Friday, July 29, 2011

Day 288 - Yakezie Summer Group Roundup - Blogs of Summer Edition


Yakezie BadgePart II: Check out some of these awesome personal finance blogs I have been reading. These blogs are all either challengers or members of Yakezie - the web's largest personal finance and lifestyle blog network. I have found some great reads browsing through all the Yakezie blogs. All of the blogs included below are part of the Blogs I Love section (scroll down and look to the right) because, well, I love them. Hope you enjoy reading as much as I have.


Spruce Up Your Finances. Financial tips for keeping more of your hard-earned money. Very helpful articles on topics ranging from retirement, insurance and debt management to careers and home-based businesses.
Recent Post: July Bonding with Friends and Picnics at the Park

The Debt Myth. Aside from being a great personal finance blog, you can also get a 'Pay Off Debt' App for your iPad, iPhone or Droid phone.
Recent Post: 26 Free Things to Do (Instead of Spending Money)
 
Cash Flow Mantra. This blog is a great resource for those of you wanting to learn more about all things investing, including the elusive (at least to me) option.
Recent Post: Are You Ready for Stock Market Limbo?

Investorz Blog. Another great resource for learning about investing mixed in with some financial advice.
Recent Post: Why You Can't Copy the Pro Investors

The Saved Quarter. This blog is written by a frugal mom and gives great tips on cutting expenses and saving as much money as you can. My favorite series she does is to analyze her readers' budgets and suggest ways to change their spending habits.
Recent Post: Cut Your Budget Update: Erin

The University of Money. This blog does a good job of focusing on helpful tips related to stock market basics and financial planning.
Recent Post: Save Some More Money

Prairie EcoThrifter. This is a personal finance blog but with an environmentally friendly twist. In the words of Miss T, "I like to live frugal, healthy and green."
Recent Post: Female Products - The Budget Killer

Money Talks. This blog sprung from a lifelong passion to motivate people to get out of debt and build wealth. Some great reads.
Recent Post: My First Craigslist Experience

Enjoy these great blogs and have a great weekend!!

Stay tuned,
 



Thursday, July 28, 2011

Day 287 - Student Loans 101: Basic Concepts

Student loans are a large percentage of many people's total debt burden. I wish the answer to paying off debt was as easy as saying 'just don't use student loans', but many (including myself) don't have many other options if they want to attend school. If you have exhausted all resources for scholarships, grants and work study, you will need to educate yourself on the ins and outs of student loan lingo. Below is a brief explanation of student loan phrases you will encounter often. I have attempted to do a clear and concise summary. My information came from Federal Student Aid, an office of the US Department of Education. There is a plethora of information on this site including many very helpful publications to read. Make sure you do additional research prior to making any financial decisions related to student loans. My explanations below are merely a starting point.

Subsidized vs. Unsubsidized: If you have a subsidized federal loan, the federal government pays interest while you are in school at least half-time and during grace and deferment periods. An unsubsidized loan, on the other hand, accrues interest from the time the funds are disbursed to you. You are responsible for paying that interest. If you choose not to pay the interest while you are in school, the interest will accumulate and be added to the principal balance of your loan. If you let the interest capitalize, you will then pay interest on the increased loan principal amount (essentially paying interest on interest!!).

Federal Loans vs. Private Loans: Generally, federal loans have lower and fixed interest rates, general repayment plans and no prepayment penalties. Private loans usually have higher, variable interest rates that could substantially increase the total amount you repay. Some private loans also have prepayment penalty fees. Warning: Private loans can be aggressively marketed to students - make sure you have considered any federal student loans you may be eligible for prior to taking the private loan route.

Deferment vs. Forbearance: A deferment is temporary postponement of loan payments if you meet certain requirements. During the deferment period, the government will pay the interest on subsidized loans, but you are responsible for any interest that accrues and is eventually added to the principal balance. The most common loan deferment conditions are enrollment in school at least half-time, inability to find full-time employment, economic hardship and military service.

Forbearance allows you to postpone or reduce your monthly payment amount for a limited and specific period if you are willing but unable to make your scheduled loan payments for reasons that include financial hardship AND you do not meet the eligibility requirements for deferment. WARNING: Interest will continue to accrue during the forbearance period, even if you have a subsidized loan. This interest will be capitalized and ultimately increase the principal balance when you resume making payments.

