Recovering Broke Guy

A painful reminder of the Importance of a Total Money Makeover

2006-09-01T16:27:00.000-07:00

A painful reminder of the importance of a Total Money Makeover.

It’s been a rough week. My dad died on Tuesday. It came rather suddenly. Only a month ago had he been first diagnosed with “Pneumonia”. Over the next 4 weeks the “Pneumonia” became suspected cancer, to cancer in the liver and lung to cancer all over the body. Only two weeks ago had they said that there were chemotherapy protocols that could improve and extend his life (but probably not cure it). He never got the chance to try as the damage to his liver was too severe and he died 1 week and 2 days after the news was first confirmed.

He was a good man. But woefully inept in his finances .It is his and my mothers experiences and my own similar mistakes that started me on the road to Financial Peace. But I had recently stalled out. We had lost some focus after paying off about 15K. But seeing the aftermath of my dad’s death reminded me of the importance of what we’re doing. I’m going to share what he left my mom. Not to ridicule him, but to remind myself and you the importance of taking care of your finances.

Debt

My dad has almost always turned to debt to solve his immediate financial problems. He refinanced his house in Southern California so many times he eventually had to sell it and move to Nevada because the payment was so high. He came to Nevada with $112,000 and a little more than a year later. He has a house, no money, maxed out credit cards, past due bills, overdrawn checking accounts and even a payday loan off my mom’s paycheck (after doing a cash out refinance 3 months ago). The smaller credit cards had “credit insurance”. But the big one did not. Luckily all but one was in his name only and they cannot come after my mother for those. My mom will not be able to afford a 2000/mo payment and will need too immediately sell the house as she needs the equity to survive.

Savings

At the time of his death, at the still relatively young age of 62 he had not one penny of savings. No retirement, CD’s, stocks, savings accounts or anything. As a matter of fact his checking accounts were overdrawn. The mismanagement has been going on for years. But we suspect it got worse as the cancer began attacking his brain. Luckily they had paid off their cars so we were able to sell one to raise some immediate cash.

Life Insurance

Absolutely no Life Insurance.

Financial Affairs and Paperwork

Going into my dad’s office and sorting through the papers is a little like entering Baghdad. We are still going through stuff and trying to figure out where there at. My mom had no idea where they were at.

It’s such a clear object lesson to the value of the teaching that Dave Ramsey puts out. All of these issues are addressed in them. And if we follow the common sense advice our loved ones will not have to face a financial Hiroshima if we pass away. While I am sad at the passing of my father, I am more motivated than ever to honor him by doing things better and truly changing my family tree.

2006-04-14T09:16:00.000-07:00

Q&A: The Hidden Dangers of Credit-Card Debt - Newsweek Business - MSNBC.com

This is an interesting article, about a documentary entitled "Maxed Out". This is not a game folks. The lenders have no sense of ethical responsibility, only profit.

2006-04-09T23:03:00.000-07:00

HSBC, Citigroup Stymied by Chinese Who Pay Credit Cards in Full
It's like drug dealers trying to get kids hooked.

Quote:
****

China Merchants, HSBC Holdings Plc and Citigroup Inc. must get more Chinese into the borrowing habit to make money in the nation's nascent credit-card market, says Ron Logan, who heads the credit-card unit of HSBC's venture with Shanghai-based Bank of Communications Ltd., China's No. 5 lender.

``While profit may not be immediately possible, this is something that will develop over the next few years,'' says Logan, 49. ``Crucial to achieving this is ensuring that the percentage of active cards grows along with revolving balances.''

***

The Siren Song

2006-03-14T10:52:00.000-08:00

The Siren Song…..

Remember back in greek mythology, where the sirens would try to lure wayard sailors to their deaths by their music. I've lately noticed those sirens are the credit card companies. I'm credit card debt free, and I know our credit is improving. I keep having the thought of shortcutting the Dave Ramsey process by getting 1 credit card, charging two bills per month and autodrafting the entire balance per month, in an attempt to improve my credit faster. We’re starting to get house fever.

