Goodbye Renting
Page 10
medications, entertainment and so on.
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Facing Your Demons
There are things you will have to confront in order to achieve
your goal and one of them is facing your demons.
Oh! I know that you’re keen to find out how on earth you can get
your own place… so you want me to just cut to the chase but… there are
a number of absolute integral components to this and how you approach
this requires some changes in you. Don’t expect change when you keep
following the same old patterns. And even if you do get into your own
home you must keep it and that, my friend, is the hard part. So… I’m
going to get you to look at yourself as a person and get you to recognise
your strong points because they are going to see you through this.
You have to find in yourself the ability to converse with a great
many people, from lenders to agents to solicitors and more. You
need to speak up when you’re not and ask the question, whatever it
might be. Don’t not ask the question simply because you think it
might sound silly. That one question could be saving you a lot of
money in the long-term or give you more information than you were
aware of before you asked the question… and knowledge is power
(I say this over and over throughout the book, just so it gets
drummed in).
It means confronting your fears…
Excerpt
The fear factor is the one prohibiting factor that can stop you
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from doing anything in life. We all fear things in our life but, from my
own experience, the underlining reason many people do not
progress further in the direction of where they want to be is caused
by fear. “Fear is both the cause and effect of thoughts, feelings and
actions that prohibit you from accepting yourself and realising your
full potential” and “Fear’s number one job is to guard you against
any negative feelings that would confirm your worst fear - that
you’re not good enough” (Britten, R. 2001, Fearless Living, p 21). In
other words, fear can be very damaging to our whole approach to
life. There is no doubt that we need a certain amount of fear to
protect us, but in many cases it can also stifle any pleasures or hopes
we may have.
Recognising what is unrealistic fear is difficult because we like to
protect our feelings from hurt and pain, but that unrealistic fear can also
create other long-lasting pains that restrict our own personal growth.
Fear often comes from a very low self-esteem, lack of confidence and
continual rejection. In many cases, people have become so held back by
fear that it can restrict everything that they aspire to (including getting a
permanent address of their own).
The harm this can inflict on a person’s ability to grow, develop and
succeed can be overwhelming.
Often, it’s a crisis that may afflict us, which creates a turn-around in
confronting fear. For whatever reason that might be (and everyone’s idea
of a crisis is relative), when something knocks you for six, you tend to
gain a courage that overcomes fear.
Why?
Maybe it’s because the pain of the crisis supersedes the pain of ear, or
maybe it’s because when we have a tragic experience and we get
through it, we know we can get through almost anything. It puts the fear
into perspective.
Whatever the reason, once the realisation is firmly in place, you can
then start to live. The point of this exercise is to put those unrealistic
fears to the back and push forward nonetheless. You have no more to be
fearful of than anyone else and you only have one life and there isn’t
anybody or anything who has more power over it than you.
So - you’ve to get past the fear factor.
Confront your debts…
Assess your current debt… Ooh! I know this is a place most people
don’t want to go, but you really do need to find out exactly where you
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are with your debt. Don’t choose to be financially illiterate and stop
pretending everything will be alright.
You need to face your financial demons and where you are with your
credit is a good place to start.
If you have multiple credit cards, some interest-free furnishings
(that won’t be interest-free in a few months), and other outstanding
debts, I need you to gather the whole lot together, including the
statements of what you owe. Now, get a pencil and some paper and
then sit down on the floor with the paperwork spread out. Look at
each statement one by one and work out what you are paying each
and every month. You need to include the interest-free items if you
haven’t already paid them off. Calculate how much interest is
charged monthly on each of your debts, then multiply that by 12 to
get the yearly charge. Then work out how long each of the loans has
left to run. In other words, how long before you will be ‘bad’ debt
free? Yes, bad debt because this debt (as you will read later) is the
worst debt there is.
This debt does more than just suck copious amounts of interest out of
you. It stops you from progressing into financial sustainability and is
preventing you from having your own address.
I want you to keep telling yourself that you WILL NOT take out
any more credit, on anything, at all!
