FINANCIAL TIPSI have a real confession about my outright distrust of financial institutions. I really worry about the average Joe and Jane and how they can be manipulated by these giants. I see the greed going on and it makes me mad. I see the banks hiding behind their fancy offices in charge of all the money YOU and I worked so hard to make. I see the rates for banking services and fees continuing to skyrocket with no end in sight. I see the government, who is supposed to protect us, in bed with these banks. Are the foxes in charge of the henhouse or is it just me? Did you know the single largest sector to make political campaign contributions are...BANKING? Now they, being bankers with a financial background, would know best where to put their money to get the most out of it. It seems that buying political favors is the perfect place to put your money if you‟re a banker. They know perfectly well that you have to spend money to make money. And they chose to spend it buying the ability to continue to take advantage of ordinary folk like you and me. I don‟t really hate bankers; I just hate the way people are being ripped off by these massive faceless entities. So, in an effort to help you and to help me exorcise my own banking demons I decided to write this book on how to get out of debt and stay out of debt. I thought it would be great to help people figure out their finances and stop relying on debt to get them through life. Now, a super-duper byproduct of this is when you have less debt, you are using less credit, therefore the bank makes less money.

In discussing money management techniques, it came as a bit of a surprise to me that many smart people are truly illiterate (read: dumb as a post) when it comes to money. Actually, it has been proven that intelligence has nothing to with being in or out of debt. Now, I am not talking about investing in stock markets or how compound interest rates benefit your retirement savings. What I am referring to, is the day-to-day expense of simply living. I am talking about the task of ensuring that your money doesn‟t run out before the end of the month. My common sense debt approach to debt reduction is nothing new. There have been books out on the subject for decades. Just like how to find a mate or how to lose weight. These subjects have been around for eons. However, perhaps timing is everything. And so is the wording used to convey the message. Maybe seeing it this time, the secrets to financial freedom will strike a chord with you and you will find yourself nodding and saying “Self, I can do that. I can live with that.” I‟m not saying that I haven‟t put a bit of a different spin on this compared to most folks who have written about debt before, because I have. What I am

saying, is that there are certain truths that have been valid since these truths were first uttered or even thought of.

I know these techniques work. They worked for me. And, I am an average guy, with an average income, in a modest house with my wife, two kids, two cats and a bird. It‟s the old saying, if I can do it, certainly so can you! Focus is not on investment techniques, but on spending habits. It is time that your finances reflect a plan for your future rather than a reflection of the history of your life. This is a very fundamental change in how you view yourself and money. So let‟s get started so you can experience first hand the success of this approach. I believe absolutely make a positive impact on your financial life. You will relate these concepts to your own personal situation. And, as you proceed, these concepts will become integrated with your own approach to managing personal debt. I can show you the way, but you need to personalize it. Are you ready? Here we go....this will be fun I promise.

The Four Cornerstones of Being Debt Free The book you are reading is based on a few common sense principles that I call The Four Cornerstones. These cornerstones, like the foundation of a building, form the base that everything else is built upon. These cornerstones or principles will be repeated in various forms from time to time throughout the book. They are that fundamental to the understanding of your part in the process of getting out of debt. It is very important that you understand these concepts. I don‟t expect you to study these or memorize them. I want you to understand that these four simple cornerstones are the basis for much of that follows in this book, not so much to educate you, but so hopefully you will relate these concepts to your own personal situation. After all, I can show you the direction, and even explain why you are going there. But you need to be the driver so to speak. It is up to you how much you get out of this book. Really, I am here to help. My website is there as a resource. WWW.RJSFINANCIALLLC.COMYou can do it.what are the 4 cornerstones ?Delayed Gratification This is where you learn to curb your impulses and be patient and confident. I have more on this later in the book. Living Below Your Means This is actually spending less than you make. Don‟t laugh – you will learn to do this! Living below your means is the best way to have money left over at the end of the week/month/year. Changing Your Spending Patterns Starting with an analysis of where you spend your money now, you will learn what to look for in yourself (your motives and behavior) and in the products and services you are considering purchasing. Ending with, saving for the future, which is bright indeed! Being Grateful For What You Have Right Now Pretty self explanatory. Being grateful could be one of the secrets of the ages. Instead of the constant comparisons to your co-worker or your neighbor or friend about what they have and you don‟t, isn‟t it cool to have the stuff you already have? Absolutely.

There will always be somebody better off than you, and there will always be somebody worse off than you. The trick is to be happy being you, and not equating goods and money with success.

We are bombarded with advertising that took that song to heart “Don‟t Worry, Be Happy.” There‟s always credit cards, don‟t pay a cent for 2 years with no money down and lease-to-own programs. Someone is always willing to lend you money – at a price. Most businesses take all forms of payment: plastic and, as an after thought, cash too. Cash in today‟s society is a rarity. Weird. Just how often is a credit card used? 52 million times a day 2.2 million times an hour Seriously, we as a society are putting what we want ahead of what we should do. Sorry for the downer here, but we need to think, think, think. Would you consciously decide to teach your kids to pile on the debt so they can have that vacation? Or would you teach them to save for what they want, and to get it when they can? You know the right answer here! But, it seems, that we, as a society, have drifted away from that kind of delayed gratification thinking. There are thousands of ways to increase your credit and quite frankly only one real way to get out of debt. Unfortunately.....hard work.It’s not a secret …SPEND LESS THAN YOU MAKE! This ever so simple thought seemed to work quite well for our grandparents, and their parents before them. Back in the day, they had no credit options other than cash so it made getting into debt a lot more difficult. You pretty much only had a loan for a house or a car. That was it. I believe, that we need to get back to the simpler times of our grandparents – at least when it comes to buying things. We need to ignore all the options available to us in modern times, and resist the latest fad and gadget – at least until we have saved for it and can buy it outright. By doing this, you win in so many ways. You will now have extra time before your purchase which will enable you to be quite certain this is what you want when you plunk your cash down. And, your purchase will inevitably be cheaper as everything seems to go down in price over time. Plus it will have more features. It always work‟s out this way. Example: big screen TV‟s. Now let’s take a look at some of the scarier stats… The latest statistics say that one in every 177 households in the United States has received a foreclosure notice. Isn‟t that amazing? 300+ million people in a country and yet one in 177 has been on foreclosure‟s doorstep.

