February Update

March will mark one year that I've been really paying attention to our debt and working hard to get it paid off. Before March, I avoided it, because it was pretty depressing to see no progress at all. My wife graduated a few months later and started receiving full paychecks. I'm glad to report that as of writing this, we have paid off four of our seven credit cards, and the fifth will probably be paid off with the next paycheck. We still have a Mastercard and Discover card which are the big ones, but the debt snowball has been working and I think they'll be gone soon too.

A word on the debt payoff strategy...for my money, the debt snowball is the only way to go. I had my doubts, but once I started seeing zero balances, I got that much more excited.

So, now that the end is actually in sight (I haven't had zero credit card debt since college in the 90s), I have to start focusing on the rest of our debt. So, I added them to my debt snowball chart, and found that between our car loan (which will be the first to go once the credit cards are gone) and our student loans, we owe $266,500. This doesn't include our mortgage, because I don't to be too overwhelmed.

So, once our credit cards are no more and will never see another transaction, I plan to pay off the car, then my student loans, and then my wife's student loans.

With God's help, we can attack those and see them beaten also.

Spending Money to Save Money?

Let me give you a scenario...

Person A works for a employer who does not provide microwave ovens for its breakrooms and lunch areas. If an employee wants one, he/she has to bring it in and have it tagged and added to the equipment record that it is his/hers.

Now let's say that the microwave in the lunch room that Person A uses is really really old. In fact, it has one of those dials for setting time. It also is notorious for not cooking the middle of whatever is in it, effectively ruining lunch.

Person A is someone who wants to get out of debt. In fact he (or she) has a blog dedicated to his (or her) struggle to eliminate debt. However, the thought of using this microwave makes him (or her) shudder. Also, sandwiches have become really boring and he (or she) needs to have more variety. So, Person A eats out for lunch almost every day.

Do you think Person A should buy a new microwave to not only save money, but also to avoid the downward spiral that is his food intake?

Well, Person A is me (this is the big revelation of the story), and I already bought the microwave. It was $54 at Walmart. I figured that if I bring in leftovers every day, I'll save $54 in about 2 weeks. If I buy microwave dinners instead, then it gets stretched out a little more, but eventually I come out even.

Also, I can't actually use the microwave yet because it hasn't been approved for use. Ugh...bureaucracy.

Coupon Craziness!

PREFACE: Part of getting out of debt is spending less. Some people have made an artform out of using coupons to not only save money, but sometimes make money. Reference: http://www.thegrocerygame.com/

Well, my wife decided to subscribe to the local newspaper which usually means a pile of yellow bags stacked in our driveway waiting to be thrown out with the next week's trash. So, to make some use of the whole mess, I grabbed the Sunday paper and decided to clip coupons. What the woman in the above website does is: she compares her coupons to advertised sales for local stores. That way she not only gets the coupon savings, but also the store savings. Well, my wife works for Walgreens, so she gets 15% off of everything anyway. Add to that the fact that this week, Walgreens had sales on a lot of the items that also had coupons this week. So, we went to Walgreens with several piles of coupons and made out pretty well.

This first picture is from the receipt of our first transaction.

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The first line shows her employee discount. The second is regular savings from Walgreens. The third is from regular coupons. This also doesn't show the $10 we'll be getting back as a rebate. This is a grand total of $29.98 in savings. The grand total before the rebate...$23.46!

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This next receipt was the big purchase:

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Same lines as the first receipt, this time with no rebate. But, as you can see, we saved $146.12! The grand total for this order...$95.39! We saved more than we spent!

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My wife admitted it was actually fun so maybe she'll let me play again. And, the Walgreens person didn't hate us too terribly.

Eric's Tip Tab

I don't know how many of you reading this have seen "Reservoir Dogs", but it gave me an idea. Before anyone runs out to rent it, let me say that you should NOT see it if you don't like strong language or violence. This movie epitomizes both.

With the morality and viewability of the movie put aside, there is an interesting scene in the beginning. Basically, the main characters are a bunch of criminals, previously unacquainted, who come together to do a job. Their first meeting is a breakfast together. At the end, the son of the mastermind pays for the meal, but tells everyone else to put in for the tip. One character, Mr. Pink (played by Steve Buscemi), does not. He says that he doesn't believe in tipping just because society tells us to. It is an interesting argument which can be found by searching for "Reservoir Dogs tipping". Once again, it is quite a cornucopia of obscene words and dirty phrases. Anyway, I don't agree that you shouldn't tip, but I do think that tipping should be based on merit rather than duty.

