https://www.unclaimed.org/
http://nupn.com/state.php
I am sure these are not the only sites and some may reveal international funds.
How To Eliminate Debt
There are different schools of thought concerning the definition of debt.
One school says anything you owe is a debt and you should owe no man, which has become all but impossible today, unless you are a Gates or a Rockefeller. The more modern school of thought concerning debt says that when you borrow or use credit cards and can’t pay the bills when they’re due, you are in debt.
In ancient times, if you owed someone and couldn’t repay them, that creditor had the right to put you in prison until you repaid every dime. The creditor would then own everything that belonged to you, including your spouse, children and all of your possessions!
Today, I think debt encompasses more than either of these definitions. Debt is the result of a mindset—a mentality that we must destroy.
Let’s start off by talking about the mindset of the poor. The poor buy liabilities, and their minds are focused on survival. The mindset of the poor is, “I can’t change my circumstances—I need to make the best of what I have.”
Many of these people are not looking for a way out or a way up. They just want to survive. Constantly in a situation where their expenses are more than their income, many take to illegal means to support their families or their habits. I call this a poverty mentality. Many poor people settle for being poor because changing their circumstances requires energy and thought that they are not willing to expend and employ. Tragically, this is becoming more widespread in our society as we see welfare rolls and crime rates increase.
Granted, there are some people who are not mentally or physically able to change their circumstances, but the vast majority of poor people in the United States can change their lives with just a few important adjustments. I have seen it happen and know that it is possible.
Lydia grew up in the projects with two younger brothers. Her mother was a single parent but instead of acting like a victim Lydia’s mother worked two jobs to make ends meet. She also taught her children a good work ethic and did not ever let them use their poverty as an excuse to gain pity or unearned rewards. As a result, Lydia worked hard and put herself through college with few student loans. Today, Lydia is an executive at a large multinational corporation; she travels around the world for this company and is enjoying life, having escaped the poverty cycle from which she came.
Now let’s talk about the middle class. Middle class people buy liabilities, often believing that they are assets. Society has placed a picture of the American dream in front of the middle class and they are chasing that picture like a race horse chases a carrot. They work harder and longer to keep up, but their fundamental situation doesn’t change. They get caught in the earn/spend cycle, are very frustrated, and sometimes give up on their dreams.
These are the people with “decent” corporate or blue collar jobs. They go out and buy big houses and cars and have credit card and other consumer debt that is constantly drowning them.
These are the people who get paid on Friday and immediately go to the mall to buy the latest and greatest gadgets and name-brand clothes. By Monday they are “broke, busted, and disgusted,” and they survive until the next paycheck, when they do it all over again. Some are not even aware that they are literally two paychecks away from living on the street. Daily, I drive in my neighborhood and others around town, and I never fail to see furniture and clothes on front lawns, as people have been evicted or their homes have been foreclosed.
As a result of this middle class mindset:
Over 40% of all American families are in debt at a given time. Credit card debt averages around $16,000 per household and total consumer debt averages around $32,000 per household. Some people are actually borrowing money from one credit card to pay the minimum balance due on another one.
How did all of this get started in the first place? Did people always amass a lot of debt? Here are some answers:
In the early 1920s debt was uncommon. In fact, Americans usually only borrowed to buy homes. Back then, loans were for seven years or less, based on the Bible. Deuteronomy says, “At the end of every seven years you shall grant a remission of debts” (15:1).
When thousands of GIs returned after World War II, the trend of consumer debt started. Americans had lots of disposable income and were well able to handle debt.
As the debt craze escalated, by the mid-1960s, Americans could buy almost anything on credit. Major retailers became lenders; some even charged higher interest rates than banks! This was possible because the salesperson had the customer right there as a captive audience, and after the big sales pitch, the customer just signed on the dotted line without thinking about the higher interest charges.
During the late 1960s, women started to enter the workforce and the lenders were forced to start including both incomes when considering a home loan. Thus, housing prices skyrocketed because sellers knew that two-income couples could “afford” to pay more for homes. This tactic is typical of the greedy banking society in which we live.
The results were as follows: by 2002 the median income per family was $49,000. Based on that income, an average home should have cost $98,000, but was selling for just under $108,000.
By the early 1970s, due to the profit seen by big retail stores like Sears and Montgomery Ward, the credit card binge was in full bloom. Some retailers made as much on financing as they made on merchandise!
These days’ banks and retailers make much more with the interest and late fees than the costs of the items purchased. We will discuss interest and the Rule of 72 in a later chapter.
The difference between the early 1970s and now is that Americans were more hard-working, ethical, and debt conscious then. There was much more trust that the loans would be paid on time and eventually paid off. Today, people file for bankruptcy at the drop of a hat, so lenders don’t mind sticking it to everyone with outrageously high interest rates.
