#financialplanofattack

[coreykeller]

What are my priorities this week?

I was giving the idea to try to plan out my week from Amber Rae.  In a post were she showed her weekly plan drawing.  I’ve been doing the drawing almost every week.  In the bottom is a priorities section.  I have a number of daily priorities but I also have some weekly priorities.

My daily priorities are the following:

1. I want to continue to work on my nightly routine.  My goal is to try to get eight hours of sleep a night.  I also want to wakeup at 5 am to workout and write before work.  This means I’m going to have to go to at least get into bed around 9:30.  The hardest part about going to bed this early is setting up a trigger.  I’m working on it this week.

2. I want to work out every morning.  Move (& Sweat).

3. Eat Well.  Today, I'm making lunches for the week.  I'm making a few pieces of steak, chicken and pork chops to add some variety, one cup of mixed vegetables, and a half cup of beans.  For breakfast I'll eat about four eggs, some salsa, and a half cup of black beans.  I'm trying to cut out all refined breads for breakfast and lunch.

4.  Get outside everyday.  Walk Beans, go for a run, or read a book with Lisa while outside.  I need to do whatever I can to get outside and breath some fresh air everyday.

5. Pray / Meditate.  I need to spend some time in prayer, meditation, or thought on a daily basis.  

6. Write every day.  I want to write 750 words every morning and post something on this blog.

7. Express Gratitude.  Make sure I tell the people I care about how much they truly mean to me.  Appreciate life and everything that comes with it.

8. I want to start adding a weekly recurring theme to one day and try to expand or add other themes when it feels natural.  I've tried doing I Will Teach You To Be Rich Monday's in the past.  I never finished the plan last time.  This week, I'm going to try again.  I'll update my credit card spreadsheet and do a brief write up on Monday about where I left off.  I also want to start writing about my classes in the MSIS program and what I'm learning.  I think it will help me with one of my main midyear goals to learn SQL and PHP.

What are my weekly priorities?

Complete my first Toastmasters speech.

Finish painting the nursery closest.

Hang all the wall art in the office and nursery.

Clean out and paint the office closest.

Donate all clothes to Goodwill.

Unpack and assemble the baby shower gifts.

Put furniture in the garage on Craig’s List.

Figure out which car I want to buy, get financing, and prepare to buy next Monday.

Clean out the garage and downstairs bathroom to be able to paint.

[coreykeller]

IWTYTBR Week Three in Review

This past week, I’ve been working on I Will Teach You To Be Rich’s Action Plans for Week Three.  IWTYTBR’s Action Steps for Week Three were the following:

Open you 401(k) (three hours).

Come up with a plan to pay off your debt (three hours).

Open a Roth IRA and set up automatic payment (one hour).

I’ve completed two of the three actions steps a few years ago but the second action step was hard to get my self motivated to complete.  It’s never enjoyable to figure out a plan to pay off debt. But it’s necessary.  To come up with a plan to pay off our debt I tried to follow a few key sections in Chapter Three.  Two of the main parts I concentrated on were Ramit’s, “The Ladder of Personal Finance,” and the, “Crush Your Debt,” sections.  I appreciate the easy to follow and understand chain of command for the ladder of personal finance. It’s great for someone who’s new to investing because it tells them exactly where their priorities should be.  When people think of investing, they always think of stock picking.  They think of the idea of making quick money overnight.  When in reality all they’ll do is lose their shirt.  Here is IWTYTBR’s The Ladder of Personal Finance I followed this week:

1. The Ladder of Personal Finance

There are 5 Rungs to the LOPF.  Ramit’s positive reminder is that it’s not a big deal if you cannot get to number 5 because most people never make it to number 1.

Rung 1: If your employer offers a 401(k) match, invest to take full advantage of it and contribute just enough to get 100 percent of the match.  Luckily, I completed this when I got my first job.

Rung 2: Pay off your credit card and any other debt.  Review page 40 in Chapter 1 for the best ways to do this.  

- This is the Rung I’m stuck on.  I need focus paying off my credit card debt before moving onto Rung 3.  I need to review page 40, review our credit card spreadsheet we created in Ch 1, and go to Dinkytown to get an idea of how our payment effects how many payments we’ll need to make.

Rung 3: Open a Roth IRA and contribute as much as possible.  

- I opened a Roth IRA at the end of college because I contracted at a chemical company for a year before I received my current full-time position.  I’m not moving on to this step but I do currently deposit a small amount to my Roth every month just to stay in the habit of contributing.

Rung 4: If you have money left over, go back to you 401(k) and contribute as much as possible to it. Current limit is $15,500.

Rung 5: If you still have money left to invest, open a regular non-retirement account and put as much as possible there. Pay extra on your mortgage debt, invest in yourself (start a company, get an additional degree).

