August 2010 Monthly Review

This was an interesting month for me budget wise.  I spent much more than I normally because of my recent vacation and I think this will cause me to have spent more than I took in this month for the first time since December, 2009.  I was able to trim back quite a few categories last month and this month to make up for it, but I still blew my budget on some of the categories, mostly because I was on vacation.  Hey, during restaurant week, you’ve got to take advantage of the deals, right?!  (I spent almost half of my entire monthly food budget and 150% of my dining out budget on 1 meal while on vacation.  It was TOTALLY worth it, the food was great and the company was fantastic!)  Other categories I went over budget in this month were:

Student Loans:

This is by far my largest liability at this point — It’s unsecured and it’s just lame run of the mill debt.  I’ve got 3 loans from 3 different banks (way to go, feds!).  These loans came from 6 years of school, so I got out pretty good.

Nelnet Student Loan $ 2,018 ($1023) This normal payment is $50, which I have been paying.  This is my next target, as you can see.  I just checked the website on this balance.  It says I don’t need to make a payment until April 2012.  Along with this, I got an offer to enroll in an auto debit for a .25% interest rate deduction.  I’ll be forgoing that in an effort to keep the pressure on to repay in 2 more months!

Direct Loan  $6,692 ($250).  The payment for this loan just got dropped to $77 per month.  Not sure why, but I’m not complaining.  This is next on the hit list.  On a side note the subtraction on this was extremely hard for some reason this month.  I had to google the answer

Great Lakes Loan $ 12,709 ($150) Just paid the standard payment of $150, but because of interest, the amount it went down was much less than that.  Seeing how much of my payment isnt applied to the loan balance really, really bothers me.  My snowball will soon roll up on this too!

Truck Debt:

This is for my vehicle.  I had already started trying to become debt free when I bought this, so I was quite torn as to wether or not to take on new debt while I was trying to eliminate other debt.  If you want to read more about it, check herehere and here.  Despite most of the advice I heard, I went ahead and took out a loan on this.   I made the right move.  Either way, here is the status.

Ford Credit: $ 19,122 ($288): I usually pay extra on this loan, but I’ve gotten so far ahead that I decided to make a smaller payment and put the extra cash to my small student loan so I can get rid of it!  Apparently, I’ve paid $255 so far this year to service this note.  It will be nice when all that cash is back in my bank account.

Total Debt Level: $ 40,541 ($688)

This isn’t quite as much as I have been paying down, but I was able to have some fun this month.  It looks like I could have paid off my student debt with the money I spent on vacation and the lost wages from time off work.  While debt freedom is something that’s at the top of my  list, it’s important to ease off the gas once in a while and enjoy what you’ve accomplished thus far and re-focus your scope, so to speak.

How much debt did you pay down (or money did you save) last month?

July 2010 Monthly Review

This is my spending for the month of July.  Due to my volunteering, I was able to save quite a bit of money on food (they fed me almost every meal I ate for 1.5 weeks) on that category, but apparently to make it up to myself, I gave up those saving elsewhere.  Still came in under budget though.

Student Loans:

This is by far my largest liability at this point — It’s unsecured and it’s just lame run of the mill debt.  I’ve got 3 loans from 3 different banks (way to go, feds!).  These loans came from 6 years of school, so I got out pretty good.

Nelnet Student Loan $ 2,018 ($1023) This normal payment is $50, which I have been paying.  This is my next target, as you can see.  Hopefully this will be gone in 3 months

Direct Loan $ 6,942 ($157).  The regular payment on this is 92, and I paid that, but my parents send some money occasionally to this loan.  It’s a really, really big help.  This loan started out at 12k I believe.

Great Lakes Loan $ 12,859 ($85) Just paid the standard payment of $150, but because of interest, the amount it went down was much less than that.  Seeing how much of my payment isnt applied to the loan balance really, really bothers me.  My snowball will soon roll up on this too!

