Tuesday, August 12, 2008
Rules Once Tagged:
1) Link to the person who tagged you.
2) Post the rules on your blog (copy and paste 1-6).
3) Write 6 random things about yourself (see below).
4) Tag 6 people at the end of your post and link to them.
5) Let each person know they have been tagged and leave a comment on their blog.
6) Let the tagger (who tagged you) know when your post is up.
Randomness about me:
1) I have milked a goat.
2) I fear snakes and once in college Biology class I nearly dropped a specimen jar that contained a preserved snake because it startled me.
3) My name appears in the "special thanks" section on an album cover produced by Atlantic Records.
4) I am a certified SCUBA diver - though the only open water diving I have done has been in Nevada.
5) On January 13, 2001, I was celebrating my 26th birthday with some close friends at Casino Magic in Biloxi, MS. I was happily feeding a video poker machine my quarters when a man started shooting in the high stakes area. He shot 3 people before turning the gun and killing himself.
6) I am easily sucked into computer games, especially simulator-type games, such as Sim City and The Sims. I have not allowed myself to play any of these games in ages because I am afraid I will forget what I am supposed to be doing.
Who I have tagged:
1) Letters to Elijah
3) This is how I do it...
4) The Year of Frugal Living
5) My life with twins
6) Checking in
Don't be offended if you were not tagged. It was difficult to select only 6 when I have so many to choose from.
Tuesday, August 5, 2008
“Ice bar -- how cool is that? Tourists on International Drive may soon have a new way to cool off: a bar made of 50 tons of ice. Investors Patz and Ron Turner said they visited "ice bars" in Europe and wanted to bring the concept to the U.S. The attraction planned by Icebar Orlando LLC will feature walls, furniture, sculptures and even glasses made of frozen water. Guests will enter through Chill Lounge, a 4,000-square-foot bar with a Nordic theme. Admission to the 1,000-square-foot Icebar will start at $35 a person. Guests will get a vodka drink and will be provided with a cape and gloves to wear during the 45-minute experience. Design and construction is being managed by Bill Whidden, owner of Orlando-based Ice Magic Holdings Inc.”
WHAT? Did that say $35 for a 45-minute experience? I don’t have a problem paying for entertainment once in awhile, but this cost seems excessive to me. Would you pay this cost of admission for this experience?
Sunday, August 3, 2008
Netflix is an online DVD rental service. Plans start at $4.99 per month for one DVD at-a-time, 2 movies per month; shipping is included. In addition, the plans include time to watch movies instantly on your PC, and there are no late fees or due dates.
We selected the $13.99 per month plan for 2 movies at-a-time, unlimited movies per month, and we get our moneys worth! We typically watch both movies the same day we receive them and return them the next day, averaging between 8 – 10 movies a month; that’s $1.40 - $1.75 per movie. A great source for fairly cheap entertainment.
Thursday, July 31, 2008
1) When you are finished eating you do not need to throw what remains onto the floor, even if you don’t like it. I promise to notice when you are finished eating. If I ask you why you threw your food on the floor, “Uh-oh” is not an appropriate response.
2) The garage is not your play area; please do not attempt to play out there. If I ask you what you are doing in the garage, “Dada” is not an appropriate response, especially when your Dad is at work.
3) Please do not shut off my computer. I realize I am on my computer a lot; but please understand that I work from home. The alternate option is that I work out of home and you go to daycare.
4) I do not require your assistance cleaning the litter box. I am aware when it is full and I will get to it soon enough. Don’t worry; I will be sure to assign the chore to you as soon as I feel you are able to handle the responsibility.
5) Please stay out of the kitchen utensil drawer. There are many things in there that could potentially harm you. Today you dumped out the silverware organization tray. I realize it could use to be washed, but the silverware that it contained was clean before being dumped on the floor and each piece individually tested in your mouth.
6) When your Dad asks you questions such as, “what do you think you are doing” or “who said you could play with that” or any similar question, “Mama” is not an appropriate response. Most likely, I did not give you permission to do whatever it is you are doing.
7) I am tired of putting your room back together each night before your bed time. I do not know what is appealing to you to move as much of your furniture as you can to the middle of the room, but it does not belong there. I can imagine it is as exhausting to you to move it there as it is for me to move it back.
9) Please do not fill your mouth with your drink from your sippy cup and then spit it on the floor. This is a very messy activity and each additional time I have to clean the floor is time that we could have spent playing. In addition, when you have made a mess on the floor, please be more selective on what you use to clean it up. Clean clothes from your drawer or the couch pillows are not cleaning rags.
