Nobody ever said getting out of debt is easy. It isn't, and sometimes, you just want to chuck everything, seel all assets, pay off debts, and go off and live in the backwoods somehwere, away from the rat race... but quitting is for losers....fighting on is what people do when they leave the pity party and get their head on straight again.
In March, i was optimistic that I'd be in much improved shape by summer. let's see where things stand.
While i increased my income, as expected, I was not able to wipe out a single credit card debt. However, on that front, I've gone from being 3 payments behind on 3 credit cards. 2 payments behind on 2 cards, and one payment behind on two others, to being current on all but one, though still at the limit or over the limit on 2.
That is better than where things stood in march, but not by much. I caught up on my utilities after twice being a few days away from having my power cut, once hours away from my gas being cut, and actually having service on my mobile phone interrupted, a situation I corrected witin a few hours.
It has not been easy. Large sums in, large sums out, literally NOTHING to show for it.
My FICO score at last check, in early june, wass at 531. That stinks, but I'm still alive.
I am now 3 payments away from clearing one credit card once and for all, and two payments away from wiping out another debt. That is good. I am grateful to the card company in question, as they graciously wiped out the fact that I was two payments behind, and reset the card to current, without dinging me for any extra charges. Why? Probably because i had stayed in contact with them, and warned them about late payments, and kept them fully updated about my situation. Doesn't alays help, but in this case it may have.
That card will be meeting with Mr. Scissors in September!
On the negative side, we have another company which has made my life more difficult. I had stupidly bought some some furniture on one of those 16 month deferred payment deals. I later bought another piece on a similar plan, but missed one payment after the first plan came due, and they cancelled the plan and now expect me to pay an additional $49.00 minimum payment. I have contested this, and am awaiting the result. That would mess up my plans but nicely.
I am behind on my property taxes, and had to work out a payment plan with the government for income tax, but it will be possible to survive this given anticipated income over the next few months.
Over the last 8 months, we have managaed to keep a coupe of major accounts current all the way, never missed a car payment, or a mortgage payment. Not once.
We are a long long way from escaping debt hell. for at least the next two years, barring a windfall, it is going to be a weekly struggle of living on cash, and meeting credit card minimum payments, and hopefully paying some off.
Living on cash would be a piece of cake if not for the credit card debt.
My FICO score disqualifies me from a second mortgage, or any kind of consolidation loan, so we have to slog it out for at least 6 months or more with a view to getting my FICO up to 650 or thereabouts.
Thursday, July 10, 2008
Wednesday, March 19, 2008
More Lessons Learned: How to Raise Your FICOScore.
When you're in debt, you need to look at all your options. One thing we were looking at, was the possibility of selling the house and downsizing.
We have enough equity in the house to pay down 60% of my consumer debt, and still have enough left over for a 10% down payment on a new house, plus closing/moving costs.
Trouble is, I am self employed, and the past few months for me have been rough and my FICOscore is now down to 576, so I needed to find out if we could get a mortgage in spite of the positives.
I called my mortgage broker today to ask him what he thought, and he told me that my chances of getting a new mortgage, even with my current lender With whom I have been since 2001, and to whom I have never missed or been late with a payment, were just about nil. My only chance would be with a subprime lender, (and there are fewer of those around than there once were!), and the mortgage , if i got it with that score which was dicey, would be prohibitively expensive.
So what to do? First understand what affects your FICOscore, and then take immediate action to start setting things right: Timetable 1-2 years to get the score up to 650-680.
How did I get to this miserable state in the first place? There are three main reasons:
1) I have gone over the limit on two of my cards.
2) I have made too many applications for new credit. (this happened last December and January when I was shopping around for 0% -2.9% balance transfer deals) every time someone makes a hard enquiry to the credit bureau, it costs you 15 points. That alone has done me in.
3) Most of my cards are at or near the limit. Ideally they should be at 35% of the limit.
So the advice I was given:
Priority 1: On cards where I am over the limit,get down below the limit as soon as possible.
Priority 2: Pay at least the minimum payment on all accounts and pay them on time insofar as that is possible.
Priority 3: Spread the payments around your accounts with a view to bringing down the debt ratios to 50% and then 35% of credit limits. If you can top off any minimums with extra,all the better
Last week, It was suggested to me that I reduce my income to debt ratio by asking for credit limit reductions on some cards, which I did. However, by so doing, my debt to credit limit ratio became far worse than 35%, so I called them back to have my decision reversed without their consulting the credit bureaus. One creditor complied, and the other did not.
Priority 4: Do not make any applications for new credit for at least 6 months, and then only, if I have been paying all acounts on time for that period, and then only with serious lenders who can offer really low balance transfer deals, preferably an increase on a line of credit, and then transfer your high interest consumer debt over and attack them aggressively.
This goes against the popular theory of the debt snowball advocated by Dave Ramsey and his followers, but I guess it all depends on what your goals are. In our case we were thinking about moving within 2-5 years anyway, so our kids can be closer to a university, so being in a position to get a mortgage is a priority for us. While it would have been nice to downsize and pay out debt and have our freedom back sooner, it is not an option for us at this time. If you are thinking of a downsize to get out of debt , make sure you talk to a trustworthy mortgage broker first, and find out what's what. Get your credit report and know what's there, most notably the FICO score, and speak to your broker or banker, armed with the facts. The last thing you want is to sell your house, then get turned down for a mortgage and end up apartment hunting instead.
When you ask for your credit report it does NOT affect your FICO score.
We have enough equity in the house to pay down 60% of my consumer debt, and still have enough left over for a 10% down payment on a new house, plus closing/moving costs.
Trouble is, I am self employed, and the past few months for me have been rough and my FICOscore is now down to 576, so I needed to find out if we could get a mortgage in spite of the positives.
I called my mortgage broker today to ask him what he thought, and he told me that my chances of getting a new mortgage, even with my current lender With whom I have been since 2001, and to whom I have never missed or been late with a payment, were just about nil. My only chance would be with a subprime lender, (and there are fewer of those around than there once were!), and the mortgage , if i got it with that score which was dicey, would be prohibitively expensive.
So what to do? First understand what affects your FICOscore, and then take immediate action to start setting things right: Timetable 1-2 years to get the score up to 650-680.
How did I get to this miserable state in the first place? There are three main reasons:
1) I have gone over the limit on two of my cards.
