Have you ever read anything that made you feel like a failure?  Something that slammed you in your gut, made you want to vomit?

This innocuous looking article on savings rates at Smart Money hit me that way.

The article discusses the savings rate of our country compared to others in the world.  It seems that individuals who are living in the poorest corners of our world are also some of the best savers.

Ring the Bell For Others!

We complain and whine about our inability to get ahead on our income.

• “How can anybody save money in this economy?”
• “It costs so much to eat, buy gas-our monthly bills are just too high!”
• “Momma, I can’t wear those no-names, my friends all wear Uggs.

The super-savers in third-world countries, whose income would be less than 1% of our so-called poverty level,  sometimes making as little as $2 bucks a day, are living on half and saving the rest.

How many of you are saving 50% of your income, or putting 50% of your income against your debt?

The current savings rate of our country is quoted to be around 5%. That means we spend 95% of what we make on average.  At the height of the boom before things crashed in 2008, we were at a negative savings rate.  That meant as a country we were all spending more than we made on an annual basis.

Our government continues to do so at a dizzying pace.

Spending, Can You Do Better?

I know why this got my attention.  We are blessed in this country to have so much in the way of material goods-most of which sits in our homes unused, just to be available if or when we need it.

We have 15 different damn ways to cook a hamburger. From a microwave, to George Forman’s grill, to our stove, to the $1000 BBQ with 5 burners and while you’re cooking- a blender for your margarita-cheers!  Cooking, that’s for losers, let’s go to __________ (insert your favorite burger joint here!)

And don’t forget the pasta maker, the tortilla maker, the bread machine, and the rice cooker.  How many ways can you cook a starch???

I’m not just casting stones here.  I’m looking dead center in the mirror and don’t like what I see.

And my wife and I are laughed at ‘cause our TV is 20 years old and both our cars are more than a decade old!  I know I’m far from the worst spender, and that just makes it even worse.

Why Personal Finance?

Many people ask why I do this. “Why do you teach others about personal finance, as busy as you are at practicing medicine?

The only answer I can give:

I’m called to do it.  I want to help you see how poor, (some would say stupid) choices are ruining your lives.  It seems like fun to buy these new shoes, eat out, I gotta have that new boat, the kids have to go to that private school..….. We borrow money for school when we could be working and paying our own way!

We delude ourselves daily!

It’s so easy to watch TV rather than study and better yourself to improve your income.  It’s easier to have a beer with your buds rather than volunteer at the food bank or ring the bell at Christmas.

It happens so slowly and in the company of so many others, that we don’t realize we’re in Overspending Hell ‘till it’s too late!

Reader Questions:

What do you think?  What is your savings rate?  What would get your attention about your spending?  Do you save 5, 10, 15% of your current income after taxes?

If you are saving more, how do you do it?  How did you get there and what would you suggest others do who say they can’t get by?

{photo credit: Monica’s Dad c.c.}

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Many readers wonder, “Does Dr Dean practice what he preaches?”

I will let you in on a few details about how we manage our finances. Transparency seems to be the new buzz word….

As I’ve written here before, my wife handles day to day bill paying, and I handle our investments.

Money Management Mayhem

Checking:

We use online banking wherever possible, though my wife is not a big believer in automating bill pay. She would rather do it herself.

We use a locally owned bank for our checking. I like doing business with “hometown folks” when I can.  We keep the minimum balance over the required amount to avoid fees.

We manage that account with Quicken, having upgraded to 2010 version last year.  I tried to use Mint last year as a trial but it didn’t interact electronically with our small town bank.  I’ll try again in the future as it gets great reviews from those who use it.

Savings:

We have an automatic savings draw from our checking to ING Orange Online.  That’s an out of sight out of mind account.

We move money to our emergency savings account every month and keep 4-6 months of expenses in an interest bearing money market account.  Any additional income goes to pay off my real estate investments.  More about them below.

Investments:

Retirement Accounts:

I have the company match invested in my 401k automatically withdrawn and invested in a fairly aggressive mix of growth and  value mutual funds, emerging market funds, and international funds.