Bankruptcy Flat out - bankruptcy is not a viable long term solution for most folks. I apologize if you were looking for some form of counsel of how and when to use bankruptcy. You won‟t find it in this book. Bankruptcy, in my opinion, doesn‟t really teach you the value of hard work and owning up to your responsibilities. We just had a friend go through bankruptcy, and he is happier that a pig in doo-doo. Why? The computer he bought last year… PAID OFF NOW, the big screen lcd TV… PAID OFF NOW, the debts he had… PAID OFF NOW. He thinks this

bankruptcy thing is awesome. Ask yourself if he will get himself into debt again? It, unfortunately, is guaranteed. Don‟t let this happen to you! How could that happen to you? Well, it is so easy for someone to say sign here and your debt problems will go away. But again what does it teach you? If youdon‟t learn, you keep making the same mistakes over and over. And one day, when it is super important that you do something, you won‟t be able to because, financially, you will have the stigma of bankruptcy on you, and no lending company will touch you without putting your house or car up for collateral or charging you 30%+ interest.

Experience It is really experience that teaches us most things in life. We have to feel love and pain to truly understand. You cannot experience a game of golf while watching it on television. It‟s not the same as playing a round for yourself is it? The same thing is true with debt. If you don‟t feel the pain now from the pile of crap you are in, chances are greatest that you will end up in the same financial place again. Why? By claiming bankruptcy, you sidestep the mental process of dealing with debt. And by sidestepping this, you are not learning how you must change your behavior and your spending habits. And, like they say about history, “you are doomed to repeat it.” Think about all the things your parents taught you. How much of it did you listen to? How much did you end up learning the hard way because you didn‟t listen? No pain, no gain. Would you believe only a generation ago (or two, depending on your age) that debt was frowned upon. I wish it was frowned upon now. Our grandparents saved the money first and then made the purchase. In their day, cash was king. Back then, only 5 per cent of households used credit. Perhaps, when you call it simpler times what you really mean is they did not have your stress of how to cover the costs of negative financing. It was simple: afford it and buy it, save for it and buy it or the item is simply not in the budget and you do withoutThey call this living within your means. Novel concept isn‟t it? Think about it for a second. Spend more than you make and you wake up realizing no amount of creative bookkeeping will make those minimum monthly payments affordable. And, as the debt continues to grow, so does your stress level and fear. It may have started out as small and insignificant, but as it matures the debt eats away not only at your bank accounts and savings, but also mental health, relationships and well being. For many of today‟s households money is not spent on luxuries, but necessities. You can do without purchasing a latte for a day or delay a couple days putting minutes on your cell phone, but your family still needs to be fed healthy meals. Imagine, however, how much further your pay check would go if you were not paying those exorbitant interest rates on credit cards. Common sense tells you it‟s time to make a change. It‟s time to get out of debt, but how? You can do this by letting go of your past spending habits, and by committing to being debt free. By choosing to maintain a lifestyle you can afford not one financed by credit. Yes, it is an alternate reality. This is something that may take you awhile to become accustomed to. But to live with crushing debt is no way to live is it?

I hope you understand that this book is not just how to get out of debt, but also how to stay out of debt. You can create and enjoy a lifestyle you can afford with common sense money management strategies. No hocus-pocus. No magic. No pie in the sky selling. Just practical money strategies based on the four cornerstones discussed earlier: Delayed Gratification, Living Below Your Means, Changing Your Spending Patterns, and Being Grateful For What You Have Right Now. And, without developing new money skills, you will go back into debt. How long that reality of being debt free takes to achieve is up to you. It works as fast as your budget and self-discipline allow. It didn‟t take you 30 days to get into debt, and it won‟t take you 30 days to get out of debt. Let me repeat. This is not a scheme to get rich. This is not a magic bullet. Magic bullets are like magic beans. It‟s just a story, not for real. These are a set of proven common sense secrets to help you discover it is possible to live debt-free with a lifestyle you can afford and enjoy.

Do You Over-Spend or Do You Under-Earn? Kind of a crazy question, but there is reason that I ask it. It‟s about perceptions. Perceptions rule the roost when it comes to spending. Which are you? The over-spender or the under-earner? It doesn‟t really matter does it? No matter which term you use. They are both the same thing. However there is a difference psychologically. Why does it seem to be more acceptable to over-spend than under-earn? Is it because everybody else seems to be in debt, so you are in with the majority? Is it because marketers tell you it is OK to buy more?Is it because your bank will make it easy for you on that home equity loan so you can get more stuff? “No problem” they say. Is it because we as a society are very reluctant to tell others how much we make for a living, whereas we have no issues saying we owe for the couch or the TV? It‟s kind of camaraderie around credit between you and your peers. It‟s silly if you really look at it. It‟s sad we have come to this. Is it because with all the stuff we have, that outwardly looks as if we are very successful, we would rather just keep up that perception in front of others? Because if you had less, it must mean that you don‟t make enough money. And if you don‟t make enough money, you mustn‟t be successful. And if you aren‟t successful you must be a loser. Crap...all of it. Nobody dictates how you feel about yourself. Nobody...but you. You see, whether you over-spend or under-earn is not the real issue. The real issue is that if you continue to use credit to augment your lifestyle, debt will be as certain as death and taxes. Whichever term best defines you I ask one thing: take a cold hard look at your situation and decide if it is really what you want. Or do you want better than that? Of course you do. Once you figure out who you are, you will be able to make positive changes in your lifestyle. Like in other areas of this book, I‟m sorry to hammer this home, but you need to admit that you got yourself here and that you will have to get yourself out.

