Friday, January 16, 2009

Start Living Frugally: The Frugal Lifestyle Part 1

Frugal: "economical in use or expenditure; prudently saving or sparing; not wasteful" -

Learning to live frugally is an important aspect of any plan to get out of debt. It's also important to look for ways to increase your income, but increasing your income can be dependent on factors beyond your control. So a person with wisdom, as I hope you are, would find it prudent to have power over the factor most easily controlled: spending. Most people think that the expenditures they have are necessary. If you think all the money you spend is truly neccesary for your survival you are either one of the most frugal people ever to live, or you are in denial. If I were a betting man, I would wager that you are in denial.

It is more important than ever to live frugally in a time that is increasingly unstable, with rising cost of living, stagnant wages, corporate layoofs, compounding personal debt, and high medical bills on the rise in most american families, it would do for nearly any person reading this to start applying more frugality to their lives.

Mastering the art of living frugally makes it much easier to save money and meet financial goals. If you learn the many tricks of the trade you will also increase your income and financial freedom in prosperous times.

Living frugally is not about scarcity or fear. It is not about being a cheapskate. It's about being knowledegable about how to make your money go further than usual, controlling your impulses to buy indulgences you only want in the moment, and lowering your monthly expenses by purchasing according to value and neccessity.

You must learn the fine art of bargain hunting as well as the discipline and awareness to avoid junk that will break quickly. Do not purchase things just because they are cheap either! Many people go nuts when they see something for a low price and purchase it even if they have absolutely no use for it whatsoever because they are in a scaricity mindset. They are afraid to pass up a good sale because it might not come around again. This mindset is the reason the marketing tactic "Buy now I might raise the price at any time" is always effective. Even if you think your too smart to fall for that, you probably fall for it all the time, you just don't notice it.

Instead of simply spending all the money you make each week and making a meager unfocus attempt to pay off any debts you may have, it would be much more productive to start to PLAN a more frugal lifestyle. Do you have clothes, furniture, cars, restaurant meals etc. only because you have maxxed out credit cards? It's time to acknowledge your lack of planning and preperation instead of trying to maintain an illusion of financial prosperity.

Do not think to yourself, "I am a free man/woman, I earn my money and I have the right to spend it how i'd like to enjoy the fruits of my labor!". This sort of thinking is delusional. You are listening to the clamoring of your unconcious "monkey mind" to get whatever it desires right now, cost be damned! You rationalize your unconcious behavior with concious thought without ever fully acknowledging to yourself what you are really doing, even though you clearly do know the cost of your actions. By living without any financial plan and not learning to life frugally you not only deprive yourself of the things you TRULY want and NEED to satisfy impulse, but you fortify the bars of your financial prison. Learning to live frugally starts with a budget plan. Following your budget plan is to start to plan your escape from financial prison. By building a budget plan you are digging a tunnel out of the cold confinces of your cell of debt and check-to-check living, and moving toward the shining light of financial freedom.

Sunday, January 11, 2009

Facts on Credit Card Debt. Crushing the American Dream.

"According to latest information gathered by the US Census bureau, there were 164 million credit cardholders in the United States in 2005 and that number is projected to grow to 176 million Americans by 2010." (Source:

Americans have become more and more comfortable with credit cards and debt. We have been conditioned to believe it is normal, even necessary to get into debt, and use "credit" to pay for things.

"76 percent of undergraduates have credit cards, and the average undergrad has $2,200 in credit card. Additionally, they will amass almost $20,000 in student debt. "(Source: Nellie Mae, "Undergraduate Students and Credit Cards in 2004: An Analysis of Usage Rates and Trends")

Students come out of college with massive debt, including high interest credit card debt. This can take many years too pay off if is not at a manageable interest rate. Predatory lenders make every attempt to make high interest loans to college students without their awareness. If your going to college, or your sending your kids to college, be very careful about borrowing money to do so. If you are a parent your best option would be to invest in a 529 plan or ESA account. With a $2000 contribution per year, by the time your child reaches college age you can pay for their college education, giving them a lot less anxiety and a much more secure financial future.

"Approximately 74.9 percent of the U.S. families surveyed in 2004 had credit cards, and 58 percent of those families carried a balance. In 2001, 76.2 percent of families had credit cards, and 55 percent of those families carried a balance." (Source: Federal Reserve Bulletin, February 2006)

The amount of families who carry a debt balance which constantly costs them an increasing amount of money continues to grow. The trend is toward negative cash flow instead of positive cash flow. Don't let yourself get caught in this trend.

