10 Dumb Ways to Separate Yourself from Your Cash

Obviously there are lots and lots of ways to separate you from your hard-earned cash but here are the most brain-dead ways to practically give your money away to a bad cause:

1. Rent to own places. Ayayay. Every time I see a rent to own place's delivery truck go by I want to follow it to some schmucks house and lecture them on topics financial. If you can't pay cash for something, wait until you save up the money so that you can pay cash, in full, for the item. These places are especially horrible because they charge four or five times the going rate for their wares (TVs, sofas, etc) and people actually PAY it. Dumb.
2. Payday lenders. Another horrible business that takes advantage of people who can't do math. What part of 400% interest don't they understand? Taking out a payday loan will suck you into a never ending cycle of get loan, pay back loan out of next check, run out of money, take out another loan. Rinse and repeat.
3. Credit cards. See previous post about credit cards. High interest rates, universal default clause, over limit fees, annual fees, late fees....need I say more?
4. Leasing anything. Especially cars. People take out leases because it is a lower monthly payment way to get a car they can't afford. So you end up at the end of a five or six year lease and still owe half the cost of the car. Bad idea.
5. Loaning money to friends and family. Never, never, never do this. If you can't afford to give the money to the person as a present, don't loan it because you probably won't see your money or your relationship again.
6. Co-signing for anything. Again, never, never, never do this. The person needs a co-signer because their credit is bad. Their credit is bad because they don't pay back their debts. If you co-sign for their debts, they won't pay and you will end up with the bill.
7. Doing illegal stuff. Driving without a license, having expired car tags, getting a DUI...if you do something that is against the law, expect to get caught and pay through the nose for it.
8. Taking on more debt than you can afford. People who end up with house payments that cost 50% of their monthly income, car loans that are nearly four figures, and other debts that are way out of line with their income will end up bankrupt AND without the item they paid so much for.
9. Taking part in any kind of get rich quick scheme. If it was so easy to get rich quick do you think the people who are offering the information/class/item would be doing the work to get you involved? Wouldn't they be off enjoying their money some where? If a deal seems too good to be true, it probably is.
10. Trying to impress others. In order to impress others we usually buy stuff they (and we) can't afford to look better/richer/more impressive. This is a quick way to financial ruin. Better to impress people with your wisdom than stuff you can't afford.

OK. I'm off my soapbox for today. Remember...cash rocks!

The Downsizing Plan

After the drama of last week, I decided to get super serious about getting out of debt and truly stabilizing our financial life. Although we are getting by fine now--income is good, bills are paid on time each month, etc--it really hit home that one major change such as a job loss or a long term illness could spell disaster for our financial situation (and our lives in general). So I called a friend who is a realtor and ran some ideas by her.
I have been kind of in downsizing mode since I got rid of my car. Your average American has an idea of the things they absolutely need to have for a nice life: a big house in a nice neighborhood, a nice car, a good income, et al. I, on the other hand, having hit my "radical years" decades past the teenage years when you are supposed to question everything, have started wondering if what "everyone" thinks you need to have for a nice life really is true. All of these people who think that you need a huge house, an expensive car, and a good job, seem completely miserable what with their huge house payments, excessive car payments, and jobs that could be here today and gone tomorrow.

So here is my downsizing plan:

1. Sell our house which is really way too big for just two people and has a correspondingly big house payment.
2. Find a small, 1000 square foot house that I really love and buy it, hopefully with a huge down payment out of what we make from the sale of our house.
3. Have the mother of all garage sales to get rid of like half of our stuff which won't fit into the smaller house.
4. Because our new house payment will be maybe half of what we are currently paying, use the extra money that we have been paying each month on our current house to pay down our debt as quickly as possible.
5. Live totally debt free and travel the world.

Seems like a simple plan. Over the last few days we have looked at a couple of small, cute houses and had our realtor check out our house to see if it would bring in what we think it will (and she said the sales price could be just what we need for that significant down payment).

