Get Paid for your Opinion!!

I’ve never been one for online scams, get rich quick schemes, Bernie Madoff pyramids or the late night, no money down, overnight stock market millionaire infomercials. In fact, I’m a firm subscriber of the “If it sounds to good to be true, than it probably is” adage.

But that doesn’t mean that there aren’t opportunities out there to generate a little extra income with little, to no effort and/or investment. And while bloggers and websites the world round have undoubtedly promoted, profiteered and pandered to countless of us hapless web users on the easy money to be made on the internet, I was a bit suprised to find something that I consider to be legitimate.

Online Surveys. That’s right … there are a number of market research firms out their (sometimes working with huge multinational companies) that make it their business to gain insight into the thoughts, opinions and buying habits of consumers. And one of the most effective ways to gather large amounts of this data at a relatively low cost – online surveys.

I signed up for a couple of accounts with various online market research companies that promoted the opportunity to get paid for taking their surveys. And so far … it’s a relatively painless process. You visit these websites, sign up for an account and then sit back and wait for them to send you emails with opportunities to complete a variety of surveys (I was actually initially hesitant to provide my email address for fear that the survey companies would use it to bombard me with spam … but after a couple of months that has not been an issue with either of the accounts I created).

Now you are definitely not going to be able to quit your day job taking online surveys and my experience so far is that it is difficult to make any serious extra income doing so. But nonetheless, even if I can make an extra $20 a month to spend a few minutes filling out surveys its well worth my time. Payment for the different surveys (of varying length) can take a number of different formats – from being entered into a drawing, to prize give-aways, to a broad range of actual $$ payments.

I hate to shamelessly plug products, services, and websites, but I’ve worked with an online company called American Consumer Opinion and have found it to be a very easy process. If you’re interested in checking it out further here is a link to their website – http://www.acop.com/Default.aspx. I’m sure there are a number of these online survey/marketing outfits available … so look around and let me know what you find!

Posted in Extra Income | 2 Comments

Free Credit Score and Lane Bryant!

While the country is righteously outraged as a result of  the recent controversy surrounding the now  infamous Lane Bryant lingerie commercial – a dynamic issue further dividing a nation already at odds over national healthcare, financial regulatory reform, a nuclear Iran and Ben Rothlisberger – I recently stumbled upon a really useful site called “Credit Karma” – www.creditkarma.com

Lane Bryant Ad

As promised, the site provides users with an absolutely free, no strings attached credit score (which comes courtesy of TransUnion).  I signed up for an account on the site this morning and in a matter of minutes had a free credit score along with a “Report Card” that provided grades for the various components compromising my credit score (see my previous post “FICO – the 5 components for a closer look at these categories). 
A couple of other useful features on the site – you can compare your credit score to others in your state, age group, and the Credit Karma community.  Additionally, the site lets you simulate the various effects certain financial decisions (making a late payment, reducing credit card debt, etc) can have on your overall credit score.  And best of all – the site will update your score monthly (again, at no charge).  In my opinion, this is one of the most useful benefits of the website as it allows you to consistently monitor the effect of your personal financial decisions. 

I encourage all of you to visit Credit Karma.   While I’ve got no incentive to push the website nor a financial connection of any sort, I think this site can be a useful tool (one of many) in monitoring your overall personal finance efforts.  It’s easy to use, gives you immediate access to your credit score, and requires no financial committment (the site supports itself by promoting various financial products touted as money savings options – low fee credit cards, savings accounts, etc).  

And since I’ve made it through today’s Wall Street Journal already, found a useful free credit score website and managed to squeeze in a post on my blog … I’m going to allow myself a few quick comments on the Lane Bryant lingerie commercial issue currently being touted as Cleavage-gate. 

* that Lane Bryant model is absolutely gorgeous.  I wonder if she digs guys that are in debt?

* as a guy I think it’s great that there’s some buzz around the idea of a  normal, healthy looking woman.   Give me more images like this on TV and spare me the girls of “16 and Pregnant”, the monsters of “Real Housewives of Orange County”, and quasi-celebrity disgraces like Kate Gosselin or Octomom.   

* Do I mind looking at Victoria’s Secret models (cast in the role of opposition in this ‘controversy’) – not by a long shot.  Do I think they are the most accurate representation of what a healthy, balanced woman looks like –  absolutely not. 

* I’m shocked that of all the crap on TV (some of which I’m probably guilty of watching on occasion) that anybody could find this commercial offensive or inappropriate.  Isn’t Fox the same network that aired “The Simple Life”?  And doesn’t ABC produce “Desperate Housewives”, the zeitgeist of modern womanhood in America? 

* Aren’t we a silly little nation when Yahoo web trends soar with searches for “Lane Bryant Commercials” and personal finance bloggers with an unsubstantiated sense of self-importance feel the need to weigh in on Cleavage-gate?

Posted in Credit Score | Leave a comment

Sex is Cheap!!

Let’s be honest … there are a number of ways in which sex can be cheap. Far be it from me to let this post delve into deviant dalliances … but suffice it to say that many of us may look back at a booze fueled weekend in Las Vegas, too much champagne at college roommates wedding, or that Christmas work party incident with what’s her face that required a walk of shame into the office the following Monday morning … as the backdrop of a an episode that might rightly be classified as ‘cheap’ sex.   

Perhaps we’ve looked back at such escapades with regret or fondness … amused or disgusted by our own foolish sense of au natural adventure. Regardless, I’m suggesting that we may all have had some ‘cheap’ sex at some point in our lives.

But since embarking on my quest to become debt free … ahem, my personal Debt March (author holds up pinky to corner of mouth ala Austin Powers) … I’ve had to consider diverse financial matters that previously escaped my daily thoughts – a monthly budget, living below my means, focusing my expendable income on paying off debt, and perhaps learning to be a bit more frugal.

