{Week 21 Update} 52 Week Challenge Helped Me Hit A Financial Milestone!

It’s week 21 of the 52 Week Challenge and I am five weeks away from the half-way point of the challenge I started on Friday, January 3, 2014. Over the course of 21 weeks, I have saved over $500.00 dollars that I would have spent on random bits and baubles. Doing this challenge, along with deciding to play a little Russian roulette with my finances, has helped me to pay off my ENTIRE credit card balance three months ahead of schedule.

52 Week ChallengeWhile some may think a money challenge like this is not worth the effort, I strongly disagree. Not only are you putting money aside for whatever your current financial goal may be, be it paying down debt, saving for a new car or home, or planning a wedding, you are also altering your previous financial behaviors. Personal finance is 80% BEHAVIOR and only 20% HEAD KNOWLEDGE! Just taking the steps to start a challenge like this means that you are getting into the habit of saving. Becoming successful in the challenge means that it has become a part of your lifestyle and not a temporary behavior change. I urge you, if you have thought about ways to save money to try this challenge BINGO style. It’s the easiest way to save extra money under your own terms.

Email me for a copy of my 52 Week Challenge Sheet & Start the Challenge TODAY!

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{Debt Management} Is This Super Easy Financial Move Worth The Risk?

You Get Out of Debt The Same Way You Learned How to Walk- One Step At A Time

Dave Ramsey

I am from the generation of instant results. Sometimes this can be a bad thing, but in this case, I think my generational behavior will pay off. I am working toward my next financial goal of having a zero balance on my credit card by August 1, 2014. Once I reach my goal, I plan to only use the card for things that can be paid off before the end of the billing cycle (if I must use the card at all). Last year, my balance reached over $5300.00 and my monthly bill was putting a wrench in my spending/savings plan. That was my “aha moment”. It was then that I decided to take full control over my financial situation by not only setting goals, but dates to meet the goals. Financial coach and author, Dave Ramsey, believes that you get out of debt the same way you learned to walk—one step at a time. For this idea, Ramsey created 7 Baby Steps to help people beat debt and build wealth. The first Baby Step is to start an Emergency Fund of $1000.00. Once you’ve completed Baby Step One, you then move on to Baby Step Two where you start to pay off debt using the Snowball Method. I’m at Step Two and I am trying to pay off my credit card and then move on to my student loan debts as fast as possible. This led me to a thought one day to do something extremely risky….

Credit Card copy

Playing Russian Roulette With My Finances

In my Week 14 update of my money challenge, I relieved for the first time just how I have gone from balance of $5300.00 to a $1345.00. The closer I get to the $1000.00 mark the more crazy ideas flow through my head.

For instance, I came up with the idea, a while ago, to go against Ramsey’s advice and completely deplete my emergency fund.  I would do this only when I got my credit card balance under the $1000.00 mark. The Pro to that idea is that I will immediately have a ZERO balance by using the Emergency Fund to pay off the remaining balance. The CON… well we call it an “emergency” for a reason. It is a somewhat good idea if I had a crystal ball and a glimpse that there would be no financial emergencies soon. No one can foresee when you really need to tap into that fund. Plus, not having the funds at all will send you right back into debt because you will have to cover the “emergency” with credit or even worse, borrowing from someone else.

Keeping my original idea in my, I considered a tapered down version of my risky plan. Instead of depleting the Emergency Fund completely, I would take out $500.00 and apply it to my credit card balance once I got under the $1000.00 mark. Doing so will help me to reach the zero balance goal, two months ahead of time and stay on track with my financial plan. Once the credit card balance is paid in full, I would then continue my normal $300.00 per month + money from the 52 Week Money Challenge to replenish the Emergency Fund until August 1st. Because I have eliminated interest, I would actually end up with $100.00 extra going back into my Emergency Fund.

If You Were Me, What Would You Do?

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~ Update: Click here to see what Danielle decided to do ~

{Debt Management} How to Shorten the Length of Your Loans & Reduce Interest

She Makes CentsWanting to get control of your finances is great, but there is nothing like the empowering feeling of knowing when this MAJOR life goal could actually be attainable. After examining my debts, pay off amounts, and interest rates, I am proud to announce that my magic number is 8 years and 3 months to be debt free! Having an end date for a goal helps to make it more tangible and keeps me encouraged to hit my payment milestones from my personalized Financial Plan.

