The Weight of Money

I have not always been this upstanding model of fiscal responsibility (ha!). About seven years ago I started a two-three year crash course in credit destruction. And now, it is time to face the music of all those transaction transgressions and time to get straight in the eyes of creditors.

Around this time last year, a friend responded to my poor credit woes and pointed me towards creditboards.com. CreditBoards has to be one of the greatest gifts to the credit-impaired and I devoured everything on the site. And then… I let life distract me and did nothing.

Not this time! I want to sign away the next 15-30 years of my life. I’m not going to be able to do that, at least not on preferable terms, if I don’t do something about my credit. So, I’ll be sharing with you all my Credit Correction Challenge. I’ll be following the information from creditboards.com.

Step One: I got a copy of my credit report from each of the three major Credit Reporting Agencies (CRA). (Go to annualcreditreport.com to get your free credit report.)

• Equifax Summary: 15 accounts, 3 negative accounts, 4 collections, 1 judgment
• Experian Summary: 13 accounts, 2 negative accounts, 2 collections, 1 judgment
• TransUnion Summary: 15 accounts, 5 negative accounts, 4 collections, 1 judgment

Step Two: I got a copy of my credit scores from myFICO.com. I signed up for their free trial and was disappointed to learn that it only include the Equifax score. I purchased my scores from TransUnion and Experian and ended up with copies of my report too. I should have ordered my scores when I pulled my free credit report, it would have been cheaper — live and learn.

Not the greatest scores. If fact, myFICOis rubbing my nose in the fact that, supposedly, 75% of the U.S. population has a better score than me and that I’m in the almost lowest of the low scores. Okay — this isn’t a news flash for me, I knew I needed to do some work. I’ll use these scores as a baseline for what to work up from and I’ve got some work to do.

Step Three: Challenge all past addresses listed with the CRA (Equifax, Experian, TransUnion) to get them removed. This will help with disputing negative entries later. I mailed my letters of on March 8, 2007 and they have 30 days to act.

To be continued…: And now, I wait. Once I have a response from the CRAs, I’ll start challenging the negatives on my account.

Since the partner and I are still mapping out our financial relationship, I figured outlining goals for 2007 would be a good way to help us work together toward something and help us stretch a little to see what is possible.

Now that is it March, it’s time for a quarterly review of our goals, current progress, and projects for the next quarter.

Goal: Increase Savings for Home Purchase to $20,000 by July 2007. 2007 Plan of action – increase current savings from $300/month to $700/month – this comes at the cost of scaling back our debt reduction. The additional $500/month will come from ebay sales.

Progress: We’ve managed to put $1,400 towards savings in January and February — keeping with the $700/month contribution. However, we’ve not matched the $500/month from additional income streams. At this point, we have $3,000 in our joint-savings ($2,200 short of expected/planned progress) and about $5,000 in each of our individual accounts. We need an additional $7,000, at least, within the next four months to make this goal.

Our income tax return should give us a boost of $3,000. To get the additional $4,000 we need to put $1,000/month into savings for the next four months. My sewing income is about $200/month and I’ve recentlly been offered telecommuting work from my last job. Hopefully these things, combined, will help us reach that goal.

Goal: Reduce Credit Card Debt to $10,000 by December 2007. Plan of action – this will be worked out in quarterly steps with a credit card debt load of $13,000 in March, $12,000 in June, $11,000 in September, and $10,000 in December.

Progress: Our current debt is $13,500, approximately on schedule.

Goal: Buy a house in July 2007

Progress: Looking has begun, but some recent concerns over my credit history may put a ding in this. ALso, our expectations of 5 acre minimum may need some reconsideration.

Goal: Increase retirement investments to 15% of income by December 2007. Plan of action – increase to 5% in April, 10% in August, 15% in December.

Progress: We’re actually ahead of ourselves with this goal. I currently contribute 10% of my salary ($2,808) and the partner recently upped his contributions to 6% ($3,300) thanks to the new employer matching program. So, we’re currently putting away 7.4% of our income for retirement.

Goal: Increase Passive Income to $200/month. Plan of action – expand internet revenue and investments. Also, build passive income into the purchase of the new home in leasing out property or space.

