Can't live without my technology...

I’ve been with T-mobile for as long as I can remember and have always been satisfied with their service, phones, and plans.  Every few years or so I end up signing a new contract with them to get a better phone.  Usually around that time I take a look at what other companies are offering and, in the past, T-mobile has always seemed to give me the most for my money.  I am currently out of contract with them but my phone is fine and I have been satisfied with my plan so I wasn’t really thinking about changing anything.  However, since I am on the mission to scrutinize every last penny I spend each month I decided it’s time to really explore all the cell phone options including switching to a family plan which S and I have been talking about for a year but never doing anything about!

Let me just say how freaking confusing the cell phone industry has become!  My first stop was to my trusty old T-mobile which , at least the last time I went in, had a handful of plans to choose from and seemed pretty straightforward.  Not anymore!  Now they have value plans, and discounted phone plans, and a la carte options for everything.  The poor kid trying to explain what the equivalent of my old plan is and how all the different choices could affect the bottom line was getting noticeably flustered by the time I said thank you and left (just as confused as when he started talking). 

After looking at ALL our options, which was exhausting and took weeks to analyze everything we’ve decided to stick with T-mobile.  We’ve combined our plans into a family plan that costs $15 less than I was paying for just my phone plan.  With the extra savings from our cell phone bills we went ahead and got internet service at home which neither of us have had for years.  

I want to feel guilty about getting internet service at home, I mean we’ve been surviving just fine without it for years and it doesn’t fit with the reduce everything mentality but I just don’t… I love being able to stream movies and music again, I love that I can skype video chat with my friends and family again, and I love that I can waste hours online again on web games, youtube, and blogs.  I don’t feel guilty at all… besides we did reduce the overall amount we were spending by 15 whole dollars so that has to count for something, right?

2012 Resolutions

I’m a big fan of making New Year’s Resolutions.  For several years I’ve diligently sat down in January and written out my resolutions on a sheet of colorful cardstock.   Once the sheet is full of all my goals and dreams I proudly place it on the stack of other paperwork that needs to be addressed where it slowly fades from my memory and eventually gets filed away with the resolution sheets from years past.

This January I pulled out all those old sheets and reviewed what my priorities were in the past.  One category of resolutions could be lumped together as personal improvement goals like quitting smoking (took a few years but was eventually successful), running a 10k (did it), and eating healthier (not so much).   There are also a few items in the “projects that I want to complete” category like refinishing the old dresser and reupholstering the couch of which I’ve got a roughly 50% follow-through rating.  Not surprising to me, I’ve always had craft project ADD so I end up starting more projects than humanly possible to finish.   It would be nice to actually wrap up some of the projects I’ve got laying around that never seem to get done considering I’ve usually bought all the required supplies. 

There is one last category that appears on several of my years past New Year’s sheets which is really shameful… the “things I want to buy” category which were often inappropriately labeled as “needs” including a flat panel tv, new stereo, new car… you see where I’m going with this.  The worst part is that almost everything that falls into the “things I want to buy” category was fulfilled.  I’m pretty disgusted with myself on this one, it’s pretty hard to deny that I’ve got a problem when I’ve got actual documented proof that I put “things” in front of all my other dreams and goals.

This year I am vowing to put my personal growth and my financial health ahead of tangible objects… Here are the top 5 goals I want to accomplish in 2012:

1.       Pay off credit card debt which is roughly 10k

2.       Focus my creative energies on completing projects that I already have the supplies for

3.       Clean up my diet… I want to cut my dependence on processed food and junk food/ soda which is good for my health and also good for my finances!

4.       Brush up on my basic Japanese language skills and sign up for the fall intermediate class

5.       Start walking every day with the dogs… they are in need of more exercise just as much as I am!

Here’s to the beginning of a New Year… I’ve got some hard work ahead of me but I’ll be better for it if I can just stick to my priorities!

To do a balance transfer or not

My credit card balance of 10k is currently sitting on a card with a promotional 0% interest rate from a previous balance transfer that is set to expire this month.   In the past I would have just transferred the balance to one of my other cards and not thought about my credit card debt until the new promotional rate was expiring.  This time my choice is not so clean cut.  First of all, I am determined to pay off the whole balance by the end of this year so does it make economic sense to pay the transfer fees vs. the higher interest rate?  Secondly, neither of my other cards have a high enough limit to transfer the entire balance so does it make sense to split my balance amongst multiple cards?  And lastly, are there other impacts that I should be considering… I’ve heard that doing balance transfers is bad on the credit score so what’s the real truth behind it?

