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Archive for December, 2014

Arrears Audit

December 31st, 2014 at 11:21 pm

While it was my December goal to have the title loan paid off I do not think I made it and not because I lacked the funds. I am actually still waiting for an updated statement from them and they were closed a day or two for the holidays and may just be behind. Even though I may have to make a payment or two in January this is already feeling like a huge burden lifted and seems like a positive way to start the New Year. Thanks to the avalanche method I am also seeing the light at the end of the tunnel and am happy to be on track with my other debts.

In reviewing December’s expense tracking spreadsheet I could not help but notice that I spent a third of my net income on debt repayment and past due bills. Yes you read that right.... a third! I can hardly believe that myself and I definitely want that to change in 2015.

Survey of Spending

December 31st, 2014 at 11:20 pm

For December I was given a free month at a nearby gym and surprised myself by attending an average of 4 times a week to a variety of classes. There are lots of options to go around my work schedule and it helped fill some of the down time I have too much of so I think I will stick with it throughout 2015. I even used my Google calendar to track the classes I actually attended which will help compare number of visits to monthly cost. Physically I noticed that I slept better and ate less in the evening after working out. It is funny how a morning workout, which I usually prefer, increases how much I eat throughout the day and does not seem to help me sleep at all. As an added plus they have a hot tub and the one at my complex is always broken which annoys me.

Thanks to my employer I was able to get the required upfront first and last month’s membership fees waived and $20 off my monthly membership for as long as I have it. Plus they had an end of the year special that reduced the application fee to just $10. If that is not enough they then told me that they now allow members the option of coming in and paying in cash each month instead of mandatory auto billing! They do require a card on file in case you do not come in on time, but I had no problem using my prepaid Amex debit card, which also keeps them away from my personal accounts.

In other expenses news I have completed my tracking for December and wow it is weird to see all my money listed like that. It is very helpful though to know where every cent went and to have a little bit of money left over for once. I cannot wait to see what my household bills are actually like each month now that I am finally caught up.

A couple of categories seemed high such as Clothing/Accessories and Dining/Drinks Out so I will watch those closely next year. Other categories were surprisingly low such as Gas and Entertainment, so I am curious if that is the norm for this time of year or not. I will have a better idea next year.

Initial Installment

December 31st, 2014 at 11:19 pm

Well as I suspected I did not make my goal of putting 1k in my EF this month. The debt repayment and past due household bills really did me in. Plus I underestimated how much taxes would be taken from my paychecks. My income has more than doubled which is good, but the added taxes are a challenging adjustment. Regardless, I did not want to ring in the New Year with nothing in my EF so I transferred $25. It is not a lot, but at the same time it feels great knowing I started. It may sound silly, but to me it seems like a way to set my intentions for the coming year as if I were saying to the universe..... Yes I am serious about saving money!

Money Management Makeover

December 30th, 2014 at 10:04 pm

For those of you who want details and not just the brief list in the sidebar here goes.

In no particular order, my goals for 2015 are...

Continue to track all income, expenses, and debt avalanche/snowball
After using December 2014 as a test run I altered my expense tracking spreadsheet a few times and now I think it is perfect for my needs. Since I still have a second job I am going to continue to handle debts with the avalanche method, but when I am down to one job I will probably switch to the snowball method.

Continue to pay bills on time
For most things I get e-bills and I also set up reminders on my online calendar. Now that I am caught up I think this system will be fine.

Continue to pay into company retirement account
This is a mandatory and automatic deduction, but so far it has been working out ok and I am getting the employer match. I think if I had been given the choice of what percentage to contribute I would have gone a little lower to free up more income for debt repayment. However, having another job helps me accomplish that and comfortably handle the larger retirement contribution.

Find realistic ways to reduce expenses
I am not sure how or where I will reduce expenses yet, but as I review my tracker each month and read the forums I am sure I will get plenty of ideas.

Get Renter’s insurance
Before getting laid off all those years ago I had this coverage and was grateful for it even though I never had to use it. Resuming this coverage will create added peace of mind and it is not too expensive.

Get Disability insurance
My employer does not pay into the state’s system and the free policy they offer only gives you up to $800 a month for 6 months. HR blatantly said the company does not care and employees are expected to purchase a supplemental policy to protect ourselves. I later learned that because all of my prior jobs have paid into state disability it is possible (though not guaranteed) for me to still file a claim with them if I need to, but it will not cover my full income, would only be a short term benefit, and may be reduced due to benefits my employer is giving me.

My thought is that these not so great short term disability options will be ok provided I have a solid EF. My greater concern is if I need to be on disability for more than 6 months and my EF is not enough to cover a year or two or three. My employer offers a supplemental policy, but it will not stay with me if I leave them so I will begin getting quotes from elsewhere.

