Tag Archives: emergency savings

Understanding Millennials Financial Stress

1/15 Understanding Millennials  

Hi George: We spoke for a minute after your radio show with Phil Johnson today and you asked me to email you.

I am a 23 year old full time university student and I am on a full ride scholarship. I also work a part-time job and am lucky that it pays well. I have lived with my girlfriend, who is also a full time university student that serves on her weekends and volunteers once a week at KGH, in a modest apartment in downtown Kelowna. I am a millennial and I understand a lot of the frustration pertaining to the “zombies” of my generation.

I guess the issue I have is that I, like many other people my age, can only tread water and hope not to drown in financial debt. There is no way you can go to school today without access to a computer and internet. On top of paying for schooling, you have rent, utilities, food, insurance, gas, cellphone bills (another necessity in today’s world – and not the millennial’s fault) and so on.

If you do the math; a full time student spends 15 hours in class and is recommended to spend an additional 3 hours studying outside of the classroom which adds up to 45 hours/week of studying time. In addition, to keep a roof over your head, your belly full, and your vehicle that is required to transport you throughout your erratic schedule, you will have to work at least a 40 hours/week at minimum wage.

It is also recommended the average person gets 8 hours of sleep per day, or 56 hours/week. So we are now at 141 hours of our week dedicated solely to studying, working and sleeping while we only have 27 hours left to kill.

Hopefully you can fit all your driving, grocery shopping, cooking, eating, exercising, banking, personal hygiene, volunteer work, and maybe, just maybe, you will have the time to put your feet up and prey you don’t have any emergency expenditures. 

Now I cannot speak for all millennial’s, but the fact that I am on a full ride scholarship and still contemplating taking out a student loan frustrates me, and when I hear people on the radio commenting on how spoiled and lazy all of us millennial’s are, it frustrates me even more.

If you have any financial advice I would appreciate hearing it, and again, I apologize for the breadth of this email, but I thought you may be intrigued by a 23 year old’s perspective on why the majority of us millennial’s are broke.

A BIG thanks for your note. It’s so well written and thought out AND accurate! Sure wish I could magically insert your email into my book today!

You’re right that millennials get labeled. It’s mostly off US surveys of various degrees of quality and accuracy. In the next year or two, “you” will outnumber baby boomers so the world, including myself, really ought to be a little more careful in the generalizations. Thank you thank you! For every stereotypical millennial there are vast numbers of superstars and future leaders such as you.

Not sure when you’re done or if you read the Money Tools chapter If you’re about 25 or younger, but DO start thinking about the critical year after grad as outlined in there.

Nope, you can’t save right now. Reality sucks but it’s about financially treading water – of surviving and not thriving. And that’s you with a full scholarship, never mind the 90% or so that don’t have that “luxury.”

Do NOT let the need for some student loans depress  you! I know there’s really no such thing as “good” debt, but there is “better” debt on the proviso it’s not around for a decade. Everything in life is a trade-off and you’re not looking to use it for a three week Europe holiday. Just knowing that you hate doing it makes you more financially responsible than the vast majority of the world. Better sleep, less stress, a small cushion “in case” is worth using some student loan money!

The BIG goal, even if it’s funded with student loan money, as reasoned above, is to have a month of expenses in a savings account for any emergency. It’s fine if that’s half your savings, half your girlfriend’s for the time being. It’s worth the reduced stress and just knowing the next “emergency” will then be more of an inconvenience…

George Boelcke – Money Tools & Rules book – yourmoneybook.com

Withdrawing From Your RRSP

A recent Bank of Montreal survey found that the amount we’re withdrawing early from our RRSPs has increased to an average of $21,000, and 40% of us are taking money out of our RRSPs way before retirement.

Why? The top three reasons are to pay for living expenses (23%), for an emergency (21%), and to pay off debts (20%). It’s a horrible idea for all three of them.

The survey inconveniently leaves out the fact that this figure of $21,000 includes the people taking money out for first time home purchases, which inflates the average by quite a bit.

But for those of us taking out money for bills, emergencies, and debt – don’t do it. I know it’s hard to breathe and even harder to sleep and function when you’re in financial trouble. I’ve been there – and I’ve done it. But take a time-out and look at every alternative before you kill your retirement money, because there are alternatives.

First, you think you’re solving a problem today, but you are creating three much bigger ones: Next April you’ll have to pay tax on that RRSP withdrawal. Since you clearly aren’t flush with cash now, you won’t be next April, either. You’ll also have tax withheld off the amount you’re cashing out. So cashing out $10,000 from your RRSP really only gets you 80% of it, or $8,000.

