the three f's

Fury, Frustration, and you can imagine the last F.

First (no that's not the last F hah!), lets start with something non-financial. I have gotten massive nosebleeds for three of the last five days. I'm talking takes a half hour to clot kinda stuff coming from waay up in my nasal cavity. It's a ton of fun, as you can imagine.

I still have not purchased a vehicle. I've only been to three dealerships so far, but pretty much no one's willing to negotiate on the prices of cars I am interested in and we all know I can't afford a ridiculous car payment right now. I probably can't afford a car payment at all, but driving my car for much longer is no longer a viable option. Almost two weeks ago, I spent $430 to replace the engine and transmission mounts (rubber rings that hold both pieces in place); However, that did nothing to solve the transmission issue. Admittedly, the jerking is better than it was before the repair, but I still can't accelerate rapidly, which is an issue when 30 out of the 35 miles of my commute are on the Parkway. There's part one of the Fury.

Fury: Part Two (it's a three part show) involves receiving a bill from my primary care physician last night for my flu shot. Apparently, Cigna decided to terminate my coverage 11/17/2012 even though I was supposed to be covered until 12/28/2012. Now I'm in a massive appeals battle with them. This is equal parts Fury and Frustration.

Fury: Part Three happened on the way home from work yesterday when I realized I needed to pay my Kohl's bill soon. I logged on and saw they charged me a $25.00 late fee for last month. Additionally, because I was "late" they ratcheted my interest rate up to 25% and wanted a minimum payment of $70.00! This was my last straw with Kohl's - I don't remember if I blogged about how they hiked up my minimum payment for absolutely no reason a few months ago. After asking other people who have charge cards with them, I found out I was the only one who suffered that increase. I called to "decline the changes", but was told if I did, they would close my account all together. Since I haven't had my Kohl's charge that long, closing the account would actually look worse on my credit report than keeping it open, so I didn't do anything about it. Last night, I called Customer Service regarding the late fee, and the representative said "I guess we'll take your word for it and remove the late fee." I went bananas on her. B-A-N-A-N-A-S. "Of course you're going to remove the late fee, because I have never made a late payment in the two years I've had your card and I've made your company a lot of money" is what I said to her not so nicely. At the end of the conversation, I informed her I would be transferring my remaining balance onto one of my other credit card and no longer shopping at the store. Which is exactly what I did. 

The third F, as you've probably figured out, rhymes with Duck and ends with You. Not you personally, readers, because I love you all for reading this blog and I would never ever ever say those things to you. It was a big middle finger to the universe. At other points last night, it ended in F-It because I was feeling quite depressed about our financial situation and had no other words for my feelings. It's still pretty accurate for how I feel today, too.

I'm sure it'll all get better, but the question is when? I'm tired of waiting.

reward me!

Today, I discovered the beauty of credit card rewards.

Not to say that I never used them in the past. On the contrary, I have always redeemed my rewards; However, it's usually in the form of a Starbucks gift card. On a few occasions, I've redeemed my points for gift cards that I used as a birthday/holiday/wedding shower gift. I've never redeem them for cash rewards, in stark contrast to the Hubs, who only redeems his points for cash back.

Today, while I was scheduling my online payments for the months, I decided to check out what kind of options were out there for my points. Picture me maniacally rubbing my hands together while thinking of all the cool stuff I can get. Then picture someone sticking a needle in my bubble.

For all the money I spend, I have next to nothing in rewards! Boo. Cue the violins, please.

In my (limited) experience, American Express has always been a bit stingy with their reward points (or perhaps I just don't have the right card to accumulate them). I had a little more than 4,000, which bought me nothing of note in their online store. Instead, I used 3,333 of those points to pay off an "everyday charge" (a $20 reload on my Starbucks card). So I'm left with about 700 points which I will probably never use and won't accumulate anymore because I never break out the AmEx. Moving right along.

I also never use my Discover card, so that had a whopping 313 points on it (or $3.13 in U.S. currency). Oh yeah, I'm a big spender.

Our joint Chase card looked promising though. After all, we did just put $1,800 on it after repairing the Hubs' car, so I should have gotten 1,800 points, right? Wrong. Well, not totally, but the statement hasn't closed with that transaction yet. As of today, I had about 4,000 points, which gets you more than American Express, but not much.

I contemplated redeeming some points for an iTunes gift card, but I couldn't think of any paid apps that the Hubs' or I wanted recently so I nixed that idea.

As I was purusing the Ultimate Rewards site, I saw you could "Shop the Ultimate Rewards Mall" and earn more points. More points? Okay! So pretty much, you're online shopping, but when you use the Chase card they give you an extra amount per dollar. I ended up buying two things I knew I was going to have to get anyway: a gift for my mother-in-law (whose birthday is next week) and heartworm medicine for my mom's dog. I can't tell you all what I got my MIL until she receives it, but I got 7 extra points per dollar for what I spent. 8 points per dollar! Awesome.

Then I received 6 extra points per dollar at 1800 Pet Meds. So 7 points x the $60 I spent on heartworm medicine = 420 points on that purchase! Awesomely Awesome.

Understandably, this could get a bit out of control, given that I can pretty much justify any purchase, ever. But I'm exercising a little thing called self-controlled. At least for the rest of today. Once I know my MIL received her purchase, I'll pay that charge (under $50, no biggie). And the next time I see my mom, she'll pay me for the heartworm meds, so that can get paid off right away too. Maybe by next month, I'll have enough points to trade in for a nice Christmas gift for someone!

