Things have definitely been interesting this month. Tomorrow we get our first big check for my wife, so we are excited. I've actually had some things come up and had to dig into our emergency fund a little, but that's going to be replenished tomorrow. Hopefully we'll have enough left over to actually pay down more on the Van.
The budget really felt some strain this month. Most of which was the extra overhead of two people driving instead of one, but now that we're starting to get checks coming in it is balancing out. After the dust settles I'll post the outcome :).
I'm actually working on a write up between traditional IRA accounts and Roth IRA accounts, so after I've done enough research I'll post my thoughts. Short answer -- Roth's are the way to go. Find out why in detail soon. :)
Thursday, July 31, 2008
Monday, July 21, 2008
One Card Down...
I am happy to report that we have paid off one of our cards! No more Khol's charge! Now to tackle the next smallest debt in our debt snowball -- our van. We've got roughly $4900 to go on it and I think we can do that by the end of the year, but probably sooner if we play this right.
Check back later, I'll keep you updated :)
Check back later, I'll keep you updated :)
Monday, July 14, 2008
Major Milestone In Sight
My wife and I spent some time the other day to go over finances since she's been working again. Instead of working her extra money into our monthly budget, we decided to apply her money directly to our debt snowball.
Even though the likelihood of her working more than two days a week is fairly high, we decided to go on the conservative and only do our calculations based off of two days. With this in mind, we will be able to pay off one of our cars in six months. What's exciting is that if she works more than two days a week, or if I get some extra money with my side jobs, we can reach this goal much faster.
We also extrapolated this out and found that we would be completely debt free except the house in three years. Factor in raises and extra income and this snowball is starting to get really exciting :).
Even though the likelihood of her working more than two days a week is fairly high, we decided to go on the conservative and only do our calculations based off of two days. With this in mind, we will be able to pay off one of our cars in six months. What's exciting is that if she works more than two days a week, or if I get some extra money with my side jobs, we can reach this goal much faster.
We also extrapolated this out and found that we would be completely debt free except the house in three years. Factor in raises and extra income and this snowball is starting to get really exciting :).
Tuesday, July 8, 2008
Flexible Spending Account = Awesome
I know a lot of people know what a Flexible Spending Account is, but for those who don't, here is a brief rundown. You can allocate a set amount of money (up to $2000) to come out pre-tax to be used for qualified medical expenses. The glorious part of this is that you can use all of the money all at once because it is coming out of your regular paycheck for the entire year.
Some of the downsides of the FSA is that if you don't use it, you lose it. Also, they have been implemented in various ways -- most involving manually sending in receipts to your insurance provider to be processed as a claim.
In a previous post, I talked briefly how Aetna handles their FSA claims. Basically, you don't have to do anything to get a claim processed. If a provider sends in a bill, they look to see if you paid a copay. If you did, they check your account to see if you have funds available, and if you do, automatically send a check to you. This gets even better when you get a perscription filled. The pharmacy AUTOMATICALLY GETS PAID at the point of sale. This means that if you have funds available, you don't pay ANYTHING to pick up your scripts. This, is absolutely awesome :).
To top it off, Aetna has probably the tightest integration between their business systems and online presence that I have ever seen in an insurance company. EOBs notifications are sent via email at the time of processing and are availble the same day in your online account. Similarly, anything that is processed through your FSA generates the same kind of notifications and you can view your balance onlne in realtime.
How does this tie to getting out of debt? I'm glad you asked! :). Basically, if you know what your medical expenses are going to be (a year of having small children will let you know that pretty quickly), you can consider that a sunk cost -- a cost you are going to have regardless. By using the FSA, you can make that cost a dedcution, lowering your overall taxable income and thus paying "less" for the medical expenses incurred. It isn't a TON of money you'll save, but when you are fighting to climb out of the pit of debt, every little handhold helps :).
Some of the downsides of the FSA is that if you don't use it, you lose it. Also, they have been implemented in various ways -- most involving manually sending in receipts to your insurance provider to be processed as a claim.
