Creating a Life by Destroying Debt

2012 - March Financial Update

noreply@blogger.com (Texas T) — Fri, 02 Mar 2012 23:13:00 +0000

It's been a long time since my last post. Financially, we are in slow mode, working with a "status quo" mentality. My wife and I work for the same company, and for the past 3 years, we haven't had an increase in income due to the poor shape of the economy. I am not complaining...it's nice to be working.

And the work has been good to me. This past year I've been rewarded in other ways. My company sent me on a business trip to Oahu, and the family went with me (at our expense, of course). It was an amazing opportunity. I mean, how many times do you get to go to Hawaii??!! Also to show some gratitude for doing such a good job on a few projects, they bought me a nice 55" LED TV and a nice new refrigerator. The tv was a "nice to have"...the refrigerator was a "need" (we agreed it would be better for both of us to by us a referigerator, rather than paying taxes on cash).

Even though we have been living "status quo", it's been hard to keep the expenses down. My son has needed tutoring to help in reading and math, being on an HSA has meant higher medical bills each time we go to the doctor, groceries, utilities, you name it...they have all gone up. I stop and think maybe I could gain more income by switching jobs. I've tossed around that idea for awhile now, and have worked the figures with commuting costs, clothes, and such. I'll update you on that status later.

For the past few years, we've been going well at keeping the expenses from going up too much. We've tried to be intent with our finances. We've put end dates on some of our larger debts to roll off at the end of 2013. Combining the drop off of expenses, such as, tutoring, daycare, car loan, and a personal loan will net a $2K/month decrease of our expenses. In the meantime, I've taken on freelance work to hopefully speed that timeframe up...but I'm not banking on it. I want to take care of some lingering medical debt and take a little time to reward my family for being patient with me in the freelance effort.

We'll see how this year goes. "Status quo" isn't fun. You feel "stuck" many days. But you can either look at it from the perspective that the dam will break because something has to give, or the turtle wins the race.

Soda Replacement - Money

noreply@blogger.com (Texas T) — Sat, 26 Mar 2011 19:02:00 +0000

When I was a kid, growing up with soda in our lives was rare. It was considered a treat. Even when our grandparents tried to spoil us by taking us out to eat, we would generally choose water, as it didn't cost anything (we didn't want to ask for too much).

Now that I have kids of my own, having soda in the refrigerator is a common sight. It is a part of our grocery list, and a 2 liter rarely lasts a week. I've been getting more worried about how my kids are growing up in today's society, where obesity is growing and growing among kids.

In an effort to curb my son's desire to always get soda when we're out at a restaurant, I came up with a plan that will not only avoid conflict when I tell him "no soda". It is also an idea that will teach him the value of a dollar.

I told him that if he chose to drink water instead of soda, I will pay him the cost of the soda. I'd much rather give him the money instead of the restaurant. He was very interested in this idea. Over the next few months, he willingly chose water over soda...asking me how much it costs for soda each time we were out, and handed out his hand for the money. This makes me happy because he is getting a reward for not drinking "sugar water", and he is healthier for it :)

Over time I'm sure this "trick" will wear off, but my long lasting hopes are that he will naturally choose water over soda. And it is my hope that he realizes that spending money on soda means less money in his pocket when he starts paying for his own meals as an adult :)

I hope you find this a useful tip, as well. Please let me know how it works for you!

Our Financial Life Update

noreply@blogger.com (Texas T) — Mon, 28 Feb 2011 22:31:00 +0000

At the time of my last post, we decided to sell our car and drop down to 1 car. In order to do so, I had to get a loan to bridge the gap between loan and market value. Armed for a quick sale, I tried several selling options:

Appraise it at CarMax
Sell on Cars.com
Sell on eBay
Sell through local advertising
Place a window sticker on the car
Appraise it at several dealerships

It was a bit frustrating, because we didn't receive any inquiries...NOT ONE. I feel I did everything right in trying to sell it. I got it completely detailed, took great pictures, and placed it at a fair market value. One of the options was to see if dealerships would simply buy it. We decided to try the dealership where we bought it. They were very interested in purchasing it, but the excuse was that they didn't have the cash on hand to buy it outright. The offer was the fair market value (much higher than a trade-in value).

Feeling defeated and carrying an extra loan payment, I became worried that our car would not ever sell. We took a look at the option of trading it in for a nice used car. If we were to do that, my only goal was to not take on more debt (and not carry the loan longer than the CX-7). We took a look at the used car lot of the dealer that offered us the most for our car and found a nice match. A 2005 VW Beetle convertible was the choice. And so the deal was made.

