Friday, December 28, 2007

FSA: Use it or Lose it?

I have a medical expense FSA, or flexible spending account, set up through work. I use it mostly for co-pays at various doctor and dentist appointments, any medicine, and contacts. For 2007 I set it at $500, which turned out to be pretty close to my actual usage.

The thing that I don't know is whether or not I have to use the rest of the money - $64.15 - by December 31.

Because the money set aside for the FSA (or in my case, on a debit card) is not subject to payroll taxes, it has a coverage period or "plan year". In general, the plan year is the calendar year. However, in 2005, the IRS authorized an optional 2 1/2 month grace period that employers can offer, extending the "plan year" through March 15, 2008. I just don't know if my employer does this.

Seems like a little thing that I should easily be able to find, right? When my money is forfeit? I have already received my new FSA debit card for 2008 and my husband needs a new pair of glasses - if my 2007 FSA extended into 2008, then I could use that $64.15 towards the glasses and pay for the rest with the 2008 FSA. But I can't find anywhere the date my "plan year" ends. So I have to assume that it ends on December 31, 2007. I would rather use my money than forfeit it accidentally.

So today I bought 3 new boxes of contacts for us, as they won't expire for many years. Using a free shipping coupons I found online, the total came to $62.38, which leaves me with $1.77 left to use on my card. I just need to run to CVS and find something small to use the rest of it up!

Thursday, December 27, 2007

Spending Relapse

As I alluded to earlier, the budget has slipped in December. Big time. I'm embarrassed to admit it, too embarrassed even to look up how bad the numbers are. All I know is this: in December, all we paid to our credit cards debt was the minimum payments. On top of that, we had covered our December minimum payment towards the Discover card with our November payments, so we didn't even put anything towards that debt. Our grand total towards the credit cards in December was $198. Somewhere, the credit card companies are cackling with glee.

As I predicted in November, the month of December was really tough. I was really quite busy and didn't pay attention to our finances hardly at all - just enough to pay the bills. No budgeting, no coupons, lots of buying. Most of the shopping was for Christmas gifts and related items, but those budgets there were still *ahem* broken. And we went out to eat quite a few times throughout the month. I am such a bad example! Maybe I'm a what not to do?

The good news is that we didn't use our credit cards. At all. Christmas, while expensive, was all cash.

All these add up to a disastrous December for debt payoff. I think the kicker is that when I allocate money towards a certain budget category (like Christmas gifts), but I don't spend it right away, I throw it toward the debt. So some of the credit card payments in November should have been made in December. I don't know if I prefer it this way or if I would rather have a sub-accounting system to allocate my money towards its final destination. I know that when we get a savings account, I will need sub-accounts to keep track of it all.

I need some ideas- when you have money to use a certain way, but not immediately, where do you put it? How do you keep from using it for something else?

Tuesday, December 25, 2007

5 Personal Finance Lessons from National Lampoon's Christmas Vacation

Merry Christmas everybody! I hope you had a great day filled with fun, family and food. And, of course Christmas traditions.

One of our traditions is to watch watch National Lampoon's Christmas Vacation when we put up our tree. Although our tree has been up for weeks now, I wanted to divulge the secret financial lessons hidden like little presents within this hilarious movie. It's much deeper than what it seems.

5. Get your Christmas tree for free. While I wouldn't recommend trekking out in the middle of the woods and pulling the perfect tree up by its roots, Clark was on to something when he dragged his frozen family deep into the forest. Why pay $30 or more for a temporary decoration? In the past, my parents have chopped down a tree on their property and used that as our tree - a fun experience and free. The King and Queen of Debt at We're in Debt reuse the same tree every December and keep it in a pot outside the other 11 months of the year. Great way to make it last!

4. Help out others who have less. Clark and Ellen offered to buy some Christmas gifts for Rocky and Ruby Sue when Eddie and Catherine were unable to get them anything. There is always someone who has less than you and, though it's easy to feel bad about being in debt and not having any money, it's important to remember that there are others worse off. So shovel your elderly neighbor's driveway, donate some canned goods to the food bank or spend some time with a sick relative. It's easy to get a little caught up in the gift frenzy, but at the end of the day, it feels much better to have made a difference in someone's Christmas.

3. Don't let pride stand in your way. When Cousin Eddie confesses that his family has had to sell their house and live in the trailer, it's easy to feel bad for him. Until they mention that he hasn't worked in 9 years because he's "holding out for a management position." There's really no excuse for not finding some way to generate income to support your family when it's needed to pay the bills. Work a part time job, sell things on eBay, work freelance. It can be tough to swallow your pride, but much much better than losing your house.

