Friday, May 23, 2008

My New Grill!

We got a new grill yesterday from Lowes. It is awesome!

Now, I know what you're thinking...This guy claims he wants to get out of debt, but he's out buying brand new gas grills! Well let me tell you the story...

Lowe's and Home Depot offer 10% discounts to military and veterans several times a year (Memorial Day, July 4th, Veterans' Day, etc.). Well, I knew that we wanted/needed a grill, so I started thinking about if it was worth it to buy one this weekend. After talking it over with my wife, we decided to go for it. (My wife and I lead a community group at our church and we were hoping to have a cookout at our house on the last week of the semester. So the lack of a grill would have posed a problem there. We are also having two sets of guests this weekend and grilling would have been more fun and cost effective than eating out.) There was a low end grill on the Memorial Day circular for $89 which looked like it would work.

As I was sitting in my fabric covered workspace thinking about the new grill I was going to get that evening, it dawned on me that I had some items in my garage that could be returned for store credit. We have been in a constant state of home renovation since 2005 and I had bought a lot of trim and lumber which I never used.

Well, I had no idea how much I really had! I started digging through the piles of wood and MDF hanging on a rack on the east side of my garage and slowly but surely our 1999 Japanese SUV-ish vehicle was being filled up. I also found a box of unused caulk, a sheet of plywood, some small metal brackets, and on and on. I basically filled up the car.

So, we get to Lowe's and I grabbed one of those blue lumber carts and proceeded to fill it up. As we approached the entrance with our monstrocity of a cart, a guy was walking up behind us with a small bag in his hand. Being the philanthropists that we are, we let him go ahead of us.

Well, the lady at the returns desk was very nice. She didn't snicker or sneer and told us that she had nowhere else to be anyway so she didn't mind. She did have to process the whole thing in two transactions because she was afraid that if there were too many items, the computer would delete the whole thing and we would have to start over.

The total was almost $230 in returns! I had been running my own little satellite Lowe's warehouse. We decided to spring for a better grill, and we got the one listed above along with some plants for our front porch to impress our guests. The grand total after the gift card and military discount was ... $13.69. With the purchase of a new grill also came a free propane exchange (Memorial Day special). So, all told, we saved $42+.

All in a day's work.

Thursday, May 22, 2008

My Wife's Student Loans

I’ve been holding off on writing about my wife’s student loans for a while because she is not completely on board with me blogging about our finances. She thinks people will judge her for having those loans even though I have tried to tell her that it won’t happen.

The short version of it is:
She has about $215,000 in student loans. Some are consolidated and very low interest. Others are over 10% interest. They are going to be more than our mortgage and will take a long time to pay off. Thankfully, the interest is deductible so the situation isn't all bad.

I understand, and I think most anyone reading this will too, that student loans are a pretty common part of life. I feel like I should be more embarrassed about my credit card debt than she should be about her loans.

But that is as in-depth as I am going to go for the sake of her privacy. Maybe once our credit debt is paid off, she’ll let me elaborate on it a bit.

Wednesday, May 21, 2008

Buying Books

So, here's the deal. I know that blogs can make money. I don't expect mine to, but I know that some of the bigger ones net a profit because of the links you can put on your page to sites like I understand and you might notice that I even participate (no hits yet though).

What I don't understand is why I can't recall ever reading, in any of the many many blogs on frugality and debt management, about the benefits of using the library. I live in a pretty good sized city with a fairly large library system, and I use it all the time. The majority of my patronage is directed at audio books. I have a 45 minute commute every morning to work, so I can listen to these books while driving and it has made a HUGE impact on my desire to get out from under my debt.

Here are some books that I recommend:
The Automatic Millionaire
The Millionaire Next Door
The Millionaire Mind

These were all available on CD and they are very eye-opening.
I have more books to listen to, but right now, these are the only ones I have finished.

Also, let's not forget that the library has regular books too! Not to mention that some books have special hidden websites that you will have access to simply by borrowing the book from the library.

If you are one of those who needs to write notes in your books...go to the library, borrow the book and if you like it!

Tuesday, May 20, 2008

Tuesday Musings

This will be a post filled with various realizations and ideas I have had that may or may not make any sense when put together. Here we go…

1) I realized last weekend that one of the problems with our current debt repayment strategy is that although I do put extra money on one credit card every month, it has always been a card that is still being used. For a long time, this gave us a “safety net” in case we needed that money again. Basically our safety net was a credit trap. We will always find a reason to need that money.