To make the story short, we traded in our CX-7 for the Beetle. Including the gap loan on top of the Beetle loan, it was an even debt load. And we decided ahead of time not to extend the Beetle loan beyond the time the CX-7 was to be paid off. So overall, it worked out nicely. And as far as the difference per month, we actually went down $100.

I really wish we could have gotten rid of the CX-7 and dropped down to 1 car. It made the most financial sense. At least there's something to be said for not taking on more debt while trading in a car, right?

Prosper.com Peer-To-Peer Lending Review

noreply@blogger.com (Texas T) — Tue, 19 Oct 2010 20:51:00 +0000

A month ago we decided to sell our car. The long standing problem we faced was the upside down value we had in it. We rolled $12K onto this car in order to get out of the previous vehicle. At the time it was thought to be a good idea, but soon after we purchased it, my wife landed a job that allowed her to work from home. A year after that, I too began working from home. Ultimately that "good idea" car was not such a good idea.
Following Dave Ramsey's plan of getting out of a car that had an upside down value, we chose to sell it and take a loan out for the difference in market value and loan balance. We chose Prosper.com as the method of obtaining a loan.
At first I was sceptical of the whole lending process, but reading the FAQ's and reading experiences of others gave me confidence to proceed. If you take on the interest rate they recommend applying for, it was a very quick to get fully funded. If you are unfamiliar of the process, after applying for a loan, investors (peers) contribute to your goal. After it is fully funded, a bidding war takes place, and the end result interest rate is reduced. Ours was reduced 2%. I recommend waiting the entire 7 days to receive funds, even though it may be fully funded prior to this date.
Overall, the experience was pain free and pretty simple. I would recommend using them if necessary...but of course, the preferred method is to have a cash savings instead of taking on debt :).

I.O.USA - My Review and Commentary

noreply@blogger.com (Texas T) — Tue, 14 Sep 2010 18:41:00 +0000

I watched I.O.USA yesterday, and I have to say that I am only beginning to be awaken to the crisis here in America. If you ever have a chance to watch, I would encourage you to watch it. I would encourage kids to watch it, as well, but they probably won't "get it". If they realize what their world could be like if our present keeps going the way it does, they might be able to stop it.

A politician is a politician. I really don't like either side much, because our "balance of power" hasn't really worked with fiscal responsibility. Granted, we had 2 wars that were not accounted for, but the time has come to start cutting back. President Obama put in place the "Pay as you Go" system, but only after he put through health care reform that will continue to increase our national debt. How fair is that??!! I hope this country is waking up like I am and realizing that we need to play a bigger part in understanding how our government functions. I, like many Americans, have faith in our elected officials. In a Republic we elect who we "think" will do the best job. That doesn't always work, as we are now seeing. Pay attention when elections come up. If you don't want to be involved, at least understand the players. Understand the game.

Weekend Roundup: 9/12/2010

noreply@blogger.com (Texas T) — Sun, 12 Sep 2010 14:03:00 +0000

Free Educational Videos: Learn About Finance and More From Khan Academy

Consumed: Rethinking Business in the Era of Mindful Spending

Coupon Shopping 201 - Learn the terms and policies

Cost of Living or Standard of Living | Which Is To Blame for High Costs?

How I Accidentally Saved Over $8,500 a Year with My Car

How to Buy Organic Food on a Budget

Residual Income Based On "Common" Sense

noreply@blogger.com (Texas T) — Wed, 08 Sep 2010 16:54:00 +0000

I was reading a post over at the Wealth Pilgrim the other day. It was entitled "Residual Income Business Ideas - 3 Tips To Save Time And Money". I too have been looking at ways to make passive income (income generated whether I work or not). Passive income sounds great, right? It's good in 2 ways: I don't have to work hard, and it is additional income that would help fuel the debt elimination train. Besides, income is truly our greatest debt elimination tool.

The Wealth Pilgrim talks about 3 tips when thinking of passive income:
Be Realistic, Look Around, Don't Expect People to be Honest. These sound very reasonable, because nothing in life comes easy, and the world is full of dishonesty. It's a sad day when honesty can be doubted, and a mans word can be counted on by a handshake. Too many bad apples in the world, I say.

So, in summary...look for something you'd enjoy doing, work hard, and be honest. Sounds like a great foundation for making passive income!

How to Eliminate Car Debt

noreply@blogger.com (Texas T) — Tue, 07 Sep 2010 20:26:00 +0000

I don't think I'm alone when I say that I have a car that is upside down in value. My problem, is how do I sell the car in that position? Honestly, there are only a few ways:
- Pay on the loan until the loan is paid in full.
- Pay on the loan until the upside down portion is equal to the value.
- Finance the upside down portion and sell the car.
- Trade in the vehicle and roll the upside down portion into the next car.

