All posts by Jacob A Irwin
Helping A Friend Get Out of Debt – Part 3 – Cut Your Interest Rates In Half
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So far, in Part 1 and Part 2 of this series, I’ve discussed the following steps that my anonymous friend, Debtor Dan, and I have taken to put together a debt management plan in order for him to avoid the threat of bankruptcy.
- Summarized the details of all of his different debt accounts in to one central spreadsheet.
- Determined the best debt prioritization method and finalized his Debt Free Action Plan.
Both of these are important first steps to assessing your debt situation prior to considering more active measures such as debt consolidation. However, there is one more step that is needed to maximize Debtor Dan’s chances of paying off his debt as quickly as possible – negotiating a lower interest rate!
As is the case with many aspects of personal finance, negotiating a lower interest rate is not rocket science and does not require a degree in finance and/or marketing; the only thing that is required is the desire and initiative to get started by simply calling up the companies that manage your debt accounts and asking for a lower rate!
However, taking this very important step can be quite scary, as I found out with my friend, Debtor Dan. Nevertheless, by putting together a precise script of what he needed to say during the call, the majority of the nervousness felt can be alleviated.
Note: I’m going to present this information in the context of getting your credit card interest rates lowered, since those are often the debt accounts involving the highest interest rates. However, if you have other types of debt accounts, the same preparation/model can be used. Just be sure to adapt it to your specific situation.
Preparing for the call
As I mentioned above, Debtor Dan could not simply go in to the call to request a lower interest rate “cold.” By taking some simple steps, Dan and I were able to greatly improve his chances of lowering his credit card interest rates.
In order to prepare for the call with the credit card companies, you will need to gather the following data:
- Research what rates your credit card company is currently offering new customers for the same card you have.
- For example, if you have a Chase Freedom Credit Card, you would visit their website and see that they are offering new account holders as low as a 12.99% APR interest rate. You would then make a note of how this compares to the current rate they are giving you.
- Find out the national average credit card rate on Bankrate.com.
- The current average variable interest rate on purchases is 14%. You would then make a note of how your current rate compares with this.
- Visit CreditCards.com and find another credit card that you are interested in.
- Once you isolate which you like, find out their terms (% interest and term) for doing a balance transfer from your current credit card to theirs.
- Know how long you’ve been a customer with your current credit card and whether you have ever missed a payment or not.
Do you have the information above compiled? Ok great! Now, it’s time to gather all of your records and make “the call of a lifetime!”
Script for during the call
As Kevin @ DebtEye mentioned in his guest post several days ago, the first step in making this call is to find the phone number of your credit card’s customer service department. This can be found either on your most recent credit card statement, or more easily, on the back of your credit card.
Once you have located and dialed the phone number, I suggested the script below to Debtor Dan in order to ask for a lower interest rate:
Debtor Dan: Good evening/morning/afternoon. My name is Debtor Dan. In the coming weeks and months, I’m going to be paying down my credit card balance more aggressively and want lower rate. Can do that for me?
Credit Card Rep (Possibility A): Sure! Let me get that processed for you. (If this is the case, your job is done, and you just have to listen for the results!)
Credit Card Rep (Possibility B – probably more likely, and the one you need to be ready for!): Uhhhhh….Why?
Debtor Dan: I’ve committed to myself and my family that I’m going to pay off my debt more aggressively, and having a lower rate will help me do this. I’ve been a loyal customer of _____ credit card for ____ number of years and have never missed a payment. Other cards I have looked at, such as ______ card, are offering ____ % interest. Can you lower my interest rate by 40-50%?
Credit Card Rep: That sounds reasonable. However, after reviewing your credit account here in my computer, it is not showing that your account is eligible for a reduced interest rate.
Debtor Dan: Thanks for taking the time to review this. However, that will not work for me. In addition to other cards offering significantly lower rates than you, I saw on your website that you are offering new customers an interest rate that is almost ____ % lower than what I’m paying. My interest rate is also ____ % higher than the national average of ____ %. I have been a loyal customer for ____ years, and would prefer to not have to transfer my balance to a competitor. Can you match these rates or go lower?
Credit Card Rep (Possibility 1): I understand. It looks like the computer is now able to offer you a lower rate. Remain on the line for a little while I make the necessary changes. (If this is the case, your job is done! Pat your self on the back for a successful call!)
Credit Card Rep (Possibility 2): I wish that I could help you, but I am not authorized to make this change.
Debtor Dan: That’s understandable. No worries. If you are not authorized to make the change, can you give me your name and employee ID number and transfer me to your supervisor so that I can talk to him/her about this?
After the customer service rep gives you his name, ID, and transfers you to his/her supervisor, you would then inform the supervisor that you were discussing the issue of getting a reduced rate with ____ (name), employee ID _______. This is important to instill accountability in the system.
