Monthly Archives: October 2008

It sure wasn’t this hard to get the student loans in the first place …

This week I received the loan application and promissory note for my private student loan consolidation. According to the letter, I’ve been “conditionally approved.” If all of my paperwork is sent back correctly and verified, I’ll be actually approved. If I’m able to consolidate these loans, I’ll cut the interest rate and minimum payment almost in half. I’ll also have a shot at paying them down in less than 5 years.

First I need to send in a long list of documents, including a recent statement from the lender with all the loan information, my latest pay stub, a copy of my driver’s license and degree, and a copy of my marriage license since the original loan is still under my maiden name.

I was on hold for an hour Tuesday night trying to get some questions answered about the documents. The list they sent me wasn’t as clear as the one above.

Once I’ve submitted all of the documents, loan processing will begin. They will verify my employment, check my references, etc. They already ran a credit check to conditionally approve me, but they may run a more detailed credit check before the loan is officially approved.

As I go through this process, I can’t help but think back to six years ago when I first took out student loans. It was a lot easier. I filled out FAFSA, which qualified me for a certain amount of student loans. Then I filled out an application, signed it, and they sent me money. They didn’t ask me any questions about employment or monthly expenses. They didn’t even ask if I fully understood the loan.

I absolutely take full responsibility for my decision to take out these student loans. It was my mistake, and believe me, I’m paying for it now. My point is just that I was only 17 years old when I started my freshman year. Because I was turning 18 within a certain number of months, they allowed me take out loans even though I was a minor.

I understand that student loans exist to ensure that every student has the chance to attend college. That’s great. However, it seems to me that if you’re going to allow a minor or even an 18 year old to take out a loan that can never be discharged, not even in bankruptcy, there should be stricter safe guards in place to prevent predatory lending, especially since repayment doesn’t begin until four or five years later. How can an 18-year-old know if they’ll be able to afford a $300+ a month payment in four years? Most of them don’t even know what their careers will be.

Student loans made it possible for me to go to college. That’s nothing to snuff at. But if I had known what I was getting myself into, I would have borrowed a lot less money than I did. I also would have stayed away from private loans and stuck with low-interest federal loans.

Obviously, I should have known better. But I didn’t, and neither do a lot of 18-year-old kids. I remember thinking that it was a lot of money as I filled out the application. I also thought, “I won’t have to worry about this for another four years. By then I’ll be a college graduate, making a ton of money!” Ha. Yeah right.

I remember how I thought about money at 18, and I think about the other 18 year olds I knew. I can’t help but think, “No wonder so many people my age are in this mess.”

Time to start planning for Christmas

Photo by mysza

Last night, Tony and I went over our budget and plans for Christmas. The holiday stress has definitely begun.

Though we have a large extended family, we have to keep our gift list short this year because our travel expenses will be high. Not only are we paying for gas, we’ll have to stop overnight at a hotel on the way there.

I’m also going to have to take a couple days off unpaid because I haven’t accrued enough vacation time. I’ll have to factor that into our budget.

We considered using only the vacation time I have, but we don’t know when we’ll be able to make it back to Indiana to see our families again. Last year we stayed here. Since we’re splitting our time between two families, we really need a couple extra days to cover our driving and make sure we have plenty of time to spend with everyone.

My family doesn’t do a massive gift exchange. We’re all pretty much on the same page as far as gifts go, so this shouldn’t be a problem. Besides, I’m sure if my sisters had to choose between receiving a gift in the mail and having us there for Christmas, they’d choose the visit. Instead of shopping, I’ll bake some treats, wrap them up, and bring them along as gifts.

I have five nieces and nephews who are 5 years old and under. We’ve included a little money in our budget for them, so we’ll be shopping for some toys. We like to do it since we don’t have any kids of our own yet. A little holiday toy shopping is fun! Besides, the expense isn’t that great when they’re this young.

We pained over what to do about our parents. Finally, we came up with a fun idea. We’re going to build North Carolina-themed gift baskets filled with local treats. We haven’t decided exactly what’s going in them, but we’ll spend the next few weeks shopping and filling them up. We’ll put a lot of effort and thought into them, but not a lot of money. I think that’s a fair trade.

