There are plenty of things that have already been figured out by others.

There’s no need to make “trial and error” your primary form of learning.

So let’s dive into some ways you can learn how to be productive from people who have already been successful at it.

First, we’ll go back and take a look at what we can learn from Benjamin Franklin about productively, in regards to the 13 virtues he lived by. Then, we’ll look to some awesome podcasts you can subscribe to right now. Finally, we’ll close this chapter with several TED talks that will positively shift your paradigm.

Benjamin Franklin was widely known for his practices and habits…specifically: his virtues.

He was a lifehacker before it was cool.

He believed in living a fulfilling and productive life, which is what brought him to these 13 virtues.

I’ll go over each one and show you how to apply them to your life to increase your productivity.

The 13 Virtues

1. Temperance. Eat not to dullness; drink not to elevation.
2. Silence. Speak not but what may benefit others or yourself; avoid trifling conversation.
3. Order. Let all your things have their places; let each part of your business have its time.
4. Resolution. Resolve to perform what you ought; perform without fail what you resolve.
5. Frugality. Make no expense but to do good to others or yourself; i.e., waste nothing.
6. Industry. Lose no time; be always employ’d in something useful; cut off all unnecessary actions.
7. Sincerity. Use no hurtful deceit; think innocently and justly, and, if you speak, speak accordingly.
8. Justice. Wrong none by doing injuries, or omitting the benefits that are your duty.
9. Moderation. Avoid extremes; forbear resenting injuries so much as you think they deserve.
10. Cleanliness. Tolerate no uncleanliness in body, cloaths, or habitation.
11. Tranquillity. Be not disturbed at trifles, or at accidents common or unavoidable.
12. Chastity. Rarely use venery but for health or offspring, never to dullness, weakness, or the injury of your own or another’s peace or reputation.
13. Humility. Imitate Jesus and Socrates.

1. Temperance

Eat not to dullness; drink not to elevation.

Food provides energy, but overeating (or eating the wrong kinds of food) can kill productivity. How productive would you be after eating a couple thousand calories of junk? People do it everyday. McDonald’s for lunch, and then they wonder why they feel so tired in the afternoon.  Or a huge bowl of sugary cereal for breakfast, and then they think they have some sort of Chronic Fatigue Syndrome, because they’re “always tired.”  By the way, CFS is very real, and I’m not making light of it, but if you’re constantly tired, try changing your diet first.  As far as drinking goes, drinking too much alcohol will not only eliminate any chance of productivity for that day, but it will steal the day after as well.  To sum it up: eat like an adult and drink responsibly.

2. Silence

Speak not but what may benefit others or yourself; avoid trifling conversation.

Trifling (unimportant or trivial) conversation is one of the biggest time wasters of this day. Small talk is fine for a few minutes, but don’t get carried away. How often have you talked to someone for 30 minutes, only to realize you didn’t talk about anything of importance? Yeah, me too. We’re all guilty of doing this a little too much. Don’t let it steal your time. On a similar note, there’s absolutely no place for negativity in the realm of productivity.  Negativity is useless.

3. Order

Let all your things have their places; let each part of your business have its time.

Home organization can steal so much time. As they say, “a place for everything, and everything in it’s place.”  Make sure you have a place for everything in your home. Nothing will waste more time than walking around trying to figure out where something goes. It may take a few days to make a place for everything, but it will save countless hours down the road.  Make a place for everything, or get rid of it, and make time for what’s truly important.

4. Resolution

Resolve to perform what you ought; perform without fail what you resolve.

Do what you set out to do. But an important step before that is to actually set out to do something. Plan your time before it happens. Set daily goals and beyond. You need an agenda to strive for, and then you can accomplish the day’s work.

5. Frugality

Make no expense but to do good to others or yourself; i.e., waste nothing.

Do the right things. Don’t waste the precious things. Time is one of the most wasted things of our day. Like I said above, set out your plan and do it. If you always do what you planned to do, time is not wasted. That can mean getting a lot of work done, or relaxing the day away. If you plan to do it, it’s productive – work, as well as rest.

6. Industry

Lose no time; be always employ’d in something useful; cut off all unnecessary actions.

Define and eliminate the unnecessary. Resolve to live a choice-minimal lifestyle. Get rid of the distractions. That could mean negative friends, clutter around your home, or something as simple as cable TV.

7. Sincerity

Use no hurtful deceit; think innocently and justly, and, if you speak, speak accordingly.

Choose your words carefully. Say what you mean and mean what you say. Don’t drag others down, and again, don’t waste your time on meaningless conversation. Strive to always do right and good, whatever that means to you.

8. Justice

Wrong none by doing injuries, or omitting the benefits that are your duty.

Hold yourself responsible and accountable to others. Do what you need to do and don’t do what you shouldn’t do. Don’t make excuses. Sometimes just eliminating what you shouldn’t be doing can add hours to your day. And you know what you should and shouldn’t be doing.

9. Moderation

Avoid extremes; forbear resenting injuries so much as you think they deserve.

As simply and cliché as I can put it, “everything in moderation”. Hard work is good, relaxation is good, fun is good, but all of those can be detrimental if you overdo it. Try to stay clear of extremes – they’re usually harmful.

10. Cleanliness

Tolerate no uncleanliness in body, cloaths, or habitation.

Live a clean lifestyle. Stay disciplined to be clean in your hygiene and habits. Eat a clean diet. Keep clean friends, not just in hygiene, but in their habits and lifestyle.

11. Tranquillity

Be not disturbed at trifles, or at accidents common or unavoidable.

We all make mistakes. Successful people usually make more than anyone, and that’s because they understand the power of learning from their mistakes. Don’t let mistakes or errors hold you back. Learn and move on, and you’ll get better. Every time.  It’s only truly a mistake if you don’t grow from it.

12. Chastity

Rarely use venery but for health or offspring, never to dullness, weakness, or the injury of your own or another’s peace or reputation.

This was a pretty bold statement for the times. It’s pretty plain and simple: don’t indulge in sexual actions that will compromise your body or your emotions. With a culture of casual sex and one-night stands, this is an important topic. I’m not telling you how to live your life – that’s up to you – but from what I know and from what studies show, this type of behavior is only going to cause problems. Don’t think about the short-term pleasure, think about your long-term character and emotional stability.

13. Humility

Imitate Jesus and Socrates.

Humility is one of the foundations of character. This should be obvious as to how it applies to your character, but how does it apply to productivity? In several ways. The most important being this: practicing humility helps you learn and move on easier than someone who is prideful. If someone corrects you, accept the correction and take a lesson from it. Even if they’re wrong, there’s still a lesson to be learned.  Defending your position or explaining why someone else is wrong is a waste of time.  Don’t worry so much about what others think.

Read these virtues for yourself and truly think about how they apply to your life.

“There are few uses for a smart phone that are more productive than listening to a good podcast.” *
-Abraham Lincoln

If you’re into podcasts, you know there are thousands to choose from.

It can be overwhelming to find the best ones. And how do know which podcasts are the best? Reviews? Ratings? Recommendations?

I’ve been listening to podcasts for years and I’ve listened to the good and the bad.

I could put together a list of the top 100, but I’ll save your time. Why subscribe to hundreds of podcasts when there are plenty of old episodes to go through?

Even if you just listen to few, you’ll be busy browsing the archives for months if not years. So here are the top 10 best podcasts on productivity for 2015…

1. The 5 AM Miracle

New show released: Weekly

2. Achieve Your Goals

New show released: Weekly

3. This is Your Life

New show released: Weekly

4. Daily Discipline

New show released: Weekly

5. Entrepreneur on Fire

New show released: Daily

6. The Art of Charm

New show released: 3x/week

7. Beyond the To-Do List

New show released: Usually weekly

8. The Productivityist

New show released: Weekly

9. The Tim Ferriss Show

New show released: Weekly

10. The Productivity Show

New show released: At least weekly

I’m a long-time fan of TED talks. In fact this post is kind of a “part 2.”

I wrote 6 TED Talks That Will Change the Way You Think About Money in early 2015.

Ever since I published that, I’ve wanted to post about productivity TED talks. Here it is.

The whole idea of a TED talk is to change your thinking. I’ve watched countless hours of these talks, and the speaker is always attempting to either change your mind, or your mindset. That’s exactly what these speakers do. And that’s a good thing.

These six videos are extremely useful and helpful in changing the way we view productivity.

1. Smash Fear, Learn Anything

Tim Ferriss is no stranger to the productivity world. His book, The Four Hour Work Week, is on my productivity book list for a good reason. In this talk, Tim explains how he is able to learn things faster than what is generally considered possible, and how you can too.

2. Inside the Mind of a Master Procrastinator

Tim Urban, from Wait Buy Why, gets personal and transparent with how procrastination affects his daily life. I love how he doesn’t pretend to have everything figured out, but there is still a lot we can learn from this talk.

3. Forget Big Change, Start With a Tiny Habit

In this TEDx talk, BJ Fogg explains how tiny habits can change your life. I’ve written about tiny habits here, but this video explains most of what you need to know. If you want to create a new habit, start small and grow from there. You’ll be amazed at what you can accomplish.

4. The Power of Habit

Charles Duhigg, author of The Power of Habit (also on my productivity book list), explains the basic ideas surrounding the research and experiments he did to write his book. You’ll want to read the book after watching this video, but you’re going to get a lot out of the video itself. This is another TEDx talk.

5. The Art of Stress-Free Productivity

David Allen, author of Getting Things Done, gives this TEDx talk to explain most of his philosophy on productivity. He admits to being very lazy, which is why a system is so important. Watch the video, and then be sure to read his book. It’s one of my top five favorites on productivity.

6. Too Busy for Productivity

In this TEDx talk, Carlin Daharsh goes into detail about being busy versus being productive. This is such an important point, because we all get busy. Life will keep you busy, but stopping to realize that busy doesn’t equal productive is the first step to true productivity.

My morning ritual is the foundation of my productivity, from day to day.

So we’ll start there…

I have two personalities. My night self and my morning self.

Sometimes we don’t get along.

When my night self decides to stay up a little later, my morning self isn’t too happy.

My night self goes to sleep thinking about all of the great and productive things I’m going to do in the morning.

But sometimes my morning self wakes up thinking my night self is an over-achiever and I should go back to sleep.

Sound familiar? Here is how I am able to combat my morning self and get stuff done…

My Morning Ritual

My day begins at 5am, as I roll spring out of bed and make my way to the computer.

I write for an hour and then I’m off to the gym.

When I get to the gym, I lift weights for an hour. (while listening to a great audiobook or podcast, of course)

Then I get my daily hour of cardio, either with my squadron or on my own.

After that, I head back home, work on my blog for about half an hour before getting ready and heading off to work.

But it wasn’t always like this…

How I Became a Morning Person

I decided one day that I wanted to be a morning person. I woke up earlier than I ever had before.

I had the most productive morning of my entire life, so then the next day I woke up and did it again, right? Nope.

I let my morning self defeat me the following day. That’s when I realized that I have to learn how to deal with the morning me, by planning ahead the night before.

My night self was all about the things I was going to accomplish in the morning, but my morning self thought my night self was crazy and expected too much. I would wake up thinking about the mountain of tasks I planned to do. It was intimidating.

Eventually, all of that changed and I started waking up consistently and energetically. Every morning.

Here are some things that I started doing:

• Sleeping 7 hours (minimum) each night
• Drinking water as soon as I wake up
• Having a ritual at night to wind down
• Rewarding myself for waking up daily
• Only drinking caffeine before noon

I know this is where most people would say something about the importance of breakfast, but since I subscribe to the intermittent fasting philosophy, I don’t eat breakfast…at least, not until lunchtime.

It’s important to eat high quality, real food. However, many studies are starting to show that when you eat makes very little difference.

How to Perfect Your Mornings

I used to sleep until noon. I wasn’t always a morning person.

It is possible to “become a morning person”. You just have to take it one step at a time.

Here are some ways to deal with the morning you:

• Commit to One Thing: The idea behind this is that you commit to doing just one thing that gets you out of bed, like brushing your teeth or drinking a glass of water. After that, you can go right back to bed. However, once you are up and thinking clearly, you will usually stay up.
• Think About One Thing: Stay in the “one-thing” mindset. As soon as you wake up, you’re mind is flooded with everything you have to do all day. That’s not very motivating for the morning you. Take it one step at a time. By the time you get to the other things, you’ll be wide awake.
• Schedule a Nap Later: It’s much easier to get out of bed when you know you can take a nap later on. Naps are actually used by some of the most productive people in history, including Winston Churchill, Thomas Edison and John F. Kennedy. So don’t feel lazy, it’s productive!
• Plan Your Mornings: You’re more likely to wake up if you prepare the night before. Set out your clothes, setup your coffee for easy preparation, write a to-do list…these are just a few of the ways you can plan your morning. Remember, a productive morning starts the night before.
• Drink Some Water: The morning is the most important time to hydrate your body, because you just went 7 or 8 hours with no water! And water is the most important thing we put into our body, which makes it a great start to the day. After drinking a large glass, you may not even need coffee.
• Stop Hitting Snooze: The snooze button is our first opportunity to practice discipline or procrastination. Don’t start your day with procrastination. Once your morning self gets out of bed, you’ll realize those 9 minutes weren’t worth it. Why not, just buy an alarm clock without a snooze?

While we’re talking about alarm clocks, you could always try this:

The Key to Habit Building

If you’re used to waking up at noon and you decide to start getting up at 5am, that shouldn’t happen in one day.
That’s a 7 hour difference! And making that change instantly can guarantee failure.

The key positive habit building is starting small and increasing gradually.

Try waking up 30 minutes earlier, each day, for a few days. If you find that you’re very tired that way, just start cutting back by 5 minute increments.

Make small changes. Build habits gradually and you will stick with them.

It’s also much easier to get up when you have a blueprint for your life, like this one you created in Chapter 2.

I don’t like to have a hundred different apps on my phone.

The more I have, the less benefit I get from the ones I do have.

For me, the 80/20 rule definitely applies to the apps I use on a daily basis.

I’m using [actually less than] 20% of my apps for 80% of my productivity.  And here they are…

1. Blinkist

Blinkist offers over 1,500 book summaries, with 40 new summaries each month.  And these are the good books.

Blinkist creates the best book summaries I’ve ever read.  You can use it on the website, or you can use the app on your phone.  When you use the app, you can even get the audio version of the book summary.

I never knew book summaries could be this effective.  I’ve read book summaries before, but I always felt like they were lacking.  These are different.  I have to highlight and review the summaries a few times to feel like I’ve retained most of the points.

Just to test out the quality, I went through several summaries of books that I’ve already read, and it seemed like the summaries captured over 90% of the book.  For example, I started with David Allen’s Getting Things Done, and compared the notes that I had taken from reading the book once through and listening to the audio book once.  From both sets of notes, there were only a handful of things that weren’t in the book summary, and those things weren’t that big of a deal.

It goes back to the 80/20 rule.  With few exceptions, 80% of the information comes from 20% of the book.  If you select the right pages, you can get 80% of the book from reading 20%.  That’s what book summaries are.  Of course, it’s still good to read, but adding book summaries to the mix is a way to change it up and get more out of your overall reading plan.  This is similar to how I recommend going back through the books you’ve read and just reading the highlights, except someone else took the highlights out for you.

Not only does Blinkist have some of the best books (including most of the books on my top finance books and top productivity books), but the summaries are well written and easy to read.  Here are a few of the books from one page:

I signed up for the free 3-day trial, and quickly upgraded to Blinkist Plus, because I could see the value immediately.

Of course, if you sign up and you don’t care for it, there is a 30 day no-questions-asked money-back guarantee.

2. Productive App

Productive App is the best habit tracking app I’ve ever used.

I have completed more of my habits each day since I got the app than I ever have in my life.

Building good habits is the foundation of a successful life.  You won’t start to achieve goals, without first building good habits.

You can set habits for morning, afternoon, evening, or “any time during the day.”  And the app makes you want to complete things.  You want to slide your finger across the item and check it off.  If you check off everything for the day, you have a perfect day.  Then you can try to go for a streak of perfect days.  It’s fun to look in your “Life Stats” and see how many perfect days you’ve had.

I’ve put my entire morning ritual and evening ritual into the app to track.  And I’ve added several habits to each of those rituals since.

Since I have downloaded Productive App, I have:

• Written my MITs (Most Important Tasks) for the next day, every night
• Stuck with my exercise routine, and gradually increased it weekly
• Taken my vitamins every single day, morning and evening
• Weighed myself every morning
• Flossed every evening

These are all things that I did some days, maybe even most days, but now I do them everyday.

If I open my phone and want to get on Facebook, or some other unproductive app, I first open Productive App.  If I have a habit to do, I’ll do that instead of opening Facebook. It’s amazing how much less I open other apps now.  I have a lot of habits in the app.  Mostly tiny habits.

As a side note, this app was actually created by Jaidev Soin, the creator of the Balanced app, which was one of my favorite apps in the past.  Everything that Balanced was lacking is available in Productive App.

You can download Productive App for free, and track your habits.  I upgraded to Premium within the first day.  It’s only a few dollars, and it couldn’t be more worth it.  I would easily pay 10 times that much, now that I’ve used it for a couple months.  With Premium, you can add unlimited habits.  And you get access to stats and data to help you see trends, strengths, and weaknesses in your habit building.

3. Swipes

Swipes is a task managing app.  But it’s different.  And better than the rest.

Swipes took the GTD (Getting Things Done) philosophy and turned it into an app.

You add tasks like a regular task manager, but that’s the only thing that’s like a regular task manager.  First, you have to actually do the task at a certain time.  If you add an item, it will ask you when you want to accomplish it.  If you don’t do the item, it will prompt you to reschedule.  So your items never go undone, they just get rescheduled.  And you can only reschedule a task a few times before you realize how much you’re procrastinating.

The other amazing part of this app is the action steps.  If you have a project to do, that’s not a single task.  And this app recognizes that by using “action steps” that you can add to a task.  The task might be “Make a Presentation,” but the action steps will include “Create an Outline, Draft the Review, Submit to Supervisor, etc..”  That alone is worth having the app.  It helps to break down the projects that seem so daunting.

Here’s a quick screenshot of a few of my tasks:

Swipes is free for now, but they’re working on a premium version. I suggest downloading it before the premium version is released, so that you have a chance of being grandfathered in if they remove features from the free version.

I’m a walking productivity experiment.

I like to try new things and find new ways to increase my productivity. Then I bring you the results and let you decide whether or not to implement these things in your life.

I’ve been doing three new things that have really been working to make my life more productive and actually, all three of these are saving me money too.

These are kind of random, but brilliant and you won’t find these all over the internet like most tips. Here’s what I’ve been doing…

1. James Bond Showers

You may have read about the benefits of cold showers, but have you heard of a James Bond shower? I first read about them on The Art of Manliness and this is how they work:

1. Turn the water on to hot temperature.
2. Wash your hair and your body like normal.
3. When you’re ready to rinse, turn the water to cold.
4. Turn off the shower. Step out. Feel amazing. Look like this:

So why are these showers so awesome, or more importantly, why are they so productive? Well there are several reasons to take cold showers. I’m not going to bombard you with the information you can get all over the internet, but here is what I have noticed since I started taking James Bond showers (or cold showers in general):

• I feel more alert.
• My energy levels significantly increase for hours.
• I spend less time in the shower, since the water is cold.
• Therefore, I save money by using less water (especially less hot).
• This may just be a mind game, but they seem to put me in a good mood.

