Thursday, August 8, 2013

Lucky

Have you ever wondered why good things seem to always happen to good people? There is a guy who used to wonder why people that were already doing so well, continued to do better and better.  He felt like there was this pie with only so many "good" pieces in it to eat and there was a select group of people that seemed to keep getting all this pie of awesomeness. I don't believe this is a word, but it sounds awesomer than anything else I could come up with. He was continually frustrated with all the "lucky" people because he truly felt that they were just lucky and luck seemed to never fall in his lap.

-"Would there be any awesome pie left for poor little old me?"
-"How come I don't get all the lucky breaks? Why does Mike seem to have a pHd in talent and I don't?"
- "Why does Paul seem to go from the hottest girl in town to the hottest girl on Earth?" 
- "Why does Sara get to have her dream job? And why is Sara getting that promotion at her dream job?"

He would whine over and over....

"Why me? Poor me! I guess God doesn't love all of his little children the same.  Apparently I am God's red-headed step child and I will have to just eat this Spam sandwich while everyone seems to be eating filet mignon."

That guy I know was me.  And it may be you too.  Hard pill to swallow, but it's true.  Why do we feel this way?  Because we are what scientists call "human".

Why do wealthy people seem to become wealthier, the middle class remain the middle class and the poor remain poor?  Why do successful people become more successful, why do awesome people get awesomer and why do the rest of us......well.....remain the rest of us?

Believe it or not, I think the answer is luck.

"What's that you say? Luck!?!? Are you kidding me? I am going to stop reading right here because this hocus-pocus bologna tastes terrible (Please keep reading).  I happened to be very successful and it wasn't from luck!  How can you really say that luck is the answer to the question you just asked?  Get real Chris!"

Tom Corley writes in his book, Rich Habits: The Daily Success Habits of Wealthy Individuals about this thing called "luck" in our everyday lives.  He describes four types of luck:

Random Good Luck
Random Bad Luck
Opportunity Luck
Detrimental Luck

Random good luck is winning the lottery or catching a foul ball at a ball game.  While this type of luck is beyond awesome, we really have no control over it.  Hence why its called "Random".

Random bad luck is just the opposite.  You get struck by lightning, a tree falls on your house or you end up having to sit next to that person on your ten hour flight over seas.  Again, these things stink something terrible and you have no control over them.

The last two types of luck we do have control over!  Opportunity luck is the luck that the people we always wonder about have.  The ones that seem to always have that slice of pie called awesome.  How did these people get opportunity luck?  I'm glad you asked....

It's simple.  The people that continue to place themselves in good situations, have good things happen to them more often than not.  This can happen in any place in our lives, especially in our personal finances. Habit 1 in Stephen Covey's 7 Habits of Highly Effective People is to be proactive.  Webster's defines proactive as:

Serving to prepare for, intervene in, or control an expected occurrence or situation

Happy people are proactive.  Stress-free people are proactive. Wealthy people are proactive. Andrea and I are proactive. Those people that eat from the pie of awesome are proactive.  See a trend here??

How can we allow opportunity luck to lean on us in our personal finances?  Be proactive. It's that simple. When you continue to set yourself up for awesome situations, awesome things will happen to you.  When you continue to put yourself in bad situations, detrimental luck is right around the corner.  

Whenever I hear somebody tell me over and over something bad that happened to them followed by "that's just my luck",  I become really dramatic, and somehow stand above them and yell at them with a red hot face and spit spraying out my mouth while my told you so vein is popping out of my neck and head:

"YOU ARE YOUR BAD LUCK!!!!!!!!!!!!!!!!!" 
(okay, so that never really happens but it sounds cool.  Actually, most of that is all in my head just wishing it would really happen)

Bad things will happen when you put yourself in bad situations. Think about someone you know that is always whining about their bad luck.  Do you notice a trend about how these people live their lives?  Are they paycheck to paycheck when the car breaks down and they need $500 to fix it?  Are they getting ready to retire and realize just now that the government is going to do a terrible job to take care of them and they maybe should have saved up a little nest egg for retirement?  Is little Johnny getting ready to graduate college and realized that he has to actually pay for all that credit card DEBT he racked up over the past four years? Do you know someone that had his head stuck in an alligator's mouth? We could go on and on, but the point is made: put yourself in bad situations and detrimental luck will fall in your lap.

But remember, we have control over our luck!  Opportunity luck is sitting right over there waiting for you to jump on it.  Put yourself in awesome situations and let awesome happen to you instead of those dang pie eaters from awesome land getting every last slice. Live below your means and save up for purchases, for emergencies and for giving.  Be PROACTIVE (like the wealthy people) and live on a budget so you can reap the benefits of opportunity luck!  Save a nest egg today for you to enjoy life so you can retire with dignity and get some of that other awesome stuff that comes with it.  Give, give and give some more....opportunity luck loves giving!  It actually seeks out givers and spends most of it's time with them.  

You have the OPPORTUNITY right now to start living in the land of OPPORTUNITY LUCK.  What are some changes you can make in your life so the read-headed step child (detrimental luck) walks the other way?  I know I just thought of a few more things we can do to live in the land of opportunity luck, eat the slices of awesome pie and then eat filet mignon (sorry Mom, dessert sometimes does come first)



You are awesome and either way you are lucky.  Now just determine what type of lucky you would like to be.


















Friday, July 26, 2013

There is a Dead Spot in my Back Yard



If you pull up to my house, you will see lush beautiful green grass.  The kind you picture yourself sitting on during a romantic picnic with your spouse or the kind of grass you watch Phil Mickelson from Arizona State University win championships on.  It doesn't look like that because I am extraordinary at gardening or because I've always yearned for greener grass and have devoted my life to it.  It looks like that because it's synthetic grass, or what many call fake.