I have a separate older retirement fund I’m no longer funding that is invested in a fairly conservative mix of bonds and cash 40%, and a mixture of growth and value mutual funds, international funds,~45%  and commodity funds 5%.  I review that account with my personal investment adviser once a year. We re-balance those investments to keep the percentage approximately the same every year.

I have been trying to get him to increase the commodity portion a little more aggressively, but have met resistance to those ideas.  Not enough for me to fire him but enough to keep him paying attention.

My wife and I  have two traditional IRA’s I’m no longer funding.  I use those accounts for my  speculative stock investments. They represent less than 5% of my net worth.

I have  a taxable brokerage account. As I have said here before’ I don’t like to have all my retirement savings tied up in traditional retirement accounts (IRA’s, 401k’s, 403b’s) as the rules of those can be changed on a whim by Congress.

Dr Dean’s Debt:

I am paying down debt (my only debt besides my house and office) aggressively on beach property I have owned (with the bank) for  the last 5-6 years.  I hope to have my home, office and beach property paid off completely within the next 5-8 years-well before my expected retirement.

I have written a guest post at Consumerism Commentary with the details of my beach property investment fiasco.

My Costa Rica property was purchased with cash more than 10 years ago.

Credit Cards:

• A Delta American Express card I use for travel.
• A Pen Fed 5% gas card  I use for gas purchases.
• A rewards Visa I have for use in Costa Rica as they prefer Visa in Central America.

All my credit card purchases are paid in full monthly. I monitor my reward miles and cash them out frequently-usually with air travel.  I don’t trust rewards cards to not change the rules so I don’t let miles build up excessively.

Vehicles:

Both our vehicles are paid for.  We will need to buy a new vehicle for my wife in the next year or so, but will be paying cash for a 1-2 year old vehicle of her choice.

I have small investments in many side entrepreneurial efforts that may or may not pay off in the future, including this blog.

I have a Will, term life insurance (enough to pay off all my  real estate debts and allow my wife to live in reasonable comfort.)  I also have long-term disability insurance.

I need to make funeral arrangements (at this point I have no burial plot or coffin/urn picked out) and will be leaving my body to a medical school for study, followed by cremation and sprinkling of ashes in the Gulf of Mexico.  Though if my wife dumps me in the backyard, I won’t really care….

I also have researched long-term (nursing home) care insurance but have decided to not make that purchase till my late fifties as that seems to be what experts advise.

I  have an inexpensive identity theft insurance policy that covers the expense of dealing with any issues there. That’s a choice that may not be necessary if you have the time to deal with those problems if they occur.

Giving:

We give annually to our church, our local college’s nursing scholarship, and our local library and hospital and Y.  We also  give to local charities (Cancer, heart, Salvation Army)  and have given to disaster relief as those occur.

Future details:

I will write a post in the future that will detail my investment choices with more specifics for the curious. (yes, I will name names….)

Reader Questions:

What do you think?  I would love your feedback on my choices or any specific questions you have on why I do what I do. If you do something different and have suggestions I would love to hear it.

All of us have made dumb money decisions and mine are too numerous to count.   I’ve made significant money management improvement in the 2 years I’ve been writing about personal finance,  thanks to you!

{photo credit: Images_of_Money c.c.}

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• Has your credit card  been turned down because you were over your credit limit???
• Have you had a line of credit that maxed out?

If so, you know how our own US of A government is feeling right now.

Poor Timothy Geithner. The US Treasury Secretary may be facing the take-back man loading up his desk and PC as a down payment….

Although that’s not much for  collateral when you owe:

$ 14,250,000,000,000.00 ( 14 plus trillion dollars, if you have trouble with all the 0′s.)

Why a debt ceiling?

How did our government who owns the money printing press get stuck with a debt ceiling?

Crumbling Debt Ceiling-Bringing Down The House?

Up until early in the twentieth century the feds were like most states,  pay as you go-with congress having to approve each time it borrowed money.

Poor overworked congress got tired of having to approve every bill that had to be paid with debt instead of cash.

Voila, a debt limit was approved.  As long as new debt was under that limit, no separate congressional action was required.

The debt limit or ceiling has been raised over 100 times.

It”s like telling your child his credit card can’t go over $1,000 without a come to Jesus meeting…but then raising the limit every time it get’s close.  I don’t know about your kids, but mine would be headed to the liquor store with his buds!  “Time to Party!”

