Archive for the ‘debt reduction’ Category

Truth or Consequences

May 15, 2008

I’ve been quiet. We took a break from the blog and guess what? Yes, our debt went up again. The husband and I were marvelling at how close we got to kicking the debt back in September. When I think back to the months between September and May I can’t easily explain how our debt shot up by 13K. I want to be shocked and yet I am not. *Sigh* Who would read the blog of two people who came so close to their goal and then lost sight of what they were doing? Is this delusional blogging? Don’t answer that. For now I can only hope that the blog serves as a way to help the husband and I focus on our debt elimination again. For now this is our tool to jumpstart our financial awareness.

I could spend a bunch of time trying to account for why we lost track of our goal and how we racked up more debt. But I’m guessing that’s a bit boring. And yet, I wonder from a psychological standpoint, is it helpful to review the past in great detail? Will this truly help us or prevent us from moving forward? Hmmmm….I suppose there’s not a straightforward answer to that question. Shrink husband, what say you?

To tackle our debts we clearly need to look back to understand how we have spent our money and what our pitfalls were. In looking for patterns we can identify areas for improvement. But what does it take to move beyond the past and really take control of our financial decisions? Here are some suggestions:

1.) Look at past spending — If you have been using Quicken or Liquid Ledger run some reports to see how you’ve spent your money for the past 12 months. You may be surprised at what you find.

2.) Identify areas for improvement — Be realistic. Don’t go from eating lunch out everyday to packing a lunch every day and never eating out. Being absolute is a surefire recipe for failure.

3.) Remember that every decision you make about how to spend your money is a choice. — Don’t fall into the trap of thinking you need something or that you are entitled to it. Remember that you are in charge of financial choices and every choice has options and consequences.


Hitting the Financial Reset Button

September 27, 2007

I’ve been Missing in Action. It’s been a busy summer. First we had to deal with fumigating our house. Then I was away for a few weeks on a vacation and then work-related trip. Upon our return we were scrambling to unpack and get ready for the beginning of a new school year. During all of this our blogging feel by the wayside. This doesn’t mean we haven’t been thinking about our finances and ways to run a tighter ship. Still, I must say that it was really therapeutic to get away from the day-to-day grind.

When we got back from vacation I found a big check waiting for me. This check was the result of our decision to sell a mutual fund. We decided to sell this asset so that we could pay off our credit card debt. We were sure to put a good chunk of the money aside in a high-yield CD so that we have the money available to us when it comes time to pay taxes. We used the rest to help wipe out most of our debt. I have no doubt that we did the right thing as the level of stress we were living with trying to pay down our debts was really not healthy.

Our challenge now will be to keep on top of our bills and really build our emergency fund so that when big expenses arise (and they always do!) that we don’t have to use a credit card to pay for it.

Tonight when I was updating our debt/assets and paying bills online I noticed that the one credit card I had paid off in August was showing a $242 finance charge. I was enraged and called the cc company to ask them to get rid of it. Amazingly enough they did! So, I am now back to a $0 balance with that.

I’m still hoping the Bizarros will rise from the dead.

A Debt Reduction Carnival

August 6, 2007

Our First Carnival.
Warning: Many exclamatory statements ahead. I guess we’re just excited, excited, excited about hosting our first ever debt reduction carnival. It certainly has been inspirational to be a part of the debt reduction community, really.

Would You Consider Helping Another PF Blogger?
We’ve learned a lot. So, sit back and click. Would you mind? The pf community is a great place for otherwise scarce information about debt reduction. Pf bloggers are making a public commitment to debt reduction — a powerful motivator. Perhaps you will post something to the next carnival, respond in kind? Since you’re reading this, it only makes sense.

[If the previous paragraph reads like utter dross — please pardon, there’s a reason, to be explained in a later post about marketing that exploits our deepest, largely unconscious needs. Look for it on Wednesday, most likely.]

For the record, these are in absolutely no particular order! Enjoy.

Two Investment Mistakes:
I’m partial to this post, perhaps because it looks into two mindsets, cognitive rules of thumb, heuristics, that can get us into trouble when investing. That’s psychology folks. So read on… It’s hard not to want to spur someone on that has just started a pf blog, whatever the focus — debt reduction, money management, frugality, investment. Check it out!

Building A Better Snowball:
Is it possible to resist such a title. This is an awesome post. If you haven’t read it yet, get thee to consumerism commentary and check it out. It’s got Pink Floyd, it’s got a killer financial plan for getting out of debt, it’s got a credit reduction calculator, did I mention it’s got a plan. For my money, setting up the emergency fund is key, this message cannot be crowed off the rooftops enough. Check it out!