Progress: I think we might need to modify this to include alternative/additional income. Our passive income is currently less than $50/month. My new side job is bringing in about $200/month. If we modify our goals to include additional income streams, then we’ve already met this goal for 2007. But, we’ll have to see how it spreads out over the year.

Overall, it looks like we’re doing pretty good. Our savings goals are a little bit of a stretch at the moment, but hopefully we’ll be able to reach enough to make things happen. For the next three months we need to focus on increasing home savings and preparing to buy a home (which will include dealing with some credit demons).

Here is a short summary of February spending. No screenshot this month due to lack to patience for transferring and manipulating files. One downside to joint-finances is keeping our files on a jointly accessible computer and not being able to use all the wonderful resources on my mac for doing as I wish with the data.

Income Overview:

• Income for February: $4,299.31*
• Budgeted expenses for February: $4,398.99
• Actual Expenses for February: $5,211.22
• February Overdraft: $812.23 (We’ll be $800 short for March)

The Good: making progress!

• Savings: $700

• Credit Cards: $465
• Student Loans: $324
• Dining Out: $100 budgeted, $164.11 actual ($55 less than last month)

Middle of the Road: it is what it is.

• Rent: $1,575
• Electric: $114.64
• Internet: $29.99
• Gasoline: $160 budgeted, $235.74 actual ($50 more than last month)
• Personal Funds – The Partner: $300 (making up for the last two months)
• Personal Funds – Mine: $150
• Auto-Insurance: $128.16
• Household: $94.26 actual
• Miscellaneous: $85.20 actual

The Bad:

• Cell Phone: $105.25 — way too high!!!
• Groceries: $300 budgeted, $570.54 actual (Costco Month)
• Business: $61.04 (only made $25 last month)

Summary/Review: Overall, it wasn’t a bad month. While we overspent by $800, it was mostly due to the lack of income from my new job (a week without pay between positions) and holding to a savings schedule that isn’t going to work with our current income levels. We’re already modifying our savings and spending for March to deal with this problem. However, there is no more room to trim anything from our budget, so we may need to kick up the additional streams of income to help make ends meet — more ebaying and more sewing.

*As a reminder, using the YNAB system, our February income is from the paychecks received in January.

Thanks for stopping by, please take a look through the categories and other posts to get acquainted with The Weight of Money. I’m actually taking a sick day today to (hopefully) recover from a terrible headcold, and plan to be back in action tomorrow.

For the new folks, a brief summary:

I holding myself accountable for the financial decisions my partner and I are making. We’re successfully fighting off credit card debt — we’ve gone from $30,000 in credit card debt to less than $15,000 in just over a year. We’re also scraping up all the money we can to buy a house this year — yesterday was a day spent digging for diamonds in the ruff (with some success that I’ll address later).

Also, I’m a financial nudist and happily share our numbers on a monthly basis. I love seeing other people numbers because I’m nosy/curious but also because I like seeing what other people are doing with their money and also what they are struggling with. This week I’ll be exposing February’s numbers and also check in with our goals for 2007 — are we putting our money where we said we would?

But first, I’ve got to rest and get over this cold. Please enjoy the archives in the mean time. I recommend relationships for those interested in the joint finances issues we face as newlyweds, budget/goals for the voyeuristic types, and debt for those interested in our struggle with debt.

I have a whole slew of posts percolating and will be serving them up next week.

Stay tuned for:

• an update on our 2007 goals,
• our cell phone business battle – sprint versus cingular,
• another round of ‘make the call’ savings,
• February spending overview, and
• money-making action update.

Help Needed: In comments, wordpress is not linking to the author’s url (when it is supplied). That information is in the database and, as far as I can tell, commenter names are setup to be linked to. But, it isn’t working and I don’t think it has ever worked — any suggestions? I’ve already done the basic google and codex scours to try and solve it, so any quirky insights would be great.

Welcome, the Personal Carnival is where I round up the various carnivals about personal finances and figure out how often the personal is prominent. As you’ve noticed and (some have) fussed about, I’ve been slacking in posting the carnivals and statistics – well here it is in it’s catching-up glory.

