My birthday came early this year...

I wanted a nice chef's knife for my birthday (coming in August). Last year I wanted a stand mixer, which I got. I love it. I'm all about cooking and baking at home. For one it tastes a lot better. Two, I know exactly what's going into my food. Three, it's crazy cheap compared to going out to eat.

My hubby has been doing a lot of work around the house lately and somehow got the courage to go into The Cabinet. This is a place in our kitchen where over 30-year's worth of my mother and father's kitchen stuff ended up. (Mom is still around and lives with us/we live with her/however you want to look at it. Dad passed in 10/05.) This is the cabinet that we keep telling ourselves we'll go through. We can kind of find what we need, but I know there's a lot there that can be kept in the garage that would free up space in the house itself.

Hubby tackled it one night this week. I don't think he finished it in the spare hour he had, but he did get some progress done.

And, better yet, he found a chef's knife.

I used it today. It was awesome. I love my fillet knife, don't get me wrong. It does the job most of the time. It's just not the most efficient tool.

Now I get to come up with something else I'd like for my birthday. I'm thinking that maybe I'll ask the household to chip in for a freezer that we can keep in our now-clean garage. This would enable us to stockpile more meat and also to cook more meals ahead. Right now we've got very limited space in our cold box no matter how we rearrange it. (Believe me--we've tried!) Used freezers that still work go for about $50-$100 in our area. (And yes, I'll check the EnergyStar rating.)

What I'd really like to ask for is a gift certificate to one of my favorite scrapbooking or craft stores. Honestly though, I've got half of a living room full of it. I love it, I use it, but I don't need anymore. What I need are things that will:

• Make my life easier AND
  
• Save me money OR
• Make me money

What would you ask for if you knew you had $50 or so budgeted towards your birthday?

Wow.

Just wow.

W-O-W, wow.

I'm reading "The Automatic Millionaire". It's one of the ten or so books on finance and wealth that I picked up from the library yesterday. It's an easy read and so far I'm about 130 pages into it.

Why am I "wowing"?

Because David Bach makes one really strong point.

No matter how much money you are currently making, you ARE making enough to become rich.

We've all heard, "pay yourself first," right? David shows the reader exactly how this works and offers some extremely persuasive and motivational points. Another one is, "who are you working for?" Are you working for the credit card companies? No. What about your mortgage holder? Uh-uh. The electric company? Nopers.
You're working for yourself, right?

Are you really?

How much are you paying yourself?

David points out that most people aren't even working one hour a day for themselves. They go to work 40-60 hours a week and not one of those hours a week, let alone a day, is paying them. That's crazy!

For those of us in buckets of debt he recommends putting 1/2 what you would put towards "paying yourself" into accelerating your debt payoff but he does not recommend not paying yourself.

Something to think about, anyway...

Another outside post that inspired me today...

It seems like all my blog reading today has reminded me of something I wanted to say!

One of my current projects is a book for massage therapists. Initially I had my framework all laid out and was expecting to write my rough draft in 3-4 weeks of full-time writing. I realized, however, that in order to write the book the way I had initially envisioned, I wouldn't be able to write "as me".

The Simple Dollar: The truth is that you should do everything you possibly can to speak in your natural voice, “optimal consumer contact” be damned, and any obstacles you put in the way of your natural voice will water down the message you want to send and the true relationship you’ll build with your readers.

This post reminded me of that dilemma. Instead of creating a (hopefully) viable book I am now back to the drawing board. The idea is still a fabulous one, I'm still enthusiastic as all get out about it, but it's now cooking in my head a little more before I start really going to town on the rough draft.

Is it better to be true to yourself and do things in a way that works for you, even if that means you're that much further away from a payday?

I think so. What are your thoughts?

Renting works for us

The Millionaire Mommy Next Door wrote an involved post about rental pricing.

We're very lucky. Our landlord lives in Germany and lets his sister manage the property. (She in the mortgage business locally, and she's an awesome landlady!) He bought the home over 15 years ago when housing prices were much more reasonable. Our rent has increased a very small amount since 1996. It's at the point where we're paying in rent for a house what most people pay a month for an apartment! This is such a great situation for us.

Why we love renting:

• There's no possible way we can buy a house right now. We'd be beyond "house poor". Since renting is the only option, we're secure in our rent and that it's not going to shoot up. He's actually making a profit off us and that's enough for him to be happy.
  
• We don't have to pay for any repairs. We do pay for small repairs, do them ourselves, and send in the receipt with a reduced rent check. We don't mind and we've earned some serious points with the owner because we don't get on the phone about every little thing. In the past few years we've had a water heater replaced, an A/C unit replaced, the thermostat for the A/C replaced (within 8 hours!), the roof fixed, and some other medium-sized things done. It didn't cost us a penny.
  
• We have the ability to move without worrying about selling the house. I have several friends who want to move out of state and are chained to their homes in this awful market.
  
• We don't have to deal with property taxes. The tax situation in this county is crazy and makes very little sense. Many people bought houses they could afford and are now in big trouble because the property value shot through the roof and they have hundreds more in taxes.
  

Someday we'll buy a house. It's a long-term goal. Right now getting out of this awful situation with our credit card debt is top priority. After that we're going to use part of the money we have "free" each month to pay off the student loans and the other half to save up a down payment. Yay!

The faster you pull it, the less it hurts.

Lise is debating about manicures and other small efforts for feminine beauty and their payoff... http://www.electric-monk.net/lise/2008/03/28/the-20000-manicure-question/

This isn't exactly related to those probing thoughts, but it did remind me of a financial "mistake" that I'm happy about:

I made a business decision that has cost me loads of money and you know what? I'm happy about it! I'm duly-licensed as a massage therapist and as a facial specialist. One of the biggest money makers for skin care professionals is waxing. It's a great add-on service, it's fast, it pays well for the time it takes, the investment in product is small, and--this is the best part--your clients come back every 4-6 weeks to get it done again.

After I graduated the skin care program my husband and I hauled our butts up to the big trade show in Orlando. I was surrounded by so many choices! I initially had wanted to purchase everything I needed to expand my business in that direction. After being so overwhelmed I stepped back and did more research. The only thing I really put money into was my waxing system.

I found a booth that had a great product. The selling points were all there. The systems were exactly what I wanted. I ended up talking the lady into demonstrating the product on my husband. He was a good sport about it and let her wax his back right there in the middle of the trade floor! I was very impressed and took both a hard wax and soft wax system home with me.

