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I am not a big fan of borrowing money, but…I might be doing something right…

Indispensability & Salary

February 16, 2010 I read Seth Godin’s book Linchpin. At the time I worked in banking netting less than 50% my current pay. I knew that if I wanted to get my earnings up I’d have to switch companies and possibly switch careers entirely. I became increasingly more frustrated with where my future looked there. The next step up was assistant manager and even he didn’t make a whole lot more than I did.

Currently I enjoy my job, enjoy my team but I also feel like I’m not pushing myself hard enough to get promoted. So I need to become a Linchpin and use my skills to make me more valuable. Each week I need to set a smart goal like an hour a week. I’ll inevitably get hooked and want to do more but like the gym showing up is half the battle.

If I want to retire early or on time with a lot of cash I need to accelerate my annual earnings. If I don’t get promoted this year, I will be in the market to start looking for another company to work for. This is not something I want to do, but staying where I am for a long period will almost ensure I never get close to the the $100k gross target I want to hit by the time I’m 40. Then again I have almost 9 years until that happens. I just don’t want to screw things up for myself by getting comfortable.

At the same time…

• I have good work / life balance now. We have busy moments of course and I have to put out fires but I don’t have someone yelling at me each day to do something. Been there before and it wasn’t a good arrangement.
• My friends who make a lot more money than I do are way stressed out.
• Once I get Navient paid off I can accelerate the process of putting money aside for retirement. Like minimally $6k in the Roth and $8k
• It’s not all about money
• It doesn’t have to be an all or nothing approach, I could dabble or multiple things with minimal risk. Keep trying at it until something has a pay off.
• There’s always the possibility of being downsized. Doesn’t look likely, but life and business is fluid and you just never know sometimes….

A Story About Money & Dating

Recently had a bad experience in the dating scene. Well a couple recent, but this i the most extreme / recent one. A couple of issues…

1. Driving around with a suspended license, the result of an accident when he was 19. That was about 8 years ago and he still hasn’t gotten it taken care of. First sign of irresponsibility. My concern is he would be pulled over at some point and arrested on the spot. He needs to pay about $1k to make it right.
2. Driving around with no insurance on his car. Yet again another sign of irresponsibility.
3. No bank account. Said his identity was stolen at some point. He opened one up after I called him out on not having one at 27. I’ve had a bank account for about 15 years…
4. Didn’t finish college. Has a high school diploma, but still owes money for a few college classes he took but dropped out of. This means he is stuck at the one place he works for and little chance of growing future potential earnings elsewhere. When I first decided to see him I thought his act was more together that is was.
5. Tattoos – has a bunch and one in a very pronounced location that isn’t easy to cover up. He also wears a lot of makeup. So much three of my friends who saw our picture together commented on it.
6. Horrible credit. He wasn’t paying his student loan at one point and I wrecked his credit. So if it led to marriage and we wanted to lease an apartment together or buy a house with both of our names on it that would be be a huge burden.
7. Not even thinking about retirement. I brought up the idea of putting  $10 a week and his answer was basically that he didn’t have it to put aside…

After only a week we would get into heated discussions about dumb things. He thought  I needed to humble myself more when I consider myself very humble as it is. Just because I like to be in a safe neighborhood and buy nice things doesn’t mean I’m what I would consider uppity or bougie. His brother was in a gang and did jail time, he had to spend a night in jail once for some infraction. Talked about inviting me to a street car show where out of shape, scantily-clad women would prance around with cigarette burns. Really not my thing.

The moral of the story. Don’t date someone who isn’t on the same page about money as you are. Especially someone who is radically the opposite. I want an equal or someone I can aspire to be. Or at the very least, a guy I can see potential in.

Month 34 Update: Navient – $22,313.50, NMAC – 15,085.99 Total: 37,399.49

February 4, 2015 – Student Loan balance update.

So like I said I was going to get aggressive about paying the loans off this month. My tax return was about $2300. I made a $1000 payment on 1/15, $1447 on 1/30 and $452.76 on 2/4. So that’s 2899.76 in student loan payments and $279.37. So $3179.13 total. It was painful to spend that much on loans when there are other things I could be doing with that money. It was a necessary though if I ever expect to pay off these debts.

My total loan balance was in the 40s last month and now it’s the mid 30s. 25,137.39 to 22,313.50 so $2,823.89 down. I might not have a shiny iPad, 42″ television in my living room that will depreciate, expensive clothes or a fancy trip to say I went on but an 11% drop in my balance is nothing to scoff at. :) Just gotta keep up this momentum now.

