Tag: Getting Out of Debt

The No-Cash Envelope System That Works

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I am a strong believer in the cash envelope system. It works great for our family. But I also know that is not the case for everyone.  You may not want to use cash but love the envelope system concept.  Fortunately, there is a program you can use that marries your desire to use plastic with the discipline of a cash envelope budget.

When it comes to managing your money, spending and trying to get out of debt, there are many programs and apps out there. But, not all of them can do everything.  That means one app for your budget, another for trying to get out of debt and then yet another for managing your spending.

ProActive does it all.  You can manage your money, spending, budgeting, and debt payoff – all from one simple to manage app! But, before you jump in and download it, make sure you read this honest review.  That way, you’ll know what to expect!

What is ProActive?

ProActive combines the beauty of shopping with plastic and the discipline of cash envelopes.  The system ensures that you never overspend – ever!  Just like with cash, when the envelope is empty, you are done shopping!

 

What is the cash envelope budget?

A cash envelope budget is what it sounds like. Rather than using plastic to shop you get cash and place the budgeted amounts into envelopes.  For example, if your budget for food is $200 a paycheck, then you get cash and place $200 in an envelope earmarked for groceries.

When you grocery shop, you use only the cash in the envelope. That is all you have available to spend. It is impossible to overspend.  If there is only $20 left then that means you can’t spend $22.  There is not enough money there.

It is a system that works very well for people who want to better manage and control spending.

 

How does it work?

Once you sign up and create your account, you will get a ProActive branded debit card.  When you are ready to spend, you use the ProActive card.  But, before you can swipe, you have to let the app know which envelope the money needs to come from.  That way, you always stay on budget and don’t spend more than you should.

 

Add funds to your account

When you get paid, review your budget.  Pay the bills that are due.  What you have left over is what you have left to spend on everything else on your budget.  It will include items such as clothing, household items, personal care and beauty, groceries, entertainment, dues, etc.

You will go into the app and click the “+” icon.  That starts the transfer from your bank account to your ProActive debit card.

 

Allocate the money to your virtual envelopes

Once the funds are deposited, you have to assign an amount to each category (a.k.a. envelope).  Review the budget to see what you have available to spend.

 

Shop as usual (but pay with the ProActive card)

You can’t swipe your card until you have told the card which category (or envelope) the money should come from.  Simply open the app and click the spend category.  Then you can swipe.

If there is not enough money left in the category to cover your purchase, it will be declined.  That makes it impossible to overspend.

 

The smart way to use ProActive

As parents, we teach our kids.  They need to know how to take care of themselves, cook, clean and do other things around the house.  But, it seems that financial responsibility is one that gets overlooked.

One thing that ProActive allows is for you to add your kids and teach them how to manage their own money.  You can put funds on their account and they too can set up categories.  And, just like mom and dad, they have to select the category before they spend so they are not spending more than they should either.

ProActive not only teaches your kids how to use a debit card, but also the financial responsibilities that go along with it.  And, it is in an environment that both mom and dad can see (and control).

 

Who is ProActive a fit for?

Just like with every other app or budget system there is never a one-size-fits-all system. That means this may not work for you.  If you love your credit card for the rewards then this will not work for you.  You can’t attach a credit card and use this program.

But, if you struggle to try to manage your money and spending then you really need to get this app. It makes it impossible to overspend and helps you learn how to think about every purchase you make.  You may not need to use it forever as you will become disciplined.

 

What does it cost?

When you sign up, ProActive will give you a 15-day trial.  They want to make sure it is a fit for you before they make you pay.  Then, if you love it, you continue at $5.75 a month (paid annually, so $69).  You can add a second user for $29 a year and even add your kids for just $24 each.

 

What happens if I forget my phone?

It happens.  We leave our phones behind. In that case, it is important that you always have an alternative payment method handy, such as your bank debit card, credit card or cash.

If your goal is to get out of debt, you have to first start with your budget and spending. If you don’t do that, you will never achieve your goals.  ProActive is one tool that helps you every step of the way.

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How the Debt Snowball Works

This page may include affiliate links. Please see the disclosure page for more information. You may have heard of Dave Ramsey’s debt snowball as a popular method for getting out of debt. We’re going to share how the debt snowball works so you can decide whether it’s a smart way for you to get your debt paid…

The post How the Debt Snowball Works appeared first on Debt Discipline.


