Financial Inventory (Part 1)

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I decided to sit down one night and do an exercise I was calling a “financial inventory.” Realized as I went on that it would have to be a bit more comprehensive that what I was prepared to do and that I was afraid to get this honest, especially since I was committed to putting it on my blog. This post will initially be a two-part post. The part you’re about to read are my estimates because I’m not ready to really find out how bad my financial state is (it’s 8:56pm and my goal today is to go to bed without drinking so spare me). The second part will have actual numbers.

The second part will be the cold, bitter, hard-to-swallow truth. I know it’s bad and right now, knowing that is enough. Without further ado, here is my financial inventory.

Age: 29 years old

Assets

  1. What assets do I own? Off the top of my head, none.
  2. Why are these items assets? N/A

Debt

  1. What debts do I owe? Student loans, personal loans, fines levied by the state of Michigan, and medical expenses.
  2. Amount owed: $125,000
  • Student Loans: $96,000
  • Personal Loans: $16,000
  • State Fines: $4,000
  • Medical Expenses: $1,500
  • Things in Collection: $7,500

Current Net Worth: -$125,000 (estimated)

Reflection Questions:

1. Who do I feel like I owe? I feel like I owe everyone. It causes and immense amount of pressure because it feels like a weight I’m being crushed under. I feel like my phone rings off the hook with bill collectors (which makes me think of my personal relationships with people) and I feel like some sort of fraud. At first, I told myself that “getting by” was okay because it could and would get better. But it has actually gotten worse.

2. Who do I actually owe? Sallie Mae/Navient; Brown Univ.; State of Michigan; Credit Acceptance; and Various Collection Agencies

3. What do I feel like I owe? I feel like I owe so much money that I’ll never own my name. That’s what it feels like. It feels like I’m a slave to this debt on an emotional, mental, and physical level.

4. What do I actually owe? I estimated $125,000 (based on the numbers the last time I looked at anything). I have to actually look it all up.

5. Why am I motivated to change now? Freedom; and I feel like I have to.

6. If I had $15,000 ($15k), what would I do right at this moment? I’d pay down my debt.

7. Did that answer really improve my life AS IS? No (and I’m thinking of life as is as the emotional response I had to that idea). It did not. As soon as I wrote it, I realized that emotionally, I felt like I couldn’t find joy and I don’t know why that is.

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Starting Over

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It seems I’ve talked a lot about that on this here blog but here I am, yet again, with a report of having to start over.

Life became a bit more than I could handle and I found myself having to make what felt like dire decisions to just get to the next day. In a period of five weeks:

  • Broke my foot (this cost me over $600 out of pocket);
  • Lost my apartment (cost me over $2,300);
  • Finagled a last minute move that was crazy expensive (cost me over $200); and
  • Spent over what I would have normally spent to get to work ($30 a day or $150 a week).

I was making $14 an hour and I thought that spending money I didn’t have to spend was the worst of it. For a while, it was. Then I took a trip to Hawaii (that had been paid for the year before) and lost my personal identification and bank cards. Oh joy! That was surely going to be the worst of it?

Not. At. All.

It seemed as though collectors and creditors knew I was in dire straits and called for every single dollar they’ve ever leant me to be paid back. By this point, I was living with my Mom and had to enlist her help in this. The final verdict? She wouldn’t be able to help me.

And this is where I find myself today – steeped in embarrassment at my financial state and wondering IF it ever actually gets better for the poor folks who were born poor?

It might not but after some deep soul searching, I’ve recommitted to the idea of starting over, really starting over, so that I can eventually own my name. My debt has become a noose around my neck and while I know that money doesn’t buy happiness, it would certainly allow me to afford the scissors to cut myself loose.

We shall see!

I Took a Pay Cut

Haven’t been here to write about my financial life in a bit. Don’t worry (it won’t happen again – I have planned blogging into my day like a real blogger).

I do have some great news – I have a job again!

Being someone with a small business to run (especially with a service and not a good), this takes a bit of a load off of my shoulders. I’m always tired but I have a steady check and I can move toward finally getting on my feet. So let’s celebrate.

The not-so-great news is that I took a pay cut with my new job. I am no longer a salaried employee and I only make $14.01 an hour. But as with every decision that I make, there is a method to my madness.

With my $14.01 an hour, I am eligible for overtime – to the tune of time and a half. I also receive amazing benefits that I only pay roughly $85 every two weeks (in my salaried position, I was paying over $200/month for just medical and dental). I will even have the option of contributing to a retirement plan (and I plan to take full advantage of this).

The other great thing about my pay cut? I qualify for some rental programs where I don’t have to pay market rate. In my salaried position, I made too much for these programs but not enough to pay the market rates of rent (thank you gentrification – this is me being cheeky). With my student loans, I am eligible for income-based repayment plans (look into those y’all) and my payments are now super affordable. So affordable, in fact, that I can pay over and make more of a dent in the principle amount. I am even a member of a credit union.

This is great. The pay cut is great. And I never thought I’d say those words.

January’s Savings Challenge – Cut It Out

Happy New Year and good day!

I hope that all of you have found 2014 to be welcoming and inviting. As promised, here is the FIRST (of twelve) monthlong savings challenges. Keeping in theme with making resolutions and developing new habits, this savings strategy is appropriately called “Cut It Out”!

As you may have guessed from the name, you’ll have to give up something, anything, once a day or once a week and put the money for that convenience into your savings account.

The Rules:

  1. Find a daily (or weekly) indulgence that you can live without.
  2. Cut it from your daily spending.
  3. At the end of the week, deposit the amount you saved into your designated savings account.

