Still on track!

So the job change has cased a little bit of a hiccup in my financial plans, which I had planned for and am happy to say I am now done with. It’s not a big deal – it basically comes down to my new job having a slightly different payroll schedule, and of course the fact that there’s a certain lag between when I start and my first paycheck. In order to be prepared, I basically held off on Baby Step 2 until my first paycheck from my new job. At that time I figured everything would be okay, and I could use the accumulated amount towards Baby Step 2.

It worked – but I have to say that psychologically, I felt very much off-track during that time. I had almost forgotten how much I loved putting money on my car loan and seeing the balance drop. So when I finally put another principal payment on my car loan, which was an amount equal to what had accumulated while between jobs, well, it felt pretty good.

I’m happy to say that I feel like I’m on track again – not that I was really ever off track – but I feel good that I’m able to see progress again.

I like my new job, although, I have to admit I miss my old job. A lot. It’s strange how you miss the things you took for granted. At my old job my lead was able to teach me a LOT. I like being on the learning side of things. At my new job – I hesitate to say this, but it’s true – I’m smarter than my lead, and it bothers me. I continually have to explain things to him, and sometimes he doesn’t get it. I think he’s just inexperienced, and maybe a little over his head in his position. He also likes to argue, especially when he feels defensive (I sense just a little bit of male machismo in his defensiveness/argumentativeness). Now I know that all this sounds pompous, but I’m not sure how else to explain it.

I really miss my old job. I miss being able to ask my lead questions and learn from him.

After my first week at my new job I had made the decision to work this all out as a challenge – in other words, see if I can learn from the experience rather than run from it. I was in a very similar situation a long time ago, and I found another job as quickly as I could. This time I’m going to see if I can work through this, and learn from it.

At any rate, I’m on-track, or back on the Baby Step 2 express.

My last day at my old job is tomorrow. :(

So it’s probably obvious I did in fact take the new job.  It was such a difficult decision, but ultimately it matched up with what I want to be doing – and it seems like a more secure job in terms of layoffs.

So aside from leaving people I’ve worked with for the past few years, I am looking forward to the challenges of the new job.  It comes with access to a gym, so I’ll be able to continue working out – and moving forward with both my health and financial goals.

I’m STILL in Baby Step 2.  My last car payment is inching closer every single day.  It feels great that I’ll finally be free of that albatross – and of course I’ll be focusing on paying off the last of my debt:  my student loan.

I’ve somewhat settled into the routine by now.  My biggest struggle has been that I can’t make it happen in hours or days instead of months.  I’m okay with that now.  I know it’s going to take some time – but I can stay the course and implement my plan.  It’s actually, well, no big deal.  That’s how it’s supposed to be I suppose.

I probably wrote this before – but I’ll write it again:  Having the plan and implementing the plan is just about as good as having achieved the goal itself.  It is the best I can do right now.

I have been looking forward to Baby Step 6.  You see, Baby Step 3 will take me a couple more months, and Baby Step 4 is a flip of a switch.  I don’t have children, so Baby Step 5 is a non-issue for me right now.  Baby Step 6 is the one I’m really looking forward to.  Baby Step 6 is to pay off your home early.  For me, this means actually saving up for, and buying a home.  I’m still going to have to get a mortgage, but I’ll pay 20% down first and get a 15 year fixed rate, which I’ll probably pay off in about 7 years if I stay on track.    I’ve already set up the spread sheets.

So it’s basically same ol’ same ol’ for me right now.

Looking Forward

So if you’ve read my previous posts, you know that I’ve been mulling over a new opportunity for several weeks now.  This has been one of the most difficult decisions I’ve had to make because I really like my job, but there’s been several layoffs since I started, and the future isn’t quite as certain.

As I mentioned in a previous post, I was approached by another company, fairly soon after our last round of layoffs.  I interviewed with them, and then heard nothing back – for several weeks.  I had thought I was off the hook, and almost put them out of my mind assuming they had decided not to hire me.  And then yesterday the recruiter called to tell me that they wanted to move forward with an offer.  So I figured I had one more night to think/sleep on it.

