Why Not . . . Get and Stay Out of Debt?

Last weekend I put $5 in my pocket and headed out to do some yard sale shopping (my tweet of announcement). More than anything I love to look through the newly discovered treasures as well as see who I run into. After all, a Saturday morning full of summer sunshine – that is hard to top. Well, after visiting three yard sales, I had successfully stuck to my allotted amount and found some fabulous deals – one of which was Jean Chatzky’s book Pay It Down! – one of the only books of hers I don’t have yet.

While there are slight deviations on how to pay down credit card debt, the respected experts in the field – Chatzky, Suze Orman and David Bach – to name the few that I have followed – adhere to similar advice. And while I highly suggest reading one of their many books, here is the general approach:

HOW TO GET OUT OF CREDIT CARD DEBT

1. Assess the reality of your situation. How much debt do you honestly have? Consider all credit accounts (cards, home loans, car loans, student loans, etc).  The student loans can be handled slightly different, but credit card debt and anything else other than your mortgage should be included as “bad” debt.

2. Set a goal. What is the deadline you want to set for being debt-free? One year from now? Three years?

3. Look at your income and expenses. No guessing is allowed. Take time to look at all of your expenses (mandatory and discretionary – we’ll eliminate unnecessary later). Then look at what you earn.

4. Determine how much. Based on how much you earn, how much can you pay each month to complete your goal by the set date? In Jean Chatzky’s book, she devises a plan to rid yourself of debt on $10 a day (a minimum of $310 paid down on debt each month).

5. Trim your budget. Now, take a look at where your money goes each month. Do you really need two pedicures at your favorite spa each month or can you spend $9 on OPI nail polish and give yourself pedicures at home, saving yourself $50-$100 a month? Love books, but spend more than you realized on Amazon? Start visiting your local library. Click here to learn more ways to trim your budget.

6. Know your credit score. Each year you are able to check your credit score for free. Visit one of the big three credit reporters – Experian, Equifax, or TransUnion – to see exactly where you stand. Chatzky breaks down in detail exactly how your score is tabulated and what scores are preferred.

7. Pay down the highest APR first. If you have multiple cards, while you have to pay on each of them monthly, pay only the minimum on the lower APR cards and the majority on your highest.

8. Negotiate a lower rate. Don’t be afraid to call up your credit card company and negotiate for a lower rate. Bring up all of the positives you have provided as a customer – always paying on time, the length of time you’ve held their card, etc. Then, if you are going to transfer your balance to another card, threaten to cancel the card. If nothing works, look at #9.

9. Consolidate if possible. If you already have a card that offers interest free balance transfers and a 0% APR for a year or two, transfer your other card balances onto that card. Why? Interest free. This will give you time to pay down your balance without incurring interest on what you owe - in turn, saving your money. Just keep in mind the regulations – how long this grace period lasts, etc. If none of your current cards offer this option, look for a card that does (they are out there). Three things to look for – rate, fine print and fees (annual, late payment, etc).


Once you have followed these steps and wiped your balance sheets clean of debt, be very stern with yourself and continue to remain debt-free. Last year I shared specific tips on how to successfully have a credit card, but today I would also like to share money rules to follow as you go about your daily life that will also keep you out of debt permanently.

HOW TO STAY OUT OF CREDIT CARD DEBT

1. Only eat at a restaurant once a day. While many of us don’t eat at a restaurant every day, keep this rule in mind when you do, and never go out twice in one day. If you know you have dinner plans to dine at your favorite restaurant, pack a sack lunch for work instead of going out with co-workers.

2. Don’t carry your credit card with you. Or if you have to, place a piece of paper around your credit card, write FOR EMERGENCIES ONLY and wrap it with a rubber band. At least, you will have to think twice before using it. Once you trust yourself, #2 isn’t necessary.

3. Shop with a list. Real Simple did a study that revealed women who think they are successful are women who make lists. Avoid unnecessary purchases and don’t leave home without your list!

4. Shop for groceries once a week. Take time to plan the week’s meals and then on the same day each week, gather up your coupons, list and cloth grocery bags and head to your local market.


