I’ve just spent the last couple of hours working on my taxes.  Because my wife and I recently made our first new home purchase, we will be receiving the first-time homebuyer tax credit.  Instead of e-filing our return as we have for the past several years, the credit necessitates that we print out and mail in this years return.  From the IRS First-Time Homebuyer Credit website -

Because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2009 tax return must file a paper — not electronic — return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit (see the instructions for help with the form), and a properly executed copy of a settlement statement used to complete the purchase…

Obviously, this means that our refund will take a bit longer to process than it has in the past – but the extra money is worth the wait!  Once we receive our refund (most of which will simply be the credit), we’ll deposit it into our savings account.  A portion will remain in savings, in cash-reserves.  Another portion will used to pay-down our mortgage principal, and a smaller portion will go towards some new furniture for our house.

I should be finished with my taxes by this evening – and I’ll print them out and mail them off in the morning.  I always make a couple of copies of the returns, to keep on file and in a safe location.  I’ll let you know how long the process takes and when the refund check arrives.

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Working On My Taxes

The following article is a guest post from Ben at Trees Full of Money. Ben has written a great series on his website sharing the personal details of how his family paid off over $90,000 of debt in less than two years.

When I started blogging about personal finance matters over two years ago, I knew I had to share the story of how my wife and I overcame $90,000 of consumer debt in less than two years. After all, the focus of my website was to help people get control of their finances and lead less stressful lives.

I had read many great debt free success stories myself and each one kept me motivated until we eventually achieved our goal of becoming debt free! Telling our story would allow me to “pay it forward”.

What I didn’t realize was how challenging it would be to write about our success. Several times I started our story, but each time I lost focus eventually hitting a road block. I wanted to “spill the beans” of exactly how we did it, but I was apprehensive about sharing such intimate details of my financial shortcomings with the world.

Fortunately, I got over myself and finished the series! What follows is a brief summary of the seven articles I wrote detailing exactly how we got into our financial mess and how we eventually dug ourselves out from it!

How We Accumulated $90,000 of Consumer Debt: As the title suggests, part #1 of the series details exactly how my wife and I were able to accumulate $90,000 of debt in only a few short years. From graduating college in 1999, to hitting our financial bottom by the end of 2003, this series explains every major financial decision we made leading up to our realization that we had to do something drastically different.

Starting Our Debt Snowball: My wife and I utilized the “debt snowball” technique for repaying our debt. Part #2 of the series explains how we cashed out some of our non-retirement savings to get our snowball started with a bang.

Starting a Family Budget: Part #3 of our story details how we tweaked our family budget and cut back expenses to maximize how much money we had available each month to pay off our debt.

Essential Debt Repayment Tools: In Part #4, I explain the debt snowball spreadsheet I created and how valuable it was in keeping me motivated. I discovered that if I sold my motorcycle and applied the proceeds to our debt, our debt free date would arrive months sooner! As a result, the motorcycle went bye bye!

Keeping Motivated to Repay Our Debt: With no more savings to cash out and no more personal property to sell, my wife and I had to focus hard on our “debt snowball payments” as we worked our way through a mountain of credit card debt. Part #5 of our story looks at how cutting expenses, sticking to our budget, and working tons of overtime, enabled us to pay off our credit card faster than we ever imagined!

Everybody Has a Car Payment. Right?: Part #6 explains why the debt snowball technique was the right debt repayment method for us and how we would probably “always” have a car payment if we hadn’t discovered the snowball concept.

Almost Debt Free, but We Get New House Fever!: Part #7 looks at how the “new house fever” nearly derailed the momentum we had built to become debt free! Fortunately, we came to our senses and paid off our two remaining debts (student loans) to complete our quest to become debt free!

Ben’s story is very inspiring and I’m glad he shared it with my readers.  If you have written about your own debt reduction success and would like to share, contact me and let me know.  Ben, you and your family, ROCK!

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Family Pays Off $90,000 Of Debt In Two Years!

In a few weeks, we will make our first mortgage payment.  Our mortgage is a fixed-rate 15 year mortgage.  Obviously, I’m not a fan of debt – and I’m going to work very, very hard to pay our mortgage off early.  Using a mortgage calculator I calculated the following the scenarios for paying the mortgage off early -

15 years and zero months = mortgage payment + $0 extra per month

12 years and 3 months = mortgage payment + $250 extra per month

9 years and 3 months = mortgage payment + $500 extra per month

7 years and 9 months = mortgage payment + $750 extra per month

6 years and 8 months = mortgage payment + $1000 extra per month

5 years and 10 months = mortgage payment + $1250 extra per month

Looking at our present financial situation, and keeping our retirement and education savings goals in mind, the $750 extra per month appears to be the most reasonable amount for which to shoot.

Here’s my current plan -

1.  I will make regular monthly mortgage payment each month.

2.  I will make an extra payment, each month, with a minimum goal of $750 extra per month.  Apply To Principal will be in the memo line of each check sent for extra payments.

3.  I will make additional extra payments, throughout the year, as I earn and / or save extra income, with a stretch goal of $1250 in total extra payments per month.

