My wife got this call the other day from one. It was for her med bills. She told them she could pay 20.00 a month. they told her that was not good and if she sent a check for that they would send it back. Now she told them she was no job and so on. Can they refuse money?
I learned the hard way working for a government agency of "be careful of what you wish for." Having applied for a promotion to basically a different job within the agency I incorrectly assumed I would be provided the necessary training to be successful in my new position.
The new position was highly complex and demanding but I had a high degree of motivation. To be as concise a possible, the training was non-existent and to make matters even worst we had new management who came in and started chopping heads with little or often times no justification. This left me in a very vulnerable position during this period and I feared for my job.
It was extremely stressful and in the end the extra responsibilities were not worth the extra money. This is an important life lesson I learned the hard way!
In the end the new management did not last because of their poor leadership and treatment of the employees across the board. I wonder after their experience and ultimate demotion did they regret their promotion????
Sad to say, there's no magical solution--that's why deciding whether to use savings to pay off debt is always problematic: If you can get the debt paid off, you're in much better shape. But, if you get caught without a job while you're still carrying debt, you're in a bind. (The reason I'm inclined toward putting savings toward debt anyway is that, frankly, you're in a bind anyway--it just doesn't start to pinch quite as quickly if you've got more cash on hand.)
Greed, Wall Street, or whatever couldn't explain why all of a sudden greed was given free rein and why the collapse affected everyone at once. Remember the past, when a bank or business that failed, by not making financially sound decisions, only hurt a very small localized group, and remember when it wasn't so easy to get a home loan or credit card unless you passed all the strict guidelines and there also were financially sound limits based on your income.
How does getting laid off in the middle of all of this effect your plan? I have little in true savings, even more in debt and was recently laid off. I'm still looking for work and am not sure what to do. Thanks!
I could not agree more with this article. My wife and I had this debate recently. We had nearly enough in the bank to completely eliminate our credit card debt but that would also wipe out our savings. We decided to pay off the majority of the debt and leave about $1750 in the bank for emergency situations. The amount left on our card will only take a few months now to pay off out of my salary compared to the years the previous debt would have taken. We considered completely paying off the debt, but decided we needed to maintain some cash reserves. It's comforting to hear that someone else agrees!
But the story should also include how the government is in on the fraud.
Most of the home loans today are FHA. In some really depressed areas, FHA has relaxed rules to where they were a couple of years ago - what caused the problem in the first place.
Buy a home in a place like Victorville, CA (who the heck would want to live there?). A new home will go for $200,000 (cheap by CA standards). Down payment required: 3.5%! But with state and fed incentives, you can actually get cash back when you close. Enough to buy those necessities like flat screen TV and granite counter tops.
On top of this, you can have sucky credit.
This is not being covered anywhere but will result in a whole new wave of foreclosures by Thanksgiving. 1 of every new FHA loan is going into foreclosure almost before the ink is dry on the contract.
Thank you to all the taxpayers. That is, the ones that are left.
Xin Lu--This post has outstanding advice. The point about up front money is right on target. I was in the mortgage business for nearly 20 years, and the only money we ever collected up front was for an appraisal fee for $300, which you'd expect to pay.
Anytime we asked for a power of attorney, it was for a reason specific to the borrower, and always prepared by the borrowers own attorney (legitimate lenders don't prepare POA forms!). If the scammer says his attorney will prepare if for you, red lights and loud bells should start flashing in your mind. Most likely they'll perform this "service" for you specifically to keep your attorney out of the loop.
Never meet with these people alone! Bring 2, 3, 4, 5 or more advisors, one of whom should be your attorney.
Thank you so much for this post. I'm moving at the end of the month and really need to completely revamp the way I handle money. I have been going the slow route for months. I'm seeing results but I think this major change will help me to completely and quickly change all those bad habits and start good ones.
To address the original question, When to use savings to pay off debt, my thoughts...
Make minimum payments on credit cards until you have three months saved up. $1000 is a good start, and yes it will cover the payroll glitches listed, but a medium sized car repair is close to $1000 these days, so you'll need more, otherwise you'll whip out the plastic yet again.
You'll have to sell off what ever you have to raise the money, plus make substantial cuts in living expenses--no way around that if you're serious. Prove that you can live beneath your means, that you can live without debt, then you're ready to start paying off the credit cards.
Debt is a lifestyle, an emotional "bond", and you have to break that link before you can get out.
I'm curious who managed to win this, mainly because I cross-linked this blog to a friend who was debating with me that barter was dead, and I was seeking to show even popular websites still may encourage bartering of minor goods and services.
Hopefully the IRS didn't shut the post down over !40. :)
Quote:
At the end of the drawing [July 2nd], we'll update this post to include (and link to) all of your helpful responses.
Thanks for this article. I have recently raised a kitten so this is a pertinent metaphor for me. I believe I can use your ideas to help me be more careful, especially if I think of what the kitten grew to be.
One respectful suggestion - have someone proof your writing. There were a lot of typos or grammatical errors. It can be distracting.
