In my endless pursuit to cut costs and funnel my money towards my debt, I decided to wave goodbye to cable this weekend. I am back to broadcast channels, but still have wireless internet in the house (there are some things I just won't live without).
According to the customer service rep I spoke with, my bill will go from $96.32 per month to $50.51 per month, a savings of $45.81 each month. Woo hoo! This may not sound like much to some, but over the course of a year, this adds up to be just shy of $550. I decided to set up an automatic transfer of $45.81 into my Ally e-fund savings account each month. I will still try to add more when I can, but I am pleased to see this money being put to good use.
I will miss a few things from cable programming, though. Property Virgins on HGTV, Top Gear and The Inbetweeners on BBC America, The Closer on TNT, and Futurama on Comedy Central. Thus far, I have yet to find online viewing solutions for these programs. I'll just have to wait and rent them from Netflix once they're released to DVD.
31 August 2010
27 August 2010
One debt at a time
As promised, here is a bit more background on that Bank of America debt and my plans for it.
I had LASIK three months ago, prior to my fiscal awareness awakening; thus, the cost went onto a credit card (I know, I know). I put it on my Capital One Venture card, as I had just opened the account (to accumulate reward points for my trip to Ireland) and I would earn 10,000 bonus miles if I charged $1,000 in the first three months. Thus, my $1,900 LASIK surgery accomplished the task and earned me $100 worth of travel costs reimbursed.
But, I didn't want to carry over the balance, and I couldn't find a way to scrounge up the money within the month. So I called up my oldest credit card, which I keep open because it holds my longest line of credit (10 years), and a long history with one lender is beneficial for my credit score. The card had carried a zero balance for years, and in their haste to secure my debt, BoA offered me 0% interest for 12 months.
However, all is not as rosy as it seems; the balance transfer came with a 4% transfer fee, meaning BoA would get an additional $76 dollars from me. A few years ago, balance transfers with no interest for a year also came without transfer fees. Hence, college students and other chronic debtors could choose to transfer balances each year without ever paying a dime in interest or fees (I knew a few who capitalized on this practice). Sadly (or not?), those days are gone, and most credit cards levy a 3-5% fee for balance transfers. So, while I wasn't happy about the 4%, it was the best option for me at the time.
Knowing what I know now, I would have saved for the surgery BEFORE having it done, rather than borrowing and paying it back. I had my reasons for rushing the procedure, but that doesn't mean it made any fiscal sense.
My BoA card charges me minimum payments of $19 a month. My 0% APR runs out on June 8, 2011. By that time, with the minimum payments, my balance will have done from $1,976 to $1,748. So, why am I not making more than the minimum monthly payments?
Because I have opened a SmartyPig sub-account dedicated to this debt. Why not earn interest while I build the $1,748, rather than just funneling it into my credit card? With today's interest rates, this doesn't amount to heaps of cash, but I still prefer earning 2.15% in my SmartyPig account to the nada, zip, zero, zilch I would earn sending it straight to BoA.
What do you think? Not about the initial line of credit; obviously this was a mistake. But with regard to the savings account, is this a dangerous practice, in which I become too divorced from the debt and risk not saving all that I owe by the time the interest kicks in? By the way, the default interest will be 14.99%—OUCH! I have no plans to swim around in that for long. But, if I come in $200 short and have to carry the balance, with interest, for a month, does this amount to a cardinal sin in the eyes of the financial gods?
P.S. Regarding Blogger formatting, why does a carriage return sometimes create single-line spacing but double-line spacing at other times? This is driving me bonkers.
I had LASIK three months ago, prior to my fiscal awareness awakening; thus, the cost went onto a credit card (I know, I know). I put it on my Capital One Venture card, as I had just opened the account (to accumulate reward points for my trip to Ireland) and I would earn 10,000 bonus miles if I charged $1,000 in the first three months. Thus, my $1,900 LASIK surgery accomplished the task and earned me $100 worth of travel costs reimbursed.
But, I didn't want to carry over the balance, and I couldn't find a way to scrounge up the money within the month. So I called up my oldest credit card, which I keep open because it holds my longest line of credit (10 years), and a long history with one lender is beneficial for my credit score. The card had carried a zero balance for years, and in their haste to secure my debt, BoA offered me 0% interest for 12 months.
However, all is not as rosy as it seems; the balance transfer came with a 4% transfer fee, meaning BoA would get an additional $76 dollars from me. A few years ago, balance transfers with no interest for a year also came without transfer fees. Hence, college students and other chronic debtors could choose to transfer balances each year without ever paying a dime in interest or fees (I knew a few who capitalized on this practice). Sadly (or not?), those days are gone, and most credit cards levy a 3-5% fee for balance transfers. So, while I wasn't happy about the 4%, it was the best option for me at the time.
Knowing what I know now, I would have saved for the surgery BEFORE having it done, rather than borrowing and paying it back. I had my reasons for rushing the procedure, but that doesn't mean it made any fiscal sense.