5. Withdraw cash for your monthly grocery budget at the beginning of the month. I always find it interesting that I would often let my cravings increase my grocery budget unnecessarily, but when I know I only have so much cash each week to go grocery shopping, I shop wiser, I keep my cravings in check and I am forced to get more creative in the kitchen and use what I have.

6. Bank online. In an effort to avoid missing bill due dates, pay bills online. This is a wonderful approach for working together with your partner, so you know for sure that bills are paid, but it also allows you do schedule payments even if you haven’t received a bill in the mail.

7. Don’t be afraid to put something on hold. If you’re shopping and you come across a dress that catches your eye, but you’re not sure it’s worth stretching your budget on, put it on hold. If you still want it the next day and can afford it, go back and get it, if not, you’ve saved yourself some money.

8. It’s okay to return items. Don’t feel guilty or ashamed for changing your mind. It’s your money, and if you don’t want something as badly as you initially thought, return it.

9. Refuse to follow the crowd. While your friend, neighbor, or parents may have fabulous decor, clothing or outdoor equipment, you do not know the state of their finances. However, you do know yours, and you know what it takes to keep yourself financially secure – paying your bills on time, staying out of debt and saving for retirement. The New York Times recently reported in an article that in 2010, 75% of Americans approaching retirement had only on average $30,000 saved for retirement. That’s absurd! Hopefully they enjoyed their third car because retirement may not be all that enjoyable.

Don’t get sucked into doing something because someone tries to make you feel inadequate. The best feeling in the world is financially security and one of the biggest contributors to stress in life and in relationships is money, so make sure to handle wisely the money you earn.

More than anything, take the responsibility to control what you can, and how we spend our money is something that is very much in our control.

Images: (1) pinterest 

Guest Post: 30 Things I Learned About Finances

I am so happy to introduce you to a fellow blogger who inspires me every day when it comes to style, living a life of your dreams and being financially independent. Tiffani is a personal stylish living in New York City and is the entrepreneur behind Living Chic personal stylish services as well as the author of the blog Accidental Chic. The list of financial advice she has generously shared with The Simply Luxurious Life readers is something I myself will be printing and posting on my inspiration board. Have a look.

I am excited to be able to contribute to The Simply Luxurious Life’s 'Financial Food For Thought'. A passionate lover of fashion and design living in NYC I knew I had to educate myself on personal finances once I graduated from Grad School back in 2007. I was determined to be smart with my money and start off on the right foot. I find personal finance fascinating because you can tell a lot about a person by their relationship with money.

Last month I celebrated my 30th birthday in Paris, France. This has been a goal of mine since I was 27 years old. Yes, I'm a planner. However, I can't express how liberating it felt to have this amazing life experience and not worry about putting it on a credit card since I had been saving for years. Therefore, I would like to share the wisdom I have learned since taking hold of my finances in my twenties. 

30 Things I Learned About Financial Chic Before I Turned 30

1. Passion is everything; the money will follow.
2. Savings = FREEDOM
3. It's never too early to start saving for retirement.
4. Pay off your credit card balance each month.
5. Cash is KING!
6. Aim for a 720-800 credit score.
7. Never defer you student loans, especially private loans.
8. Sleep on big ticket purchases.
9. NEVER co-sign a loan for anyone. We're all responsible for our own finances.
10. Make a financial date once a week with your finances. Wine, tea - anyone?
11. Buying expensive designer clothes, bags, jewelry on credit is NOT chic. 
12. Time is money.
13. Aim for an 8 months emergency fund, the future is not predictable or promised.
14. There's nothing more attractive than a woman/man with their finances in order.
15. Whenever shopping, make a list!
16. Check your credit score & credit report once a year.
17. Set up a savings account with a high interest online bank, you'll be less tempted to take out the money since it is not accessible to an ATM.
18. KNOW YOUR WORTH!!!
19. Surround yourself with like-minded money people.
20. Start a money group.
21. Suze Orman and Carmen Wong Ulrich are great financial gurus.
22. Never, ever marry for money. You'll get exactly what you deserve...
23. Be open to talking about personal finances and educate those around.
24. Don't be afraid to say 'no thanks' to social obligations that will put you in debt.
25. Did I mention cash is king?
26. Continue to educate yourself on personal finance. Unfortunately, we have a lot to learn since we were never taught this in school.
27. Life is meant to be enjoyed, don't let poor financial decisions put a damper. It's never too late to turn it all around.
28. Buying a home does not mean financial freedom or the American dream for everyone. Stop trying to keep up with the Joneses, everyone's situation is different.
29. There's no way to balance work and play, your work should be play!
30. True wealth is not the consumption of material possessions but the ability to fully experience life.

