Thoughts on Debt

We are all feeling very helpless against the powers that be that are pulling our purse strings these days.  There are things that we need to do to take back some of the power from these piggies.  I am not saying that there has not been a cost increase in the production and delivery of the foods we love.  I am however saying that the price of gas has been backing off a little, but a block of cheese, 16oz of mozzerella cheese has risen about $3.00 a block, this is double its price only 3 months ago.  I can assure you that the cost to produce this block of cheese has not gone up $3.00 and therefore we need to be careful not to let these companies take advantage of us.  We need to take some proactive steps to stand up for ourselves here.  After all, you better believe that the price of cheese will come down after pound after pound goes bad on the store shelf.  Yes, it will mean compromising a little, but it is worth it to take a stand.  We can do something about it, we still have the power of the dollar and if we start exercising that power, we can make a difference.

It is time to move from debt to debt free and the best way to do this is to live like it was the 1900’s all over again.  Grow your own food, cook it, can it, freeze it.  That is right, we can bake bread, we can go to bed when the sun goes down and we can live without a credit card.  You may not eat what you want, watch what you want or go where you want, but you can actually live much, much more frugally than you have been.  I know this sounds like the extreme, but the truth is just like any other lifestyle change there is a period of adaptation, and it will feel a little odd for a while, but we can make the changes necessary for survival and we must or we won’t make it.

The cost of everything is going up and up and I think with each rise in the inflation rate, my blood pressure goes up another point.  All this financial stress must be putting a real strain on some very stressed out American’s.  After all, at least half of America is on some type of anti-depressant or mood altering drug, and this was before the current financial crisis.  Although we would like to think that we are immune to all the hub bub that we hear through out the day, let’s face it, this is a very stressful time and we are all feeling it.

It is tough to go to work everyday, knowing at the end of the week when you have filled up your tank and have bought groceries, there won’t be a dime left over for anything extra.  We all are feeling the pressure and those of us with children are really feeling it.  With back to school time fast approaching, the inability to stretch the dollar is amazingly obvious.  Trying to buy those little extras that make back to school time so much fun, have long since past.  Now it is a strictly necessity world, where if you don’t need it, then you just don’t buy it.  It really is that simple.

Ask most counselors what one of the biggest factors is for stress and they will tell you unequivocally it is money.  It causes stress in marriages and causes divorces and it also causes rage, frustration and uncontrollable anger.  This is why cases of divorce and child abuse are more often sighted in poor or middle class families, rich families show less tendency towards there particular family problems.  The main reason is money.  Lack of money and inability to survive attacks at our core instincts and rips us apart.  It allows those more primitive reaction mechanisms to kick in and fight or flight to take over.

Personally, I worry about how the difficult economic times are going to wear on the structure of our families.  I am afraid to see how these problems will effect the nations children.

Well, we have already arrived at the time and place that we should have been saving for all these years, and here we sit with costs of everyday items rising daily and without a savings it seems near impossible to pay the bills much less save some money.  I am here to tell you it is completely possible to save money, but it does take work and a conscious mindset towards savings.

The first thing that you must commit to is that the money that you save on this and that must be put aside.  You can not take that money and spend it on extras, extras are out.  All the money that you save must be put away for a later need.

1.  Find a bank with interest and little or no fees, and don’t keep too many accounts open this can cost you more.  I have recently found that credit unions offer many more benefits from banks without losing a step.  My local credit union charges less in fees and also supplies me with more interest than any account I have seen of late.  This is savings + interest and is worth looking into.  Also there are banks that offer incentive programs with either cash back or one’s that will match your savings money or something.  Looking into your options is just one way to put a few extra dollars in your pocket.

2. If you often use credit cards, stop.  Consolidate your cards and pay them down or off.  I know this sounds like spending money, but it will save you a lot in costly interest and fees and leave you with less debt which is always good.  Shop around for the best rates you can find, these companies want your business and have the ability to offer you some really great deals.

