Friday, December 30, 2011
Grateful... and a New Year
Thankfully I have turned out to be a better financial planner than I am a blogger! I started this blog as a small attempt to keep myself honest, but as it's turned out, I haven't needed to keep honest to anyone but myself.
What started as an act of desperation to whittle down $40K+ of debt has become a new way of life that is many millions of times more satisfying. I have been telling my money where to go instead of wondering where it went, and in that process found my desire for mass consumption has all but gone. Crazy as it sounds this wasn't actually something I was trying to achieve when I set out, and because of that it's only recently that I have even become aware of it. If I'm being really honest back when I started this in August, in the back of my mind I knew I was just putting consumption on hold for a while until I could go and pay cash for a flashy handbag or similar. Debt free meant strolling into Neiman Marcus and throwing down cash for a new Balenciaga instead of flashing the plastic. After 5-months of changed financial behavior and gaining a whole hell of a lot more knowledge about personal finance, I have naturally become aware of making smart choices. Crazy thing is the smart choices are the ones I actually WANT to make! I've also stopped wearing or carrying a lot of the luxury brand items that I have; I'm turned off by the notion of "looking" rich. But enough rambling...
I am ending the year with $13,500 debt left, which is unbelievably ahead of the schedule I set back in July when I first developed my debt elimination plan. I had originally hoped to owe around $20K by the end of the year, which then went down to roughly $16,500 when I realized I could afford to send a bit more money each month.
Then an amazing thing happened. I moved banks and in order to qualify for a deposit at home feature I was required to apply for a credit card. I was terrified that I'd be rejected and was literally shaking as I clicked submit on the application. To my complete amazement I was approved in seconds with a high limit and a 6.9% APR. I then realized that the saving grace of my AMEX debt was that it reported as installment debt rather than revolving credit, and as a result my credit score has always remained in the 780's. I did a balance transfer of $18,500, which has been a MASSIVE saving in interest compared to AMEX's 15.2%.
That still left me with a balance of $4,600 on the AMEX but I suddenly found myself with a debt snowball and I killed that AMEX balance in a couple of weeks. I have never experienced motivation like that before. Talk about gazelle intensity!
I've had a couple of unexpected visits from Murphy, but I've made it this far and am finishing up the year in a much better place. I have an aggressive plan to eliminate the $13,500 by April 20th - over two months ahead of the original schedule - and then an aggressive plan to start building wealth and security.
Far from the anger I felt towards AMEX back in August, I am now eternally grateful for the wake up call. I feel truly blessed to be on this path to financial peace.
Happy New Year!
What started as an act of desperation to whittle down $40K+ of debt has become a new way of life that is many millions of times more satisfying. I have been telling my money where to go instead of wondering where it went, and in that process found my desire for mass consumption has all but gone. Crazy as it sounds this wasn't actually something I was trying to achieve when I set out, and because of that it's only recently that I have even become aware of it. If I'm being really honest back when I started this in August, in the back of my mind I knew I was just putting consumption on hold for a while until I could go and pay cash for a flashy handbag or similar. Debt free meant strolling into Neiman Marcus and throwing down cash for a new Balenciaga instead of flashing the plastic. After 5-months of changed financial behavior and gaining a whole hell of a lot more knowledge about personal finance, I have naturally become aware of making smart choices. Crazy thing is the smart choices are the ones I actually WANT to make! I've also stopped wearing or carrying a lot of the luxury brand items that I have; I'm turned off by the notion of "looking" rich. But enough rambling...
I am ending the year with $13,500 debt left, which is unbelievably ahead of the schedule I set back in July when I first developed my debt elimination plan. I had originally hoped to owe around $20K by the end of the year, which then went down to roughly $16,500 when I realized I could afford to send a bit more money each month.
Then an amazing thing happened. I moved banks and in order to qualify for a deposit at home feature I was required to apply for a credit card. I was terrified that I'd be rejected and was literally shaking as I clicked submit on the application. To my complete amazement I was approved in seconds with a high limit and a 6.9% APR. I then realized that the saving grace of my AMEX debt was that it reported as installment debt rather than revolving credit, and as a result my credit score has always remained in the 780's. I did a balance transfer of $18,500, which has been a MASSIVE saving in interest compared to AMEX's 15.2%.
