I’ve always resisted fully automating our finances.  Recently, however, I’ve had a change of heart.  Now, not only are most of our monthly bills paid online, but I’ve also automated deposits for savings, and payments towards our mortgage.

We have a power bill, a telephone bill, a satellite bill, and a cellphone bill.  Each of these is delivered electronically, via email.  The only “paper” bill that we receive is the one from our local water department.  With online and instant access to our accounts, it’s extremely easy to pay bills, check current balances, and keep things organized.  As the bills arrive in my inbox, I look them over, make sure that everything looks to be in order, and make payments via online bill pay.

Our bank allows us to not only pay bills via bill pay, but to receive them as well.  I recently used this service to automate the payment of our various automobile and life insurance payments.  Using this e-bill service, I never have to worry about stamps, envelopes, late fees, or due dates.  The bill arrives and it gets paid.  I also have the option to delay payment for a few days, so that I can review a particular invoice or bill.

I’ve even automated, through the bank’s bill pay feature, weekly payments for various services, like child care and kids’ gymnastics.  The checks are mailed directly and I never have to worry about remembering the checkbook.

Our cash reserves, somewhat depleted by the recent home purchase, are being rebuilt, one automated weekly deposit at a time.  Each week, a fixed amount is withdrawn from our primary checking and deposited, automatically, into our online savings account.  This “set it – and forget it” system really is a great way to rebuild savings.

The payments and deposits are all controlled by me, via online banking.  In other words, I haven’t given “pull” authority to any of the companies with which I do business.  My payments aren’t automatically deducted – but they are automatically sent.  I can cancel them, review them, or change them, any time I want.  I am in control.

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Automated And It Feels So Good

Have you gotten to the point where you are “over” spending – as in -you just don’t feel like buying “stuff” anymore?

There was a time when I wanted “stuff” – a nicer car, a bigger television, a newer computer, but now I’m “over” that stage in my life.  Seriously.  I just want to enjoy the “stuff” I already have, hang out with my family, and live life.

It’s funny how, over-time, our priorities change.  Even with our new home, we bought a few things – some new furniture for the den and some decorative items for around the house – but we didn’t go crazy.  In fact, one of our goals was to minimize the clutter.  We sold, gave away, or disposed of anything that didn’t fit with our new less-is-more approach to living, and we are really enjoying the outcome.

I get the feeling that a lot of people – perhaps due to the recent recession or perhaps due to the over-commercialization of our culture – have simply decided that they have “enough” and that their priorities have changed.  My fellow blogger Clever Dude, in a recent article titled “I’m Tired Of Buying And Spending” writes -

…it’s not that I don’t want “stuff”, but when I begin to consider actually buying something I desire or even need, a feeling just washes over me and I lose the urge. I can’t even explain the feeling other than “ugh”…

I can very much identify with Clever Dude.  What was once a very strong impulse – the desire to buy – has gone away, and been replaced with an anti-impulse – the desire to not-deal-with-the-hassle-of-buying.  Does that make sense?  I just no longer have the desire to go out and spend money, even on things that I like.

There is one caveat.  I still enjoy spending money – on others.  I like to buy nice things for my wife, my kids, and friends.  Christmas, as I’ve mentioned before, is my favorite day of the year.  It’s also fun to buy things for our home, things that my wife, the kids, and I can all use.

I would love to chalk this new “frugality” up to maturity – and that might be a small part of it – but most of it, to be honest, is just apathy.  I don’t really want / need / like / “stuff” anymore.  Whatever it was that once drove me to own the newest, the latest, and the greatest – it’s just gone.

What about you?  Have you gotten to the point where you are “over” spending?  I’d love to read your thoughts in the comments below.

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Are You “Over” Spending?

My wife and recently purchased our first home.  Here is my plan to pay off our 15 year mortgage in 10 years – or less!

Opening Fire – We will us online bill pay to make our regular, monthly mortgage payments.  I have already scheduled for our monthly payment to be sent from our bank to our mortgage company on the 15th of each month, the day after I receive my monthly paycheck.  The mortgage account number is listed in the memo section of each payment check.  Even is we do nothing else, we can be confident that our monthly payment will be made early, and on-time.

Steady Assault – I have scheduled an additional monthly payment, designed to reduce mortgage principal, to be sent on the 20th of each month.  I included the 5 day buffer, just to keep things nice-and-neat.  This additional payment is above-and-beyond the regular monthly mortgage payment and is a fixed monthly-amount.

