Starting the Debt Snowball

I thought I would share here on Wallet Wise what my husband and I are up to in regards to personal finance. One of the things we have recently embarked on is Dave Ramsey's Total Money Makeover. We've completed baby step 1 (save $1000 fast) and are working on baby step 2 (get out of debt). What's our debt? Student Loans.

Arg, debt that all too many are familiar with. With a staggering amount of student loan debt, it can be a burden, especially when considering purchasing a house. Which is what we want to do. But we decided instead to embark on a two year odyssey in paying off over 40 grand in student loan debt. It can be done, and we are ready to join the ranks of those who live life debt free, dubbed 'weird' according to Dave Ramsey! And after we pay that debt off we are going to save for 50% down on a home. :-)

Read more about the total money makeover here. Are you ready to join me in this crazy quest to get out of debt? Tune in to the Dave Ramsey Show on AM radio from 2pm-5pm Monday-Friday to get a taste of what the makeover entails and to hear stories from everyday people seeking to get out of debt for good.

Minimum Wage Set to Increase

Some of you may have noticed that the minimum wage is being set to increase. Why? To help those on lower incomes and to combat increased cost of living. I wholeheartedly agree that this needs to be done in order to account for inflation, but what does it mean for you as an individual?

During these tough and trying economic times with more and more people being laid off unexpectedly, an increase in that particular statistic does not bode well. Some have argued that an increase in minimum wage equals an increase in unemployment. This may be true if companies are forced to lay off employees due to restricted budgets. However, I believe this would only affect the smallest and the most struggling businesses.

A Princeton study conducted in 1990has revealed that an increased in minimum wage simply resulted in more people falling into the minimum wage earning bracket. It also revealed that those who earned above the minimum wage typically received a pay increase as well. This study also lent the suggestion that an increase in minimum wage led to a decrease in teenage employment. However, several other studies have discovered that this is not necessarily true, but that teenagers could expect to lose hours. Whether or not the increase in pay makes up for lost hours is unsure.

Another study has declared that "It appears that minimum-wage increases are not job killers — they are job-vacancy killers," "due to the fact that a higher minimum wage attracts more workers and reduces a firm 's vacancy rate; [and] in addition, decreased turnover increases productivity."

Its looks as though an increase in minimum wage will help in the long run during this worldwide recession. Although there is no way to tell when the recession will end or even if we are starting to recover, an increase in consumer's earnings is always helpful. The more money that the average consumer makes, more money is put into the economy and its more likely the economy will set itself to recover. Albeit the debate still rages on over whether minimum wage increases should be more or less than what they are, there can be no doubt that they these increases are completely necessary to account for the inflation that the world has seen over the past year or two. I would look at the increase, therefore, as a sign that this recession is finally puttering out. Even if the end is still a year or two away, we are much closer to economic stability that we were a year ago.

Budget Right: Getting Help with Debt

For those of you who read my last post on debt management here, I figured I should leave you with some places where you can get debt help if you really truly don't know where to start.

If you are struggling or unsure about your college loans (or if you just recently graduated, like me, and are dumbfounded at that huge financial commitment you made about four years ago when all you wanted to do was move into the dorms with your friends), check out this site, called You Can Deal With It. This is a great site full of resources to help your manage and get help in paying back your student loans. For example, you can learn about the different repayment options available for your loans and find out who to call if you are about to default. It also discusses loan consolidation, and gives you tips on how to practically manage your money.

If you need debt help with credit cards, this site also provides some valuable information on step by step actions you can take now to help eliminate it.

With the Obama Administration's new financial stimulus plan, there is real help for those of us (in the USA) who've found themselves unable to pay the mortgage. Click here to visit the government's website to determine if you are eligible for refinancing.

I hope this helped steer you in the right direction if you are having trouble getting debt help.

Click here to read my review of Dave Ramsey's bestselling book, Total Money Makeover. I really encourage anyone who's trying to get control of their finances to read his book. You can buy it here.

Stay tuned for more on budgeting right as well as more principles from Dave Ramsey!

Budget Right: Debt Managementt

Debt is a familiar term for most of us. Whether it be student loans, a mortgage or maxed out credit cards, debt is a real and vibrating force in many of our financial lives. Some of us like to sweep it under the rug, and put on the persona that everything is fine and dandy. But in reality, its not so fine and dandy when those statements come in. So how does a normal person deal with this? Do you pay the minimum? Do you ignore it? Is it even something that can be managed? I'm here to answer all those questions in this post about debt management.

