Paychecks and Payments

This week I discussed trying to pay bills on time with one of my friends.  We were talking about getting paid twice per month and how it can be a challenge. We had slightly different reasons of why it's challenging but the one resounding reason is that it's hard to budget yourself and still have a spontaneous social life.

Over the years I've received my pay in several ways - Weekly, bi-weekly, semi-monthly, and monthly.  Of all of these types, I had the best experience with my budget, bills and on-time payments when I received my paycheck on a monthly basis in my last job in Nevada.  Why?  Because once I was paid for the month I'd sit down and write out all of my upcoming bills.  I'd pay my rent, do any car maintenance, pay my credit cards, etc.  Whatever was left was mine to manage for the next few weeks. It helped my credit score quite a bit because many of my bills were paid early and I always paid a little extra. Two great things to boost your FICO Score.

When I moved to Virginia, this semi-monthly pay was a hard pill to swallow. I had to think about how and when I would pay my bills. I had to maneuver varying "pay by dates", car insurance, credit card and rent payments.  Trying to figure out which pay period my payments would be taken from was trial and error - AND involved quite a few bouts of that horrendous feeling you get from seeing an insufficient funds notice from your bank! Aaack!!! That's not mentioning that I hadn't begun paying back my student loans - How would I manage a nearly $500 monthly student loan payment on top of a car payment that was just over $400? I have paid off my car since then, thankfully!

During the 6 years since I've started receiving my salary on a semi-monthly basis, it wasn't until this past year that I felt like I got it figured out. You really have to budget with more intention - It. Takes. Work.

What I had to do was look at my bills and see when the due dates were and balance them out as well as I could between pay periods. That required a couple of phone calls to companies to move some dates around.  Common sense, right? Now, if you've read my older entries, you know I've entered into a money management firm to deal with all of my creditors. Clearly what I was doing wasn't all that effective and I still ended up in trouble (Pay Day Loans anyone?). The experience of this all has lead me to having a better understanding of my money and myself.  Consequently, all those credit cards and lines of credit I once had have been closed. Not that I could have used them anyhow. They were all pretty much maxed out and even attempting to use them was a game in itself.

No one really teaches you how to be financially responsible. It's a skill most people learn through trial and error (and sometimes humongous errors). 

Which way do you receive your pay check? Do you have a specific plan to pay your bills on time?  If not, why don't you?

Continuing on my journey - and yes, it's the first of the month and I've already made my payments for this pay period. YAY!

Educated. Empower. Economize.

Using Your Talents to Help Debt Disappear

I've always had an entrepreneurial spirit. As a kid I sold other kids "bicycle insurance". The insurance got them a flat tire fixed without needing to buy a patch kit or to do it themselves.  I'm pretty sure I stole that idea from Triple A.  In high school I created hand-painted sweatshirts that my mom would sell for me at her job at the Post Office.  As an adult, I've always been interested in art and became an art teacher years ago before I started working as an administrator in higher education.

Art is one of those things I can lose myself in.  Time seems to fly and I won't even notice or remember to eat lunch or dinner. A few years back, I started selling things on Etsy. I find a lot of happiness when I am creating something for others.  It wasn't until I ventured into the world of graphic design while working at a university in Nevada that it all made sense.

Graphic design is something that people use or see everyday and these days, more and more people request the services of a designer.  I took notice of this last year when a graduate student I supervised talked about how she was getting so many clients as a freelancer that she was struggling to keep up.  That conversation spawned more discussions over the next couple of years and with a lot of thought and consideration, I took the plunge and entered the world of freelancing with my site Diablo Design.

Taking something you love and figuring out a way to make money doing it is something that can help you get out of debt.  I've had friends ask me how I find time to do all of these things and work my full-time job. The answer is that I'm motivated.  Motivated to be out of debt and motivated to make money to pay my bills on time.  Motivated to have money in my pocket to do more things for fun.

