2016- A New Year and New Goals

2016 is finally here! With that, my first goal is to rejuvenate this blog. I'm going to try to do at least three posts a week. Here are some other goals (financial and personal that I have for the year)

Financial:

1. Have a positive net value by the end of the year.

2. Pay off 2 school loans completely by the end of the year. Approx. $8,000 between our two smallest school loans)

3. Maintain our emergency fund at the level it is currently at.

4. Increase our savings by at least $1000 by the end of the year.

5. Don't worry about finances as much as I had in the past, everything is going to be AOK.

Personal:

1. Show my wife how much she means to me every day.

1a. Spend more time with my wife, because she is there for me and deserves more than the time I gave her last year.

1b. Be more active in church.

2. Go on a multi day backpacking trip

3. Volunteer more

4. Be more simplistic in my lifestyle.

5. Start and maintain a garden.

6. Be a better person.

7. Live a healthier lifestyle: workout more and eat better

What are some of your New Years resolutions?

An Emergency Fund. What is it and why do you need one?

An emergency fund is a liquid savings account in which you can easily access in the event of an emergency.  An emergency is something that happens such as losing a job, the dishwasher breaks, or you get an unexpected medical bill. An emergency fund is not "Oh look at the car, I need to buy a new car." or "That's a cute purse, I want that." It is for EMERGENCIES!!

Recently, my 2012 Jeep broke down.  The transmission went out and I was stuck on the side of the highway.  Luckily, it was covered by warranty. That didn't prevent me from dipping into my emergency fund.  I had to get my Jeep towed to the repair shop.  I paid $150 to tow my Jeep.  I didn't even break a sweat.  That is exactly what my emergency fund was for.  The best part is, my insurance company repaid me for the towing, so it was back up to its normal amount within two weeks.

Why do you need an emergency fund?
1.  An emergency fund will give you a sense of comfort.  It is comforting to know that in the event of an emergency I have some cash that I can use in my bank account to cover the cost.  I don't have to worry about my credit card limit or going further into debt.

2. It gives you a source to fund an emergency.  A majority of people that I talk to don't have any type of emergency fund.  They say that their credit card is their emergency fund.  To be honest...Three years ago, my credit card was my emergency fund.  And I used it as an emergency fund.  At the time I was a broke college student and bartending at a Golf Resort. I was driving to work and I rolled over something and got two flat tires.  I had no cash to pay for it and my credit card only have a $500 limit.  I had to go out and find two new tires for under $500, which wasn't too difficult but I just about maxed it out.  It was at that point where I decided I needed an emergency fund.  A credit card will only worsen your financial situation in an emergency.  How do you plan on

How much should be in my emergency fund?
Dave Ramsey suggests building a $1000 emergency fund until you get out of debt.  I personally did not feel comfortable with having only $1000 in my emergency fund.  Even though I have a steady job in the military, my wife and I felt more comfortable having a $3000 emergency fund.  This will allow us to fix our car if it breaks down.

After getting out of debt, Ramsey suggests building your emergency fund up to 3-6 months of expenses.  For us, that would be about $4,000- $7,000. We'll build up to about $7,000 once we get out of debt. But for now, we're comfortable with the $3,000.  It's enough to cover two months of expenses, or an emergency with our car.

How to save and buy a car for $30,000 CASH

I’ll tell you right now, this article will not teach you a quick way to get the money you need to buy your dream $30,000 car.  This will take time and commitment.  If you follow this method, you will be able to afford the car you want.  Let’s start off with the basics:

Why is it stupid to take out a loan to buy a car?

1. You’ll be a slave to the lender.  Proverbs 22:7 states, “The rich rule over the poor, and the borrower is slave to the lender.”  Taking out any type of debt automatically makes you a slave to whoever owns your debt.  Once you take out a loan there is only two ways you can get out of it: you pay off the loan or you go bankrupt.  Either way you are losing.

2.  You are spending way more than the car is worth.  If you purchase a $30,000 vehicle with a 3% interest rate over 60 months, you’re looking at car payments of $539.06 per month.  If you take out a loan, you will be paying $32,343.60.  That’s $2,343.60 lost over a 5 year period, which equals about $450 a year that you could have used on something else, or saving for your next vehicle.

3. Your brand new $30,000 car will lose about $3,000 the minute you drive it off the lot.  Once you drive it, it’s considered “used”.  So, if you read point #2 on why car loans are stupid, you’d actually be throwing away $5,343.60.  A loss of about $1,000 per year.

