Have you ever had a personal loan from a friend or co-worker?
I sure have.
It’s a situation a lot of people have been in, and it has the potential to destroy relationships.
Recovering From Crisis: What You Should Avoid
In November of last year I was faced with moving into a hotel until I could pay off some debt and get approved for an apartment. It was a struggle and one of the lowest times of my life. I lived there for six months! While I was there, I was able to pay off some debt and finally save for the moving expenses to get myself into an apartment, which I’m now able to call home. Though things are certainly better than they were, I’ve found that recovering from crisis can be just as difficult as the crisis itself.
Recovering From Crisis
You would think that the time after crisis would be the best part but you’re getting used to living in life… without crisis. You’ll need to adjust different parts of your life to make sure that you are still on the right track, financially and mentally. If you don’t, you run the risk of landing yourself back in a mess. So, what should you avoid when recovering from crisis?
- Don’t spend too much! Seriously. It is so easy to go out and buy all new stuff for your new place, start going out with friends or even buying yourself new clothing after you’ve climbed out of a financial crisis. Don’t! Of course, allow yourself some leeway but be vigilant about saving money and insuring that your crisis never happens again.
- Don’t buy anything you can’t afford. For me, this was difficult. I was moving out of a hotel room into a 2-bedroom apartment and virtually had nothing. It would have been easy to take everything out on credit and rack up debt but instead I opted for used furniture and gifts, which saved a ton. If you’re coming out of a crisis the last thing you want to do is send yourself back into one by being irresponsible with your money.
- Don’t confuse needs and wants. Do you need that 65” television? Probably not. Confusing needs with wants can send you down a rather scary financial path. If you are constantly buying things that you don’t need but want, you’ll wind up either really needing something or in debt getting the things you need.
- Which reminds me, don’t take on new debt. If you’ve just recovered from some sort of financial crisis don’t come out of it and open a new credit card account. Take a while, pay off some debt and establish a new financial routine. After you’ve gotten comfortable with your finances, then apply for credit.
- But also, don’t forget to have fun. While recovering from crisis is usually very serious, you need to make time for yourself. Don’t forget to spend a little money doing things that you enjoy, like going out with friends or seeing a movie every once in a while.
Personally, recovering from crisis has been trying for me at times. However, being able to build yourself back up will be the best feeling in the world! So, don’t give up and remember that there is a lesson to be learned through everything.
Have you recovered from a crisis (financial or otherwise)? How did you handle it?
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How to “Spring Clean” Your Finances
It is mid-May, which means many of us are going through our closets, deep cleaning our homes, and getting rid of stuff we just don’t need anymore. It feels good to go through spring cleaning each year. These actions help you clear out things that are holding you back. You can do something similar with your money. Here are some ways to “spring clean” your finances.
7 Ways to Spring Clean Your Finances
Spring cleaning your finances, in some ways, looks just like cleaning out your home. You have to literally get rid of things in your budget, clean out closets and sell things, and reassess what you are doing in terms of managing your money. Here are seven things you should do this spring to evaluate your finances.
- Sweep out bad money habits. We all have bad habits that are hanging out in the corners like dust bunnies. Examine your spending habits and determine what is detrimental to your financial goals. For example, a lot of people have a bad habit of eating out when there is food at home. Identify what is holding you back and get rid of it.
- Catch up on any late payments and get ahead if you can. The spring is a great time to hold a yard sale, raise some extra money, and pay off debt or pay bills you need to get current. Get caught up on anything you’ve fallen behind on and try to get ahead where you can. This will save you money in the long run.
- Toss out any debt you may have. Staying in debt is almost like holding onto an old sweater that you never wear. It is holding you back and just taking up space where you could fit something better. Get rid of it as soon as you possibly can.
- Dust off your budget. Take a hard look at your budget and decide if it is truly working for you. Many people don’t think about creating space in their budget for things that truly matter to them. For instance, if travel is something that is important to you, be sure you make room in your budget to do it.
- Create a simple money system to track key numbers. Most people just aren’t paying enough attention to their money. Usually, this is because they make it difficult for themselves to do so. Find a way to tidy up your finances and make it easier to track things like what you are spending, how much you are saving, and debt payments.
- Plan and budget for irregular expenses through the end of the year. The end of the year brings a lot of irregular spending for many families, including holiday spending, travel, and back-to-school costs. Make a plan for how you’ll deal with these expenses.
- Clear out your paperwork. Old, unnecessary clutter, like paperwork, can be a hindrance to your finances. Instead of keeping everything in an old-fashioned filing cabinet, consider how you can start keeping track of things digitally and get rid of that stack of papers. It will help you keep closer track of your finances too.
How Often Should You Review Your Attitude Towards Money?
Annual reviews or taking a moment to spring clean your finances each year is always a good idea. However, the frequency in which you review your attitude towards money may change with time. You may find that a quarterly review is more necessary for you, especially if you have aggressive debt payoff goals. Others may find it easier to do a quick check-in every month. In the end, it is important to find exactly what works for you in terms of reviewing and organizing your money.
