Money Possible Produces Debt Destroyers

Raquel, Fredica and Lisa and Bryan made it. Sixteen weeks of rigorous budgeting and saving and heavy financial lifting.

OK, maybe not that intense…but our three families did make a commitment, met with a financial counselor and made major changes in their financial life. And lived to tell about it.

Here’s what they learned:

“Say no to frivolous spending.”
“Live within your means.”
“Don’t overwhelm yourself with credit.”

Each participant started out with a different financial issue. Lisa and Bryan wanted to bulk up their retirement savings. Fredica needed to control her spending. Raquel’s payday loans were spiraling out of control.

But the outcome for the three was the same: a lighter debt load, and more importantly, less stress in their lives.

The takeaway is that financial stress can cause problems in your daily life…which is in line with this recent survey that says employee financial problems or stress can reduce worker productivity.

What did our participants accomplish in 16 weeks? Here’s the skinny:

Lisa and Bryan

• paid off four of their credit cards
• learned the difference between needs and wants
• involved their children and developed a family budget

Fredica

• stopped using credit cards
• is paying down her existing credit card debt
• learned to live within her means, and work with what money she does have

Raquel

• paid down 30 percent of her debt
• is current on all her bills and has stopped using payday loans
• started an emergency fund

If you only remember one thing from this post, remember this: Your household budgets and finances are up to you. It’s a life-long process, not just something you can do once and be done.

But don’t feel like you need to do it alone. Get help from the Consumer Credit Counseling Service or a credit union. Financial education is a primary focus of Kansas credit unions, and credit unions nationwide. Credit unions promote financial fitness, and their goal is to make your financial life easier. Get started on your own by downloading the Money Possible Workbook.

Thank you to Lisa and Bryan, Fredica and Raquel for sharing their stories for the world to hear. Using a public venue to air your dirty laundry can be intimidating. These three credit union members took it in stride to promote the importance of financial literacy, and learned a little something along the way.

Quick Tip: Debt Warning Signs

Destroying your debt doesn’t have to take hours. Watch our 15 second tips and then be on your merry way. These tips also air on KAKE-TV’s (ABC, Wichita, KS) regularly.

View all our quick tips.  Follow along on social media at #moneypossible.

Debt Warning Signs


While it may seem that your debt crept up on you, there are warning signs like revolving balances on your credit cards, no emergency fund or relying on payday loans to cover monthly bills.

Quick Tip: On Time Payments

Destroying your debt doesn’t have to take hours. Watch our 15 second tips and then be on your merry way. These tips also air on KAKE-TV’s (ABC, Wichita, KS) regularly.

View all our quick tips.  Follow along on social media at #moneypossible.

On Time Payments

By making credit card payments on time, you can save $30-35 per month in late fees which could free up an extra $500 a year.

The Freshman $30,000

We took an informal poll last month regarding your grade in financial literacy. The majority of US adults give themselves a C or lower in money smarts. Either smart people took our poll or you think you manage your money better than you do, because the majority of the respondents gave themselves a B. See the poll results.

In light of this being the graduation season, and the fact that we ran across a survey that said students wished they learned more financial management in school, this post will be about how kids (or their parents) can become be money smart at school.

Forget the “Freshman 15.” We need to worry about the “Freshman $30,000.” The average student graduates with close to $30,000 in debt. That’s a lot of financial weight.

Students are screaming for education in how to manage their money. Some states require a class in financial education to graduate, but many do not. And just ONE class? We all know it takes more than that to get through to a teenager!

This is where parents need to step up and teach their kids. Or find somewhere that can…like a credit union or consumer credit counseling service.

Here’s why: First-year college students required to take a financial literacy course in high school are more financially responsible than those students who didn’t take the class, a recent study found. This means they were more likely to pay credit card bills on time and less likely to go over their credit limit. Both of those add up to less debt. But just 17 states require a course. And ongoing education is critical.

Our friends at A Smarter Choice have some good tips to get students started on the right foot. Here is a scaled down version of their blog post Get Started on the Right Financial Footing.