Whew! I'm glad that I got that off my chest.  It has been killing me to live this dirty little secret.  But, I have more dirty laundry that needs to be aired out.  I have a backyard also.  And there is a dead spot.


I first noticed this dead spot a few months ago.  It was only a "bare spot" then.  Over the next couple of weeks I noticed the grass slowly started to turn brown because the grass actually was gone and the dirt was peeking through.  Today, it's gaining momentum on me and even sprouting some nasty weeds that seem to peek up at me to remind me they are winning.

Debt is a lot like my dead patch of dirt in the backyard.  You know it's there and you don't do anything about it.  "It's in the backyard and no one can see it.  My front yard looks so awesome and I'm sure my neighbors are all aware of how well I am doing.  Eventually this dead spot should go away and life will be great. Someday".

That last word is the focus of today's post.  "Someday".  Jon Acuff talks about an ad he saw from Harley Davidson that read:

Someday.
"I'll do it someday."
Monday, Tuesday, Wednesday, Thursday, Friday, Saturday and Sunday.
See? There is no Someday.

It's time to ride

Now before you go out and "get you a Harley", think about this for a second.  This made perfect sense to me when I first read it  I don't need to buy a Harley (my wife won't let me) but I have had that word in my mouth before...Someday.  And thinking back, it tasted like rotten tuna fish before I eventually decided to spit it out.  I actually sat here for 10 minutes trying to come up with something really cool and catchy and all I came up with was rotten tuna fish. Sorry.


If you have read any of the previous posts in the blog, you will know that Andrea and I went $55k in debt in three years of marriage and we were spiraling out of control.  We knew we had two vehicle payments.  We knew we had a student loan. We knew we had Wells Fargo credit card balance.  We knew that American Express gladly accepted our minimum payment due each month. And we knew that we had a dual income and we were living paycheck to paycheck.  We both had that terrible word in our mouth....Someday.  Someday we will make more money and clean all this up.  Someday we will have the cars paid off.  Someday we will invest for our future. Someday we will save money for _____ and someday we will pay off our house. Someday, someday someday!

Well, someday isn't a real day.  It's make believe and its lazy.  Not just in your finances, but in anything you do in life.  Someday I will lose weight.  Someday I will spend more time with the kids.  Someday I will take my wife out on a date.  Someday I will change careers and do what I was put here to do.  Someday I will live with purpose.  Someday I will.......



We were there.  You may be there.  We all have been there.  But we can recognize that someday isn't real and set a goal to make someday an actual day.  I had this epiphany after tuning into a radio station and listening to some bald guy named Dave Ramsey invite a couple in their mid 20's onto his radio show and scream "Weeeeeee're Debt Freeeeeee!"  This couple was a few years younger than us and they were DEBT FREE.  They told Dave they had even paid off their debt 6 months sooner than they had anticipated.  You see, this young couple didn't say "Someday we will get out debt".  No, instead they said "On this day of this month of this year we will be DEBT FREE!"  Someday had creeped into our lives and we let it live with us for way too long. The taste of that rotten tuna fish (again I'm sorry) had wore out it's welcome and we spit it out.  We set a date to get out of debt and we too beat it by a few months.  Someday is garbage.  Tuesday happened to be our day.

So where do you start?  Well, you are reading my blog, which is very awesome (and if you want to share it on your Facebook, Twitter or tell me how much you love it, @debtfreemepls or on Facebook/DebtFreeMePlease feel free to do so ASAP. Any hate comments can be sent to someday@hatemail.com - insert cute smiley face here).  You could also teach yourself a system of getting out debt by reading.  I have always recommended The Total Money Makeover by Dave Ramsey as a great tool to show you the WHY and the HOW to getting out of DEBT and building wealth.  Another great resource would be to attend Financial Peace University which is a 9 week course that teaches you fundamental principles on how to get out of DEBT, stay out of DEBT and build wealth.  We are hosting a class right now for 25 families and I will tell you that it truly is life changing.

Disclaimer: We are students of Dave Ramsey and his teachings on life and money.  You will notice that I have referenced Dave about 82 times and will probably reference him another 82 times in the future.  Disclaimer over.

Another recommendation is to find someone you know who is doing or has done something you want to do and has been SUCCESSFUL at it.  This is often referred to as Best Practices. If you want to get out of DEBT, stay out of DEBT and build wealth, find someone who has done those things and pick their brain.  If you want to lose weight, find someone who lost a bunch and has kept it off and take them out for a non-fat sugar-free skinny vanilla latte without cream.  If you want to start a business, find someone who started from the ground up and do what they did.  If you want to be a good Dad, watch re-runs of Full House.  If you want to start a landscaping business, do NOT ask me.  Remember, I have a dead spot.  

When I heard that young couple on the radio a few years ago talk about how they were DEBT FREE and what they did to get there, I decided to pay attention.  They read the Total Money Makeover and stuck to what it said and it worked.  We did the same thing and ironically, it also worked.  We even went as far as to call in on his radio show and scream, "We'reeeeee DEBT Freeeeeee!"  It was so freakin' awesome!


So now that I have pumped you up full of awesome, it's time for this 30-year-old to face the music.  I'm going to stand over the dead spot one last time, maybe even spit on it and tell it "Tuesday".  Tuesday you will be gone.

When is your day?  Seriously, when is it? Put it on paper. Hang it up and look at it everyday. Seriously.






Wednesday, July 17, 2013

Will that be Credit or Debit?



