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This week’s Blog Carnivals

Oct 172008

Hi all,

This week I participated in a number of blog carnivals. I recommend you take a look at these carnivals as they bring together some of the best personal finance minds on the web all in one place. Along with that they provide a wealth of ideas on all topics related to debt management, savings, frugality and money in general.

Here is the list

Rich Life carnival #14 hosted at Yourfinishrichplan.com

Carnival of debt reduction #161 – Fall Colors Edition hosted at Gatherlittlebylittle.com

Carnival of Credit Report Stories October 13 – hosted at La-va.com

Carnival of Money Stories #80 – hosted at outofdebtagain.com

Festival of Frugality #146 – hosted at Aridni.com

34^th Money Hacks Carnival – Fall into Savings hosted at whereyouarenow.com

6th Bankruptcy and Debt Carnival hosted at bankruptcyaccess.com

I hope you enjoy.

Money – Easy come Easy go?

Oct 152008

I was talking with my brother last night about how some members of our family are spendthrifts and how we fritter away money like it is going out of fashion.

I made the comment that the family attitude towards money seemed to be ‘Easy Come Easy Go’. My brother agreed however while I was focusing on the ‘Easy Go’ part of the statement he was focusing on the ‘Easy Come’ part. He made the excellent point that while most members of the family are spendthrifts none of them are in really serious financial difficulty.

This got me thinking.

I was focusing on the ‘Easy Go’ part of the statement and thinking about all the money I have spent over the years and all the expenses and debt repayments I now have. He was focused on the ‘Easy come’ part of the statement and when I asked him to explain and he told me that he was thinking about how money seems to easily come to the members of the family who spend a lot. He used a couple of examples where money seemed to appear out of nowhere like someone getting a big unexpected bonus at work.

He was right and the more I thought about it the more I began to realize that in general the people I know who have had difficulties with money are the very people who are uptight about money. They may read about the credit crisis and get stressed, they have effectively shut down their spending and become stressed about the flow of money into their lives.

On the other hand the people I know that aren’t having difficulties with money but yet still seem to be spending are those people who have a very relaxed attitude towards money.

I’m thinking out loud here but I reckon the reason why this seems to be the case is that people who have relaxed attitude towards money seem to take more risks and follow more potentially profitable opportunities. While people who are stressed about money seem to take fewer risks and try to maintain their financial status quo.

Take the example of a new job opportunity that pays well. The person who is relaxed about money would more than likely be prepared to take the risk and go for the job. The person who is uptight about money might not even consider applying for the new role for fear that it might upset their current employer should they ever find out.

This is a very simple example but I think it illustrates the difference between those who are stressed about money and those who are relaxed about money nicely.

The difference

The key difference seems to be the attitude to risk. The person who is relaxed about money knows that there are always plenty of money making opportunities and jobs out there for the person who is willing to work hard and take a risk. The person who is stressed about money is too focused on losing what they have and the current financial problems that they face that they do not even see the opportunities. As a result they stay stuck in a kind of financial limbo that only moves at the rate of inflation.

But I’ve got bills to pay

Me too and while I kind of figured that this was the way that money seem to work it wasn’t until I sat down and thought about it that I realized that attitude has a huge part to play in any financial situation.

Say you’re in debt like me and you’ve had a bad day at work and you arrive home to find a stack of bills. The misery just keeps piling on and no matter how sunny your disposition is there is a good chance that this will get to you. Fair enough. But you have a choice as to how you can respond to the situation. You can kick and scream at the unfairness of it all or you can simple say ‘I don’t feel up to dealing with this right now so I’m taking a time out and will deal with when I feel better’.

The truth is that when you are in debt the world tends to beat on you a lot more than if you weren’t in debt. The same problems that seemed easily dealt with before can seem insurmountable when you are in debt. That is the nature of the beast unfortunately and at the risk of sounding like a broken record the only true think that you have control over is your attitude.

What can I do?

Changing your attitude towards money takes time, patience and a lot of effort. I can only relay what I have read about it because in theory if my attitude towards money was brilliant then I would not be having problems with debt. So perhaps I’m not the best person to be asking. That said I can tell you from experience of what constitutes a bad attitude towards money if that will help?

So the idea here is to notice if you have similar thoughts. If you do then it might be the case that you need to look at your attitude towards money.

Ok so here goes.

You see someone with a fancy flash car and you think – they must be criminals.

You work hard yet get passed over for promotion and a colleague gets it instead. You think – they must be sleeping with the boss.

You receive a pile of bills but you ‘forget’ to pay them thinking that you can get away with it for another month.

You get angry at the credit card companies for charging you extortionate rates yet you knew exactly what the rates were when you signed up.

You ‘forget’ family and friends birthdays.

You live for today and adopt the ‘I could be dead tomorrow’ attitude. But wake up in two days time alive and well.

You don’t know how to get your bank balance.

You don’t know how much you owe on your credit cards and loans.

You expect some ‘manna from heaven’ i.e. some good fortune to come along and solve all your money problems in one go.

You try to match your neighbor in the lawnmower stakes. Mine is bigger than yours.

You try get rich quick schemes in the hope of making money but in the end you lose all your money.

This list is by no means complete. The point I am trying to make is that each of the thoughts and actions outlined above point to a case of bad financial attitude. If you have had some of these thoughts in the past don’t worry. Attitude is something that can be changed. So why not change yours?

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Making money in Second Life – some facts and figures

Aug 062008

My quest for further information about how to make money on Second Life continues.

This is a whole new area to me so I am threading very carefully as I don’t want to get my facts and figures wrong or indeed make some Second Life newbie mistake.

So here’s what I’ve learnt so far.

You can make a million real US dollars on Second life.

One user who goes by the avatar name of Anshe Chung has made a million real USD from her activities on Second Life. I found an interview with her from a few years back when her Second Life activities were worth a real 250,000 USD. This interview is very interesting as it comes from a person who is actually making serious money on Second Life. You can read the full interview here – Virtual Land, Real money.

There are two things I want to point out that I noticed in the interview.

The first is that back in 2006 when this interview happened, Anshe Chung had a whole team of people working for her. So my advice is not to think that she is making serious money on her own. In the interview she says that at that time she had a team of about seven freelancers working for her but that she had also just created a team of ten full time people in China to manage billing, accounting and development. This is a serious operation and not a one person show.

So straightaway it gives some idea of the effort involved in generating serious income in Second life. That said our aim is create a decent second income in Second Life and not to build an empire.