That still left me with a balance of $4,600 on the AMEX but I suddenly found myself with a debt snowball and I killed that AMEX balance in a couple of weeks. I have never experienced motivation like that before. Talk about gazelle intensity!
I've had a couple of unexpected visits from Murphy, but I've made it this far and am finishing up the year in a much better place. I have an aggressive plan to eliminate the $13,500 by April 20th - over two months ahead of the original schedule - and then an aggressive plan to start building wealth and security.
Far from the anger I felt towards AMEX back in August, I am now eternally grateful for the wake up call. I feel truly blessed to be on this path to financial peace.
Happy New Year!
Monday, September 12, 2011
Adaptation
I am in the middle of a couple of weeks of "out of the ordinary" with a few trips and a few visitors in town. I've been stressing over how much additional money these special events are going to cost. For the past 2 months I've been saving a special fund plus allocating money gained from eBay sales and I've been fretting it won't be enough. In the last week of August, I had a hard time falling asleep at night because my mind wouldn't stop calculating the money I had vs. the money I was going to need and trying to figure out how to cut costs without cutting enjoyment. Budgeting is certainly not fun if you allow it to drive you crazy.
Here I am in the midst of it though, and it's amazing how quickly it is becoming second nature for me to use cash and use it wisely. I haven't scrimped on anything or denied myself anything I would have had under the old American Excess routine. What I have done is made better choices. I haven't felt the need to impress with a $400 dinner when a tasty $30 grill at home was fantastic. I haven't felt we needed a $175 spa day to enjoy time together, when a $35 pedicure was the perfect way to relax and have fun with friends.
Most importantly I'm not stressing about a potentially more expensive few weeks and I'm amazed to find everything is much more enjoyable when I'm not over-spending. I have only the lingering pleasure of the activity and none of the unavoidable guilt of another few hundred charged to a card.
Just 2 months into my new financial world order, I'm proving (for myself at least) life is better when it's paid for.
Here I am in the midst of it though, and it's amazing how quickly it is becoming second nature for me to use cash and use it wisely. I haven't scrimped on anything or denied myself anything I would have had under the old American Excess routine. What I have done is made better choices. I haven't felt the need to impress with a $400 dinner when a tasty $30 grill at home was fantastic. I haven't felt we needed a $175 spa day to enjoy time together, when a $35 pedicure was the perfect way to relax and have fun with friends.
Most importantly I'm not stressing about a potentially more expensive few weeks and I'm amazed to find everything is much more enjoyable when I'm not over-spending. I have only the lingering pleasure of the activity and none of the unavoidable guilt of another few hundred charged to a card.
Just 2 months into my new financial world order, I'm proving (for myself at least) life is better when it's paid for.
Wednesday, August 31, 2011
Milk Toast Billing
Checking out my credit card balance on the American Express website is very painless. It's easy to ignore the high numbers owed when it's such an exclusive, slick looking interface. It reminds me how special I am and that I have access to tropical beaches and premiere entertainment and Membership Rewards First.... Plus it reminds me in giant letters that I can SHOP!!!! A couple of painless clicks to pay the minimum and I even get a "thank you".
The thing to do though is look past the pretty webpage and click the PDF that is the real billing statement. That PDF is not pretty at all. There's nothing exclusive about the front and center black type informing me that it will take 36-years and $74,412 to clear the balance if I keep making only the minumum payments.
Page 5 is where it gets really slick... I've paid $2,878.43 just in interest so far in 2011 - WTF!! That is almost a full month's rent! All for privilege of owing money! Don't even get me started on the helpful "APR Information". Wow, American Excess really is not my friend.
It occurs to me we need a return to the scary looking statements dropping through the mailbox once a month and wean off the pretty website or fancy iPhone app. The reality of debt shouldn't come with a nice font and a reminder to shop.
The thing to do though is look past the pretty webpage and click the PDF that is the real billing statement. That PDF is not pretty at all. There's nothing exclusive about the front and center black type informing me that it will take 36-years and $74,412 to clear the balance if I keep making only the minumum payments.
Page 5 is where it gets really slick... I've paid $2,878.43 just in interest so far in 2011 - WTF!! That is almost a full month's rent! All for privilege of owing money! Don't even get me started on the helpful "APR Information". Wow, American Excess really is not my friend.