Repayment Options

Standard. If you do not choose a repayment plan when you begin repayment, you will automatically be placed on the standard repayment option. Fixed payment for up to 10 years (up to 30 years for consolidation loans). Payment must be at least $50 per month.

Graduated. This plan is tailored towards those with low current incomes (recent college graduates) who expect to have their incomes increase in the future. Payment period up to 10 years (30 years for consolidation loans). Payments start out low at first and then increase about every two years. The minimum payment must at least cover the interest that accumulates on the loans between payments. Result: You will end up paying more for your loan compared to the Standard Plan because more interest accumulates in the early years of the plan when the outstanding loan balance is higher - so most or all of your early payments will only go towards interest.

Extended. You must have at least $30,000 in outstanding loans in either the FFEL or Direct Loan programs (you can't combine the two balances). Payment period is 25 years and monthly payments can be either fixed or graduated. Result: You will ultimately end up paying more because of the interest that accumulates during the longer repayment period.

Income-Sensitive Repayment Plan. This repayment plan only applies to FFEL loans. The maximum repayment period is 10 years and the monthly loan payment is based on annual income. Result: As income increases or decreases, so do payments.

Income-Contingent Repayment Plan (ICR). Applies to Direct Stafford and PLUS Loans but is not an option for parent PLUS borrowers. Under this plan, the repayment time frame is 25 years - any remaining balance after 25 years will be forgiven. Monthly payments are determined based on annual income, family size, and your total amount of loans. Result: You may have to pay income tax on the amount that is forgiven.

Income-Based Repayment Plan (IBR). Applies to Direct and FFEL Stafford/PLUS loans. Parent PLUS loans are not eligible. Similar to the ICR, your repayment period is 25 years with the remaining balance forgiven when the time period is over. Monthly payments are capped at 15% of discretionary income and you must have partial financial hardship to enroll. Interesting Note: If you are married AND file taxes separately, only your income will be considered when calculating your IBR payment. Result: Similar to ICR, you may have to pay income tax on the amount of the loan that is forgiven.
Now that you have become familiar with a few key concepts related to student loans, what other questions do you have related to the student loan process? Leave your comments!

Stay tuned,




Tuesday, July 26, 2011

Day 285 - Do You Like Free Money? I've Got Some For You.


Are you a regular $60K Project reader? Why not earn some extra cash while you are reading, commenting and tweeting away? Think of it as some cushion on your salary since you are most likely reading this at work anyway. *grin*

By performing certain actions you can earn points to redeem towards awesome rewards! This month's featured rewards are gift certificates from Amazon, Target and Groupon!! Redeem 5,000 points for a $3 Amazon gift card. You can easily earn 5,000 points in ten days! Other awards this month include a $5 Target Gift Card and a $15 Groupon gift card.


I'm In - What Do I Need To Do?

See that pretty little red Rewards ribbon floating on the top right-hand side of my blog? Click that, login using your Facebook account information and you are on your way to earning points and collecting rewards!


How Do I Earn Rewards?
There are many ways for you to earn rewards every day. Each action below can earn you +100 points after signing up.
  1. Visit The $60K Project website
  2. Like one of my posts on my Facebook page
  3. Comment on one of my posts on my Facebook page
  4. Comment on one of my blog posts on my website
  5. Tweet a blog post on my website (use the Tweet button with the red ribbon next to it - top right side of my page)
  6. Coming Soon - Google +1 a blog post on my website
 

Well, what are you waiting for? Set up your $60K Project rewards account today!




Monday, July 25, 2011

Day 284 - How To Analyze Spending Habits

Comparison - 2011: Q1 vs. Q2 Spend
After spending a large amount of money on vacation last week, I decided to do some fun and exciting data mining to see what type of expense leakage may have occurred during the last six months of The $60K Project.

Since I have dorkily diligently been tracking every single expense since the first of the year in an elaborate Excel spreadsheet, I decided to compare the first three months of "spend" in 2011 with the second three months to see if any unusual and/or helpful patterns appear. The result is this beautiful bar graph you see above. Note: Since the purpose of this exercise is to find spending habits that may need to be altered, income and debt payment amounts are not included in the analysis.

