Thursday, December 21, 2017

Dear Holiday Gift Giver

Dear Holiday Gift Giver,

Thank you so much for thinking of me.  The fact that you care about me enough to endure stressful lines in stores and at the post office tells me that you really want me to know that I'm on your mind.  You want me to know that you love me.

I already know.

Now I have a gift for you.  I would like to release you from this obligation, this burden, this stress.  My gift to you is to tell you that I already know that you love me.  In fact, the best gift you could ever give me is to let me know that you are taking care of something incredibly precious to me:  you.  This isn't the kind of thing you find in a store.  You can't wrap it, box it, ship it.  I won't find it under a tree.  I won't open it Christmas morning.  In fact, if I do find something under a tree, wrapped, and see it's from you, the image of you struggling with bills this or next month might rob me of the joy this gift was intended to bring.

So, if there's a balance on your credit card, or you have student loan debt, or any other kind of debt, then here is what I want from you.  I want you to take whatever money you planned to spend on me, and apply it to that debt.  As you press the button to confirm your extra payment, perhaps you could say a little "Happy Holidays" under your breath in my honor.  As someone I've kept in my life for some time now, I love you enough to want you to give me the gift of seeing you one step closer to your own financial freedom.  There's nothing you could place in a box for me that could ever compete with the joy it would bring me to know that you are taking care of something I love: you.

In addition, I have one more gift for you.  If there is anything I've ever given you, I release you of the obligation you feel to keep it.  If that object no longer brings you joy, it's okay to let it go.  If you have any doubts about whether or not I am okay with you letting go of something I have given you, just ask me.  Most likely, I will tell you that you should just get rid of it.  If it is somehow sentimental to me, but you no longer want it, perhaps I will accept it back from you.  Either way, I don't ever want possessions to be a burden to you.  If I've given something to you, it was because I wanted to show you that I care.  I would never intentionally give you something that would cause you any negative emotional, spacial, or physical outcome.  I am able to realize that you can throw out the object I've given you without throwing me out.

I know that this correspondence is a bit unusual, but; I hope that you find some relief now that you've been released from some obligations.

Happy Holidays!
From,
Someone You Love

Friday, December 1, 2017

Gifting Myself This Year

Want to know a dirty little secret?  I haven't had a dresser in about five years.  Sounds pretty crazy, right? When we moved from the west coast to the east coast, I let my dresser go in the move.  It wasn't in great shape anymore, and didn't seem worth putting on the truck.

Ever since then, I've been organizing my clothing in a super tiny closet and on some shelving cubes.  While it's been working out just fine, I honestly just can't stand looking at it anymore.  I've been on a decluttering mission for about a year now.  Although I have no plans to get rid of all of my clothing, I have realized that it's about more than simply getting rid of things.  Much like my money, I want my possessions to be simplified, then streamlined and organized.  I really do want everything to have a home, and I am willing to invest the time necessary to achieve that goal.  In my financial life, I absolutely do NOT want to have retirement accounts at five different places, and entirely too many credit cards.  I don't need five different bank accounts either.  The same way I don't need my money all over the place, I don't want to see my possessions all over the place either.  This is another way in which I feel clutter and money are related.

So, for the holidays this year, I am getting myself a gift.  I am buying myself a dresser.  As many of you know, we keep the holidays pretty modest in my household.  We have a PJ exchange,  pair it with a junk food, and a movie marathon.  If we have it in our budget, we also like to purchase at least one thing that will improve our space.  This year will be the year of the dresser.  I'm pretty excited because I know myself, and I will probably decide to get rid of some more clothing in the process of filling the dresser.  That will also improve my space.

I am sure this seems like a strange personal finance post, but I am realizing more and more what true balance is all about.  The more I improve my finances, the more I also want to improve my space and my physical health.  The more harmonious these things are, the better I am for my family, my students, my co-workers, and most importantly my present and future self.  So, if there's one idea that I want to put out there, it's to consider "What do I really want for the holidays?  What can I do/buy that will actually improve my life?"  I personally don't really want anything that won't improve my life.  So this year, we're getting a dresser.

What things do you gift yourself and/or others that will improve their lives?

Friday, November 24, 2017

Clutter & Money

Four years ago, when I officially switched industries and moved across the country I had to do some considerable down-sizing.  I was moving from a 1600 square foot house on the west coast, to a one-bedroom apartment of approximately 500 square feet in New York City.  We really got rid of a ton of stuff, and it wasn't exactly easy.

I'm really big on visualizing the life I want.  I am a firm believer in the Law of Attraction and taking appropriate steps to achieve that which I'm visualizing.  When I close my eyes, I see myself living in a clean place with nice things, though not a lot of them.  What's funny is that there isn't typically much "stuff" that I can see in this vision.  I mean, I'm sure I have stuff, but it all seems to have its place.

When I look around my apartment, it feels worlds apart from my vision.  While I've downsized a tremendous amount, I still have clutter.  While I probably don't have any more clutter than most other people, the clutter I see around me gets in the way of my ability to actually fully enjoy the possessions that I truly love.  This sparks an interesting debate at my house.  While it's by no means an argument, we do have somewhat opposing views on the issue.

My partner's perspective is that while we've been making this apartment work for us, it is entirely too small.  She feels that our space isn't conducive to our lives.  Honestly, she's at least partially right.  You see, our apartment is greatly lacking in the "storage" vain.  There are two tiny, bedroom closets for the entire space.  That's it.  But you see, there is some "stuff" you just need in your life.  Most people have more than one set of sheets, more than one bath towel.  If you have no linen closet, where do they go?  While I could go through plenty more examples of this nature, I'm sure you see the point.

My view on our issue is that we still just have too much stuff.  If we had less of everything, it wouldn't solve all of our storage issues, but it would certainly help.  The truth is that we're both right.  Something as simple as a linen closet would alleviate some problems.  We could also get rid of some more things.

We did a 30-Day DeCluttering Challenge this summer and got rid of lots of things.  We still have some ways to go.  We also don't let things come in without something going back out of our space.  This also helps.

There is a direct relationship between our clutter and our money.   First, and perhaps the simplest is that clutter in your space equals clutter in your mind.  If your mind and space are full of clutter, how can you be your most organized self financially?  Next is the more complicated explanation.  It's the fear of financial insecurity.

Those of you who've read The Effects of Growing Up Poor know my background.  When I was a child, we didn't have money for many extras.  Sometimes we had to wait for the things we needed, and could get them immediately.   When your resources are limited, you hold on to what you have. It makes perfect sense, but also has psychological implications for the future.  Now, I have enough money.  I make a good living, and I can buy the things I need easily.   Regardless of this socioeconomic progress, when I am about to get rid of something, I suddenly get this overwhelming feeling.    The feeling is quickly accompanied by a voice in my head that says things like "What if you need this?  What if you suddenly want it?"  There are so many years of built up experiences telling me that replacing possessions is difficult.  This is a little hard to admit, but if I am perfectly honest, I think I have a deep-seeded fear of not being able to get the things I need.  It's a fear of financial insecurity.  I am genuinely afraid of "not having enough money," and that bleeds over to my possessions.  I don't spend much time talking about fear because I don't care to lend power to fear by giving it my energy, but I think for the case of today's post, it's worth it.  I am working through this fear with a fair amount of success.  I have to remind myself of some things:  I have enough money to replace these items if I actually need it in the future.  If my life isn't improved by having a possession, I can let it go.  I am financial secure now.

