or formula
baby food can stress monthlybudgets and checking accounts,
even before new parents face thecost of daycare and other
unavoidable expenses. Beforehaving a child plan ahead and
(13:35):
start saving in advance. It'swhat it says you owe the
hospital for medical care. Well,you had a baby you went to the
hospital. Medical bills can be asignificant financial burden,
especially when you're someonewho doesn't have insurance or
you do but a high deductibleplan. But here's hospitals who
(13:55):
used to deal with patients whocan't afford to pay their bill
in full. So take advantage ofyour options to reduce the cost
and spread it out over time. Setup a payment plan with the
hospital. Some hospital forexample, willing to reduce the
amount owed in order to getpayment. And many are willing to
(14:16):
talk about payment plan thatlets you slowly chip away at
your bill over time. Theseoptions could help you pay off
your debt in a manner thatdoesn't destroy your personal
finances. Never ever pay ahospital bill with a credit
card. Never don't pay a doctorwith a credit card. Because if
(14:36):
you use a credit card, you'renot going to get it it's not
going to get written off.
They're not going to be willingto do a payment plan, work
directly with the hospital forits expenses and then work
directly with each individualdoctor that you get a bill from
for their cost. My plan when Iwas had met Go bills, I always
(15:01):
paid the doctors first becausethey are people and they
provided me a service. I paidthe hospital last. They provide
the building and the place forthe doctor to work. And lot of
those services are marked upgreatly. I basically just set up
a payment plan with thehospital, they want copies on my
(15:23):
tax returns, I send that in nobig deal. I made payments for a
period of time. And then theyquit send me a bill, they wrote
off the balance I made, he maypaid for it for a year 50 bucks
a month three or $600. And thenthe rest of it was gone. And I
owed a couple 100,001. I mean,the surance paid some of it. But
(15:47):
I still owed us a lot more thanwhat I pay, and it disappeared.
So I was happy. So work directlywith the hospital, maybe the you
have the same luck I did.
Student loans. Your student loandebt limits your financial
capabilities, go go wander largestudent loan debt can the man
(16:08):
payments that lend me ability tobuy a home or increase your
savings, but delaying thepayment of the debts only
resolved and paying moreinterest over time, consider
taking whatever approach to debtreduction to help you meet your
goals. borrowers have the optionto refinance at a lower rate to
reduce the amount of where theycan increase their monthly
(16:30):
payments to pay off debt faster.
Either pros could alleviate yourstudent loan burden while
creating opportunity to rebuildyour finances. Maybe you're
waiting for the government togive you some student loan debt
relief. And if you haven't got ayet, you're probably not gonna
get it. That's all I have to sayabout that, you probably don't
(16:53):
qualify, because every time theysay, Oh, hang on, I'll pay off
student loan $10,000 A person.
But when it comes down to themactually doing it, there is a
certain specification that youmust qualify for. And 90% of the
people never qualify forwhatever that reason is. It's
(17:13):
limited to a very limited,certain university certain
colleges that went bankrupt, andthings like that, or you have to
work in the public sector for 10years. And you have to make your
monthly payment timely for thewhole time. And if you miss one
payment, you're not going to getany debt relief. You're not
(17:35):
saving enough for retirement oryou're not saving at all for
retirement. Many US consumersare worried they're not saving
enough for retirement. But it'snever too late to start catching
up if you hadn't maximizedcontributions of 401k. Put as
much tax deferred money aspossible into the account. And
be sure to maximize matching,you feel overwhelmed by
(17:58):
financial matters. PersonalFinance is a complex subject,
but it has implications thatwill affect you the rest of your
life. If you're feelingoverwhelmed or confused by your
own financial situation, isworth the time and money to take
a financial literacy class. Yourlocal credit union may have
(18:19):
additional educational resourceto help you better understand
your finances, and what you cando to overcome financial
challenges. If you are somebodywho your parents never taught
you anything about finances, oreven just what the value of the
dollar, you have no concept ofthese pair of shoes costs $100.
