The Frugal Momma's Journey to Debt Freedom

What I am currently reading....

2007-02-23T20:35:00.000-05:00

A quickie post, I just picked up the following book at the library today:

I am going on a bit of a Bogle blitz at the moment (for reasons I shall explain in a later post). I also have two other Boglehead books in transit to my library branch (I'm convinced that my branch is designed for financial idiots because we *never* have any of the good books assigned to our location). I have already read them but I am in obsessive study mode. Potential exciting things may be happening here next week!! Stay tuned.....

I'll take my death with a spot of planning, thanks....

2007-02-19T08:36:00.000-05:00

I know it's not a topic that people like to talk about or even consider, perhaps that's why over half of Americans die without a will according to various sources. I don't even want to consider the amount of parents who die with young children and no life insurance to care for the remaining spouse, it's heartbreaking. But like the old saying goes, the only two certainties in life are death and taxes. So why don't we plan for it? I presume it's a mixture of reasons:

1. Death is an icky subject to talk about let alone plan for.
2. People feel as though they are immortal, that dying only happens to old sick people.
3. Creating an estate plan forces you to get organized with all of your financial paperwork and many people are too busy, overwhelmed, and lazy to gather it up and get it together.

When we embarked on our financial journey two years ago one of the first things we did was get life insurance on my husband (250K at the time). As a stay at home mom with no income we decided that I didn't need any (plus our budget was so tight that honestly another $15 a month was a stretch for us). In retrospect that was a stupid decision because if I were to die my husband would be strapped with the child care costs for three small children which would eat up a huge chunk of his pay. Plus I don't intend to be a stay at home mom forever so I will eventually be bringing in an income, which should be taken into consideration in the formula.

Fast forward to today and we both have 20-year level term policies, 500K on the old man and 250K on the spring chickie. I suspect that as our incomes rise we may increase that but for now it seems adequate when taking into consideration the income that we would receive from social security if one of us were to die. Because of our minimal expenses we could live on the social security and invest the life insurance.

Before you get all doomsday on me.....I don't have *any* faith that social security will be around when I'm retired but for the sole purpose of this scenario I feel confident that it will be around for the next few years. Honestly, I only need it for my calculations for the next five years while our babies are young and require child care. After that point it would simply be considered gravy and not necessary for the purposes of our financial planning.

We are currently in the process of doing our wills and other estate planning documents (they will be taken to the bank to be notarized on Saturday). In researching our options in this arena we decided to go with Nolo's Willmaker program. As our estate grows we will eventually seek the counsel of an estate attorney but for now a simple will designating the guardians of our children is sufficient. The program is very user friendly and simple to do without prior knowledge of estate planning. It also came with a useful reference book that details all sorts of estate planning information and compiles it in a readable format.

So if you are reading this and do not have life insurance or a will, put it on your to-do list this week! I feel so much peace knowing that these things are in place if something were to happen to either of us. It is a really painless process that can be done with minimal expense if you chose low-cost term insurance and do your own will using one of the many software programs available.

The way to this girls heart is through my Roth....

2007-02-15T09:33:00.000-05:00

Call me crazy but I don't want flowers or diamonds for Valentine's Day. Honestly I could care less about all the traditional gifts that are given on this Hallmark holiday. I know I am not a normal chick, I get that. Really. I love doing budgets, tracking our net worth, and seeing how little I can live on. Saving money is fun for me. I get a high from spending less than $50 a week to feed our family of 5. I don't even like chocolate (gasp!) so why would I want my husband to waste money on things that I don't want for the sake of a holiday tradition?

My ideal gift this holiday--a deposit into my Roth IRA. I only made a $3000 2006 contribution so I would have *loved* for him to deposit another $250 or more into that account. I might have even cried a little tear of joy because of the symbolism behind that gesture. Sadly I had to convince him of the benefit of making a contribution at all so I knew my chances of getting my dream gift were slim. Don't get me wrong, my husband is an amazing guy in many ways but in the arena of financial matters ummmmmm not so much. He is getting better but he still has a ways to go before he'll shave his head and drink the koolaid of the frugalites *sigh*.