Hopefully, we’ll be able to turn our 15 year mortgage in to a (less than) 7 year mortgage.  Obviously, situations change, priorities shift, and life happens, but, as of today, this is our plan.

It’s been a long time since I typed this, so here goes – Debt Reduction Rocks!

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What Will It Take To Pay Off Our Mortgage Early?

I want to thank all of you for visiting No Credit Needed.  Once in a while, I like to encourage folks to subscribe to the site, via RSS or Email.  Once you do, you’ll have the very latest NCN content, delivered directly to your feed reader or email inbox, absolutely FREE.  Also, if you use Twitter, feel free to follow me and then say hello to me @NCN.  Now enough with the self-promotion – on to this week’s financial carnivals:

Len Penzo is hosting this week’s Carnival of Personal Finance

Simply Forties is hosting this week’s Festival of Frugality

Reduce Debt Faster is hosting this week’s Carnival of Debt Reduction

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Quick Reminder And This Week’s Carnivals

It’s been a full week and we are loving our new home.  We are still waiting for the new furniture for our living room to arrive, along with some bar stools for the kitchen, but other than those items, we are all settled.  (If you ever want to find out just how much stuff you have – move!  Whew.)

Obviously, now that we have a house payment, our goals and plans for 2010 have changed.  Instead of aggressively funding my retirement account, like I did for the past two years, we now plan to aggressively pay down our mortgage debt.  That being said, we still plan to save for retirement, kids’ college funds, and other long-term goals.  Here’s the breakdown -

Retirement Savings – 15% of household gross income

Education Savings – $2000 per child, for a total of $6000, per year

Cash Reserves - Increase from current 6 months worth of expenses to a full 12 months worth of expenses

Automobile Replacement Fund – $250 per month

Debt Reduction – Pay mortgage payments early and on time, with a goal of paying off 15 year mortgage in 7 years, or less

As first time home buyers, we will receive the first-time home buyer tax credit.  This money, once received, will be immediately deposited into our ING Direct Orange Savings Account. We dipped into our cash reserves in order to make a larger down payment, and I want to rebuild those reserves as soon as possible.

As for retirement savings, a portion of that will be in my 403(b), a portion will be in my wife’s pension plan, and the rest will be in our Roth IRAs.  For the next 5 to 7 years, my primary focus will be on paying off the mortgage, but I’ll also work hard to invest wisely and save for the future.

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The New House And New Goals For 2010

I cannot tell you how excited my wife and I are.  This afternoon, we are closing on the purchase of our new house!

For the past several years, we have lived in a house provided by my employer.  Recently, we decided that the time was right to buy a house of our own.  (Honestly, we have been looking for more than two years, but we really got serious about it this past fall.)

Early in January, we found “the perfect house” for our family.  After a few weeks of praying about it and crunching the numbers, we made an offer and it was accepted.  Going through the loan process was very interesting – and my experience should lead to some interesting articles in the near future.

Obviously, we’re no longer “debt-free”.  No, now we’re “debt-free, except for the house”.  But, we do have a plan!

We now have a 15 year fixed-rate mortgage, but we plan to pay it off in (less than) 7 years.  (In the back of my mind, I’m thinking “5 years”, but that might be REALLY stretching it.)  We’ll do so using the same techniques that we used five years ago to pay off our credit card and automobile debt.

To prepare for the purchase, I’ve been making a “mortgage payment” to myself, each month, for more than two years.  I wanted to be sure that we were financially ready to take on a mortgage – and I feel that we are.  In fact, our monthly payment will be slightly less than the monthly amount I’ve been saving.

Over the next few days, I’ll have a lot more to say about the new purchase, but I wanted to let you guys know what we’ve been up to – and why I’ve been away from the blog.  This is a big step for us – and one that we are extremely pleased to take.

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We Are Buying A House!

It’s interesting how time and a little perspective can teach us things.

When I started this site, I had just one goal – I wanted to get out of debt.

With that singular goal, managing my finances became pretty simple.  Not easy, but simple.

An emergency fund was funded.

A debt reduction plan was created.

Payments and extra-payments were made.

Debt was reduced – and eventually – I was debt free.

Now, nearly five years later, I’ve learned a lot about myself -

How I relate to money

Why I make the decisions that I make

What my strengths are – and my weaknesses

I’ve learned to relax and enjoy the progress that I’m making.

I’ve also learned that credit wasn’t my problem – ignorance was.  I just didn’t know, and had never taken the time to learn about, how to manage my finances.

I’ve also learned the value of owning less.  Space is precious – and too much stuff just fills up my space.

I’ve learned that generosity is its very own reward.  It truly is better to give than to receive.

I’ve also learned that there is no end to the complexities of money management.  Just when I think I have the perfect plan – I learn of some new type of investment, some new rule in the tax law, or some new insurance need.  I am so thankful for my fellow bloggers, friends who keep me up-to-date with the very latest from the world of personal finance.

I’ve learned that one-size-fits-all solutions are actually one-size-fits-no-one.  My task, as the manager of Me Inc., is to create a solution that fits me – that works for me – and that will provide the best plan for my financial life.

