0:04

Hello, I'm

0:04

your host, Mr. Chuck, I retired

0:07

accountant turned truck driver,

0:07

I reduce my debt in a relatively

0:12

short period of time, debt

0:12

reduction, to achieve financial

0:17

freedom takes commitment,

0:17

confidence, determination.

0:24

Continuing months debt reduction

0:24

tips, the process of paying down

0:31

or off debt is never ending.

0:31

Keeping the goals and

0:34

information in front of eyes is

0:34

important to achieve this goal,

0:39

what to do when something goes

0:39

wrong, do not give up, adjust

0:43

and overcome is the order of the

0:43

day. If you're starting into

0:48

this process, and you're fairly

0:48

new, maybe only been doing it

0:53

for a few months to three

0:53

months, and you really hadn't

0:56

make any progress on your debt.

0:56

But you're already thinking,

1:01

when I get my credit cards paid

1:01

off, I don't have to do all

1:04

this. Or once I get my credit

1:04

cards and my car loans paid off,

1:09

then I don't have to continue

1:09

doing this. And what I'm talking

1:13

about is continuing doing your

1:13

tracking on all your income and

1:19

all your expenses. And then

1:19

continuing doing your monthly

1:24

budget and updating at least a

1:24

weekly basis. So you're aware of

1:31

what's going on in your personal

1:31

finances. That never really

1:36

stops if you're serious about

1:36

reducing your debt, and, most

1:42

importantly, trying to stay out

1:42

of debt. At the bare minimum,

1:49

you should try to no longer have

1:49

credit card balances. That

1:55

should be your goal. Once you

1:55

get them paid down to zero and

1:59

you get some other debt paid off

1:59

and your increase your emergency

2:03

fund. And you're doing all these

2:03

things in your getting better

2:07

off in your financial life,

2:07

perhaps you're gonna buy another

2:11

home, that's gonna cost more,

2:11

perhaps you want to buy that new

2:15

car, you always want it,

2:15

whatever the case is still have

2:21

to keep your finances under

2:21

control. And you have to plan

2:27

for whatever it is you want to

2:27

do in your life. Whether it's in

2:34

the near future, or distant

2:34

future, whether it's saving more

2:39

money to for your college or

2:39

your children's college tuition,

2:45

or increase in your savings for

2:45

your retirement. So you can

2:49

retire at an early age, or buy

2:49

that second home vacation home

2:54

or whatever it is you're wanting

2:54

to do. You still have to do

3:01

everything that you're doing now

3:01

it never ever stops. So let's

3:08

talk about the reason for that.

3:08

Let's say that you get your

3:12

credit cards paid off, but you

3:12

still have two car payments, a

3:15

line of credit and a mortgage.

3:15

That's still pretty significant

3:19

amount of debt. But you're

3:19

getting yourself in better

3:23

financial shape. You no longer

3:23

living paycheck to paycheck, you

3:28

feel like you're doing much

3:28

better. But this thing if you

3:32

didn't have those two car

3:32

payments, how much better will

3:35

you be doing? How big is your

3:35

emergency fund. So if you

3:39

continue doing your tracking,

3:39

and you continue in doing your

3:43

monthly budget, and you're

3:43

updating the actual numbers on

3:47

your monthly budget every week,

3:47

so you got an eye on what's

3:51

going on, and you look for

3:51

things to reduce your spending,

3:55

and you're keeping those type of

3:55

spending under control. And you

4:02

planning ahead on large

4:02

purchases, you're saving up some

4:06

money before you make a large

4:06

purchase so you have a bigger

4:11

down payment so you can finance

4:11

last or maybe not even finance

4:16

at all depending on how big of a

4:16

purchase you're doing. So your

4:20

emergency fund as your debt is

4:20

being reduced. your emergency

4:26

fund should be increasing. Your

4:26

goal for your emergency fund is

4:31

to have three to six months

4:31

minimum of your expenses and

4:37

your savings account in case

4:37

something bad would happen. And

4:40

something bad would be losing

4:40

your job being laid off being

4:45

injured where you can't work.

