Suze Orman's 9 Steps To Financial Freedom

It may seem strange that after all the "getting ready" of the first three steps in Suze Orman's 9 Steps To Financial Freedom, the first action you take does nothing to change your financial situation.

"It's not OK when you get sick, or when you die, to leave financial chaos behind you for everyone else to clean up." Suze Orman

Suze Orman's 9 Steps To Financial Freedom are about freedom from worry, freedom from concerns about money.

Knowing that your loved ones will be properly taken care of if the worst happens is a large part of having the peace of mind you need to build real wealth.

Make sure you have a will, including a testamentary trust, adequate life insurance, income protection insurance, and health insurance. If you are not sure what any of these are, or how to get them, consult a financial planner.

A testamentary trust puts your assets in a trust after your die. The trust can only be used for the benefit of the beneficiaries of your will. Depending on where you live, a testamentary trust will have a different set of rules, procedures, and benefits.

In some cases, a testamentary trust will prevent or reduce the loss of assets to death duties. In other cases, income from a testamentary trust is taxed at a lower rate. Your financial planner will be able to explain how a testamentary trust will benefit the beneficiaries of your will.

Life insurance may seem self-evident, but in fact there are many different types of life insurance, and you need to select the right type for your situation.

Income protection insurance will pay you an income if you are unable to work for a period of time. As you can imagine, this is a great relief at a time of sickness or injury.

Health insurance can be a surprise. Many people rely on an employer to provide health insurance, and assume that if they do not have a job with health benefits then they simply can't get health cover.

This is not true, and you should research the health insurance that is available privately. Accident and illness is the leading cause of bankruptcy in the US today, and knowing that you are protected against that possiblity provides great peace of mind.

Step 4 of Suze Orman's 8 Steps To Financial Freedom will provide the sense of security that is vital as a platform to allow you to progress to experiencing full financial freedom.

Read more of Suze Orman's 9 Steps To Financial Freedom.

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Getting out of debt is a major motivation for people to use refinancing to consolidate all of their debts. All the debts that a person has can be moved into one lower interest loan secured by property. Debt consolidation can be very helpful in getting out of debt, but refinancing for debt consolidation can cost people more money in the long term in certain cases, so exercise caution when using refinancing for this purpose.

Suze Orman says "If you're respectful of your money, and do what needs to be done with it, you will become like a magnet, attracting more and more money to yourself." Paying more interest than you need to is certainly not respectful!

Debt consolidation is where all of the debts that a person already has are moved into one debt consolidation loan, secured by real estate. The debts don't vanish - the person will still have to pay off the previous loans. However, the interest rate for the single loan will usually be much lower than the rates from the other loans in the past, because the loan is now secured.

While refinancing for debt consolidation can help to simplify one's life it can cost more money over time in some cases and that is not respectful either. You really need to think this through carefully. You don't want to do something for the purpose of getting out of debt, only to find yourself stuck with higher costs in the long run.

While there many be lower monthly payments in some cases that may result in more money to pay in the long term, because the term of the load may be much longer. You may have had a personal loan over five years, with three years remaining, and after refinancing for debt consolidation, you are now paying that loan off over thirty years. Of course, over all those years, even at a lower rate, you will end up paying more interest in total than if you kept up the higher payments for three years.

Another concern about refinancing for debt consolidation is that even though it can help to increase one's cash flow that may not be the case in all instances. It will depend on the types of debt you have currently. Online consolidation calculators can be used to help determine how much the refinancing will cost in the long term and how much of an increase in cash flow could be possible.

Of course, when you accomplish an increase in cash flow through refinancing for debt consolidation, you can't just go and spend it on living expenses. This will not help you with getting out of debt! You need to divert that extra cash flow straight back into paying off your debts faster. This will enable you to avoid some of that extra interest from making short-term debt into long term debt.

Ultimately, of course, getting out of debt will involve paying off the debt consolidation refinance mortgage as well.

Photo: B Francina

 High mileage auto refinancing - what a pain!

Don't take my word for it - if you haven't tried refinancing an older vehicle yourself, read what others have to say.

Top six links on high mileage auto refinancing:

 

1. A rant about the misleading nature of the (free AND paid) Google search results for "high mileage auto refinancing".

Google supposedly returns the most useful results for "high mileage auto refinancing", but my observation is that if you really do need high mileage auto refinancing, there is not a lot of joy in the search results that come up under "high mileage auto refinancing" ...

2. Some of the options for high mileage auto refinancing.

If your vehicle is pre-1997 and has travelled more than 80,000 miles, you may as well forget it. They advertise themselves under "high mileage auto refinancing", but anyone who thinks 80,000 miles is "high" needs to get out in their auto more often! ... However, all is not lost. High mileage auto refinancing may still be possible ...

3. More about options for  high mileage auto refinancing - and some great photos.

Human nature plays in, here, too. Borrowers are not blameless. When do you think someone is most likely to stop making their car payments?

That's right - when the sodding thing has broken down and they can't afford to repair it.

More often than not, in this situation, the lender is left with a worthless chunk of metal that they are best placed selling to a used parts dealer for pennies on the dollar.

Not a happy situation for a suited bean-counter with shareholders breathing down his or her neck about returns ...

4. An article about one of the lateral-thinking approaches to refinancing an older vehicle.

The first part of understanding refinancing for debt consolidation is to know what debt consolidation is. This is where all of the debts that a person already has - personal loans, credit cards, lines of credit, even auto loans - will be moved into one debt consolidation loan, secured by real estate ...

5. The difficulties of high mileage auto refinancing.

If you are buying an older car, you won't be able to consolidate before purchasing, so in that case you will need to go for cash out refinancing.



The benefit of that is that you have the joyous experience of telling the car-yard Nazis to take their high-priced finance deals and shove them, as you open a briefcase and pour a pile of cash on their desk ...

6. The Shaister Meister's take on  high mileage auto refinancing.

Many people search for high mileage auto refinancing, but it seems that there are not many choices for those who need to refinance older vehicles.

So it seems all is not lost. You may have to work a little harder, or get a little creative, but you can still refinance that older car with all those miles on it.

Which is just as well, after you spent all that time on DIY repairs! ;)

 

Photo: fabio pinteiro