2. Give what you can afford. Aunt Bethany shows up at the house on Christmas Eve with a Jell-O mold and her cat wrapped up to put under the tree. A little extreme, but on the right track for someone who is trying to save money. Re-gifting is a tricky business, but there are plenty of gifts you can give for very little cash. It all boils down to...

1. Spend only the money you have. In the grand mother of all financial lessons, Clark puts down a deposit on a new in ground pool - before he gets his Christmas bonus necessary to cover the deposit check. Then, of course, when the bonus doesn't come in as expected, he panics. Although the desire is strong to spend spend spend and pack under the tree with gifts, it's just. not. worth. it. to go through that kind of torture.

Merry Christmas! And if you find that you made some of these mistakes, well, there's always New Year's Resolutions. :)

Saturday, December 22, 2007

Where Have I Been?

Busy. Busytown, busyville, busy Vegas. Busy busy busy.

I know that this is a busy time of year for everybody. What I don't know is how they handle it all, keep sane, and sleep. I was doing so many things that I had to put something on hold for a little bit, and that something was the blog. :(

During the last 10 days, I began working on 3 new big accounts at job #1, worked past 11pm 4 times at job #2 (after a full day at job #1), shoveled 16 inches of snow out of two driveways, finished my Christmas shopping, made 78 truffles for various potluck events, wrapped all my gifts and went to 3 Christmas parties. So while it was fun, it was crazy.

Now things are settling down a little. I have a few days off work, most of the Christmas preparation is done, and I have time to breathe. For anybody who has been looking for new posts, I'm sorry and thanks for sticking around.

One thing I've noticed is how much work it is to stay frugal and within budget. I let things slide a little bit recently (more on that soon) and, while not devastating, my wallet has definitely noticed the lack of attention. I wonder if I'll ever be at a point where saving money is a no-brainer. Right now, if I'm not trying to save money, it seems to *poof* disappear.

I also have a lot of catching up to do with reading other blogs. Like when I was deep in the pits of credit card debt, I found that ignoring things that make me feel bad is a defensive tool. Reading other's frequently updated blogs made me feel bad about neglecting mine. And did I mention I was busy?

I am very very excited to get things back on track, and very very excited to see that there are still people who have stuck with me throughout my little lull in posting - thank you! More soon - promise. :)

Wednesday, December 12, 2007

Update & 7 Random Weird Things About Me

This week has been a crazy one! Work exploded all of a sudden and between that and Christmas, I have been overwhelmed. The good news is that business is up, which means more commissions! The great news is that there's about a 70% chance my commission backslide will be remedied and I will no longer owe my company the $2500. I have done all I can and I'm just crossing my fingers now.

In other news, I have been tagged by wealthy_1 over at Collecting my Cash for a 7 random weird things meme! I am definitely weird, so this should be easy :).

1. I have a wicked combination Boston/RI accent from growing up in the Ocean State and going to college in MA. Obviously, it is most prominent when I am angry, talking fast, or drinking.

2. I played rugby in college. If anyone knows anything about rugby, I was a second row, which is quite possibly the least glamorous position.

3. I like to sing in my car, dance & gesture wildly. One time, at a red light, 2 kids saw me, pointed and laughed hysterically. That was a little embarrassing.

4. I have different voices for each of my cats and I have conversations with them, speaking in my voice and then their voice. Usually the conversations are about Pounce or cat toys.

5. Following along with wealthy_1, I was caught cheating when I was in 3rd grade on a reading test. I was the one who knew the answers, and my pal Steve used to give me a pencil for each answer he took off my paper. He had some sick pencils. I think he still owes me a few.

6. I skipped 2nd grade, graduated high school when I was 17 and college when I was 20. People always seemed shocked that I wanted to graduate early instead of taking fake courses and bar hopping 7 days a week.

7. Penguins are my favorite animals. My PJ's are almost exclusively penguins, I have a penguin calendar, stuffed penguins, penguin candle holders... etc etc. The list goes on and on.

I am supposed to tag 7 more people, but I know how crazy everything is right now, so instead, leave a comment of one weird thing about you! Of course, if you want to play, then consider yourself tagged!

Monday, December 10, 2007

Financial Adviser? Not Right Now.

Last week, I finally got around to my free meeting with the financial adviser. Yes, it was two months later, but, hey, I only canceled on him once. :) I'm a pretty busy gal.

In our meeting, we began by discussing goals and plans for now and for retirement. I told him our current #1 priority of paying off the nasty, evil credit card debt, and that we then planned on building an emergency fund and saving for retirement. I even outlined our eventual plan - contribute to the 401(k)'s until we reach the maximum employee match, then open Roth IRA's for each of us and contribute the maximum we can. After that, go back to the 401(k)'s. Simple, right?

