Live Real, Now

The no-pants guide to spending, saving, and thriving in the real world.

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Living On Credit Cards

Finance

About 2 months ago, Linda and I decided to go back on the envelope system for all of the parts of our budget that we aren’t able to automate.

English: Money seized during "Project Cor...
English: Money seized during “Project Coronado” by the DEA. Going in “La Familia Michoacana” article. (Photo credit: Wikipedia)

The reason we’re doing this is because we’ve been consistently over budget when we do all of our spending on our credit cards.

The reason we switched back to using our credit cards is because it’s a royal pain in the butt to always make sure we’re carrying enough cash for groceries and gas and date night and fundraisers and cover charges, etc.

It’s still a royal pain in the butt, and we still suck at it.

But one of our envelopes is labeled “This went on a credit card” and is used for those times we forgot to grab cash before heading to the store.

In the last two weeks, that’s $500 that we forgot to bring with us.

Cash sucks.

I’m tempted to go back to using the credit card for our primary spending.  Yes, we are consistently over budget, but it’s not terrible….for some odd definition of “not terrible”.

We generally seem to have about $1000 left on the card after making our last monthly payment every month.  Every month.  The overall balance never grows, it’s just hanging out $1000 over what we have budgeted to be paid automatically on the card.

That’s a bad thing, but….

Since I make a payment every couple of weeks, the interest is never assessed on that balance.   In the last year, we’ve paid exactly $0 in interest, without any funny balance transfer deals.

By my calculations, that means our credit card has given us $1000 for free.

If we pay that off and get strict about using cash, won’t that mean our free $1000 would have to evaporate?

I like free money.

That also means that the total interest we paid in 2014 is $672.91, all to our mortgage.   Even if we have a small balance we carry, we’re not paying interest on that debt, and–worst case–we could raid our savings to make it vanish tomorrow.   I’m tempted to make that happen, but our savings goals are more important to me that paying back the free money.

Net Worth, April 2016

Finance

Net Worth

Last year wasn’t a good year for my net worth.  It came with a $7000 drop.

Q1 2016, however, was a great quarter.

In December, we had $13,271 in credit card debt.   At the time I took this screenshot, it was down to $3836.43.    As of this moment, it’s down to $2640.91.   If things go as expected this week, I should wake up on Friday to a paid-off credit card.  I had to raid some of our savings accounts to make it happen, but it’s happening.    Some of it was a tax refund, some of it was the fact that my mortgage payment went away in December.

That’s seven years of hard work, almost to the day.   Seven years ago, I was researching bankruptcy, and stumbled across Dave Ramsey.    Seven years ago, we were drowning in debt.

Next week, we’re free.   No more debt, hanging over our heads.   We’re free to take vacations.   We’re free to finally save for college, when my son is 16, and stand a chance of being able to pay for it for him.   We’re free to do…whatever we want to do.   Our monthly nut after the debt is paid–only in fall/winter/spring when my wife is working–is roughly 1/3 of our take-home pay.

That’s how hard we’ve cut to make sure we can pay our bills and make debt die.  We do have some things that would be considered extravagant.   We’re not savages.   But my car is 10 years old.  My wife’s is 7.   My motorcycles are 35 and 30; one of them was purchased before we cared about our debt.

Back to the net worth….

The biggest change came from our property values, which sucks.  That was $36,000 of the difference, which comes with the painful tax bump to go with it.   A large chunk of the savings increase was the money we set aside every month to cover the property tax bill, and that will go away next month.

Still, $641,000 dollars is a long way from nothing.   I’m pretty happy.

Tips to budget successfully

Finance

This is a guest post written by Andreas Nicolaides, a financial author for UK based MoneySupermarket.com.

Whether your aim is to save money for a special occasion or you just want to make sure you don’t have to struggle financially when it comes to the end of the month, a budget can be a saving grace. Budgets help us quickly and easily identify our total income and all our expenditure, allowing us to plan for the best and prepare for the worst financial situations.

Set yourself a target

 

If you have decided to set up a budget, then there must be a reason. Are you looking to save for an upcoming event? Or maybe you have realised that you are struggling to make your payments every month and you would like to feel more financially secure. Based on what you would like to get out of your budget, you should set yourself a specific, measurable objective.