Types of Debt

1. Student Loans-- This is referred to as 'good debt' because it really is an investment in your furture. So don't get down on the fact that you still owe over 40 grand. However, it is VERY important to not ignore this debt. If you do, you risk defaulting, causing your credit to not only plumment, but your loan will automatically be due in FULL. If you are having trouble paying your monthly payments, contact your lender. They can usually help you out by offering a lower monthly payment depending on your situation.
   
2. Mortgage-- This is your house. Believe it or not, most people don't own the homes they live in- the bank does! Right now there are tons of government programs in the works to help people who are having trouble paying their mortgage due to variable interests rates and recent layoffs. However, do not simply view your home as an investment-- it a place to live, a roof over your head. You are paying for shelter. Having a mortgage may increase your credit, but be careful not to default on these or you could have trouble taking out another one in the future.
3. Credit Cards-- Credit cards are either your friend or your enemy depending on how you use them. They can be an excellent way to consolidate finances, providing you pay the amount you owe in FULL each month. DO NOT pay the minimal amount due if you can help it. Interest rates, especially now, are jumping at unbelievable heights. If you pay the minimum, you risk getting yourself sucked into a whirlwind of debt that may take years to get out of.

There are other types of debt out there, but I am just covering the basics. So, what do you do when you find yourself with all this debt each month? Here is what I recommend you do in beginning debt management:

• Pay the minimum due each month for student loans. The bigger the payment the better, but only pay extra if you don't have any other debt.
  

• Pay the minimum due each month for your mortgage, but double up on one month each year. This will get your ahead in your payments and help you own that house sooner. It also saves you money that you could otherwise have lost due to interest.

• Pay your credit card bill in FULL each month. If you are a victim of whirlwind debt, I suggest you pay off the smallest amount first. For example, if you own 100$ to credit card #1 and 5000$ to credit card#2, pay the most you can on credit card #1 until it is paid off, but just pay the minimum on #2. Do this with each card until you have no more debt.

In my next post of Budget Right, I will cover how to get control of your finances to avoid incurring any additional debt by creating a budget.

Budget Wednesday: Total Money Makeover

Today I decided to post about a book that has made a huge impact in that way I handle my personal finances. Dave Ramsey's book, Total Money Makeover: A Proven Plan for Financial Fitness, is all about helping individuals get out of debt and gaining control of their money. His motto is- "Live like no one else today, so you can live like no one else tomorrow!"Ramsey offers a Christian perspective on personal finances and emphasizes principles such as paying with cash and taking baby steps that will allow you to save an emergency fund, pay off debt, save for college and pay off your home mortgage. His book is literally packed with personal testimonies of success from using his system. He also includes budget charts and other graphs to help you through the process.

Dave Ramsey has been changing lives through his books and his radio talk shows, and he can change yours too! Even if you consider yourself a guru in budgeting and personal finance, Total Money Makeover is a great read as well as reference tool. I encourage all of you (if you haven't already!) to check it out!

*image copyright Amazon.com

Budget Wednesday: Free Online Budget Software- MINT

Your budget is something that should be on the top of your priorities, everyone knows that. But it can get hard juggling so many aspects of your money life sometimes! Life intervenes, and well, we never seem to get to it like we want to.

Enter Mint.com. Its a free budget tool designed to help you keep track of all your finances in one place. The best part about it? You can view multiple bank accounts, credit card accounts and even pending college loans all in ONE place, with ONE login! Mint.com helps you budget by showing you where you've spent your money and providing pie charts to track your spending habits and trends. You can set up a budget and see whether or not you are on track in each category. There are so many cool options to this free online budget software, you really have to sign up and explore for yourself. So, what are you waiting for? Go check out this cool site here!

Welcome!

Wallet Wise is a personal finance blog for those of us who would like to stretch our dollar just a little farther. In these tough economic times, people are getting back to the basics and learning how to live within their means for the first time in decades. This blog will show you how to save on those essentials such as groceries and household items as well as provide tips on budgeting and saving. Getting the best deal for your money has never been more important, and Wallet Wise exists to show you how!

I plan to update this blog as I stumble across new deals in the area (I will reference chain stores). Be on the lookout for the following types of posts:

Saving on Sunday-- A list of all the beginning sales of major chain stores such as Meijer, Kroger, Walgreens and CVS. I will list the best deals and provide links to coupons.

Budget Wednesday-- New tips on budgeting and getting control of your finances. Guest posts will be featured.

Friday Fun-- Ideas on how to have fun on Friday nights without dropping a lot of dough.

Stay tuned for more to come!