I've proposed 3 options, but they are not all great ideas. Let's take a look at them individually - last to first.

Trade in the vehicle and roll the upside down portion into the next car
This option is what gets people in a vicious cycle of upside down vehicles. If you have a car that is upside down (owe more than the value) of $10,000 and you want to reduce that liability, you could go to a dealership, pick out that shiny new car with a $5,000 rebate and walk away with rolling in only $5,000 into the new loan. And the cycle begins. You drive off the lot, and your new car immediately loses some value. The debt to value ratio can take years to even out. In many cases, you'll end up in the same position you started in...wanting to get out of the upside down position. You could, however, trade in your car for a "beater" and lessen the blow. If you were upside down $5,000 and were able to roll 100% onto another car, then you could buy a $5,000 car, roll $5,000 into it, and then pay it off as quickly as you can with the money you save after the transaction. From what I understand, you will be hard pressed to find financing that will allow more than 100% rollover, so this may not be possible for you.

Finance the upside down portion and sell the car
Dave Ramsey is a proponent of this idea. If you can drum up the cash and pay the upside down payment, then you'll be in the position to sell the car to a private owner. Taking out a loan to pay on a loan is not optimal, but it would result in a lesser liability. If your car is valued at $20,000 on KBB.com selling to a private party, and you owe $30,000 on the car, it would be a wise to decision to take out a loan for $10,000 and sell the car for $20,000. This would leave you with a $10,000 liability instead of $30,000. Unfortunately, it's not as easy to sell car when you owe on it. A buyer would be taking a risk paying for something they won't be able to walk away with. The car most likely has to be paid for in full so that the title can be transferred...which could take weeks. Also, if you took out a loan for the upside down portion, the payments on that will begin immediately. If your car doesn't sell right away, you'll have 2 sets of payments to contend with. Not a great option.

Pay on the loan until the upside down portion is equal to the value
If you simply do nothing, there will be a point where the value of the car will level off and your loan amount will equal the value. This break even point varies on car and upside down amount. In my opinion, that point is usually 3 years on a 4 year loan, and 4 years on a 6 year loan.

Pay on the loan until the loan is paid in full
This is obviously the easiest thing to do. This may not be a grand idea, but since you made your bed, you have to lay in it. There may be circumstances that do not allow you to do the other items mentioned above. But doing nothing has it's advantages too. If you pay the loan in full and on time, you will then have a paid for car. It will then be a great one owner car where you know all the vehicle history. You can then hopefully keep it for another 5+ years, right? That's money in your pocket.

How We Used our Tax Return

noreply@blogger.com (Texas T) — Fri, 23 Apr 2010 19:10:00 +0000

2009 was a year that we paid our student loans every month. This along with the $800 tax credit, and claiming Married 0 on our W4 (with 2 kids) gave us a sizable tax return. $3600 to be more accurate. Over there collecting a little dust was a credit card with a $3600 balance, so it just made sense to pay if off. And that's exactly what we did. There was some hesitation before doing it, since there are many other things that could be done with it. Things like landscaping, car repairs, decor, etc. But we did it anyways. And once again, it feels SOOOO good to pay off a card with that kind of balance in one fail swoop. As Dave always says, "it's easy going back into debt!" Clear it off, reclaim the monthly payment, and then figure out how to stay out of debt further.

I know many people would say "change your W4, so you get more each paycheck", and I've asked myself this too. But that money would not be going towards debt each pay period, let me tell you! We do not have that strong of a will, so I will have to settle for this method for now.

I hope you all did the same debt-clearing method with your return!!

Excel Budget Spreadsheet - How to Budget

noreply@blogger.com (Texas T) — Thu, 18 Feb 2010 04:22:00 +0000

I realized yesterday that my 3-part series on how to budget didn't clearly provide a link to my budget template. It was buried at the bottom of the last post in the 3-part series. So please, if you're looking for way to budget and would like a template and instructions to work from, please download my budget, walk through the blog post series, and start plugging away!

Control Your Finances - Budget Step #1

noreply@blogger.com (Texas T) — Thu, 24 Dec 2009 05:11:00 +0000

Budgeting to me is more than a piece of paper that tells me how much money I should have if I follow it. Because we all know that a budget is nearly impossible to follow to a "T". We overspend in one category and underspend in another...make more or less money than expected. When I began budgeting many years ago, I had a budget spreadsheet and separately, I had Quicken. Things have evolved, and today, I designed my budget to be both a record of Estimates and a record of Actuals. Sort of a mix of both budget and Quicken. It is the one key tool among several record keeping tools that I use, that I can look at (at any given moment) and see in one place, the answer to the burning question that I always get asked, "How much money do we have left?".

