How saving the environment can help save you money

Nowadays, when I look at the gas prices I shiver in horror. I thought there was no way it could get any worse than $3 a gallon but now even the cheap stuff is close to $3.25 a gallon. I'm not alarmed by the gas prices because I drive a gas guzzling SUV or drive an excessive number of miles and part of me is glad that the higher gas prices are making people think about alternative forms of transportation and conservation (the operative word in that sentence being "think"). Maybe more people will go out and by hybrid cars, making the actual cost of hybrid cars go down. Maybe more people will take the bus so that they will actually start adding more buses to the route and lowering bus fare. And maybe more people will start riding their bikes and they will see the need to make more bike lanes on the street (you have to be pretty fearless to ride your bike in the street where I live). I'm not going to get into a lengthy debate about whether or not the gas prices are justified or not because, well, it just makes me angry.

But I do want to point out that it's not just the actual price we pay to fill up our tank of gas that will be going up, it will be the price of everything. Think about it. Transport costs go up. Electricity prices go up. The cost to manufacture goods goes up. As the cost to do business goes up, companies will pass this on to the consumers as higher prices. I'm no economist but I foresee inflation. Not just your regular run of the mill inflation, but big mean bad angry inflation (can you tell I am not an economist?).

They say that gas prices are the result of "supply and demand" in the market. So what can we do as consumers to decrease demand for energy therefore bringing the market cost back down and saving the environment in the process?

Well there is the obvious DRIVE LESS and buy more energy efficient vehicles but there are also a lot of other things that we can do that will save us money in the short term as well as reduce consumption. By reducing consumption we not only cut back on the amount of waste that is created when we throw the product away but also reduce the amount of energy and resources that it took to create it in the first place.

One of those things we can do is to stop buying bottled water. Bottled water is one of my biggest pet peeves. Not only are you paying a ridiculous premium for something that you can get right out of your faucet, but the waste it creates is astronomical.

PEOPLE, you have got to get over your fear of the water in the faucet and stop buying bottled water! What a waste. We don't live in Tijuana where it probably isn't safe to drink the water. Do you know anyone who has ever gotten sick from drinking the tap water? I certainly don't. Studies have shown that bottled water is the same if not worse than tap water. And if it's taste you're worried about, I have found that by purchasing a filter and keeping water in the refrigerator I end up with water that is virtually indistinguishable in flavor from any water I have had from a bottle. And if its portability you worry about, just buy a water bottle that you can wash and use over and over again.

I use the Brita Pitcher and Nalgene Water Bottle, both one time investments that have paid for themselves many times over because I don't need to constantly buy bottled water. If you consider that the price of a bottle of water is approximately $.50, the total cost of these two items is about the same as 80 bottles of water. Assuming that you drink two bottles of water per day, the cost of both of these items will be recovered in less than two months.






Have you ever thought about how much environmental harm is caused by those little water bottles? The Container Recycling Institute estimates that 1.5 million barrels of oil are consumed every year, just to transport bottled water in the United States. That is enough oil to fuel 100,000 cars for one year! That is not including the energy cost to produce the bottles or to transport the waste that will end up in landfills for more than 1,000 years, the time it takes for a single bottle to biodegrade.

Just by making one small change, you could be saving yourself money, reducing the demand for oil and saving the environment, all at once.

Ok, I'm going to go hug a tree now.

Vacation time!

I'm officially done with my last job and don't start my new job until May 1st so that means I have about 2 weeks of much needed vacation time. I would love to pick up and go on a road trip or small vacation but I still have my accounting class that I have to go to twice a week. That's o.k. though because it will help me not spend money on hotels or gas and I live in southern California where it shouldn't be hard to find fun things to do close by.

I got my last check yesterday so I am filthy rich. Well, not really but I am not sure what I should do with the money. All of my bills are paid for the next month and I have about $1,000 left over. I'll need to keep some money around for food and gas as well as other random expenses. Normally I would put any excess towards my credit card but I'm not sure when the next time I will see a paycheck will be. I think for the time being I will put the majority of it in my savings account and count it towards the debt reduction total and if for some reason I need it I will be able to still have access to the money. So don't panic if you see the debt totals rise. It doesn't mean that I've gone on a wild shopping spree with my credit card; it just means that I've had to dip into savings until my next paycheck at my new job.

In other news, I've decided to revive my failed attempts at making money off of the 0% balance transfer offers I receive all of the time. When I had tried this venture before I had received an offer for 0% interest on the balance transfer until a specific date. That is why it was so frustrating when they were taking their sweet time to transfer the money to me because every week they stalled I was losing out on the time I could be accruing interest on the money. Well last week I received another one of those offers in the mail except this time the offer was for 0% interest on the balance transfer for 6 billing cycles. I thought at least this way if they tried to delay the transfer, the time when I owed the money would be pushed back as well. The offer said I could do it all online so I logged onto my account and noticed another offer:

0% interest for 6 billing cycles and NO TRANSFER FEE

Woot! I was even more excited about this because that would save me $75 and make all of the money I earned as interest truly free money because it required no initial investment from me. But when I'm filling out the transfer form it asks me for the address of the bank. I wasn't sure what to put here. Could they mean the branch office? Or the corporate office? Or some other office address? So I call them and the customer service rep quickly says she can take care of the balance transfer for me. The catch is though that she doesn't show that the 0% interest for 6 billing cycles and no transfer fee offer is available to my account. Ummm, that's weird because I was looking at it on my computer screen at that very moment. She can't offer any explanation but says that I can call back later and ask them to waive the fee. I laugh at this because we all know that once the credit card companies have their claws in you there is no way they are going to go out of their way to make your life easier. So I decline and tell her I would rather do it all online where I can avoid paying the balance transfer fee at all. She pauses a moment and asks if she can put me on hold...I got all tingly because you know whenever they put you on hold they are simply pretending like they are going to ask their supervisor if they can do something "special" for you. Just as I suspected after a minute had passed she got back on the phone and said that she could waive the fee right then and there. Yeah!

I also decided to sign up for a savings account at HSBC because their rates are way higher than ING Direct. HSBC's rates are at 4.5% while ING is stuck at only 4%. I have had no problems with ING but a half a point of interest could mean as much as $10 more per month on my balance transfer.

Overall, I think it will be a good deal. I'll get to keep the money longer, I won't have to pay a balance transfer fee and I'll be earning at a higher interest rate. Overall I hope to earn $88 per month for 5 months all for doing nothing (except for taking a hit on my credit score for having a large amount of credit).

Book Review: Not Buying It

A while ago I was sent a reviewers copy of Not Buying It by Judith Levine. It took me forever to read, not because it was boring or tedious, but rather because the book covered so many interesting topics that I would read a page and be distracted by wanting to look up more information about that topic or look up a book that she mentioned. This book-induced ADD is a good indicator that whatever I am reading is thought provoking and inspiring.

I was almost turned off by the book because the beginning pages are filled with Bush bashing and liberal political rhetoric. While I am myself a liberal, I get turned off by overly zealous ideologues weaving in their political rhetoric at inappropriate times. I decided to keep reading (after all the book was free) and was glad that I did. The book not only chronicles her experience of a year without shopping but goes deeper into the anthropological, sociological and political forces behind shopping. "Not Buying It" explores the most banal questions, for example, "How essential are q-tips anyways?" to the more profound, "What environmental impact do my shopping habits have on the planet?"

Going a year without shopping is an interesting endeavor, however, it would have been much more interesting if she hadn't admitted to stocking up and binge shopping before January 1st and conveniently not counting the stuff that she buys for her home renovation or the generosity of her friends offering to buy her this or that or picking up the tab when they went out to dinner and the movies. At the point when my friend is paying for me whenever I go out with them, even though I have the money, I would have either stopped going out with them or chipped in my portion of the bill. I still give her kudos because she went much longer at not buying anything than I ever could.

Which makes me wonder, how long could I go without buying anything? I've contemplated doing my own experiment to see what it would be like to not buy anything and see how long I could last and how much money I could save. Then I realize that in essence, this is what I have been doing for the past two years while getting out of debt. I don't need any more severe deprivation to know what it will feel like, especially when I am so close to being out of debt now.

Do you think you could do it? How long do you think you could last?

I got a new job!

What a relief! It's only been a week and already I've had two good job offers. It was not easy quitting my job without having another job lined up but I am glad I took the risk. I had known for a while that my job was not right for me but I just wasn't in the financial position to do anything about it. So finally, all the months of saving and paying off my credit card and transferring the remaining balance to a 0% card finally paid off! I had the freedom to quit when I knew it was time to move on and now I have a new job that I think will make me much happier and ultimately much wealthier.

The job that I am accepting was the result of a referral from a friend. The day that I quit she told me about the opportunity. It was great timing. I interviewed with two of the people from the office and got really excited about the job. It is in an awesome location a block away from the beach, a casual environment (the guy was wearing flip flops and jeans when I went to go see him), the people seem really nice and free of office politics and there will be lots of room to grow and learn and make lots of money.

