Monday, March 29, 2010

Getting out of Debt: Step Three

Now it is time to start tracking where all your income goes.

And I mean every last penny.

Start by writing down all the money that you have to spend each month - i.e. - your debts. These things have to be paid, so you subtract those amounts from your income.

After that, you should see how much money you really have to spend each month on discretionary items. Track how you spend that money. Each time you stop to get a coffee, write it down!

After one month of tracking down how you are spending your money, you can add up each expense into a certain category, such as, Clothing, Movies, Groceries, Eating Out, Coffee, etc.

After you get your amounts, you can start lumping like things together. Movies and Eating Out, for example, are part of the overall "Entertainment" category.

Once you have all these categories tracked and figured out, you can see how much you are spending in each category.

If you haven't realized it yet, you are at the point of having all the data needed to set up your wonderful budget!!!!

*It is very important that during this period you only spend CASH and DO NOT USE CREDIT CARDS! Using Credit Cards will completely change the integrity of your category spending, which will make the data useless for the next step - CREATING A BUDGET!

Saturday, March 27, 2010

Getting out of Debt: Step Two

Now that you have assumed responsibility for your debts, you are ready to get rolling. But roll to where?


You have assumed the responsibility - but the responsibility for what? It is now time to gather all your financial info and I mean ALL of it.

You have got to know exactly where you stand. Get all those debt statements, to include the house and the car. Write them all down and get that ugly total number. It will probably be shocking, but you need to do it!

You also need to get all your paystubs. Figure out how much you actually MAKE each month.

If you have any open savings or checkings accounts with balances in them - you know, assests - get that information together as well. Heck, you can even get together any stocks, retirement accounts and/or savings bonds together as well, so you can have a clear total of how much money you have at your disposable.

Once you get all of this information together, written down, and filed in a system that works for you, you should be ready for the next step.

But don't be suprised if it takes you a couple of weeks to complete this step. Some of us just don't keep good financial records (which would make sense considering we are in debt!) and it takes some time to get all of those records together. Just do it as quickly as you can, since time is a wastin'!

Thursday, March 25, 2010

Getting out of Debt:Step One

Step one of getting of debt is (insert drumroll here) ASSUMING RESPONSIBILITY FOR THE DEBT.

Which is NOT the same as "Admitting you are in debt", or "Accepting the fact that you are in debt".

Of course, you have to admit and accept the fact that you are in debt before you can assume responsibility, but those two things to not necessarily mean you will do anything about it. I admitted I was in debt years and years ago and I accepted the fact that I was in debt for just about as long. It wasn't until I assumed responsibility of my debts that I started making changes in my life in order to kick the debt out.

Assuming responsibility for your debts means that you understand WHY you are in debt in the first place. Of course, it is because you spent more than earned, but WHY did you spend and WHAT were you spending on? Keeping up with the "in" crowd? Overcompensating by buying things for children or spouses? Deciding you "Deserved" or "needed" new clothing all the time, dinners out, movies, concerts, travel, etc?

Assuming responsibility means that you are logically looking at what you have done to yourself and are acknowledging that other steps must happen in order to break the cycle that you have started for yourself. It also means that you are realizing your own shortcomings and placing the blame exactly where it belongs - on yourself. Not the Ad Campaigns, Department Stores or Credit Card companies.

If you do not know WHY you are in debt and WHAT you bought that put you there in the first place, you are not going to be able to change anything.

Getting out of Debt

Getting out of debt, as you know, is not an easy task. It takes a lot of discipline, desire and honestly, an overall change in your behavior. Although some people are in debt due to severe circumstances, most of us are in debt by simply spending more money than we have.

There are steps to get out of debt. You can find differences in the steps depending on who is speaking about the subject, but they all pretty much boil down to spend less than you earn, save for purchases, use cash, and increase your income.

The next few days I am going to discuss steps to getting out of debt from my own mind.

I am also starting a "NO SPEND" week - which I will attempt each and every month to not spend a penny of money for 7 straight days. Although I believe I have my expenditures down quite a bit from where they were, I believe I can still find some more money each month to apply towards my debts - which I can get from simply NOT SPENDING!

Tuesday, March 16, 2010


Only $392 until my debt is at $16,999!!! SIXTEEN THOUSANDS BABY!!!!!!!

I have been so down in the dumps about NOT making a lot of headway these past few months, that I forgot to be excited about the fact that I am almost in the SIXTEEN THOUSANDS!!

Now, off to pay $392 towards a bill so I can actually BE in the SIXTEEN THOUSANDS!!!

Current Debt Balances

I have received my tax return and applied about half of it to debt already. As it stands, here are my current debt balances:

Capital One: $1283
Discover: $4468
Providian: $11620

My goal this year is to get my credit card balances at $12,000 or below. Selling the house should help me get to this point fairly quickly, but if I can not or ultimately choose to not sell the house, I am going to have to get creative in how that is going to happen.

