OK, Almost 3 months without a blog post. I know. I keep saying that I will try to do better but it has just been so busy.
I think I am just about finished canning for the year. Hopefully. Peaches, nectarines, apples, potatoes, meat, tomatoes, salsa, soup, beans, corn, jams, relishes, etc. Not enough, but it will have to do.
And I have been hurting. Alot. My rheumatoid arthritis has been giving me fits all summer. I went to the doctor last week and he upped my meds again. Hopefully it will help. Fall will be here soon and the rain and cooler weather don't help my hands and feet at all. Let's all hope that another surgery isn't needed on the other hand.
We got our daughter moved back into her dorm room with minimal fuss for once. She seriously downsized what she took with her this time and that helped tremendously. Unfortunately, that means she left most of it here. But it is all neatly packed away.
The economy is looking bad so we are cutting back on the spending again. We moved some things around and started looking at what all we will need to do if we have to sell the house quickly. We have a lot more work than money at this point so it will take a while to get everything fixed up and sell-able. Sigh. It is always something.
I have started making lists for things that have to be done. Some things are a given. Dishes and laundry are a daily chore, but things like mowing the lawn and sweeping the floors I can pass off to other family members. Why does it always seem like my list is longer than everyone else's? Then there is the long term list. Getting gutters, paint the bedroom, getting new kitchen counters. That is the ugly list. And getting new floors. The bare concrete in the bedroom is really starting to get old. And the dryer is starting to go out. Yet another expense, and one that we can't put off to boot. We are headed back into broke time.
Well, my feet and hands hurt, but laundry waits for no one.
Showing posts with label manage money. Show all posts
Showing posts with label manage money. Show all posts
Tuesday, August 30, 2011
Wednesday, August 25, 2010
Americans these days are concerned, or downright fearful, of what the future may hold. With the current economic situation and all of the unrest around the world, we have a reason to be concerned. This is not 1950 any more. We do not have a lot of confidence in our leaders, our economy, or even that we will have a job tomorrow. The era of "buy what you want, when you want it" is over.
Most people aren't buying big ticket items any more. Existing home sales are way down. Car sales are down. People are not eating out as much. Everyone is trying to find ways to save money.
For businesses, that means not hiring any new employees or in some cases, laying off. For the working class, that means eating more Mac and Cheese instead of grilling steaks every weekend. We try to find less expensive ways to entertain ourselves. The big problem with this is that it is a vicious cycle that just feeds into itself. Say you own a moderately priced, sit down restaurant and you have 12 employees, 3 cooks/chefs, 6 servers, 2 busboys and a hostess. You have owned this business for several years and have always managed a reasonable profit. Suddenly, the banks are not issuing small business loans and you need a new grill. You have the choice of doing without the equipment, buying it from your own salary, or getting it fixed as best you can. You decided to get it fixed and hope you have enough profit in the next couple of months to be able to buy a new one. Then one or two of the major employers in your community begin to lay off portions of their work force. Those people will have a hard time finding new jobs in the current economy so they will stop eating out. Your business drops off. You change your server scheduling because you don't need all of the wait-staff standing around getting paid with nothing to do. They all get fewer hours and fewer tips. So their personal spending is affected which affects other businesses. Your business slows to the point where you have no choice but to lay off 2 of the servers and 1 of the cooks. So now you have 9 employees. During the busiest prime time rush, your service is slower because you have less help. This causes customers to not come to your restaurant as often. Less business means you either have to raise prices or lose money. Raising prices causes fewer customers, who are also trying to save money, but losing money means that you cannot afford to upkeep equipment, buy quality ingredients, or pay a decent wage. You have no choice but to close your doors. Now there are 9 more people out of work.
All of these things are inter-dependent with every other business in the community. If even 1 business goes under, it effects everyone. And this is happening all over the country. And small communities are being hit the hardest. They are the ones who can least afford for a business to close it's doors.
