PT Money » Debt Reduction

Relying Too Much on “Future You”

Philip Taylor — Mon, 10 Oct 2011 05:20:37 +0000

Are you relying too much on "future you"?

Your future self just called. They want their money back.

We all have to rely on others from time to time. What are friends and family for, right?

So, is relying on your future self the same as asking for a handout from someone else?

I say there’s nothing wrong with doing that occasionally. But when you do it over and over again, you sort of wear out your welcome, don’t you?

The “future you” I’m referring to is of course your future earning capacity. When you go into debt, you are relying on future earnings to pay for things that you want now. And, because of the associated interest payments, you’re asking your future self to pay more than they should.

For things like a home, a car, an education, asking the “future you” for a little help isn’t that bad of an idea. After all, they will all either increase / maintain value or provide some other source of income over time.

Where you get into trouble is when you go into debt to pay for things that don’t maintain value or help produce income. The future you ends up paying money (in the form of high interest) for something that isn’t there anymore, or is outdated and long replaced.

Action step for today: Write your “future self” an email. Say that you’ve started a debt reduction plan and you’ll quit relying on his or her earnings so much.

Relying Too Much on “Future You” is a post from: PT Money: Personal Finance by PT.
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How to Manage Your Credit Card Bill After a Setback

Emily Guy Birken — Thu, 06 Oct 2011 19:42:20 +0000

How do you reduce debt after a set back?

Should coulda woulda!

We all know that carrying a balance on a credit card is a personal finance no-no.

But what do you do if you find yourself in that situation and then have a major financial setback?

Knowing that you should have handled your finances differently before you were fired or hospital stay won’t help you in the moment. Here are three concrete steps you can take to help tame the credit beast:

Note that these aren’t final solutions. You aren’t fully paying off your credit card debt by doing one of these. You are simply making the debt reduction process a bit easier and certainly less expensive. To get out of debt for good you need to bring up your income, live within your means, and build up emergency savings.

1. Transfer your Balance

If you simply need a little breathing room with your credit card bill but don’t want to rack up exorbitant interest, consider transferring your balance to a balance transfer credit card.

The benefit of this strategy is that it can buy you a little time to be able to pay off your balance without having to worry about the interest eating a hole in your budget. However, this will only work if you are able to pay off the balance before the end of the 0% promotional period.

2. Haggle

Negotiating with your credit card company may seem rather daunting, but it’s important to remember that credit card debt is unsecured. That means that there is nothing the company can come repossess should you default—unlike with a mortgage or a car loan. So that means credit companies are generally willing to work with you as long as you are honest and open with them about your financial strain.

Before you place the call, make a detailed budget showing your income, your necessary expenses and whatever cash is left over. Then take a look at your calendar and figure out how long it will take you to dig yourself out of your current financial crisis.

With your budget and calendar in hand, call and ask to speak to a supervisor. Explain the problems you’ve been facing, and point out your positive payment history (should that be true!). Then ask for a specific change to your minimum payment. You can also ask to knock 1% off your interest rate. By calling with a specific plan and an end-date in mind, you are much more likely to get a yes from your credit card company.

3. Consolidate

If you do find yourself in a situation where you have more debt than you can handle and you cannot haggle with the company—either because you do not have the greatest payment history with them or because you can’t even swing a modified minimum payment—then you will want to contact a reputable credit counselor.

Start with your state or local consumer protection office to find someone to help you to consolidate your debt. (The ads for these services may sound tempting, but unless your credit counselor is a member of the Association of Independent Consumer Credit Counseling Agencies, you may be making yourself vulnerable to a scam).

Your counselor will work out a debt management plan with you and will negotiate with your creditors on your behalf. Once your plan is in place, you will mail your monthly check to the counselor who will pass it along to your creditors.

Unfortunately, taking this step means that your credit report will show you as “in payment” for those creditors, which will negatively affect your score. However, it is much better to be making those payments than to be delinquent.

Just because we all know what we should be doing doesn’t mean we do it. Luckily, there are always steps we can take should we find ourselves in debt and in financial trouble at the same time.

Photo by The Consumerist

How to Manage Your Credit Card Bill After a Setback is a post from: PT Money: Personal Finance by PT.
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The Bankruptcy Means Test – What does it Mean?

Bob Ross — Tue, 14 Jun 2011 16:00:18 +0000

Did you pass your bankruptcy means test?

Before the federal bankruptcy law was rewritten in 2005, one of the main complaints was that bankruptcy was too easy of an option for too many consumers.

In particular, the goal was to push more filers into Chapter 13 bankruptcy as opposed to Chapter 7 bankruptcy.

The main difference, of course, is the five-year repayment plan that’s required in virtually all Chapter 13 cases, while most Chapter 7 filers eliminate the majority of their debts in as little as four months.

In order to reach the goal of more Chapter 13 cases, one of the most significant changes in the Bankruptcy Abuse Prevention and Consumer Protection Act was the Means Test.

The test established, for the first time, an income requirement of sorts for Chapter 7 cases. Consumers who didn’t meet the income requirement would have no recourse but to file for a Chapter 13 repayment plan.

