Category Archives for Uncategorized

Planning For The Future: Is A Living Trust Right For You?

As you get older, it is important to start planning ahead and thinking about how you will handle your estate. While no one likes to think about the inevitable, unfortunately it is a part of life. Estate planning, while something that can take a lot of time, doesn’t have to be a complicated process. It is something that everyone has to think about, whether they are planning on passing any of their assets onto their heirs or not.

A living trust is a helpful planning tool that will allow you to pass assets to your heirs as well as take care of you in the event that you become incapacitated unexpectedly, explains Don Robinson of ABC. For many, forming a living trust is a way for individuals to avoid probate, and may offer before death and after death advantages. So what are some of the advantages of creating a living trust?

Avoid Probate

Many people choose to create a living trust in order to avoid the legal process of probate. Probate is the first step that is taken after someone has passed in order to resolve any claims that may be made against the will before the property can be distributed to the heirs. When a person establishes a trust, and includes all of their assets in the living trust, they are able to pass to the beneficiaries after the trustee’s death without having to go through the process of probate, explains Jay Romano of the NY Times.

Doesn’t Become Public Record

When you are in the process of creating all of your estate planning documents, they are all kept private as long as you are alive. The moment you become decease however, if you have a will, it must be filed with the local probate court, automatically making it a public record. With a living trust, you don’t ever have to file the document with a court, either before or after your death, according to the Nolo website. Since your assets don’t have to go through probate, the person that you named as your trustee, without having to get permission from the courts, handles the distribution of your assets in private.

Protects Your Property

This goes along with being able to avoid probate. If you own multiple homes that are located in different states, placing those homes in your living trust can help to keep them out of probate. If you have questions on what property to place in your living trust the experts can help you decide. They can show you how best to set up your living trust in order to protect the property that you have worked so hard to obtain.

Reduce Taxes

Anytime someone who owns more than $650,000 worth of property dies, his or her estate is taxed. If you or your spouse expects to own that much, or more, property creating a living trust can save your estate from going through probate and save on the federal estate tax after your death, explains the Inc. website. If you fail to set up a living trust, your estate will be saddled with a huge estate tax bill after both of your deaths since the original survivor’s estate includes his or her share of the couple’s property plus everything they inherited from the deceased spouse.

Gives You More Control

When you create a living trust, you have complete control over when your beneficiaries gain control of their inheritance. Unlike when you set up a will, you can stipulate in the trust documents that your heirs can’t access the majority of the assets until a certain time when they can be financially responsible. If you are leaving your estate to your grandchildren, you can make sure that they can’t access the inheritance until they are mature enough to handle the responsibility of the finances. With a living trust you get to set the stipulations as to when the money and assets can be accessed.

No one likes to think about his or her death. But in order to make sure that your assets and estate are handled correctly it is important to take care of your estate planning before it is too late. A helpful tool in estate planning that is becoming more popular as the baby boomers are entering into retirement is the living trust. With the living trusts, they can have more control over their estates while they are alive, and be able to continue to use their assets if they are suddenly incapacitated. Creating a living trust also keeps more of their estate out of the hands of the government and allows their heirs to gain access to their inheritance quicker by avoiding probate.

How Does The Southwest Airlines Rapid Rewards Program Work?

Southwest Airlines works together with Chase Bank to provide loyal customers with the Rapid Rewards credit card program. These cards are available for both regular and business travelers who frequently use Southwest Airlines to get to where they need to go. They will receive preferential treatment at the airport as well as gain access to great deals on hotels, car rentals and events only available to Rapid Rewards members. Points can be redeemed for flights, hotels, cruises and even gift cards.

The Rapid Rewards Plus Card gives cardholders 25,000 award points when they spend $1,000 in the first three months of opening an account. Cardholders will receive two points per dollar spent on purchases made through Southwest Airlines or AirTran Airways as well as any purchases they make with Rapid Rewards partners for hotels and car rentals. They will also receive 3,000 bonus points on their cardholder anniversary. The card has an annual fee of $69 that is applied to the cardholder’s first billing statement.