After reviewing, The Ladder of Personal Finance, I found that I’m on Rung 2 and I need to seriously set a plan to have our debt paid off with a set timeframe.  This lead me to the next key topic of the chapter, “Crust Your Debt.”

2. Crush Your Debt

I want to become debt-free, well at least credit card debt free.  If I want this statement to become a reality then I need to revisit page 40 in Ch 1, “Five Steps to Ridding Yourself of Credit Card Debt,” or FSTRYOCCD.

1) Figure out how much debt you have.

- I created this chart when I started this plan but I haven’t been reviewing it.  I treated it more as a checkbox. I need to update it and review it, to plan my plan of attack for paying off our debt so we can move up the LOPF.  *UPDATE* I updated this chart during the week with current totals, down-payments, and I went to Dinkytown to run some calculations to figure out how long it will take us to pay off our debt with different down-payments.

2)Decide what to pay off first.

- Right now my plain is to pay off the highest APR and then concentrate on the lower APR accounts.

  3)Negotiate down the APR.

- I did this when I first went through these plans.

  4)Decide where the money to pay off your credit cards will come from.

- Last week I went through all my bills when I was in the process of moving all our bills from our online checking account back to our brick-and-mortar checking.  I figured out how much we can afford to pay towards are credit cards and how much we need to pay to pay them off in a set time frame. 

  5)GET STARTED

- I set up automatic payments, based on Dinkytown calculations, to start at the beginning of this month to payoff our credit card debt.

This week is Chapter Four of IWTYTBR titled, Conscious Spending: How to save hundreds per month (and still buy what you love). There are four Action Steps this week.  They are the following:

Get your paycheck, determine what you’ve been spending, figure out what your Conscious Spending Plan should look like (thirty minutes).

Optimize your spending (two hours).

Pick your big wins (five hours).

Maintain your Conscious Spending Plan (one hour per week).

Ramit says this is the most difficult part of the book.  By next Monday, I’ll have it completed.

[coreykeller]

IWTYTBR Week Two UPDATE

Yesterday, in my weekly IWTYTBR Monday's I mentioned that I still needed to change my automatic payment for my gas bill. I was unable to change my auto bill this weekend because my monthly payment was processing. Today, I was able to change my bill pay and I no longer have any bill payments going to my Capital 360 checking. My new problem is that I have to actual call Capital One to close the account, which is ridiculous. Is this 2002? To close a savings account with ING all I needed to do was withdrawal all the funds and cancel all automatic transfers then select close the account. I'm not sure if this was ING'S old policy or if this is Capital One starting there main goal of destroying a great banking experience. The most important thing is that I was able to cancel all bill payments from the same bank my savings is stored. Now I need to go fully commit to WEEK Three.

[coreykeller]

iWTYTBR Week Three Action Step

I still need to complete the colosing of my internet checking account.  I was able to transfer all the bills except the gas bill becaue it was already processing.  Once the bill is processed I'll be able to close the account and move the pmt to my local brink-and-mortar store.  

The Action Steps for Week Three are the following:

 Open you 401(k) (three hours). COMPLETE

Come up with a plan to pay off your debt (three hours):   Run a calculation from www.dinkytown.net to see how much you could save by paying an extra $100 or $200 per month. Revisit p. 35 in Ch. 1 and p. 220 in Ch. 9 for details on how to pay off CC debt and SL.

Open a Roth IRA and set up automatic payment (one hour):   I have this setup but I currently only send $10 a month.

[coreykeller]

IWTYTBR State Of The Plan

In the beginning of January, I started a goal to complete Ramit Sethi’s I Will Teach You To Be Rich’s six week plan.  To get our finances ready so we’re prepared when are child is born in July and later in the year when my wife goes part-time.  This is a major part of our goal to prepare for our child.  After 20 straight days of blog posts, I started back to grad school and marathon training.  Both have taken considerable time away from my writing and planning.  But I’m back with a plan to help complete everything.  I wanted to get back into my IWTYTBR posts but I felt using an entire week to write about one chapter of the program was incredibly boring and left me without much material.  This lead me to the idea to concentrate on one day to update all the week’s IWTYTBR activities. Hence, IWTYTBR Mondays will be my weekly routine until I’m complete with the plan.  This should only take a few more weeks.  Then I’ll need to figure out what to do in it’s place.

I think I did write a post about week 3 but I never really finished week 2 of IWTYTBR Beat The Banks.  The Action Steps for Week Two are the following:

Open a checking account or assess the one you already have (one hour).

Open an online high-interest savings account (three hours).

OPTIONAL: Open an online checking account (two hours).

Fund your online savings account (one hour).

