Neither a borrower nor a lender be; for loan often losses both itself and friend, and borrowing dulls the edge of husbandry.
–William Shakespeare
By Randy Neumann
Those few words say a lot, especially today. In the last few weeks, Standard & Poor’s, one of the big three rating agencies, lowered the outlook for America’s long-term credit rating to “negative” from “stable.” At about the same time, the BRICS nations (Brazil, Russia, India, China and South Africa) signed an agreement to use their own currencies instead of the predominant U.S. dollar in issuing credit or grants to each other. Not surprisingly, the value of the U.S dollar continues to drop against other currencies.
If you’d like to get a lot of information, and maybe a little depressed, log onto USDebtClock.org. On this website you can see, in real time, the U.S. debt, debt per citizen, U.S. population, U.S. income taxpayers and a lot of other information. However, this column is not about debt and gloom, but rather, about how a lot of people have reduced their debt and some ideas on how to reduce yours.
A recent press release from the New York Fed says that household delinquencies are down 8.2 percent from the third quarter of 2009 and that nearly $1 trillion has been shaved from consumer debt since the third quarter of 2008, when everything bottomed out.
OK, our friends and neighbors are getting out of debt. How did they do it? One way is to create a budget. On one side of the ledger is, “What do you spend your money on?” On the other side is, “What is your income?”
Now, to a lot of people, a ledger sounds like an arcane accounting contraption. It’s not. Take a piece of paper, draw a line down the middle and you’ve created a ledger. On the top of left side of the paper write, “What do I spend my money on.” On the top of right side of the paper write, “Income.”
You may find writing down the truth to be cathartic. You might discover that spending $100 a month at “Fourbucks” is not a necessity. Ditto for $100 per month for lousy movies. Keep going. You may find that you can cut a lot of fat out of cable TV, eating out at fancy restaurants, buying at high-end retail stores, etc.
Modern technology can also save you money. I don’t know too many young people who have “land lines” in their dwellings, and there are phone apps that can scan barcodes and give you competitive prices as you shop.
OK, we worked on the expense side of the ledger, now for the income side. I know of people who are collecting unemployment because it’s easier than working. One way for those people to reduce their debt is to increase their income and “get a job.” This was strongly suggested to me by a “fan” in 1975.
I fought Duane Bobick in a main event at Madison Square Garden. The winner was scheduled to get a shot at the title against Muhammad Ali. I won the first three rounds of the fight, but was knocked down three times in the third round causing a loss by technical knockout. Prior to the fight, I said in an interview with a writer from the New York Times that although I had just graduated from Farleigh Dickinson University, I did not want to be a “cog in the corporate wheel.” In the article, the writer accurately quoted me as saying, “Death to me is a 9-to-5 job.”
Well, as I was coming down the steps (a little wobbly after 3 knockdowns) of the ring in the Garden, a “fan” (who had obviously read the story) ran up and shouted in my face, “Hey, Neumann. Get a job!”
So, if you’re sitting on your duff until unemployment runs out, go out and get a job.
Ditto for a family member in a similar position.
Jumping back to technology, it’s amazing what you can sell. Go to your basement and attic and look around. Then go to eBay, craigslist, etc. and you’ll be amazed at the market (and the asking prices) for this and that. What people collect, want and buy may surprise you. It wouldn’t be shocking if you have a few hundred dollars – or more – sitting around your house or in your garage. You might be able to pay off a couple of credit cards – or even a loan – with what you sell. Another way to save money is on transportation. Ditch the big car payment and drive a cheaper car that gets good MPG. Say goodbye to the oversized SUV (or the overpriced sports coupe). Get a car that makes sense instead of a statement.
These are just a few life style changes you can make to help you cut down your expenses and pay off your debts. Good luck!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for the individual. Randy Neumann CFP® is a registered representative with securities and insurance offered through LPL Financial. Member FINRA/SIPC. He can be reached at 12 Route 17N, Suite 115, Paramus, 201-291-9000.
