10 Part Series on “Leading A Debt Free Life & Marriage” Part 3 (Continued…) - 6 Ways To Know If You Are Living Beyond Your Income

  

Marriage Alive Digest 10 Part Series on

“Leading A Debt Free Life & Marriage”

Part 3  (Continued…)

6 Ways To Know If You Are Living Beyond Your Income 

Unnecessary debts put a man in bondage and restrict the free spirit you need to excel in life and marriage. In continuation of part three of this series, you can tell if you are indeed living beyond your income by asking the following:

3.       Are You Craving For Credit Regularly?

Credit has become so easy to get to that even student and children are joining the bandwagon. This way, so many people without a means of steady income are bombarded with offers of buy now pay later and easy money.

·        Do you have a rotating balance on your credit purchase?

·        Are you using one credit to pay off another one?

·        Is your monthly credit balance growing instead of reducing?

If the answer is yes, then you are most likely financing living a “beyond your means” lifestyle.

You need to sit and begin to consider your credit purchases and observe exactly what you are buying.

Perhaps it is costly clothing? Maybe it is time to move to a cheaper clothing line.

Have you fallen for the buy now and don’t make any payments until who knows when promos and offers? Now that the payment time has come, are you struggling?

Whatever it is that making your debts to mount, by buying on credit, make a determine decision to quit credit buying.

Draw up a realistic debt repayment plan and do not pick up any additional item on credit until you have paid your balances off and are ready to be an accountable consumer.

4.       Are You Saving?

Saving is truly the foundation of healthy finances, yet so few of us actually save. One of the most common excuses for not saving is, “I have too much debt.”

What people don’t realize is that, unless saving is prioritized, debt will always be an issue.

Our goal should be to set aside at least 10% of gross annual income. Portion of it may go into a retirement fund while the rest to a regular savings account.

While setting saving goals, focus on both short-term as well as your long- term goals. Short-term should include having an emergency fund, 6 months of living expenses, a vacation fund, a Christmas fund, etc.

Your long-term goals should focus on retirement, car replacement fund, and college funds for your children, etc.

5.       Do You Spend More Than 25-30% Of Your Income On Housing?

Buying more home than or rent more than you can afford has been a common trend in amongst people in recent times.

Today, there are schemes where you apply for a land or housing and you pay in installments. This has leads to purchases or borrowing more than can be afforded, and coupled with a stagnant job market, many families are repeatedly thrown into debts.

·        Are you counting on more than one job or two incomes in order to make your mortgage payment or rent?

·        Are you spending more than 35% of your gross income just to pay your monthly note?

·        Would you be in deep trouble if you experienced a reduction in income?

If the answer is yes, you may be paying for more home than you can afford. Here are two simple rules to follow in regards to mortgage payments:

·        Stay within 25-30% of your gross income

·        If you are you a two-income family, buy as if you had just one income. This way you are creating margin in case of a job loss

6.       Are You Afraid To See Your Credit Level?

Do you know what your credit score is? If your number ranges from 500’s-

600’s you have some work to do.

There are multiple behaviors that drive your credit score down, but some of the most common ones are: late payment on credit, mortgage or utilities; using too much of your available credit; and defaulting on your payments.

In order to start repairing your credit you need to stop the harmful behaviours that pushed you to those issues in the first place.

·        Is it habitual overspending?

·        Lack of personal discipline?

Whatever that is, find-out your key reasons and deal with each issue one at a time.

Make up your mind today to be free from the grip of debts. It might look tough; but we can indeed achieve it!  

10 Part Series on “Leading A Debt Free Life & Marriage” Part 3 (6 Ways To Know If You Are Living Beyond Your Income)

Marriage Alive Digest 10 Part Series on

“Leading A Debt Free Life & Marriage” Part 3

6 Ways To Know If You Are 

Living Beyond Your Income

In many homes, living beyond income levels has become the standard. Using readily available credit to finance our lifestyles is routine. The everyday social pressure to meet certain living standards keeps pushing families to financial instability.

