Monthly Archives: February 2014

The Best Amount of Debt to Pay Off

Hey Pink and Rick-ers,

Did you know there’s a “sweet spot” for debt pay off?  This means there’s an optimal amount of debt to have–if you’ve got to have it.  There’s an amount that will give you the biggest feeling of accomplishment, paying it off will make a huge impact of your life, but paying it off won’t take your entire life.  What’s the number?

It’s $20,000.

How do I know this?

From experience: when we started down the road of no debt, we had to pay off $20,000 of student loans– which were ALL mine.  It was pretty awful, and it was really perfect at the same time.

Why?

1.  You get to be a super hero!  Trying to destroy something as big as $20,000 in debt, will make you feel like a million bucks.  You get to take down a huge obstacle and feel like a super hero in your own life.  What’s better than that?

2.  You get to feel like part of a team.  To pay off $20,000 you will have to ask for help–maybe it’s just finding a budget online, or maybe this means you have to get your partner/spouse on board.  If you’re single, finding an accountability partner can be a great way to stay motivated.  If you don’t have one, you can always ask me!  Being part of a team will make you feel amazing.

3.  You’re going to feel great afterward.  You’re officially taking charge of your life, and the sense of accomplishment is HUGE after paying off $20,000.  You will feel like you can do anything.

4.  You are going to lose a big monthly payment.  After paying of $20,000, I got rid of a $300+ monthly payment.  We felt so free, that it made the work feel even MORE worth it.

IMG_0478

We felt as free as Rick in a pile of leaves!

Now you might feel 3 ways.

1.  You have $20,000 in debt.  Great!  You’re in the perfect debt pay off position!  You’re going to have to work very hard, but start by finding your team and feeling like a super hero!

2.  You have less than $20,000 in debt. Congratulations!  You don’t even have to work as hard!

3.  You have more than $20,000 in debt.  Congratulations–ish!  You’re going to have to work very very hard.  But, there is a very simple solution.  Split your debt up into $20,000 chunks and celebrate (by doing something awesome) when you finish killing each chunk.

I’ve actually been in all 3 groups.  When we were paying off my student loans we were in group 1.  When we were done paying off my student loans we were in group 2.  Now, we’re actually in group 3 when we decided to pay off our house a year and a half ago.

After a tonnnn of work and a VERY small house loan, (seriously our house is tiny and we live in a small–yet awesome–place) guess what?!?  We’ve made it to the $20,000 level.  Yesterday, we sent in a payment and our remaining balance is $20,000 and some change.  It’s been crazy hard and a huge task, but we’re excited to be down to only owing $20,000 on our house.

How are we celebrating?  We’re going on two trips this month– one is to Vegas!  We’re really excited to celebrate in Sin City, and we promise not to get into too much trouble.  Actually, I don’t promise that, I only promise to tell you if we do get into too much trouble!

But, even though $20,000 is the sweet spot, there is one spot that’s MUCH sweeter–$0.  Hopefully we will be there soon!

*full disclosure-  I don’t think paying off your mortgage is right for everyone.  It’s the right thing for us based on some future goals.  However, I DEFINITELY think you should get rid of all credit card/student loan debt.  Mostly, because it will make you feel amazing!

Do you think $20,000 is too much or too little to be the best amount of debt to pay off?

Why I Got My First Credit Card

Technically, it’s my third credit card.  But, the first two don’t really count.  Here’s why…

The first credit card I’m *not* counting is one I got before I went to college.  I only put books on this card, and I didn’t make payments on the card, so I’m don’t count it as my first credit card.  I did, technically, pay this card off, because my senior year of college I was rear-ended I took the insurance money to pay off the remaining balance.  But, I’m still not counting it as my first credit card.

The second credit card I’m *not* counting is another card I got in college.  I got a Banana Republic Credit Card after my friend, who worked there at the time, talked me into it– she can talk me in to doing anything.  It’s ridiculous.  Do you have a friend like that?  We joke about it all the time.  Anyway, I still don’t count this card because I only put one $40.00 purchase on it– and as embarrassed as I am to say it, I’m pretty sure my parents took care of this one.  That, or I owe Banana Republic $40 + 5 years of interest.  Let’s hope not.

Even though I’ve never *really* had a credit card, I took one out last month.  Why?  I did it for the re-re-re-re-re-wards.  I read a lot of personal finance blogs, and one day I was reading about how one blogger uses credit cards to get free money for vacations.  Since we’re going taking a Vegas/Phoenix trip this year, I thought I’d at least check it out.  Here’s the other blogger’s original post, if you’re interested.

