Often, when talking to people about the work I do, I tell them that I help people clear their credit card debt once and for all and never have to use a credit card again. For many that sounds like the definition of impossible! They have cleared their debt before, often many times, and know that it just goes back up again.
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Then, when I tell them about the process I use and explain that, if possible, I will get them to commit to not using their credit card at all until I see them next time, I see the horrified looks and panic setting in!

The reason for this is that, like so many people, their credit card is their security blanket! It’s what stands between them and financial disaster if the car breaks down, the child needs orthodontic work, the dog needs surgery, Christmas arrives, someone has a birthday, friends ask them out for dinner, they need a holiday etc etc! It is where they go for “money” when all else fails. I know this, I have done this, more times than I care to remember, but I also knows that it doesn’t work and only makes the situation worse.

I am not going to go into all the other reasons people use credit cards, like air points etc and the reasons why it is better and cheaper to use debit cards or better still cash! Today I am just talking about using them as your back up plan! I have been a bit facetious above with the “emergencies” people use their credit cards for, but I have either given them myself or heard them, and more, many times when people have told me that they only use them for emergencies.

Now, if you are reading this and thinking “but I do only use them for emergencies and then immediately pay them off in full” then fine. Whilst I do think that there is a better way, this message is not primarily for you, but read on because you might be interested in how you could do it differently.

I then go on to explain how I help them save their way out of debt, once and for all!  Doesn’t that sound good? Too good to be true? Not at all. If you follow the method which I teach you, which was developed by Karen McCall of the Financial Recovery Institute, that is exactly what you can do. I never ask people to cut up their credit cards, nor put them in a container of water in the freezer, I just ask them to trust the process, which has worked for thousands and thousands of people, and not use their credit cards until they see me again. As Karen says, “ if you want to get out of a hole, first you must stop digging”!

The other key steps are to pay the minimum on your credit card each month whilst building up a savings account, which we call a Periodic Savings account. Now I can hear all of you with financial backgrounds or those who pay off your credit cards in full every month, exclaiming that this will cost extra because of the interest. Yes, you are right but if you are someone who constantly uses your credit card and can never manage to always pay if off in full every month, then, trust me, this is a much cheaper way in the long run. Remember I teach you how to pay if off, in full, once and for all and to never have credit card debt ever again.

That’s because the Periodic Savings account becomes your security blanket; it’s where you go to get the money to pay the dentist, the vet, the restaurant, the holiday and Christmas! Using a formula I teach you, you can plan for all these and more, and know that you will always have the money available to cover all these events, without having to bring out the credit card. Once this is functioning well we also start another account which we call a “Safety Net” account and here you provide for coverage of all your expenses if you were to have an interruption in income.

So, if you would like to learn how to save your way out of debt, once and for all, use one of the methods below to contact me and we can have a coffee and discuss it further, to see if I can help you.

I’d love your comments about all of this and feel free to share it with your friends either by email or socially below.

Have a great week everyone and give it a try… Can you manage to not use your credit card for the next week?

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For many solopreneurs or self employed people, the holidays are a time of less, interrupted or no income at all.

In this very brief video I explain how to set up a savings account, where money can be put aside throughout the year and is then available to access when your income fluctuates.

http://youtu.be/M0zw6QJ9BO8

How do you get through interruptions of income or other lean income times?

5158257_mLast week I entitled my MMM (Monday Money Motivator) – It’s not too late!

In it I gave you some tips on Christmas and holiday spending. I had some very favourable comments so it did seem to strike a chord with you.

 

In some ways “it’s not too late” could be the title for this week’s MMM too!

 

Two recent pieces of news attracted my attention.

  1. That credit card spending was going up … “Actual retail sales on electronic cards were up 7 percent to $6 billion in October from the same month a year earlier.” http://bit.ly/1iXID9F
  2.  There is a prediction that interest rates will rise http://bit.ly/1cgzkzg. Many commentators predict that this could be as high as 2%.

I must state again that I am not a financial advisor, but am talking about this because these two factors together could make huge a huge impact on people’s spending plans.

 

In the second article …“Mortgage broker Geoff Bawden calculates for every $100,000 borrowed, a 1% rise will add $64 to a weekly mortgage payment. “ It also said that the average mortgage in Auckland was $400,00, so for that “average” mortgage that would mean an additional $256 a WEEK that you would have to find. Monthly that would be $1109! That is for an increase of 1% … double that for 2%!! $2218. That is a lot of money to find in most of the spending plans ( budgets) I see.