I received the offer tonight and faxed my signature to them accepting it.  I believe it will be good for me, both personally and professionally.

So…  I’m still on Baby Step 2 – but still making really great progress.  If you listen to Dave Ramsey’s radio show you hear him say that when you start the debt reduction process it’s like you get a raise – because you address both the income and spending areas of your life – you learn to live on less than you make, and therefore spend less, and you find ways to make more money.  The new job helps – it’s not a BIG raise, but definitely significant.  But more importantly, I’m living on quite a bit less than I used to.  So ultimately I’ll be able to pay off that student loan just a little bit faster. 

Baby Step 2 is a long process for me – but I’m finding ways to speed it up. 

KISS, or How I learned to give up complexity and love simplicity

It’s really interesting to me, how only ten, maybe fifteen years ago I longed for the complex, perceived “fun” things in life. Taking on additional responsibilities (credit cards, car payments student loans) just seemed like life. And to a certain extent it is – although the older I get, the more I realize just how optional those things really are.

This process – debt reduction in particular, has caused me to consider, and even value simplicity in my life. On the “No Credit Needed” podcast, the host described the idea that he worries now, so he doesn’t have to worry. He talked about having his bills paid up, or in advance for a month in preparation for the birth of his daughter (CONGRATULATIONS, NCN!!!) – so that when she does arrive, he can focus on her – and not worry about bills. WOW.

I don’t have children, but I can relate. I remember a couple of years ago we had a pretty big event happen in my family; it was painful and traumatic. I became fairly depressed for about a month, and lost interest in – well, paying my bills or keeping up with them among other things. Now depression isn’t something I struggle with on an on-going basis – but when it did hit, I felt pretty disoriented.

Here’s the interesting thing – I eventually came back around, and when I looked at my bills and decided to catch up, I was caught up already. You see, I had set up my bill payments through my bank. My bank can receive bills from almost all my accounts, and I had set up automatic payments to be sent on the due date for those. For the bills that don’t have eBill capability, I have scheduled the right amount to be sent (which is pretty much only rent). And since my employer automatically deposits my paycheck, well, I hadn’t realized just how much my finances were on auto pilot. As long as money was in my account, my bills were paid.

I had expected to have to catch up with late payments – but everything had happened exactly on time, and for the right amount. Had I realized this, I probably could have focused on my family needs a little more – and worry less about my finances. Actually in retrospect the right thing probably would have been to pay attention and not let life’s events keep me from managing my finances. But that it worked out as well as it did is a testament to the simplicity of paying bills this way.

Now I make it a personal and unbreakable policy NOT to allow any company to deduct a payment from my checking account automatically. I want control – I’m more than happy to set up payments through my bank, where I have control – but I will NOT allow another company the right to dip into my checking account. By doing it this way I can change the amount, date, or even cancel a payment if I need to. In other words, I am in complete control.

As an aside, several years ago I had an interesting conversation with a salesperson at a gym:

Salesperson: Now, just give me your checking account information and we’ll deduct payments automatically through your checking account.

Me: Whoa! I was not aware I had to give you access to my checking account in order to sign up.

Salesperson: No, it’s okay – this way the bill is paid each month so you don’t have to worry about forgetting.

Me: I schedule payments to happen automatically on my bank’s web site. Besides, it’s a personal rule of mine, not to allow companies to take payments from my checking account automatically.

Salesperson (you won’t believe this): Well, you know rules were meant to be broken.

Me: What hours are you open?

Salesperson (a little surprised at my question): We open at 5:00am and close at 11:00pm.

Me: Would you mind if I came in at, say 2:00 in the morning to work out alone?

Salesperson: No, we couldn’t allow that.

Me: Why not?

Salesperson: You can only come in during business hours.

Me: So you’re saying it’s one of the company’s rules?

Salesperson (beginning to understand): Yes, I suppose so.

Me: And you won’t bend that rule for me?

Salesperson: I could ask, but I assure you the answer would be no.

Me: So I’m sure you understand when I tell you that my personal rule is never to allow a company access to my checking account. This, like your store hours, is a rule that is not meant to be broken.

