What Financial Headaches Are Hanging Over Your Head

A key focus of my blog is Financial Literacy/Money. To have good financial health, it’s important to know what steps to take and which ones to avoid to prevent getting yourself into long-term jams. The following contributed post is thus entitled, What Financial Headaches Are Hanging Over Your Head.

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There are few things as stressful as money. Even when things are going well, which isn’t all that often, we can be struck by a moment of panic, one that says, “it’s going well now, but you need to keep it like this for many years to come. Can you do it?” But of course, that’s nowhere near as bad as when things aren’t going as well as we’d like. They have the potential to rob us of the joy we should experience as living creatures, disrupt our sleep, and worse. Below, we take a look at some of the common financial headaches that can hang over a person’s head.

Source: Pexels.com

Too Much Credit Card Debt

Credit cards can be beneficial, of course; indeed, it’s recommended that you have one, so you can build good credit, which makes it easier to get loans at favorable rates. But credit cards usage can quickly spiral out of control, and before you know it, you can have a big bill, and your monthly payments are really only covering the interest. If that happens, then look at switching the debt to a card that offers an interest-free period. When the period runs out, switch the remaining balance to another card.

Big Bills and Reduced Income

Most people only have a pretty tenuous grip on their finances. Their security is entirely dependent on their income. But those people are just one injury away from being in trouble. If you’re involved in an incident and suffer an injury, you might find that you have to stop working. This will make it difficult to pay the many bills that you have. If this happens, the first thing you should do is pause any non-essential payments. If it wasn’t your fault, then get in touch with these accident lawyers, and fight for financial compensation. When you’re injured, the aim should be on getting better, not wrestling with your financial situation.

Expensive Homes

It is a great achievement to get the keys to your very own home. It can feel like a dream come true. But this dream can quickly turn into a nightmare if the house you bought is too big and expensive for what you can afford. The most important thing is to find more money – it is better, in the long run, to live a frugal lifestyle in order to afford the mortgage payments. Later on down the line, you’ll hopefully be able to renegotiate the terms of the deal, which will put more money in your pocket.

Everyday Expenses

Many people find that they can afford their home, but struggle with the everyday costs of living. If you’re in this position, then go through where your money is going – it’s possible that you’re spending far more than necessary on, say, coffee or eating out. A person’s shopping habits in the supermarket can influence their financial habits way more than they should. Don’t opt for the brand name stuff – it’ll taste the same, and you’ll have more money to play with.

3 Software Programs and Apps That Can Improve Your Life, Rather than Steal Your Time

Two of the major focuses of my blog are Financial Literacy/Money and Technology. While there is a danger in becoming too consumed by the new technologies available to us, many of them can help improve our lives. Which ones are particularly helpful? The following contributed post is thus entitled, 3 Software Programs and Apps That Can Improve Your Life, Rather than Steal Your Time.

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Image via Pixabay

The modern world is rich in technology so advanced that it would have been unimaginable to the average person even just a few short decades ago.

No matter what our interests in life are, and no matter our jobs and hobbies, it’s possible to vanish down a bottomless rabbit hole of endless information, stimulation, and entertainment, at the drop of a hat.

But while many modern technologies have brought with them immense benefits — such as the ability to communicate with our loved ones on the other side of the world, or to acquire a Windows 10 pro key and create an entire business structure within days — there are plenty of downsides to be wary of.

There are predatory companies out there, and exploitative apps, games, and software programs that have been designed to hijack our consciousness and trap us in a psychological feedback loop.

Here are some examples of software and apps that can help you to improve your life, rather than just serving as a timesink.

RescueTime — to reduce procrastination and enhance your awareness of how you’re spending your time

If you’re even just so much as slightly inclined towards procrastination or a disorderly lifestyle, having a computer with an internet connection is something akin to leaving a hungry child unattended in a candy shop.

Human attention is easily hijacked by novelty, probably because in ancient days, noticing novel information could mean the difference between life and death. Is that odd shape in the pushes a vicious wild animal, or a tasty meal?

These days, Google, Youtube, and social media offer a never-ending stream of novelty, meaning we easily fall into a cycle of endless surfing.

