Hello, I'm your host, Mr. Chuck, I retired accountant turned truck driver, I reduce my debt in a relatively short period of time, debt reduction, to achieve financial freedom takes commitment, confidence, determination. Continuing months debt reduction tips, the process of paying down or off debt is never ending. Keeping the goals and information in front of eyes is important to achieve this goal, what to do when something goes wrong, do not give up, adjust and overcome is the order of the day. If you're starting into this process, and you're fairly new, maybe only been doing it for a few months to three months, and you really hadn't make any progress on your debt. But you're already thinking, when I get my credit cards paid off, I don't have to do all this. Or once I get my credit cards and my car loans paid off, then I don't have to continue doing this. And what I'm talking about is continuing doing your tracking on all your income and all your expenses. And then continuing doing your monthly budget and updating at least a weekly basis. So you're aware of what's going on in your personal finances. That never really stops if you're serious about reducing your debt, and, most importantly, trying to stay out of debt. At the bare minimum, you should try to no longer have credit card balances. That should be your goal. Once you get them paid down to zero and you get some other debt paid off and your increase your emergency fund. And you're doing all these things in your getting better off in your financial life, perhaps you're gonna buy another home, that's gonna cost more, perhaps you want to buy that new car, you always want it, whatever the case is still have to keep your finances under control. And you have to plan for whatever it is you want to do in your life. Whether it's in the near future, or distant future, whether it's saving more money to for your college or your children's college tuition, or increase in your savings for your retirement. So you can retire at an early age, or buy that second home vacation home or whatever it is you're wanting to do. You still have to do everything that you're doing now it never ever stops. So let's talk about the reason for that. Let's say that you get your credit cards paid off, but you still have two car payments, a line of credit and a mortgage. That's still pretty significant amount of debt. But you're getting yourself in better financial shape. You no longer living paycheck to paycheck, you feel like you're doing much better. But this thing if you didn't have those two car payments, how much better will you be doing? How big is your emergency fund. So if you continue doing your tracking, and you continue in doing your monthly budget, and you're updating the actual numbers on your monthly budget every week, so you got an eye on what's going on, and you look for things to reduce your spending, and you're keeping those type of spending under control. And you planning ahead on large purchases, you're saving up some money before you make a large purchase so you have a bigger down payment so you can finance last or maybe not even finance at all depending on how big of a purchase you're doing. So your emergency fund as your debt is being reduced. your emergency fund should be increasing. Your goal for your emergency fund is to have three to six months minimum of your expenses and your savings account in case something bad would happen. And something bad would be losing your job being laid off being injured where you can't work. And you don't have any sick leave, things like that you're planning for a bad event that happened in your life and you're have the financial resources to pay your bills until you can recover. And that recovery period, the longer you have, the better off, you're gonna be. If you have six months, you're gonna be much better off than if you only have three months. So let's do a scenario, let's say that you and your spouse are working, you're making a good income 150,000 plus a year, you buy a nice home, you got two nice cars. When I say nice, I'm really saying expensive. Now you have a $2,000 a month mortgage, you have two car payments of seven or 887 $800 each. Plus you, you know, are going out to dinner and you're having a good time and you're entertaining people and you're doing all kinds of spending. And then you decide to have children, well, that's gonna change everything. And so you have two children. Well, now we want to set up a college fund and start saving for that. And plus all the costs associated with having children and your stone, you know, you're getting by, but you're getting closer to that paycheck to paycheck scenario. But you still have enough money in your savings account, if something bad would happen. So everything is still good, you're doing good. So maybe then you decide I'm gonna buy this boat, because my kids are going to be old enough. And we can teach them how to waterskiing. And whatever the case, whatever your thinking is, and that's a way you can then have spend time with your children's on this boat. So you buy a boat, and you get in now you're starting to struggle. Now, you're kind of living paycheck to paycheck, but you're in denial, you're thinking that you still doing all right, because I'm gonna get a pay raise here in another couple months, I'll be fine. But then your wife comes home one day and says I don't want to work no more. I want to quit my job, and I want to raise my kids, I want to spend time with them