The training I had received was great--in theory--but I personally had very few opportunities to practice. My next step was to recruit people to wax and I was not short on volunteers.

Unfortunately, my suspicions were confirmed through this process.

I hate waxing.

I don't like to hurt people. I personally find the process ridiculously painful and therefor my attitude is, "shaving takes me less than three minutes a day, if that. What would I want to go through this amount of pain once a month?" Therefore it's harder for me to sell the service to a client; I feel very insincere.

There's a pretty big liability. I've personally been burned and bruised and had my skin ripped off--from three different experienced waxers. Every female friend that had gotten their eyebrows done has admitted they too have been injured. Why should I risk losing clients who love to shell out $70 over a $15 service? It's so easy to make a mistake. The temperature gauge might be just a teensy bit off or the client might be on a medication or at a certain point in her cycle and forget to mention it.

Certain body parts are a pain in the butt to do well. It's time consuming. The positions are awkward. There are some "speed waxers" who are incredible at what they do; but for new clients or those with lower pain tolerances (like me) it's just not an option.

It's also messy. Not all the time; but there are times when wax does get where it shouldn't be.

I decided not to do it anymore. And sometimes, yes, I kick myself, but I'm happier overall.

Another thing that I've decided not to offer is ear candling. For some reason this is a very popular service that I get asked for quite frequently. I personally think it's a load of crap. The mechanism which supposedly pulls the wax out can be disproved by any fifth-grade student in a simple science experiment. Furthermore there is a risk of getting wax on the eardrum and causing permanent damage or the need for surgery. Yikes! There are those who swear by this, but I won't touch it with a ten foot wick.

What do you do when you have an opportunity to make lots of money but personally hate doing it or have issues with the act?

So I made a boo-boo

I made a decision when setting up our consolidation loans and taking advantage of a credit card's 0% APR. While I can pay back the loan amount that's "overage" due to the credit card offer, it will not reduce my monthly payments, simply the term. This isn't a huge deal as we intend to put every penny into paying down debt that we reasonably can.

However, extra breathing room would be advantageous if we are forced to get the new car soon, when student loan payments recommence, or if something happens economically.

I will be putting $3000 towards the $5000 on the Capital One card. This will reduce our payments from $150 to $60; that's $90. This $90 will continue to be paid towards the consolidation loan, however, if needed, that's half a car lease payment or a week's worth of groceries if we need it.

Total cost of this mind-change: $60. It cost me 2% in transfer fees to put that $3000 onto the card.

Analysis of this new decision:

Short term: Short term this is probably a pretty good move. It frees up extra cash which is still being put towards debt. $3000 would be put towards one or the other anyway.

Long term: There's two ways to look at this. $3000 at 15.9% probably isn't the best thing to carry around compared with the same amount at 0%. However, we'll be cutting it pretty close later on when student loan payments start again if we need a new car which could force us to use our cards in some situations. (Note: the $2500 emergency fund will be fully funded as soon as the rebate payment hits our account.) Long term it's both a smart and a stupid move.

I want a new car

I say "want" because it's not yet an immediate need.

We "can afford it" meaning that if all our requirements are met (and the dealers I've been emailing have confirmed that this is doable) then we can do it if we decide to.

However:

- We have to drop quite a few things from our budget. Hubby is okay, and maybe we should "trim the fat" anyway, but I think small changes are the key right now. In a few months we'll trim some more and then finally everything we can. Maybe. We'll have to see how it goes and be realistic.
- We will not be able to put money towards a vacation fund. Since I've taken over the budget and reworked things to start in May I've been very excited that we have a little room to save up $3000 over the next 36 months. It was a goal that's really important to us to take our daughter (and ourselves) on a "big" (to us) vacation every three years. The other years we'll do a thrifty weekend exploring Florida. This will be nixed.
- Once our student loan payments start again we will have a whole new ball of fun trying to figure out where the money will come from.
- We won't be able to put as much money towards the consolidation loan we took out.
- My income can fluctuate drastically each month. Each client who cancels is worth at least $65, and cancellations are a fact of life. On the other hand I often get calls from new clients worth at least $70. (Old clients have until June 1 to pay the new client rates, which are $5-$10 more.) I also may not be able to get another class (I teach one night a week) immediately after this one ends in mid-August, so that income is not something I can depend on. Or I may end up with twice as much income if the class is full time. It's all up in the air.
- Not having any car payments right now or for the past three years has been awesome.
- Our insurance will go up, but only $16-$20 every six months. (I called and asked.)

Why I want a new car:

- When we bought hubby's car we knew that it was a temporary fix. He'll get my car. His doesn't always start and the fumes are so bad that I will not allow my baby to ride with daddy. (In an emergency she'd have to, and that terrifies me, however an emergency is an emergency.) (Semi-real reason.) It's likely his car will have to be replaced soon no matter what. (Real reason, but not a "right now" reason.)
- My air conditioning goes on and off for no apparent reason. It will be $1200 to get fixed and I am not okay with that; it's unlikely I could sell the car for over $1000 with its mileage and condition. Summer in Florida requires a working air conditioner--especially with the baby. If it was just me I could handle it. There's no way I'm going to put her in a 130-degree car. But, airing it out will help. So we'll stand in the parking lot for 5 minutes in 97-degrees. No problem. And it does work 80% of the time... for a few weeks at a time, then off a few days, then on for maybe a month, then off for an afternoon, then on for a few days... it's really weird. (Real reason.)
- My car is a safe car, however the new cars have even more safety features. With my daughter in the car this has become incredibly important to me. (Rationalization.)
- My car has good gas mileage however we're looking at cars with excellent gas mileage. Our fuel costs would go down slightly, but not enough to make up for a new car. (Semi-real reason but mostly rationalization unless we get a hybrid, but that's far above our budget no matter what we do right now.)
- We cannot take long trips in my car. I haven't seen some of my friends in Orlando for years. Last time we went up there my car broke down and I had to get repairs and rent a car while we were there. It's done this every trip for awhile. So we stopped taking trips. Each one cost gas plus $400+ repairs. Luckily, however, we haven't had any major repairs when we're driving it locally. Since my hubby would only go 15 miles or so a week, maybe 30 on a weird week, we'd be good. I should also say there are some current noises that none of our mechanics have been able to replicate, so it's probably nothing big, but there's always the threat. (Real reason.)

