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Archive for the Tag 'Debt-Reduction'

financegirl on Mar 21st 2008 Debt-Reduction

After Hitting Rock Bottom, an Epiphany!

different.jpgAfter I’d hit rock bottom emotionally and financially, I knew we had to get out of credit card debt if we had any chance of living our dreams without blowing up our whole lives in the process.

I made a plan for paying off our $13,500 of credit card debt, but was unsure of what the next step would be. Would one of us be able to take a lower-paying job just by paying off the cards? Which one of us? What if the new career continued to be low-paying after several years? Would the other person be stuck with their job?

Then, the miraculous, mathematical epiphany (courtesy of the debt pay down advisor at Bankrate.com): We could have all our debt, including the house, paid off in 5-6 years if we stayed at our current jobs.

It was so unbelievable, I ran the calculator three different times with slightly different variables. I even worked it out by hand to see if I came up with similar numbers.

Just imagine what life would be like with no debt…I could be a copywriter, open a photography studio with my sister, become the next Diablo Cody…My husband could live out his Indiana Jones fantasy by going back to school for an archeology degree…Sure, we’d still have taxes, insurance and utility bills, but just imagine! We’d only need an income of about $30,000 to live our current lifestyle and still save for retirement.

Around the same time, I started listening to that crazy Dave Ramsey bastard on my iPod, and I really started to believe it was possible.

Though I tend to only write in my journal when I’m depressed, I went through a brief Oprah-recommended phase where I kept a happiness journal:

From Finance Girl’s Journal
10/9/07

[Finance Girl's husband] and I had a talk about keeping focused on paying off our debt. He is so on fire about it, even thinking we’ll be done in less than 5 years (3 years!?!)

When I tell people about our plan, they laugh.

But it is quite possibly the best idea I’ve ever had.

One response so far

financegirl on Mar 21st 2008 Debt-Reduction

When Did You Finally Hit Rock Bottom and Decide to Get Out of Debt For Good?

life.jpgFrom Finance Girl’s Journal
2/12/06

Where am I at in my life right now?

“The Desperate Housewives Period”

At this point in my life, I feel kind of like a sellout. I’m not an artist, a musician, a photographer, not even in advertising or a designer. Those things aren’t even my hobbies anymore.

Instead, I’m this boring, go to work every day, do the grind for the paycheck person, just like so many parents are (mine and [Finance Girl's husband's] included).

I wish my life had more meaning, I guess.

People who live this kind of life live for their family and friends, but it’s like my family isn’t a “real” one and my friendships hardly exist anymore.

We’re swimming in debt while we have a six-figure income now and the end is nowhere in sight.

I want to be interesting too - hobbies, travel the world, have parties and close friends.

And then there’s this pressure about kids - I’m afraid I’ll just become even more isolated, put my career on hold, damage my kid cuz I’m never with it and who knows when we can afford that anyway.

I really need to get a life.

My life.

One response so far

financegirl on Mar 19th 2008 Credit Cards, Debt-Reduction, Personal Progress

I Finally Own a Car That’s Not a Beater!

2344294664_b0b0153567_m.jpgTonight we’re going to Buffalo Wild Wings to celebrate paying off my car.  

The loan officially bites the dust on Friday, but we’re having an early celebration so my stepson can be there (side note: my husband bought a Powerball ticket on Saturday and we were taking turns saying what we would do with the money if we won.  My 9-year-old stepson said the first thing he would do is pay off all our debt - what a genius!)

The last time my husband and I had paid-for cars, they were both over 10 years old with close to 200,000 miles on them.  Now, we own a used car that we bought in July with 75,000 miles on it, and my ‘06 that we purchased new two years ago. 

The first thing I plan to do after work on Friday is take my car for a wash and vacuum/clean the interior.  I own this car now, so I want it to look good!

The timing on paying off the car couldn’t have been better - I just reached 50,000 miles earlier this week, which means my warranty has expired (I have a long commute).  I’ll feel a lot better paying a repair bill for a car that I’m not still making payments on!

