2007 June | No Credit Needed

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Archive for June, 2007

Protecting My Family, My Health, My Automobiles, And My Stuff

June 30th, 2007

NCN

I just finished sending a payment to my automobile insurance company. As with most things related to “personal finance”, sending the payment got me to thinking about the blog. I realized that I’ve never written a post specifically about the types of insurance I have. So, here goes:

Health Insurance: My wife is an educator, so our entire family is covered under her insurance policy. United Health actually administers the plan and it’s a pretty good plan, considering the cost and the ease-of-use.

Dental Insurance: My wife and the kids are covered by her plan at work. I’m not covered. I just pay for a dental visit. The insurance costs more than I’d like, but it will payoff if one of the kids needs braces or other dental work.

Long-Term Disability Insurance: I have a long-term disability insurance policy that is attached to my 403b account. It provides a very modest amount of monthly income, should I become disabled for more than 90 days. My wife has a similar long-term disability policy. We do not have short-term disability insurance… we have an emergency fund!

Renters Insurance: My employer provides our housing. So, I have a renters insurance policy in place to cover our “stuff”. The policy is relatively inexpensive, considering the amount of the coverage.

Term-Life Insurance: I have two term-life policies. My wife has a single term-life policy. Together, our policies amount to about 20 times our combined income. My policies are actually a little smaller than hers. Why? I signed up for my policies when we were making less money. I will be increasing the amount of term-life insurance that we have at the end of 2007. I do not have a whole-life policy.

Automobile Insurance: All three of our automobiles are insured with the same company. In fact, I’ve been with the same automobile insurance company for more than 17 years! I’ve shopped around from time to time, but I like my broker and the rates are competitive. One change I have made: I now pay my insurance once every six months instead of once every month. I have “full-coverage” on all of my automobiles.

There you have it, a list of my various insurance policies. Have I missed anything? Any thoughts or ideas? Leave a comment…

Posted in Insurance

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Guest Posts And This Week’s Personal Finance Carnivals

June 29th, 2007

NCN

Two of my favorite personal finance bloggers, Nickel (from Five Cent Nickel) and Ben (from Money Smart Life) have taken a few days off, and I wrote guest posts for their sites.

I wrote about The U-Turn: How My Debt Reduction Journey Began for Five Cent Nickel.

I wrote about Swinging Away At Personal Finance for Money Smart Life.

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I also participated in the following personal finance carnivals…

This Week’s Carnival of Debt Reduction.

This Week’s Carnival of Personal Finance.

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Posted in This Week's Carnivals

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Baby Steps Rock But It’s Also Fun To Crawl And Run

June 28th, 2007

NCN

I’m a huge fan of Dave Ramsey and his “Baby Steps” (pdf). I love the way that he sets out seven, basic steps for debt reduction, retirement, and financial security. Personally, I think that the most important Baby Steps are the first two: Have a $1000 mini-emergency fund and then use a debt snowball to payoff your debts. But, I also realize that Dave’s plan for retirement, savings, and investing may not fit every situation. For instance, Dave suggests putting 15% of income into retirement. In 2007, I plan to put 40% of my income into retirement accounts. So, with that in mind, I was thinking about ways that I ‘crawl’ or ‘run’ between the ’steps’.

Crawling: Doing The Little Stuff

I fix my own lunch, I have a basic satellite television package, I pay per-text charges on my cell phone, not a flat fee, I look for bargains at the grocery store, keeping a grocery store price-book, and I use coupons and buy generic.

You get the picture… By looking at the small things and thinking about ’small purchases’, I accelerated my debt reduction and savings accumulation. No matter how much money I have in savings, I ALWAYS think about ways to SAVE MORE. Ever penny really does count. I am amazed that so many people make fabulous salaries but are always BROKE. Want to know why? They refuse to focus on the ‘little stuff’. There are two types of people: Those who see a penny on the ground and keep on walking and those who see a penny on the ground and pick it up. Me? I’m going to pick it up, heads or tails!

Running: Doing The Big Stuff

I am fully-funding my 403b, two Roth IRAs, and two ESAs. While I enjoy the idea of saving $10 a month doing something “frugal”, I also enjoy “paying myself first” and putting away money in my retirement accounts. I like to create big goals, reach for them, and I’m not afraid to fail. While I think that it is important to manage every dollar, it’s extremely important, to me, to fully-fund these long-term investment accounts. Why? Preparation for the future, baby.

Every dollar that I put into my 403b is like a 25% BONUS to my salary. Why? I don’t have to pay taxes on that money until I withdraw it. Every dollar I put into my Roth IRA grows TAX FREE. So, I fully-fund BOTH accounts so that I can diversify my tax exposure AND prepare for the future.

Conclusion

I know plenty of people who live very modest, even frugal lives, who never focus on funding retirement accounts or thinking (much) about their futures. It is so important to look at TODAY, but we must occasionally think about TOMORROW! Conversely, there are those ‘dreamers’ among us who are waiting for ‘their ships to come in’ and they never worry about basic, fundamentals like “spend less” or “work more”. I used to be this type of ‘dreamer’. I was always looking for that magic paycheck that was just around the corner. The truth is, we must learn to crawl, take steps, and then run. Do the little things, focus on the basic plan, and then sprint ahead when you get the chance!

Posted in Savings Story

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Driving And Drivers (Cars, Vans, Golf Clubs)

June 28th, 2007

NCN

My wife and I are considering selling three automobiles and replacing them with two ‘newer’ automobiles. After reading several comments, I thought I’d take a minute to write about “why” we now own three automobiles.

