Ever feel like you are your own worst enemy!

I confess I do.

In college I definitely was!

In fact, a free t-shirt is all it took.

It was as if the smiling face on the other side of the table assured me that a credit card would be the first step toward freedom for an 18-year-old college student.

I signed on the dotted line, and after two weeks I received my very first piece of plastic.  I had no experience, so it didn’t take long to rack up debt. And since I was only paying the minimum balances, it piled on even faster.

istockphoto.com/hjalmeida

I decided it was time for a change.

I need to fight my own worst enemy.  So, I took out what little money I had saved in my mutual fund and paid off the debt.

“I’ll never do that again!”, I said to myself.

But I was wrong.

This would happen two more times over the next several years where I took IRA withdrawals and depleted my savings just to manage the debt.

I ended up entering marriage with a load of debt!  My wife (who brought no debt and all the assets to the marriage), and I came up with a toilet-cleaning plan to knock out debt.

Through hard work and perseverance we did it.  For years I dealt with the aftermath of my own worst enemy!

Ever Feel Like You Are Your Own Worst Enemy?

I often am.  There are so many times I get in my own way and impede my progress spiritually, physically, and financially.

Maybe you can relate?

Let me illustrate my point. How many times has this played out in your life?

I need to change my spending habits so I can save money.

I will stop going out to eat so much.

One week later:

I’ve had a stressful day and don’t feel like making anything.

I deserve to go out to eat…just this once.

Another week later:

I forgot to pull something out of the freezer for dinner.

I’ll just order a pizza.

And this continues, week after week, month after month, until we realize once again we haven’t changed anything.

Substitute whatever goal you have in the above scenario, and you’ll know what I mean.

How to Overcome Your Own Worst Enemy

1. Develop a written plan – Write down what exactly you want to change, and how you will do it.
2. Share it with someone – Let someone know exactly what you are trying to do.
3. Ask for accountability – This is the key. Find someone who will make sure you do what you say you will do.
4. Review regularly - Check the progress regularly so that you can build momentum, or make tweaks.
5. Celebrate little “wins” – Have fun! Set short-term goals that you can reach quickly and then celebrate to continue the momentum.

How Have You Been Able to Reach Your Goals?

What are some helpful tips you’ve found in making changes with your money?

This was an original post on ChristianPF.com. You can check it out here.

You don’t have to be a millionaire to be happy with your finances.

Being content with your personal wealth is as much about being in control of your money as the actual amount you have in your account: having a comfortable, well-managed budget, spending wisely, and keeping on top of any debts you may have.

Let’s look at some of the best ways to improve your personal wealth.

www.istockphoto.com/ayzak

Keep an eye on your money

It can be very easy to lose control of your finances if you don’t know where you’re up to with them. Keeping a close eye on your money – how much income you receive every month and what your outgoings are – can be the first step to improving your control over your money.

Most banks now offer online and telephone banking services, which can make checking your balances quick and easy – even when you’re on the go. Checking over paper statements can also help you keep track of what you’ve spent – and help you make any changes to your spending habits which you think could improve your finances.

You could also think about keeping your receipts every month and/or keeping a ‘spending diary’ to record all your monthly outgoings.

Manage your debts well

Many of us have unsecured debts on things like credit cards, personal loans, and overdrafts – and though having debts doesn’t have to be a bad thing, paying them off as quickly as possible can give you peace of mind, minimize the interest you pay, and reduce the risk of facing money worries in the future.

Some practical tips for managing debt include:

• Consider reducing the number of credit cards you have to just one – making it easier to keep track of
• ‘Overpay’ your unsecured debts wherever possible by making more than the minimum monthly repayments
• Try and repay your credit card balance as fast as you can to reduce the amount of interest you’ll repay in the long term.

And remember – if you’re really struggling to repay any of your debts, it’s important to get professional advice. For a look at a few different approaches, here’s a quick guide to help you get out of debt.

Increase your income

We’d all like to have a bit more money in our pockets – whether it’s to make paying the household bills a bit easier every month, to save up towards a holiday, or to treat ourselves to something nice once in a while. There are several possible ways of boosting your income and giving your budget a bit more flexibility.