My BoA card charges me minimum payments of $19 a month. My 0% APR runs out on June 8, 2011. By that time, with the minimum payments, my balance will have done from $1,976 to $1,748. So, why am I not making more than the minimum monthly payments?
Because I have opened a SmartyPig sub-account dedicated to this debt. Why not earn interest while I build the $1,748, rather than just funneling it into my credit card? With today's interest rates, this doesn't amount to heaps of cash, but I still prefer earning 2.15% in my SmartyPig account to the nada, zip, zero, zilch I would earn sending it straight to BoA.
What do you think? Not about the initial line of credit; obviously this was a mistake. But with regard to the savings account, is this a dangerous practice, in which I become too divorced from the debt and risk not saving all that I owe by the time the interest kicks in? By the way, the default interest will be 14.99%—OUCH! I have no plans to swim around in that for long. But, if I come in $200 short and have to carry the balance, with interest, for a month, does this amount to a cardinal sin in the eyes of the financial gods?
P.S. Regarding Blogger formatting, why does a carriage return sometimes create single-line spacing but double-line spacing at other times? This is driving me bonkers.
26 August 2010
Into the future
I don't have a lot of discretionary income, so tackling this debt won't be easy. I will get into my budget in future posts, but for the time being, know that I live in Los Angeles and make $40,500 a year. Yowza!
I am currently only sending the required minimum payments on my student loans, which amounts to $87.18 per month to Loan #1 and $93.64 per month to Loan #2. I hope to tackle these debts more aggressively in the future, but for the time being I will see a greater return on my money by funneling it toward my credit cards. I am also building my emergency fund with whatever I can manage each month.
My AMEX card has an interest rate of 5.99% and my BoA has an introductory rate of 0% until June 2011. Thus, my energies are focused on AMEX and I only pay the minimum $19 a month on my BoA card (I also have a SmartyPig sub-account dedicated to the BoA debt; more on that next time).
However, this is where things get tricky; I am also saving for a trip to Ireland in October. I am going for a friend's wedding and am SO excited for the eight-day trip. The plane ticket is paid for, as are $200 worth of hotel costs. These hotel costs were paid by reward miles from my Capital One Venture card, which I use for all my purchases and pay in full each month. I am trying to save $600 for the rest of my travel expenses. I currently have $275 in my SmartyPig sub-account allocated for Ireland, and I plan to throw $300 more in there in September. Thus, my AMEX pay-down will suffer until November, when I can start putting even more toward it. I anticipate only having $125 available to pay it in September.
Short term goals
Enjoy Ireland without creating new debt (October 2010)
Pay off my AMEX card (March 2011)
Long term goals
Pay off BoA card (before 0% APR ends in June 2011, or ASAP after that)
Build E-fund to $1,500 (August of 2011)
Create SmartyPig sub-account to grow the $3,000 required to open my Vanguard Roth IRA (end of 2011)
Long, long term goals
Build E-fund to $7,000
Fund Roth IRA to max of $5,000 each year
Aggressively attack student loans
I am currently only sending the required minimum payments on my student loans, which amounts to $87.18 per month to Loan #1 and $93.64 per month to Loan #2. I hope to tackle these debts more aggressively in the future, but for the time being I will see a greater return on my money by funneling it toward my credit cards. I am also building my emergency fund with whatever I can manage each month.
My AMEX card has an interest rate of 5.99% and my BoA has an introductory rate of 0% until June 2011. Thus, my energies are focused on AMEX and I only pay the minimum $19 a month on my BoA card (I also have a SmartyPig sub-account dedicated to the BoA debt; more on that next time).
However, this is where things get tricky; I am also saving for a trip to Ireland in October. I am going for a friend's wedding and am SO excited for the eight-day trip. The plane ticket is paid for, as are $200 worth of hotel costs. These hotel costs were paid by reward miles from my Capital One Venture card, which I use for all my purchases and pay in full each month. I am trying to save $600 for the rest of my travel expenses. I currently have $275 in my SmartyPig sub-account allocated for Ireland, and I plan to throw $300 more in there in September. Thus, my AMEX pay-down will suffer until November, when I can start putting even more toward it. I anticipate only having $125 available to pay it in September.
Short term goals
Enjoy Ireland without creating new debt (October 2010)
Pay off my AMEX card (March 2011)
Long term goals
Pay off BoA card (before 0% APR ends in June 2011, or ASAP after that)
Build E-fund to $1,500 (August of 2011)
Create SmartyPig sub-account to grow the $3,000 required to open my Vanguard Roth IRA (end of 2011)
Long, long term goals
Build E-fund to $7,000
Fund Roth IRA to max of $5,000 each year
Aggressively attack student loans
25 August 2010
Into the void
You know, I am really excited about sending my story out into the world. The act of journaling has always been therapeutic for me, and there is nothing like going back and reading over my own words years later. The amount of time I used to spend dissecting and analyzing the "signals" being sent by my high school crushes is incredible. They may not have even known I existed, but if they dropped something while walking past me in the lunchroom it must have meant they became nervous in my presence and secretly pined to hold my hand between classes. My deductive reasoning was flawless! No wonder I went on to study psychology in college.