The problem with all of this debt is that the national debt is also increasing due to the government borrowing more and more from the Federal Reserve and printing more and more fiat money, paper money based on government whims, not tangible goods.
When there is not enough income earned to cover credit card debt and interest, the average consumer will now go bankrupt, and the government will just go out and borrow more from the “Fed.”
This is an escalating cycle of debt and soon the house of cards is bound to fall. According to a financial news article, Americans spend over $22.9 billion on clothes, $3.2 billion on electronics, and $11.6 billion on furniture put into homes that in many cases are rented. In addition, we spend $46.7 billion on new cars. Americans and others are not paying attention to the coming economic tsunami, and these are the people who will be hit the hardest if the principles in this book are ignored.
How to Make and Keep a Budget
What is a budget? A budget is just a plan for how you will spend your money for a set period of time.
A budget will help you live within your means and not go into debt, or it will help you get out of debt if you are already in debt. It will tell you when you have spent all that you can afford each month. Budgeting will let you know how much to save for major expenses like car repairs, property taxes, and college tuition.
You have a set amount of money to spend and to save. A budget will help you decide how to treat it. Most families don’t have a plan for their financial future, so they continue to use credit cards and create debt beyond their ability to repay.
The system of debt has become so corrupting that people who don’t even have incomes are being pulled into debt. The most egregious example is students. High school students now receive credit card offers in the mail; ironically, many high schools across the country don’t even teach these students how to balance a checkbook. Credit card companies bank on the assumption that parents will pay the bil
ls that their high school students amass; this throws the student into a “buy now pay later” mindset, and throws the parents further into debt.
In addition, our college students are graduating with $80,000 or more in student loans. They begin life behind the eight ball and the struggle to get out of the pit can cause problems for the rest of their lives. These problems include:
1. Difficulty purchasing a home because of the student loan amount.
2. Difficulty in marriage because of mounting bills.
3. Decline in quality of life due to having to work overtime and second jobs to pay off debt.
4. Decline in health due to working multiple jobs and not getting enough rest.
5. Rapid aging because the body is breaking down from overwork and worry.
A budget will help everyone from the high school student with her first job to the retiree on a fixed income.
Before I get into budgeting methods I want to say a word about having a poverty mindset. What I don’t want you to do during this expense reduction and budgeting process is obsess over limiting your expenses. You as a budgeter shouldn’t always be saying “no” or “I can’t” or “I shouldn’t.” If you do, you may develop a mindset of scarcity, so please don’t focus on scarcity.
There are ways to budget and reduce expenses which won’t cause you to have a poverty mindset. For example, don’t necessarily set monthly limits in your flexible spending categories. We know the mortgage or rent is a set amount each month and we put funds aside for those fixed expenses. However, for other spending areas be a little flexible. For example, don’t limit your movie spending to $40 each month but pace it out based on your level of success the previous month and based on other expenses for the month. You may not see any movies that you are interested in this month and you may see three the next month. Being rigid would be to miss one of the movies you want to see because it would take you over your set movie budget. Let’s avoid this behavior because it will only keep you in a poverty mindset. A poverty mindset can hurt your self-worth, your peace of mind and make you less productive in every other part of your life.
However, being flexible let’s your mind focus instead on business building and increasing your income, which will translate into eliminating debt and accumulating wealth. Make sure that the things you spend money for add value to your life, make sure your purchases are going to be worth using that money for.
The overarching rule to remember with this “flexible budgeting” is to never spend more than you earn and save a set percentage each month. We will talk about saving and investing later in the book.
So let’s get started with budgeting methods:
I like two methods of budgeting: the spreadsheet method and the envelope method. We will discuss both methods and observe examples of both. The first step to budgeting is to know how much money is available each month and where it is currently being spent. You gain this knowledge by going through the last few months’ check registers to chart your previous spending habits. Take some time to go through your check register today to see where you have been spending your money. For those who don’t use checks, go back through your receipts; if you haven’t been keeping records, jot down from memory how you have spent your money over the past three months.
You will see average family spending trends later in this section. This chart shows what the average family spends for housing, clothes and other items, and where you fit into the average.
To prepare your budget you must place all of your annual spending categories on paper, along with the household annual salary. Go through the last few months’ check registers to figure out how much you spend on these items annually. Your goals are: (1) to make sure that no one category is out of proportion and (2) to see where you need improvement in reducing expenses.
Don’t try to overcorrect previous bad habits by not allowing any flexibility in your budget. For example, when I got married, my husband and I had about 13 credit cards between us. In my zeal to get them all paid off, I would send extra payments to the detriment of any entertainment money for our “Friday night dates.” I had to strike a balance between my zeal to be debt free and my family fun time.
