Sunday, October 18, 2015

Getting Rid of $124,500 in Debt

Whoa!  How in the world did I get to $124,500 in debt?  It was a lot of bad choices.  Living above my means for several years, taking in guests I couldn't afford to support, and hanging onto an asset that was more of a debt sponge than a long-term investment.  The credit cards slowly absorbed my inability to get ahead with the bills. Pretty soon I found myself paying for several huge emergencies with the balance remaining on my credit cards and having to transfer those balances to different credit cards to keep up with the minimum payments.
I wasn't alone, however.  It is estimated that about 47% percent of Americans could not pay for a simple $400 emergency if one should happen to spring up right now.  Nearly all middle to upper-middle income people would not be able to replace an appliance in their home without using a credit card.  And, even more grim to think about, only a small percentage of Americans pay for their wants and luxuries with cash.  This means that the large majority of us use credit to live comfortably in modern society and most of us have wants vs. needs intertwined in a way that places electronic devices above groceries on our list of priorities.

Taking A Look
My list of priorities is not that bad. I am still using an old cell phone and I don't own a Tablet or Kindle. I don't have cable or any other luxuries. Yet, here I am, still in debt up to my eyeballs.  So how am I going to tackle all of this debt.   First thing was to sit down and list every single debt I had, the total balance in one column and the minimum payment each month in the next column.  For some people, this is a hard task since watching the little payments (the fast food stop last Thursday, the ice cream on Tuesday, etc.) is hard to do.  It becomes an easy habit to just buy stuff without monitoring it.  When I helped my boyfriend out with his finances, he was shocked that over $500 per month went to his food since he never cooked at home.  After every last penny spent was accounted for, I then added all my income.  I have several sources of income and they all vary from month to month so this one was harder for me to do than if I had a regular salary job.  April was very devastating since I had a couple of emergencies to take care of and I didn't receive all of my payments owed for that month, hence the reason I stepped into May almost $2,000 in the hole.  Again, people's financial priorities are askew when their landlord is last on the list to get paid.

After I added all three columns up separately, I subtracted what I owed monthly from what I made.  Oh that number was sad!  In fact, it was a negative number for both April and May.  So I decided to do a projected budget for June and I would just barely break even if 100% of my income came in like it was supposed to.

Bad Assets
I had also realized that 63% of my income was going to my rental unit.  Although rent covered all of the normal monthly expenses, i.e. mortgage, insurance, HOA, remodel loan, it never covered all of the repairs I had to do after the tenants move out, or the necessary eviction costs when needed, the period of vacancy in between tenants, and the tedious process of finding a new tenant.  If I had the property paid off, then it would not be a huge deal and I wouldn't panic with the constant uncertainty of being paid rent.  If my tenants decided not to pay rent, which happened often, all of those bills went directly onto credit.  Over time, that added up to thousands of dollars.  When I sat down and did the math, anywhere from $4,000 to $8,000 per year was thrown into this money pit without so much as a kiss or wink from the other side.   The valuable lesson here is that money pits are not worth it.  Ergo, I am selling it and taking off the shackles this debt sponge placed on my ankles.

Toilet Paper Factor
Another bad decision I made was being too nice to friends whom clearly took advantage of me.   Without dragging you into the details, I let some friends stay with me for awhile.  In so doing, they dragged me down a chasm of debt without a way out!  I dubbed the phenomenon the Toilet Paper Factor.  One sheet of toilet paper is not expensive.  Two rolls are not much more expensive.  But when you add hundreds of toilet paper rolls up over time, it gets outlandishly expensive.  That is exactly what had happened.  The same goes for everything else, over time the stuff you use gets expensive.  The point here really is that little things do add up.  What I learned from this experience is that when you add up the all the bathroom supplies, the laundry soap, the extra cleaning supplies, the water and electricity, the garbage bags, and all the other consumables; and then all the repairs and replacements of household stuff (dishwasher, sewer, garbage disposal, silverware that went missing, Tupperware and Blender Bottles that were thrown away, or the tools that inexplicably went missing) pennies add up to dollars which explode into hundreds, and eventually thousands.  Yes!  Thousands!  Three thousand to be exact.   Three thousand dollars that I will never get back.  Realizing that all that miscellaneous stuff gets expensive is important when climbing out of debt.  I am a frugal person so I couldn't understand why the electricity and water bill doubled, or how anyone could just throw valuable stuff away.  I suppose one could argue that those people didn't care about my stuff, and to a point, that is very true.  But on the other hand, they must have continued their expensive habits into my house after becoming homeless.  Just a little awareness and changing some habits could definitely have changed their outcome.  It is important to know that taking in homeless kith & kin is a very bad idea (they are homeless for a reason), and it is important to modify some habits to reduce unnecessary costs (like shutting off a light or reducing shower time to ten minutes).  

