How to Have a Debt Free Christmas – The 4-Gift Christmas Challenge

Christmas Gifts on Credit….the Gift that Keeps on Giving…

How much will you spend on the holidays this year?  If it’s close to $1,000.00  then you are pretty much average.  How much of your monthly budget is that $1,000.00?  It goes without saying that the holidays and holiday spending can be a budget buster.  And it’s not just the gifts that are purchased, there is extra money that goes into the food budget, into holiday decorating (do you have a Clark Griswold in your family?), traveling, getting the carpets cleaned and other purchases that are made to make the day(s) picture perfect.  And that’s what we all want, right? Is to create a feeling that will last.  There is nothing wrong with that!!!! You heard me right.  There is nothing wrong with that.

Our household loves Christmas and we love to decorate.  One of my greatest desires is to make sure that my children will have fond memories of the holidays. That they will look back and have snapshots of great moments that make them feel good.  So I completely understand that the expense that goes into the holidays is not always about “stuff” – it’s about the feelings that we have and the expectations we have about what these moments mean to us.

THE DECEMBER DILEMMA 

What is not good and not all right is to borrow to make all this magic happen.  We do not want the “high” of the holidays to be followed by the January “blues” when the mail carrier delivers the credit card statement and what we thought was just a few bucks here and a few bucks there has multiplied into a bill that cannot be paid off immediately.  Did you know that a credit card balance of $1,800.00 with 11.99% interest being paid at $100.00 a month will take 20 months to pay off? Do you really want to be paying for last year’s Christmas next Christmas?

The other danger is that holiday gifts are purchased at the expense of your current budget.  How does this happen?  If you have not budgeted for your holiday purchases and you don’t have any sources of extra income to pay them, then it logically follows that the money for those purchases is going to be at the expense of something else in your budget.  The cost of this?  Late fees, NSF fees, playing catch up for a few months into the New Year is not how you want to start the New Year.

4 Gift Christmas Challenge

 

THE CHALLENGE

So what to do?  PLAN!!! You know what they say, “those who fail to plan, plan to fail!”  I know…the holidays seem to sneak up on us every year – but it’s really more about poor planning on our part, isn’t it?  The holidays are not one of those sneaky holidays that change every year.  Each year they are in December – EVERY DECEMBER.

One way our family has opted to keep our Christmas budget under control, especially since adopting all the boys, is to do the 4-Gift Christmas Challenge.  The Challenge is simple…for each child, we purchase something they Want, something they Need, something to Wear and something to Read.  It has been such a cost saver for us and each child gets a mix of presents we can feel good about giving.

THE BUDGET

The easiest way to be ready for the holidays is to simply budget for it and put money in an account or some other stash where you can keep it and keep adding to it throughout the year.  Other ideas:

  • Get a seasonal job to pay for the extra holiday expenses
  • Budget gifts into your monthly budget and purchase gifts throughout the year
  • While you are attacking your mountain of debt –
    • have a year or two (or three) of hand-made gift giving.
    • agree on one family gift.  We know a family that did this and the parents surprised the kids with a new family dog on Christmas morning.
    • tell other family members that you are not giving gifts this year while you are getting out of debt.
    • Get creative!!! There are lots of ways to make your holidays inexpensive.

We have opted to budget for our Christmas for the past several years and limit the amount we spend on gifts.  What is interesting is that as we get further along in our debt repayment the desire to spend on gift giving has decreased.  We would much rather see our debt reduced than a bunch of boxes under the tree.

THE CHRISTMAS SPIRIT

I would be remiss if I didn’t mention that one of the greatest ways to put the holidays, and what is really important about them, into perspective is by sharing it with others and by finding a way to serve someone, anyone, during this season.  You want to create memories for your kids?  You want to teach them about what is most important in this life? You want to teach them responsibility and to appreciate all that they have?  This is how it’s done.  Serve with them – shoulder to shoulder.  Serve in a shelter, deliver food to the homeless, adopt a needy family and deliver presents to them, visit a hospital, there are so many possibilities and opportunities to serve.

