2014 Third Quarter Business and Personal Finance Goals Update

I changed my goals for 2014, going with 3 goals that keep us accountable both on a personal and business level. Now that we are halfway through the year, it’s time to reflect on our progress and project out the rest of the year.

As always, I am leaving out steps on the way to achieving my goals (like fully funding out Roth IRAs and contributing to 401(k)s) because they would have simply been checkboxes. I don’t believe in setting goals that are more of a given than anything else. It’s not impressive to make a long list of achievable goals and when you accomplish 18 out of 20, to claim that 90% were completed when those last 2 might have been the most important.

1. Grow My Blog Carnival Submission Service To Over $500/Month

This has been growing a little, with a few people dropping out and a few new people coming on. However, I definitely haven’t put in effort to recruit new users, for a few reasons: I have been lazy and haven’t made it a priority, and I don’t want to step on the toes of friends and other bloggers who have similar services. It does seem like a few carnivals have stopped in the past few months, and for some, it’s been harder to find hosts. If I see things go back to normal and bloggers are more willing to host, I will renew my search for new users.

2. Create At Least Two New Streams Of Income That Bring In $100 Per Month.

At the beginning of the year, I said I had an idea for one of these income streams, and in March, I achieved that mark. With a friend, we buy some items in bulk and resell them individually for more on eBay. It worked very well, but due to circumstances outside of our control, we had to shut the operation down (we still have some more product to sell, so maybe 1-2 more months of this and then it will be done). It was a great run while it lasted and netted me more than $1,200 (or $100/month for a whole year), so I’m going to consider that a success. It certainly wasn’t a failure, or if it was, I hope all my ventures “fail” as spectacularly as this one did.

I do have another idea that would max out at $150/month that I may detail in a future post. It involves very little work and has a low barrier to entry (and anyone can do), so once I do a little testing, I’ll be able to give a step-by-step guide for everyone.

3. Keep Discretionary Spending to 105% of 2013 Levels

In the 2nd quarter, our discretionary spending was 21% higher than the first quarter, and a whopping 55% increase over our second quarter of 2013. This was caused by a whopping $1,200 international round-trip flight I booked for a friend’s wedding in October. It’s a lot of money, but it will be a lot of fun and I wouldn’t miss it for the world. For the year, we’ve spent 22% more than last year at this time, which comes down to less than 10% when that one single transaction was excluded. Maybe 5% was a stretch, especially considering that Lauren and I would like to take a big vacation after she graduates from graduate school in the fall. That won’t be cheap either, and we won’t let this goal get in the way of having a great time.

As a reminder, our new car is not included in this calculation (we decided to pay it off over 5 years instead of paying in cash). Our typical grocery bill, insurance, charity, tuition and student loan payments, rent, and utilities won’t count toward this goal, but everything else does. We want to see if we can keep our discretionary spending in check, because that’s all we can really control.

I’m not terribly excited that we spent more this year than last, and I don’t think our spending is out of control. I expect the third quarter to be kind to us, hopefully we can bring that 22% into the teens by the next checkup.

Rating Our Progress So Far

I’m definitely encouraged this quarter by the business progress, having a few extra streams of income, even if they’re temporary, definitely takes the sting out of spending a bit more. We have some room for improvement, so our work is definitely not done. Good thing we have half a year left!

How are you doing on your goals so far? Where are you succeeding?

Five Random Situations When Your Credit Score Really Matters

Credit! Badmouth it all you like. Go ahead and cut up all your credit cards. Abstain from the credit economy for as long as you possibly can. Denial can be fun sometimes. But sooner or later, there is going to come a time when you need to buy something that costs more than what you have in your bank account. When that time comes, you are going to need to know something about your credit score. In a country like the US, this will likely happen many times over the course of a lifetime. We live in a consumer society.

At such times knowing your credit score is important. More to the point, what you need to know at such times is that your credit is good. If it is not, then you need to know your score in plenty of time to do some serious credit repair. Your credit score is there to inform you of the problem in time. There are times in your life when you simply cannot afford poor credit. Credit repair can also help clean up the damage left behind by identity theft, as outlined in a recent creditrepair.com Facebook post.

As promised, here are five random situations when your credit score really matters:

Buying an automobile

One of the first encounters a person has with their credit score is when they go to a dealership to purchase their first automobile. Unless your credit score is at a certain level, many dealers will not even spend time with you. They have a series of innocent questions that help them pre-screen you for their best sales pitch. They want to make sure you are not just wasting their time with champagne dreams on a beer budget. Not every dealership will do business with just any person with a job and a signature. If you have your heart set on a new Honda, you might want to know your score. This is especially true if you want to lease. There is a reason why the commercials all mention “well-qualified applicants”.