Stay frugal. Be mindful of what you’re spending. Check with your gym, and cellphone and cable providers, to make sure you’re getting the best rates. Pack lunches from home. Have friends over for dinner and movies instead of going out.

Negotiate your pay. Starting out with a higher salary will mean higher earnings over the course of your career.

Build an emergency fund. Prepare for the unexpected by setting up an emergency savings account and have your paycheck directly deposited into that account. You should have three to six months of living expenses saved. For real.

Start saving for retirement now. If your job offers a 401(k) or similar retirement savings accounts, put money into it! Even better is if your employer offers to match a percentage of your contributions. Your 50 year-old-self will think you were super smart for doing that.

Pay down student loan debt. Know what you owe and contact your lender immediately–before the due date–if you’re going to miss a payment. Pay extra if you can.

Use credit appropriately. A strong credit history will pay off when you want to buy a house or purchase other big-ticket items (the new iPhone 6 doesn’t count). Here’s the biggest piece of advice that you don’t really want to hear: Don’t charge more than you can afford to pay off monthly! And please, pay your bill on time. Spending too much and having late payments can get you in a heap of trouble…and fast.

College students are smarter, but have more on their plate than in years past. Make financial education a requirement for them, and maybe as an adult, they’ll be shedding that $30,000 before swimsuit season.

Our Debt is Embarrassing

We know we suck at money management…we just gave ourselves a C or lower in personal finance class. But then we say we are spending more and basically not doing anything about it.

Yet, we are embarrassed about our credit card debt…more embarrassed about that than our weight, age, credit report or how much money is in our bank account.

It’s embarrassing and we stress about it. We’d like to say “don’t sweat the small stuff,” but your finances aren’t “small” and maybe sweating it would do you some good.

If you’re this far, the good news is you CAN find the light at the end of the tunnel. It’s called “saving money.” And it can be the answer to all your financial woes.

The bad news? It’s going to take some work. For the rest of your life (or until you don’t have to worry about money anymore). Money management doesn’t just “go away” once you have it in order. It takes lifelong tending and growing.

Go Girl Finance has some ideas to get you started saving money and living stress-free:

Identify the problem. Be serious…what is the real issue? Spending too much on fancy-schmancy stuff? Too much activity on your credit card? Or is there just not enough income coming in? Find out why you are stressed about money, then make a plan and start getting organized.

Stay positive in the present. Nobody likes a Debbie Downer. But it’s easy to become one and jump on the “woe is me” bandwagon. Focus on what you are doing now and give yourself a daily pep talk. Remember what Stuart Smalley used to say: “I’m good enough. I’m smart enough. And doggone it, people like me.”

Put yourself in the power seat and know that you can change your situation. Above, we said you need to make a plan. This is when you put that plan into motion, little by little. Remember, it’s a marathon not a sprint. One small change (like saving $25 a month) can have a snowball effect, and encourage you to do even more.

Exercise! Yes, move your body more than just lifting the remote. Exercise is a great stress buster. Just a regular old walk around the block can put you in a better mood, and relieve stress.

Savvy Money says to track your spending. Maybe not forever, but this is a must for a few months. Here’s how it should pan out:

• 35% for housing
• 15% for transportation
• 15% for debt
• 10% for savings (this is NON-NEGOTIABLE!)
• 25% for any other living expenses

If you feel like housing can be a lesser expense, use it towards another category. It’s your choice! You can borrow from any category EXCEPT savings.

Managing your money smartly takes time, effort and dedication on your part. But we know you can do it…because you’re good enough, you’re smart enough, and doggone it, people like you.

Poll results: What is Your 2014 Financial Goal?

Our informal poll results are in:

More than a quarter (27 percent) of respondents goal is to pay down credit card debt. That’s a biggie…the average household owes more than $7,000 on their cards, and 15 percent of us roll over more than $2,500 in credit card debt per month.

Twenty percent said the goal was to save for a milestone like college, a new baby or retirement. Did you know the average college graduate owes $35,000 in debt in 2013? Or that you’ll spend about $10,000 on a baby in the first year alone? Or that you’ll need eight times the amount of your ending salary to retire? Things to think about…

Only 13 percent are saving for a “big ticket item” like a house, car or much needed vacation.

