- @ScottATaylor Thanks for following me. in reply to ScottATaylor #
- RT @ChristianPF: 5 Tips For Dealing With Your Medical Debt http://su.pr/2cxS1e #
- Dining Out vs Cooking In: http://su.pr/3JsGoG #
- RT: @BudgetsAreSexy: Be Proud of Your Emergency Fund! http://tinyurl.com/yhjo88l ($1,000 is better than $0.00) #
- [Read more…] about Twitter Weekly Updates for 2009-12-12
Debt Options
When you’re buried in debt, bankruptcy can seem like the only option. When you get make ends meet, no matter how hard you pull on them. When bill collectors interrupt every dinner. When you have to choose between food and rent. When there is always more month than money. Do you have another choice?
Yes, you do.
Before you rush to file bankruptcy, take the time to understand your options.
Debt Settlement
Debt settlement is when you quit paying your bills and start sending the money to settlement company. The settlement company does…nothing. Really. They take your money and drop it into investments or interest-bearing accounts. You don’t get the interest, they do. Eventually, when your creditors are howling, the settlement company offers to make a settlement on the account. If the creditor accepts pennies on the dollar to kill your debt, the settlement company pays them. If not, they get to howl louder and make you more miserable.
While this process is playing itself out over years, your credit is taking a beating. You are doing nothing to dig yourself out of the hole you’ve dug. Finally, when your creditors are so desperate that they accept the settlement offer, you get a huge additional hit to your credit. “SETTLED IN FULL” is not a good status to have on your credit report.
Debt settlement companies do nothing you can’t do for yourself, and doing it for yourself at least lets you keep the interest your money is earning.
Debt Consolidation
Consolidating your debt comes in two varieties, a debt consolidation loan and a debt management plan.
A debt management plan is when you send one large payment to a debt consolidation company, and they pay your creditors for you each month. The company will usually attempt to contact your creditors and negotiate your interest rate and payments to try to get you into a situation that precludes bankruptcy and will keep your creditors happy. In the simplest terms, this is a debt payment consolidation.
A debt consolidation loan is generally done by taking out a line of credit against your home or other collateral and using that money to pay off all of your bills. Then you make the payments to the bank, to pay off your line of credit. The problem is that, if you can’t make the individual payments, can you make the payment to the line of credit? If you can’t, you risk losing your house.
Repayment
This option is my personal favorite. It involves taking responsibility for your decisions, cutting out the unnecessary expenses in your life, and paying your bills. There are a few popular plans for accomplishing this, including Dave Ramsey‘s debt snowball. The most important thing to remember are 1) debt it bad so stop using it; and 2) pay off as much as you can afford to each month. It isn’t as sexy as making all of your debt disappear, but it’s still a good option.
Bankruptcy
Let’s see. You borrow money on the promise to pay it all back. After you borrow too much, you renege on your agreement. You admit your word means nothing and you get all of your debt cancelled, forcing your creditors to raise the interest rates for all of the responsible debtors out there, as a way to balance the risk of those who will never pay. In exchange you doom yourself to lousy credit for the next 10 years. In extreme circumstances, bankruptcy may be the only option, but, I’m not a fan.
As you can see, there are almost always better options than bankruptcy. Please, before you take that leap, look into the other choices.
This is a sponsored post written to provide some insight into the world of bankruptcy and debt consolidation.
Book Review: Delivering Happiness
In April, I was given an advanced reader copy of Delivering Happiness by Tony Hsieh on the condition that I give it an honest review. Delivering Happiness is being released today and here is my review.
Tony Hsieh was one of the founders of LinkExchange, which sold to Microsoft for $256 million in 1999. Shortly thereafter, he became affiliated with Zappos.com and ended up as CEO. Zappos.com was later sold to Amazon.com as a “wholly-owned subsidiary” in a stock-exchange transaction valued at $1.2 billion.
Delivering Happiness is his story and that of the creation and management of Zappos.com.
The book is divided into three sections: Profits, Passion, and Purpose.
Section 1 is largely autobiographical. It tells the story of Hsieh’s business ventures all through his life, from a failed worm farm to a failed newspaper to an abandoned greeting card business. Obviously the business of having children sell greeting cards had improved between his childhood and mine, because, when I did it, there were many more choices than just Christmas cards. I still have both the telescope and microscope I earned selling overpriced greeting cards. An important lesson imparted is that past success is not an indicator of future success. Different personalities, goals, and economics can change the result of two nearly identical activities.
Hsieh tells the story of the excitement of building LinkExchange and how he knew it was time to move on when the excitement faded, largely due to a surprising change to the corporate culture. After leaving, he spent some time just living and reviewing his past activities. He came to the conclusion that the happiest times of his life didn’t involve money. Doing things right beats strictly maximizing profits. Taking business lessons from the poker table, he reminds his readers that the Right Decision may lose sometimes, but it is still Right.
