Proverbs 22:7

The rich rule over the poor, and the borrower is slave to the lender.

Wednesday, March 31, 2010

Slimey AFLAC Agent

My employer officers us an allowance of $20 bi-weekly towards the purchase of any AFLAC policies. When I started at this job, Pre DR, I signed up for the accident policy, and the cancer policy.

I verified today that the cost per each is 14.97 for the accident policy, and 26.67 for the cancer policy bi-weekly. If I were to cancel the cancer policy, my employer would drop my benefit to the 14.97 for the accident policy, but it's no money out of my pocket. if I cancelled both, it would still be no money out of pocket, but they wouldnt give me that additional benefit. Additionally, this has been a pre-tax benefit, so really, in th last year and a half, I've only been paying $20 or so out of my own pocket, bi weekly. Well, thats $40 a month I'm paying towards a policy that dave says I don't need.

So I figured that I could cancel that policy and use that $40 a month to pick up an additional life insurance policy through zander instead, because I don't have enough. 

Well, this slimey aflac agent starts giving me the run around today. Tried to make me feel guilty about wanting to cancel, and I even told him "Look, I know you're a salesman, and it's your job to sell to me, but I don't need this policy." and he was like "Why not? Who have you been talking to?" and I told him, "My close, personal friend, Dave Ramsey." He paused for a minute and he said "I know who Dave Ramsey is, and I know what he teaches, but he's wrong about not needing cancer policy. There's a little girl in my church who got cancer, and we paid out $50K cash to the family. Would Dave Ramsey tell you to give that $50K back?" and I said no, but he would tell me to save my $40 a month to use it for something better, like life insurance or paying down debt, especially since my health insurance will cover cancer..."

So then he goes into overdrive, and says "Well, your company uses the cafeteria plan, and IRS code 125 blah blah blah....something about it being pretax dollars you can't un-enroll until open enrollment (which is in december)" and I said "Um, You can't ENROLL until open enrollment, you can opt out, at anytime." and he said "With anything else, yes, but not this." and he went on to say "Tell ya what I'm gonna do, I'll talk to your employer and see if they are going to allow you to do this, but they might get audited and fined by the IRS, so I'm going to recommend that she not allow you..."

I pressed record on my phone about halfway through the conversation. He was really beginning to tick me off now - trying to scare me in to it - how can an insurance agency, or my company force me to continue to purchase a product that I don't want any more? Is he right? Or is he just pushing my buttons, trying to keep my business?

OH! The other thing I told him was that i was planning on keeping the accident policy, because it was a free benefit to me, but realistically, it hadn't done much for me anyway, except payout a single $60 claim from having my yearly exam. He said that my cancer policy had the same benefit - I could get a cancer screening every year, and they would pay me $75. And I said "So let me get this straight, I should pay you $26 every 2 weeks, so that I cn get a $75 check from you once a year?" and again, he stumbled, "Well, yeah, but if you get cancer, we pay you cash....blah blah EFFING blah."

So, I emailed my HR lady to tell her that he was going to be calling, and I told her that he said he was going to recommend to her that I not be allowed to opt out until open enrollment. I'm calling BS. This stinks. What an @$$. 

Friday, March 26, 2010

Jonny got a job!

This picture best described what I'm feeling right about now.

Tomorrow, Jonny starts a job as a bookkeeper for a property management group here in Columbus. One of his professors recommended him. It's 10-15 hours a week, and it's going to be an extra few hundred bucks a month. He interviewed on Monday and they offered him the position yesterday.

Oh happy day for more money going toward our debt snowball to pay that sucker off even faster. It's financial/accounting experience, and it's current, and it's going to look great on his resume. YIPPEE!

As we quicken the pace with getting stuff paid off, I find myself becoming more and more gazelle intense. My snowball calculator estimates a debt freedom date of November 2011. I've already set a personal goal of this Christmas, but I'm hoping I can shave a couple of more months off of that. Maybe by our anniversary? October 6 - we'll have been married 3 years. That would be AWESOME. With a few extra hundred dollars a month, I feel confident we can make it happen, if we just...don't spend everything we budget, and throw it at the debt at the end of the month....

I wish I had some crap I could sell. I have boxes and boxes of books that at one point, I care about keeping, but now I don't, and I cant find a way to get rid of them AND make a profit. I could donate them, but I'd rather keep them if I can get any money off of them.

I'm going to have to go through my clothes and see if there's anything I can offload at Plato's Closet. Maybe I can do that this weekend....

Until next time...

Monday, March 22, 2010

We're already there!

Well, in my post last week about the month ahead plan, I lied. I said the money I had coming in from the GIBill was about $2000.

