I think they're targeting superstititious people in rural communities. People in need who would be tormented if they didn't pay it back. And this is Latvia so they would probably be harrassed and scared into paying it back as well.
In a financial emergency, if you only have $1000 in your emergency fund, then you pay the rent, food and basics and let the credit payments (unless you will lose you car) slide.
The idea that if you are out of work and down to $1000 and you will keep paying on your credit cards is the stupidest thing I have ever heard. You could be homeless at the beginning of the following month! For Pete's sake.
Establish a month's living expenses as emergency fun and then split debt repayment equally between your emergency fund and unsecured debt repayment. If you can pull that off, you will build your reserve and also pay down your debt prudently rather than foolishly.
I began saving around the age of 22 (I'm almost 32 now). Back then I was a struggling waitress who then got a job at a bank & learned first hand how important saving was & how the younger you start, the better. My trick is to always pay myself first. I do it automatically & diversify a little - TSP (I'm in the military now), savings bonds, Roth IRA, Money Market Funds, CDs, as well as the traditional savings account for emergencies.
I always stress to the younger guys at work how important it is to save & save early. A lot of these folks are 18 or 19 years old & its their first time away from home. With a steady paycheck & no one looking over their shoulder to see how they spend it, you'll see them at the local electronics store looking for that flat screen TV or latest gaming system. Once they see how that money could grow for them they get excited about saving & then spread the word to their peers.
Also, even though I can now afford to pay full price for what I want, I LOVE clipping coupons & finding deals. I try not to pay full price for anything & love to haggle. Its funny, in the US, some people feel it would offend the seller, but overseas, haggling is expected. Try it folks, it takes practice, but you'll feel great when your wallet is not as light as it would've been if you paid full price.
On a side note, I apologize to all you English majors for my poor grammatical errors - I'm sure there are a few... I was an engineering major.
Thank you, Phillip, for outlining this so beautifully. Some of us just need a little more concrete guideline than a lot of financial blogs offer, and this is perfect. Clear goals and steps to take, but the flexibility to fine-tune it to our needs.
I follow Dave Ramsey's debt snowball plan and he says to start paying off all debts (other than home mortgage) once you have $1000 in savings. Make minimum payments on all debts, adding any extra money to the smallest debt.
I had been paying $180 a month on student loans and they were scheduled to be paid off in October 2012. Starting this past January, I began paying $900 a month and they should be paid off by the end of 2009.
Once they're done, I'll add the $900 to my existing $261 car payment and it will be paid off sometime in 2010.
There's a special issue with students loans: that they can't be discharged in bankruptcy. So, if your financial life comes completely apart, even a modest-sized student loan can make it almost impossible to start over.
On the other hand, if the rate is low and your job is secure and you're comfortably covering the payments--then student loans can work just like they're supposed to: You just act is if the payment were an expense and ignore the balance.
That's what I did with my student loan (although it was very small compared with student loans these days)--I made $30-a-month payments for about 10 years to pay it off. But the interest rate was quite modest--higher than what I could earn on savings, but lower than what I could probably earn on investments.
Basically, if the loan is at a low fixed rate, you can at least consider just paying it off gradually--especially if you have savings or investment opportunities for earning a good return. Right now, though, savings rates are so low I can't imagine that your student loan isn't costing quite a bit more. That, combined with the no-discharge-in-bankruptcy issue, makes me inclined to treat them like other debt and just get them paid off as quickly as possible. Maybe sandwitch them in between steps 3 and 4 above: Get a full emergency fund first, but then pay off the student loan before going on to do other investing. (In the 1990s lots of people were figuring that they could make 10% or 11% on their stock market investments, so it was silly to pay off a student loan with a rate lower than that. Recent experience, though, has shown that expecting an investment return over 10% doesn't mean that you'll get it.)
What are your thoughts on paying off student loans?
I still owe about $30k and only pay less than $200 a month. At this rate, I honestly have no clue when I'll be able to pay if off. Sometimes I just feel like pulling the trigger and paying off the whole damn thing...
How much should I have in savings before even contemplating such an action?
My workforce1 unemployment office always has us sign in with the last 4 numbers of the social too. Awful. But It's the gummint, whatcha gonna do....I'm more afraid of giving it to employment agencies who then don't get me jobs - but have my number.
Yes, exactly. Since "one month's expenses" is the key factor in the size of your emergency fund (it's what you multiply by 3 or 6), reducing your monthy expenses--such as by paying off a loan so that you have one fewer monthly minimum payments to make--can substantially reduce the size of emergency fund you need.