(18:44):
In order to get $100 I had towork five hours
at $20 an hour to buy one pairof shoes probably have to work
more than five hours because yougot to pay income tax on that
money to have the $100 to buythat one pair of shoes. You got
(19:08):
to get a feel for the value ofmoney. And what does it take to
earn X amount of money. So ifyou have a spending problem, if
your income if your spending isexceeding your income problem
one, you have a spendingproblem. There's only two things
(19:31):
you can do increase your incomeor reduce your spending. The
easiest one of those two is toreduce your spending. Now Yamane
got yourself into a situationwhere the minimum amount you can
spend is eating up all yourmonthly income because you have
(19:52):
a problem. What's the problem heneeds identified the problem?
What's eaten up most Have yourmonthly income, look, do some
tracking and figure it out.
Maybe it's a combination of rentutilities and your credit card
debt. Maybe it's enter too muchentertainment, or you're dining
(20:14):
out a lot. Maybe it's this,because you bought an automobile
that you can't afford, he boughtan automobile is costing you
$2,000 a month. And your takehome pay is $4,000 a month, and
you pay rent of $1,500, you have$500 to pay your utilities buy
(20:34):
food and entertainment. And youend up putting things on a
credit card. And then when acredit card comes due, he don't
have enough disposable monthlyincome to pay it off. So you
carry a balance. And now it'scosting you even more. And
that's been going on for thelast six months or a year. And
(20:58):
it's getting out of control,you're getting way too much
debt. I'll be back in one momentwith my final thoughts are the
articles I referred to, in myepisodes, have a link in my show
notes. If you're interested inchecking out the software that I
personally use to get my democontrol, it's in my show notes
(21:20):
under shop financial, you needto copy and paste the link. And
it will take you to the websitecan have any questions, you can
just contact me through thatparticular website. If you value
this podcast and I like to makea contribution, I had a
contribution link in my shownotes also, give whatever you
(21:43):
feel is appropriate for theinformation I am providing. I
thank everyone for listening tomy podcast. Okay, so now you
know that you got to identifythe problem. And maybe you have
more than one problem. You couldhave multiple problems and one
not aware of it. Maybe youthought you had one problem. And
(22:06):
as you look through yourfinances, you realize I have
multiple problems, how what am Igonna do? You got to one
identify the problem as a twolow income? What's the reason
for it? What can you do to fixit. So I have too much debt. And
my spending exceeds my monthlyincome. What's causing that?
(22:33):
Maybe it's you have too muchcredit card debt. And he add up
all the minimum payments of yourcredit cards. And then you take
all your other needs expense,housing, transportation, some
food, some clothing, take thatin consideration. And you're
(22:58):
spending more than what you'remaking a month. But if it's your
credit card debt, your housing,transportation, housing also
includes utilities andeverything else involved with
that. Transportation includesyour car payments and the cost
to operate the car. So if thosetwo categories in your debt is
(23:20):
more than your monthly income,then all the food you buy,
you're basically buying oncredit, even though you're
paying cash, but to credit yourcredit, come in somewhere that
money is coming from somewheresomehow. So just look at it. All
the food I'm eating, I'm buyingon credit and I can't afford to
pay it off every month. I have aproblem. What am I going to do?
(23:44):
Okay, identify the problems nowfind a solution, Income
Solution, maybe a second job,maybe a side hustles are self
employed of some sort, or find anew job that pays more income,
or work over time, things likethat. Spending too much, too
(24:05):
much debt? Well, the first thingis quit making extra payments
and all that make the minimumpayment on all your debt that's
going to help you a little bit.
But take that little bit that'shelping you start your emergency
fund, because that's probably aproblem. Have you ever in the
(24:26):
past had something happen thatyou couldn't afford to pay for.
So you put it on a credit cardand you're unable to pay it off.
And maybe you're still payingfor it. Whether you got a flat
tire on your car, the water pumpgoes out whether it's car
(24:48):
repair, whether you had anaccident and got injured
hospital bills, lost your jobfor a certain length of time,
say two weeks or something andAnd you'd lost your income, you
had to use credit to get by, forwhatever happened. And that's
(25:10):
not good, you need an emergencyfund, and your emergency fund
should have a minimum of $1,000.
And build it up to a maximum ofanywhere from three to six
months worth of living expenses.