Bumping against the debt limit…

When the feds have a debt due  they can’t pay with cash in the bank, they sell a government bond or treasury note.

This extends the time they have to pay the debt.  Instead of having a 5 year car note, or a 30 year mortgage, the US government sells bonds and repays the principle and interest over time to  the bond or note holder.

Currently the government of China and Japan own more of our debt than any other countries.

What happens if the US government goes above the debt ceiling?

By law we cannot.  If the government can’t sell bonds to meet its debt obligations, then real money has to be used to pay back it’s debt.

That would mean not paying principle and interest to bond-holders, not paying government employees, or having to close down certain government operations. (or all of the above!)

The money saved by these activities would be used to pay for the continued operation of the government-rather than borrowed money. (Wouldn’t last long as the feds are budgeted to spend 3 +billion dollars/day this year!)

Your federal government borrows money to pay back borrowed money, to pay back borrowed money, to pay back borrowed money.  Bernie Madoff went to prison over a similar scheme…

What if China didn’t get paid?

What would happen if China or Japan didn’t get their owed bond money?  The short answer is: No one knows-it’s never happened.

The government of Greece is giving us a little clue.  To get a buyer to pounce on a 10 year Greek government bond, Greece is paying 15-20 % interest.  The current 10 year notes sold by the US government are at a record low-<3%…Our government is borrowing cheap money.

If it had to pay even 6% on it’s notes right now, our financial system would be in panic.

The current controversy is not on whether the debt ceiling should be raised (except by  Ron Paul…) it is whether our congress is going to tie that raised limit to spending cuts to keep the national debt from continuing to spiral upwards…

My opinion is that not tying the debt ceiling vote to a significant spending cut is like giving your car keys to a drunk child.  And we all are guilty of parental neglect for letting our congress get this far in debt in the first place.

We are  telling congress it’s ok to continue to spend money our country doesn’t have-and admitting we will never, ever balance our budget..

Yes it will hurt  to live with the results of the government spending less money.  We all are getting a little milk from the governments teat.

But I’m confident our country will come out of it stronger than ever.

Not cutting spending now will mean continued deficit spending, tax increases, inflation, and an end to America as the place for dreams to come true.

Reader questions

What say you?  You ok with the government’s plan to continue spending without limits?  Are you prepared for more pain if your favorite program gets whacked a little?

{Photo Credit: Justus Hayes / Shoes on Wires / shoesonwires.com}

Carnivals: The Totally Money Carnival at My Personal Finance Journey

Carnival of Wealth @ Control Your Cash!

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1. 5 Steps to Lower Your Cards Interest Rate
2. Taking Charge of Your Credit Card Debt
3. Searching for a Rewards Card
4. Success: My Search For a 5% Cash Back Gas Card

Despair

Me to Mrs Dietz who is 8 months along:

• 1980-I’m sorry but I don’t hear the babies heartbeat.
• 1985-I’m sorry but I’m not hearing anything on the monitor.
• 1990-I can’t see the heart moving on the Ultrasound.
• 2006-Yes, 3-D ultrasound does look just like a real picture.  I’m sorry but there is no sign the heart walls are moving, there is no blood flowing across the valves, and the lungs aren’t expanding. (yes, babies breathe in the womb!)

Even after 30 years in the practice of medicine, I still get nauseous when I have to give bad news.

Bad news-the sharing of necessary though painful information is part of my job.  Telling a patient her mammogram looks bad.  That  her bleeding is from uterine cancer that has also spread to the lungs.

Despair

Telling a grown man his Mom or his wife is dying and there is nothing more anyone can do.  It hurts-not nearly as much as the families’ pain, but it hurts.

When it doesn’t hurt, I will know it’s time to hang up my scrubs…

All part of the job.

Despair

“What the hell does this have to do with credit cards and credit card debt?” you ask.

Please don’t think I’m trivializing this subject, but to change your behavior, to get true change requires despair.

Hit rock bottom! No place to go but up!   Hit the wall!