A definite Vice

We have a huge vice, my husband and I. It's called, "homemade custard," and it lives less than three blocks from us in the form of a little store called Sweetberries. Oh, is it ever yummy!

In the past we've plopped down $10 on a couple of custards a few times a month. Last night I was having a craving for my favorite concrete (where they mix it in with the custard as opposed to putting the extras on top): caramel and waffle cone pieces. Oh dear! Such YUM.

Hubby got up off the couch to go find his shoes. I asked where he was going and he said, "custard-land." Then I stopped him and told him that it was ten bucks and that the ten bucks would go much farther towards paying down debt than for custard that would be forgotten about in a few hours. He agreed and we made popcorn in the air-popper instead. Very yummy and for far less. (His favorite is butter, salt, and garlic.)

I was so proud of him when he made the comment of, "this sure is good. And you know why it's even better? Because it doesn't cost 10% of our weekly food budget."

How much easier could it be?

Chase agreed to send me a new card with a lower APR and rewards--no annual fee--when I called to negotiate rates. It finally came in the mail this week. I noticed that it did not come with a "welcome package" as promised, so I'm not quite sure what my rewards actually are. I imagine this will ship separately for security?

The card has been sitting on my desk with my other cards (active, expired, closed, you name it; they're on my desk to "do something with"). The piece of paper that it's attached to has, "Go to www.chaseblink.com to learn more about your new Chase credit card with blink." So I did.

Blink is apparently a small chip that can be used to purchase items without even swiping your card. You move it close enough to the sensor and it takes the information.

Yay for companies finding solutions that make products better. Yay for solutions that save time. Yay for free features and benefits.

But seriously... how much time does waving a credit card around save over quickly sliding it in a slot less than an inch from where you wave it? How lazy would you really need to be?

If it had a key chain  thing that I could use like some gas stations have, then okay. I can see that. I don't even have to get it out of my wallet. (On the other hand, how easy would that be to take? I'd worry that someone would swipe it--no pun intended--every time I set down my keys.

Furthermore I have issues with the demonstration on the website; they show Blink being used to pay for a slurpee. A slurpee? I understand using cards for cash rewards and miles, and sure I'd use it then, but the vast part of Americans aren't that savvy. If you don't have $1.27 in your checking account for a slurpee then it's definitely not something you should be charging. (Judge, judge, judge. There I go again.)

Yes, my credit score is going down

Why? And why am I okay with this?

By closing the accounts that we have paid off we are lowering the amount of credit we have available. So what? The amount of credit used versus credit available directly affects credit scores. By lowering the amount of credit was have access to we are skyrocketing our ratio. I don't know how much to expect my credit score to drop, but drop it shall.

Why am I okay with this?

Because I would rather be out of credit card debt sometime within the next decade, thanks.

To me that means removing temptation.

Faith in God, faith in myself, and faith in my willpower are just not enough to get us through this crisis and get out of debt. If will power was enough, we wouldn't be in this situation to begin with.

So by removing temptation we are drastically limiting our options. We either have the money for something, or we don't. And that emergency fund isn't going to get dipped into nearly as often because it's our money rather than borrowed money. Our definition of emergency will change.

Bye, bye 685. I hope to see you again sometime soon.

The Past Life... and what to do about it

In my hubby's past life he was married and then divorced. Like many people, he crumbled during this high-stress period. And, as you can tell from our credit situation, he wasn't very educated about credit, finances, and budgeting for personal use. (Ironically, he's a bookkeeper!)

As a result he has a history of "charge offs" from the cards he had back then. It's been almost ten years on some and over seven for all of it. We still get dozens of calls from collectors a week. Check out this post at Broke-Ass Student to see the good info I just found about dealing with these guys and why it's important to NOT enter into an agreement if you're past your states statute of limitations.

Where did all that debt come from?

I've decided to experiment and see if I can remember what we bought with our credit cards. These are the rough numbers that I can remember off the top of my head. This will be an exercise in finding out if I can recall the majority of the debt we have and whether it was spent on needed stuff or frivolous items.

2002: I met my husband this year and we started dating in March. I remember that on our first official date I was so excited because I had literally just paid off all my credit cards. I had been embarrassed by my whopping $800 in debt. Lol.

When I moved in with him there were things we "needed", of course. A bachelor living in a 425 sq. foot place with a dog and two cats needed far less than a couple. (We lived there for almost a year together. Yikes! That's true love.) I would guess $500.

Then my computer needed to be replaced. Enter approximately $1800 worth of debt.

Then we got married. Instead of spending lots on a wedding we went to the courthouse (I wore a pretty dress I already have; black if you can believe it!) and then on a cruise. I had already decided to go on the cruise for my birthday and had invited my boyfriend. We decided to get married the day before so that we'd have a honeymoon. $1700 plus about $400 in misc. wedding stuff. (Hey--that's a lot better than a lot of people; some spend tens of thousands on the wedding alone!)

We got into massage school this year as well. I am very proud to say that we did not get into debt. We both paid $300 a month faithfully.

2003: We moved to a beautiful house (rented) that did not have a washer and dryer. I had to purchase them. $800.

We graduated from massage school. Licenses were applied for which required a state fee and a national exam fee. We also purchased some equipment. Probably $700.

2004: I decided I needed a hand held organizer instead of trying to juggle a bunch of purse-size calendars for appointments. $400.

Took several CEU classes to the tune of $700.

I stopped doing computer consulting and worked full time as a therapist, which was great, but we did incur some expenses for marketing and such. $1200?

First year's CPA fee $500.

Splurged on random stuff at orientaltradingcompany.com for some reason. $160.

Husband, later in the year, decided he also had to have a PDA. (I use mine every day; his gathers dust. *sighs*) $550

2005: Went back to school! This was all student loan debt (not counted in my credit card total but will eventually be dealt with.)

Car repairs: $600 or more.

My husband got laid off at one point and we incurred almost $2500 here just to get by. (Still living in beautiful house with $1200 rent--what were we thinking?--at $12/hour pay. Yikes.)

My father died in late 2005 and that created some stress mentally. I only took four days off work, but I know we spent a little bit as a direct effect of this. My guess is $400.

2006:

More car repairs: $600 or more plus $500 on my husband's.