"About a quarter of families have no credit cards, and an additional 30 percent or so pay off their balances every month." (Source: Federal Reserve Board survey of consumer finances, 2004)

This is the category you want to fall into. Your better off being in the quarter of families with no credit cards though, because your more likely to save money when you don't have constant access to virtually unlimited spending power. I don't have the figures, but I suspect most of the families who pay their balances every month have a higher than average income.

"The average American with a credit file is responsible for $16,635 in debt, excluding mortgages, according to Experian." (Source: U.S. News and World Report, "The End of Credit Card Consumerism," August 2008)

Not good. The average American is constantly paying credit card companies a portion of their income. Because they have conditioned us to use their products, they have managed to siphon away a portion of the incomes of the lower and middle class. This (along with inflated costs of basic living expenses) the real reason families feel it is now impossible to live without being a dual income family. Elizabeth Warren writes in an essay for Harvard Magazine about the effects of debt on the middle class. She says "Since the early 1980s, the credit industry has rewritten the rules of lending to families. Congress has turned the industry loose to charge whatever it can get and to bury tricks and traps throughout credit agreements. Credit-card contracts that were less than a page long in the early 1980s now number 30 or more pages of small-print legalese. In the details, credit-card companies lend money at one rate, but retain the right to change the interest rate whenever it suits them. They can even raise the rate after the money has been borrowed—a practice once considered too shady even for a back-alley loan shark. When they think they have been cheated, customers can be forced into arbitration in locations thousands of miles from home. Some companies claim that they can repossess anything a customer buys with a credit card."

"28 percent of those surveyed say their ability to pay off their credit card balance has become more difficult." (Source: Javelin Strategy & Research, "Credit Card Issuer Profitability in a Difficult Economy," July 2008)

The credit industry has written the rules to make it nearly impossible for some who have fallen into a financial hole to climb out of it. The same has happened in the mortgage industry. Together these lenders have made middle class life in present times a financial struggle for many. It's time to write our own rules. Rethink the wisdom of acquiring debt. Is it ever a good idea to use a credit card? Is "owning" a home through a "mortgage" really worth it, when you pay 3 to 3 and a half times the value of the home?

"U.S. consumers racked up an estimated $51 billion worth of fast food on their personal credit and debit cards in 2006, compared to $33.2 billion one year earlier." (Source:

We are rapidly making ourselves fatter, and our wallets thinner. Armed with the tools of our own destruction, credit cards, the damage we can do to ourselves is unlimited. We are crushing the American Dream.

Thursday, January 8, 2009

National Credit Union Administration (NCUA) Activates National Examination Team


In short, this news means that there's going to be increasing credit unions failures. The dominos are falling in our debt based economy.

"January 8, 2008, Alexandria, Va. – Chairman Michael E. Fryzel announced today activation of the National Credit Union Administration (NCUA) National Examination Team (NET) to enhance the supervisory process in areas where economic conditions have adversely impacted federally insured credit unions. This initiative is in further response to the difficulties caused by declining home values, high mortgage delinquency rates, high foreclosure rates, high unemployment rates, and concentrations of real estate loans that have affected credit unions to varying degrees. Where those factors are present, NCUA will deploy a specialized team of examiners who will concentrate on the most difficult cases. “As first mentioned last October during our 2009 budget discussions, NCUA is now activating the NET,” said Chairman Fryzel. “The knowledge, skill, and experience of NET members will enable them to quickly identify complex problems, recommend appropriate corrective actions and thereby improve the overall quality of NCUA supervision during a very volatile period for all financial institutions, including credit unions. The NET is a logical and essential component of our overall NCUA's focus on strong and proactive regulation, and the priority we place on safety and soundness."NET will supervise assigned credit unions until problems are resolved, either returning the credit union to regional supervision or activating merger, conservatorship or closure. Additionally, the NET will be responsible for examining and supervising approximately ten credit unions, mainly large and more complex institutions. The NET also represents an opportunity to expose NCUA examiners to a broad range of credit unions and varying levels of risk, thereby augmenting NCUA’s succession planning objectives. The NET is comprised of a director, five problem case officers (PCOs) and the equivalent of one loss risk analysis officer (LRAO). In addition, regional subject matter examiners (SMEs) will be detailed to NET on an as needed basis.The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund (NCUSIF), insuring the deposits of nearly 89 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars. "

Monday, January 5, 2009

Bad Credit Rating Score? It's a blessing in disguise.