I’m relieved to have the ball rolling. I probably won’t start shopping until next month when I can build it into my budget, but coming up with a budget and gift ideas is half the battle.

Looking on the bright side: Benefits of the economic crisis

The news has been scary lately. Crazy stock market plunges and surges, rising unemployment, and an unstable global economy make this a very scary financial market for average consumers. The news can’t be all bad, though, can it? There has to be a bright side to this craziness, right?

In an effort to stay positive, I’ve come up with five hidden benefits of the economic meltdown. Even the worst rain clouds can have a silver lining.

1. People are healthier in times of economic crisis.

No, really. According to a New York Times article from Oct. 6, people take better care of themselves in a bad economy. Studies suggest that people are more likely to engage in unhealthy, dangerous behaviors like excessive drinking, eating unhealthy food at restaurants, and overworking themselves during times of economic prosperity. People cooking more at home and spending less on things like alcohol during economic crisis, so overall well being improves.

2. Gas prices are lower.

As the stock market falls, so does the price of oil. According to an article at CNNMoney, gas prices have fallen 30% since the summer’s peak price. That means you’re paying less for your daily commute, which equals more money in your pocket for things like groceries.

3. Less travel and consumption is good for the environment.

Despite falling gas prices, consumers are still cutting back on unnecessary driving. Airlines announced yesterday that they’ll be cutting down on flights in the coming holiday months, which means higher ticket prices and less travel. While this may sound like bad news, it’s actually good for the environment. Less driving and traveling means less fossil fuel burned.

Consumers are cutting spending, and less consumption equals less waste. It’s bad for the economy and the retail industry, but good for the environment.

4. Desperate retailers offer better bargains.

Discretionary spending has dropped in the past year, but that means retailers are working harder to get your business. I’ve noticed a lot of great deals and lower prices at many stores in the past few months as they fight to drive more sales. With experts predicting dismal holiday sales, the bargains will probably continue through the Christmas season. Take advantage of the bargain prices, and you could end up saving on your holiday shopping.

5. People are paying closer attention to their finances.

During times of economic prosperity, a lot of people put their finances on autopilot. When you have plenty of money, there’s not as great a need to pay attention to what you’re spending. People are also more likely to spend on things they don’t need when the economy is doing well.

In the past few months, there’s been a surge in interest for good personal finance habits. People are paying closer attention to where their money is going by budgeting and tracking expenses. They’re also looking for ways to cut spending with frugal habits like couponing, shopping at thrift stores, using the library, and making fewer unnecessary purchases. It’s a shame that it takes a worldwide economic crisis to get people to pay closer attention to this stuff, but I’m glad to see it happen.

What other benefits have you seen from the economic slump?

Photo by reubeningber

Dressing well on less

Photo by .leila

With the temperature finally beginning to fall to a slightly crisp autumn chill, it’s time to start reevaluating my cold weather wardrobe.

Shopping for clothes can be tough on a frugal budget, especially when you’re building a business-casual office wardrobe that has to consist of more than jeans and t-shirts. With a little extra time and effort, it’s possible to build a complete wardrobe that will keep you looking great for work or play without spending a fortune.

1. Think classic, flattering styles, not trends.

Every season has its trends that come and go. Dressing for the trends is a great status symbol, but it’s not so great on your budget. Instead, shop for flattering, classic clothing that will never go out of style.

Tailored shirts, comfy but chic fitted sweaters, casual long-sleeved tees, and pants (trousers or jeans) with a slight boot cut are classic styles that are always in fashion.

The best part? You can handpick the fashions that look best on you. Trendy styles are often reserved for certain body types. When you choose your own classic styles, you’re guaranteed to look good.

2. Make a few pieces go further by coordinating them into different looks.

I shop for clothing in a few color palettes that are particularly flattering for me. Black is a classic color that looks good on everyone, but you can personalize your wardrobe by picking the color palettes that look best on you.

I shop for greens and browns; blues, blacks, and greys; and other colors that will flatter these palettes. Shopping for clothing within certain color palettes will make it easier to coordinate a lot of different looks with a few nice pieces.

3. Choose tops based on the pants you already own.

Because pants are usually more expensive than tops and less likely to make it to the clearance rack in my size, I choose tops based on what will look best with the pants I own.