Now it’s on to my credit card.  Citibank, I’m talkin’ to you!  Just because you have a fixed 2.99% interest rate doesn’t mean you’ll be hanging on for another nine years (that’s right, nine!).

3 responses so far

financegirl on Mar 13th 2008 Debt-Reduction, Personal Progress

It’s Bad Enough This Cubicle is Freezing, But Now You’re Going to Freeze My Raise?

My employer announced today that they are freezing raises. Apparently, there’s some little problem with the economy that’s causing our top clients to slash budgets and lay off their employees, and now our company’s outlook is uncertain.

Worse, a few weeks ago, my husband’s employer announced they are freezing raises. Oh, and they’re also doing away with quarterly bonuses and laying off thousands of employees (my husband is not expected to be one of them).

This is a problem for us for two reasons:

  1. We owed the IRS $1,000 this year because we lowered our withholding last February (I thought we were doing a smart thing since we kept getting big refunds, but we ended up making a lot more money last year than in 2006, and now we owe). So, we need to change our deductions back to zero, which will leave us at least a hundred dollars less per month. Our budget is super tight because we are paying an extra $1,450 to our smallest debt each month. So, I was going to soften the blow by changing the withholding when we got our raises. Now I’m just going to have to make it work.
  2. We included estimated raises and bonuses in our get-out-of-debt timeline. While I kept estimates low (3% raises, the lowest bonuses we’ve ever received), I wasn’t expecting zero. So our five year goal (house and everything) is looking pretty unrealistic these days. Hopefully we can still do it in six.

I guess it’s just another challenge to see if we are serious about getting out of debt.

Are you there, God? It’s me, Finance Girl…I’M F***ING SERIOUS!


There is at least one piece of good news though. My boss told me they are going to try to make an exception for me and give me a raise later in the year (yesssss!)

4 responses so far

financegirl on Mar 6th 2008 Debt-Reduction, Frugality

Snowflaking: 100 Ways to Come Up With More Money for Your Debt Snowball

Yes, you are already doing some of these things.
But are you doing them all?
Utilities
  1. Set your utility bills to level pay - Pay the same amount every month so there are no surprises to your budget.
  2. Ask for a discount - Call your gas and/or electric company and ask about discounts you might qualify for. I did this and now receive a discount for having a heat pump. Some utility companies also give discounts for briefly suspending power during peak usage periods.
  3. Weatherize your home - Start with caulking your window frames (interior and exterior), filling gaps with expandable foam and putting foam outlet insulators behind switchplates and outlet covers on exterior walls. We’ve cut our gas bill in half through inexpensive fixes such as these. For more ideas to reduce your energy use, visit the Department of Energy’s Energy Savers website.
  4. Ask for a home energy audit - Many utility companies offer this service for free, or for a minimal cost through selected contractors. This audit will help you focus on home improvements that will save the most energy for your money.
  5. Install a programmable thermostat - Now you can set the temperature to be lower while you’re asleep or not home, and not notice a thing.
  6. Change your furnace filter regularly - It helps your furnace run more efficiently. And no, you don’t have to buy the $15 Filtrate ones.
  7. Use CFLs - Replace incandescent light bulbs with compact fluorescent bulbs as they burn out for big savings on your electric bill.
  8. Conserve water - Do your laundry once a week, only run the dishwasher when it’s full, install a low-flow showerhead, etc.
  9. Shop around for your trash service - I used to think only one company serviced our subdivision. Not true! Call around and check - we switched to a lower-cost company that also does recycling.

  10. Buy a trash can - We used to “rent” a trash can from the trash collectors for $3 a quarter just because that’s what everyone else on the block did. I think it’s safe to say we’ve now recouped our $20 trash can purchase.

