5 Ways to Avoid Financial STDs (Substantially Tremendous Debt)

In today's world, it's easy to fall into the trap of Substantially Tremendous Debt (STD). Many people are living paycheck to paycheck and struggling to make ends meet. It's important to take control of your finances and avoid getting into debt in the first place. In this article, we'll discuss five ways to avoid financial STDs and live a financially healthy life.

1. Create a Budget and Stick to It

Creating a budget is the first step towards financial stability. Start by tracking your expenses and income for a month. Write down everything you spend money on, from your rent and utilities to your morning coffee. Once you have a clear idea of where your money is going, you can create a budget that aligns with your income.

Make sure you allocate funds for all your essential expenses first, such as rent, food, and utilities. Then, allocate money towards your financial goals, such as paying off debt, saving for retirement, or building an emergency fund. Finally, allocate funds for your discretionary spending, such as entertainment or dining out.

Once you have created your budget, stick to it as closely as possible. If you overspend in one category, adjust your spending in another to compensate.

1. Save for Emergencies

Unexpected expenses can happen at any time, and they can quickly derail your financial stability. That's why it's crucial to have an emergency fund. Set aside at least three to six months of living expenses in a separate account to cover unexpected costs, such as medical bills, car repairs, or job loss.

Start by setting a realistic savings goal and contributing a small amount each month. Consider automating your savings by setting up a direct deposit from your paycheck or using a savings app to round up your purchases and save the spare change.

1. Avoid Credit Card Debt

Credit cards can be a convenient way to make purchases, but they can also lead to substantial debt if not used responsibly. Avoid using credit cards to finance your lifestyle, such as buying clothes or dining out. Instead, use credit cards for essential purchases, such as groceries or gas, and pay off the balance in full each month.

If you already have credit card debt, prioritize paying it off as soon as possible. Consider consolidating your debt into a low-interest loan or using a balance transfer card with a 0% interest rate to save money on interest charges.

1. Live Below Your Means

Living below your means means spending less than you earn. It's a simple concept, but it can be challenging to implement. Start by cutting back on your discretionary spending, such as dining out or shopping. Look for ways to save money, such as cooking at home, carpooling, or shopping at discount stores.

You can also find ways to increase your income, such as taking on a side hustle or negotiating a raise at work. The more you can increase your income and decrease your spending, the easier it will be to live below your means and avoid financial STDs.

1. Invest in Your Future

Investing in your future means making smart financial decisions today that will pay off in the long run. Start by contributing to your employer's retirement plan, such as a 401(k) or 403(b), and consider opening an Individual Retirement Account (IRA) to save even more for retirement.

You can also invest in yourself by furthering your education or learning new skills that will increase your earning potential. Look for opportunities to network and build relationships with other professionals in your field to increase your career opportunities.

In conclusion, avoiding financial STDs requires discipline, patience, and a long-term mindset. By creating a budget, saving for emergencies, avoiding credit card debt, living below your means, and investing in your future, you can take control of your finances and live a financially healthy life

Pay Day Loan Confession: I've fallen and I can't get up!

…have you (or someone you know) "fallen" into the Pay Day Loan bottomless pit of debt and feel like you can't "get up" out of it? I have.

When you’re in a bind and you need a few hundred bucks to bridge you over a few days until your next pay day, a pay day loan may look very appealing. In my opinion ... Pay Day Loans are like an addictive drug. The first experience may seem helpful and pleasurable but it eventually becomes something that you believe you can’t live without.  And just like a drug addiction, getting out of Pay Day Loan debt can be scary, daunting and financially painful. But … there is a cure for this Financial Dis-Ease. 

   

Let’s first discuss how Pay Day Loans causes Financial STDs (Substantially Tremendous Debt).  Ok … (true story) … a family member of mine needed $200 to pay the electric company to keep the lights on. A so-called friend referred them to a local pay day lender. The pay day lender charged $20 per $100 borrowed. The process was so pleasant and easy that they decided to borrow an extra $100 for a total of $300.  They paid their past due electric bill for $200 and had $100 for food and gas until their next pay day. On their next pay day, they made the fateful decision to renew the pay day loan. So, this time the loan was for $360 (to pay off the original loan amount of $300 loan and the $60 fee). The new fee was another $72, which totaled $432 for the new loan. My family member renewed this pay day loan at least 5 or more times and quickly began to sink into debt.

   

Getting “up” out of pay day loan debt is not as easy as falling “down” into it, but it is possible. Here are 3 tips to get out of Pay Day Loan Debt.

