Surprise! You Have a New Student Loan Payment Amount!

By no means is my new student loan payment epic. In fact, it's only $0.95 less than what I've been paying. Hardly enough to pay for a cup of coffee. At any rate, I was a little surprised to find a message in my Direct Loan Servicing inbox notifying me that starting July 28th, my electronic debit will be $228.26. 

Frankly, I wasn't expecting my student loan payment amount to change until I actively switched to the regular payment schedule. I've written before that switching to the regular payment schedule would boost my monthly payments to $265. I don't know what it would be if I switched today (and since www.dl.ed.gov is acting super-duper slow today, I won't bother finding out in time to publish this post!).

UPDATE: If I switch to the regular payment schedule beginning August 28, 2011, my monthly amount will be $368.74.

Nevertheless, I'm sure the retirement of my car loan will usher in yet another change for my monthly student loan payments, as I hope to extend my accelerated debt elimination plan to the federal government once my disposable income increases =)

By the way, there was no specific explanation as to why my payment amount changed. However, the website offered that the change might have occurred because of loans being added to my account and some other unlikely actions that I can't remember :)

Trouble Staying Focused

I'm still sick and continue to struggle with my spelling, as I shared earlier this week. Nevertheless, I will do my best to think through my drug/sick-induced brain to share with you what has been going on.

My spending for the last two months has been kind of "free spirited". I've purchased breakfast nearly every day (Monday through Friday), eaten out almost as much for lunch, and had more take out for dinner than usual. Additionally, I've spent quite a bit of time entertaining friends from out of town or going out of town to be entertained by friends (yeah, yeah, I know, gasoline is extra stupid expensive). These things don't pay for themselves and unfortunately, many of these expenses were not part of my regular budget. So what did I do? I used money I set aside for my super duper car payments. Or, I used my credit card....and then used money from my super duper car payment to pay off the credit card balance.

I'm all for the "life is short, so you gotta have fun." Yet, sometimes, I find myself struggling to balance it all. Surely, additional income would help me "have it all", so to speak. What's most important, however, is that I develop a firmer sense of discipline to remain on track with my goals, while having a little bit of fun, as well :)

My boyfriend has a similar goal of paying off a debt sooner than later. He has diligently set aside $2,000 a month to get rid of a second mortgage on his first property. He has faced similar temptations of spending money in other places (heck, I'm likely the source for half of such temptations); in spite of them, he's on track to get rid of his loan by the end of August (congrats in advance, babe ;>).

Me? I'm repeating the same old sorry song about pushing back "the date". I haven't thought at length about what it means to pay off this debt ASAP. "I know" that it will mean I can save a super amount every month (for my $10K goal). "I know" that it will mean that I can have a chunk of disposable income to do whatever I want with (shopping and weekend trips to California have been among my latest obsessions). However, I'm not connecting what "I know" with what I should be doing. Side note: I love to see how behavioral economics shows itself in my life :).

Nevertheless, I will continue reminding myself of why I set out on this particular journey and continue to work towards my goals....in spite of many "distractions."

What do you do when you lose focus? What helps you get back on track?

No More Posts About My Car Note Until...

I won't write any more posts about my car note until the balance is zero. I got so frustrated the other day when I spent and additional $335.06 on GG. The same old story: I go in for an oil change (with my coupon, of course) and come out with a list of things to fix. "Fortunately", I spent $100 less than what was estimated.

Nevertheless, my many car repairs, and other unplanned expenses, have postponed my payoff date. When I started writing about this issue, I anticipated a payoff date of May 2012, then February 2011, then April 2011, then October 2011, then July 2011, then August 2011. Currently, it's September 28, 2011. We'll see about that. I failed to plan for this car note elimination thing to be a moving target. In the meantime, I will avoid obsessing over the matter. You won't read another post about this darn note until it's paid for!

Savings vs. Debt....

I've read many articles and posts from my favorite PF bloggers that explore the pros and cons of focusing one's discretionary income on savings versus debt elimination (if you don't believe me, look here). 

Recently, I shared that I went "a little" overboard on my credit card spending in preparation for a trip. I used my "car payment" money to pay the credit card bill, and now I'm looking at postponing my payoff date to September. Unless.....

