PF Under 30

Paying off debt and finding my financial lifestyle

Archive for category Emergency Fund

Changing Priorities the Dave Ramsey way….

Sep 3

Posted by kiki in CC Debt Progress, Emergency Fund, Finance Gurus | 1 Comment

Today we have turned a corner. We’re motivated. VERY motivated! And we have the right tools at our disposal we need to be successful.

Today is the day I’m changing my 2008 Goals to reflect the Dave Ramsey principles. I’ve put $1000 in the bank for Emergencies, I’m saving monthly for annual expenses like life insurance, my home warranty, Christmas, and car tabs and repairs, I’m also paying $900/month toward paying off that USAA Amex. I will not, however, be funding my Roth IRA this year. Yeah, I said it. I’m not doing it.

Why? 1) Dave told me so. 2) I’ve been putting my debt reduction strategy on hold every year to fund my Roth. While I’ve successfully funded my Roth every year, I’ve been treading water on the debt.

My #1 and only goal before January 1, 2009 is to pay off that USAA Amex. According to my nifty Dave Ramsey calculator, contributing $900 a month will have me paying it off at the end of May. I’m going to do it by the end of December. Why? Dave Ramsey’s calculator doesn’t account for my extra paycheck, or stuff I’m going to sell to get “Gazelle intense.” It also doesn’t account for the fact that I will be trimming my budget ($250 in electricity costs down to just over $50, and a $219 health insurance payment this month that’s going to move down to $70 next month. 

Yes, my friends, I’m getting “Gazelle intense”. I’m also going to pay off the Citi card and the car loan by the end of 2009. That is my gift to myself next New Years Eve. I will be debt free minus the house. Then, and only then, the two of us made a decision tonight to hold off on buying a house together until we are both debt free. 2010 will be our year. Heck, the next 1 1/4 years will be our year. This is the biggest investment we will make in our future and independence to date. I can’t tell you how freeing it is to have both of us on board with this. This was the best $93 I’ve ever invested in our relationship. 

Anyway, from now until the end of next year, you will see my progress bars change to my last 3 remaining debts. It will be a triumphant year, I can guarantee it.

$1000 Saved – $500 earned

Aug 21

Posted by kiki in Credit and Debt, Emergency Fund | 4 Comments

It’s official, as of this morning I’ve officially completed Baby Step #1. I now have $1000 in my Emergency Fund! (Thanks to USAA and immediate transfers for my instant gratification.)

On top of that, I officially sold my old bedroom furniture set on Craigslist for a measly $500. They will be picking it up this weekend from the warehouse that I keep it at, with $500 CASH.

Not exactly sure how I’m going to accomplish this, because you can’t deposit cash @ USAA. Maybe I’ll give it to friends and have them write me a check.

Anyway, the point is, this is the first $500 toward getting “Gazelle Intense” and paying off my USAA Amex. I will feel so much better when this account goes below $8000 – it’s been sitting there for way too long.

This time will be different though – I’ve stopped using it completely. Even for “Cash Back”. Even for auto-deduct items. Every gain I make will not be “One step forward, two steps back,” it will be permanent. 

I’m also currently negotiating selling my old PC that I never use. This will clear the space out from under my desk (BIG plus) and should also net another $400 to my Debt Snowball (BIGGER plus.)

Current Debt Stands at:

Car: $12,003
Credit Cards: $18,300

TOTAL Non-mortgage debt: $30,303

Next step after this will be examining my groceries and my gas, though I have plenty of non-financial projects to work on too.

Direct Transfer to HSA – why not?

Aug 15

Posted by kiki in Emergency Fund, Finance Gurus, Taxes | No Comments

So I was about to call into Dave Ramsey and ask him if it was OK to put my Baby Step #2 on hold to contribute the max for my newly established HSA (Health Savings Account) – when I saw this “feature” -
Apparently you can rollover money from your IRA (not SIMPLE or SEP-IRA’s) once – up to the maximum annual amount – to your HSA without getting any distribution penalties.