Wrong. It was $4000. And it arrived today.

Oh my gosh, I cannot even express how excited I am. The money is sitting in our account, waiting for April 1st, when I'll go ahead and pay everything. I don't even care when payday is, because it doesn't matter.

I don't have to temporarily pause my debt snowball, and I don't have to wait until June to implement the month ahead plan. WE'RE ALREADY THERE!!!

The only downside of this is that it's KILLING me to not throw that entire amount at our debt, NOW. That's 50% of our remaining consolidation loan debt, and as much as I would love to throw it all at it, I really believe that getting on the month ahead system is going to help us be in a better position.

Now, let's see how this job interview situation with Jonny turns out. That will be a treat to see if that results in more income.


Thursday, March 18, 2010

Student Loans, Buying a House, and Babies

Okay FINE. I'll address the stupid student loan/house/babies situation, since so many people are riding my tail about it.

My undergrad student loans were not that bad. $22K. My grad student loans are going to be about $47K. Jonny's are going to be about $36K when all is said and done, for a total of $105K.

Surprisingly, that number does not bother me, because we have a plan. The plan, as I've mentioned before, is to have the car and consolidation loan gone by Christmas. Maybe earlier if Jonny can find some more permanent steady income before then. My undergrad student loans will come out of deferment in December, my grad student loans will still have a 6 month grace period. Jonny graduates in May 2011 and he will have a 6 month grace period as well.

My undergrad student loans are in an interest only repayment bracket, for the first 5 years. I'm not sure if that will change since I defered them for 2 1/2 to go back to school, However, because I will have no other debt at that point, I plan to use the amount that was going towards the debt snowball and build up the fully funded emergency fund.

But Amanda, that's not Dave's plan. You're supposed to be COMPLETELY debt free except for the house before you move on to Baby step 3.

You know what? Stuff a sock in it. Daves plan is about making changes. It's MY total money makeover. It's making smart financial choices. I am smart to know that I cannot continue to live life with a measly $1000 emergency fund. I must have more. Plus, my total money makeover is about LIVING on a budget......not isolating yourself from life and the rest of the world to stay on a budget.

Do you really think it's fair, or right, that we should have to wait to get a house just because we have student loan debt? We have made the decision to wait until we have a house to start having a family. Being debt free isnt a prerequisite to having babies, but it's a prerequisite to getting a house? Say WHAT? Yes, There are nimrods on the TMMO forums who believe this. It's okay to have a baby in an apartment. Babies dont cost anything. LIKE HELL THEY DON'T. Mind you, these are the same folks who already had houses before they started the process, so for them to wag their fingers at me like tsk tsk shame on you for not knocking out that student loan debt before getting a house, is ridiculous. Psh, to think that it's okay to have a kid and more expenses that way, but it's not okay to buy a house? So in other words, you're trying to discriminate against me because I didnt do stupid BEFORE starting the process to crawl out of debt by buying a house and then getting gazelle instense. Tsk tsk shame on me for pausing temporarily so that I can get a house and start a family. I guess my eggs just need to wait another 6-7 years and shrivle up because I must be student loan debt free first, is that it?

Yes, I realize that this is because of limitations I have put on myself. I realize that someone people are perfectly happy popping out babies while they still live in an apartment. I would not be. I know how I am and that's just not me. Jonny and I are not going to go buy some big fancy smancy house - we just want a home. But we want a home before we work on a family. Don't piss on my parade and the accomplishments we will have made by paying off $42K in STUPID DEBT because we have decided to hold tight temporarily, to the debt that is going to better our careers before moving forward.

Some people are just SO narrow minded. How dare you bark at me about temporarily pausing my debt snowball to get a house, when you have NO room to talk because you already have a house and are still in debt?

At any rate, to close everything up - the plan is that after we finish the consolidation and car loans, we will do our FFEF, and then buy a house next summer. If we have a downpayment, which I would like, then great - if not, it wont be the end of the world because we've got the VA Loan guarantee. Once we're successfull in a house, guess what? We will go back to being snowball intense and will work on knocking out that student loans at a rate of about $1500-$2K a month (and find time to have a baby in there somewhere too). If we do this, we'll be debt free but the house by ~2016. However, whats going to be REALLY awesome is if Jonny does get a great paying job and we can knock it out even faster. I really dont think that's a bad timeline to shoot for, but anything quicker depends on circumstance.

So yeah - if you want to tsk tsk me because I'm slightly deviating from Dave's plan, you go right ahead. Who are you to talk anyway?

