Four years ago, I bought our house. I know what you’re thinking. But no, this isn’t one of the many times where I type I even though I really mean we. I purchased our house. And it seems like the strangest secret in the world to finally share and celebrate because even though the house was bought in my name, it’s always been ours. Continue reading “A Home-Buying Secret: I Bought Our House”
Alright, personal finance blogosphere. Enough with the haterade for new cars. Are they depreciating assets? Yes. Is interest bad? Yes. Is financing a car the worst thing someone could do financially? Not necessarily. In fact, as someone who financed a $27,000 car several years back, I wouldn’t change a thing. Except maybe I would have spoken up sooner. Continue reading “To Everyone Who Hates on New Cars”
You know FOMO and YOLO and adulting. You’re probably familiar with regifting. But what about degifting and frugle and debth? It turns out, that as we sort through our money, millennials are creating new language right along side of it.
Why the need for the new vocabulary? Our generation is looking at money differently. Sometimes we’re confronting new issues. Other times, we’re confronting age-old issues in new ways. And when an entire generation is faced with unprecedented money obstacles, it’s going to take some new words to sort through the numbers and the emotions behind them. Because when it comes to millennial money, some of it is good, some of it’s bad, and some even gets a little ugly. Continue reading “Millennial Money Chatter: Money Sense for Us”
I am terrible at setting goals. I also don’t really share numbers here. At least not in any streamlined way. If you read my posts about unexpected expenses and the $24k in debt we killed last year, you’ll get a fairly decent picture of my income and my spending. But let’s leave a little mystery to life, shall we?
The one thing that I do consistently well, though, is to track my mortgage in an attempt to slash away at it. The goal is to have it paid off before my 40th birthday. Ten years seems reasonable. Rather than continuing to talk vaguely about it, I thought I’d share quarterly updates here.
When we bought our house, our mortgage was for $214,000. We put down just over 20%; in doing so, we dodged PMI. I’m not even sure I knew how PMI really worked back then. All I knew is that I didn’t want to give the bank any extra money on top of the gobs of money I was already going to be giving them in interest over the next thirty years. While I know some of you gasped at the thought of a 30-year loan, I made sure that we could pay it off early without any issue. See? Little Penny did have her act together a wee bit.
Earlier this year, we started to get aggressive with our mortgage paydown. In our typical budget, we plan for a double payment. Then, I toss my extra side hustle money for the previous month at the mortgage. That means that at the start of the fourth quarter of 2016, we still owe $180,815.12. Be still my heart.
As if that number isn’t panic-inducing enough, I should also point out that last year, I paid $7,076.95 in interest. Before you tell me that I can write this off on my taxes, let me remind you that I know. I did, and I’ll do it again next year. Now, let’s consider the fact that one of my friends rents a two bedroom, two bathroom apartment* with access to two pools and a pond for less than what we paid in interest. It goes both ways. You like your mortgage? Fine. Don’t let me stand in your way. But I’m getting rid of mine.
*There are also dogs. And faint odors. And neighbors very close by. Sometimes, I really do like my mortgage.
In short, the plan is to stay the course. There will be months when we pay 3.5 times our required payment. I’ll continue to celebrate obnoxiously on Twitter. There will also be months where we only pay double or slightly more than that. While I hope it never happens, there may even come a time when we only pay the regular payment. Maybe there will be some unexpected expense. Or maybe I’ll get my investing prowess so on point that I put all of my extra income there instead. I’m hoping that quarterly updates will be enough motivation to keep us pushing forward aggressively. Let’s get this done by 40, shall we?
So Tell Me…Should I share more numbers? Do you have a mortgage? What’s your debt-slashing plan?
Here’s the thing: I don’t drink coffee. I can count on one hand the number of sips I’ve tried. It’s so repulsive to me, I cannot swig it down in a Frappuccino that is 87% sugar, 11% heavy whipping cream, and 2% coffee. I won’t even eat tiramisu, failure of an Italian American that I am. But the latte factor is real. In fact, it’s my biggest money mistake. Continue reading “The Latte Factor Lived in My Closet”
Where are all my bi-weekly paycheck people at? If you pick up a paycheck every other week–or every week–then you know that there are months where you’ll land an “extra” paycheck. For me, one of those months happens to be September this year. While my monthly budget is structured based on two of my husband’s paychecks and two of mine, this particular month will actually net me three checks. Whenever I realize this and the initial excitement settles, the real question always becomes, What should I do with it? Continue reading “6 Ideas for that Extra Paycheck”
Last month, The Minimalists did a podcast on debt. That podcast led to a profusion of tweets about the drawbacks of credit scores. In fact, the underlying message–ripped out of Dave Ramsey’s playbook–was that no one should want a credit score.
