Two days ago I logged onto the website of my prepaid cell phone service provider.  I checked my account balance to find it at $11.70.  My plan charges per day and I don’t like taking the risk of getting my balance too low without realizing.  The interesting thing is that within five hours later of checking my account, the balance dropped to .05 cents.  That’s right, five cents! Over the course of five hours I lost over ten dollars of credit on my account.

Was it really my fault?

 Did I access the internet ask?  Did I send some mega-sized messages? Did I go on a random calling spree that was outside my plan? The answer is “No” to all three. 

 I didn’t do anything.  Which is why I was concerned when a couple hours after checking my balance I got a text from my service provider that my account had dropped below $5 and I should add more money soon. 

Excuse me

 How odd I thought? I had just checked it a couple hours before and seen the $11.70 balance.  But rather then getting alarmed I figured I would check it again.  When I logged on, the balance read $2.95.  WTF?

 Yeah I did a serious double take! Obviously I wanted to know the details before I called up the company and started ranting.  So I reviewed the history of my phone usage to see what the charges were.  I went through 26 screens of usage history (most of which was gobblegook and made little to no sense) and suddenly it informed me that my balance was .05 cents. 

Their fingers went a little too deep into my pockets

 It seems that over that course of time, the company had randomly assessed a charge of over ten dollars for something they termed “Data Packet”.  I called the company and the friendly representative said, “Hold on, I will have another department look into that for you.” After a few minutes he came back to tell me my account had been credited back for the amount in question, with no real explanation for the reason of the charges, and that was that. 

The real danger

 I am glad to have gotten the money back without a battle.  But the real danger was this: what if I was enrolled in an automatic replenishment plan? 

 If my account was set to withdraw money from my bank account and refill my balance whenever it drops below a certain point, I might never have known what happened.  Further still, what if it continued to happen on a regular basis, and they just kept withdrawing from my account and replenishing until I realized.  If this happened three or four times in the span of a day or two, it could have really added up.  Even worse, what if I was waiting on a paycheck and ended up bouncing a check or getting overdraft fees because of these types of glitches?

 Needless to say I will continue to monitor things for myself and keep a sharp eye on my charges in the future.  

(*My apologies to my readers for my recent absence but I was fighting a stomach virus for over a week and have just recently been getting back on track with things.)

I can’t tell you how many times I have gone shopping at the grocery store and told them to toss the receipt. Oh yah, I’m serious! I know some of you are slack jawed and staring in disbelief but it is true.

To me a receipt was nothing more than extra paper to be thrown away later.  I didn’t want to bother.  And check the receipt? Who had time for that? I already knew what I’d bought so why look at it again.

Reality check!

I know, even I am slack jawed at my own naiveté!  It is almost painful to think how unblissfully ignorant I have been when it comes to finances and frugality.  But this morning I had a real wake up call in “the value of keeping receipts” department!

On my way to work I stopped at the grocery store to buy a couple last minute things for the day (I was finally out of leftovers).  I picked up a yogurt cup, a bottle of juice, a snack bag of pretzels, and a lunchable. I was paying with a debit card and in my haste (I misread the clock and thought I was running late) I never even looked at the cost of the groceries! I just swiped the card, grabbed the bag with receipt inside, and walked out.

WTF?

Once I got to work, I took a minute to log onto my bank account to check the numbers and balance my checkbook.  Low and behold, it was then that I saw a charge from the grocery store for $14.62. WTF?

Since when should it cost over $14 dollars for one of each: yogurt, juice, pretzels and a lunchable?  Since never!   Breaking with my own tradition, I fished the receipt out of my bag to double check.  And this is what I saw:

The “clincher” was that this particular store doesn’t give you cash back on purchases with a debit card ~ ever! So there is no way they could deny this was a misunderstanding on my part and I knew the cashier hadn’t given me anything but the groceries and receipt.  No money that is for sure.

Lessons learned

Thankfully they were nice about it and refunded me the extra I’d been charged. But what if I hadn’t looked? If I had waited two or three days to check my bank account and balance the checkbook, I would have seen the $14 charge and never questioned it. I would not have remembered what I bought at the time and would just have assumed it was right! I wouldn’t have double checked the numbers on the receipt that’s for sure.

Reformed!

But I am a receipt slacker no more!!! I have been transformed.  Never again will I casually toss the receipts without a second thought, nor will I hastily agree to pay whatever number the cashier says without doing my own mental calculation.  I have joined the world of receipt checking adults everywhere who prefer not to lose anymore money than they already have too, thanks to overpriced goods. (But that is the stuff for another article.)

My significant other posed this question to me not long ago. At the time I said yes, thinking of one drunken incident on New Year’s Eve long ago (we won’t discuss details). But it occurs to me now, that for years I have been playing Roulette with my finances. Sometimes it’s been a total gamble from month to month and/or week to week, as to how I would get by and which bills would get paid.

