When a person is knee-deep in debts, he may choose to ignore his problems until it is too late. One reason may be due to ignorance. Another reason is he probably thinks he is doing just fine as his friends are also in the same situation. Are you in the same predicament?

Being in debt is no laughing matter especially if you are a parent supporting a family. What are the warning signs that signal debt is taking over your life?

• You cannot break off from a continuous debt cycle. You have not been debt free for ages.

• You borrow money to make ends meet.

If you identify with the situation above, then it is time to own up and develop a plan to pay off your debts.

photo credit: Casey Serin

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One of the biggest and important considerations when a parent decides to stay at home is regarding finance. Is one income enough to support the whole family? Are there any other sources of income or passive income besides the salary from one working parent. What about money for the future like the kids’ education and also for retirement?

With all these financial concerns, it is not surprising that a stay-at-home parent eventually returns to the workforce after a certain period. To make preparations for the switch to a one-income household, below are some suggestions to help you in making the transition:

• Make a budget base on the one income that covers your expenses. The entire family may have to make sacrifices, for instance no cable TV or less dining out, in order for the budget to work.

• When the family has successfully learn to live on one income, only then take the plunge. If not, hold off your plans until the problem is solved.

One of the biggest mistakes a family can make is to use their credit cards or home equity loan or refinancing loan to live on to replace the lost income. This family will end up being in debt.

An important word of advice is that both partners must mutually agree on the idea for one parent to stay at home. It takes the work of two people to make the idea successful and to avoid finger-pointing on one partner in the future when problem arises.

Have you faced the above situation before? What is your advice to couples who wish to make the move?

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I believe that it is a rare case if a couple has never argued about money. Money conflicts are very common between couples. The arguments may be related to a lot of issues regarding money such as:

• Who is earning more money
• Who is contributing more towards the family’s support
• Who is in-charge of the money matters, like settling the monthly bills
• Why one partner gets to spend more money on personal treats
• Why there is no money left at the end of each month
• Why there is so much debt
• Why one partner is over-spending every month
• Why the savings account is under one name only
• Why one partner has a retirement fund and the other does not

The list can go on and on. My partner and I also have our share of money disagreements. Although we rarely have strong earth-shaking arguments about money, we often have minor disagreements in our views about money issues. One of the obvious thing I notice is that we both have different opinions and attitudes about money in some areas. I called it our differences in ‘Money Personality’.

My money personality is as follows:
• I am frugal.
• My goal is to reach financial freedom as soon as possible.
• I prefer to earn passive income but currently I have to go out to work and earn an active income.
• I want to accumulate money fast rather than gradually.
• I tend to worry a lot about money. For example, on whether my retirement fund will be sufficient or not, whether my insurance will be enough to cover my medical expenses at old age or whether the children’s education fund is adequate to cover all the necessary costs.

My partner’s money personality is as below:
• He is also frugal (we agree on this part).
• He does not mind to work until retirement. Hence, building or establishing a passive income stream is not important.
• As long as he is working every month earning a salary, he does not see the big deal about accumulating money fast for early retirement.
• He likes the idea of working for someone else rather than working for himself.
• He is confident that the amount of money taken monthly from his salary for his retirement fund will be sufficient to meet his needs.
• He is comfortable with his current way of life and is not interested to learn new ideas, skills or trade.

Knowing your partner’s view on money matters helps to prevent big arguments on the related issues. Both of you would know where you each stand and both have a right to his or her own views. Hence, compromising is a good way to settle a dispute and reach a mutual decision.

What money arguments do you have with your partner? What do you disagree about the most?

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photo credit: Paraflyer

The World Wealth Report 2008 done by Capgemini and Merrill Lynch stated that in 2007, there were 10.1 million individuals having at least US$1 million in financial assets. This is an increase of 6.0% from the previous year, 2006. India, followed by China and Brazil, recorded the largest growth in high net worth individuals (HNWIs) in 2007. How would you like to be one of the high net worth individuals and where do you start?

Learn and practice the 8 tips below and you would be well on your journey to reach your goal. At the end, you may realize that getting to the millionaire level takes a lot of commitment and persistence and it rarely happens overnight.

1st Tip: Start early to build up your money

Start from young to save a large portion of your income. Generally, young people start working at the age of 23. You work hard and save hard. Let’s say you saved $20,000 by the age of 25. You invest wisely in an investment vehicle that gives a return of 10% per annum. You never touch the money but continue to put in $300 every month for the next 30 years. At the age of 55 (25 + 30), you would have about $1 million to your name. You can thank the magic of compounding interest in helping your money grow. It is certainly not a bad way to get your first million and to ensure a tidy sum for your eventual retirement.

2nd Tip: Learn ideas or skills to establish several income streams

Smart people would always find ways to ensure that there are several sources of money going into their various funds. They do not wait for opportunities to come to them but seek them out actively. It is up to you to find the things that you can do in your spare time to increase your income level. Popular methods like direct selling, network marketing, MLM business and selling insurance are all still going strong. There have been cases where people have quit their normal desk jobs to do full time what is supposed to be their part-time work. Like these people,you never know until you give it a try.

3rd Tip: Work smart

You may have a desire to be the top person in your field. Why not be the top person and command a huge salary at the same time? If you have accumulated sufficient know-how to become an expert in your field, you can command a high fee to share your knowledge. People will seek you out for consultations in your area of expertise. Since you have worked hard for the money, remember to invest it wisely to let it work hard for you.

