Debt Archives - Page 2 of 4 - The Happy Homeowner

Would You Ever NOT Pay Your Bills on Purpose?

Posted on February 25, 2013 by Jen

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I’ve been reading a lot about the looming student loan crisis lately. Apparently, Americans have more than 1 TRILLION dollars worth of outstanding student loans! Student loan debt now outranks credit card debt and auto loan debt for the average consumer and comes in second only to mortgage and rent payments.

With all of this debt and the abysmal state of our economy, it’s unfortunately not a surprise that people are beginning to default on their student loans. Worse, some people are simply deciding not to pay their student loan bills (as well as others such as credit card and personal loan payments).

Not Pay Your Bills….On Purpose?

After reading this, I began to wonder if there’s ever a time where I’d not pay my bills on purpose. Luckily, I’ve always had my head on straight when it comes to paying my bills on time. Sure, I’ve made some technical errors and scheduled payments for the wrong dates and I’ve had things get lost in the mail before, but I’ve always been able to have any late fee removed from my account(s) because I have a solid payment history.

This wouldn’t be the case had I skipped payments or missed them on purpose. After all, bad financial behavior is usually rewarded with negative consequence such as fees, credit score reductions and an inability to finance the things you want to buy at a low interest rate.

But what about if you find yourself in dire straits when it comes to your finances? What if you’ve experienced an accident or illness and have no savings or insurance? What if the reality is that you just have no money? Then what?

Not Being Able to Pay Your Bills

Most people who find themselves in this serious of a situation tend to throw in the towel and/or bury their heads in the sand. When things are so bad that you don’t know where the next dollar is coming from, it’s understandable that you’d want to deny the situation. When it comes to finances (as with most things), the problem with denial is that is just makes the situation worse!

If you truly cannot pay your bills, there are options out there. First and foremost, you have to realize that these are not good options in terms of their consequences and this is not a recipe for how to be a financial deadbeat–these are the choices you can make when in a desperate situation that can help you eventually dig yourself out of whatever mess you’re in—but only if you commit to working hard!

Realize Not All Debts are Created Equal

Do you have secured debt or unsecured debt? Perhaps both? Each of these types of debts need different approaches to dealing with them if you’re having a hard time paying your bills. Because secured debt is often tied to some type of collateral (your house, your car, etc), those are the bills you should try to pay first. For unsecured debts such as credit cards and medical payments, the lender/organization must first sue you before they can take any actions such as wage garnishment, etc. This essentially buys you more time to figure out your situation.

Again–note that this is a method to be employed during desperate situations only! When you begin to skip payments, your credit score will tank, the late fees will stack up and you’ll be facing a bigger hurdle to clear.

There is Relief

Debts such as mortgages and student loans may qualify for government assistance. If you can’t pay your bills, consider applying for a financial hardship or forbearance. While it’s not a permanent solution and you will still have to pay those loans back, the process can allow you time to get your financial house in order before the next payments are due.

Just remember that mortgage lenders can foreclose on you in as little as three months–ensure you’re doing your best to get back on track with payments ASAP!

Communication is Key

No matter what your situation, if you’re having a hard time keeping up with your bills, COMMUNICATE. Call your lenders, ask if there are any special programs, have them note on your account that your next bill will be a bit late. The more you communicate in an open, honest way, the better your chances of getting some help during this difficult time.

The Bottom Line

All of these options are temporary, short-term solutions to get yourself out of a bind–they are not part of a sound financial management plan. You can’t live and behave this way forever, so make sure you’re doing everything in your power to cut expenses, bring in more money and seek help where possible.

Would you ever not pay your bills on purpose?

Photo credit: xJason.Rogersx

Are You a Slave to Money?

Posted on February 18, 2013 by Jen

Financial freedom–a term tossed around quite a bit in the blogosphere, among money experts and an elusive “holy grail” for many people. It’s a concept touted on websites and in books alike–the idea that one day, after enough hard work, we can all live a comfortable life with little worry about finances.

But what does financial freedom actually mean?

With all the penny pinching, balance checking, time spent tracking expenditures and endless recalculations, it’s no wonder people feel bogged down, worn out and stressed about money. Hell, given my recent decision to leave my day job, I had to work through my own money stress in order to determine that I could finally strike out on my own. It’s clearly no secret that money is a subject which is sometimes (or, in extreme cases, always) fraught with anxiety for most people.