The Rapid Rewards Premier Card is a top tier credit card with options for both business and leisure travelers. While the standard bonus award is the same as that offered to Plus card holders, Premier card members have access to more benefits that have a better rate of return on their expenditures. Cardholders will receive 6,000 awards points every year for their cardholder anniversary. There are no foreign transaction fees for purchases made abroad using the card. In addition, Premier cardholders are allowed to earn qualifying points that boost them towards A-list status. Plus card holders do not have this privilege. There are no blackout dates for Premier card holders who want to redeem their miles and get on a flight. The card has an annual fee of $99, which is applied to the first billing statement.

Some people may be able to apply for and receive a great Southwest credit card offer if they meet certain criteria as observed by milecards.com. Travelers who carry little to no debt and have an excellent credit score will definitely benefit from the perks offered to Rapid Rewards program members. In some instances, travelers may want the perks that opening a Rapid Rewards card offers without the long-term responsibility of owning a credit card linked to the airline. For example, the opening offers provided by the Rapid Rewards Premier card give the user the ability to earn up to 50,000 bonus airline miles when they spend $2,000 on the card within the first three months of receiving it. This is a special limited offer that happens on rare occasions. Award points equalling 50,000 amount to over $700 worth of airfare, which is an incredible deal if one can take advantage of it. However, what should they do if they do not want to open another credit card account?

One approach that some people take is to apply for a credit card, be approved for it, and then close the account after the initial rewards have been collected. This technique is often used by consumers with good credit scores, no existing debt obligations and solid proof of adequate income. It is sometimes referred to as “churning”. Cardholders get to reap the rewards without worrying about holding onto a credit card for a long period of time. Where Southwest Airlines is concerned, this can be a great way to get a free flight for the cardholder and a traveling companion. If they qualify for the current deal, then they will receive enough points to redeem a “Wanna Get Away” flight.

However, this will only work if the person applying does not currently hold a Rapid Rewards card. This means that their application for a new card that offers this 50,000 bonus miles award will be turned down if they have already redeemed your initial bonus offer after opening the account and spending a certain amount of money. Applicants may earn one bonus offer for their personal credit card and one for their business card, which means that they may get a very good reward for opening two accounts.

In order to do this, the applicant needs to have excellent credit. “Churning” only works well if the applicant is on top of their finances and can prove they will pay the balance in full each month. After approval, they can close the account once it has been paid off and the bonus miles have been awarded. Applicants should be careful not to open too many cards at one time, as this can backfire and lead to their applications being denied.

For those who can afford to pay off their balance in full every single month, a Rapid Rewards Plus or Premier credit card can be a great way to rack up serious rewards while traveling for business or pleasure. It’s never been a better time to fly with Southwest Airlines!

Managing Portfolio Risk For Long-Term Investment Success

The following post is by Amanda Green. Enjoy! 

Portfolio risk management is important for preserving initial capital and earning return with some certainty. However, it comes with mind-numbing complexity, and each decision can involve risk amid a never-ending stream of calculations.

Because in the world of investment, it’s bound that a decision or two leave a dent in your portfolio. Add to that the problems pertaining to faulty information or insider trading and you have several risks to worry about.

So, how do you protect yourself against risk and lessen the adverse impact on your portfolio? There are many different guidelines for risk management, but there are a few strategies that can keep your portfolio on a healthy, profitable course, without forcing you to purchase derivatives or quick decision making. Here’s what you can do:

Integrate a safe haven component

What is commonly happening in the global market is that the more risky assets such as stocks and commodities could rally one day. Therefore the sentiment can change all of a sudden, so as an investor, it is usual to take advantage of any opportunities given the fluctuations. More specially, it is recommended that you keep safe heaven assets in your portfolio.