How the Debt Snowball Works was first posted on November 23, 2020 at 11:46 am.
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How to Escape Debt in 2016

How to Escape Debt in 2016

The new year is right around the corner and if you’re like most people, you’ve probably got a running list of resolutions to achieve and milestones to reach. If getting out of debt ranks near the top, now’s the time to starting thinking about how you’re going to hit your goal. Developing a clear-cut action plan can get you that much closer to debt-free status in 2016.

1. Add up Your Debt

You can’t start attacking your debt until you know exactly how much you owe. The first step to paying down your debt is sitting down with all of your statements and adding up every penny that’s still outstanding. Once you know how deep in debt you are, you can move on to the next step.

2. Review Your Budget

A budget is a plan that sets limits on how you spend your money. If you don’t have one, it’s a good idea to put a budget together as soon as possible. If you do have a budget, you can go over it line by line to find costs you can cut out. By eliminating fees and unnecessary expenses like cable subscriptions, you’ll be able to use the money you save to pay off your debt.

3. Set Your Goals

How to Escape Debt in 2016

At this point in the process, you should have two numbers: the total amount of money you owe and the amount you can put toward your debt payments each month. Using those two figures, you should be able determine how long it’s going to take you to pay off your mortgage, student loans, personal loans and credit card debt.

Let’s say you owe your credit card issuer $25,000. If you have $500 in your budget that you can use to pay off that debt each month, you’ll be able to knock $6,000 off your card balance in a year. Keep in mind, however, that you’ll still need to factor in interest to get an accurate idea of how the balance will shrink from one year to the next.

4. Lower Your Interest Rates

Interest is a major obstacle when you’re trying to get out of debt. If you want to speed up the payment process, you can look for ways to shave down your rates. If you have high-interest credit card debt, for instance, transferring the balances to a card with a 0% promotional period can save you some money and reduce the amount of time it’ll take to get rid of your debt.

Refinancing might be worth considering if you have student loans, car loans or a mortgage. Just remember that completing a balance transfer or refinancing your debt isn’t necessarily free. Credit card companies typically charge a 3% fee for balance transfers and if you’re taking out a refinance loan, you might be on the hook for origination fees and other closing costs.

5. Increase Your Income

How to Escape Debt in 2016

Keeping a tight rein on your budget can go a long way. But that’s not the only way to escape debt. Pumping up your paycheck in the new year can also help you pay off your loans and increase your disposable income.

Asking your boss for a raise will directly increase your earnings, but there’s no guarantee that your supervisor will agree to your request. If you’re paid by the hour, you can always take on more hours at your current job. And if all else fails, you can start a side gig to bring in more money.

Hold Yourself Accountable

Having a plan to get out of debt in the new year won’t get you very far if you’re not 100% committed. Checking your progress regularly is a must, as is reviewing your budget and goals to make sure you’re staying on track.

Photo credit: Â©iStock.com/BsWei, ©iStock.com/marekuliasz, ©iStock.com/DragonImages

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10 Ways to Save on College 

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College is expensive, there’s no debating that fact. The average amount of money borrowed to obtain a bachelor’s degree was $29,000 in 2017/2018, according to the College Board, That’s a whole lotta money (and it’s a number that’s only likely to go up).

If you want to avoid years and years of debt payoff after graduation then it’s up to you to try and keep your costs down. In an effort to help you do that, we’ve compiled a list of 10 ways to save on college.

1. Don’t go to college

This might sound like a joke but it’s not. The point is that before you go off and spend thousands and thousands of dollars on your education you need to make sure that college is the right choice for you. Is it what you really want to do? Are you ready?

Although college has become part of the prescribed life plan (high school — college — marriage — house…), it’s not the only option. You can also choose not to go and pursue other opportunities like entrepreneurship, a gap-year, joining the military or enrolling in a technical school. So, the purpose here is not to deter you from getting a college education but instead to ensure that it’s truly the right choice for the work/life you want to pursue.

2. Live at home

Nothing exemplifies the college experience more than living at home with your mom and dad…right? I know, this might not sound like the most fun way to “do” college. However, if graduating debt-free is a priority then it might be worth it. If you decide to go to a school that’s close to home (and your parents can stand you for another four years) then living with mom and dad can help you to save thousands of dollars on rent, utilities, laundry, and food.