Truck Debt:

This is for my vehicle.  I had already started trying to become debt free when I bought this, so I was quite torn as to wether or not to take on new debt while I was trying to eliminate other debt.  If you want to read more about it, check herehere and here.  Despite most of the advice I heard, I went ahead and took out a loan on this.  I’m still thinking I made the right move.  Either way, here is the status.

Ford Credit: $ 19,410 ($178): I usually pay extra on this loan, but I’ve gotten so far ahead that I decided to make a smaller payment and put the extra cash to my small student loan so I can get rid of it!  Apparently, I’ve paid $222 so far this year to service this note.  It will be nice when all that cash is back in my bank account.

Total Debt Level: $ 41,229 ($1453) Another month where this number dropped.  This is one of the biggest decreases I’ve seen in a long while, and its great.  Unfortunately, I know this wont continue next month as I’m going on vacation (but got free airfare/2 nights hotel from reward points).  It will be nice to get away and relax, but it’s going to pull a few teeth from my debt chomping machine.

How much debt did you pay down (or money did you save) last month?

It’s Called “Personal” Finance for a Reason

Personal Finance is one of those things that’s different for just about everyone.  Sure, some parts can be strikingly similar like saving money and spending less than you earn, but for the most part, it’s a different beast for every person or family.  One family may not value things that their friends do, and it will reflect in their spending habits and money management.  I’ve been thinking a lot lately about one thing that I did that flew in the face of all the personal finance advice that I have read and seen, and I’d like to go into depth more about why it has worked out well for me.

The decision to buy a car will confront all of us at some point, and if you’re in your 20s like me, it’s probably the most expensive thing that you will buy until you buy a house (excluding that education that we took out loans for).  Due to this, there is TONS of advice out there for people who are looking to buy a car, related to how much they should spend, what capabilities they need and whatnot.  Most of it is great advice for 95% of the population, and if you follow it, you’ll end up just fine.  The biggest spokesperson for some of this advice is a  titan of personal finance, a person who (some believe) stands below, but quite close to the big man (or woman) upstairs: Dave Ramsey.

Dave has a lot to say about cars, and for good reason.  During the time when Dave was losing all his money, there was 1 thing he felt like he absolutely had to keep, and it wasnt his home.  It was his Jaguar.  To keep up appearances that people had expected of him, he felt he NEEDED to have the jag, even though it was a huge money pit for him.  Dave learned a valuable lesson as the car was (I think) repossessed some time later.  Dave is now completely against the buying of a new car for anyone at any time (unless they can pay cash, I’d assume).  This is because most vehicles typically lose a large percent of their value after you take it home from the dealer (its around 30% I believe).  This, coupled with the american habit of wanting a new car every few years means that you’re borrowing to pay for something that will lose much of it’s value right away and will stay at that lower value until the typical consumer trades it in for a new one, and the process starts over.  Dave calls this a “Stupid Tax” , meaning that you only pay the tax if  you’re stupid.  For 95% of the population, I think Dave is completely right.  If they took this advice, they would probably be much better off buying a car that is a year or 2 old.

My issue with this is that it’s a blanket statement, and many of you who make blanket statements know that they are most likely going to be eaten at some point.  If you say X always leads to Y, you are begging for someone to prove you wrong.  In my case, Dave’s advice wasn’t the most applicable in my situation, and I feel like he left out a few of those things that were present in my situation that are not present in everyone’s situation, and I’ll list them below with a bit of explanation.

