Enemy of Debt http://www.enemyofdebt.com Motivational Money Management Thu, 18 Dec 2014 17:41:52 +0000 en-US hourly 1 Bad Debt Collectors and What You Can Do About Them http://www.enemyofdebt.com/bad-debt-collectors-and-what-you-can-do-about-them/ http://www.enemyofdebt.com/bad-debt-collectors-and-what-you-can-do-about-them/#comments Thu, 18 Dec 2014 05:01:28 +0000 http://www.enemyofdebt.com/?p=15769 Enemy of Debt - Bad Debt Collectors and What You Can Do About Them

Dealing with bad debt is no fun. Dealing with a bad debt collector can be downright terrifying. When you have a bad debt that has gone to a collection agency it can be very easy to want to avoid the pain of the situation or even totally ignore it when you know you can’t possibly pay it.  That’s why some collectors of overdue debt will do everything they can to get your attention, even if it’s illegal. Most debt collection agencies are legit and strictly follow the rules set forth by the FTC  (Federal Trade Commission). However, there are plenty […]

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Enemy of Debt - Bad Debt Collectors and What You Can Do About Them

Dealing with bad debt is no fun.

Dealing with a bad debt collector can be downright terrifying.

When you have a bad debt that has gone to a collection agency it can be very easy to want to avoid the pain of the situation or even totally ignore it when you know you can’t possibly pay it.  That’s why some collectors of overdue debt will do everything they can to get your attention, even if it’s illegal.

Most debt collection agencies are legit and strictly follow the rules set forth by the FTC  (Federal Trade Commission). However, there are plenty of bad debt collection agencies out there that are willing to do whatever it takes to collect an overdue debt.

 

Bad Debt Collectors Can be Over the Top

Some of them even resort to threats of arrest and jail, even telling people that the police will be on their way if they don’t pay their outstanding debt right now. Some of these jokers have even taken to harassing people on Facebook, on the telephone, and through email.

But some of the worst have gone so over the top as to threaten bodily harm, foreclosure on the debtor’s home, and even threatening to exhume the body of a deceased girl whose funeral expenses had gone unpaid.

Obviously, those tactics are ridiculous and illegal, but it happens so much that the FTC received over 180,000 complaints about abusive debt collectors in 2011, a large increase over previous years.

So what can a debt collector legally do to attempt collection of a bad debt?

What can you do if they don’t follow the rules?  First you have to know what the rules are.

Let’s talk about what a debt collector can’t do first.

 

What a Debt Collector Can’t Do

According to the Fair Debt Collection Practices Act,

  • They are not allowed to threaten bodily harm (unless you borrowed money from the mob, then you’re playing by Vito’s rules).
  • They cannot have you arrested.  There is no such thing as debtor’s prison anymore.
  • They can’t take your home or threaten to take your home.
  • They can’t publish or reveal to anyone else that you have an outstanding debt.
  • They can’t threaten to take away child custody.
  • They can’t have you deported.
  • They can’t call you before 8:00 am or after 9:00 pm
  • They can’t call you at all if you asked them in writing to stop, or if you’ve hired an attorney.

If you’re being harassed by a debt collector in these ways, you do have options available to you to fight back and eliminate that bad behavior.  Check these out:

  • Call the collection agency-  Do this first.  It could be a legitimate debt collection company that wants to work with you to collect the debt, and the one person that contacted you is just a bad apple.  If you can’t get anywhere taking this step, then try the others below.
  • Hire an attorney-  Probably your best bet for immediate help.  Make sure you have detailed records to back up your complaint.  A lawyer who is a member of the National Association of Consumer Advocates will be more likely to have experience in these types of cases.
  • Make sure you have it in writing-  Within 5 days of first contacting you, the agency attempting to collect the bad debt must send you written notice of who you owe, how much you owe, and what to do if you don’t think you owe the money.  If they haven’t done this first, they can’t contact you any other way.

 

You Can Do Something About It

Hopefully, you’ll never have to deal with debt collectors, especially the bad ones.   But if you do, the knowledge you’ve gained here may come in handy and help keep you from added despair.

Of course, if you have debt and you’re sick and tired of that debt dragging you down like a Mr. T necklace on a 98 pound weakling, maybe it’s time to say “I’ve had enough!”, stop the excuses and do something about it.  My “Celebrating Financial Freedom” online get out of debt course is available here.  You won’t regret it.

Question:  Have you ever had a debt collector threaten or harass you? Leave a comment and tell me about your experience.

