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I’ll never understand why some married couples keep their finances separate (yes, that is me quasi-judging some of you). Maybe it’s the traditionalist in me, but when I asked Girl Ninja to marry me, I asked her to marry ALL of me. This includes (but is not limited to) my sense of style, my obsessive compulsive behaviors, my smelly farts, my sucky artwork, and of course my finances.

A little over a year ago, I wrote a about how Girl Ninja was not only marrying me, but also my student loan (I think at the time I still owed about $10,000 to Sallie Mae). Whether she liked it or not, my debt was now her debt. A handful of commenters, however, disagreed. They felt that since I had acquired my student loans before I even knew Girl Ninja existed, they were solely my responsibility to pay back. One comment read, “I agree also that GN should have no part of your student loan. That was contracted before your marriage and is solely your obligation.”

Alright commenter, I’ll play your game. Going in to the marriage I was making $63,000/year. Girl Ninja was hovering around the poverty line bringing in about $20,000/year. My income was about three times Girl Ninja’s. It seems that if I followed the logic of the commenter above, I would then have three times as much influence in our financial decisions, or at the very least, should be allowed to spend three times as much on entertainment related expenses. After all, my income was larger than hers prior to the marriage, she has no rights to my pre-marriage income achievements…right?

I get it, Girl Ninja had no legal obligation to my debt, but that doesn’t mean she didn’t have a marital obligation to it. The second she said “I do“, my debts became her debts. My income, became her income. And my love for California burritos, became her love for California burritos…oh wait…not so much on that last one, but you get the point. I don’t even know how separating finances in a marriage would work. Do you literally say “Alright honey, you need to transfer $50 in to my checking account ’cause I just paid our cell phone bill”?

Married Peeps: Do you combine finances? Do you keep them separate? Did you or your significant other have debt? If so did you work together, or keep the debts separate?

p.s. if you weren’t aware, I actually ended up paying off my student loans about a month before our wedding, so Girl Ninja never had to worry about Sallie Mae 🙂

Debt Unicorn (again)

I might as well change my name from Ninja to Lisa Frank, because I freakin’ love Unicorns. While I was exploring Germany this weekend, I came across a store called ‘Unicorn’. I thought I died and went to Unicorn Heaven! Anyhow, when I saw that store it reminded me of an article I wrote a while back (one most of you probably haven’t read) about Debt and Unicorns. I think it’s worth reposting today…

I’m convinced whoever decided to draw a horn on a horse, and call it a unicorn, is also responsible for fabricating the idea that debt is a reasonable way of life. Seriously, it takes a very creative mind, or at least a lot of drugs, to make unicorns and debt popular. It boggles my mind.

I think debt is rooted in complacency (whoa that sounded kinda deep). There is nothing wrong with being content, but complacency frustrates me. Flat screen TVs, new cars, an overpriced home, and stainless steel appliances, are how prestige is sought. Keepin’ up with the Joneses is the American Dream. People with $40K annual incomes are living a six-figure lifestyle.

Don’t get me wrong, I have no beef with nice homes, luxury vehicles, or energy efficient appliances. Actually, I think they are all awesome, and one day, I hope to own these things, but guess what…. I don’t. I refuse to conform to the norms of society, when those “norms” are self destructive.

I drool at the sight of a plasma TV, but realize that the benefits of the TV (high definition/sexiness), don’t even come close to outweighing the negatives (decrease in net worth, more TV watching=less productivity, a desire to then increase sound equipment/dvd player/etc). So although the Joneses may have a plasma in every room of their house, I know that my life is actually better without.

Look at this picture of a Unicorn and tell me that’s not one crazy looking animal…

Now look at your credit card statement, and tell me your balance isn’t even more crazy! You can hang out with the Joneses all you’d like, but I think I’m gonna keep kickin’ it with my PF homies and increasing my quality of life and net worth.

Why do you think America has become complacent with debt? Where did we go wrong? Has it ALWAYS been this way? Do you think we learned anything from the recent recession?

Red hates happiness

I have some very disturbing news to share with you all. I just found out my home girl Red, who blogs at Girl With the Red Balloon, hates happiness. She probably also hates puppies, rainbows, and babies, but I’m yet to confirm that. I came to this conclusion after reading this sentence in a recent comment Red left

[…] shouldn’t you be advocating for the most responsible ways to get out of debt? Would you tell a family that is $28,000 in debt to take a vacation? I hope not!