When You Put Your Mind to It:
Clever Dude is not kidding. He shares his method for destroying $58,000 in debt. There’s hints galore for even the most world-weary debt gladiator. One of my favorites is “We Fix Things Ourselves.” It doesn’t take much — not that I’ve done it — to change the oil in your car, does it? Check it out!

Free Credit Reports, A Cornucopia:
Hustlerama offers no less than 15 ways to get a free credit report. Not that I’ve actually ever done this, but this could be the inspiration that finally puts me over the edge. I’m actually kind of worried that some of our behavior has led to some nasty credit comments. Maybe not. An important step in reducing debt: Know where you are, financially. (And for the not-faint-of-heart, scroll down about halfway down his homepage and look in the left gutter — something to roil the emotions of any debt reductionist.) Check it out!

Alternate Income Streams:
I’ve ventured into this area, but think it is underutilized. An occasional CD sold on amazon has bought me the occasional lunch. At businesscreditcards, the focus is New Media Ways to Raise Capital. Some tips you’ve probably not considered. If you’ve got a little time, these could really pay off! Check it out.

David On Finance:
Has got some well considered thoughts on when to consolidate debt. He also uses the phrase “raw power”, which I think is highly under-used in the pf world. If it was good enough for Iggy… David makes some excellent points about credit unions (not always…) and extra payments (ah, the power!). Check it out!

Grad Money Matters:
He calls them myths. I call them heuristics, cognitive shortcuts, rules of thumb. Well, some of them, anyway. There’s a goldmine of good advices and links here. I particularly like what he’s done with the I’ll-never-get-out-of-debt-so-I’ll-give-up mindset. Check it out!

Mighty Bargain Hunter, Putting Things in Perspective:
This is a refreshing post that puts a little forest into the viewfinder (rather than trees). Your debt needs the context of your life. Not other people’s lives. An important thing to be reminded of, that. Check it out!

Sex for $3:
Can you beat that for a deal? Another whale of a post from one of the funniest bloggers around. If you’re not conversant with the ways of Bianca and Basil, you’re in for a treat. Check it out!

OOPS: It appears that the Bizarros have “scrapped” their blog. I’m not sure what this means, but hope it’s temporary. The link may not work. Sorry.

A Book Review. Now I Want to Read This Book.
Books are invaluable motivators for re-focusing. Get it at the library or one of those great used books sites (I kick myself when I think of all the new books I’ve bought — used books are simply no longer the coffee-stained acid-ravaged items we encountered in less-than-savory warehouses.) And of course, Trish at blogging away debt is a certified maven of personal finance. Check it out!

Another Lie About Debt:
Here’s another perspective enhancing article. (Or a link to it.) In the circle of linking, I got this one from blogging away debt. I found it so interesting I broke my goal of having 10 links for this carnival. So now we have a nice prime number. Check it out!

Am I Really Ready to Get Out of Debt?
Okay. So Let’s Make It An Even Dozen. NCN submits some interesting points, ready starting points for self-inquiry. I particularly liked the one about being ready to withstand the opinions of others. Let’s face it, turning down lunch because you don’t want to spend money is awkward, in many circles. Check it out!

We’ve enjoyed hosting this incarnation of the debt reduction carnival. If there was anything you particularly liked or disliked, we’d like to hear about it.

A Second Chance with Money

August 3, 2007

For years Noma and I were excellent about managing our money. When we met we were both making under 25K and living in NYC (this was a while ago). Noma worked an extra job to make enough money to invest in Microsoft stock, which he later cashed in to help with the down payment on our home. He also ate rice and beans so that he could save 2K so that we could go to Europe together.

We didn’t have any credit card debt until the last year or two when it seemed to have sprouted up from no where. It was like we grew extra heads overnight. How did this happen?

The problem was that we were living on one salary with very high expenses and such hectic schedules that I don’t think either one of us even knew that we were carrying so much debt. I knew that we had put some expenses on the cards but I hadn’t been watching it build up. We have only ourselves to blame and yet I do think the credit card companies make it very difficult for a person to see their debt. For instance, I recently had to call American Express to understand what my minimum payment should be…this wasn’t listed on my bill.

Anyways, my series of revelations this week about our financial situation has spurred us on to action.

As Noma mentioned I don’t know why we didn’t think of this before…I think the biggest reason we didn’t think about it before is that being mindful about one’s financial situation takes a lot of time and attention. We’ve been neglecting our financial health for too long.

We’re lucky enough to have invested in some mutual funds a while ago. In looking at our situation we’ve decided to sell these and take the money to pay off our debts. We’ll then be at zero debt.

I will feel incredibly relieved when we can do this. We will have to save about 3K to pay for the capital gains taxes but even so we’ll be able to pay off our debts and have a bit to put into the emergency fund. Do I feel great? Yes and yet I also do not want to rest on these laurels. From the moment we hit zero debt I want to make sure that we are managing our finances better. I’m hoping this experience will have scared us straight. I can’t say I have 100% confidence because of all of our expenses. We may need to make some childcare changes. We need to make some difficult decisions.

