Monthly Archives: October 2007

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Debt SnowballWow!

Through Happy Rock‘s blog, I found a debt calculator that actually peaks my interest.

It’s based on the Ramsey snowball method, which I’ve sort of done in the past, but not really. I tend to try to pay down all of the debts at the same time. Sometimes it works, sometimes it doesn’t.

Eitherway, it’s a lot easier to just punch the numbers into this calculator from What’s the Cost than it is to set up your own cryptic spreadsheet. That’s the route I’ve always taken… until now.

The one feature regarding introductory rates doesn’t seem to work correctly, but that’s really not an issue in the grand scheme of things. Finally… a calculator that isn’t just the same old recycled drivel…

My Debt Snowball Chart I plugged in my numbers and things look good. I’m motivated to get things rolling on the fast track again. Even printed it out and taped it to my desk at work right in front of my keyboard.

I think I’ll stick to this schedule, with one exception. I’m still planning to pay off the Bank of America card in full by the end of the year. This schedule has it being paid off in January.

And, just think, this way I’ll be done even sooner!

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Ben BernankeWith the monthly net worth update looming in the next few days, I’ve got a pretty good idea of what it’s going to look like — granted Bernanke’s rate cut on Wednesday (Already? Why???) could sway the results.

Either way, October will end up being another month headed in the right direction. Problem is, most of the “gains” are coming in my 401k.

I guess that’s not a problem — it’s just not helping the debt reduction any. Untouchable income which, yes, is a good thing, is also like invisible imaginary income.

I look at the bottom line and see that I went up, say, $5k in the grand scheme of things. Hey, at that rate, I could wipe out all of my credit card debt in 3 months time. But my debt total hardly moved. And that’s frustrating.

I know I said that was going to be the new plan last week, but I haven’t implemented that plan yet.

But enough complaining about an increasing net worth… (Seriously, why am I moaning about that?)

The good news is that, by delaying the plan to boost my cash resources for another pay period, I’m ahead on my mortgage again. Next payment is due in January 2008, and that’s a load off of my shoulders. I generally like to have a buffer like that and there have been a few months where it’s been a little tight.

In other mortgage news, Countrywide did their annual Escrow Analysis on my account a bit earlier than usual this year and my payment has gone down around $40/month. While I’m not going to change my payment amount (I like to write checks for nice round numbers), it’s an additional $40 that will go towards the principal each month. Added to the $25/week I’m still throwing that way, that’s $140/month extra towards the principal, which according to Countrywide’s amortization schedule calendar will put me on pace to pay off the mortgage nearly 10 years early. No complaints there.

Anyway, the goals for November are to aggressively pay down the Bank of America Business credit card like I mentioned in the “Goal for the 4th Quarter” posting and increase my cash pile by paying the minimum on all of my other bills.

I guess that’s the Dave Ramsey method. Well, we’ll see how that goes…

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Fork in the RoadSeems I come to this intersection every few months. I look left. I look right. But usually I just proceed through and just keep on going straight.

What am I talking about, you ask?

Well, I “feel” broke. Basically, I’m cash poor. At least I feel like I’m cash poor. Right now, like last month, I don’t have the funds available in my checking account to pay the mortgage. (Tomorrow is pay day, though, so no worries!)

So, what’s to the right?

A simple way to increase my cash reserve while keeping my debt balances relatively steady.

Over the past 36 months, I’ve sent a whopping $82,336.27 in payments to credit card companies. That works out to an average of $2287.12 per month.

Currently, my minimum monthly payment total is around $260. Finance charges work out to $50 each month. I also charge around $400 per month. Together, that’s $710 deeper into debt each month.

Now, let’s say I start repaying the credit card companies $710 per month instead of $2287 like I have been for the past 3 years…

That would mean my credit card balance would stay relatively flat, but my checking account would swell by the difference, $1577, every month!

That, my friends, is more than a mortgage payment. And right now, in my current situation, I really like the sound of that.

To the left?

Well, I guess I hadn’t thought enough about the left. I guess it’s an awful lot like going straight. In hindsight, I should have called it a fork in the road rather than an intersection.

Anyway, this side of the fork involves paying down the debts aggressively to the point that I’m essentially living paycheck to paycheck.