    Communications
  11. Discontinue all subscriptions for magazines and newspapers that you don’t always read - If you read all your magazines or newspapers, pick your two favorites and cancel the rest.
  12. Consider getting rid of your home phone - If you have both a cell phone and a home phone, and don’t use the home phone much, get rid of it.
  13. Pretend like call waiting, caller ID and call forwarding were never invented - Your phone bill will thank you for it (if you decide to keep a home phone).
  14. Dump the replacement insurance on your cell phone - Add a contact called “me” into your cell phone with your home phone or other contact number so if you lose your phone, it will be easier for the person who finds it to reach you (your ICE - In Case of Emergency - contact is also fine). Your cell phone also usually comes with a 1-2 year manufacturer’s warranty in case it stops working.
  15. Call your current cable/satellite provider and ask for a better deal - I did this for over two years with Comcast. Every time my three-month special ran out, I would call and say I was thinking about switching to Dish. When they started being stingy, I switched to AT&T (Comcast’s customer service’s response: “Oh, I really wish you would have called us before you did that. If you ever want to come back, we have a special buy-back program for AT&T customers.”)
  16. Shop around for home telephone, cell phone, cable/satellite and Internet services regularly - See if bundling would save you money, or look into other options like VoIP.
  17. Get rid of your cable service, or cut back to basic cable - I cannot wait for the day when I only have to pay based on the channels I watch (Comedy Central, CNN, CNBC, HGTV, Style and DIY). But until then, why not cut the cord (my husband won’t agree to it, or I probably would)? And just because you have an HDTV doesn’t mean you have to pay for the HD channels. As for HBO, Cinemax, Showtime - there’s always NetFlix.
  18. Don’t rent your modem - See #10. I paid Comcast $3 a month for a modem I could have bought for $40.

    Insurance
  19. Re-shop your home and auto insurance rates at least once a year - Try using an insurance broker that can compile rates from multiple companies quickly.
  20. Use the same company - Buy your home/renter’s insurance and auto insurance through the same company for a discount.
  21. Raise your deductible - Raise you car insurance deductible to at least $500, and your home owners deductible to at least $1,000. Consider dropping collision coverage on your car if you drive a paid-for beater.
  22. Make sure you don’t have emergency roadside assistance through multiple places - Do you unknowingly have coverage under your car’s warranty, an auto club and your cell phone? Choose one.
  23. Dump your whole life insurance policy and opt for term life insurance - It costs less. If you’re going to invest, invest within your retirement accounts, not your insurance policy.
  24. You don’t need to have life insurance on your children unless you’re Lynne Spears or Dina Lohan - If you don’t depend on your children for your income, you don’t need to insure their life. If you don’t have much savings and want to have a small policy to pay for a funeral, I’m cool with that.
  25. If you and your spouse/partner work, compare your health insurance policies - Many people assume that if you’re married, it will cost less for you both to have the same health insurance carrier. But in our case, it’s cheaper for me to be on my company’s policy and my husband and stepson to be on his company’s policy.
  26. If you don’t use your employer’s health insurance plan, ask for some money back - OK, so I haven’t had much success with this one, but I work for a small company. At my husband’s work, if you don’t use the company’s health insurance (because you’re covered through your spouse or have other coverage), you get $750. It saves your employer a TON of money by not having to cover you, so why shouldn’t you reap some of the savings?
  27. Get rid of convenience fees - If you pay your insurance bill monthly and are charged a convenience fee for doing so, see if that fee can be waived if you have the amount auto-debited from your checking account.
    Beauty
  28. Go au natural - With your nails and hair, that is. Cut out manicures/pedicures or do them at home. Avoid having your hair professionally colored, straightened or blown out.
  29. Don’t go tanning - It’s bad for your skin and your budget.
  30. Break up with your high-priced hair stylist - But first, why not cheat a little and visit Fantastic Sam’s or Snip ‘n Clip? If you can’t tell the difference, neither can anyone else.
  31. Go longer between haircuts - If you usually do six weeks, try seven. Usually do seven? Try eight.
  32. Skip the wax - After you have your eyebrows done once, you should be able to maintain them without having the salon wax them every few weeks. Re-introduce yourself to the tweezers. If you have your upper lip waxed, try the hair removal cream they sell at the drugstore. If you’re having other things waxed…well, why don’t you limit it to summer or special occasions?
  33. Buy drugstore makeup - It’s really not that different. Although I prefer Clinique and it’s usually a good deal as long as I only buy during “bonus time” (where you get a bag and a bunch of free makeup with your purchase).
  34. Think classics, not trends - Buy classic pieces of clothing that you love. These don’t necessarily have to be expensive. And never spend more than $20 on a trend that will be gone by the following season.
  35. Don’t buy clothes unless they fit perfectly - If they can be modified to fit perfectly by a tailor, factor that cost into the price of the item and actually have it done! That little thing bothering you in the dressing room is going to be end up being the reason you don’t wear it.
  36. Buy clothes near the end of the season for the following year - Just stick with the classics and you’ll be fine. I buy ALL my stepson’s clothes this way.
  37. Avoid “dry clean only” when you can - You’ll pay for the item over and over when you have it dry cleaned.
  38. Alternately, buy Dryell and cut your dry cleaning visits - I use this all the time for my dry clean only items.
  39. If you must visit the dry cleaners, don’t have anything cleaned that can be put in the washing machine - That means you, fellas.