2) I have made too many applications for new credit. (this happened last December and January when I was shopping around for 0% -2.9% balance transfer deals) every time someone makes a hard enquiry to the credit bureau, it costs you 15 points. That alone has done me in.
3) Most of my cards are at or near the limit. Ideally they should be at 35% of the limit.
So the advice I was given:
Priority 1: On cards where I am over the limit,get down below the limit as soon as possible.
Priority 2: Pay at least the minimum payment on all accounts and pay them on time insofar as that is possible.
Priority 3: Spread the payments around your accounts with a view to bringing down the debt ratios to 50% and then 35% of credit limits. If you can top off any minimums with extra,all the better
Last week, It was suggested to me that I reduce my income to debt ratio by asking for credit limit reductions on some cards, which I did. However, by so doing, my debt to credit limit ratio became far worse than 35%, so I called them back to have my decision reversed without their consulting the credit bureaus. One creditor complied, and the other did not.
Priority 4: Do not make any applications for new credit for at least 6 months, and then only, if I have been paying all acounts on time for that period, and then only with serious lenders who can offer really low balance transfer deals, preferably an increase on a line of credit, and then transfer your high interest consumer debt over and attack them aggressively.
This goes against the popular theory of the debt snowball advocated by Dave Ramsey and his followers, but I guess it all depends on what your goals are. In our case we were thinking about moving within 2-5 years anyway, so our kids can be closer to a university, so being in a position to get a mortgage is a priority for us. While it would have been nice to downsize and pay out debt and have our freedom back sooner, it is not an option for us at this time. If you are thinking of a downsize to get out of debt , make sure you talk to a trustworthy mortgage broker first, and find out what's what. Get your credit report and know what's there, most notably the FICO score, and speak to your broker or banker, armed with the facts. The last thing you want is to sell your house, then get turned down for a mortgage and end up apartment hunting instead.
When you ask for your credit report it does NOT affect your FICO score.
Friday, March 14, 2008
Today's Life Lesson: Unused Credit Goes Against Your Debt-to-Income Ratio
So far, no calls from creditors today!
I called a bank today to explore the possibility of consolidating some high interest credit cards into one lower interest payment. I did not apply since I knew I would likely be turned down. I explained my situation to the person I spoke to and he was very helpful. We took a look at the situation, and he determined that my debt-to-income ratio was too high and that would make approval a virtual impossibility. He went on to explain that though my actual debt alone would not preclude me from getting the consolidation, the problem was all the unused credit I had on some of my accounts!Your credit limits are considered a part of your debt! For example, I had an $8000.00 limit at one of the major furniture stores, and my actual used credit was only about $2000.00, so that $6000.00 difference was one of the things standing in the way! I had that reduced. I also have a Sears card with a $6900.00 limit of which I have used less than half, so I was able to reduce my limit there by almost half. I also closed an account outside the province which had a $5000.00 limit, but which had a zero balance and had not been used in two years, nor would ever be used again.
Even with these accounts reduced or closed, I would still have a problem since my debt-to-income ratio was still too high, so I will have to attack a few cards according to the debt snowball plan. It was also reccomended that I close the accounts once they are paid too, since the bank would be reluctant to provide the unsecured loan on the other balances against the risk that the cards could be run back up again.
The other advice he gave me was to make sure that all my accounts were paid on time for the next 3-4 months, and combined with the reduced debt-to-income ratio, my FICO score would be on its way up again.
I have decided that once I am debt free, I will never, ever , ever go into debt again, so the only reason I care about my FICO score is for the next time I apply for a mortgage, I will qualify for the best rate possible. However, consolidating my high interest debt into a low interest LOC will make the actual payoff that much easier.
I called a bank today to explore the possibility of consolidating some high interest credit cards into one lower interest payment. I did not apply since I knew I would likely be turned down. I explained my situation to the person I spoke to and he was very helpful. We took a look at the situation, and he determined that my debt-to-income ratio was too high and that would make approval a virtual impossibility. He went on to explain that though my actual debt alone would not preclude me from getting the consolidation, the problem was all the unused credit I had on some of my accounts!Your credit limits are considered a part of your debt! For example, I had an $8000.00 limit at one of the major furniture stores, and my actual used credit was only about $2000.00, so that $6000.00 difference was one of the things standing in the way! I had that reduced. I also have a Sears card with a $6900.00 limit of which I have used less than half, so I was able to reduce my limit there by almost half. I also closed an account outside the province which had a $5000.00 limit, but which had a zero balance and had not been used in two years, nor would ever be used again.
Even with these accounts reduced or closed, I would still have a problem since my debt-to-income ratio was still too high, so I will have to attack a few cards according to the debt snowball plan. It was also reccomended that I close the accounts once they are paid too, since the bank would be reluctant to provide the unsecured loan on the other balances against the risk that the cards could be run back up again.
The other advice he gave me was to make sure that all my accounts were paid on time for the next 3-4 months, and combined with the reduced debt-to-income ratio, my FICO score would be on its way up again.
I have decided that once I am debt free, I will never, ever , ever go into debt again, so the only reason I care about my FICO score is for the next time I apply for a mortgage, I will qualify for the best rate possible. However, consolidating my high interest debt into a low interest LOC will make the actual payoff that much easier.
Tips For Frugal Living: How to Get Free Business Cards & Stationery
Tips For Frugal Living: How to Get Free Business Cards & Stationery
Vista Print is a good way of getting free business cards. You can order 250 cards, that you yourself design online, and all you pay is the shipping costs, which are variable depending on how fast you want them. The best rate, if you are prepared to wait up to 21 days, is $7.95.
If, like many people who would read a blog such as this, are considering a sideline business to supplement your business, or if you already have one, but need new cards, this is worth considering.
Here's the catch: on the back of your cards will be a very unobtrusive little advert for VistaPrint offering the recipient free cards. You will also get e-mails every day where they advertise their promotions, which also includes more free stuff for your business! It's an annoyance worth putting up with.
Vista Print is a good way of getting free business cards. You can order 250 cards, that you yourself design online, and all you pay is the shipping costs, which are variable depending on how fast you want them. The best rate, if you are prepared to wait up to 21 days, is $7.95.
If, like many people who would read a blog such as this, are considering a sideline business to supplement your business, or if you already have one, but need new cards, this is worth considering.
