Dave echos a sentiment I’ve begun to hear more and more often. Apparently, it’s getting more and more OK to walk away from ones mortgage:

This isn’t about having your credit score ruined or not being able to get another mortgage for a few more years. It also isn’t about a moral choice anymore, as I thought it was back in 2008. This is about people who have gotten screwed over by the very banks that we have been paying to keep in existence. The banks get all the help they need while the people get nothing – it’s a messed up system right now.

The logic here is truly mind-bending. Let me see if I can get this straight: Those darn banks got bailed out, which is unfair and shouldn’t have happened. But because we did go and bail them out, we should also bail out those people who borrowed far more than they should have. Which is also unfair, but you know, two wrongs always make a right.

As far as those people walking away from their homes, I have little sympathy for them. Nobody twisted their arm to get them to sign that mortgage contract. They rolled the dice in a game they shouldn’t have been playing. Just because they greatly discounted the odds of snake eyes coming up doesn’t mean they shouldn’t lose when it comes up. At the very least, *I* certainly shouldn’t be losing because they did.

A letter showed up today letting me know that AMEX has decided it is about time to change terms on my Blue account. Namely, a pretty hefty jump up in my interest rate. Plus a ridiculous rate on cash advances — does anyone actually do them anymore, and if so, how clueless are they? Tack on some minor tweaking to late payment fees.

credit: the Other michael

Oh, and most interesting, they are dropping all overdraft charges. Does this mean I essentially have limitless credit? Why don’t I run down to the local dealership and see if they’ll let me throw a Cayenne Turbo S on it? Eh, well, maybe not… they may just allow it! With the way the auto manufacturers are stumbling over themselves to get you into a new car, one never knows!

Go ahead. Set my interest rate to 39.9%. Make the late payment fee $497. As long as you don’t pull a brain-damaged move like Chase and arbitrarily start charging me a fee just to have the account, I’ll keep you around, if only to keep my credit utilization portion of my credit report as low as possible.

Because in the end, I just don’t care.

I don’t finance my life with credit anymore.

photo credit: frankie_3011

When did we develop the memory abilities of a goldfish? Correct me if I’m wrong, but isn’t this type of stupidity what got us into a pretty serious mess in the first place?

I’m beginning to think it’s time to start saving in some other currencies, because Americans apparently remain too short-sighted to avoid a serious financial spanking.

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…

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.

photo credit: danesparza

As I mentioned in my last post, we accomplished something that I consider absolutely huge — we no longer have any credit card debt. And I’d like to extend my thanks to Chase for being the pricks they are for motivating us to pull as much out of budget in order to kill them off as quickly as we did!

In other financial news, the side business that is becoming my main focus continues yielding gangbuster results. I assumed that after the holidays, things would rapidly slow down on that front. But it looks like January has ever so slightly passed up the incredible December. That said, next month is unlikely to see the same debt killing as this one, as I really need to set aside a pretty healthy chunk for quarterly taxes. I set aside none this month to ensure that we could kill Chase, so I’ve got a little catching up to do.

Anyway, on to some numbers… let me just say right now, 2009 is going to be awesome!

For the first time since I initially laid down the plastic to pick up some trinket almost 20 years ago, we are officially credit card debt free!

Following my little rant over Chase doing extensive modifications to our agreement, we shuffled a few items around in our budget, waited for my side business commission check to come in, and then scheduled one whopper of a payment to them. The payment cleared last night.

And now, I have an envelope on my desk containing the remains of a credit card along with a letter requesting account closure just waiting for me to find a stamp.

photo credit: Civisi

Hope everyone had a joyous Christmas as well as a safe and wonderful New Years! Most of my free time this month was spent doing as much family stuff as can be squeezed into the ridiculously cold weather December decided to throw at us. But since we live in the Midwest, it’s not as if winter is a surprise or anything…

As I mentioned last time, my efforts at earning a little extra are paying off in a fairly major way. December took November’s successes and handily passed even that success up in a way that boggles my mind. The earnings have slowed down in the last ten days or so, as I expected. But now that I’ve got a taste of the potential out there, I’m hooked, and am excited to get cracking in ’09!

When my assorted commissions started coming in in mid-December, I must be entirely honest: we blew some of it going ever so slightly overboard with our gift giving. We budget a bit every month for Christmas gifts throughout the year (’cause Christmas isn’t a surprise, you know!), but decided to add a chunk to that total when I saw how things were going. Even though we had it to spare, it still felt a little odd going off budget.

But most of the excess went to doing some heavy damage to our debt. Which was a lot more fun than it sounds like! I decided to check this month’s running total a few days before the end of December, and saw I was a couple hundred dollars short of a big number. So Chase got paid twice this time around. Because when I realized how close we were, I just had to see five figures disappear in a month!

Let the blood letting begin!

photo credit: Andrew Huff

A quick thought on the title: With my brother and sister both in from their respective corners of the country to celebrate Thanksgiving as well as my side’s Christmas, far too many opportunities to partake were presented. And, quite honestly, fully taken advantage of.

I don’t know about you, but I could probably skip eating for well into December and be just fine calorie-wise.

On that thought, we again had a comparatively frugal Christmas. And in the end, we were again just happy to be able to spend some time together without the day-to-day distractions that make you to forget what is really important. Namely, those close to us.

But we’re here to talk about some dollars, so on to the money front. While we knocked off right around our average debt amount, our earnings, well, soared. Like last month, the big push for November was definitely of the shovel building variety.

I really worked at the system I’ve been following, and have managed to more than double our income for November. In fact, depending on how a thing or two shakes out, it may be closer to tripling it! I still have to wait until mid-December for November’s commission checks to arrive, so again, nothing has been applied to the debt as of yet.

We will have to wait and see if anything approaching this level is maintainable outside of the holiday season. But unless I really ramp things up in an extreme way, I’ve finally reached the point where I can comfortably draw on this business’ earnings without slowing future progress down.

I have a feeling we are going to start seeing some major debt destruction in the near future!

photo by dewonn43

Ah, another month passes, and another cool thousand (and change) disappeared from that big ol’ total. Slow and steady. Blah, blah, blah.

While debt reduction is certainly way up there on our priorities, this month’s focus was elsewhere. Namely, as Dave would say, I spent a fair amount of free time the last month or two building a bigger shovel.

I’ve spent spare time in the evenings playing around with Adwords ad campaigns, and have stumbled upon a system that is doing well for me. Well enough that I’m considering shutting down my side business in the very near future. Well enough that, assuming I can continue to steadily grow it, may see me making it my primary income, for that matter. Well enough that I wake up excited to get back to it. Enjoying what you do cannot be overrated!

But those successes have not been reflected in our debt progress yet, as everything is ramping up so quickly. Yesterday’s earnings are bankrolling tomorrow’s increased earnings. I’ve literally quadrupled what I made in September’s this October, but that entities’ account (a good business owner knows that he should keep his monies separate, don’t ya’ know) shows as close to zero. At least, until my commissions come in in a couple weeks. Which I’ll then use to keep the ball rolling into December. Oh, sure, I could slow down and draw some of that out as profit. But with the holidays coming up, that seems like a shortsighted thing to do!