This is the big one…almost half of you (40 percent) want to build your emergency savings.  You are in good company. Roughly 75 percent of Americans are living paycheck-to-paycheck, with little to no emergency savings, , according to a recent survey released by Bankrate.com.

Fifty percent of those surveyed have less than a three-month cushion and 27 percent had no savings at all. People…this is not good. All households should have at least three months of living expenses saved.

It’s America Saves Week!

America Saves week (February 24-March 1, 2014) is an annual event promoting good savings behavior and a chance for individuals to assess their own saving status.

Although the week focuses on saving, it’s a good reminder for you to take a long hard look at your financial plan (or lack of) and determine a game plan for you or your family.

According to a recent survey by America Saves, most Americans still face savings challenges. Only 35 percent of respondents were making “good” or ‘excellent” progress in their savings goals. That means two in three adults are making no progress or “fair” progress in their savings needs. Come on people…we need to switch those around!

Saving money is essential for your financial health. You can’t pay down debt if you don’t have any money left over at the end of the month. You can’t build up a solid cushion of money if you are constantly trying to manage your bills. It’s  like the hamster in the little hamster wheel…spinning around but not going anywhere.

Start with this post: 54 Ways to Save Money. Surely you can find something you can do…there’s more than 50 tips!

Here’s two of our favorites:

• Reduce credit card debt by $1,000. That $1,000 debt reduction will probably save you $150-200 a year, and much more if you’re paying penalty rates of 20-30%. (Read more about credit card debt and the amount of money people throw away on interest fees)
• Take the amount the item costs and divide it into your hourly wage. If it’s a $50 pair of shoes and you make $10 an hour, ask yourself, are those shoes really worth five long hours of work? It helps keep things in perspective. Maybe retail stores should start putting that information on price tags?

Credit unions are another good place to start. Many have financial counselors at your beck and call, who can put you in the driver’s seat of a good financial plan, and definitely not one that will have you running in circles. Credit unions focus on financial literacy and people, not making money. As not-for-profit organizations, any profit they make goes back to the people who use the credit union. Here is more information about credit unions.

In the meantime, stay tuned because we’ll be unveiling our participants next week.

How Your Tax Refund Can Help Your Financial Goals

Nobody likes taxes. Have you seen the new commercial for tax software or tax preparers? They make it sound all fun and easy…like some kind of party: ”You did so much crazy, awesome stuff. So, we’re pretty sure you can answer questions about those things and file your taxes on your own.” Another claims: “Get Your Billion Back!”

Well, for one thing, you won’t get a billion dollars back, and did you really do some crazy, awesome stuff?

Maybe you used to…and are thankful every day that phones with cameras and social media did not exist back then…but last year? Not so much.

Worrying about taxes is an adult thing, and definitely not a party. Taxes are that dreadful thing that rears its ugly head. Every. Single. Year.

Some people can’t wait to get that tax refund. In fact, many count on it. According to a Fidelity survey, most Americans (75% of you) will get a refund…to the tune of $2,700 (See? Definitely not a billion dollars).

The good news is that most people say they will save or pay down debt with their tax refund.

Wait…save it? Pay off some debt? Psshhh…that’s not fun at all. Sounds like something Sandra Dee would do.

In fact, 33% said they intend to pay off debts and 46% plan to use the money for some kind of savings (retirement, college, etc). Such a responsible bunch…you know the type…Teacher’s pet. Goody-two shoes. Responsible citizen.

Yes, people want to be responsible financially…no one wants to be debt. These statistics are the light at the end of the tunnel. Individuals and families want control of their financial situation. They want financial health.

Start the ball rolling with your tax refund. According to creditcard.com, the average credit card debt per U.S. adult is $4,878. With your $2,700, you could cut away good chunk of that debt…and be on your way to that billion dollars…all on your own.

Pay Down Debt With These Four Letter Words

Oops. Are we not supposed to talk about four letter words?