Not everyone has an artistic talent to do something like this but they probably do have a talent that others are willing to pay money for. Have you ever given any consideration to what service you might offer someone? Your talent may be proofreading.  There are tons of people out there looking for that type of service. You might have a knack for writing and really enjoy sharing your words with others - you might want to share your writings by doing some self-publishing like the a friend of mine has done (she's now on her second book - Go Tumika!).  Are you a person who's handy on a sewing machine? Spread the word that you know how to do a few things with needle and thread.  Perhaps you're an awesome baker.  Bake those cakes and pastries and sell them!  The list of talents is seemingly endless. 

I remember how my grandmother hustled.  She sewed. She baked. She catered events.  She used her talents and her personality to sell things she could make and she never had a full-time job that I knew of.  Those things she would sell were her full-time job!

How does someone get started?  Like Nike says, "Just do it". You start by telling friends that you have services to offer. You tell co-workers.  You get on social media and scatter your skill set across the world wide web.  You take risks.  Not financially that is - that's how we got into this mess as it is but you can do what you can with the means you have available.  The rest is all "learn as you go".

When I first started out back in 2002, I felt as though anyone with a serious passion to sell services had a website. I spent money on this (years ago) and failed.  You can't be afraid to fail. You have to believe in yourself and in your talents that you will succeed. And you have to repeat to yourself that you must succeed in order to pay off debt.  At least that's what I told myself.

Take some time and consider what services you have to offer to others. Is it something you'd be willing to pay for yourself?  Is there a demand? Who is your audience?  Here's a great article on this very topic that may give you even more insight on how to begin.

I'd love to have a full-time career as a graphic designer and be my own boss. I'm working on getting closer to that dream. For now, I'm working on getting closer to being debt-free.

Educate. Empower. Economize.

I came across this post tonight and it rings true for me.  Does it resonate with you?

Hmmm.. let's see.  I have done  one, two, four, five, six and seven.  I guess I can't say that this is TRULY me, right? Considering I didn't do the third sign, right?  Wrong!  You had to know that was going to be my response.  

Read through these 7 signs. Even if you've done one of these and you said you'd never do it again... your finances are probably out of order.  Don't try to convince yourself that you did number six to do/take care of/pay off  _______.  There's almost no real justification to what you've done.

This year I'm committing to putting money into my savings.  That will remove the fourth sign from my list. 

Think about what you can do differently so this year can be better than the last.

Educate. Empower. Economize.

7 Warning Signs Your Finances Are Out of Order

If you're missing bills payments and not saving, it's time for a financial check-up.

by U.S. News Jan 15th 2014 12:55PM

By Sabah Karimi

Nearly three-quarters of Americans are living paycheck to paycheck and don't have emergency savings, according to a bankrate.com survey last year.

But you don't have to become part of that statistic. If you want to stay on top of your finances this year, make a commitment to review your budget regularly and take an honest look at your financial standing -- otherwise you could dig yourself deep into financial problems that may not be easy to recover from.

Here are seven warning signs it's time for a financial check-up:

1. You keep missing bill due dates. Late payment fees for services like Internet or cable can seriously add up, and you could get in even deeper financial trouble if you don't pay off your credit card bill on time and in full each month. If you're consistently missing due dates on those credit card bills, utilities or even housing payments, it's time to restructure your budget. Take a closer look at your cash flow, and make sure you are accounting for all forms of revenue and expenses in your budget.

2. You're opening more lines of credit. If you're having a hard time breaking your credit card spending habit or find yourself depending on credit, it's time to focus on your financial health. Opening more lines of credit when you are already carrying a heavy debt load can hurt your credit score. If you find yourself exploring more credit offers or loan options just to get by, stop and re-evaluate your finances.

3. You're making credit card payments ... with other credit cards. While making credit card payments with another card is a convenient payment option, you will set yourself back financially by doing so. Paying off one debt by accumulating more debt -- even if it's lower-interest debt -- will keep you stuck in a vicious debt cycle. Instead, look for opportunities to cut your expenses and earn more money to help pay down your credit card debt.

4. You're not contributing to a savings account each month. Saving at least 10 percent of your monthly income is a healthy goal. However, that's not always possible when you haven't taken the reins on your cash flow or don't have an accurate idea of your monthly expenses. When there's just no room to save money each month, it may be time to review your budget and set some new goals. Even a modest contribution toward a savings account each month will help you develop the self-discipline to save on a regular basis.