Targeting Higher Income Filers with the Means Test

There are two different ways to qualify for a Chapter 7 bankruptcy under the revised bankruptcy provisions. If your income is at or below the average median income for a family your size in your state, you qualify for to file a Chapter 7 case.

If you made more during the last full calendar year, there is a “presumption of abuse” according to the language of the federal tax law. However, you have the chance to rebut that presumption that you are abusing the Chapter 7 income guidelines.

That’s where the Means Test comes into play. In effect, the Means Test gives a consumer the chance to show they don’t have enough discretionary income, after all income and expenses are considered, to make any significant payments to creditors.

“Income” is not Really Income Under the Means Test

Critics of the Means Test say it is overly complex, benefitting perhaps, only bankruptcy attorneys, since it’s very difficult for a layman to correctly fill out the forms required for the Means Test. Critics also point to the arbitrary calculation required as part of the test.

For example, a debtor’s current or projected income isn’t part of the Means Test. Instead, the test requires paycheck stubs and other information covering the six months prior to the bankruptcy filing. An average monthly income from that period of time is used.

The expenses under the Means Test also don’t involve a consumer’s actual expenses. Instead, many of the expenses are based on IRS standards that vary slightly in different parts of the country. So, instead of a test that subtracts expenses from income to see how much discretionary income is left, the Means Test doesn’t include current income and doesn’t take into account actual expenses.

The Means Test and Bad Faith

Even if a debtor qualifies for a Chapter 7 case because the result of the Means Test shows insufficient discretionary income to pay out in a Chapter 13 plan, that Chapter 7 status is still not guaranteed. Trustees have the power, and in fact have been given the mandate, to look for any instances of bad faith that would disqualify a debtor from a Chapter 7 case.

Case law is still refining exactly what bad faith means. So far, bad faith has been defined as a situation in which the “totality of the circumstances” points to a rotten debtor. For example, courts have upheld cases in which income deductions for college expenses for kids were thrown out, creating more money to be paid to creditors.

In other cases, judges have decided that debtors in extravagant homes – and what often are exorbitant monthly payments – should instead be required to reduce those monthly living expenses so that some of the money that had been going to a mortgage for a huge house instead is paid to creditors in a Chapter 13 plan.

Has the Means Test Worked?

A five-year analysis of bankruptcy statistics suggests that the goals of the Means Test and the reorganization of federal bankruptcy laws have not been met. Initially, it seemed that the revision of the law would be successful.

In the first year, personal bankruptcies dropped by more than 50 percent, dropped to under 900,000 filers, compared to nearly 2,000,000 filers in 2005. However, the number of bankruptcy cases steadily increased and the number of Chapter 7 filings jumped as well.

By 2010, bankruptcy filings were estimated to come close to 2,000,000 for the year. While Chapter 7 filings dropped to about 50 percent of total individual filings in 2006, that figure was expected to reach 70 percent in 2010.

Photo by lawofc09

The Bankruptcy Means Test – What does it Mean? is a post from: PT Money: Personal Finance by PT.
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Debt Dilemma: Mortgage Payment or Credit Card Payment?

Miranda Marquit — Thu, 21 Apr 2011 15:36:51 +0000

Should you always pay your mortgage payment first?

The recent economic climate has created a tough decision for many people with financial obligations.

Many homeowners also have credit card debt. When times are tough and the budget is stretched thin, sometimes it seems as though you need to make a choice between making a mortgage payment or making your credit card payments.

When push comes to shove, and you have to choose one or the other, what you decide depends on your circumstance.

Do You Want to Keep Your House?

The biggest thing you have to consider when making the choice between making a mortgage payment or a credit card payment is whether you are trying to keep your home. If you want to remain in your home, retaining ownership, you have to make your mortgage payments.

Missed mortgage payments can lead to foreclosure, resulting in the loss of your home.

Credit card debt, on the other hand, is not secured by an asset. It is unsecured debt. While creditors can sue for payment, they cannot repossess your home, and if you declare bankruptcy, you might even be able to have the amount you repay reduced.

While I am not advocating bankruptcy, this is something to consider. In most states, as long as you are up on your housing payments, you are unlikely to lose your home in bankruptcy, and credit card issuers can’t force you to sell your home to repay your unsecured debt.

If you aren’t concerned about your keeping your house (or a good credit score), you might want to concentrate on the credit card debt, with its higher interest. You will eventually lose your home, though, and you might have trouble getting another place to live.

What About Your Credit Score?

The exact formula used for credit scoring isn’t released to the likes of you and me, but we do know that missed payments can have a big impact on your credit score. A missed credit card payment can bring your credit score down by quite a bit — especially if you are more than 90 days late in paying.

However, if you have gone through a foreclosure, your credit score can be dropped by more than 200 points. You might want to consider the impact of your decision on your credit score, especially if you think you want to get a major loan in the next year or so.

Trying Your Best to Avoid the Situation

Of course, it’s always best if you can avoid having to make the choice altogether. Living within your means and having an emergency fund to help you pay for unexpected expenses can help you avoid having to make this decision.

