Mrpaseo's Personal Finance Blog

I have not progressed any on this challenge, but I still have everything up to where I left off. These days I find that I do not use cash for much so I don't have any left over change...

I still intend to complete this challenge, once I figure out how to procure the change.

Week 23: 17 JAN 14
Balance: $ 527.11

Playing catch up from the holiday break. I went out of town and was waiting for some Ike Dollars in the mail so without further delay, let's see a few weeks. I'm actually going to get a week ahead. I divided up what I had on hand and found that I could supply up to week 23, so here it is.











Officially past the rim?


Top view

Week 22: 10 JAN 14
Balance: $ 483.18

Playing catch up from the holiday break. I went out of town and was waiting for some Ike Dollars in the mail so without further delay, let's see a few weeks.

Week 21: 3 JAN 14
Balance: $ 441.16

Playing catch up from the holiday break. I went out of town and was waiting for some Ike Dollars in the mail so without further delay, let's see a few weeks. Starting with week 21.











Getting deep

Week 20: 27 DEC 13
Balance: $401.05

Playing catch up from the holiday break. I went out of town and was waiting for some Ike Dollars in the mail so without further delay, let's see a few weeks. Starting with week 20.

Week 19: 20 DEC 13
Balance: $362.85

Playing catch up from the holiday break. I went out of town and was waiting for some Ike Dollars in the mail so without further delay, let's see a few weeks. Starting with week 19.

Week 18: 13 DEC 13
Balance: $326.56

Playing catch up from the holiday break. I went out of town and was waiting for some Ike Dollars in the mail so without further delay, let's see a few weeks. Starting with week 18.

Today in the mail I received a $10 cash card from Dick's Sporting Goods store. I don't usually buy into these but with my new found interest in saving money and couponing I decided to see what they had to offer. The card says in store or on line so no gas spent looking. I went to the web site and found that today only they have 15% off your order and free shipping... I looked further... I found a clearance section and started to search. I found a nice "Under Armour Women's HeatGear Slice Cap-Sleeve Polo" that originally lists for $44.99 with a clearance price of $26.97 - $10.00 = $16.97 with $1.61 sales tax totals at $18.58 for a savings total of: $26.41 from the original list price (That's better than 41% savings since the taxes were not included in the original price).

Since we have a minimal clothing monthly budget and DW was just commenting that she needed more white shirts for work, I justified the purchase. The code that I used is: FdBmU2G8R98 I'm not sure if it is a one time use or not.

Since we have been married (almost 16 years now) we have had a "His" and "Her" spending account. Currently it's $150 a month (Each). Sometimes it's $200 a month, sometimes $100. The $150 works best because that usually works out to $5 per day.

On the 1st of each month I withdraw 60 five dollar bills and put 30 each into two envelopes. On the envelope I write the numbers from 1 to 30 (Or however many days there are in the month). Each day we go into our envelope and take out our $5 and mark off the day.

On weekends we have "Entertainment money" that usually is $50 - $100 per weekend. Since we have this money to spend on whatever we do together we usually do not need our $5 dollars for Sat and Sun. When Monday comes around we can start the week with $15 dollars (5 for Sat, 5 for Sun and 5 for Mon). It usually works out to a few Starbucks coffees per week or whatever small item catches our eye at the corner store. It also offers a challenge to see if we can go a day without spending our five dollars to see how much we can save for any larger item we might want.

Here it is, the first year we will be conducting the $20 dollar challenge. Our goal, to pay off the house by 31 DEC 2010. Starting balance: $55,350

We will continue to pay on the house as we have planned (I plan on updating the mortgage amount monthly so you can follow). The $20 dollar challenge will provide the final payment (Amount to be determined). Here are the areas we will asses to add money to the account:

1. Coupons: Only coupons from items we already use.

2. Interest earned on the account: We will store the money in INGDirect.

3. Ebay: Sell stuff around the house.

4. Half.com: Books

5. Craigs list: Furniture

6. Collection sales: Lots of stuff.

7. Credit Card rewards: Self explanatory.

8. Change: Daily change added to the change bank.

9. INGDirect referrals: 43 referrals left, if you want to help ask me to send you a link.

10. Starting change bank: I have been saving change for 8 months now, we will start with this amount (About $350)

11. Starting Balance: $20

12. Yard sale: Wife says she will do this one... we'll see.

13. Insurance refund: We receive an annual refund from our life insurance.

14. Military Discounts: We often receive 10% discount, we will add this savings to the challenge.

Alright, here we go....