Next, you would basically repeat the same script used above with the supervisor. And, I will willing to bet that most, if not all of the time, this will work in getting your interest rate reduced. If it does not work, then the worst they can say is “no,” and you will be satisfied that you have done everything possible to get your interest rate reduced.
I feel that I must also stress the importance of maintaining a professional demeanor during this call. You do not want to turn it in to a “yelling match.” You should not get upset, no matter what the customer service rep says. After all, it is not their fault. They are simply doing what they are told. Remember, it makes them more money to lock you in to a higher interest rate.
If you do not succeed in getting your rate reduced, you would then want to explore other credit card options that offer lower interest rates, including the possibility of a balance transfer (provided that the fee to do so isn’t significantly high).
How much can getting your interest rate lowered save you?
Because credit card interest is “special” in that it accrues daily, getting your interest rate reduced can inflict serious savings in to your personal finances.
For example, let’s say that before calling to lower your interest rates, your APR is 25%. And, by talking with the credit card rep, you get it lowered to 12%. This interest rate applies to your current outstanding balance of $5,000.
Using the handy-dandy credit card calculator at Bankrate.com, the following results are seen, assuming that your minimum required payment is 3% of your account balance.
- With a 25% APR, it will take a total of 308 months to pay off your balance and will cost a total of $10,600 in interest. (Note from Jacob – Simply incredible! It’s amazing that this minimum payment game is legal!)
- With a 12% APR, it will take a total of 155 months to pay off your balance and will cost a total of $2,300 in interest. Talk about a large amount of savings! That’s almost an 80% reduction in total interest expense.
Clearly, the potential savings that can result from this one call is simply enormous. Well worth the 1 hour or so of total time commitment needed to make the call.
Where do you go from here?
Once the three steps discussed in this series have been completed, you must then take a step back and examine your debt payment plan as a whole. To do this, look at your total amount of monthly income compared to your monthly expenses. Identify how much you can afford to pay towards your debt balances each month.
I think that most people will find that the combination of a lowered interest rate and cutting back on extraneous monthly spending will enable them to effectively pay off their debt. However, if after examining your financial inflows and outflows, you determine that there simply isn’t enough money available to meet your minimum commitments, you should consider additional options such as debt consolidation and counseling. Remember, you are never alone is improving your situation.
How about you all? Have you ever made a call such as this to get your interest rates reduced on your debt accounts? How did it go?
Share your experiences by commenting below!
***Photo courtesy of http://www.creditcards.com/credit-card-news/images/hammer-dollar.png
The Psychology of Shopping
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The following is a guest post by Louise Tillotson. Enjoy!
Note from Jacob: For those of you reading from the USA, this = $2.30 USD per liter, or $9 per gallon. This is currently much more than the $3.60 per gallon we are paying! It sort of makes sense why Europeans use public transportation much more than we do! I sure don’t think I would be able to afford driving 40 miles to and from work every day if this was the price of gas!
It’s been found that stores generally place the higher-priced goods on eye-level shelves as this seems to be where shoppers look first, and therefore buy more from. It sort of makes you wonder how this was first discovered. I wonder if this was the result of paid market research that has been done?
How about you all? What tricks have you seen or noticed that stores employ to get you to buy more?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- @ Placement of good on shelves in a supermarket – In my hometown in Arkansas, Wal-Mart is very popular because the home-office is fairly close by. And, I know for a fact that shelf placement is a very competitive issue between the vendors at Wal-Mart. One of my friends growing up told me that Pringles has a full time analyst whose one job is to negotiate placement of Pringles chips in optimal locations throughout Wal-Marts worldwide! Amazing!
- @ Placing the fruits and veggies in the front of the store – This is definitely true in all of the grocery stores in my town! It’s very genius! I think it works because no matter what you are wanting to buy in the store, seeing all of the fresh fruit and vegetables makes you think that the store is VERY health conscious!
- Another interesting little ploy that stores use is to place the milk in the back corner of the store. This way, you have to walk through ALL of the other products in order to get to the milk that everyone needs when they go shopping!
- @ Direction of browsing – I am definitely guilty of being an American-counterclockwise shopper! That is crazy how instinctual that is! What direction do you shop in?
- Several other grocery store tactics – Listed below are several other tactics I have seen in stores.
- Placing expensive items on the left side of shelves.
- As you go down a row of shelves next time you’re at the supermarket, notice how the name-brand, expensive items are located on the left side of the row, and the cheaper, generic products are further down on the right side of the row. I think that this is catering to the way humans read from left to right. The higher priced items are placed to grab your attention first.
- The floor texture
- One of my marketing teachers once told me that the texture of floor is an important factor in influencing people to buy more. The floor at stores is almost always hard (no carpet). One of the reasons for this is that when women hear the tapping of their shoes/heels on the ground, it makes them feel more empowered, more confident, and thus more opt to buy stuff! Pretty wild, uh?!
- Another tactic used by stores is to make the floor tiled. Apparently, having the floor tiled causes the grocery cart to be pushed slower by shoppers, giving them more time to see items to buy! Genius, right?!