while they're little etc. So you agree, now you're struggling. Now you're kind of overdrawn, because he still got those two car payments, or almost paid off, but they're not. So he still got that money going out, he got that new boat payment, he got that expensive house payment, plus all the expense or additional expenses for diapers or whatever for the children, and buying them clothes and all this kind of stuff. So now your emergency fund is starting to shrink down. So you get to the point where maybe you only have$500 or $1,000 in your savings account. So now you're really on getting to the Dire Straits part of your life, you still need to watch your spending even more because you have less income and you have the debt based on a higher income. So what do you do? Well, we have to adjust, we have to cut back spending somewhere to free up some money to cover some of these expenses, because he's still working full time making a good income, but it's just not quite enough. What can we do? Do you need two cars? Can you get by with one cars? Can you sell one item, pay it off and get rid of that alone, then that will free up some cash, maybe might consider selling that boat, you want it so bad. Because now you're really at the level where you may not be able to afford it. And if you sell one card, will you have enough money to pay the other one off, so he didn't have no car loans. Now these are type of things you have to consider when you're going through this process. But all the time this is happening. You're tracking your income and your expenses. You're watching your budget, you're cutting back on spending wherever you can you watch your grocery bills, you move watch how much gasoline you put in your car, I could fill my car up not once a month. But why put all the money in my car when I can put $20 in there twice a month, and then run it down a little bit. And then I'm not putting all my money into my gas tank. That's the way I think. But that's the type of things you got to do because an extra 20 or 30 or $40 that you put don't put in your gas tank to go to buy in some groceries. And feeding your children may be more important than have extra gas in your car that you may not use right away and might be there an extra week or so that you can put in some more later as needed instead of now when you want instead of filling up so that's the type of planning you have to do. And you have to adjust as your life as you go through life when things To change and your income is reduced, then you have to look at ways to reduce your spending, and maybe get rid of something that you can't no longer afford. You notice I didn't say get rid of the house because you need a place to live. But if you get in real dire straits, and you're living on using credit cards to pay your bills, and you're just digging yourself in a deeper hole, may be selling your house, if you have equity in it, paying off the mortgage, and then buying a less expensive home with a smaller mortgage may be the way to go, based on your new lifestyles and your new circumstances, because things change throughout your life. And nothing ever remains the same. The other scenario is you're renting an apartment, and it's$500 a month and you're making 30,000 a year you graduated from college recently, and you're looking for a new job. And then within six months, you get a new job. Now you're making 50,000 a year and another six months, you get a pay raise, you're making 60,000 a year, and you don't like working for that play. So you're looking around, you get another job, a new job, now you're making 75,000 a year and you're still living in that apartment, and you're saving up your money and you're doing everything good. And you didn't buy a new car because you always had a company car. So you didn't need to buy a car and you so you have an old used car that you use for personal use, or between jobs. Now you're at the point where you're looking, again, thinking about getting married and you want to buy a home and what do you do? On this particular case, you have plenty of emergency fund savings built up because your incomes increased. But your spending stayed the same. As far as your living expenses and your transportation and maybe you're going out to eat more often. But you can afford it. And you get engaged, you get married now you need a home, what do you do? Well, the first thing is you don't want to buy something you cannot afford. Don't buy that home your wife wants. Because it's in the right neighborhood, it's the right style house or whatever the case is close to her parents, or parents are fairly well off and you really can't afford that neighborhood. You know, you got to take your income and consideration before you consider buying a house. How much can you afford? And what areas would that open up for you to look at. So don't even look at the houses you can afford. Because there's no long, no reason to dream for about things you're not going to be able to afford at this point in your life. So buy a house that has maybe in a neighborhood your wife don't like but she can tolerate it because it's closer to her parents. But it's more affordable, you don't have to struggle, maybe it's a fixer upper and you can do the painting and some of the stuff on your own save some money and then the major stuff you have contracted out as you get your tax refunds because you now you got your mortgage interest and your real estate taxes dried off so you're gonna get a big tax