I just got my last check for 2007. Yee haw!
So, I applied it all to the credit card debt.
New balances:
Card #1: $0 (21%)
Card #2: $0
Card #3: $0
Card #4: $0
Card #5: $1,900 (17% in February)
Card #6: $5,250 (21% in March)
Card #7: $2,400
Card #8: $3,900
I need these fools out of my life! The sooner the better!
I've now paid off $8,900 from my highest balance of $22,200.
Sunday, December 30, 2007
Dog: 1, Mall: 0
Go me! I have defeated the mall!
My mission at the mall was to return two items, one for $70, one for $120. Of course, they were at stores on the opposite ends of the mall.
I returned the items, and only bought one thing, a picture frame for $10 on sale that I had eyed before Christmas. Success! That should help the Christmas balance sheet.
~Dog
My mission at the mall was to return two items, one for $70, one for $120. Of course, they were at stores on the opposite ends of the mall.
I returned the items, and only bought one thing, a picture frame for $10 on sale that I had eyed before Christmas. Success! That should help the Christmas balance sheet.
~Dog
Saturday, December 29, 2007
Goals: Six for 2008, Two for Beyond
The act of writing out these goals was really useful and something I had never really done before. Hopefully now I have some accountability.
Goals for 2008 (in order of completion/importance):
1. pay off credit cards (14K)
2. 2007 IRAs (8K)
3. Wedding savings (35K)
4. 2008 401(k)s (31K)
5. 2008 IRAs (10K)
6. pay off car (14K)
Total: 112K
These goals seem ambitious but possible. This isn't as bad as it looks. I'm not sure how much (if any) support we will get for the wedding in early 2009, so I am planning as if we will get none. Also, the 401(k) money is (obviously) pre-tax.
Long Term Goals:
Net Worth of $250,000 (not including cars or personal property): end of 2009
Save $100,000 for down payment: mid-2010
Whew. 112K of goals already spoken for in the 2008 income, and most of them are not very fun at all. I might scale back the retirement savings for the short-term wedding and down payment goals.
Now I just need to get one of those progress bars like all the other PF bloggers have.
Goals for 2008 (in order of completion/importance):
1. pay off credit cards (14K)
2. 2007 IRAs (8K)
3. Wedding savings (35K)
4. 2008 401(k)s (31K)
5. 2008 IRAs (10K)
6. pay off car (14K)
Total: 112K
These goals seem ambitious but possible. This isn't as bad as it looks. I'm not sure how much (if any) support we will get for the wedding in early 2009, so I am planning as if we will get none. Also, the 401(k) money is (obviously) pre-tax.
Long Term Goals:
Net Worth of $250,000 (not including cars or personal property): end of 2009
Save $100,000 for down payment: mid-2010
Whew. 112K of goals already spoken for in the 2008 income, and most of them are not very fun at all. I might scale back the retirement savings for the short-term wedding and down payment goals.
Now I just need to get one of those progress bars like all the other PF bloggers have.
Friday, December 28, 2007
Meals on Wheels and Social Security
This Prince of Thrift fellow attacked me. He said I "don't know what I'm saying" about tithing and Social Security, and then refered me to a Larry Winget anecdote about $100. Let me say I agree 100% with Winget's (and Prince's) view on hard work. That is how I got where I am today.
However, I maintain that it is foolish to tithe away your nest egg and rely on government assistance to take care of you in retirement. (I bet Larry Winget would agree.) I plan to post a whole lot of facts about Social Security in the future. For now, I respond with an anecdote of my own:
When I was a teenager, a family member founded a Meals on Wheels program in a small town. I have since volunteered for Meals on Wheels programs in two cities, one through a church and one through a multi-faith project. Meals on Wheels has forever changed my view on life, on saving, and on charity.
Most of these seniors faithfully tithed their entire lives. Like Prince of Thrift, they naively believed that things would just work out. Churches do the best they can. The churches send food (Meals on Wheels) and hold drives for things like clothing and blankets and sometimes
give tidy sums of money. It isn't that churches don't care about the seniors, it is just that 500 starving seniors are a huge burden on any organization.