3. Use coupons for everything.  There are coupons for oil changes, department store discounts, and restaurants and fast food.  Be sure to clip and save all coupons in an organized fashion.  These can really add up especially when they can be combined with sales and discount items.

4. Change all the bulbs in your home to energy saving bulbs.  Especially in the winter this savings will really add up.  Don’t pay retail for your bulbs, go online and find a deal.  You can get 13W bulbs for about $1.50 each so shop around.  This is a big savings over the $4.00 per bulb that they are going for at Walmart.

5. Find more energy efficient ways to heat and cool your home.  Wood is an excellent source of heat and if you have a fireplace on your house it can serve as a good source of supplemental heat.

6. Walk instead of driving.  If you are going somewhere local you can save on fuel costs and get some exercise.  As long as the weather is good take the kids or the dog.  Good bonding time as well.

7. Don’t over mow the yard.  With the cost of fuel being so high, allow the grass to be a little bit longer, and when you cut it, cut it really short to stretch out the time between mows.

You can find other money saving tips on the Consumer Federation of America website.  Just be sure to calculate out your savings and put that money aside.  You will be glad you did, it will add up.

For the past 30 years American’s on average saved about 7% of their salaries. In 2006, the average savings was at -1% and now in 2008 the average American saves about .5% of their annual income. There are several thoughts on the reasons for this trend.

Some people think that it is because the Boomers and Generation X just overspend, however looking more closely at the trend there was a huge increase in family income between 1947 and 1973, sometimes even doubling which left Boomers with a huge amount of disposable income. Now with the rising inflation rate and the lack of savings everyone needs to be concerned. This trend could hit hard.

In the years of the great depression, people knew how to make the most out of every dollar. To conserve and to save was the norm and the better you could do it, the better your family would make out. When these people hit the above time frame, they made a killing. Most went from having a very low income and stretching every dime to making a lot of money, and they kept many of their frugal ways while doing that. They continued to live modestly and put aside plenty of money for savings and investing and they have done well for themselves. Future generations have not learned the value of frugal living due to the fact that entered the world during a time of abundance and there has always been plenty of “stuff” for them, so they do not have the values of saving and conserving that their ancestors exhibited, and therefore as we enter this difficult economic time, no one is really prepared for it financially. They have just been living day to day, knowing that tomorrow will bring more money, but now with the financial slow down, it is truly time to take the examples from our forefathers and put ourselves into a save and conserve mode, and when and if the economy improves, we should still live modestly and continue to save for our futures.

This time of financial difficulty can prove to be a learning experience for us all. Live modestly, conserve where you can, and save every dime that you have available to you. Times are tough but the tough people will see this through.

Everyone is talking about the prices of everything going up and up.  Most people blame it on Bush, blame it on the war, Sadaam Husien, all the arab nations, etc.  Well, a recent report says that while we are all struggling trying to be able to afford to put gas in our tank and food in our stomaches, Exxon is making a whopping $1500.00 per second.  Why is this? The problem is that everyone is using the war as an excuse to get more money out of us and put it in their pockets.  The part that I really find perplexing is where is our government in all this? Why are they not stepping forward and putting a reasonable cap on the amounts that companies especially food and oil companies can make off of us during this period of time.  Why aren’t they standing up for us in our time of need? The answer in my opinion can only be one of conspiracy.  They must be getting something from the companies either monetarily or otherwise which is worth more to them then the American public.  This whole situation is a travesty and just another way to keep the public focus away from what they are doing.  After all, if we are all so busy trying to figure out how we are going to be able to pay for things, then we can’t be looking at what they are doing, right?

I mean isn’t it lovely that during this financial crunch our government is going to start reducing their employees to a four day work week, so they don’t have to pay so much in transportation and gas.  I think that is a wonderful idea, but if this is the solution then why not reduce all companies to a four day work week.  Why not reduce school to 4 days per week? After all, not only would this save everyone money in the long run, but it would also save on the amount of gas and oil used in this country and therefore would reduce the demand, especially when you think about all the people who have really long commutes.  And wouldn’t it be helpful to have an extra day off a week? Well, I wouldn’t get your sights set on that, unless of course you are one of the elite few who get paid by the federal government.

