Roommate Financial Success Story

I want to cover one of our roommates. Sometimes it does not feel like we're really helping our roommates improve their lives (financially, spiritually, mentally, etc). Yesterday though through talking with one of our roommates it appears we're having an effect at improving her financial know-how and career.

She had been working at a job that she liked but did not like her co-workers. The two ways to handle it are to just deal with it or look for another job. She asked us for some tips and we suggested the phone book to start calling businesses that she would enjoy working for and seeing if they have openings. She did and found a pet grooming place not too far from our house, paying her more than she was making at her last place and doing what she loves.

She also recently opened up a checking account. She was previously taking her paychecks to a currency exchange, having to pay a fee every time. The reason she did not have a checking account was because she had messed up one years back by not keeping an eye on the balance and was afraid of doing the same. For now she's only going to use it for cashing her check and to learn how to balance a checkbook.

She's still making mistakes along the way, but is learning from them. She quit her previous job in anger over her paycheck missing hours, which my wife and I explained will make it very hard to get that resolved. We also explained that whenever you are working hourly, you need to keep your own record of what your working, just in case of problems like this.

My Ethical Viewpoint

A reader recently questioned indirectly my ethics, especially due to me making choices recently to tackle other items ahead of debt payments. Here's the points in no particular order:

- Tree removal versus Debt

Yes, for most situations removing trees in your property are luxuries. Here's our reasons besides the "nice to have done" point:

1. Safety: We had 2 trees that were within 15 feet of our house (and our neighbor's house). Like clockwork every July we have had huge limbs come off the trees (20+ feet). They had missed the houses in the past, but the only ones really left were aimed for the houses. I don't need a 5-10K repair bill because I wanted to stay focus on our debt obligations.

2. Timing: The better times to cut down trees is when there are no leaves on them. It speeds up the process, less brush, etc. That prevents us from paying more money.

3. Time of year discount: During the summer months, tree cutters are a lot more busy because that's when everyone thinks of their outside projects. By doing it now instead of right before the storm, it prevented us from paying more money later.

- Replacement car versus Debt

Yes, we are a 2 car family even though I'm the only one that goes to a job during the week. Here's the main reason we decided to replace my car instead of paying more to debt: My wife's emotional well-being. I know my wife, we have fought a couple rounds of depression together. I know that when she does not have a car at the house, she fights loneliness, feeling trapped, unable to get together with others. Say what you will, but my wife comes before any debt.

- Fun money versus Debt

Theoretically, our fun money should be at $0 since we made prior obligations to our creditors. It's a great idea, but in real life it doesn't work too well.

1. We need to keep running the race. I tried the $0 fun money, it was not worth it. I'd much rather work an extra hour or two than be in that situation.

2. Our "free" entertainment items break down sometimes. My wife has her sewing machine that has brought her many days of entertainment, I have my computer. In the past couple of months we have had a power supply need to be replaced on my computer and some parts replaced on her sewing machine. The money came from our fun money.

- Debt settlement

I view it ethically ok to make settlement offers. Here's when:

1. When the alternative is bankruptcy. Almost 2 years ago I lost my full-time job and started working at Taco Bell. They don't pay much, but we had a whole lot of debt. Everyone was saying I should file for bankruptcy since I was unable to pay. I'd much rather give them something than nothing.

2. The debt has become "old". During that rough period of time when we couldn't pay, most of our creditors ended up selling our debt to collectors. The collectors paid pennies on the dollar in the hopes of collecting something more in the future.

3. They are offering settlements or are willing to listen to one.

4. Bringing the account "current" would be equal to the settlement amount. Because of the many months we could not pay anything, the amount to become current kept growing. At this point in time, if I asked them how much to be current, they would pretty much say as much as the settlement amount.

5. You don't have the money in the bank to pay them everything they want.

- Not making monthly payments on all debts

1. To be current is impossible: We went through a time where we could barely pay the mortgage, let alone any debts. Because we couldn't make payments back then, the amount to bring these accounts current is astronomical.

2. What we could give them would not be enough: This goes back to #1 regarding being current. I've only had 1 creditor be reasonable regarding paying them something monthly until we could do more, which we have done fairly consistently the whole time I've had this blog (except for 1 month, which was really tight).

PS: I've been mulling this post over for over a week, there's probably more I could have put in, but I'm wanting to get this up.

$60 Thrown Away

I've been trying to be good with our finances, and then I have slip-ups here and there and everywhere. This past Sunday my wife had a baby shower and I was hoping I could just sit there, relax, and let the ladies have their fun. They decided that a couple of the husbands were going to take me out instead. We couldn't decide, so we went to a computer store nearby.

On the way back, I and another guy were thirsty, so we stopped at Speedway and I used my gift card that I had $60 on to pay for both of our drinks. I was getting tired then and I was so certain I put the cards back into my wallet or at least my pocket. Tuesday rolls around and I'm looking to put some gas into my car and it's not in my wallet. Yesterday, I looked in all the clothes that are dirty, cleaned up the bedroom, checked the vehicle I was in from top to bottom, etc.

I'm classifying it into the "missing in action" category and I'm concerned I threw it away when I threw away the receipt for the drink. That's the only other explanation I have for it. The only positive thing out of the situation is that I talked to one of the guys and he is in need of someone to dig out his crawl space so that he can expand his basement, so I'll have a job to get the money back.

Hi, My Name Is Murphy - Tax Man

I wonder how many parents name their children Murphy these days, with everyone's view of "Murphy's Law". I know there must be one at the IRS. From 2003-2005, we always received a refund due to high medical bills we were paying and donations made through the year. Last year though was a roller coaster and we overcounted on exemptions, so it's looking like we're going to be needing to send the tax man this year around $1300. I'm double-checking all the numbers before we mail it in on the 17th.

In addition, it seems like Murphy decided to visit our dryer this week as well, causing it not to dry anything. My father-in-law knows how to repair these, but he's in Colorado and I'm in Illinois so he's going to step me through it over the phone on Sunday to see if we can figure out what part needs to be replaced. The part probably won't be over $100, probably closer to $25.

Through it all, since we were working on building our emergency fund this month, we'll do like "rich" people do: Find the way to pay the least overall and then just pay it. No need to worry about it, get upset over it all, whine, cry, etc.

Great talk last night

My wife and I had a great financial talk last night. It started because I received 2 checks in the mail (I love that feeling) and was checking to see where they were going compared to the budget we had made for them, etc. The talk was mainly about the mystery shopping that she has been doing and how we had not included it in the budget as income. She is learning her response to "extra money", which is to instantly want to make it "fun money" since things have been tight. She then comes to me on how she wants to use it for fun and I am very logical and suggest something important (like getting out of debt), and she gets crushed because she knows I'm being wise with it.

So, instead of going through that roller coaster of emotions, she decided we needed to talk about the money to come before it comes. That way, she knows it's not "extra money" but it's money that has a purpose and goal. In the end, the way we decided it's going to go is 10% Tithe and 90% emergency fund, but on the condition that we ensure that every month she has $30 of "fun money" , or as in our budget, sewing supplies. That way, she doesn't have that feeling of things being so tight she can't have any fun, but at the same time we're hitting our goals of getting rid of the sick beast called debt.