Why buy a car with cash?

1.  You have leverage. If you walk into a car dealership with nothing in hand, the dealership will squeeze out as much money from you as they can.  Show them the cash.  If you show them that you are serious and have $30,000 in cash with you. They will take a knee and get you into the vehicle you want.  You have the ability to say, “I have $30,000 and not a penny more.” That $34,000 vehicle that you wouldn’t be able to get with a $30,000 loan just became available to you for $30,000 on the nose.

2. You won’t be a slave to the lender.  You own your car, nobody else does.  You won’t have to worry about making monthly payments on something that is losing value every mile you drive it or every day it gets older.

The strategy

This strategy takes about four or five years to get you to that $30,000 car, so plan ahead.  If you can, keep driving the car you have now.  If you can’t continue driving your current car (if it is completely broken with no chance of a reasonable repair) then take your savings and purchase a car that you can afford with cash. Now, let’s say you take that $539.06 per month and you start putting it into savings instead of towards a car payment.  In one year, your current car breaks down. You can afford a $6468.72 car.  You keep on saving that $539.06 per month for another two years, and that car breaks down.  Your used car probably lost about $1,000 in value since then, but you saved $12,937.44.  You can add the extra $5,000, making that $17,937.44 in cash to purchase another used vehicle.  This will get you a very reliable vehicle that should take you to the end of your $30,000 car journey.  Chances are, in the last 3 years, you earned a pay raise.  You bump up your monthly savings to $600 per month.  After two more years, you saved another $14,440 towards a car.  You current vehicle is now worth $15,500.

After 5 years and two different cars, you have $14,440 in cash and a $15,500 vehicle.  That $30,000 vehicle is now only $100 dollars away, but the good news is, you have CASH! Cash is king when it comes to purchasing a new vehicle from a dealership.  They will, in most cases take your $29,900 for your new vehicle.

Conclusion:

By saving your money and stepping up vehicles in small increments, you have saved yourself about $3,000 over five years.  Not a bad savings for purchasing a piece of equipment that is guaranteed to lose value.

Is money the root of all evil?

     Having a lot of money isn’t a bad thing.  In most cases, money represents hard work that you put in to earn it.  You shouldn’t feel bad about having a lot of money.  A common misconception of money is that “Money is the root of evil”.  There is no spot in the Bible that specifically states that money is evil.  It is simply a green sheet of paper with fancy designs and a picture on it.  1 Timothy 6:10 is the bible verse where people get the idea that money is the root of evil.

“For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.” (1Timothy 6:10)

      As you can see in the verse, you can see where people can miss the true meaning of the passage.  “For the love of money is a root of all kinds of evil.” It’s not the money itself, but the idea of a idolizing money.  The love of money can change a person and doesn't allow them to focus on the important things in life such as God, family, and service to the community.

    Some people will do crazy things to get fast money.  They'll steal from people, they'll kill people, they'll gamble to try to get some quick cash.  These are all dishonest ways to get cash.  If someone is willing to sin to get money, they have a love for money.  This is where the idea of "the love of money is the root of all kinds of evil."

     Proverbs 13:11 states that “Dishonest money dwindles away, but whoever gathers money little by little makes it grow.”  The dishonest ways people get money isn't sustainable.  The money will be gone within a matter of a short time.  People need to get jobs and earn their stead with an honest day's work.

 

Marital Finances: A summary of "I Now Pronounce You, In Debt"

I saw this article on Yahoo! that I wanted to share with you. It's called "I Now Pronounce You, In Debt".  I though it was pretty informational, talking about things you should know about finances when you get married and some advice to help reduce the shock of the financial burden you might not be expecting.

Here's the main topics the article discusses about marital finances.

1. Talk about money early.  Nobody truly wants their marriage to be based around money, but it is something that has to be discussed.  Make sure you and your spouse know each others expectations, hopes, and plans with finances.  Make sure you discuss current debts as it will greatly play in to how you work finances in the future.

2. Don't Go into Debt For a Wedding.  A wedding is a happy, blissful, enjoyable, and scary day.  It is the day where two become one.  It could also be a day where a couple drops $15,000 to celebrate for just a few hours.  Its great if you can afford that all in cash, but be careful.  Don't go into debt for your wedding.  There are plenty of inexpensive replacements for expensive wedding services.  The Budget Savy Bride is a great place to look for planning your wedding. I know my wife used it to get some ideas for our wedding.

