Unraveling Money – My Exploration of Personal Finance and Productivity

August 3, 2009

Update on Union Bank Loan Modifications

Filed under: Mortgage — unravelingmoney @ 9:50 pm

I called today as I had promised, and surprise, all of the sudden they have loan modifications! They’re still not running the “Making Home Affordable” plan, but they have their own.

Essentially, they’ll just modify the loan to the current market rate. In my case, it was down a half a percent to 5.875, which is not ideal but would definitely be a reduction. As with everything, there is always a catch. In this case, the fee is $960. It’s not that bad, but it really just depends on the payoff time – how many months would it take to see a net benefit from the modification?

I would really prefer to refinance my entire loan (2 loans, really) for a lower rate and on a P+I basis. Then, in the ideal situation, I’d be able to have a lower payment and make more progress on paying down the principal on my loan. I’m exploring that option as well right now – more information to come in the next week if I’m lucky.

July 30, 2009

Spending time “making more money”

Filed under: Making more money — unravelingmoney @ 10:09 pm

I haven’t posted anything here for awhile because I’ve been busy following Ramit Sethi’s advice by earning more money. Well, in theory.

I spent a couple of weeks looking for any part-time job I could find. Apparently, I am overqualified for everything. I must have sent out 40-50 applications/resumes/cover letters. I tried applying for a new “main” job, but I quickly realized that was a dumb idea since my current job is so flexible, pays pretty well and offers a lot of opportunity. I also couldn’t bear the thought of leaving my coworkers and my boss – I am way too emotional for that. I got *no* answers back to the part-time jobs. Not one. And I only got one interview for my “main” job – this was all very surprising to me. I even tried dumbing down my resume – nothing. It was pretty discouraging, to say the least.

Luckily, another opportunity presented itself – I’ve started a side-consultancy with a friend with great connections, skills and experience, and we already have some billable work, and the promise of a lot more. So – that is taking up a lot of my free time, and I figure it will be the ticket that helps me build up my emergency funds and pay down my debt faster. Of course that leaves less time to read and write about personal finances – but I figure for now, that’s a good thing.

Has anyone else had luck finding part-time/side work? I was really surprised that no one wrote me back. I have solid experience and I think my resume is really solid. I’m a decent writer and made none of the typical cover letter mistakes. Very odd – or maybe I am overestimating the job market?

July 5, 2009

How did I get into debt?

Filed under: Debt — unravelingmoney @ 6:31 pm

It’s pretty simple and pretty complex at the same time. To bring it down to the most basic concept – I spent more than I brought in. Well, sort of.

More accurate is: I spent money on my credit card, I brought in money on my checking account. I failed to pay the credit card balance in full until my available extra funds decreased drastically due to: home purchase, taxes and pay cut.

At the time I purchased my condo, I had about $10k on my credit card, but I had a positive cash flow net worth – I had the money in cash or cds, easily accessible. I asked my mortgage broker if I should pay off the debt to have a lower credit utilization ratio, but he said it wouldn’t make a difference.

So I didn’t pay it off.

And then I just continued living my life as normal once I bought the condo. Big huge mistake. I didn’t cut back on my spending significantly, I didn’t really have a budget. So the debt added up.

However – I’m not actually a very big spender. I didn’t buy a lot of clothes, I don’t have any expensive hobbies…just regular, everyday spending – with one exception. My company requires me to float my expenses, and I have a lot of them – I travel at least twice a month. The good thing is that they pay out expenses twice a month as well – but there still is the delay involved. So, I would put my company travel expenses on my credit card, get reimbursed – and not pay it off. This added to my ever-growing credit card balance.

Then I got hit with a huge tax bill, which wiped out my savings.

That’s where I am now. As soon as I have paid off my credit cards in full, I am going to designate one for my company expenses and ONLY my company expenses. That’s the huge mistake I made – mixing those accounts and not paying them off in full each month.

July 3, 2009

Some positive facts to balance out all the negative (debt)

Filed under: Debt, Saving — unravelingmoney @ 12:44 pm

I had a hard time sleeping last night, and I think it’s a mixture of some relationship stuff I’m going through (as in, I don’t have one anymore) and a result of listing out all my debts like that.