Credit Cards
I was told a long time ago never to take out credit cards.  I wish I followed that advice.  Credit Cards are essentially a virtual imprisonment in which you will never be free from.  Only a very dedicated few will ever be able to get rid of their high-balance credit cards and loans and live debt free.  The banking industry made it this way on purpose.  It isn't anything personal, it is just good business to make millions off of their customers.  One simple way they do this is to compound interest daily, which simply means that they add interest on top of interest on top of interest.  By the end of the month, a card might charge almost $80 for you to carry a balance of $6,000.  That is $80 you will never see again.  Over a year, that is nearly one thousand dollars you will never see again!  If a bank has a million customers with high balances on their credit cards, that can equal billions each year the bank doesn't have to work hard for.  This is no way an insult to the banking system, rather it is quite brilliant.  They loan you money to get something you DON'T really need, like a new smart phone, and you pay them back over time, plus interest every single month you carry an outstanding debt.  You borrow some more money to buy a new game station, and you pay them back plus interest, again, every single month you carry an outstanding debt.  Then your tire goes flat on your way to work.  Then your washing machine breaks and you need a new one.  You will pay a thousand dollars for that game station while it continuously depreciates into only one  hundred bucks.  Meanwhile, the washing machine and dryer break down, some jerk without insurance causes an accident, and the dog falls off the bed and breaks his leg.  Pretty soon, the minimum balances are way too much to handle and the minimum balance goes mostly to paying off the interest.  I know because this happened to me.

Loans are just as bad.  You put down something as collateral to borrow money promising to pay back the money plus interest compounded daily.  If you don't pay back your loan, the item you put down as collateral will be taken by the institution you owe.  Not only will the bank make thousands of dollars off of you, but they get to keep the item you put down as collateral.  In most cases, they get to sell the item and still charge you for the difference.  If you don't pay your debt, they get to write it off as a loss on taxes and send the remaining amount to a collection agency.  Some people fall into the trap of pay day loans and pawn shop loans.  These are the worst type of loans people can get scammed in to.  Yes, I said scam!  I know this one because I watched several friends get pay day loans to pay their minimum payments on their credit cards or buy something they didn't need (again the priorities thing) and spiral downwards until they were using pay day loans to pay down on their pay day loans to pay down their credit cards to pay their rent.  This is nasty cycle.

Sucking It Up
Faced with an extreme amount of debt, I had to act fast.  I had to figure out a way to make an extra $500 per month to apply to the debt each month.  So I took up a part time job on top of my full time job and other activities I was participating in.  That meant I had to apply time management skills and I had to cut out other activities, like my volunteer work and personal time, such as going to the gym, to just a few hours a month.  When you find yourself in a hole, quit digging and look for a rope to climb out.  Making extra money is that rope when you need to get out of debt.  Furthermore, stay away from get-rich schemes, MLM's, and investment opportunities.  When you are already drowning in debt, participating in these money making ideas can be an expensive venture that most cannot recover from.  The idea is to put down the shovel and quit digging, not to pick it back up and start digging again; when you buy into an opportunity, you continue to dig further.  Getting a good ol' part time job which will give you a guaranteed $125 per week is what you need to start climbing.

Planning For The Future
It should only take you a couple months of extra work to get to where the debt is manageable.  I knew that if I worked a part time job for six months, I could get to where the debt was manageable again.  My ultimate goal is to become debt free before 2020.  I also want to retire on time so managing my retirement accounts is crucial to getting to that goal.  It is important to look at life long goals and set easy stepping stones down so achieving those goals becomes an easy reality.  After the debt is fully paid off, speaking with a financial adviser about retirement plans is the next step.  You will want to open an emergency fund and keep at least six months salary in it.  You will also want to contribute the maximum amount into your retirement fund and open a secondary fund in order to diversify if your primary account is through an employer. 

