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Financial Goals and Thoughts for 2015

February 27, 2015 by Jeff Davidson 1 Comment

2015 Financial Thoughts

2015 Financial Thoughts

I haven’t written a ‘financial’ post in quite a while, and been meaning to writ this one since January. To b honest I haven’t been in the same financial situation as the days of those old blog posts. Economy, health and situation changed and I found myself eating into those reserves and not putting anything aside. It has been survival mode since then but I’m looking to focus once again to change that.

Since I’ve been on my own as a teenager I have been in debt. Even when I was at the height of money earning I still used debt to get more. Telling myself I’ll get out of it soon, but soon never came and I now find myself close on to 50 and saddled with lots of debt. I hope i can teach my kids how bad debt is at least then it will have served some purpose.

I’ve been doing a lot of reading and learn about goals, one reason why I really haven’t set a obligatory new year goals, I want to do it right this time. I’m starting out not with the standard goals of ‘be debt free’ or ‘get wealthy’ rather a generic idea of I want to be stable or comfortable.

What that means to me is no stress. I don’t want to be worrying how am I going to be paying the bills next month or saying no to a nice meal out because I don’t know what’s in the bank. For the time being though there will be some hardship and perhaps a lower lifestyle. Actually that’s ok with me to a degree. As I want to simplify my life more, I feel with a smoker life I will be more happy. I know already with all the money and debt to get all the gadgets I was not necessarily ‘happy’.

2 First Steps

One of my biggest problems (ok a few) are procrastination and organization. Financially that Means a couple things. First I have a problem with remembering payment dates which leads to late fees. I could probably pay off one of my credit cards with the late fees I have had. Yes I have many of my bills on auto payment but not all just in case, you know, can’t do it right away. Well this month I have set up in my GTD app and the calendar, reminders for all bill dates and hope this will keep me on time. Just have to be disciplined now to not hit the snooze button or close the reminders without doing something first.

My second problem has been overdrafts. Most of the auto payments and other things come out of my personal account. While my incoming money comes into my business account. See where I’m going here?  I forget to pay myself on a regular basis so the personal account gets overdrawn. I had overdraft protection but that would cost me $27 each instance (add that up to all the late fees). Well a couple weeks ago I finally went in and had them tie the personal to the business for overdraft. This still costs me $5 an instance but it’s a step in the right direction. I also set up alerts using mint.com to let me know when the personel balance gets below $100 so I can evaluate and transfer as needed.

Along with living a bit more frugally and watching all outflow better I’m hoping I can stop living month to month with worry and start putting some money aside again and doubling down on some of the debts as well. I am also trying to refinance the house again which will go a long way to getting debt under control, but problem with living by credit cards and the above problems is that it comes back to bite you.

Finally, Just Be Positive!

Beside everything the most important part of my plan is to be positive! It will work out and as long as I’m working towards these goals I will succeed.

 

 

Filed Under: Debt

Is an APR Home Loan Right for Me?

February 13, 2013 by Jeff Davidson Leave a Comment

20130213-094626.jpg

In the continuing effort to improve cashflow as income tightens I’m considering refinancing again. I did look into it late last year trying to use my VA benefits (read, no closing costs) but ran into an issue with wife’s credit report and they said there was nothing they could do. I alos applied with my credit union although I can’t remember if I put the wife on that one or not (think I did) and it was pre-approved but never went through with it because of the closing costs and points involved.

Round 2 Application

So I just applied again with the credit union, just me this time, and it spit out the different program options for me (not approved yet).

If I stayed with a traditional 30 year fixed I would have had 6 points and ended up with closing costs of $17,000, OUCH! I assume I could have rolled that into the loan but payments with taxes and insurance would have been close to where I am now, maybe saving $200 a month.