10) The hall closet is not your play area. There is not enough storage in our home and currently the three bottom shelves in the closet are empty. I would be very pleased if I could please have these back for storage use.
My son, I love you very much and I am sure that we can resolve these issues.
Tuesday, July 29, 2008
Flickr (part of the Yahoo! company) is a great site for photo management, hosting, and sharing and has recently included the ability to upload short videos. The free account gives users the ability to upload 100MB each month. You select your comfort zone for sharing your photos and have the option to make the photos private, friends and/or family, or public. The majority of my photos are set to friends/family, though I do have some, mostly landscape-type photos that are public.
One of the features I like most about Flickr is the photo hosting ability. Many of the other photo hosting sites provides you a code for your photo as uploaded. On Flickr, you have the option to select the size of the photo you want to host. This is particularly useful when hosting photos for use on message boards. On Flickr, you can upload the photo in its original size and then select between thumbnail, square, small, medium, large, and original for the photo url; depending on the size of the original photo. Very cool!
Monday, July 28, 2008
It is no secret to my blog readers that we are in a financial hard place. Many of our debts are in slow-pay type status, meaning the bill still gets paid, just not on time. However, this has not always been the case.
When I quit working after the birth of my son, many of my accounts went delinquent. As soon as I started working from home, I began to try to fix what had gone bad. However, it was already too late for one of my credit cards that had been charged off and sold to an apparent attorney. I tried to work with the attorney, but he wanted the entire amount “today” and refused to discuss any other options (he even suggested I take a 2nd mortgage on our home to pay it.) After some time of not hearing anything more from the attorney, the account was again sold (I believe) to a collection agency – National Enterprise Systems (NES). I have spoken with NES a few times on the phone and every time the collector on the other end has gotten “nasty” with me and I ended the call. Just recently, I experienced another of these nasty calls.
The following dialog is to the best of my recollection; however, I do not have a photographic memory, so it will not be word for word and I have omitted unimportant details. The dialog starts after NES confirming that I was on the line:
NES: I am calling about your account that is about to go to court hearing next week.
Me: I am not aware of any court hearing.
NES: We sent you a letter July 9; your account will be in court next week.
Me: Where is the court hearing?
NES: In Ohio.
Me: Am I expected to appear in court?
NES: Not at this time. The reason I am calling is because there is still time to settle out of court. You owe $x but we can settle for $x/2.
Me: That’s great savings but I don’t have $x/2.
NES: Perhaps you should ask your family.
Me: I’m not going to ask my family, they are as broke as I am.
NES: Are you saying that you refuse to ask your family and settle this debt; you would rather go to court? If it goes to court you could be held responsible for $2x including court costs and attorneys fees. The court could garnish up to 35% of your wages and if you do not have the income available you may be arrested.
Me: How long do I have?
NES: Until July 29.
At this point in the call, my heart is pounding and I feel anxiety taking over my body. I ask the lady calmly for all important information, her name and number to reach her, account number, settlement amount, etc. and tell her I will make some calls and get back with her. She informs me that I have until 3 pm eastern time that same day to contact her (I’m not sure what happened to my previous July 29 deadline.)
I have already had a bad debt proceed to legal collections. I was served a summons to appear at my local courthouse for court mediation. I appeared, and the matter was settled during mediation and did not proceed to actual hearing. Because of this, I have not only had some experience with debt collections proceeding this far, but I have also done a lot of research on debtors rights. So, after hanging up, there are a few things that stand out to me.
1) NES claimed that notice of the hearing had been sent to me. I have not been served with legal papers. I searched through my mail over the last month and found correspondence from NES postmarked on July 9; a basic “we have acquired your account of so much amount and you have 30 days to dispute the validity of the debt”. Anyone who has had a debt go to collections has seen this type of letter.
2) The court hearing is in Ohio. I do not live in Ohio. At this time, I am not sure what the laws are regarding court hearing locations, but this seemed strange to me anyway.
3) I was threatened with wage garnishment and possible arrest. I know from my previous research that collectors should not threaten debtors.
With these thoughts in mind, I go to my computer for further information on my rights. The Fair Debt Collection Practices Act (FDCPA) was created to eliminate abusive practices (and more) during collection of debts. It creates guidelines under which collectors may conduct business and defines rights of the debtor. After reviewing the FDCPA, and many pages describing debtor rights during collections, I felt sure that NES had potentially violated the FDCPA.