   

COLD TURKEY

   

If at all possible, the best method is to stop taking out pay day loans immediately and sacrifice for the pay period. This will reset your financial situation and give you your full pay check during your next pay check.  It is important to plan for this pay check deficiency. To help you through this financial deficiency,

• Ask your family members if they some money to spare or borrow,

• Contact your bank or credit union to see if you qualify for a payment deferment on your loan payment due to financial hardship,

• Cut out eating out during this pay period to save a few bucks, or

• Carpool with a co-worker or take public transportation to save on gas.

DEBT TREATMENT

   

Another option is to apply for a loan with a reasonable interest rate and short period of time (term) to pay off the pay day loan. So instead of having a pay a lump sum every month, you can paythe new loan off in more reasonable and smaller weekly, biweekly or monthly payments.  If you go this route, make sure you keep the term at 12 months or less and make sure that the interest rate does not exceed 18%. Some credit unions may offer loan programs designed to help people get out of pay day loan debt.  One of the advantages of getting a loan from credit unions is that they must comply with a “usury law,” which means that they cannot exceed a specific interest rate, usually 18%.  If you have a great relationship with your bank, ask them if they have a loan consolidation program that can assist you with refinancing your pay day loan.

   

  

TERMINATION

  

A last resort to get out of pay day loan debt may be bankruptcy. The two chapters available to file under for bankruptcy are Chapter 13 or Chapter 7.

   

Chapter 13 bankruptcy is considered “reorganization” and is appropriate if you have significant collateral that you want to keep like a home or vehicle. Chapter 13 establishes a payment plan up to 5 years to pay on your debt based on your financial capacity.  Once you have completed all of the payments ordered in the bankruptcy plan, the debt is considered “discharged” and the remaining debt is not collectible by the creditor.

   

Chapter 7 bankruptcy is considered “liquidation” and is appropriate if you have significant unsecured debt and minimum or no collateralize debt.  Chapter 7 liquidates or “terminates” qualified unsecured debt. Should you have collateralized debt, you can “reaffirm” with the bank and continue to make payments according to your credit agreement or you can “surrender” the collateral to the bank or trustee so it can be sold to pay on the debt to liquidate.

   

This option again should be a last resort consideration but can assist you in resetting your financial situation with a fresh start.  There are pros and cons to filing for bankruptcy so make sure that you consult with a knowledgeable and consumer focused bankruptcy attorney.  Click here to listen to my interview with Bankruptcy Trustee & Attorney, Angelyn Wright, Esq., as she talks about the “Truth About Bankruptcy.”

   

   

Sinking in Pay Day Loan debt can feel helpless and hopeless, but there is financial resurrection. The great thing is that you hold the power in stopping this type of financial abuse by making the decision to stop using pay day loans.  Make the decision today.

   

Of course, the best way to avoid "falling" into this bottomless pit of debt is to avoid using it at all costs. Seek alternative short term loans through your bank or credit union.

  

  

Financially True,

  

Tarra Jackson ... Making Money Sexy

   

  

P.S.  The 3 tips above is a start to help you get up from falling down into this type of debt, but there are other ways as well.  What are some other tips to "get up" from falling into pay day loan debt bottomless pit?

3 Ways to Stop Financial Self-Sabotage

… have you (or someone you know) committed Financial Self-Sabotage? I have.

   

Yeah I know what you’re thinking … “Financial Self-Sabotage?”  Yes many of us have a very dysfunctional relationship with our finances. Whether it is a fear of commitment or wanting to avoid getting into another financially abusive relationship; many people execute financial self-sabotage. Financial self-sabotage is being aware of what you are doing; knowing it is not beneficial to your financial well-being, situation or your financial goals; yet you still do it anyway.  Don't fret!  Most of us do it every now and then. Here are 3 Ways to Stop Financial  Self-Sabotaging.

  

STOP BREAKING YOUR BUDGET'S HEART

Even though budgets are living and breathing documents and may change, they help us keep financial promises to creditors, other bills, and more importantly to ourselves and our financial future through savings. Every time we break our budget, we position ourselves to break a financial promise, which may negatively affect our financial goals.
  

When I realize and acknowledge that I am breaking my budget frequently,

• I  re-evaluate my budget to make sure it is "S.M.A.R.T." (Simple, Manageable, Accurate, Repetitive with Times of all due dates).
• I may also reassess my Financial Goals to make sure they are "S.M.A.R.T." (Specific, Meaningful, Attainable, Reasonable & Time-driven) as well. 

  

PLAN FOR FINANCIAL SLIP UPS

Confession ... I am an Emotional Spender. (Look out for my Blog: Emotional Spender Confession: I am an Emotional Spender and Why it's OK!). I rebel against anyone or anything that tries to cage me in (I'm an Aquarius, go figure). I have also realized and admitted that I financially self-sabotage during a specific time of the month when I feel unusually emotional. Ladies, you may understand. Men, don't judge.
  

