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July 11, 2008

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Dave Ramsey Fans, Help Me Out Here

December 16, 2007

In the last year or so, I’ve become a fan of Dave Ramsey and his 7 baby steps. We’ve started the debt snowball, but I can’t seem to agree to putting $1000 in an emergency fund while I could be using it to pay down debt that is actively accruing interest a higher interest rate.

As I mentioned in my goals for 2008, I’ve been able to put together $1000 before in a savings account, but I ALWAYS get ants in my pants about paying off my debt. If I have $489 left on a 9% credit card, wouldn’t it make sense to pay it off with money from a 1.8% savings account? I can’t escape this thought, and it’s preventing me from saving the $1000.

I mean, if I’m really supposed to be saving 3-6 month worth of expenses for my emergency fund (which I totally agree with, and plan to do), what good is $1000 going to do? Say I have $1000 in my emergency fund and I need my car fixed for $1400? Where am I going to get the extra $400? Probably a credit card. So what’s the point if I have to use my credit card anyway?

I thought that paying down higher interest debt trumps saving.

I understand that his point is to limit or remove the dependency on credit cards, but isn’t it better to continue “playing the odds” and get gazelle-intense and put all extra available cash toward debt? I think so.Some will say that this mentality is what got me into debt in the first place, but I disagree. I understand that it’s my behavior and my past attitude that credit is like free money that has gotten me here.

I guess I’m just struggling with the math of it and every ounce of me wants to put every cent I can toward my debt.

Interestingly enough, looking back at my post for my goals for 2008, I noticed that I put it 2nd, behind paying off all my debt. I guess my goals don’t exactly align with Dave right now, like fully funding my Roth IRA before I save the 3-6 months in my emergency fund. I’ll have to look at that one again, but for now I feel comfortable with them.

Right now, facing credit card bills, I’d rather use my credit card as an emergency fund than have $1000 sitting around doing nothing for me.

Please don’t shoot me DR fans! I’m a fan too, and this is really the only beef I have with him.

photo by Arkansas ShutterBug

Posted in Credit Cards, Dave Ramsey 2 Comments »

My Home Depot Consumer Credit Card is PAID OFF!

December 13, 2007

As I’ve mentioned in previous posts, I just completed a home improvement project that resulted in a pretty significant balance on my Home Equity Line of Credit. One of the expenditures that I didn’t put on my HELOC was for a brand new garage door and the installation labor to do it. For this, I used an 12 month interest free loan from Home Depot.

Ok, in reality it was just a special offer that they ran on their Home Depot consumer credit card. But I’ll take an interest free loan any day, especially from my toy store.

Thankfully, this month I PAID IT OFF. And not a moment too soon, since the promotional period ends on Jan 1, 2008, and would have been responsible for about $400 in accrued interest. Here’s the image that I’ve been waiting to see for a long time, noting the “-” under accrued finance charges:

I didn’t start attacking this debt until September of this year, because I was busy snowballing some other debt. (which is now thankfully gone as well) Using Dave Ramsey’s debt snowball method, and the attacking debt method that NCN used, I was able to pay off a bill from an electrician, a dumpster company, and a medical bill, and roll all those minimum payments into this Home Depot bill.

Here’s all of my “snowball” payments right from my online account at Home Depot:

You’ll see that I was able to get 1 big payment in at the beginning and then put every spare penny I had into other payments, ala Paid Twice’s snowflaking method.

Needless to say, I’m thrilled that this is gone! And onward goes the steamrollin’ snowball! Next up is the dreaded Chase credit card.

photo by Neubie

Posted in Credit Cards, Home Improvement 4 Comments »

Stupid Tax Tuesday - The Anatomy of an Overdraft

December 11, 2007

In spite of my efforts to stop making dumb financial mistakes, I occasionally pull off a big one, like I did last week. This is a classic case of failure to communicate with your spouse. Or more accurately, failure to remember the communication.

I am generally the one that manages the finances, and am responsible for entering our transactions into Quicken on a daily basis. Were pretty good at communicating about what we can spend and my wife usually leaves the receipts for her stuff on the desk so I can do the Quicken thing.

We rarely use checks, but when we do, she usually tells me the check number and amount. Well, this week revealed some weaknesses in our communication plan. She wrote a check, told me about it, I forgot about it, the place cashed it the day before my direct deposit went in, and we overdrafted. Big time.

