The Active Veil Of Consumerism

We have a family budget meeting at the end of every month. For February we discussed the good progress we made, when a question came up from our middle child, our 10-year old daughter.

"If we have $2000 in our Emergency Fund and $3000 saved on taxes, that $5000, right?" "Why can't we use some of that to go to the mall like we used to?"

After some chuckles I noticed that others were thinking along the same lines...and probably me too. See when we would get money in before we would allocate some of it for "fun." We would buy something on our list that we had all agreed we wanted. New TV, DVD player, etc.. But not this time.

What we were all feeling was the break from the past.

Before we would "celebrate" our wins more. We would look forward to bonus as it meant a second Christmas, albeit with more expensive gifts! Although this was an illusion...what I call the active veil of consumerism. Sure we had debt, check out the Pinball machine. No retirement, Trip to Vegas. But every grain of sand in the hourglass was working against us. Every spend, pay-off, spend cycle got larger! The Power of Compounding was our Enemy...

That is why with our Success Map firmly in hand we had planned out what we were going to do with this Tax Refund...and it was going to be boring. No Ice Cream, no Pony rides, just put it into E*Trade for our 2008 Property Tax bill.

And that is what we said to her...how doing that in the past, while fun at the time, gave us the debt we are paying off now. And how every dollar we save or use towards paying off that debt gets us closer to our Freedom Goal.

Her reaction: "Ok, that makes sense, but I still like the mall though!"

Personal Finance QuickTake: Property Tax Cut?...

I thought I could start a new feature on my Blog that I will call: Personal Finance QuickTake. I have seen others call attention to news stories from around the web that tie to their key topic. In my case, personal finance and managing money.

For this first one it seems that many state and local government have been relying on property taxes more and more in order to fill their coffers. Given the booming paper price on some houses this has led to a quick ratcheting in rates around the country. Some have seen their taxes double or triple. Now it seem that even the government is feeling the pinch.

For homeowners, property taxes can be a real hit to your budget and manging your money!

Here is an article on Yahoo that explains more and lets you know what you may expect in the coming year...

December Final Debt Reduction Numbers...

Well the final numbers for December are in...and we did pretty well in regard to our debt reduction!

As of the end of December our Net Worth Increased $2570!

Here are the December high points:

• Paid off our #6 Snowball Debt! - Already rolled our snowball to our next debt on the list; The State Farm CC, we will now be paying about $100 over the minimum payment.
• Paid off a total of $1122 in Credit Card debt - Two more cards to go!
• Paid off $1191 in Loan Debt - Our consolidation loan has really helped to lower our average interest rate and minimum payments, so more can go into our snowball!
• Added $327 to savings towards 2008 Property taxes - Do not want to borrow to pay this off this year!

Points to Work on:

• Overspent Grocery/Entertainment this month by $100, due to hosting family for New Year's Eve - Well make it up over the next couple pay days
• Overspent Gas Bill -Ninja Bill Taking this out of January's discretionary fund (dining/Entertainment)
• Lots of travel coming up - Make sure to quickly process business expenses!

So we had a great month, especially by not going over on Christmas. The debt reduction will be out of the norm, but was paid for out of a bit of windfall on my check. Once you hit the maximum contribution to Social Security they stop taking it out of your check. In the past we would have spent this away as fun money or on Christmas, but now that we are on plan we took it all and applied it to debt retiring a credit card debt earlier than we hoped!

I don't expect January to move the budget needle as much, as my check goes back to normal and we have picked a lot of the low hanging fruit. I see Personal Finance and Budgeting as a marathon, not a sprint, but it does feel good to run every now and then...

Our Top 10 2008 Financial Goals...

OK, time to put it on the line with our Top 10 2008 Financial Goals. Over the course of the year I will provide updates on how we are doing and hopefully knocking these off of the list!