If you have read into this blog, you will quickly get a feel that Debt-Free-Me-Please! is about getting on a budget, getting out of DEBT, saving, saving some more and building wealth.  We have discussed many different topics around YOUR personal finance, but we have left out one important topic.  We need to talk about something that just about everyone has and uses almost everyday. NO I'M NOT TALKING ABOUT YOUR CREDIT CARD. No I am not talking about the scissors you could buy to cut those credit cards up. I am talking about the one piece of plastic in your wallet that you need to hang on to...THE DEBIT CARD.

I am a big fan of the debit card. Let me go back one second and say this: I am a big fan of the debit card...coming in second place to cash.  The old term "cash is king" is so true and just about everyone on Earth takes cash. Furthermore, you will get a better deal if you use cash (but that is for another blog).  But in second place is cash's best friend; the Debit Card.  And that is what sparks this conversation.

So, if you park your cash in a bank or credit union, I am going to take an educated guess and say you have a debit card linked to that account.  Debit cards are great because it's almost like using cash in the sense that when you swipe that little guy, the bank is paying that merchant instantly.  You don't have to wait until the end of the month when you're already out of money to find the extra dollars to pay the credit card (the red-headed stepchild of cash) to avoid paying the interest.  Debit cards are a great tool in your financial tool chest but there are some myths that too many of us believe to be true about the good ol' debit card.

We have been sold the lie by marketing and advertisement that debit cards are not safe. There I said it, go ahead and tell me that I am crazy and out of my mind.  Of course debit cards are unsafe and credit cards are the way to go because if anyone were to get a hold of your credit card, the money doesn't come out of your account and you don't have to pay a dime.  I will agree with half of that argument that credit cards are protected in the case of a fraudulent charge.  But guess what? So is the good ol' trusty Debit Card.


Take your Debit Card out of your wallet or purse. Look down at it and in the bottom right corner is a logo that says VISA or MasterCard.  Smile at it because those guys are your protection. They protect you just a like a credit card.  In fact, let me tell you word for word what VISA says about their zero-liability policy in regards to using your Debit Card:

Shop worry-free: Use your Visa credit or debit card to make purchases at millions of locations. Visa will always protect you from unauthorized use.

MasterCard says something quite similar about their zero-liability policy:

Have peace of mind knowing that the financial institution that issued your MasterCard or Debit MasterCard won't hold you responsible for "unauthorized purchases". Zero liability applies to purchases provided that the following conditions are met:


  • Your account is in good standing.
  • You have exercised reasonable care in safeguarding your card from any unauthorized use. Unauthorized use means that you did not provide, directly, by implication or otherwise, the right to use your card and you received no benefit from the "unauthorized" purchase.
  • You have not reported two or more unauthorized events in the past 12 months.

I didn't make this up. I pulled it straight from the websites (links available at bottom of page).  However, you can read all day long in any finance magazine or article that debit cards are "dangerous" because you are not protected. Why didn't these "experts" just call and ask VISA or MasterCard their policy? Better yet, why not take a few minutes and visit their website?


Now that we have debunked this myth, you need to understand how to obtain the protection from Visa or MasterCard. Get a pen and paper out and take notes because this is where it gets tricky:

Step 1:
Every time you use your debit card, run it as credit.

Step 2:
There is not a step 2, just a simple step 1.

I used to wonder why in the world when I went to swipe my debit card, the cashier would ask me "Debit or Credit". I would shrug my shoulders feeling defeated that I didn't really understand the difference and randomly chose credit sometimes and debit the next. It really didn't seem to matter to me because either way it was coming out of my checking account. The only difference I could see is that one would include me punching in my pin and the other would allow me to use that terrific magnetic pen that makes my signature look sort of real.  But here is what really happens:

When you punch in your pin, money is immediately taken out of your account and sent to the merchant.  You need to be really sneaky that no one sees your pin (a lot of wise guys out there) and you could be held liable up to $500 at some institutions if someone were to use your debit card fraudulently.

When you choose credit, you are giving yourself full protection from the big guys, Visa and MasterCard. The money now goes from your bank, through the Visa or MasterCard system and then to the merchant.  Also, you aren't punching in your pin which provides another layer of safety and you are obviously protected by the zero-liability policy by both Visa and MasterCard.

So the bottom line: ALWAYS SAY CREDIT.

I have a very good friend that met me for lunch a few years back. He swiped his DEBIT card at the restaurant and walked out thinking everything was fine.  A few hours later he gets a call from his wife and she was livid.  She starts screaming at him and even called him a few ugly names. She had just finished looking at their account online and noticed a full month's subscription to Match.com.  The charges were fraudulent (so the story goes) and they were reimbursed two days later.

A family member was changing planes in Houston and must have used his DEBIT card to buy something while he had a layover. While he was in the air, hundreds of calls were made to places all over the world and by the time he landed his account had gone into overdraft.  He called the bank and the money was placed back into the account during the investigation and he was never liable for any overdraft fees.

Now, one last defense mechanism you can use to save yourself from the creeps of the world that seem to be praying over you and your Debit Card.........USE CASH.


We use cash for just about everything now.  It actually allows you to "feel" the money leave your hand.  We don't necessarily "feel" it coming out of our account when it's done wireless which is why we seem to save money because we use cash and "feel" it.  I highly recommend you try using cash and see what a difference it makes.

Now, I will tell you that we don't walk into the gas station anymore and throw a Benjamin on the counter and say filler up....we choose to be lazy at the pump.  And obviously when we shop online, we are forced to use an alternative to cash.  And we don't send cash to our mortgage company or our utility companies for obvious reasons.  But EVERYTHING else is cash....and it is awesome.


