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!

My Most Expensive Financial Mistake Ever

Many people tell you that you should postpone going after your dream if it’s an unconventional way to support yourself financially. Those who love you, usually older relatives that have succumbed to the demands of everyday life, will point out the majority of people that don’t make it when following a wacky dream similar to yours (this is especially true if the road is one of creativity like artist). Yet, on January 8, 2014, I sat ruminating on some things and it occurred to me that living safely netted me my most expensive financial mistake ever.

You are probably wondering what this mistake is but if you are like so many other people in the United States, especially hard-pressed and out-of-work Millennials, then you already have an idea of what I’m going to say.

My most expensive financial mistake ever is that I went to college*.

To my knowledge, I owe roughly $104,000 in student loans (I rounded up but only slightly). Thinking about my degrees (B.S. in Psychology and M.A. in Urban Education Policy), I’m grateful for the training and the amazing professors I studied under. However, 17-year-old me would make a completely different decision about life if she knew what I know now.

That’s a hard and frustrating pill to swallow.

I’m not upset about the limited advice that family members shared with me when I pondered whether I should go to college. After all, that next step is the logical step when you are talking about a person who had been on someone’s Honor Roll since kindergarten and excelled almost effortlessly when it came to academics (Physics does not count as Physics is Satan himself in some academic form). Why would an A-student want to be an artist or a dancer? Because that’s what she spent her free time doing.

And that’s the realization that hit me like a ton of bricks.

I feel (somewhat) hindered by what society deems as acceptable and I feel exposed admitting that I am a perfectionist who seeks the support and approval of others – part of why I’m in this hot shit right now. But the great thing about being exposed is that once you let go of the shame from your confession, you can move on.

In my case though, it’s too bad I can’t readily relieve myself of this chain I’m attached to.

With that being said, I made a personal vow to myself. From this day forward, I will focus on living my joy while sharing all of my Life Fails so that others don’t have to suffer like I did. I don’t know if Sallie Mae would consider this a job but they probably don’t care seeing as I can’t tell them how much I can contribute toward that late payment. It is my hope, as always, that those of you who read this blog take something from this painfully transparent post (don’t tell my Mom though, let me…thanks.) and apply it to your life. Life is for the living and you shouldn’t have to waste your time holed up in a cubicle or chained to a desk while wearing some “approved in the dress code outfit” to make a wage that will pitifully cover your living expenses.

Seriously.

The moral: Do what you want. Live in joy. The money will follow and you won’t find yourself on someone’s couch wondering where the hell you went wrong. The end.

*I want to say that I’m extremely grateful for every soul that I have ever come into contact with as a result of following a traditional course of study. Some of my closest friends and strongest supporters are in my life because of this. I hope that none of you read this as an expression that I could do without you because that couldn’t be further from the truth. I just wish I hadn’t wasted so much time doing something that I know in my heart of hearts doesn’t fill me with joy – which is hoping to share the “correct” answer in a lecture hall to receive some arbitrary mark of satisfactorily mastering material that some dead, white guys agreed on.

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.

Rule 3: Realistically Examine Your Habits (#31WriteNow)

Realistically examine your habits.

Rule three is perhaps the second hardest rule in the “Building Blocks for Building Wealth”™ series. This rule requires that you take a fine tooth comb and go through your financial history. While doing this exercise, you’ll want to ask yourself:

  1. Over the past year, how much money did I make? Look at sources of income such as paychecks from your job, cash gifts, money from consulting work, etc.
  2. Over the past year, how much money did I invest into myself? This can be answered by looking at your savings accounts and other investment accounts (Retirement Accounts, CDs, Stocks, Mutual Funds, etc.).
  3. Over the past year, how much money did I spend? If you have a bank account, this is very easy to do (just look at the numbers in your debit column).