Additionally, sometimes, I have guilt about getting rid of things that were "given to me."  I have learned to remind myself:  No one that loves me wants me to keep items that are no longer beneficial to me just because they might have given it to me.  My uncle won't cry because I no longer have the t-shirt he gave me 5 years ago.

I have released myself from the obligation to keep things that don't improve my life.  Debt doesn't improve my life, neither does clutter.  So, that being said, I am clearing them both out of my life.

Have you noticed a relationship between your money and your clutter?  I'd love to hear your experiences and thoughts below.


Sunday, November 5, 2017

10 Things To Do With A Bonus

 
Everyone loves getting bonuses at work, right?  Working in education, bonuses don't really apply to me.  So I rarely think about them...  That is until now.  This month I am getting a bit of a bonus as a result of the most recent teacher contract.  This is money that isn't a part of any budget or savings plan I currently have underway.  So, the real question is:  What do I do with this money?  Just thinking about it gets me super excited, and inspires me to create this list.

1.  Pay Off Credit Card Debt

If you have credit card debt, this is a no-brainer.  Your bonus could go a really long way toward paying off some unwanted debt.

2.  Make an Extra Mortgage Payment

Just one extra payment per year will shave thousands off your grand total, and allow you to pay your house of years sooner.  Not a bad plan for money you didn't know was coming.

3.  Contribute to Your Roth IRA

I say, get this surprise money working for you!  If you haven't maxed out your contributions for the year, use that bonus to get yourself just that much closer.  You can contribute $5500 per year if you're under 50.  Let's get that thing maxed out!

4.  Fund Your Emergency Savings

Do you have 6-8 months of your expenses in a savings account yet?  If you still haven't reached that goal, putting your bonus into your emergency savings account will buy you some added security.  Honestly, you really can't put a price on peace of mind.

5.  Fund Your Holiday Savings Account

I only spend money that I actually have for the holidays.  That being said, you could use your bonus to pad your holiday savings account, and enjoy your holiday season minus the stress!  Of course, this move doesn't allow your money to grow or save you a bundle like the others, but I say, if you keep yourself from using a credit card during the holidays, it's a total win.

6.  Fund Your Vacation Account

Listen, I am so guilty of burning the candle at both ends that it's not even funny.  So, every year I take great pleasure in planning a vacation that will allow me to rejuvenate myself.  Much like with holiday spending, I don't pay interest on vacations.  I don't take vacations that I can't afford.  If the money's not there, I'm not going anywhere.  So, fueling the vacation account might just be worthy of your bonus.

7.  Home Organization

It's no secret I've been on a decluttering mission this year, and I still have a way to go.  I really do feel like my belongings, my home, and my systems of organization all have a direct relationship with my finances in a lot of ways.  I'm only going to briefly mention two of them right here.  First, how can we really keep our financial affairs orderly when our living space is a disaster?  Secondly, the more we enjoy our own space, the more satisfied we'll be staying home in order to save money.  So, if there's something you've put off buying that will greatly improve the way your space functions organizationally, maybe it's worth using a little of that bonus money to take care of it.

8.  Home Improvement Project

This is similar to the previous item.  If you've delayed funding a home improvement project, and your bonus could cover it, go for it.  Some home improvement projects could make your home worth more (if you own it).  Even if it doesn't increase your home's value, if it makes your home function significantly better, it might be worth the money.

9.  Buy Some Stock

You obviously want to wait for the price to be right, but if you've been eyeballing some stocks, or looking for an opportunity to get into the market aside from your retirement funds without disrupting your monthly budget, this could be the money to use.

10.  Pay Down Miscellaneous Debt

Maybe you don't have credit card debt, but if you have any other loans laying around, your bonus could help you to pay it down more quickly.  Think:  car loans, student loans, personal loans, etc.

What am I doing with my bonus?  I am putting it into our holiday savings account, which we will use for our annual pajama exchange.  We also plan to buy something to improve our space with our holiday funds.  So, my bonus will hang out in savings for a couple of months, and then it will be used largely to improve our space.

Saturday, October 28, 2017

Cutting the Cable Cord!

As time goes on, I find myself more likely to stay in than I am to go out.  Partially, this has to do with the fact that I get up at roughly 5 AM in order to get ready for work.  Staying in also saves me a fair amount of money.  I come home, make dinner, and sit down to watch some "mind candy" on television.  When I first moved into my apartment, I got a great deal on a cable subscription.  Eventually, that went away.  We all know those "great deals" are usually for a limited time only.  When they inevitably go away, suddenly the cable bill skyrockets.

I've been hesitant to pull the plug on our cable package even though we've got a Netflix and Hulu subscription.    I had been feeling like there were gaps that I would really be missing.  For example, we watch the news every morning before going to work, and didn't really care to alter that habit.    We bought an antenna but the results were patchy...

Well, I'm pleased to say that we finally got a divorce from cable, and haven't given up any of the things we love most!  Here's how we did it.

We kept our Netflix subscription the same.  Then we made an amazing discovery.  Hulu is trying out a new service package (a trial run to be exact).  This new package allows you to stream a number of stations in real time.  I was able to get the major stations: ABC, CBS, etc.  Additionally, I was thrilled to discover that I could get some of my favorites including HGTV and Food Network! What's even better is that it only costs me $40 a month!    This is way better than a cable subscription if you ask me!  It's also saving us over $50 a month too!  As far as I'm concerned this is a win-win situation.  We get a lot of the channels we love, and freedom from the cable company!

Have you had success cutting cable?  What was your strategy, and how is it going?

Saturday, October 7, 2017

4 things I DON'T spend money on!

I ran into some friends in my neighborhood on my way to running some errands. I was about to head downtown to do my primary grocery shopping at Trader Joe's.  I explained to them that our neighborhood grocery is the one I use to "fill in the gaps."  Being somewhat a health food nut, I do a lot of grocery shopping at Trader Joe's because I get a lot of the "health food" I prefer at a must less expensive price.  Of course, I can't manage to get literally everything I need there, so I usually end up at my neighborhood store for a few items. These friends of mine had just finished doing some grocery shopping, and made a comment they they too use the neighborhood store to "fill in the gaps", but those "gaps" just set them back FIFTY BUCKS!  I nodded my head to commiserate as I  glanced at their shopping bags.  I couldn't help but notice a package of paper towels...  So, without further ado:

4 things I don't spend money on:

1.  Napkins/Paper Towels

These items are expensive to buy at the grocery store so, unless I have to do some massive cleaning that requires these disposables, I don't bother to buy them.  Whenever I buy a coffee out, or order takeout, they give me a zillion napkins (which I don't really need).  I stash them in my bag, and they go into the napkin holder once I get home.  That has kept me with enough napkins to meet my needs for almost as long as I can remember.  Seriously, I think maybe two years ago I bought one roll of paper towels.  Maybe, this sounds super cheap, or cheesy...  Or perhaps you've got kids and need a ton of paper towels, and this won't work for you, but it's working for me..And saving me money.

