Irregular Payments

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photo credit: me and the sysop

As I mentioned back when we killed off our non-mortgage debt, our next basic step was funding a real emergency savings account. As I’ve seen suggested just about everywhere, somewhere in that mythical 3- to 6- to 12-month worth of emergency cash was the goal.

The first thing I needed to do was figure out what the typical month should be worth, so sat down with our last year worth of monthly budgets and began adding up all the must-have items. In other words, get rid of those things that we wouldn’t be doing if we found ourselves in an emergency setting. Think things like dining out. Or magazine subscriptions. Or vacation funding. That sort of thing. Tack on 5% — just to adjust for inflation — and multiply by the number of months wanted. In the end, six months sounded like a good middle ground, and we began funneling my side income and any extra cash previously going towards debt into our ING savings account.

And again, it is amazing what focus, hard work, and a little luck can do. Because four months later we have a fully funded emergency fund for those six months. Plus another twelve months+ on top of that. A certain portion of that will probably be set aside for next year’s taxes, but at this point we track it as a savings subcategory called ‘Wow! Funds‘. Because, wow, things are really changing for us right now.

Next money step? Think it’s time to see about getting our little five-year-old future education taken care of…

I really have to laugh at the various credit card companies and their reaction to the imminent passage of new credit card legislation that curtails some of their most egregious activities. Threatening that they may just have to start screwing over their most responsible customers in order to make up for no longer being able to screw over their less than perfect ones as badly.

“Those who have managed their credit well and currently have very good credit card deals will find that card companies are limited in their ability to distinguish between them and those that have credit problems,” Edward Yingling, president of the American Bankers Assn., said in a statement.

“The result will be some subsidy from those that manage their credit well to those that have problems, affecting negatively the terms the former will receive.”

Who do they think they’re kidding? Those most responsible customers don’t need their silly pieces of plastic, after all. They are merely a convenience. Attempt to nickel and dime them, and you’ll see a mass exodus to either those credit card issuers who know that a fairly treated customer can be a profitable one, or off the credit merry go round altogether and using their debit cards.

Or, god forbid, back to cash. The Horror…

photo credit: fotograf1v2

Glancing at the calendar, I notice that almost half of the month has disappeared in a pile of other people’s tax documents. The brain is just a little crispy right now…

Which is not to say that little has gotten done with our debt destruction progress. Actually, all of a sudden our future debt reports have gotten incredible simple. Not that they were all that complicated to begin with, but by the end of this month, the report would consist of a single line containing our mortgage balance.

That’s right. As of sometime next week, when our medical bill shows up and we write out one more check, we could call up Dave and shout WE’RE DEBT FREE! Well, except for the mortgage, which Dave seems OK with. Which always felt a bit disingenuous to me, when most people’s biggest debt is an oversized mortgage, but that’s a whole ‘nother post.

So, how did we kill off $27k+ in a single month? More awesome side job income? Nah. I didn’t tap those funds at all. Just letting those stockpile up for the time being for next year’s tax bill. Instead, we finally got rid of my father’s gift, which covered the loans taken out against it along with leaving a few thousand extra to work with. We plan to kill off the last of our medical and use the rest as an initial boost to a real emergency fund. OK, and we may blow just a bit of it celebrating.

Anyway, enough prattling on. Let’s take a peak at what is probably the final State of the Debt report:

So what’s ahead?

The State of the Debt reports are probably done. Seems a bit boring to report something like ‘Yep, made another mortgage payment.’ I fully intend to accelerate paying that mortgage off as quickly as possible, but a monthly report on that progress? Eh. Maybe in passing I’ll mention milestones, but really, I’ll have to see if I can come up with something a little funner to point out…

Like I alluded to, a real emergency fund, in the neighborhood of six to twelve months of expenses. Haven’t sat down to ponder the exact level, but somewhere in there. Our miniature one has come in handy when stumbling blocks appeared along this path, but having something substantial in place should a more extreme emergency make an appearance definitely would be a good idea. Plus, having that to fall back on gives you freedom to take advantage of opportunities you’d otherwise be hesitant to consider otherwise.

More life simplification. In my free time (in other words, not in the last six weeks or so) I’ve been reading quite a bit on life hacking. Think along the lines of books such as:

• Margin by Swenson
• Your Money or Your Life By Dominguez & Robin
• The 80/20 Principle by Koch
• The Myth of Multitasking by Crenshaw

Like too many people anymore, I spend far too much time doing things that add far too little to my life, and far too little on the things that actually do.

I will be correcting that imbalance.