Integrity

It’s a fine thing to rise above pride, but you must have pride in order to do so.
– George Bernanos

The other night, Uncle Engineer offered to pay off all my credit card debt and assume that debt himself. I’ll still owe the total balance, but I won’t be paying any interest in the time it takes me to pay him back.

Wow.

Doing a back of the napkin calculation – rounding what I owe up to $12k and averaging the interest rates out to 17% – it would take me roughly 5 years and $5k in interest paid to pay everything off. With the 0% interest rate this deal offers, I’ll save about a year of payments and $5,000.

It’s a no brainer, right? Five grand in pocket.

Still, it feels like cheating. I have a strong sense of honor and independence, and going this far into debt to a family member seems reckless and lazy, even though it’s the obvious best option financially. I actually had to deliberate for a while before accepting the offer, and even now I’m a little uneasy about the implications.

This is how I see it: unlike the credit card companies, I actually care what Uncle Engineer thinks of me, and I won’t let him down by failing to repay or being late on any of these payments. Like having an accountability partner at the gym or in business, I think knowing someone I know is aware of my debt will make me that much more motivated to pay it off.

There’s no take home message, here. Sometimes you get lucky, and sometimes you get offered help that’s so good you can’t not take it.

(Did shoulder press (75) and power clean (95) for the first time last night, and upped by squat to 145. These numbers will live on the Progress page from now on. Everything else is done and updated. I have set aside all day Saturday, and maybe Friday evening, to work on goals so they should all be updated then.)

Selling A House

Break your lease, quit your job, kiss your mama goodbye, and piss off into the wild blue yonder.
– Peter Michaud

Like the other topics, the first thing I did here was a simple google search – “How to sell a house”. I opened all the results on the first page and skimmed them all.

The basic takeaway from this:

• Decide on a full service agent (~6% commission), discount agent (2%-4.5% commission), or no agent (more on this later)
• Clean and empty your house as much as possible (duh).
• Landscape outside to increase curb appeal
• Make small repairs inside (more on this later)
• Have your home appraised – ask your bank for a reference to an honest, skilled appraiser
• Have your home inspected – same way the buyer would, and make any required repairs.
• Take time to highlight the attractive features of your house in your ad
• Summer is the best time to sell, beginning in April and May (perfect)
• Market. Craigslist, local banks, word of mouth.
• Know how to show your home. (more on this later)
• Financing – this one was interesting. Speak with a broker and be prepared to help your buyer get everything in order to make it to the closing table.
• Prepare to negotiate, particularly small concessions
• Never just say no – make a counter offer.
• Close quickly once an acceptable offer is on the table
• Get a real estate lawyer
• Undervaluing is better than overvaluing the home – multiple offers will drive the price up and offers can be rejected, whereas no offers at all is a dead end
• Look into tax exclusions (divorce? health reasons? job change?)

There was a LOT of repetition, and a million more links I could’ve followed that probably would’ve said similar things. I stopped when I felt I understood the basics and had steps to move forward, and when it occurred to me that my ex’s name is still on the title.

Next step will be talking to the bank or a lawyer about how this will impact the sale process.

The Web – Lifestyle

A lifestyle is what you pay for; a life is what pays you.
– Thomas Leonard

In short – I wear decent clothes, I eat out a lot, I drink relatively expensive booze (and I drink when I’m out) and I go to clubs, concerts, lessons, and on trips.

I spend significantly more money than I have to, on things that are purely for my own enjoyment.

I haven’t measured carefully – when I did my monthly budget back during my finance phase, I just accepted that my currently monthly expense was roughly where it needed to be.

It’s not, though. I’m well within my means, but I could live a lot more frugally. Maintaining this lifestyle represents a strand in the web, a peg in my geoboard.

This isn’t necessarily one I want to remove. I like decent clothes, decent whiskey, and going out without checking my tab very carefully. On the other hand I like my free time, travel, and pursuing my passions too – and I need to keep in mind that removing or weakening this strand is an option, if I should need more room to move.