I recently saw an infomercial on TV about debt.  I thought it had some very interesting information about how credit card companies prey on the weak.  This interview was with someone who had written a book about resolving your debt, I am not sure that I really want to plug this book, hence I am deliberately omitting the name of it from my article.

The author had some interesting thoughts that I want to share with you.  He said that credit card companies specifically target people who are low income, students, uneducated, and minorities for the sole purpose of getting them in over their heads.  Counting on the fact that it is the people without money who will max out their credit cards the quickest.  Now you may ask yourself how this serves them.  Well, let’s say for instance that you charge $1000.00 on a card that’s limit is $1000.00.  You start out making the minimum payments, but the account keeps growing and with interest your account goes over the limit and that costs you an additional $45.00 per month, and then you send in a late payment and that costs you another $45.00 and before you know it your balance when it goes to collection is about $5000.00.  Figuring that you made $600.00 worth of payments while paying the minimum and you only borrowed $1000.00 in reality then you would owe about $400.00 to the credit card company, but now they are saying you owe $5000.00 now many people actually do at least begin paying towards that $5000.00 and many actually pay it off.  If you don’t however, the company is really only out about $400.00 and they get a tax break on that money from the government and then turn around and sell the $5000.00 debt to a collection agency.  This process can be seen by many as legalized loan sharking, in the fact that with interest and charges your balance can go from $400 to $5000 in almost the blink of an eye.

People who pay their credit cards every month, provide very little income to the credit card companies and therefore they want nothing more than to see you overspend and fall flat on your face.  The problem that most people with debt face, is even after they realize their mistakes, stop spending and try to pay down their bills, they are too late because the charges are rolling in and the debt keeps increasing, even though they are not spending at all.

This book claimed to have answers and debt solutions, however, after looking into it, this particular author has tried several different avenues of scamming the public through the years, and therefore, I would not recommend his book to anyone, however, I did think that the information about the credit card companies and how they make money on you even when you don’t pay was extremely informative and worth sharing.

Credit seems to be one of those things damned if you do, damned if you don’t. What are the right choices? Is it a good idea to have a credit card? Do I need one?

Credit unfortunately is a necessary demon. You must obtain credit and use it wisely. If you purchase something on your credit card it is a good idea to spread out the payment of that item over the next 3 months and then pay it off. Then do the same thing a few months later. If you can’t afford something than don’t buy it. This is the rule. In other words, credit cards are not something that you should use to pay for something that you really can’t afford. If you do this, you will either wind up paying so much in interest that the item will cost 3x what it actually did, or you may fall into a trap of not being able to pay your bills on time, which could put a serious dent in your credit. Credit cards unfortunately are necessary, as getting them will afford you the opportunity to build your credit score and establish good credit for a car loan or mortgage in the future. One of the biggest ways to have wealth and good financial standing is to have an excellent credit rating and to own homes and land. These are how anyone who is anybody has obtained their wealth and if you don’t believe me than find someone that you know who is financially over the top, and they will tell you credit and real estate are their 2 most important and valuable assets.

Go ahead and apply for a few different cards. Try getting one gas card, one store card, one American Express card, and a Master Card or a Visa. If you can do this without racking up debt and get the items paid off in about 2 or 3 months than you are set. With the exception of Amex the other cards won’t really improve your credit rating if you pay the balance in full every month, that is why we suggest American Express as one of your primary cards. It is a big name card, but needs to be paid monthly, so you can’t get too far in over your head. Use your credit wisely and it will serve you well, don’t and you will be forever sorry.

Granted the US economy is not doing well, but if you are suffering because you have accumulated too much debt and you have not had any mitigating circumstances such as illness or death, then it is time to set yourself straight and accept some personal responsibility. Unfortunately many people may not like to hear this, but most debt comes from overspending and reckless spending. Some people can’t help but have the newest and latest things on the market, even if they can’t really afford them. Many people are trying to keep up with the neighbors, the designer clothes, and the new cars, without having the income to support doing so.