I don’t really have a problem with that, I should be used to it by now, but it just hurts (mentally) when something like the hard drive failure comes up and all of the money sent to the credit card company doesn’t move the balance at all.

I’m broke *and* my credit card balance didn’t move. It’s like treading water — but paying to do it. It’s tiring.

So, in a nut shell, it’s just a decision I need to make about where I allocate my income.

The smarter thing to do is turn left and pay down the debt, but the more comfortable thing to do is turn right.

Decisions, decisions…

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The TMBG Head GuyHave you ever had one of those things happen when it just sucks the life out of you? That happened to me on Friday.

No, not the DJIA 300+ point drop on Friday — that was a mere annoyance.

Friday night, my external hard drive died. It just clicks two or three times, then shuts itself down. Now, being an external drive, this type of failure doesn’t put me offline, but as each day passes, I come to realize, “Oh, yeah, there’s another file that I’ve lost…”

This specific drive was a 500GB Western Digital MyBook. I’ve never had much luck with external drives. In fact, I can’t stand them. This is my second to die in a little over a year.

Our extra income comes from a business we run out of our home — or actually, off of this dead hard drive. Five hundred gigs of website code, PSD files, and raw photography files gone.

Was it backed up? Well… let’s just say, I think I had enough of it backed up to get by in the short term. But this will certainly be an incovenience. An expensive one.

I researched having the drive sent to a data recovery company. I’ve no doubt the data is still on the drive and recoverable. The problem is, the quotes I’ve received have ranged in price from $995 to $2495.

Not sure why the range is so large, but even $1000 would hurt too much right now, so I’m trying to carry on, and chalk this one up as a big loss. Not a financial one, but one where I’ve lost all of the time I spent creating those files.

So far, I haven’t had to tell a client flat out — nope, we don’t have that on file. I know the time will eventually come, and if it’s a critical file, well, I suppose I will have to send the drive off to be recovered.

In the meantime, I’ve ordered another external drive. At a cost of $375, I should have a Buffalo Technologies 1TB DriveStation Duo arriving from FedEx this morning.

This one uses RAID, so it’s got a bit of redundancy, but even still, call it whatever you want, it’s still just two external drives stuck together. And external drives always fail.

It’s odd. I’ve never, in the past 15 years, had an internal drive fail. Not once.

On that note, I always say that I’m going to build my own RAID using an old computer case and fill each drive bay with a huge hard drive and just connect it to my main PC as a network drive, but unfortunately technology is changing too quickly to do that on the cheap.

I know, I know, people always say that sort of thing about computers, but for years and years hard drives were either SCSI or IDE. You had two options. Now you have to toss eSATA into the mix. And now all of the externals are now USB or Firewire — which also come in different variations. Makes utilizing an older PC difficult since older PC’s don’t usually allow for all of these different connections. Sigh…

The next few days will likely be spent setting up the new drive, backing more up to DVD (another alternative that fails all the time and takes forever) and crossing my fingers that someone out there develops a hard drive that doesn’t have any mechanical parts cause, seriously, today’s hard drives are just glorified record players and that’s kinda scary when you think about it.

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Powerball Winner John LorussoA couple of weeks ago, the winning Powerball ticket was sold relatively close to where I live. Okay, not that close, but I’ve driven through the town before — that has to count for something!

And no, I wasn’t the winner. You can’t win if you don’t play and, well, I don’t play.

Anyway, here’s an excerpt from my local paper:

For two weeks, no one knew who bought the winning $15 million Powerball ticket at a convenience store in Ashford earlier this month.

The winner kept the news to himself until Wednesday when he showed up at the Connecticut State Lottery headquarters in New Britain to claim his prize.

John Lorusso, a regular at the Squaw Hollow X-tra Mart, said at the lottery headquarters Thursday that he had been waiting for his business partner to return from vacation before telling people he was the state’s newest millionaire.

I just felt it was right to wait,” he said.

Lorusso, 43, of Eastford, received his prize Thursday at the lottery headquarters.

He opted for the lump sum of $7,035,647.28. After state and federal taxes, Lorusso will get $4.9 million.