4:45

And you don't have any sick

4:49

leave, things like that you're

4:49

planning for a bad event that

4:54

happened in your life and you're

4:54

have the financial resources to

5:00

pay your bills until you can

5:00

recover. And that recovery

5:03

period, the longer you have, the

5:03

better off, you're gonna be. If

5:08

you have six months, you're

5:08

gonna be much better off than if

5:11

you only have three months. So

5:11

let's do a scenario, let's say

5:14

that you and your spouse are

5:14

working, you're making a good

5:17

income 150,000 plus a year, you

5:17

buy a nice home, you got two

5:24

nice cars. When I say nice, I'm

5:24

really saying expensive. Now you

5:29

have a $2,000 a month mortgage,

5:29

you have two car payments of

5:34

seven or 887 $800 each. Plus

5:34

you, you know, are going out to

5:41

dinner and you're having a good

5:41

time and you're entertaining

5:45

people and you're doing all

5:45

kinds of spending. And then you

5:49

decide to have children, well,

5:49

that's gonna change everything.

5:54

And so you have two children.

5:54

Well, now we want to set up a

5:58

college fund and start saving

5:58

for that. And plus all the costs

6:03

associated with having children

6:03

and your stone, you know, you're

6:06

getting by, but you're getting

6:06

closer to that paycheck to

6:10

paycheck scenario. But you still

6:10

have enough money in your

6:14

savings account, if something

6:14

bad would happen. So everything

6:17

is still good, you're doing

6:17

good. So maybe then you decide

6:20

I'm gonna buy this boat, because

6:20

my kids are going to be old

6:23

enough. And we can teach them

6:23

how to waterskiing. And whatever

6:27

the case, whatever your thinking

6:27

is, and that's a way you can

6:31

then have spend time with your

6:31

children's on this boat. So you

6:36

buy a boat, and you get in now

6:36

you're starting to struggle.

6:40

Now, you're kind of living

6:40

paycheck to paycheck, but you're

6:43

in denial, you're thinking that

6:43

you still doing all right,

6:47

because I'm gonna get a pay

6:47

raise here in another couple

6:50

months, I'll be fine. But then

6:50

your wife comes home one day and

6:55

says I don't want to work no

6:55

more. I want to quit my job, and

6:59

I want to raise my kids, I want

6:59

to spend time with them while

7:02

they're little etc. So you

7:02

agree, now you're struggling.

7:07

Now you're kind of overdrawn,

7:07

because he still got those two

7:11

car payments, or almost paid

7:11

off, but they're not. So he

7:14

still got that money going out,

7:14

he got that new boat payment, he

7:18

got that expensive house

7:18

payment, plus all the expense or

7:21

additional expenses for diapers

7:21

or whatever for the children,

7:26

and buying them clothes and all

7:26

this kind of stuff. So now your

7:31

emergency fund is starting to

7:31

shrink down. So you get to the

7:34

point where maybe you only have

7:34

$500 or $1,000 in your savings

7:39

account. So now you're really on

7:39

getting to the Dire Straits part

7:46

of your life, you still need to

7:46

watch your spending even more

7:51

because you have less income and

7:51

you have the debt based on a

7:56

higher income. So what do you

7:56

do? Well, we have to adjust, we

8:01

have to cut back spending

8:01

somewhere to free up some money

8:06

to cover some of these expenses,

8:06

because he's still working full

8:10

time making a good income, but

8:10

it's just not quite enough. What

8:14

can we do? Do you need two cars?

8:14

Can you get by with one cars?

8:18

Can you sell one item, pay it

8:18

off and get rid of that alone,

8:22

then that will free up some

8:22

cash, maybe might consider

8:26

selling that boat, you want it

8:26

so bad. Because now you're

8:30

really at the level where you

8:30

may not be able to afford it.

8:33

And if you sell one card, will

8:33

you have enough money to pay the

8:37

other one off, so he didn't have

8:37

no car loans. Now these are type

8:43

of things you have to consider

8:43

when you're going through this

8:46

process. But all the time this

8:46

is happening. You're tracking

8:51

your income and your expenses.

