Monthly Archives: July 2009

Surprise Sofa Sale

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The same day I posted my ideas for a debt repayment rewards system we stumbled on a successful garage sale in our neighborhood with an sofa sale offer that was too good to refuse. For the last several months we’ve been casually keeping an eye out for a new (used) sofa. Nothing elaborate, but something in better condition than the hand-me-down sofa we inherited after a family member moved several years ago.

Hard to turn down a free piece of furniture, particularly when you are just starting out, but our family has outgrown the three small seats on that old couch. When we got it a few years back one of the legs was broken, so I propped up one end with a few pieces of wood. Over time, the stress on the remaining three legs began to take its toll, and I found myself turning it over and adjusting the legs on a weekly basis.

Two weeks ago, we discussed saving for a new sofa as a reward for paying off all but one credit card. At the time we decided we would save and pay cash for a new sofa and loveseat, or sectional, to increase seating space on the occasion family or friends dropped by.

leathersofa071309

Simmons Paris Wine Leather Sofa Overstock.com

Then it happened. We rounded the corner Saturday morning and saw a sign “For Sale: Sofa and Loveseat.” Across the street was a large yard sale, and I suspected the owners of the sofa were hoping to piggyback on the attention it drew. In our case, it worked!

In the driveway we saw two wine-colored pieces (I’m not good at describing colors, but it looks very much like the one shown above) – a reclining leather sofa and loveseat. The owner told us one of the reclining sections was broken and “would not stay in.” Fine with us; I’d figure out a way to “lock” it in the closed position. We could live without one seat reclining for a good price.

We offered $50 less than the asking price and it was ours. After some struggle getting the pieces in my van, and out at our house, we managed to get everything in place, and the old sofa out. We’ll probably offer it to a family member, and if they aren’t interested, we’ll donate it to a local shelter or Goodwill. With a little work the legs could be repaired or replaced and it might suit a smaller family, or single person, just fine.

After making a relatively large purchase I tend to suffer from buyer’s remorse. Before I could even sit on the new sofa I started thinking I had made a mistake. Had I fallen for the trap of an impulse purchase? Couldn’t our old sofa last a little longer? Should we have waited until we were completely debt free? But then I reminded myself of the positive aspects of our purchase.

  • We paid for the sofa and loveseat with cash (unlike our bedroom furniture purchase a few years ago).
  • We bought it used and saved several hundred dollars off the price of new, retail furniture.
  • Though there was some spontaneity to our purchase, it was something we had decided we would like to buy for a long, long time.

My wife and I both agreed that this was not a purchase to lament. We should be proud of our purchase because we finally did it the right way. We could make the argument that it was a little too soon, but sometimes you have to take advantage of these types of deals and make adjustments accordingly. With our schedules compressed we’ve decided to postpone a mini-vacation until the Fall, leaving us plenty of room to save up for the trip.

Between now and then we’ll enjoy more comfortable seating. In fact, I’m off to renew a Sunday afternoon tradition – time to catch a quick nap. I’m getting in shape for football season!

Getting Out Of Debt Rewards Plan

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Last week on Twitter I mentioned that one of the toughest things about a debt snowball plan is sustaining momentum as you move through each of the debts. Early on, victories come quickly with smaller debts geting paid off on nearly a monthly basis, or so it was in our case. But later on you find yourself staring up at those last two or three piles of debt and realizing it is going to take months, or even years, to follow through on your financial goals. That’s when it is time to schedule some rewards for your hard work.

With the summer half over, and no vacation plans on the horizon, we have decided to schedule a long weekend in the near future for a short trip somewhere close. It’s a reward to ourselves for hitting a major milestone in our debt repayment plan – we are now completely free of car debt for the first time in our 11-year marriage!

Ideas for Setting Up a Getting Out of Debt Rewards Plan

  • Share the rewards with your friends and family. Get everyone fired up about getting out of debt. For those with kids it often helps to let them know about the goals, even if you substitute dates for dollar amounts (i.e. we would like to pay off our car by September, rather than we need to pay off $9,000 in car debt). Besides getting them excited about getting out of debt, it also helps soften the blow each time you say “no” to their request for a new toy. They know the whole family is on a plan to get to debt freedom!
  • The reward should be in proportion to the level of sacrifice to achieve the related milestone. In other words, don’t schedule a cruise to celebrate paying off a $300 medical bill. But do schedule one (if that interests you) to celebrate paying off your $40,000 in student loans!
  • Put together a sinking fund for your “Rewards Account.” The last thing you want to do is celebrate paying off debt by charging a trip for the family to Six Flags. Instead, create a sinking fund in a dedicated checking or online savings account, and move some money out of each paycheck there to fund a “Rewards Account.” When you hit your debt milestone, withdraw your cash and enjoy!
  • After celebrating, get right back to work paying off remaining debts. Now is not the time to grow complacent. As soon as your vacation is over, or you’ve spent some time enjoying your new purchase, get right back into your debt snowball plan and work towards that next milestone.

