Posts Tagged ‘debt’

Lessons Learned: The Frugal Future

Prior to the recession, I thought my husband and I were managing our finances pretty well.  Sure, we had some credit card debt, but we’d already paid off a couple of cards and were starting to make inroads on the balances of those that remained.

Then the recession hit and my husband’s job disappeared with the demand for new homes as the foreclosure wave drowned the housing market. My business, which up to that point, had been doing well, was suddenly floundering and we were left with facing the harsh realities of having too little income to make ends meet.

What had been manageable on our prior income was no longer manageable and the delinquencies began as we started to prioritize our expenses. Obviously food, shelter, and the utilities were priority number one. Everything else, including those credit cards that we had been diligently paying down, would have to wait.

Today, after two years of financial devastation, the money picture looks better. My husband is working and my business is picking up. We had to move to Canada to make it happen, but we are much better off financially now than we were six months ago.

The funny thing is I don’t want to spend money, now that I have it to spend. I still cringe even when we’re buying groceries and I see the numbers on the cash register terminal inching toward that $100 mark. My husband wants to buy me warm winter clothing because of the much colder winters here. I  know I probably do need the warmer clothes, having come from California, but I can’t help feeling guilty about buying a sweater. I would rather keep that money in the bank.

While I hope I don’t spend the rest of my life afraid to spend money where it needs to spent, I am glad that I have learned a new respect for the value of a dollar and that I will always think twice before spending. I think that this new found frugality will help us to never, ever again have to relive the devastation that were the last two years of our lives.

What about you? What lessons had this recession taught you and how were you changed by it?

Frugal Living: Survival Mode

Most personal finance blogs are filled with wonderful advice, provided that you’ve got a stable source of income that is adequate to support yourself and your family and enable you to save money at the same time.  While this advice is great for those in stable financial shape, it doesn’t work quite so well for those who are struggling to survive day by day. To that end, I would like to write a post aimed at those of you who are barely getting by.

Let me start off by saying that the advice herein comes from the school of hard knocks. I was there as recently as a few months ago and I can readily empathize with how you feel and your day to day struggles. I know what it is like to spend a day on the phone making payment arrangements with the utility companies for this month’s payment because I had just made last month’s payment a few days ago. I know what it is like to receive call after call from collection agencies hounding me for money I just don’t have. I know what it is like to be at the brink of foreclosure and that sick, sinking feeling you get when you know you’ve given all you can and there is nothing left inside you to give. And yet, you must go on. You must spend your hours figuring out how best to parcel out what little bit of money you have to keep a roof over your family and keep the lights on.

The first step is to figure out how much income you currently have coming in. Once you have that, then you can prioritize your expenses and debts.

Obviously, the most important expense is your rent or mortgage. If you can keep paying it, even if it takes a huge chunk out of your available money, then that is payment number 1. If you can’t make your rent, be sure to let your landlord know. How understanding your landlord is depends on him or her. If you’re only renting, you can also always find cheaper accommodations. If you have a mortgage that you can no longer afford, then that is a stickier issue. If you intend on keeping the house, then contact your lender right away and ask for a loan modification. The earlier you get started on this, the better, because, let me tell you, it can take a year or more to get into a successful loan modification!

Next are the utilities. Most utility companies are very good at working with you on payment arrangements. Just explain that you are having financial difficulties and they will be willing to work with you. Sometimes you get a representative on the line who won’t cooperate. If this happens to you, ask for a supervisor and more often than not, that does the trick. As a shout out, the Verizon folks were always pretty good with me, barring a few individuals, as was Southern California Edison.

Following that is food. There are some tricks here to help you get by with less, and many of you probably already know them, but I am going to share them here anyway:

1: Check the mail for your weekly circulars. These will have the sales that are happening that week. The basic idea here is to look for items that you use that may be on sale. Many times you can get decent cuts of meat like london broil (top round in Canada) for as little as $1.77 a pound. Similar sales will be on for ground beef and chicken. You can shave off a good $20-50 off your weekly grocery bill by hitting up all the grocery stores with the best sale prices.

2: Chicken is your friend because it  is pretty cheap. It is also healthy, and eating healthy will be quite challenging on a limited budget. You will probably find yourself eating a lot of it. To help with the boredom of eating the same foods week in and week out, search for recipes on line or try different marinades. (These will often be on sale for cheap as well.)

Next, this is a no brainer, but cut out any unnecessary expenses such as cable or satellite tv. You don’t have to cut it out all together, but you can drop down to the basic package to cut costs.

Finally, consider moving away from your current location. Even in the States, there are regions that have not been as hard hit as some other areas have. The northern central region of the country is doing ok, and so are some southern states. Both coasts have been buried by the economy as well as the sunbelt region. You may have better luck finding work in areas where the ratio of workers looking for work and available jobs is a better percentage.

Avoiding The Debt Trap

Not all debt is bad and most people can’t avoid accumulating some debt, unless they’re heir to some massive fortune. Having said that, some debt is just plain toxic and should be avoided like the plague.

Payday Loans/Cash Advances

Payday loans let you borrow money from your next paycheck. They’re meant to act as a stop-gap when you have an emergency expense that is outside your budget. However, payday loans are a deadly trap because of the way they’re structured and the expensive costs associated with them. For one thing, they’re extremely short term and must be paid back, in full in one to two weeks.  If you’re already living paycheck to paycheck,  you’re almost certain to be short after paying back the payday lender and need another advance from your next check, plus an additional fee to last you until your next pay day. This is how payday lenders make their money and how the payday debt trap closes.

(more…)

Saving America’s Middle Class? Or Drowning It In Austerity?

Today’s post on Frugal Dad was written by a guest blogger pimping his own site, thedailymiddle.com, a site that claims to be about middle class survival during these hard times.

I read the post on Frugal Dad and I see that the author is using statistics gathered by Elizabeth Warren. Going to his site, he even has a category for her and he’s put up some of her videos. However, he takes her statistics and completely misinterprets them to continue to put forth the “overconsumption myth” which Warren has also gone to great lengths to debunk.

(more…)

The Over-Consumption Myth Is Keeping Us From Enacting Meaningful Financial Services Reform

Despite the persistent rhetoric that people in financial trouble deserve to be there because they made poor choices and now must face the consequences of those choices, the real story behind why so many American families are riding the edge of financial devastation is not as simple as that.

As Elizabeth Warren explains in her paper entitled the Over-Consumption Myth,  the average middle class family carries more debt than it did a generation ago. However, this debt is not due to overspending on frivolous items such as designer clothes, designer foods, or big screen televisions.

(more…)

The Truth About Bankruptcy

In this post over at Frugal Dad, guest blogger Neal Frankle asked this question: “Is it wrong to ask to have your debts forgiven?” In his post he mentions actor Stephen Baldwin, a born-again Christian whose income has dried up  as a result of his own choices to refuse roles based on his new-found faith, and who now is in bankruptcy.

The number one reason for bankruptcy is medical bills. The number is over 60%. Among those, more than three quarters have medical insurance. As for the rest, all report some sort of misfortune, most commonly a job loss or other decline in income. Only 9% of bankruptcy filers reported no misfortune.

(more…)

Buy VerizonCell Phones and Save. | Thanks to Bank Rates & Reviews, CD Rates and UK Loan
Easy AdSense by Unreal