Credit Card Roll Call - April 2008

I’ve been wanting to do this again since I eliminated the last of my credit card debt last month.

Should be interesting to see how things fall and how the credit card companies treat/tempt me now that I’m not carrying any balances.

For a recap, here’s how things panned out in previous roll calls:

  » June 2007 Roll Call : Limit = $98500, Balance = $13026

  » January 2008 Roll Call : Limit = $108400, Balance = $8125

I haven’t added any new cards since I started, and really, I haven’t gotten an offer sweet enough to even consider opening a new account. Anyway, here goes:

Bank of America Business MasterCard
Originally an MBNA account before they were bought out by Bank of America, I opened this account in March of 2005 when I started to divide my personal and business expenses and keep track of them separately. Turned out to be a great move as it was shortly there after I realized how much money I was bleeding on business expenses. I do not carry this card, but automatic payments are set-up for business expenses.
Balance: $0
Credit Limit: $26620 (up $2420 since January)
Rate: 9.9%

CitiBank AT&T Universal MasterCard
I opened this account in April of 2007 utilizing a 0% for 12 months offer. I wrote a $6000 check to myself, which I originally dropped into my ING Direct savings account to jump on the “arbitrage” bandwagon. Shortly afterwards, I pulled the money out to finance the siding project. Now paid off, this is the only card I carry in my waller for things like gas.
Balance: $0
Credit Limit: $8500
Rate: 13.48% 11.26%

Chase Bank Visa Card
This was one of my first credit cards. I opened the account in 1998 and it was one of the cards that I ran up a considerable balance on before I got my act together. The highest it ever went was $12905 and that was in October of 2005. By August of 2006, I’d eliminated the balance, but continued to use the card for gas and the occasional purchase. Balance was always paid in full each month. In June of 2007, I took advantage of a 4.9% for the life of the balance offer to fund the siding project. This was the last card with a balance that I paid off.
Balance: $0
Credit Limit: $19200
Rate: 17.27% 15.24%

Bank of America NHL MasterCard
Another of my original credit cards originally opened through MBNA in 1997 for a free t-shirt. This is also another card that I ran up a 5-figure balance on. In May of 2004, it topped out at $10915. By November of 2005, I had wiped the balance out. Now I have my internet service provider automatically bill to this card each month, and like clockwork, I pay back the $42.95 automatically on the same day using an autopay set up from the MBNA days. I do not carry this card and have not carried a balance since November of 2005.
Balance: $0
Credit Limit: $27400
Rate: 20.99% 18.74%

Bank of America Platinum Plus Visa Card
Originally opened in March of 2005 as a failed plan to use balance transfers to consolidate balances at a lower rate. At first I transferred $5000 to this card. Evidently, not having learned my lesson the first time, I transferred another $5000 to this card in March of 2006. Luckily the rate was only 6.25% for both transfers. I wiped out the balance, which topped out at $6925 in March of 2006, in January of 2007. I do not carry this card.
Balance: $0
Credit Limit: $15400
Rate: 18.24%

Bank of America LendingTree GoldOption Loan
This was a loan for $10000 I took out in December of 2002 to, again, consolidate a few balances and put some much needed cash in my hands. At the time, it was LendingTree.com that found me the loan at 9.9%, and when the big check made out to me came in the mail, it was from MBNA. After a couple years of paying it down in regular $226 intervals, MBNA sent me a credit card attached to the account and started treating it like a credit card. With each month, the rate would rise another half percent or so. Not cool. I made my final payment in March of 2005 when the rate had climbed to 13.24%. I do not carry this card and don’t plan to ever use this line of credit.
Balance: $0
Credit Limit: $13700
Rate: 24.99%

So, since January, other than a $0 balance, there isn’t really much to report. I’m a little suprised — I’d expected a little more movement.

My total credit limit increased $2420 and now totals $110820.

