This month I said good riddance to HSBC!
I’m marching through my credit card balances slowly but surely, with the highest rate cards first, which placed the HSBC card next in my cross hairs. For what it's worth, I asked HSBC for a rate adjustment each month and was denied each month.
So, just like the
Costco Amex card I wrote about in December, the HSBC folks will have to do business without my help from now on.
So long HSBC, I can’t say it has been nice knowing you. I know have only three cards left standing...and they're looking shaky at best.
By the way, paying off a credit card is a GREAT feeling!
We’re here at the end of the month, and I’m just doing a quick assessment of how we fared with regards to the overall budget.
My wife doesn’t care much for carrying around cash, so I tried to keep up with expenditures online using the debit card. Bottom line is, after a few extra trips to one of our favorite sports bars and some other house related purchases, we spent about $500 more than what I budgeted.
The lesson is this. If our debt reduction plan is going to work over the long haul, then we need to be even more disciplined. I don’t like coming to the end of the month with virtually no cushion in our checking account!
January and December are tough months for us in terms of spending. As you’ve read, our homeowner’s dues are due 10 days after the new year begins, which leaves us zero time to recover from Christmas spending.
All this has left me wondering if I’m doing enough to impact the revenue side of the debt equation.
There are the obvious things, like picking up a part time job, but in my career, part time work is not very practical. My wife has her own small business, but revenues there can be very sporadic, so all of my debt and budget calculations are built around my income alone.
That being said, I decided to take a look at my IRS withholding allowances. What’s that you ask? Remember when you got your first job and your employer told you to fill out a form, among many others, which was meant to tell the IRS how much to take out of your check? You had no idea what that meant, so you probably asked your parents and they most certainly said, “claim 0, you don’t want to owe the IRS money at the end of they year!”
So while that is true, you don’t want to “owe” or underpay, throughout the year if you can help it, you don’t want to overpay either! Money that you overpay can be going directly toward your debt attack. So have a look at your withholdings, and use this nifty, albeit slightly intimidating, online tool to help you judge the number of allowances you should actually be claiming:
http://www.irs.gov/individuals/article/0,,id=96196,00.htmlHopefully you’ll find a few extra bucks in your paycheck! I readjusted mine about two weeks ago, so I’ll let you know what the practical effect is in a couple of weeks when I get paid again. Good luck!
By the way, this is not to be taken as tax advice especially because I’m not an accountant or tax attorney, it’s just something that I’m trying. If you do have any tax questions, please contact your tax professional.
Well we’re only 10 days in to January and all of my financial signs are leading me to make some adjustments on my debt attack.
I may have to dial down the monthly attack amount that I had set up until I can build up enough of a reserve in my savings account where I feel comfortable moving money if one month gets tight for some reason.
In fact, this is just such a month.
With homeowners dues due and a big car insurance payment due, I don’t want to run the risk of over-drafting my account at the end of the month if I make that big whopping payment toward credit cards.
That said, I will try to “snowflake” this month. I’m going to only pay the minimum on the card I’m attacking, but if after I make those other major payments and at the end of the month I discover a little extra here or there, I’ll put that towards the credit card. That way at least I continue to chip away without giving them too much extra in finance charges.
Going forward I’m adjusting my attack amount until I have at least $1,000 in savings.
Control. According to Webster, control is a transitive verb defined as: to exercise restraining or directing influence over : regulate b : to have power over : rule c : to reduce the incidence or severity of especially to innocuous levels
This blog has been about getting personal finances under control, but really any venture with a targeted goal needs to have controls in place.
One must understand if events or situations are within a certain tolerance to know whether or not the result will be successfully achieved or if behaviors need to be modified along the way.
Right now, for example, our laundry is out of control! But our finances are finally getting in control.
One of the biggest problems I have with our house is the tendency to collect clutter. Our reluctance to donate toys, get rid of outdated electronics, etc. has created clutter, which most often manifests itself in my house as piles of stuff. I think we may hang on to a bit of the psychology that suggests that our “stuff” defines us. The reality of the piles is that, instead of creating a sense of purpose by reminding us of all the “stuff” we’ve collected; the piles actually create anxiety by reminding us of all the “things” we have to do!
We need to bring how we manage our daily tasks, under control.
But beginning just before Christmas, we started to really de-clutter. I had notebooks full of project management material that was over ten years old that I haven’t cracked open in nine years. Gone. I had a palm pilot that I haven’t used in twelve years (and I never really used it in the first place). Gone. My personal office was full of “to do” piles. Gone.
We made about three trips to the Goodwill last year which is a definite improvement, but I want to consider making that a monthly family field trip – not to shop, but to donate.
