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Helping friends help themselves

September 7th, 2012 at 06:06 am

I have a friend. Yay! OK actually he's been my best friend since we were 8 years old (that's awhile back!) He's the kind of guy that would stick his neck out for you no matter what. We pretty much share everything about each other's lives because we can trust each other completely. So it KILLS me to find out he's struggling financially. Well not struggling per se...but he just has never had a plan. He's the kinda guy that if he had the tools I would have no doubt that he could succeed.

That being said I've tried a few things to get him rolling on a plan. He knows we worked the baby steps and he's read TMMO and even gone through FPU with his spouse. I understand Dave isn't one size fits all so I'm not pushing him to follow Dave's plan. I've said I don't care what you do but do something. I think procrastination is his worst enemy.

So here's a quick synopsis: He's 35, wife is 46. Two kids (his stepkids) in college. Net income: $12k/mo. Net expenses: $6k/mo. Debt: $84k (47k student loan, 20k car 1, 12k car 2, 4.5k credit card.) No liquid savings and not currently contributing to retirement (has $150k in retirement.) I'm sure you can already see my frustration just on this little bit of info.

I don't know if anyone else has someone they know in a similar situation. Based on the numbers that float around about people not saving enough and not putting enough away for retirement I'm sure there are a lot more people out there like my friend. I just really want to help him...even though I can only provide the map. I can't drive him there...he needs to put it in drive and go. I'm just trying to think of ways to help him get to where he wants to go. Any advice as always is appreciated. Smile

The importance of having an emergency fund

August 30th, 2012 at 06:20 am

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 12:54 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

Paychecks (after 401k contributions): $11450

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 18th, 2012 at 06:44 pm

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 16th, 2012 at 07:14 pm

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 03:31 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 03:32 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 06:24 am

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 12:58 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

Putting the paychecks to work

September 3rd, 2009 at 05:44 am

Well now that we're one day past payday and the budget has been implemented here's how it went down. Below is a copy of the budget I had created for the pay period from 9/2-9/15 with notes on how it was executed.

09/02 - 09/15
Income: $4741

Electric: $242 (PAID)
The Maids: $140 (9/8)
Netflix: $12 (9/8)
Equifax: $7 (9/13)

Cash: $500 (DONE ATM)
This covers food, clothing, entertainment, medical copays and any other discretionary expenses we have during the two weeks. We do this stuff in cash only because it works really well for us.

Son's birthday: $150 (DONE TXFR)
His 16th birthday was on August 25th and we need to deposit $100 to his checking account (was a gift from us.) We also are going to purchase him a dock for the car for his Ipod for $50.

Amazon: $10 (PAID)
This is for a replacement Tassimo filter.

HVAC Filters: $69 (PAID)
This buys us two replacement HVAC filters. I vac'd out the one we had in there but it is so bad I'm going to have to replace it. It's been in there for almost a year now so it's time.

Now for the other part. At this point we had $3611 left to spend and there were some important things to put the money towards.

Wedding Ring: $2911 (PAID)
I was able to get the ring back and it looks great. The wife was EXTREMELY HAPPY to get her ring back fully repaired (it had met an unhappy garbage disposal courtesy of our cat) and with a new diamond installed. Insurance did pay a portion of it but I still had to go out of pocket for nearly $3000. It was actually ready a couple of months back but we wanted to wait until the debt was gone before paying for it.

This left me with $700 to put to savings. We have a check coming next week for over $7000 which will be put to savings as well as we continue to bolster up the cash in the bank. I can safely say this was a fun budget to work through with no debt payments attached to it.

Oh and I almost forgot! I called our cable provider and was able to get a $16 discount on our monthly bill. All I had to do was ask! It's always a good idea to call up your utility providers like cable, phone and internet (even if you bundle) to see if they can do anything to help you save some money. Smile

September Budget Part I

August 31st, 2009 at 07:25 am

September is shaping up to be a great month in our household income wise so we should be able to do a lot of good with our money. We get paid biweekly on Weds so we're looking at 3 paydays in September and a bonus in the middle of the month to boost our income even more. I usually do our budgets per pay period and any bills that are due within the pay period get paid. We have a few things we need to pickup online so those will be budgeted into this pay period's budget.

Here's how it looks right now:

09/02 - 09/15
Income: $4741

Electric: $242
The Maids: $140
Netflix: $12
Equifax: $7

Cash: $500
This covers food, clothing, entertainment, medical copays and any other discretionary expenses we have during the two weeks. We do this stuff in cash only because it works really well for us.

Son's birthday: $150
His 16th birthday was on August 25th and we need to deposit $100 to his checking account (was a gift from us.) We also are going to purchase him a dock for the car for his Ipod for $50.

Amazon: $10
This is for a replacement Tassimo filter.

HVAC Filters: $69
This buys us two replacement HVAC filters. I vac'd out the one we had in there but it is so bad I'm going to have to replace it. It's been in there for almost a year now so it's time.

So far we've spent a total of $1130 and that leaves us with $3611 to use as we see fit.

