Paying Off the Debt

I put 2 exercise DVDs up for sale on Ebay this morning and happened to think to check on them around noon today. Imagine my surprise to see that they both had bids on them for over $25 when I had made the starting price $7.50! As I investigated further I see that only 2 people have bid on these DVDs and the same person outbid themselves a couple of times. Both people joined Ebay May 3rd. It just seems fishy to me.

Who in the world would pay over $25 for an exercise DVD??? I will hold back my excitement at making so much money until I find out if it's legit or not.

I would really like to fully fund my IRA this year, but it doesn't look like I'm going to be able to do it. I currently contribute $2500 a year to it. I figured out that if I were to have the full amount withheld I would be missing another $56 out of both paychecks each month. My budget just won't support that.

I'm hoping that when I get my raise next year I can put all of that in the IRA. I think if I just keep my paycheck the same I won't even miss that money.

to reach goal #3 of getting our overall debt below $70,000 this year! That is definitely within sight! Now I'll have to come up with some new goals. Hmmm...putting on my thinking cap.

In Suze Orman's Women & Money book she lists 3 documents that every woman needs to have. They are:

- a will
- a revocable living trust with incapacity clause
- an advance directive and durable power of attorney for health care

A will alone is not enough if something were to happen to you. A will tells how you want your assets and material possessions to be distributed to your loved ones upon your death. It can also include who you want to have custody of your minor children. Almost every will goes through probate to establish that if is valid and a court order to distribute the contents of the will as stated. This process can take months or even years and cost a lot of money.

A revocable living trust is the most powerful of the must-have documents. Because it is revocable you can change it at any time. It is a living document in that it is in effect while you are living. Upon death, there is no probate period. The successor trustee (the one in charge after death of the trustee) signs an affidavit of the death of the trustee and then can sign papers to follow the trustees wishes as expressed in the living trust and will.

When setting up a trust make sure you fund it. To do this you must change the title of all property to be held in the trust from your own individual name to that of the trust.

What a trust contains:
- real estate
- nonretirement investments
- savings
- outstanding loans that have not been repaid

The trust should have an incapicity clause. This is in case you become incapable of managing matters while still alive. This clause will give someone of your choosing the legal authority to handle your affairs for you.

The trust will take care of your larger assets while the will is the place to state whom you would like to receive smaller assets that you have (family heirlooms, pictures, etc.)

An advance directive and durable power of attorney for health care is important in case we are ever physically incapable of speaking for ourselves. The advance directive will state the level of medical intervention you want if you are ever unable to speak for yourself. This is also known as a living will.

A durable power of attorney is someone you appoint that you trust to carry out your wishes if you are unable to speak. They will be your 'voice'. Put a lot of thought into your choice. It needs to be someone that is strong enough to stand against opposition by family that may not want to see your wishes carried out. Make sure that your entire family knows who you have chosen. This will avoid some hurt and angry feelings in the case of a tragedy when the news is sprung upon them.

I've changed my mind on what debt I'm attacking next with my debt snowball. I've decided to roll my credit card payment onto mortgage #1 instead of the car loan. The mortgage has an interest rate of 9.38% and the car loan is 7.09%.

I can have the mortgage paid off in March of '09 at the rate I intend on paying. My challenge to myself will be to pay it off even sooner with extra money I can save and find.

This mortgage is the one that has our taxes and insurance escrowed into the payment. They are the bank that decided they weren't paying our fall taxes and never notified us so we were turned into a collection agency. I'd really like to be done with them as soon as possible.

checking account, that is!

I got a bill in the mail today from the local hardware store that we get odds and ends at for our home repair projects. Normally I would have to transfer the money out of savings and into checking, write a check, then go to the post office to mail it. When I set up my Electric Orange account last month I put some of our home repair money in there so it would earn interest. So this time all I had to do was fill out a check form online and ING will send it first class mail tomorrow morning and I don't even have to pay postage! Nice!

If you're interested in checking out ING's Electric Orange account or their other financial services you can go to ING Direct. They are paying 4% on checking accounts and 4.5% on savings accounts right now.