The second thing that struck me was that she gave an incredibly valuable piece of advice to anyone thinking of joining Second Life to generate an income. Here is the quote directly from the Business week piece.

“To what do you attribute your success?

One reason for my success here, I strongly believe, is that I am not only here for business. I am very deeply rooted in this world, like a real native person. Most people who just come here for money fail miserably. They are foreigners, act like foreigners, and lack deep understanding of this virtual country. Many of them are also lazybones who think you just need money to make more money. The truly successful people I know here all are deeply involved in life and society here too.”

The key thing to take away from her answer is “Most people who just come here for money fail miserably”.

To me this simple sentence speaks volumes. Unless you are prepared to make the effort to fully integrate and become part of the Second Life community and experience, it appears that your chances of successfully generating an income are limited.

The figures speak for themselves.

You can check the earnings statistics on the Second Life website here.

The statistic that we are interested in is about half way down the page with the header ‘Linden™ Dollars’ and the sub header ‘Unique Users with Positive Monthly Linden™ Dollars Flow’.

From what I can gather this statistic basically shows us the number of people who are making positive income in the Second Life and how much they are making.

I’m going to use a well worn cliché – but the figures really do speak for themselves. Of the 57,821 people that generated a positive income on Second Life in June of 2008 – the vast majority earned less than $500 – 55,732 users to be exact. Most of these people earned less than $50 – 47,546 users. That’s $50 for the whole month. Not exactly a decent second income.

This makes for slightly discouraging reading. If you thought that Second Life was a quick route to riches or even a quick route to a decent second income then you need to think again.

If you examine the figures closely they seem to be representative of nearly all businesses and markets – where the top five percent make the most money. This to me illustrates nicely that Second Life is acting just like any other competitive market where there is real money involved. The winners win big while everyone else struggles on.

But Second Life is different.

Er no not really. When it comes down to it the people who succeed are those who put in the effort or as Anshe Chung puts it ‘are deeply involved in life and society’. The same with any other business venture really.

So I’m still not convinced about generating a second income from Second Life. I’m sure it can be done – Anshe Chung as well as the other 2089 users who made over $500 in June have proved that its possible.

The question is what will it cost to get to the level of income that you are happy with? How long and how deeply integrate in Second Life do you have to become in order to start generating a second income?

That’s my next bit of research…

Playing musical chairs with debt

Jul 312008

I was going to call this article ‘Robbing Peter to pay Paul’ but something in that phrase implies that while Paul might get paid what he is owed – Peter never gets paid and never seems to bother reporting the crime.

If you’ve been juggling your debt by borrowing off one source to pay another you know that while Peter may get paid some of what he is owed Paul isn’t long about coming looking for his money back.

To me juggling debt in this fashion could be more accurately described as a game of musical chairs. (For those of you that haven’t heard of the musical chairs game here’s a link to an explanation – musical chairs.) The reason I think musical chairs is a more appropriate description is because when you juggle debt by borrowing from one source to another you are gradually tightening the choke hold on your finances. As with musical chairs each time the music stops or you receive a bill your options become more and more limited until eventually you are eliminated from the game.

Elimination from the debt musical chairs game could take the form of bankruptcy or foreclosure.

If you are playing the game of borrowing from one source to pay off another then you might congratulate yourself that you have made all your minimum payments – well done, you may just have a perfect credit score. Now for the unpleasant part, what happens when your sources of credit runs out? Is it possible to continue doing this forever?

Once in the vicious cycle of juggling debt then it’s like a treadmill where you are running just to stand still. It can be incredibly difficult to break this cycle without missing payments on your debt.

However I think the alternative to not breaking the cycle is much worse.

Each month as more borrowing is used to make the payments on existing debt the pressure on your finances continues to mount. Your borrowings are growing monthly but not only that, the new borrowings you take on to meet your payments will start to accrue interest. If you are using credit cards to do this you are effectively using borrowed money to make interest payments which in turn will start to cost you more interest. Confusing? Don’t worry all you need to know is that you will effectively be charged interest on interest just to maintain your current financial situation – not good.

As you can imagine what may have started out as a small debt can morph into something much larger and uncontrollable.

Juggling debt – seemed smart at first.

I use to do a bit of debt juggling a couple of years ago. My overdraft was at its max and I needed to make a few loan repayments so I put them on my credit card. I figured that it would be just this one time and that I wouldn’t need to do it the following month. Unfortunately the following month the same thing happened and I ended up using my credit card again to pay some of my loan repayments. This went on for about four months and if I’m honest I really started to feel the pressure as my credit card fast approached its limit.

The last thing I wanted to do was to increase my credit card limit or get a new credit card. It was looking more and more likely that I was going to have to do one or both of those things. I was getting deeper into debt and the interest and fees were mounting fast.

I had no other choice but to move out of my rented apartment and back in with my parents. Not the most ideal scenario for a young man in his twenties. Needless to say this was a huge saving for me and it allowed me to divert what I would have been paying in rent towards my debt. It was not without its cost however – emotionally I felt like I was taking a huge step back. I had moved out of home a few years previously but now I was back living with my parents. As you can imagine I didn’t go around broadcasting the fact.

I was lucky in that I had the option of moving back in with my parents. Most people aren’t as lucky. However in most people’s situation there are one or two pieces of radical action that they can take to jumpstart their debt repayments without having to resort to additional borrowing.

If you are caught in this game of debt musical chairs then you have to ask yourself what action can you take that will have the biggest impact on your debt?

Normally I would be focused on long term change of habits – obvious things like quitting smoking. However in this situation the focus is purely on the short term. Could you sell or trade in your car for a smaller cheaper one and pocket the difference? Could you move in with your parents or a friend or even into cheaper accommodation? Could you rent out a room in your home? Do you have anything of value that you could sell?

Painful options and difficult decisions I know but not half as painful or difficult as playing a constant game of musical chairs all the while waiting for the music to stop.

Stop talking about recession. I don’t want to know.

Jul 092008

I’ve touched on the theme of a media diet before and I think that one of the points that I made in that article deserves an article all of its own. Recession and negative financial self talk.

As the talk grows louder and louder about the looming recession I just want to runaway and hide in a cave. The drumbeat seems to go on and on – recession recession recession. Stop it! I can’t take it anymore. Everywhere I look I see and hear talk of recession. The newspapers, the TV, the radio, the people in the local coffee shop – all they talk about is recession. Would someone please turn down the volume?

If you are in debt you have enough to be worrying about already. You don’t need to take the ills of the whole economy on your shoulders.