One last thing about the Debit Card.  Be nice to it. Treat it like you care about it. Your Debit Card is responsible because it is sure to pay the merchant right away.  But with that said, make sure there is money in the account to cover the Debit Card swipe.  In 2011, $29.5 Billion was paid out to banks in the form of overdraft fees (TIME).  That is ridiculous.  Our great grandparents are looking down at us in disgust because we allowed laziness to cause almost $30 billion to leave our back pockets because we were too lazy to do some 6th grade math and care just a little about the concept of money in versus money out.
HINT: The use of cash in almost every aspect of your life will help with this.

The largest buildings in every city are usually owned by banks.  Here in Phoenix, AZ we have Chase Tower which is the largest building in the state. Right next door is it's little brother Wells Fargo Tower.  Every time you look at a high rise that has a bank logo at the top, know that society has helped those buildings go up because of our $29.5 Billion lazy attitude with our bank accounts.  Actually, you should enjoy the buildings and make sure there is enough money in your account to cover your transaction.  I guess that's what adults would do.








Links to Visa and MasterCard policies:

Visa Zero-Liability Policy

MasterCard Zero-Liability Policy

Thursday, July 11, 2013

WARNING: Rewards Programs are Kicking your Butt!





Once upon a time my wife and I had our sophisticated American Express card. We actually thought we were someone important because American Express allowed us to use their rewards program. "American Express is a very sophisticated organization and they only let the best borrowers use their card and earn rewards". Once we had the card in our wallet, it was time to earn as much free rewards as possible. We told ourselves since we were going to spend the money anyway, we may as well use the card for anything and everything we could. We could earn enough points for that cruise we want to go on! We could earn those airline miles to Hawaii! The picture in the Rewards catalog said so. We were determined to earn those rewards. This card was going to change our lives….boy did it change it…and it hurt!

It began to control us during purchases. We would avoid anywhere that wouldn’t take AMEX. We would always offer to pay a big dinner bill and then try to collect cash from everyone. We put our tuition on it one semester. We went on vacation with friends and paid for the whole thing and had them pay us back in cash. We were working our butts off to earn these points! We thought we were winning….but we were getting our butts kicked!

If you aren’t familiar with a credit card rewards program, then you must be living in a cave totally removed from society. Credit card reward programs are nothing new. Believe it or not, they have been around for more than 100 years. The first rewards program was created by Thomas Sperry and Shelly Hutchinson and was called the “S&H Green Stamp Program”. For those of you who are not familiar with S&H Green Stamps, the consumer could earn them when making purchases from vendors who participated in the program. Eventually, enough stamps could be saved up and used to purchase something out of the S&H catalog. This was very popular in the United States until about the 1980s when credit cards came along and replaced the Green Stamps in the form of points, cash back and airline miles.

AT&T created one of the first credit card programs where points could be earned and used towards your phone bill each month. Discover Card was the first to create the “cash back” program where they would send you a check at the end of the year based on the amount of money spent on their card. Then in 1984, Diners Club teamed up with the airlines and created a credit card that earned airline miles. Since then, almost every major airline has had a credit card that earns “miles”. Today, about 70% of credit cards are linked to some sort of rewards program.

"Thanks for the history lesson, but all I want to know is if these rewards programs are worth it"

Okay, so is it a good idea to have one of these rewards programs? I always hear people who say, “I pay it off every month and get free stuff”. If you are one of those people that have the self-discipline to use credit cards and pay them off each month, then I think that is awesome. You are sticking it to the credit card companies and they are losing because of people like you! No, actually they are still winning. You see the credit companies spend more money than any other industry in the world on marketing their product so they make money off of you. I know that you are smart and there is no way that you would allow the credit card companies to pull one over you, but they are now and always have been.




Holy Crap! How could that be? I pay it off each and every month and I collect the free rewards. What am I missing? 

I am glad you asked.

I was one of the people who thought I was sticking it to these credit card guys. I used to truly believe they hated me because I was earning credit card points and wasn’t paying them interest on credit card debt. How stupid could these guys be to allow me to get the upper hand on them? I was the “little man” beating up on Goliath! I was winning with credit cards….then I realized the truth…they were beating the crap out of me and I still had no idea.

Let’s first start off with the obvious: credit card interest. Credit card companies know that the majority of people who use credit cards carry a balance and therefore pay interest on the balance in the 10%-25% range, depending on the rewards program. But, everyone I talk to will tell you that they never carry a balance and never plan on carrying a balance. I am sure that the majority of people who carry a balance on their rewards card today once told themselves the same thing - “I will use it for gas and groceries each month and then pay it off”. But then why do the majority of people carry a balance? Experian reports that as of March 2013, the average credit card that has a balance on it is $8,220.  But, for those who usually pay it off each month, the average balance is still $1,037.  Furthermore, over half of Americans indicated that they have carried a balance in the last 12 months and paid interest on that balance. (See Reference at bottom of page). How could this be true if "everyone" pays them off each month? Well, the credit card companies don’t really care about the answer to this, just as long as you have to have that $15 hat that ends up costing $60 in the long run because you used that card to get you some miles.

But, I pay my credit cards off at the end of the month and never pay interest. I should be winning right?......WRONG!

Consumer reports will tell us that we spend more money when using plastic versus cash. MIT did a study that was published in Carnegie Mellon Magazine that reported the pain receptors in the brain are activated when spending with cash and not with plastic. Credit companies know that on average you will spend 12%-18% more when using plastic. When you pay with cash, it hurts. Next time you buy gas, instead of sliding your card in and out at the pump, take Ben Franklin out of your wallet and hand him to the cashier….it will feel different, I promise. The point is this: YOU SPEND MORE MONEY WHEN USING PLASTIC!!! Now, tack on the incentive to get free stuff and we spend even more to chase those airline miles, earn points and get that cash back at the end of the year.