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Why I’m Completely Changing My Health Insurance in 2015 http://www.enemyofdebt.com/why-im-completely-changing-my-health-insurance-in-2015/ http://www.enemyofdebt.com/why-im-completely-changing-my-health-insurance-in-2015/#comments Wed, 17 Dec 2014 12:32:46 +0000 http://www.enemyofdebt.com/?p=15773 Enemy of Debt - Why I’m Completely Changing My Health Insurance in 2015

I’ve always thought of my health insurance as just….well, insurance. Much like car insurance, it’s something I willingly pay for each month to help pay for the result of a catastrophic medical event. If I get cancer, or some other serious disease and require expensive treatment insurance would be there to help take care of the bills. If I have plantar faciitis for a year and finally decide to go see a doctor, I want it to be covered. If my kids aren’t feeling well, I don’t want to have to think twice about taking them to the doctor, because […]

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Enemy of Debt - Why I’m Completely Changing My Health Insurance in 2015

EOD_health Care_pic

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I’ve always thought of my health insurance as just….well, insurance. Much like car insurance, it’s something I willingly pay for each month to help pay for the result of a catastrophic medical event. If I get cancer, or some other serious disease and require expensive treatment insurance would be there to help take care of the bills. If I have plantar faciitis for a year and finally decide to go see a doctor, I want it to be covered. If my kids aren’t feeling well, I don’t want to have to think twice about taking them to the doctor, because I’ll know that the office visit won’t cost me a cent.

I’ve always thought the purpose of insurance was to protect against the expensive unexpected, and medical expenses are expensive. It’s not something on which I would expect to ever get a positive return. Every year of my eighteen year career, I’ve chosen a low deductible Preferred Provider Organization (PPO). It always seemed to be the best decision because if a member of the Pizel household would fall ill, the bill would very low, if not zero. If there was a major medical catastrophe, the money out of our pocket would be significant, but the least out of all the plan options.

I had never looked into other options, or these health savings accounts that seem to becoming more and more popular these days. My thought process was, I have a good job and can afford good insurance, why not buy the best insurance possible?

Does this sound like you? Have you followed this same stream of logic? If so, you may have been throwing your money out the window unnecessarily just as I have been for the last eighteen years.

I had planned on doing exactly the same thing this year as the time for enroll in our health care choice for 2015 was at hand. However, some hallway talk regarding our options prompted me to scrutinize the options closer. What I discovered made a great case for switching to a high deductible PPO with a health savings account (HSA).

What Would I Lose With A High Deductible PPO:

  • My individual deductible would double, going from $1250 to $2500
  • Diagnostic office visits go towards deductible instead of being covered 100%
  • Prescription drugs go towards deductible instead of being covered 80% with a maximum amount per prescription.

What I would Gain With A High Deductible PPO:

  • The high deductible PPO plan is $300 a month cheaper than the low deductible version.
  • The high deductible PPO plan can be paired with an Health Savings Account (HSA)
  • Money can be deducted from my paycheck and placed in my HSA tax free
  • My Employer offers $1,100 healthy living incentives that can be earned and deposited tax free into our HSA.
  • I have options as to where my HSA funds are invested to help them grow
  • If I were to have the $300 difference in the price of the plans placed into an HSA instead, and fulfilled the employer specified incentives, the account would accumulate $4,700 by the end of the year.

Analysis:

The question is, do I normally have more than $4,700 of medical expenses in a year? The answer is a resounding, “No.” Our family had two non-preventative doctor visits last year (which would still be covered 100% under the high deductible PPO), which is an average year in our family with regards to medical care needs. These two visits would not have added up to $4700 of medical expenses.

What happens To The Money In an HSA?

When the year is over, your money stays exactly where it is. It continues to accumulate gains, and you can continue to put money into it. Some even use it as a form of retirement savings, but you can certainly use it to save for future medical expenses as well.

How Easy Is It To Use HSA Funds?

This is something that is likely different from provider to provider, however I will be supplied with an HSA debit card. When I pay for qualifying medical expenses such as office visits and prescription drugs I simply use the HSA debit card just as I would use my own bank debit card

The fact of the matter is, our family just doesn’t need medical care very often. Therefore, throwing our money towards high premiums for coverage we don’t use is a complete waste. The advantage of switching to a high deductible PPO is that it puts us more in control of our own money, which is always a good thing.

Have you always simply purchased the “best insurance you could afford?” Have you really ever looked into a high deductible plan with an HSA?

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I Love You Like a Blogger Roundup – 12/12 http://www.enemyofdebt.com/i-love-you-like-a-blogger-roundup-1212/ http://www.enemyofdebt.com/i-love-you-like-a-blogger-roundup-1212/#comments Fri, 12 Dec 2014 15:42:19 +0000 http://www.enemyofdebt.com/?p=15759 Enemy of Debt - I Love You Like a Blogger Roundup – 12/12

Only two more shopping weekends until Christmas, how is your shopping coming along??  My kids submitted their lists last week, and we’ve been picking items off as the days tick by.  We’ll pick up a few more items this weekend, and I’ve got some gifts for Vonnie ordered online and being shipped.  This could turn out to be the easiest Christmas shopping season ever!! To keep you financially motivated and on track, here’s my favorite posts of the week…..check ‘em out and give them some love – and do NOT forget to pump those fists! Posts That Make Me Fist […]

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Enemy of Debt - I Love You Like a Blogger Roundup – 12/12

Walmart-FamilyMobile-MarathonOnly two more shopping weekends until Christmas, how is your shopping coming along??  My kids submitted their lists last week, and we’ve been picking items off as the days tick by.  We’ll pick up a few more items this weekend, and I’ve got some gifts for Vonnie ordered online and being shipped.  This could turn out to be the easiest Christmas shopping season ever!!

