Monthly Archives: November 2010

The Needs Improvement List

My budget-analysis for 2010 reveals that I need to improve in the following areas –

I need to spend less money on convenience store items – bottled water, sodas, chips, etc.  When I fill up at the gas station, I almost always grab a snack, too.  This habit is bad for both my waist line and my wallet.  Add this to the top of my 2011 resolutions.

I need to rework my grocery store price book – and spend less on groceries.  My goal is to reduce spending by 10%.

I need to embrace the summer and turn the thermostat up a few degrees.  My electric bill was much higher in the summer months this past year, mainly because I keep the house at “just above freezing”.  Next year, I’m bumping it up by 2 degrees, and I’ll just deal.

I need to never – ever- buy an individual stock.  I rarely write about my investments, because most of them are just boring, mainly index funds and ETFs.  Once every year or so, I get the bug to buy an individual stock.  Inevitably, I lose money.

I need to blog more.  When I’m blogging, I’m more accountable, I spend less, and I save more.

I need to do a better job planning for mid-range expenses.  I’m really good at thinking long-range and short-range, but for those purchases that are 2 to 5 years away, I really need to figure out a better budgeting-procedure.

I need to be more organized.  Before we moved, I had a really neat setup for filing paperwork and keeping up with financial documents.  Now that we’re in the new house, I have a few boxes “here” and a few boxes “there”.  It’s amazing how quickly stuff can pile up.

I need to be consistent with my mortgage-debt reduction.  I’ve really been hit-or-miss when it comes to sending in extra principal payments.  In 2011, I plan to be much more disciplined and focused.

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Over 8 Million Users Stopped Using Credit Cards In 2010

According to a recent press release from credit bureau TransUnion

TransUnion’s analysis estimates that more than eight million consumers stopped actively using bank-issued, general purpose credit cards over the past year. This deleveraging is believed to be due in part to charge-offs in the higher risk segments of the population, more conservative spending in the low-risk segments, and significant efforts by consumers across the board to maintain the health of their credit card relationships as a financial cushion. Based upon income levels estimated by TransUnion’s income estimation model, consumers with higher incomes were just as likely as consumers with lower incomes to suspend their use of this payment option.

(Emphasis mine. -NCN)

It’s interesting to note that the decrease is in the number of bank-issued, general purpose credit cards.  As banks cut bank in the number of cards issued to “higher risk segments of the population” – and folks in the “low-risk segments” cut back on their spending – credit card use has decreased.

It will be interesting to see if this trend is long-term – or just a result of recent economic conditions.  I think I’ll do a bit of research and see if store-branded credit card usage has decreased.

Source – TransUnion

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Do You Know How Your Mortgage Lender Applies Additional Principal?

Each month I make my regular monthly mortgage payment – the fixed payment amount found on my monthly statement.  I use billpay from my bank.

My lender requires that a full, monthly mortgage payment be made.  In other words, I cannot split my payment into two payments, sending half on the first day of the month and the other half on the fifteenth.  I have to send the full, fixed payment amount, by the due date.

Obviously, I can send them more than the fixed amount, but I can’t send less.  They require at least one monthly payment that is equal to or greater than the fixed amount.

Once the regular monthly payment has posted to my account, I can then focus on reducing my mortgage principal.

According to the FAQs from their website, here’s how my lender applies any additional “apply to principal” amount –

Any additional amount specified as “other” will be applied first to past due principal and interest payments, then escrow deficiencies, then late charges, then fees and costs due, then outstanding principal.

Basically, as long as I don’t have any late fees, late charges, or past due payments, every penny of my extra “apply to principal” amount will be, you guessed it, applied to outstanding principal.  This is a good thing, because this reduces the total amount that I owe on my home, increases my equity, and decreases the amount of interest that I am charged.  Win, win, win.

If you are thinking about paying off your mortgage early, you might want to do some research, and find out how your lender processes extra principal “payments”.

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More Than Just The Numbers

Sometimes, money management is about the numbers, the percentages, and the rates.  Often, however, it is about attitudes, choices, and behaviors.  When it comes to staying motivated, and moving forward, here’s what works for me:

I consult the Scriptures and pray about our finances.  As a Christian, every area of my life is important to Jesus, including my family’s  finances.  It’s always comforting to know that I have spoken to Him about our financial plans and goals – and even more comforting when He, through His word, speaks to me.

I routinely talk to my spouse about our short-term and long-term financial goals.  It’s extremely important to me that my wife and I are on the “same page” when it comes to managing our money.

I work very hard to stay organized, with an uncluttered workspace and time set aside for paying bills and cataloging financial documents.

I listen to a few, trusted friends, and their financial advice.  I am blessed to have met, over the years, online and in person, some incredibly bright and capable people.  Instead of relying on my own, limited experiences, I turn to them often for input and advice.

I act only when I understand both the risks and rewards associated with any particular financial decision.  Instead of blindly following conventional wisdom, I try to find a path that fits me, one that matches my own emotional makeup.

I look for opportunities, big and small, to save or make money.  This sounds simple, but many appear to settle for their current spending and / or earning patterns.

I remind myself that what I already own will probably “do” – and that I probably don’t need the newest, the latest, or the greatest.  This is hard to do, especially when I want something super-cool like an iPad.

The above principles (for lack of a better word) have served me very well.  I think I’ve figured out how my mind works and what keeps me motivated and honest with myself.

What about you?  Have you considered what makes you ticks?  What works for you?  What keeps you motivated?  Leave a comment or hit me up over at Twitter.  Rock on.

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