Here are six quick ways to know if you above your limit and how to change the trend:

1.       Are You Always Discontent?

If you are easily discontent with your material things and constantly wishing for more, then something is wrong.

If it is difficult for you to see other people change their electrical appliances, buy nicer cars, move to bigger apartments, get better furniture or put their kids in more high-status private schools then your discontentment may push you to making reckless financial decisions.

If this is your case, consider your spending habits and evaluate whether many of your spending are driven by genuine need or just a wish to satisfy what was never lacking or to please other people’s expectations and social pressures.

Make up your mind not live to impress other people by spending money you don’t have on the things you and your family do not really need.

2.       Can You Do Without Your Income For A Few Weeks?

If you and your spouse were to remain unpaid or lost your income; how long would you and your family survive for another, lets four months only on savings?

This would be a difficult proposition for so many couples. 

Well, if this applies to you, it is an indication that you may be overspending on today’s unnecessary wants while sacrificing future needs. If this is true, you need to seriously consider your present spending.

If you don’t have a budget, make one. Do you have a plan how to spend every Naira you earn? Sit down to make sure every Kobo is assigned to a specific budget category. Monitor your spending for the next 30 days to identify all potential “drain” areas.

Your ultimate aim should be to eventually have five months of your living expenses saved or put aside and be available in case of emergency or you experience unanticipated total loss of income.

To be continued…

Marriage Alive Digest 10 Part Series on “Leading A Debt Free Life & Marriage” Part 2 (2 Easy Solutions For Mastering Our Finances)

Marriage Alive Digest 10 Part Series on

“Leading A Debt Free Life & Marriage”

Part 2

2 Easy Solutions For Mastering Our Finances

Did you know that there is one rule, one principle, one truth that if followed could almost 100% guarantee us a life free from debt and a life of true financial freedom?

Do you think this is possible? Well, without mincing words, that simple truth is:

1.       “Never spend your money before you have it.”

– George Washington.

Yes, that’s it! Quite true and simple! Nothing more, and nothing less.

But if this is so simple and clear, why do so many of us ignore or defiantly disobey this rule?  

There may be several reasons why people disregard this rule, but there are two most persistent ones. And these are: 

• I want it 

• and I want it now
  
  

A wise person knows and understands that in life, we can't have it all and that it takes time and sacrifice to reach certain financial goals.

However, a lot of us have convinced ourselves that there is no point in waiting since we can, literally, have it now. Well, if not with cash, then with credit.

Remember the “Buy it now and pay for it later" slogan? This approach to spending is what is pushing so many of couples to insane levels of debt. We seem to make up our minds to acquire stuff we don’t really need with the intent to pay later. Some convince themselves that the days of pay back will never come.

If this applies to you, it is time to wake. That the pay back time or day of reckoning hasn’t come does not mean it will not come.

So how can you break this destructive cycle? 

a).   Admit your problem. 

b).  Find an accountability partner, someone who will have your permission to keep you

on the “straight and narrow”. 

c).  Stop using debt for any purchases whatsoever and live on a cash basis ONLY.

To help you, apply the ever reliable envelope system to assign envelope for each spending category. Assign a specific amount for each of your envelopes and make a commitment to stop spending once the envelope is empty and you can fund it again with your next paycheck.

2.       Simple Quick Fix

According Maya Angelou, “Nothing will work unless you do”.  This is a simple truth of life. But we are continually bombarded with promos and adverts / messages of simple, quick, and no effort required solutions, which lures us into the trap of “simple quick fix”. This make people to believe the lie that financial breakthrough comes without corresponding work or efforts on our part.

A life of financial wealth and contentment does not come cheap or easy. Indeed, there is nothing easy on the road to genuine financial freedom. It takes hard work, concerted efforts, dedication, and determination, and sometimes, essentially going against popular opinion and beliefs.

Are you prepared to do what it takes? Are you ready to put in efforts to realize your financial dreams or you just want to remain a dreamer?

If you are indeed committed to rolling up your sleeves to actualize your dreams, here are a few you should be prepared to take:

•                If you don’t have a plan for spending your money, make one. You need to have a written financial plan, a road-map that you can follow.

