INDEBTED 2 YOU

Quick Update

Well, I hoped to put a few hundred in my savings this week, but it's not going to happen. I have a few bills I need to catch up on (if they're not somehow automated, I often get behind on them), and after doing the Christmas math, I don't have much to spare. That said, I stared at the numbers pretty hard and evenutally put $50 into savings. It's paltry, but it's something.

And... this puts me beyond the realm of "safe" finances, I suppose, but I used my savings to buy stock. I did a lot of research on the company I purchased stock in. I read the analyst reports. I listened to their earnings call. The company is in the realm of medical devices/bio, so I understand the science behind their product--I read through the data on their clinical trials. I understand what it takes to jump the FDA hurdles and get product to market, and I'm satisfied with the progress this company has made.

So... yeah. I felt bad buying the stock, because I know you're supposed to have a chunk of money in the bank before you start investing, but... I'm planting a flag and saying this is the time to buy. Prices are just outrageously low, and I will feel better losing my money than knowing I missed out.

Reached November Goal!

I just reached my November goal! My "savings" is scattered between four accounts, but I set aside another $360, so that puts me at $1510, which is $10 more than the goal. It's also about $200 less than I hoped, but what the hell.

I've used my credit cards, but only for designated items. I put my gas on my Discover, and that gets me cash back. I also bought a few items on my Banana Republic card, but I was taking advantage of some deals and I sent the money to the card immediately, so I haven't carried any balance. In fact, I still have a $110 credit on one of my cards. I'm saving that as a reserve for Christmas presents.

I'm looking into purchasing stock. Everything's cheap right now; it seems like one of of those five-to-ten year opportunities to get into the market. I've been reading up on a few companies, and I think I'm going to start purchasing on Monday. I have a feeling lackluster sales on Friday will tank the market again. We'll see.

Employee Stock Option Plan

I suppose I could spread these posts out, but why not post three times in one day?

My company's stock is in the toilet, as are most companies. I really want to buy some, because it's just incredibly low and the company itself is doing quite well; money coming in, balance sheets look good, gaining shares of the market, products coming online, medical device market that's semi-insulated. I've decided this is a really good time to start investing in the employee stock option. Like Warren Buffett says, "Be afraid when others are greedy, and greedy when they're afraid."

When they decide the price for our option, they take the lowest opening price on either January 2nd or July 1st of 2009, the open and close dates for the purchase period, and sell the stock to us at 10% below that price. Can't beat that with a stick. I thought it might be complicated, but I called up the fund manager, told them who I was and what percentage of my pay to put in the option plan, and that was it. It took under a minute.

That is all.

The Problems of Automatic Withdrawal

Speaking of not being perfect, I ran into a string of overdrafts on my checking account, recently. My overdrafts go to my credit card, so I only get a one-time $10 fee if I go over, but it added up. The reason I was getting overdrafts? Automated withdrawals! Automatic withdrawals worked well for me when I was getting paid monthly, because I had all these withdrawals set up for the day after I got paid. Now, however, with bi-weekly paychecks my paycheck lands on different days every month, and I never fully adapted my systems and habits.

Several of these withdrawals were for tiny amounts--$5 or $10 I had going to charities or my alma mater. I like giving small amounts every month, because it adds up for the institutions and it doesn't feel like a burden to me. For now, I'm nixing this habit. I'm only going to give one-time donations to institutions. I might change back, later, but I'll have to set up some reserve fund to manage that, and I don't want to think about it right now. For now, I'm simplifying, and I asked all the institutions to stop the withdrawals.

The one that really vexed me was my auto insurance. It was a larger amount, obviously, and it kept tripping up my finances. I thought I had to pay via automatic deductions--that's how it was explained to me when I opened the account. This is only partly true. I must keep the automatic deductions option turned on, but if I pay ahead, they mark me as "paid in full" and don't deduct anything from my account. I did exactly that, which put the control back in my hands. I've put enough cash towards my insurance that I'm about 1.5 months ahead, and now I have half-month payments shipping to them every two weeks (when I get paid).

Automatic deductions are great for those who have problems remembering to pay their bills, but I like to keep my checking account balance low, so I'm not tempted to spend my "spare" cash. For me, it's far easier and safer to set up my own schedule.

More Savings

I'm transferring my SmartyPig savings into my HSBC account. I also sucked it up and put another $100 into the HSBC--this leaves me only forty bucks or so to see me through next week, but if I go over, I just use my Discover card to pay for a few things. This is okay, because I transfer $150 to my Discover card every two weeks; I use it as a hedge fund, of sorts. Right now, I have a credit on that account (probably only a few bucks), and I try to keep a credit on it. This isn't the 'conventional' way to use a credit card, I know, but they don't seem to care. Why do I do it this way? By using my Discover, I'm technically going into debt (even though I have the automated payment shoring it up), so it keeps me from spending too much. Ah, psychology. We all, eventually, find a way to make it work for us.

So I get to kazam my savings goal up a little bit--looks like I'm at $1,147! I shouldn't have too much problem making my goal of $1,500 by the end of this month! Oh, and the toothbrush? I sold it on Ebay for around $35.

My HSBC Savings and the Downsides to SmartyPig

I have to admit something. I hate my SmartyPig account. It's so incredibly one dimensional. As far as I can tell, you must enter a savings goal, then you must enter an end date to reach that goal; SmartyPig divides the amount of the goal by the amount of time, and withdraws the resulting dollar-amount from your account every month. You can't simply say "withdraw $25/month from account X". If you want to withdraw $25/month, you have to back-calculate using some arbitrary goal and end date. Having trouble understanding what I'm saying? That's because it's hard to explain, and a pain in the ass to set up. You can't option to not have money automatically withdrawn, and if you reach the end of the goal (I think), you can't leave the money in the account to accrue interest--they automatically send you a card with that ballance on it. I waited around, expecting them to quickly grow up and get a better interface, but I think I'm done. SmartyPig has the highest interest rate I can find, but even at 3.9%, I've decided to go elsewhere.

I opened an HSBC online account about a year ago, but it took me forever to get it up and running. They kept sending me my temporary password in the mail, but then they didn't send my registration ID in email, as they were supposed to. After spending twenty-minutes dinking around on the phone today (I was on hold for fifteen minutes this morning before I had to give up, but I called back tonight and things went much more quickly), I was finally able to get this account up and running. I transfered $420 into this account. It would have been $520, but they need to confirm another account I'm transferring from.

This has actually been a very frustrating day, bank-wise.

The HSBC account only has a 3.0% APY, but they have a 12-month CD at 4%. I've always been intimidated by the CDs because you usually have to have $1000 or more to put in them, but guess what? I now have over $1000 in savings! As soon as I can get the SmartyPig money into the HSBC account, that is :)

And my toothbrush? I've got a $28 bid on EBay, with a day to go, baby.

How Much Is My Bonus?

We got our 3rd quarter update on our year-end bonus and I guess, not surprisingly, we hardly locked in anything this quarter. A measly 0.55%. We've locked in 4.65% for the year, so far. We have big chunk still coming, so it's feasible we'll break 10%, but that 3rd quarter was a blow. We were aiming to lock in 2.25% for the 3rd, and we missed almost all of it.

Eh.

Beggars and choosers, etc. Lots of people have it worse.

On the upside, a couple of people are in a fierce bidding war for my toothbrush on Ebay. The bidding is up to $5. Six days to go. The tension mounts.

Challenge Update

I mentioned that Ramit Sethi over at I Will Teach You To Be Rich has a one-month $1,000 savings challenge. The gist: follow his advice and you'll save $1,000 in November. Maybe, but either way, I'm giving it a try. Sethi mentioned turning the heat down, and I haven't done that but I'm still working at sealing the windows up. I do one every day or so. It takes about a half-hour to do a window right, and, since it's going to be there for five months, I want it to look good. I've located closets that seem particularly badly insulated. One I was able to simply close. Another one doesn't have a door, and it's unfortunately in our bedroom. I'm looking into buying some cheap, heavy drapes at a thrift shop and putting those up.

Tip #3 was to sell something on EBay. I put my electric toothbrush up for sale, which I spent way too much money on and found I didn't like to use. We'll see if I get any hits on that. I have to say, however, that when I moved a few months ago, I put a lot of my old items for sale and I made a pretty good haul. I think I might make it an annual project to do this.

Still doing Tip #1, which is pack your lunch. I haven't done this every day, but it's enough that I know it's going to make a dent.

I'm ignoring Tip #4, which is to get friends involved in Sethi's challenge, because I just don't feel like it. Same with Tip #6, something about using gas price as a hedge fund by putting the money we're saving now into a separate account and using it to defray future costs. Again, I just don't feel like going through that effort.

I'm planning on doing Tip #5 and Tip #7. They are (respectively), trying to haggle your cell phone bill down, and not spending any money one day a week. Both seem like sound practices, and I'm a little miffed at how high my cell phone bill is every month.

In other news, Friday is payday, and I'll have a chunk of money that I can throw at my savings!!! Also, tomorrow I may get some news on the progress of my yearly bonus. My company locks in a certain bonus percentage each quarter, and then tacks on an additional percentage which is equal to the average of all four quarters. I've locked in a 4.08% bonus so far. Because we usually have an uptick in sales at the end of the year, the bonus is projected at around 12%. Tomorrow I'll find out how much we earned for the third quarter. The bonus pays out in February. Wohoo!

Election Day Post

You should too.

