Reduce Debt Increase Wealth.com welcome and Mr. Chuck here. This week I'm gonna focus on the plan. If you've been reading articles or other people's podcasts or YouTube videos, and you're, you know, they're talking about reducing your debt, they're gonna tell you somewhere in there, you need a plan. And that's what I'm here to help you. I'm taking you step by step on how to get that plan into effect. But I've yet to tell you what the plan is. But before I tell you what the plan is, we need to focus on how did you get yourself where you are today. As far as your debt goes, you need to reflect back you got if you did what I asked you to do, and you got all your information in front of you. Did you look through it? Have you seen a trend? Do you spend more money at one time a year another time of year. Those are things you're looking for and You need to figure out how you got all that debt if you have two, three credit cards with 6,000 or more unpaid balance every month, how did you how did that happen? You need to figure out what happened, how you got there, what you're gonna do to prevent that from happening again and make a commitment to yourself. So the plan that I've been using over the years, as I talked about, and first week and a little bit more in a second week, I pretty much learn off and on by reading articles watching other listening to podcasts, and, you know, several different sources. And I pulled it all together. And I, as I go through there, I was thinking, there's something I'm missing here because it really never seemed to work. And then I thought, Hmm, what can I do this the only these are all good. ideas because, you know, being an accountant, you know, I live somewhat conservative with my finances. I thought they're not telling me everything I need to know. They're they're piecemeal. I'm just getting piecemeal information from each individual, you know, from this article. Yeah, it was good information. I should do that. And another one that was a little bit different idea, I should do that. So what happened was, one night I just dawned on me, well, if I do it this way, it might work better. So I tried it. And lo and behold, it worked. I started getting out of debt, and I started getting out debt a lot faster. So your plan is gonna be one decide, do you really want to get out debt and you should because you want to be financial sucker. If you're married, it's a lot less stress in the household, and you just have a better life overall. If you're young, and you're just getting started. My advice is Be careful. Only use debt for the things you absolutely need and that would be a place to live in a car to drive and keep it under control. Don't buy the house you can't afford buy a lesser expensive house. Maybe over two or three years. Do a little bit of remodeling updated and new Neil what's going to happen it's going to go up in value. When it goes up in value, you're gonna make more money. And then maybe three, four or five, six years you can sell it pay off that loan. Have a big chunk of money leftover. use that for a down payment for a little bit. bigger house. Better neighborhood, put use as a down payment you can get started and you're not going to be straining your budget. As far as home of rent and home. You should look at percentage of income. I when I was younger, I was told by my mother And she was, you know, pretty took care of the family finances 25% don't go over 25% Well, I did and I struggled. So you know, anywhere from 15 to 45% is a good number of income, depending on you know, where you live, how much housing costs to what your lender is willing to lend you. So that's for the younger people, if you're a little bit older, wiser ra have a home, have a couple cars, whatever you find yourself overwhelmed and things that don't seem to be getting better. And we're going to go over the plan. The first step is you want to have your plan is to reduce debt. How you do that? Well, at the very beginning, if you don't have a savings account with at least 1500 dollars or more in there for an emergency fund. That's step one. Step two, step one is getting your checking account under control knowing how much money you always have step two is having savings account and building up an emergency fund. This is a plan and you're going to work on it, it might take two to three months just to get the first two steps under control, it should only take you a few days to get your know how much is in your checking account. That's a relatively simple and projecting your expenses forward, that's a little more difficult. And I'm going to go over a little more detail. And then get your savings account set up. If you don't have one, build up an emergency fund that might take two three months, keep putting money in there, you know, maybe you're gonna say 1500 dollars, I'm on minimum and my savings, that's my emergency fund for now. But you're not going to stop there. You're going to keep putting money in there until you have five or 6000 Then you're going to take 4000 out of that you're going to leave 1500 in there and take the difference out three 4000 and apply that to one of your credit items. And then you're going to start building up your savings. count again, that might take two or three months, it takes me about three months. So every three months, I'm making a big payment on my credit somewhere. And