The first question was pretty easy to answer using the calculators on bankrate.com:

If I keep the balance where it is I am guaranteed to pay $970 in interest over the course of the next 12 months with monthly payments of $936 which is a pretty steep number to come up with each month.

If I balance transfer from Card 1, I could do $4,800 to Card 2 (0% till 10/12 then 8.99%) and $5,200 to Card 3 (5.99% for 12 months).  I would be paying $192 in fees and approx. $200 in interest over the next 12 months.  Obviously the cheaper option is to transfer the balance.

But by splitting the balance and transferring to Cards 2 and 3 I essentially max those cards out and leave my highest interest card the only fall back option I have… this sounds dangerous to me for so many reasons!  First, because I don’t have a savings account as a fall back I frequently have to put business expenses on a card and then wait for a reimbursement.  Second, if something financially major were to happen I would be stuck relying on my worst card.  Lastly, Card 3 has the best rewards program around and I use it for everything I would normally buy like gas, groceries, pet food and then cash in the points so I would be losing the financial return on all my expenditures while the balance transfer sits on it.  It doesn’t seem to make much sense to me to do both balance transfers.

And what about the last question… does it hurt my credit to keep shuffling around the debt?  I found these articles helpful: http://www.gotcredit.com/how-balance-transfers-affect-your-credit and http://articles.moneycentral.msn.com/Banking/YourCreditRating/WeirdStuffThatHurtsYourCredit.aspx

Since I’m not opening a new account to transfer the balance just taking advantage of my existing cards offers, I won’t get dinged for that.  However, it sounds like by transferring my balance to lower limit cards and maxing them out could have a negative impact.  I'm not planning on buying a house or car within the next few years though so I'm not really that concerned with a few points off the credit score.

I think the best bet for me is to transfer half the balance to Card 2 and keep Card 3 paid off… now I just hope they approve the transfer!

Results of my debt reduction efforts for 2011

In October I decided it was time to make some serious changes to my habits so that I could pay off my debt.  I set out a plan to look critically at every aspect of my expenses to find out where I could spend less and to come up with ways to make extra cash.  I cut about $300 out of my regular monthly spending and brought in an extra $200 a month by doing sewing jobs and concentrating on my Etsy site.  That added up to around $1500 to put towards my debt during the last three months just by making changes to my lifestyle!  Plus I had the regularly budgeted amounts that I was paying off each month and, very thankfully, I also got a year-end bonus at work which I put towards debt.  In all I paid off just over $5000 off my debt in the past three months.  While I realize it’s not going to be possible to keep up that pace (inevitably there will be some big expenses that I can’t avoid like new tires and I don’t think my company is going to be handing out bonuses every quarter!), it really feels great that I’ve been able to get off to a solid start!  I only wish I had come to this realization years ago instead of avoiding my finances!

Here’s a breakdown of what I did over the last three months to reduce spending and increase debt reduction: 

Here’s my estimate of what I cut from my spending:

$115 from my non-essential spending (ie. Eating out, buying snacks at work, going out for a drink, etc)

$50 from my pet costs (switch to cheaper food/ flea treatment options, coupons, sales, and reducing the toys/ treats fund)

$15 from my cell phone plan (ended up switching to a different plan with T-mobile which was cheaper)

$50 from the grocery bill (coupons, sales, and strict meal planning)

$100 from the energy costs (being diligent about reducing consumption)

  

Here’s where I started:

October 2011:
Student Loan: $38,339 @ 2.5%

Car Loan: $11,684 @ 3.9%

Credit Card 1: $10,577 @ 0% until January when my balance transfer reverts to 16.99%

Credit Card 2: $3,635 @ 15.4%

Parents: $600

Total: $64,835

And here’s where I ended 2011:

Dec 31, 2011:

Student Loan: $37,946

Car Loan: $11,275

Credit Card 1: $10,263

Credit Card 2: $0

Parents: $300

Total: $59,784

Paid off: $5,051

Looking forward to a financially fit 2012!!