So, from now on, I am going to put the extra money towards debt that we will never have access to, beginning with our loans. Also, most of our credit cards have lower rates with the warning that if we ever use the card again, they will go up on us. So, they will be next. I realize that this plan doesn’t necessarily conform to any of the regular plans for debt paydown, but it is my very own idea and we are going to follow it.

2) I opened a checking account with Bank of America today. I did this in response to a mailer I got that offered me some pretty interesting terms:
- A $125 signing bonus with a RED SOX Check Card and Red Sox checks. (They had me at Red Sox.)
- Access to the “Keep the Change” program. Click on the link to find out more about this one especially the fine print on the bottom. I’m not entirely sure how I feel about this. Has anyone else used it?
- No fees if I set up direct deposit. I’m not planning on using this as my main account, so this deposit will be as small as possible.
Obviously, I am mainly doing this for the $125, but I also love the Red Sox stuff. Maybe this is just my emotion getting the better of me.

3) I bought a new (to me anyway) tablesaw at a garage sale last Saturday. Woodworking is a big hobby of mine and I had been looking at some tablesaws last year. The ones I wanted were in the $400 range, but I figured I would pony up that money eventually. Well, this saw is older, but well maintained, and it doesn’t have all the bells and whistles I was looking at, but it was still only $70, so I was pretty happy. It was weird though, spending $70 when I have been trying to get out of debt. I had to convince myself it would be worth it in the long run, and I really think it will be.

That is all I have to say for today. In closing, I want to share an article that is really pretty amazing…Enjoy!

Friday, May 16, 2008

My Tax Idea

Last August, I quit my job and went back to school. Long story short, the school didn’t work out and I was unemployed until February of this year. Hence, we have a lot of debt. While I was off, I spent a lot of time researching ways to save and so on, and taxes came up pretty big.

It all started when we got our tax refund last year and it was over $8,000! Now, that was a nice payday, but I would have probably much preferred to have access to that through the previous year when I was struggling to make ends meet.

When I got my current job, I decided to finagle my W-4 to have Uncle Sam take as little as possible. So, on my first paycheck, I had the maximum amount of taxes withheld, and then changed it to the minimum for my 2nd check. This gave me an idea of how much I would need for taxes in the worst case.

So, knowing myself, and knowing that I cannot be trusted to actually keep track of how much I should save, I set up a direct deposit to my ING Orange Savings account. This way, the money goes away the same as if I was giving it to the Feds, but I get the ING interest rate (currently 3%) on it. Plus, God forbid, I need it, I have access to it. Ideally, I will still get a refund next year, but it will be from me and with interest.

If you want an ING direct account and $25 free dollars for signing up, email me and I can send you a link to get it.

Thursday, May 15, 2008

Thanks Michael!

I got the idea for this blog by reading the hundreds of other financial blogs out there. Shortly after I started this, I read one post about blogging your way out of debt. It did a good job of putting into words the reasons that I am doing this. The blogger (Michael) also said that he would like to know if anyone is doing what I am doing, so I emailed him and told him about my blog.

He replied with this email (hopefully the pictures are legible):


Using ExcelGeek’s Rapid Payoff Calculator ( ) spreadsheet on your debts, I come up with a suggested payoff order of:

The spreadsheet sorts by shortest- to longest-payoff. With a $400 extra monthly payment, it would have you paid off in 37 months, having paid $7,061 in interest. If it were me, I’d probably flip-flop the order of the Auto #1 loan and the Personal Loan (that 18% rate just eats at me, you know?). In any case, it could be a lot worse! A little more info:

Not that you asked for any of this, but I love watching the numbers play out. I’m just a dork that way.

It's Your Money!
It's Your Money: Money Musings
Pretty cool, huh? Check out his blogs.
I'm still working on getting more info about my wife's student loans together. As a rough estimate, they are over $240,000, so it will be a challenge.

Tuesday, May 13, 2008

How Shall I Delete My Debt?

Okay, so I began looking into different ways to attack the debt that I have. Here is what I came up with...
My budget is set up in three sections: Fixed debt, bills, and monthly spending. For the first two categories, I have a set amount that I will use every month to pay everything that is higher than the total of all of the bills should be. So, if my number is $2.700 a month, and my bills come out to be $2,450, I take the remaining $150 and apply it to the debt I am trying to get rid of first. Hence, I don't really have a set amount of extra money that I can definitely put into debts every month, but there is always extra.

So, this leads me to which debt paydown strategy I should use. There are three main schools of thought on this one and they are pretty widely known.