***Photo courtesy of http://www.betterretailing.com/wp-content/uploads/2011/02/brain-psychology-shoppers.jpg
How Much Is Your Smart Phone Data Plan Really Costing You?
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I embarked on this journey due to the fact that my family’s chocolate lab, Portia, had chewed up my cell phone the day before, after it accidentally fell out of my pocket. Poor phone!
Needless to say – I was desperately in need of a new phone.
Before I elaborate further on the story, one thing you should know about me is that one of the things that I feel is unnecessary in my life is a smart phone (i.e. a phone with internet, chat, Facebook, etc capability). I am a big fan of regular phone calls and text messaging, but I realize that with my personality, I would be way too addicted to a smart phone if I got it. Just think – a PF blogger having 24/7 access to their email and blog. My friends would never let me hear the end of it!
Nevertheless, when I entered the store, I was amazed at how numerous the options for smart phones were (Droid, HTC, Blackberry, Palm – just to name a few that I saw). In fact, the options were so numerous that upon checking out, I inquired with the clerk as to if she could give me an estimate of the percentage of people that come in using smart phones.
She mentioned that definitely more than half of people are using them currently. This definitely wasn’t very surprising, considering how common it is to see people using their smart phones in public.
However, this got me thinking – just how much is having a smart phone / data internet plan costing consumers in the immediate and long term? Let’s take a look, shall we?
Smart Phone Data Plan Cost Analysis
- In Scenario 1, the total cost of Jim’s data plan is $14,760.00. Quite astounding if you ask me!
- In Scenario 2, not only does Jim avoid this ~$15k expenditure, but his savings accumulate to $175,626.65 as a result of the miracle of compound interest.
- Note: for the specific calculations performed to obtain these numbers, please see the Google Docs spreadsheet below at the link below. Simply save a copy to your computer to allow for editing the file.
***Photo courtesy of http://www.cameraphonesplaza.com/wp-content/uploads/2009/08/smart-phone-definition3.jpg
One Call, Save Thousands On Your Credit Card Bill
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Today’s guest post comes to us from Kevin. Kevin is a writer for www.debteye.org, a fellow Yakezie group participant. Debteye is a place where you can get unbiased opinions on anything related to personal finance. Kevin previously owned a debt settlement company prior to joining the DebtEye team. He is a certified debt specialist and also works with credit counselors across the nation.
Banks don’t want to lose you if you’re a well-paying customer, and they’ll do everything they can to keep you on-board. Also, if your current interest rate is already pretty low (my guess would be 10% and under), you probably won’t have much of a chance getting them reduced.
While it is true that banks have an incentive to help struggling customers, banks typically have different types of program for hardship candidates. These programs will CLOSE your account and can impact your credit report.
How about you all? Have you tried to negotiate a lower interest rate on a credit card or other debt account? Were you successful? What resistance did you encounter?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- @ Minimum interest rate needed to bother asking for a reduced rate – I definitely agree with the idea that you probably shouldn’t bother asking for a reduced credit card interest rate if your APR is already around 10%. This is most likely the minimum that you can get anyway, so you’re already doing well for yourself and your bank account levels!
- This same topic will actually be step 3 in my series of helping a friend get out of debt. In that post, I’ll build on several of the topics discussed here! Keep an eye out for that post, on the way soon!
***Photo courtesy of http://www.recessiontips.com/wp-content/uploads/2009/04/homermad-150×150.gif
What Would You Do If You Needed to Buy a Car? – Part 1 – Sell Your Current Car
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Note: This article was selected as the winning article in the May 2nd edition of the Best of Money Carnival hosted by Crystal @ Budgeting in the Fun Stuff. Head on over to Crystal’s site to check out the rest of the top editor’s picks!
Recently, one of my graduate school friends asked me for some advice on how he should proceed in buying a car. Unfortunately, I was only able to give him general guidelines on this subject.
Why was this you might ask? The reason lies in the fact that I have been lucky enough to avoid the car buying process since being out of college, since I have been driving my parents’ 2004 Honda Accord for the last 7 years. (Side note: Wow! I can’t believe it’s been 7 years!)
While I may not be the world’s foremost expert on the car buying process (after all, the Buying a Car For Dummies book
was written by Deanna Sclar, not Jacob @ MPFJ, haha!), the goal of this multi-part posting series is to force me to do some research on car buying and get some great feedback from you readers out there in the process!
So, let’s get started answering the question, “What would you do if you needed to buy a car?”
In thinking about how to shed some light on this topic, the best place I found to start was to determine the best way to sell your car (if you are someone who currently has a set of “wheels”, like the baby in the picture above).
Step 1 – Determine if selling quickly or selling for the highest price possible is most important
When it comes to selling your car, I believe that people generally fall in to one of two categories. And, the first step in successfully achieving your car-selling goals is to identify to which category you belong. A description of each of these two categories is given below.