8:51

You're watching your budget,

8:54

you're cutting back on spending

8:54

wherever you can you watch your

8:59

grocery bills, you move watch

8:59

how much gasoline you put in

9:03

your car, I could fill my car up

9:03

not once a month. But why put

9:09

all the money in my car when I

9:09

can put $20 in there twice a

9:13

month, and then run it down a

9:13

little bit. And then I'm not

9:17

putting all my money into my gas

9:17

tank. That's the way I think.

9:21

But that's the type of things

9:21

you got to do because an extra

9:25

20 or 30 or $40 that you put

9:25

don't put in your gas tank to go

9:30

to buy in some groceries. And

9:30

feeding your children may be

9:33

more important than have extra

9:33

gas in your car that you may not

9:37

use right away and might be

9:37

there an extra week or so that

9:42

you can put in some more later

9:42

as needed

9:46

instead of now when you want

9:46

instead of filling up so that's

9:51

the type of planning you have to

9:51

do. And you have to adjust as

9:57

your life as you go through life

9:57

when things To change and your

10:01

income is reduced, then you have

10:01

to look at ways to reduce your

10:05

spending, and maybe get rid of

10:05

something that you can't no

10:09

longer afford. You notice I

10:09

didn't say get rid of the house

10:13

because you need a place to

10:13

live. But if you get in real

10:17

dire straits, and you're living

10:17

on using credit cards to pay

10:20

your bills, and you're just

10:20

digging yourself in a deeper

10:23

hole, may be selling your house,

10:23

if you have equity in it, paying

10:28

off the mortgage, and then

10:28

buying a less expensive home

10:33

with a smaller mortgage may be

10:33

the way to go, based on your new

10:39

lifestyles and your new

10:39

circumstances, because things

10:43

change throughout your life. And

10:43

nothing ever remains the same.

10:48

The other scenario is you're

10:48

renting an apartment, and it's

10:52

$500 a month and you're making

10:52

30,000 a year you graduated from

10:56

college recently, and you're

10:56

looking for a new job. And then

11:01

within six months, you get a new

11:01

job. Now you're making 50,000 a

11:06

year and another six months, you

11:06

get a pay raise, you're making

11:09

60,000 a year, and you don't

11:09

like working for that play. So

11:13

you're looking around, you get

11:13

another job, a new job, now

11:17

you're making 75,000 a year and

11:17

you're still living in that

11:20

apartment, and you're saving up

11:20

your money and you're doing

11:24

everything good. And you didn't

11:24

buy a new car because you always

11:28

had a company car. So you didn't

11:28

need to buy a car and you so you

11:32

have an old used car that you

11:32

use for personal use, or between

11:37

jobs. Now you're at the point

11:37

where you're looking, again,

11:42

thinking about getting married

11:42

and you want to buy a home and

11:45

what do you do? On this

11:45

particular case, you have plenty

11:50

of emergency fund savings built

11:50

up because your incomes

11:54

increased. But your spending

11:54

stayed the same. As far as your

11:59

living expenses and your

11:59

transportation and maybe you're

12:03

going out to eat more often. But

12:03

you can afford it. And you get

12:08

engaged, you get married now you

12:08

need a home, what do you do?

12:12

Well, the first thing is you

12:12

don't want to buy something you

12:17

cannot afford. Don't buy that

12:17

home your wife wants. Because

12:24

it's in the right neighborhood,

12:24

it's the right style house or

12:28

whatever the case is close to

12:28

her parents, or parents are

12:33

fairly well off and you really

12:33

can't afford that neighborhood.

12:38

You know, you got to take your

12:38

income and consideration before

12:42

you consider buying a house. How

12:42

much can you afford? And what

12:48

areas would that open up for you

12:48

to look at. So don't even look

12:53

at the houses you can afford.

12:53

Because there's no long, no

12:57

reason to dream for about things

12:57

you're not going to be able to

13:01

afford at this point in your

13:01

life. So buy a house that has

13:06

maybe in a neighborhood your

13:06

wife don't like but she can

13:10

tolerate it because it's closer

13:10

to her parents. But it's more

13:14

affordable, you don't have to

13:14

struggle, maybe it's a fixer

13:18

upper and you can do the

13:18

painting and some of the stuff

13:21

on your own save some money and

13:21

then the major stuff you have

13:25

contracted out as you get your

13:25

tax refunds because you now you

13:30

got your mortgage interest and

13:30

your real estate taxes dried off

13:33

so you're gonna get a big tax

13:33

refund and all this kind of

13:38

stuff comes into play. And then

13:38

when you live there for four or

13:42

five years or maybe a little bit

13:42

longer, and then you're got a

13:46

couple more pay raise and now

13:46

you're making 150,000 a year

13:50

instead of 75,000 and your wife

13:50

stole work in and you got a

13:55

bunch of money in your savings

13:55

account and you got your six

13:58

months emergency fund build up

13:58

and then a much more than that.

