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I must have had been in touch with reality at least at one point in my life. At least for a few brief moments in college. Too bad it wore off fairly quickly.

By 19, I had saved up $10,000 for a car. I did so by working 40 hours a week through winter breaks and summers. Two months of the summer I actually worked 14 hour days for 6 days a week. I researched exactly what I wanted, went into the dealership with my check, and left with a reliable car with only 15,000 miles on it. My intention was to keep the car until it started to need significant repairs. I expected it should easily last 3 years into my first job. Giving me 3 years of extra money to pay down my student loans and get on my feet.

Well, I should have written that down, framed it, and hung it on the wall. Because I didn’t listen.

Flash forward 2 years: I just graduated and landed a job with a salary overwhelmingly high salary. Pulling into the parking lot at work everyday was like a luxury car dealership. Even all the other entry level workers were buying into it. Only difference is, their student loans were miniscule in comparison to mine. Or even better, most were non-existent.

Needless to say, I fell into this non-reality dream world pretty quickly. I just thought this was the way it was. Everyone had nice new cars and money for anything wasn’t really a worry. Three months later spring came. I noticed lots of convertibles on the road. I just had to have one. In less then a week I found a model I had to have and calculated all the ‘necessary’ options.

Hungover, from a late night at poker the night before, (Mistake #1) I dragged B out of bed for an appointment at the car dealership. I left a few hours later in a brand new car. With that came a loan for $30,000 and a payment of $670 a month for the next 5 years (Mistake #2). But you wouldn’t know that if you saw the smile on my face. I remember the guy calling me “hot” in my new car as I drove away. I agree that is odd but I shrugged it off.

Without going into all the details I can summarize my time in the dealership all by mistakes. The only thing I did “right” was research the invoice pricing and options I wanted ahead of time.

 

1. I left behind my paid in full car for a trade-in $3,600. It was 4 years old with 60,000 miles on it (Mistake #3).

2. I thought it was a good idea to leave it as it was. It had a severely overdue oil change (obvious by the sticker on the windshield), no maintenance records, and had not beeen cleaned since our 20hrs of road trips from going back and forth before moving to DC. Undoubtedly showing them my car was not worth anything (Mistake #4).

3. I did not check my credit report or look for financing from outside sources. I thought my interest rate of 8% was a good deal! I realized a few months later that one of my student loans never received my updated address and was reporting me as 180 days delinquent for several months prior (Mistake #5).

A quick calculation shows that I could have saved at least $7,121 of interest (just in the past 3 years alone) if instead I had applied this money to my student loans. Giving me a total less debt of $37,000 when including the cost of the car. Even if I were to sell now and buy a clunker, I would still be out $14,121 through extra interest paid to loans and a loss in value of the car. This all happened from a few months of bad judgment. I am embarrassed to say the absolute least.

 Remember, it usually is the momentary lapses that can affect your bottom line the most.

In an effort to simplify, I decided to pay off my last balance transfer two months early. I also paid off the smallest student loan. I know this is probably not something people would ideally do when they are losing their income. But the last payment on the student loan would be in 10/2010 and based on my rough estimate of budget we have enough money to make it that long. I figured we might as well save the measly $2 a month in interest rather then having that money in the account. I am tempted to just snowball that $50 payment to the high interest loan. But I still have no idea how long I will be out of a job realistically. 

This brings our new debt level down to $156,059. November 2008 we were at $199,499 so that shows a very large payoff of around $42,000. I guess this will make up for only paying minimums in 2010. I can only thank myself for taking repayment seriously this past year. If I hadn’t we would be crippled with the $670 additional car payment on only one income. There is still a long way to go though.

So I will be jobless at the end of November. I can’t say I haven’t been stressing about money constantly since I heard the news. With only two weeks left at this job and a still incomplete resume (I’ve known for a little over a month), it is an understatement to say I’m scared. Optimism, self motivation, and discipline have never been my strong points. And that is what I’m going to need to rely on to get back on my feet quickly. I’m anticipating this will end up not only being a career change but a large amount of self-improvement at the same time. It’s probably well needed as I feel I’ve been in a rut for the last year or two. I’ve just been living for the weekend with nothing really to show for it except a paycheck every two weeks.

After severely cutting the budget and forecasting out our finances, this is where we stand:

March – We will need to start living off our savings (wedding, emergency, relocation)

July – I’d need to get a job this month in order to be able to start paying extra on loans in 2011.