I use $348.67 from my ING savings account for the car payment this month. This would leave less than $100 in the savings account. I've reasoned that in the event of an emergency, I can use my credit card and pay the balance (in full) with car payment money (like I've done before). Of course, an unexpected expense of such sort would mean that I'd have to postpone my payoff date, anyway. On the other hand, if I don't have any unexpected expenses between now and August, then I'll be done with the note and can stash away hundreds of dollars a month.

What would you do? Nearly deplete your savings to pay of the car note a month earlier or stick to the current circumstances and finish the note in September?

Update: Keeping the Change, Credit Card Spending, and Car Stuff

I'll keep it short today. Here are a few updates:

Keep the Change

At the beginning of the month, I enrolled in BofA's "Keep the Change" program. To date, I've "kept" $17.98 in change. For the first three months of the program, the bank will match my savings, penny-for-penny. This (i.e. the match) sure beats the heck out of their sorry interest rate.

Credit Card

Four billing cycles for 2011 have passed and I am still not paying interest on my credit card. Woohoo for "free credit". However, I should keep a closer eye on what balance I carry at any time. You've probably heard that if you carry a balance that you should keep it under 30% of what's available to you (if you haven't heard this, you just did.....you can thank me later ;>....and if you don't believe me, look what Kiplinger's said here). Although I do not carry over a balance (from billing cycle to billing cycle), I am also unaware of when my credit card company reports such information to the credit reporting bureaus. As such, I prefer to stay on the side of caution.

Car Stuff

My balance is just over $5,000 and if I stay on track (and not go crazy shopping for two upcoming weddings and go bezerks with graduation gifts) then I'll pay the note off by the end of August. What's more 'exciting' is that I haven't been made aware of any repairs needed for my car. We know how repairs derail the car note elimination plan.

Tax Realities....Better Than I Thought

Several weeks ago, I lamented that my goal of paying off my car by the end of this month had been dashed. Why? Because I anticipated a $2500 tax return (federal and state) which would have have been applied to my loan balance....and then I started using TurboTax and I soon discovered that my refund, if any, would be no where near that. So I updated my debt repayment plan to reflect NO tax refund. After having a CPA friend help me sort through taxes for two states (and one municipality) I've learned that I do get a refund (federal and state; I actually owe in one state). Now I am wondering how I should spend my refund. I've already purchased $100 worth of savings bonds using IRS Form 8888, so I have roughly $1100 left to play with. If I apply all of it to the car loan, I can finish the note approximately 1 month early. I could also contribute the amount to my Roth IRA for the 2010, for which I have $3,670.89 remaining. I could spend a portion of it for two weddings (within the month). I could put it in my emergency savings account towards my $10K goal. Or, I could equally divide it among the abovementioned expenses/savings. Decisions, decisions, decisions.....

What would you do if you expected something, then didn't expect anything, yet received something? Would you stick to your original idea when you were expecting something or change course?

Do You Keep Maintenance Records?

I went for an oil change last week and learned that my car requires additional repairs estimated to cost more than $1000. It seems like it was just yesterday that I was wigging out about the egregious amount of money I'd have to divert [from my car payment] in order to ensure I have a reliable ride. Actually, that was November 2010 when I paid  for the "check engine light" issue to go away and May 2010 that I paid for the rotor replacement (hundreds of bucks). 

If you guessed that I'd be talking about this again, your guess would be half right. Lately, I've been thinking about all of the work that I'm getting done to my vehicle. Frankly, I haven't been keeping an organized record of all services performed. Fortunately, however, I've been going to the same mechanic (at least since I've moved to this area), so they have a pretty good record of my oil changes, fluid flushes, and major repairs and whatnot. I've read a little bit here and a little bit there about the benefits of recording your vehicle's service history, the gist of the advice being that you'd be able to negotiate a higher selling price when you sell the car. I guess a record screams "LOOK AT ME!!! I'VE BEEN CARED FOR!!!"

Perhaps I'll get around to keeping a service record for my car. But I wonder, what's truly valuable to keep record of? Oil changes? Sure. Tire rotations? You bet! Car washes? Maybe not so much. 

I'll keep poking around to see what information is recommended to be part of such a record and will look to the comments in my budget for insight about the specific services I paid for. I'll keep you posted :)

Do you maintain a service record for your vehicle? 

If so, what information do you include?

Tax Refund? What Tax Refund?

