Frankly Speaking

Surviving The Holidays Without Racking Up Debt

Posted by Frank Wiginton on Tue, Nov 15, 2016

As we head into the holiday season, many will get the biggest surprise of all – not from the gifts under the tree – but from the credit card bill in January!

It doesn’t have to be this way if you do a little planning and stick to your list.  Below are some tips on ways to beat the January credit card blues sad

  1. Start by evaluating your gift list. Giving a gift is nice but not worth it if it is going to mean mounting debt, significant stress and anxiety. Start by speaking with your friends and family and seeing if they would be willing to do a Secret Santa exchange where you only have to buy one gift. You never know – they may be looking to save some money as well, and I am sure they would rather not have a gift if they understood the stress and anxiety it was causing.
  2. Set a budget on how much you can afford and determine how much you can spend on any one gift.  This can be the hardest one to keep but can make all the difference.
  3. Planning ahead is a must. Attempt to purchase gifts throughout the year so you don’t have a huge amount of expenses all in December.
  4. Only buy things on sale. If you are shopping year-round the item you would like to buy will go on sale. Every store has to turn over their inventory and will do it 3-4 times a year. In order to do this they will put the items on sale to liquidate the inventory.
  5. Use your debit card. This way if you don’t have the money you can’t buy it!
  6. Set up a separate savings account. Set up to have $10 every week taken from your bank account and transferred to this savings account. Come the end of the year you will have $500 saved for the holidays! The best part – you won’t even notice that $10 missing every week but you will notice how great it will be to have that $500 to pay for Christmas.
  7. Use gift cards to stay on budget. If you set a budget of $50 a person, it is easy to spend over that limit due to taxes and extras. For example you find a great item that is $54.99, you think to yourself – that’s about $50. The problem is once you pay for it the total comes to $62.14! Now you are nearly 25% over budget. Another example is when you buy multiple gifts. You buy them a DVD – $19.99, a book $22.99, and a $10 Starbucks card. Add it up throw in the taxes and your total is… $58.57!
  8. Try buying gifts online. On eBay, Craigslist, Kijiji, you can find new and used items for a fraction of the cost. Books, CD’s, DVD’s, etc are especially abundant and inexpensive. Be sure to include any shipping costs and taxes in your calculation of cost to avoid spending more than your budget.
  9. Buy expensive items after Christmas. If you are buying an expensive item (electronics, furniture, appliances, etc), cut out a picture of it from a flyer or catalog and put it in a card to give to them Christmas day. Then go and buy it after christmas when the boxing week sales are on and save a bundle!

All this is can help to make your Christmas more affordable and reduce your debt and your stress. Let’s not forget what Christmas should really about, the festivities, the traditions, seeing old friends and family. Do you remember all the Christmas gifts you were given last year? Probably not, but you likely do remember the time you spent with family and friends. these are the gifts you will carry with you year-round.

Tags: credit card, debt consolidation, christmas gifts, eBay, Gift Cards, holiday budget, holiday cards, holiday shopping, budget holiday, Craigslist, debit card, Kijiji, personal credit, savings account, Secret Santa, Debt

How To Effectively Pay Down Debt!

Posted by Frank Wiginton on Tue, Nov 15, 2016

If you have debt and are currently reading this you have already accomplished step 1.

Step 1 – Make the decision to tackle your debt once and for all!

This is a critical step to getting your debt under control. In our consumer based, got to have the latest STUFF, no matter what the costs, society it is no wonder many are living beyond their means and racking up the debt. So if you are ready to truly deal with your debt and give yourself a better quality of life repeat after me: I have more than enough stuff! I want rid of my debt, high interest charges, stress, and frustration! I AM READY FOR A BETTER QUALITY OF LIFE!

Now repeat it again!

Step 2 – Make a list of ALL your debt!