And finally, that $10,000 isn’t growing and compounding inside your RRSP anymore. In 20 years from now, that’s cost you around $30,000 in lost income. Out $2,000 tax withholding – out more tax next April, and out $30,000 or so when you get close to retirement. It’s an entire chapter in the Money Tools book called “Today’s problems become tomorrow’s nightmare.” Go down to Mosaic and invest the $20 in the book that’ll save you $35,000 or more in this example alone!

The book will also give you a ton of ways to solve your cashflow problems without killing your RRSP. You need to decide if the problem today is so bad and urgent that you’re willing to trade some relief today for significantly increased financial problems by not having that money when you’re retired.

Is your emergency a real emergency or something you can save your way into over a couple of months? Do you understand the math of paying off a debt today and how little that saves you when compared to five to ten times the cost of cashing part of your retirement savings? Can you take a deep breath and finally do a 15-minute budget to see where your money is going? Will you acknowledge that your current financial plan sucks and this is going to be necessary again unless you’re prepared to change some things around? Can you get an overdraft, instead? Yes, it’s a horrible idea, but better than the alternative you’re considering? How about taking it out of a credit card? No, it’s not a good idea, but the lesser of two evils even at 20%. Yes, there are more alternatives. I hope you read the “tomorrow nightmares” section of the book BEFORE you make the call to get the money.

George Boelcke – Money Tools & Rules book – yourmoneybook.com

Daily Pay Advance?

The CBC just posted a story of a Vancouver (and Montreal office) start-up called Instant Financial. The business model is that companies can sign up with them to allow their hourly workers to withdraw up to half of their pay immediately after their shift ends. Mr. Mikes and McDonalds have already signed up with them.

Work your shift and get up to half the pay immediately. The rest is on your normal paycheque. My first reaction was: OMG – no – please – what a horrible idea.

The company is positioning themselves between a lender and payday companies. Nothing in the article, or anything on the company web site talks about the fees. But I can assure you, they’ll be significant and frequent! Clearly this is for hourly workers and a big benefit to companies with large numbers of hourly staff. There’s no chance their payroll department is in the town or city the workers are, and there’s no chance they’ll do hundreds of $50 advance cheques for their workers. So for them, it’s a third-party handling all that work and they just deduct the amounts from the pay just like they do for any staff charges from meals to whatever.

For the individuals, it’s very tempting, but horrible idea. Sure, lots of hourly workers aren’t blessed with a lot of savings. The company’s sales pitch is that this way they can access money for emergencies or to buy necessities. But $30 or $40 isn’t changing anyone’s life – no way. A $10 an hour worker, after an 8 hour shift can take out $30 tops. It’s 50% of their net pay max. The perceived need for this money today will come at around $5 or $8 in fees and will put a huge dent into their real net pay. Then, they’ll be heading to a payday lender to make up the rest of it to pay rent, car payments, their cell bill or other bills. I’ve seen it over and over and this “today benefit” will turn into the tomorrow nightmare. You can see that even with higher income earners when 25% of early RRSP withdrawals are for “daily bills.”

I read this story an hour ago. Give me another hour and I bet I can come up with a dozen alternatives at no cost and no pain. Big picture, employers are fine with their staff being broke. It’s a great motivator to get them to come back to work next week and next month. For the quarter of (around) minimum wage workers that are still in school, they’re around 17 to 19 years old. They have no financial knowledge, and probably just as much discipline. That “today” advance will go for a trip to the mall or a pair of jeans – not necessities as the company wants to tell us.

For the rest of their target market, give me a group of the most broke, living hand to mouth people, and I bet I can turn their finances around within one or two pay periods. Can the most broke people start with an emergency savings account (see the Money Tools & Rules book page 222)? Of course. Can most broke people save $20 a month? Yes. So within a couple of months, they’ll have enough in emergency savings to avoid ever having to be tempted with this daily advance plan!

But companies don’t want that for their staff if the truth were known. But people need to decide: If they’re broke they can fix it, or compensate. This company helps with compensating and staying broke plan, but not fixing.

Spend $45 to Save $36,000

Two weeks ago, I received an email from a listener in Kelowna asking for some financial feedback. The email had enough in it to fill an hour or more, but here are the highlights:

This middle-aged couple has done really well in their investments. They have significant RRSPs and contribute 5% to their pension plan. They do have an RRSP loan at a good rate – and I won’t fuss about that.