{Tiffani is a NYC-based Fashion Stylist, Creative Director of LIVING Chic Style, Inc. and also inspiring you to live a fashionably beautiful life through her blog ACCIDENTAL Chic.}

Cost Per Wear

Often I receive questions on how I justify and afford more expensive choices in my wardrobe. And while I have a very limited clothing allowance, when I choose to purchase an item that on paper initially look a bit astronomical, I take my calculations one step further.

Cost per Wear

What does it mean? Let’s take designer jeans – my favorite are Citizens of Humanity and J.Brand. As a teenager, I was continually frustrated with jeans that weren’t long enough and never fit me correctly, which at the time made me feel as though there was something wrong with me, but when I finally discovered longer lengths at a bit more expensive price range, I was more than ready to put more than a few bucks down.

The rationalization of Cost per Wear is if I wear a particular pair of $150 jeans 75 times, the jeans are actually $2. And while some may say, but your checking account is still missing $150, my argument is that the quality of the jeans allowed them to be able to be worn 75 times, thus, saving me from buying a similar cheaper pair that wouldn’t have been able to go the distance.

I realize that not everyone will agree with this, however, no matter how much a pair of jeans cost, if the money isn’t available, there is no rationalizing it – the jeans must stay on the rack.  On the flip side, however, if the funds are there, and you know the item will be easily incorporated into your lifestyle, than don’t feel guilty for choosing quality. One fabulously tailored quality item will bring the rest of your wardrobe up to its level.

Image: A Cup of Joe

Take More Responsibility

While many banks and other financial institutions offer protections, advice and assistance on a wide variety of products and programs, there are a few things we can all do to eliminate paying for things we should be more than able to do by ourselves.

The excitement about becoming an adult is undeniably a stepping stone, but in order to be a grown up, we must behave as one which means taking responsibility.  As batman’s anthem reminds us, “With great power, comes great responsibility.”  The power in this instance is the weight we carry as adults in society, with our kids, in our communities and for today’s post, with our finances.  So why not get rid of the following protection and create a budget program for free as it will force you to be responsible and to do something you should, as a grown-up, already be doing.  Take the training wheels off!

1. Decline Overdraft Protection

If you know that the bank will not be paying those businesses you’ve cut a check too without having the funds in the bank, you will be less apt to whip out your debit card or checkbook.  And under no occurrence, should you use your credit card to purchase something when you don’t have the cash to cover it in your checking account (I’ve done it before, am well aware of the consequences and have learned this lesson the hard way.)

2. Don’t Pay for a Fancy Budgeting Program

It is unnecessary to spend more money to organize the money you aren’t already managing well. Instead, simply set up a checkbook register in an excel program as suggested by Melissa Tosetti in Living A Savvy Life with simple addition and subtraction functions for each month. At the beginning of your month, enter your paycheck(s), and deduct all of your mandatory expenses (as you would in a calculator). At the end or the beginning of each day, enter your expenses (eating out, groceries, etc), so that you know exactly how much you have in your account.  Without getting fancy, you can easily keep yourself managed, organized and your spending under control.

The thing to keep in mind is that we must control our money and not the other way around as Suze Orman reminds us, and as one of my favorite quotes that is pinned to my idea board states,

“I think the nicest thing you can say about a woman is that she lives well and she lives below her means.”

 

(Suggestion #1 suggested by Suze Orman in her book The Money Class)

Image:Simply Seductive

Live Below Your Means

I recently purchased Suze Orman’s new book The Money Class, and I have to first say I couldn’t agree with her more regarding the focus for the entire book – we must all live in our truth.  We must get real.  We must look honestly at what we will need to live on in the future and get real about how we handle money today in order to attain it.  With that said, she begins in chapter 2 by reminding us to live below our means.