    Children

  40. Don’t have any - Just kidding (kinda)
  41. Pay your child an allowance and clearly define what they are expected to pay for with their own money - Not only will you be closing the Bank of Mom and Dad, you’ll be giving your children real-world financial experience.
  42. Have your child bring their lunch to school instead of paying for hot lunch - If they’re old enough, consider including a certain amount of money in their allowance for lunch costs. Anything they don’t spend, they get to keep.
  43. Set limits on elective school and activity expenses - Buy the soft-cover yearbook instead of the hard-cover. Buy school pictures in the fall, but not when they take pictures again in the spring. You don’t have to buy something every time the teacher sends home book order forms. Etc.
  44. Don’t ask people to buy things for your children’s fundraisers - Then, they (hopefully) won’t ask you to buy things for their children’s.
  45. Speaking of fundraisers, the school or organization typically only receives a small percentage of what you pay for that overpriced wrapping paper and candy - If you must give, do everyone a favor and write them a check directly.

  46. If you go to a fancy salon, don’t take your child there for their haircut - Snip ‘N Clip or Fantastic Sam’s will do just fine (or cut it yourself, if you’re skilled/brave).

    Pets

  47. If your pets are on medication, such as flea or heart worm prevention, purchase it online - It is usually much cheaper than purchasing it from the vet’s office, and many sites offer free shipping with minimum orders. For heart worm and other medication, you may need to have your vet’s office fax over a prescription, but this is not necessary for flea prevention. Be sure to order the correct dosage based on your pet’s weight. Here are some websites to get you started: Drs. Foster Smith and 1-800-Pet-Meds.
  48. If you live in a climate with cold winters, it’s really not necessary to use flea-prevention year-round - I’m really paranoid about this, but I skipped December and January with no problem (I started again the end of February).
  49. Learn to trim your pet’s nails yourself - If you can do it and your pet will tolerate it, that’s another thing you don’t have to pay someone else to do.
  50. Inquire about multi-pet discounts - If you have more than one pet, ask about multi-pet discounts at your vet’s office, groomer and boarding facility.
  51. Trade pet-sitting duties - Instead of boarding your pet when you go out of town, find a friend or relative willing to watch your pet if you’ll watch theirs later. Alternately, hire a friend or relative to “live” at your house while you’re gone and take care of your pets, get the mail, etc., for less than the price of boarding (note: this works better when your friend lives in an apartment with few obligations like children or pets, and your home is nicer than theirs).
  52. Stop buying the expensive pet food - I’m not saying you have to buy generic, just take it down a notch. When we got our dog, I bought only Science Diet for the longest time. Then I went down to Iams, and I’m now down to Pedigree. He likes it just the same, and it’s still a pretty good brand. My vet tech says that’s what she feeds her dogs.
  53. If you have ever been interested in volunteering for a humane society or other animal adoption organization, here’s some extra motivation: These organizations often give their volunteers access to free/reduced vaccinations, microchip implantation, and other services for their pets.
    Entertainment