The only problem is that I would be hired as an independent contractor without any benefits like health insurance. Initially I will be paid on salary and then slowly that would be phased out to a commission only basis. I know that this is risky but I feel that the time to take risks is now when I don't have any dependents or a mortgage or massive bills to worry about. I do have my credit card debt but I am confident that I will be able to pay it off before I have to start paying any interest on it.

I was offered another position that would be a more stable and secure corporate job. I weighed the benefits between the two jobs and came to the conclusion that I just wasn't made for working in a corporate office environment. The thought of working in an office environment makes me cringe while the thought of working a block from the beach makes me very happy.

If it doesn't work out at least I tried and I can start over again looking for a new job. I'm still young so there is not much to lose and if it works out then the credit card debt will be gone in no time.

All I have time to say is...

looking for a job is exhausting! I really feel like I need to be 2 people right now. I hope to have lots to blog about soon... and have the time to do it!

Thanks for all the good wishes. I was so worried I would have an angry mob of blogsters mad at me because I quit my job and the debt repayment would have to be on hold for a while. =)

Bump in the road

I quit my job! It feels liberating and terrifying at the same time. I tried to look for a replacement job while I was still working at my current job but it was just too difficult. I don't know how people do it, trying to sneak phone calls in during business hours and making excuses to go on interviews. Regardless, I gave my two weeks notice and will soon be joining the ranks of the unemployed.

I kind of viewed my job as an abusive relationship. I knew it was bad for me but I depended on it to give me security and even though most days I was so stressed out that I could vomit (sorry for that mental picture), I was comfortable there. I tried to stick it out until I was debt free but 4 months seemed so far away. Before you get all up in arms let me make a few points:

1) What is more important? Being happy or being debt free? Being debt free will come in time but living your life in misery will have long term consequences. Think about how stress can take years off of your life and cause all kinds of diseases like heart attacks and stroke. I had to make the choice to take back my sanity and slow down the debt reduction for just a little while.

2) When I transferred my credit card balance to a card with a 0% interest I stopped making payments directly to my credit card (except for the minimum payment) and started socking the additional money into a high yield savings account. As a result, I have a 3-4 month reserve of cash that will tide me over until I find another job.

3) I am not paying any interest on my debt. I have until January of next year to pay it back without paying any interest on it. Even if I can't pay it back by next January I can always find another 0% interest offer to take advantage of. I'm not saying that is what I am planning on doing or that I would like to do it but if worse comes to worst it is a possibility.

4) There is a good job prospect that kind of fell into my lap the day that I gave my notice. If it works out, I could be working again right away and it won't affect the debt repayment at all.

5) Heaven forbid if I don't find another job in 3-4 months I can always go back to school full time.

I vow not to increase my credit card debt while I am looking for another job and still feel that I can reach my original goal of being debt free in 2 years. This will just make the journey that much more interesting!

My 0% interest scheme was a flop

A while ago I wrote about using a 0% balance transfer offer to earn a little extra money buy putting the transferred money into a high yielding savings account. There are technically no rules against this and although the interest would not be substantial (probably would amount to about $300), it would be "free money". I was ready and determined to avoid any sneaky fees that the credit card company might try to charge me. I was not ready however, for the endless delays that they would subject me to.

I called the credit card company and told them that I wanted to wire transfer $23,000 into my checking account. Unfortunately, the thing I did not know was that in order to request a wire transfer, you have to call from your home phone number. When I moved, I had failed to update the number on my account and the old number had long been disconnected. I updated the phone number and would have to wait another 30 days for the change to take effect. It was frustrating, but understandable. They were only trying to look out for me, right? She suggested that I simply write one of the checks and take it to my bank to deposit it.

That is exactly what I did. The only problem was that when I tried to deposit the check, they informed me that they would charge a $15 processing fee and would hold the check for 5 weeks to make sure it was legit. Apparently, banks have a dislike for checks from credit card companies. I fussed and fought but they were not budging. So I politely told them to shove it and left without cashing the check.

I waited and waited thinking of all the interest earning time that was passing by. Finally, I figured that it had been 30 days and called back to get my money. Everything seemed to be going fine. $23,000 is nothing to sneeze at so of course when I called and talked to the customer service rep they asked me to answer a number of security questions to verify that I was who I really said I was. He told me I should have my money in about a week. Finally!

Every day I would check my account online, waiting for the transaction to go through. Then one day I tried to log into my account and nothing was there. Panicked, I called them. They had placed my account on hold because they suspected fraudulent activity. (I know you can't see me right now but just imagine me rolling my eyes.) So I answer the security questions again and he cheerily informs me that my account should be back online in 30 minutes. Greeeaaat.

The next day, I log online and still nothing. I call back and go through the same ordeal.

Them: Did you recently initiate a balance transfer?
Me: Yes. I have already talked to two different people about this.
Them: O.k. ma'am. Well do to a high volume of fraudulent activity we need you to answer some security questions.
Me: Fine. But I've already answered these questions twice already.

After a series of exceedingly annoying questions, they confirm that indeed everything is legit (for the third time) and say that they will restart the balance transfer process and that I should get my money in a week. This is where I lose it.

Me: You told me a week ago that I would have my money in a week. Now you're saying that it is going to take another week?
Them: Well we had to put your transaction on hold because there were fraud concerns.
Me: Were you ever going to call and tell me this? Remember, I had to call you to solve this problem.
Them: We sent you a letter.
Me: A letter? I'll probably get that in a week. Couldn't you have at least called if you were seriously concerned about fraud?
Them: Um, we did. But we couldn't get a hold of anyone.
Me: Did you leave a message?
Them: Um, actually they said you didn't live there anymore.

I am so completely irritated at this point that I tell them to forget the whole thing. What was the point of me updating my phone number over a month ago if they can't even get the phone numbers straight in the first place? I won't even torture you with the back and forth exchange I had with these people about why they were calling the wrong number.

My theory is that they drag out the process as long as possible so you have the money at the 0% rate for a shorter amount of time. They used to give you 6 months or some predetermined amount of time to have the money at the lower interest rate. Now they do it so you only have it until a specific date. And not to mention that although they say that you have until say September 20th, they really mean that you have until September 20th or before the pay cycle that includes September 20th. This means that if you wait until September 19th to pay it back but your pay cycle begins September 18th, you are already too late.

It was a good idea but not made for a person with low tolerance for annoying customer service. I just couldn't stand the thought of having to call them and answer more security questions. Another victory for the credit card companies. But at least I don't have to sleep with the enemy anymore.

Ever wonder...

what is the point of signing when you use your credit card? Does it really matter how you sign? Do you ever just get lazy and scribble your name? I always wished I had a cool doctor's like signature but alas, my signature takes me a good 15 seconds to execute. Every letter is clearly drawn, nice and neat. 15 seconds may not seem like a long time but it feels like an eternity when there are people practically pushing you out of line because they are in a rush to be next. These people clearly don't appreciate perfect penmanship. Would it really matter if I just quickly scribbled anything, just to seal the deal and get the heck out of the way?

Well, I happened across this funny article from Zug about someone who tried just that. Not necessarily because he (or she?) was in a rush but because (s)he wanted to see if people were paying attention. (S)he even went so far as signing with a grid and a stick figure. I got quite a laugh out of it. Next time I buy something with my debit card, I'll have to try it and see what happens.

Throw away the fashion mags

For a while I held on to the fashion magazines. I lived vicariously through the glossy pages, envisioning myself in the clothes or with the new lip gloss. I figured it was harmless because I wasn't actually buying anything but I was wrong. Really, I was just torturing myself with stuff that I wanted but could not have.

You see, I now look at fashion magazines the same way I look at malls. They are evil. Pure and simple. They are evil because they are loaded with ridiculously expensive things that alter your perception of what is affordable and what is not. My eyes nearly bug out of my head when I see the price tags of some of the items. $2,000 for a handbag, $800 for a pair of shoes, $550 for a sweater. It makes it so that when I see a pair of shoes for $220 I think they are a bargain! It builds us up to a false sense of practicality. Comparatively the $220 pair of shoes are a much better buy than the $800 pair of shoes so you are making a frugal decision, right?

Not to mention that fashion magazines are designed to make you feel, well, bad. Ever notice how in those "what's hot, what's not" sections, the what's not was what was hot last month? So now that you've run out and bought the latest trend you have to hide it in your closest or risk being passé and drag yourself back to the mall to buy what is hot this month. And the cycle repeats and repeats and repeats. You can never win.

Along with banning the mall I am now banning fashion and beauty magazines as well. I'm not saying that all magazines are bad. Just the ones that try to sell an impossible lifestyle. Magazines should be inspirational, educational and informative, not a test of willpower.

