Motorcycles and Money

[mizarchivist]

Ok. First: Why did I ask if I knew folks in RI? Well, here's the deal. It has to do with an orphaned motorcycle. Cut because I care...

A friend of mine has a motorcycle that was left in her garage 4 years ago buy a guy moving back to his native Ireland. He couldn't take it with him because for- reasons unknown to me and really quite baffling given my attitude towards such things- he had no title. No title, no registration. So, here the bike has stayed. It's really quite a perfect sized bike for me. My friend is sick to death of it being in her space and the last (irish) owner is happy with the notion of it going to a good home.
Mass RMV isn't condusive to this scenario, however, RI is less strict and school-marmish about it all. And now more importantly, neither is NH
 I need an offical VIN verification and a bill of sale. I'm getting those forms faxed to me right now! I've already got Dr. Karen who has promised to be my NH resident. So, woo! Progress. Thanks for those who replied to the previous RI query.

Money management project....

•  

• Hm. I've been reading lots since I last posted.  Pay yourself remains the foremost lesson. Life shouldn't be about paying bills, it should be about making and attaining goals you actually want.
• Stop using credit cards and just keep paying down the installments on the monthly bills.
• Pay minimum on those installments. It's totally counter-intuitive. Entirely. I had to reread the first half of that chapter one or two times before I could tolerate the notion. Instead of throwing huge amounts of a paycheck to a bill, build the savings account.
• Have more than one savings account that has specific purpose. I think if I had my druthers, I'd probably have 10 for all the things I could do. One of those accounts will be for the emergencies which is why I have so much debt in the first place. If I can pay for the new transmission or suddenly dead computer monitor with cash, then the debt won't grow.
• Win from last night: I called the card company that holds my now-consolidated bill and managed to get 5% knocked off my APR. That felt good and smart.

One of the things that the author keeps assuming is that I'm using shopping/spending as a pacifier or bandaid. No- not as such. So, that's a win. I take her pep talks and ecouragement away from using cr. cards with a grain of salt.

I guess the book is already working. I'm feeling in charge of my life. Yay!

Comments

[weegoddess.livejournal.com]

Excellent news that you're feeling in charge of your life. Go you!!! Also, GO YOU even more for getting 5% knocked off your APR. That's great.

The one thing that I'm wondering about is the notion that you should be making the minimum payments on your credit card bills. I assume that these CC's are charging up to 18% APR on your current balances. I would also assume that you are not making anywhere near that in interest on a savings account. While I can totally see that having a savings cushion would give some control over finances and allow you to not run up any more CC debt in emergencies, in the end you're still losing money and are in fact paying for that security.

I guess part of the question would be how much necessary time you've projected to pay off the cards and how much in total interest this will cost in the end. Also, how long it would take for you to have saved up your goal amount and then feel like you can throw all of the extra money at the CC's, highest APR first.

[mizarchivist]

Yeah. While I'm willing to try out this insane notion of minimum payments for a while- certainly I want to put more towards savings. I don't want to rent forever being the tip of the iceberg. I can't imagine spending the rest of my life to pay off the 10 years of debt I've accumulated.
I hope by the end of this book some strategy will be determined towards truly making that Mt. Everest of obligation more like a foothill or flat plain. I have enough faith in what I've read so far to at least try the new and counter-intuitive way. Very counter-intuitive.
Re: APR- At least for me, I'll be dealing with 11%/5%/4% on my current debt: the original amount/transfer 1/ transfer 2. So, at least I'm at a good rate, and stable. The author's argument is that "so even though we may be paying 12% interest charges on our credit cards, we're beginning to offset that charge with the money we're saving. For example if our saved money is earning 3% interest and we're paying 12% on credit cards, we're not only giving ourselves the power that comes with having cash, we've also reduced our interest charges to just 9%," (p. 92).

I guess I see her point. Like I said. I'll give this a shot. If I can remove all the dread for paying bills, I'll keep being creative on how to get rid of it. I hope!

[weegoddess.livejournal.com]

Fair enough. I can't say that I agree with her, though. She's advocating selling one's personal security for whatever extortion the credit cards charge less whatever a savings account yields. That makes no money sense whatsoever, which in the end will keep a person in debt longer and thus needing to give up more money for a longer period of time for continued feelings of security and so on...