RescueTime is a service and software program that can help to free you from that vicious cycle of procrastination and enhance your awareness of how you’re spending your time. It combines an activity tracker, with a web blocker, report system, and more.

Beeminder — to help you stick to productive behaviours and avoid unproductive ones

We are all largely defined by our habits, and we tend to revert to our familiar behaviour patterns whenever we zone out a bit or are put under stress.

For that reason, it’s a very good idea to carefully focus on developing productive behaviours, and avoiding unproductive ones. Repeated often enough, good acts become good habits, and bad acts become bad habits.

Beeminder is an innovative service that allows you to set habit goals, which you then commit to with your money. Every time you stray off course from your desired habit, you pay exponentially more in penalty fees.

You Need a Budget — to give you a clear bird’s eye perspective of, and control over, your financial life

Good financial management can be tricky, especially when it’s so easy to buy all kinds of glossy, attractively-advertised products online with a couple of mouse clicks.

You Need a Budget — also known as YNAB — is a budgeting tool build around the principle of “zero-based budgeting” and “giving every dollar a job”. It’s relatively straightforward to use, and it can give you a crystal clear perspective of what’s happening with your financial life.

That in turn, of course, gives you a lot more power over your financial life.

I still don’t have a car in 2018: A story about playing financial chess

“Most successful people operate off a healthy fear of failure!”

Three of the principles of my blog are: Creating Ecosystems of Success, Wealth Building and Long-Term Thought. Hell, I’ll also pull in both Creative and Critical Thought. As we’re riding into December of 2018, I’ve wondered what to write next. A friend of mine who runs her own magazine and has her own audience suggested that I write something about budgeting. I do intend to do that, but my mind thought back to something I wrote on the Examiner several years ago which will serve as a nice prelude to budgeting. It involves several important considerations when budgeting, and it might admittedly ‘trigger’ some people, but try to keep in mind the overarching messages.

I originally published a series called; You Still Don’t Have a Car Yet? around 2012. It was inspired by a question from a lady friend who went to my church and whom I briefly dated. We bumped into each other again one Sunday and she was surprised that I still didn’t have a car after getting rid of my old Saturn SL2 which was on its last leg. I heard in her voice that there was more to her question – something I’d experience again in the future.

It’s a topic that never gets old, and instead of resurrecting and republishing the entire series, I’m simply going to pull out its main points and discuss why I still don’t own a vehicle six years later. Keep in mind that this piece was written from the perspective of a single man (due to life circumstances), and your life may be different. I hope you enjoy it and that it inspires discussion in your own circles. So, let’s dive in.

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My personal finances crashed and hit rock bottom right around 2011 – two years into my federal science career. I started my career with very little savings based upon my educational path and life circumstances. I was still a new homeowner and just paid out my entire $8,500 “Obama Tax Credit” for a condominium project I didn’t know about before closing – the first of many ‘assessments’ over the years which ended up equaling the price of a brand-new car. I also tried my hand in the investing world, at one point trying to do too many things at once, both money- and time-wise. The result was getting into a debt hole of greater than $20,000 on top of my student loan and other bills.

Around that time, I was fortunate that two friends shared Dave Ramsey’s “Financial Peace University (FPU)” with me and over the course of the next five to six years, they invited me to help teach the class with them at our church. I was also fortunate that I met a mentor who ‘adopted’ me into his group of proteges. He was very strong-willed and had a business background. He both taught me and stayed on me about some important aspects of money including: understanding what a ‘Net Worth’ is, saving into my retirement account and getting my ‘Matching Contribution’, and understanding the ‘Law of Compounding Interest’.

Now armed with this new information, it started guiding my decision making. FPU is admittedly just one of many financial programs out there, and it works very well. There are several others, but for the sake of my familiarity with it I’ll discuss it. A major pillar of it is budgeting – numerically think about your ‘needs’ and ‘wants’ with the aim of getting out of debt, building up an ‘Emergency Fund’ and then positioning yourself to stay ‘liquid’, invest, and give. To get a feel for why this important, I’ll once again refer you to back to Ylan Q. Mui’s 2016 article from the Washington Post entitled; The shocking number of Americans who can’t cover a $400 expense.