It is official: our credit card debt is gone as of today!!!

I paid the remaining $208.85 on the Discover Card this morning. We are credit card debt free!!!!

There is light at the end of the tunnel...

It's been a while since I've been here. Life just seems to not want to give us a break.

DS#2 had another seizure on Tuesday. This time there was no doubt it was a seizure so he has lost his driver's license for at least 6 months. They did another EEG on Wednesday and found seizure activity on both sides of the brain. He goes for blood tests on the 3rd to test his Depakote levels and then we will have a follow-up with the doctor before DS#2 leaves to work at camp for the summer.

I had hope that with all the car accidents we had there for a while that that would be the last punch that life threw us for a while and we could relax. Guess not!

Let's see...financial side of life is going okay. I had to draw out $500 from our EF so that I can pay my insurance deductible on the car, so that's back down to practically nothing. But on the bright side the last Discover Card payment will be made in a couple of weeks. Then I'll snowball that payment to my car payment.

I am very close to goal #3 of having our overall debt below $70,000 this year so that's encouraging.

DD#1 is done with her 2nd semester of college. She will begin doing data processing for the summer for a local company in a couple of weeks. DS#1 finishes his semester in a couple of weeks and is coming home and hopefully can get his job back at the grocery store.

Now that the Discover Card balance is down to $208.85 I'm scrounging around for every penny I can to get it paid off ASAP. Today I am depositing $5.50 of pennies and dimes to add to the payment. I can't wait to have no credit card debt! Because of the Easter weekend there was no overtime money in DH's paycheck to put toward the payment this week.

I am still using my parents' car since mine is at the body shop awaiting parts. There was a delay with the insurance so no work has begun on it yet. I hope to have it back in 2 weeks. Our EF will take a $500 hit when the car is done, but I keep telling myself that's why we have an emergency fund.

My Chase Freedom card is working well for me. I've earned over $70 in cash-back rewards since I opened it in November. I just started having our utilities billed to it each month, so that should start racking up some points. I'm goint to wait until I reach $200 to redeem them so that I get the extra $250.

Now that the credit card payoff is within sight I need to decide which loan I'm snowballing next. Should it be mortgage #1 or the car loan?

I have gone back and forth on this decision, but I'm leaning toward the car loan right now.

The mortgage has a higher interest rate than the car loan and has a lower balance. If I were to snowball into that loan it could be paid off in 2008.

But my thinking is that the car loan is for something that depreciates quickly and if we were to have to get another car and this loan were not paid off we'd be rolling a lot of money onto another loan.

What would you guys do?

Once you have your 401(K) funded up to the company match you need to look at additional ways to fund your retirement.

Traditional IRAs: These retirement accounts are funded with pre-tax money. You do not pay taxes on the money until you withdraw it. There are certain requirements you must meet to open a traditional IRA that are based on income levels. The amount you can contribute each year is $4,000 if you are below age 50.

Roth IRAs: This type of retirement savings account has only been around since 1998. This type of account is funded with money that you've already paid taxes on. So upon withdrawal, the money is tax-free. This money (what you've personally invested, not the earnings) also is available any time you might need it without penalty. This should only be done in a true emergency though.

The maximum you can contribute to a Roth IRA in 2007 is $4,00 if you are below 50 years of age. The limit goes to $5,000 in 2008.

Accident #4 happened last night.

Recap for those that missed my life of excitment the past month:

- DS#2 was run off the road and ended up in a ditch after having his car for 3 days
- DS#2 had a school bus back over his car on his 17th birthday. The car is totalled.
- I wrecked my SUV on the way to work on Friday

And last night....DD#1 and DS#2 (who have been driving Grandma's car since we're a little short on vehicles right now) drove up to see Grandma (who broke her foot and ankle in 3 places a couple of weeks ago! Anyone else seeing a pattern here?! LOL!). Anyway...on the way home, IN TOWN, a deer ran out from a yard and right into the side of Grandma's car!!! The passenger door no longer opens and it took the mirror off the door.