What difference will it make to you if the economy is in recession? Honestly? You may lose your job and I accept that this would be a huge blow. But I would argue that it is this threat of losing your job that means you should be trying even harder now to pay down your debts.

Being bombarded each day with talk of recession adds no value whatsoever in your fight to pay off your debt. How could it? I mean realistically all it is going to do is slow down your thinking and keep you from focusing on what is important.

The more you hear about a recession the more you are going to adopt a recession mentality. Conversely the less you hear about a recession mentality the less you are going to feel like you are in a recession.

Back just before the dotcom crash I took to paying a monthly instalment into an investment fund that was 100% invested in equities. I thought I was doing a smart thing. As you can image the fund tanked during the crash but what was even worst was that I was locked in for five years. I was legally obliged to continue to pay into the fund and I couldn’t touch the money until the five years were up.

Needless to say that I watched in horror as the value of the fund sank completely underwater. As far as I was concerned it was a disaster. For about the first year and a half the fund was worth far less than the money I put into it and it continued to slide even as I put more and more money into it each month. I decided after about a year and a half to stop checking the price of the fund. I made a conscious decision to simply forget about it and not to check the fund price.

For about two years I simply looked on the money going out each month as an expense. I lost complete interest in knowing the status of the fund. Really it was just another expense to me. I even stopped looking at the stock market because the news had become so bad. I closed my mind off to the cash that I was losing and I just focused on ways I could save on my other expenses to match off the money I was losing in the fund. I then began to focus more on my job and on trying to do a better job so that I could get a raise.

After about three years I remember getting a statement on the value of the investment fund. Up to that point I didn’t know what the value was and I would have assumed that I had lost a lot. Amazingly the fund had been turned around and the stock market had rebounded. The fund was up 15% on the money I had invested. I was thrilled but the best part of it was that I had not spent two years wishing and waiting for the fund to recover. I simply put my head down and got busy with the rest of my life. Doing what I could to improve the other areas of my finances.

I was lucky and I admit that but I think that you can use the same logic now that we are faced with a recession.

I’m not saying stick your head in the sand. What I am saying is to ignore the all this negative financial self talk and depressing news in the media. Use this downturn as an opportunity to consolidate your financial position by focusing on paying down your debt and reducing your expenses. Do as much as you can to pay down you debt as fast as you can. No one knows when they might be next to lose their jobs so you want to make sure that if it happens to you that you have your financial ark ready and that you can sail through the flood. The best way to build your ark is by getting rid of your debts now.

Competitions – a fun way out of debt?

Jun 182008

Crazy as it might sound but that plan might just work. How often have you heard this phrase said in movies or in TV shows? Well how about this for a crazy idea – try clearing some of your debts by entering competitions to win prizes. Then either keep and enjoy those prizes you win while saving yourself the money it would cost to buy them or sell the prizes for cash.

Let’s be clear, I’m always looking for alternative ways and ideas to reduce debt. I will consider almost anything that is legal. Any ideas I have or come across I will pass on to you. I think a lot of people’s minds are closed to new and unique ways of doing things and as a result they get caught in the vicious cycle of trying to change behaviors that are firmly entrenched while getting frustrated at the lack of results. To me entering competitions is a novel way of at least trying to do something about your debt.

Too often I hear from people that they just don’t have the patience or willpower to tackle something as boring as their finances. It’s true that personal finance can be boring but so can brushing your teeth. I still brush my teeth a couple of times a day though. Entering competitions is a fun and exciting way to maybe win a little extra money. Think of it as a way to brighten up your debt freedom journey.

Entering competitions when times are tough is not something new. During the depression events called “Dance Marathons” were held in local halls. These were dance competitions based on endurance. The idea was that couples would dance for days in the hope that they could last the longest and win the cash prize. For more background information on Dance Marathons click here.

The best way to think about entering competitions is as a hobby. There is absolutely no guarantee that you will win something but entering competitions serves two purposes. The first is that you feel like you are doing something about your debt that you are taking action and moving in the right direction, although at a slow pace. The second is that it offers hope. If you enter a competition there is always a hope, no matter what the odds are, that you will win a prize. It is this hope than can help you through the dark days of your debt. You have to be kind to yourself and give yourself hope – however small.

How to do it?

There are competitions going on almost everywhere you look. The newspapers, the local store, the radio and of course the biggest place to find competitions is the internet. Set aside sometime each week to enter competitions. If you have children then this will be a fun way of spending time together as they can help you stuff the envelopes with tokens and offer suggestions for tie breakers.

While the cost of entering competitions online is usually free. Competitions where you have to send your entries via post cost money in the form of stamps and envelopes. This is something you need to be aware of. While the cost of entering competitions may be negligible it will eventually add up. So what I recommend is that you set yourself a competitions budget. Yes I know the dreaded ‘B’ word, but at least time it is in relation to having some fun!

Why bother – no one ever wins?

This is the key point. The vast majority of people never win because the vast majority of people never enter the competitions in the first place. How do they ever expect to win if they don’t enter? Reduce it down to simple maths and probability. The more competitions you enter and the more times you enter each competition the higher the probability of you winning something. It is a numbers game.

One of the main reasons people tend not to enter competitions is that you actually have to do something. You might have to complete a tie-breaker or you might have to collect tokens. For a lot of people this is too much hassle for something that may or may not pay off. What I say to this is that you have to make at least some sort of effort and if you are honest the effort involved in entering most competitions is minimal.

Above all else have fun.

You may not win anything but as someone once said “it’s the taking part that counts” and just remember that you have to be in it to win it. J

In Debt? – get your emotions out, get over them and get on with it

Jun 162008

One of my pet hates is to see newspaper articles about people in debt. The reason why is because the people in the articles are nearly always cast as helpless fools. The picture that comes with the article is nearly always one where the people stare into the distance with a tear in their eye. I think it is highly disrespectful to the people involved. The people in debt are nearly always at their wits end and can see no future. The last thing they need is to be lampooned in public.

I always get the feeling from these articles that for the people involved view it is a last resort. A public cry for help. I imagine that if their debts were under control that they wouldn’t feel the need to tell the world about it. I could be wrong but it seems that they may have left things too late to do anything and they are throwing themselves on the mercy of the public. I feel terrible that for them it has come to this. It does serve as a salutary warning but at the same time it doesn’t really offer any insight as to how you can pay off your debts faster. If anything the articles only tend to reinforce the view that there is no way out of debt.