To keep you financially motivated and on track, here’s my favorite posts of the week…..check ‘em out and give them some love – and do NOT forget to pump those fists!

Posts That Make Me Fist Pump

Shameless Self Promotion

TeamEOD Was Recently Included In The Following Carnivals

Carnival of MoneyPros hosted by Business Action For Water
Yakezie Carnival hosted by Broke Girl Rich
Finance Carnival For Young Adults hosted by Frugal Students
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Warning: Shopping Without A List Is Hazardous To Your Budget http://www.enemyofdebt.com/warning-shopping-without-a-list-is-hazardous-to-your-budget/ http://www.enemyofdebt.com/warning-shopping-without-a-list-is-hazardous-to-your-budget/#comments Wed, 10 Dec 2014 13:04:23 +0000 http://www.enemyofdebt.com/?p=15737 Enemy of Debt - Warning: Shopping Without A List Is Hazardous To Your Budget

My love of lists is almost legendary, my daily activities driven from them. I have different lists for different parts of my day: Things needing to be done at work, written on my office white board Personal life todo list written in a notebook on the kitchen counter Blogging todo list written in a notebook on my computer desk My lists help me not only remember things that need to be done, but also to prioritize them. My wife sometimes makes fun of me because of my lists, but she understands the importance I place on them. I commonly find […]

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Enemy of Debt - Warning: Shopping Without A List Is Hazardous To Your Budget

List_Pic

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My love of lists is almost legendary, my daily activities driven from them. I have different lists for different parts of my day:

  • Things needing to be done at work, written on my office white board
  • Personal life todo list written in a notebook on the kitchen counter
  • Blogging todo list written in a notebook on my computer desk

My lists help me not only remember things that need to be done, but also to prioritize them. My wife sometimes makes fun of me because of my lists, but she understands the importance I place on them. I commonly find things added to my list on the kitchen counter written in her handwriting. She knows that if it’s on the list, it will get done.

I also make a detailed list before I go grocery shopping. Another list that my wife gives me grief about at times. I tell her that it saves me time and money, but I think she had a hard time believing me, until yesterday.

Let me tell you a tale of two shopping trips.

Shopping Without A List:

I dropped Vonnie off at Sam’s Club. She had signed up for her turn at supplying treats for the employee break room at her job for the week and wanted to pick up some snacks. She had a plan loosely formulated in her head, but no hardened list.

Shopping With A List:

I went to the Walmart next door to do grocery shopping for our family for the upcoming week. I had a detailed list, and flew through the store picking up everything on that list. Once I had everything in the cart, I headed to the self-checkout aisle.

As my receipt was printing, I called Vonnie and let her know I was done. I met her in the parking lot, and we loaded our groceries into the van.

Shopping Without A List Results:

I had a cart heaping with groceries and household items for a bill that rang up to just over $130. I got exactly what was on the list, have a purpose for every item that I purchased, and actually came in under budget for groceries for the week.

Shopping With A List Results:

She handed me a receipt totaling just under $60 for six bulk snack items plus a shirt that had caught her eye. She didn’t have a solid plan as to what she was getting, and because of that she may have to go back again and get more things. She also ended up getting an item that was completely unrelated to why she went into the store to begin with.

My list gave me two major advantages:

  1. No Wasted Time Browsing: I knew exactly what I was going to get, and I’ve been in Walmart enough times to know exactly where the items are located. It was simply a matter of execution, and not allowing myself to get distracted by other things on display. My wife, on the other hand, was simply looking around for things that looked good. Her sensors were on high alert looking for anything that appealed to her, including a shirt which had nothing to do with her mission.
  2. Pre-determined Spending: Since I knew exactly what I was getting, I already knew how much I was going to spend. I was not surprised at how many items I got for the money I spent. My wife on the other hand, was surprised and disappointed that she spent $60 on only a handful of items.

“I didn’t think I was in the store that long. How in the world did you get done grocery shopping so quickly?” she asked me as we drive home.

The answer was simple. It’s the power of the list.