“I have more friends that I had before,” Lorusso said jokingly. He said he played Powerball twice a week for about three years. This year, he purchased a Quick Pick with the winning numbers 2-4-14-15-28 and the Powerball 23.

The drawing was Oct. 3, but Lorusso didn’t realize he was the winner until a few days later when he stopped by the store.

“They’ve got the sign up, `The winning ticket was sold here,'” Lorusso said.

Lorusso grabbed a printout of the winning numbers and brought it to his car where he compared them to the numbers on his ticket.

“These look a lot like the numbers,” Lorusso said he thought to himself.

He wanted to keep the news to himself until his partner at a commercial printing company returned from vacation.

He said he felt bad lying to them and stopped going to the store. Lorusso returned Wednesday night to explain himself.

“I didn’t want to lie to you guys anymore,” he told them.

Lorusso said he has no immediate plans for his money, but wants to be smart with it. He has denied his son’s request for a flat-screen television.

My first reaction was, that’s cool that he kept it to himself and waited for his partner to return from vacation.

My second reaction — how can they still call it a $15 Million Jackpot when he’s going home with just $4.9 million?

Talk about false advertising?!

I realize that in Powerball there is the option to take a lump sum upfront which cuts the whole thing in half (does Powerball roll the “left over” into the next drawing?), and then the government takes their cut, but touting it as a $15 million dollar prize when it’s actually less than one third of that seems a little… crooked?

Powerball’s website has the current jackpot amount in HUGE bold face at the top of their page — under it, the fine print which lists the “actual” cash value. So, as of today, according to them, $26 million is actually worth $11.9 million.

Um… Yeah, sure, that makes *perfect* sense.

Even still, just the $4.9 million should be a nice supplement to his income for the rest of his life. And really, if I were him, I’d go out and buy that flat-screen television.

Credit Card Balances Over TimeEliminating credit card debt has certainly been a journey. An ongoing one.

I’ve been keeping track of my individual credit card balances since June of 2005. Previously, I was just interested in what I had in my checking account — before I knew it, and because I wasn’t looking for it, I was $20k in the hole.

Not the greatest position to be in.

It was about that time that I decided to do something about it. Looking at the graph pictured, well, from June 2005 to June 2006, I went from $20k in debt to… $20k in debt. It didn’t move at all. My “snowball” had gotten stuck it seemed.

And that’s when it became apparent to me; there is a point where you just can’t dig out of debt.

Thankfully, I wasn’t paying the cards down as diligently as I could have. Since then, it’s been a yo-yo battle. I knock it down a few thousand, then, like everyone says, something comes up.

That “something” for us was the new roof at the tail end of 2006. The loan we took out — which was essentially a $12k convenience check from a credit card — skyrocketed my debt to depths I’d never seen before. Ouch.

At the time, I kinda thought all was lost. I’ll just coast along from here like that guy in the commercial who’s in debt up to his eyeballs.

Combined with my wife, we had some pretty nice income in December 2006 and January 2007, and we applied most of that towards the debt. In just over a month, we’d knocked nearly $10k off of our total balance. Talk about a roller coaster of emotions…

But now we were motivated and, better still, on a roll. We kept at it, at a ridiculous pace, through April of 2007. By month’s end, the total balance was just over $9k. That’s a $20k swing in the span of 6 months. That… will make anybody a little cocky.

And it did. I guess ‘cocky’ isn’t the right term, but it made the idea of expensive home improvements seem possible and that’s when we decided to get the house sided as well.

Just like that, in June of 2007, we were hovering around the $20k mark. Again. Just like June of 2006. And June of 2005. So much for the wind in our sails.

But there was a difference. See, this time, the debt had gotten us something. We brought the exterior of our house into this century. Everyday when I pull into the driveway after work, I see a house that isn’t an eyesore. Two years ago — even one year ago — that just wasn’t the case. And I was still $20k in debt.

All was not lost.

As you can see, the balances are falling again. Not at the great speed they did earlier this year, but still falling roughly $1k per month. The current balance, as of today, is $14981.

I’m not proud of that. But it is manageable. And just knowing that we are capable of paying off sums larger than that in relatively short periods of time, well, it makes me that much more excited about the future.