In my opinion people in debt spend too long caught up in the emotion of debt and not enough time tackling the debt. They sit and stare as the debt grows bigger and bigger yet they remain frozen by their emotions. Like a deer caught in headlights they cannot move. When they do eventually come around and try to start doing something about their debt then they find it extremely difficult as they are emotionally and physically drained from worry.

When people realize the magnitude of their debt for the first time they sometimes adopt a ‘close your eyes and it might go away’ attitude. Eventually the debt becomes such a huge problem that they have no choice but to do something about it. For many at that stage it can be too late. The damage is done. While it is not impossible to fight their way back, their lack of initial action has makes it a lot harder. What makes it even harder is that their emotional energy is at an all time low. It’s no coincidence that debt problems coincide with relationship problems. The two almost go hand in hand.

I’ve often asked myself why there is a time lag between when the realization occurs that debts are a huge problem and the time when the people start to do something about it. I nearly always come back to the same answer. The emotional stigma and drain involved can be a huge factor. Being in debt is often seen as a failing and as a result people do not want to admit that they made a mistake. The problem is that by delaying the admission of the mistake the problem only grows and valuable time is lost.

Open the emotional floodgates

If you feel that you have a debt problem but you are stuck in that frozen stage of self denial then talk to someone. Talk to someone you can trust in confidence – a friend, a counsellor or someone you know you can be honest with. Tell them that you think you may have a debt problem and that you are worried and you don’t know what to do. Let the emotional floodgates open, cry, get angry, get scared. Go through the full range of emotions. Clear out your emotional system.

By opening the emotional floodgates you have a release. You release all those emotions that have been pent up in you. There’s no point in hiding from these emotions. Hiding from them serves no purpose whatsoever. The problems will still be there when you come out of hiding except probably much bigger. Acknowledging that you have a problem and dealing with the emotions that come with that problem is key to getting out of debt.

By tackling the negative emotions that surround a debt problem you are laying the foundation for an effective solution. If you try to tackle your debt while still carrying all the emotional baggage associated with you will find the going a lot harder than it need be. It is easier and more effective trying to tackle your debt if you are coming from a place of strength rather than a place of weakness.

Dealing with those emotions of fear and dread are the first step in any debt management program. Clear out the mental clutter of negative emotions. If you continue to carry these emotions with you as you try to tackle your debt you will be handicapping yourself needlessly. The problem of debt needs to be reduced to the simple formula of money in less money out. If you can take care of the emotions then it leaves you more energy to focus on using this formula.

Is it easy letting go of the emotions? No – it’s very difficult. Fear, worry and denial are never far behind when dealing with debt. The point I’m trying to make is that while negative emotions will continue to haunt you as you tackle your debt you can make your journey a lot easier by acknowledging those negative emotions and doing something to counteract them. Talking to someone and having a good moan about your situation is tremendously helpful but don’t make the mistake of getting caught in the ‘woe me’ trap. Where all you do is moan about your debt and how your life is crap. Get your emotions out of your system, get over them or at least accept them for what they are and get on with dealing with your debt. Remember no one else will do it for you.

Pets and debts – Isn’t it time Frodo start pulling his weight?

Jun 102008

So you love Frodo or Bobo or whatever you called your pet dog/cat/snake. You’re pretty sure they love you. Great! Good for you but now lets get down to serious business. If you are in debt then that great big ball of fur could be keeping you there. The costs associated with keeping a pet can be huge depending on your level of attention to detail and how much you want to keep up with the Joneses.

Pets are often treated as another member of the family – a very expensive member of the family. Even the smallest pet is not cheap. When they look up at you with their big loving eyes little do you realize that they are eating away at your budget.

Now before we go on I want to point out that I am not some cold hearted monster that is going to recommend that you leave Frodo at the side of the road. Far from it. I love animals. I’m more of a dog person but I have to admit that I admire the way cats can fend for themselves and give a collective two fingers to the world. I also have a soft spot for turtles but who hasn’t? Spiders and snakes are not really my buzz but I can see the appeal of an ant farm. Oh and fish, I really like tropical fish.

Now the thing is this website is about debt and your relationship with debt. The unfortunate thing is that most pets are expensive. As a pet is almost always seen as member of the family it is generally the case that you want the best for them. The clever marketing people know this and charge you accordingly. Pet expenses can be unpredictable and costly and this makes them hard to budget for.

So what’s the alternative?

Well there are a couple of simple things you can do to allow you to properly budget for your pet expenses.

The first is to buy pet Insurance. I know this is an extra cost each month but the way I look at it is it will help smooth out the annual cost of your pet. Each month you know that you have to pay a set small fee and as a result you can incorporate this into your budget. If you have to take your pet to see the vet then the insurance should cover most if not all of it.

The second step is to buy your pet food in bulk and online. If your pet is like 9 out of 10 cats and prefers a particular brand of pet food then shop around for the cheapest offer on it. The good thing about pet food is that it is usually long dated and it is a long time before it goes stale. This will allow you to buy in bulk and buy cheaply. Amazon is a good place to start but I highly recommend that you shop around.

Budgeting for a pet?

Yeah I know it does take a certain amount of the fun out of having a pet and it does add to the list of tasks that we need to do when we have a pet. I would put budgeting for a pet in the same category as cleaning up dog pooh. Not a nice task but something that needs to be done. The fact is that if you don’t budget for your pet and it gets more expensive to keep them then you will begin to resent them.

Another way to think about your pet is look at them from the point of view of cost of keeping them versus the benefits that they bring. Homes with pets in them seem to be filled with more joy. There seems to be a lot more going on if there is a dog or a cat running around. Studies have shown that the mood of people who are depressed improves when they have a pet. The pet takes the persons focus away from themselves and their problems.

The simplest way to increase the benefits of having a pet is to reduce the costs of having them. This way you get the same benefit but for a lower cost. Pets are great. They can be a little hard work and if you want to reduce the cost of having them they may require a little more hard work but the benefits far outweigh the costs involved.

Passive income? Look at your passive expenses first

Jun 092008

Do a search for the term ‘second income online’ and you will be hit with a hundred and one articles and stories about how someone makes $1000 a day in their spare time. More interestingly you will notice that the buzzword that is thrown around a lot is ‘Passive income’. Passive income has become the holy grail of the second income prophets. They talk about it in hushed tones. It almost has a reverential quality. Create a passive income and become financially free is their tagline.

If only it was as simple as some of these articles make out. Many times the authors of these articles are trying to sell you something. Some piece of software that will automate your selling or investing. Either way they are trying to make their ‘Passive Income’ by selling the idea of ‘Passive Income’ to you. In the end it resembles something like a pyramid. Person one at the top sells the idea of passive income to two people those two people sell the idea of passive income to another four people. This continues until eventually you have a couple of thousand of people all trying to create passive income by selling passive income tools.