Will this ever end??? Will we ever get back to a "normal" life?

I'm going to go now and tell DS#1, who is at college, to go hide under his bed for a week or so.

We hit the jackpot today when we got our mail! Our long-awaited state tax refund was there AND DH's check from Prudential for the cash value on his whole life insurance! So totally we had $6252.09 in our mailbox! A nice little sum, indeed.

I got right to work and started assigning each dollar a job. It really wasn't that hard though. The $901 from the state is being held to pay for DS#2's replacement car this week. He'll reimburse us when the check for his totalled car comes in the mail. The rest of the money went to pay the Discover Card almost off. There is $208.85 left to pay on that and then that debt can be retired. Woo hoo!!!

A very good mail day.

...and this time it was me with my beloved Equinox.

I decided to head into work early today to get in some extra hours and maybe come home a bit earlier since everyone else has Good Friday off.

Winter had returned to our area and the plows had not been out on the roads yet this morning. I came around a bend, only going 35 mph because the roads were so bad, when I hit a patch of ice and just totally lost control. By the time I landed in a deep ditch I was facing the opposite way of the direction I had been going.

The car was almost totally on the driver side. I had to be helped out of the passenger door by one of the people that were following me. The first thing they asked was if my neck hurt because the impact was so hard.

It's amazing that the car really doesn't look bad at all. The most damage is up front, but it's not crumpled at all like you would expect. The driver's side that it landed on is not messed up at all that we could see.

I am sure I'll have some bruising. I can already feel some aches and pains.

So my car is now keeping DS's car company at the body shop. This will hit our Emergency Fund with a solid $500 punch.

Good news on his though...they did total it but the bus' insurance has decided to give him over $1900 for it. We have no idea why they went from $800 to $1900, but they did!

More from Suze Orman's Women and Money Month Three:

Do not touch your retirement money before you reach retirement age.

Two common mistakes that people make that put their retirement years in financial danger:

1. taking out a loan:
- If you are ever laid off or change jobs, you normally have to repay the amount left on the loan within a few months of leaving. If you don't have the money to pay the loan off, you owe a 10% penalty as well as income tax on the withdrawn money
- You end up paying taxes twice on the money you withdraw. The money you use to pay back the loan is after-tax money, and when you do withdraw the money at retirement, it is taxed once again.

2. cash-outs:
- There are 4 options for your 401(K) when you leave a company:
- if you have at least $5,000 you can keep the money in the plan
- move it to your new employer's plan
- move it into an IRA rollover account
- take the money in cash
Never take the money in cash. You will owe a 10% penalty and income tax on any money you withdraw before age 59 and a half. You may think you need the money now, but think ahead to how much more you will need it in the future.

Notes from Suze Orman's Women & Money book:

- if you have at least 10 years until you retire, your money belongs in individual stocks or stock mutual funds. These give you the best chance to earn more than the rate of inflation. The historical average annual rate for stocks is more than 10%. Bonds average less than half of that and savings accounts even less.

- if you want a maintenance-free plan choose a lifecycle fund. Choose a fund that has a retirement year in the name that is close to when you plan to retire. The fund will automatically hold and adjust to the right types of investments based on the number of years until retirement.

- if you want a more "hands-on" involvement go for index funds. These types of funds strive to follow the performance of popular market benchmarks such as Standard & Poor's 500.

While on the ING site this weekend I was looking at their list of accounts and got interested in having a chceking account that earns interest. The one we've had for almost 20 years at our local bank does not have that option. Lately our balance in the account most of the month has been quite high since I've instituted a new bill paying schedule. Why not make some money on the balance?

I came to the forums and read what others had to say about the Electric Orange account and then decided to give it a try. I decided to try using it to pay the credit card bills each month and also to keep the money there for budget categories that don't get used as often (yearly tracfone bill, clothing, etc.).

I am hesitant to put the money for things like the car payment and mortgage there since I have coupons I'm supposed to send in with those payments. I don't know how that would be done. ???