The next step will be to make an offer on the house that we like contingent on the sale of our current home, get financing arranged, plant a St Joseph in our yard for a quick sale (it works!), followed by a garage sale then moving day. Once all of the dust settles, we will be in a smaller house that is more suitable to our needs, we will have much smaller house payments, we will be able to pay all of our debts in full within a year, hubby will be able to fully retire by next year, and then we will be off traveling the world as much as possible!

Things Can Change. FAST

So I was going along with life yesterday and all was well with the world. Then we had a Board meeting and life changed pretty quickly. First there was the coup by a few Board members which completely changed the make up, and leadership of the Board of Directors for the company I work for. Then everyone in the office went into panic mode. Nothing has actually changed yet but, politically, the group was very well aligned with the former Chairman and Board. They basically let everyone have free reign as long as the work got done. Now the "axis of evil" group is in power.

I'm guessing this is the kind of thing that happened in Regency England when Kings ruled, people curried favor with the King, and then on a nasty day, the King would be dethroned, or worse, and all of his supporters would find themselves out on their collective asses. Not good.

I am so not political (or politically correct, but that's another post). I also don't play chess but I'm sure that chess skills would come in handy at moments like these as people maneuver two or three steps ahead of each other while the rest of us sit around and wonder what the the Hell happened.

Which brings us to the current situation. Nothing has happened as yet and there is some legal rumbling going on. We don't know how this situation will play out. Either the axis of evil group will be removed or they will remain in power. If they remain in power, things could get dicey. This particular group has a way of railroading people they don't like out of jobs. And they don't like the majority of us. So here are my concerns/comments in no particular order:

• I would like to be out of debt before being dropped from a nicely lucrative job. Although I am working on the debt free thing, I figure it will take at least another year to complete this task.


• I am in better shape than others. One lady who is fairly high up in the organization may very well be one of the first on the chopping block. And she spends like a maniac. I don't think she learned anything from the recession, probably because she had this cushy job and could continue spending with wild abandon, and now if she loses this job I don't know what will happen to her as she appears to be in massive debt. Scary.


• I need to make a plan now and am kicking myself that I didn't have a plan ages ago. In fact, everyone should have an exit plan from their job because you never really know when your employment will come to a screeching halt.


• Some things I won't do. Specifically, I won't work at a job that I don't like and/or work for people I don't like. And after years of watching how this particular group operates, I won't work for them unless they stay the Hell out of my way.


• I need to simultaneously bulk up my emergency fund, pay down my debts, and broaden my sources of income. Immediately.

My task for tomorrow is to come up with a plan so that if worse comes to worse, I will be ready.

Credit Card Free AND Car Free...How Weird is That?

A few posts ago I dramatized the end of my life as a credit card owner. It was slightly traumatic as I have always had credit cards. In fact, most people in our country have credit cards.

I was just looking through my financial records and saw that is has been nearly two years since I went car free. No car. Most people in our country have cars. Like credit cards, I got fed up with car ownership much like I got fed up with credit card ownership.


It was getting towards the end of the lease on my car, the price of gas was continuing to rise, and it suddenly hit me like a ton of bricks that I was spending nearly $1000 each month on a car. When I added up the exorbitant lease payment, insurance, gas, upkeep, annual registration fees, maintenance, and decorations (yes, I always decorate my cars), the cost nearly reached $1000 each month! Yikes. That's insanity unless you are like a millionaire which I am not.


So I turned my car in and haven't looked back since. Actually, much like getting rid of my last credit card, getting rid of my car was extremely freeing. I actually like riding the bus. I like walking. I even like riding my bike if necessary to get to where I want to go. I actually feel more in control without a car that I did with a car.


If you dare to go car free, here's some tips:

• Check out your local public transportation options. The city bus may actually go when and where you need it to go. And when you look at the cost of a monthly bus pass compared to a monthly car payment, you will be very happy. There are also public transportation options such as Amtrak for further distances, Zip car, and car rental if necessary for weekend trips or big grocery shopping expeditions.