What’s up with that?  A message about serving in the middle of talking about holiday debt?  Here’s what I am getting at.  It’s a paradigm shift.  It’s getting off the crazy train of debt.  It’s realizing that what you have IS enough and you don’t need more “stuff” and even if there is some “stuff” you really, REALLY, want…you have to want to be debt free more.  You have to reach a point where you are satisfied and a really powerful way to create contentment in your own heart is to pour into other people.  It’s really difficult to  have everything be about YOU when you are staring into the face of someone else who needs help – it becomes crystal clear that it is not about you – but THEM.  When this shifts for you, something happens and your spending will decrease, which means more funds available to attack your debt and get off the crazy train of debt for good.

A happy DEBT FREE holiday to you all!

Love and Prosperity, 

Your GirlFIday. 

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How We Saved $4000.00 on Our First International Vacation

In October, my husband and I took our very first international trip to Greece.  It was the trip of a lifetime – and that is really an understatement – but as you can imagine, it was also expensive.  I am happy to report, though expensive, it did not break our bank account. In fact, we saved a ton.  How did we do that? 1. We saved for it and paid it all in cash.  Unlike many Americans, we did not return from our trip with debt. 2. We used our super-saving-ninja skills to get our expenses down as much as possible. That’s what we are going to talk about today.

The bulk of our savings came from a handful of choices we made.  First, we flew out of Tijuana, rather than the San Diego Airport.  We did not pay for the bulk of our meals.  Lastly, just about everything else we did was free.

The purpose of the trip was to attend a Chautauqua.  If you were like me one year ago, you had no clue what that means. Is it like a Chewbacca?  No, not even close – though that would have been a cool gathering too, I am sure.  I’ve explained our Chautauqua experience in an upcoming post, if you are interested to know what the heck one is.  (Urban Dictionary, a bit salty sarcastic, is of no assistance on this one.)

$2000.00

The first area we saved was on our plane tickets.  Having never travelled internationally before I had NO IDEA how expensive plane tickets were.  When I first started watching them, I could not believe my eyes.  They ranged anywhere between $2000.00 and $5000.00 a piece and that was for economy.  At that point, I had already bought our tickets for the Chautauqua so I was already past the point of no return. The only flexibility we had was our departure city.

I knew of a friend that flew out of Tijuana all the time, with her children, so I had to assume she felt it was safe. So, out of curiosity, I looked….I was SHOCKED at the difference.  The difference was big enough that it really was not an option.  We were already embarking on an international adventure, so why not add one more adventure to the mix. By flying out of Tijuana, we saved about $2000.00 on our tickets.  Not a bad way to start an adventure. I will be writing on that experience as well in case you’re wondering what that was like.

It’s also important to note, flight prices vary based on a number of factors besides destination.  For instance, if I you were to look up the prices to fly to Thessaloniki in March of next year they would be less than $1000 and it would have been cheaper to fly out of San Diego as opposed to Tijuana.

TIP #1 – Research your flights before deciding your destination as well as date of travel.  You can save hundreds, thousands, by having a bit of flexibility and adventuresome spirit.

SUPER SAVER TIP #2 – If you don’t want to pay anything for your flights, then there are several resources available on how to do that with travel rewards via credit card hacking.  The guys over at Travel Miles 101 have that covered.

Meals $1000 

Meals while traveling can be a budget buster.  In the past, one of the ways we have minimized our meal expense was to book at a hotel with at least a refrigerator, but preferable a kitchen. When we travel with the kids, this is almost non-negotiable.

This trip we packed non-perishable snacks; lots of nuts, cheese crisps, granola bars, and dried fruit. It kept us satisfied in between our flights and other periods we were in between meals.

Finally, as part of our package, meals were included.  This was huge.  We received 3 delicious meals at our five-star resort every day.  These varied between buffet style and plated meals.  We were able to both indulge in traditional Greek food, as well as dishes prepared by a master chef. They were divine.

Look for experience packages that include meals in your travels.  This one thing will save you additional hundreds of dollars, maybe more, depending on how many people you are traveling with.

TIP #3 – Get a package that includes meals (though be careful and analyze whether that makes sense.  Sometimes it doesn’t)

TIP #4 – Pack your own food and snacks.

TIP #5 – Get a room that has a kitchen and/or a refrigerator.

EXCURSIONS and MISCELLANEOUS SPENDING $1000.00

Another benefit of purchasing an experience package is that a couple of our excursions as well as transportation were paid for.  We were able to enjoy a walking tour of Thessaloniki as well as a tour of the museums at the foot of Mount Olympus and a bus tour up the mountain.  This also allowed us precious time to spend with our fellow travelers and get to know them better while seeing thousands of years of history.