I feel better overall when I take them and it’s still this way after several months. I can’t recommend them enough. Just try it a few times and see if you notice a difference. If you do, you’re welcome. If not, just go back to your regular old boring hot showers.

2. Activating Caffeine

If you have ever ingested caffeine while you were sitting down and remained sitting down, you probably noticed that it didn’t do much for you. Sure, it may keep you from falling asleep, but it most likely didn’t make you feel any more energetic. There’s a reason for this…

Caffeine has a much stronger affect when you start moving after taking it. If you wake up and get caffeine in one form or another, try doing a quick set of jumping jacks or going for a brief run or a brisk walk. You’ll notice almost immediately that the caffeine basically activates.

Here’s how well this has worked for me:

I used to drink two cups of coffee each morning, then it went to three, four and I ultimately realized I had a problem at six cups. It wasn’t the coffee’s fault. It was doing its job, but I was just sitting there drinking an entire pot of coffee, so I wasn’t getting the full benefit.

Now I have changed two things. First, I bought this amazing Aeropress Coffee Maker, which is super cheap, easy to use and only takes a few minutes to brew…

Next I started consuming only one cup of coffee (granted there will be a little more caffeine in coffee made with an Aeropress), but I started doing 10 minutes of exercise soon after I finished my cup. Not only does this mean I’m consuming less coffee and caffeine, but I’m also saving money by not buying as much coffee in the first place.  This all just one more way to use caffeine more effectively.

3. Eating the Same Meals

I recently started a new diet to lose a few pounds and to write about the results (walking experiment, remember?). Well so far, I’ve lost 17 pounds and I’m just now in my fourth week. Also, I’m feeling great while doing it. I’m tracking all my results and I’ll be writing about it soon, but for now, I just want to go over the productivity part of this diet.

I’m eating the same meals over and over again. It seems that most successful dieters who planned to lose fat and/or gain muscle have had the best results by eating the same meals over and over again.

This works in a few ways to make me more productive:

1. Meal-time decisions. I literally only have to think about what I’m going to eat when I cook my meals, which is only a few times per week – I can cook in bulk since I know I’ll be eating the same few meals again and again.
2. Less cooking time. Since I am cooking in bulk, I only spend a few hours each week in the kitchen. Not only am I not having to decide what to eat, but I can cook my food faster in general. It just takes cooking a few meals to have my food for the entire week.
3. It saves money. Buying food in bulk is a common tip for saving money, but often it doesn’t make sense – especially if the food is going to go bad before you use it. When you’re eating the same meals over and over, you can buy in bulk and know it will get used.

Menu

• Habit Creating and Goal Setting
• Time Management and Getting Things Done
• Thinking and Mindset
• Leadership and Dealing With People
• Minimalism

Habit Creating and Goal Setting

(Back to menu)

1. The Slight Edge by Jeff Olson
2. The Power of Habit by Charles Duhigg
3. Mini Habits by Stephen Guise
4. The 7 Habits of Highly Effective People by Stephen Covey
5. The 8th Habit by Stephen Covey
6. The 5 A.M. Miracle by Jeff Sanders (read my review)
7. Manage Your Day-to-Day by Jocelyn K. Glei
8. The Miracle Morning by Hal Elrod
9. 23 Anti-Procrastination Habits by S.J. Scott
10. The One Thing by Gary Keller and Jay Papasan
11. Ready Aim Fire! by Erik Fisher and Jim Woods
12. How Successful People Grow by John Maxwell
13. Willpower by Roy F. Baumeister and John Tierney
14. The Now Habit by Neil Fiore
15. Changeology by John Norcross
16. Sticky Habits by Barrie Davenport
17. Take the Stairs by Rory Vaden
18. Procrastinate on Purpose by Rory Vaden
19. Failing Forward by John Maxwell
20. Making Habits, Breaking Habits by Jeremy Dean
21. Succeed by Heidi Grant Halvorson
22. Redirect by Timothy D. Wilson
23. Habit Stacking by S.J. Scott
24. Smart Change by Art Markman
25. Changing for Good by James Prochaska, John Norcross and Carlo DiClemente

Time Management and Getting Things Done

(Back to menu)

1. Getting Things Done by David Allen
2. Ready for Anything by David Allen
3. No Excuses! by Brian Tracy
4. Eat That Frog by Brian Tracy
5. Time Power by Brian Tracy
6. Getting Results the Agile Way by J.D. Meier and Michael Kropp
7. The 4-Hour Workweek by Timothy Ferriss
8. The Power of Full Engagement by Jim Loehr and Tony Schwartz
9. Lifehacker’s Guide to Working Smarter, Faster, and Better by Adam Pash
10. The Willpower Instinct by Kelly McGonigal
11. The One Thing by Gary Keller
12. The Checklist Manifesto by Atul Gawande
13. Time Warrior by Steve Chandler
14. The One Minute To-do List by Michael Linenberger
15. Master Your Workday Now By Michael Linenberger
16. Control Your Day by Jim McCullen
17. To-Do List Makeover by S.J. Scott
18. 18 Minutes by Peter Bregman
19. How to be a Productivity Ninja by Graham Allcott
20. The Productive Person by James Roper

Thinking and Mindset

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1. Mindset by Carol Dweck
2. The Magic of Thinking Big by by David Schwartz
3. Peaks and Valleys by Spencer Johnson
4. Mindfulness in Plain English by Bhante Henepola Gunaratana
5. Who Moved My Cheese? by Spencer Johnson and Kenneth Blanchard
6. Rapt by Winifred Gallagher
7. The Anatomy of Peace by The Arbinger Institute
8. How to Stop Worrying and Start Living by Dale Carnegie
9. Emotional Intelligence by Daniel Goleman
10. Linchpin by Seth Godin
11. How Successful People Think by John Maxwell
12. The Difference Maker by John Maxwell
13. The E-Myth Revisted by Michael Gerber
14. The Dip by Seth Godin
15. The Innovator’s Dilemma by Clayton Christensen

Leadership and Dealing With People

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1. How to Win Friends and Influence People by Dale Carnegie
2. How to Have Confidence and Power in Dealing With People by Les Giblin
3. Positive Personality Profiles by Robert A Rohm
4. How I Raised Myself From Failure to Success in Selling by Frank Bettger
5. The 21 Irrefutable Laws of Leadership by John Maxwell
6. How to Influence People by John Maxwell
7. Leadership Gold by John Maxwell
8. Full Engagement by Brian Tracy
9. Great Leaders Grow by Ken Blanchard and Mark Miller
10. The 5 Love Languages by Gary Chapman

Minimalism

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1. The Power of Less by Leo Babuata
2. Minimalism by Joshua Fields Millburn and Ryan Nicodemus
3. The Joy of Less by Francine Jay
4. Simplify by Joshua Becker
5. Everything That Remains by Joshua Fields Millburn and Ryan Nicodemus

Do you know the total credit card debt of the United States population?

793.1 billion dollars.

Now you know. And now you have a sick feeling in your stomach. At least, I do.

Does that mean credit cards are evil? Nope.

It just means people are stupid uneducated.

That’s the problem. Here’s how to fix it…

Step 1: Access the Damage

Sometimes the first step is the hardest and that can definitely be true with credit card debt.

Face your debt.

Run the numbers and actually figure out how much credit card debt you have.

Go ahead and pull your free credit report at AnnualCreditReport.com, then head to Credit Sesame for your free score.

Once you know where you stand, it’s time to move on.

Step 2: Control Yourself

If you are in serious credit card debt, you have no self-control with them.

Easy fix. Stop using credit cards.

You don’t have to cut them up, and you don’t need to close all the accounts, but stop using them until you have paid them off and can pay them off, in full, every month.

You can always lock them in a safe or freeze them in a bowl of water. Or just stop using them and put them away like a normal person, whatever works for you. Just kidding! Freezing them is way more fun. Don’t be normal!

Step 3: Organize Yourself

Now that you know how bad it is, it’s time to do something about it.

Create a budget (learn how here), including all of your credit card payments.

Do you have enough income to cover all your expenses? You may not.

Step 4 can help with that…

Step 4: Cut Your Expenses

Cut. It. Out. (Full House reference, anyone? No?)

What do you need to cut out to eliminate your debt?

You can always cut something. Reevaluate your needs vs. your wants. Especially if one of your main wants is to be debt free.

Step 5: Make Your Choice

Now that you have faced your debt and cut your expenses, you should know whether or not you can fix this yourself or if you need professional help.

If you can do it yourself, do it yourself.

Only get professional help if you don’t see any possible way for you to do it on your own.

If you do need professional help, here is a good resource to find a good debt relief company.

Here is a list of approved non-profit credit counseling agencies.

I think you can do this though, if you think you can too, move on to step 6…

Step 6: Do It Yourself

I knew you could do it.

Paying off debt is easy in practice, but it can be difficult in discipline.

It’s all about discipline.

The most important thing is to not get into any new debt, once you begin paying it all off.

Once you have made that decision, you can call the companies and negotiate to bring the amount of debt down. This is as simple as calling the number on the back of the card, getting to customer service, and asking to speak to a supervisor. Supervisors are able to lower your interest rates more than the customer services reps. They may even be able to lower your balance.

When negotiating, it’s important to have some leverage. Just go find some cards that are offering a 0% balance transfer fee, with a 0% interest rate (usually for a certain length of time) and there’s your leverage. It’s easier to negotiate when you have the option of transferring your balance somewhere else.

The overall goal is to get a lower interest rate.

If you can’t get a 0% interest rate, you may want to transfer your balance. (The Chase Slate card is currently offering a 0% interest rate for 15 months on balance transfers, and no fee to transfer.)

I see no reason not to transfer your balance, if it will save you money overall. The problem is when you are not able to pay off a balance transfer before the interest rate goes up. So, before you transfer a balance, do this:

1. Figure out the total amount of debt your are transferring
2. Divide your debt by the number of low/no interest months
3. Decide if you will be able to pay that much each month

If you are, then it’s worth looking at. If you’re not, you need to figure out if the interest rate will be lower than you’re currently paying or higher. And remember to expect the unexpected. Just because you can make that payment now, doesn’t mean you will be able to make it for a year or longer.

As a side note, I would suggest that you NEVER use a home equity line of credit (HELOC) to pay your debt. That can be an incredibly dangerous plan.

Identity theft is a risk that you face on a daily basis provided that you own a credit card and do business online. Every time you purchase an item online, you expose yourself to this menace. Today, identity theft has been identified as one of the fastest growing crimes in the world and the numbers keep on growing almost on a daily basis. We are all experts when it comes to identity theft not by choice but circumstances. Truth is told, with identity theft, the odds are that: you, your friend or your family member has been a victim of the same.

In as much as identity theft has grown to become one of the biggest American concerns, the subject is often at times misunderstood. We are always looking for ways to fix the problem instead of attempting to prevent identity theft. We should always remain vigilant as we attempt to prevent this. Here are a few things you need to know about identity theft otherwise known as credit card fraud.

1. Identity theft is as real as it gets

Many people think that this crime is a joke therefore most likely not going to affect them. In most cases, with identity theft, it is a matter of when and not if. A film dubbed ”Identity Thief”, which features Melissa McCarthy and Jason Bateman, goes to show you just how pervasive this crime has got. Even with that said, there is no need to lose sleep as yet because the issue is containable.

2. Identity theft criminals will always be one step ahead of you

One thing with online fraudsters is that they are tech savvies who are always looking new ways to con people. As you think of a way to prevent one occurrence, they are already designing new ways to scam you. A report released by Avivah Litan of Gartner Group technologies revealed that less than 1 in 700 identity theft crimes lead to arrests meaning that most of the criminals normally get away with the crime. At the end of the day, we end up being left with a society filled with experienced hackers. These threats tend to evolve quickly to such an extent where before the police are able to handle one old technique, the hackers would have already moved to something new.

3. Your credit card number is not needed for the scam to go through

Contrary to what most people think, hackers do not really need your credit card to steal your identity. They are very experienced and crafty at the same time. At times, they only need one piece of information to complete the puzzle. Once they have that piece of information, they can automatically gain access to the rest of the information. Therefore, the best way to protect yourself would be to lock up your important documents in a safe or better yet in a safe place at home.

4. Personal information revealed online is often enough

As mentioned above, identity thieves only need a piece of your information to scam you. Even if they get your non-financial personal information, to them this is more than enough. As innocent as you may be trying to provide your personal facts on social media or any other channels, this might expose you to identity thieves. The best way of protecting yourself would be to never list your full birthdate, home address, telephone number or any other important information on any social media channel or even a job searching site.

5. Wi-Fi Hotspots can be a threat

We all can agree on just how convenient Wi-Fi hotspots can get. However, this convenience possesses a huge security risk as it can expose you to identity thieves. Always make a point of avoiding generic Wi-Fi hotspots names while in public. The biggest threat is that, once you’ve gained access to these hotspots which is often made easy, the hackers can access every bit of information they want from your phone, computer or tablet. Information such as your password, username, credit card numbers and any relevant data may be at risk.

6. Credit cards have stronger fraud protection than debit cards

You need to take note of the fact that credit card protections offered are stronger as compared to debit card protections. Ideally, the law has it that Credit cards have a set restricted amount that one is liable for at $50. On the other hand, depending on when you report a debit card theft, the card holder is liable for $50 up to the full amount.

7. Military members are highly susceptible

The military men and women are trained in such a way that they are conditioned to provide anything that is asked of them. Throughout their service, they are asked to provide personal information which they normally oblige. The most unfortunate thing about this is that they do carry on with this even after leaving the service. This in turn makes them susceptible to data grabbers and identity theft.

8. New account fraud is on the rise

In this form of ID theft, hackers usually breach databases and end up stealing social security numbers or any other financial information. Then they go ahead to open new accounts fraudulently using someone else’s name. This form of ID theft is currently on the rise and is responsible for nearly half of the total dollars lost to ID theft.

9. Identity theft is becoming increasingly hard to detect

The main reason as to why there is a rise in cases of ID theft is that most of these cases are becoming increasingly hard to detect. In the example of new account fraud, it is hard to detect unless you develop a habit of constantly looking at your credit card report or you use a credit monitoring system.

10. Identity theft cases are not easy to erase

As mentioned above, detecting identity theft is not easy. And when it is detected, it can take up to 33 hours or even more to resolve the case. Once that is done, the recovery phase is even longer as one can take up to months or even years before getting back to the financial state they were prior to the theft.

Credit cards are becoming the go to way to pay. With everyone using credit cards, there has been a growing concern for your safety with using them. How do you know when your credit card information is safe and when it’s not? Is it safe to use credit cards online?

Read on to get some answers…

First off, let me clear something up. Using your credit card online can actually be safer than using it at brick and mortar businesses.

Example: one of the common ways people have their credit card information stolen is at restaurants since servers will often take your card out of site to charge it.

So how can you prevent that?

The first thing you should be doing is watching your finances closely. It’s not overkill to check your banking account online everyday. It’s not the end of the world if you miss a day, but the important thing is that you are always watching what goes in and comes out of your bank account.

A Gateway to Identity Theft

Once people have your credit card information, usually they will just spend your money until the card is locked, but it can actually be worse! They can use it as the first step towards stealing your identity, especially if they got more than credit card information in the first place.

If someone has your credit card information, you usually don’t know how they got it, so you don’t know how much more information they have.

1. Only carry essential documents with you.
2. Keep new checks out of the mail.
3. Be careful when giving out personal information over the phone.
4. Stay on top of your credit.
5. Protect your social security number.
6. Follow your credit card billing cycles closely.

Using Credit Cards Online

Only use websites that you trust when providing any credit card information. Don’t forget to look for the “https” before the website address in the URL box to know that you are on a secure server.

When you are using online banking or otherwise storing your credit card or banking information online, make sure you use secure passwords. If possible you passwords should contain the following:

• Uppercase letters
• Lowercase letters
• Numbers
• Special Characters (ex: ! @ # $ ( ) [ ] )

Use different passwords for every website.

If it helps, you can find a method of including part of the website title in every password so that you can remember them. For example, you could always begin the password with the first letter of the website and end it with the 3rd letter of the website. This way your passwords are different, but you have a pattern for remembering them.

If you keep all your passwords together somewhere, it’s best to write them down on paper instead of keeping them on your computer. When creating passwords, remember: the more complex, the better.

Imagine getting home on Friday night, after a stressful week. You’ve been looking forward to this moment all day. All you want to do is just throw some sweatpants on and just veg out on the couch. You turn the TV on, grab some drinks from the fridge and get your favorite pair of sweats. You go to take off your pants, you empty your pockets, and you heart sinks….

Your wallet. It’s gone.

If this has ever happened to you, you know the sense of fear that accompanies this horrible event. Your entire life is contained in your wallet. There’s credit cards, debit cards, ID, money, insurance card and membership cards. You now could be the victim of identity theft, with repercussions for years.

Here’s a step-by-step guide of what to do should the worst happen…

Before your wallet is lost or stolen: lighten your wallet’s load and scan/photocopy everything inside.

This one tip alone can save you a ton of stress. If you’re like most people, you only use one debit or credit card most of the time. Too many people carry tons of cards “just in case”. Also, take your social security card out of your wallet, along with any passwords, addresses and so on. All of these are like pure gold to an identity thief.

Take everything that you have in your wallet and scan it into a computer. I mean everything – license, health insurance cards, even gift cards to your favorite restaurant. Update it as needed, and make sure that the document is password protected. This is incredibly important because you’ll know exactly what has gone missing and all the numbers to call.

You’ve just noticed your wallet is gone. Don’t panic and retrace your steps.

One of our readers told us a story about a date night with her husband. She went into their favorite restaurant, purse in tow, and went straight to the bar. After a few drinks, she reached into her purse to pay the tab. She realized her wallet was missing. Did she lose it? Did someone steal it?

If you find yourself in a similar situation, remain calm. Make sure you look in all the places it could be, and be reasonably certain that there’s no chance of it just popping up. If you’ve been to stores or restaurants, give them a call and report that you’ve lost your wallet.

Yours truly (the author) actually lost his wallet in a clothing store one afternoon. I got home, realized it was gone and called the retailer. Thankfully, they had it and I rushed back in to retrieve it.

You can’t find your wallet. You’re sure that it’s gone for good. Here’s what to do:

Step 1: Contact Your Credit/Debit Card Issuers

Some people will tell you to cancel the cards immediately, but this isn’t a good idea, since it could adversely affect your credit score. What you should do is report your card as lost or stolen. Every card issuer has procedures in place that will suspend those numbers to keep your money safe. You’ll call their number and hear something like, “To report a lost or stolen card, press 2.” In fact, here are the numbers of the four major card companies:

• Discover: 1-800-347-2683
• American Express: 1-800-528-4800
• Visa: 1-800-847-2911
• MasterCard: 1-800-627-8372

Make sure that you get brand new cards, with new account numbers. Ask for the same credit limits and the same (or lower) interest rate, with any cashback/miles/rewards transferred to the new cards. Plus, under the Fair Credit Billing Act, you’ll face no liability for a thief’s shopping spree if you report the card as lost/stolen before the charges occur. If someone charges your account before your alert your card issuer, you’ll be on the hook for up to $50.

