Task 21 - Reduce debt by 10%

Our society exists based on credit. For many credit is a necessity to survive. Credit is a person’s ability to borrow money to make purchases that he/she doesn’t have the money to complete. Credit comes at a cost and any money borrowed must be paid back with interest. While there are many types of debt two are relevant to me. Those are short term revolving debt like credit cards and long term secured debt like mortgages.

I do my best to keep both types under control. When I started the Day Zero project I set up a plan to reduce my total debt by 10% over the course of 13 months during the 1001 day challenge. For me the majority of my debt is long term mortgage debt. All good plans sometimes find themselves with wrinkles. My wrinkle was car repairs.

This wrinkle came very early in my plan and delayed its execution while I recovered from that expense. It took me a good 8 months to replenish my reserves and start my debt reduction plan. What I focused on was paying double what I was required too on my long term debt and continuing to pay my short term debt off each month. 

The great thing about paying down more principle is that it reduces the interest on every payment after that. Reducing principle accelerates the total debt and reduces the total interest paid over the course of a loan.

In the last 8 months I have trimmed 15% of my total debt. That is with several large and expensive trips and purchases made. With no large expenses planned I am going to continue this debt reduction plan and trim even more debt. While I understand that mortgage are considered good debt I’d rather have no debt.

Task 17 - Pay off Credit Card

My friends and family would likely use the term frugal to describe me but that hasn't always been the case. In fact during my younger years they might have described me as totally the opposite. I never left the house with less then $500 in cash never looked at or considered what things cost.

I lived a life in a way that needs and wants were the same thing and I never wanted for anything. That behavior definitely had its costs and I managed to collect some fairly hefty credit card bills each month. I never had any problem paying them until I had a blip in the employment area. During that time I didn't really adjust my lifestyle and actually I spent more since I wasn't working. Part of it was home remodeling that I had already planned to do and had already committed a fairly large amount of money too. So rather then paying those cards off every month as I was accustomed they built up and left me with a relatively big nut to crack.

When the light bulb in my head finally turned on I made a lot of changes in my life. Partly because if I continued down that road it would have lead to financial ruin but also because I found a new hobby. That new hobby was seeing how frugally I could live. It was strange for me at first since I had never considered what anything cost. My parents are affluent successful people and provided very well for me. When I wasn't in school I was working and as such was able to provide for myself when my parents responsibility was done. They taught me the value of money but I missed the lesson on appreciating that value and what it all meant. Not working definitely taught me that lesson.

When I found a new job I didn't change that new mind set and have continued to be more careful then I had been in the past. No more fancy 50-80k cars that I would trade in every 2 years. No more dining at super expensive restaurants every weekend and no dropping 200$ every night every weekend out at the bars. I definitely noticed a shift in my friendships too. It was then that I realized that many were just along for the ride and weren't true friends.

While a large portion of my collected debt was from home remodeling and decorating that expense was no longer needed since my condo was completely renovated and decorated. My debt was manageable with some planning I could pay it all off. I setup a budget (that used to be a naughty word) and put myself on a payment plan. Some cards vanished almost immediately and others I consolidated into a few large ones with very low rates.

I had set a goal to pay them off with out stunting my lifestyle entirely. I am a hard worker and I love to travel and I vowed not to allow my debt to stop me from enjoying life.   I didn't need to go cold turkey I just needed to learn how to do things in moderation and on a budget.  Thankfully I stayed on track and now one of those cards is down to 0$. It is liberating to know that one is gone and now I am going to take the payment I had been sending to that one and add it to the other. This will help me pay it down even faster then planned. Hopefully by the end of my extended Day Zero Project it too will be a thing of the past.

Task 20 - Pay off Car Loan

When I bought my current car I had a choice between 36 and 60 month terms. I opted for the 60 month term since my bank was running a promotion for used cars reducing the APR to the same as the 36 month loan. There was no early payment penalty so I figured why not take the longer term and I would just plan to pay as if it was a 48 month term. 

I take very good care of my vehicles and keep up with preventative maintenance. I knew I had a timing belt coming soon so I took the car in early to get it done. I even paid cash to get a better price.  It was a mechanic I had used before and that my parents had used for years. Unfortunately shortly after that maintenance the timing belt skipped and ruined the engine. It was very disappointing that a bad mechanic could throw such an expensive wrench in my plans.

I managed to find a new mechanic who was honest and fairly priced who put my car back together at a more affordable price then the dealership wanted to charge. This however significantly slowed my increased payment stream since I first had to cover the 2800 engine I just had installed. I decided to slow my payments to the required amount only and replenish my savings account I had just drained.

While that slowed me down about 7 months I am happy to report that the car is paid off and the title in hand. It’s a great feeling not having a payment anymore. I have 120k miles on the car averaging 30k+ a year and hope to get a couple more years before needing to replace it. I plan to continue to pay myself the car payment to savings as a future down payment on a new car to keep the next loan as small as possible and also to help fund my Murphy Fund.
 

Task 23 - Complete and Maintain my EFFAK

Task 23 - Complete and Maintain my EFFAK

The Emergency Financial First Aid Kit (EFFAK) is a simple tool to help minimize the financial impact of a natural disaster, national emergency, or death. It helps people identify and organize key financial records and serves as a quick reference to their family of their most important financial documents should they become unable to take care of those things personally

I know that this sounds all doom and gloom but it is better to be organized then to not have any clue as to ones assets etc. This all came to the forefront when my grandmother first became ill. It was a scramble to figure everything out while she could still be asked about things. This lead me to want to be sure that should something happen to me that everything important is ready and that whoever will have to deal with my estate has everything they will need. MY EFFAK is 134 pages long.

The Emergency Financial First Aid Kit offers easy step-by-step instructions for how to protect personal assets and financial information, and reduce the challenges associated with emergencies, disasters & death. In 2005, the document became a registered federal government document, listed as FEMA publication #532. The Emergency Financial First Aid Kit is the first free emergency financial reconstruction and economic recovery guide for disaster victims.

There is also a companion piece to the Emergency Financial First Aid Kit , the Personal Disaster Preparedness Guide (PDPG) which will guide people through steps they can take before a disaster strikes. This I have not yet completed.

Task 19 - eBay Item for Sale

(19) Sell something on eBay

Yesterday I was cleaning and of course I found a bunch of things still brand new in the box I purchased and never used or even opened. So I thought perfect items to list on ebay.  I had purchased a wireless mouse for my dad and he decided he didn’t want it. I should have returned it right then and there but it got lost in the house and only discovered 6 months later. I listed it at 10:00am and by lunch it was sold. Either I got lucky or I priced it to low but it’s shipped and done and I got a little wasted money back. Yay! Now I have to list the other items.