This is a good place to introduce the concept of ‘Cash Flow’. Cash flow is simply the amount of money you have left over once all your monthly bills and obligations are paid. The greater your expenses and debts are, the less cash flow you’ll have. The less they are, the greater your cashflow will be and the more life choices you’ll have. You’ll probably also have a healthier state of mind and body as financial stress can impact your overall quality of life.

When I looked at my budget in 2012, I sought to identify where I was trying to go in life and then what my needs and wants were. I wanted to live in a place of abundance, and I didn’t ever want to feel the shackles of debt again. I also didn’t want to be in position to have to ask relatives or friends for financial help ever again. Finally, I wanted to go that next step where I had an emergency fund, where I could get some investments, and lastly where I could help others – giving back to my alma maters for example.

While there were quite a few surprises in my condominium complex, it was a smart buy because it was right next to the metro. As such owning a car became less of a priority. Let’s unpack that a little bit. Keep in mind that I’m not telling anyone that they should get rid their car.

For you it might be something else and this would admittedly my approach may not work in cities like: Atlanta, Buffalo and Charlotte. In any case when I looked at my budget, getting rid of my car meant getting rid of: car insurance, gas charges, upkeep and maintenance, having to renew the vehicle’s registration, and any other associated costs. The state of Virginia charges personal property taxes on vehicles for example.

Yes, it was strange at first not having a car in my parking space and not being able to jump in a vehicle and drive off whenever I wanted to. As I describe later though I adjusted. It was a ‘trade off’ as the great Dr. Thomas Sowell says – giving up something in the short-term for what I saw as a greater gain in the long-term. I included the game of Chess in the title because like this, winning that game involves an understanding of the value of the pieces in your army, and in some cases, sacrificing your lesser pieces early on to ultimately win the game.

Let’s move on to some other important concepts. Among the things I learned from Robert T. Kiyosaki’s Rich Dad Poor Dad books were the concepts of ‘Assets’ and ‘Liabilities’. Under Robert’s definitions, assets are things that put money in your pocket every month, while liabilities are things that take money out of your pocket every month.

One of the things he described in his books under liabilities was cars. Was he saying not to buy cars? No, but he was encouraging his readers to look at finances in alternative ways – in this case while cars are symbols of power for some people, they also ultimately take money out of our pockets.

Speaking of which, something that’s been documented in numerous books and which wasn’t explained to me early on was that brand-new cars depreciate significantly as soon as you drive them off the lot. This is something I pondered as I decided to get rid of my car and not immediately get another one. I also realized that I was never really a ‘car guy’ meaning that I never really fantasized or obsessed over them. In fact, I got to a point where saw them as ‘necessary evils’ in a way which were put here to keep us dependent on the energy and auto industries, and at the mercy of those running them.

I’d like to now introduce the concept of ‘Minimalism’. Though this was always a part of my nature, I didn’t know what exactly it was though I had been called both ‘cheap’ and ‘frugal’ in my lifetime. Minimalism is basically the practice of getting what you need, and not wastefully looking to consume more. I credit writer and YouTube content creator Aaron Clarey for the term because I first heard it from him – something he encourages – something which goes against the grain of most of our society. If you’re in the mood for a laugh, his video content on culture and economics are both very funny and insightful.

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“If you live right next to the metro, why would you own car?” I’m going to say something controversial here. I’ve gotten this reaction from a certain group of people. It’s the same group of people who are content to eat soup and sandwiches according to my Dad as described in my piece entitled; Challenging Misconceptions in Wealth, Income and Privilege. I’ve gotten the ‘side-eye’ from another group of people, and for the single guys reading this, I’ll just say that many ladies frown upon a man who doesn’t own a car. Interestingly the other more important aspects I described above usually don’t come up in conversations about why I don’t own one.

I’ve also been ‘clowned’ about it in some instances. When you’re doing something like this, knowing in your heart why you’re doing it, and keeping your goals in mind is very, very critical when someone challenges you. Oh, and if you’ve thought it out and it’s working, don’t argue with anyone over it. It’s not worth it. This is an instance where even in adulthood, being the leader of your own life and not caving into peer pressure is key.