Alright Red, I’ll play your game. Would I tell a family with $28,000 of debt to take a vacation? While I don’t know if I would necessarily beg them to go to Fiji, I probably wouldn’t tell them not to either. I don’t have the authority to tell people what to do with their money. Vacation away my friends!

To be perfectly honest, debt freedom isn’t really that different. Sure, it’s nice not having to send Sallie Mae a check each month, but other than that, nothing’s really changed. I’m still frugal. I still drive the same car. I still buy used furniture off Craigslist.

Don’t get me wrong, being debt free is cool and all, but really it’s just a tiny piece of the personal finance puzzle. I mean how depressing would my life be if my biggest financial milestone is debt freedom? I want more. I want to  have a million dollars in the bank. I want to send a bunch of underprivileged kids to Young Life camp. I want to buy a shark and a pony, force them to make babies, and be the first owner of a ShaPony. I have bigger goals than just paying off a few creditors.

If someone, who has a car payment and a Sallie Mae loan, wants to go to visit friends in France for a week, who am I to tell them not to? Heck, who am I to say taking such a trip would be financially irresponsible? If they make all their payments, I could care less what they do, how quick they get out of debt, or how many vacations they take.

For some (like Red and myself) we wanted nothing more than to pay off all of our creditors. While others might be just fine making minimum payments. And so now I ask you… What’s your debt strategy? Are you keeping some low interest student loans or car payments around? Or did you drink the kool-aid and want nothing more than to scream “I’m debt free”

p.s. I love you Red 🙂

F-R-E-E that spells “not free”

I’m sure you’re all familiar with that catchy little jingle. The one that goes, F-R-E-E that spells FREE, credit report dot com baby. I love the song (it’s catchy), but I hate the message. Personally I think freecreditreport.com deserves a swift backhand to the jugular. It infuriates me that the company markets itself as a free credit report service, when in fact it is a we-hope-you-don’t-realize-you-are-signing-up-for-a-monthly-subscription-service.

Yes, your initial report is free, but they charge the bajeezes out of ya 30 days later if you don’t cancel the contract you probably didn’t know you signed. Unfortunately, freecreditreport.coms  catchy tune has polluted the minds of millions of Americans and have become the industry standard.

Don’t worry though, there is a way to check your credit report, three times a year, for free. As in it ain’t gonna cost you a thing free. Annualcreditreport.com is THE ONLY legitimately free, no strings attached, way to check your credit report. No fishy business going on here (it’s endorsed by the federal government). All you do is punch in a little information and within a few minutes you have full access to your credit report. No contracts, no subscriptions, no sketchiness. Booya grandma!

So now that you know how to check your credit report, it’s important you understand WHY you should check it. I do so for one reason and one reason only; To make sure everything is a-okay. I can look back through all the credit accounts I’ve had, over the last seven years, and double check that everything was reported to the credit agencies properly. I checked yesterday and let me tell you, it felt great seeing Sallie Mae showing “Paid in full.”

Not only can you check on the accuracy of any information on your report (and dispute any inaccurate information), but it also serves as the best tool to help spot identity theft. All it takes to open an account is just a little bit of personal information. What if someone has opened an account in your name without you knowing? If everything looks familiar on your credit report, than you’re probably in the clear. If there are some random credit card accounts, held with companies you’ve never heard of, there’s a good chance you’re the newest victim of identity theft.

Keeping up with your credit report (even if you have no debt at all) is just as important as maintaining a budget. It’s one piece of the whole personal finance puzzle. A very important piece mind you. If you haven’t checked your credit report in the last six months, go do it now at annualcreditreport.com (and if you’re wondering if I was compensated for this post or sponsored by them in any capacity, I wasn’t. Although, if they offered me compensation I would gladly take it :))

When’s the last time you checked your credit? Have you ever been fooled by a freecreditreport type company? Ever been the victim of identify theft? Was it as big of a headache as I imagine it would be?

Beat up debt, but save too

My boy Eric hooked me up with a guest post today. He has a finance degree from the University of Colorado and an MBA from the University of Denver. He is currently a senior treasury analyst at a Fortune 500 company. He blogs about personal finance at Narrow Bridge and the Middle East at The Israel Situation.

