The Extreme Plan One Mother Used To Erase $89,000 Of Debt In Six Months

Six kids means more than multiplying diapers, food, clothing and toys … the dollar signs multiply as well.

Angela Coffman, of Kansas City, Missouri, one of the four subjects on the recent TLC special Extreme Cheapskates, was a stay-at-home mom of six, and in debt to the tune of $89,000.

Through extraordinary dedication, effort and big-time penny-pinching, she managed to pull her family up by its bootstraps and erase all that debt … in just six months!

Today, Coffman works from home, teaching others how to live frugally on her website, Grocery Shrink. We caught up with this reality TV star to talk about how she paid off that debt, and how she budgets to keep it off.

What were you doing to acquire so much debt?
My husband and I were living the American dream. We had several credit cards, but we mostly used one that gave us cash back on our purchases. We would put everything on it—food, clothing, all of our necessities—and then try to pay it back at the end of the month. We borrowed $20,000 to buy a car, we had put $75,000 down on a house that we were using as a rental property and borrowed $1,000 to buy a leather couch. Then my husband Darren, who’s an accountant, lost his job, and we couldn’t pay off the credit card any more.

How did you become motivated to do something about it?
I knew there was a better way to handle our money. My parents paid off our home when I was in the fourth grade, and they never borrowed money again. They really had taught me better. One day, I heard finance expert Dave Ramsey on the radio announcing a contest to win a trip to the Bahamas. You had to be one of the top ten families in the nation who paid off the most debt or saved the most money in a six-month period. About that time Darren got a new job, and I figured, even if we lose the contest but we give it our all, we’ll end up winners. We won—and got to go on the trip.

What did you do during those six months to save money?
We went all out. We spent nothing that we did not have to in order to survive. We ate food that we picked from our yard, we turned off our heat and burned wood in the fireplace instead, we used cloth diapers, cloth napkins, cloth toilet paper—anything that you would usually use paper for. We hand-made gifts, I made clothes for the kids out of leftovers from garage sales that neighbors would give me. So my sons wore denim skirts … but they looked like shorts after I sewed them.

We decided to sell our house and wait for a time when we were financially able to support an investment like that. We sold some cattle that my husband owned, and we sold whatever else we could. We only kept $1,000 for ourselves. That was our only cushion between us and bankruptcy. The rest went to paying off debt.

By the end of the six months, we were completely out of debt. Three months later, we had actually saved $40,000 to put down on a new house.

Buying Necker Island For $180,000 Was The Best Deal Richard Branson Ever Made

Richard Branson, the head of Virgin Group, is one of the most famous and successful entrepreneurs in the world.

His portfolio of assets now include everything from media companies and airlines to telecommunications companies and real estate.

But one of Branson's smartest early purchases was Necker Island, a 74-acre island in the Caribbean that he visited in the late 1970s and quickly fell in love with.

Entrepreneur Luke Murray recently recounted how the deal went down on Virgin's blog.

When Branson visited Necker at age 28, it was owned by Lord Cobham, who was asking $5 million for the uninhabited property. Branson boldly decided to offer $100,000 and was quickly evicted by the insulted landowner.

Over the next few months, Branson slowly increased his offer while looking for the necessary funds, according to Murray. It just so happened that Lord Cobham was in need of short term cash, and he finally accepted an offer of $180,000, more than a 96 percent discount off the asking price.

The purchase did come with some stipulations. The government required any foreigner who purchased the island to build a resort, or the state would reclaim ownership.

It took Branson five years and $10 million to construct his island haven, but it was a worthwhile investment — despite the fact that part of the resort was destroyed in a fire last year.

In addition to the enjoyment that guests have had over the years, Branson estimated in 2006 that the island's value had grown to approximately $60 million, a 33233 percent increase over what he paid for it.

Unsurprisingly, he called it his "best financial move" in an interview with UK website This is Money.

From businessinsider.com

Stock Market Crash: Is Your Asset Allocation Right?

If we have a stock market crash, is your asset allocation right to protect your portfolio from large losses? Many investors mistakenly believe that because they are “long term investors” they shouldn’t concern themselves with “short term” returns. They are wrong!

Stock Market Crashes

Stock market crashes and secular bear markets are a reality of investing in stocks. The result of either will be determined by your asset allocation. If you are not prepared by having the right asset allocation for the current circumstances and valuation; your portfolio can be destroyed for years to come.

If you have a 50% loss and a 50% gain you are not at break even. You have lost 25% of your portfolio! Volatility is one of the most underestimated killers of portfolio performance. If you don’t have a clear understanding of this concept read my post “Portfolio Volatility and the Impact on Performance”.

Get Your Asset Allocation Right!

Once you understand the importance of capital preservation; how do you get your asset allocation right? This is the secret only value investors seem to know: Price Matters!

The public has been taught by the financial media to choose a fixed strategic asset allocation. But does this make sense? Should you buy the same amount of an asset when its price is expensive as when the price is a bargain?

Purchasing investment assets at prices below their fundamental or intrinsic value greatly improves the probability of above average returns. When you require a margin of safety you have created a margin for errors in your analysis, or unforeseen events that could affect your investment.

This means you can lower your investment risk by implementing a tactical asset allocation strategy. You should never have an asset allocation that can wreck your portfolio for years to come. That may mean being less aggressive than you have been in the past. It also may mean putting more emphasis on cash in your portfolio.

Watch For Warning Signs

Watch for warning signs long before a stock market crash. Fundamental analysis of company financial statements and current market valuations should provide warnings of over valued securities. If you can’t find many stocks that meet your margin of safety requirement, that is a warning sign.

Also pay attention to sentiment indicators. Keep in mind the public usually hates stocks when they are bargains and loves them when they are over valued. Be a contrarian thinker when it comes to getting your asset allocation right.

You now have several investment concepts to help you avoid the next stock market crash. There are always warning signs; remember, price matters.

It’s critical to limit losses in a stock market crash because you can grow your capital from a higher base. Then, when most are panic selling you will be buying at prices you know favor above average returns.

From arborinvestmentplanner.com