For those of you on the edge of your seats, I got a very nice card and some candy (I forbid him from buying a "real gift"). At least it wasn't chocolate, right? There's always next year.....

The 401K is dreaming to be free....

2007-02-14T09:03:00.000-05:00

Have you noticed how many fees you have associated with your company sponsored 401K? Even funds that are typically low cost are puffed up within our 401K plans. For example, in my husbands 401K you can purchase Vanguard's 500 index (VFINX) which typically has an expense ratio of .09%. However for the unlucky members of the 401k there is a .25% wrap fee added for a total expense ratio of .34%--joyful. I don't know about you but I am not thrilled about paying a premium for an index fund simply because it is stuck in the 401K account. I dream of the day when my husband finds a different job so we can break free from the plan and roll the funds into whatever low cost IRA we choose.

I've been doing quite a bit of research over at fundadvice.com and found the articles intriguing, especially on the buy and hold strategy. I am leaning towards some of the Vanguard options to model the strategy discussed within the article. Choices here we come!

Musical emergency funds....

2007-02-04T16:19:00.000-05:00

If you've check out my NetworthIQ entry you can see that we have over 10K in "cash" which is actually parked in money market savings accounts. The majority of it (10K) is in the process of being transferred to HSBC for the 6% savings promo. The rest is sitting in ING as our "sinking funds" for various expenditure categories (vacation, gifts, home/auto repairs). I know what you're thinking....ING is so 2005! Pishaw fair weather friends, I love that I can nickname sub-accounts and I'm suckered in by the user friendliness of the site so I continue to use it for my smaller savings balances. You can rest easy knowing that the bulk of our liquid savings is being shoved around like a dirty hooker to the best rate in town.

P.S. I'm loving how grown up the whole I-have-cash-in-the-bank-but-don't-need-to-use-it thing is, muy bueno my fellow frugalites!

P.P.S. Frugalite: fru-gal-ite, term to be used similarly to the term socialite only indicating an extreme fondness of all things frugal and fiscally responsible.

I added my NetWorthIQ badge!

2007-02-04T14:04:00.000-05:00

Hey look at me, I actually figured out how to add my NetWorthIQ badge to my blog! If you click on my badge you can see the gritty details of our financial picture. I also comment on some specific items in the section below each monthly entry. If you haven't been to that site before it's a great way to get a handle on the monthly fluctuations of your net worth. I've stopped worrying solely about how much money we make or how we are income-wise relative to our peers--it's all about the net worth baby! (apparently among PF bloggers it's the new black!) Who cares if someone makes $100K a year if they spend $105K? The game is all about keeping as much as you can so you can create true wealth for your family.

Side note: I am painfully aware of how far behind we are in the retirement savings especially considering my husbands advancing age of 37 (he'd kill me if he read that LOL) but know that we are working on it and making strides to drastically improve our financial picture. (I am 28 in case anyone cares)

Watch that net worth rise baby!

2007-02-04T13:31:00.000-05:00

Well after receiving a comment on my poor old forgotten blog I felt compelled to re-kindle the old flame that was once my financial blog. We are still on the plan and paying off as much debt as possible. I have been tracking our progress over on NetworthIQ.com and I'm proud to report that we now have over 35K net worth! I have not updated it for January yet because I typically update on the 13th but it will go up a few more thousand at the next update. Exciting stuff!

We have decided to kick it into high gear and attempt to pay off all the student loan this year. It will be difficult on one income but my husband has been working a lot of OT and ended up doing really well (for us) last year. His base pay is only 45K a year but he ended up with 73K for 2006! I feel very blessed to have such a hard-working husband.

