The Finance Fiend

Getting Financial Freedom by 35!

Back in the Saddle Again August 27, 2009

Filed under: Uncategorized — Rebecca @ 7:38 am

You know how you can be doing really great financially, then life gives you a challenge.   That has happened to us.  In a few ways.

The budget is so far gone, its not even funny.  We should be on track by the end of next month though.  In July we went over budget by at least $1900.  Yes, FOUR digits.  Not even barely four digits.  Well into the four digit numbers.

We found out we were pregnant, had a surprise you pay your own tuition moment, and increased some of our expenditures (like travel to school) all in one month.  Plus we bought plane tickets for Thanksgiving weekend to visit Daniel’s family.  This was something that we knew was going to happen, and I found a great deal online ($420 for both tickets, child in lap including fees).  We also lucked out because last week they added more flights and changed flight times so we got better seats and flights.  Can we say nonstop from Orlando to Kansas City on the Saturday after Thanksgiving?  Oh yeah! Those tickets would have cost us $350 a person, one way! Sometimes amongst the financial drizzle, hope shines on. I mean, we are leaving the next morning, so my husband can go to his evening class and work a full day the Monday before we leave.  We have a super short layover in Atlanta on the way down, and we will actually be getting more time with his family this way.

Anyway, between the tuition and the plane tickets we put almost two thousand dollars on the credit card. Which is due after our first paycheck in September.  The husband is working as much overtime as he can handle while going to school full time and having a cub scout troop. We haven’t paid extra toward any debt either.  We are handling this pretty well considering.  Of course its rather scary to look at our bank account and say “hi $300. I am glad you are here, where are your 700 friends that should be here too?”  At least this financial crunch has motivated my husband to not only have a thousand dollar cushion in our bank account, but also to open a separate savings account to have a thousand dollars in. Obviously, the goal is $1000, and it might get to be much higher than that, but having $1000 easily accessed in the case of a financially down month will be a great asset.  My real goal is to get a years worth of at least mortgage payments and insurance put away.  Its a lot easier to find money to cover things like gas for the car and utilities when we have the larger monthly expenditures covered.

Now, I just need to stop nesting.  All this, plan and buy things for several months worth of meals before I get too huge and pregnant or we have the kiddo idea can get a little crazy.  I know its silly to be really concerned about things like trash bags and toilet paper, but I just hope that I will recover faster and do better adding a second child to the mix than adding the first. Part of that recovering faster = lots of super simple meals planned ahead.  That means I will cook and freeze some meals as well as having lots of meals from a can like soup or Hawaiian haystacks.  I haven’t had Hawaiian haystacks in SO long. That’s a meal we should probably try out before planning on the menu.  Especially if we end up planning it multiple times.  I also did some good though.  We are assuming we are having a boy this time around.  (it will be confirmed in 4 weeks) I have clothing (except for a super tiny coat) for a boy that will get us by until he outgrows 18 months.  Most of it came from the daughter’s wardrobe, but I have spent around $15 at yard sales buying a bit of wintery things for 0-6 months.  Besides, if we end up with a boy wearing a newborn sized white  snowsuit with embroidered flowers, I don’t care.  He will at least have blue and green underneath and neutral colored blankets.

So, I rambled.  Sorry guys.  Anyway, long story short, we are still doing ok.  I have been making do with the 6 items of maternity clothing I have (until next month at least).  I even turned some old, out of syle jeans into maternity jeans.  It worked ok, except that the jeans were rather high waisted to begin with, so I don’t think they fit under the belly as well as they should. Again, rambling!

Next month, I hope to report that we paid off the school expenses and have a balance on the credit card of about $300 for gas and groceries.  Maybe we will also cash out our reards then. I have already bought some Christmas presents (i.e. gift cards) using reward points.  The less money we have to actually spend, the better.

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Should I refinance my home? August 20, 2009

Filed under: Uncategorized — Rebecca @ 12:15 pm

The real questions you need to ask your self are:

Can I afford the closing costs? Closing costs can be rather significant.  They tend to be at least a couple of thousand dollars.  In a recent email from my mortgage company, they estimated $2800 in closing costs.  That may not be much to many people, but that is more than 4 times our current monthly house payment (including our escrow account).

Can I afford the additional monthly payment? Often, refinancing to a shorter term mortgage will increase your monthly payment.  It may increase by $20 or $200.  In some situations your monthly payment may decrease, though that often means an increase in the life of your loan. The problem with adding additional months or years to your mortgage is that you will be getting less equity every month.

Do I have the dedication/will/funds to pay extra toward my mortgage every month without refinancing? This is a huge factor.  If you or your spouse lose a job your income is obviously less than it used to be.  If making your mortgage payment at all is difficult, you should really consider refinancing to a lower monthly payment, not increasing. If you can find an additional $50, $100, or $200 a month to pay toward your current mortgage and have the will and dedication to continue that route you do not need to pay the bank to change the terms of your loan. Note: if you have a mortgage that has a penalty for paying ahead, this is not really an option.

How much will this decrease my interest? This question relates to how high your current mortgage rate is.  If you have a 7% interest rate, or 8% or 9% its very likely that a refinance will save you money.  I have heard that a general rule of thumb to remember before considering a refinance is the new interest rate.  If the refinance will not decrease your interest rate by 1% or more, it will most likely not benefit you.

So are we going to refinance? Signs point to no.  You see, it will decrease our interest rate by less than a percent, cost us closing costs that we would have to put on our HELOC which has an adjustable APR, and would cost us $100 more a month.  It makes more sense for us to continue our current plan (double paying the mortgage).

Sure we haven’t double paid every month, but this allows us the flexability to have an extra $600 on months when we have a baby, need a car repair, travel to visit family for the holidays, or anything else that life throws us. Life doesn’t throw us these things all that often so we typically pay extra toward our mortgage.  Other people may have a more tumultous life that doesn’t allow them the benefit of dedicating that large additional payment most of the time, but for us this works.  Sure we don’t expect to have our home paid off in 6 years, but with this plan, we will likely have it paid off in 10.  You know, assuming we don’t move before then.