Every $12.99 counts!

So I decided that I didn’t need high definition cable TV service from Comcast while doing baby step 2, so I called and attempted to terminate my account. I have both cable Internet and cable TV service through Comcast, and truth be known, I only watch a couple of shows on a regular basis – “LOST” and “The Office” to be specific. If you go to http://www.abc.com, you can watch “LOST” on the Internet for free. You can also go to http://www.nbc.com and watch full episodes of “The Office” for free. Why do I need cable TV again?

So nothing else holding me back, I called Comcast to terminate my cable TV service. In good salesmanship fashion, Comcast convinced me to stay with “limited cable TV” because if I went down to only a single service (Internet) they would increase the cost of Internet access by about $13, and “limited cable TV” is also about $13. In other words, it’s a wash. It stinks of a game that I don’t want to play, but I fell for it. I suppose I was a little upset that by selecting only one of their services, they would charge me an additional $13/month. Still, I had more than cut my bill in half, and I need Internet access. This seemed to be reasonable, although I mentioned to the Comcast representative that I would be looking for less expensive Internet access in the coming months. (She mentioned that I would certainly find less expensive Internet access, but that she wanted me to know that Comcast is superior.)

Okay so sales pitch aside, I proceeded to return my cable box the following day. As I was returning the cable box, the representative behind the desk mentioned that I would be charged $12.99 for the technician to install a filter on their line. At first I didn’t pay much attention, but when I got back into my car and started driving I got to thinking about it. I’m not actually getting anything for that $12.99. What exactly IS it I’m paying for again?

So I called Comcast. They said that they charge their customers for installing a filter of some sort, which prevents me from getting channels I’m not paying for. It smelled fishy, and considering I felt a little upset at being told my Internet cost would increase if that was the only service I had with Comcast, I told them to just forget the whole thing – to just cancel my entire account, Internet and cable TV, and I would look for Internet access elsewhere.

Well, the customer service representative immediately waived the $12.99 fee, and reduced the cost of my Internet access to half what it would be – for 6 months.

It was enough to convince me to stay with them, but I’m going to use the next 6 months to find another Internet service provider – one that doesn’t play games like this with me.

Now Comcast has been good to me – I’m not aware of any billing problems I’ve had with them in the past, and their service has always been at least decent. I have had no complaints about them as a company in the past.

At this point, I do wish they would compete for customers on the basis of service, rather than this stupid game of charging more, the fewer services a customer decides to sign up for. It’s a game – period. If their service is a good value, they shouldn’t have to play such a game. Mobile phone carriers do the same thing – and it hurts consumers. First, it locks consumers into 2+ year contracts, and second it creates an environment that does not require companies to compete on the basis of service. If consumers weren’t stuck with a company, and had more ability to move between companies for competing services, then those companies would have more incentive to provide a better service for the cost.

So I’m now looking for Internet access – with a company that won’t play games, and who will provide me with a quality service that is worth the cost. No games, no hidden fees, just a fair trade of money for a service.

Where oh where should I put my emergency fund?

So baby step 1 is to establish $1000 for an emergency fund and put it into a savings or money market account. Eventually, in baby step 3, the idea is to build the emergency fund up to 3-6 months of expenses, but while getting out of debt, doing baby step 2, $1000 is enough for minor emergencies.

Last year I put my $1000 into my savings account, which is attached to my checking account. Being the person I am, it was too easy to dip into it for non-emergency spending. I needed to make it difficult enough to access that it takes effort to get to it. So I put my $1000 into an Internet savings account – not a money market, but with similar interest rates. I realized quickly that it takes nearly a week to transfer money into, and out of this account. Unfortunately emergencies normally require a little quicker access to money.

So the bank, where I started my emergency fund savings account also offers free checking with a MasterCard ATM card. I decided to open a checking account with them in order to have easier access to my emergency fund when necessary.

I don’t carry my emergency fund debit card with me – instead, I’ve tucked it away in a safe in my home. This way if/when I need it, I have access to it within a reasonable amount of time. It is still inconvenient enough to get to it that I won’t be inclined to use it carelessly.

I’ve also been thinking about baby step 3 a little bit. I once visited a financial advisor, who recommended a kind of tiered approach to saving. Basically if memory serves me, she wanted me to keep 1 month of expenses in my checking account. The next tier was to keep 2-3 months of expenses in the attached savings account. She then recommended keeping 6+ months of expenses in rotating CDs. So each month for several months, open a new CD – and keep renewing it at the end of each term. This way you have 4 months of expenses/emergency fund always immediately available, and new monthly CDs coming to the end of a term each month. It seemed overly complicated to me – and CDs don’t offer rates that are really all that great, considering you have to keep them tied up for a set amount of time.

I do kind of like the tiered idea – and I have to be honest I’m not sure that 6 months is enough in our economy, and especially for a web developer who watches layoffs happen as often as I do. I’m thinking about keeping 1 month of expenses in my checking account as padding. Maybe another 3 months of expenses in my attached savings account, and then my fully-funded emergency fund of 6 months of expenses in my Internet savings account – which pays like a money market. That’s 10 months total, and well, I might even decide to make it a full year and put an extra 2 months of expenses somewhere.

