In the last year or so, I’ve become a fan of Dave Ramsey and his 7 baby steps. We’ve started the debt snowball, but I can’t seem to agree to putting $1000 in an emergency fund while I could be using it to pay down debt that is actively accruing interest a higher interest rate.

As I mentioned in my goals for 2008, I’ve been able to put together $1000 before in a savings account, but I ALWAYS get ants in my pants about paying off my debt. If I have $489 left on a 9% credit card, wouldn’t it make sense to pay it off with money from a 1.8% savings account? I can’t escape this thought, and it’s preventing me from saving the $1000.

I mean, if I’m really supposed to be saving 3-6 month worth of expenses for my emergency fund (which I totally agree with, and plan to do), what good is $1000 going to do? Say I have $1000 in my emergency fund and I need my car fixed for $1400? Where am I going to get the extra $400? Probably a credit card. So what’s the point if I have to use my credit card anyway?

I thought that paying down higher interest debt trumps saving.

I understand that his point is to limit or remove the dependency on credit cards, but isn’t it better to continue “playing the odds” and get gazelle-intense and put all extra available cash toward debt? I think so.Some will say that this mentality is what got me into debt in the first place, but I disagree. I understand that it’s my behavior and my past attitude that credit is like free money that has gotten me here.

I guess I’m just struggling with the math of it and every ounce of me wants to put every cent I can toward my debt.

Interestingly enough, looking back at my post for my goals for 2008, I noticed that I put it 2nd, behind paying off all my debt. I guess my goals don’t exactly align with Dave right now, like fully funding my Roth IRA before I save the 3-6 months in my emergency fund. I’ll have to look at that one again, but for now I feel comfortable with them.

Right now, facing credit card bills, I’d rather use my credit card as an emergency fund than have $1000 sitting around doing nothing for me.

Please don’t shoot me DR fans! I’m a fan too, and this is really the only beef I have with him.

photo by Arkansas ShutterBug

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As I’ve mentioned in previous posts, I just completed a home improvement project that resulted in a pretty significant balance on my Home Equity Line of Credit. One of the expenditures that I didn’t put on my HELOC was for a brand new garage door and the installation labor to do it. For this, I used an 12 month interest free loan from Home Depot.

Ok, in reality it was just a special offer that they ran on their Home Depot consumer credit card. But I’ll take an interest free loan any day, especially from my toy store.

Thankfully, this month I PAID IT OFF. And not a moment too soon, since the promotional period ends on Jan 1, 2008, and would have been responsible for about $400 in accrued interest. Here’s the image that I’ve been waiting to see for a long time, noting the “-” under accrued finance charges:

I didn’t start attacking this debt until September of this year, because I was busy snowballing some other debt. (which is now thankfully gone as well) Using Dave Ramsey’s debt snowball method, and the attacking debt method that NCN used, I was able to pay off a bill from an electrician, a dumpster company, and a medical bill, and roll all those minimum payments into this Home Depot bill.

Here’s all of my “snowball” payments right from my online account at Home Depot:

You’ll see that I was able to get 1 big payment in at the beginning and then put every spare penny I had into other payments, ala Paid Twice’s snowflaking method.

Needless to say, I’m thrilled that this is gone! And onward goes the steamrollin’ snowball! Next up is the dreaded Chase credit card.

photo by Neubie

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In spite of my efforts to stop making dumb financial mistakes, I occasionally pull off a big one, like I did last week. This is a classic case of failure to communicate with your spouse. Or more accurately, failure to remember the communication.

I am generally the one that manages the finances, and am responsible for entering our transactions into Quicken on a daily basis. Were pretty good at communicating about what we can spend and my wife usually leaves the receipts for her stuff on the desk so I can do the Quicken thing.

We rarely use checks, but when we do, she usually tells me the check number and amount. Well, this week revealed some weaknesses in our communication plan. She wrote a check, told me about it, I forgot about it, the place cashed it the day before my direct deposit went in, and we overdrafted. Big time.

Here’s the 4 transactions:

As you can see, it was a check that caused 3 subsequent pending transactions to overdraft my account when they cleared. As a result, the fees came flying in the next day for all 4 transactions:

We use Bank of America as our primary checking account, and I’m very happy with the service, and the online interface for bill pay. but when I called to plead for mercy, they wouldn’t budge too much, saying this is the second time I’ve overdrafted in a year, hence no mercy. I can’t recall the first one (another memory failure perhaps?), but they were nice about it and refunded $20 of it anyway.

The result?

$120 in overdraft fees, including a $20 refund for a prior offense resulting in:

• a $41.72 bottle of shampoo from Walmart, originally $6.72
• a $40.12 chicken sandwich combo from Wendy’s, originally $5.12
• a $38.21 happy meal from McDonald’s, originally $3.21
• paying $130 for some groceries that should have been $115

The Plan?