Maybe it's time to start subscribing to a personal finance magazine instead so I will be more tempted to save instead of spend!

This is the thanks I get?

Last night I parked my car under a tree in front of my apartment. When I went down to my car this morning imagine my shock and horror when I found my car looking like this...



Keep in mind that when I left my car last night it was bird poop free. I looked around at all the other cars and not one of them had one drop of bird poop on them. I had parked in this spot and never had an incident like this before. Clearly, my car had been maliciously attacked by angry birds. They used the weapon they know best, their feces.

"Why?" you ask. I can tell you why those little buggers attacked my car. You see, it all started with trying to make my cat happy. We moved here from a place that was full of birds that my cat could watch from the window. Bird watching was her hobby. In our new apartment she had nothing to watch except a parking lot full of cars and the occasional person walking by. She was depressed and bored so I bought a bird feeder hoping that we could attract some birds to our balcony.

Months passed and no birds came. I tried everything to keep her happy. DVDs of birds, remote control mouse toys, I even contemplated getting another cat to keep her company. Nothing worked. Then one day I noticed that some of the bird food had been eaten and later I noticed that 2 little birds would come and eat out the feeder. My cat was finally happy.

2 birds turned into 4, 4 turned into 6 and soon I could have upwards of 16 birds on my balcony at any one time.

The birdy party crashers were eating me out of house and home. I would put food out when I got home from work and by the time I got home from work the next day the food would be completely gone. I went through a whole bag of birdseed in just one week. I tried to space out the feedings so that I wouldn't have to buy as much bird seed.

I ran out of bird seed and on my trip to the store I forgot to pick up more. I contemplated making a special trip but couldn't justify the effort for the birds. Apparently, the birds didn't like my decision. After 4 days of not having a refill, they decided to show me exactly how they felt about me.

You may be thinking that the bird poop happened because I had attracted these birds to my balcony in the first place. But I argue that I had never had a problem with a soiled car when they were regularly fed! Coincidence? I think not.

So I'm off to get an expensive car wash (I have not had any luck finding a cheap car wash around here) and some bird seed to mollify the angry birdy powers. I have learned my lesson.

Blogs from the Financial Front

Hooray! They finally have the link up to the article at Money Magazine featuring the "Five online money diarists too smart--or weird--to miss". Am I the smart one? Or the weird one? Hmmm. ;) Regardless, I was pleasantly surprised to be mentioned along with:

Sound Money Tips
All Things Financial
Another F@cked Borrower
Change is Good

And thanks to Bailey from Thoughts from the Change Race for providing a scan:

Bill Re-Evaluation

The whole fiasco with my auto insurance reminded me of the importance to re-evaluate all of my bills. It has been a while since the last time I really went over what all my monthly bills were and whether or not there were ways I cut back. So in the past week I have been doing some thinking and have decided on a couple of money saving sacrifices:

1) After comparing all of the auto insurance companies I decided that Unitrin was the most cost effective and reliable insurance companies, even with the additional $40 fee for renewing my policy. Even though I couldn't get that fee waived, after changing some of my coverages to what was more approriate (lowered bodily injury liability and dropped towing and rental car expense coverages) I was able to save $40 off of my premium.

They had also increased the per payment fee from $3 to $5. So I decided instead of paying on a monthly basis I would just pay for it all up front. This will hurt the debt repayment in the short term but after the initial hit I'll have more money per month to pay towards the credit card.

2) I cancelled my subscription to Audible. I don't commute anymore so I don't have any real need for audiobooks and I have a ton that I haven't listened to yet. That will save me $15 a month.

3) I changed my student loan repayment schedule from the most agressive repayment plan to the least expensive per month. That will free up an additional $50/month to put towards the credit card. While this may not save me any money (either way it would have gone towards debt) it will help me out mentally by speeding along the process of paying off the credit cards. Once the credit cards are paid off I'll be able to focus all of my energy towards paying off the student loans.

The end is near, I can almost taste it. The closer I get, the more excited I get and hopefully making these few small changes will help me along my way.

Getting to Know...Me

Head on over to the NCN Network to read a little email interview with none other than yours truly. Find out why I started to blog, what my long term personal finance goals are and much more than you ever needed to know about me.

My Day of Salvation

I tried to calculate the exact day that I will be out of debt based on my pay schedule and when my bills are due. Based on my calculations I should make my last credit card payment on August 4, 2006. This is assuming I don't receive any extra cash before then and I don't have any major unexpected expenses. That means that I have 162 days until I am debt free!

An unusual real estate investment choice

Tonight I sat in on a very introductory course on real estate investment. A lot of the stuff I already knew but one thing that struck me as unusual was one of the property types he suggested for beginners. In addition to the usual suggestion of purchasing a condo, a single family home, a multifamily home like a duplex, or a small retail space he suggested buying a post office.

I didn't even know that you could buy a post office. I assumed that the government would own the building and the land that they operate the post office on, but I was wrong. Anyone can buy a post office and lease it out to the U.S. government.

Think about it. What a sweet deal that would be! The biggest drawback that I have always envisioned for owning investment real estate is that you have to deal with people, people who don't pay their rent and who don't care about maintaining the property. If the U.S. government is your tenant most likely they are not going to be throwing wild parties and they will have the money to pay you rent (well, lets hope so because if they don't we're all in trouble).

Here are some of the advantages to owning a post office:

*Rent to a Stable tenant
The U.S. government usually signs 5 year leases so you are guaranteed the income for at least 5 steady years. Most post offices tend to stay in the same location year after year. When was the last time that your post office moved?
*Tenant responsible for all expenses
You won't have to worry about them running up the electric bill because they have to pay for it.
*Post offices are everywhere.
This means that there are plenty of cheap locations to choose from.
*Easy to manage.
Post offices are pretty self sufficient so there is no need to hire a property management company that will cut into your cash flow. Also, you can buy out of state and not worry about having to visit the property often.



A quick search on a commercial real estate search engine produces this affordable post office in Idaho. Only $48,000 to buy with an 8.2% CAP rate (rate of return on your investment).

So it all sounds good, huh? What are some of the disadvantages?

*If the post office decideds to not renew its lease, you'll have a hard time finding another tenant to replace them. If that happens you'll most likely be able to only sell it for its land value.
*It's hard to find financing.
*The U.S. government is hard to negotiate with. You'll have a tough time trying to raise the rents on them.

Not a bad deal if you ask me. It's better than having to deal with clogged toilets and evictions.

What $300,000 + Buys You in…Orange County, CA

JLP over at All Things Financial started a post on what $300,000 will buy you in the real estate market in his neck of the woods and has encouraged other PF bloggers to do the same. O.k. I'm game...but can you really buy anything in Orange County (Irvine) for $300,000?

The answer is yes, but you're not going to get much! The closest thing I could find to $300,000 was this "spacious" 1 bedroom, 1 bath upper-unit condo of 643 s.f. for $299,900.



Now maybe you can understand why I feel like I will never own a home unless I move out of the state.

Just Say No to the Mall

The mall is an evil place. Walking into a mall is like walking into a vortex where your money is sucked straight out of your wallet, or even worse, money you don't have is charged to a credit card.

O.k. Maybe I am being a little dramatic in saying that the mall is evil, but I definitely feel there is something sinister about a mall. The mall has a way of casting a spell over me while I am there. Things that I didn't even know existed are all of a sudden a necessity and my entire wardrobe seems helplessly shabby and outdated in comparison to the fresh new styles on the racks of countless stores. I lose all sense of rationality and my old mantra of "You only live once" creeps back into my mind and I feel tempted to go on a wild shopping spree. This is why I now avoid the mall at all costs!

You see, I think a lot of Americans end up in debt out of sheer boredom. Go to the mall on any day of the week, especially Saturday and Sunday, and you will find throngs of people filling the malls, fighting over parking spaces and bumping into each other with their baby strollers. Why are they there? Surely all of these people don't need to be there. I think many of them just can't find anything better to do than to hang out at the mall and grab a Cinnabon or a hot dog on a stick. And while they are there passing the time, they end up spending money that don't have on things that they don't need.

I remember every Saturday my grandma and her sister would go to the mall. It was a sort of ritual they had. Rain or shine, regardless of whether they needed anything or not, we would all go to the mall and then go out to lunch afterwards. It's only now that that strikes me as bizarre.

I rarely go to the mall anymore and I've found that my desire for things in general has dropped considerably. For the most part I am content with what I have and can resist emotional or impulsive spending. Sure there are times when I feel the need for something new but its much easier to resist when I am far, far away from the mall.

So if you are in debt or are trying to save money, stay away from the mall. I suggest having a healthy fear of the mall. Think of it: rabid frenzied women pushing you out of the way to get to the big sale, no parking, bad food, and worst of all...money being sucked right out of your bank account, never to be seen again. Not my idea of a good time!