- Category 1 – People who want to sell their car as quickly and easily as possible –
- This category describes individuals to whom price is really not the main issue when buying a car. These people are well-off enough to be able to afford a car comfortably, with the biggest concern being that their normal life is not interrupted by the car purchase process.
- Examples of people who fall in to this category are doctors, lawyers, professional workers, etc. that have enough money in their bank accounts to pay for a new car (or can easily obtain the financing required).
- I would propose that these individuals typically receive high enough pay that the extra 10 hours of time that would be required to become a semi-expert in car value in their local area would not be worth it financially. After all, if you are a lawyer or contractor charging $300-$500 per hour, that extra 10 hours could be costing you THOUSANDS of Dollars.
- However, you could also fall in to this category if you simply do not have the will, desire, or capacity to learn about the in’s and out’s of car buying and car value. While this is perfectly acceptable, I would definitely encourage everyone to read Category 2 below before deciding to which you belong.
- Category 2 – People who need to fight for every bit of value from the sale of their car –
- As you might have guessed, the majority of people fall in to this category, where price and value are the deciding factors for car-purchasing.
- This category includes those of us that need to focus on optimizing our personal finances in order to achieve financial freedom. In other words, people in this category will not achieve financial freedom simply by showing up to a $500 per hour-paying nine to five job every day.
Personally, if I were to sell my car, I would most likely be looking to squeeze every last penny out of the sale. Why is this? Simple! Because as an engineering graduate student, my time is currently only worth $9.58 per hour! (Side note: Wow! I am slightly not impressed by that figure! Maybe I should not have calculated that.)
If I can perform several hours of research and squeeze another $2000 of value out of the sale of my car, it could have a significant positive impact on my personal finances!
So, take a moment and decide which category you belong to before reading the rest of this article…30 sec….45 sec….1min……Got it? Ok, time to proceed!
Step 2 – Determine the value of your car
Having determined what type of consumer you are in Step 1, Step 2 involves determining an appropriate value for your car. Please note that the value of the car is not simply the price that the local used car dealer offers to buy it from you in exchange for positive financing on a new car.
As with many financial actions, selling your car is no different in the respect that there are many great resources available on the internet! Some useful resources that can be used to determine car value are shown below, as well as some specific results for my 2004 Honda Accord.
- Edmunds.com – Used Car Appraisal Tool
- Kelly Blue Book.com – Used Car Value Tool
- Both of these websites are great, FREE, resources that you can use to enter the year, make, and model of your car-to-be-sold, and it will give you 1) dealer trade-in, 2) Private party, and 3) Dealer retail pricing.
- However, I liked Kelly Blue Book’s appraisal tool more because there were more customization detail options available in comparison to Edmunds. I feel like this would result in a more accurate appraisal. Nevertheless, the price estimates generated by Edmunds (for my car) were more conservative (lower) and were therefore the ones cited below.
- $5,521 = Dealer trade-in value
- $6,464 = Private party sale value
- $7, 527 = Dealer resale value (so the price the dealer will charge the next person after you sell it to them).
Step 3 – Determine where you want to sell
After determining the estimated value of your car or truck in Step 2, it is now time to cash in your old car and think about where you want to sell it! As was implicated by Step 2 above, there are basically two options here: 1) trading in your used car at the dealership for a new car or 2) selling to a private party that you find.
As can be seen from the pricing estimates above, you can make considerably more money by selling your car to a private party than you can by selling to a dealer. This is due to the fact that the dealer has to pay less in order to turn a profit for himself/herself when he or she sells the car again.
Because of this, I would propose that your selling strategy be based off of the category of consumer you are (discussed previously).
If you fall in to Category 1, the best place to sell your car is to simply trade it in at the dealership. This will be your quickest and easiest option.
If you are in Category 2, things are not so simply, and we are presented with several options for selling our cars to private parties. Each of these options is discussed below.
However, in my opinion, the first step to selling your car publicly is to buy 1-2 nice-looking “For-Sale” signs to place on your car windows. On each of these signs, be sure to list the pertinent details, including price, mileage, year, model, etc. This turns your car in to a rolling advertisement. And, once you have the signs on your car, don’t be ashamed to frequently shop at crowded areas where your car in the parking lot will get lots of exposure.
Places to sell your car for Category 2 Individuals
- eBay – eBay’s motor section is always a good option. However, you must remember that there will most likely be a hefty selling fee involved.
- Craigslist – Craigslist has become truly a great place to buy and sell items. Listings are FREE!
- Newspaper ads – In the grand scheme of selling a car, the small fee charged by newspaper to list your car are nominal, in my opinion.
- Facebook – Facebook isn’t just for teenagers any more! Every one is on it, and Facebook now offers the Facebook Marketplace to buy/sell items.
- Friends/Acquaintances/Word-of-Mouth – This is probably the best alternative because you will not be selling to a complete stranger. However, be sure that both parties get a competitive price, even though you may be friends.
