Your Money Relationship

Debt Update: October 31, 2009

Chris — Sat, 31 Oct 2009 13:00:07 +0000

Well, it’s been about 4 months since I shared with you our debt problems. I figured that it would be beneficial if I made a spreadsheet of what we have paid off to date. So here you go!

In total, we have paid off $4,465.99. Not bad but definitely not gazelle intense. There were quite a few “emergencies” during that time, so that could be the reason for such a lackluster performance. Here is a list of some things to slowed us down over the last 4 months:

We saved up a $1,000 emergency fund
The Mrs. needed $500 in car work
My car needed work at $600
New car registration for $400 (included inspection and 2 year registration)

In the next few months, we should have quite a bit of extra money to throw at debt. It should be interesting to see what happens!

Debt Update: October 31, 2009

Cash Is King, But Do You Really Spend Less When You Pay With It?

Adam — Thu, 29 Oct 2009 13:00:57 +0000

I listen to The Dave Ramsey Show almost every day when I am walking to work. One of his favorite phrases is that “Cash Is King”. He also argues (with good references) that people spend more when they use credit. He states that a recent study found that individuals typically spend 12-18% more when they use credit vs. cash. It’s hard to argue numbers like that, but I am going to try!

Cash Burns a Hole In My Pocket

Yeah, you read that right. Cash burns a hole in my pocket and I always find something to spend it on. Whenever I carry cash, I just think of it as play money. It’s something that I can just take into a convenient store and spend until it’s gone. It’s just begging me to spend it! So, in the past few months, I have stayed away from cash and it’s devilish qualities. But why was I like that with cash? According to Dave Ramsey, it was supposed to help me curb my bad spending habits.

Credit Is Just As Bad

Back in the days when I was still using credit cards, my problems were just as bad as they were with cash. Everyone knows that easy access to credit can get you in deep trouble. To be honest, it got me in trouble quite a bit. I was buying things I didn’t need and adding things to the cart because I could. I guess you could say that I did spend more because I used a credit card. I spent more because I knew it wasn’t coming out of my checking account.

What’s The Answer?

I knew there was no way that I could handle the cash envelope system. It was just too tempting to grab some cash out of another envelope and spend it on something else. I know a lot of you are going to say that I had no self control, and I can tell you that you are probably right. However, I wanted to fix the money problems and I took the necessary steps to correct them. Today, we solely use our debit card and checks. We also are using a software program that allows us to spend all of our money on paper before the month is even over. Ever dollar is accounted for and if we spend more money on another category, we have to cut back on something else. It’s working for us and it seems like the ways of the past are gone!

Do you see a difference when you use cash vs credit? What works best for you when it comes to spending temptations?

Cash Is King, But Do You Really Spend Less When You Pay With It?

Good Debt vs. Bad Debt: Isn’t It All Bad?

Chris — Tue, 27 Oct 2009 13:00:48 +0000

Debt has become a common thing in the average American’s life. We take out loans to buy big screen TVs. We borrow money to get shiny new cars. We even borrow money to get our own money. When are we as American’s going to get to the point where enough is enough? Personally, I got to that point a few months ago. However, there is always the argument of good debt vs. bad debt. So, what’s the difference between good debt and bad debt?

Good Debt

Technically, good debt is debt that will create some type of value in the future. For example, you go to college (and take out student loans) with the thought that you will make more money over your lifetime because of a degree. In other words, by going into debt to get a degree, you will have a larger income than by not having that degree.

Mortgages are also described as good debt because it is something that increases in value and there are tax incentives on the debt (deductions, credits).

Some individuals also believe that going into debt is good if you can get a higher return somewhere else. For example, if you can get a 4% loan and earn 8% in the stock market, you should borrow the money. Is there such a sure thing though? I don’t think so.

Bad Debt

Bad debt is debt that does not give you any type benefit towards your financial being or create value. For example, if you use debt to buy consumer goods and you don’t pay it off at the end of the month. You will be paying a lot of money (in the form of high interest rates) over the long run. Bad debt can include vehicles, credit cards, payday loans, etc.

Isn’t It All Bad?

