Saturday, December 09, 2006

Keep Saving after Credit Card Debt is paid

I've paid off all of our Credit Card debt. So now, what do I do with that extra $185 (plus the $200+ from Kim's part-time job) that I was sending the credit card companies every month?

Yep, you guessed it, I'm going to save it. Or, most of it anyway.

The money from Kim's part-time job is nice hunk of change, but it's not something I am counting on. Part of the agreement Kim and I made about her getting another job was that it was temporary and she would quit at the first sign of feeling over-worked. (While the job lasts, it will all be saved in the New House fund.)

But, the extra $185 a month that went to pay off our credit card debt gets to be redistributed in the budget. And, that's going to be fun!

A small portion will go back into our food budget to add a little variety, and provide us with occasional treats.

Things like herbal tea, Ruffles potato chips (a rare treat, but the best brand of chips out there), roasts, lasagna (high cost for the cheese and sausage), and steak were cut from our food budget. They can come back in now - on an occasional basis.

Another small portion of money will go back toward paying down our mortgage. Paying just a small additional principal payment can shave years off your mortgage, and save you money in interest payments.

By paying an extra $30 a month for 2 years, I've cut the mortgage back 3 years and 1 month. That saved me $3720 in interest payments.

The biggest chunk will go into our New House fund and be saved for a down payment and closing costs on a new home in the sticks. (I enjoy other people, their guests, friends, music, and pets the most when it's from a distance :-).

So, most of the money I freed up by not having debt gets saved.

Saving money is a permanent goal for me, and will always be a part of my budget. It's a truly satisfying feeling knowing I will have that money tucked away - ready for what we decided is most important to us.

Credit Card Debt Paid Off - was it worth the sacrifice?

I did it! I paid off all of our credit card debt. Hooray for us! (We did the happy dance yesterday, when I sent that last payment to Bank of America.)

If you read Tweak Your Financial Goals - 1 Year Mark, you know that as of November 7 (2006), I still owed $560 on the last credit card. I figured I would have it paid off in 3 months.

I was sending approximately $185 a month to that last credit card company. Now, that might not seem like a lot of money to some folks, but when you're supporting a family of 3 on less than $20,000 ($16,700 take home) a year it's a hunk of cash to come up with every month.

If you've done the math, you can see that sending $185 a month for 3 months pays off that $560, and that was my plan. But, when I made the November payment, I was so excited about being so close to my goal that I dug even deeper to pay it off early.

I made the November payment on the 17th, and by the 27th I came up with enough money to send an additional payment. Then yesterday (December 8th) I had December's payment a week early, so I made 3 payments in about 21 days..

How did I manage to come up with $560 in less than a month? I did two things.

One, I pared our living expenses down to the bone. That meant:
  • a cold house (turned the heat way down-this meant I could use some of the money I had saved for propane, because we would have more left for next year)
  • no treats or snacks in the food budget (we rarely eat junk food so that part wasn't too hard, but entres of ground beef, eggs, beans, soups, or pastas was boring at times)
  • no eating out (we don't do this often, but I even eliminated our once-in-a-blue-moon fast-food run)
  • no extra principal payments on the mortgage (I usually send in additional payments to accelerate our 30 year mortgage, instead I sent that money to the credit card company)
Two, my partner got a part-time job at a nearby grocery store. Now, this method of coming up with extra money obviously made the biggest difference in the short run, but it was the most challenging for me.

Kim had been talking about getting a part-time job for a while, but I was against it. I felt that she was already contributing enough by working 40 hours a week at her regular job. Also, I didn't think she would find a job that would allow her to set her own hours (she wanted to work one day during each week and Saturdays).

But, she persisted. She really liked the people at the grocery store where she does our shopping, and she believed that the manager there would let her work on the two days she had available. So, I figured it was worth a try. She was right. He hired her on the spot.

The hourly wage is low, and some weeks she is only scheduled for one day, but the $50 she makes on that one day made a huge difference in our saving ability. (And, she really likes working there.)

The job doesn't cost us much. It's only 5 blocks from home, so the gas use is negligible. She packs a lunch, or comes home to eat. And, she didn't have to buy any special clothing; it's a grocery store so jeans and tennis shoes are fine.