Special Note: Of the money you spent, you’ll want to break them down into major categories. The categories that I had were:

  • A. Housing (Rent/Mortgage)
  • B. Utilities
  • C. Student Loans
  • D. Medical Bills
  • E. Self-Care
  • F: Groceries
  • G. Fast Food
  • H. Shopping
  • I. Bank & ATM Fees
  • J. Other Loans
  • K. Miscellaneous

If you are anything like me, what you see will be absolutely scary. After going through my bank account, student loan statements and credit card statements, I quickly saw a pattern emerge. I had a hunch that I spent money in a reactionary way. By the time I was midway through examining my “fiscal year,” I KNEW that I was right.

I’m not a bad spender and on its face, I don’t even have bad spending habits. Like many people in my position, an enormous amount of student loan debt ($91k to be exact) and mounting medical bills (roughly $20k), I would say that I was doing pretty good on my sole income (after take home pay for the year, $23,600 — my tax return made me cry). Like much of the working poor, I was able to stay ahead of my bills and I paid them on time. I even had everything automated so that it would come directly out of my account and I wouldn’t have to worry about late fees.

Then something crazy happened – I had surgery.

I knew before I went in for my surgery that I didn’t have enough money saved up to carry me through the time off of work and I made the decision to cancel my auto-pay. If you want to know what happened, check out my Miss Celie Moment post. This was also around the time I began to shut down mentally. I’d been running in circles about leaving a job that reminded me of an abusive relationship; and when I looked at my finances, there were key moments that stuck out to me. In November 2012, I spent roughly $200 on a whim after a bad review from my Executive Director. In December 2012, I went to the movies and dinner and shopping as a way to cheer myself up. It was at this time that I found out I had a fibroid the size of a softball and needed surgery. In February 2013, after a clash with Senior Management, I spent roughly $300 on food, books and clothes (I should also mention that in February I was sleeping on an air mattress in my Cousin’s apartment).

But what also stuck out to me is that I would juggle between paying the bare minimum of a bill and paying a much larger sum on a bill based on my fear of adverse reactions. That same November, I paid almost $400 extra dollars on a student loan because I was afraid I was going to lose my job (my thinking – “better to pay a large amount at once in case I fall behind” – which is foolish). In December, I paid up and over on all of the utilities (don’t do this ever). In February, I transferred all of the money I had in my savings into my checking and again paid up and over on some student loans.

In each scenario, I was scared — terrified — that I wouldn’t have a job. Or that my health prognosis wasn’t favorable. Or that…

Well, it doesn’t matter what I was afraid of (looking back I can say that). What matters is that I now understand that realistically, I made decisions based on fear; and fear and finances are not good bedfellows. Now that I realistically know what my habits are, I can move into developing new ones.

Stay tuned for Rule 4: Build New Habits.

Have you examined your habits lately? What have you learned about yourself? 

My Financial “Miss Celie” Moment (#31WriteNow)

I find something very interesting happening as I write the “Building Blocks for Building Wealth”™ series. Well, not interesting because the more I think about it, the more I expect that to happen. What I mean is that I don’t post about a rule until I feel comfortable posting about it.

And I don’t feel comfortable until I DO it.

With that being said, one the next steps is to “Realistically Examine Your Habits.” By that I mean, take a sobering look at the things you do financially. I’ve written before about habits with money, especially bad ones, stem from something emotional. If you are like me, you’ve had lots of time to practice HIDING those emotions and so you probably don’t know the root cause of your money beliefs.

Today I decided to come face-to-face with one of mine — I don’t open my mail.

Largely, I get reminders of bills and their due dates. When something majorly traumatic happens in my life, those reminders escalate into notices of “Hey! Girl you know you forgot to pay your bill???” and if something absolutely crazy happens, then those turn into shut off notices. Now what does this have to do with a Miss Celie Moment.