Once emancipated I want to stay that way.

Credit Card and Evil Introductory Rate APRs

August 1, 2007

One step forward and three steps back. I was just reading an article on Yahoo Finance called “Five Steps for Ditching Credit Card Debt“in which the David Bach outlines a strategy for determining which credit cards to pay off first. I decided to update my spreadsheet and follow his exercise which involves taking balance and dividing it by the minimum payment due. In doing this I noticed two things (1) my credit card statements don’t list a minimum due and (2) an extremely HIGH finance charge on my Amex Blue account. Geez. Credit card companies are evil.

I am now on hold with American Express. I just learned that I must have paid one or two of my payments late and our interest rate has shot up from 4% to 30.25%. I can’t believe this. Noma is going to have a coronary. We’ve been trying to stay on top of things and yet it seems that our payments must have been marked late and that the interest rate shot up insanely based on this.

I feel like I’ve been raped by American Express. I tried to ask them to let me rectify this but they’ve said that I need to wait 1 year of paying ontime before they will reduce the rate again. Did I mention that I hate credit card companies?

The woman on the phone just came back and gave me secret information. My minimum payment due each month is $317.79. I need to set this up for automatic payment NOW.

I feel like an idiot. So much for having transferred our balance. Now I need to look into whether or not we can transfer it again to another card w/out damaging our credit.

Debt Extermination — 1 card down, 3 to go

July 27, 2007

I just got off the phone with American Express. I’m happy to report that this member since 1990 paid off her personal card and closed the account. I found it immensely satisfying to tell them to get rid of the $55 membership charge (which was just applied this week!) and to close the card. They tried to ask personal questions and even said “what can we do to keep you with American Express?” I said, “I don’t mean to be rude but I don’t feel like I’m being heard. I’ve asked to cancel my card.” Once I hung up the phone I got my big scissors out and cut that sucker up. Chaching…that’s the sound of becoming closer to $0 debt.

So, the positive part is that we’re down to 3 cards. My goal is to get down to 1 shared credit card and $0 debt. The downside is that while we’re down to 3 cards our debt has gone up as I had to put the second half of the bill for the extermination company on a credit card since I don’t get paid until 31 July. I’ll be sure to pay that down once I get paid.

It sometimes feels like I make a baby step and then have to take a big step backwards. Today however I’m not feeling discouraged by that. At least I’m aware and doing everything I can to help us move forward.

Happy Friday.

Confessions from a Debt Whiner

July 26, 2007

Blogging about our financial goals allows me to do the following:
(1) focus on our goals
(2) communicate with my husband about staying the course
(3) track our progress 
(4) create a community in which we can share stories and inspiration
(5) have an outlet to whine and complain about how much it sucks to be in debt and how god awful it feels to start digging your way out….(shoveling a mountain of s&*t with a toothpick)

Confessions from a Blog Whiner
Lately I’ve been using this blog to really have a good whine about it all. When I mentioned that I’ve been whining a lot on the blog my darling husband kind of nodded tentatively and agreed by saying “no one really likes hearing it.” When I said “you’re right. I think I should delete it” he countered with “no, it’s part of the process.” Yes, it is definitely part of the process. Does this whining help us though?

Financial Exorcism
I still feel like I’m in a bit of a financial exorcism. Some ugly feelings have definitely come up since I’ve woken up to realize I can’t afford that coffee I’ve been drinking for the past 2 years. It ain’t pretty. I want my latte along with a generous heap of credit, thank you very much. Did I just say that? No, bad ladydough, bad. Time to drink the office brew.

Noma, the smart husband, is right in that this whining is all part of the process.  

While I realize this grumpiness is part of the process I’m going to also try to remind myself to be thankful for all that I have and to be more patient with myself. After all I am so incredibly fortunate for so many things. Also, we just started our new lives as debt warriors in May. It took us a few years to build up this debt and I need to just take a deep breath and realize it may take me a few more before I get rid of it again. That’s ok.  But it’s so hard. Now that I’m ready to face reality and make progress I have to wait. That’s tough.

 So, without further ado, here are some things I’m thankful for (not in any particular order):

1.) I have a wonderful husband and two healthy, beautiful, curious, interesting kids
2.) Everyone in our extended family is healthy
3.) After many career changes my husband has found a field that he loves and enjoys. He knows he will never want to retire and he is sure he will find success as a therapist.
4.) I have wonderful, lovely, supportive friends
5.) We own our house. Although we are cashpoor our networth is high due to the value of our home and my retirement savings
6.) For the past 5 years I’ve been able to save about 20-30% of my income towards our retirement
7.) We are lucky enough to live in an area of LA with a good public school
8.) I work at a stable company where I never have to worry about being laid off
9.) I live in a blue state
10.) I’m not on any medications

Failure to Post: Blog Avoidant

July 15, 2007

Noma has been asking me why I haven’t posted recently. Hmm…It’s true I have become a bit blog avoidant.