I am posting this in response to those of you that commented on my Home Theater Project.

It's been a few weeks and I am happy to report that my family and I have no regrets as to side stepping the financial plan to work on the HT project and we enjoy the room almost daily.

Here is a link for those that wanted to know what we put in the HT: http://www.hometheaterforum.com/htf/members-theaters-ht-projects/283558-first-home-theater-progress-pictures-opinions-suggestions-coments-welcomed.html#post3522872

I keep my wife in on all financial decisions, this has helped me over the years to assume control of our finances and build her confidence in my decisions pertaining to our financial future. The bottom line is, when I plan projects like this, she pretty much goes along with whatever I plan. It helps that I keep money in her pocket too We all enjoy going to the movies so it was easy to convince her that the HT was a good idea.

Thanks again for all your comments

It's not as bad as it sounds though. As some of you know, we recently became debt free save for the mortgage. The next step was to build our emergency fund and move onto the mortgage... but something got in our way.

My wife and I decided to install a modest home theater in our home. We took our computer/storage room, cleaned it out, then started from scratch. With a goal of spending no more than $5,000 dollars, we wanted to have the feeling of the movie theater (Save for the sticky floor, bad smell and babies crying). Well, I am happy to report $8,000 dollars later we have our theater.

Though it cost a little more than we planned (And truthfully, we still have a few more improvements that we would like to do) we are very happy with the turn out. The thought process is we will have the ability to stay home and watch a movie on the weekend and save us some money in the long run. (Maybe not but the entertainment will be worth it)

The equipment was charged on a 0% credit card and since we no longer have any debt, we were able to save enough money in the two months we took to install the theater to pay the balance in full. The only ongoing charge will be our Netflix subscription that will provide weekly movies for us to watch (We shut off our cable TV to save us almost $70 dollars per month).

Thanks for reading,
Ray

UPDATE: Thank you all for your comments, please view this link to see my HT progress. I will need to add current pictures but this link walks you through the steps I took.

http://www.hometheaterforum.com/htf/members-theaters-ht-projects/283558-first-home-theater-progress-pictures-opinions-suggestions-coments-welcomed.html#post3522872

Today marks a great day in the Paseo history as today is the day we completed Dave Ramseys Financial baby step 2, "Debt snowball".

We were able to pay off $67,200 worth of CC and vehicle payment debt in 22 months thanks to some savings, the wife picking up a job and a 15 month deployment to Iraq.

We ended up paying off the debt a month early from our projections which means we can get onto the next baby step a month earlier.

Yes you read that title correctly, Self Issued Credit Card, here is how it works.

We should always start out with a small credit balance (Much like the credit card issuers do). Let's start this example with a $300 credit limit (CL) as this is the CL that I received on my first credit card.

Take your $300 and put it in a savings/checking account that is earning interest (Electric Orange from ING Direct is a good place to work yourself issued credit card, let me know if I can send you a link for the free $25 bonus for you and the $10 dollar bonus for me). This amount is your credit limit (As all credit cards (cc) have credit limits and as with any credit card, you should not exceed this credit limit.

The next step is to get a debt card for this account (We have this set up in ING Direct Electric Orange Checking account).

Now, you use your debt card which is accepted everywhere a credit card is accepted and you have your self issued credit card.

The key is to have a plan to pay the balance on your credit card, so, if you charge $35 dollars for a meal, by the end of the month you need to pay that balance back (To bring your balance back up to your max credit limit which is $300 in this case).

You can even set up overdraft protection on your checking account to cover you just in case you do "Over draft" on your self issued account.

Let's look at the Pro's and Con's of this set up.

Pros
1. No interest fees paid to a cc for borrowing their money.

2. Interest EARNED on the balance of your credit available that you are not using.

3. No penalties if you do not pay your balance in full at the end of the month, you have the flexibility (As long as you have the discipline) to pay over time.

4. Credit limit increase. This is up to you, when you want to raise it, you simply add more to the account. Just be sure you can afford the extra money which will cause higher payments to replenish the balance. The plus to this is YOU know best what credit limit you can afford, not some credit card company that looks at your credit report. Just be honest with yourself and this will pay off in the end.

5. You will not go in debt.


________________________________________

Cons

1. This will not directly reflect your FICO score. Indirectly it will assist you in living debt free.
2. That’s all I can come up with right now.

If you see any more Pro's or Con's please post them so I can add them to the list.

Raymond





Here is the original post that I made when I thought this up, maybe it will help you better understand.