  54. Order water at restaurants - Even a soft drink sometimes costs $2.50. You’ll shave money off your bill if you skip the drinks.
  55. Use coupons at restaurants - Many people will use coupons at grocery stores, but feel cheap using them in a restaurant. Go ahead and do it - if they didn’t want you to use a coupon, why would they print them? At least the restaurant will know their marketing efforts aren’t being wasted.
  56. Better yet, don’t go to restaurants - Many people go to restaurants because they are too busy to cook. Have back-up plan when you’re in a rush: quick and easy meals in the freezer and individually packaged snacks and drinks. You’ll notice that restaurants fall into my “Entertainment” category - they are non-essential.
  57. Check craigslist for tickets - Unless you are trying to get tickets to Hannah Montana or another sold-out event, you can probably find tickets on craigslist for less than face value (with no taxes and convenience charges).
  58. Your place or mine? - You will save a lot of money if you stop going places with your friends. Do your outings involve restaurants, bars, concerts, shopping, movies and other money-drains? Invite them over instead. You’ll have better conversations, and often, more fun.
  59. Skip the martinis - If you do end up at a happy hour or club, skip the expensive mixed drinks and have a beer. Better yet, volunteer to be the designated driver.
  60. Take a vacation in your own city - Instead of shelling out the big bucks for plane tickets and hotels in another city, why not be a tourist in your own city for a week?
  61. Borrow books from the library - I have to admit that all the late fees I accrue at the library are nothing compared to the cost of buying books new. If there’s a new book you must read now, buy it, read it and then sell it to someone with more patience than you.
  62. Wait for it to come out on DVD - Movies are super expensive. The more movies you can wait to see on DVD (or rent from the library), the better.
    Groceries

  63. Bring your own bags - Many stores will give you a five cent discount for every bag you use.
  64. Only use coupons for things you usually buy - Ignore everything else.
  65. Go grocery shopping alone - You’ll get in and out quicker, with no extras in the shopping cart.
  66. Shop the perimeter of the store - That’s where you’ll find the fresh and refrigerated food that isn’t overly processed or prepared for convenience (and therefore, less expensive).
  67. Don’t buy non-grocery items at the grocery store - These items are priced much higher than they would be at Wal-Mart or Target, because they are convenience items when purchased at the grocery store.
  68. Purchase lunch food to take to work - I have a hard time with this, admittedly. But brown-bagging it can save you over $1,000 per year.
  69. Create a grocery store “price book” - Start keeping track of the items you buy regularly so you can tell when prices are rock bottom. To download a printable version, visit No Credit Needed.
  70. Wanna get a little more hard core? - Read about The Grocery Game and try the $1 4-month trial (after that it’s $10/month for one store). The Grocery Game features a database that tracks coupons, sales and specials, telling you what to buy when. I haven’t tried it yet, but other blogs say it saves you a lot of money if you’re not already the type of person who clips coupons and pays close attention to sales.

    Gifts

  71. Buy year-round gifts right after Christmas - After-Christmas clearance sales are a great time to find presents for children’s birthdays, as well as presents for next Christmas. You can even find “Christmas” wrapping paper that is appropriate for weddings or birthdays.
  72. Use your small credit card rewards point balance to buy gift cards - We rarely use our credit cards because we don’t trust ourselves to pay them off, but sometimes we have enough purchases to get a gift card for the Gap or Home Depot. These can be used as gifts.
  73. Re-Gift your gift cards - Sometimes when I’ve been really broke, I take in a gift card I received and use it to buy a new gift card (after all, it’d be pretty tacky to just cross my name out and write theirs down).
  74. Purchase sets of items that can be broken up into separate gifts - For example, a case of wine or a set of vases. Keep these items on hand for hostess, housewarming and engagement gifts.

  75. Ask for practical gifts - When you’re the recipient and someone asks you what you’d like, why don’t you ask for something practical that you would buy anyway?