Here's the catch: on the back of your cards will be a very unobtrusive little advert for VistaPrint offering the recipient free cards. You will also get e-mails every day where they advertise their promotions, which also includes more free stuff for your business! It's an annoyance worth putting up with.
Tips For Frugal Living: Change The Way You Buy Music
Tips For Frugal Living: Change The Way You Buy Music
As far as dowloading music goes, Emusic is a good deal. You can get 50 free downloads just for joining, and in my case, because I bought an RCA Lyra MP3 player, I was able to get 100 free downloads as part of one of their special promos. Regular prices are decent too, about $0.33/song. Compare that with $0.99 from other sites. They also have a deal where, in addition you can get 1 free download per day after the free trial membership lapses and the regular one kicks in.
Here's the catch: E-music is all independent label stuff, so you wont find the current big name stuff that HMV & Sam's are flogging in their big displays. You can get music from yesteryear that has been picked up by independent labels, as well as some good somewhat known artists on independent labels.
Their classical repertoire is excellent, with Naxos (being considered an independent label) recordings, and plenty of others.
Enjoy!!! It's inexpensive, good quality, and best of all, legal and ethical. BTW, you have the songs forever (no licensing restrictions) on an unlimited basis. so you can put them on as many Cds or MP3 players as many times as you like!
As far as dowloading music goes, Emusic is a good deal. You can get 50 free downloads just for joining, and in my case, because I bought an RCA Lyra MP3 player, I was able to get 100 free downloads as part of one of their special promos. Regular prices are decent too, about $0.33/song. Compare that with $0.99 from other sites. They also have a deal where, in addition you can get 1 free download per day after the free trial membership lapses and the regular one kicks in.
Here's the catch: E-music is all independent label stuff, so you wont find the current big name stuff that HMV & Sam's are flogging in their big displays. You can get music from yesteryear that has been picked up by independent labels, as well as some good somewhat known artists on independent labels.
Their classical repertoire is excellent, with Naxos (being considered an independent label) recordings, and plenty of others.
Enjoy!!! It's inexpensive, good quality, and best of all, legal and ethical. BTW, you have the songs forever (no licensing restrictions) on an unlimited basis. so you can put them on as many Cds or MP3 players as many times as you like!
Thursday, March 13, 2008
Tip for Frugal Living: Freecycle!
Tip for Frugal Living: Freecycle
What's better than getting a great deal at a thrift store or garage sale? Getting it free, of course!
Freecycle is an international organization thatacts locally. It helps keep items that in times past would have been thrown away, out of landfills, and finds people who can make use of them. The catch is that no money is to change hands!
It operates on the Yahoo Groups platform, and all you have to do is join your local group, and if you can live with the rules, which are pretty much that everything must be free, legal and appropriate for all ages.
Not only can you get rid of your own clutter and give it new life in the hands of someone who needs or wants it, or get stuff you need gratis, but it also gives you the opportunity to meet great socially conscious people in your own area!
What's better than getting a great deal at a thrift store or garage sale? Getting it free, of course!
Freecycle is an international organization thatacts locally. It helps keep items that in times past would have been thrown away, out of landfills, and finds people who can make use of them. The catch is that no money is to change hands!
It operates on the Yahoo Groups platform, and all you have to do is join your local group, and if you can live with the rules, which are pretty much that everything must be free, legal and appropriate for all ages.
Not only can you get rid of your own clutter and give it new life in the hands of someone who needs or wants it, or get stuff you need gratis, but it also gives you the opportunity to meet great socially conscious people in your own area!
Today was not a good day, but at least I learned a few things
Like yesterday, the Ides of March crept up on me again with yet another phone call from a creditor, responded to with hastily made payment arrrangements that I hope those who pay me will allow me to meet (I'm behind on several payments because commissions have been late coming in) .
It is so frustrating knowing that in 3 weeks time, I will be receiving enough money to propel me on the first leg of the journey to eventual financial freedom, but that I have to get through the next three weeks, during which my "best friends" will be accounts receivable personnel at my cell phone company, two credit card companies, and the phone company. The main thing is to survive those 3 weeks without having phone service cut off, or a credit card charged off.
I would not wish this kind of living hell on my worst enemy.
Today, I contacted the local credit union to discuss what possibilities there were to roll over some high interest debt over to a low interest loan so as to reduce monthly payments with a view to making debt repayment, and day to day life easier, but to no avail. I would have to join the credit union, and bank with them for a year to qualify for an unsecured loan, especially given my FICO score. (IMHO, Isaac is NOT Fair!) . However the girl on the phone was helpful in terms of educating me on how to play the game , and thinks it possible that I can raise my FICO score to acceptable levels within 6 months, buy sticking to a debt repayment plan, and MAKING ABSOLUTELY SURE that for the next 6 months I Make ALL credit card payments by the due date and NEVER exceed the credit limits of any card. Apparently that can ding your score like nothing else, even if you go over limit by a dollar!
My intention is to never borrow new money again, from this day forward, but within 6 months, I would like to get a 0% balance transfer card so I can shift as much high interest debt as possible to them and pay it down aggressively over a year. The cards whose balances I would transfer over would of course, be cut up and the accounts never used again. I will not close accounts until my FICO score is back at an acceptable level.
It is so frustrating knowing that in 3 weeks time, I will be receiving enough money to propel me on the first leg of the journey to eventual financial freedom, but that I have to get through the next three weeks, during which my "best friends" will be accounts receivable personnel at my cell phone company, two credit card companies, and the phone company. The main thing is to survive those 3 weeks without having phone service cut off, or a credit card charged off.
I would not wish this kind of living hell on my worst enemy.
Today, I contacted the local credit union to discuss what possibilities there were to roll over some high interest debt over to a low interest loan so as to reduce monthly payments with a view to making debt repayment, and day to day life easier, but to no avail. I would have to join the credit union, and bank with them for a year to qualify for an unsecured loan, especially given my FICO score. (IMHO, Isaac is NOT Fair!) . However the girl on the phone was helpful in terms of educating me on how to play the game , and thinks it possible that I can raise my FICO score to acceptable levels within 6 months, buy sticking to a debt repayment plan, and MAKING ABSOLUTELY SURE that for the next 6 months I Make ALL credit card payments by the due date and NEVER exceed the credit limits of any card. Apparently that can ding your score like nothing else, even if you go over limit by a dollar!