It's actually very simple, straightforward... and not really necessary for professional input. I'm sure I'll want to do some research on how to allocate my funds (once I have some) and when we eventually have the money to invest directly, I'm going to want some help. But right now, there's not much for him to do. I did leave the meeting feeling better about the decisions I am making,but that's about it. Reassurance.

I'm just glad the meeting was free and I didn't have to pay for it. :) And I can't wait until we reach the point where we can use professional help. Just one more reason to get the debt monkey off our backs.

Thursday, December 6, 2007

Carnivals Galore!

Back in the swing of things! This week I participated in FOUR carnivals. Very exciting stuff! In order of appearance:

The Carnival of Debt Reduction #116 at Blogging Away Debt. My post on my Minimum Payments Gone Haywire was included. Others I enjoyed were:

  • Journey to Financial Freedom has 8 Debt Signals to let you know how serious your debt is. I wish I have never had any of those signals, but a few look familiar!
Debt Consolidation Lowdown posted the Carnival for Debt Management #31, and my post on What I'm Financially Thankful For was a part of it! My picks are:

Next up is the Festival of Frugality #102 at Lazy Man and Money. One of my favorite festivals at one of my favorite blogs :). My thoughts on Leftovers Gone Wrong were included, along with these other great posts:

Last but not least, Loonies and Sense posted the 37th Carnival of Money Stories. My Commission Backslide tale of woe was included along with:

  • A Penny Closer has a fantastically written story on his First Debt. He has a new subscriber in me!
That sums up this week's carnivals! Be sure to check them all out, and, as always, many thanks to the hosts!

Should I Keep the Great Deals to Myself?

As I progress through this gift giving season, I have been faced with a dilemma. I have been getting great deals on the presents I'm giving left and right, which I am very excited about. So what's the problem? I don't know whether or not to share that the gifts I bought were on sale.

This doesn't really sound like a very big problem, I know. Except I don't want it to seem like I spent too much money on their Christmas gifts. If someone gives me a gift or gifts that are much bigger or more expensive than what I give them, then I feel pretty bad. I wouldn't want to make anybody feel bad on Christmas. On the other hand, I am averaging about 50% off the retail price, which essentially doubles my Christmas budget. I want to, and planned to, use my Christmas budget to the max. Nor do I want to brag about how well my shopping went (to them, anyway, blog readers are fair game:)).

Some people are easy - my husband, for example knows exactly what I spent on his gifts, and my mom always loves a good bargain. With my pared-down Christmas list, most of the people on it are people I can share the deals with. It's not like I'm shy about being frugal - it's a well-known fact. And some of my gifts are pretty obviously low-cost. I hope that those don't make me look cheap. What problems to have - half too expensive and half too cheap. :)

I think my best bet is to be honest as much as I can, but keep a little bit of mystery. If someone asks me how much something cost and I don't want to share, I'll just say "Exactly as much as I wanted to spend." Case closed!

Tuesday, December 4, 2007

Practically a Different Person

Last week, when reading a post over at PaidTwice about her changes in attitude, I started thinking of how I've changed since we started this debt payoff journey. I couldn't really come up with anything except "I spend less money now". It sounds so simple, right?

Then I had a conversation with my sister, discussing our respective Christmas lists. I told her a few things I was looking for: knee highs, undershirts, hair mousse, cookbooks, and she proclaimed, "But none of those are fun!" It hit me like a ton of bricks - almost everything on my list was practical. Even the cookbooks weren't solely for pleasure; they were useful, too. I wasn't really asking for things that I wanted, but things that I needed. Things that the old me would have run out to the store to buy.

Somewhere in the past year and a half, I went from buying the things I wanted to buying the things that I needed to wanting the things that I needed. Unless it is something I can't live without, I put off buying it until I can ask for it as a gift. I have been out of hair mousse for at least 3 months, but I refuse to buy it because I don't strictly need it. Same goes for some makeup - I have been using an old, forgotten eyeliner until I can ask for a new one in my Christmas stocking.

Of course, if it's an essential, it's already built into the budget, but for all the little "extra" items, nope. Many a time I've stood in an aisle of Target, picked up some new non-necessity only to put it right back again. The one time in recent memory I've actually purchased a non-necessary item for my self, it was a pack of bobby pins. That were on sale. For $0.79. That, when I got home, I gave to my husband to give to me for Christmas. In October.