Accepting the Challenge...

I haven't been paying much attention to the blogosphere lately, but JD over at Get Rich Slowly mentioned that Ramit Sethi's blog I Will Teach You To Be Rich has offered a challange to save $1,000 in 30 days.

Wow! That's a lot of links for this little blog. While I'm on a roll, here's the actual announcement of Sethi's challenge:

Every day this month, Sethi's posting a tip on how to save $1000 this November. His first two tips were:

1.) Pack a lunch
2.) Turn the thermostat down 3 degrees.

Luckily, my GF and I spent Saturday cooking, both to eat healthier and to pair down on my rampant eating out. So, #1... done! #2? We've already got the thermostat pretty low, and I'm not going to turn it down lower, but with winter coming I went out and bought plastic sheeting for our windows, and then borrowed a hair dryer from a friend to install the sheeting.

Here's a cute commercial from the 80s on how install the sheeting!

Today's tip was to sell something, and I have just the thing! I own one of those Oral B Triumph toothbrushes, and I hate it. I'm putting it on eBay tomorrow.

Savings Update

Payday! I put an extra $300 into savings, so I can update the Freedom Fund in the upper right. I have a personal goal to get that savings up to $1500 by the end of November, which is going to take some belt tightening. The Freedom Fund "ultimate" goal, which I'll add, is $20,000. If I can get a part time 15-20 hour/week job, I should be able to write for over two years by partly living off my savings.

That is all.

Starting to Save

It's time to put some money into my savings. A lot of people say to start saving right away, but I wanted to wait until I got my credit cards paid off. Now (wohoo!) I'm free from all consumer debt, and I need to start turning the tides on the interest-machine, and get it working for me instead of against me.

I have a measly $327 in my savings account. My stretch goal is to get that up to $1,500 by the end of November.

When I finish school, which should be Spring of 2010, I want to have enough money set aside to quit this job, start working part time so I can write full time. I can, theoretically, have about $25,000 in the bank. I have a budget of $1,340/month. I need to examine the ol' budget again and see how much I'm actually spending, but using that number as a mark, I can go for 18 months without a job. With a part time job or a teaching gig, I should be able to stretch that for several years, enough to say I've given professional writing a fair shake.

Okay, so if you look in the upper right corner, you'll note the new line item for savings. Let's see what we can do with it.

Credit Report

I just checked my credit score at Experian.... 770.

So, that's cool. I'd like to get over 800 just for kicks, but I'm not going to worry about it. Because I was checking my score, I also took the time to buzz through my account records, as displayed on the credit report. I've been working hard to get out of debt, and in the process I took a lot of 0% credit card offers so as to eliminate my formerly horrendous interest payments (looks like I got out of debt just in time, as most of those wonderful offers for "1 year, 0% APR w/ no balance transfer fees" seem to have dried up).

I was SHOCKED at how much credit I had available.

I thought I had somewhere around $20-30K in credit (I know I should have had a better grasp of that number, but I just kept a loose tally in my head). It turns out I have $51,300 in available credit.

I'm not worried about having all that credit floating around; I'm not going to spend it. I was actually going through the records to figure out which cards I should eliminate, however--partly why I'm posting right now--but another thing that came up that complicated this: phantom cards.

I've posted some information below to give you an idea of what I'm dealing with. I've made the information ambiguous enough that I'm comfortable sharing it, and I changed some of the information that is there, in order to further obscure the facts.

So, here's my credit cards, with their "available credit" and the "open date".

CARD....LIMIT.........DATE OPENED
1.......2,000.00......2006
2.......7,500.00......2008
3.......12,500.00.....2008
4.......6,500.00......2002
5.......Non Active....1999
6.......10,500.00.....2007
7.......6,500.00......2006
8.......2,500.00......2008
9.......Not Active.....2004
10......3,000.00......2005

Two of my oldest accounts are those "phantom" cards, opened when I was really bad with my credit. Those are Cards 5 and 9. I checked with both banks and both gave me the same answer: these accounts aren't "active", meaning they can't find them. Each bank gave me the address for their credit score dispute department. For a while, I thought of just ignoring the error and leaving them on my report, because I figured their long history would serve to my score's advantage. Two things stopped me: 1.) it's irresponsible to have accounts just floating out there and 2.) I don't think it's helping my score.

I say this because the part of your credit score that takes your credit cards into account uses these variables: length of time your cards have been open, percentage of available credit on your individual card, total credit available. It might also take the actual number of cards into account, I'm not certain. I don't know this equation, and I can't find it on the net. Anyway, my point is this: I don't think a card with a "0" in the "available credit" column can help my credit score. It could actually drag it down (but again, I don't know).

If anyone's listening, I'd love a little advice.

1.) For my "phantom" cards, I'm thinking of writing the companies to see if I can revive these accounts. If they'll put some actual credit in them, so much the better. If not, I'll have them axed.

2.) Does anyone know of a calculator that would allow me to view credit score scenarios relating to which cards I should keep and which cards I should eliminate? Does anyone have a rough formula that allows you to figure this out? Does anyone have a professional "guestimate" or a gut call they would like to make?

The only cards I need/want to keep are:

#2, because I'm carrying school loans at 0% until my company reimburses me.
#8, because I get cashback for buying gas with it (I have a reoccurring payment going to it)
#10, because it's attached to my checking account

Any thoughts? Either way, it's been good to frame the issue for myself!

Remarkable Failure

In eighteen months, I’ve eliminated over $14,000 in debt. I paid off my car loan (two years early) and I paid off my numerous credit cards. I sent my last check to a credit card company yesterday, for $600. It felt anticlimactic when it happened—I intended to have it paid off in July—but today, it’s starting sinking in. $14,000 is a lot of money.

Some people set goals and nail them. I’m not one of those people. In my journey to pay off this debt, I set goal after goal, and the only thing I was consistent at was failing to hit my marks. If I promised myself I would pay $1,000 towards my cards, I would inevitably pay $200, or barely stay even. I would go out and spend large amounts of money for dinners when I promised myself I wouldn’t. Expensive wool jacket? Well, I know I shouldn’t, but what the hell.

I have a $300 pirate outfit in my closet, bought after I consumed several glasses of wine at a fair. Being the hit of some as-of-yet unplanned Halloween party doesn’t seem as cool as it did that night.

But I kept setting goals, and I kept trying. And when I told myself I would send the $600 government refund check to my credit card company, and I actually sent $500, it was still $500 less to worry about. When I told myself I wouldn’t go out and spend money on Friday, and I went out and spent $20, at least it wasn’t $50.

I’m not a sterling example of personal finances. I know that. But I think there are a lot of people like me out there, who just have to keep plugging away. Keep setting goals, keep trying.

It’s remarkable how great a success you can be, if you persistently fail enough.

Credit Card Debt.... Gone!

Hello? Anyone home?
My, it's dusty in here. Chilly. Feels like nobody has been around for ages. My last post was... five months ago? That's five lifetimes, in cyber-years! Oh dear, bread and beer, as my grandmother says.

What needs to be updated? Hmmmm.... it says that my credit card debt is $1458?! Nope. Let's shake that column out a bit.... mind the dust... and... done! Looks like I have eliminated all my credit card debt.

It didn't happen as fast or as easy as I would have liked. I flew to San Francisco to visit some friends, which cost money, and I bought a few things, some of which I probably didn't need, but some of which I did. I won't go into the details for now.

I have a small savings account, with about $350. It's not much, but I'm going to start filling that up. I'm looking forward to that cushion.

I'm still working full time, going to school full time, and sleeping part time. My work is still paying for school.

I go from seven in the morning until late at night, which is why I've been so delinquent in posting. I'm going to have to rearranged how I approach my finances now, seeing that I've accomplished a lot of my major goals, and that means I'll be back more frequently these next few months. I still have school loans, two which are in interest free deferment while I'm a student, one that I need to pay off. I just need to figure out the details.

I'll keep you posted.

Land and Sea Voyages

I bought the bike. It’s an intro level Bianchi with low-level Sosa components, but I took it for a ten-mile test ride last night and found myself yelling “Wohooo!!!!” as I dug into the pedals and raced down the trail (I made sure there was no one around when I yelled “wohoo!”). Outside of my car, this is the biggest purchase I’ve made, and unlike my car, I bought this outright. It’s beautiful. To me. Here’s a bad picture taken with my camera-phone.

Above the bike is a watercolor that my great-great grandmother’s sister painted. It’s of the ship that my great-great grandmother left on to come to the United States from Finland. She came as an indentured servant. Right after I took this picture, I found myself staring at that watercolor for a long time. I looked at the bike. I stared at the picture.

For the first time in my life, I started to really ponder the sacrifices generations of people made so that I could live the life I’m living right now. This isn’t a post about feeling guilty about buying the bike—I’m happy I bought the bike. Those generations of people would be happy I bought the bike. I just wondered what they would think of me now, in general.

Maybe this is a post about growing up. I guess I’ve been thinking about that, lately. At my grandmother’s 90th birthday earlier this month, it kept hitting home. Staring at the picture last night, I felt this sense of obligation. Not a crippling obligation, but an almost uplifting obligation. It was as if someone tapped me on the shoulder and whispered a secret in my ear. It’s like they said: “We’re on this really long journey together, and you just have to get this boat a few more miles across the ocean.”

