Sunday, September 21, 2008

Going Static for a While- Please subscribe!

I really thought that I would be able to get more posts in. Lately I haven't even had time to get on the computer and check my email. I have decided to just let POW go static for the time being. I may post some things here and there, so if you do enjoy my posts I highly suggest you subscribe. That way you will be updated ONLY when there is a new post and won't have to check here for new posts.

I figured I would do a quick update on our financial situation. I had to take $500 out of our emergency fund to cover expenses preparing for Gustav. We were missed thank goodness, but we didn't get our money back. I guess overall it will even out because I won't have to buy batteries or canned goods for a while. Also, thanks to some overtime we were able to pay the E fund right back.

One day I may post on my new system, because it is really working out well for me. I keep my bill info in an Excel worksheet I created and keep up with our subaccounts in MS Money. We have money socked away for irregular expenses and our lump sum fund for our annual expenses is growing nicely.

I really appreciate those who have participated in POW comments etc, over the last couple years. This is not goodbye, but I just have so much I am focusing on right now. I don't have the quality time to devote to this blog. I don't want to leave you with a bunch of cruddy posts. Thanks for reading. Please subscribe!!

Thursday, September 18, 2008

WOW! PoW Retro

PoW Retro (that is Picture of Wealth, not prisoner of war) is a look back at some of my favorite posts over the past year and a half. I hope you enjoy these!

Today you get a two-fer. My biggest money mistakes followed by my biggest accomplishments. And, I have to make another little change there. I did stop contributing to retirement a few months ago but only long enough for me to get out of debt. And, since I have been going non-stop for 8 years it shouldn’t be so bad. Oh, and I still contribute to my mandatory retirement so there is still SOME going in. Read these and see how many you have done or are doing!!

Tuesday, September 16, 2008

Back to Basics Post 8 A Few Parting Words

For the final post in this series I just wanted to talk about what to do when all the debt is gone.

First of all, you need to think about the future. Dave Ramsey suggests continuing to save until you have 3 to 6 months worth of income in savings. This will cover you if you lose your job unexpectedly.

After that it is time to think about retirement. You should be able to max out an IRA at this point. If your job gives matching contributions for a 401K contribute the maximum amount.

If you are fully funding the retirement accounts each month then you can think about saving for a house, or kid’s college, etc.

I have also made it very clear to everyone that once my debt is paid off the first thing I am going to save for is a trip to Disney. I ran the numbers recently and by the time we are done paying off our debt we will have $1600 coming in free and clear each month. In two months we would be able to have enough money for a great vacation. (We don’t pay that much in debt each month but we do have two kids in daycare and they will be out by that time.)

So, once you start really working at it you will see your debt clearing up and many possibilities for the future. I hope if you are not already using the steps in Back to Basics that you will start soon!! I hope you have enjoyed this series!! Thanks for reading!

Thursday, September 11, 2008

WOW! PoW Retro

PoW Retro (that is Picture of Wealth, not prisoner of war) is a look back at some of my favorite posts over the past year and a half. I hope you enjoy these!

This was the BIG News that changed my plans and my life forever. And, I am pleased to report that I DID IT…. DEBT FREE…. BABY!

** My thoughts and prayers are with all those who lost someone close to them 7 years ago today!

Tuesday, September 9, 2008

Back to Basics Post 7 How to Get Out of Debt Faster

If you are just finding the Back to Basics series you can find all of the posts in the series by clicking on “Back to Basics” in the sidebar. So far we have discussed tracking our money, finding money in our budgets, saving for an emergency fund, things to do before you start repaying your debt, and how to choose and implement a Debt Snowball.

Today I want to tell you how to get your debt paid off even faster.

The first time I ran my figures through Dave Ramsey’s Debt Snowball Calculator and saw it would take us 53 months to pay off our debt I was a little upset. I wanted it to happen faster obviously. Well, I forgot about a few things. Number one you can make it happen SOONER!!

This is known as Debt Snowflaking. Think of a snowball. Obviously this is where most of your efforts are focused. A big ball made up of all the extra pennies you have to throw at your debt each month. A snowflake is the same thing, just on a much smaller scale. (Although not always.) A snowflake is when you get extra money during the month and you add it to your debt before you can even think of what else to spend it on.

Many people use a change jar for this. Whatever money is for spending each month goes into their pockets, but when they come home at night they put any coins into a jar. At the end of the month they money in the jar is cashed in at the bank and immediately that money is transferred to the debt you are working on.

I have found many other ways to do this though. You can have a yard sale. All the money from the yard sale goes to the debt.