    Taxes
  76. Stop paying for tax preparation - If your household’s adjusted gross income is $54,000 or less, you can file online for free at the IRS’ Free File website. You will have a choice of tax preparation websites, some of which also offer free state income tax filing and e-filing. If you are not eligible for Free File from the IRS, you can still prepare your federal return for free and e-file it with TurboTax online if you are a renter and file a 1040EZ or other simple return. Even if you cannot use these services, doing your own taxes is MUCH cheaper than having someone else do them for you. It’s also much simpler thanks to advanced software and websites that guide you through the process.
  77. Sign up for an FSA - If your employer offers Health or Dependent Care Flexible Spending Accounts (FSAs), sign up during your next benefit enrollment or when you have a qualifying life event (marriage, divorce, birth, adoption, etc.). Your doctor’s visits and daycare expenses with be paid with pre-tax money, and since the same amount is witheld from each paycheck, it makes budgeting much easier.
  78. Reduce your withholding - Getting a huge refund from Uncle Sam every year? Why not update your W4 and siphon the money from your paycheck to your debts automatically every payday?
    Unfinished Business
  79. Close old accounts - Do you have little balances left at your old banks? $8.16 here, $2.00 there? Call and close the accounts. The longer you wait, the less money you’ll have left, as most banks charge small fees for abandoned accounts to gradually deplete them.
  80. Check for missing money and unclaimed property - There are some great websites you can check to see if you’re owed money by a previous employer, the IRS, a long-lost relative, etc. Check out Get Rich Slowly’s post for details.

    Transportation

  81. Take public transportation - Check the routes and see if it’s feasible to ride the bus or take the subway to work. If not, can you use public transportation for errands or other trips?
  82. Carpool - Ride to work with a coworker, your significant other or look for someone on local ride share websites.
  83. Keep your car tuned up - Regular maintenance is the key to preventing costly repairs. Have the oil changed and tires rotated regularly, and follow the service schedule in your owners manual.
    Cash and Coin
  84. Use cash for purchases - You will spend less. Why else do you think all the fast food chains were so eager to accept debit cards? For your convenience? Ha!
  85. Don’t spend your change - Save it in a jar. When it gets full, take it to the bank and pay extra on your debts. Note to self: consider adding a lid to the jar so it doesn’t become the vending machine fund.
  86. Pick up found money - This includes change. Pennies, even. Put them in the jar. Wash hands.
  87. Institute the “love jar” - Everytime you have sex, put a dollar in the jar. Man, I wish my husband and I had started this before we got married.
    Earn More Money
  88. Ask for a raise - If you deserve one, ask!
  89. Sell your pseudo-valuable items online - Use eBay and Craigslist for the stuff worth more than $50 or so.
  90. Sell your junk in a garage sale - Go in with friends and neighbors, or have your garage sale during the neighborhood garage sale weekend.
  91. Participate in medical research studies - If you’re between the ages of 18 and 64, are taking no medications…you know the drill. Call the number and sign up already!
  92. Participate in marketing research studies - Although many studies are conducted online, the real money is in studies that need live people, like taste tests, focus groups and fit tests. Contact a local marketing research facility and inquire about getting on their contact list.
  93. Donate plasma - I know a guy who does this weekly. Call your local blood bank or plasma collection center for details.
  94. Turn your hobby into cash - If you play the piano, give piano lessons. Take photographs? Sell them to stock photo websites. Almost any hobby can be monetized (unless it’s playing video games - I still haven’t come up with one for that).
  95. Get a(nother) part-time job - Yes, I know you’ve already thought of that. Is it time to reconsider?

    Miscellaneous

  96. Pay your bills online - You’ll save stamps and save time.
  97. Start a Upromise account - Upromise is a service that gives you money for college by shopping at specific partnered retailers. This money can be linked to a 529 plan or to your existing student loan, if your loan is through Sallie Mae or another participating lender.
  98. Transfer balances (not just for credit cards) - If you have excellent credit and are paying off other (non-credit card) loans, consider transferring the balances to low- or no-interest rate credit cards. Just make sure to read the fine print (I generally won’t do it if there’s a transfer fee, or if the fee doesn’t have a low cap), and know that you will have it paid off before the rate goes up. I have done this for our car loans, and am planning on doing it with chunks of our home equity loan, assuming good offers are still out there when we begin paying that off.
  99. Have a weekly, bi-weekly or monthly budgeting meeting with your spouse/partner - It doesn’t have to be long. Go over the budget and promise not to spend any money not included in the budget without consulting each other first.
  100. Don’t hire people to do things that you have the time and ability to do yourself - Mow, fertilize and aerate your own lawn; Paint your own house; Lay your own tile; Do your own taxes; Walk your dog yourself; etc. You can start paying others to do the things you don’t like doing when you’re DEBT FREE!