Also, if you can cut spending in order to have more money to put toward your obligations, this is also helpful.

There are times that you might not be able to avoid this decision. Job loss or some other situation may arise, forcing you to skip the payment of some bills. If you know that you are going to have trouble making payments, you should contact your lenders to let them know of your situation and perhaps get a deferral, or work out some sort of a new payment plan.

In the end, it is important to carefully consider your options, and understand your goals and preferences. Only then can you make a decision that will provide the best possible outcome in your situation.

photo by nikcname

Debt Dilemma: Mortgage Payment or Credit Card Payment? is a post from: PT Money: Personal Finance by PT.
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PTM 011: Making Extra Money as a Pizza Delivery Guy to Payoff $45,000 in Debt with Jeff Kosola from DeliverAwayDebt.com

Philip Taylor — Fri, 11 Mar 2011 08:25:43 +0000

In today’s episode, I interview Jeff Kosola from deliverawaydebt.com. I love Jeff’s story. I think you will too. Especially if you are struggling with a lot of debt to pay off. Have you ever wondered how much pizza delivery drivers make? Apparently, it’s enough!

Jeff took on the classic part-time job of delivering pizzas on the weekends so he and his wife could get out from over $100,000 in debt. Since he started working his part-time job, he’s been able to pay down over $45,000 of the debt from his earnings. Jeff also took to the personal finance blog-o-sphere with this story. Look for his new online video venture: Minute Money Tips

Listen to the Podcast

Here are a few of the questions I ask Jeff:

Motivation for Part-Time Money

What led you want to make part-time money?
What lead you into that much debt?
What was the catalyst to finally wanting to get rid of debt?

About Pizza Delivery

What was it about delivering pizzas that worked out for you?
What was the appeal of the job?
What was the job application process like? What skills did you need?
How many hours a week did you work?

Family and Dealing with Debt

How did you wife feel about this?
What allowed you and your wife to come together under that common goal?
Why did you need a financial coach?
What did the financial coach teach you?
How long did it take to pay down your debts?
Did you do anything extra to pay off your debt?
What is it about your debts that allows you to press pause and focus on the down payment?

Making Money in Pizza Delivery

What kind of money were you making an hour at delivering pizza?
How did you stick with it?
How do you make the most of your efforts at a pizza delivery job?
What mistakes did you make early on?
Are you sick of pizza yet?

Blogging About Debt Reduction

Why did you start deliverawaydebt.com?
Do you make money from your blog to help you more with debt reduction?
What’s next for you?

To see the full transcript, click show

Welcome to the Part-Time Money Podcast, Episode 11: Making Extra Money as a Pizza Delivery Driver to Pay Off $45,000 in Debt. I am your host Philip Taylor, creator of PT Money Personal Finance.

Alright, today I am here with Jeff Kosola from DeliverAwayDebt.com. Jeff and his family have paid off more than $45,000 in debt due to his part-time efforts as a pizza delivery guy. So, we are going to learn about his story today and learn how to make the most of your efforts as a pizza delivery guy and how to use that toward getting yourself out of debt.

Philip Taylor: So welcome, Jeff.

Jeff Kosola: Thanks, Phil.

Philip Taylor: So, what made you want to start making some part-time money?

Jeff Kosola: Let’s see, it happened to be my enormous amount of debt. At the time I was $101,000 in debt!

Philip Taylor: Wow!

Jeff Kosola: I had just returned from working in China, and my wife did not have a job. I was the sole provider at the time, and we had a little boy, so she was taking care of him. It was cheaper to do that than to go pay for daycare. So, when I was listening to Dave Ramsey 1 day, he said, “Hey, go deliver pizza to get out of debt.” So, I pulled right in the pizza place that had just opened up down the street from me. I was hired on the spot, and I started 2 days later.

Philip Taylor: Wow! Interesting. So, I know what you are talking about, the reference of Dave Ramsey there. He always mentions I guess it is gazelle intensity and really doing what it takes to get that extra money to get out of debt. I have heard him mention the pizza delivery guy as sort of the typical reference there. It is interesting that you actually took the literal advice and went after it like that. What was it about delivering pizzas or that type of role that made sense to you or that I guess worked out for you?

Jeff Kosola: It worked out because at the time I was working my 9-5 job which was really like a 5-3:30 job. Pizza provided me a way in the evening to do it.

Philip Taylor: Okay.

Jeff Kosola: It worked out well to be Fridays, Saturdays, and Sundays because it was all evening, and I did not have to sacrifice my first job which was really important. The side job was just to make the extra money to pay off the debt. So, time wise it fit in the best.

Philip Taylor: I see. So, what was your first job again?

Jeff Kosola: I work at GM. I am in engineering.

Philip Taylor: If you do not mind getting into it, what led you into that much debt?

Jeff Kosola: Oh, a bunch of different things. I never really watched my finances when I was growing up. I started making really good money. By the time I was 25, I was out-earning my father which was a pretty good accomplishment. I wanted to live the life they led. My parents led a good life. I come from a middle class family. Both my parents worked making good incomes, and I wanted everything right away.

