Starting to See the Light

Dark Tunnel by Russell Bradshaw

A year ago this month I was in a dark tunnel.  No end to this tunnel in sight. I was lost and unsure what to do and thought that financially, I was at the point of no return.  Okay, that was a bit dramatic because there is ALWAYS a way out but I wasn't sure which was that route began.  This is when I wrote into the Suze Orman show.

That was a whirlwind.  I found myself physically on the show, talking to Suze on camera. It was completely nerve wracking and one of the best things I've done.  That episode aired on December 1, 2012 and garnered much attention from family and friends. Many of them saying how brave I was to tell my story on the show.

While on the show, Suze talked about being honest with people about who you are and what you can afford and can't afford. She also gave me some advice that I took.

Some of the advice was to:

• Stick with a budget
• Pay my student loan payment regularly
• Learn to say no to friends and family when it comes to spending money
• Take in a roommate
• Refinance my home
• Quit bowling and going out on the town
• Enroll in a debt management program

I am happy to report that I have done all of these things since my appearance on the show with the exception of quitting the bowling league. The final piece of the puzzle was the refinancing of my home.

Having debt and a bad FICO score didn't make it easy for me to get the refinancing.  I tried the traditional methods of attaining a loan and was always turned down because of my credit score. Note to my readers, if you don't take that score seriously  YOU SHOULD!

The refinancing of my home came out of the blue. My loan company sent me a overnight letter stating that I might be eligible for a streamlined refinancing program where the company would pay all fees associated with the refinance. Of course, I thought this was a hoax so I called the company to verify that they did send me this information. They did indeed send it and after answering a few questions I was eligible! Woo! Hoo!  The big question was, "How?".  The mortgage consultant stated that since I had a strong payment history with them that they wouldn't use my credit score to determine if I'd get the loan or not.  It pays to pay on time and regularly.

After nearly 3 weeks of back and forth with paperwork, I was ready to go to closing.  This was such a simple process. I met with my closing agent at Starbucks and brought with me a check for $980 to cover escrow payments for two months.  The total savings on my monthly mortgage payment is $212! I lowered my interest rate 2% over the life of the loan. I pay far less for this house than I could have ever imagined.  Honestly, I would not be able to find a studio apartment in the area for the amount I pay for this mortgage!

In the past year of following Suze Orman's advice, I've been able to reduce my debt, pay my bills in full and on time each month and no longer rely on having a roommate (currently I am without a roommate).  It feels AMAZING to have made it to this point.  Now I must stay on my plan to completely pay off my debt - but in the meantime I am enjoying the light that I am seeing at the end of this long tunnel.

One year down. Two or less years to go.

Educate. Empower. Economize.

The First Cut is the Deepest

You'll probably hear me say this over and over in this blog.  You MUST face your financial truth.  I'm standing in front of my truth officially as of December.  I consulted a debt management company to help me dig out of the pit of financial hell that I've dug myself into. They are now working with my creditors to pay back my credit debt.  There is no more ducking and dodging the phone calls from bill collectors. No more avoiding opening the bills because of fear of what I already know is the truth - I owe too much damn money to companies.  Essentially, I work for them until it's all paid for.

When you enter into one of these repayment plans you have to document all of your expenses.  Sadly this was the first time, in all of my life of having my own money to spend, that I really accounted for what money came in and what money went out.  I was a little sick to my stomach. How on earth will I find the money to pay these people?

The company I went with to help me fix my mess was Money Management International.  They offer free credit counseling - and that's really the only thing that's free.  This is when you realize that anything of value has a value attached to it somewhere.  After being told is such a delightful way, that I would have these creditors paid off in 36 months, they informed me that there is a $75 application fee and a $40 a month maintenance fee for managing it all.  Honestly, once they got my interest rates lowered, it's still less that I would be paying if I did all of this myself. Add to the fact that I would probably still duck and dodge my creditors to try to seem as though I have money to buy frivolous things for myself such as Chipotle or cocktails.