And there you have it folks … today’s word is Frugal. Yes, for months now I’ve visited your weblogs – all with there obligatory “Frugal” sections touting dinner recipes, walks in the park, great sites for coupons, nights at home with the Scrabble board and a variety of other cost savings tips for life’s expenses and entertainment.

Bravo you monastic clan of personal finance gurus and bloggers out there in cyberspace! Let the masses stand upon their desks shouting “Oh Captain, My Captain” at your inspirational words and encouraging blog entries.  Yes, I can’t wait to take my paycheck, put 10% of it directly into savings, pay my monthly living expenses, split the rest between Citibank and my Stafford Loan and sit down on the couch for an enjoyable night of Bill Moyers on PBS (because of course I canceled cable) and a hot serving of leftovers from last night’s tuna casserole courtesy of www.frugaldinners.com!!

So I’ve been pondering …. because hell, living on a budget and below my means leaves me quite a bit more time to consider such deep thoughts about  the universe as cheap sex, Bill Moyers and tuna casserole … do all of you personal finance bloggers and preachers have more or less sex than the average credit card junky buried in debt?  And if you are having more, how come I never see sex touted on your “Check out Big Smart Personal Finance Guy’s Frugal Money Saving Tips section!”  Where’s “Frugal Diva’s” shout out to sex as one of the financially savvy girls closest allies? 

I for one have been resorting to sex as my top frugal distraction since staring this project at the beginning of the year and I’d encourage all of you to do the same.  Feel like going out for a fancy dinner – nope, not as good as staying home and ‘eating out’.  Front row tickets to Shakespeare … me thinks my mistress would rather lie with me!  Charge a new outfit at the mall … I always think my girl looks better with nothing on. 

But let’s promote frugal things that are actually enjoyable (ahem … sex) with the same gusto as the coupon clipping,  yard sales,  garden planting and breakfast budget cutting tips!  Lets inject a little marketing and salesmanship into the personal finance message … after all, are all of you just trying to make a few extra bucks from Google AdSense or are you really trying to promote financial responsibility? 

So here  are my closing thoughts and financial tips of the day  –

“Debt is expensive.  Sex is cheap!”

and 

“Put your credit cards away … there are more enjoyable ways to get screwed!”

Posted in Frugal Living | Leave a comment

FICO Score – the 5 components

The FICO score .  Yes, that 3 digit number that reflects our credit worthiness and more importantly, the rates and terms that lenders will offer us on various loans (mortgages, car loans, etc).   But what goes into it?  How is our FICO score calculated?  What should we be paying attention to? 


While I’m not one of those guys that thinks my FICO score is something I need to guard on a daily basis and watch hawkishly with each and every financial step I take, I do think it’s important to have a general sense of what helps and what hurts my credit score. 

Here’s a quick graphical look at the “5 components” that make up your FICO score and the relative importance or ‘weight’ of each. 

 fico_breakdown.jpg
CreditCards.com

And for the sake of clarity –  here’s a breakdown of these 5 components (straight from the “I’ve got a deal with Fair Issac Corporation” (FICO) High Priestess herself).  

  • Payment history (35%)-Aside from extreme events, like bankruptcy or tax liens, late payments have the greatest negative impact on your score. Recency and frequency of late payments count too. In other words, even though a 60-day late payment is not as risky as a 90-day late payment in and of itself, a 60-day late payment made just a month ago will count more than a 90-day late payment from five years ago.
  • Outstanding balances (30%)-Evaluation of your total balances in relation to your total available credit on revolving accounts is one of the most important factors in the FICO score. Owing a great deal of money on many accounts or “maxing out” on various credit cards can indicate that a person is overextended, and is more likely to make some payments late or not at all.
  • Length of credit history (15%)-Your score takes into account how long your credit accounts have been established in general, how long specific credit accounts have been established, and how long it has been since you used certain accounts.
  • New Credit (10%)-Research shows that opening several credit accounts in a short period of time does represent greater risk-especially for people who do not have a long-established credit history. Multiple requests will reduce your score because it looks like you are either trying to get a high amount of credit (possibly because of a cash flow problem) or that you are being rejected by lenders and having to apply elsewhere.
  • Types of credit (10%)-The score will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. Your score takes into account what kinds of credit accounts you have, and how many of each. The score also looks at the total number of accounts you have
  • Posted in Credit Score | Leave a comment

    Personal Finance and …. Bling?

    Is there a place for jewelry in the mind of the 30 year old former debt addict?  Do I dare delve into temporary debt and pull out the credit card for a pair of diamond earrings? 

    I’ve been doing so well with the debt snowball, my monthly budget, living below my means and a number of other things a fiscally responsible individual is supposed to do.   And yet here I am, at the ledge looking down, pondering a financial move so obviously inconsistent with my long-term goals.  Am I not recovered from my addiction … do I just need a little taste of financial frivolity?

    My girlfriend – who I actually adore and can’t believe I do because I have  never adored a woman I was dating before (but that’s a whole different blog) – is graduating in May and getting her Doctorate in Physical Therapy.  I consider this a big deal and a signficant accomplishment … perhaps even something worthy of diverging from the saintly path of responsible personal finance. 

    She is not an unreasonable woman, is aware of my past addictions (credit has been just one of my ‘dark passengers’), supports my current personal finance efforts and has no expectation of some lavish gift that I can’t afford at the moment. 

    But damn it … can’t you cheat just once in a while?!  I read all of you saintly, ascetic personal finance bloggers with your lessons on frugality, your personal net worths, and your rah rah  rants against plastic and debt.  And you know what … I’m a believer in your church, I kneel at your altar and I repent for my past financial indiscretions.   Oh and there’s the pontiff Ramsey bellowing “live like no one else, so you can live like no one else”. 

