The formula that was used to determine the housing cost to income ratio (2.5 times your income)-Is that gross or net? What is a good formula to go by when determining the housing costs that you can afford?
A Dave Ramsey favorite - Don't use credit cards. Sorry - but I like my credit card. It's easy to track my spending, and I get a little bit of cash back. As long as you don't carry a balance - credit cards rock!
Does all of what is suggested going to help everyone the answer would be NO, do parts help some the answer is YES.
Saver credits do help the ones of us that live within our means and do save rainy day fund.
I was told by a co worker how bad the economy is how he lives from check to check and how he is blamming the tragic economy on George Bush.
I asked him if he been saving now under the current administration his reply was NO. How much did he save under George Bush he said NONE.
I then asked him how much did you save under Bill Clinton he said none.
I told him could I ask you one more question do you own or rent he said he owns his home he bought it and got the home credit 8000.00. I told him I noticed you have a newer vehicle he said he bought when cash for clunker program. You also said your new plasma TV was bought last Christmas on you Credit Card.
Im sorry George Bush had you buy all this stuff and make payments too Im glad you didnt buy this during the current administration you would be blamming him.
I get tired of hearing about how I should sell my dvd collection/massive wardrobe/luxury car/etc and use the proceeds to pay off my debt. What about those of us who never overspent on frivolous material things in the first place? I never splurged on big vacations or lots of clothes or daily lattes or whatever it is that so many "get out of debt!" bloggers seem to have done to get themselves in (and then out, of course) a heap of consumer debt. What I did do was spend money on my "priceless" education that hasn't gotten me the kind of job (yet) that makes the student loans worth it.
I'm sick of hearing about taking an extra job to get extra income. My husband has been unemployed and underemployed on and off for the last 2 years. He's got a strong work ethic, and he applies to virtually everything - from the skilled labor he's experienced with to the meanest of menial jobs - but there just isn't enough work to go around to even cover a first job!
- Latte factor. Enough said. I don't drink coffee and often make $10 stretch for a week. That's not my problem.
- Pay off your credit cards. I know. I'm working on it. How do I deal with everything else going on in the meantime?
- Move to a cheaper home. I did everything right (20% down, can afford my mortgage, etc) and am still upside down now, so unless you are telling me to walk on that (which is valid advice and something I'm considering) this isn't' an option right now. My savings went into buying it 5 years ago with a solid down payment (3 years before the crash when it wasn't on anyone's radar) and isn't there to get me out from underwater now.
I hate the advice to earn more by getting a second (or third, etc.) job. It's hard enough finding a first job out there right now; I don't know why people think its just a simple cake walk to find another job if you've already got one.
I'm sick of hearing how easy it is to make money on the side, in addition to your day job. After I spend the 65 hours a week at my day job, I'd like a little time to spend with my wife and daughter. Between the pittance I earn from surveys and and the unprofitable hours of selling I'd have to do for anything more project-oriented, with higher returns, finding a truly profitable side income is a no-go for me. It would be great to get down to 40 hours a week, but that would likely trigger poor evaluations, a layoff or my job being outsourced. I'd like to avoid all three, so I'll stick to my one job.
I hate the advice that if I just tracked where I spend my money and made "easy" cuts that I don't even miss, I would save $500, $200, whatever amount a month. I do track every penny we spend and if we spend money on something non-essential then it's because we've thought about it and have decided it's worth it and is aligned with our financial goals. We may budget more than some, but I think few people are so dumb not to realize that if you spend $10 a day on lunch, it adds up.
It's not the program that stinks, it's the banks. I was current with a high interest rate and no job, making payments out of my savings. I was turned down by HAMP for insufficient income but made all my payments on time. Unfortunately, Citimortgage decided to apply my mortgage payments toward my escrow, even though my loan was not escrowed. Now I am four months behind and they want to foreclose. Or I can take their crappy deal of adding $15,000 on to my principal and a $25,000 baloon payment in five years. And since I am not upside down on my note, they win either way and I lose.