Another example of strange tipping practices was one performed by a college friend of mine. He would take astack of quarters with him when he would eat out. If the server did something wrong, like failing to refill a drink, he would take a quarter off of the stack. If the server did something well, he would add a quarter to the stack. Once again, I don't think this is the best way to figure out a tip, but it does bring up an interesting idea.

Today, my wife and I had sushi for lunch and I sort of mindlessly wrote in a tip. It was after this, that my brain started working. How can I know if my tip was correct or proper? Well, what if I developed a method to fairly decide what was deserved? So, I came up with my Tip Tab. It has different categories that will either add or subtract percentage points from the tip. I started with this website "How Much Should I Tip?"and used it as a baseline.

Well, here is my Tip Tab:


The blanks on the right are used to add or
subtract percentage points from the tip.
You can modify the numbers if you like,
but this is what I am starting with.

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Use these "additional" lines for any extras not listed above.

Take the total number, divide it by two and add the result to the 15% most people agree is the average tip.

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I made this the size of a dollar bill so it would fit in my wallet. I have it as a excel spreadsheet, so email me if you would like me to send it to you.

The reason that I am including this on a blog about getting rid of debt is that debt should not stop someone from being generous. I know that I often give less for a tip when I am feeling a pinch financially. I realize now that if I can afford to eat out, I can afford to tip someone who does a good job serving me.

I want to finish by saying that I have never been a waiter, but I know it is a very hard job. I greatly appreciate what they do, and if someone is ever really spectacular, I'll just give them a big tip. However, if someone is absolutely terrible, it would take a LOT for me to tip nothing. In fact, I can only remember one time that I did not leave some kind of tip, and I could go on and on about how terrible that service was.

This is me thinking out loud. Let me know if you agree, disagree, etc. Let me know if you think this idea has merit or if I am a total jerk for even suggesting it. I'm curious to see what others think.

New Year, New Post

Well, its been a long time since my last post. For the most part, this is due to the fact that our lives were pretty much turned upside-down with our move. Then, to really complicate matters, we found out that we are going to have a baby in May. This is very exciting news, but it does help to throw one's financial plan into a tailspin.

Anyway, with all of that being said, here is our current status.

As of our next paychecks, we will have paid off a total of 3 credit cards. We had paid off a fourth, but then we decided to buy a new recliner and mattress and this opened the door up to using the card for other things as well. I know, this is terrible and totally counter-productive. Well, we have stopped using the card...again...and I should have it re-paid off by February.

This will leave us with three credit cards. Two of them are our biggest ones, and the other has about $2,500 on it. A while ago, when things were pretty tough, I put this card on a slow-pay plan through a debt management company. This promised a lower interest rate and so on, so it was a good idea at the time. Well, I think we've reached the point now that I am going to take that card back and it should be paid off before the baby arrives.

I do want to add that paying off the cards with the smallest balances first (i.e. the debt snowball) is the method that is working for us. I realize that it may not be the most cost-effective, but we are making progress.

We have paid off my car, which is nice. Now if it will only keep running for a while so I can enjoy it.

Also, the mortgage on our first house is now covered. One of our former neighbors (a realtor) got us in contact with a company that gets homes for families that can't qualify for loans because of the economy. Their monthly payment covers all of our expenses and they are responsible for any repairs to the property. After a certain period of time, the company gets them a mortgage based on their payment history. Not bad. We won't make any money, but we also won't have the headache of landlord-ship either. Hopefully, it will all go smoothly.

The biggest development since my last post is that my wife's student loans are now in repayment status...most of them anyway. She has loans through Sallie Mae and Wells Fargo as well as some other miscellaneous loans that will start repayment next year. We have already signed up for graduated repayment (meaning we pay pretty much just interest in the beginning and then more at the end), and the Wells Fargo payment alone is exactly as much as our now-covered mortgage payment.

It has been nice (really nice) having two paychecks, especially since one them is for a pharmacist. It was nice to sit down and reevaluate our finances for 2009 and see how much we accomplished in a relatively short amount of time.

Debt Freedom is still a far away dream, but we are getting closer.

It's Been A While

Change of jobs + change of location + change of just about everything = Very few posts.

I must admit that I started this blog while I was working at a call center which had many slow periods, thus allowing me to post when work was down. I enjoy posting as it helps me put my ideas into words, so I am going to try to keep it up despite the fact that I'll have to do it on my own time.

