Monthly Archives: August 2010

Use The Debt Reduction Mindset To Save For Future Purchases


Back when I was getting out of debt, I was the very definition of determined.  I worked hard, extremely hard, to stay on budget, earn extra money, and rapidly pay down my debts.

Once I paid off my debts, I remained determined, and worked hard to fully-fund my emergency fund.  I also worked hard to fund retirement and education savings accounts.  I was motivated, pumped about the progress I had made, and, like I said, determined.

After  couple of years of enjoying the debt-free life, things changed.  I lost a bit of my determination, and a bit of my focus.  I think that this is natural.  Once I reached my major goals, I took a breather, enjoyed some of the benefits of a little extra cash, and kinda relaxed.

Alas, it is now time to breakout ye olde debt reduction mindset and really focus on saving for future purchases.  Why?  Well, at some point, I’m going to need to buy not one, but two, newer automobiles.  We’re also going to need need some newer furniture for the house, and we have lots of plans for the landscaping of the yard.  In other words, there are some pretty big-time purchases that we need to make, in the not-so-distant future, and I need to prepare for them now.

The last thing I want to do is work as hard as I have worked to get out of debt – only to slip up and go right back into it.  I don’t want to simply be debt free – I want to remain debt free, forever.

Side note – Those who are familiar with this site might be asking – “NCN, haven’t you been working hard to remain debt free, already?”  The answer, frankly, is “yes and no”.  On the one hand, I have been saving some money for future purchases, and I’ve continued to live on a budget.  On the other hand, I’ve gotten a little sloppy, not really displaying, in my opinion, the proper degree of intensity.  That, my friends, changes – today.  Rock on.

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I Mailed A Payment To The Wrong Business Address

Have you ever

– lost your wallet?

– forgotten to mail a payment?

– misplaced an important financial document?

– overdrawn your checking account?

– spent more than you could afford to spend?

– maxed-out a credit card?

– made any number of finance-related mistakes?

If you answered yes to any (or all) of the questions above – welcome, you are among friends.

Just last month, I mailed a check, which I intended to mail to a local medical center, to the wrong business address – a doctor’s office located just down the road from the medical center.

When I make a mistake, like the one mentioned above, I do my very best to minimize its impact.  I have called the medical center, assured them that their payment is on the way.  I know that I sounded like a joke from an old comedy skit – “the check is in the mail” – but it was better to call, just to give them a heads up.  They were very nice about the whole situation.  I get the feeling that this might not be the first time they’ve received such a call.  I also called the other doctor’s office.  They are searching for the check.  I also informed the bank and asked them to cancel the check.

I also look for ways to prevent similar mistakes from happening in the future. In this case, both the doctor’s office and the medical center have nearly identical names and they’re located in the same city – and on the same street!  When I looked up the medical center’s name, online, the address for the doctor’s office popped up.  I used that address, and the check was mailed to the wrong place.

Why did I have to look the name up online?  Because, I spilled water on the original bill, and the address on the bill was smeared beyond recognition.  Seriously.  I couldn’t make this stuff up.  So, from now on, two things:  One, I will check and double check that I have the correct name and address on any bill that I pay.  Two, I will not eat or drink while paying bills.

It’s going to take a few days – or even weeks – for this issue to work itself out.  I’ll stay on top of it, calling both the medical center and the doctor in a few days.

We all make mistakes – goof up and cost ourselves time and money.  The key is to minimize the impact of these mistakes, correct them, and learn a few lessons along the way.

Oh, I do believe that this post wins the “least-creative blog post title” award.  Rock on, my pf-nerd friends! And, obviously, I’m not trying to down-play the seriousness of our financial mistakes.  I’m just saying, once a mistake has been made, the goals should be – face it, deal with it, and improve.

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Amended Our Tax Return

I did something today that I’ve never done before – I filed an amended tax return.  Back in March, I filed my taxes but didn’t claim the first-time homebuyer credit.  Armed with the proper paperwork, forms, and software, it took, literally, 10 minutes to amend the return.

According to the IRS website, returns claiming the first-time homebuyer credit must be mailed, with correct documentation, and cannot be e-filed.  This is the primary reason we did not claim the credit on the initial return.  We were expecting a small, but not insignificant, tax refund, even without the homebuyer credit, and didn’t want the processing of the refund to be delayed by the processing of the tax credit documentation.