Others in our trip hiked and went in to town to explore.  Also free.

Curtis and I opted to simply enjoy the resort on the days there were no excursions.  We were on vacation to relax and enjoy ourselves.  Reading a book, overlooking an infinity pool that expands over the Aegean Sea is how I would describe paradise.  It was enough for me.  And Free.

Don’t forget to look for coupons or other discounts for excursions.  There are so many ways to save, if you are intentional about it.

TIP #6 – Prepay for Excursions.

TIP #7 – USE COUPONS!

Curtis and I left for Greece with a spending budget.  Because of the intentionality of our spending, we came home with two-thirds of that budget unspent.  A much better position to be in than coming home with debt. Pre-FIRE movement, we would have come home from a trip having to rearrange our budget to account for our over-spending as well as work for months to pay off our credit cards.  To not have the stress of coming home to that?  It’s priceless.

How have you been able to save on your travel expenses?  We’d love to hear it.

Love and Prosperity

Your GirlFIday

 

**Photo by Alex Antoniadis on Unsplash

 

5 Grocery Shopping Rules to Save You $1,000.00

5 Rules to Save at the Grocery Store

5 Grocery Shopping Rules to Save you a $1000.00

Two times in our lives we have had reality smack us in the face when it came to realizing how much money a month we were spending on food.  The first time was when we first discovered Dave Ramsey years and years ago, and the second time was last year when we discovered the FIRE Community (Financial Independence/Retire Early). I thought I had it all together when it came to our food budget.  I knew all the rules.  I used to lead Financial Peace classes for Goodness Sake!  I was careful about our spending.  When we made the commitment last year to begin saving for retirement I didn’t know where we were going to  get the extra money to do so.  So, I began cutting expenses wherever I could.  Imagine my shock when I took a good hard look at our banks statements and realized we were actually spending more than double what we had budgeted every month for food.  Whoopsie-doodle…..life had certainly crept back up on us and we didn’t even realize it.

We went back to the basics and reacquainted ourselves with several rules that had helped us in the past.  They work.   And if all used together are an almost fool-proof way to “find” extra money in your own budget. Get out your pen and paper and commit them to memory.

  1. DETERMINE HOW MUCH YOU HAVE TO SPEND

Your food budget is one of the best areas you can cut expenses to make room in your budget for savings.  Don’t believe me? Take a look back at your own bank statements. Go back three months and see how much money you spent on food. (Seriously, do that – like right now) Did you look?  Are you shocked?  OK.  So, now you are ready to really get to work.

Commit to eating at home and sticking to the budget you have set for yourself.  You won’t find anyone here telling you to live on “beans and rice” (although delicious, if you ask me).  So be realistic, while at the same time make an honest effort to cut back and meal plan wisely. If you normally were spending $1,000.00, try cutting that back to $600.00.  See if you can do it.  If not add a little back in.  If that was too easy, then cut back some more.  Then take those savings and either supercharge your debt repayment and/or your retirement accounts.

In our house, we typically have two major shopping “hauls” a month.  On these trips, I try to get most everything we need for two weeks at a time.  We have a large family – so two times a month works better for us.  You may be able to extend this to just one large trip a month.  We then have one or two smaller trips in between to replenish things like fresh fruits and vegetables.

  1. USE CASH

Studies have shown that people spend more when they use a credit or debit card when they shop.  My suggestion for you, especially if you are just beginning your financial independence journey, is to use cash when you shop for groceries.  You will spend less.  Spending less is the goal – so anything you can do to achieve your objective is preferred.  Once the cash is gone – it’s gone and you are done shopping.

I have one caveat.  IF you are disciplined with credit cards and are diligent about paying them off every month – using your credit card is a good way to collect lots of different types of rewards points.  However, this also means that you should still stick to the budget.  If you hit your pre-determined amount to spend for groceries, it is time to stop shopping.

TIP:  A lesson I learned from my mom is to keep a “tally” as you shop.  On one-side I have my list and on another I keep a running ledger on how much I am spending.  I round up to the nearest quarter.  This gives me an automatic cushion for taxes on non-food products and makes it easy to do the math as I am shopping.