In today’s culture, that may come as a slap in the face, but think about it this way.  When we retire we will live on approximately 75% of what we live on today (if we have been diligent about our retirement savings). Becoming used to living below our means will provide less shock in the future and allow us to save now for a grand future when we do retire.

So how do we do this? How does one live below their means?  Here are a few of her suggestions to consider:

1. If your mortgage payments surpass 35% of your monthly income, consider living in a smaller house.  It was always suggested that a mortgage payment be 33% of your income or less, but with the financial housing crisis, many are paying easily 50%.  If you exceed the 35% try getting creative on how to downsize. It might take some time, but will save income today, so that you can save for tomorrow.

2. Take care of the car you have. Leasing a new car every 2 years simply to keep up with your neighbors will not bring true contentment, but it will strap your monthly budget.  Find contentment within yourself by pursuing a life that is truly fulfilling to you that does not need to be validated by anyone else.  By simply taking your current vehicle in for oil changes and tire rotations every 3 months and overall service, you can have a car that runs efficiently and is paid off so that you save yourself hundreds of dollars each month.

3. Eat out less. There are many benefits to deciding to eat meals at home beginning with your hard earned cash – more of it stays in your pocket!  Not only are you saving money, but you are aware of what you are eating and promoting an environment within your home of strong family relationships.  Saving those special occasions for taking the family out to eat will create a more grateful attitude and possibly produce children and spouses who love to cook in the kitchen with you.

4. Eliminate the excess. Take a moment and look at your monthly expenditures.  Where is your money going? Suze offers a great tool upon purchasing the book that allows you to go online and enter all of your expenses. She goes over your expenses and income numbers (well a computer system does) and reveals where she thinks you can reduce, add more to savings or are doing well.   After walking myself through this, I realized I have extra money which should be going toward my savings cushion (which will increase the amount I am already adding).

With these four suggestions and living more consciously, reminding ourselves that we give money power, ask yourself today, what power am I giving to my money?  At the end of your life, be the person who can say, I took advantage of the power of the money I earned and put it to great use for myself, my family which ultimately created a peace of mind for the present and for our future. Take back your power and purchase peace of mind, not more stuff.

Image: Southern Sophisticate

Pay Yourself Instead

{A simply luxurious life, while full of the concept less is more, luxuriates in the decadence of high quality, complementary style and an appreciation for the beauty that surrounds us in decor, fashion, nature and people themselves. One does not need to maintain a balance in the bank that one might associate with a millionaire, however, it would be a mistake for me not to address the fact, that being secure financially – just the knowledge of this fact – brings about a priceless piece of mind that contributes greatly to a well-balanced simply luxurious life.

With that said, my new series every Friday will focus on sharing a bit of financial food for thought that will help you create a sound financial life that makes it possible to make the choices that will help you create the life of your dreams.  Because after all, simply having choices is a luxury – enabling independence, however we might choose to go about our every day lives. }

One of the daily emails I receive is from The Daily Worth which shares small tidbits of information how to be more financially savvy.  Earlier in the week they shared a tip that has saved me hundred of dollars a year, and I had to pass it along.

We all are reminded that we must stay in shape, burn calories and be active, but at what expense?  When I first moved to Portland in my early twenties, I immediately dashed to the local 24 Hour Fitness in my area and became a member. With monthly payments of over $30 at the time I felt it was a good investment, however, when my budget changed a few years later due to my first home purchase, I had to reprioritize what was worth my hard earned dollar.  Could I sufficiently work out on my own or did I need to pay over $300 a year to make sure I got my little fanny over to the gym?

Well, after much contemplation and after reading Mireille Guiliano’s French Women Don’t Get Fat, I convinced myself that I could forgo the gym.  I gave myself six months.  As a way of taking preventative measures, I paid for a one time session with a personal trainer I trusted and asked her to show me all of the free weight and strength exercises I could do in the comfort of my own home and still reap the same effects.  That particular investment saved me oodles and seven years later, I am still no longer a member of a gym, am in the best shape I have ever been and have more money in my bank account, which feels great.

Here are a few ways to help transition from working out at the gym to working out successfully at home:

1. Dog Owners – there is no excuse! Walk, walk, walk – each day.  You’ll receive more dog kisses because of it, and they will sleep much more soundly, as will you.