What's really crazy is the only thing we actually HAVE to pay on this list is the electric bill. The rest of the list (other than the cash...which we could cut down in half) is wants. Now that we're debt free we feel we can open up the discretionary spending a bit more but we're still retaining 75 percent of this biweekly income. That's not a bad thing.

We still have some long term goals to work on as well. My wife's wedding ring is still at the jewelers and I believe it'll take $2700 to pick it up now that it's been repaired. FYI to everyone make sure you have a proper rider for jewelry on your homeowner's insurance policy. We only had a small reimbursement and we now have the rider but you have to get it appraised and get it on your insurance properly. Check with your agent as to what you need to do to do it right.

We also need to pay off our son's Spain Trip which I mentioned in an earlier post. That'll be exciting to see that gone.

We're also going to be funding Roth 401k's (15-20 percent of net income with a 25 percent match to a traditional 401k by the company), saving for cash flowing college (we start paying the piper in Fall 2010) and accelerating our mortgage payoff (increasing the amount to principal) so it's not like that money doesn't have anywhere to go. We have a long haul ahead of us but we're excited at the prospects of being able to knock all of this stuff out.


First cool debt free expense

August 24th, 2009 at 12:17 pm

I just wanted to share the first cool thing we were able to do after clearing all of our non-mortgage debt. We were able to pay cash (well..debit card from our checking account) for our son (turns 16 tomorrow) to trek out of the USA to Europe in April with his classmates through a school trip. They'll be over there for 11 days total and the balance is due in full by December 19th. Well we've paid nearly $2000 out of the $3000 it cost already ($1750 of that $2000 in the last 4 days) and we'll be able to pay the remaining balance in full on September 2nd without batting an eye. A full three months + before the balance is due!

The best part is having the cash to do it instead of going into debt to do it. I can remember a time when that $1750 was going to minimum payments on credit cards. No more! Now it goes to things we WANT to do instead of obligations we HAVE to do. Yippie!

So for anyone mired in debt and wondering if it's worth the effort and sacrifice to bulldoze your way out...I can say absolutely! You can pay for a trip without paying more than the trip costs in credit card interest and fees. Smile

A thank you to everyone who followed our road to debt freedom

August 17th, 2009 at 04:41 am

I just wanted to send out a "thank you" for everyone here who gave us advice and ideas from the time I started this blog 2.5 years ago. We spent the last 4+ years wading around in over $75,000 of credit card debt and could never figure a way out (at its peak in April of 2008 it was at $110,000) and it took a lot of focus to finally just cut down the lifestyle and get it all paid off. I want to answer a few of the replies in the announcement here so here goes.

To everyone who sent congrats THANK YOU!! We really do appreciate it.

To crazyliblady: What we ended up doing to figure out how much we had to throw at our debt was to go line by line through each and every item we were spending money on and really decide if there was something we could do to cut it down. We ended up trimming out a lot of things we thought we couldn't live without and we basically used a zero based budget approach to make sure all the money was allocated before payday so there were no surprises. We did keep some money to the side for emergencies but not a lot because we didn't want to continue to get eaten up by interest. I would just list everything out and prioritize everything you spend money on each month and you can find all kinds of places to save. When it comes to credit cards make sure you don't use them (it's easier to pay them off when they're not nibbling back at you) and another thing we did to earn extra income was to sell little stuff around the house on ebay and craigslist. We made selling stuff we didn't need our 2nd job and were able to really help supplement our income that way (especially in the beginning.) Just try to focus as much of the extra $ as possible at the card and shut the card down so you don't incur any more payment than you have to. Smile

fern: There wasn't really any trick to what we did. It was really just focusing as much extra income as possible at the lowest balance at the time. We had tried paying it off by interest rate before but really just kept spinning our wheels so we flipped to try lowest balance and that seemed to do the trick. We had three cards with $27,000+ balances but knocking them down one at a time really energized us to continue throwing as much disposable income at them as possible (we ended up putting about 50 percent of our income to the debt while we were working to pay it off. The really cool thing about that was we realized we could support the household on one income since my wife and I make around the same amount of money.) We did a lot of coupon shopping and sale shopping and cut out a lot of the stuff we did on cards before like vacations (we did go on one vacation but we had $10,000 in non-refundable reservations so we went and just used cash while we were away.) The cards went locked up in the drawer and then we closed a bunch of them down (we had way too many credit cards) because we were getting all kinds of fees (annual fees, monthly fees, etc) and it just didn't make sense to keep them open.

campfrugal: The synopsis is we paid off $117k in credit card debt over the last 15.5 months ($110k in APril 2008 + $7k in interest.) We did it by cutting down our lifestyle and just lining up the cards and paying them off one at a time. We availed ourselves of as much extra income as we could by cutting down lifestyle and budgeting our income to the last penny. Smile

Don't worry I don't plan on leaving anytime soon now that the debt is gone. I'll continue to update the blog and try to add some words as to what we did and how we did it to get here. Again thank you everyone for the kudos and congrats as we are so happy to be done with debt!