How Much Car Insurance Do You Really Need?

I've been with Unitrin Direct auto insurance for the past year. They were the cheapest quoted when I went to www.insurance.com and when I switched to them from Mercury insurance I saved about $40 a month. I've never had any really problems with them...until now.

I received my renewal package in the mail and was looking through it to make sure they hadn't raised my premium and was even hoping they would decrease my premium. Neither really happened but what they did do was slap on a $40.00 "policy set up fee" to the total bill. What? A policy set up fee? Nothing on my policy had changed, nothing fancy is required of them. And to make things worse, they decided that they are no longer doing annual policies but instead are now only offering 6-month policies so in another 6 months when my policy renews I will have to pay another $ "policy set up fee." What BS!

Their policy set up fees will end up costing me another $80/year or about $6.60/month. I hate when companies nickel and dime you so that they can lure you in as customers and then try to squeeze as much money out of you as possible. It's more than principle of the matter more than anything. Why not include their expense costs in the premium instead of making it seem as if they are doing you a favor or providing you some additional service by renewing your policy? Isn't that exactly what their business is?

I called them and told them "NO THANK YOU" to the additional fees and they said "TOUGH LUCK." So I started shopping around for auto insurance.

I went back to www.insurance.com and got back a few different quotes, only 1 of which was less expensive than the quote at Unitrin. Annoying but the quote that was less was $108 cheaper for a 6 month policy than at Unitrin. All of the other quotes were

The quote was from Esurance so I decided to do a quick search to see what they were all about. I was so glad I did because I read numerous complaints from the Consumer Affairs website about them claiming that they gave them the run around when they submitted a claim or that they ended up raising their rates during the policy period for no good reason. I think I'll take a pass on them.

Here is what I don't get. I'm 24, never been in an accident, never had a ticket, have a good credit rating and only drive 4 miles one way to work. My car is pretty reasonable; it's about 3 or 4 years old, I own it and it is probably worth about $13,000. But for some reason I end up with ridiculously high quotes from insurance companies. AIG gave me a quote of something like $1,100 for 6 months or $183/month. That could be another car payment!

Maybe its time to reevaluate my coverages. There could be other ways to trim down my auto insurance cost which is my biggest expense after rent, credit card payment and student loans.

I found a good article on this subject at Smart Money. Here it is in paraphrase form with some of my own comments. I recommend checking out the full article as well.

Bodily Injury Liability
This will compensate the driver of the car and its passengers and passengers in your car when you get into an accident. The amount of coverage you need should be determined by the amount of assets you need to protect. This was news to me. I had bodily injury liability coverages of $100,000/$300,000 and I don't even have any assets besides my car. Unless they want to take me to court to win a portion of my credit card debt, I should really lower my coverages here. Smart Money recommends using their Net Worth calculator to determine the amount of assets you need to protect.

Property Damage Liability

This will help pay for the cost of damage to the other party's car. If you live in Orange County like me where too many people buy ridiculously expensive cars, you should have enough to cover the cost of that Mercedes or Porsche.

Personal Injury Protection

This will cover medical and funeral costs of you are passengers in your car regardless of whose fault it is. If you already have medical & life insurance you can be fairly safe in skipping on this coverage.

Uninsured or Underinsured Motorist

This will cover medical and funeral cost for you and your family if you get hit by a hit and run driver or with someone without any or enough auto insurance. A definite because of the number of people driving without insurance. It will make up for anything your medical insurance does not cover.

Collision and Comprehensive

Collision will reimburse you for the cost of replacing or fixing your car after an accident. Comprehensive will reimburse you for the cost of replacing or fixing your car in the event of a natural disaster, theft, or vandalism. It's best to choose the highest deductible available (usually $1,000) so that you can save on the amount your policy premium will cost you. In the long run, you'll only be paying more than $500 to reduce the amount of deductible you have. This is only of course, if you'll be able to pay the $1,000 deductible if you are in an accident.

If you have an older car it may make more sense to drop collision and comprehensive all together as these coverages can make up 30-40% of your total policy cost. If you get into an accident the amount of money you receive to replace or fix the car may not be more than you have already paid in insurance.

Car Rental and Roadside Assistance

The likelihood that you will need to use them are pretty slim. You'd be better off paying for them out of pocket if you do need them instead of paying a monthly fee just in case you might need them.

Unfortunately, even taking into account some of these changes, I still can't find a price that beats Unitrin and isn't shady like Esurance. It would be nice to move to a more reputable company like Geico or 21st Century but I would have to pay at least $40 more per month. In the end I just don't feel it is worth it. I guess I'll have to keep crossing my fingers and hope I don't get into an accident. And it gives me a reason to look forward to getting older...maybe when I turn 25 I'll start getting lower auto insurance rates!

When you love your shoes too much...

I have a confession to make. I'm not really a shoe person. I'm one of those people that would walk around bare foot or in flip flops most of the time if I could. This works out great for me because I am not tempted like some people to spend an inordinate amount of money on shoes thus breaking the budget. I have other vices but shoes are not one of them.

Mainly I hate shoes because they tend to hurt my feet, especially heels. I've never gotten used to walking in heels and I always look ridiculous when I do. Just today, I tripped and nearly fell on my face 3 (yes three!) times because my heels got stuck on something or I twisted my foot the wrong way. Its fine as long as no one notices. I usually do a quick look-around to make sure no one saw and if I don't see anyone giggling then I'm cool. But its hard to play it off when you are trying to carry on a conversation with someone and all of a sudden you are immobile and your shoe flies off of your foot because it has gotten stuck in the floor (and yes, this did happen to me today).

I'm just not one of those girls who freaks out about shoes and wants to own 100 pairs of Prada or Jimmy Choo shoes. I have a hard time getting excited about shoes because I know that my feet will hate them and its hard for me to care how cute the shoes are when I'm in excruciating pain and falling all over the place. Even tennis shoes are hard to buy because it is so difficult to know whether or not they are going to be comfortable because they have to be broken in before you can truly know the nature of the shoe.

But alas, there is one pair of shoes that have always done me right. I bought them about 5 years ago and never regretted the $80 I spent on them. They carried me across Europe on a backpacking trip and I wore them just about everyday when I was in school and didn't have a car and walked everywhere. When I wear them I feel like I'm not wearing anything at all and they provide great ankle support so I can really hussle when I'm walking somewhere in a hurry.



They have looked terrible for a while now but I can't bare to part with them. I've washed them but they still look dirty and there are little plastic things that are falling off left and right.



I've bought other shoes since then but they don't compare. I feel like every time I buy another pair of shoes I am just wasting my money because I won't want to wear them. On the other hand, I don't want to wear the old shoes because they look beat. There comes a point when frugality must make way for fashion.

So what is a girl to do? I either buy new shoes which could be a waste of money (and money is tight) or I can just keep the old shoes and look, how do you say, ghetto.

I did have one other brilliant idea. I could just try to find the same old shoes for sale on the internet. Unfortunately, these shoes seem to be a rather rare find. I searched through tons of shoe listings on ebay but didn't have any luck finding the shoe.

I'm not sure what they are called but the bottom of the shoe has the words "Turbulence," "Duration," and "Max Air." Most of these brings up tons of shoes, not one of them being my shoe. The tongue of the shoe has the number 302308 which seems to be a product number because when I type it in I get results from some Asian website that has a picture of my shoe in red and gold. If only I knew what the heck the website said and they had it in the right color my life would be one step closer to being complete.


Oh mighty shoe gods...please help! These shoes must exist somewhere.

Reader Success Story

Have you ever seen the commercial that says "When banks compete, you win?" I'm not sure what company that commercial was for but it is so true! A Defying Debt reader recently shared her sneaky strategy of getting her interest rate lowered and I think it was such a wonderful idea that I wanted to pass it along to everyone.

Raven had over $65,000 worth of debt at the end of 2005 and now owes $49,000. That is an amazing feat in itself. If you do the math that is $16,000 paid off in just a few months, wow! The problem was was that she had one credit card with a balance of $14,700 with a whoppin 22% interest rate. She had tried numerous times to call the credit card company to have them lower her rate but with no success. I guess they knew they had her in a bind and they were not going to make things any easier for her (those bastards).

So she took matters into her own hands, contacted a bank that would let her take out a personal line of credit for $15,000 at 20% interest to pay off her credit card. Now that is all fine and dandy, 2% interest on $15,000 can add up. But she didn't stop there.

She then called the credit card company back and asked them what it was worth to them to keep her as a customer. They then offered her a balance transfer rate of 6.99% for the life of the loan!

Just by creating a bidding war between banks she was able to cut her interest rate down by 15%. That just proves the commercial right, when banks compete, you win!

I'm lovin it! Congrats to you Raven! Thanks for sharing.

