5 Year Plan» Pay Debt

Ways to Make Money – It’s Working!

Digigirl — Tue, 14 Jul 2009 18:35:04 +0000

Our main focus right now is finding ways to make money to help with debt reduction. We are learning ways to make money online as well, but the quickest way to get some fast cash right away was to start selling off things around the house (most of which was just collecting dust anyway).

Here’s an update on our progress:

Selling Used Books, Videos & Music on Amazon.com

This has worked out very well for us. We collected all the books, DVDs, CDs and games we had around the house and put them all up on Amazon. Check out our settlement report from Amazon for our first month selling:

Some additional stats:

Days selling: 27
Items sold: 146 (avg 5.41 per day)
Avg profit: $3.69
Total Amazon profit** to date: $538.80

**Profit number is sale price less selling fees, postage & supplies

We would have made a lot less money per item if we sold them at a garage sale, so I think this is definitely the way to go despite the additional work of listing, packaging and mailing. We still have a bunch of items listed and waiting to be purchased, PLUS we still have tons of stuff at home to list. So this has a lot of ongoing potential for us.

Selling Household Items on Craigslist.com

We’ve only sold 4 items so far (weight bench set, punching bag set, set of 2 garden benches and a dress form), but we have lots of other things to list. We just need to get them out, dusted off and a picture taken.

This method is even easier than Amazon, but I think it’s really best for larger household type items that are hard to ship. I doubt we’d do as well with the books & videos on Craigslist. Craigslist is totally free, and we just put in the ad that the buyer needs to pick up the item, so there are no fees or supplies to subtract. This one is pure profit.

Total Craigslist profit to date: $531.00

Selling on Ebay

This is the time-honored way to make money online, but my feeling is that Ebay just isn’t the powerhouse it once was. When I moved from California to Texas, I sold a lot of stuff on Ebay and had some great success. But as I look up items now it seems there there is not much bidding going on and very few completed sales of similar items to use for comparisons. I think Ebay has really become more of an online merchant conglomeration rather than the global garage sale it used to be.

Nevertheless, it is the still only good place to sell some things that don’t work well on Amazon or Craigslist. We’ve only sold a couple of things there so far (back issues of expensive magazines). We do have quite a few things that will end up here, though (Bill’s old comic books, for instance), so we’ll see what happens.

Total Ebay profit to date: $10.30.

So in our first month, we managed to find ways to make money that earned us an additional $1,080.10! This helped us keep current on our bills but more importantly, allowed us to pay off debts (2) that were just sitting out there collecting interest every month!

What will next month bring?

Book Review: All Your Worth

Digigirl — Mon, 06 Jul 2009 18:28:45 +0000

It’s amazing how things that were once way too boring to be bothered with can suddenly become an obsession. That’s how it is with me and personal finance topics, lately. In my usual fashion, once I decide to do something, I become obsessed with it. I scour the Internet, I read books, I watch videos. I learn everything I can about the topic at hand. Right now, the topic is personal finance. Hopefully by the time this obsession passes, I’ll be in great financial shape!

All Your Worth: The Ultimate Lifetime Money Plan by Elizabeth Warren and Amelia Warren Tyagi will definitely help me along.

This book says right in the beginning that a lot of other personal finance books are really written for people who already have money and just want to know how to make more money. This book is not for them! This book is for regular people working regular jobs, trying to get their finances in order. It’s for those of us who make a decent wage, but not necessarily a great one, who struggle from paycheck to paycheck. It’s for those of us who wonder why others in similar situations seem to do fine, and yet we never have enough money to do more than barely scrape by. They wrote a book for ME!!

The premise of the book is basic. Just as we should eat a balanced diet for optimal health, so we should have a balanced plan for how to spend our money in order to remain financially healthy. Such a simple concept, and yet I’ve never seen it stated quite this way before. Does everybody else already know about this? How did I miss out?

Obviously, hard dollar amounts won’t work, as everyone’s situation is different. Instead, they provide percentage amounts for you to use when dividing up your take-home dollars. Yes, that’s right – TAKE HOME dollars. The after tax ones. The ones you actually end up with! Wow, common sense. What a novel idea!

Must-Haves – 50%

They suggest that an ideal balanced money plan allows 50% of your take home pay to go toward “Must-Haves” – Must Haves include those things we all need to live a basic life with dignity – housing, basic transportation, utilities, food. Also included in this section are things that you are contractually obligated to pay – student loans, for instance.

Savings – 20%

Next, 20% goes to Savings. That sounds like a lot, but when they break it down and tell you how you should be saving it, it all makes a lot of sense. First, the entire 20% goes towards building some basic funds that you should always have on hand. A $1,000 emergency fund should remain in your account, liquid and ready to go at all times. Once that is in place, you build your Security Fund – this is an amount equaling 6 months of your “Must-Haves” spending to be used in case you lose your job, major illness or something similar. Again, it should remain pretty liquid and easy to get to without major penalty.

Once those funds are in place, you start working it a little differently. Of your total 20%, 10% goes toward retirement savings, 5% is for paying down your mortgage, and the remaining 5% goes towards your personal goals – buying a house, starting a business, whatever it is you dream of.

So, while 20% of my take home pay seems like a lot for savings, when they put it that way, it does seem really important. All of those are things we really need. How can we not address them?

