In Debt…Again? How to Break the Borrowing Cycle

By Credit.com

You hate debt.

You got out of debt once and vowed you’d never let it happen again. But here you are – stuck in debt again.

It’s not fair! How did it happen so quickly?

And what can you do to create a permanent debt solution so that you never repeat the pattern again?

The Permanent Debt Solution

Defining the source of your debt problem is critical to solving it.

You believe your debt is a financial problem, but it’s actually a personal problem masquerading as a financial one. That’s why a permanent debt solution eludes you.

Treating debt as if it were a financial problem is similar to trying to cure the flu by blowing your nose. You relieve an obvious symptom but don’t address the underlying cause.

When you don’t address the cause, you don’t get better.

In other words, debt is often just a symptom of a much larger problem: an addiction to an unsupportable self-image and lifestyle that results in overspending.

Until you address the real problem, the symptom will recur, which may explain why you are in debt again.

What that means is debt’s real cause is often personal life habits and attitudes that result in overspending.

The rule is simple – you must spend less than you earn. There’s no way around it.

However, teaching a chronic debtor to spend less and earn more is like telling an overweight person to lose weight by eating less and exercising more.

Everyone already knows what to do. The difficult part is actually getting it done.

How to Slay the Debt Monster

Sure, you want to get out of debt as fast as possible, but superficial financial solutions result in repeat offenders.

Using debt consolidation, or transferring balances to a HELOC or a 0% credit card, or selling assets such as a house, boat or car does not address the root cause of the problem.
You are trying to relieve the symptom by looking only at financial issues.

Instead, what you must first do is figure out what is causing your debt.

What are all the ways you spend more than you earn? But there are ways to identify these habits and change them.

The permanent cure is to plug all the habitual ways you leak money so that you never go into debt again. This isn’t sexy, but it permanently solves the problem.


You must persist in plugging these leaks until you are spending less than you earn.

It may take you months (or years) to achieve this objective.

That’s OK.

Read the full article online. 

11 Essential Money Tips For New College Grads-- from Forbes

Kerry Hannon, Contributor 

When my nephew Michael walked across the graduation stage at Wake Forest University last week to pick up his bachelor of science diploma, I wasn’t worried about his financial future.

Ever since he was a teenager he has always saved and invested the money earned from a potluck of summer jobs. (I put that down to good parenting skills and the financial lessons modeled by my sister and her husband.)

But not every recent college graduate is as knowledgeable about personal finances.
So, inspired by Mike’s Wake Forest ceremony, I couldn’t resist jotting down 11 pieces of financial wisdom that I would’ve imparted if I’d been asked to be the commencement speaker.

11 Personal Finance Tips for College Grads

Here goes:

1. Pick up a book or two on money basics. A couple that I like, written specifically for young adults, are Generation Earn: The Young Professional’s Guide to Spending, Investing and Giving Back, by U.S. News & World Report senior editor Kimberly Palmer and the bestselling Get a Financial Life: Personal Finance In Your 20s and 30s by Beth Kobliner, a noted personal finance commentator and former colleague of mine at Money magazine.

2. Pencil out a budget. After working for a few months and getting used to the amount of take-home pay (after taxes) you’re earning, figure out how much money you can afford to spend each month.

Mapping out your budget is a great way to help you quickly uncover whether you’re on the rocky road to spending more than you make — as I was for a while after college.
I’m not ashamed to tell you that it was scary and stomach-turning to get phone calls from credit card companies. To set things straight, I borrowed money from my older brother to erase my credit-card debt (I repaid him over time, without interest) and began using my cards only when I knew I could pay them in full each month.

After that experience, I vowed never to let anything like it happen again.

To begin budgeting, first add up the essentials, like your rent, utilities, groceries, transportation, student loans and a car loan. That’ll let you know how much is left over for other spending and saving.

Try not to eat out at restaurants too much, take taxis or spend frivolously on clothes. You’ll probably need to jump-start your wardrobe for work, but there are plenty of ways to do so frugally. Don’t forget to check out secondhand stores for lightly used clothing buys — I found a terrific black Armani suit in one for a song not that long ago. (Some smart money habits stay with you.)

Bottom line: Always spend less than you make. Websites like Mint.com and Youneedabudget.com can help you create a workable budget.

Read the full article online.

5 Financial Habits That Will Change Your Life

By Credit.com

With 2014 underway, New Year’s resolutions are a dime a dozen.

Study after study concludes that annual resolutions are rarely kept. In the words of Mary Poppins, resolutions are like a pie crust promise — easily made, easily broken.

Resolutions aim too high. While getting out of debt, spending less, and saving more are admirable goals, they do little to change our day-to-day actions.

Instead of lofty resolutions, we need to change our core habits.

Here are five habits to develop in 2014 to significantly improve your finances.

Track One Expense

A lot of people hate to budget. Tracking every dime spent is tedious and often unhelpful.
Just because one knows where they spent their money doesn’t mean their budget actually influences their spending decisions

Instead, develop the habit of tracking just one spending category. Pick an expense that you believe may be a problem area for your budget, and keep track of spending in just that one category.

Once you get spending in that category under control, start tracking the next expense that’s causing you to blow through your budget.

Audit Your Monthly Bills

We’re taught to check the batteries in our smoke detectors twice a year when the time changes.

Likewise, make it a habit to examine your monthly bills. You may find that you can get rid of services you don’t really need (e.g., 500 channels of cable you never watch) or at least reduce the cost.

I call this the One-N-Done method of saving because you make just one change that saves money month after month.

Automate Saving

One of the hardest habits to develop is saving and investing money.
Fortunately, we can easily automate this process, which makes developing the habit of saving much easier.

You can automate the building of an emergency fund by setting up monthly transfers from a checking account to a savings account that pays a decent interest rate.

Even better, sign up for your company’s 401k or an IRA and have money set aside each month automatically.

Learn Daily

Build learning into your daily routine. That may mean spending 15 minutes every day reading a book about finance or your career or a side business.
It could mean following blogs relevant to finances or your chosen career.

Successful finances and building wealth are about more than spending less than you earn and saving for a rainy day.

You need to learn how money works, and have a good grasp of the fundamentals if you want to turn your money into long-term wealth.

Track Your Progress

You can’t improve what you don’t measure. The measuring stick for finances is a personal balance sheet, which lists what an individual owns and owes.

Commit to updating your balance sheet every month. It takes just a few minutes, and this habit will cause you to refocus every month on your financial progress.

To make it even easier, there are free online tools you can use to track your investments and debts automatically.

In the words of Aristotle, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” The same is true for financial freedom.

“5 Financial Habits That Will Change Your Life” was provided by Credit.com.  

Read the full article online.