Archive for the 'Shortcuts' Category

06
Feb

Shortcut #3: Automate Your Bills

By David 0 Comments
Categories: Shortcuts

Out of all the things I did to regain as much as my paycheck as possible, likely the biggest benefit was putting my finances on auto-pilot. I had been late on almost every credit card payment, and when I added up those $10-50 fees for being late the past 3 years, it amounted to enough money to pay off all my current credit card debt right now; thousands of dollars worth. Basically, if I had simply made payments on time, I would be out of debt right now. As it stands right now, I’m still a year away from that. All due to laziness.

This is the simplest of all shortcuts, because it’s somewhat obvious. However, I didn’t consider it until I started to get my life in order, and it may be something others are overlooking as well. Basically, you start using automatic bill payments to simplify your life. Car payment? Automatically debited. Credit card payments? I have it setup to where all I have to do is click a button once per month. Insurance? Deducted automatically.

If you, like me, have problems accruing late fees, I would urge you to add them up and see how much money you’ve lost due to procrastination. It will shock you into setting up automatic payments. Online Billpay is easy to set up, whether through your bank or through the companies themselves. However, I would recommend you never give your actual account information to a 3rd-party company, and set up all your payments through your bank instead. When a credit card company has your information, it’s more difficult to protest false charges since you won’t notice them in time, and the payment is already made. Use your own discretion with who gets your information.

Once set up, it only takes a few mouse clicks once per month to get everything sent off. No more late fees, and you will find that you have extra money to add to the debt snowball you’re hopefully building. We live in an automated world, and small things like these can save lots of time and effort writing checks, at little time investment.

Additionally, I should mention that because of my procrastination, some of my %APR rates had skyrocketed to the 30% range. By agreeing to use their automatic payment service to ensure no more late payments would be made, two of my credit cards were able to offer me rate reductions to around 22%, a major decrease that will help me get out of debt much sooner. I win in two ways: no more late fees, and lower interest paid in general. And two of my other accounts say that after 6 months of on-time payments, I will be eligible for rate reductions with them too. Either way, for the amount of effort invested into putting your payments under an automatic payment system, the benefit is outstanding.

30
Jan

Shortcut #2: Swallow Your Pride

By David 1 Comment
Categories: Shortcuts

Shortcuts are an ongoing series where I summarize quick ways to make maximum impact on your finances.

Think about the people around you in life, those who are close to you and not so close. How much do you know about their financial life? Do you know how much they earn per year? How much debt they have? How you can best support them in whatever financial goals they have? Chances are, you don’t know. Even some married couples don’t know about each others finances!

This apparent taboo of talking about money is widely talked about. Personally, I think it’s a hold-over from centuries ago when it was considered polite to squander your money on elaborate decorations and items, but impolite to discuss how much money you inherited in order to be able to buy such nice things. In modern society, perspective is gradually shifting towards the opposite; in the near future, showing off your money through purchases may be taboo, but talking about your checkbook may be considered a matter of relationship with others.

I’m going to go on the record and say that it is almost impossible to truly get hold of finances without being open and honest about where you stand. Without telling people your true condition, where is your accountability in getting into a better condition? How will they need to know what they need to do to help you out of it? For some, maybe start with telling one close friend, and ask them to check you if you are about to make a poor spending decision. For some, it may be starting a blog so that everyone knows your condition. Keeping things in the dark makes them rot. In the same way, either extreme you take will expose your situation to the light. From there, change can begin.

Plus, it will keep self-help gurus from going crazy:

Dear Self-Help-Guru:
I currently go to lunch with a co-worker who wants to spend more on lunch than me. I’m in a ton of debt, and I’m afraid that going to all these nice restaurants will put me even further in debt! How can I tell my co-worker politely that I have to start brown-bagging it?
Sincerely, Broke-In-Chicago

This is a made-up example, but I’m sure you’ve seen similar things on “Ask Miss Manners”. Usually those “P.C. gurus” give some response that they should lie and say they could save lunch time by eating in the office, or other such nonsense. Here’s how it should be answered:

Dear Broke-In-Chicago,
Shame on you! In a vain attempt to look like you have it together more than others, you’ve now sabotaged your financial health even more. You should have told your co-worker years ago the reason that going out for lunch was not good for you. Contrary to common belief, most people are in debt, and they will not only understand your reasons, but they may offer up their own state of debt, and that maybe it would be wise for both of you to bring your lunches and eat together. The only way for someone to know where you stand is to come straight out and tell them, so either swallow your pride, or be prepared to further damage your finances.
Sincerely, Self-Help-Guru

Unfortunately, things are so politically correct I don’t expect to see this happening in the near future. However, each of us can start the process by telling someone else. When I began, I started this blog, and I also told my best friend and my roommate. Guess what? They were in the same boat I was! Now, they are helping me get out of debt and I’m helping them. We share knowledge, keep each other accountable, and we all win. Yes, they know what I make each year and how I spend it, but why should I care if two people close to me know that? If you’re really concerned with telling people, then it must be really bad, and therefore you should tell them anyway.

There’s simply no reason for falling under an archaic system that leads to the systematic destruction of our finances. Maintaining a tiny bit of pride costs us the ability to do the amazing things we want to do in life, the ability to pass that gift on to our descendants, and a bunch of stress and health. Why not spend a few minutes, swallow your pride, and let someone that cares about you know where you stand. Maybe they will be the one that can help you out of it.