My intention is to never borrow new money again, from this day forward, but within 6 months, I would like to get a 0% balance transfer card so I can shift as much high interest debt as possible to them and pay it down aggressively over a year. The cards whose balances I would transfer over would of course, be cut up and the accounts never used again. I will not close accounts until my FICO score is back at an acceptable level.
Wednesday, March 12, 2008
They Make You Feel Like a Death Row Inmate
Some days are like this. I'm a month behind on two credit cards, and a month behind on my cellphone, and a month behind on my landline (Only one month now since i made a payment yesterday) I will have enough money coming in before the end of the month to cover these bills, trouble is my creditors don't want to wait to be paid out over a couple of weeks. They want the money N-O-W!!!!!
There is no worse feeling in the world than the fear that goes down your spine every time the phone rings at a time such as this. 90 % of the calls are legitimate business calls, but that one call from a creditor will always come in, and ruin my day. (Just had another one as I was typing this. Little do they know that in April, their card is targetted for total payoff and they can no longer extort from me, nor call me ever again!) As I stated in my story, come April, I will not only be up to date on all bills, but I will have been able to start an emergency fund, AND pay off one, maybe even two credit card balances in full. The trouble is, will I be able to get from here, March 12th until April without being cut off by someone or charged off by another?
Debt is serfdom. Serfdom is defined as indentured labour. All the money we bring in is claimed, down to the last penny by bills and credit card companies. I can live with the power, gas and phone bills... they are an unfortunate neccessity. But the credit card bills I resent. I HATE (yes, it is a strong word) that industry. I am so looking forward to paying out and cutting up that first card. (I gave myself a bit of a foretaste the other night by cutting up a card I had that has a zero balance)
Essentially I am no longer working for myself and my family's betterment so much as to protect them from creditors. I can't take any more of these phone calls! They start phoning when you're even a week late!
I am so depressed about this, made worse by the fact that There's little I can do to start paying things off until April. All I can do is cling to the knowledge that I will have the wherewithall to do it then... the hard part is having to fend off creditors until then, an keep food on the table.
If there's any advice that I'm qualified to give, that you can take to the bank, it is this....If you don't have one, never, ever ever EVER get a credit card. You don't need one. Looking back on my life, the biggest mistake i ever made was getting a credit card. the second biggest was not learning from my experience the first time.
Once I have paid these suckers off, if I find I ever "need" a credit card to book a flight, rent a car etc, I will either get a prepaid master card or an American Express green charge card. That's if I can even qualify for one after the mauling my credit rating has taken over the last 5-6 months. (FICO Score: 576).
Why am I telling you this? I just needed somewhere to vent, and if my venting helps someone put the brakes on living on credit, because they don't want to be where I am, then I've done my job.
I feel like the criminal on death row who is brought in to tell high school students to change their ways or end up like them. These collectors from the credit card companies have a way of making you feel like you're Ted Bundy.
There is no worse feeling in the world than the fear that goes down your spine every time the phone rings at a time such as this. 90 % of the calls are legitimate business calls, but that one call from a creditor will always come in, and ruin my day. (Just had another one as I was typing this. Little do they know that in April, their card is targetted for total payoff and they can no longer extort from me, nor call me ever again!) As I stated in my story, come April, I will not only be up to date on all bills, but I will have been able to start an emergency fund, AND pay off one, maybe even two credit card balances in full. The trouble is, will I be able to get from here, March 12th until April without being cut off by someone or charged off by another?
Debt is serfdom. Serfdom is defined as indentured labour. All the money we bring in is claimed, down to the last penny by bills and credit card companies. I can live with the power, gas and phone bills... they are an unfortunate neccessity. But the credit card bills I resent. I HATE (yes, it is a strong word) that industry. I am so looking forward to paying out and cutting up that first card. (I gave myself a bit of a foretaste the other night by cutting up a card I had that has a zero balance)
Essentially I am no longer working for myself and my family's betterment so much as to protect them from creditors. I can't take any more of these phone calls! They start phoning when you're even a week late!
I am so depressed about this, made worse by the fact that There's little I can do to start paying things off until April. All I can do is cling to the knowledge that I will have the wherewithall to do it then... the hard part is having to fend off creditors until then, an keep food on the table.
If there's any advice that I'm qualified to give, that you can take to the bank, it is this....If you don't have one, never, ever ever EVER get a credit card. You don't need one. Looking back on my life, the biggest mistake i ever made was getting a credit card. the second biggest was not learning from my experience the first time.
Once I have paid these suckers off, if I find I ever "need" a credit card to book a flight, rent a car etc, I will either get a prepaid master card or an American Express green charge card. That's if I can even qualify for one after the mauling my credit rating has taken over the last 5-6 months. (FICO Score: 576).
Why am I telling you this? I just needed somewhere to vent, and if my venting helps someone put the brakes on living on credit, because they don't want to be where I am, then I've done my job.
I feel like the criminal on death row who is brought in to tell high school students to change their ways or end up like them. These collectors from the credit card companies have a way of making you feel like you're Ted Bundy.
Read 3 times daily: Morning, Noon and Night!
I found this on the Discussion Forum at Get Rich Slowly, posted by Cleverbeans . I'm posting it here primarily for my own benefit, but it looks like a powerful motivator to keep me from losing focus:
Goal: Get out of debt
Why am I committed to achieving this goal right now?
To make sure that my money is working for me and my family, not someone else. To prove something about my self-discipline and character to my friends and family. To simplify my bills every month and free up my time which is precious to me. Because it's a smart thing to do,and I'm a smart guy!
How will I feel when I've completed this goal?
Fantastic! I'll have a lot of freedom that I didn't have before, and I'll be more confident. I'll be very excited about getting to watch my wealth grow rather then dwindle and that passion will translate into all areas of my life. My relationship with my wife will be more loving and peaceful, which will feel amazing. I'll feel very focused as well, knowing how much I've accomplished will only drive me to greater heights. I'll feel more loving because I'll be able to support my kids through college and afford them every opportunity they deserve, all the while teach them about responsible money management.
What will it cost me to not change today?
I'll be losing money hand over fist every single day I delay this. The strain on our finances will also strain my marriage, and it pains me to argue with the woman I love and not be able to buy her the things I want because we're broke all the time. I won't be able to send my children through college and I'll feel awful watching them struggle under the burden of huge student loans or worse, never going to college at all because they can't afford it. If I don't make this change, I'll also be teaching my kids all the wrong things about money and I owe them more then that. I'd lose a lot of the passion I have for life the longer that I go on like this knowing that I could be doing better but choosing not to. I'd be ashamed of my finances and that would likely lead to lying about it to my loved ones, and that's not the kind of man I want to be.
