Every new year the dreaded question pokes it’s head up – “What’s your New Year’s resolution?” Yep, I hate that question. It forces me to choose something to change, tell someone what I plan to change and at that point I’m forced to stick with said change or else I will fail before the new year even begins.

It’s a lot to think about! So I want to hear from you… Did you make a New Years Resolution? If so, what is it and how are you doing with keeping your resolution?

Or, did you opp for not making a resolution so you can avoid the feeling of failure when you mess up.

Some of the most common resolutions for the new year are dieting/losing weight, working out more, spending less and getting rid of debt. If you’ve chosen any of the above for your resolution you’ll be happy to know that eBillme can actually help you! Check out our Gift Card Mall with over 60 top brand gift cards including NutriSystem for weight management, Champs Sports and other sports merchant gift cards for working out plus all gift cards offer a cash back rewards program on every order so you can start working off that debt right away!

eBillme is a debt free online payment option and your best choice for online payments in 2012!

Cheers to a successful and blessed new year.

My Debt Free Experience

I have a taste of what it’s like to live debt free. We are currently debt free besides our mortgage – believe me, we long for the day we’re completely free from debt. I can share with you a bit of my experience.

I remember the day we paid off our last non-mortgage debt. It was exhilarating. No more interest payments, one last payment not hanging over our heads. I pictured all the credit collectors waiting to see if we’d miss a payment. Nope! No profit for them! Instead, we paid more month after month until their investment was gone. It feels good. Trust me. You should try it!

But the real results showed up when didn’t have to make such large payments. In other words, we got to keep the money we earned – it wasn’t merely being passed in one hand and out the other. Because we had all this extra money, we could quickly fund our emergency fund and now we’re on track to meet additional goals!

Ultimate Financial Living

Living debt free holds special meaning to me. You can’t know the feeling until you experience it. It’s really the ultimate financial living. But I’ll try to describe what it means to live debt free and what you’ll be able to do below:

• Save money. This is the obvious one. You’ll save so much money on interest, fees, and other miscellaneous charges. Remember, many lenders want you go to into debt. Why? They want to make a profit. They aren’t a financial “services” organization. They are there not to serve you, but to serve themselves. Be a savvy consumer by rejecting debt and living debt free.
• Release the stress. Everyone agrees that stress is bad for you not only psychologically, but also physically. It’ll wear you down in an instant and halt productivity. Simply not having to remember to pay another bill can simplify your life and make managing your finances that much easier.
• Reduce risk. Holding onto debt represents risk – that they might want to collect the debt faster, that the interest rate might change, or that you might not be able to adhere to the payment schedule. Many things can go wrong in a loan.
• Gain negotiation power. Spending cash at small businesses can lead to huge savings when you flash the money. When salespeople have quotas to meet, they’ll be more likely to offer deals to customers they feel have the cash. Don’t be afraid to spend with cash. It’s a medium of exchange that’s been used for centuries!

Security Matters

The eBillme motto is not only to live debt free, however. It’s to shop secure. We all must maintain a certain level of security when we’re entering the marketplace – online or not. We should always be aware where our debit cards are, how we’re making purchases online, and to which merchants we are giving our information. The built-in security feature with eBillme is that you never give out your personal information – a huge safeguard against fraud. Living debt free implies living smart. It’s certainly not enough to spend your money wisely, you must do what you must to protect it.

Hopefully this gives you a little taste of what it means to live debt free. Do everything you can to save money, dump debt, and enjoy a healthier financial future.

For more tips on living debt free check out Personal Finance Summarized in One Sentence

It should be mentioned that people always have the opportunity to raise their income and save for retirement while paying off the mortgage. If both can be done at the same time, by all means do so! But if you’re stuck at this present moment and have to choose one or the other, here are some thoughts to keep in mind.

The Interest Rate Argument

If you have taken advantage of recent low interest rates in a refinance or newly purchased home, it can be argued that it is more worthwhile to invest your money than to pay off the mortgage. The small tax advantages associated with a mortgage also add merit to this viewpoint. When you’re investing in mutual funds with long term track records of high returns, it’s easy to see why investing is the better route to go.

Remember, investing is only a better choice than paying off the mortgage if you’re investing in retirement. Short term investing should only be done after the house is paid off. Why? Investing in the short term incurs more risk. Investments tend to provide higher and more stable returns in the long run.

The Debt Free Argument

There is a group of people out there who desire to be completely debt free – fast! I truly understand that passion. There is an ever-increasing longing against debt in America and the world. Paying off your mortgage by allocating a significant amount of resources to pay down the principal can be tempting.

One might argue that those who take out loans are morally obligated to pay them back as quickly as possible. But then again, in most cases the lender wants the borrower to hold onto the debt so that more interest is gained. If you feel morally or spiritually obligated to get rid of your debt, however, that’s completely understandable.

Another point of the debt free argument is that paying off debt eliminates risk. This is very true, and perhaps one of the strongest reasons why you would want to pay off debt.

Dave Ramsey’s Method

Looking at Dave Ramsey’s 7 Baby Steps, we learn that he recommends contributing 15% of your income to retirement accounts before throwing extra money toward the mortgage. He developed the 15% rule after years of working with countless families on their retirement planning. In essence, he advises to contribute 15% to retirement and any extra money should be thrown at the mortgage (assuming the kids’ college education is being funded).

If you’re having trouble funding both, Dave allows a family to cheat down to the 12% mark in The Total Money Makeover. But he warns against doing so, because it would result in a sizable loss at retirement. Another way to ensure you’re able to contribute up to the 15% mark is to find extra side jobs. Taking on an extra part time job might just be the ticket to get your income up where it needs to be for funding retirement.