Sunday, March 14, 2010

The Month-Ahead Plan

I am sick of my cash flow problem. The money is budgetted appropriately each month, but the fact of the matter is that with only 1 steady income, the money is not there as quickly as we need it to get through the month. As a result of this, during the first half of the month, I am ashamed to say that we have "borrowed" from the emergency fund, to have cash for expenses such as food and gas, and then paid back that which we borrowed when the paycheck for the second half of the month comes in.

This is dangerous, and I'm sick of having to do it. What is going to happen if we do have a Major Murphy visit after rent has been paid, but before Paycheck #2 comes in for the month? DISASTER!

I've been reading on the MTMMO forums that many people operate under the "Month-Ahead Plan." Basically the idea is that you build up one month's worth of income and you have that money sitting in your account, and then, on the first of the month, you already have every bit of money you need to pay your entire expenses for the upcoming month. You could essentially pay your entire month bills on the first, and pull out the cash you need for the month on the first. By doing this method, it wont matter when your paychecks for the current month come in, because you'll be paying THIS month's bills with LAST month's income.

So for example, if my usual monthly income is $4000, then I need to build up a reserve of $4000 in my account before the first paycheck of the month even comes in. Then on the 1st of the month, I can pay all my bills for the upcoming month, and withdraw cash for my cash envelopes - gas, food, and blow money. For safety's sake, I would probably actually only pull out enough cash for each envelope to get me through 1 week at a time, so that I wouldnt accidentally spend my entire month's grocery budget in the first week, etc.

It's going to be very very hard to look at my checking account and see a large available balance of $4000 or so from month to month, and not throw it to my debt snowball, but I think that this is the best way to take control over the cash flow issue. I need to start paying THIS month's bills with last month's income, rather than struggling to make this month's income work for this month's bills.

The plan to put this into place is to back off the debt snowball for a month or two and resort to paying only the minimum balance due on my consolidation loan, and car loan. I have some money, approximately $2000, coming in from the Post 9/11 GIBill within the next several weeks, and Jonny is still bringing in some money from his job at the tax office. If I have calculated everything correctly, I should be able to be on the month ahead plan starting June 1st, which is only 11 weeks away.

There are many more plus sides to getting a month ahead. I can stop relying on each bi-weekly paycheck and I can set up more allotments through work, to where certain funds go into particular savings accounts already, rather than into my checking account and manually transferring the money when it's time to put it in. My $300 a month Sinking Funds could become a $150 per paycheck allotment that would automatically go into my sinking funds account. Instead of having to wait until the second half of the month to pay the church my monthly tithe, I could pay the entire tithe at the beginning of the month. I could even FINALLY set all my regular bills up on AUTOPAY, rather than insisting that I pay them on a specific day of each month, because I know it's a day that the money is available. <--I'm a little iffy on that one, I'm afraid I would become sloppy, and not double check the bills to make sure they are right and that I'm not being overcharged.

At any rate....I've been digging my heels in about this one, but as I tried to come up wth my cash flow plan for April and May, I was thoroughly depressed to learn that, once again, I would be forced to borrow from the emergency fund in order to have the basics covered: food and gas. Bummer. I guess it's time to put my big girl panties on and just DO IT.

What are Sinking Funds?

Sinking Funds are defined by Frugal Dad as follows:  "In the personal finance world we can use sinking funds to help prepare for large, infrequent expenses that come along throughout the year. A prime example of such an expense is car insurance. Many insurers allow customers to pay monthly premiums for a convenience fee (my company charges $4.00 per monthly payment). I can easily save $24 by rejecting the monthly payment arrangement and agreeing to pay once every six month, when the auto insurance policy renews. But this means I have to come up with a hefty sum of money twice a year to cover the premium. This is where sinking funds can help."

Dave has a great form for such Lump Sum Payment Planning that works beautifully. The idea behind it is that you list your pricier infrequent expenses (you know, those things that you only have to buy every so often - usually only once or twice a year) and rather than having to come up with a large chunk of change when it's due, or paying a convenience fee to give the company the honor of setting you up on an installment plan, you save the money in your own savings account in the months leading up to when that bill is due, and pay it in full, with cash.

Our current sinking funds are $300 a month, for a total of $3600 over the course of the year. This includes auto insurance, renters insurance, car tag/taxes and fees, car maintenance (tires, oil changes, other services), and life insurance. Here are our yearly expenses on these items:
Car Insurance: $1300
Amanda Life Insurance: $350
Jonny Life Insurance: $450
Car Tax/Tags: $300
Renters Insurance: $350
Car Service/Repairs: $850
Total: $3600.

We actually had our car service and repairs a little less (only $700) when we initially started working on this, but when we divided the total amount out by 12 and our monthly savings were to be $287.50, we decided to round it up to $300. This way, if something happens and it's a little more expensive, we've got a little more wiggle room in there.