So, that's how we did it. Lots of sacrifice and some extra work. Was it worth it? You betcha! We are Free from debt (except the mortgage), and that feels really fine!

Wednesday, December 06, 2006

Organize your Kitchen

Cleaning out your kitchen cabinets and drawers might not be the most fun you’ve ever had, but it offers some real benefits.

  • An Organized kitchen
  • Less clutter; more space for everything; less breakage when rooting in the cabinets
  • Time savings – no more searching through a drawer full of utensils for the potato peeler
  • Money savings - you won’t waste money on duplicates or things you don’t need

Are you with me? Then let’s get started.

First decide how many dishes your family needs. If you have a family of 3 like I do, a service for 4 is enough. If you have a family of 6, a service for 8 will give you 2 extra place settings. If you have guests often, then you will want a few extra, but don’t have (buy) more than you need.

Why? Because the more dishes you have, the stronger the temptation to let them pile up. If you have just enough dishes for everyone, they will be washed quickly because they are needed. They won’t be piling up in your sink.

Now, open the cabinets that hold your dinnerware. This is where you will start. Once you get your plates, bowls, and glasses pared down based on your family size, other decisions come easier.

Take out any dishes that your family doesn’t (or rarely) uses. Do you actually use those small glasses? What about coffee mugs; how many of those do you actually use?

Do your plates all match? Do you want them to match? Pull out what you don’t use.

Second, move to the silverware drawer. You might want to keep extra forks or spoons. If your family is like mine, you have a problem with disappearing forks or spoons. So, pare down based on your family size (2 of each utensil per person), but keep extra disappearing utensils (we keep extra forks).

Third, tackle the preparation and cooking utensils. Take your time here and really think about whether these are actually used. Most of us have too many cooking and preparation utensils, and we don’t use most of them.

The cook in the family usually has a favorite spatula, slotted spoon, ladle, potato peeler, paring knife, and carving knife - and she/he doesn’t use anything else. But, count how many spatulas, spoons, peelers, and knives you have. Wayyy more than you use, I bet.

If you don’t use it, get rid of it. It’s just taking up space and making it difficult to find what you need.

Fourth - on to the mixing bowls. Unless you mix and bake several things at the same time, you only need 3: small, medium, and large. If you have several sets of mixing bowls, keep the glass bowls and get rid of the rest. Glass is best because it won’t react with anything you put in it, unlike aluminum (which doesn’t get along with acids).

Last, take a good look at your cookware. How much of it do you use? Does anyone actually use that little saucepan that comes in the set of pots and pans? I think my daughter has used ours for hot dogs a couple of times, but mostly it just takes up space.

If you get stumped along the way, or just have a difficult time letting something go, put it into a box and set it aside (in the garage or shed). If you find you need it, it gets to come back inside. If you don’t go looking for it, you don’t need it. Pass it on to someone who will use it (donate it).

There, now you have an organized kitchen. You can reach your mugs without knocking the glasses over. You're saving time because you know where everything is. And, you won't be wasting money to buy duplicates of things you can't find.

Tuesday, December 05, 2006

Christmas Gifts Coming in - old stuff has to go Out

Christmas is a great time to weed through all your "stuff." With everyone in your family getting gifts, a bunch of new things will be brought into your house, and you will have to make room for it all. This is also a good way to discover what you really need for Christmas.

Remember, if you want to be organized and clutter-free,
old things have to go Out when new things come In (unless you don't have enough for the basics).

I'm starting with the linen closet. So grab some boxes and let's get started. You're doing this with me, right?

It might amaze you to see how many duplicate linens you have. It surprised me, and I usually keep my belongings to a minimum. But, when I opened my linen closet, I had to ask myself, "How did I get so many "extras," and how many do I really need?"

For example, how many sets of sheets do I really need for 3 beds? I had 8 sets of sheets, plus 3 unmatched sheets. Two of those unmatched sheets were for a twin bed! We haven't had a twin bed in years.

I pared these down to 2 sets of sheets for each bed. One set for the bed, and one set for the laundry (this way you won't feel pressured to wash your sheets immediately).