Side bar: I understand that many people (especially in financial circles) do not agree with our decision to pay off the student loan with it's tax-deductible low interest rate (3.125% lowering to 2.125% in a few mos.) but for us it is the best move. We want to be DONE with non-mortgage debt in any form. We are willing to sacrifice for one more year in order to meet this goal. Then we will be right back on the bandwagon of aggressively socking away cash and funding retirement to the max (we do contribute now but only about 10%).

I am also looking (albeit lazily) for a weekend gig so I can bring in some extra cash while the hubby gets some daddy time with the rugrats. I need to step it up so I can locate something that is semi-professional and pays well. After getting my degree and working in management for a few years I feel very meh about taking a lowly retail job or something equally as uninspiring (at least to me). Perhaps I'll post an ISO on craigslist...

I still suck....but my net worth is going up!!

2006-11-06T16:14:00.000-05:00

I am such a bad blogger, I keep a journal on a private forum and tend to spew out all of my financial diatribe on there to those poor unsuspecting souls so my inertia to duplicate the post here (where no one reads it) is nonexistent.

However, I have great news!! Our net worth is has increased dramatically since the last time I posted (one benefit of ignoring my blog for months on end, no?).

Current net worth: $25, 945 in the BLACK--no more negative NW!!

The suckiest blogger of the year award goes to....

2006-06-13T15:24:00.000-05:00

ME! I have been *horrible* about updating the blog so I'm going to make an attempt to salvage it from the depths of despair. I've got to go back and check old posts and update from there...

New Net Worth--10/5/05

2005-10-05T08:07:00.000-05:00

$-11,149.00

more later...

Credit Report Inaccuracies

2005-09-30T08:37:00.000-05:00

With the inception of nationwide free annual credit reports from the three major bureaus one should have no problem staying on top of what is listed in their credit file. Granted, you can only request the free report once a year from each agency (unless you have been denied credit) which may not be often enough if there is something erroneous and harmful that needs to be removed but it's a start.

I went ahead and pulled one of the three on mine (my theory being that I will request one bureau every 4 months to stay abreast of the file throughout the year) and found a medical bill that was reported as unpaid when in fact it has been resolved. I filed an investigation request online and am hoping to receive an updated copy of the report soon. With all of the free credit reports being requested I am wondering if that will effect their response time in handling investigation requests.

Adios Chase balance :)

2005-09-30T08:30:00.000-05:00

We received the escrow check *finally* from a home that we sold in the last few months so I was able to pay off the $746.00 Chase balance and throw another $100 towards the Citicard--happy day! I can't wait to update the net worth calculations but I have to wait for 401k contributions and other things to post to the account.

Financial Peace University--to attend or not?

2005-09-28T19:29:00.000-05:00

In my recent following of Dave Ramsey I have come across the Financial Peace University classes that are offered through local churches. It is a 13-week financial class that couples take together to go through Dave Ramseys Total Money Makeover plan. On one hand I am really interested in taking part in such a class with my husband because I tend to dominate the financial stuff and it would be nice to approach it from a standpoint of working together through the long term financial goals to ensure that we are on the same page with the direction that we are trying to take this journey. On the other hand, I am not 100% convinced by Dave Ramsey's philosophies so I don't want to feel pressured to follow the plan 100% while we are taking the class. I like having the liberty to pick and chose which financial advice that we follow and not 100% jump on the bandwagon of one particular financial guru. Another thing is that the class starts in about three weeks and we are due to have a baby in another week or so which means that the littlest tax deduction *wink* will still be quite tiny and I'm not very comfortable leaving him in the child care room (they offer child care for people taking the class). Hmmm decisions, decisons....

moving my money from ING to Emigrant Direct...

2005-09-24T21:46:00.000-05:00

Well after much pondering I've finally decided to shift the money market savings from ING to Emigrant Direct. I've watched Emigrant slowly outperform ING on the interest rates and this last hike sealed the deal. Emigrant is now offering 4% on its MM savings while ING is sadly still stuck at 3.4%. Granted, with the miniscule balance that is in my ING account at this point in my journey there won't be much of a difference as far as interest income but if I want to be a rich person, one must act like a rich person--right? Why let my money suffer at 3.4% when it can be thriving at 4% (okay I possibly went a tad overboard with the sentiment but you get the point). Anyhoo, as soon as the application process is complete I will officially transfer the funds over to Emigrant.

http://www.emigrantdirect.com/
http://home.ingdirect.com/

What is your Net Worth?

