The Broke Man's Holiday

 Tis the season to be broke for many Americans. Not because they anticipate overspending on gifts for aunts, uncles and distant cousins, but rather because many people will not have a dime to spend on anything superfluous.  For them, tis the season to be broke because they were recently laid-off work or still unemployed or underemployed as a result of last year’s lay-off!  Once accustomed to purchasing the latest overpriced video console for their child, they are now trying to figure out a way to pay the mortgage and utilities on a shoestring budget. They try to accept this reality by telling themselves the money just isn’t there this time.  Plain and simple; they just have to deal with reality.  But that fact only makes the outlook seem more dismal, especially when Christmas carols are playing in every store and the next door neighbor is decorating for a holiday light show so spectacular that airplanes might confuse it for a landing strip! 

 

However, there is no need for the broke man’s holiday to consist of a can of Spam and a glass of water.    All is not lost.  Fortunately, the holiday season is the time of year where more people are in the giving mood.  According to causes.com, donations increase by 42% during November and December more than any other period.   We are barely halfway through November when we hear bells ringing for spare change to be placed into that little red tin bucket in front of every store.  That is good for the broke man because those donations are being collected on their behalf.   Social Service agencies are handing out holiday baskets complete with a turkey or ham with all the trimming.  There are also toy drives to make sure your child has a gift under the tree.

 

Each year the social service agency for which I work help many individuals who have experienced lost income for the first time.  It’s difficult for them to ask us for help when they have been the one who has been “the giver” not the receiver.   I try to encourage them by offering that the situation is only temporary.  Though in this economy, how long is “temporary?”   In the meantime, here is a simple plan of attack to help the broke man through the holiday season:

1.      Contact local social service agencies in your area to see if they are offering food baskets. (This is available in the form of groceries or gift certificates.)

2.      You might not be able to spent hundreds of dollars on the latest gadget for your child, but they deserve to have a few gifts under the tree. Toys for Tots teams up with partners like Toys r us, Hasbro, Walt Disney and FAO Schwartz to bring quality toys to kids. Contact toys for tots http://www.toysfortots.org/ to find a location near you. 

3.      Some local churches sponsor Christmas Angels programs where anonymous donors purchase gifts for needy families.  These programs are usually by referral only, but if you state your need early enough, your chances of selection are good.

4.      If you need a little expendable cash, consider shopping at your local Salvation Army http://www.salvationarmyusa.org  or Goodwill http://www.goodwill.org. You can often find brand new, never opened toys for pennies on the dollar and you can often find those popular electronic gadgets at flea markets and pawn shops.

According to CNN Money, 76% of Americans are living from paycheck-to-paycheck.  If your next paycheck was your last, wouldn’t you like to know help is available?  Therefore, if you are in a position to help, then consider buying an extra toy to donate to a child in need or giving to a charitable organization.  Not just because it’s the holiday season, but we have to lift up our fellow man during the rough times.



Weathering The Storm

The Federal Credit Reporting Act Section 605 states that negative information stays on a consumer credit report for no longer than seven years (bankruptcy stays on for ten years).

 Can you weather the storm for seven years? Weathering the storms means waiting seven years for the negative information to drop off of your credit record. If within seven years, you know that there is not a chance of you raising the thousands of dollars needed to pay off your debt, then what do you have to lose?

“Mike” suffered from a long illness that prevented him from working steady. Since his first priority was to keep a roof over his family’s head by paying the mortgage, he suffered an automobile repossession and several charge-offs from credit cards. Charge-offs are when creditors decides after an extended period of time that they will not be paid, and they write the debt off as a loss. The charge off stays on your credit report for seven years.

Of course, there are exceptions to the seven-year rule such as credit transactions and life insurance that are greater than $150,000 and employment when the annual salary is greater than $75,000. In cases such as this, a creditor or a potential employer can obtain information about your credit history beyond seven years.

Anyway, back to “Mike”. After he fully recovered from his illness, he was able to repair an old automobile to get back and forth to work. During the course of his illness, a little over three years had elapsed. After another four years, the vehicle repossessions and charge-offs were no longer on his credit file. Mike had a fresh start with his credit without filing bankruptcy.

Bill Payment Help

As mentioned in the previous post, "Roger's Story", payment arrangements are a great way to help you get keep your gas and electric bills paid when you have fallen behind, which can happen regularly when you are a broke man (or woman).  However, unforeseen circumstances can come out of no where.  Maybe your car is suddenly in need of a new transmission.  Hours get cut at work.  The water heater breaks down.  It happens.  These type of emergencies can cause you to miss a scheduled payment arrangement and instantly get kicked out the program.  A week later you get a disconnection notice demanding full payment.   Where do you get the hundreds of dollars needed to keep the lights on?

 

Federal and state governments provide funding through various programs that can help you pay vital bills, such as past-due rent and utilities. Here are a few: Emergency Shelter Grants (ESG) has a homeless prevention component that provides funds to aid people who are at risk of becoming homeless due to eviction, foreclosure, or utility shutoff by paying first-month's rent, rent arrearages, and past-due utility payments.

FEMA does more than just help during national disasters. They also sponsor the Emergency Food and Shelter Program (EFSP) which was created to help people in need of emergency assistance. EFSP is utilized to assist individuals and families with issues regarding payment of utility bills, rent and mortgage payments, as well as temporary shelter and food.

The Low Income Home Energy Assistance Program (LIHEAP) is a federally-funded program that provides a once-per-year payment for heat (primary utility) and electric (secondary utility) to income-eligible applicants. The LIHEAP Program is able to provide once-a-year reconnection assistance payments for applicants whose utility has been disconnected for non-payment or applicants who are being denied service because of an old bill. LIHEAP is also able to provide emergency furnace repair or replacement for eligible applicants whose furnace does not work or is red-tagged by the utility company.