Readers, do you have any annual “to-do” items for spring cleaning your finances?
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How to Pay for College Without Going into Debt
Image Credit: PxHere
With the cost of education skyrocketing ever upward, it’s no surprise that prospective students are looking for any and all alternatives to student loans. Who could blame them? Is any degree worth putting yourself in five or more figures of debt at the start of your career?
I certainly don’t think so. The good news is that there are alternatives! They aren’t always easy, but they beat 20 years of student loan payments every time.
Choosing the Right School
Before you take out tens of thousands of dollars in student loans to go to that one school because it’s more prestigious than the rest, know this: Employers don’t care where your degree comes from as long as it’s accredited.
All that extra debt won’t give you a leg up on the competition for employment either. There’s nothing at all wrong starting school at an affordable two-year college and transferring to a university later. The degree you end up with is the same as if you’d spent all four years there.
Work!
Get a job, even if you’re taking a full course load. You’ve got time to work a little. Besides helping financially, previous work experience of any kind looks good on a recent graduate’s resume for multiple reasons.
It shows that you’ve got the drive. And it shows that you’re already familiar with the expectations and social intricacies that come with any job. Sure, you get a little less sleep and a little more stress, but the payoff is worth all of it.
Scholarships and Grants
There are tons and tons of scholarships and grants out there for just about every career path you could think of. You can’t get them, though, if you don’t apply for them! This is where good grades pay off.
Several states will pay for your first four years completely as long as you go to college in the state and stay above the minimum GPA they set. You’d have to be crazy not to take advantage of that! Many employers are starting to offer grants to their workers as well. It never hurts to ask!
Conclusion
The bottom line here is that there are ways around the crippling debt of student loans when it comes to pursuing higher education. They may not always be easy, but nothing worth having in life is. There is no replacement for the feeling of accomplishment you get when you do something complicated on your own.
Student loans should be a last resort instead of the norm they’ve become. Two-thirds of people who graduate with student loan debt claim that it wasn’t worth it. Don’t be them. You shouldn’t have to be stuck paying for education well into middle age. You should be someone who owns one of those beachfront Miami homes before thirty years old because you chose the more difficult path early on. You may not get everything just right, but in my experience, the path of action leaves the fewest regrets.
Suicide Prevention Awareness Month: Remember, Your Debt Doesn’t Define You
Did you know nearly 30,000 Americans commit suicide every year? Although there are many reasons someone may choose to take their own life, in many cases, finances play a huge role in suicide. More specifically, individuals in debt are more likely to have suicidal thoughts. So, as a part of the 3rd Annual Suicide Prevention Awareness Month blog tour, I wanted to share some more of my personal debt story.
September is Suicide Prevention Awareness Month
According to research performed by the Money and Mental Health Policy Institute, there is a clear tie between finance and suicide. Individuals who’ve experienced a major financial crisis within the last six months are eight times as likely to have suicidal thoughts than those who aren’t holding any financial stress. The study went on to say that people with multiple debts, or individuals who are unemployed, are especially at risk.
Drowning in Debt
As you all know, I’m currently holding about $65,000 in debt with my other half. Although we already steadily work on paying things off, it gets heavy. Every time money comes in, it is going out on yet another debt repayment or bill.
If you’ve been following the blog for a while, you know that $65,000 in debt is still an improvement upon where I once was. At one point, I was homeless (living in a motel). I needed desperately to pay off a $1,600 debt in order to be able to have a home again. During my six months of being homeless, I hit some of my lowest of lows and, yes, even contemplated taking my own life.
I felt like life was a constant struggle with no relief. On top of feeling like I had no way out, I also felt as though my debt was burdening others. My other half just relocated nearly five hours to start a life together and I felt as though I was holding everything back – for him, for both of us. Not to mention, I was so broke and so tied down with finances that I couldn’t see many of my friends. I didn’t have a vehicle. I didn’t have money to go out. I felt alone.
Wake Up Call
We got a windfall that allowed us to pay off the $1,600 initial debt that was holding us back and got moved into an apartment within two months. After I got that paid off, I realized that things could (and would) improve as long as I remembered I wasn’t alone. More importantly, I remembered my life was more important than the debt I carried.
Debt is exhausting – emotionally and physically at times – but it is something most people have faced in their lives. If you feel like you are alone in this, you’re not. Millions of people are in debt, but it does not have to be a death sentence. I am living proof!
Startling Suicide Statistics
Because this month is about raising suicide prevention awareness, I wanted to leave you all with a few statistics and resources.
Who is at Risk?
- Suicide rates are highest in the spring.
- For individuals between the ages of 24 and 35 suicide is the second leading cause of death.
- Women are more prone to having suicidal thoughts, however, men make up 79% of all suicide deaths.
However, everyone is at risk for suicide if you experience depression or are feeling overwhelmed in life.
Suicide Doesn’t Fix Anything
I have lost family members and friends to suicide and I personally know the pain it can bring. Whether you’re up to your eyeballs in debt or feel like you are a burden financially, suicide is never the answer. In many cases, it leaves your family to pay for unexpected funeral costs. Not to mention, your family will experience an unbelievable emotional burden that will never be lifted.
