I’ve thought about taking a second job, but my hours are so unpredictable that it would be difficult. My wife babysits (both for the cash, and because she loves it!), but I really can’t think of anything like that to do besides consulting work.

So, for now, I guess my plan is to sell stuff on eBay, and to try to get small consulting gigs. I’d appreciate any advice on other ways to bring in some dough!

I hate paying the high prices for gas as much as anyone, but personally think this is one thing that actually is not our government’s fault. Am I wrong?

If I am interested in cooking something I’ve never made before, my first instinct is to hit up foodtv.com and search for ‘ Alton Brown’; if that fails, I go on to Google. I’ve never failed to find a multitude of recipes for whatever I’d like to cook in this manner, and most of the recipes also have user generated comments attached to them with ideas on how to make it better.

I haven’t touched the recipe books on my shelf in a couple years.. might be time to put them on eBay before other people stop seeing the value in them!

If you still find them valuable, please tell me why — I’d love to have a good reason to keep ‘em around!

Some advice:

• If you are interested in a particular title, always do a google search for something like “ free”. If it is a trade-related rag, there are often companies that will “sponsor” your subscription. For example, “eweek free”
• Check sites like fatwallet and SlickDeals for running discounts on magazines.
• Never, Never, EVER subscribe using the magazine’s subscription card. I have never found a price on one of those cards that couldn’t be trivially beat by one of the discount magazine providers
• Check eBay. Seriously.

Oh, yeah, if anyone wants a subscription to Maxim, post a comment with your e-mail address and why you’d like it [I will strip your e-mail before actually approving the comment].. I’ve got like 6 more years for free, and never read it!

So, reasons to get rid of the cell phone:

• Save some green!
• When I’m away from home or the office, I’d actually be *away* from home or the office.
• Less temptation to talk while driving, which would decrease risk on the road.

..and reasons to keep it:

• I like having the internet in my pocket.
• It’s nice to be able to call people from where I am.
• In case of emergency
• Because I want one!!

I knew before I posted this that I wouldn’t be cancelling my phone. I wish I could bring myself to do it.. it was really nice in the “old days” when there wasn’t that constant distraction.

I think coupons are great, but they can be bad for impulse shoppers like us in cases like this — just because something is cheap doesn’t mean you’re saving money.. you can save more by not purchasing the item to start with!!

I’ve been doing quite a bit of this — finding extra stuff around the house that we no longer need, and putting it up on Craigslist and eBay. However, one of his big recommendations always seems to be to sell your cars. Even if I had any desire to sell off our cars (one financed, one leased), it would be a huge money-losing proposal for us (we owe more than $3k more than the financed car is worth, and selling off a lease is never profitable.) In a year or so, however, we could easily sell the financed car and buy a cheaper one.

Am I an idiot? Should I lose money on my cars, just so I can say I sold them??

Of course, there are a few downsides to this approach that I see:

• You’re saying that you can touch your retirement. Not a bad thing in itself necessarily, but this could quickly become a “slippery slope”.
• Once you start contributing above the company match, you may be better off just putting the money in a bank account for emergency purposes.
• 401k’s can lose value! If the economy crashes, and your mutual funds plummet, you may not have the money there.
• Even though access to funds from your 401k is relatively quick, it still takes time. For this reason, I’d still keep at least a couple thousand dollars in a bank account.

Certainly something to think about when we’re getting to the point of trying to build up a real emergency fund.

I also took a look at some of the consolidation offers out there.. MBNA/Bank of America has a consolidation loan that allows you to borrow up to $50,000 at an interest rate of as low as 8.99%, and a term of as long as 8 years. Even assuming that I’d only qualify for an interest rate of 11.99%, this loan would be able to help us get our minimum payments down to our base income, and would make it easier for us to do a “debt snowball” style plan where we’d throw a lot more money at smaller debts (preferably the ones with higher interest rates), and could get us out of debt a lot faster. Unfortunately, they wouldn’t qualify us for the loan. Sigh!! If anyone has had experience with banks that are actually willing to look at your overall situation, budget, etc, and help you out with a loan at a reasonable rate, I’d love to hear about it!