They live within their means, no extravagant spending, small mortgage at a great rate, and an income of over $100,000.

On the debt side, it’s a different story. When they bought the Money Tools book at Mosaic, they immediately found $12,000 savings! Pretty good for a $20 investment! I keep saying: You go to almost any page and you’ll find a way to save money in whatever area! In their case, they have a line of credit that’s insured with life and disability. That’s one of THE biggest ripoffs in the financial field. The bank’s profits are 50 to 60%. Never get your insurance from the bank – ever. He immediately called to cancel it, but was on hold for 1 1/2 hours and never did talk to someone. Well, don’t bother calling. Write a three sentence letter that you want it cancelled as of today and deliver it to your branch. Banks can have a way of ignoring a call, claiming they never received it, etc. in order to protect their profit. In writing and delivered gets it done.

Their line of credit has been around since finances weren’t so good in the 1980s. It’s around $40,000 at a rate of over six percent! The rate is always prime plus something. That rate may have been OK when things weren’t so good, today it’s a massive overcharge. His credit score is over 780! He’s in the top 10% most credit worthy people in the country and ought to pay prime! 3% over for the last 10 years and on-track to only pay it off in another decade is over $25,000 in extra interest! All he did was go to equifax and pull up his credit score! When rates go up, lenders move up your rate. When your credit improves, they’re not voluntarily passing on a lower rate! You have to know your score and go ask – or demand it or fire your bank.

In the case of this couple, I wouldn’t move the credit line, but just get from the 10-year plan to one that pays it off pretty easily by Christmas this year. They have $20,000 in savings. Read the step up debt repayment section: First pay off your debts, then start saving. In their case, they should keep $5,000 for emergencies, dump $15,000 onto the credit line and pay $2,000 a month to get it done. It will take another six months to pay off the RRSP loan, and by June next year, they’d be debt free – instead of the 10-year payment plan they are on.

With a great income and getting really mad and motivated, they would be

$25,000 insurance cancellations for the 10 years the line of credit would take to pay off on their current plan

or: $25,000 (roughly) to pay off the line of credit 10 years sooner

$11,000 paying off the RRSP loan (the interest isn’t tax deductible) nine years sooner (by next summer)

That’s $36,000 of savings by spending $20 on the book and $25 on pulling their credit score. That’s a pretty good return!!

Then, next June to December, they can save the $500 they were paying on the RRSP, the $2,000 they were paying on the line of credit for six months or a total of $15,000 by just re-directing what they had been paying on their debts!

Paying Less This Year & Saving $1,400 the Easy Way

Some Things That Will Cost Less This New Year

4K Televisions: If you haven’t seen one, you should. The resolution is two or three times better than a high definition TV. But these 4K TVs were in the thousands of dollars just a year or so ago. They’re dropping quickly – as everything in electronics does! Walmart in the U.S. now has the Avera 49″ for $249. That won’t be the Canada price, but you can use it as a guide.

Small cars and sedans: California sells in a month what Canada sells in a year. So the U.S. sets price trends and U.S. customers are still buying SUVs and big vehicles like crazy. That makes you crazy smart if you buy a small car or sedan that isn’t selling. They’ll see price reductions and rebates the entire years. And you’ll be even smarter if you buy a two or three year old!

Some groceries: Beef, veal, fruit, and eggs should see a decrease this year, according to the department of agriculture. That’s assuming normal weather and, in the case of most fruit, a stable exchange rate.

Certain Apple products: If you’re an Apple fan, the second half of the year should bring a bunch of price drops on Apple computers, iPads and phones. And what nobody seems to know is that the Apple website has a hidden section where you can get refurbished products right from the manufacturer at great prices!

Airline tickets: According to Expedia,  2017 will give you lower prices and more selection. Supposedly prices should be those of 2012, which would be great! Anecdotally I’m seeing that already with three flights I booked in the last week.

Cell plans: Rough rule of thumb is that you need to re-shop your cell plan every 18 months or you’re probably overpaying! The competition is heating up again, in the U.S. any contracts are gone, and Wind is trying to increase their business a lot since Shaw bought the company!

52 Week Saving Challenge

Can you save three dollars this (third) week of January? OK, can you save four bucks next week?

The 52 week saving challenge was put out by the budgetnista blog. The challenge is to save a dollar in the first week, and add a dollar for each week after that. You’ll have almost $1,400 saved at the end of the year – one dollar at a time. I don’t know about you, but that’s a lot of money, and it starts with a buck.