14:04

And if you could sell this house

14:04

because you now have got some

14:08

equity in it because you fixed

14:08

it up it's much nicer and of

14:11

course inflation and everything

14:11

else and you can sell it and

14:16

have $30,000 Extra and then add

14:16

to that for a down payment now

14:24

you can get a little bit closer

14:24

to that house your wife wanted a

14:27

little bit five years ago you

14:27

know get a little bit bigger

14:31

home little bit nicer

14:31

neighborhood whatever the case

14:35

and move up and to it instead of

14:35

trying to buy something you

14:41

can't afford and and struggling

14:41

and then perhaps losing that.

14:45

Work your way up to it and be

14:45

consistent and conservative on

14:51

your finances, and you'll be

14:51

much better off you did so I'll

14:55

be back in one moment with my

14:55

final thoughts. If you're

15:00

interested in learning about an

15:00

online software that helped

15:04

myself get out of debt, it does

15:04

tracking, budgeting, and keeps

15:10

track of all your assets and all

15:10

your debt, and even tells you

15:15

how much and when to transfer

15:15

money into your savings account,

15:20

and how much and when to

15:20

transfer money to your debt, and

15:24

which debts to pay off in order.

15:24

First, it's not cheap, it's a

15:30

one time payment. But it will

15:30

definitely be an investment,

15:35

something and yourself and an

15:35

investment in your personal

15:40

financial life. If you're interested, send me an

15:42

email at reduced debt increase

15:48

[email protected]. And I'll send

15:48

you the information about this

15:54

online software that worked

15:54

great for me. And one of my

15:58

tips, I have back a couple

15:58

episodes, I talked about paying

16:03

off your credit cards. And when

16:03

you get that first one, pay it

16:06

off, don't close it. The reason

16:06

you don't close is because it'll

16:10

hurt your credit score, if you

16:10

have less credit, based on your

16:17

income, and you're gonna have a

16:17

worst credit score, so if you

16:22

can leave it open, if they don't

16:22

answer it on you, then leave it

16:26

open and don't use it. But down

16:26

the road within three months or

16:30

six months, that credit card

16:30

company is gonna send you an

16:35

offer probably in the mail maybe

16:35

mailed who knows, given you the

16:39

opportunity to transfer some

16:39

money from other credit cards,

16:45

that's what we're talking about,

16:45

on to hear a transfer of

16:49

balance, and for say three or 5%

16:49

fee for the transfer fee, and

16:56

then give you 12 months or 18

16:56

months of no interest. And

17:02

that's when you're gone to start

17:02

using this credit card, you need

17:07

to figure out how much money you

17:07

can pay towards that credit card

17:13

on a monthly basis, times 18

17:13

months. And that's the amount of

17:18

money you transfer over. Paula,

17:18

it's gonna cost you a little bit

17:22

more than that because of the

17:22

fee for the transferring the

17:26

balance fee. But that's really

17:26

no big deal. Within a couple

17:31

months, the interest you save on

17:31

not paying interest on the other

17:35

credit card, because you're

17:35

going to take off your highest

17:39

interest credit card, you're

17:39

going to actually make save

17:45

enough money on not paying

17:45

interest to cover that fee for

17:51

the transfer. So it's gonna be a

17:51

win win situation. And then you

17:56

make that monthly payment for 18

17:56

months. And the important part

18:00

here is you must get paid off

18:00

before the end of that 18

18:05

months. So they don't come back

18:05

and charge you a bunch of

18:09

interest for whatever the fine

18:09

print says, I keep thinking is

18:14

they're going to charge me

18:14

interest from day one for the

18:17

all the whole balance for the

18:17

whole year and a half if you

18:20

don't get it completely paid

18:20

off. So I always paid it off

18:24

before the end of that process.

