financial zen

This Christmas, take a moment to guess a gift – and it’ll give a gift to a child! />

Please, if you like the idea, please digg it – we’re going to give away a lot of gifts with this one! This is something that will lead to a lot of holiday cheer for some lucky kids!

I’ve read across a few finance blogs that have been talking about prepaying mortgages or not – a lot of people seem against it, saying that the money would be better spent putting into various investment vehicles for “in theory” greater returns on the investment.

In researching this idea, I’ve gotten a good grasp on what seems to be the going concern – what debts are being paid off first?

In thinking about prepaying the mortgage, we’re laying out the debt that takes interest – i.e. credit card debt, which we will have paid off this month (as we do every month).

Our debt consists of:

• 0% credit cards (used for appliances, setup to be paid off one month before they expire)
• Student loans (for me, still in school).
• Mortgage

That’s the extent of the debt – Mortgage, Student Loans, and credit cards. What is charging the most? Our mortgage!

I’m contributing to my company’s 401k to the match, so I’m not losing any money, and with my wife working that gives us over a grand extra disposable income per month! The plan is to take this money and apply it towards our debts AND the mortgage principal – paying the principal (by sending a direct check notated that it’s for the principal) will cut down on insurance, as well! I do not look at it as “a return on investment” with our prepayments do to the recent volatility of the housing market. If we prepay the mortgage and sell the house in – say five years – we’ll have paid down $30,000 on the mortgage, plus the built up equity, meaning we could potentially have a huge down payment for the next home – all from the money gained from our home!

It’s still something I’m looking into, but I will be paying some extra down on our mortgage while paying down all other debt – while reaping the tax benefits of interest paid on student loans and our mortgage… :)

In fighting debt, one thing you should always do is establish an emergency fund.

Of course, in my venture, I’ve got a mixed response:

• I’ve got a built up (and building) 401k retirement account.
• I’ve got an emergency fund (albeit, a small one).
• I’m two months ahead on my mortgage payments.
• I’ve paid ahead on bills!
• I’ve got debt!

This is kind of a “no-no” – why wouldn’t it be great to be ahead of some bills, especially my mortgage?

It’s showing that I’ve lost track of my finances!

I’m overpaying when that money could be better cycled into paying down debt! To fight this, I plan on taking some of my emergency fund, my extra cash from my mortgage gap, and my wife’s income (all of it!) and paying down debt. Basically, my excess influx of cash goes – debt/mortgage principal. Back and forth. Pay down the big one and hammer away at the rest.

One small step at a time, but as I get things in order I’m slowly moving back in track.

Its been a long time coming, and after the birth of my son, a change of employment, and still married and in school full-time!

So of course certain areas suffer – my writing was side-lined, my goals got side-lined, and my sleep is side-lined.

In terms of goals – in my transfer of employment, I upped my income, my wife took on a part-time job – every little bit helps! This has lead to a reassessment of our payment schedule, and our income. Since I changed jobs, I haven’t set up my new 401k yet – but I’ve sent the emails to get the details so I won’t be losing the company match for much longer! But it’s cause me to change our spending habits, as they were starting to get out of control – large purchases, a lot of “nice to haves” and not “needed to have” items.

So that’s lead me to utilizing the local craigslist to sell a few items I no longer need – an old TV, old game systems – but we’re having trouble coming up with other items we can actually sell! We tend to give away items instead of selling to local charities (church, goodwill, et al.) so when it comes to “selling” it seems we only think of the items like electronics and entertainment!

Put the quest for financial zen hasn’t been ended, it’s still an adventure.

This upcoming Christmas season, take a moment and reflect on the meaning of the holidays.

I bring this up for more than one reason – not just for the financial impact, but more importantly for the impact of gathering for the family. Make your holidays about your families first – the gathering, the food, the festivities – and not the gifts, the giving, the receiving. Drop the holiday hassle, boycott the consumerist angle of the holiday season.

Still want to “give” something?

Why do you have to buy something? Do you ever feel like you’re buying meager offerings because you feel you “have” to? Instead of giving gifts – make something. Make them a Christmas card, make food, make cookies. Why does it have to be material goods? Donate money to charities in their name. Make the money do something instead of spending money on random items that they may/may not want or even NEED.

It’s one thing when you know someone needs something – a heater, an electric blanket, firewood, food, or even company – compared to buying some $20 gadget because you think they’d like it when they’d rather have the pleasure of your company. This Christmas/Holiday season, how about we step back from the consumer rush and just enjoy some time together?

In the midst of the whole work/school/parenting/marriage gig, my wife loves to check out the second hand shops. Our son, now 8 weeks old, has gone through so many clothes!

