The Reality of Money-

I thought I would look at money and the evils of it this year. I am looking to reduce the amount of debt I have and each year this is a goal. But each year that I have made this goal, I have promptly brushed it under the rug so I do not have to look at my own errors. Who wants to admit that they have a problem? Why look at the ugliness of my spending when I could just pretend I have everything under control. I do know how to make a budget, the execution not so much. So this year, I have decided is the year that I get it under control (outside circumstances being I need to be able to move around this summer requires me to grow up). I am also going to look at how I got here.

$54,765.80 

That is what I owe due to this economy. Wait, $58,439.70 now that is what I owe. I can tell you that $48,405.72 is what I have racked up in the last seven years trying to keep up with the Jones. (A bit of irony there.) Averaged out that is about $7k a year in debt. Now that isn’t all in one place and it covers a wide range of items and a few consolidations. I’ll get to those later.

While I have not made the same mistakes I made when I first ventured out on my own. (the payday loan centers) I am making a whole lot more and I have a teeny tiny problem. Well two, Kindle and I suffer from retail therapy, which may be one and the same.

In today’s economy it is not hard to rack up large amounts of debt. School loans, medical bills, daily living, wages not meeting living expenses… All of these can add up. So the goal is to look at spending and learning how to live within my means.

But, yes there is a huge but here. The school systems are now using Ipads at school, clothes are needed, phones are needed, Wi-Fi is needed for school work, a new computer is now needed and moving expenses are needed and and and

Is anyone else feeling the need to go shopping?

So let’s go over a few things:

“Do not get a credit card.” That is what my grandpa told me before I left for the Navy.

Umm.. I didn’t listen. I am really wishing I had listened.

While my credit is good, in the 700s. My debt to income ratio… not so good. I live on credit and this is not how to go on in life. I talk and listen to people older and younger and hear how they are managing without credit or how much credit has destroyed their lives. And I think from my high horse, “NOT ME”. Well, um… said horse has left me high and dry and with piles of debt.

Within the first year of being in the Navy, I had two credit cards and a lot of debt. I was using the payday loan centers and living off of floating checks using two checking accounts. Now this was possible because I was living on base and eating food on base so I didn’t really need my paycheck. All the basics were taken care of. (including a clothing allowance for when I needed new uniforms) Just an FYI, I have nothing to show from these few years but a very bad spending habit.

And when I went out, no I didn’t pay for myself soo…. I learned to live off of credit and live well. Well, but not realistically.

All I can say was I wasn’t really taught how to save money. Yes the basics of put aside so much each payday for a rainy day. But what 20 year old thinks they need a rainy day fund? Considering the previous years of working before the Navy I lived paycheck by paycheck and was not encouraged or forced to save any of the money, so I didn’t. Granted I had books to buy for school, gas, insurance and food. But, still I could have learned how to save money. I mean we were taught in school how to balance a check book register, how to write checks and growing up with the words “CHARGE” said every year before we went school clothes shopping. I learned how to charge, but not the reality of what would happen after said charge and interest and everything was said and done. Money was a non-issue. Gas was .99$ a gallon or less.

So, what is my excuse now? I have too much debt. And there is so much things I want. Not need, want.

So, let us start with the payday loans. DON’T! I can’t stress that enough. Just don’t. Call whoever it is you are owing money and try to work with them so they understand you just cannot pay the full amount. Don’t not pay, pay some. And pay it all off as soon as possible.

Just an example:

You make $1200 a month and have $700 in bills each month.

One month you decide to go crazy and want a new, oh let’s say a new computer. Now if you can put $650 down today, you’ll get it at a discount and lower payments each month for so on. ($75.00 vs $100)

Umm.. is anyone seeing a problem here?

So you run over to the payday loan place and write a check for $367.50. This is for $350.00 plus 5% to cover their fees. (This is a loan.) You get $350.00 in cash. Yeah computer time!!!

Okay, so let’s add this up:

Month 1:

Payday             +$1200

Bills                 -$700

Payday loan     +$350

Computer         -$650

Left over          +$200

That’s $200.00 left for food gas and what not…         where normally you have $425 that you completely need. Seeing as you didn’t budget for that additional needed $225.00 you find another payday loan to write another check to cover what you needed.

Month 2:

Now there is an additional bill this month so the bills went up.

Payday             +$1200

Bills                 -$775

Left over          +$425

Right?

WRONG!

Remember those checks you wrote to payday loans? The $425.00 you have to cover that and the gas and what nots that are needed for this month.

So:

Left over          +$425

Payday loan     -$367.50

Payday loan2   -$243.00

Everydays        -$425

Left over          -$610.50

Umm…. There is an issue here.

Now back to the payday loan place. Wait, there is monetary increments that you have to write the check to the cash checking place (usually $50.00) so…

You write a check for $682.50 to cover the interest and everything else.

Month 3:

Payday             +$1200

Bills                 -$775

Payday loan     -$682.50

Everydays        -$425

Left over          -$682.50

And the cycle continues until you have to apply for a loan or borrow money from someone to stop the ugly process.

Granted I had more paydays than this and very minimum bills but this was what almost a year of my life looked like until I realized I was truly living off of floating checks. Not cool. It took some very hard months and a few bounced checks before I was able to stop using the Payday loans.

So the moral of this story is: DO NOT USE THE PAYDAY LOANS. Save money, ask family. Ask yourself if you truly need what it is you want so badly. SAVE! Because in the example above not only are you paying interest on the loan for the computer you are paying interest on your own money.

Until next time…

Cyber hugs & kisses

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