What reward program do you use? Do you prefer the cash back or a gift card to "treat yo'self"? (as Tom Haverford would say)

three points

I was passing the time at work reading A Cup of Jo 's archives yesterday and I happened upon a post about authenticity. Joanna's mother wrote this to her regarding the subject:

"It seems to me that being authentic is being brave enough or just candid enough to be honest about what you are experiencing or who you are, whether it is popular are not... Whenever you are honest, you are speaking for a thousand silent people who don't have the voice to say what they really feel or are really experiencing. So, if you ever talk about [the thing you went through], you will touch a million hearts. Because you are speaking for more than just yourself. You are never alone in what you are feeling."

It resonated with me the whole day.  I think I've done an okay job being authentic (so far!) with those that read this blog, but lately, I think I've been sticking my short-comings in the corner and not acknowledging them as I should. I don't want, nor can I afford, to resort back to the "ostrich syndrome" (sticking your head in the sand to avoid something). So with that, here's a list for you of what I've been able to do and what I still need to do in my financial life.

For Better:

Writing down daily expenses/purchases in a mini-notebook, including anything auto-debited from my account 

 Transferring chunks of money into my short-term savings account - I've learned that the less money I see in the "available" column, the less I spend overall.

 Spending less money on groceries, overall. I'll have a post about that soon.

 Being able to say no/put things back/be more realistic with my purchases. For example, I was in Target on Tuesday, and put back more than a few things that I just didn't need.

Still Needs Work:

 Using coupons. I'm doing pretty good with using coupons at major retailers, especially if gifts are involved. My grocery couponing is pretty much non-existant.

 Giving up some other non-essentials, like soda, specialty lattes from Wawa/Starbucks, & eating out when I don't feel like eating what I've made for lunch/dinner.

Increasing retirement contributions. I've upped the contributions on my Deferred Compensation & Roth plans to 2% of my annual salary. Still no where close to the 10% I used to be at, but we're getting there.

Has Been Totally Ignored:

 Not using credit cards. This could probably go in the "Still Needs Work" column, but I'm going to put it down here. In this post, I talked about not cutting up the cards after they were paid off, which was a stupid move on my part. My friend, Jenn, warned me that paying everything off in a lump sum probably really wouldn't "teach" me the lesson I needed, and she was right. I haven't used them lately, but I did during the summer, and now I'm not only paying the minimums on those, but my loan as well. Lesson definitely learned.

 Automatic savings. Confession: I have no auto-save from my paycheck set up. I did go to the credit union and get the paperwork, but I never turned it into Human Resources and now I have no idea where it is. That's my only goal for next week.

 Budgeting - in the sense of giving myself X amount of dollars to spend on a certain thing (like gas/groceries/shoes) per month. I am reviewing my Virtual Wallet Spending Tracker a few times a month to see where I need to cut back, but I just can't seem to give myself a hard & fast number.

So that's where I'm at. I'm getting there. Like most things, this takes a lot more time and effort than I initally think it will. I try not to get too frustrated with myself, but the perfectionist in me makes it hard somedays. I still get moody and want to buy a shirt sometimes, but I'm getting better at realizing that shopping high is going to last about as long as my bad mood.

In the wise words of Alanis Morisette: "And what it all comes down to/ Is that I haven't got it all figured out just yet"

How are you doing in your financial life?

what we have here...

... you know the rest.

We had a slight failure to communicate this week regarding our finances this past week. Luckily, it didn't cause any major damage, but I'll get to that momentarily.

Last month, we had to take The Hubs' vehicle to the repair shop. It was making this ridiculous clunking noise. Obviously, not good. If he were a single man, he would have let it go until the car didn't start anymore. But, since he decided to get married, I did my wifely duty and nagged him about it until he agreed to get it looked at. As it turns out, he needed new hub bearings (whatever those are), but more urgently, he needed new brakes (another thing I had nagged about for months, but wasn't as successful at getting replaced). We agreed to have the brakes replaced and once he started bringing home paycheck again, he would take back the car and fix the hub bearings.

Since my hubs is a teacher, we are on a pretty tight summer budget, we tend to blow through our summer budget by the end of July, and have to pinch our pennies until the first paycheck in September (what can I say, we like beer). We agreed to put his car expense on my Chase card and pay it off at the end of this month. Sounds okay, right?

Let's just say, I've never been so happy to have a car repair before. Had it not been for this charge, I would have never logged into my online account (since I haven't used the card since paying it off a few months ago) and I would have never seen all the other charges he put on it without giving me the heads up. Late fees and general chaos would have ensued.

It's not like this caused a big fight or anything. I was mildly annoyed for about an hour. I may have shot off a sarcastic text. But now it's over and done with - I'm over it.

So consider this a Public Service Announcement/Reminder to let your significant other know when using their credit cards ;-)

P.S.: I'm taking my car in for work this Friday - keep your fingers crossed this doesn't blow up our savings account like Bat Gat.

332.0 - 332.999

I've been reading personal finance books off and on since starting the blog. I get through a few chapters, then put the book down for a week or so before coming back to it. I have David Bach's "Debt Free for Life" by my bed, Carl Richards' "The Behavior Gap" at my desk, and Ben Stein's "What Would Ben Stein Do?"

I haven't picked up Mr. Bach's book in weeks and I'll probably just return it to the library. Like Dave Ramsey and other financial advisors out there, Mr. Bach focuses on paying off all your debt in the fastest amount of time by sacrificing just about everything else. While this approach may work for some, it's just not for me. Full on deprivation just leads me to overdo it later. Plus, I'm not getting another job to help pay off the debt faster. Fact: I'm lazy. I did toy with the idea for a few weeks, but right now, the hubs and I have something going on just about every weekend until June. I'm hopeful I might be able to pick up a nights & weekends gig during the summer when the hubs is off and we don't have to worry about Molly Monster, but we'll see.