People are scared that if the economy doesn't get better, all of the jobs in the US with the exception of teachers, public safety(police and firemen) and union jobs (which are protected by the big wigs in Washington) will simply go away. The jobless numbers that we hear about on the news are ONLY the new unemployment claims, not those who have been unable to find a job for the last 18 months.
But even so, you think 10% isn't a bad unemployment number. But think of it this way. That is 1 out of every 10 people you know has just gotten laid off. You know 30 people? 3 of them got laid off this month. And the next month, 3 more get pink slips, and so on. Eventually, most of the people you know will be without a job. Some, maybe half, will be able to find a job of some sort, but it will probably not be for the same pay they were getting before and it probably will not be in their chosen career. It is just a job to keep the bills paid. And it will take them longer to get that job because employers do not want to hire over-qualified people for entry level positions. And there is a lot of competition for every job opening.
Is it any wonder people are nervous? According to the US Department of Labor, 14.6 Million people in the US, and 6.6 Million of those have been unemployed for more than 27 weeks. Don't believe me? Here is the press release from the DoL dated Aug 6, 2010. http://www.bls.gov/news.release/empsit.nr0.htm .
Does anyone honestly think that 14.6 million jobs will miraculously appear in the US so these people can go to work? Not very likely.
Most people aren't buying big ticket items any more. Existing home sales are way down. Car sales are down. People are not eating out as much. Everyone is trying to find ways to save money.
For businesses, that means not hiring any new employees or in some cases, laying off. For the working class, that means eating more Mac and Cheese instead of grilling steaks every weekend. We try to find less expensive ways to entertain ourselves. The big problem with this is that it is a vicious cycle that just feeds into itself. Say you own a moderately priced, sit down restaurant and you have 12 employees, 3 cooks/chefs, 6 servers, 2 busboys and a hostess. You have owned this business for several years and have always managed a reasonable profit. Suddenly, the banks are not issuing small business loans and you need a new grill. You have the choice of doing without the equipment, buying it from your own salary, or getting it fixed as best you can. You decided to get it fixed and hope you have enough profit in the next couple of months to be able to buy a new one. Then one or two of the major employers in your community begin to lay off portions of their work force. Those people will have a hard time finding new jobs in the current economy so they will stop eating out. Your business drops off. You change your server scheduling because you don't need all of the wait-staff standing around getting paid with nothing to do. They all get fewer hours and fewer tips. So their personal spending is affected which affects other businesses. Your business slows to the point where you have no choice but to lay off 2 of the servers and 1 of the cooks. So now you have 9 employees. During the busiest prime time rush, your service is slower because you have less help. This causes customers to not come to your restaurant as often. Less business means you either have to raise prices or lose money. Raising prices causes fewer customers, who are also trying to save money, but losing money means that you cannot afford to upkeep equipment, buy quality ingredients, or pay a decent wage. You have no choice but to close your doors. Now there are 9 more people out of work.
All of these things are inter-dependent with every other business in the community. If even 1 business goes under, it effects everyone. And this is happening all over the country. And small communities are being hit the hardest. They are the ones who can least afford for a business to close it's doors.
People are scared that if the economy doesn't get better, all of the jobs in the US with the exception of teachers, public safety(police and firemen) and union jobs (which are protected by the big wigs in Washington) will simply go away. The jobless numbers that we hear about on the news are ONLY the new unemployment claims, not those who have been unable to find a job for the last 18 months.
But even so, you think 10% isn't a bad unemployment number. But think of it this way. That is 1 out of every 10 people you know has just gotten laid off. You know 30 people? 3 of them got laid off this month. And the next month, 3 more get pink slips, and so on. Eventually, most of the people you know will be without a job. Some, maybe half, will be able to find a job of some sort, but it will probably not be for the same pay they were getting before and it probably will not be in their chosen career. It is just a job to keep the bills paid. And it will take them longer to get that job because employers do not want to hire over-qualified people for entry level positions. And there is a lot of competition for every job opening.