January 2011 – We’d run out of money completely. Would need to use credit cards to cover our net negative monthly or stop paying the minimums on our loans.

To be honest I’m not really sure what to expect in terms of time until I land a job. I’m guessing around 8 months, but I hope it is shorter for my own sake. My experience is specialized and there are no companies in the immediate area which any of my skills would apply. So I would basically be looking for an entry level position.

The other thing I am coming to terms with is a very large paycut of 25-30%. That is tough with when I had repayment planned. Now the schedule is more then doubled. It is what it is though. It just means more sacrifices will need to be made and time until I’m debt free increases. Things could be much worse though. So I guess I am okay with it. We will see how it turns out.

Our main killer of our spending budget lately has been eating out for lunches while at work. We rarely (think once every three months) go out to a restaurant for dinner when you exclude vacations. But with the amount we end up spending on lunches we could go out to nice dinners twice a month. The last month alone we spent $114. Granted, most of this is due to moving and not being able to or wanting to have lunches ready. But even so we usually end up spending 60-70 a month on lunches. When you look at our spending budget of only 500/month. That’s nearly 15%! I would much rather spend that on other things that we could enjoy together like date nights. Instead of chowing down on fast food only to rush back to work.

I get too bored with lunch food. First off, I’m not really a fan of leftovers. I won’t even eat them at home unless its pizza. The only leftovers I ever bring to work are mac and cheese or fettuccine alfredo. I don’t see many other options left other then sandwiches with deli meats (expensive!), salads (time-consuming), and soups (not appealing most of the summer). Also, I’ve realized things are very unappetizing on the third day, and for that reason refuse to eat anything more then twice.

The other main problem is most of the times I’m too lazy to get anything together the night before. It usually involves going to the store then fixing something in addition to dinner since I don’t like leftovers. That is just too much work and cleanup. I guess I just need to get more creative. And also learn to enjoy leftovers. Not really sure what else to do.

I’m going to try to go an entire month without eating out for lunch. I’ll have to shamelessly exclude the first week of September, since we went every single day that week! I’ll let you know how it turns out.

Fuel – ~3 tanks at 10 gal at 2.85/gal – 85.50
Food/Coffee for car ride – 35
Tolls – ~30 round trip (bridges are expensive)
Beach Day – 10 parking + 3 treats
Lunch on Friday – 40
Food for Saturday at BBQ– 15
Beverages for the weekend – 95 – with some leftover for margaritas later in the week!

Total of $313.50

Is this inline with other people who took a long weekend to visit friends and family? I feel like this is about average with the trips we usually take. I am always disappointed with the cost of food on the road. But it is so difficult to plan ahead of time after a long week of work. About half of that is usually the cost of coffee and/or energy drinks to keep us awake for the ride.

Not included in this total is the cost of a cracked windshield by a friendly truck. I miss being part of a state where this is included at no cost in car insurance. We are looking at around $450 for a new windshield. I don’t want to let it wait too long since its not too safe to have a huge crack in the windshield. Our car maintenance envelope only has $220 in it right now so it looks like it will have to sacrifice and go negative. Especially since we used our entire emergency fund last month to pay off one of the balance transfer cards.

Virginia is one of the lucky states with an annual tax on vehicles. After getting hit with hefty tax bills in the past (almost $1,000 in 2009) and having no money set aside, I finally learned my lesson. In January, I gathered the Kelley Blue Book and Black Book values for both our cars. I saved electronic copies along with filed a printed copy. Since the tax is based on the value of the vehicle I wanted to have some evidence in the off-chance they were overvalued. I used this along with the tax codes to calculate the expected amount of the bill. I think I added some buffer amount of ~$50 too. I set this into equal payments for the 10 months (its due in October). I had ING auto-transfer this amount into a separate savings account so it would all be there when it was due.

I got my tax bill this week and it is $280 less then I expected! I guess I should be upset since it says my car is worth less than I thought. But now I’m able to adjust my monthly savings to the new amount too give me more wiggle room through the end of the year. I am also going to snowflake the extra $280 towards debt. Don’t you love it when things work out?

Since we have moved we decided to see how long we could go without cable. Prior to moving, our cable+internet bill was $208. For only one TV! Needless to say I think we got a little carried away with adding extras, then just accepted the cost as is. Since all we watch is baseball during the season we figured it was a perfect time to quit.