 

I don’t bring these to your attention to scare you, but rather to persuade you to act now, especially if you are affected by both pieces ie you are using credit cards more than you did last year (especially if you are not able to pay them off every month) and your mortgage repayments may significantly increase next year.

 

Take these steps:-

  1. Stop using your credit cards now!! Revert to cash or debit/eftpos cards. Research shows that your spending on credit cards is likely to be about 20% more than it would on debit cards and that number is even higher when compared to cash! Then work very hard to get them paid off ASAP. If mortgage rates rise you can guarantee that so will the interest rates on credit cards!
  2. Relook at your spending plan for Christmas and the holidays and reduce the spending where possible.
  3. Get help now. Don’t leave it until you are in trouble; do what you can to prevent it happening. Remember that I offer a free chat over coffee. If time and or location make that impossible we can always have a virtual chat by phone of Skype!

Whatever you do, take action now and get yourself better prepared for what could come in the New Year! If the interest rates don’t rise think how much you could pay off your principal instead!!

 

I hope I haven’t put too much of a dampener on your Monday, but just know I am doing it with your best interests in mind! Please don’t bury your head in the sand; it will be that much easier if you act now!! You will feel much better if you are proactive.

If you have  a mortgage are you making any plans on how you might manage the increased interests rates? Is your mortgage on a fixed interest rate? Please share your thoughts below.

 

 

 

 

 

 

 

Do you spend a lot of time worrying about money? Does it interfere with your work life?
 
A recent arti12637931_scle in US News cited a study by McGraw Hill Federal Credit Union, which showed that in a survey of more than 1000 people, 36% of them said that they spent at least two hours a day either worrying about their finances or handling them. “…another study, “Stressed at Work,” from Bensinger, DuPont & Associates, an employee-assistance program provider, that suggests almost half of workers are so stressed out that it interferes with their ability to get their jobs done. About 44 percent of male respondents and 49 percent of female respondents said they had “difficulty concentrating” as a result of “personal problems and stress.” Meanwhile, Gallup’s 2013 State of the American Workplace report finds that 7 in 10 workers are not engaged with their work.”
 
If you are an employer this must make scary reading!
 
I was interested in the article, because I have been approached recently by an employer seeking assistance for one of their staff, who had a significant amount of debt and was very worried about it. It was agreed that they would pay for their employee to see me. We have met several times and have made some plans for dealing with their situation, which has eased her anxiety considerably. Even if she wasn’t worrying about her money situation at work ( and I’m certain she was!) she was losing sleep over it. This alone would have reduced her effectiveness at work.
 
So her company paying for her work with me will, I’m sure, be very cost effective. As well as improving her productivity it will also increase her company loyalty, because she appreciates how they have supported her personally.
 
Many companies now subsidise gym memberships; a good case can be made for also providing access to financial education and support. I have done several talks for companies to provide this. I am very happy to do it for your company as well; just give me a call.
 
As promised a couple of weeks ago now, here is the link to request my article “How to get through Christmas and the Holidays without blowing out the credit cards!” Simply click on the Christmas tree. You will also be sent a Holiday planner from Karen McCall of the Financial Recovery Institute along with the spreadsheet to go with it.

Have a great week.
 

I read two excellent articles in the NZ Herald on Saturday.

The first by Diana Clement, their “Real Money” columnist, “Plastic Surgery: Clever Ways to Use a Card”,  demonstrates how “…Credit cards can be rewarding if you know how to use them wisely and receive more in rewards points than you spend on the fee”. As usual Diana gives excellent advice and I recommend you read the article.

However today, I am going to focus on the other one, by Nicky Pellegrino, an Auckland novelist and journalist. “Change your attitude and keep the weight off”, is, as you might have guessed, about dieting or not!! In it Ms Pellegrino, explains how she lost more than 10kg and kept it off by changing her attitude to food and how she ate.
Firstly, she identified what was wrong with the way she ate, which for her was “…. a ruinous love of the starchy carbohydrate. Great bowls of silky risotto, comforting pasta dishes, mashed potatoes and bread on the side were what stood between me and a healthy weight.” So she changed her way of eating and ate more vegetables etc and limited her carbohydrates. She didn’t give them up completely.