I've done that over the last almost four years now. And I've paid off over around somewhere around $100,000. In one of these days, I'm going to get that number together and, and let you all know, and you just do that over and over and over. As your deck comes down, it speeds up, you get to one credit card paid off, you got a little bit extra more money that you can put in your savings, you get the next one paid off, you got a little more money you put in your savings, you get the next one paid off, you get a little more money, you get the next loan paid off. Maybe it was a loan was that, you know, $300 a month payment or a $500 a month payment and then you got a lot more money going in your savings account every month. So as you go and you pay things down, this process is gonna speed up. It's like a domino effects. It's gonna start slow and it's gonna speed up over time. So with that said, I'm going to now go into a little more detail on how to project your expenses forward from your checking account. For your computer savvy people who maybe have a spreadsheet on your home computer or your laptop, that would be the best way to do this function. You know, you'd have a column, maybe column A, as a description, column B as a date, column C as the dollar amount and column D as your running balance in your checking account. So you go online, you figure out what you know, you look at your checking account balance, and you plug that on the top. And you go forward, you know, you might look back the last month, what did I pay when you know you in hopefully you got all those statements there in front of you. So you go back a month. So if it's around the 15th a month When you're doing this, you go back to the 15th of the previous month, you look what you're paying from the 15th to 16th to 17th, the 18th. And you list that down in there and skip every other column, every other row, I mean, so that you leave yourself some space, maybe two or three lines, so you can add stuff in there. Later on as you go. As you discovered you forgot something you maybe didn't pay something last month that you paid this month. That kind of thing. You can also do the exact same thing on paper, slow, more tedious, but it can work. And you want to start out first going from paycheck a paycheck be one pay period. As you get that perfect it may be copy and paste it a second paycheck period, run it down, then you just go in and update it and change because you're gonna be paying different things at different times. You want to do that as far out in advance that you can to pay periods if you get paid every two weeks, bi weekly, and maybe do it two or three that gives you a four to six weeks in advance you're looking for you want to look forward. And as far as your income, you want to if your incomes the same every paper, it's easy. If your income changes every pay period, he need to go back two or three pays, add them up divided by three, use an average. Over time, you'll get that average pretty close. If it's off $50 $100 You know, you're gonna be okay. That's why we leave the balance of $500 you know, you don't want to take your checking account below $500 because you don't want to bounce checks, you know, you want to look bad. You don't want to pay fees, man, we really don't want to pay fees because it's a waste of money. So with that said, the more you can do that. the better off you are, the more accurate you can be, the better off you are. Once you know pretty confident that man, here's my balance, and I'm gonna get pay. And that's my new balance was a big number, take them extra money out out of there and put a line in there transfer to savings and make it an A minus and take it out and adjust your balance going down and look what happens. You want to do that as soon as possible. So you get paid. You look for forward to same day as payday maybe the day after payday within a day or so. Okay, it looks like I'm gonna have an extra $500 transfer that $500 immediately to the savings account. member. The feds require you're only allowed to take six withdrawals from your safe Count on month. A word from my sponsor I support isotonic vitamins. If you're not taking vitamins on a daily basis, you should be in it should be isotonic, it should be a part of your monthly budget. So you've already got a budget, you might as well buy the best rapid absorption highly concentrated and maximum benefits, and they work really good. So I highly recommend them. To find out more, go to my website, Reduce Debt, Increase Wealth.com dot buzzsprout.com upper right hand corner, click on the heart and I'll take you to the website. Thank you very much for supporting this podcast. Last week we had an article where they mentioned about off off online banks we can get a higher interest rate if you're just getting started trying to get a savings account going don't worry about that right now. Once you have have a say a $3,000 minimum balance and you're saving and you are building it up fairly quick and you're no you don't have to use that money, then maybe go online and look for a search, high yield savings. There's many options, compare the rates at that time, they are always changing. And maybe go in and set one up and transfer $2,000. Because $2,000 at 2% is a whole lot more than $2,000 at one 10th of 1%. And you know, then that account, you know, you, you