One Year from Now- Operation Credit Card

In January of this year, I revealed that I racked up $5300.00 in credit card debt, after getting it down to a zero balance. It happened by not adapting my spending habits to my drop in income. Today, that balance is now around $3400.00 by paying a little more every month on the minimum and doing the 52 Week Money Challenge (Bingo Style). Dare I say it out loud, I will have NO credit card debt by this time next year (insert fireworks here)! I’m truly proud of the way I have tackled this particular debt obstacle because I’m doing it at my own speed. I don’t even miss the extra money that I’m using to knock the balance down faster. If I were okay with just paying the minimum, it would take me 4 years and 3 months, instead of one year, to complete step one of my financial plan. Once the credit card is paid off, my monthly credit card payments will become extra payments to my student loans and so on…this is called the Snowball Method.

Four and a Half Years from Now- Goodbye Sallie Mae

debt-freeI have a love/hate relationship with Sallie Mae. Although we go back about ten years, she is not my friend nor is she yours. Don’t let her fool you. Yes, in times of financial need, she was there but in reality most people end up paying more than double for their educational loans. Currently, I pay the minimum $200 per month for my educational loans with more money being applied toward interest and not the principal. As I’m sure you know, paying just the minimum and nothing more will result in years and years of interest and a longer pay off timeline. In fact, by adding the money I would normally use for Operation Credit Card to make two or three lump sum payments per year toward the principle, not interest, I will shorten the length of my loan by 10 years and 11 months. Five years ago, I was a recent college graduate and while a lot has happened in that time, I still feel like time flew by. Knowing that these next five years could go by just as quickly helps keep me motivated. One day, four and a half years from today, I will be able to say goodbye to my financial frienemy- Sallie Mae for good.

Eight Years and Three Months- Debt Free

A lot can happen in eight plus years that could slow down my timeline or cause me to come up with a new goal altogether. Regardless of what life throws my way, I hope a victorious sprint toward financial freedom is in my foreseeable future. In eight years, my home will be a rental property providing is a great form of passive income. Having it completely paid off allows a greater financial contribution to my household. The idea of never having to think about another mortgage payment for my current house is a blessing in itself and I plan on tackling this debt by using the Snowball Method. In the same breath that I say goodbye to Sallie Mae, I will be begin this last phase by saying hello to extra payments, consisting of my monthly credit card payments and Sallie Mae payments, on top of my current mortgage.

What’s the point of all of this? Sure, I could continue to pay the minimum on my bills every month and I will forever owe someone but I have 17,636 reasons why that won’t work for me. Yep, having a plan and attacking my plan will help me save an overall of $17,635.15 in interest payments. While yes, I am at the beginning of my journey, I take solace in knowing there is light at the end of the tunnel.

How Long Will It Take You to Be Debt Free?

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{Financial Cents} How To Make A Financial Plan

Sometimes I need to remind myself that a goal without a plan is just a wish. Every morning I would pray for financial blessings but somehow found myself going through the motions, which was slowing my progress to my goal of zero debt. For me, it is about finding that balance between enjoying my lifestyle and making financially sound decisions. I have been bitten by the travel bug and I can’t wait to explore the world, I live for bottomless mimosas at brunch, and I believe shoes and the right lipstick makes the outfit. However, I also believe in building hefty savings, going into marriage without bad debt (i.e. credit card and student loans), and building generational wealth. I must agree with Dave Ramsey, financial guru, who affirms, “Personal finance is 80% behavior and only 20% head knowledge”. I am working on the behavior part. I found that even though I enjoy shopping, I’m more likely to shop when I’m bored. Recently, I started filling that boredom with QT with the Mr. walking and exploring our city. I am focusing on better decisions, which will yield better behavior. Every cause has an effect and every decision has a financial consequence; that’s why coming up with a personalized financial plan has been my saving grace. Yes, I prayed for financial blessings…I still do, but I have also added the caveat that with financial blessings come financial responsibility.

Check Out My Financial Plan Outline!

1.  Write down your debt & don’t forget to include people you owe money.    I was talking with a childhood friend who says he had zero debt.  As we got to talking it was revealed that he did not include the almost $7,000 he owed to a family member and the card he maxed out in his college days.  Out of sight, out of mind, I guess.  Once we dove deeper into our conversation, he and I started listing our debt.  At the time of this conversation, my list was simple- one credit card, student loans, and mortgage.  His, well…let’s just say that I composed a very sobering list on his behalf that included all the debt that he could remember.  Seeing your debt listed and then learning out to find out just how much you are paying in interest makes it all VERY REAL. 

2.  Emergency Fund Minimum.  Baby Step One of the Total Money Makeover is to get your emergency fund to $1,000 if you have an annual income of $20,000 or more.  “Your car will need repairs and your kids will outgrow their clothes. These are not emergencies; they are items that belong in your budget. If you don’t budget for them, they will feel like emergencies”.  It was this statement from the book that caused me to stop dead in my tracks and redefine what I considered an emergency versus saving.

