Good Bye Bank Of America

Some may call it the "Golden Ticket" and others will call it stupidity, but I am happy and relieved to have dropped off my final payments to Bank of America. Now before you get all excited for me, all I did was transfer the balances to another card. The good news is I went from 27% to 3.99% which will save an incredible amount of money. Essentially, I will be paying less than $40 per month in finance charges compared to ever $300. The bad news is this is not my credit card that I transferred it to; it's my mothers and I have 23 months to pay it off.

I'm not worried about paying it off in time. The payments equal what I'm currently paying every month. Any follower of Dave Ramsey knows that you should never lend money to family unless you're prepared to gift it or accept that you won't see it again. I took over a month to accept my mother's offer because of my concern on how it would affect her credit rating and the fine print her bank would put into such an offer. To guarantee that my actions will to adversely affect my mom's good credit, I am giving her an extra payment up front to act as a cushion. I will also roll over the payments I've been making towards my LASIK surgery as soon as that's paid off in October.

Goal Progress

After 6 deliveries in one day last week, I'm happy to report an extra $100 payment to one of my credit cards as well as an extra $100 payment for my LASIK. I realize I should have put all $200 towards the LASIK, but the balance on the credit card is so small it will be easy to snowball once its out of the way.

Announcing My Newest Goal!

Dave Ramsey has coined a term the "Idiot Tax." Basically, the Idiot Tax is the true cost of an item after all of the interest you've paid is added into the original cost. One example is a$400 sweater that was originally on sale for $14. Another example is the $70 dinner that ends up being $568. All of this because many people do not pay off their credit cards every month.

While I don't follow Dave Ramsey's program and I disagree with him on some of the advice he provides to his audience, I do tune into his radio program in the evenings when I'm driving and you can't argue with the numbers. Families following his program are successfully getting out of debt and learning about fiscal responsibility.

So how does this all tie into announcing my newest goal? First, most articles you read on setting goals say that you are more likely to succeed if you let people know what your goals are. Telling people what you are working towards holds you accountable. If you let your support network know, they will even help you work towards those goals, cheering you on in victory or supporting you in getting back on the horse.

My personal Idiot Tax has not occurred yet... but the deadline is coming quickly. I had LASIK surgery done a little over a year ago. I signed up for my flexible spending medical savings account through work, but could not pay it all in one year. I was offered financing at 0% interest if I paid it within 18 months. After 18 months, all of the interest will be tacked onto the bill. Unfortunately, things always come up when your emergency fund isn't adequately funded. I have been making payments faithfully every month, but I'm coming up short by about $1,600. Essentially, I have to earn an extra $400 per month for the next four months in order to avoid $1,200 in interest. It's not as difficult to do as it sounds. During the summer I have a delivery job that brought in an extra $2,300 last year. My challenge is, thanks to the recession, this year is slower. I will be working on my creativity in order to meet the challenge, but I'm determined to do it. I'll be posting updates regularly and feel free to post any challenges you may be working on.

The Tax Man Cameth

I know it was my money already, but that doesn't make the day I receive my tax refund check any less exciting. Due to decent planning, my check was only a few hundred dollars. You may ask why that's a good thing, but it means that I didn't loan the government much interest free money.

My first stop was to make a 2nd payment on a Visa card. The second stop was to a department store to pay off a card. Yes, I agree that store cards are high interest, but this one is a rewards card and I pay it off quickly if not monthly. Felt good!

I did the shift this weekend, but didn't work as many hours as I hoped. At least I was able to put $5 towards my emergency fund and fill up the tank of my car. Tomorrow I have a taste test that will bring in another $20 for my emergency fund.

Lastly, I received an email from a local college asking me if I was still interested in participating in a mock jury. If I fit the criteria I will earn $100 for 5 hours of work. That will be a nice addition to the pot.

Do Over!

Paying off debt is a lot like weight loss. It takes years to put it on and its going to take time to get rid of it. Knowing that fact doesn't make it any easier. Instead, I tend to get frustrated, do something really stupid, beat myself up about it, and then get back on the wagon. Its a vicious cycle, but when I'm done, I know I'm good for awhile.

To readjust my thinking, I officially published my full debt load and replaced my previous pie chart from No Credit Needed. (For the record, I really appreciate NCN for everything he does, but I felt I needed to be brutally honest with myself.) I pulled all of my hidden cash and made an extra payment on a credit card to get a jump start. The hidden cash came in the form of:

• $5.50 from returning pop cans for their deposit - I also return the cans from work
• $28.67 from my loose change jar - I save all of my loose change in a glass which I turn in when it reaches a certain point
• $20.00 from my dollar coin stash - When I have a few extra dollars and find myself making a deposit at the bank, I swap them for dollar coins and save them as an emergency fund for end of the month gas in the tank or other surprise expense

The next step in my "recovery" is to look for ways to make extra money. This week I am putting up Easter orders at a bakery I used to work at. That will be an extra $50 for the evening. Next week, I'm participating in a taste test which will earn me an $20. Its a start for the snowflakes.

Finally, I get to have an honest look at my spending habits. I was lucky enough to have a very nice gentleman buy me lunch today, which was a complete shock because I didn't know him. He apparently won on Keno and appreciated the fact that I talked to him. I still feel guilty about it. My kitchen is not set up for cooking right now. I somehow have lost my can opener. Don't ask me how. I have NO idea. The fridge is looking like a bad bachelor commercial. Its time to get real and time to put the plan together.

Day 4 Of 33 Days And 33 Ways To Save Money And Reduce Debt : Extra Payments Extra Deposits

No Credit Needed is posting a series on 33 Days and 33 Ways to Save Money and Reduce Debt. Day 4's topic is on making extra payments and extra deposits. The idea is to make extra payments because creditors calculate debt on a daily basis. I am a big supporter of this method, but it can also proove difficult if you do not already have an emergency fund in place. (Big red flag... this has been one of my greatest downfalls in my efforts to repay debt, but I'll get into that in later postings.)

I find that creditors are very supportive of receiving those extra payments, but I may have to explain what it is. Oddly, its my brokerage that seems to scoff at deposits that they don't deem as worthy. These brokers, who seem fresh out of school, must be able to make large deposits if they don't wish to be bothered by my attempts at saving. I on the other hand am quite happy when I can deposit an extra $25. One of these days, I will bring them a copy of "The Millionaire Next Door" by Thomas J. Stanley and William D. Danko to read. Until then, I just smile when they roll their eyes.

Some ways I've found extra money to make additional payments include housesitting/pet sitting, recycling cans for deposits, FSA reimbursements, mileage reimbursements from work, and e-bay sales. I am always looking for new ways to increase income.