I'm not going to do it, but it's amazing the overwhelming conditioning that the banks and credit agencies have done to us. My life has changed so much for the better but yet I think about reaching into the snake pit again. I know the prescription. Listen to all 13 FPU CD's plus 20 hours of Dave Pod casts and call you in the morning.

2006-03-07T09:28:00.000-08:00

The Ultimate Get out of Debt Plan:

DevilDucky - Don't Buy Stuff You Cannot Afford

Need more Help?

Were Credit Card Debt Free!!!!

2006-02-22T09:53:00.000-08:00

We’re Credit Card Debt Free!!!!!

We reached a major milestone in my household this week. As of this morning; We paid off the last two creditors on our debt management plan making us CREDIT CARD DEBT FREE.. Here’s where we are at as of today in our get out of debt and get healthy plan.

Total Debt Paid Off: $ 14,647.31
Emergency Fund: $1000.00

Remaining Debt

Car: $6545.00
Misc Collection Debt: $7945.00
Student Loans: $29,882.00

My goal for 2006 is to be down to JUST the student loans.

Let me hear some of your success stories!

2006-02-06T06:28:00.000-08:00

An Honest Credit Card Company

Dvorak Uncensored has an interesting article about an extremely honest credit card company.

Quick quote:

He said Barclaycard was "having to face up to the fact that clearly we are not making as much money out of customers that pay their bill in full as we are out of those that borrow", he said.

2006-02-03T11:01:00.000-08:00

A Great Idea
Cheers to The Orange County Teachers Federal Credit Union. They are now offering a tool to help people break from the "Payday Lender Cycle"

Many payday lenders charge exorbitant rates and fees for paycheck advances. Our Payroll Savings Loan provides a lower-cost alternative to payday lenders and offers a quick and confidential way for Members to get a cash advance until their next paycheck. Funds can be used for just about anything, such as bills, groceries, and more. By providing a more cost-effective way to get a paycheck advance, we hope to help Members avoid a repetitive payday loan borrowing cycle.

The best part of this tool is the 5% of each advance is put into a Savings Account. That money is locked up for 12 months (the maximum amount of time this tool can be used). After that the consumer should have a good emergency fund and have broken the paydayloan cycle.

I was stuck in this for years and it's great that Credit Unions are offering tools to help people break free. Quitting cold-turkey and eating top-ramen until these are paid back is the best way. But this is an alternative (a nicotine patch for paydayloans!)

2006-02-02T06:51:00.000-08:00

Waking up from Hibernation

Wow I'm hungry. It's been a while folks. So why has it been so long? Well for the last couple of months my "Total Money Makeover" has been in hibernation. I've been treading water. Not horribly slipping but not moving forward. Some updates:

1.) From November thru January I was only able to make minimum payments on debt. All of my snowballing of debts really depends on bonuses and comissions. Which were non-exisistant. But my debt didn't grow.

2.) Several family events and emergencies (car repairs and break-ins) drained my emergency and oops (slush) funds from $1500.00 to $134.00. But it was awesome to be able to say. "The car pump is ONLY $200.00, go ahead and fix it!".

3.)As we've moved into the New Year, my comissions and bonuses have returned. In the month of February I have planned to pay off the remainder of my credit card debt and fully recharge the Emergency Fund. I'll be CREDIT CARD DEBT FREE!!!!!

4.) Next step will be paying off the car, going after the sleeping collection accounts and finally the Student Loans.

Your Financial Recovery will go through ups and downs. Don't give up. If things slow down for awhile, remember you too will wake up from hibernation. Don't give up!!

2005-12-27T13:00:00.000-08:00

Updates Coming...

Hi all,
I've been way negligent on posting to the blog. I will give a big update this week. Stay tuned

Cheers,
Craig

2005-11-07T16:51:00.000-08:00

It's so Easy to Rationalize

My desktop home computer is on it's way out. It's not quite dead yet but at least the hard drive is close to death. I almost had myself convinced to go buy a new complete system out of my Baby Emergency Fund. There were some very good deals out there. However.... I started thinking about a couple of things.

