- Uop past midnight. 3am feeding. 5am hurts. Back to bed? #
- Stayed up this morning and watched Terminator:Salvation. AWAKs make for bad plot advancement. #
- Last night, Inglorious Basterds was not what I was expecting. #
- @jeffrosecfp It's a fun time, huh. These few months are payment for the fun months coming, when babies become interactive. 🙂 in reply to jeffrosecfp #
- RT @BSimple: RT @bugeyedguide: When we cling to past experiences we keep giving them energy…and we do not have much energy to spare #
- RT @LivingFrugal: Jan 18, Pizza Soup (GOOOOOD Stuff) http://bit.ly/5rOTuc #budget #money #
- Free Turbotax for low income or active-duty military. http://su.pr/29y30d #
- To most ppl,you're just somebody [from casting] to play the bit part of "Other Office Worker" in the movie of their life http://su.pr/1DYMQZ #
- RT @MoneyCrashers: Money Crashers 2010 New Year Giveaway Bash – $8,300 in Cash and Amazing Prizes http://bt.io/DQHw #
- RT: @flexo: RT @wisebread: Tylenol, Motrin, Rolaids, and Benadryl RECALLED! Check your cabinets: http://bit.ly/4BVJfJ #
- New goal for Feb. 100 pushups in 1 set. Anyone care to join me? #
- RT @BSimple: Your future is created by what you do today, not tomorrow"— Robert Kiyosaki So take action now. #
- RT @hughdeburgh: "Everything you live through helps to make you the person you are now." ~ Sophia Loren #
- Chances of finding winter boots at a thrift store in January? Why do they wear our at the worst time? #
- @LenPenzo Anyone who make something completely idiot proof underestimates the ingenuity of complete idiots. in reply to LenPenzo #
- RT @zappos: "Lots of people want to ride w/ you in the limo, but what you want is someone who will take the bus w/ you…" -Oprah Winfrey #
- RT @chrisguillebeau: "The cobra will bite you whether you call it cobra or Mr. Cobra" -Indian Proverb (via @boxofcrayons) #
- RT @SuburbanDollar: I keep track of all my blogging income and expenses using http://outright.com it is free&helps with taxes #savvyblogging #
- Reading: Your Most Frequently Asked Running Questions – Answered http://bit.ly/8panmw via @zen_habits #
Six Year Loan in 10 Months
Back in October, I mentioned that we were taking on more debt.
Our plan was:
We now have a car loan for $21564. Our plan is to sell the Caliber for $9500 and the F150 for $6800. That will leave $5354. We have a beneficiary IRA that has to be cashed out relatively soon, so we’re planning to do that early in January to push the tax burden to next year, which will end the loan.
How has that worked out?
We made the final payment on the Tahoe today. Our first payment was December 10, 2012. It took us 10 months to pay off six year loan.
We had initially hoped to have it paid off by March. That didn’t happen. Our plan didn’t work, so how did we do it?
Here’s what happened:
We sold the F150 for $6400, cash.
We still haven’t cashed out the IRA.
We sold the Dodge Caliber for $8500, but….
(This is where the story starts.)
While we were fixing up our rental house, we met quite a few repairmen and installers of various expensive doo-dads. Several of them were interested in buying the Caliber. One of them convinced my wife that we should accept payments for it. That’s a mistake we’ve made before, but we decided to make it again.
We wrote up a loan agreement, listed ourselves as the lien holder on the title and sold the guy a car for $1500/month with no interest. It was supposed to be paid off in just a few month, so it didn’t seem like that big of a deal.
He made two payments, then disappeared for a while.
When he re-materialized, he told us he’d been in the hospital and had lost his job.
Crap.
When the time came to make his next payment, he told us he was going into the hospital for a couple of weeks, and he’d work something out after.
It’s “that kind” of hospital. The dry kind.
Suddenly, it was May and he was telling us his sister would help make payments because drinking yourself into rehab once a month makes it hard to keep a job.
Stories, excuses, BS.
Finally, we got sick of it. I like helping people, but I despise being lied to.
Repo time.
In Minnesota, if you’ve ever taken action(or not taken action) that would make it appear that you were okay with a modified payment plan contrary to the loan agreement–for example, not taking the car back after the first missed payment–you have to send a “Letter to Cure”, which is a 10-day notice of intent to repo. This gives the customer a chance to make things right.
