Article of the Week: 10 families no credit card debt

I found a very interesting photo gallery-article on CNNMoney.com today. It features 10 families without any debt.

http://money.cnn.com/galleries/2008/pf/0806/gallery.sans_plastic.moneymag/index.html

Most impressive to me was the last family:

"The Moment: Two years ago, the Lees were $270,000 in debt. Then one day at a flea market they saw a sign that read, "Live Simply." They bought it, hung it inside above the front door of their house and decided to drastically change their lives.

They sold just about everything they owned - including their house - paid off all their debt and now have a net worth over $100,000. "We look at [the sign] as a reminder every time we leave the house," says Chris. "

It was also very cool to see fellow blogger - Leo Babauta (the Author of Zen Habits ) - be featured as well.

If you need some inspiration on getting out of debt, definitely check out this article.

3 ways (I would use) to reduce debt

I've been out of debt (again) for months now and it definitely feels good. However, watching the news these days - or reading it as I do - makes me feel as if I might be one of a shrinking minority - those free of debt. For everyone who's out there, currently in debt. I have to say - I've been there. Here are some ideas for reducing your debt today.


1. Negotiate down your interest rates - One way to reduce debt is by taking the time to humbly call your credit card company and talk up the CSR about your interest rate. Now it should go without saying in order for this technique to work - you almost have to have an excellent payment history - If you don't, you most likely won't succeed. that being said, a good way to start out the conversation is by talking about how much a great customer you've been over the year's and how you'd hate to break up the relationship by switching to a card that will give you a better rate or even a 0% rate. If the CSR seems unwilling to budge, then immediately ask for a Manager and again start off polite. Being and @$$ over the phone line with someone who deals with jerks all day will not magically open up doors for you but, just might win you the 'jerk-of-the day' award - an award by the way that has more likelihood of increasing your interest rate than decreasing it.

2. Sell that shiny new car ..for a junker - You just graduated from College or maybe you got tired of carrying around Bondo to patch up your multiple dings and dents on your 80's model car. So you went out and headed towards the new car lot searching for something that was affordable but would be around for year's to come. The salesperson was so nice and explained everything except for the fact that you would be contributing a little too much money out of your monthly budget if you chose the cherry red sports car. But man, can it turn heads! Now, however, buyer's remorse has set in and the new car smell has long since left. You can turn the heads of the opposite sex but can't help pay for dinner or really go out for that matter. It might be time to swallow your pride sell the pretty little sports coupe and buy a 90's model dependable car until you're out of debt. It will be painful no doubt at first to switch in the automatic starter for the 'manual power windows' but, in the long run your pocket book will thank you and you'll be able to maybe just meet you date at the restaurant that's within walking distance form your house if you're that embarrassed of the new car. If you can't give up the car, just make sure your car and your pride don't lead you to bankruptcy - which will no doubt lead you to both in the process.

3. Pay the smallest balance OR the largest interest rate first - This is an ongoing debate between debt-hating people like myself. Which do you do first - pay off the bill with the highest interest OR the smallest bill? Honestly either way will probably work - it's just a matter of personal preference. If you have a pretty high credit card/debt bill in general - over $5K or $10K - then either way will get you there. I personally like the Dave Ramsey approach of paying off the smallest bills first. For example:

- If you have a 5 cards, 1 with a balance of $500 at 0%, 2- with a balance of $1500 of 15% and cards 3, 4 & 5 all with balances at or around $3,000 with 20% interest rates. It would probably be easier to pay off the $500 card first then the $1500 cards as well. You could also use that extra money from one less payment to attack the next card in line once the first is paid off. Having one less payment also builds your confidence and allows you to gain more focus as well.
- In contrast, if you have 1 card with $9000 on it at a 30% rate and 4 other cards with balances all under $1000 and interest rates under 15% it might be best to attack the big card. Even possibly look for balance transfers to the lower rated cards and then focus all your energy on the remaining balance while paying the minimum on the smaller cards. Have a small party (with cash) once the big one is paid off and then repeat said steps for the smaller cards.

Anyway, those are just a couple of ideas to get out of debt quicker. Just be aware that there WILL be hurdles along the way. Don't get discouraged and give up just realize that any worthwhile goal in your life will have roadblocks and detours. Your goal should always be to continue on despite these roadblocks.

Disclaimer: Reggie, is by no means a CPA or CFP so it would behoove readers to speak to professional financial adviser before making any major or minor financial decisions. Thanks for reading!

A credit card for your debt-freedom?

So, I got a credit card solicitation in the mail over the weekend.