Tough love sucks, I know.

Is More Better? More = Better...Right? Not really. Having more is no better than having less is less better. It is what it is. You need to change how you see yourself within this so called civilized society we live in. Are you the driver or the passenger? “It‟s not a competition you know!” How many times have you heard that saying in your life? How many times have you used that saying? Yet we all seem to be competing for stuff all the time. Why? Ask the marketers. I mean jeez, we can‟t even drive anymore without competing to be first. Are you comfortable standing in line for something, or do you wish you could cut in? „Nuff said. I really hope that by reading this book you end up believing that more does not equal better. It’s just MORE, not BETTER.

You see, the marketing people will tell you anything in the world to buy their wares. They will tell you absolutely anything at all to get the sale. It‟s a twisted way to look at life really. But we all do it to a certain degree. Now if you also have been living beyond your means, you are effectively using debt to finance your satisfaction. “Hmmm, I‟m using debt to finance my satisfaction????” Make sense? In then end, you are swapping short term gain (purchase=satisfaction) for long term pain (being in debt for years to come.) How do you make yourself feel better again? Make another purchase. It‟s like crack cocaine. A short term fix before you have to sign your life away to get some more. I don‟t mean to call us all satisfaction addicts; it‟s just that the behavior is pretty similar. We are part of a more affluent society in North America, and consequently we have more temptation. To a certain degree it is human nature to crave comfort over discomfort, or in this case – to crave goods and stuff over not as much stuff. Buying more does not put you further in control of your life. There are many times in life when logic must triumph over emotion, and when dealing with money problems, logic rules. Why? Because basically it is all MATH! Please understand that it is consumerism that drives our economies along, so put everything into balance please. Chances are, you have a job because people are buying stuff. I‟m not asking you to stop buying stuff. I’m just asking you to NOT BUY ON CREDIT. He who dies with the most toys does not win – he‟s just dead

The Blame Game We all love to do it. We point fingers. We figure out who‟s fault this all is. After all, it sure is easier than saying you had a choice and well, you made the wrong one. Who wants to do that? Not most people. Today‟s society always seems to want to apportion blame. It‟s kind of a

Hot-Potato mentality when it comes to something like responsibility. That is unless of course, if the situation was a positive one where things went right. Then, there is a line up for people to take credit for the good situation. Here are some examples of blame: (in no particular order) Your Employer ~ everybody loves to blame their boss or the company they work at. We feel they don‟t care about us, or they are greedy and won‟t share. All we do is give. And, all they do is take. Yup, I‟ve used that one. The Credit Crisis ~ is blamed on corporate greed. Some blame this on consumers reneging on their financial commitments. And, fat-cat executives with their hand in the cookie jar. Plus, don‟t forget the government looking the other WAY TOO…

The Government ~ now these people are champs at pointing fingers and figuring out who is to blame. Have you ever noticed how the current government always blames the previous government for the problems we have? China ~ it‟s taking our jobs and decimating our manufacturing sector. It‟s taking all of our lumber and oil, or whatever it is that we need more than them. Video Games ~ are blamed for the obesity of our children. They are also the cause of violence in children.

Well, may I politely suggest that we STOP? Enough already! Stop blaming your spouse. Stop blaming your co-worker.

Stop blaming your boss. BLAME Stop blaming your kids. Stop blaming your parents. Stop blaming the economy.

STOP BLAMING OTHERS

What do we really achieve by blaming others? What do we gain? Maybe we get a clear conscience. It‟s them! Not me! Ahh, but we are really lying to ourselves aren‟t we? Blame only accomplishes one thing; it keeps you mired in negativity. Negativity is the opposite of what we are trying to achieve here. You need to stay positive so you can stay focused on the job at hand – which is to get out of debt and stay out of debt. Question: Are you the passenger or the conductor in your own life? I hope you want to be the conductor; because you are the person who makes your life work. You are the person who gets it all together, not someone else. Sound about right? Of course it is. Bottom Line: You need to accept responsibility for your actions, your situation, and the absolute fact that you will have to get you out of debt. By accepting responsibility for your current situation you will be able to get so much more out of this book. Accept your situation and vow to change it NOW!

Needs vs. Wants Now is the time to take hard look at your spending habits. For 21 days, keep a list of every nickel you spend. Many of us have no idea where all our money goes. I know it sounds boring and a lot like work, but it is important to know where you are actually spending your hard-earned money. This is actually one of the hardest things to do. 21 days is a long time. But, when you sit down to do your budget, you will be able to realistically determine where you can cut the fat or eliminate some expenses altogether.

Areas to cut expenses are: Eat out less often Increase insurance deductibles Wait for sales Use coupons I know these are super obvious but how many of us do this?Don‟t groan. Saving $1 is a significant step towards financial freedom. They can and do really all add up. Every journey starts with the first step. There is a reason we all know the saying “A Penny Saved Is a Penny Earned.” Think how long it takes you to earn the amount of money you are spending for whatever it is you are purchasing – before taxes. Don‟t be so quick to hand it over to someone. Remember, your net worth is what you saved, not what you earned and spent. That‟s called cash flow and is an entirely different thing. Start saving as much as you can as quickly as you can and apply it to debt reduction. Talk Is Not Cheap Talk to creditors. In many cases they are willing to work with you. Keep in mind this is strictly a business relationship. They are in the business of lending you money in order to make a profit. They want their money and they may agree with you that it is cheaper for them to collect their money from you by renegotiating terms rather than repossess an item or to take court action. But that usually happens after they have harassed you incessantly day and night. Take a proactive approach. Fess up to your responsibilities and tell them you want to work with them. Of course, it is best to talk to creditors before they turn your account over to a collection agency. Be honest in what you tell them and what you are able to Common Sensepay. They are looking for either full payment or a deadline or regular timely payments. If a creditor will not take your payment then pay the bill collector. This means your creditor has sold your bad debt to a collection company. And especially, document everything that is agreed to. Everything. Every phone call, every person you talked to, the time and date…the works! You should also develop the habit of keeping a log (time line) recording what happened at each encounter. It may save your butt one day. Courts love people who keep track of timelines and logbooks. It just may swing a judge in your direction one day. Pay cash. Put the credit card away! You will be amazed at how many purchases are made on impulse. Credit card companies are in the business of promoting this. The more you spend, the more

