November Debt Summary November 26, 2008

Debt at start of blog (July 2008):   $51,497.33

Debt at end of November 2008:   $42,094.48

Difference:   $9,402.85

 

Current Breakdown:

Car loan (at 5.75%):   $18,254.00

Grad School Loan (at 6.55%):   $8,582.93

Undergrad Loan (at 3.35%):   $15,257.55

 

This month we put an extra $7,000 towards the car loan from my husband’s bonus.  I also put an additional $81.43 toward the grad school loan.  This was composed of profits from selling things on Amazon, and from snowflaking the leftover money in my bi-monthly budget.

Service Plan Savings November 23, 2008

I have always been a little wary of service plans — unless it’s a major item, I don’t like to buy them.  Well, I had purchased the 3-year Best Buy service plan for my laptop back in February of 2006.  The plan was about $350, but as the sales guy put it, “Under this plan, you can pour a glass of orange juice into your laptop and we will still fix/replace it for you.”  Being naturally klutzy, I figured this was probably the best coverage for me.

I didn’t pour a glass of juice into the laptop, but apparently the move from Hawaii to Virginia must have been a little rough on my computer, because a month into our transition, my screen started to display multi-colored horizontal stripes and  would stop functioning for a few minutes at a time.  I also noticed at one point that my cd-rom drive had gotten bent, and it would no longer open or close all the way.

So, I took my pc into the Geek Squad. They took one look at the service plan, said, “no problem” and I got it back as good as new in a week and a half.  They gave me a summary of what the repairs would have cost if I didn’t have a service plan — $943!  That’s the cost of a new laptop!  In this case, my service plan was definitely worth it.

CD Clean Out November 16, 2008

A year or so ago, I decided that our CD collection was taking up too much space on our shelves, especially since we had converted all the CDs we actually wanted to listen to into mp3s so we could play them on our Zunes. So, I took all the CDs from their individual cases, and put them in CD books, and then packed away all the cases. Since that time, we haven’t touched any of them.

I’ve now decided it’s time to purge the collection. I’m going through and checking each one on Amazon to see if it’s worth anything resale-wise.  I have also begun sorting the CDs into the following piles:

1. Worth at least $8 on Amazon

2. Worth at least $6 on Amazon (I haven’t decided if this is worth my time to resell yet).

3. Sell at spring Garage sale for $1 each (those not sold will go to Goodwill).

4. Keep for sentimental reasons (just a few, I promise!)

Profits from all CD sales will go to reducing my student loan debt.

New Harry Potter Trailer! November 15, 2008

The Leaky Cauldron just posted the new trailer for Harry Potter and the Half Blood Prince!  This was my favorite book of the series so I am really really excited for the movie.

Check it out here!

Half and Half November 14, 2008

We’ve decided to split the car loan money half and half — $7,000 to the car, $7,000 to invest.  I made the big payment to the principal on the loan yesterday! (I get really really excited when I see our debt decrease, even a  little bit, so this was huge for me!) We are going to keep the other $7,000 in savings a little longer, just to be sure, and then we’ll talk to our financial adviser in December about investment options.  If we don’t like what we see or we decide not to invest, that money will go toward the debt.

In other, more entertaining news, I’m going to go see Monty Python’s Spamalot tonight!

The $8,000 Dilemma November 12, 2008

To pay down debt or invest for the future?  That is the question.

“Whether tis nobler in the mind to suffer the slings and arrows of outrageous fortune . . . .” Oh wait, that’s Hamlet’s dilemma, not mine.

Anyways, my husband got a bonus for work. It was a substantial bonus, and when we received it, we decided to set a certain amount aside for furniture and other expenditures related to the new house, another sum aside to help us out if things got rough financially before I found a new job (if we don’t end up using this money, it will go into the emergency fund), and  a large sum to put towards paying down our debt.

We were planning to put $14,000 towards paying down my husband’s car loan. This is our top priority in the debt snowball I have constructed, as it has the highest monthly payment, and the 2nd highest interest rate. One of my student loans has a slightly higher rate, but since the interest is tax-deductible, it’s a lower priority on the debt scale.  We decided to immediately pay down $6000 worth of car debt so that we owe less than the car is worth. That way if (God forbid) the car gets totaled, we will at least get enough from the insurance company to cover the rest of what we owe.

Now that we’ve met with our financial adviser, however, we are reconsidering what to do with the other $8,000.  Should we pay down the car debt some more, or should we invest it to assist us in achieving our short-term goal of having a new house down payment in 2 and a half years?  I’m no investment expert, and I’m often wary of my financial adviser (mainly because though I’m sure he wants to help us, ultimately his interest is primarily his own commission).  However, he pointed out to us that we have a big goal that needs to be accomplished in a short amount of time, and paying down debt won’t necessarily accomplish that. Also, he pointed out that the market is so horrible right now, that once it finally hits bottom, it can really only get better. This is something my spouse and I have discussed a lot as well — buy low, sell high.  This also seems to be what Warren Buffet recommends.

I don’t know, I’m not much of a risk-taker, but at the same time, I’m not the savviest of investors. Maybe we will split the money down the middle – $7000 to the loan, $7000 to invest. That still puts us in range to be debt free by the end of 2010 (if we follow my snowball plan, and I get a job here pretty soon). Also, it allows us to try to grow $7000 over the next couple of years in hopes of building up some money for our goals. I don’t think I’d allow it to go into anything super risky –  I’m sure my adviser can recommend some sort of uber-diverse mutual fund or something.  Also, worst case if the market for some reason HASN’T improved in 2 years or so, we can always leave the money in there for retirement, or one of our other longer-term goals.  It’s gotta come back eventually, right?