You could think about:

• Working some extra hours if your boss is looking for people to do over-time
• Selling clothes, CDs or electronic equipment you no longer use
• Taking in a lodger and charging them for monthly rent and bills.

Remember that being secure in your personal wealth is about finding the right approach for your situation – so always set yourself realistic goals that you’re confident you can commit to, and that will make you feel happier about your finances in the long term.

Useful webpages:

• http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm
• http://www.mymoney.gov/category/topics/managing-debt-and-credit.html

This has been a guest post from Melanie Taylor at ThinkMoney.com

When trying to pay off debt, there are a lot of different obstacles that you must overcome. For some people, they are able to look past every roadblock, and focus on the finish line. For others, these things can cause them to get discouraged and give up, resigning themselves to a lifetime of debt!

4 Obstacles When Trying To Pay Off Debt

These things can add years to your financial goals, or even destroy them completely. Find out what they are so you can be better equipped when they show up!

It Takes Sacrifice

This is the most common and most practical reason why it is hard for the average American to pay off debt! We are so used to things being made easy for us – even our so-called struggles are nothing compared to other nations.

We are so used to being able to get what we want, when we want, because of credit! It takes a lot to overturn that mentality and begin to sacrifice. In order to get out of debt, you have to give up certain things. It may be certain expensive forms of entertainment, eating out, vacations, or even selling a few possessions (including your car and/or house)!

If you are not willing to make sacrifices, you could very well be headed for a lifetime of debt! I’ve actually had people tell me that it is impossible to get through life without accumulating, and living with, a lot of debt! But then when I took a look at their finances, I saw plenty of areas where they could save hundreds, and sometimes thousands, each month, if only they were willing to sacrifice.

What they were really saying is that it is impossible to for them to live without debt, because they will borrow to buy everything they desire, when they first desire it, and will never make a sacrifice!

It Could Take Years To Pay Off Debt

When many people look at how long they can pay off debt with their current income, they get discouraged. Not only will they have to make sacrifices, but they may have to do so for what seems like a long time!

It can be very difficult to stay motivated when you see everyone else around you buying what they want, and you have 3 years of sacrifice in front of you! It can become tempting to only pay the minimum balance on all your debt, and use the extra money to fund your indulgences.

The key here is to set up a sound plan, budget fun into your finances, and check your progress often. That is the only way that you will be able to stay on track with your goals!

No Emergency Fund

If you do not have an emergency fund, then you will not be able to deal with any unexpected expenses which may arise. Not having an adequate cushion in your finances will mean that you may need to rely on credit whenever something comes up!

I’ve been in that place before. I placed every extra penny into debt repayment, and didn’t have anything set aside for emergencies. Then I lost my job and was forced to put all of my basic expenses on credit cards. My lack of a “rainy day” fund added thousands of dollars to my total obligations, and made it extremely difficult to pay off debt!

You May Have To Change Your Lifestyle

We already talked about the need to make sacrifices when trying to pay off debt. However, that word can be vague, and can mean different things to different people. No matter how you choose to attack this problem, you will have to make strong changes in the way you live.

The most simplistic reason for getting into debt is spending more than you make. So, at the very least, you will have to make severe cuts in a few budget categories in order to see any real progress. You may have to forgo your cable/satellite television package, sell your car and buy a cheap one with cash, stop dining out completely, and other things that are seen as drastic – such as living with friends or relatives.

Another huge change that you may have to make, is to look for more income. This could mean getting a second full-time or part-time job (maybe even cleaning toilets to get out of debt), taking on a lot of overtime, or looking for a higher paying job altogether. This will mean a huge change in your lifestyle, and many people are not willing to do something that drastic to get out of debt!

No matter what you choose, it will mean a huge adjustment to the way that you’re used to living. This can be a major barrier to paying off your obligations, if you do not have the proper mindset.

photo by Renjith Krishnan

Reader Questions

1. What has been the biggest stumbling block to you paying off your debt?
2. How were you able to overcome it?
3. How often do you do something fun, or celebrate your victories when it comes to your finances?

Starting a business necessarily involves significant amounts of capital spending. The industry, and the product or service the business seeks to provide, may dictate purchasing equipment, factory or office space and hiring employees.

Entrepreneurs who want to start a business and work at building it full-time have little choice but to go into debt. The alternative is to issue shares of stock to investors in anticipation of future dividends. Since a new business is not likely to attract venture capitalists, financing the creation of a business through debt is the only option.