Philip Taylor: Right.

Jeff Kosola: I lived that lifestyle when I should not have, so I used credit cards and other things. Once you get into debt, it just starts to spiral from there because you start to play the balance transfer game and everything else. Then in ’06 you could play the home equity loan game, which I did. So every debt rule you are not supposed to do I have broken, and I paid for it by delivering pizzas.

Philip Taylor: What really turned the tide for you? Was it listening to Dave Ramsey’s message?

Jeff Kosola: That was it, and then the other part was we just could not live like that anymore, so my wife and I started to have some money issues together. Neither of us wanted to be in debt. There were things we wanted to do, and we just could not do it because everything was going toward the minimum payments, so there was nothing left over.

Philip Taylor: I see.

Jeff Kosola: I needed some way to make extra money to get out of it because at the time there was no hope.

Philip Taylor: I see.

Jeff Kosola: So, delivering the pizza and taking on another job, that is what really turned it around for us.

Philip Taylor: So, talk about that decision to choose delivering pizzas. You said you are an engineer by trade. You mentioned delivering sort of fit into your schedule, but what else appealed to you about that job?

Jeff Kosola: It appealed that I did not want to be flipping burgers, not that there is anything wrong with it, but I did not feel like it, and I did not want be working at Taco Bell. I did apply to Home Depot and Lowe’s and never received any word back from them. I thought about going to some other places, but it just was not in the cards. Like I said, I walked right into the pizza place, and I was hired on the spot.

Philip Taylor: Alright. What did you need to be hired on the spot? What were they looking for?

Jeff Kosola: Willingness. Do you have a car? Do you have insurance? Do you know the area? If not, we can train you. Can you start in 2 days? It was the easiest job interview I have ever had.

Philip Taylor: Awesome! So, let’s see here, backing up a little bit, what year was that that you first got the pizza delivery job?

Jeff Kosola: I started delivering in May 2008.

Philip Taylor: Okay. How many hours a week was that?

Jeff Kosola: I was working 22 hours a week, so Fridays and Saturdays I worked from 5 o’clock until 1 o’clock in the morning, and then Sundays I would work from 5 till 11 at night.

Philip Taylor: Okay. So, how did your wife feel about this?

Jeff Kosola: She was okay with it because she understood we had to do it and we had to sacrifice. I have always been a worker in my life, so adding more work was not that big a deal. It was just difficult at first to balance a home life with the second job, but we got through it, and it just became second nature to us. She would go to the family events without me, and I would be delivering pizza.

Philip Taylor: What helped you and your wife to really come together under that common goal?

Jeff Kosola: At first when I was delivering pizza, we were just using that money to basically finance our current lifestyle, so I delivered for I believe it was 11 months and really did not pay down a single penny of my debt.

Philip Taylor: Really?

Jeff Kosola: Yeah. So, my first year delivering pizza was just to basically maintain our lifestyle, and then we both looked at each other 1 day and said, “Oh crap! We’ve got to get some help!” So, we sought out the advice of a local financial coach.

Philip Taylor: Okay.

Jeff Kosola: Basically after the first couple hour’ meeting with our guy, we were hooked on it and sold, and he pointed us in the right direction. We had 3 total meetings with him, and within a month we were paying down debt, and the rest was history. It took us to go seek outside help because we could not do it ourselves.

Philip Taylor: I see. So, you had the initial passion from the Dave Ramsey, but it sounds like you maybe did not have the outside accountability to help you really put it in practice.

Jeff Kosola: Yeah, I had some systems in place, but really my entire life not managing money, I needed someone else to put the last piece of the puzzle together for us, which our financial coach did. Once he did that, it clicked.

Philip Taylor: What were some of the things he did?

Jeff Kosola: The biggest thing we did was figured how I can live off my normal income from GM and bank 100% of my pizza money, so he got us on a better budget than I was. He showed us some really good tricks, which is the system I use right now. I use ING, and I have a ton of different subaccounts that all my money funnels into on payday. I just take 5 minutes and transfer all kinds of money, and that is all automatically taken out and everything. Just having the system in place where I do not have to focus on the money and worry about it so much is what the key for us was.

Philip Taylor: That is great. I like it. I use ING as well and have a couple of accounts with them like that. That definitely helps. Well this is interesting. So, that was back in, you said, ’08. You said the first 10 months or so you were sort of just treading water there. It sounds like maybe in the beginning part of ’09 you really started making some progress. Is that right?

Jeff Kosola: It was April ’09 that we started making our first real debt payment, and then May is when I really started snowballing everything.

Philip Taylor: Okay. Very cool. And then, how long did it take at that point to pay down a significant portion of the debt or however much you want to share in detail about you paying that down?

Jeff Kosola: In May 2009 I started out with $101,000 and change in debt. Then, by December 2010 I was down to less than $30,000 left. Right now my financial outlook has shifted so much. I am saving money right now because I am starting to build a house. I am not snowballing the debt right now. I am snowballing a down payment. It has shifted a little.