    Yes … the force is weak in this one and I am considering a brief venture to the Dark Side … temporary credit card debt. 

    I love this girl and think there are occasions in life that need to be celebrated appropriately.  And in my mind … this girl has worked extremely hard to accomplish this goal and if her boyfriend can’t make a big deal out of it, who can? 

    “Oh silly man … there are other ways to acknowledge her accomplishment and not go into debt.  If she’s such a great girl she’ll understand and wouldn’t want you to succumb to the Dark Passenger of Debt!”

    So what does a man on the road to recovery do?  Have any of you personal finance experts ever diverged from your righteous paths for a girl?  a special occasion?  an important milestone?

    Love is patient, love is kind.  It does not boast, it is not proud …

     …. but does Love ever just say, “The hell with that.  I’m buying this beautiful girl who I love a big pair of diamond earrings to show her, albeit in a silly consumerist driven splurge, just how proud I am of her!”

    Posted in Spending | 5 Comments

    Tax on Sales Commission

    Ouch!

    As a long time sales professional it’s always a mixed bag of emotions when it comes to commission payments on sales.  The best way I can describe it is that feeling you got as a kid on Christmas morning when you were overly excited to open a gift, were handed a big box that you were sure contained the coolest toy, only to open it and realize it was a new outfit.  Sure, you could definitely use the new clothes and your parents did a great job of picking out the latest in kids’ fashion … but there is still that tinge of disappointment, that slight feeling of disbelief – “I can’t believe it … no Nintendo?!?”.  Nonetheless, you would sit paralyzed by confusion, putting on a happy face for your Christmas morning pictures, wondering “What the hell just happened!?”. 

    Years later, I’m currently sitting here thinking the same thing.   I just got my first quarter sales commission check.  Here’s a quick look at the math …

    Total Gross Commission earned:  $8329.01

    Federal Taxes withheld:  $2082.26 (yep, that’s 25%!)

    Social Security paid:  $516.40

    Medicare:  $120.77

    State of WI:  $541.39

    Net Commission received:  $5068.20

    That’s right, when all was said and done I had nearly %40 of my gross commission taken out in taxes.  Some initial thoughts that ran through my head:

    * Didn’t I just read an article last week that said 50% of the country doesn’t pay any federal income tax?  Did I really just drop$2082.26 on federal income taxes for my first quarter commission check alone?

    * Social Security.  Ha!  At just over 30, there’s absolutely no chance I’ll see that.  What’s the funding deficit on that magnificent program currently running at?

    * Medicare.  Well I’m sure ObamaCare will sort this all out.  It is supposed to lower costs, right? 

    * The lovely state of Wisconsin.  An unfriendly tax policy towards corporations and an increasingly unfriendly tax policy towards residents.  Add in cold miserable weather 5-6 months out of the year and … what the hell am I still doing here?

    So there it is.  There are the thoughts running through my silly little mind as I hold my sales commission check.  Sure, my net $5068.20 is going to be very useful (see: Debt Snowball) … but I can’t help but wonder how useful the $3260.82 taken out in taxes will end up being? 

    My confidence in how, where, when, why and how my taxes are spent is at an all time low.  I’m all for taxes (or as much as someone can be) – provided they are sensible, well thought out,  fair and effective.  

    Granted, my tax burden is well below the outrageous taxation levels of some individuals and corporations (great article on this in yesterday’s Wall Street Journal).  But with the Bush tax cuts coming to an end, an increasingly hostile attitude towards corporate profits in multiple industries, increased tax penalties proposed on capital gains, and the discussion of a European style VAT tax (not to mention all the nickel and dime taxes States are using to plug budget holes) … I’m starting to think that Federal and State tax policies are not well thought out components of a fair/balanced national fiscal approach, but rather the too often ill-conceived reactionary noodlings of a small child that hasn’t learned to say “NO”. 

    And the more the spotlight is shed on the current fiscal crisis of our Federal and State governments, the more I can’t help but feel a little frustrated.   A frustration that stems in part from this project.   The more I’ve focused on living within a budget,  controlling my expenses, living below my means to pay of debt … the more I think it reasonable to expect state and local governments to do the same.  The more I read the personal finance blogs of others, the money-saving tips and budgeting resources I see available on various financial websites, the news stories about individuals spending less and living more frugally … the more concerned I am at the disconnect between governments and those they govern. 

    I for one would like to see the state of Wisconsin and Washington DC keep a monthly budget and debt tracking spreadsheet – a detailed glimpse into what’s going in and what’s going out. 

    My apologies for the Sales Commission Tax induced rant.

    Posted in Uncategorized | Leave a comment

    iPhone and iSave

    I’ve always been that guy when it comes to cell phones.  And anybody reading this probably knows at least one guy like me –  the guy that always goes with the free phone when I’m signing up for my cell phone plan or extending my contract with a current provider. 

    And I’ve been fine with being that guy up until this point in my life.  Sure, I was still walking around with an analog phone when everything went digital.  And yes, I was still carrying around a Zack Morris/Saved By the Bell sized phone when flip phones first came out.  My last phone did have a camera though – .00025 megapixels!!  

    But hey – I only needed my phone to make calls, right?

    That’s what I thought until I finally popped for an iPhone – the 3GS, 16gb in black.  And I must admit, it is a tremendously useful little device. 

    But why include this in a blog on my personal financial situation? 

    Because my decision to switch carriers (former US Cellular customer) and go with the iPhone was based primarily on the fact that doing so would actually SAVE me money in the long run be reducing my monthly cell phone budget. 

