Personal Finance | Are Crocs Shoes a Good Buy?

As a self-proclaimed personal finance guru (and believe me, no one else claims that!) I'm always looking for ways to do two things, make money and save money. And if I can accomplish both goals at once, then it's all the better. Today, I'm focusing on the save money side, and it has to do with shoes.

See, I really love shoes. No, really, if I had enough money, I would be buying at least one pair of shoes every day. It's almost a sickness. But, I don't have all of that money, and despite being a self-proclaimed personal finance guru, I don't at the moment, have a lot of extra cash floating around. So, instead of buying as many shoes as I can, I look for value. How do I find value in a pair of sneakers or sandles that I want to buy? It's simple, really. I want to find a shoe that looks great, that is made well, and that is priced right. Now, notice what you didn't hear - name brand or high end shoe store.

In my search for these great buys, I've done quite a bit of research. And for the past week or so my research has been on croc shoes, otherwise known as crocs. These croc shoes are an interesting phenomenon. Let's be honest here, the shoes are ugly. They don't look good at all. Almost like modified sandles with a toe covering that has had a bunch of holes punched out of it. And the colors - bright green, bright pink, bright red, purple, blue. These shoes are definitely not the most aesthetically pleasing thing on the market. But people seem to be buying crocs by the boatload. And people always say that croc shoes are the most comfortable shoes that they have ever had.

So I tested them out. I went to my local shoe store, found a pair of crocs that fit, and bought them. I must admit, they are extremely comfortable. But man are they ugly. Every time I looked down at me feet I honestly got to feeling a little bit nauseous. And the price was decent. At $30 it's hard to say no to these guys.

At the end of the day, do I think crocs are a good buy? I would say yes, but only if you are going to wear them around the house, to do yard work, and things of that nature. If you plan on wearing croc shoes anywhere but at home, you've crossed an imaginary line of mine I'm not willing to cross. But to each his own.

Building Wealth | Mortgage Refinance Options

The past year has wreaked havoc on the United States, particularly in the real estate industry. Many people have purchased homes that they can't afford, banks are foreclosing like crazy, and many people are in a state of financial crisis. But, there is a silver lining, particularly if you are one of the people that didn't buy your home at the height of the bubble (and are therefore still right side up on your house - meaning it is worth more than you owe on it) or enter one of those pesky sub-prime mortgages or adjustable rate mortgages that reset last year.

As I've mentioned before, one way to build wealth is to create more money for yourself. Another way to build wealth is to save money doing what you are already doing. The post today is about saving money doing what you are already doing, namely paying for your house.

If you weren't aware, mortgage rates, because of the housing crisis, are at the lowest rates they have been at in some 20 or thirty years. This means that instead of paying 6-7% interest on your mortgage, you can now pay around 4% (if you qualify, which is easier said than done these days). This can lower your monthly payment by hundreds, even thousands of dollars (and you could continue to pay what you pay now into the principal in your house and pay off your house super fast while saving a bunch of money!).

For example, let's say you own a house in Austin, Texas, and you want to refinance your mortgage to save some cash. If you go in, qualify, and get your interest rate lowered 1-2 percentage points, your Austin mortgage refinance will save you great amounts of money.

But why do it now? Interest rates aren't going to get much lower, and if you have the time you should get it done. Why waste money paying interest that will never help you pay off your house or save for retirement? Get your home mortgage refinanced today and save big time dollars!

Our First House Sold! And We Only Lost a Little Money!

In the never ending saga that is building wealth, trying to get rich, and now a day just trying to survive, our first house flipping adventure is over with the sale of house number one. It closes on Friday, and everything appears to be a go. Although we did end up losing a little money ($6,000 or so), it could have been so much worse, and is worse for so many others out there. I think the difference was, we weren't necessarily trying to get in and out to make money on the bubble. We created value and just happened to get a time in the housing market when everything went down. Oh well.

Now that we have sold the house, we are looking for a different place, much smaller, in a different city (Seattle - new job). Before we get a new house, however, I think we are going to rent for a bit. One of the major downfalls of our new living spaces will be a new lack of closet space. Before we had a huge walk in closet with a large amount of space. Now we have nothing but a little dinky 8 by 3 foot closet. So organizing the closet is going to take a little work. I think instead of looking all over the place for a book on space I'm just going to buy some closet organizers and use them to do all of the work for me.