Investing in Stocks: Part III

So far I've talked about choosing a good broker and reading a company's financial statements but haven't gotten into the really fun stuff yet. I've been reading lots of books from the library and listening to audiobooks about investing and I have to say that there are so many ways to evaluate a stock that I don't really know where to begin. I don't want to bore you with a bunch of terms and ratios. Those kinds of textbook explanations are much harder for me to understand and digest than an explanation that is dynamic and uses tangible examples.

The best way I think I can synthesize this information is to just break it down by the main points of each book and what information I thought was most useful and applicable.

The Warren Buffet Way
I love reading and learning about other successful people. I'm always hoping that just a little bit of what they have that makes them successful will rub off on me. Of course, when you think of successful investors you probably think of Warren Buffet, the second richest person in the United States. His net worth is over $40 billion (can you imagine?) so he must have been doing something right with his investments.

Apparently, Buffet followed in the ways of Benjamin Graham, who I had not heard of before but is considered to be the "Father of Value Investing" and wrote the highly influential book called "The Intelligent Investor," which is next on my books to listen to. Graham's method of investing is called "Value Investing" and taught that one should only buy shares in a company that are selling below their true value. Simple, right? But how exactly do you determine if a company's stocks are selling at a bargain price?

Buffet determines the value of a company by estimating the future cash flows of a company and then adjusting for the time value of money (or discount rate) based on the rate of a long-term U.S. bond. This is called the discounted cash flow and can be calculated with the equation below:



AGH! Equations, I know. I apologize for that. This is what equations do to my head:

All this equation is doing is putting the future earnings into today's dollars plus the amount of interest that it could have earned if you had bought government bonds.

Moving on.

Buffet is able to determine the future cash flows of a company by only focusing on companies that he understands and that have had consistent earnings power in the past. By focusing on companies that have consistent earnings and on companies where he understands the business he feels he can eliminate much of the risk that he can confidently project earnings into the future.

For those of us who aren't Warren Buffet and who don't have the experience of reading tons and tons of financial statements over many years, there are a bunch of ratios that people can use to determine if shares appear to be underpriced. The most popular one is the price to earnings ratio that I mentioned in a previous post. The P/E ratio can be computed:



P/E ratios are useful in comparing stocks between like companies, say if you are trying to decide between buying a share of Coca Cola or a share of Pepsi. The lower the number the better. Basically what it means is that if the P/E ratio for Coke is $10 you are paying $10 per dollar of earnings and if Pepsi has a P/E ratio of $15 then you are paying $15 per dollar of earnings.

Have I confused you yet? I think I'll leave it at that for now as all the numbers and equations are making my head spin. Please note that I am by no means an expert but rather I'm still trying to grapple to understand most of this myself. If you notice anything that is grossly erroneous, please let me know and if I make absolutely no sense, let me know and I'll try to clarify.

The good thing about trying to write this is that I can try to fill in the gaps in my understanding and I am learning a lot as I go. I hope you are getting something out of it too.

Recovering from your mistakes

We only get one life. That's why it is so frustrating when you've made mistakes with the life that you were given. No one is perfect; we are all bound to make mistakes sooner or later. But sometimes it seems that the mistake of getting into debt is costing me too much of my life. The effects of debt have had repercussions on my life for years and will continue to cause repercussions for many years to come.

In ways, getting into that much debt (in May 2004 I had over $30,000 of debt) is one of the best things that have ever happened to me. I know it sounds crazy but I truly think that it had to come to such a dramatic climax to help me understand how important it is to save money for the future. Who knows when I would have realized the need to start saving for a house, retirement, etc. without it coming to that point.

Then again, I'm frustrated that all of this effort and sacrifice is being made just to pay off obligations; obligations that have left me with no real assets (except for my car, which doesn't really count because it is always depreciating). Wouldn't it be great if that $30,000 that I started off with could have been saved as part of a down payment for a house or the seed money for my own business?

Enough of that negativity! Gosh, talking about debt can be depressing sometimes. The most important thing to take away from this is what we can learn from our mistakes and how we can make up for the time it has cost us to repair those mistakes. Let’s face it. Anyone in debt like me has more of a disadvantage than someone who was smart with his or her money to begin with. So how can we make up for lost time? Here are some of the tips that I have come up with to take control of our financial futures:

1) Have a master plan.

The plan should not only include how and when you get out of debt but also what you are going to do after you get out of debt. This could include saving for a house, a business, emergencies, retirement, or all of the above.

2) Educate yourself.

Read tons of books (from the library). Read lots of blogs (especially mine!). Keep up with the news. Take a class on something that interests you. Getting educated not only helps you make more informed decisions but it will also keep you motivated to do the right thing. Besides, if you are constantly engaged in ways to better yourself, you will be less likely to be at the mall spending money.

3) Network with like-minded individuals.

People with similar goals will keep you on track and will hold you accountable for your actions. Not only that, but you can exchange ideas and assist each other in accomplishing your goals. I recommend that if you are also struggling to get out of debt to join the No Credit Needed Network. NCN has recently gotten himself out of debt and has started the network to encourage others to do the same. Imagine, a whole network of people cheering you on to attain your goal.

4) Always look for ways to learn a new skill or improve on your skills.

Having a large skill set will help increase your income earning potential. Whether it is by taking a class or by engaging in a hobby that helps you practice a skill (like blogging) you will be glad you did it. You never know when an opportunity to practice that skill might present itself.

5) Think big.

Most people laugh when I tell them that I want to buy a chateau (stop giggling!). It sounds so big, so unattainable but that is precisely the point. I probably could never have kept up my motivation to get out of debt if the end goal was to only get out of debt. Boring, right? There have been many times when I wanted to rebel and go on a wild shopping spree but then looked at pictures of chateaux and realized that my dream would be that much further away if I did. Dreams have to be big in order to keep inspiring us.

Debt can be the biggest blessing in disguise if we learn from it and vow to improve our finances. If you aren’t in debt, learn from my mistake and don’t do it!

Remember: “Success seems to be connected with action. Successful people keep moving. They make mistakes, but they don't quit.” ~ Conrad Hilton

Investing in Stocks: Part II

It has been one crazy week! I don't even know where all of the time went between working and class and everything else that life has thrown at me in between. Sorry for the lack of updates...I promise to do better!

Next month, my company is going to hold a training class for the staff on how to begin investing in real estate (i.e. how to buy your first home, whether you should buy a singe family home or a 4-plex, & how to buy a small commercial building). This should be great blog material. Look out for that in the near future.

But let's get back to investing in stocks which is the topic du jour. Now that we've picked an online investment firm, we need to understand what a stock is.

This may sound very elementary but understanding this basic principle is crucial in allowing us to make informed decisions when we invest in the stock market. So please, bear with me!

Basically, when you buy stock you are buying partial ownership of a company and therefore a claim on it's future earnings. The more stocks you own, the more say you have in how the company is run and are the larger your claim is on the company's future earnings (paid out in dividends). The more the value of the company grows, the higher the stock price is likely to go, thus allowing you to sell your stock at a later time for a higher price. Conversely, if the value of the company declines, you will not be able to sell your stock for as high a price as you bought it for and you will lose money (boo).

Therefore, when you buy a stock you want to know as much as you can about the past and future potential earnings of the company so you can gauge how safe your investment is and what the potential for return is. Learning about the past financial history of the company is the easy part. Predicting the future...well that's another story. So let's start with understanding the past.

All corporations are required to issue financial statements to investors at least once a year. Once you are able to read these financial statements you will be able to make a more educated decision on whether or not a stock is a good investment or not. The 4 important financial statements are:

Income statement: Records the revenue and expenses and provides the net income or net loss for the year
Cash Flow Statement: Records where cash is being spent and how they are financing business operations
Balance Sheet: Records all of the company's assets, liabilities and stockholder's equity
Retained Earnings Statement: Records how much of their Net Income was paid out in dividends

Financial statements are available for all companies if you go to NYSE website. Simply go to the "Listed Company Directory" and pull the "SEC Filings" for the company you are interested in.

The information in the financial statements allows investors to calculate different ratios that can measure a company's performance (i.e. Earnings per share and Price-Earnings ratio), track the company's revenues, and see how much debt the company has, among many other things.

Knowing what everything in the financial statements means will probably take lots of time, but reading through even at a high level will give you a greater sense of the operations of the business, how the company intends to grow (if at all), and how profitable the company is.

It can be fun to read through financial statements randomly. I would recommend to think of a product you love, or an industry that you are familiar with and read through some of the annual reports for those companies. You will probably learn a lot!

Next: What to look for in a company...

**Disclaimer: Please keep in mind that I am by no means an expert in investing in the stock market. Quite to the contrary! These are just my general findings as I educate myself on how to invest wisely so please, take everything I saw with a grain of salt. And I'd love to hear your opinions and advice from your own experiences!