What made me actually open it is how ironic the the wonderful offer is. On the window portion of the envelope it says:

"Apply for your Debt-Free Plan* account today"

Little do they know - I am debt free. However, it was nice that a big bank, whose initials spell a rather large snake, had the thoughtfulness to offer me more debt in order to get out of debt. How quaint.

I love how the big banks watch out for me. They even added:

"Upon approval, we can deposit the money directly into your checking account so you can use it right away."

That's the way to do it - put a ton of cash into the checking account of someone who doesn't know how to manage there money in the first place. real good, I wonder if they would approve the maximum $50,000 credit limit for me...

The Debt/Debt-Freedom Rollercoaster.

So over the past 3 months I have gone from Debt-free to indebted to Debt-free again and now I am again in the Indebted category.

It's like a bad debt-rollercoaster: One minute I'm high in the air and financially free, the next moment I am plunging back down into debt-hell.

I'd like to stop this debt-rollercoaster and get off on top, or at least on level ground.

I guess part of the problem is that I've lost my focus and intensity. I used to have signs up everywhere that had my goal:

PAY OFF ALL CREDIT CARDS/DEBT BY BIRTHDAY

I had this sign up everywhere - Above my computer, on top of my big TV. Below my little TV, by the fridge, it was an avoidable goals and my mind never lost sight of that goal for too terribly long. and when I missed this goal, I made a new goal:

PAY OFF ALL CREDIT CARDS/DEBT BY 8/23/07

I also put this sign up everywhere and I got excited because even though I didn't make the Birthday goal, I was not that far off at all from it when my birthday came and went. In the end, I paid off my debt (the first time) about 3 weeks ahead of my re-scheduled goal and 2 1/2 months after my original goal.

Now I sit with a much smaller amount of debt but still - it keeps coming back after I pay it off - I guess the goal now is to build up an emergency fund that will stand the test of time over minor $1000+ emergencies that will undoubtedly come up over the next several months as me and my fiance plan out wedding and try and come to a compromise on expenses. I might have to raise that emergency fund to the 5-10K range - which will take a lot of work and most likely another job.

I guess it's time to put up another set of signs.

Article/News bit of the Week: Don't kill yourself over debt

So I was reading this article from my favorite online new source over the weekend:


Man kills self in front of City Council after zoning decision

And after delving a little further into the article I realized this man's senseless death had a lot to do with his impending financial state. This particular blurb says a lot:

"Ronald "Bo" Ward, owner of Bo's Barber Shop, had told the council his business would go under if he couldn't get his home rezoned as commercial. After the 5-7 vote Thursday night, Ward stood and walked toward the council.

"Y'all have put me under. ... I'm out of here," he said before shooting himself in the head with a small handgun."

Suicide is a touchy thing but after honestly considering the suicide option, - more than once - while I was in debt above my head, I have to say it is really not worth it. If you're deep in debt right now and the thought of suicide has crossed your mind or you've gone so far to checked out suicide.com ...I would strongly suggest seeking a counselor or a very sympathetic and open friend to talk about what you're going through right now.

Life can be beautiful when you overcome your mistakes but a key step in overcoming your mistakes is facing them and getting over, around or sometimes straight through them.

If you're in high-interest credit card debt hell right now, start by getting a big pair of scissors or a blender you don't use and destroy those cards. DO it NOW!

Another good step to take would be to either pick up a book by Dave Ramsey or if you have an Ipod, join his free Podcast. Everyday on his Podcast he talks to people who have been through what you've been going through if not worse. This will help you understand that you are definitely not the only person on the planet that has made a mistake. (I wouldn't suggest giving him a call though until you're OUT of debt - he tends to yell at callers and another person yelling at you is probably the last thing you need right now)

Another Option is to Check out Bloggers that have gotten rid of debt or are in the process of getting rid of it. My personal favorites are -Debt Hater , Debt Free Renee, and the blog that inspired me to start blogging - Make Love, Not Debt.

Last but, not least - make some goals. If you have no direction, chances are the powers that be will push you in a direction - not necessarily the one you want to go in either.

Maybe make 3 financial goals of how you can change your direction, this week. It could be as little as "I will save $10 no matter what", to "I will omit my $5 Starbucks coffee break for a .99 cent coffee break at the gas station/convenience store" to "I will sell my least favorite Elvis collectible plates on e-bay this week" But do something, Living life debt free is so much more enjoyable - you don't HAVE TO work for the man YOU CHOOSE to work for the man. Or maybe, just maybe, you'll go out and work for YOURSELF -once that goal of being debt-free is achieved.