So, our options are to just pay off debt, get out of debt quicker, and lose the benefits of compounding interest for a couple more years. Or, we can start bringing the 401k back up, and have more money for retirement, but take longer to pay off debt.

Anyone been in this situation before? What do you think we should do?

If you are replacing a standard 150w bulb, the CFL replacement will use around 42 watts. According to my last energy bill, I’m paying $.0876/kwh. Assuming you are using your lights for 8 hours a day (which is on the high side), the 150w incandescent bulb will consume 1.2wh each day. The 42w cfl bulb will consume .336kwh each day. With 365 days in a year, the 150w bulb ends up costing you (1.2 * 365 * .0876) == $38.36 a year. The 42w bulb ends up costing you (.336 * 365 * .0876) == $10.74/yr.

Wow - that’s quite a difference. Of course, this is a high-powered bulb, and assuming lots of use — but still, WOW! And we are only considering the raw energy cost.. you also don’t have to replace these bulbs nearly as often, and they put out far less heat. Sounds like a win-win to me!

Have you tried a HSA? What has your experience been?

However, I have found that rewards cards would actually work out pretty well for me — *if* I paid the balance off. For example, I generally earned an average of 1.5-2.0% cash back on my Amex Blue card, which was always nice on my annual renewal statement.

What has your experience been with reward cards?

http://www.nytimes.com/2008/06/04/business/04motors.html

In some ways, I see this as both a positive and a negative.. we Americans do tend to drive much larger vehicles than we actually need, so the gas prices will certainly help encourage people to drive the smallest car they can get away with. On the other hand, is this going to make it harder for those that do need a larger vehicle to purchase one?

We have two cars — a sedan with good gas mileage (which I generally drive), and then a SUV with crappy mileage (which my wife usually drives to work, which is only 5 miles away). We like having the SUV around, as it’s much nicer for hauling the dogs around with, and gives us the ability to pull a trailer those few times we need to. Of course, we could always just rent a truck any time we pulled a trailer.. but I don’t really have a problem with driving a SUV for the few miles that vehicle is driven.

What do you think? Is it OK for us to drive a SUV?

Myth: If you pay off your credit card each month, you get the free use of someone else’s money.

His reasoning was that most people don’t pay off their cards every month, and that even if you do, most people spend more money on credit cards than when paying cash. I don’t know about you, but I find that cash spends easier than credit to me - I must be the exception? As you can see, I obviously hadn’t been paying off my cards every month, but that won’t be the case in the future for me.

Myth: You need a credit card to rent a car, check into a hotel or buy online.

Been there, discussed that.

Myth: You should get a credit card to build your credit.

Discussed this one in yesterday’s post. I, for one, still think that your credit score is important.

Myth: You can get a good deal on a new car at 0% interest.

He goes to say how the car loses 60% of it’s value in the first four years. Sure.. but you also don’t have any repair costs, etc. I still think you can do fine with a used car, but have no problem with buying a new car at 0%.

Myth: Car payments are a way of life. You will always have one.

I’ve discussed this one in a couple posts. In some cases, you can come ahead with keeping your money in the bank and having car payments. I’ve also never heard anyone say that it’s “just a way of live” to have payments. Have you?

Myth: Debt consolidation saves interest, and you have only one payment.

First of all, it was pretty clear that he was discussing debt consolidation via a home equity loan. Obviously, that’s dumb — let’s roll unsecured debt into a secured one!! In any case, he then goes to discuss how you end up consolidating some debts that have a lower interest rate into the loan, and your overall average rate goes up. I’m curious — *why* would you consolidate lower interest rates into a higher interest rate loan?

Myth: Debt is a tool and should be used to create prosperity.

Sure, you shouldn’t get yourself into debt up to your eyeballs. But it is certainly possible to use debt as a tool to help you build wealth — like with the car payment example.

Now, for a few I completely agree with…

• Myth: If I loan money to a friend or relative, I am helping them.
• Myth: By co-signing a loan, I am helping a friend or relative.
• Myth: Cash advance, payday loans, rent-to-own, title pawning and tote-the-note car lots are needed to help lower income people get ahead.