3.  52 Week Money Challenge- BINGO Style.  This was actually a part of my New Year’s Resolutions every year.  The challenge is to make a weekly deposit that reflects the number of weeks of the year. For example, on week one you deposit $1.00 and on week 27 you deposit $27.00 and so on.  I took the challenge one step further by remixing it into a BINGO style which makes it easier to be successful.  The most I have ever saved in a year is a little under $2,000.00 and I am hoping to beat that very soon.  I have used the 52 Week BINGO Money Challenge to pay off my credit cards completely, save for my birthday plans, and even gifts for family and friend during the holidays.   Want to join this money saving challenge?   Click here for more information and to grab your FREE copy of the money guide.

4.  Tackle Your List.  I revealed in the post, Tackle Your Credit Card Debt Today, that as of January I started with $5300 in credit card debt.  I have reduced my debt down to $0.00  by paying a little over the minimum and applying the money challenge money to the balance EVERY Friday (I have yet to miss one), but that was interest is killing me.   While making additional payments to the credit card, I am making the minimum payment toward my student loans and mortgage.  Once the credit card was paid off, I will now apply that money to extra payments to my student loans and so on…this is called the Snowball Method.  Now, I will confess, if I had more debt, I would recommend switching between the Snowball Method and the Avalanche method, which we will discuss later in the Financial Cents series.

5.  Emergency & Savings.  Don’t forget to save that money you are no longer paying to others.  Use it to prepare for the future.  Emergencies will arise and more than likely something will come up that will cause you to tap into your savings….be prepared.

She Makes Cents Wants to Know If Personal FInance More Behavior or Knowledge?

{Financial Cents} Is Your Way of Thinking Making You Poor?

Just as slaves born into slavery can’t visualize freedom, we Americans don’t know what it would be like to wake up to NO debt.
Dave Ramsey, Total Money Makeover

Is Your Way of Thinking Making You Poor.pngYour alarm clock sounds, alerting you that a new day has come. You awake to find yourself owning a car without a car payment, a home without a mortgage, an education without student loans, and credit card(s) with a zero balance. How did you get to this financial freedom? Did you a) win the lottery, b) rob a bank Sugar & Spice style, or c) align your behaviors with your long-term financial goals? Well, the answer to the question depends on whom you ask.

I told a friend of mine that I was working to become debt free and she looked me right in my face and laughed. I mean laughed to the point of tears while telling me how unrealistic I was being. “Everyone has debt”, she alleged. If this were her outlook on financial freedom, I would guess that she could image a debt free life comes only as a result of a windfall. She will either rob the bank or win the lottery. I, however, understand how even the most minute  sacrifices will help me get closer to my financial goals. I have to think beyond the day-to-day and month-to-month if I want to build  generational wealth. Financial expert, Dave Ramsey adds, “We have been sold debt with such repetition […] that it’s hard for people to imagine what it would be like to have no payments”. Debt shouldn’t be the normal status quo and I am not comfortable adopting that mind-set. When the day comes when I wake up with no mortgage, no student loans, and no credit card balance, I know it will be a result of my financial plan and my commitment to it.

Is Debt Normal? Share Your Thoughts…

{Financial Cents} Say No Social and Yes to Finances!

During the infancy of She Makes Cents, I started reading Shoo…Jimmy Choo by Catey Hill. This, I admit, was another book I picked up because I like the title.  In it, Hill goes beyond the standard advice to create a spending chart and record everything you spend your money on in it. She adds the recommendation to also include additional information such as who was with you and the motivation behind your purchase. I did this for about two months and learned that I often spent extra money when I was with one particularly close friend. I usually spent money on expensive lunches and after reviewing the spending chart, my motivation behind my spending was purely emotional. I didn’t realize that was I was spending a great deal of money simply because I missed hanging out with her like I did when I was in college. Fast forward almost two years later where I started repeating the pattern of emotional and socially inspired spending. With my current job, I got back into the habit of frequently going out to lunch with the girls. I didn’t want to miss the great conversations but most importantly, I didn’t want to appear anti-social.

She Makes Cents money saving blog for women

At the start of the year, something clicked for the Mr and me. Our view on how we spend money as a couple and individually has narrowed. We have become super serious about saving and making better decisions on how we spend our money. Does that mean no lunches with the girls? Absolutely not! It does mean that I won’t be going with them EVERY DAY for lunch or drinks after work, though. Instead, I am cooking more at home and packing more lunches. As much as I hate to decline a social invitation, I would hate it more if the collective whole of my socially motivated financial decisions were the reason I wasn’t truly living a fabulous debt free life. I am proud of myself. I find that I’m eating better and cleaner. I also becoming a better cook, which is always a plus, but more importantly, I have learned to say no to social and yes to finances!