Spending Habits Analysis
The blue bars represent the amount of money spent from January to March in the various expense categories shown at the bottom. The red line shows money spent from April to June. What clearly jumps out at me is the tremendous increase in travel expense during the second quarter. This is due to travel for a wedding, bachelorette party, doctor visit and a birthday. There was also an increase in car expenses (due to unforeseen repairs) and personal care. Surprisingly our food expense was almost exactly the same for the each quarter.

So what did I learn? I clearly see that the travel bucket got a little out of hand the second quarter. That is money that could have gone towards a faster debt payoff. I would also like to take a more in depth look at the Other bucket - this is likely a source for expense leakage since this includes everything else not included in the first ten buckets. Overall, I would say the total amount of money spent on expenses is very good compared to the amount that went towards paying debt ($12,500 and $23,300 during Q1 and Q2, respectively).

Your Turn
Below are four quick tips on how to analyze your own spending habits.

Consider a comparison period of at least three months. You aren't looking to be exact with this analysis. Instead you are trying to detect unsitely spending patterns that may be occurring. By using a three month (or longer) time period, you will be able to even out any non-recurring - yet necessary - expenses that may pop up one month and be gone the next.

Think carefully about your expense buckets. I chose ten expense buckets and added "Other" to catch everything else. If  you find that your "Other" bucket of expenses is quite large in dollar amount, consider adding additional buckets in order to gain some more detail. I ended up breaking out Personal Care, Gifts and Travel from the Other bucket. Also take a close look at Other - this could be a great first place to start searching for spending reductions.

Look for patterns. Unless you moved in the last six months or decided to make extra mortgage payments,  you would expect your rent/mortgage payment expense to be very similar in both quarters. But when your travel expense jumps by 1200% (like ours did!), it may be time to take a closer look at whether spending this extra money was really necessary.

Look at overall amount spent in a category. Even though you may be spending close to the same amount each period on a certain expense, stop and consider whether this amount might be a ilttle high.  If you spend $2,000 a quarter on personal care consistently, there may be room to reduce that expense.

Stay tuned,




Have you analyzed your long-term spending habits? Did you find anything unusual?
 

Thursday, July 21, 2011

Day 280 - Yakezie Summer Group Roundup - Summer Lovin' Edition

Yakezie Badge
The $60K Project is currently on vacation with a poor attempt at shutting down all electronic devices for most of the week. While I'm away, check out some of these awesome personal finance blogs I have been reading.

These blogs are all either challengers of members of Yakezie - the web's largest personal finance and lifestyle blog network. 


I have found some great reads browsing through all the Yakezie blogs. All of the blogs included below are part of the Blogs I Love section (scroll down and look to the right) because, well, I love them. Hope you enjoy reading as much as I have.

Nickel By Nickel. Andrea lays it all out there - even reporting exactly what she spends on a weekly basis. I strive for this type of transparency in my blog but still not quite comfortable with putting myself 100% out there.

My Personal Finance Journey. Great post this week on psychological tricks retailers use to make you spend more.

The College Investor. Do you have credit cards with rewards? This week TCI highlights why many credit card companies are ending the rewards program.

My Multiple Incomes. This blog highlights many, many ways to create side income. And these aren't just run of the mill ideas you've heard before - check it out!

So Over Debt. I've been reading Andrea's blog for a while and love her story. This week: Do you have too much stuff?

Fat Guy Skinny Wallet. Great tips on how to reduce energy costs this week.

The Penny Hoarder. Want to learn how to make money playing Monopoly? Check this out!

Stay tuned for more great posts from Yakezie next week!

Stay tuned,





Wednesday, July 20, 2011

Day 279 - Trying to Vacation On A Budget

The $60K Project is currently on vacation with a poor attempt at shutting down all electronic devices for most of the week. I'm starting to get the shakes so I'm logging in for a brief update on our vacation expenses. Side note: I borrowed this grading format from Travis @DebtChronicles. He recently posted a Resolution Report Card so I'm using a similar theme with a Vacation Report Card today.