In a previous post, I talked briefly how Aetna handles their FSA claims. Basically, you don't have to do anything to get a claim processed. If a provider sends in a bill, they look to see if you paid a copay. If you did, they check your account to see if you have funds available, and if you do, automatically send a check to you. This gets even better when you get a perscription filled. The pharmacy AUTOMATICALLY GETS PAID at the point of sale. This means that if you have funds available, you don't pay ANYTHING to pick up your scripts. This, is absolutely awesome :).
To top it off, Aetna has probably the tightest integration between their business systems and online presence that I have ever seen in an insurance company. EOBs notifications are sent via email at the time of processing and are availble the same day in your online account. Similarly, anything that is processed through your FSA generates the same kind of notifications and you can view your balance onlne in realtime.
How does this tie to getting out of debt? I'm glad you asked! :). Basically, if you know what your medical expenses are going to be (a year of having small children will let you know that pretty quickly), you can consider that a sunk cost -- a cost you are going to have regardless. By using the FSA, you can make that cost a dedcution, lowering your overall taxable income and thus paying "less" for the medical expenses incurred. It isn't a TON of money you'll save, but when you are fighting to climb out of the pit of debt, every little handhold helps :).
Monday, July 7, 2008
June Update
It has definitely been an interesting couple weeks to say the least. The good news is that my wife was able to start working part time again to bring in some extra money. That, and we're going to be able to pay off one of our credit cards this month. The BAD news is that the added expense of lunches and gas for her to go to work we have to eat until she gets paid. I'm on a bi-monthly pay cycle, so we have been in an interesting funk waiting on paychecks to come, while being in the middle of extra expense.
With the amount of hours she will be able to pick up, we could theoretically pay off the Van in about 4-6 months if we can push all her money onto it. Again, there is the extra expense of gas for her to commute and lunch (whether she buys it or takes it), but I think we can make a pretty good dent into things.
I did, however, manage to reduce our monthly outlay by about $100 so far. I canceled my Rhapsody service, and re-negotiated terms on an unsecured loan I have. I'm going to be forcing that excess into the snowball to get it rolling. All I need is to get some traction and this is going to take off.
I also got something interesting in the mail today from Chase. They are trying to get me to refinance my 2nd mortgage. I've got multiple accounts with them, so the rate is going to be about half what I have now, and thus the payment will be about half (freeing up more money for the snowball). The only problem is that my current 2nd has a pre-payment penalty if it is paid off in less than 5 years. I've technically got 4 years left on that loan, so I would essentially be borrowing money to help pay off other debt -- which is never a good idea. I'm sure the percentage is fairly low (still need to look it up), but combined with the $44,000 loan, that could add up to be quite a bit. I still need to do the math on it, but if the savings in monthly outlay could pay the penalty in under a year, I may go that route to free up the cash to help the snowball. After I get just one of these larger loans paid off, I'm really going to make headway.
I'm looking into some other ideas on how to generate some extra income as well, so maybe I'll hash some of those out on here later, but for now I'm off to get some much needed sleep.
Until next time... :)
With the amount of hours she will be able to pick up, we could theoretically pay off the Van in about 4-6 months if we can push all her money onto it. Again, there is the extra expense of gas for her to commute and lunch (whether she buys it or takes it), but I think we can make a pretty good dent into things.
I did, however, manage to reduce our monthly outlay by about $100 so far. I canceled my Rhapsody service, and re-negotiated terms on an unsecured loan I have. I'm going to be forcing that excess into the snowball to get it rolling. All I need is to get some traction and this is going to take off.
I also got something interesting in the mail today from Chase. They are trying to get me to refinance my 2nd mortgage. I've got multiple accounts with them, so the rate is going to be about half what I have now, and thus the payment will be about half (freeing up more money for the snowball). The only problem is that my current 2nd has a pre-payment penalty if it is paid off in less than 5 years. I've technically got 4 years left on that loan, so I would essentially be borrowing money to help pay off other debt -- which is never a good idea. I'm sure the percentage is fairly low (still need to look it up), but combined with the $44,000 loan, that could add up to be quite a bit. I still need to do the math on it, but if the savings in monthly outlay could pay the penalty in under a year, I may go that route to free up the cash to help the snowball. After I get just one of these larger loans paid off, I'm really going to make headway.
I'm looking into some other ideas on how to generate some extra income as well, so maybe I'll hash some of those out on here later, but for now I'm off to get some much needed sleep.
Until next time... :)
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