The more you have, the longeryou can go, and if something bad
would happen, and it's not, ifit's gonna happen, it's more of
(25:33):
a matter of when it's gonnahappen. Because over your
lifetime, you're gonna havesomething happen, that's gonna
be considered an emergency, anemergency is some unforeseen
event that causes you to pay outsome finances. When a hospital
accident, a car accident, a caraccident could be both the car
(25:59):
and the hospital. Remember,insurance might pay for some of
that. But they hardly ever pay100%. And they're slow unpin you
might have to pay the bill upfront, and submit why you paid
to an insurance company. So youneed an emergency fund to cover
things like that, so that you'reprepared to go forward. Without
(26:23):
putting a undue stress onyourself when something
stressful is happening. Take thefinancial stress off yourself by
having the emergency fundunplanned for baby Well, things
happen. Even a plan for a baby.
If you're gonna have children IIgot to know before upfront,
(26:44):
children are not cheap, you gothospital bills, you got doctor
bills, you got daycare, you gotfood, all those things over time
accumulate into a pretty bigpricey amount. So if you can go
into it with some money upfront,they won't last you forever to
(27:04):
get you by the first year, yearand a half, he gets a couple pay
raises in your set. You knowwhat I'm saying here? It's not
gonna last forever, but it'sgonna help you at the very
beginning. Take less stress,obviously, you can have that
happy family that you're hopingfor. Keep listening to this
podcast. The next episode, youset up your goals you know what
(27:30):
you want to achieve in life. Ifidentify some of your problems,
I'm gonna help you solve worktowards solving your debt
problem. You need a debtreduction plan. I've talked
about it in a past but the nextepisode, I'm going back to it.
(27:54):
The more times I talk about it,the more I talked about I add
new stuff. Maybe they updatethings I don't know. But the
more you hear it, I dread todrill it into your brain.
Repetition is a good thing foryou to know how to take care of
(28:16):
paying off your debt. Have aplan and you'll be glad you did
so
Hello, I'm your host, Mr. Chuck, a retired
accountant turned truck driver,I reduce my debt in a relatively
short period of time, debtreduction to achieve financial
freedom takes commitment,confidence, determination,
solving problem, having a depthproblem and not sure what to
(00:26):
solve or what to do, it startswith identifying the cause and
then work to solve. I'm gonnastart out what were your goals
in life, either now, or when youfirst got out of high school,
college, trade, school, whateveryou are doing, or you had goals
(00:50):
to get a job in your chosencareer, and then work up and
tried to be the best she can tobuy a nice place to live and
have some transportation thatnobody else has. Maybe that was
(01:12):
your goals in life, when youwere looking at graduating from
your last level of school ofwhatever that was, whether it's
college, or trade school, orjust high school, it doesn't
matter. Whatever you decide todo, what were your goals in
life? And where are you today?
And how long has it been. Butthe reality of most likely was,
(01:38):
what is something along theselines is a career that you
chosen to go into, eitherdoesn't pay a whole lot, or
there is no job openings in thefield, or a combination of both.
So you end up creating moredebt, because you you had school
(02:02):
loan debt to start with, thenyour field that you chose didn't
pay as well as you hoped. Or hewas unable to get that higher
paying job for whatever reason.
And you end up living off somecredit cards, or use credit
(02:24):
cards more often than what youshould have. And now you got
yourself into a debt problem. Soyou can't finance nothing. It's
hard to get loans, you're payingmore for insurance because you
got a lot of debt. Andeverything is not looking so
good. So what do you do? I'mgonna start out by lists
(02:50):
identify the problem first, youcannot solve a problem. Until
you know what the problem is.
You identify the problem, thenyou figure out ways to solve it.
There may be more than one way.
(03:10):
And then you take action to dowhatever your plan. So let's
give you an example of somethingnot financial. But you live in
an apartment and you pay rent,you notice that your sink, he
got a leak underneath your sink.
So what'd you do? You looked onthe sink and figured out where
(03:31):
the leak was coming from? Andyou probably put something under
it to catch the water. What'sthe next step? That is
identifying a problem andfinding out where it was? But
how do you fix it? Well, ifyou're a rent, it's you got to
you can either fix it yourselfis something simple you can take
(03:53):
care of. Or maybe you make aphone call and call a landlord
who sends a plumber in to fixthe problem. That's a problem
was the leaky leaking plumbing.