I guess though, if the closet space is my biggest worry, then that isn't too bad. And as far as our next house, I think we are going to continue to look for value that we can add and then sell, but maybe not quite the undertaking we did the last time. I'm thinking appliances, some paint, but not the entire house. Nothing that costs over $5,000. And it will have a ton of closet space, which will be nice.

I'll continue to keep you up to date on all of my financial workings, hopefully in a little more detail than I have been. But in the meantime, remember that the key to financial success, to working toward the "big closet" if you will, is to keep costs low, keep returns high, and keep your nose to the grindstone.

Early Retirement | Debt Snowball Update

Right now early retirement is probably the last thing on anyone's mind. With the economy in the tank, automakers on the verge of bankruptcy, and winter nipping at our noses (I hate cold weather so I thought I'd drop that in!) there is no room to talk about early retirement right? Although it may appear as though the primary question of the day may be how to get out of debt, now is actually the perfect time, because there is never going to be an exactly right time to get your financial house in order.

Because of the state of the economy, however, you may need to turn your sites away from investing and creating passive income and focus on the things that are slightly less risky. And there is no better time than the present to start another debt snowball to help you on your way. If you remember, I discussed exactly what a debt snowball was in an earlier post (and my friend over at the daily dosh has done exactly the same thing).

If you are anything like me, you have probably strayed from your debt snowball for whatever reason (for me it was moving to a new city and starting my own business from scratch). Well, now is the perfect time to get back on that horse. It is really hard to retire early if you have a mountain of debt to pay down.

To started paying down your credit card debt, first find out the exact balance and interest rate you are paying on each card, find out the minimum payments on each, and find out what you can put toward credit card debt generally per month. After that you pay the minimums on every card you have but one, with the one you choose determined depending on your psyche. One way to pay down the debt is to put all the extra money toward the lowest balance and moving upward. This is nice because it allows you to actually see progress very quickly. The other method is to pay off the debt with the highest interest rate first. This actually save you more money in the long run (and is the best choice if you are strong willed).

As you pay off each credit card balance, you apply all of that payment (the excess plus the minimum you were paying) toward the next card in line. In no time you have eliminated credit card debt!

As for the update on me, I don't have much progress to report, sadly. I think I may have to make that a New Years Resolution. Starting a business is tough on the debt, though. But if you want to retire early sometimes you've got to go out and get that money on your own, you know.

Building Wealth | Bush's Economic Stimulus Check

I received my economic stimulus check on Friday from the government. I'm married, so it totaled $1,200.00. Although when you just look at it like that and think about holding $1,200.00 it seems like a lot, when you think about what you can buy with it, it really doesn't amount to much.

Since we did get it though, and this is supposed to be a discussion on personal finance, building wealth, and retiring early, I thought I'd discuss how my wife and I planned on spending the stimulus money we received. What better way to talk about personal finance than to discuss what you are doing in a real world situation, right?

For starters, although we knew we were getting the $1,200 from the government, we didn't pre-spend the cash before we got it. This is a major problem for a lot of people. You know you are coming into some money, whether it is a lot or not, and you spend it before you get it, and when you get it you spend part of it on what you'd intended to and the other part on something else, and when you look back you actually have a net loss. So, great thing number one, we waited until we had the money to decide what to do with it.

Once we had it, we had a pretty clear plan for it: (1) save; (2) reduce debt; (3) reward ourselves for reducing debt; (4) let some linger in the bank account.

Saving

Actually, we aren't technically saving. We are saving to spend (which I guess what all saving really is technically). As I mentioned before, saving for fun is just as good as saving for a rainy day and is an important part of personal finance: it allows you to spend without worrying; it provides a sense of accomplishment as you see your bank account growing; and it gives you concrete financial goals to work toward. My wife and I recently set up a vacation fund, where we sock away a hundred to a couple hundred bucks a month to use at some point on a destination vacation (our vacation dream list is long and includes places such as Atlantis, Greece, Brazil, and Paris).

To get a great start off on this, we decided to put $500 of this money in our vacation fund (it has actually already been earmarked, as we have planned a trip to London this summer with family). But it technically is saving, and we'll be pulling the interest from it in our ING savings account.

Reducing debt

As you have heard, we've put ourselves on a debt snowball, to hopefully erase our debt and feel really great about it at the same time. Like many others, though, the debt is going down, but not nearly as fast as it should, because things come up that get put on the credit card, making the debt reduction more of a trickle than a flow (for example, a plane ticket to Seattle this summer was put on the credit card - it just doesn't hurt as much when your balance is going up - credit card balance - as it does when it's going down - bank account balance).

