Debt Free Alpha

Getting Out Of Debt – Automation

April 11th, 2012

One of the videos that really inspired me. It’s kind of like massive weight loss, no one thinks you can do it until after you have done it. I’m still wondering how the pieces are going to come together with my salary being what it is. There are a lot of options here, but regardless I’m going to put a huge dent in this baby.

Breaking the math down without including interest…

250.00 a year x 52 weeks = 13000
My tax return has historically been above 1000/yr, so add another $20 each week to that.

14000*3=42000. That’s not including any bonuses I get or raises along the way. A couple grand short of the goal, but surprisingly close. It’s a high percentage of my income, which I may have to adjust at some point. Going with it for now. I’m running lean next few months, with a minimal emergency fund, student loan payments on-hold until my credit card is 0 again. Also saving for this June townhouse downpayment ($400 of $2000 saved so far), $72 in my other bank accounts until I’m paid. I have over $10k of available credit if I needed to access it, but to me that isn’t even an option. It’s good to see there is light at the end of the tunnel. I will post less over the next few days than I have been, but like anything else this is still shiny and new starting out.
Tolls

April 11th, 2012

Toll Roads in Dallas. They chop the length of your commute down by half or more. The benefits are less gas consumption, feeling happier on one’s way to work and getting to locations on time. The way lights are timed, you wait a good 3 minutes sometimes before it changes from red to green, a good 10 set of lights to potentially hit.

I have ‘ve paid some occasional thought to how much money I spend on the toll roads in Dallas. The primary advantage of the tollroad is a much quicker commute. Typical day I take the tollroad to work and side streets home. That’s 1.18 a day time 5 days x 4 on average or 23.60 a month. On top of that I can spend an additional 3-5/wk on tolls each week. So $20 extra is a 43.60/mo. I hate to wait, but I also hate to burn money when I don’t have to. I’m thinking I could plan ahead and leave the house an extra 15 min earlier and save, but I’m not sure I’m that cheap. 😛
Why We’re Buying a Townhouse

April 10th, 2012
In my last post, I mentioned my partner and I are in the process of buying a townhouse. We don’t have a whole lot of money saved for a down payment, but needed to have the deal closed before July 2012.

Why the heck would someone in over 40,000 in debt be a coborrower on a mortgage for a townhouse?
- Closing Cost Benefit – Since we moved, as part of our relocation package my partner’s company will pay for closing costs provided we close by a certain date. Value: $2500.
- FHA Qualification – We did an FHA loan, which only requires 3.5% down by closing and before April 1st only required 1% of the value. 20% down would be ideal, but with our incomes / rent I don’t think it’s realistic.
- Rent – We live in a nice apartment, but it is $1300/mo. Round up to 16000/yr just for rent with no equity. Our mortgage will be under 150k. In 10 years at what we pay now, the bulk of our townhouse would be paid off. We also pay for gas each month, for our hot water heater and a fireplace we never use, adding about $40/mo to our bill.
- Utilities – Our electricity bill in the summer time is between 200 and 300 per month for July and August. One of the downsides to living in a 3rd floor apartment with lots of sunlight / poor insulation. This townhouse has a new HVAC unit, energy efficient appliances and lots of shade.
- Space – The 1300 sq footage for our place is fine now, but 1800 is much better especially when friends or family come over. It also has 3 bedrooms vs 2.
- Housing Market – Sure it could get worse, but I don’t think it can go much lower than it is right now. Our complex will likely try to raise our rent after this year is up by 100/mo.
The property has been fully inspected, passed with the exception of some electrical issues (not up to code, couple thousand to fix) the seller has agreed to fix before closing date and minor roof work we are going to have done for ~$200. Like most properties in the area, it has had foundation work done recently. In New York that might be a red flag, but in Texas it’s business as usual.