Quick look back: Payments & Interest

So far…
Number of Payments: 109
Original Balance: $46,769.87
Total Amount of payments: $30,520.92
Amount applied to principal: $22,718.87
Amount applied to interest: $10,009.22
Current Balance: $24,200.02

I have this all in a table. I’ve come a long way. Still sickens me to know that I paid $10k interest for anything in my life. My car is 0% interest. I pay my credit cards in full to avoid paying $1 in interest. Yet the student loans. I managed to pay 5 figures in interest.

What you focus on is what you make a dent in. I’m about to make some huge progress on this student loan debt and am sort of giddy about it. Just shy of 2 years on the not super aggressive plan and and more like 12 months on the very aggressive one. Using all the money from the house, tax refund and my eventual bankruptcy settlement toward the loan. Don’t want to be irresponsible and I’m not sure I fully trust myself leaving it in a liquid account.

Things may be tight but I want to keep at this and not take another 13 years to pay off the loan. That is all.

So would you like 47 cents on the dollar?

A debt acquisition company sent me a letter in the mail last week. Basically I am entitled to over $2200 as part of the WARN Act settlement from the Purchasing Specialist position I held at the glass company before they files for Ch. 11. The question right now is basically when will I get my money. It could me 1 month or 12 months. No one is really sure.

I get this fancy letter talking bout how if I forfeit my rights they will mail me a check for about $1100 over the next 5 business days. It was tempting for a moment but I’ve already waited about 3 years for this to happen and who wants to lose 50% right off the bat just for being impatient. I certainly don’t, it’s giving away free money essentially.

I wonder how many desperate people fall for it, they just want the cash now. Who cares about the actual math… The fact they are willing to buy it also makes me think it will be sooner vs later. We shall see…

100% Debt Free? August 2017 or Earlier

So as some of you will recall I bought a new car back in June 2014. The car is great on gas (31mpg), comfortable, looks nice, allows me to easily pack the bike in the trunk. I’ve had a couple of unexpected expenses come up but I really do enjoy driving it each and every day. I don’t plan to sell the car and take a financial hit. I expect the cost of ownership to be very low and the loan stays at 0% regardless of how long it takes me to pay it off.

It did add about $16,762 to my overall debt which was previously at 29,719.74. As of my last monthly update my total debt was just over $40k.

One of my goals continues to be to be completely debt-free. It won’t happen before the age of 33 but I still want to try like crazy to get the student loan paid off by then. It looks more and more likely like at age 35 I’ll be 100% debt free. I don’t plan to buy any real estate until these big debts are out of the way.

The money will remain in a separate account and I’m basically hoarding it until I am able to hit the payoff amount at that particular time. My estimates are a lump payment of 10k which god willing I can hit by August 2017 or 31 months from now. The money will also serve as a large emergency fund since I don’t have as much set aside as I really should.

Speaking of that, I’m doubling up on my emergency fund. The $1000 I keep tapping into so I plan to keep an additional $1k buffer in my checking account. Right now it’s been going to 0 almost every month and I have to transfer $250 from the money market. This will also help me stop using credit cards and help curb my overall spending.

If I were to lose my job tomorrow, I’d be royally f’ed over. Only about a month of expenses set aside when I should have 3-6. No one else is going to bail me out if things go astray. My folks don’t have the money liquid and I don’t expect anyone I’m in a relationship with to just suddenly give me that money. As much as I just want to put everything toward the debt, I don’t have a crystal ball.

I also will sleep easier at night knowing I’m not one accidental overpayment or or two weeks away from financial insolvency. The loan isn’t worth ignoring common sense.

Credit Cards – Do I need to keep using them?

So Terri of Chasing Dreams left a relatively simple comment the other day.

And congrats on paying off that credit card. My suggestion – unless it’s the only one you have, I would say to now cut it up!

So I began to think about why I’ve been using the cards so much. Well through one of the store I frequent I get an additional % off if I use my card. In some cases that can be as much as 20%. In addition I get an extra % off thanks for my employee discount. So suddenly that $1000 has dropped to $600 instead of $750. Aside from my extra payment debacle that’s a decent chunk of savings. Though you are right, I did spend a little more than I might have with just cash / a debit card.

The other part is my Chase Rewards card. That has been my go-to for almost every single purchase for the last 8 months or so. So let’s look at the numbers:

2014 Chase Reward Redemptions

$316.73 in bonuses for using my card. Sounds pretty good right? That could be a nice flight somewhere or about 18 full tanks of gas at current prices. I don’t have how much I actually had to spend to get that back, but an argument could be made that is was more than I might have with cash / debit. Currently I get about 5% back on grocery store purchases with card and 1% back on everything else. When I buy gas at costco I also get the cheapest gas in the area and a few % back.

It’s not “free” money because the merchants have to pay an additional  percentage which in turn drives up what consumers pay, but I still like getting a kickback for something I would have purchased anyway.

