Unraveling Money – My Exploration of Personal Finance and Productivity

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.

Blog at WordPress.com.