Today, I used tax preparation software to amend the return.  I then printed out a copy of the amended return.  After attaching proper documentation, including the settlement statement, I put everything into an envelope and mailed it to the IRS.  The process was very simple.  (A settlement statement is a statement that summarizes all the fees and charges that both the homebuyer and seller face during the settlement process of a housing transaction.  Source: Investopedia)

It may be several months before the amended return and the homebuyer credit are processed.  That’s cool.  I can wait.  In the meantime, I’m making plans for the money.  A portion will go into various savings categories, another portion will go towards the purchase of some new furniture for the kitchen, and another portion will go towards reducing the principal balance on our mortgage.

I am not a tax-professional, nor do I play one on the internet.  I always consult with a tax professional before making any tax-related decisions.

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Hidden Costs Of Home Improvements

This past Saturday, I had my kids playhouse moved from our old house to our new one.  The playhouse paint didn’t match our new house, so I spent some time today painting it.  I also repaired a few shingles that were damaged during the move.  Oh, and I also installed a small window-unit air conditioner, so the kids can play in the house and be comfortable.

I have a list, a mile long, of home improvement projects.  I want to build shelves for the shed.  I really want to build a potting bench for the back porch – and I still need to do something about landscaping our backyard.  So many projects – so little time – and so little money!

I’ve noticed, as I’ve tackled various projects, that almost everything I want to do ends up costing more – sometimes a little more, sometimes a lot more – than I expected.  I am, however, getting a bit better at predicting costs, because I’ve learned to look for the “hidden costs” associated with home improvements.

Fasteners – Bolts, Screws, Nails

It never fails.  I need to attach (fill in the blank) to (fill in the blank) but I don’t have the right fastener for the job.  Whether it’s a $3 box of nails or a $50 box of specialty bolts, it’s imperative that fasteners be included when calculating the cost of any home improvement.  (Also, it also important that you buy the correct type of fastener for the job.  I cannot count the number of times I’ve purchased 2 inch nails, only to have to return to the store and buy 3 inch nails.  You would think I would learn – measure first!)

Finishes – Paints, Primers, Stains

Quality, long-lasting paint is rather expensive.  When working on a project, it’s very easy to forget, or under-estimate, the amount of paint that a project might require.  On the flip side, it’s also easy to buy too much paint, for fear that you might run out!  Think about your finishes before you begin your project, and don’t wait until you’re standing in the paint isle.  (Side note – When you complete a project, hang on to any unused paint.  You never know when you’ll need it for touch-ups.)

Measurements – Level, Square, Plumb

What’s the old saying?  Measure twice, cut once?  I say, measure twice, write it down, measure again, then cut.  There’s nothing worse than cutting a board to 43 inches long, only to find out that I really needed the board to be 44 inches.  Material costs can quickly skyrocket if care is not taken when measuring and cutting.  Haste makes waste!  (This is the old-time-sayings portion of the blog post!)

Tools – Blades, Extension Cords, Batteries

If you’re going to learn how to “do it yourself”, you’re going to need some tools.  Tools have associated costs – blades, extra batteries, drill bits – for which one must account.  When working on a DIY project, it’s important to factor the cost of any tools I might need to buy, rent, or borrow.  The right tool might cost more upfront, but will save you time (and probably money) in the long-run.  Oh, it’s also important to be able to “power” any “power tools” – and that means quality extension cords.  (Have you ever heard someone call an extension cord a “drop cord”?  I’m trying to determine if this is a term from the South, a term that folks who live in rural areas use, or if it’s universal, and lots of folks use it.  Leave a comment and let me know!)

Experts Required

I’ll be honest – I know just enough about home improvement to take care of “basic jobs”.  If I’m not comfortable tackling a particular task, I’ll call an expert.  I’d rather pay someone who knows what he is doing – and avoid making even-more-expensive mistakes.  This is especially true when dealing with projects involving electricity, plumbing, or structural work.

I actually enjoy doing projects around the house.  With a little planning – and lots of learning from past mistakes – I’m getting better at estimating the real cost of home improvements.  Now, time to check the honey-do-list and see what’s on the schedule for Saturday!

One last thought –  This article is intended to focus on “do it yourself” type home improvements.  Obviously, if I were planning a major project, like adding an addition to the house or installing a swimming pool, there would be tons of other costs to consider.  For now, I’m just dealing with stuff like painting a play house, building a flower box, or adding a lean-to to a shed.  Baby steps…

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