Using percentages to help stay motivated

If you haven’t yet figured it out, I’m a bit of a numbers geek. I am a Certified Public Accountant and my specialization is tax. Yes, I know. Most people would rather gouge their eyes out with a rusty spoon than do taxes and this is my chosen profession… but I digress. I am also the person in the household who does the monthly budget and maintains the snowball and the payoff schedules that go with it.

Yesterday, I made the first extra payment on one my husband’s student loan. It wasn’t a huge payment compared to the money we were throwing at the car and I got a bit discouraged. Then I realized that the payment I made was a pretty decent chunk of the balance. In fact, it was 8.2% of the balance (yes, I actually calculated it).

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The regular monthly payment is not even a fraction of a percent of the balance. I like 8.2%. Next month, when we make a full snowball payment, we are going to pay off about 50% of the remaining balance on that loan. I like 50% a lot better but I can live with 8.2% today.

The reason I can live with 8.2% is because we have made amazing progress. We paid off the car a few weeks ago. In the same budget month (remember we use the 28 day budget), I was also able to make a decent extra payment on one of husband’s student loans. Not a bad month and I’ve still got two weeks to scrape some extra money out of the budget. I’m hoping to get that 8.2% up to 10%. We’ll see how that goes.

Now for those of you who are following our debt snowball and are wondering how on earth I am going to pay off 50% of a $21,000 loan, husband’s total loan balance is actually two loans that we pay in one payment. The smaller loan has a balance of about $8,900, or at least it did before I made my snowball payment this month. My stretch goal is to knock that one out by April 15. It is a huge stretch but it’s tax season so it is mathematically possible. I’ll keep you posted.

Christmas Shopping…Check!

Tonight, I did most my Christmas shopping. That’s right, and I did it all online. Jeff and I were sitting here trying to figure out how to get all of our shopping done with our busy schedule. It didn’t look promising. We always end up waiting until the last minute to shop and, therefore, can’t shop online. Not this year. I opened up the laptop and logged into Upromise. I hit a few stores and after about two hours, I was done with most of my list.

I did the majority of my shopping at Red Envelope. I got a ton of gifts and got a pretty good deal. My purchase was originally $403. The site was having a 20% sale if you purchased more than $125. That brought my purchase down to $325. My rewards from Upromise will be $52, bringing my total purchase to $277. Not bad.

When Christmas shopping this year, don’t forget rebate sites like Upromise and Ebates. They can really add to your savings. Ebates let you accumulate rebates and then receive the cash. Upromise allows you to do a number of things with your earnings. You can save them for college for yourself or a family member or you can use them to pay off a Sallie Mae student loan. Now you can put rewards into a Sallie Mae savings account which will give you a 10% bonus on your earnings each year. If you don’t like any of those options, you can also request a check. The rebates you earn vary by store but most major online stores participate in one of the two programs. Many sites participate in both programs.

What sites do you use to get the most bang for your buck when shopping online?

Back-to-college shopping? Think life insurance

A few weeks ago, I read in article in the Wall Street Journal about a family who lost their 25 year old son in an accident but were still wrestling with his student loan debt cause they had cosigned on his loans. In addition to the pain of losing their son, they were all working extra jobs to try to keep up with the loan payments. While no one wants to think about something like this happening in their family, it is important to plan for the worst and hope for the best.

If you have a student preparing to go back to college and have cosigned for student loan debt or have taken out parent loans, please consider getting life insurance on the student. A term policy on a college student is extremely inexpensive and can cover all the costs of loan repayment should something happen. Reading that story just broke my heart. Grieving the loss of a child is hard enough but to be remembered of that loss every time you have to make a student loan payment; I can’t even imagine what that poor family is going through.

Make sure you shop around for life insurance. Many student loan providers will offer you life insurance in conjunction with the loan. This is generally not a very good deal. You will most likely do much better on the market.

Stop being broke, part 1: The problem

As this idea is forming in my head I know I am probably speaking mostly to the choir. Most people who read personal finance blogs have already made the decision to be weird and not live like everyone else. This is for those of you who might need a bit of a nudge or have friends or family who might need a bit of a nudge.

If you are living paycheck to paycheck and racking up a little bit more credit card debt than you had the month before and you feel hopeless, there is a way out. This is not a get rich quick scheme but it may be a get rich someday way of life. The first step, just like AA is to recognize that there is a problem. You don’t have any savings, you have car payments and debt, maybe your mortgage is a  bit too much, forget about retirement accounts and saving for college for your kids. That’s not even in the realm of possiblity. Are we starting to see a problem here?

I know things might look bleak. You may have lost your hope years ago. Today is the day to get that hope back. Today is the day that you make the decision to  change. Today is the day you decide that you don’t want to be  broke forever, that you want to stop using credit cards and dig yourself out of the mess you’re in. If you make that pledge, I will help you. I will do everything I can to help get you on the right road. Realize now that this is going to be hard work. You are going to have to sell stuff, cut your spending, maybe get a second job or get some education. This will not be easy, but is what you’re doing right now easy? Is the stress you feel when the bills come easy? Will living like this for the rest of your life be easy?

If you are ready to start living your life like the few, start today by saying “Enough is enough. I don’t want to live like this anymore.” Say it all day. Keep saying it to yourself. I will help show you the way.

This is the first in a series “Stop being broke”. On Monday, I’ll discuss the second step. If you have questions or are really pumped to get started, you can comment here or send an email to kristin@klingtocash.com. Put “Enough is enough” in the subject line.