On day 8, he called us, fresh from rehab, promising his sister would help him out. On day 10, she called. Her business had been broken into and she was working that out, but she’d arrange something with us after the weekend.
Crap, that sounds like more excuses.
Remember, this was already August, and the car was supposed to have been paid in early April. We’re such suckers.
By the middle of the week, she called and said she’d make the payment. My wife and I decided that we’d give her three days, then go take the car. On day 2, she said she was overnighting money.
On day three, we got a check and two postal money orders to cover the balance. $4500.
Today is the 10th day from that deposit. The check has cleared, and payment is off to the bank, killing the loan.
But wait, 4500 + 6400 is only $10,900. That leave $10,664 unaccounted for.
From the beginning, we were making double payments. Instead of paying $425 per month, we paid $850 most months, except when things got a little tight over the summer. The tax refund we got that we weren’t expecting also went to the loan. Every extra dollar got sent to the bank, because we weren’t sure how the car loan drama was going to end.
Taking the cars we sold out of the equation, we still paid off the remaining $10,664 in just 10 months. Interest payments came to about $300, which the buyer of the Caliber says he wants to pay us, but I’m not counting on it.
So again, we are debt free and have just freed up $850 in our monthly budget. Half of that will be getting saved for the next car, and half will go towards our other savings goals.
Avoiding Financial Traps & Saving Money on Big-Ticket Purchases
This is a guest post written by Jason Larkins. He writes at WorkSaveLive – a blog he started to help people change the way they think about their finances, careers, and lives.
Who doesn’t like to buy stuff?
Okay…I’m sure there are a few of you out there that take pride in never buying a new “toy,” but I know personally that I LOVE stuff!
Not to the point that I make dumb financial decisions that jeopardizes my family’s financial well-being, but I do have that natural American desire to have nice things and to be able to do fun stuff!
If you’re in the market to buy a Big-Ticket item (i.e. a new car, TV, or other technology gadget), what are some of the things you should be thinking through as you contemplate making the purchase?
The first mistake people make is buying on impulse. The massive majority of Americans don’t even have a thought process when it comes to buying toys, so that’s why I decided to dedicate a post on a few things you should ponder.
3 Financial Traps You Should Avoid
1. Avoid spending extra for add-ons, or features, that you’re never going to use.
It is easy to get an appliance or technology gadget that has a ton of amazing features on it – but why pay for them if you won’t use them?
Consider buying the item that may be a step below what you’re looking at.
I know that I personally love the thought of having an Ipad 2, but am I really going to utilize it to it’s full capabilities?
Probably not!
It doesn’t mean I shouldn’t have one, but it does mean I can look at the older Ipad and save some money. Or, I can avoid the purchase altogether if I don’t think it’s going to be worth the money.
2. Be cautious with offers such as “no money down,” “90 days same as cash,” or “12 months interest free.”
Nearly 88% of the “90 days same as cash” offers are actually converted to payments because the purchaser couldn’t pay off the bill before the offer was up.
3. Don’t buy it just because it’s the cheapest.
Always be sure to do research prior to your purchase – check consumer reviews and product reviews. Saving money may not be worth it if the product breaks down quickly or doesn’t have the functionality that you’re looking for.
3 Strategies to Save Money
1. Prepare for large purchases and pay cash for them.
If you can’t pay cash for the item, then there is a good chance that you can’t afford it.
Determine how much money you will need to spend on a particular item and save up for it! This is going to help you in a couple of ways:
- It will help you avoid buying on impulse.
- If it takes awhile to save up for the item, then this will give you valuable time to really determine if it’s something you WANT badly enough to pay that kind of cash for it.
- It will allow you to ask for a DEAL. Every retailer pays a fee to run a debit/credit card. If you’re paying in cash the worst you can do is to ask for that 2-3% discount the store would be saving!
2. Buy at the end of the month, or at the end of the year!
Consumers rarely think of this, but it’s important for you to know that every store (and store manager) has monthly/yearly sales to report.
If they’re wanting to close out the month/year strong, they’re much more inclined to offer you a deal on whatever you’re buying!
3. Avoid the extended warranty!
Insurance (in general terms) is the act of transferring risk – the more people that pool money together to help mitigate risk (buy insurance), then the lower the cost of the insurance becomes.
