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Money

The www.FedPrimeRate.com Personal Finance Blog and Magazine

Tuesday, April 29, 2008

What A Little Effort Can Do For Debt Reduction

There are many, many things I love about my life here in the beautiful mesas of the Chihuahuan Desert. Among those are the contrasts, the juxtapositioning of old and new ways of living.

While I make use of the remarkable technologies of today as I write this now, I spent some time this morning as the indigenous women of this region did for thousands of years -- making tortillas. And, while I was working, I was thinking about a couple things related to cooking at home -- far less expensive and far more healthy overall.

I could buy tortillas. They run about a dollar a
dozen. In the photos (always clickable for a larger view), I am mixing up a batch of about 40 for less than a dollar... and, if I do say so myself, my home-made, fresh tortillas are far better than those mass produced in the factory and bagged up. Everyone here has said so, too.

In the big pot next to my wanna-be comal -- I have no proper comal for tortilla making, so I make do with a well-seasoned iron skillet -- are about 5 pounds of pinto beans. I'm feeding 9
people with hearty appetites. I'll be smashing and
frying a good portion of those beans with some
spices for tacos tonight, which is why I made
tortillas this morning. The rest of the beans will be used tomorrow by my sister to make her awesome chili.

The dried beans are pretty inexpensive, about 2 dollars for 4 pounds. Canned beans are easily double and often triple the price. It seems kind of silly to pay that when cooking dry beans is so easy. If I wanted to, I could buy canned refried beans for my tacos, though that would also be much more expensive, and I'd still have to add spices to make them palatable. Furthermore, they'd be less nutritious from the can, and probably have MSG and be high in sodium.

My point, over all, is that many people spend a lot of money on prepared foods, convenience foods, and drive-through foods, when by investing a little effort they could save a considerable amount on their food bill by cooking at home. Furthermore, most of those quick foods are price heavy and nutrition light. The benefits of eating fresh, whole foods are innumerable, but if we stick to the financial aspect for a moment, improved health leads to less money spent on costly health care.

There are many things in day-to-day life that are similar. For those looking to reduce debt and decrease spending (leaving more money for saving or more time for something other than working to pay the bills), learning to do basic repair tasks around the home and on the auto really isn't all that difficult. Being less dependent on others to meet your needs is a very good thing, particularly in today's economic climate.

I've been following the recent news about food shortages, skyrocketing prices, and the rationing of some food items throughout the world with a blend of fascination and horror. This is exactly the scenario that inspired me to remove my family from the city. I, geek that I am, have strange hobbies. Global economics is one of those hobbies and I've been watching trends for a few years now. To me, as well as to many financial experts, it looks like times are sure to be fiscally challenging in the near future and for a significant period of time thereafter. The financial markets are going to have to go through their spasms of correction and we're all going to have to go along for the ride.

During the Great Depression, while those in rural areas did experience severe poverty, they did have a significant advantage over those living in urban areas -- the ability to grow and hunt for their food. During World War II, the Victory Garden was an important supplement to households throughout the nation, including urban neighborhoods, as common, daily-use foods were rationed by the government. Looking at our situation today, it seems that learning to develop a bit of food self-sufficiency -- whether by cooking more, creating urban patio or fire escape gardens in containers, or larger suburban or rural gardens --is not just good economics in terms of a debt reduction plan or strategy for reducing overall expenses, but also simply good old-fashioned common sense.

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Monday, April 28, 2008

Out Of The Blue...


We've had the equipment for weeks. What we didn't have was an installer. The company couldn't seem to locate one willing to come to our remote high desert location. Naturally, they made no mention of that potential difficulty when they took the order.

So, we held the equipment through installation cancellation after installation cancellation. We just had our appointment for April 30th recently canceled, as the closest installer had to drive 800 miles and had yet to schedule other installs in the area.

And, then, out of the blue, this past Saturday, installers arrived with no notice. After, of course, I'd contacted another satellite company because this one couldn't seem to get the job done. Naturally, their website is just as good as their customer service and I cannot get into my account and will have to go somewhere to call them, as there is no way to e-mail their support system. That doesn't surprise me, ha ha ha.

All that, though, seems fairly small in comparison to this great leap forward for us here in the desert. I can now work from home again. The past few weeks of me having to go out to work have been very stressful for the children. I've always been at home with them. With everybody -- my sister and my brother -- having daily access to the Internet, everybody can get back to work and we can start moving forward with a variety of essential projects, like solar panels to run the modem so we don't have to use the gas powered generator as much.

With all that is in the news today -- food shortages and rapidly increasing prices, oil prices skyrocketing, the dollar continuing its fall, an epidemic of struggling mortgagees, a tidal wave of foreclosures, and the potentials that lie underneath the staggering burden of consumer debt -- our efforts towards sustainability and self-sufficiency seem quite timely and more important than ever.

The path for some of our nation's banking and lending institutions seems inevitably to lead to failure. Already sustaining significant losses from the sub-prime mortgage and lending debacle, many of these institutions are now having to deal with consumer debt gone bad. Economically stressed consumers have been missing payments as they struggle to make their salaries extend to cover the most basic of needs as the costs of those needs move steadily upwards.

That oft repeated Chinese curse -- not the one referring to flooding the market with cheap consumer goods, but the one that says may you live in interesting times -- appears to be an apt description of our current situation. Very interesting times, indeed. To me, everything going on today indicates an imperative need for preparation -- reduce debt, increase savings, and stock the shelves.

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Monday, April 21, 2008

It's A Long Road...

Now that we have this 46 acres of land, it's a long road to getting everything set up and running smooth. There is so much to do, from devising and setting up alternative energy systems to making adobe bricks to dealing with the utility companies that we do plan to do business with.

