Creating a Life by Destroying Debt

Soda Replacement - Money

2011-03-26T14:02:00.004-05:00

When I was a kid, growing up with soda in our lives was rare. It was considered a treat. Even when our grandparents tried to spoil us by taking us out to eat, we would generally choose water, as it didn't cost anything (we didn't want to ask for too much).

Now that I have kids of my own, having soda in the refrigerator is a common sight. It is a part of our grocery list, and a 2 liter rarely lasts a week. I've been getting more worried about how my kids are growing up in today's society, where obesity is growing and growing among kids.

In an effort to curb my son's desire to always get soda when we're out at a restaurant, I came up with a plan that will not only avoid conflict when I tell him "no soda". It is also an idea that will teach him the value of a dollar.

I told him that if he chose to drink water instead of soda, I will pay him the cost of the soda. I'd much rather give him the money instead of the restaurant. He was very interested in this idea. Over the next few months, he willingly chose water over soda...asking me how much it costs for soda each time we were out, and handed out his hand for the money. This makes me happy because he is getting a reward for not drinking "sugar water", and he is healthier for it :)

Over time I'm sure this "trick" will wear off, but my long lasting hopes are that he will naturally choose water over soda. And it is my hope that he realizes that spending money on soda means less money in his pocket when he starts paying for his own meals as an adult :)

I hope you find this a useful tip, as well. Please let me know how it works for you!

Our Financial Life Update

2011-02-28T16:31:00.002-06:00

At the time of my last post, we decided to sell our car and drop down to 1 car. In order to do so, I had to get a loan to bridge the gap between loan and market value. Armed for a quick sale, I tried several selling options:

Appraise it at CarMax
Sell on Cars.com
Sell on eBay
Sell through local advertising
Place a window sticker on the car
Appraise it at several dealerships

It was a bit frustrating, because we didn't receive any inquiries...NOT ONE. I feel I did everything right in trying to sell it. I got it completely detailed, took great pictures, and placed it at a fair market value. One of the options was to see if dealerships would simply buy it. We decided to try the dealership where we bought it. They were very interested in purchasing it, but the excuse was that they didn't have the cash on hand to buy it outright. The offer was the fair market value (much higher than a trade-in value).

Feeling defeated and carrying an extra loan payment, I became worried that our car would not ever sell. We took a look at the option of trading it in for a nice used car. If we were to do that, my only goal was to not take on more debt (and not carry the loan longer than the CX-7). We took a look at the used car lot of the dealer that offered us the most for our car and found a nice match. A 2005 VW Beetle convertible was the choice. And so the deal was made.

To make the story short, we traded in our CX-7 for the Beetle. Including the gap loan on top of the Beetle loan, it was an even debt load. And we decided ahead of time not to extend the Beetle loan beyond the time the CX-7 was to be paid off. So overall, it worked out nicely. And as far as the difference per month, we actually went down $100.

I really wish we could have gotten rid of the CX-7 and dropped down to 1 car. It made the most financial sense. At least there's something to be said for not taking on more debt while trading in a car, right?

Prosper.com Peer-To-Peer Lending Review

2010-10-19T15:51:00.003-05:00

A month ago we decided to sell our car. The long standing problem we faced was the upside down value we had in it. We rolled $12K onto this car in order to get out of the previous vehicle. At the time it was thought to be a good idea, but soon after we purchased it, my wife landed a job that allowed her to work from home. A year after that, I too began working from home. Ultimately that "good idea" car was not such a good idea.
Following Dave Ramsey's plan of getting out of a car that had an upside down value, we chose to sell it and take a loan out for the difference in market value and loan balance. We chose Prosper.com as the method of obtaining a loan.
At first I was sceptical of the whole lending process, but reading the FAQ's and reading experiences of others gave me confidence to proceed. If you take on the interest rate they recommend applying for, it was a very quick to get fully funded. If you are unfamiliar of the process, after applying for a loan, investors (peers) contribute to your goal. After it is fully funded, a bidding war takes place, and the end result interest rate is reduced. Ours was reduced 2%. I recommend waiting the entire 7 days to receive funds, even though it may be fully funded prior to this date.
Overall, the experience was pain free and pretty simple. I would recommend using them if necessary...but of course, the preferred method is to have a cash savings instead of taking on debt :).

I.O.USA - My Review and Commentary

2010-09-14T13:41:00.003-05:00

I watched I.O.USA yesterday, and I have to say that I am only beginning to be awaken to the crisis here in America. If you ever have a chance to watch, I would encourage you to watch it. I would encourage kids to watch it, as well, but they probably won't "get it". If they realize what their world could be like if our present keeps going the way it does, they might be able to stop it.

A politician is a politician. I really don't like either side much, because our "balance of power" hasn't really worked with fiscal responsibility. Granted, we had 2 wars that were not accounted for, but the time has come to start cutting back. President Obama put in place the "Pay as you Go" system, but only after he put through health care reform that will continue to increase our national debt. How fair is that??!! I hope this country is waking up like I am and realizing that we need to play a bigger part in understanding how our government functions. I, like many Americans, have faith in our elected officials. In a Republic we elect who we "think" will do the best job. That doesn't always work, as we are now seeing. Pay attention when elections come up. If you don't want to be involved, at least understand the players. Understand the game.

Weekend Roundup: 9/12/2010

2010-09-12T09:03:00.003-05:00

Free Educational Videos: Learn About Finance and More From Khan Academy

Consumed: Rethinking Business in the Era of Mindful Spending

Coupon Shopping 201 - Learn the terms and policies

Cost of Living or Standard of Living | Which Is To Blame for High Costs?

How I Accidentally Saved Over $8,500 a Year with My Car

How to Buy Organic Food on a Budget

Residual Income Based On "Common" Sense

2010-09-08T11:54:00.004-05:00

I was reading a post over at the Wealth Pilgrim the other day. It was entitled "Residual Income Business Ideas - 3 Tips To Save Time And Money". I too have been looking at ways to make passive income (income generated whether I work or not). Passive income sounds great, right? It's good in 2 ways: I don't have to work hard, and it is additional income that would help fuel the debt elimination train. Besides, income is truly our greatest debt elimination tool.

The Wealth Pilgrim talks about 3 tips when thinking of passive income:
Be Realistic, Look Around, Don't Expect People to be Honest. These sound very reasonable, because nothing in life comes easy, and the world is full of dishonesty. It's a sad day when honesty can be doubted, and a mans word can be counted on by a handshake. Too many bad apples in the world, I say.

So, in summary...look for something you'd enjoy doing, work hard, and be honest. Sounds like a great foundation for making passive income!

How to Eliminate Car Debt

2010-09-07T15:26:00.007-05:00

I don't think I'm alone when I say that I have a car that is upside down in value. My problem, is how do I sell the car in that position? Honestly, there are only a few ways:
- Pay on the loan until the loan is paid in full.
- Pay on the loan until the upside down portion is equal to the value.
- Finance the upside down portion and sell the car.
- Trade in the vehicle and roll the upside down portion into the next car.

I've proposed 3 options, but they are not all great ideas. Let's take a look at them individually - last to first.

Trade in the vehicle and roll the upside down portion into the next car
This option is what gets people in a vicious cycle of upside down vehicles. If you have a car that is upside down (owe more than the value) of $10,000 and you want to reduce that liability, you could go to a dealership, pick out that shiny new car with a $5,000 rebate and walk away with rolling in only $5,000 into the new loan. And the cycle begins. You drive off the lot, and your new car immediately loses some value. The debt to value ratio can take years to even out. In many cases, you'll end up in the same position you started in...wanting to get out of the upside down position. You could, however, trade in your car for a "beater" and lessen the blow. If you were upside down $5,000 and were able to roll 100% onto another car, then you could buy a $5,000 car, roll $5,000 into it, and then pay it off as quickly as you can with the money you save after the transaction. From what I understand, you will be hard pressed to find financing that will allow more than 100% rollover, so this may not be possible for you.

Finance the upside down portion and sell the car
Dave Ramsey is a proponent of this idea. If you can drum up the cash and pay the upside down payment, then you'll be in the position to sell the car to a private owner. Taking out a loan to pay on a loan is not optimal, but it would result in a lesser liability. If your car is valued at $20,000 on KBB.com selling to a private party, and you owe $30,000 on the car, it would be a wise to decision to take out a loan for $10,000 and sell the car for $20,000. This would leave you with a $10,000 liability instead of $30,000. Unfortunately, it's not as easy to sell car when you owe on it. A buyer would be taking a risk paying for something they won't be able to walk away with. The car most likely has to be paid for in full so that the title can be transferred...which could take weeks. Also, if you took out a loan for the upside down portion, the payments on that will begin immediately. If your car doesn't sell right away, you'll have 2 sets of payments to contend with. Not a great option.

Pay on the loan until the upside down portion is equal to the value
If you simply do nothing, there will be a point where the value of the car will level off and your loan amount will equal the value. This break even point varies on car and upside down amount. In my opinion, that point is usually 3 years on a 4 year loan, and 4 years on a 6 year loan.

Pay on the loan until the loan is paid in full
This is obviously the easiest thing to do. This may not be a grand idea, but since you made your bed, you have to lay in it. There may be circumstances that do not allow you to do the other items mentioned above. But doing nothing has it's advantages too. If you pay the loan in full and on time, you will then have a paid for car. It will then be a great one owner car where you know all the vehicle history. You can then hopefully keep it for another 5+ years, right? That's money in your pocket.

How We Used our Tax Return

2010-04-23T14:10:00.002-05:00

2009 was a year that we paid our student loans every month. This along with the $800 tax credit, and claiming Married 0 on our W4 (with 2 kids) gave us a sizable tax return. $3600 to be more accurate. Over there collecting a little dust was a credit card with a $3600 balance, so it just made sense to pay if off. And that's exactly what we did. There was some hesitation before doing it, since there are many other things that could be done with it. Things like landscaping, car repairs, decor, etc. But we did it anyways. And once again, it feels SOOOO good to pay off a card with that kind of balance in one fail swoop. As Dave always says, "it's easy going back into debt!" Clear it off, reclaim the monthly payment, and then figure out how to stay out of debt further.

I know many people would say "change your W4, so you get more each paycheck", and I've asked myself this too. But that money would not be going towards debt each pay period, let me tell you! We do not have that strong of a will, so I will have to settle for this method for now.

I hope you all did the same debt-clearing method with your return!!

Excel Budget Spreadsheet - How to Budget

2010-02-17T22:22:00.006-06:00

I realized yesterday that my 3-part series on how to budget didn't clearly provide a link to my budget template. It was buried at the bottom of the last post in the 3-part series. So please, if you're looking for way to budget and would like a template and instructions to work from, please download my budget, walk through the blog post series, and start plugging away!

Control Your Finances - Budget Step #1

2009-12-23T23:11:00.012-06:00

Budgeting to me is more than a piece of paper that tells me how much money I should have if I follow it. Because we all know that a budget is nearly impossible to follow to a "T". We overspend in one category and underspend in another...make more or less money than expected. When I began budgeting many years ago, I had a budget spreadsheet and separately, I had Quicken. Things have evolved, and today, I designed my budget to be both a record of Estimates and a record of Actuals. Sort of a mix of both budget and Quicken. It is the one key tool among several record keeping tools that I use, that I can look at (at any given moment) and see in one place, the answer to the burning question that I always get asked, "How much money do we have left?".

Through a series of posts, I want to go through what I do during the month for my budgeting. I hope it opens your eyes to new ideas or give affirmation that what you are already doing is sane. What I do helps me keep a grip on how much money we have in the bank at the beginning and will have at the end a pay cycle...even before the pay cycle is over.

My flow of budgeting goes like this:
Budget Setup (Estimates)
Bank -> Quicken
Quicken -> Budget Update (Actuals)

First and foremost, you need to have a budget setup. One that is made up of realistic spending behaviors. Without it you will be in a constant struggle to keep up. Believe me, I know :)
In the next post, I will demonstrate how I setup a "master template" budget and how I use it as the starting block for each and every month.

Control Your Finances - Budget Step #3

2009-12-23T23:08:00.022-06:00

In this post, I want to demonstrate how to combine your actual pay period data in with your budget data. In my world this action allows me to see how much I had when I got paid, how much money I have today, and how much money I can expect to have at the end of the pay period based on the current spending trend.