"You've got to have good credit!"

As soon as your old enough to get a credit card, it's usually told to the average teenager that building credit is important. That's the conventional wisdom. Unfortunately it's also the reason so many teens and young adults are in debt. They use credit cards with the idea that it's important for them to do so because they "need to build credit". Many people put an enormous amount of stress into their own lives by worrying incessantly about the status of their credit score. They've been taught by society that credit is important.

Make sure you tithe to the credit gods.

You absolutely MUST make sure that you continue to be a good customer of those issuing credit, otherwise how could they make money? Also, unless they come up with an excuse, how can they charge you exorbitant interest rates? They can charge these enormous rates to people getting their first credit card, because they have marketed the idea that credit is extremely important for success in life, so you'd better get a credit card, and use it, otherwise you'll be missing out on the best that life has to offer.

The idea that a 'credit score' is so important has mislead many people into filling the pockets of companies who issue credit. Many people work both for their employer, themselves, and their credit card companies. They pay large monthly premiums on huge debt, in an endless cycle designed to entrap a person for as long as possible so as to extract as much of that persons income as possible.

Breathe. The sky isn't falling...

In reality, your credit rating score is really not as important as you might think. A good credit score isn't going to pay your bills and put food on your table. You can get a debit card instead of a credit card and enjoy all the same convenient. The only good reason you may need a high credit rating score is that some companies may not hire you because of extremely negative marks on your credit score. The companies who look at your credit score and base hiring decisions on it are few and far between however. It's usually only a factor in jobs that involve handling a lot of valuables, such as a jewelry store, a bank, certain federal jobs etc. The way I see it, if you are denied a job because of your credit score, it's probably a blessing in disguise. It's unlikely you would have a good experience working at a company that judges people based on their credit score.

A good credit score may actually be the undoing of many people. It empowers you mostly to do things which are self destructive. It gives you the power to buy lots of things you don't have. It gives you a false sense of security which leads to undisciplined financial management. It makes you think you are a master of personal finance simply because you have a "good score", meanwhile your hundreds of thousands in debt and your monthly expenses seem to always find a way of meeting or exceeding your income. In this way they are able to mold people into modern day debt slaves. The sad part is that some people actually feel they are getting ahead by engaging in this sort of volunteer slavery.

The silver lining

It may truly be a blessing in disguise to have a time period in your life when your credit score sinks so low that you are unable to open up lines of credit and make life altering financial decisions such as purchasing a home. Many people are in very dire straits financially simply because they really thought that there was no way banks would lend out money to them unless it wasn't risky. What they failed to realize is that as the one purchasing the home you really take all the risk. Credit card companies and banks are only too happy to lend out money to anyone they can. They stand to gain much more though by making the world of higher and higher debt an exclusive club of those who build their "Credit score". They've managed to actually make the ability to acquire greater sums of debt seem desirable. "It's amazing! I qualified for a million dollar line of credit! Isn't that great? Now I can go a million dollars into debt if I want to!" Read that sentence out loud. Does it seem at all ridiculous to you?

Seriously, breathe, relax your shoulders, it will be OK

So the moral of the story is - Do not have a heart attack if you happen to have a low credit score. It may have been just the wake up call and lesson you need to work toward true financial freedom. The tools you could use to harm yourself have been taken away. Now you can use real tools (your mind, self discipline, and determination) to build a bridge to debt freedom. When you manage to pay off your debts you may find that you've learned a valuable lesson of living within your means. You'll likely find that the time you spent simplifying your life in order to save money is the very thing which will your secure your prosperous future.

Thursday, January 1, 2009

Americans have too much debt

“Ninety-seven point five percent of Americans reach age 65, a normal retirement age, and they don’t have the resources to retire.” -

According to the Center for American Progress, family debt has hit record highs. Household debt averaged a record 133.7% of disposable income in the fourth quarter of 2007. In the fourth quarter of 2007, families spent 14.3% of their disposable income to service their debt, up from 13.0% in the first quarter of 2001.

