Are You An Indentured Servant? Part I

Payday Loans

Payday loans have been around for a while and are not a great idea. Some advocates say that payday loans are better than paying the late fees for certain bills. With interest rates as high as 1305% per year, there is nothing good that I see in them.

How Do They Work?

If you go to a place that offers payday loans, there is an up-front fee attached to the loan. You write a check for say, $115.00 and they will loan you $100.00 until your next payday. For an eight day loan, the fee is $15.00. No big deal – right?

If for some reason, you are in a bind and cannot pay the full amount, you can go in before your next payday and extend the loan for another fee of $15.00.  You can do this up to four times before they collect.

If you are living paycheck to paycheck, this arrangement automatically cuts your next check short. Maybe it’s time to look at your spending habits and sell a few things you have in order to get out of this situation.

Kick The Little Guy While He Is Down

In my humble opinion, payday loans are an invitation to being an indentured servant. It reminds me of my days in the US Navy where people would loan others money at 100% interest. If you borrowed $20, then the next payday, you had to pay someone back $40.00. It was simple. You paid the guy back, on time, with interest, or something would happen to you or your stuff. It was a harsh reality but very few people did not pay back their money.

The loans described here target those who are already living paycheck to paycheck and none of them appear to have an issue with it.

What Can It Turn Into?

Imagine if you are already living paycheck to paycheck and you start taking out these payday loans. Suddenly, a situation arises where you cannot pay the loan back like you intended to. Then your next check is short because you have this outstanding loan that needs to be repaid. What happens if you now do not have enough to make it through to the next payday? Do you take out another payday loan because they say it is “better” than paying late fees?

Something to think about. Have you heard about people consolidating loans so they can get another loan to pay off their payday loans?

Savings Challenge Update

I do not have the figures for my savings account right now but I am saving every week. I can tell you that the amount is over $600.00 now. I will make sure I have the figures and the chart updated for next week.

PURGE!

I’ve Had It!

It’s amazing what you find when you get ready to move. When my wife and I moved less than a year ago, we got so overwhelmed that we did not even bother going through everything. Instead, we got to a point where we simply put stuff in boxes until it was all packed. Since we were renting a house instead of buying one, we did not even unpack a lot of stuff.

Well, it is that time again. Moving.

A New House

We recently closed on a new house. It’s exciting because it is our first home together. If you have read other posts or my About page, you know that we were married in 2010. At that time, we each had our own houses.

As we began to pack things this time, we started to realize that we liked having extra counter space, fewer things to collect dust and a more “showroom” look to things.

We talked recently about what to do with the new house. We don’t want it to fill up with a bunch of junk. Instead, we would rather have a few nice things that we can take care of and use for a long time.

What To Do With Stuff?

Well, it’s a bit late to be sorting things out before the move so we will once again move more than we need, including the boxes that we have not opened.

One of my jobs going forward is to sort through a lot of the stuff at the new house and determine what will stay and what will go. You see, we seem to have a problem with being emotionally attached to everything including scraps of paper. It might get tough at times but we are going to do it.

The plan is to start selling things on ebay or some other venue. I have not done it before so it will be a learning experience. We have a lot of things that are not junk but that we do not need. For example, I have from my life before Sharon, an eight place setting of china with lots of extras. The kids do not want it and together, we chose a set of china for ourselves that we use a lot. Certainly, someone will be interested in the pieces. We also have extra furniture that is not needed and some stuff we would just like to upgrade.

We plan on doing all our upgrades with cash. We do not want to finance anything for the new house.

There are some things we will donate as well. Finally, there are some things that the kids can have now. With all the kids out of the house, maybe it is time they take some of the things that we have both saved since they were little. I know that some of them already have some things and others will enjoy seeing the things from their youth.

How Does That Help?

By eliminating a lot of the things that we no longer need, we free up space and have a simpler lifestyle. If we can sell some of it, we can use that money for upgrading items or going on a much needed vacation. If you are carrying a balance on a credit card, this is a great way to pay those down without cutting into your paycheck.