It is stupid to assume that if you tithe (or squader) away your retirement nest egg that someone will magically care for you in your retirement. If incredibly inefficient mandatory
investment/reallocation taxes (Social Security) match your view of religion and 1K/month is enough for you to live in dignity, fine, don't save for retirement. If you want to depend on charity (the church) or if you want to burden your children, fine.
As for me and my house, we will take care of ourselves and save now for retirement. It's hard to value dignity in retirement until you see those who lack it.
However, I maintain that it is foolish to tithe away your nest egg and rely on government assistance to take care of you in retirement. (I bet Larry Winget would agree.) I plan to post a whole lot of facts about Social Security in the future. For now, I respond with an anecdote of my own:
When I was a teenager, a family member founded a Meals on Wheels program in a small town. I have since volunteered for Meals on Wheels programs in two cities, one through a church and one through a multi-faith project. Meals on Wheels has forever changed my view on life, on saving, and on charity.
Most seniors in Meals on Wheels are on Social Security and literally cannot afford food. Most are widows who lost exhausted their nest eggs. They can't afford to run the air or heat; they can't afford to travel to see their families. Meals on Wheels even brings pet food because they can't afford $5 in cat food.
Most of these seniors faithfully tithed their entire lives. Like Prince of Thrift, they naively believed that things would just work out. Churches do the best they can. The churches send food (Meals on Wheels) and hold drives for things like clothing and blankets and sometimes
give tidy sums of money. It isn't that churches don't care about the seniors, it is just that 500 starving seniors are a huge burden on any organization.
It is stupid to assume that if you tithe (or squader) away your retirement nest egg that someone will magically care for you in your retirement. If incredibly inefficient mandatory
investment/reallocation taxes (Social Security) match your view of religion and 1K/month is enough for you to live in dignity, fine, don't save for retirement. If you want to depend on charity (the church) or if you want to burden your children, fine.
As for me and my house, we will take care of ourselves and save now for retirement. It's hard to value dignity in retirement until you see those who lack it.
Selling my Depreciating Asset, er, Car?
Looking over the math, it's clear that one of my worst decisions was buying a new sports car right out of school with a ridiculous 6.99% interest rate. Never again.
But now that I am in this mess, I have to decide what to do. I put 5K down on the car and have since paid on 7K in principal on the loan. The loan is now about 13K, and the car is worth something like 18K. Because of what kind of car it is, I am pretty sure I could sell it easily.
If I sold the car, I could pay off the 13K left on the loan, but then I would have only 5K to spend on a car.
I admit, this is lifestyle inflation. I don't want to drive a 5K car. I will offer one additional lame excuse, that my business does require me to look a certain way, and that means driving a fairly nice car. So, I'm sticking with this money-sucking car. I've lost 7K on this stupid car in almost 2 years. Now, I just have to drive it until the wheels fall off, I suppose.
Sad thing is, if I were buying a new car right now, it would be a totally different one. My silly sportscar is just not ideal for my needs in the end.
But now that I am in this mess, I have to decide what to do. I put 5K down on the car and have since paid on 7K in principal on the loan. The loan is now about 13K, and the car is worth something like 18K. Because of what kind of car it is, I am pretty sure I could sell it easily.
If I sold the car, I could pay off the 13K left on the loan, but then I would have only 5K to spend on a car.
I admit, this is lifestyle inflation. I don't want to drive a 5K car. I will offer one additional lame excuse, that my business does require me to look a certain way, and that means driving a fairly nice car. So, I'm sticking with this money-sucking car. I've lost 7K on this stupid car in almost 2 years. Now, I just have to drive it until the wheels fall off, I suppose.
Sad thing is, if I were buying a new car right now, it would be a totally different one. My silly sportscar is just not ideal for my needs in the end.