Credit cards also have served as a buffer for when my cash reserves were low at various times.That’s not the way it should be, but it sort of is the current reality. Until next month at least. :) Thoughts?

Retirement – $7,026

When I started this blog I had $0 in retirement. My situation today:

$5812 – 401k (total vested amount)
618.83 – Discount Brokerage Roth IRA
595.93 – Betterment Roth IRA
Total: 7026.76

As much as I want to have the student loans paid off, I’m still not forgetting about this very important part of my life. In fact due to the power of compounding and long term effect on my quality of life this is almost as important as getting rid of Navient.

I used 4% because after taxes this is probably a more accurate estimate of how much I’ll have by the time I’m 65. The good thing is that next year assuming I stay at my current path my balance will essentially double. If I become more aggressive like I’m planning to after the student loan is out of the way I will be on target to have even more.

Retirement FV of money

My long term goal is to have $1,500,000 set aside by the time I am age 65. By the time I hit 40 I want an income goal of $100k gross (almost 80% more than I earn annually today). I also plan to put $20k aside each year toward that goal. This year I plan to read a lot more about entrepreneurship and business in general. Since getting my MBA in 2008 I’ve been more lax than I care to admit. I have a taste for being financially independent. It just needs to be on my terms and no one else’s.

Less talk more doing. That’s my new mantra. Only actions will take me closer to my goal. Talk is cheap. :)

Month 33 Update – Navient $25,137.39, NMAC – 15,365.36 Total: 40,502.75

Did three dumb things recently.

1. Scraped the rims on my car. The two front ones. Ordered a replacement on eBay for 209 (delivered) and on my way to pick it up I scraped one on the opposite side. Local place estimated $90-130 per rim to replace. So $418 on rims, then need to pay probably 50 or so each to install them. I hope to get around $300 total to recoup my expenditure. It bothers me that I have a car just about 6 months old and the rims all look janky. Maybe women feel like this about shoes and a new dress.

2. Double paid credit card balance. Somehow I made an extra $443 payment instead of the actual $99 balance I had. So in order to get my refund they have to mail me a check. Even though my payments are processed electronically. My fault but the site shouldn’t calculate a different balance when you have a pending payment.

3. Doctor visit. About $170 between the visit itself that I did at a local walk-in clinic and my prescription. Something I could’ve prevented had I known but doing much better now. Health matters can be super scary sometimes. You live and learn.

Did two not so dumb things recently.
1. Bought a warranty on my car. 96 months / 120k miles Nissan Gold Preferred Warranty. $1750, 10% is up front and the remainder split into 18 payments. Just need to get an inspection done and send the paperwork over. My parents have cars a few years old and didn’t have a warranty. Ended up having to cough up a good chunk of cash to get them fixed. I plan to avoid that and the warranty also encourages me to keep the car until it’s up. In this case about 7 1/2 years from now.

2. Paid my credit card down to 0. Dipped temporarily into emergency fund to do this. I was not happy carrying that much consumer debt into the new year. I didn’t buy anyone gifts, just focused on paying my bills off. The balance was $1156.

3. Eating in more. I like this one aspect of apartment living on my own. I spend 60-80 in groceries each week and the food basically lasts me most of a week. I get breakfast, lunch and dinner on that budget. When I go out for dates I tend to spend more.

Met a guy who I thought was pretty cool right before Christmas, then New Years Day he said he just wanted to be friends. He was kind enough to pay for both of us. Was kind of heart broken but talking to new people now. Better to find out early than let it linger for months and months. Life is a game of trial and error really though. Have a couple of good candidates and may meet new friends in the process too so I’m happy about that.

For work at least I started writing my daily goals down as soon as I get in. Each day even if half of them are carried over from the day before I start with a clean slate. I feel better about how things go as a result. Need to start doing this with my personal life too. As soon as I sit down and start letting technology take over my productivity goes from incredible to zilch. It’s about balance though like anything else.

February is going to be the month that I get back to the original plan. By then all my furniture will be paid for and hopefully no other major bills coming in other than my dog’s annual vet bill. I feel like so many things just kept coming up that were not typical. Big $183 electricity bill from townhouse, final $144 Verizon payment, $804 initial payment for moving in and then the $773 payment for the first full month, around $650 for Home Depot, paying the Allstate bill I put on my credit card in November. Between my loan interest, clothing donations and a new car purchase I should be getting a decent-sized tax refund toward the end of the month. It will go all toward Navient. I really want the loan down in the low 20s by Spring.

Despite weather in the 20°s I still have been going to the gym. Kicking and screaming but going. Want to maintain at least even if I’m not losing any weight.