At the same time, you need to understand ETFs and mutual funds you are purchasing. This is where you could benefit from a complex body of investment knowledge, which is attainable through certification programs and courses. Such knowledge would help you integrate the right asset component depending on the nature of your portfolio.

Diversify

Diversification includes holding different asset classes including commodities, property, bonds and equities for going through troubled times during asset-specific downturns. For instance, if you are holding an equal weight in all of these asset classes, and bonds go haywire, the rest three will make sure your portfolio is able to hold the fort.

Diversification can also be used to spread risks in different sectors. This year, Goldman predicts steep losses for gold; however, having your portfolio spread to more than one sector would prevent you from feeling the effects if gold was one of your investment. Lastly, you could diversity on the stock specific level. Holding stocks of more than a single company in a sector reduces risk specific to stocks.

Rebalance your investment portfolio

You’ll need to rebalance your portfolio every 12 months. It means bringing back your portfolio to its initial asset allocation. This is important because investments may go out of sync with your initial asset allocation over time; this usually happens when one of your portfolio assets, typically equities, grow at a faster pace than the others.

For example, if equities represent 25% of your portfolio at the start of the year, but have grown in value to 35% after 12 months, you’ll need to sell some of your holding and buy an underweight asset to rebalance to your original allocation.

Managing risk is vital, because it can keep your portfolio safe from a drawdown. These tips would help in managing your exposure to risk and keep unexpected losses to a minimum.

3 Ideas For People Who Aren’t Quite Ready to Give Up Work Just Yet

The following post is by Nigel West. Enjoy!

Retirement is bliss; after all, we work for all of our lives praying for the sanctity of retirement, so why shouldn’t we enjoy it? Unfortunately, because of how hectic our working lives are, we rarely get the chance to enjoy our retirement, with most people (at some stage at least) missing working life. So, what if you’re of retirement age but not ready to give up work completely? Here are just 3 ideas of occupations you could take up to help pass the time.

Volunteering at a Charity

You may miss life in the office, but you probably won’t miss the stress that accompanies it. Working in an office with others is great for socializing and making new friends, but the stress levels are obscenely high. If you love the environment but don’t need the stress in your life anymore, then consider something like volunteering at a charity.

You can still socialize with staff and customers alike, but there’s nowhere near the volume of stress, with the working atmosphere being far more relaxed. Sound like your cup of tea?

Running a (Very) Small Business from Home

If you’re someone who would much rather stay close to home then you could even consider setting up a home business. This really doesn’t have to be anything stressful, but it could incorporate anything from dog walking to sewing repairs.

There’s no reason why a business like this has to take over your life and, because you’re effectively working freelance from home, you’re always able to turn work down without feeling guilty that you may be letting someone down.

Take Up a Profitable Hobby

Hobbies are one thing that keeps everyone busy, and retirement is the perfect time to try everything you didn’t have time for when you were busy working in the office. If this hobby is a profitable one, then that’s even better and it can help bolster your income. As opposed to betting or gambling, however, you should think about whether you can make something that is sellable – knitting perhaps? Or take up a hobby that shows your strengths.

Of course, knitting and trading are only two examples (although they really show the range of options on offer). The world is your oyster when it comes to hobbies, so make sure you find one that’s perfect for you.

To conclude, retirement is peaceful, but there’s absolutely no reason that it should be boring. Just because you’re retired doesn’t mean that you’re unable to have fun with work and there are a number of things that you can do to break up your days. From volunteering at charity shops to setting up a small home business, the sky is effectively your limit, so go wild and have fun. You’ve got the rest of your life to relax, remember.

How To Find An Insurance Agent

The following is a guest post. Enjoy! 

When searching for auto insurance, the actual insurance agent you will be dealing with may be more important than the name of the company holding the policy. This agent will be the person you deal with on a regular basis. If you have a question about your policy or are trying to make a claim, the agent assigned to your account is the one with whom you will be in contact with. That is why it is important to find a good agent that has expert knowledge and years of experience in the insurance industry.

