What Do You Mean "The Bank's Empty?"

One of my joyous duties as Head of Household is monitoring our monthly budget and paying bills.  I'd rank the duty right up there with, oh, plunging clogged toilets.  But it has to get done so I do it.

As I was balancing the books, as they say, late last night I noticed a little discrepancy.  An $800 discrepancy which left me broke a$$ until payday.  The good news is that payday is two days away.  The bad news is I have a mandatory car loan and second mortgage payment due before payday...to the tune of $730...and my bank is empty!

Let the games begin!  Once I figured out where MY error was, and I take full responsibility, it was time to figure out where I was going to get $730 in less under 12 hours.  Having lived paycheck to paycheck for several years while going to school, I had become quite skilled at robbing Peter to pay Paul.

So aside from the embarrassment of being a financial dolt, I'll share with you the thoughts that went through my head on how to come up with a sizeable chunk of money quickly, as many people often have to do.

1- Flat out borrow the money from friends or family.  This could be an option for some...not an option for me.  My pride mainly but I've done it in the past and it just doesn't feel good to me.  If it works for you, more power to you.  There's no shame in asking for help.

2- 24 hour loan sharks or Payday stores.  I've done this before too.  I borrowed $500 at 20% interest from a brick and mortar money-to-loan type place.  Obviously I don't recommend this because the interest is WAY too high but if you are in a tight enough squeeze, it might be your only option.  I had to show proper ID and two recent pay stubs. Be aware, if you are late on payment they will also add fees to the ridiculously high interest rate.

3- Cash in your precious metals.  I thought I would have to do this today.  I have a handful of silver coins and bars that I could sell.  I've never sold precious metals and I am really interested in how it works.  I mean, I understand the whole "buy it and hold it" strategy but if the economy takes a turn for the worst and we have to start using our silver, how much will we REALLY get for it?  I was interested to see if I could sell the silver coins I bought for $18/oz for $40 to a currency exchange place.  Obviously pawn shops will pay as little as you will accept.  I could have tried CraigsList but I needed cash in 12 hours.  Fortunately, I didn't end up going this route.

4- Start scrounging through the house.  I have half dollars and coins that I purchased from banks in hopes they were silver.  Some were, some weren't and the ones that were NOT silver might as well be spent.  I have several rolls of half dollars like this.  I also bought several Presidential and Sacajawea gold colored coins just because the kids and me think they look cool.  There's always change in dresser drawers, couches, car ash trays, kitchen counters, etc.

5- Have you noticed aluminum is up to $0.85 per pound lately?  We have bags of aluminum cans in our garage waiting to be recycled. It takes about 31-35 cans to get one pound.  You won't get rich quick but as any frugal person knows, it all adds up.

6- There's the old handwritten shell game with checks called "check floating" which used to be fairly common years ago.  Here's how the game worked: I owed a payment to a credit union due by 5pm today.  I could write a check for that debt on say, a Bank of America check and turn it in at 4:45pm.  The credit union debt would be satisfied on time but the check from BofA wouldn't hit BofA until the NEXT business day or later.  Years ago, the float time was 2-4 days between when a check was deposited at Bank A and withdrawn or transferred from Bank B.  These days, float times are usually 24 hours or less.  In my case, I had a bill due today (Wed) by 5pm but wasn't getting my paycheck until Friday.  It could still be done but you'd have to use three banks.  The downside: you risk the bank beating your deposit and you get an NSF fee (usually $35) for each bounced check AND your debt payment would be deemed as late after all that work.

7- Use bank fees to your advantage.  I have had scenarios in the past where I ran out of money but still had a bill left to pay before payday.  There was still money sitting in my account but my checkbook register told me that the money was already spoken for via a "pending" or "outstanding" payment I had already made.  I weighed the costs of borrowing from a Payday Loan place (20% interest or higher) versus an NSF fee from my bank (usually a flat $35).  Let's say I had $400 in the bank.  I had paid a bill for $400 but it hadn't been cashed yet and could take up to a week to process depending on where the receiver is located.  Our old timeshare company was like that.  They would take ten days to process a payment. I have another bill due for $300 in the next two days for my electric bill but payday is three days away.   If I borrowed $300 from a loan shark, I would pay $60 in fees to the shark or I could withdraw my $300 and pay the electric bill and try to get cash back into the bank before the timeshare check was cashed (a slight variation on the "float".)  If the timeshare attempted to withdraw before I got the money back in, the check would bounce and I would get a $35 NSF fee from my bank.  I would call the timeshare company and apologize, then offer to send a money order asap.  A $35 NSF fee is better than $60 to a loan shark.  Banks will give you ONE reversal of an NSF fee per year too.  If you keep track of when your checks clear and when you wrote them, you'll learn how long everyone takes to cash them.