I think this is due in part to our recent set back with having had to dip into our emergency fund. And because I know we’ll have to dip into it again to pay for the termite tenting we have to do in the next couple of weeks/months (unscheduled so far). I’ve got my head down and my blog between my knees. Who am I to write about battling debt? Perhaps I can offer some schadenfreude to those who have avoided dipping into their emergency funds this month.

The optimist in me thinks these are small setbacks and that we are still in a better place than we were before because we are much more aware of our spending. This awareness, however, does, not in and of itself bring any feeling of progress. In fact I’ve noticed it makes me feel more anxious and lackluster about life. This is probably because I’m more aware of our situation and how impossible it feels to get ahead.

Feeling more lackluster about life because of my financial situation doesn’t make me feel proud. Why should any of us not enjoy what we have in the moment because of something we’ve done in the past (incur debt) or something we want to obtain in the future (a car, a remodelling project, a vacation, keeping up with the joneses)? How is it that our financial situation can dictate how we feel about life and ourselves to that degree?

How can we work on achieving financial goals without losing a sense of balance? Any tips from fellow debt bloggers would be appreciated.

Debt-o-Meter Updated: 13.877%

June 25, 2007

I just updated our debt and emergency fund watch numbers. The good news is that we’ve continued to make some progress on our debt. The bad news is that our cash flow hasn’t been flowing in the right direction and we had to transfer some funds from our savings to our checking to cover expenses until I get paid at the end of the month.

So, how did we get off track? I attribute this to having to buy year-end gifts for teachers and having to increase our childcare costs over the summer. A twenty dollar bill here and there can make a difference on a budget without any fat. A 10 hour day with a $15/hr babysitter obliterates me.

I imagine we’ll have to dip into our emergency fund soon as we learn we have termites and we’ll need to tent. It’s going to hurt. Just when it feels like we’re making progress something else comes up. Anytime anyone goes under our house I cringe because of what they might find. Ignorance is bliss. But then again, that’s how we ended up in so much debt. So, the question is how can you be on top of things and still find your bliss? How can you be a realist on a mission w/out getting totally obsessive and discouraged? I’m hoping to find out…

National Debt — Boomer Legacy?

June 21, 2007

Recently in my listening this track has struck me as being somehow related to the frugalist mindset.

Papa’s faith is people
Mama she believes in cleaning
Papa’s faith is in people
Mama she’s always cleaning
Papa brought home the sugar
Mama taught me the deeper meaning

Thoughts about this?

Since I’m not a baby boomer, I won’t list the artist, but you can check out her extraordinary fan website here. It includes tons of cool stuff like all the alternate guitar tunings for her songs, full lyrics, art, etc. As fan sites go it is stunningly competent, thorough, and useful.

Speaking of boomers — Ken Wilber (shudder?) has an interesting book called Boomeritis. One of the premises is that boomers eat their young. Highly pertinent regarding parenting we’ve observed. The book itself might be okay if it was the first of his you’ve read, but otherwise is mind-numbingly repetitive. Still, the guy obviously knows a lot and has lots of interesting ideas. Beware of New Age sentiments. To be fair, he is as critical of New Age marketing as the next skeptic.

If you’re in a reading type of mood, have bent toward social commentary, I highly recommend this book by Christopher Lasch, The Culture of Narcissism. A lot of it relates directly to spending habits, consumerism, current trends in helicopter parenting (eternal hovering). I just did a search on this site. I am dumbfounded that I’ve not mentioned this before. Dumbfounded.

My dad (depression-era generation) driving in parking lot: “Okay, here we go.”
“Look at this, crikey. It’s a very interesting phenomenon. The me-generation in action. Look at them.”
The couple in front of us are wandering through the parking lot in front of traffic, seemingly oblivious to their holding it up.
“It’s a fascinating phenomenon. Other people simply don’t exist!”

My dad is, as he likes to put it, “a trained social scientist.” So he does have a frame of reference in his observations. Not sure I’ve connected all the dots here. One thought is that when the baby boomers are gone, it’s possible that the cycle of debt slavery at the personal and national levels, if it hasn’t collapsed already, will begin to subside.

Another thought is that with the boomer parenting in evidence, living without limits and incurring debts as ways of being in the world are actually going to get worse. Bummer. Must think good thoughts!

No Credit Needed

June 18, 2007

We finally got our numbers together and put them on the NCN site. Here’s a great post at Free Money Finance on deterring burglars, should they make it into your home.