Many times it "seems" like it would be smart to use that savings to wipe out the debt, however, if you did and then an emergency came up you are right back to where you started...using credit cards.
If you currently have zero in a cash reserve then shoot for that $1,000, otherwise I think 1 months worth is comfortable until you get that debt paid off. I agree with your steps above. Getting that debt paid off will also help reduce the amount needed for an adequate cash reserve as well.
the whole discrepancies thing, the citation has my race as W. im pretty sure thats white/caucasian and im hispanic (and you can tell). can i get it dropped for that? and how would i do that?
I'd guess that at LEAST 95% of people would take the money and that's my safe guess. The number is probably more like 99%. Who cares where the money came from?
I'd sell my soul for $1,000 no problem. If the person buying it really believes there's some mystical "stuff" that's being transferred to him when I sign on the dotted line, then he can have it. Heck, I'd sell it for $5.
You have to fill out an I-9 to show your legal work status. YOu don't have to be a citizen, but you need the right to work. You could have a green card or work authorization card. These are legal documents. Legitimate businesses that actually obey minimum wage laws would obey immigration laws, too.
You absolutely must present ID establishing your citizenship prior to being hired to work in this country. You are either self-employed, unemployed or have a bad memory. Every job I've ever held has required this type of ID.
Well I've been trying to think up something cool and practical arty to make with my growing collection of wine corks. Someone made a boot pad to place dirty boots on top of themas they're easy to hose or wash. Thanks for more ideas here.
it is an inescapable fact that, in order for you to be in good-to-great shape for the rest of your life, you have to exerecise for at least 30 minutes virtually every day for the rest of your life. once you've accepted that, it's just a matter of time. if you don't accept that, then you are doomed.
That is absolutely GENIUS- we buy mouthwash at Costco and the bottle is too big to fit on the tiny counter, if we had a pedestal sink it would be even harder. In a decanter, it almost deserves its own shelf. Thanks so much for sharing this and- I'm with you on the tablecloth thing:)
Am sure many of us wouldn't deny with your reasoning including myself. Was going to purchase exercise equipment but started going to the gym. In a way going to the local gym did help out, the other people around you give motivation- am sure they get it from you too.
Next time try that, but stay motivated to go every other day.
In regards to people not handling frugality well, it simply comes down to them feeling guilty about their own habits.
Deep down inside, we all know what works in life and what doesn't. Spending money wisely, saving, living within our means and budgeting are all activities that help our lives be less stressful, more empowered and independent. Eating fresh, non-chemically or genetically altered food that is heavy on the vegetable, fruit and fiber side and exercising regularly all lead to bodies that work better, enabling us to feel energetic, happy and healthy. We all know "what's good for us", right?
When we make the choice to do what is good for us, it takes integrity (aligning our actions with our words) and discipline. It's not easy, but the rewards make it worthwhile. We we make the choice not to do what's good for us, causes tension within ourselves and calls our integrity into question. We know what works and in spite of this knowledge, we act in such a way that doesn't work.
When we're in that situation and come face to face with someone who actually is doing "what's good for themselves," it brings to light our lack of integrity with that behavior. Rather than admit being "wrong" and potentially making ourselves look foolish to other people, we tend to become self-righteous and take the role of the victim. This is, of course, ridiculous unless they actually are trying to convert you or blatantly criticize you.
I had to confront this myself with my vegetarian friends. Some actually were trying to guilt me out of eating meat, but most were just making that choice for a wide variety of reasons, but they were aligning their actions with their beliefs. Regardless of the camp, I felt threatened by all of them. I realized that I actually did believe a non-meat diet was more healthful and yet I ate meat anyway. My issue had suddenly become theirs! Once I realized this, I took a look at my life and values and made the choice to continue to eat meat, but on a much smaller scale. Once I had aligned my values to my actions, the feeling of being attacked or confronted vanished.
Don't let other people's guilt or lifestyle choices affect what you know to be true and good for you.
I think they're targeting superstititious people in rural communities. People in need who would be tormented if they didn't pay it back. And this is Latvia so they would probably be harrassed and scared into paying it back as well.
Cory,
If you would be interested in being a part of a class action against the "credit card companies" (banks), call me at 800-852-6299 ext 7155.
Kim
In a financial emergency, if you only have $1000 in your emergency fund, then you pay the rent, food and basics and let the credit payments (unless you will lose you car) slide.