I expanded my business. I took out student loans for most of the expense of skin care training but easily $1600 got charged.

Went to trade show, had car repairs (see above) on way, had to rent car, plus cost of tickets and items we bought for business expansion. $1300? That's probably a little high.

Spent at least $2000 for new equipment for skin care.

CEUs $600.

We may have put this year's CPA fees on the credit card. I'm sure we did it two years. I'm not sure which two.

2007: I think I put a total of $300 on my credit cards in 2007. Whoo hooo! This was to renew our licenses.

I was very proud of myself because in late 2006 and early 2007 I got to the point where I could buy retail product to replenish my stock out of the sales I had made, sometimes to the tune of an extra $600 a month. This was a really cool thing, in my opinion. Since our business expansion was complete there wasn't a whole lot I had to charge. In fact, if my husband hadn't gotten laid off again and I wasn't pregnant, I think we could have paid the $300 ourselves.

2008: Zero, baby, zero!

And the grand total... $21,110.

Wow.

I am amazed. I really thought I'd have to scratch my head and go, "what did we spend all this money on?" And while I'm sure a lot of my above figures are not accurate I am happy that I wasn't really far off the mark. I'm a little over it, in fact.

Can you remember each purchase that got you into debt?

An investment that paid off, big time.

I work for myself. There is no such thing as paid time off if I get injured. As a massage therapist, injury can easily take me out of the office for days if not weeks at a time. This is why I signed myself up for a short and long-term disability policy through Allstate Workplace Division.

I've only had to use it once, but it gives me incredible peace of mind. And, it paid off big time. I had the policy for exactly 24 months when I needed to use it. As per doctor's orders I stopped doing massage on October 25. I got paid from Nov 1 - Feb 2 at $1044/month; just over $3000. My investment had thus far been just over half of that.

I get paid for hospital stays, dislocations, dismemberments, illnesses, and all kinds of other things that I really hope don't happen! I even get a check for $50 for my wellness visits!

Some people say that it's better to save the insurance premium each month and have an emergency savings instead. I think, however, that this is the best policy for me because it can pay quite a bit more than my premium if something were to happen.

The Fruit Stand

One of the ways we recently discovered to save money on our weekly
grocery bill is to utilize the local fruit and veggie stand. It's not too far from us and we're often close enough that gas mileage doesn't really factor in.

Based on the prices last Sunday when we went shopping at Publix and from the fruit stand today when I went:

Publix Cucumbers: 2/$1.79
Fruit Stand Cucumbers: 2/$1.00

Publix Beef Steak Tomatoes: $3.29/lb
Fruit Stand Beef Steak Tomatoes: $1.79/lb

Publix Red Bell Peppers: $3.99/lb
Fruit Stand Red Bell Peppers: $1.00/each

You can see that the prices are quite a bit lower.

Another thing I have to admit is that in addition to being a much better price, the food tastes awesome! Oftentimes what we get from Publix is but a shadow of what a garden version would taste like. (I grew up with a huge garden and miss it horribly.) The fruit stand tastes like I remember food. Yummy.

My one thing I have to improve on is learning how to pick out veggies and fruit that aren't perfect. What I see at the grocery store are the perfect-looking waxed primped versions. The fruit stand has "warts and all" versions. I need to learn what's a natural blemish, what's dirt, what's a real bruise, and what signs of rotting are for my favorite freshies. Unfortunately these are things I don't remember from childhood.

I've made a commitment to go to the fruit stand at least twice a month. I'm aiming for twice a week. (What we buy hasn't lasted as long in the kitchen as Publix stuff normally does. I guess it's not "bred" to be as transportable and hardy.)

Stupid mistakes I've learned from (but not made myself)

Since I'm not giving this blog address out to people I know personally, I figure this might be a safe topic. Maybe.

A friend of mine decided to go back to school after her divorce. Her parents were gracious enough to allow her to room with them again and all seemed to be well. One of her agreements was to hold a job during the summer when classes weren't in session.

Option 1: Work for an office for $11-$14/hour over the summer
Option 2: Continue to work as a student-employee for $7/hour over the summer.

Guess what she chose? Yep, Option 2. Instead of working for almost twice the money, she kept her student job. Why? "I promised one of the ladies that I would stay and help out over the summer."

I understand commitments, but I also know that there is no way I would keep that promise. I would say, "I'm sorry, but my financial situation has changed and I am forced to take a position that pays more over the summer. However, since you have been so flexible with my schedule, let's talk about the possibility of me helping out again when classes start."

A new concept... wow

I've always wondered how people plan for the small expenses that pop up from month to month (but not every month) as well as the bigger yearly expenses.

- Every 8 weeks I pay $20 for The Grocery Game. We've saved thousands of dollars by using this website so $20 is more than worth it.
- Every 3 months I pay just over $22 for a subscription to Shockwave.com. My husband and mother and I all play computer games to unwind. (Yes, our time could be used more productively.) This allows us full access to the full versions of all the games on the site. It works out to about $3/month "entertainment" for the each of us.
- Every year we have a bill at our accountant's. (As business owners we choose a professional.)
- Our car insurance is billed oddly (we may change this) so we have one month with no payment and the first month with a larger payment.

Anyway... these are just some examples. A freedom savings account breaks down each expense in the following manner:

Amount of expense / months until expense occurs

So my birthday, which I'd like to budget $150 for, is in August. This would be 150/3 or $50 a month I'd need to save between now and then. At that point it would be $150/12.

The $20 would be $10 a month.

See where this is going?

Instead of "trying" to keep enough money in the accounts to cover these random expenses we plan ahead.

Some people don't like this and would rather keep the extra money in months without these expenses an interest-bearing account and transfer it later. I'm debating. I think I'm going to budget for the amount of my FSA and then transfer it at the end of the month to my savings account that I just opened with ING. This way I'm both planning for it AND I'm earning interest on the money. Make sense?

Decisions, Decisions

I have downloaded a few awesome spreadsheets to help us plan our finances. (Thanks It's Your Money!)

Now I just need to choose one of the following ways to go about doing things.

1) The Envelope Method - Using Cash and Bill Pay

Using this method I would take out cash to cover the following: gas, groceries, household expenses, entertainment, and any other things we can physically pay cash for. I would use Bill Pay for our utilities and things that would be too difficult to pay cash for.

