FAQ (or, Searches That Found This Blog)

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I’ve maintained a variety of websites, but this blog has turned up some fairly unique Google searches compared to the other sites! I don’t know if other finance bloggers have the same results, but I’ve had some hilarious searches. So, in an effort to make those people feel at home here, I’ll attempt to give some good information on those topics, as I’m sure you didn’t find it here the first time. Some of these are intended to be a bit funny, but hopefully provide some decent content for these situations as well!

  1. does it make sense to pay off car payment? – Many of these searches are entire questions. Of course, the answer to this one is, yes, it makes sense to pay off your car payment. You do not want to get it repossessed! I know, funny, but the better question would be rather to make multiple payments or not. There are two takes on this. Dave Ramsay believes in the psychological impact of debt, and would have you make as many payments as possible to pay it off sooner. However, mathematically if your interest rate is less than 7%, it might make more sense to invest your extra money. There are benefits to both methods. Personally, I prefer to just get it paid off as soon as possible, then start saving up to pay cash on my next car.
  2. getting rid of debt through prayers – Whew, I wish it were this easy! Now, while I believe in the omnipotence of God, I also believe in the stupidity of humans. If we managed to get ourselves into debt, I think it’s our responsibility to get back out of it. That’s not to say it doesn’t take a lot of prayer to get the strength to do it, just that if everyone prays to win the lottery, then whose prayer does God answer? There are no quick fixes, you just have to get up and do it every day.
  3. is it beneficial to make half car payment every two weeks – Likely not. Basically, it’s confusing and you’re likely to miss a half payment. Plus, most auto loans are behind the times, and offer very little in terms of online payments and account management. The easiest way is to make one payment per month with as much as you can pay. The interest rates of typical car loans in a 15-day period is usually not as debilitating as those on credit cards, and to me, the hassle of it all is not worth the 5-10 bucks per year you’ll save. Your mileage may vary, though.
  4. using your brain to trick people – I got a lot of interesting searches after the article on NLP. While there are ways to use NLP for less altruistic means, most of which are quite fun, this is unfortunately not primarily an NLP website. However, basic NLP can be useful for training your mind to accept positive thoughts about your goals and to get rid of negativity that could be inhibiting you from success. As far as tricking other people, though, I can’t help you there. 🙂
  5. a shortcut to debt free life – Sorry, but there are no shortcuts to a debt free life. I know I have a series called “shortcuts”, but those are just part of a larger picture. There are a lot of small things you can do that have major impact on your finances, but in the end, it comes down to hard work and dedication, like everything in life.
  6. 15k loan no credit check – Good luck with that, and let me know if such a lender exists!
  7. taboo 2 – Um, this is hardly that sort of website. You’ll have to get those sorts of movies elsewhere. 🙂

Ok, so that concludes the first edition of FAQ. Keep those awesome google searches coming in, and I’ll do my best to answer your questions!

Carnival of Debt Reduction #127

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Yesterday, Paid Twice posted the latest edition of the Carnival of Debt Reduction, and my article about my upcoming vacation made it! Also mentioned was the launch of the “Snowflake Revolution“, a place where snowflaking bloggers combine efforts to, er, create a giant snowball? Seriously though, while I won’t be a part of the Snowflake Revolution (my only good tips to add to the debt snowball is to make more money and spend less of it), I look forward to a centralized place where people can find tips on how to add a few dollars to their debt snowball. For those unfamiliar with snowballing and snowflaking, the premise is that the snowball is the amount of money you pay towards debt each month, which gathers mass as you begin to eliminate each debt. Snowflaking is obviously the art of adding small amounts to that money each month. And as we know, a few dollars per month can add up to hundreds in savings, over a long run. Viva la revolucion!

Among the articles, all of which were great, there were a few I felt stood out. We all know I’m a fan of the psychology behind why we get ourselves in these situations, and Life Lessons of a Military Wife wrote a great article about how to reject those pesky payday loan offers and get started on the road to good financial health. I have many friends I wish could have had this advice when things were looking bad.

One of my favorites was Millionaire Money Habits talking about the real cost of using credit cards. This is one of the first exercises I did to show me how terrible those pieces of plastic are. Even though I was buying stuff on sale, I imagine that $40 bargain blender has cost me several hundred dollars by now. I’m still paying off a great deal of a laptop that broke over two years ago. I’m still paying money towards an excellent deal on a premium car stereo system for a car I no longer own! When you add it up, credit cards fall way short of anything resembling common sense. Basically, if you can’t afford something up-front (except for maybe cars and houses), you simply can’t afford to buy it. Credit cards aren’t the magical golden ticket to keeping up with the Joneses.