Get Life insurance
After learning that life insurance can do more than just protect minor children I have decided that obtaining a term life policy is a good idea. I currently do not have funds for my own burial and that expense would create a severe hardship for my family. I would also like a part of this benefit to support my mom in her golden years should something happen to me. I still have plenty of research to do in this area on required documents/proper set up as well as help her get her affairs in order, which I mentioned briefly in my blog post Incapacitation and Inevitable Incidents.

Establish an EF account of 2k ASAP and later get it to 5k
I talked about this in my blog post Predicaments and Precautions, but in a nutshell I decided 2k is the bare minimum I need to handle basic emergencies and to feel comfortable raising my insurance deductibles. 5k is the number I came up with to start to work toward having 8 months of living expenses set aside. I am still not entirely sure exactly how much my monthly expenses are because of all the debt repayments/catching up and I have only been tracking for a month, but it is looking like 2k per month or 16k total. Not bad, but that could change later in the year, which is fine. I think I am disciplined enough to treat EF contributions like a bill each time I get paid, and after some research I have decided to try putting this money in a Barclays Dream Account. I am not completely sold on online accounts though so we will see how it goes.

Tithe/Charitable giving of 5-10% of net income
This goal is part personal part spiritual. I just do not feel right having so much when so many have nothing. Plus during my years of struggle there were so many times people surprised me with help in ways I never imagined. I have always done my best to be a good person and help others either by offering my time, resources, or money and all the help I received in my time of need had to be karma. I would love to do more, but my debt and savings goals have to be a larger priority.

Become debt free except for student loans
In my opinion the student loans are my only positive debt and they have always remained in good standing on my credit reports. All the other debt I have is not serving me so it has to go.

Deal with my old car
This may be something I consult a lawyer about because I will admit I am not completely sure where things stand. This is currently not my top priority and not even in the top five so I am going to stop thinking/talking about it until I have taken care of a few more important things. Then there will be space to deal with this.

Review and clear up discrepancies/errors on credit reports
I still have those 2 that I did not open, but I am getting there. The suggestions on these boards have led me to a few helpful resources on handling this so I am not worried.

Obtain a secured credit card, select one household bill to be automatically charged, and pay it off on time each month
Now that I really understand how credit cards work I think I can do it right this time. No cash advances, no convenience checks, no balance transfers, and no carrying it around! And no letting them waive my payment for a month (or two or three!) because I have made a few consecutive on time payments! That is not a benefit; it is an underhanded way to get me to pay more interest! A limit of $300-$500 should be just fine to help me rebuild my credit and keep me from getting into trouble.

I am also leaning toward choosing the phone bill (yes I still use a landline!) to be automatically charged. Right now it is the only routine bill that I get via snail mail because the company does not offer e-bills. Yes I know that is stupid and I have been back and forth with them about it, but they are not interested in creating that option. To send a paper bill they charge me a $2 fee each month, but they will waive that fee if I set up an automatic payment via a credit card or bank account. I do not want them anywhere near my bank account so a credit card is a good option.

Use up my FSA
I learned a very hard lesson in 2014 that I am hoping to not have to repeat again. In January 2014 I landed a full time job in my new career that offered benefits. Having to go without health insurance for a few years I knew there were some things I needed to take care of and I could finally do so using my new coverage and the FSA. I did some research, estimated my costs, and began to fund my FSA accordingly. The challenge I quickly found was having to pay for my medical costs out of pocket and then wait for the FSA to reimburse me later when my low wage (and trying to keep my head above water financially) did not allow for that. I was hoping that by the end of November 2014 to have enough money to front the cost of everything and then get everything done in December since my original plan was to stay at this job a year and then move on.

Well then in October 2014 I was blessed with the opportunity to take a much better paying job and I jumped at the chance. I had not reached my savings goal regarding my FSA and found out that only services through the end of October would be eligible for reimbursement because I was leaving my position. There was just no way to squeeze in the appointments I needed or front all the out of pocket costs before leaving my job, so I ended up losing more than half the money in my FSA. When I signed up for the FSA originally it was not clearly explained how the account would be handled if I left the company and I was so grateful to get off the temp/unemployment wheel I did not think about it either.

With my current job they gave me an FSA debit card which allows me to use the benefit immediately after it is deducted from my paychecks. No more trying to save up to pay out of pocket costs, no excuse for losing this money at the end of the year or if I leave this job unexpectedly, and no mailing in receipts waiting for my own money back.