3. Make a plan.  A plan can be as simple as saying your going to pay an extra $50 per month towards a loan to pay off debt. It can also get complicated and include percentages and widgets.  Just as long as you have a plan, you should be good.  Along with a plan, write down a realistic budget so you know where all of your money will be going.  Every dollar should have a name to it.  Make sure your budget is within your means.

4.  The unexected will happen.  Plan for a rainy day. Have an emergency fund.  This article suggests $1,500 for renters and $3,000 for homeowners in an urban area.  I agree with Dave Ramsey on this topic.  I'd go for $1,000 until you pay off your debt, then 3 to 6 months worth of expenses.  $1,000 might sound small for an emergency fund for some people.  It did for me and my wife. We increased ours to $2,000 and now we are paying off debt.

This article also includes a section for advice from married couples. I would also suggest reading that section.



Source: http://news.yahoo.com/now-pronounce-debt-120500539.html, I Now Pronounce You, In Debt, U.S. News, Erin Lowry

Turning your Craft or Skill into Money

I'm sure you've seen this before, but I'm going to say what everyone else says.  If you want to make extra money but you don't want to do something you don't enjoy, turn your hobby or craft into money.  There are three basic "crafts" you can turn into money: Services, Arts,  and Art Services.

Services: Services include anything you would do for someone else, such as cutting the grass or giving tennis lessons.  It could include anything that you offer your time to directly help the customer.  When you do a service for another, you have to make sure you are doing it correctly, safely, and legally. If you want to make money in an industry that requires a special certification, make sure you have proper documents stating that you have completed the proper training.  For example, you cannot Notarize something without being an officially licensed Notary Public.  Also, when you offer a service, such as some type of lessons, you are advertising yourself correctly.  A new guitar player cannot offer advanced guitar lessons.

Here are a few more services that one could offer:
Personal Cook
Delivery Person
Give Lessons
Mystery Shopper
Grass Cutter/Lawn Care
Notary Public
Tutor

If you can think of any more, feel free to comment and share your knowledge.

Arts: Arts are something you make and sell.  This can range anywhere from a homemade Greetings Card to a Kitchen Table.  You can sell your homemade items on websites such as Ebay, Etsy, or Amazon.  Note, that these websites take a cut of your profits, so make sure you add that in to your selling costs. If you have the proper FDA approvals, you can sell food items and soaps.

Here are a few more Arts you can offer to sell:
Soap
Candles
Handcrafted furniture
Crocheted items
Knitted Items
Sewed Items
Clothing

Pictured above is an old lawn chair that was modified.  Take off the plastic rope and used colored rope to make this design.  It only costs about $30 to make, and I know of people  offering to buy it for $75-$100. 

If you can think of any more, feel free to comment and share what you think.

Services and Arts: Serviced Arts are custom ordered items that you can offer on websites.  An example of this would be custom embroidered Christmas Stockings or a custom handcrafted kitchen island.  The world is the limit when it comes to this type of product.

Some examples of Services and Arts:
Custom wood projects
Custom fabric projects
Custom Ordered Food
Custom soaps and candles

Please share in the comments if you can think of anymore items.

Save money couponing, without the extreme

Sometimes your paychecks just are not getting you far enough.  You are living paycheck-to-paycheck and you are stuck at home all of the time.  It might sound different, stupid, or useless, but there is one way to easily cut down on grocery costs.  Couponing.

You don't have to be an "Extreme Coupon" to save money while shopping.  Most coupons will get you anywhere between 25 cents and 1 dollar off of a purchase.  These little sheets of paper with barcodes on them are as good as cas at grocery stores.  Most people don't use coupons because they feel like it's a waste of time. I'm going to tell you why it's not.

1.  Each coupon is like a down payment towards an item.  Let's say you receive a "Redplum" in the mail with fifty coupons.  There are three coupons that have items that you will purchase on a normal grocery store trip.  Why not take the minute and a half to cut out those 3 coupons, each worth $1.  You just saved yourself $3 off of your $100 grocery bill. Savings of 3%.  That's still more than what you normally would have saved.