When he gets into building his business on a foundation of relationships, he is reminiscent of Keith Ferrazzi. Don’t network. Build your relationships based on friendship and let the friendship be it’s own reward. The rest will follow.
Section 2–while denying it was intended–reads heavily like marketing copy. It is almost entirely about how wonderful Zappos.com is to work for and with. I think it is fascinating to read about how successful businesses are built and how the corporate culture comes with that, but it’s not for everyone. The important points from this section include being open to necessary change without being reckless and their insistence on transparency. I don’t believe in hoarding information and it’s wonderful to hear others feel the same way. They go as far as giving all of the profitability and sales numbers to the vendors, live, which makes the vendors feel respected and gives the vendors an opportunity to suggest future orders based on past trends. That saves time and effort for the buyers at Zappos.com.
Section 3 attempts to tie the business lessons to life lessons and almost–but not quite–succeeds. After discussing differences in vision and alignment between the Zappos executives and the board, he talks about his growing speaking arrangements. When he started, he nervously memorized his presentations, resulting in mediocre speeches. When he discovered his “flow”, it all improved. His method of writing and speaking involves being passionate about his topic, telling personal stories, and being real. When he adopted that plan, his speaking became natural and popular.
In the final chapter, Hsieh actually discusses happiness. His equation is Perceived Control + Perceived Progress + Connectedness + Vision & Meaning = Happiness. He works to apply all of this as a part of the corporate culture at Zappos, giving the employees a measure of control over their advancement, duties, and culture. The employees help write the Corporate Culture book, which is given to all new hires and vendors. I intend to get a hold of a copy in the near future. It sounds like a fascinating read.
He also addresses the three types of happiness: Pleasure, Passion, and Higher Purpose, also described as Rockstar, In The Zone, and Being a Part of Something Bigger. The first is fleeting, and the last is long-lasting.
Would I recommend the book?
Yes. I found Delivering Happiness to be incredibly interesting, but, if you have no interest in how a successful-but-not-traditional company is built and run, or if you are bored by successful people, this book is not for you. The book is largely autobiographical and a case study in the success of Zappos.com. If that sounds remotely interesting, you will not regret reading this book.
Now, the fun part. I was given two copies of the book. The first one is becoming a permanent part of library. The second is being given away.
Giveaway
There are three ways to enter:
1. Twitter. Follow me and post the following: @LiveRealNow is giving away a copy of Delivering Happiness(@dhbook). Follow and RT to enter. http://bit.ly/czd31X
2. Become a fan on Facebook and post about the giveaway.
3. Post about the giveaway on your blog and link back to this post.
That’s 3 possible entries.
Next Sunday, I will throw all the entries in a hat and draw a name.
Future Reviews
If you have a book you’d like me to review, please contact me.
Where the hell have I been?
For the last year or so, I haven’t been writing much, which feels weird. I used to write three timer per week. I’d write about saving money, investing, frugality, sometimes, relationships and parenting.
But that stopped. Why?
When I started this site, I was about $110,000 in debt, and just starting my journey out of it. A few months before, I was looking into bankruptcy, because I didn’t know how to get out of debt.
For years, the ways I saved money, cut corners, and earned extra money was fodder for this site. Everything I did was about saving money, earning money, and paying off debt.
Now? I’m about 2 months away from being completely debt-free. I paid my mortgage off last month, and have about $10,000 in credit card debt at the moment. I know, I paid that off backwards, but there are reasons. Reasons I’ll share another time.
4 years ago, I was essentially working 4 jobs. My day job, my gun training business, my internet marketing business, and my websites(including this one). I was working all of the time. It was necessary, but it’s a path to burnout. Then, I changed jobs a couple of times, nearly doubling my day job’s pay. My business partner got promoted out of a position that generated leads for one of our businesses, then had an accident that the other shared business on hold for a while.
Suddenly, I had free time and enough money coming in that I didn’t need to work all of the time. It was a crazy place to be after spending more than a decade pretending to be a workaholic just to keep my head above water. (Here’s a secret: I’m incredibly lazy. I’m just the busiest lazy man I know.) So I started pursuing hobbies.
Linda and I have been taking ballroom dancing lessons and are nearly to the point that competing is a real possibility.
I cleaned out my garage and assembled a decent wood shop, which is something I’ve wanted to do roughly forever.
I’ve been taking blacksmithing lessons with my teenage son.
I’ve been playing games with my kids, dating my wife, and simply enjoying my life.
This site?
Through all of that, I haven’t known what to write about.
“Dear audience, this month, I paid my bills, didn’t go on vacation, and bought a drill press.”
“Dear audience, my debt went down another $500 this month.”
“Dear audience, I didn’t buy a car I can’t afford this month. Again.”
Those aren’t good articles. Financially–while paying off debt is disturbingly exciting–my life is very repetitive. That’s the hardest part about paying off a lot of debt. It’s good, it’s necessary, it’s boring. My wins have been spaced out by several years lately, and I haven’t been creatively frugal. Screw frugal. If you can afford some conveniences and luxuries, frugal sucks.