  1. SHOP FROM A LIST

Contrary to popular belief, shopping is not a recreational sport. From this day forward, all shopping is a planned event. (GASP!) Whaaaaaaat! Yes, it’s true, there will be no last-minute excursions to the store. And definitely no stopping by the grocery store “for a few things” unless you are armed with two things, a list and money left in your food budget.

Heading into a store with no plan is like heading into a jungle without a guide and with no protection. You are vulnerable. A store, any store, whether it be a clothing store, a hardware store, or a grocery store, has one purpose – to sell you STUFF. To separate you from the money in your bank account. They go to extreme lengths to do it. But let’s be frank, it’s really not all that hard to do right? I’m guilty of it. Stopping by the store to get “one” thing that is just a few bucks but, somehow, I leave with 25 items and spend $100.00. How the heck does that happen? Because you are not as good at the sport of shopping as the retailer. But you can be.

  1. STICK TO THE LIST

If it’s not on the list, it does not go into your cart. Impulse buys will wreak havoc on your food budget.  This is an exercise in two things.  First, it helps create discipline, and Second, it helps you get better about planning.  Of course, if it’s an absolute necessity – you get it – but you still stick to the budget.

  1. DO NOT PAY FULL PRICE, IF AT ALL POSSIBLE.

Not everyone is a fan of couponing.  We are all busy. I get it.  It takes time to collect them, then match them with ads, cut them out, keep them organized, not let them expire etc… So, if you ARE a couponer – you get mad respect from me! My husband and I used to coupon regularly, and even taught others how to do it, but when we moved to Southern California, it became more difficult.  Also, several stores eliminated their “double coupons” which really made couponing worth it and then, Walmart stopped price matching.  Which totally sucked! T.V. shows like, “Extreme Couponing”, likely ruined it for the rest of us. Ruiners!
Keep your grocer ads nearby when you are making your shopping list. Scan them and look for savings on staples like meat, milk, fruits and vegetables.  Then, plan your meals around what is on sale.  Also stock up.  A stand-up freezer to stock up on sale items is something to consider.

This step may add a tiny bit of time to your shopping but in the long run the savings is totally worth it.

  1. OTHER RULES OF THE ROAD.
    • Eat before you leave the house – if you shop hungry you are far more likely to impulse buy.
    • Do not shop with children. This can be difficult especially if you have little ones.  However, I urge you to find a way to shop without them.  Try going after they go to bed or after a spouse/partner gets home.  Swap with a friend.  Then do the same for them.  Shoppers tend to spend more when they have children with them.  The little crumb-catchers want all the things and can be relentless.
    • Shop the perimeter of the store. Try to avoid going down every aisle.  The foods in the middle are more often processed and less healthy. Processed food may last longer but by eating more fresh and whole foods, you will live a healthier life and realize long-term savings in reduced medical expenses.
    • Consider the dollar store for some items. For instance, our local dollar store carries the same bread we would normally purchase at the grocery store for anywhere between $2.50 and $3.00.  By purchasing them at the dollar store, I save $1.50 a loaf at a minimum.  When we buy bread at the dollar store we purchase multiple loaves at a time (sometimes 10 or more) and freeze them until we need them.  By doing it this way, we can save between $10.00-$20.00 every time we go.  That’s real dollars – and those savings add up.

There you have it.  Now you are armed with a plan that will help you add real dollars back into your budget.  If you stick with the plan, these savings can super-charge your savings goals.

I am almost embarrassed to tell you that when we took a good look at our food spending, we were wasting over $1,000.00 a month on groceries and eating out.  $1,000.00!  It’s insane.  But we don’t realize how quickly a trip here and there, a trip through the drive-thru because we are exhausted, or lunch out with friends multiple times a month adds up.  You do not have to deprive yourself – that’s not what this exercise is about.  It IS about setting a goal to save and finding a way to do it with the resources you have.  By shopping intentionally, you can easily put hundreds back into your wallet and that should make you very happy!

Happy shopping…er…I mean savings!

Love and Prosperity,

Your Girl.FI.day

House of FI Podcast COMING SOON!

House of FI JPG

Friends! We have some exciting news to announce…Girl FIday will be partnering with an amazing mom-prenuer, Timika Downes, in launching a “family focused” podcast very soon.  Timika and I are both passionate about achieving Financial Independence and taking as many other parents on the journey with us.  We both are busy working moms and entrepreneurs.  We both understand the unique challenges families face who also want to be debt free, save fiercely and achieve financial independence in the pursuit their best lives.