Mike and I have wanted to go to Durango, CO for a very long time. It is an outdoor lover's playground. A few months ago we decided it was finally time to take the plunge. We were ahead of schedule with our debt payoff goal and had some extra money we could use to pay cash for a trip to somewhere. So here we are in Durango for a week. Below is a breakdown of what we have spent and also money saved by using coupons or lower priced options. Yes, I do realize that we could have saved a lot of money by not going on this trip altogether. But we're here, we're vacationing and we're trying to not go crazy.

Lodging. We rented the bottom floor of a pet-friendly house (with separate entrance and kitchen) on the outskirts of Durango for five nights. The remaining two nights we are staying at a Residence Inn. Mike's company owns a bunch of Marriot's so we get an employee rate when we stay (yay!). Total cost of lodging for the week: about $750 bucks. After we booked the house, the Residence Inn rates dropped to $45 a night which would have saved us about $300 on lodging for the week. But it was a last minute rate drop which is tough to wait out when you are trying to plan ahead. Lodging Grade: B

Entertainment. This is probably where we have splurged the most. We took a trip on the Durango Silverton Narrow Gauge Railroad and Mike is doing a river rafting trip tomorrow. Total cost for both: $422. Yowsa. Given that there are many free and low cost things to do in Durango (mountain bike, hike, road bike - which we have done), I would say that our entertainment expenses have been kind of a bust. But we also knew that these were two things we really wanted to do. So we're sucking it up and just admitting defeat on this expense. Entertainment Grade: C-

Food. We have generally been trying to eat out only once a day. Since we have a kitchen, we stocked up on breakfast, lunch and snacks at the grocery store. Plus our most expensive meal out cost $20 bucks. Total cost so far: $280. This amount seems a little high, but given what it could be if we were eating out every meal I don't think this is too bad. Plus our usual budget for food is $340 every two weeks and we are still under that. So we really haven't dipped into any of our vacation expense for food yet. Food Grade: B+

Dog.
If we left Duke at home we would be paying $60 a day to our dogwalker. That comes out to about $540 for the week. So we threw Duke in the car and saved some money. So far we spent $28 for a day at doggie day care during our train ride (about an 11 hour day), and we also spent $80 bucks at a vet in Flagstaff due to a sore paw (he's ok, folks!). Total savings: $430. Dog Grade: A 

Gas.
Flights to Durango from San Diego run about $400 a person. Plus car rental for the week would probably have been another $200 bucks. By driving instead of flying we will probably end up saving around $700 bucks. I'm not including general wear and tear on the car in this amount. Gas Grade: A

Summary of expenses to date:
Lodging:         $753
Food:             $280
Entertainment: $460
Dog:               $108
Gas:                $133
Total:           $1,734


Ways we have saved money:
Driving vs. Flying  ($700)
Bringing Duke       ($430)
Coupons                 ($15) 2-for-1 Tuesday at Trimble Hot Springs
                              ($17) 10% off code for train
Eating in vs. out     ($200) Estimate of extra money spent if ate out every meal
Total Savings:   ($1,362)

Final Exam. I think our trip to Durango will end up costing about $2,500. Would this money have been better spent if gone towards our debt? Probably - that amount is about half of our remaining debt balance. This has been kind of an eye opening experience for both Mike and myself. Yes, we did find ways to save some money, but I don't think either of us realized the true cost of a vacation - even when you are attempting to do it on the cheap. Final Grade: B-

Going through this exercise has been helpful and really forced us to realize what we spent. We were budgeting/guessing this trip would cost around $1,700 total and it looks like we have already spent more than that! Still have a lot of financial learning to do.

Stay tuned,




Have you gone back and reviewed your vacation expenses after a planned trip? Were you surprised to find out how much you spent or were you right on track with what  you expected? Any tips and tricks you can share would be great!

 

Friday, July 15, 2011

Day 274 - Mid-Month Debt Payoff Report


The first and fifteenth of each month I will update you on the status towards our goal of paying off $60K in one year.

** Check out the Real Time Debt Tracker!!! Keep up to the minute tabs on our debt balance and whether we can pay it off in 365 days! **

To date, we have paid off $54,369 of our debt in 274 days.  We have about three months left in our year so in order to pay our debt off on time, we will need to pay approximately $1,877 each month for the remaining four months.  We average almost $4,000 a month in debt payments so we are still way ahead of schedule.