I have a couple pairs of flattering jeans, some khaki pants in tan and brown, and dress pants in grey, black, and khaki. I’ve collected these over a couple seasons, and I tend to shop for tops that will look good with the pants I already own.

4. Don’t be afraid to shop off season.

If you’re shopping for classic pieces, it doesn’t matter when you buy them. I’ve found most of my best deals at end-of-season clearance sales.

A couple weeks ago I found a nice pair of light khaki pants for $15, more than half off the original price. I also bought some summer tops for $2-$4. I won’t be able to wear them until next year, but they’ll be brand new when they come out of storage.

It’s a lot of fun to find these “new” clothes that I often forget that I bought by the following year. When I unpacked my winter clothes, I found a beautiful cashmere sweater that I bought for $10 last spring and haven’t worn yet. What a fun surprise!

5. Take good care of the clothes you have, and avoid clothing that requires expensive cleaning.

Follow care instructions carefully. Treat stains immediately with cold water and stain remover. Consider hang drying instead of machine drying to extend the life of your clothing. I’ve kept some pieces looking great for several years simply by caring for them properly.

Keep this in mind when selecting clothing, too. If you have to dry clean it every other week to keep it looking nice, it’s probably not a great investment.

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Menu Plan Monday & Grocery Round up: 10/18-10/24

This week was not so great on the grocery budget. We ended up at the high side of our budget limit at $60.

We had to stock up on some monthly necessities. We’re also out of chicken stock just as soup season has begun, which means we need to roast a whole chicken this week to make some stock.

We ended up picking up two whole chickens at Costco essentially for the price of one. We’ll use one for dinner and chicken stock tonight, and freeze the other for later. Buying two drove up our costs for this week, but it was ultimately a better buy. We cook a lot of soup in the colder months. Next time we need stock, we won’t have to buy another chicken.

Another reason for our high grocery costs? We finally picked up some reusable shopping bags. They were on sale for 99 cents each, and I really liked the size and stability of these bags. I’ve been keeping an eye out for affordable, good quality reusable bags for some time now.

We’ve tried to reuse the plastic bags, but our cabinet has become overrun with them at this point. They’re too flimsy to make it through more than a couple shopping trips, and other household uses just don’t use them up quickly enough. We’re just not using them as quickly as they’re accumulating. Overall, this is better for the environment and it’ll cut down our kitchen clutter.

Here’s a picture:

Aren’t they cute? They hold an amazing amount of food. One of these cloth bags holds about as much as three or four plastic bags, which makes it much easier to juggle our groceries when we carry them inside.

Obviously, they’re capable of holding much more weight than plastic bags, too. We bought five, but really could have fit everything this week into three. It’s good to have a couple extra, though, for bigger shopping weeks.

The soft cloth handles also make it much more comfortable to carry our groceries up three flights of stairs. Those plastic bags can be so painful when they cut into your hands, and I’m always terrified they’re going to rip!

We’ve seen similar reusable bags at the other grocery store where we shop, but they have the store’s logo plastered all over them. I didn’t like the idea of becoming a walking advertisement for the store. I liked that these have a generic logo.

Obviously I highly recommend that you go out and buy yourself some bags like these. Honestly, I bought them because I wanted to cut down our clutter and plastic waste, but they ended up making it so much easier to carry our groceries. Not only that, but we feel really good about the environmental benefits of reusable bags.

They’re now tucked away in the trunk of our car so we’ll have them on hand for the next shopping trip. Yay!

And now on to our menu plan for the week:

Sunday: Oven roasted chicken and potatoes
Monday: Chicken noodle soup
Tuesday: Leftovers/sandwiches
Wednesday: Chicken quesadillas
Thursday: Spaghetti with meatless marinara
Friday: Homemade pizza

Check out OrgJunkie for more menu plans!

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Why does the idea of using ING as my primary bank freak me out?

I’ve been using ING Direct for my savings account since June. I have absolutely loved my experience with them so far. My interest rate has dipped a little from the original 3% to 2.7%, but it’s still much higher than any brick and mortar bank.