I am a believer in Dave Ramsey who says that all debt is bad (other than a 15 year fixed rate mortgage). While I was in school, I believed that student loan debt was a fact of life and it would definitely pay off in the end. Thinking that caused me to take out student loans and spend my income (however small it was) on frivolous things. If I just would have spent that income on education, we definitely wouldn’t be in the predicament that we are in. Looking back, I don’t think my student loans were ‘good debt” no matter how much additional income it will help me get in the future. The stress alone is probably going to knock off 10 years to my life!

I am guessing that there is going to be some pretty good discussion on this topic. This is one of those areas that’s just like politics. Either you’re on one side or the other and neither likes the other. Please share your thoughts!

Good Debt vs. Bad Debt: Isn’t It All Bad?

Great News! We’re Back In Business!

Adam — Fri, 23 Oct 2009 12:00:20 +0000

Woohoo!!! The time has come! After a long hiatus, I have finally been granted permission to continue the site. I thought this day was never going to come! Well, it’s here now and I cannot wait to get going again.

Look for some new material next week from Chris and I. He has been stockpiling articles and I will release them in a somewhat methodical way. They are great and I know you will enjoy them. His story is one that I hear frequently and I hope his journey can help each and every one of you. I will be posting too, but probably not as frequently as him. I will be focusing on getting posts ready for the upcoming tax season. I hope to give you a one-stop site for all of your tax questions for next filing season over at The Simple Tax.

Finally, I want to thank you for sticking with me and remaining a subscriber (if your not one, shame on you ).

Great News! We’re Back In Business!

Carnival of Personal Finance #219 – Little League Edition

Adam — Mon, 24 Aug 2009 12:00:10 +0000

Welcome to the 219th edition of the Carnival of Personal Finance! My name is Adam and I am VERY pleased to be your host. I have been dying to host this carnival and when I found out I was on the list, I was ecstatic. I have decided to base this weeks theme on little league as they are currently playing the Little League World Series. Many of us have played little league, have kids playing it or just love the game. I was surrounded by it my whole life, living 15 minutes south of where they host the annual Little League World Series in South Williamsport, PA.

: Lamade Stadium is located in South Williamsport, PA. This is where they host the Little League World Series each year.

Editor’s Picks

M is for Money helps you decide What to Do When Your Partner Doesn’t Care About Money. Luckily, both my wife and I care dearly about our money situation. It’s great to have that other person to talk to.

Beyond Paycheck to Paycheck presents Bank Fees and Billing Errors. I bet this bank is wondering why they are losing customers. Do companies not understand that their income comes from it’s customers?

Weakonomics wonders What Kind of Saver Are You? I think that my wife and I are “Sweepers”. We low spending ever dollar on paper every month. However, we never use credit cards. Does that make us a different kind of saver?

Darwin’s Finance shows you The Cost of That Puppy in the Window. Ever think that a dog could cost you $100,000+? This post gives you an extremely detailed view of the cost.

: Team Japan

The Little League World Series includes 16 teams from all over the world. There are 8 teams from the USA and 8 others from Canada, Japan and more. The USA teams are automatically guaranteed one birth in the finals.

Frugality

Punch Debt in the Face says Go Little or Go Home.

Man Vs Debt shares with you 25 Essentials That Are Better and Cheaper to Make at Home.

Free by 50 gives you some reasons Why They Don’t Like Giving Friends a Ride to the Airport.

Money Under 30 presents Confessions of a Textbook Salesman.

Budgeting

Bucksomeboomer’s Financial Path to Retirement presents 5 Free Budget Tools.

Wisebread talks about Using Prepaid Gift Cards for Modern Envelope Budgeting.

The Little League World Series began in 1947 with just a few teams from Pennsylvania. To no surprise, a team from Williamsport, PA won the first World Series title.

Credit

Ask Mr Credit Card has some new Updates to the Credit Card Bill of Rights.

Credit Card Offers IQ has 10 Super Cool Credit Card Offers (You’ve Never Heard Of).

The Smarter Wallet shares with you a Review of Equifax Products.

Funny About Money talks about Toothless Credit Card Consumer Protection Laws.

The Digerati Life shows you How to Use Secured Credit Cards to Boost Your Credit.

Funny About Money talks about the Toothless Credit Card Consumer Protection Laws.

Rabbit Funds share with you his Review of Credit Karma.

Accumulating Money has some Tips on Improving Your Credit Score.