2005-09-23T08:21:00.000-05:00

Ever wondered what your net worth is? Well you can go here:
www.bankrate.com/brm/savings-advisers/net-worth.asp and it will calculate it for you. I plugged in my numbers and came up with a net worth of: $-12,157 which is actually better than what Yodlee calculates it as, $-170,157.22. I'm a little perplexed as to why the bankrate one is so much lower and the math doesn't seem to add up. Here's a run down:

Assets: Enter totals for the following assets:

Bank account balances Include checking and savings accounts, CDs and MMAs
1,465
Retirement savings Include IRAs, 401(k)s, annuities, and other employer retirement balances
737
Value of home
144,000
Value of automobiles
9,000
Other assets & personal property
5,000

Liabilities: Enter totals for the following liabilities:

Mortgage balance
128,400
Balance on student loans
37,296
Balance on credit cards, store charge cards, retailer financing arrangements
6,664

so according to my calculations I have:

$160,202 assets

-172,360 liabilities

_____________

-12,158

but for some reason I am still not understanding how I arrived at that figure, maybe I'm just mathematically challenged *sigh*

I guess the goal is to be in a position of a positive net worth so I should focus on that before I get too involved with the complexities of the formula. As I think about it more it may make sense...Have a net worth of zero does not indicate that one doesn't owe anything, it simply means that the assets and liabilities zero each other out. Okay my preggo brain is slowly absorbing the information *lol*...

YODLEE!!

2005-09-21T20:59:00.000-05:00

Okay I feel slightly retarded for not discovering this earlier but while surfing on some other financial blogs, specifically mymoneyblog.com I came across some info on this FABULOUS program called Yodlee. Here's the scoop from his blog:

"My favorite tool for this is Yodlee OnCenter. It is a site that aggregates all of your logins and passwords for different accounts, such as bank accounts, brokerage, 401ks, loans, and credit cards. It even keeps up with all your frequent flyer miles and various other points. It can tally up all your assets, subtract all your liabilities, and show you your net worth on a daily basis. Try it out, it's well organized, free, and I use it every day!

Alternatives to Yodlee include Microsoft Money and Intuit Quicken, but those cost money, and Yodlee is free and you can log in anywhere. Also, for some reason Bank of America charges to sync with Quicken, so I dropped it after a short trial. For the rightfully paranoid, Yodlee is probably a target for hackers trying to get at all those passwords. But since I log in just about every day to keep track of my many accounts, any sort of unauthorized withdrawal will be noticed immediately. And I figure it's just as likely that someone will hack into my bank's website as Yodlee's, so at least this way I can nip it in the bud."

I signed up and am very excited about the tracking and financial snapshot capabilities of this program. I am a bit bummed that our mortgage company and student loan holders are not listed on the site so it does not give us a 100% accurate financial picture but it's a start and captures things that I don't log into on a regular basis (reward accounts).

Selling stuff...

2005-09-21T18:44:00.000-05:00

In a mode of de-clutter and expedite debt re-payment I've started to go through some stuff and put it up for sale. I've sold some items on a local board, half.com, and another message board I belong to. I've managed to sell about $200 worth in the last two weeks and hopefully we'll get some more pulled together in the coming week. It is such a freeing feeling to get rid of unwanted junk AND make money at the same time. I can't wait to get some more of these obligations knocked out---FREEDOM!

In other good news, I never cancelled the homeowners policy on the home that we recently sold (I thought that it would be handled by the mortgage company since insurance was paid through escrow) and I called today only to discover that it is still active. So I cancelled it and they are going to send us a refund , according to my calculations it should be about $475-$500 ...that'll make for a nice payment to the credit card!

