Finance

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New Worth 2015-07I often say that “Data Don’t Lie” but sometimes it’ll really surprise you.

The fact that I squeezed out a positive number last month is quite shocking to me as it was a month when my property taxes were due and I guess I kinda felt like I was spending…and spending…and spending some more each month.

So, just a few explanations on the movers and shakers…

The savings dropped so much because, as I mentioned, my property taxes were due. I don’t have my real estate property taxes built in to my mortgage which basically means that my mortgage payment doesn’t have anything going into an escrow account.

The upside is that my mortgage payment is under $500 per month and stays the same regardless of whether taxes go up or down. The downside is that, twice per year, I need to pay my taxes myself — out of pocket.

If you’re pretty good with your money, it might be something to look in to. I love it.

Connecticut, the state where I live, also applies a property tax to automobiles so those were paid too.

On the liabilities side of things, I’m thrilled to report that I knocked another $2800 off of the auto loan.

The downside is that when I started rapidly paying that balance down (from $11k), I had pretty much zero credit card debt. Now I have over $7k owed at a relatively high interest rate.

It’s okay, though. (I’ve explained my reasoning in the past)

A few more weeks down the road when the auto loan is gone, the credit card balances will start to fall quickly.

I’m on the right track.

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Car LeaseIn the past I’ve gone on and on about how leasing a car is a terrible idea from a financial point of view.

I made the mistake, once, almost 20 years ago now.

I went so far over the mileage limit (auto leases usually put a limitation on the number of miles you can put on the vehicle each year), I had no choice but to purchase the car as the lease was expiring.

In the end, it worked out for me as I probably should have bought the car right from the get-go but didn’t have the funds for that to happen (or the credit history — requiring my dad to co-sign)…which is why I went with the lease option.

Fast forward to today and, well, things have drastically changed.

I have the funds available to purchase pretty much any vehicle I’d like — all the way up to an entry level Lamborghini.

So here I am, in the final days (yes, days), of my most recent auto loan — and I’m looking at my currently daily driver (a 2005 Scion xA) and thinking, hmmmmm, will I get through another winter with this thing?

I’m not certain.

While it hasn’t let me know…yet…it also fails to give me that “reliable transportation” feeling lately. I’m often quite prepared for it to just, you know, die at the next stop light.

Another shortcoming, and really the biggest of them all, is that in 2005 I was a single guy. Now I have a family of five…and a car that can only seat four comfortably.

With that forcing my hand, I need a bigger and more reliable ride…sooner rather than later.

And that brings my back to my finances…

With it still fresh in my mind (from the loan I’m eliminating now) that a roughly $25k loan equates to a $450 payment and my complete disdain to, you know, continue making $450 payments (weekly, no less) seemingly indefinitely AND the fact that, deep in my heart, I know this next vehicle will simply be a stop-gap until I can get the car I’d really like, well, the lease offers out there are really, really, enticing.

New car with a smaller payment than what I’m paying now and…no huge new debt taken on.

Financially, today, for me, that sounds pretty great.

Hang with me here, I’m trying to convince myself that it’s okay to lease…

Now, about those mileage limitations…well, I don’t foresee those being an issue.

See, when I was in my early 20’s, it wasn’t out of the ordinary to, you know, drive to Ohio for lunch or whatever.

In the last decade, I haven’t driven 500 miles for lunch…yet.

Further, I now live less than 2 miles from the places I visit most often (work, elementary school, and daycare) so clocking under the mileage limit shouldn’t be an issue. And…I have two other vehicles that I OWN should I start getting close to making it cost prohibitive.

So, here’s what I’m thinking off of the top of my head right now.

The “new” car has to be reliable. Duh.

It has to fit my entire family and an assortment of hockey equipment comfortably.

And it has to cost me less than the Swagger Wagon has been costing me.

Notice that I did not say it had to look cool. Or fit in the new garage I’ll be having built. Or last a long time.

Stop-gap, remember? Once this thing is gone and my kids are out of their enormous car seats, I can go back and get another Land Rover like I really want.

For now, though, I’m leaning towards the Ford Transit.

A what?

Sure, you’ve never heard of it but, trust me, you’ve seen them. They look like delivery trucks. Plumbers and electricians use them. Florists. Kind of like the modern day version of a panel cargo van — somewhere between a regular old school van and a full blown box truck.