How does one get by without owning a car? Well again it helps to live right next door to a metro system. My first year of college at SUNY Brockport, I was amazed by the number of classmates from New York City who didn’t have their driver’s licenses. Where they were from, they just didn’t need them and openly admitted that.

Once I got rid of my car, I now noticed that there were quite a few other people in the Washington, DC metro area using “Zipcars”. Then within the last couple of years ‘ride share’ programs and ‘apps’ like “Uber” and “Lyft” became prevalent. Admittedly if you need to go to an area that’s further out, it usually requires some planning – maybe using a Zipcar, or maybe just renting one, but again you must keep your overarching goals in mind.

Again, it’s a tradeoff. There’s a definite convenience to getting in your car whenever you want to and zipping off some place, and that’s what you’re paying for when you own one unless of course it’s giving you some sort of social prestige or personal confidence boost. How much is that convenience worth to you?

So in summary, again I’m not telling anyone what they should do with their lives. I chose to make a tradeoff (a car and certain people) with specific goals in mind. Now that I had a grasp on money and finance as described above, my new ‘drivers’ (no pun intended) were:

• To become ‘financially peaceful’ and to build wealth;
• To be able to handle all the costs associated with homeownership – something I stumbled into which came with its own set of financial costs and surprises and;
• To maximize my cashflow so that I could save, invest and to be able to give.

In terms of giving, we often think about giving to our churches and alma maters but sometimes there are other needs. A fellow alumnus from Johnson C. Smith University recently needed to raise money to buy winter clothes for the students at his school in Grand Rapids, MI. Because of some of the personal choices I’d made, I was easily able to support his effort and help the kids in his community stay warm this winter.

Again, major components to all of this are long-term thought, and budgeting which I’m going to cover shortly in its own blog post. Another important piece is being a secure individual, following the beat of your own drummer and not being peer pressured into keeping up with other people’s thoughts of what’s acceptable for your life. The other piece is being malleable and willing to continue to learn more information and applying it to your life.

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I’m going to end this post with some quotes. The opening quote for this piece is from the popular and outspoken sports talk show host Colin Cowherd who weaves life parables into his sports commentary. This one involves our personal drivers and motivations. “My investing advice to the average individual, is don’t be average,” is a quote that has stayed with me from Robert Kiyosaki’s books. It involves thinking outside of the box and doing the opposite of the crowd.

Dave Ramsey’s famous quote is, “We’re going to live like no one else, so later we can live like no one else!” It involves making temporary sacrifices for greater gains later. Finally, one of the content creators on a YouTube show I regularly watch often says to, “Keep your savings high, and your overhead low!” I think you get the picture. What are your motivations and where are trying to go in your life?

Thank you for taking the time to read this blog post. If you enjoyed this one, you might also enjoy:

Your Net Worth, Your Gross Salary, and what they mean
A look at the Law of Compounding Interest and why you should care
My personal experience with Dave Ramsey’s Debt Snowball revisited
The difference between being cheap and frugal
We should’ve bought Facebook and Bitcoin stock: An Investing and technology story
Challenging misconceptions and stereotypes in class, household income, wealth and privilege

If you’ve found value here and think it would benefit others, please share it and or leave a comment. To receive all of the most up to date content from the Big Words Blog Site, subscribe using the subscription box in the right-hand column in this post and throughout the site, or by adding the link to my RSS feed to your feedreader. Please visit my YouTube channel entitled, Big Discussions76. Lastly follow me on Twitter at @BWArePowerful, on Instagram at @anwaryusef76, and at the Big Words Blog Site Facebook page. While my main areas of focus are Education, STEM and Financial Literacy, there are other blogs/sites I endorse which can be found on that particular page of my site.

Financial Decisions That’ll Help You Down The Line

Two of the focuses of my blog are Financial Literacy and Money. Our everyday behaviors and decisions impact our where we end up financially in the future. The following contributed post is thus entitled; Financial Decisions That’ll Help You Down The Line.