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I Love You Like A Blogger Roundup – 12/5 http://www.enemyofdebt.com/i-love-you-like-a-blogger-roundup-125-2/ http://www.enemyofdebt.com/i-love-you-like-a-blogger-roundup-125-2/#comments Fri, 05 Dec 2014 15:52:20 +0000 http://www.enemyofdebt.com/?p=15731 Enemy of Debt - I Love You Like A Blogger Roundup – 12/5

Great weekend ahead, EOD Nation!  We have our neighborhood Christmas party this evening hosted by one of our neighbors.  Tomorrow night we’re getting together with friends for an ugly sweater party.  Each gathering will require us to bring along some dish to pass, but throwing together some sort of appetizer or dessert will be super cheap.  Two nights of fun with friends, two nights with very little spent.  That’s what I like to call #WINNING. It definitely deserves some fist pump action….what do you have going this weekend? Posts That Make Me Fist Pump How To Save $200 On Your […]

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Enemy of Debt - I Love You Like A Blogger Roundup – 12/5

fistpumpGreat weekend ahead, EOD Nation!  We have our neighborhood Christmas party this evening hosted by one of our neighbors.  Tomorrow night we’re getting together with friends for an ugly sweater party.  Each gathering will require us to bring along some dish to pass, but throwing together some sort of appetizer or dessert will be super cheap.  Two nights of fun with friends, two nights with very little spent.  That’s what I like to call #WINNING.

It definitely deserves some fist pump action….what do you have going this weekend?

Posts That Make Me Fist Pump

Shameless Self Promotion

TeamEOD Was Recently Included In The Following Carnivals

Carnival of Money hosted by Carnival of Money
Yakezie Carnival hosted by Messy Money
Finance Carnival For Young Adults hosted by Broke Girl Rich
Finance Carnival For Young Adults hosted by Business Action For Water
Carnival of Retirement hosted by Home Money Easy
Carnival of Money hosted by Carnival of Money

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Instant Gratification Here, There, and Everywhere http://www.enemyofdebt.com/instant-gratification-here-there-and-everywhere/ http://www.enemyofdebt.com/instant-gratification-here-there-and-everywhere/#comments Mon, 01 Dec 2014 13:58:45 +0000 http://www.enemyofdebt.com/?p=15709 Enemy of Debt - Instant Gratification Here, There, and Everywhere

I felt myself becoming more agitated as I sat at the stoplight waiting for the light to turn green. I was on my way to the gym, and was anxious to get started. The light was seemingly taking forever, so I decided to figure out how long the light was red.  I was sure it would be a ridiculous amount of time. I remember that I had started a new track as I pulled up to the intersection so I would easily be able to calculate how long I was sitting there. After what seemed like an excruciating eternity the […]

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Enemy of Debt - Instant Gratification Here, There, and Everywhere

trafficLight

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I felt myself becoming more agitated as I sat at the stoplight waiting for the light to turn green. I was on my way to the gym, and was anxious to get started. The light was seemingly taking forever, so I decided to figure out how long the light was red.  I was sure it would be a ridiculous amount of time. I remember that I had started a new track as I pulled up to the intersection so I would easily be able to calculate how long I was sitting there. After what seemed like an excruciating eternity the light finally turned green.  I looked at the digital display and found that I was exactly two minutes and thirty seconds into the song.

As I stepped on the accelerator, I physically hung my head in shame as I reflected upon how bent out of shape I had become because my progress towards the gym was halted for a mere 150 seconds. I instantly started thinking about how our entire existence now revolves around having everything we need at our fingertips, and how any obstacle towards immediate fulfillment of our wants and needs seems unacceptable.

Let me give you a few examples I thought of as I drove the rest of the way to my gym:

  • Text Message Response: We were traveling to a nearby town last weekend and my wife texted our son, who had stayed home, to see if he was doing alright. When he didn’t respond within a few minutes she started getting concerned. Think about that for a minute, if you text someone, at what point to you start to wonder if they are simply ignoring you? How long of a time goes by before you start trying to assign some sort of meaning to the lack of a response?
  • On Demand Movies: Remember the days when you had to drive to a movie rental store to rent a movie? Now we have an almost limitless number of movies and TV shows available through streaming services such as on demand cable television, Netflix, and others. How quickly do you become upset when you cannot find the movie you want to watch immediately?
  • Internet Searching: The World Wide Web has the answers to everything. You bring up your favorite search engine, type in what you’re looking for and pages of answers pop up almost immediately. How quickly do you become frustrated when you discover that your first search did not yield the answer you were looking for and you have to refine your search phrase once or even (gasp) twice?

In these examples the result is relatively harmless. You inflict upon yourself unnecessary frustration and aggravation, but that can be dissipated quickly. But now let’s apply this perspective to material possessions. If we expect and demand our wants and needs to be instantly fulfilled, how will we react when we see something we’d like to own?  The ability to have everything we want at a moment’s notice is so ingrained into our life that we become frustrated when we cannot have what we want, at the very moment that we want it.

In this world of instant gratification, it’s no wonder we turn to credit.