Various social service agencies apply to federal and state governments to receive these funds and distribute to those who qualify within their service delivery areas.

(Excerpts taken from The Broke Man's Survival Guide)

Roger's Story

Today I want to tell you "Roger's" story.   It is a story that I am sure many of have faced when seeing red.  

 

Roger sorts through his bills for the month. He notices the envelope of the electric bill isn’t as thick as it normally is, and there is a familiar bit of red paper peering through the clear portion of the window envelope. Roger knows right away that it’s a disconnection notice.  He’s been down this road before.

He opens the bill to discover that the electric company is once again threatening to disconnect his electric service in 14 days. He was unable to pay the electric bill last month because he had to pay the mortgage, gas bill and his son needed eye glasses. Being a “broke enthusiast, Roger knows all of the stalling tactics. He immediately contacts the electric company to request a 7 day extension. Now he has three weeks to come-up with the money. Therefore, he can pay the car note, which is two weeks late with this week’s pay check and the electric bill with the next paycheck.  Unfortunately, this payment method has been a way of life for Roger since he lost his high-paying job a year ago. He was forced to take a lower paying job which makes it more difficult for him to make ends meet.   

When you are broke disconnection notices can be a frequent visitor to your mailbox.  Many utility companies have budget billing plans are payment arrangements to help you stay on course with your bills.   However, when you find yourself out of work for longer than expected or forced to skip a bill to handle emergency situations, you sometimes are unable to live up to the payment agreements.  This breech will normally result in the utility company kicking you out of the payment arrangement program and demanding full payment in a matter days.  This amount could equate to upwards of $700 or more depending on how much you were delinquent.   What do you then?  We'll there is a way to get help in this extreme situation.  I will cover that in my next blog.  Stay tuned...

I'm Just Sayin'

Sometimes in life, there are unforeseen circumstances that come out of nowhere. Let us not forget the infamous Enron scandal of 2002, where thousands of employees lost their jobs and benefits as a result of the corporate giant filing bankruptcy. I am sure many Enron employees woke up that historic morning prepared for a normal day at the office and were devastated to discover they were without a job.

Many “dispensable” workers were escorted from the building by security while others were fired at home via phone messages. Perhaps one of them had just purchased a new home a month prior, or purchased a new car the weekend before, thinking that they could easily foot the bills with their safe and sound Enron salary. Then suddenly, without warning, they are fired and given a measly $4,500 severance package, devoid of any consideration of their many years of service to the company.

Undoubtedly, some of these former Enron employees were forced to start a new job earning a pay rate that did not match the salary it took years for them to build at Enron. This lower pay rate probably didn’t make ends meet in the lifestyle they had grown accustomed to. Worst of all, many former Enron employees, who had paid their bills on time for years, may have found themselves hastily pulled into the downward spiral of debt.

The downward spiral starts with being forced to pay only the minimum amount due on credit card bills to assure that there is enough money to pay the most important bills, like the mortgage and the car note. Next, the minimum payments are paid late, and then they are not paid at all. Soon the car note falls behind because the mortgage has to be paid. Before they knew it, the phone was ringing off the hook from angry debt collectors who have never called before, complaining about the late bills.

Okay, in the beginning  creditors are considerate and courteous, especially if there has been a good payment history. However, it won’t take long for those pleasant creditors to become impatient and cruel. Suddenly, you are labeled as one of those "deadbeat bill dodgers," who has no interest in paying down the accumulated debt and is swiftly turned over to their collections department.

Millions of honest people get trapped in circumstances that are beyond their control due to unemployment, divorce, or illness. There should be some type of mercy and compassion for them.  Nearly 90 percent of bankruptcies occur because of illness, lost job, or divorce and are not the result of haphazard credit use. This calculates into thousands of honest folks who, despite many years of paying their bills on time, find themselves thrust in the sea of endless debt. And despite the fact that they would pay their bills in a heartbeat (if they had the money), they are hounded and harassed by debt collectors like the deadbeats they are not. I'm just sayin'.  (Excerpts taken from The Broke Man's Survival Guide.)

This Blog's For You...

When you are broke-I’m talking car note, rent, electricity and gas bills are due and I ain’t got no’ money broke--, the last things you want to hear about are saving plans, financial portfolios, or investment strategies.  Debt collectors are calling. Disconnection notices are mounting. The Fridge is empty.  You want to hear about how they are going to make it another day without the red tape and politically correct mumbo jumbo that comes along with the territory.  Well, this blog is for you.

Let me warn you up front: If you are expecting a penny pinching, cost-cutting, credit repair blog--look elsewhere. There are enough debt rehab blogs floating around the Internet that detail ways to get out of debt and improve your credit score.  Unfortunately, a lot of us are struggling too bad financially to use their advice.     Sure, the typical financial advice blogs provide great information for people who have made a few mistakes with spending habits and just need to tweak their budget,  but what about the people who are seriously and desperately broke? What do they do in the meantime?

 

As the program director of a social service organization, I have worked with people who were employed but were still forced to sleep in an emergency shelter because they were paid a minimum wage--not a living wage and could not afford suitable housing. I have worked with families who lost it all when their $50,000 a year salary vanished after their employer went out of business and  faced foreclosure because they were unable to secure a another job that paid a comparable salary.  I doubt they want to hear a tête-à-tête about Roth IRA's and FICO scores!  No, they want to hear about how to keep a roof over their head and food on the table!

 

Therefore, The Broke Man’s Blog  will strive to address the tough issues  by offering unconventional, yet real life options to consider when you literally don’t have two nickels to rub together. Real Talk.