If you use any of those cards for automatic payments, inform the appropriate companies immediately. This is very popular with student loan repayments – you just link up your student loan to a debit card and put it on autopilot. But if your card is suspended, the payment will not go through and your debt will remain unpaid. This could affect your credit score.

Remember to act fast. You’ll be glad you did, because victims of debit card fraud only pay up to $50 as long as they report the card lost or stolen within the first two business days of realizing the card’s disappearance. It’s most likely that your bank won’t hold you liable for anything as long as you let them know immediately. If wait longer than two days, your liability limit shoots to $500, and if you wait longer than sixty days, you’ll lose any and all money stolen from your accounts. I don’t know why you’d ever wait sixty days, though….

Here are some bank numbers:

• Wells Fargo: 1-800-869-3557
• Citibank: 1-800-950-5114
• Bank of America: 1-800-432-1000
• TD Bank: 1-888-751-9000
• Chase: 1-800-935-9935

Step 2: File a Police Report

If your wallet has been stolen, it’s a good idea to let the police know. It’s also a crucial step towards protecting your identity. Make sure you get a copy of the police report! If the theft results in identity theft, you can file a complaint with the Federal Trade Commission, fill out an identity theft affidavit form and attach the police report. This goes a long way in protecting yourself, as it will become evidence in your favor in the case of fraud or identity theft. What you DON’T want to do is get asked, “Well, why didn’t you report the loss?” Not a good look!

Step 3: Set Up Fraud Alerts

This is an important step, because without it, thieves could still open new lines of credit in your name. You need to set up a fraud alert with one of the three major credit reporting agencies: Experian, Equifax, or Transunion. Once you set up an alert with one, the law requires that agency to report your loss to the others and an alert will be set on all three of your credit reports for free (for an initial 90 days).

A fraud alert lets lenders and creditors know that they must verify a person’s identity before extending any new credit. How do they verify your identity? They’ll usually call you, via the number you put on file with the fraud alert. This makes it impossible for a thief to get more credit and run up huge bills in your good name. Here are the numbers you need:

• Experian: 1-888-397-3742
• Equifax: 1-800-525-6285
• Transunion: 1-800-680-7289

BONUS STEP: Pull your credit report and look for anything fishy. Some identity thieves won’t do anything with your information while it’s “hot”. That’s why you need to make sure to monitor your credit regularly.

Step 4: Go to the DMV to Report Your Stolen License

Everyone keeps their driver’s license in their wallet. It’s also one of the most important tools for an identity thief. Get someone to drive you to the DMV and report your loss. They’ll process an application and reissue you a new license, which will cost a few dollars in fees. The DMV will probably ask you to file a police report as well.

Step 5: If Your Social Security Card is Gone…

If an identity thief gets your social security number, he’s hit the jackpot. You should know your social security number by heart and have NO REASON to carry it with you. However, if you just so happened to have it in there, you need to report it IMMEDIATELY. This is absolutely critical, because you won’t ever get a new number, like with credit cards.

Make sure you call the IRS Identity Protection Unit at 1-800-908-4490. Then, file the loss with the Federal Trade Commission by calling 1-877-ID-THEFT.

Because a thief could easily open accounts in your name with your SSN, I strongly advise you to consider a credit freeze. This makes sure nobody can apply for credit under your name and social security number. These are not free (around $10 or so per credit reporting agency) but it is a vital safeguard.

BONUS: DID YOUR WALLET CONTAIN KEYS? IF SO, CHANGE THE LOCKS.

You’d be amazed at how many people neglect this step. It’s not that hard for someone to rob your house this way. All they have to do is make a copy of the key and jot down the address from your license. Someone could even return your wallet to the police, but he or she would still have your key.

Lost and stolen wallets can cause massive damage to a person’s life if the information falls into the wrong hands. With this information, you’ll be prepared, and you can turn what could be a devastating disaster into a minor headache.

Credit is a funny thing. Especially when you start talking to other people.

Some people have all the answers on how to improve your credit, but are they accurate?

Just because something seemed to work for someone else doesn’t mean it will work for you, but there are some standards that you (and anyone else) can meet to ensure your credit score will continue to rise.

Before you get into raising your credit score and cleaning your credit, you’ll want to look at these credit myths.

There’s no reason to waste time on things that won’t help you…

This awesome infographic was created by Credit Sesame, a free service that gives you a monthly credit score, monitors your credit and even gives you identity theft protection…yes, I said for free.

You can check out Credit Sesame here, or go read my review for more about them.

Here’s the graphic…

I’ve been there. Over $20,000 in consumer debt with interest rates higher than Cheech and Chong combined.

I remember seeing the offers pouring in to lower my interest rates. This one stuck out:

“0% interest rates on balance transfers for up to 15 months!”

It was a Chase Slate card. 15 months was the longest zero interest offer I could find for a balance transfer at the time. I calculated how much we needed to pay each month to pay it off in 15 months. We applied. We were approved.

It worked for us. We went from paying interest rates of 12%, 15% and even 17% to paying no interest whatsoever. But what would have happened if we would have went over the 15 month mark? Around 23% interest would have happened.

We had to ask ourselves if we were certain we could pay off the account in time, no matter how many unexpected costs popped up, but that’s not all we had to ask. Here are four questions to ask if you’re considering a balance transfer. Two to ask the company and two to ask yourself…

1. When Does the Rate Expire?

Obviously first you’ll want to know what the rate is; then you’ll need to know when it expires. You should be able to find 0% (like the Chase Slate card), but once the introductory rate expires, the interest will likely skyrocket, so make sure you’re able to pay it off in time.

All you need to do is divide your total amount of debt by the number of months you have to pay it off before your interest rate goes back up. If it’s doable and possible even with unexpected expenses then you’re in good shape so far. You’ll have to crunch some numbers here, but even if you don’t pay it off during the intro period, you still may save money on interest. That depends on what the interest will jump to. We’ll talk about that next…

2. What Are the Terms?

With many 0% introductory offers for balances transfers, they will do anything they can to get that interest rate back up into the double digits. Typically if you make one late payment, your interest rate will go back to the normal rate and stay there.

You should also consider that if you make new purchases on that card, you’ll probably be paying the regular rate for the new balance. Most 0% intro offers are only for the balance you transfer and not for any new debt. So before you start thinking you can rack up your balance without the interest, read the terms.

3. How Will the Balance Transfer Affect Your Credit Score?

One balance transfer will have little to no effect on your credit score. Ten balance transfers will have a significant effect. If you plan to transfer your balance multiple times, make sure you know the potential impact it can have on your credit.

Credit agencies and credit card companies can tell when you’re just transferring your balance to avoid paying interest. You would think it would make you look smart (and I personally think it is pretty smooth), but they would rather see that amount being paid off rather than sticking around for several years.

4. Are You Responsible Enough to Do It?

This is the ultimate question. If you’re not responsible enough to pay off the card in time after you transfer your balance – don’t do it. But this is difficult, because you have to be honest with yourself. Look at your past and look at who you are now. If you have a history of being undisciplined with paying extra on loans, who’s to say you aren’t going to be undisciplined with this one? If you have any questions about your ability to pay it off in time, you may want to consider creating a plan in your current situation without transferring any balances. You can still negotiate with credit card companies to lower your interest if you decide not to transfer your balance.

Balance transfers can be great if you’re disciplined and responsible enough to take advantage of them, as opposed to being taken advantage of by them. You’re the only one who can make that call, but if you’re dishonest about your ability, you’re only hurting yourself and potentially your family.

Since you’re reading this guide, I assume you want to eliminate every bit of debt you possible can.

Because of that, I’m not going to go into whether you should or shouldn’t pay off your mortgage early.

You probably hate debt, and you want it gone. I can relate.

If you want to know more about other mortgage issues, such as the question of “should you pay it off early?”, a list of things to do before paying it off early, and a few more answers to common mortgage questions, check out chapter 5 of The Complete Guide to Control and save Your Money.

Now for some extremely powerful strategies for paying off your mortgage early.

1. The Short-Term Strategy

This is a big one.

30 years is a long time to pay for a house. Opt for a 15 year mortgage or even a 10. If you can’t afford to take out a mortgage shorter than 30 years, you can’t afford that house.

If you can’t refinance, that’s ok! You can pay a little extra on a 30 year loan to pay it off quicker. Look at how much extra you would have to pay to pay it off early, it’s not much:

This is the amount you would pay every month (for an 8%, $100,000 loan) to pay off your mortgage early:

• 30 years: $733.76
• 25 years: $771.82
• 20 years: $836.44
• 15 years: $955.65
• 10 years: $1213.28

Did you notice that there is only a $102.68 difference between paying off this loan in 30 years and paying it off in 20 years? That’s 10 years off your mortgage!

Figure out your numbers and how much you can save with Dave Ramsey’s free mortgage calculator.

Not only do you pay off your mortgage earlier with a shorter loan, but the interest rate is usually much lower as well. Why? Simply because the bank is “stuck” or “locked-in” at that interest rate for a shorter period of time.

2. The First Day Payment Strategy

If you take full advantage of this strategy, it is one of the most powerful ways to make a huge impact on shortening the life of your mortgage without paying extra.

You simply make your first payment on the day the loan is activated (the day the lender starts charging interest) instead of waiting until your first payment is due.

This works so well, because this way, your entire first payment goes towards principle. Principle payments have the most impact during the early years, especially this first payment.

It will make you sick to see how much of each payment is going to principle in the early years of a mortgage. There could be as little as $20 or $30 each month going to principle on a $1200 payment. The rest is going towards interest.

If are already the proud owner of a mortgage, you can still apply this strategy by simply making one extra full payment. It won’t have quite the same effect as it will on the first day, but you will still knock some time off your mortgage.

3. The Famous Split-Payment Strategy

You’ve probably heard of it. Some people think it’s magic, but it’s actually a really simple concept.

You simply pay half your payment twice per month, instead of making one full payment.

This works in 2 different ways…

1. Paying half-payments every 2 weeks will cause you to automatically make one extra full payment every year. (26 half-payments per year comes out to a total of 13 full payments instead of the usual 12)
2. You will lower the principle balance 26 times per year instead of 12.

You can usually set this up with your bank, but if they won’t do it, you can still take advantage of this strategy by adding a little extra to your principle each month.

To figure this out for your mortgage, simply divide the amount of your principle payment (principle only, not escrow or interest) by twelve and add that amount to each month’s payment.

For example, if you have a $500 payment, add $41.67 to your principle every month and you will achieve the same effect.

Before you start paying off your home early, check out the next section…

“I’m in debt. I am a true American.” -Balki Bartokomous

It’s true. Just about every person in American (and much of the world) is in debt.

We are so used to it that we even consider ourselves to be debt-free when we still have a mortgage.

You know how it goes…

“Yeah, I’m debt-free…well, except for my house.”

If you have a mortgage you are not debt-free.

But you can be…

There is a lot to know before you start paying off your home early…

Types of Mortgages

There are many types of mortgages, but really, only a few apply to the savvy home-buyer.

Fixed-Rate Mortgages

Fixed-rate mortgages have a fixed interest rate for the entire life of the loan. This means that you will pay the same interest rate until it is paid off (or until you refinance). Fixed-rate mortgages are predictable since the interest rate remains the same. The standard loan is 30 years (in America), but it’s also fairly standard to see a 10, 15 or 20 year fixed-rate mortgage. The shorter, the better. Under no circumstance should you ever take out a fixed-rate loan for over 30 years. If you need a 40 year loan, you can’t afford that house!

Adjustable-Rate Mortgages (ARMs)

Adjustable-rate mortgages (ARMs) have an adjustable interest rate. Usually the rate is fixed for a certain amount of time, but after that time it fluctuates with the market rates. ARMs are unpredictable since interest rates fluctuate. They can go lower, but they can also go much higher. This makes an ARM much more risky than a fixed-rate mortgage. To keep it simple, I would just say: don’t do it!

Other Mortgage Types

Other mortgage types include interest-only mortgages, interest-only ARMs, balloon mortgages and other types of “creative financing”. There are also several variations of ARMs. These types of loans are very risky and should never be used by the average home buyer. In my opinion, they should never be used, period.

A fixed-rate mortgage is the safest and most predictable type of mortgage. Unless you are experienced with creative financing, stick with a fixed-rate. I recommend refinancing if you have anything but a fixed-rate.

It All Comes Down to One Thing

No matter which type of loan you may have, there is one very important thing for you to know right now when you are attempting to pay off any mortgage early.

It’s all about making extra principle payments.

I have probably heard 100 different ways to pay off a mortgage early and every single one of them equated to paying extra principle payments in one way or another, but that doesn’t mean that they aren’t all effective.

There are different reasons for the different strategies.

These strategies are not magic, but they work. And they set you up to be able to make extra principle payments, even if you don’t think you can afford to.

Pre-Payment Penalties

Everyone likes to talk about pre-payment penalties.

I have actually heard this as an excuse for not paying off a mortgage early.

Many loans don’t even have them. You need to contact your mortgage company if you are unsure and figure out if your loan has pre-payment penalties.

Even if you do have pre-payment penalties that doesn’t mean you shouldn’t pay off your mortgage early.

Yes, the bank would love for you to make payments for the entire length of the mortgage, 15, 20 or 30 years. That’s why pre-payment penalties exist, but don’t let them scare you!

These penalties generally only apply to the extra principle payments you make, not to your regular payments. Even if you have a penalty, you will almost always benefit from making extra principle payments.

Pay More, Earlier

You will see a bigger difference when you make extra principle payments in the earlier years of your mortgage, as opposed to the later years.

With a fixed mortgage, your payments will stay the same over the life of the loan as long as nothing about your loans changes.

Your interest rate will also stay the same with a fixed mortgage.

You payment is made up of principle and interest.

This means that in the early years, your payments will be almost entirely made up of interest. In the later years, your payments will be almost entirely made up of principle.

Why? Because your payment amount stays the same and your payment always includes principle and interest. In the earlier years, you owe much more on your home than in the later years.

Once you have paid off the majority of your mortgage, you are paying much smaller interest payments and much larger principle payments. Think about it: 6% of $150,000 (when you first get your loan) is a lot more than 6% of $20,000 (after you have paid off most of your loan).

Does that make sense? Hopefully! But if you have questions, that’s what the comments are for.

It’s important to make extra principle payments in the early years in order to pay less interest overall. Once you make it to the final years of the loan, you won’t notice as much of a difference.

Some people say that you shouldn’t pay off your mortgage early, but you should invest the money since you can generally earn more by investing than you can save by paying off your mortgage early.

This is true, but it’s much more true in the later years of your mortgage.

If you are in the very first few years of your mortgage, you can make a huge impact just by paying a little extra here are there.

It can mean years off the life of your loan if you pay extra in the beginning.

What Are You Putting Down?

If you are still looking for a home, consider making a sizable down payment.

You will reduce your overall mortgage amount. You will reduce your monthly payments, which makes it easier to pay extra. And you will pay less interest!

Don’t fall for those first-time buyer 0% down loans.

Plus, there are great ways to save money for your down payment.

First, you need to determine how long it will be before you will be buying a home.

If it is less than 5 years, you should save your money in a savings account, Money Market account or possibly a very conservative mutual fund.

If it is more than 5 years, you should invest your money in a moderate to aggressive index fund until 5 years before you plan to buy, then transfer to a safer account.

If this is your first home, you can use an IRA to shelter your down payment.

Now let’s talk about something that you may have heard about, but you may not understand…

A Word About Private Mortgage Insurance

Private mortgage insurance (PMI) is basically an insurance that the lender uses as protection in the event that you default on your loan.

It’s common for loans with less than a 20% down payment, since those are viewed as a “riskier” investment by the lender.

If you are required to pay PMI, it is typically included in your monthly payments.

The thing that many people don’t know about PMI is that once you have paid 20% of your total loan, you can drop it, but don’t expect the lender to remind you about this.

If you are required to pay it, pay 20% of your loan as quickly as possible, then call your lender and kindly ask them to remove your PMI.

Car payments are a beautiful thing, aren’t they?

Of course they are…when you are the one receiving them.

When it comes to car payments, you have 2 options.

You can take out a loan, put yourself in debt and pay interest on your monthly payment to a financial institution or you can opt for the better option…

Make a payment to yourself!

That’s right, open an account and set a certain amount as your monthly payment that goes into the account every month, automatically. Not only will you be saving for a vehicle, but you can earn interest on the money you save, as opposed to paying interest on your car payments.

What Type of Account is Best?

The best type of account to use depends on how long you will have to save. If you have less than 2 years, then your best bet is something safe, like a Money Market account. If you have 3 or 4 years to save, then you could look to a low-risk mutual fund. If you have been very responsible, thought ahead and have 5 years or more to save, then you can look at some aggressive mutual funds and possibly individual stocks. It is always best to use the stock market, only when you have at least 5 years before you will need the money.

As with any investing, the longer you have, the greater return you can expect. The main point here is to plan ahead.

If you currently own a vehicle, chances are that you will need a new one in the future, whether sooner or later. Why not start making the payment to yourself now in an saving or investment account? This allows you to pay what you can afford instead of having to afford the car payment you are stuck with.

So you’ve decided that a life of debt isn’t for you.

Congratulations! Good choice. Welcome to the club.

You know the first step to seeing big results is to sell your expensive vehicle, but there’s one problem.

You’re upside down. Way upside down. And it looks like you may not get flipped back over.

Don’t panic! You have some options, and you can still make this work. Here’s how.

What Not to Do

When we’re talking about what to do, it’s important to first understand what not to do.

The reason you’re selling the car (or truck or van or winnebago) is to get out of debt. The last thing you want is to get into more debt because of it. I’m talking about financing another car and adding your current balance. Don’t do that.

A friend of mine owed $24,000 for an $11,000 car, because he kept adding the balance of his previous car to his new loan. Not just once, but four times! A few thousand each time caused him to have a $13,000 balance when he bought the fourth car. Fortunately, since then, he has paid it down tremendously and is working on getting out of debt.

Another thing to be weary of is transferring the remaining balance to a line of credit. Sometimes it makes sense to do a balance transfer. For example, if you know for a fact that you can pay this off in less than 15 months, the Chase Slate (not an affiliate link) is a good option, because it’s the only card I know of that offers a 0% APR on balance transfers for the first 15 months, with a 0% balance transfer fee as well. So you pay nothing extra if you pay it off in 15 months. Of course, this is a risky option, because if you don’t pay it off in time, your APR will likely be double what it was when you were paying your car loan (that’s what Chase is hoping for). It’s also worth noting that your credit needs to be pretty high to qualify for this card.