But don't kill yourself over your bank statement - in this country that might mean a lot but in other countries it means next to nothing. Believe me I've been there, and I am so grateful today that I never went through with it - no matter what the TV says your credit score does not completely define who you are.

There are some people with 800-850 credit scores who effectively useless when it comes to being a 'good person'.

My *new* plan for becoming debt free in the next 3 months.

Seeing as I have been thrust back into the realm of 20-something debtors,I have decided it's time to make a couple changes in order to return to the less-stress realm of debt-free 20-somethings.


The following are a couple steps that will hopefully work out sooner than later:

1. Use $200 of 'extra' spending money and immediately apply to Collection as a sign of good faith.
   
2. Use new bank 0%- for 12 mos-card to pay off remaining $1400 so it is not showing as a 'negative' entry on my credit
3. Reduce 401K contribution to 1% for the next several months - from the 3% it is currently at. This will free up $50-100 extra that I can devote directly to the new cards balance
4. Put all extra discretionary money towards debt - this would be give or take $500-700 a month depending how it's spent
5. Call medical center to make sure there are no lingering bills - that they don't want to call me about but, do want to submit to collections and damage my credit report with.
   
6. Take a deep breath, then start searching for an engagement ring and Christmas gifts at the same time.
   

At some point I might have to find a part time gig as well but, I think I'd rather do something more freelance than retail. Submitting my book to publishers and/or working on art for my friend's children's book comes to mind.

V is for Victory: I'm DEBT FREE!!!

[I originally tired to POST this Monday 8/6/07 - but it wouldn't post correctly, here's a 2nd try]

I officially determined my debt is paid off yesterday. I'm in kind of a good mood. I thought I'd add some mood music:

If You've never seen V for Vendetta - don't hit play. If you have, in this scene I play 'Evie'-short hair and all - while the credit card companies/God play "V"





This scene, the 'God is in the rain' scene, I think makes a similar analogy of what I've gone through over the last several years. I've been trapped and lived a tortured life pretty much of my own making. At any time I could have given up all hope but a little over a year ago I made a decision that I needed to be free from this debt if it was the last thing I did. Now, as I've accomplished this goal I realize this experience, being in debt, was a necessary life lesson that I won't soon forget. This lesson from the school of hard knocks has also allowed me to appreciate the benefits of saving much more than I did beforehand and hopefully, with some willpower I'll be able to realize the benefits of budgeting as well.

My Apologies ...

I apologize in advance (again) for the next week or so;

I will most likely be enjoying my new lack of indebtedness. It will most likely sound like I am bragging. In essence my posts will likely be pretty boorish for the next week or so.

I also plan to re-claim a 'life' I've lost while pursuing this dream of being debt free. Thus, I may post a little bit less but I will try and keep them at least regular.

Thank all of you for the comments and support - I'm debt free and loving it.

1 day to go...TILL I'M DEBT FREE!!!!!!!!!!!!!!!!!!!!!!!!!!!!

OK let me be honest,

Technically, I am debt-free at this moment. The check is in the mail.

However, My money-market is in danger of accruing no interest and thus ruining my passive income for the month unless I get paycheck from my 2nd job today and deposit it into my money market along with money from another bank. Seeing as I don't want to lose that interest, I will be doing some running at lunch today.

I did call the credit card company yesterday to see if they had miraculously received my check after 1 day in the mail - they didn't. I expect it to hit there books on Monday. I only wish I could somehow record the automated credit card system saying "Your current balance is...$0" that would be Priceless...

2 days to go...till I'm debt FREE!!!

I don't have the that many complaints about today.

For the last 2 days I've been getting up at about 5 or 6 in the morning without the help of my alarm clock.

Two days ago, I woke up at 5 AM and went right to the gym, worked out and got back home about 5 minutes before my alarm went off! I feel like the idea of this debt being gone is relieving at least a 1/3 of the stress in my life.

Today, I worked on a skeleton crew at work while everyone else went to a company picnic. Don't worry, I didn't really want to go + I got free pizza for staying. This was a much better alternative to my packed lunch. And apparently, according to co-workers, I was honored at the picnic by my bosses' bosses' boss - so that was pretty nice to hear.

Oh debt, I wish you well -well not that well.

2 days till I'm debt free - it feels gooooood!

3 days to go...till I'm debt Free!

So now the real countdown begins.

I actually sent the check today and now it's a waiting game on when it hits the money market to determine if it go there ok. Based on when I sent my last check to the Shiny red 0% card and when they 'received it'. They should get it by Monday.