The reason to avoid the extended warranties is because the cost you’re paying to cover your item also includes: commissions paid to the retail store, overhead for the insurance company (wages for employees, building costs, utilities, etc), and some profit for the insurance company as well.
Sure, you may be in the miniscule percentage of buyers that has their item break down on them, but the reality is that it’s unlikely.
If it was likely for your item to break down, then the insurance wouldn’t be available because it wouldn’t be a profitable endeavor for the insurance company (and they’d be out of business).
Whenever you’re buying something that has a large price tag, you should develop a process that you think through before buying it!
Always pay in cash, get a deal, and make sure you actually need everything you’re paying for.
10 Ways to Secure Your Kids Against Debt
Everybody wants their children to do well. I want my kids to grow up without making my mistakes. Here are a few ways to help them avoid debt.
- Talk to your kids about money. Your kids will never learn how to handle their finances if nobody teaches them how. This is important. The factor that contributes most to stress, divorce, long hours, and unhappiness can’t be left to chance.
- Set a good example. Spend less than you have and let them see you doing it. No matter what you tell your kids, if they see you doing otherwise, they will learn the bad lesson. Money, work, relationships. They all need attention, and your kids are watching you manage each of them. Make them proud.
- Open a savings account for them, and let them fill it. Teach them the value of their money by letting them work for it, watch it accumulate, and spend it on something they care about. I make my kids work to convince me to make a withdrawal, so they know it is only for the important things. I don’t, however, decide what is important for them.
- Start a college fund. $100 or $10, it doesn’t matter. Start putting something aside today. College costs keep rising. In 10 years, or 20, you can be sure that college will cost more than it does today. Last year, nearly two-thirds of students graduating with a four-year degree did so with an average debt of more than $23,000. Anything you can do to move your kids towards the debt-free 35% will help. They will thank you for it for the rest of their lives. Remember, they are in charge of choosing your nursing home.
- Teach delayed gratification. Don’t let them think that every whim needs to be satisfied…ever, let alone immediately. Sometimes, anticipation improves the act. When I am looking forward to a good meal for a few days or weeks, I really savor it when I finally do get the chance to eat it. If they want everything they see, make them figure out what they want most, and what it will take to get it.
- Teach them to balance a checkbook. This is one of life’s basic skills that far too many people are lacking. If you can’t balance your checkbook, how do you know what you have? If you don’t know what you have, how can you know what you’re able to spend on necessities, or even luxuries? Knowing where you are is at least as important as knowing where you are going.
- Give them control of money. This is the best time to learn how to manage money. Give them an allowance and make it big enough to cover school lunch and bus fare. Let them practice real-world skills and, more importantly…
- Let them make mistakes with it. This is their opportunity to make financial mistakes that won’t haunt them for years or decades. Let them have some money and let them screw it up. When they can’t buy the new game, or can’t fix their car, they will learn. It’s better to do that as teenagers living at home than as adults forced to move back home.
- Let them see your pride in their good decisions. If they do well, tell them. Let their endorphin rush come from your praise instead of their purchase. You aren’t helping them by getting them hooked on the latest gadget. You are helping them by making them feel good about making the right decisions.
- Beat them with a stick.
How do you protect your kids’ future finances from the kids themselves?
https://liverealnow.net/tag/budget/
10 Dumb Money Moves
Free Money Finance has a post up on Stacy Johnson’s 10 dumbest money moves. I thought I’d share my take.
Here are the mistakes:
1. Not having a goal
2. Not having a spending plan
3. Attempting to derive self-esteem from possessions
4. Doing what everyone else is doing
5. Starting to save large and late rather than small and soon
6. Paying interest to buy things that drop in value
7. Turning down free money
8. Buying a new car
9. Buying more house than you need or can afford.
10. Not protecting your good credit
Here is my response(and a test: Orthogonal Monkey Silicon Beam)
:
1. For most of the last 15 years, I didn’t have much for financial goals. “Get more money” isn’t specific enough to be a goal, and our spending precluded the possibility, anyway. Right now, my financial goal is simple: Get out of debt. I’m down to about $61,000.
2. We have a budget, even if it’s been partially ignored for the last couple of months. If it weren’t for my side-hustles, we would have come out negative last month.