    No responses yet

    financegirl on Mar 5th 2008 Debt-Reduction, Frugality

    When I’m Debt-Free, I’m Buying the Expensive Toilet Paper!

    Before our Rock Band party this weekend, we were down to our last two rolls of toilet paper. My husband went out to get some and came back with (cue angel choir:) Cottonelle Ultra!

    I used to buy that kind all the time until we got intense about trying to get out of debt. And boy, did I forget what I was missing! It’s going to be hard to go back to the cheapo Charmin version I usually get.

    But, it’s not like Charmin doesn’t do the job. In fact, my “cheap” brand is probably someone else’s “expensive” brand. I just think it’s amazing how quickly you can get used to not having something you once thought was essential.

    Take caller ID. I once thought this was a must-have, but I cancelled it years ago and have barely noticed.

    And while I love having cable TV, I’m sure that even a DVR-crazy person such as myself would get over it. I mean, three years ago (when I didn’t have cable), my boss asked what TV shows I watch, and the only thing I could come up with was, “Well, I’ve seen Desperate Housewives a couple times, and that new show with the doctors looks like it might be good.”

    What “essentials” do you have that need to be re-evaluated? Are you spending more on your cell phone than you’re saving for emergencies? Is your Whole Foods bill bigger than the extra payment you’re sending the credit card company?

    No responses yet

    financegirl on Mar 4th 2008 Debt-Reduction

    Rewards and Motivation: They Don’t Just Work on Dogs

    We’re about eight months into our five-year get-completely-out-of-debt plan. Only two things sustain me:

    1. The thought that at the end of all this, I’ll be able to pursue my dreams (even though I’m not exactly sure what those are yet)
    2. Another trip to Buffalo Wild Wings

    You see, every time a debt gets paid off, we reward ourselves with a trip to Buffalo Wild Wings. I love Buffalo Wild Wings, so I can hardly wait to get our last $1,800 of car debt paid off next month. Yum!

    I think that rewarding yourself for making progress is a step that many financial advisors and gurus overlook. It’s relevant for debt reduction, saving and really any behavior that you want to change.

    What are your rewards for meeting your goals? Do they increase as the goals get bigger? Is it a challenge not to feel guilty about rewarding yourself after trying so hard to be stingy?

    No responses yet

    financegirl on Mar 1st 2008 Debt-Reduction, Spending

    Times When I Just Can’t Say No

    Some things are easier to say no to than others. Here are some recent questions I’ve had a hard time saying no to, even though I really shouldn’t be spending the money:

    • Do you want to come out with us to a bar tonight? (friends)
    • Are we going to take another group vacation to the lake this summer? (friends)
    • I want to go to see a musical for my birthday. Can you and John come? (my mom)
    • Do you want to have your dog’s nails trimmed today? (the vet)
    • Can you donate money to my walk for cancer? (one of my company’s clients)

    I’ve said yes to some, no to some, and ignored a few for now.

    Last night, I was asked another such question.

    My sister and her husband had tickets to a musical that I had been wanting to see (but didn’t have the money to buy tickets for) and her husband couldn’t go because he had to work at the last minute. She needed someone to go with her. Tickets were $40, but she said I didn’t necessarily have to pay her, just pay for parking or whatever.

    Well, they just recently graduated from college, got married, are getting ready to move and make about 20% of what my husband and I make. Essentially, they are broke (why they are buying tickets to Broadway shows, I don’t know). So I went. And drove there, paid for parking and gave her money for my ticket.