Getting out of debt is as much about being disciplined emotionally as financially. If you become burned out with your debt repayment plan long before you pay off 50% of your debt, chances are you will never make it to debt freedom. Planning a few rewards along the way will help keep you and your family on track.

In case you are wondering, our next milestone to celebrate is when we’ve paid off all but our final credit card. The reward? A new living room sofa. When we are totally debt free? We’re finally going to Disney World!

Do You Suffer From Financial Inferiority Complex?

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If so, please read the following post and seek help for your affliction before it is too late. Financial Inferiority Complex affects millions of Americans, and is spread rapidly by media outlets, car lots, Realtors, and yes, even our government.  If you’ve ever felt compelled to buy a home instead of rent, lease a new car to keep up with your neighbors, or felt a twinge of jealousy because your best friend was approved for a platinum card but your credit card is gold, then this information is for you.

Disclaimer: The information below is for entertainment purposes only and should not be used to treat a real health problem or psychological condition. Duh!

What is Financial Inferiority Complex?

FIC is a range of symptoms involving the central common sense system, traveling from the security gland to the heart. Fortunately, the brain is unaffected as those with FIC are typically not using it. If left untreated FIC can cause serious damage to one’s pride and sense of self-worth. Fortunately, there are a host of home remedies for FIC, which if utilized properly, can head off the need more invasive procedures later in life.

What are the symptoms of Financial Inferiority Complex?

Identifying the symptoms of FIC can be difficult, especially through self examination of one’s own habits. Often the affliction is detected by a friend or loved one honest enough to tell you the truth about your behavior. If you know anyone with the following symptoms, or recognize them in yourself, please read on to determine treatment options.

Symptoms include, but are not limited to:

  • Hostility towards “rich” friends and associates
  • Insatiable appetite for stuff
  • Feelings of shame over debt
  • Car fever, especially when accompanied by visits to new car lots
  • Feelings of anxiety when credit cards are being swiped

Treatment Options

Financial Inferiority Complex presents in various forms, and the best course of treatment often depends on how long the patient has had symptoms, and the severity of those symptoms. For some, prescribing a budget and icing down their credit cards may be enough. For sicker patients, a complete credit card plasectomy may be required, which involves taking scissors to all credit cards in their wallet. This is a risky procedure as the closing of credit cards after surgery may lead to low FICO scores, or in extreme cases no FICO score at all.

The best way to prevent Financial Inferiority Complex is to subscribe to Frugal Dad. The daily dose of financial common sense helps patients cope with the barrage of temptation that surrounds them. But you should not rely on Frugal Dad alone. It is ultimately up to you to be content with your life and your posessions.  Judge your success not on the accumulation of material things, but on the accumulation of relationships built with loved ones. On the impact you have in other people’s lives. Ultimately, that is the only known vaccine guaranteed to prevent Financial Inferiority Complex.

Weekly Roundup: Credit Card Use Stings Edition

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Now that we have paid off a number of debts, including most recently our car, we have decided to use one of our two remaining credit cards as a dedicated gas card. It has a decent rebate program on gasoline purchases, but we are really using it for convenience and will pay it off when the bill arrives.

My wife was the first to use the card at a local gas station, and she later told me that she did not like the feeling she got using the credit card. Now keep in mind that we have not charged anything in over a year, but have been swiping our debit card when cash was not convenient.  Frankly, I was a little surprised to hear her tell me that using the credit card “stung a little.” Neither of us had a problem swiping it before last year!

So now we are in the process of weighing whether or not 5% back on gasoline is worth normalizing the use of credit cards again. Perhaps we’d be better off to stick with the debit card. Or perhaps this is a good time to show debt who’s boss, and prove that we can control the spending on credit cards. We’re still undecided, but I’ll keep you posted.

The Frugal Roundup

The Myth of the Parent that NEEDS to Work.  A thoughtful response to the notion that two parents need to work to get by. Often times the second parent wants to work, and that’s fine, but be honest about the intentions rather than blaming it on financial necessity. (@Brip Blap)

An Introduction to Money Market Accounts. Money market accounts are like forgotten gems in the world of personal finance. For a long time, no MMA could touch the rates on other types of savings account (particularly online savings). However, as J.D. explains, in a few occasions they do offer higher rates, and can be a great place to park short-term cash. (@Get Rich Slowly)

Your Home is Not an Investment – Don’t Treat It Like One. I think many of us have come to this realization over the last several months, but the question is, will the lessons last. Jeremy makes several good points in this post regarding the true costs of home ownership compared to the investment potential. (@Generation X Finance)