Apparently due to the Fed’s interest rate cuts, my card rates have also dropped around 2%. That’s always welcome even if I’m not paying finance charges these days.

Unfortunately, the cards that lowered their rate also happen to be the ones with rates so high that it’s unlikely that I’d choose to use them for a large purchase anyway.

Posted on April 17th, 2008 at 7:00 am by Brainy Smurf
Finance, Credit Card | No Comments »

Is the Price of Oil *Really* Rising?

Today at lunch while listening to the radio, I heard a report the the price of oil had reached a new high — $113 per barrel.

Moments earlier, there was a report about inflation and the value of the US dollar falling in comparison to other currencies.

Hmmmm… think the two stories are connected?

I do — but they never mention that on the news.

Of course the “price” of oil in USD is going to rise as the value of the USD falls!? Makes perfect sense to me.

So, did the price of oil *actually* go up?

Or did the value of US currency just fall?

It’s one or the other…

I’m guessing it’s the latter.

Maybe due in part to all of the new $5 bills they just printed. :0)

Posted on April 15th, 2008 at 12:55 pm by Brainy Smurf
Current Events | 1 Comment »

2008 Economic Stimulus Payment Plans

Since it was first announced that we’d all be receiving an Economic Stimulus Payment in the mail back in January, I’d been hearing varying numbers. For us, at first, it sounded like we’d automatically receive $1200…

I was pretty excited about that news.

Then the media made it out like it would be only $600 or perhaps even nothing, because of our income. More recently, I read elsewhere that it would be $1000 based on our situation. There didn’t seem to be a real concrete number — a hazy gray area.

Don’t get me wrong, even on the lower end, $600 for nothing is pretty nice. $1200, though, is a totally different game.

Our plan is (was?) to use the $600 to buy my wife a new computer. She’s never had a new computer — always one of my hand-me-downs, overloaded and customized with all of my personal crap.

We’re going to get her a new one and she can set it up as she likes. It can even come with a pink keyboard and fuzzy mouse if she likes — this one won’t be mine.

So this morning, I ventured on to the IRS’s website to see if they’d posted any new information on the stimulus checks…

I’d visited before, but all they had was a bunch of hard to understand legalese. Even their “rebate calculator” was a hassle (and for the first few weeks, it would error out).

Now though, it appears they’ve got some pretty solid info with easy to understand examples:

Examples of ways the Economic Stimulus Act of 2008 may affect taxpayers who are married, file a joint return and are either childless or do not have children who qualify for child tax credit payment:

1) Married couple with no children, wages of $4,000, no federal income tax liability.
Rebate is $600

2) Married couple with no children, no wages, veterans’ payments of $2,000, social security benefits of $2,000, no federal income tax liability.
Rebate is $600

3) Married couple with no children, no wages, no social security benefits, veterans’ payments of $4,000, no federal income tax liability.
Rebate is $600

4) Married couple with no children, no wages, no social security benefits, no veterans’ payments, AGI is $20,000, federal income tax liability is $250.
Rebate is $600

5) Married couple with no children, AGI is $25,000, federal income tax liability is $750.
Rebate is $750

6) Married couple with no children, AGI is $60,000, federal income tax liability exceeds $1,200.
Rebate is $1,200

7) Married couple with no children, AGI is $160,000, federal income tax liability exceeds $1,200.
Rebate is $1,200
Phaseout reduction is ($500)
TOTAL is $700

If I’m reading it right and I’m sure I am because, for once, they give real life examples in plain English, we’re going to receive the originally advertised $1200 sometime during the first week of May. That is uplifting news.

Even with payout to be double what we’d expected and planned on, I think the plan is still to buy a new computer — maybe with a few more bells and whistles than originally thought.

And I’ll probably blow around $200 on myself for something short-sighted and stupid (hey, I want something shiny and new too!) with the remainder likely going into savings.

Or perhaps we should save it to pay our property taxes in July?