Now let’s discuss your primary options…

Two Options to Get Right-Side Up

Generally (not always), the loan company will not give you the title until you pay off the loan. So in a normal sale, you would sell the car, pay off the loan with the money you receive, and then get the title within 30 days and hand it over to the new owner. This means that you usually don’t have the option of selling the car, paying off the amount you receive, and then continuing to pay down the loan without the collateral (the car).

In the rare circumstance that you already have the title, you could do what I just mentioned, but you should still check with the loan company to make sure you’re not doing anything illegal that was stated in your contract.

Choose the option that works best for you:

1. Take out a loan on the difference

This may sound counterintuitive, but hear me out. If you owe $15,000 for a $10,000 car, go to the company you’re borrowing the money from (or another company if you need to), and explain the situation. Simply say “I owe you $15,000, but my car is only worth $10,000. I’d rather sell the car and only owe you $5,000.” Most companies will work with you to make that happen. Just make sure your interest rate isn’t way higher on the new loan, to the point that you’re not paying much less overall.

2. Pay down the loan to even it out.

This is a more disciplined approach. You simply pay down the loan until you’re not upside down, then you can sell the car and pay it off.  In this scenario, you would basically forget about the debt snowball/avalanche until this was accomplished, because selling the car would be your priority. Then you’ll have all that extra money freed up, from not making the payments anymore, to pay off the rest of your debt.

Either option is going to require you to get aggressive. Start selling everything in your house except your children, unless you can get a high price for them.  In that case, you’ll want to…I kid, I kid (no pun intended).

Once you sell your car, you should first celebrate (not by spending a bunch of money!), then do this…

After You Pay it Off (And Your Next Car)

There’s a good chance that you’re planning to get a “little beater car” – that’s what everyone seems to call them – to get you around, usually to work and home. You need to make sure you don’t make another purchasing mistake here.

When my wife and I decided to buy our last vehicle, we were on a mission. We knew exactly what we wanted, exactly what we were willing to pay, and exactly how to walk away if they didn’t meet our needs. This is vital.

I wrote about our entire experience of getting a van that was listed at $8,900 for $2,800, and included it right after this section.

Remember that your get-out-of-debt car is not permanent. Like Dave Ramsey says “you’re living like no one else, so later you can live like no one else.” It always gave me a sense of pride to drive beater cars while I looked around at everyone else driving brand new cars.  I couldn’t help but think of how much they were paying a month.

We’re the ones winning. Driving junk and getting out of our funk.

Buy a nice car later, or just spend money on things that actually matter, and invest intelligently. Your call.

On a beautiful spring afternoon, my wife and I headed into Oklahoma City to look for a vehicle.

After spending the majority of the day at a certain car dealership, we ended up driving a new car home…well, new to us.

We are happy with the vehicle, and we were even happier with the price.

Long story short, they were asking almost $9,000 for a vehicle that we ended up purchasing for $2,800.

How did we do that? We used these 6 haggling hacks (I hope you can appreciate the alteration) to get the deal…

1. Be Flexible

We were flexible on everything except the price.

If you’re flexible, you can always move to a different car (or a different seller) when the negotiation doesn’t work out.

We wanted a vehicle with at least 6 seats for under $5,000.

That’s it. We didn’t care if it was a minivan, SUV, or a bus…if it fell within our criteria, we were interested.

This opened up a lot of options, which brings me to my next point…

2. Don’t Get Married at the Dealership

I’m talking about to a vehicle, not to a person. That would be a weird wedding.

There are better places to get married and better things to marry than a car…like a human, for example.

Don’t marry the vehicle you want, even if it’s the “car of your dreams”.

It’s important to know what you want, but not to fall in love.

That’s exactly what the dealer wants.

It won’t be the end of the world if you don’t buy that exact vehicle.

We didn’t fall in love, so we could always walk away, which leads me to…

3. Don’t Be Afraid to Walk Away

We left the dealership and they actually called begging us to come back. That happens when they know you are serious and they know you have money (either in the form of cash or a credit score).

The deal isn’t going anywhere, and if it does, you’ll survive.

Once you have your price set in stone, don’t budge.

You can always find a good deal. Seriously, you can.

Sometimes you have to just walk out so they know you’re serious. You can always come back.

Be prepared to devote at least one day to buying a car and that may mean walking out more than a few times.

4. Be Informed and Know the Value

You should be as informed as possible. It’s easy these days, since most of us have the internet in our palms.

The more informed you are, the less they can take advantage of you.

You can compare the value at these sites:

• Kelly Blue Book
• Edmunds
• NADAguides

Most dealerships use these guides, along with others, such as a “black book value”. But just because they show you a piece of paper with a price on it, that doesn’t mean it’s accurate.  Edmunds actually sent a staff writer undercover as a car salesman for a few months and one of the things he discovered is that some dealerships just make up a value and hope you’ll pay high-dollar for the vehicle, instead of questioning the price.

Salesmen tend to…”fluff” the truth a little, so don’t always trust the value they come up with.

Know the value of what you’re looking at. Do your research. You’ll want to check a few things out to get the real value.

It’s a good idea to take a test drive to a local mechanic for a quick inspection. If that’s not an option, try out Firestone or Auto Zone for a quick diagnosis (it’s not completely thorough, but it’s better than nothing).

You can check a lot of it yourself. Just remember to check everything. It’s easy to be sold by a cold A/C in the middle of July, but how well does the heat work?

5. Don’t Be Afraid to Hurt the Salesman’s Feelings

They will try every tactic in the book. They will try to make you feel guilty or even obligated to buy a car, but you don’t owe them anything.

You should see how much they would be willing to help you after you buy the car…probably not much. It’s all sales gimmicks.

The only decision that matters is the one you make. It doesn’t matter what the salesman wants. It’s your money. It’s ok if you decide not to buy and they get upset.

6. Don’t Finance, Get Rewards Instead

Pay cash. plain and simple. If you have to finance, you can’t afford it.

You have more negotiation power with cash. When you finance, they can always talk you into buying more car.

You should never finance something that depreciates.

We used a credit card for the purchase to get the cash-back. More money saved!

Just be sure to pay it off in full when the bill comes in.

Final Words and One Last Tip

We actually had a great experience buying our car. It was fun to haggle and watch the price sink lower and lower.

You will usually get a better deal when buying private-party, but we chose to keep our options open to dealerships as well…and it worked out well for us.

It was sad, however, to watch the couples sitting in the different offices. Sad, upset and even scared. One lady was crying!

That’s what happens when you finance and especially when you overpay. It can be stressful.

We walked away knowing our car was paid in full. It’s a great feeling.

One Last Tip: Make sure everything that is promised is on paper. A tank of gas, gift certificates, a TV…these are a few examples of what dealerships will do to earn your business. Make sure, if you haven’t already received it, that it’s in the paperwork or you might as well forget about it.

And don’t forget to ask for the CarFax Report. No need to pay for one yourself.  Any reputable dealership will provide one, free of charge.

Attending college is a rewarding and exciting time in a young person’s life.

It’s a period marking your transition from childhood to adulthood and the obligations that come along with it.

A critical area of responsibility necessary for this change is finances; you must be financially prepared for college and everything that comes after.

Savings, scholarships and grants, and student loans are topics you need to become educated in.

Savings Programs

Hopefully you already have a savings program, such as a 529 plan, in place. Named after Internal Revenue Code 529, these plans are designed to invest in higher education. Parents and guardians typically open these accounts to save money for their children’s future education. All qualified education expense withdrawals from 529 accounts are free from federal income tax.

If you do not already have a savings plan in place, start now; even small savings add up and make a big difference in the long term.

Scholarships and Grants

Scholarships and grants are funds awarded to you based on merit or need. They are “free money” in the sense that you are not required to repay the funds you receive. Scholarships may be “merit-based” meaning you have to meet certain standards set forth by the scholarship giver; whether that is in the area of academic achievement, sports, or talent. Grants are typically awarded based on financial need rather than merit. Schools, employers, private organizations, and state and federal government may all be sources of free money. The funds may cover a small portion or the full amount of your tuition, easing your financial burden, in either case.

Free Sources for scholarship and grant information:

• High school guidance counselor
• College financial aid office
• Local library
• U.S. Department of Labor’s search tool
• Federal agencies
• State grant agency

Student Loans and Repayment

Scholarships and grants may not cover the entire amount of your tuition and educational expenses. There’s also the possibility that you were unable to qualify for scholarships or federal loans due to your academic standing, criminal convictions, or non-US citizenship. At this point, you may need to turn to private loans to cover any remaining portion of your expenses.

It is important to repay your loans to remain in good credit standing. Repayment is especially important if you are looking to continue your education – as mentioned above, you can be denied for federal loans if you’ve previously defaulted. Some students choose to consolidate their debts after college in order to have one lower monthly payment. Another good option is to make an ascending list of your debts and begin paying them off in that order. With the snowball, at the start you get the satisfaction and confidence boost from eliminating the small debts, and as time goes on you’ll be better equipped to take out the larger ones.

Preparation is the Key

It’s important to prepare for college. Saving from an early age can be particularly beneficial, but any and all savings can go toward your college education. Grants and scholarships are especially effective in reducing your overall financial obligation, but are not a guarantee, which is where student loans come into play. Make sure you are financially responsible and repay those loans – you do not want to ruin your financial reputation as you are just getting out of the gate.

3 Strategies to Plan Ahead for Student Debt

As of 2012, the average amount of student debt accrued by graduating students reached nearly thirty-thousand dollars.

For these graduating students, debt is a fact of life that they’ll be dealing with for around a decade after leaving their old alma mater.

Student debt can be prohibitive for many students, and the snowballing interest of forbearance makes it a highly unappealing option.

However, there are ways to brace yourself, or avoid payment entirely, by planning ahead when it comes to how to manage student debt before it becomes a problem.

Here are three strategies to consider when a future of student loan payments is just around the corner…

1. Loan Forgiveness or Discharge

Instituted by the U.S. government, loan forgiveness occurs after completing a qualifying program or community service endeavor.

If you’re working as a teacher, doctor, or are involved with the military, there may be a variety of options for you to get a free ride after college to avoid paying student loans.

Many state-based institutions such as teacher associations offer career specific loans which can be forgiven with a certain number of years of service, oftentimes as a means to encourage more professionals to work within the state, for example.

Other organizations, such as the Peace Corps., will often work with its volunteers on forgiveness programs for their service.

However, loan discharge is another type of financial assistance entirely, and possibly the silver lining to an otherwise devastating personal event. While having a relative pass away as an excuse for not completing a paper might be as popular as “my dog ate my homework”, it can have dire financial consequences when it actually happens.

The government recognizes this predicament and is often able to discharge loans when death, or serious disability, impede one’s life too severely to manage repayment.

2. Know Your Options and Best Approach

Depending on your amount of debt and the rates of interest you’re dealing with, there may be preferable options for your situation.

The popular “pay-as-you-earn” repayment plan can make payments significantly lower, but often saddles students with a decade longer of payments than they could have dealt with originally.

Only after carefully measuring each of your options, such as standard, graduated, or other models of payment, should you commit to any course.

While you should ideally stick with the option that results in the least overall sum, be careful to not overextend your finances with the ideal option if it’s not immediately affordable. After all, there’s a reason you needed a loan in the first place!

3. Strategy When You Can’t Afford It

Forbearance can seem generous on the surface, but accruing interest can be crippling in the long term.

It should only be used to keep collections calls at bay and your credit score safe, since allowing interest to accrue alone can be devastating.

Instead of relying on this as your only option for pushing back payments when you can’t makes ends meet, consider reviewing your student loan consolidation options.

Most providers are willing to compete with your current interest rates and help streamline the debt repayment process – especially if you’re dealing with multiple loan providers.

Best of all, this stems the tide of interest that has been gaining against you all the while you were attending college.

While no two financial situations are the same and a piece of cookie cutter advice isn’t always applicable, these methods can be foolproof once you’ve analyzed your personal debt situation and assessed your options.

Managing your student debt wisely – or avoiding student debt entirely – can be the bright start to your life in the “real world.”

Student loan forgiveness has been a hot headline over the last year. The ever increasing mass of student loan debt continues to weigh on the hearts and minds of our college graduates. Today, 7 in 10 college seniors are graduating with student loan debt! While student loans are a necessary tool for some students, they should be used carefully by borrowers.

You may have seen the late night television ads preaching the benefits of student loan forgiveness. Despite what these television ads say, not everyone is eligible for student loan forgiveness. These ads are often being run by unethical telemarketers looking to take advantage of uneducated student loan borrowers. To qualify for student loan forgiveness you must meet certain eligibility requirements for federal programs. Don’t find yourself victim to a student loan forgiveness scams.

The following U.S. Department of Education programs can actually forgive your student loan debt:

1. Public Service Loan Forgiveness (PSLF) Program

The PSLF Program was created to encourage individuals to enter and continue to work full time in public service jobs.

Under the PSLF program, federal student loan borrowers may qualify for forgiveness on the remaining balance of their Direct Loans after they have made 120 qualifying payments on those loans while employed full time by certain public service employers. Qualifying employment is any employment with a federal, state, or local government agency, entity, or organization or a not-for-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC).

Private student loans are not eligible for the PSLF program!

2. Total and Permanent Disability (TPD) Discharge

If you find yourself total and permanently disabled you may be eligible to receive federal student loan forgiveness.That being said, you must be able to prove that you are totally and permanently disabled in one of the following three ways:

1. If you are a veteran, you can submit documentation from the U.S. Department of Veterans Affairs (VA) showing that the VA has determined that you are unemployable due to a service-connected disability.
2. If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within five to seven years from the date of your most recent SSA disability determination.
3. You can submit certification from a physician that you are totally and permanently disabled. Your physician must certify that you are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that

3. Death Discharge

If you, the borrower, die, then your federal student loans will be discharged.  If you are a parent PLUS loan borrower, then the loan may be discharged if you die, or if the student on whose behalf you obtained the loan dies.

Depending on the private student loan lender, your loans may or may not be forgiven with death. You should check to see if your private student loans will be discharged at death. You may have seen the headlines where cosigning parents have been stuck paying the student loan debt in place of the primary borrower. Don’t let this happen to you! Check your promissory note for more information.

4. Teacher Loan Forgiveness

If you are a teacher and also a new borrower, and have been teaching full-time in a low-income elementary or secondary school or educational service agency for five consecutive years, you may be able to have as much as $17,500 of your subsidized or unsubsidized loans forgiven.

5. School Closing While Enrolled or Soon After

If your school closes while you’re enrolled or soon after you withdraw, you may be eligible for discharge of your federal student loans.

Be aware, private student loans may not be eligible for forgiveness under this rule.

Student loan forgiveness has been a hot topic and will continue to be a hot topic as long as borrowers struggle with student loan debt. There is no easy way out of student loan debt. That being said, you can improve your student loan situation through a variety of other programs. Income-based-repayment can help you better manage the repayment of your federal student loans. And, if you find yourself paying high interest rates on your student loans, student loan refinance may be a great option to lower your interest rate.

You’ve graduated college, now your student loan forbearance or “grace period” will end soon and you don’t know how to formulate a payoff strategy.

For those who don’t know where to start, below are 4 tried-and-true strategies to help jump-start your loan payoff…

1. Find Money in Your Budget

It can be hard to adjust a budget to include a loan payment, especially if you’re not used to making one.

Before you trim a budget, you need to build one that works for your lifestyle.

A good rule of thumb for beginner budgeters is to separate your budget by the 50-30-20 rule: 50% of your monthly take home income toward living expenses, 30% to debt repayment and savings, and 20% to discretionary funds or “spending money.”

Once you have the basics down, try and find money within your budget to make extra loan payments. Cable, subscription services, eating out, and your daily coffee habits are all great sacrifices to make in the short term to fuel long term goals. Try making a game out of it and see how much extra money you can contribute to your loans each month.

2. Pick Up a Side Hustle

What if you are on a tight budget already and can’t allocate any extra money to your loans?

Consider picking up a side job, weekend gig, or working remotely on a contract basis to bring in extra income.

Your 9-5 job doesn’t have to be your only source of income, and earning more often allows those who “side hustle” to pay back debt at an aggressive rate.

3. Get Strategic with a Debt Snowball

In the debt snowball, you list all of your loan amounts, putting the smallest balances at the top.

The idea is to put all of your extra money towards paying off the smallest balances, and then when that one is paid off, on to the next loan, and so on and so forth. This is a great strategy to get those “small wins” in the beginning and work towards the rest of your debt aggressively.

Others prefer paying off the highest interest loans first. This method is known as the Debt Avalanche. It doesn’t matter which way you go about it, as long as you have a plan that works for you!

4. Research Consolidation

If you have more than one loan, whether federal, private, or both, you can consider consolidating your loans into one interest rate and monthly payment.

There are many advantages to this including saving money on interest, or adjusting to a lower monthly payment. However, be cautious as some borrowers end up consolidating at slightly higher total interest rate and end up paying more over the life of the loan because they receive a lower monthly payment, which looks good to them in the moment.

Be sure to do your homework.

Don’t stick your head in the sand when it comes to your student loan burden.

While it may seem like an insurmountable amount of debt, many students before you have managed to pay off the debt and live financially stable and fulfilling lives.

The important lesson here is to have a plan of attack, stick to it, and work hard to accomplish the payoff goals you set for yourself.

How do you protect yourself financially? It comes down to having the right information.

I want to start this chapter with one of the most common mistakes people make: co-signing.

After that, we will discuss the worst case scenario when you’re facing serious financial hardship or simply more debt than you can handle. The worst case scenario is called “bankruptcy.”

Type “Why Co-Signing” into Google and you will quickly see the suggested searches start with things like:

“Why co-signing is bad”

and…

“Why co-signing is a bad idea”

Have you ever co-signed for someone before?

Or have you ever had someone co-sign for you?

Let’s see why it’s so bad and what you can do instead of co-signing for a friend or family member…

What is Co-Signing?

Co-signing is a simple process of signing on the dotted line for someone’s purchase. Usually for a loan. Most popularly, a car loan.

If the person pays the loan, you are good to go. You will never pay anything.

However, co-signing is a bad idea because of what happens when they don’t pay. And there is a good chance that they won’t.

If someone needs a co-signer, that means that the bank thinks they won’t pay the loan.

You won’t need a co-signer if the bank trusts you.

What You’re Agreeing To

By signing for someone else’s loan, you are guaranteeing their debt.

In some states, the lender can actually come after you before they try to get the money from the person who actually received the loan.

Why would they do that? Because if you have the credit to co-sign, you’re more likely to pay than the actual borrower.

Your responsibilities should be spelled out in a co-signer agreement. You will see things like this:

“You are being asked to guarantee this debt. Think carefully before you do. If the borrower does not pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.”

Just know that when you co-sign, you are legally responsible for that debt.

If You Still Decide to Co-Sign

There are some situations where you may want to co-sign. Most commonly when your child needs wants their first loan.

I have still heard horror stories, even when people are dealing with their own children, so beware!

I also have a good friend who co-signed for his own father. My friend is now paying the bill on a car that he never sees. Sadly, he never sees his father either.