Finding an Agent

One of the best ways to find an agent is to ask the people you know. Your friends and family can give you the referrals that they have had good experiences with. They can also give you a heads up on which insurance companies and agents to avoid. Another option is to do a quick search online for local agents and read the reviews posted by pervious and current clients. A good agent will need to be trustworthy and someone with who you feel comfortable talking and interacting with. To know if you feel comfortable with a particular agent simply talk to them for a few minutes. He or she will be learning some very private information about yourself so being comfortable and trusting them should be a huge factor in your decision.

The vice president of Navion Insurance Associates, Chad Bitterlich, says that consumers looking for an agent should seek out those who have experience outside of the sales portion of the auto insurance industry, such as claims or underwriting. Mr. Bitterlich also warns consumers to beware of agents who merely want to give you a cheap price quote since the agent should be more concerned about the amount of coverage needed over the actual price of the coverage.

Remember to always check with your state’s insurance department to make sure the agent has a valid license with good standing. And always keep copies of all proposals, applications, quotes and other documents you receive from the agent.

Captive Vs Independent Agents

Captive agents are those who only work with one carrier while independent agents can represent multiple carriers and offer a wide selection of quotes and coverage that a captive agent cannot offer. If you are interesting in shopping around at different insurance carriers, an independent agent is the way to go. They can provide you with multiple quotes from various insurance carriers to help ensure you are getting the best coverage available for a great price.

What Circumstances Are Best Suited For Structured Settlements ?

The following is a guest post. Enjoy!

When you have been awarded the ruling in a case such as one where you have been injured personally in a car accident or in any accident or you have just been awarded compensation in a case of workman’s compensation claim or a negligent death case you would in all probability receive your money in the form of an annuity. This annuity will pay you your claim in the form of periodic payments and is known as structured settlements. These forms of annuity are superb for people whose financial needs are met by the periodic payments received from structured settlement. And the fact that you get the advantage of not paying tax on the amount received from these annuities makes up for the icing on the cake. Structured settlement is without any doubt the best form of claiming huge amounts of money to be received in the form of settlements in many a case.

The reason why structured settlement came into picture

It was witnessed by the lawmakers of the country that the plaintiffs who won any compensation for damages from defendants did not possess any financial management skill to manage the large chunk of lump sum amount received by them in the form of settlement of a case. Thus, even though this money would suffice enough to pay for the medical expenses and provide for living expenses, a large portion of it would be utilized in a manner that does not actually improve the plaintiff’s condition.

Keeping this factor in mind The Congress in 1982, passed The Periodic payment Settlement Act which encouraged payment of compensation in personal injury cases or cases related to workmen compensation claim or wrongful death in the form of structured settlement. It was also put forth that the compensation would be paid not as a lump sum amount but in installments over a period so that the plaintiff can enjoy a hearty interest on the same. Moreover, the Government made the amount receivable free from tax, thus, adding to the benefits of structured settlements.

The great advantages of structured settlements

A structured settlement is nothing but an annuity which is made use of to pay compensation to plaintiffs by the defendants. There are many advantages of such structured settlements, some of which are highlighted as below:

• Tax Free: One of the most important advantages of structured settlements is that the interest which accrues on them or if any capital gain arises on sale of such annuity, then the amount is absolutely free from any federal tax or local income tax or state tax. This implies that the saving in a structured settlement will be much more than in any other investment of the same nature.
• Not affected by bull or bear phase of economy: A great thing about structured settlements is that they are not at all affected by the rise or fall in economy. Whether the financial market is in a bearish phase or in a bullish phase, the structured settlement will continue to pay you interest at the same rate and will not be affected by it.
• Beneficial even after death: In case of death of the plaintiff, the beneficiaries of the recipient may continue to receive such tax free payments from the insurance company.
• The payments can be made to begin immediately or may be deferred as per the will of the investor. The payments can be made to be scheduled for any length of time as desired by the investor.

