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Sometimes, it's hard to say goodbye

June 9th, 2008 at 05:24 pm

I was reading Mom-senseís blog and it struck a chord with me.

So, I owe $929 on my second car. I havenít been paying it off. I have been putting the money aside to pay off in one lump sum. Well, I currently have over $12,600 saved and ready to go once I save up the rest.

Unfortunately, I have become quite attached to this $12,600. You see, it was brought a sense of security and safety. I know that the $12,600 well take care of almost any emergency including 3-4 months of being laid off. Especially in these uncertain times.

But alas, this money is not meant for the emergency fund. This money is meant to pay off the second car and help get us out of debt.

Now, the emotions start coming back of a little fear, stress, and anxiety. Iíll be back out there with a flimsy safety net. My wife was feeling the same way I was. Maybe we could keep it and just start saving for the car again.

As long as the fear and anxiety doesnít rule you, it is good. The fear has caused to take a step back to re-evaluate where we are, where we are going, and what are priorities are. It also has helped to focus what are next steps are and general timeframes around those steps. And lastly, it has made us aware of some of the risks to our plans.

Re-evaluate and affirm Ė YES!!! Rule us Ė NO!!!

So in the next few weeks, this money plus another $929 will leave our accounts. What we will be left with is the memories of what it will feel like when we have no more debt.

So I thank you dear friend for helping us, but I must bid you ado in the next few weeks.

Goals Review Ė May

June 2nd, 2008 at 12:00 pm

All and all a pretty good month. Executive summary: all lights are green and we are on target.

So, letís jump into things, shall we?

My goals for 2008 are:

1) Pay off debt (except mortgage) by October 1st
. a) Pay off CC by April 1st
. b) Pay off Car 1 by June 1st
. c) Pay off Car 2 by Aug 1st
. d) Pay off wifeís braces by June 1st
. e) Pay off sonís medical by October 1st
2) Invest $15,000 by year end
3) Invest $15,500 in 401(k)
4) Review and reallocate retirement funds by end of Q1
5) Will by end of Q2
6) Life Insurance by end of Q2
7) Save $4,000 for college by end of Q4

1) Pay off all debt but the mortgage by October 1st

Total Debt
05/31/2008 - $18,301 ($4,756 paid)

Car 2 (3.9% interest rate)
05/31/2008 - $929 ($4,100 paid)

Wife's braces (0% interest rate)
05/31/2008 - $1,872 ($156 paid)

Son's medical (0% interest rate)
05/31/2008 - $15,500 ($500 paid)

I was hoping to pay off $5,500 this month, but it didnít happen. I had camp, preschool, and a bike for the wife to pay for. And I used some money to shore up some budget items. Mainly, a party we will be having in August. I think itís going to cost $1,500 to $2,000. So, I should start saving for that.
Still I am on target to pay off the second car and my wifeís braces this month.

2) Invest $15,000 by yearend

I am currently on track to start this one in September Looks like we will start hitting this in September. I upped this goal from $10,000. A little more aggressive, but what the heck. Aim for the stars and settle for the moon.

3) Invest $15,500 in 401(k)

Invest $15,500 in 401(k)
05/31/2008 - $8,621 invested

Right on target to finish this up in October.

4) Review and reallocate retirement funds by end of Q1

DONE

5) Will by end of Q2

Made the call to the attorney. I should have this completed end of June or July. So yes SCFR, I am finally getting it done.

6) Life Insurance by end of Q2

Just got a packet for additional life insurance. Iíll probably schedule the physical for this week or next.

7) Save $4,000 for college by end of Q4

This is also a new goal for this year. Aggressive Ė yes. Achievable - yes


Summary

I canít complain. I seem to be achieving my goals while adding new ones. I added $9,000 in savings goals.

As long as I stay on point and focused, they should be achievable.

Conversation with Myself

May 2nd, 2008 at 01:30 pm

So I had a conversation with myself this morning.