Goal: Get out of debt
Why am I committed to achieving this goal right now?
To make sure that my money is working for me and my family, not someone else. To prove something about my self-discipline and character to my friends and family. To simplify my bills every month and free up my time which is precious to me. Because it's a smart thing to do,and I'm a smart guy!
How will I feel when I've completed this goal?
Fantastic! I'll have a lot of freedom that I didn't have before, and I'll be more confident. I'll be very excited about getting to watch my wealth grow rather then dwindle and that passion will translate into all areas of my life. My relationship with my wife will be more loving and peaceful, which will feel amazing. I'll feel very focused as well, knowing how much I've accomplished will only drive me to greater heights. I'll feel more loving because I'll be able to support my kids through college and afford them every opportunity they deserve, all the while teach them about responsible money management.
What will it cost me to not change today?
I'll be losing money hand over fist every single day I delay this. The strain on our finances will also strain my marriage, and it pains me to argue with the woman I love and not be able to buy her the things I want because we're broke all the time. I won't be able to send my children through college and I'll feel awful watching them struggle under the burden of huge student loans or worse, never going to college at all because they can't afford it. If I don't make this change, I'll also be teaching my kids all the wrong things about money and I owe them more then that. I'd lose a lot of the passion I have for life the longer that I go on like this knowing that I could be doing better but choosing not to. I'd be ashamed of my finances and that would likely lead to lying about it to my loved ones, and that's not the kind of man I want to be.
Gas prices: 10 Ways To Save At The Pump
One thing that has put a hole in my pocket are the constantly rising gas prices. I believe we are simply being hosed by companies who know that they can charge what they want and get away with it because we are so car-addicted that we will pay even while we complain.
Rants aside, how to deal with these prices?
Here are some suggestions:
1)If you live or work near a First Nations Sovereign Territory, buy your gas there. The First Nations get their gas tax free, and sell it at a significant discount from off-reserve prices. I've seen spreads of between $0.04-$0.10/litre.
2) Buy regular gas. Don't get sucked into the marketing of higher octane (more epensive) fuels as a panacea to keep the car rnning better. Unless you're getting a knock, then your vehicle will run just as well on regular.
3) Drive calmly, accellerate naturally. Slamming your foot into the gas won't get you where you're going much more quickly. Also reduces the chances of getting a ticket, or having an accident, both of which bear their costs in terms of fines or premium increases, which are both nothing more than tossing money into the fire. And both will ultimately slow you down.
3)If you have two vehicles, and need both, use the more fuel efficient one for your city driving needs, errands and other day to day needs.
4) I know it means laying out a few shekels initially, but make sure air filters are clean, spark plugs are replaced regularly and of course oil. What you save in gas (Not to mention MAJOR repairs) will more than pay for the parts. If possible, do it yourself.
5) Don't speed. You save on gas, you save on tickets, you save on insurance.'Nuff said.
6) If you have A/C don't use it unless you must. Save it for the really hot days, and highway driving, where the drag will cost you more in fuel efficiency than the A/C.
7) If you can, walk to the store for small errands rather than drive. It'll save you on gas, and help your general health. I'm not a big fan of public transport if you have a car. When it costs $2.00 or more to ride the bus, you're further ahead financially by driving to your destination. Public transport makes sense, however, if you buy a pass and use it regularly (It only pays for itself if you're using it twice daily), or if you're going into the downtown core of a city, and will have to pay for parking. Then the $2.00 bus fare starts looking more attractive.
8) Idle the engine as little as possible. For warm up, a minute is sufficient. Note: This dos not apply in a Canadian winter when one is stuck waiting for someone to be picked up, or when one's car is covered with 2-3 cm of ice after freezing rain. Common sense rules at the end of the day.
9) If you're going to use the car wash anyway, some companies, such as Petro-Canada will give you a discount on your gas ($0.04/litre) if you buy a car wash. At times like this it's worth it.
Note: Some argue that you will save by washing your car yourself: In communities where water is not metered and billed, that makes sense, but where billing applies, it's worth going to the car wash from time to time.
10) Pay cash, if at all possible. Unless you're the kind of person credit card companies loathe, ie: one who pays off their balance in full each month, yor tank of gas will cost you an obscene amount in compounded interest on top of the price at the pump!
Rants aside, how to deal with these prices?
Here are some suggestions:
1)If you live or work near a First Nations Sovereign Territory, buy your gas there. The First Nations get their gas tax free, and sell it at a significant discount from off-reserve prices. I've seen spreads of between $0.04-$0.10/litre.
2) Buy regular gas. Don't get sucked into the marketing of higher octane (more epensive) fuels as a panacea to keep the car rnning better. Unless you're getting a knock, then your vehicle will run just as well on regular.
3) Drive calmly, accellerate naturally. Slamming your foot into the gas won't get you where you're going much more quickly. Also reduces the chances of getting a ticket, or having an accident, both of which bear their costs in terms of fines or premium increases, which are both nothing more than tossing money into the fire. And both will ultimately slow you down.
3)If you have two vehicles, and need both, use the more fuel efficient one for your city driving needs, errands and other day to day needs.
4) I know it means laying out a few shekels initially, but make sure air filters are clean, spark plugs are replaced regularly and of course oil. What you save in gas (Not to mention MAJOR repairs) will more than pay for the parts. If possible, do it yourself.
5) Don't speed. You save on gas, you save on tickets, you save on insurance.'Nuff said.
6) If you have A/C don't use it unless you must. Save it for the really hot days, and highway driving, where the drag will cost you more in fuel efficiency than the A/C.
7) If you can, walk to the store for small errands rather than drive. It'll save you on gas, and help your general health. I'm not a big fan of public transport if you have a car. When it costs $2.00 or more to ride the bus, you're further ahead financially by driving to your destination. Public transport makes sense, however, if you buy a pass and use it regularly (It only pays for itself if you're using it twice daily), or if you're going into the downtown core of a city, and will have to pay for parking. Then the $2.00 bus fare starts looking more attractive.
