Debtdates or How’s That Debt Doing?

There’s been some good news and bad news in terms of my credit card problems.

My VISA is currently maxed out. My funds are slim and I was only able to pay the minimum payment on the card. After I paid my card, the interest came out: It was $3 more than the minimum payment, setting me back slightly further. Or, at the very least, it put me right back where I started–with a maxed out credit card.

So that’s the bad news.

The good news is that I was able to increase the limit on my 6.99% credit card and I’ve put in a request to transfer the balance from the higher interest rate card to the lower interest rate card. Woo-hoo!

That means I’ll pay less interest on the balance as I pay it down. I finally feel like I have control over that debtload.

I’m debating whether I should cancel the card outright or keep it as a sign of good debt. I think I will close the account. I now have another card that has the same limit, meaning I have plenty of credit (once the debt is paid off). I won’t use this card again. Some financial advisers like Gail Vaz Oxdale suggest that you shouldn’t own a card at the same bank as your bank account because they can take money out of your account without asking your permission (from It’s Your Money). While I’m not at a point where they’d even begin threatening to do that to me, I’m not too keen on giving them the option anyway. Like I said, I already have a card now that has the same limit (but with a better interest rate) and the “points” that I earn on the card are kind of minor. I plan on cashing the remaining points balance into a $100 gift card to Best Buy or Future Shop. It will go towards the purchase of a new laptop (aka my workhorse).

The other reason I’d like to cancel the card is because it may hinder me in the future from getting approved for a mortgage or car loan because I’ve got too much credit. Banks and lenders see too much credit availability as a liability because I may be tempted to use all of that credit and then not pay it back. While I would never do that, because the threat is there, it may be a better option for me to just close the credit card now before I make any plans to do some borrowing in the future. I really don’t need that card any longer.

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Setbacks and New Beginnings

How does that old chestnut go? Two steps forward, one step back?

Yeah, that’s what’s happening here.

While I’m getting better at tracking my spending and I’m spending less money overall, there are still some obstacles in my way on the path to becoming solvent.

big girl panties

Problem #1: Four Wheels, One Badly Damaged Door

My mother graciously lent me her car while she’s visiting relatives in Europe. Not one week after she left, I put a massive dent in the passenger’s side. I got too close to a handrail in a parking garage. Classic screw-up. To make matters worse? I was distracted by my thoughts of money when it happened. It was like my unconscious wanted to dig the knife in a little deeper. Well, now I know how deep the wound goes: to the tune of $3,200.

I don’t even know where I’m going to get the money. My boyfriend says it’s time I tell my mother because it’s unlikely I’m going to be able to pay it on my own (which he’s right, especially after today.)

Problem #2: Goodbye Freelancing

My freelance situation is changing. I need to start looking for a full-time job because it’s evident that I can’t sustain myself on a freelancer’s salary. Not at this point in my life. I’m coming to terms with that and, you know what? I’m kind of okay with it. I know I won’t stop freelancing completely–hustla’s gotta hustle–but I’m about to lose a well-paying gig.

I had a bit of a cry today about this. I’m not even sure I want to keep this gig any longer. The only reason I’ve kept it this long is because it’s been lucrative. But now that the purse-strings are tightening, I’m not sure it’s worth it. It’s a smaller hourly rate than my normal charge because I negotiated it when I first started freelancing and I haven’t renegotiated since. Plus the scope of my work has been chipped away to the point where I’m basically a copy and paste machine for the company. No wonder they want to cut my hours.

I have to ask myself: what value am I getting out of this job? They clipped my wings long ago and now they want to take away the only incentive to keeping this gig going. I’m not sorry to see this go. In fact, it’s a bit of a relief. The plus side of having a full-time job will be that I don’t have to relentlessly search for gigs so much. More of my time can go into gaining experience rather than trying to prove I have experience. Once I find that full-time job, that is.

back to work

Today wasn’t all bad news, though. I started the day off on a good note. I met up with my financial adviser, Michelle. Funny that I have a financial adviser and I’m in this crap-shoot, isn’t it? Well, it’s partly because I haven’t seen Michelle in well over a year. Ostensibly we got together to update my life insurance (yay, I’m a non-smoker now!) but we spent the majority of our coffee date catching up. Michelle and I have always had a good rapport together. We met through a mutual friend one evening while I was singing at a bar and we hit it off as friends from the start. Every time we get together it’s always a good catch-up. Turns out we both lost our fathers in 2013 so today’s conversation was especially emotional for us.