  1. Dave Says that you should buy a used car because you’re going to trade it in a few years down the road.  What I’m assuming he means by this is that you’re not going to ” drive it until the wheels fall off ” and the car absolutely wont go another mile.  Who could blame you, anyway?  You could end up driving around a 25 year old car.  I was taught that you bought a new car if you could afford one, and you drove it for 15 years or more. My parents have done this for as long as I can remember, and I picked it up from them.  If you buy and hold a new car, a new car isnt a bad purchase, it’s just a purchase like any other.  You’ll lose a lot of value in the beginning (but it’s only paper value), but if you plan on rolling in the car until you’ve got to take it to the scrap pile yourself, who cares if it loses some value 30 minutes after you bought it?
  2. It’s also common knowledge that your car will depreciate after you drive it off the lot, and you’ll be upside down (owe more than  you can sell the car for) for the next year or so.  This is true for most cars but not for trucks.  Trucks are (no-no-)notorious for holding their value years down the road.  When I was test driving vehicles, I test drove a truck that was 3 model years old (it was a 2007) that was fairly nice with some extras, but nothing terribly fancy.  They were trying to sell it for about 3500 less than what they wanted for that same truck that was brand new.  Curious to see how my truck was holding it’s value, I checked it on kbb.com recently.  I don’t recall my exact sales price (but it was less than $25,000) but the value of my truck currently is $22,000 and the total cost of my loan was somewhere in the mid to high 23’s.  As it sits right now, If I sold the truck, I could make approximately 3500 on it, because I’ve been paying a small bit extra each month, and because the value didn’t tank when I drove it home.
  3. My future.  I went to the readers of Debt Free Adventure and got advice similar to what I’ve listed above.  It was all great advice, it just did not take into account one of the most important things about money: My (or your) personal future goals.  In the future, I would like to do a few things, most of which involve needing a truck or at the very least, something with high ground clearance and 4 wheel drive.  Where I live, 4 wheel drive is also almost a requirement due to adverse weather.  Along with possibly using this truck for a business that I’d like to create, I’d also like to purchase some land and work it.  I’m thinking of raising some sort of animals or growing alfalfa, but I have not really decided.  This is something I really want with my life and I know it’s in the future, so I figured why not get a truck, drive it around nice and new for a while, then when I purchased land and started a business, turn it into a work truck.  Whenever I see one of those really old beat up trucks on the road, I tell myself that soon my truck will be beat up and super awesome like the one I’m looking at.

The way that I see it, I made a pretty good decision and was able to balance my needs and wants and fly in the face of some sound financial principles.  Even though this is still debt and I still don’t like it, It sure beats waking up in the middle of the night wondering if my car will start so that I can get to work later that morning.

So readers, do you think I’m in an alright spot considering I broke a cardnial rule of Personal Finance?

If you were in a similar situation where you were going against most of the PF literature that you have read, would you be able to go through with it?  Admittedly, mine was easier because ‘normal’ people buy new cars, and typically people who buy used ones get looked at like they’ve got 3 heads.  But the question remains, Could you still go it alone?

June 2010 Month Review

Here is where I spent/saved in June of 2010.   For most of May, I was driving a rental car, so my gas prices have gone back up this month, which is unfortunate.  I also have paid off the last of my credit card debt, finally.  I used part of my snowball to pay off my credit card debt, and I’m going to send the remainder to my smallest student loan.  My goal is to have that loan gone by the end of the year.  Once that’s gone, I’ll have some decisions to make about what to tackle next, and I’m sure I’ll be asking for some help.

Credit Card Debt:

I cancelled two of my cards last month after I paid them off.  I’m pretty happy about that!  Right now I have 1 card that I think I’m going to keep, as it is pretty good with rewards miles.  I haven’t decided yet though.

Southwest  Card: $ 0 ! My last credit card (tear, not).  I’m so sorry that we are going to have to break up, but right now, I think it’s for the best.  Do you know how much money it will save me?

Student Loans:

This is by far my largest liability at this point — It’s unsecured and it’s just lame run of the mill debt.  I’ve got 3 loans from 3 different banks (way to go, feds!).  These loans came from 6 years of school, so I got out pretty good.

Nelnet Student Loan $ 3,041 ($32) This normal payment is $50, which I have been paying.  Apparently, of the $50 I pay, $18 goes to interest.  This is my next target.  Get ready to part ways, nelnet.

Direct Loan $ 7,109 ($359).  The regular payment on this is 92, and I paid that, but my parents send some money occasionally to this loan.  It’s a really, really big help.  This loan started out at 12k I believe.