I am in the process of trying to setup a VPN for our very small office with limited resoures. I am doing everything I can to go green and save our natural resources. I would prefer to not have to purchase a new router when my current router is working perfectly. Thanks.
"Pay yourself first." It's good advice, and I've followed it for years. But unfortunately, "myself" doesn't charge interest or late fees, unlike everybody else I'm supposed to pay.
There are a lot of them!
1. The latte factor -- yes, I get that there cutting back spending on the small things can add up over time, but there has to be a point where guilt inducing or shaming behaviours are detrimental as well.
2. 3/6 months worth of expenses in savings -- yes, that's nice, but sometimes you aren't starting off with a clean slate and being made to feel bad for not being where it would be best at your age? Not helpful.
3. No phone/tv/home internet -- this is one I have heard a lot, and while these are expenses that are not "necessary" it shouldn't be a situation where you are judged as bad with money if you choose to keep utilities or services
That after paying the bills, rent, groceries, etc., I should be saving 30% of my income for retirement. I can hardly pay for what my family needs - how on EARTH am I supposed to be able to save that much each month?!
These acts are good while a person is pregnant, but apparently they don't cover in the case of a stillbirth and the emotional as well as the residual physical effects that come from such an event. My wife's company let her go while having pending FMLA for one of such physical concerns following the lose of our child.
Thanks for the words of wisdom, but if I had money to pay off my debt, I'd have done it by now. Simply telling me to do something that I already know I have to do doesn't help me one bit.
- "cash is king"
- "instead of going out with friends, have a board game night." sorry, my friends and i are just too high maintenance for that.
- Not necessarily a fan of GTD though, but hey, if it works for you.
Advice to move somewhere with a lower cost of living than where you are now is unbelievably tone deaf. We live where we live because we have family, friends, jobs, children in school, mortgages, etc. Additionally, moving someplace cheap means you probably won't be paid as much. Your current debts will cost proportionally more than they did living in an expensive area where you have a higher gross income.
1. Lay off the designer coffee. I know, I get it, I rarely drink coffee, move on!
2. Pack lunches for work/school. Really? I mean, really? It's so obvious and redundant I feel like next they'll be telling me not to brush my teeth with gold flakes.
3. Put X amount of money into savings and X amount into investments. If you can put aside $500 a month towards savings and $500 towards investments/401k etc then you DON'T have significant financial issues. Some of us work very diligently to spend wisely and save often but sometimes it's simply a matter of not making enough money to live on or not being able to find a job. I hate that all the financial advice I see assumes that I have a lot of money I'm simply not budgeting it well.
P.S. It's not letting me comment in Firefox again, the same issue I had last week. Works fine in IE though.
I think the advise of pay off your credit card with the highest interest is not only old, but common sense! I also often hear create a budget. I'm not tired of hearing that, but sure wish someone would hold my hand to do it. I haven't been very successful in trying!
I buy Apples all the time and they are never under a dollar a pound. Unless I get them from the 99 cent store. In my regular grocery stores it's like 1.50-1.80 dollars a pound. At a fruit stand they are still over a dollar.
But the rest of your points seem to be accurate. Nice post.
I get tired of hearing how everyone should have 3, 6, 9, 12, 18, whatever months worth of an emergency fund. I think most rational people understand that, yes, saving is good and we should all have at least a little money in the bank for things that come up. I try to do that, and I WISH I had a year or two of emergency savings but sometimes that simply isn't doable/realistic when things happen NOW that require money. That and the ever-popular "pay yourself first". Well, I'd love to, but I think the mortgage, car, and insurance people wouldn't be too happy if they don't get their share! It just seems like a lot of financial advice is common sense that rings true but doesn't need to be repeated ad nauseum.
The formula that was used to determine the housing cost to income ratio (2.5 times your income)-Is that gross or net? What is a good formula to go by when determining the housing costs that you can afford?