Luckily, there is a Second-Hand child store down the road – where we’ve bought nearly all of his clothes (and, owned by the same company, a store for expecting mothers!) Instead of shelling out the big bucks for baby Gap, we shelled out a few bucks for used Baby Gap, used name-brand maternity apparel, and, after spending (roughly) $180 (I’m talking maternity clothes and baby clothes over the pregnancy period to the past couple weeks) we’ve turned around and sold them back – not at a profit mind you, but enough to make it worthwhile to continue buying used clothing from these stores!

Of course, they only buy “in-style” or “in-season” clothing, but if you can hang on to a few items for a couple months and sell them back then – if they don’t end up in the Goodwill pile.

That of course, is where all our other clothes end up – the clothes we (or I) have stockpiled over the years, and I finally parted with a large chunk, and together we’ve accumulated five bags and three boxes of clothes that were dropped to Goodwill – cleaning out our closets has been a very nice experience, getting rid of those items we’ve not worn in many years… this way, someone else can find our old goods, and use them, wear them, and enjoy them in the ways we haven’t been able to in a long time.

(I know, I’ve been gone awhile, but that’s life for you!)

I participate on a few online communities that receive lots of broad comments – local boards, financial boards, and web design/development boards. It’s great to have a helping hand, and it’s nice to be able to assist when you can.

However, often you come across someone who decides to post how down-trodden they are in their current state. They can’t get hired because they’re a particular sex/religion/race/age, or “how dumb I was to get an Art History degree” or other “woe is me” type posts. As a friend pointed out, this person was getting interviews based on their resume – meaning that the company obviously was interested (they wouldn’t waste time interviewing someone ‘as a courtesy’). This person wasn’t hired, so she started listing the reasons for why it was so horrible for her, and she was relegating herself to be stuck in a server position for the rest of her life.

It’s very quick to judge online – and even more difficult to express emotions, sarcasm, and seriousness. So it’s no surprise that any comment that tried to help her was taken as a negative, which only reinforces the idea that “whoa is me – nothing can help me, and you’re an asshole for trying.”

Plain and simple – a degree is merely a piece of paper. I’ve met CEOs that held bachelor’s in liberal arts, department managers with art degrees, and designers with computer science degrees – we determine where we go, not by our degree, but by our own choices! The most important aspect of any degree is the ability to accomplish something difficult, and the critical thinking it takes to get there. Not everyone tries, not everyone succeeds. I’m still in school, and I hold a professional position with no degree and primarily personal experience. It’s not impossible!

This young lady felt that her degree limited her in her abilities, as some people often feel – it is NOT a limitation, but should open new doors for you, should you choose to open your eyes and sell yourself not as someone who majored in XYZ, but as someone who can accomplish your goals, find creative solutions, and keep on truckin’!

Thanks to everyone for the kind comments about the birth of my baby boy! I’m hesitant to post pictures because I enjoy the anonymity of the site, but I have a feeling I will be overtaken with the need to share my parenting experiences and future financial zen moments!

Thanks to everyone, and The Wife and Baby Boy are both doing exceptionally well! (As you can probably tell, he’s got no problem keeping me up, or waking me up – but it’s time for updates as it is!)

I’ve mentioned before you should have an emergency fund – and I hit one of those snags that shows how important it is to have one. We have two cars (both Honda Civics) which both needed major repairs – timing belts, water pumps, and exhaust work. My car – the old beater – was less than $400 (which also goes to show – find a trustworthy mechanic! I was quoted $600 at the first place I went to!)

The nicer, newer car? Nearly $1000. Needs a new exhaust manifold. That, needless to say, was a shocker. With the new baby, I really hate having only one car available at a time, and “exhaust leaks in the front of the car” cause me some concern when I’ve got a growing boy in the back seat, so of course I had him fix it (and I use this mechanic repeatedly because he’s always straight, never lies, and has been a friend of my wife’s family for years).

Luckily, we’ve got nearly $5000 set aside for emergencies, so this will greatly offset any ding that it would’ve otherwise caused. See how important an emergency fund can be when you’re prepared? $1400 is more than my mortgage payment – which means if I wasn’t prepared, this would go onto a credit card, which I couldn’t pay off immediately, giving me interest charges for the next few months (more than likely!)

Because I was prepared – I can pay off these charges right away, without worry! No worrying about not meeting any bills, no worries about “how can I handle this” – a true moment of Financial Zen. My wife was taken back by my tone when I initially told her – and through no fault but my own she was concerned. We try and talk weekly about our finances, but with the baby being born it’s sidetracked us both – but because we are prepared, it’s a non-issue.

Whew!

My baby boy was born July 25th at !:26am!

I’m going to take a brief break from writing while we get settled in and will try to pick back up this week!