Debt and Credit Free

Now, in my 1st. blog, I spoke of not having any debt in order to start a business. I read many articles and books. So here are some articles that I am allowed to post.

Debt! Getting In—Getting Out

LOIS and Rick had been married for almost a year. Like many young couples, they wanted everything at once—and it was easy! The payment on the TV was only $52 per month and adding a VCR only increased the payment to $78. The new furniture was a little more difficult—the payment was $287 per month. Of course, that did not include the drapes and the carpet, which boosted the payment by $46.50. But the finance company had been cooperative.

The appliances came a little easier because the store accepted their credit card. That way monthly payments were automatic, and they did not have to apply for a loan. It would have been easier if Rick’s sports car had been paid off before the wedding as he had planned, but he had not quite been able to manage that.

Rick put it this way: “I thought marriage would be great, but I worry so much about our debts that it’s just not fun.” Lois agreed and added: “It was so easy to get into debt. Will we ever, ever get out of debt?”

This plaintive query echoes the dilemma faced by millions of families in most countries of the world. Rare indeed are the persons who manage to live their lives without shouldering a large, sometimes unmanageable, burden of debt.

Getting Into Debt

How does one get into debt? Simple! It is a way of life. Governments, multinational corporations, small businesses, families, and individuals have all come to accept debt as normal.
Pride often creates debt. Debt creates strain. Strain leads to other difficulties. So how does one live in a world that is debt oriented and, at the same time, stay out of debt?
Perhaps the first lesson to be learned is simple sales resistance. One cannot enter the door of most financial institutions without being assailed by posters offering loans. Credit cards are easily available. Over the spectrum from loan sharks to respectable banking institutions, there are millions of successful, aggressive persons who are in the business of selling money. To them, money is a commodity—like groceries—and their job is selling it to you. Learn to say NO.

Debt Management

Many formulas exist to define an acceptable ratio of debt to income. But these vary so much that many have little meaning. For instance, some economists feel that a family may comfortably allocate 30 percent of gross income to pay for shelter. This is for mortgage payments or rent. However, this formula may not be feasible for the very poor. So general formulas are often too vague. The whole problem of debt control is better considered on a personal level.

Some debt may be acceptable, but this demands discernment and careful management. For instance, most people cannot buy a home without incurring debt. It is unrealistic to think that a family must live in rented accommodations until they have saved enough money to go out and pay cash for a house. It will probably never happen. Rather, the family may feel that the money they are paying for rent can be channeled into paying off a mortgage on a house. Even though this plan will take many years, they conclude that it is more practical.

When we realize that the value of the house will likely increase with time, it follows that while mortgage payments may be higher than monthly rent, the family may be better off since they are creating equity, which is the value of the house minus the claims against it. A house mortgage at a reasonable rate, with manageable payments, may, therefore, be an acceptable debt. The same may be said of other large, necessary family purchases.

Other forms of debt may be absolutely unacceptable. Debt management includes the ability to reject them. Perhaps the best rule is: Do not buy what you do not need and cannot afford. Avoid impulse buying. Even if something is half price, it is not a bargain for you if you cannot afford it. Do not borrow for luxury items. Do not take vacation trips unless you can afford to pay before you go. Whatever you buy must be paid for sooner or later. Credit cards are used to avoid carrying cash but are very expensive when used as a means to borrow money.

Getting Out of Debt

Some people may feel that advice on debt management is too late for them. ‘I’m already under a landslide of bills and commitments. How do I get out?’ The fact is that it is never too late to start.
The first move should be to establish a working relationship with a reputable bank. If you must borrow, this is where you will likely get the best interest rate. If your bank refuses you a loan, it is probably doing you a favor. Remember, it is in the business of lending money and will lend it to you if it seems reasonable.

Second, you must start paying off the debts in some organized way. On paper, project your anticipated personal cash flow over the next 24 months. Be realistic. Include every bit of income you expect to have. Then list everything that must be paid. Include some allowance for items that you cannot even think of right now. List the debts in order of priority. Then allocate your money on a fair basis so that each debt receives at least some payment. Set a target payoff date for each debt.
In conjunction with this plan, consider where you might reduce costs. Debt reduction always requires some sacrifice. Can the grocery bill be shaved by bargain shopping? What cheaper substitutions can be used in meal planning? Can vacations be cut? Can your living standard be reduced? Can some luxury items be enjoyed less often? Sometimes we just have to be ruthless with ourselves. Certain expenses can be moved from the “necessities” column to the “luxuries” column.

Once you have a plan worked out on paper, discuss it with your bank loan officer. He will be impressed when he sees that you mean business. He may be able to show you how to improve the plan. He may even suggest a debt consolidation loan. If so, be sure to consider the interest rate and the length of time over which the consolidated debt is to be repaid. It will usually mean smaller payments over a longer period of time. But do not be tempted to use the debt consolidation to borrow more money.

Communicate!
Any debt-reduction program requires communication if it is to be successful. Visit or telephone each person to whom you owe money. If you think it would be helpful, show them your plan. At least talk to them. Remember, they want to know what you are doing. Keep them informed. The one thing no lender can tolerate is silence. Silence is quickly interpreted as indifference or even refusal to pay. Many a creditor has started a lawsuit to recover money simply because no one bothered to explain what was happening.

Should you consider bankruptcy? In some lands, all people are entitled to the benefit of such provisions of the law, but it is not to be taken lightly. Debt is a commitment. Moral obligation is involved. Bankruptcy has a ripple effect that creates problems for others. It will remain a blot on your record.