A new business has access to several potential sources of credit. The business owner can apply for a business loan from a bank, preferably one with whom the owner has a prior relationship. This is risky because the owner may be turned down and have to look elsewhere for credit.

Credit cards may be the answer to his dilemma. Charles Huang of Harmonix maxed out his credit cards to finance the business in 2007. The popular video game series, “Guitar Hero,” grew of his efforts. The founders of the search engine Google, Sergey Brin and Larry Page, also used their credit cards to fund the start-up in the mid 1990s.

[Side note from Jason: There are hundreds of examples of credit cards backfiring as well.  A business credit card can get you through times when cash flow is tight. As always, you must have a solid business plan to grow your sales and increase your revenue]

Personal Credit Cards

The quickest way to starting a business is to use personal credit cards. This route is a fast track to either success or failure, depending on the start-up idea and execution. The trade-off is to go into debt now in order to make enough money to pay it off later. The entrepreneur borrows from his future success in order to start the venture and get it going. The primary motivation for these businessmen is the chance to try something big and turn a hobby or a crazy idea into a profitable enterprise.

Using personal credit cards to do this is fraught with pitfalls. Creditors may get jittery when faced with rapidly increasing debt loads and suddenly lower credit limits. Alternatively, using so much available credit increases the credit utilization ratio, which can also trigger negative consequences. The ratio is a useful indicator of the risk of default. The higher the ratio, the higher the risk of default, at least in the minds of creditors.

Small Business Credit Cards

The differences between personal credit cards and business credit cards do not mean that entrepreneurs should treat them differently. For a start-up with no capital and no history, creditors view it as indistinguishable from the owner. The owner’s credit history becomes the business’s credit history. All the steps borrowers can take to clean up their credit report will help them get approved for a business credit card.

The risks are different with small business credit cards than with personal credit cards. The regulations and rules of the Credit CARD Act of 2009 do not apply to small business credit cards. Entrepreneurs have more flexibility for their funding needs at the cost of increased risks, like a sudden rise in interest rates or lower credit limits. The advantages of small business credit cards can help compensate for these risks. Some cashback credit cards are specifically tailored for business purchases and can offer as much as 3%.

But with anything, you must be sure to weigh the costs, and make an informed decision.

Anothony Benedict writes for CreditDonkey.com, a credit card comparison site.

When I was growing up, people talked about three main economics groups within society. There were the rich (upper class), the poor (lower class), and everybody in between (middle class). Investopedia recently posted an article looking at 6 signs that you’ve made it to middle class.

As I looked at some of the signs on their list, I began to wonder how exactly should we define what it means to be a part of the middle class. If we use a broad definition to describe the middle class, we come up with something like this – “a family that brings in too much money to be considered poor, but not enough to be considered rich”.

Well, let’s look at this list and decide whether these things actually demonstrate a family crossing the line from poverty into semi-abundance.

Signs That You Are Middle Class?

Home Ownership

The article proclaims that, “The step up from renting to owning signifies prosperity and achievement”. Most people who know me, already know how I feel about this subject. This idea of home ownership being a meaningful step in someone’s life is just not true.

My problem with using home ownership is that in order to be considered a homeowner, one only has to beg a loan officer to give him money apply for a loan to buy a house. Borrowing money to buy something, and then taking 30 years to pay the loan back is definitely not the same as buying an item. This is especially true when considering whether someone has “made it” to middle class or not.

Let me add that if someone has saved up enough money to buy a house without a loan, but then chooses to acquire a mortgage for other reasons (such as the ability to earn a higher guaranteed return on an investment then the interest rate on the loan), they have definitely crossed over into the middle class (and probably even higher)!

Automobile Ownership

This is a even more laughable than home ownership. Even though there are a lot more people who are able to purchase a car with their own money than compared to a house, there is still a lot to consider.

Firstly, many people who use automobile ownership as a status symbol, have a particular set of makes in mind. Some will only consider luxury cars to be a sign of moving up, others will include sports cars or even more “standard” cars with lots of accessories. The point is, this category is so subjective, that it can’t really be a clear sign that one has moved up from poverty to the middle class.

