No, I haven't forgotten

This blog hasn't been abandoned. I haven't posted in a while because I have been in a state of financial stasis and frustration. I'm trying to develop ways I can have more money each month and until that really happens there hasn't been much going on financially. I think I may be moving in with a friend who is coming here from Ohio. Nothing is 100% sure yet, but if the move happens it will most likely be in January or February. THe only reason I'm insane enough to move yet again in such a short time is the fact that while I am not living beyond my means, I'm pretty darn close and I would like to save a few undred dollars each month. More on this later...

Free Money!

Haha, not really.

Well, kinda sorta. I wanted to put up a post about Perkins Loans. If you are currently or were recently in college and you took out a Perkins loan, you may be elligible to have some or all of it cancelled. I teach in a high-need district and I'm considered a "shortage area" teacher (foreign language, mathematics and science are the major shortage areas I know of, but there may be others). Therefore, I'm elligible to have the Perkins loan I borrowed from my university cancelled over a period of five years. It necessitates doing some paperwork at the start of each school year, but they progressively forgive a percentage of the loan each year for five years until it is gone. Now, if you're not a teacher I believe there are other kinds of jobs that are elligible for this forgiveness, but if you ARE a teacher or are sure you are going to be a teacher out of college, definitely look into this. Even if you teach in a wealthy district, you may be able to get the forgiveness if you are in a shortage area.

Knowing all of this, I only wish I had borrowed more through the Perkins program, but back then I didn't know I was going to be a teacher. Hindsight is 20/20, eh?

3, 2, 1...

Welcome back, dear readers! As the new school year gets underway my financial juices are once again flowing with the influx of my salary, so I've been inspired sit down and think about a new approach to managing my finances this year.

Last year I had just moved to a new state with little more than what could fit in my Toyota Matrix (which had been bought brand new, with no money down a few months before). Soon I was laying out money for housing deposits, rent, car payments and insurance (almost twice as expensive in NY as OH), furniture and the necessities of life that get us through each day. After moving out of a house share and into my own one-bedroom apartment I began to realize what it really costs to live on one's own. The previous year after I had received my job offer and salary information, I stared wide-eyed at a computer spreadsheet that showed me the riches I would have at my disposal and the speed with which I would be able to pay down the debt I had incurred over six years of undergraduate education, a year abroad and my master's degree. As many of you know, these things always look good on paper.

Although I didn't do as well as I had hoped last year (a year for me is September-August), I did end the year in less debt than when I began it.

I have long been a Suze Orman disciple and have followed the idea that as long as I have CC debt, I have no reason to be saving money and that all of my extra income should go towards paying down the debt. After a year of living with a big boy's salary and trying to put this idea to use I have found that I have problems with it, and I'll tell you why. This past spring I was feeling really good about how I had done financially. I had paid off the $3000 I had borrowed from family members to help me with my move, my CC debt was going down and my credit score was going up, and I'd even opened up a retirement account that had quickly amassed $1000. I had a lump of money in the bank to live off of for the summer and set to enjoying the next ten weeks of relaxation, road trips and entertainment.

Six weeks later, I was basically out of money. Aside from the checks I had written in June to pay my rent through September, I didn't have much left to live on. I started using my charge card, thinking I would maybe have to charge a few hundred bucks that I would pay back as soon as I got paid. For some reason, money seems to "spend easier" when you are charging. By the time I received my first check of the year this past week I had run up just over $1000 on a card that had been previously empty for some time.

I realize now that this could have been avoided by setting aside a little money each paycheck throughout the year so I would have a lump in savings that could pinch hit if my big summer check ran out. This year, I'm going to set aside $100 per month or $50 per paycheck in my ING account. (1) I'm going to continue to contribute to my 403(b) at the rate of $200 per month (2). For my CC debt, currently around $8000, I'm going to pay a total of $300 each month towards it, focusing first on a couple of small (less than $1000) balances, then gradually whittling away at the bigger accounts (3). I arrived at these amounts by trying to be realistic about my debt and treating it as an unchanging bill, almost like a car loan. I pay my car payment every month because I have no choice. I could pay more, but I can't pay less. By this logic, assuming I can keep my CC debt at a 0% interest rate (nearly all of it is now), I should have my CCs paid off in two years, while having put over $5000 in retirement and $2400 in personal savings. Here's where it gets interesting, though. I picked these figures based on the assumption that each month I will have maximum bills (I only pay car insurance eight months out of the year) and minimum income (not counting a tax refund, bonuses for extra work from my job or my end of year grant). I'm hoping that in July of next year, after the smoke has cleared, I should actually end up doing better than planned for the year because of those little windfalls I'm not including in my calculations.