Here are some things to consider if you decide to do it:

• Make sure you agree with the purchase
• Make sure you can afford to pay the loan
• Make sure you will be notified if they don’t pay
• Make sure you understand all the consequences
• Make sure you read your state’s laws on co-signing

6 Things to Do Instead of Co-Signing

Most of the time, people will understand why you don’t want to co-sign for them, but sometimes they won’t. It’s possible that you can actually lose friends, because you choose not to co-sign.

That, however, is ridiculous. And you should probably be questioning the integrity of that friendship if you lose them over something like this.

It’s like the old saying “if you loan $20 to your brother-in-law and you never see him again, was it worth it?”

I’m a positive person, so I don’t want to leave you with all this negativity of what you shouldn’t do…

Here are some things you could do instead:

1. Explain why it is such a bad idea
2. Suggest they not take the loan at all
3. Explain why they shouldn’t co-sign either
4. Help them learn to save for big purchases
5. Explain that your relationship is more important
6. Direct them to this blog for help with their money 

What If You Already Co-Signed?

Alas, if you are here and you are dealing with a “co-sign gone wrong”, you have some options.

Here are some things you can do:

Attempt to work out a payment plan with your friend/family member. If you are still in contact with them, they may be willing to at least help pay the loan, since they can’t pay it in full.

Call the lender and negotiate the agreement. The lender may be willing to work with you, especially if you aren’t able to pay. They would rather get something, than nothing. You may be able to negotiate a lower interest rate and/or lower the balance.

Stay disciplined and learn from this. It may have been a bad idea for you to co-sign, but you can’t change the past, so why not learn from it? Now you will never do it again. The good news is that this can be the last time you make this mistake.

We can overcome almost anything if we take responsibility and just do it!

 There are around 1,000,000 bankruptcies every year in the US.

Obviously, it’s a problem.

A problem that can be avoided, but if you’re past the avoiding stage, it may be your best option.

Let’s dive in and discuss the different types of bankruptcy, when to file, when not to file, and the effects of filing.

What is Bankruptcy?

The actual definition is “the state of being bankrupt.”  Well that explains everything.

Bankruptcy is when you can’t pay your debt (personal or business) and you have to find a way to get rid of it.  It’s a fresh start, kind of.  But as you know, there are negative effects and consequences.

Generally the process involves paying your outstanding debt with your assets, but not always.  It depends on the type. There are companies that specialize in accounts receivable collection and these companies are very good at getting thier money, so if it comes down to having to file for bankruptcy to get away from mountains of debt, then so beit.

Here are the primary forms of bankruptcy you may need to know about:

• Chapter 7 – Assets are liquidated, if you have them.  This includes all property, vehicles and even furniture; however, your state will work with you to help you keep the things you need, like your homestead, clothing, furniture, and in some cases, vehicles.  Once your debt is wiped out with a Chapter 7, you will not make payments on it.  It’s simply gone.  But a Chapter 7 won’t wipe out everything.  Things like school loans, child support and taxes will stick around, and you’ll still have to pay them.  There are also income restrictions to file for Chapter 7.
• Chapter 11 – This is available to businesses or individuals, but you will rarely, if ever, hear of an individual filing Chapter 11.  Chapter 11 is a way for a company to reorganize their debt, but it is very expensive.  Generally small businesses stay away from this type of bankruptcy, because it’s difficult for them to continue operations after paying for it.  You will most often hear about Chapter 11 from major corporations.
• Chapter 12 – You haven’t heard about this one much, because it is only available to farm owners and commercial fishermen.  Chapter 12 is setup in a way to help them specifically.  The debt limits are much higher than other options, which is necessary for people who own a few thousand acres.  Ideally, this option would allow farmers and fishermen to keep their land and occupation.  There is a five year limitation on the restructuring plan, which means the debt must be paid within five years.
• Chapter 13 – If you have disposable income left over at the end of the month, after all bills are paid, you can’t file Chapter 7, so Chapter 13 is generally your best option.  Or if you make more money than Chapter 7 allows, Chapter 13 is your best bet.  Chapter 13 requires a 3-5 year payment plan for all of your debt.  After your payment plan concludes, all of the debt included in the bankruptcy is wiped out.  Basically, if you can afford to pay something, you will be directed to file Chapter 13, if you can’t and your income is low, Chapter 7 may be better.

There are a couple other types of bankruptcy.  They include Chapter 9, which is for cities and towns to reorganize their debt, and Chapter 15, which is applies to people who have debt within the US and outside the borders.  I’m not going to go into detail about these, because you most likely don’t need them!  Unless you own a city or something.  Do you own a city?

When to File Bankruptcy (And When Not To)

Bankruptcy can be devastating to your financial situation on paper, but it can also provide relief.  Sure, it can hurt your chances of getting another loan in the future, but if you’re facing bankruptcy, the last thing you should be worried about is another loan.

Simply put, bankruptcy is for people who owe more than they can afford.

If your bills are behind, creditors are calling, you’re barely making minimum payments and you don’t see another way out, bankruptcy could be an option for you.  It is a solution to a completely overwhelming financial situation.  It would be better to file for bankruptcy than to sacrifice your health over the stress of a financial meltdown.

There is a really popular bad reason to file for bankruptcy.  It’s becoming more and more popular to get into a poor financial situation by being completely financially irresponsible.  Then file for bankruptcy and hopefully keep all of your stuff.  Some people do this on purpose, knowing that they can just file for bankruptcy once they buy too much stuff.  This is basically a form of strategic default.  And it’s really popular with mortgages.

Especially after the housing bubble popped, people have been walking away from homes that they could afford, because they owned way more than the home was worth.  If you can afford to make the payment, and you purposely don’t, that’s strategic default.  There’s nothing responsible or commendable about strategic default.  Any self-respecting adult should see that.  So don’t do that.

File for bankruptcy when you see no other way out of the situation.  If you’re just in a lot of debt, but you’re able to pay it, read our Get Out of Debt Guide or go talk to a professional.  Consolidate your debt if you have to.  But bankruptcy is only for an otherwise unsolvable situation.  You don’t want to file for bankruptcy on a whim, and I’ll explain why below.

What to Do Before Filing for Bankruptcy

So you’ve decided that bankruptcy may be for you.  You don’t see another way out.

The process for filing isn’t always fast, but it is relatively easy.  However, before you file for bankruptcy, you should do a few things:

• Get your finances in order.  Make sure you need to file for bankruptcy.  After you get all of your finances in front of you, you may see that you don’t need to file for bankruptcy, you just need a plan.  You may be able to make it work.  It almost always seems worse than it is, until we actually look at it on paper.
• Figure out which debts won’t be forgiven.  As mentioned earlier, things like student loans and taxes are not forgiven with bankruptcy.  You may find that most of your debt comes from debt that isn’t going to be wiped out with bankruptcy.  In that case, you don’t need bankruptcy, you need to call the lenders (schools, student loan companies, the government, etc.) and tell them you’re unable to pay.  They will usually set up a payment plan.
• Think about your co-signers.  Co-signing is almost never a good idea, but you may have talked some people into co-signing for you in the past.  If so, you should make sure they aren’t stuck with you debt when you file.  It depends on the company you took the loan out with, but it’s not uncommon for a co-signer to be stuck with the full balance once you file for bankruptcy.
• Assess what will be affected. Do you have a home?  Other property?  Vehicles?  Furniture?  Retirement plans? These are all things that could potentially be affected and taken from you when you file, though some of these things are usually protected, such as retirement plans.

You have to be prepared when you file for bankruptcy.  The last thing you want is to file without realizing your home is going to be taken away.  Then you’re bankrupt and practically left on the street.  I’ve personally known people who lost everything and were literally living on the street with their family.  Full disclosure: this happened before I met them; otherwise, they would have been welcomed at my house.

The Negative Effects of Bankruptcy

Bankruptcy stays on your credit report for seven to ten years.  So what does that mean?  It means that you will have a hard time doing anything that involves your credit report for several years.  This includes getting a loan, but it also includes things like getting hired.

In the scope of life, a decade isn’t as long as it sounds, but you will have to expect your life to be different until you’ve fully recovered from the bankruptcy.  It’s good that you can’t file for bankruptcy and then immediately go out and get back into the same amount of debt, and that’s why it has that effect on your credit report.

That being said, when you file for bankruptcy, it’s likely that you will start seeing credit card offers immediately.  Why? Because they know you filed for bankruptcy and they know you can’t file again for a long time; therefore, they send the offers.  Obviously this is a trap.  Your interest rates are going to be astronomical, and they will promote the credit offers as a way to bring your credit score back up.  Don’t fall for it.

Once you file, you should wait a long time before even considering more credit cards.  Credit cards are great if you use them responsibly, but there’s a good chance that using them irresponsibility is what got you into bankruptcy in the first place.  In that case, I highly suggest using cash for at least the seven to ten years your credit is hurting.  Then, and only then, can you possibly make the decision to start using credit cards again, but you have to be honest with yourself about your level of responsibility.  You don’t want to file for bankruptcy twice, do you?

There are some other areas that are affected by bankruptcy, but they aren’t often talked about.  For example, if you want to join the military, a bankruptcy could hold you back.  It’s not impossible, but it will require a waiver, and waivers don’t always get approved.

Your best bet is to avoid bankruptcy unless the benefits outweigh the consequences.

Retirement is always an interesting topic.

It may be so far in the future that you haven’t really thought about it, it could be closer than you care to admit, or you could technically be retired right now.

It doesn’t matter how old or young you are.  The fact is, you need to start thinking about retirement now.  Today.

You need to know your options.  So I’m going to explain what they are and what to do.

Here’s what you need to know about retirement and planning for it…

Retirement Plans 101

Retirement plans aren’t that complicated.  In fact, you really only have a few primary options:

• Work Retirement Plans – These are things like 401(k)s, 403(b)s and Thrift Savings Plans (TSPs), but it also covers things like pensions (if anyone actually still knows what that means).  There was a day when almost all major companies offered pensions, which was basically the company saying “if you give us 20, 30, 40 or more years, we’ll give you a check for the rest of your life”.  Yeah, that doesn’t really happen anymore in the US, with the exception of the military, but even that isn’t something I would count on.  A Simple IRA is another type of company retirement plan, but only for smaller companies with less than 101 employees.
• Personal Retirement Plans – This would be your IRA, which is technically and legally known as an Individual Retirement Arrangement since it is simply a shelter to cover an arrangement of investments, not an actual account. There are also SEP IRAs, which are IRAs that are fully funded by the employer, but most often used for self-employed people to fund their own retirement – that’s why they’re in this section.
• Unconventional Retirement Plans – This would cover anything that’s not a typical retirement account.  One of the most popular unconventional retirement plans would be to sell your home (given that it’s very expensive) and downsize, using the cash you earn to live on.  Of course, this would assume that your home would be paid off by the time you reach retirement.  I’ve also known someone who built a subdivision and owner-financed all of the houses, using the mortgage income as retirement income.  This type of retirement planning can be risky if it’s your only option.  It’s always good to diversify, but especially if your retirement is of this nature.

There are limits to each of these plans; contribution limits, as well as actual limits as to what you can do with them.  There are also misconceptions about a lot of these accounts that I address later in this chapter.

Now that you’re familiar with your options, let’s talk about what to do about it…

How to Plan for Retirement

You’ve probably heard about an employer match – this is where your employer will match the money you put into your retirement account (401(k), 403(b), etc.), up to a certain percentage.  It’s usually around 6%, though I have known of a company that offered a 100% match.  Yes, you should contribute enough to get the match, because it’s free money.  It’s like getting a 100% return, but then what?  If you want to contribute more than that, do you just put it into your employer retirement plan?  Not necessarily…

The thing is, you do want to get that free money (employer match), but over that, your better off putting your money in an IRA, because you have thousands of options, as opposed to the handful of options your employer offers.  Here’s my personal step-system for retirement:

1. Start by contributing enough to your employer retirement plan to get the employer match.
2. If your employer doesn’t offer a match or a retirement plan at all, obviously skip that step.
3. Pay off all your debt, except your mortgage (if you have one).  This will prepare you to fund your retirement.
4. Fully fund your IRA.  If married, fully fund both your and your spouses IRA, even if your spouse doesn’t have a job.
5. If you max out your IRA (both if married), continue to contribute to your employer’s retirement plan.
6. If your employer doesn’t offer a retirement plan, see if a SEP IRA works for you.  If so, contribute to that.

Once you’ve completed all of those steps, you’ll be looking good for retirement.  If you still have more to contribute, consider opening a standard taxable account, opening/investing directly into a business or investing in some real estate.  Either way, the goal is to diversify as much as possible.

What about Traditional vs. Roth plans?  Most plans offer both options.  Even the TSP and 401(k)s offer a Roth version of the plan.  To keep it simple, I suggest investing in a Roth if you qualify for it.  If you earn too much to qualify for it, good job!  But you’ll just have to go with the Traditional plan.

What do you put in your retirement plan?  I’ve explained the different types of plans, but what goes into them?  Well, you have a few options.  If you’re interested in some individual stocks, refer to the last part of chapter 3 or keep reading for some options.  If you would rather stick with mutual funds, you should go with index funds (I explained why in chapter 1).  For the specific index funds based on your age, check out the article, How to Choose Specific Index Funds for Retirement Based on Your Age, at the end of this chapter.

How to Get Started

You can open a retirement account with your employer (or ask if they offer one) by speaking with their finance department.  You can open an IRA in less than 15 minutes at TD-Ameritrade.

The Benefits of Starting Early: The Life of Bob and Pedro

Let’s look at some numbers. You like numbers, right?

Well…you probably do when they involve your money.

We will use the fictitious charters: Pedro and Bob.

The Story of Pedro

Pedro understands that he needs to start contributing to his retirement at a young age, so he begins to put $100 into an IRA every month. Let’s just say he puts it all into index funds and he averages a measly 8% annual return on his money. Pedro is 20 years old and he contributes to this IRA until he is 50. Pedro will end up with $146,815.04. Probably not enough for Pedro to completely stop working, but he is only 50 now and this is assuming that he was never able to contribute more than $100 per month. Not bad, Pedro!

The Story of Bob

Bob knows everything and in knowing everything, he realizes that he has plenty of time to think about retirement. Despite what Pedro tries to tell him, he waits until he is 35 to even start thinking about it. At the age of 38, Bob finally decides that he can’t work as the head-repairman of Chuck E Cheese’s for the rest of his life. He will need to start contributing to his retirement. At 38, Bob is starting to realize that he may be a bit behind the game, so he contributes $400 every month into an IRA. He had heard Pedro mention something about index funds, so he puts it all into those…whatever they are. Since he is using the same index funds as Pedro, we will give Bob the same assumption of an 8% interest rate. Bob contributes until he is 50 (like Pedro) and he will end up with less than $100,000 (98,377.42 to be exact).

Well…what did we learn, class?

First off, we learned that Bob should really be taking advice from Pedro.

We also learned the compound interest that accumulates is much more powerful than contributing more money.

Bob contributed 4 times the monthly amount that Pedro contributed! But since it was only invested for 12 years, he still ended up with much less money.

Bob actually contributed more in 12 years than Pedro did in 30 years.

Bob: $57,600 Pedro: $36,000

Oh, the benefits of starting early.

A little diversity here, a little security there.

There are several components to a well-rounded retirement portfolio.

You shouldn’t put all your eggs in one basket, but you don’t need a whole bunch of baskets.

It’s all about balance.

There are all kinds of ways to create a great portfolio, but you have to start with a solid foundation.

An IRA is a great foundation for retirement, whether it’s in addition to your company retirement account or on its own. Let’s look at 3 parts to a great IRA…

1. Index Funds

Index funds anyone? Is the S&P 500 the first that comes to mind?

I’ll start with my favorite. Index funds are indeed my favorite.

Diversity. Stability. Security.

Those are only a few of the things that index funds can provide.

You should have a nice mix of domestic and foreign index funds.

You can choose actively managed mutual funds if you really want to, but they aren’t necessary.

You may even want to throw in some bond index funds.

2. Solid Dividend Stocks

It doesn’t get much more solid than Coca-Cola, but it’s not exactly a health drink.

If you want to throw some individual stocks in your portfolio, try some well established dividend stocks. Think Dow Jones companies.

Here are a few:

• 3M Co.
• Coca Cola Co.
• Johnson & Johnson
• McDonald’s
• Proctor & Gamble Co.

Go for fairly high-yielding dividend stocks, but a high dividend shouldn’t be all you look for. Look for companies with a strong brand and strong financials.

It’s great to earn a dividend whether the stock price rises or falls. You can reinvest your dividends to keep buying more stock.

Once you reach retirement, you can start receiving income through dividends.

DivHut is a great blog completely dedicated to dividend investing.

3. Warren Buffett’s Picks

Who knew a stock shareholders meeting could be so exciting?

Considering that Buffett made his money through investing, I think it’s safe to say that he knows what he is doing.

He has created a portfolio of great long-term value stocks, as well as many really solid private companies.

Think of it like a mutual fund that was created and managed by Buffett himself.

If you didn’t know, I am talking about Berkshire Hathaway.

This is the one stock that I would recommend to anyone. It’s Buffett’s holding company for investments and businesses.

Class A Shares (BRK.A) will run you close to $200,000 each, but for us normal people, we can buy Class B shares (BRK.B) for under $200 each (at the writing of this article).

With high capital, low debt and an annual growth of 19.7% to it’s shareholders for the last 48 years, it’s really a no-brainer.

Remember That it’s YOUR Portfolio

Your retirement portfolio may include more than these funds and stocks…and that’s fine.

You can always invest in some income real estate. You can even buy physical commodities like gold and silver.

The recommendations here are meant for your IRA.

Diversity should include all kinds of investments, not just stocks and other paper assets (see chapter 6).

This gives you a great idea on where to start and what you may want in your portfolio.

It’s your portfolio, and only you can make the final call.

But what if you don’t think you have enough money to start? I’ve got something for that…

36% of Americans save absolutely nothing for retirement.

80% of people ages 30-54 believe they will not have enough money saved for retirement when the time comes.

You know you need some sort of retirement plan, but can you afford it?

Are you a statistic? Or on your way to becoming one?

Spoiler alert: Yes, you can afford to invest in your retirement

It doesn’t take much to get started and it takes even less to keep going.

Here’s how you can invest for retirement, even if you think you can’t afford it…

What You Need to Know

There are 2 very important things to pay attention to when you are starting with a small amount…

Minimums and fees.

You can’t invest what you don’t have, so you will need something with a low minimum initial investment.

Fees can be a killer. Especially when you’re dealing with small amounts, because fees often stay the same.

Start With a Good Foundation (It’s Free!)

You can generally start your retirement account for free. That’s right! Free!

Not only is it free, but you have options!

If your employer offers a retirement plan, you should look at that first, especially if they offer a match. There usually isn’t a minimum to get started.

If your employer doesn’t offer a retirement plan, you can open an IRA.

These companies let you open your IRA for free…

• TD Ameritrade
• Ally
• Vanguard
• USAA

That explains the method you should use, now let’s move on to what you can invest in with just a few bucks.

3 Options to Invest With $100 or Less

There are way more than three options to invest for under $100, but these are the easiest methods to implement right now…and by the way, there may be a fourth method here, because I couldn’t resist — I told you there were more than three!