18:24

If you want to be a little

18:28

conservative and go a little bit

18:28

later, beloved smaller amount,

18:32

that's fine. And then once it's

18:32

the zero again, they send you

18:37

another offer, you can do it

18:37

again. And then you get another

18:40

credit card paid off. Now what

18:40

you want to do is you never want

18:45

to close your credit cards down

18:45

unless they cancel them on you.

18:50

Because the more credit you have

18:50

available, based on your income,

18:55

your income, the credit ratio is

18:55

getting better. So your credit

19:01

score is improving. And why is

19:01

that important? It's important

19:06

because your insurance rates are

19:06

based on your credit rating. And

19:11

the worst credit rating you

19:11

have, the more they're going to

19:14

charge you for insurance,

19:14

whether it's car insurance,

19:17

homeowners insurance, whatever

19:17

insurance you're trying to buy.

19:21

So that is important because of

19:21

that. And then when you don't

19:25

want to go out and maybe buy

19:25

another home or new home or car,

19:31

the better your credit rating

19:31

the better rate of interest you

19:34

can get on that new loan down

19:34

the road. It's important to keep

19:40

your credit cards at a zero

19:40

balance and it's important to

19:44

use them like cash. If you treat

19:44

him like cash, and you don't buy

19:50

something, unless you can pay

19:50

for it right away. Not next pay

19:55

day or two pay days from now,

19:55

but you already have the money

19:59

available to pay for it, then

19:59

you can use their credit card,

20:03

and then the following Friday or

20:03

the next pay day, generally

20:07

would go in and pay them off for

20:07

that particular item. So I'm not

20:13

carrying a balance. So nowadays,

20:13

you can go online to your credit

20:18

card statement, and you can pay

20:18

them off weekly, you can pay

20:22

them off monthly, you don't have

20:22

to carry a balance at all. So if

20:27

you want to make sure you don't

20:27

have a balance, and don't forget

20:31

about it, you want to pay it off

20:31

two or three days after you make

20:35

the purchase, because you got to

20:35

let it flow through and it takes

20:39

a couple of days. And then

20:39

you'll make sure you receive the

20:43

item and make sure it's in good

20:43

shape this and you don't want to

20:47

pay off your credit card and

20:47

then have to return it and get

20:50

refund, you have this credit

20:50

there that you're not going to

20:53

be able to use for a while now

20:53

use tying up your cash, some

20:58

place when you don't

20:58

particularly have to. So it may

21:01

wait a week, then make sure

21:01

you're not going to return that

21:04

item or whatever the case would

21:04

be conservative way to look at

21:10

your finances. If say the two

21:10

scenarios going on, and you lose

21:16

your job. And either or there's

21:16

certain scenarios, you're gonna

21:20

have enough mergency fund that

21:20

cover you for at least three

21:24

months, so that you can start

21:24

collecting unemployment and

21:29

maybe get a part time job, start

21:29

looking for a new job, get you

21:34

know, because you're gonna have

21:34

a little bit of delay in getting

21:37

your final paycheck. So that's

21:37

gonna help a little bit. But if

21:41

it takes you a year to find a

21:41

new job, you're going to be

21:43

hurt. And if you only have three

21:43

months emergency fund, if you

21:46

have six months, you still gonna

21:46

be hurting, but it's gonna take

21:49

longer, you can start working a

21:49

part time job and doing

21:53

something, maybe your spouse

21:53

could go back to work and you

21:56

stay home with the children,

21:56

whatever you have to adapt to

22:01

the situation. And that is not

22:01

set in stone, you have to be

22:06

flexible, you have to be doing

22:06

whatever it takes to get

22:11

yourself through the particular

22:11

financial problems that you're

22:15

in, it's important to always be

22:15

tracking your income and your

22:21

spending, and always know about

22:21

your budget, even if the budget

22:26

is 80% going into your savings

22:26

account. And the rest of its

22:31

just paying utilities and food

22:31

and gas for the car. And

22:35

insurance when it comes along.