I'm thinking that I will update my financial snapshot every two weeks (corresponding with payday) as we make payments to various debts.

13 ways to live well on less

2005-09-20T08:08:00.000-05:00

article originally found on MSN Money
By Dana Dratch, Bankrate.com

Can you remember life before $100 sneakers and $5 coffee, when people actually lived on what they earned and still had a little something socked away for a rainy day?"

People moan and groan about why they can't make do," says Michelle Singletary, author of "Seven Money Mantras for a Richer Life." "But if you look at your lifestyle, there's almost always a way to trim (costs) and make do with less."

Singletary and her four brothers and sisters were raised by their grandmother, who earned a modest salary but owned her home and car and accumulated a nice savings and pension while providing well for her family.

Cutting costs was more than a handful of tips, says Singletary. "It was a way of life."

Her grandmother looked at potential purchases in terms of "what you could spend that money on that would put you in a position of not having to struggle," says Singletary. Like a fast-food meal out vs. allocating that money for the phone bill. "And I actually do that now myself," she says. "I ask, 'What are the consequences of spending this money?'"
Don't let retirementsneak up on you.Create a perfect plan

Track what goes out

That approach, save automatically and spend selectively, is exactly what money experts and consumer advocates advise. To accomplish that, here are 13 strategies for living well on less:

Analyze your spending. Look closely at what you've spent for the last three to six months, says Ed Moore, CFP and president of Edelman Financial Services. "And look for spending (you) might regret." As you examine your expenditures, ask yourself, "What dollars satisfied a need, what dollars satisfied a want and which expenditures might not have satisfied either?"

David Bach, author of "The Automatic Millionaire," says not to forget even your smallest purchases: Where do you spend small amounts of money on a daily basis? For many, it's something as seemingly insignificant as a few bucks for a cup of gourmet coffee, but it adds up. That doesn't mean you necessarily have to give up your java break. Bach says you do, however, need to change your thinking. Notice exactly now much you are spending and where.

Make a budget. "Without exception you have to do a written plan, called a budget," says Dave Ramsey, author of "The Total Money Makeover." Listeners to his national call-in radio show tell him once they make a budget, "they feel like they got a raise." The reason, he says, is "managed money works harder."

But there's no one-size-fits-all budget. "It varies from month to month," Ramsey says. So sit down and plot how each dollar will be spent "on paper, on purpose before the month begins." (For more on budgeting basics, read "A simpler way to save: the 60% solution.")

Never pay retail. "Everything's negotiable," says Bach, who learned this money lesson from his grandmother. "Almost everywhere she went, she could talk the price down," he says. And that's still perfectly acceptable in many retail situations, he says.

Also know when to shop. For example, buy clothing in season. That's when the retailers consider it past the season and put it on sale, says Clark Howard, co-author of "Clark's Big Book of Bargains."

Try store brands. "Every time somebody goes to the supermarket, I want them to try one more store brand," which Howard notes costs up to 40% less. "To get people to change everything isn't possible. But to get them to change one item at a time is less difficult." (You'll find other ways to save in "20 ways to slash your grocery bill.")

Buy used. New is nice, but for the best buy, think pre-owned. Bach points to the classic example of a used car. After two years of depreciation, you can get a good, high-quality car at virtually half price, says Bach. "And if you ever do buy a new one, plan on keeping it five to 10 years," he says.

Whatever you're buying used, Ramsey says to focus on high-quality merchandise, "not torn up, junky or dirty."

Secondhand shopping isn't just for those who have to watch their pennies, either. Ramsey recalls a millionaire friend who picked up a $38,000 Rolex for $18,000 from a reputable jeweler. "That's how he got to be a millionaire," Ramsey says. (M.P. Dunleavey has more thoughts on buying used in "Why first-class folks love second-hand stuff.")

Pay cash. "When you spend cash, it hurts," says Ramsey. "And you spend less."