Nah…

Posted on April 15th, 2008 at 8:19 am by Brainy Smurf
Rants, Current Events, Taxes | No Comments »

Pants in a Can: 1 Year and Counting…

Well, I’m one year into this now…

Has it paid off?

I like to think so.

I was well into my journey when I started the site last year (on tax day — total coincidence), but I was still carrying over $20k in non-mortgage debt — much of it at a high rate.

In July, I then went out and used credit cards to finance over $20k in home renovations, which sounds crazy, but in the end, it worked out nicely.

Today, I’m only lugging around $6300, or so, and it’s at a low rate of 5.35%.

The site has definitely forced me to hold myself more accountable in regards to spending.

There’s just something “extra” about wanting the net worth numbers to go up each month and just that little tiny additional incentive makes a huge difference.

Let’s be honest… It isn’t much fun to broadcast down numbers, so it’s become a habit to avoid having to.

The site has also also forced me to keep better track of where my money is going.

I’d done that routinely in the past, a couple of times per week, but never like I do now. I’m a lot more detailed now — I can tell you to the penny how much I’ve sent to Citgo, Mobil, or Sunoco this past year.

Apparently Shell is my gas station of choice…  Interesting.  Or not.

Weekly tranfers into savings? No way I would have considered doing that a year ago. No way.

I’m starting to think that, by April 15 next year, it’s a given that I will easily be 100% non-mortgage debt free and I’ll have a nice savings cushion to fall back on.

That is unless I finance another huge home improvement project between now and then — which is a definite possibilty…

Stay tuned…

Posted on April 15th, 2008 at 6:24 am by Brainy Smurf
Success, Blogging? | 1 Comment »

Ahhh, the Good Life…

Last week, for the first time ever, we hired a local landscape company to come out and pick up our leaves.

It’s something that we’d normally do on our own, and in the past, it has been something we’ve done on our own, but it’s probably not something we’ll ever do again.

(Before anyone points it out, I know, I know, wrong time of the year for that sort of thing north of the equator.)

Next door to our house is an open lot which we also own. In the fall, it could be summed up as a leaf magnet.

Each year, we clear the main lot to make the house look nice; raking and blowing towards the empty lot.  Probably not the best strategy, but making sure the main lot looks nice takes priority.

From there, our city requires that we bag the leaves in those giant brown paper bags — like in the picture.

Idea is, you bag the leaves, leave them at the curb, and the city will come around and pick them up over the span of about a month — usually in November.

On paper, it sounds like a great idea.

But there are a few problems…

The first problem is probably unique to our situation — lack of time.

Working for the hockey team all of these years has sucked up our weekends. It’s difficult for us to find the time required (during daylight) to rake and bag the leaves at that time of year because, well, simply put, we didn’t have weekends from September through May.

Now that I’ve left the team, that should no longer be a problem.

The next issue is a financial one. The leaf bags aren’t free. They come in bundles of 5 and you can buy them at Home Depot, Lowes, Walmart, Stop-n-Shop, and pretty much any where else that has some sort of “hardware” aisle.

You can price shop all you want, but bottom line, they come out to around 50 cents per bag. Sounds like a relative bargain, huh?

Typically, at the start of “leaf season”, we’d pick up around 10 bundles. Let me tell you, there’s nothing more upsetting than walking out to the car with a bunch of oversized lunch bags that you just paid over $50 for.

And then it really hits you like a punch in the stomach… You just spent $50 on something that you’re just going to throw out in a matter of hours.

Making matters worse, we’ve always had to go back and buy even more bags. As a result, we’ve never actually cleared and bagged the *entire* yard. I always end up mowing the crap out of them with the lawn mower — finally chopping them into a fine powder by around August. It’s embarrassing to admit.

In the end, I’d say that over the past 3-4 years, we’ve averaged between $60 and $80 spent on those paper bags. That’s PER YEAR.

Add in the time it takes to bag over 100 bags of leaves. It hurts.