1. My saving account is linked to my checking account so my plan is to build it up to $1000 and use it as my overdraft account, in case this happens again. I’ve already set up a automatic transfer to my saving account every week so this should happen without me having to think about it.
2. Have my wife write down on a piece of paper, the checks she’s written, so I can’t miss it.

Depressing? Yes. With this mistake, I think I’ve easily wiped out more than 2 years worth of interest that I earned from all my savings accounts. I’m trying not to dwell on it too much, but that money was slated for Christmas presents, and it hurts.

Photo by Wellzee

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When I knew I want to start a personal finance blog, everything I read said I needed to get a .com. Among others articles such as Free Money Finance’s blog said I needed one. Well, easier said than done. I suppose there are good .com’s available if you’re creative, but I’m not so much.

Why godsgreenearth ?

The name godsgreenearth came to me in the shower(sorry for any visuals), and usually something that comes to my mind in the shower I pay special attention to. Take it as you may, but it’s true. I knew I wanted to use it because it has multiple meanings: God, money, earth(I love nature), and godsgreenearth is a used in a phrase that commonly exresses surprise as in “What on God’s green earth…”. All these things are things I wanted to talk about in my blog, so I settled on it. I assumed that the .com was already taken, which it was, so the task was to find an acceptable alternative.

.info? .name? They didn’t seem quite right for a blog - godsgreenearth isn’t a name, nor is it a wiki.

What’s .ws?

I’ve read a lot about it and basically it’s a country code top level domain (ccTLD) that comes from the country extension for Western Samoa, which owns the .ws top level domain. Some forum posters seem to think it has an association with the terms “wireless” or “warez stuff”, but the overwhelming majority think it stands for “web site”. I’ve also read that Western Samoa was promoting it’s use as an ideal TLD and also was promoting it as “web site”.

Without finding any show stoppers about the .ws domain, I settled on it.

What’s the downside to using a .ws?

Well, it’s not a .com. But I don’t plan on spreading my website by word of mouth, so I doubt people will be going to the .com version of godsgreenearth to find me. (There’s nothing there at godsgreenearth[dot]com by the way, maybe I should make an offer!)

I figured that all my traffic will come from links on other PF blogs and forums, so I figure a .ws domain clicks the same as a .com!

I read on some forum that Google doesn’t like to index pages from .ws sites. To me, this makes no sense, and can’t be true, because I can see that Google has indexed every page I’ve written so far (site:http://godsgreenearth.ws)

I also read that you can’t transfer a .ws domain to another registrar, butthat should be an issue.

Other than just being different, I see no downside to using a .ws domain. But I guess we’ll see as I develop the blog. I’m actually starting to like it. It’s short and sweet and I think it’ll catch on someday as an alternative to the big TLDs.

Overall, my primary goal was not to have huge amounts of traffic, it was to have a place, a method, an accountability device to help me get out of debt and be financially free. And that will remain my goal. If a .ws domain extension limits my traffic in some weird way, so be it.

I’m new to this - so I’m open to any suggestions and please point out any goofy things you see on my website, except my .ws extension. He He.

Image by labnol

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Consumer Reports magazine recently had an article on 10 ways to reduce your energy costs around your home and it reminded me of my recent upgrade to my central heat and air conditioning system. Since I’m kind of a cheapskate, and I like to do home improvement projects, I figured I’d combine the two facets of my personality and try to get a deal on a new Heating/AC system.

The old system was installed in 1983 and was a 8 SEER (Seasonal Energy Efficiency Rating) which, by today’s standards is pretty inefficient. I would have started shopping sooner, but rumors that new AC systems run around $5000 to $7000 scared me into sticking with my current one. My electric bill was high and the unit had to be repaired 3 times in the previous six months, so I figured it was the right time to start shopping around.

I’m a member of Angie’s List, which is a highly regard compilation of competent contractors and service providers, and got some estimates for new systems, both inside (air handler) and outside (condenser/compressor) units. Sure enough, they all ranged from $4800-$7000. That was a no-go for me.

On a lark I looked on eBay to see if they sold such things there. Low and behold. there were tons of sellers for heat pumps and AC units, especiallyfor the southern US. To my happiness, most combo units (inside and outside) for the size I need were around $2300.

A listing just like this caught my eye:

And to my surprise, they were local and I could save another $150 in shipping by picking it up with my trusty trailer.

I went ahead and used Buy It Now and a few days later drove over to pick it up. This was a complete hassle and I’d never do it again. They were extremely unorganized and didn’t have it ready even though I’d called them a day ahead of time to schedule the pickup.

My guess it that their operation is streamlined for shipping, so when a guy like me comes along with his trailer and wants to pick his order up, it completely throws them for a loop. I ended up spending almost 3 hours there waiting for them to get their act together and get the stuff on my trailer. Avoiding that mess would certainly be worth $150.