In the previous post, I showed how to setup a budget (Texas T style). Now that you have a "master template" budget month setup in a spreadsheet, copy it to a new sheet, so that you have your template on one tab and a new month on another tab.

Now for a little tricky part. In order to get your actual data (provided by Quicken, Money, etc) to interact with your budget data, you will need to insert some columns next to the current pay period. The way I built my spreadsheet was based on a Quicken report of category expenses. So for me, I needed 3 columns. It may be different for Money or other financial software. Here is how it should look and how the formulas work:

The next part will be geared for Quicken users, but the concept should be the same for other applications. In Quicken I generally reconcile with the bank once every few days. During the "bad days", it was daily. Now that the pay period is underway, I will have entries in Quicken for any purchases I've made with my debit card and any automatic payments made from my banks billpay service. From this, I setup a basic Income vs Expense report in Quicken for the pay period I am in:

Armed with my "actual" spending data, I click on the "copy report to clipboard" option in the top menu of the report. I switch over to my spreadsheet, and I paste (menu -> edit -> paste) the report under my "actual" column:

Now that you have your actual spending data in with your budget data, you can now begin the process of merging the two. This involves copying your categories and amounts from the Quicken report data and placing it up into the budget section:

Have you wondered what column K and column L are for in the picture above? Well, column K is the amount you have spent in that category as of today. Column L is the amount you have left to spend for that category. As you paste in your Quicken data, you will notice the "At EOP" (or end of pay period) amount goes down. That's because you've spent money in that category.

Also note that if you over spend in a category, the "At EOP" amount goes negative. You can't have a negative amount left to spend, so delete these amounts in column L. It will mess up your end numbers if you don't and make you think you have more money than you actually do!

What you are left with are 3 columns of data: Your budget data, Your "Right Now How Much Is In My Bank Account" data, and your "How Much Will Be In My Bank On The Last Day Of My Pay Period" data. It is very useful for me, because it shows me in one spot where I wanted to be, where I am, and where I will be if spending doesn't line up with my budget before the pay period comes to a close. I can do this exercise 7 days into the pay period and say "wow, I overspent my entertainment category money. I better cut back on grocery money before I go get them!"

I am placing the spreadsheet used in this example out for all to download download my budget. Feel free to use it and change it. Please give any constructive criticism :)

Control Your Finances - Budget Step #2

2009-12-23T22:22:00.012-06:00

In this post, I will demonstrate how I setup a "master template" budget and how I use it as the starting block for each and every month.

The first thing I do when creating a budget is to start a spreadsheet similar to the below image. The way I like seeing my finances is in 2 ways: a month at a glance (in red), and a split view of what expenses need to occur in each pay period. In our case, we get paid bimonthly. The 2 views totals should always match, as it is simply 2 different ways at looking at the same data. Don't ask me why I chose mint chocolate chip colors...I think it was simply the most pleasing color on the screen :).

A few things that you will notice about my spreadsheet is that I have a section with income (with subtotal), a section for expenses (and subtotals), followed by a net of the 2 at the bottom. My expenses also are listed a certain way: I separate my fixed expenses from my variable expenses (placing fixed first), and then list them all from highest to lowest cost or order of importance. This is purely my preference, as it just became more pleasing to my eyes to see a descending order of dollar amounts.

With this budget template saved, you now have a "master template". The idea behind this, is to provide you with a starting point month after month. Without question, you know the "essentials" that need to be taken care of and when they will be taken care of. If there are any extra items (or one-offs), those belong in the month they occur in...not the "master template".

I generally create 2 months in advance from my template budget. More than this and things could get a little confusing. I say this because when you create this "master template" and begin creating months inheriting from the master template, you will begin to realize things change (i.e. new expense categories), and then you'll have to update the "master template" and all the months that inherit from it. It's much easier to stick with 1 or 2 months ahead of the game. Here is how the tabs in my spreadsheet look:

In the next post, I will go into details about how to combine data from your financial software with your budget.

Riding the Pay Period Wave...Managing Finances with a Budget

2009-12-23T22:09:00.005-06:00

I've been doing budgets for many years now, and I can say very confidently that I'm still far from having "the best" budget process. But what started with pen and paper has now become a very efficient way of viewing my data. Now I know everyone has their own style and method, but I'd like to share with you how I do my budgets (from beginning to end), in hopes that I can contribute to your success. If you see a flaw in how I do it, please let me know, so that I can better my process.
So over the next few weeks, I will create a series of posts outlining how I run the home finances.

Thanks for reading, and stay tuned!

Second Income - The Spice of Life!

2009-11-16T22:49:00.003-06:00

Not me...my wife. My wife recently started with a second source of income. She found a hobby that she really enjoys and actually wants it to be a business. Up front I told her to do as a hobby first, and a business second, so that she won't become pressured to sell.

It's been about 6 months now, and it's very fun to get the business up and running. Starting a business is relatively easy and cheap nowadays with the internet. She's got a website and I've been helping out with SEO and "getting the word out" (dropping word of mouth advertising on various forums). We put Google Analytics in her site, as well, which is a great way to see who visits your site, how often, and who left and came back.
So far it's been a great thing to see the business grow. I found a great article that put it all in perspective: My Wife Quit Her Job. Very cool to see how one couple broke the $100k mark in 1 year.

More to come, but all I wanted to say was that finding a second source of income is a great way to reduce debt, since income is your greatest wealth building tool. I too have my dreams of making money through a second income. I'm just glad that my wife found her niche. Nothing like a little motivator like that!

Alternative to Cable

2009-09-05T20:15:00.002-05:00

A new season of House is coming upon us, and we are big fans. Last season, my wife was happy to buy each episode a day or two after it aired. But with this season being pumped bigger than the last, she has been twisting my arm (with her pinkies) to get cable back, and I "let her" get her way. No, I'm not a HUGE fan either, can't you tell?!

I'd be lying if I said I was completely ok with getting cable back. As much as I use to enjoy cable, I've enjoyed seeing our money stay with us more. My thought has been either get cable or have no cable. So, as I was doing my due diligence with the various providers looking for the best deal, the idea of an antenna came to mind. I've heard about them before but never fully investigated it. I always thought the old rabbit ears were a piece of crap. But I also knew technology has come a long way. I spent the better part of the other day acting on the curiousity I had. I went out and bought 3 HD antennas and finally found one that worked very well. Compared to paying for cable, this is the best thing since sliced bread!

There are a few things that you should do in preparation to buying an antenna that will save you the time I lost:

Use antennaweb.org to find out how far the nearest signal towers are from you, as well as, the direction an antenna should point. These two items will tell you if you need an outdoor antenna and/or a multidirectional antenna.
Research a few stores like Radio Shack or Walmart online to see if they offer an antenna like the one you need. Call them next to see if they have it in stock. I was surprised that both of these stores didn't have the one on their website.
Follow the antenna directions and have fun playing around with it.

Chances are, if you live more than 20 miles from the nearest tower, you'll be spending more time finding the right angle to get the most stations. Hopefully you'll get some good results. Mine were pretty good. We live 45 miles from the towers, but luckily they are all within 4 degrees of each other. We get at least 20 stations, including all the local channels that broadcast in HD. Pretty cool, I must say. Going from 6 months of no cable to having digital channels is a great alternative to cable. Needless to say, paying a one time cost of $50 for an HD antenna instead of a monthly reoccuring cost for cable makes me feel like a true wise man! And my wife is happy that she gets to watch House in HD (which fulfills the goal in the first place).

I would highly recommend giving it a try. You've got nothing to lose except the time invested in seeing if it works. I'm on the hunt for a DVR now, so that we can get most all of the benefits of "paid for" broadcasting.

What we do without Cable?

2009-08-16T17:35:00.002-05:00

It's hard to believe it's been 6 months now living without cable in our life. It's been hard at times because we have a TV series we absolutely love: "House". But with change comes a change in thinking. My wife can wait a day or two after a new episode and download it for $2 on iTunes. Still much cheaper than having cable. My son continues to watch his morning cartoons, but now, it's internet TV. I like ToonJet, because it's continual commercial free vintage cartoons, like Tom and Jerry, Looney Tunes, and Woody the Woodpecker. Netflix, Hulu and Cartoon Network.com are a few others that he likes. One cool thing that we've done is hook the laptop up to the TV. Our flat screen has a PC input, so we can hook it up with a monitor cable. Many programs are already in high resolution, so most of the time, it's like watching regular TV.

I wouldn't say it's been the easiest thing in the world to stop cable "cold turkey". I'd be lying if I said I didn't wish for moments where I could just wind down in the evening with a little channel surfing. With only a computer dishing out entertainment, there is a little sharing that has to be worked out sometimes.

Overall, I would highly recommend trying it. You can always get cable back (and probably at a discount for new customers).

A Quality Gift with an Inexpensive Pricetag

2009-08-05T11:54:00.003-05:00

I found a nice, fairly inexpensive gift that I thought virtually anyone could send or receive. I thought I'd share it for my readers:

http://simonandlucy.etsy.com

When I saw this, I thought it was a cool idea...build a necklace, bracelet, anklet, or even a key ring that "tells a story". Back when things were really tight, I use to make birthday cards with colored paper and crayons. My wife (then girlfriend) loved it more than a store bought card, since it "came from the heart". This idea is similar to that, in that you can tell the designer your story, and he/she can make polished pieces of metal with those memories stamped into them. It's very personal...and the cool part is that my wife relishes those times when people ask "what do those mean?". It opens up a whole new conversation and gives her a chance to tell her stories about her college soccer number, anniversary, and kids birthdays. The price seems about average for quality necklaces. The one I bought had pieces of brass, sterling silver, and copper. The personal touch is priceless, though, in my opinion.

Important Financial Considerations for Graduates

2009-07-21T21:48:00.006-05:00

This is really geared towards anyone, but since college grads are abundent right now, I thought I'd gift this knowledge to them. As you embark on a lifetime of post graduate work, it is very probable that you will change jobs and/or careers several times. As you go through these changes, there are 2 things I found to be valuable knowledge:

Consider the Cost of Health Insurance
As an individual or as a family, the cost of health insurance can change dramatically when changing jobs. Premiums for larger companies are generally lower than smaller companies, as you are part of a larger group of people causing a "volume discount" for the company. With smaller companies, the risk of someone having a major health issue (if not already) causes premiums to be higher. I have made it a point to ask a potential employer what their premiums are, so that I know how much it'll affect my net pay. By this, I mean if I go out looking for a higher pay job that increases my salary by $5,000/year (or ~$312/month net), it could be a very real possibility that my health premiums could be $300/month higher because it was a smaller company (or a large company with bad health insurance!). If you don't ask the questions during the interview process, you'd be in another disappointing pay job after you got settle in and discovered this information when they handed out the HR paperwork during the new hire orientation, right?

Be Aware of the Pay Cycle
It took me several times to catch this one. When you're on a shoestring budget, knowing how much your take home pay will be matters a lot. Assume you change jobs and the pay unchanges. If you previously got paid twice a month (bimonthly) and switched to a job that pays every two weeks (biweekly), you're net pay each pay period will actually be less. Did you know that? Here's the math:

BiMonthly: 2x/month * 12 months = 24 pay periods
BiWeekly: 52 weeks per year / 2 = 26 pay periods

As you can see, there are 2 extra pay periods when get paid biweekly. That means your employer takes your salary and divides it by the number pay periods to get the amount per pay period. The disadvantage of this is that if you are on a tight budget, you'll need to be prepared to be paid less. The advantage is that since you already budget on a monthly basis, you expect there to be 2 paychecks per month. This creates 2 times per year where you'll have an extra check. Think about it and plan wisely what to do with those checks.

I hope you learned something today!

Extra-Ordinary Expenses - What a spending killer!

2009-06-28T16:15:00.003-05:00

Back in 2008, I was tired of non-recurring items creeping into our life, so for 2009, I decided to setup a savings account for these expenses. Items like these included HOA dues, anniversary, birthdays, holiday groceries, holiday gifts, family trips, family visits, oil changes, spring landscaping, etc.