So, I set aside extra money in my "Slip Up Money Jar" to use when I need a little retail therapy through emotional spending. I don't justify it, I just plan and allocate for it.
  

If you are like me regarding this, include your Emotional Spending Sprees in your budget so that you don't use money that is allocated to something more important like, giving, saving or paying your bills. Just remember, being Financially Promiscuous requires Financial Contraception (Budget).  Again, plan and proceed with caution.

  

STOP PLAYIN' YOURSELF

Ok, here’s the thing … if we don’t know the rules of the financial Game, we're going to get Played. Many years ago, I used to lose the financial game because I didn't understand how my money and credit management behaviors financially affected me. As I matured and grew in the financial services industry, I realized that I was playing Checkers when the financial institutions were playing Chess and losing was EXPENSIVE. I was financially self-sabotaging myself because I didn't take the time to learn the rules of the financial game by reading the Disclosures thoroughly and completely.  My reality check was that "they weren't cheating me ... I just didn't take the time to learn the rules of the financial game." That was why I was getting played. 
  

So because I was (and still am) a sore loser, I learned the rules of the financial game by reading the Disclosures very carefully before I opened an account or signed for a loan, product or service. 
  

Some examples of disclosures you should you read and understand are:

• Truth In Savings Disclosure
• Truth In Lending Disclosure & Loan Agreement
• Fee Schedule
• Credit Card Disclosure & Shumer Box

 
Although I Financially Self-Sabotaged myself, I was eventually able to identify it, acknowledge it and fix it. The great thing is that now, when I start doing things that are counter-intuitive to what I need and want to accomplish financially, I am able to choose to make better financial decisions to stop financial self-sabotaging myself.
 
 
Financially True,
      

Tarra Jackson ... Making Money Sexy

Teaching Money and Credit Management - Whose Responsibility is it anyway?

In the United States, our school system requires all children to take and pass Reading, Writing, Arithmetic (I hated Geometry), a foreign language, Social Studies, Science, and in some schools they still require Physical Education.  However, it still baffles my mind that Money and Credit Management Education is NOT required. 

There may chapters that teach the denominations and how to count currency in elementary; as well as a little bit of finance education in high school.  And yes, there may be a financial management class offered in college as an elective.   Huh?  An Elective?   Yes, I use Reading and Writing every day of my life.  The other required courses … maybe on occasions or for fun, but I deal with MONEY EVERYDAY OF MY LIFE.  As a matter of fact, I dealt with money before I could read or write when my grandfather gave me a dollar bill when I was 2 or 3.

So, the question of the day is… Who is responsible to teach a child how to manage money, to leverage its potential wealth building power and to avoid ending up in tremendous debt and bad credit?

…I hear someone in the audience yell… The Parents!  OKAY…  And who taught the Parents?   

Many parents don’t teach their children about how to manage money because they either assume that the schools are doing it or because they don’t know or weren't taught themselves.  They may have “Colorful Credit” and could be drowning in debt.  They probably were never taught how to balance a checkbook properly.  “Checkbook?  Who uses checks nowadays?  We have debit cards.”  HINT: you still must balance your account when using your debit card. 

So, the second question of the day is…If the Parents don’t or can’t teach their children how to manage money & credit, who is now responsible to teach the child?

…I hear someone else in the audience screaming, “The Church!”  The Church is its people.  Most of those people have not been taught and are seeking financial counsel.

I do believe that Financial Institutions, such as banks and credit unions, are the most qualified to teach the world how to manage money.  Makes cents (sense) right?  “Herein lies the rub…”

LACK OF RESOURCES TO EDUCATE THE MASSES

IF the financial institutions teaches money management to the communities it serves, it may not have the resources to share the information to every consumer that needs and wants it.  Some financial institutions, do share money matters information to communities, organizations and schools, when they can get in there; but that is a small drop in a large bowl.  BUT…it’s a start!

CAN’T TEACH THE UNWILLING

You can only teach a person that wants to learn.  There are thousands of resources online, in the communities, independent professionals, etc. that provide some form of Financial Education.  However, reality check… the target audience may be set in their ways and probably afraid or unwilling to make necessary changes or sacrifices to help their financial situation.  Money & Credit Management should be taught before bad habits are formed. 

  

IT JUST DOESN’T PAY!

