DebtFREE-Revolution

Last week, as part of the group writing project for the M-Network, I listed my worst financial mistakes.  Almost as an afterthought, I added “Not saving for retirement in my 20s” at the bottom of that loooong list of bad financial decisions.  Apparently that should have been more than just an afterthought, according to a Yahoo! Finance article from yesterday that describes the me-from-a-decade-ago just too well.

“It’s tough to start talking too many numbers with young people because a lot of times they’re also overwhelmed — it’s their first job, their first real paycheck, their first apartment, their first time dealing with health insurance,” says Derek Avdul, financial consultant and author of “Real Life 101: The Workbook.”

“When you have all these variables going on and they’re trying to be grown-ups, retirement just takes a back burner for a lot of them.”

Um, yeah, that was definitely me! My biggest thing when I was 20 was being pregnant with my son.  Then there was the divorce that started just before my 25th birthday.  The whole time, I had not put ANY money away for retirement.  I’m starting to feel pretty nervous about that now that I have lived past 30 years of age…

For those of y’all who are still in your 20s, PLEASE take heed: START SAVING FOR RETIREMENT!  Really!  I have done some research, and you can start a Roth IRA for $250 and an auto-draft of $50 a month.  I just did that myself in August, so I am up to a whopping $350 in my retirement account now.  I really wish I had done that back when I was 19 or 20.  I think you don’t even need the monthly auto-draft to start up a Roth or even traditional IRA.  Set it up, even if it’s tiny like mine.  If you start when you’re young, you won’t get that nervous feeling in the pit of your stomach like I have when you wake up one morning and realize you are in your 30s.  Please, do it for me, if you don’t think you can do it for yourself.

I’ve pried my eyelids open, am almost to the bottom of my first cup of coffee (Can you tell I am not a morning person?), and have fifteen good submissions to this week’s Carnival of Debt Reduction!

Debt reduction takes support for the long haul, as Editor’s Pick The Happy Rock discusses in Principles in Action #2 : Accountability and Friends Can Save Your Finances.  It also takes a basic paradigm shift for you, as Single Guy Money talks about in Have YOU changed your behavior?   Eric from A Penny Closer demonstrates this resolve to change behavior in Keeping Out of Debt - The Speakers.  Ispf from Grad Money Matters compares the attitudes before, after, and back in Student Debt, Entitlement Attitude and Other Thoughts.

Now that you’re in the zone with the mindset, it’s time to get to some nuts ‘n’ bolts of reducing that debt.  Eric Stanley from Personal Finance Blog Articles kicks it off with Three Rules for Financial Freedom. Erin from Working For Financial Freedom shows Why Creativity Will Help You Get Out of Debt, and Tim Ramsey from My Debt Relief Blog starts you off with 5 Ways to Try and Reduce Your Debts and Outgoings. Then PaidTwice digs out the details for her Snowflaking - A Primer to actually hack away at those pesky debts. No Credit Needed - Podcast breaks out the microphone for his podcast with two very good ways to reduce debt in No Credit Needed Podcast Episode 50 - Eliminate Fees Brand Loyalty Financial Planning.

Frugality dovetails nicely with debt reduction, and Lynnae from BeingFrugal.net shows how she is Starting your own business the frugal way, while Stephanie from Stop The Ride has Frugal Recommendations for New Parents - TT #12 to keep the little bundles of joy from being bundles of debt.

No Credit Needed - Blog has a Reader Poll - Are You Debt Free? - Share Your Story at his written blog, while plonkee wonders does debt-free mean mortgage-free?

For those who aren’t done using their credit reports, Aaron Wakling from the Credit & Credit Card Blog discusses Credit Checks - What They Are And What You Need To Know and Patrick from CashMoneyLife talks about the different types of credit card users and asks Which Type of Credit Card User Are You?

And if this just wasn’t enough blog carnivaling for you, Mighty Bargain Hunter hosted the Carnival of Personal Finance #122 and included my One Good Financial Decision and a Whole Lotta Bad Ones.  He even managed to fit all the entries into verse…Dr Suess style.  Either he’s more creative than I am, or he’s had more coffee this morning!  Now, on to my second cup…

Yesterday while I was blowing off steam in the My Total  Money Makeover chat room I realized I have an odd reputation in there: apparently I have become the “sell the car” chat regular.   We had a newbie to both chat rooms and the Dave Ramsey program in asking about how long it should take to work through “baby step two” aka the debt snowball, which included TWO car notes.  One note (auto loan for non-Southerners) was $290 a month, and the other was $390 a month, and the person had already decided to sell the car with the smaller note.  He (?) was surprised when I recommended selling both.