Secondly, many people borrow money to buy new cars. Actually, many people borrow money to buy used cars as well. Once this happens, you run into the same problem as with houses – you can’t borrow money to buy something and then use that purchase as proof that your economic status has changed!

The ability to purchase a reliable car, with cash, and without depleting your emergency fund, is a good indication that you have crossed over into a new economic class!

College Education For The Kids

I’ll save you the, “borrowing money to buy an item doesn’t count” speech and just say this – if you are able to pay for your child(ren) to receive a quality education from a college or university, then you are definitely not poor!

Obviously, we are not counting grants, scholarships, and other forms of assistance in this evaluation, since those are often the product of low income or high academic achievement. Having a significant amount of college savings speaks very highly of one’s financial condition!

Retirement Security

This is a tough one because it involves more than just the means and ability to save for the future. Many people had a significant amount of money saved up for retirement, but then lost some or most of it due to bad performance in their investment vehicles, or bad decisions.

I do believe that having enough disposable income to build up adequate retirement savings indicates that you [at least] belong in the middle class. The fact that someone would know both the IRA contribution limits, 401k contribution limits, and take advantage of both, is more than what most people accomplish in this area!

Health Care Coverage

This is another difficult one because most people do not pay for their health care (at least not directly). Most people are part of a group through their employer, and so their employer pays a large portion (sometimes all) of the insurance premiums. Therefore, health care coverage is not always a function of income. In fact, most companies will pay a lower income because your health care coverage is also a part of your total compensation package. They may even offer a flexible spending account to sweeten the pot!

However, many people who don’t have health insurance through their employer often work at low paying jobs, or only work part time. Therefore, there can be a correlation between net worth and level of health care coverage.

Family Vacation

I really don’t know too many families that fail to take vacations, regardless of income level or net worth. This is another category where debt has leveled the playing field. Also, I don’t think this is a good indicator because there are too many ways that a “poor” family can come across $1,000 or $2,000 (tax refund, bonus, etc.).

My Thoughts

The fact that most people have access to debt makes it very difficult to determine who is poor and who is middle class. Because of this, examining possessions alone is an incomplete way to evaluate someone’s economic status. We must consider their level of income and debt as well as their possessions before making such a determination.

photo by renjith krishnan

Reader Questions

1. Do you think that the three main economic classes are still applicable today?
2. Do you think that debt has changed the way people view these classes?
3. Where do you consider yourself to by, and why?

As we are probably all aware, the federal government passed the tax cut extension at the end of last year. 

Part of that extension was the payroll tax break that provides a 2% payroll tax cut for employees, which would result in tax relief of an estimated $120 billion for workers.

This means we get more in our pockets with each paycheck, which lawmakers hope we’ll go out and blow on consumer goods to help spur economic growth.

But, we all know better don’t we?  I hope we do anyway.  Recently, Wise Bread ran a post about the 2011 payroll tax break and how to use the savings to get ahead. 

I thought I’d offer a little perspective on how to use the savings on payroll taxes too:

Save Your Payroll Tax Savings

This is an obvious one, but a 2% reduction in the payroll taxes could wind up being a nice chunk of change at the end of the year.

Here’s the thing, you’re already used to not having that money.  Why not sock it away?  Here’s a couple ideas to get you started:

1. Increase (or start) your 401k contributions – a 2% increase to your 401k contribution will make for a nice addition to your retirement plan.  Or, if you haven’t started saving into your 401k yet, it’s the perfect time.
2. Make IRA contributions – now is a great time to use that money to open a Roth IRA, or make a Traditional IRA contribution.
3. Build up your cash reserves - use that 2% to build up that cushion for emergency funds or general cash reserves.

Give Your Payroll Tax Savings

According to GenerousGiving.org, “Christians worldwide had personal income totaling more than $16 trillion in 2007 but gave only 2 percent, or $370 billion, to Christian causes.”

Two percent!  Many of us could take our 2% payroll tax cut and double our giving!!  Or, some of us could simply start giving with that money period.

Here are some ideas and motivation for generous giving.

Reinvest Your Payroll Tax Savings

Think like a business owner.  If a business owner turns a profit, or experiences some savings, he or she naturally thinks about how they could invest right back into the business for growth.