The first is the one that Dave Ramsey suggests: Lining up all of your debt from the smallest amount to the largest, then paying it off and using the money you would have used on your paid-off debts and applying it to the next debt on the list. This is known as a debt snowball. This is mainly accepted due to the pyschological benefits of closing out accounts as you go, but it usually costs you more in time and interest.

The second is championed by Suze Orman and it goes: Lining up your debts with the highest ineterest rates on top. From here, it works the same way. You pay one off and apply the money to the next. This plan makes the most sense financially as it will save money in interest charges.

The third is based on Mary Hunt's "Rapid Debt Repayment Plan". You can follow the link and figure it out for yourself. It works out about the same as the first plan but it requires more figuring to get it right.
So, I put my debt numbers into a debt paydown calculator along with an added monthly payment of $400 and came up with these two outcomes based on the first two options:

The first option would save me 71 payments and $6,662.55 in interest.
The second option would save me 72 payments and $7,340.13 in interest.
Logic dictates that I go with the second, but I might be one of those who needs the emotional lift of getting cards paid off. Plus, the first two cards I would have to pay off in the second plan equal almost $15,000 and that could take a LONG time.
Any thoughts?

Friday, May 9, 2008

My Debt Summary

Well, the truth can be depressing. I sat down today and jotted down all of the debt that I could find (minus my wife’s student loans which will probably have a post all to themselves). Here is the current state of my debt:

Mortgage - $107,000 – 5.5% - $853
(This house will become a rent house as we are planning to move soon.)

My Student Loans - $9,325 – 3.125% - $30

Auto Loan 1 - $1,750 – 3.59% - $196
Auto Loan 2 – $17,150 – 6.49% - $336

Personal Loan - $1100 – 18% - $96

Credit Card 1 - $6,850 – 11.15% - $120
Credit Card 2 - $8,550 – 14.99% - $150
Credit Card 3 - $1,725 – 5.9% - $25
Credit Card 4 - $425 – 3.99% - $10
Credit Card 5 - $650 – 12.16% - $19
Credit Card 6 - $2850 – 0% (until Sept) - $117
Credit Card 7 - $3800 – 10% - $142
Total Credit Debt - $24,850

Total MINIMUM Monthly Payment: $2,094

Total “Bad Debt” - $44,850

Total debt as of this post: $161,175

So this is where I am starting from. (NOTE: When I say “I”, I mean “we” as in my wife and I. It’s just easier to use “I”.)

As I am writing this, I realize that our situation is about to (or “fixin’ to” as they say in the South) get worse:

1)We will probably have to use our credit cards to finish the house we live in now to make it rent-ready.

2) We are going to be buying a house in the next few months. This means a new mortgage, and any loans that we may have to take out to make the down payment. (NOTE: Interesting story. I am a veteran and so I am eligible for a VA loan which would mean no down payment. However, my bank told me that they wouldn’t approve me because the jobs that I have had are not related to each other. Kind of frustrating.) Add to this the cost of moving, with all of the new things you have to buy for a new house, and it sure does get to be a pricy ordeal.

3) My wife’s student loans will begin repayment around the fall. As it is, we are going to have to pay $150 to Sallie Mae for a 6-month forbearance on her private loans. Like I said, I’ll get into them later.

Coming up in future posts:
My wife's student loans
Strategies for paying this stuff off

Thursday, May 8, 2008

First Post

I’ve been reading a lot of financial blogs recently, and I thought that perhaps I would try it. Just to make it clear, I don’t claim to be any kind of an expert like most of these bloggers. In fact, I am pretty much just an ordinary guy with a whole lot of debt that I want to “delete”. (NOTE: I know that the name is kind of lame, but the good ones were all taken.)

A little about me: I am 30 years old. Although I grew up in New England, my time in the Air Force led me to the great southern-Midwest area. I got married a couple of years ago and my wife has just finished Pharmacy School. As such, we’ll be making a lot more money now, but we are also about to move to a different state, a bigger house, and so on and so on.

Also, with a shiny new degree comes all those student loans she used to pay for college, and it is a LOT. Don’t get me wrong, I have quite a bit of debt as well, and mine is more "bad debt". I'll get into more detail about all of this in a future post as I try to delete my debt.

So, I guess that my goal with this blog is a) I want to blog and my regular life is pretty boring, b) I want to get out of debt and encourage others and I don’t imagine there are many people out there with as much “bad debt” as we have, and c) I can share tips and such that I find on other blogs.

Your feedback is very welcome.