In an effort to feel better about our actions, we decided to take $300 of the economic stimulus check and put it toward our credit card debt, on top of what we already pay. That will make the Seattle tickets almost non-existent, and make us feel like we aren't completely wasting the money. Remember, the key to the debt snowball is to get it rolling. I know it's easier said than done, but you can't start building wealth if you don't get started.

Our Reward

Because we were so good with so much of the money, we decided that some of it we should just use for whatever guilty pleasure we want. To do that, we decided to divide up $300 between the two of us to spend on whatever we want. $150 went to my wife, in her separate account (marital finances is an interesting topic of discussion that I'll touch on some other time) and $150 went to me. Once again, the point is to use it for something you want that you may not need. Kind of like taking a bite of a cookie when you're on a diet - it's something that gets you through the hard times of personal finance.

If you are wondering what I'm doing with mine, I haven't decided yet. I'm trying to save for a trip to Wales in a couple of years for the Ryder Cup, so most of it will probably go there. A new golf club is also a distinct possibility. I have no idea what my wife will use it for, and would hate to speculate.

A Little Money Left Over

If you are doing the math, we have $100 left of our $1,200 that hasn't been earmarked for anything. We have decided to just keep that in our checking account and build that balance up just a little so the threat of over drafting is even further reduced. Again, probably doesn't sound very fun or very sexy, but building wealth and personal finance only gets sexy at the end. Spending the money you've been saving and ensuring the stability of your family feels great once its accomplished.

Personal Finance - Building Wealth

Building Wealth | Personal Finance | Tracking Expenses

Tracking Your Expenses the First Step Toward Building Wealth.

There is an old saying out there that goes something like, "you can't know where you're going if you don't know where you've been." This adage applies to many things: career; love; family; life; and, believe it or not, finances. So often in our lives we have dreams of wealth and happiness and early retirement, but we never seem to reach those goals. One of the primary reasons for this is that so much of our money slips through the cracks. Money that in the end could be used to buy that new car you want, pay off that credit card debt, or invest in that IRA so you can retire early.

Perosnal finance and building wealth begins with one very simple idea: you must bring in more money every month than you spend. If you do not, it will be impossible to build the wealth you need to retire, to accrue the compound earnings necessary to live the good life, and to live without having to worry about paying the bills every month.

I'm sure that you believe me that knowing what comes in and out every month is important to your personal finances, but you probably have no idea how to get started. Starting is simple. It is maintaining your data over the long hall that I have found to be the hardest thing to do.

To track what you spend (tracking what you make is usually fairly easy), the easiest thing to do is set up a spreadsheet. I use one sheet per month, and label each row with a category that I want to track. When you first begin, you may not have that many categories. That is okay. As you discover a category you can add it in for that month. Right now I have the following categories: fast food; dining out; booze; miscellaneous; bills; gas; and groceries. I think the more precise you are with your categories, the easier it will be to see what you can minimize to increase your savings potential.

I'd label each spreadsheet something like Personal Finance - Building Wealth - May, to give you a reminder of where you want to go each month. Then at the bottom of each tab I set it up to add everything up. So, for instance, you can instantly know what you've spent on groceries for the month. I then have a final tab that adds everything up so I can know exactly how much I've spent.

Once you have these numbers you are on your way to building wealth and retiring early. Armed with these figures, you can begin to tweak your lifestyle to shave some of those wasted dollars off your monthly expenses and put them where they are more beneficial.

I'll keep you up to tabs on my monthly numbers so we can all experience the journey that is personal finance, building wealth, and retiring early together. Implementing this into your life will help you get where you're going, because you will know where you've been.

Personal Finance | Eliminating Credit Card Debt | Debt Snowball

Building Wealth - Personal Finance - The Debt Snowball

In my last post, I talked about debt snowballs and eliminating credit card debt. In this post, I want to outline my own personal debt snowball to provide not only an example of how to do it, but to provide you some motivation to do it yourself. It really doesn't take that long to put together, and once it's up and running, it's very easy to maintain. This post is all about building wealth and personal finance. Furthermore, if you are wondering how to be frugal, this is a great start.

Debt Snowball Spreadsheet

To keep yourself on task (and motivated to continue the project) the first thing I would do (after compiling all of your credit card debts) is put together a spreadsheet. I use google docs spreadsheet. It's free, it's easy to use, and you can access it from any computer.