1. Pay Off State Farm CC - $2836.22 - We only have two CC's left to pay off, but they are both good sized with horrible Interest Rates. This is our current #1 snowball debt and we are overpaying the minimum. I hope to pay this off when my bonus comes.
2. Pay Off Car - $4594.87 - We were overpaying on this loan until we began following snowball payoff plan. This would be really nice to retire this year as it is a $350/mth payment...on a Taurus...doh!!!
3. Pay Off CitiBank Platinum CC - $8989.16 - Our oldest CC. When we got into trouble though they jacked the rate. High $ + High Rate + High Suck factor! I am going to work the Rate down and if my bonus will pay off the first two debts, our snowball may be able to kill this one too!
4. Pay Off all CC debt - This would be accomplished with the above and not charging anything at all! We would still have our Lines of Credit to pay off, but they are at interest rates 66% lower! This would be a big boon to our FICO scores as well.
5. Save 100% for 2008 Property Taxes - $5000 - Don't want to borrow to pay on this one this year. Already saving for it. Hope my neighbor isn't "helpful " again. May fund part with bonus...can you see I am really counting on a good bonus :)
6. Keep Snowball 100% Intact - If we pay off the above debt our snowball amount shouldn't change, but it is easy to justify other uses when minimums are much less...Must protect Snowball!!!
7. No CC use - We will use Debit card were we have to, but it's Cash and Direct Electronic Payment where possible.
8. Increase Average FICO Score to 720 - Current: 692.7 over three bureaus - Need to refinance house in 2009. ARM will end with bang otherwise. As soon as I can afford to , want to move to fixed loan. I will sleep much better. 720 is the basement for the best loans, really want 750...one step at a time!
9. Stick to Cash Budget System - This has been key to not letting us go over budget. However, it is a pain. Our society IS trying to be cashless so they make you go inside to pay for gas, cannot use the self-checkout at the grocery store, etc..
10. Net Worth Increased by $20,000 - This would be a great move and poise us well for 2009.

Our stretch goal for the year - This would be to get to a break even Net Worth. This would be a tough goal given were we are, but if we stick to budget and work our plan we may be able to do it.

Thanks to all for your support in 2007 to reach our goals in budgeting and money management. We can't wait to mark some of these goals off as well!

The Neighbor from Hell vs the Taxman......

OK, I am still really mad, and I know I should get over it...but...

In early October I received my Property Tax bill for the year. This is our first year in a house as an owner (I know, I know, rent down the drain). This is also a brand new sub-division, with bigger houses that had been typical for the area.

So when we got our mortgage we were prepared to have our property taxes paid as part of our monthly mortgage payment, but after talking with the broker it was clear the city had no idea what the area would be assesed at so the broker told us an expected average as well as a Worst and Best case scenario. We saved the average and hoped for the best.

I get my tax bill and it is lower than the average estimate by $800! wOOt! I run off and pay off another debt with the difference, building my debt snowball of doom.

About a week later I get roped into a new neighborhood dinner (I hate these things with a passion, but since I am in this house forever I make nice). During dinner, my newest noseiest neighborhood tells me this story:

Nosey Neighbor - "Hey I got my tax bill. How was yours?"
Me - "Better than I thought it was gonna be!"
NN - "Yeah, mine was too high, so I called the city to fight it"
Me - "Really?"
NN - "Yep, in fact I looked yours up online and since I know you paid a lot more for your house, I used that as an example of how high mine was..."
Me - "How do you know what I paid, I never told you"
NN- "Oh the contractor and I looked it up"
Me - "Huh?"
NN -"Oh, yeah it is all available online. I showed then and funny thing, they think mine was right..."
Me (waiting for other shoe to drop) - "...and?"
NN - "They think your's was low"
NN- "Yeah funny thing, he is going to review the whole neighborhood"
Me - "I already paid..."
NN - "Oh you are fine then..."

Sure enough two days later I get a supplemental bill for $1200!!! So $400 more than my "savings" and I already spent the delta. Luckily I have a $2000 Emergency fund (Thank goodness) so I could pay it especially since the city gave me NO extra days to pay.

So the guy didn't get his fixed and got mine raised!

No good deed goes unpunished!

I wife will never force me to go to another neighborhood meeting, so at least I got something out of it!