Playing the wheel of fate

I would realize that only so much money was available (let’s say $900 for the sake of argument) and there would be a stack of bills overdue (perhaps totaling $1300 just to give it a number). At this point I could randomly draw from the deck and let fate decide which creditors got the cash and which ones got the “check’s in the mail” bluff for another month. And I am ashamed to say that for awhile I did exactly that.

It all adds up, your not buying yourself time your digging the hole deeper

Of course the late fees ($30 here or $45 there) would add up on the unpaid bills. I don’t know why I was clueless to this at the time except that I was living in a constant state of denial. This continued until I had to apply for a loan just to finish covering my monthly living expenses. In hindsight I’m surprised it didn’t happen sooner but its amazing how talented you can get at juggling (even without clown training).

Trying to make it right

Then I realized that I had to stop letting my decisions ride on fate’s spin of the wheel. No more stabs in the dark and hope the bet would end up going my way. I had to sit down with all the bills, prioritize them, organize due dates, and make phone calls on the ones that couldn’t be paid in order to negotiate better terms, perhaps a deferment for the month, or whatever I could manage.

Getting there

It hasn’t always been successful and I still ended up falling into the payday loan trap for awhile. But there is no way to get out of the deep hole of debt unless you start paying your way out, one bill at a time.

A couple of weeks ago my son’s jacket was stolen at school.  I didn’t give this as much attention as I should have. It was an old jacket with a broken zipper.  Something I knew would need to be replaced soon anyway.  I know some of you are shaking your heads at me thinking “zippers can be replaced”, and “an old jacket is as good as a new jacket as long as it still fits”, and your right. But that’s not the point of this story…

At the time when he told me, I didn’t really believe it had been stolen.  Because he said it had “disappeared” I figured he had left it in the gym locker and would find it the next day. But as days and weeks went by, he still had not found it.

CONFESSION

Last night he confessed to me that when the jacket disappeared, it had his Nintendo DS video game system in the pocket.  He expected quite a lecture about this.  I had told him many times that if he took it to school, someone might steal it.  I had warned him, I would not replace it and he would have to do so himself if it was taken.  And as he confessed the loss of the game with the jacket, he immediately followed it up with a restatement of all the above things I just mentioned. 

SURPRISING MATURITY

I wish he would have told me sooner.  But I have been in his position and know how he must have agonized over keeping it a secret all this time.  In fact he confessed it to me, after I told him a financial secret of my own. So I didn’t lecture or say ‘I told you so’.  He had already learned his lesson the hard way.  He had accepted that he would be without it until he could replace it himself.  I felt that showed maturity and I respected it, especially from a 12 year old.

As is common with siblings, he didn’t want his sister to know, for she would have lectured and hassled him over it time and again.  I felt bad knowing that at his age, he doesn’t have many money making opportunities and it would take time for him to earn the money.  I considered offering to pay half if he saved up the other half (so that the goal wouldn’t be too far off in the future for him). 

 LIFE LESSONS LEARNED

As an adult it is not easy to wait for things I want and save for the things I need.  But how much harder is it if you never learn that lesson, until you’re an adult.  Maybe this experience is a catalyst for a life lesson that may save him a lot in the future.  If he learns to work for things he wants; to take better care of the valuable things he has; and to heed warnings when they are given; then his life may be far less turbulent and full of financial pitfalls than his mother’s has been.

*Photo provided by freedigitalphotos.net

            This is especially true for me with money.  All too often, I find myself between a rock and a hard place.  Say I had to make a car repair this month and it used up money I didn’t have to spend.  That means something else gets cut. 

I would try to make the least painful cut possible and then within hours or a day, something else happens. My daughter comes to me and needs basketball shoes $50 (easy) or I have to pay a school athletic fee for her to play $50.  Or its time to pay for school lunches again at $30.  Then my son wants to know if he can have this new video game he saw on tv for $30.  There is like an endless sea of expenses that crop up and some are necessary (shoes, lunches, etc.) and some are not (games) but it hits like sledge hammer every time. 

I don’t like to tell them “No” because they are only children for a short time and I want them to enjoy the experience.  At the same time, I am torn between what I know I can and can’t afford and the realization that I need to teach them some wisdom when it comes to spending money. Sometimes that has to mean saying “No” but sometimes it can also mean having them help me with the choices of what to say “No” too. 

For example, my daughter wanted to go see the movie “2012” this past weekend and hads already made plans to see “New Moon” this Saturday.  As soon as she brought up the “2012” movie I was instantly ticked.  I slipped into the “hulk mode” immediately (as mentioned in Man vs. Debt’s blog) and I felt pressured because I knew there was no way the money would stretch for her to see both movies. 