Gather up all your bank statements, credit card statements, store credit, car loans, personal loans, lines of credit, mortgage, etc. Now on one piece of paper (if it is a long list use legal length paper) or in a spreadsheet list each creditor, the amount outstanding, the minimum payment, outstanding available credit, and the rate of interest. If you don;t know or can’t figure out how much interest you are paying – then pick up the phone call them and ask them to tell you! If you have a “DO NOT PAY FOR 18 MONTHS” kind of loan then learn how much the interest is and be sure to pay it all off before it comes due.

EXTRA: If at this point you have debt payments that total more than 40% of your gross income, you should contact Credit Canada at 1-800-267-2272 or visit their website at www.creditcanada.com . They can help educate and organize you to pay off your debt. They will show you how to communicate with your creditors to stop interest charges and reduce your payments. They can also help you to protect your credit rating and prepare to the future.

Step 3 – Organize the debt from highest interest to lowest interest

Rewrite or sort the spreadsheet from highest interest to lowest interest. Example:

Creditor Amount Outstanding Minimum Payment Available Credit Interest
Department Store Card $      2,200.00 $     66.00 $ 300.00 28.0%
MBNA Card $      4,850.00 $   145.50 $ 250.00 24.5%
Master Card $      3,300.00 $     99.00 $ 700.00 19.9%
Visa $      5,275.00 $   158.25 $ 725.00 19.5%
Personal Loan $     11,000.00 $   220.00 $     - 12.5%
Line of Credit $       8,850.00 $   265.50 $ 1,150.00 9.5%
Car Loan $     14,825.00 $   450.00 $      - 6.5%
Mortgage $   248,000.00 $1,250.00 $  12,000.00 4.8%

Step 4 – Pay out highest interest debt first!

Be sure to make the minimum payment on all debt first. This will help to protect your credit rating. Then any money you have left over take and put it all against the highest interest debt to pay it down as quickly as possible. Now look at the bottom of your spreadsheet where you have listed the debt with the lowest interest rate. Do you have any available credit at these lower interest rates? If so I want you to max out these accounts to pay off the higher interest debt as soon as possible.

Step 5 – Close your credit!

For many once you have paid off the debt it is far too easy to rack it back up! Once you have paid off the debt (highest to lowest interest) close the credit. This will help you in the future to qualify for other credit, improve your credit score and make it easier for you to stay on track for debt elimination.

Be aware that for many it may take four or five years to payout debt. The secret is that once you do start and you see those balances going down rather than up it will make you feel better and help motivate you to stick with it. By using the services of a credit counselor you may be able to save thousands of dollars in interest and having someone to talk to and work with you to accomplish this goal can make all the difference. Call or go to Credit Canada’s website www.creditcanada.com to learn more. Be sure to check out a number of great tools they have on their site that can help you to pay off your debt faster and save you more money http://creditcanada.com/financialtools.asp

Watch for my book “One Day A Month To Financial Success” due out October 2011!

Tags: Budgeting, credit card, debt consolidation, Mortgage, interest, Credit Canada, creditcanada.com, Loan, Financial Planning, car loan, Credit Cards, financial tools, Debt, Budget, Line of Credit

What Is A Budget and How To Get Started?: Budgeting 101

Posted by Frank Wiginton on Tue, Nov 15, 2016

The dreaded ‘B’ word! There is absolutly no reason to fear preparing a budget. I think the reason why many people do is that they feel it is a lot of work, they don’t really know how to do it, and those that have tried have never been able to keep it (likely because it was done wrong).

Yes! It does require some work. The good thing is that with today’s technology it is getting less and less.

So what is a budget?

Simply: a budget is a record or projection of all the money coming into the house and all the money going out of the house. Another name for it is a cash flow statement. This makes it easier to visualise. Money flows in and money flows out, and flows out, and flows out…

Why is a budget important?

A budget is paramount to financial success! You need to know how much you have and what it is being spent on to be able to prioritise spending and allocate funds towards different goals. Whether it is retirement, traveling, buying a new car/house/boat, the kids education, pay off credit card debt, or maybe a wedding – you need to understand where you will be able to get the money to pay for these things.

How do you get started?