After making all of these payments, this leaves me with approximately $ 320 per month for gas, groceries, medication, etc.  At first I thought, "How the hell am I going to do this?"  Now, I know how and budgeting has become a buzz word for me. Once you accept things as they are it becomes increasingly easy to live more simply.  If you need to create a budget on your own, there are many online versions available.  Mint.com has a great system that also syncs with your smart phone AND it's free!

While it was scary to take that step and commit to having over $300 a month taken out of my bank account automatically for credit debt (which is utterly ridiculous and I own that). That's not including my student loan payment that is now being repaid in the same manner, to the tune of $512 a month. Then there's the loan payment at $227. It's almost as overwhelming to think about now as it was when I was completing my budget spreadsheet in preparation for my appearance on the Suze Orman Show. ZOINKS!  Over $1000 a month in debt payments! It's painful. Thankfully my car is paid off or I'd be in an even bigger mess!

What steps have you taken to reduce your expenses?

Start a budget with Mint.

Missed Opportunities - Right Out of the Window

I have to say - It took a lot to turn down the opportunity I was presented with for replacement windows just before Christmas. The opportunity presented to me was to offer me 6 new energy efficient windows and a full sliding glass door just below cost. What was the reason for this phenomenal offer? They wanted to use my home as a model home and advertise my address in the area to show their work. After over 2 hours of seeing windows, discussing options and his efforts on convincing me that this opportunity is once in a lifetime, I became excited about windows. The only catch - I would have less than 24 hours to decide.

The company representative was not a sales agent. In fact, he is the Director of Marketing looking for a model home. The deal was amazing and I, of course, didn't want to miss out on a deal. I love a great deal. This comes from a guy who has been known to buy things off the clearance racks just because it's such a good deal - whether I needed it or not.

I quickly thought about the benefits of getting these windows.

1. Energy efficient.
2. Look great.
3. Easy to clean.
4. Added value to my home.

Then I thought, "How in the hell am I going to come up with $5000?" Oh, I know - I can apply for the line of credit the guy was offering.  I had to be honest with him and inform him of my financial truth - "I won't get approved", I told him. "My FICO Score is in the toilet" (520 the last I've checked). He promised that since they are a $35 million dollar company, I could get approved and convinced me that I would get approved because he recently got someone approved with a credit score as low as mine who makes less of a salary than me. Then I had another thought.

"Do I really need to enter into even MORE credit debt? Even if I'm approved, I can't afford to pay it right now. I'd have to do some financial acrobatics to pull this off!"

Of course I don't need more debt!!

Then I thought, "I do have a large amount of equity in my home. What about a HELOC?" A Home Equity Line of Credit.  See, I bought my home as a foreclosure in 2008 when the real estate bubble burst and banks were trying to unload these homes. So I got a great deal and have a good amount of equity in the house.

I was all about this idea.  I only needed $5000, right?  The guy was telling me the process of when the first payment would be needed, etc. and thought that a HELOC would be a good investment.

I've watched The Suze Orman Show enough to know that a HELOC is really not the road to take. Plus, I did make the call to my mortgage company and got educated.  A HELOC has a variable rate and I would have to take out $10,000; pass a credit check and even after all of that it takes 45 - 60 days to get the money. I could hear Suze's voice yelling at me now, "Dennnnnnnnnis - What the heck do you think you're doing, boyfriend?!"

I did snap out of the fantasy of having these windows. QUICKLY!   The bottom line is that I need to pay off what I currently owe and not take on additional debt - especially a wild card form of debt that comes with a variable interest rate that I can't afford anyway!

Once I made this decision I was getting myself prepared to make the call to the representative who came by my house. He beat me to the call and as my phone rang, I mentally prepared myself to stand my ground and say I can't take the deal - as much as I knew this would add considerable selling value to my house and that it was an outstanding deal. 

The moral of this story is to practice using sound judgement. Rarely are there times where an expedited decision is needed that doesn't involve life or death.  This situation was a challenge in doing what's right, financially speaking.

It's a missed opportunity for sure. One that is missed as a result of the poor management of my finances in the past. Had I had great credit and much less debt, I'd be getting my new triple-paned, energy star rated, custom windows. Living in your financial truth takes a lot of bravery and offers more confidence in yourself (in my opinion) as the result.