Participate in the 52 Week Savings Challenge
After reading some of the threads on this it seemed like a great way to make saving fun. I need fun or I will get lazy and quit. I am not sure what this money will be for.... New cookware? A vacation? Professional development? Wardrobe updates? Something else? I love the idea of having it for a rainy day though. For now this money will sit in my regular savings account, but if things seem to be ok with Barclays I can move it there.

Incapacitation and Inevitable Incidents

December 27th, 2014 at 11:30 pm

This month has been a whirlwind of financial gains, learning, and reality checks all of which I am grateful for. I think I am almost done finalizing my 2015 goals thanks to the input on these boards and the books I have been reading. Surprisingly it has been reading Suze Orman’s book Women & Money that made me realize that preparing for the unavoidable is a huge part of financial planning when I guess it always seemed like something else to me. What I am not sure, but something else. I have always known it was important to designate beneficiaries for things, that I will care for my mom in her golden years, and I should ponder my own end of life care but since I am only in my 30s I have not really figured out all the details yet.

The book discusses the benefit of having a will, a revocable living trust with an incapacity clause, an executor for your estate, an advanced directive, and a durable power of attorney for health care. There are likely other options or documents not discussed, but just this much information was about all I could take in. Why this type of preparation is helpful makes sense especially since I have repeatedly seen the agony families go through without this type of planning. I realize I do not have to rush to do this stuff as my health is fine, I have practically no assets right now, and no one is currently dependent on my income. I do think it is good to have this topic floating around in my head though.

You know what is terrifying? The fact that when my situation changes and the need for these documents becomes more urgent I do not have anyone to handle any of these things if something did happen to me. When it comes to my mom I can count on her to want to do the right thing, but to be completely lost in all the documents, legalese, and grief that she will just fall apart and do nothing. Generally in times of crisis I handle everything and she is comfortable letting me make all the decisions and explaining options to her. There is no other me in our family. I have a sister, but I would not trust her with a rock let alone my estate, health, or finances. I have a large extended family, but we are not close-knit and instead just see each other a couple times a year. They are not really trustworthy anyway. I do not have any close friends that I could ask to handle these kinds of circumstances either.

What do single people do in these situations? Sure things could change in the future and I may get married, but what if I do not or I outlive my husband? It seems like regardless I am supposed to have this person who will handle my affairs and fight for my best interests and I have no idea where such a person is supposed to come from.

Predicaments and Precautions

December 23rd, 2014 at 11:32 pm

Originally I had hoped to create a 1k EF this month, but I likely will not make that. Some of my household bills were higher than I thought and there were fewer hours at my second job than expected. Considering everything else I have accomplished before the end of 2014 I am ok with this. Hopefully I will be able to put something in my EF to at least get it started, but I am not sure how much I can contribute yet since I still have one more paycheck on the way and I am hoping to knock out that title loan. Regardless having the idea of a 1k EF floating in my mind solidified an EF as something important that I have no choice but to create.

After pondering my own expenses and reading On My Own Two Feet 2nd Edition by Kedar and Thakor I have decided that my EF needs to be a minimum of 2k, so that will be my starting point for 2015. When I think back to the financial emergencies I have had over the last 10 years most of them were under 2k so having that amount on hand would be great. I also realized that I can raise my insurance deductibles, therefore saving on the premium, and put more money toward debt repayment. No longer am I the gal that can barely scrounge up $500, because I am becoming the gal who planned ahead and had her deductibles waiting in the wings. Of course I realize emergencies are not just insurance deductibles so my long term goal in 2015 will be to get 5k in my EF.

I am going to try to keep it simple and just pick an amount each pay day to transfer into it after I have covered bills and debt repayments. Since I am avalanching my debts the amount I contribute to my EF will likely go up later in 2015 and I want to add part of my tax returns as well. For now I am going to put my EF in my general savings account, but at a later time I might be able to move it to a money market account and get a better interest rate.

Advantageous Achievements

December 21st, 2014 at 06:56 pm

It is official..... I have caught up on all of my household bills! I can start off the New Year sans late fees and past due notices, what a relief! It will be so much easier to just pay them as they arrive and finally get off the which-bill-should-I-pay-now-and-which-should-I-juggle merry go round. I can also see if I qualify for incentives to lower any of them as well.

Additionally, I have done well bringing breakfast and lunch to work, which is a nice improvement and makes the day more relaxing. I even made a small donation to a charity that I feel very strongly about which is something that I am hoping to do more often as my finances continue to improve.

In other expense tracking news I am enjoying this process. As predicted it is not depressing the way sticking to a budget was and it feels way more flexible in terms of unexpected costs and things I want. At the same time I am not having any difficulty thinking first and often postponing purchasing wants because it is so much easier to see how close I am to my goals and I love accomplishing things.