There is nothing wrong with the old-fashioned concept of “pay as you go.” Indeed, if at all possible, the wisest course is not to get into debt in the first place. Debt can be a deadly quicksand that consumes you. Rick and Lois allowed themselves to be swallowed up. They have changes to make, but step-by-step they can climb out of their debts.

If you were buried under a literal landslide, you would use whatever mobility you had to start digging yourself out. It may be slow, but it works! Remember, no matter how long it may take or how difficult it may be to do it, getting out of debt is well worth it.

Sinking into excessive debt is like being swallowed by quicksand!

Does It Pay to Go Into Debt?

“NEVER spend your money before you have it.” Since going into debt is for many people a way of life today, does this advice given by former U.S. president Thomas Jefferson sound old-fashioned?

In many lands, wages remain low in comparison with prices, and inflation eats away savings. Also, the economic climate affects people’s sense of values. Yet, honesty is important. Because such things as cheating on taxes and failing to repay debts are widespread, it is indeed a challenge to maintain a good conscience. No wonder, then, that the economy is often the talk of the day and stories on saving or making money abound in newspapers and magazines and on television as people try to figure out how to deal with economic complexities. At the same time, you are rightfully concerned about how to provide for yourself and your family.—1 Timothy 5:8.

Since relatively few people enjoy economic stability, what can you do to avoid hardships for your family? For one thing, there is a vital lesson to keep in mind.

Avoid Too Much Debt

Why do some go into debt? Borrowing is not always due to a dire situation, such as illness. The desire to possess certain material things may be very strong. On the other hand, the inducement to go into debt may not in itself be wrong. In fact, it may be better to pay a mortgage on a house than to pay rent, or it may be necessary to buy a car. A breadwinner wants his family to be happy. He wants to be a success as a husband and father. Likely, he feels that his family is entitled to enjoy many of the material things that others possess.

Admittedly, it may be tempting to borrow money to purchase a desired but nonessential item. Acquiring things makes one feel good, does it not? Who does not enjoy a beautiful dress, a new pair of shoes, or even something like a brand-new car? And who would not like to have a more attractive home? Yet, beware! Businessmen can be persuasive, and a lot of money is made selling items to people who do not need them and cannot afford them.

Remember, too, that keeping up on payments can cause a strain on family relationships. Disagreement and bitterness may result. Playwright Henrik Ibsen was right when he said: “Home life ceases to be free and beautiful as soon as it is founded on borrowing and debt.” If you do not make your payments on time, your good name may be tarnished. Since it is much easier to spend the borrowed money than to pay it back with interest, many discover that what they bought does not bring the joy they had anticipated.

Commonly, governments persist in borrowing more and more, increasing their interest payments. Although this may be normal, why imitate the debt-ridden nations? Rather than creating riches for the people, too much debt can increase poverty and insecurity. As a Danish proverb puts it, “it is hard to pay for bread that has been eaten.”

Happily, stress due to the burden of debt decreases greatly when you learn to spend wisely. So take the time to plan your shopping carefully to avoid pressures to borrow. Even in countries with hyperinflation, there are ways to save money—by shopping for bargains and by buying only necessities. It requires living within your means, being willing to wait or to do without.

Ask yourself: If I go into debt will it  cause hardship for my family? What about my reputation if I cannot repay the loan? It may take a long time to be trusted again! In this regard, practical, solid counsel is available. Why not examine the Bible to see whether it can help you and your family to deal with the matter of debt?

Can the Bible Help You?

Most important, the Bible can help all of us to cultivate implicit trust in Jehovah. Surely we need help in these “times hard to deal with.” (2 Timothy 3:1) We are admonished: “Let your manner of life be free of the love of money, while you are content with the present things. For he has said: ‘I will by no means leave you nor by any means forsake you.’ So that we may be of good courage and say: ‘Jehovah is my helper; I will not be afraid. What can man do to me?’” (Hebrews 13:5, 6) How vital it is to develop a strong faith in God as our Provider!

Although the Bible does not tell each person how to make a living, it does provide sound guidelines. Jesus Christ urged his listeners to care first for their spirituality: “Happy are those conscious of their spiritual need.” (Matthew 5:3) We are also told to set goals: “Make it your aim to live quietly and to mind your own business and work with your hands, just as we ordered you; so that you may be walking decently as regards people outside and not be needing anything.” (1 Thessalonians 4:11, 12) To live quietly and enjoy a measure of tranquillity, does it not require living within our means?

God’s Word can help us to adjust our thinking. 

The writer of Proverbs showed a balanced viewpoint in requesting of God: “Give me neither poverty nor riches. Let me devour the food prescribed for me, that I may not become satisfied and I actually deny you and say: ‘Who is Jehovah?’ and that I may not come to poverty and I actually steal and assail the name of my God.” (Proverbs 30:8, 9) So do not feel ashamed if you have to get along with a little less, at least temporarily. Never let your happiness depend on material things, as many do, comparing themselves with others or unduly worrying about material possessions.—Matthew 6:31-33.

In addition, the Bible can help you to cultivate good habits. Learn to be thrifty without being stingy, finding satisfaction in the things you can afford. If you are a youth, do not expect to get instantly what adults have obtained through years of work. Avoid being enslaved by materialism. Aptly, the Bible warns us about, not money, but “the love of money,” saying: “Those who are determined to be rich fall into temptation and a snare and many senseless and hurtful desires, which plunge men into destruction and ruin. For the love of money is a root of all sorts of injurious things, and by reaching out for this love some have been led astray from the faith and have stabbed themselves all over with many pains.” (1 Timothy 6:9, 10) How essential that you recognize the difference between what you really need and what you merely want!

