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The Lord Will Provide

Finance, Life

Debtors like to make excuses.

When I used to work collections, I’d try to work out a payment plan to get people out of debt, and I often heard “The Lord will provide” as their only excuse for not paying the money they owed.

That’s crap.  It’s not a financial plan.  It’s not a life plan.

It’s a crappy excuse to make you feel better about why your life sucks, has always sucked, and will–most likely–continue to suck.

Over the weekend, I got to spend quite a bit of time with family, including some that we don’t get to see often.   One couple in particular really stands out.   Neither of them are employed.  She’s got some medical problems and has several major surgeries recently.  I’d give her a pass for that, but she was unemployed for many years prior to that.  He used to have a job, but lost it a couple of years ago, and is now milking welfare with his wife and daughter.   They recently lost their house and had to move in with his mother.

Neither one is looking for work.  Between the two of them, they smoke 4-5 packs of cigarettes a day.  They want to buy a house soon, or rent an apartment, or something.  They aren’t very clear in their planning because, “It’s in God’s hands.”

No plan, no ambition, no goals.  I don’t understand how anybody can go through life with no intention of improving it.  How can you try to hide behind platitudes instead of making things better?

Here’s the bumper sticker that can actually improve your life: “Good things come to those who bust their asses and make good decisions.”

It’s not the easy path, but in the long run, it’s a better path and one of the few paths that doesn’t lead to royal life-suckitude.

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About

I am a husband, father of three, and a software engineer and I think  I am going through a mid-life crisis*.  I woke up one morning and took stock of my life. There are quite a few things I am not happy with in my life. It’s time to correct that.

We have too much debt. My wife and I have gone through a slow financial meltdown over the last ten years. We spent so much time living beyond our means that, now that we are earning a comfortable salary, we can’t afford to do the things we did on half this income. Our lives are upside down. This is going to change. As a start, I’ve been slashing expenses and selling my toys in an effort to get out of debt.

We have too much stuff. I’ve been downsizing and simplifying everything we own. I have thrown out truckloads of stuff we don’t need or can do without. We recently moved a close friend into our spare bedroom. Making room for him was a chore, due to our excess crap. It’s gotta go. If we don’t know what we have, we don’t need it.

I’m out of shape. I used to be in great shape. Ten years of surburbia and desk jobs has changed that. I’ve started running and will get back in shape. I intend to live long enough to be a happy burden to my children.

I don’t spend enough time with my wife. I’m still completely in love, but we need to be closer. I’m in this for the long haul. Fifty years of watching TV isn’t good enough.  We need to be close.

Those are my problems and some hints towards my plans to correct my life. There is nothing I’ve earned that I regret, but definitely some things I want to improve. In short, I want to be the man my children think I am.

Please join me for the ride.

*If this is mid-life, I’ve made some very bad life choices.

Introduction

Misc

I am a husband, father of three, and a software engineer and I think  I am going through a mid-life crisis*.  I woke up one morning and took stock of my life. There are quite a few things I am not happy with in my life. It’s time to correct that.

We have too much debt. My wife and I have gone through a slow financial meltdown over the last ten years. We spent so much time living beyond our means that, now that we are earning a comfortable salary, we can’t afford to do the things we did on half this income. Our lives are upside down. This is going to change. As a start, I’ve been slashing expenses and selling my toys in an effort to get out of debt.

We have too much stuff. I’ve been downsizing and simplifying everything we own. I have thrown out truckloads of stuff we don’t need or can do without. We recently moved a close friend into our spare bedroom. Making room for him was a chore, due to our excess crap. It’s gotta go. If we don’t know what we have, we don’t need it.

I’m out of shape. I used to be in great shape. Ten years of surburbia and desk jobs has changed that. I’ve started running and will get back in shape. I intend to live long enough to be a happy burden to my children.

I don’t spend enough time with my wife. I’m still completely in love, but we need to be closer. I’m in this for the long haul. Fifty years of watching TV isn’t good enough.  We need to be close.