Pros: Once the cash is gone, it's gone.
Cons: I tend to spend cash way way way too easily and "forget" where/how I spent it.

2) The Envelope Method - Using Debit Cards and Bill Pay

Using this method I would use a spreadsheet (It's Your Money) to keep track of my "envelopes" though no actual cash would be withdrawn.

Pros: Once the cash is gone according to my spreadsheet, it's gone. Easier to manage.
Cons: Easy to "cheat" by spending more anyway; there's nothing to stop me.

3) The Cash Back Card Method

I have a Chase card that offers 3% cash back on a number of categories including gas and groceries. I could use this for our bills and pay it off immediately, thereby avoiding interest charges and getting additional money back.

Pros: It's like getting a discount on all my purchases.
Cons: So easy to buy more than I need, "pay it off next month" and so forth. Especially since the money will be sitting in our account. It will seem like we have more than we really do.

Each method has pros and cons. Each method is going to require will power.

I'm thinking about option 2. I'm not going to risk blowing cash on who knows what (seriously, it's a blind spot for me) and I'm not going to risk charging things and then not paying them off. (If I could charge things and then pay it off, why am I in debt? Oh yeah, cause I didn't have the money.) If I can stick with this method for four months, consistently, then I am going to try method #3. First time we "slip", however, it's back to method #2 and the card goes back into its ice-block in the freezer.

What method do you use?

Free Electricity!

Okay, you're probably reading this post for some secret to cutting your utility bill. My "secret", however, is more about a promotion from the yummy makers of Silk Soymilk rather than a way to help the average Joe save money.

This is a quote from an email I received from Bzzagent Jono (I'll write more about Bzzagent at some point soon!):

Did you know that Silk offsets 100% of the electricity used to make their products with clean, renewable wind power? This saves 17,500 tons of greenhouse gases from entering our atmosphere every year. Wow!

Want to help the environment too? Get ready to Go Green! The Silk^® Green Caps for Green Energy^™ program is back again, so be on the lookout for Silk cartons with a green cap (like the ones shown here).

Make sure to head over to the Silk site to help the earth--one green cap at a time. Just visit the website, enter the UPC code from your carton, and Silk will donate enough money to power a home for one day! You could even win a Green Home Makeover!

Oh yeah, http://www.silkgreencaps.com/, will also email you a $0.55 coupon towards your next silk purcahse.

Kudos to me!

I faced my Giant today and I won. It was a hard battle and I almost had to call home for an intervention and support.

I actually entered JoAnn fabrics, got exactly what I needed (one 8x8 scrapbook and a pack of 8x8 refills for a going-away gift for a friend: 40% off thank you very much) and didn't buy anything else.

I didn't buy anything else.

Holy cow. The only thing worse than a scrapbook or craft store is a bookstore.

*phew!*

I'm practically sweating.

Also, in related news, this purchase allowed me to finish a project. I finished something! My life tends to be filled with projects that are at various stages yet rarely finished. Two boosts in one day! Yay!

A post to remember

I wasn't lacking in education about money. Certainly, working for small wages from the time I was 14 has helped me understand concepts about money. But if my education was so great, why the heck am I so far in debt?

This post is one I want to remember for later. It has great ideas for teaching the little ones how to understand money. At 10 they are giving their daughter a "salary" that includes money for gifts, activities, and so forth. She gets paid once a month and will be responsible for budgeting. Brilliant!

What we stockpiled this week

I don't have a chance to build up my stockpile every week. However, this weekend we did pretty good:

• I bought eight deodorants at WinnDixie. They were 2/$4 if you had a preferred customer card. Then I used eight $1.00 coupons. Each deodorant cost $1.00 each. Since we use a very particular type of deodorant (Dove Sensitive Skin) it helps to stock up when I can get it on sale. Last year in August I got the same deal at Publix and bought as many as I had coupons for.
• We bought four cases of Dasani water at Walgreens for $3.99 each and got a raincheck for four more cases.
• I bought enough ketchup for the next three months as Hunts was B1G1F.
• We used a combination of Extra Care Bucks from CVS and formula checks to get Enfamil for $15.39/24 oz can. This will last us one week and the usual rate is $25.39 a can.
  

The Secret and Zero-Budgeting: Making them non-exclusive

I am going to be using the zero-based budgeting method starting in May. I'm trying to find a way to reconcile this idea with The Secret.

I'm saying, "The Secret," because it's a popular book and DVD that summarizes a strong belief in "how things work" that we've ascribed to for years. One of the subjects the DVD, which we've only recently watched, tackles is debt and finances.

When you think about any certain topic or event, especially if you have strong feelings toward it, you send out a burst of thought to the universe which is amplified and then eventually returned to you. You attract what you focus on.

According to The Secret, those who focus on debt only get more debt. Those who focus on abundance and having plenty get more and have lots.

We put this into play about a month ago and the results were amazing. I focused on specifically receiving lots of checks in the mail. I pictured myself going out to the mailbox, opening the door, and finding an envelope with a check in it. Then I "felt" what it would feel like, pictured the excitement of depositing the check into the bank account, and so forth. According to The Secret you must really FEEL it.

Within 48-hours I had received a check for over $250 in the mail. I also had seen my mother who handed me an envelope. One of her friends had gotten a bonus at retirement and she had decided to distribute it to a few people she knew who could really use it. The envelope had $200 in cash.

More checks started coming. A lot of times they were comical; here's a $20 check and oh yeah cashing this signs you up for (fill in the blank). Some were "checks" for automobile sales. But the point is, they were checks.

I kept picturing this and amazing things happened. The insurance company had settled with our midwife and they changed their minds! Instead of paying her part of the fee they paid it off entirely. I should get my refund of $600 from my deposit any day now.

So I know this works. We've used it for years (before anyone had heard of "The Secret") to get parking spots or arrive at a deli before the line built up. This is simply the first time we've ever thought to apply it to money.

Well, that's not entirely true. We've always had "enough". Somehow we always knew we'd have enough, no matter what. If my business fell short one month, suddenly the pool table we'd been trying to sell got snatched up for our asking price. Things like that happened all the time.

Now we're focusing on those checks coming in and on having MORE. Not on having "enough". We've got that part. Enough to cover all the bills that "have" to be payed. Not necessarily enough to go out to eat or buy the fun toys. (Hello, debt!)

We're moving forward in the real-world too. By leaps and bounds compared to where we were before.