Great article!
A Dave Ramsey favorite - Don't use credit cards. Sorry - but I like my credit card. It's easy to track my spending, and I get a little bit of cash back. As long as you don't carry a balance - credit cards rock!
Does all of what is suggested going to help everyone the answer would be NO, do parts help some the answer is YES.
Saver credits do help the ones of us that live within our means and do save rainy day fund.
I was told by a co worker how bad the economy is how he lives from check to check and how he is blamming the tragic economy on George Bush.
I asked him if he been saving now under the current administration his reply was NO. How much did he save under George Bush he said NONE.
I then asked him how much did you save under Bill Clinton he said none.
I told him could I ask you one more question do you own or rent he said he owns his home he bought it and got the home credit 8000.00. I told him I noticed you have a newer vehicle he said he bought when cash for clunker program. You also said your new plasma TV was bought last Christmas on you Credit Card.
Im sorry George Bush had you buy all this stuff and make payments too Im glad you didnt buy this during the current administration you would be blamming him.
So much to choose from...
I get tired of hearing about how I should sell my dvd collection/massive wardrobe/luxury car/etc and use the proceeds to pay off my debt. What about those of us who never overspent on frivolous material things in the first place? I never splurged on big vacations or lots of clothes or daily lattes or whatever it is that so many "get out of debt!" bloggers seem to have done to get themselves in (and then out, of course) a heap of consumer debt. What I did do was spend money on my "priceless" education that hasn't gotten me the kind of job (yet) that makes the student loans worth it.
That I need to be saving 20-30 percent of my income for retirement.
"Eat at home! Stop eating out!"
I'm sick of hearing about taking an extra job to get extra income. My husband has been unemployed and underemployed on and off for the last 2 years. He's got a strong work ethic, and he applies to virtually everything - from the skilled labor he's experienced with to the meanest of menial jobs - but there just isn't enough work to go around to even cover a first job!
"Spend less than you earn." Well, duh.
- Latte factor. Enough said. I don't drink coffee and often make $10 stretch for a week. That's not my problem.
- Pay off your credit cards. I know. I'm working on it. How do I deal with everything else going on in the meantime?
- Move to a cheaper home. I did everything right (20% down, can afford my mortgage, etc) and am still upside down now, so unless you are telling me to walk on that (which is valid advice and something I'm considering) this isn't' an option right now. My savings went into buying it 5 years ago with a solid down payment (3 years before the crash when it wasn't on anyone's radar) and isn't there to get me out from underwater now.
I hate the advice to earn more by getting a second (or third, etc.) job. It's hard enough finding a first job out there right now; I don't know why people think its just a simple cake walk to find another job if you've already got one.
I'm sick of hearing how easy it is to make money on the side, in addition to your day job. After I spend the 65 hours a week at my day job, I'd like a little time to spend with my wife and daughter. Between the pittance I earn from surveys and and the unprofitable hours of selling I'd have to do for anything more project-oriented, with higher returns, finding a truly profitable side income is a no-go for me. It would be great to get down to 40 hours a week, but that would likely trigger poor evaluations, a layoff or my job being outsourced. I'd like to avoid all three, so I'll stick to my one job.
I hate the advice that if I just tracked where I spend my money and made "easy" cuts that I don't even miss, I would save $500, $200, whatever amount a month. I do track every penny we spend and if we spend money on something non-essential then it's because we've thought about it and have decided it's worth it and is aligned with our financial goals. We may budget more than some, but I think few people are so dumb not to realize that if you spend $10 a day on lunch, it adds up.
It's not the program that stinks, it's the banks. I was current with a high interest rate and no job, making payments out of my savings. I was turned down by HAMP for insufficient income but made all my payments on time. Unfortunately, Citimortgage decided to apply my mortgage payments toward my escrow, even though my loan was not escrowed. Now I am four months behind and they want to foreclose. Or I can take their crappy deal of adding $15,000 on to my principal and a $25,000 baloon payment in five years. And since I am not upside down on my note, they win either way and I lose.