• Consider car pooling. In my case, I go to a lot of far-flung meetings but there are almost always other people from my office or related agencies going as well. Car pooling can work very well in these instances and my employer only needs to pay one person mileage instead of two. Note that Craigslist is another option for rounding up a car pooling ride and most major companies in our area as well as the local transportation agencies have ride share lists you can get on to coordinate rides with others who are going your way.


• Walking is another option is you live relatively close to where you need to go such as the bank, post office, library, or grocery store. Plus it's good exercise.


• Many people in our area commute by bike. I'm actually rather surprised how many bike riders are out on the roads during the early morning heading to work. I have a friend who rides 20+ miles each way to work!


• When you are car free, consider patience and preparedness. Since you don't have the speed and safety of an automobile to get you somewhere in a hurry and to act as a shield to protect you from things like the weather/traffic/other people, you need to do a couple of things. First, give yourself plenty of time to get to where you are going. You don't want to be running for the bus in the morning like you did in elementary school so leave early enough to casually walk to the bus stop. Also, be prepared. Wear good walking shoes, make sure you dress appropriately for the weather, carry a flashlight and wear a reflective vest if you will be walking in the early morning or late evening, and be aware of your surroundings (ie: don't walk through dangerous areas of town, etc).


• Check out car free living blogs and websites for good information and moral support.

Much like getting rid of your credit cards, getting rid of your car can save you an outrageous amount of money which you can spend on other things that are more important to you. Also, like getting rid of all of your credit cards, society at large is going to think you have lost your mind. Which in my mind is just fine, the average person in our society is up to their eyeballs in debt, usually because of credit card and car payments, so like Dave Ramsey says, it's great to be weird. Enjoy it!

Personal note: We have one car in our family. Hubby has kept his paid for car but has significantly decreased his use of it, choosing like me, to get a bus pass and ride the bus more often than drive. Not only does this save money, save the environment, and save repairs/wear and tear on your car, it is also almost like having a chauffeur; many times I am delivered practically to the door of where I am going--no parking costs, no traffic to worry about. If and when I ever decide to buy another car, you can be sure it will be with cash and on my own terms, it won't be because of a "great deal", the "small monthly payments", or a smarmy salesperson.

How I Funded My Emergency Fund

A few months back I got totally serious about getting out of debt. I had been listening to Dave Ramsey for maybe six months by then but still felt that there was no way I could even begin to get my baby emergency fund together let alone go without using a credit card for a month. How was I supposed to put $1000 aside? The only time my bank account sees that much money is the day after payday--a couple of days later it is always back to double digits as I use the money to pay my bills. Then I got irked at a credit card company.

I used their credit card but not often and had a really low balance on it but for some reason I started getting more than a dozen calls A DAY from them saying that I was behind in my payment by a week or so. I wasn't behind in my payments with them though. I thought they had made a mistake and would figure it out but after three days of continuous calls (literally dozens a day from a computer) I called them and asked what the heck was going on. The lady checked my account, said she didn't know why it was happening, and said the calls would stop.

That weekend we were having a garage sale so I used some of the proceeds to pay off the bill online. I then called back on Monday and told them to cancel my credit card. When she asked why, I told her if that (meaning the onslaught of computer calls) was how they treated their customers I wanted no part of giving my business to their company. She apologized but by then I was pretty irked so I insisted that she cancel the card. The feeling of having power over a credit card company--something that had never happened IN MY LIFE--was like your first hit of crack (I'm guessing...I've never used crack but it seems fitting what with the blissful high people talk about but that's a different blog...). Anyway, after that call I was psyched. I didn't feel like I had lost anything but rather gained something indescribable...like a mix of power, pride, and control.

So my next step was to fund my small emergency fund with $1,000, then as quickly as possible pay off my last remaining credit card, figuring that instead of needing my credit card for a crisis I would actually have CASH to cover the things I would usually use my credit card for. So the ways that I both paid off the last credit card and funded my emergency fund at the same time included a mix of:

• Garage sales. We usually had one a year but this year had two. The first garnered about $500 and the second brought in around $200. I found that huge signs on the busy roads around our house coupled with ads on our local Craigslist brought people out of the woodwork...the road in front of our house looked like downtown LA at rush hour.


