Financial Freedom Classroom

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Credit card insanity

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Image courtesy of scottchan at freedigitalphotos.net
Image courtesy of scottchan at freedigitalphotos.net

The definition of insanity is doing the same thing over and over again but expecting a different result.  If you are working on becoming debt free you cannot continue to charge anything to your credit card and carry a balance over month after month.  Do you realize that the minimum payments established by most credit card companies aren’t designed to pay off the balance?  The payments are set up so that the interest is paid first then, maybe one percent of your outstanding balance.  If you continue to charge ANYTHING to the card the balance will NEVER be paid off.  Stop this insanity!

Most credit card charge very, very high interest rates.  Your money doesn’t go very far with these high interest rates and there is very little left over to pay the principal. In order to get rid of those balances it requires not charging any more and paying as much as possible to the card with the highest interest to pay it off.  Determination and focus is what is required.  Do you have what it takes?
This Thursday at 7pm we will dig into this topic as well as many others with a financial freedom case study of the Spendalot family.  Click here to register to join us and bring your questions.
Click like if you will be joining the webinar.

The big payoff

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Image courtesy of iosphere at freedigitalphotos.net
Image courtesy of iosphere at freedigitalphotos.net

For a lot of people a home will be the largest single purchase they will ever make and the most expensive. Take a look at a 1098 form from a mortgage holder. It shows the total interest paid and the total amount applied to your mortgage. In the early years it can be very discouraging.

But you can change that! Get rid of any additional costs like private mortgage insurance (PMI), if you have it. Then apply that amount towards your mortgage every month.

Make additional payments any way you can. Pay half your regular payment every two weeks, if your lender will allow it, which adds up to an extra full payment every year. Or make one extra payment per year, increase your monthly checks by one-twelfth, or you could even use your tax refund to make a large lump sum payment.

Anyway you can do it, make a plan and make the BIG pay off. You can save thousands.

If you are living mortgage free, please comment on how GREAT it is!

Cutting the cable

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Image courtesy of arztsamui from freedigitalphotos.net
Image courtesy of arztsamui from freedigitalphotos.net

Do you remember a time when you could watch TV for free? Maybe you had to buy an antenna.  I know it is a radical thought in this day and age where everyone has cable subscription service, but do you enjoy it enough to keep it? Is it just a habit to pay the bill every month?  Take back control of your television watching!  There are currently many options for your viewing pleasure beside cable television and usually with less commercials!  One is to watch programing from your computer, which can be streamed wirelessly with Chromecast or connected with an HDMI cable.  There are many programs available for FREE LIVE or sometimes you may have to wait for a short period of time after the show airs.  There are also online pay services like Netflix or Hulu that charge a MUCH lower monthly fee, mostly under $10 per month.  Consider it!  I am sure you could find a use for that extra $100 or more per month.  Couldn’t you?

What could you do with that extra $100 plus per month?

BULLSEYE Target

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Image courtesy of David Castillo Dominici from www.freedigitalphotos.net
Image courtesy of David Castillo Dominici from www.freedigitalphotos.net

Target Department Stores has some great ways for you to keep more of your money!  Besides the usual manufacturer’s coupons and Target coupons, they have a smart phone app called “Cartwheel” that provides some great savings.  The app is easy to use and it can be used to scan bar codes of products in your cart to see if there are any additional savings!  After you have added the products to the app it will produce a bar code that the cashier can scan which will deduct savings.  Be sure to sign up for coupons to be mailed to you as well they provide some pretty good offers.  Also their clearance is usually located at the ends of some isles and can provide some super deals.  Lastly if you use the Target credit card they will give you 5% off everything you buy.  There is some significant savings to be had.  Target has hit the bullseye for savings!

Please share other stores that provide great savings.

 

Phases to FREEDOM!

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Check out our “Phases to FREEDOM!”.  This webinar goes over our “5 Phases to Financial Freedom” which are (1) Always watch your nets, (2) Starters, (3) Debt destroyer, (4) Self first, then kids and (5) Put your money to work.

Are you on the path to financial freedom?  If so, please comment on what phase you are in.

Expect the unexpected

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911 by Stuart Miles from freedigitalphotos.net
911 by Stuart Miles from freedigitalphotos.net

Establish and maintain an emergency fund of at least six months of expenses.  This is extremely important and should only be used in emergencies.  It should be easily accessible so that you can withdraw the funds quickly.  It should only be used for unexpected costs, it should not fund vacations, new expensive clothing, dining out or other luxuries.  Be sure to keep the emergency fund in a separate account so it is not mixed with other funds for other purposes.  Stay away from temptation!  A good way to make it grow consider is to set up automatic monthly transfers to ensure it gets fully funded.  The emergency fund is for unexpected expenses like appliances that stop working, getting laid off from a job, long illness or an accident.  Be sure to keep this fund for the unexpected and you will be prepared!

Please click “Like” if you have an established emergency fund.

Taxes; The Good, The Bad and The Ugly

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Just in case you missed it…A fantastic webinar, Taxes; The Good, The Bad and The Ugly with Kim Landry, CPA from Landry and Associates.  Kim gave us some great tax strategies and planning techniques to be able to keep more of what you make.

What is a tax strategy that has saved you from paying more taxes than necessary?  Please share.

Please use tools only as directed.

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Image courtesy of vectorolie from freedigitalphotos.net
Image courtesy of vectorolie from freedigitalphotos.net

Credit cards cause a lot of pleasure that could ultimately cost you a lot of money and pain if used incorrectly.  Our theory is to use credit cards as a tool only to make your life easier, BUT NEVER CARRY A BALANCE, EVER!  If you can’t pay for the item you are purchasing by the time the bill is due, don’t buy it.  This concept is very, very important.  Many other finance specialists will tell you to never use credit cards, but I would like to believe there are some disciplined adults out there who can benefit from their use.  Be sure to use them only if the total monthly payoff rule is ALWAYS, ALWAYS followed!

What type of cash back or rebate program does your credit card provide?  Please comment.

 

Capital gains, hopefully not losses…

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Image courtesy of Stuart Miles from freedigitalphotos.net
Image courtesy of Stuart Miles from freedigitalphotos.net

Capital gains (or losses) are recognized when you sell a capital asset.  A capital asset is almost everything you own and use for personal, pleasure or investment purposes.

 Capital gains are categorized either as short term, held less than one year or long term, held for one year or more.  Long term gains have beneficial treatment in the US tax structure since they are taxed currently at 15% where short term gains are taxed at the individual’s tax rate which can be much higher.  One exception to the rule is the treatment of stock options under section 1256 where gains or losses open at the end of the year or terminated during the year are treated as 60% long term and 40% short term regardless of how long the contracts were held.

We all know taxes are very tricky so there are exceptions to most rules and we encourage always seeking the guidance of a professional.  Check out our webinar on Thursday, January 22, 2015 with Kim Landry, CPA to discuss “Taxes; The Good, The Bad and The Ugly” and she will help clarify some of the tax laws for us.

 What tax strategies are you planning on using in 2015?