I next proceeded to call the Federal Trade Commission (FTC). I described the phone call to the FTC, who confirmed my suspicion that NES may have violated the FDCPA and filed a complaint. The FTC also confirmed my suspicion that any court hearing regarding the matter would be held in my state of residence. I then called my state’s Attorney General (AG), as directed by the FTC and also filed a complaint with them. The AG office told me that I could send a certified letter to NES requesting that all correspondence between us should be in writing, and that any calls from them after the request would also be in violation of FDCPA. And finally, under the direction of the AG, I filed a complaint with my state’s Office of Finance.
During my research of my rights, I learned that any debt settlement offer should be in writing, and no money should be sent to the collection agency until the debt settlement offer is in the hands of the debtor. The reason of this is because if you do not have the agreement in writing then the collector could say that there was no agreement and proceed with collecting the remaining amount. Also, the settlement should be sent to the collector in the form of a money order or bank check. This is so that the collector does not have access to your personal account information. So with this knowledge, I called back NES (about an hour after my 3 pm deadline) and asked for a debt settlement letter.
NES: Sure, what is your fax number?
Me: I do not have fax available to me.
NES: You don’t have fax anywhere that you can access?
Me: No, could you please just send it?
NES: If we send it, it will not reach you before your deadline.
Me: I’m not going to give you any money until after I have a debt settlement letter.
NES: You could postdate a check and we will send the letter. Then, if you don’t receive the letter you can cancel the check.
Me: (I am confused at this point) I’m not sending you money until I have a debt settlement letter.
NES: Are you saying you are going to let this matter go to court because you refuse to pay the settlement? We could have the letter faxed to you in 10 minutes! (The woman then proceeds to get nasty with me with a raised voice; then, in a much quieter voice.) My supervisor would like to speak to you.
NES Supervisor: I understand you are interested in settling this debt.
Me: Yes, I would like a debt settlement letter, first.
NES Supervisor: Could you provide a fax number?
Me: I do not have fax available to me.
NES Supervisor: Can’t you go to Kinkos?
Me: That costs money.
NES Supervisor: It’s only a quarter.
Me: Just mail me the debt settlement letter.
NES Supervisor: If you send it to us and provide us with a fax number we can have it to you in ten minutes.
Me: Excuse me? It sounds like you expect me to send you something before you send a debt settlement letter.
NES Supervisor: Yes, you need to post date a check before we will release the debt.
Me: I refuse to send you any money until you send me a debt settlement letter. (This is the end of this call.)
After hanging up, I call the FTC back to add this incident to my previous complaint. The FTC informs me to send a certified letter with return receipt to NES requesting that all correspondence be in writing, and a second letter requesting a debt settlement agreement to be provided to me in writing.
This is what I have done since: Remember the letter NES sent to me dated July 9, that states I have 30 days to dispute the debt? Well, the 30 days is not up yet, so I sent a letter stating that I dispute the debt and I am requesting it be validated. The collection process cannot continue until validation is sent to me; meaning they cannot sue me next week (which I think was a scare tactic lie anyway.) Even though I know this debt is valid, it is still my right to request the debt be validated; besides, what if my memory of the debt faulty and my actual debt is actually $500 less.
I also sent a letter stating that they are not to contact me via telephone and all correspondence should be in writing. Both of these letters were sent certified mail with return receipt, this is important! By sending certified mail, the document becomes submittable in court. If for some reason they do not accept the delivery, I will have that as evidence in court that they refused to work with me. If they accept the letters and violate FDCPA and do not follow through with my requests then I will have that on my side in court.
I have also prepared a letter stating that I would like to settle the debt for x amount of dollars and if they agree with the terms to send me a letter of agreement. I do not intend to send this letter until after they have followed through with my request to validate the debt. My letter looks much like this sample. In addition, this page has numerous sample letters for many things credit related.
If you or someone you know is forced to deal with an impossible collection agency, remember that you have rights, too. Consumers have the right to not be abused over the telephone (and more); do not let this happen to you or anyone you know.
Saturday, July 26, 2008
This brings me to Snopes.com a site dedicated to urban legends, a term that (on Snopes.com) embraces common fallacies, misinformation, old wives’ tells, strange news stories, rumors, celebrity gossip, and similar items. I recommend this site, not only to check the validity of your forwarded email, but also for pure entertainment.
You would not believe how I first discovered this site. I received a forwarded message in my email, I can no longer remember the message it included, only that it claimed it was true as seen on Snopes.com (with a link.) The funny thing was, when you clicked the link to Snopes.com, the page clearly identified the email as being false. HA! I guess who ever started the email figured that if they referenced Snopes.com the recipient would take the email as fact without checking the link. (This brings up "the chicken or the egg" type question - which came first, the false email, or the Snopes.com page that identified the email as being false.... hmmm?)
