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Friday, March 30, 2012

Has This Ever Happened To You?

You know those letters you get regarding class action suits? They tell you to fill out your name and return it if you want to be apart of it? Well, I did...

I just got a real $12 check in the mail from a law firm, my portion of the settlement.

According to the web, X bank had to pay between $6 million and $7.8 million and everyone got $12 each...

Cool Beans...


How is Your FICO Score Determined?

Interesting...A little education for all of you out there on how your FICO score is determined.

Read an excerpt from Get Rich Slowly, a blog that I follow:

Quick overview of credit scores and home mortgages
Let’s review the anatomy of a credit score. There are a few categories that determine your final number. All you Gwynns out there, lend a quick ear…

A FICO score serves as a quick reference guide for lenders to determine the risk level for them to give money. It’s a number between 300-850, the higher the better.
Lenders take your credit score and a few other pieces of information into consideration, such as age and salary, and make a decision about how your loan will play out. In short, a high score will be less risk, therefore a lower APR and less overall cost to the borrower.

Here’s a chart comparing APRs and total cost for a 30-year fixed mortgage on a $500,000 house:

Credit Score APR Including interest, your house will cost…
760-850 (best) 4.014% $860,760
700-759 4.236% $884,160
680-699 4.413% $902,880
660-679 4.627% $925,560
640-659 5.057% $974,880
620-639 (worst) 5.603% $1,003,560

--Taken from 
(Tim Sullivan)

Bottom line: the only way to build a good FICO is to borrow money (regularly) and pay it back. At the top of my game, I had a 769 FICO score and around $50,000 in open lines of credit, which (by the way) I was sooo proud of.

However my score was not an accurate measure of how financial sound I was. It was just my "I love debt" score...nowadays I count my financial security in actual cash and real assets.  That is, I let my FICO score take care of itself...the only reason I pull my credit report today is to make sure its accurate.

You think rich people give a flip about their credit score? We want to be RICH don't we?

One day I hope to be more like Gwynn in this story, she rocks! 

Check It Out!


Monday, March 26, 2012

Another Way to Stay Broke...Rent A Wheel!

Since my post last week about Rent A Center I've been getting a lot of feedback.

Someone close to me turned me on to another way to stay broke!  Dont just rent TV's and couches you cant afford (at Rent a Center), rent your wheels too! 

Check out Kevin Hart, he has the solution for your played out vehicle!

Rent-A-Wheel Radio Commercial, 'Official Voice', featuring Kevin Hart

Did he just say that if you can pay rent, you can go to rent a wheel...there is so much wrong with that statement, don't even get me started!


New BMW 3 Series!

Hello! I am a wife and mother, hoping to have more kids, I drive a Toyota Highlander...last thing I need is a BMW 3 Series. But someone out there thinks I need one!  How exciting...for me (or them?).

I did some fishing around and the new 2012 BMW 3 Series (328i) starts at $34,900. Okay...a little rich for my blood, given I cant easily get a stroller in the truck...but I digress.

According to the brochure, the "Offers to get your (my) pulse racing" is a choice between $1,000 credit on select BMWs OR 2.9% APR financing!

Check it out!

Since I'm broke (still in debt), I'll most likely take the 2.9% financing please. After all the BMW company must know that I can afford it, or they wouldn't have sent me the offer, right?

Being a broke person, I will only consider the payments when determining if I can afford this car. Even though I am NOT maxing out my retirement, I have a negative net worth, and my kids DO NOT have a college fund. I'm going to take the plunge, you only live once and I'm sure I can pay it off quickly and get back to my goals in no time!

Lets see...
ASSUMING I qualify for a 2.9% APR:
A) If I pay the car off in 3 years, I will have $1,102 monthly payments and pay $1,721 in interest.
B) If I pay the car off in 5 years, I will have $680 monthly payments and pay  $2,864 in interest.
C) If I pay the car off in 7 years, I will have $499 monthly payments and pay $4,028 in interest.

Given that I'm broke and want the lowest payment possible...I most likely will take Option C!

Oops don't forget the opportunity cost of the doesn't stop at just $4,028 in interest.  Let calculate how much money I would have saved if I had not bought a car and just paid myself...$499/month invested in a mutual fund (for college savings, investments, or retirement) would have yielded me $60,449 over 7 years. If at the end of 7 years, I leave that $60,449 alone and don't touch it for 20 more years, I will have $442,976...

Oh Darn! They don't mention that in the brochure!


Another One Bites the Dust!

Our Journey keeps getting better...

Paid off our last credit card this month!

Should have another item wiped off by the end of April...

We are KILLING it!


Credit Card Offers, They Keep Trying!

So, my husband and I have been on our Debt Free Journey since August 2010, that's about 19 months.  Meaning that was the last time we used a credit card or loan or anything related to debt. When we started all of our credit cards were close to maxed.  Capital One was one of the first credit cards that we paid off, it had a low limit/balance.

As you may know, as you pay debt off, you start to look more desirable to banks, and they start sending you offers again. About 6 months ago, the offers started pouring in...