Ramsey recalls a study several years ago that showed when shoppers spend cash, "you spend 12% to 18% less than when you spend plastic because of the emotional pain."

Plus, he says, you can get a better deal when you use cash as a negotiating tool.

Pick your credit card wisely. If you must use a credit card, make sure it's one that gives you something. Look for a no-fee card with a rewards program. Mark Oleson, director of the Financial Counseling Clinic at Iowa State University, recently signed up for a AAA-branded no-fee card that rebates 5% of all gas purchases. The credits are applied automatically to his account every month. Now he's getting $2 gallon gas for $1.90 without changing his buying behavior. (For an easy way to compare card rates and perks, try MSN Money's Credit Card Analyzer. )

Shop around for auto insurance. You want your car protected, but make sure you get the most cost-effective coverage you can. Howard recounts one ecstatic caller to his radio show who compared rates and sliced his annual premium by $1,433. "That's the easiest money for someone to grab," he says. Anecdotally, Howard says, the typical savings by shopping around for better auto insurance rates is around $1,000.

While you're at it, look at your coverage and deductibles on an annual or semiannual basis, says Oleson. Can you afford to raise the deductible to lower your premium? Are there any overlaps in your coverage that could be eliminated? (Learn more at our car insurance Decision Center.)

Dial up phone savings. Your cell phone certainly comes in handy, but is your plan really worth what you pay? "There are lots of people who sign up for calling plans for cell phones who don't need them," says Howard. He says a more economic choice might be a prepaid plan.

Do you travel with your cell phone? Be sure you don't face roaming charges. A better telephone-travel move might be a discount calling card. "I'm a big believer," says Howard, who finds that the average per-minute price on the cards runs about 2.9 cents per minute, a far cry from regular or in-room long-distance charges.

Change your mortgage payment method. Make biweekly payments instead of monthly house payments. You don't change the amount; simply send in half a payment every two weeks. That means, says Bach, you make an extra payment every year and can slice nearly seven years off the average mortgage.

Use family and community resources. This is something that a lot of new parents discover when faced with the cost of expensive baby goods that their child soon will outgrow. "Rather than going out and buying a new crib, this and that, there's a lot of sharing," says Chris Farrell, author of "Right on the Money!"

You can also do the same thing at other stages of life with furniture, appliances, electronics and clothing. Farrell employed the strategy to get rid of a fairly recent desktop computer when he switched to a laptop. "A lot of us are in situations where we spend money on something we wanted, but it's outgrown its usefulness," he says. "And someone else could get pleasure out of it."

Pay yourself first. Automatically transfer part of each paycheck to a retirement account before you get your take-home pay. "Learn from the government, which figured out years ago (people) can't budget," says Bach. His rule of thumb: Save one hour a day of your income each week.

In addition to the longer-term retirement account, also save for short-term emergencies. How much? "I think (a salary contribution equal to) 30 minutes a day is a good start," says Bach.

And while the goals of the two accounts are different, the savings method is the same: Pay yourself first.

Exercise restraint. Finally, call upon your willpower when it comes to spending. Want to save money on your phone bill? Hang up. Want to use less gas? Stay home. Do you really need a bread maker when you have an oven?

Sometimes cutting costs really is just a matter of saying enough is enough.

"As long as I can remember (growing up), I never ate out at fast food (places)," says Singletary. Why? Because her grandmother's motto was, "I have good food at home."

That attitude helped Singletary's family flourish. And by using at least some of these strategies, you too could find that it really is possible to live well for less. (You'll find more perspectives on spending less in "How small cuts become huge savings.")