I set up 2 automatic deposits that will be made biweekly to Electric Orange. DH gets paid weekly and I get paid biweekly. So one amount will be automatically transferred on the weeks that I get paid and another amount on the weeks only DH receives a check.

I feel that this is another step forward in managing our finances.

Month 3 of Suze Orman's book Women & Money focuses on retirement investing. She starts by telling us to focus only on what is in our power to do today. Don't worry about setting aside a larger amount of money than you can right now.

If you have to decide between setting aside money for your children's college education vs your retirement, you should save for retirement. If you don't retire with enough money to fund your retirement, you're going to be a financial burden on your children. It's best for them if you put yourself first in this area.

The earlier you start to save, the more time your money has to grow. You have to start saving and you need to do it now.

If your employer has a retirement plan (401(k)for corporations or 403(b) for nonprofits), you can designate how much of your paycheck goes into your retirement account. It will be automatically deducted from your paycheck and deposited into the retirement account. This money is taken out of your paycheck before taxes. It will not be taxed until you withdraw it.

Employer's generally match the amount you contribute up to a certain percentage. This is free money and should not be passed up. Make sure you contribute the maximum that your employee will match.

We have to decide if we want tax withheld from DH's cashout payment from his whole life insurance. My thinking right now is not to have the tax withheld because I think that we will have more than enough in our normal withholding to cover it.

We got a much larger refund this year than we expected because of the 2 college kids so I think that that money will more than offset the taxes owed on this amount.

DH called Prudential last night to have them send him the surrender papers for his whole life insurance. Of course, they were not happy and gave him a hard time about it. He finally told them that they might as well not waste their time going through all the numbers, just to send the papers. So I should be getting a fax at the library today and hopefully we'll be able to fax them back tomorrow. Hopefully the cash value check will arrive within the next month. Soon the Discover card will be paid off!

After reading the glowing reviews for You Need a Budget here in the blogs and on the forum, I bit the bullet today and bought the pro version. I didn't have a lot of time to play with it before I had to leave for work, but I did get the budget part entered and started adding income and expenses.

I'm hoping this will work well for me and that I'll be able to get rid of my paper budget. It's getting cumbersome and I'd love to simplify and have it all before me on the computer screen. Right now I am keeping track on paper and then spending at least an hour each month transferring it all into Excel to generate the reports I like to use to track our spending and net worth.

Here are 2 pictures of the bus damage done to DS's car when the bus backed over him:

and....



The guy that went and picked it up on his flatbed is pretty sure that the insurance adjustor will total it.

Well, it appears that our GE refrigerator might be fixed after waiting 15 months for them to do the repairs ordered by the class action lawsuit! We will know tomorrow when we test out the ice dispenser. I can hear it making ice cubes, at least.

The repairman came today and spent over 2 hours getting the new doors on and all the other things installed. The water is working so far, but I'm not holding my breath. It's always been a toss of the dice as to whether the water would come out when you wanted it or not. We'll see...

Yesterday was DS#2's 17th birthday. He just bought a car 10 days ago and has not even made one payment on it yet.

He had taken the car to Vo-tech so that he could replace the brake pads for the inspection he had scheduled for today. At the end of the day he was following the bus he normally rides on out of the parking lot when a kid along the street threw a snowball at the bus. At that point the vehicles were stopped. The bus driver put the bus in reverse to back up and yell at this kid. She did not realize that DS was behind her and she BACKED UP ONTO HIS CAR!!!!!!

DS said at first he thought he hadn't done his brakes right and that it was his car that was moving! Then he realized what was going on. The kids on the bus were screaming at the driver to stop as they watched the car get crushed. It pushed his car back along the road before she realized what was going on and stopped and then drove forward off of his car.

The car is most likely totaled. It was a '95 Toyota Corolla. He had no coverage on his own car, but I'm assuming since this was definitely the bus driver's fault that the bus garage's insurance will pay him for it.

He bought it for $900 which is much less than book value for it. I'm hoping he gets book value since he has put a lot of work and money into it. That way he can pay it off and also get another car.