There are several other articles I could mention, but these two stood out based on recent conversations I’ve had. Go check out the carnival! In these times of economic uncertainty and with houses foreclosing right and left, it is clear that there is at least one community of bloggers who are getting a grip on their finances the old-fashioned way–with determination.

The Failure of Neglect (or, Vacationing on a Budget)

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One of the misconceptions I’ve had in this journey to becoming debt free is that I had to tighten my belt and not do the things I’ve wanted. To an extent, it is a wise idea for sure; I carefully budget for movies, eating out, and going out with friends. Having a set limit means I can’t just go out all the time and spend, and I’ve resorted to many not-so-fun nights at home. I think that while my debt is so massive, this is actually a healthy thing.

However, I’ve also neglected doing big, extravagant things in the name of saving money, such as relaxing vacations, or random adventures. I’ve had neither vacation nor adventure in the past two years, really. While that is a good idea finance-wise, it’s a horrible plan for a person’s psychology. The fact is that as Americans, we are far too busy, overworked, and underpaid to neglect setting apart time to take care of ourselves, to rejuvenate and get perspective. I’m a guy in my mid-twenties; I am supposed to be going on adventures and exploring right now. Since I haven’t, my vigor has atrophied. I feel blah and mediocre, and my conclusion is that I must take a vacation.

However, how is one to take a vacation where there is no money? Furthermore, how does one not feel so guilty about spending money on a vacation when there is plenty of debt to be repaid?

The answer to the latter is simple; I don’t feel guilty because if I keep neglecting myself, I’ll burn out at work, I’ll burn out in life, and there will be no energy left to keep up with everything life throws at me. I’ll try to fill life up with things again, which will sink me back into debt even more. The principle of interest works both ways; while sacrificing money in debt payments results in more payments down the road, sacrificing a vacation right now might result in a complete catastrophe.

The answer to the first is not as simple. Vacations are, simply put, expensive. While relaxing in the bahamas for two weeks would be awesome, I can’t afford several thousand dollars either! After using all the logic God gave me, I concluded that a trip to Washington D.C. was the perfect vacation. I’ll share some of my tips here, so someone hopefully benefits.

  1. Think About Proximity – A good vacation spot has to be far enough away to keep you from getting sucked back in to life, but close enough to keep travel costs down. D.C. is less than $200 airfare from Atlanta, which is great! Another thing keeping travel costs down is that it’s easy to walk once there, or take public transit. Either way, a perfect place location-wise.
  2. Find Cheap Lodging – I have a friend that just moved to the D.C. suburbs. Furthermore, he’s been wanting me to come up for a long weekend quite awhile now. Lodging costs will be zero. While it may be more difficult for a family to do this, there is also no harm in asking. I remember a time when I was a kid, we went to visit family and my parents stayed in one family member’s house while we kids stayed in our favorite aunt’s house. We both got a break from each other, and a family of four had free lodging. Win-Win.
  3. Consolidate Dining Costs – Most people ruin their food budget by eating out all the time. Since I’m staying with a friend, we can cook several nights. This means we can use our money to eat very nice meals strategically. What’s better, 5 decent meals out, or 2 really nice meals out and eating at home the rest of the time? Breakfasts are cheap this way, and I may even get stuff to pack quick lunches a few days, keeping total food costs around $100.
  4. Consider the Attractions – D.C. is a hotbed for things to do for free. Almost all the museums are free or cheap, and there are a plethora of them. I know two of my interests are politics and the arts, and D.C. is a great place for both. The only thing I’ll be really spending money on is if I see a show at the Kennedy Center, which I probably will. You can’t beat a city with enough free things to keep you busy for a full month if you wanted.
  5. Share Your Trip – Talk to people about your trip! They may suggest places to go or things to do. Or, like my roommate, they may know someone who can get you an exclusive tour of something. In this case, it is possible I can get a White House tour through this contact (rather than the 3-4 month waiting period through Congressional offices). Others may advise you on things to ignore, and some may even want to make it into a road trip! I found 3 friends who may want to go with me (and possibly do different things while there), but this keeps down travel costs, and those friends may tell other people who can help us out with the trip too!
  6. Time it Perfectly – In my case, I wanted it to be soon, but still have plenty of time to save up for it. I chose mid-April for many reasons. First, summer has not yet begun, and summer is peak season. Spring breaks should be pretty much over by that point. The weather is still somewhat cool at that time. It overlaps two paycheck periods, so I can work straight until I leave, and then work straight when I come back, meaning I don’t sacrifice any time off work even though it’s a whole week (and in my case, time off means I don’t get paid). Plus, it centers around the weekend, which means that my friend can take two days off and still hang with me pretty much the entire time. It’s two months away, which is plenty of time to save for it, yet two months is not a long time to wait for a vacation. All said, it is the perfect time to take the trip!
  7. Know Your Limits – The total cost for my trip is around $600, even assuming I go over in some categories. That is NOT a lot of money, and I can easily save that in three paychecks. Furthermore, I will receive a fifth paycheck while there, which means that if something bad happens and I need extra money, it won’t hurt me so much. Plus, the structure of the trip means that each paycheck can go toward something different. I’ll purchase the airline tickets this paycheck, other tickets and car reservation on the next, and then save for food on the last. The fourth will go toward “extras” on the trip, like possibly a new lens for my camera.
  8. Know Thyself – I know my personal physical limits, and planned days around light walking accordingly. There’s nothing worse than a vacation when you come home tired each day, so while I want to do a lot of things, I consolidate it in a way to where I’m not ever exerting myself. Plus, I’ll not be afraid to simply just not do something if I’m not feeling it. While I want to observe a Supreme Court session while there, maybe the better option is to just take their quick tour. Also, I just finished saving up for a nice camera (a Canon Rebel XTi), and D.C. is the perfect place to shoot the type of photography I like. While some people would choose different things to do there, I know my likes and dislikes and choose accordingly. That said, don’t fall into the “prepackaged tour” trap. Spend time planning out your vacation. Trust me, the planning alone is already making me feel energetic and ready to take on life. Don’t sacrifice that for a bit of convenience, especially when it means you might not fully enjoy everything on your trip.