I'd rather work with I've got and learn subtle tips and tricks to save more, but still being able to feel like I'm enjoying life. I know, I know, you don't need money to enjoy life, but it sure does help!

Mr. Richards book is more my style. While it's primarily about investing, there are some snippets of wisdom that have stuck with me. Plus, there's pictures! (Diagrams, really.) One phrase I've been carrying around:

"'Personal finance... is more personal than financial.' It's true. Planning for your financial future is personal. It has to be. A good plan will be unique to your situation, and what is right for your situation may be a disaster for your neighbor. So ponder how the advice you encounter applies to you before you make important decisions about your money."

Last month, I embarked on trying to pay down my debt myself. As we saw at the end of the challenge, it didn't work out for me as well as I'd hoped. My overall debt total only went down a smidge and I was a bit dicouraged. And I had barely anything left over at the end of the month to put in our savings account, which frankly, was stressing me out. I decided to go back to another option I had previously shurgged off: getting a personal loan to pay off my credit cards and starting fresh. PNC offered loans with a starting rate of 8.25% if payments were deducted from my checking account. I applied... and was rejected.

Remember back when I reviewed all the componants of my credit report/score on Credit Karma? One of the biggest black marks on my record was my high debt to income ratio (43%). This was the main reason why I was rejected for the personal loan. Fresh off our anniversary conversation, the hubs told me to re-apply, but to to add him on the loan as well, thereby increasing our incomes while keeping the debts relatively the same. I did and this time we were accepted.

On Saturday, we took a trip to the bank to sign all the paperwork. Our rate ended up being 8.99% which is still half of what the lowest interest rate is on one of my credit cards. I took out a $9,000 loan for four years at $225 per month. There is no penalty for pre-payment, either, which means anytime I have some extra money, I can throw it towards the principal and pay it off faster. Plus, now I know I'll be able to contribute more to our savings account (I already increased the automatic transfer to $100 per paycheck, instead of the previous $50). All in all, this feels like a much better fit for my life than the previous attempt.

And for the credit cards? They're still tucked away. I opted not to cancel any of the cards, since another black mark on my credit report was the "length of time accounts have been opened." Instead, I'll just let them hang out for awhile. Maybe in a few months, when I feel like I have more control over my spending, I'll break them out for one necessary purchase per month, like gas or groceries. But until then, I'll recognize my weaknesses and keep temptation out of my grasp.

I already feel like a burden has been lifted. Even though I know the debt is still there, being able to see zero balances on the cards AND being able to save for any unexpected expenses, instead of having to whip out a card to pay for them, makes a world of difference. And if I ever get tempted to buy something unnecessary on credit, all I have to do is read my own blog.

Anyone else have any similar experiences lately - either with money or something else?

the limit does not exist

Actually, in this case, a limit DOES exist and I am not happy about it.

Yesterday afternoon, I received an e-mail from Credit Card #1 stating they were dropping my credit limit - by $2,000!!!

As you can imagine, I totally flipped out. I immediately called the company and pitched a fit. My main problem with the decision was my new limit ($3,000) only spared me about $200 from maxing the card out. In addition, I've never made a late payment on the card, have paid the balance off before in the past, and used the card actively. So what gives?

The customer service rep told me they had pulled my Experian credit report as part of an "Annual Credit Profile" (which, in the four years I've been with the company, is the first I'm ever hearing of this procedure). Having just pulled my credit report last week, I knew exactly what Experian had reported, and I couldn't see any negative reasons why they should drop my limit that much. The main reason was because my "debt to credit utilization ratio was too high". I know my utilization was a bit high (about 43% - read about it here), but, doesn't knocking my limit down so much make the situation worse since now I'm almost maxed out on one card? Apparently this company doesn't think so.

Other reasons were the length of time my accounts have been opened (nothing to do about that but age) and the amount of my payments (the minimum, right now while on my payment plan) in relation to the balance. Geez. At least I pay my credit cards (and on time, for that matter!).

I had half a mind to tell her to cancel the card right then and there, but then that's not going to help my "length of time accounts have been opened" situation. Instead, I asked her what I could do about it. There are two ways to appeal the decision. The first is to make a large, lump sum payment on the card (not happening, since we're still rebuilding our savings account). The second is to file an appeal based on income. So after work today, I have to run over to the UPS Store and fax over copies of all my assets (savings account, retirement accounts, last paystub) to the company with a request for my credit limit to be restored either to its original amount ($5,000) or another amount. I'm going to ask for my original limit back, but if not, at least increased to $4,000.

The one good thing that came out of this scenario was I'm totally re-motivated now to pay these stupid things off as soon as possible so I never have to deal with a credit card company and their sneaky tactics ever again. Oh, and I found out my FICO score was 709. Still lower than last year by about 30 points, but not as bad as I thought it was.

Anybody else have a similar experience before?

Friday Spending:
$5.97 Dunkin Donuts (breakfast)
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Friday Saved: $0.00

goal tending

In continuing the theme from Wednesday's post, we're going to sail on into Financial Literacy Month with more tips. This weeks FLM topics seem to be centered around goal setting and goal tending. Ironically, I was listening to the Man versus Debt podcast yesterday and Baker interviewed a blogger who believed in a "no goals" theory.

I'm not sure yet whether goals are for me, but perhaps that's because I have a hard time setting realistic goals. Or even if the goals themselves are realistic, I can't deal with slow results. I'm a "needed it yesterday" kind of person. I want immediate results, whether it's in my finances, weight loss, the house, etc. So as you can imagine, I'm often disappointed when things don't happen as fast as I think they should and I abandon whatever the goal/resolution was. I'm honestly surprised I stuck with the Lenten goal (for the most part) even when I wasn't able to make big dent in the debt overall.