Debt is an important part of personal finance descision making. Just because it is normal to have debt does not mean it should be. Focusing your energies on paying creditors and bill collectors and getting out of debt is extremely important to your future financial health.

Tuesday, December 30, 2008

Top 10 ways to survive in 2009

A lot of people are going to have a tough time making it through the recession of 2009. Many significant problems are coming to head, and many people are losing their jobs. Here are some ways you can make sure you and your family survive in 2009, even if a worst case scenario were to take place of a major depression.

1. Stop all completely unncessary wasteful spending and pay off high interest debt

2. Don't try to sell your house for 2004 prices. Too many people are still in a house that they can barely afford because they are trying to sell it for more than anyone will buy it in todays market.

3. Find a cheap/free living situation. Move in with your parents/relatives/friends if you can.

4. Figure out how to make extra money online.

5. Save at least 30% of your income. Do not invest it unless you are extremely confident in your investment or large solid blue-chip companies like apple have dramatic stock plunges.

6. Learn to cook at home, and how to shop better at the grocery store. If you buy real nutrious food from the grocery store and cook it at home instead of eating out, you will save a signfiicant amount of money each week. Don't go to the grocery store and buy a bunch of snacks. A big plus: your health should improve dramatically if you do this.

7. Spend your money on things which have real value to you. It's important that americanscontinue to spend money. We should vote with our money though and spend on things that have true value to us, instead of spending on luxury items like jewelery, way too expensive clothing, electronics we won't even use etc.

8. Reduce your energy footprint. Get more effecient lighting, shut off lights, electronics, computers when not in use.

9. Learn basic survival skills like how to build a fire, create shelter, ration food, grow food, store food, do first aid etc. No one is hoping for the worst, but you never know how bad things could get.

10. It's the new year! End your senseless addictions to starbucks, cigarettes, and mcdonalds hamburgers.

Monday, December 29, 2008

Stop your addiction to spending

Have you ever been in the store and saw the person in front of you looking at a magazine, paper or candy, which is easily available? They did not plan to buy, but an announcement or a catchy phrase compelled them to. It is an impulse purchase. To buy without thinking, this is an impulse, and it is not necessary. Do not spend all your hard-earned money on products or meaningless items that do not help you make money! Stop making impulse purchases right now and start saving! Failure to do so is very similair to failure to quit smoking.

You are addicted to something detrimental to your future and without much positive merit at all. Just like smoking, the feeling isn't great, but you simply are in the habit of indulging in it. In fact, if you are a smoker, one of the first things you could do to free up your money is to quit this destructive and nasty habit! Your money is money, not someone elses. You have the right to retain it. You don't need to add all your money to the balance sheet of huge companies. Why don't you add it to your own balance sheet? Instead of spending all your money on electronics, movies, cds, videogames etc. you should learn to purchase only those indulgences which provide the most value. Become much more selective about which products you buy. You don't need to become a cheap miserable person to save a significant amount of money monthly, freeing you to be able to end each month with a significant positive gain to your bank account.

Learn to spend more of your time on things which have a positive effect on you and are largely free. Borrow books from the library. Find out when the best tv shows are on and make an event of watching them. Purchase board games which force your family and friends to interact with each other strengthing your bonds and causing plenty of laughter and fun without requiring you to keep spending money on the latest diversion.
It is easy to forget that your money is your own, it does not have to constantly flow from you into the hands of someone else. We all must resist the temptation and wait until can really afford luxury things.

A dollar spent is a dollar you won't have anymore and you can never get back.

Destroy your credit card and get out of debt.

Credit card debt is a cancer that is spreading in American households. Credit cards give us an idea of the possibility that we can spend more than we have. Please get rid of your credit card and never use one again!

Credit cards are largely useless, and unneeded. They are one of the main obstacles in the way and financial wealth. They are full of traps which make you pay much more in the long term. How rich could you become in the long term if all the money for your credit card interest each month was invested?

A debit card can give you all the convenience of a credit card, with all the limitations of your bank. It is a good alternative. Just be careful because if a thief is in possession of your debit card they can drain your bank account and it may take longer to clear up the mess than with a credit card.

Thursday, December 25, 2008

3 easy ways to stay out of debt

1. The first trick is to detail the costs - this miracle is your ability to save. Make a list of everything you buy and spend, you're looking for where the money goes. A small number of purchases on a daily basis can turn into something big in the long term on a monthly basis, which is clearly something. This brings the second round: to stop paying for many things that are not necessary.