Step 1 - Dates

In my spreadsheet, I have DATE up in the top left hand corner. Down the first column, in the next space I have "beginning balance", followed by a blank cell, followed by the rest of the months in the year. After that is a blank cell, followed by "current balance," followed by another blank cell, then "original owed," and finally "current owed."

Step 2 - Labels

Going across the top row I have each of the names of the credit cards/debts I have (6 total). Before getting to this step, though, first you need to list your debts in order, from smallest balance to biggest balance, from left to right. This is how you would enter the names of the debts into the spreadsheet in the first row (rows go across, columns go up and down). If you pay interest on your debts, leave two columns in between each of the debt descriptions.

In the next row, enter the current balance of each of your cards (it should correspond with the "beginning balance you entered earlier"). In the row right next to the balance, put the minimum payment, or just over the minimum payment, except in the first column. In that column, I want you to write in whatever it is you have determined you can pay, which hopefully is at least 3 times your minimum payment (for me, my minimum payment is $50 and I'm paying $650 - put in the most you can comfortably put toward it).

After the balance row, under the row you actually entered your current balance enter "payment." In the row right next to that put "interest." It is in these columns that you'll document your monthly payment as well as the interest that has accrued on your debt. This should keep your credit balance up to date.

Step 3 - Formulas for Calculating Progress

Next, go down to the current balance row and in the payment column enter the formula so your monthly payments will be subtracted from your balance but your interest will be added in. In Google docs it looks something like this: B2-SUM(B4:B14)+SUM(C4:C14). The letters and numbers refer to the cells you want to add up.

Almost done. The next step is to define your original balance. Do that in the cell right next to the one labled "original owed." That formula looks like this: SUM(B2+E2+H2+K2+N2+Q2). This will add up all the original balances.

Finally, determine what your current total balance is (you don't have to do these two steps, but I think it really helps to see that balance shrinking so rapidly). That formula looks like this: SUM(B16+E16+H16+K16+N16+Q16). Once this is complete, all you have to do is fill in the corresponding cells every month and the math will be done for you.

Remember though, that when the first debt is paid off, you roll all that money over into paying off your next debt. By the end you should be making a huge monthly payment toward that big balance (mine will be over $1000 in the end).

My personal debt snowball

Finally, to give you an idea of where I currently stand, and to make updates worthwhile, I'm going to give you my current debt standing. As I said before I have 6 outstanding balances originally totalling $30,693.11. The current balance is $28,667.96. My original balances are as follows: $3,197.41; $4,516.20; $5,819.77; $7,110.55; $8,564.00; and $1,485.18 (interest free). On those balances I pay $650; $100; $100; $120; $80; $135.93. If you add all that up, I should be completely debt free in 2 1/2 years. At that time all this money can be put someplace much more valuable!

Hope everyone learned a little from this. I plan on updating it from time to time to let you know my progress.

Personal Finance Debt Snowball Credit Card Debt

Personal Finance | Dave Ramsey "The Total Money Makeover" Review

Building Wealth - Review of Dave Ramsey's "The Total Money Makeover"

A sucker for personal finance books, both the get rich quick kind and the get rich slowly kind, I couldn't pass up checking out this book when I was perusing at the book store. As the cover implies, it is your traditional get rich by scrimping, saving, getting out of debt, building wealth, and throwing as much money as you can into retirement (good advice by the way - just not worth paying for). If you are wondering how to create wealth, you might want to check this book out.

Although it is full of much of the same information, he did have some points worth repeating. Essentially he laid out seven steps toward "financial freedom." Some of them are good for everyone, some of them you should take with a grain of salt. Let's take a look. All of these are supposed to be done in sequential order.

1. Save up a starter emergency fund of $1,000.

This one actually makes a lot of sense and is something everyone should do. This fund is essentially untouchable unless an actual emergency arises. Things that would not qualify for emergencies would be Super Bowl parties, a chance to play 18 at that exclusive golf course, a sale at Macy's, or a chance to score those Bon Jovi tickets you've been searching for. Things that would: car repairs, house repairs, hospital bills, etc.

It is astonishing how hard it is to dig yourself out of financial ruin when one of these emergencies arises. Not only does it make it feel like you'll never get out, but it actually does make it harder. Imagine the difference in putting $400 of an emergency fund toward a car repair versus $400 on a credit card. The implication with a credit card is that you don't have the cash on hand, starting once again that cyclical fall into debt.