Through a series of posts, I want to go through what I do during the month for my budgeting. I hope it opens your eyes to new ideas or give affirmation that what you are already doing is sane. What I do helps me keep a grip on how much money we have in the bank at the beginning and will have at the end a pay cycle...even before the pay cycle is over.

My flow of budgeting goes like this:
Budget Setup (Estimates)
Bank -> Quicken
Quicken -> Budget Update (Actuals)

First and foremost, you need to have a budget setup. One that is made up of realistic spending behaviors. Without it you will be in a constant struggle to keep up. Believe me, I know :)
In the next post, I will demonstrate how I setup a "master template" budget and how I use it as the starting block for each and every month.

Control Your Finances - Budget Step #3

noreply@blogger.com (Texas T) — Thu, 24 Dec 2009 05:08:00 +0000

In this post, I want to demonstrate how to combine your actual pay period data in with your budget data. In my world this action allows me to see how much I had when I got paid, how much money I have today, and how much money I can expect to have at the end of the pay period based on the current spending trend.

In the previous post, I showed how to setup a budget (Texas T style). Now that you have a "master template" budget month setup in a spreadsheet, copy it to a new sheet, so that you have your template on one tab and a new month on another tab.

Now for a little tricky part. In order to get your actual data (provided by Quicken, Money, etc) to interact with your budget data, you will need to insert some columns next to the current pay period. The way I built my spreadsheet was based on a Quicken report of category expenses. So for me, I needed 3 columns. It may be different for Money or other financial software. Here is how it should look and how the formulas work:

The next part will be geared for Quicken users, but the concept should be the same for other applications. In Quicken I generally reconcile with the bank once every few days. During the "bad days", it was daily. Now that the pay period is underway, I will have entries in Quicken for any purchases I've made with my debit card and any automatic payments made from my banks billpay service. From this, I setup a basic Income vs Expense report in Quicken for the pay period I am in:

Armed with my "actual" spending data, I click on the "copy report to clipboard" option in the top menu of the report. I switch over to my spreadsheet, and I paste (menu -> edit -> paste) the report under my "actual" column:

Now that you have your actual spending data in with your budget data, you can now begin the process of merging the two. This involves copying your categories and amounts from the Quicken report data and placing it up into the budget section:

Have you wondered what column K and column L are for in the picture above? Well, column K is the amount you have spent in that category as of today. Column L is the amount you have left to spend for that category. As you paste in your Quicken data, you will notice the "At EOP" (or end of pay period) amount goes down. That's because you've spent money in that category.

Also note that if you over spend in a category, the "At EOP" amount goes negative. You can't have a negative amount left to spend, so delete these amounts in column L. It will mess up your end numbers if you don't and make you think you have more money than you actually do!

What you are left with are 3 columns of data: Your budget data, Your "Right Now How Much Is In My Bank Account" data, and your "How Much Will Be In My Bank On The Last Day Of My Pay Period" data. It is very useful for me, because it shows me in one spot where I wanted to be, where I am, and where I will be if spending doesn't line up with my budget before the pay period comes to a close. I can do this exercise 7 days into the pay period and say "wow, I overspent my entertainment category money. I better cut back on grocery money before I go get them!"

I am placing the spreadsheet used in this example out for all to download download my budget. Feel free to use it and change it. Please give any constructive criticism :)

Control Your Finances - Budget Step #2

noreply@blogger.com (Texas T) — Thu, 24 Dec 2009 04:22:00 +0000

In this post, I will demonstrate how I setup a "master template" budget and how I use it as the starting block for each and every month.

The first thing I do when creating a budget is to start a spreadsheet similar to the below image. The way I like seeing my finances is in 2 ways: a month at a glance (in red), and a split view of what expenses need to occur in each pay period. In our case, we get paid bimonthly. The 2 views totals should always match, as it is simply 2 different ways at looking at the same data. Don't ask me why I chose mint chocolate chip colors...I think it was simply the most pleasing color on the screen :).

A few things that you will notice about my spreadsheet is that I have a section with income (with subtotal), a section for expenses (and subtotals), followed by a net of the 2 at the bottom. My expenses also are listed a certain way: I separate my fixed expenses from my variable expenses (placing fixed first), and then list them all from highest to lowest cost or order of importance. This is purely my preference, as it just became more pleasing to my eyes to see a descending order of dollar amounts.

