From a friend, for a friend :)

There's a new-ish post coming shortly, I promise. The delay I've been experiencing will be its primary subject :) In the meantime, I got this from Missie over at Death by Chocolate Martini, and figured I'd indulge. Unfortunately the chain'll have to stop here for the moment :(

· go to your documents
· go to your pictures
· go to your 6th file
· go to your 6th Album
· go to your 6th picture.
o no changes here… sorry
· blog about it
o …or here either
· Tag 6 friends to do the same.

Here's my photo -



Ahh yes, this picture. When I was at Iowa State, I joined Tau Beta Sigma, which is a co-ed music service sorority (of course at the time I joined I was only the second male in the chapter :) ). This was taken at Kappa Kappa Psi/Tau Beta Sigma Midwest District convention in 2001 or 2002, don't remember which. The blanket I was wearing was one that I was selling, as each had the fraternity or sorority's letters and crest on it. To sell some more, and to make a fool out of myself (since I enjoy making people laugh), I created this character called Blanketman, and constantly referred to myself in the third person. At a meeting of all attendees, when they asked for any announcements, I jumped up and gave a version of the following speech:

"Do you find yourself freezing in the evenings? Have your feet gone numb due to lack of warmth? Need some security in this harsh world? Then you're in luck! Blanket man is here to save you! With one of my trusty blankets, you too can combat the callously capricious cold! See me for details!"

So yeah. Fun stuff. Ahh, my sorority days - :)

9 useful money tips from Get Rich Slowly

Was browsing the web while my code was compiling, and stumbled across this article at GetRichSlowly.org. In case you don't feel like reading the whole thing (and I highly recommend reading the entire article, as well as several of the associated links), here's the 9 tips summarized:

1. Track every penny you spend
2. Develop a budget
3. Optimize your accounts
4. Start an emergency fund
5. Get out of debt
6. Fund your retirement
7. Automate your finances
8. Earn extra money
9. Educate yourself

These are all very good (if somewhat obvious in some cases) tips for getting your finance in order and increasing your overall wealth. Obviously this blog is focused on number 5 - getting out of debt - but that is most definitely not the only subject I'll discuss. I'm also already performing several of the above steps:

• I track all of our spending in Quicken, mostly out of a paranoid fear that someone may have stolen our credit info. I keep track of categories to the best of my ability, and have all our bills entered as recurring payments. I've recently begun to use this as a twice-a-month checkpoint to determine where our funds our at. One of the things that got this whole effort started was a daunting lack of knowledge regarding our financial situation - at any point in time, it was almost a guess more than a certainty that any given transaction at the grocery store, or while grabbing a bite, would be successful. Since I've started the budgets and keeping an eye on debt, I've been a lot more confident with these situations - and it's only been about a month!
  
• I've got two unofficial budgets for tracking purposes, and one budget I'll be discussing with the wife that we'll use to actively control our spending habits. The tracking budgets are just tools I use for the moment to keep myself on the ball, to get a general feeling of where we stand in terms of our financial situation. The new budget will actually be geared toward having foreknowledge of where all our money will go, and will come with guidelines for how to function under the budget. Somewhere along the line I developed an obsession with documentation, and I'm working on describing this whole thing in a doc that will probably become a blog post somewhere down the line.
  
• I'm constantly educating myself on money matters by browsing finance blogs in my free time - it's how we saved 10% off market when we purchased our home as a foreclosure. The Housing Bubble Blog was one I used to mitigate my frustrations with my life as a rental during the housing insanity of the past several years, and has been a wealth of information and resources.
  
• We're both working towards funding our retirement. It's not a lot at the moment, as we're both kind of focused on debt reduction, but it's also not zero and every little bit helps. I'm matching my company's 1% at the moment, and increase that amount by 1% every may after merit increases go through.
  
• We're also establishing an emergency fund. One of our primary problems, as most homeowners know, is that within the first year of homeownership thousands of dollars worth of expenses can come out of nowhere (especially in a house like ours that was vacant for 18 months before the purchase). With the new budget, we'll be putting away at least $250 towards savings every month, which should give us a comfortable $1,000 emergency fund within five months, and at least a month's worth of expenses by the end of the year (if all goes according to plan, that is).
  