3. Live with roommates

If living at home is not an option then consider renting with roommates. Yes, having your own space can be glorious however, it also comes at a premium price. If you’re serious about saving on college then having a roommate (or five) will help you save on things like rent, utilities, and even streaming services. It will also teach you how to cope with different personalities, which will serve you well when you graduate and enter the real world.

4. Live close to campus

If you live close to campus then you can probably get by without a car. This means no car payments, no insurance payment, and no gas. As an added bonus, you’ll never have to be the designated driver (assuming you’re 21 years old, of course). Instead, take advantage of public transit or bring your bike and get around using your own power.

5. Use your student status

Being a student is expensive but it also comes with a lot of perks! As a student, you’ll often have access to things like free transit passes, free gym memberships, equipment rentals (bike, skis, skates, kayaks), as well as tutoring and counseling services. Your student status might also get you discounted rates to museums, concerts, clothing, car rentals, and technology. To make sure that you don’t miss a student discount opportunity check out this list by Deal Hack.

6. Eat and drink at home

Eating and drinking at a restaurant or bar multiple times a week can get really expensive. Why not learn how to cook (a great life skill!) and save big by eating at home. This is not to say that you should never go out and have fun but if you want to minimize expenses it’s best to avoid multiple nights at the bar and opt for a BYOB potluck at your place.

7. Avoid credit card debt

The last thing you want to do is graduate from school with student loan debt AND credit card debt (a double debt whammy). If you’re going to have a credit card make sure you understand how a credit card works. If you’re not able to pay off your credit card in full each month then it’s probably best to stick to debit or cash.

8. Apply for scholarships

You don’t have to be the best or the brightest to win a scholarship. If you’re willing to put in some time and effort, you probably have a pretty good shot of winning some money. And remember, not all scholarships are based on your GPA. There are scholarships for everything: financial need, athletic ability, minority status, single moms … and so on.

If you’re a high school student — be sure to fill out the Free Application for Federal Student Aid (FAFSA). It’s estimated that $2.6 billion in FAFSA went unclaimed by eligible students for the 2018/2019…ouch!

9. Work, work, work

If you can hack it then get a job while you’re going to school. A great way to avoid debt is to have a continual source of income. In addition to the extra money, having a job is good for the resume, it can help you build your professional network (especially if you’re working in the field you’re going to school for), and juggling multiple obligations will teach you how to be organized and efficient.

10. Find a company that will pay for college

Both Starbucks and Walmart have programs that allow employees to get online degrees for nearly nothing. That’s becoming common at large companies and a surprising number of businesses offer at least some help paying tuition. There are also a number of employers that will help workers pay back their student loans.

You may not want to work at Starbucks, Walmart, or any place else that will pay for college, but it might make sense to suck it up and work for four years or so and come out of it with no debt and some solid employment history.

Just do what you can

When it comes to trying to save on college every little thing helps. While college should be fun, don’t lose sight of why you’re there … to get an education! When it comes to making tough financial decisions think about the position you want to be in when you graduate. You want to put yourself in a position to graduate debt-free (if at all possible) or at least put yourself in position to have a clear and easy plan to pay it off within a few years.

–By Jessica Martel

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From Bankruptcy to Paying $22,000 Cash for a Car

The post From Bankruptcy to Paying $22,000 Cash for a Car appeared first on Penny Pinchin' Mom.

rebounding from bankruptcy

I was recently a guest on the Masters of Money podcast.  One of the statements Phil made was “Wait a minute.  How does one go from declaring bankruptcy to paying $22,000 cash for a car?”

I had never really looked at my journey in that way.  But, when I thought about it, I realized –  “Dang!  That really is pretty awesome.”  And, what is even more interesting is how my bankruptcy was the catalyst for bringing me to the place I am today.


WHERE IT ALL BEGAN

When I was in my 20s, I was in a relationship. To be totally honest, it was destined to fail.  We were just really too different and so it was never going to work out.  However, being young, naive and in love, I was doing all I could to make it work.

For me, that meant buying things to make him happy.  But, truth be told, I was really spending money to make myself happy.  I loved money because it made me feel good.  I adored all it offered to me.