With this budget template saved, you now have a "master template". The idea behind this, is to provide you with a starting point month after month. Without question, you know the "essentials" that need to be taken care of and when they will be taken care of. If there are any extra items (or one-offs), those belong in the month they occur in...not the "master template".

I generally create 2 months in advance from my template budget. More than this and things could get a little confusing. I say this because when you create this "master template" and begin creating months inheriting from the master template, you will begin to realize things change (i.e. new expense categories), and then you'll have to update the "master template" and all the months that inherit from it. It's much easier to stick with 1 or 2 months ahead of the game. Here is how the tabs in my spreadsheet look:

In the next post, I will go into details about how to combine data from your financial software with your budget.

Riding the Pay Period Wave...Managing Finances with a Budget

noreply@blogger.com (Texas T) — Thu, 24 Dec 2009 04:09:00 +0000

I've been doing budgets for many years now, and I can say very confidently that I'm still far from having "the best" budget process. But what started with pen and paper has now become a very efficient way of viewing my data. Now I know everyone has their own style and method, but I'd like to share with you how I do my budgets (from beginning to end), in hopes that I can contribute to your success. If you see a flaw in how I do it, please let me know, so that I can better my process.
So over the next few weeks, I will create a series of posts outlining how I run the home finances.

Thanks for reading, and stay tuned!

Second Income - The Spice of Life!

noreply@blogger.com (Texas T) — Tue, 17 Nov 2009 04:49:00 +0000

Not me...my wife. My wife recently started with a second source of income. She found a hobby that she really enjoys and actually wants it to be a business. Up front I told her to do as a hobby first, and a business second, so that she won't become pressured to sell.

It's been about 6 months now, and it's very fun to get the business up and running. Starting a business is relatively easy and cheap nowadays with the internet. She's got a website and I've been helping out with SEO and "getting the word out" (dropping word of mouth advertising on various forums). We put Google Analytics in her site, as well, which is a great way to see who visits your site, how often, and who left and came back.
So far it's been a great thing to see the business grow. I found a great article that put it all in perspective: My Wife Quit Her Job. Very cool to see how one couple broke the $100k mark in 1 year.

More to come, but all I wanted to say was that finding a second source of income is a great way to reduce debt, since income is your greatest wealth building tool. I too have my dreams of making money through a second income. I'm just glad that my wife found her niche. Nothing like a little motivator like that!

Alternative to Cable

noreply@blogger.com (Texas T) — Sun, 06 Sep 2009 01:15:00 +0000

A new season of House is coming upon us, and we are big fans. Last season, my wife was happy to buy each episode a day or two after it aired. But with this season being pumped bigger than the last, she has been twisting my arm (with her pinkies) to get cable back, and I "let her" get her way. No, I'm not a HUGE fan either, can't you tell?!

I'd be lying if I said I was completely ok with getting cable back. As much as I use to enjoy cable, I've enjoyed seeing our money stay with us more. My thought has been either get cable or have no cable. So, as I was doing my due diligence with the various providers looking for the best deal, the idea of an antenna came to mind. I've heard about them before but never fully investigated it. I always thought the old rabbit ears were a piece of crap. But I also knew technology has come a long way. I spent the better part of the other day acting on the curiousity I had. I went out and bought 3 HD antennas and finally found one that worked very well. Compared to paying for cable, this is the best thing since sliced bread!

There are a few things that you should do in preparation to buying an antenna that will save you the time I lost:

Use antennaweb.org to find out how far the nearest signal towers are from you, as well as, the direction an antenna should point. These two items will tell you if you need an outdoor antenna and/or a multidirectional antenna.
Research a few stores like Radio Shack or Walmart online to see if they offer an antenna like the one you need. Call them next to see if they have it in stock. I was surprised that both of these stores didn't have the one on their website.
Follow the antenna directions and have fun playing around with it.

Chances are, if you live more than 20 miles from the nearest tower, you'll be spending more time finding the right angle to get the most stations. Hopefully you'll get some good results. Mine were pretty good. We live 45 miles from the towers, but luckily they are all within 4 degrees of each other. We get at least 20 stations, including all the local channels that broadcast in HD. Pretty cool, I must say. Going from 6 months of no cable to having digital channels is a great alternative to cable. Needless to say, paying a one time cost of $50 for an HD antenna instead of a monthly reoccuring cost for cable makes me feel like a true wise man! And my wife is happy that she gets to watch House in HD (which fulfills the goal in the first place).