1. Mutual Funds

The initial investment for mutual funds can be high, but not always. Here are a few mutual funds that you can open with $100 or less…

• UFSGX – USAA First Start Growth Fund ($0 Initial, $50/month)
• MYIFX – Monetta Young Investor Fund ($100 Initial, $25/month)
• Guggenheim Partners (Funds starting at $100 Initial and higher)

Starting with one of these “starter funds” is a great way to begin, but don’t stop there. Once you have enough to afford a better mutual fund, start upgrading!

The fund you really want may have a $1,000 or a $3,000 minimum (especially if you’re looking at index funds), so just climb the ladder. Start with a $100 minimum fund, then go to a $500 fund when you get there, then $1,000, then $3,000. Work your way to the top. You’ve got the idea.

2. DRIPs

Dividend Reinvestment Plans (DRIPs) are a great way to start small. A DRIP is a plan that allows you to start as small as buying one share of a company, then continuing to invest your dividends into buying more shares. It compounds over time.

It’s a great way to start small and end up with a lot more than you may expect.

More on DRIPs in chapter 7.

3. ETFs

Many companies offer free ETF trading, so you don’t pay any commissions. This is definitely a great way to start investing. If you want to trade ETFs for free, look to one of these companies…

• Vanguard
• Schwab

More on ETFs in chapter 7.

4. Betterment

I know I said three ways to invest, so consider this a bonus. Betterment is a great way to invest and there is absolutely no minimum to start an account.

Betterment is a website that allows you to invest in different ETFs based on the asset allocation you select. You don’t actually pick the specific ETFs, so that may be an issue for some who want to have more control over their investing.

Go check out Betterment Here.

Keep it Going

These are only a few of the options you have for investing with a small amount.

This all goes to show you that anyone can start investing for retirement. It doesn’t take much.

Once you start contributing to your retirement, keep going! Even if you can only afford a few dollars every month, contribute something.

Automation is a word you should be familiar with.

Automation has changed spending, saving and investing.

It’s virtually taken the discipline out of it.

Automation, A Substitution for Willpower

It used to be that investing required discipline. Especially long-term investing.

Not anymore.

You can retire wealthy with little to no discipline.

Sure, there is some discipline involved, just like there is some discipline involved in going to work everyday, but that’s not much at all. And it’s definitely not enough to make excuses for not investing.

It only takes a few minutes to setup an automatic investing system that you can retire on.

Automatic Investing

What kind of investing can be automated?

All kinds. Practically your entire retirement.

You can easily set up an auto-investing plan with:

• Index funds
• Mutual funds
• DRIPs
• 401(k) Plans
• TSP Plans

…to name a few. Learn more about these in chapter 7.

So how do you set up all of this automatic stuff?

How to Automate Everything

You can automate your entire budget, which is especially nice if you hate budgets.

This will require you to set everything in place one time and then you can set back and know that you are living responsibly without using a typical budget. Of course, you will still want to monitor your finances, but they will be set.

You may be able to automate more than you think. Here’s how:

• Bills can be paid automatically through the company or through online banking
• Investments (index funds, mutual funds, retirement accounts, etc.) can be drafted automatically
• Savings can be automatically deducted every month
• Giving can even be deducted from your checking account monthly through your church, charity, organization or online banking

What’s left after all of that?

Your spending. That’s it. Once you automate all of the things above, then you will know how much will be coming out of your account every month. That’s when you know how much money you have left for spending.

If you are a visual person, I suggest pulling out all of your spending money in cash. That way you can see it dwindling down throughout the month. When you run out of cash, you stop spending. Not having money to spend makes it easy to not spend money, right? It’s one of the best ways, really.

You can automate your entire retirement, and it may not even cost what you think.

Small amounts add up. You’ll see in the next section.

The Slight Edge is a book, but more importantly, it’s a concept. A very successful concept, I might add.

I’m not going to take all day to explain what it is…

The Slight Edge is the idea of making small changes and small progress over a long period of time, which leads to extraordinary results. And the best part is that these small changes can mean automating small amounts to go towards your retirement.

Now, there’s more to it than that, but that’s the “nutshell” explanation.

Let me explain exactly how it works, how it’s applied and how it can make you rich…

The Way of the Slight Edge

Have you ever tried to start a new habit?

And have you ever not followed through with it? We all have.

Look back and think about where you would be today if you would have followed through…

• Would you be 50 pounds lighter?
• Would you have read 100 books?
• Would you be much closer to retirement?

Now really think back. I’m talking years back. If you would have stuck with it, think about where you would be.

OK, the guilt trip is officially over.

That’s enough talk about what you didn’t do. Let’s talk about what you can still do.

If you failed, it’s most likely because you started wrong. You probably started by doing too much, too soon.

The Slight Edge is a way to look back over the last few years and realize your monstrous accomplishments. And then realize that it was actually easy. How was it easy? Because you applied “the compound effect.”

The Compound Effect

The Slight Edge is about small habits. Daily habits. Habits that almost seem too small…but they add up.

If you think something is too small, remember these 3 things:

1. It’s better than doing nothing
2. It’s better than starting too big and giving up
3. When you look at the compound effect, you’ll be amazed

So, what exactly is the compound effect? It’s like compound interest.

In the short term, it’s small. Over the long haul, it compounds like a snowball turning into an avalanche.

Again, look back and think about where you would be with a habit now, if you started it this way a year ago. Or, more positively, think about where you will be in the future.

Now let’s talk about where your finances can be in the future…

Compound interest. The 8th wonder of the world.

Now we’re shifting from metaphorical to actual. I’m talking about cold hard cash. Actual compound interest.

The most basic application of The Slight Edge is in your finances. You contribute a small amount, consistently, for a long time and you will be rich.

Let’s see just how rich you could be…

I’m not going to use the typical “10% average return of the stock market”. I could make a great argument that 9% is actually realistic; but just to be conservative, let’s use a rounded 8%.

Would it be possible for you to save more than $500/month? The answer is yes, but it depends on how much you’re willing to sacrifice (or how hard you’re willing to work).

How The Slight Edge Can Make You Unstoppable

If The Slight Edge can do that for your finances, what do you think it can do for the rest of your life?

You can implement this strategy for any goal. The thing is, you can accomplish anything if you start small enough and stay consistent.

If don’t have The Slight Edge, I would strongly recommend getting it. It’s just a few bucks on Amazon and the content is priceless.

Click here to buy The Slight Edge on Amazon.

Use the Magic of 1%

If you have a retirement plan through your employer, see your finance department and figure out to have a specific amount of percentage deducted from each paycheck.

For other options (mutual funds, index funds, IRAs, etc.), go to TD Ameritrade or USAA and open an account. Both companies offer options for automatic investing.

Once you automate your investment, check back in at least annually, and while you’re there, increase it by 1%.

If you only increase by 1% a year, you won’t notice much of a difference, but it will make a huge difference to your bottom line in the end.

“The US dollar is going to collapse, don’t put money into the stock market!”

Have you ever heard similar advice? I’m sure you have. And for good reason.

The US dollar is economically weak, but politically and realistically strong — a weird combination, but it’s true.

Before we get too far off into the debate over the US dollar (and I can go on all day; I am a finance nerd, remember ), let’s get to the important stuff here: investing without the stock market. That’s what this is about.

What Diversity Really Means

I love the stock market, but I also love diversity, because I love investing and investing without diversity is illogical.

There’s diversity, and then there’s diversity within diversity. Diversity means owning several types of investments. Diversity within diversity means owning several types of each investment. Owning stocks across several sectors, different types of bonds, and cash accounts is great diversity within the paper asset class, but that’s all it is.

True diversity has to span asset classes.

Warren Buffett has been one of the most famous, and long-running, advocates for the stock market. That’s where he made his money, and he recommends it as the easiest way for you to make money on your investments. But even Buffett has diversification outside of the New York Stock Exchange.

Buffett’s Investing Rules (Not Just for Stocks)

Buffett’s famous letters to his Berkshire Hathaway shareholders have not only been valuable for learning how to pick stocks, but they’ve been valuable in making any investment decision.

Here are a few examples from Buffett’s letters:

“Focus on the future productivity of the asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on.”

As you’ll see in a moment, many of these comments pertain to Buffett’s farm and the piece of commercial real estate he bought in New York. Whether we’re talking about a dividend stock or a farm, there are many universal investing principles.

There are always two basic types of investment: investments that produce and investments that don’t.

That means you have three ways to make money when you invest:

1. You can make money from what the investment produces
2. You can make money from what the investments becomes worth
3. You can make money from a combination of the two

That’s it. And that covers any investment I can think of. The terms may change, but in the end, you’ll be earning money in one of the above three ways. The stock market gives you the opportunity to use one or all of these ways to make money, and so do plenty of other investment opportunities.

Back to what Buffett says about his his two non-stock investments mentioned earlier:

“With my two small investments, I thought only of what the properties would produce and cared not at all about their daily valuations.”

According to Buffett, what an investment produces is much more valuable than what the investment itself is actually worth. This idea is easily explained in the stock market by looking at dividend stocks, but how do other types of investments “produce?” Investments can produce in several ways; a farm produces a crop or meat or dairy or something along those lines. Real estate can produce cashflow through rental income.

There are all kinds of ways investments produce.

Let’s look at one more universal investing principle from Buffett, and then we’ll get into how you can start investing without the stock market:

“My two purchases were made in 1986 and 1993. What the economy, interest rates, or the stock market might do in the years immediately following — 1987 and 1994 — was of no importance to me in making those investments. I can’t remember what the headlines or pundits were saying at the time. Whatever the chatter, corn would keep growing in Nebraska and students would flock to NYU.”

It’s funny how these ideas that are often thought of as “stock market investing tips” can span asset classes.

That’s my point. Look at most investing principles universally, and apply the principles to the following ideas…

9 Ways to Invest Without the Stock Market

I highly suggest diversifying your portfolio to include some of the following. You don’t need everything here, but I recommended at least trying a couple.

If you’re investing outside of the stock market because you’re afraid the market or the US dollar is going to collapse, I have bad news. If the dollar or the stock market collapses, it’s going to affect other investments. It would affect everything. In the world.

1. Hard Assets – Commodities like gold and silver are the old “go-to” alternate investment options. The only problem with these is that they don’t produce; the hope is that the value increases, but it doesn’t always. It’s good to have some hard assets, but I personally wouldn’t go as far as backing a 401(k) with them.
2. Inventions – Angel investing is the main way to find good invention ideas, or just talk to people you know. You might only be a couple degrees of separation from an inventor who’s looking for investors. When you hear of a good Kickstarter fund for an invention, contact the inventors and ask them if they have investment opportunities.
3. Real Estate – It will always be worth something. Everyone has to live somewhere. You can invest in rental properties that will produce an income, or you can buy raw land in hopes that it will increase in value. Just keep an eye on your taxes and make sure to pay them. Commercial real estate is another option, but do your research first!
4. Small Business – It’s true that most small businesses end up failing, but if you really know of a groundbreaking local business, it’s worth a shot. You know the local market better than outsiders; use that to your advantage. If you think you’ve found the next Apple, you could be in for some big returns …of course you could also lose everything you invest. Greater rewards come through greater risks.
5. Peer-to-Peer Lending – You can loan money to your brother-in-law and tell him to pay it back with interest. However, that may be the last time you ever see your money or your brother-in-law. Fortunately, there are ways to take advantage of peer-to-peer lending with less risk. Lending Club and Prosper are two of the most popular options, and the offer quite a bit of protection. Similar to the protection of a mutual fund, they will spread your investment across many different peers, so you’re not lending your money to one person.
6. Collectibles – Sports cards, stamps, model cars …almost anything is collectible if you can find a buyer and you can keep it in mint condition. This is more of a hobby than anything so you want to be sure you’re interested in whatever you’re collecting. But remember, for collectibles, without a buyer, it doesn’t matter what it’s “worth.” Use that to your benefit when you’re buying collectibles, and you will have an easier time selling them down the road. Often, due to how long it takes for some collectibles to become valuable, consider leaving this as a legacy to your children, possibly even for their children.
7. Antiques/Art – Similar to other collectibles, antiques and art are only worth what someone will pay. That being said, there is a large market for both of these things. The most important thing here is to do your research. A well-researched buy can outperform the stock market any day. An uninformed buy can be the biggest burden in your portfolio.
8. Wine Bottles – It’s actually possible to make between 6% and 15% annually by investing in wine. You need to know a lot about wine, such as which wines are worth the most, how to store it properly and where to buy it, but this investment can definitely pay off. Of course, you need to make sure you’re not going to be tempted to drink it all.
9. Farming – This can go one of two ways. It can either be a lifestyle investment by buying and working a farm yourself, or it can be a capital-only investment by owning a farm that is run by someone else. Of course, you’ll usually have to go in and get the process started yourself, but it can be a profitable investment once it’s up and running. Remember, this is one of the alternate investment options Warren Buffett uses.

These aren’t your only options. Of course, you can always put your money in “high-yield” savings accounts or “invest” in CD (Certificate of Depression Deposit) ladders, but the rates of return are so low, it’s not much of an investment.

If you’re just looking to get out of the US stock market, there are plenty of stable foreign stock exchanges.

The terms can be the most intimidating part of investing.

If you’re new to it, it can seem like a new language.

In some ways it is, but you don’t have to know everything.

There are really only a few terms that you need to understand to get started.

I’ve included the following list of some common terms associated with investing.

While it’s unlikely that you will ned to know what each one of these mean, you will need to know more about a few.

Learn more below…

You don’t need 1000 tools to start investing, but you do need a few.

Some make investing possible, like brokerage companies and banks.

Others just make investing easier like resources and apps.

TD Ameritrade is a great place to get started investing. You can open an IRA for retirement, a 529 for your children’s education, a standard brokerage account to buy stocks, or start a number of other investments. They offer some of the lowest fees and best customer service for beginners.

Learn More

USAA is my absolute favor place for banking, investing and even insurance. However you must have a military affiliation (personally or family member) to use them. You can click here to see if your military affiliation qualifies you. They make it easy to open every type of investment, and they offer some great mutual funds and index funds.

Learn More

Betterment offers automatic investing options and low fees. It’s easy to set up your retirement plan and to keep contributing to it automatically. They will automatically invest your money based on your desired risk level and stage of life. It’s worth it to have someone else you can trust to handle everything.

Learn More

Analyze Your Porfolio

Check for fees and make sure you’re making the best investments.

Completely Free

Since they make their money from their investment advisory services, using Personal Capital is 100% free!

Financhill

Great information on individual stocks.

Serenity Stock Screener

A screener for value stocks, based on Benjamin Graham and Warren Buffett’s method.

Yahoo Finance

Financial reports for companies all in one place.

1. The Intelligent Investor by Benjamin Graham
2. The Essays of Warren Buffett by Warren Buffett and Lawrence Cunningham
3. Why Stocks Go Up and Down by William Pike and Patrick Gregory
4. Financial Statements by Thomas R. Ittelson
5. One Up on Wall Street by Peter Lynch
6. Active Value Investing by Vitaliy N. Katsenelson
7. Why Are We So Clueless about the Stock Market? by Mariusz Skonieczny
8. F Wall Street by Joe Ponzio
9. Beating the Street by Peter Lynch
10. The Little Book of Value Investing by Christopher H. Browne
11. Why Smart People Make Big Money Mistakes and How to Correct Them by Gary Belsky and Thomas Gilovich
12. Value Investing: From Graham to Buffett and Beyond by Bruce C. N. Greenwald
13. The Shortest Investment Book Ever by James O’Donnell
14. Common Stocks and Uncommon Profits by Philip Fisher
15. The Little Book That Builds Wealth by Pat Dorsey
16. The Motley Fool Investment Workbook by David and Tom Gardner
17. The Automatic Millionaire by David Bach
18. Quality of Earnings by Thornton L. O’glove
19. The Five Rules for Successful Stock Investing by Pat Dorsey
20. Security Analysis by Benjamin Graham
21. Bull: A History of the Boom and Bust, 1982-2004 by Maggie Mahar
22. The Four Pillars of Investing by William J. Bernstein
23. A Random Walk Down Wall Street by Burton G. Malkiel
24. Million Dollar Portfolio by David and Tom Gardner
25. The Snowball: Warren Buffett and the Business of Life by Alice Schroeder
26. The Little Book that Beats the Market by Joel Greenblatt
27. Buffett: The Making of an American Capitalist by Roger Lowenstein
28. Little Book of Common Sense Investing by John C. Bogle
29. The Millionaire Fastlane by MJ DeMarco
30. Stocks For The Long Run by Jeremy Siegel

1. The Intelligent Investor by Benjamin Graham
2. The Essays of Warren Buffett by Warren Buffett and Lawrence Cunningham
3. Why Stocks Go Up and Down by William Pike and Patrick Gregory
4. Financial Statements by Thomas R. Ittelson
5. One Up on Wall Street by Peter Lynch
6. Active Value Investing by Vitaliy N. Katsenelson
7. Why Are We So Clueless about the Stock Market? by Mariusz Skonieczny
8. F Wall Street by Joe Ponzio
9. Beating the Street by Peter Lynch
10. The Little Book of Value Investing by Christopher H. Browne
11. Why Smart People Make Big Money Mistakes and How to Correct Them by Gary Belsky and Thomas Gilovich
12. Value Investing: From Graham to Buffett and Beyond by Bruce C. N. Greenwald
13. The Shortest Investment Book Ever by James O’Donnell
14. Common Stocks and Uncommon Profits by Philip Fisher
15. The Little Book That Builds Wealth by Pat Dorsey
16. The Motley Fool Investment Workbook by David and Tom Gardner
17. The Automatic Millionaire by David Bach
18. Quality of Earnings by Thornton L. O’glove
19. The Five Rules for Successful Stock Investing by Pat Dorsey
20. Security Analysis by Benjamin Graham
21. Bull: A History of the Boom and Bust, 1982-2004 by Maggie Mahar
22. The Four Pillars of Investing by William J. Bernstein
23. A Random Walk Down Wall Street by Burton G. Malkiel
24. Million Dollar Portfolio by David and Tom Gardner
25. The Snowball: Warren Buffett and the Business of Life by Alice Schroeder
26. The Little Book that Beats the Market by Joel Greenblatt
27. Buffett: The Making of an American Capitalist by Roger Lowenstein
28. Little Book of Common Sense Investing by John C. Bogle
29. The Millionaire Fastlane by MJ DeMarco
30. Stocks For The Long Run by Jeremy Siegel

Controlling and saving money is important, but, more often than not, only a very few people have been successful with their efforts. Controlling and saving money requires time and discipline. With the number of online and offline stores selling different products and services today, it’s easy for most people to lose sight of their goals.

It’s common knowledge that money can affect peoples’ lives in many ways, yet, some still choose to spend hastily without putting any money in their savings. To help you out, listed below are the 3 primary reasons people usually have a hard time controlling and saving their money:

1. Failing To Set Goals

Not having a clear picture of how, why, and how much you want to save can become the reason why your plan will fail. If you’re truly serious about controlling and saving money, you should have a detailed plan on what your goal for saving is, how you’re going to save, and how much you’re going to save after a specific time frame. The more detailed your goals are, the easier it’ll be for you to achieve them.