My first objective I set for myself was to save $100 every month for a year. This sort of objective is easy to manage and easy to monitor and this is what we are trying to achieve. One important thing I would mention here is to ensure your objective is achievable; don’t set yourself a target that is too far out of your reach, being realistic is extremely important.

How do you set up your budget?

The main key thing when you start to put your budget together is to make sure you’re as honest as possible. Get yourself a pen and some paper and on one page detail all of your income. Include the obvious and also remember to include any benefits you are entitled too. Then grab another piece of paper and detail all of your monthly outgoings, remember to be honest and thorough and try not to forget anything. Once you have both figures, deduct your expenditure from your monthly income that will give you your monthly figure.

You have some extra cash?

 

If when you have your figure you realise that there is some cash left over, you can then decide what you want to do with it. My advice here depends on your own personal circumstances, for example if you have high levels of debt, your main aim should be tackle your high interest debt aggressively and as often as possible.

If you have some money left over and your aim is to save, then set up an interest bearing bank account. If you are based in the US then you could look to set up an LSA or lifetime savers account. In the UK we have the equivalent, that is called a cash ISA saving account.

No money left over?

 

If after working out your budget you find you have no money left over, then you need to do something about it. Debt is one of those things that won’t just disappear overnight; it’s something that takes time and commitment, but not giving up is paramount.

How to cut down your expenditures?

 

One of the main things you can do when you realise you are in a bad situation is to try and cut down on your expenditure. Here’s a couple of quick ways:

  • Use price comparison sites – These sites are great to check and see if you are paying too much on your bills, and if you are, you will have a list of fantastic options available for you to choose from. This is a great way of saving money on things like your car insurance, see here.
  • Sell unwanted items – Selling unwanted items is a quick way to making some cash, everyone has them around their home, so why not make use of them instead of letting them build up dust?
  • Cut down on your spending – Try to avoid buying luxuries and try to stick to a specific shopping list when out doing the weekly food shop, this will help you avoid unnecessary purchases

A budget is used by many just to monitor what they spend month to month, but I hope I have detailed how it can be a helpful financial tool that can help you reach your financial goals. I hope my tips to budget successfully will help you get started on your way to financial freedom.

 

Sunday Roundup: Father’s Day

Finance

Father's Day Cake 2009
Image by Jim, the Photographer via Flickr

On Father’s Day, 3 years ago, my third and final kid was born.   My kids are all horrible brats and I love them dearly.

I wouldn’t give up fatherhood for anything.  Watching my kids grow and learn, steering their development, and teaching them how to navigate life is the most fulfilling thing I’ve ever been a part of.  Also the most frustrating.  I can’t imagine being anywhere else, not being with my kids.   I have no respect for deadbeat parents.

I am incredibly grateful that I had a proper model for manhood and fatherhood.   My dad taught me the concepts of honor, integrity, and responsibility.   I couldn’t be the man I am now, if he wasn’t the man he is.   Thanks, Dad.

Best Posts

Sometimes, the coolest things in the world are the things most likely to kill you.    Call me crazy, but I’d happily strap a 1200 cc propeller to my crotch and find out what 10,000 feet looks like.

Via Budgeting In The Fun Stuff, Super Frugalette reminds us that, when there’s a significant amount of money involved, spending a few hundred dollars on an attorney isn’t wasteful.

Fivecentnickel discuss multi-level marketing.  It doesn’t matter which company you are in, if your downline is more important that your product, it’s a bad business model.

Keith Ferrazzi shows us how to improve our body language when it really matters.

When I started driving, I tossed my car in a ditch going way too fast.  Naturally, it was my parents’ fault for giving me the curfew I was trying to beat.   They never would have bought it if I would have told them I was driving like my grandma and it jumped into the trees by itself.   Why does the FBI think that’s believable?  Corruption, maybe?

Financial Samurai talks about living a life without regrets, which is a personal goal of mine.

Food storage will become critical when the zombies come.

Beer is good.  Even the cave-men thought so.