His premise is that to even have a FICO score, you need to be using your credit. This is true. However, in my opinion this does *NOT* translate directly to loving debt. For those of you who are unfamiliar with how FICO works, here is a forum (which is a bit dated, but is the most current description I can find) with a post which describes the FICO scoring system:

http://forums.kiplinger.com/showthread.php?t=9424

Basically, to have a good FICO score, you need to have credit opened in multiple categories, and be actively using it. Having a credit card that you pay off every month will be enough to get you a FICO score. It won’t be great (since you don’t have installment debt, etc), but it will be “good enough”. If you have a credit card that gets paid off every month, plus a mortgage or car loan that is being payed as agreed, you will have a pretty decent FICO score. Really, Dave’s presentation of this portion was relatively accurate, although I still don’t agree with the “I love debt” part — I’d refer to it as the “I use credit, and use it responsibly” score. If you have many credit cards that are all maxed out, or late payments, your FICO score is going to suck.

Now, for his point that you don’t need a FICO score to be able to get along in life. It amuses me that he aid this, and then went on to say how he wouldn’t be able to go rent an apartment for $500/mo, even though he could pay for the entire building in cash. This could be a pretty big problem for those of you who don’t have enough cash to purchase the building! Sure, you may be able to find an apartment complex that will work with you, but you may have to put a couple month’s rent up front, and may be limited on where you can go. And if you go to get a mortgage, you’re going to be in trouble — most of the lenders I talked to required a base FICO score before they would even talk to you. Sure, you could use one of the lenders that he offers that can go through a different process to certify you — but what is the real harm of having a single credit card (or charge card) that you pay off every month, which would make it easy for you to work in the standard lending industry?

I’d love to hear what you think!

As your renewal date of 07/02/08 approaches, we want to remind you that your Safe & Sound Plan will be automatically renewed at $18.95. After this date, the credit card you’ve placed on file with us will be charged $18.95* per month. Please take a moment to review your OnStar billing statement below.

Since we have never once used the OnStar since purchasing the vehicle (and the pack of cheap minutes that came along with it), we decided to cancel. The only downside I see is that we lose the automatic notification if the vehicle is in an accident, but is that really worth an additional $18.95/mo?

I’d love to hear about anyone’s experiences with OnStar, and if it’s possible to get a less expensive, “accident-only” package!

I finally got fed up enough with it that I gave them a call, and said I was going to switch to satellite and DSL if they couldn’t lower my price. What do you know, they dropped it to $99/mo, just because I threatened to go elsewhere. Nice!

Proves the “never hurts to ask” saying true! I really need to try that at the grocery store sometime..

• Checked Baggage — they now charge for the *FIRST* bag, not just the second and third like a few months ago. Sheesh!
• Seat Preference — you used to be able to just pick a seat. Now, you get to pay for the privilege of getting an aisle seat.
• Curbside Checking — it’s better for the airline, and for us. Why charge??
• Fuel Surcharge — well, I suppose they need to pay for the gas too.

I hate traveling.

To start with, here is a link to an article from Dave on this issue:

Dave Ramsey’s Advice About Debit Cards

I’ve had a hard time finding a lot of references for this issue that are recent, but here are a few random links, all of which appear to have been written after the April 4, 2000 deadline mentioned in the article above:

http://www.kiplinger.com/columns/fitness/archive/2001/ff20010808.htm
http://www.pirg.org/consumer/banks/debit/debitcards1.htm
http://www.insiderreports.com/storypage.asp?StoryID=20006836

Most of the articles above refer to credit cards being federally regulated [ie - there are legal requirements for them to protect you], and you are guaranteed the right to chargebacks. Apparently, however, debit cards are based purely on the policy of the banks, which they can change at any time.

One of the biggest reasons that I don’t use my debit card online is simply because if any fraud does take place, it exposes direct access to my bank account (so if a thief cracks the database of a retailer where I purchased something and steals the account numbers, they can drain every penny out of my account plus however large of an overdraft my bank will probably allow even though I’ve requested they not allow overdrafts.) In this case, I’m out whatever money was in my checking account until I can prove to the bank that it was fraud and get my money back (which can take months). With a credit card, once I file a claim, the money is back in my account right away (however - the bank does reserve the right to reverse the refund if they find that the refund is outside of their protections. I’ve never had that happen yet..)