What I did was take a look at 2008 and setup a list of everything I knew that happens out of the ordinary. This list added up to ~$5,000 a year (or $416/month). It was easy to apply this to the budget each month, since we had the extra money, but what I'm finding is that even though it is nice to have the money there when we need it, it really cuts into our spending! :)

It's tough living on a streamline budget knowing there is over $400/month going into savings. Savings has never been our forte. And when the end of the pay period comes and it's tight, it's easy to see that money sitting in savings as a "over spending savings account".

It's worked out nicely, and we've stuck to keeping the money for those expenses. Have you ever gone back to see how much those expenses add up for you? You spend the money regardless, so you might as well somehow budget for them, you know?

Whose Tired of Car Commercials?

2009-05-08T22:13:00.002-05:00

Since my money mindset change, car commercials are just so much more annoying nowadays. I have to laugh at their tactics:
"Come on in because this deal won't last!" or
"We'll pay off your trade, no matter how much you owe" or
"We're helping you in this credit crisis because we've just been approved to lend millions of dollars"
My long time favorite is how they throw out a payment like "$199/month!". I'm sure many people fall for it, but it just kills me knowing that there's no way they can guarantee it without looking at your credit worthiness. It's just a made up number based on someone with perfect credit with a car with no air conditioning, fm radio, and seat belts (hee,hee). What a ploy...

I understand the "make a buck" philosophy, because I too like to "make a buck", and I believe in a good capitalistic society. If I'm a stockholder of a car company, I want them to make a buck as much and as often as they can. And because of the shape the economy is in, I also understand that car dealerships need to put the full court press to keep those dollars coming in. I personally just find it annoying to hear the advertisements on my radio...anyone else too?

Living through a series of stupid car mistakes in my many years on this earth, I'd like to take a moment to offer up some suggestions and/or advice to those who read this and find themselves in the market to buy a car:
1) Buying a quality used vehicle is always better than buying new.
2) Line up the credit ahead of time. Don't waste hours sitting in the dealership. If the kinks are worked out ahead of time, you'll have a ton more buying power at the dealership. Even if there is an incentive to use their financing company, it just doesn't feel good being put in a vulnerable spot when spoken to by a person who's sole job is to tilt the tables in their favor. Walk in with the confidence of knowing you're ready to deal or walk away!
3) Don't look at the payment. Look at the loan and interest. If you can't afford to pay the car off in 4 years, don't get it. Over the years, car prices have gone up. Do you think their costs have gone up by the same amount? I would bet costs have gone down and profits have gotten higher. Higher car prices = higher payments. So, to keep Americans enticed into the debt trap, the terms have quietly gotten longer and longer. Who wants to make payments on a car for 6 years! I wonder what the percentage is of people who actually finish out a 6 year loan!
4) Once the deal is settled, walk away and "do the math": Take the payment and multiply it by the number of payments. Subtract the original loan amount from this number, and what you're left with is how much interest you'll be paying. If it's a "way out there" amount in your books, and if you can convince yourself that you'd rather pay a bank this amount instead of to yourself, get the car...it deserves you :)
5) Make yourself immune to the tactics of car dealerships. Assume their advertisment talks are statements of opinion (not fact), and remember it's just advertising...a way for a company to reach potential customers and take money out of their pockets :).

I speak from experience when I wrote those, can you tell? I've learned my lesson, and I'm done making someone else richer. Don't let your car be your #1 or #2 largest expense, like we have let ourselves for many, many, many, many (you get the idea) years.

Playing with a Cool Cost Cutting Tool

2009-05-08T21:47:00.003-05:00

I like gadgets. Especially ones that help me lower my costs. A few years back, I stumbled upon the concept of "Phantom Load". Anyone ever heard of it? Well, did you know that any appliance in your house that has a remote, consumes electricity even when turned off? It's really in "standby" mode, because it has to be constantly ready to receive the "on" command from the remote. Being contanstly ready = electricity.

Just recently, I found this electricity meter called Kill-A-Watt for around $20 on Amazon. It's like having the electric meter on the side of your house, in the palm of your hand. It measures how much electricity a certain appliance is consuming. It keeps a running total over time, so I can determine how much money it's costing me over time. Considering how many appliances that use electricity even when they are not in use, it's been pretty neat to see how much money we've been throwing out the window. Even if I don't waste a significant amount of money, it's still very informational.

The biggest "phantom load" items that consume electricity is the home office. Not a whole heck of a lot to do about that, except turn the power strip off at night to eliminate any lingering phantom loads. The next big item is the entertainment center (hdtv, dvd, dvr, wii, computer speakers). Since we cut cable, we don't nearly use the entertainment center as much. So shutting off the power strip happens more often for longer periods of time.

Like I said, I don't think we'll be saving a ton of money by eliminating those items that consume electricity. But every little bit helps. If you think about it, a $150/month bill is only $5/day. If you can cut that down to $3/day, you'll save $60/month! Something that costs $.50/day to run costs $15/month! Plus, it just plain feels good to be in a little bit more control.

Random Thoughts on "Happiness"

2009-04-12T23:10:00.002-05:00

Today I was going through a bit of a self dwelling period. There was something wrong, but I couldn't place what exactly was the problem. It all related to how I can be happy and what "happiness" is to me. Better yet, what do I need to do to acheive "happiness". The things that were weighing on my mind in recent days are the following:

Currently, we have no retirement savings...and I'm 35.
Family vacations are few and far between.
I dispise the feeling that I put my job ahead of my family some times.
Worrying about being a 50+ year old Web Developer. I don't know too many!
Feeling that there is never going to be a time that I'll be sufficiently skilled in Web Development. Technology changes all the time, and I can't see the time I'll be an expert in the field.

I never found the answer to my thoughts, but I had to wonder if people can truly find happiness in their lives. What defines happiness to you? Did happiness start with a passion? What actions/sacrafices did you have to take to acheive it? Was it some life changing experience that opened your eyes? What does it feel like?

I am not saying that I am unhappy or incapable of being happy. I enjoy my life as it is now. I have a great family and a loving wife. My job is going well, and I love what I do. I just wish I could take those simple enjoyments and be content with them. I'm always afraid something is going to come along just when things are finally going our way and "F" it all up. I know it stems from years of financial blunders and career mistakes. But now I want nothing more than to have an inner peace that will let me relax and take life as it comes and not worry about money or career. I once heard that if you find something you love doing, you'll never work a day in your life. I can only wish I had that passion.

We Cut the Cable

2009-04-12T13:57:00.002-05:00

We've talked about it for months, but finally we took action. We've always had a modest cable package with DVR through Time Warner Cable, but the bill was usually within the range of $80-$90/month. Considering my son loves the Wii and Netflix, we didn't watch but probably 2 hours of tv a day. It just never seemed worth the money but was an item we felt was always necessary. If we could get a cheap package that included only House and Spongebob, we'd be set :).
So last week, we had the cable guy come and cut our cable access and remove the DVR. It was a lot less painful than I thought it would be, considering my son used tv as a "wakeup tool" each morning. I instead woke him up a little later, got him dressed right away, had my morning coffee with him while he ate breakfast, and then took him to school. Not having tv created extra bonding time, which can't be beat.
Cutting cable was also a move that we wanted to do to make us feel that we were trying to spend our hard earned money more wisely. If we can cut back on those things that are "luxury items", we might not complain so much about not having more discretionary income.
The one thing to always keep in mind is that cutting back doesn't mean doing without. As Dave Ramsey always said, "It's always easy to go back into debt. And what you're doing now obviously isn't working. Why not try it different for awhile.". Cable tv isn't a debt item, but it doesn't hurt to try doing without it for awhile. If we miss it, I'm sure Time Warner Cable will be happy to take our money again :)

Refinance Complete

2009-04-06T00:09:00.003-05:00

We refinanced our house last week, and I must say, we are VERY pleased with the outcome. The overall outcome will be a reduction of loan term from a 30 year fixed rate conventional mortgage to a 15 year fixed rate FHA mortgage with only a $90/month increase! We locked in a rate of 5%...down from the 6.65% we started with a year ago.

We credit much of the easy to our mortgage broker (and accompaning title company). In a world where customer service doesn't account for much (but is the determining factor in many decisions), these folks did the job right:
Jennifer Smith: First National Bank, Denton, Tx (link)
Fon Laughlin: Laughlin Law & Title, Crossroads, Tx (link)

If anyone else is looking to refinance here in North Texas, I'd recommend these people. We are not AAA rated people, so don't think that it was so smooth to avoid any hickups :)

What Could Budget Software Offer You?

2009-04-05T23:50:00.007-05:00

In the past 11 years, I have crafted probably thousands of budgets, trying to cut down on the time it took to reconcile my budget against the bank, while keeping tabs on where our money was going. When times were tight, it was highly important to make sure I did this reconcilation daily, so we didn't overspend during the pay period. If I had forgotten to jot down that $5 meal, it could've turned into a $35 meal after going negative in the bank. I can't tell you how many times I had to call the bank begging them to reverse overdrafts. To say it bluntly, I was HORRIBLE at managing money. We are in a much better position in life now, but I know I still have quite a bit to learn.

When it comes to tools to manage finances, I haven't found a way to beat the ol' spreadsheet method. There's Mint.com and QuickenOnline.com, but there always seems to be something about them that just doesn't make me jump for joy because my life will now be easier. For me I need a software that can do these key things:
- Let's me setup a budget view for a month but break its down by pay period.
- Let's me categorize bank transactions
- Let's me enter other transactions (future planned amounts, debit card transactions that haven't hit the bank yet, or check payments)
- Does a category by category comparison report to show over/unders
- Shows how much money will be left at the end of the pay period based on budget minus actual

Only with these key items accounted for, can I come up with an amount of money I expect will be in my account at the end of a pay period. As far as I know, Mint.com or Quicken.com doesn't do this the way I need them to. I can achieve that now, but it takes a combination of exporting report data from Quicken into my budget spreadsheet and running some comparisons.

What process do you use to keep yourself on track daily, weekly, or bi-weekly? Being a Web Developer, I dream of the day that I can build a software tool that helps me automate the mundane things I do.

Baby at Home vs Baby at Daycare

2009-03-07T16:24:00.002-06:00

My wife and I both work from home, and we new having an infant at home could have its trials at times. Up until recently, after 6 months, our baby has been great in fitting into the work schedule. Between the two of us, we've been able to give her the attention she needs and still focus. But obviously, as she gets older, she'll need more than we can provide.
Knowing February was going to be tough, work wise, I came up with the idea of enlisting the help of a babysitter (part time) to help through the tough days ahead. Instead of taking our baby to a daycare, we now have a college student (found through Care.com) that comes in 3 times a week for 4 hours at a time. Overall, we pay her $400/month. It may sound like a lot, but it beats spending $1000/month on daycare. She gets something out of it, and we still get to keep our baby at home. It's a win-win.
It's nice to continue to budget for $1000/month for daycare but only use $400!

Refi Commences

2009-03-07T16:15:00.003-06:00

About 2 months ago we called up the mortgage broker we used to get us into our current home, to see if refinancing would be beneficial to us. We've only been in our home for a year now. She came back and said rates were around 5%, and would could save approximately $400/month with the rate change from our current 6.25%. This was fantastic news. My next question was how much would our payment change if we went from a 30 to a 15 year loan. Her response was that our monthly payment would go up approximately $200/month. This was even more fantastic news, since in my mind, it would follow Dave Ramsey's phylosophy of not taking out more than a 15 year loan and not exceed 25% of your net monthly income.
So, we just paid for an appraisor to come out and see where we fall within the FHA guidelines. We have to have 3% equity, and the only way we could do that (being that we've only been in our house for a year), would to have a good appraisal value. Based on initial research by the mortgage broker, she didn't think we'd have a problem meeting that. The kink in the rope will be how to come up with the closing costs. It'll be ~$3,000. If the house meets the 3% equity, the $3,000 will have to come out of pocket. Anything over the 3% means we can roll the closing costs into the loan. To be honest, rolling the closing costs into the loan is the only way we can make this happen.
That was yesterday, and I hope to hear back soon with good news. I'll keep y'all posted!

Peer-to-Peer Lending. Anyone ever done it?

