Category Archives: debt

A True Story from Frances Godek Goodman’s Financial Counseling Sessions – Open Your Mind To Prosperity

Open your mind to prosperity.

I’ve heard the words “could’ve” and “should’ve” during my financial counseling sessions at the Submarine Base in Groton, CT, on more than one occasion.  In this context the “could’ve” and “should’ve” refer to the failure to save money to meet living expenses and debt payments.

One of my “could’ve” “should’ve” clients came to see me because he was on the verge of losing his security clearance.  He had excessive debt and needed help.  Of serious concern for him was that he had only 2 more years before he could retire.  He came to see me when our government was reducing the size of our military, and a service member’s debt was one reason for dismissal.

I reviewed his financial situation and together we worked on a plan to reduce his debt.  The plan was workable and would show the military that he was serious about getting his financial house in order.

I gave him resources to help him get moneywise.  Let me add that he was single – never married with no dependents.  Thus, it was easier for him to reduce some of his expenses, including his very expensive vacations.

I told him to check in with me periodically so that jointly we could review his progress.  Six months later he checked in with me.  He was in panic mode.  His dismissal was almost certain.  I asked him where he put the financial plan we worked on together and all the material I gave him to help with his finances.  He said it was in his car.  I asked him if he could get all of it from his car.  He left and was back in a flash.  I put all the financial material I gave him in a large manila envelope which I sealed.  When he handed me the envelope, it was obvious he never opened it!  I asked him why he didn’t look at the material I gave him.  He had no answer for me.  He was dismissed from the military.  There was nothing I could do for him.  I had similar cases in which service members said that they were going to join the reserves to finish their service years to obtain retirement benefits.  I passed that message along to him and he smiled as he left my office.  Procrastination was a very expense lesson for him to learn.

Saving money requires discipline.  Here are a few tips for making it a habit.

  1.  Pay yourself first.  Most financial advisers suggest you save 10 to 15 percent of your net income.  If you cannot afford this much, at least set aside   as much as you can.
  2.  Think of saving as a bill you must pay – as an expense.
  3.   Collect loose change.  Empty your pockets and wallet at the end of each day and put the change in a container.  Every so often, deposit the change    into savings or a retirement account (if you are working).
  4.  Create a scrimp and save day.  Whatever you would have spent on that day for lunch, coffee, snacks or whatever, put that money into savings.

Truly, I do realize how difficult it is for many people to save money.  However, you are the one that must come up with some imaginative/creative ways to start saving even in small amounts. 

I had the most enjoyable experience to travel to Portugal and Spain in 2016.  One of the stops on my tour was Gibraltar.  This picture I am using here is of the lighthouse on Gibraltar.  It was taken by a fellow traveler.  I’ve used a lighthouse for this blog for a symbolic reason.  A lighthouse can be your beacon that points to where you want to go – hopefully to a bright financial future. 

Lastly, talking about being creative – during WWII Gibraltar was a base used by the Allies to defeat Hitler.  The Allies dug caves into the sides of Gibraltar.  I asked our tour guide if he knew what they did with all the dirt from digging out those caves.  He said that the dirt was used to make the runway for airplanes.  That runway is still used today.  Talk about imagination, creativity and solving a problem! 

Thank you for visiting, and I wish all of you happiness and prosperity.

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The Pilgrims had their money problems, too!

Just a little something about me. I live in Mystic, CT, and I frequently walk around Mystic to get some exercise. On November 2, 2016, I stopped on the boardwalk that’s part of a park along the Mystic River. I couldn’t understand why there were so many people standing around with very expensive cameras. Less than 5 minutes later, the Mayflower 2 was sailing towards the Mystic Bridge. I caught this picture with my iPhone! The Mayflower 2 was headed towards the Mystic Seaport where it is being renovated. The renovation will take 2 or more years to complete.

I thought it might be interesting, for some of us at least, to review some history about the settling of America as well as some information about its financial beginnings.

