by debt kid on November 19, 2009
Christmas is coming round the corner faster than an Amazon PRIME delivery.
And with that, comes the pressure to spend, spend, spend.
We are constantly bombarded with marketing messages, but never more so than during the holiday season.
So, you’ve got savings goals. How do you stick to them?
Here’s what I’ve been doing (successfully)
1. Print out a picture
I used to want to be a missionary pilot, so I printed out a quarter million dollar float plane and pasted it on my bathroom mirror. Ambitious? Yes, and it worked. I’d hit the restroom late at night, see that picture, and be re-motivated to get back to work.
2. Think of your Grandparents
My grandparents lived through the depression and to this day my Grandma is one of the most frugal people I’ve ever met.
She’s also one of the happiest.
3. Make it a competition
I love competition. When it comes to saving money, I’ve been trying to make a competition with myself to see how much I can save each month, and try to improve on that number each month.
4. Think of your future (grand)kids
Every time I’m tempted to buy something I don’t need, I think of my kids.
What? “Debtkid, you don’t have any kids!” you say?
Yeah, but I will someday.
5. Think of who you could support
I’ve got 2 friends who are doing fantastic work in the non-profit world. I would love to be able to support them financially someday.
Can’t do that if you’re broke.
6. Make it automatic
Set up your monthly or weekly savings draft and forget it. Done.
7. Write down your savings goal
Seriously, write it down on a sheet of paper. I’ve had a sheet of paper at my office since January with my savings goal on it. And you know what’s funny, I’m on track to hit that goal almost EXACTLY.
It’s amazing how much psychology plays into our ability to save and resist spending. Write down your dream savings goal for the month/year and just see what happens.
How do you motivate yourself to save?
Twitter says….
@nodebtplan – Goals are all the motivation I need to save. Run basic math to figure out how much to save to reach a goal by a certain date.
by debt kid on November 17, 2009
I have all my cash savings at SmartyPig right now, and they just announced a 12% bonus at Macy’s (and other bonuses at Barnes and Noble, iTunes, etc). And I kinda like Macy’s. Quality stuff, and not too overpriced.
So, what the heck should I save for?
They have a ton of nice furniture stuff, but I don’t need any furniture at the moment. But, by next year, I probably will. So hmmm…
You can see all the SmartyPig bonus % and retailers here.
by debt kid on November 9, 2009
I’ve been observing lately how friends and family interact with money, or the lack of money in their lives.
I know this may be obvious to everyone reading here, but I honestly never thought about the impact of money until the last few years. It really does impact nearly every area of our lives.
It impacts our school choices, our family vacations, our church giving, where we entertain ourselves, the circle of friends we have, how we sleep at night.
But I don’t think it has too. As I climb closer and closer to getting out of debt, the more and more I want my life to NOT be defined by money.
I want my life to be defined by my values, my ambitions, my family. Not my bank account.
3 Major Hindrances
So, how do you do that? Well, I think it starts with removing the hindrances that money can play in your life.
1. debt
2. not having savings
3. not having steady income
If you have debt, it’s constantly on your mind. If you don’t have savings, you’re always in fear of your car breaking down. And if you don’t have a steady income, both debt and no savings are difficult to achieve.
Once those three milestones have been hit (little debt, healthy savings account, steady income), the challenge is to recognize how far you’ve come, and choose to not let money rule your life. But it’s very difficult until those three marks have been hit.
I still have a lot of debt. And so unfortunately, I still feel ruled by that debt. I can’t run off to some third-world country to help feed the poor. I don’t think that’s my calling, but because of my debt, that isn’t even an option, I’m confined by that debt to some extent.
What do you think, does money rule your life? Are you confined by your debt? Or your lack of savings? or lack of a steady income?
by creditcruncher on November 5, 2009
I have been temporarily MIA the past few months and I apologize for my disappearance. Long story short, 2 things have happened recently…
- More staffing changes at work lead to more work production expected with fewer people.
- I broke my right arm about 5 weeks ago leaving me with just the ability to peck at the keyboard. I am right handed so not having use of this arm made it even tougher.
But work has now slowed down and I am ready get back to contributing again!
Since my last post, several new things have happened:
- Paid down the last $2500 on 2nd to last credit card. I was very excited to get this debt knocked out and only have 1 card left. Part of this was from the savings but it was the last $2,500 and was more of a mental accomplishment than anything else. Now that I only have 1 credit card with less than $10K left and I am pushing every penny towards it.
- Selling/Renting out townhouse next May. Never too early to start planning right?? My roommate and I were college roommates and were both looking to enter the real estate market after graduation. Hindsight is 20/20 but we purchased near the top of the real estate boom; luckily housing prices in our community have remained steady and even slightly increased. So based off comparable homes that have sold and adding in fix up costs and real estate agent fees we should come out a couple grand on top each. Another positive is that there are a limited number of our models in the neighborhood (2 bedroom end unit w/ basement) and 2 other end units are on the market now so we should have a good idea of the selling price come spring.