2009-02-05T15:31:00.003-06:00

I've thought recently about the whole peer-to-peer thing and whether or not it would actually be a viable option for us in dealing with an unwanted vehicle. A few places are Prosper and LendingClub. So I wanted to pose the questions to my readers. Have you or anyone you know ever used these lending places? I have to wonder if their qualifications are any more or less strict. Not that it matters...just more of a curiousity than anything else. I'd love to hear real experiences.

Just a test

2009-01-07T13:36:00.001-06:00

Don't bother with this. I'm running a FeedBurner test.

Sorry for the inconvenience

The Simple Things in Life...Cheese Whiz

2009-01-06T20:30:00.003-06:00

Last night, I got my box of Triscuits and bottle of Cheese Whiz and sat down to watch a little TVwith my son. As I was squirting the cheese on the Triscuit to eat, my son began looking at with me funny. Actually, he was looking at me with amazement. I quickly realized that I didn't show much movement out of my finger when pushing on the nozzle and it must be weird for him to see cheese "magically" come out of this bottle without doing anything (as it appeared to him anyway).

He asked me "How does it do that?!", and I responded, "I have a magic finger that makes it come out". I showed him how my other fingers didn't do anything (not putting pressure on the nozzle), but when I used this one finger, the cheese comes out. He was ROLLING with laughter because he couldn't figure it out. He even tried placing his finger on the nozzle and nothing happened.

Eventually, after about 10 minutes, I showed him how it worked. It was probably the best 10 minutes I've had in a LONG time. It goes to show you that the simple things in life are usually the best things.

Happy New Year!

2009-01-01T12:43:00.000-06:00

I hope you have a prosperous one!

Looking Ahead At 2009

2008-12-30T19:38:00.002-06:00

I've been doing the normal end of year stuff like setup a whole new 2009 budget spreadsheet (which I like the feeling of starting with a clean slate worksheet), and also tally up the progress and setbacks of the current year. 2008 was a year of both progress and setbacks.

First off, 2007 was the first year of having a debt elimination plan. We paid off roughly $6800 that year. In 2007 we paid off roughly $9200 worth of debt. In 2008, we had one major event that increased our debt...our baby girl was born. We also recently binged and bought a long overdue mattress and a new sofa. Overall, the net result of 2008 was an increase in debt by $14,000.

2009 planning is already in the works. In a nutshell, $14,000 worth of medical and credit card debt over 12 months is roughly $1200/month. $900 is already going out in monthly payments, so I'm in the process of figuring out where the other $300 can come from.

One nice feature of the 2009 budget is that for the first time ever, I can actually include a line item for unordinary expenses. This is an average amount per month to cover those incidentals that will come about throughout the year (HOA dues, vehicle emissions, scheduled oil changes, vet vaccinations, anniversaries, birthdays, Christmas, school photos, holiday grocery bill increases, etc). These are items that I've pinpointed as always occuring events that I live in denial about, and invariably come out of the "catch all" Entertainment category. Funny thing is, is that we always spend the funds in the Entertainment category, and then things always get tight. For us, this category accounts for almost $5800/year in things I never account for. That's $485 per month!!

Outside of getting 2009 setup in Excel and seeing the projections, I'm finding that I have to take a step back from being obsessive about it. I can easily spend an hour or two pinching pennies on paper while playing with the numbers (a result of living paycheck to paycheck for years). All will be fine. All will be fine. Breaaaatthheee. :)

Coping with an Unwanted Vehicle

2008-12-20T09:23:00.003-06:00

"Trapped" is about the only word I can describe the feeling of our vehicle right now. It's a 2007 Mazda CX-7 that was once boughten because my wife had such a long commute for work. But now, it just sits in the garage except for the few miles a day we drive it. We tried the Dave Ramsey advice of getting a personal loan for the overage and selling it, but a few dings on the credit report nixxed that idea. We tried refinancing it to get a post 10 year-bankruptcy-off-the-credit-report rate, but the refinancing amount doesn't cover the overage.

We're pretty much stuck with this thing until 1 of 2 things happen: We pay down the overage and sell it, or keep it for the next 4 years. The current value is $18,000 and we owe $30,000 on it. The overage is $12,000 (partially made up of the previous car and the ever decreasing value of the car). My guess is that this $12,000 overage will stick around for the next 2 years (as the principal payments increase and the value decrease stabalizes, this overage will decrease).

I know it sounds easy just to say "pay it down fast", and I'm not going to disagree with you. It definitely is an option. Whether we do it or not is just a matter of will power. Until that time, we'll be paying $750/month in Stupid Tax!

My 2008

2008-12-20T08:49:00.005-06:00

It's been a big year for events: We moved into our new home in March, I landed a job with my wife's company in July, and we welcomed our second baby into the world in August. It's hard to believe so much has changed...the most likely reason these events were seamless transitions is because they are all positive things.

With these changes, our cash flow has changed. Our new house adds about $1,000/month more expense to our budget. It was a much needed move with another little one on the way. It worked out nicely too with the job change that allows both my wife and I to work from home.

Speaking of which, the job increased our income by about $500/month net (between insurance increases and such too). The income alone was an increase of $12,000/year gross.

The new baby added some costs too (and for about the next 18 years too! :) ). Between my wife and baby, there was a total of $3,000 worth deductible to meet. Plus, our emergency fund that was suppose to carry us through the maternity leave, didn't carry us through. So, the overall affect was $3,000 in medical bills that correspond to $588/month for 6 months and a $3,000 maternity leave overage that we had to address.

We added a credit card to our life to address the loss of income during the maternity leave. I know, I know...my "no more credit" line in the sand was dotted, but the deal with my wife was that if we paid off all the credit cards and we fell short of making the full maternity leave work, we'd get some debt. It was a price I was willing to pay, because it's true what Dave Ramsey says about debt, "Try something different (getting out of debt). If it doesn't work, you can always get back into debt". In essence, we traded $9,000 worth of credit card debt for a $3,000 credit card. I can rationalize that a little :).

I'm having a bit of a problem nailing down a budget that I'm satisfied with. I go back and forth with fulfilling the purchases we'd like to do (new mattress, start painting some walls, landscaping, etc) and debt reduction. To tell you the truth, the non-debt reduction costs are winning.

Our Auto Refinance Experience

2008-12-10T22:01:00.002-06:00

In my previous post, I talked about our 10 year bankruptcy anniversary happening recently. Well, finding ways to reduce debt (or at least interest payments) has been on my mind for awhile.

Almost 2 years ago, my wife and I took out a loan for a Mazda CX-7 because my wife was commuting 1.5 hours each way to work, in a 9 year old Volvo that was "showing it's age" a bit. We got a good deal (we thought at the time) on it but had to roll in roughly $13,000 from a previous car loan. My thinking was that #1: she got a dependable car, and 2#: we were replacing $900/month for 2 car payments with $750/month for 1 car payment (after we finished paying off the Volvo a month later).

Today, we both work from home, and all the CX-7 has turned out to be is a pain in the butt-waste of good money, car that sits in the garage (except for the 2 miles a day we put on it taking our son to/from school).

With the bankruptcy looming over us for 10 years, it's always been impossible to do the Dave Ramsey suggestion of taking a loan out for the over value, sell the car, and be left with a much smaller loan at a smaller interest rate. But now...the impossible became possible (with a clean credit slate).

Because the value of the car has decreased, we're still upside down around $12,000. I applied for an auto refinancing loan with our local credit union (as Dave suggests). We were not approved for a personal credit line of $12,000, but we were instantly approved online (which has NEVER happened) for a refinancing loan. The problem with that, is that the loan was for the value...not including the overage. We'd still have to come up with $12,000 before refinancing could happen.

So, we're stuck with the car...for now. I wish I had that truck payment of $560/month back instead of rolling the loan into this car and have this $750/month CX-7 payment today.

10 Year (Bankruptcy) Anniversary

2008-12-10T21:37:00.003-06:00

Wow. I NEVER thought this day would come. Our bankruptcy has FINALLY been cleared off of our credit reports. It's been a long road...one that I would never suggest is easy or worth doing. I take that back...I guess in some instances, it just makes sense. But to take the easy road out of debt is a cop-out. I now realize that.

10 years ago, my wife and I had a salary of roughly $61,000/year. We were over spending, didn't have a budget, and barely making to the next payday. "The debt finally caught up to us", we thought. Our credit card debt and a few other bills were roughly $15,000. So, with the yellow pages in hand, we found a cheap bankruptcy attorney, and signed the deal. What was more ignorant about the situation, is that we reaffirmed our ~$20,000 worth of cars and the $3,000 diamond stone in my wifes wedding ring. It wasn't the original stone either!

I remember the day at the bankruptcy court well. We were sweating bullets to get through the process, and we walked out of the courthouse with a weight lifted off our shoulders. Almost 10 years later, we finally paid off that $3,000 diamond stone, just finished paying off $9,000 worth of credit card debt that we racked up again, and have gone through several car loans (3 to be exact). Was the bankruptcy worth it after all? HELL NO. It was a temporary fix.

But...on a much brighter note, it was an awesome day to get our free annual credit reports and see that there was no trace of bankruptcy. I thought I'd have to make a few calls, but sure enough, the law was right on the money and they were gone! This time, I feel that same weight lifted off my shoulders. This time, however, we both have the right mindset. No more big outrageous debt (like cars and credit cards). There is no reason for it.

A Blogger That Made Me Think Deja Vu

2008-10-15T10:16:00.002-05:00

I read this article over at My Debt Blog this morning, and I couldn't help but remember the time my wife and I were in the same boat. Stress over money, always staring at the budget, living the highs and lows when thinking of the future, not feeling in control of our money, and flat out feeling like I failed at managing money. In many ways, I still live some of these issues. I am impatient by nature, so little advances never seem quite "good enough". And it's very hard to understand why we can't do more when we bring home over $90K after taxes.

This is usually the point that I hear my inner voice chime in with a reality check. The voice is never my own...it's usually my wife's (hee,hee). I need to remember what strides we've made over the past few years and where we're at mentally. I use to think "if only we make more". Well, we do now, and that's apparent in the bigger house we live in, and I don't mull over the budget as much as I use to. I also use to think "if only we didn't have credit card debt". Well, we don't anymore, and I'm grateful for having more money in my pocket.

We are now down to 2 more debts. Two HUUUUGE debts (see chart below), but just saying that we "only" have 2 more debts sounds pretty cool. And I owe it all to making planned attacks with the right state of mind. In the big scheme of things, I think that just having the right state of mind is all it takes to get where you want to go. It may take many long years, but it'll all work itself out.

Did you grasp what I just said about having the right state of mind? Think about it...If you're in a car loan, and your mind shift tells you it's a bad idea, you have 2 choices: 1) get rid of the car, and/or 2) don't pay on another car loan again. Either way, you'll be way ahead of the curve when the loan is gone. If you're in credit card debt, and your mind shift tells you that debt is bad, you have 2 choices: 1) get rid of them, and/or 2) don't use them again and pay them down when you can. Either way, you'll be way ahead of the curve when the debt is gone.

Just knowing that debt is bad and vowing to not get into more debt, you're way ahead of the curve. And when the debt goes down, you'll naturally have more money staying in your pocket.

Ch, Ch, Ch, Changes...

2008-09-16T10:19:00.001-05:00

My daughter is 5 weeks old now, and Mommy and baby are doing great. I never thought I'd say this, but it's nice to have a little one around again. For the longest time, I thought one would be enough. It's logical thinking if you put in terms of cost. But here I am with 2 great kids and a loving wife...working at home each day as Fall approaches. It's a very sweet thing.

So, my wife and I have been on a plan lately. A plan that is always subject to change. It's funny, because I've learned to always put that disclaimer in there when I talk about "our plans". It's rare that we follow through on the original plan. It can be good or bad sometimes. This time, it's my thoughts that have changed, and we're going through some initial talks to see if it's worth it.

The plan has been to start the focus on retirement. Through our employers 401K matching plan, we could start socking away ~$15,000 a year torwards retirement starting in January. I wanted to do this, because I'm 35 years old with no retirement to speak of. But after playing with the budget and the total money makeover spreadsheets, I put together some scenarios of paying off debt. Obviously, the most effective plan excludes retirement for another year. My initial thought was "What's just one more year without retirement when we can accomplish X without it?" Coupled with the idea of getting rid of the 1.5 year old car that sits in the driveway would only make it that much more dramatic.