they make. That is reality. Hit your limits and more often than not they will extend them for you. Let‟s face it. Many branded credit cards are owned by the banks. So who will give you a loan to consolidate your credit card balances...why the bank!!! Sound like a win-win for the banks. They‟ve got you either way. Keep going and the banks will own everything in your house. You will be renting it all from them for a monthly fee.Then there is the arch enemy of debt reduction – compound interest. It is a great thing in building wealth, but it is a killer in debt reduction. That‟s why it takes decades to pay off a credit card by simply making minimum payments. The only way for debt reduction to work is to stop making new debt.

Stop Using Your Credit Cards Sociologists agree it takes about 3 weeks to break a pattern and create new habits. Be prepared as the first month will be the most difficult. At the end of the first three weeks you will be receiving your first set of bills and on your way to debt freedom. If you have used cash to buy all purchases this month, you will actually see inroads. Yes, it‟s a good feeling. This common sense system really does work. NOTE - I do have a credit card, a Visa – no that‟s not a typo, I have, for the past five years, only one credit card. I don‟t keep it in my wallet. In fact, I seldom keep my debit card in my wallet either. They are kept in a safe place in my home. I use cash and debit (because debit only let‟s you spend what you have in your bank account) for all my purchases. I don‟t even think about other ways to buy something, like using credit. When I know ahead of time, I am going to make a large purchase, I take the visa card. Otherwise, I have to go home first and get it. It gives me enough time to think do I really “need” a certain item or do I just “want” it. Yes it is more inefficient, with all that driving, but overall, the savings outweigh the costs. Some people put their cards in a safety deposit box. Others give them to a trusted relative who will return them when a zero balance can be shown. Let‟s say you cut up the cards and report them as stolen, you have about 5-10 days before the companies send you a new one. And, of course, you cannot use them during that time. But that is a rather extreme action to take. Others put them in water and put them in the freezer. You know, to put a freeze on spending (ha-ha). The effort it takes to thaw them gives you enough time to think do you really want and need to purchase a certain item. Do not use your credit cards (am I repeating myself or what – it must be important or I wouldn‟t keep saying it – it is crucial) until your debt is fully paid off. By then, you will have developed some new spending habits. You will discover you only need one credit card. You will enjoy the rewards of saving up and paying cash for something is greater than any airline miles or cash back bonuses offered by credit card companies. By the way, you know those air miles and other customer retention programs, well; they do not save you money……PERIOD. Look at it this way. We all want the banks to be on our side. But, they are out for themselves. Would you go to a casino in Vegas thinking you were going to come out ahead? Nope. You know you will most likely lose whatever you bring to the table, right?

But with credit cards, you use your card for anything and everything because you can get……what….. air miles? Come on! You know better than that. Just like the casinos, the odds are against you that you will really receive any kind of bonus from a bank. Remember, there is NO FREE LUNCH. And by knowing that, you have taken yet another step on your way to financial freedom. Cool. Trade High Interest Cards for Low Interest Cards The credit card industry is highly competitive. You can pay anywhere from single to double digit interest rates. If you pay off the balance every month, it really does not matter. Well, except for those pesky yearly renewal fees and such. Just remember that signing up for new cards will red flag your credit rating too. Why? Well, you are requesting an increase basically in your credit amount available to you. Maybe you look at it as having more room for unexpected problems, but the credit bureaus look at it like an increase in the debt of your debt to equity ratio. If your wages haven‟t gone up, then you look more risky to the banks and anyone else who would look at your credit rating. So, following what I said above, if you carry a balance, you can save money with a lower-interest card and move your balances onto that one. You get a cash advance from the low-rate card and use that money to pay off other, high-rate cards. WHY NOT? My next suggestion is to:

CUT UP THE CARD YOU HAVE PAID OFF! And then pat yourself on the back – GOOD JOB This is especially true for those that carry 2, 3, 4 or 5 or more cards. Use the savings in interest to pay off more debt. You are simply reshuffling the existing debt into a more cost effective scenario for you. Good for you. Make sure you read the fine print and know what is being offered. Many low rates are only temporary and may skyrocket when the time limit is up.The idea is to minimize interest payments in order to maximize monthly payments. Budget Time Know How Much You Owe and To Whom Now is the time to develop a monthly budget. List every expense and every debt payment. Remember quarterly payments like insurance. If you have any money left over, put it towards paying down debts. Obviously, a budget needs to be realistic or it won‟t work. And, you will continue on the debt merry-go-round forever if you cannot maintain yourself on the path towards financial freedom. Everyone in the family needs to be buying into this. A budget won‟t work unless everyone follows it. Knowledge and communication is the key to success. Your family has to have a vested in making this work. Set priorities. You know the things you can live without long term, temporarily or never. Discuss it with your family openly. Your kids will thank you years later for helping them learn about credit. All of these below will definitely help decrease your debt!

Direct TV or Cable. Do not rent movies, but borrow from friends or neighbours. Cut down on coffees, lattes, frappachinos and of course lunches out. Take a lunch to work. Eat out once a month vs. once a week – for a while until you get out of debt. Review auto and home insurance policies for better rates. Do not renew any magazine subscriptions – in fact cancel them if you can. Look at phone plans – both cell and land lines. Cancel monthly clubs, memberships, etc. until the debt is paid. Remember this is short term pain for long term gain.