• Craiglist. I love Craigslist. Hubby was worried that murderers stalked the Craigslist site what with all of the bad publicity that came about after some high profile assaults and murders related to the site some time ago, but we have found nothing but wonderful people who have answered our ads. And we had plenty of ads. Everything that would bring more money via Craigslist than at a garage sale was advertised--basketball hoop, patio furniture, bikes, etc. all got sold.


• eBay. I usually sell small, higher value items on eBay such as cell phones, digital cameras, etc. We sold a couple of things this way which added to our emergency fund.


• Sold gold. One day driving down the street I heard a radio ad about selling your gold. I always heard that these places were a rip off but the idea of making money from the clump of broken gold chains and bracelets that had been collecting dust for over a decade was appealing. I called a local jeweler who had been in the community for ages and had a good reputation and found out that they bought gold. I immediately collected up all of my broken and unwanted gold things and brought them to the jeweler where he cut me a check for over $700! I hadn't seen or used that jewelery for literally more than ten years so it wasn't like I missed it when it was gone.

So there you have it. Almost $2,000 earned within a couple of months that went to start an emergency fund and pay off my last credit card. When you are pissed off and totally intense, miracles can actually happen. Best of all, I used to use my credit card when I ran out of money justifying that I would pay off the balance the next month. With my emergency fund, I don't have that attitude. My feeling is that the $1,000 I have in my emergency fund is ALL that I have in case of an emergency. I would no more want to spend that money, even a little of it, even if I could repay it next month, than pull my eyes out. You don't have that same emotional feeling with a credit card.

Dave Ramsey's Seven Steps for Getting Out of Debt and Living Like No One Else

I kind of thought that it was a given that everyone knew Dave Ramsey's Baby Steps which will help you get out of debt then go on to become wealthy. I was talking to my sister the other day and realized there was at least one person who had no idea what I was talking about so it's likely there are others as well.

First, if you want to get out of debt and become wealthy, you should listen to Dave Ramsey on the radio or via podcast or catch his TV show on Fox Business Channel each weekday. This is exactly why I am so motivated to become debt free and live on cash only. With like 99.9% of society evangelizing debt and small monthly payments, the average person is going to think that being in debt is the only way to live. Until you listen to Dave Ramsey and he pounds it in to your head that there is a better way to live. He is the perfect counter to consumerism and debtism run amok. As someone who has been in debt, bankrupt, and has managed to not only become debt free but to prosper for nearly 20 years with what are simple, common sense ideas, Dave Ramsey is the only person I would turn to for financial advice. Judging by the number of callers he gets on each show and the number of people who call in to scream "I'm Debt Free" on Fridays, I don't think I am the only person who feels this way.

So anyway, you can click on the link above to read through his Baby Steps. Here is the condensed version:

1. Put $1,000 aside to start an emergency fund (this is what you will rely on for emergencies instead of your credit cards).


2. Pay off your debts using the "debt snowball". Pay off your bills, listed from smallest to largest, with the utmost intensity (it will go faster than you think if you focus on this one activity and live on beans and rice, rice and beans until you are done). Of course cancel and cut up your credit cards with each debt that is paid off.


3. Once your debts are paid off, put three to six months worth of expenses away to fully flesh out your emergency fund.


4. Once your emergency fund is totally funded, invest 15% of your income in Roth IRAs and pre-tax retirement programs.


5. At the same time invest 15% of your income in a college savings plan for your kids.


6. At the same time, pay off your home mortgage as quickly as possible.


7. Now you get to build wealth and give some of it away! ...And live like no one else.

Where Do I Turn for Inspiration?