The salesperson grumbled, but he did find the right forms, and he signed me up with traditional payments.

I’ve been told before that I’m a salesperson’s worst nightmare. Later on I saw that salesperson again, and he told me that he had called another salesperson at another location and told them what I had said.

At any rate, I like to keep control of my bills. So setting up automatic payments through your bank isn’t for everybody – but for me it works like a charm. In fact, in a way it allows me the freedom from worry. As long as I have an income.

So over the past few months, I’ve been able to remove bills from the list of bills on my bank’s website – and the smaller that list becomes the better it feels. Simplicity feels great – and allows me to relax a little bit.

Inspiration at 33%

Hey I found a new podcast today, and I’ve listened to almost all of the new, 2008 podcasts.  It is called “No Credit Needed, or NCN for short.  I liked the name so much I just had to listen.  It’s basically an informal, humorous podcast by a normal guy who has worked his way out of debt and likes to talk about personal finance.  I’m not sure what his name is – online he seems to go by “NCN.”

The No Credit Needed website:  www.ncnblog.com

I like that he uses the same principles that Dave Ramsey teaches, so it’s nice to get another perspective to help balance things out.  It also helps that he’s willing and able to laugh at himself; in fact, even though he offers much of the same advice that Dave Ramsey teaches, the light hearted nature of his podcast is a welcome change.

Something he provides at his website is that you can sign up for a chart to show how much you’ve paid off, or towards a goal.  It inspired me to take a look at where I’m at – actually how far I’ve come would be more accurate.  I added up all the debt I had in 2007, in order to see what percentage I’ve paid off so far.  I had thought I had paid off more – but in fact, I have only paid off 33% of the total so far.  At first I was a little disappointed – I mean, only 33%?  But considering the time goals I’ve set for myself – it is right on target.  And hey, that 33% represents a considerable chunk of change.  I know in my heart that I’ve done everything I could to pay as much as I could since I started – so aside from a serious windfall, it’s the best I could do.  I have plenty of reason to feel good about where I’m at – and more importantly, that I’m still on-track and well on my way.

Opportunity vs. Loyalty

I’m faced with a very difficult decision. I can’t provide too many details, except that I was approached by another company with the possibility of employment.

Jumping ship.

Okay so normally that’s not such a bad thing, but as with most drama, there’s more to it. I’m a web developer, and I started right out of college about 10 years ago. As you can imagine, I’ve witnessed my share of layoffs. So job stability has not been something I’ve counted on, although I’ve managed to survive all but one layoff throughout my career. I’m either doing something right – or extremely lucky.

I started working for the company I now work for, almost 2 years ago. This was one of the first companies I really wanted to work for. The product they provide is something I really believe in, and feel that they’re not just trying to make as much money from the consumer as possible. The product is well worth what they charge, and probably more important – I and my friends, and my family all use it on a regular basis.

In the past 2 years we’ve had a few layoffs though. I hate layoffs for obvious reasons, but with this company it really scares me because I really want to work there. I told a coworker a few weeks ago that I can get a paycheck anywhere -I don’t need to work there – but I want to because I believe in what I’m doing. I also like the people I work with.

So. The dilemma? I’m not confident that my job is stable – and another company has approached me and wants me to interview with them.

I agreed to the interviews, and scheduled a vacation day with my current employer for that day. The new company is doing some really neat things – I would certainly be challenged intellectually, but I’m not yet sure how much I can believe in their product – it’s not that I don’t – I just don’t yet know enough about them. I’m doing my homework though – and paired with the interviews, I ought to know enough this week.

I can’t help but feel guilty. At work today I had a hard time looking people in their eyes – I felt like I was betraying them. My sense of loyalty is probably one-sided. I’m sure they would lay me off in a heartbeat if it was right for the company. They’ve done it to others.

Welcome to 21st Century Corporate America.

The thing is, if I can increase my income – even if only a little bit, it will help me financially. I have no way of knowing whether this job has more stability – probably not – layoffs seem to be a way of life for developers. I don’t yet know whether I can believe in this product more than I do with my current job – which may be a moot point the next time layoffs happen.