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Picture Source

When it comes to your personal finances, you need to think beyond your current situation. It’s essential to cover your basic costs, but you need to do so in a well-calculated manner so as to ensure that you’ve got savings for the future. In this article, we’ll discuss that point along with other helpful pieces of financial advice. If you want to protect your money then here are some financial decisions you could make right now to help you further down the line.

Investing some of your earnings.
The first financial decision you could make to help yourself down the line is to invest some of your earnings. This is something you should do on a continuous basis if you want to increase your wealth; it’ll bring you additional forms of income on top of your existing salary. And there are plenty of different investment routes you can take as a beginner. You might want to do some research on getting started in the property market. With the correct guidance and management advice, you could start buying properties to lease them out (that’d bring you a nice monthly income). You could even buy properties to fix them up and sell them at an increased value.

Of course, there are plenty of other ways to invest your earnings, too. Getting involved with trading can be very profitable if you do your research and learn how to monitor market trends carefully. You might want to consider spread betting over traditional trading methods. Earning tax-free profits is just one of many reasons to trade this way. Investing wisely is the type of financial decision that could really help you down the line. You’ll be able to start building up some savings for the future.

Creating an emergency fund.
Another financial decision that will help you down the line is creating an emergency fund. We all face unexpected costs at different points in life, so it’s important to have a backup plan in place for just such occasions. Your budget can only account for regular and predictable expenses, but you should also set aside a little bit of money on a regular basis for emergency costs. For instance, your house might need repairs after a natural disaster, or you might need emergency financial support if you leave one job and start searching for another. Creating a backup fund now could really help you further down the line. You don’t want to dip into your bank account for emergency costs and find yourself low on funds for necessities.

Spending your money sensibly.
This final suggestion is possibly the most important. If you want to improve your financial future then you should simply improve your financial present. By making a proper budget, you’ll be able to start tracking your expenditures accurately and making smarter decisions with your money. Calculate the cost of your essentials, and figure out how much income you need to devote to those necessary expenses. If you barely have any remaining funds then you could start reducing your basic costs in smart ways. For instance, you could save money on groceries by using coupons and start using price comparison sites to search for better deals from energy providers. You could reduce your monthly expenses if you did a little research. And it’ll benefit you in the future if you have more money to set aside for your savings.

My personal experience with Dave Ramsey’s Debt Snowball revisited

“The rich rule over the poor, and the borrower is slave to the lender.” – Proverbs 22:7

One of the principles of my blog is the “Teaching of Wealth Building and Financial Literacy”. A key component of Financial Literacy is understanding debt – specifically what happens when you carry too much of it. I painfully learned what it’s like to carry exorbitant amounts of debt – a place I hope never to return to.

I got out of debt because some friends graciously shared Dave Ramsey’sFinancial Peace University” with me. While there are supporters of Financial Peace University and Dave’s “Debt Snowball”, I found that there are also detractors and critics. I wrote the following piece on the Examiner in early 2016 after someone else wrote an article about why she quit her Debt Snowball. I didn’t write this to rebut the author in a confrontational way or to discard her experience altogether, but instead to share an alternative perspective. By the way, to read about how to prolong your Debt Snowball, see my Mother’s Day 2017 blog post.

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Over the holiday season, an article appeared on my Twitter feed from another passionate Financial Literacy writer (there are many) titled; Why I Gave Up on Dave Ramsey’s Debt Snowball. Being a coordinator within the Financial Peace University ministry at the Alfred Street Baptist Church, and also in the final stages of my own Debt snowball, the article resonated with me and prompted the crafting of this piece. This piece won’t refute Jennifer Calonia’s experience, but will actually agree with some of her points and discuss my own experiences.

No one plans to go into crippling financial debt which usually occurs because of a lack of Financial Literacy; living above one’s means, or something else such as today’s soaring costs of higher education. Many people don’t understand what they’re doing and the long-term ramifications as was in my case. Roughly nine years were spent completing my Ph.D. and then the two and a half years of subsequent training – all on a taxable graduate stipend which ranged from $17,000-$22,000, and then a postdoctoral salary of $37,000. During that time, my expenses often exceeded my income for a number reasons. My old Saturn SL2 was bought with my father’s credit card. It was maintained using another credit card whose balance eventually ballooned to $8,500 (just paid off this month). An unhealthy relationship or two also contributed to the bonanza.