Is it any wonder people are nervous? According to the US Department of Labor, 14.6 Million people in the US, and 6.6 Million of those have been unemployed for more than 27 weeks. Don't believe me? Here is the press release from the DoL dated Aug 6, 2010. http://www.bls.gov/news.release/empsit.nr0.htm .
Does anyone honestly think that 14.6 million jobs will miraculously appear in the US so these people can go to work? Not very likely.
Monday, January 12, 2009
Saving Money
Everyone knows that saving money is a good thing. And everyone has little tricks they use on themselves to save the most. But not every tip will work for every family.
Take, for instance, the fact that I save money by cooking at home instead of eating out. That works very well for us because I have the time to cook and really enjoy it. Some friends of ours do not have that luxury. She works an hour and 15 minutes from home and doesn't get home in time to cook a nice meal every night and still be able to get the kids in bed at a decent time. And she doesn't really like to cook that much. But they both have good jobs and make good money, so eating out for them is an option.
For us, as a family, we really don't need that much stuff. We spend more on groceries than anything else. None of us are clothes hounds, we don't compulsively buy new "toys", we don't go out to the movies or dinner very often, and we don't just go shopping just to be shopping. When we do buy things, it is generally used DVDs. We watch a lot of movies at home. We won't buy them new. Why spend $20 on a movie that will be less than half that in a couple of months? We have a lot of movies, some of them really good, some really really bad, but most are just on the good side of average. Which is fine. There isn't really anything being filmed that is better than average anyway. And by paying $6.99 for a DVD instead of $7 each for movie tickets ($28 for the 4 of us) plus concessions, we are saving a ton of cash. And if one of us needs to take a break, we can just pause it. Much better than going to the theater.
I have seen lists of money saving tips all over the internet, and for the most part, it is good sound advice. And we do a lot of the things that make sense for us. But not everyone can grow their own food or make their own clothes. Or cut their own hair. Or bicycle to work. It just isn't possible for most of us.
The key is to be comfortable with it. Going from living large to being a tightwad over night is impossible. You will only make yourself crazy. Anyone who has lost their job will tell you that it is no fun living on pork and beans and mac and cheese. Work up to your savings goals. When you get comfortable with one change, then add another. Don't just stop spending cold turkey. You have to retrain your self to a new lifestyle. So work up to it. Slow and steady will work much better for long term change. If you feel yourself getting depressed or feeling deprived, have a treat. Just remember that it is a treat, and that you can't to do it all of the time.
So when you decide to start getting serious about saving money, study the tips. Make a list of your own. But keep in mind that if it isn't something that you can actually do, and will do consistantly, forcing yourself to do it will only make you feel guilty when you don't. Saving money should make you feel good, not deprived. I have found that having a goal in mind when you start trying to save money really helps. Something like, "I want to pay off this bill by the end of the year. How much do I have to save to be able to do that?" If you drink coffee shop coffee everyday, you can save 3 or 4 dollars a day my making coffee at home instead. That is around $80 a month you can add to your bill payment every month. Or if you go out every weekend and spend $30 at the bar, go every other weekend and save $60 a month. If you have a big dry cleaning bill, try to find clothes that don't need to be dry cleaned, or if you have to wear suits to work, try to wear them more than once as long as they pass the sniff test.
There are a million ways to not spend money, the secret is to find what works for you. Set a goal, add new tips slowly into your lifestyle, and if you start to feel deprived, splurge a little.
Take, for instance, the fact that I save money by cooking at home instead of eating out. That works very well for us because I have the time to cook and really enjoy it. Some friends of ours do not have that luxury. She works an hour and 15 minutes from home and doesn't get home in time to cook a nice meal every night and still be able to get the kids in bed at a decent time. And she doesn't really like to cook that much. But they both have good jobs and make good money, so eating out for them is an option.