2. Make a date with a friend to walk or run.

3. Schedule to do your strength workouts or treadmill during your favorite show so that you’re more motivated to hop up and get going. Or watch a movie or program your DVR.

4. Schedule your workout time like an appointment for work. After all, we’re talking your health which is paramount to success everywhere else in your life and in your relationships.

5. Work out in the morning before the day takes on a life of its own.

6. Purchase fabulous workout clothes.  Just because you’re working out at home doesn’t mean you shouldn’t look your best. All the more reason to stay fit.

Out of curiosity, I would love to know what works for you when it comes to working out at home, traveling or on your own. Do share.

Image: Southern Sophisticate

Self-Confidence Aids Financial Success

{A simply luxurious life, while full of the concept less is more, luxuriates in the decadence of high quality, complementary style and an appreciation for the beauty that surrounds us in decor, fashion, nature and people themselves. One does not need to maintain a balance in the bank that one might associate with a millionaire, however, it would be a mistake for me not to address the fact, that being secure financially – just the knowledge of this fact – brings about a priceless piece of mind that contributes greatly to a well-balanced simply luxurious life.

With that said, my new series every Friday will focus on sharing a bit of financial food for thought that will help you create a sound financial life that makes it possible to make the choices that will help you create the life of your dreams.  Because after all, simply having choices is a luxury – enabling independence, however we might choose to go about our every day lives. }

It isn’t just in the math, it begins with a boost of belief in ourselves.  When we feel good about ourselves, when we know we are competent and worthy of others giving us a chance, thereby, taking on the responsibility that our work ethic, our talents and abilities are worthy of being taken seriously, it is a forecast for a higher income and more financial security down the road.

In Jean Chatzky’s book The Difference, she shares the fact that everyone has a narrative running through their minds.  The difference is, those that have a positive narrative on repeat in their minds are more likely to have the confidence in themselves to take a chance, introduce themselves to new people and ultimately stack the odds in their favor.

Exercises to help you improve your narrative:

Fake It Till You Make It

This is where those that may lack self-confidence, decide to turn around.  Sometimes opportunities will be presented that we don’t believe we are ready to take on.  However, I would argue, that simply by the fact that you recognize it as an opportunity is reason enough to pounce – ready or not.  Who knows what might happen? Who knows what you might be capable of until you try?  So when it doubt and your dream is looking you in the face, do not turn around and walk away! Grasp it! Pounce! Seize the moment.  Because you never know when you’ll get another one. And the worst case scenario, you’ll gain experience so you won’t have to fake it next time.

List What You Deem Valuable

By focusing on those things that you value, you are able to step outside of your boundaries, realizing why you are living the life you are living, or if need be, get back on track and focus on what really matters and what efforts can make a more positive difference in your life.

Image: Byblos Fall 2008/09

Taking Control Of Your Spending

{A simply luxurious life, while full of the concept less is more, luxuriates in the decadence of high quality, complementary style and an appreciation for the beauty that surrounds us in decor, fashion, nature and people themselves. One does not need to maintain a balance in the bank that one might associate with a millionaire, however, it would be a mistake for me not to address the fact, that being secure financially – just the knowledge of this fact – brings about a priceless piece of mind that contributes greatly to a well-balanced simply luxurious life.

With that said, my new series every Friday will focus on sharing a bit of financial food for thought that will help you create a sound financial life that makes it possible to make the choices that will help you create the life of your dreams.  Because after all, simply having choices is a luxury – enabling independence, however we might choose to go about our every day lives. }

Do you feel like money has control over you? Do you feel like you can’t get a handle on it? Or maybe you just want to give your spending a bit of a break and begin saving more.  Wherever you may be in your life regarding money, getting it under control and keeping it under control are imperative to a successful financial future. Over the next few weeks, I will be sharing two tips per post from David Bach’s book Smart Women Finish Rich.

Why only two you might ask? Well, while we sometimes want the information now, all at once, we often become overwhelmed and end up tossing all help aside when we’ve taken on too much.  So I’d like to suggest (and I’m following my own advice as well) to those of that would like to gain a bit more control over your finances, to try and incorporate the two tips that are suggested each week into your life as they are suggested.  By gradually adding, it is my hope that they will be more likely to remain a habit that you practice on a regular basis on your road to financial success. Let’s get started!

