2015 Financial Thoughts

I haven’t written a ‘financial’ post in quite a while, and been meaning to writ this one since January. To b honest I haven’t been in the same financial situation as the days of those old blog posts. Economy, health and situation changed and I found myself eating into those reserves and not putting anything aside. It has been survival mode since then but I’m looking to focus once again to change that.

Since I’ve been on my own as a teenager I have been in debt. Even when I was at the height of money earning I still used debt to get more. Telling myself I’ll get out of it soon, but soon never came and I now find myself close on to 50 and saddled with lots of debt. I hope i can teach my kids how bad debt is at least then it will have served some purpose.

I’ve been doing a lot of reading and learn about goals, one reason why I really haven’t set a obligatory new year goals, I want to do it right this time. I’m starting out not with the standard goals of ‘be debt free’ or ‘get wealthy’ rather a generic idea of I want to be stable or comfortable.

What that means to me is no stress. I don’t want to be worrying how am I going to be paying the bills next month or saying no to a nice meal out because I don’t know what’s in the bank. For the time being though there will be some hardship and perhaps a lower lifestyle. Actually that’s ok with me to a degree. As I want to simplify my life more, I feel with a smoker life I will be more happy. I know already with all the money and debt to get all the gadgets I was not necessarily ‘happy’.

2 First Steps

One of my biggest problems (ok a few) are procrastination and organization. Financially that Means a couple things. First I have a problem with remembering payment dates which leads to late fees. I could probably pay off one of my credit cards with the late fees I have had. Yes I have many of my bills on auto payment but not all just in case, you know, can’t do it right away. Well this month I have set up in my GTD app and the calendar, reminders for all bill dates and hope this will keep me on time. Just have to be disciplined now to not hit the snooze button or close the reminders without doing something first.

My second problem has been overdrafts. Most of the auto payments and other things come out of my personal account. While my incoming money comes into my business account. See where I’m going here?  I forget to pay myself on a regular basis so the personal account gets overdrawn. I had overdraft protection but that would cost me $27 each instance (add that up to all the late fees). Well a couple weeks ago I finally went in and had them tie the personal to the business for overdraft. This still costs me $5 an instance but it’s a step in the right direction. I also set up alerts using mint.com to let me know when the personel balance gets below $100 so I can evaluate and transfer as needed.

Along with living a bit more frugally and watching all outflow better I’m hoping I can stop living month to month with worry and start putting some money aside again and doubling down on some of the debts as well. I am also trying to refinance the house again which will go a long way to getting debt under control, but problem with living by credit cards and the above problems is that it comes back to bite you.

Finally, Just Be Positive!

Beside everything the most important part of my plan is to be positive! It will work out and as long as I’m working towards these goals I will succeed.

Credit cards get a bad rap these days. With millions of Americans struggling to pay off high-interest debts, is it any wonder they look at credit cards as the enemy? Despite the negative attitudes held by many, 78% of U.S. households own at least one credit card.

The fact is, credit cards CAN be dangerous if you don’t use them correctly. In the past, credit card companies targeted college freshmen, offering them free t-shirts and water bottles to sign up for cards. At 18 years old, most people aren’t ready to use credit the right way – instead, they treat it like free money. When the bill comes at the end of the month, they’re shocked by how much they owe.

Once a person misuses one credit card, they’re likely to apply for (and misuse) multiple cards. Eventually, they owe more in minimum payments than they are able to make, and they may default on their credit agreements. This can have disastrous effects on finances, credit scores, and even relationships.

With all the issues associated with credit card use, why would anyone in their right mind want one? Believe it or not, there are ways to use credit without all the negative consequences. You just need to take precautions to make sure you don’t end up on the wrong end of the spectrum when it comes to credit card use.

Understand the terms of use for each card. Do you know the interest rate you’ll pay on your credit cards if you don’t pay them off each month? What about the payment due date? If you aren’t mindful of the rules associated with your cards, you could violate them without even knowing it, leading to fees.

Pay off your cards each month. Unless you have a flat tire or other real emergency, only use your cards to purchase what you can pay off at the end of the month. You can build a strong credit history by using credit for everyday expenses – but only if you refrain from spending the money you’ll need to pay off the balance.