Do you feel, however, that your income is too low? True, it is not easy to bear privations without becoming frustrated. Nevertheless, be willing to go without some nonessentials rather than going into debt for them, which may cause you heavy burdens and even financial loss. Plan carefully, and be economical. You may get practical suggestions by talking with an experienced friend. Would it help to learn a new skill? Remember: Following Bible principles, putting spiritual matters first, and trusting fully in Jehovah are vital—whatever the circumstances.—Philippians 4:11-13.

Yes, going into debt may not pay. It has been said: “A man in debt is caught in a net.” The burden of debt can be damaging to family life, health, and spirituality. Debt may make the borrower even poorer. Says Proverbs 22:7: “The rich is the one that rules over those of little means, and the borrower is a servant to the man doing the lending.” Hence, avoid unnecessary debt. We can still benefit from the principle involved in what the apostle Paul recommended to Christians: “Do not you people be owing anybody a single thing, except to love one another; for he that loves his fellowman has fulfilled the law.”—Romans 13:8.

Regardless of the condition of the economy in your country, look forward confidently to God’s new world. Soon mankind will no longer be divided into lenders and borrowers. Under God’s Kingdom, no one will be poor. Jehovah’s promise will come true: “He will deliver the poor one crying for help, also the afflicted one and whoever has no helper. He will feel sorry for the lowly one and the poor one, and the souls of the poor ones he will save.” (Psalm 72:12, 13) Rather than struggling merely to survive, earth’s inhabitants will then “find their exquisite delight in the abundance of peace.”—Psalm 37:11.

The Way to Stay Out of Debt

IN THESE changing times, managing family resources can be a challenge. How can you meet the challenge successfully?

The answer is not necessarily more income. Financial experts say that the answer has to do with having a sense of where the money is coming from and where it is going as well as with being willing to make informed decisions. To do this, you need a budget.

Overcoming Resistance to a Budget

Budgets, however, “conjure up all sorts of images of dreariness,” says financial adviser, Grace Weinstein. So, many people simply will not make one. Some also associate the need for a budget with a low income or a lack of education. But even professionals with high incomes have money problems. A financial counselor says: “One of my first clients made $187,000 a year . . . Their credit card debt alone was just under $95,000.”

Michael, mentioned previously, was reluctant to seek financial advice for another reason. He admits: “I was afraid that others would view me as naive and foolish.” But such fear is unfounded. Managing money and making money call for different skills, and most people are not trained to manage money. A social worker points out: “We graduate from high school knowing more about an isosceles triangle than how to save money.”

Budgeting, though, is relatively easy to learn. It involves making a list of income and a list of expenses—and then keeping the expenses within the income. Actually, making up a budget can be enjoyable, and living by it can be satisfying.

Getting Started

Let us start by making a list of income. For most of us, this should be easy because it generally involves only a few items—salary, interest from a savings account, and so forth.

But do not count on an income that is uncertain, such as that from overtime pay, bonuses, or gifts. Financial consultants warn that planning on uncertain sources of income can get you into debt. If such revenues do materialize, you may choose to use the money to treat yourself and the family, to help others in need, or to contribute to a worthy cause.

Making a list of expenses, however, can be a bit more tricky. Robert and Rhonda, mentioned in the previous articles, could not understand where their hard-earned money was going. Robert explains how they solved the problem: “For one month we each carried a piece of paper and wrote down every single penny we spent. We even wrote down the money spent on a cup of coffee. And at the end of each day, we entered the amounts in the budget book I had purchased.”

Conscientiously recording everything you spend will help you locate any ‘mystery money’ that seems to slip away. If you know your spending habits, however, you may decide to bypass keeping a detailed itemization of what you spend each day and go ahead with a list of monthly expenditures.

Listing Monthly Expenses

You may want to work up a chart similar to the one shown above. In the “Actual Spending” column, enter the amount you currently spend on each item. Limit the number of main categories, using headings such as “food,” “housing,” and “clothing.” However, do not omit pertinent subcategories. For Robert and Rhonda, a large part of their money was going toward eating out, so separating “eating out” from “groceries” proved helpful. If you enjoy extending hospitality to others, this too can be a subcategory under “food.” The idea is to make the chart reflect your individuality and preferences.

When working up your chart, do not forget quarterly, semiannual, annual, and other periodic expenses, such as payments for insurance and taxes. To include them in the monthly chart, though, you will have to divide the amount by the appropriate number of months.

An important item in a list of expenses is “savings.” While many may not think of savings as an expense, you will wisely budget some of your monthly income for emergencies or special purposes. Grace Weinstein emphasizes the importance of including savings in your list of expenses: “If you can’t manage to save at least 5 percent of your after-tax income (and that’s a bare minimum), you’ll have to take harsher measures. Cut out your use of credit, rearrange your style of living, and get down to basics.” Yes, make a point to include savings in your monthly budget.

For a cushion during a period of possible unemployment, it is now commonly recommended that you try to establish readily available savings of at least six months’ earnings. “If you get a raise,” says a fiscal adviser, “save half of it.” Do you feel that it is impossible for you to save?

Consider Laxmi Bai, who like many in rural India is very poor. She started to put away in an earthen pot a handful of rice from the daily portion she cooked for her family. Periodically, she would sell the rice and deposit the money in the bank. This was a step toward getting a bank loan to help her son set up a bicycle-repair shop. Such small savings have made big differences in the lives of many, reports India Today. This has made economic independence a reality for some.

