A couple of weeks ago, I wrote an article about Standing Your Ground.  I discussed collectors and a few best practices when dealing with them.  At the end of the article, I made the following statement:

I encourage you though to find a way to resolve your debts so that you can build a solid financial house.  A house with holes in a few windows (the bad debts) doesn’t look too appealing. Does it?

Although I used broken windows as an analogy, it’s actually a theory first introduced by James Wilson and George Kelling.  A portion of the theory states:

Consider a building with a few broken windows.  If the windows are not repaired, the tendency is for vandals to break a few more windows.  Eventually, they may even break into the building, and if it’s occupied, perhaps become squatters or light fires inside.

Or consider a sidewalk.  Some litter accumulates.  Soon, more litter accumulates.  Eventually, people even start leaving bags of trash from take-out restaurants there or breaking into cars.

The underlying meaning is that when a window is broken in the neighborhood, it should be fixed immediately.  This more than likely will deter further damage from those that are attracted to vandalize.  Cleaning up the sidewalk every day, prevents others from seeing the need add to the pile.

Now, as I consider it here, I think about broken windows in terms of the financial house most of us are striving to build.  We all have some type of structure we reside in whether it be a single family home, condo, an apartment, etc, right?  Well, when a window is broken, you have to make one of two choices:  fix it or ignore it.

To warn you of potential danger, I’ve created a short list of “windows” to be aware of and offer some encouragement of right action along the way.

• Credit Limits

When you’re trying to get your money train back on the right track, your credit limit is something you might want to keep under your radar.  Why?  There are two reasons: one – to avoid the trap of the “over the limit fee”, two – to help your credit scores.  A high balance greater than or equal to your maximum credit limit does not have a positive affect on your credit scores.  And how does it look to potential lenders?  Not good at all.  Though you may pay your bills on time every month, you’d be considered a high risk.  

• Credit Reports

Since we’ve looked at the credit limits being a broken window, let’s look at the larger picture of the full credit report.  It must be checked.  You have the right to obtain a free copy of your credit report once every twelve months from each major reporting agency: Experian, Equifax and TransUnion by way of www.annualcreditreport.com.  A good idea is to not request them all at once.  Spread the three requests out asking for one every four months checking for accuracy.

Xenophon says, “…but accuracy is everything.”  I couldn’t agree more.  Checking everything from the personal and public information, as well as the credit history.  If anything looks strange, you have a right to request an investigation.  Don’t let the litter accumulate.

• The Mail

This broken window will probably require some time a patience, but it’s repairable nonetheless.  You know that pile of bills you’ve got stuffed over in the corner? Yeah, that one.  It’s time to pull it all out and deal with it.  Yes, the time is now.  Believe me, it’s not going away. 

It’s easy to put it to the side and say, “I don’t have time for this right now.”  But if not now, when?  Small debts become collections, collections become judgments, judgments become garnishments.  A little extreme, but some collections may even lead to jail time (click here to see a recent newspaper article about that).

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The bottom line is this:  Being held hostage to unwanted guests is not going to be an option if you don’t repair your windows quickly.  As stated earlier, this is a short list of ideas (things we may ignore).  You could probably think of some examples from your own situation or someone you may know.  Feel free to write about it in the comments.

 Thank you so much for spending your time here with me today!

Image Cred gregoreosz

“One critical day is all you need to turn any “what if” in your life to “what is”.” – Jim Rohn

Have you ever had a day in your life when everything changed?  A day when you realized that life could no longer continue on the same path? 

My husband and I had a day such as that one.  It was a day that resulted in turning our financial future from one of burden to one of relief.  We didn’t realize at the time how life changing that day was.  Let me tell you about it.

Our Story…

For seven years, my husband and I slowly walked down a road destined for continuous struggle.  We married with high hopes and big dreams.  Dreams of financial security which included great careers and a stable family unit.

We didn’t realize it, but from day one, we were in debt.  Small debt, but debt nonetheless.  It included one auto loan and a small amount on a credit card.  We didn’t think much about it because everyone we knew had these same “normal” debt payments.