First – prepare yourself that in order to prepare a good (i.e. accurate) budget you (and your partner) need to set aside 4-5 hours of time to complete it.

Secound – Gather up at least the last three months bank statements and credit card statements! ALL THE CREDIT CARD STATEMENTS! Not just the ones you tell your spouse aboutsmile .

Third – Use this Budget Worksheet as a guide to identify the various categories to seperate out your spending. It is important to understand how much you spend on various items so you can identify where you may be overspending and can cut back.

Forth – Start going through all your statements line by line noting the category that each one belongs.

Fifth – Start fillling in the spreadsheet to determine how much you earn and spend every month!

Sixth – Once you have tallied up the income and subtracted off the expenses ask yourself this: I SPEND HOW MUCH?!?!

Be sure to read The Most Common Budgeting Mistakes!

Watch for my book “One Day A Month To Financial Success” due out October 2011!

Tags: Budgeting, credit card, debt consolidation, Mortgage, Loan, Financial Planning, Debt, Budget, Line of Credit

The 4 Most Common Budget Mistakes!: Budgeting 101

Posted by Frank Wiginton on Tue, Nov 15, 2016

When building a budget many people get to the end of the process and are surprised by the amount of money they spend, and or are surprised by how much money they should have left over every month! This is primarily due to the fact they are not calculating their budget properly.

Mistake #1 – Not everything is paid or charged on a monthly basis!

This is the biggest error. If you get paid $2000 bi-weekly you don’t make $4000 a month! You actually make $4333.33 a month! Your hydro bill comes every two months so if you didn’t account for it in your monthly budget you will be short $200 in your budget to pay for it. If you did account for it but included the entire amount in that month, your budget will show you spending more than you really are!

Solution: Identify how often something is paid – to you or by you!

Once you have identified this apply the following formulas to determine the monthly budget amount:

Weekly = $amount  X  52  /12

Bi-weekly = $amount  X 26  /12

Monthly = you don’t need to do anything here just plug it into your spreadsheet

Semi-monthly = $amount  X  6  /12

Quarterly = $amount  X  4  /12

Semi-Annually = $amount  X  2 /12

Annually = $amount /12

Mistake #2 – Not all pay cheques are equal

Many people who have salaried positions will have an easier time with this. Although there are still mistakes made. The most common is that your deduction for Employment Insurance and Canada Pension Plan max out at a certain point (depending on your income). So if you used pay cheques from the first part of the year to calculate your income, you may have underestimated the amount of income you have coming in. Bonuses, commission income and irregular hourly work can also throw a wrench into the numbers.

Solution: Use last years tax return to identify exactly what income you had.

This won’t work for everyone as variable income is hard to predict but try to identify how much you expect to make in a year and divide it by 12.

Mistake #3 – Double counting.

This is typical when people have money taken off their pay cheque for pension or RRSP or other savings. They will tend to list it again when they fill out their budget as it is top of mind! Other examples are when you include eating out or ordering in under entertainment, but also under “food” (i.e. groceries).

Solution: Be sure to start by categorizing each expense only once as you go through your credit card statements and bank statements. Do not start filling in the budget spread sheet until this is completed. If there isn’t a categorie that it will fit into than create a categorie for it. Even more so – be patient and dilligent in preparing this important document.

Mistake #4 – Not including everything!

Without going through a full years worth of statements, it is very easy to miss or forget about some items. Especially those that you only pay once a year! Maybe it is an annual dividend that is paid, or association membership, professional dues, or annual insurance premiums. What ever they are they can really throw a budget out of whack.

Solution: Build an annual payment section to your budget!

This may include memberships, dues, insurance premiums, magazine, newspaper, and website subscritptions, car registration, kids school fee’s, etc.  Once you have grouped them all together take the total and divid it by 12 to add to your monthly budget.

Watch for my book “One Day A Month To Financial Success” due out October 2011!

Tags: Budgeting, credit card, debt consolidation, interest, Financial Planning, Personal Finance, Debt, Budget