8- Always call the debtor and ask if you can get an extension.  I happen to know this credit union very well and there is NO extensions on anything.  I can honestly say this is the WORST bank I have ever dealt with.  I made it in there today to make my payments and just like always, they screwed it up and I ended up sitting there for an hour.  They still couldn't fix their screw up even with the assistance of a manager.  Maybe I'll share that story another day.  What a nightmare this bank is.  Anyway, my electric service, internet, gas, water, cell phone are all very good about extending a deadline. Heck, even my mortgage company will do it.  But don't ask a bank, oh no.  They give no breaks.  You know, cause they don't get any breaks...right.  Bailout anyone?

9- Ask if you can move a due date.  Don't mention you can't make the payment up front, just explain how the due date is close to another large payment you make (mortgage, auto) and explain it puts a pinch on you at that particular time of the month.  I've had companies move the date forward as much as two weeks.

How I feel about MY credit union.

10- Return some recent purchases.  We usually have items we purchased that can be returned for cash.  Just recently, Wifey had to go buy bras for three daughters and guess the sizes.  Two of the three were wrong and can be returned for cash with the receipt.  Did you just buy an expensive item a week ago before the checkbook snafu?  We recently bought a juicer from Walmart for $99.  There's a 30 return policy at Walmart.  If we had to, we could return the juicer for the $99 and go back for another one when we could afford it again.  It's important to keep your receipts.

11- Collect on your debtors.  Does Jim Bob owe you $200?  Offer to let him off the hook for $175 if you can drive by and pick it up in the next two hours.  Explain that you're in a bit of a pinch and, after all, you helped him, right?  You get quick cash and he saves a little dough.

12- Request an early paycheck.  My hospital did this for me one time, years ago.  I don't remember why I asked for it but I simply called the payroll department and asked if I could pick up my check a day early.  They complied and I got my paycheck one day early.  Doesn't hurt to ask.

13- Sell your stuff to a second hand store.  We have a clothing store in town that will buy used clothing for pennies on the dollar.  In college, I would take last years out-of-fashion clothing there and get some spare cash for it.  They will inspect it and make you an offer.  They won't want things that you think are awesome and they'll offer you chump change for stuff you paid $100 for, but you get the idea.  It is one more way to turn stuff lying around the house into cash the same day.  I've left that store with as much as $40 in cash.  Of course, that was 1994.

That's all I can think of for now.  Suffice it to say, I pulled it off.  Even though the bank screwed it all up, at least I did my part and held up my end of the obligation.  After I got back home and hinted that we might be having Ramen noodles for dinner, a neighbor whom my wife has been babysitting for lately showed up and gave her $60.

Anyway we look at life...we're blessed.  Hope you are too.

~OJD

Money Seeds and Anti-Banking Fertilizer

Bella's first day of Kindergarten.

A full day of sleep yesterday afforded me the ability to stay wide awake for my entire night shift and into the mid-morning hours.  Usually I get home a little after 7am and drag myself out of my Jeep and limp towards the front door of my house.  Working the night shift gets old after a while...or maybe I'm getting old.  But today I felt fully charged when I drove up the driveway.

Instead of longing for the comforts of my bed, I was energetic enough to take my kids to school.  Only two have started: my 5th grader and kindergartner.  It's always heartwarming to take a child to their first day of school.  The thoughts of the new friends they'll make as they embark on their new lifelong journey of learning.  Wifey and I are blessed in that we have found an elementary school that does a terrific job.  As much as we like the idea of homeschooling, we have seen tremendous work done with our children at this school.  It's junior high and high school that we haven't found what we're looking for but that was already blogged about here.

Anyway, as I was driving my girls to school this morning my 10 year old asked "Dad, why didn't we buy the Erecksons' house?"  We had received a call from some good friends in our church who informed us they would be moving in about six months.  We had always admired their house and the work they had done with it.  It was a beautiful two story house probably close to 3500 square feet.  Mr Ereckson discovered he had quite the knack for woodworking and over the years added beautiful wooden accents throughout the house.  Large hand carved wooden beams bordered the entrance to the main living area.  A cozy wooden kitchen nook brandished a hand made wooden bench seat stained a dark cherry with what had to be so many layers of gloss that it looked wet every time I saw it.  He took months laying flagstone around the pool in just the right patterns.  Yes sir, this house had character and comfort.  A man could be proud of that home.

