competing priorities
From this month’s Net Worth Update:
“I did OK, I guess. It’s home improvement season, so I’m not sure how much progress I’ll be making in the coming months. We got some landscaping done (paid in full up front), and we bought some furniture (No money down, no interest for 12 months – we plan to have it paid off in the next couple months, and yes, this does mean that I have another credit account – but I wanted it, because we’ll be buying quite a bit of furniture this year). But we’re still saving for the future (wedding, baby) and I’m paying down my student loans – about $300 more than the minimum payment per month (The $300.00 comes from the payments I was making on other bills that I have now paid off.) My car payments are mostly principal at this point, which is great. And all that money in “cash” includes money we’re saving to spend on the wedding (the planning/spending for which is already under way), so I’m not sure how much stock you should put in that number. And oh yeah, how ’bout that bear market? I’m down about 10% from last month.”
I’m still up about$400, but it would be so much better if I hadn’t lost that amount in the market, and if we hadn’t bought furniture. But look, we need furniture. Our hand-me-down furniture has literally fallen apart. My room is atrocious. That’s bad for my peace of mind. I’m not too worried about the additional debt. We’ll be paying it off in the next few months. And still, that doesn’t really matter, because after it’s paid off we’re getting carpet and more furniture.
The good news is, we pay for this stuff with the money that’s left over after we contribute a big chunk of our money to our various savings goals and the household expenses. The other good news is that we’re only buying one home improvement at a time. We know we can’t afford do everything at the same time while continuing to save, so the one-at-a-time approach will keep us able to continue saving and paying down debt. I have no interest in being miserable and completely dissatisfied with the decor of my house just so that I can boast about being debt-free. I will spend my money on things I want to have – I’ll just do it as responsibly as I can think to do it. We have savings and steady work, so now is the time to take advantage of being dual-income-no-kids.
Although, I’ll admit that I hate it when my net worth graph doesn’t shoot up in the air.
hate mail
So when I got home tonight, a letter from one of the companies that has issued me one of my credit cards. Let me let you in on my credit situation: I have four credit cards.
The first is my first card from college, that I got because I wanted a free candy bar. I’ve had it for over ten years now, and the only reason I keep it is for the longevity of my credit history. (Because I hate the interest rate, and because they’re always sending me “convenience checks” that are inconveniently jamming up my PO Box. They never reduced my interest rate when I asked. They only increased my spending limit once. I pretty much hate them.) It has no balance and is in good standing. I use it once or twice a year to keep it active.
The second was offered to me when I opened a checking account while I was still in college. I’ve also had it for over ten years, and it has no balance. I only use this card for very large purchases. It has a rewards program, so I can get stuff by using it – last year, I used my rewards to help pay for my new TV. I usually don’t use the card, but if a high-dollar purchase comes up, I use the card to get the reward points and then I pay it right back. It has a relatively high balance, so it’s great for stuff like contractors or furniture. I had a line of credit with this company which helped me to consolidate my debt. I paid it off, and in the past year, they cancelled it. That kinda pissed me off, but I was kinda expecting it too. Either way, this is my highest balance card with my lowest interest rate, and I’m glad to have it. It has no balance and is in good standing.
The third card is my AMEX, which I’ve had for about ten years. It’s a classic green AMEX card with financial rewards. It’s my only card with an annual fee, but I love this card! When I was struggling through college and grad school, it helped me avoid using my other cards, avoid accruing a balance since it had to be paid off at the end of each month, and it gave me a little advance on my paychecks when I needed it. When I got this card, I was right at the point in my financial development when I learned how NOT to run up a bill. If I’m using a credit card nowadays, it’s usually this one. It’s in good standing, and I clear the revolving balance every month.
I just got the fourth card, a department store charge card, in the last year. Department store charge cards are pretty evil and not for the faint of heart. I have it because I like the store and I like the discounts I can get by using the card. I cleaned up on Christmas shopping because of this card, and as long as I don’t carry a balance, the ridiculously devious interest rate, typical for cards like these, won’t affect me. It doesn’t have a high balance, but I like the discounts. Again – no balance, good standing.
Well, the letter I received today was about the second card. It says in part,
Dear Sistah Ant:
I am writing to inform you that the Financial Rewards credit card program will be ending… [and] will be replaced with the new Cash Rewards Visa Signature credit card – one of our premier cash rewards programs… Your APR will not change… Your unredeemed rewards will be transferred to your new account… [and the card] comes with exceptional features and benefits. …You will receive credit for your continuous account relationship going back to the old card. Blah, blah, blah,
Sincerely,
Fake Signature
Name that means nothing to me
Stupid Bank
I know this doesn’t sound like a bummer, but check out what’s in the fine print on the back of the letter – “As a result of this upgrade, your account will have a revolving line, rather than a preset spending limit. This does not mean that all transactions will be approved. We will consider transactions for approval on an individual basis, including transactions in excess of the revolving line. If we have previously permitted transactions in excess of your revolving line, it does not mean that we will permit another transaction in excess of your revolving line. Your revolving line, which may also be referred to as a credit limit, will be disclosed to you when you receive your card and, generally, on each monthly statement. We may change your revolving line from time to time.” Some upgrade.