I got a raise!! My company awards raises once a year and I got one! Combined with increase in the cost of my health insurance I will probably bring home about $200 extra a month. Yay!!

I got a bonus!! I got a $4,300 bonus that I will receive on September 15th. More like half of that after taxes but that's fine - I'll take what I can get! Plus by the time I get my bonus we should (hopefully) have our $60K Project completely paid off. Sooo.... what to do with the extra money??

Side hustles. Our second income streams make a tremendous difference. I highly recommend a side hustle if you can swing it. I am a question writer for the CPA exam and just got a check this week for $630 bucks from questions I wrote in the past. I also earned $240 this week by writing additional questions and will receive that money in about a month or so. All going towards debt, baby!! Kickin' it to the curb.

Why I do this.  If you add up all the minimum payments we will no longer be making when we pay off the $60K, we will have an additional $550 of cashflow free'd up each month - about $6,600 a year! That is extra money that can be put to good use towards savings, retirement, a wedding or a house.

Just want to say thanks to all of you who have left such positive and inspiring comments on my blog. You are what keeps me going!! I hope you keep going, too. Trust me, the results and the feeling of accomplishment are completely worth it!

Stay tuned,




Thursday, July 14, 2011

Day 273 - Weekly Roundup Travel Edition

Every Friday I highlight blogs and articles of note from the past week. Since my mid-month update falls on a Friday this week,  lucky readers get an early look. Since I will be heading out on vacation in a few days, I dedicate this edition to some great travel reads. Enjoy!

Married With Luggage: I just heard about this blog and have already spent countless hours reading about this couple who sold everything to travel the world. What's even better is they are attempting to sustain this lifestyle by creating income from jobs they can do while on the road. Basically, I want to be @betsytalbot and @warrentalbot.

I'm Hooked, Where To Next? Did that previous blog get your adventure juices flowing? Continue your journey through the Philippines and Malaysia via Washington Times staff writer Matt Payne.

Might Need to Cut Back a Bit on the Traveling Budget. A great budget travel blog is the Frugal Traveler in the NY Times. You just might use all your free NY Times online clicks for the month in one sitting. A lot of articles about visiting exotic places on the cheap. via @frugaltraveler

40 Most Useful Websites That Can Save You A Fortune. Wisebread has done a great job of compiling all sorts of budget travel resources into a one-stop webpage.  This summary highlights anything from cheap accomodations to budget traveler magazines and blogs. via @wisebread.

Wandering Earl. Earl started a three-month trip to Southeast Asia in 1999. Twelve years later he's still at it! Some pretty amazing stories on here - this is another one you could easily spend hours browsing. via @wanderingearl.

Todd's Wanderings. I wonder if Todd and Earl have every bumped into each other in some remote village in Cambodia? Todd has been on the road for about ten years. He is a conflict and human rights expert who brings a great perspective to world travel. via @toddwassel


Explore, enjoy and stay tuned,




Don't have enough money for a vacation? Live vicariously through some of these great adventurers! What is your dream travel adventure? Mine is a very in depth exploration of New Zealand and all it has to offer.

Tuesday, July 12, 2011

Day 271 - Smashing Debt With A Snowball

Photo Credit: Wikipedia
Yesterday I discussed paying off debt purely from a numbers perspective. I focused on interest rates, loan balances and the impact on additional interest paid . Today I'm writing about the snowball approach.

Remember those economics courses you took a loooonnng time ago? I did so many supply vs. demand graphs in college that I began to have nightmares.  Neoclassical economics (make sure to point your nose in the air while saying this out loud) is an approach to economics that relates supply and demand to an individual's rationality and ability to maximize utility or profit.*  For example, if demand increases and supply stays the same, the result is a higher equilibrium price and quantity - as explained by the nifty graphic above. Coming back to you yet??? Now stay with me for a minute.