This process will probably take a little while so I will update you on the progress.

Savings Challenge Update

The savings challenge is going well. We are three months into the year and already have over $600. Where are you with your savings plan? Are you working on the savings challenge or are you working on the $5 savings plan? Share your progress.

 

The Fine Print

First Things First

My apologies for being late with this blog post. I have been trying to post weekly since I began this blog and this is the latest posting that I have had. Things should be better next week.

Contract

Contract1

Contracts are everywhere! When you buy a house, sign up for cable or Internet Service, purchasing a car and any number of other things. If you rent a place, it is called a lease. Contracts are there to protect the supplier. However, when something changes and you need to be out of a contract, you end up paying quite a bit to get out of them.

Buying A Home

My wife and I recently purchased a home. However, we are in a lease with the place we are renting for a couple of months to come. Cha-Ching! Breaking the lease means extra money so they can list the place earlier. Even though they are going to list it when we leave, they charge extra in the hope they can rent it before regular lease expiration. If that happens, then we don’t have to pay for all the time on the lease.

Cable

We recently made the decision to eliminate cable. We had given up TV for lent anyway so it was not a hard decision. Cable companies are a pain. When we first purchased the home, we thought we would just transfer the cable to the new location. Because we had only been with them for nine months, there was going to be an extra fee of $100.00 to move it to the new location. When we called back to cancel instead, they came up with all these offers in order for us to keep it. Free transfer, reduced billing, even a suspension of services for a mere $20 per month for up to nine months. We could reactivate it at any time within the nine months and pick up the contract where we left it off. What a bargain. For $30 per month for the remaining months in our contract, we could pay to cancel the service altogether. We opted to cancel altogether. Can you still get TV via an antenna?

Decisions

If at all possible, I am going to try to avoid contracts with service providers except in the case of utilities, etc. since we will be in our new home hopefully, for a long time.

What contracts do you have and what is the cost of getting out of those contracts if you need to? Think about it the next time you get ready to sign up for another service.

Savings Challenge Update

Here is the status of our savings challenge.

Savings Challenge 3-11-2014

Our balance now is $530.68. Getting there. How about you?

Gain All You Can, Save All You Can, Give All You Can

A Quote

“First, gain all you can, and, Secondly, save all you can, Then, give all you can.” ~ John Wesley

John Wesley

Picture credit: Wikipedia

This is a quote from John Wesley, one of the founders of the Methodist movement, not referred to as the United Methodist Church. It is from his Sermon 50. Easy enough to find on Google.

Gain All You Can

And I am not referring to weight – although I am working on that issue.

It is the simple idea that we should begin early and do as much as we can with our lives. Since the focus of this blog is financial, then it only goes to say that we should make as much money as we can as soon as we can. This is a great idea if you want to NOT worry about retirement when you are older.

If I had only listened to my parents who encouraged me to save a little from each check as soon as I started working. If you think about the money that has gone through your hands over your lifetime, it is daunting.

Some people work tons of hours and save as much as they can. Others start businesses. Still others, let go of instant gratification and invest as much as they can stand.

Save All You Can

Not to worry. We can start a savings plan right now if we have never done so. Check out my posts:

Another Savings Idea To Build Savings Quickly

Here is something my wife and I have started doing. To make it clear, it does not work every month and at times we backslide but it is a goal of ours. We are saving about 2/3 of my check every month. We are living for the most part on my wife’s check at this time.

We did not get in this position easily. It required getting out of debt – completely. No credit card debt, no car payments, no mortgage, no debts to anyone. You can read in several of the blog posts here about getting yourself there.

In the spirit of John Wesley, we are gaining all we can so we can save all we can so that we can give all we can.

Maybe it means getting a second job to do it. The key is to eliminate the debts you have so that you can put that money aside from your second job. The savings will grow rapidly.

Savings Challenge Update

Another week, another payment towards our vacation/house fund which will be available in January 2015. This is where we are with our Savings Challenge. Our balance right now is $520.66. Not too bad for two months and one week of savings.

 

Savings Challenge 3-04-2014