So – I want to celebrate the GOOD things that I have now:

Health – I am healthy

Family – I have a wonderful family that I love very much

Friends – I have some great friends – I love them too

Job – I have a job still, and it’s pretty stable. I got an interview for another job recently, and although I don’t think I’ll be taking it anymore, it’s nice to know that my skills are in demand. My boss told me I was the smartest person he’d ever worked with (he wasn’t joking that time)

Financial -

401k – current value is about $6,500

Traditional IRA – current value is about $1,800

High-interest savings – I have about $2,500 towards my emergency fund, and about $1,000 worth of other savings

So – it’s not ALL bad. This is the hard part – pushing through all the debt and getting my emergency fund up to at least 3 months.

I’ve been applying for part-time work (advice of Ramit Sethi in I Will Teach You To Be Rich and Dave Ramsey’s Total Money Makeover) – I need to spend a certain period of time focusing all my energy towards earning extra money to pay off debt and save. So – positive outlook! That’s my mantra for today.

July 2, 2009

Implementing the “Debt Snowball”

Filed under: Debt — unravelingmoney @ 5:52 pm

I’ve been reading the seminal Total Money Makeover by Dave Ramsey (got it at the library!) and I’ve also read reviews on his book at other sites, and I think I’m ready to try to implement the famous “debt snowball”. Dave Ramsey may be an Evangelical Christian and a Fox News supporter, but he has some great ideas and perspectives on living a debt-free life and successfully paying off debt and saving for the future.

Essentially, the debt snowball is a motivational tool for paying off debt from different sources. Sure, you could somehow consolidate everything through a debt consolidator, but by all accounts they are ripoffs. With the debt snowball, you line up your debts from smallest to largest and pay them off one at a time. You get the motivational benefit of crossing something off your list each time, and then the intention is that you keep paying at least the sum of all the minimums on each debt you are tackling, adding to the amount each time. He always mentions intensity and focus – you must be extremely focused at paying off more and more debt each time, earning extra money wherever possible and saving wherever possible.

So – I think I’ll try this. The first step is to list out all your debts in order, smallest to largest. I’m also going to include the interest rate where possible. Now that I was able to reduce the interest rate on both of my credit cards to 7.99% (YAY – that’s what follow-up will get you), I won’t need to prioritize one over the other in terms of paying off sooner. That, incidentially, is one of the main arguments agains the debt snowball – it isn’t logical. Logically, you should pay off the debt with the highest interest rate first. However, humans aren’t usually logical, so it’s possible that the motivational benefit of crossing small debts off the list is helpful. We shall see.

So – deep breath – here are my debts:

Banana Republic Store Card -$274.98 – APR 23.90%

IRS (unexpected charges from 07 that just came in) -$1,700 – APR unknown

Wells Fargo Visa -$6,842.59 – APR 7.90%

Citibank -$7,246.55 – APR 7.99%

Sallie Mae Student Loan -$35,000 – APR WAY TOO HIGH

Union Bank Mortgage – $600,000 – APR 1 MILLION PERCENT

To be updated…

July 1, 2009

Follow up is everything

Filed under: Debt — unravelingmoney @ 1:58 pm

One thing I’ve learned is that following up with all of the various financial institutions I do business with is key to success – so many times, you’ll think a change has been made, only to find out later that no change was made at all.

I just checked and finally, after about 1 week, my secondary credit card issuer processed my 1.99% balance transfer and applied my reduced purchase APR of 7.99%

I still need to follow up with my primary card issuer at my bank to find out if my “appeal” for a lower APR came through – and also need to finish the transfer process for my IRA account from an old employer 401k.

So many follow-ups! I’ve started keeping reminders in my Outlook for work – I’m not sure if that’s the best rate. Regardless, I’m sure that many financial institutions make money when people like me forget to follow up – so it’s my job to beat the system.

June 16, 2009

The day of beating down the doors of various financial institutions

Filed under: Debt — unravelingmoney @ 5:07 pm

Inspired by Ramit Sethi’s great book, I went on a financial-institutions-rampage. No, I didn’t show up with a weapon, I started calling, and I probably spoke to 10 different customer service agents in order to accomplish the following:

- Got the APR on my oldest card reduced to 7.99%

- Found out the the APR on my card with the highest balance got moved back up to 12.6% even thought it used to be 6.99% because I missed a payment (but I got the late fee removed on that back when the incident ocurred)

- Got a balance transfer offer of 2.99% on my oldest credit card that is good for 14 months – they had a 0% offer but it was only good for 2 months. Got a credit line increase so that I can transfer more away from the high-interest-rate card. Sure, credit line increases aren’t great – but I fully intend on paying off my debts and then having the limits reduced again.