State of the Union (Between You And Your Finances) Ok here we go. Let‟s take a look.... Household Economics Now is the time to think of your household as a viable business with you as the CEO. Fun Eh? And, your first task as CEO is to do research and development into how to better utilize your dollars to enhance your bottom line. Don‟t panic. If you can do simple math like addition and subtraction then you can do this.....I promise. Don‟t think of it as a budget with all its negative and restrictive connotations, just think of it as a money management tool but done on a monthly basis. And, just like businesses, you need to operate in the black – that‟s what‟s left after your expenses to invest in your financial future. In order to know where you are going, you need to know where you are. Be brave. This will likely be an eye opening experience. Most people have no idea where all their money goes only that it‟s gone before the month is over. The first step is to organize yourself. Gather all your bills from the past 12 months and create a filing system. Be prepared because this is not a five minute exercise. Do not go out and buy a filing cabinet. Look around your house to find a storage container. Now sort you expenses and list them in the Big Monthly Money Manager. Again, some people use Excel or another computer program. Do not purchase a fancy program. Remember, you are taking the first step to financial freedom. You don‟t want to spend money, but save money. Having said that, I simply use a pencil, paper and a calculator. Now that you have everything handy….We are going to figure out your net worth. List your assets. Do not list items such as large-screened television sets or jewelry or furniture unless you plan on selling them. In this case Assets are items that you are willing to and readily able to convert to cashSubtract debts from assets. That is your net worth. It reflects what you have saved and invested; not what you bring home in a paycheck or what you spend in a month. Hopefully, your net worth is positive or in the black as they say, but if it is negative don‟t panic. This too will change. We will do it together. I know it sounds hokey, but I want you to keep this list and update it every month as part of your monthly money management tool. It is positive affirmation that you are on the right path to financial freedom. As you see your debts eliminated and invest in your financial future you will feel good about

yourself. Your stress will decline. Your financial worries will go away. You will be able to enjoy a lifestyle you can afford. Honestly, I can‟t stress enough that when you start to feel the weight of all this debt decreasing – you will feel betterWHERE DOES ALL THE MONEY GO? Do you wonder where your money goes? Most people know how much they take home every month, but not where the money goes? Does your lifestyle nickel and dime you into debt? You are only ¾ of the way through the month, but your pay is gone and you are now using credit cards to make ends meet. The cycle of debt continues, only at a much higher rate. Now you have chosen to end that cycle of debt. You have taken the positive step of building a solid foundation of a debt-free future. You have already made the decision it‟s time to change. This is where you decide what exactly gets changed. You have 30 days to decide. If this were a contract…here‟s the fine print... Do not make any credit card purchases during those 30 days. Put yourself on an allowance. Carry cash, you will find you will spend less. You don‟t see the money draining out your account with a credit card, but you do when your wallet is lighter. Trust me, you will find yourself spending less as you become more aware of your spending habits.You can develop your monthly money manager on the computer. You can create an excel sheet which will do your adding and subtracting for you. Do not purchase a computer program. How many people own a budget program, but have never taken it out of the box or plugged in the numbers? You can also do it with a piece of paper and pencil. I, personally, like writing it all out. I keep it in a folder at the front of all our bills. And, yes you do need to sort and file all your bills monthly. There is saying that proper preparation prevents poor performance. The better prepared you are in your monthly budget, the less surprises there will be. Plus, the really cool thing is you will start to intuitively know where you stand financially during the month. No more guessing and praying it all works out. Take your time with this. Figure out what your monthly expenses will likely be, and then write in your monthly money manager what they actually were. Figure out what your monthly expenses will likely be rather than experience the grief of what they actually were. I promise each month will get easier. Keep track of your daily spending for the next 30 days. Keep it in a little notebook and date it each day. As the month goes on, you will become more aware of your spending habits – and that‟s what they are, habits. You will make conscious decisions to curb impulse buying of that latte, book or piece of clothing.

Remember, NO credit card purchases. Common Sense

Okay, the next step is to figure out the costs of your life’s necessities… Housing

In the Big Monthly Money Manager this is listed first because we all, whether we own or rent, need a place to call home. We also want it warm and well lit so there are the utility costs and insurance fees. Transportation You have to be able to get to work so this is listed next. Transportation includes not only your monthly car payments, but also the costs of gas, insurance, maintenance and parking fees. Owning a car is likely more expensive than you thought. Medical Expenses This is a necessity, especially if you don‟t have health insurance. It includes doctor‟s visits, prescriptions, eye care and dental visits as well as over-the-counter-medication. All the things that is necessary to keep your family healthy.Debts After the necessities in life, there are still monthly expenses. In prioritizing items, the next is debt repayment. Most people are inherently honest. If money has been borrowed, it must be paid back. Take all of your credit cards and list the minimum amounts due each month as of today. The amounts won’t go up as you have already agreed no more credit card purchases. Include all debts such as student loans, credit cards, department store debts and payments for furniture and appliances. It is important to include all debts – other than your mortgage which has been listed under housing - including loans made by family members even if there is no interest charged on them. It will make you feel good about yourself to pay these off and family and friends will be appreciative of your efforts.

Groceries You need food to live. But think carefully, do you and your children need to purchase your lunches every day at work and school. How often do you have fast food? What about the coffee/tea or soft drinks bought every day? I read that one person refers to this as the “latte factor.” And, for the price of a coffee, who wouldn‟t want to be debt free. I don‟t mean to suggest that if everybody just gave up a coffee then we would all be out of debt, it‟s just an easy and obvious thing to make an example of. Holidays and Birthdays Holiday spending or birthdays must be part of your budget. My practice for years now is that nothing at Christmas can be put on a credit card. I remember once when my sons were young, I think we spent half of the following year paying for the “wow” factor at Christmas. What was truly “wow” was when the

bills started coming in. My wife is the ultimate “especially priced for you” shopper. She is a great bargain shopper and purchases Christmas and birthday presents year round. And, since she rarely has a credit card with her, gifts are always paid for in cash and bought when an item reminds her of someone and not because something must be purchased. Seriously, you ought to try it. I think buying Christmas stuff all year long is sheer genius.