However, balancing a budget is more than making a list of income and expenses. It involves keeping expenses within income, which may call for cutting back on your spending.

Is It Essential?

Notice the heading “Essential?” on the form on page 9. This column is vital to consider, especially if you find that the total in the “Amount Budgeted” column is greater than your income. However, deciding whether an item is essential and how much money to allow for it can be a challenge. Especially is this so in these changing times when we are bombarded with a continual supply of new products that are advertised as needs. Thinking of each expense in terms of definite need, questionable need, or nice-to-have luxury will help.

Look at each expense that you have listed, and after thoughtful evaluation, enter “Y” in your “Essential?” column if the item is a definite essential; “?” if it is a questionable need; and “N” if it is a nice-to-have luxury. Remember, the total listed in the “Amount Budgeted” column cannot be greater than your monthly income!

The items marked “?” and “N” would obviously be the ones to begin cutting. These expenses may not need to be completely eliminated. The idea is to examine each item to see if the expense is worth the enjoyment that the expense brings and to slash accordingly. Robert and Rhonda saw from their list that they were spending $500 a month on eating out. It was a habit they had fallen into because neither of them knew how to cook. But Rhonda took steps to learn and says: “Now cooking has become enjoyable, and we eat at home more often.” Robert adds: “We now eat out only on special occasions or when it is necessary.”

A change in your circumstances may cause you to make a total reevaluation of what is essential. As mentioned in the first article, Anthony’s income took a nosedive. It went from $48,000 annually to less than $20,000 and stayed at that level for two years. If this should happen to you, you may need to set up a survival budget, paring all fat from your spending.

Anthony did just that. By making serious cuts in money spent on food, clothing, transportation, and recreation, he painfully managed to keep from losing his house. “As a family, we had to determine our real needs and wants,” he says, “and we have benefited from the experience. We now know how to be content with less.”

Cut Back on Debt

Unchecked debt can frustrate your efforts to live within your means. While long-term debt used for financing the purchase of assets such as a home that increases in value can be advantageous, credit-card debts used to finance day-to-day living can prove disastrous. So “don’t pay a penny in card charges,” says Newsweek.

Financial experts encourage paying off credit-card debts even if you have to dip into your savings. It simply does not make sense to carry debts at high-interest rates while nurturing savings at low-interest rates. Realizing this, Michael and Reena paid off their credit-card debts by cashing in their savings bonds, and they resolved not to get into that situation again.

Robert and Rhonda, not having such resources, went to a survival budget. Robert says: “I made a bar graph on a whiteboard showing how our debt would be decreasing month by month and hung the board in our bedroom where we could see it every morning. This provided a daily incentive.” At the end of the year, how delighted they were to be free of their $6,000 credit-card debt!

In some countries, even a mortgage is not as good an investment as it once was. And buying a home can end up costing you plenty in terms of interest charges. What can you do to reduce the cost of a mortgage? “Either put more money down than the bank requires or buy a less expensive house,” recommends Newsweek. “If you already own a house, resist the urge to scale up.”

You can substantially reduce the cost of an auto loan by making a large down payment. But you will have to save for this ahead of time by making an entry for it in your family budget. And how about selecting a good previously owned vehicle? Its low initial cost may mean lower finance charges. You may even be able to purchase one without having to go into debt for it.

Will You Succeed?

Whether you succeed in making your budget work depends to a large extent on how realistic it is. “The system won’t operate if the amount set aside for the household is so small you can’t possibly get through the month on it,” says one couple who have successfully lived by a budget.

Another very important factor in making a budget work is good communication among family members. Those affected by the budget should have an opportunity to express their viewpoints and feelings without being ridiculed. If family members involved understand the needs and wants of one another and realize what the family’s financial situation really is, there will likely be better cooperation and a better chance that the family budget will succeed.

In these critical times, as the scene of the world keeps changing, pressure on family finances increases. (2 Timothy 3:1; 1 Corinthians 7:31) We need to exercise “practical wisdom” in coping with the challenges of modern life. (Proverbs 2:7) Keeping a budget may be just the thing to help you do that.

CHECK THESE COST-CUTTING AREAS

  It may be that some of the following suggestions do not apply where you live. We are sure, though, that many do. We suggest that readers examine how they can cut costs by using whatever applies to them in the chart and by applying similar principles in areas that may not be covered here.

HOME

Bathroom:

□ Do you take showers instead of tub baths?

□ Do you limit the time in the shower?

Furniture: Instead of new furniture—

□ Do you check out the cost of reupholstering and refinishing?

SHOPPING/FOOD

Clothing and shoes:

□ Do you wait for clearance sales?

□ Can you do repairs, alterations, replacement of linings, zippers?

□ Do you check out a garage, yard and secondhand sales for needed household items or toys?* Unfortunately, I fail in this category I sell my old clothes and household items on eBay.

□ What about local auctions that offer items for home?

Groceries and sundries:

□ Do you buy fresh foods in season and do home canning and freezing?

□ Could you plan more one-dish meals, utilizing bargains?*

Joined a coupon club and asked certain supermarkets do they have double coupon days. Most Asian markets do.

□ Do you buy in quantity at discount prices?

□ Do you compare prices from store to store?

□ Is it more economical to make your own bread, pastries?

□ Could you grow your own food (in own backyard, ‘rent-a-garden,’ allotments or other locations)?

□ Do you curb the tendency to overeat or buy luxury food items?

TRANSPORTATION

□ Is public transit less expensive than gas, repairs, licenses and insurance costs for a car?

□ Is your present vehicle, kept in good running order, less expensive than a new car?