hopefully never have to use it. That's the idea. And then maybe as your debt comes down, you can increase it to 4000 or more. Just a note from the article last week, and the article is pretty good because it you know, told you to look at things like your big expenses, your housing, your car, See how you can reduce that. There are ways to reduce it, you can refinance, you can refinance your car loan nowadays, it's you don't want to refinance, finance your house and pay off your car because you got, you don't want to take a three year loan or a five year loan and turn it into a 15 or a 30 year loan. You want to try to get out of debt as quick as possible. You don't want to extend it and you're going to make the house payment bigger if you pay off that car and roll it over into your mortgage. That's just my personal thought. You want to try to become financially secure, and you want to try to get your mortgage payment down. So if you lose some income, your spouse quits working, something bad happens you still have enough money in that savings your emergency fund or you might still make enough money from Unemployment or some other source, working part time, we can still pay for the house, you don't lose everything. That's the main reason. You can always you know, sell the car, pay that off or just default on the car and they just take the car instead of defaulting on the house may take her house can't really live in a car, he could live in a house. So that's just my point. This week's article is how to reduce your spending by $700 a month so this is gonna be an interesting one. That's up next. overspending here's how to cut your expenses by $700 a month by Tanisha. A Skype special to USA Today. About a year ago Shannon and Daniel karns of Keller Texas face bankruptcy. Both foot doctors they had 50 500,000 in debt. We quickly found out that owning our practice while facing massive amounts of debt was not the best plan says Shannon 30. Instead of filing for chapter 13 bankruptcy to restructure and get the collectors off their back, she says they decided to get extreme by reaming in their life reeling in their life's style to pay down the debt, and men taking a hard look at their budget and identifying ways to drastically reduce it. We cut all unnecessary our miscellaneous spending for about two months she says this allow us to realize there was extra money in our budget. We weren't just being intentional with it that intentionally a term of offside by Financial Group they Ramsey lead deck Karnes, who are parents to three young children to cut more than 8000 of expenses from their budget in the first six months of 2019. By switching services, swapping cars and ultimately downsizing their home. There are dozens of ways to save money. If you're wondering where to begin. Here are six ways to cut your expenses by over $700 a month. One lower the cable 30 something married couple Anthony and I don't know Hargadon in Frisco, Texas we're paying $250 a month for cable. We cut the home phone and lowered our tear. For a high speed internet says Anthony and IT director. We now pay $150 a month. If you want to cut the cord all together sign up for streaming services like Hulu prime video, YouTube TV. monthly savings $100. shopped around for car insurance. When the monthly premium nearly doubled for our 220 13 Nissan Altima, my family compared rates versus in surfy.com. And when they called six companies for quotes we slashed or built from 277 to $122 a month by switching companies and bundling our homeowners and car insurance monthly savings. $155 but there's quite a bit, eat in not out. Shannon karns de patatas prodigious also runs the blog, the frugal food foot doctor calm. I instruct readers to go through three to six months of bank statements to assess where they are spending. She says she herself discovered a family for spending hundreds of dollars on fast food. Consumers spent an average of $3,459 eating out in 2018. According to the Bureau of Labor Statistics, that breaks down to $280 $88 a month. Instead of dining out go to the supermarket and cook monthly savings $288 slash your cell bill. The hotdogs pay $200 a month for service we switch to family plan for $85 a month and then put the extra towards debt says Anthony. With the debt paid. They're using the funds to help save up for home comparisons. shopping sites like Wi Fi. Wirefly comm may help. The average user saves 30% by switching from one switching from one provider to another, says Logan Abbott, the company's president monthly savings. $115. Cancel the gym. Take your workout, outside through walking, biking or using local recreation room for free. If you're not using the gym regularly cancel it says Tonya Peterson vice president was freedom financial network memberships can cost $30 a month funnel that money towards some summer fun monthly savings $30 stem subscription creep in 2019 users spent $640 on digital subscriptions including music service, dating apps cloud storage streaming service, according to an analyst for the New York Times by men, that comes down to $53 a month. You may be surprised to learn how much you're I'm actually playing And each month without even using a service says Motley Fool. Molly Ford coats founder and CEO of Ford financial management in El Paso. It's an incredibly painless, painless way to cut expenses. monthly savings $53 