But back to Step 12: Set short, mid, and long-term goals. Their default goals are: Pay down debt (short), establish emergency savings (mid), and Retirement (long).

My goals would be:

Short (one to two years): Build our emergency savings back up & save for a new car

Mid: (two to five years): Pay off credit card debt (we established back in February this would take me at least four years)

Long: Continue contributing to my retirement accounts and increase the contributions back to 10% once the debt is paid off. Establish a solid long-term savings. Sell our house and buy one I actually like in Atlantic County.

Step 13 of FLM covers a topic we're super familiar with around these parts: methods to pay down debt. They provide the examples of Debt Snowball (lowest balances first) and Debt Avalanche (highest interest rates first). I'm not one to beat a dead horse, so here's a handy debt pay-down calculator if you're interested.

Moving right along... we're going to bang out Steps 14 & 15 today as well, since I'm a bit lax on the weekend blogging.

Step 14 talks about the importance of an emergency savings account. This is an area I've been worrying a lot about lately, since our savings was wiped out after the bat removal. If we hadn't just received our tax return, I don't know how we would have managed. I know most financial websites recommend saving three to six months of living expenses which would put us somewhere between $7,377 & $14,755. Yow-za. I think we have $1,300 in the account right now (all thanks to the hubs).

Step 15 makes me feel better since it's about preparing for retirement and I'm all over that. Prior to this debt paydown journey, I was contributing 12% of my salary to a Roth IRA and a Deferred Compensation plan. This was in addition to our mandatory pension contributions (which, to be honest, I wish I could just opt out of since I doubt NJ will have the money to pay it back to me when I retire). For now, I'm contributing 2% while I focus on knocking out my debt, but I'm look forward to getting back to fully funding my retirement accounts once my credit cards are wiped out. The Hubs also contributes a lot (I don't know the percentage off the top of my head) towards his 403(b) plan so we're on track to spend our retirement golfing (him) and at the beach (me).

What are your financial goals? Do goals motivate you or do you get discouraged like me? Any tips for better management?

April is Financial Literacy Month

Did you know that? I didn't until I was doing research on a different topic for the blog.

Money Management International is sponsering a Financial Literacy Month Challenge as well as guest bloggers on their Blogging for Change website which highlights each days "step". You can enter the Challenge for a chance to win $500 - you know I did!

I'm a bit behind on the steps, so lets kick this baby into overdrive to catch up, shall we?

Step 1: Commit to Change. Done!

Step 2: Assess Your Finanical Situation. I scored 12 points on their quiz, which "reflects a good effort to manage your money effectively. The 30 step plan can help determine changes that can be made to improve your financial well-being."
Step 3: Clearing Out Financial Clutter. I will give myself a pat on the back for being pretty organized; I usually alway toss receipts (except for major household purchases), I print & save our utility bills for one year to compare costs. I'm hit-or-miss on saving credit card statements. Lately, I've just been reviewing them online.We have a big bag of bills I need to get around to shredding then burning in our fire pit. I need to add our paystubs to the pile now that we've received our tax return. The blog post for day 3 lists an interesting tip about carrying three different registers - one for cash, one for your bank/debit card, and one for credit cards. The author also mentions people who struggle with their finances may need to document their spending for longer than a month (ugh!)

Step 4: Set Yourself Up for Success. I would consider myself the Family CFO, meaning I track and pay the majority of our household bills. Again, I'm pretty organized with our paperwork. We're half & half on automated payments- I should probably work towards full automatic payments. I couldn't view the webcast at work though, unfortunately.

Step 5: Get Copies of Your Credit Report. Done - over 40 pages!

Step 6: Clean Up Your Credit Report. Easy-peasy since there were no errors from the three reporting agencies.

Step 7: Make Your Money Count. Using their Income Worksheet Form, I calculated a monthly take home of $2,553.24 (a bit more than my previous estimates due to knocking down my retirement contributions in the short term).
Step 8: Identify Your Starting Point. I calculated my net worth at $1,130.87. Woo-hoo! In the positive! I didn't have the information on the balances in my pension & IRAs so I just estimated some rough numbers based on my last year & a half of contributions. I did not factor in our joint savings because I haven't recently contributed anything to it (whomp whomp)

Step 9: Passing the Debt Test. I answered "yes" to four questions:

Is an increasing percentage of my income going towards debt payments: yes, but that's because I'm riding the debt meteor

Is my savings cushion inadequate or nonexistent: bats- 1, savings account- 0

Are you at or near your credit limits: depends on your interpretation of "near", but I answered yes anyway

If you lost your job would you be under immediate financial strain: hell yes. this scenario gives me nightmares.

The guest blog posts lists "5 Great Reasons to Have Less Debt". They all sounds fabulous.

Step 10: Set Your Priorities. When filling out the worksheet they provided, I could almost place each priority in the "need" catagory, but I decided to be reasonable. The blog tells you to "market to yourself" what your priorities are instead of letting the mass media market to you which I think is a really interesting concept.

Rank 1 (most important): Paying off unsecured debt; Making on-time payments on secure debt; Maintaining a savings account (all ranked as needs)

Rank 2 (semi-important): Buring a car (still more a want than a need), taking a vacation (want), having money for entertainment (want)

Rank 3 (not as important): Saving money for a down-payment on a house. Obviously, we already own a house, so we don't need a D.P. but we should work on increasing our home equity.