2.  Expensive Cleaners

Along with being a health food nut, I am also all about natural products where possible.  This definitely bleeds over to the category of "cleaners."  I have plenty of books on natural methods of cleaning and disinfecting things, and have found that what has worked for our grandparents FOREVER still works today for me.  I have spray bottles and such at home with mixtures of things that are cheap, effective, and living in my pantry.  It's amazing what you can do with lemon, vinegar, alcohol, hydrogen peroxide, etc.  In fact, you can make your own laundry detergent (which I did for years, but now I use drop off service since moving to NYC) for much cheaper than what you buy in a store.  I will leave you to your own research, but I am suggesting, you can save a bundle, and keep a very clean house...just like grandma did.

3.  Veggie Stock

You can spend a ton of money on this stuff.  I make my own.  I keep a baggie in my freezer for the ends of veggies that are ready to be discarded.  Once the baggie is full, I boil the veggie ends into stock and freeze it.  My home made stock tastes way better than what is in the store, I know what's in it, and it's much cheaper.  It also doesn't really take me time.  I just let it simmer when I am doing other things at home.

4.  Haircuts for my cat...

If you love your pet groomer, continue on!  Otherwise, I have my own electric clippers.  My partner and I trim our long haired cat ourselves when needed.  We spend plenty of money buying her the healthiest food, and the litter with the least chemicals, but kitty hair cuts?  We've got that one covered!

How about you?  What are some things that other people are paying for that you aren't?  We'd love to hear your tips!

Sunday, September 24, 2017

How I am saving over $100,000 on my mortgage!!!

This summer I was "taking a break" from my financial goals.  Sounds funny right?  Well, I work in education, so I have summers off.  I ended the school year, and simultaneously met two financial goals:  I paid off my private student loans, and met the annual savings goal I set for my Freedom Fund.  I decided that over the summer, my partner and I would come up with a new plan that would start in September.  July and August would be all about maintaining, relaxing, etc.  We were successful.  We didn't drain our savings, or gain any debt.  We also came up with a new game plan.

Of course, anyone that knows me knows that I don't "relax" very well.  I have a huge tendency to burn the candle at both ends.  In fact, if I could find a third end to burn on that candle, I'm sure I'd try...  So, here's what happened...

The day before we were leaving for a trip to Stockholm, Sweden, I saw an email from my credit union.  They were advertising a mortgage special; a flat fee of $799 (in my situation, I don't even need to buy an appraisal).  I know one of the mortgage officers there, so I quickly shot her an email.  She knows me quite well, so immediately asked:"Aren't you supposed to be in Sweden?"  She knew I couldn't resist a deal that could possibly save me a lot of money, and boy is it going to save me some serious money!

What I have currently is a 30 year fixed that started in 2011.  So, I have 24 years remaining on it.  The refinance will lower my rate by almost 1%.  That doesn't sound very exciting, does it?  Don't be deceived!  Because I would be refinancing to a 15 year fixed, the total savings would be $99,970!  That's some serious dough!  Side note:  I personally would never refinance my mortgage if it meant paying a loan for longer.  I know there are people with valid reasons for doing so, but I would avoid it.

Now, my payment would increase by about $150 per month, but this is a rental.  The rent being paid by the tenants more than covers the difference.  Now, let's add another exciting dimension to this scenario.  If my partner and I put an extra $100 per month to the mortgage, we will pay it off 2 1/2 years sooner.  That means that we will save even more money!  It also means that in roughly 12 years, none of the rental income will be paying a loan.  It will truly be passive income!

Needless to say, we are going through with the refinance and planning to save a boatload of money, while paying the loan off significantly sooner!

Have you ever refinanced your mortgage?  Did it save you a lot of money in the long term?  Alternately, are you considering a refinance now?  Have you figured out what your overall savings would be?

Monday, September 4, 2017

Make the most of Commuter Benefits!!!


There are certain times of year that I stop and review my financial game plan.  One of those times is the top of September, when school starts.  I review several things: payroll allocations, debt repayment strategies, savings strategies, and several other things.

When it comes to reviewing payroll allocations, one thing that I do is revisit the HR part of my company's website.  I take a look at the benefits that are offered to me, and make sure that I am actually taking advantage of everything that could possibly benefit me.  Maybe that seems like a silly thing to do, but sometimes, I realize that I'm leaving money on the table.

One really common benefit that gets missed is the Commuter Benefit.  Different companies call this by different names, but it can add up to some serious dough!  Don't worry, it happens to all of us.  In fact, I realized that there was a Commuter Benefit that I could be taking advantage of, but had missed.

Here's the way it works with my employer.  I sign up for the benefit, and select a monthly dollar amount.  I live in NYC and take mass transit.  My monthly pass is $121.  Occasionally, I take a bus or train that requires a separate fee.  So, I am going to choose $130 as my monthly dollar amount.  Once I plug that number in, I will be sent a "debit card," that gets loaded with that amount each month.  The money comes out of my payroll BEFORE taxes.  When I purchase my pass each month, I simply pay for it using the debit card associated with my commuter benefit.

You might be asking yourself, "What's so special about that?  I'm still paying for my own pass with my own money!"  It's the pre-tax aspect of this benefit that is actually saving you money.  Over the course of the next year, $1560 will come out of my paycheck on a pre-tax basis in the form of this commuter benefit.  On my income taxes, it will appear to Uncle Sam that I made $1560 less.  In other words,  I won't be responsible for the taxes on this dollar amount.  If Uncle Sam has a tendency to keep 20% of my earnings for taxes, the savings is easily over $300.  Now, I just did some really straightforward math, and we all realize that your taxes are never completely straightforward, but you get the point right?

Now, when I lived and worked in Oregon, my employer offered a commuter benefit to anyone that didn't drive a car to work.  I think it was $50.  They technically called it a Carpool Benefit, but the truth is that any employee car pooled, rode a bike, walked, or took mass transit qualified for it.  Yet another company that I worked for offered a Mass Transit Benefit; they would reimburse employees the dollar amount of their monthly metro pass provided that was the manner in which they commuted to work.

Regardless of the details, if your employer offers some sort of Commuter Benefit that you qualify for, and you are not taking advantage of it, you are leaving some serious money at the table!

Does your employer offer a commuter benefit of some sort?  If so, how does it work?  Are you able to take advantage it?

Friday, August 25, 2017

The effects of growing up poor...

When I stop to consider why I gave my blog name Sense with Cents, I suppose that it seemed to be the most obvious name. "Sense with cents" is something I've always had... or rather what I had to have....

I was born of a teenage pregnancy.  My mother found out that she was pregnant with me shorty before her 17th birthday, at the end of her Junior year in high school. My mother was above average in intelligence, though fairly average regarding academic scores.  At the time, my father was twenty.  He had stopped attending high school a few years before that. He had taken a full-time job opportunity at the local grain elevator, and I suspect that he felt he wasn't necessarily an academically inclined person, although he certainly had a high level of intelligence measurable in other ways. They loved each other and proceeded to marry several months before I was born.

My mother did not complete her senior year of high school in the traditional sense.  She wanted a high school diploma rather than a GED.  So, she enrolled in a correspondence program, and spent the next two years completing the work necessary to earn her high school diploma.  During that time, she had also taken a job waitressing in a local restaurant.  My father's job offered benefits, so we were covered on his insurance.  We were very thankful for that.  He also had a retirement account through the elevator.  His job was very secure, but the pay wasn't necessarily the highest.  You could probably safely say that we were poor. We were making it, but poor.  When I was 4 1/2 my sister was born, and within a year of that she was diagnosed with Cerebral Palsy.