8) Idle the engine as little as possible. For warm up, a minute is sufficient. Note: This dos not apply in a Canadian winter when one is stuck waiting for someone to be picked up, or when one's car is covered with 2-3 cm of ice after freezing rain. Common sense rules at the end of the day.
9) If you're going to use the car wash anyway, some companies, such as Petro-Canada will give you a discount on your gas ($0.04/litre) if you buy a car wash. At times like this it's worth it.
Note: Some argue that you will save by washing your car yourself: In communities where water is not metered and billed, that makes sense, but where billing applies, it's worth going to the car wash from time to time.
10) Pay cash, if at all possible. Unless you're the kind of person credit card companies loathe, ie: one who pays off their balance in full each month, yor tank of gas will cost you an obscene amount in compounded interest on top of the price at the pump!
Tuesday, March 11, 2008
Just Sit Right bBack, and You'll Hear a Tale....
" a tale of some dirty tricks".
This is an excellent PBS documentary about how the credit card industry became the allconsuming monster it is today, literally enslaving millions for life, destraying families, and causing untold misery in the lives of most people who use them. The first step away from this kind of serfdom is education, and this movie qualifies as Credit Card 101.
There's some good stuff here but if you want to skip straight to the documentary "Secret History of the Credit Card", then click here
This is an excellent PBS documentary about how the credit card industry became the allconsuming monster it is today, literally enslaving millions for life, destraying families, and causing untold misery in the lives of most people who use them. The first step away from this kind of serfdom is education, and this movie qualifies as Credit Card 101.
There's some good stuff here but if you want to skip straight to the documentary "Secret History of the Credit Card", then click here
Increasing income increases taxes, right?
Not neccessarily. We just found a way to increase our income by $700.00 per month without tax liability.
Where we live there is an International students hosting plan. The bottom line is, you as a volunteer, open your home to an international student who comes to the Ontario Public School system to learn and live in English, and the school board will re-imburse you to the tune of $700.00 per month for expenses. This is non-taxable money. Check with your local school boards and find out if they have a program such as this in place.
Where we live there is an International students hosting plan. The bottom line is, you as a volunteer, open your home to an international student who comes to the Ontario Public School system to learn and live in English, and the school board will re-imburse you to the tune of $700.00 per month for expenses. This is non-taxable money. Check with your local school boards and find out if they have a program such as this in place.
Why Listen To Me?
I'm broke. As Dave Ramsey would say "Why would you want to take advice from a broke person?" First off, I am not offering my own advice, but sharing what I am learning, and applying to my own life, and there will be something to learn from my experiences.
I started wanting to get serious about our debt problem last spring (2007) after hearing Dave Ramsay talking about his debt snowball plan, but I got stymied 3 weeks later when my wife had to leave the country and got (us) hit with thousands of dollars in medical bills. This only made our situation worse. See"How We Ended Up in Debt Hell"
Now we are faced with a do or die situation, and have had one last lifeline thrown our way, so it's now or never.
What I have learned so far from listening to Dave Ramsey and reading blogs like Get Rich Slowly, and Zen Habits is that 1) You need to stop borrowing. Now. Immediately. Totally. ANY borrowing adds to your debt and means a greater output of money each month.
2) You need to spend less than you make. This can be accomplished to some degree by cutting back on things, and cutting others out. Alternately you can find ways to increase your income if that's possible. Ideally you can do both.
3) You need to get current with your bills and establish an emergency fund, which should, ideally be at least $1000.00 if you're still in debt, or up to 3 months living expenses once you're debt free. When (NOT IF) life's incidentals hit, you can deal with them without going back into debt.
4) You need to start paying down your debts, as quickly as possible.
5) You need to plan your spending, which means some sort of budget. Even if you're in debt you regain even some measure of control over your life again.
More on these later in separate posts.
I started wanting to get serious about our debt problem last spring (2007) after hearing Dave Ramsay talking about his debt snowball plan, but I got stymied 3 weeks later when my wife had to leave the country and got (us) hit with thousands of dollars in medical bills. This only made our situation worse. See"How We Ended Up in Debt Hell"
Now we are faced with a do or die situation, and have had one last lifeline thrown our way, so it's now or never.
What I have learned so far from listening to Dave Ramsey and reading blogs like Get Rich Slowly, and Zen Habits is that 1) You need to stop borrowing. Now. Immediately. Totally. ANY borrowing adds to your debt and means a greater output of money each month.
2) You need to spend less than you make. This can be accomplished to some degree by cutting back on things, and cutting others out. Alternately you can find ways to increase your income if that's possible. Ideally you can do both.
3) You need to get current with your bills and establish an emergency fund, which should, ideally be at least $1000.00 if you're still in debt, or up to 3 months living expenses once you're debt free. When (NOT IF) life's incidentals hit, you can deal with them without going back into debt.
4) You need to start paying down your debts, as quickly as possible.
5) You need to plan your spending, which means some sort of budget. Even if you're in debt you regain even some measure of control over your life again.
More on these later in separate posts.
How We Ended Up in Debt Hell
I am in debt up to my eyeballs. Serious debt. You know, the kind of debt you find yourself in when you finally hit the wall. Your line of credit is maxed out, your cards (plural) are maxed out, and you are forced to live on what you earn, no more, no less....actually much less. Even though the cards have been put away, the bills keep coming in.....Then you fall behind on some payments, and the calls start coming, often on a daily basis. On the bright side, I may not have a phone much longer at this rate, but I digress. They'll just turn to the mailbox, the trip to which I dread every day where I will only find more bills marked "past due".
However, the journey to freedom has already begun, and despite the moments where I feel like a rope and a stool are are a serious option, now, there is a speck of light at the end of the tunnel.
My wife and I have been living from paycheque to payheque since almost day one. We have been up and down the debt ladder several times only to get right back to where we were, only worse each time.
The first time we had trouble we took a consolidation loan to cover about $5000.00 in debts. The bank required us to turn in our cards, and sent letters to each creditor asking them to close the accounts.
Within two years, there we were again, $5000 or more in debt! Our income at the time was much lower than it is now, and we were sweating big time. Then we got a surprise cheque from the government, which was to compensate for overpayment in income tax, and we wiggled out once again. This time we did not cut up our cards, and the companies gave us even larger limits. The reeled us in like the fish we were. We fell into every trap they set. Walk into Sears to buy some shoes for the kids, and Sears gave us $10.00 off the purchase if we would take their card, and purchase the shoes on it. Naturally, we accepted, even though it was against our better judgment, with the full intention of paying the balance in full and bever using it again. We all know where the road paved with good intentions leads....