One other interesting fact: consumer reports state that 78% of the airline miles are never redeemed. I’m sure you are smart and are part of that 22% who uses every mile earned. I really hope you are because you are truly earning them. But, for the majority of you, the credit card companies are winning…again.

Southwest Airlines Rapid Reward Program: 1pt for every $1 spent. When you earn 24,960 points (or spend about $25,000) you earn a free round trip flight valued at $208 each way. There are bonus points available if you spend $1,000 in the first 90 days on the card and for every year you are a member. Also, $69 annual membership fee and interest starts off at 15.24%. If minimum payment is ever missed, interest increases to 29.99%

Discover It Card: 1% cash back for every $1 you spend. If you spend $10,000 you would get $100 back at the end of the year. They also have incentives where if you spend on certain items for a particular month, you could earn up to 5% for every dollar in those categories.

Venture Rewards Card: 2pts for every $1 you spend. $59 annual fee and you have to have excellent credit to be accepted (which means you have to be excellent at borrowing money and paying it back with interest)

There are thousands of rewards programs where the idea is to make you feel like you are winning. To make you feel like you are getting something for free. To make you feel like whenever you are spending money, you are getting more in return. They have even added programs that put 1% cash back into your kid’s college fund, cash back to a school of your choice or even 1% cash back into a mutual fund for your retirement. This tactic isn’t because the credit card companies suddenly decided to have a heart and “give back to the consumer”. It’s because YOU SPEND MORE when using plastic and YOU SPEND MORE when there is a carrot dangling in front of you.

No, not me…I am way too smart for that. I would never allow them to gain control over me.”

The longer we believe this lie, the credit card companies will continue to beat us. Reward programs are not your friend. You may win the battle by earning some free stuff but they will win the war. They are not going to take the chance on giving away so much free stuff that they lose money….that is obvious. You may have extreme discipline and pay off your credit cards each month, but there is always a chance that won’t happen. Most everyone who carries a balance didn’t sign up for the card and think “I can’t wait to use this thing, carry a balance, make minimum payments and stay in debt”. Roy Horn from Sigfried and Roy played with tigers and was eventually bit. I used to watch the Crocodile Hunter and think he was insane with how close he got to the crocodiles and deadly snakes…he sadly died. Why take the chance of getting into debt? So you can spend $25,000 and get a free airline ticket? Is it really worth it? My experience is NO.

Now, back to my credit card rewards program. Remember the American Express card that I had? Well check out this great deal:

I used that card for 10 years at $45 a year: $450
I occasionally carried a balance because I was stupid: $120
I KNOW I tried to use it as much as possible to earn points. I went as far as to pay for gas for other people, switched all of my bills over to it and would buy stuff when they featured double/triple pts! I really was stupid – The Cost – way more than if I just used cash.

When we finally decided to get out of DEBT and we cut up the credit cards, I thought I may as well get something for the 10 years of credit card swiping. We decided to get our free chaise lounges for the pool from the Rewards catalog. The retail cost for the chairs was about $400. I can picture American Express laughing at us. They beat the crap out of us for 10 years, but we got us some sweet chairs! American Express 1 – Chris and Andrea 0.

If you truly want to get out of DEBT, then get out the scissors and cut the credit cards up. Even if you may lose out on your precious miles, you are taking away any risk of possibly getting into DEBT. Pitbulls are great dogs…until they bite you. If you play with fire, eventually you will get burned. And, if you are currently winning with your credit card rewards program…they will beat you. You can count on it.




Shocking Stats:

About 60% of Consumers have some sort of Rewards Card
Visa reports that 80% of the money spent on credit cards are through Rewards Cards
More than 1/3 of consumers choose which card to use based not on interest rates, but on rewards
Average Number of Credit Cards held by people who use credit cards: 3.5
Total U.S. Revolving Debt (98% of which are Credit Cards) was $856.5 Billion (as of May 2013)
176.8 Million People owned a Credit Card  as of 2008 Survey

See Reference Below











Tuesday, June 18, 2013

6 Sensible strategies that may lead you to a debt free life

By Guest Blogger Susan Green

Debt free life is a dream, especially for people with low income and huge amount of debt. It’s easy to dream of a life with no restrictions of regular debt payments, but finding the right way to achieve that dream isn’t that easy. It’s extremely important to follow the right strategy to eliminate debts as soon as possible and live a financially stable life.

6 Strategies to make it easy for you to achieve debt free life:

Wondering what the right strategy can be? Some useful strategies to deal with debts have been described below to make the things less complex for you. Glance at the strategies and get an idea about how you must approach a debt free and bright financial future:

  1. Find out ways to save: How will you pay off your debts if you won’t have sufficient money in your account? So, save money to pay off your debts as quickly as possible. You need to work hard to save in a legitimate way. Bargain while shopping, control your urge for buying more, modify your way of living and formulate smart budget plans to increase your savings. The more you’ll save, the sooner your debts will be paid off - the equation is simple.

  1. Spend but carefully: A careful shopper knows how to make purchase along with saving money. You need to be as tactful as a careful shopper. Stick to your budget plan and spend according to your limit. Never shop impulsively. You must also be very cautious with the usage of your credit cards. Remember, credit cards come with high interest rates. So, whenever you’ll swipe your cards for shopping, you’ll have to pay the interest on your bills too. That’s why shopping carefully is extremely important. This will keep your bills and debts manageable.

  1. Get a better paying job: Not everyone gets a high paying job, yet you can try to get at least what you deserve. Try to get a job that pays you moderately according to your capability. Also look for some part time jobs. All these things will help you to earn more and save more to get out of debt quickly.