Despair

I’ve seen it so many times:

• The smoker who truly quits- when he has a lesion on the lung.
• The addict who shoots up for the last time when she wakes up in an alley wearing nothing but the blooming bruises covering her flesh like a tie-died blouse.
• The minimum wage clerk who can’t look  her husband in the eye to explain the new bracelet and how she was able to afford it and the other new little treasures around the house….

Despair

You’ve tried everything and you can’t make progress on your credit card debt.

Then and only then should you consider Debt Consolidation.

• You are making your minimum payments 90-95% of the time.
• You have a job but your income won’t quite allow you to get ahead.
• You’ve sold your last bauble on Craigslist.
• You’ve begged Chase to lower your interest rate and drop those penalties for being late only twice in the last three years-sorry Charley is the only response….

You KNOW you’ve done all you can do.

It’s time then to try credit counseling/debt consolidation.

I know you hear some gurus say-”Don’t do it.  You can do the same thing yourself.”

Yes- you might theoretically be able to take out your own appendix.   But should you?

Just as you go to a professional like me for your medical care.  Once you’ve tried everything to get ahead of your debt and failed, it’s time to get professional help.

Please, oh please, get the RIGHT help.  Not the loudmouth who claims he can cut your debt in half.  Just send me 500 bucks a month for 6 months, quit making your payments.  Then we’ll MAKE IT HAPPEN FOR YOU, DUDE!

Use an accredited non-profit professional who has helped millions of others….

How?

• Take a deep breath, quit beating yourself up, promise to quit spending, and look for non-profit debt consolidators.
• Make sure they are members of the National Foundation of Credit Counseling (NFCC) or the Association of Independent Consumer Counseling Agencies.
• Get references-either friends, accountants, or attorneys.  Or call and ask the company for previous clients you can call.  If they won’t give you any, run away.
• Interview several before making a decision.  At least by phone.  Make sure you get a good vibe.
• Check’em out.  What the hell is Google good for if it’s not to search for ” XYZ Credit Counseling complaints”,  “Better Business Bureau Membership of XYZ Inc.” or “I got screwed by Acme Credit Counseling” searches.

You lost your brain for a time while you were running up this debt-I know.  Don’t lose it again by turning your life over to the first smiling credit counseling cad who has a slick spiel and a promise too good to be true.

Do your homework.

Then trust them and do what they tell you to do.

• cut up your cards.
• pay the bi-monthly payment on time.
• And pray that God (whichever one you believe in) will be there to give you strength the next time you are tempted to spend.

What are the affects of going through credit counseling?

• You will have to admit your spending problems.
• If approved and you go into a debt management plan, you will be debt free in an average of 3-5 years.
• You cannot use your credit cards during that time.
• Your credit will take a hit! (it probably already has) but not as much and bankruptcy, or written off debts.

Despair?

Are you there?  Is it time? Do it before it’s too late!

{photo credit Steve Snodgrass c.c.}

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Julie RN-Staff Writer

Like 99% of other consumers, I hit my favorite stores in a blaze of glory after Christmas eager to grab up some great deals.  After all…buying at 50% off is smart shopping, isn’t it?

The items I wanted earlier in the season but wouldn’t buy would surely be marked down to prices too good to pass up.

247moms.blogspot.com

I have a weakness  for Ann Taylor and Lucky Brand, which are  on the pricey side.  So the after-Christmas 50%-off sale is the perfect bait to reel me in.

The retailers’ scheme is successful…SUCKER!

Lead us not into temptation…

I was enjoying my quest to pick up some great bargains when this little voice kept nagging me, “You don’t need that!”

Well no,  I didn’t “need” it, but I really liked it and it’s a great price!  “What are you doing?  You just finished spending for Christmas and  still paying off a wedding!”

That little voice drives me nuts! THAT’S when it really hit me…

This is insane! We are such suckers for “deals”.  I started questioning “what is my goal here? Why am I so eager to spend money for something I don’t need?”  My goal is to be completely debt-free and save for a comfortable retirement.

I don’t remember increasing spending on the after-Christmas sales as being  part of that plan.  So, I reluctantly restrained myself and listened  voice whispering “don’t do iiittt!!!”

Mounting up credit card debt after Christmas

Consumers consider after-Christmas sales “Merry Christmas to me!”. Most after-Christmas spending is on self and not for gifts to others.  If you are utilizing those fabulous gift cards for after Christmas spending,  then shop on!!