2.  Some grocery stores double your coupons.  If you do a quick google search to find out which stores double coupons.  Some do it only on specific days, so you have to pay attention.  In the same situation as above, you go to a grocery store that doubles, you save $6.  A 6% savings.

3. On average it takes about 20 seconds to cut out one coupon. Let's say you clip only .25 cent coupons. You cut out 3 coupons per minute for a total of .75 cents. If you did this for an hour, you would cut out $45 worth of coupons. Granted, you probably won't do it for an hour, but hey, a penny saved is a penny made.

4. Don't clip coupons you won't use or coupons of items you don't normally eat. Don't eat Yakisobi? Don't clip the coupon. It's that simple. Don't waste your time and energy.

As you can see, coupoing doesn't have to be extreme. You don't have to spend hours doing it and you can still benefit from them. In the world today, every penny you save will be worth it.

Maintaining a Debt Free Lifestyle

Personal Finance Cheat Sheet posted a pretty interesting article: "6 Ways to Maintain a Debt-Free Lifestyle" Click here to read the article.  Below is a review of their 6 Suggestions to maintain a debt free lifestyle.

1. Build a Large Savings.  Makes sense to me.  If you have a large enough savings, you won't have to pull out the pesky credit card or go to the bank to request a loan to purchase an expensive item.  It also talks about saving money to pay for your children's education or new home. 

2. Pay off Credit Card Transactions Immediately. If you have a credit card, pay it off right away when you use it.  You can collect points to use in the future.  Be aware though, if you don't pay off your credit card immediately, you'll get hit by those enormous interest rates and the debt will add up.

3. Buy a cheap used car.  New cars depreciate in value the second you take it off the lot. If you purchase a new car with cash, it won't depreciate as much and you'll outright own the car and you can trade it in more easily in the future.

4. Go to Community College. Furthering your education will improve your hireability and desireability to an employer.  You can go to community college for a lot less money and get some education that can really help you in the future.

5. Rent. I don't really agree with this one. Sure it'll keep you out of debt, but where is that money really going? It's going to pay off someone else's mortgage and you only get temporary housing that you cannot modify yourself to make it more personable.  I say, if you have a steady job in a steady location, purchase a house you can afford.

6.  Buy only what you need. I'll add 'and what you can afford'.  My wife and I rarely follow this rule.  We are very impulsive when it comes to shopping.  I do believe we've gotten a lot better though, since we sat down and really talked through our finances.  With large purchases, we generally wait a day and talk about it before acting on buying something large. 



Source:
http://www.cheatsheet.com/personal-finance/6-ways-to-maintain-a-debt-free-lifestyle.html/?a=viewall, Chloe Della Costa, March 2015, Personal Finance: Cheat Sheet

Best Ways to Utilize your Tax Return to the Fullest

It is tax season. Tax season is the time of year where you might be expecting to receive a nice lump-some check to do with what you please.  If you're unsure of what to do with your check, here a few great ideas!

1. IF YOU HAVE DEBT, USE YOUR TAX REFUND TO PAY OFF YOUR DEBT!!
     The last 3 years I have used my tax refunds to make large payments towards my school loans.  I have paid off over $10,000 worth of school loans. Paying off loans not only reduces your overall debt and increases your net worth, but it also frees up more money for you to use throughout the year (if you have more debt, I'd suggest putting the extra money toward that)

2. Make a payment toward your Retirement Account. 
     You can put up to $5,500 if you're younger than 50 and $6,500 if you're older than 50 towards your IRA per year.  If you put it all in from your tax refund, you can use the rest of your wages in other places. Click Here for details about federal guidelines for IRA Contributions.

3.  Invest your money.
     After filing your taxes, you're might receive a nice big check. You've lived without that money for the past year, you can live without it for longer.  Invest your money to make it grow.  There are many companies that offer financial advice, money management, and investment opportunities.  By investing your money and waiting just a little bit longer, you can increase your tax return and use it to get something even bigger.

4.  Invest in your children
     College is expensive. I'm sure you came out of College with some debt.  You can help out your children by investing in their future education.  Start a 529 plan for your children, which is pretty much an interest building savings plan for your childrens' tuition payments.  Click here for IRS restrictions and FAQ about 529 plans.