1.) If I spent the majority of my Emergency Fund on this "minor emergency" I am opening a big door for a real emergency.
2.) I started going through the "purchase principles" in the Buyer Beware lesson in FPU. I had "Computer Fever", and then considered the opportunity cost and discussed it with my wife and while we both had a bit of the fever we were able to talk ourselves down.If the computer does die. I'll go through the spare hard drives in the house, then if I HAVE to buy a new hard drive before even thinking about a new machine.

We'll also try to start a sinking fund for a new machine.

2005-10-26T17:04:00.000-07:00

Capital One Loves me!!

My Capital One credit card is closed and being managed my consumer credit counseling. That's why I found this message on my statement hilarious!
**
Your request to close your account has been received. Your account will be closed when it reaches a $0 balance. Until then, you will continue to receive statements and must continue to make payments. All terms and conditions of the account will apply while a balance remains. Please remember to cut your cards and cancel all charges which automatically bill to your account.

We appreciate your business and are converting your account to Platinum status as of October 17, 2005. So, be on the lookout for the arrival of your new Platinum card at your next reissue. Until then, you will receive Platinum benefits when you use your current card. For details about your new Platinum benefits, visit www.capitalone.com/creditcards and click on the Guide to Benefits link. Thanks for choosing Capital One.
***
Woo hoo! My closed, CCCS managed account is now PLATINUM!!! I've arrived baby! Woo hoo!!

2005-10-06T21:53:00.000-07:00

Progress.....

It's been awhile since I posted anythng. But some great news:

We have our starter emergency fund of $1,000.
We have an additional buffer of $500.00

I've paid off the last of my IRS bill.
And we're on track to pay of 6 additional creditors for a total debt reduction of $2700 bucks by November. Including all credit card debt :-)

It's doable folks. Budget, sacrafice a bit, work hard, and DON'T borrow! One of my goals with this site is to provide my perspective, advice and encouragement. Don't give up!!

Cheers,

2005-09-16T18:55:00.000-07:00

What a wondeful problem to have!!

I purposefully drained my Emergency fund to cover some school expenses last week (knowing it would be recharged this week).

I am opening up a Money Market at Capital One for my starter Emergency Fund. They offer Check Writing and ATM withdrawls however my money would be tied up for a few weeks while the account is opened. Since it's an EFund I was a little concerned about tying things up Efund $$ for that long so I called my wife to discuss what we should do. I realized! What a great problem to have! Just a few months ago the discussion was about covering overdrafts or paydayloans. Now we're talking about keeping $$ liquid. We've come a long way! :-)

2005-09-14T16:34:00.000-07:00

Budget Busting and Financial Peace University Update

Ok. It’s not going to be a perfect pay period. The budget for the 1st -16th will be way off.

I’m still getting used to budgeting in a non-crisis mode, so I have tended to forget or was off in several categories:

School Clothes
Dr Copays
Medications (My wife has been sick)
Food (Deviations from the normal menu and a bit more eating out due to my wife being sick)
Blow $$

Luckily we’ve been blessed this month, so I am able to adjust everything to make it work. We will still be able to recharge the $1,000 starter Emergency fund and our $500.00 buffer (pre-emergency fund). In addition I was able to register for school before my graduation deadline,Pay all my bills, knock out most of the small “gnat” size debts, fund a nice evening for my wife’s birthday. Not too bad. All with no debt or even a Wells Fargo Direct Deposit Advance.

We are having an awesome time facilitating Financial Peace University. The program has been fun, and informative and people are being blessed and we’re seeing changes. I can’t wait to do it again! If you are in the Inland Empire of Southern California and would be interested in attending FPU early next year let me know!

2005-09-12T22:12:00.000-07:00

Another chance to see Dave Ramsey...

Tomorrow 9/13/05 check out the Oprah Winfrey show. Dave Ramsey will be appearing assisting people with "Total Money Makeovers". Should be good.

2005-08-30T21:11:00.000-07:00

I'm glad we have our priorities straight!

Here's an interesting quote from a news blog at WWLTV.

2:07 P.M. - (AP) -- A top casino executive is calling on the Mississippi Legislature to enact emergency legislation to keep the state's coast gaming industry alive.
Treasure Bay Casino President and CEO Bernie Burkholder says most of the casino hotels on the coast survived Hurricane Katrina, but several gambling barges suffered extensive damage. He says it could take several years to rebuild.