Mirror image: You make me sick!!!
Me: What did I do now?
Mirror: Your goals. Are you going to up them or what?
Me: Well, I am still working on some scenarios ?.
Mirror: LIAR!!!!!
Me: Well, they?re very aggressive ?.
Mirror: So we shouldn?t do it because it?s hard?
Me: Well I might fail and it will be in my blog ?
Mirror: This isn?t about them. This is about you and where you want to be.
Me: But?..
Mirror: You got keep on adjusting those goals every time they become achievable.
Me: But?.
Mirror: But nothing!!! How do you think a baby learns to crawl? You put the toy just out of reach. Then the baby twists and turns until he gets the toy. Now, you move it further away. And the baby learns to crawl
Me: These last goals are just in my grasp.
Mirror: Exactly!!! Time to move the line!!!
Staring into the mirror and in my best Rambo voice: GOALS!!! I?m coming to get you!!!
As I was leaving, the mirror: That?s my boy. Keep the focus.

And with that, I am upping my savings goal from 10k to 15k. Yes, a 50% increase.

I am also adding a new goal of saving 4k in college funds for my kids.

This should keep that guy in the mirror happy and off my case, at least for a little while.

June is next month. At the end of the month, we will be half way through the year. Are you on track? Do you need to make your goals more aggressive? What?s holding you back?

You might need to talk to that guy or gal in the mirror. Be careful, they know when your lying and they don?t take excuses.

Mile 13.1 Passed

April 17th, 2008 at 01:10 pm

I have hit the 50% mark on my consumer debts. Yes, I have paid off over 50% of my debts. Itís more of a physiological thing then anything else. I am at the halfway point. Like a marathoner, itís like getting my second wind.

But, I know up ahead is Heartbreak Hill. In the Boston marathon, there are four hills in succession right after mile 16 and going to mile 21. The last one is called Heartbreak Hill. Many a marathoner has ďhit the wallĒ on Heartbreak Hill and dropped out of the race. At this point, everything is telling you to quit (your body, your mind),, but those crowds are egging you one. ďCome on!!!! Only 5 more miles!!!Ē ďOne foot in front of the other!!!Ē

I know this is coming up. Somewhere between now and being debt free, there will be these hills that will test my resolve to the core. After Heartbreak Hill, until the finish, are just nasty little hills. You have used everything you got just to make it pace Heartbreak Hill and now you have these small nasty little hills where every step is an effort. At this point, it is the mind dragging the broken down body to the finish line.

And what do you get when itís done? A medal. A little bronze medal for finishing. Was it worth it? You bet.

And thatís how I see my journey. Iím at the halfway point running through Wellesley College. Everyone is screaming and the real work is just about to begin.

The first half was mostly pacing my self as people pass me and get out of debt faster. But now I have my pace and feeling pretty good at the half way mark, knowing that soon it will be a battle of pure will.

And when I cross the finish line, what will I get? A little piece of paper generated from a computer in a billing department saying ďPAID IN FULLĒ. And will it be worth it? You bet.

But until then, keep the pace, work the plan, and keep the focus.

April Update: Chilliní like a Villain

April 14th, 2008 at 01:09 pm

Itís the halfway point of the month and Iím chilliní like a villain. I canít believe tomorrow is April 15th.

As I said before, the 15th is usually my stress time when all my big bills are due. This month was no different. I looked at my watch last night and it was the 13th and I just logged onto my bank account and paid them. No muss, no fuss.

Great feeling.

As you can see from my sidebar, I have paid of $12,803 just this month. Most of it was due to a large tax return but I plan on adding another $2,200 to payments this month (see if I can crack $15,000). So, now car 1 is paid off and am working on car 2. I have $7,129 left to pay off on it. The current schedule is to have it paid off in June with the wifeís braces.

Since I paid off the CC and car 1, I can start feeling the snowball gaining strength. I also feel some breathing room. Rather then treading water keeping my head up, I am starting to swim to the shore.

In fact, I have started dreaming, dare I say, of a debt free existence. Yes, I have calculated the time needed to pay of my mortgage, fully fund my emergency fund, fully fund my retirement accounts, and fund my kids college funds. It may be 5-8 years away, but I can almost taste it. I can almost see it. Dare I dream?