5. You have no idea the state of your credit. Even if you don't plan on buying a home or car in the near future, you will want to make sure you have an accurate idea of your creditworthiness. Use annualcreditreport.com to order a free copy of your credit report you are entitled to at least once a year. Checking your credit report can also make it easier to catch signs of identity theft.

6. You have nothing in reserves. If you've been dipping into your savings regularly or have just stopped contributing to your savings and investment accounts, it's time to take a closer look at your spending habits and determine whether you are working with a realistic budget. Having no reserves could set you up for financial ruin in the event of a medical emergency, job loss or other financial crisis.

7. You're paying bills with your 401(k). If you find yourself dipping into your 401(k) just to take care of monthly expenses, it's like you're robbing from your future self -- plus you'll probably have to pay taxes and fees on early withdrawals. Instead of taking money from your retirement account, consider supplementing your income with a second job or scaling back expenses to better manage your money.

Sabah Karimi writes for the financial blog Wise Bread, where you can find resources on how to land more jobs by improving your online reputation.

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.

What Methods Would You Take to Rid Yourself of Student Loan Debt?

Very interesting story.  Could you go to this extreme to pay off debt?  If you have student loans, do
you have a plan (other than making the monthly payments) to pay them off sooner than later? 

Check out this article on a student who lived in a van while he attended Duke University.

Photo: Ken Ilgunas

http://finance.yahoo.com/news/duke-grad-student-secretly-lived-in-a-van-to-escape-loan-debt-194021112.html?page=1

Consumerism and Our Debt

"What do you really want?"

That's the thought that goes through my mind when I make purchases.  I'm not perfect. I still succumb to the, "The cost is just too great to leave this in the store" spending philosophy. It's all part of consumerism.  That's the idea of advertisers telling us that we need stuff in order to be happier, make others happy or find ways to make life easier. Subliminal and oftentimes blatant notions that we must have stuff to feel "fabulous", "amazing", or have the "most amazing skin", the "silkiest hair" or that a pair of shoes can make us run and jump higher.

I discovered a group that's led by Macklemore & Ryan Lewis.  On their album there's a song called "Wing$". This song is about consumerism and the violence and status that is associated with it - with the endorsements from celebrities to sell products and how it affects us as consumers. It's pretty deep! The song is centered around shoes but it can be associated with just about anything you buy.

Are the things we buy the stuff that make us happy?  I'll be the first to say that shopping used to give me a "high".  I'd buy something and be so happy that I got it only to realize that it was more about just the experience of having it for the first few days or weeks.  After that, I wouldn't appreciate the purchase and more times than I care to mention, wouldn't use it.  Case in point, my acoustic guitar. I always wanted one for the fantasy of having a guitar and being able to strum the strings in a magnificent melody.  Well, that didn't quite happen.  I ended up with an instrument that lives in a brilliant red cloth case tucked away in my closet, that hasn't seen the light of day in over 8 years.

The role you play in consumerism becomes even more important now that it's tax time.  I have filed my taxes and have since gotten my refund. The plan is to use 90% of it to pay toward debt.  I still have a couple of bill collectors calling the house and this will take care of that.  The rest will go toward my bank consolidation loan.  The remaining 10%? I bought myself a reasonably priced juice extractor and will use the remaining cash on my trip to a professional conference.  I will also buy a new entryway door for my townhouse to continue working on the investment of my home.

Without careful consideration, it would be easy to buy myself stuff with this large tax refund.What do I really want? I really want to be out of debt. Therefore, I will put $2000 toward that bank loan.

What's your plan of action if you're getting a tax refund?

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.

Trying to Pay Up

This is a shame.  I am trying to pay off my credit card and I can't log into Capital One!  Ain't that somethin'? hahaha When I can't pay it I can log in anytime.  I guess the good thing is that I am ready to pay it!

I actually paid off my laptop today, too.  How did I do this you ask?  I have taken in two renters in my townhouse.  This has been a great experience so far (much better than the previous experience - not that previous renter was awful - just not as pleasant as these current roommates).

Having roommates was a difficult decision to make but I am keeping my eyes on the prize and making the necessary adjustments to get out of debt quickly.

What sacrifices are you willing to make in order to pay off debt?

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.