FREE $15 credit + “Kitchen Must-Have” Sale up to 56% off {prices start at $8}!

5 piece utensil set

This weekend  is having a  sale with LOTS of kitchen items on sale up to 56% off! Prices start at $8! This sale features some of the best accessories for the kitchen! Find , ,  and so much more! Be sure to check it out today while supplies last and best of all, if you 

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Daily Grommet: Amazing Products & Offers You’ve Never Seen!

Daily GrommetDaily Grommet: Amazing Products & Offers You’ve Never Seen! There’s a cool new site I just learned about! It’s FREE to sign up! They feature HOT new offers each day with “Amazing Products You’ve Never Seen”! Hurry & sign up here: Daily Grommet

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The easy way to get out of debt!

The easy way to get out of debt! Is there any easy way to get out of debt? Well, not really! But I bet I have your attention! 🙂 Gtting out of debt takes a lot of determination and hard work! Engineer has written some great articles about how to get out of debt, based on our own personal experiences! Did you know we used to have over $200K in debt and have paid off about $150K in just 5 years? Here on CAFM we are committed to helping you save money and make extra money online so you can get out of debt, or hopefully never have go into debt in the first place! 🙂 Read Engineer’s 6 part series on .

easy way to get out of debt

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2009: The plan of action: Debt mitigation and more!

By no means do I mean to offend anyone trying to diet on a new years resolution or whatever resolution you chose to do, nor do I mean to offend anyone with lofty goals. If this method works for you, you are a better man/woman than I am.

It seems like everyone is talking about new years resolutions and goals these days. I guess it got me thinking since we are changing our course in debt repayment right that I need to contemplate what we want to accomplish this next year.

First of all I don’t believe in new years resolutions. Here’s why: you resolve to make some change in your life (usually far to drastic to stick to) and for the next 3-6 weeks you suffer trying to attain this unreachable ideal. Then you fail miserably and end up in worse shape than before. Be it personal finances or dieting, it never works. The reason it never works is these major changes aren’t just a change that you make to do something different, they are complete lifestyle changes and take commitment beyond just saying your are going to loose 50 pounds and throwing away potato chips and buying carrot sticks. You have to devote your life to this change and change your whole fundamental thought process to make it work. To do this you have to make all facets of your life conform to this and this takes time, not just deciding that starting Jan. 1st you are going to diet.

The other thing that gets my goat is the notion of goals. I see people set goals all the time, usually lofty goals stating that this year they will do this and that. They always put some time frame in, but the problem is that most people make their goals so lofty and ambitious that they aren’t actually realistic. While it works for some people, the concept of goals has never worked for me.

Instead I prefer to set a plan of action. I use logical figures and facts and estimate where things are going to end up on a time line, so that at any given moment I know what my progress is and how far off I am from my estimate. I guess what I am saying is that to me it makes more sense to plot an expected target and realistically (with rough numbers to back it up) make out a plan to follow. Sort of my brain’s roadmap or instruction set of how to accomplish the task it set out to do. Maybe it’s just my engineering background or project management, but I like to have a course of action and be able to know where I am at any given time.

So with that said, 2008 came to a close just as we got the truck paid off. So in 2008 we paid off the last of the sallie mae private student loan, paid off the siding loan from the house and paid off the pickup.

The 2009 Plan of action:
  • Item 1: Continued Debt Reduction:

For 2009 it will be a short list for debt reduction as the house is the next target. The mortgage is currently at just over 33K right now.

Our plan is to add the $800 a month we were putting on the truck and put that on top of the mortgage payment, making it out to a nice even $1200/month starting in February.

So taking out the interest, taxes and insurances… it should track as follows:

January – $33,300 starting balance
====Start $1200/month payments
February – $32,400
March – $31,500
====Call and remove PMI, saves us another $20/month
April – $30,580
May – $29,660
June – $28,740
July – $27,820
August – $26,900
September – $25,980
October – $25,060
November – $24,140
December – $23,220

Now these are just rough numbers, but planning things out, we should at around a $23k balance by the end of the year. That’s motivating. Hopefully we can keep this up, if so we should have the house paid off around the fall of 2011.

  • Item 2: Start a savings account:

In the past we were also adding snowflakes on top of the debt snowball. We will not be doing this from now on as dealing with the mortgage company is a PITA. Instead, since we do not have any savings other than the extra $1000 we have in the checking account for emergencies, we are going to put any extra money from and our free money endeavors, selling stuff on ebay/half, birthday money and overtime money into a savings account. While we don’t plan to religiously add to this, we will periodically re-balance the checking account and transfer the excess over the basic $1000 dollar float into that new savings account.

  • Item 3: Funding the HSA medical expense account:

Since my employer has us on this horrible HSA account with an insane $6k deductable, I was putting $240/month into this health savings account just for paying medical bills. We basically broke even in 2008, so I am going to continue to put $240/month in there this year hoping that since the kiddo is at home with momma now he won’t get as sick this year.

  • Item 4: Funding the 401K

It’s really hard to force myself to put money into this knowing that every time I log on nowadays the balance is down about 10% from the last time I looked. However my employer matches 35 cents on the dollar up to 10% so I need to take advantage of that. While I can’t afford to put in 10% right now, I am going to stay the course from last year and continue putting in 4%. After we are debt free in a couple years I am going to make this a priority, but for now paying off the debt is the priority and we are still putting some in there.

Well, that’s the plan. So long as nothing drastic happens financially, I can look back at the plan and know what has to be done.

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Thinking positive: Think about your assets and not just about your debt

I myself have become hung up on this idea that right now debt is the enemy and must die a horrible death. While this is technically true, I had the realization that while I have been blogging about debt in general, I need to remember that there is more to finances than just debt.

Last week I wrote about sending in the last truck payment, paying off our new truck in full in only 2 years. While this was an awesome feeling, I started planning the next stage of the battle… paying off our house. We chose this as the next step as the other major loans we have are school loans with my wife’s being around 4 or 5% interest and mine at 1.75% interest (yes, 1.75%), so it makes more sense to pay off the house at 6.25% interest first. So I mapped out the course, plotted the changes in payments in the checkbook and ran everything out to the end of the year to be sure to include any non-recurring expenses like tags. Everything looks good.

I realized that I have been so focused on eliminating debt and reducing that balanced owed on everything to zero dollars that I completely forgot about looking at our assets as far as evaluating our financial predicament.

So I figured out what our real assets are and their worth and I actually feel a little better. I guess it’s just another way of looking at things so that I can find motivation and positive reinforcement that we are making changes for the better. I am proud to say that for the first time in a long long…long time we actually own stuff free and clear.

Anyway, while debt reduction and elimination still remains the focus, don’t forget to stop and smell the roses every now and then and be thankful for what you have.

Our Assets:
$16,000 -House: Worth 50k – 34k owed
$17,500 -2006 Dodge ram – owned free and clear (edmunds.com value)
$4000 – 2000 Chevy Blazer – owned free and clear (edmunds.com value)
$13,000 – 401K – used to be worth a lot more *sigh*
============
$50,500 – Tangible Assets

Wow, now that is inspiring. Of course you add to that the $105,000 in debt we still have and we are actually worth -$55,000 or so, but some day that will come around too.

My point is this, successful debt reduction is just as much psychological as it is financial. I speak from experience, the right state of mind changed everything for us. So while the staggering numbers of the debt bills are depressing, there is hope. You need to use whatever motivational tools you can. I try to motivate myself as many ways as possible. Realizing that we actually have assets for once in our lives, now that is motivating.

Good luck in finding your own motivational tools.

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