Anyway I’m not yet in baby step 3 – and for now I’m very much inclined to keep it simple and just follow Dave’s advice. After all, his advice seems to work well.

If it’s 2008 this must be Baby Step 2

Well, right in-line with my obsessive personality I’ve gone and budgeted myself right into boredom. Well, it’s not really THAT bad – but I’ve used up my discretionary money and I still have a week yet to go. It’s not bad really – it just means I won’t get to indulge in my favorite mocha this week. And I’m going to have to be careful over the weekend, too. No eating out. No movies. No more gas for my car. I feel like I’m working minimum wage again.

Last year at about the beginning of the year I started doing the Dave Ramsey baby steps and crashed. When I get into something I tend to go overboard – I kind of become obsessed with it until I decide it’s no longer interesting and then I stop – or until I become overwhelmed. It’s been good for my career – I think employers have appreciated the intensity I bring to my endeavors. The problem is when those things take long-term intensity. Whether weight loss or financial plans, long-term is just difficult for me. I want results immediately, and I’m willing to put in almost superhuman efforts to attain those goals – it’s the daily grind that’s so darned difficult. My best friend thinks I have ADD. I think I’m just American.

So last year I started the baby steps with more than gazelle intensity – it was more like I got on the Space Shuttle and tried to reach the moon – but instead of a rocket I was pedaling – with all my might. I was working a full-time 9-6 job during the day, doing freelance web design projects on the side, and even doing magic shows for children’s birthday parties on the weekends. As if that wasn’t enough, I had decided to take on a 2nd job at Safeway, stocking shelves from 9:00pm – 2:00am. I was able to keep this up for a couple of months before I really just crashed. Two people in my life showed concern over my well-being – my best friend, and my Mom. Together they convinced me to quit my part-time evening job so I could get some sleep and regain my health.

And to add insult to injury I had turned something I love (magic) into something I hated – every time a new request came in for another birthday party I started to hate it. The last show I performed, I realized something was wrong – I snapped at one of the children. Now I started doing magic because I love children – I love seeing their wonder and amazement, and enjoyment. Until I started the baby steps last year I used to perform for Birthday parties – not for the money, but because I loved doing it. When I started losing my passion for it, things started going downhill.

So even though I knew to watch out for it, I allowed myself to go too far again this year. It isn’t even half as bad as it was last year – not by a long shot. But I’m probably not giving myself enough blow money between paychecks. It’s not serious – and certainly not detrimental to my health. In fact, that I noticed and am able to admit this to myself is pretty big actually.

It’s this daily grind that is so difficult! And it’s kind of a downward spiral – when I’m trying so hard not to spend money, I have tended lately to stay home – but staying home is boring. So I either start browsing the web and find cool new gadgets I want, or I start looking at my spreadsheets trying to maximize efficiency – trying to find ways of reducing the amount of time to complete baby step 2 as much as possible. Boredom sucks.

My friend warned me last week, that she thought I was obsessing over this again. That was probably when I started paying attention. It was also right before I ran out of money.

And it’s not like I don’t have hobbies! I love photography, and want to get out and start doing that again. In fact I’ve been thinking a lot about trying to do this new technique – called HDR, or High Dynamic Range. It doesn’t require any new equipment at all – I can basically do it for free with everything I already own.

I also play poker. Yes I know it’s gambling and that’s not good for somebody trying to get out of debt. It’s pretty social. A small group of friends and I play twice monthly, and the buy-in is $10. It’s one of the few scheduled “adult-only” times I get to spend with friends. We’ve talked about the possibility of playing only for chips – in other words no money at all, but that idea wasn’t met with a lot of enthusiasm. It seems harmless enough anyway. I figure it amounts to about the cost of a movie, and I get to spend it with my favorite people. Oh, and it helps that I win occasionally.

Let’s see – aside from various hobbies, I also have several friends.

So it’s not that I have nothing to do. I have plenty to do. But so often I find myself bored to tears – and that’s when I start thinking about shopping or obsessing over my budget.

This time is going to be different. I’m not going to tighten my budget so tight that I have no room. I can still be gazelle intense – and still stay on target!

Partying Like It’s 1929

Economist Paul Krugman weighs in on the current financial crisis: “… what we should be asking is: How did we get here?”

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Why We Borrow Until It Hurts

If the subprime mortgage mess has taught us anything, it is that we are leverage addicts. Nearly all of us are — from Northern Virginia, where we bought big houses with no money down, to Wall Street, where traders borrowed cash to make bigger bets on the housing market.

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Sub-prime collapse ‘beyond the US Federal Reserve’

US Federal Reserve ‘lacking funds to help crisis’ – Losses yet to come ‘easily exceed remaining $400bn’ – Not going to be able to deal with situation on own.

FEARS are growing that the US Federal Reserve may soon find itself short of the funds needed to continue propping up the nation’s financial system.