I have taken a breather from the dramatic affects of clearing off debt to remember why I wanted to focus on retirement instead. I was compelled to focus on retirement for a reason, you know?

The problem I see with myself is that I never can see beyond the paper in front of me. I can't see the affects of each scenario 5, 10, 15 years down the road. I see the math change, but I don't see how life could change. I'm trying now, though, and maybe that'll help me decide the best course of action based on reality...not by how "cool" it would be to dump this debt.

Our Latest Debt Sequence Plan

2008-08-08T22:32:00.002-05:00

My wife and I continue to be on the same page with finances. We both work at home, and we have a $910/month car expense sitting in the garage (payment + insurance + gas) that we would love to simply walk away from. Since walking away is not an option with $10k upside-down on it, we have 2 options...take the next year or so and pay down the rollover and get rid of it, or keep it. We choose the 1st option.

Above that priority, we both still feel that we need to start the retirement savings. I noted before that I am 34 and she is 33 with no savings worth mentioning. We have the ability to contribute ~13% in 401k and still walk away with ~$600/month in emergency fund and debt reduction money. I also look at the overage as a "catch all" for those items that we normally don't budget for (birthdays/holidays/car registrations/house expenses).

I feel good. Better than I ever have about our future. Doing things the smart way instead always "doing what feels good" makes life run so much smoother. And having a smooth life makes you still feel good (which is the whole point of "doing what feels good", right?). And even though we're not following Dave Ramsey's plan to the "T", we've changed our behavior, which is all he ever asks from his audience.

Baby #2 Is HERE!!!!

2008-08-08T22:27:00.002-05:00

Our baby girl was born yesterday, and everything uncertain is now certainly clear. I finally got to see what she looks like...something I've wanted for 9 months now. She's a healthy 7.5 lbs, and she's already shown to be a very mellow person. Life is good.

My Life Feels Reversed..In A Good Way

2008-07-25T07:29:00.002-05:00

Yesterday morning as I got home from taking my son to summer camp, I pulled in the driveway and noticed several neighbors leaving for work. A feeling came over me...a feeling that my life is a little bit reversed compared to the majority of people right now. As you know, I landed a new job that allows me to work from home (thanks mainly to my wife!). The result of that work is that I spend less in gas each month...while others are spending more for gas. At a time in the morning that most people are leaving or have left for work, I am getting home from taking my son to summer camp. Also, many people are "feeling the crunch", as their dollars are not taking them as far these days. My dollar is actually taking me farther, as I got a nice $12K raise with the new job.

I guess I could also make a note about the use of credit. Many people are turning to credit to suppliment the declining buying power of the US dollar...while we have "drawn a line in the sand" about not using credit any longer :)

New Gig Going Well

2008-07-18T11:12:00.001-05:00

It's been a week now at the new job. I'm not going to boast all the perks, so I'll just say that I think I've adjusted nicely. With the recent event happenings, our net budget increased by ~$386/month. Not a bad deal. On top of that, my wife gets a raise of $5K/year starting next month. That will net another increase of $200/month, bring the total to an increase of $586/month.

Bucking the trend to increase the lifestyle with the increased income, we're both in line with the thinking that we need to start paying ourselves first...meaning kick up the retirement savings big time. By my estimates, after the dust settles and life becomes routine again, I think we can manage contributing 10% each in a 401K and still have ~$400/month left to use for unordinary expenses like car registrations, school clothes, holiday groceries, etc (things you can't ordinarily budget for each month).

As time goes on and with each raise, I think we both can safely bump retirement to the full 15% with less affect. It's important to fund as much as possible up front, before we get use to making more :). It's also important to do this instead of paying off all consumer debt, since I am 35 with no retirement savings, and my wife is 33 with no retirement savings. It's time...

Got a New Job!

2008-07-01T09:38:00.002-05:00

If I've said it once, I'll say it again. Life continues to get better and better. My company was recently purchased (which could be good or bad for my position), but one the same day as this announcement, I was called with an offer of employment by a company that I've been talking to for months. This new gig is pretty sweet for several reasons:

The opportunity to grow is much greater than it ever has.
I will be getting a nice, hefty raise.
Gas savings will amount to ~$3,000 in gross income each year.
I get to work from home.
I get to work from home.
I get to work from home.
I get to work from home.

There are other "cool" features of this job. My wife currently works from home, and it'll be nice to see her more often. I know what you're thinking..."you're going to work with your wife?! There's no way I could do that!". It makes for a funny conversation piece, but in all seriousness, my wife and I make a good team. Yes, there will be good days, and there will be bad days. But overall, I look at it as a good test to see if we can do this as a business later on (without the liability now).

The most important bonus is the increase in homelife. With both parents at home, doing those little things for our kids will be tremendous. I look forward to eating lunch with my son at school every now and again, ride a bike with him to school, and more simply put, just not be far away from our kids. Pretty cool.

Our 12 Year Anniversary

2008-06-06T13:49:00.002-05:00

This weekend (June 8th) signifies 12 years of marriage for us. I wanted to take a moment to reflect a little of these 12 short years. My wife is 33 and I am about to turn 35. We've been together for 15 years overall. It seems like we've been together since childhood, though, because we grew up in nearby towns (15 minutes in rural Illinois) from each other and frequented the same restaurants and hangouts. I often wonder how many times we passed each other on the sidewalk or maybe saw the same movie at the local theater. She even worked at the McDonalds I ate at and worked at the Hallmark store I frequented to by my girlfriends gifts (too funny, huh?).

15 years does not have its share of trials and tribulations. I always honestly tell people that our relationship has only gotten better and better as it has evolved. Our marriage didn't start off in bliss...we started off broke (low income with rising debt), and family issues were present even before I asked "will you marry me?". My wife and I went (unsupervised) to a state park for spring break, which apparently was a direct correlation to nothing but sex the whole time (my Mom's thinking). Also, we lived together before marriage, which apparently also a direct correlation to sex all the time (also my Mom's thinking).

If I had to offer any advice on marriage (based on our own experience), I would have to say this:

Neither person is "better" or less flawed than the other. (It took me a years realize this).
Money is the root of all evil in a relationship. Much of everyday life can be somehow traced back to money.
Sex is an significant part in a marriage. Sex is the most intimate thing you and your partner can share. If you can't be open and honest about your desires, you won't give your partner the chance to fulfill them.
Choose your battles wisely. It's not worth ruining a perfectly good day for both of you just because you had to make the point that you were running 20 minutes late.
Children consume your life, but you can't let them be the most important thing in your life. Your spouse started off as #1 and must always be #1.

Our evolution has amazed me. To look at my wife as my best friend after all these years is truly awesome. My aunt and uncle have always been a model marriage to me. Once, I asked my uncle what keeps the flame alive. He said "I always introduce her as my girlfriend. Think of her as that, and it reminds you of how your relationship should be."

Why Can I Not Create a Realistic Budget?

2008-06-04T06:58:00.004-05:00

I have been creating budgets for probably 13 years now, and I admit, I am not a master budgeter. Over the years, my budgets have evolved from a basic inflows minus outflows to a intricate web of Excel formulas. I show it to my wife sometimes, and she looks like she understands my logic, but I know she's only interested in the bottom line.

Today, I have a budget that fits nicely for our lifestyle. It accounts for every recurring expense and the categories match our spending habits. So, then, why do we always go negative each month then and dip into savings? It's a question I can never seem to answer. The only answer I can come up with is that I'm still not being real with myself and our spending habits.

When I talk about going negative, I'm talking mainly about our entertainment expenses. I budget for $400 per month. To me, that is a lot of money that leaves our pocket without receiving anything in return. But it still happens, and I'm not sure how to cut back effectively. For several months, I cut that $400 down to $200, and we still overspent. We ended up feeling like we were under house arrest, and inevitably, we would go do something that then cause the budget to spill over for that category.

I want to reach out to my readers and ask:
1) How many people are in your household and the ages of each?
2) How much do you budget for food and frivolous items (ordinary weekend stuff) each month?
3) If you have cut back on this amount, how have you done it without cutting the "fun" factor (i.e. movies, restaurants, mall trips).

Note: I do not want to hear how you think I should do it. I realize that it requires discipline and self control. The questions I'm asking are about how YOU did it, so that I can hear real world examples.

3-6 Months of Expenses or Income?

2008-05-05T13:06:00.003-05:00

I haven't seen too much discussion on this topic, so I thought I'd start one. What is the reasoning behind 3-6 months worth of expenses and not income?

I was talking to my father-in-law this weekend about money. We have open, and honest discussions about money matters. It's nice to talk money with someone in the family (other than your spouse) about money. Never should you want to replace your spouse in money matters, though!

Anyways, we were talking about the emergency fund, and I (with all my Dave Ramsey wisdom), rather intelligently said "It should be 3-6 months worth of expenses, since it's the expenses that most likely will be lower and there's no need to save over what you need". He, rather intelligently responded with "Well, more often than not, people spend more than what they make (or close to it). Saving 3-6 months worth of income is just a little more cautious".

This made me change my view a bit, because it makes sense for those who live paycheck-to-paycheck. It's also easier to determine what is needed to save, since income is income but expenses can sometimes feel like necessity but are luxuries and have to be sorted out.

I'd like to open the floor to these thoughts...

Don't Do It!

2008-05-01T17:07:00.003-05:00

I had the opportunity to witness someone filling out a credit application at Toys R Us the other day. It's not something you see everyday, you know? Watching this lady gave me an especially weird feeling, since my wife and I have been in the anti-debt mindset. I've read articles where people want to scream out "Don't Do It!". I had the same thoughts. This lady looked sophisticated...by that I mean she was dressed up (not in casual clothes). She looked liked she had some money. She was talking on a fancy PDA, so that only added to her wealthy appearance.

I waited for nearly 10 minutes while they entered the application in the system only to witness her application was rejected. Pretty wild. I felt embarrassed for her. Her and her little girl went to go stand outside and wait for her husband (I guess). I have to admit, those feelings of rejection came back to me rather quickly. But I soon became very appreciative of our current financial health. Oh well...she'll learn like the rest of us, huh?!

My (lower than inflation rate) Raise

2008-04-11T10:29:00.003-05:00

I got my raise yesterday. A whopping 3% and an "atta boy". This increase will add ~$100/month to the "saving for baby" fund, which in the optimist mind is "better than nothing". Considering the inflation rate is higher than my raise, I didn't really gain anything. Is that the generic way of looking at it?

Why call it a raise, when all it REALLY is, is a cost of living adjustment? It's sad that, in my opinion, the only way to make more money these days is to be a job hopper or be in a company that has personal growth potential on the near horizon. Oh yeah, I almost forgot the 3rd option (which many people forget): Spend Less!

Spend Less Than What You Make...what a concept! Every debt you pay off, the payment amount each month is like giving yourself a raise. To date, we've cleared off enough debt to keep ~$450/month in our lives (~$5,400/year). If you look at it as paycheck earnings, that's ~$7,700/year in pre-tax income.

Life After Credit Cards

2008-04-02T07:16:00.002-05:00

It's been a few days now, and I still can't believe we don't have credit card debt. We made such a quick and decisive move, that it doesn't seem real. I think about it all the time, though, and it feels GREAT.

As I look hopeful into the future, I can't find a reason that we would ever need credit again. We just bought a house, we have a 1 year old car, and baby expenses fit nicely into the budget with extra income remaining. Murphy is always a concern, so realistic that I can't say "never".

Our (Controversial to Some) Monumental Day

2008-03-28T17:02:00.002-05:00

Today was a monumental day. We paid off over $8,600 of debt, which was the remaining balance of our entire credit card debt. "How did you do it", you might ask? Well, it was a decision some people would say was a wise move, while others would call it simply "Stupid Tax".

About a month ago, we were nearing the final stages of closing on our house and in the 4th month of a pregnancy. My wife took it upon herself to withdrawal ~$7,200 from her IRA, as a safety blanket in case something were to happen during the closing. I reacted harshly towards this, because of everything Dave Ramsey had instilled in me about only withdrawing money from retirement only to avoid bankruptcy. Fidelity gives a 60 day period to return the funds back to the IRA without the normal penalties, so we've sat on it since that time.