...guess those rescue and relief efforts can wait.

P.S. I've been really busy with work. I will be writing some more about my own personal financial journey as we go along.

2005-08-30T17:10:00.000-07:00

Pay it Forward….

Looking for a good way to tech your kids money AND character lessons? Dave Ramsey and Chick-Fil-A have teamed up to offer Dave’s kids books on money management called Life Lesson’s with Junior in their kids meals the month of October. 5 of the 7 books will be available. Buy them with the kids meal, or by themselves for about a buck a piece.

Dave Ramsey has also started a new book club and website “Junior’s Clubhouse”. Your kids can get all 7 of the Life Lesson’s with Junior series, one per month. The books come addressed to your kid. I know my daughter is always looking forward to getting her own mail. She never wants the bills though! J

One more product that might interest you parents out there is Dave’s Financial Peace Jr. series. You may have seen this on 60 minutes this week. Basically it’s a set of tools to put your kids on commission instead of allowance. It allows you to track what they earn, pay the commissions and teach your kids budgeting by dividing their commissions into three envelopes Save, Spend, Give. We’re using it and it works pretty well.

What tools do you guys recommend for kids financial education?

2005-08-25T11:27:00.000-07:00

Dave Ramsey on 60 Minutes

Dave Ramsey, author, talk show host and the creator of the program I'm facilitating right now Financial Peace Iniversity will be on 60 Minutes this Sunday night. He is one of the most entertaining debt experts and if you've never heard of him check out the profile this Sunday.

2005-08-21T10:21:00.000-07:00

A Payday Loan Store on every Corner.

I'm visting my parents at their new home in Las Vegas. I noticed one thing right away. There's one of these on EVERY CORNER!!

It was pretty scary. Wonder if those money sucking casinos down the street have anything to do with the amazing proliferation of these monsters?

2005-08-16T23:52:00.000-07:00

Hmmmm,

The Google Adsense ads don't really fit my goals for this site. I may have to take them out. I'm going to see what happens after a couple of additional posts.

Any thoughts?

2005-08-16T14:45:00.000-07:00

Who am I?
Why am I writing this?
Did I really spend half a million dollars on Drive Thru?

Let me give you all some background which will answer the above questions.

I am 34, married for almost 2 years. We have an 8 year old daughter who was part of the package deal with my wonderful wife. I work in IT Sales.

I enjoy theme parks, the Internet and listening to talk radio.

Sounds good so far.....

I've also declared bankruptcy twice.

After the 2nd bankruptcy, I started the usual road of rebuilding my credit. I had reaffirmed a Capital One card, as well as getting an Orchard and First Premier Card and an overdraft protection loan. I also had been caught in the web of Payday loans for years. I probably could of bought several small Central American countries for the interest paid to these sharks.

Never had a plan for my finances just lived from day to day.

I figure I've earned somewhere in the neighborhood of $400-$500K in my working life. I have nothing to show for it.

Well, I did go on a few fun vacations. But I think most of it went to payday lenders and drive thru.

So November of last year I decide enough is enough. IÂm sick and tired of being sick and tired. That started a journey which included consultations with some of the leading financial coaches out there. As well as throwing my debt into a Debt Management plan. But that was only the start. I really needed a plan. I found the plan championed by Dave Ramsey to be one I could get my arms around.

As he would say I didn't start with Gazelle Intensity, but we are building speed and focus.

As a matter of fact we are now facilitating Dave Ramsey's Financial Peace University Basically Weight Watchers for money. We are leading the program not because we know or do anything better. But for two reasons:

1.) We need the additional accountability that comes from leading the group.
2.) The pain we've gone through with money has been so intense I really want to help others.

So there you have it. This blog is an additional piece of that. I want to use this for the same reason to keep myself accountable and help others.

Next I will write about our (wife and I) family background with money.

2005-08-15T10:18:00.000-07:00

Howdy!

Welcome to my chronicles of going from broke to stable.

I'll give you my background, my progress, my experiences helping others by facilitating a class on Financial Management. As well as my random thoughts on things money, and anything else.

More to come! Stay Tuned!