Yes, but now is the time to keep the head down and focus. No time to pat ourselves on our back. We got a lot of work to do before we get to these sweet dreams. A lot of workÖ

Bottom line: I have paid off $24,129 or 48.8% of debt to date.

Goal Review - March

March 28th, 2008 at 12:42 pm

Well every good plan hits some speed bumps. I am not saying that I went backwards or stopped, just slightly less process then I would have liked.

So, letís jump into things, shall we?
My goals for 2008 are:

1) Pay off debt (except mortgage) by October 1st
. a) Pay off CC by April 1st
. b) Pay off Car 1 by June 1st
. c) Pay off Car 2 by Aug 1st
. d) Pay off wifeís braces by June 1st
. e) Pay off sonís medical by October 1st
2) Invest $10,000 by year end
3) Invest $15,500 in 401(k)
4) Review and reallocate retirement funds by end of Q1
5) Will by end of Q2
6) Life Insurance by end of Q2

1) Pay off all debt but the mortgage by October 1st

$6,000 CC (0% until May 2008)
12/31/2007 - $6,000
01/31/2008 - $3,543 ($2,457 paid)
02/29/2008 - $1,388 ($2,155 paid)
03/31/2008 - $0 ($1,388 paid)

Car 1 (4% interest rate)
12/31/2007 - $5,726
01/31/2008 - $5,317 ($409 paid)
02/29/2008 - $4,761 ($556 paid)
03/31/2008 - $4,264 ($497 paid)


Car 2 (3.9% interest rate)
12/31/2007 - $17,064
01/31/2008 - $16,432 ($632 paid)
02/29/2008 - $15,800 ($632 paid)
03/31/2008 - $15,168 ($632 paid)

Wife's braces (0% interest rate)
12/31/2007 - $2,652
01/31/2008 - $2,496 ($156 paid)
02/29/2008 - $2,340 ($156 paid)
03/31/2008 - $2,184 ($156 paid)

Son's medical (0% interest rate)
12/31/2007 - $18,000
01/31/2008 - $17,500 ($500 paid)
02/29/2008 - $17,000 ($500 paid)
03/31/2008 - $16,500 ($500 paid)

This month I had some extra expenses: summer camp for my son was $350, CPA $400, baptism for other son with brunch $250, and hockey and swimming classes for my son $200.

Given these expenses, I am still pretty happy with my progress and am still on goal for all my consumer debt. I am also getting a $13k refund that Iíll use for car 1, wifeís braces, and start attacking car 2. I checked the IRS website and my refund was mailed on the 26th so should be here pretty soon.
Bottomline: I paid off the credit cards before the rate adjusted from 0% to who knows what.

2) Invest $10,000 by yearend

After the debt is paid, we will start tackling this. I am hoping to start this in September. When I first put this goal down, I was thinking there would be no way I would get to this. To me, itís all about having a roadmap with your goals prioritized and then focusing on the first one, accomplishing it, and moving on to the next.

3) Invest $15,500 in 401(k)

Invest $15,500 in 401(k)
01/31/2008 - $1,451 invested
02/29/2008 - $3,291 invested
03/31/2008 - $4,881 invested

I am very happy with this. I am still on schedule for the end of October and then Iíll roll the extra money into my holiday budget.

4) Review and reallocate retirement funds by end of Q1

I am putting in my trades today. I believe the market has bottomed and the volatility has decreased to a level I feel comfortable with.

5) Will by end of Q2
6) Life Insurance by end of Q2


These two steps are going a little slower then I thought they would. Iíll have to just clamp down and get through this. My cash flow is improving so l should be able to float the lawyer fees and insurance premiums. I just need to get on them.

Summary

All and all, Iím pretty happy. We had some extra expenses this month and yes some of it was discretionary. But, the good news was we were able to absorb it. The big accomplishments this month are I get to cross of 1a and 4 from the list.

March Update and I feel fine

March 13th, 2008 at 01:28 pm

Itís a few days early, but I decided to go ahead with my mid month update. My February one, I was feeling like I might not be able to pay down the debt as quickly as I thought. At the end of the month everything worked out and I has a few hundred ahead of target.