Lately, I've been coping with some "not so great" news. I don't think it's realistic for me to eliminate the car note by the end of this April. It turns out that my estimated tax return is no where near what I'd planned for it to be. Additionally, I think I might owe state taxes. I'll be turning to my CPA friend for help  =) Maybe, just maybe, the circumstances won't be as bad as I expect them to be.

Nevertheless, since reality is screaming at me not to expect a significant tax refund, I have to look at other ways to eliminate my car note and stay on track to achieve my savings goals on time. I've updated my budget to set aside more money from my "extra" paycheck in April (originally, it was $955; I plan to redirect $237 from savings to the note to increase the amount to $1192).

Assuming that I: 1) receive no additional funds (in the form of a tax refund); 2) pay an extra $1192 in April; and 3) stay on track paying an average of $1,010/month (starting May 2011), I can eliminate the car note by July 2011--three months behind schedule.

My takeaway from this planning experience is to never bank on a tax refund. If I receive anything, I should spend and save some. 2010 presented a few changes that significantly altered my tax situation, namely a new job (with a $17,000 income increase) and a new state (with higher and additional (local) taxes).

How do you plan to spend/save your income tax refund? 

Do you expect one every year?

I Spend Less than 75% of My Income

Lately, I've been thinking about how fortunate I am to be able to spend less than 75% of my income on necessities (housing, transportation, food, debt repayment, etc.) In fact, I am currently spending just over 71% of my income (or $1,999.46/month). The $785 left over goes towards the car payment that I obsess over (hooray for principal-only payments!). Later, it will go towards my savings goals. 

I'm happy about these circumstances for a few reasons. First, I've made some updates to my income, and throughout each update, I am able to stay on track with my "financial success plan." Specifically, when I started this blog, my net income was $1,389.01/pay period; later, because of recent and temporary changes to the payroll tax, that amount increased to $1,417.23/pay period; finally, I increased my contributions to my 403(b) thereby reducing my net pay to $1,392.23 each pay period.

Secondly, I am happy about this fraction of spending because it confirms that I can live well within my means. For example, I think a lot about increasing my income and how I would spend it (one of my other 'obsessions' is writing budgets of how I would spend $5,000 and $7,500 of monthly net income). Even with increases in housing expenses (assuming that I'd be a homeowner with thousands more at my disposal) and modest increases in my food, travel and miscellaneous expenses, I'd still be able to pay extra toward my student loan debt, max out the Roth AND max out the 403(b).

Finally, I think about the high percentage of Americans who live "paycheck-to-paycheck." These are folks who spend every cent they earn, leaving very little- if anything at all, for savings or additional debt payments.

Ultimately, my goal is to spend 50% or less of my income. And considering that I aspire to live a comfortable lifestyle (i.e. consistently save at least $10K a year in non-retirement/non-investment accounts, max out individual and employer-sponsored retirement accounts, and travel domestically and internationally every year), I MUST increase my income. I better get started thinking about how to do that....

What percentage of your monthly income do you want to spend? What percentage of your monthly income do you currently spend? What's your plan for achieving your goal?

February Net Worth Update

Here's this month's summary explanation:

Assets

403(b): (+2356.90) I recently updated my 403(b) contributions from $100/pay period to $125/pay period. You'll notice that the $4300+ listed next to this account is more than double what I posted last month. Well, I finally got around to accessing my account. When I first started my current job, I received an email (which I didn't print; nor did I receive any mailed copies) of my customer ID. This ID number allowed me to access my account to view my balance, change asset allocation, and a bunch of other stuff related to employer sponsored retirement accounts. Unfortunately, since receiving that email, my work computer crashed and my laptop was later stolen. And I hadn't backed up a single thing. 

At any rate, I finally got around to calling my plan's sponsor to retrieve my customer ID. Now, I have access to my account and can see all the money I (and my employer :>) have been contributing. By the way, my job contributes up to 4% of my salary to my account, and I'm making sure to get every last penny of it!

Emergency Savings: (+111.57) I'm still not contributing funds to this account on a regular basis. However, I moved $111.17 into this account from my Bank of America savings account because I earn a higher interest in this account...and I didn't have any plans for the excess. I earned $0.40 in interest this past month (versus the typical $0.01 from BofA).

Regular Brokerage Account and Roth IRA: (+117.07) The increases in these accounts are attributed to market increases (i.e. the value of my investments increased). Starting February 4th, every two weeks I will deposit $25 to the Roth IRA. It's not much, but I figured I could cut out some frivolous spending for something of more value. I can't wait to supercharge these deposits!