Current financial snapshot:

2005-09-20T07:37:00.000-05:00

DEBTS:

Chase MC: $501.60 (8.9% interest)
Home Depot CC: $419.75 (0% interest through 12/05)
Citicard: $5700.00 (0% interest through 8/06)
Student Loans: $37,445.87 (3.125% interest)
__________________
total debt: $44,067.22

SAVINGS:

ING Money Market savings: $1293.50
401K balance: $601.81
mortgage equity: $15,332.75
__________________
total assets: $17,228.06

*random thought on assets...I'm wondering if I should count the 2 paid for cars on the asset side or leave that list as liquid or semi-liquid funds that can be pulled out if needed, hmmmmm I need to do more research . I'm also wondering how one counts the mortgage equity as time goes by as home values change, I am basing this figure on our down payment and principal paid in so far (we only purchased the home in 5/05).

DEBT-FREE here I come!

2005-09-19T21:57:00.000-05:00

Welcome to my blog! A little background, I am a 27-year old SAHM to 20-month old twin boys (with another baby due in 2ish weeks). I have been casually posting financial info on a journal that I have kept on a mommy message board but have felt for some time that the content was not best served on that site. I will be transferring my financial-related posts over here and look forward to the journey that lies ahead. We are an "average" American family with an "average" income of around 50K, we live off of only the hubby's income since my job as a momma does not pay in dollars *yet--LOL*. While it is more difficult to save and become debt-free while living on such a limited income I do not feel it is impossible and if it can be done, I will find a way!

Goal-o-rama-lama-ding-dong:

2005-09-19T21:23:00.000-05:00

financial goals accomplished
(began "overhaul" journey 5/2005):

-set up life insurance for D (5/18/05)
-consolidated student loans (through UHEAA) to lower payment and reduce interest rate by 2.25% overall (5/19/05)
-set up money market savings account @ ING(4/9/05) & currently contributing $100 bi-weekly via autodraft ("safety net" account to eventually contain $6000--goal completion date: 12/2006)
-D enrolled in 401K, contributes 5% of gross pay (w/a 2.5% fully vested company match = 7.5% overall contribution rate) (7/1/05)
-organized all financial documents (5/19/05)
-sold SUV (only car with a payment, other one is paid off) and purchased a used minivan in order to eliminate all car payments (8/12/05)
-paying add'l 12% on monthly mortgage payment in order to build more equity into the home and pay down the mortgage faster (9/1/05)
-paying add'l 5% to student loan in order to pay off faster (7/20/05)
-set up life insurance for me (8/18/05)
-sold house in Augusta (8/31/05)

mid/short-term goals to be accomplished
(desired date of completion by 6/2006):

-establish secondary WAH income source to fast-track financial goals
-open Roth IRA accounts for D and I ($1000 min. investment required to open each account)
-open 529 education savings accounts for the kids
-open a vacation/"dream basket" account and set up auto-contributions
-pay off all consumer debt (currently set up on auto pay to be paid off by August 2006)

medium/long term goals to be accomplished
(desired date of completion by 12/2006):

-max out annual contribution limits on Roth IRA
-increase D's 401K contributions
-increase extra mortgage payments to add'l 20% or more-set up supplemental disability insurance for D
-increase additional payments to student loan

long term goals to be accomplished
(desired date of completion within 5 years-2010!):

-purchase second home to have as rental property
-M return to work (once kiddos reach school age) while still living off of only Ds income, M's income to be used for savings/investment goals

2005-09-19T21:19:00.000-05:00

Financial gurus that I am currently obsessed with:

Clark Howard www.clarkhoward.com
David Bach www.finishrich.com
Dave Ramsey www.daveramsey.com

a sidebar on this list--I have *loved* Clark Howard for years and have always followed his radio program (which can be streamed in through the computer) , he is a great resource for general consumer info and some financial/frugal advice.

David Bach has peaked my interest in the last six months with his books, "The Automatic Millionaire" and most recently "Start Late, Finish Rich". While I found his other books a little blah I was thoroughly impressed with those two titles and "The Automatic Millionaire" is actually what inspired the start of my financial journey some months ago.

Most recently I have become interested in the financial teachings of Dave Ramsey. While not totally convinced by all of his methods I am certainly interested and willing to listen to what he has to say.

The debt snowball starts rolling...