Well, last week was one of those stressed week where Murphy puts you to the test. We had my sonís baptism and family had to stay over. This included a donation to the church ($100) and additional food and wine for dinner (people stayed over or house - $150) and party (small brunch party - $75). So, I had to borrow from some envelopes to scrap the cash together. And a very stressed wife. No new debt Ė Iíll take my wins where I can.

So we are closing in on the second week of March and I am actually feeling pretty good. With the paycheck I am getting tomorrow, I well have my envelopes funded where they need to be, a $1,000 in the CC envelope, and $416 in my 401(k).

This should put be on target to pay my minimums plus another $2,000 towards debt, eliminating my credit cards before they start charging interest and starting on paying down the first car.

I also sent in my taxes this week. Bad news Ė cost $400 for the CPA to do it, good news Ė weíre getting $13,400 back between state and local. This is mainly because when I switched jobs they screwed up my medicad withholdings and I paid double.

So, I hope that Iíll get my tax refund in April and most of that will go for debt. Iíll probably skim off about $1,200 for TruGreen to take care of my lawn this summer. The one that services my neighborhood really does a good job and it makes a huge difference. That still leaves $12,200 to go towards debt reduction then in May we get the tax credit. Iíll get $1,800, which will go towards debt.

I am basically hoping that by end of June Iíll have the CC, car 1, car 2, and the wifeís braces paid off. So, Iíll be able to snowball everything into my sonís medical.

So far, March is looking good. Looks like by end of June, Murphyís family will be gone. Murphy will still be at my house, but I told him that heíll have to find a new place by end of the year. But you never know with Murphy, heís a tricky guy and once heís in your house heís tough to get rid of.

Goals Review Ė February

February 29th, 2008 at 03:01 pm

When I first created my goals for the year, they seemed difficult. Since Iíll be starting my 5th monthly budget this weekend, these financial goals now seem easily attainable.

My goals for 2008 were:

1) Pay off $6,000 CC by May 1st
2) Pay down car 1 by Aug 1st
3) Invest $10,000 by year end
4) Invest $15,500 in 401(k)
5) Review and reallocate retirement funds by end of Q1
6) Will by end of Q1
7) Life Insurance by end of Q1

My new goals are:

1) Pay off debt (except mortgage) by October 1st
. a) Pay off CC by April 1st
. b) Pay off Car 1 by June 1st
. c) Pay off Car 2 by Aug 1st
. d) Pay off wifeís braces by June 1st
. e) Pay off sonís medical by October 1st
2) Invest $10,000 by year end
3) Invest $15,500 in 401(k)
4) Review and reallocate retirement funds by end of Q1
5) Will by end of Q2
6) Life Insurance by end of Q2

So, how are we doing with these new goals?

1) Pay off all debt but the mortgage by October 1st

$6,000 CC (0% until May 2008)
12/31/2007 - $6,000
01/31/2008 - $3,543 ($2,457 paid)
02/29/2008 - $1,388 ($2,155 paid)

Car 1 (4% interest rate)
12/31/2007 - $5,726
01/31/2008 - $5,317 ($409 paid)
02/29/2008 - $4,761 ($556 paid)

Car 2 (3.9% interest rate)
12/31/2007 - $17,064
01/31/2008 - $16,432 ($632 paid)
02/29/2008 - $15,800 ($632 paid)

Wife's braces (0% interest rate)
12/31/2007 - $2,652
01/31/2008 - $2,496 ($156 paid)
02/29/2008 - $2,340 ($156 paid)

Son's medical (0% interest rate)
12/31/2007 - $18,000
01/31/2008 - $17,500 ($500 paid)
02/29/2008 - $17,000 ($500 paid)

I am actually a few hundred dollars ahead of my targets.
One of the things I have not talked about was that I switched jobs and the firms took out double the FICA, so I will be getting $12k back from the government. I expect the check to either come in April or May. My CPA is currently finishing the forms.
So once this check hits, I plan on eliminating debt for car 1, my wifeís braces, and make a huge dent in car 2. So end of May, I plan on owing less then $1,000 on car 2 and my sonís medical will be the only outstanding debt (minus mortgage).


2) Invest $10,000 by yearend

After the debt is paid, we will start tackling this. On hold for a few more quarters.