Credit allows us to to perpetuate our perspective that we can, and should, have everything we want at a moment’s notice.   Unfortunately, some of us do not think of the effects this will have later, and end up in trouble financially.

We need to change the underlying expectation that everything should be instantly available.  Remember those Heintz ketchup commercials from years ago featuring someone waiting an insane amount of time for the thick red condiment to roll out of the bottle?  The scene would then cut to the person experiencing extreme pleasure by eating something with the ketchup on it, with the catch phrase, “Good things come to those that wait.”  I remember as a teenager lying awake at night thinking about things that I wanted, and calculating how long I would have to save up to buy it.   Night after night I would lay awake in excited anticipation of earning something new.  We need to reintroduce that excited anticipation, and this perspective of working to earn something as the norm.

Think about that the next time you’re waiting in frustration at a red light.  But don’t think too long, you’ll only be there for 150 more seconds.

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I Love You Like a Blogger Roundup – 11/28 http://www.enemyofdebt.com/i-love-you-like-a-blogger-roundup-1128/ http://www.enemyofdebt.com/i-love-you-like-a-blogger-roundup-1128/#comments Fri, 28 Nov 2014 16:26:16 +0000 http://www.enemyofdebt.com/?p=15697 Enemy of Debt - I Love You Like a Blogger Roundup – 11/28

I’m breathing a sigh of relief today, my friends.  In preparation for Thanksgiving at my mother-in-law’s house I spent all day Wednesday smoking a brisket, and got up crazy early yesterday morning to smoke a ham.  I got a great night’s sleep last night though. I hadn’t planned on going Black Friday shopping, but just for fun I looked through all the ads looking for anything that I was in the market to buy.  I found nothing.  The big goose egg.  Nada.  I woke up this morning refreshed and ready to take the rest of the weekend to recharge the […]

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Enemy of Debt - I Love You Like a Blogger Roundup – 11/28

Walmart-FamilyMobile-Marathon

I’m breathing a sigh of relief today, my friends.  In preparation for Thanksgiving at my mother-in-law’s house I spent all day Wednesday smoking a brisket, and got up crazy early yesterday morning to smoke a ham.  I got a great night’s sleep last night though.

I hadn’t planned on going Black Friday shopping, but just for fun I looked through all the ads looking for anything that I was in the market to buy.  I found nothing.  The big goose egg.  Nada.  I woke up this morning refreshed and ready to take the rest of the weekend to recharge the batteries and get ready for the next week.

Oh, but that doesn’t mean I can’t fist pump……

Posts That Make Me Fist Pump

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A Black Friday Deal you WON’T believe! http://www.enemyofdebt.com/a-black-friday-deal-you-wont-believe/ http://www.enemyofdebt.com/a-black-friday-deal-you-wont-believe/#comments Thu, 27 Nov 2014 15:11:44 +0000 http://www.enemyofdebt.com/?p=15691 Enemy of Debt - A Black Friday Deal you WON’T believe!

Good morning and Happy Thanksgiving! I hope your day is filled with family and board games along with tons of turkey and stuffing (I love stuffing). I should be entering receipts into YNAB right now. I usually check our bank account for my wife’s deposits at the same time but when I signed on to online banking I saw this: They are using the holidays as an excuse to sell you money Look, I understand if you don’t have enough money to purchase all the Christmas gifts you’d like to. Maybe you will borrow money to buy gifts this year, I’m […]

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Enemy of Debt - A Black Friday Deal you WON’T believe!

Good morning and Happy Thanksgiving! I hope your day is filled with family and board games along with tons of turkey and stuffing (I love stuffing).

I should be entering receipts into YNAB right now. I usually check our bank account for my wife’s deposits at the same time but when I signed on to online banking I saw this:

Black Friday Loan Special

DON’T FALL FOR THIS!

They are using the holidays as an excuse to sell you money

Look, I understand if you don’t have enough money to purchase all the Christmas gifts you’d like to. Maybe you will borrow money to buy gifts this year, I’m not here to judge.

We certainly don’t have an unlimited supply of gift money and borrowing would be a quick fix.

I want to buy my wife a $300 bluetooth-enabled car stereo for her 10yr old SUV and $120 J-racks for her kayak, but our goals are a bit more noble.

My wife DEFINITELY deserves those types of gifts, but we decided to be purposeful with our spending.

BTW: Nobody is going hungry and there will be gifts under the tree, so we’re all good.

The real problem with this ad

They are monopolizing on the weekend festivities to market their product to you.

What’s wrong with that? Everyone does it, and I understand that too.

But what does selling loans have to do with Black Friday?

THEY ARE SELLING YOU MONEY!

Hello? McFly! Let’s just call it what it is – they are selling you money.

Do you really need a Home Equity loan for Christmas? If so, I have a suggestion that will work better (keep reading).

Is this deal on an auto loan only available on November 28 and 30th? (Note: They won’t be open on Thanksgiving Day or Sunday, so this is truly a ‘Limited Time Offer”)

HA!