Philip Taylor: Okay. Tell me about that. What is it about the particular debt that you have left that makes it sort of okay to shift your priorities?

Jeff Kosola: Some of it is to my parents. Everything is paid normally. Then, the last one is a credit card my wife had. Everything else is paid off free and clear, so we have just put that on autopilot for right now. The loan to my parents will be all paid off in the next 2 years without paying anything extra, and then the credit card once we get into our house will be re-snowballed and done after another 6 months or so once we get in our house.

Philip Taylor: Well, that is great! Congrats on the prospect of a new house. That is always fun!

Jeff Kosola: Thanks.

Philip Taylor: So, tell me. You said you worked 22 hours a week with the pizza delivery job. What kind of hourly wage were you making there?

Jeff Kosola: When you factor in my hourly rate which was $6, so we got paid $6, and then we would get $1.50 on each delivery and then tips, basically the average for a year and a half was just over $19. That was including taking out money for gas.

Philip Taylor: So you are looking at roughly $400 a week?
Jeff Kosola: Yeah. I mean that is really good money for the amount of time. Any part-time job you can make $19 to $20 an hour, I do not think you can sneeze at it.

Philip Taylor: Okay. Wait! Did you say that was after gas or before gas?

Jeff Kosola: That was after gas.

Philip Taylor: That is really good. So, that $400 back in May ’09, you really started throwing that all at your debt?

Jeff Kosola: Right.

Philip Taylor: That pretty quickly sounds like it was able to get it down. Did you do anything extra to sort of hammer down the debt? Sell anything?

Jeff Kosola: We did not have a whole lot to sell. We had already tried doing that before we started debt snowball and stuff. Any hours I could pick up at my normal job, I picked up as well.

Philip Taylor: I see.

Jeff Kosola: There were plenty of times when I would go to work at 2 in the morning on Friday and depending on my different shifts between the jobs, I would get to bed at 1 o’clock on Sunday. I have done that a few times which is pretty hectic. The money is good, and it is hard to turn that stuff down.

Philip Taylor: So, how did you stick with it? What was it about the process or the job that either you enjoyed enough or your relationship with your wife? It just sort of seems to all have worked together here. Really, what was it that helped you to stay with this part-time job for so long?

Jeff Kosola: The place where I am at right now because we have wanted to get out of our house forever, and now we can. Thanks to paying off the debt we did, it was simple to qualify for a new house and get out of ours right now. That was the biggest thing – to improve our life so we did not have to wait another 3-4 years to do it. That was the focus. In that time I had started out with a son. When I was delivering I had a daughter. Now I have another son on the way. With all those kids coming down the line, I want to get rid of the debt so I do not have to worry about it. Then, having the blog too, that drove my accountability as well.

Philip Taylor: Yeah, I definitely want to talk about your blog, but I have just 1 more question about the pizza delivery. How do you make the most of your efforts there? Can you get tips? How do you increase your earnings at a pizza delivery business?

Jeff Kosola: You drive very fast. Stop signs that have a white border around them are always optional.

Philip Taylor: Is that every stop sign?

Jeff Kosola: Yeah, that is every stop sign. The way you make money delivering pizza is get it there as fast as you can, safely of course. Always smile, and always treat your customers like you would want to be treated. I call them my customers because I see a lot of the same people a lot, and they always order. So, I know most of their names. I try to do whatever I can to make sure their order is exactly what they need. You carry a few extra pops in your car. If you screw something up, you take it out of your pocket and give them a pop. I have dropped someone’s pizza before right at their door. I picked it up, and there was not a whole lot wrong with it, but I said, “Alright, it’s on me, so it comes out of my pocket.” I do not really tell the boss or anything because they are not going to help you.

Philip Taylor: Right.

Jeff Kosola: The customer, you know, they could still eat their pizza, and they got it for free. So, you do little stuff like that, and then people remember that.

Philip Taylor: I see.

Jeff Kosola: You have got to loop people too, so if there is more than 1 driver delivering pizza, the faster you drive if you are both out on a run, if you beat him back, you are next in line.

Philip Taylor: I see.

Jeff Kosola: The more deliveries you get, the more money you make.

Philip Taylor: Okay. Good advice for future pizza delivery guys out there. mistakes you made along the way in trying to make money with delivering pizza that you could share with others?

Jeff Kosola: I cannot think of really any.

Philip Taylor: Yeah, it is pretty straight forward.

Jeff Kosola: It is not a hard job. It is actually fun. I mean I love delivering pizza honestly.

Philip Taylor: Have you ever been pulled over by the police?

Jeff Kosola: No. I have been waiting. I have my pizza shirt on, delivery bag, and am always willing to offer them free pizza as long as they want it if they let me go.

Philip Taylor: So, you are actually still doing it?

Jeff Kosola: Yeah, I am actually going to stop at the end of March.

Philip Taylor: Okay, okay. I see. I was under the impression you had stopped a while back. That is cool you are still doing it.

Jeff Kosola: I had to take 6 months off last year because I was working way too much at GM.

Philip Taylor: I see. Okay. I see.