Yes, it’ll be harder in week 40, because you’ll be saving around $200 or so come October. But is having a $1,400 savings account worth it? Only you can decide.

Learning from Calgarians?

We didn’t learn from the massive 2008 financial meltdown in the US that triggered millions of job losses, business closings, and over five million foreclosures, from which they’re still not fully recovered. That doesn’t make me hopeful that we’ll learn much from what’s still happening just a six hour drive East in Calgary, but you should know:

Oil prices started to fall in late 2014 and the job losses became very big and very real in the spring of 2015 and are now at a 22-year high. One of my former clients is down to a third of their staff while their debt has reached $2.5 billion – today they’re a walking bankruptcy within months. In the “good old days” one-fifth of Calgary families earned over $363,000. Today, restaurants are empty and it’s easy to find parking spots downtown. Bankruptcies are up 28% and suicides up 30%. With every month that passes, the psychological depression gets worse as there seems to be no end in sight.

It’s now been long enough for an entire city that’s dependant on the oil business to likely change their views on money, debt, and financial security. It isn’t – or should never be – about a line of credit for an emergency, or the attitude they can always remortgage their home – or sell if it absolutely need be. You can’t keep running up a line of credit with no income, and you certainly can’t remortgage. The last great hope of selling the home may take a year or more, and at a much lower price, and that $100,000 price drop is all their equity wiped out.

An expensive lesson is also that everything can go wrong at the same time: A job loss, plummeting home prices, a stalled market that won’t grow investments, no more stock options, and the dollar back down to the mid 70s. It’s a shock to anyone, but more so people in their 50s or older who were counting on every one of these factors in funding their retirement. For younger people, the student loans have started, while the promise to an average entry level wage of $50,000 are dead, and they’re now scrambling for any job paying anything at all, in order to pay the rent and to eat.

Calgarians (and all of us Canadians) were fine with perpetual debt because we thought we had a perpetual income stream. The hard reality is that income isn’t guaranteed, or permanent – but the debts are! And now they need to be paid with little or no income in a new reality. It isn’t hard to skip a few dinners out for a month. It’s hard to skip a car payment – and it’s almost impossible to recover a month of arrears on their mortgage payment. The more you owe – the higher the odds are that you’ll lose everything.

EI has run out, the small savings are long gone, soon the RRSPs will have been cashed out, and everything that took decades to build will be wiped out within a year or two, tops.

I’m here to tell you that Calgarians won’t see those bonuses and wages again in their lifetime. Of course the oil business will recover. But it’ll be a very different reality when it does. Just look at all the economic turmoil that happened in the U.S. if you don’t believe me. Calgarians of all ages, and they’re not alone, are starting to realize that their peak earnings are already behind them. The question is: What financial changes would you make today if you knew this is your last large paycheque?

Banks do stress tests on themselves: What shape would we be in, or what would we do, if the worst happens? Think about that in your own financial life. One day it may start raining and not stop for a long time. How big and sturdy is your umbrella for a rainy year or two or three?

Once You’re Debt Free…

I was super excited for a couple that someone met and asked to contact me. He told them to get in touch with me for some feedback on whether to use investment money to pay off their mortgage, or keep investing. That wasn’t the exciting part, though. Debt free but the home is something most people haven’t ever experienced in their life. If your home is also paid off, you’ve reached the pinnacle of financial success. But the critical hurdle is to have all the consumer debt cleared first.

This couple, at $780,000 actually become part of the richest one percent in the world. That includes your toys, cars, and equity of your home. Net worth is the total of what you OWN less the total of what you OWE. If you’re someone in that position, there are a few general things you should consider:

Close any line of credit you have. That’s especially true if it’s secured against your home. Once you have some net worth – stop borrowing forever. Don’t be tempted to just keep that line of credit in case…close it today.

Have one normal second credit card, but get an American Express card right from them with no monthly payments. A real charge card forces you to pay the balance in full every month. Close every other card but these two.

What’s you big reward for having won with money now? Maybe it’s a new vehicle every five years, perhaps it’s travelling, or now doing a ton of charitable giving. Set up a separate savings account and have money transferred into it automatically every month. $500, $800, or whatever accumulates automatically and pretty quickly to fund your well-earned big rewards.

