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53 Percent

I didn’t grow up with money. I never lacked for anything important, like food, clothes, shelter, affection, but we weren’t exactly rolling in cash.

When I was 6, I got a paper route so I could buy my own toys.

When I was 13, I started doing odd jobs on nearby farms.

When I was 15, I worked construction with my Dad in the summer. When school started in the fall, I gave up a study hall and my lunch period to work in the lunch room, serving food and washing dishes, for $4.25 per hour.

Within two weeks of getting my driver’s license at 16, I got a job working evenings and weekends washing dishes. I’d call it a part-time job, but it wasn’t, most weeks. A couple of months of busting my butt got me promoted to cook, which was more fun and had better pay. $6.25 and hour was a decent amount for a teenager in 1994.

Three days after graduating high school, I moved out.

At 18, I was living on my own, working two jobs. During the day, I stacked pallets. I stood at the end of a conveyor belt, picked up the 50 pound bags as they came my way, took 3 steps and set them back down. 1500 times a day. In the evenings, I was a cook at a different restaurant 5 miles away. My car was broken, so I had to bike to both jobs. In the winter. In Minnesota. That winter, my parents passed up a new washing machine to buy me a beater car so I didn’t have to freeze. It lasted until spring, but I’m still grateful for that car. That’s the only time I’ve taken money from my parents as an adult.

At 20, I was working 12 hour graveyard shifts in a machine shop when Brat #1 came along. I’d work from 5PM to 5AM, come home and take the baby so my wife could get 5 hours of uninterrupted sleep. That kid drank 8-10 ounces of milk or formula every hour, so without that, the idea of uninterrupted sleep was a cruel joke. We qualified for WIC, a “feed your family” welfare program. I was broke and scared of formula prices, so we signed up. My son puked up the one brand of formula we were allowed, and it hurt my pride, so we cancelled without ever using the benefits.

After 6 months of missing so much of my family’s life, I quit that job and moved into a call center, taking a $4/hour pay cut, before overtime. Fortunately, busting my butt every day allowed me to stomp all over my goals and get some decent bonus pay.

Working a daytime schedule also allowed me to go to school part-time. Here’s the scene: At 21, I had a baby, a full-time job, and I was going to school. I took student loans to make that happen. I was also doing side jobs fixing computers. Traveling IT for people who have no idea how to work a mouse. During this time, we started accumulating debt, based entirely on our own choices.

Within a few months of graduating, the years of busting my butt in the call center paid off and I got promoted to be the administrator for the phone system and collection system, which gave me valuable experience.

Until I got laid off.

Again, busting my butt saved it. My boss volunteered to “forget” about the vacation time I had used that year so it would get cashed out on my last day. I could cover expenses for a while.

Job hunting became a full-time job and it paid off. I landed my current job right as my funds ran out.

I work, on average, 50 hours per week. When it’s needed, I’ve cleared 100 hour work weeks. I have a side business as a firearms instructor. I have a side business doing web consulting for businesses. I blog here.

I do whatever it takes to support my family. I am that support.

I have never had an unemployment check, and I’ve never used government charity.

I have busted my butt to be where I am today, and continue to bust my butt to make it better.

Some day, I’ll be out of debt, and that will also be due to hard work, not charity.

I love my family.

I pay my taxes.

I give to charity.

I am the 53%.

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.

Handling a Windfall

Finance

What would you do if you were handed $10,000 tomorrow? $20,000?

The easy default answer–if you spend time in the personal finance world–is to pay off debt and save the rest.

But is that the right answer?

When my mother-in-law died, we inherited a little bit of money, a house that hasn’t been updated since the 60s, and a new-ish car that still has an active loan.

We also have about $16,000 in credit card debt and a small mortgage.

The Dave Ramsey answer would be to pay off the card at all costs and worry about the inherited house later, but that seems off. If we modernize the house and fix the things that are broken, we have a mortgage-free rental property. Our local rental market is strong; we should be able to clear $800 per month after expenses.

Is the right answer to pay off our card and scrape to get the house ready or should we fix up the house and use that new income to pay off the card?

My wife has also inherited an IRA that–due to its status as a Beneficiary IRA and the fact that there have been disbursements–has to be drained within 5 years. It’s not huge. After taxes, it’s about the size of the car loan. Should we make the $200/month payments, or cash out the temporary IRA and make the car loan go away immediately? Should we cash out the IRA and open one for my wife?

Although the cause was sad, these are good problems to have. If we manage this right, we’ll be more financially stable than we would have been for decades, otherwise.

I want your opinion, please.

2 questions:

1. House or credit card?

2. What would you do with a $10,000 IRA that has to be cashed out over the next 5 years?

How Much is Too Much?

Business, Finance, Life, Parenting, Relationships

I work.

A lot.

Aside from my day job, I’ve got my gun training classes, this site, advertising and online marketing for a few companies, and a large custom software project. I’m working 60-70 hour weeks and have been for at least 2 years.

When it all started, it was all necessary. We were in debt, I was underpaid for my industry, and we couldn’t make ends meet. Today, our debt is nearly gone, our savings has grown, and I make considerably more money that I did 2 years ago.

But I’m still running as hard as I can.

My wife is unemployed, but I don’t think that matters much. I probably make enough at my day job to cover our lifestyle. I’ll know for sure in 2 weeks when my benefits all kick in.

But I’m still hustling.

When someone calls me up to ask to pay me for a project–a highly skilled, high-margin project–how can I turn them down? When the headlines drive people into my classes, how can I say no to the money?

