Debt Blasting

Car talk-- making lemonade

2010-06-29T03:46:00.000-07:00

Part of the reason I'm in debt now is because about 5 years ago (maybe more) I bought my first All-Mine Car. I engaged my friend Andrew to come with me, and we headed out to used-car-lot land, out by Sackville. We visited six or more lots in the run of an afternoon, ending at Cars 'R' Us, and there I found a reasonably-priced Mazda. Now, I have little to no car knowledge, but I'd owned an Escort that had proven reliable (tie rods notwithstanding), and I knew this car had the same kind of engine. It was in my price range -- $3500 -- and not too old. It didn't have a frightening number of kms on it, either. PERFECT.

I didn't jump that fast, though. I did the wise thing. I both test-drove it and I took it to a nearby mechanic that had been recommended by a friend. They looked at it -- granted I didn't pay them for a full inspection, I wasn't that wise -- but said it looked like a good, tight little car.

The horn broke when I drove it off the lot. That was just a forerunner, though, of all the things that would go wrong in short order with that car. Over a year and a half, I invested almost what I paid for the car in repairs -- new brakes, new piston, rebuilt engine -- the car was a lemon. The mechanic I finally settled on (not the original ones, who I'd gone back to for the horn, only to see the fella that had sold me the car coming in, greeting them all by name and chatting with them like old chums, as he dropped off another car from the lot), my mechanic Steve, told me that the car had been ill-used by the last owner, obviously. Eventually, after a year and a half, when the transmission went, he bought the car from me for $1000, because he was sick of fixing it. Thus ended my brief spell of car ownership.

I may soon re-enter that world, and experiences like this one make me consider leasing a new vehicle. However, this article may change my mind:

http://www.moneytalksnews.com/2010/03/31/how-to-buy-a-5000-car/

Penny Wise, Rewards Foolish

2010-06-01T08:32:00.000-07:00

Are 5% Rewards BS?

Part of taking charge of your financial life is actually reading and understanding the terms of service on the financial products you use. Like, for instance, credit cards! Now the latest marketing sensation in the credit card universe seems to the 5% Cash Back Rewards cards. Wise Bread, my new favourite source of financial wisdom, has a terrific post calling BS on these 'reward cards'. How often do you actually get 5% back? Nearly never:

Interchange fees (or "swipe fees") in the U.S. are generally around 2-2.5%, so credit card companies would actually lose money on every transaction if they paid out more than 2-2.5% to you in the form of rewards.

Whether it's air miles or introductory rate or other rewards, KNOW what you're really signing up for.

Home budget tools

2010-05-14T18:35:00.000-07:00

I've experimented with lots of the online home budget calculators. Gail Vaz-Oxlade's was great (her redesigned site is awesome, visit it!) But the best one I've found (for me) is the one on the CUA site. And I'm NOT just saying that it because I work at the CU Central. I was actually kind of surprised, but it kicks butt.

Budget Progress
This month has been on target budget-wise EXCEPT ... for Maddie's birthday. I had offered to purchase a friend's computer for $250 a while ago, specifically for Maddie. This is attempt number three at getting a usable computer for her... hopefully this one takes. I got a monitor that work was going to throw out (a bad row of pixels). Meanwhile, I also spent a budgetted $50 on her (actually gave it to her and we did a value learning day at the mall with it).

Debt Update
So the $250 is a bit scary. It may mean I have to borrow from credit to cover, but I can defer to the end of month to see how much I can pare out of budget otherwise. Meanwhile, I flipped $1300 free from my credit line (4.75% interest) to my Visa (16.9% interest). This means there's no space left in the LoC (just under $18,000), and the Visa is down to about $9000 (tosses confetti!!). AMAZINGLY, Visa dropped my limit from $11,000 to $10,500. DROPPED THE LIMIT. AUTOMATICALLY. Bizarre, eh? But good. Next month I call and ask them to drop the limit to $9000. I will need to then pay down enough by late July that I can rent a car if need be (but pay it right off!)

Service charges dropped!
I have gotten my RBC account package dropped to $4 / month (from nearly $14) -- no more overdraft! So I'm living in the cash world as much as I can. Give me a month or three of living this way. I can do this.

Next post -- I have a friend who's actually going through bankruptcy (there but for the grace of god and CUCNS go I). Do you know anyone who's gone through it?

focussing

2010-05-03T18:13:00.000-07:00

No, I haven't been ignoring my finances while I was away. Doing my taxes (at somewhat the last minute) gave me renewed optimism, since I'm due for a refund of $198. Hooray!

Also the process wasn't that hard. So then Friday I took a day off and spent part of it watching Gail Vaz-Oxlade -- ALWAYS inspiring. I CAN DO THIS.

I went in to my credit union Friday to see about a consolidation loan. Got to see my credit report -- it's not great, but it's not horrible, either. She didn't laugh me out of the office.