Next there where the ARM Loans, 7/1, 5/1 and 3/1. These basically start out at a very low rate and then after the first term of 7, 5 or 3 years the rate would be re-evaluated each year. Increases in the rates to never exceed 2% and lifetime to not exceed 6%

Where I’m at and Where to Go

Currently I am in a fixed loan at 6% with P&I payments at $1430. Dont have a traditional impound account and pay the insurance and taxes on my own. These equate to about another $350 a month.

If I go with with the 5/1 the rate starts at 2.5% making the P/I payment of about $980 which by the way I love or I could go for the 7/1 with rate of 2.75% and payment just a bit more at $1020. Either one would be great with a saving of at least $400 a month, just have to decide when I want that first rate jump.

We all know that rates are at an all time low, and realistically the will be going up. But… How high 5-7 years from now? With the cap the max it could go is 8.75% in 10 years (putting me in a worse position than now) but I can always refinance again right?

I know it’s best to lock in a low rate for the long haul, but I have to also look at realities of my current situation. I need to improve cashflow so that I stop using credit (another post for another day) and doing the APR loan will improve the current situation.

Well I’m at the doctors and he just came in so those are my thoughts for now. Guess I just wait for an answer on the application and see where we go from here.

What are your thoughts? I’m curious on what you would do or have done.

Filed Under: Budgeting, Debt

November Wealth Report – Looking Ahead

December 2, 2012 by Jeff Davidson Leave a Comment

End of the YearHere’s a phrase you will hear often the next couple days “wow its already December?” Yep it is and means time to loosen up the budget and credit cards right? Well I do tend to splurge a bit for the holidays but this year will be a little tighter than past. To me December is a time to start looking at what has happened this year, recap on goals and to see what needs to be done before the end of the year.

Nov 2012 Report

November was actually a very good month! Looking at the bank statements its hard to see but according to my income report on Mint.com it was almost double the previous month, lets hope this is a trend. Had some great portrait sales this month and couple black friday sales helped as well. Also stating up the web design business again contributed a bit.

Adsense has been trickling along, well call it lunch money right now. Thanks to google almost all my nuche sites have disappeared in the rankings and not sure if its worth the effort to try and revive them. Still have a couple ranking and think Ill just concentrate on those.

Spending was up over last month due to sales tax paid, take that out and it was about the same as last month.

Income

Earned Income$14,609
Expesnes$9,767.27
Cashflow$4,841.73

Assets vs Debt

Cash Accounts$37,933.88
Vanguard$24,091.51
BuyandHold$4,444.42
House$325,238.00
Debt$289,381.64
Net Worth$108,726.17

The biggest change has been the house value which has shot up, which is good news as we are trying to refinance the house right now. This has also shot up my Net Worth so I take that value with an asterisk, actually money has not gone up much and my portfolio has taken a beating since August especially because of Intel.

Whats ahead for December

So looking where I am at against my year goals Im in ok shape except a couple of them. The big loser will be the credit card debt thing, actually went backwards a bit there and no way to recover before the end of the year.

The other one one to focus on this month is the investment portfolio as I’m just about there. So I will be looking at dumping some money somehow into my dividend portfolio or the IRA. I’m $1,500 short right now and dont think I can put that much in hard cash so I’m praying to the market gods as well. December is also a big dividend and capital gains month for vanguard so that should help and I am scheduled to have a little over $300 in auto deposits made. So it is with in reach 🙂

I am also getting a new computer (hey its one of those business things) mine has been draggin lately and its a early 2008 macpro. figured better to go with latest tech and get a maxed out iMac. Hope to get it on order with the next few days to save on sales tax (If you’re not from California, somehow a sales tax increase got voted in that starts Jan 1) even though it wont be released or delivered till after the 1st.

Finally as mentioned we are working on getting the house refinanced. Its currently at 6% and I have been putting off doing it for ages mainly because there is always an out of pocket expense. I then realized that I have my VA benefit I can use. So went ahead and started the process and hope we get approved and close before Christmas! We are going to try and take a little cash out, but the main purpose is to improve cashflow. We currently handle taxes and insurance separately which is a little of a pain. So if everything gores right we will go back to an impound account and have a monthly payment, including taxes and insurance, for just a bit less than the current mortgage alone.