Those are my problems and some hints towards my plans to correct my life. There is nothing I’ve earned that I regret, but definitely some things I want to improve. In short, I want to be the man my children think I am. I have three wonderful children, and I want our lives to be as perfect as possible.

Please, join me for the ride, starting December first.

*If this is mid-life, I’ve made some very bad life choices.

The Zombie Guide to Saving

Finance

Mr Zombie
Image via Wikipedia

Brains!

Nobody has ever accused a zombie of being smart.  The are, after all, dead and rotting.  Their primary means of education themselves is eating the brains of the living, which is hardly an efficient learning style.  Besides, in a strictly Darwinian sense, their victims are among the least qualified to teach useful skills.

Zombies smell.  They are little more than flesh-eating monsters.  They are lousy in the sack.  Yet, for all their flaws, have you ever heard of a zombie in debt or worried about financing retirement?  They are obviously doing something right.

What can you learn from a zombie? That depends on the type of zombie.  Not all of the life-challenged were created equal.

There are 3 main types of zombies:

1.  Slow shamblers are best recognized by their lurching gait and unintelligible grunting, similar to a frat party at 3AM.  They are rarely fresh specimens.  Arguably the the scariest of all zeds, due to the sheer inevitability of their assault, they do always get where they are going, even if it takes a while.   Trapped in a pit or a pool, they will keep trying to reach their goal.  A slow shambler, were he able to effectively communicate beyond the basic “Hey, can I eat your brain?” would tell you to approach your goals like the famous tortoise: slowly.  Set aside an affordable amount in savings every week, no matter what. Even if your are stuck saving just $10 each month, you will eventually get your sweet, sweet brains.

2.  Voodoo zombies are the still-living, yet mindless minions on a voodoo priest.  These unlucky non-corpses crossed the wrong people–usually by stealing or not repaying their debts–and ended up cursed for it.  They are forced to do the bidding of their masters until such time as their debt has been repaid, if ever.  Their warning is to always pay your debts and do not steal.  Honest, ethical behavior is the best way to avoid this fate.

3.  Runners are almost always “fresh” to the game.  As they decompose, they slowly transform into slow shamblers.  These fellas can often pass for the living…from a distance.  By the time you get close enough to identify them as monsters, your brains are on the menu.  They are capable of sprinting for short distances and, on occasion, have even been seen to run up vertical walls.  To properly categorize the runners, we have to break them down into 2 sub-groups.  The first sub-group is the envy of all zombies still capable of envy.  They have used their skills to trap enough prey(that’s us, folks!) that they will feel no hunger for the foreseeable future.  They are secure.  They are the successful runners.   The other sub-group tries to emulate the first, but lack both planning and follow-through.   While the first group builds momentum to secure their future, the second group tends to use that momentum to smack face-first into the wall, confused at where their lunch went.  Constantly charging from one thing to the next, they never manage to sink a claw into their goals.   To avoid falling into the second group, you’ll have to settle on a strategy and pursue it with all the single-minded, decomposing determination you can muster.

You know what they say: “Great minds taste alike.”  What kind of financial zombie are you?

The Do-Over

Finance

This post is from Kevin @ DebtEye.com.  Kevin is a co-founder @ DebtEye.com, where he helps consumers manages their finances and find the optimal way to get out of debt. .  This is guest post is part of a blog swap for the Yakezie, answering the question “If you had one financial do-over, what would it be and why?”.

I usually look on the brighter side of things.  There’s never an incident where I wish I could go back in time and change things.  Everyone will eventually make mistakes, but it’s up to them to learn from these mistakes and make sure it never happens again.  However, if there was one moment in the past I could change, It would be not buying a house straight out of college.

Throughout my college days, I have been fortunate to have saved up enough money for a down-payment on a house.   That’s not enough to maintain debt-free living. I worked with several internet gaming companies and acted as an affiliate for them.  I saved up around $25,000 and decided to buy a condo with my brother.

