Easy Change

Selling your house sucks. At least that is my view after seeing my parents struggle in various situations to sell their house. I work with someone who is very smart. He doesn't believe in real estate personally because he has also come to the same conclusion independently -- selling your home sucks. And in short, I agree with him now. That said, they need to sell. Why? Many baby boomers are in a similar situation where for many many years, they paid their bills dutifully and then continued to pay and live a nice lifestyle until they realized at the end of their working years that there was not all that much money available to handle things that needed to be paid for, particularly if they stopped working. Social Security to the Rescue? So, we'll just bank on social security? Not a great plan in my option. So at this point, we're back to more traditional methods of handling your retirement. Trading up in houses over and over and paying off an expensive house with h...

So, with a ton of time behind me on this blog I have decided that it is time to finally take the last plunge toward becoming debt free in 5 years. I know that this is not a terribly new idea in terms of personal finance but I think that it is a good thing to think about and a good goal to have. At this time, I continue to have a car payment which is a result of driving my old toyota corolla for about 10 years and then finally junking it this past summer at about 180K miles when the A/C stopped working and the expected repair bill would top 1000 dollars. Since there was some money in the checking account, I decided to buy a new car. One major theme that I would like to discuss this coming year is managing cash flow . I have always been conscious of this topic but I was especially conscious of it this year because I wanted to make sure that adding the car payment would not impact me too much. So, with a small downpayment, I took a loan at zero percent interest for 5 years. At this p...

I found this post recently and I thought it was quite interesting to look back and see how reasonable and accurate it was since about 2 years have passed since it was written. So, I leave the full post here for you to read and my ideas/comments are at the end. To say that this month has been difficult with the spending would be a huge understatement. Just this past weekend I went overboard on the spending with clothes and christmas shopping. What's more, the car needed new brakes this weekend--420 dollars! Yikes! Yes, Christmas shopping. I know that it is early, but I still intend to be prepared and get it out of the way. That said, there are huge cutbacks this year. I'm hoping this update with help me get some perspective. First off, in our own families, we are keeping the gifts much smaller. Even though I normally give bonds to my nephews and neices I have decided to not do that this year. The bonds are normally quite small and we need to make sure we're being mo...

Being debt free is sexy. There. I said it. Nothing is more attractive than someone who has their financial house in order. It often indicates this person is self confident, has drive and motivation,and most importantly, knows how to execute. Who doesn't want to be with someone who knows how to execute? All that being said, what is the best thing that we can do in terms of reviewing the debt reduction strategy for Christmas. The first, and it bears repeating is that you should reduce spending on Christmas and avoid putting anything on credit cards. The next two ideas are more novel and could really help with your debt reduction. 1. When you are asked what you want for Christmas say you want some help paying off some debt. Give you friend/relative the address and account number of the bill and have him/her pay an amount equal to your gift. Some might think this is tacky or smells like a hand out but I disagree. This is admitting you need help and directing resources someone wants to ...

To say that this month has been difficult with the spending would be a huge understatement. Just this past weekend I went overboard on the spending with clothes and christmas shopping. What's more, the car needed new brakes this weekend--420 dollars! Yikes! Yes, Christmas shopping. I know that it is early, but I still intend to be prepared and get it out of the way. That said, there are huge cutbacks this year. I'm hoping this update with help me get some perspective. First off, in our own families, we are keeping the gifts much smaller. Even though I normally give bonds to my nephews and neices I have decided to not do that this year. The bonds are normally quite small and we need to make sure we're being more careful with our money in this economy. No one knows what the future holds. While the stock market has bounced back, it certainly seems like we cannot feel certain about anything. Volitility seems to be quite high over the past few years, so who knows what will happe...

This week I finally did a calculation that I had not done in some time: worst case scenario. This is a calculation that I do in order to give me some confidence that things are in a good state if the worst case scenario that I am interested in protecting against happened. Simply put, if there was no income because of a job loss, how long could the household be operated without any additional income. In this scenario, my goal is to determine this kind of scenario under realistic conditions. Put simply, I wouldn't be accelerating my debt repayments, continuing my savings plans, or doing anything other than the base payments on all of my fixed expenses. Given these parameters, without additional income, we have over 12 months of running room. This is a good feeling and is the first time that there have been that kind of savings. It is a really nice feeling. Does anyone else track this kind of figure, I wonder? Personally, after net worth and saving's rates, this is one of the bigg...

