Sunday, April 1, 2007

Free Wii

As someone who doesn't have money to spend on new toys right now, I'll take free ones! Uneasy Silence is giving away a Wii if you spread the word. Here's my entry.

Tuesday, March 13, 2007

Part 2 - The 250 Personal Finance Questions Everyone Should Ask by Peter Sanders

Here's part 2 of my self-evaluation while reading The 250 Personal Finance Questions Everyone Should Ask by Peter Sanders.

Chapter 5
My story of how I became entrapped with debt is probably similar to many others. It first started with being laid off, and trying to pays bills while living on unemployment alone. Bouncing around from job to job during the time when I got married and started a family. More recently it has been things like hospital bills, car repairs, etc. It seems that the problems never cease. I never really tried to manage it, other than moving credit card balances around to get the next great introductory rate until I got to the point where no one else would issue me a card. At this point my credit score was down, due to too many accounts, balances near credit limits, and little income. The only way I got out of this was by refinancing my house to consolidate the debt. Fast forward now to the present and things aren't as bad, however I've finally gotten sick of this constant debt and am ready to get myself out. I've paid the minimum balances for too long.

Chapter 6
Sometimes, it's tough to avoid big purchases. But when your car breaks or your only tv (and you're a tv-oholic), you need to replace them. Just make sure that when these situations arise, you are willing to take on the extra costs. Some costs probably aren't worth it, such as Extended Warranties, though in some instances there is a good reason, such as when I got my wife a new car. I felt safer knowing that she was covered in her car, in case of problems.

(to be continued)

Sunday, March 11, 2007

Part 1 - The 250 Personal Finance Questions Everyone Should Ask by Peter Sanders (ch 1-4)

I've started reading The 250 Personal Finance Questions Everyone Should Ask by Peter Sanders and am going to remark occasionally on what I'm taking out of it.

Chapter 1
In order to handle your personal finances, you are required to be aware of your finances, commit yourself and take control. Obviously, I am aware of the need to take control, as I've set up the this blog to help motivate myself. Commitment may be a problem for me as my record of starting and completing things isn't the best, which is another reason I've set up this blog. If it's keeping me accountable, I'll be able to stick with things. As previously posted, I've started taking control of my finances by setting up Microsoft Money 2006 Deluxe which gives me the awareness of my finances which leads to giving me the control to handle everything.

One thing not mentioned in this chapter was responsibility. As the only one bringing in an income in my family and as the main person who handles the finances, I need to make sure that everything is taken care of in terms of providing for my family.

Chapter 2
I've never had a budget; never wanted a budget. Probably because it would mean I have to be accountable to something, and as someone who likes the latest and greatest gadgets, I know some of my purchases would be hard to justify! While setting up my budget, the main direction I'll be heading in will be to first take my bills, and figure out what my obligations are. Next, I'll be able to figure out the daily necessities, discretionary purchases, and finally my surplus savings. With that as a starting point, I can figure out where I can add or subtract where needed, and as needed as life changes.

Chapter 3
Savings... Where do I start? Well, as someone who always likes to buy new toys, I really haven't had much in the way of savings. Leading by to my comment able being responsible, I'm going to need to start by building up an emergency fund. I do have a little bit of a long term savings provided through a 401k. In terms of short term savings, I guess our shoebox Disneyworld fund counts.

Chapter 4
This chapter has been the least useful for me so far. Most of my current accounts are already held at a big bank and I'm for the most part happy. I've had accounts there for nearly 15 years, so why change now? When I get to the point of building up a savings, I may shop around for the best rates, however rates aren't everything. You need to be happy with the service as well.