I just need to fix this in my head. How a zero-based budget system will work. I don't want to focus on their being "nothing" at the end of the month. I need to find a way to "put it" in my head that is a positive spin where the two can work together.

Maybe some of these ways will work:

• We have so much money that I can pay myself first.
• Our money is being allocated wisely so that every penny has its place.
  
• Our savings account is increasing exponentially because of our abundance.
• I know where every dollar goes and I know it's increasing our abundance every day.
  

Note that I'm not saying, "our savings is increasing while our debt decreases." I am not going to focus on putting out "debt" when I do my focus sessions several times a day. I'm even concerned that writing about debt so much is going to "put it out there".

Maybe if I look at our debt as "a step" to increasing our savings. It's something that we just need to overcome, no more difficult really than wiping down the counters before cooking a good meal. It's going to be "easy" and "fast".

And yes, I realize that's not the "reality" of it. I get that. The difficulty, focus, and effort required are why we're still in debt in the first place. However, I want to focus on creating abundance rather than dwelling on mistakes. Does that make sense?

Why we do bottled water

Bottled water is expensive and wasteful according to most people. Not to mention that many experts cite is as being no better than tap water in many cases. So why do we buy it?

• We always provide our customers with a bottle of water after their massage.
• I always have a bottle of water with me in the car which I refill from our tap or from a water dispenser in a waiting room. (I use a new bottle every day.)
  
• Having a bottle with a cap on my night stand has stopped me from bathing electronic devices like our charging cell phones and alarm clocks. I don't have to worry about finding a spider in my drink. (This has happened before with a glass of water!)
  
• I can take put a sealed bottle of water in my diaper bag along with some powder and mix a bottle when needed. It doesn't need to be in the fridge and I've wasted much less formula this way by mixing on demand.
  

Not the best reasons ever, but good enough for us. So how do we save money?

This last week Dasani was on sale for $3.99 for a 24-pack. This is a really good price for most bottled water and especially for Dasani. I purchased four cases and went to another Walgreens that was out for a rain check for four more. This allows me to go back when I'm on my last case and get it for the same price.

As I've mentioned above I reuse my personal bottle. I don't leave it in a hot car or use it for more than one day. This helps keep bacterial growth and plastic leeching to a minimum.

We recycle, which doesn't save us money immediately. I do believe it saves it in the long run by preserving resources.

Giving clients a bottle of water is much more appreciated than a simple paper cup. It doesn't cost a whole lot ($0.17/bottle) and it creates a lot of good will. Plus I can attach a special handmade holder that has our business card, a referral postcard, and a small chocolate. This is impressive and they take our information with them.

We have our own bottled water for events and in the car so we don't end up paying $1.00 for a bottle. (I've often thought about being a water-only-vendor at craft shows and such. We'd make a killing!)

Check those receipts

Extra money out the door can be as simple as missing someone else's mistakes.

Example: I went to a "getting to know you" lunch with the other ladies that rent space from the same spa that I do. I brought my own bottled water. Its been refilled twice today from the tap, so it's actually water in the bottle, but I prefer knowing that a waiter hasn't stuck fingers in my drink. Call me crazy.

I checked my ticket before handing over the cash I had brought. "Drink $2.19". I pointed out to the server that I had brought my own water. She agreed, apologized, and looked embarrassed. She corrected it immediately.

I can't tell you how many times I've found mistakes on my food bills. One time a restaurant accidentally swapped cards and I ended up paying over $40.00 when my bill was less than $10! (Again, corrected, but what a pain!)

Sometimes saving money is just making sure you know where it should (or shouldn't) be going.

How I saved money:

• Saved over $2 by checking my receipt
• Asked for a box immediately as the food arrived, cut my burger in half, and wrote what it was and when to eat it by on the outside of the box.
  
• Took cash so that I couldn't impulse-buy a soda, soup add-on, or dessert.

Stuff

Last year we had a garage sale. We worked for many weekends and evenings going through an accumulation of "stuff" from four different people over two different states and five cities.

I think this was one of the biggest catalysts for us to bring things into balance.

I realized that we don't have "nice things". The majority of what we own was given to us. Some of it was new (like the television with dvd and vhs that my hubby won at a work event) and a lot of it was second-hand. Our computer equipment and business equipment are about the only things we've really put money into.

Instead of purchasing a really nice, comfortable sofa, we've probably spent about ten times as much on little $20-$40 items at Target. It's so easy to spend a small amount of money. What's $20, really? Seen alone in a wallet that twenty dollars doesn't have the "add-up power" that it does in a stack of other $20 bills. It's hard to imagine how $20 will make a difference. It's real easy to say, "well, if $20 makes or breaks us honey, we have loads of other problems."

And yes, we've said exactly those words, at least 2-4 times each month the entire time we've been together.

"If $20 makes or breaks us, we have other things to worry about."

What a wonderful way to think, eh? What a wonderful way to live in denial and build up debt.

$20 is also an amount that is easily paid off at the end of the month. No cash? Don't worry... $20 won't make or break us, we'll just pay that off when our bill comes in.

I feel very embarrassed right now. And rightfully so. We were idiots.

Because in going through the boxes and boxes of stuff in our attempt to declutter and consolidate our belongings into a more manageable amount, I realized just how many items we really had purchased.

Seeing them, lined up on our garage sale tables, made me realize that those items could easily have been a nice new couch, a dining room table, or even a nice down payment on a new car.

Instead of investing our money or using it to pay down debt, we celebrated life in quick bursts of spending that fizzled quickly and left us with a garage full of crap.

And not only was it a garage full of crap; it was a garage full of crap that no one wanted to buy.

One of my favorite candle holders was a pair of wrought-iron loops with four votive candle holders around a bowl that could hold floating candles, pretty pebbles, or anything else that would be pretty. They were on chains that we hung from the ceiling. Total? $40 for the pair plus about $16 replacing the glass votive holders that ended up getting broken.

Our total amount down the drain was at least $56 plus tax. Oh, plus the cost of the hooks to hang them.

We "meant" to hang them up and when we finally found the boxes, dusted them off, and got around to it we had just over a year before we had to move and no longer had the room for the lovely decorative candle holders. Then they sat in the garage collecting dust for almost two years.

They sold for $5 each.

