Beat And Battered

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Debt Defined
The definition of the term itself is simple, something that which is owed. However it’s meaning goes far beyond this simple 5 word phrase. Most of the time we refer to debt as something monetary, you owe someone else money or they owe you money. I suppose you can be in debt other ways such as owing someone your time, borrowing a cup of sugar (which usually never gets repaid) or if you save someone’s life I guess you would owe your life to them? Anyway, at this site we are going to talk about the monetary aspect of debt: the different types of debt, how to manage debt, personal debt, business debt, and we might even debate if debt is good or bad.

How Debt is Repaid
Before any debt is established there has to be an agreement of how the debtor will repay the creditor. The debt can be paid back in a lump sum or over a stated period of time. Most of the time the debtor will pay the creditor interest on the debt. For example, if you (the debtor) borrow a cup of sugar from your neighbor you might agree to pay back the sugar to your neighbor (the creditor) in a lump sum when you go to the store the following Saturday. You might also agree to pay back interest and buy them a whole bag of sugar for their courtesy.

Types of Debt
The simplest monetary type of debt is a basic loan. A lending institution such as a bank agrees to loan a certain amount of money for a fixed period of time usually paid back in payments over the agreed time. Many of us have borrowed money from a bank or lending institution in order to purchase big ticket items such as a car, house, boat. These loans are considered secured loans because the items stand good for the loan. If you don’t pay the payments the items can be taken back by the bank to help pay the loan. Other types of debt include syndicated loan, bonds, and promissory notes, but these mostly deal with businesses so we won’t discuss them much for now.

Effects of Debt
The effects of debt can be debated as good or bad. Many extremists such as Dave Ramsey see debt as a complete negative influence on our lives and should be avoided at all costs. Other disagree and say that debt allows people and organizations the opportunity to do many wonderful things they would otherwise not be able, or allowed to do. I guess I fall somewhere in the middle with my beliefs. I think if utilized correctly debt can used for good, but very few people or organizations possess the power to control debt for the greater good.

Get Out of Debt
Getting out of debt can be one of the hardest tasks you will every have to attempt. After all most of us didn’t get into debt overnight, it took months, maybe years to get deep into debt. I guarantee you won’t be able to get out of debt overnight either. If you want to get out of debt you have to have a plan and a lot of sacrifice and discipline. You may have to take a part-time job or work extra hours at your current job. You’ll also have to give up some of the things you enjoy. Most important you will have to track your spending and create a budget.

Copyright © 2008 admin. Visit the original article at http://lexchoice.com/?p=97.
Tired of the monthly budget? Want to something a little out of the ordinary when it comes to saving money or reducing your debt? I just went for a three hour drive today on my way to a business trip and came up with this idea. What if there was some type of incentive every month for you to save money, wouldn’t it make it much more fun? So what’s fun and different about this idea you ask?

First, you’ll need to do a little research into your budget. If you’ve kept a good budget then this shouldn’t be too difficult. Break down your budget into three categories:

1. Completely Mandatory - This category contains all the necessary bills such as home, auto loans, electric, water, credit cards, etc. This does not include cable, phone or internet.
2. Somewhat Mandatory - This category will include bills such as cable, phone, and internet services. It will also include grocery money, clothing money, etc. Things that you need but you could probably reduct the cost somewhat.
3. Not Necessary - Finally the not necessary category includes entertainment money, and blow money. Money that if you didn’t have for a month you could live without. You really don’t need to go to the movies or spend $60 on dinner!

Now here is where the contest comes in and your reward. Total up the amounts from each category based on your last months bills. For example:

1. Necessary: Electric $150, Water $35, Home $1000, Auto $400 total of $1585.
2. Somewhat: Cable $40, Phone $35, Internet $40, Grocery : $400, Clothing $250, total of $765.
3. Not: Entertainment $400, Blow $100, total of $500.

Now our goal is to reduce each category by a small amount each month paying down debt and rewarding ourselves in the process. Reducing all three categories may leave a good deal of leftover money. Use half of this money on paying down debt and the other half to spend on some type of reward. Something fun you normally wouldn’t buy yourself.

First, those necessary bills you can reduce your electric and water bills by simply being aware of the resources you are using. Turning off lights when you leave rooms, take showers instead of a baths, take shorter showers than usual, use lamps instead of overhead lights, don’t leave the water on while brushing your teeth or shaving, etc. As for that auto payment you may want to do something extreme like sell the car and buy something with cash you have on hand or finance something for half of your current payment. You can find decent cars for $5,000 or even less!