I know about this because I’ve tried to create passive income in the past but with limited success. Generally I end up working very hard for the so called ‘passive income’ that I do generate. Passive income in itself is supposed to be self perpetuating by its very nature. Once you set up a passive income system it is suppose to carry on by itself using its own momentum.

So where does that leave you? You’re in debt or maybe not but either way you want a piece of this ‘Passive Income’. Well to begin with if you are truly going to go after passive income you are going to need a lot of time. Time is the one of the key elements.

Lets be honest most of us don’t have the time or energy to create a second income. I know I hadn’t. I was so busy doing nothing (well nothing important) that I made excuses and couldn’t get anything done. The few times I did get start passive income projects they invariably died a quiet death never to be mentioned again.

So what’s the alternative? It’s a lot closer to home than you think.

Passive expenses – the mirror image of passive income

No one ever really talks about passive expenses. Or certainly no one talks about them in the context of your personal finances. To illustrate what I mean about passive expenses take the example of gym membership. Say you have membership of the local gym that costs you $80 a month and is paid by direct debt. This $80 will be taken from your account every single month regardless of whether you are in the gym every day or whether you haven’t seen the inside of the gym since January 2^nd.The point is that the expense is passive you don’t have to physically go out and buy anything for it to occur. You signed up once and now you pay via direct debt every month.

Now as an alternative to generating a passive income a simple solution would be to eliminate as much of you passive expenses as possible. The net result is the same. If you manage to eliminate $100 worth of passive expenses each month then that is still $100 staying in your account and not going anywhere. It means that you don’t have to invest time and energy into generating a passive income of $100.

Here is a list of some of the typical passive expenses.

Phone bill

Have a look around for a cheaper provider. There are always better deals to be had.

Electricity bill

Look for ways that you can permanently reduce your electricity bills. For example use energy saving bulbs. They may cost more initially but they will save you money in the long and there are more environmentally friendly. You’ll need to get creative while at the same time trying not compromise your standard of living.

Magazine subscriptions

Do you really need these subscriptions? Can’t you just check the magazine out in the store, see if there is anything interesting in it and then buy it if there is but don’t buy it if there is nothing that interests you in it.

Gym memberships

Be honest, how many times have you gone to the gym in the last three months? Is there anything that you do in the gym that you cannot do outside the gym? Things like going for a run, cycling etc.

Insurance

Shop around for the best offer. Usually if you go with one company for your home and car insurance then they will give you a discount. Keep looking!

Website memberships

As with magazine subscriptions – do you really need the membership? Most of the information contained in the website is probably available for free on the web somewhere else. It just takes a bit of searching.

Cable TV

Do really need those 200 TV channels? When was the last time you really watched anything on channels 50 to 200?

Rent/mortgage

If you have a mortgage, then shop around for a better deal. There are some good deals still on offer but it will depend on your individual situation. With rent maybe it is possible to rent a place for $100 cheaper a little further away from your current place? It might be worth a look. That extra $100 would go a long way.

Banking fees/credit card fees

Again shop around. Change banks if you have to. A lot of these fees can be reduced or eliminated.

The list above is only a sample of the passive expenses that people incur every month. There are other things that you could probably identify in your own situation that could be classified as a passive expense.

If you are determined to generate a second income then may I suggest that before you start that you tackle your passive expenses first. You are better off, initially at least, spending time and energy reducing your passive expenses. That way you can be sure that any additional income you earn will be adding to your bottom line and not to go to pay passive expenses.

It could be the case that in some situations if you reduce your passive expenses enough that the need for a second income could be eliminated. You may not need to take a second job or start a side business in your spare time.

Impulse spending – it’ll be the debt of me

Jun 052008

Cheesy title I know. I had to think about that for a long time. J Cheesy as it may be it does contain a lot of truth – for me anyway. When I look back at my spending habits since I started working, impulse spending has played a huge part. In my opinion it was one of the primary causes of my debt downfall. For me there was no such thing as impulse spending there was just shopping. Every purchase came under the umbrella of ‘Shopping’.Now before we go on I want to point out that my spending was on the most mundane stuff you could imagine – books, CDs, DVDs, clothes. The thing was that I bought a lot of each. I would simply wander into a music store with the intention of browsing and come out an hour later with three CDs and a couple of DVDs. I can only begin to imagine the damage that impulse spending does on the bank balances of women. I’m not being sexist but there are some women I know that could buy three pairs of shoes in a day.

Women only?

No I think guys are affected by impulse spending as much as women. The difference is that the stuff that guys buy are probably not as expensive and can fulfil them for longer. The latest Xbox game will probably see more mileage than the little black number bought for the Christmas party. You see advertisers want everyone’s money. They will differentiate their advertising campaigns based solely on whether their target market is predominantly female or male. The thing is they go after everyone’s money with equal gusto.

Some of the best and brightest minds are employed with one goal and that goal is to separate you from your money. You shouldn’t feel too bad about it when you impulse spend. The reason why is because “they made me do it” is a very valid excuse. And no we’re no talking about the voices in your head. We’re talking about the hundreds of little tricks that advertisers use to get you to take action. You too can have a body like mine…for $9.99…ok you get the idea.

What can you do?

Hide in a cave somewhere? Erm maybe! But as an alternative solution you just need to take a look at your buying behavior.Have you ever gone into a shop for no reason only to come out with a bag full of ‘stuff’? Then when you get home you realize that you don’t even need any of it? It was almost like you were in a hypnotic trance. The key to defeating this behavior is to gain clarity about what you want and to become strategic about your shopping. You need to become more conscious of your shopping decisions. Sounds very grand doesn’t it?For some shopping is fun, for others it’s a chore. Either way becoming more strategic about your shopping will help eliminate impulse spending. The simplest way to become more strategic about your spending is to write a list and wait for it – stick to that list.

By writing a list of the items that you want you are pre-programming you brain to focus on the items on the list. As a result your mind will help push out the potential impulse items that are not on your list.

To strengthen your focus, make sure that when you write a list of the items to include the stores that need to go to get them. This way you are reducing the number of stores you are ‘allowed’ visit. If it’s not on the list then don’t allow yourself to go to that store.