Mainly because the Providian card (bought out by Chase) upped the interest rate to 26%. Only $144 of the payment is going towards principle. Why did they up the rate? I have no idea. I called and attempted to get the rate lowered, but to no avail.

So now I am questioning paying down the lowest amounts first, because it seems as though I make ZERO progress on the Providian debt.

What to do? Paying down the lowest balances first does indeed give a much needed boost to the brain with the "I PAID THAT OFF!" exclaimations. Seeing that the highest balance isn't moving really makes me angry. It should make me angry enough to get the other balances out of the way in order to attack it; but it only makes me want to do things out of order.

Monday, March 15, 2010

Disability Claim

Well, three years after I got out of the Army, I finally went in and started my disability claim.

I know, I am late. Yes, I should have gone earlier. But I didn't and I can't change that.

In any case, I claimed my knees (pretty much torn to shreds after falling in a ditch with 80 pounds on my back - oh, I was such a graceful Soldier!) migraines (started to occur after the 7th Anthrax shot. Don't get those. I wouldn't have, except that they made me. And yes, they can make you.) My lower back (partial sacralization of the 5th lumbar - whatever that means, I don't really know. But that was the diagnosis from the back doctor) and some various other things.

I have no idea what things will be covered and what will not (although I am pretty sure the knees, migraines and back will be covered) and I have no idea how much I will be awarded.

Although the money will help, I am more interested in being able to go to the doctor for the back, knees and headaches.

Hopefully I will get some type of monetary compensation, though. Only because my income is about to go down again with the end of my GI Bill and I do need something to make up the difference.

Wednesday, March 10, 2010

Selling the house? *long post... typing out my thoughts!*

The plan, when I moved in with my boyfriend, was to rent out my house. No, I'm not really making any money on the rent - enough to pay the mortgage and the siding loan is about all I am raking in. Okay, you got me - I am making $24 a month on the rent!

The thing was, with the house rented, I still had the house and at some point it *could* or *would* become basically a passive stream of income. Since I no longer had to pay a babysitter to watch the children while I worked all the freaking time (yes, the boyfriend could have watched them. No, I would not allow it. Call me silly, but I refused to *use* him for that without more of a committment than we were going out on dates and were not seeing anyone else but each other) and because I was not going to have all the other bills associated with the house (utilities, ect.) I was going to have a boatload more money to throw at the debt. Technically, with the plan I had, I would have been credit card debt free in May, the same time I graduate.

I got the house rented right before I lost my job. Which really is/was a great thing, because at least the mortgage was taken care of. At the time I lost my job, I stated that come March I would revisit the idea of either renting the house or actually selling it. I wanted to give myself time to adjust to the new income levels and see how things were progressing before making a major choice to unload the house off of my spreadsheets.

Well, March has come around and it is time to revisit the question, Sell or keep renting it out?

I have had the same renters since August. Their lease was up last month so now they are on a month to month basis. I have had no major issues with the renters. Actually, I haven't had any issues with the renters, really, except for their not maintaining the garden that I planted a few months before I moved out. But, that wasn't in the lease, so I really can't say much. They pay rent in full and on time every month and when I did enter the house in December over the hot water replacement issue, nothing was falling down or severely damaged. Yes, they hung a television on the wall which is going to require a repair job, but it isn't thousands upon thousands of dollars. If they don't fix it when they do leave, the security deposit will cover the repair.

I say all of this just to quantify the fact that I am not having issues with the renters or keeping my house rented. The income comes every month.

But here is the issue - I am graduating in May. My GI Bill, which has already been slashed in half last month due to not needing full time enrollment this semester to graduate, is going to be gone. That is $684 that I will no longer have coming into my checking account.

With the current economy, I am not sure if I will be able to obtain employment in the general vincitity of where I live in my field of study. Sure, people say just move to where the jobs are, but I have the wonderful boyfriend who I am going to marry, so I can't just up and move away when he is basically stuck here for a few more years due to his job.

So that means that I have to be open to employment that may very well have nothing to do what I went to school for. Which is okay. It's life. I get it.

But - again with the economy thing - I don't know if I will be able to get solid employment in ANY field. I may very well have to bartend for a bit after graduation, riding out the storm, if you will.

Now, I have made some pretty good money bartending, so I am not knocking it. And the bar I am working at now has been good to me. Not as good as my last bartending job, but I have been able to pay all my bills, not touch my buffer, paid cash for tuition and even got one debt paid off! But I have also had the benefit of a full GI Bill from August until January, a $900 GI Bill check in February and will have half benefits until June, which is $684 a month. After June, that money is gone.

And I will still have $16,000 in credit card debt. Which terrifies me to no end.