He identified where it was andyou took action calling the
(04:14):
landlord to have come in and geta fixed. It's the same thing
with personal finance. What isthe problem? What is holding you
back from achieving your goalstoday? Maybe your goal is to
build up a downpayment so youcan afford a home and an area
(04:37):
that you want to live maybe yourfamily lives in that area. Or
it's just an area you like forwhatever reason. And you've been
struggling for 10 years and youyet to get even 5% saved up. So
what's the problem? The problemis you're not saving enough And
(05:00):
that could be either your incomeis not high enough, or you have
too much debt. Too much debt iseaten up your monthly income so
you're not able to set someaside. Well, how do you go about
solving that? And that's whatwe're here to help you with. But
(05:24):
let before we get into that, forthe 10 common financial
challenges that most peoplehave, few people are lucky
enough have no experience for usfinancial issues, I have had
financial issues most of mylife. In fact, many, many of us
face the same struggles andchallenges when it comes to
(05:47):
building financial security,saving money and adjusting to
major life events. Whether yourpersonal finances are temporary
worry are a constant source ofstress. The good news, the good
news is that you don't have toface these issues forever. For
every financial problem, thereare solutions that can help you
(06:08):
adjust your financial strategyand improve your ability to save
for the future. Here are the top10 Problems US consumers face,
and expert approved ways toovercome these obstacles,
monthly spending exceeds incomeand number one, how can you
(06:29):
spend more money than what youmake is called credit cards. As
Carl borrowing money you don'thave many consumers struggle
with the basic challenge ofhaving an income that doesn't
cover their expenses. The firststep to overcome this obstacle
is to set a monthly budget thatcategorize expenses to rein in
(06:52):
excess spending. That's yourproblem excess spending. But
depending on the gap betweenyour monthly income and your
financial costs, you may need toconsider getting a second job
requesting to work overtime, orseeing if your employer can give
you a raise or which is not inthe article, find a better job
(07:16):
in your career field changeemployers. Number two, he can't
get out from under car payments.
Car payments, eat up spareincome every month. If you're
reasonably upgrade your vehicle,you might feel like you're
always making car payments butnever make but now are paying
your vehicles off. By changingthe way you approach your car
(07:40):
purchase, he can reduce yourlosses and minimize the cost of
car payments. One way to reducepain car payment that is to buy
a used car, which comes in at alower price and depreciate
slower than new vehicles, thenwhen you go to trade in that
(08:01):
car, you have a greater trade invalue, and your new car payment
will be smaller as a result. Soif you buy a used car, generally
you're not going to pay new carprice. So you finance less
money. And if you have any typeof down payment, it will be a
(08:23):
larger down payment. So eventhough the interest rate is
higher on a used car loan, witha bigger down payment, you will
be better off in the long run.
Because that car if you're gonnakeep it for two years, and it's
gonna lose less value over thetwo year period because you
(08:44):
already lost most of the valuebefore you purchase the car.
Then when you trade it in,you're gonna owe less on it. So
the payoff will be less,which gives you a larger down
payment on the next use vehicleyou buy. Stay away from buying a
new car brand new car because itis a depreciating asset and it's
(09:08):
not a good investment over thelong term. It will cost you
money in you will lose a lot ofmoney. Number three, he carry a
credit card balance every month.
Credit cards charge highinterest fees on any bounce
(09:28):
carried over from one month tothe next. As you reevaluate your
budget and rent work to reduceexpenses. Make sure your income
is also to pay off the creditcard balances every month,
saving yourself from fees thatpush you further into debt.
Additionally, consider exploringoptions to transfer high
(09:50):
interest credit balance to cardsor as lower rates or explore
debt consolidation plans tostreamline your payments.
