It is very easy to get yourself into debt. Everywhere you look; companies are promoting credit cards of all colours, shapes and sizes. They tell you all about how good they are but do nothing about reminding you that they are going to cost you money. And a lot of it. It should be like smoking. Every credit card should carry a large warning on the front of it ‘CAN DAMAGE YOUR WEALTH’. Unless you are very good at avoiding these marketing techniques, then you likely have at least one credit card in your wallet. And it doesn’t stop there. It became fashionable to get a new credit card with zero interest on it, and then when your interest free period expired, transfer it to another card. Great idea you think! No! In reality what happens is you now have two credit cards in your wallet and it doesn’t take long for you to realise this and start using both of them. Disaster.
It gets to all of us. If we then for some reason find ourselves with reduced income and unable to manage the repayments, we can start to lose control and fall into the ever increasing spiral of debt. If you have found yourself in this predicament, and maybe found help via one of the debt-help charities, you know what it is like. You have had your fingers well and truly burned. But if all of your credit cards have been cut up, your cheque book shredded and your overdraft sent off to never-never land, what do you do when you have a temporary cash shortage?
No credit card for you. In fact no more credit. You have crossed the point of no-return and have to spend the next 10 years or so of your life paying back all that you owe. So what if you have a cash dilemma? Wonga offer an alternative to a payday loan. They can help you, even if your credit is poor as they do not carry out traditional credit checks. Of course they will look at your cash liquidity and your earnings etc., but as you are limited to borrowing less than £400 for no more than 28 days, you will likely find that you will be accepted. You will not be adding to your debts as you have to pay back the amount in full on a pre-agreed date. The company will then take the sum due out of your nominated bank account without you having to raise a finger. So, unless there are no funds in your account, your debt will be cleared in full. No putting off until tomorrow what you can pay back today. It’s a simple and straightforward way of coping when funds are short. The great thing is, even if you are tempted to do so, you cannot put off the payback time. It’s all about being responsible for your actions and accepting the fact that money is hard to come by.
I am kind of disappointed this morning since I found out yesterday that the refinance on the rental homes would not work. Apparently, my credit score is not good enough. Ever since 2008, it has been incredibly difficult to get credit so I will be focusing on getting out of debt instead.
Ultimately, it turns out that the net impact on the monthly cash flow won’t be all that different without the refinance. That is because I had to have 2 appraisals and one came in below the expected amount. As a result, I had set aside $10,000 to bring to closing in order to save about $650-$700 per month through decreased payments.
Now that the refinance won’t be going through, I will using that money to pay down a credit card balance in order to save over $2300 per year in interest. Once I get this card paid off which should be in the next few months, I will save almost $800 per month in cash flow which can be added back into the budget. So all is not lost with plan B.
Then once that card is paid off and I get a little more credit card debt eliminated, my credit score may very well be in a better place that I could refi the rental houses, decrease my interest rate and my term. I don’t anticipate rates moving up any time soon. I would think that I have a year or more to get a better interest rate.
If not and rates start to increase, that would mean that the economy is heating up which will only help my retirement account investments in the stock market. So I look at it as a win-win.
With this behind me for the time being, I can now focus on getting the business transaction complete and meeting my 2 goals for this year which are losing weight and paying off debt. In fact, I am about to launch a blog solely devoted to working my way out of debt which should bring some increased accountability and motivation to the equation.
I will let you know when it is up and running.
Here are the recent carnivals that have included articles from my blogs:
Wow, I can’t believe how busy it has been last week and this week. I will have to write a post about it sometime to explain what has been going on. Suffice it to say, that it is certainly interesting and will make for lots of good posts in the future. As a result of all that has been happening, I am just now getting to the obligatory goals post for 2013.
It should be a pretty easy post though, because I only have 2 main goals: Pay off some debt and lose some weight.
1. Pay Off Debt
I am having a new blog designed to help with this goal and will probably put more information on that site once it is up and running, but I am wanting to pay off quite a bit of debt this year which should help with the monthly cash flow. I have put together a spreadsheet and a plan and so far, January is going according to plan. It should be a lock for the first half of the year. I am a little more concerned as we get into summer.
You see, the plan is to pay off a certain amount of debt each month and maintain a cushion since my income can fluctuate somewhat from paycheck to paycheck and the budget is pretty tight although it is better than last year. I have enough in the cushion to make it through at least May even if the income comes up short or I have an emergency. But, I want to be able to continue the momentum as long as possible so I will be keeping a close eye on the extra funds.
2. Lose Weight
Unfortunately, yesterday I was the heaviest I have ever been in my adult life. Terrible, I know. I suspect that it has something to do with the amount of stress that the debt had been having on me throughout the last half of the year. Now that I have a little breathing room and a plan for creating more room, I should be able to focus more on my health. I do continue to lift weights and plan on playing softball in the spring and summer, so I have to get to a better playing weight by losing 15 pounds by May. That is only about a pound or a little more per week, so it should be quite feasible.
The way I look at it, focusing on just 2 main goals for 2013 will increase my odds of success. I really don’t have any blogging goals for this year since I am really just going to consider it a hobby and will write when I have something to say and feel like I have the time.
If what I am working on pans out, then I will have enough to do and can make money at the same time.