How could you reinvest your payroll tax savings in yourself for growth?  Here are some ideas:

• Better your education – take online courses, or buy some books and become a self-taught master at something that could improve your skills and help you earn a little more money.
• Invest into a home-based business – many home-based businesses are scams, but some are very legitimate ways to earn a little extra money.  Here are some legitimate home-based business ideas.
• Invest into a blog or website – starting a blog is a fun way to make extra money, but it takes time and a little bit of cash.  Use the payroll tax savings to help get your site off to a great start.

Spend Your Payroll Tax Savings

This seems counter-intuitive to what the first three ideas are, doesn’t it?  Let me explain:

Don’t just spend the money on yourself, but rather use the money as an opportunity for True Wealth, specifically by building relationships.

In other words, use the savings for dates with your wife, or taking the family out to eat to their favorite restaurants.  Think about ways you can build the relationships with those you love.

Or, use the payroll tax to host dinner parties at your place and invite your neighbors over for dinner to get to know them. 

Spend the money to build relational equity.  Investing into people is one of the greatest expenditures you could make.

Reduce Debt With the Payroll Tax Savings

Lastly, if you are in “debt-paying-mode”, then simply take the payroll tax savings and reduce your liabilities.  Put the money down on credit card debt, your auto loans, school loans, or your mortgage and get ahead.

Think about how much further ahead you’ll be when you use that 2% to knock down debt.  You’ll be glad you did.

What Are You Planning to Do with Your Payroll Tax Savings?

Let’s hear from you, what are your plans with this money?

What a week!  We finished up our 10-day journey where we looked at 10 money-saving tips to help us stash $10,000!

Through each of those tips we freed up between $275 per month on the low side all the way up to $950 per month on the high side if you were able to maximize each of those tips!  That’s a savings over this next year between $3,300 to $11,400! 

Again, the question is – what will you do with your savings!?  If you’re not careful, any freed up money will evaporate to other expenses.  Be intentional about putting that money away!

Well, it’s another week in the books and it’s time for a quick tour.  This Week in Personal Finance takes a look at interesting articles, posts and news from the past week in the personal finance arena. 

So give these articles a click!

Don’t miss another post! Get Redeeming Riches delivered straight to your inbox!

• Matt Jabs from Debt Free Adventure shares his story of how he saved over $41,000 by refinancing!
• Kevin from Out of Your Rut asks a very pertinent question that usually elicits some heated debate – Is it better to build your savings or pay off debt!?
• Over at Len Penzo Dot Com there was some very interesting discussion going on regarding whether people should walk away from a mortgage if they cannot afford to make the house payment!
• In today’s economy it’s even more important to diversify your income sources – Five Cent Nickel offers up a great post via Matt Jabs on How and Why to Diversify Your Income.
• I love talking about retirement issues.  Flexo over at Consumerism Commentary references a recent ING survey about retirement that had some pretty interesting stats.  Flexo says he might need $3,000,000, but one-third of Americans believe they can retire on $250,000 or less. 
• Jeff over at Deliver Away Debt might be the hardest working guy in the PF Blogosphere – dude delivers pizzas on the side to help knock out his debt, which is why he’ll need a guest post now and then.  If you were a fan of Teenage Mutant Ninja Turtles growing up, you’ll like this post on fighting debt – TMNT style.
• Looking for a new job and getting ready for interviews?  Check out some helpful tips and reminders on the art of the interview from Financial Samurai
• Is there such a thing as good debt?  Take a look at what Kevin says over at Fiscal Geek!

R2 Around the Web

How Should We Help the Poor was included in Wealth Pilgrim’s Round Up

What is Your Motivation in Giving was included in the Carnival of Personal Finance #245.

Tip #8 in the 10 Money-Saving Tips Challenge was included in the Yakezie Alexa Challenge Carnival over at CJBowker.

Tip #7 in the 10 Money-Saving Tips Challenge was included in the I Love You Like a Blogger round up at Enemy of Debt

Is Money Your Functional Savior was included in the round up at Personal Finance by the Book

Have a GREAT weekend everyone!

It’s been a great week!  My first post as a writer went up on Christian PF (see link below).  I’m excited about the opportunity to write for a great site like that.

The markets have been a little crazy this week and there still a lot of talk about our national debt.  The best thing we can do is focus on changes to our own personal situation. 