One of the reasons I decided not to open a checking account with ING is because I was so happy with my brick and mortar bank. We’ve been banking with Wachovia for a little over a year, and we’ve been equally happy with their service. Even though we could earn 1.5% APY with an ING checking account, I decided the peace of mind of banking with a brick and mortar bank was worth more to me than extra interest. I liked knowing that I could talk to someone in person at a local branch if necessary.

Now that Wachovia is being bought out by Wells Fargo, I’m reconsidering ING as our primary checking account. I have no reason to believe the quality of service will decrease with the transition, but I don’t know. More importantly, I’ve realized that I haven’t had a reason to speak with a teller for over a year. In fact, now that I work 9 to 5, the rare paper check deposits that I make are usually done at an ATM anyway.

ING Direct is fully FDIC-insured, so my money is in no more danger there than it is at Wachovia/Wells Fargo. The idea of earning a little interest on my checking account does appeal to me. So why am I so nervous about taking the plunge?

There’s certainly some security that comes with the ability to stop in at a local bank branch if necessary, but in this electonic age it’s rarely necessary. In fact, calling and speaking to a customer service representative on the phone during my lunch break at work would probably be more convenient for me than going into a branch.

If we decide to move again at some point in the future, it would be nice to have most of our money in a bank that will move with us.

I’m strongly considering opening an ING checking account for our primary banking and leaving our Wachovia account open only as a linked account. First I wanted to ask all of you about your experiences with ING checking. Has anybody had any problems with using ING as a primary checking account? Is moving money from your linked account to you ING account more trouble than it’s worth? How is their customer service?

Feeling down? Don’t let it tempt you to overspend (or overeat)

It’s just been one of those weeks. Everything is just … blah. Nothing in particular, really. Maybe it’s because it’s my first full week back after a short vacation. Maybe it’s because I’m feeling deprived of fall in the 85-degree heat. Most likely I’m just more than a little homesick for the beautiful Midwestern fall weather and for my friends and family back home.

At any rate, I’ve been feeling down in the dumps.

Usually when I’m down, the first thing I reach for is something extremely bad for me to eat. Chocolate. French fries. Pizza. Whatever. But I’m watching what I eat now, so that’s not really an option.

Instead, I was craving seared tuna. A downtown restaurant makes a delicious seared tuna that I found myself thinking about as the afternoon wore on. It seemed like the perfect comfort food. I was so tempted to call my husband after work and tell him to forget about the meal we’d planned (roasted chicken breasts) and take me out to dinner.

But we’re already cutting it close with our grocery budget for the month. And honestly, overspending or overeating never really make me feel better when I’m down. Sure, it’s great temporarily, but when the meal is over and the bill arrives, I feel sick — not just because I’ve probably eaten too much and wrecked a week of dieting, but also because it’s extra money we shouldn’t have spent.

It never fails. I feel worse than I did before the meal.

Instead, I called my husband and asked him to start thinking about how we might recreate the seared tuna recipe. On my way home, he gave me a very short grocery list. Basically tuna and rice. We had the rest of the ingredients on hand.

For about $10, we made our own seared tuna at home. It was absolutely delicious and completely satisfied the craving. The chicken breast that we defrosted in the refrigerator last night will be just as good for another meal early next week.

The money we spent will fit easily in our entertainment budget for which we allow about $12.50 a week. No big deal this weekend since we’re going to a work-related picnic Saturday that won’t cost us a dime.

After a healthful, delicious meal I’m feeling better, and I didn’t have to break my diet or my budget.

Time to redeem MyPoints … what to do?

Never heard of MyPoints? Well, where have you been? It’s a free rewards program that requires very little work for a great payoff.

After signing up, you’ll receive about 3 or 4 emails every day. All you have to do to earn points is read through them quickly and click on the “Get Points” link to credit your account. Each email is worth 5 points.

You can also shop through their portal at a ton of online retailers to earn 1-4+ points for each dollar you spend. Just go to MyPoints, click on “Shop,” find your retailer, and click on their link through the site. Other retailers offer special points bonuses for taking advantage of offers, signing up for newsletters, or joining online communities.

Once you’ve acquired about 1500 points or so, you’ll be eligible to redeem them for $10 gift cards to a huge assortment of retailers, including Target, Starbucks, BP, Amazon.com, and more. Once you have 3500 points, you’ll be eligible for $25 gift cards. Finally, 7500 points will earn you $50. Some retailers offer $75-$100 gift cards for 12000+ points.