- Online ads on car buying sites (Autotrader.com, Carsdirect.com, Edmunds.com)
Personally, if I were to sell my car, after determining when should I sell my car, I would probably focus on the FREE options first (friends/word-of-mouth and Craigslist). Then, I would move to newspaper ads, car buying website ads, and then to eBay.
How about you all? How would you or have you gone about selling your car? Did you proceed through a dealership or another outlet? Is price or speed of sale most important to you?
Share your experiences by commenting below!
Essential Steps to Buy a House
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The following is a guest post by William from Home Loan Finder.
Essential Steps to Buy a House
When it comes to buying a home, there are many things to consider. Not only do you have to have a lot of money for a down payment, but you should also be fully aware of the level of commitment you are about to enter into. A house is a major investment. Below are 5 things to keep in mind as you are embarking on this step in life.
1. The price is always negotiable
When you are ready to buy, home sellers are ready and waiting to sell to you. And, since you do not know the situation of the seller, you never know if they are anxious to sell or not. If they are, this can be to your advantage. If the house is more than you can afford, but you feel the seller might be willing to budge on the sale price, ask them to come down a bit. It does not hurt to ask and you may be surprised to discover that many sellers expect it.
2. Buy what you can afford
You may want that gorgeous house on the beach with all the windows and space, but you probably can’t afford it. Look at your finances and your prospects for the future and judge accordingly. When you buy homes, it is always easy to have our eyes be bigger than our wallet. If you get into something that will be detrimental to your financial life in the future, you will regret it. Be responsible, be thoughtful and make the best choice according to what you can reasonably pay.
3. Have a down payment
Gone are the days of financing for anyone and their dog. You must have a down payment now when you approach a bank and it should be at least 15% of the value of the loan you would like to borrow. The more you have saved the more a bank is willing to negotiate with you and give you the best interest rate and the best product. You will be in the drivers seat if you have done the hard work and saved the money.
4. Keep your credit clean
If you have bad credit, it will be difficult for you to qualify for a loan. It is important that you pay your bills on time and pay your outstanding balances off. A lot of credit card debt and other liabilities may stand in the way of you getting the loan that you need for your home.
5. Make an offer that is in line with other homes in the area
Many home sellers are expecting that you will want to negotiate the selling price. So, when you are ready to put a bid in on a house, be sure that it is in line with other similar homes that are in the same area. Look at the sales of homes similar to the one you want and find out what they were sold for. This will put you in a good position when you go to the bargaining table.
If you look at all of these points, then you will be ahead of the game when you are ready to search for and buy your new home. It can be an exciting process and hassle-free if you do your homework and make the right decisions.
How about you all? Have you been through the home purchase process recently? What steps did you take to make sure it all went smoothly?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- @ The requirement to have a big down payment in order to buy a home – This is not necessarily true. You can get FHA home loans with very little money down. However, you must be ready to pay for Private Mortgage Insurance (PMI) each month if your down payment is less than 20% of the home value.
- @ The price being negotiable – This is certainly true. Personally, I was able to negotiate the price of my condo down from $109,000 to $105,000. I’ve heard that as a general rule of thumb, you should at least offer 5-10% below asking price.
- This is one of the important reasons to have a good real estate agent to help you. They will be able to advise you on the proper value of property in the area you’re investigating.
- @ Buying what you can afford – This is certainly true as well. Typically, you can qualify for much more home than you can actually afford. Generally, you should target paying no more than 30% of your monthly income to mortgage payments.
***Photo courtesy of http://www.redwoodbridges.com/images-spa-steps/spa-steps2.jpg
My Current Asset Allocation and Net Worth Growth – January-March 2011
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This post was selected for inclusion in the April 2011 Carnival of Passive Investing at A Rich Life.
Overall, the 1st quarter of 2011 has gone very well.
The financial markets have been recovering fairly well, I have been enjoying my classes in my Chemical Engineering PhD program, Spring is just around the corner, and I just discovered that I’ll be getting a 30% pay raise starting June 1 due to being accepted for fellowship I applied for.
Side Note: Even with this 30% pay raise, I’ll still be making less than half of what I was making while working as a full time engineer. You got to love graduate school!
Let’s take a look at the pertinent details….
Net Worth Growth (not including condo)
From December 28th, 2010 (when the last portfolio update was published – see link below for more information) to April 1st, 2011, the S&P 500 index went up by 5.95%. Pretty nice little run for a quarter! Let’s hope it keeps up!
My Personal Finance Journey – September-December, 2010 Portfolio and Net Worth
During that time period, my net worth (excluding condo ownership) increased by 9.1%.
Condo Equity Growth
Currently, I have 10% home ownership in my condo (up from 9% at the end of December, 2010), with this accounting for 26% of my real net worth (so net worth subtracting the condo loan – this is different from the net worth above).
I have now achieved the following financial goals in 2011. I have done quite well I think – thanks to everyone’s help for keeping me motivated and accountable!