If you need to borrow money for gifts, do this

Get ready, I’m about to recommend doing something you would never expect. I am going to show you how to borrow money but STAY within budget.

First, make a list of names

Santa has a list and checks it twice. Even I can make one that includes my friends and family.

I use my phone’s Contacts to find those names I would otherwise have forgotten. Note: There are only a few people to buy gifts for that are not in your phone’s Contacts. Think about it – if you don’t have their phone number then they are merely an acquaintance (except the obligatory White Elephant  gift-away or something for your boss).

Second, write down the gifts and estimated costs

This is the hard part. What would Aunt Sally like?

If you can’t think of anything then a gift card will suffice. Yes, we’ve been told that gift cards are gift cards are impersonal but they have become more socially acceptable over the past 5 years. (In fact, that’s all I want these days).

Third, take a cash-advance on your credit card

Yeah, you read that right. I just told you to take a cash advance on a CREDIT CARD! Remember, this is ONLY IF YOU MUST BORROW to buy gifts. If you have the money then ignore this advice.

Take out the exact amount of money you need for all your gifts and put it in an envelope. Keep the list with the envelope and only use the money to buy what is on the list.

The reason? Spending cash will keep you on budget.

Even if you get charged a 3% fee for the cash advance at least you won’t overspend. That’s the magic of cash: When it’s gone, it’s gone. There’s no going over budget. You have restricted your gift-giving to purchase plus 3 percent.

Fourth: Pay back the debt ASAP!

I’m a NOT recommending you borrow money for Christmas, but if you are new to getting out of debt or just need a little more to get by then this is the best way to limit the damage.

Make your first 2015 New Year’s Resolution to pay off the debt your Number 1 Priority!

Make sure this never happens again. As soon as the debt is gone start putting something away every month for next year.

Join a savings club at your local bank. Put $20 or $50 a month away and in ten months you will have $200 – $500 for Christmas 2015.

Eat turkey, don’t be one

One of the worst things you can do to your finances is fall for gimmicky deals and marketing tactics that have nothing to do with your long-term goals.

They are designed by very smart people with lots of dollars in their department to entice you to purchase what they have to sell.

This is all fine-and-good for retail stores, restaurants, and supply chains but what does Black Friday have to do with borrowing money?

It shouldn’t.

I laugh at my bank’s Black Friday Weekend Loan Sale, especially since they will only be open two of the three days this weekend. If you want to buy a car, don’t let a flashy ad make the decision for you.

There will be plenty of deals in the future. Your job is to avoid them at all costs for the good of your family and your future.

Happy Thanksgiving, have fun sitting in lines outside of Walmart tonight, and remember the REAL reason for this season.

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What Your Credit Score REALLY Means http://www.enemyofdebt.com/what-your-credit-score-really-means/ http://www.enemyofdebt.com/what-your-credit-score-really-means/#comments Wed, 26 Nov 2014 12:54:25 +0000 http://www.enemyofdebt.com/?p=15671 Enemy of Debt - What Your Credit Score REALLY Means

I’m currently enrolled in a credit monitoring service, getting periodic updates about inquiries into my credit, and small changes up or down in my FICO score.   When we charged something on our American Express, I was notified of a balance change. When we applied for a consolidation loan, I was notified of the inquiry and of a slight decrease in my score. Everything made sense, until I read a notification that landed in my inbox last week. My FICO score had increased by 24 points, and I couldn’t believe the reason why. A few weeks ago, my wife was in […]

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Enemy of Debt - What Your Credit Score REALLY Means

FICO

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I’m currently enrolled in a credit monitoring service, getting periodic updates about inquiries into my credit, and small changes up or down in my FICO score.   When we charged something on our American Express, I was notified of a balance change. When we applied for a consolidation loan, I was notified of the inquiry and of a slight decrease in my score. Everything made sense, until I read a notification that landed in my inbox last week.

My FICO score had increased by 24 points, and I couldn’t believe the reason why.

A few weeks ago, my wife was in need of some new clothes, and we had money budgeted for her to go shopping. She had a coupon that would save her some money at a specific retailer; unfortunately it would require her to use her store credit card.   We have a history of credit card abuse, most recently noted in our failed attempt to participate in the credit card rewards game. We had decided that credit cards are simply not for us, therefore I didn’t want to even contemplate using the coupon. After some discussion we decided that we would use the line of credit and the coupon, but immediately pay the bill online when we returned home.

We executed our plan as discussed, and figured that was the end of it. I didn’t think about it again until I got that email from my credit monitoring system. As mentioned above, it was a notification that my FICO score had increased by 24 points. Here’s the reason given for the increase in my FICO score:

Dormant Card Activity: An account that has been inactive for more than 12 months has become recently active.