Losing someone to suicide is absolutely heartbreaking. Speaking out about the link between money and mental illness, like depression, can help reduce the stigma and prevent further suicides.
This blog post is part of the 3rd Annual Suicide Prevention Awareness Month blog tour. If you are feeling suicidal, please call the National Suicide Prevention Lifeline at 1-800-273-8255 or text HOME to 741741.
Read More
- How Marian and Dave Paid Off $120,000 of Debt in 3 Years!
- How a Side Hustle Helped Melanie Lockert Break Up with Debt
- How Alicia and Ralston Used Faith to Cut Their Debt By $225K in Five Years
- Miriam’s Journey Out of Debt and Into the Life of Her Dreams
- How We Paid Off $65K of Debt in 11 Months on a Single, Middle Class Income
Dontae and Laura’s Debt Free Story
Today I have another debt free story to share with you!
One of my favorite ways to research for the blog is to interview people who have paid off their debt or are on the path to become debt free.
It’s no wonder that these stories are some of my most popular posts. [Read more…]
How to Avoid Catastrophic Health Care Costs for Your Parents
According to the Kaiser Family Foundation (KFF), “About a quarter (26 percent) of U.S. adults ages 18-64 say they or someone in their household had problems paying or an inability to pay medical bills in the past 12 months. Now think about these same statistics as people age. With age, health care needs and costs tend to increase. This potentially means more personal indebtedness for those with health care issues.
This Core Habit Will Lead You to Financial Freedom
The purpose of this blog is to take you through the exact process that my husband and I have used to pay off more than $65,000 of debt in 11 months on a single middle class income.
To get you started on your journey, we began the process with making a promise and getting your spouse on board. Since then, you have calculated your net worth, reviewed the checklist to a strong financial plan, and written your goals.
Now you must develop a specific core habit to ensure your success.
Consolidation Loans Are Tempting – Here’s Why You Shouldn’t Get One
My debt situation and money situation hasn’t necessarily improved since I last updated you here. Some major changes have been:
- Open discussion about selling one of the cars.
- Finding other items in the house to sell.
- A solid plan to find my other half a job through temp agencies in the area.
- When we have $1,000 saved, we will begin to snowball every penny towards our debt until we are relieved of some of this pressure.
- After we are a bit more comfortable, we will increase our savings to cover a six-month emergency. That way, if either of us is out of work for an extended period again, we are prepared.
During the process of settling all this, one thing came up over and over: should we consider getting a consolidation loan. Of course, it would help us pay a lot of our “petty debt” in one fail swoop, but isn’t taking on new debt to pay off debt just continuing the cycle?
If you’re considering pulling out a debt consolidation loan, hear me out. They aren’t all bad all the time. They’ve helped some people out tremendously, but here are three reasons we opted out.
Say No To Consolidation Loans
There are a plethora of reasons to “just say no” to consolidation loans. You may be paying a higher interest rate for a longer period of time (even if the payment is lower). There is also no guarantee your interest rate will remain the same in many cases. Below are the three main reasons we decided not to consolidate.
1. Our Credit Scores Aren’t That Great
We are back in that spot where our credit scores aren’t that great. We’ve missed some credit card payments that have hit our credit. Luckily, we’re planning on building a life where we won’t need a credit score because we won’t be looking to take out any debts. Also, our payoff plan will slowly increase our scores over time.
2. Most Consolidation Loans Want Collateral
Many consolidation loans want to know that if you don’t pay there’s something they can hold as collateral. For me, they wanted my car – which is worth far more than I have to consolidate. That alone was enough for me to not want to move forward.
3. What Are You Learning From Taking Out a Loan?
As I chatted about in our debt update, we’ve become fans of Dave Ramsey. In general, he doesn’t “believe” in debt consolidation because it tricks people into thinking they are eliminating debt. When, in fact, you will be in debt longer by consolidating. It may impact your life in a positive way immediately but if you really want that financial freedom, we all need to learn how to be more patient and do things the “long” way. Which, in this case, will actually take less time.
Everyone’s Finances Are Different
You may be reading this saying, “But Amanda, a consolidation loan helped me and my family get back on the right track.” That is great! I’m happy for you. However, for my situation and current debt, a consolidation loan would simply elongate the amount of time I’ll be in debt. Not to mention, my other half and I feel we need this time of “discomfort” to really enjoy, appreciate, and maintain our financial freedom in the future.
After taking a look at our finances, many of our smaller debts, we could pay off in a single swoop if we made it our focus. A few of them will be paid off in the next few weeks (yay).
Readers, I’d love to hear back from you on this topic! Have you consolidated debt? Did it help or hinder your financial situation?
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Our Monthly Debt Freedom Progress Report — March
Each month I bring you a recap of the previous month’s progress on paying off our debt. This serves two purposes — to keep my husband Mike and me accountable to our financial goals and to give you a look behind the scenes of our strategy for paying off our debt.
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