So next time before you hit the forward button, check Snopes.com first. You may potentially save yourself some embarrassment.
Friday, July 25, 2008
I was snoozing ever so soundly when DJ walked into the bedroom, “Someone broke into the truck, where is the camera.” I immediately sat up in bed, “What? In our neighborhood?” We live in a quiet neighborhood filled with many elderly retired people. I tell DJ where to find the camera and dress myself so that I can go outside to see the damage. Damn, it was not some cruel joke to get me out of bed (not that DJ ever does that.)
As you can see they did a lot of damage to the passenger’s side door. There were finger prints visible at the top of the door above the window and a foot/shoe print below the window. This makes it appear that they grabbed the door at the top and physically pulled it down using leverage with at least one foot on the door.
While a police man was here taking prints, a neighbor walked by and asked if the truck had been broken into. She then stated that her neighbor across the street from her had their vehicle stolen overnight. This gives the impression that whoever broke into our truck had the intension of taking the whole thing, and for some reason gave up and moved on to easier prey.
The truck is currently at the shop waiting for a new door to come in. The damage is covered by our insurance, everything over our $500 deductible, that is. If we had an emergency fund, this would not be such a big deal. An example of why you want an emergency fund.
Tuesday, July 22, 2008
I am a registered user on this site, but have not posted much. I learned quickly that even though the information here can save you from being scammed out of your hard earned money, the members of this site can be tough. Perhaps they harbor hard feelings from having been scammed, I don’t really know.
Monday, July 21, 2008
While searching for legitimate work that I could do from home I came across WAHM.com, the online magazine for work at home moms. I have to admit, I have a love/hate relationship with WAHM.com. I love this site because it has a wealth of information for anyone wanting to work at home (WAH) and it is on this site that I found my current job. I hate this site because it tests my patience with slow downloading or refusing to load at all. I have recently learned that WAHM.com has been sold. The site is not expected to change other than moving the site to “bigger, faster servers”, so hopefully there will be improvements to the site soon. However, even with the current slow server, I continue to visit the site frequently and would recommend it to anyone interested in WAH.
My favorite feature on this site is the message board. This is where people get together and discuss all things WAH. You can find information about potential WAH jobs, identified scams and how to avoid them. One comment regarding the message board, if you leave a message, only hit the “submit” button once – even if it takes forever for the submit to occur. If you hit submit more than once your message will be posted an equal number of times in the thread.
One final note on WAHM.com, you will notice “Ads by Google” posted all over this site. The “Ads by Google” are from Google’s AdSense. If you are not familiar with AdSense, an optional feature here on Blogger, AdSense is a “pay-per-click” program that scans the content of your page and then places ads relevant to the content. The site owner is then paid for each click of an ad (no, I do not know how much it pays.) Sounds great, right? Well, this is actually a potential problem on WAHM.com. Because WAHM.com contains content focused on WAH the AdSense ads on the site are related to WAH and unfortunately, many are scams. I once saw someone ask why a site that is focused on legitimate WAH would have ad links to scams. The answer is simple, the owner is not able to select or refuse an ad, but since the ads generate revenue for the free-to-use site, the ads remain. The thing to remember for WAH, you NEVER EVER have to pay for a job. If they want money from you, it is a scam.
Friday, July 18, 2008
Dave’s site contains a wealth of information where you can visit the online store, learn about Financial Peace University, read Dave’s column, and get information on where you can see Dave live among many other things. And if you have some spare money to spend, you can join the My Total Money Makeover online community.
The official Dave Ramsey website is a must visit for anyone on a total money makeover.
Thursday, July 17, 2008
Some months ago we replaced our faulty manual thermostat with a programmable digital one. It is designed so that we program temperatures into it and it will provide either heat or air depending on which way the actual temperature moves. The thermostat will turn on the system when the actual temperature is 2 degrees above or below the setting; so if the setting is 78 degrees, when the actual temperature reaches 80 the AC turns on and when the actual temperature drops to 76 the heat turns on. Now the big question came, to what temperature do we set it at? This is a huge debate in our home; if I am comfortable, DJ is roasting; if DJ is comfortable, I am freezing!
What is a comfortable temperature, anyway? Have you ever noticed that in the winter you are comfortable at higher temperatures, but in the summer those same temperatures feel too hot? We initially set the thermostat to 78 in the day and 76 at night. This was in the spring and I quickly discovered that 78 left me feeling cold. After talking with DJ and discussing the potential cost savings, we adjusted the thermostat to 80 by day and 78 at night.