I was making 47,000 before I got laid off which was way more than $475 a week. So if you make minimum wage you get close to that for unemployment. The amount is calculated based on your wages that you earned within the last year. If you made less you get less. Imagine earning 80k a year and having to live on $475 a week!!!
@Phil and Timothy: Thanks for the advice on the student loan.
I think I will call my lender to find out exactly when I can pay the loan off at the current rate and how much it would change if I raised my monthly payment by a couple hundred dollars.
Your 1979 $15,080 would now be $47,000 as there has been 311% inflation since 1979!!!!! Thus comparing your $15,000 from 30 years ago to today makes absolutely no logical sense.
Right. A $1000 emergency fund is only enough to manage financial glitches, not a long-term loss of income. But life is full of financial glitches:
Your employer screws up the payroll and your paycheck is a couple days late.
Your landlord decides to rent your place to his brother-in-law and doesn't renew your lease.
Your car insurance company goes broke and the state gives you 30 days to buy a new policy. (This actually happened to a friend of mine.)
You make a mistake in your check register (adding when you should have subtracted), and discover that you need $150 today to avoid bouncing a check.
You get a better job, but payroll cycles mean that during the transition month you're short one week's pay.
In many cases cases you aren't actually out any money--your paycheck eventually arrives, you get your damage deposit back after a month or two--and you can restore your emergency fund. The point is that having some cash saves you money--no bounced check fees, no need for a cash advance or payday loan.
If you lose your income while carrying significant debt you've got different kind of emergency. If you're debt free, you can actually get your expenses--on an emergency basis--quite low indeed. (I've written a couple of posts about this, one on emergency belt-tightening and one on the first steps to take if you lose you job.)
With that in mind, I think it's worth aggressively paying off your debt. Yes, if you lose your job before your debt is paid off you're in trouble--but you're in trouble anyway if you lose your job while you're in debt, even if you've got a few hundred (or few thousand) more dollars in your emergency fund.
Since we are a state funded institution with a very inflexible budget, we will have to cut hours for all minimum wage employees to make up for the increase. All other businesses in our area are either laying off employees or cutting hours.
At least a million would go into the bank, not to be touched. I would run for public office just to bother the establishment. I'd travel the world many times over. Where is he oh we can't find him because with don't have %$###&^ U money? LOL:)
My wife got this call the other day from one. It was for her med bills. She told them she could pay 20.00 a month. they told her that was not good and if she sent a check for that they would send it back. Now she told them she was no job and so on. Can they refuse money?
I learned the hard way working for a government agency of "be careful of what you wish for." Having applied for a promotion to basically a different job within the agency I incorrectly assumed I would be provided the necessary training to be successful in my new position.
The new position was highly complex and demanding but I had a high degree of motivation. To be as concise a possible, the training was non-existent and to make matters even worst we had new management who came in and started chopping heads with little or often times no justification. This left me in a very vulnerable position during this period and I feared for my job.
It was extremely stressful and in the end the extra responsibilities were not worth the extra money. This is an important life lesson I learned the hard way!
In the end the new management did not last because of their poor leadership and treatment of the employees across the board. I wonder after their experience and ultimate demotion did they regret their promotion????
Sad to say, there's no magical solution--that's why deciding whether to use savings to pay off debt is always problematic: If you can get the debt paid off, you're in much better shape. But, if you get caught without a job while you're still carrying debt, you're in a bind. (The reason I'm inclined toward putting savings toward debt anyway is that, frankly, you're in a bind anyway--it just doesn't start to pinch quite as quickly if you've got more cash on hand.)
A few comments back, I linked to two posts I wrote on emergency belt tightening and dealing with losing a job. They've got the best advice I know to give.
Greed, Wall Street, or whatever couldn't explain why all of a sudden greed was given free rein and why the collapse affected everyone at once. Remember the past, when a bank or business that failed, by not making financially sound decisions, only hurt a very small localized group, and remember when it wasn't so easy to get a home loan or credit card unless you passed all the strict guidelines and there also were financially sound limits based on your income.
How does getting laid off in the middle of all of this effect your plan? I have little in true savings, even more in debt and was recently laid off. I'm still looking for work and am not sure what to do. Thanks!
this better work
The doctor who fixed the silicone lady is in California.
His website is trivalleyplasticsurgery.com
There's also video of the interview with him and her -
Tri Valley Plastic Surgery fixes self surgery gone wrong
@RabbitFunds
I could not agree more with this article. My wife and I had this debate recently. We had nearly enough in the bank to completely eliminate our credit card debt but that would also wipe out our savings. We decided to pay off the majority of the debt and leave about $1750 in the bank for emergency situations. The amount left on our card will only take a few months now to pay off out of my salary compared to the years the previous debt would have taken. We considered completely paying off the debt, but decided we needed to maintain some cash reserves. It's comforting to hear that someone else agrees!
I know others have asked, but how large an area can this 36-ounce mixture treat?
------------ should say 1 of every 8 new FHA loans
Timely too!
But the story should also include how the government is in on the fraud.
Most of the home loans today are FHA. In some really depressed areas, FHA has relaxed rules to where they were a couple of years ago - what caused the problem in the first place.