If you have money, and you work, then you need to try to live within your means. Sometimes that isn’t fun, but it is very freeing to know that you have very little money going out every month, and it is extremely rewarding to watch your savings and 401K accounts grow. There is something so peaceful about not owing everybody and their cousin money, and about not having bills piling up while you are riding around in your new car. With the economy struggling you need to tighten your belt even further, which may mean putting off that vacation you have been saving for or reducing it to a smaller one. You must be smart, and at this stage of the game if you are wallowing in debt, you need to start up a plan to get it to a manageable amount quickly. That may mean cutting out the luxuries, saving money on your current bills, cutting coupons, or even taking on a second job. You need to begin getting those bills paid off and living within your means before things get even worse.

No one is really sure how long the prices on necessities are going to be rising for, but they do all agree that we are nowhere near the end yet. It is time to scrape every penny together and save it. Don’t spend without worry, that could be money that you will need to live on next year. Save at every opportunity and the payoff will be great.

The financial pains of our country are being felt in every household across the board. Money that used to be spent more frivolously is now being spent on the necessities such as food, clothing and gasoline. I have heard many people ask are we in a Recession? A Depression? Well, financial analysts are referring to this as a financial slow down, but is that just a way of saying that what we are going through now has yet to be experienced by those before us. Well, it doesn’t seem that having the correct term for it is going to help us any. We all seem to think that they would tell us that we were going through a depression, even if we were, they can’t say that. To say that would bring spending to a halt, and that would further slow down the economy, so to put it bluntly, they won’t tell us either way.

As I see it, it is a time to buckle down and save anyway that you can. Reducing the extra expenses is one way to cut back spending. Entertainment is an area that we as American’s spend a lot of money on. With the average adult movie ticket going for about $9 and the cost of a soda and popcorn reaching about $8 per person, isn’t it maybe time to sign on for one of these online DVD delivery services. That would not only save you gas, but they also don’t have any late fees and they pick up and deliver at your door, how’s that for convenience? Then you can buy your own soda and microwave popcorn and the whole family can go to the movies for about $8. That is an amazing savings.

Actually, this economic “slowing” as the experts like to call it, may be the best thing that has happened to us in a long time. It will cause most of us to find ways to cut back, have less waste, and to stop living completely above our means. Also, by less spending companies will have to drop prices on non-necessity items to stimulate buying, so in the long run we may actually get the deals. Also, with the rising prices of gasoline, we will all need to stay closer to home and spend more time with family and friends and less time out spending. This will be a good thing for the moral fiber of our country as well.

I guess there is so much negativity about the economy, that I just thought it would be nice to hear some of the positives about the rising prices.

Is it any wonder why so many people in this country are in debt? If you think about it we live in a country that is always in debt, but ironically their debt never seems to count against them in the same way our debt counts against us. Why is that? When we spend more money than we have or than we can afford, we run the risk of losing everything, yet somehow our government overspends and they just call it a “deficit“. Why are they allowed to function at a deficit, but we are not? If you think about it, where do they get the money from when they are spending more than they have? Do they borrow it or just print up more money?

I would really like to just be able to say I am functioning at a deficit this week and move on, but unfortunately no one would think that was acceptable if I said it. Aren’t they really setting a tone for American’s to spend more than they have? I assure you that in other countries the credit card debt is nowhere near what it is in this country, although the trend is showing an increase in debt internationally as well.

As American’s this is a definite time to learn from our mistakes and start taking down our debt. Let’s face it you can live without a new TV or a new car, but can you really live without food and shelter? We need to stop putting things on our credit cards that we really can’t afford and start paying cash. I really think that this is the wave of the future in this country, as I just can’t see how credit card companies are going to continue to lend us money if we continue to not make good on our debts.