Sep 19

Why the debt snowball wasn’t for me

snowballIf you’re interested in personal finance you’re probably familiar with the, “debt snowball” method of debt repayment. Popularized by author and radio talk show host, Dave Ramsey, the debt snowball is a debt reduction method whereby you list your debts smallest to largest and pay them off aggressively, one at at time.

Example: Let’s say you owe 3 debts. A $1000 debt with a $100 minimum payment, a $10,000 debt with a $300 minimum payment and a $15,000 with a $450 minimum payment. Once you start the snowball, you pay the minimum payments on each of the debts each month ($100+$300+$450) then throw whatever extra money you have on the smallest debt. So in this example, you’d pay $100 a month for the next 10 months (or less), until the smallest debt is paid in full.

Once your smallest debt is gone, you “roll” the minimum payment you were paying on the first debt ($100) into the minimum amount you pay on the second debt ($300), for a total of $400 payed each month until the second debt is paid in full. Get it? The snowball is rolling downhill and you’re benefiting from it’s momentum! Rinse and repeat, on the 3rd, and biggest debt, until all of your debts are gone!

The theory behind why the snowball works is simple. After you pay off your first, “little” debt, you’re totally stoked and proud of yourself. So proud, you want to do it again (and again) until you’re debt-free! While I didn’t follow the snowball plan, I understand why it would be very motivating.

If the debt snowball is so, “great”, why didn’t I use it?

  1. I wanted to pay the loans with the biggest interest rates first. Basically, I’m pessimistic a realist and I wanted to make sure if I lost my job or had an emergency, my loans with the highest interest rates were paid first.
  2. The debt snowball would have cost me more money. I planned to pay off my $30,000 student loan debt in less than 3 years, and actually paid it off (once I really buckled down and got serious) in less than 2 years. In my case, using the debt snowball method wouldn’t have been any faster and I would have paid slightly more in interest since my, “biggest debt” had a 6.8% interest rate and my smallest had a 3.25% interest rate.
  3. I didn’t, “need” the psychological boast of paying off the small loans. I’m pretty good at motivating myself so I made a poster board “thermometer” documenting my debt payoff. Each time I paid off $100 I colored in a part of the thermometer. I think it was just as motivating as paying off my smallest debt first as part of the debt snowball.
  4. My debts were similar sizes. I didn’t have a really small debt, so my first, debt payoff “victory” would have been very delayed. Not exactly that instant motivation and gratification that gets you excited about debt pay down.
  5. A $1000 emergency fund wasn’t enough for me. Dave Ramsey encourages readers to have a $1000 emergency fund while they are, “debt snowballing” their debt. $1000 felt too small for me, so I saved more. It took me a little longer to pay off my debt because I had to build up an emergency fund first, but in the long run that’s what made me feel comfortable.

Don’t get me wrong, I listen to the Dave Ramsey show podcast regularly and appreciate Dave’s, “no nonsense” approach to personal finance. His, “baby steps” help people change their money and their lives. So if the debt snowball works for you, you should use it! It doesn’t matter how you chose to kick your debt to the curb, as long as you stay dedicated and motivated and work “your plan”, whatever it may be.

Did you/are you, “snowballing” your debt? Why or why not?


Image: Kamyar Adl

Sep 15

9 Ways Being a Homebody Saves Me Money

ecardEveryday at work, we have a meeting first thing in the morning called, “rounds.” Rounds is where the managers talk about client and staffing issues and any trainings that are taking place during the day. This past Friday, during the unofficial, “tell me your weekend plans” part of the meeting ;-) one of my co-workers asked me what I was doing over the weekend.

When I responded, “probably just cleaning the house and relaxing.”

She remarked, “I guess you’re just a homebody, aren’t you?”

The comment sort of took me aback for a minute. First, I felt a little bit insulted like, “what’s that supposed to mean?” you think I don’t have a life? Then I felt annoyed, like, “it’s none of your business what I do on the weekend!” And then I felt like I had to “defend” myself, by explaining all of the “fabulous” plans that I hadn’t told her about…”Well we were planning on taking out the schooner, but since it’s supposed to rain we’ll probably just go to a Broadway show and then stop by Momofuku Ko for dinner and drinks.”