When you're already economically disadvantage, a severe disability coming into play takes things to a whole new level.  My mother was already a frugal person, and wasn't someone that took on debts, but this new set of circumstances required her to go from frugal to resourceful.  She learned how to navigate complex systems not because she wanted to, but because she had to.  She had to learn how to meet my sisters individual needs (medical, developmental, social) and simultaneously meet our family's financial needs, which were growing ever more complicated. A few years later, and through no one's fault, my parents divorced. My father continued to be involved in our lives both physically and financially.  Despite his continual support, our financial lives were still a struggle.

Low Skills = Low Incomes.

The financial struggle was almost unavoidable.  My parents both came from backgrounds with very modest incomes.  Neither of them had above high school level education.  They had two children, one of which had a severe disability. That is what I would call having the financial deck of cards stacked against you.  During these years, my mother learned how to find every loophole, and jump through every hoop imaginable.  If there was a resource that would help make our family's life easier, better, or richer, she'd find it.  She could find resources that would keep us feed, clothed, and cared for within budget.  She learned how to utilize services for the disabled whether available through government sponsored programs, or non-profits of various natures.  She was committed to making sure that her children didn't loose out on opportunities because we were "economically disadvantaged."  Finding the resources you need is really difficult.  She became VERY good at it because she HAD to...

Increased Skills = Increased Income

Eventually, my mother decided to go to college and pursue a degree.  She didn't want to feel as
though she was climbing uphill for the rest of her life.  During this time we became a blended family adding my stepfather and step brother.  My stepfather also returned to school.  They worked as much as they were able, being full-time students and raising us...(There were years they worked full-time while attending college.  There were a few years they didn't.) So, there we were: a family of five, living primarily off student loans.  In those days, we grocery shopped once a month for the majority of our food: buying in bulk, repackaging, and freezing items.  Finding out about food outlets where we could get savings, using double coupon deals, taking advantage of grocery store samples for "lunch."  We did back to school shopping about a month into school because that's when student loan disbursements came in, we used a budget, second-hand stores, hand-me-downs, and department store sales.  These were the years of family game night and helping my parents survive college algebra.  We had chores, and got an allowance.  No raises, though; couldn't afford one. We had to budget our allowances, or be broke.  I learned the words "I can't afford that," and it didn't occur to me that there was anything "wrong" with saying it.

In fact, there are things that I learned by growing up poor that many people aren't lucky enough to have learned.  I learned how to use a budget, and basically budget to zero.  I learned how to look for discounts, combine discounts, and use coupons.  I am the QUEEN of the LOOPHOLE: I even went to an out-of-state school as an in-state resident because my mother and I found the loophole.  I learned how to navigate complex systems: I was actually able to claim financial independence from my mother for purposes of financial aid while I was in college.  I learned how to survive without spending money, and make it my "normal," my "baseline."

It's pretty ironic that I grew up "economically disadvantaged."  I mean, seriously, middle class was pretty far away....  But that "disadvantage" has really given me an advantage over a lot of people. I really had no choice but to learn to be really savvy....resourceful....smart with my money moves.  Just like my mother, I learned to succeed when failure wasn't an option.  While I don't suppose I would really wish a "poor childhood" on anyone, I would wish them the lessons that went with it because I don't really know anyone that is better with money than I am.  I wouldn't trade that for anything.

And for those of you who are interested, my mother now has a Master's Degree, works for a University as a Professor, owns rental property, has no debt, and owns her home outright.  I guess those lessons have served us both well.




Wednesday, August 23, 2017

Invading Middle Class

About five years ago, I made a decision that uprooted my whole life.  I decided to move to New York.  I had many reasons to want to do this.  One reason was financial.  I had an employment opportunity that would more than double my income.

You see, I had started working full time in the summer of 2008, right when the economy went south.  I was lucky to become employed full time in a position that offered me medical and retirement benefits.  Furthermore, I liked the company quite a bit.  The problem was that I never earned more than $27,000 a year (before taxes).  I grew up poor and as a result, I became like Houdini with money.  It seemed like I could make it appear out of nowhere.  The reality is that I was just REALLY good at budgeting.  I spent five years working for that wage.  During that time, I bought a house, contributed to my 401k and got the match.  I had a minimal amount of credit card debt, was repaying a private student loan, as well as a federal one (barely).  I stayed out of trouble financially for the most part.  The trouble was...  I just couldn't get ahead.  I was taking home around $700 every two weeks after the taxes came out.  My mortgage payment ate up an entire paycheck.  That leaves about $700 for the month.  How was I supposed to get ahead on that?  The truth was that I couldn't.  Now, I am sure someone out there would've been able to move in with their parents, live rent-free, save a boat-load of money....  But that sure wasn't my circumstance.

In order to change that situation for myself, I literally had to change industries...  You see, unfortunately, I had become pigeon-holed.  At least that was the way I saw it, and employers must have too, because they weren't offering me positions that were at a higher level and paid more (even when I was more than qualified)...

My work history had begun to speak louder than my other qualifications.

If I stayed in my city and in my industry, I would only receive more of the same.  I could probably climb the ladder a little bit, making it into the $30,000 range, and eventually closer to the 40's.  The experts are still out to lunch a little on the exact numbers but a recent CNN report suggests that most of them agree that middle class STARTS around $48,000 respectively...  The way things were stacking up for me, I was going to have to work for the next ten years to reach an income that would still disallow entry into the middle class.

There were bars of steel and iron keeping me firmly locked out of middle class.

The only things that would change this were either: work 2-3 jobs, or change cities and industries.  I did the later.

I took an opportunity in New York City, doing something completely different.  I also now have a Master's Degree.  Changing both cities and industries required a LOT of work on my part (and from my partner).  In the process, my income alone has more than doubled, and that's without considering our rental income or my partner's income at all.    In the past, I really felt like there was an iron gate between being poor, and middle class.  But the truth is, I annihilated that gate.  I have now completely
invaded middle class, and I am not going back.

I haven't let lifestyle inflation get a hold of me in the process.  Every single dollar of my new earnings have a very specific job, and it feels amazing that I can do some things that were absolutely impossible for me before.  I have zero credit card debt, and just paid off my private student loans.  I am rapidly working on my federal student loans.  I have a savings account for emergencies.  I invest.  I can afford to update our rental property.  This life change was really hard on my partner and I, but we have persevered, and come out much better.

How many people experience upward class mobility?  The truth is that I have already experienced class mobility in my lifetime, and I am extremely grateful.  I am also taking advantage of the opportunity to secure my future.

Have you or someone you love experienced upward class mobility?  What did they do to secure their future?

Sunday, August 6, 2017

Does "doing it yourself" save money?

This might come as a surprise to you, but, I haven't actually done my own laundry in about four years.  You see, I'm all about saving money.  I take back cans for a return on the deposit.  I pick up change from the sidewalk.  I used coupons when they come my way, but I also recognize that there are situations where doing something myself isn't really saving me money.  Sometimes, In fact, it's actually cheaper to pay for a person or service to take care of something for you.  This takes me back to my laundry.  It actually provides a perfect example of what I'm talking about.