Now, the nice thing is that it was a (very expensive) reality check and it completely changed the way we spend our money. It also got rid of a lot of things that we had no need of. We gave a sizable donation of usable items to Goodwill. (Unfortunately we weren't smart enough to get a receipt.) We had a baby on the way and we needed the space; we accomplished a goal.

We accomplished a goal. We actually finished something that we had started.

This was something we needed to know about ourselves. This was the first "big project" that we had seen through from start to end. It was a big thing.

This garage sale was full of lessons. I'm thankful that we have finally learned them rather than sitting around and waiting another few years. I'm glad we've proven that we can start what we finish. We can work as a team. We can get stuff done.

Now our big challenge is finding a reality check for all the things that can't be lined up on a table in the early morning light of a Saturday garage sale. Like our trips to Starbucks (1-2x/month), getting homemade custard from the shop down the road (2-4x/month), trips for Slurpees (4-6x/month) and all the other assorted "treats".

Why I'm not paying off my medical bills

I have a balance of a whopping $127 due to a local hospital. My payment agreement with them is $10 a month. I've been paying $10 a month for the past few years. Most "get out of debt" websites agree that since this is a small debt I should pay it off and get the "high" that comes with getting rid of a balance.

Here's why I'm not going to pay it off right now:

• I'm not being charged interest on my payments.
  
• The money can go towards our emergency fund and paying off other debt.
• The hospital was a pain in the butt about billing me.

Number 3 is actually the biggest reason.

I was admitted in March of 2004 and stayed for less than 24 hours. It was awful, to say the least. We were on a PPO for the first time in my life and I was shocked to see the sheer number of medical bills come in. The x-ray tech billed me. The anesthesiologist that gave me morphine for the pain billed me. Every single doctor I saw billed me. The hospital billed me.

The first thing I did when I received those bills was to pay them. I did my absolute best to get them paid ASAP. Why? Because they provided me with a service and I wanted to make it right as soon as possible.

After a week or so I got yet another bill. I didn't have the money this time so I put it on one of my credit cards. I felt that they should be paid. Plain and simple.

A year and a half later... yes, I said eighteen months later... I receive a huge bill from the hospital. This started a long stream of phone calls to my hospital and insurance company trying to make it right. They sent no less than four revised bills. Then the insurance company changed their minds again.

Finally they figured out what I owed them and sent me a final bill. I called and said, "I did everything I could do to pay every bill that came into me after being released. I even put some of it on my credit cards. We just aren't in a position--a year and a half later--to pay a bill that should have been figured out months ago." I explained that our financial situation just didn't allow us to pay them and that I could afford ten dollars a month. "Ten dollars? Let me send you over to our payment associates. They'll set you up with a payment plan for ten dollars a month."

I was shocked that they would accept such a pittance against my bill. But, they did.

So I've been paying ten dollars a month and that's all I'm going to pay them. I think it's ridiculous that they waited for so long to get things worked out. And yes, I know, it can take that long to deal with insurance companies. I get that. But I don't think that I should be required to put more debt onto my credit cards because I failed to budget for something that should have been taken care of.

It's a matter of principle to me.

It's also the reason why I will always choose an HMO from now on, at least until I have a really big reason not to.

Why an End Date Matters

Every few months I get out a piece of paper and a pen. I scribble down our monthly expenses and income and figure out how we could do things differently. I play with dozens of scenarios.

Inevitably, I come up with the, "how we can get out of debt in only 3 years," plan. I get all excited. I bounce around. I show it to my husband, who is a bookkeeper, and ask him to check my logic. Yup, it should work.

The next day I wake up and look at my insane scribblings and realize it won't possibly work. All the good intentions lead to a goodly amount of disappointment. It sucks. This has happened several times a year for the past five years. No matter how much we mean to pay off extra, no matter how many coupons and deals I can find, we always make our bills with a tiny bit left over. This amount can range from $2 to $45 on a good month. This goes towards building a padding in our checking accounts. (I aim for a $300 padding.)

It gets frustrating! We've modified our personalities as far as they're going to go. There's just no way that we can make due with Ramen Noodles five times a week or avoid "entertainment" money altogether. We're not going to squeeze packets of ketchup into our bottles just to save on the little things. I'd like to say all it would take is willpower. I know us, though, and the reality is it's not going to happen.

And I think a large part of financial success is being realistic.

So now I know exactly when we'll be out of (credit card) debt, if not earlier. And that matters because it's not some ephemeral date based on scribbled notes in the middle of the night. It's a contract; agreed upon by BOA and by me. 96 months.

It matters because I know that it is going to end.

(Note: We do have a budget, in excel, for the "reality" of our financial situation. We've managed to completely stop using our credit cards due to our budget and this has helped quite a bit. However, it's not getting us ahead. Minimum payments take forever. One calculator located online suggested 22 years...)

This week's goals

I'm going to create goals each week and post how I do. If they are small goals, there will be several. Larger goals may go over several weeks or more.

Goal #1: Keep in touch

Description: I am going to follow up with every single credit card and make sure that they've received the payoff amounts.

Purpose: Ensure payments have arrived and avoid daily compounding fees.

Revised Goal #2: Manage my husbands card

Description: We are going to cancel my husband's Chase card. (We're going to give them a call and see what they can do for us first. If they can give us a kicking APR instead of the current APR, then we'll negotiate with BOA and the winner gets it. If it's only a few % points, however, we'll stick with BOA simply because managing the card is immediate and convenient. Also, since we don't intend to leave anything on the card beyond a few days, grace period will fall into the equation as well.)

Purpose: Remove temptation, negotiate better situation.

(Update 4/23: Wow. Chase was basically like, "there's nothing we can do for you." My husband said, "I have a better APR through BOA and that's the deciding factor." The operator said, "I'm sure you do." He closed the account. Crazy.)

Goal #3: Manage Stockpile - 2 weeks

Description: I am going to create a list of all the items we stockpile and wish to stockpile and put it in one easy-to-manage system. This way instead of forgetting to tell me we're on the last (fill in the blank) my husband can cross off an item every time he opens a new one.

Purpose: Avoid wasting money by paying $4 for a "must have now" item instead of buying it in advance for much less.

