Letters to the Editor
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Yeah, it rings true
I definitely relate to this article. I didn't pay my bills because I was broke, unorganized and had an irrational fear of money issues all together. I was afraid of the damage I had done to my financial health, and I figured if I didn't open the bills, they would just disappear all together.
So about a year and a half ago, I taped the Oprah Winfrey Debt Diet show, and forced myself to watch it. I figured if anyone could be nice about breaking bad news, it would be Oprah. Cheesy, but true. I then forced myself to take a hard look at the damage I had accrued over the past few years. It was similar - about 10K of debt with 30% APR.
So good news - I sit here now with zero debt. Not only that, but I just helped finish to pay off my husband's 10K debt (which he had acquired before we got married) about two days ago. It's now all done, DONE! I am somewhat shell-shocked, but relieved. The experience turned me into a full-fledged credit card nerd. and I am thrilled to be considered a "deadbeat" by the credit card industry. (Meaning, I pay the full balance every month and get loads of miles).
I won't lie. It took laser-like focus and stamina. I took an extra job, and I sold alot of stuff on Ebay. I stopped shopping for clothes. We kept our cable, but got rid of Netflix and rarely went to the movies. I cut coupons, and bought in bulk.
Our splurge was one night out a week at a cheap restaurant and bar, but that was it. (And yes, I live in NYC). My husband and I learned to enjoy nights home, where we got a great bottle of (cheap) wine, and ate our dinners by candlelight. It felt like a fancy meal out, but obviously less expensive. We got used to our new lifestyle, and even learned to cook a mean porkchop.
So yes, you can do this on your own. It's possible. I now pay my bills on time, and opened up a high-yield internet savings account and a Roth IRA. I'm finally a freaking adult at 33, woohoo. It took awhile, but I'll try not to beat myself up over that.
Congrats to the writer, and good luck with handling finances in the future....
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Making a real budget
I kept getting frustrated with the lack of a usable budget feature in the mainstream personal finance programs (Quicken, MS Money, etc.)
I finally found youneedabudget.com and got a budget that works. When I was a little kid, "budgeting" meant divvying my allowance up into envelopes for various categories. If I didn't spend everything in a particular category, I could "carry it forward" into the next month. YNAB is the only budget program I've found that lets you carry unused balances forward in this same way.
Without this capability, the other programs' "budgets" are really just frustratingly irrelevant measures of how closely the current month is following the pattern of previous months. Useless.
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stop throwing away money on food out!
Good article, but what struck me is how long it took her to start bringing her lunch instead of eating out. This is one of the easiest ways to save a ton of money. I make six figures, and I still bring my lunch every day. Like any kind of diet, this allows me to not worry if, say, I want to buy myself a latte in the morning, or a snack in the afternoon, because I know I'm not spending $40 or $50 a week on lunch.
Same for dinners. Anyone who's in debt and is eating out more than once a week is missing out on a great way to save money, not to mention be healthier. If you don't like cooking and live alone, invite a friend over and make a big pot of soup or spaghetti or chili. That will last for several dinners. That way, when you want to go out on weekends and eat out or get drinks, you won't be doing this on top of spending $70-$100 on takeout that week.
Clothes are another money trap. Consignment stores generally have better quality clothes at lower prices than regular stores. Anyone who enjoys nice clothes and is in debt should just stop buying new; it's painless, and you may end up better dressed anyway.
For entertainment, rediscover the public library. With online service, it's easy to put books and movies on reserve and cut back on those expenses.
I could go on an on; in fact, I'd love to be the secular Dave Ramsey.
I do totally feel for the people who get in debt because of medical bills or caring for children or divorce or any of the many things you can't prevent. But getting into debt and continuing to throw money away on things that are so easy to cut back on is hard to fathom.
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I'm sort of in the opposite situation
I'm in the 70k range of credit card debt and my FICO score is in the 700s! Yes, even the bankers were amazed. At the time I did a refi on my house I was bringing in about 55k. I missed the lowest rates because I was too embarrassed to talk to a live human being about how stupid I was. So due to that, I missed out on the best rates and waited another year to refi and upped my debt more.
So after doing that everything was nifty, I was paying it down without adding to it and then 6 months later I lost my lifelong job. Yeah, funny timing this article was because I just finally broke down and cried a few hours ago while I was grocery shopping. I realized I would finally have to either declare bankruptcy (bye bye excellent credit, even after all of this) and borrow money from friends or family to get me through the next several months. And I don't have the type of family who would gladly do such a thing, even though my siblings are well off. I'm looked at as the weird one since I'm still single and childless.
I work a commission-only job now and realize it just isn't cutting it. I was actually wondering if I'd qualify for food stamps. I finally decided I have to get rid of HBO and cable TV along with other basic expenses (have already kept my house at 62° all winter). I haven't done any of this yet but I will have to tackle it in the next month before I make another 401k withdrawal.
Some of the worst advice I received while in my 20s:
1. Don't double up your student loan payments (the 8% rate was considered great in the 80s) to pay it off quicker. I wanted to but was told not to by my brother, the same one who told me this:
2. Don't put too much into your 401k since you can't access it if you need to. Well, I am accessing it early and had I continued to save at 10% (I was saving in an after-tax program at work before the 401k and used the whole thing for a downpayment on a house) instead of the initial 4% which later became 6, I'd have another 80k to yank out and pay all of this debt down with and still have a good sum in there. As it is, I've reduced it by half and am getting dangerously close to not having anything left and my debt situation isn't any better.
3. Don't throw money away on rent. Had I kept renting I wouldn't be saddled with a house I can't sell because I can't afford to make the 30k or so of structural repairs just to get it to sell at a decent price. You can't sell a house with obvious structural issues. Not to mention where in the hell would I live then? Its not like rent would be cheaper, just that maybe I could move to a different city, although those cities are more expensive and I have 3 pets.
My unemployment situation would've been better sans house since I would've been able to look at other, higher salaried positions in other cities. As it was last year, all the jobs I was looking at in my home town or qualified for were 20k less than I had been making. (I was in a very small niche field and was having a hard time getting anyone to interview me for a drastic career change even though I've always been a hard worker and loyal-to-a-fault employee.)
So here I am ready to drown. I should actually write a book about how to manage debt instead of all the usual get-out-of debt books. I was a whizz at transferring to 3.9% til paid off cards and never using them for purchases. Using Discover for all new purchases (getting that 1% cash back) and then transferring to a 3.9 what I couldn't pay off at the end of the month. That means all of my debt is on low-interest til paid off cards with the exception of one which is only on a 6 month rate. Thats where I'm going to fail as its coming due soon and transferring it will be harder. I had to take a few cash advances on it at 3.9% just to make ends meet this year due to the under-employment.
You see, those nice credit card companies caught on to people like me and decided to lift the $50-$75 cap that a transfer would incur so now trying to transfer a 16k debt somewhere else will now incur the full 3% fee. Youza!
So yeah, I may need to look into bankruptcy before I eat through the rest of my 401k. I didn't realize that it was still possible. I'm going to read up on how the 2005 law really didn't change things because I thought it had. Interesting. Still doesn't solve my income problem since my commission-only job isn't an 8 hour day so doesn't really leave me time to get a second job. And I have no idea what I'd be qualified for outside of my past career which is a done deal now.
Yeah, if I could do it all over again I would have never bought the house as it hasn't appreciated much in 13 years like other cities. I had zero credit card debt before it and no one informed me as to the cost of upkeep it would be. Thats when all the problems started. As an unhandy single girl, renting would've been much better and I was saving like a mad-woman at the time. Ugh.