It’s hate mail, I tell you! My predictably high credit limit – *poof*. The predictability of knowing what I can spend – *poof*. Going up to the counter knowing that my card will be approved – *poof*. What I like about this card, opposed to my AMEX, is that I KNOW how much I’m approved for. I don’t have to call before I spend to see whether or not I’m going to be embarrassed at the register. The high balance on this card makes me look as awesome as I am on my credit reports. Now the only cards I have that have regular credit limits are the first card and the department store card, and their credit limits combined don’t add up to my current Visa limit. Do you know what this could do to my credit score, less than a year after my line of credit has been cancelled (by this same stupid bank)? My ratio of debt to available credit will still be “zero” to “combined credit limit,” but that combined credit limit is shrinking, and I didn’t do anything to deserve it.
I wouldn’t care if I wasn’t trying to buy a bigger house in the next several years. But I am. It’s hate mail, I tell you. They hate me because they don’t get interest from me anymore. They can’t hold a big balance over my head anymore, ’cause I paid it off. I probably take more money from them with my rewards that I earn them in merchant fees. So they send me this stupid letter, which is all happy and stuff (“upgrade” my foot!) when they’re really sticking it to me. I hate them now. That is all.
Broke.
You know why I’m broke? Bad planning and overuse of my AMEX. If I would think farther ahead, I would realize that racking up $500 of charges that have to be paid off right before graduation season is a bad, bad thing for my cash flow. You’d think I’d have gotten better at planning by now…
uneasy
Did you ever get the feeling that it has been too long since you looked at your bank balance? I’ve been doing the no-checkbook-register thing for a few months now, and it’s really hard. I went on a short trip recently and though we had a budget, I was often thinking about whether or not we were overspending. I’m not sure if I can keep this up without the detailed record keeping I ‘m used to…
pleasant surprise
I updated my net worth (with a few minor details yet-to-be-updated, like the big reduction in my student loan amount and the actual amount of my stocks’ value) and lo and behold, there was a $6,000 net worth increase sitting there staring me in the face! Wow. Praise God!
This progress, despite my newest material acquisitions – clothes, a smart phone, a data plan, weekly visits with a personal fitness trainer – is nothing short of amazing.
Here’s my latest net worth explanation:
“The amount shown in my net worth is incorrect because I’m having technical difficulties with one of my student loan accounts and with my ShareBuilder account, so I can’t see the actual balances. Until I can get these numbers, the amounts shown here are incorrect.
I used my tax refund to pay down some student loan debt. I made my last medical bills payment in April. Yay!!! That is why my “other debts” category has gone down. Another reason it’s declined is because I’m paying back the $7,500 tax credit from 2008 through payroll deductions, since 2010 is the first tax year in which Uncle Sam will start getting his money back from the homeowners who took the 2008 home buyers’ tax credit (i.e. “loan”) – which, in my case, is sitting in a bank account collecting an insulting amount of interest (when are the rates going to go back up?!?!?) and augmenting our emergency savings.
Mister Ant and I have been saving for our wedding expenses and for start-up costs for a family (no, we’re not trying yet!).
The credit cards get cleared by the end of each month, and I’m pretty much using them for rewards points. My main priority is to use the payment amounts I no longer have to pay to the medical bills to pay down my smaller student loan. I’m really excited about seeing that final 0.00 balance when I log in one day! I hate this loan with a passion.
I haven’t been saving much in my IRA, because so much of my money is going towards wedding/household savings and debt reduction. Apparently I lack the drive/discipline to contribute regularly to the fund, but at least I am saving something somewhere, and next month after open enrollment, I’ll start contributing to the 401K at work, since I become eligible this month. I looked into converting the IRA to a Roth, but it’s really not worth the initial tax costs to me right now.
Someone dinged my car, but not so significantly that it would have been worth paying my $1000 deductible, so I took some value ($500) off of the car, since the body is no longer in “excellent” condition.”
But, perhaps most importantly of all – my net worth has broken the -20,000 mark and I feel like I’m oh-so-close to going positive! I was so excited to see that, and then my jaw dropped when I saw that I’m 77% closer to a positive net worth than I was when I started this journey three-and-a-half years ago back in 2006. Oh joy! Negative 87K seems so far away now. I mean, what’s another 16K? I’ve already improved by about 70. This is so awesome!
watch out for the drugstore
I didn’t realize how liberal I had become about spending my money until I had a hard time talking myself out of the drugstore last night. I only went in for one thing I needed, and the next thing I know, I was actually browsing all over the store. And then something in my head said, Sis, look at what you are doing. Get what you came for, and get the heck outta here! Can I tell you, it was SO HARD! Reining it in was so much easier when I was a) broke, or b) emotionally invested in a goal.