After-Christmas sales are excellent opportunities to pick up some great bargains.  But don’t fall for the temptation on “great deals” by increasing credit card debt or even paying cash for self-indulgence.

If it’s not a necessary expense,  buying even at 90% savings is no savings.

Discipline, discipline, discipline!

Don’t lose sight of your long-term goal…debt-free and happily retired !

I felt emotionally beaten to a pulp after the ongoing battle of  ”I really do want this! 50% off is too good to pass up!” and “That money needs to go towards debt. You don’t NEED that!”

Fortunately, the more sensible side won out.  And I have to say after the initial let-down that I was very proud of myself and happy to go home empty-handed.

Waiting for the after-Christmas sales to purchase needed items is a great way to save money.  But staying on track towards a comfortable retirement means finding the willpower to resists those great deals that are actually no-deals on our finances if we are buying just for the sake of buying .

Rather than  losing 50% on “great sales”, why not increase those retirement accounts and MAKE SOME MOOLAH!

Reader Questions:

Have you succumbed to any “great deals” you didn’t need this  post-Christmas?

What secrets do use to help keep you on target with your goals, and not falling off the wagon????

Share with others-we are all on the same team!

Have a great New Year’s Eve, but be careful!

Julie RN

Guest Post By Ray Evans, Mortgage Specialist, Element Funding

Bankruptcy is an uncomfortable subject for a variety of reasons. The most obvious is the grenade it throws on your finances.

Running a close second is the negative stigma which is often attached to the process. (“Isn’t that the guy who filed for bankruptcy-he can’t even pay his doctor bill!”)

This negativity is important to mention because strong emotions can sometimes lead to unsound financial decisions with devastating results. In other words, it can make us stupid!

When Should Bankruptcy Be Considered?

Bankruptcy is a viable option for someone who is “upside down” in terms of cash flow. In other words, when a person has more money going out each month than coming in, and no potential for reversal is in sight, then bankruptcy can be considered.

The longer someone waits to explore the various options available, the more serious his or her situation may become.

One of the worst things people can do in this situation is to borrow more money to try and pay off their debts. On paper, this is clearly an unwise financial decision.

In the real world, however, it is very common for individuals to pursue this strategy in an attempt to buy time and hold off on filing for bankruptcy. On the surface, this is certainly a noble notion; however it can often compound the problem and serves only to delay the inevitable.

Ways to Prevent Bankruptcy

For many homeowners facing the threat of bankruptcy, speaking to a qualified mortgage professional, sooner rather than later, is a much better option. An experienced loan officer can objectively look at your finances and help you determine if restructuring your mortgage would not only help, but possibly even alleviate any need for bankruptcy.

There are several mortgage adjustment plans available if you qualify. Many mortgage companies have specialists in their office to help with the paperwork involved.

Doing a short sale, if mortgage adjustment doesn’t work, may also help you get out of your largest debt!

When Bankruptcy is Inevitable:

If bankruptcy is the only option, seek out a reputable bankruptcy attorney and credit counselor. A qualified mortgage specialist can provide references for you as well, as he or she works with these professionals on a regular basis. Reliable references are essential in this case because experienced professionals greatly increase the odds of a successful bankruptcy experience. It’s that simple.

And believe it or not, there are many dishonest folks out there waiting to take advantage of those in dire financial straights…

Just The Facts, Ma’am!

When filing for bankruptcy, be completely honest and accurate regarding every aspect of your financial situation. This includes any changes to your income which may occur throughout the process. Bankruptcy is a federal procedure, adjudicated by real judges, and scrutinized by representatives who coordinate with the Department of Justice, the FBI, and the IRS.

It’s one thing to be bankrupt.  It is something else to have to pay a big fine or go to jail.

Additional steps-Make the bankruptcy process as painless as possible:

• Save all paperwork regarding your bankruptcy, and keep it organized. This will prove beneficial after your bankruptcy as you now have all of the pertinent information in one place. Also, be sure to write down your discharge date. It’s surprising how many people forget to do this.
• Establish a household budget. This can be accomplished in many ways, but there are several inexpensive computer programs available which do an excellent job.
• Live below your means-Throughout the bankruptcy, do your best to not only spend less than you make, but to save as much cash as possible. You never know what you may need it for once the process is completed.
• Be prepared for a barrage of junk mail. There will be sharks on the loose who are hoping to capitalize on your need for credit.