There is a good side to credit if you can use it properly, but if you
have more than one credit card, a personal loan, you’re paying off a
plasma TV, or any electrical item or furniture for that matter, then
you aren’t using credit properly… it’s using you!
Some people have told me they know it’s not good to get all that
credit but they can’t survive without it.
Sorry, that one doesn’t wash!
Humankind has survived without credit cards for eons. Instead of
credit they tended to use creativity, inventiveness and endurance… and
surprise, surprise… those things do still exist.
Now is the time to work out how you got into this situation and how
you’re going to get out.
Obviously, paying off the debts is foremost, but NOT taking on any
new ones is absolutely paramount. Whatever you’ve heard about how
important it is to have a credit rating… I want you to disregard it. I hear
it time and time again, the reason why someone has a credit card or debt
to begin with is because they need to get a credit rating. Sorry, but that
doesn’t wash either.
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Whoever spread that rumour must be laughing all the way to the
bank!
Your long-term livelihood is being jeopardised by owing money
you haven’t earned yet, so while you may be in some debt, you need
to realise that you don’t have to be in a situation of being totally
indebted.
Now that you’ve got all those credit statements and cards spread out
in front of you, look at the amount you owe and how much you are
actually paying off each month. If you’re paying the minimum amount
you’re playing right into the hands of the creditors and that has to stop
now!
/> Check out how much interest you’re paying for each loan and start to
investigate ways and consolidating those debts, i.e., merge all the debts
into one lump sum with one credit provider, preferably the one that
charge the least amount of interest.
Get in touch with your creditors and find out which one will take over
all the loans. Take into consideration that each individual loan may have
different timeframes for paying them off so use the length of time you
know is realistic to achieve.
Then you do whatever it takes to pay that debt off
(within reason).
If it means taking on an extra job or two, doing your
homework around your family for payment, cleaning
out the gutters for elderly neighbours or becoming a
tele-salesperson, then do it.
Don’t hide from your creditors
Go in and face them person to person. They’re people after all,
with human feelings, knowledge and experience. They may have
some suggestions or persuasive powers to assist you with the
payment of the debt… and it is a whole lot more difficult to dismiss
someone face to face than it is over a phone. But whatever you do,
don’t take on more debt!
Make sure you pay off the credit with the highest interest rate first.
For future reference…
Start to live with the principal that if you don’t have the cash.
You can’t afford it!
The only exception to the rule from here on is borrowing for a house
loan.
Then whack as much off the loan as possible and as often as you
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can… think about every can of soft drink you buy that could be
substituted for a glass of water and put that money towards paying the
loan out.
Back to the papers on your floor. Put all the statements and credit
card accounts into an accessible file, in a place that can be revisited
regularly. From here on, you will deliberately visit those files every
month and make yourself look to see how much money is actually
coming off the loan. This will help to keep your focused and motivated
you to rid yourself of the dreaded debts.
These are probably the most important debts to get rid of because
they can be one of the biggest obstructions when going for a loan.
So, start taking control of your own financial situation now, put an
end to borrowing for material wants and work like the clappers to get
your current debt wiped out.
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Paying for all of your
tomorrows
Living for today is the surest way of depleting any income. Sure, it’s
wonderful to buy whatever you want whenever you want, go out for
meals, catch up with friends over a bottle of vintage wine, and drive
around in a car that makes you feel good.
But nothing, and I mean nothing, will deplete your income more than
your lack of control and awareness of where the money goes.
All your ‘living for today’s’ is going to have a profound impact on all
of your tomorrows for three reasons:
1. You have made a decision to be financially ignorant, which
doesn’t allow you to develop discipline and therefore control over
your financial situation. This in turn can create more financial
problems later down the track because you won’t have the ability
to resolve an unexpected cost, which can further instigate
expensive mistakes, i.e., the need to take out a personal loan to
cover the cost.
2. Secondly, you are leaving your future in the hands of the
unknown. Whether it is tomorrow, next week, next year or in ten
years’ time, you and only you can monitor, calculate and insure
your financial future. Without something to fall back on, you are
also going to be living in hope that you don’t lose your job, get
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sick, have family troubles, or just come unstuck!