Second, those somewhat necessary bills can save us some major cash! Drop any premium channels from your cable service. You may be able to reduce your internet service by switching from cable to DSL or from DLS to cable. Drop that lan line phone service if everybody has a cell phone with enough minutes. Clothing is necessary, but name brand clothing is not necessary. Watch for sales and check out consignment shops for cheaper clothes. Groceries can also be a good money saver. Use those coupons you always toss out with the trash. Buy generic foods when possible. I’ve read multiple articles on saving hundreds of dollars per month on your grocery bill! It’s possible to save some good money in this category.

Finally, the enertainment/blow category can be your biggest savings area. Eating out is just not necessary and although enertainment is necessary it doesn’t always have to cost money. Limit eating out to a minimum. If you must eat out order water or get takeout and bring it home. Go to the park instead of the movies. Go on picnics and hikes instead of amusement parks. There are hundreds of ways to save money on enertainment.

Here is a revised sample budget and what can be done with the extra money.

1. Necessary: Electric $145 (old $150), Water $31(old $35), Home $1000 (old $1000), Auto $175 (old $400) total of $1351 (old $1585). SAVINGS OF $234.
2. Somewhat: Cable $40 (old $40), Phone $0 (old $35), Internet $35 DSL (old $40), Grocery : $360 (old $400), Clothing $225 (old $250), total of $660 (old $765), SAVINGS OF $105.
3. Not: Entertainment $350 (old $400), Blow $80 (old $100), total of $430, SAVINGS OF $70. 

In our sample budget we saved a total of $409!!! We didn’t make huge sacrafices just small sacrafices in each category. Now take the $409 and pay $200 toward one of your high interest rate debts and take the other $209 and spend it on something nice for yourself. You may even want to save the $209 for next month and pick up something much nicer. Reward yourself for saving money and it will be much more fun!

Point of order: Sorry for delay in post, forgot I was still a scientist and had two journal articles to proof and correct for Health Education Journal and Global Public Health

Now since I was finally able to post Recess – is- on and PP (which were written in April), back on the grind, which you know in most cases means loot. I am kind of frustrated with America, I mean we aint got what it takes it seems anymore. I can understand how K street gets politicians in a bind but I can’t understand why regular folk don’t see why things are the way they are economically.

We are big on crying and asking folks to do for us, but we never have a good understanding of first what needs to be done or even what or how serious the problem is. Come this November, after the general election, well really before, I hope we can come to an understanding of the aforementioned.

This country has not been in this bad of shape economically since the 1920s and 1030s. I’m sure some will disagree with me, but this is just my opinion. Right now, at least based on numbers from two years go; our domestic financial debt was more than 14 trillion dollars. Fourteen trillion. Today I suspect it is maybe 4 or 5 trillion more, but there aren’t any real numbers available, just estimates so I made my own.

And although we talk about the housing market as being a major contributor to this problem as well as multiple wars, the truth is that the financial sector is mostly to blame, along with republican and democratic leadership at the legislative and executive level. For as I said before, with regulatory constraints basically removed, this created an environment for this particular sector of our economy to go buck wild. Bill Clinton repealed the Glass –Stegall Act and bam.

Long time ago, there were regulated fees for Credit Cards for example, now they can make up fees and even charge you for paying on time or even if you pay off your monthly balance. Don’t even throw in the outrageous and wide ranging interest rates credit card companies (the financial sector) can charge, that is a whole ‘nother story. But to sum it all up, this is where the problem lies. We didn’t have this type of concern when America made stuff and had a strong manufacturing base. Since the financial sector has replaced manufacturing as our largest industry, our national debt has sky rocketed. This sector alone accounts for more than 30% of all of our national debt. Namely as a result of what is called Securitization or what can be called collateralizing debt obligation

Like I said back in the 20s and 30s when we saw similar problems, the national debt was about 250% of our gross domestic product. Today it is about 350%. What does this mean, well in simple terms, maybe a 10% reduction in the values of our houses for those of us who own one, commodity inflation (as mentioned in a prior post) and a 500 trillion dollar debt, which will eventually come back to bite us in the ass one day. I think that is one of the reasons I don’t have an ATM card. Never had one ever. So they next time you go to an ATM machine, just remember that the $3.00 they charge you to use it, is just adding to our national debt. Three cheers for the financial sector. Hip Hip Hooray.

Addendum: Love the fact folks can come in shop with dogs and kids, lay up and drink wine for free – they always end up buying stuff.