When we finally took a look at my numbers I was surprised to learn that my spending had decreased a lot since our last meeting. Now that we’ve established that, though, it means there isn’t much room for movement in that category, meaning I need to definitely start making more money. Thus, another reason to get back in the 9 to 5 game (at least for now). Michelle also suggested another alternative: becoming a financial adviser. This isn’t the first time she’s made the suggestion to me, but I was finally listened.

Michelle is a full-time teacher, but she’s a financial adviser on the side because she loves helping people. She suggested I explore it because we share similar traits.

I think it’s funny that a person like me is looking into becoming a money adviser to others, but it would be a great way to help myself first. I’d learn the foundations so I can help myself get out of this debt crisis and then I could help others with their problems. I really like that idea!

I’m meeting Michelle at her office this coming Saturday to explore the options. My curiosity is peaked. Who knows, this could be the start of something good!

What I would tell my twenty-year-old self

This year I’m turning twenty-nine. I might be a bit early to start thinking about what I would tell myself as a twenty year-old, but because I had the pleasure of watching a bunch of girls who were just at that age last night (kind of like a fly on the wall) it got me to thinking about what I was like.

Truthfully, I was never the kind of person who had no responsibilities whatsoever. I’ve had a job since I was fourteen. I didn’t live in residence at school, so I didn’t get the sorority experience. When others were hitting the bar, I was getting on a GO bus for the two and a half hour ride back to Hamilton through traffic and congestion. After graduating from university I landed my first full-time job a month out of school.

Still, I had a lot of fun in my early twenties, especially when I moved into my first apartment in the Big Smoke (aka Toronto). I sort of made up for the lost years of living carefree in my first two apartments. While I contributed to an RRSP, I spent my money without much regard, I didn’t think much about “the future”, it being an intangible what-if, I dreamed big, I lived hard and I cultivated bad habits (social smoking and drinking). Hardly the kind of life that would make a nun blush. But I still have a few words of wisdom for my younger self because looking back on that life now I can see where I was spinning my wheels. Maybe I’d be further ahead if I had taken these lessons to heart at an earlier age, but I don’t regret getting to this point now. It’s not about the destination, it’s about the journey, right?

These days I’m all about settling down. I live in a great apartment with my boyfriend, I have clear goals for my future income and I’m cultivating a freelance writing and marketing career. I’m also trying to get myself out of the debt I put myself into by not tracking my spending. I don’t have an RRSP any longer because I used it to clear my debt once before (and promptly forgot the lesson such a decision should have taught me.) I’m ready to start saving and clearing my debt-load the right way now.

Party girl's lives revolve around very simple things.

Party girl lives revolve around very simple things.

Here’s what I would tell my 20 year-old-self:

  1. Chill out. Don’t worry so much about not being at a certain point in your life or the development of a skill, talent, career choice, or whatever. Not only does your intensity scare the bejesus out of people, but it’s actually counter-productive. Worrying about what you can be doing better, faster or whatever means you’re just spinning your wheels instead of doing the work that needs to be done to get there.
  2. Keep track of your money. You’re going to lose a lot of it to debt.
  3. Own your goals. You’ve got big dreams, honey, but you don’t even know where to start because you’re lost in the what-ifs of all your dreams. You’re obsessed with doing it all, but you keep forgetting that there’s time for everything. You just need to take it one step at a time. You might not be a musician yet, but keep learning songs and you will! Just look at how you’ve changed over the last ten years. You went from barely being able to stand in front of a mic to jamming with session musicians once a week. You’ll be okay.
  4. Cultivate lots of interests. When one wanes you can always pick up another and you’ll never be bored.
  5. Don’t take other people’s words to heart and don’t get so upset when others don’t agree with you or don’t life you. You don’t have to be liked by everyone.
  6. Don’t be jealous. There’s room for everyone, no matter what.
  7. There’s more to life than what you’re wearing. This is something I still struggle with. I like fashion, but I forget how expensive it can get. And I tend to have expensive tastes, like Kate Spade purses and shoes. That said, I’ve only ever bought one Kate Spade purse and I’ll have it until my dying day.

Edmund Bergler, Long-Forgotten Psychoanalyst

edmund-bergler-photoEdmund Bergler was an American Psychoanalyst from the 20th century, whose work was based off of Freudian psychoanlysis. A lot of his published work is based on the unconscious and how it dictates our actions. How does this relate to money issues? Well, according to Bergler, our unconscious wishes for us to suffer. The psychological neurotic is preconditioned through years and years of bad habits to suffer instead of working his or her way out of the bad situation.