Anyways, This Week in Personal Finance takes a look at interesting articles, posts and news from the past week in the personal finance arena. 

So give these articles a click!

• NPR takes a look at the decade ahead in jobs - this is an interesting graphic that shows what they project to be the best and worst employement areas.
• The question of giving and tithing is an oft-debated one in Christians circles.  Questions of how much and to whom stir up lots of answers.  Craig from Money Help for Christians looks at a healthy view of Christian giving and tithing.  This is a great, in-depth post on the subject.
• Paul from Fiscal Geek takes a look at 10 Ways to Invest $100 - he covers just about anything you can think of to get you started.
• Miranda at Personal Dividends writes about  6 Things You Should Know About the 2010 Roth Conversion.  This was a very solid post.  For more on Roth Conversions, check out my guest post over at Wise Bread.
• This post from Linsey at Wise Bread was right up my alley – saving money on office supplies! 
• Matt from Debt Free Adventure shares some pretty common ways people get into debt and how to dig out!

Don’t miss out on another post!!  Get Redeeming Riches delivered to your inbox!

R2 on the Web

I’ve recently been “hired on” as a writer over at Christian PF – one of the leading Christian personal finance blogs out there! 

This was a great honor to be asked by Bob Lotich to contribute articles on a regular basis. You can check out my first on called Blueprint to Building Your Financial House!

Also, Tipd.com is a financial news website where users vote up their favorite articles.  My article 6 Ways to Find Free Money received enough votes to be the #1 article on Tipd’s Greatest Hits!  Thank you to everyone who voted for it!

That article was also included at Fiscal Geek’s Perma Friday Round Up and Canadian Finance Blog’s Friday’s Links post.

4 Money Lessons from a Fool was included in One Money Design’s Friday Round Up.

Have a great weekend everyone!!

Today’s the big day! We are finally closing on our new house.

We started the building process back in August of ’09, moved into the inlaws basement and recently have been frantically trying to get a bunch of little things done so we can keep our closing date.

We locked in our rate back in November with a 45-day lock and today’s the last day!

But the house is ready, we’re ready and we’re so excited to get back to our normal routine!

Enough about us – let’s talk about some of the interesting discussions going on in the Personal Finance world this week!

This Week in Personal Finance takes a look at interesting articles, posts and news from the past week in the personal finance arena.  Give these articles a click!

• Joe Taxpayer is confused why so many Christians seem to look at all debt with such disdain and asks an interesting question, “Is Debt Anti-God?”
• Free Money Finance is a very popular and simple blog  that offers some very thought-provoking posts.  I like that.  This week he says that Those Who Give More Become Rich Faster.  I don’t think that should be our motivation to give, but he does offer a good look at the relationship between wealth and giving.
• Paul over at Fiscal Geek asks a questions we’ve all asked at some point in our lives, “Should You Save For Retirement While in Debt?”
• Kevin at Out of Your Rut asks another popular question, “Will A Million Dollars Be Enough to Retire On?”
• Free From Broke delves into the dark world of credit card reform to find some answers on how the CARD Act affects us.

R2 On The Web

My post about the 4 Questions You Should Ask Before You Buy Life Insurance was included in:

• Cavalcade of Risk from the Colorado Health Insurance Insider
• Canadian Finance Blog’s Friday Links

Ever wish you could have a financial “re-do”? We probably all have one or two things in our past where we wish we could go back and do it all over again. One of my major financial mistakes is retold over at My Next Buck.

Brian was gracious enough for me to share my experience of buying my first brand new car with a giant balloon payment at the end in his Financial Foul Up Series. Check it out.

This Week’s Links

Healthy Online Banks - Jim Wang over at Bargaineering takes a look at some healthy online banks as an alternative to your regular brick and mortars.  I didn’t realize until after reading the post that there have been 145 bank failures since the start of the credit crisis!

How Much Does Your Debt Cost – Matt Jabs tackles this one over at Five Cent Nickel.  After calculating how much his debt was costing him he used that as motivation to knock it out!  He challenges readers to do the same! 

Does Saver’s Remorse Exist? – Bob at Christian PF looks into ING’s tagline – “There’s No Such Thing as Saver’s Remorse” and shares his two cents.