Ultimately, I just smiled and said that I enjoy simple pleasures, like spending time with my boyfriend and our pets, catching up on housework and having a few drinks with friends. She agreed that sometimes she likes to do the same and the conversation ended as quickly as it began.

But it obviously, “stuck” with me because I’m still analyzing it today. Maybe I’m over sensitive or maybe I’m a little neurotic (or maybe both), but I feel like there’s definitely a stigma associated with being a homebody, especially in NYC.

There’s almost some sort of unwritten rule that you’re, “broke” or “boring”, if you don’t have some sort of exciting plans for the weekend. Even if it’s dinner out or drinks with friends, you have to have something to say to co-workers when you get back to work on Monday morning.

9 ways being a homebody (on the weekend) saves me money:

  1. Staying at home is free. There’s no cover charge or admission.
  2. I don’t have to wear, “work clothes” or nice sweaters that need to be dry cleaned. I can rock the same PJs all weekend and nobody cares.
  3. I don’t get overcharged for booze. There’s no markup on the beer in my fridge.
  4. Who needs an improv show when you have pets? I swear they totally crack me up on a daily basis.
  5. Christmas is coming and gifts are expensive. Staying at home means lots of time to work on homemade gifts. Sweaters for my nephews and niece don’t knit themselves…
  6. Why go to the movies when you enjoy movies and TV in the comfort of your living room? Eric pays a lot of money for cable. Someone has to make use of On Demand episodes of Dance moms!
  7. The maid (me) only works on weekends. If I didn’t take time to clean on the weekends I’d probably have to hire a maid because when I get home weeknights I’m way to tired to do anything except eat and go to bed.
  8. Weekends are the best time to prep food for the week. Cooking on Sunday and bringing my lunch to work saves me at least $50 a week!
  9. I know what my friends do on the weekends and it’s pretty similar to what I do. So I’m don’t feel like I’m, “missing out” on anything. When I want to get together with friends I invite them over and we both save money by staying in.

What’s best about being a homebody? When I want to go out and do something fun, I have the money to do it because I didn’t blow all my money trying to impress my co-workers with, extravagant plans every weekend!

Are you a homebody? Do you think there’s negative stigma with being a homebody? What does a “normal” weekend look like at your house?

Image: Ian Burt

Sep 08

Money & Relationships: Finding the Right, “Money Partner”


Have you ever thought about how you picked your partner? Was it her pretty eyes or his perfect smile?

I picked my boyfriend because he’s a financial stud. Just kidding (sort of). Once we got past the initial, “getting to know you” stage, I was very impressed with his diligence in paying off his student loan debt and saving for the future. Don’t get me wrong there were a few financial things that we didn’t see eye-to-eye on, but overall we were basically on the same page when it came to money.

Let’s be honest, you can date a guy or gal who is really attractive, really smart and a ton of fun to hang out with, but if he/she is financially irresponsible, it’s probably not going to work in the long run. I know I wouldn’t have continued dating Eric if he was a financial mess and vice versa! In fact, our dedication to pay off our individual student debts before buying our condo actually brought us closer together.

Why you should be on the same, “money page” with your partner

Arguments about money often start out small. They are like a smoldering fire waiting for a stiff breeze. Maybe you can overlook your partner’s financial indiscretions for a short while, but if you’re committed to spending a lifetime together you need a partner who shares at least some of the same, “money values”.

When I was looking for a boyfriend, I definitely wanted a partner who was, “responsible” with his money. But “fiscal responsibility” means different things to different people. The way your parents spent money, your values about money, your current socio-economic status etc. etc. all influence the way you think about money.

When I talk about money and relationships with friends (girls and guys), the following “money qualities” seem to be desirable:

“I want to find a guy/gal who…”