I actually felt a little embarrassed, thinking about my debt and all the time I’ve wasted in life. But not horribly embarrassed. There have been great achievements and great failures in the life of my family. My great grandfather on my mother’s side was a prominent doctor and a state senator. His son (my grandfather) became very wealthy during WWII, and then lost his money after the war. My mother had a rough life, and in the big picture, that leaves me (and my sisters) the job of picking up those pieces and moving on.

But moving on to what? We’re all educated. We all have good jobs. It’s an exciting thought for me, all the sudden; the biggest—and maybe always the only—goal in my life. As I ride my bike over the Memorial Day weekend, cruising around the perimeter of Minneapolis and Saint Paul, I’m going to puzzle through what this might mean to me in the greater journey I’m, apparently, just a part of.

Financial Notes

Feeling a little overwhelmed by money and life, lately? Me too. I’ve been trying to do too many things at once. I need to take a step back and ask myself “what can I get done?"

Let me ramble about some specifics for a minute.

I have approximately $800 in the bank to “spend” (meaning, I have other monies sitting around, but that’s set aside for food and gas, etc.)

I have some financial hurdles in the next month:

1.) Moving

I’ve decided to use all my monies in June to pay for moving. That sets aside about $1,700. What does that buy? I include rent and a down payment in this figure, which will be around $1,200-$1,300. That leave about $400 for the move itself, which is probably correct. I’ll be doubling-up with my GF this time, so we’ll split the truck, etc.

In July, I’ll get my $550 deposit back from my old place, which I can then turn around and put towards my last credit cards.

2.) Bike

If I had an infinite amount of time in life, I would put off the bike for a few months when I have all my credit cards paid off, but I don’t have an infinite amount of time. Summer is here, I only have a few months of good riding weather, and getting in shape isn’t one of those things one should put off. I’ve done my homework, checked out everything online, went to five local bike stores, and test-driven about eight bikes. I found a new bike that I like, on sale for $750, at a store that seems to be pricing things under the competition. They have a friendly, knowledgeable staff who went the extra mile to make sure I found something that fit, in my budget range. I’m not thrilled about the components, but I can upgrade them next year when I’m more financially solvent.

Oh, I forgot to mention, I'll be able to sell my current bike for ~$400, so the cost is significantly defrayed.

3.) Credit Cards

If you look at the ticker on the right sidebar, you see that I have $1458 left on my credit card. I’m so anxious to just pay this off right now, but if I do, I’ll just end up putting more money on my damn cards, at a higher interest rate than is on there now. I just need to take a breath. I can get this paid off by the end of July. Waiting is the smart financial decision.

4.) Future School Loans Complicated By A Credit Card Mistake

I have to pony up the cash to pay for a class this summer. I’ll (very soon) have to do the same thing for next semester. I was planning on putting these loans on my Discover card (I have a 0% purchase rate for the rest of the year), but I made a credit card mistake. Not a huge mistake, but one that just ticks me off. When I was looking into buying a home, I needed $3000 on hand to pay for some fees that I would incur. Knowing I would get this money back, I decided to put it on the same Discover card using a transfer check. I ate a $90 balance transfer fee to get a 2% rate. I didn’t get a house, so I paid the money back, called the $90 a wash, and was set to walk away happy.

Here’s the problem: I’m floating school loans on that same card. They’re at 0%. I have to wait for my grades to come in before my company will reimburse me for the loans, and by that time, I’ve already put the next semester’s tuition on the card. Some of you know the answer to this riddle, and I have to say, in the back of my head, I did too. The issue is, that $3000 at 2% is the last thing that my card will pay off, because it’s the highest interest rate, and because I always have over $3000 floating on that card, I’ll perpetually pay $60/year in interest, or $5 a month. Boo hoo, right? Yeah, well, it gets on my nerves. I haven’t figured out the answer to this dilemma, yet, but writing about it at least helps me to lay out the problem. I’m going to sit on this one for three more months (giving myself some breathing room to move), and call it a $15 learning experience. Grrrrr…..

5.) Miscellaneous Expenditures I’m Not Tracking

I’m not awesome about recording “extra” expenditures. Here’s some that I’ve recently added that take a large-ish nibble out of my pocket book.

$5/month to the Grameen Foundation. This money subsidizes micro-loans in developing countries.

$10/month College Donation. This money subsidized my alma mater, underage drinking, etc.

$27/month SmartyPig savings. Did I mention I have a savings account? Wohoo! Now I just have to keep from spending the money. I’ll write more about SmartyPig later.

Little payments add up to $43/month, which ISN’T insignificant.

That, and lately whenever I have too much to drink, I donate $25 to my favorite politician. Some people drunk dial, I drunk donate. Sue me.

Okay, that’s enough thoughts for today. This has been good, and I can look back on this post, laugh at myself a bit, and feel a little relieved that I’m not in a financial catastrophe. Thanks for listening.

What's In A Bike?

Holy post! I meant to put this up a few days ago, but it took me SO long to do all the research. I'm going to put a "links" section at the end of this post, to summarize all the great sites I used to get this information, but for now, I wanted to get the main article up!

* * *

I’ve been thinking of buying a new bicycle.

About two years ago, I purchased a very nice Cannondale R500 road bike on Craigslist for $350. It was used, and it would be perfect for my needs, but it is WAY TOO BIG. I had a really fun season riding it, nonetheless—I competed in my first “real” triathlon, and I got a lot of other use out of it. It’s not a good idea to ride a bike that doesn’t fit you, however, so it’s time for me to get a new set of wheels.

After perusing the local bike shops, Craigslist, and a variety of other online retailers, I realized I didn’t know what the hell I was looking at. I knew that some bikes were pretty and cost $3,500, and some bikes were pretty and cost $600. I knew gear sets seemed to be very important, but I didn’t know why.

I’ve just finished doing the necessary homework so that I feel comfortable walking into a store again. Here’s a few days of web-surfing, condensed. It’s not exactly “everything I need to know about road bikes,” but it’s a good start.

For the casual rider

Before I begin with some of the nuts and bolts of the bike-buying business, however, let me qualify this article by stating that I’m an amateur biker, and I get out enough to know I need a machine that will last a few years and a few races. If you don’t bike more than 10 miles a week, I think you can happily get by with the cheapest bike in a reputable bike store. Pick one that looks nice. Get it fit for you (this should be free with purchase, but if it costs a few bucks, it’s worth it). Modern bikes are marvels, and the trickle-down affect of high-performance technology will ensure that unless you’re trying to shift gears while you crank up a hill in a race, you probably won’t have any gear slippage, and the parts will probably last you for years. If you wear a bike out, don’t get angry, consider it an accomplishment, and read on! You need a higher class bike, and I might be able to help you make the right economic decision.

Gears

Shimano. Oh, Shimano. You’re on all the bikes, and all your different styles look the same to me. What makes one Shimano gear set different from another? What’s the difference between Shimano 105 and Shimano Tiagra? Shimano Ultegra and Shimano Dura-Ace?

Weight, durability, looks, and price.

Shimano comes in two tiers. At the top are the Cadillac models. These are (in ascending order):

- Shimano 105 (awesome)
- Shimano Ultegra (really awesome)
- Shimano Dura-Ace (indescribably awesome)

If you’re just starting out, and you want to go top-of-the-line, you still don’t need to go higher than the 105s. The Ultegra and Dura-Ace are for the top-level professional riders. Lance Armstrong used them. The Ultegra and the Dura-Ace are slightly lighter than the 105s—about 6 lbs compared to the 105’s 7 lbs (that weight applies to the full gear set—check out Shimano’s site to get an idea of what a full gear set includes). Also, the Ultegra and Dura-Ace are slightly more durable, but again, if you somehow manage to wear out the 105’s (you won’t), the bragging rights are worth the inconvenience. This is a good thread that talks about the difference; what sealed the deal for me was the biker who put 10,000 miles on a set of 105s and Dura-Aces, and says that the 105s are as high as he’ll ever go. Some people describe the Dura-Ace as a smoother ride, but most people say it’s not worth the money, unless you want bragging rights.

But wait! Shimano has a second tier of gear sets (again in ascending order):

- Shimano 2200 (just fine)
- Shimano Sora (darn good)
- Shimano Tiagra (super great)

Again, the difference is weight, durability, looks, and price, but let’s put this whole conversation into perspective. My current bike is nine years old, and it has Shimano RSX gears on it—that’s the latter-day equivalent to the Tiagra. When you go to a store, everything you see will have nine years of advancement over this technology, and you know what? My bike works great. I put a heavy season of commuting, pleasure riding, and “racing.” I came in about middle-of-the-pack in the triathlon I competed in, and it wasn’t the bike that held me back. I was happy with the performance. I’ve been test-driving new bikes, and yes, I see the difference in shifting for the higher-end components, but it’s not something that would affect my commute, training, or racing. I would personally shy away from using the Shimano 2200 gear set on my main components (the deraulleurs and the shifters), but that said, you can get a great bike at a really reasonable price ($500-$1000) with these gear sets.

When you finally walk into a bike store, you’ll probably see a variety of components on a single bike—they mix and match when they assemble them to keep cost down, putting higher-end components on more-crucial part. It’s helpful to know the reason why the bikes are priced where they are.

Frames

Frames come in three varieties: steel, aluminum, and carbon. High-end bikes used to come in titanium, also, but that’s a quickly fading fad, as carbon and aluminum now offer everything titanium once gave you (weight and durability), but at a much-reduced cost.

The difference?

Weight, rigidity, and cost.