Great Lakes Loan $ 12,944 ($86) Just paid the standard payment of $150, but because of interest, the amount it went down was much less than that.

Truck Debt:

This is for my vehicle.  I had already started trying to become debt free when I bought this, so I was quite torn as to wether or not to take on new debt while I was trying to eliminate other debt.  If you want to read more about it, check here, here and here.  Despite most of the advice I heard, I went ahead and took out a loan on this.  I’m still thinking I made the right move.  Either way, here is the status.

Ford Credit: $ 19,588 ($325):  This one is just holding steady for now.  I pay more than the minimum each month, and I call every month to make sure that they apply my extra to the principal.

Total Debt Level: $42,682 ($793) Another month where this number dropped.  I’m fine with that, although it’s not dropping as much/as fast as I’d like.  I’m hoping I can get another side hustle going  soon.  More importantly, I have spent less than I earned all year!  I’m hoping to continue this all year, and for the rest of my life!
Creative Commons License photo credit: Daquella manera

A Break Up Letter

credit cards
Creative Commons License photo credit: TheTruthAbout…

7/2/2010

Dear Credit Cards:

Boy, we’ve known each other for quite a while, but I’ve been feeling a bit queasy about our relationship for the past 3 or so years, and I wasn’t sure how to break it to you at first.  I decided that the best way for us to separate would be through this letter, which I will write and send to you, and then never look back.  There will be no more “emergencies” or “fun things I can’t miss out on” funded by you.  I’m sorry, but it has to be this way.

Boy, we have known each other for almost 8 years, can you believe it?!  Me neither.  It sure hasn’t seemed like that long.  Do you remember back when we had just met each other?  I wasn’t even in College yet, but you and I were growing close.  I would just charge a fuel purchase here or there to build our relationship, and then I’d get you back at the end of the month.  I always thought you were cool, because you never really seemed to mind that I paid you later.  You didn’t always seem too happy that I paid you back in full though, but I never seemed to mind.  I figured, that’s odd, but oh well.

Remember that time we got to College, and we made so many other friends?  There was the card with my school logo on it that gave me a sweet t-shirt, the card with the airline miles, and countless others.  They were all your friends to begin with, but soon the became our friends.  Some of them were some pretty cool cats, but some were pretty lame.  I mean they wanted me to pay to hang out with them every year, plus they didn’t give me any freebies?  Sorry I was so rude to them, but I think it was for the best.  Even though I never got along with all your friends, you still let me hang out, which I thought was cool.  I really appreciated that, man.

Little did I know that you were one of those true friends I kept reading about in books and stuff.  Do you remember that time I had that financial emergency?  I didn’t think you did, but remember how you were there to spot me the cash, and said it was cool?  You were even nice enough to set up a payment plan for me because  I had a job and you knew I was good for it.  That was really, really sweet.  You were there to spot me then and many other times in the coming months.  Not only were you there for the big emergencies, but the small not-so-much emergencies too, like going out to eat with my friends or hitting up the bar to hang out.  You were a pretty good friend to me then, man.

We had some good times, too.   First, we bought a new winter coat and some snowboarding gear in the winter.  Then, do you  remember when we went snowboarding in Lake Tahoe, NV for that spring?  It was a really awesome trip that you lent me the  money for 89% of.  That new computer I got a year later?  That was you too.  It felt great, having all that new stuff and doing all those things with you.  After a while though, our relationship became strained.  You started to get testy when giving me money, so I figured it was time to re-examine my priorities and think about what I was doing.

(Un)fortunately, I’ve been feeling our relationship has strained a bit, you know?  It’s just not the same as it used to be.  We’ve both grown up and bit and changed into different people, and our relationship has been neglected because of it.  I don’t know if you even noticed or not, but I haven’t even hung out with you in almost 2 years!  Can you believe that?  All I’ve been doing is paying you back, dawg.  While it’s been no fun for me, it doesn’t really seem like you care all that much.