Sounds a bit kooky, doesn’t it? But I swear that it makes sense. Bergler wrote about basically every type of psychological problem that exists: weight troubles, financial woes, divorce, the lack of laughter in one’s life, even creativity and productivity.

Sadly, Bergler’s kind of forgotten. Why, though, when his work makes so much sense?

I’m going to attempt to shed some light on Bergler, along with my own financial goals, through this blog. Many of his books are out-of-print. My hope in giving him a spotlight here on this little stage is to drum up at least a little interest in him so that his work is not forgotten. Trust me, it’s actually really useful.

To that end, I’ll start by offering the ten rules for combating not-too-severe cases of tension (aka anxiety). These are found in Tensions Can Be Reduced to Nuisances, last published in 1979.

Found via Pinterest and edited to be a little more realistic. ;)

Found via Pinterest and edited to be a little more Berglerian.

  1. Accept the truism that “the world is not your oyster.” The world provides you, tax-free, with a constant flow of nuisances; it is your business to cope with and neutralize these nuisances internally.
  2. Keep your sense of proportion. Recognize the fact that the aggressive actions of the people in your environment are not necessarily meant to attack you personally.
  3. Don’t accept your tensions at face value, excusing them by making the convenient claim, “I’m just that type of person.”
  4. Be prepared to “face the music,” in the form of constant reproaches from your inner conscience.
  5. Accept the fact that everybody unconsciously harbors self-damaging tendencies; understand that your conscious rationalizations have the purpose of obscuring, not clarifying, the reasons for your tensions.
  6. Since the complex detail-interconnections in your “tensions” are beyond your reach, start your attack on these tensions by sending up a trial balloon: consciously perceived (though  not understood) indictment of self-damage unconsciously enjoyed.
  7. Determine whether some of your tensions are not self-created.
  8. Ask yourself whether you aren’t an unconscious in-justice collector and self-appointed trouble maker. Consciously, of course, you are “your own best friend and well-wisher”; unconsciously, the story may be different. Don’t automatically dismiss your environment’s indictment of you as a person who “asks for it” and “leads with his chin.” The criticism may be valid.
  9. Understand that your “inexplicable depressions” and “lousy moods” are no more than alibis presented to your inner conscience.
  10. You cannot eradicate nuisances, but you can keep them on the level of incidental irritations, instead of paying them the costly compliment of elevation to “intolerable tensions.”

His language may be a little old-fashioned but his ideas are not. I encourage everyone to look up Dr. Bergler. His books are out of print but you can find more information at edmundberlger.ca.

Sources of Income

income-moneyTonight I thought I’d share with you my current sources of income and places where I would like to potentially make more income this year.

Blog Editing

I’ve been running a corporate blog for a well-known publishing house for over three years now. The money that I make through this blog pays my rent each month. I’m very lucky to have this job because it’s a great source of income. The people I work with are my former co-workers (I used to work in the department, then quit to take on another job, after which I transitioned to freelancer.) The job is not difficult and it does not take up a lot of my time. I do roughly two to three hours of work on this blog each week.

Transcriptions

This is a new job for me that just began this week. I transcribe close captioning files for television shows. The money is also quite good for the work: $2/minute of show. Thus far I’ve done three hours worth of television transcription this week, which paid out to $356. It takes me about an hour to an hour and a half per show, meaning I’ve done roughly six hours of work for the week. That averages out to about $59/hour.

Gift Shop

On Mondays and Tuesdays I work at a local shop in my neighborhood for $10.25/hour (aka minimum wage) for seven hours each day. That’s down from eight hours per day, plus seven hours on Saturdays during the holiday season. I make $143.50/week, minus taxes at this job, for fourteen hours of work. While the job is easy and not very taxing, the amount of hours I spend there at such a rate is not helping me much. However, I have been asked by the shop’s owners to build an e-commerce website for the shop–the first in its twenty-year history!–and I’m hopeful that this project will be both lucrative and long-term.

Potential Sources of Income

Elance

I’ve been on Elance for some time now. It’s recently merged with oDesk, another freelance community for potential projects, as far as I know (having never used it). While I like Elance to an extent, it’s time-consuming, building proposals. I’ve gone as far as even recording myself giving a pitch to a potential client because under30CEO advised that this was a great way to differentiate yourself between all the other Elancers bidding for the job you want.