□ Do you plan errands, visiting sick, picking up children, and so forth, to combine for fewer trips?

□ Do you buy oil, antifreeze and windshield washer fluid in money-saving quantities, adding needed amounts yourself?

□ Do you keep tire pressure at the best level for better mileage?

□ Do you avoid motor idling, frequent starts and stops and excessive city use?

□ Do you walk where possible or ride a bicycle for neighborhood errands?

□ Do you limit the length of wintertime car warm-ups?

□ Do you use banking services that regularly pay bills from your account, thus saving unnecessary trips or postage?

UTILITIES

Air conditioner:

□ Really needed in your climate?

□ Are ceiling fans more economical?

□ Only used when really needed?

□ Does it cause waste by making temperature colder in summer than in winter?

Dishwasher/Clothes washer:

□ Handling only recommended capacity?

□ Clothes hung out to dry instead of using the dryer?

□ Do you measure the amount of detergent?

Heating system:

□ Keeping the temperature low?

□ Turning thermostats down at night?

□ In winter, closing drapes on the shady side of the house; opening drapes on sunny side? (Reversing this in summer?)

Lights:

□ Are they turned off when not necessary? *

I unplug certain item that I am not using the oven and stove, microwave and television when not in use. Bill went down considerably and I received two months free from the gas and electric company. 

Used the money to pay off a bill. 

□ Smaller wattage bulbs possible? Or are fewer bulbs needed?

Stove or oven:

□ Are menus planned to cook several meals at the same time, thus getting maximum use from oven or burners?

□ Are leftovers stored safely for use again as a meal or a portion of another meal?

Telephones:

□ Used only for essential calls and time-limited on calls?

□ Are necessary long-distance calls made during discount hours?

Television:

□ Turned off when no one is viewing?

Unplug when not in use.

□ Restricted to selected viewing?

Appliances:

□ Radios, fans not left on needlessly?

□ Could you do most of your home repairs?

□ Water heater at lowest safe temperature? Is it turned off manually or by time clock?

LAST BUT NOT LEAST

□ Do you carefully question the need for new purchases or “bargains” you do not need?

When Expenses Exceed Income

Now that you have a rough draft of your budget, start adding up how much it costs for you to live. In some cases, it will look as if you need more money than you make. If so, you had better check some of your estimated expenses. Some will doubtless have to be trimmed down. The college professor mentioned at the outset discovered that he was spending too much on food. He found that by just cutting down on eating out and on snacks, he could ease his financial difficulties. In your case, however, trimming the budget may be quite a bit more painful. You may have to scrutinize more carefully what your real needs are as opposed to wants.

Those living in the wealthier, industrialized countries especially need to consider this factor. The wisdom of the Bible’s words at 1 Timothy 6:7, 8 is often disdained in our materialistic world: “For we have brought nothing into the world, and neither can we carry anything out. So, having sustenance and covering, we shall be content with these things.” Yet for many, these words have proved their worth.

So think twice before concluding that you need to bring in more income to make the budget balance. Working longer hours, getting an extra job, or putting another member of the family into the job market may well detract too much from the quality of your family life. And oftentimes families that take on extra secular work so as to meet some particular expense find themselves in a materialistic trap: Long after the expense is met they keep working. That added income becomes irresistible. So take another look at the budget and see if yet further (painful though they may be) cuts can be made. 

Here are a few suggestions:

• Recreation and Entertainment: In the United States over 6 percent of income is spent on recreation and entertainment. This may just be too high for you. Reading, outings to the park, and so forth, are far less expensive than movies, restaurants, and sporting events. *

I go to the movies during matinee hours and buy the kid's meal, go to the museum on free days. Go online type in the state that you live in and get the brochures and inside the packet, you will get coupons to restaurants etc.

• Expensive Bad Habits: Some spend $1.25 out of every $100 (U.S.) on tobacco. Gambling is another expensive vice. Would eliminating such habits strengthen your budget?

• Food and Drink: Alcoholic beverages are pleasurable but unnecessary. Plain foods, such as baked potatoes, are often not only cheaper but more nutritious than their fancier counterparts (such as French fries). In-season foods are also less costly. Rather than throwing out leftovers, find ways of using them, such as in stews and casseroles.

• Credit: Use conservatively, if at all. Money borrowed or items bought on credit may cost more because of interest. 

I paid off the smaller bills first and then work my way up and call the company about starting a payment plan. Some credit card companies have some kind of insurance for emergencies, such as sickness and family crisis etc. Find out about such insurance before applying.

 Then think do you NEED that particular card or is the store making you apply for the card by saying you will get a 30% off the items that you are buying. Hey, if it is not 100% then I don't want it.

Always think a percentage off is a 100 lb. wallet weight gain later on. NOT WORTH IT. I want to start my own business, I want to go on a real vacation. Think of your main goal in life.

http://www.tkqlhce.com/click-3136574-13058300 - I had to get a consolidated loan to pay off my debts. After the paid in full, I didn't apply for credit, I either paid in cash, money order or used PayPal. You will see how much money you'll spend and save. Interesting.

Living by the Budget

Figures written down on paper do not solve a family’s financial problems. Actually, setting up the budget is the easier part. Living by it is not always so easy. It requires real self-control and discipline. And there is a need for a way of allocating your money.

Much will depend upon the way in which you are paid, be it weekly, biweekly, or monthly. If for example, you are paid weekly, you can make it a habit each week to parcel out enough of your wages to meet your weekly expenses, while at the same time setting aside a little bit each week so as to meet monthly and yearly expenses.

