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Archive for August, 2012

The importance of having an emergency fund

August 30th, 2012 at 01:20 pm

Most of you here already know how vital it is to have an emergency fund setup for those times when Murphy kicks the door in and sets up shop in your life. I have an example of how not having that baby EF can cause undue stress!

I was at the car dealer yesterday getting my car inspected when a gentleman came out from the service area in a bit of a panic. He had been having problems with his brakes and was told it was going to cost him $300 for the repairs. I thought he was going to pass out with how red his face was! He said "My car has 160,000 miles on it and I don't have $300 to fix the brakes!" I thought to myself "Oh boy could this guy use a $1000 baby emergency fund!" I didn't engage him directly only because he was so flustered and just started pacing really fast around the dealership but it triggered in my mind BABY STEP ONE: $1000 in the bank.

Anyone else have stories like this when they're out and about? I found myself really feeling sad for the guy. He just seemed so stressed out about a $300 car repair bill. It's a friendly reminder to make sure you stock away that emergency fund money so you don't end up stressed to the max like our friend here. Smile

We're going to miss August

August 27th, 2012 at 07:54 pm

August 2012 was a very good month for us financially. We have been blessed to have been given a sizable shovel to work with over the years but we were able to double that shovel in August (including payday coming up this Weds) with work bonuses, ebay sales and some Intellishop work. We're going to be able to use this last check to pay all of our monthly September bills and our mortgage due Oct 1 before September begins and that's always a great feeling.

I opened up a 529 plan for my granddaughter and since she's less than a year old hopefully down the road she isn't going to have to think twice about where she'll want to go for college.

We've been able to really simplify our budget over the past few years and it's become a well-oiled machine. There are a few things on our budget today that when we were in debt we certainly considered frivolous. Now that the only debt is our primary mortgage we've been able to relax a bit and enjoy life a lot more. The kids being out of the house and on their own (for the most part) has also lightened some of the everyday expenses that we had when they were under our roof.

So here comes September and it's looking pretty good. Hopefully there aren't too many Murphy's hiding in the bushes!

September 2012

Income
Paychecks (after 401k contributions): $11450

Expenses
Maids: $310 ($155/visit)
Netflix: $8
Electric: $360
Life Insurance: $147
Cable TV: $160
Everyday Expenses: $1000
Oct Mortgage: $2768

Total Expenses: $4753

Income - Expenses = $6697 for September.

EE is our cash spending categories like food, clothing, transportation, entertainment, electronics, pharmacy...basically the "out and about" spending.

That excess will be spread across the mortgage, savings and investments so we can continue to grow in multiple areas (I know DR would want it to go to the mortgage being on BS6 but we're happy with spreading it out across the friend with three hats (Save/Invest/Pay down mortgage.) Smile

Gift cards

August 19th, 2012 at 01:44 am

Anyone have those gift cards that you use up until there is a couple of bucks here or there and you just can't figure out what to do with them? If you do any shopping online it might be worth it to consider cashing them at Amazon. Amazon will issue a gift card directly to your email and you can redeem the gift cards on your account and accumulate a balance that you can spend at checkout. As long as you have a minimum of 15 cents you should be able to redeem the card there. This goes for those generic Visa/Mastercard/AMEX/Discover gift cards of course (not merchant cards.) We just redeemed quite a few cards and accumulated a 21 dollar balance which my wife will turn into some music and a kindle book.

I'll note that I have one Visa gift card from TD Bank that doesn't seem to want to redeem (and it has a $12 balance...darn it) so if you have a card from a specific bank you may have to call them to find out the deal.

If anyone has any other great ideas for gift cards I'm all ears! Smile

Playing Bank Bingo

August 17th, 2012 at 02:14 am

Over the years we've probably had our money in just about every so-called "big bank" on the planet. We had moved our money to Commerce Bank a few years ago and were really happy with them. Then TD Bank took them over and ever so slightly they've been taking away benefits and making it a little bit more expensive to do business there. I also have family in the Midwest and the West Coast and TD just doesn't seem to be where I need to be when I travel.

We have also been ING customers for about 11 years now and I have always been very loyal to them. They were a very important part of our path to debt freedom since keeping the emergency fund with them kept it somewhat out of the immediate area. Now that Cap One has taken them over and the interest rates have been dwindling we're not as keen on the Orange Dot as we used to be.

I think the point of my rambling is to just remind everybody if you're not happy with your bank you have a LOT of choices out there. It's making me woozy comparing all the different banks to each other. This is a case where personal finance really is PERSONAL because you really need a list of what you want out of your bank. Is it convenient? Can you get your money out when you need it? Do you have to wait an eternity to access your deposits? Do you do mobile banking? Is it free? Do you have to have a minimum balance? Do they offer mobile check deposit? Do they link with Quicken? Do they hammer you with fees? E-I-E-I-O.

if anyone out there is happy with their bank I'd be happy to hear about it. You never hear enough about the happy customer...especially in today's era of negative news. It'd be nice to hear a happy note or two from the Saving Advice realm about where they're putting their hard earned dollars (and cents!)

FWIW we also have money at a credit union. I love credit unions because they're very personal and personable but they also have their limitations for us in spots.

Thanks (in advance!)

The Calendar Game

August 11th, 2012 at 10:31 pm

I know the topic probably could cover a host of different topics but I'm actually referencing a game that we like to play with our day-to-day finances to make them a little less boring. As the nerdy husband I scoff at finances being boring but my wife's more smiles and sunshine than calculators and computers so we like to play a game that takes very little effort to setup and really gets the whole family into it. Even my kids find this way of relating to personal finance more friendly and fun so maybe it makes sense for you to give it a shot in your home. Smile

All you need is a calendar and two different colored markers (preferably a color you like and a color you don't like...you'll see why soon.) I like to use a dry erase calendar but those big flat desk calendars work nicely too. Set it up anywhere you like but usually somewhere common that's friendly to everyone.