I thought it would be cool to own a condo in the city.  I was really looking forward to turning this new place in a bachelor’s pad.  This was probably the worst decision I’ve made.  I always believed that it was better to buy a property instead of renting one, since some of the payment would go towards paying down the loan.  Of course, I realized that this wasn’t the smartest of ideas.

Here are some reasons why I regret it:

  1. Property Taxes:  Property taxes in Chicago are one the highest in the nation.  For a $320,000 property, annual real estate taxes were roughly about $5,800/year.  Property taxes usually go up every year, it can be difficult for some people to maintain these payments.
  2. Valuation:  Thankfully, the property only decreased 10% in the past 2 years.  It’s not as bad as some areas, but the timing to buy a property was poor.
  3. Cost:  Buying a property involves more money to spruce up the place.  New paint, new appliances, new floors, etc.  Most of us won’t get a free appliance from the government.  Many homeowners have to put in extra care of the property, so when they sell it, it’s still in great condition.

Looking hindsight, I definitely wish I rented instead of owning a home.  In this day of age, I think most people can make the clear argument that renting is worthwhile to look into.

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What Can Cause Damage to Your Credit?

Business, Finance

Factors contributing to someone's credit score...
Factors contributing to someone’s credit score, for Credit score (United States). (Photo credit: Wikipedia)

Credit scores move up and down as new financial data is collected by the credit bureaus. Many factors can cause a credit score to rise or fall, but most people don’t have a clue what they are. Understanding what affects credit can help keep your number in a good score range, where it should be. But, even a bad score can recover more quickly than most people realize, even after a bankruptcy or default. Here are some factors that can help you understand why credit moves up or down:

Late Payments

About 30% of your score is made up from your payment history. This is comprised from things like credit card bills, auto loan payments, personal loans, and mortgages. At this time, bills like utilities or rent are not factored into your score, unless they are sent to a collection agency. If you are late to pay your credit card bill, it will show up on your credit file. One late payment will probably not have much of an effect, but a history of this over time can drop your score. It is very important to keep bill payment current as a courtesy to creditors and the benefit of your own financial history.

Credit Inquiries

One of the most misunderstood factors that can cause a credit score to drop are “credit inquiries”. An inquiry takes place anytime your credit is checked. This makes up 10% of your total score. What most people don’t know is that there are two different types of credit inquiries, “hard inquiries” and “soft inquires”. Only hard inquiries affect credit and happen when you apply for a new credit card, loan, or mortgage. Soft inquiries on the other hand happen when someone like an employer, landlord, or yourself check your credit report. These are not factored into your credit score at all. Hard inquiries are a necessary part of applying for a loan or credit, so an occasional inquiry will not cause damage. It can only cause problems if there are many hard inquiries in a short period of time. This can be a signal to creditors that you are in financial trouble and are desperately seeking cash.

Credit to Debt Ratio

Your total amount of available credit compared to the amount of credit you use each month, makes up your credit-to-debt ratio. FICO suggests that you use no more than 30% of your available credit before paying off your balance each month. For example if you have $10,000 of available credit spread across 3 different credit cards, the optimal amount to charge would be $3000 or less each month. Maxing out your credit cards can cause your score to drop even if you pay them off completely each month.

Age of Your Credit History

The length of time you have had an open credit account is a major factor of your credit score. It can help to open a credit card when you are younger by getting a co-signer. If you are the parent of a teenager, it may be helpful to open a credit card in their name, but only allow them to use it for emergencies. Having an open credit card in good standing for a long period of time can help build this history. The length of time that you have had credit makes up about 15% of your score.

Different Types of Credit

The last major factor that makes up about 10% of your score comes from the different types of credit that you use. These credit types include revolving, installment, and mortgage. The ability of an individual to successfully handle all of these credit types can show that they are financially well-rounded. This makes up about 10% of the total credit score.

About:
Ross is an investor and website owner.

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