3) Invest $15,500 in 401(k)

Invest $15,500 in 401(k)
01/31/2008 - $1,451 invested
02/29/2008 - $3,291 invested.

This is kind of where Dave Ramsey and I disagree. I can not bring myself to stop contributing to my 401(k) while I pay off debt.
So, I am about 21% done with this. This should be complete by November 1st. Then, Iíll use the extra money for holiday stuff. Wine for thanksgiving and Christmas, presents, tree, etc.

4) Review and reallocate retirement funds by end of Q1

I have everything set to go. I was just waiting for the market to become a little less volatile. I will probably due this towards the end of next week. I have a spreadsheet set up to show me the trades. I just need to update quantity and price, then execute the trades.

5) Will by end of Q1
6) Life Insurance by end of Q1


I wanted to talk to my CPA first and I did. I have interviewed a few lawyers and found an estate one I like. The next step is for me and my wife to really talk about what we want, then we will probably talk to the guardians for our children if we were to die, and then we will talk to the lawyer to draw up everything.

I am pretty happy so far. It hasnít been easy these last 3 months. We have really focused on where our money is being spent. I feel I am just starting to get some traction. I can see things starting to come together, but I am still a little apprehensive.
Time to keep the focus and give the troops a pep talk.

More agressive goals

February 5th, 2008 at 05:26 pm

So, I have a spreadsheet that tracks all my debt except the mortgage. I have everything bucketed by month and what I plan to pay off and when. I have a regular and aggressive payment sheet. The theory on the regular is that the are realistic numbers and if I stay on track I should hit them. The aggressive numbers are a motivational tool. Just out of my grasp but attainable in a perfect world (barely).

Well, after much debating internally, I have decided to redo my goals. I am dropping regular plan and adding a super aggressive plan. I donít know how Iíll even come close on the super aggressive plan, but the goals on the regular plan were being easily accomplished.

1) Credit Card Debt (0% until May 08) Ė Balance 1/1 Ė 6,000

Regular: April 2008
Aggressive: March 2008
Super Aggressive: February 2008

2) Car 1 (4% interest rate) Ė Balance 1/1 Ė 5,726

Regular: July 2008
Aggressive: May 2008
Super Aggressive: March 2008

3) Car 2 (3.9% interest rate) Ė Balance 1/1 Ė 17,046

Regular: February 2009
Aggressive: September 2008
Super Aggressive: July 2008

4) Wifeís Braces (0% interest rate) Ė Balance 1/1 Ė 2,652

Regular: March 2009
Aggressive: September 2008
Super Aggressive: April 2008

5) Sonís Medical (0% interest rate) Ė Balance 1/1 Ė 18,000 (estimated)

Regular: August 2009
Aggressive: January 2009
Super Aggressive: September 2008

Letís see how this works. Strive for the super aggressive plan and settle for the aggressive. Keep the focus!!! I donít know how Iím going to do it, but thatís the challenge.

Goals Review Ė January

January 29th, 2008 at 02:58 pm

My goals for 2008 are:

1) Pay off $6,000 CC by May 1st
2) Pay down car 1 by Aug 1st
3) Invest $10,000 by year end
4) Invest $15,500 in 401(k)
5) Review and reallocate retirement funds by end of Q1
6) Will by end of Q1
7) Life Insurance by end of Q1

So, how are we doing? Good in some and procrastinating in others. Probably par for the course.

1) Pay off $6,000 CC by May 1st

12/31/2007 - $6,000
01/31/2008 - $3,543 ($2,457 paid)

Nice. I might be able to pay this off by end of March. 2 months early. Keep the focus.

2) Pay down car 1 by Aug 1st

12/31/2007 - $5,726
01/31/2008 - $5,317 ($409 paid)

Well, if I can keep up the pressure and the focus, I might be able to pay this off by end of May. Nice.

3) Invest $10,000 by year end

Yea, well, you knowÖ Iíve been real busy lately. Seriously, once car 1 is paid is will get attacked. On hold now but itching to start.

