Month: July 2014

Would you rather? The Car Version

I have been listening to a lot of Dave Ramsey lately. Love him or hate him, he’s gotten a lot of people out of debt.

I’ve taken some of his advice: 1) I have a $1000 baby emergency fund. 2) I’m trying to pay down my debt FAST. 3) After I pay off my debt, I plan to build up my emergency fund to about 3-6 months expenses.

The biggest way I’ve gone against his advice is by not focusing on one goal at a time. While I’ve been paying off my debt, I’ve been doing several other things. I contribute to both my Roth IRA and my 401(k). I’m saving to buy my car. I’m saving for vacations. I care a lot about interest rates and I’m using my credit cards for everything (Don’t worry! No Credit Card debt here!)

As I’ve been listening to Mr. Ramsey, I’ve started to question the distribution of my money every month. Am I spreading the money too thin? Should I be contributing to all these accounts when my money could be more effective hitting one target at a time? It was time for a thorough examination.

My retirement savings quickly made it past my questioning. I’m getting excellent returns in both my accounts. I’d be losing money if I diverted my funds. This is a Keep.

Maintaining my travel savings contribution was also an easy money decision. I need to travel. The world is big and I need to see it. I don’t want to go into CC debt because of travel… so I save.

I am, however, struggling with my decision to save to buy out my car at the end of my lease. I’m buying out the lease, that’s not the issue. The money is. Doing what I’m doing, which is saving about $320/month in my Car fund, is not making the most financial sense. If I diverted some or all of this cash, I could be making greater progress on my student loans.

Let’s study the numbers. The Pros and the Cons.

1. Student Loans.
I have approx. $30,000 left in student loans. My interest rate is 6.55%. My student loan interest is tax deductible, making my effective interest rate ~5%.

2. Car Fund/Car Loan
With no down payment, buying out my car will cost approx. $13,000 + taxes and other add ons. I’m expecting the taxes and fees to be about $1,000. So $14,000-ish. To pay for this, I’m going to take out a car loan. (Yes Yes, I know. More debt. Sucks.) I expect my interest rate on the loan to be between 1.5% and 2.5%. I plan to buy my car in January.

My savings account, where I put my $320/month, has an interest rate of 0.75%. Right now, I have a roaring $1770 in my Car Fund. I have 5 more months to build this account. If I continue how I’m going, I will have $3370 when I buy the car.

3. My thoughts.
I’d like to have some money down for the car. I’m not sure if that even matters, but I’d feel better about myself having something. The interest rates are telling me to dump all the extra cash on my student loans because my savings account isn’t doing anything for me and the car loan rates don’t really hurt me.

Pending your reactions, my plan is to cut my car fund to $1500 (a respectable amount down) and divert the remaining $270 plus $320/month to my loans. The amount I could add to my loans over the next 5 months would be $1870. That feels like savings to me.

What would you do? Help.

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2014 Goals– June Update

Happy July everyone! We are half way through the year.

Back in April, I wrote up my goals for what I’d like to achieve in 2014.

Here is how I am doing so far

Money Goals

1. Say Goodnight to $19,000 of my Student Loans. PASS!

Here’s a break down of what I’ve thrown at my student loans thus far.

Dec 2013- $525.86 (My first payment!)

Q1- $7282.36

Q2- $7564.82

Total: $15373.04

Over the last 3 months, I’ve been a bit underwhelmed by my monthly debt payment numbers. I was riding high on my tax refund and left over loan money, and I’ll be honest… I got a bit spoiled with extra large loan payments.

Well Hot Dog! Looking at these big picture numbers puts my payments into perspective. I had some really big numbers in Q1, but my total payments in Q2 are higher! And to think I doubted myself. Silly Kate.

Due to that pesky little thing called interest, I’ve been able to knock my debt down to $31307. A total of $14,023 PAID OFF! (which also means I’ve paid $1350 in interest.)

To pay off $19,000 this year, I only have $4970 left!  That’s an average of $828/month.  At my current pace (around $1800/month), I could reach my yearly goal by the end of Q3!!

New Stretch Goal: $23,000

2. Quarter Max my Roth IRA ($1375).  PASS!

I am slightly ahead of schedule with my Roth IRA. If I hit my goal early, I plan to throw any extra dollars on my loan.

3. Build a $2000 Emergency Fund. EVEN

Oops! I have barely contributed to my Emergency Fund in Q2. It is currently sitting at $1003.38.

HERE’S WHY! I’ve decided to buy out my car lease. Any extra savings lately has been going to my Car Fund. Currently, my Car Fund + Emergency Fund > $2000. I consider this a win.

Health Goals

1. Work out at least 12x per monthPASS! 

April, May & June each logged 12 visits to the gym. I’ve also gone on several long walks with the Hubs.