Here is an example of one:

In case the print is too small:  They are trying to convince my husband that he needs a little cash....

They say "Get 0% APR for 12 months with these checks!"  The checks are attached...

"There are times when you need a little extra cash. With your Capital One account ending in xxxx, you can get the cash you need at a low 0% APR for 12 months."

The offer goes on to mention that although the offer is for 0% APR, they will charge us a 3% transaction charge...TRANSLATION: Instead of charging you interest throughout the next year, we will just charge you up front (how convenient).

They also tell us that these checks are for necessary expenses.  I love how they draw a picture of how simple it is to get this FREE money! In case I can't read...LOL

Thank God, we started getting smart with our money! This use to be so tempting to me! I mean...0% for 12 months! Even 3% is cheap money--the old me might have borrowed it Just In Case (because you never know when an offer like this may come your way again). BUT because we changed the way we look at money, we have saved over the past 19 months an emergency fund.

So for the amount of money that is available for us to borrow with these checks at 3%, I have more then that amount sitting in my savings account ready for me to borrow at a true 0% interest rate, oh and I can take my time paying myself back...genius.

What's in your wallet?????



Tuesday, March 20, 2012

More Ways to Stay Broke!

Let Montel tell you how to manage an emergency...

Dumb, Dumb, Dumb...

If I don't have $1,000 NOW, what makes you think I am going to have it when its time to pay it back? Don't forget to add the 900% interest they will charge!

Its called an emergency fund!


Rent A Center is the New "Pay Day Loan"!

Wonder what's keeping you broke?

Is this you?

$39.99 a week  for a TV!!!!
For all you math nerds...using Rent a Center is like charging your TV on 100% APR Credit Card.

See the "deal" below:
96 week rental
Cash Price - $1704.00
Cost of Rental - $2,135.04
Total of Payments "Rent to Own" - $3,839.04

If you want to be poor, do what poor people do, if you want to be rich, do what rich people do...its simple!

Stop buying stuff you cant afford!  


Dave Ramsey Student Loan Rant...Love It!

Dave Ramsey goes off on the craziness of student loan debt!

This is classic! If you want to hear the audio, click the link below and scroll to the end of the page and select "play".  If you want to skip through, start at minute 5:05.

Her is a piece of it; but its worth hearing (click the link)...

"I’ve got to tell you that I’m about to blow a gasket. I’m about to go into orbit. I’ve taken so many calls like this. Where are the parents here? If your kids are that stupid, jack them up! Seriously—$130,000 to get a degree from Columbia in divinity to get a $40,000 job as a minister. Spending $130,000 to get an undergraduate degree in psychology—that’s crazy!! So when you have babies, you go home to be a stay-at-home mom.

I love stay-at-home moms. But you know the number one reason I’m finding out now that people can’t stay home with their kids? It’s their freaking student loan stupidity! I’m not mad at this particular lady that just called. This concept is driving me bananas!

If you have a 20-year-old or an 18-year-old walking around, grab them by the ear and tell them they should not get a useless degree from a private university that you cannot making a living with and then choose to go home and be a stay-at-home mom with $100,000 in student loan debt.

This is how life happens. You say you’re going to be a professional at something and then you change your mind—YOU LOST THAT OPTION! You lose these options when you go this far in debt. You are forced into a situation where you are choosing between your children and student loan debt to get a useless degree!

You know what a psychology degree without a master’s degree is worth? NOTHING! Nothing! Absolutely nothing! You can’t get a degree in a factory with that degree! You know what a theology degree from Columbia is worth? NOTHING! It has no marketplace value! Think, people!

This is what’s going on! You’ve lost your ever-loving minds, America. You are stupid about education—how paradoxical is that? You wander in, spend any amount to get a degree and act like the student loan tooth fairy is going to come in and pick up your stuff. There is no student loan tooth fairy! You have to think.

Your stupid degree in a stupid field does not have a marketplace value and it doesn’t guarantee that you’re going to get a job! As a matter of fact, it’s an indicator that you’re too stupid to hire! Do not allow your 18-year-old to go $200,000 in debt so they can get a good Christian education in underwater basket weaving. That’s stupid! Stop it!

It’s out of control, people. Somebody’s going to have to stand up and say enough already! It’s not the institution’s fault, it’s the parents’ fault! Parents, tell your children to not be stupid and don’t assist them in this stuff. Don’t assist them to go hundreds of thousands of dollars in debt to get a degree that has no marketplace value. This is ridiculous! THINK, people!
Stupidity with education choices is about as paradoxical as anything I can think of. It’s got to stop. It’s destroying the American family. It’s destroying the economy. It’s ridiculous!"

--Dave Ramsey (March 13, 2012)


Sunday, March 18, 2012

More Women are Prospering as Sugar Mamas (article)

Interesting Read!  More women are prospering as sugar mamas

The majority of US households in the US are dual-income.

How many of you prefer a traditional (one income) household as opposed to the dual income household? 

For all the men out there...Does it bother you to be married or to date a woman who makes significantly more money then you?