The press has been covering various countries and their possibilities of defaulting on their debt for some time. Last year, Iceland had a financial crisis that caused many to become quite nervous that it could cause a series of defaults across Europe. Lately, the big target has been Greece. For quite some time, the burgeoning levels of greek debt have made many investors nervous. A country, like a company or a person, can spend more than they have, but must borrow in order to do so. Companies can borrow by issuing stock or bonds. Countries can borrow by issuing bonds or other similar securities. All are forms of IOUs. In the case of Greece, the increased debt levels have made people nervous because they seem to be at a level that could never be repaid. This fear was lessened to some extent today with a new agreement that provides some backing for Greek debt. Read Bloomberg's Greek European Union Accord article to learn more. What does this all mean for the average personal finan...

Well, like everyone right now, things are a little scary in this economy. So I'll take this opportunity to focus on some good things that are going on with my personal finances. In a huge feat, I've paid off the car loan (a year early). This reduces monthly outflow by 450 dollars (even though I was paying 600/month). Given the current climate of the job market and the situation with the politics in this country and throughout the world, it seems to me that the safest thing I can do with my money is to pay off debt and give myself more options and mobility. As for the net worth, that has finally come back a little bit with some big contributions for the 401k and the tax returns. Finally, after many months, its finally starting to come back. I'd encourage anyone who is worried about what to do with your money right now that looking at debt as a place to "store" your money is worth considering if you have a fully funded emergency fund (as I do). With these changes, t...

Well, with a recent windfall, it was possible to retire a significant bill which was costing about 250 minimum in cash flow each month. However, this was a bill that was being paid extra on, so strictly speaking, this is more like a 500 dollar increase in monthly cash flow. Getting debts paid off is really great for three reasons. The first reason is the increase in cash flow. The second reason it is great to pay off debts is the emotional feeling. In reality, the debtor really is a slave to the lender. And I know that people will feel that this is a somewhat dramatic stance to take, but I feel like it is true. Each time I pay off a debt, I feel more and more free. Finally, the great thing about paying things off is knowing that it is over. In a strange way, finishing a debt is like crossing the finish line on a long race. And when extra income comes in, it is like a windfall, a burst of energy that cannot be missed.

This quarter has held quite a bit of interesting stuff. As per usual, the updates to NetWorth continue. Although net worth got over 100k total, I was worried that things would become more difficult with the big drop in the markets. In a strange twist, although net worth dropped, it did not drop below 100k. Big expenses this month have included a new plasma tv (since the old tv broke with a big blue spot that burned in to the center) and a recent purchase of a sliding door. With any luck, things will continue to go well as the financial education continues and the debt continues to be reduced.

Well, the payoff's finally complete. With the advent of electronic banking, I've been paying many of my bills using my bank's online bill pay. I like the convenience of knowing exactly when the amount is going to hit my account. This is easy to plan since most of my bills that are paid this way are actually paid as an electronic debit instead of a check. However, for some institutions this might not be possible and therefore a check will be cut. So, for your situation, mileage may vary on online bill pay. But when it comes to my student loan/credit card payoff which happened this week, it is a great feature. I scheduled the payment and I knew exactly when the money would hit my account. Now the bill is completely paid off and has given me even more wiggle room in terms of my measurement of free cash flow on a monthly basis. The key here is what to do with the free cash flow. Currently, it appears that I will be doing some sort of a three-way split with the funds. I plan on ...

So, today I should be depositing a check that will allow me to make the final payment for loan #2 for college. I will be using this combined with some other miscellaneous income that I've transferred over from my paypal account. And then there was one. That one that is left is a biggie, but simply getting these things paid off gives a huge sense of accomplishment. In retrospect, I think that the transfer to a zero percent credit card was a great idea. It gave me the opportunity to actually accumulate some forward momentum since I wasn't fighting the tide of interest. As for me, I went out to a celebratory dinner last night in honor of the achievement. Next up is my car loan. And with just over 3000 dollars left, something tells me that I'll be paying that off early as well.

After a very long journey of about 7 years, I will soon be paying off my second student loan. This loan is a private loan which unfortunately did not have any tax-deductible interest so it was in my plan to move this to a zero-percent credit card. I've done that and it has made a huge difference. Making progress wasn't super easy, but I took most of my extra income and tried to put it toward this debt. For me, one of the biggest benefits to paying off this bill would be the increased monthly cash flow. Now it looks like there will be fewer than 6 payments left, depending on how much I can pay toward it each month, since there is a balance of 1290 dollars left. The amazing thing about paying off debt for me is the feeling. The debt actually feels like a weight. And as it is paid off, I feel more and more confident and in control. I think that this just comes from knowing that as time goes by, more and more of my money is actually mine and not going to other people.