Spring quickly became summer and our comfort zone altered accordingly. DJ found his sleep disrupted and changed the thermostat to 75 at night, leaving the day temperature at 80. This made me curious and after a quick Google query I found a page that stated that at 78 degrees sleep is disrupted. This means that DJ has a viable argument and so this has remained our current temperature settings for some time.
Of course, now summer is here in full force and I am finding the once comfortable 80 degrees is too hot, though still freeze my butt off at night. The thermostat wars are never ending.
Wednesday, July 16, 2008
The first website I want to review is Simple Mom. This is a blog that is on its own domain. The blog is updated with a new post frequently. The author of Simple Mom is known in the blogosphere as Toblerone. In her words, the blog “is a cross between a mom blog and a productivity blog.”
It is the Simple Mom site that first introduced me to Dave Ramsey and his Total Money Makeover. However, this site is not solely dedicated to finance. The focus of the blog “is for the mom who needs that extra nudge of motivation to manage her home in a productive and balanced way.” Topics to look forward to on Simple Mom include: managing the household, budgeting and family finances, healthy cooking, quality entertainment, organizing, sewing, gardening, and living greener.
Tuesday, July 15, 2008
As mentioned in many of my previous posts, Step 1 of the Total Money Makeover involves; a) be current with all of your creditors, b) write a budget, and c) save the $1000 mini emergency fund as fast as possible. So where am I? Struggling with “a”. I could easily pay my creditors and be current if only they would quit sending a new bill each month! Yes, I know this will not happen.
In Dave’s book, The Total Money Makeover, he discusses that it takes gazelle intensity to be successful in the plan. I have seen gazelle intensity in reading some of my reader’s blogs. I have read about treadmills and other unused objects being sold.
I think everyday about how I can bring in more money. What do I have to sell? DJ and I are not possessions-rich. We do not have expensive toys, recreational vehicles, exercise equipment, excess furniture and both of our vehicles are low value (per Kelley Blue Book). I can only think of one item that DJ and I own that has any value and is not in use, a generator.
On another’s blog, I recently commented that even while working your total money makeover, that sometimes it is ok to spend a little more money on something if it brings you peace of mind. This generator is an object that gives me peace of mind. We live in hurricane central and since we purchased the generator we have not been threatened by a hurricane. It is just our luck that if we sold the generator, we would find ourselves in a hurricane and without power for days or even weeks. If it was just DJ and I, this would not so much be a problem, but now we are a family. We have a child to think about, so I will not be selling our generator.
I know that it will be ok. I will figure something out and begin progressing through the steps. I have been looking into other sources of income and ways to cut back on spending. It will all work out, somehow.
Monday, July 14, 2008
I have been trying to find the strength to call on my own, which is certainly possible, but I can’t bring myself to do it. I don’t know why I can’t do it. I’ve been listening to the radio show enough now that I have an idea what he will say.
If in the future I make it on air, I will be sure to let you know how it goes.
Wednesday, July 9, 2008
Our pediatrician said, “No more pacifiers after 12 months”. That sounded reasonable to me, until his one-year birthday arrived. How can I take away this one item that he loves so much? Perhaps it was me that did not want to let go of this symbol of infancy. So I let him keep his binky, but only at naptime and bedtime. It was not difficult to keep it away from him unless he saw it, “B, b!” he would say while pointing at it.
Weeks fly by and I continued to hear the pediatricians words nagging at me, “No more pacifiers after 12 months”, so I stopped allowing him to have it at naptime. Still not much trouble, since his nap is immediately following lunch and he frequently starts to nod off while still in his highchair.
Again, the weeks fly by and his 15 month appointment dawns closer and closer. I know the pediatrician will ask, “Is he still taking a pacifier?” I am an honest person, and I would have to tell the truth if asked, so, no more binky.
The first night was not as bad as I thought it would be. As he sat on his daddy’s lap with his sippy cup of milk, he demanded, “B!” But there was no binky and he finally fell asleep. The next night, instead of demanding for his binky he quietly asked, “B?” But there still was no binky and he again fell asleep.
Nights turned into weeks, and it now appears that his “B” has been forgotten. My baby is now a little boy.
Monday, July 7, 2008
Saturday, July 5, 2008
DJ: "Do we have chicken?"
Me: "Yep, we have plenty. Do we need mayo?"
DJ: "I can’t remember, we better get some."
Of course, when we come home we discover that we have plenty of mayo.
I have an idea of what to do, but I don’t know where to start. Do you do meal planning? Do you know of a great blog about meal planning that I should read? Have you posted a blog about meal planning? How about any useful (free) sites on the topic?