I’m a little torn, undecided, and maybe a little afraid.

I suppose I don’t have to make any decisions until I’m actually offered a job. It’s interesting that I can actually relax – I don’t need to get this job, so the interview process is a lot less stressful. Without a job, I’m more inclined to take the 1st offer I get. Now, I am counting my blessings that I can – at least right now – really evaluate how I feel about this company, and whether it’s what I really want to do. It feels good.

What do snowballs and behavior have to do with each other?

I just re-read my last post, and decided that I hadn’t explained why Baby Step 2 “…has everything to do with behavior.”  It makes mathematical sense to pay down the debt with the highest interest first, right?  I mean you’ll pay less in the long run.  Well, based on what I’ve learned from Dave Ramsey’s books and radio show, the snowball method helps to gain psychological momentum.  In other words, it feels great to have a few relatively easy wins at the start.  As those smaller debts get paid off, you gain a feeling of accomplishment that helps you to stay with it, and possibly even become more “gazelle intense.”

Each Friday (I believe), Dave opens up his radio show to let people call in to do the “I’M DEBT FREE!” yell.  It’s amazing – if you haven’t heard it, and need a little inspiration this is an easy way to find it.  The first few times I heard this, I was surprised to find myself tearing up.  In those 3 simple little words you can hear the hurdles overcome – the struggles, the victory, and ultimately the hope in those people’s lives.  It’s amazing.  I want so badly to call and do that scream.  Even if I can’t manage to get onto his program I might just do the scream at home – recorded, and post it here. 

Everyone has a story, and while you don’t get the details – every time I hear people call Dave’s show and yell, I get a glimpse of their story.  You get the important stuff.

So it’s obvious – we’re all human.  We need inspiration.  We need more than raw math to win.

Weight and Debt

This process is teaching me an important lesson, as well as forcing me to face one of my biggest demons: frustration with long-term commitments. I’m learning that consistent behavior over a long period of time will get me to where I want to be – both in terms of weight management and financial goals. I’m slowly accepting the fact that getting out of debt is a long-term commitment; it won’t happen overnight, and is going to take a commitment on my part. I’m terrible when it comes to long-term. I hate long-term. I want to achieve my goals immediately. But this one isn’t going to happen that way. Neither will losing weight.

I’ve started working out pretty much every day – nothing really big, just about 30-45 minutes a day starting with an elliptical machine, and ending with some weights. I’m beginning to see results, although I’ve actually gained a little since I started. I think the gain is from muscle. The point is that this, like the debt snowball, is about making consistently good choices over a long period of time.

Dave Ramsey is right – this is about behavior. When I can change my behavior and begin to make good decisions consistently, things start working. Whether money or weight, it’s pretty much the same.

The changes I’m beginning to see in my life are most pronounced not in the size of my wallet, or the length of my belt – it’s other, probably less noticeable, but more important things. I have more free-time to spend on what is important to me. I’ve started to put consistent effort into making sure my living area is clean – so another case of consistent good choices being good for me: it’s better to spend 5 minutes a day to maintain a healthy living area than to put up with a mess for weeks, until I finally get sick of it and spend 4-6 hours cleaning it up, only to start the cycle again. I have a better outlook on life – both because I think I am beginning to realize that big problems don’t have immediate solutions – and also because there are simply fewer things to worry about on a day-to-day basis.

It’s about behavior. When I first listened to Dave Ramsey talk about the debt snowball – paying down the smallest debt first instead of the highest interest debt – I thought he must be horrible at elementary math! But, his argument for the debt snowball has everything to do with behavior – change behavior and the rest just kind of falls into place. I agree. This process is forcing me to address what has been a problem in so many other areas of my life – behavior.

So Americans kind of have a reputation for being impatient – for wanting everything right now, and not wanting to wait for anything. So is it any surprise we have both national debt and weight problems? Something happened between the signing of the Declaration of Independence and today, that caused us to become too comfortable – to want to have everything, and not wait for, or work for anything. Okay I’m being a little pessimistic – but I’m not far off. We’ve become a country – a society where we have everything, but own nothing.

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.