The cases where structured settlement is ideal form of legal settlement

Structured settlements are ideal in a number of cases such as personal injury case, worker compensation claim and wrongful death cases. It is seen that in maximum number of such cases, structured settlement is received by people in the form of legal settlement. These are the main reasons why structured settlements are ideal for these cases:

• Wrongful death: In case of wrongful death, structured settlements help the family of the deceased. If the plaintiffs i.e. the family of the person who is made to be the subject in case of a wrongful death claim wins the case then the legal settlement received in the form of structured settlement would help to aid the family financially and support them in time of need. Since the amount is received over a period of time, the family has a fixed source of income in this form.
• Workmen’s Compensation Claim: When any workmen get injured while being on work, they receive compensation from the employer. It must however be proved by the workman that the injury has taken place in due course of employment and if this condition is fulfilled then he is paid compensation in the form of structured settlements. This helps the worker in meeting his medical expenses and supporting his family while he gets fit again to work. The amount received in periodic amounts with tax free interest supports the worker and his family as a substitute to the salary being received by the worker.
• Personal injury: In case of a personal injury case, when the plaintiff wins a award then it should be paid in the form of a structured settlement since it is paid on an annual basis or monthly basis and helps the plaintiff to meet his medical costs as well as legal costs.

Debt Lag? – 5 Tips for Paying off those Holiday Debts ASAP

The following is a guest post. Enjoy! 

Everyone likes to enjoy themselves on their holidays. But unfortunately, many people end up spending more than they actually have in pursuit of these good times. If you’re struggling to pay off your holiday debts, and need a little help getting back on track, read on. Here are 5 tips for paying off those debts ASAP.

1. Consolidate those debts.

Trying to keep track of multiple debts is not only a headache, but could be costing you more in monthly repayments. If you’re struggling to keep account of looming multiple debts, consolidate your debts into the one payment. Doing this will more easily allow you to keep track of your debt repayment progress, and with competitive debt consolidator interest rates, it may also save you a lot of money.

2. Talk to your credit card companies.

It never hurts to contact your credit card company directly, and explain your financial situation if you’re struggling to make ends meet and pay off your debt. Many companies may turn a compassionate ear to your tricky situation and may just lower your interest rate, or waive late penalty fees. A little help here can really help you get back on track to a better financial future.

3. Create a budget, and stick to it.

If you find yourself in an unfavorable financial situation, and are finding it difficult getting on top of your debts, it’s time to sit down and take stock of where you are (financially), and where you need to go (a place of being debt free). Creating a budget and sticking to it can help you get out of this financial quagmire of sorts. Of course, once the budget is created you’ll need to stick to it almost religiously to pull yourself back into a better financial standing. It helps to tell someone about your budget and get them to keep an eye on you. This social accountability can help you stay on track.

4. Sell whatever you no longer need.

If you’re like most people, you’ll have valuable items just collecting dust around the home. Why not gather these items up, and sell them for cold, hard cash (which you can then put towards paying off your debt)? Trying using online auction websites like Ebay.com, services such as the Trading Post and local classifieds, or the old fashioned garage sale. Not only will selling little used items help you pay off your looming debt(s), but it will also free up more space around the home.

5. Make more than the minimum repayment.

By only paying off the minimum payment each month, you’ll be doing precious little to reduce your debt(s). In fact, this way, all you’ll be doing is paying off the interest, without paying off your actual debt. And this will keep you in debt for some time to come. That’s why it’s important you pay as much as possible on your debt as soon as you can to quickly get back into the black.

Getting out of debt can be a struggle at times. Between making ends meet, paying off bills, and generally living your life, setting aside extra funds to pay off looming debts can be difficult indeed. Try putting the above into practice the next time you find yourself in debt, and hopefully you’ll be back in the clear in no time at all.