Some find it helpful to use the “envelope method.” Simply take a few envelopes and mark each one for the type of expense it represents, such as food or clothing, and the amount. -Unfortunately the envelope method worked for me, I have a out of sight, out of mind policy.

 On payday, you can distribute your income to each envelope. So when the time comes to meet the expense, the money is ready and waiting. And if you have not allocated enough money to pay a particular kind of expense, it is simply a matter of borrowing money from another envelope to do so.

Others prefer to use their checking account to pay bills, rather than having money lying around the house. In this case, you can monitor how the money is being spent by means of check stubs and deposit slips. 

Some even keep separate savings account for long-term bills. They may pay their regular bills out of a checking account and then contribute each week (or month, depending on how the person is paid) to the other account to build up funds for long-term bills.

Whichever method is used, at the end of the month you should compare how much money was actually spent with how much was budgeted. A third column on the budget sheet can, therefore, serve to keep track of how much money was actually spent.

 Do not panic if at first, the figures do not jibe well. Your estimated figures were just that—estimates. They were not engraved in stone. As the weeks go by, you may want to make a number of adjustments to your budget estimates until your figures approach reality. Rising expenses due to inflation may force you to adjust your estimated expenses regularly.

Too, by listing your expenses you may find yet further ways of cutting down. One man, for example, tried to cope with the rising cost of food by raising animals for food. Still, he had trouble making ends meet. After keeping track of his expenses, he could see that the cost of feeding and caring for the animals was more than he was getting out of them. The solution? He simply gave up the animals and saved money.

Well, with consideration of what was written and read. We have come to the conclusion that "We Need A Car".

How to Buy a Used Car

WHO would not relish buying a car for half the original price or less? ‘Is that really possible?’ you ask. Yes—if it is a previously owned automobile, better known as a used car. The problem is, many fear that a used car is not a good deal. Cars, like other machinery, wear out. Thus, the value of a car decreases with age, mileage, and use.

May I introduce myself? I have been an auto technician for more than 15 years. So let me pass on to you some of the things I’ve learned. The following are a few questions to ask yourself before buying a used car.

How Much Can I Afford to Spend?

First, figure out how much your budget will allow you to spend on a car. Newspaper ads can then give you an idea of the year and model of cars that fall into your price range. In some countries, banks, loan institutions, and some libraries have monthly guides listing the prices of used cars. Be sure to calculate not only the price of a car but also the expense of taxes, registration, and insurance. Also, plan to have some money for unexpected repairs the car may require after you buy it.

What Kind of Car Do I Need?

When deciding what you need, determine what is important to you. Consider your family size and what activities the car will be used for, such as driving to work, transporting your children to school, and going into the Christian ministry. 

Will the car be used for local trips or long-distance ones? Don’t limit yourself to a specific make and model; rather, look for a car that has been maintained well and is in good shape. Get a car that is easy to service. 

All cars will need parts eventually. In your area is there a supplier of the appropriate parts? Parts for cars over ten years of age can be hard to obtain. If you are on a limited budget, steer clear of luxury or imported specialty cars, as parts and service will no doubt be more expensive. Although such cars may be very reliable, they can also be very expensive to own.

Is It a Good Car?

A good car is one that has been serviced well. Generally, it is best to avoid cars with extremely high mileage—especially if this is the result of driving in the city rather than on highways. What constitutes high mileage may vary from place to place. No used car will be perfect. However, will you be able to afford the repairs the car needs?

  Usually, the repairs will not increase the value of the car. For example, if you buy a car for $3,000 and then spend $1,000 on needed repairs, the car will not necessarily be worth $4,000. Ordinarily, it is less expensive to buy a car in good shape than it is to buy a car in bad shape and fix it up.

Here are a few tips on selecting a good car:

• Check the car thoroughly before you buy it. To get the right picture, avoid looking at a car at night or in the rain. Take a quick walk around the car. What is your impression of it? Do the interior and exterior show pride of ownership on the part of the previous owner? Have they been maintained well? Can the seller provide a record of maintenance done on the vehicle? If not, likely the car has been neglected. You may not want to look further at this car.

• Test-drive the car. Accelerate the car up to highway speed on a test-drive. Also, do some stop-and-go driving on hilly terrain and on level streets.

Engine:

Does the engine start well?

Is the exhaust free of a lot of smoke?

Does the engine run well?

Does it idle smoothly?

Is the engine free of noises?

Does the engine have enough power for good acceleration?

If the answer is no to any of the above questions, then the engine may need tune-up work or more serious repairs. These conditions can also be signs of a worn engine. Be wary if the seller says it just needs a tune-up. Tune-ups should have been a part of the regular maintenance of the car.

Transmission:

Does the automatic transmission slip or not engage when put into gear?

Does it fail to shift smoothly?

Are there grinding noises in any of the gears?

If the answer is yes to any of these questions, the transmission may need repair.

Brakes and suspension:

Does the car pull to one side when you drive or brake?

Does the car vibrate at certain speeds or when you brake?

Are there noises when you brake or turn or drive over bumps?

If the answer is yes to any of these questions, the car may need brake or suspension work.

• Look for other areas that need repair. Wear clothes that will allow you to look at the car inside, outside, and underneath.

• Check the body for rust. Avoid cars that have it. Most of the newer cars are “unibody” construction. The body parts are used for structural strength in several areas. When these parts rust, it is generally too expensive to repair them completely. Fender rust can be cosmetic but usually is a sign that structural areas also have rust. Look underneath the car for rust. Be wary of new paint jobs; the car could be a whitewashed grave.