Here is the Oxymoron Answer to this million dollar questions (Pun intended):  It is frankly not advantageous for financial institutions to educate consumers on money management.  Consumer ignorance is a multi-million dollar business. Financial Institutions make money off of financial ignorance, poor money management, and financial irresponsibility of consumers.  Those consumers should take a close look at their monthly bank statements or check out the interest rate on their loan.  The less educated/informed and disciplined a consumer is with their money, the more money they will pay in fees and interest.  Simple math. So… if that is the case, is it really advantageous for financial institutions to have a massive Financial Literacy Campaign for the world?   

I believe that  1) it is the responsibility of the schools to provide the information as a core class from Elementary through Higher Education, 2) it is the responsibility of the Parents to reinforce the information by modeling the behavior of proper financial management for the child and instilling discipline, and 3) it is the responsibility of the Financial Institutions to provide the Financial Educational resources for the Parents to learn more and continue to be informed and fiscally responsible consumers.

Call me a Dreamer or Optimist!  I believe that Financial Knowledge is power. And … Hopefully one day the US Board of Education will understand the significance of and require Money and Credit Management Education as a curriculum in all schools.  Until then…Private Schools / Charter Schools…here is your opportunity to including Money and Credit Management Education to your curricula. (I'm Just Saying!)

For more information about money and credit management curriculum for your school, contact Madam Money at info@tarrajackson.com.

  

(c) 2010 Tarra Jackson Enterprises

What is FINANCIAL FORNICATION?

Here is a quick summary of my book, Financial Fornication. Check it out and share you comments or questions below.

Tarra Jackson
Madam Money
www.MadamMoney.com
FB.com/tarrajacksonenterprises
Twitter.com/MsMadamMoney

"To SPEND or NOT to SPEND..." That is the question!!!

"Ms. Jackson, I work in sales and I just found out that I will be getting a $19,000 bonus for the last sales quarter!  I feel so blessed!  I don't really have that much debt to pay off BUT I have wanted to build a backyard deck.  About a year ago I got estimates for when I was ready and able to have it built.  The lowest bid was around $10,000.  I also wanted a surround sound system since I do a great deal of entertaining at my home.  I know during this economy I should save my money but I feel that I deserve to do something special for myself since I busted my butt last quarter.  What do you suggest?  Should I use my bonus to get what I want or should I bite the bullet and save it?  -  Ready to Spend, Union City, GA"

Dear "Ready to Spend,"

CONGRATULATIONS on your healthy bonus!  You are truly blessed and are obviously great at what you do.  It is also great that your debt is not so overwhelming that you have to use your bonus to pay it down or in full.

I will NOT tell you NOT to spend you money!  If  you are a spender and I tell you that you can't spend, you will feel deprived and may rebel and possibly spend more than you want or spend it all.  For example, I don't do Diets.  When I hear DIET, I hear DIE...deprivation.  When I feel deprived (and can't have a Big Mac), I rebel.  So instead of having a Big Mac once a month, I may have one once a week just so I won't feel deprived.  Same thing with money with Spenders!

I WILL tell you to apply your Spending Plan allocations to your bonus.  At the very least, take 5% of the bonus for your play money and get what you want and put the 95% of the bonus in a high yielding interest bearing savings or CD.

OR, if you are really inclined to build that desired backyard deck, put the bonus in a high yielding interest bearing account and use the money as collateral for a Secured Loan.  This will provide you the following benefits:

• No or Low Risk loan from a financial institution (easy or guaranteed approval & should you default on the loan, the financial institution can just take the money in the savings to pay it off ... you were going to pay cash anyway.  Just kidding.  DON'T DEFAULT!!!)
• You may get a below market interest rate (for example, 3.00% above the savings/cd rate ... 3.00% + 0.50% = 3.50% interest rate.  Shop around.  Credit Unions have competitive Share/Savings Secured Loan Rates)
• You'll have a positive trade reporting on your credit report to assist in improving your credit score
• When the loan is paid in full, you still have your money with interest

Although your funds may be held up during the duration of the loan, at the end of the day, you will still have YOUR MONEY!!!

Which ever option you choose, be wise about your decision and DO NOT spend all of your cash!  Cash is leverage, especially when your credit may be "colorful" and your "credit score" may not be as SEXY as you would like it to be.

My book, Financial Fornication, discusses "Spending Plan Allocation" to help ensure all areas of your expenses have the appropriate allocation of your net income.

Again, congratulations and enjoy your new deck or new sound system and growing savings account!!!

Get my book, Financial Fornication, for more helpful hints or contact me for further assistance at http://www.tarrajackson.com/.

Tarra Jackson
Financial Relationship Specialist
Author of Financial Fornication: Avoid Financial & Credit Dis-Ease
http://www.financialfornication.com/
Tarra@TarraJackson.com

* Do you have Financial Relationship questions? Submit your questions to Tarra Jackson for "Real Life Real Talk" answers to www.TarraJackson.com.