Investing in Stocks: Part I

Investing in the stock market can be a scary thing. It is something that I've heard about a lot but never actually took the time to understand. Part of the reason why it seems so difficult is because you may not know where to start.

Do you start by looking up ticker symbols and viewing graphs and charts that mean absolutely nothing to you?

Do you start by reading about companies and industries and what is going on in the market as a whole?

Do you start by looking up definitions and terms so you might stand a fighting chance of understanding investment jargon?

NO.

Personally, I think the first move that someone interested in investing in the stock market should take is to choose a brokerage firm where you will conduct your business of buying and selling stocks. Why is it so important? Well for starters, for every transaction that you conduct you will have to pay a fee. The total amount of fees that you pay for buying and selling shares could have a significant impact on your total overall return on your investment. The amount that you are willing to pay may vary depending on any number of factors including how often you want to buy/sell, how much you are investing, and what kind of tools you are looking for to research and track your investments.

For the beginning investor (like myself) there are a number of online investment companies. Each one offers a different fee schedule, different plans and research tools.

Sharebuilder: Offers the lowest fees for trading that I have found so far. There are 3 levels of accounts:

Basic: $4 per investment, $15.95 for a real time trade (buying or selling a stock at the current market price), and $19.95 for a real time trade limit order (buying or selling at a specific price).

Also includes a Portfolio Builder tool which recommends stocks based on a simple survey that tests your risk tolerance, goals and experience.

Standard: $12/month which includes 6 free investments per month + $2 per additional, $14.95 real time trade, $18.95 real time trade limit order.

In addition to the Portfolio Builder you get a Gain & Loss tracker which tracks the performance of your stocks.

Advantage: $20/month which includes 20 free investments per month + $1 per additional, $11.95 real time trade, $15.95 real time trade limit order.

In addition to the Portfolio Builder and Gain & Loss Tracker you have access to a tool that tracks your capital gains for tax purposes and an IPO (company's first sale of stock) priority notifier.

Transferring money is simple. You can link it directly with your checking and savings account and transfer money online. Under the basic plan you set your investment plan to do everything automatically for you.

For example, let's say that you have $100 to invest every month. You can create your own custom portfolio and have it invest in those same stocks every month (or every week). You can also set it up so that you can make a one-time investment. The only problem that I have is that investments can only be made on a Tuesday so if it is Wednesday you will have to wait nearly a week to buy (unless of course you want to pay the $14.95 for a real time trade).

Also, I decided on Sharebuilder because of a promotion through Costco where new members earn $65 just for signing up for an account and conducting their first transaction. Can't beat that if you are already a Costco member and are interested in beginning to invest.

Ameritrade: There is only one type of individual investing account. They charge $10.99 per internet equity trade which includes stop and limit orders.

Their fee structure seems to be a lot trickier. For instance, the $10.99 fee for trading only applies to stocks being traded online. If you decide to do it over the phone they will charge $14.99 and if you want to talk to an actual broker it is $24.99 for a market order and $29.99 for a limit order. OR if you want to trade a mutual fund rather than a stock you will be subject to a whole different fee structure. And it doesn't end there. They will charge a $15 maintenance per quarter if the liquidation value of your account is below $2,000 in addition to the normal trading fees.

Bottom line that they will probably find a way to charge you for anything and everything they possibly can.

Ameritrade offers a variety of tools, some of which come with a fee. Some of the complimentary services they provide are the Ameritrade Streamer which gives you customizable real time streaming quotes and the Quote Scope feature which will give you the best bid and offer and last trade prices for a stock and displays such things as the Liquidity ratio and Flow indicator for your selected stocks. There is also the Advanced Analyzer which tracks the performance of your portfolio for $19.99/month.

Scottrade: As with Ameritrade there is only one level of account. They offer $7.00 online trades, $12 for a limit order and a minimum of $500 to open an account. They do not charge inactivity fees so that is a plus. Reading some customer reviews I noticed many people had the complaint that they had lots of technical errors (servers crashing, website being frequently unavailable) which would be frustrating if you are used to have 24/7 access to your accounts. The layout of their website leaves much to be desired; searching for info on their fees and services is quite a challenge. From what I can tell they offer the following research tools:

Scottrade: Online portal to track your account including news alerts, access to stock quotes and research.

Scottrader: Live streaming quotes, Top Ten lists and interactive charts, personal stock lists and Quick quotes to track individual stocks.

Scottrade Elite: Free if your account value is over $25,000. With this tool you can get Dow Jones News, Comtex News, advanced charting capabilities, and technical analysis.

Plus they were rated 6 times in a row for Highest Investor Satisfaction with Online trading services.

Well, I'm sure there are lots more that I haven't covered yet like E*Trade, Buy and Hold, etc but you get the idea of what types of things to consider when you are on the hunt to find a right match for your investment needs.

"Make More" to Get Out of Debt

There are two parts to getting out of debt and to saving money in general. They are "make more" and "spend less". Making more without spending less will never result in an increase in net worth. Alternatively, spending less without making more is a good start, but will never help you achieve your maximum potential.

The posts on this blog have primarily focused on the "spend less" part of the equation and recently I have felt that there are not many more ways I can cut back on spending without resorting to eating nothing more than beans and rice, taking public transport and living in a cardboard box. A girl has got to have her limits.

The best part about focusing on "making more" is that there is no limit to how much you can make. Depending on your skills and your willingness to take risk, you can make millions with luck, a good idea and hard work. Granted, most of us will not make millions (darn it) but the point is that how much you earn is entirely up to you whereas spending less is limited to the amount of money you already have.

For years I avoided thinking very much about money because I thought only greedy people thought about money a lot. Then, as you already know, I got myself into loads of debt, over $30,000 by the time I graduated from college in 2004. (I've only been tracking the amount of debt I had since I started this blog last year but yes it was much more to begin with!)

Being in debt has taught me a lot about what money really means. It's not about buying new cars, clothes and jewelry, although it can be for some people. What I have realized is that having money is more about having freedom. The freedom to do what you love, help others and be happier as a result. Now, I don't feel so guilty about thinking about ways to make money because I've learned how it feels to be powerless without it.

There are so many ways to make money but most people only focus on the one tried and true way: getting a job. I'm sure this does not apply to some of you. Obviously if you are reading personal finance blogs on a regular basis you have an advantage over the average person. Nonetheless, I want to take a beginners approach to all the myriad ways a person can increase their income while at the same time spending less.

I'm thinking of doing a series of articles taking each topic from beginners level to advanced. Maybe something on investing in stocks, real estate, starting a business, advancing your career.

What do you think? What would you like to see? Obviously, I'm not an expert in any of these fields (yet) so if you would like to contribute, let me know!

First trades on the stock market - yay!

My first transaction with Sharebuilder went through this week. I decided on investing in the S&P 500. I actually didn't give much thought to what investment to go with. I contemplated doing hours of research but didn't think that I would be too savvy any time soon. I vaguely remember reading something that the S&P 500 has consistently outperformed actively managed funds and thought that it would be a overall safe choice for this testing period. Also, I heard somewhere that if you really over analyze your decisions, you are more likely to make a bad decision than if you go with your gut. No serious. Read about it here.

The problem is now I find myself wanting to check it all the time. Definitely not good for someone with OCD, like me. :) But what is great is that I qualify for the $65 ($55?) account promotion since I have now completed my first transaction.

Thinking about stocks and how relatively uneducated I am with the lingo, I decided I would add a new feature called "Definition of the Week" to encourage me to learn about the technical aspects of investing and finance. Hopefully, it will prove to be useful.

Today was another Friday payday. All of my additional money after making minimum payments on the credit card are going directly to my savings account instead of straight to the credit card. This way, I will be earning interest on the money instead of it paying down a balance I am not paying interest on. You'll continue to see the debt balance go down on the sidebar but I am calculating the total based off of the balance owed on the credit card minus the amount I have in my savings. I have it down to $6,488 which feels so big and so small at the same time. Sometimes I feel like I'm am trying to move mountains paying down this debt!

Money in the Media

Aside from reading numerous personal finance blogs and websites on the internet, I am finding more and more outlets for finance related inspiration and knowledge. The wealth of information out there is truly amazing! Here are just a few alternative's to the internet:

The Suze Orman Show

Most of you have probably heard of Suze Orman before and maybe even watched her show. She cracks me up; she's like a cross between Judge Judy and Ricki Lake talking about finance. With show titles like "Confessions of a Video Vixen" you know that there is more than just straight up financial talk about IRA's, insurance and the like (and there is plenty of that too).

The Dave Ramsey Podcast

Dave Ramsey is quite possibly the King of Debt Reduction. The best thing about the podcast is his southern accent a la Dr. Phil. He's a no nonsense kind of guy. Debt is not an option. Whenever I feel like getting out of debt might not be as big of a priority as I have made it, I listen to his show. He will remind me of how important it is to make it my numero uno priority to get out of debt NOW!