How does your year goals look? Any last minute tasks to try and make them?  

 

Filed Under: Budgeting, Debt, Income Reports, Investing

What if You Can’t Pay your taxes?

April 4, 2012 by Jeff Davidson 3 Comments

taxes breaking the bankFirst I would like to point out to Andrea that I ended the title with a Question Mark.

Next it is tax time again as my recent posts have mentioned and this year was a bit of a shock to us as we owe quite a bit more than expected. First my wife was on unemployment during last summer (teacher, need I say more?) and no withholding is performed on those checks. Second it seems to me at least that the her regular withholding by the school district is light (lesson here boys and girls is to check with your HR dept before tax time to be sure enough is being withheld if you dont want a big bill come April 15th). Lastly I actually made more money than the year before. Now I was setting aside $125 a week to an ING account for income taxes but this was based on last years and I didnt really think it all out (maybe a bit more on my thinking another time) also I only started doing this mid year. Bottom line is the set aside and what ever the wife can dig up quickly is no where near enough.

So what options are their when off the top you dont have enough to pay the IRS? Well here are some strategies I have going through my mind, of course kicking up anxiety levels as they do.

Refinance the Mortgage

This was my first option to explore. We currently have a mortgage at 6% along with a second at 4.5% So I thought if we could refinance the first to a 4.1% with my credit union which was showing 0 points and take out just enough to cover the tax liability we would be set. Taxes paid, House down to 4%, lower monthly payments and getting the insurance and property taxes back to an impound (been hell with out it). So I went ahead and started the application…

First road block, due to our wonderful credit scores (being sarcastic in case you cant tell) there would be points. This would make the loan cost us $15k to refinance. No problem I have always financed the closing costs before. Well doing that puts us outside the LTV ratio and would only get maybe $2K cash out. Not enough. Second road block, checking for the ballpark value of our home came in at $280K way below my estimate of $350k. This along with the balance on the second puts us in the category of underwater on our home I.E owing more than the house is worth. This wipes out any chance of using the home, even if I agreed to a 7/1 ARM (no closing costs and at 3%) there is no chance of getting it done.

If our home loan was held in some way by Freddie Mac/Mae then we could have been eligible fo the HARP2 program to refinance down but alas we are not.

Payment Plan With the IRS

As long as you file on time you can apply to do installment plans with the IRS. The one nice thing about this option is you tell them what you think you can afford each month. Niceties stop there. You will pay an interest rate of 6% APR on the balance as well as a monthly penalty of 1% of the balance. Oh and there is a set up fee of $43 if what you owe is less than $50,000. So in all reality I would be paying an interest rate lets just say 7% just to make it easy, which really isnt that bad. BUT in my opinion it also puts you on their radar which is not a spot any of us wants to be.

I dont have to mention how totally unfair (I really hate that word though) it is that you have to pay interest when you owe and can’t pay right away, but if they owe you of course no interest and they’ll get it to you when they can.

Credit Cards and Loans

If you read the IRS material about not being able to pay they really push you towards other financing, seems they really want all their money up front. Well with the effort I have been making towards paying off my credit cards I do have room there. Lets see I have my capital one card with $750 available (they even owe me $.68) which I could ask for an increase on, oh wait it has an interest rate of 18% (24% on cash advances). The next card I have been working on has over $4k available but does have a rate of 12.9%. Finally there is the equity line (second) with about a $1k available at that 4.5%

So their would be higher rates than going with the IRS but will be off their radar and going back to square one paying them off again.