3. We struggle with this one a lot. “Keeping up with the Joneses” is an issue in our house. My wife’s closest family is 10 years older than we are, and has more stuff, which makes it hard to visit without making comparisons. We both know it’s irrational, but it’s the way it is.
4. We are fighting this one as well. The fight is going better than #3. We’ve stopped using new debt, which shocked our friends, and I’m working on launching a new business, to break more bonds.
5. Is 30 late? We’re saving small while he fight debt, but I think we started early enough to make the rest of our lives easier.
6. We pay far too much in interest each month, but there has been absolutely no new debt since April 2009.
7. I got into my company’s retirement plan to get the match, but that ends next month. My wife’s employer killed the match 5 years ago. There’s no free money to turn down anymore.
8. We bought a new truck, as part of our debt-accumulation, in 2001. In 2005, we instead bought a car as it came off a lease. It had 11,000 miles on it and that saved us $10,000.
9. We bought our house in 1998. It sits on 1/8 of an acre. sometimes space is tight, but we’ve watched so many people trade up and find themselves in severe trouble. I’m happy we’ve stayed here.
10. This is one we’ve always guarded. No matter how much debt we’ve had, we’ve made every payment. We’re hugging the underside of an 800 FICO score. Thankfully, we’re closing in on the point where FICO no longer matters, because we’re paying in cash.
What are your biggest money mistakes?
Living in Debt: How I Sacrificed My Future
For those of you who haven’t been following along, I’m in debt. Starting 13 years ago, when I was 19, I managed to bury myself in debt, until I decided I’d had enough of that…almost 2 years ago.
Why?
It wasn’t because of college expenses, though they contributed to my debt level. I was in debt before I went to college. Heck, I was a daddy before I went to college.
It wasn’t because of major medical procedures. The only major medical procedures we’ve ever had were the births of our children, and we had two of them well after we built our shackles.
It wasn’t because we bought more house than we could afford. We own a modest house that we bought before the bubble started.
Then what was it? Why did we do the things we did that have financially crippled us for so long?
It was a combination of things, crowned by a glorious lack of financial sophistication. As I wrote in No Brakes, neither of us had the early training to really understand our financial decisions. We knew bills need to be paid, but what was the difference if the money came from a credit card versus our checking account? Why did it matter if we carried a balance on the cards, as long as we could make the payments? What’s wrong with just making the minimum payment?
Naïve. Unsophisticated.
That day-to-day lack of sophistication was only part of the problem, and it wasn’t the biggest part. We made a lot mistakes, but they were all small. Before 2001, I think our total was about $5000. Too much, but not painful.
Between the fall of 2001 and the winter of 2002, we took our naïve decision-making process and ran with it. It was a full-scale mistake marathon.
That year, we built an addition on our house, because a full dining room and a bigger kitchen would make our house so much more livable and it was cheaper than buying a home, new. Oh, and since the difference between the mandatory crawlspace and a full basement room was just a few rows of concrete blocks, let’s expand it. Wait, don’t bedrooms require walls, sheetrock, windows, closets, paint, furniture, and electricity?
That was also the year that the car companies all jumped on the 0% loan fad. In case you don’t remember, that was the program that meant you could get a 0% loan on a new car if you picked up a 3 year term on your loan. At 22, making maybe $45,000 combined, we decided that buying a $35,000 truck was a good idea. To save money. Rationalization is wonderful. Or at least, effective.
That summer, we got married. We did a phenomenal job getting married on the cheap. We had about 100 guests, a park to get married in, flowers, food, and a hall to eat and dance in, for about $3000. The problem was, we didn’t have $3000. We didn’t have the $1500 + activities for our 10 day honeymoon on a Caribbean cruise, either, though I still plan on returning to St. Thomas.
None of those individual payments were terrible. The biggest problem was that we piled them all so close together that we never had time to absorb their impact before taking on the next obligation. When we did realize how much we had to pay, we made up for it by only buying big things that came with a “0% for a year” deal, like our living room set, our carpet, and our dining room table.
Then, when we finally did pay something off, or came into more money, we’d immediately expand our lifestyle to fill the void. The month we paid off our truck, I got a significant raise. Did we use it to pay off some other debt? Of course not, we bought a new car on a six year term.
We had so many opportunities to make bad decisions with our money, and I think we took them all and have suffered for it, since.
If you’re in debt, what made you decide to get that way?