It occurs to me we need a return to the scary looking statements dropping through the mailbox once a month and wean off the pretty website or fancy iPhone app. The reality of debt shouldn't come with a nice font and a reminder to shop.
Not Adding Up
It's very surprising to me how resistant I am to saving. If all goes to my debt elimination plan I am still 9-months away from being able to start seriously saving, but it is shocking how my perception of saving over the years is so skewed.
I have wasted tens of thousands of dollars over the past few years. Literally, WASTED. I once wrote an $18,000 check as a down-payment on a new car (along with a trade in and a loan) and that value essentially evaporated the second I drove the car off the lot; I've sold items on eBay for not even a tenth of what I originally paid for them. I've definitely experienced firsthand the difference between cost and ultimate worth.
And yet, I've recently realized that my perception of contributing a high percentage of my income to my 401(k) or sending a significant amount to a savings account or IRA (even though I wouldn't think twice about wasting that same amount or sending it to American Express) has always been negative. I can't fathom how the never ending cycle of borrowing and repaying on credit cards has seemed more favorable than paying myself and having control of my own money.
I'm very rational and very logical, but when it comes to money I just don't add up. It's amazing what a little research and a good budget can teach you about yourself.
Monday, August 29, 2011
Not quite vaulting over the first fence
I'm doing pretty good with the budget and the cash in my wallet. I just replaced a typical $50 Bloomingdales “necessity” with a perfectly good $15.76 version from Walgreens instead. However, there is an item that does generally fall more into the "need" over "want" category that caused a bit of a scuffle at the first real test of my newly reformed ways.
I need to get a safe for my house. I'm not overflowing with valuables and I'm certainly not keeping wads of cash lying around, but I do have certain documents and things that could use a bit more security. It's one of those purchases that I've put off (in favor of real needs such as a Burberry trench coat) but now with a vacation coming up, I'm getting a bit itchy about the fact I don't have one.
I've done the research and finally settled on the purchase (for anyone interested in a home safe, consensus tells me this is a solid choice: http://www.amazon.com/First-Alert-2096DF-Waterproof-Digital/dp/B000WUJ5X6/ref=sr_1_3?ie=UTF8&qid=1314652650&sr=8-3). I'm really blown away by a cool fantasy of the future when I'm debt free and can envision a James Bond-style safe with stacks of 50's and a couple of different passports. So, having looked again on Amazon last night I decided this was definitely a need and a $367.77 charge to Platinum (current balance only $24,999.38) was completely justified.
After 10-minutes of guilt and feeling like I literally jumped off the horse as soon as I saw the first fence (let alone sat tight until I fell) I went back into my Amazon account and cancelled the order. It was a great relief but I still felt shitty for the rest of the night.
Accountability is important in this process (hence this being a blog and not a private diary) so I told my mum (in a round about sort of way) that I'd identified the purchase and was saving up until I could afford it. God bless her, she called me this afternoon and she's buying it for me. She’s impressed by my will to save up until I can afford it, but equally she feels I need that added bit of security. I'm thrilled of course but can't help feel disappointed in the instant gratification of it all. Saving up and really earning the safe would have been a good lesson. I am telling myself at least the instant gratification isn’t shoes, or bags or clothes this time, and ultimately I'm very grateful to have a solid piece of equipment in my quest to build wealth. Hopefully it won't be too long until my new safe will be James Bond-style after all, and in the absence of available stacks of 50’s, in the meantime my passport will have a really secure (albeit lonely) new home.
I need to get a safe for my house. I'm not overflowing with valuables and I'm certainly not keeping wads of cash lying around, but I do have certain documents and things that could use a bit more security. It's one of those purchases that I've put off (in favor of real needs such as a Burberry trench coat) but now with a vacation coming up, I'm getting a bit itchy about the fact I don't have one.
I've done the research and finally settled on the purchase (for anyone interested in a home safe, consensus tells me this is a solid choice: http://www.amazon.com/First-Alert-2096DF-Waterproof-Digital/dp/B000WUJ5X6/ref=sr_1_3?ie=UTF8&qid=1314652650&sr=8-3). I'm really blown away by a cool fantasy of the future when I'm debt free and can envision a James Bond-style safe with stacks of 50's and a couple of different passports. So, having looked again on Amazon last night I decided this was definitely a need and a $367.77 charge to Platinum (current balance only $24,999.38) was completely justified.