Sneak Peek: Goals for next week (April 28-May 4)
- Set up new money system in excel
- Transfer money to one account instead of three!
- Open IGN account for our emergency savings (update: applied for 4/21)
- Transfer tax rebate money into IGN account once open for our emergency savings fund (goal: $2500) (4/24 transferred $1000)
- Send check to BOA for the overage amount (4/24 set up BOA as a payee in my bill pay so once I'm ready it's a click away)

Avoiding "the trap"

Isn't consolidation great? Just give us your business and we'll take care of those awful credit card payments. Oh, and you don't even have to pay us as much as you were paying them. Fabulous, isn't it?

Except that most people suddenly find themselves with a little extra cash during the month and a stack of empty credit cards. They've been "paid off" right?

The result? A pile of new credit card debt and a situation worse than what they started with.

This is how we're avoiding that trap:

• I used the money that was put into my account to pay off my Capital One card. This gave me $5500 of available credit and a zero balance.
• I paid off my BOA and Fleet cards.
• I transferred all of my WaMu card to my Capital One card. (Note: even with transfer fees and such this and the next step actually save us over $1500 in the long run.
  
• I transferred most of my Chase card to my Capital One card.
• I checked to see that the payment had been received by BOA, Fleet, and WaMu and then called to cancel those cards.
• We paid off both of hubby's cards in full.
• I am paying back the amount of the loan that we did not use as soon as all the checks clear.
• In seventeen months I am going to borrow from the loan (it's like a revolving credit) to pay off the Capital One card in full.

My husband will have exactly one card and I will have two cards: the Capital One with the $5000 at 0% interest and my Chase card. The goal is to use my credit card only for real emergencies (it will be in a block of ice in the fridge) and to use his for small purchases and then pay it off during the grace period. He needs to rebuild his credit due to a few "forgotten" payments that resulted in a flag or 30 days+ late on his credit report.

• Credit card purchases over $20 in one month must be discussed and approved by both in writing.
  
• Receipts are stapled to the written slip and filed.
• The card is paid off as soon as the amount shows on the account. (Since it's a BOA card it's so easy to do.)
  
• Both of us will have account transparency (the other spouse has access 24/7 to the account online to see that there are no sneaky charges)
  

In short we are:

• Avoiding using the "overage" to pay for anything, thus doubling our debt.
• Not giving ourselves the temptation of using our "paid off" credit cards by closing the accounts
• Reducing our monthly payment by almost half... and continuing to use the great majority of the difference towards the loan anyway
• Using the small difference that we are saving with the reduced payments to avoid "having" to charge anything else since our margin of error is so tight
  

How I saved over $400 in Twenty Minutes

I called our cable service and told them that we had gotten a competing offer from Verizon. I joked around about, "my hubby's friend just got the Verizon Fios and now my hubby wants it to. I'm hoping you can do something for me to help me convince him to stick with you."

This is what we got:
- Added phone service for $13 a month
- Waived installation fee of said service
- Free HBO for one year
- Rate guaranteed for one year (at which point I will renegotiate again)

Because we will now have phone service through Comcast I can cancel our Verizon phone service. This is a savings of of $32.00 per month.

Then my AAA bill came in the mail. After a brief chat with hubby I called Geico and asked them about their roadside assistance. I'm saving over $40 for the year by doing it through my insurance company.

$32 x 12 = $384
384 + 40 = $424

I saved $424 in twenty minutes.

I recommend that you take the time to negotiate your bills as well.

The post that sparked my motivation at No Credit Needed

What sparked this - the long post

I received an impressive balance transfer offer from Capital One:

• No interest (0% interest) for 18 months.
• After 18 months goes back to my normal rate. (Many times they will give you an outrageous "new" rate after the offer expires.)
  
• 2% balance transfer fee (3%-4% is the usual)

This sparked something I had meant to do for a long, long time; I needed to call and ask my creditors to do something about my APR which has steadily been creeping upwards over the past two years.

First I called Capital One. I explained what I wanted to do and that I was willing to consolidate my debt on their card. I was passed onto the "senior account manager" and explained all over again. He cheerfully offered to either increase my credit line by $2000 or to reduce my APR by just under 2%.  I chose the $2000 credit line increase.

Then I called Chase. They passed me onto a supervisor and I was changed to a rewards card. After ensuring that there was no fee, I accepted. This lowered my APR by 4% and gives me up to 3% cash back on a list of things.

My third call was to Washington Mutual, who used to be Providian. Out of every phone call I made, their customer service reps were the rudest. In fact, having made many phone calls in my life to CS hotlines, I have to say they were the rudest I had ever dealt with. They could do nothing to help me.

My fourth and final call was to Bank of America. My BOA card and the Fleet card that they absorbed had the same CS number. Two birds, one stone. Unfortunately they could do very little to help me and I only had my rates reduced by less than 2%. I told them if I had no other choice I'd take it and told them my story. The supervisor asked me if I knew about the GoldOptions loan.

This sparked a 90-minute long phone call.

Bank of America has a GoldOptions Loan that is basically for debt consolidation and that doesn't require any collateral. To my shock I was approved based on the financial health of my business (since I'm self-employed) without even factoring in hubby's income. He negotiated the rate with me.

I'm not proud of this rate, but it is far lower than all of our other credit cards. My lowest is Capital One at 16.9%. The loan is $15.9. Some of our credit cards have steadily marched up to 25%, 26%, and one of hubby's is 29.9%. OUCH. Even though the loan rate isn't the best, it's still slashing our interest rate by almost half. This alone is worth thousands of dollars.

My payment is $350/month on the $18,000 and the loan term is 96 months. That means that in eight years we're out of credit card debt. Making minimum payments on the seven combined accounts was costing us almost $700 and it would have taken us a really long time with all the compound interest to get out from underneath that. Now we can continue to pay over $500 on the loan, get out early (no pre-payment penalties), and have a little breathing room.

Welcome

I've been reading a lot about debt reduction lately and was inspired by the wide range of blogs others have started to chronicle their own journeys. Most blogs (even mine) are full of random day-to-day observations and anecdotes. Which, while entertaining, don't add much value or new information to my world-view.

Financial blogs, on the other hand, have been a great boon. Not only have I learned some new tips, I've educated myself about credit cards and the company strategies, and I've learned the number one best thing ever for motivation:

Other people have gotten out of debt. Other people have not only gotten out of debt, they've started to save for their future. IT CAN BE DONE.

So thank you, bloggers. I hope that one day this blog will be as inspirational as yours. If not, at least it's a way to be accountable.