I see you out and about with a much younger kid, much like I was when we met, and the two of you are having a grand old time.  I tried to talk to the kid about you, but you wouldn’t let me near him.  I just figured that if you and I were good friends, and you and him were good friends, then him and I were practically destined to be soul mates!  I thought that you were acting kinda rude, but I just sighed and let you and that young kid hang out.  One day (hopefully) he’ll grow out of your guys’ relationship, but for now, I hope he’s having fun.

Either way, credit cards, I think it’s time that you and I parted ways — no hard feelings or anything, but a clean break would be nice.  I know you’ll try & call me, send me letters in the mail (who does that anymore, anyway?) but my mind is made up.

Sincerely,

Jeff

ps: If you’re reading this, it means that I have (or will in 48 hours) sent the final payment to my final credit card with a balance on it, zeroing out my balance over all cards for the first time in longer than I care to remember.

Saving Money Tip: Change your own Oil

Oil Change Equipment

There are a lot of ways to save money floating around the interwebs, some common (like using coupons) and some not so common (like buying cloth rags to use instead of toilet paper).  Today I am going to tell you about one of my personal favorite saving money tips, which is changing my own motor oil.  One of the reasons that I do it is I just like to go out side and get a bit dirty, do some work that I can get positive, semi-immediate results from, and there’s something at least a tiny bit manly about being able to work on your own car.  I didn’t always know how to change my oil though so there are a few things that I have learned on the way.   (Materials Pictured Above from left to right: Socket wrench, socket wrench extension, oil drip pan, oil, oil filer, filter wrench, funnel)

Changing your own motor oil saves some money.  The amount saved depends on how much you drive your car.  If you’re like me and drive a lot, you can save quite a bit of coin over the course of a year.  If you don’t drive as much, the savings will be slightly less (~$120/yr).

  1. Make sure to use the proper tools.  You can’t get something done right if you don’t have the right equipment
  2. Make sure you have a spot for the waste oil.  Here at sustainable life blog, we don’t like to waste anything.  Depending on where you live, you can probably call the city or county, and they will tell you how you can dispose of it.  My county (and most of them around here) will collect the used oil.  Some recycle it, and some burn it for heat, but it’s always used.
  3. Check and Double Check Yourself.

Alright, after we’ve got that out-of-the-way, let’s get dirty!  First, you’ll need to figure out what kind of motor oil and filter your car has.  To do this, you’ll need to look in the owner’s manual that (hopefully) came with your car.  Once you do this, you need to take the car that you’re going to change the oil in and head over to your local auto parts store and get some new oil, a new filter, a drip pan (if you don’t have one), and an oil filter wrench.  The first time you pick all this up, it will probably run you about 30 (which is what jiffy lube charges).  Simple cheap stuff, and once you buy it all, you’ll only need a new filter and oil, which will run you about $10/trip.

Get Ready to get Dirty

Once you’ve got all your stuff back home, it’s time to get down and dirty.  Get out your owner’s manual and look for an engine diagram (or there could be a how to change oil guide in there) and find the Oil drain plug.  Get a torque or crescent wrench,  and slowly loosen the bolt. (Dont forget to keep the bolt out of the oil when you remove it completely) Oil will start to leak on you a bit, and it should be warm (unless your trip to the parts store took a while, then give it some cooling time).  Just make sure you have your drip pan ready to try to catch it when you remove the screw completely.  While the oil is draining, you can grab your oil filter wrench and locate your oil filter.  It will be round, and sticking off of the engine somewhere.  If you can’t locate it right away, go back to your owner’s manual and find an engine schematic that will tell you where it is.  Once you find it, take your filter wrench and loosen the oil filter slowly.  Some oil will start leaking out of here as well, don’t worry about it.  Once you get it off, you can set it aside.

Replace what you took out

Now, it’s time to replace what you’ve taken off.  Get the bolt, and screw it back into where you took it out of.  Then get your new oil filter and rub a bit of oil around the rubber seal.  This will make it much easier to get off the next time, and I can tell you that there’s nothing worse than a stuck oil filter.  Then screw it back where the old one came from.  There is no reason to tighten these things down as hard as you possibly can get them, either.  Remember, you’re going to be the one taking them off next time.  So get the snug and give them a bit more and call it good.