Savings Account: (-24.87...and other deposits through January) I deposit $25 plus any money left in my checking account at the end of a pay period into this [BofA] savings account each month (I like to match my pay checks with "expense periods," a sort of personal billing cycle). I previously mentioned that I moved some "excess funds" from this account into my emergency fund.

Liabilities

Car Loan: (+300.96) I'm chugging along with eliminating this debt. I'm halfway through paying off this account in 18 months. Had I stuck with the assigned payment amount, I would be halfway through my debt in 31 months.

Credit Card: (+433.33) I paid off the previous balance using funds set aside for my super-duper car payment (just as I suspected). Hooray for no credit card interest charges. Boo for compromising the debt reduction plan for the car. I intend to pay off the current small balance with funds in my checking account and BofA savings.

Student Loan: (+98.26) Hooray for a principal reduction of ninety-eight bucks (sarcasm). I can't wait to unload this sucker, too!

Considering that my liabilities are close to 3.5 times more than my assets is a bit discouraging. At the same time, it's a reminder that I need to work harder to improve my financial situation.  

What do you think is an appropriate balance between assets and liabilities?

Lesson Learned

In my last post, I was gearing up for part two of my vacation to the Bahamas [to help my girlfriend celebrate her birthday]. Sadly, I didn't go. I left my passport [1: The Passport Story]. Shipping that sucker overnight would've been stupid expensive, not to mention the expense related to changing my flight reservation. To make matters worse, several hours after returning from the airport, I got sick. I don't know if it was something I ate or my distress over missing my girlfriend's birthday manifesting itself, but I was out of commission for 2.5 days. Fortunately, I've recovered, and my vacation is behind me :( 

Although I missed out being a Bahama Mama this past weekend and creating adventure-filled memories, I've managed to find a [financial] bright spot in the midst of it all. The money set aside for the trip went unspent. And once you consider that I was bed-ridden and in no mood to do any online shopping, that money has remained unspent. Previously, I mentioned the temptation to go above and beyond those funds, but considering all of the circumstances, it's safe to say that that's not an issue. 

Here is my question to you: what do I do with the unspent vacation funds?

So far this is what I've come up with: buy a gift for my girlfriend (had I attended the festivities, I would've footed the bill for something- dinner, drinks, souvenir, excursion, etc.), put the money back into savings, use it for another trip (I'll be in a winter wonderland of snowboarding this upcoming weekend), put it towards my car payment, or buy something nice for myself.  

What would YOU do with previously set aside funds that go unspent?

[1] The Passport Story: August 2008, my girlfriend (the same one whose birthday I missed :<) and I drove 8+ hours to Toronto. As we approached the US-Canada border, my friend asked me a very important question: "do you have your passport?" If you guessed my answer being "no", you guessed right. Despite a verbal reminder to pack that sucker, I left it behind and was faced with the possibility of turning around (no fun, if you've ever driven on New York's I-90 [the exits are 15 trillion miles apart from one another...I'm only exaggerating a little bit]). Luckily, we were allowed to pass through without issue. Perhaps I took that lesson for granted; this most recent incident hurt a lot (i.e. not being able to go). Undoubtedly, I consider this a major lesson learned!

A New Tradition?

Two of my favorite bloggers, Debt Ninja and J. Money, share monthly net worth updates with their readers. Since I'm down for being a copycat (disclaimer: so long as it's the right cat to copy ;>), I've decided to do the same at the beginning of the month. Here goes:

Here's a summary explanation:

Assets

403(b): $100 every pay check.

Emergency Savings: Currently, I'm not contributing to this account. However, I've tapped it a few times in 2010 to pay for major car repairs.

Regular Brokerage Account and Roth IRA: I'm not contributing to these accounts, at the moment. However, I made a random deposit (from my "emergency savings") to beef up the Roth a bit. In hindsight, it was totally a psychological band-aid for the realization that I haven't been maxing it out.

Savings Account: $25 month. I opened this account for overdraft protection, but I haven't had to use it for such in the past year. Yet, I sometimes transfer a few bucks to cover an unanticipated, small expense (like the crap I got around Thanksgiving 2010).