Four years ago, my wife was driving the Honda Accord and I was driving the Ford F150. We were happy with our automobiles. But, after the birth of our second child, my wife wanted to purchase a mini-van. (In our case, a Chrysler Town & Country). So, we were faced with the following options: We could sell my truck and then buy the van. We could sell the Honda and then buy the van. We could sell neither the truck nor the car and then buy the van. We went with option 3. Why? The truck was paid for and it was perfect for hauling off the trash and carrying stuff from the hardware store back to the house. We live in a VERY rural area of the country and it’s best to have a truck (of some sort). We still take our trash to the “dump”, so an old “trash truck” comes in handy. As for the Honda, I decided to keep it because it gets great gas mileage, it looks great, and I like the way it handles. So, we kept the two automobiles and purchased the van. (The van, by the way, was the last item I’ve ever financed.)

So, fast forward to mid-2007. The old truck has been driven less than 3000 miles in TWO years. Literally, I drive it from the house, to the dump, to the hardware store, and back home. While it still runs, I wouldn’t trust it for a trip over 50 miles. The Honda still runs well, but it just rolled past 120,000 miles. The van, while in decent shape, has almost 140,000 miles and starting to make a few of those “what’s that” noises. So, while we are happy with our current automobiles, we are considering replacing them.

As for replacing the truck and the Honda with a “crew-cab” truck… I want something that my entire family can ride in, something that looks “nice” and something that I can still “haul the trash off with.”

Moving on to an ENTIRELY different topic… I just purchased a NEW set of golf clubs! I’ve been using the same sticks for more than a decade and I was ready to upgrade. I purchased a set of Cleveland TA-4s. I also purchased a new Cleveland 588 wedge, so I’m ‘good to go’. The cool thing about this purchase is that I will be listing my old Callaway’s on eBay and I should be able to recoup most of the cost of the new clubs.

By the way, the golf club purchase has been in my budget for more than TWO YEARS. Category: New Sticks

Posted in Automobiles

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No Credit Needed Introduces Guest Author: Big Honkin

June 27th, 2007

NCN

I’d like to introduce guest author, Big Honkin. Big Honkin and I are friends in the “real world” and I’ve asked him to contribute a series of articles to No Credit Needed. Big Honkin is at the same place I was about 3 years ago: He’s ready to get out of debt. Big Honkin has joined the No Credit Needed Network. Click here to see his current NCN Network chart. Without further ado, Big Honkin and the beginning of his story… (I’ll have a few comments at the end of the article.)

Big Honkin Debt Reduction: Big Honkin Decisions

Honkin (hawn’ – kin) adv. – an adverb used to describe the adjective big. The term “big honkin” may be replaced with “very big,” however, scholars maintain that the phrase “very big” does not convey the actual bigness of something that is
big honkin.

ex. I can’t eat anything else after that big honkin meal we just had.

So, I’m Big Honkin, and I want to reduce my debt. I’ve known NCN off line for a while now and as he got excited about his debt elimination, I began to get a vision for being able to do the same.

The problem? I had no idea where to start. As I logged onto No Credit Needed and listened to the No Credit Needed Podcast, I found that NCN was talking about things that are a few years down the road for me. I would seek for tips that he may have had to help me get started on the journey into debt free living, but he was already there, and now he’s talking about how much he is saving and where it’s all going. That’s all good and well for him, but what about me? What about Big Honkin?

The first issue I had in getting started was that it seemed that I was always behind on everything. Car payments, electric bill, water bill, phone bill, name it, and it was late…consistently late.

Up to this point in my life, I always though the answer was more money, or bigger paychecks. Then, I sat down and worked the numbers and realized that I was making enough in a month to pay my bills, buy some groceries, and have a substantial amount left over. What then?

Well, then comes the first step in my trip to a debt free lifestyle. Get caught up. How? Honestly, this requires a little biting of the bullet and just doing the work to get caught up. I had to look and see what I was spending, where I was spending and how much I really needed to be spending. What I found is that I had to cut out a few things for a little while. And you know what? I could do without the things I cut out in my life. What things?

1. Hobbies. I am a hobby obsessed geek. All of my friends know. My family knows. Everyone where I work knows. While hobbies are a great diversion, I fell into the trap that a lot of people fall into. I let my hobbies become too big. As I made the decision to quit spending for a while on my hobbies, I had money to put towards bills to help get caught up.

2. Entertainment. I love my movies and DVDs. I love my TV shows. All of these things cost money. Now, I think it’s important to have entertainment in your life. The problem is, I let entertainment be too much in my life. There are some TV shows during which I refuse to answer the phone. So what did I do? I decided to make a list of movies that I really wanted to see, which ones I would like to see, and which ones that if money were no issue I’d go see. Then, I decided to only see the movies that I really wanted to see, and only see them once. (I am a movie repeater, I will see a good movie three or four times…in the case of one of my favorites several years ago…17 times!)

I decided to put buying DVDs on the back-burner for a while and spend that 15 to 20 dollars on bills. I mean…that’s practically a water bill. As far as the TV goes, I asked myself..do I really need 500 channels? The answer is no. And you know what, I don’t miss any of the ones that are gone.

3. Going out to eat. I do this…A LOT!!!! To the tune of almost $100 a week on eating out at restaurants. So, I decided to brown bag it a bit to work. Be willing to shrug off laziness and cook supper in the evenings. (I’m a good cook, and I enjoy cooking.) The difference…amazing.

Overall, I had to make the decision to cut some things out. I found out that I can live without these things, and I also have a plan to phase some of the hobbies and stuff back into my life without breaking my bank again.

So, I’m caught up on my bills and working on taking the next step. Getting a budget into place. Any ideas?

As you can see, Big Honkin has already begun to make changes in his lifestyle. Comments, suggestions, and ideas are welcome! How did you get started? How did you manage that “first budget”? How did you “get ahead” so that you had money in the bank BEFORE the bills arrived?

Posted in Big Honkin

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