Thing is, as I re-discovered today, I have pretty decent interest now. I was only looking to consolidate my Visa (16.9%) and Line of Credit (4.75%)... for some reason i was thinking the LoC was 10%. Duh.

When I discovered this tonight, I whipped the available $1300 of credit on the LoC over onto the Visa. Now the Visa is down to about $9000. Whew. My goal is to have the limit collapsed to $5000 by the end of 2011. Get it gone, then I'll work on the LoC.

Meanwhile, no sign of Bell. But wayward debts never go away.... that one will blow up on me eventually. So sometime by the end of July, I will send them a cheque for the $550 or whatever the back payment was, and hope they pardon the account payout part. Sigh.

Tracking

2010-03-15T15:37:00.000-07:00

Where does the time go? Paydays come and paydays go and the money just goes and goes. I've almost managed two months of staying out of overdraft ($15 in last month). I STILL haven't gotten to the bank, but I have another chore to add to what I must do there, and that is cancel & trace a mysterious $5 / month payment which is NOT my EAC membership.

I was feeling good about current budget ($300 for two weeks of groceries, entertainment and incidentals) until I took Maddie to a movie (ran late, bought lunch there OMG $$$) - so we spent $20 there, less her Empire Theatre cards. Then to the bookstore, where I decided to buy Gail Vaz-Oxlade's book ($18.00ish) and Maddie wanted an Oak Island book ($17.00 but a difficult read, and I can't resist the kid wanting a grown up book!). She had Chapters cards... which we forgot to use. Ouch. Then we went to Claire's, and the slippery slope was steep by then, so I got earrings and fingerless gloves and the kid got gloves and a bag and a few other things and THAT came to $42.00 (less her $20 Claire's card). Then today I got bc pills again and three months' worth were $43. Less than film or sponges, to be sure, but a bite all at once like that.

TRACK SPENDING needs to become CURB SPENDING. Maybe I should commit to noting in this little blog everything I spend for a week. Hm. That's an interesting project. I'm such an exhibitionist, it may work!

Ok, today I bought coffee & a muffin - $4.45 (Daily Grind) and my pills - $43.00 (Lawtons). Forgot my Air Miles card too. Grrrrr.

Discipline

2010-02-22T17:46:00.000-08:00

Discipline, as Barbie once said about math, is HARD. I need to set up a system that doesn't rely much at all on my will power. The cutting up of the Visa has been a godsend more than once in the last month.

So here is what I need to do now, that I've been slack about doing thus far:
Talk to the Royal bank about cutting my banking fees--don't need an overdraft (ulp) or a safety deposit box I don't use, especially not at $14 / month and $35 / year respectively.
Make a budget. I mean it. MAKE A BUDGET and stick to it.

Currently, I have the unforeseen expenses of getting a passport and SIN card, but once those are paid I'm on track.

Must check bank accounts biweekly as well. NO SURPRISES. Track spending and stop using debit.

My more-than-week away

2010-01-24T17:38:00.000-08:00

Busy social life this week = money spent. Last night was an especially bad example, winding up with a cab home, something I'd sworn off. This Thursday I get a 'real' pay and so I will move on setting up a reasonable budget. Tonight I made this list of topics to cover in the next while. I'm open to suggestions, too, so feel free to leave some in the comments!

I know that the key for me is going to be monitoring spending. How do we feel about tracking that? What's better, saving receipts or jotting in a notebook? I have a hard time sticking to either system, just as I have a hard time with food diarying.

Any thoughts on best systems? I think I'll do some interviews for my next post.

Topics

Controlling expenses
Writing a budget
Talking to a debt counsellor
Budget tools
Saving money on entertainment

Food
Music
“Wants” – Tattoos, clothes, hair...

Deciding how to deal with RRSP withdrawal (tax implications)
Emotional spending
Five years from now: Dreaming
Travel
Gym vs working out at home
Making more money: focus on Freelance (starting march)
part time job

Spending on something not-gooey

2010-01-12T17:21:00.000-08:00

SO my first step, before budget, is track spending. Where does it all go?

Monday I spent nothing (amazingly)until the evening, when I went for groceries. About $74.85. I used a list and stuck to it rather religiously except to shift two veggies to take advantage of sales. This leaves me about $10 in the bank till Thursday, when I get paid for my first three days of work. Not sure yet how much this will be. Expect it to be not quite $500. This will be my bills / spending money for a month, since second pay must cover rent and debt repayment.

I am expecting a cheque for freelance work, but not sure when it's coming. Tomorrow would be good.

Today I was going to go bowling but decided to skip it to save money. Except... I needed my prescription filled. (Thyroid meds. Without them I am sluggish, depressed, snackish and pathetic. Ok, missing it makes me sluggish.) My benefits haven't kicked in yet, so it was $21.56. I took $60 out of my Royal account to cover it... $60 from the money due to go to Bell. BAD...! But meds -- necessary!

So why $60?