I look forward to your comments…
Tuesday, July 1, 2008
Today I listened to the first third of the show (I will listen to the rest tomorrow) and about 30 minutes into the show; Dave starts to talk about hopelessness. Even though my email or name was not mentioned in this segment, I felt that he was talking to me; our forest is so thick we cannot see out, we need a lumberjack.
Then later I received a reply email from a representative for the show. They want me to take my question on air with Dave. I replied that I will go on air. I have to admit, I am scared; but I know there is hope. There is light at the end of the tunnel, and it is not a freight train.
Thursday, June 26, 2008
The first few chapters focus on debt denial, spending behavior, money and debt beliefs/myths, ignorance, and the false need for approval from others. At the end of chapter 5, you have been shown that by being in debt, you are a slave to that debt and that being an average (in-debt) American means that you are broke. It’s true. I am broke and a slave to my debt. I am forced to continue to work because I need the money to pay my debt commitments. My money is currently “promised” to others for as long as 30 years, if not longer. I will NOT live a slave to my debt, I WILL be debt free.
Chapter 6 starts on the details of the plan, Baby Step 1. There are two things that should be completed before starting on the first baby step – create a budget (not just an initial, but each month) and be current with all of your creditors. I have done neither of these things; but they are both goals that I knew I needed to do before starting on my emergency fund. I knew this before I read the book, and I am glad to read that Dave agrees.
Dave also addresses the question about saving a small emergency fund before paying debt. He points out that most of America uses credit cards to catch all of life’s “emergencies” including anticipated things like Christmas, which is not an emergency but is often treated as one. However, the cycle of dependence on credit cards has to be broken and a well-planned budget for anticipated things and an emergency fund for true emergencies can end the credit card dependency cycle. He continues to say that he use to teach/counsel people to first start on the debt snowball, but he found that an emergency would cause people to stop their Total Money Makeover completely because they felt guilty that they had to stop debt-reducing to survive. To quote the book, “If you use debt after swearing off it, you lose the momentum to keep going. It is like eating seven pounds of ice cream on Friday after losing two pounds that week. You feel sick, like a failure.” So that is why we have an emergency fund; it is a psychological motivator – the key to success with this plan. No more borrowing, break the debt cycle!
After you have a budget and you are current with all of your creditors; it is time to save that emergency fund. You may have to squeeze your budget, work extra hours, sell something, whatever degree of intensity it takes to complete this step quickly, less than a month if possible. No one said it would be easy. The sooner you have completed this step, the sooner you can focus on the debt snowball.
I could go on and review the rest of the book for you, but since I’m still on Baby Step 1, I’m not going to do that. If you are starting this plan too, I highly recommend this book. Dave also has authored other books that may be of interest. Keep in mind that you may not need to purchase the book(s), as your public library may have them available like mine does.
In closing, I challenge you to take this quest too. Don’t just “walk” beside me on my path. Take your own path. You don’t have to follow Dave’s plan, there are other similar plans out there, such as John Cummuta’s “Debt to Wealth”. Regardless of what I choose to do, I suggest you conduct your own research and do what is best for your needs, even combine the best of multiple plans if that is what works best for you. The more you read on the subject, the more knowledgeable and better prepared you will become to conquer your own debt. The time is now! Refuse to be a slave to your debt!
Wednesday, June 18, 2008
Since my last post, Quest to be Debt Free - Step 1 of the Plan, I have been asked questions regarding the financial soundness of saving money while owing creditors money. So, in this post I plan to address that question. Before proceeding any further, I want to say that I have requested The Total Money Makeover: A Proven Plan for Financial Fitness By Dave Ramsey from my public library and therefore may be able to answer any questions (not only yours, but my own) better as I learn more. Until then, I will do the best I can based on my limited understanding of the plan.
Shortly after I posted my last blog, I received an email from someone close to me (her name is withheld for her privacy) who is also on a financial freedom program. Her plan is different in that you do not save any money until your debt is first paid in full. There may also be other differences, but this is the only difference that has come up at this time. She says:
“…It is different b/c it tells you not to put money in savings if you own a home. Your home equity is your rainy day plan. Reason: you cannot service debt and grow wealth… "All your money is going to interest: house payment interest, car payment interest, credit card interest, student loan interest." This is YOUR wealth going into others' pockets, just how they want it! Americans are spending tomorrow's money today, just how they want it. The banks and credit cards want you to commit your FUTURE earnings to them, that is how they stay in business. Money you haven't even earned yet, is committed to others for years and years and years to come! . . . money in savings earns 2% or so? Your credit cards are over 18% right? Your loans are over 6% right? You cannot service debt and grow wealth. Every penny goes on debt, once debt is eliminated you can grow wealth…”
I think this comment is a great motivator for starting any financial freedom plan, whatever it may be. There is no direct question here, but unless I misunderstood, the question is similar to the comment Alicia posted:
“I don't know how it is possible to start an emergency fund when you (WE)owe on credit cards already... how do you NOT pay that off first to avoid more apr charges... as in would it not be smarter to get rid of that debt first???”