I view my debt as a beast, and to pull unashamedly from Don't Be a Menace to South Central While Drinking Your Juice in the Hood, I'm constantly looking for knowledge bullets that I can load my brain with, so as to more effectively bust a cap in that bitch. Or something.

Don't resolve, just do.

Around this time of year, people are making resolutions for the new year. They resolve to get out of debt. They resolve to quit smoking. They resolve to get in shape. What do all of these people have in common? Simple - they're likely setting themselves up for failure.

There are two problems with new year's resolutions. First off, the special significance ascribed to the new year is unnecessary. If you are continually waiting for some big event, some turn of the clock, or some magical marker to begin your improvement plan, you're setting yourself up for failure. By making a big deal out of the goal you are trying to accomplish, you are doing exactly the opposite of what you need to be doing - making the improvement a habit.

Second, by calling them resolutions we mislead ourselves by improperly labeling these items - they are goals, and goals need to have several components in order to be useful. They need to be specific, measurable, attainable, realistic, and timely - known by the acronym SMART. Most resolutions will resemble the following:

"I resolve to get myself in shape this year. 2009 is the year, baby!"

Now on the surface this seems like a good goal. The problem is that it's doomed to failure. First off, the person making the resolution is trying to step outside their life, to circumvent their habits by using the new year as a jumping point. Why the new year? What's so special about this one date? How will you then not use this logic to circumvent that goal on, say, your birthday? After all, it's your birthday, it's a special occasion!

Second, where's the specificity. What does the resolver define as being "in shape"? Personally I'm in shape right now, that shape just happens to be "bulbous." If it's not specific, how do we know when we've attained our goal? What about a deadline, to hold us accountable? There is absolutely no way to gauge the success or failure of this goal accurately - it is simply far too nebulous a beast to get a handle on.

When I was first out of college, my boss made me read a book entitled The Power of Focus - this book did a great job of laying out what one needs to do in order to achieve lasting self improvement. Specifically, it focuses on two areas - setting appropriate goals, and developing habits. Both of these areas are crucial in achieving the things you want - you need to get into the habit of doing whatever it is you need to do to achieve your goals, otherwise you will just relapse into the patterns that got you into the hole in the first place. This is why most resolutions fail - the person making the resolution is trying to sidestep their habits by making vague promises on a special day. I'm sorry, but the world just doesn't work that way.

So if you must, make your resolutions, but make them SMART. Don't fall into the trap that so many other people will fall into this year.

Debt #4 - My Car

2006 MINI Cooper S (link goes to picture source)







Original loan length: 5 years
Remaining loan length: 2 years, 8 months
Monthly payment: $465.57
Principal remaining: $13735.92 (estimate)
Interest rate: 6% (estimate)

Description
This is a loan for my current vehicle. I'd test driven a mini back in 2004, and had so much fun driving it that I promptly began to work towards purchasing one. I was able to fulfill this goal in 2006, when I changed jobs to get a 21% increase in pay. The car was purchased brand-new, and so far has had few problems. It's got about 10k miles left under warranty.

Plan to payoff
This debt will be accelerated by adding in the monthly payments from both my wife's car and our past taxes. This will most likely occur beginning in December of 2009.

Edited because I like extra words

Debt #5 - Past taxes

Past-due taxes from 2006 and 2007
Original loan length: until paid off
Remaining loan length: until paid off
Monthly payment: $100
Principal remaining: $3502.61
Interest rate: 5% + 1% per month late. Finding this number is actually insanely challenging, as the IRS site is very labyrinthine and does its best to hide numbers from you to avoid an implied promise of rate (or so I figure).

Description:
This is a repayment plan I had started due to a couple of tax bills that we weren't able to pay in full. In both cases, the underpayment was the result of simple lack of knowledge of what impacts our taxes owed, and how much those items would actually impact our taxes.