Honey, Milton Friedman thinks I'm Rational - Why Don't You?
When you make purchases, do you consider yourself a rational human being? When you go to Macy's and think about buying a pair of shoes, do you always rationally (and, in a way, selfishly) consider ways to maximize utility and profit? Or do you also consider looks, trends or even social responsibility (think Tom's)? Behavioral economics introduces the theory that people may make decisions based on rules of thumb rather than strict logic. One good example: The phrase 'you get what you pay for' is often followed even when a cheaper version of a product exists that is as good or better than the higher priced version (thanks Wisegeek!). A second theory  relates to the herd mentality - people tend to follow the trend over being rational - like the fact that every outfit Kate Middleton wears is immediately sold out all over the world. Doesn't sound too rational to me. A third theory involved in behavioral economics is framing - mental filters created through their own personal experiences. You have a $10 item that is 75% off!!! Or....Save $7.50. Which sounds like a better deal even though you have the exact same outcome? Even better, are you one of those people that proudly announces 'I got this leopard print tube top on sale!!'? Sometimes that sale price isn't much different than retail, but the store has framed it up in a manner to make you feel like you got a good deal.

The Snowball - Irrationality Rationalized
Sarah, how were you able to mention Milton Friedman and leopard print tube tops in the same blog post? And what about the debt snowball?

I believe that the snowball concept, made popular by Dave Ramsey, is a positive extension of the theories behind behavioral economics. Do your eyes glaze over when people start talking to you about interest rates and loan terms? While these concepts are still important to understand, getting out of debt is about more than just the numbers. Some people need an Excel spreadsheet; others need to simplify and see immediate progress by paying down the smallest debts first. Rationally speaking, it may take you six months less to pay off debt if you start with the highest interest rate loan first, but emotionally this scenario may make you feel like you'll never be able to do it. Is it better to choose the debt payoff plan that is rational and makes more sense? Or choose the plan that makes you feel confident you can pay everything off even if it takes a little more time?

As mentioned in yesterday's post, I chose the snowball method. Lucky for me it didn't matter too much since the difference in interest paid between the two options discussed ended up being less than $100 bucks. I feel way more engaged in paying off my debt and I'm doing a darn good job of it, too! I can't give you a reasonable explanation - I just know that it works for me. And this isn't the first time I have tried to pay off my debt. I also know that this option is not a one size fits all concept and what works for me may sound completely ridiculous to you.

So.......Lowest Balance or Highest Interest Rate?
Have you figured out which method best suits your personality (or even come up with a third option)? A few things to think about:
  • Be informed: model out your options (as discussed yesterday).
  • Don't do something because you should; do it because it fits your lifestyle and works for you.
  • Some people are into the numbers, others are more visual. Think about your style when choosing your plan.
  • Just pick one! Go with your gut and go for it. It's not the end of the world if you decide in a few months to change your strategy. My only advice is to give it at least 4 months before giving up on your strategy - it took me at least 3 months to finally realize our success.
  • You can only listen to other people for so long. Thank them for their opinion and move on. Their lifestyle and formed opinion may not exactly align with yours. You should be the final decision maker!
Stay tuned,




What method do you prefer when it comes to paying off debt? What has worked best for you?

* Definition from www.investopedia.com 

Monday, July 11, 2011

Day 270: How to Pay Off Debt: Lowest Balance or Highest Interest Rate?

jscreationzs / FreeDigitalPhotos.net
Part I: Just The Facts, Ma'am

Have you set a goal to become debt free but not sure how to do it? Should you pay off the highest interest rate debt first or work the snowball and pay debts off in order of smallest to largest balance? Well, the answer is clear as mud - it depends. Let's take a look at this question from a few different angles. Today in Part I, I'm going to look at this question purely from a numbers perspective.