I’ve got about $9,000 sitting in a Traditional IRA that will be taxed when I retire and withdraw it. If I move it (without penalty) to an HSA – it’s basically like a ROTH – grows tax free and can be withdrawn tax free (for qualified medical expenses.) If I had the cash, that would be ideal, but I’m already worried about maxing out my ROTH before April 15, 2009. If I can make taxable money non-taxable money without a “balance transfer fee” – why isn’t this a no-brainer?

In other news – I am establishing my Dave Ramsey Emergency Fund. Just transferred my first $200. However, I have a meeting w/ somebody on Monday who’s interested in buying my old bedroom set. If that goes through, I will have made my $1000 Emergency Fund and can check off Baby Step #1. Look for my brand new progress bar for the Emergency Fund coming soon.

Reader Poll: What should I do with $5300?

Oct 25

Posted by kiki in Big Purchases, Emergency Fund, Living Expenses, Refunds and Rebates, Roth IRAs | No Comments

So as most of you know, I have been trying to sell my car. Well, today I finally did it! After almost 3 months of sitting there, I have gotten rid of it for the bargain price of $5300 – CASH. I have already called my car insurance company – effectively dropping my premium by $41/month.

So there are multiple things I can do with this and of course a combination thereof:

1) Pay off credit card debt. See my recent post for balances. I will definately be getting rid of the $942 I owe to stupid BOA.

2) Pay down my car loan - not the best option because it is not my priority but it is sitting at 9.25% right now.

3) Max out my Roth – haven’t even contributed a penny to it this year yet, but I have until April 15 to “fill up”.

4) E-Fund. As most of you know, I want to have $10,000 in a high yield savings account for emergencies. Seeing that I’ve been jobless for 3 months now, I would say this qualifies as an Emergency.

I’m quite partial to the Credit Card Debt. The Costco Amex doesn’t show up on my credit score, but the rest sure do. I could pay those down, boost my credit score and effectively change the APR for my car loan too. Still, I want your advice. If I was an expert, I wouldn’t have gotten myself into this Sh!% in the first place.

Finding a home for my new Emergency Fund

Oct 3

Posted by kiki in Citibank, Costco, Emergency Fund | No Comments

So everybody knows by now that with my recent layoff, I’ve learned the importance of an Emergency Fund. My goal is $10,000 in a single liquid account. According to my calculators, with direct depositing 10% of my (expected) gross income every 2 weeks, it’s going to take me 1.3 years to complete. I would like to think that somewhere along the way I could add more to do it in a year flat, but if I can’t… I’m OK with that.

My goals right now are 10% gross into my emergency fund, $192 per paycheck to my Roth ($5000 max 2008 contribution limit / 26 paychecks), and of course, credit card debt reduction. Currently I have scheduled 10% of my gross pay to go to one particular card. Minimum payments for the rest are going to have to come out of my everyday spending account. I’m trying to automate as much as possible so that what I have left in my checking account is what I can spend.

Anyway, back on topic. I’ve been looking for new homes for my new E-fund. Look here for a great list of current rates. I looked at the Capital One 5.20APR deal for Costco members, but the minimum is too high for me. Plus, I’m not too fond of opening an account with yet another bank.

But I think I have found the solution. The Vanguard Prime Money Market Fund. Currently yielding a little over 5%, it’s a great solution for me since I already hold all of my retirement funds with them. The only problem is that it has a $3,000 minimum. While I still want to go with them, I can’t until my account meets the $3000 minimum threashold.

So where do I stash my moola up until I reach the $3000? New banks are out of the question! I absolutely hate the idea of setting up another address/phone/social security info with another bank. And the additional website login… the horror! the horror!

So it’s going to be either Citibank, Bank of America, or my local credit union. Well, my local credit union savings account yields .75% APR, plus it would be too easily spendable. BoA has savings accounts, but at not great rates and not without fees. Citi, on the other hand has an Ultimate Savings account yielding 4.75APY. It requires no checking account, and has no fees. And since I’m looking at dropping my Citibank checking account as soon as my last check clears, this is perfect for me!

It’s probably going to take me about 5 months to get to that $3000 threashold, but that’s OK with me.

I’m excited! Even though I don’t have it going yet… I HAVE A PLAN PEOPLE! AN AUTOMATIC PLAN! And once I setup all of these direct deposit pieces, we will surely be in business!