Let me explain.  I live in a New York City apartment building that does not have a laundry facility in
it.  In order to do my laundry, I have to bundle it up and take it down the street to a laundromat.  Then, I have to sit there for two hours washing, drying, and folding.  I have to spend money on each of the machines, not to mention detergent, etc.  Then, you factor in the two hours I spend sitting there actually doing my laundry.  Two hours of my time alone is worth $90.  After factoring in the money for machines and supplies, this is well over $100.  Pretty expensive load of laundry, huh?  When I drop it off at the place on the corner, they charge me about $30 (depending on weight, so more in winter, less in summer).  The only time I have to spend is dropping it off, and picking it up the next day.  Dropping it off seems to be about $70 cheaper so far.  Furthermore, I'd likely be doing a side-gig for 3 hours on most Saturdays, which is my typical laundry day.  I make $135 during that three hours and it's pensionable, meaning those dollars will factor into a pension that will keep paying me even more money in my retirement, so this $135 Saturday earning is worth a lot more than that.  If I was doing my laundry on Saturday morning, I would not be in my side gig, and not earning the $135+..  So, if I combine the time and money saved (the $70 from before) with the money I can also earn instead, this is more than $200.  Doing my own laundry would actually cost me more than $200 per week!  Sounds crazy right?

While I am not hiring out every task that needs to be done in my life, I have learned to evaluate whether or not hiring the task out is financially advantageous.  Lucky for me, it turns out that doing the dreaded laundry isn't really worth my time, so for now, I will just keep dropping it off!

Is there anything in your life that you have found is actually more advantageous to hire out as opposed to doing yourself?

How much is your time worth?

You know what?  I love getting paychecks: regular paychecks, bonuses, overtime, side gig paychecks, checks in the mail, direct deposits...  I love them all.  It's easy to take for granted that another one will be coming...  We keep working; checks keep coming. Every time I get one I have this burning realization of how long it took me to get that paycheck.  How much of my life I sold in order to receive it...  Don't get me wrong, I like what I do for a living.  I don't make a practice of doing things that I don't like for money; that seems like a terrible way to live your life, and I choose not to live that way.

Regardless, I feel hyper-aware of the amount of time each dollar takes me to earn.  I earn about $0.75 per minute.  If I go somewhere to sit down for a cup of coffee or a glass of wine with my friends, I know that a $9 glass of wine costs me 12 minutes of my time to earn; a $5 glass costs me about 7 minutes..

My point is not that you need to sit around and figure out how many cents per minute you earn and compare it to the things you pay for, but it is an eye-opening experience.  While I don't typically spend my time calculating how many minutes it takes me to earn each of the things I pay for, I do know how much money I earn per minute (roughly...I am a salaried employee, not hourly).  It's a bit of a strange thing when you really think about it, trading my time for money.  While I can always get more money, time is a commodity I will inevitably run out of, and I can't really earn more of it.

This is why I am so meticulous about my money moves.  I traded something I can never get back in exchange fore each dollar I earn.  I have no plans on squandering any of my dollars because it seems like wasting time, literally.  All of my dollars have a job because eventually, I will have used my money so wisely that I can stop trading in my time...

Double My Money!

I was talking with my mother recently, and the conversation at hand was money and our investments.  She was in the process of doing a little bit of financial housekeeping, and make some decisions in the process.  What I would like to share with you, is a little trick that she was able to use to give her some clarity on a few of the decisions she was facing.  This trick is called The Rule of 72.

The Rule of 72

Let me start by saying that I did NOT invent the Rule of 72, but I do use it for my own quick figuring.  The Rule of 72 is a quick-math method of being able to figure out how long it will take your money to double.  The exact formula for the exact calculation is pretty complex, and requires a calculator.  This will easily get you in the ballpark using simple mental math.

All you have to do is take 72 and divide by the compound annual rate of interest.  The answer is the number of years it will take for your money to double.

72/rate = # of years

For example, I have a retirement account with a guaranteed 7%.  Using the rule of 72, I know that it will take 10.28 years for my money to double (about 10 years and 3 months).  I know this because 72/7=10.28 roughly.

Why do I want to know when my money will double?

This information is pretty valuable when trying to decide where to invest your money. Let's use that retirement account of mine as an example.  I've been looking a some of the other funds that are options in my retirement plan, and am considering moving into one of those instead.  The rate isn't guaranteed, but I'm seeing that they have a track record of about 10% over the last five years.  While there's no certainty that it will stay at 10%, if it does, my money will double in 7.2 years (72/10=7.2).  On the other end of the spectrum, I have a savings account at my local credit union.  I use that account for my emergency savings, but not at all for investing.  It hasn't made more than about 1% in years.  At 1%, it would take 72 years to double my money.  Hmmm... Not sure I want to wait that long.  So, that's why I only have my emergency savings in that account.

So, while you can get more exact using a more precise formula and a calculator, The Rule of 72 should also do the trick!

Wednesday, August 2, 2017

The Landlord Files: Emergency Savings



We've talked about our own emergency funds, but haven't really discussed the specifics of being a landlord and having an emergency fund.  As you probably know from a previous post, I keep a completely separate account for my rental property, and it has it's own emergency fund.


How much do you really need to have in it?  I have to be honest, that isn't as simple as a straightforward number.  The first thing you need to consider is: What possible scenarios could come up, and how much would they cost me?  Let me give you a few that we've encountered:

  • Break-In (While it was empty):  setback $6000
  • Vacancy (Between renters):  setback of 1+ month's mortgage plus cleaning and maintenance fees.
  • Plumber:  setback $100+
  • Electrician:  setback $700+
  • Roof Repair (small repair):  $300+
  • Roof Replacement:  $5000+
This list goes on and on.  The numbers I've listed are approximations based on experiences that I have actually had.  These figures can vary hugely depending on the nature of the problem, and where you are, etc.  My point is that the last thing you need/want is to need to take out a loan to fix any of these kinds of issues.  The purpose of having a rental is to make money, not borrow more of it.  

All things considered, I've settled on 6-8 months worth of the mortgage payment.  In my situation, that is enough to cover pretty much all of the above listed items.  It would even cover a combination of those items.  

If you are considering getting a rental property, and have never done so before, you might want to make your own list of possible expenses and dollar figures to go with it.  That way you can decide safely whether 6-8 months of the value of the mortgage would suit your emergency savings needs, or if you need more than that.  Remember:  vacancies, repairs, and maintenance are all very real needs.  They don't need to be stressful if you're prepared.



For further reading, see also:

Wednesday, July 26, 2017

The Landlord Files: A Financial Life of it's Own


As you might recall, my partner and I have a rental property in Portland, Oregon.  It's been almost three years since we "placed it into service" as a rental, and I have to say that this rental has been a really great financial move for us.  That being said, it could have been a real disaster in terms of financial organization.

In addition to your regular bills: mortgage/rent, utilities, etc., you'll find an entire additional set of expenses that need to be tracked.  Your rental property will likely have it's own mortgage (unless you bought it outright), taxes, insurance, maintenance, and certain utilities that you'll still be responsible for paying.  Sounds like a tracking nightmare, right?  Well, it doesn't have to be...