The one job that I did end up winning was a small email marketing project. Essentially I built two simple email templates and uploaded them to MailChimp. So, after that happened I thought I would continue searching for MailChimp projects on Elance. Only problem is, I’m bidding too high on them, I think. My first bid won because I accidentally underbid myself. I only made about $35 for the whole project, not the $35 an hour I was expecting to make for it. I tracked the hours and it came to about $145 worth of work (about four hours worth of work). I chalk it up to experience.

I’d like to continue doing email marketing stuff via Elance, so I’m going to continue writing proposals and testing out what works and what doesn’t. I finally watched one of under30CEO’s Youtube video proposals and comparing it to my own, mine feels very stiff and wooden (mostly because I was reading off a script) and his was very natural. Although he’s a bit too sales-y for my taste, I guess you do have to overcompensate with your pitches, especially when you’re doing them via video. Also, his location and camera are way better than my own. He’s up against a gorgeous red background, you can see the hint of a beautiful flower in the corner, he’s sitting in a comfortable chair. Me? I’m sitting at my dining table. You can see my pantry and the kitchen behind me. Which sounds more professional? Alright, so I got some work to do on the video proposal front!

Fiverr

I am not on this website yet, but I could see myself doing quite a bit of work on here. The only thing is, I don’t want to focus on the same thing as I do on Elance. I think on Fiverr I could focus on my copy writing as opposed to the more technical stuff that I can do (i.e. web development and marketing), so that is what I’m going to put my focus onto on Fiverr.

This Website

While I know that this is my personal blog about finance, I know that it also has the potential to making me some passive income if I work at it. Guest blogging, sponsor links, I’m not even sure what else there is out there, but the potential is high if I work at it.

So, all in all, I work about 23 hours per week with the projects that I currently have. That means I have another 17 hours left in a work week to fill up with other work. I forget that I used to work these kind of weeks no problem. Being freelance means making your own hours. Today I’ve been working for roughly ten hours and I’ve done only a handful of the things I wanted to get to. How do other freelancers do it? I know having a set schedule is a good idea, but I kind of like the fluidity of my days. I love that every day is different.

The Psychology of Change

In a recent article in the Toronto Star, journalist Ian Harvey wrote about the reasons why diets don’t work: “The biggest barrier to success are psychological, and the patients who fail most often are those who aren’t ready to totally commit. Conversely, those who are either at crisis or have decided to change — whether it’s quitting smoking, exercising or dieting — will be more successful in making better choices.”

One has to commit to change in order for it to happen. It’s not something that happens overnight. It doesn’t even happen in a week’s time. You’ve got to really build upon small successes slowly but surely.

Trust me, this is me building myself up as much as it is a reminder for anyone else.

I’ve begun building my emergency fund with a dollar a day in the jar. So far so good. And my Spending Journal is being used. This journal will help me keep track of each dollar that I spend.

My next step is to begin making some small changes to how much I spend per week on various things and to increase my income. The biggest money pit for me is food. I spend a lot eating out. When I don’t care, I don’t care and I’ll spend without even thinking about it, to the point where the Popeye’s Chicken restaurant in my neighbourhood knows my order. That’s embarrassing and unhealthy for me. I shouldn’t be eating there so often.

But enough negative talk! This isn’t about what I should or shouldn’t be doing. Here’s what I did today that I’m proud of: I bloody well packed a lunch, got the coffee maker ready in the morning, brewed a pot while I was in the shower and didn’t almost leave the travel mug sitting on the kitchen counter. Okay, maybe I did. But I remembered it while I was in the elevator, so I wasn’t too put out by it. I had been distracted by my phone, which I was checking emails from on my way out the door. Note to self: next time, just wait. You don’t have to read them while you’re getting ready. I had received a rather chastising email from someone about a post I made on my reading blog and it was bothering me while I was getting ready, hence why I wasn’t fully mindful of the fact that I didn’t have everything in-hand. But, no matter, I got my coffee.

mary-brownsTonight, before I go to bed, I’ll make myself lunch again to take to work. It worked out really well today and I’m looking forward to eating food from home again. It was just enough to tide me over until we went out for supper this evening to Mary Brown’s. It’s not often we go to Mary Brown’s, but now that we have my mother’s car for the next couple of months we’re making a point to go occasionally because we love it so much. And because I hadn’t bought my lunch today I was doubly happy to get my Big Mary sandwich, relatively guilt-free.  (Still not the healthiest meal, you know?)

