Beating Broke

Give the Gift of Experience This Holiday Season

September 21, 2011 By MelissaB 11 Comments

It is only September, but I have already seen Christmas trees and holiday presents in Costco. Most people probably aren’t thinking about holiday gift buying now, but they will be in another month or two. If you are like most people, you probably have difficulty coming up with gift ideas for several people on your gift giving list; most people often have everything they need, and what they don’t have, they buy themselves. Or, you may look around your house at “stuff” you are not using that is just taking up space and dread the latest infomercial product Aunt Shirley will buy you for the holidays because she doesn’t know what else to give you.

If you are tired of giving more “stuff” that people don’t need or the generic gift cards that people now resort to, consider giving a different present this year—the gift of experience.

Maybe your best friend, inspired by Dancing with the Stars, has always wanted to take a ballroom dancing class but can’t justify spending the money on that kind of indulgence. Why not give the gift of a class or two for her so she can try it out?

Perhaps your sister recently had a baby and would like nothing more than a weekend away to reconnect with her husband. You could offer to babysit for the weekend or to pay for a room at a bed and breakfast for her.

The opportunities are endless for this type of gift. Chances are that those closest to you often tell you what they would like to do and what is most important to them at this stage in their lives. By listening closely, you will have endless gift giving possibilities.

People often will not splurge on things they want to try or experience, so they will appreciate your gift all the more. In addition, they will remember your gift for years to come. You probably don’t remember that cousin Ricki gave you a $50 gift card to your favorite department store last holiday season, but you will remember that she paid for a three hour cooking class for you to take at the local culinary school.

Another bonus of giving the gift of experience is that there is no remnant of it physically. Unlike gifts that you don’t want or need that just clutter your house because you feel bad throwing them out or selling them in your next garage sale, the gifts of experience do not take up a physical presence in your home. They enrich your life and create pleasant memories, and you are able to keep your home free of clutter.

If you are tired of the commercialism of the holidays and would like to connect to your friends and family on a different, more thoughtful level, consider giving the gift of experience this upcoming holiday season. Chances are they will enjoy the gift and the new experience and will remember it for years to come.

photo credit: Shandi-lee

Debt Consolidation Loans: What, When, Why

September 19, 2011 By Shane Ede 6 Comments

Many of us have heard of debt consolidation loans. Some of you might have even used one before. They’ve gotten a bit of a bad rap over the last few years because they get associated with debt consolidation companies, some of which can be a bit shady. But, they aren’t all bad. And, in some cases, they can be a very useful tool in your debt repayment strategy.

Debt Consolidation Loans: What Are They?

The concept is actually pretty easy to grasp. As the name implies, a debt consolidation loan is a loan that consolidates all of your other debt and puts it all under one single loan. Depending on the lender, you can consolidate just about any debt. We’ll talk about some of the things you might not want to consolidate in later. For many, the prospect of trading their high interest credit card debt for a lower interest rate loan can be very enticing.

Debt Consolidation Loans: When Should They Be Used?

While you can get a consolidation loan at any time, there are a few times when they are of the most use. The most common of these is when you have several credit cards that have high balances and higher interest rates. As we all know, paying only minimum payments won’t get us very far, but having several cards to pay sometimes leaves us with little left over to pay extra towards those balances. A consolidation loan can reduce the interest rate, and reduce the payment amount, making it easier to pay extra on the balance. One of the biggest factors to determining if you should use a consolidation loan is your resolve to stay off the debt treadmill. If you can’t commit to not adding any more debt, you’ll only find yourself worse off in the long run.

Debt Consolidation Loans: Why Should They Be Used?

A debt consolidation loan can be a great tool when you’re working on paying off your debt. The reduction in interest rates and payments can help ease the burden of your debt while also enabling you to pay off the debt at a quicker rate. Again, if you aren’t committed to not adding any more debt, and you start using those same credit cards again, you’ll find yourself in a much worse situation than you were before. Combined with a commitment to no more debt, they are a great tool.

Debt Consolidation Loans: Caveats

With anything, there are a few things that you’ll need to watch out for. Besides reloading your credit cards, that is. Some lenders will attempt to roll a car loan or a home equity loan into the consolidation loan. Only do that if there is no other option. Why? Both the car loan and the home equity loan are what are called secured loans. There is some physical asset that the lender holds title to should you default. If you roll either into the consolidation loan, you don’t own that physical asset until the consolidation loan is paid off. Consider this example. You have a car loan for $5000, on a car that has a value of $10000. You roll that car loan into your consolidation loan along with $20000 in credit card debt. The total for your consolidation loan is then $25000. Until you pay that $25000 off, the lender will keep it’s lien on the car. What if you get in a wreck and total the car? You can’t use it as a trade-in, or sell it to a salvage yard until that $25000 is paid off and you can get the lien removed from the car. It’s a hairy situation to be in, to be sure. All that said, getting an unsecured loan can sometimes be difficult, and depending on your situation, some lenders might require at least part of the loan be secured. You’ll have to determine if that’s a risk you want to take in order to take ownership of your finances.

Much like any other financial tool, a debt consolidation loan can be helpful under the right circumstances. Be careful, examine the details, and learn how it works, and you can make sure that it remains that way.

photo credit: Vectorportal

Taking Financial Ownership

September 16, 2011 By Shane Ede 16 Comments

I was reading a story somewhere where a person was being interviewed about their debt. In the interview, the person was speaking about how they had this credit card debt and how they just couldn’t get out from under it because of all the interest, fees, and other ways that the credit card company throws on the heap each month. They went on to talk about how they were in fear of having their car and house repossessed because they were falling behind. With each new problem, they were quick to point out the things that were keeping them back and causing their slide into bankruptcy.

Something occurred to me, then. They were taking no ownership in their finances. No matter what the financial woe was, it was always someone elses fault. The credit card companies were tacking on interest and fees. The bank was adding late charges onto their car loan and mortgages. Not once did they take any ownership of their situation. Not once did they say, “we shouldn’t have charged so much on the credit cards”, or “we bought more house than we could afford”. The blame was always on the other guy.

If there’s one thing I’ve learned in my journey towards beating broke, it’s that it’s all my fault. I signed that credit slip. I signed that mortgage. I signed the loan papers. Yes, some of the credit card companies have interest rates and policies that border on predatory. Yes, the banks will allow you to borrow right up to a point where you’re living paycheck to paycheck. But, I signed on the dotted line. Along the way, I discovered all of that, and I took financial ownership. And, in doing so, I took control.

Through financial ownership, I have control over where my money goes. I have control over which debt gets paid off first. I have control of how tightly the purse-strings are held. And, most importantly, I have control of my financial future. A future that I plan to make as financially independent as possible. Not at the whim and mercy of any bank, but a future where I can plan to buy things, and save money towards retirement.

My journey isn’t over, but I am beating broke. I’m taking financial ownership and making my future one that is free from broke.

I want you be able to say the same thing. It’s one of my goals for this site to help you beat broke. Beating broke is the first step in your financial journey towards a life free from concerns over where next months bills are coming from. You can do it. But, you’ve got to take financial ownership. You got yourself in the situation you’re in, and only you can get yourself out. Do it today. Accept that you are the only one that can take ownership of your financial situation, and you are the only one with the power to fix it. Take that step.

photo credit: woodleywonderworks