Wants – 30%

Finally, the remaining 30% of your take home pay goes towards Wants. That’s right – WANTS. First you have to realize that Wants include some things you might currently be thinking of as Must-Haves – cable TV for instance. High speed Internet. How about food above and beyond subsistence level? Those types of things all fall within Wants. But it also includes your fun money – movies, shopping, whatever blows your skirt up.

If you can't afford fun, you can't afford your life!

You may be thinking – but why should I be so frivolous? Why so much for Wants? As the authors say, “If you can’t afford fun, you can’t afford your life.” Wants are what life is all about! It’s what gets us up every day, it’s what makes life interesting. Nobody should have to live with only the basics, and a balanced money plan provides for that. So get your money balanced and spend your Wants money guilt-free.

Coloring Inside the Lines

The trick here is getting your spending within those guidelines. There are a lot of little worksheets and questionnaires to help you identify where you’ve been going wrong thus far, but the bottom line is that you’re going to have to spend some time tracking your spending to figure out exactly where your dollars are going. The upside is that once you’ve done that, and adjust what you’re doing to bring yourself into line, you shouldn’t have to track every dollar you spend going forward. Once you know your fixed costs are right, and set up your savings to get pulled out automatically, basically the remaining amount is what you get to spend on your Wants.

Much easier than a big, hairy budget.

As many personal finance gurus do, the authors suggest using an envelope system for your spending cash. Once you figure out what your monthly Wants amount is, divide it into 4 weekly amounts. Each week, pull that cash out, put it into an envelope in your purse or pocket and that’s it. As long as you have money in your envelope, you can spend it however you like. The kicker is – when it’s gone, it’s gone. No more spending.

We’ve identified that our problem is actually in the Must-Haves area, not the Wants. It’s not going to be quick or simple to get those more into line, as our credit scores (way less than perfect right now) have to improve and some major home repairs / upgrades need to take place before we can really affect those monthly costs. But at least now we know what, where and how.

Goals & Inspirations

Maybe the Balance Money Formula is a no-brainer for other people. But for me it was an epiphany. Now that I have a framework, I can work towards getting things in line. Reading this book not only gave me the information I needed to set concrete goals and the tools to get where I want to go, but it gave me inspiration to really want it, even more than I already did! I can’t wait to get those debts paid off! I can’t wait to see that credit score improve so I can refinance my mortgage! I can’t wait to get a big, fat Savings Account statement one of these days!

It will happen. We’re going to make it happen! You just watch.

Hey, wanna buy some books or videos?

Taking off the Blinders

Digigirl — Wed, 17 Jun 2009 16:37:19 +0000

Stages of Personal Finance

Fumbling in the dark
A candle in the dark
The light at the end of the tunnel
Lighting the way
Financial independence

Get Rich Slowly has a series of articles about the stages of personal finance that he (and many others) go through.

His descriptions really resonate with me as we are just beginning along the same journey he documented on his blog. But as I research ways to improve our situation, rather than finding a candle in the dark I feel more like blinders are coming off. As if I have been purposely hiding my eyes for all these years from the many simple ways I could have managed my money better. Granted, there are a lot of great online services available now that weren’t previously, but that doesn’t mean that I couldn’t have done more before this. I COULD have done more. I SHOULD have done more. But I didn’t. I kept the blinders on.

Seeing the Light

I’ve never been comfortable with numbers. Math and I don’t get along. I think that is part of the reason I avoided learning anything more than the absolute basics of personal finance. I had visions of complex accounting, constantly crunching numbers, pulling out my hair because I’d never be able to get the right results.

Now that I have finally put some bone into my back and turned to face the problem instead of ignoring it, I am finding that while some topics are still ominous and overwhelming to me (like, the stock market), there are so many easy things I can do right now that are not any more scary than the basic banking we all do every day.

Better Banking

One of the easiest things we can do to maximize the money we do currently have is to get a better bank account. It’s so easy to just pick a bank account and then forget about it as years pass. I’m amazed at all the benefits I can get at other banks for the same exact money I currently have, sitting in a plain ol’ checking account.

Interest on checking accounts with zero minimum balance requirements
Higher interest online savings accounts
Refunds on ATM fees charged by other banks

All without doing anything different than we are currently doing – except switching to the new bank. How do these plain bank accounts even still exist, I wonder? To take advantage of all of us who aren’t paying attention, apparently. Well, unfortunately for them – we’re now paying attention.

Look at this site listing high yield checking accounts: HighYieldCheckingDeals.com

Paying Attention

Last year, I lost 35 pounds. One of the biggest lessons I learned during that process was to PAY ATTENTION. It was so easy for years before to just not think about my weight, not step on the scale because I knew I wouldn’t like the number. Wear baggy clothes so I wouldn’t have to worry about the body underneath. Then, one day I looked in the mirror and saw how terrible I looked, realized how sluggish I felt and knew I had to do something. It took nearly an entire year of carefully counting calories and revamping my eating habits to get in a better place. And I still have work to do! Even though I’m at a better size than I was before, I’m not at the optimum size for me.

Our finances are exactly the same. We’ve just been cruising along all this time, not paying attention. Then when we finally looked up, we realized we’d really dug ourselves a hole. I can already tell the lesson will be the same – PAY ATTENTION! Make sure bills get paid on time so you avoid fees. Watch the banking trends so you can take advantage of better bank accounts as they come along. Right now our finances are just like my weight last year – we’re just starting to pay attention, learning how we need to act, and what to do to be healthy going forward.