I believe our mortgage payment will slightly lower than our rent right now, including homeowners insurance, taxes, pmi and interest (~3.65% rate iirc). My partner could afford to pay for it all on his salary, but we’re doing this together and are in it for the long haul. I am definitely looking forward to buying a home. Before we moved I never would’ve thought it was possible. Definitely not on Long Island where property values and taxes are twice as high as Dallas….

On my way to work now, but will update more soon.
Getting to Senior

April 10th, 2012

Interesting to see what people with my title but the word senior earn at my company. The high end is about 15% more than my current earnings. Raises are given based on performance and not length of time. Is it bad that I’m looking at my earnings potential less than a month in? I don’t think so. It’s not just about the money, it’s about the overall experience. I’m happy right now and really don’t have any complaints. When I started focusing on what other successful people were doing instead of myself, I started becoming overly critical and questioning my choices in life (not in a good way). Now I focus more on what I do have control over and just enjoying each day regardless of what happens. The grass isn’t always greener on the other side. A friend of mine worked in sales and would still be doing work at 10pm. Not my idea of a super life.

I quit working at a supermarket I was at for 5 years in 2006. It closed for good just last month. This picture explains it all. Those who can’t compete go out of business. You can be the best worker at the supermarket and still not get ahead in life. Unions won’t always save you and often hold back top talent or artificially deflate their wages.

After I left, I was in banking for another 5 years, with essentially one promotion. Part-time to full-time and then again to a supervisor. I tried a couple times to advance, but was overlooked for someone else each time, even people hired after me with less education. Those experiences made me realize a little cockiness, confidence, OCD and impatience is necessary to get ahead. Playing it safe all the time can really hold a person back over the long-term. I’m not where I want to be yet at 28, but I’m a step closer than I was a month ago. This blog and the accountability it creates will help me stay on the mark.
4/8/12 Snapshot…

April 9th, 2012

4/8/12 Snapshot of Sallie Mae Loan Status

Paid down only about 4800 of this loan over a 4 year period. Percentage-wise that’s a mere 10%. This is a reminder for me that things need to change. Paying the minimum isn’t working anymore. At 300/month, the interest alone would take 6 months to pay off. Then the remaining 1800 would go towards the principal.

I plugged the numbers into a loan payoff calculator. The result is that at 300/mo it would take 193 months or 16 years to pay this off. The loan payment after this year is supposed to shift to 121 payments at 453.51 starting 12/4/2012 and 9 at 296.23 starting 1/4/2023. I will still qualify for income-based repayment based on my income for 2011 so it’s highly likely I won’t have to make any more payments for another year. This is a unique opportunity to get my financial house in order and pay down as much of the principal as possible. I don’t want to still be paying this off 5 years from now, much less 10, or pay $9000 in interest over that time.

Using The Inflation Calculator, What cost $9000 in 2000 would cost 11279.73 in 2010. That’s approximately 25% more. The math isn’t nearly as cut and dry with inflation, compounding, change in gas prices and all that jazz…but I honestly believe it makes more sense to make compromises now instead of down the road. Especially when tax rates may change and the cost of living will inevitably be higher.
Ground Zero – My Challenge

April 7th, 2012
Wild!

1095 days. 45,159.35 remaining.

I graduated from St. Joseph’s College of New York with an MBA at the age of 24 and 42k of debt in 2008. This debt is the aggregate total of my loans from 2001 – 2008, including Community College and Undergraduate Education. I am 28 now, pushing ever closer to 30 and realized I need to do something with my debt before it gets completely out of control.

While my story isn’t as exciting as Mr. No More Harvard Debt, it is my own and no one else’s. Everyone has to start off from somewhere. Today April 7, 2012 I owe $45159.35 in debt to various entities. This number is the culmination of student loans and credit cards.

The breakdown is as follows:
41,971.74 to Sallie Mae at 4.25%, currently on Income-Based Repayment Plan. Still unsure if my interest will be covered at all.
3187.61o on a Chase Slate Card at 0%, which I believe is good until the end of the year.
47.70 to Citibank.