Sniper Attack – I am a big fan of micro-payments – those small, irregular payments that can be made throughout the month.  Just as I did when I was reducing my consumer and credit card debt, I plan to use micro-payments, this time to reduce my mortgage principal.  Throughout the month, if I see that I am spending less in a particular budget category than I had originally planned, I will use this leftover money to make a micro-payment.  The first types of payments, the regularly scheduled monthly payment and the regularly scheduled extra payment, are hands-off.  Once they’re set, they pretty much work on their own.  These micro-payments, however, keep my head-in-the-game and really create a sense of accomplishment.

Secret Weapon - I make a little money from my blogging activities.  Over the past few years, this money has gone towards “extras” for around the house.  From now on, any money earned from blogging (or other side jobs) will go directly towards mortgage principal reduction.  The more I make from blogging – the faster we own our home!

There you have it – our plan of attack!  We are super-excited about our new house and ready to start paying it off.  With three kids and modest income, it’s not going to be easy, but we are determined and we have a plan.  Rock on!

Image by - Danny Fowler

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The Plan Of Attack – How I Plan To Pay Off My Mortgage Early

We’re all looking for ways – big and small – to save a few bucks.

Here are 10 (relatively) painless ways to save 10 dollars (or more) each month!

1.  Eliminate premium cable / satellite channels – or just select a lower-tier channels package.  With my current satellite provider, we moved down from 250 channels to 150 channels, barely noticed the difference, and saved $10 per month.

2.  Reduce the number of paper towels and paper napkins that you use (and purchase).  With a family of 5, it’s pretty easy for us to go through a roll of paper towels rather quickly.  For tasks that don’t specifically call for paper towels, we now use a trusty dish towel.  Works just as well – and can be washed and reused.

3.  Install a power-strip (or two or three) for your entertainment center devices.  We have a satellite receiver, a DVD player, a surround-sound system, and a video game console in our living room.  These items are “on” even when they are “off”, so I attached all of them to a surge protector / power-strip.  Now, when we leave the house or we’re not using the entertainment center, I flip the power-strip off – and save some cash.  According to the Department of Energy, up to 75% of the energy used by such devices is used when the devices are (technically) “turned off”, but are still using phantom power.  Anecdotal evidence, meaning I’ve looked over recent power bills, suggest that we are saving between $15 and $30 a month, because we are both using the power strips AND we are more conscientious of our overall energy usage.

4.  Consolidate trips to and around town.  For us, a round-trip to the nearest shopping center is roughly 30 miles.  Combine that with actual driving in town, an average trip to the grocery store and gas station might total 40 or 50 miles.  With gas near $3 a gallon, each trip costs between $6 and $10.  Eliminating one or two (or more) of these trips, per month, with better planning and time management, can really add up to some big savings.

5.  Take your lunch to work just once (or twice, or three times) per week.  What’s the difference between $10 for lunch at a restaurant and a $2 lunch prepared at home?  $8 a week, or $32 a month!  When you do the math, a small change can make a huge difference!

6.  Replace x with y.  For me, x = soda, which is costly, not very filling, and bad for my health, and y = water, which is free, very filling, and great for my health.  Find something in your life, your x, that’s not very good for you, and replace it with a y, something that is good for you.

7.  Learn how to better manage cash and avoid ATM fees.  I love the convenience of the ATM, but I hate the associated fees.  Find a bank that refunds said fees, or avoid them all together, by using a better cash management system.  The last thing you want to do is be “strapped for cash’ and have to pay a fee to get to your own money.

8.  Cancel unnecessary monthly subscriptions.  Are you a member of a gym that you no longer go to?  Did you once sign up for a monthly service, but you never actually use it?  Cancel it!  (Always be aware of any fees or penalties associated with such cancellations and make your decision accordingly.)  Back when I was getting out of debt, I canceled my subscription to satellite radio.  I really liked the satellite radio – but I loved getting out of debt!

9.  Be smart when buying fresh and perishable food items.  There’s nothing worse than watching good food go to waste.  A good, organized meal plan, made out at the beginning of each month or week, will go a long way to eliminating this problem.

10.  Wash your own car.  This one is simple.  Instead of zooming through a car wash, take thirty minutes, go outside, and wash your own car.  You’ll get some air, take in a little sunshine, and save some cash.  If you don’t have a car – replace this tip with any other “service-related” task that you can easily do for yourself.

Once you get the hang of it, you’ll soon start looking more and more and more ways to save cash.  When we save cash – it goes towards building cash reserves or eliminating debt.

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10 Ways To Save 10 Bucks Each Month

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!