Slowly over the next few years, after two children and purchasing a home, we started to feel as though we were running in place.  Both of us were working the normal 40 hours per week and paying the bills, but not being able to really see the fruits of our labor.

Sure, we learned to save for a rainy day.  The problem was…it always seemed to rain.  Every time the savings would build, something would happen and we would have to use some of it.  It didn’t seem that we could ever continually build our savings and live comfortably.

Needless to say, this was very frustrating.  We kept asking ourselves the same question, “What – are – we – doing – wrong?  Life is not supposed to be lived this way!”

In principle, I believed in my Christian roots which were based on the promises of God (peace, prosperity and freedom).  But our reality was much different.

We were by no means poor and destitute.  We were both blessed to be college educated and earned great middle class salaries.  But we were missing a piece of the financial puzzle. 

The Wake-Up Call…

In late 2004, my husband and I reached a point where we felt like robots.  We were working just to have more of our money going to bills than savings.  That just didn’t feel right to me.

My mom was our saving grace.  In late 2004, she purchase the book, Total Money Makeover by Dave Ramsey and a cd accompaniment.  I listened to the cd’s first and was totally blown away by what this man was saying.  He made it sound so simple.  I finally had a clear vision of how to control our family’s finances.  But, I knew that in order for us to become debt free I was going to have to get my husband on board.  I gave the cd’s to him and to my surprise, he had the same reaction.  It took us a couple of weeks to read the book and create our plan, but…

We finally got it! 

We immediately…

• cashed in our savings bonds that were worth about $7,000 to start paying off the debt.
• created a budget and the debt snowball to determine how we were going to spend our money monthly and pay extra towards the debt.
• stopped using all forms of credit and used cash only.
• became more focused and invested time into learning about different ways to spend less money on daily expenditures.
• made time to do daily/weekly check-ups on spending.
• found numerous ways to stop wasting money.

That day began the process for us to tell our money what to do instead of wondering where it went.  The impact of this entire process has been life changing.  Not only financially, but mentally and physically as well.  And we have not looked back.  We always thought that if we could make more money, we’d be able to live life as we dreamed.   The truth was…

We didn’t need more income – we needed a plan.

Have you had “A Day That Turned Your Financial Life Around.”  What was that day like for you?  Tell us your story.  We’d love to read about it.  If you’re reading this article by Email or RSS, click here to come on over and share with us in the comments.

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A guest post written by  Dwight Anthony of financiallyeliteblog.com     

Are you Rich? When I speak those words, many people conjure up visions of being a millionaire on a personal luxury boat traveling around the world.

Unfortunately, this is not really the exact meaning of being ‘rich’ or bountiful that I am indeed talking about. Granted, you must take care of your finances and build wealth in order to be Financially Free someday, but I am speaking of the intrinsic value within you that really makes you rich. You see when you realize that everyday when you wake up and breathe oxygen into your lungs it’s a new day of renewal and one that you should give thanks or gratitude for the things that you have in your life right now.

There are many people that go about their life’s work, working a 9 to 5 job.  Some even have two or three jobs just so they can pay the bills. Is this you? If it is, make sure you have something you are working towards and reflect on why you are working in the first place. You must have a purpose. When we have a clearly defined endpoint in mind, we can more clearly navigate and reach the type of life that we ultimately want to live.

You’ve got to realize that if you are living, you have a new and blessed opportunity each day in order really capitalize on living life and really reaching your goals. You see there is a basic law that says, until we are grateful for what we already have, we won’t be given any more.

I implore you to meditate and really visualize what your life can really look like, make it measurable yet attainable. You see if you take the time and pay attention, you will find that you really are a lot richer in many different ways than just the financial aspect.

If you liked this post, engage us in some feedback or commenting below.

About the Author:  Dwight Anthony writes the blog financiallyeliteblog.com where he shares tools needed to become debt free, live your life fully and become successful.