One of the interesting things that I've "figured out" over the past few months with regard to my debt repayment is the importance of paying early on daily compounded balances. I've been doing this myself over the past year and it really makes a difference. The first question for all of your debts should be "how is the interest compounded?" For many debts, the interest is calculated each month on a monthly basis. For others, it is calculated up front for the life of the loan and then factored into your payments. Prepaying effectively does nothing to save you money on interest. If however, you have credit cards, it is likely that you have a type of interest calculation that is called the average daily balance or two-cycle average daily balance method. If this is the case, paying off your balance earlier in the month can save you money. This tip is not about paying extra principal per se, although you obviously should do that. Instead, the tip is about how you...

I'm back off Dunkins. Well, sort of. Since things were going so well lately in terms of finances, I found myself getting a little bit too comfortable with my morning coffee routine. If you add it up, its about an extra 10-12 dollars per week that I was spending on my morning cuppa. Then in the afternoons, I might run down and get a starbucks as well. Another 6-8 bucks per week. All told, I was spending close to 20 dollars per week just on coffee or tea! This seemed ridiculous to me even without any of the latte factor hype. In the end, I've decided that I will try to switch back to my old ways of making coffee at work. I use the coffee-single "tea-bag" type coffee. Its not as good as Dunkins, that is for sure. But, I think that in the long run I will be happier knowing that I didn't waste 20 dollars a week on something that I really didn't need to have every day. I think that once I get rid of all my non-mortgage debt, I will be more relaxed about these th...

Lately I've been somewhat discouraged. In short, I hurt my back while exercising so my exercise routine is down the drain and while I tried to 'work around' the problem, I'm convinced that I am making it worse, so I have decided to stop exercising until I feel better. Yesterday, I was out for lunch with an old college classmate. It was a great time and we were able to catch up about friends and people we knew etc. But after a little bit of time, we talked about finances. During the lunch I discovered that despite how well I was doing with paying off my debt, I was apparently quite behind. He did an amazing job of paying off his college loans right after college. I had mixed emotions at that point. I was happy for him, but irritated that I hadn't done the same thing. I guess this is why it ranks as one of the biggest financial mistakes I've made. It is also why I crusade against student loan debt and work very hard to talk to people I meet about their college deb...

Last night I was trying to figure out what the balance on one of my credit cards that I had done the transfer for my unsecured student loans was and I found out that it was much less than I thought. Originally, I thought it was about 1600 and then on the voice machine it said that it was only 890 dollars. I was pleasantly surprised. I somehow thought that it would be more than that but I must have made some payments in there somewhere that really knocked the balance down. So finishing that bill off should be an easy feat for the second half of this month since there seems to be quite a bit extra in the checking account right now. Once that is done, more than half of the balance of that loan will be paid off. Now I just need to get my No Credit Needed chart updated again. :)

Everyone who is involved in personal finance knows about the idea of debt snowballing. Well, this process has worked quite well for me lately. I've maintained a chart over at <a href=" http://www.ncnnetwork.com ">No Credit Needed</a> and I find that it works quite well as a means of keeping track of my debt reduction. I've made posts before on how I dislike student loans and the process and how my particular situation was handled. I graduated with tons of student loans and even after consolidation, there were too many bills and they cost me way too much in interest and there was no one there to be an advocate for me. But now that things are going well, household spending is under control and the emergency fund is growing steadily in a high-yield account over at ING (submit your email on the right for a link to open an account and get a bonus), I've realized that the finish line really is not that far away. About 18 months ago, I got really serious abo...

So, I went to the mail this weekend and was pleasantly surprised to open up one of the statements and find that a retirement account had twice as much as I thought it had. I don't know if I messed up the spreadsheet I track with or something, but I was quite pleased when I plugged in the updated numbers. This month's net worth entry is going have a nice bump and I am excited. And is it me, or is the market doing quite nicely? I just checked and on the year I am averaging about 5% in my retirement accounts. That is not too shabby; granted, you can make that in a savings account, but if it continues to grow at that rate I should easily get to over 10% on the year which is my target.

I can't believe it, it is only March 23 and the books are closed for the month! It is a great feeling to be paying things online now. I can immediately get things paid as soon as there is available cash. For those of you who have not started paying your bills online, I would encourage you to give it a try. I've been nothing but impressed by the system since I started doing it. I find that I can easily keep track of what is due and make sure that it gets paid on time, every time. Not to mention the amount of money I am saving in stamps. As for the actual numbers, those are good as well. Total expenses for the month are down about 200 bucks from last month.  And debt is continuing to decrease as loans are payed down. There's still a long way to go, but the extra money coming in recently has really helped out a lot. The one negative though is that the average so far for this year seems to indicate that household expenses have gone up way more than the 0.03 percent that I ...