It’s a new year, and to spin an old saying, “out with the old, not necessarily in with anything else for a while.” Be it bills, mail, laundry, or dishes, I want no piles in my house…unless of course it’s cash ;-)
I have the day off – Happy New Year’s Eve by the way – and so I was just going through one of my four remaining credit card statements.
This one happens to be my Costco American Express card; a card I have about 12 more months to pay on. I started scanning the basics: balance, date my last payment was received, etc. and then I looked at the finance charge. Oh the finance charge, that little bit of data that laughs at me every month and says, “this is money that should be going to your retirement accounts and investments.”
Anyway, I noticed that my finance charge is a actually slightly higher this month, even though the balance on my card is lower. Where’s that stinking APR?!
Of course, there it is, American Express has decided to arbitrarily raise my interest rate another 2 points! I immediately call to politely inquire as to why in the hell they raised my interest rate, I’m not late, I pay over the minimums, etc., and the nice young lady on the phone says, “American Express sent you a letter in August letting you know that we were going to do this.” I of course ask, “any particular reason why?” To which she responds, “American Express decided it was in the company’s best interest to increase rates across the board because of the difficult economic times.”
I almost sprayed my coffee across the room! THEY are having difficult economic times and to solve it, they pass through higher rates to their customers who are just having a peachy old time in this economy??
Brilliant customer service move by American Express and they need to know that in my case, it probably is a smart move that they squeeze me for every penny they can get for the next 12 months.
Because the second that balance goes to zero, the card will be canceled and destroyed, they will never get another penny from me, and I’ll gladly tell them that I’ve ended a seven year, so called relationship, because of “difficult...economic...times.”
No sooner than I started patting myself on the back for striking a good balance for Christmas, did I get the bill in the mail for our #$%&!@ homeowner's dues!
I know, I know...I choose to live in a covenant protected community and I'm sure that one day, ten or so years down the road, our property values will have rebounded to the point where it makes sense to keep close checks on homeowners with, shall we say, eclectic tastes in decorating.
That being said, this bill has some pretty rotten timing. Right on the heels of Christmas spending and before any chance for a federal tax refund. Which means that I may have to - yet again - push back my debt attack another month.
I would just drag my feet on this one but because apparently a LOT of my fellow homeowners place this bill very low on the priority list, the board has decided to tack on a 10% late fee. Did I mention I hate late fees?
Theoretically next year this won't happen because...you guessed it; the dues are a part of my monthly cash box budget so I'll be setting aside for it each pay period.
Of course that doesn't help me so much for this year...groan.
I don’t know if irony is the right word. Perhaps it’s some kind of strange financial sadism. But for whatever reason, we backslid on spending after I was laid off.
At the beginning of last year, when we finally recognized that credit card debt and other consumer spending was eating away at any chance we ever had to build wealth, the first thing I did was put us on a “cash box budget.”
I segmented the family expenditures and applied a finite monthly amount to them, ensuring that the total equaled an amount that when combined with my debt attack, would not leave us negative at the end of the month.
It worked fantastically for the three or so months that we used it. In fact, what we thought might feel stifling, turned out to be liberating. There is a large peace of mind factor that goes with knowing what you have to spend. Then the job bomb, and like I said for whatever reason, we threw the cash budget out the window.
So here we are, almost a year later, and in spite of some major set backs, we’ve done a great job of paying down our consumer debt.
With that said, I’m getting the cash box ready again. This time the balances are adjusted to be a bit more realistic and if I’ve done the math correctly, we still will be able to continue with our aggressive debt attack while hopefully building a decent buffer in our operational (i.e., checking and savings) accounts.
I’m already planning for post consumer debt life; where we start routing money in to investments and not debts!
As much as it pains me to know that my thieving credit card companies will be getting another month's interest out of me, I have of course decided to re-purpose my debt attack amount to Christmas.
I had to convince my wife that we are making outstanding progress and that there is a light at the end of the tunnel, but this past year has been pretty tight around here and we haven't done a whole lot. After it was all said and done, a little Christmas spirit was just the thing we needed!
I will say this. We are all getting the travel bug and I think a nice trip, paid for with a "trip budget" and not with a credit card, will be a fantastic reward. Unfortunately, we will not be in a financial position by this summer to go to the World Cup in South Africa, but my goal is to be in that position by the next Cup in 2014!
It's December and we all know what that means. Christmas shopping! Well, I'm torn. I want to enjoy the season of giving without being stressed out about backsliding on my debt butt kicking routine that is now finally back in full swing since my layoff.
So part of me wants to go VERY light on gifts, in which case I run the risk of being a scrooge this Christmas.
And the other part of me wants to use my monthly debt attack amount to buy Christmas gifts for everybody; which of course knocks me back a month on my debt pay down goals.
I guess the answer is, what will my kids remember when they are grown and raising their own family in 10 years and our debt is ancient history?