My credit score went up because we used a line of credit that had not been used in 12 months.   This is the complete opposite of what I would expect.   Let’s try a little exercise. Let’s say you were told to evaluate someone’s credit score based upon the fact that they just charged $200 (sample amount) on a line of credit that hadn’t been used in over a year. What thoughts would come to mind? Here’s what would be going through my head:

  • Negative: The consumer has increased their amount of consumer debt.
  • Negative: The consumer may be purchasing items they don’t have the cash for, as they have not used this line of credit for in over a year.
  • Conclusion: This consumer’s financial situation may have taken a turn for the worse, thus their credit score should be reduced.

Seems logical, however, that doesn’t seem to be the way the folks at the credit score calculating think tank are looking at my recent spending patterns. I searched the internet to try to figure out why using a dormant line of credit would cause such a jump in my FICO score, and ran into a much bigger mystery:

It’s difficult to find a simple description of what a credit score really means.

I challenge you to bring up your favorite search engine and search for “what does a credit score mean” and read a couple of the top articles. Here’s what I found:

  • The Range Definition: Many of the articles define what a credit score means by defining the ranges. You may have seen these as well, anything above 720 is excellent, etc, etc, etc. Then they go on to define all the good things a high credit score does for you, and all the bad things associated with a bad score.  This definition only describes what you can do with your credit score, and NOT what it really means!!
  • The Behavior Definition: Other articles will define a credit score by what actions a consumer can take that will result in an increase or decrease in your score. Paying bills on time will increase your score, racking up too much debt will lower your score. This definition only describes what spending behaviors you exhibited that led to your score’s calculation!
  • The Big Words Definition: Finally, a few articles will define your credit score as a measurement of your credit worthiness.    The article may mention that your credit score is an indication of whether you are more or less apt to pay your bills on time, or how you will handle a credit limit increase.  This seems like a valid definition, until I try to apply this to my scenario.  It doesn’t fit!

I took my example of using a dormant account, and applied it to these three types of articles I found searching for the meaning of a credit score and was left scratching my head. There was nothing about me using a dormant line of credit that seems to match anything that would lead me to believe that my credit score should be increased. It was at this point that the universe hit me over the head with the real definition of the credit score.

A credit score is a measurement of the likelihood that creditors will make money by extending you credit.

Think about these points:

  • Charge Nothing: If you’re not using the account, creditors are not making any money.
  • Charge a little: If you use your lines of credit but the balance is fairly low, it means that you are carrying balance from month to month paying absurd interest rates. But your credit utilization is not increasing; therefore the risk factor of you defaulting is low.
  • Charge too much: Your utilization is high, and you are paying your bills each month, but you are obviously living beyond your means, thus the risk of you ditching your debt and leaving us holding the bag is high.

Now, apply my scenario to the above rules. For an entire year, this creditor made zero off of me. But now that the account is active again, the chance that I may continue to use it is higher. The chance that I will carry a balance from month to month and pay interest is higher. The chance that any creditor will make money from me is also now higher.  My definition seems to more accurately describe why my credit score increased.

The thought I’m left with is this: If my credit score is a measurement of the likelihood that creditors will make money from me, that means they think I’m likely to be paying interest. If I’m likely to pay interest, then I’m overpaying for the goods and services that I purchase. Is a good credit score really a good thing?

Have you ever seen a change in your credit score that left you scratching your head?  What do you think of my definition of the credit score?

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7 Ways You Can Stay Motivated to Get Out of Debt http://www.enemyofdebt.com/motivated-get-out-of-debt/ http://www.enemyofdebt.com/motivated-get-out-of-debt/#comments Fri, 21 Nov 2014 15:51:09 +0000 http://www.enemyofdebt.com/?p=15661 Enemy of Debt - 7 Ways You Can Stay Motivated to Get Out of Debt

Over the years I’ve seen plenty of people get motivated to get out of debt, but they never end up following through with the process.  They are usually pretty fired up about getting out of debt and start out very motivated.  But not long after they start the process, their energy flags and it’s not long before they lose their motivation. I’ve seen a lot of other people make decent progress in paying down debt, but for whatever reason, they end up losing their focus and go back to their old habits, never finishing the get out of debt process.   How to […]

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Enemy of Debt - 7 Ways You Can Stay Motivated to Get Out of Debt

Over the years I’ve seen plenty of people get motivated to get out of debt, but they never end up following through with the process.  They are usually pretty fired up about getting out of debt and start out very motivated.  But not long after they start the process, their energy flags and it’s not long before they lose their motivation.

I’ve seen a lot of other people make decent progress in paying down debt, but for whatever reason, they end up losing their focus and go back to their old habits, never finishing the get out of debt process.

 

How to Get on the Right Track and Stay There

When you finally decide it’s time to get out of debt, it’s easy to get fired up about the idea of becoming debt free.  But actually doing the work that will get you there is much harder.