4) Invest $15,500 in 401(k)

01/31/2008 - $1,451

Right on target. Looks to complete in middle of November. (A little boost in income around Christmas by not having the old 401(k) deducted from the paycheck.)

5) Review and reallocate retirement funds by end of Q1

I have reviewed the allocations and mine are all out of wack. I have set up a spreadsheet to figure out the buys and sells automatically. I am just waiting for some of the volatility to leave the market. No sense rebalancing if I need to rebalance next quarter. I like to do it once or twice a year. So ready to go, just waiting.

6) Will by end of Q1
7) Life Insurance by end of Q1


These last two items I believe go hand in hand. I might push these off to Q2 because I want to get some advice from my CPA, and I definitely donít want to rush it. I figure work out the general plan with the CPA (how the trust and wills work together for tax purposes) and then have a lawyer fill in the blanks. Now, Iím not a millionaire; but once I throw in life insurance for me and my wife, my estateís value goes up considerably.

All and all, I think I am pretty much on target to get all my goals accomplished this year. In fact, I have two other goals I might add: pay off a second car ($16,432) and my wifeís braces ($2,496).

The funny thing was that when I started putting together my goals for 2008 in December I thought that they were tough and it was going to be a stretch to achieve. After the first month of January, Iím ready to add more goals to the list.

Even Lead Balloons Can Fly

January 28th, 2008 at 05:02 pm

I was watching Myth Busters over the weekend and they had a show where they were talking about how lead balloons can not fly. When youíre looking at material make a balloon, 2 characteristics come to mind: strong and light. Lead is neither. Lead foil rips easy and is 6 times heavier than aluminum foil.

In the end, the built a 10x10x10 cube and inflated it. All the time repairing rips. Make sure the various sides werenít rubbing against each other. After it was inflated, it rose to the top of the ceiling and yes the lead balloon floated.

Sometime when I think of my finances, it seems that I am trying to get a lead balloon of the ground with debt and financial obligations being the weight of my balloon. The rips occurring so easily are my old spending habits.

So how do I get a lead balloon airborne? Well, Iíll follow what the Myth busters did.

1) Have a plan Ė So my plan is to start shedding debt. The order will be credit cards, my car, wifeís car, wifeís braces, and sonís medical. Basically it is from highest interest rate to lowest.

2) Implement the plan, working each step of the plan Ė In other words, concentrate on the first step. Letís get the credit cards paid off before worrying about sending more to the cars.

3) Plan for the catastrophic risks Ė I may not know what the risks are, but I can plan for what happen when they occur. I have a budget that should take care of most things (car maintenance, house maintenance, etc.). I also have an emergency fund to go above and beyond this. I havenít tapped into since I started a budget.

4) Review progress of the plan Ė
Now, you can review your progress to your plan. Is too aggressive, not aggressive enough?

5) Make adjustments as necessary Ė Little bumps are to be expected. Just rework the plan and make the small adjustments you need to.

And this is how I plan to fly my lead balloon. Tears rips and all, my toxic shining balloon will rise

Goals 2008

December 27th, 2007 at 05:53 pm

First of all, thank you all for your comments.

I have been struggling with my goals this week. Good comments all around. Pure logic and rational me agrees completely with DisneySteve. On the other hand starting this year I will be paying for my own insurance ($1,258/month) and repaying the hospital ($500/month on about $16,000). So I think the smart thing is to increase my financial stability in the first half of the year and then start saving in the second half.

So my financial goals are as follows:

1) Pay of $6,000 in CC by May 1st
2) Pay of one car by August 1st (currently $5,700 is owed and last payment is 2/09)
3) Invest $10,000 by year end in Taxable assets
4) Invest $15,500 in 401(k)
5) Review and reallocate (if necessary) retirement funds by end of Q1

The only reason why number 4 is so low on the list is because I have been doing this every year for the last 5 or so years. So, Iím basically already set up for this and wonít feel the pain. Nothing like autopilot.

1, 2, and 3 all feed off of each other. If I can do 1, that money will roll into 2, which will roll into 3. I just need to do 2 things: Be more frugal and more disciplined.

So personal goals:

1) Be more frugal
2) Be more disciplined
3) Enjoy life a little more

So, these are my goals. Iíll track them here and see how the new year goes.