Tips for Rebuilding Credit:

• If you must buy a car, focus on transportation as opposed to style. Buy an inexpensive, used car, and try to get a loan for it. It’s a good idea to figure out what your budget allows in terms of a dollar amount first. This means obtaining financing prior to looking for a car.

• Get a secured credit card. Secured credit cards allow for the cardholder to deposit a said amount of money into an account, thus establishing the spending limit of the card. Missed payments result in deductions from the account. Some of these cards will reward responsible borrowers by upping the limit without an additional deposit. Some will even convert the account into a traditional credit card. (Be wary of offers of “easy credit” or any card which asks you to call a 900 number. You will be charged for the call.)
• Meet with a credit repair specialist. Not only can they help you clean up the damage to your credit report, they can advise you on specific ways to rebuild the credit you lost as well.

While it does take time, there is definitely life (and credit) after bankruptcy. Some mortgage lenders will even lend to you within a year or so after a bankruptcy. If you’re in serious financial trouble, the trick is to get the help and advice you need from professionals you trust.

Article by Ray Evans, Mortgage Specialist, Element Funding

Reader Questions:

As Ray mentions, Bankruptcy has an emotional strain on the entire family:

Do you have any experience with bankruptcy?

Any thoughts or tips you want to share with our readers?

What about the argument that there is good debt versus bad debt?

As I have mentioned here many times, the core reason for this blog is to teach basic money management skills to nurses.

Debt is obviously a common money problem-obvious to all, unless you have been sailing around the world for the last 7 years….

photo by alancleaver-2000

And like many of you, if I am starting my research on something, like an article on debt for this blog, what  do I do?

I go to Google-so I googled “good debt versus bad debt.”  The first non-advertised link, was an article in MSM, submitted by bankrate-articulating many of the old arguments.

The third article on the list is from MSM Money-(way to go MSM-I am jealous of their google juice!).

It has this quote-”Good debt includes anything you need but can’t afford to pay for up front without wiping out cash reserves or liquidating all your investments.”  This sounds like Yogi Berra  in the barbershop explaining why you need AFLAC.

What the heck does that mean?  “Anything you need.”

Now, I don’t know about you, but I can be pretty creative about things I need.  How many people need the new i-Pad, a new car, or even a haircut.   Does that mean if I put those on my credit card, they are “good debts?”

Is a Mortgage, Good Debt?

Some argue that mortgage or other real estate debt is ok as it is an appreciating asset.(something you own that is increasing in value)

Is Business Debt, Good Debt?

The same for money borrowed to advance their business-it will help GROW the business-so it is all good.

Is Student Debt, Good Debt?

Student debt is also good, in that it allows you to grow your income.

Is Good Debt a Hedge Against Inflation?

Many argue these so-called good debts  are  inflation hedges-as they increase in value overtime, or allow you to increase your income.  Therefore these represent a wise financial strategy.

David Bach, for example, a respected personal finance guru, strongly encourages home ownership as a wealth building tool.  His example is that home appreciation averages 6.5%-Allowing many people to build wealth, while they are sleeping.

This video was obviously done after the housing bust.  And I agree with him on many of his points.  But I think the idea that renting is bad, is not nearly as straightforward now as it was in years past. Price vs rent ratios have been used for years to decide whether markets for buying homes were favorable.  As you can see at this NY Times site,   the housing  markets in many cities are still overpriced compared to the rental market.

What those people who think good debt is ok are forgetting is that any debt, increases your risk.  Did any of the folks buying their home during the real estate boom, think their debt was risky?

Home prices were increasing 5-to even 25% per year for many years running.  All their friends were buying homes, and not just a few were flipping them for a huge profit.

Now those same  homes have dropped in value-the average nationwide is about 30%.  Many in the boom areas  of our country have dropped 60% or more.  How many years will it take homeowners in those areas to get back to neutral, much less building wealth in their home.