I am in the process of trying to setup a VPN for our very small office with limited resoures. I am doing everything I can to go green and save our natural resources. I would prefer to not have to purchase a new router when my current router is working perfectly. Thanks.
"Pay yourself first." It's good advice, and I've followed it for years. But unfortunately, "myself" doesn't charge interest or late fees, unlike everybody else I'm supposed to pay.
There are a lot of them!
1. The latte factor -- yes, I get that there cutting back spending on the small things can add up over time, but there has to be a point where guilt inducing or shaming behaviours are detrimental as well.
2. 3/6 months worth of expenses in savings -- yes, that's nice, but sometimes you aren't starting off with a clean slate and being made to feel bad for not being where it would be best at your age? Not helpful.
3. No phone/tv/home internet -- this is one I have heard a lot, and while these are expenses that are not "necessary" it shouldn't be a situation where you are judged as bad with money if you choose to keep utilities or services
That after paying the bills, rent, groceries, etc., I should be saving 30% of my income for retirement. I can hardly pay for what my family needs - how on EARTH am I supposed to be able to save that much each month?!
These acts are good while a person is pregnant, but apparently they don't cover in the case of a stillbirth and the emotional as well as the residual physical effects that come from such an event. My wife's company let her go while having pending FMLA for one of such physical concerns following the lose of our child.
I hate hearing "Pay off your debt!" all the time.
Thanks for the words of wisdom, but if I had money to pay off my debt, I'd have done it by now. Simply telling me to do something that I already know I have to do doesn't help me one bit.
- "cash is king"
- "instead of going out with friends, have a board game night." sorry, my friends and i are just too high maintenance for that.
- Not necessarily a fan of GTD though, but hey, if it works for you.
Advice to move somewhere with a lower cost of living than where you are now is unbelievably tone deaf. We live where we live because we have family, friends, jobs, children in school, mortgages, etc. Additionally, moving someplace cheap means you probably won't be paid as much. Your current debts will cost proportionally more than they did living in an expensive area where you have a higher gross income.
1. Lay off the designer coffee. I know, I get it, I rarely drink coffee, move on!
2. Pack lunches for work/school. Really? I mean, really? It's so obvious and redundant I feel like next they'll be telling me not to brush my teeth with gold flakes.
3. Put X amount of money into savings and X amount into investments. If you can put aside $500 a month towards savings and $500 towards investments/401k etc then you DON'T have significant financial issues. Some of us work very diligently to spend wisely and save often but sometimes it's simply a matter of not making enough money to live on or not being able to find a job. I hate that all the financial advice I see assumes that I have a lot of money I'm simply not budgeting it well.
P.S. It's not letting me comment in Firefox again, the same issue I had last week. Works fine in IE though.
I think the advise of pay off your credit card with the highest interest is not only old, but common sense! I also often hear create a budget. I'm not tired of hearing that, but sure wish someone would hold my hand to do it. I haven't been very successful in trying!
I buy Apples all the time and they are never under a dollar a pound. Unless I get them from the 99 cent store. In my regular grocery stores it's like 1.50-1.80 dollars a pound. At a fruit stand they are still over a dollar.
But the rest of your points seem to be accurate. Nice post.
I get tired of hearing how everyone should have 3, 6, 9, 12, 18, whatever months worth of an emergency fund. I think most rational people understand that, yes, saving is good and we should all have at least a little money in the bank for things that come up. I try to do that, and I WISH I had a year or two of emergency savings but sometimes that simply isn't doable/realistic when things happen NOW that require money. That and the ever-popular "pay yourself first". Well, I'd love to, but I think the mortgage, car, and insurance people wouldn't be too happy if they don't get their share! It just seems like a lot of financial advice is common sense that rings true but doesn't need to be repeated ad nauseum.