Make sure your investments are conservative if you’re into your 50s or older. But do make sure they grow, and aren’t parked at a bank with really bad returns. Whether it’s $200,000 or $2 million – conservative investments should still yield you over seven percent a year before taxes! That will double what you have in the coming eight to 10 years!

If your investments do, or will, include rental property, make sure it’s with 50% down. Pay it down if you have one or have the 50% down if you buy one. Do not make a rental property the reason your finances crash. The risk isn’t worth the income. 50% down lets you sell it in a week no matter what the economy does.

Set up a full emergency account. Most people struggle with the first step of one week’s pay to get started. If you’re financially successful, set up a savings account with three to six months of all your expenses. That way you’re not breaking investments, cashing RRSPs, or using a line of credit in an emergency. If you need big car repairs or a new roof, it’s no longer an emergency, but only an inconvenience.

If you still have a mortgage, it’s time to get serious about paying it down or paying it off. You may just want to write a cheque for the balance and then re-direct what you were paying a month back into your investments. Plan B would be to pay 10% extra each year, cut the leftover term down, and change to weekly payments to cut another four to five years off the time left. You have the money – now just increase what goes on the mortgage.

Lastly, pay it forward. Make sure the kids of friends, your nieces, nephews, grandkids, or families in your church or elsewhere get to learn the lessons you know AND that you live: Put some money into savings each month, live on less than you earn, and learn the difference between needs and wants. Oh and if you care enough to share: Got to Mosaic and get someone a copy of the It’s Your Money book. They may not listen to you but maybe they’ll read a chapter or two…

Graduating to Financial Adulthood

In most places, when you’re 18 you’re an adult. In BC, the age of majority is 19 and by 21 you can do anything anywhere. You’re done with high school and can drive, drink, vote, borrow or invest, and live on your own. However, for the majority of the population, that doesn’t make them a financial adult. That can happen soon after, or it might not happen until your 30s or 40s – if ever…

This week and next, I want to go through a list of what I believe makes you a financial adult. It doesn’t mean you have to be debt free or take a university course. The essence of it is that you need to be in control of your finances and money, instead of it being in control of you. You’re pro-active versus reactive and out of control. If you do these, or know how to do these, congratulations! You’ve graduated! Some are easier than others, but all are really important.

1..You have at least one-week of income as basic emergency fund and are working towards a full three to six months of all your expenses.

2..You have two credit cards and a debit card. Your credit card balances are less than 30% of your limit (or are lowering your balances every month in order to get there) and you do not have or use an overdraft on your chequing account.

3.. In the last two years you have checked your credit report and credit score at least once and your credit report is accurate. In other words: You’ve disputed and had them fix any errors. (Go to Equifax.ca and purchase ‘score power’ which is your credit report and score.

4..You have opened an RRSP account and/or Tax Free Savings Account and make a regular monthly contribution. No matter how small – at least you’ve started and have traction.

5..You have basic insurance. Car and home coverage is obvious. But if you’re a renter, you have a tenant fire insurance policy and if you have a child, or a partner, you have a term life insurance policy.

6..Whether you’re single or married, rich or broke, you have a properly completed will. It can be a $20 do it yourself kit if you’re single, or a lawyer-prepared one if it’s more complex and you have kids. But you (or you and your partner) do have a will.

7..You know the actual amount of your net take-home pay every month. You can’t control your money if you don’t even know the exact amount you net and keep talking about your gross pay as if that were what you could spend each month.

8..You have done at least a one-time budget, or have a system of tracking your spending.

9..Your monthly spending is less than your monthly take-home pay. You may have ten cents left or $1,000 – but you’re not spending more than you earn. Financial adults figure out how to pay for something and then buy it. Others buy it and then figure out how to pay for it later.

10..You know your net worth. At least once a year you figure out what your total assets are (what you own) less your total debts (what you owe) and whether you’re growing it by savings, or whether it’s shrinking by going into debt.

11..You have a system for paying your bills every month. Waiting for the mail is not a system! Whether it’s an app on your phone, setting up automatic payments, a calendar, an on-line program or a simple check list you look at every month – it needs to be a specific system.

Waiting for the bill in the mail isn’t a plan. If the statement doesn’t come and you forget, your credit rating plummets. Blaming the post office won’t work. It’s your fault that you don’t have a system for staying ahead of the game and on top of your bills.

12..You have a proper filing system for your financial stuff. It can be six large envelopes for each of the last six years, or a ton of file folders, if you’re an organizational nerd. Kids get to say ‘I lost it.’ Financial adults don’t have that option. The graduating test will be whether you can find your tax return from 2011, or a bank statement from February within 10 minutes.