Mad Money

Investment advice from a nut-case. I usually can only watch half of a show because I can feel my blood pressure go up from his yelling and screaming. But it's cool because since I know next to nothing about investing, I feel like I can glean a lot of information about what people look for when evaluating stocks. I definitely don't take his advice as gospel but its interesting to see what is being put out there as advice to investors. He also has a podcast available through iTunes.

Marketplace Radio Show

News about the economy and businesses as well as personal finance related advice. I usually listen to it on public radio but they also have a Podcast of the best of the week. You can stream the entire show from their website. Examples of current stories:

Getting a Raise: Advice from an expert at Salary.com.

Emergency Savings: Tips on how to save for a rainy day.

ETFs: Buzzword of the week.

No Credit Needed Podcast

One of the first PF bloggers that I know of to branch out to podcasting. Very well put together, reminiscent of Dave Ramsey. He talks about his own experiences of recently becoming debt free and advice and his weight loss goals. And theres just something endearing about the southern accent.

Those are just some of the alternatives I find to the standard website. What do you recommend?

What is in my wallet?

Some Cap at Stop Buying Crap has challenged people to show the contents of their wallets. For some strange reason, I feel compelled to share as well. There is something strangely voyeuristic about sharing intimate banal details.

Not only that, but I rarely take the time to actually look in my wallet to see what is in there. This is what I found in the black abyss of my wallet:

Drivers License
Photos of friends over drivers license to hide my crappy mugshot. People gasp and laugh hysterically when they see my drivers license photo. It's a real tragedy.
Debit Card
Credit Card
Regal Cinema Crown Club Card
Old old old Mervyn's gift card (only has $2 but I never go to Mervyn's so it will probably stay in my wallet forever)
Costco club card
Starbucks gift card
Spa gift card
Coupon for the Limited
Medical insurance cards
Library cards (3 different cities, why?)
Ikea gift card
Petco PALS card
Dave & Buster's Power Card
Business cards
Frequent Boba drinker card (taro milk tea is my favorite)
Blockbuster card (even though I haven't been to Blockbuster for 3 years)
Southwest Rapid Rewards card (haven't flown anywhere for a long time nor do I plan on flying any time soon)
Office Depot gift card
Petsmart Pet Perks card


No no wait, theres more!

$82 cash (I have a lot of cash from a bonus I got from work, long story)
Receipts galore
Old movie tickets
Coupons (car washes, kitty litter, cat food & oil change)
Emergency contact information (i.e. relatives phone numbers from other states/countries that could help in case local phone lines are down)
Change

So I guess the real question is what don't I have in my wallet????

Random Thought

Citibank, gotta love them, has sent my credit card to me without my apartment number. Kind of annoying but not really the end of the world. I was still able to call them to make the balance transfer and they offered to overnight me my card to the proper address. "No need" I tell them, "just send it regular mail". I figured I had no need to have the card in my hand by the next day so why go through all the trouble of sending it overnight. Plus, I was afraid that I might have to sign for it and I wouldn't be there, thus causing further delays...

Anyways, I still had some extra money lying around in my checking account (its a nice feeling) however the online payments hadn't been set up for my account (there is a 6 business day delay) and as I hadn't received my card yet I didn't know my account number and thus couldn't access the auto menu where I assume I would have been given the option to pay be phone. I have gotten in such a habit of making payments to my card whenever I had the money available that I decided I might as well call a customer service rep to make the payment over the phone. Mind you, the payment is not due until 2/23 so I still had plenty of time.

The lady I talked to was rather terse and interrogated me as if I was some sort of imposter trying to make a payment over the phone but I was fine with that as I would rather her give me the 3rd degree than not care at all. After a long series of questions she says, "Now you know, theres a $14.95 fee to process a payment over the phone, right?"

What? Are you kidding me? I told her to forget it of course; I didn't want to give them my money that bad after all. I told her it didn't make any sense in the nicest way possible to which she replied "Well, we are providing you a service by offering payments over the phone." Riiiiiiight.

So when did offering ways to pay them money become a service they provide? You would think that payment is just part of the deal. My car insurance company pulls the same trick. For every payment that you make they will charge a $3.00 fee. If you want to send in a physical check, well, that is an additional $10 fee. Naturally, I do not send them any checks.

So being a little annoyed but not really mad because it really had no negative affect on me besides having to wait a few days to make a payment I started thinking. Why was I in such a rush to pay them?

Part of it is that I am paranoid that if I am late for a payment my interest rate will go through the roof. But the major reason is habit. I got in the habit of sending in payments whenever I had the money was available so that I could lower the average daily balance thus lowering the amount of interest that I paid for the month. Now that I am not paying interest, I have no incentive to make extra payments before the 12 month 0% interest period is up so I could make the minimum payment, save the rest in a high yield savings account, and then once I have built up to the amount I owe, pay it off in 1 big payment.

If I did this over an 8 month period (which is the time I estimate it will take me to pay off the remaining debt) I could end up with an extra $120, which is not a lot but is more than I would have if I paid directly to my credit card.

$55 from Sharebuilder for Costco Members

Yesterday, as I was surfing around the blogosphere I came across a post here on a great deal from Costco.

Costco is currently offering a special for members who open a new account with Sharebuilder. Just for signing up and completing your first transaction you will receive a $55 account bonus and rebates on transaction fees (25% if executive member, 10% everyone else). If you are already a Costco member and were considering starting to invest, this is a good opportunity to get started. Check out the nitty gritty details here. Offer is valid until 4/2/06.

So despite the fact that I am still not out of debt I think I might as well at least sign up and complete one transaction to take advantage of the free money. I'm not yet sure what I want to invest in or how much I should invest but I am hoping this will also be good practice for my accounting class. Part of the class is a group project where we have to choose a publicly traded company and analyze its financial statements so it will be much more interesting if I have a vested interest in the company that we choose.

Any advice on where to start? Of course, there are the big individually traded stocks like Microsoft, Google, General Electric, Pfizer or I could go with an exchange traded fund like the S&P 500. It seems a bit intimidating now, kind of like when you first go to Vegas to gamble. I feel like when I hit buy I will be hitting the big red nuclear button of investing. I'm not sure what is going to happen but it feels nerve wrecking. :)

Helpful Post

Just ran across this post from 2 Million Blog outlining important things to know about taking advantage of balance transfer offers to earn additional income. Great read if you are considering taking the plunge.

Click here to read the post.

Goodbye Chase...Adios Interest Payments

This morning I logged on to my online banking statement and was pleasantly surprised that not only was today Friday payday but that my tax return already went through and deposited into my account. It was a very joyous morning because with both the overtime money earned from the conference and the tax return I was able to pay off the remaining $1,500 on my Chase credit card with money to spare.

Hurrah! Hurrah! The interest payments are dead. Never again will I have to pay credit card interest (assuming of course that I am able to pay off the remaining balance on my 0% interest for 12 months card).

Only $7,500 to go until I can breathe again. As soon as the payment posts to my account I will call them to see if I can do the 0% balance transfer for 6 months to my account and move the money to my ING savings account. And yes...I promise to be careful! I will beat them at their own game.

I started my accounting class this week and so far I am fascinated. I know that sounds totally nerdy to say but it's true! What is wrong with me? Whenever I tell people that I am taking an accounting class they look at me with pity. Hopefully, I'll be able to maintain the enthusiasm throughout the course, but from what I can tell it will be immensely useful to not only my professional life but my personal finances as well. After I get out of debt I want to start investing in the stock market and the best thing about accounting is that it teaches you how to read financial statement so you can make wise decisions on whether to invest in a company or not. So stay tuned...

Balance Transfer Complete!

It's official. I've transferred over $7,500 of my debt to the Citibank card leaving only $1,499 on my previous card. With the transfer, I'll only be paying about $5 per month on interest instead of about $30 and it puts me closer to being able to use my credit line for my devious money making scheme using those 0% interest checks from your credit card.

Here's the plan. Once I have $0 on my credit card with the credit line of $23,700 I can use one of those checks that gives you 0% interest for 6 months to put directly into my savings account. The credit card company will charge $50 max for the balance transfer and that would be the only fee I would have to pay as long as I paid the money back within the 6 months. I would write the check to myself for $23,000 and sit on it for 5 months to give myself a bit of a cushion. Even better, if I deposit the money into my ING Direct account it would earn me 4.75% interest until April 15, 2006 with their promotional Winter Save Up Sale. Assuming that it takes me another month and a half to pay off the remaining $1,500 on my card, the money could be deposited in the ING account in 2 months. Unfortunately, that would only leave me about 15 days to earn at the higher rate, but so be it! Even after that date it would be earning at the regular savings rate of 3.8%. That would earn me over the 5 month period a little over $314 or $63 a month. Not bad for doing nothing at all.