Carnivals I’ve Rocked and Guest Posts I’ve Rolled

3 Ways to Keep Your Finances Organized was an Editor’s Pick in this week’s Festival of Frugality.  Thanks!

5 Reasons Your Wealth Isn’t Growing was included in this week’s Carnival of Personal Finance.

Money Problems: Insurance was included in the Totally Money Blog Carnival.

Unlicense Health Insurance was included in last week’s Carnival of Personal Finance.

Thank you! If I missed anyone, please let me know.

Yakezie Blog Swap

Last week, the Yakezie shared what they would do with a single financial do-over.

– Melissa from Mom’s Plans shares her biggest financial mistake at Barbara Friedberg Personal Finance: Opening an eBay Store and Using Credit.  It is a great story about how not to grow your business and how competing priorities can pose a real challenge.

– Budgeting in the Fun Stuff shares her biggest financial mistake and potential do-over at Super Frugalette: Investing in a Friend’s Business.  Its a good, but costly lesson learned about small business.

– Eric from Narrow Bridge Finance shares how He Wouldn’t Have Paid Down His Student Loans So Fast at The Saved Quarter.  This may seem counter-intuitive, but he has some good points.  Check it out.

– Mr. S from Broke Professionals shares how He Wouldn’t Have Bought a New Car at My Personal Finance Journey.  This has some great analysis, especially considering the new car was a hybrid!

– The College Investor posted at Wealth Informatics: What you should know when you are investing?

– Wealth Informatics posted here: If you had one financial do-over, what would it be and why?

– Barbara Friedberg shares how She Was Scammed at Mom’s Plans.  You have to watch out for the hard sell!

– Joe at Retireby40 tells us about How He Invested his 401(k) in Company Stock right before the dot com crash, at Financially Consumed.  A financial adviser may have helped avoid this one!

– Financially Consumed shares his Car Purchase Do-Over And Over at Retireby40.  Car addicts have it tough!

– LaTisha from FSYA shares her do-over story in It’s Never Too Late at Little House in the Valley.  Sometimes the do-over is quicker and more painless than most.

– Little House yell’s Do-Over! Do-Over! at FSYA Online.  It looks at the road to saving more, starting on an elementary school playground!

– The Single Saver asks, What Are The Long Term Consequences of Small Purchases at Totally Money.  A cool post on how past purchases cost future returns!

– Miss Moneypenniless from Totally Money shares her story of Vacationing to the Brink of Bankruptcy.  Sometimes a vacation can be fun, but the bills afterward may be daunting.

– Super Frugalette shares How a Lawyer Could Have Saved Her $24,700 at Budgeting in the Fun Stuff.  Maybe lawyers are worth it sometimes?

– Jason from Live Real, Now shares how he Amassed $90,000 of Debt at Debt Eye.  A good lesson in living a little more frugally.

– Kevin from Debteye shares his do-over: Not Buying a House Right Out of College at Live Real, Now.  I have said it before that buying a house can be challenging right out of college.

– Penny from The Saved Quarter shares how She Would Have Finished College Before Having Kids at Narrow Bridge Finance.  An awesome story that has will soon have a happy ending!

– Jacob from My Personal Finance Journey shares how he was Scammed on eBay at Broke Professionals.  An important lesson for anyone selling or buying online.

– Marissa from Thirty-Six Months shares how she Accumulated a Ton of Student Loan Debt at So Over Debt.  If you are going to live the life, you’re going to pay the price!

– Andrea from So Over Debt shares How She Would Have Started Saving for Retirementat Thirty-Six Months.  I would love to read a post on each of the stories you mentioned getting to where you are now!

– Below Your Means shares his story about A Missed Investment Opportunity.  There are so many times I wish I could have gone back and bought a stock!

Get More Out of Live Real, Now

There are so many ways you can read and interact with this site.

You can subscribe by RSS and get the posts in your favorite news reader.  I prefer Google Reader.

You can subscribe by email and get, not only the posts delivered to your inbox, but occasional giveaways and tidbits not available elsewhere.

You can ‘Like’ LRN on Facebook.   Facebook gets more use than Google.  It can’t hurt to see what you want where you want.

You can follow LRN on Twitter.   This comes with some nearly-instant interaction.