Building Have it a responsiblecredit card use and timely
payments can significantlyimprove your overall financial
health in the long run. Whenthey say timely payments or
(10:12):
meaning timely payments that payoff the balance, any credit card
you carry a balance on is a nono, and it's gonna cost you a
lot of money, and it's going toeat into your budget, thus,
getting you to the point you arespending more than what you
make. Number four, you don'thave an emergency fund. Life
(10:35):
events like loss of income carbreakdown, hospital visit, or
other unforeseen events can putconsumers into a hole if they
don't have an emergency fund attheir disposal. Even a font of
$1,000 can save and can save youfrom having to take a credit
card interest, or open apersonal loan, dedicate part of
(10:58):
your monthly budget to save forthis emergency fund. Even as
even contributions of $50 amonth can add up quickly,
creating a buffer that will comein handy when a rainy day hits.
That is very important to havean emergency fund. And all your
plans have life financial plans.
That is, and I've talked aboutit extensively in the past, your
(11:23):
rank keeps going up. risingrents across America pension
consumers budgets and manyconsumers find themselves
wondering if it takes makes moresense to buy instead of rent.
Well, there are a number ofthings to consider including
your household income, and yourwillingness to stay in a
purchase home for at least fiveyears. It's worth looking at,
(11:44):
for rent versus buy calculatoror talking to a financial
advisor to determine whetherbuying can save you money and
start building equity in a realestate property. This depends on
where you live. If you live in abig city, say New York City,
you're not going to be able toafford to buy anything most
(12:07):
likely. So you've got to berent. There are some areas where
renting is actually cheaper thanbuying because the cost of the
homes. So that has to be takeninto consideration. But as a
general rule, when you're buyingyour home, you're building
equity, you're paying rent toyourself, think of as this you
(12:31):
got a mortgage payment, you'repaying that mortgage payment.
And as you pay it, what you oweis going down over time the
value of the house is going upbecause it's real estate. So
you're building equity, I callthat paying rent to yourself.
And one day down the road,you're gonna sell that home and
(12:52):
get your money back and whyyou're paying their mortgage,
especially early in the mortgagelife. You've got mortgage
interest and real estate taxes,which are a income of federal
income tax deduction, where it'sgoing to lower your income tax
and how to offset some of thatcost. Six new baby brings
(13:14):
unexpected costs well now thatcould be expected. Children are
expensive. Every day. Allieditems like diapers or formula
baby food can stress monthlybudgets and checking accounts,
even before new parents face thecost of daycare and other
unavoidable expenses. Beforehaving a child plan ahead and
(13:35):
start saving in advance. It'swhat it says you owe the
hospital for medical care. Well,you had a baby you went to the
hospital. Medical bills can be asignificant financial burden,
especially when you're someonewho doesn't have insurance or
you do but a high deductibleplan. But here's hospitals who
(13:55):
used to deal with patients whocan't afford to pay their bill
in full. So take advantage ofyour options to reduce the cost
and spread it out over time. Setup a payment plan with the
hospital. Some hospital forexample, willing to reduce the
amount owed in order to getpayment. And many are willing to
(14:16):
talk about payment plan thatlets you slowly chip away at
your bill over time. Theseoptions could help you pay off
your debt in a manner thatdoesn't destroy your personal
finances. Never ever pay ahospital bill with a credit
card. Never don't pay a doctorwith a credit card. Because if
(14:36):
you use a credit card, you'renot going to get it it's not
going to get written off.
They're not going to be willingto do a payment plan, work
directly with the hospital forits expenses and then work
directly with each individualdoctor that you get a bill from
for their cost. My plan when Iwas had met Go bills, I always
(15:01):
paid the doctors first becausethey are people and they
provided me a service. I paidthe hospital last. They provide
the building and the place forthe doctor to work. And lot of
those services are marked upgreatly. I basically just set up
a payment plan with thehospital, they want copies on my
(15:23):
tax returns, I send that in nobig deal. I made payments for a
period of time. And then theyquit send me a bill, they wrote
off the balance I made, he maypaid for it for a year 50 bucks
a month three or $600. And thenthe rest of it was gone. And I
owed a couple 100,001. I mean,the surance paid some of it. But
(15:47):
I still owed us a lot more thanwhat I pay, and it disappeared.
So I was happy. So work directlywith the hospital, maybe the you
have the same luck I did.