(to be continued)

Saturday, March 10, 2007

Computer tools to help

The last few days I've been trying to get myself organized. As I start out, I'm going to be using Microsoft Money 2006 Deluxe to track my accounts, bills, and budget. I've used previous versions of Money before, but haven't really kept up with it the last few years. This has lead to importing a bunch of data and trying to figure out how to break out purchases to categories. Some things are easier than others, such as seeing that a purchase that came from a gas station is "Gasoline", and purchases made at a restaurant is "Dining Out". This is a lot tougher when you have a $200 purchase from CostCo, where the individual items may be anything from groceries to electronics to jumper cables.

This is where I hope the NeatReceipts Scanalizer is able to help. I just ordered one of these after checking out a bunch of reviews and am anxiously awaiting it's arrival. My main goal for this hardware/software solution is to scan in receipts, use the bundled software to automatically itemize the receipt where I can assign a category for each item, and then import the results into Microsoft Money 2006 Deluxe. The NeatReceipts Scanalizer keeps a database of all your purchases as well as a scanned copy of the receipts so you can always go back and see exactly what you bought. It will also itemize sales tax, which since I live in Washington State I'll be able to deduct when it comes around time to file taxes. And as for my wife, she'll be happy that I can get rid of a lot of the physical paperwork laying around my cluttered office, since it can all be scanned in.

Once I've used it, I'll make sure to followup with a review. Especially since most of its marketing is aimed towards people who travel for work and creating expense reports, and that's a feature I won't be using.

Books to read

I've read a few finance type books in the past; many of the Rich Dad series. While I can take out individual pieces of information here or there, as a whole it's just a bunch of motivation to me, rather than a plan. Since I'm still trying to figure out the best financial plan for myself, I'm going to try and pick up some books from the library or from used bookstores, and has a good list of books to start with titled Building a Personal Finance Library: 25 of the Best Books About Money.

Friday, March 9, 2007

What can happen with a bad loan agent?

Believe it or not, not all loan agents want to get the best deal for YOU.

Someone had called me who claimed to be my mortgage's account rep asking how things were going. I was considering a refinance, to roll up the equity loan I have which has higher rates. My mortgage sits around $184,000 while my equity loan sits at nearly $43,000. I also mentioned that I was interested in taking about $5000 cash out. Current estimates of my house value are near $300,000, which gives me a little breathing room.

He initially told me I could get a 5.5% on a 30year fixed with P&I payments near $1485, and asked if I wanted to lock in which I said sure.

Once I got the paperwork and was able to read through it, I saw many red flags.

1. The interest rate he quoted was not what was in the paperwork. It was 6.25%.
2. Also he failed to mention that I'd need to pay for 2.875 discount points, which rolled into the loan so I didn't have to pay cash up front.
3. Instead of the $5000 cash I asked for, the paperwork showed him taking $19,000 cash out.

All these things caused the loan to go over the 80% loan to value ratio, which means I'd have to pay mortgage insurance as well.

On top of all this, as he is my account rep, I'd expect him to mention that my current loan has a prepayment penatly (which thankfully I remembered before continuing).

My lesson learned is to keep aware of existing contracts and read EVERYTHING (which I did). Also, make sure you ask every question you can think of, and never assume anything. If I would have just signed those papers and sent them back, I'd be even more upset over this situation that I already am, and possibly more in debt (with less hope to recover qiuckly) than I currently am.

Another new personal finance blog

Welcome to my new blog. I'm going to try and use this blog to help motivate me to get out of debt. But, before I actually go into the debt part of my story, I'll share a bit about me. I live in the Seattle area (where the cost of living is a higher than average). I have a gross income of around $65k. I'm married with 3 kids.

You might be asking why this is the "Dueling Debtors" blog? Well, you see the sentence from the previous paragraph that mentioned I'm married? Well, that explains it! Actually, neither of us really have been actively trying to manage our finances, and although we may say we're trying to watch our spending, I've found that without a budget, it really doesn't work well because it's too easy to cheat.

So here is what I'm hoping to accomplish with this blog:

1. Start watching (and organizing) my finances on a daily basis
2. Establish a budget
3. Start applying extra money towards debt.
4. Have fun