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?