1. Use Only Cash

In other words, if you don’t have it in the bank, don’t spend it. This will temper your spending and will at first be difficult if you’ve been using a credit card for many purchases. However, once you start to practice this habit, you will feel better with every purchase because you know that you have the funds to back up your decision.

2. Keep A Daily Record

At the end or beginning of every day, write down into your budget sheet (excel, mint.com, or whatever source you prefer) what you have spent. This will not only keep you accountable, but you will be able to visually see what you are spending as it adds up.

Image: (Source)

A Savvy Decision

It is with three thumbs up, if only I had that many to raise, that I would give Living the Savvy Life: The Savvy Woman’s Guide to Smart Spending and Rich Living written by Melissa Tosetti and Kevin Gibbons.

I came to learn about this book through one of my favorite bloggers and blogs How To Be Chic and in doing so contacted Melissa Tosetti almost immediately.  Simply based on reading the description I had a very good inkling that this book would be something not only The Simply Luxurious Life readers would enjoy, but would also find to be a valuable resource in creating a more balanced and fulfilling life. I was not disappointed.

Beginning with the premise that a savvy life is one which includes balance, it continues to go in depth with individual chapters focused on money, home organization, entertainment, wardrobe, beauty and food. After all, Tosetti and Gibbons remind the reader continually, that in order to create the life we want, we must prioritize – saving money by not purchasing and spending money on things that are of little or no importance to us, so that we may be able to spend our hard earned money on things that are of great priority.

While this concept may sound simple, living a savvy life is one that involves discipline, and whether we want to admit it or not, money is at the bottom of the foundation of the life we want to build.

Financially speaking, the authors speak to the readers, as though you are having a conversation. Examples from their own experiences are given which makes it much more personable and honest. I particularly appreciated their approach in how they talk about money. The concept of planning to be successful will ultimately help lead to a more confident person who steps forward in pursuit of the life they want. Most importantly, we must all know where our money is going and exactly how much we make and thus spend, but instead of purchasing an expensive Microsoft Money or Quicken program, why not just use Excel?

Now if talking about money for an entire book seems a bit much, don’t worry.  There are wonderful chapters on how to be a savvy shopper for your kitchen and your closet, as well as simple ways to make sure you are able to enjoy the entertainment you wish to spend your money on.

One of the tests I have in determining whether a book will be passed on to my friends and family, and now my readers, is if I am annotating madly as I read. And, in this case, it began on the first page, while at the same time I was jotting down notes in my notebook. Here are just a few of the many specific ideas suggested on how to create a more savvy way of life that immediately caught my attention:

*Create a weekly cleaning list

*Create a spa-like atmosphere in your master bath (add an orchid, bamboo, etc)

*Drink 1 glass of water with each meal

*Enter expenditures daily into Excel program

*Sign-up for Ebates

*Call cable, telephone and credit card companies quarterly to look into lowering bills or taking advantages of special offers

*Only purchase things you love

*Create a family cookbook, complete with plastic covers to protect each recipe

*Visit one of your favorite boutiques each pay period

*Set up your closet like a boutique

*Do not use a credit card a second time until you have paid off the balance in full

*Come up with five different dishes you can serve when you have guests over that allow you to enjoy your company and give you the peace of mind that dinner will be delicious and very much enjoyed by your company

*Create your own style book

The list could go on and on.  The specifics that are given endlessly is one of the reasons I know this book will be a resource for me.  Not only do the authors share their own ideas, but they share interviews with respected professionals in their fields – for example, with Michael Chiarello (of Food Network fame), excerpts from Debra Ollivier’s A Woman’s Guide To Finding Her Inner French Girl, five pages full of titles of books suggested as references on all of the topics discussed in the book and at the end of each themed chapter, a list of 10 Tips for that particular topic.

The beauty of this book is that it reminds us that we truly are “the designers of our lives".  Because as they see it, and I couldn’t agree more, “You are the artist and a savvy life is yours to create.”

I highly recommend this book for anyone who desires to perpetually grow, live their best life and create their very own success story.