Also, when it comes to renting a car or staying at a hotel, in my experience most companies will
place a hold on your account for much more than the actual value of the transaction, to ensure
they can get their money in case of any incidentals. This can cause a debit card to be declined
for other purchases on your trip, even though you have more than enough money in the account.

I’d love to hear what you think!

* It’s free
* I haven’t found any calculation errors with any of the calculators I’ve used
* You don’t transmit any data to the site — the calculators are Java applets that run locally on your machine.

If you look closely, you will find that most major financial sites license the calculators from JavaCalc. Pretty cool, huh?

After much discussion, we decided that we would keep an American Express charge card for internet purchases. The advantage of this card is that it requires us to pay the balance in full each month, and it still offers all the protections of a standard credit card. The only downside I see is if we run into trouble after we’ve already paid the balance, we may not be able to file a chargeback — but this is certainly better than the case where the money is already gone from our account before we receive the item!

How do you deal with internet purchases without digging yourself further in the financial hole? Does the Amex route ring true to you?

I’ve also found that the online “competitor’s pricing” that companies like Progressive offer are not accurate at all. They usually tell us that State Farm’s prices are at least twice what we are actually paying for our insurance.

For me, the possible savings offered by these online-only companies is not worth the hassles that happen during a serious accident. We’ll stick with a company that we know will take good care of us. What do you think?

As a borrower, it really doesn’t look that interesting — the interest rates generally seem very high compared to bank-based lending. However, once I actually have some money to invest, it looks like a pretty safe investment - if you spread loans of $75 among 100 people, for example, you would likely get a fairly good return on your money with very few defaults.

A little twist on the concept is Zopa. With Zopa, borrowers take out a personal loan from a bank, with a hope that friends (and random other people) will take out a CD from Zopa (at a very competitive rate), and designate a certain percent of their returns to help pay off the borrower’s loan. Looks like a very interesting way to get family and friends involved in your financial life. No risk to the people investing their money, and the possibility of good returns for the borrower.

If you’ve had any experience with solutions like these, I’d love to hear about it!

We have never had a late or missed payment, so once the high unsecured balance is off our credit reports, we should have a great credit score. We’d like to keep it this way. Also, I’m an old fashioned believer that I should pay back any money that I borrow.

So, here are the options I’ve come up with:

1. Regular Payments: This is the option where we keep making our regularly scheduled minimum payments, and use a plan similar to Dave Ramsey’s “Debt Snowball” to increase our momentum as accounts are paid in full. We could also try to negotiate with our creditors to receive a lower interest rate and/or monthly payment on our accounts.

   The positives:
   * As long as we can make payments on time, there would be no harm to our credit history.
   * Accounts can remain open as they are paid off, so we can show a better used credit to available credit ratio
   * We pay off the entire balance owed

   The negatives:
   * Our minimum payments are not likely to decrease quickly, so it may be hard to make minimums for awhile.
   * We need to ensure that payments are made on time across all of our accounts.
   * The creditors may not be willing to cut interest rates, so this may be the longest payoff method.

2. DMP (Debt Management Plan): A Debt Management Plan is an option where we would hire a company to negotiate with our creditors to try to lower interest rates and minimum payments. They would put together a plan where we pay them a certain amount of money per month, and they will distribute the payments to our creditors. The plan is structured so our debts would be paid off in a definitive period of time.

   The positives:
   * It is very likely that our required monthly payment would be drastically decreased, as they will negotiate the interest rate and minimum payment down.
   * The DMP providers have more power to negotiate with the creditors than I do, as they can show them that all creditors are being treated fairly, and that they will be paid in full after a specific period of time. They also have pre-existing relationships with most creditors that allow them to give us a good estimate of what the payments would be before ever approaching the creditors.
   * Our debt would be paid in full.

   The negatives:
   * During the repayment period, our creditors may note that we are paying on a Debt Management Plan. This does not reduce the credit score itself, but if we need new credit before the balances are paid in full [ie, buying a new vehicle, or a home improvement loan], the banks can see that we are on a DMP. This can be looked at as either a positive or a negative. Note that this note is taken off when the account is paid in full.
   * All the credit accounts are closed. This is bad from a credit perspective, but good from the perspective that the temptation to use the cards will be removed.
   * It may be more difficult to re-establish credit with the companies that were paid off with the DMP after the program’s completion.