refund and all this kind of stuff comes into play. And then when you live there for four or five years or maybe a little bit longer, and then you're got a couple more pay raise and now you're making 150,000 a year instead of 75,000 and your wife stole work in and you got a bunch of money in your savings account and you got your six months emergency fund build up and then a much more than that. And if you could sell this house because you now have got some equity in it because you fixed it up it's much nicer and of course inflation and everything else and you can sell it and have $30,000 Extra and then add to that for a down payment now you can get a little bit closer to that house your wife wanted a little bit five years ago you know get a little bit bigger home little bit nicer neighborhood whatever the case and move up and to it instead of trying to buy something you can't afford and and struggling and then perhaps losing that. Work your way up to it and be consistent and conservative on your finances, and you'll be much better off you did so I'll be back in one moment with my final thoughts. If you're interested in learning about an online software that helped myself get out of debt, it does tracking, budgeting, and keeps track of all your assets and all your debt, and even tells you how much and when to transfer money into your savings account, and how much and when to transfer money to your debt, and which debts to pay off in order. First, it's not cheap, it's a one time payment. But it will definitely be an investment, something and yourself and an investment in your personal financial life. If you're interested, send me an email at reduced debt increase wealth@gmail.com. And I'll send you the information about this online software that worked great for me. And one of my tips, I have back a couple episodes, I talked about paying off your credit cards. And when you get that first one, pay it off, don't close it. The reason you don't close is because it'll hurt your credit score, if you have less credit, based on your income, and you're gonna have a worst credit score, so if you can leave it open, if they don't answer it on you, then leave it open and don't use it. But down the road within three months or six months, that credit card company is gonna send you an offer probably in the mail maybe mailed who knows, given you the opportunity to transfer some money from other credit cards, that's what we're talking about, on to hear a transfer of balance, and for say three or 5% fee for the transfer fee, and then give you 12 months or 18 months of no interest. And that's when you're gone to start using this credit card, you need to figure out how much money you can pay towards that credit card on a monthly basis, times 18 months. And that's the amount of money you transfer over. Paula, it's gonna cost you a little bit more than that because of the fee for the transferring the balance fee. But that's really no big deal. Within a couple months, the interest you save on not paying interest on the other credit card, because you're going to take off your highest interest credit card, you're going to actually make save enough money on not paying interest to cover that fee for the transfer. So it's gonna be a win win situation. And then you make that monthly payment for 18 months. And the important part here is you must get paid off before the end of that 18 months. So they don't come back and charge you a bunch of interest for whatever the fine print says, I keep thinking is they're going to charge me interest from day one for the all the whole balance for the whole year and a half if you don't get it completely paid off. So I always paid it off before the end of that process. If you want to be a little conservative and go a little bit later, beloved smaller amount, that's fine. And then once it's the zero again, they send you another offer, you can do it again. And then you get another credit card paid off. Now what you want to do is you never want to close your credit cards down unless they cancel them on you. Because the more credit you have available, based on your income, your income, the credit ratio is getting better. So your credit score is improving. And why is that important? It's important because your insurance rates are based on your credit rating. And the worst credit rating you have, the more they're going to charge you for insurance, whether it's car insurance, homeowners insurance, whatever insurance you're trying to buy. So that is important because of that. And then when you don't want to go out and maybe buy another home or new home or car, the better your credit rating the better rate of interest you can get on that new loan down the road. It's important to keep your credit cards at a zero balance and it's important to use them like cash. If you treat him like cash, and you don't buy something, unless you can pay for it right away. Not next pay day or two pay days from now, but you already have the money available to pay for it, then you can use their credit card, and then the following Friday or the next pay day, generally would go in and pay them off for that particular item. So I'm not carrying a balance. So nowadays, you can go online to your credit card statement, and you can pay them off weekly, you can pay them off monthly, you don't have to carry a balance at all. So if you want to make sure you don't have a balance, and don't forget about it, you want to pay it off two or three days after you