Car and truck notes eat up a huge portion of just about everyone’s monthly budget who has them.  A hidden cost of carrying a vehicle note is the requirement to carry full coverage auto insurance, with the noteholder being the loss payee.  Dave Ramsey likes to joke that most times he does the car theme hour on his radio show it becomes the “Sell the car” hour as he tells caller after caller they need to sell the car or truck that they still owe on.  And in at least 99.99% of the calls I listen to, I agree with that advice.

All that being said, we do still have the stupid truck note in our monthly budget, and most of y’all know just  how much I hate that.  We’re not being hypocrites here, though - we can’t sell the truck until hubby gets home from his tour in South Korea next month.  I do have the “For Sale” signs already in preparation for the Big Event.  Selling the Chevy truck and paying off the stupid truck note will make us “debt free but the house” so that makes it a Big Event!  I’m already happy about it LOL

I think the most depressing phrase I hear is the “You’ll always have a car note” mantra.  I’ve carried a note on only two vehicles that I have ever bought.  All the rest of them I have paid cash for.  So the concept that a person is destined to pay a auto note for their entire adult life is truly foreign to me!  Why do people become convinced that they must have a vehicle note?

For the record, the Dave Ramsey criteria for selling a vehicle is if it cannot be paid off within 18 months and the total value of all things that have a motor and wheels is more than half your annual income.  If your car or truck note meets either of these, then it is time to sell the car or truck and be free of the chains of that payment.

Debt reduction is a major key to anyone’s financial plan. I prefer to go a few steps further and personally advocate total debt annihilation. Eliminate debt completely is my motto! My goal is to be debt free except for my mortgage by the end of this year. If we can sell hubby’s stupid tax on wheels before the New Years’ then we will accomplish that goal.

In that spirit…Yes, it is happening again!  I will be hosting the Carnival of Debt Reduction, a topic very near and dear to my heart right now.  Those of y’all who have a blog and write about debt reduction, please submit your posts here.  Those of y’all who are eager to read about debt reduction, tune in right here on Monday, and I will put it together once I wake up and fire up the coffeemaker. 

Since I am a bit “rabid” on the subject, I’d like to offer a few guidelines for those of y’all who are submitting posts for the carnival.  Please, please, make sure they pertain to debt REDUCTION!  Please don’t submit articles on how to get more debt, or various other off topic subjects.  I do welcome personal stories of how debt has adversely affected your finances and life, in fact that is the spirit that moved me to start this blog.  So fellow bloggers, grab the link to what you feel is your best debt reduction post from the past month and send it my way!  I will be naming my editor’s picks again…let’s see who gets the gold stars for this month.  By the way, I intend to host this particular blog carnival on a very regular basis.

Saturday afternoon when I went in to work, the opening driver was very busy showing off his “ton of debt,” as he described it at first.  Now, y’all know me…my ears perked up at the word debt and I immediately started asking questions.  His ton of debt is quite literally a TON!  He financed a brand new GMC truck, all red and shiny and chrome sitting in the sunlight, with the temporary tags dark and readable in the back window.  He had finished up the paperwork maybe an hour before he was scheduled in for work.

The night before, he had been driving a cute little 1995 Ford Ranger XLT extended cab which was coincidentally also purple…basically a two year younger version of my purple truck I got hubby last month.  I just had to ask what was so wrong with that Ranger to necessitate the literal ton of debt.  He hemmed and hawed a bit: “Well, the clutch was going out on it, and it needed new tires, and the AC needed to be recharged…”  I started to point out that it probably wasn’t the clutch but the slave cylinder, but he wasn’t interested.

Then I grabbed a piece of paper and asked if I had heard his payment correctly: $297 per month.  I asked how many months, and he had to think about it before remembering he had signed up for 72 months of payments.  I did the math out on the paper while he mentioned the financing guy at the carlot had already shown him the numbers and it would be about $17,000.  I had to break the news to him that the car lot lied, because he would pay $21,384!  I asked him if he thought tires, clutch replacement, and AC recharging would cost more than that.  It was then the truth came out: “Basically, I’ve had the Ranger for six years and I’m tired of it.”  He didn’t want to discuss the subject any more with me, although I heard him bragging about the truck to the other employees the rest of the evening.

I don’t know a whole lot about this guy, other than he is in his early 20s (college age) and works delivering pizzas on the weekends.  I’m not sure if he has another job, but if he doesn’t I don’t see how he will pay the auto loan note plus the full coverage insurance on a brand new (red) truck on minimum wage plus tips.  I’m also having a hard time understanding the mindset that makes people want to pay that much for a ton of steel and tires that will be discarded in about six more years the same way he is discarding his old Ranger.  When I asked what he was doing with the Ranger, he commented he was selling it to his parents for only $500 “but it isn’t even worth that!”  He used the same tone of voice someone would use if they had sold a bag of garbage for two bucks.