3. Debt Settlement Plan: A debt settlement plan is very different than a debt management plan. On a debt settlement plan, you go to an attorney, who will look at your debts and work out a plan to settle them for less than you owe. Then, you stop making payments to your creditors, and start sending monthly payments in to the settlement administrator. Once you have built up enough money to pay off your creditors, the attorney will start negotiations with your creditors for the settlement.

   The positives:
   * It is likely that the debt will be paid off for much less than actually owed.
   * It is likely that the debt will be paid off much quicker than with other options.

   The negatives:
   * This is murder for the credit score. You actually stop paying your creditors while the settlement amount is built up, so they have no idea what is going on. They may go the route of filing a lawsuit against you, etc.
   * There is no guarantee the creditors will accept the settlement. If they do not accept it, you will owe a pile of fees on top of the remaining principle.
   * You are settling the debt for less than you actually owe. For me, that is not a good thing.

4. Bankruptcy: This one really isn’t an option for me, so I’m not going into the details. In my opinion, this should be an absolute last resort.

We have decided to get some estimates to see what our payments and payoff schedule would look like under a Debt Management Plan. If the DMP would be able to help us significantly, it’s likely that we will go with that option. If not, we’ve decided we will continue making regular payments, and also try to negotiate with our creditors. I’ll keep you posted on our decisions and how things are going.

I’d appreciate any questions or comments, and would especially love to hear from anyone who has been in a similar situation and has managed to get out of it!

Let’s take a look at how you would end up after 8 years if you purchased a car with a 5-year loan at 0% interest (which is pretty easy to get right now) and then kept making your payments into a savings account, versus Dave’s method. Read more with the link below!

Assumptions:
* Payment of $417/mo in either plan (this would buy a $25k car at 0% interest)
* Keeping saved money in a mutual fund that earns 12%
* No car repairs needed, same maintenance schedule on used car vs. new car (yeah right.)

0% Method:
* Purchase car at 0% interest for 60 months, pay a total of $25,020 over 5 years for the car.
* At the end of the 5-year period, start paying $417/mo into a mutual fund that earns 12% interest. At the end of a 3-year period (for a total of 8 years), you will have paid $15,012 into your mutual fund, and it will be worth $17,964.
* At the end of the 8-year period, you own a car that is worth around $3000, and you have $17,964 in your mutual fund. So you could trade in your car and your cash, and purchase a car for around $20,000 in cash.

Dave’s method:
* Purchase a $1668 car with cash on hand.
* Pay $417/mo for four months to “pay back” your savings for the first car. Total: $1668
* Save $417/mo for 12 months. Total paid is $5004, with interest you have $5324 in your savings account.
* Sell car for $1000 and purchase new car for $6000. You’re now 16 months into the plan, and are driving a paid-for $6000 car, and you have $324 left in your car savings account.
* Save $417/mo for 3 more years, for a total of $15008 paid and $18419 in your savings account.
* Sell your car for $2000, and purchase a $20,000 car. You have $419 left in your savings account.
* You are now 4 years and 4 months into your plan, have paid $21,680 into your savings account, and are driving a $20,000 car.
* Save $417/mo for 4 years, for a total of $20,016 paid into your savings account, and a total of $26,103 in your savings account.
* At the end of the 8-year and 4-month period, you own a car that is worth around $6000, and have $26,103 in your mutual fund. So you could trade in your car and cash, and purchase a car for around $32,000 in cash.

So it does look like Dave’s plan will get you a better car, on paper at least. However, a few things to note:
* Over a loan period this short, it can be very difficult to get a 12% return on your money.
* On the 0% plan, you start with a brand new car. On (my interpretation of) Dave’s plan, you are driving a $1500 beater for the first year, and then a $6000 car for the next 3 years. The nice thing with the new car is that you can often get a warranty that will cover the first 100,000 miles or 5 years, so you don’t run a risk of high repair bills for the period where you are still paying for the car.

Personally, I’d probably stick with the 0% new car plan, as our budget is tight, and it could be tough to keep enough money in savings for repairs if the car breaks down. What would you do?