You put 300 in the bank. This is your credit limit. DO NOT EXCEED THIS LIMIT. Use this money as you see fit, treat it like any other credit card. At the end of the month ensure you pay the balance (You should end up with the 300 in the bank at the end of the month).

When you want a credit limit raise all you have to do is sit down and go over your budget. When you can afford to put more money in yourself issued credit account, then raise your limit. I suggest 500 dollars. Do not go to high to fast as at the end of the month you will not be able to pay this credit card in full.

I know what you’re thinking, how am I going to get to the money? That is a good question; most banks have what is called a Debt card. This card withdrawals the money ON THE SPOT! So you need to ensure you stay within your credit limit.

I would recommend tracking your account daily (5 minutes a day looking at your budget will ELIMINATE any financial induced stress). If you are a once a week or fortnight type of person then you can sign up for what is called "Over draft protection" for yourself issued credit card. If you go over your credit limit there will be a slight fee but you will not experience the embarrassing moment of a card rejection.

Alright, all joking aside, if you save up some money into an account for no particular reason you will have funds for that spontaneous purchase. This is different from your emergency fund, and different from your "I'm buying a car" fund. I usually set aside 50 dollars per month for this fund. I call it my "slush fund". I keep about 300 dollars in the fund (It just sits in my credit union checking account as my "Overdraft protection"). Each month I allot 50 dollars to this fund. If we use it, the 50 dollars goes into the account to replenish the use (No interest paid out to a credit card company). If we do not use the fund during the month, at the end of the month the 50 dollars that is budgeted is recycled into the budget.

You can do this with any amount. Once you establish your budget, your emergency fund and you are debt free. All you have to do is set up your slush fund (Some people call it a blow fund). Get a debit card on this account and use it like a credit card (ONLY UP TO YOUR LIMIT which is the balance that you put into the account). If you use more than your monthly allotment then pay back into this fund as if it's a bill. For instance:

Credit limit (Account balance): $1,000
Monthly allotment (Let's say 10%): $100 (This is the money that you budget for this account)
Let's say you charge $300 dollars
It would take 3 months to make up the money, but what if you charge again next month? To fix this, treat this account like a credit card that you want to pay off ASAP. Once you charge on it, you need to work out an aggressive plan to pay it off ASAP, remember for every day you remove money from this account you are no longer earning interest (Imagine a credit card that paid interest on the balance that you did not use).
I know what you are thinking, “How does this help my FICO score?”. Good question, it doesn’t, well it doesn’t directly. Indirectly it will keep you from going in debt which will keep your loan to debt ratio pretty high. Imagine a life where you do not need a FICO score. A life where you paid cash for everything, a life where the only interest you experience is interest earned.
Think about it

ING Direct
ING Direct has provided three sources of income:
3a. Interest earned.
3b. Sign up bonus.
3c. Debt card use.

3a. INTEREST EAREND: The first is interest earned. As with any interest bearing account ING Direct provides a competitive return for your stored money. When you decide to go with an on-line bank you will usually earn a better return as there is little to no overhead for the bank because they do not need to keep a brick and mortar branch open.
Initially I was searching for a place to store my emergency fund that offered a good rate of return. I found this in ING, what I also found as a bonus was a way to link my brick and mortar bank accounts. Through ING Direct you are able to link up to three external bank accounts that you can transfer money to and from (All for free).
I have been a member since 2004 and have found only one drawback though for some this drawback might be a blessing. The time it takes to transfer money from one bank to the other is approximately 2-3 days. For those of you that need money on the spot this will be an issue, to negate this issue I opted to store $500 dollars in my regular checking account which also is a secondary overdraft protection for my main checking account. For those of you that are compulsive buyers, this drawback might be a blessing as it will take a few days for you to receive your money which in most cases is enough time for you to decide if you really need the item.
BONUS: Watch for a future post of the use of credit cards and interest bearing savings accounts as a form of passive income.
WORK INVOLVED: Open account, link external accounts and deposit money.

COMMITMENT: 30 Days, Initial set up is $250 dollars for a $25 dollar bonus then a minimum of 1 dollar must be maintained in account to earn interest.

PROJECTED EARNINGS: Interest is compounded daily (You can see the money grow in the website) then deposited on a monthly basis. Currently 2.75% APY.


