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Debt Burnout

You’ve got a budget. You’ve got a debt repayment plan. You’ve been paying off your debt. You’ve even paid off a few of your smaller debts. Now you’re staring down the barrel of your big debts: your mortgage, a $30,000 credit card, maybe a car payment. You’re looking at months of payments with no quick wins; no more watching your debts die every few months. You’re in the middle of a very long slog.

All of the easy milestones have been reached and the next one is a year or more away. This is when debt repayment gets hard. How can you avoid getting burnt out doing the same thing, month after month, with no major visible progress?

1. Keep your eye on the prize. Try focusing on the end result, while ignoring the time it takes to get there. Do you have a reward planned for when you pay off your debt? If not, consider that to be your new shining goal-post. My wife and I plan on taking an Alaskan cruise when our debt is repaid.

2. Ignore the prize. If #1 doesn’t work for you, try focusing on just the current month’s progress. How much did you pay off this month? Was it more than last month?

3. Make micro-goals. Try breaking the long slog into bite-sized pieces. How fast can you pay off the next $1000? How many months will it take to pay off that TV you bought last year? Sometimes, meeting a smaller goal can make the whole works feel like it’s going by faster.

4. Take a snowball vacation. For just one month, take every dollar you would normally apply to your debt–except your required payments–and have some fun with it. Take a weekend trip, have a fancy dinner, or pick up that video game system you’ve been eying. Something. Anything to take your mind off of your repayment plan for a while. Be careful not to make this a habit or you will never get out of debt.

5. Start a blog to share your pain.

A debt snowball is a long, intense process. If you’re not careful, you can burn out and let the whole thing collapse. How do you avoid burnout?

How Much is Your Pet Worth?

Finance, Life

A few years ago, one of our cats had a urinary tract blockage. When that happened, the cat’s bladder became almost rock-hard. He was in pain.

Naturally, this came to our attention late on a Saturday evening. Our choices were to leave the cat in pain or head to the emergency vet. One x-ray, one emergency catheter, and 2 nights in the vet’s office later, we charged the $750 bill and brought the cat home. He lived about two more years and had to be on a special UT-friendly diet. He spent the next two years with poor bladder control and very little energy.

About the same time, I had a coworker with a cancer-ridden cat. Until that time, I had no idea that you could get chemotherapy for a cat. Between the chemo and the regular surgeries to remove tumors, they were dropping a few thousand dollars every few months.

Recently, a friend’s cat ate a ball of twine and narrowly avoided intestinal surgery that would have cost $2500. He was willing to pay instead of seeing his 8 year old cry. I figured a new kitten would soothe her hurt.

How much is too much to spend on an animal?

When our cat needed a trip to the fuzzy emergency room, we had no savings. I’m not sure how we were keeping our bills paid. $750 was a lot of money, but we didn’t hesitate. Afterward, we discussed it and decided that it wouldn’t happen again. When a pet needed that much care, it would be time to put it down.

We’ve currently got a 17 year old arthritic cat. I tried discussing its end-of-life options, but my wife looked at me like I was asking her to punt bunnies into a lake. I fear we’re going to be paying a lot to stretch out the end of the cat’s life.

Now, before anyone tells me that I hate animals, we have 5 cats, 3 kids, 2 gerbils, 2 pythons, and a dog. We are an animal-friendly house. Or we keep spares.

That said, it’s the natural order of things. People outlive their pets. When you buy a pet–with the exception of giant tortoises and some birds–some part of you knows you are going to outlive it. What’s the right amount to spend, trying to stretch out the most uncomfortable years of a pet? When does the financial burden outweigh the companionship? When do I go from cold-hearted jerk to financially-responsible pet-owner?

For the pet owners out there, how have you dealt with this? How much would you spend to keep your pets kicking?

Year of the Unfair Fees

Finance

The year 2011 was a challenging economic year for many, with housing prices continuing to fall in many parts of the country, with unemployment numbers remaining high and with a credit crunch making it challenging for many to get new cards or unsecured loans.

Those going through economic turmoil were, unfortunately, faced with little understanding from many corporate conglomerates. In fact, so many companies instituted so many silly fees and surcharges that 2011 may as well be known as the year of unfair fees.

Whether you are taking out unsecured loans, opening a bank account or signing a TV service contract, it is up to you to read the contract carefully and be mindful of the fees you are being assessed.