When you go shopping do you have a list? I’m not just talking about grocery shopping. I’m talking about shopping in general. Ok I know you might like to browse and this is fine but you need to be browsing with intent. So say you want to buy a new pair of jeans, by all means browse until you find the right pair but make sure to browse with the goal of buying a pair of jeans. Not with the goal of just ‘browsing’.

If you see something else you like, resolve to buy it tomorrow and let yourself sleep on it. The decision not the item! Usually the following day you will have either forgotten about it or it will seem less appealing.

Another thing you can do to stem the tide of impulse spending is to set yourself a time limit. If you are under time pressure you are less likely to meander around the stores ‘browsing’ for stuff. If you have a time limit to do your shopping then you will be in and out and won’t have time to browse.

Ideally you should think about your shopping like a military expedition. You have your objectives – the items on your list. You have the targets you have to hit – the stores you can visit. You have a time frame in which you need to reach those objectives. This way you limit your options and reduce exposure to radiation – sorry I mean impulse spending.

Is this way of shopping fun? No not really but it is a very effective way of reducing your impulse spending. Shopping this way tends to be very matter-of-fact with very little room to enjoy the whole shopping experience. That’s the point. The more you enjoy shopping the more you want to do it and the more you shop the more you spend and the more you spend the longer it takes to get out of debt. You get the picture.

Are your vices keeping you in debt?

Jun 042008

Before your eyes glaze over and you go to sleep this is not going to be a rant about the morals of alcohol and smoking. You know the facts or at least you should make it your business to know the facts about alcohol and smoking. You see in this article I’m really only concerned about money and in particular debt. Your debt. There are plenty of other websites out there that will tell you about the ills of alcohol and smoking so I’m not going to waste too much time here. Check this link out if you want to know more. EasyQuit

If you look up the word vice in the dictionary you will get something like this

Vice: Definition: bad habit, weakness; sin

Now I’m not going to sit here and cast the first stone on the sin part so I want to use the word ‘vice’ in the sense of bad habit. I want to go further and I want you to think of your habits and whether they are good or bad in the context of your debt only. For example going for coffee with friends every morning can be considered a good thing from a social point of view but from your debt point of view it is a bad habit or a vice.

Think about your average day or average week. Can you spot any vices that you may have that are costing you money? Do you buy a daily newspaper but only read the sports or fashion section? Do you buy gourmet sandwiches for lunch even though you could make nicer sandwiches yourself for half the price? You see it’s the little daily routines that when combined have the effect of keeping us in debt.

The sandwiches and the daily newspaper are pretty worn out examples and I think a lot of people get annoyed when they hear them. Like c’mon I’ve heard this all before. Ok and I agree but it is a point worth repeating. Those daily expenses will burn you in the long run. Imagine that on average that the daily cost of your habits is $15 (including weekends) so in one year on average you will have spent $5475 on things that you don’t really need or things that you could replace with cheaper alternatives. Think about what that money could do to your debt.

As an experiment calculate the savings that you would make on a daily basis if you cut out your vices. You don’t even have to cut out your vices completely just cut down on them. So if for example you smoke ten cigarettes a day reduce it down to eight – you’re still making a saving of 20%. Once you have at least cut down on your daily vices and have calculated the saving then simply take that amount out of your wallet at the end of the day and place it a jar or money box. So if you save $7.50 a day by cutting down on your vices then place that $7.50 in a jar. At the end of the week you should have $52.5 ($7.5×7) in cash saved in the jar.

The use of the jar is very important. It acts as a psychological reminder of both the progress that you are making and the amount that can actually be achieved if you start small and work it day to day. If you were simply to cut down on your vices but not physically take the money everyday and place it in a jar it is unlikely that you would notice any difference in your debt. I’m not sure why this is because the net result should be the same. The money saved just seems to get lost among all the other details on your financial statements. I think it is probably due to the fact that when you place the money in the jar you set it aside and assign it a purpose. That money now has meaning to you.

Saving money in a jar? Are you crazy? So you’re not an eight year old anymore? No you’re not but can you remember when you were? Did you save your pennies in a money box? It felt good didn’t it? By saving the money that you free up from your vices I’m trying to get you to tap into that same feeling you had as a child. I’ve always saved some of my money this way. Whenever I had loose change in my pocket I would throw it into a jar at the side of my bed. I remember once in college I was so broke that I couldn’t afford my train ticket home. Then I remembered my jar full of change. I didn’t think that there would be a whole lot of money in it but I decided that I needed every cent I could find. When I was through counting it the total was about $170. It was first class all the way home!The simplest things are usually the most effective and I have found this to be true over and over again. The idea of saving money in a jar is nearly too simple. I’m not saying you should be putting your life savings into it. What I am saying is that any money that you can honestly say that you have saved as a result of cutting down on your vices should be put in the jar to help motivate you and keep a record of your progress. Simple but effective – just the way I like it.

Do you have the energy to fight debt? Part 1

May 282008

When I read personal finance books I generally feel like the life is being sucked out of me. I am hit by a wave of tiredness. Part of the reason why has to do with the fact that most Personal Finance books are dull. They are full of facts and figures and they can be well written but they make what is already an unappealing subject even more unappealing. The thing is I actually like personal finance and I enjoy reading about new ideas in relation to personal finance. But if I am honest most of these books put me to sleep.

If these books put me to sleep I can only imagine what they are doing to people with no interest in personal finance. People in debt may have been recommended to buy a certain book as a quick solution to their debt problems. However it is likely that some of them will become even more frustrated and depressed if they are faced with a book that is boring.

It’s not just the personal finance books that cause people to go into a trance. The whole field of personal finance is almost like a dirty word to most people. There seems to be an inbuilt resistance to tackling financial problems – particularly debt problems. Most people just don’t want to know, sure they’d like to have all their financial problems solved but when push comes to shove they are not really bothered.

You come home after a long hard day at work, you’re tired and hungry. The last thing you want to do is sit down and go through the process of creating a budget or sorting your bills. I know I’ve been there. In fact it can get even worse because when you know that you should be doing work on your personal finances you start to feel guilty. But no matter how guilty you feel you still can’t overcome the inertia that has you sitting in front of the TV all night.

The weekends aren’t much better. You wake up on Saturday morning full of confidence. You assure yourself that this weekend you will tackle your finances. By noon on Saturday you still haven’t done anything but you are still confident – there’s plenty of weekend left. By six on Saturday you decide to enjoy your evening and you will sort your finances tomorrow. Sunday is not much better. It passes by so fast that you don’t even have time to think. Its eight o’clock before you realize that you forgot to look at your finances. Ok you say to yourself I’ll do it one night during the week. Unfortunately that one night during the week never happens. Your finances remain the same.