The Web – Credit Cards

In short, ugh. That’s a lot of consumer debt.
– Agon

This one isn’t complex, but it’s just as real as the others. I spend several hundred dollars a month making minimum payments on credit card debt I’ve built up over the years. That’s a significant percentage of my income that I can’t use for anything else, which raises the bar for the minimum income that I can survive on.

It’s a peg. It’s straightforward to pull – I’ve already outlined the plan, and it’s been working for the past couple months – but it’s also time consuming, and short of spending less and making more I don’t know how to get it done in less than a year or two. On the other hand, it’s not that difficult of a peg to work around – whatever career or income or expense changes I need to make, they just have to account for an extra couple hundred a month. That’s doable.

More on money next time.

Now I Know How To Be Rich

A rich life is about more than money.
– Ramit Sethi

(Sorry for the super boring, super cliche quote – we’re moving on from money.)

If you’re paying attention you’ll notice I skipped the last few chapters of the book, which deal with setting up and maintaining investments and saving up for life’s big expenses.

I did that because, frankly, I have at least 18 months of paying off credit card debt before I’ll be investing more than my matched 401k, and I’ve already paid for my house (heh) and wedding (heh heh).

So I feel that the past couple weeks with this book have given me 80% of the value I’ll get here, and it’s a matter of time until my debts are slain and I will have excess money to invest for the long term. Eventually I’ll start saving for a new car, new house, or travel, and then maybe I’ll crack the book again.

Things I learned:

• You’ve got to know. If you don’t know your total debt and the corresponding interest rates, or roughly how much you spend monthly on various things, or your credit score and the factors affecting it, you’ve gotta find that stuff out and write it down somewhere. Even if the news isn’t great, you’ll feel better once you do.
• If you’re comfortably above water financially, but you have credit card debt, you’re throwing money away. I knew this rationally but the actual amount of cash that was just disappearing to interest, every month, escaped me. Now that I know, it’s easy to get motivated to throw my extra cash that way.
• Automation is great. I already had this 90% set up, but moving my bill and savings transfer dates to right after payday was a nice touch.

If you aren’t certain about your situation on any of the above points, get the book. It’s a fun, light read, the action points are well summarized, and Ramit seems like a cool guy.

Automatic Money Flow

I want to be clear about something: I plan to do less and less work as I go through my life.
– Ramit Sethi

Finally – MUCH later than intended – the last Action Steps I’ll be doing from I Will Teach You To Be Rich. In this phase, I linked my accounts together and set up automatic transfers after each paycheck – bills, transfers to savings, transfers to investments, etc.

I’d already done most of this stuff, so it was pretty straightforward to tweak the last few things. I really liked the idea of having all my bills come out on the same day, preferably right after the paycheck – unfortunately I get paid every two weeks, so that wasn’t really feasible. I had to set it up so that roughly half my bills came out after each paycheck – annoying to a purist like me, but better than checking my balance constantly and making sure there’s enough money in each account as each bill comes due.

So this chapter was pretty easy, but I also felt it was one of the more beneficial. After just a couple hours of phone calls to get my billing dates moved, and a tiny bit of math, I no longer have to worry much about my bills each month. Whatever I’ve got in my account after each “bills/transfer day” (three days after each paycheck comes in) is “safe” to spend. A little bit less work to do each month, a little more peace of mind.

Made $25, Building the Door I Want to Walk Through

If opportunity doesn’t knock, build a door.
– Milton Berle

Quick updates: called Gap, figured out my situation. Turns out something I thought had gone on my debit card had gone on my Gap card instead, and then I hadn’t paid it (naturally). I got the late fee waved, saving me $25 bucks (thanks, Ramit!), and paid the rest over the phone. I’m not going to close the Gap account, but I am going to be more careful next time I shop there.

Things I still need to do are call my credit card companies and ask for lower APRs using Ramit’s script, and make and implement an actual paydown plan by raising the automatic payment on my highest-interest card to the maximum I can safely afford each month.