Jeff Kosola: So I am back delivering for a little while.

Philip Taylor: Alright. Very cool. So, are you just downright sick of pizza, or do you still like it?

Jeff Kosola: I love pizza.

Philip Taylor: Okay. That is good. So, let’s talk about your blog DeliverAwayDebt.com. Why did you want to start that?

Jeff Kosola: Actually I started on Twitter, and I started tweeting my funny stories (or supposedly funny stories to me) about all the delivery people I run into and all the crazy people. A couple of other bloggers followed me, got in contact with me, and said, “Hey, you should start a blog.” So, that is how it started on October 1, 2009.

Philip Taylor: I think I remember that.

Jeff Kosola: J. Money from BudgetsAreSexy.com and Brian Scheur from MyNextBuck.com.

Philip Taylor: I definitely know J. Money. I think that is where I heard about you initially, and I have definitely seen you around the blogosphere. We have interacted a few times. So, DeliverAwayDebt.com, you have obviously enjoyed doing the blog and sharing your story. Have you been able to get some income off the blog as well?

Jeff Kosola: Yeah, I make a little bit of money off the blog. It is from some advertising. That is really about it.

Philip Taylor: Okay.

Jeff Kosola: Nothing to write home about.

Philip Taylor: Okay, okay. So, you still like pursuing the part-time business versus the blogging business world?

Jeff Kosola: Yeah, I mean you have got to be pretty talented to make some good money quickly blogging.

Philip Taylor: I would agree with that. So, let’s see, I noticed on your blog you have a future endeavor. Maybe you want to share what is in the future for you? You have already mentioned you are going to be stopping the pizza delivery here in the next month. What is sort of next for you online as well as offline with your family?

Jeff Kosola: For me I am going to slow down a little more on DeliverAwayDebt.com just because I am losing a little bit of the writing passion. I am honestly really not a writer. That is not my forte, so I have decided to pursue video. I will be starting a video blog. It will actually launch on April 1, 2011. There is an early list if you want to get in early on my new site which will be MinuteMoneyTips.com. It is really going to be money tips. The videos are going to last probably 1-2 minutes, and they are just quick tips in a different type of format because nobody really does a whole lot of video on the personal finance realm. I figured what the heck I might as well make a go at it. I like video. I like speaking. A lot of it is part of my job too. I am much better at that than I am at writing. It is a lot easier for me to do, so I can do 5 videos a week every week without a single issue where right now I have some trouble writing 3 or 4 posts a month on DeliverAwayDebt.com just because I am not as inspired as I once was.

Philip Taylor: Yep. I know where you are at, and I agree with you on your assessment of the personal finance blogosphere that it definitely needs someone out there doing video well. I think you are right. If you do it right, you will really be able to get some traction with it. Good luck in that. Again, the website for that is MinuteMoneyTips.com?

Jeff Kosola: Yep. That is right.

Philip Taylor: Alright. Very cool.

Jeff Kosola: It will be coming soon.

Philip Taylor: Well, thanks so much for being on with me today. This was an excellent interview and right up the alley of what people who are listening to Part-Time Money Podcast are looking for, so I appreciate you sharing your tips, advice, and your story.

That does it for this week’s episode. Thanks so much for listening. You can find more episodes at ptmoney.com or on iTunes under the Part-Time Money Podcast. See you guys next week.

PTM 011: Making Extra Money as a Pizza Delivery Guy to Payoff $45,000 in Debt with Jeff Kosola from DeliverAwayDebt.com is a post from: PT Money: Personal Finance by PT.
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When is a Lawsuit Merely a Debt Collector’s Empty Threat? Answer: Statute of Limitations

Guest — Tue, 01 Mar 2011 17:10:36 +0000

Editor’s Note: I recently had a friend and reader email with a troubling story about debt collection. Joe [fake name] recently turned a car, in which he was the second borrower, back into the financing company [Capital One] using what is called a voluntary repossession. The balance on the loan was 10,000.

Shortly after, the financing company sold the car at auction, and sold the debt to a collection agency. The collection agency [NCO Financial] is now contacting Joe and Joe’s employer threatening legal action like garnishment if Joe doesn’t pay 7,000 immediately.

I thought this would be an appropriate time to share a post I have from Odysseas Papadimitriou, CEO and Founder of CardHub.com, an online marketplace for credit card applications and gift card exchange. The article is about credit card debt, but the same advice should apply to Joe’s situation above.

Things You Experience During Debt Collection

The letters started coming in the mail after your first missed payment, and as you sank further into credit card default, their tone became harsher and the typeface used, much larger. Then the phone began ringing at all hours of the day and the debt collectors darkened your doorstep looking to recoup the money you owed.

You heard threats of lawsuit, talk of ruined credit and the insinuation that paying some of what you owe will get creditors off your back, at least for the time being. You don’t know what to believe or where to turn for help.

Doesn’t sound like too much fun, does it? No, but considering the fact that credit card debt continues to rise in the United States, this likely serves as foreshadowing for many of us, if we haven’t experienced something similar already. However, your experience with debt need not be marked by uncertainty and confusion.