Wednesday, December 26, 2007
A 529 for a Theoretical Child
I followed Jonathan's lead and opened a 529 for my unborn child. Unlike Jonathan, I am not even married, but I do plan on having a child eventually. Unlike Jonathan, I only put $75 in the account.
The Fidelity American Express 529 card automatically contributes 1.5% of purchases into a Fidelity 529 plan. With this, I can follow Jonathan's lead and just allow the rewards to accumulate for the 5-10 years until I have a child. That sweet $75 is also sheltered from the scathing 33% taxes from short-term gains.
I was torn between an ESA (Coverdell) and a 529 at first because there are so many more options in an ESA. It's kind of like an IRA, you can open it anywhere and put almost anything in it. A 529 is more like a 410(k), you're limited to the sponsored options.
However, a 529 was right for me for quite a few reasons. Both 529s and ESAs can be changed to another member of the family, which is fairly broadly defined. For me, this means I can set up the 529 in my name right now, change it to my child's name later, or, if I never have a child, I can change it to a niece or nephew. However, a Coverdell can only be set up in the name of a child, that is a living person under 18. Thus, I can't set up a Coverdell for my theoretical child, as it lacks a social security number at this time for obvious reasons.
The other problem is I make too much money for an ESA, so Uncle Sam pretty much made that decision for me. To set one up in the future for private high school, I might need grandparents' help and lesser income levels.
I needed to choose the best Fidelity-administered plan. I like Fidelity, and I needed that rewards credit card. If Vanguard offered a similar card, or if Fidelity abolishes the card, I would probably go with Vanguard. EDIT: I don't actually have the Fidelity card yet, I am waiting to pay off my credit card debt to open another card. But I plan to open it in early 2008.
In researching 529s, I found that a lot of information out there about 529s is just too old. They are improving! Today, there are a ton of great 529s to choose from, which wasn't true even two years ago. In the end, I used Nickel's fantastic recommendations. I don't have any state benefits in my state. I chose California's Fidelity plan, and just did the total market index: no fees, expenses of .5%. California even has a socially responsible fund. Lots of great new 529 options.
I am impressed at the number of great 529 options, and I am glad I finally just picked one.
The Fidelity American Express 529 card automatically contributes 1.5% of purchases into a Fidelity 529 plan. With this, I can follow Jonathan's lead and just allow the rewards to accumulate for the 5-10 years until I have a child. That sweet $75 is also sheltered from the scathing 33% taxes from short-term gains.
I was torn between an ESA (Coverdell) and a 529 at first because there are so many more options in an ESA. It's kind of like an IRA, you can open it anywhere and put almost anything in it. A 529 is more like a 410(k), you're limited to the sponsored options.
However, a 529 was right for me for quite a few reasons. Both 529s and ESAs can be changed to another member of the family, which is fairly broadly defined. For me, this means I can set up the 529 in my name right now, change it to my child's name later, or, if I never have a child, I can change it to a niece or nephew. However, a Coverdell can only be set up in the name of a child, that is a living person under 18. Thus, I can't set up a Coverdell for my theoretical child, as it lacks a social security number at this time for obvious reasons.
The other problem is I make too much money for an ESA, so Uncle Sam pretty much made that decision for me. To set one up in the future for private high school, I might need grandparents' help and lesser income levels.
I needed to choose the best Fidelity-administered plan. I like Fidelity, and I needed that rewards credit card. If Vanguard offered a similar card, or if Fidelity abolishes the card, I would probably go with Vanguard. EDIT: I don't actually have the Fidelity card yet, I am waiting to pay off my credit card debt to open another card. But I plan to open it in early 2008.
In researching 529s, I found that a lot of information out there about 529s is just too old. They are improving! Today, there are a ton of great 529s to choose from, which wasn't true even two years ago. In the end, I used Nickel's fantastic recommendations. I don't have any state benefits in my state. I chose California's Fidelity plan, and just did the total market index: no fees, expenses of .5%. California even has a socially responsible fund. Lots of great new 529 options.
I am impressed at the number of great 529 options, and I am glad I finally just picked one.
