Sep 30

A survey weeks ago by the Canadian Payroll Association found that around 60% of us live paycheque to paycheque. While their president stated he was very surprised that people were so close to the line, we shouldn’t be surprised at all. In fact, I believe the figure is actually higher!

Being poor and broke is most often a choice. We create our own mess, the mess doesn’t just happen to us. No, not consciously, but in the financial decisions we make, the debts we take on, and our priorities with money. I know that if I spill a cup of coffee, right now, this minute, I’m going to clean up the mess. That’s a cup of coffee – why don’t we take that same attitude towards our finances?

To change it around, we can spend less, or earn more. Either one works, both together change our financial situation that much faster. If we wanted to, by next week, we can make around $1,000 extra each month delivering pizza, the newspaper, or a bunch of other part time jobs. If we wanted to…

If we wanted to, we can sell our car with the big payments by next week, and drive a $2,000 beater until we’re debt free. Just not having that car payment is a huge amount of money that could go to paying off other bills. If we wanted to…

People don’t move until they’re fed up and mad with their financial situation. When we no longer want to live in the state we’re in, you’d be amazed how quickly we can change it around. But until then, we keep confusing our needs with wants, and just give our money to everybody but ourselves.

We’re like an ATM – two paycheques go in, and all the money quickly goes out to make every payment in the world, and we just hope that we’re not out of money before we’re at another payday. Everybody has their hand out for our money and we give it to them voluntarily, and then complain that we’re broke. That’s not a life – that’s surviving, and it’s not a fun way to go through life!

At some point, all the stuff we’re still paying for isn’t worth the financial pain we’ve taken on. At some point, hopefully soon, it has to become an issue of the heck with the cheeses, I just want out of the trap!

In relationships fights over money is one of the #1 issues with couples. It’s the biggest cause of divorces, and a huge contributor to male suicides. We hear this, we experience the fights, and we STILL keep doing what we’re doing? Does that make sense at all?

People know how to get wealthy and know how to avoid making their financial situation worse. But why don’t we take the steps to make it happen? The bottom line is whether we’re prepared to do what it takes to turn it around? If so, it starts with some easy steps that very few people take:

Sit down without the TV and the kids and do a written budget with your partner. Every dollar is planned, and nothing gets spent over and above the budget. It’ll really clearly show you where all your money is going. If the budget is $600 for groceries, $300 cash goes into an envelope or a jar for the coming two weeks. When that money is gone – you’re done spending.

Step two is to get an emergency fund of one week’s gross pay into a separate savings account. Stop being naïve – there will be an emergency. This small rainy day fund is critical. It will rain – you know that!

Step three is to focus on paying off your debts. No RRSP savings, no investments, no vacations, and you’re not seeing the inside of a restaurant unless you work there. But rather a 100% focus on getting debt free except the mortgage. The It’s Your Money book has an easy to understand section that has you list your bills smallest to largest, then every dollar goes to the smallest debt until it’s paid off. Then it rolls to the next one, and so on.

There was a survey done of the richest people in the world from the Fortune 400 list. Seven out of ten started with nothing. Their wealth was built entirely on their own, without inheritances. When they were asked what the number one key was to building wealth, the answer was always: Get out of debt and stay out of debt.

It might seem cruel, but if were to be honest with ourselves, would we agree with this line from Larry Winget’s book jacket: People want what they’ve got. It’s a simple formula: You have what you want because your actions produced your results.

Can you get out of the life of living payday to payday? You bet. Do you want to? I’m guessing we all do. Will you do what it takes to make it happen? Ah – that’s where 90% of people choose not to…

Sep 16

Back to school is a $50 billion industry this time of the year. But, by all accounts, it was a bust, in spite of some really great Staples commercials. And retailers are pretty freaked out as back to school is their best indicator of the Christmas season.

For one group of students, back to school didn’t end two weeks ago, and that’s University and College students. First, I know a bunch of students are still shopping for textbooks, and will again, for the next term. Here are nine great sites for comparison shopping on line. But first, start with your professor and ask if you can purchase a prior edition, which you’ll find used, if you try:

Cheapestbookprice.com Allbookstores.com Abebooks.com A1books.com Bookfinder.com Valorebooks.com Biblio.com and Textbook411.com.

There are also a number of U.K. sites for used science textbooks priced so cheap you’ll still be ahead, even after shipping. Finally, if you’re game to rent your textbooks, there is a new site that has saved students over $41 million as of July this year. It’s at chegg.com

While this may be your first few weeks of school, or the final year, do remember that the average student graduates with a degree, but also about $4,00 in credit card debt, and more than $20,000 of student loan debt. THAT will assure being broke for a lot of years to come, even after you start to earn a paycheque. And let’s be honest, it’s not the textbooks or course fees. More often than not, it’s the pizza and beer, the need to own a car, clothes shopping, or trips to the mall. But ask yourself some of these questions. And these questions aren’t just for students, but probably the rest of us that are broke or living paycheque to paycheque:

• Are you mature enough to delay pleasure?
• Are you prepared to be a winner with money?
• How long after graduation do you want to be broke?
• Are you prepared to say the four hardest words out loud: I can’t afford it?
• Do you believe that getting that free T shirt to sign up for a credit card is a better deal for you or the credit card company who now has you trapped and helping with that going broke project they have in mind for you?
• Exactly how do your marks go up when you think you need a plasma TV, or a 23 inch flat screen monitor?
• Are you prepared to live like a student for a few years, so later in life you can live like 95% of the world can’t afford to?
• If you need a car, is this an actual need, or a desire? If it’s legit, are you prepared to drive a “stay out of debt” student car for $2,000 max?

The great news is that you’re an adult now. So choose to act like it, financially. You’re smart enough to go to University! You ought to be smart enough to know that credit and getting into debt is not your friend.

Do you even believe that student loans count as debt? If not, you’re like most students. But you’re also kidding yourself, and will be financially doomed for at least a decade after graduation. No, you won’t think about that today. But you’ll remember my words in about five years or so, I assure you. 70% of the population lives paycheque to paycheque. This year, and for a few more years, you’ll be in a temporary state of broke. That’s part of being a student! Just don’t join the 70% of the world AFTER graduation when every dollar you finally earn goes to rent, food, student loans, and the hangover of credit card debt for stuff from years ago that you can’t even remember charging.

And one more thing for parents:

If you have a son or daughter across the province, or the country, who needs access to some money in a hurry, what do you do? Paypal has just developed a student account.
One of their VPs has six kids and got stuck trying to figure out how to send one of them some money.

The cost is 2%, so when you’re sending $100, $98 shows up at the other end. It’s in Beta testing, but you can get it right now if you already have a PayPal account. If not, you may have to wait. It’s great to have competition from PayPal. Right now, the banks and Western Union have a virtual choke hold on this area, and charge a lot of fees.

Another way is to set up a bank account where you and your son or daughter has a debit card. It can be your son or daughter’s account, but with your card and secret PIN number you can make a deposit into the account and they can access it at the other end.

Just make sure the account is set up without holds on the money, or they’ll be waiting two to six days to get access to it! What’s NOT a solution is to give you kid a supplemental credit card linked to your card. It’s too risky and too tempting. Don’t do it!