- Am maintaining a my target of 6-9 months of expenses in a cash reserve fund in my Dollar Savings Direct high yield online savings account.
- Have rebalanced my mutual fund portfolio to meet my asset allocation target %’s (75% equity, 25% fixed income overall)
- Have donated $1,150 to Multiple Sclerosis Foundation in 2011 (5% of income).
For a detailed list of my short term, mid term, and long term financial goals, click on the link below:
My Personal Finance Journey – Financial Goals
Review of Current Asset Allocation (excludes condo)
- Overall Fixed Income / Equity Allocation
- Currently, 24% of my net worth is invested in fixed income instruments (cash or bond funds), and 76% is invested in equity.
- This is almost perfectly aligned with my targets for these categories of 25% (fixed income) and 75% (equity).
- Equity Allocation
- In the equity portion of my portfolio, 74% is invested in US Domestic Equities with the remaining 26% being held in international equities.
- This is almost perfectly aligned with my equity breakdown targets of 71% and 29%, respectively, for US Domestic and international holdings.
While the overall percentages for these categories looks pretty good, a detailed look (table below) at the allocation breakdown reveals the real story and provides for better analysis of the current state.
Remember: a red flag goes off if your current % allocation in a category is greater than +/- 5% off of the target allocation. This is my trigger that I need to rebalance that aspect of my portfolio.
% Cash (money market target 5%) 7%
% non-inflat Bond Funds (target 15%) 14%
% TIPS Bonds (target 5%) 3%
% International Equity (Target 11%) 10%
% International Emerging Markets (Target 11%) 9%
% Domestic Large Cap (Target 8%) 9%
% Domestic Small Cap (Target 8%) 9%
% Domestic Small Cap Value (Target 14%) 15%
% Domestic Large Cap Value (Target 13%) 13%
% REIT (target 10%) 9%
Analyzing my current asset allocation percentages, it appears that I am lucky enough to be exactly on target with all of my asset classes (within +/- 5% banding) .Therefore, no rebalancing is required. Always a good thing!
My next moves for the April-May, 2011 time frame will be to do the following:
- Continue contributing to my Roth IRA for the 2011 year. I only need to contribute $2500 more to fully fund it for 2011.
- After fully funding my Roth IRA, any extra money I have will most likely go towards paying off my condo loan and obtaining even more equity in that investment. The only other option I would have is to invest in my individual mutual fund (taxable) account. But, I feel that it would be a more efficient use of my time to build up more equity in my condo. What do you all think?
- Continue investing $41.67 each month in microloans to help the working poor in Peru. This is part of my 2011 goal of having $500 in microloans.
- Try to reach my $5000 fundraising goal for the Multiple Sclerosis bike ride I am doing in June of this year. Currently, we have reached $3,800. If you are interested in making just a $10 donation, click here.
Wish List
- At some point, purchase the Vanguard Total Stock Mkt Idx (MUTF:VTSMX) to replace S&P 500 index fund. This gives better, broader diversification to the US stock market.
- Install a stacked washer/dryer combination unit in to my condominium. This one will be a long shot, but it just may be possible!
How about you all? After fully funding your Roth IRA, would you either 1) gain more equity in your home ownership or 2) purchase additional investments in a taxable index mutual fund account?
Share your experiences by commenting below!
***Photo courtesy of http://www.greekshares.com/uploads/image/calculate_net_worth.gif
Financial Goals April 2011 Update – Short Term, Mid-Term, and Long Term
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Back in January of this year, I laid out my short term, mid-term, and long term goals for the 2011 year. I do this once every year as part of my goal to create what author David Bach calls a Purpose Focused Financial Plan. The goal of this system is to employ money in your life in a way that matches your life values and dreams.
You can read more about my journey to create this system at the following links – Creating a Purposed Focused Financial Plan & My Personal Finance Journey’s Investment Strategy.
As part of making this system work, I wanted to give an update on how I’m doing so far this year with the goals I established. Overall, I feel that I am doing a satisfactory job.
Updated 13-April-2011
Short Term (< 1 year) Goals:
- Contribute $5000 (or $420 per month) to my Roth IRA with Vanguard this year (maximum allowed) – Have contributed $2,640 so far this year. This puts me a little ahead of my target of $420 per month, but that’s all right.
- Reach net worth target for this year (not displayed here) – Ongoing – getting closer and closer! Requires 20% increase in net worth. May not be possible to obtain, but will attempt.
- Maintain target 6-9 months of expenses in cash reserve fund in Dollar Savings Direct account – Correct for this month, but ongoing.
- Rebalance mutual fund portfolio to meet asset allocation target %’s (75% equity, 25% fixed income overall) – Correct for now, but ongoing.
- Obtain 15% ownership / equity in condominium – Ongoing – currently have 10.11% ownership.
- Put together a will and have it reviewed by a lawyer – Will completed. Not yet reviewed by lawyer.
- Continue to save money for trip to Grand Canyon – Ongoing – need to figure out when to take this.