make the purchase, because you got to let it flow through and it takes a couple of days. And then you'll make sure you receive the item and make sure it's in good shape this and you don't want to pay off your credit card and then have to return it and get refund, you have this credit there that you're not going to be able to use for a while now use tying up your cash, some place when you don't particularly have to. So it may wait a week, then make sure you're not going to return that item or whatever the case would be conservative way to look at your finances. If say the two scenarios going on, and you lose your job. And either or there's certain scenarios, you're gonna have enough mergency fund that cover you for at least three months, so that you can start collecting unemployment and maybe get a part time job, start looking for a new job, get you know, because you're gonna have a little bit of delay in getting your final paycheck. So that's gonna help a little bit. But if it takes you a year to find a new job, you're going to be hurt. And if you only have three months emergency fund, if you have six months, you still gonna be hurting, but it's gonna take longer, you can start working a part time job and doing something, maybe your spouse could go back to work and you stay home with the children, whatever you have to adapt to the situation. And that is not set in stone, you have to be flexible, you have to be doing whatever it takes to get yourself through the particular financial problems that you're in, it's important to always be tracking your income and your spending, and always know about your budget, even if the budget is 80% going into your savings account. And the rest of its just paying utilities and food and gas for the car. And insurance when it comes along. You still have to track and you still need to have a budget so you know these things. And the more in the future, you can see what's coming up and what's new, the more you know what's coming up what's due, the better you can plan for it. And the better off you're gonna be the be no surprises. And you shouldn't really have too many surprises in your personal financial life, he should be aware of what's going on. And he should know pretty much that if you lose your job or quit your job or whatever the case that you'd be able to get by for X amount of time with no particular problems until you can get and to an income producing state. Again, whatever that may be saying, just because you pay off your credit card doesn't mean you'd quit tracking and quit doing a budget. Just because you pay off your credit cards and your car loans means you don't do your tracking and don't do a budget. Just because you're completely debt free means you quit your tracking and don't do a budget. I've been debt free for a couple years now. And I still track all my spending and all my income coming in. And I still have a monthly budget I update on a regular basis, maybe not as often as I did in the past, but I still update it every couple times a month at the very least as my bills are being paid throughout the month, I will update my budget and make sure I'm not going overboard somewhere along the line. Before making that next large purchase where you have to get a loan that's going to be multiple years, whether it's a five year loan, four year loan, six year loan, whatever it is, you got to know it'd be able to afford it. So here's a tip, figure out how much your down payment is gonna be and then figure out how much you're gonna finance. And how much is that gonna cost you? If say it's a new car purchase, you got to figure at least 9% interest. It may be a little bit lower than that but figure 9% for five years or six years what's your monthly payment once you know that you figure that out. Now, without changing anything in your budget, put that amount of money more into your savings account, pretend you have the loan, and every month, put that much more into your savings account. If you have to take out money to pay bills, then you can't afford that payment. I don't want you to reduce your savings that you've already set up and set aside whether it's $100 a month,$50 a month, that's got to remain the same. We're trying to figure out if we can afford this loan. And if you can't put that amount of money aside, and not take it back out of your savings account, even if it's $1. That means that you cannot afford that particular loan for that amount. So either you need to increase your savings or your down payment to reduce the amount that you're borrowing, or find a better rate of interest or just don't buy that particular item. Do that for a minimum of three months. And better off if you did it for six months. This is called planning ahead. We're planning to make a large purchase. And if we know what the monthly payments gonna be, and we can't make that continuously without taking money out of our savings account, in order to pay other bills, then maybe it's something we can't afford at this time. Maybe you need to wait to get a pay raise. Maybe you need to buy something a little less expensive. Maybe you need to get a better rate of interest on your loan. Whatever the case may be. It's multiple items. But this is called planning ahead and looking towards the future and not just jumping in headfirst and hope everything works out to the best because as I said earlier, there should be no surprises in your personal finances. And if you do these things, you'll be glad you did so