I gotta get my emotions back into this!
algebra?
Mister Ant and I are putting our finances together. For us, that means checking our credit reports, figuring out how a joint account could benefit us, and working together on debt reduction (mostly student loans and the mortgage) and savings for long-term goals. I actually had to do some algebra! We now know what percentage from our respective checks is enough to take care of household expenses. It’s a different dollar amount for each of us, because we have different salaries, but it’s the same percentage, so neither of us gets burdened more than the other – or in other words, a fifth is a fifth, a quarter is a quarter, or a third is a third for either of us. Our percentage is 32%. This means that 1/3 of our collective net monthly income pays all the household bills, so if each of us put 32% of our income in a joint account, it would cover things like the mortgage, household incidentals, utilities, entertainment, etc. This would leave us with 2/3 of our net monthly income to divvy up for savings, debt reduction, and a spending allowance.
That’s just the beginning, though. We should also have to figure out a percentage for joint savings goals, once we nail down a joint debt reduction plan. The days of splitting bills like roommates are over. Soon, our joint checking account will be paying our bills, instead of one of us reimbursing the other for their share of paid bills. But this takes a while, with all the other things we’re busy with to distract us. There’s lots of scribbling, and lots of communicating. But it will all be worth it. Our opinion is that money should be the last thing we have to worry or argue about as a married couple if we’re proactive and smart about our money management.
Mister Ant is happy I’m blogging again. He wanted me to tell you guys Hi!
*sigh* happy new year
Oh the horror!
The triumphant spirit I had this time last year has given way to contrition this year. If I don’t want to feel like this in 2011, some things are going to have to change.
I made a deal with myself that I could keep my head in the sand until the end of December. I allowed myself to turn a blind eye to the hard numbers, buy whatever Christmas presents I wanted, eat lunch out if I felt like it, ignore contributing to my retirement account or my stock purchases, ignore my debt reduction goals… I did all of that. I am done with that. This has been such a mediocre year! I feel like I haven’t moved forward and like I’ve abandoned my goals.
I’ve been so busy with my new work hours and other activities, and I used that as an excuse to slack off on my diligence with checking the numbers and blogging about my progress or the lack thereof. I even finished 2009 with credit card debt because of a house improvement and a very expensive engagement gift I wanted to buy.
Which brings me to my newest motivation – marriage and babies are only as imminent as my (our) ability to handle our money correctly and progressively. I have a renewed commitment to debt reduction. The credit card debt will be gone by the end of the month. The medical bills will be gone by June. The car note will be gone by June 2011, and only because we have to save for our ceremony, since we will not incur debt for it. by June 2011 – mark my words – my only debt will be the mortgage and the student loans, provided the Lord helps us to avoid emergencies.
Regarding savings, I have found that it’s harder to keep the money I save. This year, I wound up spending what I saved so that I can avoid using credit cards and avoid raiding the savings I had already. I’m not completely uncomfortable with this, but I would like to increase my savings. So, I’m counting on the 7.6% raise I got at the end of the year and the 401K program at work, which kicks in for me in a few months, to help me feel like I’m making saving progress.
My challenges to debt reduction and savings will be home decorations (we’ve made improvements/repairs but hardly any decorations) and the wedding ceremony. I hope to do everything for the cheapest prices we can get, and I’m willing to compromise on those things in order to achieve the goals I want. I have to use better time management and abandon my excuses if I want to do that! So here goes…
Oh and one more thing, I told myself that I would only update the value of my home once a year, so there it is. My actual net worth progress has been kind of stagnant, and the bump seen this month is due primarily to the increase in the market value of the house (which I listed conservatively last year).
back on the saddle
As my latest net worth update says, “I have finally included the doggone medical bills. (In “other debts.”) So there, $2000 more debt. And it’s taking a while to pay off because I have other things to take care of – house repairs and decoration, mainly. I’ve had very few indulgences because I know I have all this debt. I know it’s been a while since I’ve updated, but honestly, I’ve been discouraged by the slow progress with paying off debt and building up my investments. Most of the progress you see has just come from making minimum payments and saving to use cash instead of credit. This update is as of the middle of October. It’ll be another month-and-a-half before I do another update on the net worth, at the end of November.”
Anyway, this blog has been calling me back. It’s good for me to see where I stand, and I’m really glad I forced myself to do this update and see the numbers. It’s really not as bad as I thought it would be – not as bad as it could be. But I’m not finished with home improvements. In the next month or so, I’m going to be spending even more on the house repairs. Right now, the name of the game is to at least maintain and not slip backwards. That means continuing to pay in cash, avoid new debt, and pay down on debts, if only the minimums.
I fell off the record keeping horse – doing nothing more than balancing the checkbook. But it really does help to know your situation and keep tabs on it, so here I am, hopping back in the saddle.
communicate with your mate about money
Presented without comment (but one disclaimer – that ain’t me) for your viewing pleasure:
