I’ve Paid For This Twice Already…

Archive for the ‘33 days’ Category

Day 4 of NCN’s 33 Days and 33 Ways to Reduce Debt Challenge is about Extra Payments Extra Deposits. Basically it boils down to making more than one payment a month, be it to your savings account or snowflaking to debt.

Any of the regular (or even casual) readers of this blog know that I am a HUGE fan and practitioner of the mini payment concept. As *soon* as I get money that is earmarked for snowflaking (surveys, selling things, unexpected gifts) off it goes to the credit card. The very moment it hits my bank account it is bounced off to the credit card. Very very often if one was to look at my bank statement online there will be what I call matching payments. There will be a deposit for an amount (like $10.69) then the very next line is an online payment to Capital One for the exact same amount. This will have to be altered slightly as I change to Citibank that only allows 4 payments per billing cycle, but I aim to make it a weekly event instead of an instant event with a similar effect.

To illustrate this in action and the power of making these mini payments, I’ll dissect my last billing cycle with Capital One . My minimum payment due was $117. I made one large payment, that included my $117 minimum payment, of $323.01. So $206.01 of that was over and above the minimum. But that’s not all. In addition to that snowflake, I made payments in the amounts of $55.54, $23.62, $4.28, $3.00, and $12.00 over the course of the billing cycle for a grand total in payments of $421.45, the total amount over the minimum being $304.45. Without making those extra mini-payments, I would have missed out on reducing my principal by close to $100. That’s a lot of money to me! I could have saved them all up for one big snowflake but something might have happened to make me spend some of it before it got to the credit card. You may think that it isn’t worth it to make a $2 or a $4 payment but it really is. Every little bit adds up.

All these extra instantaneous mini payments are really helping me get out of debt faster than I ever thought possible. Seeing my debt total creep downwards really keeps me focused and motivated. I recommend everyone try it! I like the big payments too of course but I like the multiple mini concept as well. I intend to employ a similar tactic when saving is my primary goal, and I hope I get great results!

~J

Day 3 of the 33 Days and 33 Ways to Reduce Debt Challenge at No Credit Needed is about sacrifice. What are you willing to sacrifice to get out of debt? And what won’t you sacrifice?

For me this ties into priorities. What things are a priority for me even above debt reduction? Because those are the things I keep spending money on, right? And what things are not as high a priority any more?

Well, there are many things we gave up, like going out to eat, extras at the grocery store, trips to Target for random stuff for the house, new clothes, I cut back yard sale shopping even. My spouse wants a Playstation 3 and I want a Dyson. But we are not purchasing either of these things until we are out of debt and save the money for them. My spouse says by then it’ll be a Playstation 4 he wants. Heh.

We could save the money now for these things a little at a time, but we choose not to, funneling that money to debt reduction instead. But there are things I do continue to save for, even if it is at a scaled back degree while we are aggressively reducing debt. I save for each of my children’s college educations. I save a small amount each month for a new furnace for our house because it is 20 years old and we don’t want to have to finance a new one when it gives up. And my spouse makes a 401K contribution each paycheck. Any or all of these savings plans we have put into place could be diverted to save for one of our *wants*, but our priorities are with other things now. And these savings plans continue even in light of our debt reduction, because for us there are some things as important if not more important than reducing our debt. And those are ours.

There are also a few things we *could* eliminate (not necessities like food or shelter) but we choose not to. One is activities for the kids. My son will be doing gymnastics this fall and my daughter mommy-and-me swimming. I don’t want them to miss out on life experiences because of choices their parents made before they were even born. But I choose one activity at a time for each of them, I don’t do as many as I might if money was no object. Another is cable TV. My spouse says he’d rather stay in debt than give up cable. I’m not sure he’s kidding. Right now, our cable is basically free (we have a package introductory deal with phone and high speed internet, and separately those two would cost as much as the three combined) but it won’t stay that way, next April the cost will go up. We need the high speed internet, it is specifically required for my contracting work. But we’ll have to revisit cable television. As I watch a rerun of What Not To Wear and type this, I sincerely doubt we’ll cut the cable. But we’ll see. We’ll still get a three-service discount and it might end up being really cheap for the cable.

Sacrifice is all about priorities. What is more important than debt reduction, and what is less important.?  The less important can wait, or be eliminated altogether.

~J

Yesterday’s post on No Credit Needed for the 33 days and 33 ways to save money and reduce debt challenge was about Brand Disloyalty. Basically, it talked about not being loyal to a particular brand to get savings when there are sales and especially, try generics as a substitute for your favorite brands.

Well, I have talked before about buying generics – I shop at Aldi for example, which is all generics all the time. But there are some things that I am very very hesitant to try generics or brand-switching on – toiletries. I find I am very loyal to particular deodorants, shampoos, and conditioners especially. I have too often in the past bought a different brand than I usually use of one of these things and had disastrous results. No one wants to have wet spots under their arms halfways through the day or have their hair feel like straw from being under-conditioned (or have their scalp bleed from a reaction, which actually happened to my mom). And even if you don’t have a strong negative reaction, if something doesn’t work as well, you aren’t as inclined to use it. I am still working my way through a deodorant bought in 2002 that works okay as long as I know I won’t be doing anything strenuous. I hate buying something and then throwing it out without using it all. And toiletries tend to be expensive items in general so it drives me crazy to spend a lot of money and then effectively waste it.

So I combined my love of free samples with my desire to reduce spending and try out for free many many different brands and types of all sorts of things. For example, right now I am trying out Dove deodorant. In the past I’ve gotten different shampoos and conditioners for free and found a few that I really like and would buy on sale or with a coupon.

Now, this won’t generally work with generics — you usually can not get a free sample of a generic, and if you want to switch to a generic you just have to bite the bullet and try it. And, I have heard about loyalty clubs at drugstores like CVS where people manage to get toiletries free, and I keep meaning to look into that and don’t. Because a free full size would be cool too. But this technique of finding free samples of items I use but different brands (google searches for “free shampoo” etc are your friend!) has really helped me break some of my brand loyalty.

And if I get a free sample of something I normally use along the way… well that is just a bonus.

~J

No Credit Needed is running a 33 day series on 33 Days And 33 Ways To Save Money And Reduce Debt. The first topic, posted today, is about eliminating fees. I thought I’d chime in with my advice about eliminating fees – know all the facts about your accounts so you don’t incur them. Especially if your bank or credit card or other account gets bought by a new lender/institution.

A few months back, I had a $3 charge on my savings account at the end of the month. I have a savings account at my local brick and mortar institution connected to my checking account at the same location that has a low minimum balance to avoid monthly fees. I knew my balance had been well above that the whole month, so I was confused and started delving deeper into my savings account agreement through the online documentation. When I had first opened the account 7 years ago, I had read all the accompanying documentation and was aware of what fees may be involved for certain actions. But about 2 years later, my bank was bought by another larger bank, and I got a new customer agreement that I barely skimmed other than to see what the minimum balance was and what fee was associated with being under it. Big mistake. Just because the minimum balance fee was the only one in my old agreement that I thought might apply to me at some point didn’t mean the new agreement might have different terms I needed to be cognizant of and adhere to.

Now, after incurring this $3 mystery fee, reading the online customer agreement, I found out that I was only allowed 3 free withdrawals from my savings per month, and every one after that incurred a $3 fee. I don’t often withdraw from that account more than once a month, so I hadn’t gone over the limit before, but this particular month I had been setting up my ING account and transferring money out of my savings to my checking for various subaccounts and had gone over the maximum free withdrawals by one. Oops!

Since my brick and mortar savings bank account earns paltry interest (about 0.25% at last reckoning), that $3 had just wiped out any interest we had earned maybe… ever. We use the account for short term savings (like annual bills etc) so the interest rate didn’t bother me vs availability of funds. But… oops! If I had just been aware of the withdrawal limit (and I take full responsibility for not being aware) I could have structured my withdrawals more efficiently and never paid that $3 fee.

Be aware of *all* possible fees! You can save money easily by just not spending it in the first place. I’ve made a promise to myself to never pay another unnecessary fee.

~J