Welcome to Michael’s Blog!

Welcome to Michael's blog. Michael Andrew, (aka Michael The Maven) is a freelance producer, photography instructor, tech innovator, and when needed, disaster aid specialist. Disclaimer: Michael is a participant in Bhphoto & Amazon affiliate programs that provides an advertising commission if you purchase through links on this website.


Viewing one post  |  view all recent posts

08.04.11         michael's insights  

A Maven's Advice on Personal Debt


This last week I have spoken with a few really good friends about their jobs, the economy and that things are very tough financially for everyone. Something I hear over and over again, is about a person's desire to make more money.

I know that there were will be many people who will disagree with me on this, but it is my personal opinion that making more money in and of itself will never solve financial problems, for the simple reason that making more money leads to spending more money.

Take a look at all of the athletes and celebrities today who are filing for bankruptcy. Mike Tyson is a classic example of someone who at one point was fantastically wealthy and now has nothing to show for it.

The reason for this phenomena is simple; without some type of discipline we will always believe that whenever we make more money, we are making much more money than we really are. For example, if you get a $2000 a year raise, human nature is such that we are wired to automatically spend $3000 more a year "Because YOU earned, YOU have worked hard and YOU deserve a treat!". The result of this type of thinking is more debt.

Sometimes I am asked for my advice on how to get out of debt because those close to me know how much trouble I was in at one point. After years of very, very hard work and a very difficult behavioral change I am thankful to say I have digged myself out of an awful hole. I know the feeling of having that stress of debt on you day after day, constantly haunting you, constantly stealing good thought time. One day, when I get the guts to give you guys the specifics I will lay it all out for you. Prepare to be shocked because its a crazy story.

If I were to give someone a crash course on debt reduction there are only 2 key things I would emphasize:

1. Focus more on making behavioral and habit changes to live well below your means, more so than making more money. That type of thinking is a behavioral change that will work with any income. The only way to do this starts with tracking all of your finances, how much you make as well as where all of your money is going. Differentiate between absolute needs (Rent, electricity, food (not eating out)) and fun (movies, new shoes, trips, eating out). The key here is to be disciplined and track everything. If you can come up with extra money every month on paper, and then actually do it- you are ABSOLUTELY going to make it. This is important because it will develop a pattern of financial responsibility and also increase your self awareness of how you spend your money.

2. Cancel all credit cards and get on a debt repayment program. Most good debt repayment programs will allow you to make one payment each month, and in turn they will pay your creditors. They are also often able to help reduce interest rates. I used a company called "Nova Debt". It took just over 3 years, but it worked. I cannot tell you how much better life is without worrying about credit cards bills. Even getting those bills in the mail was stressful. I pay for everything now with cash, personal checks, or debit cards. If I cannot pay for it with any of those I do not buy it.

Some of you will counter this with the excuse of

A. You need a back up plan (To which I will say, its a trap to believe Credit Cards are there to help you).
B. You want to earn rewards (To which I will say, its a trap to believe Credit Cards are there to help you).
C. You want to "establish credit" (To which I say, why would you need credit if you can buy with cash, to which someone will say, but what about a house? To which I say, I personally wont buy a house until I can pay cash for it. Besides, look at all the mortgage messes everyone is in right now. I rent a small 1 bed room Ohana, and while it isn't much, I have no worries about being evicted or having it seized. I know there are many valid arguments against this, but this is just me.

Another note is that no one gets a credit card with the thought of "Im going to get into a lot of debt!". We all believe we can pay it off on time. Truth of the matter is sooner or later, it will catch up to you. Studies have been done on reward programs in that most cases you must spend a tremendous amount of money to earn anything significant.

There are some other important keys such as lowering your expenses, but for the most part these are pretty obvious. I think if an individual can start with those 2 simple keys and really master them, then is the time to start thinking about more income and devoting pretty much all of it to paying down debt until its gone.

I say it because I care about you guys and this is exactly what worked for me.

I hope this helps!

blog stats
posts: 4,714
comments: 12,203
visits:
archive by month
2019:   january  february  march  april  may  june
2018:   january  february  march  april  may  june  july  august  september  october  november  december
2017:   january  february  march  april  may  june  july  august  september  october  november  december
2016:   january  february  march  april  may  june  july  august  september  october  november  december
2015:   january  february  march  april  may  june  july  august  september  october  november  december
2014:   january  february  march  april  may  june  july  august  september  october  november  december
2013:   january  february  march  april  may  june  july  august  september  october  november  december
2012:   january  february  march  april  may  june  july  august  september  october  november  december
2011:   january  february  march  april  may  june  july  august  september  october  november  december
2010:   january  february  march  april  may  june  july  august  september  october  november  december
2009:   january  february  march  april  may  june  july  august  september  october  november  december
2008:   january  february  march  april  may  june  july  august  september  october  november  december
2007:   january  july  august  september  october  november  december
Nikon D5300 Crash Course DownloadAdvanced Photography Techniques Lessons DVDCanon 5Diii Crash Course Training VideoPaintballer ProMA- Maui Screen Savers 2009Canon Speedlite Crash Course DVDMichael Andrew Lollipops | Photoshop Action SetPhotoshop Crash Course DVD Beginner LessonsPhotography Lighting Crash CourseBH PhotoMichael Andrew Maui Desktop WallpaperMaven Adapter - Sky Cam ConnectorDigital Photography Crash Course DVDCanon 6D Crash Course Tutorial Training VideoCanon 600EX-RT Speedlite Crash CourseNikon D7100 Crash Course Training Tutorial VideoBusiness Crash Course For Photographers