Kicked in the face

It feels really good to kick debt in the face. In the last four years, I have bought a brand new, $17,000 car and taken on about $40,000 in student loans working on my MBA. Of the $57,000 in debt, less than $14,000 remains. I have a plan to be paid off completely in less than two years. I have managed to live below my means and kick debt in the face. However, beating the hell out of debt is only one part of the personal finance puzzle. It is also important to keep track of your finances and build up a safety net while paying down your debt. The two main savings methods that I am employing are investing in cash savings and investing in my retirement, but I had not been focusing on both of those as much as I should have until recently.

I have felt great about paying off my debt so quickly. Paying off a $90,000 MBA within two years of graduating is something anyone should be proud of, but I recently checked in on my savings account and realized I only have enough cash on hand to live for about 2 months, not the 3-4 that I should have saved. I am on track with my retirement savings, but that can always use a increase as well. Because of this, I have developed a two prong strategy to both kick debt in the face and kick yourself in the butt to start saving more.

Part I: Kicking Debt in the Face

You have probably heard of the debt snowball at some point if you are a regular on the personal finance blog circuit. If not, here is the low-down: Pay the minimum on all of your debts except for your highest interest debt, where you put every dollar you can. This is scientifically the fastest way to pay down your debt.

Part II: Kicking Yourself in the Butt

There is no big secret way to save money, you just have to set a plan and follow it. Sites like Mint.com and banking sites like SmartyPig can help you track your savings goals. You can also set up a separate savings account at your bank if you want a little extra barrier between your savings goal and your spending accounts.

The smartest way to save your money is to not have to think about saving it in the first place. The best way I know of to do this is to set up your direct deposit from work to deposit your paycheck into two accounts. A certain amount of money is designated to go to the savings account and the remainder goes into your checking account. Keep your savings account deposit going as long as you have to in order to reach your savings goal.

Increasing your retirement savings is also an easy, automated process. Most employers let you take money directly out of your paycheck to be deposited into a 401(k), Roth 401(k), or IRA account. Every time I get a raise, I increase my contribution to my retirement accounts by 1%. If you are not taking advantage of a 401(k) match from your employer, you are giving up free money! Set that contribution level right now. If you are already contributing to your retirement accounts, just increase your level by a percent or two to keep building your retirement accounts. If you are worried about locking the money away, try an automated investing plan at a brokerage that allows you to sell and withdraw your funds whenever you want without tax implications.

Whatever you do, just make sure you are saving for emergencies and your future, and while you are at it, make sure you are paying off your debt too.

Questions: How did you decide how much to save vs use to pay down debt? Do you use the automated saving methods above? Why is Ninja so freakin’ sexy?

Editors Note: My only beef with Eric is that he likes to Kick debt in the face, where I prefer the punching method. And yes, I added that last question, I’m pathetic.

Excusing bad behavior

One of my favorite things about personal finance is hearing all the crazy excuses people use to justify bad decision making. For example my friend pulled the, “My transmission just went out so I HAD to buy a brand new car” Since when did a little car work, justify the need for a new car loan? Maybe it’s a sense of entitlement, or perhaps a lack of responsibility? Maybe I’m crazy, but I think it’s time we slap our peers back to reality and remind them that financing a boob job (wonder how many pervs are gonna click that link) is a terrible idea. Here are some of the most common “crappy excuses” I’ve come across…

Car:

The only thing stupider than financing a new car, when your old one is broke, is financing a new car when there is nothing wrong with your old one. Seriously people, cars are not like shoes. They do not need to match your outfit. I know at least three people who sold there, perfectly fine, cars for some type of hybrid or ‘fuel efficient’ car. Ummm, really? You are going to sell your $8,000 Toyota Camry that gets 25mpg, and go finance a $30,000 Prius that gets 47mpg? Did you know, that prius will only save you about $600 a year in gas? Which means it would take more than 20 years to actually save money. Fuel efficiency is NOT a valid excuse for financial stupidity. (I’m not talking about people who can afford Hyrbids, so all you hyrbid owners can stop foaming at the mouth.)