If you make sure to learn the basics of credit card debt and your legal rights in approaching it, you will garner a measure of control over your situation and will be able confront your debt as strategically as possible.

Debt Collection Statute of Limitations

The first thing you must realize is that creditors have two main weapons at their disposal when attempting to recoup money owed to them: the courts and their ability to ruin your credit. Both are contingent on the payments you make toward your debt. Only one depends on debt’s statute of limitations.

Think of the statute of limitations for debt as you would the statute of limitations for a crime. If someone commits a crime, that person can be prosecuted for doing so until a certain number of years elapse and the incident becomes too old to try in court.

If you incur debt, you’re legally responsible for its payment until a state-specific time period expires as well. After this occurs, lawsuits can still be brought in an attempt to recover the debt, but they will be dismissed as long as you make it clear that the debt in question is “time-barred,” or older than the statute of limitations.

The statute of limitations clock starts at the time of last payment. Therefore, each time you make a payment, you reset the clock and increase the amount of time you’re vulnerable to a lawsuit. Depending on your state, merely signing a document in which you promise to pay your debt or admit to owing money at all will reset the statute of limitations as well.

Your Best Action With Debt Collectors

Thus, should you find yourself with charged-off credit card debt, the best course of action would be to work with your credit card company to establish an affordable payment plan or settlement agreement. This debt settlement or payment plan would not only remove the possibility of a lawsuit but would also provide you with a definitive plan to free yourself from the burden of debt.

However, if you are unable to reach such an agreement you should refrain from making payments because the payments you are able to make will not appease your debt collector and will reset the statute of limitations.

Waiting out the statute of limitations should only be viewed as a last resort, however, because reaching a reasonable payment agreement with your creditor will also benefit your credit score by enabling the reclassification of your debt from “not paid” to “paid” or “settled.”

Though negative information about your credit card debt will stay on your credit reports for seven years from the time of first delinquency no matter what, successful completion of a payment plan will mitigate the credit score damage you incur.

You ultimately have options in approaching your credit card debt, so don’t believe everything debt collectors say and don’t allow nerves or pressure to influence your decision making process. Consider the choices and rights at your disposal and make the decision that’s best for you.

Do you hear that? It might seem a bit foreign, but it’s silence. No phones ringing or doors being knocked upon with debt collectors on the other end. Just silence. And it’s right around the corner.

(photo by graymalkn)

When is a Lawsuit Merely a Debt Collector’s Empty Threat? Answer: Statute of Limitations is a post from: PT Money: Personal Finance by PT.
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Is It Always Good to Pay Off Your Car Loan Early?

Philip Taylor — Tue, 22 Feb 2011 17:26:55 +0000

Is it always good to pay off your car loan early, right? There are the obvious benefits:

more money in your monthly budget,
improvements to your credit (increased ability to borrow),
lower insurance opportunities, and
the general good feelings from not having a loan.

One other area that’s often touted as a benefit is that you are escaping the interest charges on the loan. The general advice is to look at your interest rate, for example 7.5%, and say, “your money could be doing more for you each month if it weren’t tied up in those loan costs of 7.5%.”

But what if you are in your final years of a 5 or 6 year loan? Does the fact that you aren’t paying near as much interest each month in actual cash outlay now make a difference in your decision? Let’s look at this example. Back in July of 2006 you borrowed $15,000 at 7.5% for 5 years to pay for a car. Here are the first and last year amortization schedules:

Year 1 of the car loan.

In the first year of this car loan, you pay over a third of the financing costs.

Year 5 of the car loan.

In the final year, you only pay just $163 to finance this car. So even though you are still paying annual interest of 7.5%, the actual cash outlay is nowhere near what it was in the first two or three years.

Does it make sense then to pay the car off early (at 48 months for example), just to save $163? Am I reading the numbers right? Should this be a factor?

From my experience, paying off a note early had more to do with my cash situation over anything else. If I have enough cash, I don’t want to have debt, regardless of the interest rate. I want the payment out of my life, and I want complete control of the asset. If I’m short on cash or trying to build cash reserves, I’ll hold on to some reasonable debt (i.e. 7.5% car loan).

What about you? Would you hold on to debt, like the car loan in the example above, even if you had the cash?

Is It Always Good to Pay Off Your Car Loan Early? is a post from: PT Money: Personal Finance by PT.
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Prosper to Match Loan Payments up to $300 ONE DAY ONLY

Michael — Thu, 17 Feb 2011 16:15:24 +0000

When banks started to tighten their lending practices, one of the industries that benefited was p2p lending. Why borrow money from a bank when you can borrow money from other people AND on the flip-side, why invest in a paltry CD when you can be earning great returns by helping out others in need? Peer-to-peer lending has seen amazing growth and continues to increase it share of the loans taken out by consumers and small businesses alike.

Today, one of the leaders in the p2p lending game, Prosper, is turning five years old. To celebrate, they’re offering a loan match program where all new borrowers can receive up to $300 towards the payment of their loan. The catch of course is that the loan must be new, and must be signed up for TODAY. This promotion will expire when the clock ticks midnight, February 18th 2011.