Ten Great Ways to Make Powerful Visual Reminders of Your Personal Finance (and Other) Goals. I’ve used a number of visual reminders over the years.  From huge wall charts tracking our debt balance to a list of classes I needed to take to complete my undergraduate degree after returning to school. (@The Simple Dollar)

Simplify Your Life By Bartering for What You Need. Bartering is one of those frugal skills I really should brush up on. The idea of trading an item with someone else so that the transaction is mutually beneficial to both parties is an exciting idea to me. Unfortunately, it is something I rarely practice in my world, but I’ll work on it. (@On Simplicity)

What To Expect in Traffic Court. First-hand account of a day in traffic court. While I hope to never find myself in traffic court again, these tips will certainly be helpful if I do. Yes, I spent a little time there as a teenager for speeding and excessive window tint – I was a real rebel! (@Bargaineering)

How to Make Today Memorable. The last few weeks have been insanely busy at my full time job. When that happens I feel like the days are simply sliding by without me having much to say about the outcome. This article provides some great ways to generate key moments throughout your day so they stand out as remarkable. (@Marc and Angel)

Carnival of Pecuniary Delights.  An outstanding collection of high-quality personal finance posts (and not just because mine was selected as an editor’s pick). (@CreditCards.com)

Seven Secret Places To Hide Cash In Your Home

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It’s a good idea to keep a little cash in your home for emergencies. How much you decide to keep is up to you, but I would suggest keeping enough cash on hand to pay for a week of groceries, and maybe a night or two in a hotel. Because this money will not be earning interest, and is subject to being stolen by a burglar, I don’t suggest keeping a huge stash in your home. In addition to a small amount hidden at home, I also stash cash in our online savings account (my ING Direct review) to put a little distance between me and some of our savings. Think of cash stored in one of the best online banks as an offsite backup disaster recovery plan.

When you’ve settled on an amount you should think about secret hiding places to stash the cash. We’ve all seen those spy movies where the guy removes the tile from the back splash behind his stove and pulls out a cache of bills, passports and ammo. Well, the following ideas may not be worthy of James Bond, but they will improve the chances of your money surviving a break in.

Seven Secret Hiding Places for Your Cash

1. In the freezer wrapped in aluminum foil. Save a little styrofoam from the next pack of meat you buy and cut it down to the size of a couple large steaks. Put your cash in a Ziploc bag, stick it between two pieces of the used meat tray and wrap it in aluminum foil. Take a piece of masking tape and write “Scraps – 05/22/2005.” Robbers are not likely to look through the pack, and if they pull back the foil they’ll only see the familiar styrofoam tray and stop.

2. Sandwiched between the cardboard backing of a hard-to-reach picture frame. Most thieves pull back pictures from the wall to see if money is taped to the back, but they aren’t likely to take the time to look behind the glass, the cardboard backing and the picture itself. Use a pen knife to split the cardboard backing into two halves and sandwich the cash in between.

3. Under a piano, entertainment center or anything weighing a couple hundred pounds or more. If you have a hand truck around the house it’s pretty easy to just lift up the corner of a piano and slide an envelope under it. However, a burglar probably won’t be able to lift something this heavy, and would spend his time digging through the drawers or inside of the furniture rather than trying to lift it.

4. Inside a used can of soup. The next time you have soup, open the bottom of the can to empty the contents and the leave the top in tact. Rinse the can thoroughly, then use it to cover your stash of cash hidden inside your pantry. Stack a few cans of soup on top just to make it less convenient for someone to pick it up out of curiosity.

5. Buried in the “soil” of a fake plant. If you have a fake plant, or small tree, in your home, wrap your cash in a Ziploc bag and nest it inside the “soil” of the plant.

6. In hollowed out pages of a book on your book shelf. Using a pen knife or box cutter, carve out a few pages of your least favorite title. Hide your cash inside the book and return it to the book shelf.

7. Inside a kid’s toy hidden in their closet. Kid’s rooms are notoriously messy, and kids are not known for having large sums of money. Take apart an old plastic toy they no longer play with and hide your stash of cash in there. Return the toy to the bottom of the pile of toys in your kids closet, or toy chest, and it should be safe.

It’s important to remember that any cash saved at home could be lost in a fire or natural disaster. The ultimate hiding place is a fireproof safe bolted to the floor, and even that isn’t fool-proof. The ideal spot for storing large amounts of cash is an online savings account, far away from your house and any potential danger. But for the small amounts you stash at home, take the time to put it out of sight.

Also, remember to tell a spouse or close friend about the money in case you are not able to get to it (you die, or become injured or ill and cannot communicate). Keep enough cash on hand to cover you a few days in a major emergency, but not so much that you’d be completely wiped out if it all disappeared.