Financial Management 101

Financial management for a a lot of people means simply debt management, so we’ll talk quite a bit about that here too.

Simply (although not always easy) the best way to manage your debt problems is by paying them down. Remember those nasty student credit cards burned huge holes in your pocket all those years ago? How can you forget? You still owe on them. It was so bad for us at one point I even thought I would have to refinance my house. What are some ways you can free up some money without refinancing your mortgage?

A lot of people are constantly asking their advisors when to refinance. My answer… don’t. Not the way they want you too.

Debt consolidation – Carol and I ditched the line of credit and consolidated all of our debt including those dreaded student loan payments which we so needed relief from. Now we keep our one credit card as close to zero as humanly possible and have one single payment to make on the other loan. We have less than three years before we’ll be debt free and have all the money currently going toward the loan to go into an aggressive income growth fund and some other investments that I’m looking at.

Sold our home – A radical step but, we were able to pay down some of our debt with some of the accrued equity. Now, as we rent, we have more space and less worries. And yes, more cash. We have no longterm home loans hanging over our heads We went with a realtor we trusted and knew and paid close to no closing costs. Some of you say holy shit, you’re not building equity anymore. I say pshaw! We aren’t having any children so owning a home right now isn’t the way for us to go.

Cutting your monthly costs – One way Carol and I did this is that we cancelled our landline but we still have a phone. How did we do that? We have great high speed internet service. What’s that you say? How does that make a difference? Well we went with a broadband phone service, called Vonage instead. We pay a flat fee of $60 per month for a full featured phone with what I like to call “free long distance” at anytime to the US and Canada. Not bad. That’s just one of the ways. Streamlining costs is good.

Get help – We have a great financial advisor. She’s right there when we need her as she works for our bank and we pay nothing but regular bank fees. Nothing like free debt advice.

Keep track – For a few years I have been keeping track of every penny in and every one out with a simple excel spreadsheet. Thank you Rhonda! I have each of our monthly expenses budgeted on separate rows. Each month is broken into a deposit and paid column. There are year to date and monthly totals keeping track of our finances. We’re not starving yet so I guess it’s working. It’s hard to buy that extra DVD when I know it’s going to have to come out of the grocery budget, Gulp! I’ve gotta eat.

Anyway, that’s just a brief rundown on how we manage our finances. I didn’t even get into term life insurance and that kind of crap. I know this is way off the beaten path here at my blog, but I thought fukitol.