Miscellaneous This could be all encompassing and should be broken down into categories. For example, there is education and associated costs like tuition, books, supplies and activities for your kids. These are, however, the areas that you have greater flexibility in. For example, you can easily give up renting a couple of movies a week or a magazine subscription. In fact, they along with books can be gotten free from the public library. It sounds cheap I know. But for a short while would it really kill you to go to the library? Text books for school do not have to be purchased new, they can be bought used or also borrowed from the school library. Fill in the following Monthly Money Manager based on your receipts for the past 12 months. If payments such as your insurance are made quarterly, then divide the costs into 12 equal payments. If your total income minus expected expenses is not zero or in the black then you will need to play around with this. Take a look at the Found Money section for ideas. You want to maintain a lifestyle you can afford, not go into debt for the one you wish you had. Live within your means now and before long you will be pleasantly surprised at the lifestyle you will be able to afford. And now to the BIG Monthly Money Manager...

MANAGER FOR MONTH OF ___________ Monthly Expenses

Proposed + / - Actual Monthly Expenses

Proposed + / - Actual

Housing Groceries Rent/Mortgage Meals at Work Condo Fees Kids‟ School Lunches Hydro Fast Food Meals Taxes Coffees / Beverages Gas or Oil Basic Expenses Telephone (land line) Clothing Telephone (cell) Dry Cleaning Water Children‟s Clothing Garbage Hair Cuts House Insurance Holidays / Birthdays Transportation Gifts Car Payment Car 1 Decorating Gas Car 1 Entertaining Parking Fees Car 1 Christmas Maintenance Car 1 Vacation Insurance Car 1 Other Car Payment Car 2 Education Gas Car 2 Tuition Parking Fees Car 2 Books

Maintenance Car 2 Supplies Insurance Car 2 Kids Activities 1 Taxis / Buses / Train Kids Activities 2 Medical Expenses Club Dues or Expenses Doctor Visits Entertainment Dentist Movies/Concerts/Rentals Eye-Care Internet Service Prescriptions Books Over-the-Counter Medication Cable Insurance (life, health, disability) Magazine Subscriptions Debts CD‟s / Music / DVD‟s Mortgage Pets Loan 1 Food Loan 2 Medical Credit Card A (min. payment) Supplies / Grooming Credit Card B (min. payment) Charitable Donations Credit Card C (min. payment) Church Savings Other Contingency Fund Miscellaneous Child Care Other Child Care Total Living Expenses Child Support S Surplus / Deficit _________ for the month

Monthly Record for _________________

Gross Income Net Income

Income 1 Income 2 Other income (child support, social security, military retirement, etc.)

Total Gross / Net Income _________________ - _______________ = ____________ Total Net Income Total Expenses ( + or - ) (add columns from proposed budget)

Every month, you will need to look at your money manager and make adjustments. You will look at the previous month and make sure you are on track and not overspending in any category. And, in the upcoming months you will be better prepared. It is important to continue to update your net worth sheet and see your bottom line improve as the debts of the past are paid off. You will see the amazing progress you have made in becoming debt free. Wiggling and Jiggling Even in the tightest of budgets there is some room for wiggling and jiggling. For instance, say 4 months from now you have created your $1,000 contingency fund and have been paying off your credit cards, but suddenly you have to have new brakes on your car or your fridge goes out. Don‟t worry. You have the money to have it all repaired. That month, you pay only the minimum amounts on your credit cards, which you are still not using, and replace the money in the contingency fund.

The good thing is that that month you have not incurred any additional debts and you are still paying down your cards because since you are no longer using them the original principle has decreased. Pat yourself on the back. Good job. Once the contingency fund money is replaced, you return to your debt repayment schedule.

DEBT – Good, Bad and Ugly Debt can look pretty scary when the minimum payments look like the maximum payments for some months. However, you have already developed your Monthly Money Manager so you know how much those minimums are. The key to most financial investments is compounding interest. When you are investing, it is totally your friend. When you are in debt, it is your worst nightmare. It means that $5,000 will take almost a decade to pay off by making minimum payments. (Keep in mind, the average American has $8,000 in credit card debt...pretty scary stuff.) For instance, to pay off your $5,000 credit card balance, with an interest rate of 17.5 % over two years or 24 months you will need to pay $251.13 per month assuming you make no additional monthly purchases. If you keep your monthly payments at $100, it will take you 8 years to pay it off. OUCH! The above example of paying $251.13 per month ends up saving you over $3,500 in interest fees. That is why it is so important to pay off your credit cards first. And why it is so important to find additional income in your budget so that you can quickly pay off the past to better enjoy the present and the future.

Credit card rates are high because credit cards are considered unsecured debt. If you fail make a payment, no one is going to repossess that amazing outfit bought on sale which needed coordinating shoes, unfortunately, not on sale. Secured debts, such as mortgages, have a lower interest rate because if you fail to make payments, the bank can foreclose and take your home. The problem is when you put the two together; people often find they are maintaining a lifestyle they cannot afford. And, most people have no idea what they are paying in interest and service fees. Credit cards are good when you can completely pay them off at the end of the month. If you cannot do this, you are quite simply living beyond your means. Let me repeat: *** Credit cards are good when you can completely pay them off at the end of the month. If you cannot do this, you are quite simply living beyond your means. *** You, however, are changing that. Put away all your cards. Cut them up.