They also recommended an installer, who came 2 days later and did a great job removing my old systems and installing the new one.

The total price was as follows:

Both Units with tax:…………………… $2130
Misc piping and electrical parts:…. $ 180
Installation Labor Cost: …………….. $1000
—————————————–
Total:…………………………………………. $3310

By doing a little research and investing a little time, I was able to save around $2000!

Next money saving home improvement project….a tankless water heater.

photo by Jan Tik

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Ok, I know all us worker bees in the corporate world have run into this before, or perhaps regularly, like me. Your friends at the office seem to think that they have a better chance at winning the Lottery, or the Florida Lotto, in my case, if we pool our resources and all chip in to buy a bunch of tickets.

Here’s some quick statistics from plainmath.net and other sources on winning the lottery, as well as some interesting facts:

• The chance of winning the jackpot is 1 in 22,957,480 or the percentage equivalent of .000004%
• The chance of being hit by lightning is 1 in 2,650,000.
• The chance of dying from a flesh eating bacteria is 1 in 1,000,000.
• The chance of dying from a snake bite or bee sting is 1 in 100,000.
• The chance of being hit by an asteroid in 2029 is 1 in 40.

Ok, you get the point.

But, what do I do? Occasionally, I get the courage to say no, but most of the time, I chip in. Why? Despite the stunning logic proving that I’m wasting my money, they are my friends, and the brief sense of camaraderie is worth $5/month to me.

So if I didn’t play the lotto in the office pool and saved my $5 a month, where would it get me? The following shows how much I’d make if I put the $60 in an investment earning an 8% return:

I know it’s not that practical, but getting almost $3000 investing $5/month isn’t too shabby. The total out of pocket for the 20 years is $1200.

I think i’d pay $3K for 20 years worth of some goodwill in the office, regardless of the lotto math. Would you?

photo by wetwebwork

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Since starting this blog, I’ve been thinking alot about goal-setting and the importance of focusing on smaller, more attainable goals. I’ve also been greatly inspired by J.D.’s articles at Get Rich Slowly. This one on goals really inspired me. No Credit Needed also has a great article on his 2008 goals, which also inspired me to get very specific with mine. I think it’s very important to have the “$1 million by age 55″ - type goals, but if they’re not broken down into much smaller chunks, then I think people (ok, me) are much less likely to achieve them.

So, I’ll start my long term goal by setting yearly goals, and maybe I’ll break them down even further, I’m not sure yet. So for 2008, here are my financial goals:

1. Pay off all my consumer debt. This includes my credit cards, medical bills and my 1 car loan, for a total of $23,587. I’ve outlined all this debt in my November Financial Status Update.
2. Get $1000 into an emergency fund and leave it there. I’ve built up an emergency fund before, but I couldn’t resist dipping into it to pay off a bill. I get anxious like that - I can’t see the sense in having money laying around when I can use it to pay off a debt that is costing me interest every month. I will take this issue up in another post, as it’s one beef I have with Dave Ramsey’s baby steps.
3. Fully fund my Roth IRA. I know the ideal is to have 3-6 months worth of living expenses in an emergency fund, before contributing for retirement, but I feel contributing toward retirement is more important right now. I plan on the saving the 3-6 months after I fully fund both our Roth’s. This may be a gamble on my part, but I don’t think I can afford to waste any more time to start really putting money toward retirement.

   I have up until April 15th to contribute to this year’s Roth limit, ($4000) so I think I’ll do that first and contribute all I can. After April 15th, I’ll start adding to my next year’s limit, ($5000 for 2008). I really would like to open a Roth IRA for my wife, but that’s probably for next year, or if I get lucky and fully fund mine before the end of this year.

That’s it. Ambitious enough I think, and yet I’m trying to make them as uncomplicated as possible. The complicated part will come, I’m sure, in coming up with the money and avoiding impulse buys, and unexpected expenses.

So my total debt payment goal this year is $23,587, which breaks down to $1965 per month in payments. I’ll get an early boost from a tax return which should be about $3000, so taking that off my total, I’ll be looking at $1715 per month toward my debt repayment goal.

My emergency fund goal should be relatively easy. I’ve already set up an automatic transfer to my Bank of America Savings account at $40/week, (I get paid weekly and this amount seems reasonable to me right now) So I should have that in place by May.

To fully fund my Roth IRA, I’ll need about $416/month ($5000/12). Starting in January, I’ll start an automatic transfer to my Fidelity account at $105 per week.

So my total monthly outlay to meet my goals for 2008 will be around $2295 per month. Seems very substantial, but the majority of this money is for consumer debt! If I didn’t have this big chunk of debt, and only had my Roth IRA and emergency fund goals, I’d only be putting out $500 per month to meet them. And I could easily be putting lots of extra money toward my wife’s Roth, or paying off my mortgage.