After 10-minutes of guilt and feeling like I literally jumped off the horse as soon as I saw the first fence (let alone sat tight until I fell) I went back into my Amazon account and cancelled the order. It was a great relief but I still felt shitty for the rest of the night.
Accountability is important in this process (hence this being a blog and not a private diary) so I told my mum (in a round about sort of way) that I'd identified the purchase and was saving up until I could afford it. God bless her, she called me this afternoon and she's buying it for me. She’s impressed by my will to save up until I can afford it, but equally she feels I need that added bit of security. I'm thrilled of course but can't help feel disappointed in the instant gratification of it all. Saving up and really earning the safe would have been a good lesson. I am telling myself at least the instant gratification isn’t shoes, or bags or clothes this time, and ultimately I'm very grateful to have a solid piece of equipment in my quest to build wealth. Hopefully it won't be too long until my new safe will be James Bond-style after all, and in the absence of available stacks of 50’s, in the meantime my passport will have a really secure (albeit lonely) new home.
Sunday, August 28, 2011
($40,028.05)
On July 23, 2011 my former best friend (aka American Express Platinum Card) turned against me. After 3 years of a comfortable $1,500-ish minimum payment, suddenly Platinum was requesting $7,975.47 of the outstanding $40,028.05 (that we'd thoroughly enjoyed spending I might add!) by August 16.
I drive a BMW, I wear a Rolex, I carry a Dior wallet inside a Balenciaga bag (nothing but the best to hold my dearest Platinum) but I make PAYMENTS. I don't have savings or investments or $7,975,47 in "disposable" income each month. I thought Platinum knew that? So I had to wonder if perhaps this was just a ploy all along? Perhaps Platinum secretly knew I was addicted to consumption and status symbols? Perhaps Platinum was really just stringing me along, staying "Approved" and laying in wait for me to charge $8,420.22 to an already sizable balance so Platinum could pounce? Hitting me with a massive monthly minimum in the hope I wouldn't be able to make it. Then Platinum could really have it's way with me - hitting me with a late payment fee when I couldn't cover the whole amount, thereby justifying skyrocketing my interest rate and really making me "one of our most valuable Platinum cardholders".
Well I'm sorry Platinum but you're not going to win this one. I'm going to be shittiest Platinum cardholder there is because I'm not going to be your slave anymore. You're being replaced in my Dior wallet with something much more valuable: a small amount of cash that won't offer me unlimited credit or Rewards First points and that won't get me access to the Admiral's Club. But, a small amount of cash that will buy my groceries, gas my fleeced (oops - I mean leased) BMW and actually pay for all the other simple needs in my life until I can rejoice in owing you $0.00.
This is not an original story. I have a plan, and I'll stick to it.
I drive a BMW, I wear a Rolex, I carry a Dior wallet inside a Balenciaga bag (nothing but the best to hold my dearest Platinum) but I make PAYMENTS. I don't have savings or investments or $7,975,47 in "disposable" income each month. I thought Platinum knew that? So I had to wonder if perhaps this was just a ploy all along? Perhaps Platinum secretly knew I was addicted to consumption and status symbols? Perhaps Platinum was really just stringing me along, staying "Approved" and laying in wait for me to charge $8,420.22 to an already sizable balance so Platinum could pounce? Hitting me with a massive monthly minimum in the hope I wouldn't be able to make it. Then Platinum could really have it's way with me - hitting me with a late payment fee when I couldn't cover the whole amount, thereby justifying skyrocketing my interest rate and really making me "one of our most valuable Platinum cardholders".
Well I'm sorry Platinum but you're not going to win this one. I'm going to be shittiest Platinum cardholder there is because I'm not going to be your slave anymore. You're being replaced in my Dior wallet with something much more valuable: a small amount of cash that won't offer me unlimited credit or Rewards First points and that won't get me access to the Admiral's Club. But, a small amount of cash that will buy my groceries, gas my fleeced (oops - I mean leased) BMW and actually pay for all the other simple needs in my life until I can rejoice in owing you $0.00.
This is not an original story. I have a plan, and I'll stick to it.
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