I have a completely separate account for the financial life of my rental property. That's right, your rental property has pretty much developed a life of it's own, so it really needs an account of it's own.  I opened a separate savings and checking at the same institution that holds the mortgage for my rental property.  I also set up online banking and a direct deposit into that account.

Every month, my property management company direct deposits my rental income into the rental
checking account. From there I set up an automatic transfers to the mortgage payment.  That way, no matter how crazy my world gets, I know the payment will occur on time.

The next thing I do to keep this all organized is to log in once each month.  First I check that the payment was made.  Then I transfer a portion of what remains into the savings account.  That savings account is for "Rental Emergency Fund/Maintenance Needs."  Just like your regular financial life has emergency needs and maintenance needs, so does your rental.

In many ways I've personified my rental property.  It's got a financial life of it's own, and I've done my best to set it up to be financially independent.  It earns it's own paycheck, has it's own direct deposit, has it's own emergency savings, and occasionally has it's own emergencies.  I personally, don't use any of the money from the house's account for my own world if I feel that it's savings account is underfunded.

Another area of "financial organization" that you need to be mindful of, is taxes.  Your tax professional will be able to help you with the specifics, but being organized from the start is key.  Every dollar that is spend with regards to the house is going to impact a certain part of your return.  So, I personally only pay for things involving the house out of the house account, or via my management company.  That way, at the end of the tax year, all of those expenses are easy to locate.  They are either on the house's bank statement, or the statement that the management company sends.

By keeping a completely separate account for your rental property, you will save yourself a lot of work organizing later!

For further reading with regards to rental properties, please check out the following:

The Landlord Files: Location is Key
The Landlord Files: How do I know if this house will get a good return?

Taking Care of Me

When I think about the last 12 months in our lives (mine and my partner's lives), I realize that I feel tired.  Accomplished, but tired.  I worked 6 days a week for the majority of the year.  My partner worked full time all year, prepared taxes during tax season, had a few side gigs, and completed half of her Master's Degree.  I know that she is tired too.

We had a huge checklist of items that we wished to accomplish by the end of June: a personal savings goal, a loan payoff goal, paid for a new roof, and saved for retirement.  We got all of these items checked off the list.  It was thrilling, but exhausting.

Now we have two months off.  Well, technically, she is taking a class this summer, but neither of us are reporting to work.  By the top of September, we will have established a new set of goals for the next 10-12 months.  Until then, my goals are a bit different from what you might expect.

I am spending two months taking care of myself. It's hard to be healthy in one part of your life, but not in others.  While I can compartmentalize a great many things, I don't really believe all things can be separated.  How can I keep my financial world in order, if my house isn't?  How can I be super caring about my financial health, but ignore the health of my body, mind, and spirit?  While I would say that I am well in all aspects of my life, I feel like it is really important to take a time-out and address some things that have been on the back-burner.

My space feels neglected, so we are doing a 30 Day De-Cluttering Challenge.  I didn't create it; I've just modified one I've seen online.  I'm not working extremely hard at it.  I'm just doing one task per day, and recycling, donating, throwing away, anything that seems to make sense.  As I see things come into order in my home, I notice that there is more clarity in my mind.  I am very aware the physical clutter, clutters my mind.  I don't tend to get rid of a ton of things at once, but I do like to  selectively pare down periodically.  Seeing a few things float out of my world makes me feel somehow lighter, just like eliminating my debt makes me feel lighter.

I have scheduled all of those appointments that I've neglected over the past nine months: doctor, dentist, DMV are all on my list.  The appointments are all made and I'm checking them off one-by-one.  I mean seriously, how can I rationalize being "on top of" every financial money move, but ignore my dental exam or the renewal of my license.  While I don't enjoy most of these things, I do feel like my stress levels reduce greatly after I've completed them.  Having things left hanging over my head causes me a lot of stress, and if I can cut that off at the pass, I will.

I am doing all of those "quiet things" that fill me up and make me feel good.  I watch marathons of movies and old tv reruns of things that make me happy or feel inspired.  I am sleeping in, meditating, exercising, cooking, getting a massage, and spending time outside.  I try to do these things all year long, with somewhat patchy results.

Lastly, I am planning vacation.  Sometimes, the anticipation of travel is part of enjoyable part of the experience.  I am always careful to get a good deal, and not to spend any money that I don't have, but travel is honestly important to me.  If I had credit card debt, I would not be going anywhere, but I haven't had credit card debt in a number of years.  The major trip that is on the horizon for us, is to Stockholm, Sweden with a stopover in Reykjavik, Iceland.  The idea of this vacation brings me so much joy.  I also know that part of the satisfaction (for me) comes from knowing that it's all paid for in advance (with the exception of paying as we go for food and attractions).  There are some smaller day trips and long weekends in the words as well.  I am aware that I could save more money or pay something off by skipping the vacation.  I'm not skipping it.  I purposely worked this into our financial plan for the year.

Those of us who consider ourselves to be personal finance warriors can go months upon months without buying new clothing, or going out to dinner.  We take great pleasure in seeing our financial worlds flourish.  That being said, we need to make sure we are looking at our lives holistically.   Don't be afraid to hit the reset button. My little "me break" isn't going to undo any of the great things I've accomplished.  In fact, it will likely give me the fuel I need to go even further in the next year.

Thursday, July 20, 2017

Is a penny saved really a penny earned?

"A penny saved is a penny earned," as the saying goes.  But what does that mean?  This proverb's intent is to highlight the value of saving by suggest that the value of saving money is equal in power to that of earning it. But is it really true?

Recently, I've been combing through our budget looking for places to save money without causing any added difficulty to our lives.  I just spend one hour of my life to get a $20 monthly savings on our cell phone bill.  Can we really say that this $20 savings is the same as earning $20?

If I spent one  hour working and earned $20, I would make $20 one time and one time only.  I've really done quite a bit better than that.  I spent one hour of my time, and now I am going to reap a $20 benefit every single month.  When comparing this savings to work (aka earning), there is really no comparison.  Let's follow this example through.  This one hour I spent working to get $20 off my cell phone bill is going to benefit me to the tune of $20 every single month. Over the course of the next year, I will have reaped a $240 benefit because of this one hour spent creating the savings.  If I also spent 1 hour today earning $20 in cash, in order to make that same $20 next month, I will have to work another hour.  Over the course of the year, I would have to work 12 hours to gain the same $240 benefit that I got through one hour of time spent finding a savings.

This doesn't even begin to consider the influence Uncle Sam has on the scenario.  While everyone's tax situation is different, I typically only take home 70% of what I've earned.  So, while my $20 monthly savings really is $20 a month, the earnings might look a little different.  In order for me to take home $20, I really have to earn $28.58.

This is quite the philosophical rabbit-hole we've explored; however, I think the point is entirely clear.  Never underestimate the power of savings, especially if you can create a reoccurring savings.  If you can spend might spend less time saving money then you would otherwise spend earning it!



6 Ways To Save On Your Cell Phone Bill


Lately, I've been feeling pretty eager to find some places to save money in our monthly budget.  The difficulty is that we don't really have any nonessential categories.  While we could both stand to spend a little time and money on things just for ourselves, the truth is that we don't really have a manicure budget, or a coffee out budget.  We really tend to avoid lifestyle inflation and the unnecessary categories that go with it.  That being said, we don't have any obvious categories that we can take a chainsaw to...