2. Complete my First 5k! PASS! 

Running has been a big success over here. I ran my first 5k over Memorial Day and finished under my goal time! Around that same time,  I briefly flirted with running a 10 mile race at the beginning of October. I decided to pass and run an additional two 5ks instead. If my training goes well, my final 5k also has a 10 Mile race so I could always upgrade.

It feels great to call myself a runner.

3. Eat Clean-erFAIL

I’ve been struggling in the eating department. I’ve managed to get Breakfast and Lunch under control but Dinner has been a battle. When I eat clean, I feel so much better. I need to remember this when I’m tempted to order the Bavarian Pretzel appetizer…. fail.

Random Goals

1. Take a pre-paid Road Trip. FAIL!

Welp. The travel bug bit again. The road trip fell through due to a bunch of places being closed for the year. We really struggled to find another trip that excited us. So we had a major change of plans. With a little help from Hubs’ parents, we will be going to Great Britain for 10 days.

Here’s hoping we don’t break the bank.

2. Learn more about Canada. EVEN

I should pick up a book to formalize my Canadian education, but at this point I’m just paying more attention.

One thing that surprised me was how many Canadian bloggers were deeply affected by the shooting spree last month that killed 3 police officers and wounded 2 others. It made me realize how desensitized Americans, including myself, are to gun violence. Perhaps that’s the side effect to the media constantly telling you that a shooting spree could happen at anytime under any circumstance. I hate guns.

3. Read 10 books. PASS?

I’ve read 5 books so far this year. 1 was a short story, but I’ll take what I can. Getting to 5 has been a beast I didn’t think I could slay. I started reading the Casual Vacancy by J.K. Rowling and I hated it. I thought it would get better and it didn’t. It took me a total of 8 months to get through it. (Perseverance eh?)

Technically, I’m a little behind schedule, but I know I’ll catch up now that I don’t have Krystal Weedon in my way.

_______________________

Overall, I think I’m doing pretty great. The debt numbers are surprising because I thought $19k was going to be tough to reach in 1 year (plus December).  Over the next 3 months, I plan to focus on improving my eating, planning a cost effective trip to London/Edinburgh, and reading books I actually enjoy.

Here’s to Q3!

How are you doing with your goals? Are you making progress? Am I a bad debt slayer for going on a 10-day trip to Great Britain?

 

June 2014 Recap

The Fourth of July has come and gone, and THAT is a bit alarming. July 4th is typically seen as the halfway point through summer, but after this past winter, I’m going to need at LEAST another 6 months before I’m ready for snow again.  Why can’t summer drag on like winter does? hmmm.

June was a good month for me. The Hubs and I were out and about for much of the month. We saw several comedy shows and attended an elite bicycle race (as spectators of course!). We spent 3 days at the bicycle race and I really enjoyed learning more about the sport. There is so much more to it than just “pedal like the dickens.”

Another big thing that happened in June was Hubs finally took charge of his medical situation. His back has been a major pain and our first attempt to fix it was to get him some new orthotic shoe inserts. It has been a bit of a learning curve for him to get used to these new inserts, but its going to help him in the long run. There has been a noticeable change in his demeanor now that we’ve taken care of his feet.

Summer is getting us up and out of the house. We’ve been able to find a lot of free or nearly free things to do in our area. There are a lot of free festivals, art fairs and random parks/walking trails to explore. The biggest budget buster has been due to the fact as we are out of the house from dawn until well past dusk, we are eating out a lot during the weekends. I guess you take the cheap entertainment with the spendy food options.

Money in June was good. Nothing grand, nothing meager.

I’ve settled into my smaller paychecks due to my increased HSA contribution.  Hubs was house sitting for 2 weeks in June and for that he was rewarded with a small chunk of change. This certainly helped keep the monthly loan contribution up.

…. and the numbers are…..

Debt Progress

End of May Debt: $33,036

End of June Debt: $31,307

That’s $1729 paid off this month!

By this time next month, there will be a big number 2 at the beginning of my debt. That’s so cool I can barely handle it. It’s crazy to me that 6 months ago, there was a big number four leading the charge.

Also, my smallest of the 3 remaining loans is almost gone. I have $2790 remaining. I should have that paid off by the end of August!

Debt repayment becomes much more fun when I’ve got major milestones within reach.

Debt repayment is also fun when it is full of fun facts. For example– The number 1729 is divisible by the sum of its digits.

1 + 7 + 2 + 9 = 19

1729/19 = 91

19 x 91 = 1729

According to Wikipedia, 1729 has another mildly interesting property: the 1729th decimal place is the beginning of the first occurrence of all ten digits consecutively in the decimal representation of e.

I’m a math geek. I don’t expect you to appreciate my nerdiness 🙂

How did you do in June? Do you have any major milestones coming up?