Career

FiscalGeek shares some tips on How to Boost Your Income for a Season.

MoneyNing lets you know What to Do When You Hate Your Job.

Budgets are Sexy presents A Day In the Life of a Poker Player.

Bargaineering presents Get Towed Twice a Year.

MoneyMonk wants to know What is “Upper” Middle-Class?

Every umpire at the Little League World Series is a volunteer. Now that’s what I call dedication to a sport!

Finance

Doughroller shares with you 11 Simple Ways to Improve Your Credit Score Today.

Fine Tuned Finances talks about the Lending Club Scam.

Fiscal Fizzle presents Extremes in Personal Finance and the Conventional Approach.

FIRE Finance presents Free Money – Online Bank Account Signup Bonuses .

TIPBlog presents Alternative Income Streams.

Investing

Redeeming Riches presents Who Can You Count on For Retirement.

Good Financial Cents presents How To Survive a Stock Market Crash.

Affine Financial Services presents The Three-Minute Portfolio.

The Canadian Finance Blog presents Dividend Funds That Don’t Pay Dividends.

Investing Toolkit presents How To Find A Good Mutual Fund.

Prime Time Money presents My 403(b) Rollover to a Traditional IRA .

Saving to Invest presents How to Invest in Mutual Funds.

Don’t Quit Your Day Job presents How Does Your 401(k) Stack Up?.

Financial Highway presents Emotions and Investing: 4 Tips to Keep Emotions Out of Investing.

The Incidental Economist presents Need For Risk: The Details.

In 2007, there where over 2.2 million kids playing Little League around the world. There were also over 350,000 softball participants. Little League is a great organization to get your kids involved in.

Money Management

Mrs Bankrupt from Mrs Bankrupt presents 5 Ways to waste money.

Banker, Saver presents CD Ladder Basics: Diversifying With Certificates of Deposit.

Free From Broke presents Americans To Spend Less This Holiday Season.

My Dollar Plan presents The Best Bank for Your Money.

Help for Your Personal Finance presents How And When To Refinance A Mortgage: Rule Of Thumb.

Saving

My Findependence Day presents How Much Should You Spend When You Travel?.

Personal Finance By The Book presents Do it Yourself Car Transactions Can Save You Thousands.

Saving Cents in the City presents Lessons I Could Learn from My Younger Self – Value Work.

PennyJobs presents In the Eye of the Storm, Get a Jump on Frugal Living and Start Saving Today.

Other

The Happy Rock presents 13 Simple Tips To Make Tent Camping Easier And More Fun.

Personal Finance Software Reviews presents Weekly Envelope Review – Personal Finance Software.

Wealth Pilgrim presents Funeral for a Friend.

Provident Planning presents New Covenant Giving: Give with Sincere Desire and Love.

Christian Finances presents 10 best tipping celebrities.

Amateur Asset Allocator presents Mortgage Life Insurance Is A Rip-Off.

One Money Design presents How Web 2.0 and Bloggers are Helping People Thrive in Personal Finance.

The Frugal New Yorker presents Time Management: A Better Way.

Green Panda Treehouse presents Weighing the Pros and Cons of Home Ownership.

The Little League World Series will continue through this week with the Championship game taking place on Sunday. Be sure to check out this great tradition with various games on ABC, ESPN and ESPN 2.

Thanks for letting me be your host this week! I hope you enjoyed all of the great articles!

Carnival of Personal Finance #219 – Little League Edition

Be Back Soon (Hopefully)!

Adam — Wed, 19 Aug 2009 12:00:00 +0000

I just wanted to give you a quick status update from my world. Here is what happened in the past 4 weeks:

I got married to a beautiful woman
We went to Jamaica for our honeymoon
We moved into a larger apartment in the same complex
I started my new job and I am currently in Cincinnati for training

There you have it. Can you see why I wasn’t blogging? Well, there is another reason I wasn’t blogging either. This site may cause a conflict of interest with my new job. Therefore, I need to file certain forms to see if I can continue this site. I hope everything will work out and I will be able to get back to blogging by the end of next week.

So, I want to apologize to all of you readers for not having content that I know you are dying to read. I also want to apologize to Chris. Actually, I have been apologizing to him behind the scenes but I thought this was appropriate as well. He has been sending me plenty of articles but because of the new job, I have been unable to publish them. I hope to get them going again too as soon as I am back in business.