As I mentioned before, a lot has changed. I still work for the same organization, but I live in Arkansas now and perform a completely different job. It gave me about a $4,000 a year pay increase and I'll get another pay increase in January and then a promotion in August. Not bad at all.

My wife is also an official pharmacist now. This of course has helped us dramatically. She got her first full paycheck a couple of weeks ago and we are looking forward to more. There are some indications that by this time next month, she'll be a pharmacy manager which will also include a nice pay raise and bigger bonuses.

And now an update on our finances...

We bought a new house (obviously) and we are very happy with it. During its construction, the builder had to declare bankruptcy, so the bank took it over. They finished it and owned it since March 2007. So, you may imagine, they were anxious to unload it. The asking price was $189,900, so our initial offer was $169,900. We also asked for a fence for our dogs as well as gutters. They countered with their initial asking price and the fence and the gutters, but they said they would give us a mortgage at 5.25%. I did the math and over 30 years, we would save a pretty decent amount of money than if they accepted our asking price and we got a mortgage even one percentage point higher. The closing went very smoothly, and now we own two houses.

The first house will hopefully be rented soon. We still have to tie up some loose ends on it, and the two hour drive it takes to get there is making it difficult. We can stand to pay the mortgage for a couple of months, but not once my wife's student loans enter repayment.

Also, we've paid off the first of our credit cards. It was the smallest of them, and the rate was not terribly high, but it feels good to get started.

My car loan is finally below $1,000, and should be paid off in 5 months.

That's about all I can think of for now. Hopefully, the next post won't take as long as this one did. If you read this, please post a comment. I'd like to think that this is reaching someone.

Dave Ramsey Marathon and My Credit Card Woes

I know I haven’t really posted in a while. I guess its because I don’t have very much to report.

On the 4th of July, my wife and I stayed over at her parents’ house. The plan was to go boating and watch fireworks in the evening. Well, the morning was pretty laid back, and I am always an early riser so I watched some TV while everyone else was sleeping. My in-laws get the Fox Business Channel (which I don’t think is available through my provider) and they were playing a Dave Ramsey marathon. I know Dave is a great financial counselor, but I have yet to really watch or listen to him live, so I was pretty excited about it. There isn’t much to his show, at least not the reruns they were playing. About half of the callers are in debt and are asking for help. The other half call in to report that they are “DEBT-FREE!” Dave asks them some questions about how much they paid off, what they did to pay it off, and so on. Then, he has them yell over the phone “I’M DEBT FREE!” It’s a little cheesy, but that is coming from someone who is not debt free. I think when I get everything paid off, I might just want to yell a bit too. It was funny though…a couple of times people said how they paid off $17,000 of debt and I just thought how much I wish I only owed $17,000. I have two credit cards that total more than that. Oh well. Someday, I’ll be the idiot yelling on the phone, until then, I criticize what I envy.

In other news, I spent the early part of my morning going over some of my credit cards. Here’s the back-story…in January, my main bank erroneously reported that I had been late paying my bill a year and a half earlier. As a result, they raised my rate and so did my Discover card(which also has the most debt). I called them both right away to get it fixed, but they told me to wait it out and call back in six months.

Well, it’s been about six months and I decided to try again. My credit report has been fixed so I was ready to go. I called my main bank first. It seemed a little silly because my rate is currently 10.9% (Prime + 5.9%), but if they hadn’t raised it in the first place, it would be 7.9%. Anyway, I asked and they looked into it, but said they couldn’t do it right now, but to call back in October. The dance continues…

This morning I call the Discover and asked the same question. My rate was 14.99% with them and they lowered it to 12.99% without very much effort. I have done this in the past with them, and I learned not to accept their first offer.

When I first signed up for Discover, I was a naive college freshman in 1996. For years, I lived with a 21% interest rate, not realizing that you could ask them to lower it. It almost ruined me several times. In 2004, I found out about the possibility of getting a lower rate by asking, so I did. At first, they offered me 15%, but I said I wanted it lower than that. She did a little more “figuring” and offered me 12%. I said that I had a card that was offering me a lower rate (a complete lie) and if they couldn’t go lower, I would just switch. She finally gave me 0% for six months and 10% thereafter. It saved me a boatload of money.

Even with that knowledge, I didn’t really push too hard for a lower rate. I figured that the 12.99% is okay for now and I can try again later when I have a little more leverage.

I also found that we were paying for Credit Protection on one of our smaller cards. It wasn’t much (about $6 a month), but we never asked for it and it wasn’t necessary. So, my wife cancelled it. I really hate it when credit cards do that.

Anyway, that’s my news.