A Note from Marguerita Cheng, CFP® Pro — I invite you to tune in for this week’s episode of my podcast and video show, Margaritas with Marguerita, where for 15 minutes each Friday at 5pm EST, women learn from industry experts how to flex their financial muscles.
Today’s guest: Attorney Lyle Solomon
The topic for today’s show: How you can think differently about money — and save more!
About Attorney Lyle Solomon: A member of the State Bar of California, Lyle has extensive litigation experience and has helped over 6,000 people become debt-free. He has also contributed articles to top-notch websites on debt, credit, consumer laws, bankruptcy, and more.
- Check out the nationally recognized attorney’s latest book on Amazon to get 48 tips to save your hard-earned money: Think Different! Save More!
- Click here to meet Lyle on YouTube.
- Scroll down to discover Lyle’s comprehensive plan to deal with debt problems and financial challenges.
Join us every Friday at 5pm EST on Facebook Live for Margaritas with Marguerita Cheng, CFP® Pro: facebook.com/hopekatzgibbs
Watch all of our episodes: MargueritaCheng.tv
Debt comes with a lot of challenges, including:
- You face problems when qualifying for a new loan.
- Even if lenders accept your new loan application, they ask you to pay high-interest rates.
- You have to pay late fees and fines.
- You have to deal with pesky debt collection calls.
- You may have to deal with lawsuits and wage garnishments.
- Your credit score goes down every month.
- You have very little money in your bank account.
- Stress causes you to lose precious sleep at night.
With a comprehensive plan, you can overcome these challenges, pay off debt, and get the financial stability you want.
How to overcome financial challenges and debt problems
If you are struggling to secure your finances by paying off debt, you can use the following financial plan with minor adjustments. Follow basic budgeting rules: When you are in debt, you need financial discipline. That’s the cardinal rule. If you are facing financial challenges because of debt problems, you first need to follow the basic rules of budgeting.
Some of the basic rules of budgeting include:
- Tracking your income and expenses.
- Allocating 50% of your income towards your needs.
- Allocating 30% of your income towards your wants.
- Allocating 20% of your monthly income towards your savings.
- Stick to the budget plan no matter what happens in your life. Evaluate your current budget after a month to check your progress. If you find that the current plan is not working, you can change it as needed. Don’t change your budget just because you cannot spend as much as you would like to. Make minor modifications to your budget if you can’t save a specific amount at the end of the month.
You can even install a budget app on your smartphone to track your income and expenses.
- Spend less than what you earn. If you spend more than what you make, you can never get out of debt. Ask any expert on how to get out of debt and they will tell you only one thing: spend less than what you earn to save money. Then you can use that money to get out of debt. If you keep using credit cards to buy what you can’t afford, you will always be in financial trouble. No matter how much you are tempted to buy new things, you have to stop making impulsive purchases until you are debt-free.
- Build an emergency fund. What will you do if your car breaks down tomorrow? What will you do if you find a leak in your water pipe? Well, these are unforeseen expenses, and you have to be prepared for them. Otherwise, you’ll have no choice but to use your credit cards to cover those expenses, increasing your debt load. Try to save at least 10% of your monthly income for building an emergency fund. Make a target to build an emergency fund that would cover at least six months’ worth of living expenses. It’s a tough challenge, but you can do it.
- Increase your income stream. Multiple income streams help you generate surplus funds for debt payments. Consider taking a part-time job to increase your monthly income. You can also work as a freelancer and get paid for different assignments. The best part is that you can do those assignments from home. Explore platforms like Fiverr, Upwork, and LinkedIn. You can find and bid on several lucrative projects there.
- Make extra payments, if possible. Have you received any financial windfall? If so, use the money to make extra payments on your credit cards, personal loans, mortgage, etc. That would help to speed up your debt repayment and you will achieve financial freedom quickly. Even if you haven’t received any financial windfall, always try to make additional payments on your debts. That would help to chip away debt fast.
- Stay away from new debt. What’s the easiest way to cover your expenses when you are in debt? Well, for some people, the easiest option is to borrow a payday loan. There is no credit check. Plus, they can get the money within 24 hours. But that’s a major financial mistake as people fall prey to the debt trap again. Payday loans are new debt. Borrowers have to pay high-interest rates on payday loans, and that increases their debt problems. If you are already in debt, focus on the ways to get rid of it. Don’t increase your debt burden and financial problems. Stay away from personal loans, installment loans, and credit cards for the time being.
- Plan ahead for major life events. A major life event means an extra expense. You can’t afford that right now. So what does that mean? Should you postpone your marriage until you become debt-free? Well, not necessarily. What you can do is save a specific amount for the major life event every month. So if you are planning to get hitched, start saving money from now on.
- Lead a frugal lifestyle. A frugal lifestyle helps you to save money and pay off debt quickly. Here are a few frugal-living tips you can follow:
- Sell things you don’t need
- Cook meals at home
- Use coupons for shopping
- Shop around for the best deals
- Cancel all unnecessary subscriptions
- Grow your own vegetables
- Recycle your old clothes
Final words: It is not easy to get out of debt. We all know that fact very well. Yes, several financial experts can educate you about how to get out of debt. They can give you a financial plan to overcome your debt problems. But your success will depend upon the execution of the financial plan. If you can execute it properly, you can overcome any challenge. But if you lose your patience or don’t follow the plan, then your victory can get delayed. Best of luck!
Click here to buy Lyle’s book: Think Different! Save More!