Do you rule your money–Or does it rule you?

When it comes down to it, your relationship with money (and subsequent path to financial freedom) can be identified by asking yourself one question, “Do you rule your money or does it rule you?” Your answer to this question highlights the inner core of your financial being: Whether or not you’re a slave to money.

How to know if you’re a slave to money

Signs of being a financial slave include overdrawn bank accounts, accumulating balances on high-interest credit cards, collection calls, missed mortgage payments, etc, etc etc. With each of these instances, the reality is clear that a lack of funds is wreaking havoc on your finances. When you’re constantly digging yourself out of money-related messes, how can you possibly get ahead?

But what about some of the causes for the shortage of money? Sure, there are unique situations such as illness or accident but the majority of those who are slaves to money are in this position because they aren’t managing their finances responsibly.

Perhaps they’re mindlessly spending or trying to keep up with the Jones. Maybe they’re lazy and apathetic about learning fiscally responsible behaviors. They could constantly make excuses for why they’re “bad” with money. Whatever the reason, the essence of the issue is more about gaining control over one’s money in order to build a financially stable future. It’s not about repeating the same damaging behaviors and hoping for different results or expecting to win the lottery as a way to turn a blind eye.

The road to financial freedom

If you’ve asked yourself the question above and have realized that you’re a slave to money, fear not–there are many ways to get yourself on the straight & narrow. Your first steps should include educating yourself about sound money management, identifying where your money comes from and goes to (a budget is a great tool to do this!) and seeking support from the people around you. Just as Rome wasn’t built in a day, neither will your finances be repaired.

Remain calm, stay inspired and commit to turning your finances around. Your future self will thank you as you’ll no longer be a slave to your money once you have control over it and know how to use it correctly.

Are you a slave to money?

Photo credit: vectorportal

Kick Your Debt to the Curb in Four Easy Steps

Posted on January 21, 2013 by Jen

Debt. While it’s an unfortunate reality for most of us, I’ve never met a person who actually enjoys it. In fact, most of the people I know and/or interact with absolutely hate debt.

When I think of financial independence, I believe part of that equation entails being debt free. This means no mortgage, no student loans and certainly no credit card debt. When you’re free to do whatever you want with your money rather than send it to others, it’s much easier to accomplish your financial goals.

If you’re currently digging your way out of debt, here are four easy steps to get that much closer to being debt free once and for all:

Get Smart About Credit Cards

Credit cards can be both a blessing and a curse. If used properly (paid off in full each month, never charged over their limit, etc), they can be filled with great perks which include cash back and travel awards. However, left unchecked, they can be a source of high-interest, ballooning debt. It’s not worth the damage to your credit score to let this type of debt linger any longer than it has to–cut up or put away the cards until you’re able to use them in a more responsible, beneficial way.

Make More Money

Find a way to bring in as much extra income as you can and send every dollar of it towards your debt. I’m always looking for enjoyable ways to boost my income; from turning my passions into income sources to managing multiple jobs, all of the extra money I make is funneled to a variety of financial goals.

It’s important to note that as you increase your income, you should continue the same lifestyle you had before—this is not a time to let lifestyle inflation creep up; it’s a time to work yourself out of debt and on your way to financial independence.

Create a Budget

While it’s true that not many people actually enjoy adhering to a budget, it’s an invaluable tool for setting yourself up for financial success. A budget is a fluid, ever-changing entity that can help you track your spending, track your debt payoff progress and help you identify any unnecessary expenses that could be trimmed back. The key to setting up a good budget is to be realistic and honest about the numbers you’re entering for each line item.

Slash the Expenses

As you track your spending, pay attention to items that are sucking up your precious dollars but aren’t truly necessary. Some of the cutbacks I’ve made over the years include cable, shopping for clothing and dining out. I also set goals around cutting my expenses, such as my 2013 goal to cook at least 4 dinners each week and my focus to take my lunch to work instead of spending money in the cafeteria or nearby restaurants. With a bit of creativity, it’s possible to slash your expenses in a way that’s not detrimental to your current quality of life. Once you have that extra cash cushion in your budget, make sure to send the extra money straight to your debt.

By following these four simple steps, you’ll be on your way to a debt-free existence. Imagine how good it will feel to know that you no longer owe anyone another dime!

What are some ways you’ve sped up your debt repayment?