Finally, I’ve learned that there are times, those important seasons in my life, when I will make big, huge, life altering financial decisions – and I need to dedicate myself to being prepared for those times.  Looking back over the past five years, I am greatly encouraged, and excited about the prospects for the future.

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Space

After two weeks of very cold weather (for us), the temperatures have returned to “normal”.  It’s in the mid-50’s and perfect weather for doing a little yard work.

Back in April, I purchased a lawn mower.  I really, really like my lawn mower, and since it has mulching blades, I use it to mulch pine straw and leaves in the yard.  Unfortunately, when I opened my shed this morning, the left-rear tire of the lawn mower was flat.

I pumped the tire back up and pored some soapy water on it.  Noting the area where the soapy water “bubbled-up”, I located a small nail that was causing the tire to leak.  I removed the nail with a pair of pliers and then repaired the leak with a  simple tire plug.  The tire is holding pressure – and for less than 5 bucks (the cost of the tire plug repair kit) – it’s ready for some mowing.

While I was at it, I checked the owners manual, to see when the next oil change was scheduled.  Since I had the time – and the weather is so nice – I went ahead and changed the mower’s oil, a couple of hours ahead of schedule.

I also checked the air filter and inspected all of the mower’s nuts and bolts.  We had a relatively dry summer, so the mower didn’t get a lot of use.  I used it a couple of times in the fall, to mulch up leaves, and I’ll use it later today, just to give the engine some time to run and clean up the few leaves that are in the front yard.

Oh, I almost forgot.  I also had to put a charge on the battery.  Several years ago, I got a battery charger for Christmas.  It’s one of my all-time-favorite received-gifts.  I use it for the lawn mower – or my old truck – when their batteries need a boost.

One final note – I was able to quickly locate the owner’s manual for the mower because I keep all of my manuals in my handy-dandy Owners Manuals Binder.  Click to read how this idea can help you keep track of all of your owners manuals.

If we are going to save money – the money that we’ve worked so hard to make – it’s important to take care of the things that we buy.  It pays to spend a little more time (and a little more money) to keep something running, rather than a whole lot of time (and whole lot of money) trying to replace it.

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Lawn Mower Maintenance

I have a few questions for you guys, my awesome readers.  First, a little information.

My wife and I have a couple of couches.  Structurally, they’re both in great shape.  However, one of them has some damaged fabric on its arms, and the other has been faded by the sunshine.  We’d love to keep the couches – they’re both very comfortable – so there’s no real (non-cosmetic) reason to get rid of them.  At this point, we’re thinking about buying some slipcovers for the couches.  (We don’t sew, so we’ll have to purchase the slipcovers.)

Now, the questions.

1.  Have you ever used a slipcover to improve the look of an old couch or loveseat?

2.  If so, how did it look?  In other words, did you find a slipcover that didn’t “look” like a slipcover?

3.  What type of slipcover did you buy and approximately how much did it cost?

Feel free to leave your comments section.  If you have a site where you ordered your slipcover, feel free to leave the link.  If, for some reason, the spam filter blocks your comment, please contact me and let me know.  Alternatively, you can head over to Twitter and @NCN with your input.  Thanks so much, in advance!

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Reader Feedback Request – Alternative To New Couches

I love Holmes on Homes.  If you haven’t seen the show, you really should check it out.  Originally produced for Canadian television, episodes now air on HGTV.  The show stars general contractor and renovation specialist Mike Holmes and his crew of workers.

Holmes on Homes features families who have had unsatisfactory work done to their homes.  Mike and his crew come in, assess the situation – and fix any problems.  Along the way, Mike explains how each problem was caused, how each one could have been prevented, and what he’s doing to repair them.

When the Holmes on Homes crew is finished with a house – the job looks amazing.  Seriously, it’s a great show and if you like home improvement shows in general, you’ll really dig Holmes on Homes.

Like Mike, I’m in the remodeling business.  However, I’m not remodeling houses, I’m remodeling my finances.  Here are my remodeling principles -

1.  Start with an honest assessment of current situation.

2.  Recognize that a temporary fix is just that – temporary.

3.  Rip away the external and get to the heart of all problem areas.

4.  Return to the basics and focus on a good foundation.

5.  Do the hard work in the beginning – and continue with it until each task is completed.

6.  Make sure each layer of subsequent work ties in to the work that came before it.

7.  Stop making excuses and do the work.

8.  The true cost of any decision cannot be measured simply in dollars, but must also take in to account time.

9.  There is little value in appearance if it is only camouflaging structural damage.

10.  A job, well done, truly is its own reward.

My favorite part of the show, strangely enough, is the very beginning.  I like to hear Mike describe the cause of each and every problem.  Knowing a little about carpentry myself, I am always fascinated by what Mike finds – and the detailed methods he uses to repair the mistakes.

Remolding my finances works in much the same way.  I start with a current problem, need, or want.  Then, I drill down, dissecting my budget, my income, and my current situation.  Over time, a plan takes shape – and I can begin to implement the changes necessary to fix the problem, provide for the need, or satisfy the want.

I have no affiliation with Holmes on Homes – I just really dig the show.

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Principles Reinforced By Favorite Television Show – Holmes On Homes