Day 86: Shall we talk about debts?
So, how many of you have unsecured debts, and are now unsure how you will pay them back? Secured debt is the kind where you put up collateral, which the lender can take if you don’t pay them back. Unsecured debts are your credit card debts, basically. Your credit card can have some important things on it that are helping your secured debt run, like maybe business equipment or supplies. But, if you don’t pay that back, the credit card company won’t show up to collect the items that you placed on the card. Therefore, there is no collateral for that debt.
I just saw that 4.4 million more people filed for unemployment today (4/23) bringing it over 26 million, at a rate of about 11%. During the Great Depression it hit 25%, so we are almost halfway there. There are going to be businesses dying, but new ones will be developing, too. Every problem contains the seeds to its’ own solution. For every problem solved it can create a new set of issues, though. People are getting creative.
Back to debting, and what people have taught me over the years. First and foremost, you have to pay them back unless they are somehow forgiven, or you gave up the collateral, but that means you paid the debt off. If that were the case for, let’s say your house, it is best to talk with the lender to work any problems out. In the case of COVID, many have been given the privilege to put their house payment on deferment for 60–90 days, which is to help ease finances during this precarious time. BUT, it is not forgiven, it is on hold. Two things could happen; one, you pay that time in a lump sum at the end of the grace period, or, two, you throw it on the loan and maybe catch it up later with extra payments, or have 60–90 days longer on the mortgage. Student loans are on deferment until September 30, 2020 (USA), and no interest is being charged on that time. BUT, it is not forgiven, it is on hold. BTW — you can bankrupt on your debts EXCEPT student loans..
When you were working, even if you had a lot of debt you knew you had a way to pay it down. In the age of internet, you can take Masterclasses from anyone, anywhere in the world. I did just that in December. I signed on for a year to learn how to create and launch online courses. Through that, I learned about someone else’s courses to create funnels. Somehow you need to be able to get your stuff to the masses, right? And add software, supplies to create, and all the other things you need to make it happen, and you spent a fair amount of money. The only way to pay someone in Australia from America is through a credit card.
Now, I consider learning to be a good kind of debting, if you have to do that to improve yourself, or your business. It has a plan and potential to improve your life and the lives of others. Anything you buy online is through a credit card, possibly you can use a debit card, but not always. And, taking courses that you know you won’t finish, isn’t something you should do because then you are wasting your money. Don’t become a course junkie.
I believe that you have to take care of your basic needs before your unsecured debts. You need to have a place to stay, so rent or mortgage come first, then food. And, if you have to, pay the minimums on the cards, do so until your situation changes. Not paying that, though, will start tanking your credit score so you have to do something. Keep a record of your debts, and record your payments. Sometimes a spread sheet or a notebook work equally well, depending on what you want to look at, or what is easiest for you to keep up. Online paying allows you to see the progress and what is coming ahead. I used to buy these folders that had multiple sleeves with pockets and each pocket was for a certain bill. It gave me spots to record the transactions and so I knew if I had paid that bill this month, or not. Now, I have an expanding folder and same for each pocket, and each year I buy a new one. This is my way of doing hard copy, and my bill statements may have notes about phone conversations, etc. I keep this for tax purposes, also. Each year’s tax hard copies get filed in there so that if I need, I can just grab the whole file and have everything I need to know, right there. I make a copy of everything. There is no worry about a computer crash, or getting erased. Yes, I use Turbo and e-file my taxes, and have automatic deposits to my favorite bank account made.
You have to make a plan about money, and you have to constantly pay attention to it. My guess would be that it is a constant subtle chatter in most people’s heads. You go to a store, and you are making plans to purchase something, and other things grab your attention. Your thoughts are do I need it, do I want it, will buying it keep me from buying something else that is more important to my life, or is it just sparkly?
There are emotions around money. There are subconscious beliefs about money. There are ways you can sabotage your relationship with money, and there are ways you can make friends with money. Much of it is self-worth based. You may not admit to that, but it is true. Many times people are in financial trouble even if they are working hard, but because they are under earning, there is never enough. You may not have any credit card debt, at all. You may be happy that way, you say, to not have much money but when a crisis hits, like what just happened to the world, it becomes a different need. Maybe even someone had been helping you with your living expenses but the crisis hit them, too, and now they can’t help anymore, or like they used to.
Maybe you are one of those who are not only still able to keep working during this time, but you’re even doing really well, but if your self worth is low, or you have some guilt about it, you will find a way to get rid of it (helping others is a good thing, but be careful about being too altruistic). You made good money by working smarter, not harder necessarily, and you should feel good about that.
Money is an energy. It is a tool. It does nothing unless it is used. Have a plan. Implement that plan. Even if only in baby steps. Even if it is only carrying out one or two things a day to move you forward to that first goal in your plan. Break it down so it doesn’t seem daunting. You must stick to it, because if you don’t, you will lose it from your sight, and then you will minimize things about it, and maybe even throw out a good plan. Bring value to it and it will bring value back to you.
When your plan is to help others with its’ creation, you will feel good and your self worth will feel good. It will be lasting. And because it is good, you deserve to be paid, accordingly. People are always complaining about minimum wage. So, don’t pay yourself a minimum wage. Pay yourself, first. If you are not making money, you will not be able to sustain that plan for very long, and that typically brings people a sense of failure. The plan wasn’t so much a failure as the fail came in not carrying it through to fruition. It might have been a highly successful plan but the bumps got in your way. I know because I have done this, myself. I have started things with great gusto and then let it fall because I couldn’t do something. Somethings just need to be outsourced.
When Thomas Edison was asked how he felt about failing to get a light bulb created, he said, “I didn’t fail. I just know 10,000 ways the light bulb doesn’t work.” He continued to work on it, without stopping, until he found the way. I am sure we are all glad of that.