By the end of 1996 we were drowning again. I'll never forget how my daughter's tongue was yellow from eating chicken soup so regularly. I could not get a raise from my then-employer, nor could my wife from hers. We were looking , for the first time, at the possibility of losing our house.
Then in Jan. 1997, I was headhunted, and got a $20 000 signing bonus (to be paid in two installments) and a near tripling of my salary to jump to the new company. We were saved again. Every penny went toward paying off credit card debt. But again , we kept the cards.
A year later, we had some debt, but with the new salary, we could manage just fine with minimum payments, but still kept on living from paycheque to paycheque (My wife had stopped working to stay home with our daughter.) We sold our first house, and with the second installment of my signing bonus put a downpayment on House number two. We moved in Feb 1998, and within three weeks, my new job was history.... I got my two week notice, and within that time had lined up two possible new jobs which would have paid me the same. One was with my old company so I took that one. However, with the new house, came the "need" for new furnishings, and before we knew what hit us, we were back up to our eyeballs in it again in April 2000, I lost my job again (partly due to being distracted by financial concerns) but quickly found another which kept us afloat, but just treading water. By the end of 2000, the new job was not working out well, so I left, and lined up a new one the next day. A family member bailed us out of our debt, so we started fresh again.... but again did not change our habits. By the summer of 2001, we were looking down both barrels again. We decided then to put our house on the market and downsize. During this process, we got lousy offers, and then 9/11 hit and everything changed for everyone. Our Realtor suggested that intead of selling and downsizing, that we remortgage the house, and pay off our debts. We did this, and on Dec. 11th, 2001, we were debt free once again..... but not for long.... 2002 did not bring much good for us either. I was let go by my employer, and was left with little else but to start my own business which i continue to operate to this day. I did not qualify for unemployment insurance payments since i had started my own business, and even though I would see no income for a couple of months, I was considered "employed" so my wife went back to work outside the home, while I worked from home.
Again, the debts started piling up, but a bit more slowly than in times past, but by the summer of 2004, things were a mess once again. We put the house on the market, and there it stayed for several months without a single offer. Realtors have a way of not telling you what needs to be done just so you hear waht you want to hear, and they get the listing.
by Jan 2005, we had hit the wall. It got so bad that even though our income was good, our expenses, because of the compound interest of credit cards, exceeded what was coming in. We were hurting so badly that we had to look into a second mortgage to pay off our debts which at that point totalled over $40 000.00. We did that, through my wife's tears, and used the residual to start upgrading the house so that we could sell it, since by then my wife had decided she wanted to leave the province in which we lived. So on the renovations went from May 2005 through August 2006, and again we managed to accumulate significant debt just to complete the job, but fortunately for us, the housing market was exploding, and the values increased by over 20% in almost 18 months. We had learned our lesson about realtors, and sold our house ourselves, on the first day on the market, for nearly full asking price, saving us an enormous commission.
However, our trip to the notary/lawyer's office was not very pleasant since it was time to pay the piper: To close out our mortgage, we had to pay the balance in full. We also had to pay the second mortgage in full, and our mortgage company, in order to get our new house outside the province, required us to pay off over $35 000 in debts! This left us with a grand total of enough to pay our down payment and closing fees for our new home, pay the movers, and leave us with about $2500 in the bank.
We tjough it would be slam dunk for my wife to find new wok, but how wrong we were. We started renovating immediately after we moved in , but still no job was forthcoming. Finally we found out that she needed to get accredtation for this province before she could ply her trade, so she had to go to school for several months. So we were down to one income again, and the line of credit and credit cards carried us through until she finished school and landed a new job. Then she had to fly home to her country because of the death of one of her parents, which meant more money out on the credit cards and line of credit. By October, we had hit the wall, and my income took a major hit. Sine then we have fallen behind on some payments (never missed a mortgage of car lease payment, though) We have received letters from the utilities (here they come after you if you're three weeks late) threatening us with being cut off, so we have had to put some other bils off (department store credit cards. Major cards have always been paid on time) and are getting calls almost daily.
Early February, it looked hopeless, almost to the point where I would lose everything. I had enough income to cover a few expenses and keep a creditor or two at bay , at least temporarily, but little more that that. March would be the end, and it would have to end with the sale of my house to pay off debts, and back to renting, something I have not done since 1992.
Then things broke in a wonderful way for me. I confirmed a huge amount of new business, enough to at least get me caught up on all expenses, and slay a credit card or two, while starting an emergency fund.
This will be the beginning of the journey toward freedom for us. We have decided that if possible , we will pay down our cards using the Debt snowball method, and reel in several aspects of our lifestyle. We have resolved NOT to borrow any more. Ever . (We have not cut all the cards up yet, because there is still about three weeks to go before we can establish an emergency fund of $1000.00), but will cut them all up once we can do that. The evidence is clear that we simply cannot handle credit cards. For booking hotels, flights etc, we will get a American Express Green Charge Card which of course, must be paid in full each month.
Nothing will be bought until it is absolutely needed, and if possible at a discount store like Giant Tiger or even thrift stores if possible. Eating out will only be done when we have the cash to do so, and only in celebration of big events like brthdays, and to celebrate each time a debt is paid off. We are always looking out for new ways to save.
We also plan to sell off alot of clutter in our house at a garage sale, which we will probably have to hold in April, given the amount of snow we have now. All proceeds to go toward debt repayment. We plan to get rid of CDs' (they helped me get into debt-my big vice)since all my music is now stored on my computer and MP3 players, books, and out of the still usable light fixtures, and other things we replaced during or renovations, in addition to alot of other nickel and dime stuff we have accumulated over time, and never use.
Our goal may be a bit ambitious, but we plan to be free of credit card debt within a year, and free of all debt within two.
However, the journey to freedom has already begun, and despite the moments where I feel like a rope and a stool are are a serious option, now, there is a speck of light at the end of the tunnel.
My wife and I have been living from paycheque to payheque since almost day one. We have been up and down the debt ladder several times only to get right back to where we were, only worse each time.
The first time we had trouble we took a consolidation loan to cover about $5000.00 in debts. The bank required us to turn in our cards, and sent letters to each creditor asking them to close the accounts.