The Ole Emergency Funds

I had been good and got my emergency fund up to $10k mark and was still adding a little bit to it each week. Along with what I had set aside it would cover the bill but would be back to the beginning here if an emergency came up. Not a prospect I really like thinking about. Speaking of cash funds I do also have a large cushion in the business account for slow months (which April is looking like). If its slow and cant pay the lease thats were it comes from. If its not there then Im out of business.

Last Resort

Im not even considering this at all but mention it because maybe somebody out there is at that point. If you have a retirement account of some sort you can withdrawal some from there, as long as you are aware of the costs. Most retirement accounts have an early withdrawal penalty and of course taxes. Since it usually goes in tax free when you take it out it is taxed as income, as well as a 10% early withdrawal penalty. Done that before and its not pretty. There are some retirement accounts where you can borrow from your funds and you make payments back to yourself, if you have one of these this might be a good alternative to credit cards.

So What do I do?

Now Im sure there may be other options out there, like borrowing from family, but its not something I’m looking at. The more I think about it I will most likely end up doing a combination of credit and emergency funds so I dont deplete either. If you read my previos post you know I also have property and sales taxes this month to contend with as well. As of right now I’m increasing the withdrawal to the ING account to $175 a week for next year and the wife is going to talk to HR about her withholding. We have other issues coming up and I think this one will be handled fine so we can move on.

How were your taxes this year? What did or would you do if you owed a large amount?

Filed Under: Debt, life, Taxes

Learn to Use Credit Responsibly

January 28, 2012 by Jeff Davidson Leave a Comment

credit card dealsCredit cards get a bad rap these days. With millions of Americans struggling to pay off high-interest debts, is it any wonder they look at credit cards as the enemy? Despite the negative attitudes held by many, 78% of U.S. households own at least one credit card.

The fact is, credit cards CAN be dangerous if you don’t use them correctly. In the past, credit card companies targeted college freshmen, offering them free t-shirts and water bottles to sign up for cards. At 18 years old, most people aren’t ready to use credit the right way – instead, they treat it like free money. When the bill comes at the end of the month, they’re shocked by how much they owe.

Once a person misuses one credit card, they’re likely to apply for (and misuse) multiple cards. Eventually, they owe more in minimum payments than they are able to make, and they may default on their credit agreements. This can have disastrous effects on finances, credit scores, and even relationships.

With all the issues associated with credit card use, why would anyone in their right mind want one? Believe it or not, there are ways to use credit without all the negative consequences. You just need to take precautions to make sure you don’t end up on the wrong end of the spectrum when it comes to credit card use.

Understand the terms of use for each card. Do you know the interest rate you’ll pay on your credit cards if you don’t pay them off each month? What about the payment due date? If you aren’t mindful of the rules associated with your cards, you could violate them without even knowing it, leading to fees.

Pay off your cards each month. Unless you have a flat tire or other real emergency, only use your cards to purchase what you can pay off at the end of the month. You can build a strong credit history by using credit for everyday expenses – but only if you refrain from spending the money you’ll need to pay off the balance.

Find the best credit cards for you. There are thousands of websites that help you compare credit card deals. Keep an eye out for interest rates, annual fees, and other potential fees, looking for the card with the lowest cost of use. Also, look for cards that offer rewards, such as airline miles, cash back, or points you can trade in for gift cards.

If you follow these guidelines, you can learn to use credit cards without incurring debt, and you can even earn benefits along the way.

Filed Under: Debt

Why I can’t get my new toy, iPhone4S

October 13, 2011 by Jeff Davidson 7 Comments

iphone 4SYes I love my electronics. I have been an early adopter of new tech and toys for as far back as I can remember. Anyone remember Laser Discs? Yep I had a nice collection of those too. Its especially true with iPhones, I have been there on release date for each one ordering my new phone. Often because new phones came out before contract expired I would always be hoping for that grace period from ATT saying yes you can early upgrade for the lower price. This time around things are different (maybe a sign of the economy) and do you know what is stopping me?

late payments

I am was notorious for waiting until receiving several notices of lateness before finally paying my bill. In the past I just wasn’t organized and yes a bit lazy and would just let it go until threatened with cut off (or they actually did cut off the phone). Yes I racked up the late fees and it never really hit my how those add up but now Im being hurt with something worse. I can’t upgrade to the 4S until after my contract expires. Seems this time around payment history is a factor on who gets out of their contracts early to upgrade at the lower price.