Liabilities

Car Loan: If you've read through my previous posts, you know that I'm a bit obsessed with paying off my car note sooner than later. I opened this account in July/August of 2009 with a $13,500 balance. If I paid what my credit union wants me to pay on a regular basis, I would retire this debt in 2014. However, I have other plans. I set aside $1,055/month to pay off this sucker. With my estimations of a nice tax refund and "extra" paycheck in April, I plan to completely eliminate this debt by May 2011.

Credit Card: Despite setting aside cold-hard-cash for holiday gifts, I still resorted to my credit card to make some purchases. Gas. Food. Clothes. Accessories. And they were all for me. Now I'm staring this junk in the face, wondering how I'm gonna pay it off (one of my goals this year is to avoid incurring interest charges) while staying on track to pay my car note off by May. I'll keep you posted (even though I suspect the funds will come from January's $1,055 car note money :/).

Student Loan: Six years of post secondary school for me = $30,000+ student loans. Currently, I am on a graduated repayment plan (which will adjust in February to a higher amount). I have no intentions of continuing to pay on this plan, as, ultimately, the total interest charges exceed those of the standard repayment amount (i.e. about eleven years of the same payment each month). As soon as financially possible (hopefully May of this year), I can begin paying the standard repayment amount ($360.10) and then some (you know, so I can knock this puppy outta the water!).

I'll also share my yearly net worth updates once per quarter. Heck, I might later change my mind and display the YTD net worth totals with the monthly ones. But seeing as this is my first stab at it for the year, I figured I could spare you the redundancy.

Do you check your net worth? How often do you calculate it? Monthly? Quarterly? Bi-Annually? Yearly? Never? What benefits do you glean from assessing the differences between your assets and liabilities?

One More Day of 2010

Image from: www.geeks.pirillo.com

Lately, I've been reflecting on this year and the past decade (technically, the past eleven years, but I digress). It never ceases to amaze me how quickly time "flies by." My sister warned me that "after 21, it's all a blur." Blur or no blur, I'd like to review some of my accomplishments and a few things I am looking forward to in the new year.

 

What I'm Proud of... 

• Procuring a higher-paying position with an organization I admire and a wonderful group of colleagues. 
• Making massive additional payments to eliminate my car loan debt.
• Reining in credit card spending and managing the account so that I have a small balance (i.e. less than 30% of my credit line) or zero balance.
• Sharing my financial experiences with the world [wide web].

What I'm Looking Forward to...

• Increasing my savings and investing amounts (including maxing out IRA and getting on track to save $10,000).
• Increasing my net income.
• Finally eliminating my car note...and increasing my principal payments to my student loan debt.
• Consistently paying my credit card balance in full.
• Expanding my knowledge about insurance, taxes and investing.

What was YOUR biggest financial accomplishment of 2010?

P.S. HAPPY NEW YEAR!!! Have fun and be safe!

Hooray for Tax Cut Holidays!!!

2011 is right around the corner and with it, our paychecks will have a little something extra. As part of the deal extending the Bush-era tax cuts, a number of employees will receive a 2% reduction in payroll taxes. As of now, this reduction is temporary (it will last only a year). What does this mean for me and likely for you? Mo' money! $40 'extra' per paycheck in my case. I used a nifty calculator at Kiplinger's website to confirm my own calculations.

Naturally, the first thing I did was update my 2011 spending plan to reflect this anticipated increase (too soon?). Then I started thinking about what I would do with an extra $80 a month. It isn't much, but it kinda is (with the price of gasoline going up, I think these few bucks will definitely come in handy!). At any rate, I'd like to plan how I would spend it. Here are my ideas:

• Add to my car payments
• Use for travel (particularly airfare to see the beau; I haven't budgeted for this for the first quarter of 2011 and I need to purchase airfare for February and March).
• Add to my savings (I did say I want to save $10,000 in 12 months, didn't I?)
• Add to my Roth (I also said I wanted to max out the ol' IRA...)
• Go shopping...a little

The last idea is inspired by my long-held desire to dress more stylishly. Undoubtedly, this is also what is expected of us, as this tax cut is labeled a sort of "stimulus package."

What are your plans for the few bucks additional to your 2011 paychecks?