After we moved into our house financially unscathed, her safety blanket turned into a desire to clear off debt. I understood her desire, but in my mind, the cost out weighed the benefit no matter which way I looked at it. I mean, who in their right mind would voluntarily pay a 10% penalty ($700) and take a hit on the income tax? In my mind, I was right and she was wrong.

Yesterday, though, I stopped thinking about the implications of keeping the money and started wondering if there were any benefits that might come out of it. I had previously been concerned about 3 things:

The 10% early withdrawal penalty

The tax to be paid on that income

How future retirement wealth will be affected

I started addressing these one at a time, and I was surprised at what I discovered:

10% of her withdrawal would roughly be $700. If we paid off the 3 credit cards, we'd save ~$70/month in interest. I'd rather pay the IRS $700 than pay the credit card companies $70/month in interest for 10 months (and most likely a lot longer than that!).

My wife is giving birth to our 2nd child in August. She will take 4 months off for maternity leave, in which she will not get paid for that time. 4 months of income for her is ~$23,000. We will still be reporting a lower income, even with the $7,200 counted as income, so I feel better about that.

I really don't have a rebutal with how withdrawing money from an IRA will affect future retirement wealth. This is a true statement, and there's no denying it.

When paying off credit card debt with retirement money, there is a very uneasy feeling that comes over me. It's the exact feeling Dave Ramsey tells you will happen when you stop contributing towards retirement. You start looking at how quickly you can get through the mess and kick up contributions again.

So overall, it's been a very monumental day. I feel great that we no longer have any credit card debt. We've had enough of a mindset change in recent years to know that we didn't just simply put a bandage over the symptom and not the problem. We've recognized the problem and we, therefore, have curbed spending, vowed to not take on anymore debt, and we have a plan to eliminate our debt.

I welcome the comments. I'm sure I'll get some doozies :)

What's On My Mind

2008-03-24T10:05:00.002-05:00

We've been in turmoil the past few months with buying a new home, selling our old home, and planning for a baby. The fact is, I'm stressed over it. Those are 3 huge items that make up a slippery slope that you don't want to fall off of. I am a creature of habit, so I have to constantly remind myself that it's just a wave of change that will soon subside. I am hopeful that 2009 will bring debt elimination back in the picture.

We finally got our taxes put together using TurboTax Online, and we got hit with a rather high tax bill. I expected that we would owing, so it was not a shocker, but nonetheless, $2,800 is hard to swallow. In 2007 my wife worked a few months as a 1099 employee for her company until she became fulltime. I also did some freelance work, so the result was over $10K in untaxed income. It wasn't too smooth of a move to utilize this money for other wants and needs, but we did it anyways. I'm not complaining, though. We have the non-BEF money in savings to cover it, and THAT, is a very nice feeling.

We moved into our house 3 weeks ago, and we close on our old house this Friday. The next item to tend to is the savings for the baby. We have 4 months starting April 1st, and the goal is a little more than $10,000 (roughly $2,500/month). What makes up this amount is $1,000 emergency fund, $1,000 baby items (crib, clothes, diapers, etc), and $8,000 in lost wages for 4 months of maternity leave. This is totally do-able for us, but it will require some discipline (we have a current shortfall of approximately $600/month to get us there). This one is going to be the most difficult item to do because of 2 things: If we don't meet the goal, my wife could possibly regret dedicating the full 4 months to our new baby. I want it to be a special time...not a limited time because of needed money.

Big News - Update

2008-03-04T14:58:00.002-06:00

Well, the closing on our new house went fine, and now all we have to do is sell our current home. Actually, as coincedence goes, we received 2 offers this past Sunday, and we are going through the counter-offer stage. All we hope to accomplish is to break even. It's been a LONG 8 months in getting to this point, and now that we're in our new house, we don't really want to be attached to the old one anymore. I'm not saying I want to lose my shirt, though :)

Another little piece of news, is that I might be getting a new job. My wife has been working from home for a Connecticut based company for about a year now, and an opportunity within her company has blown my way. My wife and I are in the same industry (Project Manager and Web Developer, respectively), so it would be "interesting" opportunity for both of us. She wouldn't be my boss, but damn close to it. There are, of course, pros and cons to this kind of setup, but ultimately, it comes down to the fact that we've been married for almost 12 years, and we have equal respect for one another. Working with each other from home just sounds awesome! It's a rare opportunity that we both look forward to.

Some Big News

2008-02-18T16:45:00.002-06:00

It's been a long time since I last wrote because I've been waiting on the "official" word on a few items before writing. The first news-worthy item is that I'm going to be a father for the second time. My wife is a little over 3 months pregnant, and we are very excited. The second go around is a much different feeling than the first...primarily for a couple of different reasons. We are in much better financial shape than we were 6 years ago (during the 1st pregnancy). Even though debt is still an issue, we have begun a transformation that gives us hope (ie. job changes, raises, a "get outta debt" plan). Another reason is the "been there, done that" feeling. I'm not scared about how to care for a baby or how it will affect my marriage.

The second bit of news is that we are closing on a house in 2 weeks. It's a very exciting time! No, we haven't sold our current home yet, but we just don't have the will to continue living in this kind of "limbo". Our current home has been on the market for 8 months now, with no serious bites. We looked at our budget and because we have a fairly low mortgage ($100K), we determined we could keep the same standard of living carrying 2 mortgages. It will come at a cost, though. Debt reduction would have to stop until the smoke clears a little.

You know, it's not easy having a little voice in the back of your head saying "Don't do it...don't have 2 mortgages. Dave Ramsey would not approve. Be patient. Wait it out". As much as I rationalize the move we're making, I can't help but feel that we're doing it out-of-order. But sometimes, we all have to make decisions that we feel is right for us. The truth is, we've been on hold and have been patient for 8 months now. It's time to move on. And with a little one on the way, the time is ripe for a move.

A Tip to Teach Young Kids about Money and Spending

2008-01-17T09:21:00.000-06:00

I read a blog today about a mother who taught her 5 year old son the value of a dollar. I was reminded of our own little 5 year old's expectation to get a toy everytime we went to Wal-Mart or Target. We haven't set him up on a chore list yet, but I did come up with an easy way to tame his appetite for "cooler" items that tended to cost more.

Instead of waiting until he could learn math, I simply told him that he couldn't get any toy that cost over "3 numbers", meaning $9.99 or less. If it was $10.00, then it was off limits, because it was "4 numbers". He picked this up right away, and to this day, he puts a toy back on the shelf if it is more than "3 numbers" without having to say a word.

Pretty cool thing. I think I'm next going to teach him the value of a dollar like BeingFrugal.net.

Personal Finance Blog Review

2008-01-16T12:10:00.000-06:00

Every morning, I get into work, grab my first cup of coffee, and read the 3-4 blog subscriptions I have each morning in my Inbox. This morning I read an article by No Credit Needed entitled "Stop Waiting For Tomorrow - And Get Informed, Honest, And Focused".

For so many years, I did the "Once I get a raise, I'm going to..." or "Once I get my tax return, I'm going to...". But instead of thinking of debt reduction, I was thinking "...I'm going to get current on my bills". I'm so glad the tide has turned, and we're now reducing debt. NCN said it best in the last paragraph, when he said "The funny thing is, when you HAVE a plan and you HAVE determination, you’ll be better prepared for when “tomorrow” finally comes.". That is exactly what we did. At the planning stage, we didn't know how to start. We still felt helpless and hopeless. But being optimistic and hopeful breathes life to your plan. I think it was more helpful to have a mindset change before "tomorrow" came, because like Dave Ramsey says, "debt is the symptom, not the problem". Plan how your financial life should be, and it will help curb temptations when windfalls of money come into your life.

Helping Family with Finances - Update 12/18/2007

2007-12-18T21:14:00.000-06:00

It has been almost 4 months since I began writing about my sister-in-law, Tia. Tia came to us for help in controlling her financial situation after severly overdrawing her account by hundreds of dollars with no idea how to get out of that hole. To say the least, we've been expecting her to fall flat on her face more than once (not getting it right the first time), but to her credit, she's been doing fabulous. I've been setting up budgets (1 month in advance) that reflect slightly inflated, yet real, amounts based on her spending habits. And she has been adhearing to them without fail. She has definitely risen to the challenge of getting on a game plan. For now, it's just a matter of getting her in the routine of creating and staying within spending limits.

I brought up one day how to really get out of debt. I could tell that getting out of debt was not the top priority. Too many times, people look short term and do not necessarily want to get out of debt. They just want to get to the point that "affording the payments" is managable. When I suggested halting her 401K and company stock for a temporary timeframe, she became fearful. I explained that stopping her retirement investing will do 2 things:

- Motivate you to get out debt quicker, so that you can start investing again.
- Create a Snowball that will help melt her debts away.

After 10-15 minutes of talking about the Total Money Makeover "way of thinking", she said, "Stop. You're making too much sense!". We'll see, though, if I can get her to see the possibilities.

We live in a Republic?

2007-11-19T16:38:00.000-06:00

The words Republic and Democracy came up at our house this past weekend, and I thought it was interesting enough to write about it. First up, I admit, I've never been a very political man. There are many things I'm actually ashamed that I do not know (but should), since I'm a born and bred American. All I can say is that, in my younger days, I didn't care about politics. So, therefore, I didn't vote because I didn't want to cast a "blind" vote. As I've grown older and have become more responsible, I'm seeing a bigger picture, and feel as though, I should make it a bigger priority to gather more knowledge about politics. It's a privilege and responsibility to control our nations future. The only way to do that is through voting.

The one thing that I could never understand was the role of the Electoral College. I couldn't understand why we vote, but yet, these guys decided who will be President anyways. It made no sense for the longest time. But I never questioned it. I knew there was a reason for it.

My father-in-law recently made the comment that we do not live in a democracy. We live in a Republic. We have a democratic form of government, but we are by definition, a Republic. This was thought provoking, because I couldn't remember a time I thought we were something other than a Democracy. All we hear is democracy, democracy, democracy. After digging around a little, I read the Pledge of Allegiance again: "I pledge allegiance to the flag of the United States of America, and to the Republic for which it stands, one Nation under God, indivisible, with liberty and justice for all." It brought new light to an old quote.

Well, now I feel like an idiot! I feel ashamed that this knowledge wasn't second nature to me. It now makes perfect sense why in government elections, it's not always that majority wins. Our government functions in a way that gives the people a voice but still has "checks and balances" to keep "liberty and justice for all" in tact. I believe the creators of the Constitution were genius in their idea of creating an equal and fair nation. They knew that people were susceptible to greed, corruption, and violence more in a true democracy than in a republic. People can vote for the ones who will best represent them at the government level. The example I read on this was "In a democracy, if the majority of the population decided that murder was not a crime, then murder would not be a crime. In a Republic, having law based on God's word, murder will always be a crime".

James Madison said "Democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have, in general, been as short in their lives as they have been violent in their deaths."

My lack of knowledge might sound crazy to many of you. I guess my hope is that I can "wake" some of you up to what I now know. I can't be the only one. You may be 30 years younger than me (I'm 34 :) ), but that's OK. I feel better and much prouder that I know the difference between a Republic and a Democracy now.

Here are 2 articles I read:
http://www.1215.org/lawnotes/lawnotes/repvsdem.htm
http://www.freerepublic.com/focus/f-news/1351222/posts

Another One Bites The Dust

2007-11-14T08:55:00.000-06:00

About a week ago, we paid off another credit card. Woo-Hoo!! What a great feeling. Even though it pains me to pay ~$1,900 on a card just so I can save $79/month, I feel incredible knowing I'm that much closer to debt freedom. This year the grand total of debt cleared has been ~$7,900, which has added $551/month onto the debt snowball. Because of Christmas, we won't be doing much in the way of debt reduction. Just not accumulating debt over Christmas and not having an unrealistic budget is good enough for me. Also because of 2008 goals, it's our "last hoorah".

In 2008, our snowball will be $3,124/month using a Gazelle-inspired budget. I've been so excited, that I've already mapped out January, February, and March of 2008. Maybe I'm getting a little too far ahead of myself, but I CAN'T HELP IT! Seeing how those suckers are gonna drop like flies is soooo cool.