    I know … Whiskey Tango Foxtrot? 

    Well in a recent conversation with my boss I mentioned how useful and iPhone would be for business purposes: checking work email, navigating while traveling, having access to the internet while at various industry conferences, etc. 

    And you know what – he agreed.   And he agreed to the tune of 60% – the percentage of my monthly phone bill that my company has agreed to pay. 

    So now I have a monthly plan with AT&T (including internet, minutes and text) that runs approximately $115 per month: my share of this translates to roughly $46! 

    My previous plan with US Cellular ran me $70 a month and I had no internet access, the same minutes and fewer text messages.  Granted, I did have to buy out of my current contract – a cost of $140. 

    It’s possible to argue that I could have looked at US Cellular smart phones and accomplished the same thing – save money by getting my employer to pick up part of the tab.  But I admit it – the idea of finally splurging for phone and those incessantly catchy Apple commercials led me straight to the iPhone.  In my mind, US Cellular didn’t offer a smart phone that could compete with the iPhone on a number of levels – so, I ate the contract cancellation penalty (understanding that my plan to now split the bill with my employer would offset this upfront cost of switching providers in less than 6 months). 

    The long-term result – I’ve got a much better/more useful phone and going foward the switch is going to save me money on a monthly basis. 

    The lesson – think outside of the box when it comes to your monthly expenses!   Taking the initiative to approach my employer will save me $288 a year – and got me a better phone and monthly plan. 

    And while not everybody might be able to sell their employer on the idea of paying a portion of their monthly bill, perhaps there are other, less obvious, options.  In the case of your cell phone bill:

    1) shift to a share plan with a friend.  Typically, you can add a line to an existing plan for a relatively low monthly fee and up the minutes on the plan for less than it would cost for two individual cell phone plans. 

    2) look at a lower monthly package.  Seriously, when’s the last time you actually analyzed whether you have too much or too little when it comes to your monthly minutes?  Call your provider and ask them to analyze your usage over the last 6 months. 

    Any other ideas on how to save when it comes to your cell phone bill?  Other tricks you’ve used to reduce a monthly expense?

    Posted in Uncategorized | Leave a comment

    No Federal Income Tax?!

    I read an article on MSNBC today with the headline:

    “Half of Americans pay No Federal Income Tax: Credit for low – and middle – income families exempt many”

    This is the image that immediately came to mind.   What do you think?

    Posted in Uncategorized | Leave a comment

    What's Your Current non-Mortgage Debt?

    [polldaddy poll=2478008]

    Posted in Uncategorized | Leave a comment

    Closing Credit Card Accounts?

    To close or not to close – that is the question I am currently pondering with regards to the stack of credit cards I’ve accumulated over the years.  I’ve got those cards I first signed up for in college, the department store cards that gave me a ‘discount’, the obligatory accounts that I opened to ‘take advantage’ of a balance transfer, the Rewards  cards that I’ve accumulated airline miles, and a Diamond, Gold and Platinum just for good measure. 

    Now even before deciding to pass my fiscally conservative – no credit card usage – budget earlier this year, I did not use the bulk of these cards (I’m currently carrying one large balance on my oldest card).  Rather, I opened these for short terms reasons (a more attractive interest rate), long-term reasons (by debt to available credit ratio) and sometimes for no reason at all. 

    Ah … what a tangled web of debt we weave …

    And while Dave Ramsey might have me sign up for a check card and sacrifice my plastic on a celebratory debt funeral pyre; Suze Orman might have me waking up with night sweats, pondering every fluctuation in my precious FICO score.  I’d like to find a middle ground that takes into account the concerns of both of these schools of thought without having to operate at either extreme. 

    In doing so, I found a very useful article on Bankrate that answered many of the questions I had:

    Will closing inactive cards hurt?

    Is there ever a reason to close a card?

    Does it matter if you or the card issuer closes the account?

    Is there any difference in cancelling a store card versus a major credit card?

    If a store card is your oldest card and you cancel it, will it hurt you more?

    The article sheds some light on these questions and exposes some of the myths that exist surrounding the closing of credit cards (at least as they relate to your credit score).   And as a guy getting out of debt, that’s my primary concern at this point since I’m no longer actively addicted to plastic. 

    And even more useful feature of the article is that these questions are actually answered by an actual FICO employee. 

    My final decision after reading this article – stand pat.  I’m certainly not going to close my oldest accounts (that would be most detrimental to my credit score).  And keeping my existing accounts doesn’t seem to have a measureable negative effect. 

    While this was a rather anticlimactic process for me (I was actually looking forward to cutting up a few cards as some small token of victory over my long-standing addiction to plastic), I think it’s the right one.  Of bigger concern to me now is my debt mix (I don’t have a mortgage or auto loan) and that one large remaining balance on my Citibank card. 

    Here’s a link to the full article – hope you find it useful! 

    http://www.bankrate.com/finance/credit-cards/closing-credit-card-dings-credit-score-1.aspx

    Posted in Uncategorized | Leave a comment

    Student Loan Debt – update

    At the start of this blog – mere months ago – I had two student loan debts that I have been paying off one sad monthly payment at a time since early 2004.  For the sake of brevity – and more importantly because I think it’s representative of my previous attitude toward debt – I’ll focus in on my Perkins loan. 

    My initial balance on this loan was $5,090 at a 5% interest rate.   

    The good news – after a very focused couple of months I have finally paid off this debt. 

    The bad news – up until January of 2010 I had been happy to make my minimum payment of $58/month on this account – which over the course of the loan ranged in monthly interest charges of $8-$20 a month. 