Financial Goals for 2011

In my most recent post, I shared that I'd been organizing my finances (reconciling savings plans, debt reduction plans and budgets). Naturally, the next thing for me to do was to think about what my goals are for the upcoming year and what I need to do to make sure these goals are achieved. Below, you will find my goals and the steps I intend to take to make them a reality:

• Zero credit card balance: My goal is to end every credit card billing cycle without a balance. This is one way to ensure that I don't spend above my income. I can make regular purchases, such as gasoline and groceries, with my credit card. In fact, I've been considering a rewards card to earn points for ___________ (<<that means I don't know, yet >). This year, I paid $68.21 in interest charges.  That's enough money for gas (and then some), a nice dinner with my boyfriend, an outfit, or a small contribution to my savings plan (after all, it all adds up!).
• Max out my Roth IRA: You already know that I've been kind of obsessed about paying off my car note. As such, I don't have much money left over to max out my IRA. With a projected payoff date of April 28, 2011, I have May 2011 through April 15, 2012 to contribute $5,000 to my individual retirement account. What do I have to do to make this happen? Contribute $454.55 each month to the account. With two "extra" paychecks in 2011, I may have the flexibility to reduce the monthly amount, but this requires that I'm diligent about redirecting a sufficient amount of those checks to the IRA. Knowing me, I'd like to set a few bucks aside for fun =)
• Pay off my car note: Originally, I planned to pay off my car note by June 2012, that is, until I ran the numbers on my beau's proposition of significantly increasing the principal payment amount. Currently, I am on track to achieve this goal by the end of April 2011, especially if my assumptions about my anticipated tax refund are correct. If they are less than I estimate, I may have to postpone the due date for this goal (which, undoubtedly will effect the savings goals). Let's keep our fingers crossed and hope I am at least right :)
• Generate at least $250/ month in extra revenue: Before I took the job that I currently hold, I had a steady goal of generating $3,000 in net income each month. With my deductions for my defined contribution plan, I am short of this goal by $222 each month. For the past few years, I've been toying around with a business idea that promotes personal finance. My goal for next year is to get serious about a web design and marketing plan so I can realize some income. $250/month of income to be exact. To be clear, I'm not looking to pocket all income; undoubtedly, I will reinvest into the business, but having the income will definitely provide some peace of mind.
• Accumlate $10,000 in non-retirement savings accounts by 05/31/2012: These funds would be available for immediate access and as part of my emergency savings. Why $10,000? Frankly, it's an arbitrary amount, but it's definitely a "stretch goal." There are a number of factors at play. Let's start with the not so good possibilities: what if I don't pay off my car by the end of April? What if I don't generate enough additional income? Well, my $10K goal within 12 months will be postponed (by the way, I'd redirect my "car payment" money to this goal). For me to achieve this goal, I need to set aside $833.34/month.  

If you recall, I have $1255 available as discretionary money each month. I'm comfortable spending $200 of this amount for fun stuff. So $1055 - $454.55 (Roth)-$833.34($10K goal)= $-232.89. A girl MUST increase her income to make these goals come true. Even if I sacrificed fun stuff every month (i.e. the previously mentioned $200/month), I'd still be a few bucks short! 

At any rate, these are my financial goals for 2011. What are your financial goals for 2011, if any? How do you intend to achieve them?

Set it Right or Else...

The title of this post refers to your perspective. Two posts ago, I shared that my money fear boiled down to being financially unstable and restricted by debt. Well here's a quick update about my "mini-dilemma." The car repair wasn't some irrational amount of money. After my coupon, I paid $231.66. No more "service engine light" and no more "gettin' jiggy with it" action from my engine.

Now about my perspective...

I'm not the type of person to spend my resources recklessly then look to someone else come to my rescue. But I do know, for sure, that if I legitimately faced an issue that cost me more than I have in all of my bank and investment accounts and more than my credit card limit, I still have somewhere to turn: family and friends. I know they would come to the rescue because they have in the past. For example:

• I'd worked through most of my undergraduate studies to pay for rent and tuition (whatever scholarships and loans didn't cover). It wasn't until my senior year that I focused my efforts on saving up to purchase a car. What I'd saved wasn't enough to purchase a reliable car on my own. And heading into grad school with a $1300 monthly stipend spoke volumes about my capacity to re-pay a car loan (that is to say, it wasn't in the budget!). You might argue that I didn't "have" to purchase a car, but I was headed to a place where I had no networks and there was little (read: absent) public transportation. In short, I was forced to purchase a car. Who dropped some stacks to fill the gap? Dad.