The real challenge is not getting a serviceable automobile. People with poor credit drive cars all the time. The challenge is getting the car you want at terms you can live with. The lower your score, the worse your terms will be. A wealthy person walks in the showroom and drives off with the flagship vehicle with a lower monthly payment than you will in a 5 year old mid-range car. It seems wrong, and probably is. But that is the way the real world works. It all comes down to credit worthiness. You will have to pony up more for your used car than another person with better credit for her new one. It’s a harsh lesson.

Getting married

Debt is one of the first realities of married life. Money will be one of the first and most serious challenges to the new marriage. Fairytale weddings are not actually bought and paid for by fairies. For the most part, they are paid for by the new couple. Outside of story books, few brides come with a dowry. That Downton Abby style wedding you were wanting is going to cost someone a fortune, most likely you.

Here is the truth about those types of weddings: Even the doctors and lawyers of the world cannot afford them. You don’t have the money to really do it right. This is an unfortunate time in your life to discover that your credit is not all it was cracked up to be. This is one occasion where knowing the score will make all the difference in a beautiful wedding you can actually afford, and a magical wedding that will haunt you for the rest of your marriage.

Twins

Sure, it took a while. But you finally decided that now is the right time to start a family of your own. You have read all the books, watched all the videos, listened to all the advice, and most importantly, saved up all the money to do this right. The only thing you didn’t consider are the words coming out of the doctor’s mouth: twins!

This is not a simple matter of buying two cradles instead of one. This is an exponential increase in everything except income. The new mom is going to need more than twice as much help. Your new home might require an extra room that was not in the budget. That sensible car might not have quite enough room for two baby seats. The happiest moment of your life also happens to be the most expensive. …And nobody is ready for it.

At times like these, the love and support of friends and family are just not enough. What you need is crazy strong purchasing power. Like the stereo from your freshman year of college, you need a credit score that goes past 11; 1,100, that is. The last thing you need is to be surprised by a less than perfect score.

One way or the other, you are going to find out the truth: you need to know your score long before emergencies come knocking. It is not only critical that you know your score, but that you monitor it. That way, when things start going South, you will know it right away, and be in a position to take corrective actions before things get out of hand. Monitoring your credit score is a little like keeping fresh batteries in your smoke alarm.

What will it cost me to pay off my home loan?

There may come a time in your life when you have the finances available to pay more off your home loan then you originally intended, or you may find a more affordable home loan and want to re-finance. But what happens if you decide to do this and will it really be beneficial financially?

When you first apply for home loan is when you really need to be asking yourself this question. Once you have signed a contract you are tied into any of the included clauses, including anything relating to penalties for early payment. You will be able to tell if you are liable for pre-payment penalties from the Truth in Lending Disclosure form your lender will complete.

Why are penalties imposed?

When you apply for a home loan you should be given the option of having early payment penalties in place or not. Sometimes opting to have penalties on your home loan agreements can seem like a good idea as you may receive a lower interest rate, or lower closure fees.

But you need to make sure that you fully understand how much the fees may cost if you decide to pay off the loan early, re-finance, or even sell your home.  Penalty clauses in home loan contracts can vary; you may have to pay only if payment is made within the first five years, or you may not have to pay if you are selling your home, for instance – read more at NPBS.

Are penalties always bad?

If you want to re-finance and it looks like it’s going to cost you a fortune you may think that penalties are a bad thing.  It has to be said that home loan penalty clauses are there primarily to benefit the lender. They are a way of attracting business by offering appealing benefits, such as reduced interest rates, whilst at the same time assuring a certain level of income for the lender should the customer opt to take advantage of the benefits but then decide to repay early.

That doesn’t necessarily mean that having penalties on your home loan contract is always bad; you may decide that any fees you risk paying are worth it to get benefits when you first take out the loan.

I have penalties in place for early payment, what should I do?

The first thing you need to do if you want to pay early, or re-finance on a home loan, is to check exactly what the penalties will be.  You can then try and negotiate with the lender to see if they are willing to reduce the penalties. Remember that you are trying to get something from them that they are not obliged to give so it is always a good idea to be polite.

If you are not able to get any reduction on the penalties payable it is then up to you. What is going to be more beneficial to you in the long run, paying off or re-financing and paying the penalties, or deciding to stick with your regular home loan payments?