Educate. Empower. Economize.

What's in Your Wallet?

One of the things that I find helpful in preventing me from spending money I don't have comes from the idea that Dave Ramsey presents - spending money out of envelopes. He suggests that you set aside envelopes with cash in them to track how much you spend. Using the "Cash Only" method is a great way to track your spending. I sometimes will carry only $20 in cash on me for the week and try to make it last all week.

 Sometimes carrying cash isn't all that helpful when you have to use a credit card for a purchase. Usually those are online purchases that present great deals on things. I have been using a pre-paid debit/credit card for a year now. I have 10% of my paycheck automatically moved to this card through direct deposit. This is the money that I use for random purchases I really don't need but just want. For example, a new pair of jeans or Starbucks Coffee. Setting a finite amount of money causes you to think differently about the purchases you make and it leaves the bulk of your money safe for bill paying. If you don't use all of the money each pay period then it carries over.

The card I use is The Suze Orman Approved Card - It was easy to set up and well, I've been a Suze Orman fan for years.  I am not endorsed by her but I do like her card for several reasons. 

1. I like how it can notify you of your spending and gives you a running tally of what's left.  You can set it up to text you after each purchase. I did turn mine off after a few weeks because it got a little annoying.  I opted for the emails instead.
2. To be able to set up different funds on the website is great!  Whether it's a vacation fund or a Christmas fund, you can set it up. Maybe this is where your carry over money goes each pay period.  
3. You've heard people mention having an emergency fund.  You can set that up here as well.  My 52 Week Money Challenge will be going into this. 

There are some things to know about The Approved Card.

• Monthly fee is $3.
• If you don't use Direct Deposit you will experience a lot of other fees.

EVERYONE AND THEIR GRANDMOTHERS seem to be on this prepaid debit/credit card idea. There is something lucrative about these cards or else celebrities and banks wouldn't be in on it. With so many choices,   I encourage you to do your research and figure out what would work best for you.  Everyone's needs are just a bit different.

Here is a SHORT list of a few banks/companies that offer them:

BB&T
Paypal
Green Dot
Rush Card
*Western Union
*Target Red Card 
*Blue Bird

Of the cards listed, the only ones that seems to be the better options are Western Union, Target Red Card and Blue Bird. Again, I stress to you - DO YOUR RESEARCH!   What works for one person will not work for everyone.

Educate. Empower. Economize.

Facing My Financial Truth

In 2012 I taped a little show by the name of The Suze Orman Show.   It was the start of something big.  The start of living honestly about my finances.

Going on the show was a whirlwind.  It happened seemingly overnight.  One day I was responding to a tweet from the Suze Orman show that asked for viewers to write in with their story. The next day I was sitting in a studio.  In my email to the show I said, "I'm in so much debt and I have no idea what to do. I bought a house, I have student loan debt and I'm behind on a lot of my bills.  I don't want to be like this when I'm 50!"

What in the hell is about to happen to me?

The producer asked about all of my personal finances. Which was embarrassing on many levels. Having watched Suze raise her voice many time over at people over some of the choices they would make,  I knew I was standing in line to get a Suze Smackdown.  Over the next week I had a few more conversations with the producer about my finances and my story and she informed me that we would be taping within a week! Oy!

This was the start of me living in my financial truth.

When I taped the show I was totally petrified - trying to really be present in the moment. What was TRULY happening to me in front of countless viewers?  You can see for yourself.

Clip of my appearance on The Suze Orman Show

Facing the truth is hard. Especially when someone presents you your truth and you don't recognize it immediately is huge!  When she said that I am almost 40 years old and don't have anything to show for it - that resonated with me like I was in the tower with the bells of Notre Dame!  It felt so totally awkward but on the other hand it felt like such a relief. Now that my truth is out there it's easier to continue living in my truth and be honest with others. When I can't do something I don't. When I want something I recognize it for what it is. A want.  I even have friends that will comment on things I may purchase by saying, "Would Suze approve?"

My truth was made available for the entire world to see. I'm now seeing it, too.  It's time to make a change so here I am.

Let's make 2013 the most financially smart year, ever!

Educate. Empower. Economize.