Step 11: Set financial goals. They use the acronym SMART:

S - "A smart goal is specific. It pinpoints something you want to change to achieve." (I want to pay off my credit cards before I turn 30.)

M - "A smart goal is measurable. You can measure or count a SMART goal."

A - "A smart goal is achievable. Setting goals too high can lead to frustration." (going to be hard, but achievable)

R - "A smart goal is rewarding. Reaching the goal should be a reward for your hard work."

T - "A smart goal is trackable. Set milestones and schedules for your goals." (first goal: Pay off Card 3 by July at latest)

That brings us up to date on our steps. Are you motivated to take the Challenge now? I'm actually kind of excited about it. I'm definitely a person motivated by challenges/experiences so this is right up my alley.

pay it downward

Since the "challenge" portion of the blog has officially ended, I thought I should check into my various cards and see where my balances are at and if I've made any progress. Plus I had to schedule my online payments for the month anyway. Two birds, one stone kind of deal.

Card 1: $2,752.02 (+ $32.51)
Card 2: $2,047.82 (+ $104.85)
Card 3: $409.29 (-123.50)
Card 4: $3,579.61 (-$300.00)

Total debt: $8,788.74

For a difference of $288.14 less than when we started. Blah. That's kind of depressing. But at least I'm under the $9,000 mark.

We get paid this Friday, so I'll be able to throw my credit cards back in their "hiding place", hopefully for a lot longer this time, barring any home or car emergencies (like this one).

A quick check on Credit Karma revealed no changes to my estimated score from the last time. Not surprising, given it's been less than a month since I last checked.

I'm reading a new money management book which gives yet another way to manage your payments, so this week we'll analyze the sixth (or so) debt payoff strategy.

Do you become frustrated by how slow some things take? Even though I know I've only been making two months of credit card payments I feel like there should be a much bigger dent in the debt - probably because I blog about it so much!

Monday Spent: $1.45 coffee
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Monday Saved: $0.00

the secret life of mees.

I have to be honest with ya'll: I used my credit card twice recently. After the check for the bat removal clears and my student loans are taken out on Monday, I'll have a whopping $33.41 to last until Friday's paycheck. Have I mentioned how high gas prices are right now? $3.75 a gallon on my way to work today. Yikes. It's going to be a close call.

But I digress. On March 29th, I paid $32.10 for a full day of doggie day care at Camp Bow Wow. The hubs and I were supposed to go out that night for a friend's 30th birthday celebration, so I didn't need Molly destroying the house all day and night. I ended up having a migrane and staying in, so if my future-vision was working properly that day, I could've avoided that expense. This was also prior to finding out just how much it would cost to have bats removed from the premises. Damn future-vision.

Yesterday, I paid $25 to the NJ Civil Service Commission, but I can't tell you why just yet.

There's another secret I've been keeping from you and it's a doozy. It'll probably help you understand me better, but you'll probably also be a bit surprised and/or disgusted.

This is not my first go around on the credt wheel. I've been here before, albeit not with this much money. When I was a sophomore in college, I had three open credit cards. I don't remember what the combined balance now, but it was more than I was comfortable with only working 3 or 4 days a week on campus. I called Consumer Credit and was set up on a payment plan. While in the plan, you had to sign off that you wouldn't use credit cards and you had to complete their online education program. Having taken a personal finance class the year before, I blew through the online test without actually attempting to learn something. About 6 months before I completed the program, I signed up for Card #1.

After the hubs and I got married, we took about half of the monetary gifts we received and each paid off one card. Now, most of the items charged on my card were wedding-related items, but I still feel this guilt that the money was essentially wasted, since the card has a balance on it again after only a year. Clearly, I had learned nothing from my past mistakes.

The good thing is, I think the third time is finally the charm. I get it now. I can look you in the eye and tell you I have a shopping problem. I was in the jail at work the other day and my co-worker was interviewing a guy who had an extensive shoplifting history. He said when he didn't have money for drugs, he would shoplift. He said he would get the same high clearing a metal detector as he could hitting the pipe. I think almost everyone has the capacity to become addicted to something. I certainly could have. But no more. I'm done. I have to be.

Day Thirty Seven Spent: $0.00
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Day Thirty Seven Saved: $0.00

5gether

Does anyone know where the name of today's post came from? It's from the geniuses that developed this little diddy:

Can you believe it's been twelve years since that series aired? Me either. Anyway, "5gether" was the first song off their sophomore album 2gether: Again. It popped into my head while reading the article "5 Tips to Cut Custs on Your Home" What? You're not reminded of fictional boy bands while reading finance articles? Weirdo.

Absolutely none of the recommendations are helpful to us at the moment. None of the homes in our area are even selling for me to fight a property assessment (though this tip did help my mom last year!), we can't even afford basic remodeling right now because of the costs of removing the zoo from our attic, I'm fairly certain we have the cheapest mortgage we could have scored (and a low interest rate to boot), and we don't have a business that needs a home office, at least not until this blog goes viral.

The only tip that got me thinking was #3 - Know how much mortgage you can afford. I distinctly remember being on the phone with Wells Fargo during the pre-approval interview and almost having a heart attack when we were approved for a $1,600 per-month mortgage. Once I picked my jaw up from the desk, I remembered I was only paying half that amount. $800 per month still seemed like a lot, especially with our wedding right around the corner. I never did a monthly mortage calculator back then, so why not do one now?

Most mortgage calculators tell you to take your gross monthly income and multiply it by 28%. This percentage accounts for monthly payments for principal and interest, mortgage insurance (we have it), property taxes, homeowners insurance, homeowners association fees (don't have it), and payments for a home-equity loan or line of credit (don't have either). I used my take-home pay to do the calculations - I don't see the point in figuring out what I could afford before everything is taken out, since that's not what goes into my bank account every other Friday.