Sometimes it is hard to be digging yourself out of debt and living cash free. It can be stressful. And boring. Buying a new car is exciting. One minute you are in your living room pondering a new car (which, since you just started considering the purchase a few minutes ago and haven't actually saved any money towards, means you will be going into debt to buy it) and the next thing you know you are in the dealer's show room preparing to sign away your hard earned income for the next six years or so. The upside is that you leave with a beautiful new car that your neighbors will oohh and aawww at.
Then there is the cash-only, living within your means way to buy a car. You save money each month towards the car's purchase. Meanwhile you drive a crappy car that the neighbors giggle at. And you scrimp and save and drive the old car for a very long, boring time. Eventually you have enough money to purchase a car with cash. Since you are moving up from a clunker to a car that is nicer but not new, there is not a lot of pizazz in the process. You find a decent car, you haggle, you haggle some more, and you drive away with what you hope will be a good car that gets you around efficiently and economically. It probably won't be a car that is going to overwhelm anyone but that's OK.
The point I am trying to make is that living below your means while saving to buy the things you want is boring and a really slow process. No wonder credit cards are such a hit. So when I get bummed out that I don't get everything I want NOW and when I am bored to death waiting for something fun (that requires an outlay of cash) to happen, I turn to a number of really inspirational sites on the web. These sites are common sense, often times inspirational, blogs and websites from people who are doing the same thing I am trying to do and reaching small success milestones a little bit at a time. Then I don't feel so bad, like I am the only one crazy enough to try to change my financial future. Here are a bunch of great sites to check out:

• Dave Ramsey (I love Dave!)
• Dollar Stretcher (lots of good articles and they sometimes buy articles from me!)
• Simple Dollar (lots of good tips and insight)
• Consumerist (news and articles about shady practices by companies that impact consumers)
• Enemy of Debt (a new blog I just found with a great name and inspiring articles)
• Saving Advice (a compendium of blogs by people from all walks of life trying to get out of debt)
• Deliver Away Debt (a guy who delivers pizzas to earn extra money just like Dave says to do. Cool!)
• Man vs Debt (a family that sold everything to pay down debt and is cash flowing their world travel)
• Get Rich Slowly (nice name...that is what I intend to do. Good articles too.)
• Less is Enough (I found this blog when the writer did an experiment to feed herself for a dollar a day for a month. I like radical experiments. I wish she would post more.)
• Wise Bread (this site has a cadre of great writers and interesting financial topics)
• Brip Blap (I like this guy's writing style. Good articles on money)

Success Update

My recent financial successes:

• All of my November bills have been paid by the first week of the month. Usually I run out of money before I run out of bills so some payments can drag out until the end of the month. I got my check today, paid down my list of bills due in November, and had enough money to pay everything on the list. Amazing!
• I paid off and cancelled the last credit card I had. Now I am credit card free. Whoohooo!
• I currently have $1,200 in my emergency fund. This is $1,200 that I can access at any time. I have NEVER had this much in savings!
• I cancelled a vacation we had scheduled which we would have ended up using credit to pay for. I think this was a really good decision which before I would never have considered. I used to want what I want no matter what it cost and it didn't matter how it got paid for. Now I am much more aware of my spending and have some semblance of control over it. Wow.

25 Reasons Why I Hate Credit Cards

I hate credit cards. They are like a drug that you get addicted to. Pretty soon the thought of making a move without one or more credit cards at your side seems virtually impossible. After a while though, you get mad. Anger is a good motivator and anger at the whole credit card system (along with repeated Dave Ramsey lectures on TV) pushed me to the point that I abandoned credit cards all together. Here's why I hate credit cards:

1. Over limit fees.
2. Late payment fees.
3. Annual card fees.
4. Universal default clause.
5. Companies that slash your credit limits randomly.
6. Crappy customer service.
7. Companies that jack up your interest rates to loan shark levels.
8. The ease with which it helps you spend money.
9. The psychological reliance on a piece of plastic.
10. The ease with which an addiction to spending can develop.
11. The ease with which an addiction to collecting credit cards can develop.
12. The way that being granted credit makes you feel superior, worthy, and important.
13. The psychologically manipulative way that the color of a card makes you feel important...red...black...gold...platinum!
14. The impact your credit card use has on your credit rating.
15. The paper trail that using a credit card leaves.
16. The fact that when you most need credit, like in a crisis, they refuse to increase your limit. When you aren't in a crisis they seem to raise your limit randomly.
17. The fact that people will use a credit card when they are having a crisis (job loss, etc) which actually has the affect of compounding their crisis (because then they have added debt to the mix).
18. The greedy credit card companies. If they treated people fairly, people wouldn't hate the credit card companies.
19. The marginally illegal collection practices they and their collection agents use.
20. The ease with which you can spend more than you can afford.
21. The manipulative way they use "incentives" to keep customers. Air miles that are virtually impossible to use, for example.
22. The way that you can use a card to pay for a meal and still be paying off that meal two years later.
23. The way that by paying the minimum amount due, you can actually be paying the card off for thirty years even without adding any more purchases!
24. The changeable interest rates (they can raise your rates any time they want to while you have no say so over this even though you entered into the contract at a set interest rate).
25. The changeable due dates. Some credit cards seem to change their due dates monthly without giving you any notice so if you set the payment to recur on a certain date which worked the last few months, this month paying on that same date could cause a late payment.

I hate credit cards! Blah!

I Did It! No More Credit Cards!!

I'm feeling light-headed. I'm feeling faint. My heart is racing. Am I having a panic attack? I'm not sure.
Today I paid off my last credit card. I had paid of this card last month but rung up a couple of purchases on it this month so had a small balance on it which I paid off today. Then I called the company and told them I wanted to cancel it.
I talked to one person who couldn't believe I would want to do such a thing. "Don't you need it for emergencies?" "No, I have cash for emergencies." "Uh...let me send you to a supervisor."

Me to supervisor: "I would like to cancel my credit card."
Supervisor: "Don't you want to keep it for emergencies?"
Me: "I have cash for emergencies."
Supervisor: "You have cash set aside for emergencies??" She sounded surprised.
Me: "Yep. I don't want any more credit cards and this is the last one I have to cancel."
Supervisor: "Oh" Then a long pause.
Supervisor: "Can I add 10,000 air miles to your account so that you will keep the card?"
Me: (tempted) "Uh no. I am finished with credit cards, please cancel it."

So I did get the card canceled but it seemed like a traumatic transaction for both me and the supervisor. I have never been without a credit card since the day I turned 18 years old and I am now in my 40s. I feel like I have been on crutches for so long that even though I can walk fine and don't need crutches anymore, someone yanked the crutches away from me and I am left standing there feeling like I don't know what to do. Breathing deeply would be a good start, I guess.
In theory, I am literally better off without the card than I was with the credit card. Before I would say I need a credit card for emergencies however I would keep the balance near the limit so the actual money I had on the card to use for an emergency was often less than $100. Now I have $1,200 in my emergency fund IN CASH that I can rely on in an emergency. Obviously I am now much more prepared for a financial emergency than I have ever been. I just takes some getting used to though.

Not Going into Debt Can be Tough...Especially When the Joneses Buy a New Mercedes

My heart is set on living debt free and cash only. I am slowly working my way out of debt inch by inch and I look forward to next week when I cancel my last credit card. Today I talked to my sister-in-law who informed me that my other sister in law just bought a new Mercedes. I don't know if I feel happy about it (happy for her because she does work really hard and kind of "deserves" it and even more happy that it isn't me signing up for years of car debt) or sad because I would really like a new Mercedes (or a new anything...the only thing I have now is a shiny bus pass and a hubby who lets me drive his old car any time I need it). Also, I know that this particular brother and sister in law are up to their eyeballs in debt and have been for decades so I actually feel sad for them even though they will look nice driving around in their new car.
So I think I will push my sadness aside and focus my attention on getting out of debt. I will be thankful that I have a wonderful, supportive husband, thankful that we are both employed and our incomes easily pay our bills each month, thankful that with each paycheck we are slowly becoming debt free, and thankful that indeed, one day, I will be able to "live like no one else" as Dave Ramsey says and actually pay cash for any car that I want. I bet the car will even drive better than new because it won't be dragging a payment book along behind it!