Comments for 99k by 2011

Comment on BETRAYAL! by RL

RL — Mon, 31 Mar 2008 18:08:22 +0000

Hi again,
I fully understand the dual software routine to balance the checking account. Before YNAB I used excel as my check register, and I have a little formula on the side of the page that quickly “reconciles” my account (checks that haven’t cleared + actual balance = bank balance). I am still using my excel register to make sure my bank account is accurate (and YNAB is accurate). This also means I’m entering every checking transactin twice (once in YNAB and once in excel) but ce la vie. Even if I was living Rule #1 (and we’re not either yet), I still want to make sure my checking account balances.
A few other points:
1) I use separate register tabs in YNAB for different accounts: checking, ING savings, AmEx (where most of our monthly expenses are charged), and cash. I always make sure the total on my YNAB checking tab matches my excel spreadsheet to the penny. Then I know I haven’t missed anything.
2) We just switched to the Schwab High Yield checking account, which I love!! This was primarily motivated by YNAB… we have $3000 in buffer (which is also serving as our emergency fund), and it helps to have that sitting in the checking account to “sort of” live Rule #1 (enough so that I can pay bills whenever and not worry about spacing them out across the month). But, I didn’t want to sacrafice the interest I was getting when the buffer was sitting in ING (my bank of america checking was paying 0.2% inerest, or something horrible like that). Solution: Schwab checking. It’s totally free - no monthly fee, no min. balance, free checks, free online bill pay AND unlimited ATM fee rebates (=awesome), PLUS they pay 3.01% interest on your checking balance. Basically equal to the ING rate (which is 3.00% right now). So this was a no brainer. Schwab has been amazing so far. Excellent customer service. You do have to open a brokerage account to get this checking product, but it’s painless, you don’t have to fund it, and there’s no fee on that either (so ours will just sit there at $0).
I know I sound like a commercial, but this has really worked well for us.
So don’t feel guilty for using quicken - whatever works!

Comment on number crunching: the interesting interest by lpkitten

lpkitten — Sat, 29 Mar 2008 02:34:34 +0000

when i was paying off my debt i chose to save the money in my savings account instead of paying it directly to the credit card. as long as you’re not paying any interest, there is no monetary benefit for you to pay it down. paying it down may help your credit score but most likely you’d rather have the extra interest money. just make sure you’re not tempted to spend it before you use it to pay the credit card!

Comment on cockamany idea? or sound financial course of action? by RL

RL — Fri, 21 Mar 2008 18:58:08 +0000

Oooo - I got a shout out! Cool.

I just read (and commented) on the number crunching result post that comes after this (reading things out of order), but it sounds like you’re fully aware of the “psychological effects” argument bouncing around here. I suppose you can tweak your spreadsheet to give you a similar effect…. If you add in the savings columns, and subtract the growing savings balance from your total debt - you can still “watch” the debt number going down each month, even though the balances are still on the cards. This might also help prevent tapping into the savings for “emergencies.” Just a thought.

Comment on number crunching: the interesting interest by RL

RL — Fri, 21 Mar 2008 18:49:09 +0000

I have been using the spreadsheet you sent me back in February to calculate our debt paydown strategy (I love that thing by the way - thank you!!). Like Jonathan, I also use a formula of “(interest rate / 12) * principal” to calculate the interest we will be paying each month.

My first thought is - the 3.5% you are getting now may drop a bit (or alot) depending on the fed’s continued mood over the next year. I saw yesterday that my ING rate is now at 2.9% or something horrible like that. (But, on the flip side, the interest rate drops are a huge help in paying down the one variable rate student loan I have, so I can’t complain that much.)

I thought about pursuing a similar strategy as this post - we have all our credit card debt on 2 cards now. $13,000 fixed at 1.99% through Jan 09, and $8200 at 0% thr. March 09. Our plan is to pay the $13,000 off completely before the rate expires, and then if it makes sense, find another 0% card for the $8200 (which we should have paid off by mid 2009 regardless).