You can send me an email, telling me what you liked, what you didn’t like, or what you’d like to see more(or less) of.   I promise to reply to any email that isn’t purely spam.

Have a great week!

 

 

 

 

 

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Carnivals This Week

Finance

I seem to be failing frugal parenting.  My son spent the entire week telling me how happy he’d be if we could go to the game store so he could spend some of his money.  Tying emotions to shopping is badbadbad.

Live Real, Now was included in four carnivals last week:

Carnival of Financial Planning – Edition #224 at AaronHung.com

Yakezie Carnival – Mardi Gras Edition at Young Adult Finances

Canadian Finance Carnival #76 at Canadian Finance Blog

Carnival of Financial Camaraderie – Rain Man Edition at Thirty Six Months

Thanks to all of the hosts for including my posts.

Get More Out of Live Real, Now

There are so many ways you can read and interact with this site.

You can subscribe by RSS and get the posts in your favorite news reader.  I prefer Google Reader.

You can subscribe by email and get, not only the posts delivered to your inbox, but occasional giveaways and tidbits not available elsewhere.

You can ‘Like’ LRN on Facebook.   Facebook gets more use than Google.  It can’t hurt to see what you want where you want.

You can follow LRN on Twitter.   This comes with some nearly-instant interaction.

You can send me an email, telling me what you liked, what you didn’t like, or what you’d like to see more(or less) of.   I promise to reply to any email that isn’t purely spam.

Have a great week!

Thrifty Sucks – The 30 Day Compact

Finance, Relationships

Image by waving at you via Flickr

During the month of September, we went on a 30-day compact.   We decided to avoid buying anything new for 30 days.   The plan was, if we needed to buy something, we’d hit a pawn shop, a thrift store, or Craigslist. Obviously, food and consumable hygiene products were exempt from the rules.   I’m not going to stink or starve for an experiment like this.  Ideally, at the end of the month, our discretionary budget would reflect our extra thriftiness, leaving us a couple of hundred extra dollars at the end of the month.

Great plan.

I found out a few days ago that we actually made it 3 days.  Grr.   That’s when the credit card bill came.  Double-Grr.

All in all, that one slip isn’t a big deal.   We also had a few presents we had to buy for a couple of birthdays and one wedding.   Also not a big deal, since we have a budget for gifts.  It may have been against the rules, but what were we going to do, drink the free beer at the wedding without bringing a gift?  How rude.

So we had a few slips. That’s not bad, considering exactly how well “consumer” describes us.

Avoiding retail shopping is a lot harder than it sounds.   We have everything we need, so on paper, it should have been simple.  We didn’t need anything, so we wouldn’t have to buy anything.

Like I said, great plan.

There were a few books released this month that I have been anxiously awaiting, like Monster Hunter:Vendetta and Chris Guillebeaus’s book, The Art of Non-Conformity.   They have both had to wait.   In the next few days, I will be buying both of these books.    That makes this project very similar to an inverse “Cash for Clunkers” program.  Instead of moving spending that would have happened anyway to an arbitrary time-frame, I moved spending out of an arbitrary time-frame, but the spending is still happening.

My wife has an admitted shopping addiction.   This project caused a rather…explosive…discussion this week.  Not-so-coincidentally, that happened the day we got the credit card bill.   Note to self: “What the heck is this?” is not the right way to start a conversation. Oops.

We had 30 days of trying to avoid the retail trap, and kicking ourselves when we slipped.   What did we learn?

1.  We are big damned consumers. We are so much better than we used to be, but so far off of where we’d like to be.

2.  Target is infinitely more convenient that Craigslist. We may pay a small premium for that convenience, but generally, it’s worth it.

3. When you forget to budget for a speeding ticket that needs to be paid 5 months after you received it, it does not matter if you saved some of your discretionary budget by not shopping retail that month.

4. When you open a credit card bill and get upset, be prepared to get clubbed over the head with #3.  Repeatedly.

This month, I’m going to do my best to learn a new language.    I’m having a hard time deciding which one.   Spanish would be most practical.  Norwegian would let me read some of the artwork on my Grandma’s wall, but Italian sounds like the most fun.

Nothing like waiting until the last minute.