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FINANCES IN DIFFICULT TIMES – Recession Proofing

Posted by rise2it on October 19, 2009

Do you have more month, than you do money?

Recession proofing takes discipline and effort. However, if you take you finances seriously you can see yourself through these tough economic times. Short term pain for long term gain.

I want to share with you how I went from having over $250,000 in consumer debt at the end of 2005 to being retired before the age of 40 (2008) all without going to a debt counsellor or declaring bankruptcy.

NOTE: If you are thinking of hiring a credit-repair company? DON’T BOTHER!!!

Credit repair companies can’t do anything you can’t. A credit bureau will not remove accurate negative information from your credit report before the legal time period has expired so don’t get suckered by anyone who claims they can mop up your credit disasters faster. There are no “loopholes.” The only way to fix a poor credit rating is to be smart about how you use credit. Learn from your mistakes and move on.

The above paragraph was copied from http://www.gailvazoxlade.com/index.html

To see a turn around in your finances you MUST first create and follow a budget.
I like the one Gail Vaz-Oxlade has set up on her website.

Then look at how you can reduce unnecessary expenses.

Below are ways I reduced our monthly expenses:

  • Switch to NO FEE banking – you can save up to $145.80/year on each account – it may not seem like much but it adds up
  • Call the credit card companies and see if they will reduce your interest rate…you don’t know if you don’t try…I was able to drop a 19% card to 12%
  • Call the phone company and get your monthly bill down to the bare minimum
  • Call the cable company and reduce your TV channels
  • Call the internet company and find out if they have any special offers to help reduce your monthly bill
  • Call the cell phone company to reduce your package or switch to a pay-as-you-go phone

NOTE: Sometimes you can get a bundle package from a provider to help lower your charges which include phone, cell, internet and cable all-in-one bill.

Look at ways to increase your income:

  • Clean house and sell things in a garage sale, on EBay or Kijiji (I like Kijiji because there are no commission fees)
  • Find a second job to help increase your debt repayment (short-term pain for long-term gain)
  • Find a home based business…this allows you to deduct several expenses incurred in the home and will lower your taxable income. This was/is a definite plus for us as we have receive on average $5,500 a year in tax returns since 2000. Yes, that money went towards the debt repayment

Other things I did to help get through our finance troubles were:

  • DID NOT MISS a payment even if it was only the monthly minimum
  • I choose the credit card with the highest interest to pay off first, once it was paid off I used that money to pay off the next highest interest card. Each time adding and increasing the monthly repayment to the next card
  • As I paid off each credit card debt I would reduce the available credit so I was not tempted to use the balance available and once the card was paid off I cancelled it so I could not use it again

The idea below takes a lot of disciple but can be a benefit:

  • I switched our Visa to a travel Visa in order to get points on flights, hotels, car rentals, etc…I use this card for just about everything so long as the expenses are budgeted. Food, gas, phone, internet, cable…if the company takes Visa I pay by Visa.

These are just a few of the things I did to help us climb the ladder to financial freedom.

copyright © 2012. RISE2IT (coaching). All rights reserved.

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