January Report

I don't believe in New Years Resolutions, but I am pursuing a few goals for 2012:

1. Pay off credit card debt ($11,875 to go)

2. Max out Traditional IRA contributions (currently at 10% of $5K target)

3. Max out 401k contributions (currently at 2% of $16.5K target)

4. Learn a second language (Rosetta Stone on it's way - funded by a Christmas gift card!)

There's more stuff in general that falls under "Personal Development" - listening to NPR in a morning instead of the iPod, practicing yoga a few times a week, keeping up with my personal finance education etc. etc. - but this is not a list of resolutions (that we all know we break). I'm sticking to the few hard goals and we'll see where they take me.

Growth and Shrinkage

January is almost over and it's been a great financial month. I owe less money on my credit card than I have in three years, and since the first of the year I've started to relax about it all. Don't get me wrong, I'm not relaxing the objective or becoming complacent in any way. What I am feeling is that I don't have such an insurmountable task ahead like I did when the debt was still $25K, $23K, 18K etc. As of today it's at $11,875 and I'm crazy excited to be so close to dropping below $10K. 


I have started focusing on seeing some growth in retirement in savings as well as the shrinkage of debt. I'm starting small and certainly the largest part of my disposable income is still being thrown at the debt but I've increased my 401k contributions back up to 6% (they'll jump to 9% once my annual increase hits in March) and I've started to fund an IRA. I'm also making small contributions to savings. 


Even though they're small numbers, seeing them grow is hugely motivating. I got crazy inspired by http://www.budgetsaresexy.com/category/net-worth/ and started tracking my net worth. It's still a negative of course but the last two months have both delivered over 20% increases on the prior month! 


Buying shoes was never this satisfying... even when they were Louboutins.  

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.

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.

($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.