•                    Find a tool, a friend, club, programme, etc that will help you enforce your monthly budget.

•       Spend 15 - 30 minutes every day reviewing your budget and where you stand. This will help you to identify or assess what parts of your budget are over or under funded and you’ll be able to make quick adjustments in order to stay within your monthly spending limit.

I know you, just like many other people, might come up with a few more reasons why we continue spending money before we have it, but we hope that this series will serve as a motivation to help you break that destructive cycle.

The longer you delay, the harder it will be to achieve your dream, so make today the day of your financial turnaround.

Work hard at it and give it time.

Tunde Obe's Advice To Those Who Live Above Their Means

Tunde & Wunmi Obe

In light of our 10 part series of leading a debt free marriage, we wish to highlight the advice of Tunde Obe on living within your means as a married person.

In an interview with Encomium magazine, the popular music artist said, “Any artist who owns a car that the quarter of its cost price isn't in their account is a failure”.

This was his response when he was asked to advise artists who pay millions to live in rented apartments.

"When Wunmi and I started, we could have afforded to rent an apartment on the Island considering the kind of money we were making that time; but we were living in Gowon Estate, Ipaja, Lagos, where we paid minimal rent so we can save for our basic needs.

It wasn't a day's journey. Many artistes don't get it right. My advice is that they should not live above their means of income. And those who are doing very well now should invest wisely because no condition is permanent".

What is the lesson here?

Marriage Alive Digest 10 Part Series on “Leading A Debt Free Life & Marriage” Part 1 (Continued) Has Debt Become Your Remedy To Your Problems?

Marriage Alive Digest 10 Part Series on

“Leading A Debt Free Life & Marriage”

Part 1 (Continued)

Has Debt Become Your Remedy To Your Problems?

Depending on your financial standing, the step-by-step on this series would help you reduce or eliminate your consumer debts.

1.       Are You Spending More Than You Earn?

If you belong to the category of over-spenders, the first thing you need to do is align your spending with your income, which means that you start living within the confines or limitations of what you earn.

The way to achieve handling over-spending is to employ the “envelope budgeting system”. Here you create a monthly plan, a budget that would apportion a precise amount of money to every category where you spend money. Your plan should certainly not exceed 100% of your income, and then make a 3 month pledge to stick to that plan.

Once you start living within your means, this prepares you for the next step on the debt elimination drive!

2.       At Least 5% Reduction in Spending

Eliminating cost from your budget may seem ordinary; but you can make it an exciting experience as well!

Imagine if you and your spouse begin a contest of finding 5% to cut in your daily budget list. Yes, some things like your mortgage payment or rent may not fall into this category; but a whole lot of what you spend money on will definitely will.

Let’s say you spend N79,000 on foodstuff or provisions every month. A cutting of 5% would mean about N4,000 a month. Perhaps you can buy some items in bulk and reduce your overall spending. The bottom-line is, look for what you can cut.

When couples seek to find cost reductions by percentage, it becomes fun, a game and a non-threatening way to eliminate expenses. And at the end of it, whoever wins can be treated to something special. Yet, no one truly loses!

Let’s assume you are able to reduce say, N2,500 out of just 5 spending category. That would automatically free about N12,500 every month which could be channeled towards paying your debt or building your emergency savings fund!

  

3.       You Must Have a Plan

Thirdly and lastly, once you have gotten used to living on your current income and you have succeed in reducing a certain percentage out of your spending, your last step would be  to create your debt elimination plan or roadmap.

You need to itemize or list all of your consumer debts, the balance you owe, and the expected payoff date. This list should be placed where you and your spouse can see it easily, and every time you pay off a debt, tick it off and celebrate it.

After paying your debt, take that payment amount and roll it over to your next debt in line and watch the balance melt away. Keep doing this until you finish paying off all of your debts.

Depending on your financial need, consider using a portion of any “extra cash” towards your debt repayment. If you stick with the plan, you’ll become debt-free, and free your family for a great financial future!

Considering the current economic situation, there is nothing more important than ensuring that you and your family are free from debt and prepared for whatever the future holds!