Now the scenario above is a bit general but it outlines nicely the way most of us manage to push looking at our finances as far away as possible. I’ve always had a problem with looking at my finances. Ironic I know but true. I often wondered why this was. The reason I came up with is that I was tired and the thoughts of looking at my finances made me even more tired. For me looking at my finances was too much like work.

Do you feel the same? Do you feel that looking at your finances is too much like hard work? Well you’re right it is like work and it’s certainly not easy. So how do you overcome that inertia?

Clear the mental clutter

Before you can tackle your finances you need to tackle the mental clutter. The feelings of tiredness and dread come primarily from the one hundred and one thoughts going through your mind at any one time.

The simplest way to tackle this mental clutter is to write a list. On this list write down all your thoughts – however random. In fact the more random the better. You will feel immense relief once you get these thoughts down on paper. You are in effect verbalizing your problems, hopes, fears, dreams and worries. This allows you to then think about your thoughts in a more structured and logically fashion. Do this for a week – everyday after you get home from work. You will be surprised at difference it will make. After the week is up you will probably notice a pattern to your thoughts. This pattern should then be used as the basis for an action list.

I know the dreaded ‘A’ word – action. But trust me you’ll enjoy this. Ok so you have your list of thoughts and you have highlighted the recurring thoughts. Now what I want you to do is to write down three fun and enjoyable actions that you can take that will help you solve your problems or resolve a particular situation that you are thinking about. For example if you are stressed at work – you could invite a close friend at work for a coffee or a beer and you could have a good rant about the situation. You could take your companies logo and put it on a dart board and fire darts at it for an hour or so. The list is endless but the emphasis has to be on fun fun fun. You have to take actions that will allow you to let off steam and enjoy yourself.

So what has this go to do with my debt and personal finance? Well the aim is to tackle the problem of your inaction in a roundabout way. For most people the thoughts of diving head first into their financial problems can be too much. It was financial neglect that caused the problem in the first place and this is not going to be solved overnight. The goal here is to clear your mental clutter and get the cogs of action turning in your brain. You’re more likely to take action if it seems appealing so the key here is to make it appealing.

I mentioned it in previous articles but one technique that I find really useful is NLP or Neuro Linguistic Programming. A bit like brain surgery without the actually surgery. Here is a link to an ebook that comes highly recommended. Success with NLP

In Part 2 of this article I discuss the impact of environment and how it can slow you down mentally and impeded your progress.

In Debt? – Let go and move on

May 272008

It’s hard to believe that the party is over. The last few years that have been so good to so many people are now over. Years of excessive spending fuelled by easy credit have now come to a bitter end. The banks were literally throwing money at us and boy did we stand up and accept their challenge. Yes we can spend more than our neighbors and Yes we will spend more than our neighbors.

Then it changed, at first a whisper of change and then suddenly a roar of change. We all became familiar with the term subprime and what it meant. It basically meant that banks no longer want to know. They don’t want to know you or anything about your debt situation. The nice man down at the bank no longer works there anymore. Those tricky loan forms have become even trickier without his help.

Where does that leave you now? Your debt didn’t seem so big and scary when you were been given easy money by the banks. But now after the tide has gone out it seems that your debts are an even bigger problem that you first thought. Your escape route of more easy credit is drying up fast and you’re finding it hard to make ends meet. At first you were stunned but now you are slowly coming round to the fact that things have changed. So how have you responded? Have you made changes to your lifestyle to match your changing circumstances?

The lifestyle you have become accustomed to has been the cause of your debt. The question I have is why are you still living that lifestyle? Why do you still go for your latte in the morning? Why do you continue to pay lip service to cutting up your credit card yet we still find you down the mall at the weekends? Why haven’t you downsized your car yet?

What is so precious about the lifestyle that you cling to so dearly? Are you worried about what the neighbors will say if you downsize your car? Worried about what your friends might think when you don’t meet them out for dinner anymore? If you think about it most of the people you know are probably in a similar situation. Everyone is impacted by this debt storm in one way or another. Why should you be a martyr to a lifestyle that is no longer useful?

Times have changed – but for many they are still living in the past. Still living the highlife and not realizing that the music has stopped and the smart people already left the party long ago. Isn’t it time you did the same? Get up now and leave the credit party. Go home and take stock of your situation and realize that times have changed and its time to do something about it. Its time to let go of your old lifestyle and move on to a new lifestyle based on financial awareness.

What type of Second Income person are you?

May 162008

The headline screams at you “Make $5000 a month in your spare time”. Curious to find out how this is possible you read on. It appears that it is a Multi Level Marketing (MLM) scheme. You read a little further and then you lose interest thinking to yourself that it is a scam. How on earth can someone make $5000 per month in their spare time? I tend to agree with your first reaction – initially at least. It does seem like a bold claim.

Dig a little further into something like MLM and you are confronted with even bolder claims of wild earnings. The same sort of thing applies to “Internet Marketing”. Stories abound of people who claim to have made lots of money in their spare time. The thing is you only ever hear about the success stories. I doubt that you will ever see a headline like “I lost $2,000 trying to make it in MLM”. The truth is thousands of people try and fail at MLM and Internet Marketing – myself included. In the quest for that elusive second income people spend thousands and make very little in return.

It always made me curious as to what separates the winners from the losers in the game of trying to generate a second income. Now my focus isn’t just on MLM or Internet marketing. You can take any part time endeavour such as a second job or trading on eBay and you will see that long term success is limited to a select few. The turnover of staff in part time jobs tends to be large. The long term success of your average eBayer is not guaranteed.

What makes the difference? Well to be honest I struggled with this myself for a long time. If you want to generate a second income you have a number of factors to consider. The key one is how badly you need the money. If you need it bad enough you will do anything. However this attitude will only work in the short term. To really generate a significant second income you need to be thinking long term.

Your focus needs to switch from short term activities to something that you can maintain in the long term. Ok this is best explained with an example. Say you are in debt and you need money fast. You have a day job but you get a part time job as a security guard to make extra money. You personally find the work boring but you need the money so you stick with it. You took the job to improve your situation and clear your debt but in the long run if you don’t like it then it will become a burden. My advice is to do it as long as it takes to make the money you need to pay your debts. Then look for something more suitable for you for the long term.

What suits you long term?