Most people don’t like weight in their road bikes, which is why steel is out of fashion. There’s always a caveat, however! It pays to test drive steel bikes—they’ve improved the build-technologies so steel frames can be made fairly light, now, and they’re cheap. You might find the weight difference between steel and aluminum to be too minor to quibble over. However! You might not even find a steel bike at the bike shop. Most road bikes are made from aluminum—even the less expensive models.

So that leaves us with carbon and aluminum, and seriously, don’t buy an all-carbon frame for your first bike. That’s such a poser move. Carbon is really expensive. Aluminum is the material of choice for intro riders. It’s light and fast.

It’s also very rigid.

What does that mean? More importantly, why does rigidity matter? Carbon has more flex to the frame, and that flex translates into a smoother ride (really). However, when you’re peddling a carbon bike, some of your energy is used-up flexing the bike, whereas with a stiffer frame like aluminum, that energy goes directly to peddling. Riders often say that aluminum is faster.

A lot of frames are built with both aluminum and carbon components, however. A popular package: the front fork (the part that holds the front wheel) is made of carbon, as is the seat post, and the rest of the frame is aluminum. I’ve been testing bikes, and I like this hybrid option. It’s cost effective, and from what I’ve seen, it really does make the ride smoother.

Tires?

I don’t really know that much about tires, except that my friend who weighs about 220 has to worry about them, because he’s heavy enough that he blows out cheap tires, and I weight about 177, and I’ve never blown out a tire. Eh, this will probably come back to haunt me. Don’t take that as an actual review.

Summary

I read up on all this stuff because I felt stupid when I entered a bike store. I was intimidated by the knowledge of the sixteen-year-old bike monkey behind the counter. I’ve found that taking a test ride is more important than reading any of this, but I wouldn’t have known which bikes I wanted to test ride unless I’d known something about the components.

I was talking to my sister a few months ago when she purchased her most recent bike. She bought one off Craigslist—it’s a stock bike with cheap stock parts, and she loves it. She wanted to get in shape, and we decided that the upside to crappy bikes is it takes more energy to ride them, so you get a better workout. If you’re starting to consider all those ultra-light components and frames, here’s a quick test that I think is worth taking!

1.) Stand in front of a mirror.
2.) Remove all your clothes.
3.) That bike is only a small portion of the weight you’re lugging down the trail. Now, is that 4 lbs difference for the $1,500 bike really that significant in the whole package (that being you and the bike)? Hmmmmmm….. If you happen to be staring at a Greek God/Goddess with rippling muscles, and you know that you need to lose that “bike weight” to compensate for the muscle mass you’ll be putting on, then by all means, drop the cash. If you’re like me, however, it might be best to look at the less expensive bike—I know a few other places I can shed the weight.

Happy Biking!

I Won A $50 Smartypig Gift Card!

For such an errant personal finance blogger, I've certainly had a nice streak of luck the last couple of weeks. First the press in Spain, and now I won a $50 Smartypig card from 2million over at 2 Million's Personal Finance Blog. 2million hosted a comment contest last week--to win, you had to subscribe to his blog (I already was) and write what your financial goals were. I was a little flippant (now my face is red!) and wrote:

I read you via my Google reader. My financial goals? To take over the world! But first I'll settle for paying off the rest of my credit card debt (just $1800 to go!) and using my Smartypig account to get an emergency savings in place.

In other news, my GF and I are moving in with each other in July! Big steps! We've been dating for three years now, and we're happy. It will be a nice financial relief for me, because I'll pay about $200-$300 less in rent/month, and can carpool with a friend who lives in the area I'm moving to.

That's all! I'm off to write.

International Press!

I glanced at my site statistics and saw an unusual bump in readership about two weeks ago. It turns out I was mentioned in a widely circulated Spanish newspaper, La Vanguardia! Isn't this a strange world?! I laughed and told my friends that I've skipped right to international news.

What did La Vanguardia say about me? I used Google's handy translator to read the article (here's a link to the translated article--it's not perfect, but you get the drift). Essentially, it relates the monetary woes of the US citizenry and talks about the resulting proliferation of PFBs. It highlights my blog as an example of a success story! Awesome. It also talks about Tricia over at Blogging Away Debt. Thanks to the author, Eva Gonzalez Cervera!

Per Wikipedia's article, La Vanguardia has been around since 1881 and has a readership of over 200K.

Hey Stranger...

This weekend was my grandmother's 90th birthday. She's been a benevolent matriarch to her very large family, and is loved by so many people. We hosted a party in the community center in her small town, and over 200 people showed! How great is it to be so appreciated?

My grandmother is frugal, something she learned in the depression. It's a gift, even though it's a gift she'd rather not have learned. She had a rough life, but she made the most of it. Too many stories to tell--I spent the weekend with around 80 relatives!

Just a quick financial update before I work on my novel--I just paid off my Discover card*! I'm on track to having all my cards paid off by end of July!

That's all for today, folks. I know that I don't update my blog that often, but I needed to get my finances in order to work on other portions of my life, and now that I'm more financially stable, it's important that I keep my eye on the ball! I'll keep blogging, of course, and I'm sure I'll occasionally increase the rate, but I just wanted to say (to all 56 of you who have this on their feed!) that I really appreciate the chance that this blog has given me, in life. It's really gotten me back on track, and every reader and commenter has been a great moral support! Thanks!

* In honor of all the credit card "small print" I've read the last few years, I'll just note that I "paid off" everything except some school loans I float on the card, but that amount (about $3000) is at 0% and my work will reimburse me after I get my grades, so I don't count it. I feel this is a "proper" use of my card.

Carnival of Personal Finance

Thanks to The Happy Rock for hosting this week's Carnival of Personal Finance!

Freelance and Contract Technical Writing Rates

I've always let people pay me less than I'm worth. I was recently given a raise, but it only came after I sat my supervisor down and told him I'd quit if they didn't promote me and pay me more. Despite 12% in pay increases this last four months, I'm STILL $6K a year under market value. I've decided to start looking for another job. I don't think I can dig myself out of this monetary hole--they've got me by the numbers, literally. Once you get behind your pay, it's hard to get back on your feet without a radical change.

Because I want to get the right salary this time around, I've done some research to figure out what I'm worth to the market. Here's some of my mistakes, experiences, and numbers to go with both.

MY TIME AS AN INTRO WRITER, AND WHAT I WISH I HAD KNOWN

When I first started technical writing (six years ago), I came to the market with no knowledge of what I should ask, and I was seriously taken advantage of. I was paid $17/hour by a contract house, but as a intro contract technical writer in my area (the medical device industry), I should have gotten $25-$30/hour. I was fresh out of college and didn't know my earning potential. After getting $9/hour at the movie store, $17/hour sounded great... until I realized how much the guy next to me was making, with less-relevant educational background. Because I've been around for a while, I know that six years ago, most of the contract houses in my area got $50/hour for an intro writer--that was a negotiated rate. Keep this number in mind if you're negotiating for a contract with a technical writing house.

When I was hired-on full time to my company, I started at $40K a year. This was a reasonable salary, but I probably should have tried for $45K a year. The next mistake I made was not pushing for a promotion sooner, but that's another story.

HOW MUCH SHOULD I ASK FOR AS AN INTERMEDIATE/ADVANCED LEVEL WRITER?

I have six years of experience under my belt, a science background from a top-notch college, and a ton of project management experience. I'm in a different league. My job description has me at a Level II Technical Writer. If I were to apply as that, the median is about $57K a year, and the 75th percentile is at around $64K. However, I do work that requires a specialized knowledge--it's some of the most complicated technical writing out there. If I stay in this area, and apply for Level III jobs, which I think is fair, the median salary is $68K.

Here's my problem: because I'm getting paid below market value right now, if I walk into another HR office and tell them how much I'm getting, they'll try to pay me below market value again. My thought, then, is to work with a contract house for a while, and try to wipe the record clean. I had some trouble finding out how much I should ask if I'm working for a contract house. And remember, this is where I got screwed the first time.

Freelancers with my level of experience ask between $50-$80/hour (the median seems closer to $70), but (to me) this seems different than working through a contract house, as the contract house theoretically does a lot of footwork finding you a job. Because I wasn't certain, I located a writing contract house in a different city with a similar pay-range, posed as a company looking for someone with my level of experience, and asked for a quote. Ethical? Well, they're going to try and underbid me, and what's ethical about that? They said I would cost $85-$95 an hour. That, then, gives me a real number to work with. I think my rate should be $50/hour (if they're getting me work), and starting negotiations at $65/hour seems appropriate.

This information is based off my own casual research and isn't meant to be a definitive guide--feel free to leave comments if you think I'm off, or I'm missing some information.

SOME HANDY LINKS I USED IN MY SEARCH

I can't seem to retrace all the articles I originally took notes from--if anyone has a page to add, email me or throw the link in the comments.

- Monster's Salary Search

- The Society For Technical Communicators (membership required, however you get access to their annual salary survey)

- Peter Kent's Article: Making Money In Technical Writing (outdated, but helpful)

- Writing Assistance's FAQ Page

I hope people find this helpful!

Housing Woes Force An Impulse Buy

At 7 o’clock tonight, the road was busy. Much busier than I remembered when I went by this weekend. The house was small and cramped, although it was nicely painted. Or what we could see with the flashlight seemed nice. There was no power, so some of the shades were hard to make out. It smelled of cigarette smoke, but my real estate agent was mumbling something about an ozone machine that would get the stench out. Every time a car drove passed, the rumble echoed through the empty rooms, and there were a lot of cars. My girlfriend was trying to look enthused, but it was depressing, and cold, and far away from where we wanted to live.