Remember, this is to pad those savings accounts in little ways because I know you’re already automatically depositing a percentage of your pay into your savings (if you aren’t, we’ll just pretend that you were because you’re going to start as soon as you’re finished reading this post). If there is ever a day where you slip up and buy whatever item you’ve agreed to give up, it’s okay. You can always do better tomorrow.

So what are you giving up for the first 31 days of the new year?

Financial Intentions for 2014

The tumultuous year of 2013 is quickly winding down. That means it is time to give some serious thought to what you want to accomplish in 2014, if you haven’t already. Since this is a blog that focuses on my finances and goal of getting (and staying) out of debt, I’ve decided to share my financial goals here.

Financial Intentions for 2014

  1. MAJOR: Pay off my remaining student loan debt by 33%. This goal is HUGE, seeing as I have over $100,000 remaining in debt. To my surprise though, there has been some interest in this series I plan to have in January. If you’re interested, sign up here.
  2. MAJOR: Save $5,000 for the entire year. This is maybe the one goal that I want to stick to. I’ve always set a goal to save a particular amount of money and it never worked out. However, I’ve made the decision that I’m prioritizing my self and my needs above others. I’m sure this will be very beneficial.
  3. MAJOR: No overdraft notices on my accounts. I’m a bit ashamed to admit that when I looked back over my account and where most of my money went, it was to overdraft notices. This year, I’m taking extra protective measures to make sure it doesn’t happen again. 12 months of no overdraft charges? I know I can do it.
  4. Minor: Pay my bills a week early. While it’s something I don’t have to do, I wonder if I’ll notice anything change in my financial habits because of it.
  5. Minor: Adopt a family for the Holiday Season in 2014. I want to find a family and adopt them from Thanksgiving on through Christmas. Ambitious? I know but it’s something that I’ve always wanted to do since I was once the recipient of a stranger’s kindness.

So there you have it! My five Financial Intentions for 2014.

What are your financial intentions for the upcoming year?

Your Financial Problems and Your Personal Priorities

On my personal blog, Miss C. Jayne, I shared how I was impacted by the sermon during my church’s annual Women’s Day. You can read the entire post, but i wanted to share what my revelations has shown me about my personal connection to money.

Yesterday, our speaker shared a lesson and entitled it, “Why me?” Many times, it is in our human nature to ask this question when we find ourselves in uncomfortable positions. I decided to pay extra attention since I found myself asking that question almost daily in a tear-filled fit (these mini-breakdowns have not been pretty, but then a mini-breakdown is never pretty). While speaking, she shared something that stuck out to me: “The trials (in our lives) reveal our trust (in God).*” When she said this, a thought immediately flashed in my mind:

The problems we create in our lives reveal our priorities.

When this thought hit, I found myself in a strange place of calm and understanding. It literally felt like everything was muted. I thought back to my largest frustration – money and the bill collectors on my phone. I thought about my inability to apply to PhD programs, something I’ve wanted to do since 2008, because I owe money on my student accounts at my former universities. I even thought about the current state of my bank account (takes deep breath) and the fact that I owe $1,089 to even get my balance to a cool $0. I thought about every single student loan that I owe on and I felt nothing.

For a moment, I wondered if I had made my transition to the spiritual world in church but I was quickly brought back to my senses when I was elbowed by another person in my pew (lol).

I didn’t die (thank goodness) and I felt a strange sense – clarity. Not peace but clarity. My heart still races when I think about the debt I have at 27 years old but since yesterday, none of that has been embarrassing or daunting. I realized that my priorities have been misaligned and I made decisions in haste with serious consequences. I had a small “Had I known then what I know now” moment. I simply took that moment to remind myself, “But I didn’t know and that’s okay.”

With this clarity, I’m moving forward and making the necessary changes to course correct. After all, that’s why I’m here sharing my story and journey with you all. I hope that you learn from my missteps or that you get some encouragement about your own financial situation.

If you’re still living, it’s never too late to align your actions with your priorities to move towards living the life you want.

*Words in parenthesis are my own and added for context.

Sometimes I Just Stop Reading

Here’s a little secret of mine – I love a GREAT story where the underdog conquers a seemingly impossible feat and triumphs over a beast that no one else was able to defeat. It’s why Hercules was one of my favorite movies growing up and why Mulan was so kickass.

It’s also why I love a great I paid off my student loan debt story.

But what kills me is that nine times out of ten, I actually can’t relate to the people who are spotlighted in the post. Most of the time, I’m left wondering why they had student loans in the first place. As a woman who spent a great majority of her childhood either in homeless shelters or couch-surfing in loved ones’ homes, I find myself shaking my head at a LOT of the posts that will give you “ten easy steps to get rid of debt. But I always tell myself that I will be able to find a nugget of wisdom and that is usually the case. Thankfully.

This post was inspired by four pieces I read yesterday. For every hypothetical question that the author asked, I found myself saying “No.” In the beginning, I kept muttering to myself, “I can’t really relate to your struggles of imaginary poverty,” but then something clicked.

Struggling with money has nothing to do with how you spend and everything to do with your understanding of how it works. That’s the whole reason there is a BOOMING industry that focuses on helping people get out from under their crushing debt and it’s the premise of (my now favorite financial) literacy book, Rich Dad, Poor Dad, by Robert Kiyosaki.

The more I read, the more questions I have. The more questions I have, the more I read. What that (unfortunately) means for some of my favorite blogs is that sometimes I just stop reading the posts. While they make me feel good (remember I love a great story), they lack the information that really speaks to people like me – formerly poor kids with great degrees and not so great careers who don’t have rich uncles.

Hopefully, this blog starts to help more of you who are like me by offering (1) explanations for how things work and (2) practical steps that you can relate to.

In the event that you ever find yourself not reading material all the way through, I hope you let me know.

-Fellow Underdog Slaying the Debt Giant