Within two years, there we were again, $5000 or more in debt! Our income at the time was much lower than it is now, and we were sweating big time. Then we got a surprise cheque from the government, which was to compensate for overpayment in income tax, and we wiggled out once again. This time we did not cut up our cards, and the companies gave us even larger limits. The reeled us in like the fish we were. We fell into every trap they set. Walk into Sears to buy some shoes for the kids, and Sears gave us $10.00 off the purchase if we would take their card, and purchase the shoes on it. Naturally, we accepted, even though it was against our better judgment, with the full intention of paying the balance in full and bever using it again. We all know where the road paved with good intentions leads....
By the end of 1996 we were drowning again. I'll never forget how my daughter's tongue was yellow from eating chicken soup so regularly. I could not get a raise from my then-employer, nor could my wife from hers. We were looking , for the first time, at the possibility of losing our house.
Then in Jan. 1997, I was headhunted, and got a $20 000 signing bonus (to be paid in two installments) and a near tripling of my salary to jump to the new company. We were saved again. Every penny went toward paying off credit card debt. But again , we kept the cards.
A year later, we had some debt, but with the new salary, we could manage just fine with minimum payments, but still kept on living from paycheque to paycheque (My wife had stopped working to stay home with our daughter.) We sold our first house, and with the second installment of my signing bonus put a downpayment on House number two. We moved in Feb 1998, and within three weeks, my new job was history.... I got my two week notice, and within that time had lined up two possible new jobs which would have paid me the same. One was with my old company so I took that one. However, with the new house, came the "need" for new furnishings, and before we knew what hit us, we were back up to our eyeballs in it again in April 2000, I lost my job again (partly due to being distracted by financial concerns) but quickly found another which kept us afloat, but just treading water. By the end of 2000, the new job was not working out well, so I left, and lined up a new one the next day. A family member bailed us out of our debt, so we started fresh again.... but again did not change our habits. By the summer of 2001, we were looking down both barrels again. We decided then to put our house on the market and downsize. During this process, we got lousy offers, and then 9/11 hit and everything changed for everyone. Our Realtor suggested that intead of selling and downsizing, that we remortgage the house, and pay off our debts. We did this, and on Dec. 11th, 2001, we were debt free once again..... but not for long.... 2002 did not bring much good for us either. I was let go by my employer, and was left with little else but to start my own business which i continue to operate to this day. I did not qualify for unemployment insurance payments since i had started my own business, and even though I would see no income for a couple of months, I was considered "employed" so my wife went back to work outside the home, while I worked from home.
Again, the debts started piling up, but a bit more slowly than in times past, but by the summer of 2004, things were a mess once again. We put the house on the market, and there it stayed for several months without a single offer. Realtors have a way of not telling you what needs to be done just so you hear waht you want to hear, and they get the listing.
by Jan 2005, we had hit the wall. It got so bad that even though our income was good, our expenses, because of the compound interest of credit cards, exceeded what was coming in. We were hurting so badly that we had to look into a second mortgage to pay off our debts which at that point totalled over $40 000.00. We did that, through my wife's tears, and used the residual to start upgrading the house so that we could sell it, since by then my wife had decided she wanted to leave the province in which we lived. So on the renovations went from May 2005 through August 2006, and again we managed to accumulate significant debt just to complete the job, but fortunately for us, the housing market was exploding, and the values increased by over 20% in almost 18 months. We had learned our lesson about realtors, and sold our house ourselves, on the first day on the market, for nearly full asking price, saving us an enormous commission.
However, our trip to the notary/lawyer's office was not very pleasant since it was time to pay the piper: To close out our mortgage, we had to pay the balance in full. We also had to pay the second mortgage in full, and our mortgage company, in order to get our new house outside the province, required us to pay off over $35 000 in debts! This left us with a grand total of enough to pay our down payment and closing fees for our new home, pay the movers, and leave us with about $2500 in the bank.
We tjough it would be slam dunk for my wife to find new wok, but how wrong we were. We started renovating immediately after we moved in , but still no job was forthcoming. Finally we found out that she needed to get accredtation for this province before she could ply her trade, so she had to go to school for several months. So we were down to one income again, and the line of credit and credit cards carried us through until she finished school and landed a new job. Then she had to fly home to her country because of the death of one of her parents, which meant more money out on the credit cards and line of credit. By October, we had hit the wall, and my income took a major hit. Sine then we have fallen behind on some payments (never missed a mortgage of car lease payment, though) We have received letters from the utilities (here they come after you if you're three weeks late) threatening us with being cut off, so we have had to put some other bils off (department store credit cards. Major cards have always been paid on time) and are getting calls almost daily.
Early February, it looked hopeless, almost to the point where I would lose everything. I had enough income to cover a few expenses and keep a creditor or two at bay , at least temporarily, but little more that that. March would be the end, and it would have to end with the sale of my house to pay off debts, and back to renting, something I have not done since 1992.
Then things broke in a wonderful way for me. I confirmed a huge amount of new business, enough to at least get me caught up on all expenses, and slay a credit card or two, while starting an emergency fund.
This will be the beginning of the journey toward freedom for us. We have decided that if possible , we will pay down our cards using the Debt snowball method, and reel in several aspects of our lifestyle. We have resolved NOT to borrow any more. Ever . (We have not cut all the cards up yet, because there is still about three weeks to go before we can establish an emergency fund of $1000.00), but will cut them all up once we can do that. The evidence is clear that we simply cannot handle credit cards. For booking hotels, flights etc, we will get a American Express Green Charge Card which of course, must be paid in full each month.
Nothing will be bought until it is absolutely needed, and if possible at a discount store like Giant Tiger or even thrift stores if possible. Eating out will only be done when we have the cash to do so, and only in celebration of big events like brthdays, and to celebrate each time a debt is paid off. We are always looking out for new ways to save.
We also plan to sell off alot of clutter in our house at a garage sale, which we will probably have to hold in April, given the amount of snow we have now. All proceeds to go toward debt repayment. We plan to get rid of CDs' (they helped me get into debt-my big vice)since all my music is now stored on my computer and MP3 players, books, and out of the still usable light fixtures, and other things we replaced during or renovations, in addition to alot of other nickel and dime stuff we have accumulated over time, and never use.
Our goal may be a bit ambitious, but we plan to be free of credit card debt within a year, and free of all debt within two.
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