So please, new car buyers and fans, please explain this mentality to me.  I really don’t understand it!  Why pay so much for so long when by the time it’s paid off it will be considered “worthless” and you will need to repeat the process, and the debt, all over again?

As part of the M-Network’s big group post today, here are my ONE good financial decision…and a whole lotta bad ones!  Like most of the other members of the network, I found it much easier to think of the things I have done wrong with money, and could only come up with one right - possibly even semi-smart! - financial decision.

The ONE good financial decision was when I made certain I could afford my mortgage.  The real estate agent tried to talk me into going $35,000 more than what I was looking for, but I dug my heels in (in true stubborn Capricorn fashion) and refused to go above what I personally determined my limit to be.  As a result, my mortgage payment over six years later is only $610 PITI and is only 20% of my income during the school year.  I am quite happy to say I do not need to worry about getting on the VA Foreclosure list…and rumor has it there are over 3,000 foreclosures in this town of only 150,000 for just this month.

Now, for my long list of “stupid” when it comes to money:

• Getting a credit card when I was an 18 year old freshman at college.  Let’s see here…I had no job and tuition bills and had to buy textbooks…what was I thinking??
• Financing the Ford Escort ZX2 that I have finally paid off.
• Financing the 1984 Ford fullsized Bronco from a buy-here pay-here lot because they were the ones who had what I wanted… not to mention my credit was shot from getting that Citibank credit card as a dumb 18 year old college freshman.  It’s a toss-up as to which one soaked me for the most interest.
• Buying a horse on the bank credit card I got as a 19 year old.  No, I am not kidding.  I think I finally paid that horse off in 2000…three or four years after I sold him.
• Fifteen years of smoking, and thirteen years of drinking (legally).
• Sixteen years of my adult life not making a budget.  OK, so I really didn’t understand the concept, but it really did hurt me.  “What you don’t know won’t hurt you,” is such a lie.
• Not investing!!!  I had six years in the army and countless jobs that offered a 401k plan, and have never taken advantage of it.  Now I am 34 and getting very nervous about not having anything saved for retirement…now that I realized I would live past the age of 30.

Well, that is the short list just from off the top of my head.  So, what does the rest of the network say?

• Plonkee has her “Least Bad and Least Good Decisions“
• Pinyo says these are “My Best and Worst Financial Decisions“
• PaidTwice reports on her “Best and Worst Financial Decisions: From the Trenches“
• Lynnae says “My Best and Worst Financial Decisions: They Might Surprise You!”
• GLBLguy has his “6 Financial Decisions: Don’t Learn the Hard Way!“
• Christian PF confesses to his “Best and Worst Financial Decisions“
• Dough Roller rolls out his personal “Best and Worst Financial Decisions” also
• Single Guy Money’s “My Financial Decisions: The Good and the Bad“

Enjoy, everyone!

Well, as most of y’all know I switched jobs this week, going from a “pizza delivery expert” at Domino’s to a driver at a little independent shop … that just won the “Best of Clarksville” in the pizza category last night (Thursday).  The owner is estatic, of course.

What has me feeling very happy is that the owner is listening to me on ideas to bring up business.  I joked with him at the beginning of the evening on whether he had the sign changed from “nominee” to “winner” before midnight (he did).  He aslo mentioned he took menus to the motels up by the highway as I had suggested during our interview last weekend.  As he was checking me out at the end of the shift I asked him about how soon he was going to do up a flyer since he now has bragging rights.  He asked how I would make up the flyer.  A few sketches and a few ideas bounced back and forth later and I left him an outline and the suggestion to make it printed up on bright colored paper.  I am amusedly wondering if he hired me as a delivery driver or a marketing consultant LOL but it really makes me feel good to have my voice heard once more.  The better his business is, the more pizzas I get to deliver and the more tips I can make!

The tips are actually better here at the little independent pizza store.  I have heard this from other delivery drivers before, and I think it may have something to do with the “mom-and-pop” image versus the “big corporate behemoth” image.

Oh, I almost forgot to mention: one of the first questions a coworker asked me yesterday was if I was in school on campus, because he recognized my Dave Ramsey bumper stickers on my car

Just a heads-up that the members of the M-Network, which includes me, are going to be blogging about our best and worst financial decisions on Monday, October 8th.  I already know what my best financial decision was, but boy is it going to be a toss-up for my worst financial decision!  I mean I have so many to chose from…

 So, before the network fun begins on Monday, do any of y’all have a best or worst (or both) financial decision you’d like to share?