Yes, it would be financially smarter to get rid of debt first, or at least you would think so. You may remember that I my last post I said the following, “It is difficult for me to imagine saving $1000 with an already tight budget. Not only do I need to find the money to save, I need to resist the urge to pay a bill with it.” Here is what is said about Step 1 on Dave’s website:
“An emergency fund is for those unexpected events that are not regularly planned for happening in life - you lose your job, there's an unexpected pregnancy, the car's transmission goes out, or, or, or. Something like this WILL happen. Money magazine says that 78% of us will have a major negative event happen in any given 10-year period of time. So get a rainy-day fund, an umbrella.The idea is, if something does happen you will have the cash to help you through it. How would you handle a minor emergency if you did not have the cash on hand? I would have no choice but to pull out a credit card, and then I would be doing opposite of what I want to do. I would not be paying off my debt, I would be increasing it. Sure I could use my home equity, assuming I have any; however, home equity is not liquid. Home equity is extracted via loans creating more debt.
This beginning emergency fund will keep life’s little Murphies from turning into new debt while you work off the old debt. If a real emergency happens, you can handle it with your emergency fund.”
Numerous financial freedom programs exist because what works for one does not work for all. Dave’s plan is not the most mathematically correct plan out there but it is a great starting point. Depending on your individual financial situation, you may end up paying out more in interest in the long run by following Dave’s plan; however, the end result is the same, you are debt free. In addition, as you progress through the plan, you can always adjust your plan and do what is best for you at the time keeping one rule in mind, “owe no one”. The reason Dave’s plan is successful is because it psychologically motivates you to follow through. I will get into this further when I am set to proceed to step two; but if you can't wait – you can always jump ahead of my blog and research the plan on your own. I have provided a few links throughout my blog history and a query search will provide many more resources.
Wednesday, June 11, 2008
The first step in my plan to be debt free is probably one of the most difficult. I need to save $1000 for an emergency fund. It is difficult for me to imagine saving $1000 with an already tight budget. Not only do I need to find the money to save, I need to resist the urge to pay a bill with it.
Of course, the reasoning behind saving $1000 for an emergency fund makes perfect sense to me. Currently, in the event of a minor emergency we would have no choice but to pull out a credit card. However, the idea of being debt free means that you owe no one and this cannot happen if credit card use continues.
The first thing I need to do for step 1 is to find the money to save. If you remember, I mentioned that in our current situation we only have about $180 after paying our monthly obligations. This does not allow much for saving money or for step 2 - putting additional money towards our debt. That means that the first thing I need to do is find more money.
In attempt to make this a reality, I am trying to work more hours. I am allowed to work 30 hours a week, but in the past have only worked an average of 10 per week. Somehow, I am managing to work more hours and keep up with housework without depriving my son of my attention. It has been challenging, as I more frequently than not have my son tugging at me, wanting me to pick him up or tapping his sippy cup on my leg trying to tell me it is empty. But I have managed.
I have calculated that if I work 30 hours each week, I will be bringing in about as much take home pay as I was working full time before my son was born. There are two main factors that make this so; 1) I am not paying for medical insurance since my husband has us covered, and 2) since I work from home I do not have commuting costs, which are pretty hefty at the moment. In addition, if I went back to working outside of the home I would now have to pay for child care, a cost that I did not have previously.
It will be a couple of weeks to a month before I will be able to start saving. I think it is important to have all of our bills current first. We have fallen behind on some of our bills since we typically spend more than $180 even though that is all our budget allows. My husband can easily spend $150 in gasoline alone, just to go to work. Within the next couple of weeks, I will also set up a strict budget.
I will see where we are at in a couple of weeks, and then if necessary… start selling things.
Tuesday, June 10, 2008
1. $1,000 to start an emergency fund.
2. Pay off all debt using the Debt Snowball.
3. 3 to 6 months of expenses to savings.
4. Invest 15% of household income into Roth IRA’s and pre-tax retirement.
5. College funding for children.
6. Pay off home early.
7. Build wealth and give.
When you are in debt over your head, these 7 Baby Steps seem unachievable in today’s society, especially when you look at steps 6 and 7. Wow! How would it be to not have a mortgage? To have money that you will happily give to someone else? To actually have some spare change?