  • Is financially stable. Umm OK… please define “financially stable.” What you consider, “stable” might not feel stable to me. Being honest about what you need/want to feel stable is really important. When you’re 22 financially stable might mean having a job and no longer relying on your parents for financial help. When you’re 32, it might mean being debt-free, or owning a home, or saving for retirement. Or it could mean something completely different.
  • Works hard. Works hard how? Is, “works hard” synonymous with, “makes a lot of money?” What if your significant other puts in 70 hour weeks at a non-profit that pays $30k a year? Be clear about what you mean when you say, “works hard”. There’s nothing wrong with working hard at a job you’re passionate about and not making a lot of money (in my opinion, but not everyone feels the same way). if you work hard and don’t make a lot of money (or your partner doesn’t) how will that make you feel?
  • Is a “Saver.” Saves how much? $100 a week, $1000 a month? 50% of her take-home pay? If I save every extra penny I make and refuse to spend a dime on the people around me, would you want to date me? Maybe you would? Maybe you wouldn’t. What your partner is saving for (or want you want them to save for) is also important. What if your partner saves $5000 a year to spend on vacations but doesn’t save anything for retirement? What if she saves $100,000 a year in retirement but refuses to go on vacation? (and you love to travel).
  • Spends in the, “right ways”. Spending money isn’t a bad thing (or is it)? How do you feel about your partner spending his money on his family and friends? What about a new car or a trip? What if he goes to the casino to gamble once a month?
  • Is a “giver.” How much giving is good? What about charity giving? How much is, “enough?” How much is, “too much?” What if your partner wants to give 10% of your income to the church or temple and you’re not religious? What if she wants to give to a charity you don’t like/support?
  • Is generous. Generous to who? To you? To your family? To his/her family? If your partner gives half of his paycheck to his family would you be pissed? If you send $100 a month to your elderly grandparents will he be pissed?
  • Is debt-free. Good, great, wonderful! But be careful of setting the bar too high. I’m not saying you shouldn’t shoot for the stars, but try to be realistic as well. Life happens and we all start off our adult lives in different financial places. if Mr. Right comes along and he’s aggressively paying off his student loans (Eric was when I met him), give him a shot! If Eric said he’d never date a girl with student loan debt, I would have been SOL.

The bottom-line, in my mind, is you have to know what you want from your significant other. If certain attributes and saving and spending patterns are important to you, it’s best to talk about those things early and often. Lack of communication about money (and everything else) is what makes relationships fail.

So if you find Ms. or Mr. Right and he/she doesn’t think about money the same way you do, talk to him/her. People can change their money behaviors if they have motivation to do so and you may be able to come to a compromise that will meet both of your needs. If not? I’d carefully consider whether the relationship is going to work in the future.

Have you found the right money partner? If you have, what were your non-negotiables. If you haven’t, what are you looking for?

Image: Giuliano Maiolini

Sep 05

Free Yankees Tickets and $9.75 Bud Lights

yankee stadium

Tuesday afternoon I got a text from my dear friend Molly, inviting me to the second game in the Yankees/Red Sox series at Yankee Stadium. Here’s what the text, “conversation” looked like:

Molly-“Yankee game tomorrow night? It’s against the red sux!! I just got tickets!!!!”
Me-“Omg, yes, yes, yes!!!”
Molly-“Yay!!! Go Yankees!!”
Me-“Eric will crap his pants he’ll be so jealous!”

(no I’m not exaggerating the number of exclamation marks used in this conversation!)

Molly’s godfather has season tickets to the Yankees and isn’t able to attend all of the games. Lucky for Molly (and me!), he often gives his tickets away to friends and family (or sells them if nobody can go). I’m very grateful that this arrangement works in my favor several times each season.

It’s sort of ironic that I’ve become good friends with one of the biggest Yankee fans on the planet. When I moved to NY, my grandfather explicitly told me, “NY is a great city, just don’t come home a Yankees fan!”

My grandfather is the biggest Red Sox fan I know. He watches the game live then watches it again the next day on NESN. He hand scores the games and knows the stats for all the players. Don’t try to talk to him while the game is on because it’s like talking to the wall.

My mom and I sometimes joke that the US Army ruined our chances of fame and fortune. A little known fact, my grandfather was actually scouted by the Red Sox after he graduated from High School. He had a date  to go to Boston and try out for the team but was drafted by the Army to serve in Korea.

He’s a really modest guy and never talks about his baseball days (but his friends still remember how good he was). Although he’s a proud Vet, it’s probably pretty hard not to think, “what if…” Sadly his leg was injured in the war and when he returned home he couldn’t try out. In case you’re curious, I’m terrible at baseball. I was a great hitter, but my fielding skills sucked. I stopped playing farm league when I had to start playing softball with the girls. I never liked the bigger balls and begged my mom to quit the team.