Debit Card Use Fees

Many people who are trying to get out of debt and pay off credit cards, unsecured loans and other obligations may consider making a commitment to avoiding credit and using their debit card instead. Unfortunately, in 2011, many banks wanted to try to make this more expensive for consumers who were trying to be financially responsible.

Faced with a limit on the fees they could charge for debit transactions, a number of banks began to explore the idea of a monthly charge to consumers of between $4 and $5 just for using their debt card. Politicians and the public reacted so strongly against this, however, that the banks relented and gave up the plan. [ed. Just like Suze Orman’s new blunder!]

Fees for Depositing Cash

Also near the top of the list are the fees that certain banks institute to business customers who deposit large sums of money. Some banks will charge a small fee if you deposit in excess of a certain amount, depending upon the type for account you have. For instance, one major bank charges .20 for each $100 in cash deposited over $10,000. The fees are small, but some customers are still upset at the principle. After all, just what is that fee justified by since all you are going is giving the bank your cash to put into your account.

Airline Fees

Airline fees aren’t a new thing and almost everyone is now aware that they’ll be charged for bags on many flights. However, in 2011, some airlines decided to try to take things a step further. Passengers faced fees for booking a ticket, for printing a boarding pass at the counter instead of at home and even for taking a carry-on bag. These surprise fees that hit you may make it difficult to comparison shop for the best flights, making it harder for cash-strapped consumers to find affordable travel.

Early Termination Fees

Early termination fees have become standard for cell phone contracts, but the dreaded charges are now spreading to other industries as well. Some television service providers have now instituted early termination fees for consumers who end their contracts with the service providers early. The cable and satellite companies attempt to justify this by saying they need to cover the prices of the expensive equipment used to provide you with service, but the companies have come under fire anyway. In fact, one major satellite company recently had to settle with regulators over its business practices and cancellation policy.

Watching for Fees

Only by being diligent will you avoid the excessive fees that banks and other companies are beginning to institute in a time when every cent counts.

Post by MoneySupermarket.

Sunday Roundup: Outta Town

Misc

Scrapbooking Cupcakes! — Image by clevercupcakes via Flickr

This weekend, my wife is off scrapbooking with my mother and sister-in-law. Instead of hanging around the house trying to keep three kids entertained, I’m at my brother’s house, since his wife abandoned him with their kids, too. I’ll let his kids keep mine entertained, and vice versa. Woo!

30 Day Project Update

I am on the Slow Carb Diet. At the end of the month, I’ll see what the results were and decide if it’s worth continuing. For those who don’t know, the Slow Carb Diet involves cutting out potatoes, rice, flour, sugar, and dairy in all their forms. My meals consist of 40% proteins, 30% vegetables, and 30% legumes(beans or lentils). There is no calorie counting, just some specific rules, accompanied by a timed supplement regimen and some timed exercises to manipulate my metabolism. The supplements are NOT effedrin-based diet pills, or, in fact, uppers of any kind. There is also a weekly cheat day, to cut the impulse to cheat and to avoid letting my body go into famine mode.

I’m measuring two metrics, my weight and the total inches of my waist , hips, biceps, and thighs. Between the two, I should have an accurate assessment of my progress.

Weight: I have lost 30 pounds since January 2nd! That’s only 1 pounds since last week. 12 more to meet my goal for February. The difference this week? I’ve cut back on the supplements, to see if they actually make a difference. It would appear they do.

Total Inches: I have lost 16 inches in the same time frame, down 1.5 since last week.

Best Posts

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$39Glasses is having a killer sale. $15 off a $40 item is huge.

Tim Ferriss has a guide to slow-carb seasonings. It’s worth reading if your food is boring you.

LRN Timewarp

This is where I review the posts I wrote a year ago. Did you miss them then?

This was Scam Week last year. I had a post on debt scams and scams that target disaster victims. As we roll into flooding season, it’s important to know how these scams work.

I also discussed my attempt to teach my son to savor delayed gratification. It has been working. He makes long-term(for an 11 year old) plans regularly.

Carnivals I’ve Rocked and Guest Posts I’ve Rolled

Money Problems: Setting Goals was included in the Festival of Frugality.

Your Budget is Worthless was included in the Carnival of Personal Finance.

Brown Bagging Your Way to Savings was included in the Carnival of Money Stories.

Debt Burnout was included in the Totally Money Carnival.

Thank you! If I missed anyone, please let me know.

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Have a great week!