$2,200 x 0.28 = $616.00 per month

I'm just squeeking under the max by $16.00. Phew!

The other calculator the article suggested was a Maximum Monthly Debt Repayment (MMDR) calculation of your gross monthly income multiplied by 36%. The MMDR includes mortgage payments, credit cards, student loans, car loans/leases, ailmony, child support, or other debt with more than ten months of repayment left. It's noteworthy that the ideal percentage is 36%, but in places where the cost of living is higher, like the northern NJ/NYC region, the percentage may go as high as 45% Here's mine:

$2,200 x 0.36 = $792.00 per month

Here is where I blow past the recommended 36% and even topple the cap of 45%. Between the morgage ($600), my student loans ($205), and my credit card payments ($350), I'm closer to using 52% of my monthly take home pay just for debt. Wow! No wonder it's tight during the winter months when the electric bill gets sky high as well.

What's your percentage look like? Off the chart or small and sweet?

Day Thirty One Spent: $0.00
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Day Thirty One Saved: $0.00

Credit Chameleon

On the recommendation of a friend, I decided to check out Credit Karma, an online service that allows you to see your TransUnion credit score (not the same as your FICO score) for free. In addition, you also have the opportunity to see your credit report card so you know what areas you to improve on. I was a bit hesitant to utilize the site, as giving out personal info to unverified, third party companies isn't something I'm usually comfortable with. I familiarized myself with their privacy policy and used Internet Explorer's "In Private" browsing feature which restricts cookies. I was relieved they did not ask for my whole SSN, just the last four digits. Here's how I faired:

Credit Report Card: C (ouch! definitely thought I'd do better than that!)

 Open Credit Card Utilization - C - my utilization ratio (balances divided by credit limits) was 43%

Percentage of On-Time Payments - A - 100% !

Average Age of Open Credit Lines - D - my average is a little less than 4 years, with the oldest credit line being 7 years.

Total Accounts - B - 21 (14 active, 7 closed)

Hard Credit Inquiries - C - 3 in the past two years (most likely all from buying the house last year)

Derogatory Marks - 0

Total Debt: $175,557 (79% mortgage, 16% student loans, 5% credit cards)

Debt to Income Utilization - 62% (just me, hubs' salary not included)

Credit Score: 686 (double ouch)

That score represents an almost 80 point drop from where I was at this time last year. I believe when we started prepping to buy our home, my score was in the 740-750 range. This was the initial kick in the pants I needed to reign in my spending and reverse the downward trend. Checking back in is definitely the boost of motivation I need to keep up the plan.

There's not much I can do about the "length of time" my accounts have been open, save for not opening any new accounts. I'll have to keep watch over the accounts I do have to make sure I'm not charged any kind of inactivity fees - or worse - have cards closed for inactivity. According C.K. accounts open for 8 years or more is what I'm aiming for. Additionally, with the passage of time, the "hard inquiries" on my credit report will disappear as well.

The big area to work on is my utilization ratio. The sweet spot is 20% or less. Now that I have a plan, that number will, hopefully, be achievable in the near future.

What was really cool on the website was the Credit Simulator - Essentially, you can plug in different scenarios and see how it reflects your credit score. For example, if I pay off my credit card debt, my score would rise to 755. If I obtain an auto loan for $12,000, my score drops three points. If I do both those things, my score still rises to 729. Pretty cool.

Has anyone else used Credit Karma (or a similar website)? Raise your hand if you'll have Karma Chameleon stuck in your head the rest of the day. Yep, me too.

Day Twenty Five Spent:
$1.00 vending machine chips
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Day Twenty Five Saved: $0.00

Debt Tsunami

The next time you have a few minutes google debt + natural disaster of your choice. It's kind of fun. But not right now, you're busy reading my blog.

The final installment of our debt elimination journey has us riding the waves of the Debt Tsunami. Adam Baker claims it's the "ultimate method to pay off debt" by tapping into our emotional connection with our credit cards. This sounds like it's about to journey into "My Strange Addiction" territory. The Debt Tsunami is "about paying off your credit cards in order of their emotional impact" regardless of their balance or interest rate.

Mr. Baker contends that the snowball and avalanche methods won't work if they don't correlate with your specific personality type. For example, "logical" people usually prefer the avalanche method because it makes sense to pay off high interest cards first. The method assumes you are a mathematical person who can detach yourself from the emotional side of debt. The snowball method works if you're someone who's motivated by little victories. But what happens if you're neither (or both) of those people?

In the argument for the tsunami, Mr. Baker references two scenarios which both involve money lent by a friend or family member. This scenario doesn't apply to me at all, so I have some trouble identifying with the "emotional side" of my debt. But I'll try. Let's go through his step-by-step strategy:

1. Create the initial burst of energy. Oh, look, "start a blog" is one of the options. (double check!)
2. List your debts from smallest to largest including interest rate



can i put "creates awesome tables in paint" on my resume?

     3. Focus on the emotional connection with each debt. Apparently I should be closing my eyes and imagining what it'll feel like to pay off each debt, but I'm at my desk, so that's not going to happen. Other questions to focus on:     
      a. How long will it take to pay off?
      b. On what did you spend the money? .
      c. How much of a burden is this particular debt in your financial life?
      d. Is it secured or unsecured?

   4. Reorder your list based on potential emotional impact - Mine would be in order: 1, 2, 3, 4. There is a caveat here - "order the debts by how awesome it'll feel to eliminate them combined with how easily you can actually get that result." Eliminating Card #1's debt is not going to be easy, so there's a wrench thrown into my list.
   5. Head immediately towards shallower water: "The only way to build momentum is to go as fast as you can towards shallow water." Here is where we reduce spending & budget better in order to apply more money towards the debt payments.