I would highly recommend giving it a try. You've got nothing to lose except the time invested in seeing if it works. I'm on the hunt for a DVR now, so that we can get most all of the benefits of "paid for" broadcasting.

What we do without Cable?

noreply@blogger.com (Texas T) — Sun, 16 Aug 2009 22:35:00 +0000

It's hard to believe it's been 6 months now living without cable in our life. It's been hard at times because we have a TV series we absolutely love: "House". But with change comes a change in thinking. My wife can wait a day or two after a new episode and download it for $2 on iTunes. Still much cheaper than having cable. My son continues to watch his morning cartoons, but now, it's internet TV. I like ToonJet, because it's continual commercial free vintage cartoons, like Tom and Jerry, Looney Tunes, and Woody the Woodpecker. Netflix, Hulu and Cartoon Network.com are a few others that he likes. One cool thing that we've done is hook the laptop up to the TV. Our flat screen has a PC input, so we can hook it up with a monitor cable. Many programs are already in high resolution, so most of the time, it's like watching regular TV.

I wouldn't say it's been the easiest thing in the world to stop cable "cold turkey". I'd be lying if I said I didn't wish for moments where I could just wind down in the evening with a little channel surfing. With only a computer dishing out entertainment, there is a little sharing that has to be worked out sometimes.

Overall, I would highly recommend trying it. You can always get cable back (and probably at a discount for new customers).

A Quality Gift with an Inexpensive Pricetag

noreply@blogger.com (Texas T) — Wed, 05 Aug 2009 16:54:00 +0000

I found a nice, fairly inexpensive gift that I thought virtually anyone could send or receive. I thought I'd share it for my readers:

http://simonandlucy.etsy.com

When I saw this, I thought it was a cool idea...build a necklace, bracelet, anklet, or even a key ring that "tells a story". Back when things were really tight, I use to make birthday cards with colored paper and crayons. My wife (then girlfriend) loved it more than a store bought card, since it "came from the heart". This idea is similar to that, in that you can tell the designer your story, and he/she can make polished pieces of metal with those memories stamped into them. It's very personal...and the cool part is that my wife relishes those times when people ask "what do those mean?". It opens up a whole new conversation and gives her a chance to tell her stories about her college soccer number, anniversary, and kids birthdays. The price seems about average for quality necklaces. The one I bought had pieces of brass, sterling silver, and copper. The personal touch is priceless, though, in my opinion.

Important Financial Considerations for Graduates

noreply@blogger.com (Texas T) — Wed, 22 Jul 2009 02:48:00 +0000

This is really geared towards anyone, but since college grads are abundent right now, I thought I'd gift this knowledge to them. As you embark on a lifetime of post graduate work, it is very probable that you will change jobs and/or careers several times. As you go through these changes, there are 2 things I found to be valuable knowledge:

Consider the Cost of Health Insurance
As an individual or as a family, the cost of health insurance can change dramatically when changing jobs. Premiums for larger companies are generally lower than smaller companies, as you are part of a larger group of people causing a "volume discount" for the company. With smaller companies, the risk of someone having a major health issue (if not already) causes premiums to be higher. I have made it a point to ask a potential employer what their premiums are, so that I know how much it'll affect my net pay. By this, I mean if I go out looking for a higher pay job that increases my salary by $5,000/year (or ~$312/month net), it could be a very real possibility that my health premiums could be $300/month higher because it was a smaller company (or a large company with bad health insurance!). If you don't ask the questions during the interview process, you'd be in another disappointing pay job after you got settle in and discovered this information when they handed out the HR paperwork during the new hire orientation, right?

Be Aware of the Pay Cycle
It took me several times to catch this one. When you're on a shoestring budget, knowing how much your take home pay will be matters a lot. Assume you change jobs and the pay unchanges. If you previously got paid twice a month (bimonthly) and switched to a job that pays every two weeks (biweekly), you're net pay each pay period will actually be less. Did you know that? Here's the math:

BiMonthly: 2x/month * 12 months = 24 pay periods
BiWeekly: 52 weeks per year / 2 = 26 pay periods

As you can see, there are 2 extra pay periods when get paid biweekly. That means your employer takes your salary and divides it by the number pay periods to get the amount per pay period. The disadvantage of this is that if you are on a tight budget, you'll need to be prepared to be paid less. The advantage is that since you already budget on a monthly basis, you expect there to be 2 paychecks per month. This creates 2 times per year where you'll have an extra check. Think about it and plan wisely what to do with those checks.

I hope you learned something today!