I began to explain to my pre-teen that unless you have lots of money in your pocket, which most people don't have, you have to borrow money from a bank to buy expensive things like houses and cars.  Right now, in our recession, banks just aren't lending much money to average people.  I shared with her that our house cost about $140,000 when we bought it ten years ago.  Since we didn't have $140,000 in cash, we had to borrow it from a bank and in turn, pay the money back over time.  Then I briefly explained interest and how the bank makes a profit from loaning money, careful not to get too deep into the boring stuff.

She's starting to understand that we need money to pay bills and that is why Dad goes to work.  This is where I started planting seeds.  I told her that if I had it to do all over again, I would have done things differently.  I impressed upon her that she should do business with banks as little as possible.  "They are a business", I told her. "Their sole purpose is to make money...off of you and you're hard work."  I explained how the Jeep we were riding in cost me around $24,000 when we bought in five years ago. Since I didn't have that much in savings, I had to borrow it from the bank. Now I have to pay $430 every month just to drive it.  Her eyes got big and she asked "How long do you have to pay them Daddy?"  I could see that she was understanding the debt obligation and it's longevity.

Out with the old (beige Yukon), in with the new (white, Suburban)
Goodbye $24,000 debt, hello 100% Ownership for $7.600.

I told her that if I could do it all over again, I would buy an older Jeep for much less money reducing the amount I would owe the bank considerably.  I reminded her of the 2001 GMC Yukon that we had last year.  "The one Mommy totalled?", she asked.  "Yup, good thing too", I replied.  In a strange twist of fate, Wifey was t-boned in an intersection when the driver of a PT Cruiser decided he wasn't going to turn after all.  He may have been in a turn only lane...with his blinker on...but he decided to change lanes and drive straight after Wifey had pulled out into the intersection. She got her first ever ticket and it was for failure to yield. 

Our Yukon was worth about $8000 at the time.  Since we didn't have much cash in savings, we financed that vehicle for $23,000 for our local blood sucker, I mean, banker.  The world of buying cars still amazes me to this day.  A car can be worth $8,000 "wholesale" but have a lending value or "retail value" of $23,000.  Of course, our bank had no problems whatsoever loaning us $23,000 on the vehicle worth only $8,000.  Here's the strange twist of fate.  I was smart enough to add GAP insurance to the vehicle when I bought it.  GAP insurance means that if the vehicle is totalled or wrecked beyond repair, if there is any loan amount NOT covered by the auto insurance company, the GAP insurance company covered the balance so you wouldn't be left owing money on a car you no longer possessed.  So, the $23,000 Yukon was paid off almost completely.  The insurance I had at the time (Geico) paid $12,000 to the bank as that was the estimated value of the vehicle.  Another $10,000 was paid by the GAP insurance leaving me with about $1000 which I settled with the bank for $500. (I pitched a HUGE fit about them lending so much money that auto insurance AND gap insurance wouldn't even cover the balance. Greedy turds.)

So I tied this all together for my daughter by explaining that after we got rid of the big bank loan for the Yukon which cost us about $450 a month, we had enough cash to go and buy our 2001 Suburban (almost the EXACT same vehicle but with less miles) for $7,600.  Now we OWNED the vehicle because we were able to pay cash instead of borrowing money from the bank.  We'd never have to make another payment on our Suburban, we owned it 100%.  She smiled and it made me smile.

"Avoid the banks as best you can", I told her.  Not many people will be able to buy a house without a bank loan though.  The trick there is to buy what you can afford.  You don't want to be "house poor" which was a term I hadn't heard until the last decade.  I told her my folks and Momma's folks didn't warn us about the banks.  We grew up thinking that when you needed a car or a house, it was normal to go borrow money.  Then that led to getting credit cards when we needed more money.  "Stay away from all that sweetie", I said.  Only pay cash for the things you need.  Make what you can for yourself.  Like the way you've learned to knit scarves and stocking hats. 

She stared off into the distance digesting what I said as we bumped along in the unforgiving suspension that Jeeps are built with.  I had planted a field of money seeds and anti-banking fertilizer in the garden of my daughter's mind.  When she grows into her twenties and thirties and experiences the natural yearning for nice homes and automobiles, I hope she remembers this talk and avoids the debt trap that ensnared my entire generation.  Of course, I'll continue planting with every chance that the good Lord gives me.

As my cousin Stephen would say: "Can I get an Amen?!"