For us, as a family, we really don't need that much stuff. We spend more on groceries than anything else. None of us are clothes hounds, we don't compulsively buy new "toys", we don't go out to the movies or dinner very often, and we don't just go shopping just to be shopping. When we do buy things, it is generally used DVDs. We watch a lot of movies at home. We won't buy them new. Why spend $20 on a movie that will be less than half that in a couple of months? We have a lot of movies, some of them really good, some really really bad, but most are just on the good side of average. Which is fine. There isn't really anything being filmed that is better than average anyway. And by paying $6.99 for a DVD instead of $7 each for movie tickets ($28 for the 4 of us) plus concessions, we are saving a ton of cash. And if one of us needs to take a break, we can just pause it. Much better than going to the theater.
I have seen lists of money saving tips all over the internet, and for the most part, it is good sound advice. And we do a lot of the things that make sense for us. But not everyone can grow their own food or make their own clothes. Or cut their own hair. Or bicycle to work. It just isn't possible for most of us.
The key is to be comfortable with it. Going from living large to being a tightwad over night is impossible. You will only make yourself crazy. Anyone who has lost their job will tell you that it is no fun living on pork and beans and mac and cheese. Work up to your savings goals. When you get comfortable with one change, then add another. Don't just stop spending cold turkey. You have to retrain your self to a new lifestyle. So work up to it. Slow and steady will work much better for long term change. If you feel yourself getting depressed or feeling deprived, have a treat. Just remember that it is a treat, and that you can't to do it all of the time.
So when you decide to start getting serious about saving money, study the tips. Make a list of your own. But keep in mind that if it isn't something that you can actually do, and will do consistantly, forcing yourself to do it will only make you feel guilty when you don't. Saving money should make you feel good, not deprived. I have found that having a goal in mind when you start trying to save money really helps. Something like, "I want to pay off this bill by the end of the year. How much do I have to save to be able to do that?" If you drink coffee shop coffee everyday, you can save 3 or 4 dollars a day my making coffee at home instead. That is around $80 a month you can add to your bill payment every month. Or if you go out every weekend and spend $30 at the bar, go every other weekend and save $60 a month. If you have a big dry cleaning bill, try to find clothes that don't need to be dry cleaned, or if you have to wear suits to work, try to wear them more than once as long as they pass the sniff test.
There are a million ways to not spend money, the secret is to find what works for you. Set a goal, add new tips slowly into your lifestyle, and if you start to feel deprived, splurge a little.
Friday, January 9, 2009
This Bailout Thing Has Got To Stop!
There are a few things that just really set me off. Government getting in my business, someone telling me how to raise my kids, and people begging for my tax money that don't deserve it.
This morning I heard of some people who are asking for Federal Bailout money. There is a small town in Georgia, a village really, with less than 200 people, who are asking for millions of dollars of MY tax money so they can put in Solar traffic lights, plug in stations for electric golf carts, and an EcoMuseum among other things. Now my question to them is...Why? Does this town have such a high electric bill from their one traffic light that they are having trouble paying it? Is there a large number of golf carts in this little hamlet in Georgia? And would a museum even generate enough income to pay the one employee it would take to run the thing?
Or maybe it is just the prospect of free money that caused them to stick out their hand? I find it almost absurd that the Bank Bailout Package, which started out as an obscene $900 Billion is going to be used by every group of 3 or more people as an excuse to do stupid things. I was opposed to the original bailout to begin with. It is time for the greedy folks to pay the piper. They have been bilking the common joe for decades, and now that they have gotten "caught", they are whining about how it wasn't their fault. If any of these companies had a shred of common sense to begin with they would not have employed the business practices that lead to their downfall. It is their own danged fault they are going under. Have none of these people ever taken an economics class? Interest rates that border on usury, giving loans and credit to people who don't have jobs, giving multiple mortgage loans to people without verifiable income, robbing Peter to pay Paul, shipping jobs overseas and keeping Americans either underemployed or overpaid. None of these things are good business practices. When the average American Adult is more than $10,000 in debt, not counting their mortgages, you should know that there is a problem.