So I have to wait while all my friends laugh and tease me as they talk to their phones and Siri talks back. Unless I want to pay full price, but not sure Im there yet, we’ll see in a month or two.

So moral of the story is to make you payments on time, its not just late fees anymore…

Did you pre-order your new 4S? or you waiting out for the 5?

Filed Under: Debt

The evils of debt add up fast

October 5, 2011 by Jeff Davidson 8 Comments

money_in_toliet

Ya paying interest is kinda like this

I dont know if I would really call interest evil. I understand the need for interest payments and I dont fault them. If you take out a loan or use a credit card its the way the bank makes their money from the loan. They are a business and need to cover business expenses and make a profit. Without it why would banks take the risk of giving you money? Now if you go overboard with debt an only pay the minimums then interest can seem evil and can really add up over time.

Throughout my young life (well even till a couple years ago) I never really paid attention to the interest payments, always making the miniumum payments. I would always look for new credit when there was something I wanted (i.e. not need) just because I didnt want to take out of savings (when I had it) or just really wanted it.

How much interest?

I bring this up now because I was laying in bed playing with the mint.com app on my iPad. I got to the payments im paying now on my credit card and for the first time (well maybe first time, with my memory maybe I did look before) it dawned on me how much I am paying wasting on interest payments.

I currently only have one credit card left at 12.9% interest rate. I was paying about $350 a month on it and $130 was going to interest. Over a year thats $1560 and since I have kept this card near max up till earlier this year and I have had this card for lets say at least 8 years thats about $12,500 in interest at least over its life (thats more than the current balance).

Sorry just had to go throw up a little.

I also have a 2nd mortgage outstanding at %4, again I have kept it maxed out foolishly. It comes to about the same payment and again the $130 going to interest. So over the 8 years thats $25,000… Could get one of those Kia hamster cars for that (love their commercials). On top of that add up the car loans (this year is my first time without a car payment in almost 20 years) and all the other credit cards I have had, and there have been many, not to mention the house mortgage. Its not to far fetched that I have paid over $100,000 in interest over my life.  Time for some of that pink liquid….

All you younger folks pay attention to that before you start that slippery slope of credit/debt.

So what am I going to do about it?

Well the first thing is I have to get rid of the credit card debt asap. The one minor good thing about the 1st and 2nd mortgage is that the interest is tax deductible. So I took the available credit on the 2nd and applied it to the credit card, only $1,000 but its at a lower rate now. Next Im going to do what I can to pay at least $1,000 a month to the Visa with the goal of having it paid off by June of 2012, sooner if I can of course. With normal payments to the 2nd I can do another $1,000 from it in February. After that I will concentrate on the 2nd mortgage. Even though it is tax deductible It rather not be paying the interest and much rather have the $350 a month in my pocket or invested somewhere.

Im in my forties now and I wish I had someone to point this out to me in my 20s (or pound it into me, I was stubborn) So lessons learned a little late for me but I hope that maybe the younger crowd, even my kids would read this and pause to think before they start to charge everything they want in life. Credit when used safely is one thing, as a lifestyle not so much.

Have you ever stopped and thought about how much you have paid in interest?or even calculated it?

LIke this post? please share 🙂 even if you didn’t like it.