While I appreciate the ideas behind the Debt Tsunami, I don't think it's right for me in its entirety. Instead, I'll combine it with parts of the Avalanche & Snowball theories to create my own Debt Meteor program (kudos to my co-worker for that one). I'll tackle the balance on Card 3 first, since it has both the lowest balance and the highest interest rate, but one of the lower emotional connections. Then we'll move onto Card 1, which has the higher balance, interest rate, and emotional impact. From there we'll go to Cards 2 & 4. I'll tweak the plan if and when it's needed, since I need to set myself up for successes, not failures.

Which program works best for you? Anyone else inspired to create their own debt program this weekend?

Day Eighteen Spent:
$28.56 gas
$5.00 lunch
$32.10 daycare for Molly
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Day Eighteen Saved: $0.00

Debt Earthquake & Aftershocks

Two other ways frequently mentioned in eliminating debt are balance transfers and loans. Neither of these choices are optimal for my personal situation, but maybe they will help you out.

The first option, balance transfers, is pretty simple- Apply for a 0% interest card (and be approved) then transfer your high-interest balances over. Assuming you pay off the balances before the promotional rate expires, you'll have saved a good chunk of change in interest. One cavat to look out for is the fee associated with transferring the balance, usually a flat fee or a percentage of the transfer.

MyMoneyBlog.com lists the following as the Best No-Fee, 0% APR Offers for 2012:

1. Citi Platinum Select Mastercard - 0% APR for 18 months on transfers and purchases. Transfer fee is 3% of the balance
2. Slate from Chase - 0% APR for 15 months on transfers & purchases. Slate is one of the only cards with no transfer fee
3. Discover More - 0% APR for 18 months on transfers and 6 months on purchases. More cards are also part of cash-back program
4. Capitol One Platinum Prestige Mastercard - 0% APR until June 2013. Balance transfer fee is 3% of total with no minimum to transfer over. The annual APR's are also lower (depending on your credit score, of course)

You can read the full list here. I just opened a balance transfer card in August 2011 (Card 4 on my list) so obviously, opening another line of credit is going to hurt me more than paying off the existing cards . Card #2  just sent me a letter in the mail offering 0% on balance transfers; However, that would take up most, if not all of my credit line on that card which isn't a good idea either. If you only have one or two cards with high balances, can sock extra money into payments, and won't be tempted to use the new card, then this might be an option for you.

The second method would be to take out a personal loan to consolidate the debt into one monthly payment. Generally speaking, the loan rates at the bank tend to be lower than credit card rates. They dip even lower if you have a credit union nearby.

I decided to call up PNC and find out what kind of terms they were offering for a $10,000 unsecured loan. Since I'm already a customer with the bank, they offered me an APR of 8.99% if I have the payments automatically deducted from my checking account. The base APR is 9.24% - still not too shabby. There are no pre-payment penalties associated with the loan, which is good. A three year plan would cost me $318.00 per month and a four year plan would be about $250.00 per month. This would almost seem like a great option if I didn't already have that one card with 0% interest. Plus, another unsecured debt would not look good on my credit report right now.

Some websites even suggest taking a loan out from family members or friends, but I'm of the mindset not to mix business with pleasure. Has anyone ever loaned money to a family member and actually had it all paid back? I know if it's not going to affect my credit score negatively, I would be lax in my re-payment efforts. No need to create unneccessary family drama - we do that well enough on our own.

Just in case the past three days didnt't have enough natural disaster analogies for you (spoiler alert), tomorrow, we'll look at the Debt Tsunami! Hold onto your surfboards.

Day Seventeen Spent:
$5.00 Sally Beauty Membership Renewal
$1.07 Dollar Tree (makeup remover cloths)
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Day Seventeen Saved:
$5.79

Debt Avalanche

It seems that the majority of debt reduction plans all have some kind of destructive nature theme going on - like the "debt snowball" is really a snowball packed with ice that's going to impale your credit card debt and the "debt avalanche" is going to bury your debt in a pile of who-knows-what.
The second program I'm going to look at,"Debt Avalanche", focuses on paying off high interest rate cards first instead of paying off the cards in low-high order. The premise behind this program is by paying off the higher interest cards first, you'll save money since the interest charges won't be as large.

Sounds promising. Here's my table (click to make it larger):

According to a Snowball vs. Avalanche calculator, paying down the debt in this fashion will save me $55.00 in interest. Meh. Pretty unimpressive, in my book, but I guess any savings is good savings when it all boils down, right?

In both scenarios, I'd be paying off Card 3 first, which fits in nicely with how I planned to do it anyway. So you don't have to go back to Friday's post, the plan for Card 3 is: First payment comes out on March 14 for $134.79 and I'll be paying $100.00 towards that card each month while paying the minimums on the other cards. Barring any emergencies, I'll make a double payment on the card this month and have the whole thing paid off in the next three months.

These two programs seem to encapsulate the most popular ways to pay off debts. Tomorrow, I'll look at two other options that I'm fairly certain I won't use, but we'll discuss because I like to hear myself type.

Day Sixteen Spent: $0.00

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Day Sixteen Saved: $0.00

Debt Snowball

The premise behind Dave Ramsey's "Debt Snowball" is a fairly simple one: pay off your debts from smallest to largest. According to Mr. Ramsey, "Paying the little debts off first shows you quick feedback, and you are more likely to stay with the plan." The idea is to apply each debt's minimum payment to the next as you work down the list in order to eliminate the debt faster. "Payments Remaining" is the number of payments remaining on the debt when you get to that item. "Cumulative Payments" is the total number of payments made (aka a running total).