Chances are I will not make up that $684 difference every month. Especially not starting in July - the middle of summer- the slowest season for bars. So what happens when the bills come and I don't have the money to pay them?

I have worked hard at getting the debts paid down. My starting debt when I started this blog is NOT the debt I started with. I have gotten my debt down from around the $70,000 mark to where it is now. I have worked hard to do it. The idea that all that work would be for basically nothing if I couldn't pay the bills - have my credit score tank - late fees - still owe the money, but more of it in fees and interest- makes me feel sick to my stomach. I may not have made the most progress the last 8 months in getting the darn things dwindle down, but I have paid them on time, every month. Not paying them on time is not an option for me, even if it could become reality.

But, that is one option I have. Just pay what I can and to hell with whatever I can't.

Another option I have is to seriously consider and file for bankruptcy. But again, the idea makes me sick to my stomach. I could have just done that 7 years ago and saved myself over six figures in payments when you include interest payments and it would be off my credit report by now. I didn't do that because I felt that it was my responsibility and duty to pay back the money that was borrowed. So, although it is *an* option, I really do not consider it an option for *me*.

The third option I have available to me is to sell the house. Which is painful to think about. I know it is just a structure - but it is *MY* house! I brought both of my babies home from the hospital to that house! I put my blood, sweat and tears into that house! It is a safety net - a place where we can always go!

And this is where I need to let go of the emotion and really think about what is best for my family.

I could net between $12,000 and $17,000 with the sale of the house after realtor's fees, which when combined with the $5,000 I am applying towards debt with my federal tax refund, leaves me anywhere from $4,000 left in credit card debt to having money left over to put towards my Fully Funded Emergency Fund.

Not having any credit card payments would certainly relieve stress, worry or concern with the current economic situation. Only having $4,000 left of credit card debt still leaves some bit of concern, but nowhere near the same magnitude.

Either way, it is preferable or at least highly manageable for me. If I have to keep bartending for a period of time, all the work I have done will not become for naught.

I have another issue with selling the house - I hate the thought of having owned it for 11 years and having nothing to show for it when it is all said and done because every dime of the profits go towards debt payments. It really irks me. Of course, none of that should matter. I needed shelter no matter what - and debt free or close to it is what is going to help me sleep at night. I need to get over myself.

So, okay, say I have decided to sell the house. What do I do with the renters? Do I leave them renting the house until it sells? Expect them to keep the house show ready when there is nothing in it for them whatsoever? Or should I end their lease and keep the house vacant for showings?

If the house is vacant, will I be able to afford the mortgage without that rent check? Honestly, at this point in time, I could cover it for two months, MAYBE. More likely just one month.

So now comes into the quandrum of using my tax return to cover the possible months it may take to sell the house, instead of sending it straight towards the debts. Which, in the long run, keeps my overall debt totals higher after the house does sell.

Now, some people may worry that the house won't sell because of the housing market and people having houses listed for over a year. I feel pretty confident that my house will sell for the following reasons:

1. The area in which I live, although affected by the housing crisis, has not been demolished by it
2. I live right next to a military base. Soldiers buy houses all the time and have the advantage in these times to have the VA back their home loan. Less risk for the banks when lending money.
3. My house is not a McMansion. It is a 50's style bungalow house. It is small, but a perfect "starter" home or a "downgrading" home.
4. Price - the price of my house is one of the best features of the place! Listing prices in my neighborhood are anywhere between $35 - $65,000. I am figuring my house would sell for anywhere between $45,000 and $50,000. It could potentially go for higher, but I don't know. But anywhere in that range is a REALLY good price for a 3 bedroom/1 bath brick home with a attached garage pretty much ANYWHERE you go. It isn't in the ghetto - housing prices have always been pretty low here. When I bought the house in '98, it was only $36,000. (And silly me, with my 30 year mortgage, was paying just what the note said. So I owe $30,000 - 11 years later. Urgh!)
5. The house has had the roof and siding replaced 5 years ago - so no big repair there. The stove/oven, washer and dryer (which would stay with the house) were purchased in 2007. The Fridge was purchased last February and the hot water heater was replaced in December. The kitchen floors were redone (beautiful hardwood flooring!) the summer of 2008. So, there are a lot of new and newer things that come with the house.

On the flip side, there are some things that could be done to the house that I never had the ability to get around to. The bathroom needs a cosmetic update. It could be done for about $2,000 if we did it ourselves. I am not talking about plumbing work - all the fixtures in the bathroom (except for the tub itself) were actually replaced in 2006. Just things like ripping out the pink tile that goes around the entire bathroom and replacing it with sheetrock and installing a new tub surround and flooring. The house could stand for some new carpeting. The carpet currently there isn't torn or worn (completely) out - but it does look a bit dated. The house has new kitchen cabinet hardware and the cabinets themselves have been sanded and painted, but it could use a new sink and countertop.