Living Happy
After you have reached a debt-free lifestyle, achieved a six-month emergency fund, and your retirement account is all situated, having a budget in order to keep yourself from digging another hole is a great idea.  But, better yet, planning a little fun a couple times per year makes for a better life.  Simple things like taking a long weekend vacation or doing something exciting on a day off could break up the monotony of living the rat race.  Plus, saving up for these fun exertions help to keep your goals on track by encouraging you to continue to evaluate and update your budget regularly.  




Friday, October 16, 2015

Natural vs Vegan

I meet a lot of people from all walks of life.  I meet people from rural areas, agricultural areas, city and metro areas, and urban areas.  I meet people who live industrial lives.  I meet people who live farm lives; or even better, redneck lives.  I have even met people who live a mountain man life with no formal electricity or running water.  Then I am bombarded with the diet conundrum.  Some people eat mostly meat.  Some people eat mostly processed foods.  Some people eat farm food.  Others eat just raw vegetables.  I have met people who consume only legumes, nuts and seeds.  Some people eat food I didn't even know can be considered food.  A friend was telling me about a guy she knows who's normal lunch is a bacon sandwich, pop, chips and a Hostess treat.  On the other extreme, I know many people who's lunch consists of carrots, celery, hummus, quinoa, and kale chips. 

Last night, I was giving a presentation to a handful of vegans of different varieties.  Most of them were processed food veganists.   They are the type of vegans who consume industrially-made meat/dairy-free foods.  Processed vegan foods are easy to obtain and often ready made meals wrapped in plastic.  Some meals are even processed and packaged such where you can take off the wrapper and throw into the microwave for a minute before serving.   And although there are many types of processed vegan foods with many different types of manufacturing methods, I will pick on one specific brand to focus my point on.  The point I am going to make is that veganism, in and of itself, is not the same as natural.  Certainly you can be a naturalist vegan or you can subscribe to a vegan naturalist, but subscribing to the vegan culture does not make one natural.