The other scenario is to keep the house and rent it out. We are currently deciding if we want to be landlords. It would be nice to get some extra cash right now to pay off the debt from the sale but long term it might be nice to have someone else pay down the mortgage. Renting was our original goal when purchasing the house but as you all know things change and thus both of our goals have changed in the last 4 years.
Thus, Debt Kid’s last article about home ownership has really hit home lately!
- Broken arm. This created some surprise medical expenses. I am on a high deductible plan so I have to pay everything out of pocket at first. Luckily I do have an HSA to cover the deductibles and I have contributed a significant amount over the past year. But medical bills add up quickly so combine this accident with x rays I needed earlier this year and I will be using up all of those funds and probably paying some out of pocket.
- Cleaning house. I have been relentlessly cleaning shop to find extra cash to pay down debt. I sold quite a bit of electronics on ebay/amazon earlier and now I’ve moved onto extra clothes, books, and random items. I’ve taken a lot of these items to Goodwill and taking another batch over to Platos Closet too see if I can get anything there.
I am contemplating a career change/move and realized I need to be as mobile as possible. Going through my closet/attic I also realized how much junk I’ve accumulated and have absolutely no need for.
How do you sell/donate your extras? What is the best way to achieve the highest return on your investment/time?
I look forward to posting again!!
by debt kid on November 2, 2009
Have you ever owed money to family?
It sucks.
When I was living in my office, I needed $1,000 a secure an apartment and actually have a place to live. I knew I was going to have that $1,000 in a few weeks, but didn’t at the moment. So, I borrowed from my older brother.
It turned out fine, in a few weeks I mailed him a check, and that was that. But still, I didn’t like it.
I’ve been pretty lucky that even though I owe still owe my mum a ton, she hasn’t freaked out too much. And that she hasn’t been charging me any interest, which is fantastic.
But even still, owing family money just blows. It can change the relationship in a negative way if you’re not careful.
As a rule, I would say never borrow from family or friends if you can avoid it.
Have you ever borrowed or lent to a family member or friend? How did it turn out?
by debt kid on October 30, 2009
why buy when you can rent?
I love that the love affair with “home ownership” has come crashing down in the past few years.
Especially among 20-somethings. I’m obviously sympathetic to those that have lost their homes, but nonetheless glad “homeowner” isn’t such a golden term anymore.
Graduating from school in the heyday of the housing boom, there was a quiet and sometimes not so quiet “race to be the first homeowner” among my peers.
Why were we all chasing this American dream?
We got caught up in the hype. Caught up in the lie that owning a home is always a good investment.
I strongly believe now that owning a home in your 20’s is a bad idea for the majority of us
Why?
Most 20’s college grads live/work in urban, high priced areas. Rents may be high, but they are still much cheaper than the mortgage on comparable places for sale.
You pay a crapload of interest the first few years of even a traditional 30 year fixed mortgage.
Property Taxes.
Homeowners Fees.
If money buys freedom, why would I use it to tie myself down?
I understand the advantages of homeowners (tax deductions, pride, etc), but I just think for most urban 20-year olds, you’re much better off to rent than stretch to afford a condo that’s small and ties you down just so you can “buy a home”
I have a friend who’s girlfriend is upset because he can’t afford a house here in Seattle. He is 26 and in grad school. Are you kidding me? A decent single family house, in the city limits is going to start at 300K not falling apart.
By this time next year, I’m pretty sure I could be in a position to buy a nice place if I wanted….and I’m gonna pass.
by debt kid on October 28, 2009
I remember the plastic bag I carried into Toys R Us very vividly. It was a concoction of $1 bills and coins, with a little dust thrown it for good measure.
My allowance at the time was .50 a week, and the squirt gun I wanted to purchase was $20.
It was the earliest “saving experience” I can remember, I was 6 or 7 at the time.
It’s funny how little has changed now that I’m grown up. I still get an allowance (payday!), and I have goals that I’m saving for. The only difference now is the numbers.
At some point growing up, I switched from a “saver” to a spender. I believe it was around my 18th birthday. It’s only in the last 3 years, really since I started the blog, that I’ve reverted back to my “saver” mode. I spend significantly less now than I earn, which has allowed me to make some huge strides in paying back my debts this year.
Some thoughts that parents could use to encourage saving:
1. Be a saver yourself
2. Setup a kids passport account for them
3. Match their savings
4. Withhold money from their allowance for savings
5. Set savings goals (ala smartypig)
Are you a saver or a spender? Did your parents encourage saving?
by Real Estate Kid on October 26, 2009
I received in the mail this week another notice from my credit card hiking my rate, for no apparent reason. It’s now up to 29.99% from 9.99% when I opened it just over a year ago. Luckily, this rate hike does not affect because I never use this card for purchases. This is the card which offered me a 3.99% locked rate for the life of my balance transfer which I consolidated all my debt to. I did call them to ensure this locked-in rate would not be affected by the recent rate hike. I will also call again to double-check before the new rate goes into effect.