So there’s my plan and I’m ready to take it on. I’ll be posting periodic updates to track my progress.

photo by Frank Jakobi

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As I’ve described before, I’m not a huge fan of credit cards and I’ve gotten into pretty big trouble when I used it like monopoly money in my stupid days. However, just this week, I’ve run into a situation where I wish I (actually my wife in this case) had used a credit card.

My wife and I are doing most of our Christmas shopping online this year, so in keeping with our general policy of paying for things in cash or with a debit card, she bought something for me at Best Buy’s website with our debit card. I still don’t know what it is, and I probably never will.

After buying it from the website and getting a confirmation email, my wife elected to pick it up at the local store the following Monday, which was an option at checkout. It was all good until…

Day1, Day2. It took Best Buy 2 days to send an email informing us that the item was not available to be picked up, and gave us the option to cancel the order.

This is the part that bugs me about debit cards –> they have a pending charge on my account since the moment my wife hit submit on the Best Buy’s website. This, of course makes the money unavailable.

Day 3. Of course, by the time we called to see if we couple pick it up at another store in the area, their customer service department was closed for the day.

I’m still ok with this being the 3rd day with the pending charge, because we had budgeted for Christmas presents and were prepared to commit to the purchase and be without the money for good.

Day 4. My wife finally connects with BB customer service and figures out that she can’t get the item in any local store and the shipping time would be too long, so she cancels the order. BB informs her that they will refund the money to our debit card.

However, BB informed her that it may take up to 8 days to clear our account.

Day 5. Here I sit, still with a pending charge on my account, tying up my hard earned cash, and now I won’t have access to it for up to 8 more days?

It’s a good thing it was only around $85. What if my wife had gotten me a nice $1200 laptop? or a $2000 LCD tv? Best Buy would have managed to withhold that money for a total of 12 days, without me being able to do anything about it.

While the Best Buy’s refund time seems a little excessive, the bigger problem is that it ties up my real money. If she had used a credit card, it’d be no big deal, because I can live with a portion of my credit line being withheld for up to 2 weeks.

I’m now rethinking my general debit-card policy for everyday and online use. I think from now on, it will be credit cards for online purchases and “major” (maybe over $100?) purchases at local stores, or any situation where I don’t want to tie up my “real money” for something that my not work out.

UPDATE: Day6. The refund from Best Buy finally cleared my checking account.

photo by KlipschFan

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I’ve had my Chase credit card for about 9 years, and they’ve always been fair to deal with, even helpful sometimes. So what they did to me recently took me completely by surprise. Feeling like I was singled out, I was glad to read recently over at Consumerist about other people having issues with Chase. as well as Gather Little by Little’s issues with Chase

I’m not a big fan of credit cards and try to use them as little as possible, but occasionally a free 30 day loan comes in handy. My history with Chase goes back almost 10 years, and over that time, I’ve sometimes carried a balance and had to pay interest, but most of the time I was able to pay it off in full every month, and I’ve never been late on a single payment with them.

With my recent home improvement project, I was forced to use a credit card. The subcontractor I hired to do the framing on my new addition needed me to put a credit card on file with the lumber company, so he could go pick up materials when he needed them. I obliged, because he came highly recommended, and he was diligent in showing me the receipts and the material every time he had to make a purchase.

Soon enough the balance on my Chase card was about $6000, all lumber and material costs. I didn’t pay it off with my home equity line, because I needed to keep that free for remaining project expenses. Sure enough, I needed use my HELOC money for a new concrete driveway and electrician bills, so my Chase card balance remained, and I started to go about diligently paying it off.

I opened up my Chase statement recently, and noticed that my minimum payment was twice what it normally is. Looking over the statement, I quickly found out why: my interest rate had skyrocketed to 21%. I quickly got them on the phone for an explanation.

“Sir, we sent you a notification letter last month warning you of this change in terms.” Okay, I’ll admit, they probably did. I get junk mail from Chase all the time about account protection, travel rewards and other such nonsense that I promptly chuck. I most certainly gave this nondescript letter the same kind of treatment.

“You have two choices, you can close the account and we’ll set your rate back to 9%, or you can keep it open and pay the 21%.” It didn’t take me long to realize that keeping it open would cost me approximately$100 more per month, so I closed it.

I still don’t know why they pulled this on me.

• Did they check my credit at notice that I had almost maxed out my home equity line of credit? and thus deemed me a credit risk?
• I recently changed employers, could they have found out included that as a factor?

Maybe I should have called and said I never received notification, as the Consumerist counseled this reader. Maybe I can still do it, I don’t know.

Either way, after I pay the card off (it’s next on my snowball list) I’ll never do business with Chase again.

photo by Maulleigh

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