It’s part of a new trend that I absolutely love: marketers paying YOU for your time and attention. For our whole lives we’ve been inundated with advertising and marketing messages that don’t pay us a dime. It’s about time we get rewarded for listening to the messages they’re sending out.

You can visit the site yourself if you want more information about MyPoints. If you’re not already a member, drop me an email so I can send you a referral link! I’d love to pick up some points for telling you about the program.

I always click through my emails and check MyPoints before making online purchases to see if I can earn some points. I’ve been able to earn about 3500 points or $10 every three months or so for very little work. I’ve acquired almost 8000 points since my last points redemption in April. That’s enough for about $50 worth of gift cards.

With the holidays coming up, I know that the most responsible thing to do is use these points for a Target or Amazon gift card so I can cut down on my holiday spending and supplement my gift budget. We’ve also got a huge drive ahead of us back to Indiana, and a $50 gas card could help us out.

Last time, I used my points for a Starbucks card so I could treat myself to gourmet coffee without affecting my budget. Because this is “free money,” I’m so tempted to use it for something frivolous. It’s not like snowflakes because I can’t pay off debt with a gift card. However, I could potentially put $50 extra toward debt that would have been spent on holiday shopping or gas for our trip to Indiana for the holidays.

I’m torn. I know that every little bit counts, but I also like being able to treat myself without throwing off my budget. I don’t have enough will power to say that I never treat myself even when it is coming out of our budget. If I take opportunities like this to treat myself, then I’ll be less likely to use our regular income for frivolous things.

I look at $50 and it just seems so small when it’s used for holiday shopping or a tank of gas. But when it’s used for something fun, it seems like an huge amount of money. I’m not sure what to do.

My question for you: Do you use MyPoints to supplement your budget with necessary purchases like gas and gifts, or do you use it to treat yourself?

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Finally on my way to paying down my student loan debt

Last night I called Chase to find out more information about consolidating my private student loan debt for a lower interest rate. I was hesitant to call. With the stock market rebounding yesterday, part of me wanted to wait another week or so to see if the credit market stabilizes a little.

The truth is I was just being a chicken. The economic crisis isn’t going anywhere in the next 6 weeks, so I figured I might as well get this out of the way to find out my options.

Not only do they still offer private loan consolidation, but I’m approved! I answered all of the questions over the phone, they ran a credit report, and approved me based on my credit score, income, etc. Now they’ll send me a loan application and promissory note, which I’ll sign and return with the necessary legal documents.

Honestly, just finding a lender who is willing to issue this type of loan was the hardest part. I’ve worked hard over the past year to raise my credit score, and it seems to be paying off. I doubt I could have gotten this loan in this economic market without a good credit score to back me up.

Depending on the interest rate they offer me, I could see a 50% decrease in my current interest rate. That’s going to translate into thousands of dollars by the time the loan is paid off. It will also mean a lower monthly payment. We’ll continue to send the amount we’ve budgeted for debt repayment ($325 a month plus additional snowflakes), but more of our payment will be going toward the principal instead of interest.

This is a huge relief. I’m hoping now that I’ll be able to get the loan processed without any kinks so I can finally start paying off this debt.

For the past 2 years these student loans have been the source of a huge amount of anxiety for me. They’ve been in voluntary forbearance, which means my credit score has not be adversely affected even though I’m not currently making monthly payments, but the interest has continued to compound. I hated that they were continuing to accrue interest, but I just couldn’t pay both my credit card debt and student loan debt at the same time under our previous financial situation.

I decided it would be best to put the student loans on the back burner so I could focus on getting out of credit card debt. Credit card companies aren’t as forgiving of missed monthly payments as student loan lenders, and they don’t offer voluntary forbearance. They also have higher interest rates.

Watching this debt grow as the interest has continued to compound and knowing that I’m not doing anything about it has been the hardest part. Now that I’m on my way to paying it down, I already feel a lot better. I can finally see the light at the end of the tunnel. I’ve managed to get out of credit card debt, which was once equally overwhelming, so I’m feeling encouraged.

I just hope it continues to go smoothly!