Christmas Arms Race
Christmas damage (my family and my fiancee's)
moms: 350
dads: 150
siblings (3): 150
nieces/nephews (3): 100
friends(5 plus one name-drawing): 300
tips (maid + secretary + salon): 200
food: 20
christmas cards: 50
postage: 21
ornaments: 35
total: 1376
Now, that is pretty extreme for a single couple with no kids.
The problem is one set of parents gives extravagant gifts they can't afford. This year, it was a Playstation 3. I mean, great, it's nice, but I didn't need one, and I will never have time to use it. So, the only way I know to accept a gift that they can't afford is to give back. Thus, a mom got a really nice $200 gift with a lot of utility that she will use for years (a nice piece of kitchenware). A $200 luxury that she probably would have bought later, so a very good gift.
Next year, I'd like to spend even more on the cards for distant family and friends, and less on the immediate family. It just feels so wasteful. The problem will be getting good ole momma to scale back, and I am not sure that is even possible.
I am incredibly grateful that our families are (more or less) local, so we had minimal transportation costs and no lodging. All in all, it was a lovely Christmas.
moms: 350
dads: 150
siblings (3): 150
nieces/nephews (3): 100
friends(5 plus one name-drawing): 300
tips (maid + secretary + salon): 200
food: 20
christmas cards: 50
postage: 21
ornaments: 35
total: 1376
Now, that is pretty extreme for a single couple with no kids.
The problem is one set of parents gives extravagant gifts they can't afford. This year, it was a Playstation 3. I mean, great, it's nice, but I didn't need one, and I will never have time to use it. So, the only way I know to accept a gift that they can't afford is to give back. Thus, a mom got a really nice $200 gift with a lot of utility that she will use for years (a nice piece of kitchenware). A $200 luxury that she probably would have bought later, so a very good gift.
Next year, I'd like to spend even more on the cards for distant family and friends, and less on the immediate family. It just feels so wasteful. The problem will be getting good ole momma to scale back, and I am not sure that is even possible.
I am incredibly grateful that our families are (more or less) local, so we had minimal transportation costs and no lodging. All in all, it was a lovely Christmas.
Monday, December 24, 2007
Going Against the Grain: Maxing out the 401K despite the debt.
I make over $150,000 at 25 and have a huge amount of credit card (0%) and car loan (7%) debt. My employer has a well-run Fidelity 401(k) with a whole lot of great options, but no match. I have maxed my 401(k) out, even with all the debt. Let me explain.
According to Suze Orman, I should contribute only to the match, which I guess would be zero. According to Dave Ramsey, I should both eliminate all my debt and save a large emergency fund before I contribute anything to my 401(k), also zero. Wow, Suze and Dave agree! And I am ignoring both!
As an earner in the terrifying 33% federal tax bracket, my money goes a lot further in the 401(k) than the 67% remaining by the time I pay off Uncle Sam. I make a lot of money, and I anticipate maxing out my 401(k) as long as I possibly can. If I can get money into a tax-sheltered account, I will. If I don't use my 401(k) now, I will never be able to, and I want as much money in that 401(k) as possible.
Most importantly, I am not certain about the future. The boomers are starting to retire. According to Congress, one quarter of boomers will live entirely off government benefits. It doesn't take an economist to notice that Medicare, Medicaid, and Social Security are not exactly flush with cash.
I believe that when the government needs money for the aging boomers, they will get it the easy way, by taking away the few tax benefits enjoyed by the rich: 401(k)s, mortgage deductions, the 2010 Roth roll-over option, the ceiling on the Social Security taxes. This makes the situation all the more urgent for me. If I can invest in any kind of tax-favorable plan now, I will.
The tax code today bears little resemblance to its 80s predecessor. We simply have no idea what will happen with taxes in the future. So, if I have a benefit available to me, I will take it! Thanks, Uncle Sam!
According to Suze Orman, I should contribute only to the match, which I guess would be zero. According to Dave Ramsey, I should both eliminate all my debt and save a large emergency fund before I contribute anything to my 401(k), also zero. Wow, Suze and Dave agree! And I am ignoring both!