If you’ve ever seen The Color Purple*, then you know that there is a pivotal moment for the main character Celie Harris Johnson. During the holidays, Miss Celie is preparing a meal for a large group and Shug (one of my absolute favorite characters ever) happens upon a letter from Celie’s sister, Nettie. Now, Nettie is in Africa and has been for some time after being forced to leave the Mr’s house because of “personal differences**”. As Celie prepares the meal, Shug tells her that she has something to show her and they find an empty room in the house where Celie finally sees the letter. Shug realizes that there have to be more letters because Nettie and Celie were absolutely close…and lo-and-behold, after searching through Mr’s personal belongings, they find them. Shug tells Celie, “Put them in order by date” so she can read them. It is in this moment that Celie faces a truth that she must have either felt foolish for holding in her heart OR it dashes whatever craziness she made up about why her sister (Nettie) never wrote her.

So what does this have to do with me? Remember I said I don’t open my mail?

Well….yesterday I was cleaning up and came across a huge stack of mail. I mean, some things go as far back as April when I had my surgery. The other thing that happened was that I had to face the realization that I worked over 40 hours a week at a job and couldn’t even take care of myself during an extended absence from work. Craziness. Bananas. Downright wrong.

Since April, I’ve been on a silent campaign of not opening jack squat and yesterday it really bit me in the ass (excuse my language). When I took my extended leave from work, I removed all of the auto-payments for loans and utilities from my bank account. I needed to control the payments that hit the account so it wouldn’t overdraft. And I did. But I never remembered to actually pay the bills. The end result:

  • 3 months behind on electricity
  • 2 months behind on phone bill
  • 3 months behind on 4 of 5 of my student loan groups

I’d put numbers to those things…but I don’t want to cry.

The thing I realized while putting my mail in order is that I had a habit of “out of sight, out of mind.” Financially, that’s a dangerous habit and it’s scary to face that part of myself. Fiscally irresponsible isn’t something I’d ever call myself, but that stack of mail tells me that’s exactly what I am. What’s even more stressful is that I’m like many other Black women (well, women of color in particular) in that my income doesn’t just support Me. To me, I realize that I’ve been unfair to others who rely on me which makes me selfish in the wrong way.

So during yesterday’s Miss Celie Moment, I learned a lot about myself. Now I think I can move forward somewhat on getting cracking on these financial goals.

Have you ever experienced a Financial Miss Celie Moment? If so, what was it? Don’t be shy, just share it below.

*It is a great cinematic piece. You should see it. No really. See it if you haven’t already.

**I don’t want to go into why she left. But see the movie…if you haven’t already.

Check Your Financial Health

Are your finances on Life Support? Do you think you have a good idea of what you need to do to get them under control?

Well, if you found this blog, I’d bet my last dollar (not really) that your finances are in a bit of trouble AND that you actually need help getting them under control. Not to worry! This quiz will give you an idea of what you need to start working on. These questions will point out areas that you need to work on yourself. I’ve included a quick write-up at the end of where I stand because I want you all to really know you’re not alone. I’ve also included a link to the original survey because I’ve modified a few of the questions (all modifications are italicized). Here are my answers!