The Minimalists by way of Ramsey tweeted out that a credit score is nothing more than an I-Love-Debt score. If you don’t love debt, you don’t want a credit score. At all. None. Nada. Zero. It sounds absurd–and it is–because a credit score in-and-of-itself doesn’t cause the debt problem. By their logic, I should throw away my mirror if I don’t like my hair. I should get rid of my scale if I don’t like my weight. And I should probably disregard those wellness screenings I get every year. Those warning lights on my car dash? Apparently, my car can’t have problems if warning lights don’t exist.
The reality of a low credit score is that it reflects a small slice of a vastly complex conundrum, just like a check engine light or a thyroid test result. It is one piece of someone’s overall financial health. It’s not the only piece, nor is it the most important piece. But it is a piece nonetheless. So let’s not ignore it, okay?
Instead of thinking of a credit score as an I-Love-Debt score, I think of it as a Make-Money-Work-For-Me score. Money is a tool. Learn to leverage it. A healthy credit score matters. Not convinced? If you ever plan on doing any of these things, someone is probably going to take a hard or soft look at your credit score:
- Buy a home.
- Rent an apartment.
- Take out a loan.
- Employer background checks.
- Set up utilities, Internet, or cable.
- Rent a car.
- Open a bank account.
So credit scores do count for something. Of course, if you can pull a Dave Ramsey and pay cash for your mega mansion, you don’t need a credit score. But for the average person, having an understanding of credit is important because it plays a role in establishing a financial foothold. Saying it doesn’t either speaks from a position of ignorance or privilege. And if Ramsey is the financial guru he’s lauded as I’ll let you decide which camp he lands in. While it may be true that you can work around credit inquiries, why put someone in a position where they have to learn to do that?
Besides possibly needing a credit score when establishing yourself as a homeowner, renter, employee, or TV binge-watcher, a high credit score can open a lot of doors for people. If we’re going to teach financial fitness, let’s share all the possibilities. Let’s not limit people.
Here’s a short list of ways in which I’ve put my credit score to work:
- Financed my Master’s degree and wedding with 0% cards – hello, bonus points!
- Travel hacked my way to cheaper vacations
- Qualified for a better mortgage loan rate to the tune of .50%
- Financed a car for 0% – gasp, I know!
And I’m sure there are all sorts of other ways that my credit score works on my behalf that I haven’t even stopped to consider. The fact of the matter is debt is a problem, but credit scores are not. Like most things finance related, with a deeper understanding, this is one more tool that can put money to work for you.
So Tell Me…What do you think of credit scores? Have you ever put yours to work for you?
Is your budget really as smart as you think it is? One of the first things many people do when they are trying to get their financial fitness on is to create a budget. Undeniably, there is a requisite amount of trial and error involved in the first few passes. A budget should meet everyone’s needs, be grounded in reality, and align with your goals, values, and charitable priorities. Flexibility is key. For a long time, I was pretty pleased with our budget. After all, it allows us to save 42% of our after-tax income without factoring in any side hustle money. And that doesn’t even include the 10% of our pre-tax income that we each pay towards our respective pension plans every year. Clap louder. I can’t hear you this far away.
While it seems like we’re sitting pretty with our line items each month, it turns out that the true test of a budget involves the magic number twelve. That’s right. Yearly budgets lend an equally powerful perspective. Even if you already have your budget broken into percentages, the yearly totals either get a little harder to swallow when you think of what else you could be doing with some of that money, or the numbers will inspire you to take a victory lap around the kitchen table. I put our budget up to the test and multiplied every line item by 12. Below, I share just a snapshot of the good, the pricey, and the ridiculous: Continue reading “Test Your Budget with the Power of 12”
In our budget, we currently set aside between 42%-48% of our after-tax income. It is also worth pointing out that 10% of both our salaries is taken out pre-tax and put into our pension funds. So on the surface, it looks like were are living on a fairly small portion of our income. But just because we aren’t spending it, doesn’t mean we’re actually saving it. Or does it? Continue reading “Is Not Spending the Same as Saving?”
I thought I had goals. But it turns out, I have mostly hopes and dreams when it comes to personal finance. Paying off our mortgage in the next 10 years isn’t a good goal. Staying out of debt isn’t a good goal. Increasing my net worth isn’t a good goal. They’re undoubtedly important aspirations, but they’re not measurable. They’re also quite vague.
For someone as fond of spreadsheets as I am–I love them, I do, I do, I do–you’d think that I’d be all about SMART goals. The more specific the goals, the more observable the metrics. Hello, spreadsheets. For too long, I’ve let fears prevent me from setting specific goals. Fear of failing and fear of investing have kept me locked in a holding pattern of saving but not really allowing our money to work for us. So here’s to shaking off the fear and setting some real goals for once and for all. Continue reading “Goals are Good: I Should Set Some”