Student loans. Your student loandebt limits your financial
capabilities, go go wander largestudent loan debt can the man
(16:08):
payments that lend me ability tobuy a home or increase your
savings, but delaying thepayment of the debts only
resolved and paying moreinterest over time, consider
taking whatever approach to debtreduction to help you meet your
goals. borrowers have the optionto refinance at a lower rate to
reduce the amount of where theycan increase their monthly
(16:30):
payments to pay off debt faster.
Either pros could alleviate yourstudent loan burden while
creating opportunity to rebuildyour finances. Maybe you're
waiting for the government togive you some student loan debt
relief. And if you haven't got ayet, you're probably not gonna
get it. That's all I have to sayabout that, you probably don't
(16:53):
qualify, because every time theysay, Oh, hang on, I'll pay off
student loan $10,000 A person.
But when it comes down to themactually doing it, there is a
certain specification that youmust qualify for. And 90% of the
people never qualify forwhatever that reason is. It's
(17:13):
limited to a very limited,certain university certain
colleges that went bankrupt, andthings like that, or you have to
work in the public sector for 10years. And you have to make your
monthly payment timely for thewhole time. And if you miss one
payment, you're not going to getany debt relief. You're not
(17:35):
saving enough for retirement oryou're not saving at all for
retirement. Many US consumersare worried they're not saving
enough for retirement. But it'snever too late to start catching
up if you hadn't maximizedcontributions of 401k. Put as
much tax deferred money aspossible into the account. And
be sure to maximize matching,you feel overwhelmed by
(17:58):
financial matters. PersonalFinance is a complex subject,
but it has implications thatwill affect you the rest of your
life. If you're feelingoverwhelmed or confused by your
own financial situation, isworth the time and money to take
a financial literacy class. Yourlocal credit union may have
(18:19):
additional educational resourceto help you better understand
your finances, and what you cando to overcome financial
challenges. If you are somebodywho your parents never taught
you anything about finances, oreven just what the value of the
dollar, you have no concept ofthese pair of shoes costs $100.
(18:44):
In order to get $100 I had towork five hours
at $20 an hour to buy one pairof shoes probably have to work
more than five hours because yougot to pay income tax on that
money to have the $100 to buythat one pair of shoes. You got
(19:08):
to get a feel for the value ofmoney. And what does it take to
earn X amount of money. So ifyou have a spending problem, if
your income if your spending isexceeding your income problem
one, you have a spendingproblem. There's only two things
(19:31):
you can do increase your incomeor reduce your spending. The
easiest one of those two is toreduce your spending. Now Yamane
got yourself into a situationwhere the minimum amount you can
spend is eating up all yourmonthly income because you have
(19:52):
a problem. What's the problem heneeds identified the problem?
What's eaten up most Have yourmonthly income, look, do some
tracking and figure it out.
Maybe it's a combination of rentutilities and your credit card
debt. Maybe it's enter too muchentertainment, or you're dining
(20:14):
out a lot. Maybe it's this,because you bought an automobile
that you can't afford, he boughtan automobile is costing you
$2,000 a month. And your takehome pay is $4,000 a month, and
you pay rent of $1,500, you have$500 to pay your utilities buy
(20:34):
food and entertainment. And youend up putting things on a
credit card. And then when acredit card comes due, he don't
have enough disposable monthlyincome to pay it off. So you
carry a balance. And now it'scosting you even more. And
that's been going on for thelast six months or a year. And
(20:58):
it's getting out of control,you're getting way too much
debt. I'll be back in one momentwith my final thoughts are the
articles I referred to, in myepisodes, have a link in my show
notes. If you're interested inchecking out the software that I
personally use to get my democontrol, it's in my show notes
(21:20):
under shop financial, you needto copy and paste the link. And
it will take you to the websitecan have any questions, you can
just contact me through thatparticular website. If you value
this podcast and I like to makea contribution, I had a
contribution link in my shownotes also, give whatever you
(21:43):
feel is appropriate for theinformation I am providing. I
thank everyone for listening tomy podcast. Okay, so now you
know that you got to identifythe problem. And maybe you have
more than one problem. You couldhave multiple problems and one
not aware of it. Maybe youthought you had one problem. And
(22:06):
as you look through yourfinances, you realize I have
multiple problems, how what am Igonna do? You got to one
identify the problem as a twolow income? What's the reason
for it? What can you do to fixit. So I have too much debt. And
my spending exceeds my monthlyincome. What's causing that?