You have to look past the grand idea and let reality smack you in the face.  You have to understand that it takes work to get out of debt, and you have to stay motivated if you want to actually get the job done.

Once you’re committed to doing the work, you have to realize that it takes time to get out of debt.  I think time is probably the most important factor as to why so many people don’t stick with the process.  It’s easy for that initial excitement to wear off and let the passage of time allow you to slowly return to your old habits.  It takes commitment to constantly keep the ultimate goal in mind.

With that said, here are my top 7 ways you can stay motivated to get out of debt, along with a list of great resources at the end of the post.

 

7 Ways You Can Stay Motivated to Get Out of Debt

 

Get Mad at Your Debt

When you’re getting out of debt, getting emotional about it can actually be a good thing.  You have to get so mad at your debt that you take a never give up attitude toward it.  You have to do whatever it takes to meet your goal, even when things get difficult.

 

Get Naked

One thing I’ve noticed is that a lot of people still use a credit card when they’re getting out of debt.  They use the excuse that it’s “just in case” they need it for an emergency.

But here’s the deal.

If you have credit available, you’re most likely going to use it.

That’s why I tell my followers you gotta get naked.

Getting naked means you should cut up all your credit cards and go naked with credit.  Yes, I know that’s kind of scary.  I remember how Angie and I felt when we got rid of our credit cards for good.

It was extremely weird.

In fact, I think the naked analogy is a good one, because you feel exposed and vulnerable.  But if you follow the right steps, you find that you’re actually less vulnerable when you go naked with credit.

 

Get An Accountability Partner

Many times during your journey out of debt, it can feel like a lonely ride.  Getting out of debt can take a while, so if you have someone who can give you moral support throughout your journey, it can be a great help.  Share your goal of getting out of debt with a friend or a mentor who’s willing to encourage you.

Preferably you’ll want to find someone who is already out of debt, and understands what it takes to get there. An accountability partner can help you continue to see the light at the end of the tunnel.  They can assist you when you get stuck and feel like things are going nowhere.  A good accountability partner will always keep you moving down the right path.

 

Keep a Journal or a Blog on Your Progress

Writing things down is a good exercise to help you stay focused.  When you write about your feelings, struggles, victories, or whatever else you’re experiencing in your debt payoff journey, you’ll discover that it forces you to think about what you’re doing.

It helps keep you engaged in the process and moving forward toward each small goal.  Writing about your journey is also great because you can look back at your first entries and see how far you’ve come, which helps motivate you to continue.

By the way, some of the best personal finance blogs were started by people writing about their journey out of debt, so you may be able to inspire others and maybe even make a little money while you’re at it!

 

Constantly Educate Yourself

It’s very important to constantly educate yourself about finances and getting out of debt.  Listen to podcasts, watch videos, read books, and read blogs about the subject.

The more you expose yourself to the subject, the more you understand it.  The more you understand it, the more motivated you’ll be to stick with the process.  When you learn how to use your money wisely, you will be able to have much more control over your situation.

I’ve included a list of great resources at the end of the post to get you started.

 

Learn to Develop New Habits

There’s no way you will ever get out if debt if you keep doing the same things that got you into debt in the first place.  Learn to develop new habits such as eating out less, using cash only (remember going naked?), learning to do a written budget every month, taking lunch to work, shopping only when you need something, etc.

When you change your habits, it actually changes the way your brain works, and can lead to lasting results!

 

Focus On Getting Out Of Debt Just a Little Every Day

Getting rid of a mountain of debt happens one small step at a time.  Find ways to focus on the process of getting out of debt every single day.  Have a thought for the day, say a prayer, read an article, find something new to save money on, or listen to a podcast.

small effort every day keeps you engaged in the process and helps you stay motivated to continue the journey.

 

Getting Out of Debt Is Always Worth It!

Developing the discipline to stick with a get out of debt plan to the end can be more difficult for some people than for others.  But when you decide to be relentless about overcoming the obstacles, it makes getting out of debt much easier in the long run.

Getting out of debt is not always easy, but it’s definitely worth the journey!

Below you’ll find some great resources I recommend to help you stay motivated and educated when it comes to getting out of debt.

Question:  Have you ever become discouraged while trying to pay off debt? Share your thoughts and leave a comment.

 

Resources I Recommend

Blogs:

Celebrating Financial Freedom

Beyond Debt Freedom

Christian PF

Bible Money Matters

The Christian Dollar

 

Books:

Financial Peace- Dave Ramsey

Balance: The Quick and Easy Guide to Financial Stability Using a Budget- Jason Cabler

The Total Money Makeover- Dave Ramsey

Rich Dad, Poor Dad- Robert Kiyosaki

The Cashflow Quadrant- Robert Kiyosaki

Spirit Driven Success- Dani Johnson

 

Podcasts and Radio:

48 Days

Dave Ramsey on IHeartRadio

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