2. Living Life Without A Budget

Having a high-paying job doesn’t mean that you should live life without a budget. You’ll be surprised how your month’s salary will immediately vanish if you don’t prepare and follow a budget.

If you want to easily control and save money, learn to create a realistic budget, then stick to it. Having one will go a long way for you to attain financial independence in the future.

3. Not Having An Emergency Fund

Regardless of how well-planned your life is, emergencies can still happen. For example, you can lose your job during the most unexpected time or get involved in a car accident even if you’re driving safely.

For you to control and save money effectively, creating an emergency fund is a must. When you have one, you’ll have the resources to get your money in times of emergencies. An emergency fund will save you from a lot of stress as it’ll ensure that you can continue living your life even when an emergency occurs.

Controlling and saving money is vital, and if you’ve been trying to accomplish this task but to no avail, start getting tips from the Wealth Teacher. The information stated in these resources will help you control and save money.

Now let’s get into the guide…

You can save money on everything.

You can haggle anywhere.

And you can always save more.

Let’s start with a list of 14 one-sentence tips that will drastically improve your finances.

These are quick tips, but they will surely make a huge improvement if you take them to heart.

Remember, just because you have heard some of these before, doesn’t mean you actually absorbed it.

Read the list slowly and see if you can implement some of these, especially things that you may have “already heard.”

Hearing alone doesn’t help. It’s about acting and implementation.

Without further ado and in no particular order, here are a total of 14 One-Sentence Tips for your finances…

1. Sell the useless things around the house that you don’t need.
2. Cutting off your cable will not only save you money, but you will have more time to be productive in other areas.
3. Always compare online prices when shopping around.
4. Buy things based on what you and your family need, not based on what other people think.
5. Add up the costs of your jobs (travel, food, expenses and daycare), then determine if it’s worth it for both parents to work.
6. Spend less than you make.
7. Compare rates for insurance companies frequently, since they are always changing, and switch if you find a better deal.
8. Fine tune your budget so that you know where every cent is going and have more control over your money.
9. Use Personal Capital to link your budget and all of your accounts together.
10. Look for promo/coupon codes when you buy online by searching: “[site name] promo code”.
11. Cut out a useless activity, like watching television, and replace it with reading a good book on finances.
12. Cut up your credit cards if you have made late payments or failed to pay them off in full every month.
13. Have an emergency fund for emergencies, not a credit card.
14. Add at least one of these tips to your life today!

Try to implement as many as possible over the next few weeks.

You will notice a change in your finances if you do.

Dollar stores are interesting because they make their money by charging a dollar for everything.

So that means things that are typically $2 or $3 are only a dollar at the dollar store. That also means some things that are typically 50 cents are also a dollar at the dollar store.

Then there are stores like Dollar General, which isn’t really a dollar store at all, if you’re going off the “everything’s a dollar” idea. I suppose Dollar General just means everything is generally…close to a dollar, which is more accurate, but still a little shady if you ask me.

I want to be clear that this list is talking about dollar stores where everything is actually…*drum roll please*…a dollar. Dollar stores can save you money, but if you use them for all your shopping, you may be wasting some money. Also, it’s worth noting that some dollar stores accept coupons and that can be quite lucrative, so check into that with your local stores.

Here are 15 things you should generally buy from the dollar store and some ways to save even more money…

1. Home Décor

Home decorations don’t have to be made out of the most expensive materials. Dollar stores offer really nice options for decorating your home, throughout the year or for the holidays.

Save more money: Look at the clearance sections of places like Ross and TJ Maxx. Or why not make your own? Go to some yard sales and bring some life into older pieces.

2. Party Supplies

Plates, plasticware and party decorations. Dollar stores usually have specific designs, like a one year birthday party or a going away party, but if you need a better selection, try Walmart.

3. Holiday Supplies

Almost everything you need for the holidays can be found at the dollar store. Wrapping paper, gift boxes, tissue paper, etc.

Save more money: The absolute best way to buy holiday supplies is to simply go to large retail stores like Walmart, after the holidays. We bought our Christmas tree there for 90% off.

4. Cleaning Products

You may be picky about your cleaning supplies, but if you’re not, dollar stores have a great variety. I use “LA’s Totally Awesome” for almost all my cleaning. $1/bottle.

Save more money: Make your own cleaning supplies for things like detergents or turn to coupons. Coupons may not always be worth your time, but you can get cleaning supplies practically for free with them if you do it right.

5. Spices

The more expensive spices may be hard to find at your local dollar depot, but for the basic spices, go to dollar stores.

Save more money: Why not make your own?

6. Preserved Foods

This one is 50/50, but when it’s a good deal, it’s a really good deal. Try to keep track of what you pay for canned and other preserved foods, on average.

Save more money: Can your own food. The Frugal Farmer is a great place to learn about canning.

7. Food Storage Containers

If you aren’t looking for quality, but just a cheap way to store food or possibly containers you can give away, the dollar store has the best deals.

Save more money: Walmart’s Black Friday, hands down. You can wait a little later after all the crazies leave to buy the storage containers. It will still be there.

8. Kitchenware

Once again, if you’re not looking for quality, but just looking to stock your cabinets, the dollar store is your friend. Cups, mugs, glasses, plates, etc.. It’s really great if you’re just starting out.

Save more money: Black Friday. Kitchenware isn’t the highest demanded thing, so come after the crazy train leaves.

9. Coloring Supplies

Crayons, markers and colored pencils are cheap at the dollar store. And you can usually get actual Crayola brand if you want it. (Because everyone knows the other brands are junk, or is that just me?)

Save more money: Back to school sales. Get there early. Almost everyone procrastinates until the week before school. If you go within the first week of the sale, you’ll be shopping freely and possibly alone in the aisles.

10. Batteries

Dollar stores often have name brands for cheap. Like everything on this list, it depends on the store, but if you shop around, you’ll find deals on batteries at dollar stores.

Save more money: If you use a lot of batteries, look into rechargeable options.

11. Candy

This one is especially true for movie theater candy. So if you’re one of those theater-goers with the extra large purse , you’ll love the dollar store.

Save more money: Look for sales in the actual candy aisle instead of just looking at the checkout counter. Or just stop eating candy.

12. Greeting Cards

This is the best thing on this list in my opinion. I buy all my greeting cards from the dollar store. They usually still have the $3 or $4 price on the back, so you really feel like you’re getting a deal.

Save more money: Make your own printable cards or use a free greeting card service to send an e-card. Saving the trees and saving money, right?

13. Undergarments

This is especially true for children’s undergarments. Socks and underwear are worth checking out at the dollar store.

Save more money: Outlet malls! Or back to school sales.

14. Crafting Supplies

Crafting items, such as scrap booking supplies are cheap at the dollar store. Once again, you’re not looking for the highest quality, you’re just looking for the visual effect.

15. Balloons

If you can find one of those dollar stores that sell the actual mylar balloons for a dollar and air them up for free, you won’t find a better deal. Some even offer a custom design or wording on them.

Every dollar store is different, so don’t be surprised if you have had a different experience with something on this list.

Just remember to check the dollar stores out and know where to get the best prices in your area.

Who doesn’t love shopping on Amazon?

It’s hard to beat the prices, but what if I told you that you can do better?

I’m not talking about shopping somewhere else.

I’m talking about better deals where you already shop. On Amazon.

Here are 9 tools to become a master shopper on Amazon…

What Works and What Doesn’t

There have been numerous tools through the years for shopping on Amazon.

Many of them have bit the dust like Jungle Crazy, Deal Locker’s Secret Amazon Discountand Refund Please. Those sites were great.

There used to actually be a website that allowed you to get paid when someone bought you something off your wish list…yeah, shut down. It was called AmzWsh and the entire idea of it seemed a little sketchy to me.

I’m actually going to keep this list up to date. I want you to be able to come back to list and use all the resources in the future, including resources I add when I find out about them.

Without further ado, here they are…

9 Tools to Become an Amazon Master Shopper

Check out these 9 tools and the 3 bonus tools at the end…

1. CamelCamelCamel

This one is a must, even if you don’t like camels. It’s a free service that allows you to follow the price of an item and then receive a notification when the price drops. It’s an automated way to save and keep saving. There’s really no reason not to use it.
Visit: CamelCamelCamel

2. Price Jump

Enter the URL of the product you’re interested in and this site will let you know if Amazon has the best price. It will compare other websites that sell that type of product. For example, if you’re looking at electronics, it will compare to places like New Egg and Tiger Direct. This an extremely simple way to save.
Visit: Price Jump

3. Amazon Warehouse Deals

This is like buying used, but not really. Many of the deals are just open-box products. Never used, but the box was opened. The important part is that it’s all backed by Amazon’s return policy. There is nothing “as is” about Amazon Warehouse Deals. You buy a product, if it isn’t what it’s supposed to be, you return it. No risk.
Visit: Amazon Warehouse Deals

4. Amazon Outlet

Markdowns, clearance items, overstocks and more. That’s what the page says. You can score some pretty great deals here, just make sure you don’t buy things just because they are on sale. That can get you in trouble.
Visit: Amazon Outlet

5. Amazon Filler Item Finder

Trying to get to $35 for free shipping? Simply enter the amount you have left to reach $35 and hit enter. It will show a list of items you could add to your cart to get free shipping. This is a great alternative to buying useless junk, just to get free shipping. Buy stuff you actually need.
Visit: Amazon Filler Item Finder

6. Subscribe and Save

This is an autoship type service. If you know you need certain products every month, subsribe and save. Save up to 15% and get free shipping.
Visit: Subscribe and Save

7. Amazon’s Programs

Everyone knows about Amazon Prime. Amazon Mom is also becoming a popular way to buy diapers at a discounts. But did you know about Amazon Student? If you’re an extreme Amazoner, parent or a student, these programs can save you some money.
Visit: Amazon Prime, Amazon Mom, Amazon Student

8. Drop the Price

Yes, Amazon will usually price match. If you find a lower price elsewhere, just click on “tell us about a lower price”. Why not just buy the product there, instead of getting Amazon to price match? Because you can earn cash-back that I’m going to tell you about right now…

9. Cashback

You should be getting cashback from Amazon. Ebates is one site that allows you to earn cashback while shopping on Amazon. We can’t forget the Chase Amazon Visa card. Earn 3% cashback on Amazon purchases? Yes, please. The best part is that you can combine the two.
Visit: Ebates, Chase Amazon Visa

Related: 11 Ways to Make Money When You Spend Money

Bonus Tools

Shopping isn’t all about Amazon.

Lest we forget the classics like eBay and Walmart. Here are 3 bonus tools…

1. Fat Fingers

This is a great way to find mispellings of items you may be looking for on eBay. It works best for things that are hard to spell, but you should always give it a shot.
Visit: Fat Fingers

2. Bay Crazy

Another great eBay tool. My favorite feature is the listing of auctions that are ending soon with 0 bids. You will find some great deals there. You can also use this site to search for misspellings, like Fat Fingers.
Visit: Bay Crazy

3. Walmart Savings Catcher

Finally, a tool for smarter shopping at Walmart. If you find a lower price after you bought something from Walmart, just scan your receipt and Walmart will give you a gift card for the difference.
Visit: Walmart Savings Catcher

Remember when you were able to go months without spending any money at all?

Me neither.

It seems like it was somewhere in my childhood, but…it’s been a while.

We spend money. All the time. That’s life.

Why not make money while we spend? It’s very possible and here are 11 ways to prove it…

Get Smart About Credit Cards

We all know about the credit card rewards out there.

You see the ads in the mail everyday…

“Earn up to 5% cash back on your purchases”

“We offer the highest cash back of any card”

The truth is that nobody offers the highest cash back on everything.

That’s why you need more than one credit card to get as much cash back as possible.

Let me go ahead and preface the rest of this article by saying two things about credit cards:

1. If you use credit cards, pay them off fully every month
2. There are other ways to make money when you spend

Now let’s get back on track…

Choosing the Right Card

It’s common for certain cards to offer a higher cash back for certain purchases.

The percentages will be different, depending on the category, such as:

• Groceries
• Gas
• Specific stores
• Home improvement

Find cards that match your normal purchases.

It’s important that I say “your normal purchases”. Don’t get caught in the trap of buying things you don’t need, or things you wouldn’t normally buy, just to get the cash back. That doesn’t make sense, unless you are a crazy person, but you’re not a crazy person, you are a money-savvy genius…or close to it, at least.

If you have a hard time remembering which card is which, just take a Sharpie and write “Gas” or “Groceries” on the card.

Also, make sure you do your research to find the best cards.

I shop on Amazon.com all the time, so I have an Amazon.com Visa that earns 3% cashback on Amazon purchases. That’s my most used card.

If you have multiple rewards programs, you can keep track of them all with Points.com.

Like I said earlier, there are other ways to make money while spending it. You don’t have to use credit cards. That’s only one way. Let me show you the rest…

Get Paid to Shop

There are a plethora of websites that offer rewards for shopping through them.

Basically you will buy everything you normally buy, but instead of going to the store or the website, you go to one of these sites first. You are then linked to whichever website you want to shop with.

For every dollar you spend, you earn a certain amount of cash back for shopping this way.

Then you can use your credit card to make the purchase and get rewarded twice!

Here are the other 10 ways to earn while you spend:

1. Swagbucks – Earn money for all kinds of things.
2. Ebates – My favorite! Earn while you shop.
3. Fat Wallet (inactive) – Another great way to earn while you shop.
4. Memo Link – Earn while you shop here too.
5. My Points – A fourth way to earn while you shop.
6. My Deals Club – Great coupons and coupon codes.
7. Extrabux – Up to 30% cash back through them.
8. Shop At Home – Cash back for online shopping.
9. Big Crumbs – Yet another cash back shopping site.
10. Mr. Rebates – One more cash back website for you.

Maybe you were already taking advantage of these rewards. Maybe not. But hopefully now you will.

There are so many ways to earn while you spend, why not take advantage of them all?

My wife and I headed into Oklahoma City this past weekend to look for a vehicle.

After spending the majority of the day at a certain car dealership, we ended up driving a new car home…well, new to us.

We are happy with the vehicle, and we were even happier with the price.

Long story short, they were asking almost $9,000 for a vehicle that we ended up purchasing for $2,800.

How did we do that? We used these 6 haggling hacks (I hope you can appreciate the alteration) to get the deal…

1. Be Flexible

We were flexible on everything except the price.

If you’re flexible, you can always move to a different car (or a different seller) when the negotiation doesn’t work out.

We wanted a vehicle with at least 6 seats for under $5,000.

That’s it. We didn’t care if it was a minivan, SUV, or a bus…if it fell within our criteria, we were interested.

This opened up a lot of options, which brings me to my next point…

2. Don’t Get Married at the Dealership

I’m talking about to a vehicle, not to a person. That would be a weird wedding.

There are better places to get married and better things to marry than a car…like a human, for example.

Don’t marry the vehicle you want, even if it’s the “car of your dreams”.

It’s important to know what you want, but not to fall in love.

That’s exactly what the dealer wants.

It won’t be the end of the world if you don’t buy that exact vehicle.

We didn’t fall in love, so we could always walk away, which leads me to…

3. Don’t Be Afraid to Walk Away

We left the dealership and they actually called begging us to come back. That happens when they know you are serious and they know you have money (either in the form of cash or a credit score).

The deal isn’t going anywhere, and if it does, you’ll survive.

Once you have your price set in stone, don’t budge.

You can always find a good deal. Seriously, you can.

Sometimes you have to just walk out so they know you’re serious. You can always come back.

Be prepared to devote at least one day to buying a car and that may mean walking out more than a few times.

4. Be Informed and Know the Value

You should be as informed as possible. It’s easy these days, since most of us have the internet in our palms.

The more informed you are, the less they can take advantage of you.

You can compare the value at these sites:

• Kelly Blue Book
• Edmunds
• NADAguides

Most dealerships use these guides, along with others, such as a “black book value”. But just because they show you a piece of paper with a price on it, that doesn’t mean it’s accurate. Edmunds actually sent a staff writer undercover as a car salesman for a few months and one of the things he discovered is that some dealerships just make up a value and hope you’ll pay high-dollar for the vehicle, instead of questioning the price.

Salesmen tend to…”fluff” the truth a little, so don’t always trust the value they come up with.

Know the value of what you’re looking at. Do your research. You’ll want to check a few things out to get the real value.

It’s a good idea to take a test drive to a local mechanic for a quick inspection. If that’s not an option, try out Firestone or Auto Zone for a quick diagnosis (it’s not completely thorough, but it’s better than nothing).

You can check a lot of it yourself. Just remember to check everything. It’s easy to be sold by a cold A/C in the middle of July, but how well does the heat work?

5. Don’t Be Afraid to Hurt the Salesman’s Feelings

They will try every tactic in the book. They will try to make you feel guilty or even obligated to buy a car, but you don’t owe them anything.

You should see how much they would be willing to help you after you buy the car…probably not much. It’s all sales gimmicks.

The only decision that matters is the one you make. It doesn’t matter what the salesman wants. It’s your money. It’s ok if you decide not to buy and they get upset.

6. Don’t Finance, Get Rewards Instead

Pay cash. plain and simple. If you have to finance, you can’t afford it.

You have more negotiation power with cash. When you finance, they can always talk you into buying more car.

You should never finance something that depreciates.

We used a credit card for the purchase to get the cash-back. More money saved!

Just be sure to pay it off in full when the bill comes in.

One Last Tip

We actually had a great experience buying our car. It was fun to haggle and watch the price sink lower and lower.

You will usually get a better deal when buying private-party, but we chose to keep our options open to dealerships as well…and it worked out well for us.

It was sad, however, to watch the couples sitting in the different offices. Sad, upset and even scared. One lady was crying!

That’s what happens when you finance and especially when you overpay. It can be stressful.

We walked away knowing our car was paid in full. It’s a great feeling.

One Last Tip: Make sure everything that is promised is on paper. A tank of gas, gift certificates, a TV…these are a few examples of what dealerships will do to earn your business. Make sure, if you haven’t already received it, that it’s in the paperwork or you might as well forget about it.

And don’t forget to ask for the CarFax Report. No need to pay for one yourself.  Any reputable dealership will provide one, free of charge.

My wife was nice enough to share some of her secrets.

When people see how much money she saves, they always want the inside scoop.

Here it is! Ladies and gentlemen, I introduce my wife to give you some saving advice…

From door handles to baby gates to the cabinets under the sink, we do a thorough job of child-proofing our homes.

But do we make sure our finances are child-proof?

With children come new expenses. Expenses that can get out of control if we don’t have a plan.

Here are 21 tips for child-proofing your finances…

1. Get Free Products

Sign up for baby clubs of products you use.

They will send you coupons for things you’re already buying.

You can also get samples from your OBGYN or pediatrician. I did not pay for prenatal vitamins the entire time I was pregnant (and for a couple months after I gave birth). My OB gave me what I needed.

This can also be true for some prescriptions at the doctor’s office. I can’t tell you how many times I didn’t have to buy a prescription because I asked the doctor for free samples.

