MM’s Money

September 12, 2008

Small Victories!

Filed under: Family Financial Makeover,Lil One,Planning,Saving — mmsmoney @ 12:00 pm
Tags: , , ,

So based on the FFM (Family Financial Makeover -I’m gonna copyright/trademark that if I can) I went to the credit union and set up three new savings accounts, in addition to the one I already had:

Share Savings 01:  Primary savings – for holding the buffer. Balance: $230 (it was $260, but I transferred $10 to each of the new accounts). It’s still pitiful and sad though!

Share Savings 02: Major Emergency Fund – for building up 6 mos of expenses – which is at this point (including our slash & burn of the budget) roughly $18,000. This would cover us in terms of that major disaster deductible on DH’s business insurance or in the event of my losing my job. Not both – so we’ll have to re-address this goal as money starts piling up. Balance: $10

Share Savings 03: Car Replacement Fund – for the eventual replacement of my vehicle. My 13-year-old rattletrap which I love and cherish and whisper sweet “do not die on me” nothings to every single day. Balance: $10

Share Savings 04: Baby College Fund. With a grand total of $20 in it. Wait! What’s that you say? My numbers don’t add up? You’re right! My branch manager, who knows my name you know!, let me know that for college savings accounts, the credit union puts in their own $10. So free $10 for Lil One! Woot!

Now I know some of you would say, why local Credit Union with its measly 1.5% interest on savings accounts? Why not ING or HSBC or some other bank? Well, I plan on converting each of the values in these accounts to other accounts when they get built-up. A combo of 3, 6, 9, 12 mo. CDs (see below) and for baby-girl, an educational investment instrument of some sort that I haven’t yet researched. So for now, until we’re dough-rolling, I’m happy to have these monies socked away closer to home.

Oh, and I opened another account too – the credit union version of a Certificate of Deposite is a Share Certificate. Normally, the minimum initial deposit is $1000 and earns 4.1% (12 month – I think the 6 month ones earn slightly less). But right now, they are running a promotion to attract members who might not be able to affort the minimum deposit. SO I bought a share certificate that can be augmented with additional funds throughout the term for $10. And it earns 6%!!! Upon thinking about it, I should have put baby’s CF amount in that, but they wouldn’t have matched it. And I can always earmark the Share Cert for Baby Girl when we are wealthy and almost debt free next September. I just can’t exceed the 1000 or the entire thing becomes a normal Share Cert – which is weird. What if it had 990 and earned interest to top 1000? Would the whole thing then lose the special rate? I am so uneducated and Sometimes don’t ask enough questions!

Advertisements

September 11, 2008

Conflicting Goals, Maybe?

Filed under: Debt,Planning,Uncategorized — mmsmoney @ 12:00 pm
Tags: , , , , ,

So part of my family financial makeover is to start saving. Family Financial Makeover has a nice ring to it…Googling…No, it doesn’t appear that I am using someone else’s trademark/copyright (I get those confused). OK. It’s MINE. My Catch Phrase. Hands Off! Now how do I trademark/copyright it? Can I get people to pay me for usage?

 Ok- back to topic: Yes, I am trying to build the buffer between me & disaster (that YNAB Rule#1 one-month’s expenses discussed in the previous post – listed as Goal 1 below), but at the same time, I have equally important and compelling goals:

  1. Goal: Generate Buffer. Execution – slash & burn expenses and allocate avoided dollars to buffer.
  2. Goal: Pay down debt. Execution – begin snowballing personal loan (at the YIKES! interest rate of  18.6% !) to free up cashflow in the budget ($201.50 per month). Current Snowball Amount: $100/month
  3. Goal: Start saving for Major Emergency Fund/Baby College/Car Fund. Execution: start slowly at $10 per payperiod in 3 accounts (total per month: roughly $60).

Now why would I try to accomplish all three goals at once? Am I setting myself up for failure?

First, for psychological reasons. I have been so beaten down by financial trauma, stress and discontent that I need to start on that debt ASAP. And I feel that with the help of YNAB, I can get to my one-month’s goal within the same timeframe as paying of that personal loan. And I do buy into the Dave Ramsey small-victories build momentum approach…I need to change my behaviors and I need to get positive reinforcement through accomplishing a goal. I should note I have not read any of Dave Ramsey’s books – I’ve heard his radio show two or three times, but I have read A LOT of blog posts and comments-debates on his theory and alternative approaches! I guess I am luck that my smallest debt and the highest interest rate are the same debt so I don’t have to be “stupid” according to varying groups of blog-commenters (and I’m pretty sure they are roughly divided in half in each of these camps).

Second, it’s kinda six-of-one, 1/2 dozen of the other to me. I’ve screwed up and screwed up badly in the past and have not done the requisite learning from my mistakes (yet – I need another disaster to prove/execute on what I’ve learned). Building the buffer will implement the YNAB approach, but only if no emergencies happen in the near term (til I get that loan cleared). My credit union really takes care of its members and in conversation with my branch manager, who yes – does know me by name, she indicated that the credit union is very willing to help members get out of trouble when they proven themselves dedicated to fixing their issues which (in context that I shan’t go into) to me sounded like my clearing my loan successfully (never been late, never asked for more funds, paid extra upon occassion and more regularly lately) would be beneficial if that near-term disaster were to appear. I really think my car is going to die soon – I really do. And being eligible for a car loan from them in 6 months is more likely than my being able to save $7000 for a good used vehicle. So as awful as it sounds, I’m almost resigned to needing another loan! and need to clear the current one to ensure this future one becomes available.

Last, the savings issue – I’m oh-so optomistic here. We have to have the major emergency fund – DH’s insurance (liability) has a $10K deductible. Where we would get that money should a project he’s working on go up in flames and we’re liable…Oh I could lose sleep over that. $10 at a time sounds miserly, but babysteps, right? Next – the baby. She will get college tuition paid for and I need to let the power of compounding interest begin to work its mojo. Simple as that – it is as important as any other goal in my personal view. And last – yes that car will die sometime. Maybe its death is 6 months from now, maybe 18 months. In any case, some money will be set aside for that eventuality and to avert the total need for another loan!

So tackling them concurrently, although with differing amounts budgeted against each per month, seems like a reasonable approach to deconflict the goals. Ultimately, it’s my job to make sure we don’t screw up again and this is the plan for now. Subject to revision, subject to God’s Will!

Create a free website or blog at WordPress.com.