Unlike a journal, this is a blog, meaning I don't need these thoughts to remain private (as all my high school rambling must). I realize this blog could very well remain private; no one may ever find this and my inane rambling could fall on deaf ears. I am fine with that. Or maybe, two years from now, someone will read my most recent post and decide to delve through my archives. Hello from the past! How's the future? Please tell me all reality television shows based on the state of New Jersey have disappeared. Is Ed Hardy out of business? Or did the guidofication of our country continue unfettered?
One thing I do know is my blog post two years in the future will present a much more pleasant financial picture than I'm about paint. Let's crunch some numbers:
Liabilities
Student Loan #1: $10,495.34
Student Loan #2: $5,787.51
AMEX: $1,169.59
BoA: $1,919.00
Total debt: $19,371.44
Ugh, looking at that number makes me tired.
Savings
Ally Emergency Fund: $416.12
SmartyPig Account: $600.25
Total savings: $1,016.37
Overall net worth: $-18,355.07
I am choosing not to include my car (valued around $9K) in these calculations. I am also not including my work-provided retirement fund, as I am not fully vested in our profit sharing plan yet (no 401k at my small business).
Tomorrow, some background on these haunting numbers.
Unlike a journal, this is a blog, meaning I don't need these thoughts to remain private (as all my high school rambling must). I realize this blog could very well remain private; no one may ever find this and my inane rambling could fall on deaf ears. I am fine with that. Or maybe, two years from now, someone will read my most recent post and decide to delve through my archives. Hello from the past! How's the future? Please tell me all reality television shows based on the state of New Jersey have disappeared. Is Ed Hardy out of business? Or did the guidofication of our country continue unfettered?
One thing I do know is my blog post two years in the future will present a much more pleasant financial picture than I'm about paint. Let's crunch some numbers:
Liabilities
Student Loan #1: $10,495.34
Student Loan #2: $5,787.51
AMEX: $1,169.59
BoA: $1,919.00
Total debt: $19,371.44
Ugh, looking at that number makes me tired.
Savings
Ally Emergency Fund: $416.12
SmartyPig Account: $600.25
Total savings: $1,016.37
Overall net worth: $-18,355.07
I am choosing not to include my car (valued around $9K) in these calculations. I am also not including my work-provided retirement fund, as I am not fully vested in our profit sharing plan yet (no 401k at my small business).
Tomorrow, some background on these haunting numbers.
24 August 2010
The wake-up call
After spending my life sleepwalking through my finances, the eve of my 30th birthday brought a rather rude awakening. My story is not unique; like it has for countless others, this milestone birthday prompted some intense self-reflection. I took stock of my life, my goals, my career, my friends and family, my treatment of others, my outlook, and my place in the world. It's something we all do, every day, but on this occasion I did it with more focus and clarity than normal.
It's hard to believe, but this was the first time I had ever seriously considered life after my career (and my career isn't all that glamorous, honestly). I had just spent so much of my time and energy moving toward this particular moment that I hadn't really bothered with what came next. But I really enjoyed envisioning myself after 60. There will be lots of travel. There may even be an RV (I love camping). There will be lots of cooking with family and friends, whether grilling seafood at the beach with a glass of wine or tucking into French Onion Soup at a ski lodge in Canada. Retirement is something to look forward to, plan for, and get excited about. I'm not saying that the next 30 years won't be FULL of amazing experiences, life-altering mistakes, love, and laughter, but I've always known and trusted that. Now I realize there is even more to look forward to than I had previously considered.
And then, I woke up. "Oh crap, I'm gonna need a retirement account to fund this, aren't I?"
My online search for information about retirement plans led me to so many wonderful and insightful pieces of financial advice, mostly written by bloggers simply sharing their personal experiences. I began to relish each new tip and suggestion, and I loved seeing the budgets of others laid out before me. Plus, I finally knew the difference between a 401k and an IRA (and a Roth IRA, nonetheless).
What these bloggers showed me was how to start moving toward the future, rather than treading financial water. Debt has to go. Money I am throwing at my debt should be getting thrown at my retirement. Priorities have to shift. I feel like my eyes have finally been opened; knowledge is such a powerful tool.
I'm not proud that it took me this long to get myself together. I currently have a negative net worth, comprised of student loans and credit card debt. But I'm sure this story has a happy ending. I'm making a plan and setting goals. Tomorrow, we'll get down to brass tacks and examine the numbers. Thus begins my journey to fiscal fitness. It will be slow going, but I'll get there.
Subscribe to:
Posts (Atom)