2005-09-17T22:01:00.000-05:00

forgot to mention...debts #1 ($130 medical bill) and #2 ($140 medical bill) in La Debt Snowball were paid off on Friday , #3 ($419.75 Home Depot credit card) and #4 ($501.60 Chase credit card) should be gone within a week or so when we recieve the escrow check from the house from hell. After that, only the two biggies are left--Citicard ($5700.00) and the student loan ($37, 445.87)

2005-09-13T21:57:00.000-05:00

Dave Ramsey will be on Oprah today--I'll have to check him out. I've been streaming in his radio show through the computer and I really like him, I've also ordered some of his other books from the library so I can further study up on his methods.
It's all based on going through the Total Money Makeover baby steps:

1.$1,000 to start an Emergency Fund

2.Pay off all debt using the Debt Snowball

3.Three to six months of expenses in savings

4.Invest 15 percent of household income into Roth IRAs and pre-tax retirement

5.College funding for children

6.Pay off home early

7.Build wealth and give! Invest in mutual funds and real estate

Like I said before I totally agree with all of his steps, it just makes me nervous to put all my eggs in one basket as I go through the steps singularly--I like to focus on more than one goal at a time. This is especially true because it will take us a long time to get through step number 2 because of our $37,500 student loan debt and I don't want to wait years to start saving in 401K or our safety net account. So if going through the steps we've already got number one covered *yahoo* so we should begin on the debt snowball which is simply placing your obligations in order from smallest balance to largest and knocking out the smaller balances first (while still paying the minimum on the bigger ones). I've made a list and already started that process. We have six debts total and I can kill two of them on Friday when D gets paid so we're down to 4, once we get the money from escrow on the Augusta home we should be able to kill debts 3 & 4 and we'll be left with one credit card and the evil student loan. It will take us a while to get through the Citicard balance (I had it figured out that we could have it paid off by 9/06 but I'm hoping to get it done earlier than that). Hmmmmm, enough rambling--did you really want to know all of that?

2005-09-12T21:55:00.000-05:00

Almost done the Dave Ramsey book, still not sure what to do with it though. There are some very good points but I also am very comfortable with the plan I've got now, I may stick with what I've got going and incorporate some of his theories as I go (although he's not really all that different than DB so it's not like I'm doing things opposite of his suggestions--I've just chosen to work on multiple goals simultaneously). I am quite sickened by our student loan debt though after reading his book so I may want to fast track paying that off once we get the consumer debt knocked out.

Random thoughts on Dave Ramsey and student loan DENIAL...

2005-09-11T21:48:00.000-05:00

So I'm halfway through the Dave Ramsey book ("Total Money Makeover") and I'm still quite interested in what he's got to say, which is more than I can say for most financial books I've read recently. I really like his no-nonsense view on debt and money and I'm not at all put off by the biblical references in the book (normally I wouldn't think that has any place in a financial book but it's very subtle).

However, I couldn't sleep last night because I was haunted by some of the things that I've read...I realized that I am in denial D-E-N-I-A-L . For some reason when taking into account our financial situation I totally disregarded the student loan debt when factoring in our actual debt picture--I always took into account car loans, credit cards, ect but totally wrote off the student loan debt as a typical evil of those with degrees these days. So between D and I we have two Bachelors degrees and two big FAT student loans debts to go along with them , now that I have to factor that into our debt outlook it's not as rosy as it was before. Now, I could continue on as I was before and not include the SL as part of my goals to pay off our debt and pay as usual for the next 15-20 years but why not bust our asses and get rid of it so we can free up the extra $250/month to use for something else and be FREE of the debt all together? It will not be easy but I'm thinking that I'm willing to accept the challenge . I'm not 100% sold on all aspects of his plan (for example he says to contribute all of your money to debt first--eliminating even contributions to 401K while accomplishing the debt-free goal) so I am going to modify it to what is comfortable for us--I want to continue simultaneously saving for our future while paying down the past, I need the sense of security that provides. More later....