***Photo courtesy of http://www.flickr.com/photos/59937401@N07/7214443324/sizes/l/

An Introduction to Technical Analysis and Indicators

The following is a guest post. Enjoy! 

Technical analysis is a powerful method of utilizing historical price data for the prediction of future price behavior and it has a variety of technical indicators in its arsenal.

Forex traders’ biggest challenge is what to trade next and technical and fundamental analyses are the two main methods used to forecast a currency pair’s price move. Even though they differ vastly in terms of methodology, they both have the same objective and could prove useful in predicting future price behavior. Fundamental analysis concentrates on elements that cause price action but technical analysis is more focused on the effects on price action.

Technical analysis in the forex markets utilizes historical data and past market action of financial instruments for the prediction of upcoming price movements and trends. Technical analysts are very reliant on price charts as they provide the easiest method to visualize historical data. This method relies on the basis that the current market price of a financial instrument is a reflection of everything that affects it, such as supply and demand, geopolitical factors, and the economy’s state of health in the case of a currency. Another principle of technical analysis is that prices create patterns, and once these patterns are identified there is a probability that they will move in a specific direction. Many types of patterns which were repeated over time have been recorded during the last century, and they provide evidence that future ones may behave in a similar way.

Predicting the future state and direction of forex markets by using technical analysis is helped by a variety of indicators. These are measurements calculated from historical price data of a currency pair and they are estimators of upcoming price level or at least the upcoming price direction. Some popular technical indicators are the Moving Averages (MA), Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), and Bollinger Bands. All of these indicators are really easy to use by technical analysts of any experience level because they are included in all top trading platforms such as the MT4, and they automatically perform the calculations needed.

The prices of forex instruments are liquid and sometimes change because of volatility, but a single drop in price is not a confirmation of a downtrend and a rise is not strictly the beginning of an uptrend. The MA acts as a trend following indicator and even though it will not predict future market direction, it will help to confirm a trend once it has begun. The MACD is also a famous trend following indicator, which may be able to confirm a trend and it also may predict a change in trend direction.

Other indicators, like the RSI, are momentum signals and they give information on overbought and oversold conditions of a currency pair. By having this type of information, the trader may be able to predict whether the currency will change trend direction. In a similar way, Bollinger Bands take on another method to signal trend reversals of currency prices and hence provide buy or sell tips.

The descriptions of the above mentioned technical indicators are merely an introduction, and a proper study of the properties and methodology of each one of them should be undertaken by prospective technical analysts who want to find more on how these tools can be utilized to take advantage of the power of historical price data.

6 Differences Between Variable Annuities and Mutual Funds

The following is a guest post. Enjoy!

Investing your money today can bring you significant returns tomorrow. The key to maximizing financial growth is to put your money in the right investment program. Variable annuities and mutual funds are both viable options, but which one is better for you? To find the answer to this question, you need to understand the differences between variable annuities and mutual funds.

Here are 6 key differences:

Insurance Product vs. Investment Vehicle

• Variable annuities are insurance products that you buy from an insurance company. Under a contractual agreement you contribute money, either through serial payments or in a lump sum, and the insurance company agrees to return the money back to you at a set time in the future. Meanwhile, the insurance company invests your funds in a series of mutual funds, otherwise known as subaccounts.

• Mutual funds are investment vehicles in which a money manager collects your cash, combines it with other peoples’ cash, and invests it in stocks, bonds, and similar assets. Mutual fund programs give groups of people access to a diverse portfolio of securities they would most likely not be able to afford with their own capital.

Lifetime Payment Guarantee vs. No Guarantee

• Annuity holders are promised a lifetime of regular payments once they reach their Payout Phase. Depending on market performance, the payments may be small or large, but they continue until death.

• Mutual funds make no such guarantee. You might earn enough cash to support you for decades to come, but you might not. There are no insurance benefits to be had in a mutual fund plan.