I have begun to notice my wants (whether things, entertainment, etc) increase significantly when I have too much time on my hands and I grow frustrated sitting around by myself. I work two jobs, have a handful of volunteer projects, have hobbies, and yet I still have so much down time. This is so much worse this time of year as friends and family spend more time doing couple and/or kid things and my life is not like that. I ended up with a free guest pass to a gym in my area which has helped kill some time and improved the quality of my sleep. The monthly fee would not be a hardship and the New Year will likely bring a few specials so it is on my to consider list. Regardless I still have a ton of time to fill.

Perceptions and Progress

December 14th, 2014 at 11:45 am

We are what, a third of the way through the month? So far I am doing well tracking all of my expenses even though some of the numbers are a little surprising. For example, going out to eat or for drinks has cost three times what I have spent on groceries so far. Some of that going out is laziness or being social, but when I looked more closely at the receipts I noticed something else. Often I am going out for ethnic food which I do not know how to make at home and a number of the ingredients used are not found in standard grocery stores. There are tons of specialty grocery stores around, but perhaps I am wrongfully assuming they are more expensive.

Skipping ethnic food completely is not an option, so I have been researching dishes that can be made in a crock pot to hopefully save time and money. Of course I have to buy a new crock pot since mine broke awhile ago and I did not have the funds to replace it. Recipe searching has actually been a lot harder than I expected. Do the makers of ethnic food not think using a crock pot is a good idea? So far I have found a few Mexican and Indian recipes, but not many Ethiopian or Moroccan ones. That is just the tip of the iceberg when it comes to cuisine I eat too. Regardless this is worth a try and I do actually miss cooking.

Other observations? This was the first month I paid rent in full and on time in I have no idea how long. Before I was so underpaid that I was dividing my rent over a few checks which meant getting a 3-day notice each month even though the landlord was aware of my situation and said it was ok to make payments. The notice was really for their documentation in case I did not make all my payments and actually needed to be given an eviction notice. Paying rent in full and on time should not be a problem going forward, YAY!

I also wanted to get my hair done last week and decided to try a local beauty school. It took a little longer since the students had to stop for instructor assistance, but overall I paid half of what I would have at a regular salon and they did an excellent job. They also do manicures and pedicures for far less than I pay elsewhere. I can see myself returning, but I do not think I would do something that required any kind of chemicals like coloring since you do not have the same recourse you do at a regular salon.

Someplace to Start

December 7th, 2014 at 05:55 pm

Finally dealing with my debt has been a relief. I still have not opened those other two credit reports and therefore do not have a complete picture, but that is ok. Even though I wanted to get into a position to improve things for a long time I know I have to pace myself. Otherwise I will get discouraged and probably do nothing which will not do any good. Here is what I have tackled so far:

Title Loan
Amount Financed $3,090.00
Amount Paid $6,642.01
Balance Due $2,748.34

Yes I know that is ridiculous lol. The interest rate is outrageously high and I accrued late fees when I could not pay on time or made partial payments. I do not like to say never, but after this experience I can truly say I will never do this again! I am absolutely determined to have a decent EF so that I do not have to resort to this ever again. I seriously cannot wait to pay this off and be done with them forever.

Given that this is my top priority and the interest rate is so high I decided to use a modified Avalanche method. Basically instead of making a monthly payment I am making payments from each paycheck, because I have been blessed with two jobs. Given my estimates of this months income I see this loan paid off before the new year.

Student Loans
Grad $56,475.22
Undergrad $8,666.40
Total $65,141.62

While the goal is to be debt free one day I am less stressed about these debts. Why? Because before my world turned upside down (when I just had my Undergrad loan) this was the one debt I was actually happy to pay. The whole experience of getting this bill, writing a check, and putting it in the mail reminded me of what I had accomplished with the money I borrowed. Despite how easy it was to get a forbearance I felt the guiltiest about being unable to pay this debt. At that time the payment was $100.00 a month and the fact that I could not afford that (or less than that!) made me feel like such a failure.

As soon as I finished my Grad degree this past spring I could not wait to enter repayment. I was still working a low paying job (although permanent full time with benefits) with no idea how long it would take to get a better one so I applied for the Income Based Repayment (IBR) on both loans. I was surprised that IBR gives you the choice of using last years tax return or submitting current paystubs to determine your monthly payment. I opted to use last years tax return because my income was less while a full time student and primarily temping/unemployed. I figured I could use the breathing room to take care of more important debts and get caught up on household bills. Right after I turned in the IBR paperwork I landed my new job, but decided to stick with my original plan. IBR is good for one year and here are my monthly payments:

Grad $0
Undergrad $0

They likely settled on $0 because at the time I was making less than a third of my overall loan total. My hope is that I can begin paying midway through 2015 and at least enjoy writing the interest off on my taxes. When its time to renew in 2015 I am leaning toward using my 2014 tax return so the payments stay low, allowing me to focus on building my EF.