...except maybe our cell phone plan...

1.  Check for Updated & Less Expensive Plans
In order to remain competitive, cell phone carriers change their plans on a semi-regular basis.  New plan offerings could provide a savings compared to what you currently have.

2.  Check for Employee Discounts
Cell phone carriers offer deals to a lot of companies to entice their employees to utilize that particular carriers services.  They even have deals with small companies.  So, don't assume because you don't work for a huge corporation that there's no discount until you've asked.  Either your carrier or your HR department should be able to tell you if their is a discount available.

3.  Don't Upgrade Your Phone
If you still have the kind of plan that offers a free phone (or highly discounted one) once your contract is up, find out what happens if you don't order a new phone right away.  I was credited $15 per month that I didn't upgrade my phone.  That being said, I went an extra year without upgrading, and saved a ton!

4.  Share A Family Plan
Find a friend (or multiple people) that are responsible and share a plan.  Plenty of people save a lot of money by having a shared plan rather than one for only their household.

5.  Ask for a Discount
I literally just did this.  I put the pressure on them.  I told them that if I couldn't find a savings with their company, I would let another company buy out my contract so that I could find the savings I needed.  Needless to say, they found me a discount.  In fact, I think they might have just created one for me, but that's neither here nor there.

6.  Don't Be Afraid To Walk
If they can't or won't get your costs down, go somewhere that will.  Carriers offer to buy out contracts all the time. Either look for an offer that will do just that, or make your move when your contract is up.

What have you done to save money on your cell phone bill?

              

Wednesday, July 12, 2017

The Credit Union Difference

This is a topic I've been sitting on for a while.  While some personal finance articles are about products or services that you should consider, others are about strategies that you ought to be taking.  This one is a little more philosophical by nature. Today, I want to talk with you about where you are putting your money.  I am not referring to which investment is better than another. I am thinking much more basic than that.


In the personal finance world, we all love to talk about our investments, insurance, and passive income.  However, the real foundation of our financial lives lies in the most basic accounts that we use on a daily basis.  Where are you keeping your money?

According to a recent Washington Post article over 100 million Americans are now using credit unions for their checking and savings accounts.  Are you one of those Americans?  If not, you might be on the wrong side of things.

How does it work?

In extremely simple terms, a bank's goal is to make money from consumer accounts.  Once that money is made, it is able to pay out dividends to it's stockholders.  This might be great for you if you happen to be the stockholder, as the interest and fees paid by customers are lining your pocket.  If you happen to be the account holder, then you are on the absolute wrong side of the deal.  You are paying interest and fees in order to line someone else's pocket.

A credit union works differently.  While the accounts are the same (checking, savings, credit cards, etc.), the philosophical concept is very different.  When you open an account at a credit union, you are required to open a basic savings account, typically called a "shares" account.  In this basic savings, the credit union will require that you deposit a minimum amount (typically somewhere between $5 and $25) into that account.  That minimum amount is basically frozen until you close the account.  That dollar amount has bought you one share ownership of the credit union.  Yes, you read that right.  You will be a partial owner of the credit union.  When you close the account that small portion that was previously frozen, is given back to you, and you give up your one owner's share.

What does that one share buy you?  It buys you one vote at the annual meeting.  All members of the credit union are member-owners, and invited to attend the annual meeting where decisions are made regarding the credit union's board of directors, etc.  Has your bank ever asked you to help make decisions about how it was being run?  I thought not.

Speaking of the board of directors.  In a credit union, this is composed 100% of volunteers.  These volunteers are member-owners just like you, and they are not paid.  At some point, you might even serve on this board and be even further involved in helping make decisions for the credit union.  Again, is your bank going to ask you to serve on their board of directors?

Even if you never serve in his capacity, you still get to vote, and that's very important.

What about interest rates and fees?

Credit Unions still have fees just like banks do.  The difference is what they do with them. Remember, a bank's goal is to make it's stockholders happy.  In some respect, the stockholder is a little like the bank's boss.  A credit union's boss is you, it's member-owner.  In other words, the person that has the account.  So, when they make money, they sink it into better services, better rates, better fees,etc.  Remember, the people that have the accounts, also run the board of directors, and vote at the annual meeting.  Yes, there are still fees, but you are partly helping to decide what happens with that money, and you are directly benefiting from it.  That's not how it works in a bank.

Is my money safe?

YES.  Credit Unions are Federally Insured by the NCUA.  This is similar to the FDIC.  The FDIC is for banks.  The NCUA is for credit unions.  The insurance limits and levels are exactly the same, so you don't need to worry that your money is somehow in danger.  For further information on NCUA insurance levels, click here.

What are the possible drawbacks?

I spent almost ten years of my life working in the credit union world and I've hear it all.  One of the most common things that you might hear people complain about when it comes to credit unions is the number of branches.  You may hear "My credit union only has three branches."  This is different from the banking world where there are branches on every corner.  The credit union world has become very savvy in attending to this issue.  The credit unions have come up with a system called "Shared Branching."  Credit Unions all across the country have joined this network.  If your credit union is on this network, they also have branches that offer shared branching services to others.  What does this mean for you?  As long as you have your account number and ID, you can simply walk into ABC credit union at a branch that offers shared branching services, and they will access your account at XYZ credit union for you.  For more information on Shared Branching click here.

In short, I spent nearly a decade of my life working in the credit union world.  Although I am no longer employed by a credit union, I am still a huge advocate and believer that credit unions are the way to go.  In fact, my credit union is in Oregon.  I live in New York, and I have all the access that I need.  I use mobile deposit, online banking, direct deposit, and shared branching.  My access is phenomenal; the service I receive from my credit union is amazing.  I feel like a member of the family, not just a number.  That to me is the credit union difference.

Do you belong to a credit union?  If so, what do you like about it?  If not, why might you hesitate to join one?

Friday, July 7, 2017

Credit Report Self-Monitoring

I greatly dislike debt.  If you've been reading my work, you probably already know that.  In general, I am not in favor of taking on a loan.  That being said, there are a few situations in life where you may not be in a position to pay cash for something that you need: cars and houses come to mind.  While we can debate forever whether or not you should take a loan for these things, or whether you really need them or not, the truth is that you are going probably going to get a loan when you decide you want to purchase one of them.  That is, assuming someone will give you a loan...  There I said it.  Yes, it is possible that someone might not want to give you a loan, and if they do want to give you a loan, what kind of rate will they qualify you for?  Much of this depends on your credit report.

Your credit report is basically a report that tells a lender about your relationship with debt.  Although having no debt might be great, let's look at it from a lender's perspective.  Do you think they really want to lend money to someone that doesn't have a proven track record of paying back?  Lenders use your credit report to judge you and whether or not you are able to manage your debts responsibly.  Lenders DO want to lend you money, because that is how they make money.  Equally, lenders want to make sure you are responsible enough to pay them back.  So, if you think you might want to take a loan in the future, you need to take the first step.

You need to pull your own credit report.  Many people avoid doing this out of fear. I get it.  I still get a little nervous every time. That being said, you cannot correct any errors if you don't find them.  You also don't want to find errors in the moment you are applying for a loan.