Give them to a friend for safe keeping. Put them in a container of water and freeze them in the freezer. You will have to defrost them to use them. It would hopefully slow you down enough to think carefully about your purchase.

Finding Money - Suggestions Temporary Second Job Naturally, the more income you have, the quicker you pay off debts. You do not, however, want to spend your entire life working. I always said I worked to live, not lived to work. This is a temporary measure. Set a time limit and only use the income to pay off debt. Otherwise, you are killing yourself for nothing. Make a commitment to yourself that the extra income will be used solely to reduce or eliminate debt. Be realistic. If you want to earn $200 months to pay towards debt then figure out how many hours that will take a week. It may be easier to reprioritize a budget than find an extra 4 or 5 hours, let alone 10 hours working a second job. Be honest with a new employer as to how many hours are you willing to work as well as your availability. There are endless possibilities for second and third jobs – work out of the home, think service industry. Look at places that offer night shifts. And most importantly check with family and friends. Over 70% of jobs are found through word of mouth, not the newspaper or online. So don‟t be shy, ask around. If they are real friends and family, they

won‟t make fun of you doing your best to get out from under the bankers thumb. And when you have gotten out of debt, I‟m sure one or two people will pull you aside and ask you how you did it. How good will those feel for you? Now you are an “authority.” Your self esteem just keeps going up. This means you are enjoying life more as a result. It is important to maintain a balance not only in terms of the household budget, but also in terms of your lifestyle and family. Make sure you take one full day off each week to recharge yourself. If you are tired and stressed, you won‟t make a very good employee and run the risk of losing both jobs. You also won‟t make it as a good family member. No point in having people peed off at you all the time because you are totally stressed out. This will be tough. You will be tired. This is the epitome of short term pain for long term gain; financial freedom versus your current increasing strangulation of debt. You decide whether it is worth it. It‟s NOT of course. That‟s why you are reading this, and together we will slay the debt dragon.

Sell The Stuff

George Carlin had a bit about Stuff. And, he acknowledged that the bigger the space, the more stuff you would have. No room could or should be empty. You spend a lot of time and energy maintaining and cleaning that stuff, not to mention insuring and storing. Wouldn‟t you want to be able to park your car in the garage? I know that is a battle for us at our house. I bet you know people, you may be one of them, that cannot get into their garage because they have too much stuff. Now is the time to clean your house from top to bottom. Be ruthless. Sell everything that hasn‟t been used in the last six months. Involve your spouse and kids so they don‟t think they will be next on the selling block. Nice try, but there are laws against that! Hey, we‟ve all thought about it. When looking around your house - remember that nothing is sacred…clothing, dishes, electronics and collectibles. Is there anything you haven‟t used in six months, except holiday items of course? ven some of those could go. Hold a garage sale. Use e-Bay. Use consignment stores. Take out a free classified ad. Can‟t sell it? Then give it to charity. It may not pay down your debt, but it will make you feel good. You may even get a receipt for a charitable donation that could be used at tax time. Now is the time to de-clutter your life. Sell the stuff. Sure, you wouldn‟t get what you paid for it, but that‟s okay. The stuff is just taking up space, not being used. No matter what you paid, if you are not using it then the item is truly worthless right now to you. Lighten your load as you journey towards financial freedom. Think of it as a life lesson in consumerism gone bad. Use the money only for debt reduction. Embrace financial freedom. Feels good doesn‟t it? If you‟re not feeling it yet, that‟s OK. You will. Many times our debt is the result of owning things that we shouldn‟t. Do you really need that model of car or multiple cars? Is it an affordable way to get from point A to B? Do you really need a television set in the back? Can you really afford to maintain all of it? Is it the reason you are in debt? Sell it, trade it, downsize. Are you living in a nice big house that you cannot realistically afford with your current income, no matter what the bank has said? Be honest. Downsize. Sell and buy a smaller place. OK, in today‟s uncertain times with the financial crisis and all, maybe now is not the time to look at selling your home. Your position should be more about hunkering down for the long haul and to wait out the storm. But, in the meantime, you dig out of your debt one bite at a time. But removing yourself from the burden of a mortgage that is financially un-manageable can be a very tough but smart move on your part. It is a huge decision and a rather drastic one like bankruptcy. Just do the MATH. you are doing the right thing for the right reasons. And seriously – crunch those numbers before you sell your house. By the time the real estate agent is paid, the movers are paid, the lawyers are paid, etc. you may find that these people

have just wiped out all of your equity you were going to get back when you downsized. Rent a room to a student so you can still enjoy the house to yourself part of the year until it is fully paid for. Use the rent money and apply it directly to the mortgage. Make sure the mortgage you have allows you to do that without incurring penalties. My wife, when she bought her first house, knew that she would need to have roommates for three years. After that, she had the place all to herself and could afford to make the payments on her own. Again, it‟s short term pain for long term gain. There is no free lunch here people. My wife had to sacrifice her private space at home for three years in order to get what she really wanted, which was to own a home. Are you willing to take even less drastic measures than my wife? If it‟s a priority you will. If it‟s not a priority for you, ask yourself why.