Now I am not giving advice on nutrition and dieting here, but I was amazed at how the advice she was giving could also be adapted and be equally effective for spending and getting out of debt.

I often tell my clients that there are many similarities between food and “dieting” and money and “budgeting”. Firstly, whilst if you have a problem with alcohol, cigarettes or drugs, you can give them up and never have to deal with them again. This is not so with money and food…we will always have to use them, so we need to change how we do that. The other one I use often and it is the language we use. Just as “food plan” sounds better than diet, I use the term “spending plan” rather than budget. I always heard deprivation when anyone suggested I needed to be on a budget; spending plan denotes more choice somehow!

One of the things Ms Pellegrino said, was that as she wasn’t feeling deprived or hungry she could stay with it and gradually lose the weight. This is something I stress with my clients; it is important that we don’t feel deprived when we are trying to change our spending habits or eliminate our debt, as that will almost always lead to a blowout, ruining all the good work you have done. It is far better to allow for treats and the things that nurture us, and make slower progress, than to face the blowout and give up all together!

So, if you are trying to save money, make sure that you make a realistic spending plan which allows for the occasional treat and some fun, so that it can be sustained over time, rather than putting yourself on a starvation diet and blowing it after a week or two!

As always I would love to hear your comments. Have you been successful at sustained weightloss or saving?

Have a wonderful week and remember “All things in moderation”!!!

Big hugs,

Jill

Sally Feinerman

Have you ever wondered just what a Money Coach does? If you have, well you are certainly not on your own! It is the number 1 question I get asked! Here comes an explanation:

Recently one of my clients, the inspirational Sally Feinerman, from www.fitnessfix.co.nz, made me a very generous offer. I could blog about her journey to financial clarity and simply having a better grasp on her finances, both personal and financial.

This is the first part of that story.

JP :- So Sally, can you tell me what drew you to seeking my help with your finances?

SF:- “Well I’m very goal driven and I wanted to be really clear about my finances so that I could set some goals. I had some debt with an overdraft, which I wanted to pay off. I also wanted to get my credit card bill under control. Basically, you actually helped me pay it off altogether. Also I went from having three credit cards to just one. I now only use it for my business. This has been so fantastic. My spending is now much more in the moment, rather than retrospective. Now, I am much more conscious of what I am spending and whether or not I can afford something. Before I just put it on the credit card and dealt with it later. So the really great thing is, that now it looks as though I will have all my debt paid off this year, which is just fantastic! It also looks as though I will be able to start saving this year and have a safety net, which is just awesome. So I just feel that I will be really on top of my finances and knowing exactly where I’m sitting. I think that the discipline of going online and updating my MoneyMinder, every day just shows me visually what I’m spending and that really helps me as well. Also with my spending plan, when I do spend money I don’t feel guilty about it. I had planned to buy that and the money has already been allocated for it and is sitting there ready. Rather than if you don’t know what you are spending then you always feel kind of guilty about spending.

JP:- also, equally, even if you did spend on something that you hadn’t planned it has a great mechanism, which allows you to go back and revise the plan to account for that purchase and still stay within the plan and not go into debt.

SF:- Yes, I find that when I have done my spending plan, I know that if I stick to it , this is where I’ll be at the end of the month. If I don’t spend it all I can also see how that will make me better off.

JP:- Do you update your spending plan most days?

SF:- Yes, I do. At the beginning I did a 30 day challenge where I had to do 5 things for 30 days and 1 of them was my MoneyMinder. So that got me into a really good habit of doing it everyday. I like to get up and just do it in the morning. I also find if I do it everyday it takes no time at all to do. We’ve just been away for a long weekend, with out internet access, so it took me a bit longer this morning!

JP:- In Financial Recovery we talk a lot about conscious spending and many of my clients say that the thing they most value about the process is how aware of their spending they’ve become. Did you find this?

SF:-Yes absolutely. We find we are making different choices too. We have just been away for a long weekend  road trip and instead of eating out all the time we made lots of our own food and had picnics etc. We just loved it. It saved us money, but also we were enjoying nature and could stop and eat where and when we liked.