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{Financial Goals} Tackle Your Credit Card Debt Today

Slow-and-steady-moneyHave you ever heard the phrase, “a goal without a plan is just a wish”? Well I’m starting to think that is true. Like many of you, I always have financial goals… some I have shared on this blog and others I have not. As we start this brand new year, I have to ask myself, were my goals of last year actual goals or just wishes for the future? I started reflecting on this the other day while looking at older posts about financial goals. Sure, I can list some of my goals but without a plan, how can I help you as readers follow my financial journey? Isn’t that the point of all of this? I also started wondering how much is too much to share? The answers to these questions will unfold throughout 2013, but for today, getting a plan together is the priority.

The Problem: In my pre-She Makes Cents life, I worked every month and in a short amount of time, I paid off my credit card. Then the bottom fell out and I was using my credit card to simply…live (very honest moment). Long story short, my balance of about $5300 (rounding up) is nowhere near, where it should be. Why, you may ask? Because I was caught up. I started swiping to get the “cash back” deals that I told myself I would pay it off at the end of the month and didn’t. I wasn’t using my envelopes as I should have and I might not have fully realized the my new financial situation.

The Solution: In reading some of my older posts, I remembered a period where I locked my credit card up in a safe deposit box.  Initially, I just wanted to see how long I could go without credit card spending.   I wasn’t swiping, I wasn’t living beyond my means, and the balance was slowly decreasing over time. I am a very goal oriented person, so I know adding the component of an end goal date, one of the tips featured in the post How to Make and Achieve Your Goals, will help.  Thinking back, why did I ever take the card back out?

The Plan: If you are in a similar situation, this is how I plan on making this wish into a goal and a goal into a “been there done that”. While I would like to have this paid off in a year, I know I may need cushion. My end goal date for credit card payoff is August of 2014. That means, with my interest rate, I will need to be making a payment of $294.36 per month to be credit card free by next August (check out the credit card payoff calculator at the bottom of my sidebar to figure out yours).  Instead of paying the minimum, which is NEVER a good look, I will pay the fixed rate listed above or more.  Also, whenever there are cash back deals through my bank, I will use the “rewards” to pay down my credit card. In my research, I have heard the advice to pick up the phone and call your credit card company for a reduced interest rate but depending the company, they may label you as a “high risk” customer and close your account, so do your research first. 

How Are Your Eliminating Your Credit Card Debt?

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How to Dispute Errors on Your Credit Report

You are on the road to financial empowerment. You have printed out your spending chart. You have cut back on impulse spending. You know at least 5 ways to improve your credit score. The birds are chirping. The sun is shining and you look like you’re the happy little stranger in the middle of a Brady Bunch episode because your latest financial decisions have been uncharacteristically positive. Then is happens…(insert screeching sounds here)… something pops up on your credit history that is inaccurate. What do you do?

What is on Your Credit Report?

Your credit report reveals how you spend, the type of loans you have, your revolving credit, how you pay your bills, etc. This information is then used to decide whether you are approved for a credit card, loan, car purchase, insurance, home purchase and rental, and even employment. For potential employers, your credit report is used as a measure of your level of responsibility and can be a part of the deciding factor of whether you are offered the job or not.

How Credit Report Errors Are Made?

Mistakes can appear on your credit report for several reasons. Clerical errors are common because people make mistakes. Perhaps numbers were transposed, your handwriting was not legible, or the unfortunate situation that you have become a victim of identity theft. Check your credit report periodically for these types of errors.

How to Resolve Reporting Errors for FREE

Contact the credit bureau in writing, highlighting the information to be investigated. You will need to submit supporting documents such as a copy of your driver’s license if the inaccuracy involves a name change, change of address, or dispute of a utility bill. If your dispute is regarding your social security number, you will need to present a copy of your social security card and/or a copy of your W2. If you have your credit report number handy, this is the time to get it. Submit your credit report number and copies (not originals) of documents to be reviewed. The Federal Trade Commission recommends you “send your letter by certified mail, return receipt requested,” so you can document what the credit reporting company received. Keep copies of your dispute letter and enclosures. If you used Experian, the fastest way to challenge a dispute is online. Generally, disputes are resolved within 30 days but depending on the nature of the dispute, resolutions can take up to 45 days. If you find information on your credit report that is not accurate or doesn’t belong to you, please contact the credit bureau which produced the report.

For information about contacting Equifax to launch an investigation click here

For information about contacting TransUnion to launch an investigation  Click Here.

For information about contacting Experian to launch an investigation click here .

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