    Since January of 2010, I found ways – namely, more controlled spending and an eBay sale – to direct $2,071 towards paying of my Perkins loan.   As I mentioned earlier, over the lifetime of this loan I had averaged a meager minimum monthly payment of $58/month … or a total of $174 in the same three-month period that it took me to finally payoff the loan. 

    Well that’s all I HAD to pay!?!  … goes the little voice in my head

    But by paying the bare minimum on this loan since May of 2004, I unnecessarily lengthened the time it should have taken for me to pay of this debt.  And the true cost was not only my initial loan of $5,090 … but an additional $1081.68 in interest. 

    And while I realize student loan interest is deductible, I think this scenario is very typical not only of my own debt experience and approach, but is a microcosm of the approach to debt that many of us take.  And the worst part – many of us are taking my ill-conceived Perkins Loan minimum monthly payment method and applying it to much larger debts, with higher interest rates, over longer period of times.  Mortgages, auto loans, that new refrigerator and range we put on the Kohl’s charge card, a new summer wardrobe on the Macy’s account, and who knows what else. 

    But perhaps like some of you, I always felt decent about my debt position – and that’s the SCARY part.  I’d tell myself thing like – “I make my monthly payments”, “I’m not defaulting on any accounts”, “I don’t pay late”, “I have no problem opening up lines of credit”, and all the other little psychological tricks I could use to justify the comfort of minimum monthly payments. 

    And I only write this entry because I’m thankful that the fog lifted on my minimum monthly payment approach.  At my previous rate, I probably would have been paying off this silly little debt I had been holding onto since college for the next 3 or 4 years.  Obviously, that’s ridiculous.  But that’s the point, I think if many of us with debt issues really stopped and thought about the behaviours that led to our debt problems we’d realize how silly and illogical our approach to money is/was.  

    And therein lies the power of two tools that I am now a firm believer in; two tools that helped bring some clarity to what I had been doing wrong and what I could do to make things right:

    1) the Monthly Budget – take control of what’s coming in and what’s going out.  Most importantly, find ways to cut out the waste.  

    2) the Debt Snowball – there are multiple variations to this, but I think Dave Ramsey’s approach is pretty solid.  He properly assesses the value of short-term wins when it comes to those of us with debt issues. 

    So here’s to my first short-term Debt Snowball victory.  And now I can apply that same focus and energy (not to mention another $58 a month) to my next target – a $9500 balance on a Citibank card (currently 1.99% until the end of 2010). 

    Have you been prone to the minimum monthly payment trap?  What was your first Debt Snowball success?

    Posted in Student Loans | Leave a comment

    Increase Your Income

    Obviously those of us who have made the conscious decision to get out of debt and eliminate credit card payments, car notes, mortgage payments and any other debt, have inevitably had the thought process “How can I increase my income and move towards my debt-free life at a quicker rate“. 

    Of course the easiest answer is to spend less and make more.  Given the huge number of people saddled with debt in this country (I read a headline this morning indicating that more people are paying their credit cards ahead of their mortgages), the simple approach of spending less and making more isn’t quite as easy as it seems. 

    While I’ve come to view the ‘spending less’ part as primarily a psychological challenge – prioritizing how and where our money goes; the ‘earning more’ half of the equation actually seems to require some tangible physical action and much more effort.   

    I’ve read the financial guru books that suggest everything from yard sales, to eBay, lemonade stands to filling out online surveys.  And while these options might serve a small complimentary role towards boosting your household income and consequently, the size of your DEBT SNOWBALL, I’ve personally found the best option (and probably my least favorite) to be …

    The Part-Time Job

    That’s right, the part-time job.  Not very appealing on the surface to those of us with full-time gigs that we find ourselves at Monday through Friday.  And even less appealing is the thought of leaving one job to head to directly to another.  Of course we value our down time and have other ‘responsibilities’ to address – kids, the house, pets, laundry, yard work, time to relax, etc.  The thought of a part-time jobs becomes even less appealing when we realize that it’s most likely going to pay a heck of a lot less than what we’re used to earning between the hours of 8 and 5.  

    But lest you forgot … “Long is the Way and Hard, that out of Debt hell leads up to light” … I believe that’s how Milton put it anyway. 

    What I decided to do is pursue short-term, temporary jobs that I could work during the hours I had available – namely, nights and weekends.   And psychologically for me, the ‘temporary’ aspect is important.  I get a chance to try something new, earn a little extra money, and most importantly – no matter how much I may dislike the job, I know it’s only short-term.  I’m thinking of it like the show Dirty Jobs – I’m going to take a series of temporary jobs, maybe learn a few things, and increase the size of my debt snowball along the way. 

    And really, if we apply the same diligence towards managing our TIME that we do towards managing our BUDGETS, I’m sure we can all find a little waste in both and an opportunity to use our time and resources more wisely.   I’ve made the decision to find a way to squeeze an extra 20 hours out a week to direct towards a part-time jobs. 

    So what’s up next for me?  A perfect part-time job for the debt weary: a 2010 US Census Job.  Seriously, the jobs are temporary and the pay is not bad – $15 an hour in my area.  The big perk – lots of scheduling flexibility.  Take a look at the website for job information in your area –

    http://2010.census.gov/2010censusjobs/

    Other things on my list – H&R Block part-time tax employee  and working in a political campaign office (lots of elections coming up at the end of this year). 

    So what have been your strategies to increase your income and the size of your debt snowball?  What part-time jobs have you worked?  Any ideas to share?

    Posted in Uncategorized | 1 Comment

    Home Ownership A Bad Idea?

    I know, not a headline you’re use to seeing.  We all – especially myself if you have read some of my other posts – have been told that homeownership is a great investment, a mortgage is “good debt”, and it’s much more sensible to build equity in a home than it is to throw money away in rent.  This last point, in fact, is what has been my primary motivation in possibly entering the market as a first time home buyer (though I have to say I’ve been tempted by the allure of that $8,000 tax rebate). 