~OJD

The College Scam: Debt AND No Job

I grew up being told by those around me that all that life had to offer was more readily available to those who took the time to earn a college degree. High school counselors were quick to point out that over a person's lifespan, more money would be earned if I had a college degree as opposed to only possessing a high school diploma. Heavily touted were the Ivy League or elite colleges such as Yale, Duke and Harvard among others.

I started college a year after high school. I was 19 years old and on my own. Housing wasn't too hard to find and I quickly settled in to a quiet, sleepy little college town of about 15,000 people. About 5,000 of that population was the college.

It didn't take long to figure out that the lack of jobs in town was due to the large population of students in the area. I still managed to land a few odd jobs at a corner store and the university cafeteria and library. The problem with these minimum wage jobs was they barely covered living expenses, let alone college tuition.

I met with a financial advisor from the regional university in the town of my new residency. It was there that my life changed forever. It changed forever and I didn't even know it. At least, not until more than a decade later. That was the year I learned about student loans and began to acquire debt.

Up until this time, the only debt I had was $1500 for the 1983 Camaro I was driving. Grandma had co-signed with me a few years earlier and my payments had always been made on time (no way was I going to let Grandma down.) I was almost debt free and didn't really know what freedom I (almost) had at my fingertips.

I was "awarded" several student loans from different entities within weeks of my financial advisor helping me to fill them out correctly. The paperwork was daunting but with the aid of a professional, it only took about twenty minutes. The best part, or so I thought, was that the "awards" not only covered my university tuition AND my books and fees but it also allowed me a little extra for living expenses. SWEET!

I had very little credit history but to my knowledge the student loan companies didn't even ask about previous credit or credit scores. Just have the school fill out their portion of the document, sign on the dotted line and wait for the money to come.

And the money came. And it came. Semester after semester, I continued to pass my classes and proceed to the next year. Freshman and Sophomore year were a blur of lectures and tests. It was during my junior year that I moved from Oklahoma to Arizona, thus switching to the lavish Arizona State University. Ah, the palm trees and sunny weather. I hardly noticed the increase in tuition expense with so much going on around the ultra-large campus (remember, I came from a small town.)

ASU quickly got me in the fast track to financial aid. Their process was so streamlined, I could do most of it by dialing an automated telephone line. Aid continued to ebb and flow. I rented a condo here and shared a four bedroom house there. Towards the end of my college "career" I met my wife, in a class at ASU. Needless to say, my education was reduced to summer classes only during the last few semesters as we begining to have children.

When it was all said and done, I beamed with pride as I held my Bachelor of Science degree. I had accomplished what everyone told me I should do. My mother and father had Bachelor's degrees and now, so did I.

Now what?

For the sake of time, I'll just tell you that they jobs I held after receiving my degree, for the most part, had NOTHING to do with my degree. I managed a smoothie bar in a health club. I sold Toyotas at a car dealership. It seemed as though my job income was slowly falling below the needs required to support a growing family. We were starting to run late on bills.

That's when the student loan companies began to call inquiring about my repayment options. Oh, did I mention I racked up $80,000 in student loans? Yep. $80,000 for my Bachelors degree. There was no way I could afford to pay that back at this time. Luckily for me, or so I thought, I was introduced to a process known as deferment.

Deferment means the student loan company will let you "skip" your monthly payments for usually six months to a year. You don't have to pay a dime but the interest continues to accrue. "Sure, I'll defer. I should have a better job in a year. After all, I have a Bachelors degree."

I am now indebted for the rest of my life. Indebted to an entity which has been taken over by the federal government. If I don't make my payments, it will eventually be garnished from my wages. Laws were passed to make it impossible to file bankruptcy on federal student loans. I believe it is the only thing that can not be washed away by a bankruptcy.

Am I making more money now? Yes, because I went back to school again...twice. This time I learned two trade skills: Radiograhy and Sonography. It is because of these trade skills that I can now "afford" to have a family. The kicker: Sonography only cost me $6000 for the whole two year program.

I'll never understand how a government can impoverish its young people by offering them loans with no credit worthiness necessary to get approved. Enslaving us to be doomed to pay back loans for decades to come with no REAL guarantee that we'll even get a job.

Mac Slavo's recent title says it all: "Nowhere to Go: 85% of College Graduates Will Return Home Jobless. 

It is one giant College Conspiracy and EVERY student from junior high and up should watch the documentary detailing how we've been scammed about colleges all along.



Now, I'm NOT saying don't get educated. I'm saying don't take out student loans to do it.

Luckily, for now, student loans die with the borrower. It won't be passed down to my children when I depart this earth. That's a good thing...because I just may still have a balance when I die.