- Upgrade condominium with investment in stacked washer/dryer combo – $1000 for unit, $1000 for labor/installation – Currently saving $87.50 per month for home maintenance and upgrades – Ongoing, but on track.
- Invest $500 in Microloans for Latin America in 2011 ($41.67 per month) –Ongoing – Have invested a total of $208 this year so far to working poor fund in Peru. This comes with a pretty nice 3% interest rate. Note: I use Microplace.com to invest this money. It seems to work well and be dependable.
- Donate $1,150 to Multiple Sclerosis Foundation in 2011 (5% of income) –Done. So far, I have raised approximately $3,800 to support finding a cure for this disease. If you’re interested in making just a $10 donation to my ride, click here.
- Save 3% of take home pay each month (after taxes) for Dream Account. On target – Have an automatic transfer each month from my Bank of America checking account to my ING Direct high yield savings account.
Mid-Term (3-5 years out) Goals:
- Continue contributing $5000 to Roth IRA each year
- Reach intermediate net worth target (not displayed here, but is 2X my current net worth)
- Own a rental property by 2016.
Long-Term (>5 years out) Goals:
- Obtain a net worth of $1,000,000
- Own a home free of mortgage payments
- Own a vacation home in the mountains somewhere remote
- Accumulate enough funds not have to work, but will probably anyways because I would get bored.
How about you all? What are your financial goals for 2011 and beyond? Are you all staying on target in reaching those goals?
Share your experiences by commenting below!
***Photo courtesy of http://indiejourno.com/wp-content/uploads/2010/11/financial-planning.jpg
Blogging Goals Update – April 2011
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In January of this year, I wrote a post detailing some of my blogging goals, targets, and dreams for the year of 2011. When I did this, I also added a reminder on my Outlook calendar to track our progress pertaining to these goals each month.
I have been sort of bad in that while I have been tracking these goals offline, I have not published an update on my blog in three months (only so many hours in the day, right?!).
My goal for today’s post is to rectify this!
By tracking blogging goals, I am hoping that it provides us with more accountability and visibility to what we are doing and where we want to go with this community/blog.
So, here goes! The blog goals for 2011 are as follows, with progress updates given in bold type, current as of April 2011.
- Obtain Alexa ranking of 200k or less. Dream goal = 100k. Currently at 112,000! Yah! We actually were lower than this and falling until I got busy with the semester course-work in my Chemical Engineering PhD program about a month ago.
- Read and interact with (comment) 5 partner blogs per day. Currently below this average, but hope to improve. However, I have been doing well this past week by reading and commenting on most all of the Yakezie Blog Swap posts (which were very good, by the way!).
- Continue active participation as a proud Yakezie Personal Finance Blog Network member. Have posted a total of 800 comments on the Yakezie Forums advising and learning from others. Also, I have now coordinated 5 advertising campaigns, bringing in a total of $3700 revenue (and counting!) to partner blogs and have hosted the 4th Yakezie Blog Swap.
- Publish 3-5 blog posts per week. On target for this average currently. I’m very proud that I’ve kept up the consistency!
- Obtain 200 unique visitors per day average by end of 2011. Currently averaging 180 per day. I was up to 307 average per day a month ago before I had to focus more time in to my graduate program’s classes.
- Host all personal finance blog carnivals (Festival of Frugality, Best of Money, Tax Carnival, Carnival of Personal Finance, etc). Have hosted all blog carnivals that have allowed me! If any one out there needs a host in the future, just send me an email!
- Grow Carnival of Passive Investing to point where someone would be proud to host it. Have now had 4 editions of the carnival. Three were hosted by me, and the last one was hosted by Tom @ Canadian Finance Blog (who actually just won the Free Money Finance March Madness tournament!). The April carnival will be hosted by A Rich Life. Submit your passive investing posts by clicking here.
- Continue to spread word about benefits of passive investing over active investing. Get involved in BogleHeads forums as well. Need to do this more. I have done a good job organizing the Carnival of Passive Investing, but have neglected visiting the BogleHeads forums. However, I just placed an automatic weekly recurring reminder on my Outlook calendar to try to increase my participation.
- Write and publish 1 guest post for another blog per month. On target with this goal. Have guest posted once this year on Free Money Finance, twice on InvestorJunkie.com (a review of Sharebuilder and a review of Vanguard), and guest posted a total of three times during the 2nd, 3rd, and 4th Yakezie Blog Swaps.
- Create an eBook on one of the following topics – a) Ways to be Frugal b) Investing Strategy c) Steps to Buying a Home. Ongoing, but have not yet started.
- Possibly transfer blog to WordPress hosting???? This is still a maybe. I am leaning more towards not going to WordPress. I know that it limits me from doing some things, but with weekly manual backups, I feel safe using Blogger for now.
- Create newsletter – “X Number of Weeks to a Frugal Lifestyle”. Ongoing, but have not yet started.