The Numbers
First, full disclosure: We use the snowball approach and pay off debts from smallest to largest balance. I keep a spreadsheet that tracks the monthly debt payments we make and also estimates which portion of these payments go to interest and principal. That way I can forecast when I expect each debt to be paid off. So how much extra money am I having to pay in interest by using the snowball? Based on our actual first 270 days of payments and estimating the last 95 days of payments, the difference is a whopping $76 bucks.
 After doing this calculation, I convinced myself that the snowball method was definitely the way to go. But take a look at my fact pattern - the difference between my lowest and highest balance is about $11,000 (I didn't include the debt we paid off on Day 1 since there is essentially no interest involved this year). But my interest rate spread is only 0.3% (4.55% - 4.25%). I decided to try the calculation again but make the loan amounts all the same and change the interest rates to reflect a more significant spread. Note: By making the loan balances the same I am removing the snowball method option and purely focusing on the impact of interest rates on loan payments. In this scenario, I assumed that all loan balances are $20,000 and the interest rates are 4%, 8% and 12% - a spread of 8%. I also assumed a monthly payment of $3000. If I pay the debts off from lowest to highest interest rate I pay $1,923 more in interest than if I had started with the highest interest rate debt.
Wow!! I can honestly say I didn't think it would be this much of a difference, especially with an accelerated payoff time due to the large amount of money going towards monthly debt payments.

The Takeaway
So what am I trying to prove? Well, mainly that every person has a different fact pattern and without an attempt at forecasting out your debt payoff you may be completely in the dark (like me) on whether your method will end up costing you $5 or $5,000 in extra interest payments.
So know your fact pattern for each debt:
1) loan balance
2) interest rate
3) monthly minimum payments
4) term of loan
5) estimated total monthly debt payments you can afford

Next, create your forecast. See how long it will take you to pay off your debt and test out multiple payoff scenarios to help you figure out which may work best for you.

Not sure how to create a forecast? Send me an email with your fact pattern (see #1-5 above) and I am happy to help you model it out. Or I can send you the Excel spreadsheet I used and you can model it out yourself.

Knowledge is power,



Stay tuned for Part II: The Debt Snowball Discussion

Friday, July 8, 2011

Day 267 - Weekly Roundup Student Loan Edition



Welcome to this week's edition of the Weekly Roundup! I scour the Internet weekly to find interesting and thought provoking articles and blogs you should check out. This week's theme is student loan debt, enjoy!

Considering a for-profit college? Consider this. Bridgepoint Education, a for-profit university giant spent (according to their SEC statement) $700 per student on instruction, $2,714 per student on recruiting and profited $1,522 per student. Also, based on students enrolled during the 2008-2009 year, 63% of bachelors students have withdrawn from the program, while 84% of associates have withdrawn. If you actually do graduate from a for-profit university, expect 96% of you to be saddled with an average of $33,050 in student loan debt - about $10,000 greater than the national average.

Higher Education Tax Credits. Are you paying college tuition for you or someone in your family in 2011? Make sure you read this post from the writer of Frugal Students to see if you are taking advantage of these education credits on your tax return.

Dave Ramsey talks student loan debt. I wish Dave had been making videos like this when I was 18 - although I'm not sure I would have paid attention. Student loans are practically an epidemic in this country - listen to what Dave has to say. via @daveramsey @foxnews

Before you sign that loan, get educated. MSNBC does a decent job of covering the basics when it comes to obtaining and paying off student loans. Although the content could be a little more in depth this is a useful place to start. My idea: some type of mandatory education requirement about borrowing money. You think kids would get anything out of it? via @msnbc

Sallie Mae's Misleading and Dangerous Press Release. Ahhhh yes, I have lots of experience with ol' Sallie Mae. This articles tackles the company's promotion of variable rate private loans and why they might not be such a good idea. via @zacbissonnette @time

When Freddie met Sallie: Parallels Between the Mortgage Meltdown and Student Debt.Some very interesting - and scary - similarities noted here. Definitely worth a read. via the blog Memoirs of an Economic Student.

Have a great weekend!





Wednesday, July 6, 2011

Day 265 - Stuff, Stuff, More Stuff.....Oh Yeah, and Fireworks

I was 99% sure at some point that I would be off on my day counts. Turns out I was - but only by a few days. So without further ado, my second post for Day 265!
Photo by sarah@60kproject.com
Forget risk averse - trying to pay off debt has made me "stuff averse". I now get nauseated when our house accumulates those random piles all over the place - and try as we might it happens a lot. 

So this Fourth of July, Mike and I decided to head up to La Jolla Cove and watch the free fireworks with a gorgeous Pacific Ocean backdrop. We headed to the grocery store, packed up our cooler and splurged on some yummy deli sandwiches at the Olive Tree Market in Ocean Beach - total cost $25.85 with plenty of leftover fruits veggies and hummus for the week. Not too shabby.