Extra-Ordinary Expenses - What a spending killer!

noreply@blogger.com (Texas T) — Sun, 28 Jun 2009 21:15:00 +0000

Back in 2008, I was tired of non-recurring items creeping into our life, so for 2009, I decided to setup a savings account for these expenses. Items like these included HOA dues, anniversary, birthdays, holiday groceries, holiday gifts, family trips, family visits, oil changes, spring landscaping, etc.

What I did was take a look at 2008 and setup a list of everything I knew that happens out of the ordinary. This list added up to ~$5,000 a year (or $416/month). It was easy to apply this to the budget each month, since we had the extra money, but what I'm finding is that even though it is nice to have the money there when we need it, it really cuts into our spending! :)

It's tough living on a streamline budget knowing there is over $400/month going into savings. Savings has never been our forte. And when the end of the pay period comes and it's tight, it's easy to see that money sitting in savings as a "over spending savings account".

It's worked out nicely, and we've stuck to keeping the money for those expenses. Have you ever gone back to see how much those expenses add up for you? You spend the money regardless, so you might as well somehow budget for them, you know?

Whose Tired of Car Commercials?

noreply@blogger.com (Texas T) — Sat, 09 May 2009 03:13:00 +0000

Since my money mindset change, car commercials are just so much more annoying nowadays. I have to laugh at their tactics:
"Come on in because this deal won't last!" or
"We'll pay off your trade, no matter how much you owe" or
"We're helping you in this credit crisis because we've just been approved to lend millions of dollars"
My long time favorite is how they throw out a payment like "$199/month!". I'm sure many people fall for it, but it just kills me knowing that there's no way they can guarantee it without looking at your credit worthiness. It's just a made up number based on someone with perfect credit with a car with no air conditioning, fm radio, and seat belts (hee,hee). What a ploy...

I understand the "make a buck" philosophy, because I too like to "make a buck", and I believe in a good capitalistic society. If I'm a stockholder of a car company, I want them to make a buck as much and as often as they can. And because of the shape the economy is in, I also understand that car dealerships need to put the full court press to keep those dollars coming in. I personally just find it annoying to hear the advertisements on my radio...anyone else too?

Living through a series of stupid car mistakes in my many years on this earth, I'd like to take a moment to offer up some suggestions and/or advice to those who read this and find themselves in the market to buy a car:
1) Buying a quality used vehicle is always better than buying new.
2) Line up the credit ahead of time. Don't waste hours sitting in the dealership. If the kinks are worked out ahead of time, you'll have a ton more buying power at the dealership. Even if there is an incentive to use their financing company, it just doesn't feel good being put in a vulnerable spot when spoken to by a person who's sole job is to tilt the tables in their favor. Walk in with the confidence of knowing you're ready to deal or walk away!
3) Don't look at the payment. Look at the loan and interest. If you can't afford to pay the car off in 4 years, don't get it. Over the years, car prices have gone up. Do you think their costs have gone up by the same amount? I would bet costs have gone down and profits have gotten higher. Higher car prices = higher payments. So, to keep Americans enticed into the debt trap, the terms have quietly gotten longer and longer. Who wants to make payments on a car for 6 years! I wonder what the percentage is of people who actually finish out a 6 year loan!
4) Once the deal is settled, walk away and "do the math": Take the payment and multiply it by the number of payments. Subtract the original loan amount from this number, and what you're left with is how much interest you'll be paying. If it's a "way out there" amount in your books, and if you can convince yourself that you'd rather pay a bank this amount instead of to yourself, get the car...it deserves you :)
5) Make yourself immune to the tactics of car dealerships. Assume their advertisment talks are statements of opinion (not fact), and remember it's just advertising...a way for a company to reach potential customers and take money out of their pockets :).

I speak from experience when I wrote those, can you tell? I've learned my lesson, and I'm done making someone else richer. Don't let your car be your #1 or #2 largest expense, like we have let ourselves for many, many, many, many (you get the idea) years.

Playing with a Cool Cost Cutting Tool

noreply@blogger.com (Texas T) — Sat, 09 May 2009 02:47:00 +0000

I like gadgets. Especially ones that help me lower my costs. A few years back, I stumbled upon the concept of "Phantom Load". Anyone ever heard of it? Well, did you know that any appliance in your house that has a remote, consumes electricity even when turned off? It's really in "standby" mode, because it has to be constantly ready to receive the "on" command from the remote. Being contanstly ready = electricity.

Just recently, I found this electricity meter called Kill-A-Watt for around $20 on Amazon. It's like having the electric meter on the side of your house, in the palm of your hand. It measures how much electricity a certain appliance is consuming. It keeps a running total over time, so I can determine how much money it's costing me over time. Considering how many appliances that use electricity even when they are not in use, it's been pretty neat to see how much money we've been throwing out the window. Even if I don't waste a significant amount of money, it's still very informational.