I spent 150 minutes today reading through all the links in every carnival I missed — thats a lot of reading to do. I’ve posted the statistics and some posts that I enjoyed.

As a reminder, my numbers are not guaranteed and some articles may have been miscounted, overlooked, or simply failed to load. Also, these carnivals are not required to be personally focused and many include tips, suggestions, and strategies posts that are very helpful. However, I want to feel the personal connection with the writers and will highlight posts that I enjoyed where the personal is prominent.

Overview:
For February, the carnivals with the highest percent of personal were the Carnival of Ethics, Values, and Personal Finance No. 3 (66.7%), Festival of Frugality No. 61 (55.6%), and Carnival of Debt Reduction No. 75 (53.8%). Also, I feel it is important to point out that the Carnival of Personal Finance No. 87 had a stellar 44.1% personal element, which is very high for the carnival and there were lots of great posts highlighted.

And now for the carnivals …

Carnival of Ethics, Values, and Personal Finance No. 3: 8 personal articles of 12 posted (66.7%)
Posted at An English Major’s Money. Articles I enjoyed:

1. Your boss wants you to do what? - do I also hold on to a “it’s not my job” mentality…

Carnival of Ethics, Values, and Personal Finance No. 4: 8 personal articles of 16 posted (50%)
Posted at Grad Money. Articles I enjoyed:

1. Profiting from a non-profit, ethical or rotten? – Somewhat related to this post, we’re selling lots of things on ebay and have wondered if were getting money when we should. There are some machines that the partner owns that he got for free or from an education shop closing — should we sell it and donate the cash or try to off load it somewhere else? I think it boils down to mostly that we’re just trying to make things go away and selling things is the umbrella strategy we’re using and will simply keep using.
2. Environmental ethics: Corporate culture – my own post about how presenting a certain image comes at the cost of being a good steward of our dollars and the environment.

Carnival of Debt Reduction No. 74: 9 personal articles of 21 posted (42.9%)
Posted at Blogging Away Debt. Articles I enjoyed:

1. How to lower your credit card interest rates – Make the call is always a good first step and Tricia and Blueprint for Financial Prosperity has some other good tips that have also helped us. We’ve lowered our interest rates here and here.

Carnival of Debt Reduction No. 75: 7 personal articles of 13 posted (53.8%)
Posted at The Art of Making Money. Articles I enjoyed:

1. Breaking down your debt – Being a fairly visual person, I really like graphs and charts like this one that help illustrate existing conditions.

Carnival of Debt Reduction No. 76: 8 personal articles of 18 posted (44.4%)
Posted at Money Smart Life. Articles I enjoyed:

1. Why did you get in debt? – Understanding and admitting to why you’re in debt is not the same thing as making excused and justifications. While special circumstances can push people down that slippery slope, there are often some fundamental behaviors and (lack of) strategies that can get people in debt.

Carnival of Personal Finance No. 87: 30 personal articles out of 68 posted (44.1%)
Posted at 2million – My Journey to Financial Freedom. Articles I enjoyed:

1. How to stop nickel and diming yourself – Another personal example of how holding yourself accountable will help trim the fat from your finances. Sigh, another good article submitted to multiple carnivals.
2. WWYD: Revealing how much money you make – Post on one of my favorite topics, sharing the nitty-gritty financial decisions with others. Posted on multiple carnivals.
3. Top 100 personal finance blogss – Okay, so there isn’t much new here, just a great collection of blog links including your’s truly (thanks!).
4. Get oodles of money, but work for a company you don’t like? – Work and money are high on my radar these days and I can say that I couldn’t take a job I didn’t like. In fact, I almost left the one I’m in due to fears of not liking it; thankfully, things have improved since my first week.
5. The Cost of a free ride – why not to use a buyer’s agent – A good read for those, like us, scanning the housing market right now.
6. Getting my insurance together – Getting life and disability insurance is at the top of our to-do list. I don’t see this topic described often enough in the personal finance sphere.