In 2011 I earned ~14000, working for effectively half the year up until we moved.
2010 I earned ~$13000. Also essentially working half of the year, since I spent a couple months doing per diem executive assistant type work. Long story which I prefer to skip right now.
2009 $~25000. This was the most money I made in a single year. I also worked in an environment of mind numbing repetition and dreaded coming in each day after months worth of drama. I quit to explore my options and my finances tanked as a result.

I will not divulge my income or that of my partner (yeah I’m gay) in this blog, for obvious reasons but he makes considerably more than I do. I plan to get this debt paid off in the next 36 months. That’s April 7, 2015 y’all. It’s doable. I plan to automate as much as I can and get a raise / promotion in the next 12-16 months.

I’ve been hit with a wave of adversity the past 9 months since moving to Dallas from New York. I don’t want to dwell on it, but sharing it will provide some background as to my thought processes.
- Got laid off after working for a company 6 weeks after being out of work for 6 months. This company also bounced my last paycheck and owed me money for the days accrued between my last check and the day they closed up. It appears they have violated the Worker Adjustment and Retraining Notifcation (WARN) Act by filing for bankruptcy and not giving any employees adequate notice. I have filed a claim and would really like to get my money.
- I was on unemployment for 4 weeks while I went on a massive networking campaign and collected about $1000.
- Got a ticket for $178 from a cop on my way to a job interview I was already 45 minutes to. I couldn’t find the building and decided to circle around the neighborhood. Needless to say a cop was hiding and clocked me for 49 in a 30. Settled, paid the fine and it is off my record.
- Got $500 from my folks to help with my bills after my layoffs. I didn’t ask for it, but definitely benefitted from it.
- Prior to finding the job at that company, I applied to over 120 positions and went on about 10 different interviews including one at a company offering to pay me $30/hr. After my third interview with no clear answer as to when they could hire me, I made the decision to try something else.
My 2008 Nissan Altima is paid off and I expect to get at least another 4 good years out of it. I could sell it today and get ~$15k . I put about 4k into it between upgrading the sound system, installing dynomat and hushmat in key places, along with a strut bar / sway bar, tinted windows, rims / tires etc. and my warranty is good till 2015 so no new car for me. Some might call it foolish, but I enjoy these things everyday and it isn’t breaking the bank right now.

I just started a new job March 2011 at a company I feel is financially stable and has a great team of smart people working there. This is my first time working in this industry, so my experience can’t yet command a higher salary. I’d like to be making $50k by the time I’m 32. My credit score is presently a 781.

Breakdown of my expenses are as follows:

$101 – Cell Phone (AT&T Wireless on iPhone 4)
$145 – U-Verse (Triple package with 18Mbps internet)
$150 – Gas (commute to work is only 10mi roundtrip)
$34 – Life Insurance
$30 – Haircut
$80 – Car Insurance
$30 – Car Washes
$125 – Entertainment
$200 – Food
$32 – Gas Bill
$15 – Rdio Music Subscription
$50 – Random Miscellaneous
$35 – Washer / Dryer Rental
$800 – Toward Townhouse downpayment, Need 1500-2000 by June 10th.

1827 in monthly expenses short-term, according to my best estimate. My partner has been paying the rent since we moved here and I’ve been helping out as much as I can with expenses outside of that.

I am paying this debt off as much on my own without help from any outside sources. I am continuing to research ways of making money on the side and continually develop my skills to start marketable in this fast changing economy. I get paid semi-monthly, so my updates will be targeted around that timeframe unless I feel a reason to post otherwise.

We are also saving for a downpayment on a townhouse we’re closing on in June ideally. It’s an FHA loan, so 3.5% down instead of the typical 20, but PMI applies. Our combined income could pay for off in 2 years, but that is not the goal. I will go into more detail on that in my next post.

Getting Out Of Debt – Automation

Tolls

Why We’re Buying a Townhouse

Getting to Senior

4/8/12 Snapshot…

Ground Zero – My Challenge