Once bagged, we’d end up building a huge pyramid of paper bags at the curb — it actually looked pretty neat.

But then the city wouldn’t come on the day they were scheduled.

Some children would topple the pyramid.

It might rain.

A bag would tip over, spilling leaves all around.  You know, that sort of thing…

Worst case scenario, and one that happened last year — an early snowstorm before the we’d even started bagging. Sigh…

Basically, there are a myriad of problems to be had each year… One big headache… Alongside a back ache, a butt ache, and two heavily blistered thumbs.

But this year, we solved it all with a phone call.

My wife called the company one morning before she went to work last week, and when I arrived home for lunch, our extra lot was clear.

We haven’t received the bill yet, but when you combine the savings on the bags and the time and the lack of blisters, we’ll, I’m pretty certain it will end up being a great deal.

Posted on April 14th, 2008 at 2:51 pm by Brainy Smurf
Home Improvements, Bargains | No Comments »

Emergency Savings - Should I Bother?

In a recent comment, Grant from the Corner Office Blog wisely pointed out that while its great that I’m eliminating debt so aggressively, I should probably be accumulating more of an emergency savings cushion, you know, just in case…

I agree and I disagree at the same time.

A lot of people in personal finance circles hem and haw about establishing an “emergency fund” (EF) containing 6 months worth of expenses. That’s probably good advice.

Obviously, I don’t have that (current savings is $575) nor do I really strive for it. Six months, while nice, is overkill in my book.

My pseudo-EF has always been just keeping at least $1000 in my checking account at all times.

Combined with the modest amount I have invested as I-Bonds, this would be enough to pay the next mortgage bill — which it seems to me is the most common worry when an emergency comes up.

I’m also routinely ahead by a month on all of my non-utility bills. Next bill due date is always a minimum of 3 paychecks down the road — so in my own “imaginary” sort of way, I actually do have an EF.

I may not have the money on hand right now, but I also don’t have to send it out right now either. I’ve got around two months leeway.

Some will say, “What if you lose your income?”

Well, based on what I’ve already said, I’d have a few months to coast before the big bills came due.

I’d also like to think that that would enough time for me to be able to find a decent new income or more time to allow me to add new paying clients to my side business to cover my expenses.

If not, I’d likely end up using my credit cards to cover my expenses. You see, credit is my other EF. I have a zero balance right now, but in excess of $100k in available credit. Many will disagree, but as a last resort, and in a real emergency, that’s a pretty powerful thing to have in your back pocket.

On a side note, and something I should probably reveal anyway, in a pinch, my wife’s income is enough to pay all of our bills in the short term. It would require a bit of a lifestyle change, but it would definitely be possible for us to get by — and that’s just another (and the best) financial safety net going for me.

Posted on April 14th, 2008 at 10:09 am by Brainy Smurf
Finance, Savings | 6 Comments »

Financing for a Second-Time Homebuyer

Not that I’m in the market to buy a house right now, but if the foreclosures come like their forecasted too (I’m not holding my breath), I may take a closer look.

Having already purchased a home once, in hindsight, I kinda wish I’d gone the 80/20 route (taking out two loans) so as to avoid paying PMI. Not sure how much of a benefit it would have resulted in, or even if I would have been able to make the payments that first year, but at the time, I didn’t even know it was an option.

But let’s say, for instance, the house next door to me went into foreclosure. I’ve always kinda wanted to “own the block”, you know, take over the neighborhood and eventually name the whole street after myself, so this scenario would be a good start.

What would I do differently now that I understand how loans and, specifically, amortization schedules work?

Well, I’ll tell you…

Let’s say the house next door goes on the market at $200k and my GFI says the bank will loan me up to $240k. I decide to close on the house. For simplicity sake, let’s just say there is no down payment — 100% financed. Interest rates are about 6% these days, no? Well, let’s go with that figure.