Now grab the marker you really like and write in your net income for today (or whatever day you start the game.) If you get paid monthly or bi-weekly or weekly just figure in what you average per day. It doesn't have to be exactly precise but you want to get an idea of how much you make each day you work. An easy example is you make $3000 a month so you'd divide $3000 by 30 days and get $100 a day. So you'd write in $100 in today's date. If your spouse/significant other works too you can add both daily incomes together. Remember to use your happy marker.

Now go through your normal day. If you buy something do what you usually do to keep track of it. You don't need to put it in any category for the game...you just need to know what you spent. Anything you spend regardless of what method of payment just jot it into that day on the calendar with the marker you don't like the color of (we use red for bad and green for good.)

Now you can see in plain view on each day if you made more that day than you spent! What we like to do is write the total (good marker number minus bad marker number) in the bottom right corner and then update it as we go through each day. Obviously you'll have days when you get paid and you pay a bunch of bills at once (so that may be a negative day for that day) but by keeping the running tally you have a nice visual representation of how much you made vs how much you spent as you went along through the days, weeks and months. If you get extra income on certain days always add it to that day's happy marker total.

It's a very easy and fun way to track income and expenses on a very basic level. The real nerds can get really creative and calculate what an investment made that day or how much interest they were charged on that day on a debt. The main thing is not to take the game too seriously because you don't want to lose the people in your household that may not be so into the numbers. One thing it helps us with is impulse spending. Taking a quick look at the calendar before going shopping or going out to eat really makes us think a little harder about what we're going to spend our money on.

Just thought I'd share since we really enjoy playing the game in our house. Have fun with it!

Murphy = Inconvenience vs Tragedy

August 9th, 2012 at 10:32 pm

Well I get home from work and as I'm switching my sunglasses off and putting my regular glasses back on I feel a SNAP! and they break in half right at the bridge. Doesn't that just figure. I now have my 1995 backups on and they're a little bothersome but they're doing the job for now. I called and left a message for my eye doctor and I'll probably be on the hook for at least one pair of frames. Back when we were digging out of debt I'd have probably panicked about how to pay for it (I'm still going to try Krazy Glue...although that never works considering how thin the bridge is.) Now I know I have plenty of money in the medical budget category and a new pair of frames is going to be a minor inconvenience instead of a Murphy tragedy.

Over the weekend DW (the wife!) and I cleaned out our master bedroom closet (well at least the bottom of it.) Normally my wife would stay well clear of this process but I enticed her by making it like she was at the store. She had dozens upon dozens of shoes and purses so I pulled them all out and put them in another room. Then one by one i brought each pair of shoes and each purse in and had her look them over. She got to keep, donate, ebay or toss the shoes depending on how attached she was to them. Instead of paying with cash she was paying with space. We have only so much space in our closet and I always give her the majority so I said you can keep enough to fill the shoe racks in the closet but once they were full we needed to compromise. She was great and we eliminated over 30 pairs of shoes! The closet now has a whole floor of space and she still kept a lot of shoes. We also emptied out all the purses and found a lot of change and even a few gift cards. I took the change to the bank today and put it in one of those penny arcades and we deposited $156.56 in change! I also deposited $169.23 from ebay sales to the checking account. Now she can get her hair done and I'll put the rest towards my glasses.

You can take anything that seems like a chore and turn it into a fun time (and cleaning out the closet ended up making us money...so talk about a no cost activity.) Who knows what you might have around the house that you don't need (and that someone else sure could use!)

Getting up to speed

August 9th, 2012 at 01:24 pm

OK so I thought I'd start the comeback trail by updating a few key points of where we're at. In case you don't remember our story we were buried under $117,500 of credit card debt when we finally got serious about getting our finances in order. It took a lot of work but we eventually dug out and got to debt freedom (thanks largely in part to this place and the Dave Ramsey way of thinking...the TMMO forums were very motivating and helpful for us.)

A few good bullet points since that debt free day:

1) I became a grandfather. Smile

2) We're still debt free! For you DR fans we're rolling through BS6.

3) We're cash flowing both of our kids college educations.

4) We have a good sized emergency fund and are building savings as well. We're also maxing out our
Roth 401k's.

5) We still budget as if we were in BS2. Instead of having debt payments we have savings payments.

6) Credit cards are still not welcome. We've been there done that and we're not going back.

7) We were featured in a DR Gazelle Gazette (the newsletter) for paying off all the cc debt. It was awhile ago though...I haven't had an active subscription there in a couple of years.

8) We're still selling stuff on ebay for extra money!

9) I still listen to the DR FPU audio lessons on my phone at work in between songs. They're in my playlist. Smile

Don't get me wrong it all sounds great but we still have to be very vigilant about our money. We have a good stream (I like that I don't have to call it shovel anymore) of income and we're content. Although I'm the nerd and still get OCD about doing budgets and the numbers all the time. I'm hoping by coming back I can continue to be accountable for our expenses (the expense tracker will come back to life) and hopefully some of the things I post will help others who may need some extra motivation to stay on the plan they're on and stay focused. We got to the point plenty of times where we said "is this really worth it" and I can tell you now sitting on the other side of that mountain of debt is one of the most beautiful views you can have. It's worth much more than just the numbers. Smile

Wow nearly 3 years to the day...

August 3rd, 2012 at 07:58 pm

I can't believe how long it's been since I last updated my blog on SA. So much has happened since September 2009. I'm going to start back up in the hopes that it will help us stay focused on the task at hand and help others that might be wrestling with similar issues as we are. So this is a welcome back of sorts! I'm excited to keep our story going (and there is a lot to talk about!) Smile