No, not those four letter words. These are words you can say out loud and on regular television, and they won’t get you a trip to the principal’s office. Words like debt, more, high and time. See? Innocent four letter words.

Let’s start with DEBT:

$15,270.

It’s the price of a 1.13 carat round brilliant flawless finish diamond or a used 2008 Nissan Pathfinder.

It’s also how much the average American household owes in credit card debt (according to NerdWallet.com).

Seem like a lot? Yeah, well, swipe and spend is as American as burgers and fries.

Do you know how long it will take for you to pay down a $15,000 credit card debt?

We didn’t think so, which is why we did it for you using this handy-dandy calculator. This graph shows $15,000 debt, at 18% APR and only paying the minimum payment. In this instance, the minimum payment is calculated at 4% of the balance, which comes to $600 for the first payment. As debt is paid down, the minimum payment is reduced as well.

Wait…that said 14 YEARS. Yes, my friend, it did.

Now, let’s add $25 to the minimum payment, which means you are paying $625 per month, and we’ll continue paying $625 until the debt is gone.

I don’t know about you, but two years sounds a whole heckavu lot better than 14 years. Fourteen years is twice as long as the average marriage in America. It’s also about how long a kid has been in school by the time he or she graduates from high school. You remember how long THAT was, right?

Oh, and did you happen to notice how much you’ll save in interest just by paying $25 more per month? (About $5,000, if you are wondering).

One more thing: These amounts are based on the fact that you aren’t ADDING to the debt.

So, let’s nip this in the bud. The above shows that by paying a little bit MORE toward your credit card DEBT can be extremely beneficial. Those are the first of your four-letter words!

Here’s the rest:

HIGH: Got a card with a high interest rate? Pay off that card first, even if other credit cards have larger debt. And in case you didn’t get it the first time, the more you pay, the quicker the debt goes away.

TIME: This is a no brainer. Make your payments on time. Making a late payment could result in a fee. And being 60 days overdue could result in a late penalty fee, which increases your interest rate on that card, and possibly your other cards too! That’s blasphemy! I know, right? But it’s true. Pay on time, people.

Debt, more, high and time. Four letter words that can actually get you out of (financial) trouble.

Consumer Debt is Rising, but Consumers Say Getting Out of Debt “Extremely Important”

With headlines like “US Household Debt on the Rise Again” it’s easy for consumers to fall into the “everyone is doing it” mindset.

Reports indicate that consumer debt is climbing faster than Austin Powers’ Jaguar can go from 0 to 60 (7.4 seconds if you are wondering). Outstanding student-loan balances have reached more than $1 trillion.

That’s right.
A trillion dollars is a million million. One followed by 12 zeros or $1,000,000,000,000. And of those loans, more than 12% were delinquent 90 days or more!

Before you and Mini Me throw up your hands in despair and wonder who is racking up all this debt (because we know it’s not YOU), there’s a light at the end of the tunnel.

A recent survey from Credit.com (Americans and Credit Card Debt) indicates Americans with credit card debt believe that getting out of debt is “extremely important” and plan to shape up their finances this year.

I know we started out talking about student loan debt, and this recent survey is only about credit card debt, but according to this infographic, 75% of those who sought help from a financial counselor had credit card debt. Let’s face it, who doesn’t have one or two…or eight credit cards?

If you are a numbers geek, here’s more survey findings:

• 55% of survey respondents said they have at least some credit card debt.
• Of those 55%, half are chomping at the bit to develop a debt reduction plan for 2014.
• 68% are ready to roll now, as they said it is “extremely likely” that they will start to pay down their debt in 2014. Yeah baby! (That has to be said like Austin Powers or it’s just not as funny.)
• A little more than 40% of those surveyed say it is extremely likely they will be able to eliminate all of their credit card debt this year. Let’s do it!

That’s what this campaign is all about. Most people know they have debt. Most people know they spend too much. They just need guidance and a little push in the tush to get them going on a path that’s going to make them a Saver Superhero or Debt Destroyer. I mean, who doesn’t want that alter ego following them around?