JP:- we use the term “spending plan” rather than “budget” as it tends to have a more positive connotation. Just as in Weightwatchers – they use food plan rather than diet for the same reason. When I was at the peak of my overspending, if anyone mentioned that I should be on  a budget, I heard deprivation. That I was going to have stuff taken away from me. Since I have been on the Financial Recovery programme I don’t feel that, as I can choose to spend my money on anything I want. It’s my choice. As Mikelann Valtera says “you can have anything you want but not everything you want”, but it’s your choice! Did you have any sense of being  deprived when you started on this programme?

SF:- In the beginning, to be perfectly honest, I probably did, but I think now we do need to question what we spend. We have become such a consumer society that when you look at life more holistically as well and get back to grassroots you don’t need half of the stuff you go and buy and so I have to say that I don’t now and it is more rewarding now to look forward and see where I’m going rather than to look back and think about what I might be missing out on.

JP:- Fantastic. It is really key to have some mechanism that draws you away from the negative behaviour. It is great when, like you, people can have goals and focus on the positive even if it is further in the future, rather than the deprivation.

SF:-If you can get yourself into, or see yourself getting into, the positive that is really good. If you have done all the planning and tracking and can see your progress you can see where you are going and be looking forward to that.

JP:- The other thing which is very linked to that is..well I’ll give you a hypothetical situation. What if you were walking along somewhere and you saw a really nice top or dress or pants that you really liked, but you had not planned to buy any clothes this month? Can you tell me how you might deal with that situation? Or how it might be different from how it would have been before?

SF:- Well, before I probably would have just got them anyway, if I really liked them. Now I would have to justify them to myself, that I could afford them or that I had them on my plan. If they weren’t on the plan then I wouldn’t get them.

JP:- that’s very good. Don’t let me put words into your mouth here, but before might you have just got them and put the expenditure onto your credit card if you couldn’t afford them at the time?

SF:- Yes, absolutely.

JP:- You said at the beginning that you are only using one credit card now. Has that made a real difference?

SF:- absolutely. I think that just knowing what I spend every day rather than just spending and then dreading the credit card bill coming in at the end of the month and then going “Oh my God, look how much money I spent last month!” Knowing that I’ve got to pay it and sort of being in fear of that bill coming in. Now that only one bill comes in a month and I know what I have spent because I have recorded it all, it’s never a shock.

JP:- Thanks for that Sally. I think that next time we should talk about how you now deal with things that come outside the normal monthly expenditure. I know, for example, that you have recently had a big overseas holiday. It will be really interesting to find out how you handled that and if it was any different from how you would have done it before.

Thanks, Sally, this has been really great. It will be useful for others who might be wondering how the process of working with me goes and if it’s for them.

 

From my last post you have seen I recommend that, unless you pay your cards off in full each and every month, you use debit cards.

Now that’s all very fine but, what if you already have a credit card, or cards, which have balances on them which you can’t pay off in full. What do you do then?

The first thing I recommend is,  stop using your credit cards immediately. There is a saying which is very pertinent here:

” If you want to get yourself out of a hole, first you have to stop digging”.

In other words, you can’t hope to get your credit cards paid off, whilst you are still using them and increasing your debt. Once you stop using them, the amount you pay off them then actually starts to make a difference. How you go about paying them off was the topic of another post of mine http://wp.me/pDpjD-2p. Essentially I recommend that you pay the minimum off them, until you have savings that will cover all periodic expenses you have, or will have. As I say it is the subject of another post!

For those of you who are now saying ” This doesn’t help me, because I have to use my credit card just to buy my groceries or kids’ clothes”

OK, what I suggest for you is that at the beginning of each month, you sit down and draw up a spending plan for the month ahead. Now if you are really serious about paying off your credit card(s) for good, this plan should address all the real needs of your family, namely, shelter, food and essential clothing, but not include wants eg new flat screen TV etc!! Once you have this drawn up, if there is a gap between the money you bring in and the money required to fulfill those needs, that is the amount you may put on your credit card. This amount is planned, which is the key word. This does not mean that you can see a dress that you just love and buy it with your credit card. The dress is not a need, and it’s purchase is not planned. You would also benefit from seeking the assistance of a Financial Recovery℠ Counsellor. You will find a list of them here:-http://www.financialrecovery.com/?p=find-by-area

Do you draw up a spending plan or budget at the beginning of every month? Do you stick to it? I’d love to hear your experiences.