Credit Card Dog

I chased those rewards like Rick chasing…everything

I ended up applying for the Barclay Arrival World MasterCard (Fyi, I didn’t link to the card, because I don’t take ANY money from them…and I don’t want it to seem like they’re an advertiser or something.  I just thought you might be interested).  This card gives you $400 in travel rewards if you spend $1,000 in the three months.  We put our flights, hotels, and rental car on the card and quickly racked up $1,000 in charges.  Then, I logged into the online account and redeemed my rewards points for our travel expenses.  My bill was automatically lowered by $400.00.

What sucks:

1.  I still owe the credit card people some serious coin! $600ish.

2.  There is a yearly fee for this credit card that is waived for the first year, so I will have to cancel it before the first year is up.

3.  Messing around with credit cards can affect your credit score.  It’s not supposed to be by very much, but this article says to hold off closing a card if you’re applying for a mortgage, a car loan or another credit card.

4.  Credit cards are annoying to keep up with.  I like when the balance comes out of my bank account, and I can just move on to the next purchase.

5.  With this card you can only redeem your “points” for travel expenses.  So,  you couldn’t get any money back for grocery store purchases.

What I like:

1.  Those rewards!  It’s pretty sweet to get a free flights to Vegas/hotel in Phoenix!

The verdict: 

I’m going to cancel my credit card as soon as I pay it off (this month!).  I probably won’t open another credit card again, unless it’s a Southwest Card that gives you 2 free roundtrip flights (this exists!).  I like to keep my financial life simple, and I hate payments, so credit card churning isn’t on my to-do list.  On the other hand, it’s hard to say no to free money, so if the right deal came along, I might bite… but probably not.

What do you think about credit cards?  Are they worth the rewards?

January Bucket List Update!

Hello!  It’s been a while, and that’s my fault.  Just so you know there’s been some crazy stuff going on in my life, and I’m working hard to get over it.  Someday, I’ll write a blog post about it when everything doesn’t seem so fresh.  But, for now I’ll just get on with regularly scheduled programing blogging.

Because of my life, I’m behind on my 2014 Bucket List.  I’ve made a little bit of progress, though!  I’m celebrating that!

2014 Bucket List

1.  Organize one room in my house every month (Reoccurring and taking the place of a January Challenge).

I organized both of our bathrooms this month.  It feels amazing.  I picked the bathrooms because they’re tiny, and the only work I needed to do was underneath the sink.  I’m going to try and tackle the living room this month.  Watch out old DVDs.  Your days are numbered.

2. Lose 10 pounds through the Paleo Diet or South Beach Diet (February).

I’m starting this on Monday.

3.  Go on a Vegas Vacation (March).

We just booked flights and hotel.  I’m very excited about this trip.  First of all, it’s the first trip my husband and I have taken together since our honeymoon.  Secondly, I’m excited about it because we’re seeing two very special friends get married (well… they’re technically already married, but they’re having their official celebration).

4.  Run 365 miles (reoccurring and taking the place of an April challenge).

I SUCKED at this one.  Mostly, because of the circumstances I vaguely mentioned before.  I only walked/ran 12.75 miles last month.  True confession– I walked most of that.  I’m committed to making up some ground this month, and I’ve signed up for a 5k in March, so that will give me something to work towards.

5.  Go one month without artificial sugar (May).

6.  Learn to hula-hoop or whistle (June).

7.  Go skydiving (July).

8.  Write 2 blog posts every week (Reoccurring).

I officially didn’t do this one either.  I only wrote 3 posts last month– which means I’m five posts behind.  I probably won’t try and make those up, but I’m going to try and reach my goal for this month.

9.  Become debt free– including paying off our house (September).

We’re working on paying off a smaller loan, but we haven’t actually sent the money in yet.  Next month I should have more to report.

10.  Write a fiction book and sell it on Amazon (October).

11.  Do something spontaneous (November).

12.  Make $1,000 of side income a month, by freelance writing/blogging/video projects (December).

I didn’t make a dime this month.  Ouch.

 

I’ve done a few things, but I have a long way to go.  I’m well rested now, and I’m ready to conquer this month.  Hopefully, I’ll ace this Paleo Diet and be 10lbs skinnier by the end of it!

Want more bucket list updates?!?  Check out myyearlybucketlist.com for some amazing progress!  One of my friends paid off $10,000 last month!!!