Because I am a compulsive shopper. There's a reason I don't go to the mall, and this is it. I bought a tea, which kept me from buying something sweet and gooey, so at least the diet is intact. But then I found a clearance sale (A SALE! I SAVED MONEY!!) and bought two skirts, $28.48. Now, this was clearly a want. New job = want new wardrobe... it's natural, if not excusable. And it was a damned good deal. And both are good quality, durable, and will be wearable for years.

But still.
But still.

I may not have fallen for the donut, but I fell for my spending donut.

Reading challenge

2010-01-10T16:35:00.000-08:00

By the way, I am obligated to note that I have reading assignments with this blog. I live with an insane workaholic. She's the ant, I'm the grasshopper. This roommate, who amazing and inspirational financially, ordered me a booklet called "Get out of debt" through her work EAP.

Also on my reading list is the Smart Cookies book that I won onTwitter by following @B4UInvest. If you are interested in learning more about finances and taking charge of your debt or investments if you're lucky enough to have manageable debt, you should follow this Twitter account too. It's consumer education provided by the NS Securities Commission. Don't know what they do? You should! (or you know, your own securities commission wherever you are).

Snowballing

2010-01-10T16:24:00.000-08:00

Credit Card: $10,345 - Interest Rate 16.9%
Line of Credit: $17,234 - Interest Rate 3.75%

These are the major debts. So, do I transfer the remaining under-limit balance of my LoC to the Visa (which used to be, once upon a time, a low interest Visa with 10% or thereabouts. Clearly I lost my rights to that!)

My friend Chris Mercer suggested I look into the Debt Snowball payback theory. It makes total sense to me (although if I had several other debts, I'd be tempted to pay back the smallest balance ones first just to have consolidation of fewer bills to pay). I know I can figure this out... but the math involved makes my head swim. That's part of the denial thing I'm dealing with.

Does anyone else think it makes sense to keep the Line of Credit at its limit and keep shifting the $400 auto payments that I make on it to the Visa to pay it off faster?

By the way, the roommate can testify: the Visa is in pieces as of yesterday.

I plan to eventually (in six months) apply for a Global Payment debit card on my new account and use it where I might otherwise be tempted to use a credit card.

Today's daily affirmation, kids: NO MORE CREDIT. (Mortgages don't count. Now say it with me:) NO MORE CREDIT. NO MORE CREDIT.

First steps

2010-01-09T10:04:00.000-08:00

After three months of ignoring my debt, the calls had just started. I finally made the decision to take enough money out of my RRSP to cover the immediate bulk of debt and get me back on track.

So I called RBC and in a very quick and painless (up front anyway, call me at tax time!) telephone call, got $4000 released to my account. Actually, $4400 was taken from my RRSP, because there is a 10% surcharge that goes to -- taxes? Or RBC?

I actually don't know that. It's a question I should have asked. Perhaps I will ask my two financially-savvy friends, Rob and Natalie. Both have been tremendously accommodating about helping me along this process. I may give them posting privileges in case they want to post corrections to anything i post. :-) Rob is a financial planner and Natalie is a finance educator with the government.

Back to first steps, the $4000 brought my account ought of the $1600 overdraft place it had fallen to. Apparently, even if I don't put money in, they will seek to take money out to pay my credit line (I have a $400 auto-payment coming out monthly). It sounds like robbing Peter to pay Paul to me, but what do I know? The good news is my line of credit is down to $17300 or so.

Today, I put $1600 on my Visa, which brought it safely back down under its limit. It was at $11,900 or so. That leaves about $700 in my account to start dealing with Bell, although I'm going to leave it there for the time being until my first pay is deposited.

Small steps.

Next one: budget!

How the hell did it get this bad?

2010-01-09T09:56:00.000-08:00

In September I met with Price Waterhouse Cooper to talk about going into bankruptcy. I have a Visa with a limit of 11,000 that was over that limit; and a credit line with a limit of 18,000 that was bumping against it. I was in my overdraft every month, have an arrears account on my old cell phone, and could see no way out.

Almost everyone in my family has been in bankruptcy. It almost felt inevitable.

PWC coached me through the process and my account rep was warm, supportive, awesome. She too felt that bankruptcy was likely my best option.

We started wrangling details and, long story short, the process turned into three months. I opened a new bank account and essentially ignored my debt during the process. Also during that time I met with my bank (and primary creditor), the Royal, and the rep I spoke with there was appalled that I'd consider going into bankruptcy over 'just' 30,000. She pitched a possible debt consolidation. I was working at a non-profit--that was a good 5/6 of my gross pay for a year. It felt overwhelming.

New wrinkle: I got a job at the central headquarters of a financial institution. I'm sure which one will come up later, but before I name it I'll check to see if this will get me into trouble. Anyway, the new job came with enough of a raise, and the added wrinkle of a bonding requirement that involves a credit check, that I decided to reconsider bankruptcy.

So here I am, figuring out what to do. And blogging it.