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Archive for April, 2009

What would you do? -- ADVICE NEEDED!!

April 25th, 2009 at 06:04 pm

I currently contribute $200 per month to my 401k, which gets me a company match of $100. I've been reading advice from various financial gurus (Dave Ramsey, etc.) saying if you have credit card debt (which I do) and a small or non-existent emergency fund (which I do ... a small EF that I am currently working on building up) that you should suspend 401k contributions temporarily and use that money to pay off debt/save. Hearing this advice spurred me to do some research, and I came up with the following options.

(Note: I used the debt reduction calculator found on this website to calculate all the schedules used in the following options; it was really cool, and you can find several other calculators there as well.)

Option 1: Staying the course. I currently pay $300/month towards my CC debt, and I have not incurred any new debt in 1.5 years. Not including any windfalls I might receive, and not taking into consideration any changes in my current APRs, at the rate I am going I won't pay off my CC debt until July 2012.

Option 2: Cut my 401k contributions in half, giving me an extra $100/month to put towards my CC debt. I would shave one year off my current timetable and be done by June 2011.

Option 3: Cut my 401k contributions entirely and put that $200/month towards my CC debt, paying it off in December 2010.

Option 4: Cut my 401k contributions entirely and put $100/month towards my CC debt and $100/month in savings. (I currently have $130/month set up to go into savings.)

Please give me your input and help me decide!

It's been awhile ...

April 16th, 2009 at 04:47 pm

... since I last posted! My gosh, time flies!

I got moved into my apartment a month ago, and I LOVE IT! Moving was the best thing I have done for myself and my kids in a long long time. We purged big-time, and got rid of years worth of JUNK. (I gave a LOT of stuff away at the end just to get rid of it!) The apartment is so much nicer than the house we were renting (which seemed to be falling down around us) -- it's light, bright, and CLEAN, and it's amazing how much lighter I actually feel!! I am really happy to have the move over and done -- it was a HUGE hurdle for me.

Even though I haven't posted in awhile, I did update my sidebar and my debt payoff pie chart at the end of March. My savings have taken a hit (don't people always have to buy some new things when they move?) ... but I've got transfers set up so that money moves from my checking account into three different savings accounts (ING, Venture, and Smarty Pig) every month, so I think I'll build those back up again fairly quickly (barring any visits from Murphy). Now that the move is out of the way, I have returned my focus to finances!

On the credit card debt front, my higher-limit Capital One card sent me a 0% balance transfer deal up to my credit limit, which enabled me to transfer the entire balance (close to $700) of a card with an APR of 27.24% ... so, while my total amount of CC debt won't change much at first with that consolidation, I will be able to pay down the principal on the transferred amount much quicker! (Capital One is the card that's lowered my APR from 24.4% to 12.9% over the past few months.)

I saw Suze Orman on Oprah recently, and she said she's now advising people who think there is a possibility they could lose their jobs to make minimum payments on credit cards and save all they possibly can. I really think my job is stable ... of course, I could be wrong ... but I wonder if I should follow that advice. Actually, I can't nail down my "new" budget yet, since I haven't gotten an electric bill or a water bill in my apartment so I have no idea what those expenses will run. I am really going to miss having my electricity on an averaging plan like I had in my house! (I do plan to get that established once I build up the history required.) I am a bit nervous about how much my monthly bills will run here, especially the electricity (since my apartment is upstairs and the temps climb into the 100s here during the summer months)!

It feels good to post again! Smile