Tomorrow I get paid by my 1st job, Friday I get paid by my 2nd job.

Saturday I'll be off the 2nd job and hopefully put in the 2 weeks as well - I might make it 3 weeks so i can take advantage of the 20% discount on clothes cause I will definitely need a shopping spree.

debt-free, it's slowly hitting me I apologize for the self-congratulatory posts - they will most likely continue for a week or so...don't say I didn't warn you.

5 days to go...till I'm DeBt FreE!!

OH man,

I did not really want to work today. I just kept thinking of all the things I'll be able to (ideally) do come Friday:

• pay more than $20 for groceries every week
• save a lot more than I am saving now
• buy clothes - BUY new CLOTHES!!!
• buy new shoes
  
• two words: dry cleaning
• eat out a couple times a week - guilt-free
• subscribe to some magazines
  
• buy some books
• possibly get cable again
  
• pay more for dates with my girlfriend (no more $1 theater)
  
• did I mention - buy some books?
• save for a piece of Jewelry for my impatient girlfriend
• the list goes on...

My only real fear is that once I have that financial freedom again after a decade-long (or longer - I'll check) wait, I might overreact and begin spending outside my means again. I think this $18,000 several year lesson from the prestigious School of Hard Knocks won't be soon forgotten though.

6 days to go...till I'm DEBT FREE

So today, I have to work a pretty long shift at the 2nd job.

Today is 'employee day' at the 2nd job so they'll be open longer and there will be HUGE discounts. They had a flier up for the jewelry department advertising that - for example: with all the discounts a $500 diamond would cost $98! I am very tempted to use my card to take advantage of the discounts but, I can't do it.

I've come too far to go back into debt even if ends up being only a couple $100 dollars. I have gained an indigestion for credit. Plus I'm not sure what my girlfriend's ring size is anyway...

8 days to go...

SO it's the weekend.

I'm 8 days (actually less than 8 days) till I reach my long(long) term goal of being out of debt.

I've gotta say it feels good. Feels really good - I can see the...



light at the end of the tunnel...

and it feels damn good.

by the by - stole the image from whyfiles.org

9 days to go...(single digits y'all!)

So I'm down to 9 days to go till I'm debt free.

I am not awake at all right now though.

I have the day off today but I might go to work - Have I mentioned I need a new job?

I called my electric company for my balance. They continue to send out my bill later and later in the month, throwing off my check-book balancing. The amount came to just a couple dollars under what I was expecting and I did the math:

Once I'm paid next week, I'll take out about $335 for my remaining debt, $100 for food and gas for the next 2 weeks, $100 for insurance and gym membership, $220 I'll hold onto and/or give to my girlfriend for our vacation.

Give or take, that will leave me with about $120-$140 in debt-free celebration cash. Not a whole lot but I guess it's better than just $5

OK, time to sleep in some more.

10 days to go...

So at my 1st job - we had a meeting with my bosses' bosses' boss. He basically told our group that we can expect more work and less staffing. He also explained that we shouldn't worry about 'rumors' that departments might be getting down-sized. He said something to the effect of:

"you can e-mail me directly if you have any questions about the 'changes' coming through"

yeah right. I'm not worried though he seemed to have sincerity that no jobs would be lost or moved in the next 3 months. I only need a little under 2 weeks to have this debt-monkey removed from my back so that's cool with me. Shortly thereafter I will be actively looking for a new position.

Speaking of my debt monkey - the shiny red 0% card - They sent me a mailer today. It appears they're slowly catching onto the fact that I intend to make them exactly 0 cents in interest off of me. Here's the main portion of the mailer:

"Thanks for your balance transfer -
but there's so much more.
Your [shiny red 0%] Rewards Visa (R) card is too good to be kept in a drawer Use it to reach your everyday goals...from filing up your tank to funding major home improvements.

It's an everyday card with special rewards. Your Rewards card gives you a full 1% in [shiny red 0%] Dollars (R) with every purchase. Once you've earned 50 or more [shiny red 0%] Dollars you can redeem and apply them toward the [shiny red 0%] product of your choice.

Put your recurring payments like the cable and electric bills as well as frequent purchases such as groceries, gas and clothing on your Rewards card to keep all of your expenses in order. Just use your statement to easily track all of your expenses. (Plus your [shiny red 0%] Dollars will really start to add up!)

Use these coupons provided by Visa to save on your next purchase and start earning [shiny red 0%] Dollars!"