But here’s the thing — you can also get them with windows and seats in the back making them look more like handicapped vans or shuttle buses.

Ford Transit Titanium

Hardly cool — for real, it’s another Swagger Wagon — but way, way, practical.

And amazingly affordable too…

Hmmmmm….

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MolassesThroughout my years in high school running cross country and long distance on the track, the coaches would often say things like “finish strong”.

Not such an easy task when you’ve already gone around the track a dozen times as fast as you could and are on your last legs.

My finishing “kick” could only be described as “slow as molasses in February”.

No joke, my track coach called me that.

Frequently.

ALL FOUR YEARS.

Thankfully my pace for the previous dozen or so laps greatly exceeded nearly all of my competitors so it was pretty rare event that I’d actually “need” to finish strong.

In fact, I can only remember having to actually sprint down the final straightaway once… ever.

I lost, obviously, you know, being slow as molasses in February…

So here I am, fourteen weeks into my aggressive auto loan payment plan and the finishline is in sight.

I’m excited to rid myself of this monthly, err, weekly bill.

But like on the track 20+ years ago, even though I’m nearly done, I’m worn out.

My checking balance has fallen to the point that, well, I probably should be “re-arranging” some payment dates or dipping into my savings so as to not only avoid fees but also maintain my own personal finance standards of pretty much always being a month ahead of myself.

Basically, the extra payments I’ve been making, while painful from day one, are really getting to the point that they’re crippling.

Okay, crippling is too strong of a word.

They’re restrictive, I guess. I treading water, yes, but slowly sinking. Not sure how much longer I’ll last…

But I’m not suspending the payments.

I’m too close.

And based on my past experiences, the moment you start to veer of course and start making excuses, well, you lose.

I might not have the kick I thought I’d have for these last few weeks of payments (in fact, I thought I’d pay it off by August at one point), my fast pace will get me there soon enough.

Just over $3000 to go…

– – – – – – – – –

PIAC Tangent
Usain BoltIt’s funny, the first time a coach yelled that on my final lap, I was thinking, “Huh? Does he want me to flex on the straightaway?”

Seemed like a goofy request considering I’d already lapped the competition…

Finish strong?

Dude, I’m so far ahead, I could start walking and still finish first.

But here’s the thing if you’ve never really watched distance running… The further you go, the more your “form” breaks down. Your shoulders start to rise, you bend your elbows more, your head flops around, and you start taking smaller and shorter steps.

Even marathon runners run like Usain Bolt at the start. Twenty six miles later, only the really elite ones still have that form.

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July 2015 Net WorthAnother month, another net worth update.

So, I dropped $1196 overall but that’s almost entirely due to the situation in Greece and the inexplicable reaction to it in the North American markets earlier this week.

If you’re not following, the decline in the value of my 401k is because the markets dropped a little over 2% in reaction to the most recent round financial woes in Greece.

How a country like Greece can effect the markets over here is a discussion for another day…

Aside from that, though, I was pleasantly surprised with what transpired during the month.

See, while I’ve been focusing nearly all of my attention towards paying down the auto loan, I’ve been using my credit cards with, what feels like, reckless abandon and not really paying much back towards them.

Or so I thought…

I expected my credit card balance to be far more than $441 deeper in debt.

Truthfully, I was prepared to be $1k more in the hole.

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End in SightJust ten weeks ago, when I embarked on a very aggressive payment plan, I still owed $11099 on the Swagger Wagon loan.

Today, my balance is $5410, putting me just a little beyond the half way point.

I’m ecstatic.

It certainly hasn’t been as cut and dry as I’d originally thought it would be as I’ve run out of money a couple of times and gotten dinged with maintenance fees for dipping below the minimum balance threshold on my checking account.

I’m also a little surprised that I’ve only been able to make a handful of extra payments so far (on top of the already scheduled “extra” payments).

I guess my debt paying skills have grown rusty. Hmph.

But that said, I’m just now coming upon a remaining balance where I can apply my “red zone finances” method of ridding debt.

Now, with the end in sight, I’m sure I’ll be able to “scrounge” up a few bucks here and there to get me to the end point sooner.

Can’t wait to rid myself of the $444.15 monthly payment, freeing that up for use elsewhere in my unwritten budget, and, once again, own all of my cars free and clear again.