If you're first starting out, and trying to get your sinking funds caught up so that you can go forward with the correct monthly amount, you'll need to figure out how many months you have until that expense is due, and how many months portion you are behind on that item. Lets look at our example again, from a monthly standpoint, and taking into consideration when our due dates are:

Car Insurance: $1300/12 = 108.33 per month, Due in May and November ($650 every 6 months)
Amanda Life Insurance: $350/12 = 29.17 per month, Due in January
Jonny Life Insurance: $450/12 = 37.50 per month, Due in November
Car Tax/Tags: $300/12 = 25.00 per month, Due in December
Renters Insurance: $350/12 = 29.17 per month, Due in October
Car Service/Repairs: $850/12 = 70.83 per month, Varies.
Total: $3600.

To clarify, I have a separate savings account that I dump the entire $300 per month into, and I keep track on an excel spreadsheet how much belongs in what category.

For illustration purposes, let's pretend that I just got my tax return back, and rather than putting that amount towards our debt snowball, I wanted to get current on my sinking funds before putting any remaining amount towards debt. This way, starting next month, I'll just need to add the budgeted $300 to the sinking funds savings account. How much money would I need to put into the SF account to bring me up to speed?

Car Insurance is due in May. There is only 1 more month between right now and May, so to get caught up, I need 5 installments of the car insurance. $108.33 * 5 = $541.65

Amanda Life Insurance is due in January. I have 9 months between now and January, therefore, I need to pay 3 installments: $29.17 * 3 = $87.51

Jonny Life Insurance is due in November. I have 7 months between now and November, therefore, I need 5 installments: $37.50 * 5 = $187.50

Car Tax/Tags are due in December. I need 4 installments: $25.00 * 4 = $100.00

Renters Insurance is due in October. I need 6 installments: $29.17 * 6 = $175.02

Car Service/Repairs due dates vary. You can start with the current month and only add $70.83, or keep in on a calendar year basis. I'm going to assume this is a calendar year  thing, and save up from January through December. Therefore, I will save 3 installments now, which will catch up January, February and March, for a total of $70.83 * 3 = $212.49

Now, I'll add all these installments up: $541.65 + $87.51 + $187.50 + $100.00 + $175.02 + $212.49 = $1304.17 needed in my savings account for the month of March. In April, I will add $300 to it. In May, I will add another $300 to it, but I will also pull $650 from it, to pay my semi annual Car Insurance. In May, I'll add another $300, etc etc etc. Car service money will be pulled from it as needed, but make sure you don't spend more than you've currently built up for the year for car repairs. If you need more than you've built up, you'll need to budget to pay it back in future monthly installments.

Here's a list of other Sinking Fund expenses you may need to consider budgeting for:

Real Estate Taxes
Homeowners Insurance
Home Repairs
Replace Furniture
Medical Bills
Health Insurance
Life Insurance
Disability Insurance
Car Insurance
Car Repair/Tags
Replace Car (You should watch this video! As for the skeptic comments by users - just remember that the stock market AVERAGE is 12%. No, it's not 12% right now, but over a period of time, thats the average. Don't over-think the concept because of technicalities, or you'll end up just being another boring NORMAL person. Be WEIRD!)
Bank Note
IRS (Self-Employed)
Gifts (inc. Christmas)

*If you're reading this on Facebook, please go to to read the original post for links to videos and other websites.

Tuesday, March 2, 2010

Mr Murphy is trying to attack me....

During the first week of March in 2007, my desktop computer died. It was spring break my senior year. I had 8 weeks of classes left and I could NOT survive 8 weeks of classes with no computer.

So...on March 7th, my bestie Cynthia went with me to purchase a new one. I bought an HP Pavillian dv9000 laptop.

Today, it fried. I think it's the graphics card, but I have no way of knowing for certain until they look at it.

I called Fry's to verify the date of my purchase and the warranty info. Leap Day back in 2008....yeah, would have screwed me over. My warranty is valid until 9pm on Friday the 5th (so I guess a 3 year warranty is really a 1095 day warranty when you add in leap days....)

To make matters worse, since I now live in Columbus, and not the Atlanta area, there is NO Fry's location nearby. None, nada, zilch. I have to make the 135 mile drive 1 way to take it in to the store, because they will not allow me to ship it.


Luckily, the store is open until 9pm during the week. I guess I'll be getting off work at 5:15 tomorrow and will be making the trip to Atlanta.

Murphy tried to get me to go out and buy a new one. After all, it's mighty tempting considering you can buy a netbook for less than $500 these days. But that was the old me. The new me will spend 2/3 tank of gas round trip to get the darn thing fixed rather than buying a new one.