    But I’ve had a couple of visitors to this site actually call my decision to become a homeowner into question (based on my financial situation which I’ve tried to make quite transparent).  And as with any decision, particularly a large decision like a home purchase, I think it’s important to consider the benefits and risks involved. 

    With that being said, I wanted to highlight a couple of “risks” outlined in a recent article I read that discussed common fallacies in thinking among homebuyers/homeowners.  Obviously this is just a small component of the overall “should I buy a house” decision – but I found it to be a very interesting take on assessing the value of homeownership.  Here were the main points:

    1) Owning a Home Requires Significant Cash Outlays – the article pointed to the massive cumulative costs of principal, interest (particularly over 30 years), PMI and natural disaster insurance, property tax and a host of other costs. 

    2) For Most Owners Tax Deductions have Minimal Value – the contention here was that the interest paid on a home loan over the course of a year are frequently very comparable to the standard deduction offered by the Federal government. 

    3) Home Equity Gained Through Appreciation is Significantly Overvalued – the logic here was that to realize the value of any appreciation in the value of your home you would need to sell it at some point in the future.  And any gain seen in the appreciation of your home would also be reflected in the price of a potential new home (unless of course you were looking at a less expensive house or a different geographical area). 

    4) Accurately Evaluating the Pricing Level of Homes is a Major Weakness Among Most Homeowners – the author pointed to the recent collapse within the housing market and seemed to suggest that many homeowners are too willing to buy into the myth that investing  in real estate is a no brainer.  Buying into this myth is what caused so many buyers to get caught up in the most recent bubble (in which prices were being artificially/inaccurately driven up). 

    So those are some of the main arguments posed in the article that suggest that homeownership isn’t always what it’s cracked up to be – particularly if new buyers haven’t done a sufficient amount of homework (I’ll post the link below for those who would like to read it in its entirety). 

    And that’s the scenario I find myself in – trying to make the right decision about possible homeownership.  As I’ve posted elsewhere, I despise the idea of sending a rent check in every month and having nothing (financially speaking) to show for it.  The arguments above – while somewhat compelling – certainly don’t seem to outweigh the benefits of homeownership in my mind. 

    To be clear, the article certainly didn’t seem to frown upon the idea of homeownership.  Rather it seemed to suggest that individuals move into this decision more cautiously, having done their homework, and fully aware of not only your individual financial situation, but the financial health of the housing market in your area. 

    The article has an interesting formula that it recommends using to assess the relationship between median incomes and median home prices to determine whether or not homeownership in your particular area makes sense. 

    Here’s the full link –

    http://finance.yahoo.com/real-estate/article/108679/when-owning-your-own-home-doesnt-pay?mod=realestate-buy

    Posted in Home Ownership | Leave a comment

    Budget Success! More Money than Month

    When is the last time you looked at your checkbook, an ATM receipt or online bank account and noticed that you had money left over at the end of the month? 

    Well let me tell you … it is quite a strange feeling and one that I just experienced for the first time!  That’s right … for the first time in my adult life I spent less money this month then I brought in.  I know …. you’re feverishly wondering “How did he accomplish such a miraculous feat?  Next thing we’ll see posted is – Obama realizes that Cap and Trade is essentially a tax on the middles class because corporations don’t just absorb costs!” 

    Perhaps to many the idea of getting excited about something as apparently simple as a month of financial self control seems to be a bit much.  Truth be told, many of you have probably mastered this skill with relative ease.  But in the short time I’ve been conducting my own personal finance project, I’ve started to pay more attention to the number of personal finance blogs that exist, the number of “Get your Finances in Order”, “Personal Finance 101” and “The Tragedy of American Debt” articles on CNN, Yahoo, MSN and nearly any other news outlet.  So obviously for many of us the idea of  spending less than we make isn’t quite the no-brainer it seems. 

    After making a conscious decision to get my personal finances in order I think the biggest realization I’ve had is that my biggest problem is not how much money I make, the bills I have, or the “man” getting me down … but very simply it’s the psychology of money that manifests itself as loud “But I DESERVE it!!!”  Yes … I’m starting to wonder if I’m not my own little entitlement program?!  Am I simply an inflated micro-bureacracy that increases the budget every year but does very little to reign in reckless spending?  And who have I assigned to the oversight committee on my spending? 

    And that’s really what I started asking myself this month.  What monthly spending items did I have to veto?  Where was spending out of control?  What programs weren’t getting a good return on investment?  Were there expenditures that were propping up regimes intent on destroying my personal finances? 

    Most importantly – I stopped the “I deserve it” mentality that I used to justify everything from $200 boxes of cigars, to trips to NYC,  going out for lunch every day and an innumerable number of daily situations and little decisions in which I refused to tell myself “No”. 

    Instead, what I told myself was …. “You DESERVE to be out from under the weight of Debt.  You DESERVE to be free of The Debt March!”.  I know I know … a bit dramatic … but it is empowering (and down right exciting) to consider the idea of no debt.  No payments to Credit Card companies, no Student Loans, no Medical Bill, no Car Payment.  And really … it can be a simple as that – telling ourselves ‘NO’. 

    So I said “NO” for a month and here are the highlights

    * I paid off my Discover Credit Card.  Sent them $350 and put that card in a place never to be used again.

    * I put $250 into a Savings Account and am now at $295 for my Dave Ramsey Baby Step 1  “$1000 Emergency Fund”

    * I’ve got $50 leftover that I’ll be carrying over to this month.  And that’s $50 I can put towards paying off more debt!! 