I could go with the tried and true method I did with my first home purchase and just borrow the $200k at 6%.

Or… I could go and borrow the full $240k the bank is willing to spot me…

This time, the older and wiser Brainy would borrow the full $240k and then, with my first monthly payment, I’d send the mortgage company the extra $40k right back, knocking the balance back down to $200k.

Wait… what? Why not just borrow the $200k? You’re still sitting on a $200k balance… What’s the difference?

There’s a *HUGE* difference…

With the larger $240k loan, the fixed monthly payment would be $1438.92 which is roughly $240 more per month than a smaller $200k loan would be. That is the only disadvantage. And given the assumption that you can afford a second home, another $240 per month shouldn’t be that great of an issue.

Working greatly in your favor are the interest payments…

With the smaller loan, it would take 30 years and over $430k going towards interest alone.

With the larger loan, and an immediate “extra” payment of the difference ($40k), you’d only pay a little over $143k in interest. As an added bonus, you’d also knock off over 10 years on the term of mortgage.

The end result? A savings of $287k and 10 years of not having to pay a mortgage.

Hardly identical $200k loans, huh?

Sure, some will disagree, “Why not just take the smaller $200k loan and pay the “extra” $240 difference each month…”

Yeah, the number from that method works out about the same, but for me, I’d prefer to have more equity from the start and to be guaranteed to have the mortgage paid off early rather than leaving it up to my own personal financial discretions…

It would also be a great way of eliminating PMI on a 100% financed loan… ;0)

Posted on April 11th, 2008 at 6:14 am by Brainy Smurf
Finance, Bargains, Mortgage | 3 Comments »

Lost My Way & The Power of a Plan

I’m discombobulated. I had a plan that I stuck to…

And it worked!

Just a few weeks ago I paid off all of my credit card debt, $28k worth, on that plan.

Then, somehow, I ended up with dollar signs in my eyes.

I started sending even more towards my mortgage principle with the prospects of paying off my mortgage in April of 2014. I said I’d wait until May to get this started, but I started already to get a jump on things…

Then I started sending more towards savings seeing my $10k goal this year as *finally* possible.

I even thought up a way to send more towards my auto loan to finish it off too – even set-up a recurring e-payment just this week to get that one moving too.

All of these sound like good financial moves.

But I spread myself too thin. Way too thin.

In the now distant past, I had 5 credit cards with roughly $5k on each one. I was paying them all down aggressively — for a few years. Yes, the balances were falling, eventually I had them all down to around $4k each.

Progress? Yes, but it still felt like I was spinning my wheels.

Balances weren’t really falling. Finance charges weren’t falling. The balance in my checking account was the only real thing falling at a decent clip.

But once I set out targeting one thing at a time, I was knocking stuff out in a matter of months.

When I started with a real plan back in October, I still had three of those original credit cards. Coincidently, all three had a balance hovering around $5k.

With a real plan in place, the first card was wiped out by the end of November. The second was gone in January. And the third and final balance was gone a couple days before the end of March. One, two, three…

Now it’s April.

Today was my first paycheck since becoming credit card debt free. My auto loan balance sits at roughly $6670.

Eh, what’s that, like 3 months until it’s paid off?

Well, that should be the case…if I’d stuck to that original plan.

I hinted at it earlier this week, but I’ve come to realize that my current priorities are definitely backwards. I started attacking the mortgage ahead of the auto loan and that was the wrong course of action.

In an attempt to compensate, I overstretched myself.

So from here on out, again starting in May (for real this time) so I can catch my footing, the auto loan comes first, then the mortgage (until PMI is eliminated), and then savings.

With the summer season coming, and lower utility bills as a result, the combined monthly budget for these goals will remain $2000.

Best of all, this strategy still makes achieving all of the 2008 goals possible by year’s end.

Posted on April 10th, 2008 at 10:17 am by Brainy Smurf
Finance, Motivation, 2008 Goals | 5 Comments »