2. Don’t Say “No” to Baby Showers

They take time, but what you get is completely FREE.

If you get stuff you won’t use, just return it for stuff you actually need.

3. Use Cloth Diapers

Using cloth diapers is not only great for your baby’s skin, but it can save hundreds over the span of the diapering age.

I chose to do a mixture of cloth and disposable. I use disposable when my child sleeps so I don’t have to change him every time he wakes up (plus, it’s easier to get him back to sleep).

I also use disposable diapers when we go into public or when someone else watches him away from home. Then I don’t have to tote dirty diapers.

I end up using 1 or 2 disposable diapers a day instead of 6-10 or even more!

I have heard of babies using upwards of 20 per day!

You can also use wash cloths instead of wipes. You can dampen them with water and add a little Witchhazel to the mix if/when they get a diaper rash.

4. Breastfeed

If you are able to, breastfeed your baby. It saves time and money.

With our first child, I was unable to produce enough milk, so I breastfed as much as I could, then supplemented with formula for the rest of her diet.

Also, be sure to check with your hospital or insurance provider if you need a breast pump. Sometimes they are free or at least discounted. You can also rent one from some hospitals.

5. Be Smart About Baby Food

Solid baby foods can be made in a blender or food processor. You can feed your baby whatever you are eating (make sure to introduce foods according to what your pediatrician suggests).

You can also buy canned veggies and process/blend those for quick feedings.

For the ease of it you could try canned pumpkin or unsweetened apple sauce. It’s already a good consistency.

6. Don’t Pay Retail for Your Car Seat

Make sure to get your car seat from a trusted source.

Always check to see if the car seat has been in an accident and check it’s expiration date (they have expiration tags on the bottom).

That being said, a car seat can be a great hand-me-down from friends or family. Or you can always reuse one from an older child.

7. Plan Ahead

Have a small bag in the car with a few diapers, some wipes, a change of clothes and some snacks.

This will keep you from having to make “spur of the moment” purchases when something unexpected happens.

8. Compare Hospital Costs

All hospitals are not created equal.

Some hospitals charge for television usage as well as other “perks” such as single recovery rooms.

Keep this in mind when you are looking at the potential overall cost of your stay.

And just so you know, you or your insurance company has paid for all the items stanched under your little ones bassinet. Don’t forget that stuff. Baby wash, diapers, thermometer/covers, wipes…it’s all yours!

9. Don’t Immediately Go to the Doctor

If it’s not a life threatening issue, call your doctor and talk to them over the phone instead of automatically making an appointment

A lot of times they can diagnose and even prescribe a treatment over the phone, potentially saving you the cost of a doctor’s visit.

10. Borrow

Many times you can borrow baby items from a friend or relative who isn’t using them.

Some big ticket items such as a breast pump, baby swing, jumper, or car seat can be borrowed at zero cost to you.

11. Swap Sitting Services

Alliteration aside…ask a trusted friend to swap sitting with you.

They can watch your kids one night and you can watch their kids another.

If they don’t have kids, maybe you could swap them some other service such as dog sitting or mowing their lawn.

This not only saves you money, but it saves your friend’s money too!

12. Don’t Be Afraid to Say “No”

Kids will be kids. And that usually means they ask for a lot.

It’s a great thing to get them what they want…sometimes.

Learn to tell them no, especially if it is an impulse request, but don’t forget to explain why you are telling them no.

My daughter asks for a lot after she sees a commercial or walks down the toy isle.

Oh, marketing.

Does she usually remember that toy exists a week later? Nope.

I listen to her requests and file them away. When she asks for something often, that can give me a great gift idea for the next holiday!

13. Know What Your Insurance Covers

Insurance doesn’t always cover everything.

I always discuss what my insurance covers with my doctor and let them know that I DO NOT want any procedure that is not covered by my insurance unless they talk to me about it first.

A lot of doctors just follow a routine and it can end up costing you more if your insurance does not cover their “routine”.

Some insurance companies don’t cover things like the 2nd ultra sound when you are pregnant unless it is medically necessary. Speaking of pregnancy, if you don’t have insurance, some hospitals have a reduced payment plan for births (among other things). It never hurts to ask!

14. Count the Cost of Daycare

It isn’t always beneficial for both spouses to work outside the home.

If the cost of daycare outweighs (or comes close to) the income brought in by the second spouse, you might want to reconsider. At least calculate what you actually earn after expenses.

For instance, if day care is $300 per week and the second spouse makes $9 an hour for 40 hours, they essentially added $60 a week to the total household income.

What could you cut back to save $60 a month and have the second spouse stay at home?

After expenses like commuting and eating out, there may be even less than $60.

15. Don’t Always Buy in Bulk

Always calculate cost per ounce or item such as per diaper.

Contrary to popular belief, the bigger package isn’t necessarily the best price.

I also find that quite often they are close to the same price per ounce/item and with a coupon; it makes the smaller package a better deal.

Take the time to check. It’s worth it.

Some stores list the price per ounce on the shelf tags. Double check these as well. Surprisingly, they are not always correct.

16. Baby Stuff? Think Resale, Not Retail

Buy baby stuff from resale shops, yard sales and other second hand places.

Facebook swap shops are great for this!

You can purchase baby toys such as jumpers for pennies on the dollar and quite often, they are barely used because of how quickly they are outgrown.

17. Be Reasonable With Baby Clothes

Why not purchase baby clothes used as well?

Baby clothes are worn only a hand full of times before they are out-grown.

If you buy new, you end up paying $15 for an outfit that you can sell for $1 a month later when your baby out grows it.

Also, buy unisex colors/styles so that they can be reused for more babies in the future. You never know what (or who) is going to happen.

Forego the shoes. They outgrow the footwear very quickly. Shoes are cute, but they are unnecessary for babies until they start walking.

18. Compare Prices

Before you buy, make sure you are getting the best deal. Many times you could buy items for less on the internet or at another local store than the “one” you always shop at.

No one store has the best deal on everything.

Try to know the average price of the items you buy frequently.

Kalen and I frequently buy things like diapers off of Amazon instead of in store. You can often buy them with a damaged box (but no damaged or open diapers) for much less.

Amazon also shows the price per count for easy price comparison.

While you are comparing prices, make sure to check out the reviews on the products you are considering buying to see what others like you have to say about the product’s value. You can also talk to friends or family to see what their favorite or most useful buys are.

19. Buy What You Need When You Don’t Need It

If the item is not perishable or doesn’t expire quickly, buy it when it is on sale or when you have a coupon. Or both!

If you don’t do this, you know you will have to buy the item anyway and when you do, you will end up paying full price for it.

Why pay full price for anything, really?

Here are a few things that you could be looking for:

• Paper Towels
• Toilet Paper
• Laundry Detergent
• Soap/Shampoo/Conditioner
• Shaving Cream

This is a great concept for Christmas and holiday gifts too; you can buy things all year round when they go on sale and put them away for later.

20. Pay for the Product, Not the Marketing

You may find a store brand or a less expensive brand that you like just as well or better than the one you have always used.

Often these brands are made by the same name brand companies, just without all of the fancy packaging.

Name brands are mostly only more expensive because of the marketing, advertising and packaging.

21. Don’t Buy What You Don’t Need

This seems obvious, but we still do it.

Do we really need a fancy expensive diaper disposal pail? Why not use a grocery sack? Tie up the used diapers and throw them out.

Do we really need 20 outfits of one size? Why not use 6 or 7 and just wash them every couple days?

This also works well with our cloth diaper regimen.

What about a changing station? Could you use the top of a low dresser? Why not use the floor or the bed?

Sometimes saving money on what you “need” can be as simple as challenging the concept of what is “needed”.

Buying a home. The American dream. Though many are questioning whether it still makes sense to buy or if you should rent, many still believe that a home can be worth the price tag. When you’re buying a home, there are a few things you need to know. First, you want to make sure the property you’re buying is worth it. Consider doing a few things before you buy:

• Get your own home appraisal
• Get a professional home inspection
• Get a real estate agent that knows their job
• Get a feel for the area by talking to some homeowners
• Get everything in writing – verbal agreements don’t hold up

Once you have found your home and you’re ready to get a mortgage, it’s extremely important to get the best interest rate you can find; it’s amazing the difference 1% can make on how much you pay over the life of the loan. If you already have a mortgage, run the numbers to see if a refinance is right for you.

Let’s start there: refinancing…

Refinancing your home is like the government.

Sometimes it makes sense.

Sometimes it doesn’t.

And sometimes it will force you to spend a lot of money with little or no return.

Doesn’t that remind you of the government?

So, when does it make sense to refinance?

There are ways to figure that out and there are some things you need to know about refinancing…

Refinancing Explained

Refinancing is the process of taking out a new loan to pay your existing loan.

There are several reasons for this:

• Lowering your interest rate
• Shortening the term of your mortgage
• Switching one type of mortgage to another
• Retrieving some of your home equity
• Possibly even debt consolidation

But, wait! It doesn’t come free… or even cheap, really.

There are costs associated with refinancing, such as:

• Appraisal fees
• Application and processing fees
• Title search fee
• A percentage of the loan’s principle

Like I said, it’s not always cheap. But…it’s often worth it.

Lowering Your Interest Rate

When seeking to lower your interest rate, you need to make sure that the change is enough to be worth it.

Refinancing companies will usually run your numbers and tell you whether or not it is best for you, but it’s best to know for yourself.

Use the calculator below to figure out how much money you will save with your new interest rate. Weigh that against the estimated closing costs for refinancing. Make your decision.

Even a 1% drop in your interest rate can make a huge difference.

Shortening the Term

Generally, the shorter the loan, the lower the interest rate. This is typically a win – win.

As long as you can afford the monthly payments and everything else makes sense, you should go for the shorter mortgage, even if it requires you to refinance.

It is easy to pay off a 30 year mortgage in 15 years, but it’s easier not to.

That’s why most people don’t do it.

If the interest rate is higher or the same, you will need to run the numbers.

If interest rates are down and you are locked in at a higher rate, you may even be able to shorten your mortgage without changing your payment.

Shortening your term makes much more sense in the earlier years than the later years, but once you run the numbers, you will know if it works for you.

Switching Loan Types

If you have a “creative financing” type of loan, such as an adjustable-rate mortgage (ARM), switching to a fixed-rate mortgage is a good idea.

At a minimum, you are reducing the risk of having interest rates skyrocket.

Creative financing can be very risky, so make sure you know what you are doing if you decide to use it.

Don’t fall into the trap of thinking that creative financing is the only way you can afford a home in your area. If that’s the case, you can’t afford to live there.

Tapping Into Home Equity

Not a good idea.

If you need to borrow money from your home equity, you can’t afford what you are buying.

As far as emergencies, use an emergency fund.

Running the Numbers

Basically, you should run the numbers to see if a refinance makes sense for you.

Hopefully you have a better understanding of what to look for.

You have everything you need to make the decision. Now you make the call.

Should you pay your mortgage off early?

Some people believe paying off your mortgage early is dumb. Let’s see why they think that…

Why is it Dumb?

I have read the articles on why you shouldn’t pay off your mortgage early and why it is “dumb” to do so.

Those arguments, for the most part, are pretty terrible.

Obviously, check to see if you have a pre-payment penalty, but if it isn’t that high, it may still be a good idea to pay your mortgage off early.

And yes…

Don’t Pay Off Your Mortgage Until…

One of the main things people will say about paying your mortgage off early is that you need to have the rest of your debt paid off first.

Really? Is that not obvious?

What should be paid off before you start aggressively attacking your mortgage?

Just about everything.

• Personal loans
• Credit card debt
• Student loans
• Auto loans
• Medical bills

…to name a few.

Your mortgage should be the last debt you pay off.

I actually read an article that explained how you shouldn’t pay off your mortgage early, because your finances could “go south” and you may need to take out the extra equity you’ve put in. Come on, people! That’s why you have a fully-funded emergency fund before you start pouring money into mortgage payments.

Do This First

It’s equally important to set yourself up for success before you pay off the mortgage.

So do this before you begin to aggressively pay off your mortgage:

• Pay off the rest of your debt.
• Fully fund your emergency fund.
• Max out your IRA for the year.

Many people will also tell you that you need to make “sufficient contributions” to your children’s education accounts, but obviously that is up to you. Don’t feel like you “need” to do that before paying off your home. It’s not your responsibility to pay for your children’s education, but it is nice and [hopefully] they will appreciate it.

Why You Should Pay Your Mortgage Off Early

Once your home is paid off, you [usually] cut out your biggest payment.

Talk about setting yourself up for success.

Just picture it…

You now own a huge asset that is paid in full. Your home is no longer the liability it once was since you no longer paying for it.

Sure, you have maintenance costs and repairs, but when your home is paid off and you have a fully funded emergency fund, your cashflow can take care of most of those expenses.

This should get you excited about paying off your mortgage:

• You can live in a home that you own instead of a home the bank owns.
• You have the option to sell you home for pure profit.
• You can live on much less since you lost that huge payment.

You can’t set yourself up much better than that.

Yes, you should pay your mortgage off early.

Once you have done everything mentioned here, get to work!

Another Option: A Compromise?

There are strategies for paying off your home early. We’ll get to them in a moment.

Those strategies are great and they work.

With mortgage rates being so low, why not invest the extra money instead of paying off your home?

I really don’t think you have to pick. I think you can do both.

If you want to pay off your home early, this may be the best strategy for you.

Let me explain…

Meet in the Middle

I haven’t read about this strategy before, so I am just going to claim a name!

I am calling it “meet in the middle”.

Since there is a big debate about whether you should pay off your mortgage early or invest that extra money, let’s look at both sides.

For this article, we will refer to these two crowds as the “OCD Investors” and the “Debt Haters”.

The “OCD Investors” think, with mortgage rates being so low, you can earn more money by investing than you can save by paying off your mortgage early.

The “Debt Haters” think, as long as you have a mortgage, you are in debt. And they hate debt (hence the name).

So, who’s right? Both of them.

Can’t We All Just Get Along?

I have devised a plan.

A plan to unite OCD Investors and Debt-Haters everywhere

It’s as simple as investing the extra money you would be putting towards your home.

Keep steadily investing until you accumulate the amount that you owe on your home.

Or, in other words, until you meet in the middle.

To start, just figure out how much you can contribute each month and start investing.

Make sure to use a separate account from all your other investments.

If you can’t afford the fund you want, start with a mutual fund that has a smaller initial investment, then keep upgrading once you have enough for the fund you want.

Once your investment is worth the amount you owe on your home, pay it off.

Is This the Best Mortgage Strategy?

This is only the best method if you can get a high enough return on your investment to earn more by investing than you would save by paying extra on your mortgage.

Usually this strategy wins, because you should be able to get a low mortgage rate right now and your return on some good basic index funds should yield a high return.

To calculate your situation, you need to figure out:

1. Your available amount to invest
2. Your mortgage interest rate
3. Your specific tax situation

Simple Steps: Once you know how much you can contribute, use this calculator to see how many years and how much money you would save by paying extra on your mortgage. Then use this calculator to see how much you could realistically earn by investing.

This strategy works great for some, but not for others.

For example, if you’re interest rate is really high, you may want to refinance. If you can’t refinance for some reason, it may be more beneficial to pay extra on your mortgage.

The thing about this strategy is that it works extremely well for those who are in the right situation to make it work.

There are many variables, especially interest rates and taxes…

Watch Out for Uncle Sam

Obviously, it wouldn’t be worth your time to invest all this money, only to pay high taxes when you withdrawal to pay off your mortgage.

There are some ways to accomplish this strategy tax-free…

If you will be over 59 1/2 when you pull the money out, you can put it in a Roth IRA (if you meet the requirements).

If you are in the 10% or 15% tax bracket (USA), you pay 0% long-term capital gains taxes (long-term means gains on assets held for longer than 1 year).

Of course, tax brackets can always change, but they will most likely remain very low for the bottom tax brackets.

If you don’t have any options for tax breaks, you may have to do some more math. If you’re in a higher tax bracket, it may benefit you more to simply pay extra on your loan.

Just make sure it makes sense when you calculate your rate-of-return, taxes and interest rates.

Every situation is different.

Final Thoughts

This strategy is not for everyone.

You may not be able to make this method work.

Calculate the costs. If this method doesn’t make sense for you, you will have to choose a side, my friend.

“Debt hater” or “OCD investor”.

Figure out what is more important to you. Being debt free or creating the most possible wealth.

There is no right answer. It’s about your priorities.

If you’re not sure whether this makes sense for your situation, just leave a comment or send me a message. I would be more than happy to run your numbers.

“I’m in debt. I am a true American.” -Balki Bartokomous

It’s true. Just about every person in American (and much of the world) is in debt.

We are so used to it that we even consider ourselves to be debt-free when we still have a mortgage.

You know how it goes…

“Yeah, I’m debt-free…well, except for my house.”

If you have a mortgage you are not debt-free.

But you can be…

There is a lot to know before you start paying off your home early…

Types of Mortgages

There are many types of mortgages, but really, only a few apply to the savvy home-buyer.

Fixed-Rate Mortgages

Fixed-rate mortgages have a fixed interest rate for the entire life of the loan. This means that you will pay the same interest rate until it is paid off (or until you refinance). Fixed-rate mortgages are predictable since the interest rate remains the same. The standard loan is 30 years (in America), but it’s also fairly standard to see a 10, 15 or 20 year fixed-rate mortgage. The shorter, the better. Under no circumstance should you ever take out a fixed-rate loan for over 30 years. If you need a 40 year loan, you can’t afford that house!

Adjustable-Rate Mortgages (ARMs)

Adjustable-rate mortgages (ARMs) have an adjustable interest rate. Usually the rate is fixed for a certain amount of time, but after that time it fluctuates with the market rates. ARMs are unpredictable since interest rates fluctuate. They can go lower, but they can also go much higher. This makes an ARM much more risky than a fixed-rate mortgage. To keep it simple, I would just say: don’t do it!

Other Mortgage Types

Other mortgage types include interest-only mortgages, interest-only ARMs, balloon mortgages and other types of “creative financing”. There are also several variations of ARMs. These types of loans are very risky and should never be used by the average home buyer. In my opinion, they should never be used, period.

A fixed-rate mortgage is the safest and most predictable type of mortgage. Unless you are experienced with creative financing, stick with a fixed-rate. I recommend refinancing if you have anything but a fixed-rate.

It All Comes Down to One Thing

No matter which type of loan you may have, there is one very important thing for you to know right now when you are attempting to pay off any mortgage early.

It’s all about making extra principle payments.

I have probably heard 100 different ways to pay off a mortgage early and every single one of them equated to paying extra principle payments in one way or another, but that doesn’t mean that they aren’t all effective.

There are different reasons for the different strategies.

These strategies are not magic, but they work. And they set you up to be able to make extra principle payments, even if you don’t think you can afford to.

Pre-Payment Penalties

Everyone likes to talk about pre-payment penalties.

I have actually heard this as an excuse for not paying off a mortgage early.

Many loans don’t even have them. You need to contact your mortgage company if you are unsure and figure out if your loan has pre-payment penalties.

Even if you do have pre-payment penalties that doesn’t mean you shouldn’t pay off your mortgage early.