What a birthday present!

We received a letter today confirming that Zander received our payment for DH's term insurance, that it is now in effect, and that we can now begin the process of cashing in his whole life policy. Yeah! The cash value on his policy is over $4600. That will take a big chunk out of what we owe on the Discover card!

The second month of Women & Money focuses on credit cards and your FICO credit score.

Suze's aims in this chapter are for women to:

- have 1 credit card in your name only
- check your credit card statement every month
- avoid extra fees and high interest rates
- make it a goal to pay your credit card bill in full each month
- know the difference between good and bed debt
- have a plan to pay off old credit card balances you've been carrying
- understand how important a good FICO credit score makes in your financial life
- learn how your credit reports work
- check your credit report annually

My Chase Freedom card that I use for gas, groceries, and utilities is in my name only. I also pay the balance off every month. I check it on-line several times a month to make sure that charges are mine and nothing else has been charged. It has no fees and no interest for a year.

I have a set amount of money that I pay on the Discover card each month to get that paid off ASAP.

I learned the difference between good and bad debt in my Personal Finance class last year and I know the importance of a FICO score. Last year I ordered a credit report and got my FICO score. Wish I still remembered what it was, but at that time it meant little to me so I didn't pay much attention.

I need to work on learning more about how my credit reports work and need to remember to check them at the end of the year.

I have noticed a trend since I first joined Saving Advice last October. At that time I was not saving any money at all and it seemed like I was barely able to pay our bills at the time. It seemed that we were losing the battle of treading water and were beginning to go under.

Since I have joined, our bills have not really changed much, but I took to heart the advice of "paying yourself first". I started setting aside $5 a week out of DH's paycheck. Over the months that has grown to $25 a week for an upcoming vacation/birthday trip, $20 a week for an emergency fund, and $50 a month for the Ameritrade Save Yourself plan.

Where did I find that money? I have no clue! I just decided that it needed done and started doing it. I seldom miss a week now that I don't set aside money in all the savings areas.

I have also found that the easiest money to save is the account that I have set up to be transferred automatically from our checking account each Friday. If money is tight one week I am liable to not put the Emergency Fund amount aside because it's not already scheduled. But the payment that is scheduled is made each time. It's just easier to sacrifice money in one of my less important budget categories than it is to change the automatic transfer.

My advice: pay yourself first. It really does work!

Suze Orman walks women through a 5-month process for gaining control of their financial lives in her book Women & Money.

I want to make myself walk through this plan one step at a time. I quite often tend to dwell on those steps that are easy for me and skip altogether those that I struggle with or that take too much energy.

The first month's focus is checking and savings accounts. The assignment is to:

- learn how to read the statement and balance your checkbook
- stop paying for checking services
- know the difference between checking and savings accounts
- appreciate the importance of savings accounts to financial security
- earn the highest savings account interest as possible
- use an automatic investment plan to build a savings account to cover 8 months of living expenses
- open a savings account just for yourself in addition to a family account

I already have conquered all of these requirements so no need to spend time on these.

I am officially registered to take the summer semester Accounting Applications course that I was supposed to take this semester. I ended up having to drop out of it this semester because I didn't know what was going on with my health and was afraid I wouldn't be able to finish it.

Now that my health seems to be heading back to normal again, I took the plunge and registered. The class starts May 21st and will cover Quickbooks and Turbo Tax. I use Quickbooks every day at work but it will be nice to know more of the ins and outs of it than what I know now.

I must admit it has been very nice not taking a class lately. I've gotten lots of reading done but I'm ready to hop back on the education wagon!

Okay, since I read Suze Orman's Women & Money I've been thinking more about our need to get a will and living trust done. We've been saying for YEARS that we needed to get a will drawn up but I had no idea until I read this book what a living trust even was.

Through our library district we have access to legal forms that you can download and fill out. I looked tonight and they have wills and living trusts. These documents are tailored for your individual state. So I downloaded both but haven't had a chance to look at them yet.

I will have to take a look this weeekend and see what all it entails and do a bit more research.