• After opening a Maaco credit card and spending $2500 of my own money to repair my car after an accident, my mom fronted me several thousand dollars to use for a down payment on another car. Unfortunately, when I retrieved my car from the body shop, the engine seized. Estimated replacement cost: $5600 for a rebuilt engine. I paid about that much for the car. And considering that I had JUST gotten out of the repair shop, it didn't seem prudent to drop that kind of money on it. So I got another car, with the help of Mom.

• The car I purchased (with help from mom) was stolen. Everyone knows that when you file an insurance claim, you have to pay a deductible for services rendered by/through your insurer. At the time, my deductible was $1000 (it was this high because I wanted to pay lower premiums). However, stupid me didn't have the full $1000 in liquid savings. I would've been forced to pull funds from my investment accounts (which would suck: fees and penalties and crap) had it not been for my boyfriend. He surprised me and put a check in the mail. As it turns out, I didn't have to pay the deductible because of the way my appraisal turned out, but he was there for me nonetheless.

Going forward, I should be reminded of these instances - and many more- of support around me and not freak out (as much :>) when I'm faced with a financial "dilemma."

Who would you turn to if you exhausted your resources in case of emergency/major unexpected expense?

Money Fears

I struggled a bit with what to discuss today. I sought a little inspiration from the Financial Planning Association's blog and a few of my favorites. Then I got distracted....I stared thinking (again) about how much my car is gonna cost me. If you've read my previous posts, you know that I am working diligently to pay off my car note. I've got just over $8400 more to go. Not bad, considering that I've owned the car for 15 months and the original balance was $13,275. Nevertheless, my "service engine soon" light came on Friday. Wistfully, I hoped that it would turn off just as quick as it came on. Not so much. Instead, on Saturday and Sunday, my engine has been "getting jiggy with it" and shaking a bit.

I drove my sister's car to work yesterday and today to reduce the likelihood of me getting stranded somewhere along the 40 miles between our home and my job, yet I'm still reluctant to take it in for servicing. Well, I'm not SO crazy, and I realize that machines are machines and they often need fixing. I'll drop my car off tonight so it can get serviced some time tomorrow (based on my conversation with the car shop dude, it may need a tune up). It doesn't tickle my fancy to drop another hundred (or two hundred) dollars on the car. Especially considering that since September, I've spent just over $780 on maintenance and repairs. 

I've decided that the real root of my concern is not having enough money to pay for subsequent emergencies. I've got just over ten hundred bucks in my emergency savings account and I worry that [yet] another car repair (or some other unexpected expense) will place me closer to being financial unstable. It's frightening. In fact, I get ill at the thought of using my credit card to pay for unexpected expenses (I've been there and done that; trust me, digging out of debt is no fun). I think of the restrictive feelings associated with being obligated to paying off a loan, rather than using the money to do what I want (like, treating my friends to an occasional lunch, or buying a nice outfit).

At any rate, this is one of the costs of being an adult. I know that I have to TCB because no one else will. 

Do you have any money fears? What are they?

Life Expectancy & Retirement Savings Goals

Many people are challenged by the question "how much should I save for retirement?" One of the primary obstacles to answering this question is being able to predict how long one might live. Also, who wants to face the fact of their own mortality? Nevertheless, I came across a handy-dandy life expectancy calculator at MSN.com. According to the quiz, I should prepare to live to 102 years old (or more). That means I have 76 more years of living...woo hoo!! It also means that - assuming I retire at 67 years old (perhaps the new normal for retirement age for my generation?) - I will need to prepare for at least 35 years of income. That's quite a bit of time...

Naturally, my next step was to use a retirement calculator to get an idea of how much money I should aspire to have (at a minimum) for retirement. Here are the results from CNN/Money's Retirement Calculator:

 

"YOUR NEEDS

In retirement, you will need $36,400 a year in income. (Because of inflation, in 2051, that will be equivalent to $122,300.) 

Part of that income will come from your Social Security and/or pensions. To produce the rest, you should build up your nest egg (including your 401k, IRA and other savings accounts) to $306,084 by the time you retire. (In 2051, that will be equivalent to $1,028,413). 

YOUR CHANCES OF GETTING THERE

To save $306,084, your investments need to gain an average of 3.04% from now until retirement. We estimate that there is a 100.00% chance of this happening."