I pulled the two oldest sets
(they were pretty worn) and the unmatched pieces. These went into my sewing storage for future projects (I crochet rag rugs, and sheets make excellent material for this). This left me with 6 sets, just enough.

If you find that you don't have enough sheet sets, put them on your Christmas list. Maybe someone will give you a gift certificate and you can pick out the sheets that match your bedroom decor (you could drop a hint). (Overstock.com is the best place to buy quality sheets at a real discount.)

How about pillows? How many bed pillows do we need? Four pillows for each bed is too many if you ask me, but everyone wants four pillows on their bed, so 4 for each bed it will be. Eight pillows is what we needed, 11 pillows is what I had.

The extra 3 pillows went into the trash. (They were too lumpy to be used, even as pet beds.) Need pillows? Put them on the Christmas list.

I figured we needed 2 blankets and 2 comforters per bed. One light-weight blanket and comforter for summer, and a heavier weight blanket and comforter for winter. We had an extra comforter that I pulled. This went into sewing material storage. It will make a great window quilt.

Winter throws; I had 2. I am making the third as a Christmas gift. (shhhh don't tell.)

Now, how about towels? Two towels per person is enough. One towel in use; one towel for the laundry. Six towels is what I had. The old towels had already been delegated to wet dog duty.

I had 10 washcloths, and only needed 6 (2 per person, one set for the laundry and one set in use), so the older, thinner washcloths will be used as cleaning rags.

That's it for my linen closet
(how did you do). I've pared down to basics, and cleared out space for Christmas gifts. Next, the kitchen cabinets.



Overstock.com, Inc.

Monday, December 04, 2006

Money Tips for Teens

  • Save 5% of All the money you get - Gifts, too.
    Saving 5% isn't hard, it's only a nickel out of every dollar. But the earlier you start saving it, the faster it will grow. So, when you need a hunk of cash to buy a car, clothes for the prom, or an expensive trip with your classmates, it will be there for you.

  • Have a Savings Goal.
    Are you saving for a car? The prom? A trip? Whatever your goal is, figure out how much money you will need, and start saving. Having a goal focuses your brain power, and makes it easier to save (It's cool, too. Watch your friend's reaction when you tell them you are saving for a car).

  • Open a Savings Account.
    You can open a savings account online or at a local bank. You will earn a higher interest rate with an online savings account. Either way, you will need to have your parents open the account for you if you are under 18. If you want to be the only one who can access your cash, then save it in your room somewhere. Just make a commitment to save, and don't touch that money until you've reached your savings goal.

  • Spend your money with a Plan.
    Take a minute to write down what you want to buy and how much it costs, before you go to the store. At the top of a piece of paper, write how much money you have. Subtract the cost of what you want to buy. Is there enough left for your 5% Savings (leave 5% at home so you can't spend it)? Do you have enough for the tax? It only takes a minute to write it down, but it keeps you on track once you get to the store.

  • Go online to find the Best Price.
    Always compare prices at different stores to find the best price for what you want to buy. You will be surprised how much you can save just by shopping at a different store. Try Froogle.com or pricegrabber.com for online shopping, or go to local store web sites like Walmart.com or Sears.com to find local prices. You don't have to buy it online, you are just checking prices.

  • Think of what you buy as an Investment.
    An investment is something you spend money on that you expect to last for a while. So, ask yourself how long this thing (that you are buying) is going to last. If it isn't going to last very long, like a pizza, don't spend much money for it. If it will give you value for a long time, like a CD player, then it is a good investment and spending more money on it is a good idea.

  • Don't Borrow Money without a Plan to Pay it back.
    Avoiding debt (owing someone money) is best, but if you do borrow have a plan to pay it back. Write it out on paper (writing always helps to focus your brain to work on your plan, even when you aren't consciously thinking about it). Can you work it off? Can you earn extra money recycling aluminum, cutting grass, doing laundry for someone? If you can't come up with a plan, don't borrow money.

  • Save all your Receipts.
    You just never know when something you bought is going to break, stop working, or just not work right. If you have the receipt, it's easy to take it back (most stores will give you your money back on defective merchandise for up to 30 days after you buy it). And, receipts are your record of what you spent your money on. With a record of your spending habits, you can go back and see if you are making good investments or bad ones.