Here’s the 4 transactions:

As you can see, it was a check that caused 3 subsequent pending transactions to overdraft my account when they cleared. As a result, the fees came flying in the next day for all 4 transactions:

We use Bank of America as our primary checking account, and I’m very happy with the service, and the online interface for bill pay. but when I called to plead for mercy, they wouldn’t budge too much, saying this is the second time I’ve overdrafted in a year, hence no mercy. I can’t recall the first one (another memory failure perhaps?), but they were nice about it and refunded $20 of it anyway.

The result?

$120 in overdraft fees, including a $20 refund for a prior offense resulting in:

• a $41.72 bottle of shampoo from Walmart, originally $6.72
• a $40.12 chicken sandwich combo from Wendy’s, originally $5.12
• a $38.21 happy meal from McDonald’s, originally $3.21
• paying $130 for some groceries that should have been $115

The Plan?

1. My saving account is linked to my checking account so my plan is to build it up to $1000 and use it as my overdraft account, in case this happens again. I’ve already set up a automatic transfer to my saving account every week so this should happen without me having to think about it.
2. Have my wife write down on a piece of paper, the checks she’s written, so I can’t miss it.

Depressing? Yes. With this mistake, I think I’ve easily wiped out more than 2 years worth of interest that I earned from all my savings accounts. I’m trying not to dwell on it too much, but that money was slated for Christmas presents, and it hurts.

Photo by Wellzee

Posted in Life, Stupid Tax Tuesday No Comments »

Thoughts on the .ws Domain Extension

December 8, 2007

When I knew I want to start a personal finance blog, everything I read said I needed to get a .com. Among others articles such as Free Money Finance’s blog said I needed one. Well, easier said than done. I suppose there are good .com’s available if you’re creative, but I’m not so much.

Why godsgreenearth ?

The name godsgreenearth came to me in the shower(sorry for any visuals), and usually something that comes to my mind in the shower I pay special attention to. Take it as you may, but it’s true. I knew I wanted to use it because it has multiple meanings: God, money, earth(I love nature), and godsgreenearth is a used in a phrase that commonly exresses surprise as in “What on God’s green earth…”. All these things are things I wanted to talk about in my blog, so I settled on it. I assumed that the .com was already taken, which it was, so the task was to find an acceptable alternative.

.info? .name? They didn’t seem quite right for a blog - godsgreenearth isn’t a name, nor is it a wiki.

What’s .ws?

I’ve read a lot about it and basically it’s a country code top level domain (ccTLD) that comes from the country extension for Western Samoa, which owns the .ws top level domain. Some forum posters seem to think it has an association with the terms “wireless” or “warez stuff”, but the overwhelming majority think it stands for “web site”. I’ve also read that Western Samoa was promoting it’s use as an ideal TLD and also was promoting it as “web site”.

Without finding any show stoppers about the .ws domain, I settled on it.

What’s the downside to using a .ws?

Well, it’s not a .com. But I don’t plan on spreading my website by word of mouth, so I doubt people will be going to the .com version of godsgreenearth to find me. (There’s nothing there at godsgreenearth[dot]com by the way, maybe I should make an offer!)

I figured that all my traffic will come from links on other PF blogs and forums, so I figure a .ws domain clicks the same as a .com!

I read on some forum that Google doesn’t like to index pages from .ws sites. To me, this makes no sense, and can’t be true, because I can see that Google has indexed every page I’ve written so far (site:http://godsgreenearth.ws)

I also read that you can’t transfer a .ws domain to another registrar, butthat should be an issue.

Other than just being different, I see no downside to using a .ws domain. But I guess we’ll see as I develop the blog. I’m actually starting to like it. It’s short and sweet and I think it’ll catch on someday as an alternative to the big TLDs.

Overall, my primary goal was not to have huge amounts of traffic, it was to have a place, a method, an accountability device to help me get out of debt and be financially free. And that will remain my goal. If a .ws domain extension limits my traffic in some weird way, so be it.

I’m new to this - so I’m open to any suggestions and please point out any goofy things you see on my website, except my .ws extension. He He.

Image by labnol

Posted in Blogging, Internet No Comments »