Anyway, I’m taking small steps. The Emergency Fund is coming along, $1 a day, and my expenses are down by at least $5 from a week ago. (I spend roughly $5-$10/day on lunch.) I’ll be interested to see when I tally up January’s funds to see how they compare to December’s. Will I inherently spend less now that I’m tracking my dimes and nickels (no more pennies in Canada!)? Or will my food budget be the same? I think it will take some time to see a difference because I’m now tracking all of my money, not just what I have in my bank account or on my VISA. The bank withdrawals category is a big ol’ I Don’t Know Where It Went since I haven’t kept track of my cash for the last six months. But that’s okay. We’ll see where it pans out.

In regards to my VISA, I’m also working on moving my balance to a lower interest rate card. I’ve requested an increase on the lower interest rate card so I can put the full amount onto it. I don’t know if I’ll get it, but it doesn’t hurt to try. Even if I can’t, I’ll save some money on interest by switching some of the balance over and paying the higher interest rate card off as quickly as I can.

What I need to prepare for is my student loans. I’m about to put that back into the budget because I can’t hold off on the payments any longer. I mean, I could try and ask fro repayment assistance again and I’d probably get it, but that’s the irresponsible thing to do. I need to pay these debts off once and for all. If I don’t it’s just going to continue sitting on my head like a dead weight, not contributing anything. Considering I can’t even tell you half of the courses I took in university any longer, I think it’s time I put this degree to bed and move onto the next phase of my life, right? Right.

Introduction

Solvent: Adjective; having assets in excess of liabilities; able to pay one’s debts.
Synonyms: financially sound, debt-free, in the black, in credit, creditworthy, solid, secure, profit-making;

What do I owe?

Student Loans:  $14,434.11
Interest Rate: 5.50%

My student loans have been stopped for about a year now as I transitioned myself into freelance work. I justified putting a stop to them instead of working them into the budget by thinking that I would eventually get them back into the mix. Thus far I have not done that and it’s been over a year since that happened. Instead of actively paying down my student loans during that time they have been sitting around doing nothing. I’ve avoided the National Student Loans Services so well that I don’t have my Username and Password for my account in a ready place for me to find it. For the purposes of this post I have now hunted down my username and password, and I’ve written it down on a piece of paper that will be filed away with the rest of my student loan files.

VISA: $8.025.34
Interest Rate (Purchases): 19.99%
Interest Rate (Cash Advances): 21.99%

This is the first month that my VISA has gone over its limit. When I did my six month evaluation of my budget, I realized that I’ve been spending roughly $1000 more than I’ve been making, so it’s not a surprise that my VISA has taken the brunt of that extra cash and now I’m up shit’s creek without a paddle. The main culprit of this is cash advances. While I’m fully aware that you should never take cash advances out because the interest rate is much higher AND it begins as soon as the cash advance is taken out, I have been using them anyway to cover my rent in case my pay cheque comes in late.

In the future, I would like to use a buffer of $1,000 in my bank account to do that instead. I’ve begun saving for this emergency fund with $1 a day. It’s not much, but it’s all I can afford right now.

My other goal is to eventually close this account and pay off my debts with my low-interest MBNA credit card. I have a card with a 6.99% interest rate. I will use that card to pay down my debts and once the VISA is completely wiped I will close the account because I do not need it. The MBNA card is with another bank and it has a much better interest rate. There is no reasonable excuse for holding a credit card with such a high interest rate when I have one with a better rate.

HBC Mastercard: $42.10
Interest Rate: ???

It’s not much. I don’t spend a lot on this card. Once, maybe twice a year. But I’ve missed one payment waiting for the money to come in and I know that it affects my credit rating. I have no reason to own this card other than the occasional trip to Hudson’s Bay Company. I convinced myself that it’s a good idea to get it one Christmas and I’ve held it for sometime without having any problems with it, but even $40 can cause a problem with your credit rating when you don’t pay it off right away.

Also, I’m aware that a department store card holds a much higher interest rate than a regular VISA or Mastercard. I’m unaware of the interest rate on this card. My online account does not say and when I tried calling to update my mailing address, which is missing the apartment number(!), I couldn’t get through to a human being and I lost my patience. The lack of an apartment number on my mailing address is the reason why I haven’t received my bill in the mail yet either. I was aware that the bill was missing, but it took me this long to track down the reason. Once I pay off this card I’m going to close the account and I won’t need to worry about it any longer.

Savings

Emergency Fund: $3

The goal is to build this to $1000 so I have a good buffer in my bank account for occasions such as the one I mentioned above.