This is important for everyone, and should be done.

2. Debt Snowball.

The next thing prescribed by Dave Ramsey, and another I completely agree with, is beginning your own debt snowball. What is a debt snowball, you ask? A debt snowball is simply a term used to describe a method of paying down credit card debt. It works like this (there are actually several ways to do it, but this is the one Dave recommends and the one I use): line up all of your credit card balances and their minimum payments from smallest to largest. If you are paying more than the minimum balance (or just over it), take that money out and document it so its available. Next, see if there is any additional money coming in that you can allocate to credit card debt. Put that money in the same pile as the pile with the extra money. Finally, put all your credit cards away and stop using them (you really don't need them).

Once you've done this it's time to get the debt snowball rolling. All you do is take the smallest balance and put the minimum payment and all the other money you have over and above the minimum balances into that smallest balance. When that one is paid off you move onto the next balance, putting all the money from the first into the second. In no time at all you have paid off your credit card debt!

This really works and I would recommend using this method if you want to get rid of credit card debt and are looking for a way that works fast and provides postitive reinforcement (there is nothing better than paying off that first card!)

3. Finish the emergency fund.

After the credit cards are paid off, it's time to move on to building up that emergency fund so you can really take a financial hit and still stay afloat. Dave Ramsey recommends 3-6 months expenses in your fund, but I'd stretch it out to 6 if you can. There is nothing that helps you sleep at night like knowing you are financially secure in the event if a tragedy. I'd recommend this one too.

4. Invest 15% of your income in retirement.

Again, I say go on ahead with this, especially if you are young. The more you save now, the plusher your lifestyle (and your kid's kids lifestyle) will be in the future. And the great thing is this shouldn't be that hard to do because you can apply the money you've been paying off credit cards with toward this. I think you'll find it won't take much more to get up to 15%.

And this is a little more specific than Dave discussed, but make sure you are maxing out your 401K and Roth IRA contributions first. These will be discussed in much greater detail later, but not only is much of this either tax deferred or tax exempt when paid in, with the 401K your employer likely matches your contribution up to a certain percent. That is free money for you for doing nothing! Take the time to learn about these savings vehicles and become familiar with them. It will pay off enormously in the future.

And while I'm telling you where to go, let me tell you where not to go. Savings accounts with your local branch are the worst place to store your money. The interest rate is not high enough to make it worthwhile, particularly with all the high-interest savings accounts available. If you need the safety of a savings account, make sure you have a competitive interest rate (nothing below 3%).

5. Save for college.

Now is where Dave Ramsey and I start to drift apart. I am all for saving for college, and Dave recommends using an education savings account or 529 plan, which is sound advice, but there are other things you can do with your money that can provide a greater return and still pay for your kid's college in the end.

Alternatively, taking some of that extra money and putting it into making sure your kid has a solid elementary, middle, and high school education is also an option. College is lost on so many who don't have the foundation to excel and succeed there. Give your kid a head start and he or she will likely be getting paid by their college of choice to attend (and there are tons of scholarships available, don't forget to look).

6. Pay off your mortgage.

Again, I'm going to have to diagree with Dave Ramsey on this one. Mortgages, like student loans, are great to have, especially if you are paying them on time. They provide a great source of credit information for lenders and anyone else who relies on credit score to evaluate your risk tolerance and the interest rates are usually so low you can invest the extra money you would be paying toward your mortgage some place else and see greater returns (isn't this what building your empire is all about?).

In following this plan, I'd probably skip this step. It isn't a financial step backward, put to me it feels like treading water instead of swimming ahead.

7. Build Wealth.

Now he's talking. Building wealth means many things to many people. For some it is getting that vacation home, for some it's starting or investing in that business idea you've always had, and for others it is simply accumulating enough wealth so you can do whatever you want whenever you want.

This blog's focus is on building wealth, which for me includes all of those things previously mentioned as well as building several streams of passive income so while I am playing I am continuing to build more wealth. I'll touch more on building wealth in future posts, but I'd highly recommend focusing on this immensely when you have time (even before you've completed some of your other steps, if you can).

All in all, I'd say Dave Ramsey's book, The Total Money Makeover has a lot of great content. Some of it is original and fresh, but most is information everyone has already heard before, or can hear right here. It's not a bad book for the shelf, so if you have the extra cash, I'd pick it up and take a look.

Personal Finance Building Wealth