The dirt road you see -- that's the road we live on. We see another vehicle go by once every two or three weeks. When we came here, it was a nameless and dusty easement used by various property owners in the area to access their land.

That nameless dirt road is a good part of why I have set up a temporary office in my neighbor's home-in-progress. In order to get telephone and Internet service, mail, UPS deliveries, and just about anything else, we had to get our dirt road a name. On the surface it was a simple process, but in reality, it was long and slow. After weeks of waiting, it was through the intervention of a local that we finally were able to get a name and number. However, that is just the start of the effort to get phone and Internet (the only utilities we are going to get out here, as we're going with alternative energy sources for electricity).

There is a waiting list for everything. We recently learned that we won't have a landline -- thus no DSL -- until much longer than the 3 MONTH waiting period we were initially informed of. August 28 is now said to be the big day. And, although the satellite company sent our equipment a long time ago, we still don't have an install date. Never mind that they told us two weeks....

So, it looks like I'll be toting my computer stuff and generator over to my neighbor's to work for quite a while... Fortunately, it's so beautiful here in the high desert lands on the border -- I walk out of my currently humble abode and see clearly into our neighboring nation -- that these delays and hassles feel like small details in the grand scheme of things.

While things seem to move slowly in my part of the world, that doesn't seem to be the case in the rest of the world. Now that the psychological barrier of the $100 mark has been breached, the price of oil has been shooting up even faster. Last Friday, according to MarketWatch.com, the price per barrel touched $117. Food prices have also been moving up, some quicker than others. Rice has gone up astonishingly on the world market, causing major exporters to ban exports, as they fear that they will not be able to feed their own citizens. Some nations have even started to ban the export of wheat. News headlines from all over the world are full of the food crisis and riots in areas where rising prices are leaving the poor hungry.

Looking at all that is going on -- how quickly things are seeming to deteriorate in the global economy, the biggest names in the financial industries teetering on the brink of fiscal disaster, the rising cost of living -- it seems to me that this point in time is one in which all of us should be thinking seriously about debt reduction. The less debt we carry into the uncertain economic times that seem fairly sure to be a part of our future for a while to come the better.

And, on that note, I read a really interesting article on the Motley Fool the other day. It described how 0 percent balance transfer credit card offers can -- with discipline and commitment to a goal of debt reduction -- be a valuable tool in getting control of and eliminating credit card debt.

Many people use such offers unwisely and end up with a much greater debt burden or simply move debt around without ever really dealing with it. However, the smart consumer can really make out with such offers, using them as a means to really knock down the principal of their debt. Things out there in the economic world don't look like they are going to get better any time soon, making now a great time to act to reduce your debt. A glance to the left offers some great resources for 0 percent balance transfer credit card offers. Apply today and you may soon be able to put this debt reduction tool to work for you.

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Friday, April 18, 2008

Have I Got A Debt Reduction Plan For You!

This is the view that I enjoy during dinner today. (photo credit, David Secor) Click it if you'd like to see the full-sized version.

It's a big change from just a few months ago, where the dinner hour conversation was interrupted by deep bass thumping out of the speakers of passing cars and by the loud hip hop and reggae music streaming from the cars waiting outside of the local drug selling spots.

I no longer step out my door onto a sidewalk littered with wrappers and trash left by careless people passing by when leaving local businesses, legitimate and illegitimate. Instead, I am greeted by wide-open sky and an almost mystical natural beauty.

The children have more freedom than they've ever experienced. When they lived in the city, they weren't allowed to play out front without adult supervision. It was not safe. After a couple of exchanges of gunfire between neighborhood drug dealers, it was no longer safe to allow them to play in the backyard without supervision. Today, they run, they play, they explore. They see the night sky and countless stars, they see wildlife. They are learning so much and are having a wonderful time.

And, best of all, I've significantly reduced my debt burden and, as time goes on, will continue to lessen the amount of cash I need to spend on daily living -- certainly a good thing with all the turbulence and trouble in the realm of economics. Not only is the United States struggling, but the world as well. Major exporting nations banning the export of rice and of wheat, oil prices skyrocketing, food costs rising, the dollar dropping in value... the list goes on and on. Clearly, it is a good time to consider debt reduction, with a goal of debt elimination, and the building of a more sustainable lifestyle.

Oddly enough, reducing my debt burden began with taking on more debt -- $20,000, to be exact. However, this debt is productive debt, very productive indeed. The concept of productive debt versus consumptive debt is a bit of an old-school notion. Though, I suspect that, as these easy credit, no money down, buy now pay later, no doc loans days come to an end, that old-fashioned, old-school notion will soon be back in style, at least among the smart set.

So, what did I get for my $20,000 no credit check, easy terms debt? The one that I pay back at a rate of $360 per month? The one that, if I pay the principal all off within the year, becomes significantly less, as the interest charges that bring it up to $20,000 will be waived? (And, I will!) I got 46 acres of land, in a warm and sunny climate perfect for relying on solar power, in a region with winds that make wind power an attractive alternative to more traditional energy sources. I got space for food growing and home building. I got a lifestyle that -- immediately upon my arrival, before anything was set up at all -- dramatically reduced my living expenses.

In NY, the last heating bill I paid for my apartment in the two-family house I shared with my sister was just over $600 and that was for the month of December. I have no heating bill here, but I do have a lovely tan. The monthly land payment is less than the amount I gave my sister monthly for my half of the mortgage on the house. (We got rid of that when we came here.) Those are just a couple of the quick and easy ways that I've experienced a reduction in my living expenses.

In the weeks to come, you can expect to read more about my adventures in working towards a debt-free and richly economical lifestyle. I look forward to sharing the details of my personal debt reduction plan and my progress in making it happen. I hope that some of my experiences are useful to you, helpful in your efforts to achieve your own debt and lifestyle goals.

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