And now the same people who have killed us as a nation are wanting the taxpayer to pay them for being stupid? Just where do they think all of this money is going to come from? Can we just pull BILLIONS or TRILLIONS of dollars out of the air and say, "Here ya go. We are sorry it isn't more?"
There are only a couple of ways the government can get enough money to pay these people off. One is to raise taxes. Americans are already under such a tax burden that the average worker only sees maybe 60-70% of their paycheck. And if we add more taxes to pay for the bailout, it will suck even more out of our paychecks. The major problem with that idea is that most people are living paycheck to paycheck as it is. So people can't afford to buy anything, including food. Or they default on their loans and credit cards and file bankruptcy. Less people buying things means less being sold. That is bad, very bad, for retailers and manufacturers, Then they go bankrupt and lay off or fire employees. That causes more people to not be able to pay their bills. See the cycle here?
Or, the federal reserve can just print more money. Yeah, lets do that! Big mistake. Our money isn't really worth anything anymore since it isn't backed by anything but the good name of the United States. All of that gold sitting in Fort Knox is just sitting there useless. Used to be a time when the Fed would only have enough currency floating around the US equal to the value of the gold in the Federal Reserve. That kept our dollar worth something. We knew that each and every US dollar anywhere on earth was equal to a piece of the gold bars in Kentucky. That isn't the case anymore. We dropped the gold standard sometime back in the 80's, I think. Since then we have just been printing money to be printing money. It isn't really worth anything except in it's rarity. If we print more for the sake of the buyout, each piece of currency will be worth less and less. So it will take more of them to mean anything. That is called inflation. And if we actually print enough for the bailout, that will be called runaway inflation. Yes, boys and girls, if we inject $900 Billion new dollars into the economy just to pay people for being stupid, it will cost $10 for a loaf of bread, if you can find a bakery that is still in business. Hamburger, which is already $3.00 a pound will probably be over $15. And for people who are already out of work, and behind on their bills, how will they live?
All of this just burns my tail feathers. If corporations hadn't gotten greedy and made bad decisions, and if people in general hadn't taken on more debt than they could pay and banks encouraging them to take on more, none of this would be an issue.
And maybe, just maybe, we wouldn't be lambasted all over the world for being the largest consumer on the planet.
It just makes my teeth hurt.
This morning I heard of some people who are asking for Federal Bailout money. There is a small town in Georgia, a village really, with less than 200 people, who are asking for millions of dollars of MY tax money so they can put in Solar traffic lights, plug in stations for electric golf carts, and an EcoMuseum among other things. Now my question to them is...Why? Does this town have such a high electric bill from their one traffic light that they are having trouble paying it? Is there a large number of golf carts in this little hamlet in Georgia? And would a museum even generate enough income to pay the one employee it would take to run the thing?
Or maybe it is just the prospect of free money that caused them to stick out their hand? I find it almost absurd that the Bank Bailout Package, which started out as an obscene $900 Billion is going to be used by every group of 3 or more people as an excuse to do stupid things. I was opposed to the original bailout to begin with. It is time for the greedy folks to pay the piper. They have been bilking the common joe for decades, and now that they have gotten "caught", they are whining about how it wasn't their fault. If any of these companies had a shred of common sense to begin with they would not have employed the business practices that lead to their downfall. It is their own danged fault they are going under. Have none of these people ever taken an economics class? Interest rates that border on usury, giving loans and credit to people who don't have jobs, giving multiple mortgage loans to people without verifiable income, robbing Peter to pay Paul, shipping jobs overseas and keeping Americans either underemployed or overpaid. None of these things are good business practices. When the average American Adult is more than $10,000 in debt, not counting their mortgages, you should know that there is a problem.
And now the same people who have killed us as a nation are wanting the taxpayer to pay them for being stupid? Just where do they think all of this money is going to come from? Can we just pull BILLIONS or TRILLIONS of dollars out of the air and say, "Here ya go. We are sorry it isn't more?"