- Two free giveaways / contests during 2011. Have hosted 3 giveaways so far this year – a $25 Amazon gift card to the best cheapskate story, a $25 Wal-Mart gift card for the best passive investing article from the March 31st Carnival of Passive Investing, and an H&R Block At Home giveaway of 5 tax software codes.
- Put together material to present to groups and or classes on personal finance. Ongoing, have not done yet.
- Attend blogging, marketing, finance, or real estate classes at local community college or nearby conference locations. Need to search for seminars. Found classes offered at local community college in blogging and marketing. Have not made any progress on this yet.
How about you all? What goals do you have set for 2011?
Share your experiences by commenting below!
***Photo courtesy of http://bobhyatt.typepad.com/photos/uncategorized/2008/03/07/goals.jpg
The Comcast Soap Opera Continues!
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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Dictionary.com defines the word “soap opera” as “a serialized drama, usually dealing with domestic themes and characterized by sentimentality.” That sounds about right for my relationship with Comcast!
In the ongoing, drama-filled saga that is my relationship with Comcast (my cable internet provider), there has been a recent occurrence that I wanted to fill everyone in on!
Background
In my last post regarding Comcast, I discussed/ranted about how Comcast’s customer service team tried to hide the cheaper, Economy, internet package from me when I requested a lower priced service. I was doing this because my Performance internet promo offer was running out and threatening to revert to the $60 per month pricing.
As a result of this post, we even attracted the attention of Comcast’s social media team, which was concerned about me voicing my negative experience with their customer service team, and wanted to correct it. This was very considerate of them. 🙂
In the end (after 2-3 repeated phone calls to the Comcast customer service line), I was able to downgrade my internet service to the $40 per month Economy package two months ago. And, with automatic payments with my Chase Freedom Credit Card enabled to pay my internet fee each month, I figured that I would just be able to sail off in to the internet sunsetting horizon for months to come! Guess again, Jacob! Comcast had other plans for me!
Current Affairs
Having set up my account for auto-payments for my $40 per month Economy internet package fee and being told by the Comcast rep that my account was paid in full until the April billing cycle, I figured my affairs were in perfect order.
However, on Thursday of this past week, I received an email from Comcast (my BEST friends!) saying that I owed them $80 for two billing cycles + late fees for not paying my March balance.
In other words, my account had been marked “delinquent.” Now there’s a lovely word, isn’t it!? Nevertheless, this special occasion called for another lovely call to Comcast’s customer service line! Yah!
Surprisingly, Comcast’s customer service rep was quite pleasant this time. She saw that my account was correctly set up for auto-payments and acknowledged that the error was due to a glitch in their online payment system. She even took off the late fees! Quite nice!
And, on top of this, the customer service rep told me about a 6 month promotional deal for the Performance internet package (faster than the Economy package I currently have) for $20 per month. I jumped at this opportunity because this was half of what I am currently paying.
Furthermore, after checking on Comcast’s website, I found out that they are also currently offering a promo for Blast internet (super fast speed!) for only $30 per month. This is a reminder to us all to keep checking with our utility providers to ask for discounts periodically. It can really save a lot of money!
Is Comcast going to be responsible for making my credit score go down?
Needless to say, I was surprisingly satisfied with my Comcast experience for once. However, one question remained in my mind – would Comcast’s mistake in marking my account as delinquent make my credit score go down?
My initial guess to this question was that it most likely would negatively affect my credit report. However, I wanted to do a brief investigation just to make sure. Listed below are several useful/illuminating links I found on the subject:
Privacy Rights.org – Description of Credit Score Calculations
WikiAnswers – Effect on credit score of late internet bill payments
CreditBoards.com – Effect of utility payments on credit score
The general consensus from the above resources seems to be as follows – “The late payments won’t affect your FICO credit score unless the account gets reported to the credit bureaus. Most utility companies don’t report their accounts unless the debt gets charged off. However, there are some utilities which report to the CRA’s (credit reporting agencies = credit bureaus).”
So, I basically take this as, “it depends on the company.”
Recommended Action Step
Since it appears that the effect of your payment history with utility companies on your credit report varies quite a bit, I would recommend that everyone check their credit report for free once per year (using Annualcreditreport.com) to see which of your utility accounts is actively reporting.
Personally, I just checked my credit report (hadn’t viewed it since March of 2010, so it was definitely time to look again!), and none of my utility bills are being reported. Therefore, I think I may have dodged a bullet on this mistakenly-delinquent Comcast account problem. Good to hear!
Also, be sure to do yourself a favor and place a recurring, automatic reminder on your electronic Google or Outlook calendar (and sync the two) to check your credit report for free once per year on the site above. I just did!
How about you all? Have you had any interesting experiences with Comcast recently? Has your credit score ever been negatively impacted by a mistake in billing such as this?
Share your experiences by commenting below!
***Photo courtesy of http://www.businesspundit.com/wp-content/uploads/2009/12/comcast.jpg