Downsize? No Way… I’d Rather Just Pay it Off…

The lack of a financial goal for 2009 is sorta making me worry… I mean, I set all of those very specific financial goals for 2008 and worked hard all year long and pretty much accomplished them all.

This year, I’ve got nothing.

I’m saving up for a home improvement project without a price tag.

It’s too, um, fluffy for my tastes.

So, in a desperate search for something more specific that I can keep track of — and after reading Frugal Dad’s resolution about downsizing his home (and concluding that while it will work out well for him, it would be a horrible idea for me), I’ve been toying with the idea of hitting the mortgage hard.

Over the past two years, my debt attacking strategy has knocked around $25k per year off of my combined debt balances. At a pace like that — now, finally, with no other debt besides the mortgage — I could theoretically pay off the house in 4 years.

I mean, just last year, when I set out to overpay the mortgage by $6100, I instead ended up knocking $11k off of the principle, almost double, while still paying down the credit cards and an auto loan.

I can totally “afford” to do this.

Yeah, yeah, I know, it’s dumb to pay off your mortgage early… But I think it’s even stupider to downsize a home that you can easily afford, while likely taking a loss on it as well.

Now, Frugal Dad intends to pay off his future mortgage (for the smaller home) in 10 years time. Maybe that means that I didn’t fall into the bigger is better trap of the last decade because, if I pay mine off in the next 4 years, I’ll essentially be paying it off in 10 years as well.

Regardless, the thought of being just 36 years old and owning my home free and clear (with no other outstanding debt) kind of outweighs the stupidity of it all. Different strokes for different folks.

Still on the fence about it though…

Posted on January 4th, 2009 at 10:04 am by Brainy Smurf
2009 Goals, Finance, Mortgage, Motivation | 1 Comment »

Brainy’s PF Goals for 2009

I suppose it’s time to set and log some goals for 2009…

When I set my goals for 2008 back in December of 2007, I thought they were a little lofty but somehow I managed to tackle every one of them.

The only one still remaining is the $10k in savings, which isn’t likely to happen after my Black Friday episode, but it’s still a possibility, albeit dim.

Even if I don’t manage to achieve that one, I’m still far ahead of where I was at this time last year. Far ahead.

My goals for 2009 aren’t going to be as specific as my goals for 2008 were.

I don’t have any debts worth paying down at an accelerated rate anymore and, while I’m still struggling to get a grip on how to save money more efficiently, I think I’ve made HUGE strides in the past year.

Just having a few months worth of expenses up your sleeve, or in an ING account, really does take a load off of your shoulders. I didn’t think it would, but it did.

So here are my ultra-vague goals for 2009 that will be all but impossible to track throughout the year with colourful side-bar graphs:

1. Find a contractor to gut and remodel the entire first floor of my house. New kitchen, new bathroom, new floors, new walls, and new ceilings throughout.

Preferably, I’d like to have the project nearing completion by May 2009.

2. Pay for all of the work done by the end of the year. Realistically, we’re going to have to find financing for a great deal of the work and, again, I’ll probably use my credit cards for most of it.

That said, I’ll have to cross my fingers that I don’t receive more “Change of Terms” letters like the one I received from Citibank earlier this week. That would be bad.

So far, we haven’t really done much in regards to these goals.

We’ve briefly researched a few general contractors, two of which I’m all but certain we’ll seek out for quotes when we’re ready to get things started financially, but I can’t, for even a second, claim that we’ve looked very hard or even thought about exactly what we’d like done.

On the financial front, we’re saving like we’ve never saved before while also reading the fine print on every credit card convenience check offer that comes in the mail — just waiting for the right offer and when it comes, we’ll be sure to take full advantage just to have the cash in our hands and readily available.

The 100% credit card financed method has worked in the past so I’ve little doubt that it will work for us again.

So that’s it.

Pretty short list this year but pretty lofty at the same time…

Posted on December 3rd, 2008 at 7:53 pm by Brainy Smurf
2009 Goals, Finance | No Comments »

So, the Cat’s Out of the Bag…

I’ve been living in squalid conditions for over a year.

Rice and beans, beans and rice, right?

I was too “busy” paying down my debt to notice, right?

Cutting corners, you know, to save money?

That’s how I can justify how horrible that room looks…

Please?

Well, not exactly.

While I am horribly ashamed of that photo of the entry way to my home, the rest of the house isn’t like that at all.

If it were, I mean, dontcha think I’d be a prime candidate for the police to come barging through the door with a camera crew in tow for a taping of the show Cops?

The setting is almost too perfect. All it needs is a plaid couch with cigarette burns in the cushions and domestic beer cans strewn randomly about the floor…

My crime would be driving without a front license plate. (Did you know that they’re required?)

“Suspect is a white male of average build. Last seen driving a late model BMW in the vicinity of Gargamel’s castle…”

But now that I’ve shamed myself on the internet (what was I thinking?), it’s time to get things moving on this room (and entire first floor, while I’m at it) and set up a budget for 2009 to pay for it all, which I’ll start in November.

In the months ahead, I have one bill to pay that will likely be paid from my savings account. My horrible homeowners insurance premium is $902 (ouch!) and it’s due on December 18.

Aside from that, though, the month-to-month finances should remain consistent from here on out. No trips planned, no weddings scheduled, no huge holiday expenditures on the horizon, and we never really spend much for our birthdays (which are in the summer anyway). Basically, it’s an empty schedule.

Also, in an effort to speed things up even more, I’m going to try to get my wife on board — wipe out her credit card and boost her savings. A lot.

But my savings need the most work…

Resorting back to what worked so well while paying down debt, I realize that the only way to go is to make it automatic and then, if anything is left over, keep throwing that on to the pile too.

At the height of my pay down, it wasn’t unusual for me to make 7-8 payments to the same creditor in a week’s time. I’ve got to grow my savings the exact same way. If I find $5 in my winter coat pocket, that’s enough to initiate a transfer. Just do it.

So what’s my ultimate plan?

I’d like to be able to save up at least 1/3 of the cost of the remodeling cost before we get started. I’m not saying that I’ll use it all at the onset of the project, but for peace of mind, if nothing else, I want to have it available before I commit myself to such a huge debt load.

The remaining 2/3 would be financed on credit cards.

I know, I know, if you’re new to this site, that must sound crazy. Who’s willing to charge that much?

Well, that’s the method we used on the siding project and it was a whole lot more cost effective than the more common home improvement loan route we took for the roof the year before.

If you’ve got the right cards, the right offers, and a zero balance, you can borrow tens of thousands of dollars at well under 5 percent. No bank or contractor can offer financing that approaches that.

So, to begin, I’m going to continue the auto savings plan I started this month where I’m transferring $400 per month into an ING savings account. I may not reserve it for a vehicle purchase anymore, but I’m not going to cancel the transfer series either.

I was also planning to step up my extra mortgage payments from $50/week to $165/week to keep me on pace to have the mortgage paid off by 2015, but now, instead, I’m going to send that to my savings account plus what I would have been contributing to my savings account anyway and all of my passive income.

All together, on a good month (you know, when my clients actually pay their invoices), that would be around $2310 going in to savings right off the top. That’s freakin’ huge.

Basically, almost $10k every 4 months.

Sounds lofty. Borderline un-realistic.

Probably is.

I’m not really sure, I’ve never not had huge bills to pay…

The plan starts next week.

Posted on October 29th, 2008 at 8:46 pm by Brainy Smurf
2009 Goals, Finance, Home Improvements, Life, Savings | 4 Comments »