Those same people now are facing a struggle, with their home “upside down” or worth less than they owe.  They now need to move to find a job, but can’t sell their home for anywhere close to the amount they owe.

And banks are kinda weird in that they want the money you owe them.  And the banks don’t really give a rat’s ass that the home is now worth 30% less than it will get on the market, they still expect you to pay….. (They actually do care if you go into foreclosure, as then they have to sell the home and book the loss! )

I do agree that with the current price of housing and the interest rate’s being at historic lows, that now is a great time to buy a home. But only if you are financially prepared, and are ready for the responsibilities of home ownership, not because it is a great financial tool-to build wealth.

Now what about other  “so called” good debt.

Student loans are mentioned as good debt in many articles- as they allow you to earn more income.  But what happens when you borrow money, but don’t finish the degree because “stuff happens” or you decide to quit to “go find yourself”.  Or you borrow more than your new job’s income stream will allow loan payback without financial hardship.

Nurses are lucky in that there are loan repayment programs available-but not every field has these options.   And if you don’t finish your program-obviously these programs have no value.

Debt

So, think about your justifications for borrowing money, before it is too late!  Be sure you can afford whatever debt you choose to carry, and by all means eliminate consumer debt ASAP, but don’t forget all debt has RISK!

Reader Questions about Good Debt:

What are your thoughts about Good Debt vs Bad Debt?

Have you gotten into a so-called “good debt” that turned into a nightmare for you?

Share your thoughts with our readers, so they can learn from your mistakes or concerns!

But be careful when you try to justify your debts as good debts, as that may be a trap you can’t get out of.

I would like to add another couple of thoughts.  He mentions consumer traps.  The wholesale clubs are a great place to “not save money”.  Mainly because of all the temptations.  It is hard to resist all the great stuff at great prices.

To protect against this phenomenon, you definitely need a strong will, and a list-buy nothing unless it is on the list.

Watching TV certainly doesn’t cost anything, except when you are paying for 1000 channels of satellite tv, with the ginormous NFL, NCAA football, Nascar and movie  package comes in at a cool $150 bucks a month…..

Add in the wasted opportunity, when you coulda’  been reading a book on personal finance, (THE MILLIONAIRE NURSE comes to mind) getting free continuing education on the computer, or exercising (also can be free).

Another good read, by the Financial Samurai, is about working to make money, instead of following your passion. I think a lot of folks, unfortunately, are being given the opportunity to follow their passion-cause they lost their jobs.  That certainly can be looked at as an opportunity, rather than a crisis.  If you have always wanted to do _________, then if you have no job-go for it!

At Out of Debt again, there is a great story about Shopping at Whole Foods-my wife would have had the same sense of disbelief about a 6 buck pepper!

151 Days Off, (how bout that name for a blog), has written a post about not getting too uppity( Southern Speak) , if you are making progress in your walk towards financial freedom.  I don’t think that is likely for me, as I dig my way out of attempting to be a real estate baron in Florida-before the crash.   If anyone says they have never made a financial mistake-then run, don’t walk to the nearest exit….

All of these bloggers are in the Yakezie Challenge, which is a self -help/group support lesson in getting the word out about your blog.   I appreciate what they are doing to help the new folks on the blog-block get recognized.  Sometimes it gets lonely writing, and wondering if anyone is reading.  So look for other great posts from other members of the Yakezi Challenge. (I do love a challenge!!!)

Enjoy these great stories, I did!

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You have decided to make a huge change.  You have decided to quit spending more than you earn.  You look at your spending plan.  You add up your payments and bills. You add up the income.

Your extra money- to put against your debt-there is NONE!!!!!

What can “Millionaire Nurses do, to break through the log-jam and make progress?

We have discussed this a few times:

• Sell stuff-yard sale, e-Bay, consignment-to raise money
• Getting rid of some of your payments-use cash raised above to add to the sales price of that 4 wheeler to pay off the note-one more payment gone-Cha-Ching!!!!  (Substitute boat, big screen, Harley or whatever toy you are making payments on.)
• Earn extra money!

EARNING  EXTRA MONEY

Earning extra money–let me go talk to the boss, for a raise-well, that does work sometime, but let’s just pretend you are still in nursing school-( I know, what a nightmare!).     What can you do?