There are plenty of examples of my attitude transformation:

BAD: Buying a magazine every time I saw a new issue on the newsstands
BETTER: Subscribing to my favorite magazines
BEST: Ordering magazines through My Coke Rewards (Bonus: using other people's Coke caps) and reading from the selection at the gym

BAD: Grocery shopping every day, with reckless abandon
BETTER: Grocery shopping once a week with a list
BEST: Grocery shopping once a week with a list, coupons, freezer inventory and menu plan

BAD: Buying myself gifts because "I deserved it"
BETTER: Buying myself treats with my fun money
BEST: Treating myself to free "gifts" like a night in watching movies or an hour blog-a-thon :)

BAD: Buying books I wanted to read
BETTER: Only buying a few books, on sale
BEST: Getting books at the library, or with gift certificates

BAD: Replacing an item if it broke, on credit
BETTER: Replacing broken items with cash
BEST: Evaluating how necessary the item was, and only replace immediately if I can't go on without it

Obviously, this has pushed me to become more frugal, and work towards the ultimate goal of eliminating our debt. Some of these are borderline cheap, but they only affect my husband and me, and are taken on a case-by-case basis. It's pretty amazing to see the differences in our spending now that we only buy absolute necessities.

Monday, December 3, 2007

Standing on the Brink

My darling husband started his own blog today, Standing on the Brink. On his blog, he writes about growing his company and the trials, successes and failures along the way. In my completely unbiased opinion, he is a fantastic writer. Plus, reading all about his company will help explain how we took on this debt in the first place - much of it was used to get Servprise off the ground. So take a minute and check it out!

Sunday, December 2, 2007

November Round Up

All in all, November was a great month. We received extra paychecks, visited family, started our Christmas shopping, and paid off another credit card! Wow.

The best news of all is... we hit our debt payoff monthly goal for the first time since June!! In November, we paid $3103.14 toward our credit card debt, which surpasses our goal of $3000 per month and blows our budget of $2771 out of the water. The total paid to principle was $2971.48, bringing our current total debt down to $13620.08. To date, we have paid off 65% of our credit card debt, up 8 percentage points from October!

Despite my problems with my commissions, my income was still $330 above the budgeted amount, thanks to those extra paychecks. We went over our gas budget by $27.06, in part from the extra travel and also the increasing gas prices. I thought that was going to be much worse, so I am OK with that. The grocery budget was under by $10.98, but our fun money was over again by about $40. What is really hurting us there is we have gone to a few concerts recently, and it costs us more than the price of the ticket. Something to work on :).

The Christmas budget is coming along nicely. I have been filling out my Christmas Plan spreadsheet after everything I buy, and I'm about halfway done with all the shopping. It really helps to not be exchanging gifts with the in-laws this year (more on that soon). I am pretty amazed with how far my dollars are stretching, and I can't wait to write some posts about it. I knew I shouldn't have shared this blog with my family!

That being said, December is making me a little nervous. We'll be traveling again for New Year's, and with all the gifts and craziness, I'm going to have to fight to keep the budget under control. I know that if my commissions don't get sorted out, the chances of us hitting our debt payoff goal for December are pretty slim. The credit card we're working on currently has a balance of $2486.55 - I would LOVE to knock that off before the new year. I think it's going to be pushed into 2008, though.

Saturday, December 1, 2007

Minimum Payment Gone Haywire

Back in August, I messed up and paid one of my credit cards late. After a few phone calls and back and forth, the late fee was removed (twice, then one put back) and I was promised that my interest rate wouldn't change. Which it didn't- the interest stands at 12.49%, making it my lowest rate of all our credit cards. In fact, while writing this post, I realized that the interest rate has dropped from 12.99% to 12.49%, without me having to ask.

What has changed on this account is our minimum payments. I pay attention to the minimum payments because, as our smallest interest rate in the snowball, that's all I pay. Right after the late fee drama, the minimum payment was off by one late fee ($39), and totaled $171. Then the following month (October), the payment was still high, at $164. This was completely unexplained.

Logically, as more payments are made, the principle will decrease, and the interest earned will also decrease over time. As most credit cards charge interest on the average daily balance, days with longer months will have slightly higher interest charges than shorter months, thus creating a variable interest amount built into the minimum payment. So I checked out the interest charged in August (for September's payment) and September (for October's payment). They were $70.49 and $64.78, respectively. I think this is why the interest rate dropped from $171 to $164. Now we're getting somewhere.

Except... in August, the minimum payment was $133. So October's minimum payment should have been somewhere close to that. And then November's minimum payment was $128, and the new bill for December has a minimum payment of $122. Why does this have to be so confusing?!?

I think that, quite simply, BofA made a mistake in calculating October's minimum payment. Maybe it was a result of Sepetmber's mix-up, or maybe it was just a glitch. In the long run, it doesn't make that much of a difference, and the money was applied to the principle, so it's still going to the debt payoff. What really disturbs me is that the minimum payment can change so drastically. While my budget allows for such fluctuations, it could be detrimental to someone who is under tighter financial restrictions. What is really disturbing is that I couldn't find how my minimum payment is calculated on the statement, nor was I able to find it on their website. I hope it's there somewhere and I'm just missing it - otherwise it leaves me with a very uneasy feeling.