Debt Free-The Way to Be!
In the late 1980s I generated a take-home income of $5-7,000 monthly. The 80s were good to us. My wife thought nothing of dropping $500 on a blouse at Saks Fifth Avenue.
We had all the trappings of success. A beautiful 4-bedrm home on a wooded lot in an upscale neighborhood, two new cars, two kids in private school, an interest in an ocean-side condo, and more. My wife spent an average of $12,000 annually just on gifts. It was crazy then, and it would be even more ludicrous today.
We were the poster couple for yuppies living the life of conspicuous consumption.
A divorce and selling off my business put an end to that. I pursued other dreams; she pursued other men. Thankfully, unlike many others or our government, I’m no longer drowning in debt, although I do live a much more modest lifestyle today.
Debt is a form of slavery and can even lead to suicide and broken marriages. It still puzzles me how anyone could take out a seven-year loan on a vehicle, a depreciating asset? Consider these startling facts:
- Total consumer debt in the US comes out to more than $7500 per person (excluding a mortgage)
- Americans bought more than $2 trillion worth of stuff on credit in 2005
- The total amount of money Americans don’t pay off on their credit cards each month is about $700 billion
- Nearly 2/3rds of Americans can’t pay off their credit card balances each month and have an average balance of $12,000 or ¼ of their household income.
- The ranks of senior citizens and poverty level citizens are sinking deeper into debt in an effort to cover higher costs of living. Since 2005 our dollar has lost 40% of its value.
There is no magic cure for getting out of debt. Thanks to credit card lobbyists, declaring bankruptcy for a fresh start has become a whole lot more difficult and expensive proposition…a boon to the legal industry.
Like a basic diet, which means consuming fewer calories while burning more off through exercise, debt reduction means you must either increase your income and/or decrease your expenses.
Most experts agree there are three basic steps:
- Get to work…find a second job if necessary to double up on credit card payments and other debt.
- Negotiate with creditors. Contact them and ask for a lower rate. Keep in mind many credit card firms now will limit the credit line on even borrowers who maintain a good payment history and many make most of their revenue now from unreasonably high fees such as late payment charges. Your best bet is to cut the cards up while following this advice.
- Make a budget and stick with it. Keep track of every dollar you spend (keep an expense journal with you), pay bills on time to avoid late fees.
Changing your spending habits could require a personality transplant. Even our children have been brainwashed into a “I gotta have it now and it’s got to be a designer label,’ mentality. What I’m saying is, getting your financial house in order will require a family effort.
Obviously, cut out expenses you don’t need…cable TV, extra cell phones, the weekly hairdresser appointment and so on. This will free up cash you can use to pay down credit card and other debt.
Years ago when I was a volunteer Stephens Ministry marriage counselor through our church, there were two main reasons why couples experienced problems – money or morality issues.
Here are some resources you can use to get started:
Dave Ramsey’s Debt Snowball Plan-Useful
http://www.daveramsey.com/the_truth_about/get_out_of_debt_4055.html.cfm
Good House Keeping Seal of Approval on Surviving Your Finances
http://www.goodhousekeeping.com/money/budget/out-of-debt-aug05
AARP Organization offers a variety of useful how-to resources
http://www.aarp.org/money/
Mortgage Protection Plans…Can Possibly Save Your Home
Three months after George Mackey lost his job…he didn’t lose his house because of a mortgage assurance program backed by the Rainy Day Foundation, a non-profit group headquartered in Washington, D.C.
The foundation made Mackey’s next four $1,400 mortgage payments and is likely to make two more.
“It’s unbelievable,” he says. “I wouldn’t have my house anymore if it weren’t for them.”
Chances are you never heard of the Rainy Day Foundation.
Until a few weeks ago, neither had I. If you’re ready to buy a house or refinance your mortgage, you should know about the foundation.
“Our goal is to help homeowners maintain homeownership,” says CEO Rick Del Sontro.
The Rainy Day Foundation rolled out its Homeowner Education and Loan Protection program (HELP) about 19 months ago. HELP is only available when you buy a home or refinance a mortgage. You cannot enroll on your own. The program is paid for by participating lenders, builders or real estate firms.
More than 125 companies across the country have partnered with the foundation. Most are local or regional lenders. But a number of big banks, including Wells Fargo, SunTrust, Flagstar and National City, also take part.
http://www.msnbc.msn.com/id/31806075/ns/business-consumer_news/
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Who’s Looking Out for You?
What to do when you get laid off-New Resource page
at our sister site...
The most heavily trafficked portion of our site is our JobResources page, which is updated weekly. We just added a new ‘sub’ section with resources you can use if you get laid off. Worth sharing with others.
http://www.poormansurvival.com/layoffstrategies
>>>Note: pay particular attention to the new group being formed to foster better government and corporate policies for putting Americans back to work (info at the end of the layoffstrategies page). Still in the formation/startup phase, RehireAmericaNow.org
will be seeking volunteer board members, suggestions for direction, donations and more.
I can’t think of anything more important in this economy than putting people back to work! I’m already on board as an advisor.
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Giving Families a Fresh Start
A decade ago my wife and I had a small ‘ministry’ if you will that the YWCA dubbed the bread and butter ministry. We donated boxloads of household goods and food items to the Y for which they used to set up apartments for struggling mothers…now, Suezette Steinhardt has taken that a step further.
Steinhardt, a former social worker in Vienna, VA became dismayed over how many young mothers worked at dead end jobs but were still unable to make ends meet, no matter how many jobs they worked.
She and her husband started out by renting an apartment for one young mother, stocking it with necessities and more to help a young woman in need. They gave up some of their own social spending to come up with the cash. The couple has now helped 16 families get a fresh start and has started a non-profit group called Family Preservation and Strengthening Services (Family PASS). A network of her friends helped her get started with cash donations and by providing office space and other tools they needed. I personally believe that’s what it will take to restore this country – people helping each other and not relying on government. To learn more about her organization, go to:
www.FamilyPassFairfax.org
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Money Saving Tip
If you have children returning to school, you know the cost of those school supplies adds up. Aside from shopping at dollar stores, many states are offering tax holidays to meet your back-to-school needs. Most occur during August. Check this site for more…
www.TaxAdmin.org