So how does this promo work? We’ll, if you are a borrower, in need of a loan, no matter the size, one option you have is to visit www.Prosper.com and post a loan listing, asking an investor to back you. If you do this today, and are approved for the loan, you qualify for the promotion. If you list your loan any other day than today, or it is approved any other day than today, you do not qualify for the promotion.

Once approved, Prosper will match the second loan payment you make, up to $300. It’s important to note that Prosper says your second “required” loan payment, which means if you owe $150, and you decide to pay $300, Prosper will only match the $150 amount.

While this promotion seems a bit rushed, it is. Prosper is reaching out to anyone who has been on the fence, or considering a loan and not to people looking to make money. This opportunity is definitely not something you should rush into, however Prosper has just lowered interest rates across the board for borrowers and with up to $300 additional cash toward your loan, now is the time to borrow with Prosper.

Prosper to Match Loan Payments up to $300 ONE DAY ONLY is a post from: PT Money: Personal Finance by PT.
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Get to Zero Credit Card Debt with ReadyForZero.com

Philip Taylor — Mon, 14 Feb 2011 23:19:50 +0000

Creating a plan to get rid of your credit card debt is fairly simple.

First, list out all of your debts and rank them according to one of three methods: highest interest rate (debt avalanche method), lowest total balance (debt snowball method), or most emotional.

Then, start aggressively paying off debt #1, while making minimum payments on the others.

Work your way down the list over the course of weeks, months, years until you are debt free.

Easy, right?

Now a company called Ready For Zero wants that process to be even easier. Their online based tool let’s you securely sign up and provide your credit card details (they pull your total debt from your credit file and they pull details based on the credit card account credentials you provide).

Once you’ve signed up, they suggest a debt reduction plan (based on the debt avalanche), and give you suggestions for paying off your debt quicker, including consolidating your debts with Lending Club for a lower rate (this is partly how they make money).

They also have email reminder to keep you on track each month and to let you know if the plan has changed based on various factors. Here’s what the dashboard looks like:

Ready For Zero is free and easy to sign up. Literally within 5 minutes you could have your very on debt reduction plan in a pretty, user-friendly online tool. If you are looking for a single, simple solution to help you focus on debt and smash it, I suggest you check out Ready For Zero (www.readyforzero.com). Once you check it out, come back here and let me know what you think.

Get to Zero Credit Card Debt with ReadyForZero.com is a post from: PT Money: Personal Finance by PT.
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Staying Motivated on the Long Road to Debt Freedom

Sandra Parker — Mon, 14 Feb 2011 14:11:50 +0000

There is nothing more exciting that deciding that you want to become debt-free.

In the beginning, you read all the books, organize all of your bills, get copies of your credit report and map out your plan to financial freedom.

You’re finally committed to making your financial dreams a reality.

But, six months into your plan you find the shiny novelty of your resolution to pay off your debt start to fade. You find yourself yearning to buy that new handbag you saw in the window of your favorite department store or go out to a movie or even just sit down for a nice meal at your favorite restaurant.

I mean, who would know if you slipped out for a night on the town, right? You would. I know from personal experience how easy it is to slip back into old habits, especially when it comes to irresponsible spending.

So, how do you stay motivated and keep your debt reduction plan on track? Here are a few simple tips you can employ to help you on your journey to financial freedom.

Assign Accountability

Accountability is a huge motivator when it comes to staying on track. Why? Because it is easy to tell ourselves that it’s okay to splurge every now and again, but it’s a whole other ball of wax when it comes to having to explain your missteps to someone else.

If you don’t have an at-home accountability solution, use the millions of people who surf the web every day by starting a blog.

Read Success Stories

If you find yourself in a particularly sticky spot, it helps to know that others out there have been where you are and have triumphed over your adversity. Not only will this help you take a deep breath and stay on the wagon, but you might actually discover a few more tips that can help you along the way.

Get a Reality Check

One of the first steps you took when deciding to get debt-free was to take a long hard look at your debt. This step probably included adding up all of your monthly payments in order to see how your debt impacted your monthly budget.

If you find yourself starting to buckle under the pressure, repeat this exercise. Not only will it remind you why you are on this journey, but seeing your progress in terms of having less debt can also be a real morale booster.

Give Yourself Some Slack

Okay, so you caved and spent money outside of your plan. It’s okay. Nobody’s perfect. The key here is to understand that slips do happen and that while they can represent a slight setback in your overall debt reduction plan, it doesn’t mean that you are a failure.

It simply means that you are human. Get right back on your plan and redouble your commitment to living a debt-free life.

Staying on track with your financial goals will be difficult, but in the long run it will be well worth your time and effort. And staying motivated is the key to staying on track. If you find that your commitment is starting to lag, try changing your strategy and keep your eye on the prize.

You’ll be glad you did.

What tips do you have for staying motivated in your debt reduction plan?

(photo by cwwycoff1)

Staying Motivated on the Long Road to Debt Freedom is a post from: PT Money: Personal Finance by PT.
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