Signs That You Have a Spending Problem

Posted on April 24, 2012 by Jen

It’s no secret that I used to be absolutely horrible with my money. I’ve mentioned before how I’ve done a financial 180, and I’ve highlighted some of the ridiculous excuses about money that I used to make. What I haven’t discussed is how I finally learned that I had a spending problem.

For whatever reason, carrying around tens of thousands of dollars in credit card debt didn’t seem to phase me for quite some time. Like a Sherpa schleps packs up the mountain, I crawled my way through my early 20s with multiple credit balances and a complete lack of financial knowledge tethered to my back. Effectively, I ignored all of the following signs of a serious spending problem. That is, until I finally gave myself a kick in the pants and got my financial act together for good…

You Might Have a Spending Problem (as I Once Did) if:

You’re spending more than you bring in

This is one of the easiest ways to gauge your financial health and decision making habits. If you’re spending more than you’re bringing in, you’re creating a monthly deficit that must be paid. Often, that deficit is paid via savings or credit. If you suck your e-fund dry on non-emergencies, what will you do when the real stuff strikes?!

You opt into paperless statements to avoid seeing how thick your credit card statements are

Helping the environment is one thing. But opting in to paperless in order to avoid having to deal with your 10 page credit card statement is just another way of shirking financial responsibility. Consider this: Your statement wouldn’t be so large if you weren’t spending so much!

You ignore your mail (or shred it without opening)

I was certainly guilty of both of these. I stuck my head in the sand by not dealing with my mail, and I chose to stay oblivious to my actual debt totals for a very long time. The thing is, the joke was on me because I ended up paying thousands of dollars in interest on mindless purchases.

You have a closet full of clothing, shoes, and accessories that still have tags

Do a quick scan of your closet(s)….Do you see multiple tags sticking out? Unless those items were free, there’s no reason to see so many brand-new, never been worn items (but if you scored a closet full of free clothes, please email me your secret!!).

Your significant other, friends, or family members roll their eyes when you tell them about your latest purchases

Non-verbal cues are powerful messages. Even if it’s not an eye roll, a raise of the eyebrows or a smirk can say indicate the same disdain for an over-spending tendency. Worse yet is if you’re hiding your purchases for fear of being judged and/or starting yet another argument about how you spend your money.

You convince yourself that you’re “saving money”

This was another one of my weaknesses. I could easily justify buying something if it was on sale, regardless of my actual need for the item. Another version of this behavior is buying things in bulk. If you’re not going to use all of the items or honestly have no need for them, why are you spending your money?? For me, overcoming this nasty habit was as simple as asking myself that very question each time I went to purchase something.

You have no idea how much you’ve spent

If you’re spending mindlessly or emotionally, chances are you have no clue how much you’re actually spending. My receipts often went right into the bag with the items, only to be tossed out immediately after I emptied the bag at home. Knowing how much you spend is paramount to gaining control of your finances.

You’re surprised by your receipt totals

If you finally bring yourself to see how much you’ve spent and are shocked by the total or can’t remember an item that’s on the receipt, it’s a sign that you might be spending too much.

You’re on a first-name basis with local shops, retailers, or the FedEx man

Having “the usual” might be OK for a morning coffee or weekend brunch order, but the other instances listed all sound the alarm bells for me now.

You let your emotions rule your money

If you find yourself shopping away anger, guilt, sadness, etc, take a moment to take stock of your emotional tank. If it’s running on empty, step out of the mall and instead talk to a friend, go for a walk, or play with your pet. I let my emotions dictate my spending for years until I finally understood that it really wasn’t the items I shopped for that I wanted–it was relief from the negative emotions and stress I was feeling.

You have spending hangovers

Have you ever gone on a shopping binge and then literally felt sick to your stomach after realizing how much you spent or that you couldn’t actually afford what you purchased? I certainly have!

You “forget” to pay your bills

If you’re not automating at least the minimum payment each month, what is the real reason you’re not paying your bills? Perhaps you’re stretched to the limit. In that case, you definitely shouldn’t be spending anymore. If you still have money coming in to pay your bills, perhaps you’re paralyzed by your debt (I was for a while after I finally tallied it up). In that situation, reach out to someone who you trust for help, educate yourself about all things personal finance, and accept that you have some work to do. Doing so will give you control of your finances and your future.

Do any of these apply to your situation? How do you keep your spending under control?

The Happy Homeowner

Living a Healthy, Balanced Life One Cent at a Time…

Category Archives: Debt