Carnival of Personal Finance No. 88: 18 personal articles of 61 post (29%)
Posted at Stock Market Beat. Articles I enjoyed:

1. Getting rich: It’s the little things – Yet another nick and dime post, those small things add up — start saving them!

Carnival of Personal Finance No. 89: 15 personal articles of 53 posted (28.3%)
Posted at Binary Dollar. Articles I enjoyed:

1. Reader comment: Newborn baby expenses – Babies are on our horizon, albeit distant horizon, but there just the same. I like watching the number games people play when thinking about having a baby — of course, i still find that having a baby is far more valuable than the savings or expenses needed.

Festival of Frugality No. 61: 20 personal articles of 36 posted (55.6%)
Postedat Hustler Money Blog. Articles I enjoyed:

1. Free money: Unclaimed property – I found this amusing because I also ran my name and all family members name and came up money for them (and none for me). Maybe charging commission is something to consider, hehe.
2. Using up veggies, or “it’s not frgual to throw it out” – I take advantage of almost all the tips listed here to make our food go the extra mile. In fact, the soup bag in the freezer is about ready for a yummy pot of whatever soup.

Festival of Frugality No. 62: 8 personal articles of 26 posted (30.8%)
Posted at Lazy Man and Money. Articles I enjoyed:

1. It’s easier to be frugal when you are single, true or false?

Festival of Frugality No. 63: 15 personal articles out of 31 posted (48.4%)
Posted at Stingy Students. Articles I enjoyed:

1. Frugalities and potatoes – potatoes and milk are our tonight’s dinner menu (potato soup, yumm).
2. Frugality births creativity – combining my creative and thrifty side is always a big plus for me.
3. Frugal butterfly wings for our daughter – yet another creative-frugal example.

It’s Just Money posted a call to get some people to join him as he participates in CNBC’s Million Dollar Portfolio Challenge. I’m going to join in. I’ve always wanted to do my own little virtual stock market playing and this seems like a fun way to give it a try.

Of course, playing the stock market in this sense, is very much a game and a poor indication of actual real investing. For me, investing is putting money in and expecting it to grow. There is jump, hip, hopping around to get the best short-term returns and following all the up and downs of the day to day market. It’ll be a fun adventure for a few weeks — hopefully it’ll hold my attention for the span of the contest — if not, there I’ll be making a 10-week long-term investment and seeing how it plays out.

If you wanna give it a try, go to the Million Dollar Portfolio Challenge website or email me for a referral and I’ll even “earn” extra “cash” from it. Game starts March 5th.

It looks like spring is finally here — or, at least, people are starting to put some more houses on the market. There were several that caught my attention and we’re going to go see a few this weekend. In analyzing the different properties, I heard myself say “this one might be falling down as we speak, it just might be perfect.” It took a moment to realize what that really meant, that “enter at your own risk” is a red flag for us, a flag saying “hurry and check me out.”

The partner and I have been starting a conversation about the advantages and disadvantages of buying a house in need of repairs (often, serious repairs). Do we want to conserve our cash and reduce our purchasing power just to be shelling out big bucks for necessary improvements, or do we want to stretch and get a house that isn’t going to need repairs (and isn’t going to leave as much leftover each month for other things)? I have some serious romantic notions about the diamond in the ruff house — but will it turn out to bite us in the end? Or, if we get a house that is livable, but more expensive, are we going to feel stuck when there isn’t extra cash to make modifications we may want? At least starting from semi-scratch allows us to really build in what we want in a house.

Also, both the partner and I have the skills and drive necessary to make most of the improvements. In fact, we both enjoy projects like this and wouldn’t back down from some major projects. But, we’re also seriously considering how much time it would take, how much time we have, and realizing that it will cost at least twice as our inflated estimates. Overall, we see strong benefits in both options and will probably just see what the market offers us this summer and pick which ever one gives us what we want.

Our home tour this weekend will be digging in realty dirt and seeing how bad some of the houses are looking. None of them are in good shape and each will need its own set of drastic measures to make living there possible. But, they all fall very far under our housing budget, are in areas we like, have plots of land attached (though still not enough), and would leave us with a lot of extra cash each month to pour into the place (not to mention the savings we won’t be throwing at the down payment).

I figure this will be a good eye-opener, even though we already looked at similar houses last year, and will re-frame our mindset a little. Of the four we want to see, there is only one that looks like a very strong contended. I have high hopes for it but reasonable expectations for the overall process.