Tomorrow is the first day of classes. I'm nervous to go back but also excited to see what it will be like. Wish me luck!

Debt as a Mental Prison

I'm not sure if you've been able to tell in my tone, but man, this debt has been taking a great toll on my mental stability. I've compared myself to a hermit, in private thought of my life as a hell, then moved on to thinking of it more as a form of purgatory, a limbo stage that I must pass through before I can move on to a brighter future. It got me thinking about the psychology of debt and how it is affecting all of the other areas of my life.

For example, work is the one element in my life that is most directly related to getting out of debt. I loathe going to work everyday because I feel like it is a form of punishment for my debts. I get frustrated with work because it is not helping me get out of debt fast enough and I feel like I am trapped working there because of my debt. No matter how much I don't like going there everyday, I feel like I have to because if I don't, the debt will only get bigger and bigger.

How messed up is that?

Another example. Like I posted before, I feel like my social life is suffering because of the debt. I can't go on vacations. I can't buy new clothes. I can't spend money to go out and do fun things. Any sort of pleasure that involves spending money is laden with guilt.

Realizing all this, I know that I cannot constantly be looking towards my "life without debt" as the oasis on the horizon. I have to stop using my debt as an excuse for why I can't do this or I can't do that. Debt is just one aspect of my life and it shouldn't rule all of the others. So hurrah for me, tomorrow is a new day!

On another note, a while ago, I was selling lots of books and CDs on Half.com and Amazon. I managed to make some extra cash that way and get rid of lots of clutter. I had totally forgotten that I still had stuff listed on Half.com until yesterday when I was checking my online bank statement and noticed a deposit from Half.com. I was confused because it had been months since I sold anything and just assumed that I had forgotten that there was any money in my account and this was just old money. I checked back at half.com's website and saw that there were 4 books that had sold in January. Being the ditz that I can be at times, I thought "Oh January, those must be the old ones and marked them all as shipped". Duh! I guess I have no concept that the month we are in now is January! Maybe this is part of the problem of living in California; every month of the year seems to be exactly the same. I then realized that I would have to go back and issue a refund for each of the books that I sold because I gave all the ones I didn't sell to the Good Will but of course, I had another blond moment and checked on "issue full refund + return shipping" charging my account more than the amount that the buyer had actually paid. Oops. I guess lesson learned; if you're going to sell stuff online you must remember to take it off once you no longer have it!

Back to the Real World

It feels good to be back at home after being at work for a few days straight. The hotel was amazingly nice and being around so many people with so much money was both depressing and inspiring. It was like living in a parallel universe where people go in and fold the toilet paper on the roll into a little tip every hour and where you are rubbing elbows with people who made $7 million dollars in just one year. Its depressing because you know that they could pay your debt and would never notice that the money was ever gone. Inspiring because you see how these are normal people and perhaps you can do it too.

I saw the guy who co-authored the Millionaire Next Door. I was looking forward to hearing him talk but ended up being bored out of my mind. I felt like I was in a college lecture hall as he was talking about his book. If you've already read the book than you pretty much already know what the guy is about (living below your means, love what you do, etc). On the other hand, I was blown away by Nido Quebin who wrote "Stairway to Success". Wow, talk about motivational. He managed to get people pumped up without being cheesy or corny. It makes me want to have him on speed dial every time I get discouraged to remember to keep truckin on.

That is the problem with those motivational speakers. The effects are usually only temporary. But I am still psyched that the debt keeps going down, I'm close to being under $9,000! As soon as I got back I did my taxes and figured out that I paid waaaaay too much on my taxes. I was really trying not to. I used the IRS tax calculator to see if I was overpaying so I could adjust it but it said I would only end up with a $200 refund so I never changed anything. Come to find out that after I did the federal file that I should be getting back $820 and $120 from the state. It will be nice once I get the money to be able to put it all towards my debt but it would have been even nicer to have had that money earlier so it could have already been paid down!

Debt Hermit

I realized something about myself today. I have become a debt hermit. I came upon this realization today when I went to the mall to pick up a pair of pants that had been tailored. While I was there I decided to go into Forever 21 to look around. I told myself that I was just going to look to see if they had a shawl or something to wear with my dress for Saturday night but ended up finding a few casual tops that I wanted to buy. I thought I really needed these tops because during the conference I'll be forced into situations where I will have to wear non-work clothes and wanted to look nice. For any of you that know Forever 21 you will know that everything is inexpensive and cheaply made so a few tops would have probably cost $50 tops. I had everything ready and was walking to the checkout stand when my logical, frugal self took hold.

I realized I didn't really need these clothes but rather that buying the new clothes was part of a coping mechanism that I use for facing social situations. Somehow I feel much better about being social with people when I am wearing new clothes and if I feel that I have nothing to wear, I will avoid the situation at all costs. This is partly how I got into so much debt in the first place. If I had a date I would have to buy a new outfit. If I was going out with friends I felt the need to buy something new. Now, since I can't run out and buy a new outfit on every occasion (nor should I ever even if I didn't have debt) I avoid the situations and stay at home as much as possible.

I know part of my shopping neurosis is imagined whereas part of shopping neurosis is very real. People are judged so often by what they wear, what they drive, what latest gadget they have that I don't wonder why people have so much debt from trying to live up to what people expect them to be. I think I felt this pressure much less when I lived in northern California because people were much more laid back there.

So I wonder, if they had a map showing the areas with the highest concentration of debt-laden individuals, where would they be?

New Credit Card & balance Transfer

Today, I applied for a new credit card. Yikes! O.k. it's really not that bad. I signed up for a Citi Platinum Select MasterCard and was approved for a $7,500 limit. The great thing about this card is that you get 0% APR for 12 months on balance transfers with no balance transfer fees. That means that once I transfer over the $7,500 I will only have $2,293 at 3.99% APR to pay for the rest of my debt-ridden life. Over the long run this will probably only save a little over $100 but any bit helps and it will help me pay it down faster. I have not received the card yet and before I transfer any money I am going to call them to make doubly sure that there are no hidden fees. I will keep you posted.

In other "news", I have been stressing out about my company's upcoming National Conference. This is where all of the nearly 800 people from the company fly out to California to meet, network and get pumped up about the coming year. Of course, being in the real estate industry which is very sales and all about appearance and projecting an image of wealth and prosperity, there is pressure to look your absolute best. The girl in me feels the need to go out and buy a whole new wardrobe so that I feel like I will be suitably dressed but my extreme guilt about spending money on anything but the necessities is holding me back. I think that is part of what got me in this debt in the first place (the feeling that the outfit, the hair, etc will make me feel more confident and more at ease). One thing that I have to buy for sure (theres no getting out of this) is a dress for the black-tie event. Ugh. I hate buying dresses, especially dresses that I will probably never wear again. SIGH.

The one thing about the conference that I am looking forward to is our keynote speaker, William Danko, who is the co-author of The Millionaire Next Door. I really enjoyed the book and I am interested in what he will have to say.

One other good thing about the conference is that it will mean lots of overtime, not nearly enough considering I will be there from Wednesday to Sunday. But any extra money will mean that the debt will go down faster!

Save Karyn

My favorite radio show in the world is To The Best of Our Knowledge. Every week they interview people about a theme. These people can be authors, musicians, artists, or just people with an interesting story to tell. This morning, I was listening to an older program that dealt with shopping. Of course, no discussion about shopping is complete without throwing debt into the equation.

They interviewed someone who was in a similar situation to myself. She was young (in her 20's) and had found herself in over $20,000 in credit card debt after she moved to New York and succumbed to the extravagant lifestyle. After she lost her job and could pay her bills anymore she became determined to pay off her debt and started a website called Save Karyn. She basically asked everyone to donate money to her cause and amazingly enough, people actually gave her money. She is now debt free thanks to her savings effort and through the generous donations of others. She wrote a book that I am tempted to buy all about how she got into debt into the first place and how she got out of it by "internet panhandling".

It's stories like these that give you that "why didn't I think of that feeling". Actually, I did think of it, but my pride wouldn't let me turn this blog into a donation center. It's funny to think that this approach actually worked for someone and now they are debt free and selling books! Maybe I should have been asking for donations all along...

Going back to school

I finally registered for my one and only class for the Spring 2006 semester. I struggled with how many classes to take. I figured I should just stick with one class so that I don't feel overwhelmed and so I can figure out if I am going to like it at all. I was shocked at how expensive it was, $132 for one class at the community college. I didn't apply for financial aid because I figured that I would qualify and that it would only cost about $60. Comparatively, to what I paid at the UC system it doesn't seem like a lot but I can remember when the cost per unit at a community college was only $13 (and this was only about 4 years ago). Now the cost per unit is double that, $26. Yikes!

Hopefully, this new path will steer me towards greater financial independence at a quicker rate. Lords know I'm never going to get there with my current salary. I can't wait!