The goal in 2008 is to pay $30,000 in 8 months, and then finish the year by saving 4 months worth of expenses. When forecasting 2009, we will be able to max out our 401K and Roth IRA and still life well enough to possibly have another child.

I feel like we're finally "Acting Our Wage"...

Saved some money this weekend!

2007-11-05T09:19:00.000-06:00

We've been doing The Grocery Game now for ~4 weeks now. I don't know how some people do it...I've got sore shoulders and cramped fingers from all the coupon cutting (yes, give me some cheese with that whine!). On a weekly basis, I go to Kroger to stock up on what The Grocery Game lists as the best stock-up deals from "The List". I have to give a big round of applause to the creator, because they make it soooo easy to save money.

Nothing was more evident of that than this past weekend when we did a grocery store visit to get a full load of groceries. Armed with "The List" and coupons, we headed to Kroger. We did our normal thing at the checkout counter of giving the checkout lady our Kroger card and coupons AFTER running all the items through checkout (it's fun to see the savings this way). What started out as $264 ended up as $170. $94 in savings just by using coupons and seeking out the best deals. And these were stock-up items that we hopefully won't have to buy the next round of grocery shopping we do! All the effort of clipping coupons was worth it. I know clipping coupons has been stereotypically a stay-at-home mom's job...but saving money is not gender specific!!

Am I crazy to want to pay for my son's college?

2007-11-05T08:10:00.001-06:00

While my Dad came to visit this past week, we found ourselves talking about college and student loans. He made the comment, "You shouldn't pay for your kids' college education. They'll never learn how to handle money if you give them a free ride like that". This hit home, because he paid for a minor amount of my college education, and I'm still paying for the majority of it (literally) 12 years later! I disagreed with my Dad by saying "My kids will know how to manage money long before college. If I can help them with the cost of college, I'll be helping him stay financially healthy for life". I think it's foolhardy to think it's a good idea to adopt the "sink or swim" attitude in this situation.

A little background:
There were 4 kids in my family, with 3 of us finishing college. Two of us boys were in college at the same time. So for my Mom and Dad, with a family income of probably $50K (and no college fund), paying for college was not an option. They gave us money when we needed it, but taking out as much we could in student loans was "the thing to do". I remember my Dad saying "It's free now, so take out what you can" (how naive was I?).

When I graduated, I had over $40,000 in student loan debt. I'm all for teaching kids how to handle money, but why advocate putting this kind of financial stress on a kid who is just entering the workforce with no idea where their first check is going to come from or what pitfalls that kid might run into over the life of that loan? Something also to think about is that a spouse might be a part of the final equation. The majority of people meet their spouse in college. If his/her parents couldn't afford to pay for their college, then the total financial debt could be doubled (or more!).

Now I'm not saying that loans are not necessary. Not every parent can afford to flip the bill for college. And I'm definitely not saying you need to place college education before your own debt elimination and retirement planning (those definitely come first). But for my Dad to associate school loans to "how to handle money" is just simply a wrong mindset.

"Call me Cheapscate. Meet my wife Hermit."

2007-10-29T13:18:00.000-05:00

It's such an awesome feeling when you and your spouse can be on the same page and in tune with financial goals. What I thought was only a pipe dream just became more of a reality. Recently my wife and I did a little more "soul searching", as to how to get where we need to go. We both found ourselves extremely excited and extremely hopeful about the future. When this feeling comes around, you can't ignore it. You must jump on and ride the wave as fast as you can.

It all started when I sent this link to my wife. You all know from past blogs that we've been trying to sell our current home. We originally had the plan to build another, but became uninterested in the new house market. Then I recently came across this blog article. It's a blog called Learning to Love the Not So Big House. It made us take a step back and think. We now realize that we don't "need" a bigger house with a mortgage payment increase of $500-800/month to be happy. When we re-worked with the Total Money Makeover spreadsheet I put together, we began to see some hardcore potential when "staying put".

Currently our house payment is $1006/month. How can you beat that in today's market? It would somewhat foolish to think that you could do better than that for a 3 BR/2 BTH/ 2 car garage. With that in mind, we saw that by being Gazelle intense for a period of 8 months, we could pay off all CC's, pay down the CX-7 in order to sell it, and buy a nice, paid for car. In essence, paying off $30K in 8 months. It gives me a rush every time I think about it.

It's been quite a long road with many mixed emotions that got us to this point. I hope we can soon lay some good rubber on that new found "financial freedom" road there in the distance. Living 8 months with "not so much" will require discipline, but so many others have done it (which truly helps).

Soon after talking about how we were going to do this 8 month stint, my wife said "Just call me Hermit" (since she works from home and won't be shopping much). Then I said "Just call me Cheapscate".

As always, I'll keep you posted!

Skip to Baby Step 3 (Update)

2007-09-26T09:53:00.000-05:00

It's a good idea to revist "The Total Money Makeover". I say this because I did the other day, and not only does it refresh the ideas Dave teaches, but I found the solution to the "Skip to Baby Step 3" dilemma. In the audiobook, Dave talks about how to treat a 2nd mortgage or a high balance home equity line of credit. He said not to include that in the debt snowball and to deal with it at a later point. Since the student loan falls into the same, similar category as a 2nd mortgage, I feel better about pushing it until later in the plan.

Thanks for the advice!

Skipping Ahead to Baby Step 3

2007-09-13T13:26:00.000-05:00

According to the Total Money Makeover plan:
Baby Step 2 is to wipe out all debt except the house.
Baby Step 3 is to save 3-6 months worth of expenses.
Baby Step 4 is to max out your 401K.

At this point in the game, we've cleared off $6K worth of debt and we've got $11K more to go before moving onto the auto loan ($36K) and student loan ($71K). This is a HUGE mountain to climb, and I'm having concerns as to the date at which we'll begin maxing out our 401K. In the current plan, it'll take 5 years, if everything remains the same. But what if things get bad? It could possible be 5+ years before I start saving for retirment! Shouldn't that scare me?

What I'm thinking of doing is to do a little rearranging. I want to finish clearing off credit cards and the auto loan (a total of $47K), and then move onto Baby Step 3. I think I want to treat the student loan like the mortgage (interest deductible). This would move up the date of maxing out the 401K to 2 years...down from 5. Given the fact that I'm 34, this is making a whole lot of sense.

I know this is going against the grain of the Total Money Makeover plan. I've been telling myself to just get intense and clear it all off. The truth is I'm selfish about how I want to live my life. I have already benefited a lot from Dave Ramsey in the sense that my wife and I both don't like debt, we regret ever getting into debt, and we don't want to carry anymore debt. But there is a great need to start saving for retirement, since between my wife and I we have $10K in retirement. That's a sad statement in my mind (especially when $8K is my wife's!).

As always, I'm open to your thoughts and wisdom!

Helping Family with Finances

2007-09-13T12:48:00.000-05:00

My sister-in-law (let's call her Tia) is a single mother with 2 children (both under the age of 11). The family knew she had been struggling financially for awhile now, but how much she was struggling wasn't apparent until it all came to a head a few weeks ago. She had severly overdrawn her checking account and was "sick and tired of being sick and tired". Many of us can relate, and it seems that we have to go through this kind of "rock bottom" state before we wake and take real action. My mother-in-law told her awhile ago to talk to my wife and I, since we had been gaining ground financially and could possibly offer some sound advice. I've been waiting for the opportunity to help her, but you can only help the willing. It was up to her to make that call.

I guess I've been taking my knowledge for granted when it comes to how to budget. I still have my share of mishaps, but for the most part, I do fairly well. I know how to create a balanced budget based on reality, how to pay bills on time, plan for vacations months in advance, and how to reconcile a bank register. These things apparently are foreign to Tia, because she has done none of these.

After about a week or so of talking to Tia and having complete access to her finances, I discovered that her mindset has been simply: get paid, pay some bills when they become due, and spend the rest. She never had a written budget and never knew how much money she really had at any given point. I knew that even though I know we're not experts at finances, we were in a position to really impact her life in a positive way with a little hard work. That to me is a great feeling.

It has been a few weeks now, and I've got her to the point that she can see what a balanced budget looks like and what things are keeping her from attaining a balanced budget. The tempation is there to fix her mess by supplimenting her income, but I know that doesn't really solve the problem. We feel she needs a hands-off teacher more than a compassionate family member (even though we're both).

The first step to make this successful was to "stop the bleeding" and vow not to take on anymore fees. We advised her to talked to the bank about possibly reducing the amount of overdraft fees. She was mildly successful at this. We then advised her to talk with the auto financing company about possibly moving the past due payments to the end of the loan, which catches her up on those payments instantly. She was also successful in this. We finally got her to the point where September was balanced after making some hard sacrifices. October looks better, though, and November should actually be "normal" with bills getting paid while still being able to eat and play a little. After this exercise becomes routine for her, I'll start down the road of how to tackle her debt load. That is a whole other can of worms, as many of you can attest to.

It truly does feel good to help family, especially when you know you have the knowledge and know you can make a difference.

The "Valley" In Home Buying

2007-08-13T13:14:00.000-05:00

It's been a slow going road the past few months. To recap a little, we decided recently to build a new house. All money going to debt would now be going to buying upgrades, closing costs, down payment, etc. We got the house with the addition of a contingency contract (we wouldn't have to move in upon closing if our current house doesn't sell). The builder (DR Horton) recently did a "CYA" act by modifying the contingency contract to state that they wouldn't even break ground until our current house sells. I guess they want to reduce the risk of sitting on an inventory house. The "Pro" to this is that we would not have the worry about selling one house while building another, but the "Con" is that it pretty much guarantees that we'll have to move twice.

In a nutshell, our "peak" has turned into a "valley". We took it as a restriction rather than a blessing, and so now, we've done a 180 (well, maybe a 120) degree turnaround and have gone back to thinking that maybe we should just make the most with what we've got. Staying in our current house for awhile longer seems like the least stress route. It could still work out, though, so we are keeping an open mind.

In the spirit of "making the most with what we've got", we came up with a list of things that would make us happy and want to stay put in our house. This past weekend, we purchased a new TV and new sofa...2 items that we have been wanting for awhile now (both paid with cash, of course). It probably sounds a lot like we've abandoned "the plan" to eliminate debt (it does to me too sometimes). But I'm realizing more and more that it's ok to spend money while clearing debt...as long as it's done responsibly and with a purpose. We've cleared roughly $6,000 worth of debt already this year, and it's not done yet! And I still look forward to the next credit card closing date!

The Latest Plan

2007-07-23T12:56:00.001-05:00

Well, we're diving in head first into selling our house while preparing to build another. We decided on doing For Sale By Owner, since we didn't think Realtors' were anything more than marketers. My wife and I are both in the Web Development industry (with my wife working for an Advertising company), so we're familiar enough to get in a "DIY" mode.

Here's what we've done so far. We sunk ~$1,000 into preparing our our house to look like a model home. We took all necessary photos, and created a nice photo gallery using nothing more than Picasa with a Simpleviewer plug-in. Here's the result http://www.9875cedarcrestdrive.com/. Then, I found a site that advertised Free MLS. I thought there might be a catch, but I've yet to see one. Here's the site: Iggys House. They posted it on Realtor.com and is searchable when realtors' do their database digging. Pretty cool stuff... Then, I posted our house with several other popular house searching sites, such as Zillow and Craigs List. (I'm thinking about Yahoo RealEstate, but that'll cost ~$50). Then I added Google Analytics to our site to track visits by users, so that we can see what rooms people are looking at the most, what site is referring them, how often people are on our site and for how long, and if they used a search engine, what keywords they used. (I love Web Development!). The results haven't been overly promising yet, but the few inquiries are more than just "looking". Plus, it's only been 3 weeks. We'll see...

On a side note, I put Google Analytics here in my BLOG by adding a Page Element. It's interesting to see the traffic I receive. I never thought more than just a few people actually read what I have to say! (hee,hee). Also, I only thought JW linked to my BLOG. Apparently there are several (thank you, thank you).

That's all I've got for now! Thanks for reading...