22:35

You still have to track and you

22:39

still need to have a budget so

22:39

you know these things. And the

22:43

more in the future, you can see

22:43

what's coming up and what's new,

22:48

the more you know what's coming

22:48

up what's due, the better you

22:52

can plan for it. And the better

22:52

off you're gonna be the be no

22:55

surprises. And you shouldn't

22:55

really have too many surprises

22:59

in your personal financial life,

22:59

he should be aware of what's

23:03

going on. And he should know

23:03

pretty much that if you lose

23:09

your job or quit your job or

23:09

whatever the case that you'd be

23:13

able to get by for X amount of

23:13

time with no particular problems

23:19

until you can get and to an

23:19

income producing state. Again,

23:25

whatever that may be saying,

23:25

just because you pay off your

23:30

credit card doesn't mean you'd

23:30

quit tracking and quit doing a

23:33

budget. Just because you pay off

23:33

your credit cards and your car

23:36

loans means you don't do your

23:36

tracking and don't do a budget.

23:40

Just because you're completely

23:40

debt free means you quit your

23:43

tracking and don't do a budget.

23:43

I've been debt free for a couple

23:47

years now. And I still track all

23:47

my spending and all my income

23:52

coming in. And I still have a

23:52

monthly budget I update on a

23:56

regular basis, maybe not as

23:56

often as I did in the past, but

24:01

I still update it every couple

24:01

times a month at the very least

24:05

as my bills are being paid

24:05

throughout the month, I will

24:09

update my budget and make sure

24:09

I'm not going overboard

24:14

somewhere along the line. Before

24:14

making that next large purchase

24:18

where you have to get a loan

24:18

that's going to be multiple

24:21

years, whether it's a five year

24:21

loan, four year loan, six year

24:26

loan, whatever it is, you got to

24:26

know it'd be able to afford it.

24:33

So here's a tip, figure out how

24:33

much your down payment is gonna

24:38

be and then figure out how much

24:38

you're gonna finance. And how

24:42

much is that gonna cost you? If

24:42

say it's a new car purchase, you

24:47

got to figure at least 9%

24:47

interest. It may be a little bit

24:51

lower than that but figure 9%

24:51

for five years or six years

24:55

what's your monthly payment once

24:55

you know that you figure that

25:00

out. Now, without changing

25:00

anything in your budget, put

25:06

that amount of money more into

25:06

your savings account, pretend

25:11

you have the loan, and every

25:11

month, put that much more into

25:16

your savings account. If you have to take out money to

25:18

pay bills, then you can't afford

25:24

that payment. I don't want you

25:24

to reduce your savings that

25:28

you've already set up and set

25:28

aside whether it's $100 a month,

25:33

$50 a month, that's got to

25:33

remain the same. We're trying to

25:38

figure out if we can afford this

25:38

loan. And if you can't put that

25:45

amount of money aside, and not

25:45

take it back out of your savings

25:49

account, even if it's $1. That

25:49

means that you cannot afford

25:55

that particular loan for that

25:55

amount. So either you need to

25:59

increase your savings or your

25:59

down payment to reduce the

26:03

amount that you're borrowing, or

26:03

find a better rate of interest

26:08

or just don't buy that

26:08

particular item. Do that for a

26:13

minimum of three months. And

26:13

better off if you did it for six

26:17

months. This is called planning

26:17

ahead. We're planning to make a

26:22

large purchase. And if we know

26:22

what the monthly payments gonna

26:26

be, and we can't make that

26:26

continuously without taking

26:31

money out of our savings

26:31

account, in order to pay other

26:35

bills, then maybe it's something

26:35

we can't afford at this time.

26:40

Maybe you need to wait to get a

26:40

pay raise. Maybe you need to buy

26:44

something a little less

26:44

expensive. Maybe you need to get

26:48

a better rate of interest on

26:48

your loan. Whatever the case may

26:52

be. It's multiple items. But

26:52

this is called planning ahead

26:57

and looking towards the future

26:57

and not just jumping in

27:02

headfirst and hope everything

27:02

works out to the best because as

27:06

I said earlier, there should be

27:06

no surprises in your personal

27:10

finances. And if you do these

27:10

things, you'll be glad you did

27:15

so