Our goal is to showcase quality guests as well as share the experiences of other parents on this journey.  It can be a lonely road, especially in a culture that thrives on consumerism.  Have you ever been met with blank stares when attempting to share what you are doing with family and friends?  Yeah been there too!  Sadly, many either don’t understand what we are trying to achieve or are simply not interested.  So with that in mind, we hope to grow a community where you feel comfortable sharing and growing – and embracing your financial nerdom.  We love weird!

We are currently in the production stage and hope to have finished editing our first several episodes in the coming weeks.  Stay Tuned!

In the meantime, you can follow me here  at girlFIday as I will be posting updates regularly.

You can also like and follow our House of FI Facebook page at https://www.facebook.com/Houseoffi/

Timika can be found over at http://reluctantfrugalist.com/ – give her some LOVE too!

Sharks, Scorpions & Alligators – Payday Loans, Title Loans & NSF Fees

sharks scorpions & Alligators

Payday lenders and title loan companies are Sharks.

You must train your brain that every time you drive by one of these lenders or see one of their commercials to hear the Jaws theme. They are predators and they prey on people who are afraid they can’t make it to next pay day. Let me ask you this, do you think these lenders are in rich or well-to-do neighborhoods? No, of course not. But you drive through a struggling neighborhood or near a military base, and you will see one just about on every block. And once you borrow from one of them do not expect to pay off your loan. You will keep paying interest on it indefinitely. This is how they make money. It is called predatory lending and that is why in many states, pay day lenders have been shut down by the law.

These same pay day lenders are now making loans on titles to vehicles and it is the same trap. Let’s say you own a vehicle that is worth $5,000.00. The title lender will loan you $3,000.00 and place a lien on your vehicle and charge you interest every month. Every month, you will pay them, for example, $300.00, of simple interest. None of this monthly amount pays down your balance. You cannot come up with the $3,300.00 to pay it off for next month, so you keep paying $300.00 a month. No matter how you try you can’t get together $3000.00 because something always happens. You intend on paying more next month, but there are some doctor visits or something else happens and so next month you only make the minimum payment. This goes on for a year. At the end of the year, you have paid them $3,600.00. You have paid them what amounts to 120% in interest and you still owe the original $3,000.00. Does this sound smart? Well, it is certainly smart of the title lender. But for you, not so much. As a bright line rule, just DON’T DO IT!

The same principle applies to the payday loans. You borrow a sum with the intention of paying it all off the next payday. But the next payday comes and you can’t pay it back, so the payday lender says,” OK, just pay us the interest and we will make a new loan.” Every payday, you pay the interest but the balance of the loan does not go down. Even with a small amount, you will end up paying more than 100% in interest in a very short time.
When I am up late at night and the commercials for these sharks come on, one of the things they hook you with is the guilt, “avoid NSF fees”, “avoid the embarrassment of bouncing a check” or some other measure that plays upon your fear. Now, get ready, because I am about to get harsh here. A simple solution to NSF fees is to NOT WRITE CHECKS UNTIL YOU HAVE THE MONEY! Novel idea, I know. But it is the truth. Let me remind you that you are not alone. You are not the first person who has bounced a check.

Hopefully, I have earned the right to speak frankly with you because I have been in your shoes. Just about every mistake I discuss in this blog, I have made. We have been there. We know what it is like to have your rent or mortgage due and to not have the money yet. So, we risk it and give the landlord a check hoping they won’t deposit it until tomorrow and that it won’t clear for 2 days and by then your deposit will go through. But WHOOPS! It deposits in 24 hours and now you have to have an uncomfortable conversation with your landlord. So, next month when you are back in the same boat, you go get a payday loan or title loan so that you can avoid that whole scenario. The problem is that you have now gotten suckered into something you cannot get out of and it’s going to cost you a ton of money you can’t afford.

So just don’t do it, no matter how tempting it is. Instead, call your landlord or whoever it may be and explain the situation. Nine times out of ten, if you are honest and simply explain it, they will give you an extension. They may charge you a fee, but it will likely be less than what you would have paid in bounced check fees, that often create a snowball of fees. I have never had someone not work with me, if I simply call them and explain the situation.