La Jolla Cove - sarah@60kproject.com
The Cove was packed. When we finally found a spot of grass we ended up next to the lovely pile of "stuff" you see above. As Mike and I dropped our blanket, cooler, jug of tea and bag full of books and hoodies, my immediate thought was that we obviously weren't going to have a good time because we didn't bring our giant gazebo tent (not shown in picture because it was too freakin' big) or the 50 pounds of additional amenities one might need while having a "relaxing" time. Relaxing, that is,  between the time you pack the car, haul all of that stuff out of the car...relax...., think about packing the car, and then pack it back up and haul it out again. And not to mention the fact that you MUST own a gas guzzling Suburban or Expedition or - god forbid - Excursion just to make it to your destination with all your goodies.


La Jolla Cove - sarah@60kproject.com
He Who Has The Most Toys Wins
America, let's just take a step back and look at the monstrosity of stuff we've become. It's not good for our pocketbooks, wallets, piggy banks, mattress stuffings. Is it just me or does carting this much stuff around make for a less enjoyable and more hassle-filled time for yourself and your family? I'm not talking 100 Thing Challenge, but try to show some restraint. If you forget the baked beans, the three packages of cookies for four people, the fold up table and the banquet warming trays it's not the end of the world.

La Jolla Cove - sarah@60kproject.com
Simplify, Simplify, Simplify
I truly believe stuff is an addiction with society fanning the flames by promoting an economy based on consumer spending. And I've been right in the middle of that addiction. So while this post seems to be heading down Rant Lane, I'm going to try to make a U-turn and at least dish out some advice.
  • Limit yourself to bringing 10 or 15 items to the _____(fill in the blank). Or even 5 if  you're an overachiever.
  • Remember the backpacking rule: pack what you need and then get rid of half of it.
  • Try to make people and your surroundings your focus rather than bringing your entire living room. 
  • Bring a camera so you can selfishly plug your photography attempts on your next blog post rather than focus on the trash heap next to you. *big grin*
  • Does your house look like that first picture? If you haven't used something in a year, toss it or donate it!
  • If you have a large group getting together, coordinate what you bring so you don't end up with stuff that someone else also brought.
Compare the first photo with the last three - which would you rather be staring at while you hang out at the beach/park/lake? Do you really need all of this stuff to have a good time? Are there any helpful hints for cutting back? I'd love to hear your comments!


Stay tuned,
 

 

Saturday, July 2, 2011

Day 265 - I Joined the Yakezie Challenge - You Should Too

One Hundred Days to Go

One hundred days left in my own challenge - The $60K Project. Two hundred sixty five days ago I was pretty certain there was no way possible to pay off $60,000 in one year. I have proven myself wrong (we're almost there!). And I love it.

I credit blogging with keeping me on track, introducing accountability and making me really think about my financial decisions. When you put yourself out there to the world, you tend to check and double check yourself before pursuing a course of action - be it deciding what expenses to throw out or whether to buy that latte. I would rather eat rusty nails before I told the world that I messed up and didn't meet my goal because I went on a spending rampage.

So what's next for The $60K Project? Well, financially have no fear! We've still got more debt to pay off even after the $60K (*sigh*) and I've still got a lot to learn so no lack of material on my side. As far as my blog, I never knew writing about my personal and financial challenges would be so freakin' fun! I'm not going anywhere soon. And now I'm ready to take on a new challenge.

Yakezie - Selflessly Helping Others

I love to help people. I love to inspire and be inspired.

A few weeks ago, a fellow Tweeter sent out a 140 character distress signal about the horrible day personally and financially she was having. I have been in that position on many an occasion and know how hopeless it feels. I decided to reply with an attempt at a few words of wisdom and hope - something about lemons and lemonade so nothing earth shattering. Later in the day I got a grateful tweet back.

Even though there was no face to face and very few words exchanged, I still felt a connection between us. By joining the Yakezie Challenge, I want to build on that connection with a community of people who are there to support me on the rough days. And vice versa.

Stay tuned,




Have you joined the Yakezie Challenge? Do you have any pearls of wisdom to share?

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