Excel is Excellent

December 5th, 2014 at 09:16 pm

Here you can see the modified spreadsheet that I am using for my expense tracking needs. There are some things I left from the original that I do not currently have or do such as Life Insurance, Car Payments, Vacations, or Netflix because they may be things I acquire or can just act as reminders of worries I do not have. I probably have way too many sections, but without being so detailed I am afraid I would forget to track something.

The original spreadsheet worked from net income which I did not like. I really wanted to be able to see all my money in one place and not have to go hunting for paystubs or W2s if I do not remember how much I paid in taxes or for benefits. Plus I have more deductions coming out of my checks than I am used to and I thought it might be helpful to see the whole year at once as I adapt to being in a higher income bracket. Wow that is weird to say still.

The difficult thing is forcing myself to track all those things that many would consider frivolous such as the Hair Salon, Spa, Clothing, or Dining/Drinks Out. Yes when money was practically nonexistent I enjoyed these things far less often and was not ashamed to search for deals, but these things are likely spending kryptonite for me. This is worsened by the fact that I tend to pay for them with cash which I have a harder time keeping track of. I have gotten rather defensive before when questioned about how much money goes on these things because I knew exactly what people would say. In the past I have sacrificed things that I should not have in order to enjoy these things, which is not good. If I am serious about improving my finances then it is important I be honest with myself.

It has only been a few days, but I have done well tracking my expenses. I ask for receipts and when that is not an option I note the expense on a notepad I carry in my purse. My focus is on getting caught up and so far I am doing that.

This might sound ridiculous, but I am kind of struggling with constantly having a positive balance in my checking account. I am used to having my account at zero (or negative) and pay day is a week or more away. But now one paycheck is more than I used to make in an entire month! December is special because I will get 3 checks instead of the usual 2. It is just very very strange. Then on top of it having a 2nd job? Having 2 jobs is normal, but actually making ends meet feels foreign. I wonder how long it will take to actually enjoy it and accept that I worked hard to earn this so I deserve it.

Planning and Preparing

December 1st, 2014 at 08:42 pm

I need order. When I was always broke it did not seem to matter that I sort of tracked expenses on random scraps of paper or haphazardly in my head. I already knew there was not going to be enough money so why bother getting more organized? I tried setting up a budget many times and always failed. I would get frustrated that every single penny had to go somewhere and never anywhere fun. Then I would get more frustrated by the never ending emergencies that threw the whole budget out of whack. It was suffocating and eventually I could not take it anymore and would ignore what my budget said and do whatever I wanted. This of course created bigger problems.

Suze Orman says budgets are like diets, which we all know are strict and not fun. Instead of budgeting she suggests just tracking your expenses because that will tell us if we are living within or above our means. Considering how frequently I use cash and either do not ask for or lose receipts this will not be easy, but I am determined to try. I have found a simple spreadsheet (courtesy of SquawkFox) that I was able to modify to my expenses and another for tracking debt repayments (courtesy of Vertex) via snowball, avalanche, snowflake, or a custom method. December will be kind of a practice run to not only get into the habit of using them, but also to make sure I modified them correctly for my needs.

So here is what else I have done to develop my financial plan:
-Pulled all 3 credit reports. Admittedly I only read one of them and then got tired, but I will get to the others.
-Got my credit score from VantageScore and laughed because in the last 4 years it has gone up 5 points.
-Signed up to have 9% of my income go into my retirement account at work (this is the minimum for the company match).
-Decided to use the avalanche method for debt repayment until my title loan is paid off, hopefully by the end of the year. A number of my debts are under 2k and no longer on monthly repayment schedules so it may make sense to continue avalanching, but just pay each one in full.
-Caught up on 2 household bills, with 3 still behind.
-Signed both of my student loans up for Income Based Repayment and they were approved for monthly payments of $0 (consolidating them would actually cost me money in the long run so I declined to do that). I have decided to not fixate on these for a few months while I focus my attention on the worse debts/household bills and an EF.
-Decided to start with the Dave Ramsey 1k EF because I might be able to swing that before the new year.

There are still a lot of things left to do, but I at least feel like I have started. I figure this month may be a little hectic as I adjust my goals, gain more information about my situation, and just keep learning.