When you are considering the best method for you to generate a second income you need to examine your personality very closely. How well do you know yourself? Just because a MLM advert promises riches does this mean that the work involved is suited to everyone? Could it be that the people who really make it in MLM are pushy extroverted people who are extremely driven? How comfortable would you be hard selling products to your friends and family? I know I wouldn’t be comfortable with it but I know people who would have no problem with doing it.

The way I see it is if you want to successfully generate a second income in the long term you need to play to your strengths. You need to do something that matches your personality. This seems pretty obvious but I don’t know how many people I have heard about or met that go into something just because there seems to be a lot of people making a lot of money at it. I think it is easier to pick an income generating activity that matches your personality rather than trying to force your personality to match the requirements of an income generating activity.

So if you know yourself, your strengths and weaknesses then you can begin by drawing up a list of activities that you think would suit you. The secret is if you are well suited to an income generating activity and you genuinely enjoy it and put the effort in you will make money at it. It’s as simple as that. It may not happen overnight and you may not make a million but it will give you the satisfaction of knowing you are controlling your financial destiny.

Generate a Second Income? – You can't be serious?

May 132008

You have a job and you have a lot of debt. There is only so much budgeting and belt tightening that you can do. Your focus has now shifted from reducing outgoings to increasing incomings i.e. you want to generate a second income. You can take all the second income and ring fence it so that it goes directly against your debts. You will have your debt problem solved in no time. Unfortunately the reality is a lot different.

To gain an appreciation of how realistic you need to be in order to generate a second income there are a number of key factors that you need to consider. Generating a second income is not as easy and as straightforward as some people would have you believe.

The options

Here is a quick list of ideas off the top of my head and in no particular order that could generate a second income for you. Take a moment to think about each and how they would fit in with your current lifestyle.

1. Get a part time job.

2. Rent out a room in your house.

3. Buy a rental property and rent it out.

4. Trade shares online.

5. Build a website and sell a product.

6. Start trading on eBay

7. Start selling a Mutli-Level Marketing (MLM) product.

8. If you have a trade or skill start doing them on your own account in your spare time.

There are dozens of ways of generating a second income. I just wanted to throw these ones out there to get you thinking.

All fired up yet?

When I look at the list above I say to myself that I could do any one of the items on the list. A nice warm feeling fills up inside of me as I think about how I am going to pay off my debt in double quick time. Oh this is going to be great!.

Then reality hits me square on the chin.

If you have ever tried to generate a second income you will know exactly how difficult it is. Each method of generating a second income has its own drawbacks and limitations. In theory they all seem so simple yet the only person who seems to be making any money is the person who is selling the latest ‘Get rich in your spare time’ course.

Over the next few articles I’m going to be examining what are the best and most effective ways of generating a second income. Is it really possible from a long term perspective to generate a second income? Why it can be hard to generate a second income and finally what are the key factors you need to consider before you can generate a second income effectively.

Where is my money? Clarity is the key

May 122008

Picture the scene. It’s the end of the month and you’re about to get paid, before you do you check your bank balance and you realize that you didn’t spend as much as you did last month and that you have $600 left in your account. You smile. Tomorrow you will get paid. In the following week your mortgage, your phone bill, your electricity bill and your retirement savings will all leave your account. The following day a large sum of money will leave your account and be transferred to your savings account. After all you are saving for a new entertainment system. It’s your reward for all the hard work you have been putting in. That leaves you with plenty to live on for the month.

Ok – back to reality. The existing scene probably goes a little more like this. It’s coming to the end of the month. You’re about to get paid. You go to check your bank balance and it is in overdraft and you are touching your overdraft limit – not much room to move. You cringe. Tomorrow you will get paid which will just about cover your overdraft. The following day your mortgage will come out putting you straight back into an overdraft position. You will delay paying your phone and electricity bill until as long as possible. You’re not trying to scam anyone but you just don’t have the spare cash. You have stopped making payments to your retirement fund – sorry I can’t afford them. Savings you ask – what are savings?

There is a vast gulf between the two scenarios outlined above. When you picture the first scene you can almost feel the mental clarity of the situation. Everything is taken care of and there is enough money to pay all the bills. There is almost a sense of joy as the reward of the entertainment system is on offer. You look forward to the future because you know it will be prosperous.

When you picture the second scene your thoughts become muddled and the level of stress you feel increases. You begin to feel anxious. That dreaded look at your bank balance. The sinking feeling you get when you know that in order to make ends meet that you will have to draw down cash on your credit card. You dread the future because you can see no end in sight and you feel like you are trying to plug a hole in the dam with you finger. The future looks bleak.

These two scenarios are on opposite ends of the same spectrum. The question you have to ask yourself is whereabouts on this spectrum does your existing financial situation put you. Are you a stress free financial wiz? Then fantastic – well done!

If on the other hand you are like the vast majority of us and your feelings about your financial situation vary from bad to very bad then take comfort in the fact that you are not alone.

Don’t use the fact that you are in a similar situation to most people as justification for inaction. Fine if you make the conscious choice that you are happy to continue existing like this then no problem that is your choice. But if you want to change it and have been putting it off by using the rationalisation that we are all in this together and that you are afforded some sort of camaraderie then I ask you to question your decision. That to me smacks of peer pressure of the most insidious kind.

Get real about the choices that are available to you. At any moment in time you can simple say to yourself ‘No more’. You can cut that credit card up and downsize your car.

You need to be clear about why you are doing these things. You need to realise that you want to move from a place of pain and stress to a place of action and direction. By action and direction I mean that you are using your pain and stress to propel yourself to take action in the right direction and that direction should always be towards bettering your financial situation.

Accounting for where every cent goes is the first and probably the most important action you can take. If you are already in debt then this type of thing will be hard at first but realise that in a bizarre way it can be fun and after a while it becomes very empowering. The satisfaction you get from knowing that you are gaining control – however slowly – over your finances can be compelling. You need to realise that there are small things you can do that that will have a big impact on your financial situation. The great thing is that the majority of these things won’t cost you a cent as it’s a case of cutting out instead of adding more.

To fire your engines and get you moving in the right direction I want you to go back to the two scenarios outlined above in the first two paragraphs. I want you to really visualize them. Make them real in your mind. Now which scenario do you want to make real? If you want the first scenario to be your future then keep focusing on it. Use this scenario as a baseline for the financial future you would like. Every time you begin to think about your current financial situation change the focus of your thoughts by thinking about how you want your financial situation to be and how you are taking small actions to achieve it. Always reaffirm your dedication to achieving the financial situation that you want. It may take six months or it may take six years the point is that you need to always keep yourself moving in the right direction.

Till Debt Do Us Part – Pay off debt fast