After starting my first real job in the Federal Government, my debt swelled at least two to three times due to wanting to learn to invest in real estate, and wanting to do too much too soon money-wise. It was a good idea but the trainings came at a steep price which in hindsight could’ve been obtained for less money. Those who gave those particular trainings dangerously encouraged us as students who didn’t have tens of thousands of dollars saved up, to use our credit cards, under the assumption that the costs of the classes would get paid off relatively easily once we some real estate deals were done (to be covered in depth in a later piece).

After accumulating my mound of debt, my life was blessed when two friends (from the same trainings) discovered and shared Dave Ramsey’s Financial Peace University (FPU). Just briefly, four of the key components of FPU – the cornerstones of Dave’s “Baby Steps” include:

• Saving an Emergency Fund – one month and then four to six months
• Learning how to budget
• Using cash instead of credit cards and debit cards
The Debt Snowball

The Debt Snowball is a strategy for eliminating debt. The individual lines up all of their debts smallest to largest, steadily paying them off one by one using the money from each paid off debt on the next one, steadily increasing the size of the payments on the larger ones until everything is paid off using “Gazelle Intensity” as Dave Ramsey calls it. Dave Ramsey uses the parable of the Gazelle who represents consumers who are preyed upon by the Cheetahs who represent credit card companies, banks and marketers.

Jennifer Calonia’s points are honestly all valid. My own Debt Snowball has taken two to three difficult years (and that’s without children), and it is easy to feel like quitting. Life continues to happen not just to you, but those around you – some of whom aren’t making good financial decisions and ultimately need your help – often unexpectedly. There is also the pull to do what others are doing – taking lavish vacations and acquiring luxury items for example. Finally, because you’re living on a fixed income when doing the debt snowball, some people may conclude that you’re “strapped” for cash which can be hurtful if you’re sensitive to the words of others.

These are all reasons why Ramsey discusses prayer when pursuing this effort (if that’s in your value system of course). From experience, when doing the Debt Snowball, one has to know that there are times when this financial plan can and must be altered temporarily – the holiday season for example. Furthermore, periodic rewards are realistically a good idea too (within reason). In other words, if you’re doing the Debt Snowball, you have to allow yourself some fun, or else you’ll stop it and never go back.

Much to my surprise, Dave Ramsey does have his detractors and critics as does every author/speaker/guru. There is for example a second method to paying down debts which involves paying down the highest interest rate obligations first. Some consider this more financially intelligent than the debt snowball which is powerful because of the ‘emotional’ effect of seeing the debts go away.

“We’re going to live like no one else, so later we can live like no one else,” Ramsey says frequently during frequently during FPU meaning that some sacrifices are initially involved, for greater gains and a comfortable life later on. Money is an emotional topic and as with most things, everyone has to make the best decisions for their own lives. Being on the cusp of completing my own debt snowball, it admittedly wasn’t easy, but if one can find a way to stick to it, it does work.

Thank you for taking the time to read this post. If you enjoyed this one, you might also enjoy:

Chris Brown discusses true stewardship and financial peace
Your gross net worth, your gross salary and what they mean
The difference between being cheap and frugal
Mother’s Day 2017: One of my mother’s greatest gifts, getting engaged, and avoiding my own personal fiscal cliff
Father’s Day 2017: Reflections on some of Dad’s money and life lessons
We should’ve bought Facebook and Bitcoin stock: An investing and technology story
Challenging misconceptions and stereotypes in class, household income, wealth and privilege

If you’ve found value here and think it would benefit others, please share it and/or leave a comment. To receive all of the most up to date content from the Big Words Blog Site, subscribe using the subscription box in the right-hand column in this post and throughout the site, or add the link to my RSS feed to your feedreader. Please visit my YouTube channel entitled, Big Discussions76. You can follow me on the Big Words Blog Site Facebook page, and Twitter at @BWArePowerful. Lastly, you can follow me on Instagram at @anwaryusef76. While my main areas of focus are Education, STEM and Financial Literacy, there are other blogs/sites I endorse which can be found on that particular page of my site.