It sounds like this is more of a self-help warm-fuzzy rah rah book than a book based on actual finance based on numbers. That said, I can understand wanting to have a cushion in savings to help feel more secure. My thought would be a compromise: save up for a certain amount of expenses (like having a goal of the amount of 6 month's expenses in savings) and then use every bit of extra money after that to pay down those credit card debts.

Regardless, I know that this isn't easy for you and I'm really proud and impressed that you are taking charge. You have lots to be proud and impressed about too. ;-D

[mizarchivist]

You and I are of a mind, really. I am still not chugging the Kool-Aid. Part of my savings plan should and certainly will be to pay down the cards. And yes so very yes and absolutely: I want to have 3-6 months worth of money set aside so if I'm out of work or whatever, I can still pay bills w/out freaking the hell out.

[deadwinter.livejournal.com]

Pay minimum on those installments. It's totally counter-intuitive. Entirely. I had to reread the first half of that chapter one or two times before I could tolerate the notion. Instead of throwing huge amounts of a paycheck to a bill, build the savings account.

Some of my cards have a 29% APR. That is not just counter-intuitive, that is bad mathematics.

I'm glad you're taking that advice with a bucket o'salt.

[mizarchivist]

If my cards were 29%, this plan wouldn't work even a little. *nod*

[dani-namaste.livejournal.com]

all things awesome.

One note on the paying minimum thing - one thing that's important is to throw extra money at the balance that has the highest interest rate. Once you've got that paid off, throw the extra money at the card with the next highest rate, and so on. Paying minimum on all your cards just extends the debt ever-further.

Positive you know this already, but it's one thing that's worked for me.

[mizarchivist]

It may have been too buried in a long comment for you, but I did cover this point above- I don't have anything higher than 11%, which at least for me isn't high.
What I didn't say was, in order to get at that, the highest, I'd have to pay off the majority of that card. They pay off the stuff that's lower APR first. Of course!

[dani-namaste.livejournal.com]

yeah, figured you'd covered that somewhere.

[drwex]

I totally agree with this phrase: "Life [...] should be about making and attaining goals you actually want"

I'd just like some method for figuring out goals I care about. Well, new ones. I got all the old ones.

I'm afraid I'm also on the "that's bad math" bandwagon. The APR out is always going to exceed the APR in, and that means you're bleeding money. Bleeding less for longer isn't a plan I find sane.

Congrats on your wins with the motorcycle and with getting them to drop the interest rate!

[mizarchivist]

Yeah- the author is all 'doo doo doo, it'll go away eventually,' and I can't buy that. For me this minimum thing can only be a temp. fix until I re-wire my brain to have an altered sense of priorities. I entirely see how having some specific savings for the identifiable expenses makes sense (car repair, hospital/dds bills- ad nauseum). IF I have those set up and I'm not using my credit cards to fix things, then my debt won't grow as it has. That's a win.
I, too, want some very specific methods for dealing with the logistics of all this.
I took a break from reading the book so I can digest and control my obsessive thinking a bit. It's worked, as I was able to focus on other stuff throughout today. If the author has more specific tips on logistics, I'll let you know, but I expect I will need to find a secondary source - like my UBS financial advisor- to also brainstorm.

[drwex]

Ah, neat. I had forgotten about the advisor.

I make the wild-ass guess that the author may be making the point that this plan is better from a psychological point of view. That is, I personally would feel better if I could say "Well, I can use this savings I have to buy my new tires" versus "Oh crap I have to put hundreds more on the CC to buy these new tires."

I also believe that a lot of peoples' issues around money aren't based on logical math, but rather on feelings and attitudes. So if I guess that she's coming at it from that perspective I can see a point.

I'll look forward to new postings and reply there; I do enjoy talking with you about whatever, whenever. *hugs*

[mizarchivist]

Hey, look! You don't need to read the book now ;)
Yes, she assumes we're all hugely damaged by money. She's right some of the time. Sometimes the hurt doesn't go so deeply that we can't make it work out with some fine-tuning.

I entirely agree with her that I put all my focus and priority goals to "paying off the cards/having zero debt." I also agree with her that if that's all I'm doing and not focusing on saving for what I want: HOUSE, vacation, next wheeled-object, then I'll get to the point of it, still have debt, and no(t enough) money set aside for Object.

Yeah- I'd think it interesting to talk more about this- like, in person- when I get a bit further in this book.