Chipping Away - Busting Debt in Boston

A personal finance weblog about my own journey to eliminating my debts and building net worth. Hopefully this will serve as a place for me to share and discuss my strategies and ideas, as well as keeping me on track and focused.


Back From Vacation!

My apologies to anyone who might have been following my blog and hasn't see anything new in awhile. I forgot to mention in my last post that I was headed out for a vacation to visit Vegas and southern California to have fun and visit family, respectively. As with most vacations, I definately spent a LOT more money than I usually would for the month, but isn't that what a vacation is for? To me, vacation's not just about getting away from work and your everyday surroundings, but also from worrying about things like money and other stressors. Not to say vacation means go hog wild about spending, but if you've saved up to take a vacation then take it!

Short post for now, but I'll post again later today about my recent salary increase and bonus check that came in yesterday. And maybe if I'm really ambitious, about my current debt consolidation strategy and how that's going. balance transfers with 2.99% apr for the life of the balance? Thank you very much American Express! :-)


Denied for Credit - Check Those Reports, People

After waiting almost two weeks for Capital One to process and respond to my application for a card with them, and an associated balance transfer from my current Citibank card, I received a letter stating that my request for credit had been denied. I was more than a little surprised since my credit score is a 714 and I've held credit with ZERO problems (minus one that will be repaired on my credit report by next cycle) since 2000.

The two biggest reasons they cited were that I haven't held a revolving line of credit for a long enough period of time and that i had too many delinquencies on my record. As I mentioned, I've held a credit card in good standing since 2000, so I'm not quite sure how long is long enough for Capital One. Also, my credit report, unbeknownst to me at the time of applying for the new line of credit, has a single ">30 day" late mark from an Old Navy credit card which I held for some time last year. There was a period shortly after I moved where the customer service folks over at Old Navy couldn't seem to take down my new address properly, because it took three calls to eventually start getting statements sent to me again. All in all, I didn't see a single shred of paper from Old Navy for a little over three months.

Long story short, the final time I called and was successful at having my address properly changed, I paid off the remaining balance. I was sucessful in getting the representative to remove the late fee that had been assigned and was informed that the late payment would not be reported to the credit beaureu due to the circumstances. Apparently that wasn't the case...

Fortunately, this will all be behind me by next billing cycle as after a short chat with yet another representative at Old Navy, the late payment mark on my credit report will be corrected and all the accounts listed will have nothing listed except timely and accurate payments. But the moral of the story here is that had I been in the habit of checking my credit report before I applied for that new card, I would have spotted the error sooner and had it corrected. Keep an eye on those credit reports, people. Especially if you're looking at anything like a house or car purchase anytime soon. Don't let someone else's mistake cost you money!

Next post I'll explain why getting denied for that card by Capital One turned out to be a blessing in disguise, since it opened my eyes to a better possibility for consolidating and shifting my debts...


How I let Debt Pile Up - Part 1

Just read a post over at My Money Path entitled Work is Holding My Money Hostage, and it reminded me of two things. One is that I have done a lot of thinking about the same issue. And two, I actually allowed this phenomenon to assist me in building up more debt...

Similar to the issue mentioned above, when I go somewhere for work, I pay out of pocket with my credit card and later get reimbursed in the form of a check. That check goes into my bank account and then needs to be paid back to my credit card immediately (to avoid racking up extra finance charges). This SHOULD be done in addition to whatever regular monthly payment I was planning on sending to that card anyway. The problem is that more than a few times, I ended up making no additional payment to my card on top of the reimbursement from work, and subsequently let more debt and interest stay on my balance.

Do it once and it's not a huge deal. Do it several months in a row and suddenly you're not only a few months behind on your planned payments, but you're also further in the hole due to additional interest that's built up. To make matters even worse, think of what happens if you purchase a couple things during that period of not really paying into the card... Now where's that balance, again? ;-)

Question of the Day Marathon

Well this should be fun. I've secured myself a spot in All Things Financial's August Question of the Day Marathon. I'll be posting my contribution on the 23rd of August, and every morning will be linking to the relevant post for the day which will be provided by other like-minded bloggers. Keep an eye out on August 1st for the first question, since I'm sure there will be a good response to this.


Debt Reduction - When to Change Gears?

I just read a good post over at A Penny Saved... which in turn linked me to a post on Mighty Bargain Hunter's blog entitled "Why is being debt-free so unpopular?"

I wanted to take a second to point this out because the combination of those two posts got my brain wondering about when enough is enough, and when it's time to start shifting my main focus away from simply hammering down as much of my debt as possible and when to start looking more at saving/investing those would-be debt reducing payments. Right now, I have it in my head that until I've reduced my debt to zero, I don't really have any reason to be thinking about somehting like home ownership or investing...

Now, I know what the financially savvy of you are thinking. It's pretty simple math, right? If an investment vehicle offers a higher rate of return than the interest rate on a particular debt, you're better off making the minimum payment on said debt and putting the remainer would-have-been-payment money into the investment. Oversimplified, I know, but that's the basic idea and it makes sense at face value.

However, the picture gets a little muddier if you consider that not all investments have a guaranteed rate of return (in fact, anything reasonably high probably isn't), and muddier still if you want to include the psychological effects that debt vs. no-debt has on you personally. If you're the type of person that can logically understand the fact that your investments are making you mroe money over the long haul than the loss you're taking to interest, then by all means invest away. But if that's a stretch for you and having debt hanging over your head is more worrisome (as I suspect is where most of us live, mentally) it might be a better idea to stay focused on becoming debt-free so you don't get distracted by your debts and allow that to affect your savings and investment goals.