• Look for accident damage. Check for concealed accident damage under the hood and in the trunk. Do the doors, hood, and trunk fit? Are there signs of paint sprayed where it doesn’t belong, such as in doorjambs? Are there leaks in the trunk or in carpeted areas? These leaks can cause rust.

• Check the engine oil. Look at the oil dipstick. Is the oil level low? This could be the result of excessive oil consumption or leaks. Is the oil very dirty or black? Does it feel gritty?

 Look for signs of wet oil around the valve covers. Get in the car, and turn on the ignition switch, but do not start the car.

 Does the low-oil-pressure warning light come on? If the car is equipped with an oil pressure gauge, this should read zero.

 Now start the engine, keeping the engine at a low idle, and notice how long it takes for the oil pressure light to go out or for the gauge to read normal engine pressure. More than a couple of seconds for the light to go out or for the gauge to read normal pressure could indicate major engine wear. 

On some newer cars in the United States, a “Check Engine” or “Service Engine Soon” light should come on when the key is on but the engine is not running. The light should be off when the engine is running. If the light stays on with the engine running, this usually indicates an engine problem, perhaps with the emission control system or the fuel delivery system.

• Check the automatic transmission fluid. Is it low or burned? Look for leaks under the transmission. These conditions can indicate a need for major transmission work. If the car has front-wheel drive, look underneath it to see if the rubber constant velocity joint boots are torn. If so, the grease can be thrown out, and this can cause rapid damage to the joints, which are expensive to replace.

• Check all four tires. If they are severely worn, count on replacing them. If there is an unusual wear pattern on the tire tread, it may be that there is a need for alignment or replacement of steering parts.

• Check the power-steering system. Does the fluid appear burned or low? Start the car and turn the steering wheel several times from side to side. It should require equal pressure to turn right or left. Is there any grabbing motion as you turn the steering wheel? Operation of the power steering should be fairly quiet. Any problems with operation could mean costly repairs.

• Other checks.

Check the condition of the belts and the hoses.

Check the operation of the parking brake on a hill.

Check for an unusual amount of wear on the brake pedal.

Check the condition of the exhaust system. Is it noisy? Is it lose?

Check shocks and springs. Does the car sit low, or when you push down on each corner in turn, does it bounce more than three times?

If there is an air conditioner, does it work on all blower speeds?

Do the lights, wipers, horn, seat belts, and windows work?

Check underneath the rear of the vehicle for any telltale signs that a trailer hitch was installed. If so, caution is recommended, as towing may have put excessive strain on the transmission.

If you are unsure of any of the checks mentioned in this article, it might be wise to have the car assessed by a professional mechanic before buying it. Ask him to look the car over and make a list of the following:

1. The repairs the car needs immediately and an estimate of the cost of parts and labor.

2. The repairs the car may need in the next year and an estimate of the cost of parts and labor.

This inspection by a professional mechanic should take less than an hour. While this may cost you the price of labor for an hour, the expense is small compared with the unknown cost of needed repairs. 

Find out from the seller what work has recently been done on the car.

 Ask to see service records. 

Were the oil and the oil filter changed regularly? 

Has the automatic transmission ever been serviced? 

When was the last time the car was tuned up?

 Remember, a good car is one that has been maintained well and does not need a lot of work.

Sit down and calculate the expense first—with all the facts and figures about the car. 

Then decide if the car is worth it and if you have budgeted enough money to cover not only the purchase price but also other expenses.

Contributed by an auto technician.

Plastic Money—Is It for You?

A CALIFORNIA man, known by some as “Mr. Plastic Fantastic,” amassed a collection of 1,265 valid credit cards. Granted, this man hardly represents the average credit-card holder. However, it is widely acknowledged that the credit-card phenomenon has become a well-established feature of modern Western society.

American Demographics states that in 1986 almost three-quarters of U.S. households had one or more credit cards. There are over 25,000 different credit cards available in the United States alone. Oil companies, retail stores, and airlines issue their own cards. In 1991, Americans held 232 million valid MasterCards and Visas, the two most popular cards.

The so-called plastic-money industry is also growing in Europe, sparking intense battles among rival banks and credit companies for the patronage of eager consumers. The total number of valid credit cards worldwide is well over a billion! Why this abundance of plastic money? Who benefits the most from its use? What are some of the dangers and problems that credit-card holders face? ☞

Who Benefits?

Banks and credit-card companies earn substantial profits, not only from the fees—including annual membership fees, late-payment fees, over-limit fees—but also from the high interest they charge on the money owed them. But, of course, they cannot profit from finance charges unless credit-card holders incur sizable debts. In the United States alone, millions have obligingly spent themselves into perpetual debt. About 75 percent of American credit-card holders have outstanding balances on their accounts, for which they must pay exorbitant interest each month. The average American credit-card debtor owes over $2,000 on his monthly account.

In his book The Credit Jungle, Al Griffin observes that the “15 to 20 percent of cardholders who do pay their statements in full as soon as they get them do not contribute a dime to the bank’s operations.” He adds that “the other 80 to 85 percent of the cardholders make a credit card plan the most profitable operation the bank has. A modest-sized $10 million bank card operation can gross a $1.8 million profit per year.” In 1990 the U.S. bank with the largest share in the credit-card business made almost $1 billion in profit from its consumer operations, mainly its credit-card subsidiary.

Beware of the Dangers

There is a dark side to these small pieces of plastic. For example, have you ever received a telephone call from an obscure company informing you of a prize you’ve just won? Many have. To get your gift, all you have to do is answer some basic questions. But then the caller asks for your credit card number. Why? Because in reality, you have won no gift. Such a caller just wants your credit card number so that he can make mail-order or telephone purchases on your account.