Debt Reduction or Investing

December 26th, 2007 at 03:26 pm

Well, Iíve been going over my goals for 2008 and have been struggling with whether to reduce my debt or save and invest the money I would use to reduce the debt.

Letís start with the easy stuff. I have some CC debt (about 6k with 0% interest until May). That will be paid off by May, hopefully J. No way I could earn more investing then the CC interest, unless I get in the ground floor to a pyramid scheme.

Now it starts getting harder. I have 2 car loans that are 4% and a medical bill thatís 0%. I also have a 30 year fixed mortgage at 5.5%.

Theoretically, I could save and invest and make more money then I would need to pay out for the cars and the medical, letting those 3 payments end a natural death.

The mortgage has a low interest rate over 30 years, has a tax advantage for the interest paid, and if I put the money into diversified stock funds, I could almost double the return and still take advantage of the tax credit.

Woo Hoo!!! No brainer!!! All aboard the investing express!!!

As I said before, theoretically looks good on paper. The answer has to be more complex then this. So I go to Sir Google and ask him. He returns about a gazillion articles each with a different answer. Ok maybe 2 answers: payoff mortgage and donít payoff the mortgage, and most article slanted to not pay off the mortgage.

One of the articles was from a financial advisor from either Morgan Stanley or JP Morgan. He stated that his clients that paid off the mortgage retired 10 years earlier then clients that didnít. How could this be?

The answer is quite easy: Life happens. So, letís say we have a mortgage of 350k. We start saving and investing money. After a few years, we saved about 75k. During that time, we have foregone new furniture, expensive vacations, and our cars are needing to be replaced. Well, we could use some of that money for these things we ďneedĒ. Right? And there is the trap. There is a huge temptation to use that money. After all, whatís a few thousand dollars? Youíll make it up next year.

And thatís the answer. Most average people, myself included, donít have the discipline necessary to leave that money alone. Itís just too tempting.

If you pay down the mortgage every month, you donít see the wealth accumulating and itís a lot easier to forgo the temptations.

With what to do about the mortgage answered, all my other answers are easy. Pay off all debt!!!

One last thing, I plan to live in my house for the next 20 Ė 30 years. If you are in a starter house or plan to move in the next 5 years, you might want to use the extra money to save up for a bigger down payment for your next house.

I am a failure ... but not in 2008

December 24th, 2007 at 06:12 pm

Well, that time of year again. Time to start thinking about my New Yearís resolutions or goals for 2008.

I am determined not to fail this year (sound familiar?). Why is this year going to be different then other years. Because I am going to try not to make the same mistakes.

Easier said then done. I am about to do my second monthly budget, and I feel the tugs of my old ways. Due it next week, relax, enjoy the family and holidays. It will get taken care of.

Luck for me, my wife is ďencouragingĒ me to complete next monthís budget. I call it nagging; she calls it supporting.

So my goal is to me debt free in 2008!!! Sounds great. Weíll that was my goal in 2007 and 2006 and 2005 Ö.. But this year will be different!!! So was 2007 and 2006 and 2005 Ö.

So how is this year going to be different?

Achievable goals that cause me to stretch Ė OK maybe not all debt. I donít think Iíll be able to bay off a mortgage that is more than my gross salary for the year. So maybe Iíll need to refine it to something more manageable.

Plan Ė There is a saying I like ďPlan the work and work the plan.Ē The largest reason I have failed is because I will make a goal but not have a plan to achieve the goal. This year Iíll put together the budget monthly to achieve my goal.

Out of sight, out of mind Ė This year Iím not going to put my goal in a desk drawer. Iím going to keep it somewhere visible where I will be reminded everyday, maybe my bathroom mirror.

Feedback Ė I need to update these goals monthly probably at the same time I look at the budget for the next month.

No Accountability Ė This is where the wife comes in. Sheíll be nag Ö erÖ encouraging me all year.

To doís this week:

1) Determine goals
2) Plan goals
3) Post goals on mirror
4) January Budget with goals in mind

So much for an easy week, I got work to do. Good luck to everyone and may your goals be attainable and enjoyable.


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