Tax Deductions:

Similar to the hybrid model above, I can’t believe how many people used the $8,000 tax credit as their excuse for buying a home. Since when did getting $8,000 from the government, warrant spending $300,000 of your own? Seems a bit crazy to me. Again, if you were already looking to buy a home and had adequate liquidity, then you made a smart move by taking advantage of the low market and the tax credit. Something tells me, however, a bunch of people went and bought homes they couldn’t afford, just because they felt like they were suppose to. Do you know anyone that took advantage of this credit or any other credit, that should not have?

Sales:

This is probably the excuse that makes me want to punch a baby the most frustrated. You know exactly what I’m talking about, and sadly, some of you are probably guilty of it. I’m talking about the woman, who after complaining about how broke she is, goes and buys a pair of boots from Nordstrom because they were on sale. Or the unemployed dude who puts rims on his car because he got four rims for the price of three. You know the guy. He loves to say “I saved $300 buying these rims”  when the truth is he SPENT $900 to get them. There is nothing wrong with looking for a good deal, but there is absolutely something wrong with buying crap you don’t need just because “It’s on sale!”

Man oh man, the list goes on and on and on. I can think of at least three more categories I could rant about (balance transfers, student loans, unemployment) but for the sake of not offending everyone, I’ll bite my tongue and call it a day. I’m sure many of you come across excuse makers every day. Care to share any of the ridiculous things these people come up with?

Should you save before paying down debt?

I love getting mail from PDITF readers. It makes me feel like I’m important, even though I’m really not. Well, it’s time we help another Debt Puncher out and share our two cents on his situation. His email says…

I just paid off the first of my 9 (yes…credit+retail) cards. It’s a huge achievement. I’m currently following the high-interest method to keep motivation high. My top priorities are:

*Paying off credit card debt
*Establishing a buffer in checking

Would you apply all your monies to paying credit card debt first or vice versa? Or set-up a plan so both can be achieved albeit at a slower pace. According to my projections, I can reach both these goals within a year.

Well, Mr. Anonymous Reader Guy, if I were you I would stop paying your credit cards, forget about savings, head to Vegas, and bet it all on black. Thanks for stopping by, hope I helped 🙂

Haha, I’m only kidding (unless you’re feeling lucky then GO FOR IT!). I’ll answer your question by sharing a little bit about my journey. As you may already know, I started my PF journey with $28,000 in student loan debt, and just a few hundred dollars to my name. Making the decision to save vs pay down debt is not an easy one. In fact, I wrote this post, this post, and this post about it.

Personally, I hated the idea of not having any liquidity. Dave Ramsey suggests saving up $1,000 in a checking account and throwing all discretionary income at your debt. It’s not bad advice, but it’s not what made me feel comfortable. I totally would have lost sleep knowing I couldn’t even write a check for next months rent if crap hit the fan. You can’t pay rent with a credit card so I needed to have money in the bank.

That said, I would not recommend doing what I did and OVER save. At one point I had $20,000 in the bank,  but only $17,000 in student loans (you can read about it here). If I could go back in time, I would give myself a swift backhand to the face for that one. I totally perverted my enthusiasm for saving and kept that student loan around longer than I should have. I was a very bad Ninja.

So my advice to you is probably going to be the most incredible advice you have ever heard in your entire life. Go get a pen so you can write it down. Ready? Don’t Drink and Bike, you might spill your beer. Oh wait, that was advice I gave to my alcoholic friend.

What I meant was, you should probably save some predetermined amount ($2K, $5K, or whatever) while making minimum payments on your C.C. But the second, and I mean the second, you’ve accomplished that goal, pay down those CC’s like there’s no tomorrow. It may not make the most financial sense to keep your CC balances a little longer, but if you’re like me it makes a lot of PERSONAL sense. Besides, it sounds like you are gonna knock out both goals pretty quickly anyway, so the difference in interest paid is probably relatively small.

That said, I realize I am only one voice in this PF world, so I’d like to turn the soapbox over to the PDITF readers and see what they would do. How much did you put in savings before attacking your debt? Anyone else out there like me and OVER save? How do you balance financial sense (paying down the CC ASAP) with personal comfort levels (saving up a decent chunk in savings)?

If you have any questions, comments, or just a funny YouTube video you want me to check out, feel free to shoot me an email.