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Piggy BankI have a regular checking account with Bank of America and that’s where I deposit all of my income before spreading it all around.

Maybe not the best idea but it works for me.

The one thing I’m not real fond of with BoA’s regular checking accounts is that if your balance dips below $1500 at any point during the month, they’ll hit you with a $14 maintenance fee.

I hate that.

Didn’t hate it when their limit was $750 but definately hate it now as much as I did when they first raised the threshhold (and I first got dinged by the fee.)

This morning I find myself with a balance of $1507.31.

Yep, less than $10 away from getting fee’d.

Sure, things could be a lot worse — I know there are a lot people out there that don’t have a $1500 cushion to rest on and end up paying the maintenance fee every month.

I’m thankful that I’m not really close to zero. Very thankful.

So here’s my dilemma…

I can avoid dipping into fee territory if I postpone (or just skip) my next automatic car payment that I have scheduled in my aggressive pay down plan.

That would save me from the $14 maintenance and only cost me maybe $3 or so in added interest on the loan.

No brainer, right?

Skip the payment.

But here’s the thing… if I skip this payment, what happens next week when I get low on cash?

Do I skip that one too?

I mean, my car loan statement currently says my next payment due date is September of 2016 — OVER a year away.

I could totally skip it.

But I’m not going to.

I want this loan to go away.

I came up with a plan to make that happen quickly, and I’m going to stick with it — even if I pay a few fees along the way.

Financially, by the numbers, I mean, it’s clearly the wrong way to do things but, for me, paying a $14 fee is worth it to rid myself of a $444.15 monthy payment before the summer is over.

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Years ago while paying down my mortgage in a fruitless attempt to eliminate PMI, I posted a graph showing how much of an effect additional payments have when it comes to paying down debt.

Back then, it was just an extra $25 per week and, boy, did it ever make a difference!

Of late, my target has been my $24750 auto loan taken out in April of 2013 and will you look at that slope change since I started up’ing my payment schedule! Wow!

Auto Loan Amortization Chart

Visuals are great motivators, I find.

So the blue part is the amortization schedule, you know, how it’d all go if I made the minimum monthly payment for the duration of the loan.

The green part is what my actual balance is currently — and will be as I extrapolated the data out a few months until the balance is paid in full.

As you can see, for the first year or so, I was just making the minimum monthly payment of $444.15, you know, just getting acclimated to having a car payment after so many years of owning my cars free and clear.

At around the 1-year mark, I started tossing an additional $102.50 each WEEK towards the loan in a effort to speed things up.

Granted, that’s a lot of money to have lying around on a weekly basis but you’d be amazed at what you can make do without — especially when you have it set-up to be taken out automatically.

Honestly, I’m at my best when I’m cash poor. I’ve said it over and over — I’m amazing at paying down debt but horrendous at saving money.

The key for me is to not have any money to spend. Can’t spend what I don’t have. And the reason I don’t have any is because I’m sending most of it towards my debts — on auto-pilot.

Now, within the past month or so, I’ve stepped it up a notch with crazy with $452 payments (WEEKLY!) that essentially line the entire balance to be paid in full this August.

Yep, before the mid-point of the original amortization schedule — even with just paying the minimum payment for the first year!

— — — — —

For the record, I never was able to get Countrywide Home Loans to stop billing me for PMI (Private Mortgage Insurance) even though I was far beyond the threshhold that it should have been dropped (automatically, I might add) even after numerous phone calls and letters.

To solve the problem and rid myself of an expense I no longer should have had to pay, I ended up re-financing with another bank and cut my mortgage bill by nearly 60%.

Their loss.

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June 2015 Net WorthSo the good news is that I’m still on the up-and-up when it comes to the bottom line.

Clearly, my all out assault on the auto loan is making a HUGE difference with just shy of $3k falling off of the balance during the month of May.

On the other hand, it’s apparent that I’m not paying down my credit cards very much at all and, to my surprise, actually, I’m using them more frequently than I thought I was.

This is due largely in part to expenses incurred during a last minute mini-vacation we took during the Memorial Day weekend, a tablet purchase for my son’s 6th birthday, and some rather expensive license renewals for my side business.

Thankfully, if they’re not annual expenses, they’re really infrequent ones so the month of June should look a lot more attractive.

Can You Dig It?

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