So, all in all an exciting trip I have planned. A full week, no sacrifice with work time, cost is less than $600, everything is perfectly tuned to my interests, and a few friends might even join me (but not join me on EVERY thing). That sounds like a perfect trip to me. Plus, with properly saving the money beforehand, I won’t be regretting it 4 months down the road when I’m still paying on it. Putting vacations on plastic is a sure way to keep yourself home forever, and it will feel good to come back from it and STILL have less debt than when I left, thanks to the magic of automatic payments.

So the lesson here is to not neglect yourself when on the journey to financial freedom. Don’t feel bad about taking a vacation, just plan it so well that nothing is wrong about it. Then save the money (and extra money) ahead of time, and you are all set. It doesn’t have to be the Bahamas to have a great time and relaxing trip, but with a few basic tips like these you can maximize your Vacation ROI and make it even better than a plain old island adventure.

Shortcut #3: Automate Your Bills

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Out of all the things I did to regain as much as my paycheck as possible, likely the biggest benefit was putting my finances on auto-pilot. I had been late on almost every credit card payment, and when I added up those $10-50 fees for being late the past 3 years, it amounted to enough money to pay off all my current credit card debt right now; thousands of dollars worth. Basically, if I had simply made payments on time, I would be out of debt right now. As it stands right now, I’m still a year away from that. All due to laziness.

This is the simplest of all shortcuts, because it’s somewhat obvious. However, I didn’t consider it until I started to get my life in order, and it may be something others are overlooking as well. Basically, you start using automatic bill payments to simplify your life. Car payment? Automatically debited. Credit card payments? I have it setup to where all I have to do is click a button once per month. Insurance? Deducted automatically.

If you, like me, have problems accruing late fees, I would urge you to add them up and see how much money you’ve lost due to procrastination. It will shock you into setting up automatic payments. Online Billpay is easy to set up, whether through your bank or through the companies themselves. However, I would recommend you never give your actual account information to a 3rd-party company, and set up all your payments through your bank instead. When a credit card company has your information, it’s more difficult to protest false charges since you won’t notice them in time, and the payment is already made. Use your own discretion with who gets your information.

Once set up, it only takes a few mouse clicks once per month to get everything sent off. No more late fees, and you will find that you have extra money to add to the debt snowball you’re hopefully building. We live in an automated world, and small things like these can save lots of time and effort writing checks, at little time investment.

Additionally, I should mention that because of my procrastination, some of my %APR rates had skyrocketed to the 30% range. By agreeing to use their automatic payment service to ensure no more late payments would be made, two of my credit cards were able to offer me rate reductions to around 22%, a major decrease that will help me get out of debt much sooner. I win in two ways: no more late fees, and lower interest paid in general. And two of my other accounts say that after 6 months of on-time payments, I will be eligible for rate reductions with them too. Either way, for the amount of effort invested into putting your payments under an automatic payment system, the benefit is outstanding.