Anyway, back to the game… unfortunately the Red Sox lost, but we still had a lot of fun. I had very expensive nachos and Molly had a very expensive Cuban. I passed on the $4.25 cotton candy, $6.00 ice cream bar and $12.00 beers. I literally laughed out-loud when the beer guy came through the stands selling the $9.75 plastic bottles of bud light. The day I spend $9.75 on a bud light in a plastic bottle (or any bottle for that matter) please call 911 because I’ve officially lost my mind!

What’s the best event, concert, show etc. you’ve ever attended for free? How’d you get the tickets? What’s the most money you’ve ever paid for a single beer?

Sep 02

10 frugal hacks for saving $ at fairs and festivals

ferris wheelEric and I really enjoy attending local fairs and festivals. This year alone we’ve been to 4 and have plans to go to at least one more before the weather gets cold. We usually spend the day hanging out, eating, meeting new people and shopping. But festivals can get expensive really fast if you’re not careful. So we’ve devised a few frugal hacks to keep our costs low.

Keep festival spending “in check” by:

Food and Drink

fried food1. Eating before you go. I always try to eat a big breakfast or lunch before we go to a festival. It saves me money (and calories) because I’m too full to eat the “bad stuff” that I always gravitate towards. Those $10 butterfly French fries and $6 dough boys can add up fast.

2. Making a food plan. We love, “fair food” but it can be a real budget buster. Before we go, I make a “food plan”. Sounds complicated, but it’s simple. My food plan is just list of the foods I absolutely, “have to have”. Generally the food plan includes foods I look forward to eating all year (yes I’m obsessed with food). At the NYS sheep and wool festival the “plan” is always artichokes cooked in garlic and maple syrup cotton candy. When I’m there I buy those items, then avoid the rest of the food vendors.

3. Bringing your own food. If the festival allows you to bring your own food, I highly recommend doing so. I usually stick a few granola bars or a piece of fruit in my bag in case I get hungry or tempted to stray from the food plan.

4. Carrying a refillable water bottle. Drinks at festivals are always way overpriced. I bring my refillable water bottle and fill it up at the drinking fountains. When we went to the St. Ann’s festival I stuck a bottle of seltzer in my purse. It would have worked out fine except I forgot we always pour the dog a bowl of water once we get there. He obviously does not like seltzer and couldn’t, “figure out” why the water was so bubbly, which of course, means I had to shake the bottle until it went flat.


5. Buying multi-day tickets. If you plan to attend the fair several days there are usually discounted tickets available for multi-day admission. Sometimes it’s only a few dollars cheaper, but every dollar counts, right?

6. Going on less popular days. Thursday and Friday admission are sometimes cheaper than Saturday and Sunday admission. If you happen to have a flexible work schedule and can attend festivals on weekdays the admission might be cheaper. This year we attended the local fair by my hometown for just $5 admission on Friday. Regular price of admission on the weekends was $10. Plus as an added bonus we avoided a lot of the weekend crowds.

7. Going early or late. Some festivals allow free re-admission the next day if you arrived after a certain time. For example, go on a Friday night after 9pm and get free re-admission on Saturday (with a hand stamp or bracelet). This is a great strategy to get in twice and only pay once. It’s also a nice way to get reduced cost admission on a potentially less expensive admission day (Friday vs Saturday).

Buying “stuff”

8. Bartering with vendors. Ask for a discount. Vendors may be more likely to give the discount if you’re buying multiple items. It can’t hurt to ask and the worse thing they can say is, “no”. Note: bring the correct change and buy with cash. Vendors are not going to be thrilled to give a discount if you’re buying with a credit card or you bartered them down from $10 to $5 and don’t have the correct change.

9. Buying close to closing. We’ve had great luck buying from vendors on the last day of the festival and/or close to closing time. We once stopped by the “frickles” (fried pickles. If you’re not familiar you should be, they are delicious!) vendor a few minutes before the fair closed. Obviously the vendor couldn’t keep already fried pickles until the next day, so we got a double size serving and free fried garlic for $5!

10. Buying on the last day. If the vendor came from far away he/she may not want to haul all of their merchandise back to wherever they came from. This is especially true if they vendor isn’t a local vendor and/or if he/she is selling perishable items.

What are your favorite fair or festival treats? How do you save money when going to the festivals?

First Image: Karen Kleis

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