sorry for any mispronouncing of names and words within that article, I sometimes struggle with pronouncing the English language. Thank you very much. I got a few notes there. I like to expand upon the cable. What I did was switch to streaming. So instead of paying $90 a month for satellite TV, I switch to streaming. I get international channels from my wife at $16 a month. I get all the cable networks history discovery TLC All those for $16 a month. So you can really save a lot of money. But the trick is saving money from cutting from your cable to streaming, he only need to stream one or two channels, whether it's Netflix and what I do is mom one, if I've seen all those programs, I a month a month, so I, I stopped that service and I might go to Netflix, watch their stuff for two or three, six months. Once I've seen most of that, I cancel that I go back to the other one. I watched her stuff for maybe a year. And that way if you go back and forth, whatever you set up, you know in within that plan for your favorite channels and your save channels, it'll still be there because I've done it and I go back and forth. So instead of spending $32 a month, you know 16 twice. I'm only spending it once And I'm a truck driver. So I'm not home. I'm only home couple days a week. I don't watch TV all the time my wife thinks I do. But that's beside the point. So that that's where I'm coming from that we're looking ways to save money because what we really want to do is reduce that debt. And you only got two ways, as I said before, increase your revenues or reduce your spending. So there was a big tip there in that article for cable and streaming, how you can switch to streaming and replace it with your replace your cable. I've never gone over the mountain, maybe your internet service might go up $10 a month because you're streaming more using more data. You might want to try it on a limited basis and see what happens. watch a lot of TV for two three days. Then check your internet provider and see you know how much of your data you're using, or maybe pay that extra 20 bucks a month. increase the amount you can stream and then cut that $70 a month, you know build out. You're just reducing are all around EMA one might go up a little bit, but another one come down a little bit. So what's the plan? Your plan is to reduce your debt as quickly as possible by keeping track of your finances by reducing your spending, cut out all unnecessary spending, increase your income if possible. Reduce your expenses. If you can reduce large expenses that's even better. But look at everything you're paying, try to reduce it. I'm not saying that you get an inferior product. Or don't buy things. Don't buy if you don't need it. That's a good step towards it. And instead buy in five pages. is a toilet paper by one case, you know it, it's kind of look at the short term. When you're buying stuff, buy stuff for the week ahead or two weeks ahead. Don't go overboard because you buy too much food is a good example. And you put it in your freezer and you have a storm, you lose your electric, you're gonna be throwing all that away. So only by what you're going to eat in the next seven or eight days. It's always better fresh anyway, it's my opinion. One of my other hobbies is smoking meat. So I just buy the meat right before I need it. Then you know i marinated or I put my robe on there and I let it sit in the refrigerator for overnight you know, 10 1224 hours, and then I smoked it right away and I eat it up right away so there's less waste, so some way to waste too. I guess what I'm getting at ways to cut your spending is have less waste. It's keeping everything under control. Don't, don't go out and buy a cup of coffee, you have a coffee machine at home, even though it takes a little bit longer, get up five minutes earlier, and make that cup of coffee, take it with you, instead of buying it at five bucks a day, at $25 a week, five days a week. So it's not only is it the bay things, it's also the little things. The other part of the plan is increasing your credit. So as your debt goes down, you don't want to close out your credit cards. They might close them for you depends how bad your credit is. But you need to make the minimum payment on time. And then when you get it paid off, don't close it, leave it open because if you close it that's going to reduce your credit and it's gonna hurt your credit rating. So not only going to get your finances under control, you're going to pay down your debt. It's also going to increase your credit rating, which is gonna make other things cheaper such as your insurance on your car, because your insurance company looks at your credit rating and to assess how much they're going to charge your premium. So it all kind of works together. So that's the plan. You need to stick to it. Remember, he didn't go in debt overnight. You might have you know, if you bought a house you can't afford it's gonna take time. There's a lots of tip tips out there. They work just got to stay at it. But it's not going to be a What can I do today and I'm out of debt tomorrow. That's not going to happen. It's going to be 2368 years. New episodes are released weekly subscribe so you can follow Mr. Chuck's journey to reduce them. debt and financial freedom as you do the same. If you liked this podcast please share it Transcribed by https://otter.ai