Anything new happening in my world that would apply to this site would make it read like an accountant’s ledger book. $100,000 minus $1500 plus $10,000 minus $300, ad nauseum.
Instead of inflicting boring accountancy on you, I’ve been absent.
What next? Who knows. I enjoy writing. I enjoy writing here. I’ve started writing a novel.
What would you like to see here?
3 Reasons You Hate Your Budget
One of the first steps in clearing up your financial mess is to set up a budget. You need to figure out how much money you are making, how much you are spending, and what you can do to keep one of those numbers smaller than the other. If your income is smaller than your expenses, you’ve got work to do. If not, yay!
Even if you don’t obsessively cling to your spreadsheets and calculator, you need to spend the time to establish a budget–at least once–to know where you stand. When you do, you’ll find out it sucks. With good reason.
1. It takes too long to set up. Setting up a budget can be a long, drawn-out pain in the butt. Fortunately, it doesn’t have to be, but you won’t know that until after you make your first budget, then see some fairly drastic changes, and make a second budget. That one will be easier. For the first one, just concentrate on making a list of all of you regular bills and how often they are due. Don’t be surprised when you miss some. I missed a couple of our quarterly bills. All told, it took a year to get our budget completely done.
2. It doesn’t lie. Once you have all of your expenses down on paper, you are done hiding. You can’t tell yourself it’s all puppy dogs and ice cream when you are staring at the giant red pit that is the negative balance of your bad decisions. Nobody likes the messenger who brings bad news. When your budget shows you how big the hole is, you are going to hate it. That’s when it’s time to confront the problem head on and get out of the hole. Find the problems and rip ’em out. Cancel the cable, taxidermize the cats, and start buying generic underpants. It’s time to take an honest look at your situation. If you can’t handle where you are, how are you going to get where you want to be?
3. It’s not fun. When your friends go out, but you stay home because you’re broke, you will hate it. Y’ou’re also gonna hate comparing your old cell phone to the iPhone in the hands of the d-bag contemplating bankruptcy. Like Dave Ramsey says, “Live like no one else, so that later you can live like no one else.” Skipping some of the fun now will turn into security later. When you get to that point, it will have all been worth it.
Why do you hate your budget?
How to Cut Costs on Legal Fees
Occasionally, life goes truly pear-shaped and you’re forced to enter the legal system.
Even if you’re not embroiled in a tawdry, tabloid-fodder divorce, there are still legal issues that everyone needs to address, without exception.
The problem? Or rather, one of many, if you’re having legal problems?
Lawyers are expensive.
Before I go any further:
- If you are having criminal court issues, get a lawyer. Get the best possible lawyer. Really. The cost does not compare to a lifetime in jail, or even 10 years. If you’re facing jail, get the best dang attorney you can find.
- I am not only not an attorney, but I’ve never even played one on TV. I have driven past a law school a couple of times, but never stopped in. I do know several attorney, carry the business cards of a couple and have a couple on my speed dial, just in case. If any of them thought I was giving legal advice, I’d be in trouble. To reiterate: I am not an attorney. This is not legal advice.
- Don’t do a prenuptual agreement at home. A prenup will almost always be found unenforceable if both parties don’t have an attorney.
Where was I? Ah, yes. Lawyers are expensive, but there are ways to mitigate that.
There a couple of things you can handle yourself.
Small claims court, also known as conciliation court. Typical cases in conciliation court include cases involving sums under $7500(varies by state) that involve unpaid debts or wages, claims by tenants to get a security deposit, claims by landlords for property damage, or claims about possession or ownership of property. Fees and procedures vary by state, but generally cost less than $100 to file. The procedures for your state can be found by googling “small claims court” and the name of your state.
Small worker’s compensation cases can be handled yourself, if they don’t involve a demotion or termination related to the injury.
Apartment and car leases are usually simple and straightforward. Read them carefully, but you probably won’t need a lawyer.
You can probably handle your own estate planning and will writing with some decent software. I love Quicken Willmaker. It walked me through a detailed will that takes care of my kids, and gave me advice on financing their futures in the horrible event that I am tragically killed before my wonderousness can fully permeate the world. It also contains forms for promissory notes, bills of sale, health care directives and more. If you have extensive property, I’d still seek an attorney’s advice, but I’d bring the Willmaker will with me to save some time and money.
Purchase agreements. A few years ago, I sold a truck to a friend and accepted payments. I made a promissory note and payment schedule. When he quit paying or calling me, that paperwork was enough to get the state to accept the repossession when I took the truck back.
A simple no-fault divorce is actually pretty painless, on the scale of divorce pain. Again, the procedures vary heavily by state.
Other resources for finding legal information free or cheap include www.legalzoom.com and www.nolo.com.
Have you had to do any of your own legal work? How did it work out?