  1. Is more than 15 percent of your income going to pay any kind of debt? The MAJORITY of my income actually goes toward Student Loan and Medical Bills. I look at my income in two different ways: “Before Taxes” and “Take Home” to get an idea of where my money actually goes. I’ll write a post about why this is useful and give you tips/tricks on how to simply calculate where your money goes. (+1)
  2. Are you borrowing money or using credit cards to pay for items you used to pay for with cash? While I don’t borrow money or use credit cards to pay for items I used to pay for with cash, I have developed a nasty habit of using my credit card (which was originally for emergencies) to get me through half of the month. At the time of this post going live, I’m in the midst of developing a personal Credit Card challenge (to clear that balance for good). I also have a few store credit cards with balances near the limits. (+1)
  3. Are you dipping into your savings or any other money stash to pay current bills? In order to dip into a savings account, there must be something in there for you to dip into. Since I’ll readily admit that my savings account looks empty, I have to go ahead and give myself a point for this question. (+1)
  4. Are you paying bills with money intended for something else? Thankfully…no! All of my bills are actually set up on a Kwik-Pay or Automatic Debit System! Additionally, I set them up on days where my Direct Deposit hits my account. It’s almost as though I don’t miss the money because it’s gone before I really have the chance to notice it. I got something right. 🙂
  5. If you or your spouse lost your job, do you have less than three months’ take-home pay in a savings account? Unfortunately no. This point hit home for me when I had to take time off of work to heal from a surgery. Here’s another point for all of the wrong things. (+1)
  6. Can you usually only make the minimum payment on your credit cards or any other credit account? No. I’ve set up automatic payments to take out more than the minimum payment. While this is great, I’ll admit here that the payment amount isn’t enough to put a real dent into the balance on the card.
  7. Are you extending repayment schedules – paying in 60 or 90 days bills you once paid in 30 days? No. This makes me feel a little bit better (this quiz is slowly making me think about all of the things I need to work on). However you should also consider ask yourself this question another way — do you have to ask for extensions on bills because you don’t have enough to cover the small balance for that month? If I ask the question that way, the answer (thankfully) is still no.
  8. Are you near, at, or over the spending limit on your credit cards or spending accounts? Yes. (+1)
  9. Do you take out a new loan before the old one is paid off or take out a new one to pay off an existing loan? No. Thank goodness. The only loans I have are Student Loans.
  10. Are you unsure of how much you owe (within $50)? No. I’m aware of how much I owe. My problem has been getting a handle on being able to put a real dent into it.
  11. Do you habitually pay your bills late? No. Look at answer number 4 for the explanation as to why.
  12. Do you charge more each month than you make in payments? No. I use my credit cards in waves. There may be a period, say of 3 months, where I don’t use them at all AND then, I’ll get all emotional and go on a shopping spree. However, I’ll answer yes to this because the difference in what I buy and what I pay still plays out in much the same way. (+1)
  13. Do you use a cash advance on one credit card to make payments on other credit cards? No. Pretty impossible to do this with one credit card.
  14. Has a collection agency called recently about an overdue bill? Yes. As of the date of this blog post going live, I’ve actually been receiving pretty consistent calls from two companies. *deep sigh* I’m too young for this. (+1)
  15. Are you threatened with repossession of your car, cancellation of your credit cards, or other legal action? No. It hasn’t gotten there yet…and the point of this blog is so that it doesn’t get that far.

I scored a 7. If you’ve answered “Yes” to three or more of these questions, you’re at risk of increasing financial distress and if you gave four or more “yes” answers on the financial health quiz, you’re at risk of slipping into the financial danger zone. My seven means that I DEFINITELY have some areas I need to work on.

But as with all things, it gives a nice snapshot but not really the whole picture. Because this only offered a snapshot, I included the links to two other quizzes below:

How Healthy Are Your Finances? Source: CNN Money. This is an interactive assessment. You start by putting in your age and your gross annual income and go from there. There are some pros and cons to this. The biggest plus is that it is easy to use and gives you a neat little picture of your financial health. It asks you to input how much you put toward (1) Retirement Savings; (2) Housing Payments; (3) Debt; (4) Emergency Savings; (5) Diversification of Stock; (6) Company Stock; and (7) Life Insurance. The major drawback is that  it assumes you work for a company that offers things like company stocks or that you’re investing in the market. I’ve included my neat little picture below (so you can see that I also need work):

As you can see, I got a "C" as a grade on the CNN Money Financial Health survey. It tells me the areas that I need to work on and the areas that I'm doing okay with.

As you can see, I got a “C” as a grade on the CNN Money Financial Health survey. It tells me the areas that I need to work on and the areas that I’m doing okay with.

Quiz: How’s Your Financial Health? by Better Homes & Garden. This one definitely works if you need to consider the spending habits of another person (say, your significant other). For me, there were a few questions that I couldn’t really figure out how to answer because I’m single. However, it’s simple to follow (as it’s a click-through quiz). My only annoyance was the pop up ads of to the side. I didn’t get to see my result because page 3 continued to reload whenever I pressed forward.

I hope that these questions get you start thinking about your Financial Health in a different way and on the road to where you wish to be.