Sadly (and like so many others), it lead me down the path of financial ruin.  Well, not the money itself.  My attitude did.

I had such an adoration of money, and what I thought it was doing for me, that I misused it. I allowed it to take control of my life to try to fill some of the emptiness I was experiencing.

In December 2001, that relationship came to an end.  When it happened, I was devastated. It was a mix of sadness because it was over but honestly, more fear of me being able to support myself alone financially.

I had built up a lot of debt with him. While it was joint debt, we were not married. We both knew that we could not make ends meet alone and that we also needed to find a way to put this all behind us.  So, bankruptcy it was.

That following August, we met in Wichita, Kansas before the bankruptcy judge and it became official. I was bankrupt.

 

REBOUNDING FROM BANKRUPTCY

Fortunately for me, a few months after that relationship ended, I had moved to a new city and met the man I would eventually marry.  In fact, he proposed to me just a week after I declared bankruptcy.  Talk about a keeper!  😉

When I met my husband, I learned a lot about myself and what real love was like. I began to understand that it wasn’t in the things I gave him or he to me, but in the moments we shared. For the first time in my life, I experienced true love and joy.

He was the change I needed.

We married in June 2003 and knew that we wanted to start our family as soon as possible.  One thing we both agreed upon was that we wanted for me to quit my job and stay home with our children.  It was important for both of us that one of us was there to raise them.  We knew it would be a financial challenge, but one we felt we could overcome together.

In September 2004, our first daughter was born.  That was the same day I officially quit my job.

 

HERE COMES THE DEBT (AGAIN)

Once I was staying home with our little girl, our finances changed.  They had to. We could not spend as much money dining out and in other ways as we once did.  We both knew that.   However, we also had purchased a new home and there were things we needed wanted.

A few months before she was born, my husband purchased a pickup.  One month after Emma arrived, we went out and bought a brand new minivan.

Between the vehicles and a home equity loan to buy things for our house, we had accumulated quite a bit of debt.  We just kept juggling the bills and trying to balance it all – and not very successfully.

I started working part-time from home a few hours a week. That meant I was able to be here to take care of my baby, and was also able to bring in a little bit of cash.  It was difficult to do, but I knew we needed the money, so I kept at it.

Our son followed in March 2007.  There was no way I could still try to work the hours they needed for me to, and raise two kids. My kids mattered more.

So, I quit.

We continued getting by.  There were times when we robbed Peter to pay Paul.  We were making it, but not in the way we wanted to.

Then, one evening, my husband told me to go out to dinner with my friends.  Little did I know what would happen next.

 

THE DINNER THAT CHANGED IT ALL

After an evening of dinner and drinks with my girl friends, it was time to pay.  Most of us pulled out a credit or debit card to pay.  However, my son’s Godmother, Kathy, reached into her purse and pulled out an envelope.

I asked her what that was about, as I’d never seen such a thing before.  She explained how they were using cash for everything instead of plastic because they were trying to get out of debt.

That intrigued me, so I asked her more questions.  She told me how she and her husband had recently started to follow Dave Ramsey.  They were able to create a budget and a plan that was helping dig them out of debt.  She filled us in on some of the program and what they were doing.  That left me wanting to learn more.

When I walked through the door that evening, I sat down and started sharing all of this with my husband.  We knew that our friends did not make much more than we did, so we thought “if they can do it – so can we.”

I grabbed my computer and we started researching this Dave Ramsey.  We had no clue who he was or what he taught. The more we read, the more we were inspired to follow his plan.  We pulled out the debit card and made our purchase.  Nope.  We didn’t even sleep on it.

 

HOW WE CREATED OUR DEBT FREE PLAN

Once the Dave Ramsey books and materials arrived in the mail, we were like two kids on Christmas morning. We tore open the box and could not wait until our kids were in bed that night…..so we could read!!!

Within the week, we had started our plan.  Luckily, we had around $2,000 in the bank, so our emergency fund was already taken care of. We created a budget and a debt snowball plan and were ready to attack.

I was looking at the numbers and our plan and it hit me. I was in debt again.  However, this time, I felt as if I had brought my husband along with me.  I felt horrible that I was back in this situation.