22
Jan

Shortcut #1: Trick Your Brain

By David 0 Comments
Categories: Attitude Adjustment and Shortcuts

I am an efficient person, an engineer by nature. I’m also lazy. I love shortcuts, but only when they work. So I’d like to dedicate this post, and future posts like it, to a series I’m calling “Shortcuts”. Put simply, they are tiny activities that take little time yet produce great results. I hope they may be of use to the other lazy people out there that want to get hold of their finances!

The human brain is a complex organ, and there is still a lot of mystery surrounding it. One field of study I have been interested in lately is Neuro-Linguistic Programming, abbreviated NLP. To avoid all the science jargon (which I do suggest researching if you’re interested), it is basically a method (some may call it a form of hypnosis) in which we can suggest behaviors, both to ourselves and others. If you’ve ever seen a mentalist perform, or a mind reader, chances are they are using NLP principles to accomplish their task. However, it also holds some striking benefits when used as a form of psychotherapy. Put simply, you can spend just a few minutes each day to completely change the way your brain thinks about money (and more!).

I know for myself, in my journey to become debt free, I have found many presuppositions towards money and how I feel about it. While my conscious mind knows differently, the unconscious part of my mind that is responsible for binge-spending and making late payments was going strong and keeping me on a path to stay in debt forever. I imagine most people that wake up one day and realize they’ve gone too down that path have similar issues. NLP is one method of changing that attitude.

I won’t go into why it works, but I will give the basics. You can apply this to any area of life, too. Are you trying to lose weight but can’t keep from eating poorly? Do you have self-worth issues when it comes to the opposite sex? NLP is one technique you can use to change that. Basically, there are three areas we can use to program (plant ideas inside) our brains. There is kinesthetic, visual, and auditory, meaning “touch”, “sight”, and “sound”, respectively. If you can create a pattern that keys into multiple areas, then it creates a stronger bond. For example, you may look in the mirror and say something out loud to yourself. Yes, basic NLP is pretty much just the tried-and-true “talk to the mirror” advice!

How many times have you said, “I will never get out of debt” to yourself? Likely a lot, even if you only said it in your mind. The thing you did not realize, is that was basic NLP; you were programming your brain to think you will never be capable of getting out of debt, and surprise, now you aren’t! What you will have to do is reverse that. Just like anything in life, it takes as much effort to reverse something as it does to get there in the first place. Every day, or even multiple times per day, use the mirror method. Tell yourself not that you “will” get out of debt, but that you are out of debt. The problem with using future tense is that your brain will always think this action comes later. Use the present tense, because this is the attitude you want to have right now. If your issue is weight loss, then say “I am skinny”. When using verbs, make them active.

The mirror method ties in both the visual and auditory senses to program the brain. You can also use the kinesthetic by writing statements down on paper. The movement of your hand keeps the notion that you are out of debt firmly in your brain. However, you may have to use multiple statements. Try to identify the things keeping you in debt, and make up suggestions for each of those. Try to make a list of 5-10 suggestions you want to program your brain with. Find the root issues of your money problems, and tell your brain the opposite.

An example list might be:

  1. I make wise spending choices and am a thrifty person
  2. I regularly consult my budget before making a purchase
  3. I pay all my bills early and in full
  4. I do not need expensive things to make me happy in life
  5. I no longer make purchases on credit cards

Of course, this is just an example, and for this to work you should make your own list dealing with your own problems. Hopefully you catch the idea here. NLP really is as simple as that, in its basic form. And while it might sound silly (and somewhat non-revolutionary) to talk to yourself in the mirror, you might be surprised at the effect it has on your outlook on money. They say to be a millionaire you have to spend like a millionaire, but it’s impossible to do that without first thinking like a millionaire. NLP is one method to get your thoughts in the right direction. A proper thought pattern will overflow into your natural habits. Keep in mind that initially, you have to overturn years of bad programming, and you may likely think negative thoughts even now. This is why it’s important to do this every day or more. Get it into your brain. When your brain starts thinking properly, make it start thinking in other ways. Start telling it about how you will invest, or think of business ideas, etc. The possibilities are endless, and yet the investment is literally only one minute per day or less. Even if it doesn’t work for you at all (for whatever reason), it got you thinking about why you behave the way you do, which is still beneficial.

Main Excuse: “I don’t have/want/use a mirror!” Well, there is another way, and since it ties into the emotional, many people think it’s actually better than just a visual. Simply say them out loud like before, only while you say each one, visualize your life with that principle. For example, if you say “I pay all my bills early”, then visualize yourself writing a check and sending it in, or clicking an online billpay. What this effectively does is to tie a particular action to your words, which may give it more weight. Better yet, do both methods if you can!

Super-Shortcut: As an aside, you can also use more advanced NLP tricks to enhance your money abilities. Try tying in the the kinesthetic directly to your mirror exercise. For example, when you say “I spend money wisely”, try touching a particular part of your body in a certain way. Maybe you brush behind your earlobe. Something you can feel easily. After awhile of doing this, when you are in Best Buy checking out the latest HDTVs, perform that same touch. Your mind should actually reject poor spending! This is called anchoring, and is particularly effective in making yourself (and others) behave a certain way when a particular stimulus is present.

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