My Canoe Trip - 2007

2007-07-18T10:38:00.000-05:00

This weekend I went on canoe trip with 6 other guys that included my Dad and 2 brothers. It's an annual thing that my Dad has done for 12+ years now, and it has been a great way to spend some time away from normal life and catch up with my family. We packed in 2 days of golf and 1 day of canoeing, and as usual, it was an awesome time. When the trip was originally formed, the typical scene included a popup camper and tents with the humid, fire smoke-filled sky overhead, cooking out on the open flame, and bathing the public showers. It has since progressed and has turned into sharing a/c cabins with each member having their own bed, private showers, and eating in the dining facility provided by the campground. Roughing it never felt so good.

The campground is called Huzzah Valley Resort. It's one of the most popular campgrounds in the area of central Missouri along the Huzzah River. It's an excellent place to get away, and you have no choice to turn off your cell phone, since you can't get a signal there. A few years ago, we found a golf course about 20 miles away in a small town (Potosi, MO) called Fourche Valley Golf Club. It is an absolute gem found in the middle of nowhere. To me, it is a championship style course, with flowing hills, lush green fairways and greens, and very challenging holes. We even found deer roaming around this year! And for $35, we played a round of 18 with carts and lunch. How can you beat that?!

It was another great, successful trip. I don't see my family nearly enough with us living in Texas and them living up north in Missouri and Illinois. I figure the whole trip cost was ~$400 including the roundtrip flight. Not bad for 4 days of golf, canoeing, food, beer, and travel. Oh yeah, you can't forget the relaxation (which can be priceless).

Head vs. Gut

2007-06-22T17:04:00.000-05:00

I think Dave Ramsey finally made his mark on me. I feel like I've got a little voice inside of my head right now saying "Don't do it!". The reason I say that is because my wife and I decided recently to put earnest money down on a new construction home. The feeling is leaving me a little skittish, because it's a substantial upgrade.
4 years ago, we bought a 1360 sq ft. / 3 bedroom house because I wanted the enjoyment of buying our first house brand new for $100K in a pre-growth area north of Dallas, Tx. knowing we could build up equity and upgrade later. We went through many of those years with 1+ hour commutes and endless frustration over the amount of time we've wasted away from our son. Today, my wife works at home, I have a 30 minute commute, and our son goes to school within 1/2 mile from home. Plus, the income went way up and we've got a debt elimination plan going. Life is good!

We're too the point where upgrading to a larger house would be nice and a little necessary. We've outgrown our house and actually find it harder and harder to maximize storage. I believe with my gut that making a housing upgrade is a smart choice because we got a house for a very good deal, and moving was never a question of "if" but rather "when". My head says, though, that we should stick with what we've got and suffer through the years of debt reduction before making an adjustment.

I'm going with what my gut says. I know a little mind shift is in order, and the plan has to be readjusted. There will also be some concequences to this action...adding on about 1.5 years added onto the plan before getting to the house. But we're still well within our budget, and the plan WILL resume. Those were the 2 requirements. We're both dedicated to the plan (but also to the happiness of our family).

I'll keep y'all posted.

11 Years Ago...

2007-06-11T13:34:00.000-05:00

I've been married to a beautiful wife for 11 years. Time certainly does fly.

Murphy Comes A Knockin'

2007-06-11T13:05:00.000-05:00

Well, I didn't think a visit from Murphy would come this quick, but I guess he wouldn't be called Murphy if there was anyway to predict him, huh? We recently had to purchase a new dryer, since the old one kept heating up to the point where it would turn itself off. Not a nice feeling. I tried to take a crack at finding out what was wrong with it, but I couldn't.

My wife researched which dryer in the market today had the best rating by consumers (Consumer Reports) and then, we went to Home Depot on Memorial Day to get it at the holiday price. We have our emergency fund at a different bank that isn't easily touched, so we literally had to go into that bank to take cash out. And since we weren't too keen on carrying $950 in cash, we converted them to traveler's checks first (call us crazy). It was an awesome feeling to be able to walk into a store, buy exactly what you've researching (for that amount of money), and not even flinch at the price.

Debt Elimination Plan Spreadsheet Addition

2007-06-11T12:59:00.001-05:00

I got an idea from a blog I found today called "Need To Be Debt Free". The guy uses Google Spreadsheets and Docs to publish his plan to the public. I'm going to try and do the same. It's pretty cool, in that as I modify the spreadsheet, it auto-publishes. You'll find it at the bottom of my blog. In addition to the Google Docs Debt Elimination Spreadsheet, I also uploaded a Budget Spreadsheet in the Excel format to Google Docs. They now allow you to upload any format of document...it doesn't have to be a Google Doc. Pretty neat!

3 Down, 4 to Go

2007-05-24T10:43:00.000-05:00

Yesterday, I had the joy of calling Capital One to close a credit card account. This is the 3rd card we've cleared off, but the first one to cancel. Even though we've got our emergency fund setup, there's still that unexplainable feeling of keeping those credit cards handy. So we've agreed that we'll keep 1 card available (with the lowest limit), and close all the other accounts as they get cleared. It'll be our "pay for medicine and clear off when the Flex money comes back for it" card, so that it has no affect on our budget cash flow. I've setup my wife as an authorized user on my credit card (the one with the lowest limit), and after we get her card in the mail, I'll close the card she currently has that is now cleared off.

Slowly but surely, we're making our way. It's getting tougher, since the ones we cleared were $1,300 or less, and we cleared them within a month (sometimes 2/month). The ones now are going to take 3 months to clear because of their $3,000+ balances. I'm expecting a greater sense of accomplishment as these clear.

A note about my wife:
She is the spender in the family, and without her devotion to the debt elimination plan, there would be a lot of wheels spinning without gaining ground. Sure, we could spend less and get more "gazel" intense, but if I don't take a step back and appreciate the ground we've covered thus far, I'll never be satisfied. I am grateful to be "doing" instead of "wishing", and I have to thank my wife for her willingness to create a better life for herself and family.

My Father's Day Gift - 2007

2007-05-15T12:31:00.000-05:00

I approached my wife about a Father's Day gift idea. It is a month long, 3 credit card debt elimination goal. If successful, we'll be an additional 2 months ahead of schedule, which translates into clearing off ~$16,000 worth of credit card debt before Christmas.

What items are factored in this June gift?

I receive an extra check from work (1 of 2 during the year being paid bi-weekly).
A retention bonus from my job for sticking around for 6 months after being hired.

All in all, I think we can clear off ~$4,000 if we work hard at it. If I know my wife, she'll make it happen. The part that makes her so special is that she derives great joy in giving me the things I really want. She knows its rare that I ask for anything monumental.

Tune in to see what happens!

"I want this, I want that"

2007-05-01T10:48:00.000-05:00

I never realized the power of advertising until a 4 year old child is exposed to it on TV. With every commercial, it's "I want that". It's every advertiser's dream, and every parents' nightmare. I see how children can be spoiled, because every toy they see on TV is "cool". Even if you think the toy is harmless, it'll eventually be money burned, because it'll inevitably be cast aside for another toy. The perfect example is the movie "Cars". Once you get every toy imaginable for the kid, the next great Disney flick will come out and the cycle starts again. I guess you can recoup a little money when you donate the stuff to charity...NOT!

4/20/2007 - Debt: $123,055

2007-04-20T19:31:00.000-05:00

Emergency Fund: $450
Credit Cards: $13,605
Vehicles: $38,000
Student Loans: $71,000

1/1/2007 - Debt: $126,822

2007-04-20T19:26:00.000-05:00

Starting the year off, I put a price tag on wealth building. Clearing debt is the beginning of all beginnings, and the price tag is a hefty one.

Here's the breakdown:
Emergency Fund: $1,000
Credit Cards: $14,601
Vehicles: $40,221
Student Loans: $71,000

Taking the blinders off

2007-03-27T12:56:00.000-05:00

When I think about the life we have built so far, and then think about the life I can see in our near future, the stuff in between feels like being a horse with blinders on. We were so focused on living, we stopped living. It got to the point where our "weekend money" was $50. There was no budgeting for lunches, trips up north, and clothing expenses came out of weekend money. On paper, my budget netted to zero, which to me, meant I was doing my part in managing finances. Sure bills were getting paid...or were they? Our student loans have been deferred several different times since graduation and should be paid by now. Well, they're not, and now we're faced with a sizable sum left to pay.
How can one live like that?! How can you move beyond an unrealistic budget? You have 2 options: Make more, or spend less. We chose to do neither and to let something happened to us. Luckily something good happened. I'd hate to think of something really bad happening.

Riding the Snowball

2007-03-27T12:49:00.000-05:00

At the time of this writing (3/27/2007 - 2 months after starting the debt elimination plan), we have paid 3 debts (approximately $3650) putting $434 more onto the monthly snowball. We paid off a car and two credit cards. It feels good to recoup income, but there is a lot more to go. The mole hills are pretty much gone, as we begin to climb the mountain.

A Song for Bubba

2007-02-23T12:30:00.000-06:00

I heard a song today that I'd like to share with you all. In 2002, my wife was pregnant with our son, and I was on the road quite a bit. To sum our life in the fewest words, I'll tell you simply that it was a tough time for both of us. From my perspective, I was still "green" as a Web Developer, I was traveling more than I should've been, I had a pregnant wife that grew more and more resentful over me traveling (rightfully so, by the way), and I was about to be a father for the first time.

A father...a concept I just couldn't grasp. I was always the "baby brother" member of my family, and now I was going to be put in a position my father is in, whether I was ready for it or not. I was in a tornado of feelings...

But one evening, as I was sitting on a plane bound for New York City for one of the longest trade shows of the year (11 days), feeling more guilt than ever for leaving my wife, a music video began playing on the monitor. I was consumed by it's true-to-life feelings, and it made me feel better, knowing the feelings of fatherhood were "normal". As a result, it became my song to my son. Maybe it can be yours too. Enjoy!

My Reason to Blog

2007-02-15T13:32:00.000-06:00

I've never done this before, and I'm a little afraid to start. But I think it'll be therapeutic and motivating to put our goals and objectives out there for all to see. Of course, I couldn't completely expose myself to the world, so I've keep my identity a secret :)

The Background:
I guess you could say I stand before you now after 16 years of living paycheck to paycheck and living beyond our means. It all started freshman year in college when I was bombarded with credit card offers. I bought into the idea of buying now and paying later without having to pay it back in full.

When I started out in the working world, I don't think I planned how much money I had to spend out of each paycheck. I simply put value on everything I did ($350 sounded like a good deal for rent). Besides, I was raking in the dough ($24K/year), so why budget, right? Budgeting was non-existent. To put life after that "simply", every purchase was made to accomodate our lifestyle, whether it meant buying things with cash or credit.

The Motivator:
In life I have gotten bitter about money. I don't like the idea that money controls how happy we are and how well we get along with our spouses and other family members. Money related divorce is #1 in America for a reason, you know! My wife and I have been married for over 10 years now, and I love her more than she'll ever realize. She has gotten more beautiful with age, and she looks better than most women her age. I have visions of our life without money problems. A life of helping our 3 person family to helping our parents in their later years, to helping our kid's kids later on. That is my biggest motivator.

The Resolution:
For a few years now, I've been listening to Dave Ramsey and John Commuta talk about how to clear debt and build wealth. Both have similar teachings (Debt Snowball). It's sad, when I started pouring their teachings on paper, it was a real shot in the arm and a real shot to the head, all at the same time. I could see the potential, but I could not see how to get us there. It looked great on paper, but it lacked the one thing we have always considered necessity... LIFESTYLE!

Even though I did not have the means (equating to "will" in my world) to do anything about it at the time, at least I knew what to do when the time came. I always knew that my wife and I were working in underpaid professions, and the time would come that it would be rectified. And when that day came, we shouldn't follow the rule that with increased income comes increased lifestyle.

That day came last year when my wife got a nice hefty salary adjustment, and I left my company for a better opportunity. In one fell swoop, we gained another $30K in gross income. It was now our time to start reversing the effects of years of money mismanagement. It was our time to start "The Plan".

My goal of this blog is to document our steps to financial freedom and to become somewhat of a model for others to follow. Many others have done this, so why not join the growing numbers of debt free families? Read on and enjoy. If nothing else, I hope you can walk away with something new that you didn't know before.Thanks!