I’ll think about it some more, and talk to C.  I’ll keep you posted on our decision.

Financial Adviser – Setting New Goals November 10, 2008

When C and I met with our financial adviser on Saturday, we realized that we had already accomplished a lot of the financial goals we had on file, and that it was time to look ahead to some new ones.  These goals are supposed to be large future expenditures that require careful planning and significant saving.

 

In 2005 we had set 3 goals:

1. For me to go to graduate school within the next 2 years.

2. To buy a house in 2008.

3. To retire at 55 with 1 million dollars.

 

Since I have now completed graduate school, and we have purchased our first house, we eliminated those goals.  Our new goals are:

 

1. To be financially independent at age 55  – (ideally to have the equivalent of $200,000 a year in today’s dollars by April of 2036).  Comments: We would like to have the option of retirement at 55, even though we both plan to continue working. 

 

2. To be able to fund half of each of our two future children’s college educations (to have the equivalent of $30,000 in today’s dollars by August of 2029 and another $30,000 by August of 2031).  Comments: Though we haven’t specifically decided when to have children, we know it’s coming up in the next 5 years, and that we’d like to have 2 if possible. Obviously we won’t begin saving for this goal until we actually have children, but it’s good to realize how having a child or 2 may impact our financial plans.

 

3. To have a 20% down payment on a new house by May of 2011 (est. $80,000).  Comments: Ideally, we’d like to stay in this area and keep our house for five years, but because of the nature of my husband’s job, we are aware of the possibility that we will need to relocate in May of 2011. If that happens, we’d like to have the option of keeping this house as a rental property and buying a new home somewhere else.

 

Obviously these goals could change quite a bit over the years, but they are the major money milestones we see in our future that will probably require significant planning, investment, and savings.  We are already on our way to accomplishing the first goal, we continue to max out our Roth IRA contributions each year, my husband has a 401k he contributes to, I am rolling my previous retirement benefits into a traditional IRA, and we have a mutual fund that we contribute to on a monthly basis. 

Goal two is something we probably won’t worry about until we actually have our first child, which we don’t anticipate happening for at least 2 more years.  Goal three is something we need to start seriously looking into. If we really want 80,000 in 2.5 years, we’d need to put away $2666.66 per month from now until then (assuming no interest/growth).  Since we don’t have an extra $2700 lying around (especially while I’m not working) we need to look at what we can save or invest, and the best way to grow that money.  (This will be discussed further in another post).

Financial Adviser Meeting Accomplishments November 9, 2008

Yesterday C and I met with our financial adviser.  Since we had moved away for a year, and our previous adviser had moved to a new branch, we were assigned a new adviser within the same company.  I was pleased with the fact that we got a lot accomplished in our meeting. 

Including:

- Writing checks to ensure we max out our Roth IRAs for the year. (When they raised the limit this year, we didn’t increase our monthly payments immediately due to tight finances — after our financial situation improved, we set aside the amount needed to make up the difference).

- Dealing with my previous job’s retirement plan – I am setting up a traditional IRA into which I can roll my 401k from my last job.

- Closing out our money market account.  We have a money market account with a bank owned by our financial advising firm.  This account is only paying 1.46% interest, unlike my ING savings, which is paying almost double at 2.75%.  So, we transferred the money, then double checked with our adviser on how to close the account.  (I’ll handle this next week).

so, I got to check quite a few things off my to do list, which made me happy. Our adviser is reviewing our new goals (to be discussed in another post) and will get back to us with some suggestions for how to meet those goals.

I love it! November 2, 2008

I absolutely love our new house.  Closing went very smoothly — it took less than an hour!  The people who owned the house before us were very nice and cleaned it very thoroughly before moving out.  They took care of all of the repairs we requested from the inspection, and I am just THRILLED with the house.  On Friday we got our express shipment, so we were able to move out of the hotel and into the house.  (We are sleeping on an air mattress until monday when our bed arrives). 

The express shipment arrived mostly intact.  The ancient tv we shipped didn’t fare very well — the buttons get stuck when you push them in, but it still works via remote.  Since we were planning on recycling this tv by the end of the year (it’s so old Goodwill won’t even take it), we probably won’t file a claim for damage — I doubt they’d consider it worth much anyway.  Otherwise everything else looks good.

Also, we decided not to try to paint immediately.  It turns out that without the former owners’ dark furniture, the paint looks much better than I had thought.  It’s still not a great color for our furniture, so we’d like to eventually repaint, but since it doesn’t look terrible, we’ll probably wait a year until we recover a bit financially from all the furniture purchases.  I am also relieved that we are not painting, since we are so busy getting the express shipment unpacked and getting as settled as possible before the main move on Monday.

Our new living room furniture arrived on Saturday.  That went well, except one of the tiles in the top of the coffee table was broken, so they have to send us a replacement table next week.  We found family room furniture last night, a couch and chair, and are having that delivered on Wednesday.  (Monday is the movers, Tuesday the cable guy comes and we need to go vote, so Weds was most practical).

In the mean time I’m really pleased that we got the house we did.  It was definitely worth the longer wait for closing. Also, just as a heads up, my posts are probably going to be a little less frequent until we get the internet hooked up next week.