Survivor Benefit vs. No Survivor Benefit

• Annuity beneficiaries are guaranteed a survivor benefit in the event of an annuity holder’s death.  They receive whichever is greater, the sum of all the monies in the account or a guaranteed minimum payment for life.

• Mutual fund programs do not guarantee a survivor benefit to beneficiaries in the event of a fund holder’s death.

Tax-Deferred vs. Taxable

• Money earned by an annuity is not taxed until the money is withdrawn. This tax deferrment allows annuity holders to avoid paying the government for money they are not yet using. When the money is finally withrawn, it is then taxed at a regular income tax rate.

• Money earned by mutual funds is taxable on a yearly basis. Tax on all dividends and distributed capital gains from mutual funds must be paid in the year the money is received. When the money is finally withdrawn, it is not taxed again.

Withdrawal Penalties vs. No Withdrawal Penalties

• If you’re not yet 59 ½ and you need to get your hands on more than 10 percent of the accumulated cash in your annuity, you’re going to pay a tax penalty on that money. Money taken out of annuity before the standard 7-10 year surrender period is over comes with a penalty price tag, too.

• If your money is tied up in mutual funds, you’re free to access it at any time without paying a tax penalty.

Long-Term Goals vs. Any Term Goals

• Variable annuities are designed specifically for long-term retirement saving.  They don’t make people rich overnight, and a person who doesn’t have the time to sit around waiting around for funds to grow would be better served elsewhere.

• Mutual funds are designed to serve both long and short term financial goals.

Major Fees vs. Minor Fees

• Annuities are notorious for their extraordinary fees. The insurance company charges you a “mortality and expense fee” for the handling of your money. You also pay subaccount fees, insurance fees, and numerous taxes.

• Mutual funds charge an upfront administrative fee. You also pay account mangement fees, purchase fees, and other assorted charges. Overall, the fees typically associated with mutual funds are lower than annuity fees.

Depending on who you talk to, one of these investment plans can seem a lot better than the other one.  In reality, both plans offer significant benefits and drawbacks.  Before entrusting your hard earned money to an insurance company or money manager, consult a financial advisor.

***Photo courtesy of http://www.flickr.com/photos/76657755@N04/7027604401/

Accept Your New Life to Make Permanent Changes

The following post is by MPFJ staff writer, Melissa Batai.  Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food.  She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

My cousin is a sucker for those Facebook pages that ask you to pray for so and so who is battling such and such physical problems.

I resisted clicking on any of them until I saw the cute face of Caleb, a little baby who had multiple heart defects.  Something about his smile and his mother’s openness in her Facebook postings held my attention.

Even when his condition deteriorated so badly that I felt certain I would be reading about his death soon (at less than 6 months old), I kept reading in the hopes that maybe, just maybe, he’d get the heart transplant he needed.  And then he did last summer!

Now little Caleb is 10 months old and home with his family, though he’s not completely medically healed yet.  On her December 30th post, his mother shared that it was her eighth wedding anniversary.

She said that she was crying to her husband that they’ll never have their old life back, which was much less stressful than their current one.  (However, she’s obviously very thankful that Caleb is still with them.)  To which her husband replied, “We cannot make our old life an idol, as something to be attained again, because it may never look like that again” (Pray for Caleb).

That statement stuck with me all day, and then into the next day.  Of course, this family has a great adjustment to make to their lifestyle as they learn to care for a medically fragile child who may or may not have delays.

But, even those of us who don’t face such challenges would be wise to heed his words.

We all have to let go of the past to flourish in the present.

Paying Down Debt and Staying Out of Debt

When you’re on a mission to pay down debt, you change your lifestyle radically.

You stop going out to eat.  Perhaps you buy used close and drive an old beater car.  You cut corners and do without.  All of your extra money goes on the debt.  Sometimes paying off that debt is all you can think about.