As an earner in the terrifying 33% federal tax bracket, my money goes a lot further in the 401(k) than the 67% remaining by the time I pay off Uncle Sam. I make a lot of money, and I anticipate maxing out my 401(k) as long as I possibly can. If I can get money into a tax-sheltered account, I will. If I don't use my 401(k) now, I will never be able to, and I want as much money in that 401(k) as possible.
Most importantly, I am not certain about the future. The boomers are starting to retire. According to Congress, one quarter of boomers will live entirely off government benefits. It doesn't take an economist to notice that Medicare, Medicaid, and Social Security are not exactly flush with cash.
I believe that when the government needs money for the aging boomers, they will get it the easy way, by taking away the few tax benefits enjoyed by the rich: 401(k)s, mortgage deductions, the 2010 Roth roll-over option, the ceiling on the Social Security taxes. This makes the situation all the more urgent for me. If I can invest in any kind of tax-favorable plan now, I will.
The tax code today bears little resemblance to its 80s predecessor. We simply have no idea what will happen with taxes in the future. So, if I have a benefit available to me, I will take it! Thanks, Uncle Sam!
I am $30,332 in debt.
I am $30,332 in debt.
Almost 14K of that is the new car I had to have a year ago. I can pay it off in a little over a year, right? Well, that didn't happen. Now, I have paid off about 1/3 of the loan while the rest compounds on me at 6.99%
The rest is credit card debt. It is all at 0% at the moment, but that runs out in the spring, from February to May. It is EIGHT credit cards in total, all with balances at the moment.
Card 1: 30
Card 2: 1500
Card 3: 300
Card 4: 500
Card 5: 2500
Card 6: 5200
Card 7: 2600
Card 8: 3900
There is one silver lining in this. I shifted a great deal of student loan debt into these debts. I have paid off about 80K in student loans. But what made me think that putting 16K on credit cards would be better than 16K of student loans? I guess I was seduced by the 0%, and it was nice for a while. I just hope I can pay off these cards before they kick in their terrifying interest rates.
Really, the problem is my out of control spending, which I will detail next.
Almost 14K of that is the new car I had to have a year ago. I can pay it off in a little over a year, right? Well, that didn't happen. Now, I have paid off about 1/3 of the loan while the rest compounds on me at 6.99%
The rest is credit card debt. It is all at 0% at the moment, but that runs out in the spring, from February to May. It is EIGHT credit cards in total, all with balances at the moment.
Card 1: 30
Card 2: 1500
Card 3: 300
Card 4: 500
Card 5: 2500
Card 6: 5200
Card 7: 2600
Card 8: 3900
There is one silver lining in this. I shifted a great deal of student loan debt into these debts. I have paid off about 80K in student loans. But what made me think that putting 16K on credit cards would be better than 16K of student loans? I guess I was seduced by the 0%, and it was nice for a while. I just hope I can pay off these cards before they kick in their terrifying interest rates.
Really, the problem is my out of control spending, which I will detail next.
Saturday, December 22, 2007
The First Post
My dog ate a truly fantastic pair of shoes last night. As I went to go buy another $100 pair (charge them, as always), I was irritated by how much this puppy had cost me in her eight months of life.
But the $100 shoes were a drop in the dog expense budget. I knew she was sick when I got her. I hadn't expected $2,500 in vet bills. I also spent $120 on collars, $600 on food (eight months), $450 on cages and pens, $250 on toys, $50 a week on daycare---$1000 in five months on daycare?! How could it have been so much?! Where was I?
All said this dog cost $4950.
That's right I said it. $4950 to give this dog the most fantastic life I could. While I am $30,332 in debt (to be detailed later).
I am out of control.
I make $150,000 a year at 25. I make more money than my parents, than any of my friends, than most of the people I know. So how am I still broke?
This blog is a journey. To get out of the hole I have dug myself in, and to make sure I don't go back to that place.
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