There are several types of credit-card fraud, costing hundreds of millions of dollars each year. And even when this problem does not directly affect you, if you have a credit card, you are probably paying for such scams through higher fees and interest rates.

The real danger in credit cards lies in the hardships and suffering that come if you fall deep into debt. The Credit Jungle notes that “countless people who are able to resist the temptation to buy luxury goods and services they can’t afford when paying cash, are totally helpless to resist temptation when they have a credit card in their hands. Many a family eats beans for a couple of weeks after paying for the lobster dinners charged on the credit card the previous month.”

But more than your eating habits can suffer if your debts consume a major portion of your income. The book Credit—The Cutting Edge reports that “on the average, Americans spend approximately 75% of their income each month repaying loans, debts, and credit cards.”

Sadly, for too many consumers, a credit card is, not a gateway to economic paradise, but a slippery slide to long-term debt and anxiety. American consumers, for example, have in recent years been piling up credit-card debt, which has resulted in more credit-card delinquencies, defaults, and bankruptcies. In 1990, U.S. consumers owed a total of $3.2 trillion on credit cards, car loans, and mortgages! The average household owed about $35,000 and paid about $3,500 a year in interest.

Not surprisingly, personal bankruptcies have soared. In 1990 a record 720,000 Americans filed for bankruptcy, nearly a 17-percent increase over 1989. In 1991 this number went up to 800,000, and in 1992 the new record was 971,517 personal bankruptcies.

Some who find it difficult to control their use of credit cards have chosen to get rid of them. On the other hand, many are able to make wise use of credit cards without unnecessarily complicating their lives.

Grace W. Weinstein, in her book The Lifetime Book of Money Management, observes: “Many of the rules of the financial game have changed, turned upside down by an unpredictable economy, new attitudes toward spending and saving, and changing lifestyles.” In the topsy-turvy world in which we live, more and more people are finding it increasingly difficult to manage personal and family finances.

Well, when you are trying to get out of debt. It can be overwhelming and there are so many books on the subject including youtube videos. 

Here is what I have learned over the years. You will always have bills and when you try to save something always seem to come up unexpectedly.

First - You have a job and you are living from check to check. Professional try to give you advice on how to spend. But most so-called professionals are not poor.

Ok, here is some sound advice. First figure out how you make in a month not grossly, but after taxes. 

Then first you figure out how much you have to pay for rent.

2nd. Renter's Insurance

3rd. Gas and Electric

4th Food - try Trader's Joes, Aldi's and 99 Ranch Market, Smart and Final, Zion Market very reasonable places to shop for food.

5th. Maybe change from Driving to taking the bus - yes you may have to wake a little earlier - If you do the math, you will realize how much you are saving.

Make sure you sign up for automatic payment and keep a journal, so you will know when the payments will be taken out of your account.

Sign up for programs such as Ebates where you can get extra saving on your online shopping. Don't forget to ask for rainchecks when a store doesn't have your products that were on sale.

Now when you check your bank statement every month. Let's say you make 555.75 every two weeks - You take the 0.55 cents out your account and you add it to your piggy bank or you add it to your savings account. Keep your bank account that you use on a regular basis. With dollars and no cents, believe me When you add your change and it turns into dollars you put it back into your account that you use on a regular basis.

How to pay your credit card bills - Try not to pay the minimum amount, you may have to start off paying maybe $1.00 - $5.00 over. 

Let's say that you owe more than a couple of credit cards pay off the smallest amount first. Then you go to the second, third and so on.

Cell phones  - Try pre-pay Total Wireless has a good deal - Go to your local Target, Walmart, CVS or Rite-Aide.
I remember the days that bank had Vacation Clubs etc. so check if your Banks or Credit union still have them.

Club Accounts (Christmas and Vacation Club)

Our Club Accounts are designed to help our members save up for Christmas and vacations by only being open for withdrawal once a year. In the event of an emergency, members can still access their savings but there is a fee involved.

Christmas Club Account

Opening a Christmas Club Account each year falls into the "must do" category. With a Christmas Club Account, you can have the cash you need for the holidays without starting off the New Year in debt!!

You are able to save all year long, without any maintenance fees, and the money will roll over into your account on the first business day in November. If you need to access those funds before the rollover date, you can, but you will receive a $20.00 early withdrawal fee; which has been only implemented to encourage you to save!

Vacation Club Account

Having a Vacation Club Account allows you to have the cash, when you want it, to take the vacation that you've been dreaming of. And, best of all, you're spending your own money which makes your vacation even better.

You can make one withdrawal, every 12 months, without any penalty. Like the Christmas Club Account, each withdrawal thereafter will incur a $20.00 withdrawal fee and, once again, this is meant to encourage you to save this money.

Making Deposits Into Club Accounts

The minimum deposit to open either one of our club accounts is only $5.00. You may deposit funds at any time during the year, as many times as you wish. The most popular method is through payroll deduction.

Watch Your Money Grow!

• Deposit $ 5.00 a week = $260.00 plus interest per year
• Deposit $10.00 a week = $520.00 plus interest per year
• Deposit $20.00 a week = $1,040.00 plus interest per year

American Express Serve is a Prepaid Debit Account. We have 3 options so that you can choose the Accounts that are right for you: American Express Serve®, American Express Serve® Free Reloads, or American Express Serve® Cash Back.

Is the perfect card for your saving, if your bank does not have a Vacation Club or Christmas Club.