Filed Under: Debt

Tracking your Financial Status with Mint.com

September 12, 2011 by Jeff Davidson 5 Comments

Couple posts ago I mentioned a new service I started using to track all my debts and more. This service is mint.com now owned by intuit, yes same company that makes quicken. A lot of those in the PF community already know and use this service but incase you dont here’s the scoop. This online service is free of charge and allows you to track all your accounts, debts, investments as well as budgets and goals. Not only does it give you one place to view your financial status but it analyzes your spending and make suggestions as well as send you text/email alerts that you set up. I started using this service when I was looking up quicken, hoping to get my finances in order again.

Is it Really Free?

Yes it is free to sign up and use. The way they make their money is by analyzing your spending and your accounts and then making recommendations to you that will help you. For instance they may notice your savings account may only pay 1% interest so they will recommend some others that pay more. Im sure they also do analysis of all the data of their users to see trends in spending and such but your info is not shared. Im ok with this, dont matter to me if someone uses how much groceries I spend money on for a report somewhere.

Getting Started

You start off by entering each account and the online access info you use to normally view your information. Almost every financial institute allows you to access your account online and mint.com has these already in their system. Just do a search and then enter your log in info for that site. You enter your banks, investment firms, mortgage, credit cards, all of it. If you own property you would also enter the address for each one and it will use Zestimate to find an estimate on its value (if you have a loan on the property you also tie it to the loan). Once that is done every time you log into your mint.com account you have all your accounts visible on the overview page, showing all the balances and values with your net worth on the bottom.

Not only that your overview page will show you alerts, upcoming bills (it automatically finds the due dates) budget graphs, goals and portfolio highlights. And of course at the bottom suggestions for improvements.

Transactions

You can click on any of your accounts or the transaction tab up top and it will show you all your transactions, or just ones associated to the account you choose. When I did this it went back to May getting transactions so it gets a good history when you start, not sure if this limit is Mint’s or my Banks. It will also categorize all your transactions, and do a pretty damn good job, but you can of course add your own then set up rules to make sure it gets the right category. I look at it like quicken but I dont have to do any data entry. Whats neat is if you click on a transaction, say my insurance payment, in the upper right it gives you a little snapshot of what you have spent on this payee in the past few months with a comparison to the national average (seems I’m paying a little more)

mint.com budgets

mint.com budgets

Budgets

One of the keys to financial planning and debt reduction is budgets. With mint.com you can set up budgets for any and all of your categories and it will be automatically tracked with the transactions. This is displayed in a nice graph on the budgets page and color coded of course (green, yellow, red) to track you progress. There is a snap shot on the right shows your total income/spending/goal budget progress as well. These are all monthly budgets and reset on the 1st for you.

 

mint.com goals

mint.com goals

Setting Goals

This is for more of your long term goals and it has a few wizards to help you in setting them, like credit card reduction. You would activate this goal, it will find all your credit card accounts and show you a payment schedule based on minimums (you can increase) and sets it up with the snowball plan. Pay off one and apply its payments to the next credit card until all paid off. It will even calculate an estimated date for pay off based on this, and based on your current payments. It also has goals for emergency funds, retirement, saving for college and of course custom goals.

mint.com trends

mint.com trends

Trends

This area gives you nice little pie charts and graphs that show you how are spending your money, how you are making it, assets, debts, and net worth. If you have your categories all set up the way you want these graphs will come in handy to see were your money is coming and going and help you make decisions on where you need to cut back.

mint.com investments

mint.com investments

Investments

The investments tab is pretty self explanatory but worth mentioning. Again it takes  all your investment accounts that you entered and draws in all the data to give you daily status of value and charts comparing your investment to the Dow or S&P plus much more. If you have multiple accounts for investments this is a great way to get a snapshot of your total portfolio, again with no data entry which is my favorite. (ya thats a rough patch for me this month).

 

 

mint.com iPhone app

mint.com iPhone app

Going Mobile and Alerts

They do currently have an iphone app (I believe droid as well) that allows you to view key items on the go. The big use for it is to enter cash transactions that wouldn’t normally come through from your bank, they can then be analyze with other transactions for your budgets and trends.