There are only a couple of ways the government can get enough money to pay these people off. One is to raise taxes. Americans are already under such a tax burden that the average worker only sees maybe 60-70% of their paycheck. And if we add more taxes to pay for the bailout, it will suck even more out of our paychecks. The major problem with that idea is that most people are living paycheck to paycheck as it is. So people can't afford to buy anything, including food. Or they default on their loans and credit cards and file bankruptcy. Less people buying things means less being sold. That is bad, very bad, for retailers and manufacturers, Then they go bankrupt and lay off or fire employees. That causes more people to not be able to pay their bills. See the cycle here?
Or, the federal reserve can just print more money. Yeah, lets do that! Big mistake. Our money isn't really worth anything anymore since it isn't backed by anything but the good name of the United States. All of that gold sitting in Fort Knox is just sitting there useless. Used to be a time when the Fed would only have enough currency floating around the US equal to the value of the gold in the Federal Reserve. That kept our dollar worth something. We knew that each and every US dollar anywhere on earth was equal to a piece of the gold bars in Kentucky. That isn't the case anymore. We dropped the gold standard sometime back in the 80's, I think. Since then we have just been printing money to be printing money. It isn't really worth anything except in it's rarity. If we print more for the sake of the buyout, each piece of currency will be worth less and less. So it will take more of them to mean anything. That is called inflation. And if we actually print enough for the bailout, that will be called runaway inflation. Yes, boys and girls, if we inject $900 Billion new dollars into the economy just to pay people for being stupid, it will cost $10 for a loaf of bread, if you can find a bakery that is still in business. Hamburger, which is already $3.00 a pound will probably be over $15. And for people who are already out of work, and behind on their bills, how will they live?
All of this just burns my tail feathers. If corporations hadn't gotten greedy and made bad decisions, and if people in general hadn't taken on more debt than they could pay and banks encouraging them to take on more, none of this would be an issue.
And maybe, just maybe, we wouldn't be lambasted all over the world for being the largest consumer on the planet.
It just makes my teeth hurt.
Friday, February 1, 2008
Debt, Debt, and more Debt
For the last several months I have been scouring the web for tips on how to live well on less money. I have found a lot of good ideas. And some that are a little bit out there. But they all say about the same thing. Get rid of your debt.
I know that for some people that sounds nearly impossible. As a society, we have all gotten used to the instant gratification that comes with being able to buy whatever you want on credit. You find that great pair of shoes that are on sale for only $75 and you whip out the Visa or "Store" card and buy them on the spot. But if you don't pay off the balance every month, and how many of us can actually do that, you wind up with interest that will make those $75 pair of shoes cost well over $100 in the long run. And did you really need another pair of strappy black heels anyway?
With the way the economy is headed (and the credit crisis, housing crisis, and unemployment going up) a lot of people are beginning to realize just how over-extended they really are. If your house payment, car payments, utilities, and credit card bills are more than your income for the month, you are in big trouble.
Credit card companies are the world's biggest scam. They offer credit to just about anyone on the hope that people will buy more than they can afford to pay off every month. They make billions of dollars a year off of the interest. And the real kicker is that if you are ever late getting your paying in, they can legally double, or in some cases, triple your interest rate, making it even harder to get it paid off. Trust me, I have been there. And it really sucks.
I have found a couple of ways to get out of debt that don't involve bankruptcy. I will use our situation as an example of what not to do, or how to fix it if you already have.