Anyway, I hope you continue to stick around!

Be Back Soon (Hopefully)!

How To Pay Off Debt: 3 Methods Examined

Chris — Mon, 13 Jul 2009 12:00:38 +0000

Debt sucks! You know that and I know that (although I wish I knew it sooner). But how do you go about getting rid of it? It can be overwhelming when you have $150,000+ in debt. Personally, we don’t really know where to start. We also don’t know how to keep the momentum going after we get started. So, we explored three different methods to paying off debt.

Debt Snowball

The debt snowball was created by debt counselor and radio host Dave Ramsey. With this method, you basically list all of your debts out in order from smallest to largest. You then keep making minimum payments on all of your debts but the smallest. You attack the smallest debt with all of the extra money that you have in order to get it paid off fast. Once you get it paid off, you then take all of the extra money and roll it over to the next smallest debt. In essence, you are making a “debt snowball” that keeps getting larger and larger after you pay debts off. For an example, let’s take a look at our debt (listed smallest to largest):

1) Best Buy Credit Card: $1,468.90

2) Personal Loan: $1,922.68

3) His Car Loan: $7,279.19

4) Her Car Loan: $8,673.10

5) Family Loan: $16,500

6) Her Student Loan: $48,763.88

7) His Student Loan: $66,070.88

So, for us, we would continue to pay the minimums on each debt but the Best Buy card. Once we get that paid off, we roll over everything we were paying on that each month into the next debt. That will continue until each debt is paid off.

Dave Ramsey argues that personal finance is 20% head knowledge and 80% behavior. So, he states that having these “quick wins” will help keep you motivated.

Highest Interest Debt First

Some people argue that Dave Ramsey is bad at math. After reading that post, I agree with the premise that it is better to pay the highest interest debt first. However, I do also agree with Ramsey that you need some sort of motivation. For example, let’s say that you have five debts: $2,000 on a 0% credit card, $2,000 on a 5% home equity loan, $6,000 on a 7% car loan, $6,000 on a 8% car loan, and $35,000 on a 29% credit card that is at the universal default rate. Common math says pay off the high interest credit card because you are losing A LOT of money. However, you would not pay off any of the debts fast. I think that we would get discouraged if we were in that position.

Now, let’s take a look at our situation. Here are our debts (listed from highest interest rate to lowest):

1) Personal Loan (10.9%): $1,922.68

2) His Car Loan (6.49%): $7,279.19

3) Her Car Loan (5.49%): $8,673.10

4) Her Student Loan (~5%): $48,763.88

5) His Student Loan (~5%): $66,070.88

6) Family Loan (0%): $16,500

7) Best Buy Credit Card (0%): $1,468.90

I’m not sure what the rule is, but the 0% Best Buy card will got up to something like 20% next year. I think that would mean we should move it up the list (the top?). Otherwise, the list doesn’t seem to bad to me. The only thing that bothers us is the family loan being toward the bottom. Our family member said it was alright to pay them whenever, but we feel that it needs to be ASAP. There is something about a family loan that just doesn’t sit right with us right now. It was something that we needed to do at the time (to avoid HARD financial times) but since we are able to pay now, it seems like the right thing to do.

Debt Tsunami

The debt tsunami is a debt reduction method that focuses on paying off debt in order of emotional impact. We really like this approach mostly due to the fact that we have a family loan. In the previous two methods, the family loan was placed toward the bottom of the pack in terms of when it is to be paid off. That’s not acceptable to us in the point in our debt reduction phase.

If it were up to us, this is how we would pay off our debts (emotional impact):

1) Best Buy Credit Card: $1,468.90 (mostly due to the fact that it will go up to 20% next year)

2) Personal Loan: $1,922.68 (we want to pay this next because it’s not much and will be a small victory for us)

3) Family Loan: $16,500 (like I said before, we want to get this paid off fast)

4) His Car Loan: $7,279.19 (after getting the family loan out of the way, we feel it’s best to pay them off in order of highest interest rate)

5) Her Car Loan: $8,673.10

6) Her Student Loan: $48.763.88

7) His Student Loan: $66,070.88

After some consideration, we feel that the debt tsunami is our best option. It allows us to pay off our family loan sooner and then focus on some higher interest rate debts.