  1. Put snowball or avalanche to use: Debt snowball and avalanche are two effective methods to work on due debts. Through the debt snowball plan you’ll have to arrange all your debts in an ascending order and pay off the smallest amount first. Once the smallest debt gets eliminated, you can repeat the process with the next smallest debt amount. Debt avalanche is exactly the opposite process. You need to arrange your debts and the interest rates in descending order and start payment with the highest interest debt. Both of these methods are effective enough for effective debt elimination. You may follow any of these techniques to reduce your debts in a methodical way.

  1. Don’t keep on borrowing mindlessly: To achieve a debt free life you must also stop accumulating further debts. Of course, if you’ll spend carefully, save more and pay off bills on time, then you won’t have to borrow to maintain your living. Less borrowing will make it easy for you to keep debts under control. Don’t neglect to pay off debts on time as this will only increase the overall burden for you. For complete elimination of debts you need to stop accumulating them at any cost.

  1. Make it point to check your budget regularly: Preparing a budget plan is important but modifying it regularly is also equally important. You can’t expect to face the same expenditure every month. There may be changes and some extra expenses according to your needs. You need to include all of them in your budget plan. Keeping track of your every expense is very much important for you to be sure of your exact financial standing. This will ultimately help you to move towards a debt free life.


Practice these 6 successful strategies to eradicate debts from your financial life. You must follow the strategies until all of your debts get over. Lack of consistency may spoil your endeavors. So don’t let inconsistency ruin your efforts and make it a habit to pay off your debts on time.

Wednesday, June 12, 2013

"You've Got a Friend"



I was talking with a friend today who is getting out of DEBT.  For the last decade, he has worked his butt off only to watch all of his money go out the window in the form of payments. He said that whenever he would get paid, his paycheck went to pay Visa, Mastercard and Ford Finance and then he would spend the next two weeks scraping by until next payday. He was living paycheck to paycheck because he chose to buy things that he couldn't afford and he always had more month left at the end of the money. He finally said, "I'VE HAD IT!!! ENOUGH IS ENOUGH....I AM DONE LIVING LIKE THIS".





My buddy was furious with how his life was going and decided to DO SOMETHING about it.  And he did! He did what some would call "drastic". He stopped spending like he worked for Congress. He worked any extra jobs he could to pay down DEBT.  He said "NO" to people when they wanted him to do something he really couldn't afford. He sold his truck that he LOVED and started living on a written budget. And guess what happened??? He finally stopped living paycheck to paycheck and in just a few months paid off all of his DEBT that had been holding him back for the last decade.  Today, my buddy finally has the feeling that things are going to be okay because HE decided to do something about it.

I am happy for him. He is a great guy and deserves a life of awesome. But that isn't what sparked today's post. I am irritated....no, actually I am pissed off!  Why, am I pissed off....let me tell you.

My buddy is going through something that we went through and many of you have gone through. He is having people take jabs at him and try to pull him down. His friends are now calling him a sissy because he sold his truck and drives a car. His friends tell him he should go back to living the way he was before he decided to change his life. "The saving money stuff is stupid...you can't take it with you when you die so may as well spend it now". "The Dave Ramsey plan is stupid, you should be able to buy what you want when you want it".  And my favorite that we've all heard before: "You need to just live a little". Remember, he was "living a little" for the last decade.

Why the heck do his friends, or anyone for that matter, get to tell him that his choice to be DEBT FREE is stupid and he should live the way they want him to live? Were they in his shoes when he was living paycheck to paycheck and barely scraping by each month? Were they in his shoes when he was working overtime "just to make it"  the last few years? Were they in his shoes when he was laid off in the recession and went into panic mode because he didn't have any money put away in savings? Were they in his shoes when he wondered if things would ever get better? No, they weren't! Then why do they get to belittle him, embarrass him and tell him he needs to go back to the way they would like him to live?  IT DOESN'T HAVE ANYTHING TO DO WITH THEM.....SO STOP IT!

Which brings me to my next side topic: ME

I am highly aware that many of you hate the topic of DEBT Freedom. I am sure that some of you probably think I am a jerk because all I do is preach about not going into DEBT, saving money, investing for retirement and paying cash for things you NEED or WANT. I know that I have occasionally/frequently/more than once crossed over that boundary and said things about going into DEBT that made you mad. I'm sorry, I should not have done that. I don't have any ill feelings towards anyone who thinks DEBT is a good thing or a "no-big-deal thing". In fact for some of you, you will live in DEBT, prosper and do amazing things far beyond what many of us could ever accomplish and it was BECAUSE you took the risk and went into DEBT and you won.  I need to realize that for some of you, DEBT is something YOU choose and it really has nothing to do with me. I'm working on it....but DEBT freedom is so freakin' cool!

Also, I am not naive. I am aware that if all of sudden everyone on Earth stopped using DEBT the economy would be in trouble and things would be bad. But I honestly believe that I will have a pet snake and Michael Jackson will do one more "Thriller" before the majority of the world stopped using DEBT. So, for all of you who love DEBT, prefer DEBT and truly believe that DEBT is necessary...you will be part of that majority for a LONG time.

Which brings me to my last point: Why do I write this BLOG?

If any of you are wondering if I make money from this blog: the answer is NO. If you think that I am writing this because I get enjoyment out of making people angry: the answer is NO (you don't have to read this blog if it makes you angry). If you think that I write this because I enjoy writing and I enjoy people reading what I write, then you are spot on. Fair enough?