When my husband and I first got married, we each had a credit card(visa) and I had a department store card. We didn't use them much, only for necessities like getting the cars worked on or replacing worn out clothes. Then I got pregnant with my daughter and my husband got a new job in a new town. So we had to move. No one would hire a pregnant girl so I couldn't work and we had the expenses of moving and setting up a new household. Visa time. Well, since I was pregnant before he got hired, the new insurance considered it a pre-existing condition and wouldn't pay the doctor visits. So that was $200 a month out of our already slim budget. Utility deposits, rent deposits, moving expenses, gas back and forth to get everything moved, all of that left us eating mac and cheese and ham sandwiches. And it also raised our credit card bills. By the time my daughter was born, we had bought the house we were renting, so we also had closing costs and insurance to pay. We were almost $2000 in debt in a matter of a couple of months. Now we had diapers, formula, baby clothes, doctor visits for the baby in addition to my hospital bills for the delivery on top of the student loan payments that were coming due, house payment, car payment, utilities, and the credit cards. So more credit card debt was building up.
By the time we finally decided that it just had to stop, we had 5 credit card with high interest rates (almost $22,000 in debt), 2 gas cards, 2 department store cards, a car payment, a house payment, and 2 kids in daycare. Even with minimum payments on the cards, the total everything combined was more than our monthly income. Then we discovered the Debit Card.
That was actually a wonderful day for us. It allowed us to completely stop using the credit cards. If we didn't have the money to cover it in the bank, we simply couldn't buy it. We were 13 years into a 30 year mortgage so we refinanced the house for a lower interest rate, cashed out enough equity to pay off 4 of the 5 credit cards(boy was it fun to cut up those cards) and continued to pay on the last one until we got the truck paid off. Then we began to apply the amount of the truck payment to the payment we were making to the credit card ( an extra $334 a month) and finally started getting that one paid off. A large cash gift from the Mother-In-Law took care of the rest of it.
Wow! No more credit card debt.
I know that most people cannot expect a large cash gift, but there are ways to get out of debt without going crazy.
1) STOP USING CREDIT CARDS! If you cannot afford to pay cash for it, do not buy it.
2) Actually sit down with all of your bills, bank statements, loan payment books, and a calculator. Make 3 columns, one with income amounts with every dime that comes in from every source for the month, one with the payment amounts due for the month not counting groceries, and the last column is for the amount of outstanding debt left on that bill. Add up each column and see if your bills are more than your income. Also compare your income to the balances due on all of that credit. You may be shocked to realize that you have $15,000 in credit card debt and that if you only make minimum payments every month, it will take you 12 years and $50,000 in interest to pay it off, if you don't add any more to the balance. That is an eye opener. And a real motivator for getting out of debt.
3) When you pay off a debt, you do NOT have extra money each month. Use that payment on another debt. If you paid off a debt that you were paying $250 a month on, like a car payment, you now add $250 to the highest interest payment that you have. Keep doing that until that debt is paid off. Then you take the combined payment amount (say...$550) a month, and add that amount to the next highest interest bill. And you keep doing that until everything is paid off. This is actually a fast and rather painless way to pay off your bills. You are not used to having the extra money anyway, so why not use it to get rid of debt.
Now, this is not a step by step guide for getting out of debt. There are a thousand different ways to do that, and just as many opinions on which way is the best. But you cannot get out of debt by using credit to make all of your day to day purchases. You have to make the decision to get out of debt all by yourself. No one can do it for you. If you are not willing to give up those shopping sprees or eating out every night, then no one can help you.
I know that for some people that sounds nearly impossible. As a society, we have all gotten used to the instant gratification that comes with being able to buy whatever you want on credit. You find that great pair of shoes that are on sale for only $75 and you whip out the Visa or "Store" card and buy them on the spot. But if you don't pay off the balance every month, and how many of us can actually do that, you wind up with interest that will make those $75 pair of shoes cost well over $100 in the long run. And did you really need another pair of strappy black heels anyway?
With the way the economy is headed (and the credit crisis, housing crisis, and unemployment going up) a lot of people are beginning to realize just how over-extended they really are. If your house payment, car payments, utilities, and credit card bills are more than your income for the month, you are in big trouble.
