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Living On Credit Cards

About 2 months ago, Linda and I decided to go back on the envelope system for all of the parts of our budget that we aren’t able to automate.

English: Money seized during "Project Cor...
English: Money seized during “Project Coronado” by the DEA. Going in “La Familia Michoacana” article. (Photo credit: Wikipedia)

The reason we’re doing this is because we’ve been consistently over budget when we do all of our spending on our credit cards.

The reason we switched back to using our credit cards is because it’s a royal pain in the butt to always make sure we’re carrying enough cash for groceries and gas and date night and fundraisers and cover charges, etc.

It’s still a royal pain in the butt, and we still suck at it.

But one of our envelopes is labeled “This went on a credit card” and is used for those times we forgot to grab cash before heading to the store.

In the last two weeks, that’s $500 that we forgot to bring with us.

Cash sucks.

I’m tempted to go back to using the credit card for our primary spending.  Yes, we are consistently over budget, but it’s not terrible….for some odd definition of “not terrible”.

We generally seem to have about $1000 left on the card after making our last monthly payment every month.  Every month.  The overall balance never grows, it’s just hanging out $1000 over what we have budgeted to be paid automatically on the card.

That’s a bad thing, but….

Since I make a payment every couple of weeks, the interest is never assessed on that balance.   In the last year, we’ve paid exactly $0 in interest, without any funny balance transfer deals.

By my calculations, that means our credit card has given us $1000 for free.

If we pay that off and get strict about using cash, won’t that mean our free $1000 would have to evaporate?

I like free money.

That also means that the total interest we paid in 2014 is $672.91, all to our mortgage.   Even if we have a small balance we carry, we’re not paying interest on that debt, and–worst case–we could raid our savings to make it vanish tomorrow.   I’m tempted to make that happen, but our savings goals are more important to me that paying back the free money.

Winning the Mortgage Game

There’s a game that’s often mistakenly called “The American Dream”.   This game is expensive to play and fraught with risk.   It single-handedly ties up more resources for most people than anything else they ever do.

Conway's Game of Life
Image via Wikipedia

The game is called Home Ownership.

At some point, most people consider buying a house.   On the traditional, idealized life-path, this step comes somewhere between marriage and kids.   That’s usually the easiest way to organize it.   If you have kids first, you’re much less likely to buy a home.  This is a game with handicaps.

Once you get to the point where you are emotionally ready to invest in the 30-year commitment that is a house, your first impulse tends to be to rush to the bank to find out how much money you can borrow.

That’s a mistake.  If you take as much as the bank will qualify you for, you’re most likely to overextend yourself and end up losing your house.   That’s the quick way to lose the home ownership game.

The best thing you could do is figure out how much you can afford before you visit a bank.   Conventional wisdom says that your mortgage payment should be no more than 28% of your gross income, but that’s absurd.   Who builds their budget on their gross income?  I like 28%, but only of your net income.    To make the numbers easier to remember, I’d round it to 30%.   If you take home $3000 per month, your mortgage payment should be no more than $900 per month.

From there, it pretty easy to figure out how much house you can afford.  Using this e mortgage calculator, you’d be able to afford a mortgage of $175,000 if we assume an interest rate of 4.5%.  Throughout most of the United States, that will buy you a reasonably sized home, though certainly nothing ostentatious.    Clydesdale Bank also has an excellent loan calculator.

Some people like to start out with an interest-only loan.   That same emortgage calculator shows that an income of $3000 per month would be able to afford a $240,000 with almost the same payment.  That seems like a good plan, but eventually, you’ll have to pay more than just the interest.   Taking out a loan that will one day be more than you can afford on the assumption that you’ll be making more money by then is not sound financial planning.    That’s the same logic that helped me bury myself in debt.

When you buy a house, make sure to base your payments and your mortgage on what you can realistically afford.  Anything else, and you’ll only end up poorer and less happy than when you started.

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Does Amanda Bynes Need a Conservatorship?

Amanda Bynes
Amanda Bynes (Photo credit: EyesOnFire89)

The publicly documented downward spiral of Amanda Bynes may be reaching its breaking point. She has been on psychiatric lockdown for the past three days, and her parents are petitioning for conservatorship in California

on the grounds that they believe she is suffering from acute schizophrenia. They claim that the troubled starlet is unable to make safe decisions regarding her own well-being, not to mention the safety of others. The issue is complex, but the former childhood star has demonstrated that she meets the criteria to have external guardians instated to protect her from unpredictably irrational behaviors.

This development is the latest in a long saga of antics for Bynes, and the recent news report inserts a tragic twist into her somewhat comedic downfall. She had a pristine public persona only a year ago; however, at this time, she was caught publicly smoking marijuana. No one expected this incident to escalate, and it was treated like an innocent youthful infraction; however, the act recently turned criminal when she was reported for smoking in the lobby of her apartment complex.The comedian ran from the arriving police officers, and hurled a large cannabis apparatus out of a skyscraper window. The water-pipe was never found, but it presumably shattered upon impact. Bynes was incarcerated by the New York Police Department. During this time, the actress accused law enforcement of sexual assaulting her in a very lewd manner. Her absurd claims were never substantiated. The case against her is pending, and she has been evicted from her residence.

This was not the first criminal case against Bynes; she is also dealing with hit-and-run allegations in California. It was also not her last interaction with the police. Most recently, the actress doused an elderly woman’s driveway in gasoline and set it ablaze. She accidentally covered a puppy in the flammable liquid, so she ran down the block looking for something to save the animal from catching fire. After ransacking a convenience store, officers accosted her. The exchange resulted in the psychiatric hold that has been placed on Bynes.

Unfortunately, grounds for conservatorship can be exceedingly challenging to meet. Clear proof of mental illness needs to provided, and the standards are rigidly strict; however, if anyone has showcased the fanatical craziness that constitutes a lack of personal responsibility, it is Amanda Bynes.

Her schizophrenia is no longer dormant. The actress has become obsessed with plastic surgery, and she has deformed her face with cheek piercings. She uses online social networks to decry public figures for their ugliness. Victims of this attack include even Barack and Michelle Obama. Furthermore, she makes offensive sexual remarks towards rappers, and she wants to be a hip-hop artist herself. She has spent fortunes on a wig collection, and she employs a different style at every court appearance. The actress even used one as a disguise for an incognito trip to a trampoline emporium.

Anyone that has seen her Nickelodeon program would not be shocked to learn that she was schizophrenic. The role had her switching between dozens of identities for different skits, and she even played a character that was, in effect, obsessively stalking the star herself. “The Amanda Show” was neurotically fast-paced. Ultimately, the entire program can now be viewed as an eerie foreshadowing to the budding of a latent psychological disorder. If the legal standards of insanity are not met, then she will be free to wreak havoc on herself and others.

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