Someone once told me about a life of DEBT Freedom and I laughed at the idea. I believed DEBT was necessary and it would always be a part of my life. I had that tattooed in my brain. I believed it with every ounce of belief that I had. But then, just like my buddy, I decided enough was enough and went through the process of getting out of DEBT, and you know what I found out? I was wrong. I was completely wrong about DEBT and the feeling we had after just a short time of working our butts off to declare "We're DEBT FREE" was awesome! Going to sleep at night and knowing that everything is going to be okay because we NOW have the ability to create a savings, save for retirement, save for kids college and save to do AWESOME things (travel, buy cool stuff, help others out, etc.) is a feeling that I would like everyone to have. And I know that it's possible for everyone to have whether you believe it or not. There are way to many people in all different types of situations winning when it comes to DEBT...there is no reason why that shouldn't be you.

I also realize that many of you have DEBT and are doing just fine, but don't forget about my buddy. Put yourself in his shoes, or the shoes of someone you know that is struggling because of DEBT. Take a moment and think about what a life without financial stress would be like for them. When I started writing this, I didn't know if or when anyone would read this. But, to my surprise, I occasionally run into some of you and you tell me "thanks". Or "I read your blog and we are doing this to get out of DEBT". Even for some of you that have told me "I read your blog, but I disagree with you and think DEBT is cool" (that happened) I still want to say thanks for reading.

One last thing: If you would just quit picking on my buddy, or anyone else that is trying to change their lives around and get out of DEBT, I promise I won't personally pick on you for choosing to have DEBT.  Just like your finances are none of my business if you didn't ask me, it's also none of your business to tear down someone who is trying to do something good.  I am fully aware that my passion for getting out of DEBT, staying out of DEBT and building wealth has upset people and I take full responsibility for upsetting you. I need to remind myself that if you didn't ask my opinion, I don't need to give it to you personally. But, for those of you who are trying to get out of DEBT, are out of DEBT or simply like reading this blog...I'm not going anywhere.

Have an awesome week!


Tuesday, May 28, 2013

Helping from Heaven



On Friday May 24th, Andrea and I sat next to each other at the funeral of Phoenix Firefighter, Brad Harper (age 23) who died in the line of duty just days before.  Brad Harper was a 2 year member of the Phoenix Fire Department and was assigned to Rescue 21. He was needed by GOD earlier than we had expected and leaves behind a wife and loving family.

As we were sitting there filled with emotion at this tragic loss, I was wondering why GOD needed him so early? Why he was taken from us at only 23 years of age and why his wife would have to be such a young widow? I also found myself thinking "that could have been any one of us".  I am a Christian, and I believe that GOD has a plan for us. HE is in control and there are some things that we cannot avoid. Whether you are Christian, Atheist, Muslim, etc. the point is we can all agree that at some point in our lives we are going to die. We don't know when that will be, but in the mean time we can try our best to prevent future accidents from happening and most importantly, we can prepare for when we do die.

I know as a firefighter, there will be things that are implemented within our fire department and the fire service in general to try to avoid another tragic accident that happened within our department. It's a small way we can honor Brad for giving his life.  Another way we can honor Brad, or any other person who has died, is to prepare for when that day comes.

One of the most important things we can do for our loved ones is to have life insurance.  We can all agree at some point our loved ones are going to mourn over the loss of one of us. Whether that is tomorrow or at age 100, we will never know but we can still prepare for it so our loved ones aren't left heart broken and trying to pick up the pieces without a way to pay for life when the dust settles.

There are many different types of Life Insurance out there and it is important that we at least have an idea of how each one works.  These different policies can be very confusing and in depth, so let me give you the cliff notes version of the basic life insurance policies available.

CASH VALUE POLICES (Whole Life, Universal Life and Variable Life)

About 70% of life insurance policies sold are Cash Value Policies.  These polices are sold as insurance and savings accounts bundled into one.  The insurance part pays out the death benefit and the "Cash Value" is the savings account.  This may sound confusing, so let me put it into an example.

Jenny has a Whole Life Cash Value Policy. She is age 25 and purchases a life insurance policy that pays out $100,000 when she dies. Whether she dies at age 25 or 95, the plan pays out $100,000 to whoever she chooses as the beneficiary and pays out tax-free.

This plan costs Jenny a monthly premium of $78.13 (quote taken from State Farm on 5/28/13) and that is a fixed amount that will never change for the rest of her life...hence the term "whole life".

So now we know that with Whole Life Insurance, when you die, the benefit will be paid out. But what does this "Cash Value" term mean?  I am glad you asked.

The "Cash Value" portion of the plan is a savings/investment account that is set up within the insurance company that has the ability to earn a return (like an investment).  The account builds over time with your monthly premiums and compound interest until it matches the death benefit, which in Jenny's case is $100,000. Also, whole life policies usually end if the person lives until age 95 or 100 and in that case you would be paid out $100,000, which is now the value of your Cash Value savings/investment account.  So if you live to be 95 or 100, the insurance company doesn't have to pay you out of their pocket, instead you are paid back what you have put into it.  If you die, the beneficiary (your family) will be paid the $100,000 death benefit and the insurance company keeps the savings account.

If Jenny pays $78.13 until age 95 she would have put $65,629.20 of her own money into the plan in form of premiums and she would collect $100,000. That may sound awesome, but the rate of return on your "investment" is only 1.1%.  The stock market has averaged 11.9% since it's inception.  So from just doing the math, Andrea and I do NOT buy any Cash Value Policies because in our opinion they are garbage.  Remember, this is strictly our opinion...you may feel differently, which is okay...everyone is entitled to their opinion.