I once paid over $300.00 in NSF fees because 1 item cleared before I expected it to. Most banks have a policy of paying items largest to smallest. The reasoning, I have been told, is that the higher items are for more important items, like mortgage payments and car payments. The reality is, if they pay largest to smallest, they get more fees because more items will overdraft. That’s the real truth. Banks are in business to make money, period. And NSF and overdraft fees are expensive, often $25 to $35 per item. In 2009 the Huffington Post reported that banks make 38 billion, that’s right Billion with a capital “B”, in overdraft fees per year! They also reported that was double what they made in the year 2000. Overdraft fees are income for banks, plain and simple.

Have you heard the fable about the scorpion and the frog? A scorpion asks a frog to carry him across a river. Leary of the scorpion and not wanting to be stung, the frog says, “but you will sting me”. The scorpion assures the frog, “if I stung you, both us will sink and drown”. Feeling better, the frog agrees and begins carrying the scorpion across the river, but midway across the scorpion does indeed sting the frog, dooming them both. When asked why, the scorpion explains, “what can you expect from a scorpion, it is simply my nature.” I’ve heard this fable told in many versions, sometimes it is an alligator toting a rabbit across and half-way the alligator attempts to eat the rabbit, but the moral is the same. Sharks are sharks.  Scorpions are scorpions.

The moral of this story for you is to beware of sharks. Like the scorpion or the alligator, sharks will always be sharks and they will always do what is in their nature. Your goal is to survive. And in this journey to be debt free, your efforts in doing so will be much easier if you stay out of shark infested waters.

And if you need a life preserver, I am here to help.  How can I help?

Love and Prosperity, 

Your GirlFIday

Debt Triage – First Stop the Bleeding

Debt Triage PINTEREST

In an emergency room, patients are treated based upon the urgency of their need for care.

If you are reading this and you are living pay-check to paycheck, and/or you have past due bills, or are just trying to stay on top of all the debt you have accumulated, you have a debt emergency.

The very first step for anyone in your circumstances will be to “triage your debt”. What do I mean by “triaging” your debt? It is this – Before you can dive in and begin working a system of overall debt repayment and savings, you have to first start with vital matters.

Are you behind on your rent/mortgage? Utilities? Your car payment? These are your necessities. Take a look at them first. Make a list and address each one of the following in order:

Food and Shelter

Your primary needs are food and shelter, then critical utilities (cable and internet are not critical- unless you work from home and cannot work without internet). Before you can even begin to start paying down your debt, you must get these items current. If you lose your shelter and cannot provide sustenance for you or your family, the least of your worries will be making sure your AMEX credit card gets paid. Talk to your landlord, will they forgive late fees, will they let you pay your rent a week late so you can get caught up on your utilities. Will they break the rent into two payments so that you have more to go around for each paycheck? Be honest with them – be creative. As my grandma used to say, “closed mouths, don’t get fed!”  You won’t know, unless you ask.

House-hacking.  One idea is to “house-hack.”  Can you temporarily rent out a room in your home.  Or can you rent a room/rooms in someone else’s home. Housing costs are most often our biggest expense and if you are able to change this one thing, it may be enough to give you the relief you need to get all the other areas under control. It may be humbling. It may be inconvenient. You maybe sacrificing your privacy.  Remember this is temporary and sometimes, we must do the hard things.

Utilities

After food and shelter, are utilities. If you are behind, call each one of them and work out a schedule of repayment AND STICK TO IT. Often, the dread of calling can be debilitating – I totally understand.  But, I promise, you will feel better once you have a plan.  I also know (from experience) that in the vast majority of instances, if you simply explain your situation – a lot of the time they will be able to help you. Besides, you also don’t want to find yourself in a situation where they get turned off and you have to pay reconnection fees.  This will only compound the problem.

Transportation

Next is transportation. Can you negotiate with your lender to perhaps postpone a month’s payment so that you reflect as current and then possibly use the freed-up expense to get caught up on your shelter needs? Will they forgive late fees? What else can you do? Perhaps you temporarily use public transportation or some other means of transportation and forego a vehicle all together? Be creative here.

Perhaps you need to sell your car and purchase one outright to get rid of your car payment?  Maybe you car share.  Remember, this is an emergency and you need to do what you can to stop the bleeding.

All Other Debt

The last priority is to bring current all debt.