Okay, I have all of these action steps complete, but I have a major obstacle before I can move to the next week.  I currently have a high-interest checking account which I’ve used to pay bills online.  The problem with this high-interesting checking account is because it’s at the same institution as our high-interest savings account.  I’ve been meaning to close this high-interest checking and pay all of our bills out of our current brick-and-mortar bank checking account.  The only thing I need to do before I can close the high-interest checking account is I need to cancel all the current bill payments being deducted from this account.  I also need to recreate those bill payments in our other checking account. This week, I’ll complete the closing of our online high-interest-checking account.  Then Monday, I’ll recap Week Two and we’ll be able to start Week Three Get Ready To Invest.

[coreykeller]

IWTYTBR Done Beating The Banks and Getting Ready to Invest

Yesterday, I looked over my bank accounts and I've decided to not open up the Schwab online checking account, for now.  I want to concentrate on moving all of my bill paying from my online checking to my regular brick-and-mortar bank.  Once I have my new payment plans setup and everything is running smoothly. Then I'll look into opening a different online checking account.  I'm hesitant to get to aggressive with all this planning because I want this process to be as easy as possible.  I don't want to get in a situation where reviewing my finances becomes a drag on my life.  Let's review the Action Steps for Week Two, Beat The Banks: 1) Open a checking account or assess the one you already have (one hour). COMPLETE I have a checking account and it is a no-fee, no-minimum account. 2) Open an online high-interest savings account (three hours). COMPLETE I have an online high-interest savings account. 2a) Optional: Open an online checking account (two hours). I'm holding off on this optional action step. I want to get my bill payments moved to my brick-and-mortar bank and away from my online savings.  After the move is complete and everything is running smoothly then I'll revisit this step. 3) Fund your online savings account (one hour). COMPLETE I currently fund my online savings account for Christmas and vacation.  My main goal with the online savings account is to close the online checking account currently attached and move all of my bill payments back to my main checking account.  I also want to move all of my money that is not related to saving for long term goals out of my online savings.   Two weeks down and four to go.  Next up, Week Three, "Get Ready To Invest."  This week is obviously about investing but it's more about the types of accounts you should open and a decision hierarchy to figure where to invest the bulk of your money.  Here are the Action Steps for Week Three: 1) Open your 401(k)(three hours).  COMPLETE This is the number one thing everyone should be investing in if offered.  Especially, if your company offers a match.  If they do, then you should at least fund the account to receive the full match from your company.  If they do not offer a match, then leave your 401(k) open but contribute nothing. In the chapter, Ramit throws out some shocking figures about how only a small percentage of people take advantage of their company match.  My opinion, it's free money why wouldn't you do it.  I like to think of the company match in this way: Imagine if there was a machine in the mall, if you put a dollar into the machine, it would give you two dollars back.  Would you put a dollar into the machine to get two dollars back?  Of course you would.  I can not think of another thing in life which offers a 100% return on your investment.  The match at some major companies offer just that.  I already have this step completed.  My wife and I have a 401(k) and we currently contribute enough to receive the full company match.  I want to look into the benefit and cost to our take home pay of increasing our contribution a 1% each year until we are contributing the max. 2) Come up with a plan to pay off your debt (three hours). You need to pay off your debt before you can start investing the rest of your money.  It doesn't make sense to invest your money, other then your 401(k) if they offer a match, because earning 8% in a mutual fund and losing 20% in interest fees on your credit card is not a solid financial plan.  Ramit recommends you to go to dinkytown.net to see how much you could save by paying an extra $100 or $200 per month.  You should also revisit page 35 in chapter 1 and page 220 in chapter 9 for details on how to pay off your credit card debt and school loans. 3) Open a Roth IRA and set up automatic payment (one hour).  Send as much as you can but even $50 / month is fine.  Ramit will get into the details a little later. These are the Week Three Action Steps for Chapter Three, "Get Ready To Invest."  I'll follow the same process as the past two weeks.  Saturday and Sunday will be dedicated to some big ideas or fun posts.  On Monday, we'll start on action step two.

[coreykeller]

IWTYTBR Beat The Banks Day 4

Yesterday, My goal was to research the Schwab Investor Checking account to see if I felt it was worth switching to my main checking account. After looking over the account, I've come away pretty impressed. You do need to open a Swhab brokerage account with the checking account, but the brokerage account is also no-fees, no-minimums. The interest rate on the checking account is 0.25%, much than a typical checking account. All the questions I had about an online checking account had been answered. The problems had with ING online checking are the following: 1. The only free ATMs are the scetchy ones in gas stations, convince stores, and some grocery stores. - This is a major downside because how could I make an account my main account without access reliable access to get my money. - Schwab stops this fear by offering ATM fee reimbursement any where in the world. At the end of the month, Schwab will credit your account with all the fees that where taken out during the month. If you are a heavy ATM user than this could be a downside for you because the ATM fees will be deducted out of your account and then you'll have to wait to have the money reimbursed. This is the only temporary downside with this account. Plus, you would need to monitor how my ATM fees you had during the month and double check that your account was properly reimbursed. 2. Depositing checks - Checks are free and to deposit a check they give you prepaid envelopes or you can deposit checks through your iphone app. ING may have these options but I've never tried them. I like the Schwab checking account but I don't know if I'll enjoy checking my ATM fees every month. I'm going to do a lot of reseach tonight when I analyze all my accounts and figure out what I need to change to I be able to cancel my current ING online checking account and only use ING for savings. My goal for tonight is to analyze all of my accounts. Figure out my automatic payments and debits in each account so I realize what payments I need to change. If I decide to go with the Schwab interest checking then I'll need to notify my work to adjust my direct deposit. I think I'll setup an Excel spreadsheet showing each of my accounts and the monthly payments leaving each account. Let's Beat the Banks tonight.