It’s been about 3 weeks now without it, and I have to say there are still times I still miss it. I haven’t come across other activities to fill my time I would normally watch TV. I find myself coming home after work, sitting on the couch, and staring at the blank flat screen. I think lazy Saturday and Sunday mornings are the worse though. Before I can get my coffee in I would normally just blow through the entire morning on mindless TV. I still have the urge to do so, but I think I could easily scale back and turn it off after an hour now.

But that’s not to say I haven’t seen the benefits. We used to watch TV straight after work, through cooking dinner, and eating. Its nice to just sit down at the dinner table, have quiet, and nice conversation. Not too mention I think we’ve both lost weight by not being distracted while we are eating! I’ve filled my Saturday and Sundays with bringing my cat and the laptop onto the patio, writing blog posts, and planning my day. I can’t say I get terribly too much more accomplished. But mainly, I feel like less time is lost to nothingness.

We plan on getting cable again for the start of football season, or at least baseball playoffs. I’ve saved a coupon for 6 months to keep the costs down to $50 promotional/month. Best part is, the off season for baseball is conveniently that, October to April, 6 months. We’ve found alternatives to fill our HBO, Showtime, and movies need. So that can keep the bill low. I think I can swallow $100/month. Actually be happy with it.

So I know that I should sell my car. I’ve probably had it posted on Craigslist since January. Purposefully overpriced so no one would ever contact me about it, no pictures nothing. The past few weeks I figure its about time that I should work on selling it and downgrade. Taking out the equity pretty much and applying it to my loans. Its the right thing to do. If I don’t sell it, it will just keep depreciating and will be lost money in the end. Honestly having a sweet car isn’t worth the $8,000 I could hopefully get out of it by downgrading. But still, when I got the email today about someone asking for the pictures my heart still sank.

I know its materialistic. But I love that car. I feel like someone in that car and it feels like it fits me perfectly. It’s my ultimate splurge. I don’t know if I could ‘live’ without a convertible not to mention, power and heated seats, a supernice stereo, dual climate control!

On the other hand, it also makes me feel fake. Like I’m putting on this facade to be carefree and have a lot of money. When really all I do every day is think about some magic solution to get out of debt. I know its impossible to get out of debt without some drastic changes in your life. And this is one of the few ones I have left to get me a little closer. Not only would downgrading my car give me the physical cash but it woudl remind me what its like to be normal again. That I don’t need all these fancy things. Generally they just complicate everything more. Give me more things to worry about and keep perfect.

I know it will just keep depreciating. And let’s just say the make is not known too well for reliability but rather high maintenance costs. Not something that will help my debt repayment in the future.

But then again, $8,000 sounds like a lot. But in the scheme of things, its not terribly too much. Its only 2 months worth of payments of the 60 planned that I have left. But I know that’s not the way I should look at it. I should go through with selling it. But its difficult.

I see all the benefits moneywise. Mainly, I’d probably use the money to pay off SWMBO’s car loan. Not because it has high interest, but because it would provide the most security and flexibility with lower monthly debt payments.

I’m really torn. I know the right thing to do but its so hard. How can you remove emotional attachment when the benefits are 5+ years away?

Update: A few hours later a second email, I guess the price drop is what did it.

Beer Prices to Raise

This is a new one to me, price increases due to less consumption. Last year all the prices were raised due to higher ingredient costs with the hop shortages. Over the past year I think this has subsided though. Hop prices have actually gone down since the shortage last year! Although brewing takes a lot of drinking, patience, to be cost effective it has for me. I think I broke even on my initial equipment costs after about 20 5-gallon batches, as compared to buying cases of Heineken. And it provided a much better variety in the types and quality of beer you could create. The main key to keep it cost effective is to not get too obsessed and want to buy MORE equipment. Well you will probably hear more about my brewing hobby later on. Just thought this was interesting.


My last payment is on the 25th of every month, so I can post my new debt totals a little early. With my balance transfer scare, my principal paid was artificially large. To compensate I have discounted it by the amount transferred from my wedding fund to pay off the one card. I didn’t apply any snowflakes this month as I have them set aside while we rebuild the money spent on moving. But the fewer days of interest from my August snowflakes are showing their effect on the loan balances now. How’s this for consistency, my principal paid is only $12 less then last month!

Because of the extra large payment on my balance transfer, my monthly payments will be about $600/month less through January. This extra money is going to be used to ramp up the Wedding Fund so we can meet our goal of a fully funded $6,000 by the end of the year.