The idea that if you are out of work and down to $1000 and you will keep paying on your credit cards is the stupidest thing I have ever heard. You could be homeless at the beginning of the following month! For Pete's sake.
Establish a month's living expenses as emergency fun and then split debt repayment equally between your emergency fund and unsecured debt repayment. If you can pull that off, you will build your reserve and also pay down your debt prudently rather than foolishly.
I began saving around the age of 22 (I'm almost 32 now). Back then I was a struggling waitress who then got a job at a bank & learned first hand how important saving was & how the younger you start, the better. My trick is to always pay myself first. I do it automatically & diversify a little - TSP (I'm in the military now), savings bonds, Roth IRA, Money Market Funds, CDs, as well as the traditional savings account for emergencies.
I always stress to the younger guys at work how important it is to save & save early. A lot of these folks are 18 or 19 years old & its their first time away from home. With a steady paycheck & no one looking over their shoulder to see how they spend it, you'll see them at the local electronics store looking for that flat screen TV or latest gaming system. Once they see how that money could grow for them they get excited about saving & then spread the word to their peers.
Also, even though I can now afford to pay full price for what I want, I LOVE clipping coupons & finding deals. I try not to pay full price for anything & love to haggle. Its funny, in the US, some people feel it would offend the seller, but overseas, haggling is expected. Try it folks, it takes practice, but you'll feel great when your wallet is not as light as it would've been if you paid full price.
On a side note, I apologize to all you English majors for my poor grammatical errors - I'm sure there are a few... I was an engineering major.
Thank you, Phillip, for outlining this so beautifully. Some of us just need a little more concrete guideline than a lot of financial blogs offer, and this is perfect. Clear goals and steps to take, but the flexibility to fine-tune it to our needs.
Money for nothing = Awesome!
@Joe
I follow Dave Ramsey's debt snowball plan and he says to start paying off all debts (other than home mortgage) once you have $1000 in savings. Make minimum payments on all debts, adding any extra money to the smallest debt.
I had been paying $180 a month on student loans and they were scheduled to be paid off in October 2012. Starting this past January, I began paying $900 a month and they should be paid off by the end of 2009.
Once they're done, I'll add the $900 to my existing $261 car payment and it will be paid off sometime in 2010.
Whatever you decide to do, best of luck!
There's a special issue with students loans: that they can't be discharged in bankruptcy. So, if your financial life comes completely apart, even a modest-sized student loan can make it almost impossible to start over.
On the other hand, if the rate is low and your job is secure and you're comfortably covering the payments--then student loans can work just like they're supposed to: You just act is if the payment were an expense and ignore the balance.
That's what I did with my student loan (although it was very small compared with student loans these days)--I made $30-a-month payments for about 10 years to pay it off. But the interest rate was quite modest--higher than what I could earn on savings, but lower than what I could probably earn on investments.
Basically, if the loan is at a low fixed rate, you can at least consider just paying it off gradually--especially if you have savings or investment opportunities for earning a good return. Right now, though, savings rates are so low I can't imagine that your student loan isn't costing quite a bit more. That, combined with the no-discharge-in-bankruptcy issue, makes me inclined to treat them like other debt and just get them paid off as quickly as possible. Maybe sandwitch them in between steps 3 and 4 above: Get a full emergency fund first, but then pay off the student loan before going on to do other investing. (In the 1990s lots of people were figuring that they could make 10% or 11% on their stock market investments, so it was silly to pay off a student loan with a rate lower than that. Recent experience, though, has shown that expecting an investment return over 10% doesn't mean that you'll get it.)
The best exercise is ...
... the one you'll actually do!
Don't just think "stationary bike". There are many kinds, many quality levels.
Don't overlook a rowing machine (my personal favorite).
In the end, find an exercise YOU LIKE and SPEND THE MONEY to get high-quality equipment. For example, $1,000 on a good rowing machine.
What are your thoughts on paying off student loans?
I still owe about $30k and only pay less than $200 a month. At this rate, I honestly have no clue when I'll be able to pay if off. Sometimes I just feel like pulling the trigger and paying off the whole damn thing...
How much should I have in savings before even contemplating such an action?
My workforce1 unemployment office always has us sign in with the last 4 numbers of the social too. Awful. But It's the gummint, whatcha gonna do....I'm more afraid of giving it to employment agencies who then don't get me jobs - but have my number.