Last Thoughts

Only you can determine whether it is the right time to start paying off your mortgage or save for retirement. Doing a little of both might be the answer. Nevertheless, make sure you identify what is priority in your spending and stick to it!

How much money do you have in investments? Does that question make you worried that you don’t have enough? No fear. In this article we’ll explore when investing makes sense, and where you should place your money. We can all take advice from Dave Ramsey, and I believe some of his principles listed below will help you make wise investing decisions.

Principle 1: Start investing only after you are out of consumer (non-mortgage) debt.

This is one of the most important principles when it comes to investing. Why is it suggested that you wait to invest until you are out of debt? It’s simple: risk. Risk occurs when you have too much debt leveraged to handle sound investments. Some people make the unwise choice to incur more debt in order to turn around and use that money to make investments. While this can make mathematical sense (ex: borrowing at 5% interest to invest and make 12% ROI netting 7%), is doesn’t make sense when you figure in the taxes, risk of your returns being lower, or an emergency when you need liquid cash.

While this will slow down your investing strategy, it will also ensure that you have a firm foundation before you try and produce wealth. When you’re out of debt, you’ll have better peace of mind in order to make wiser investing decisions.

Principle 2: Start investing only after you have an emergency fund built with 3 to 6 months of expenses.

The last thing you want to do is take money out of an investment prematurely before it has time to grow. Emergencies have crashed too many portfolios to count. If you have a situation where you have to use a large portion of your money for emergency purposes, you’re going to want to pull that money from a designated emergency fund.

Avoiding interest and having great financial peace are the purposes of an emergency fund. If you’re interested in building your emergency fund, and have questions about how much you should save, see my eBillme article on Emergency Fund Basics.

Principle 3: Always diversify.

I’m a natural gambler. I remember playing with single stocks, day trading, and investing large portions of money into very few companies. I soon realized that there was a better route: diversification. Spreading your money out between several investments is much wiser than committing to one bet.

One way to diversify your investments is through mutual funds. Mutual funds are professionally managed investments in which many people invest (thus called mutual funds). A fund manager will buy and sell investments based on the mutual fund’s purpose or goal. Typically, mutual funds are well diversified to cut down on risk and provide a solid opportunity for growth.

Another way to diversify your investment is through multiple forms of investment. For example, you can buy stocks, real estate, or invest in your own business. Have a good mix to find out which methods work best for you.

Principle 4: Invest in the long term first, short term second.

It can be tempting to start investing right away. My rule of thumb for investing is to never invest money unless I plan on leaving it untouched for 5 years. But before I invest with the intention to make a profit in the short term (5 years through retirement age), I always invest for the long term first (retirement and beyond). It’s usually the case that your best working years are now, not in the future. That’s why it’s important to raise your income as much as possible and invest for the long term.

Along with thinking long-term comes many benefits. You’ll hold onto your money longer, make better purchasing decisions, and learn to live debt free. What are some of your investing principles? How have investments been an important part of your financial planning? Let us know in the comments!

Why Pay Off Debt In The First Place?

It’s not unusual to ask the question: “Why pay off debt?” After all, we live in a nearly credit-dependant society. The media has lifted credit up on a pedestal and made it one of the most desired financial products today. But think about it, what does credit really give you? Well, it gives you the ability to go into debt – thus pay interest. Do you really want to pay money to use money? I sure don’t!

Another reason to avoid the use of credit are the dreadful payments. Payments sap your cash flow and ensure that you don’t have money left to save and invest. By freeing up your money, you will have more power to do those things you always wished you could.

How To Pay Off Debt

The last thing you want to do when paying off debt is try to attack all your loans at once. Instead, focus on one loan at a time and make minimum payments on everything else. This is commonly referred to as the debt snowball.

There are two main schools of thought when it comes to the order of paying off your loans. Either will work, but both have their pros and cons. Let’s take a look at them below:

• Pay off higher interest loans first. This is the mathematically correct way of paying off your debts. You’ll save the most money on interest, and therefore will pay less with time. The downside to this strategy is that if your highest interest loans happen to have the most principal, it may take a long time to see results.
• Pay off lower principal loans first. While this is not a way to save the most money, paying off the lower principal debts first will provide encouragement as you quickly knock out a few loans! This method is approved by Dave Ramsey, and it is the one that I officially endorse. The motivation you gain from immediately eliminating several debts pushes you to continue, and is worth the few extra dollars spent in interest.

Ideas To Get You Started

It’s not always easy to get started paying off debt – especially when you have no wiggle room in your budget. Previously, we discussed lowering your expenses and raising your income. This is truly the only way to get the wiggle room you need to put some extra money toward your debt.

I challenge you to look at major items you can put up for sale to jumpstart your debt reduction process. Maybe you have an expensive vehicle you can sell? Or what about moving down in house? Push the limits and find ways to make immediate progress. As you blast through your debt, you’ll naturally think of ways to save money and earn a little extra at the same time.

It helps to find the best price you possibly can when shopping online. Don’t settle for whatever catches your eye first. Instead, look for great deals. Whether online or not, you need to stay conservative in your shopping habits in order to save enough money to pay those you owe.

I Did It, And So Can You!

I know firsthand that eliminating debt isn’t the easiest thing to do. It takes time, dedication, and pure effort! It took my wife and I approximately a year to pull ourselves out of non-mortgage debt. But let me tell you, it was well worth it! Our mindset about life and money has changed. When you finally know what it’s like to live debt free, you’ll never want to go back.

Share with us your story: how much debt do you have and how do you plan to eliminate it?

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