Money Problems – Day 1: Setting Goals

Finance

Today, I am starting a series, Money Problems: 30 Days to Perfect Finances. The series will consist of 30 things you can do in one setting to perfect your finances. It’s not a system to magically make your debt disappear. Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

I’m not going to run the series in 30 consecutive days. That’s not my schedule. Also, I think that talking about the same thing for 30 days straight will bore both of us. Instead, it will run roughly once a week. To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.

In this, the first installment, we’re going to talk about goals.

First, we’re going to ask 3 questions.

What is your financial goal?
Why?
How can you get there?

The first question is “What is your goal?” Of course, in this series, on this site, we’re only going to be addressing your financial goals. Losing 300 pounds, growing wings, and flying to the moon may be an admirable goal, but it’s considerably outside of the scope of this project.

So, what is your financial goal? Do you want to retire a millionaire, or become financially independent? Do you want to pay off your debt, or save enough money to see the world? Do you want to learn how to retire by 40?

Your goal does not matter…to anyone but you. To you, though, it is terribly important. Without a goal, how can you measure you progress and see what you have accomplished? It’s easy to get frustrated and give up when you can’t look back and see what successes you have actually accumulated.

Whatever your goal, you have to do two things:

Don’t let anyone tell you it is stupid or impossible. There is a quote that I can’t find attribution for, other than as an old Chinese proverb: “Those that say it can’t be done should get out of the way of those doing it.”
Write it down and hang it up. This lets you see your goal every day. It will be impossible to forget and difficult to ignore. I have Dave Ramsey‘s Baby Steps hanging on my refrigerator where I see it a dozen times per day.

The second major question to ask yourself is “Why?” Why is this goal important to you? Why do you care?

If you can’t answer that, it’s time to sit back and think about it for a while. Without a solid reason to succeed, you’ll lose motivation and fail. Are you getting out of debt to give yourself a secure retirement? Do you want to save to travel the world because you’ve been dreaming about it since you were in diapers? Do you simply want to provide a secure future for your family? Whatever your reason, it is–and should be–uniquely yours.

The third and final question is “How can you make it happen?” That question has an extremely simple answer: read the rest of the series.

Three Alternatives to a Budget

Finance

the envelope system: day one — Image by J. McPherskesen via Flickr

Budgets aren’t for everyone. For some people, the very idea of trying to track where their money going is painful. And that’s just the idea of tracking the money. It gets far worse when you’ve got $10 budgeted for coffee, $12 for fast food, $66.50 for gas, and $0.75 for entertainment. It’s can be hard to follow a strict budget for long.

If you know you need to track your money, and you also know that a strict, zero-based budget won’t work for you, what can you do? Luckily, there are alternatives.

1. Hope and Pray. This is otherwise known as the “Call my bank everyday and see how close I am to over-drafting” system. To fully embrace this system, you need to not only abandon a written–or even organized–budget, but you should also throw your checkbook register in the garbage. Make sure you’ve got a good overdraft protection account attached to your checking account and let your money take care of itself. This is the ultimate zen of personal finance. Don’t stress or worry, just hope for the best. This system works best if you make more money than Oprah and have modest tastes. For those of us who have to watch our money a bit to make sure the month outlasts our money, this probably isn’t a great plan.

2. The Envelope System. To implement this system, you do need to create a basic budget so know what you are obligated to pay. Once you have that done, take a stack of envelopes and label them for each item you have to pay. Add another envelope for food, another for entertainment, and another for miscellaneous because there is always a miscellaneous. Divide the money among the envelopes. Now for the magic. When you have to spend something, take the money out of the appropriate envelope and spend it. That’s it. If, however, there isn’t enough money in the right envelope, but you still need to spend the money, you have to take it out of a different envelope and spend less on the category that lost money.

3. Percentages. This is the simplest of the non-budget budgets. Take 50% of your money and spend it on necessities, like the mortgage, food, and utilities. The next 30% goes to savings and retirement. The last 20% is for fun or any other thing you want to spend it on. This naturally works best if you are out of debt, but if not, just make sure most of the 20% fun money goes to repaying debt. This system works best if your bills are automated and you will need to set up a basic budget first, so you can make sure your necessities come in under 50% of your income.

Not every budget plan will work for everyone, but there are always alternatives that can still help you manage your money.

How do you track your money?

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30 Day Project Update

Best Posts

LRN Timewarp

Carnivals I’ve Rocked and Guest Posts I’ve Rolled

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