3b. SIGN UP BONUS: ING Direct offers a $10 dollar bonus for each new person/account (Up to 25) that you assist in setting up. Basically you send the offer to a friend or family member and they use the link that you send to set up the account. They must open the account with $250 dollars. Within 30 days they will receive $25 dollars (An immediate 10% profit on their initial $250 dollars, then currently 2.75% thereafter) and you will receive $10 dollars. If you can get 25 people to sign up, you will receive $250 dollars free (They count it as interest income on taxes).
WORK INVOLVED: Once your account is established, contact friends and family and see if they are interested, if they are, just send a link, they do the rest.

COMMITMENT: Maintain at least $1 in account to keep it active.

PROJECTED EARNINGS: $10 per sign up bonus up to a maximum of $250 dollars. Since I have been a member, at one time they reset the number of sign ups. This provided the opportunity for 25 new sign ups.

NOTE: You can also sign up for an electric orange which is a checking account (See 3c below). This account will allow the same sign up bonus as the savings account. If you can find 25 people to sign up for each of these accounts your potential profit is $500 dollars.

Also, if you would like a link for the free $25 dollars feel free to send me an e-mail or post to this thread and I will send you a link: mrpaseo@hotmail.com

3c. DEBT CARD USE: This requires the set up of an Electric Orange account. The Electric Orange account is a checking account that ING Direct offers. This account is interest bearing but provides less than the savings account (See website for details). ING Direct often has a $20 dollar bonus program that entails you using your debt card that is linked to this account five times within a month. This program does not happen every month so you need to pay attention to your e-mails and watch for it.

WORK INVOLVED: Establish an Electric Orange account; wait for program to be announced, transfer money on planned purchases (If you do unplanned purchases you will not be making any money because you will be spending any profits) to the account, use debt card for at least five purchases for a minimum of $10 per purchase within the month

COMMITMENT: Maintain at least $1 in account to keep it active

PROJECTED EARNINGS: $20 dollars per event (Currently I am tracking that they have done this event twice)

NOTE: We took advantage of this once (We did not see the first one until after the month was over). The bonus was received within the 30 days.

The largest one time "Free Money" that we have earned is $125 dollars. The requirement was to open two accounts with a minimum of $100 (one checking and one savings, both interest bearing), set up direct deposit to the account and maintain the account for six months.

Simple enough. As you can see, the initial cost is $200 dollars. This is where I came up with the $500 dollar goal in the free money account. My objective with this goal is to start with the $500 and see how much I can make it grow. How it will be spent will be determined later on in life, until then, I intend to just have fun.

We have a new credit card with this bank; this credit card has a zero % interest for 12 months. We decided to take a cash advance (At zero percent interest) of $2000 for each account. Effectively we started earning interest on $4000. That said, the opening amount was easily covered at a profit. The next step was the direct deposit, we use my wife’s income for these venues as we live entirely on my income, if there were any issues with her direct deposit we would not have any issues without budget. Another alternative would be to have a 3-6 month emergency fund set up to cover any issues with your direct deposit (That is if your family has only one income). Once her direct deposit was set up we connected this bank account to our ING Direct account so we would continue to have access to her income. Now we just wait for the six month time limit and we can move her direct deposit to another account for a similar mission.

WORK INVOLVED: Research bank account offers, save initial money for set up, set up direct deposit, attach new account to ING Direct so we can still access the money

COMMITMENT: 6 Months

PROJECTED EARNINGS: $125.00 received as soon as the first direct deposit hit.

The simplest way to earn free money comes in the form of interest earned from our savings account. Currently we have three banks with six accounts that earn interest. On the first of the money I transfer the balances into the free money account in ING.

During the past year I have been in Iraq, being over here has offered me a lot of time to think about finances. I decided to develop a "Free Money" account. My goal to produce passive income has been my fuel for the research, within this blog I will enter how we produced the money, how much and what we plan on doing with it.

Our current goal is to simply build $500 dollars in this account.

In order to stick to a budget, there must be a failsafe. The failsafe is your emergency fund. We like Dave Ramseys Total Money Makeover so these are the steps that we are following.

Step one involves saving $1,000 dollars for emergencies. We store our emergency fund in an on line account. Currently we use www.ingdirect.com; our current emergency fund is $1,000 dollars.

Onto the next step.
Raymond

Hello, my name is Raymond I am married to a wonderful woman and we have one beautiful daughter.

I have been on active duty since 1992 and fully intend to complete at least 20 years.

Our goal is to retire fully at the age of 50 with a pension and $800,000 to $1.2 million in savings/investments. I am sad to say we have a long way to go so hopefully this site will help us learn enough to meet our goals.

This is a learning experience for all so please ask any questions or offer any comments that you might have so we can all learn.