Feeling the pulsing anger about being put into a position of having to say “No”, I did what Man vs. Debt suggested.  I shrugged off the “hulk mode” (before it got the better of me) and slipped into a “lets think about the alternatives” mode.  I told her outright, you can’t do both the money isn’t there.  So you choose, which one is it going to be?  Considering how badly she wanted to see “New Moon”, there wasn’t much of a contest, “2012” lost and went down in flames.  But at least she decided what to say “No” to for herself, and I learned that the “hulk mode” is better to remain in hiding!

According to the freedictonary.com  charity is defined in some of the following ways:

char•i•ty (ch r -t )
n. pl.
• Something given to help the needy; alms.
• Benevolence or generosity toward others or toward humanity.
• Indulgence or forbearance in judging others. See Synonyms at mercy.
• Charity Christianity The theological virtue defined as love directed first toward God but also toward oneself and one’s neighbors as objects of God’s love.
• Voluntary activity of or disposition towards donating money, property, or services to the needy or for general social betterment. — philanthropic, adj.
• Kindness (especially in giving money to poor people)

In the above mentioned blog, there was a concern that by accepting the gift, there would be an implied obligation that something was owed. Now correct me if I am wrong but if you give something with an expectation of being repaid or owed, than it is not a gift at all. Instead, this implies your really ‘selling’ or ‘trading’ it in exchange for something else. That is not what I mean when I refer to gifts or charity.

Charitable gifts are those given with no expectations in return. They are a show of generosity and concern where the betterment of someone else is truly at the heart of the giving. In these cases, we should not let pride get in the way. We live in tough economic times and everyone can use a helping hand in one form or another.

I know this sounds like the “pay it forward” concept but if someone gives you a gift that you cannot afford or that will help ease a burden in some way, why not accept it? Then when you are able, either return the favor or do something similar for someone else who is in need. The world could do with a few more expressions of kindness and generosity, and giving to others does your own heart a tremendous amount of good. Besides, there are many far less fortunate people who are desperately in need, yet they have no one to give them gifts.

In the cases where someone offers you something with expectations in return, then simply give them back the gift. But only if you are sure those are their intentions. Call me an occasional optimist but I like to give people the benefit of the doubt until they prove otherwise.

Then the collection calls begin to roll in.  At first, it is just like one or two a month, then a week, than pretty soon they can come on a daily basis, and multiple times in a day.  It is like being lost in a money desert with no cash in sight and the creditor are buzzards breathing hot on your neck.  You want to escape but they just keep hunting you down.

What do you do now?

The magic words

For me, I needed to stop the calls.  This wasn’t going to happen just by wishing for it.  I had to stop dodging the phone when it rings and instead take some control.  When they called me, the conversation was can I make the payment I owe? If not, then when did I think I could? At this point I said the magic words.  Are you ready for them?

“Hardship plan.”

These magic words immediately told the creditor that I was seriously in debt and unable to pay the huge minimum payment. (Please! Minimum payment? There’s nothing minimum about them most of the time.)  At this point the creditor asked what amount I would be able to pay so I threw out a number that I could handle. In this case it was a little less than half the minimum payment but an amount I felt confident I could pay on a monthly basis.  I also said that the APR was way too high for me at 21% and he told me that with the Hardship Plan that he could offer me, the APR would temporarily go down to 11% for the duration of the payment plan.  In this case, we agreed on a twelve month plan during which time they would no longer assess late fees to the account as well.

Now the interesting thing is, this same creditor who I just negotiated the Hardship plan with, had told me a year ago that they don’t negotiate at all, that APR’s were permanently fixed, as were minimum payments.  They had denied any possibility to work out a deal with me at all.  Oh what a difference a year of economic hardship for the country has made!

“Final Payoff Plan”

If things were so dire for me that I couldn’t have handled the terms of the Hardship Plan, I could have requested what is called a “Final Payoff Plan”.  But this is a permanent termination of the account and set up with terms that will allow for the eventual payoff of the remaining debt.  I believe (though I haven’t confirmed this) that the Final Payoff Plan is more detrimental to my credit standing than the Hardship Plan. Although, when your credit is already shot and you just want to get out from under, this may be the way to go.

Ugly truth about creditors

The thing that angers me most is that many creditors will not come out and tell you about these plans.  You have to say the actual magic words, “Hardship plan” or “Final Payoff”, in order for them to discuss it with you.  So don’t be afraid to ask about negotiating terms of your account with them.  The worst case scenario is that they say “NO” and you have to consider going through a credit counseling agency (no, not debt reduction agency – because I have heard only horror stories about them) or perhaps a bankruptcy attorney.  There are some highly reputable credit counseling agencies and they can really help with negotiating when the creditors are unwilling to work with you directly.  For more information on them: NFCC.