4th Tip: Invest in properties

Good examples of successful people in Malaysia are Azizi Ali, Milan Doshi, Renesial Leong and Dr. Peter Yee. This does not mean that you simply go out to buy any property that you fancy and expect to immediately make money from it. Like most things, you need to have sufficient knowledge in the area before you take the leap. Knowing when to invest and when not to is equally important as one wrong investment may affect your equity reserve. Hence, learn from the experts first and only then apply your knowledge.

5th Tip: Learn the ways to become a millionaire

You can either borrow or purchase books that teach you the ideas or methods to become a millionaire. Practice the ideas or methods correctly as recommended in those books and you have a greater chance of becoming a millionaire. There are so many books available and to name just a few of the popular titles are The Millionaire Next Door by Thomas J. Stanley and William D. Danko, The Automatic Millionaire by David Bach, The Smart Couples Finish Rich also by David Bach, 365 Ways to Live Cheap by Trent Hamm and Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Freedom by Vicki Robin, Joe Dominguez and Monique Tilford.

6th Tip: Control your spending and debt level

If you go to any financial website or blog, the idea of controlling your spending and level of debt is always emphasized. Even books on finance never forget to mention this idea. Do you know why? If you have gone through tip No. 5 above, you would have learned that this is one of the important habits practiced by millionaires. Therefore, adapt this habit as well as the other habits of a millionaire and you cannot go wrong.

7th Tip: Start a business

It is common to hear people going bankrupt due to a failed business venture. On the other hand, you also hear and read stories about people who have made it big through their successful businesses. A lot of times, these people actually failed initially but eventually through perseverance and because they have faith in their businesses, they become successful. The initial business idea can be crucial to whether it can be profitable or not. Just because you like to cook does not mean you can run a lucrative restaurant business. Finding the correct type of business to run is equally important where there should be a strong demand and big market for it. It takes a lot of skills to do well in business. Having one type of skill only may not be adequate to ensure that you can run your business well. You either have to learn the skills or source the work out. Doing everything right means your business has a higher chance of flourishing and making you a millionaire in the process.

8th Tip: Avoid making big money mistakes

Making the right investment moves can move you forward and up very fast but making huge mistakes can also push you right back to the bottom. Expand your knowledge and learn from other people’s mistakes to ensure that you do not make the same costly mistakes. It is normal to make small mistakes once in awhile from bad decision making but it is not acceptable to make serious ones that can wipe you out. It is good to be opened to new ideas and to try out opportunities but at the same time it is wise to be prudent as well.

There you have it, the ideas that can assist you in your journey to make your first million. If done successfully, you may reach your millionaire status sooner that you expected.

Do you have a great tip or idea to share? We would like to hear from you.

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photo credit: pfala

In my previous article “The Top 10 Criteria to be a Wise & Successful Parent”, I mentioned that some of the criteria are to be able to provide the necessities in life (material needs), i.e. food, shelter and clothing and to provide a stable and comfortable home for your children.

Well in order to be able to fulfill that requirement, the parents have to be financially stable. One way to ensure stability is by controlling your finances, i.e. keeping track of your spending, eliminating your debts and building up your savings. Money that has been spent is gone and debts will take more of your money away due to the interest payments.

Money issues

It is a common fact that married couples with or without children argue about money or finances at one time or another. It is no secret that it is one of the sensitive issues for married couples and one of the top causes for couples to break-up or get a divorce.

As a wise parent, you know that it is your responsibility to ensure that the family’s finances are in good order. However, it is difficult to ensure this if both parents do not openly talk about it, do not want to acknowledge their financial problems or if only one parent is handling the finances or they just do not know where to begin.

Where to start?

If you have no idea where to begin, then I suggest that you watch the TV show “Til Debt Do Us Part”, hosted by a woman named Gail Vaz Oxlade who is a Canadian financial writer. In the show, she works with married couples that are facing financial problems and helps them to get their finances back on-track. She normally starts off by touring the couple’s home to see how well they live. She does a detail check on their actual spending and most of the time, the couples are caught spending way above their income, in other words, living beyond their means. It is not surprising then to see the high debt accumulation.

To help the couples, Gail will give them a few challenges or assignments that address the root cause of their problem. The goal of course is to improve their financial situation. To begin with, the couples are requested to live on a strictly cash budget and to record down all their spending. This is to encourage the couples to keep track of their spending and is aware where their money is going. The cash money is kept in jars allocated for various purposes like food, transportation, entertainment, clothing and gifts. Earlier on, she had confiscated the couple’s credit cards to ensure that there is no more debt accumulation. In one show, she actually freezes the cards in a container of water.

The are weekly challenges to be completed such as the ‘Life Lesson Challenge’, the ‘Budget Booster Challenge‘, the ‘Future Plan Challenge‘ and the ‘Relationship Rescue Challenge’. In one show, the couples are requested to move to a cheaper abode as their financial situation does not allow them to stay at their current home. In another show, the couple is requested to find ways to increase or boost up their income. In the relationship rescue assignment, the couple must work together and communicate with each other to complete the task given. At the end, the important thing for the couple is that they learn about their money mistakes and take control of their finances. Most importantly, they work together as a couple to address their problems and hence in the process become a better parent.

Successful ending

Finally at the end of the show, the couple will be rewarded with $5000 for successfully completing the challenges or assignments, which is used to help them pay down their debts. I have seen couples that only get partial of that amount when they were unsuccessful during the challenges. Overall, the couples would have learned to control their spending, to do budgeting, to have a debt repayment plan in placed and to have a long-term savings plan.

So if you want to be a wise parent and ensure your family’s finances are in order, you might benefit from watching this TV show. You can watch it on Channel 733 on Discovery Home & Health by the satellite TV provider, ASTRO (Malaysia). You may also check out Gail Vaz Oxlade’s website at http://gailvazoxlade.com where she answers questions from the public about money and finances.

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