In my next post I will discuss step 1. I had considered continuing the discussion in this post, but it made more sense to me to keep it separate.
Thursday, June 5, 2008
In my attempt to make this a reality, I will be using concepts from Dave Ramsey; however, I am in no way endorsed by Dave Ramsey. I have never taken a Dave Ramsey class, read a Dave Ramsey book nor was it a Dave Ramsey website that introduced me to the program. I will do more research on the program while on my quest; however, I may do things along the way that Dave would frown upon. So, if you follow my blog – realize that this is my journey; it is my plan to be debt free, now on referred to as “my plan”. With that being said, if you would like to learn more see Dave Ramsey’s Official Website or Simple Mom, the page that introduced me to Dave Ramsey.
My Financial Background
Shortly after the birth of my son, I decided that it was in his best interest for me to stay home. In doing so, I reduced our income by about $36,000. After six months of not working I found a legitimate work at home job. Hourly, the pay is only about $2.00 per hour less then I was making before; however, I only work on average 10 hours a week, so I still make significantly less then I did before the birth of my son.
We have been living pretty tightly and often struggle to make ends meet, but I didn’t really know where we were financially. Near the end of April 2008, I realized that we needed to make a change and before that could be done I had to know exactly how much in debt we really were. I carefully gathered all of our bills (student loans, mortgage, 2nd mortgage, utilities, credit cards, medical bills) and calculated our total debt and monthly payments. The result was overwhelming; after paying all of our monthly obligations we are only left with about $180 to purchase groceries, gasoline, baby necessities, non-food items, medical expenses, and so forth.
I looked at some of our options: 1) Debt consolidation - assumes we could be approved for a loan that had interest rates and monthly payment less than current. 2) Debt management - charges a monthly fee, only works with the credit card debt and will damage our credit. 3) Bankruptcy - the option that I fear most, we could lose everything and we would have to file Chapter 13, so we would still have debt to pay back. I refused to accept that these three options were the only solution.
So where does that leave our household? Right where we started, debt above our heads and no help in sight. We accept responsibility for our debt and we do not expect an easy way out of it; we have to pay the consequences of our actions. There has to be another way…
Monday, June 2, 2008
So as you can see, I selected “One Mom’s Quest” as the title for this blog. I selected this title because I feel that I am always on a quest for something in my life and therefore, felt that the title would be relevant throughout the life of this blog.
I welcome you on my journey as I follow the paths of my many quests in life. Here are some of my “quests” you have to look forward to in upcoming posts:
1) This is my ultimate quest – and the one that I will blog about most often; the quest to become debt free and my struggles along the way. I have done a little background reading and will attempt to use Dave Ramsey’s Baby Steps to complete this quest. I will go into more detail as I post along the way, but for now if you want to read more I recommend this site: http://simplemom.net/dave-ramseys-baby-steps/
2) To raise a fine young man and be the best mom that I can be. In other words, when the desire strikes me I will write about the everyday goings on in my life as a parent. The joys, the heartache, and the lack of sleep… you get the idea.
3) To complete the miscellaneous little “to dos” that I never get done. These are things that I want to do, but do not make time for: scanning all of my photos to upload to my off-site digital storage location, working on Hayden’s baby book, start meal planning, and so forth – there are many more, I’m sure. The idea is if maybe I “write” about it, I will be motivated to actually do it.
There is a preview of what you have to look forward to. Thank you, dear reader, for taking the time to take the journey with me!
That is the question…
Many of my acquaintances have blogs, and a quick query search reveals that many others are participating in the world of blogging. So I ask myself, “should I enter the world of blogging?” Sure, why not? Since this is my first official blog, this is really just a test to see how it works and therefore not likely all that entertaining; but I need to start somewhere.
Ready, set… here we go!
Step 1 – Create an account. Sounds easy enough; just click on the button.
Email address; pre-entered. I guess that is a bonus.
My name; yep, that is already entered too.
Display name; I didn’t think about that. I guess “Amy” will work.
Step 2 – Name your blog. That’s a tough one. I want a name that is catchy, and will last throughout the life of my blog. I wonder if it can be changed later? Of course the answer is not conveniently located on the signup page. I guess I had better think about it… “One Mom’s Quest” it is.
Step 3 – Choose a template. Excellent, this one I can change later…
Woo-hoo! My blog has been created! Now I can add my posts to it, create my personal profile, or customize how my blog looks. It is late now, so I guess I end here and come back another time… so many settings, so little time!