13..You are taking specific steps every month to pay off your existing debt, excluding your mortgage. You are paying more than minimum payments and your total debt is shrinking each month. You have a specific month and year that you’re working towards when you will be debt free except your home.

14..In the past year you have made at least one call to dispute a charge, ask for a lower rate, or comparison shop. If you don’t know how to stand up for your money – others will gladly keep taking it from you.

15..If you’re in a committed relationship, you and your partner spend at least an hour each month without the TV or kids discussing your money, savings, bills, purchases and budget. Kids spend – financial adults have a plan and communicate.

16..You have at least two specific and measurable financial goals. Saving more in my RRSPs, or paying off my credit card isn’t a financial goal – it’s a dream. It needs to be specific: Saving $150 a month in RRSPs is specific and measurable. Reducing my credit card balance by $200 or more every month until it’s paid off is a measurable and specific goal.

17..At least once each month you have the self-confidence to say no to an expense. It may be at work, to your kid, or to yourself. If you don’t know (or don’t want to) say no or say that you can’t afford it, or don’t need it you’re doomed to have your money continue to control your life, instead of the other way around. Setting boundaries is what financial adults do.

18..On anything expensive you shop around before committing to a debt or a bill. That includes interest rate shopping, your insurance, cell phone contract, and your credit card interest rate if you always carry a balance. Kids impulse buy until they’re out of money – financial adults don’t spend until they’re broke. If you do – you can skip the other items and save a bunch of time and effort – you’re doomed to be broke for years to come.

It’s RRSP Time – But You Shouldn’t Contribute This Year

There’s a news story this week that most Canadians want to put some money into RRSPs but don’t have the cash. That’s great news!

If you want to be a doctor, you’re not doing surgeries today. You’re getting your MD, and then you’re ready to do surgeries. In the same way, it’s not the other way around with paying off your debts versus savings. It’s pointless to put some money into RRSPs while you’re in debt, or to send $200 to Visa and the next day put $200 into your savings account. Just send the $400 to Visa and get done with it. Then, and only then, can you focus 100% on getting wealthy and save the whole $400 a month.

If you have debts, forget savings and your RRSP for a year or two. Your tax deduction and interest aren’t going to equal the interest you’ll save by paying down your debts. But this is not about math – this is about behaviors and it’s 80% psychological. If it was about math, you wouldn’t sign up for a stupid 20% credit card or owe on your line of credit a decade later.

And if you think that borrowing to put money into your RRSP is a good idea, you’re doomed to be in debt for a very long time to come. You must be kidding? You’re broke, in debt, and your best thinking figures that the solution is MORE debt? Hello? If that’s what some financial person at the bank or wherever is telling you – run away fast! That person is on commission. They are making money from selling you to borrow. They’ll make money on the loan, on the RRSP, on commissions up front, and on trailer fees. THAT is the person you’re going to listen to? You have to be kidding me.

I’ve seen it hundreds and hundreds of times when people attempt to put a little into their RRSP, pay $20 extra on the credit card and juggle savings and debt. It won’t work – guaranteed. You save $50 in an RRSP and just think: That doesn’t add up to squat and you’re right. You pay $50 extra on your credit card and realize: That’s not worth the effort and I’m not getting anywhere so what’s the use – and you’re right. That shotgun approach won’t work. It takes 100% focus and commitment to one thing! Take a step back from savings and only focus on getting every debt paid off except your house. THEN you’ll have so much freed up money you’ll end up with five or 10 times as much into savings as trying to do everything off the bat.

Guaranteed, you’ll become debt free in a year or two, but only if you follow the steps one at a time:

Step one: 1 week of your net pay in an emergency savings account. It’s more than 60% of people have and turns your next emergency into an inconvenience.

Step two: Get debt free on everything but your mortgage. No more credit cards or borrowing – it hasn’t worked so far in your life. List your debts smallest to largest. Pay minimum payments on everything but the smallest.  That smallest bill gets every spare dollar you have. That’ll  pay it off in just a few months. Then onto the next smallest and you’re not looking up until all your debts are paid off.

Step three: 3 months of all your monthly expenses in the full emergency account

Step four: Save 10-20% in investment and retirement money

Step five: Now start paying extra on your mortgage.

If you want to reinvent the wheel and do it differently – good luck to you. E mail me in three or four years when you’re right back to where you were today – honest!