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A Taste of Things to Come: Gas Rises to $5.20 In Some Places

Listen to the entire report – in Europe they’re used to paying higher prices for gas – upwards of $8.00 per gallon!

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What’s the biggest threat to my carefully laid plans?

Well, I’m not sure it’s the number 1 threat, but it ranks pretty high: boredom. When I’m bored I tend to take trips to the mall and window shop, or eat out, or browse great sites like engadget or gizmodo to see what the latest and greatest technology has to offer. (I’m a gadget geek at heart.)

So Friday night and Saturday morning I came down with a 24 hour flu which kept me from going anywhere or doing anything. But Saturday evening, and today, Sunday, I was bored. Aside from preparing for tonight’s budget committee meeting, I decided that I would go wash my car and get the oil changed.

It’s interesting to me that I really like my car so much better when I’m washing it or taking care of it. This is the only thing that is probably not on Dave Ramsey’s plan – it’s a 2007 Ford Mustang Convertible. I LOVE my car. I know that Dave Ramsey would probably suggest selling it and purchasing a used, dependable car. I’m open to the possibility, but for the time being I’m enjoying paying it off and washing it and of course, driving it. Especially as the weather gets nice enough that I can take the top down.

So why would Dave suggest selling the car? It’s not upside down – I owe less on it than it is currently worth, and I am making great progress towards paying it off. He suggests purchasing a reliable used car from a private seller because cars drop in value FAST. It is losing value so quickly that the cost of owning a new car is tremendously more than the cost of owning a used car – even with the more frequent maintenance demands.

I really like my Mustang. A lot. I’ve given up credit cards, and am well on track to be debt free in about a year from now. Sooner if I can sell more stuff. So while I understand that I’m paying a high price to own this car, I’m willing to absorb the cost. For now. My mind could be changed, and honestly it wouldn’t take much. I took it to the car wash today and spent some time on it, cleaning it inside and out – and just that act alone makes me appreciate it so much more.

BUT just for sake of running some numbers, what would happen if I did sell the car? First, with the extra money (equity) in the car, I could easily buy a dependable used car – which would be absolutely fine for the next few years. Without this payment, I could eliminate the car payments, and focus on the last of my debt – my student loan. I could easily have it paid off before 2009. So I would probably be cutting baby step 2 down to about 6-8 months.

I’m ALMOST convinced. I bought the car before I started doing the Dave Ramsey baby steps.

So today is the budget committee meeting with my accountability partners. I’m excited about the progress I’ve made – and am excited to relay that to them. A couple of other things I’ve discovered, which will help to reduce expenses are:

• I can get reimbursed for Internet access at home by the company I work for.
• I’m going to cancel Comcast cable TV, as I don’t really watch it very much, if at all.
• My rent is being reduced with the introduction of a new roommate. yeaa!
• I’m setting aside things for the upcoming spring garage sale.

So things are going well. It helps so much to hear from others doing Dave Ramsey’s plans! Thank you to those who left encouraging comments!

Gosh it feels good!

I stayed up tonight with the intent to wait for my salary deposit, so I could make another principal payment on my car. Wow. It feels great!

So a couple of things have been on my mind lately. This idea that Dave Ramsey talks about, essentially drawing a line in the sand and making the commitment not to borrow money anymore – it’s actually bigger than I had imagined. I mean, credit cards are one thing – but I have to admit, when I see some of the newer cars out there, and I know that I could drive onto a car lot and trade mine in for a brand new one – well, it just seems way too easy. I have been wondering whether I really have given up borrowing money. I imagine how nice it would be to be able to pay cash for a car – and I tell myself right now that I won’t borrow money anymore – but I also understand just how vulnerable I am to changing my mind. I’m probably exactly what a good sales person is looking for…

But right now, I am focused on the goal – to complete baby step 2 in as short a time as I possibly can. I think about that every day. I actually really like my car, and enjoy taking care of it – so it’s not like I’m tempted to drive onto a lot tomorrow and pick out a new one. But I can drool a little I suppose – and well, that’s probably what I’m worried about the most.

It’s the intensity – to see how much I’ve paid off already on my car just this year – the past 2.5 months, is kind of cool. Technically only 11 more payments (making principal payments twice per month) – I will have it paid for by August. This year! That means I could be driving a paid for, essentially brand new car by fall. That’s pretty cool.

The student loan will be the last debt I have to pay off, and if I can keep up the pace, it will be paid off by April 2009. Just over a year away. I know I keep reducing the amount of time – I think my original estimates put baby step 2 at about 2 years – but I keep finding ways to pay stuff off sooner. I’m digging through all of my personal stuff and finding things I no longer need or want – and selling them. Every little bit helps, as evidenced by the fact that I’ve managed to reduce baby step 2 time from 2 years down to just a little over a year!

So I’m going to bed tonight feeling pretty darned good.

Simple (And Easy) Money Saving Tips For Frugal Living

We all know that scrimping and saving is a pain and too dull for words but the fact is that making a few tiny changes to the way we shop, save and invest could mean the difference between ending our days in a mansion or an old peoples home.

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