I shop using coupons and often there will be a rebate on a product I use. I apply for the rebate and when that check comes it goes to the debt.

If I get unexpected money it goes toward the debt. Recently I got a check back from one of our doctors for overpayment. I put it all toward my credit card.

There are also many websites online that will pay you for surveys etc. If you look at the sidebar up top there are several links to places like CashCrate, Survey companies and Cash4Books. I have gotten money from all three of these and have used it to pay my debt down even more.

I have also begun to sell items on Craigslist and Ebay. That money is still waiting in my PayPal account to be transferred.

I promise if you look hard enough you can find ways to pay off your debt. Get creative. The more you can do the faster you will be out of debt.

Thursday, September 4, 2008

WOW! PoW Retro

PoW Retro (that is Picture of Wealth, not prisoner of war) is a look back at some of my favorite posts over the past year and a half. I hope you enjoy these!

I don’t know when you will actually read this but today is July 28, 2008 (I am scheduling this for some time in the future). This post was written exactly a year ago today, and I tell you what. I still use this to make me feel better when I see others with toys I would like to have, but choose not to buy in order to become debt free. Who knows maybe it will help you too!!

** Just to clarify... I wrote this post in July, but it is being posted in September!! Ahh, the magic of the internet. (and today is still July 28, 2008) It is like time travel.

Tuesday, September 2, 2008

Back to Basics Part 6 Does it Matter How You Snowball?

If you are just finding the Back to Basics series you can find all of the posts in the series by clicking on “Back to Basics” in the sidebar. So far we have discussed tracking our money, finding money in our budgets, saving for an emergency fund, and things to do before you start repaying your debt.

The next item up for discussion is the Debt Snowball. This can be quite controversial. There are diehards on both sides of the coin. I will give you a brief synopsis of what each “side” is, and which to choose based on your personality.

The Dave Ramsey Method
For either method you will need to be able to list all of your debts. For this one list them in order from smallest debt to largest debt. You don’t need to worry about the interest rate. So, let’s say your first debt on the list is a hospital bill for $150. You are paying all the minimums on all of your other debt until it is that one’s turn on the list. So, all cards are being paid at the minimum but on this debt you happen to have “found” $150 a month in your budget so month one of your snowball you pay this bill and it is gone… poof!! Next month you start to pay your gas card. You owe $500, your minimum payment was $15 a month, but NOW you have the $150 of “found” money so you start paying $165 per month. Once the gas card is paid off you take that $165 and add it to the next debt on the list.

Who is this for?
This is for the person who needs to see progress to stay motivated. By paying off the smallest debts first you feel a sense of accomplishment. As you are able to cross more and more debts off the list you get even more motivated and start selling baseball cards and other junk to add the money to your debt payoff.

The Dave Ramsey Doesn’t Know Math Method.
Obviously the way to save yourself money on interest is to pay the debt with the highest interest rate off first. Now, I still would pay of things like hospital bills first because if you don’t they will be sent to collections. So any bills like that I would still pay immediately. But, let’s say you don’t have any of those. You have a car payment of $500 a month and you accepted an interest rate of 13% on that car. This is your highest interest rate and you still owe $20,000 on the car…. Ouch. So, you add your $150 of found money to the car payment and are now paying $650 a month. When you finally pay off this car you go to the next highest interest rate 10% on a credit card which now only has a balance of $1000. So you are paying $650 plus whatever your minimum payment was. This method will get you out of debt a little faster and will save you a little money. But, like I said, it may not be for your personality.

Who is this for?
This is for individuals who have strong will power. Even though you will not see a lot of progress at first you are able to keep in mind at all times that in the end you will save yourself some money and time. But, how much? I can tell you exactly….

Here are my debt stats paid off using both methods, however I had to change my interest rates on a few items because believe it or not my debt lines up smallest debt has highest interest and my largest debt has the lowest rate. (In other words if I didn’t change the interest rates they would both be equal.

Dave Ramsey Method
Debt will be paid off in 61 months.
Total interest paid $7163

Dave Ramsey Doesn’t Know Math Method (I got that term from Five Cent Nickel)
Debt will be paid off in 61 months
Interest paid $7100

So with the more mentally draining second method I only save $63 in interest. That is enough for me to say I will go with the more motivating technique.

So, there you have it. Your next step is to begin the debt snowball. You may think since this is going to take a while you need to stop reading the Back to Basics series. However, next week I will tell you how to get your debt paid off even faster.

I used the Dave Ramsey Debt Snowball Calculator to get my results. This is something I purchased from his website.