Sadly, I think the idea of Social Security benefits being paid out to me is laughable, so I should prepare to pick up the $21,825 in expected yearly benefits. Currently, my only retirement contributions are $100 per pay period (i.e. 2800/year) to my 403(b) (luckily, I receive a partial match from my employer). I am not actively contributing to my Roth nor my regular brokerage account because I'm focusing my funds on debt elimination (well, my car note; I also have a massive student loan). That said, the idea of living past a century and having to save and invest early to be prepared for it is a bit daunting to me. Suffice it to say, I am well aware that I have to get a 'move on' with significantly increasing my contributions (to the employer-sponsored plan, IRA and regular brokerage account).

How do YOU take the intimidation out of retirement planning?

Too Soon?

Lately, I've been obsessing over what my budget will look like once I pay off my car. Assuming that I remain on track, this new budget will take effect May 2011. Nevertheless, I've plotted out what to do with the $1055 I would NOT be spending on a car note. So far, I've come up with a combination of the following expenses:

• Increase the amount I pay on my student loan from $230 to $350 (the standard repayment amount; currently, I am on a graduated payment plan) .
• Increase my student loan payment to $400
• Increase my student loan payment to $500

• Set aside $810 in my ING Direct account. In addition to the $25 I set aside in my Bank of America savings account, a total of $835 towards savings accounts will yield  $6680 by the end of 2011, and $10,020 over the course of 12 months. One of the goals I've set for myself includes having $10,000 in emergency savings.

• Set aside $625/month (from May to December) to max out Roth.
• Set aside $200/month for Roth.

• Set aside$200/month to travel.
• Set aside $100/month to travel

• Set aside $258/month for miscellaneous expenses which may include Roth, fun stuff, additional savings, additional principal payments for student loans, and who knows what else.

I'm sure it would be helpful to see the variety of scenarios I've plotted out, but I assure you that that's an exercise in futility. You see, I've drafted more than 15 of the various budget scenarios, some in my handy-dandy composition notebook, others on index cards, backs of envelopes, and other random pieces of paper. The recurring themes, however, are that I set aside a hefty chunk for savings (especially since I haven't been doing so while eliminating this car note) and paying more than the $230 currently requested of me to pay my student loan. By the way, I my current payoff amount is $30,801.65. Yikes!

What would you do with the "new" budget?

7 Days and 1,604.85 Dollars Later...

Last week, I posted "Decisions, decisions, decisions..." to reflect the conundrum du jour: should I use my "extra" paycheck for a trip to Houston or do other stuff with it?

Well, it took me less than a week to blow through more than my "extra" check. Here's how I did it:

• $717.73 for bills ($689.01 for my car payment and $28.72 to pay off my credit card balance)
• $255.64 for "other" or miscellaneous expenses (stamps, airfare, brake lights (the DIY replacement of $6.35 is much less than the $29.99 the rotor-replacers wanted to charge...more on them, next), pet food, public transportation fare).
• $250.10 (on a credit card) for an unexpected car repair.
• I had my coupon ready to go for my oil change, but after a road test (something that I insisted be done because I've been hearing squeaking while braking), I was informed that my front brake rotors needed to be replaced. Unfortunately, they were worn down to the point that resurfacing them (a cheaper alternative to rotor replacement) was not a feasible alternative.
• $197.63 for food (sadly, more than half of this was spent on eating out, including this little indulgence).
• $71.43 for gasoline.
• $60 for an ATM withdrawal ($49.72 was spent on a day trip to NYC - tolls and food- and state park admission for a "hiking" trip in a part of the Appalachian Mountain range. I spent another $6 as a tip for lunch that I didn't pay for.) Sadly, I can't account for the outstanding $4.28.
• $39.53 for savings (I wanted to make the amount in my ING Direct account an even number. Lame. I know).
• $12.79 for a bottle of vino (yes, liquor has it's own category in my spending plan). Don't judge me ;)

All said and done, I will have $34.26 left over from this "extra" check. None of which, I might add, went towards a trip to Houston. I should mention, however, that part of the airfare cost listed in the miscellaneous category includes a membership fee for Spirit Airline's "$9 Fare Club." This service, at approximately $60, will pay for itself over the purchase of two airline tickets (one down, one more to go) as I will receive special fares for being a member ($19 one way ticket to travel 900+ miles, anyone?)

I know this isn't the most impressive record of spending "fun" money, but tell me, WHAT WOULD YOU HAVE DONE?

I guess I don't have "money to blow".....

 

From Candy Slice Comedy