    So am I going to right the financial ship anytime soon?  No.  Do I have to be diligent and watchful of a relapse into “But I Deservitism”.  Absolutely. 

    Nonetheless, after a month of adopting some very common sense tools (a monthly budget) and an even more common sense attitudes (“your not a child Holden and sometimes you’re going to have to say No”), I feel good about the direction I’m going in. 

    And that’s a first when it comes to my personal finances. 

    For a discussion on the pyschology of debt, take a look at this article at www.bankrate.com

    The psychology of debt: Why we do the things we do” – http://www.bankrate.com/brm/news/cc/19980713a.asp

    Posted in Budgeting | Leave a comment

    The Tax Man … check your W2's for accuracy!

    I can’t believe it’s not yet February and I’m writing about Tax returns! Truth be told, I am typically one of those people who files hard copies of my taxes on that last Tuesday in April. But I suppose that’s in keeping with my general attitude towards personal finances for the first 30 years of my life … an attitude dominated by laziness and a lack of discipline.

    But this year things will be different. This year I’m going to file online and I’m going to file as quickly as possible! It’s amazing – having my Debt Snowball front of my mind really adds a sense of urgency to my financial decisions. The idea of getting out of debt is so attractive that I’ve done a complete 180 … or at least a 180 for me. For the first time in my life I’ve tracked my spending for a month (and even enjoyed doing so), I’ve cut back on frivolous spending (lunches out, random credit purchases, monthly subscriptions to things I didn’t really use) … imagining a life without consumer debt is just so damn appealing!!

    But to continue with taxes … here’s a warning to everybody out there – DO NOT ASSUME YOUR EMPLOYER GOT YOUR W2’S RIGHT!!! My employer for much of last year (I switched jobs in September) sent me two W2 forms – one for my regular earnings and another for a brief stint that I spent on short-term disability. Well, surprise of all surprises … the short-term disability W2 had a reported an income twice of what it should have been. Apparently my previous employer had duplicated a couple of checks paid to me during that time frame.

    So what does this all mean? My previous employer will need to issue me a W-2c and the purpose of this form is to correct W2 errors. I had never heard of this before and perhaps there’s a good chance you haven’t either.

    For some basic information, visit the IRS site at http://www.irs.gov/pub/irs-pdf/iw2cw3c.pdf  

    The moral of the story – take a close look at your W2 forms this year! While the mistake on my forms may only amount to a few thousand dollars, I’d be willing to be that much larger and more serious mistakes exist.

    And for any of you out there that may still be filing hard copies – do it online this year. It really is so much easier – not to mention you can file your Federal Tax Returns for free.

    Check it out at – http://www.irs.gov/efile/article/0,,id=118986,00.html?portlet=7

    Posted in Uncategorized | Leave a comment

    Track your spending!!

    I’ve never been one for spreadsheets, but then again I’ve never been one for monthly budgeting.  In fact, I’ve never been one for focusing too keenly on where my paycheck is going every month.  Sure, I’ve become quite an adept guesstimator of what’s coming in and what’s going out.  And perhaps like some of you, I haven’t relied on the tedious chore of checkbook balancing.  No, my system up until recently consisted of an ill conceived menage of ATM receipts, occassional visits to my bank website to see what’s left, and my all to often fallible memory. 

    Typically, this “system” resulted in more money going out every month then I had coming in.  Obviously, this is how I ended up writing a blog about being a financial mess and trying to get myself off the path to personal financial destruction. 

    But lets face it, running in the red by a few hundred dollars every month doesn’t seem that bad does it? At least not for that month. I always found an excuse for my overspending and actually got really good at it – to the point where I believed it wasn’t a problem.  “Don’t worry, you had a rough month and deserved those dinners out, that new toy, that weekend away.  You’ll get ahead next month.  Next month for sure is when you buckle down financially!”. 

    But inevitably next month comes and goes, next year goes, and here I am 30 years old with nothing to show for my hardwork except a pile of debt, no savings and my crappy apartment.  Oh but I’ve looked so good getting myself nowhere!  I haven’t told myself “no” for the last decade and it felt soooo good. 

    A visit from the ghost of my Financial Future over the holidays lead me to ask the question – “So how’s this working for you?”. 

    I feel there is hope though.  And I’m pinning my hopes squarely on the capable shoulders of a monthly budget.  That’s right, I’m going from tracking absolutely nothing to keeping track of everything.  Every dollar out, every paycheck in.  After 3 weeks of this “Where’s My Money Going?” experiment, I’m actually having a bit of fun.  I’m tracking my earning/spending by pay period (so bi-weekly for me) and believe it or not, after 2 weeks I actually had money left over!  Not a huge amount – only $35 – but I can see that amount improving each paycheck as I get better at saying “no” and more budget savvy.  And the more I can save, the more I can put into my “Baby Step 2” – The Debt Snowball. 

    Here’s a look at a portion of my budget worksheet from the first half of January.  Not terribly exciting – but I just want to show you how basic it really is. 

    There are plenty of already formulated Monthly Budget Spreadsheets available online for free. 

    Here’s a link to just one example – http://www.vertex42.com/ExcelTemplates/personal-monthly-budget.html

    Posted in Uncategorized | Leave a comment

    Let it Snow, Let it Snow, Let it Snow!!

    Here’s a partial look at the list of debts that I’ll be applying Snowball payments to.  It seems that compiling a list of debts (using whatever format or method you find most useful) is a common practice among those of us trying to turn our personal financial situation around.  I know for me, it makes frivolous spending and credit card useage much more difficult when I’ve got an overview of my poor financial situation at my fingertips. 