You can even set up your alerts for items like bills due, low account balance, unusual activity, even credit score changes. These can be emailed and/or texted to you. You can even set up a weekly summary to be emailed to you showing you where your money went that week.

 

 

Conclusions

As mentioned earlier in the post this is a lot like quicken but without the hassle of data entry. Almost everything is done automatically. You can tweak things as needed and once everything is set to your liking its a great way to just log in and see your whole financial picture on one page, from any computer. Safe and secure it will help you keep track of your financial life and thus help focus on the debt pay off and maximizing your savings.

 

Have you tried Mint.com? Whats your thoughts?

Like this post? Please share or tweet 🙂

 

Filed Under: Articles, Debt, Investing, Savings Tagged With: budget, debt, income, savings, tracking

Debt, the evil arch enemy of wealth

August 21, 2011 by Jeff Davidson Leave a Comment

cut your debtAs I develop this website i have decided that I must include debt in the equation. After all why are we seeking multiple streams of income? For most of us it is to create wealth and increase net worth, to provide comfort and security now and in our future. The biggest killer of this would be debt and the accumulation of debt. With debt not only is your hard earned income going somewhere else, but if you are like most and only pay minimums then these debt payments can go on for years and years and end up costing you much more than your original purchase. This ends up  crippling your your ability to grow your wealth and net worth. Take the following that was in a recent statement of mine for a card that had a balance of about $650:

MINIMUM PAYMENT WARNING: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance.

Approximate Time to Pay Off Statement Balance 8 Years

Estimated Total Cost $1,222

What ever I bought for $650 will end up costing me double and take 8 years to pay off! thats money that could have been spent on something else I wanted (ok ok needed) or into savings or investments where it could have been making me money instead. Nice of them to put the warning in though 🙂

Personally I have been in debt since I was at least 19. I have always been the type that likes to have the best toys and wants them now. So I would apply for credit cards all over the place. Getting the best sound system, biggest tv, fastest computers. Something new and better came along I had to have it, so new credit card or credit limit increase. Needless to say this got me in a lot of trouble with bill collectors as I would forget or put off payments. As I got older and with family I would at times try to buckle down and pay down the debt with a goal of elimination, but was unable to change my habits so the debt would eventually go back up. Even recently I was using credit to pay off bills just because I didnt want to see my bank account go down (yes stupid I know). Also since I was 20 I have always had a car payment. Trading in when I got tired of the old one. This would always increase my payments a bit cause of course the last car wasn’t paid off yet.

Well I have gotten a bit better 🙂 Im actually down to 2 credit cards and the 2nd mortgage. My expedition was finally paid off early this year and… Im still driving it. Ipad2 came out and…. I actually didnt buy it (dont hold your breath when the ipad3 comes out). I have got in the habit of paying cash for almost everything and working on paying off the debt sooner rather than later. Im doing this while still feeding my money market and stock accounts a little each month, but having the lions share of extra money go torwards paying off the debt.

I recent blog I have read, The Debt Myth, talked about snowball debt reduction, which is something I had done in the past, which is to put every extra cent you have towards a debt and when its paid off tackle the next one the same way. She even talks about paying it to the debt as soon as you have it, dont wait till the due date (but dont forget it either). I recommend this to anyone with to much debt but also they must work on the habits that got them there in the first place or else it will be useless.

A word of advice to all the younger folks out there to not even get to that point. Stay out of debt as long as possible. If you can afford credit card payments, put that money into savings instead then pay with cash. In hind sight if I had done this I know I would have several thousands of dollars saved or invested just from the saved interest paymetns.

With all that being said I will be adding debt goals to my goal page and including them in my monthly report which will also start showing wealth and net worth. In a post coming up I review a new online service that I found that will help you in setting your debt reduction goals as well as savings and tracking your financial life, best part is its free!

How are you doing with debt?

 

Filed Under: Debt Tagged With: debt, net worth, passive income, wealth

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