As a side note - Mr. Ramsey encourages each participant to have $1,000 in savings before starting any kind of debt repayment. Although throughout the blog, I keep my spending/saving separate from the hubs, I did count our joint savings as my safety net in this exercise. Since one of the goals of this journey is to save more money, I will work on a separate personal savings of $1,000 as well.

Here is my debt snowball (click on it to make it bigger):

First impression: Wow. Almost six years to pay it all off.

You'll probably note that there is only a month & a half payment left on Card 4 by the time I get down to it. I currently pay $150 per month towards the balance because it is a 0% interest rate card. If need be, I may adjust that number in the future once I'm being charged interest, depending on how far along I am on the other balances.

Mr. Ramsey also encourages you to list all debts, including student loans and mortgages on the debt snowball, but since revolving debt is my immediate focus, that's all I've chosen to include on here. I accepted long ago that I wasn't paying my student loans off until my 40's and the mortgage... well, that's 30 years for a reason.

Overall, I think the Debt Snowball is one of the easiest plans out there and I'm partial to it; However, tomorrow we'll look at another option and compare. I know my sister-in-law, Stephanie, has used this plan with success. Anyone else out there have a plan you recommend?

Day Fifteen Spent:

$22.00 Lunch (treated co-worker for birthday)

Day Fifteen Saved:

$5.00

Apple Pie Chart

Bonus time! What Wheel of Fortune catagory does today's headline belong in?

What's that? No one under the age of 30 watches the Wheel? Bummer.

For the past two days I've been condensing the spending on my three cards into ten catagories. Luckily, most companies now offer some kind of "year end summary" so all I had to do was sift through the transactions to make sure they were in the right catagory. Then, I added up the totals and made a neat little pie chart:

For clarity:

"Other" included some printing/photo purchases, charity, & dry cleaning
"Fees" was primarily interest accrued on Card 1 and a small rush shipping fee from Card 2
"Grocery" included grocery & drug stores
"Home" is limited to improvement/maintenance - think Lowe's/Home Depot - anything else went to "Shopping"

I think the other catagories are fairly transparent. Clearly, I chose the right thing to give up for Lent, since shopping is the largest catagory. Looking at the shopping section is rather embarrassing; I can't even name one thing I purchased with all that money.

Yesterday, I scheduled my monthly payment for Card 3 (total: $534.79). I've chosen to pay this card off first, regardless of the method I use for paying down the balances. $134.50 will be March's payment. Since March is a three paycheck month (woohoo!), I plan to make a second payment on this card as well, hopefully for at least the same amount.

Starting Monday, I'll be blogging about the various options/strategies that exist for paying off the debt and picking one as my own. Are there any methods you have found helpful? Please share!

On an unrelated note- I want to thank those of you that have reached out to me, via comments, Facebook, or in person with your suggestions and support. I've only encountered one judgemental person thus far which makes me so grateful to have such uplifting people in my life. Even though it's uncomfortable to look at my flaws head on, it also feels good not to be carrying this secret around anymore. Who knows, maybe this weekend I'll get around to telling the hubs about the whole shebang. I'll admit, this honesty thing is pretty refreshing!

Day Ten Spent:
$1.50 vending machine soda
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Day Ten Saved:
$0.00

The Big Reveal

I'm nervous. Today is the day where I have to admit to all of you (and myself) just how bad it's gotten. My fingers are shaking as I type. But, before we get to that, I have some good news! I have $20 for my starving savings account.

The hubs and I had a planned dinner with one of his former neighbor's from home last night. She was in Atlantic City for a conference and we couldn't pass up the opportunity to see her (& play some Slingo). We picked a moderately priced tapas style restaurant and I set a budget of $60 for dinner, drinks, slots, and parking. Miss T, being a wonderful & generous person, grabbed & paid the bill before the hubs & I even had a chance to open our wallets. I agreed to leave the tip and my hubs paid for the t-shirts we had ordered from her brother (he brews his own beer - gotta support your friends!). Pre-Lent, I would've put both $20 bills in the slot machine, but this time I chose to just give $20 away to the Slingo slot gods (I didn't win). Then, as if to reward me for my restraint, the frugality god(s) left a Diamond card on a nearby slot machine. I know, I should have turned it in. But I didn't. Now I have free parking at four casinos until March of 2013. And $20 to put in my savings account. I'll take it.

Now onto the not so awesome part of the post. Before I get into the details about my personal finances I ask, nay demand, you refrain from posting negative comments about "how irresponsible I am" or "how could you let it get that high", etc etc. I know this is my fault. I know it was/is irresponsible of me. I do not and will not attempt to place the blame on anyone else. This blog is about being honest with myself and whoever chooses to read it. I won't sugarcoat it, but I also won't be shamed. At this juncture, I need support, not insults. Thank you in advance for that.

My heart is pounding.

I have $9,076.88 in credit card debt.

Wow.

I have four cards. #4 was opened last year when the company was offering 0% on balance transfers. Technically, I have five cards, but one (a store card) has no balance (we just paid it off two months ago). Here's the breakdown:

Card 1: $2,719.51
Card 2: $1,942.97
Card 3: $534.79
Card 4: $3,879.61

I'll save the breakdown of what I spent money on for a later post (I think that's going to take some investigative work). I might need the weekend to process the above number- at least we're not doing anything that involves spending money.

Day Three Total Spent:
$25.00 EZ Pass
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Day Three Total Saved: $5.00
(Rebate from bakeware purchased three months ago)