Who taught us that borrowing money for everything we want is a good idea?
Financial guru Dave Ramsey has posed this question for his audiences to consider, and points to a very old bit of wisdom, about 3,000 years old and from the the Book of Proverbs, found in the Bible:
“The rich rules over the poor, and the borrower is the SLAVE of the lender.”
From an article previously in the Examiner, however, a record number of Americans are living on an “economic edge” in basic survival mode. An article, on the online website for the Wall Street Journal, has also reported that about 15% of the population — 46 million people in the U.S. — were living below the poverty level which is set at $11,484 for an individual or $23,021 for a family of four per year.
So using the number for an individual, here is one plan to pay off debts and live on a poverty income.
POINT 1: Make a plan, stick to it.
If you are an individual and have to live on $11,000 per year, or $916/per month, try this budget:
Your basic needs are housing and food, so one option is to find someone else in your same situation and rent a home together. Whatever the original plan, make an effort to stick to it no matter what.
POINT 2: Sharing the daily burden is a good idea.
In Vista, CA you can probably find rentals for a 2-bedroom that cost $1,200/month. With two people splitting the cost, that means each of you pay $600/month, which leaves you both $316/month.
But splitting the cost for food needs and utilities with another person leaves you better off too.
With only $11,000 income per year, you probably qualify for food stamps. If it helps you to survive, please note that you will be paying off your debts and take the amount for food in exchange for setting that amount aside to pay off a bill and decreasing your debts. Chipping away at big bills is getting you out from under crushing debt. Keep that in mind.
Last year Newark, N.J. mayor Cory Booker took a high-profile challenge, according to the Daily Beast, for that food stamp amount.
Maybe you can learn from what he did and plan ahead.
In the Huffington Post, Booker noted after just three days he was hungry and suffering coffee withdrawals.
“Not being able to stop and drop a few dollars for a Venti coffee or Diet Mountain Dew is really raising my consciousness about the food choices I often take for granted.”
He also mentioned regret over some of his purchases:
“The second day on the #SNAPChallenge, I ate salad for breakfast, a can of peas and corn mixed together for lunch, and cauliflower, broccoli and a sweet potato for dinner,” he wrote. “In hindsight, investing more of my SNAP budget in eggs, and perhaps some coffee might have helped me later in the week. I am growing concerned about running out of food before this is over — especially as I try to resist the urge now to have another sweet potato before I go to bed tonight.”
Members of Congress have been challenged by the Food Research and Action Center to live on the food stamp budget and the amount given for that, per week, is $31.50.
So, if you are splitting costs with one other person in the same boat as you, what basic necessities can be bought on the food stamp program for that amount?
The Huffington Post recently reproduced a relevant article on what can be purchased for $40/week.
The author cited Barry Popkin, PhD, a professor of global nutrition at UNC Chapel Hill and author of The World Is Fat as inspiration.
Popkin maintains that eating healthier will cost you less:
“With many convenience foods, we’re paying for packaging and processing that adds fat, sugar, sodium, and calories.”
Bread, milk, peanut butter, jam, cheese, meat, fruits and vegetables, for one week, can cost you about $30 depending on what and how much you buy, but if you are sharing the expenses with one other person on the same food stamp budget, that can be your contributions for meals. Also, try shopping and bagging your own groceries, like at food4less, because it really saves money when you are on a budget.
The other person can purchase other things, like pasta, tortillas, beans, etc with their 31.50 allowance per week.
But you need to pay down on your debts too, to clear your name and improve your life by making the debt collection agencies happier.
Debt is the most aggressively marketed product in our culture, according to Nationwidedr.
On his website, Dave Ramsey states to those family or friends who want to help someone out by co-signing a loan for them:
“If debt is the most aggressively marketed product in our culture today, if lenders must meet sales quotas for ‘loan production,’ if lenders can project the likelihood of a loan going into default with unbelievable accuracy—if all these things are true and the lending industry has denied your friend or relative a loan, there is little doubt the potential borrower is trouble just looking for a place to happen. Yet people across America make the very unwise (yes, dumb) decision to cosign for someone else every day.”
POINT 3: Use money leftover to pay down debts and start an emergency fund.
Keep things simple until all your debts are gone. Use that $316/month left to you after paying your half of the rent for paying down debts, and maybe use some for an emergency fund and the rest for your share of the utilities.
If you can focus just on what you need, versus what you want, things will go better.
Remember: whatever you can save each month, use it to pay down debts. If you renegotiate a cell phone program plan, put the money you save into paying off bills or start a savings plan for emergencies.
My best wishes to you.