“I don’t think this one’s going to work, Nancy,” I told my real estate agent, who I had dragged out at 7 o’clock to see a place that I now realized had no potential.

After a long drive in which my girlfriend tried to put a positive spin on things, I dropped her off and went to a coffee shop to think. I started to feel really bad for myself. This sucked. I couldn’t afford anything.

So that’s how I found myself wandering Target at 9 o’clock. Not just wandering. For the first time in my life, I really wanted to buy something to make myself feel better. I stood there, knowing that I had enough cash on hand (or in my reserve account) to pay for anything in the store. I could afford anything. Bose stereo system? No problem. For six months, I wanted the one that hooked to my iPod. The biggest TV they had? I don’t watch TV, but what the hell. I perused the aisles and sat in the leather chair. I could do better, but this one would work. $400? A steal.

Then I made a purchase. Absolute top of the line. Total impulse buy, and I feel great about it. Not a speck of buyer’s remorse. Oak handles, stainless steel fittings, and almost three yards of braided nylon.

After an invigorating 100 lap test drive of this $5.37 work of art, breathing hard from excitement and flushed with adrenaline, I frivolously threw another $100 at a credit card bill. Oh, I might have to cut back for a week, I may have to pack a few lunches to work, but you know what?

I’m worth it.

Carnival of Personal Finance

Thanks to MoneyNing for this weeks Carnival of Personal Finance. Go take a look at the selections everyone posted. There's some good reads.

AMEX Paid Off!

I have now paid off my Amercian Express card. $255 and WHAM! Scared you? Sorry about that. Wham! My Amex card is now paid off. Can I say that again? Wham! My American Express card is now paid off.

Midway through May, pushed by the fair winds of determination and the helpful $600 gust from our Federal governement, I will have completed paying off my CREDIT CARDS.

All of them.

wham.

Phone Calls Saved Me $185

JD over at Get Rich Slowly recently wrote a blog article about how his friend saved $57 by making a phone call. Well, I just made three phone calls and made $185 dollars. One call was pleasant, one was eye-rolling, and one was infuriating, but they each offer a lesson.

$20 IN FEES RECOVERED FROM WELLS FARGO

I want to preface this one by saying that I've had some serious gripes with Wells Fargo in the past, and I know of one incident where a woman who overdrew her account to pay for her husband's funeral was told by a customer service rep that "cancer is not a bank error." I kid you not--the customer service rep bragged about this to me over a beer (our last beer). That said, Wells Fargo customer service has improved immensely. Within the last year, and I think within the last six months, the customer service staff has obviously gone through some serious soft-skills training. I know this, because for a while I was getting the same tag lines from each rep: "That was a very good suggestion," or "I really appreciate that input." And even though it was obviously prescribed, how much nicer is it to have a human being tell you "I appreciate your input," rather than, "I'm sorry, ma'am, but cancer is not a bank error"??? So my grudging bravo, Wells Fargo. You don't suck as much as you once did. You actually were the "pleasant" call!

So, how did I save $20? I called Wells Fargo because my account had two phantom overdrafts that the system wasn't savvy enough to pick up on, and my overdraft protection account dipped into my credit card, charging me $10 a pop. I was transferring money between two Wells Fargo accounts (a checking and a savings), I didn't carry the 2, and accidentally moved $2500 instead of $2400 from my checking to my savings. This happened at 2AM. I figured it out immediately and had the accounts straightened out by 2:05, but it still dipped into the overdraft kitty (this was only one of the two incidents, but the other was similar). The bank is supposed to figure this out automatically and correct it, I've been told, but there's a glitch in the algorithm and it never credited my account for the mistake. Anyway, I called and after a few minutes of explaining, they (pleasantly!) agreed to drop the charges. I also asked them to pass along to there tech people that this glitch exists, and they pleasantly demurred, so I doubt the glitch will get fixed, but oh well. FYI, watch out for this glitch if you're a Wells Fargo customer!

$35 IN FEES RECOVERED FROM CHASE

I cancelled a Chase credit card four years ago. I paid off the card (actually, I transferred the balance, still being in the 'dark' financial years), called the company, said See Ya!, cut the card up, and then went on my merry way. I didn't hear anything from them, until about a week ago, when I got a bill in the mail.

Huh?

I couldn't for the life of me figure out what the heck was going on. It was a $35 charge on an account I had no recollection of opening, with a horrible interest rate and a yearly fee (hence the balance). Um... no. Then something starting nagging on my memory, and I realized I was guilty of a very errant lapse in judgement. I may have screwed up the card closure, but that was years ago and I'm not going to get down on myself for that. This is where I screwed up: the last time I was looking at my credit report, I saw that damn card listed as a open account, squinted my eyes, shrugged, and didn't follow up on it. This was a serious lapse in judgement. It turned out to be a card that I opened, but it could have been a case of identity theft and should have triggered four alarm emergency action on my part. I should have called and called until I got things figured out. But I didn't. I squinted my eyes, shrugged, and congratulated myself for having such a nice credit score. Argh. How foolish was that? All is well, but it could have been disastrous.

I called the card company and got things straightened out. We don't know why my card didn't get officially cancelled, but Chase lost track of me for a few years and then my address came back up on the radar, hence the re-initiation of the account, and the odd bill. I laughed (kindly) when the guy said I was responsible for the charge, and told him (again, kindly) "not a chance in hell." His attempts to get me to pay up were kittenish (the eye-rolling call), and eventually he agreed that it was near-impossible to justify the charge. As a side note, however, I actually kept the card. Because of it's phantom status, it survived the Great Credit Card Purge of '05, where I repositioned all my old loans into cards with better interest rates, and cancelled the old cards. Because of its incognito status, it's my oldest credit card, and a surprising lynch pin in my credit history. I had them change me over to a card with better terms, and Chase and I will probably live happily ever after.

FRS and I, alas, will not.

$130 WON IN AN UGLY ARGUMENT

I ordered a sample product about a month ago from a company called FRS. Confession: I'm kind of a sucker for health gimmicks. FRS makes a drink with tons of antioxidants and a tiny amount of green tea extract (equal to half a cup of green tea). Lance Armstrong either runs the company or chairs it, I can't remember which. If you happen to order the free sample, which comes with a variety of different forms of this drink, and wonder why they have a little medicine cup firmly attached to the concentrate, it's because I didn't think it was concentrate and downed the entire container in a few gulps, and then proceeded to vomit profusely. At work. I wrote them a letter and explained the labeling issue, and they started putting those little cups on the top of the concentrate. Anyway, whereas I thought I was paying only for shipping on the free sample, it turns out I missed the fine print that said I was also agreeing to have them ship me $65 worth of product every month (unless I called to opt out). Or maybe I did read the fine print, but forgot after all the back and forth with respect to the vomiting conversation with their customer service (who weren't very nice about the whole thing--I wrote them a humorous email explaining that it was my fault, but they might want to look into the labeling issue, and they replied back that they had professionals design the original package, thanks for the input. I wrote a more pointed letter in response).

So a few weeks later I got this package in the mail and saw the bill on my credit card, and I called the company. I got an answering machine and left them a message, telling them to get back to me so that we could get this figured out. The didn't get back to me. Over the next month I called twice more, left two more messages, and didn't get a reply. I did, however, get another package in the mail and another bill on my card. I called again today and finally got an actual person, who tried to cheerfully tell me I was going to have to suck up the charges. That one degenerated into an ugly argument right from the start, with vague hints of legal action on my part and a hurried escalation to management. They said, "I'm sorry, I can't...", and I said, "I'm sorry, yes you can...". Etcetera.

Fifteen minutes later (and I seriously wasn't going to give up), they credited the money back onto my account. Then they had the nerve to ask me what I thought of their product, and would I like a discount on future purchases? I paused, breathed a few times, and said I was fine, thanks, but they should probably cancel my account.

It's a pity, really, because I like the sugar free powder drink. Awesome pick-me-up in the morning.

SO THAT'S IT!

$185 dollars. Some of it wasn't easy, but in the end, it wasn't about the money. In the last instance, I wasn't nice, but then I've run into too many customer service reps who are beyond "not nice." They smile and send you through hell, hoping you give up and go away. I understand it's not an easy job being a customer service rep, but then it's not an easy job living in an economy where companies try to take your money through technicalities, and every time you turn your back you find yourself burdened with another $5 fee or fine. So talk back, be strong, and keep an eye on your money. It is your money, no matter what they try to make you think.

Housing, Credit Cards, and Time Management!

The House Hunt
Tomorrow night I'm going out to look at another duplex. I drove by the property, a big red-brick building with nice trim, but it's not in the greatest section of town, and they don't seem to be making that much in rent so I wonder what the inside looks like. We'll see. It's only about $230k, which (with taxes and insurance) would come to about $1,700/month in payments. They only get $750 per unit, each of which has two bedrooms. That's pretty cheap, even for the area. Most two bedrooms seem to go for around $1000, so one thing I want to determine is if there's something seriously wrong inside, or if they've just miss-priced things.