2. This problem lies with the compulsive buyer. He loves to be walking through the malls and shops signing credit card slips as if he doesn't really have to pay for it. If this this type is you, using different types of loans to quench your insatiable thirst for more goods, only digging yourself increasingly in the pit of debt problems - a big no-no. The only thing to do is spend money on necessities and manage savings, after all the deductions. The percentage that recommended is of at least 12% of cash flow should be saved, possibly put in a safe investment, while making sure to keep the head just above water.

3. The trick is not hard, you should stop eating out. The reason why people continue to do so is simply because they lack the willpower to go grow grocery shopping and make their own food. It's also much generally much healthier to preapre your own food from gocery stores as opposed to eating out. Eating out is a needless expenditure.

So from now on, try to exercise some willpower by following the above tips in order to keep your head above water and start to pay off your debts. Don't give up hope you can salvage your credit rating and be debt free and stress free with the proper management of your money.

Want to make debt collectors scared?

Dealing with a debt collector is delicate. It can sometimes resemble a poker game, the two parties May or May not be the bluff and there is money at stake.

This technique could be particularly useful for consumers who are engaged in a credit card, debit request. I urge both mail cease and desist letter that using the technique described, with the presentation of his appearance, positive response from this.

If anything can kick the collector to the rear end, this will.

The end goal is that the collector to harass you (and / or withdraw its request) and move on the next victim, right?

Try this:

1) Send all communication with the debt collector (including validation, verification, or cease and desist what your situationrequired), via certified receipt Priority W / USPS number.

2nd) CC (Carbon Copy), the Attorney General in his report, as well as debt collectors. use USPS to include the tracking number for all parties to the letter so theycan see for themselves that it is not just bluff.

3rd) CC (Carbon Copy), the State Bar and the state debt collection.

4. ) CC (Carbon Copy) local television journalist Consumer research by collectors and its Member States.

5.) Be sure to include the courage of the CC of all documents sent to the collector W / figures on the USPS.

"debt recoverers" know that less than 1% of consumers tend to go ahead with their threats to contact the BBB, Bar, etc. Be proactive and "cc"-ing to these organizations in its correspondence or the collector will not take their shit and will not be intimidated.

Consumers who have tried this technique have found that you and your questions are taken much more serious than the threat to act alone. You have nothing to lose! everything to gain!

Your right in dealing with bill collectors

Stress of being unable to pay can have many effects in time. It is even more stressful to listen to a bill collector continue to call day and night about the recovery of debts. Even if the bill collectors can be persistent (their work), if a bill collector goes beyond the limits of the law, we can act. Federal Fair Debt Collection Practices Act, or FDCPA, prohibits certain acts of unfairness

In order to deal with debt collectors, it pays to learn what they can and cannot do. Although most bill collectors are careful to follow the law when contacting you, some are not. If a bill collector goes too far, you can take action.

The FDCPA covers debt collectors who work for collection agencies. It does not cover debt collectors that are employed by the original creditor (the business or person who first extended you credit or loaned you money).

Debt collectors from collection agencies cannot do any of the following:

* Call you repeatedly or contact you at an unreasonable time (the law presumes that before 8 a.m. or after 9 p.m. is unreasonable).
* Place telephone calls to you without identifying themselves as bill collectors.
* Contact you at work if your employer prohibits it.
* Use obscene or profane language.
* Use or threaten to use violence.
* Claim you owe more than you do.
* Claim to be attorneys if they're not.
* Claim that you'll be imprisoned or your property will be seized.
* Send you a paper that resembles a legal document.
* Add unauthorized interest, fees, or charges.
* Contact third parties, other than your attorney, a credit reporting bureau, or the original creditor, except for the limited purpose of finding information about your whereabouts. Unless you have asked collectors in writing to stop contacting you, they can also contact your spouse, your parents (if you are a minor), and your codebtors.

Under the FDCPA, you have the right to tell a collection agency employee to stop contacting you. Simply send a letter stating that you want the collection agency to cease all communications with you. All agency employees are then prohibited from contacting you, except to tell you that collection efforts have ended or that the collection agency or original creditor intends to sue you or take advantage of some other legal remedy.
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