The biggest "phantom load" items that consume electricity is the home office. Not a whole heck of a lot to do about that, except turn the power strip off at night to eliminate any lingering phantom loads. The next big item is the entertainment center (hdtv, dvd, dvr, wii, computer speakers). Since we cut cable, we don't nearly use the entertainment center as much. So shutting off the power strip happens more often for longer periods of time.

Like I said, I don't think we'll be saving a ton of money by eliminating those items that consume electricity. But every little bit helps. If you think about it, a $150/month bill is only $5/day. If you can cut that down to $3/day, you'll save $60/month! Something that costs $.50/day to run costs $15/month! Plus, it just plain feels good to be in a little bit more control.

Random Thoughts on "Happiness"

noreply@blogger.com (Texas T) — Mon, 13 Apr 2009 04:10:00 +0000

Today I was going through a bit of a self dwelling period. There was something wrong, but I couldn't place what exactly was the problem. It all related to how I can be happy and what "happiness" is to me. Better yet, what do I need to do to acheive "happiness". The things that were weighing on my mind in recent days are the following:

Currently, we have no retirement savings...and I'm 35.
Family vacations are few and far between.
I dispise the feeling that I put my job ahead of my family some times.
Worrying about being a 50+ year old Web Developer. I don't know too many!
Feeling that there is never going to be a time that I'll be sufficiently skilled in Web Development. Technology changes all the time, and I can't see the time I'll be an expert in the field.

I never found the answer to my thoughts, but I had to wonder if people can truly find happiness in their lives. What defines happiness to you? Did happiness start with a passion? What actions/sacrafices did you have to take to acheive it? Was it some life changing experience that opened your eyes? What does it feel like?

I am not saying that I am unhappy or incapable of being happy. I enjoy my life as it is now. I have a great family and a loving wife. My job is going well, and I love what I do. I just wish I could take those simple enjoyments and be content with them. I'm always afraid something is going to come along just when things are finally going our way and "F" it all up. I know it stems from years of financial blunders and career mistakes. But now I want nothing more than to have an inner peace that will let me relax and take life as it comes and not worry about money or career. I once heard that if you find something you love doing, you'll never work a day in your life. I can only wish I had that passion.

We Cut the Cable

noreply@blogger.com (Texas T) — Sun, 12 Apr 2009 18:57:00 +0000

We've talked about it for months, but finally we took action. We've always had a modest cable package with DVR through Time Warner Cable, but the bill was usually within the range of $80-$90/month. Considering my son loves the Wii and Netflix, we didn't watch but probably 2 hours of tv a day. It just never seemed worth the money but was an item we felt was always necessary. If we could get a cheap package that included only House and Spongebob, we'd be set :).
So last week, we had the cable guy come and cut our cable access and remove the DVR. It was a lot less painful than I thought it would be, considering my son used tv as a "wakeup tool" each morning. I instead woke him up a little later, got him dressed right away, had my morning coffee with him while he ate breakfast, and then took him to school. Not having tv created extra bonding time, which can't be beat.
Cutting cable was also a move that we wanted to do to make us feel that we were trying to spend our hard earned money more wisely. If we can cut back on those things that are "luxury items", we might not complain so much about not having more discretionary income.
The one thing to always keep in mind is that cutting back doesn't mean doing without. As Dave Ramsey always said, "It's always easy to go back into debt. And what you're doing now obviously isn't working. Why not try it different for awhile.". Cable tv isn't a debt item, but it doesn't hurt to try doing without it for awhile. If we miss it, I'm sure Time Warner Cable will be happy to take our money again :)

Refinance Complete

noreply@blogger.com (Texas T) — Mon, 06 Apr 2009 05:09:00 +0000

We refinanced our house last week, and I must say, we are VERY pleased with the outcome. The overall outcome will be a reduction of loan term from a 30 year fixed rate conventional mortgage to a 15 year fixed rate FHA mortgage with only a $90/month increase! We locked in a rate of 5%...down from the 6.65% we started with a year ago.

We credit much of the easy to our mortgage broker (and accompaning title company). In a world where customer service doesn't account for much (but is the determining factor in many decisions), these folks did the job right:
Jennifer Smith: First National Bank, Denton, Tx (link)
Fon Laughlin: Laughlin Law & Title, Crossroads, Tx (link)

If anyone else is looking to refinance here in North Texas, I'd recommend these people. We are not AAA rated people, so don't think that it was so smooth to avoid any hickups :)