I have taken the following information from the website of the Pilgrim Hall Museum, located in Plymouth, MA.

We all know – or think we know – who the Pilgrims were. We know them as people on the cutting edge of a religious reformation that altered every aspect of European society.

But what many people may not realize is that Pilgrims were also on the cutting edge of a great economic change. Their voyage was not just an adventure; it was an investment.

Most of the Pilgrims were not wealthy. They knew they would need a lot of money if their new colony in America were to be a success: money to rent a ship and crew, money for supplies for the voyage, money to support the colony until it could become economically self-sufficient.

And so, the Pilgrims asked some London merchants to invest in the colony. After much negotiation, 70 merchants decided to form a joint stock company with the Pilgrims. Because this was a risky venture, they were known as “merchant adventurers.”

We know that the merchant adventurers invested between 1200 pounds and 1600 pounds before the Mayflower sailed.

Shares were issued, each worth 10 pounds. The merchant adventurers bought their shares. The adult colonists – who were after all, putting life and livelihood on the line – were each given one share and given the option to purchase more shares. For the first 7 years, everything remained in the “common stock,” owned by all the shareholders. The common stock would furnish the Pilgrims with food, clothing and tools. At the end of 7 years, the shareholders (Pilgrims and merchant adventurers alike) would divide equally the capital and profits (land, houses and goods).

In the meantime, the Pilgrims planned to engage in businesses such as lumbering and fishing, sending wood and fish to England to be sold.

In actuality, however, instead of sending back goods, the Pilgrims had to ask the merchant adventurers for even more money, again and again and again. The Pilgrims’ debt became very large very quickly. The merchant adventurers were not happy and the Pilgrims agreed to buy them out.

Beginning in 1628, the Pilgrims were to pay the merchants 200 pounds a year until they had paid 1800 pounds.

By that time, with the extra money invested in the struggling little colony, the debt may have been as high as 7000 pounds. The merchant adventurers decided, however, that they would rather be sure of having some of their investment returned instead of running the risk of losing it all. Only three of the merchant adventurers continued as partners with the Pilgrims as they struggled to pay off their debt.

Although the money to be repaid was not nearly as much as they had borrowed, it was still a large amount of money for the Pilgrims. One of the ways they found to make the money they needed to repay their debt was through the fur trade, particularly the trade in beaver fur.

While it lasted, fur trading had a very important effect on the development of America. However, the fur trade was far from simple.

The reason? Financial rules were still being invented. Bookkeeping was not standardized. Communications were poor. Not only were there many unethical businessmen as there are today, but the rules of business ethics were not universally agreed upon. Commercial practices were largely unregulated. Even the simplest of transactions were fraught with potential danger.

There is much more to read on the Pilgrim Hall Museum website.


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Pay Off Small Debts First?

Hello Friends,

Paying off small debts first may be the best way to get you in the black quicker. I know that may sound the opposite of what many financial experts recommend – paying off the highest interest rate debt first and the minimum on all other debt. With paying the highest interest rate debt first, you do save as much money as possible in interest payments.

But first ask yourself, do you have the motivation to stay with the game plan of paying off your highest interest rate debt first? Or do you need to win small victories like paying off small debts first to give you the motivation to meet a larger goal. With this approach, you feel that any results are success even if it’s not reaching the total goal.  Paying off smaller, lower-interest debts first probably will result in your paying more interest over time.  And it could result in considerable more money.  However, if you are motivated and have positive financial behaviors, for you saving the most money is your best strategy.

You, yes you, are the one who has to determine what works for you in solving your money problems. Think balance, not sacrifice.  And ask yourself: what makes you happy; where do you want to be in 3-5 years; what worries you most about money.

I like the following quote but truly don’t know who said it – “if it is to be, it is up to me.”

I encourage you to continue your pursuit of gaining a greater understanding of managing your moolah!

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