I think there's probably a lot of gray area in there, and lots of points to reasonably start switching gears from aggressively paying down debt to focusing more on investing/saving, it's just a matter of where you're comfortable with it personally. As for my switch-point? I'm not 100% sure, but I'd definately like to hear some opinions on the matter.

Grocery Cards - PILES of Savings

The last couple of times I've been to the grocery store, I've been pleasantly surprised to find that some brand of almost every item I needed/wanted was on sale if I used my Stop&Shop card at checkout. $10 for 10 for items that usually cost $1.29, ice cream for $1.99 instead of the regular $4.99, or packages of rasberries for $2.50 instead of $4.00... The list goes on and on, and even though the individual discounts never seem like much at the time, it's amazing how much they add up.

See, every receipt I get when I check out has a running total of how much I've saved for the year by taking advantage of the card-specific sale items. The running total? A little over $250 so far this year (keep in mind it's only July). That's more than a whole month of groceries in savings! Suddenly I'm starting to think that coupon-clippers aren't that crazy after all...


Free Money - Thanks PartyPoker!

This morning as I was getting situated for another day of work, I did the usual things and checked a couple of email accounts and glanced at a couple of blogs I keep tabs on. The blogs hadn't been posted to yet, since it was pretty early, but one of my email addresses had smoething to read which put a big smile on my face. My withdrawal from PartyPoker went through and is waiting in my Neteller account. :-)

This withdrawal doesn't have anything to do with my finances, really, since the money was only in my account for a few days and was only there to take advantage of a bonus code they sent me a few days ago. This time, I only had an extra $150 that I knew I could do without for a few days, which netted me a $30 bonus after I played the required 300 raked hands to release it. Since my quest with poker is to grow a bankroll organically from an initial investment of $50, and eventually be playing high enough stakes to generate a few hundred a month in additional income, I considered the recent deposit a loan to myself. Now that the loan's paid back, I've netted a 20% return on the "investment" in a couple of days, for doing something I would be doing anyway. Thanks PartyPoker!

Pretty soon I'll get motivated enough to add a poker section to this blog to help document my progress on growing my bankroll and generating usable debt-reducing income through poker. Until then, who else likes free money, and where have you found some recently?


Community - A Quick Survey

I just wanted to take a few moments out of my day to see how the rest of your folks think you'd fare with your finances if PF-blogging didn't exist. I'm sure that most of us would get along just fine and not really see any difference if it were all gone tomrorow (well, except maybe for those of us who take in any reasonable amount of revenue through advertising), but are there some of us out there who actively use blogging as a tool to help achieve goals?

I'm probably somewhere in the middle, to be completely honest. I'm quite motivated enough at this point to see what i want to do and get it done, but all this stuff definately helps. I find it's MUCH easier for me to get my feet wet learning about investing topics, real estate, etc etc etc... when it's in someone's blog versus a book on ths subject. Of course, that wetting-of-the-feet tends to be followed by a desire to understand the topic in much greater detail than blogging allows, so I tend to end up doing a bit more research after the fact. But the blogger/blogging tends to be what gets my butt in gear, so to speak.

So back to the question, how much do you think your financial life is affected by blogging? Is blogging, or reading blogs, something that is driven by your financial life being relatively on track? Or is it the other way around?


Anti-Miser - Frugality without being "Cheap"

Just a quick post this morning that I thought would be a good thing to pass along, since although it SHOULD be something that makes you think "well duh...", it could be something that you notice you don't quite adhere to all that frequently. The idea is recognizing the difference between being frugal and wise with your money/finances, and being a cheap and miserly bastard. This goes beyond whether or not others view you as a tightwad, because it comes down to how much you let your fear of spending (or your love for saving, depending on the spin you want to put on it) affect your quality of life.

Meandering through some old posts at Worthwhile Living I stumbled across this post which I think paints the difference quite clearly.

Without going into too much more of a rant, I'll just add that this is possibly the most important thing I've learned over the past few months of gradually taking control of my financial life. The whole reason I'm trying to pay off debts, put money away in savings/investments, make some plans for building wealth, etc... is to improve the quality of my life from a financial perspective. If doing so starts to negatively affect my overall happiness, or deprives me of things I really enjoy... Well, what's the point?



Roundup - A Summary of Debt

Since this is the first month of my new blog, I figure a good place to start would be to post a roundup of all my debts and associated interest rates. So without further hesitation, my total debt picture in descending order of interest:

  1. Citibank Card - $7,302.23 - 15.990%
  2. Car Loan - $3,802.38 - 13.25%
  3. Student Loan #1 - $15,843.06 - 7.14%
  4. Student Loan #2 - $2,839.87 - 5.00%

There it is, a grand total of $29,787.54 of debt. As I said before, ick. So first things first, look at those interest rates! Based on those, my first order of business is to try and reduce those interest rate numbers as much as possible, so my total payout for these amounts is as close to the actual principal as possible. I've applied for a Capital One card with a promotional balance transfer rate of 0% for 12 months and indicated that I'd like to transfer the full balance of my Citibank card over to it. Once that goes through, I'll have no balance on the Citibank card and will have 12 months to pay off the $7,300 on the Capital One card with no interest.

Recently I also got an offer in the mail from American Express which specified 2.99% for the life of any balances i transfer on application. I'll have to think about whether I want to utilize that right now, though it seems like a no-brainer to apply it against my smaller student loan and my car loan...