• Tutor your friends, especially if you are strong in a certain subject like Anatomy, or Chemistry.  Put up a sign on the bulletin board at school, advertise on Craigs’ List.  See what the going hourly rate is.  Just make sure you don’t get carried away and have it hurt your progress to your degree.
• Car pool-pick up others, and have them pay towards gas and car maintenance.
• Get a room-mate or rent out a room or couch- if you have one.
• Start a blog, and monetize it-if you can write, and are creative.
• If you are a savvy-social networking expert, (spend too much time on facebook) advertise your services to old people like me to help them set up their page, teach them to post.  They will pay you, and probably feed you, mother you, and you never know, you might find a mentor.

OK, so you are working as a nurse and no raise is in sight…  What can you do?

• You too can tutor nursing students.
• Work extra shifts, and over-time.
• Rent out one of your rooms-maybe to a nursing student-be a landlord and a mentor!!!!
• Carpool to work-to share expenses.
• Second job-either in nursing, or in your hobby area-catering on the weekend if you like to cook and you work weekdays.  Find a “temp” agency, and get on their list.

Get creative.  Let nothing be sacred.  Get after your debt.  Remember, as you pay down your debts, you will have more money to put against the remaining bills so the process speeds up-unless your “spending demon” awakes from the dead!

When you are finished knockin your debt down with a hammer, remember how hard you worked:

And never go there again!

Tell us your stories or ways you have earned extra money-legal or illegal-(JUST KIDDING!!!).

I found this definition of economics online:  “The social science that deals with the production, distribution, and consumption of goods and services and with the theory and management of economies or economic systems.”

Just the definition puts most people asleep.  What I found a little surprising, was that economics is a social science.  When I think of social science- I usually think psychologists, social workers, and anthropology.

I thought economics was “mathematical”.  Most social scientists that I know, would run from a calculator-so I learned something today….

One of my ways that I give back to society (one of the most important tenet’s of “Millionaire Nurses” -giving back) is serving on our city council-yes, I am a politician!!!!  You might think I do it for the money, but the 300 bucks a month that I get paid, doesn’t go far when I miss at least 10-15 business days a year from my medical practice.  ( I need to learn more about  “economics” myself.)

Now I am not telling you this to pat myself on the back. I consider it a privilege to serve my community- that has provided a great living for my family  for the last twenty-five years.  I also have learned a lot, by going to seminars, and educational opportunities to help become a better councilperson.

Today, I had the opportunity to hear a round-table discussion about the current economic downturn, to help cities manage their budgets. To assist us in providing the services citizens expect from city government, with the severe downturn in revenue from the drop in sales tax revenue, and other fee’s that normally support local government.

The featured speaker, was Dr Jeffery  Dorfman, Professor of Economics at the University of Georgia.

I am happy to tell you, he was neither pointy-headed, nor boring, and certainly didn’t sound like a nerd.  He gave a great presentation on the current economic situation facing our country, and by extension our state and city governments.

My “take home” points from his presentation were:

• The recession is now over, but until consumer confidence returns, it may not be obvious to you or I.
• When you are out of work-it doesn’t really matter whether we are in a recession-the household affected is in their own version of a “depression”!
• This recession, while severe, is comparable to recessions in the sixties and early 80′s, though it will probably take longer to recover, than those past recessions for various reasons.
• City and State politicians should plan their spending based on conservative estimates of revenue, using the good times to put money in  reserves, so when times are bad, they have a cushion.  This, to prevent having to curtail services, fire people,  or raise taxes-when it is the most harmful for the citizens, who are already struggling.

Now how does that relate to “Millionaire Nurses”?  Obviously, a lot, or I wouldn’t be writing this long post!

This is exactly what I am trying to stress to my readers.  The huge benefits you and your family will have , when you put aside money in the good times-(also known as the “Super-duper emergency fund”).  Limiting your spending to less than you earn, and limiting your borrowing so that you can continue to prosper when times are bad.  Millionaire Nurses are not struggling because of  living beyond their means.

So thanks, Dr Dorfman for an enlightening presentation-the Georgia “Dawgs” are lucky to have you.