There are three main credit reporting agencies:  Equifax, Transunion, and Experian.  You are entitled to getting a free credit report from each of them every year, but you have to request it.  You can do so by going to www.annualcreditreport.com.  As I said before, the report will be free. If you want know your credit rating (the number), you will be charged for it.  This is pretty much standard.

A lot of people get very credit concerned (understandably so), and want to sign up for credit monitoring services.  If you haven't ever had a problem, you could very easily skip the fees and monitor your credit on your own.  Each of the three agencies will give you one report per year for free.  No one says you have to order them all at once, even though most people do.  I generally order one at a time.  I order one just after the holidays and mark down the date, and which company on my calendar.  Four months later, I order another (from a different agency), and so forth.  As long as everything continues to look right, I can monitor my own in this way for free.

If you feel that you've been compromised in some way, there are steps that you can take as well.

For further reading:
So, your social security number may have been compromised....

Thursday, July 6, 2017

How we slayed the $8,000 credit card dragon!

When my partner and I first moved to New York City, I was the only one working.  Our situation remained this way for more than a year before she finally found part-time work, then eventually started a full-time teaching position as well.  During that span of time, things were really tight.  We had always been avoiding the trap of two incomes, but even so, moving had cost us a lot, and our newly established rental property had some unforeseen expenses.  At this point, we had acquired about $8,000 in credit card debt.  I know, a lot of people have started in much worse situations than that, but for me, this felt like the weight of the world hanging around my neck.

Despite our one income situation, I was determined to pay it off before the start of the next school year, and we did just that. Here is what we did, and how you can too:

Budget to Zero
We literally made a plan for every dollar.  Every dollar had a name and a job.  We didn't leave an extra fifty bucks sitting there because we know that when people do that, the money gets spent somewhere, and not usually in the most ideal place.  So, that means finding the starting point, and creating a budget. Once you've accounted for everything necessary, allocate everything else to the credit card debt!

Forget Dining Out
When you have eight grand in credit card debt, you have no business dining out!  You can't afford it!  I am sorry if that sounds harsh, but it's reality and probably time to face it.  We took great pleasure in ordering our cheap $10 pizza as a Friday night treat.  It was the cheapest pizza joint in the neighborhood, and we even used the coupons.  I'm not kidding.  Your dinner out will taste better when it's fully paid for, trust me, mine sure did!

Practice Saying "I can't afford that..."
I don't care how embarrassing it is; you get used to it.  It actually becomes relieving to be honest about your money.  No one cares about your credit card debt but you, and people will ask you to do things socially that you can't afford.  Either decline, or come up with a free or cheap alternative.  Until you are out of credit card debt, you can't afford the outing.

Throw ALL Bonuses at the Debt
This includes gifts, tax returns, bonuses, you name it.  The biggest bonus you will ever get is the bonus of zero credit card debt.

No Holiday Gifts
This one sounds crazy right?  During the holidays, we found a great pajama sale, and indulged in super cheap new pj's and some snacks for an at-home movie day.  It cost next to nothing, and is one of my favorite holidays yet.  I also avoided the holiday financial hang-over that many Americans face in January.  Nope, not me!

Scrap the Vacation
This one was rough as a teacher.  I had two months off, and friends going to Ghana, Brazil, Greece, South Korea, and a number of other amazing places.  It would have been really dishonest of me to do something like that with a giant visa bill staring at me.  I did need a vacation though, just to get out of town, so I went camping a couple of times...  Super cheap, and exactly what I needed.  I planned for the vacation I needed, not simply the one I wanted.

These strategies got me out of credit card debt about two years ago, and I've never looked back!  My partner and I threw every dollar possible at the credit card debt until we slayed that dragon once and for all.  Utilizing the strategies I mentioned above made us progress much faster than we might have otherwise, even on one income.

For further details on how to eliminate credit card debt, consider the following strategies:

Debt Snowball: Eliminating Credit Card Debt
Smallest Balance First Method:  Eliminating Credit Card Debt




Friday, June 30, 2017

How I paid off $10,000 of student loan debt in 6 months

Before I can rightfully tell you about how I paid off $10,000 of debt in 6 months, I need to back up a little bit.

Until the summer of 2016, my partner and I were living primarily off my income.  She worked part-time here and there, but was largely focused on her undergraduate degree program.  At that point, she was accepted into another program that would pay for her Master's Degree in Education while simultaneously employing her as a full-time, full-salaried, teacher.  We were already accustomed to living off my income only, so when we started school that fall (I also work as a teacher), we decided not to change that part of our financial picture.

Upon arrival of her first paycheck in September, we paid off the remaining balance of one of my two private student loans.  After paying off my credit cards the previous year, I had been hurling every extra dollar at the smaller of the two private student loans.  I had it down to about $1200, when she got that paycheck, and we used that check to eliminate it entirely.  We had decided to continue on using her paychecks to eliminate debt, and mine to live on.  Over the next few months, we saved her paychecks in order to buy a new roof on our rental property, which I am proud to say we paid for in cash!

That brings us to January.  In January, I had one remaining private student loan with approximately a $10,000 balance on it.  We decided that we wanted to pay off that remaining private student loan by the time school let out for the summer (for us that's the end of June), so June 30th became an absolute mission.

Now, I don't know about you, but for me, paying off ten grand in six months is already difficult enough.  Add to that they chaos that is this year.  By that I mean, this is the year that everyone we love most has some sort of monumental event happening:  weddings (2), graduations (2), monumental birthdays (2).  We knew that we were going to have to miss some of these occasions, but even so, the fact remained that we were going to be traveling three times during that time frame.

This is where my partner is such a huge asset.  I get so fixated on eliminating my debt that my tendency is to ignore some of these other things.  She does a great job of helping me to work those items in without detouring much from our path.  For example, we probably could have gotten the loan paid off by the end of April if we weren't traveling three times during that time frame. So, we settled on June 30th as a date.  Ultimately,  I just wanted it done by summer break, so that worked just fine.

We budgeted $2000 per month starting in January ($1000 per paycheck).  That needed to include my $10,000 student loan, two trips to Portland, Oregon and a trip to North Dakota.  That gave us $12,000 from paychecks to work with over the course of 6 months.  I decided to add another $1000 of my income from a side gig to this cause.  Since we decided this as early as January, it was really easy to break up the $13,000 into monthly allotments.  One month we would pay $1000 to the loan and the other $1000 to one of our family related visits, and the next month we would pay a full $2000 to the loan.  We decided to alternate so as to feel like we were steadily making progress on both fronts.

This strategy worked really well for us.  I think it helps that we view our money as being in "buckets."  Each bucket has a specified purpose, and gets a specific amount of money added to it.  Now that we have no more private student loans, we will devise a new plan of attack for the next priorities on our list.

For further reading, see also:
Paying Off Private vs. Federal Loans
Private Student Loans: How I got into debt in the first place!

If you or someone you love are working hard to pay off student loan debt, and feel that refinancing could help I recommend using LendEDU (affiliate link).  LendEDU is one of my sponsors, and has a tool that helps people to quickly and efficiently compare several student loan refinancing companies in order to evaluate which company can offer you the best deal.  Utilizing their tool doesn't necessarily mean you have to go through with the refinance, but it will help you to gather information to make an informed decision.

LendEDU is a company with which I have an affiliate marketing relationship.  I earn a commission when an individual clicks through my link and uses LendEDU to gather information about refinancing student loans.