Which is why I estimate the house selling for $45-$50,000. Perhaps if I put the $5-$7,000 into the house on those issues I could get $65,000 for it - but there is no guarentee of that. Besides, I don't have the 5-7 thousand dollars available to do the work anyway.

So, if you have read this entire post, I thank you and hope that you can make sense of what I am saying! LOL!

I know that selling the house is the right thing to do financially for family. I know that getting the proceeds from the house can really help the purse strings. It will allow for more breathing room into the budget. With the uncertainity that is looming closer and closer to us, it will bring more security.

So why, even after everything that I wrote, do I want to stomp my feet and scream that I am not going to do it and no one can make me?

I am going to set up a meeting with the current property managers though for next week. When I used them to manage the property I had to sign a contract which states that if I were to sell the house within 6 months of their involvement with the property, I had to use them to sell the property. I don't feel like getting into a legal deal with them over it and hey, it's Remax.

Hopefully they will have some really good news for me. Like, list it for $65,000 even with the imperfectations because someone will bid $54,000 for it and I will end up with 4-9 thousand more than I originally thought.

Tuesday, March 9, 2010


Today I am writing out the rest of my March Meal Plan. I had done up until tomorrow with things that we already had around the house.... allowing myself some time to wait before hitting the stores *right* at payday. I hate the crowds, what can I say? Actually, I pretty much hate the grocery store. I don't know why. Maybe it's because right when you walk in they have a damn "cold part" as I used to call it when younger and I don't like COLD!

Anyway, last month the planning of the menu's actually WORKED! We stayed well within our budget, had lower stress levels, and didn't starve. Sounds awesome to me! Let's do it again!

Ah... planning. I see now that planning can probably save me lots of stress, time and money overall if I just settle down and do it, other than flying by the seat of my pants. Growing up is hard.

Thursday, March 4, 2010

Credit Report Check

Today I checked my credit report, just to make sure everything was the way it is supposed to be.

Imagine my suprise when I see that I am past due on two debts - debts that have been given to collection agencies.

So, I called to find out what I supposedly owed money for. One of them is a supposed Old Navy debt - $58 -yeah right. I paid that sucker in full in 2004. Now I have to get the bank to get me a copy of the cleared check if I can't find it through the online banking machine.

Second debt in collections is for BMG. $157.00. Um. Right. The dates associated with that account is when I was in Germany. (Being in Germany seems to have been bad for me!) I never received one music CD or anything else associated with that company - nor have I had a BMG account since I was a teenager. So, I have to dispute that one as well. The company said I just dispute it online with the credit bureaus.

Both customer service people I spoke to were pleasant. No nasty yelling or anything about my not having paid them money. But to be honest, I don't think they were even looking for me. I mean, these debts date back to 2005/2006. They weren't on my credit report last year when I checked. I haven't received any letters in the mail from these companies.

Now, the Old Navy debt people asked for my address. I refused to give it to them. Then they asked for my phone number. I told the girl, "Sorry, but I am not giving out that information. I do not want to start getting phone calls all the time over something I don't even owe."

I mean, if they want my address, the credit bureaus have the current one. They could have sent me a darn letter. But no way am I giving up my phone number.

Of course, they probably had caller id and I will start getting calls anyway. Urgh.

Other than that, one thing was missing from my credit report - one of the debts. It was for siding on my house that I got back in 2004. I financed it on installment over 10 years. It isn't being reported. Which is odd because it was being reported last year, but all of a sudden, it isn't on my report anymore.

I tried to call that company to find out what the payoff balance is and I got a recording asking me to leave a message and someone would call me back with the information within 5 business days. Wow. Leave a message? Um, where is the customer service department? I didn't even get transferred to India.

But, I am trying to make sure everything gets wrapped up and in order. Check your credit report, you may be suprised at what you see!

Tuesday, March 2, 2010

State Tax Commission

Back in November/December, I had received a letter from my State's Tax Commission, stating that I owed them $3,800 in taxes for the year of 2006.

Right. 2006. The year I was living in Germany because I was a member of the United States Army. The year BEFORE I moved to this State. The year I was still paying taxes to the State of Louisiana - where my permenant address was.

So, I send in the copy of my 2006 tax form to get this mess straightened out. ( I still have no idea why they even *thought* I owed them money - urgh) It was supposed to be taken care of.

Until last Thursday, when I got another letter saying that they were taking my State tax refund and applying it to my 2006 tax debt.

Needless to say, I was on the phone in nanoseconds. After 2 days, I get told that the appropriate steps had now been taken to close my case and that I should be getting my state tax return in approximately a week. Also, a letter absolving me from this debt is in the mail for me.

I really hope this time it is all straightened out. But I really want to know why they thought I owed them money in the first place.