[coreykeller]

IWTYTBR Week 2 Day 1

This week is all about Beating the Banks.  This chapter deals with setting up the basic accounts every person should own, the savings and checking account.  Ramit talks about these two accounts, how to optimize them, and his opinion on the best available accounts.  The Week Two Action Steps are the following:

1) Open a checking account or assess the one you already have (one hour).  

If you do not have an account already than Ramit explains them, which places offer the best accounts, and how to open one.  He recommends you call the bank (or go in) and open the account.  

If you already have an account than make sure it's a no-fee, no-minimum account.  Look at your last bank statement or call the bank.  If you're paying fees then use his negotiation tactics to switch your account to a no-fee, no-minimum account.  Be aggressive in threatening to leave if they won't switch you.  A good website if you decide to switch is www.bankswitcher.com.

2) Open an online high-interest savings account (three hours).

Ramit is a big fan of online accounts because he likes earning more interest and paying less fees.  Does that sound good to you? Obviously.  Plus, I agree with him that it is psychologically powerful to have your savings account separate from your checking.  You're much less likely to dip into your savings.  Compare the banks he recommends on page 61.  For more options go to www.bankrate.com.  Ramit and I both use ING Direct.  On Friday's post, I talked about the recent acquisition by Capital One.  Here is Ramit's response to all the questions he has received.  His opinion is that Capital One is horrible to deal with and he always avoids their cards and accounts.  He doesn't think it's necessary to immediately close your account because they're not going to come in and start screwing everyone right away.  The changes will be gradual and over time it'll probably be best to avoid this company.  I agree.  I've been very satisfied with ING but now things have changed and there are other accounts out there without such a poor reputation.  For now, I'm sticking with ING but I'm not sure for how long.  Again, I receive no financial compensation from ING, I'm just a satisfied customer.

2a) Optional: Open an online checking account (two hours).

Not necessary but if you're ready to be more advanced and earn a higher interest rate, then this is the option for you.  The main benefits of an online checking account are a high interest rate and fewer tricky fees.  Ramit's favorite checking account is the Schwab Investor Checking.  I do have an online checking account but it's with ING Direct that I want to cancel.  

In the chapter Ramit has a section about, "Finding The Perfect Account Setup."  He recommends three options:

I. Most basic option (good for lazy people).  

A checking account and savings account at a local bank.  Talk to your bank to make sure you're not paying any fees.

II. Basic option + small optimization (recommended for most people).

One an account at two separate institutions: a no-fee checking account at your local bank and a high-yield online savings account.  This is my current banking options.

III. Advanced setup + full optimization (perfect for people who read things like lifehacker.com and The 4-Hour Workweek).  

This setup consists of several checking accounts and savings accounts at different banks, usually to eke out the most interest and services that various banks have to offer.  Ramit's example is that he has a basic checking account at a brick-and-mortar bank, an interest-bearing checking account at an online bank, and a savings account at yet another online bank.  I'm thinking about switching to this setup.  I am the guy who reads lifehacker and the 4-Hour Workweek.  I want to fully optimize my accounts.  Plus, I could have another layer away from my savings account if I go with the online checking account and not connect my online savings account to it.  

3) Fund your online savings account (one hour). 

Leave one and half months of living expenses in your checking account, or as close to it as you can manage.  (This will prevent overdrafts as you're getting used to transferring money between accounts.  Most transfers take 3 to 5 business days.  Transfer the rest to your savings account.

This is my plan of attack for this week.  I've already completed action step one.  I have a checking account and I know that it is a no-fee, no-minimum account.  Action step two is also complete.  I have a high-interest savings account through ING Direct.

This week I'm going to concentrate on 2a  and 3.  I'm going to look into the optional Schwab Investor Checking account.  I currently fund my savings account on ING but I also use a ING online checking account to pay my bills.  I want to move all of my bill paying to an online checking account out of ING and close my existing ING checking account.  I want to leave my ING savings account to only save for vacation, Christmas, and emergency account