3. Thirdly, you are making yourself vulnerable. By deciding to
ignore the whereabouts of monies coming in and going out you are
putting yourself in a place of high vulnerability. What happens
when the rent goes up, the credit card is maxed out, the car needs a
new transmission, and the kids’ school feeds need to be paid? The
pressure this places on relationships alone can have a devastating
effect. Living for today is great while you can do it but there won’t
be much to show for it at the end of the day!
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What is an income stream?
An income stream is the source of income you have coming into a
household. So if you are the sole breadwinner and your partner doesn’t
work, you generally have one income stream. Unless… you have also
along the way put some of that income into managed funds or invest it in
something that gives you a return, in which case you may have a couple
of income streams. In most households these days if you are a couple
with children the income stream can be in the form of interest on
accounts, child support payments, dividends on investments or a refund
on your tax return.
If you were to read about how people become wealthy it generally
stems from the fact that they haven’t relied on just the income from their
employment. Instead, they have initiated other income streams by way
of investing. In fact, it is very, very difficult to grow your money by just
working and relying on one or two income streams. It might be a slower
return but income from property is a stream that flows steadily and
seldom gets hit by drought.
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Time to save, save, save!
Only one cafe latte a week, at a cost of $3.95 a cup, equates to
over $200 a year. Imagine how much money you’re blowing if you
buy one cup of coffee every day!
Start to stash the cash
Money boxes tend to be a thing of the past but I always have one. Do
you know how much coinage we collect over a year? I find coins in
pockets when washing, coins in the bottom of my daughter’s school bag
and coins rolling around in the car floor. If I see a coin in the street I
pick it up (if no one looks as though they own it), take it home and put it
in a huge tin money box. Last year I collected $700. Now, you might
think that $700 isn’t a huge amount of money and probably wouldn’t
make that much difference to most people’s lives, but I beg to differ. To
me, it’s all in the eating. That small amount of money can be the
lifesaver that pays for the school camp you couldn’t afford, or make sure
all your insurance are paid so that when something does go wrong
you’re covered, or in my case the money goes straight into the bank
account to offset my mortgage, reducing the time and interest off the
loan.
In the I was saving for my first unit while on a single
mother’s pension, I saved over $1,000 in coins, which I
paid off the mortgage the first week I moved in. This alone
reduced the mortgage repayments immediately and
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significantly. It put me in a position of having some funds
available to fall back on if money became a little tight at
times because I was
already in front with my first monthly
repayment. Fortunately, I never needed to fall back on the
money and as a result of saving those coins was always in
advance of my payments and therefore paying off the
principal at the same time.
Of course, coinage may not be around for much longer.
It is starting to be known more as a weighty nuisance to
most people rather than as a valuable commodity. But
while coins are still in existence and may seem of little
value, this loose change can in fact accumulate to a
worthwhile amount. Generally you don’t tend to notice
any significant variations to your finances when you
empty out the small change from your purse, wallet or
pocket, so try making a concerted effort to empty it into
a container at the end of the day or week.
Something as simple as saving small change can make a difference to
your finances and your circumstances.
In bygone days women kept the housekeeping
money in separate brown paper bags, the cookie
jar or envelopes apportioning amounts for the
upcoming expenses.
As old hat as this may sound, it’s a tried and
true way of managing your accounts. Just make
sure it’s kept in a safe place and PAY THOSE BILLS.
Keep a close eye on your household expenses and make sure they
are kept to a minimum.
Get in the habit of throwing your coins in a can or jar and letting it
accumulate.
Get focused on how much your bank charges are and work out
whether it is worth finding a new arrangement with another
bank/financier so that you don’t incur fees and charges for transactions.
Put your hard earned dollars into a high-interest management fund
and don’t touch it!
STOP using the credit card and start to transact with REAL MONEY.
This will put you in the position of seeing the actual amount of money
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passing through your fingers. That makes it a whole lot harder to part
with.
DON’T take out any short-term payment schemes, even if you are
given 12 months, 24 months, or for that matter your whole life, to pay it
back. Every loan or debt you have will be taken into consideration when
you go for a housing loan (the most important one of all). Not only that