A lot of people have been complaining about unsubstantiated rate hikes recently. In actuality they are not unsubstantiated, at least from the bank’s point of view. Almost every credit card that currently exists, even so called “fixed rate” cards, can have their terms and conditions modified at any point in time by the bank. You even signed something saying this was OK when you applied for the card. I’m sure you didn’t read it, but it was there in the fine print.
So, what’s the bank’s point of view?
Well, unknown, or maybe forgotten (since it was signed in May of this year), by a lot of people is the Credit CARD Act of 2009. This law was passed on May 22, 2009 but does not go into effect until February 22, 2010 and seems to have faded from the news lately. Basically this law will protect credit card users from the unfair practices the credit card companies have been using for years to make as much money as possible off us. The banks’ point of view is that this is the deadline for the unfair changes they can make to your credit card, and therefore they are trying to maximize their profit now by hiking up rates. You can read up more about the act here, but the main points as I see them are:
- No more “universal default” rate increases
- No more “double-cycle” billing
- Payments are applied to the highest rate balance first
- A hard credit limit (selectable by the card holder) in which transactions going over will be denied, eliminating over-limit fees.
- 21 calendar days grace period (increased from 14 days minimum now)
What to do if your rate is hiked?
The credit card I mentioned above is a Citi card and they allow me to reject the rate hike and close out my account at my current terms if I choose to. This means the account is still open until I pay off my balance at my current rate, but no new charges are allowed on the account. While Citi is doing this now, and I’m sure some other cards are as well, this option will also be available to all cardholders under the new law going in effect early next year. You might not want to close a credit card but at the same time, you just might not be able to afford not to.
by Jessica W on October 22, 2009
Mint: There’s many other great systems, but I simply want something that will scream at me (or text me) if I’m over budget and a dashboard or “mission control” for all my accounts in one place. Networth on demand, every day. I love Mint. If you haven’t tried it—you should! If you use a smaller bank—you may need to use Green Sherpa (they’ll add banks for you, but there is a small monthly subscription fee). Green Sherpa is also much better for the data-nerds who want to download, and “play” with all their data every month.
SmartyPig: Who doesn’t love a 2% return on a small-balance savings account? Just try to beat that with your local bank for a minimum deposit under $100. This is like savings account and gift registry, with all the convenience of an automated 401K contribution. Set it and forget it—literally, and there’s no charge to use it. These handy free savings accounts are set to automatically transfer from your primary account at any bank over to your SmartyPig account until you’ve reached a savings goal. You can even use a widget to show your savings goals on your Web site or Facebook. Kids’ college fund, honeymoon cruise, or just your annual Christmas shopping savings account, this is free, convenient and cute. Check it out! (Also, they offer great customer support via phone or Twitter!)
Podcasts: My personal favorite is The Dave Ramsey Show—especially the “Debt Free Friday” shows. I plug this one-hour daily podcast in and hit the treadmill. So far I haven’t lost any weight but I’ve lost a lot of debt!
NetQuote: If you love shopping for insurance… you’ll be disappointed. But if you’re like me, and would rather hang out with your dentist—a wealth of free quotes is pretty spiffy and saves time and money.
SmartHippo Nope, the name doesn’t tell you anything, but SmartHippo.com can tell you if you can get a better deal on a mortgage. It’s smart and social search engine is an awesome tool for getting the best deal out there—it helped me get a screamin’ deal on a refinance earlier this year.
Credit Score: You don’t get your full credit report, but you can monitor your credit score for free at CreditKarma.com. Handy for a multitude of reasons, and allows you to watch for long-term trends in your credit history.
Blogs: The blog world is vast. Most bloggers aren’t experts in their area. I’m no personal finance expert—but I’m an expert on my situation—and you may find some things are similar to your situation. Perhaps we can all learn something from one another. Not only is the blogsphere a great resource for creativity and ideas, but also for community. We get to know our readers and our readers get to know us. It helps keep us on track and accountable.
So—speaking of staying on track and accountable—what have I missed? What are your favorite free financial tools online?
by debt kid on October 22, 2009
If you’re a visual learner, you’re going to love Lending Club’s new statistics page.
The new page takes all the granular, nitty gritty data that Lending Club collects on it’s borrowers and lenders and turns it into a beautiful, almost sensory, colorful experience.
Lending Club's new stats page
Data Highlights
- 79% of Investors are earning returns between 6% and 15%
- Lending Club has issued over 61 million in loans to date
- 58% of Lending Club borrowers use their loan to consolidate or payoff credit cards
- The highest returning loan purpose? Renewable Energy Financing at 10.58%
- The lowest returning loan purpose? Moving Expenses at 4.59%
- “E” credit grade borrowers are providing the highest average return of 10.88% (”A” credit grade is the highest)
Get $25 to Lend at Lending Club
Lending Club is still giving you $25 to lend if you sign up using this link.
My Lending Club returns
My current return with Lending Club is at 9.15%. I’m going to be moving a decent chunk of my cash fund into Lending Club in the next month.