Here's why:
Morning Star is a subsidiary offshoot brand of Kelloggs.  Kelloggs is a large industrial agriculture company in which their agricultural practices rely on GMOs, specifically Round-Up ready crops scattered across the Mid-West.  Kelloggs also owns other offshoot brands, geared toward vegans, such as Bare Naked and Kashi, pulling in hundreds of millions of dollars annually.  None of the products Kelloggs manufactures is genuinely natural.  Here's where the divergence between vegan and healthy happens.  Processed veganism utilize these foods as sustenance, often replacing a portabella mushroom head for a synthetic burger made of mashed soy.  Manufacturing of the soy burgers starts with GMO soy which is processed, refined, dipped in hexane, pulverized, mixed with stabilizers and preservatives, and then formed into patties where it is then cooked and packaged in plastic.  Plastics, when disposed of, potentially ends up in the ecosystem where it harms wildlife.  Furthermore, some of the preservatives include: calcium propanoate (which has been shown to cause neuroinflammation in lab studies), artificial flavorings, unsalted butter (which is anti-vegan), sodium triphosphates (which production damages ecosystems), sodium hexametaphosphate, and other not so good ingredients. Yum. Then, large manufacturing plants use thousands of gallons of diesel fuel to ship their products across the united states (killing bugs and wildlife in the process). As a naturalist, I would take an organic, hand made, locally farmed portabella mushroom sandwich over a synthetically made factory hamburger any day!
But even if a person decides to convert into an organovegan, problems with that arise.  Organic or not, bugs in processed food is more common than you might think.  In fact, the FDA allows bugs (among other animal parts) to be processed in with food.  It is rather unavoidable in large manufacturing plants such as Kelloggs.  Mice, rats, grasshoppers, flies, maggots, worms, crickets, beetles, moths, caterpillars, and other creatures, as well as their feces and body parts, mix in with the plants being processed and therefore cooked within the food.  A processed vegan's meal can contain over 60 insect fragments, hair, scales, and droppings per bite of food. A naturalist is more concerned about the toxins and byproducts put in their food rather than avoiding the consumption of living organisms.
The push for veganism is still harming the environment.  Even though I receive a lot of arguments about this, the amount of pesticides and herbicides which are used taint the water supply and leach into the ground damaging the surrounding ecosystem.  What's worse, land fragmentation due to industrial farming interrupts the natural life-cycles of many animals.  For instance, the removal of grassland to plant GMO soy kills off or moves the wildlife in the local area, urging other predators, such as fox, owls, and hawks to relocate as well.  Deemed as pests, everything from coyotes to squirrels are killed off to ensure the agricultural business maintains crop quota.  One large example is the prairie dogs in the eastern part of Colorado, which are considered a huge nuisance to most farmers, are subsequently poisoned by the hundreds.  With them, the eagles, hawks, fox, coyotes, black footed ferrets, and other animals reliant on the fragile food chain disappear with them.   Then the rabbit population explodes so more poison is brought in to take care of the issue because rabbits are detrimental to farmland.  Other loosely linked animals find themselves migrating into urban areas in the search for territory and food.  Bears, mountain lions, bobcat, lynx, coyote, and fox are all winding up in cities where they normally wouldn't be because they are being pushed out of their natural habitat; thus forcing politicians to find ways of exterminating these pests.  Colorado legislature is currently working on a bill which will push to eradicate the mountain lion, which is heavily supported by hunters and farmers.  Just recently, a bill that would bring back baiting bears to hunt was brought through but thankfully didn't pass.  As industry farming grows, the worse the problem becomes and the more bills are brought through to take care of the ecological imbalance created by industry farming.  A naturalist is more concerned about holistic farming practices, ecological preservation and sustainability rather than modes of increasing crop production world-wide.
I promote and encourage a naturalist diet and lifestyle. Now I, myself, am not 100% natural.  I can't be! I live in an urban part of Denver where the growing season is half a year long and I can't leave my house nude to go pick edible flowers in the field behind the library.  If I could, I would.  On the same token, I don't wear hair products or makeup, and I wear mostly cotton or wool clothing.  I hit up the farmer's markets during the summer and the natural supermarket during the winter.  I buy meat and dairy from local farms who believe in holistic/sustainable practices.  I stay away from industrially made items and food.  Yes, I watch TV occasionally.  Yes, I cook on a gas stove.  Yes, I have a water heater in my basement which heats up my water for showering.  But I also garden every year, I recycle everything I can, I compost, I conserve energy and water, and I buy my household consumables from a responsible manufacturing company that doesn't test on animals.  
Last night, the group of vegans I spoke with held themselves higher than me because, in their mind, am an animal murderer.  The slice of cheese I put on my sandwich condemns cows to a horrific death. I invoke rage and animosity in them for my dietary habits, which one person emphasized milk drinkers should be stabbed in the face!  But none of them realized that they were as much a culprit to animal slaughter as I am.  The major difference is that a naturalist believes in helping the environment as a whole while maintaining a healthy lifestyle.  Most processed vegans subscribe to a philosophy of saving animals by keeping them from being slaughtered for food, even if it requires consuming synthetic food.  Most processed vegans I have met are extremely unhealthy and start having serious issues related to deficiency or toxicity problems, i.e. sodium build-up, homocysteine build-up, biotin deficiency, iron deficiency, vitamin B12 deficiency, and thiamine deficiency just to name a few.  In fact, one vegan man I knew suffered from hepatic edema, pancreatitis, and gynaecomastia after being on a processed vegan diet for two decades.  Many of these health problems could be avoided if processed foods were not consumed, vegan or not.  

As I put a load of laundry in my washing machine this morning, I thought to myself, "I wonder how many of those people last night use natural, animal-safe laundry detergent to wash their clothes?"  I would be willing to bet one hundred bucks that none of them use naturally derived, animal-safe, biodegradable products in their homes.  None of them arrived on a bike.  None of them walked in nude (albeit I hope not).  All of them wore shoes, had groomed hair, and had cell phones.  Not a single one of them insisted I turn off the light because it used electricity, for these city dwellers, that would be a silly request.  Not one of them walked into the room in such a way that they didn't leave a carbon footprint or took up space in some way.