Breaking It Down For You
To illustrate my point about the money flowing out faster than it will ever flow back in, let me give you a few details.

1) Today is payday! (That’s always awesome.) So as of this morning I had $968.27 deposited into my account.
2) Immediately my loan payment was taken out which reduced it by $75.33.
3) My department store credit card payment was automatically taken out $20.
4) I had to take money from the ATM this morning for school/kid costs of $10.
5) I bought groceries totaling $32.01.
6) Gas in the vehicle cost me $29.53.
7) Lastly, repayment of a loan from a friend was $50.

Okay, so to recap, this morning I had $968.27 to the good. Then through the course of events I laid out, I am now $216.18 dollars poorer for a total of $752.09 remaining less than 12 hours later! OUCH! Considering I have yet to pay the big bills for the month, maybe I will be able to afford to eat the rest of the month, maybe I won’t. Good thing rice is still cheap! Lol.

My Master Plan
My master plan is to do what all the truly good personal finance bloggers suggest:

a) Plan ahead. Scan the local paper, find the grocery sale items, plan my next week or two of meals around the sale items, scan the internet for applicable coupons to coincide with the sale items. Try to avoid temptation from the non sale items that will be calling my name (Oreos, Chocolate, Twinkies, etc.) – easier said than done!

b) Fix my budget. I currently don’t have a real budget. It is more like a poker hand. I take what I think I do the best with and throw the rest back for the next paycheck/month. LMAO! It is not a “genius taking over the world” kind of master plan, but it has been a hard habit to break. So, that is on the list of must do’s.

c) Negotiate. By trying to negotiate lower payments and APR’s with my creditors, I may be able to save myself some serious troubles later on. At this point, my credit score is shot with so many bad credit bullet holes, that it won’t do anymore damage to get some help. If need be, I may have to enlist the help of a reputable credit counselor. But I will take this one step at a time. I prefer to negotiate for myself, rather than leaving my fate in the hands of someone else, if possible.

I do have some of the worst money management skills in the universe but at least I’m not in denial, right? What do they say about the first step to recovery is admitting you have a problem? I don’t know if that’s true with money matters but it sure can’t hurt.

What are you going to buy with that:

1)      One trip to Starbucks (if you go cheap)?

2)      Four dollar menu items from McDonalds!

3)      Or, if you save that $3.65 until another year has passed, applying the same method, you now have $7.30!

Alright, I am not bashing the idea of saving money, I’m really not.   So let’s tweak the numbers a little and see what we come up with.

(Yeah, that penny a day theory is looking pretty weak right about now.)

On the upside, even those of us who are so broke, we don’t think its possible to save anything, just might need to think again.

Look at the numbers.  Most people can at least afford to spare a quarter ($.25) a day.  C’mon, that’s only an average of  $7.75 a month, but after a year you will have $91.25! Maybe that doesn’t sound awesome, but if someone offered to give you $91.25 (no strings attached) you’d take it! Who wouldn’t? Bottom line is, even a quarter adds up to something significant!

What about the $5 dollars a week?  That’s only $20 a month ($25 on the two odd months with an extra week) but after a year you will have $260. Would you turn down the $260 if it was just offered to you outright? Nah, I didn’t think so.

It’s kind of weird to think about saving money on an hourly basis, but here goes.  If you can afford to save a nickel ($.05) an hour for a year, you will have $436.80.  This breaks down to $8.40 a week/$33.60 a month. There it is, that’s all. Can you believe it? For the cost of a cheap weekly meal at McDonald’s, you could save over $400 in a year.

Now if that became a dime ($.10) an hour for a year which totals $873.60, we’re talking about $16.80 a week/$67.20 a month. Higher stakes and harder to do I know, believe me, I’m not there yet myself. But talk about nickel and dime-ing it! If I listen closely, I can almost hear the “ching ching”.

The Facts

In order for you to truly appreciate my payday loan history, let’s take a look at the numbers:

Payday loan history 2007

Payday loan history 2008

Payday loan history 2009

So over the course of the last three years, I have borrowed exactly $14,300 in payday loans and I have paid back $15,801.55!  Can you say ouch?

After such a long state of dependency, I still feel unsure that I can make it through a month with just the income I have.   But I am sure going to try.  Because after looking at the numbers, I am not stepping back onto that payday train ever again.

It is not worth it!

Where to go from here?

Right now, I’m looking up from the bottom of a deep well of debt.  The way out seems so far off, I’m not sure it really exists.  (But I almost have myself convinced.)  Getting there won’t be easy, but then again, I didn’t get here overnight.

I am roughly $60,000 dollars in debt, less than $20,000 of which is a mortgage.  The rest is what can be called unsecured debt of the malignant kind (it feels pretty toxic and deadly to me).  Debt can be like a cancer, that left to its own devices, will not only grow out of control but eventually consume you.

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