First, in 2006 we came up at around $4,000 off in our taxes. This was primarily due to some stupidity on my part. I had changed jobs in the middle of the year, and had a number of expenses come up all at once. So instead of rolling over my 401k, I simply took the disbursement and ate the penalty. As I didn't adequately understand the documentation, I thought the penalty (which it seemed to me was extraordinarily severe) included the taxes due on that amount. Obviously I was incorrect. Couple that with incorrect number of allowances, and bam - tax hit. We paid off $2,000 of it right off the bat, then requested a payment agreement. We promptly stopped hearing from the IRS until about 6 months later, when it turned out they had received our payment, but misplaced our tax returns. Of course they were very quick to cash the check we sent them, but they continued to bug us about their mistake for the next two years. We refiled no less than 5 times, and in this case it seemed the fifth time was the charm. By this point, we already had another installment agreement going.

In 2007, there really wasn't much wrong. We got some bad advice on the number of allowances to take, and as such we didn't have enough money taken from our paychecks. This resulted in right around $1800 that we ran short. As we were moving pretty much right at the same time (we closed on our house on April 11th, 2008), we decided to send in a small amount (I think it was like $500 max), and then just wait to start an installment agreement until we could afford it - e.g. as soon as all the traditional "new house crap" sorted itself out. By the time we got the installment agreement going, the IRS had yet again lost our 2006 taxes, so we refiled. Somehow they were magically accepted this time, and we had the amount tacked on to our current installment agreement for 2007.

Plan to payoff:
This will be the second debt we tackle, for two reasons. First, the monthly payment is something we can easily afford (it's why we selected that amount), so we have no worries in the immediate future about being able to pay it off. Second, I'm holding out hope that our 2008 returns will wipe out some of this balance. Once I found out about the issue with our allowances/exemptions in 2007, I immediately reduced the number of allowances I was taking at work. So the idea is that this year we'll probably overpay, and according to the installment agreement any returns are first applied to the past due balance before returning to us. The same thing happened with the economic stimulus payment from earlier this year, which was a pleasant surprise (even if it would have been nice to have the cash on hand).

So in any case, this amount is just something we're not too concerned with at the moment. If our returns for this year eliminate the amount due, then great! If not, we need only wait until May, at which point we can accelerate our rate of repayment using the payment from my wife's car that will have just finished. All things held equal, this debt should be gone completely within 12 months. Ideally. Unless we owe on our taxes again, which I am pretty confident we won't but not 100% sure of. Online estimates of the taxes we owe are $15,000 (approx), and I've already had $8,900 deducted from my paycheck over the year, and this isn't counting student loan interest deductions, mortgage interest deductions, property tax deductions, or 401k contributions (not to mention the amount that my wife has paid towards taxes as well). So while it's possible that we may have underpaid yet again, I don't think that will be the case this year. In all honesty, though, getting a handle on this garbage is probably going to be my next target once we've got a handle on our debt.

$100k not as sweet a deal as it used to be?

Makes me wonder what I'm striving for:

http://www.bankrate.com/nltrack/news/pf/20081215-inflation-shrinks-income-a1.asp

Personally, I think the article's author needs to take a look at people closer to the median salary instead of looking so far out into the standard deviations. Lots of people out there would still kill to make $100k, even if it doesn't go as far as it used to.

edited because median != medium. Stoopid typos

Debt #6 - My wife's car

2003 Dodge Neon (link goes to picture source)
Original loan length: 60 months
Remaining loan length: 5 months (complete in May)
Monthly payment: $215.22
Estimated amount remaining: $1076.10
Interest rate: Unknown

Description:
This is my a loan for my wife's car. She picked it up in 2003 after an accident involving myself, a car full of football players, and far too many late nights studying for finals. It's a 2003 Dodge Neon, bought new with some hail damage, and currently has around 83k miles on it. We're hoping we can keep this car for at least another 5 years or so. We've been diligent on the basic maintenance front, and so far haven't had very many issues with it (knock on wood).

Plan to payoff:
This is going to be the first debt we pay off. We're pretty much just going to make the remaining payments, perhaps throwing a little extra at it. At this point, we won't save much in interest by paying it off early as the interest damage is done by this point. I don't have the rate here, but it was probably around 6%. Upon completion, we'll be using this payment to accelerate debt #5.