Credit Card Update!
So, in about a month and a half, I should have my credit cards paid off! Okay, not ALL paid off, but the rest of the money floating on the cards is accounted for. I have about $3.1K in school loans that my company will reimburse, $2K in house earnest money that's sitting in my bank account for when I need it, and $800 for my sister's plane ticket to Singapore. The earnest money will be rolled into my home loan and returned to me when I buy the house. I'm only buying at well-below market value, so while I know this is a risk, it's calculated, and I'm willing to take it. I'm alright floating my sister the money for Singapore--it's at 0%, and she's paying it off at $120/month. She's getting BETTER with her money, but she needed some help for the trip. She works 80-100 hours a week, so she really did deserve the trip. She's 35, and as a resident in Boston, she doesn't make that much money.

May should be a good month, financially. It's one of the two "magic" months in the year where my bi-weekly pay period affords me three paychecks. That, and the big tax reimbursement will be coming, so there's another $600.

Time Accounting
I was sitting around thinking of how I've never been that good at making schedules and sticking with them. If I set a date for when something has to be completed, I procrastinate horribly, and I spend too much time worrying about the process. This has gotten worse at work because I'm in charge of several groups and multiple projects, and I don't feel like I get anything done, anymore.

I've decided to look at my time more like I look at my finances. I used to run into the same problems with finances as I do with time: I set goals as to when I wanted to be debt-free, but I never just sucked it up and started paying the debt.

At work, I'm no longer going to give people "completion" dates, because I ALWAYS blow by these. I'm just going to tell them how long I'll work on a project, then I'll hand back the project after that time has passed, no matter how far I'm into it. I think, in reality, that I'll finish up more work this way, and I won't beat myself up and spend to much time on any one assignment. I think it's going to make me more efficient. I haven't worked out the details, but I'll update you as to how this new method works for me.

A Little Perspective

When I started this blog, I intended it to be a dialogue about my writing as well as my finances. Over time, I mostly stopped talking about the writing, which I think was a smart decision. Writing about writing makes me incredibly self-conscious, and feels awkward. Today I'm going to take a moment, however, to talk about what I've accomplished with my novel, because in many ways that journey correlates with my financial journey.

I just found a draft of my novel from this time last year. In that draft, I was still laboring under the delusion that I would use the first draft of my novel as a framework, and 'bulk it up' for the second draft. I laughed when I looked at the amount I accomplished since then. Only about 70 pages of that old draft survived. I wrote almost 400 more pages between then and now.

I get down on myself when I look at the novel because of all the revisions it needs, but I just need to remember how I ended up with that massive manuscript to begin with: one page at a time. I wrote almost every day. Sometimes it seemed like a snail's pace, but realistically, those small additions created a giant product. It's like my debt. It never seemed like much, but a few dollars here and there swept $12,000 away and put me (mostly) back on my financial feet.

I think I need a Do-Over Day. I have these occasionally. Sometimes I get overwhelmed, not just with the things I need to do, but with my accomplishments. Not only does the journey ahead seem incredibly long, but it also seems impossible to top last year. I feel like I need to do even better, when in reality, if I did half as much this year as I did last year, I would still being doing great!

I can't get in my own way. I need to just shout Do Over! and put everything back in perspective. In this journey, it's still just one page, one dollar saved, one step at a time.

Boots On The Ground House Hunting

I'm still holding out hope for some properties in the Crocus Hill area of Saint Paul. This is an area that would have been great to buy in about five years ago because it was still possible to get a house at a reasonable price. Historically, the intersection of Selby and Dale Ave in Saint Paul was the worst part of the city. About twenty or thirty years ago, in fact, the city of Saint Paul actually owned a large percentage of the property in this area (in the past, the city bought condemned property), and they GAVE the houses to people who promised to fix them up. I think they even got low interest loans or grants to revitalize the neighborhood. It worked--big time. Thousands upon thousands of hours of sweat equity revitalized this area of town. The crime problem has been mostly taken care of. I'm looking at a narrow swath of streets that's sandwiched between two affluent neighborhoods--three blocks where the housing is affordable. To the South is Summit Avenue, several miles of old brick and Victorian mansions, and to the North is Selby, which is just beginning to understand it's property value (a recent developer just put in brick townhouses selling for upwards of $450k).

However, today I'm spending some time driving the city. I'm checking out the Northeast, which everyone says is the new "hot" spot. I can afford a lot of property here, but I don't know about the neighborhood. I've mapped out the houses and I'm driving the area. Right now I'm in a coffee shop in Southeast. My writing group meets here sometimes. I want to check out the neighborhoods before my realtor and I start looking at specific properties.

House Deal Fell Through

My first housing deal fell through! The seller pulled out because she wanted almost the same amount she paid for the place, which was high even for last year. She's decided to go into foreclosure instead of cutting a deal with the bank. I think what happened was this: if she sold to me, the bank would force her to pay some of the closing fees. If she foreclosed, she just walked away and didn't have to pay a dime. I found out afterwards that this was the third deal she turned down.

It's interesting because about five years ago, I could see myself making the same bad decision she did. She only saw the few thousand dollars she would have to pay to get herself out of the hole she dug, and she didn't see the positive qualities of the deal. Now she's out a house and she destroyed her credit, the bank will have to foreclose and probably won't get near what I offered, and I have to keep looking for a place. Her realtor quit and the bank is apparently in a rage.

Defining Short Sale -- And -- A Talk With My Realtor

I had a talk with my realtor this morning and told her in a very polite but direct manner than I wanted to be kept more closely informed on the proceedings. She was very nice and forwarded me a three or four emails; part of a conversations she's having with the seller's realtor. I learned a few things--the seller is planning to haul away the dozen old windows in the basement, and also the large appliances tucked next to the garage. That's a relief, as I had already planned on doing that on Day 1. More importantly--the bank has given the OK on my offer, and it just needs to be signed by the seller. Again, this is a short sale, so the bank is the party that matters most (from everything I've read), as they're going to eat the loss. Here's a helpful Wikipedia description of short sale:

"A short sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic hardship on the part of the mortgagor. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale."

A short sale comes right before a foreclosure (in fact, this seller will foreclose in six days if they don't except my offer). You have to be on your way to foreclosure, generally, to qualify for a short sale. I have a feeling the rules are changing daily with these deals, and wouldn't be surprised if the banks were leaning more heavily on the original owner to pay back some of the debt, and not just absolve it completely. I'm pulling that from my magic hat, however, and I don't know if that's true. In practical terms, what this all means to me is that I'm simply waiting for the seller to sign a piece of paper, and then the deal will essentially be sealed. I honestly think the selling party is dragging their feet in the hopes a better offer will come through.

I have to say, I know the financial weather is horrible right now, but this is a very exciting time to be getting into the market. I guess I just like storms.

Closing On My First House: Limbo

I've been waiting impatiently since Friday evening for my agent to get back to me concerning the house. She called me at four today (Sunday), and explained why we aren't signing anything yet--the selling agent was in a car accident over the weekend. She spent some time in the hospital, and apparently the people in her car are STILL in the hospital, so it must have been bad. The selling agent sent a two line email to my agent saying something to the affect of "we'll get the information to you tomorrow," but we don't know if that means the signing papers, or a decision as to whom they've gone with. While I wish I had more decisive data, I understand the circumstances. I just wish my agent was more proactive with getting me information. Even if she hasn't heard back from the agent, I want to hear that. While it's not a huge deal, in terms of real estate, $237k is still a lot of money, and I want better communication.

I went to an Easter brunch with my GF. It was at her aunt's place. Because several members of her family are in real estate, they talked through the deal with me, and agree I need to jump on it. They suggested contacting the branch manager to get a better response from my agent, but my agent is my landlord (or she helps manage the property), and I like her personally, so I don't want to do that. Also, she's been really nice and responsive with respect to my place. Lesson learned, however. Think twice before using those personal contacts to do business with. I'm usually pretty good at driving a deal, but I can (and have) let people railroad me into decisions, and this is a case in point. I wasn't certain if I wanted to use this woman as an agent, but she was persistent and I finally signed and agreed. If I do this again, I'm going to have a short interview with several agents, quiz them on property details, and then choose the one with the best follow up to a few questions I ask. Sigh. Live and learn. If this goes through, and it might, I'll have to say it's more due to luck than effort.

Waiting Nervously

No word on my house offer yet. The longer this takes, the more disappointed I'm going to be if I don't get the deal. Yesterday morning, it was no big thing. Eight o'clock last night, I was wandering the aisles of Home Depot, pricing out supplies. On the one hand, how pathetic. On the other, I can install laminate flooring for only $500! What a deal! And it looks great. And did I mention the siding special?! Home Depot could install the whole house for $10,000, which is $7,500 less than I originally estimated. And I blush at the midnight internet cruising, oggling counter tops like cheap porn.

Then I went to bed and dreamed of buying the house, fixing it up, and building financial equity.

Alright. I'm hung over from my debaucherous night of domestic fantasies. I'm off to my writing group. They're reviewing the last bit of my novel.

Call Me Old Fashioned, But What Happened to "Run!"?

I recieved a little wallet-sized brochure from my company, on what to do in the event of an emergency. Most of the advice seemed sound: for fires, you go out, for tornadoes, you come in. Etc.

For bomb threats, however, this is what they tell employees to do:

1.) Keep the caller on the line as long as possible.
2.) If possible, alert a co-worker to call security.
3.) Try to get as many details as possible. Examples include:
- The reason for the call.
- What kind of bomb it is and what it looks like.
- Background sounds or identifying characteristics.
4.) When the caller hangs up, do not hang up the phone.
5.) Call security from another phone.