Wednesday, March 14, 2012

3 Money Tips for Every Income

Check this out!
3 money tips for every income

I like this article, it gives general guidelines for every income level.

Incomes from Low Income (Below $20k) to Upper Income (Above $100k).

Word to the wise, if you find yourself in the lower end of this spectrum...make a promise to yourself not to stay there for long...


Tuesday, March 13, 2012

Can Taco Bell Take Down Chipotle?... I Think NOT!

Check this out!  Can Taco Bell take down Chipotle?

I for one am on "Team Chipotle".  A colleague once told me that when you pick stocks go with what makes sense.  Taco Bell may be good on a day when you are starving and only have $1.25 in your pocket, but come on...Chipotle says, "class", "I'm special" and "you better have at least $10 on you when you walk in here"...

They will charge you the same amount for a "salad" then they do for a burrito (burrito toppings on lettuce), they will charge you extra for chips and guacamole, and they will make you wait in line for 10 minutes...Why? Because they are that good! 

Therefore, if I were a bettin' woman (and I'm not), I would put my money on Chipotle every time!

Taco shells made out of Doritos? Come on!


Monday, March 12, 2012

In Reply to the comments on Gen Y's Retirement: $2 million...Not Impossible

I want to caution you all by saying that I am not an investment expert! I would advise that you seek the counsel of a financial investment adviser when choosing your investments.
However, the average return I used was based on the overall stock market of 10% SEE LINK (average over the past 20+ years).  Most 401ks or IRAs are mutual funds which are based on a diversified grouping of stocks. I wouldn’t look to the stock market for short term returns.  Retirement investing is for the long term.  

Typically, a 401k (403b) should be more beneficial because usually a 401k offered through an employer has a contribution match.  Therefore to follow my example...If an individual makes $52,500 annual salary and contributes 8% of their income per month ($350), and receives a 75% company match on the first 8% of their salary contributed to the 401k; their $350 "car payment" would actually be $612.50 a month. Therefore, this can only benefit them in the long run to the tune of about $3,873,499 (40 years) or $2,325,441 (35 years).  This also doesn't include increases in income over the years which will also subsequently increase the contribution and matching amount. 

Bottom line, It’s all goodness...

As for an IRA, usually these do not include a match, and they come with their own annual contribution limitation, however one can choose to go with Traditional or Roth IRA's that provide different tax advantages. In many cases individuals can contribute to both a company 401k and an IRA.   

Hope this helps...


Friday, March 9, 2012

Gen Y's Retirement: $2 million...Not Impossible

Check this out!   Gen Y's retirement: $2 million

So, apparently according to this article, Generation Y-ers need around $2M in Retirement!  Seem impossible? It shouldn't, most of Generation Y (mostly those born in the 80's) are fully capable of saving at least $2M in retirement.

Perhaps my experience is limited, but almost everyone I know has financed a car, at one time or another.  If you can finance a car, you can save $2M by the time you are 65; plain and simple.

Check out the math:

Lets say the average car payment in America is $350/month, although I have read that it is higher then that!
And you invest that $350 a month in an IRA or 401k making at least 10% annual return a year (reasonable estimate), in 40 or 35 years from age 25-65 or 30-65, respectively. On your 65th year you should have $2,213,427.85 or $1,328,823.32.

The idea is to save enough, so when you are in retirement you can pull out the growth (interest) on an annual basis and live off of that. For example, if you have $2M in the bank, and you earn 10% a year (on average) you can pull $200k a year out for living expenses. 

Mind you these numbers are simple in that they don't include an employer match or inflation. My point is that it doesn't take much to re-set the trajectory of your financial plan.

Just something to think about...if you can afford a Tahoe or Camry payment you can afford retirement.


Wednesday, March 7, 2012

My Financial Journey...

Back in 2010, my husband and I started on our journey to Financial Freedom...

We had done all that we were suppose to do...gone to school, secured professional jobs, but we had barely any savings and was barely living paycheck to paycheck. It was one of those moments when we looked at our situation and realized "something had to change".  We were sick of it!  So we started on our journey inspired by Dave Ramsey's Total Money Makeover. Now, I have shared in the past our journey through real estate hardships. But I never gave you exact figures...well, here is the closest to details you can get.

When we started our journey, my husband and I owed a total of $430,379 in debt!

Here was the breakdown:

See, prior to our revelation we never really considered auto loans, student loans, and rental property to be "bad debt", but after realizing how much per month it was costing us, we decided to conquer our mountain.

As of today, our journey continues, but we have made significant strides in the last 18 months.

Check it out!

The journey continues...


The real cost of living: $150 000 a year...Really?

I thought you would be interested in this:

According to this article, in a survey, people who claimed to make $150k a year are among those of us who where quoted in "saying they could buy what they need, afford some extras, and still be able to save a bit". I live in Southern California (higher cost of living) and tend to agree with that (believe me, I've worked the numbers).  However, since the article claims to be an average or a national representation...I wonder what people these days define as "what they need vs. what they want"?  

$150k a year use to be considered upper middle class, have we re-defined "needs vs, wants" or is has the American Dream really grown out of our reach?

Something to think about...


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