Yes, this time around the spending was not for the same reasons as before, but it had happened. Were we going to get out of debt and just do this all over again in a few years? Why would it be different this time? Did I really learn from my past mistakes?

I started giving this a lot of thought and realized that even though the bankruptcy was behind me, my money attitude was still the same.

 

MY (MUCH NEEDED) ATTITUDE CHANGE

When I looked at the money we had spent, I realized that it was because I enjoyed spending it.  It wasn’t because I was trying to replace an emptiness in my life. Heck! I was happier than I had been my entire life.  But yet, here I was, still building debt, buying things I did not really need.

I had to do a lot of self-analysis. It began with me asking myself one simple question:

“What do you feel when you think about money?”

For me, it was simple. I loved it. I loved how I could use it to get things I wanted.  And, not having had much money growing up, I thought I worked hard for this, so I will spend it as see fit.

When I said that out loud to myself, I knew it was not healthy. Money is not here just to get the things I want.  Sure, it is fun to buy items, but those things were never making me happy.  My husband and children were doing that for me.

I took another look at the debt and knew that the money had purchased things.  Those things were replaceable and if I lost them all tomorrow, I’d be OK.  However, my family wasn’t.  There was nothing in this world that could or would ever replace them.  Ever.

In that moment I made the decision that I was no longer going to love money.  I was going to love my family – and myself – more.

For me, it meant changing my entire attitude.  Once that happened, it all started to fall into place.

 

THE PLAN WE USED – THAT WORKED!

As I mentioned above, we read the Dave Ramsey plan.  While we followed most of what he said, we also had to do some of our own research and come up with our own ways to do things.

For my husband, it meant selling some of the guns he owns (he is an avid hunter).  I sold furniture and other items that were taking up space in the basement.  We had garage sales.  Any money we made from these ventures went to our debt.

I started researching and finding ways to save more money at the grocery store.  And, as a result of my findings, some of my on-line friends encouraged me to start a blog.  (And, we all know where that lead now, don’t we.  😉 ).

Through it all, we did it.

On February 10, 2010, we made the final payment on our mini van.  We had done it.  We had become debt free.

 

THE CASH CAR

Once we were out of debt, we were able to start saving money.  It felt amazing to be able to keep more of what we earned and not have to hand it over to everyone else.

My husband and I knew that we would eventually need to replace our mini van. We started paying ourselves monthly payments – instead of a car company.  We built up that savings for many, many years.

When we had enough built up to pay cash for a car, we did not do it.  Even though we had the money to pay for it, we did not really need a new car.  That was a want.

So, we saved even more and researched and waited until the right car came along.  And, it did.  More than 2 years after we had enough money to pay for the car we wanted, we made the purchase.

There is nothing like sitting down at the dealership and writing a check for a vehicle.  There is no worry about how to fit the payment into our budget. The car is ours.  We were able to drive it home and just enjoy it.

The hard work had paid off.

 

YOU CAN TO IT TOO – I PROMISE

During our journey, I found my calling.  It was to help others, just like you, do the same thing we did.  This blog is how I do that.

I have shared many stories, tips and ideas to help you and your family save money over the years. I know some of you have been able to follow my articles and get started on your own debt free journey.

However, reading a few articles here and there can be difficult to follow. My husband and I did that ourselves.  Yes, it worked for us, but we both kept wishing we could follow a plan that would not just give us a few tools on how to do things, but really be there.

Someone who would hold our hand when we were scared. That we would have others to lean for advice.  We wished that we could celebrate our victories with others who really understood and can relate.

That led me to where I am today.  This blog.  This chance to really help others.  And, in those continuing efforts, The Financial Reboot Course was born.

 

CHANGE YOUR ATTITUDE – CHANGE YOUR LIFE

For me, the one change I needed to make was my money attitude.  I did not do that the first time around and I ended up making some of the same mistakes. History was repeating itself.

Once you can do the same thing, and really understand the root of how you feel about money, then – and only then – can you start to overhaul your finances.  If you don’t change the way you handle money, you will be destined to make the same mistakes over and over again.

I want to guide you on your own financial journey. I want you to be successful. I want you to be able to shout it from the rooftops — I’M DEBT FREE!!!!

Let me help you make the change you need at this moment in your life.  Kick start your own Financial Reboot, and leave the past in the past.

 

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