Credit card companies are the world's biggest scam. They offer credit to just about anyone on the hope that people will buy more than they can afford to pay off every month. They make billions of dollars a year off of the interest. And the real kicker is that if you are ever late getting your paying in, they can legally double, or in some cases, triple your interest rate, making it even harder to get it paid off. Trust me, I have been there. And it really sucks.
I have found a couple of ways to get out of debt that don't involve bankruptcy. I will use our situation as an example of what not to do, or how to fix it if you already have.
When my husband and I first got married, we each had a credit card(visa) and I had a department store card. We didn't use them much, only for necessities like getting the cars worked on or replacing worn out clothes. Then I got pregnant with my daughter and my husband got a new job in a new town. So we had to move. No one would hire a pregnant girl so I couldn't work and we had the expenses of moving and setting up a new household. Visa time. Well, since I was pregnant before he got hired, the new insurance considered it a pre-existing condition and wouldn't pay the doctor visits. So that was $200 a month out of our already slim budget. Utility deposits, rent deposits, moving expenses, gas back and forth to get everything moved, all of that left us eating mac and cheese and ham sandwiches. And it also raised our credit card bills. By the time my daughter was born, we had bought the house we were renting, so we also had closing costs and insurance to pay. We were almost $2000 in debt in a matter of a couple of months. Now we had diapers, formula, baby clothes, doctor visits for the baby in addition to my hospital bills for the delivery on top of the student loan payments that were coming due, house payment, car payment, utilities, and the credit cards. So more credit card debt was building up.
By the time we finally decided that it just had to stop, we had 5 credit card with high interest rates (almost $22,000 in debt), 2 gas cards, 2 department store cards, a car payment, a house payment, and 2 kids in daycare. Even with minimum payments on the cards, the total everything combined was more than our monthly income. Then we discovered the Debit Card.
That was actually a wonderful day for us. It allowed us to completely stop using the credit cards. If we didn't have the money to cover it in the bank, we simply couldn't buy it. We were 13 years into a 30 year mortgage so we refinanced the house for a lower interest rate, cashed out enough equity to pay off 4 of the 5 credit cards(boy was it fun to cut up those cards) and continued to pay on the last one until we got the truck paid off. Then we began to apply the amount of the truck payment to the payment we were making to the credit card ( an extra $334 a month) and finally started getting that one paid off. A large cash gift from the Mother-In-Law took care of the rest of it.
Wow! No more credit card debt.
I know that most people cannot expect a large cash gift, but there are ways to get out of debt without going crazy.
1) STOP USING CREDIT CARDS! If you cannot afford to pay cash for it, do not buy it.
2) Actually sit down with all of your bills, bank statements, loan payment books, and a calculator. Make 3 columns, one with income amounts with every dime that comes in from every source for the month, one with the payment amounts due for the month not counting groceries, and the last column is for the amount of outstanding debt left on that bill. Add up each column and see if your bills are more than your income. Also compare your income to the balances due on all of that credit. You may be shocked to realize that you have $15,000 in credit card debt and that if you only make minimum payments every month, it will take you 12 years and $50,000 in interest to pay it off, if you don't add any more to the balance. That is an eye opener. And a real motivator for getting out of debt.
3) When you pay off a debt, you do NOT have extra money each month. Use that payment on another debt. If you paid off a debt that you were paying $250 a month on, like a car payment, you now add $250 to the highest interest payment that you have. Keep doing that until that debt is paid off. Then you take the combined payment amount (say...$550) a month, and add that amount to the next highest interest bill. And you keep doing that until everything is paid off. This is actually a fast and rather painless way to pay off your bills. You are not used to having the extra money anyway, so why not use it to get rid of debt.
Now, this is not a step by step guide for getting out of debt. There are a thousand different ways to do that, and just as many opinions on which way is the best. But you cannot get out of debt by using credit to make all of your day to day purchases. You have to make the decision to get out of debt all by yourself. No one can do it for you. If you are not willing to give up those shopping sprees or eating out every night, then no one can help you.
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