I started to laugh at "the reason for the call." Seriously? Come on people. What ever happened to a healthy regard for life, and the evacuation of the building? I know, bomb threats are generally a hoax, but still...

"Wait sir, you say there's a bomb in the building. Now, is that the reason for your call, or can I help you with something else?"

Earnest Money

I'm more than a little annoyed with myself. KNOWING I had to have earnest money for my loan, I still paid off some debt that could have waited. In order to scratch enough cash together for the earnest money, I used one of those checks that your credit card company sends out. I know. I feel like an ass, and wonder if I'm ready for a house loan if this is how I handle the situation.

Okay, so a bit of what happened yesterday.

After low balling the buyer with a $215 offer, they countered with $237. That's a serious discrepancy, but they're only getting $223 of that, because they have to gift me $14k back so I can cover the down payment. It's called a Genesis program. This puts my mortgage (and taxes and insurance) at about $1650 a month. I have a renter downstairs who pays $950. The rest of the mortgage would be less than my current rent. Also, my GF is moving in with me, and we're splitting the costs, so I'll essentially be paying $350 a month. This leaves me a significant amount of money to do upkeep (I'll have $1,500 'free' each month, after expenses), and I'll have about $50k equity in the house right off the bat. I know, that might disappear with the market, but at least it's a buffer.

With respect to the figures I posted yesterday, I was off by a lot. The furnace is only around $2500, and I think I can get the siding done for under $15k. Also, I talked to a home inspector and he said the siding has years left if I'm careful and keep it painted. I can get the windows repaired--I found a company that will do that for a fraction of the replacement cost.

So I'm taking the risk, but it seems like a reasonable risk and a good investment. Also, I'm glad I lowballed because I think they came back with an honest "low as we can go" answer.

WRT the earnest money: it's folded into the loan, so I get it back when the mortgage goes through (I double-checked with the loan officer). Using that check, I took a $90 hit for the initial 3% interest they charge (the amount is capped at $90), and the loan is at 2.9% while it sits on my Discover card. It was frustrating, but I think it was the right decision.

One other point: I did some shopping around for different mortgage rates, and I was pleasantly surprised at how shocked other companies were by the 5.5% interest I'm getting, for a 30 year mortgage. I had a family member in the mortgage industry go over the loan terms, and she said it's a great deal, and there are no funny costs associated with it.

That's all for now. I have to wait for a day or so because two other buyers were putting in bids. I wouldn't be surprised if I get beat out, but this is my first offer, and I'm happy with the initial attempt.

Making an Offer

So I'm making an offer on a duplex. I'm bidding too low, but I'm super nervous about the property and I want to protect myself. The duplex is about to go into foreclosure. The bottom unit is rented out ($950/month) and I would live in the top unit. The property is listed at $241K, but I'm bidding $215, with a Genesis gift program wrapped into it, which means the owner would "gift" me about $12,000 from the actual amount I pay him, so I can use that for my down payment. That means I'm essentially bidding $202. Here's why:

$280,000 (similar houses in the area went for this last year)
-$42,000 (15% property value loss: 10% last year + 5% conservative estimate for this year)
-$17,500 (siding: siding is crap, and while functioning right now, it needs to be replaced. Online estimates put siding at about $7 square foot with removal. House is about 2500 square feet of surface.)
-$4,000 (furnace: this unit has 2 furnaces, and one of them is 25 years old)
-$7,000 (windows: some of the windows could probably be fixed, but a few are fogged and they're all 25 years old, and not the best quality. I put this at 14 x$300 (small windows) + 4 x$700 (bay windows))
-$5,000 (it's next door to some kind of halfway house--it's a giant brick mansion, but it's still a halfway house. I didn't realize this the first time I looked at the property.)

= $204,500

The repairs I list are honest, but not necassary right away. They are right on the edge, however, and I don't want to risk it. I KNOW this is asking a lot (the guy bought this one year ago at $340k, but that was a lame deal), and I'm probably asking too much, but I was panicking last night and decided that I wanted to go way too low, and get laughed at, so at least I feel like I'm covered in case of all eventualities.

I put down $350 to lock my interest rate at 5.5%, with a one time "float down" option, to bring it down to a lower interest rate if one should appear. I have this interest locked for 90 days--even if I don't use it, this is worth the investment.

I'm bummed about putting in such a low offer, because I don't think it will be accepted, and the financials are nice even at a higher price. My GF wants me to jump on the property. At $241K (the asking price), my mortgage would have been around $1800, and as I get $950 from the bottom tennant, my GF and I would split the rest of the mortgage, each paying $450.

There are other deals in the world, however, and I don't want to jump at the first one I see.

I've Paid Off Almost $12,000 In Debt!

In the last year I've paid off just about $12,000 in debt. I wanted to think back a bit. I've been down on myself, lately, but looking at my numbers and knowing what I started with, I decided it was time to put things in perspective, and talk some about the last year, and my personal journey of debt reduction.

First off, just before I started this blog, I transferred some credit card balances to low or no interest cards. That was when I had about 9K in credit card debt, so I was getting killed with ~25% interest rates.

I was losing thousands of dollars a year to interest.

To get the better rates, I sorted through my junk mail, went online, and called around to an assortment of credit card companies. Several reps told me I could report my year-end bonus as salary, and doing that freed up some credit space on my maxed-out portfolio. Although at this point I often paid bills a few days late and ate hundreds of dollars in fees every year, I had been decent about getting things paid within 30 days of their due date for the few years previous to this, and my credit score had improved (your late payments don't get reported until after 30 days). My credit score was probably in the mid-600s at that point, so that and the reconfiguration of my salary allowed me access to the better credit card rates.

One of my first blog posts was to figure out how much debt I had.

Wait, you say, you didn't know what your debt was? Not even then. I couldn't have told you what my student loans were. I knew nothing about my car loan or my credit debt across my varied Visas (despite having just moved some big balances). I certainly didn't know the interest rates were for most of that! I wouldn't have been surprised if I had $50K in loans. When I first added them up, a few estimates put me almost $5,000 over the actual number--that was how little I was aware of my own money!

At this point, I lined up my loans via interest rates, made some charts (I put together this rather simple Excel sheet, if you would like to use it), and then I ran a scenarios to determine what payoff would get me out of debt fastest. I made some decisions, taking into account types of loans, interest rates, and psychological satisfaction of getting a certain loan paid off first. I learned that student loans can sit on your credit history forever, and banks don't blink at them. Car loans are similar, but my car was at a 9% interest rate, and that was eating a hole in my wallet. Credit cards look the worst to banks, but I managed to get most of the balances to better cards, as I mentioned, and decided to take a hit on my credit score and leave some of the bigger balances at low interest rates in order to get the car paid off quickly. Just a note: even if it's a low rate, high credit card debt isn't just bad for your credit score, it's just plain dangerous. Credit card debt is some of the most volatile debt out there, and rates can change at a company's whim. I just recently transferred a balance off a Bank of America card because I felt the company was trying to trip me up, and make it purposefully difficult to make payments on time. My automated payments weren't registering on the right days, and BOA said I was late (I don't want to explain the intricacies of this, but suffice it to say they were wrong). Three months in a row I had to call to get my rate returned to the zero percent I signed up for--they cranked it up to 29 percent!--at which point I cut ties with them. By this time, I had the luxury of a quick and easy balance transfer where I didn't have to pay the normal 3% transfer fee, but don't count on that unless you have a excellent credit score (mine was around 750 by then).

After making a plan on how to pay the debt off--what order to pay my loans off and how quickly--I had to buckle down and just do it. This was the hard part, because it suddenly became necessary to own up to my problems.

I couldn't go out with my friends like I once had, and I finally swallowed my pride and told them I was paying off (gulp) credit card debt.

That was tough. It was embarrassing. It was very very necessary. I needed my 'play' money to get the debt paid down, and I couldn't just put people off indefinitely without them thinking I was shunning them. I had to be honest and say "I can't afford that," and in the U.S. these days, that's a hard pill to swallow. For those of you with debt issues (and that's a lot of the country) I think it's a really important step to tell at least some of your friends and family that you're having money problems. You can admit it to yourself all you want, but until you tell another person, it's often not real to you. I confessed part of my problems to my GF, and told her that I was taking steps to make certain I repaired the issue. She shocked me (although only me, I'm sure), when she said she knew I was spending money too freely. She was having second thoughts about being in a relationship with such a horrible financial planner. I probably just managed to save my relationship by getting my books in order!

And then...

And then I came up with a hundred little ways to help myself stay on track. The most important step? I automated all my various payments through my bank's online BillPay service. Wells Fargo's BillPay is one of the few services I don't mind paying a monthly fee for. It costs me $5 a month, but they mail up to 18 bills (I think) which justifies itself in postage. It also centralized my bill-paying to one easy-to-use interface. Because I set it up ahead of time, BillPay knows when to send my bills out, even if I flake a bit. Also, I timed all the payments to coincide with the day I got paid, so I don't accidentally spend all my money for the month and then discover that my electricity bill needs to be paid.

I've done a few other things, of course. I've gotten better, although I'm by no means perfect, at making my own food instead of eating out. Some people would scorn me and say that I'm not any good at this at all, but compared to what I once was, I'm now a saint.