Yet, what happens when the debt is gone?  If you haven’t changed your mindset and adjusted to a new normal, you may go right back into debt.

I have a friend who was gazelle intense.  She and her family paid down all of their debt (over $40,000) in less than two years.  I was so impressed (and, I admit, a little jealous).  But just recently she confided to me that she and her husband are back in debt, and not just a little bit of debt.  In less than 2 years since becoming debt free, they acquired another $35,000 in debt.

She explained that they felt like they could relax and live it up because they’d worked so hard to pay off the debt.  Then, when she lost her job, they figured it was only temporary.  They didn’t scale back their lifestyle because they didn’t want to start scrimping and saving again.  They didn’t want to feel the pain of the struggle.

To her and her husband, being mindful of their money and saying “no” to things like going to the coffee shop and dinners out as a family was something they could endure temporarily, but they couldn’t accept that this way of life might be a permanent change for them.

They kept dreaming of their old life.  They started living the way they had before, and now they have the debt to match.

Losing Weight and Keeping It Off

This phenomenon of temporarily enduring what we perceive as difficult circumstances only to go back to our old behaviors is the number one reason why people fail at weight loss.  Time and time again we see people who follow a diet to the letter and hit their target weight.  Then, a few months or years later, the weight is all back on, plus more.  Kirstie Alley is a celebrity who has regularly lost weight only to gain it all back as has Oprah Winfrey.

Unfortunately, I’m no different in that regard.  This past year, I lost 75 pounds following a strict Paleo Auto Immune diet to heal my digestive issues.

I know that sugar is my weakness, and for five months, I had absolutely no sweets.  Then one day I thought, “I can have just a little bit.”  Well, guess what?  There is no having a little bit for me.  I thought I could handle a little bit in early October and had my first bit of a sweet then.  Now, almost 4 months later, I have had much more than a “little bit” of sweets and I’ve gained 20 pounds back.  I know I’ve also delayed my healing.

Last week I finally gave up sugar again.  This time I know that thinking, “I can have just a little bit” is a dangerous thought for me.  Much like an alcoholic, I can’t have just a little bit.  If I do, I open the flood gates and go on a sugar bender.

My new reality is that I can’t have sweets.  I have to change my perception of my life.  That old way of life is gone.  While maybe a long time ago I could handle having only a bit of sweets, I can’t any more.  Sweet treats just can’t be in my life.

Try A Behavior Change Just for Day

One of the best ways to accept your new reality is to write down what you want for your life.  If you want to be free of debt and have a healthy savings account, perhaps going out to eat, as much as you used to like it, just isn’t right for you anymore.  When you’re faced with a challenge, think about your goals and ask yourself if going out for coffee, for instance, will help you meet your bottom line?  If not, then know that this behavior, while you may have loved it in your old lifestyle, isn’t a fit for now.

Another thing to do is to use some of the strategies from Alcoholics Anonymous.  Those using the AA program can’t think, “I’ll never have alcohol again” because that thought is too overwhelming.  Instead, they need to think, “I won’t have alcohol this hour” or if they’re further in their journey, “I won’t have alcohol today.”  That’s how I need to know think of sugar.  I won’t have sugar today.  But string together days of not having it “today”, and you develop a new habit that is better for you and helps you reach your current goals.

Embrace Your New Lifestyle

Finally, don’t look at yourself as a victim.  Rather than thinking, “I can’t hire a babysitter and go to the movies with my spouse because we don’t have the money,” think, “I’m choosing to be responsible with my money and do what will help us reach our financial goals.”

Also, remind yourself that you’re changing your life so that you will be financially comfortable for years.  You choose this over struggling financially to make minimum payments on your debt.  Remind yourself, “I choose temporary discomfort of not being able to do what I want to do so that I have the opportunity to live a better life not just now but in the future.”

How about you all? Have you been able to make permanent life changes?  What has helped you to be able to do so?

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/alan-light/251536635/sizes/o/