Now, you’re almost done, but you need to grab your oil, pop open the hood, and put back the required amount of oil!  Fire up the car, make sure everything works and you’re good to go!

Now, that wasnt so hard, was it?

Here’s a cost breakdown.  This will probably take about an hour of your time, and assuming you drive as much as the normal american (12,000 miles/year) you’ll save about $60 during the first year (due to costs of oil drip pan and wrench), and about $80  every year after that.  Of course, the better you get at it, the less time it will take you.  I change my oil about once every 6 weeks, so I can stand to save a bit more than that.  I wouldn’t trade less driving

But I can guarantee you’ll feel good after having changed your own oil, because there’s nothing like the feeling of a job well done.

Monthly Review: May 2010

May Month Review

Credit: www.destination360.com

Well, another month is gone, and it sure seemed to go by fast.  Here’s my recap for the month of May, 2010.   There were quite a few changes from last month, and one was due to the fact that for 3 weeks of May (and 1 of april) I was driving a rental car after my car went in for a problem and there were issues with the dealer obtaining the part.  It didnt really matter to me not having my car.  I drive a lot, so I was happy to put miles on someone else’ car (and get a huge increase in gas mileage).  Also, according to mint, I’ve finally made it into the positive side of the net worth scale!  Wooohooo to me!

Credit Card debt – This just seems to be the hardest thing to shake.  Most of these cards have been paid off at one time or another.  To read the stories about them, click here and here.

Citi Card:   $0 ($1702) This card has been my main focus, as the promotional rate was to expire this month.  I paid a significant amount to this card last month, and I did again this month.  Although I have yet to transfer the funds, this is paid off!

Southwest Card: $450 ($27) I’ve been using this for gas recently, because of the airline rewards.  I’ve had the car for just over a year, and I’ve already earned a free ticket!  I think when my other two cards are paid off, this will be the one that I keep.

WaMu Card: $0 ($0) This was paid off, then when I went to purchase something over the internet, I accidently used this one instead of my Southwest card, so it had a bit of a balance this month, but I’m going to pay it off this week.

Other Debt – This is all non credit card debt.  Just Student Loans and an Auto Loan that I took out which you can read about here.  This debt has held steady, and will become the target of my debt snowball soon enough. I just haven’t figured out which debt it will be.  The amount of my debt at this writing is in red, the amount I paid last month is in green.

Nelnet Student Loan $ 3,073 ($50) This normal payment is $50, which I paid last month.  It seems like there’s not too much of this going to principal, considering the small balance.  I think this will be my next target.

Direct Loan $ 7,468 ($92).  The regular payment on this is 92, but the amount the note went down was $67….Interest…Sheesh.  This was up above 12k, but I started sending them a bit of interest payments while in grad school, and by the time my repayment came around, my balance was lower than what I borrowed.  I’m glad this is going down.

Great Lakes Loan $ 13,030 ($ 156) Double paid on this one last month, but just hit it with the standard payment this time.

Ford Credit Loan $ 19,907 ($ 350) I always pay a bit more than the minimum, but always have to call and get my extra payment applied to the principal of the loan.  I’m really not sure why the payoff balance sunk almost 1k this month, but I dont care.  The sooner this is gone, the better!

Total Debt Level: $ 43,475 ($3251)  When this number goes down, I’ll never be complaining.

I’ve kept up my handy excel spreadsheet, and it’s fun to see the amount go down every time I update it.  It’s similar to the spreadsheet Matt Jabs created, but with more graphs (I’m a visual person) and less focus on interest paid.

Another point of note: It’s been 5 months since I’ve spent more than I earned (!) and I’m excited to keep this gap open and widen it in the future!   My goals for the next month include focusing on my non credit card debt and hopefully getting myself into a position where I can have only 3 debts.