- Set up a new IRA with Schwab and rolled over an old 401k account I had with my previous employer

- Inquired about a personal line of credit with my main bank to assist in paying off credit cards, but declined as soon as they told me the APR of 15%! My credit cards are lower than that…

And in between some of this, I actually did some work. You know, for my real job. Which pays me…

June 15, 2009

End of the line for Union Bank

Filed under: Uncategorized — unravelingmoney @ 3:53 pm

After getting a tip from a commenter and from a friend who is a mortgage broker, I decided to call Union Bank again to request some kind of reduction in interest rate apart from the government loan modification program. The answer? It is, in fact, possible to get a refinance without have 20% equity. Also, the rates these days are much better than what they used to be. The only problem is this: my main loan has a prepayment penalty of 1 year – so I can’t do anything until September. Basically – I’m stuck. No loan modification and no refinance options.

It was promising to hear that my monthly payment would go down signficantly – by over $600. So – I’ll need to figure out the cost and the payoff time if I do this, because I’m sure there will be fees galore from the bank.

This is on hold for now…

June 9, 2009

How to really save money

Filed under: Saving — unravelingmoney @ 5:20 pm

Tips for saving money abound. There are a thousand-and-one ways to save on utilities, entertainment, and just about everything else.

Unfortunately – saving money is kind of like weight loss. No one wants to confront the truth that EVERYONE actually knows – the only way to really save money is to…not spend it in the first place. Similarly, the only way to lose weight is to not gain it in the first place – by limiting the amount of calories you take in and increasing your calorie output by exercising more. There are no real secrets to saving. All you need to do is slow down spending and start actually putting your money in an interest-bearing account. Simple stuff, when you get down to it – but it’s definitely not easy.

Spending used to be such a carefree activity for me. I could throw my credit card down at any minute and buy pretty much everything I wanted, and since my income was relatively so much higher than my tastes (I tend to like a lot of cheap things rather than one very expensive thing), I never saw the repercussions.

Now I’m working on getting used to the fact that I don’t have the ability to go out and buy whatever I want, even when it seems like I’m buying “necessities”. It’s about reexamining what those necessities really are – for example, I bring lunch or snacks with me much more often now when I go out and I try to eat dinner at home every night rather than just assuming I can go out to eat. I stay away from drugstores because I have a tendency to buy a bunch of stuff there – from body care products to hairties – I always come away with a bunch of stuff that apparently, I can live without.

At this very moment I’m sitting in one of the most beautiful places on earth – Southeastern Alaska – looking out at an inlet and over to some mountains. I’m so lucky that my family lives here so that I can travel for cheap and stay for free – but this really reminds me why I’m doing this entire get-in-control-of-finances project in the first place.

I think it’s extremely important to have some kind of inspiration. Whether it is something personal or something for your family – it’s good to really examine why you want to be in control of your money and your financial life.

Saving money is an integral part of that puzzle – but like weight loss, it’s incredibly simple and at the same time, incredibly difficult.

June 2, 2009

My Expenses – Adding it all up – May 2009

Filed under: Keeping Track of Expenses — unravelingmoney @ 11:31 pm

Here comes the moment of truth – my personal balance sheet for the month of May. I’ve kept pretty good track of my expenditures this month, and to back me up I have Mint.com and Wells Fargo – they do a pretty good job of categorizing as well.

After completing this exercise, I intend to define my personal savings plan and finish setting up my ING savings/sub-savings accounts as planned. If there is one thing that this month has taught me, it’s that one absolutely needs a “stupid mistakes” fund.

Expenses

So – I somehow managed to spend ALMOST $9,000 in May. OMG. I can hardly believe it. My income was $8,480 – which includes expenses payouts from previous months as well. Ok, when I look at it that way, I guess it’s not TOO bad especially when you consider that $1,353 of my expenditures were expenses I’ll get back, I paid about the same to my credit cards (just a coincidence this time, I promise), I saved a small amount and I donated a small amount to charity. Regardless, I need to find ways to increase my income as well as cutting back on spending.

Going through this process was EXTREMELY valuable for me and I’m going to make it a habit every month. It’s very clear to me that I need to cut down on eating out and non-essential shopping immediately. I feel like I have already slowed way down on this – and my Mint.com account shows the same – but I need to do a better job. I still have a lot of credit card debt to pay off.

Next step – define my savings plan and get all of my accounts set up correctly.

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