OH so tempting & easy charge my monthly expenses to a credit card? I think I'll go do that n....HEY wait a second, isn't that how I got myself into this mess in the first place? I think I'll pass for now Shiny red 0% [for now] card. Nice try though...

Budget thus far - to get out of debt

It's late. my feet hurt and I need some sleep but I thought I'd try a post a hap-hazard example of my budget as I approach the debt-free club.

I'll eat right quick and then I might post some more - it's more likely I'll pass out though.

15 days to go...

So I got paid by my second job today and got a little bit more than I was expecting they are also increasing my hours slightly.

Barring a unexpected termination, Operation Debt-free is in full effect and on schedule.

I have this weird feeling I might just get overconfident to the point of insolence and tell all my bosses ( and I have many layers of bosses) that they can just shove it. I think I'll be able to maintain my cool though.

I picked up a jewelry flyer today while on break at my 2nd job. The prices actually all look pretty decent but I have no money - except credit - in order to pay for anything. The jewelry store offers 'free' financing for 1 year as long as you pay on time - assuming you don't pay on time or you wait over a year to pay it off it immediately goes to a 22% interest rate.

Very tempting but I think it will be so much more gratifying to go into a jewelry store with a wad of 'Benjamin's' in my pocket and just flap them on top the display case.

18 days to go...

So I went to Barnes & Noble today after work and was perusing a great book on Benjamin Franklin & Wealth.

I found a great, long quote while there about debt - when I tried to find it again on line it was only in bit's and pieces:

This site: http://www.sacklunch.net/poorrichard/ has just about all of the quotes but they are broken into much smaller pieces.

I guess the sweetest and most 'to-the-point' quote would be:

"He that goes a-borrowing goes a-sorrowing."

I've been debating today whether I should hold on to my 2nd job when(not if) I pay off my debt. There are advantages on both sides.

By staying I would be able to:

1. Pay for a shiny piece of jewelry for my girlfriend (possibly future fiance/wife) quicker
2. Save more money to pay for a possible wedding reception (my girlfriend and her family will have nothing to do with 'dancing' or 'drinking' that my family & friends all-but require in order to attend - it's a long story...)
3. I'd be able to stock up on a struggling wardrobe by using the nice 2nd job discount.

By leaving I would be able to:

1. Relax
   
2. focus more on finding a better 1st job
   
3. Spend more time with girlfriend, family & friends
4. ...Did I mention RELAX?
   

I'm leaning heavily towards the latter option right now but, I know I'll feel bad If I resign again from the 2nd job just as they are getting into their 2nd busiest time of the year 'back-to-school'. I can guarantee though if I am more than 1/2 or 2/3rds as stressed out then, as I am now about just my 1st job - I will be giving my 2 weeks notice with no remorse whatsoever....

20-days to go....

That is hypothetically, 20 days to go before I become debt free.

Of course this bars any other major financial setbacks this week. I had a couple this weekend;

1. My GF & I went to a movie on Saturday morning. The movie was free through work and I fed the meter for exactly the 2 hours we would need but when I came back 1:40 later there was a ticket on windshield. I had 22 minutes left on the meter. Then I read the ticket and it noted the $40 bill/ticket(arrrgh!!!) was due to my lack of a front plate on my vehicle. For as long as I can remember I believe that Ohio has been a single-plate (on the back) state but apparently the meter maid thought differently.
   
2. I hung out with a friend at a bar Last night. I was attempting to just sit and drink water but I guess I was looking a little too bored. So of course the friend decided to buy a pitcher of some type of margarita and said "I could get the next round" - I hate that 'I'll buy then you buy trick' - the next round was at 'hipper' bar. I ordered the drinks, then asked the bartender what the current tab was. The bartender gave this condescending look then a few seconds later said $13. I considered giving no tip due to the condescending look [Excuuuuse me, for not wanting to go into debt for a temporary social poisoning]but decided on $2, and $15 was all I ended up paying.
   

I also paid for dinner on Friday and lunch on Saturday for my girl but I figured this would be coming anyway.

Luckily I decided not to go in on Lottery tickets with my girlfriend on Friday. She spent $20 and said I could keep 10% of her winnings. An hour prior , I had explained to her and my brother that the 'Lottery is just a tax on the poor'. She dismissed this and said that the Lotto is 'fun'. 2 'fun' hours later she was 11 dollars poorer. She did make a $9 return off of two of the 10 cards that she bought. So in essence her return was about (correct me if I'm wrong) negative 55%!! I told her she could keep the $0.90 that she earned me. At least she had fun, right?