Whew! Long post today...Do you have a strategy that works for you? Let me know at joelstuartliving@mac.com

Inactivity Fee?! Screw You, Chase!

I'm done with Chase Bank. Done, do you hear me?! First, after being a good little credit card customer with Chase for over a year, having taken advantage of a 0% offer from them and always paying at least the minimums (though usually more) on time, I decided to stay with them after the 0% ran out because my rate was still a very reasonable 6.99% and it was a larger balance so I didn't want to transfer at the time. Earlier this month I logged on to my online account to find that Chase had more than doubled my interest rate to over 14%. When I called to ask about this, the gentleman on the phone informed me that Experian had informed them that I had become a higher credit risk because more than 50% of my available credit had been charged on. Hmm...sounds fishy. I bought a credit report and score from Experian and found zero negative items on my report and a score over 730! I called Chase back and they said I could either pay down some of the credit and they may lower the interest rate back down or I could close my account with them and they would lower it then. Sound insane yet? I promptly went to www.lowermybills.com and applied for a new zero percent intro card with Discover. Within a few days I had been granted the new account with a hefty limit so I could transfer the balances. Sometime in the next week I will no longer be carrying a balance with Chase, so ha!

That was strike one.

Strike two came when I received my bank account statement from Chase (formerly Bank One) this month. I have not used the account much since I moved to New York, because when I got here I could not deposit locally because the transfer of accounts from Bank One was not yet complete. So I decided to open an account with the Teacher's Credit Union near where I work. While it has its idiosyncrasies, I have been very satisfied with the service from the credit union, but had intended to begin using Chase again eventually. I had $17 dollars sitting in the Chase account for the past year, and this month I guess they got fed up with me and charged me a $6 "inactivity fee." This week I plan on calling them, bitching to get my six bucks back and closing my accounts with them. I'll leave the credit card open while I pay down my balances so there isn't a sudden impact to my available credit, but I'll be damned if I ever do business with this company again.

What would possess a bank to go after more money from someone who is, in effect, an ideal credit customer? I have CC debt, yes, but it's well under $10,000 and I'm slowly paying it down. I make a good salary and have a great credit score. Who knows? I think this is how people get screwed by CC companies. You think you're doing fine, then something you aren't even aware of happens to jack up your interest rates and suddenly your balances aren't going down anymore. It's just evil. I can't wait to have all this stuff paid off in the next year or two. Credit is a useful tool and important to have if you ever need to borrow money for something, but I've paid my dues and I ain't payin' no more.

Temporary setback...

Despite my best efforts to budget my "summer money" to last until I get my first paycheck of the school year next week, I basically ran out of money about a month ago. I had enough to cover bills and rent, but not enough to live on. Consequently, I've had to charge some basic necessities and items I needed for the school year and have set myself back a bit in terms of paying down my debt. My goal is to be back on track by the end of October, and with a slightly higher salary this year and less overhead costs I had to pay last year. I'll start posting regular updates again now that I'll have some income. Stay tuned!

$X,XXX

Well, my fears came to fruition and I ran out of damn money! I've been living on my MasterCard for the past month and I can't wait to start getting paychecks again. This has set me back a little, but I'm still up for the year. No big thing.

$7,073

Whooo boy! It won't be long before it's under $7000! To think that I started this blog in March with an initial CC/Personal loan tab of $9,791. In just five months I've paid off over $2,700 in debt! That bodes very well for my goal of wanting to get this debt completely gone within the next 18 months. Over the past year I paid back the $3,000 that I had borrowed from family members to help get me started in New York. I think I'm most proud of that. I don't care if it takes me a while to pay back my CC companies, but getting out of debt to my family was extremely important to me. Plus, I'm financially stable enough now that I don't have to make ends meet by charging random things like gas or groceries and I've cleaned up my habit of little indulgences I used to put on my cards.

I should also mention that as of right now I have already socked away $1,000 in my 403(b) plan and I have $525 dollars sitting in savings. I have the money in savings becaue I'm not sure I'm going to make it through the rest of the summer on what's in my checking, but I'm going to try.