I try to avoid fees of any kind. I once paid an atrocious amount of money towards ATM fees. I would withdraw $20 twice a week from mismatched ATMs, getting hit with $2 from my bank and $2 from theirs, losing almost 20% of my money before it even got in my hands! That's over $200 a year, just because I didn't want to plan ahead and get my money from the right ATM! Now I go out of my way to get to a Wells Fargo ATM, and I set up an account with my work bank for the simple reason that I often need to withdraw money from their ATM, and I would get charged any other way.

That's about it. What it comes down to is determination. It's not fun to pay off debt. It's not sexy. It doesn't (or didn't) give me a thrill. But it has deeper satisfaction. The first year went by quickly, and I'm sure the next will too. Soon, I'll have to start looking at what's next, and having the luxury to plan ahead is wonderful.

Today

Sorry about the occasional self-pitying melodramatic posts. If you meet me, I'm normally stable to the point of stoic, but I have a flair for melodrama in my personal thoughts. Anyway. I'm looking around for duplexes right now--I found one just off of Summit Ave. in Saint Paul for $240K, a bit more that I want to pay, but also $50K below market value, and in a really nice part of town. Also, the GF likes it, which is important because that means she'll move in, thus helping with a few hundred a month. Not that this is any indicator of anything (these days), but it sold for $343 last year. Needs a little cosmetic work on the inside, but nothing pressing. My real estate agent is also my landlord (for now) and I'm going to see if she can give me a deal on moving out early. We'll see.

It's EXCITING looking for places. Probably too exciting! I'll have to temper my enthusiasm. It occurs to me, also, that if I buy a place for below value, I've essentially devalued the entire neighborhood, because prices are set with respect to what's sold for what price in the neighborhood. The neighborhood that this house is in, however, is affluent and resistant to price fluctuations.

Anyway, it's just one of a billion places. I'm off in a few minutes to say hi to my agent, and see what's what.

Just Thoughts

So I had a good time in Singapore, but it was difficult and a little... embarrassing isn't the word, but I walked away being kind of ashamed of my life. I hung out with some members of my family who are very successful. Success that, when I started to make comparisons to my own life, gave me nightmares. I was taken out for dinners I couldn't possibly afford, so I felt ten because there was no way for me to pay my own bill, much less be gracious to my host and offer to pick up the tab for all their troubles. We drank wine that cost more than I make in a week. And here's the thing: my family who have done well, did it through hard work. They really earned it.

It put my life so in perspective. Worst of all, some rumor started in my family that my book was about to be published, so they were all excited for me when I got there.

Nope.

My book was rejected by an agent a few days before I left. I've been working with a professor on it, and I've become aware that I have a lot to do. Not that it's an impossible mountain, but enough that I feel like I've been deluding myself. Or worse, I haven't been deluding myself, I've been deluding others to make myself feel good.

I thought being in Singapore would be so exciting. I felt so... privileged. The bad, conceited emotion of privilege. But once I got there, I just felt out of place.

I grew up in the middle of nowhere, and my parents were poor. I always liked the aura of success, so I've spent my life inflating my accomplishments to sound like I've done a little more than I actually have.

I'm going to attempt to keep it real, in life and blog. Here's my first admission: nobody really reads this thing! A good days these days sees fifteen people. And yet I still feel the need to exaggerate. I'm going to try to be more honest, and work harder at my job and my book and my life. Or work more honestly. That would be better.

Qualified for a Home Loan

I originally wanted to get a loan for a rental property that I could just run as a landlord, however it turns out you need to put about $30K down and have about $15K in the bank to qualify for a true rental property loan. However, I can buy a duplex and live in one half of it, and as long as I live in it for at least a year, I qualify for a loan of about $250K.

It turns out I have perfect credit with respect to home loans--my credit score, even after a bit of a beating in the last two months, averages to 730, which gets me the best rate. The rate is variable, moving as much as three times a day, but is somewhere between 5.5-6.5%. If I decide to go ahead and buy a property, which I'm not certain I will yet, I can wait until the rate hits 5.5% and put $350 down to hold the rate for 90 days. This $350 is subtracted from the eventual loan, but even if it wasn't, it's a comparitively small amount of money with respect to the amount you save in interest (0.005% of $250k is $1,250).

So now this is where I get picky. I have a few months to think this over, and this is what I want in a place:
- Nice part of town (not a rich part of town, but at least a safe neighborhood). Aside from the rich neighborhoods, here's a few areas I'm thinking of buying:
> Uptown
> Calhoun Lakes (theres a few places I could afford)
> Merriam Park/Cathedral/Mac-Groveland
> Longfellow
> Northeast
- An area with a high rental value, so when I move out I can easily rent my portion
- Energy efficient
- A property on a quick sale, for below market value, so if need be I can turn a profit in a few years
Hmmm... anything else on my wishlist? :-)

That's all for now. I'm going to contact a real estate agent today and start to feel my way around the process.

Home Loan

Today I'm meeting with a loan officer to see what I can get for a pre-approved home loan. I honestly don't know if I'll even qualify, but I have excellent credit and a decent paycheck, plus I've paid off my car and most of my credit cards. I don't have any money to put down. We'll see.

Also meeting with a professor who's reading my novel--he liked the first 90 pages and gave me some great feedback. He's just finished looking over the next 90. I'm nervous as to what he's going to say.

And... $600 more paid off!

I just got paid so I sent another $600 to my Chase card, bringing that balance to...

$200!!!

Oh, I'm giggling with delight. All my debt is getting easier and easier to pay off. I've really hit that "snowball" point. I'll finish up the Chase bill next paycheck and start work on the AMEX, my last old bill to finish up. I should break apart my AMEX bill in April (although not quite pay it off). In May, due to the irregularities of a every-two-week paycheck, I'll get an extra paycheck, with which I can easily pay off my old Macalester loan (this is a college loan with a high 8% interest rate).

Back From Singapore

Back from Singapore, and I'm wailing away at my debt! I didn't spend as much as I feared in the trip--about $900 over 11 days. I ended up getting waylaid in Hong Kong for a day, and decided I should go into the city and see some sights--I don't get a chance to see Hong Kong often! I spend an extra $100 there, but this still kept me under my $1000 limit. The exchange rate worked in my favor, and things were pretty inexpensive. As usual, my sister nickle-and-dimed me through the trip. Example: "Well I paid $50 for that and you bought that for $62, so why don't we just call it even?"

Oh well!

And today, the exciting news:

1.) I finished paying off my car!
2.) I sent a check for $4,600 to my credit card company, with the intention of sending more tomorrow!

Here's my new credit card debt:
AMEX: $1214 at 2.9% (Remainder of big bad debt)
CHASE: $803 at 0% (Remainder of big bad debt)
DISCOVER: $1000 at 0% (Singapore ticket, paying $50 every 2 weeks)

Ha ha ha!

Bonus!

My bonus is going to be about $1000 more than I estimated! Wohoooo!!!!!!!!!!!!

That just kicks the hell out of my credit cards now.

All this money should hit my accounts by the end of the month. I'm in SUCH A GOOD MOOD!!!!!!

Breathing Large Sighs Of Relief

So. I'm feeling pretty good. I finished my book and have that out to an agent for review, and my finances are looking better, because of several large influxes of money, from bonuses and tax returns and just because I've been really frugal the last couple of months. I wasn't keeping close track of my finances, but I spent a lot of time at home writing, so I didn't spend that much.

The book is 130,000 words, with is about 320 pages. I'm happy with the length and how everything turned out. I was particularly happy with the ending and how I managed to pull all my varied themes together. Whoo! What a marathon. I'm working with a professor at my graduate program on revising it, so instead of trying to do school and my novel this semester, as separate entities, they'll be combined.

It's 35 below zero, with the windchill. I can feel the cold rushing through the windows of the coffeehouse I'm in right now.

I'm off to Singapore in two weeks, and I've set aside about $1,000 for spending money. That actually equals about $1,400 in Singapore dollars, so I'm hoping I won't even spend that much. I've talked to my sister about being frugal.

By the end of this month, I'll have about $4,000 left in my accounts to pay off debt. This will basically decimate my credit cards and (disregarding the school debt for now) leave the rest of my debt for "mop up".

The real estate market is crazy right now, and I've been talking to a realtor about buying an inexpensive rental property. Some of these places already have renters in them, and the rental amounts are larger than the mortgage, taxes, and housing insurance would be. They're bank owned and the banks are desperate to get rid of them.

That's all for now. Later skaters.

Keeping Hope Alive - Barak Obama

This is inspiring.

Ups And Downs

I just went out to run a 30 minute errand over lunch and my breaks started squealing, so I had to pull into a service station and drop $250 to get them replaced. I'm in a tough spot, financially, but I have some money coming my way. I'm going to (finally) get in and update this thing tomorrow morning. I have to run, however, because my GF is expecting me at her place for dinner.

New Years Day!

I'm wonderfully non-hungover today! My GF and I had six friends over for dinner--we split the cost of the food, which came to around $80. Well worth it. Bacon-wrapped scallions for an appetizer. Brazed pork tenderloin covered in a mushroom stuffing and then rolled in puff pastry for the main course, with green beans covered in a light sugary glaze, and a sweet potato risotto. Then pears boiled in wine, split open and injected with a cream cheese based filling for desert. A friend brought champagne, and a few of us went out dancing afterwards. We got tickets for free ahead of time, which was lucky because the door was charging around $15/person to get in. Lots of fun had, my ears are still ringing.

I'm writing the afternoon away, then sneaking into work to use the gym and get some finance related work done.

Happy New Year!

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