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UTstarcom SliceReceived my new cell phone last night. Took me nearly 10 minutes to get the package open — it came sealed in one of those super sharp plastic enclosures that you need scissors and a crow bar to get open. Thankfully I didn’t cut myself.

Took me another few minutes to get the stubborn battery door off. I was pushing so hard, I was concerned I’d snap the phone in half.

But after that, it was smooth sailing. The phone is a lot smaller than I’d expected. The thing is tiny, but feels nice and solid in my hand. Definitely not a hunk of junk, by any stretch.

I went online to activate the phone and have a number assigned. Not even 30 seconds after submiting the phone’s information, I had a text message come in saying the phone was now active. Quick and painless. Didn’t have to sit on hold, didn’t have to speak to a person, didn’t even have to lift a phone. That’s just the way I like it.

Sadly, my new number contains both zeros and ones — so I can’t say things like, “Yeah, my number is B-R-A-I-N-Y-8,” but that’s okay, I guess. I’ll live.

So far, so good. I’m very happy with the phone. The signal looks good, call quality was better than my Verizon phone. The volume, of a call and the ringer, destroys my old phone. I used to hate how I could never hear the other end of a call and I don’t think that will be a problem with this phone.

Voicemail set-up was short and simple. They even had an option to skip putting in a password each time you want to check messages — and that’s a feature I like. I’m sure Verizon had that option somewhere too, but it certainly wasn’t well advertised.

I also set up my account online to automatically bill me the $20 every 90 days to keep my service active. It comes out to $21.20 including taxes, but wow, I mean, by next month, I will have already cut my costs by $30 and that’s including the cost of the phone itself.

Better phone, better features, better call quality and at one sixth of the cost.

Why didn’t I do this sooner?

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From BankRate today:

It’s easy to fritter away money on little daily expenses. If you fall into these money traps, learn to avoid them and pocket the savings.

Coffee: According to the National Coffee Association, the average price for a cup of brewed coffee is $1.38. There are roughly 260 weekdays per year, so buying one coffee every weekday morning costs almost $360 per year.

Cigarettes: The Campaign for Tobacco-Free Kids reports that the average price for a pack of cigarettes in the United States is $4.54. Pack-a-day smokers fork out $1,650 a year. Weekend smoker? Buying a pack once a week adds up, too: $236.

Alcohol: Drink prices vary based on the location. But assuming an average of $5 per beer including tip, buying two beers per day adds up to $3,650 per year. Figure twice that for two mixed drinks a day at the local bar. That’s not chump change.

Bottled water from convenience stores: A 20-ounce bottle of Aquafina bottled water costs about $1. One bottle of water per day costs $365 per year. It costs the environment plenty, too.

Manicures: The Day Spa Magazine Price Survey of 2004 found that the average cost of a manicure is $20.53. A weekly manicure sets you back about $1,068 per year.

Car washes: The average cost for a basic auto detailing package is $58, according to The tab for getting your car detailed every two months: $348 per year.

Weekday lunches out: $9 will generally cover a decent lunch most workdays. If you buy, rather than pack, a lunch five days a week for one year, you shell out about $2,340 a year.

Vending-machines snacks: The average vending machine snack costs $1. Buy a pack of cookies every afternoon at work and pay $260 per year.

Interest charges on credit card bills: According to a survey released at the end of May, the median amount of credit card debt carried by Americans is $6,600. The average interest rate on a standard card is about 13%. Making the minimum payment each month, it will take 250 months (almost 21 years) to pay off the debt and cost $4,868 in interest. Ouch!

Unused gym memberships: reports that the monthly service fee at gyms averages between $35 and $40. At $40 per month, an unused gym membership runs $480 per year.

Lists like this always make me feel good about how I’m doing…

The only coffee I drink is the free stuff at work, I don’t smoke, I don’t drink alcohol, I think the whole concept of bottled water is stupid, I’ve never had a manicure, I’ve washed my car once in the past year, I don’t each out for lunch, I never use vending machines, and I’ve never had a gym membership.

The interest charges, well, we know I’ve got some of those in my closet…

The only downside to lists like these is that they don’t give me any sneak peeks on areas that I can cut my own spending…

Can You Dig It?