Universal Life and Variable Life Insurance are also Cash Value polices that  have more flexibility and are less expensive. These Cash Value policies transfer a little more of the risk away from the insurance company and onto the policyholder, and in return lowers your premium . The main difference with Universal Life versus Whole Life is it allows the policy holder more flexibility to change the death benefit amount, change premiums, allow cash value buildup to pay premiums and not be "locked in" to a set premium amount for the life of the policy.  The Variable Life Insurance allows the same flexibility as Universal Life, but in addition allows the policyholder to choose their own investments through mutual funds within the insurance company.  Andrea and I do NOT buy Universal Life or Variable Life because in our opinion they are also garbage.
Remember, this is strictly our opinion...you may feel differently, which is okay...everyone is entitled to their opinion.

The idea of Cash Value Policies is a good idea on the surface: These policies bundle life insurance with an investment account that accrues interest and you have the option to use the investment account to withdraw funds out of for emergencies, college tuition, life, etc.  But here are some average rates that come straight out of Kiplinger's Finance and other consumer reports:



The average return on investment after paying out commissions and expenses is:

Whole Life: 2.6% (Better than Jenny's quote from State Farm)
Universal Life: 4.2%
Variable Life: 7.4%


Basically what we learned is if the life insurance company is in the business of selling life insurance...then just buy life insurance.  Circle K (a gas station in Phoenix) sells gas.  They also can bundle that gas with a lovely Circle K Hot Dog.  If you have ever had one of these hot dogs you know that Circle K should remain in the business of selling gas and leave the hot dogs up to the restaurant/food people.  The same applies with investing.  If you are interested in investing for retirement (I hope everyone is) then wouldn't you invest with investors/financial planners rather than with your insurance agent? Made sense to us.

The most straight forward type of life insurance is called LEVEL TERM LIFE INSURANCE.  Most insurance agents will not want to sell this to you because there is not a lot of money made on these plans.  These plans are extremely affordable and cover you for a fixed term of your choice, usually 10 to 30 year terms in 5 year increments (10,15,20,25 or 30).  Remember Jenny's Whole life quote of $100,000 at $78.13/month.  Well, if Jenny wants a 30 year Term policy for $100,000 it would cost only $10.35/month!  So, she saves $67.78 a month and if she invested that in the stock market for 30 years, at age 55 her investment would be worth $235,193.29!!  Now hopefully Jenny doesn't die within that 30 year term, but if she did the beneficiary would be paid out $100,000 tax free and the balance in her investment account would go to whoever she left it to in her WILL...not State Farm.  If she lives to be 56, the policy would end and she would get nothing from the insurance company. Sort of like if you don't get in a car accident, the car insurance people don't return your money to you, DUH!.

So let's break it down really quick:

Jenny's Options:

Whole Life Policy:
Death Benefit: $100,000
Premiums paid out if you live to be 95 and never collect death benefit: $65,629.20 ($78.13 for 840 months)
Rate of Return on Whole Life "investment": 1.1%

30 Year Level Term:
Death Benefit: $100,000  (only good for 30 years or to age 55 in Jenny's case)
Premiums paid out if you live past 55: $3,726
Save $67.78/month and invest that into stock market for 30 year term: $235,193.29 assuming stock market average of 11.9% 
(If you don't believe in a 11.9% average, then lets say only 8% return on investment which gives you $102,214.88....still better than waiting 70 years for a 1.1% return and getting only $100,000. Your call though)


On a side note, Andrea and I are not mad at insurance agents. They have a job to do and their job is to sell all different types of insurance.  We have some really great friends in the insurance business and we aren't mad at them for selling what we refer to as garbage (sorry for calling it that). You shouldn't be mad or offended either if you are pushed on buying the Cash Value.  The insurance agents have to make a living just like any one of us and that is simply what they are doing. Besides, 70% of the life insurance policies out there are Cash Value, so I think the insurance agents will survive.

You are going to be DEBT FREE. Once you are DEBT FREE; no credit card payments, no car loans, no student loans, no boob job loans and no mortgage, imagine the wealth that you could build in 20-30 years!  However, during that 20-30 year period, insure your family in case GOD needs you sooner than you had anticipated at an affordable rate with Term Life Insurance.  It literally takes 5 minutes on the computer and a week to process and your family is protected if something were to happen to you.  Dave Ramsey, along with many insurance agents, recommend you purchase 10 times the amount of your salary and $400,000-$500,000 for stay-at-home moms/dads.

Here are some quotes from an independent insurance broker - Zander Insurance

Male in good health age 35 making $50,000/year
Needs $500,000 in coverage for a 20 year term
Monthly Premium: $22.19

Female in good health age 30 stay-at-home mom
Needs $500,000 in coverage for 20 year term
Monthly Premium: $18.71

Male in good health age 30 making $100,000/year
Needs $1,000,000 in coverage for a 20 year term
Monthly Premium: $35.67

After reading this I hope you decide to get Term Life Insurance today.  Even if you would like to get ripped off and buy a Cash Value Policy, at least you are doing something to protect your family in the event the unthinkable happens. There are no excuses for delaying this decision past today.  Go to www.zanderins.com for a FREE quote. No they will not call you or hassle you.  If you don't want to enter your email address or phone number and you would like to make up a fake name for quote purposes, go ahead.  You love your family, you would do anything for your family, so do this one simple thing. We did it and we sleep better at night knowing that we have taken care of our family and each other.  God bless and stay safe!


NOTE: Andrea and I at one time had Cash Value Policies.  When we found out what we had, we immediately purchased 20 year level term insurance. Once we were insured, we called our former insurance agent and "nicely" asked them to give us the "surrender" amount or the "Cash Value".  They sent us a check (reluctantly) and we used it to pay off debt.