5.  Buy a Car or Start Saving for a Car.
    Notice how I didn't say "make a large down payment on a car".  I said "buy" a car or "start saving" for a car. These days, it seems like everyone feels like they need to have a car loan.  I admit it, I'm guilty of this at this very minute. I have a car payment and I regret that I bought that car just about every time I think about it.  Lets say you currently drive a 2004 Pontiac Grand Prix with 130,000 miles on it. Your car is worth approximately $2,400 for a trade-in.  You received $2,000 for your tax refund. You can afford a $4,400 car, which still wouldn't get you much at all.  However, if you plan on getting a car and making $400 a month payments. After 1 year you would have enough money to purchase a $10,000 car.  That greatly opens up your opportunities AND you WOULD NOT INCUR MORE DEBT!

6.  Use it to buy something nice for yourself or family
     Anything can really fall into this category.  You can take your family on a nice vacation, purchase that new big screen TV the kids want. What ever you do with your tax refund, I suggest not taking on any debt.

#taxreturn #savingmoney #debtfree




**Please note I am not a certified personal finance manager, I am speaking from personal experiences and research conducted. I am not responsible for any financial decisions you make in the future**

What I did with my Tax Refunds

Since graduating college, I have filed my taxes three times.  All three times I have made significant payments to debt.

2012 Tax Return:
Our 2012 Tax Return was the largest of them all. The reason....I got married in December 2012 and received credit for being married.  A majority of our 2012 tax return went to pay-off our 2 small college loans, worth a total of $5,000.  The rest of the money went towards paying off the credit card I was using to pay for our Honey Moon to St. Lucia.  Paying off these two small loans reduced our monthly loan payments from $1,410 to $1,304. That would save us $104 a month to pay our monthly bills without dipping into our savings.

2013 Tax Return:
2013's Tax Return was quite a bit smaller.  We received back approximately $4,000.  Half of the money went to repay a small loan from my wife's parents (which I would never suggest doing again, they didn't bother us about it, but in the back of my head I hated every minute of it).  The rest went to payoff a loan with a remaining balance of $1,800.  Paying off this loan reduced our monthly loan payments from $1,304 to $1,268.

2014 Tax Return:
2014 was our smallest tax return yet.  We received $3,002 dollars.  We paid off our smallest loan, worth $2,324. The rest of the tax return went to purchasing new tires for our car, which were down below 2/32" tread. Paying off this loan saves us $50 per month.  Our monthly payments are now $1,218.

2015 Tax Return:
2015 is going to be our smallest tax return yet.  Since I will be deployed, I believe that our tax return will only be around $1,000 - $1,500.  But I already know where that money is going to go.... Loans.

My first post, Introduction, and Background

About me:

To start off, my name is Chris. I am currently serving in the US Army and I love my job.  I get to serve my country and fly helicopters, which is pretty awesome.  I have a knack for helping others so I thought, 'why not' I'll start a blog to reach out to others around the world.  I've created this blog to help share ideas on how to save money, make extra money, pay off your debt faster, plan cheap family trips, and plan a cheap, but great date.

My growing debt:

Before going to college, I had zero (0) debt plus I had my entire tuition paid for by Army ROTC. Coming out of college, I was lucky and had only $24,000 of debt (flight costs that were not covered by the ROTC scholarship).  Immediately after graduating college I took out a $25,000 low-interest cash loan and I bought a brand new 2012 Jeep Patriot. I traded in my paid-off 2004 Pontiac Grand Prix GT and paid the rest in 'cash' from that loan. My total debt as of May 2012 was $49,000. In December 2012 I married my College love and she brought an additional $40,000 worth of debt to the relationship. Our total debt after marriage was $89,000. WOW!!! Talk about drowning in debt.  I was the only one working and we were struggling to keep our heads afloat. We were making our minimum payments on our loans and we luckily had the remaining cash from the cash loan to keep us living. In September 2013, we moved to Tennessee. My wife didn't have a vehicle and despite the knowledge we had, we went and bought her a used car, adding $16,000 of debt. (Later I will tell you all of the mistakes we made with this purchase) Our total debt after purchasing the new car was $82,000.

Time for a change:

In February 2013, our lives changed. We attended Dave Ramsey's 'Financial Peace University'. At this point we realized that we were a 'slave' to the lenders and we wanted out.  This blog will walk you through the steps that we took and are still taking to get ourselves out of debt and become free.

What this blog is about:

This blog is truly meant to inspire others to become free and share my experiences as a Soldier while trying to climb out of debt.  This blog is not intended to be only for other Soldiers, but for everyone who knows the struggle.