How are you paying off you debt? What method to you use and why?

How To Pay Off Debt: 3 Methods Examined

Friday Feed Frenzy – Wedding Edition

Adam — Fri, 10 Jul 2009 05:00:49 +0000

Well, it’s time. Next Saturday is our wedding day! We are getting very excited for the big day and some of the stress is starting to melt away. If you don’t already know, weddings can be a VERY stressful affair (just ask my fiancee). After figuring out things such as seating charts, decorations, music selections, etc, we almost feel like it would have been better to get eloped. Well, it’s too late for that now!

Moving on, there were a lot of great posts this week. Here are some of my favorites:

MyLifeROI shares with you his three most influential lessons from his childhood.

Gen X Finance has a great post on how your home is not an investment.

Wealth Pilgrim shows you how Michael Jackson’s estate can teach you one great financial lesson.

Green Panda Treehouse breaks down their Costo membership and shows you if it was worth it.

Bargaineering gives you some ideas of how to hard reset your financial life.

Enjoy the reading and have a great weekend!

Friday Feed Frenzy – Wedding Edition

1 Year Anniversary of Your Money Relationship

Adam — Wed, 08 Jul 2009 12:00:32 +0000

Well, I just noticed that I started Your Money Relationship on July 2, 2008. That makes this site 1 year and 6 days old. So, I’m a little late but it has been a great year here and I am very grateful that I have made it this far. I know that it has been a weird year. I posted infrequently for a few months and changed the design of the site multiple times but I just want to thank everyone for sticking with me.

Looking Back

I wanted to share with you my favorite posts over the past year.

The Age of No Negotiation – After receiving so-so customer service from a big-box store, I question if customer service and price negotiation is dead.

10 Reasons Not to Pay For Your Kids College – Ever want to know some convincing reasons to not pay for your kids college education?

Should Your Forgo a Match From a 401(k) In Order to Start An Emergency Fund? – Would you pass up free money in order to be prepared for financial emergencies?

10 Things to Do When You Graduate Without a Job – Searching for a job? Follow these tips in order to get ahead of the game.

Are You Living ‘Within Your Means’ or ‘Below Your Means’? – Does ‘within your means’ mean you are living ‘paycheck to paycheck’?

Money Genie: I Grant You 3 Financial Do-Overs – What would you do if you could erase some financial mistakes?

Create a Financial Mission Statement to Stay Focused – Having trouble getting started with your financial future? Utilize this method to get focused.

Have Jobs Become Disposable? – Have the recent generations starting thinking of jobs as disposable?

5 Motivational Tips to Start Saving Today – Use these tips to kick your bad habit of not saving.

Looking Forward

As many of you already know, I have recently added another blogger to the site. His name is Chris and he is going to be blogging about getting out of $150,000+ in debt. I think Chris will add a lot of additional topics that I would not have otherwise covered.

I also look to be back to blogging at a faster pace once my new job begins in August. Up until then I will be pretty inactive as I am getting married next week and we are heading to Jamaica after that.

Once again, I want to thank all of you readers for the great conversations over the past year. I look to many more!

If you haven’t already, I encourage you to subscribe to the blog. By subscribing to this site, you can get FREE updates in your inbox daily. Why not give it a try? You can unsubscribe at any time and it’s FREE. You can subscribe via RSS or you can subscribe via email.

1 Year Anniversary of Your Money Relationship

Festival of Frugality #185 – Barbecue Edition

Adam — Tue, 07 Jul 2009 12:00:01 +0000

Welcome to the 185th edition of the Festival of Frugality! My name is Adam and I am grateful to be your host this week. After you are done reading these great frugal tips, be sure to poke around the site for some great information. Also, you may want to consider subscribing to the blog as we recently added a new blogger to the site (Chris) who will chronicle his journey out of $150,000+ in debt. You can subscribe via RSS or you can subscribe via email.

Over the past holiday weekend, it’s pretty easy to guess that you were at some sort of barbecue. My fiancee and I were at 3! Barbecues are a great time to eat some great food, spend time with family, and meet exciting new people. However, they are also a time to put on about 5 pounds!