But, before you begin focusing on your debt there are other steps that you will need to take, including assessing your income vs. outgo, total over-all debt situation and creating a budget. For now, focus only on triage – assessing in order of urgency and treating the most critical of issues before moving on. This is not to say that your overall debt situation is not important or that it is not an emergency. It is – debt freedom is an emergency. However, as with the emergency room, for now it can wait until critical needs are stabilized.

In an emergency room, the doctors and nurses work quickly, they work with purpose, they assess, treat and move on to the next patient. You will do the same with each necessary expense that is past due. Doctors and nurses also do not pretend that a situation is not as bad as it seems – to do so would cost lives. You have to triage your debt with an open and honest heart. Truly determine where you are with your necessary expenses. “Treat” each debt emergency as if your life depended on it, because in reality – it does. How can you be the parent – wife – husband – employee – friend – you are meant to be if you are consumed with worry about where you will live or how will be get your next meal – you simply can’t. And I am here to help you do that.  I care about your well-being and I want to see you succeed financially.

In the next several series of posts, we will be addressing the financial fundamentals so that you can achieve financial independence and begin saving.  But for now, first things first. Be brave.  You can do this!

Love and Prosperity,

Your GirlFIday

Don’t Be An Ostrich – You Can’t Hide From Your Debt

Don't be an ostrich PINTEREST

The first step in getting out of debt is to assess your situation. Over the years, working with hundreds of bankruptcy clients, I have seen over and over what I call the “Ostrich Syndrome”.  The enormity a clients debt situation is so hard to face they instead ignore it.  And I will be perfectly candid here, when I say “they” I include my husband and I in this category.  As we struggled over the years, we put our heads in the sand several times.  What we can both tell you is that ignoring your circumstances does not make this situation any better.  You too might be an Ostrich if:

  • Instead of opening your bills each month you stuff them in a drawer telling yourself you will get to them later.
  • You fail to answer all calls because you fear it is a bill collector
  • You do not check your bank account balance – afraid it is a negative balance
  • You do not balance your checkbook
  • You do not know how much you are in debt because you have not looked at your credit balances
  • You have not checked your credit report
  • You do not answer your door because you are afraid you are being served for a lawsuit

Does any of the above sound familiar to you?  Do not be ashamed or afraid.  Face the truth head on.  Much like an alcoholic or any other addict must do, you must admit where you are and how you got to where you are so that you can begin the process of healing.  You cannot skip this step because interest does not stop accruing, balances do not go down, bill collectors do not magically disappear, lawsuits do not get dismissed, negative balances do not turn into positive ones.  You cannot get financially healthy until you first know how bad things really are.

Adulting is hard.  But it does get easier.  Especially when you have help and know that you are not alone.

Let’s get started…

Assessing where you are:

  1.  I suggest getting out a pen and paper, or if you are a spreadsheet-type person, like me, start a spreadsheet.  More accurately, you may need to create more than one. At a minimum, create a list of every single monthly expense you have.
  2. You need to know the present balance, the regular monthly payment, past due amounts, if any, and due dates.
  3. Do the same thing for each debt you have.  ALL OF THEM.  Credit cards, loans, loans from mom. Collection accounts.  Everything.

You can combine the two lists, or keep them separate, whatever helps you feel organized and presents to you a clear picture of what you currently owe and what you owe going forward.

Determine what you have:

  1. What is your net monthly income coming in?
  2. When does it come in?
  3. If you have irregular incomes, go back to the past 3-6 months and chart each month’s average – or see if you can determine a baseline of the minimum you know you will receive. Anything extra will be extra.
  4. Do you have any savings?
  5. Do you have any items that you can sell?
  6. How much extra cash can you come up with to kick-start things?
  7. Can you hold a garage sale?
  8. Can you work overtime?
  9. Uber? Lyft? Amazon Flex?
  10. Do you have a side business you can supplement your income?

It’s time to really get creative.  If your child was sick and you had to pay for a medical procedure in cash (without committing a crime people!) how much money could you come up with?  Think of things in these terms and see what you can do!

Now that you know what you owe…OUCH, I know that hurt…and know what you have, the next step will be to create your plan.  Your Budget.  Get amped up.  Get excited.  You no longer have your head in the sand.  Be proud.  That was hard and you are still here.  You are about to kick some #ss and take names!  It’s time to attack.

Next week we will discuss your strategy for getting out of debt, stay tuned.

Love and Prosperity, 

Your GirlFIday