@ Redeeming Riiches:
Yes, exactly. Since "one month's expenses" is the key factor in the size of your emergency fund (it's what you multiply by 3 or 6), reducing your monthy expenses--such as by paying off a loan so that you have one fewer monthly minimum payments to make--can substantially reduce the size of emergency fund you need.
Many times it "seems" like it would be smart to use that savings to wipe out the debt, however, if you did and then an emergency came up you are right back to where you started...using credit cards.
If you currently have zero in a cash reserve then shoot for that $1,000, otherwise I think 1 months worth is comfortable until you get that debt paid off. I agree with your steps above. Getting that debt paid off will also help reduce the amount needed for an adequate cash reserve as well.
the whole discrepancies thing, the citation has my race as W. im pretty sure thats white/caucasian and im hispanic (and you can tell). can i get it dropped for that? and how would i do that?
I'd guess that at LEAST 95% of people would take the money and that's my safe guess. The number is probably more like 99%. Who cares where the money came from?
I'd sell my soul for $1,000 no problem. If the person buying it really believes there's some mystical "stuff" that's being transferred to him when I sign on the dotted line, then he can have it. Heck, I'd sell it for $5.
Several drunken guys and a goat...Sounds like it could get ugly at times.
You have to fill out an I-9 to show your legal work status. YOu don't have to be a citizen, but you need the right to work. You could have a green card or work authorization card. These are legal documents. Legitimate businesses that actually obey minimum wage laws would obey immigration laws, too.
You absolutely must present ID establishing your citizenship prior to being hired to work in this country. You are either self-employed, unemployed or have a bad memory. Every job I've ever held has required this type of ID.
Well I've been trying to think up something cool and practical arty to make with my growing collection of wine corks. Someone made a boot pad to place dirty boots on top of themas they're easy to hose or wash. Thanks for more ideas here.
it is an inescapable fact that, in order for you to be in good-to-great shape for the rest of your life, you have to exerecise for at least 30 minutes virtually every day for the rest of your life. once you've accepted that, it's just a matter of time. if you don't accept that, then you are doomed.
Buy a bike! Find one at a garage sale if you have to. It's FUN exercise!
That is absolutely GENIUS- we buy mouthwash at Costco and the bottle is too big to fit on the tiny counter, if we had a pedestal sink it would be even harder. In a decanter, it almost deserves its own shelf. Thanks so much for sharing this and- I'm with you on the tablecloth thing:)
Am sure many of us wouldn't deny with your reasoning including myself. Was going to purchase exercise equipment but started going to the gym. In a way going to the local gym did help out, the other people around you give motivation- am sure they get it from you too.
Next time try that, but stay motivated to go every other day.
BTW, do you have a twitter profile?
In regards to people not handling frugality well, it simply comes down to them feeling guilty about their own habits.
Deep down inside, we all know what works in life and what doesn't. Spending money wisely, saving, living within our means and budgeting are all activities that help our lives be less stressful, more empowered and independent. Eating fresh, non-chemically or genetically altered food that is heavy on the vegetable, fruit and fiber side and exercising regularly all lead to bodies that work better, enabling us to feel energetic, happy and healthy. We all know "what's good for us", right?
When we make the choice to do what is good for us, it takes integrity (aligning our actions with our words) and discipline. It's not easy, but the rewards make it worthwhile. We we make the choice not to do what's good for us, causes tension within ourselves and calls our integrity into question. We know what works and in spite of this knowledge, we act in such a way that doesn't work.
When we're in that situation and come face to face with someone who actually is doing "what's good for themselves," it brings to light our lack of integrity with that behavior. Rather than admit being "wrong" and potentially making ourselves look foolish to other people, we tend to become self-righteous and take the role of the victim. This is, of course, ridiculous unless they actually are trying to convert you or blatantly criticize you.
I had to confront this myself with my vegetarian friends. Some actually were trying to guilt me out of eating meat, but most were just making that choice for a wide variety of reasons, but they were aligning their actions with their beliefs. Regardless of the camp, I felt threatened by all of them. I realized that I actually did believe a non-meat diet was more healthful and yet I ate meat anyway. My issue had suddenly become theirs! Once I realized this, I took a look at my life and values and made the choice to continue to eat meat, but on a much smaller scale. Once I had aligned my values to my actions, the feeling of being attacked or confronted vanished.
Don't let other people's guilt or lifestyle choices affect what you know to be true and good for you.