To married couples: The budget has to work for both of you, not just one. It’s not a budget if one is following it and one is frivolously spending.
Be patient. It may take up to a year to balance the budget on a monthly basis. Remember, it took you more than three months to get into the hole and it will take more than three months to get out. A budget requires discipline.
For those of you who have fluctuating income, such as salespeople, consultants, real estate agents, contractors and seasonal workers, don’t think that you can’t budget. A budget can help you tremendously. The trick is not to borrow during lean months and not to spend all that you have during high-income months.
First, figure out your average annual income from last year. Divide the result by 12 and develop your budget around that monthly figure. You should put all of your income in a savings account and draw your average monthly salary from that.
Let’s look at a couple of examples:
Randy Reid is a single real estate agent. Randy earns commissions when he sells a home; he doesn’t have any other income, but usually sells enough homes in a year to make sure that he can keep his own home. In months when Randy’s sales are high, he has been spending all of his money on the latest electronic gadgets known to man. In months when Randy does not sell a home or just one home, he has been using his credit card to get cash advances for his bills.
I asked Randy to figure out how much money he made last year, and determined that he made $70,000 that year and averaged around $70,000 the past two years. Dividing $70,000 by 12 showed that his average monthly earnings are $5,833. Randy completed a worksheet detailing his monthly income and expenses. Remembering that his average monthly income is $5,833; he wrote in all of his monthly expenses, line by line, adding a couple of miscellaneous lines.
Next, Randy opened a savings account in which to have his commission checks direct deposited. After determining that Randy’s monthly bills averaged $5,000, it was clear that Randy should have enough income to avoid being in debt, and even to start saving.
When Randy received a commission check that was more than $5,000, he only withdrew that amount from savings and transferred it into the checking account for expenses. When Randy’s commission check was well below $5,000, he had money in the savings account to cover the difference, instead of getting a cash advance from a credit card to pay the bills.
As you can see in this example, Randy was able to balance his budget and start saving almost immediately.
Now, let’s look at Bert and Benita Benford.
Benita Benford is a master beautician with a young son. She runs her beauty salon in her basement. Benita has struggled with her household finances, even after leaving the salon she used to work for. Her husband Bert is a bank teller who makes $3,000 per month. Benita’s monthly income fluctuates between $2,000 and $4,000, including $1,000 per month from her father’s death benefit.
When Benita and Bert sat down to do a budget, they first needed to be on one accord about how they would run their household. They needed to agree:
1. To do the budget together and stick to it.
2. To talk about every spending decision over $20 that’s outside of the budget.
3. Not to create any additional debt.
Once we charted all of the Benford’s expenses we noted that their monthly expenses were above $6,600 and they were not consistently earning that amount.
The first thing they had to do is get their expenses down to $6,000 or less. After some heated conversations, Benita agreed to give up spa treatments, Burt agreed to give up golf, and they both agreed to drastically cut movie going and other entertainment until the budget is balanced and they are able to save a little.
Last year’s records show that Benita consistently makes around $30,000 per year, and we know that Be
rt makes $36,000, for a combined total of $66,000. After taking spa treatments and golf out of the budget and reducing entertainment and eating out expenses, they were able to make progress. Bert had his funds direct deposited into the couple’s checking account along with all of Benita’s beauty shop income; her death benefit money was direct deposited into their savings account.
When Benita had good months, they left the death benefit funds in the savings account to be available for months that they came up short. After the savings account grew to about $2,000, the couple opened an additional savings account to actually save for emergencies and after that to invest for their future.
The two previous examples utilized the spread sheet method of budgeting.
Now let’s explore the envelope method of budgeting.
The envelope method is where you use cash or money orders instead of checks. Many people, for many reasons, do not like to have money sitting in banks. We will not get into that debate here, but suffice it to say that you can still manage a budget without utilizing a bank account.
With the envelope method, you still chart out your expenses on paper, but instead of depositing your income into a bank, you cash checks or receive cash payments and put the cash into envelopes or purchase money orders with it.
For example, let’s meet Patrick Peterson.
Patrick Peterson is a 58 year-old plumber who loves his craft and has been doing it for over 30 years. He used to work for a company, but decided that he wanted to control his income, so he started his own company—Peterson’s Plumbing Solutions.
Patrick’s grandparents experienced the Depression and taught him to never trust banks. Even when he worked for the plumbing company, Patrick would cash his pay checks as soon as he received them. He lives in a rented condo and drives a 20 year old Honda Accord named Bessie.
How to Escape the Rat Race Page 3