    It’s hard to say no when your reason is getting out of debt quickly, and the person asking is just trying to pay their bills.

    No responses yet

    financegirl on Feb 19th 2008 Children, Debt-Reduction

    Pregnant with Debt

    When I was younger, I figured I’d have a baby when I was 24. Then, it became 25, 26, etc., and now I’m hoping to get to it before I’m 30.

    What happened? Well, student loans, credit cards, cars, a house..plus, I wasn’t really ready until recently. So now that I’ve started seriously thinking about it, I’m not sure when the best time would be. And while I know there’s no “perfect” time, my husband and I have a goal of getting completely out of debt (including the house) within five or six years so we can explore lower-paying, more fulfilling careers.

    Will having a baby ruin our plans? It might create a few detours, given the cost of daycare these days. But there’s no way we’re waiting five years for a baby. So our target date for the baby being born is December 2009, when we should have most (if not all) of our non-mortgage debt paid off. Then, I’m hoping my mom might want to watch the baby, since she only works part-time a few days per week. I’d like to pay her more than she makes now, but less than the cost of daycare. But I need to talk to her to see how she feels about it (although I hate the idea of people knowing we’re “trying” - it grosses me out).

    I’m sure everything will work itself out. But I’d rather have a plan that goes awry than no plan at all.

    No responses yet

    financegirl on Feb 16th 2008 Debt-Reduction

    My Dave Ramsey Hybrid Approach to Paying Off Debt

    I started listening to the Dave Ramsey Show podcast in July, and have continued to listen to it every day on my way to work. That’s a real compliment to the show, considering I’m a non-church-going liberal and he’s, well…not.

    I’ve been working on paying off my debt ever since I began acquiring it in college, but once I’d get one thing paid off, there was another reason I “needed” to borrow money. But listening to Dave Ramsey every day is like AA for overspenders.

    Here are Dave Ramsey’s steps to financial freedom, which he refers to as the “Baby Steps:”

    1. Build an emergency fund of $1,000.
    2. Pay off all your debt except your mortgage, from smallest to largest (regardless of the interest rate). This is called the “debt snowball.” You pay minimums on all your debts except the smallest one, and you attack it. Then, when that one is paid off, take all that money plus the minimum you were already paying and apply to to the second smallest debt. Etc. If you have a second mortgage, you are supposed to include it in this step if it is 50% or less than your total annual income.
    3. Build your emergency savings up to 3-6 months of living expenses
    4. Invest 15% into retirement, not including any employer matching. You should not be contributing ANYTHING to retirement (even if your employer offers a match) until you reach this step.
    5. Save for your children’s college.
    6. Pay off your home early. (Steps 5 and 6 can be done at the same time)
    7. Invest in mutual funds and real estate, and donate lots of money to charity.

    So, I am following this basic plan, but here’s where I’m doing things differently:

    • We are contributing 5% of my husband’s income into his employer’s 401k because they give a 5% match. I get about 10% from my employer with no contributions on my part, but I’m putting $50 a month into a ROTH IRA. Dave’s basis for saying you shouldn’t contribute to retirement until you reach baby step 4 is that steps 1-3 shouldn’t take that long if you’re really being hardcore, and the 15% should more than make up for it. However, steps 1-3 will probably take us about 2 1/2 years, and I am not going to give up any free money.
    • We started our debt snowball with our car loans, which did not have the smallest balances, but did have the highest interest rate. We’ve paid off about $16,000 in car debt since July. As soon as the remaining $3,000 is paid off, we’ll move to the $3,400 credit card, which has an interest rate of 2.99% fixed. I know it doesn’t make much sense mathematically to pay this off, but I’ve been carrying around this balance for 7 years and am sick of it! Plus it will give us the momentum we need to keep with this once we start paying extra on our $35,000 second mortgage.
    • Dave says to tithe 10% of your income to your local church throughout this whole process. Well, we don’t go to church, so we don’t do that. I’d like to give 10% to our favorite charities, but I think it makes more sense to make this commitment after we’re out of debt. So for now, we just give $50 here and $25 there.

    2 responses so far

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