I’ve been accused of being a workaholic, and I can’t argue with it anymore. I’m working all of the time, and the rest of my life–my marriage, my kids–is suffering for it. I’ve spent so long with not enough, is it possible to just enjoy what I’ve got?

I’ve got no hobbies. I rarely spend time with anyone. I quit working an hour before my kids are asleep, and see them in the morning just long enough to get them to daycare.

I’ve got to scale back. That means my plans to go self-employed are getting paused, but that was mostly an exit strategy for my last job. I enjoy my current job. I’m doing what I love in an industry I care about.

What can I cut?

This site. I could sell this, make a bit of money and reclaim that time, but I need this vent. I need to be able to talk about my finances and release whatever pressure is building up.
Gun classes. This business takes up about 10 hours per class, with 1-2 classes per month. It’s not a huge time sink. Right now, business is booming. There is an old saying: “You have to make hay while the sun is shining.” Eventually, the market will slow down, but for now, we’re one of the most successful businesses in our market. I can’t turn this tap off.
Marketing company. This is the biggest time sink I’ve got. It’s also the most profitable. This is where I spend my time every evening, and where I think I need to wind down. I’ve got a couple of major commitments I can’t back out of, but when they are done, I think this has to go. I simply can’t keep going like this. We’ll keep the business entity, so we’ll be able to say yes to the right projects and be ready to go with the next brilliant idea….crap, there I go again.

My name is Jason, and I’m a workaholic. The idea of shutting down my business hurts, but the idea of losing my wife and kids hurts more. I don’t know how painful winding some of this down will be, but rest assured, I’ll be sharing the progress here.

Funerals Cost Too Much

Finance, Life

When my mother-in-law died, we weren’t prepared to pay for her funeral. We were three years into our debt repayment and were throwing every available cent at our last credit card. We had a couple of thousand dollars in savings, but that was earmarked for property taxes, braces, and a few other things that make money go away.

Then we found out we had a $1500 bill just to get her released and moved to the funeral home.

And catering for the funeral.

And programs.

And the grave, marker, and urn.

Scratch the last one. My mother-in-law prepaid for her grave site and had a funeral insurance policy to cover the marker, cremation, vault, and urn. She paid $800 and saved us nearly $1900 last spring.

By the end, we spent about $2500 for everything, including a reception at the funeral home.

I can’t describe how helpful that was. We couldn’t have covered it without debt, and the money we inherited was months away.

A little pre-planning on her part smoothed out the hardest time in our lives.

In 2009, the average cost for a funeral was $7,755. That’s a lot of cake for something that often catches you by surprise. In 2012, the average savings balance in the U.S. was $5,923.

Unexpected funeral expenses are a “wipe me out” expense. In a flash–a heart attack, a car accident–your life savings can get sucked into death expenses, leaving your family with nothing.

That reminds me, it’s time to buy a pair of grave plots.

Why Kelly Rutherford’s bankruptcy should make you more prudent about your finances

Celebrities, Gossip

Kelly Rutherford is an actress. Not just an actress, but a working actress. She is not a familiar looking extra or an actress who frequently guest stars on television, but someone who has appeared as a series regular on multiple high profile shows since the 1990s. She recently ended a six-season run on the CW hit “Gossip Girl.” This all makes the recent revelations of her bankruptcy that much more surprising. How does someone who has made it in an ultra-competitive, well-compensated field end up with over $2 million in debt? There are several lessons that we can learn from Kelly Rutherford’s unfortunate bankruptcy.

1. Divorce not only has an emotional cost, but can also have a steep financial cost The vast majority of Kelly Rutherford’s debt is related to her divorce and custody battle with her ex-husband German businessman Daniel Giersch. The legal battle with her ex-husband has cost her over $1.5 million.If you are considering getting a divorce, be cognizant of the fact that divorce proceedings may end up being expensive. Between attorney fees and court costs, your expenses can quickly ramp up. Try to have an objective assessment of how you expect the divorce proceedings to go. Do you expect the divorce to be amicable or acrimonious? If you have children, do you expect that you and your spouse will battle for custody? Do you have a plan in place to divide the marital assets? The more questions you can answer and plan for before divorce proceedings occur, the better chance you will have of keeping your costs down.

2. Have a plan for paying your taxes

In addition to the $1.5 million in legal fees, Kelly owes $350,000 in income tax for 2012. For the majority of us, paying taxes is simple. Your company automatically takes deductions out of your paycheck that pay for your income tax.

If you are a contractor or self-employed, it’s important to remember that not all the money you earn is yours. Make sure to set aside a certain percentage of each paycheck that you will use to pay your taxes at the end of the year. Try to estimate your expected income and taxes for the year and set up a separate account that you can use to settle your tax bill. If possible, get some guidance from an accountant on how to pay your estimated taxes quarterly.

3. Set up an emergency fund

Kelly works in a profession in which rapid changes in income are quite common. One month you are earning $40,000 per month for being on a hit show, the next month your character is written off the show or the show comes to an end and you no longer have any income coming in. In any field in which income tends to drastically change, it is especially important to set aside an emergency fund to help account for the uncertainty in income stream.

While the majority of us likely have more certainty about how much we expect to earn in the future, it is still important to set aside some funds in an emergency account. Whether you are an actor or an office worker, there is always some uncertainty about the future, and having an emergency account can make it easier to ride the ups and downs as you encounter them.

While Kelly Rutherford’s bankruptcy is sad and alarming, there are lessons we can derive from it to make us all more prudent about our financial future.

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