Buy a home in a place like Victorville, CA (who the heck would want to live there?). A new home will go for $200,000 (cheap by CA standards). Down payment required: 3.5%! But with state and fed incentives, you can actually get cash back when you close. Enough to buy those necessities like flat screen TV and granite counter tops.
On top of this, you can have sucky credit.
This is not being covered anywhere but will result in a whole new wave of foreclosures by Thanksgiving. 1 of every new FHA loan is going into foreclosure almost before the ink is dry on the contract.
Thank you to all the taxpayers. That is, the ones that are left.
this is a great collection of information - I am sharing a link to it from my blog!
Xin Lu--This post has outstanding advice. The point about up front money is right on target. I was in the mortgage business for nearly 20 years, and the only money we ever collected up front was for an appraisal fee for $300, which you'd expect to pay.
Anytime we asked for a power of attorney, it was for a reason specific to the borrower, and always prepared by the borrowers own attorney (legitimate lenders don't prepare POA forms!). If the scammer says his attorney will prepare if for you, red lights and loud bells should start flashing in your mind. Most likely they'll perform this "service" for you specifically to keep your attorney out of the loop.
Never meet with these people alone! Bring 2, 3, 4, 5 or more advisors, one of whom should be your attorney.
Thank you so much for this post. I'm moving at the end of the month and really need to completely revamp the way I handle money. I have been going the slow route for months. I'm seeing results but I think this major change will help me to completely and quickly change all those bad habits and start good ones.
To address the original question, When to use savings to pay off debt, my thoughts...
Make minimum payments on credit cards until you have three months saved up. $1000 is a good start, and yes it will cover the payroll glitches listed, but a medium sized car repair is close to $1000 these days, so you'll need more, otherwise you'll whip out the plastic yet again.
You'll have to sell off what ever you have to raise the money, plus make substantial cuts in living expenses--no way around that if you're serious. Prove that you can live beneath your means, that you can live without debt, then you're ready to start paying off the credit cards.
Debt is a lifestyle, an emotional "bond", and you have to break that link before you can get out.
I'm curious who managed to win this, mainly because I cross-linked this blog to a friend who was debating with me that barter was dead, and I was seeking to show even popular websites still may encourage bartering of minor goods and services.
Hopefully the IRS didn't shut the post down over !40. :)
Quote:
At the end of the drawing [July 2nd], we'll update this post to include (and link to) all of your helpful responses.
Thanks for this article. I have recently raised a kitten so this is a pertinent metaphor for me. I believe I can use your ideas to help me be more careful, especially if I think of what the kitten grew to be.
One respectful suggestion - have someone proof your writing. There were a lot of typos or grammatical errors. It can be distracting.
I was making 47,000 before I got laid off which was way more than $475 a week. So if you make minimum wage you get close to that for unemployment. The amount is calculated based on your wages that you earned within the last year. If you made less you get less. Imagine earning 80k a year and having to live on $475 a week!!!
@Phil and Timothy: Thanks for the advice on the student loan.
I think I will call my lender to find out exactly when I can pay the loan off at the current rate and how much it would change if I raised my monthly payment by a couple hundred dollars.
Your 1979 $15,080 would now be $47,000 as there has been 311% inflation since 1979!!!!! Thus comparing your $15,000 from 30 years ago to today makes absolutely no logical sense.
I wholeheartedly support maintaining a landline for all residential homes. Unfortunately, it is a losing battle in Florida and the legislature is not on the side of consumers. I see it as a safety issue. Apparently, the legislature and governor view it as an issue to be decided by the telecommunications industry. For another take on this, visit http://www.tboblogs.com/index.php/thinkoutloud/comments/no-dial-tone/ and http://www.telecompetitor.com/att-stresses-need-for-wireline-home-phone/
@ david in norcal:
Right. A $1000 emergency fund is only enough to manage financial glitches, not a long-term loss of income. But life is full of financial glitches:
In many cases cases you aren't actually out any money--your paycheck eventually arrives, you get your damage deposit back after a month or two--and you can restore your emergency fund. The point is that having some cash saves you money--no bounced check fees, no need for a cash advance or payday loan.
If you lose your income while carrying significant debt you've got different kind of emergency. If you're debt free, you can actually get your expenses--on an emergency basis--quite low indeed. (I've written a couple of posts about this, one on emergency belt-tightening and one on the first steps to take if you lose you job.)
With that in mind, I think it's worth aggressively paying off your debt. Yes, if you lose your job before your debt is paid off you're in trouble--but you're in trouble anyway if you lose your job while you're in debt, even if you've got a few hundred (or few thousand) more dollars in your emergency fund.
Since we are a state funded institution with a very inflexible budget, we will have to cut hours for all minimum wage employees to make up for the increase. All other businesses in our area are either laying off employees or cutting hours.
At least a million would go into the bank, not to be touched. I would run for public office just to bother the establishment. I'd travel the world many times over. Where is he oh we can't find him because with don't have %$###&^ U money? LOL:)
There's always a catch and I'm sure there is one here.