Find the best credit cards for you. There are thousands of websites that help you compare credit card deals. Keep an eye out for interest rates, annual fees, and other potential fees, looking for the card with the lowest cost of use. Also, look for cards that offer rewards, such as airline miles, cash back, or points you can trade in for gift cards.

If you follow these guidelines, you can learn to use credit cards without incurring debt, and you can even earn benefits along the way.

Yes I love my electronics. I have been an early adopter of new tech and toys for as far back as I can remember. Anyone remember Laser Discs? Yep I had a nice collection of those too. Its especially true with iPhones, I have been there on release date for each one ordering my new phone. Often because new phones came out before contract expired I would always be hoping for that grace period from ATT saying yes you can early upgrade for the lower price. This time around things are different (maybe a sign of the economy) and do you know what is stopping me?

late payments

I am was notorious for waiting until receiving several notices of lateness before finally paying my bill. In the past I just wasn’t organized and yes a bit lazy and would just let it go until threatened with cut off (or they actually did cut off the phone). Yes I racked up the late fees and it never really hit my how those add up but now Im being hurt with something worse. I can’t upgrade to the 4S until after my contract expires. Seems this time around payment history is a factor on who gets out of their contracts early to upgrade at the lower price.

So I have to wait while all my friends laugh and tease me as they talk to their phones and Siri talks back. Unless I want to pay full price, but not sure Im there yet, we’ll see in a month or two.

So moral of the story is to make you payments on time, its not just late fees anymore…

Did you pre-order your new 4S? or you waiting out for the 5?

Ya paying interest is kinda like this

I dont know if I would really call interest evil. I understand the need for interest payments and I dont fault them. If you take out a loan or use a credit card its the way the bank makes their money from the loan. They are a business and need to cover business expenses and make a profit. Without it why would banks take the risk of giving you money? Now if you go overboard with debt an only pay the minimums then interest can seem evil and can really add up over time.

Throughout my young life (well even till a couple years ago) I never really paid attention to the interest payments, always making the miniumum payments. I would always look for new credit when there was something I wanted (i.e. not need) just because I didnt want to take out of savings (when I had it) or just really wanted it.

How much interest?

I bring this up now because I was laying in bed playing with the mint.com app on my iPad. I got to the payments im paying now on my credit card and for the first time (well maybe first time, with my memory maybe I did look before) it dawned on me how much I am paying wasting on interest payments.

I currently only have one credit card left at 12.9% interest rate. I was paying about $350 a month on it and $130 was going to interest. Over a year thats $1560 and since I have kept this card near max up till earlier this year and I have had this card for lets say at least 8 years thats about $12,500 in interest at least over its life (thats more than the current balance).

Sorry just had to go throw up a little.

I also have a 2nd mortgage outstanding at %4, again I have kept it maxed out foolishly. It comes to about the same payment and again the $130 going to interest. So over the 8 years thats $25,000… Could get one of those Kia hamster cars for that (love their commercials). On top of that add up the car loans (this year is my first time without a car payment in almost 20 years) and all the other credit cards I have had, and there have been many, not to mention the house mortgage. Its not to far fetched that I have paid over $100,000 in interest over my life.  Time for some of that pink liquid….

All you younger folks pay attention to that before you start that slippery slope of credit/debt.

So what am I going to do about it?

Well the first thing is I have to get rid of the credit card debt asap. The one minor good thing about the 1st and 2nd mortgage is that the interest is tax deductible. So I took the available credit on the 2nd and applied it to the credit card, only $1,000 but its at a lower rate now. Next Im going to do what I can to pay at least $1,000 a month to the Visa with the goal of having it paid off by June of 2012, sooner if I can of course. With normal payments to the 2nd I can do another $1,000 from it in February. After that I will concentrate on the 2nd mortgage. Even though it is tax deductible It rather not be paying the interest and much rather have the $350 a month in my pocket or invested somewhere.

Im in my forties now and I wish I had someone to point this out to me in my 20s (or pound it into me, I was stubborn) So lessons learned a little late for me but I hope that maybe the younger crowd, even my kids would read this and pause to think before they start to charge everything they want in life. Credit when used safely is one thing, as a lifestyle not so much.

Have you ever stopped and thought about how much you have paid in interest?or even calculated it?

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