2 reasons I’m throwing $$ directly at the debt instead of letting it build up and accumulate ING interest instead (and lets pretend my 1.99% is 0% for the sake of this discussion, because obviously at 1.99% I’m still paying interest so the paydown makes sense): 1) I agree that the psycological effcts of seeing the balance shrink will be motiviating - esp. because I have a whole snowflake theory and I want to see how that pays off, and 2) we’re in the process of changing our credit card rewards strategy (based off things I’ve read at FMF) - we just received a Blue AmEx, and the next step is to get a Chase Freedom Visa. I’m not 100% sure our credit is strong enough for the chase card right now (we’re both around 680-700) but I know that paying down the credit card debt will help bring up that score. So that’s my rationale. (These 2 cards will be used exclusively for monthly expenses and paid off in full every month. We do the same now with a gold amex, but I can’t stand the annual fee)

But if I was in your shoes - I might do the “put it all in savings” approach. Hey, $189 is a pretty big snowflake. Even if saving rates go down, you’ll still end up with at least $150 or so, right?

Comment on number crunching: the interesting interest by Jonathan

Jonathan — Fri, 21 Mar 2008 17:43:58 +0000

The calculation looks right, although I would have used a monthly interest rate rather than annual to simplify the logic (0.035/12).

Be careful not to underestimate the psychological benefit of paying off the credit cards. My wife and I started saving in a separate account, but didn’t really get focused on paying debt until we started putting it straight on the card. Watching the balance drop is what kept us going. With a high savings balance, it gave us the false impression that we had more money that we really did.

You also need to be careful about potentially dipping into the balance for “emergencies”. Paying off the debt is final, but saving it leaves you open to the potential for spending it on other things.

Sounds like you are doing great, keep up the good work!

Comment on Let’s Play Catch Up! by RL

RL — Wed, 19 Mar 2008 20:13:39 +0000

Hello again - I was wondering when the next installment would be! Nice update - your blog has really helped as we began our YNAB jouney… keep it up!

Comment on Let’s Play Catch Up! by Tim Ramsey

Tim Ramsey — Wed, 19 Mar 2008 17:04:57 +0000

I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

Tim Ramsey

Comment on Let’s Play Catch Up! by Mike Harmon

Mike Harmon — Wed, 19 Mar 2008 16:39:31 +0000

I came across your blog on Technorati. Nice site layout. I will stop by and read more soon.

Mike Harmon

Comment on Our Life Before & After Budgeting by domino

domino — Sat, 15 Mar 2008 18:14:52 +0000

It looks like you are on the right track. A couple of years ago we took a good look at our net worth and wasn’t very pleased with the result. We had a lot of cc debt too ($30k) without much to show for it, so I know exactly where your coming from. We paid most of that down just out of sheer terror, well before we found YNAB.

It’s funny, it took us 2 yrs to pay off the 1st $24k of our debt without budgeting, $6k more of it in 6 months with budgeting, but the last $30k of it was paid off within five months of really getting gazelle intense about it. Somehow we always managed to find $1k / mo to pay on it without really effecting lifestyle, but it wasn’t until we got “weird” about it and made it our life’s mission to get clear of the remainder of it as quickly as possible that it started to take off. Praying about it helped out a lot too.

I wish you swift progress and look forward to reading your updates.

Comment on End of the Month Antsy-ness by 99kby2011

99kby2011 — Sun, 02 Mar 2008 21:55:05 +0000

We didn’t fall short, we made our goal of $1k a month.

And again, as long as we are on track, I’m fine with spending some bonus money.

I guess the next post I need to write is the changes we’ve made in our lifestyle!

Even with that though, I foresee you being disappointed with a lot of the choices we make/will be making in the future. Yes, we’re serious, but we’re also happy with a 3 year plan. We’re not going to kill ourselves and deprive ourselves of ALL fun to do it quicker. We went out to dinner & a movie on my birthday this month too, and when you throw in the cost of a sitter, it’s not a small amount. But we budgeted for it, and we’re not going to feel guilty for it.

I’m grateful for the comments, and will listen to constructive criticism just fine. But we will make our own decisions as to how we go about this.