    Many sheets that you can download online will also help calculate the amount you’re paying in interest every month.  Despite the balance transfer fee of $150, I recently shifted $9500 in credit card debt into my CitiBank account at 1.99% APR until 12/10.  I think over the course of a year I’ll still come out ahead based on the monthly interest I was paying on this debt with my higher interest rate cards. 

    Posted in Uncategorized | Leave a comment

    My Debt Snowball

    I’ve recently read a few books by Dave Ramsey – The Total Money Makeover and Financial Peace – both good reads.  It’s strange experience reading Mr. Ramsey because he really doesn’t saying anything profound but what he does say is based thoroughly in common sense and practicality.  In that respect, I really found his books useful – as a newbie to trying to get some control over my personal finances, a very simple common sense approach is exactly what I need.  Dave covers some great things that seem to be the foundation for getting your personal finances in shape – simple things like creating a monthly budget, not using credit cards and planning for future expenses. 

    In his books, Dave recommends a series of 7 “Baby Steps” – I’m focusing on the first two. 

    Baby Step 1 – Save $1,000 in an Emergency fund to cover the “what if’s” of life. 

    I decided to part with a very dear possession – my tenor saxophone.  Yes, I’m an amateur musician and have been playing for my own personal enjoyment on and off for the last nearly 20 years.  But … the instrument and accessories should be able to get me over $2,000 on eBay … so that’s where they’re going. 

    Hopefully within the next week or so I’ll have $1000 for my Emergency Fund and can apply the additional money to my Debt Snowball. 

    But that’s where I take issue with Mr. Ramsey. 

    Baby Step 2 – Pay off all debt with the Debt Snowball

    Now certainly I don’t disagree with paying off debt – that’s why I started this silly little blog.  But I wonder about the method Dave recommends … specifically, paying of Debts from smallest to largest as opposed to working on those debts with the highest interest rate.  Dave’s argument is that it’s important to have little ‘WINS” along the way and that psychologically, it’s helpful if we have quick successes in our Debt Snowball effort. 

    In my personal example, that would mean paying off a Medical Bill ($1700 and no interest) and a Student Loan ($2000) first.  Now I suppose that still makes sense based on the fact that my other debt is also a Student Loan (around $12000) and a Citibank card ($9500 balance but at a rate of 1.99% until 12/10).   But I wonder if this would still be the best route prior to some other recent financial moves I made: a month ago, I decided to sell my 401K , take the tax hit, and pay of a large Credit Card debt with a 9.99% interest. 

    But if I hadn’t done that, wouldn’t it make more sense to pay off the higher interest rate debt first?  Especially since Dave spends so much time in his book talking about compounding interesting working for and against us?  I understand the appeal of short-term “WINS”, think the motivation they provide to continue with the 7 Steps makes sense, and am going to work the Debt Snowball from my smallest to largest personal debts as suggested. 

    But I’m wondering what some of you smarter financial people out there might think?  Has anybody tried a different Debt Snowball approach? 

    Nonetheless, goodbye saxophone and hello Emergency Fund and the start to my Debt Snowball.

    Posted in Uncategorized | Leave a comment

    Michael – don't stop reading!

    One response

    15 01 2010
    Michael (02:43:41) : edit

    I can stop reading your blog at this point. A $163k home on ~$40k base annual income?

    Sorry. You’re cooked. Whoever’s insuring this loan (the taxpayer) is cooked. Whatever broker/realtor/banker put you in this deal ought to be taken out back and thrown in a pile of hungry red ants.

    Have you learned NOTHING from the last 2 to 3 years? Nothing at all?

    The fact that you cannot differentiate (or simply don’t wish to do so) between what “rent” constitutes, and how that’s different than a mortgage payment with its accompanying liabilities, tells me that you’ve been SOLD.

    You have no savings.

    You have no down payment.

    You have $30k in debt.

    You’re buying a $163k house on a $40k base income.

    Put simply, you’re a foreclosure in waiting. You (and the gov’t policies encouraging you) are why this crisis is not anywhere near over, and won’t be over for years.

    Posted in Uncategorized | 3 Comments

    Measure twice, Cut once

    Ok … so it’s time for the big reveal.  I’ve put together a list of all my debts (found a great excel spreadsheet that was free to download) and here are the grim statistics (wish I was more computer savvy and knew how to copy and paste the actual spreadsheet I’m using … something I’ll have to figure out):

    Debt                             Balance                          APR                    Minimum Payment

    Citibank                     $9628                              1.99%                  $200

    Discover                    $227.23                         16%                      $20

    Student Loan 1        $11744                                                          $265.26

    Student Loan 2       $2098                                                            $58

    Medical Bill              $1629                                                            $75

    So I know what you’re saying … doesn’t look so bad, I thought this guy mentioned something about $30,000 + in debt.  Well a couple of things that I did last week and didn’t have time to mention.

    1) I sold my 401K and cashed out a meager $13,000 and change, got hammered on the taxes and paid of a larger credit card debt no longer listed above.

    2) I negotiated hard with Citibank to give me a balance transfer offer of 1.99% until 12/10 (seems like those 0% offers are getting harder to find) and transferred over the balance from two cards that I was previously paying higher interest on. 

    Total Debt: $25,326

    Which still isn’t a pretty number.  But a few weeks into this project and I’m still very motivated, haven’t used a credit card, and have even started to make a few lifestyle changes. 

    I’m not sure what the experts say about the 401K move I made, but I’d like to think getting out of debt SOONER will allow me to play catch up on actual investments at a later date. 

    What do you think about the 401K decision?  Has anybody explored debt consolidation? 

    By the way, here’s a link  to the debt tracking worksheets I mentioned … very helpful stuff on this guy’s website –

    http://www.mdmproofing.com/iym/excel.html

    Posted in Uncategorized | Leave a comment