Chapter 2 of I Will Teach You To Be Rich is about checking and savings accounts, and while I’m not perfect, I’m satisfied with my situation on that front – no fees, overdraft protection, etc and I’m not at all worried about the interest rate on my savings account. In addition, some bill paying and direct deposit are already settled with those accounts, so switching seems like too much work for a meager reward. Unless something comes up, there won’t be a post about this chapter.

I didn’t find a financial planning tool I liked enough to use, and before I can plan my credit card paydown I need a watertight grasp on where my money goes every month. I’m going to build a tool for this, that works exactly like I want it to. I’m going to bang it together very quickly so I’m not sure I’ll release it publicly, but if I do I’ll link it here and either way I’ll write about it.

I have been and will be ridiculously busy this week, so it might be a few days before another update. I actually miss writing every day and will be back to it ASAP.

I Will Teach You To Be Rich Week 1 – Credit Cards

You want 21 percent risk free? Pay off your credit cards.
– Andrew Tobias

Went to annualcreditreport.com and got my free credit report from Equifax. According to Ramit, it doesn’t really matter which of the three you use. They asked me some questions about my finances; mortgage and car loan specifically, which was interesting. I also got my credit score from Equifax for $8.

Here’s what I saw:

Potentially negative, you say? Let’s look into that (pertinent numbers removed):

And finally, the number itself:

BELOW AVERAGE?!

Some things to note:

• My debt to credit ratio is like, really high. This is bad, as it means I have spent most of the credit anybody was willing to give me. This appears to be mostly due to my mortgage and student loans, so I’m not sure what I can do about it, but it was interesting. My ratio on “Revolving” accounts – consumer credit cards, basically – is 64%, which is really bad and could be dropping my score by 20-50 points.
• There’s a GAP credit account open that apparently has a $100 balance and is in negative standing. I’m not sure what’s going on there – I did open a Gap card, but I paid the balance months ago and haven’t put anything further on the card. This will warrant a phone call tomorrow.
• My overall credit score is, just barely, in the “below average” category. This is annoying, but it’s pretty much what I expected.
• Overall I owe $163,999, which is roughly three times my after-tax yearly income. Ouch.

So. Glad I looked at this, if only for motivation to fix the problem (and now I know about whatever’s going on with Gap).

Unfortunately the Equifax site took a dump on my session after I signed up for an account, and is now telling me to wait 24 hours before I can see my report again. Overall, their site’s kinda shitty – it’s the only one I’ve seen, but I’m not impressed.

On to my credit cards, then. First step is tabulatin’ how much I owe at what APRs:

• $6746.08 at 12.99%, minimum $144.45
• $2207.80 at 17.99%, minimum  $55.00
• $1475.03 at 18.24%, minimum  $37.00
• $2730.53 at 19.24%, minimum  $72.00

There’s another card out there in my name, but I’m not counting it because a family member makes the payment and has all the info. This is more than enough to start with.

In short, ugh. That’s a lot of consumer debt. Suffice to say I am much more frugal (and much more single) than I used to be. These numbers haven’t been increasing for a while, but they haven’t been decreasing much either. Next post will be my action plan for paying this down, and some bonus moves courtesy of Ramit.

Learning to be Rich

You know what? Let the fools debate the details.
– Ramit Sethi

This week I’m reading I Will Teach You To Be Rich by Ramit Sethi.

Normally this is a six week program; I was going to try to tear through it in six days, but since I’m already one behind and I’m stupid busy this week, that’s not looking likely. I know, I know, excuses.

We’ll definitely be done by next Saturday, but I won’t try and put a timeline on it other than that.

Here are the six five weeks, which will also be the next six five posts.

1. Credit cards (and a follow up, and another)
2. Bank accounts (didn’t end up doing much with this chapter, so no post)
3. Investing accounts
4. Conscious spending
5. Automatic money flows

And a recap.