(22:33):
Maybe it's you have too muchcredit card debt. And he add up
all the minimum payments of yourcredit cards. And then you take
all your other needs expense,housing, transportation, some
food, some clothing, take thatin consideration. And you're
(22:58):
spending more than what you'remaking a month. But if it's your
credit card debt, your housing,transportation, housing also
includes utilities andeverything else involved with
that. Transportation includesyour car payments and the cost
to operate the car. So if thosetwo categories in your debt is
(23:20):
more than your monthly income,then all the food you buy,
you're basically buying oncredit, even though you're
paying cash, but to credit yourcredit, come in somewhere that
money is coming from somewheresomehow. So just look at it. All
the food I'm eating, I'm buyingon credit and I can't afford to
pay it off every month. I have aproblem. What am I going to do?
(23:44):
Okay, identify the problems nowfind a solution, Income
Solution, maybe a second job,maybe a side hustles are self
employed of some sort, or find anew job that pays more income,
or work over time, things likethat. Spending too much, too
(24:05):
much debt? Well, the first thingis quit making extra payments
and all that make the minimumpayment on all your debt that's
going to help you a little bit.
But take that little bit that'shelping you start your emergency
fund, because that's probably aproblem. Have you ever in the
(24:26):
past had something happen thatyou couldn't afford to pay for.
So you put it on a credit cardand you're unable to pay it off.
And maybe you're still payingfor it. Whether you got a flat
tire on your car, the water pumpgoes out whether it's car
(24:48):
repair, whether you had anaccident and got injured
hospital bills, lost your jobfor a certain length of time,
say two weeks or something andAnd you'd lost your income, you
had to use credit to get by, forwhatever happened. And that's
(25:10):
not good, you need an emergencyfund, and your emergency fund
should have a minimum of $1,000.
And build it up to a maximum ofanywhere from three to six
months worth of living expenses.
The more you have, the longeryou can go, and if something bad
would happen, and it's not, ifit's gonna happen, it's more of
(25:33):
a matter of when it's gonnahappen. Because over your
lifetime, you're gonna havesomething happen, that's gonna
be considered an emergency, anemergency is some unforeseen
event that causes you to pay outsome finances. When a hospital
accident, a car accident, a caraccident could be both the car
(25:59):
and the hospital. Remember,insurance might pay for some of
that. But they hardly ever pay100%. And they're slow unpin you
might have to pay the bill upfront, and submit why you paid
to an insurance company. So youneed an emergency fund to cover
things like that, so that you'reprepared to go forward. Without
(26:23):
putting a undue stress onyourself when something
stressful is happening. Take thefinancial stress off yourself by
having the emergency fundunplanned for baby Well, things
happen. Even a plan for a baby.
If you're gonna have children IIgot to know before upfront,
(26:44):
children are not cheap, you gothospital bills, you got doctor
bills, you got daycare, you gotfood, all those things over time
accumulate into a pretty bigpricey amount. So if you can go
into it with some money upfront,they won't last you forever to
(27:04):
get you by the first year, yearand a half, he gets a couple pay
raises in your set. You knowwhat I'm saying here? It's not
gonna last forever, but it'sgonna help you at the very
beginning. Take less stress,obviously, you can have that
happy family that you're hopingfor. Keep listening to this
podcast. The next episode, youset up your goals you know what
(27:30):
you want to achieve in life. Ifidentify some of your problems,
I'm gonna help you solve worktowards solving your debt
problem. You need a debtreduction plan. I've talked
about it in a past but the nextepisode, I'm going back to it.
(27:54):
The more times I talk about it,the more I talked about I add
new stuff. Maybe they updatethings I don't know. But the
more you hear it, I dread todrill it into your brain.
Repetition is a good thing foryou to know how to take care of
(28:16):
paying off your debt. Have aplan and you'll be glad you did
so
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