Food Purchases Groceries are a staple (admittedly, a bad pun) in a monthly household budget. In the U.S., it is estimated that a family of four spends $709 a month on groceries or $177 per person per month in 2007. In Canada, during 2006 (most recent stats) the average household spent $7,050 a year or $146 a week on groceries. Even though food prices are increasing right along side gasoline and electricity, sadly, about 25 per cent of all purchased groceries are not eaten and thrown out. WOW…that much wastage and spoilage! Yup. Most people have no idea how much they spend in groceries yet it is an expense that represents about 10 per cent of the family budget, not including going out for meals or lattes. Take a moment and think about your grocery spending habits. In a consumer-oriented society, it is ironic that we do not know how to wisely hunt and gather bargains for the kitchen pantry. Perhaps you could train the hunter in you to track and snare the best foods at the best prices…..hey, it‟s worth a try if it will help you turn that chore of grocery shopping into a game. I hear this a lot. Grocery getting is one of THE dreaded chores that nobody wants to do. It‟s a little like who gets to clean the cat litter in our house. Here is another example of how food can be bought: in our house, there is no freezer chest. We have a regular fridge with the small freezer on top. We made the decision to give away the freezer chest about five years ago. Often the amount saved on food that was “on sale” was offset by higher electricity bills. Plus, the food would remain forgotten for months because no one thought to look in the freezer as it was not in the kitchen, but in the basement because we had no room for a freezer upstairs. Have you ever dug through the deep freezer and found stuff you had no idea was there because you forgot or the freezer was so deep that you had to move stuff all over the place just to see what was in there? Too bad it had major freezer-burn by then.....ahhhh toss it out. Since then, we purchase groceries once a week. And, we do not shop at the big box stores where bulk food is everywhere. Even with two teenage boys in the house, the bill is consistently between $160 and $180 a week. When the kids are away, it plummets. We shop at three stores…one has better fresh produce,

but expensive overall prices. One is the cheapest, but has no selection and one is the middle of the road and has lots of sales. Of course we try to combine trips in the van so as to get the best mileage. I don‟t mean to sound like a cheapskate, because we aren‟t. I‟m just saying it all adds up and for you to think about it. Grocery shopping is a solitary job. The minute the sons or spouse offer to help, the grocery bill literally skyrockets, often by 20 per cent or more. What we do share is the task of grocery planning. The list is drawn up together and no matter who does the shopping, it is up to the rest of the family to put it all away, as well as putting up with the choices of the “designated shopper.” Here are some great ways to reduce your grocery expenses: Less trips to the store means you spend less. With the price of gasoline these days, any extra trips tax your gasoline bill as well as your grocery bill. We have all had the experience of going to the store for some milk and bread, only to walk out having spent 25 dollars or even more. Avoid the “What are we eating tonight?” syndrome. I can‟t stress this enough. Plan in advance. You should try to know the night before or by noon that day at the latest. The longer you delay this decision, the more likely you are to eat fast-food (junk) or some form of instant microwaveable pre-packaged dinner (less junky but still not as good as fresh). In other words, this delay will end up contributing more than you think in increasing your overall food bill. Plan weekly menus and shopping lists before going shopping always keeping in mind sale items or coupons. (Of course, planned menus for the week, also helps structure your week and, hopefully, eliminate the need for expensive take out.)Take out is fine, but we need to get out of debt first, right? You will be able to enjoy take-out again. I promise (if you follow our guidelines.) Snack packs sure are convenient, but they are also expensive. It may be worth your while to take a few minutes and create your own. Plan not only meals, but also what snacks and treats are to be purchased. And please try to... ...Stick To The List. Deviating from the list will absolutely cost you more, but you know that already. And, when the treaties are all gone, they are all gone. With any luck this will teach your children not to be sugar gluttons, and to enjoy the treats during the course of the week. Most things in life are about balance and so, eating everything up in two days like my kids used to do, mean they have five days without anything to munch on. And you know that can contribute to arguments around the house too. Bigger kids, (and you know who you are ) can suffer the same problem of wanting to eat junk for breakfast, lunch and dinner. But we adults don‟t really do that, do we? The average regular old household throw‟s out 25 per cent of all food they purchase. Now that is scary. In a household of four, that translates into $177 a month or $44 a week. Uneaten leftovers and perishables gone bad are simply a waste of your money. Organize a way to use leftovers either as a lunch or freeze them for a meal. Stop to think before buying lots of perishables or items close to expiry dates. Do you really need twice a many grapes because they are on sale for 20% off? Remind yourself that….…bananas and grapes are good for about a week; pears, cucumbers, peppers and lettuce can last a couple of weeks; oranges, apples, cabbage and celery can last for several weeks.

Freeze bread and cheese. Even milk can safely be frozen. I know it may seem weird at first but it will extend the life of the food in your house and ensure that is eaten as opposed to thrown out. Translation: $$$

Congratulations I, Rick Schuller, want to personally congratulate you on completing this book. You have done a wonderful job reading all the information and formulating ideas on how to make positive financial changes in your life. My hope for you is that you diligently follow the common sense secrets shown to you. As you have no doubt figured out by now, there are no secrets to common sense. Mostly, these so called secrets have been forgotten by you and me over the years. Perhaps you noticed my reference to the “old days” and the way that our grandparents got by in good and bad times. Some say that progress is an illusion. I think when it comes to the pervasive use of debt and credit as a way of augmenting or boosting our incomes, it certainly is an illusion that we are better off with what the banks and credit card companies are offering us. My sincerest wish for you is for you to ignore the temptations around you, at least until you can afford to indulge in those temptations. Turn off the TV. Throw out the ads that come in the mail. Cancel your newspaper if you wish. My wife Anne and I did years ago. It was all bad news all the time. It‟s too depressing. Surround yourself with all the very best things in life which are all FREE! Your family and friends!!!! Go for a walk. Smell the roses. Read a book. Get out of the house. Go back to household economics where you can only spend what you have. Forget about debt financing as a way of keeping up with the rest of the human race. The truth is, they are likely as in debt as you and have no idea on how to get out of it. That does point out another illusion: everybody has it better than you, right? What a crock? Common sense says a certain percentage of the population is better off than you, and that a certain percentage is worse off than you. STOP keeping up with other people. Learn to be happy in your own skin, in your own house, with your own stuff. And... Remember the Four Cornerstones: Delayed Gratification, Living Below Your Means, Changing Your Spending Patterns, Be Grateful For What You Have Right Now. Leave bankruptcy to the businesses. You do not need it to change your situation. It is a terrible experience for anyone to go through. And, anyone that tells you that is easy and painless is outright lying to you.