The Debt Repayment - April 2006

We have completed our debt repayment for the month of April. In total, we paid $3,678 this month to our current debt. We paid an additional $178 more this month than our budget amount of $3,500. We have a current goal of paying off $36,500 by the end of the year. We have currently paid off $5,994 in the past 2 months.

To reach our goal, we need to pay off an average of $3,814/month over the next 8 months! It will be difficult to achieve, but we are up to the task!

Just This Close To Free Money!

This past weekend we flew home for a family member's wedding as well as Mr. Medicated parent's 35th anniversary! We decided to catch a flight home late Thursday night and leave shortly after getting out of work. As is normal, nothing ever seems to go exactly as you planned, and we found ourselves rushing to the airport with about an hour until the flight left. After running the 5k sponsored by the airport terminal, we made it to our gate as the flight was boarding. In between trying to catch our breath, we heard that Continental overbooked the flight by 2 seats and were looking for volunteers to offer up their seat in exchange for compensation. Not knowing what the compensation would be and the fact that we were trying to just recover from the run (at least Mr. Medicated was; Mrs Medicated looked like it was nothing!), we didn't even consider ourselves as possible volunteers. Yet, as we were walking to step in line to board the plane, the gate attendant announces, 'Excuse me travelers, but we are looking for just 2 passengers to give up their seats for this flight. Each passenger will be compensated with $400 Continental money, night in a hotel (this was the last flight of the night), and meal vouchers will be included.' Well, to be honest, when we heard the $400/ticket, we looked at each other and said let's do it. The funny thing is before this blog was created and money was our last concerned, we would have tuned out the announcement, and boarded the plane.

Yet, this was a deal! After confirming what we heard, we signed up for the deal and took a seat as others boarded the plane. We kept laughing thinking we were going to make $800 dollars plus stay at a hotel plus a meal voucher for leaving 10 hrs later (we were able to rebook the flight home for the next morning at 7 am). This was great: quality time for us to just relax for the night, plus our next couple of flights home paid for! Everything was blue heaven until we heard, 'Mr. & Mrs. Medicated, please come to the desk immediately!' That didn't sound good. Unfortunately, we were told that a flight that they were waiting for was 30 minutes late, and they decided not to hold the plane for those 2 unknown passengers we gave our tickets up for! 'You must board immediately, but here are 2 drink vouchers as a way for us to say thank you for volunteering!' We went from a nice night of being paid $800/dollars, hotel accommodations, and meal vouchers to being that person that boards the plane after it has been waiting already 30 mins to leave. You know what I mean, the stares, the comments of we made everyone leave late because we were late even though we were sitting just outside the plane for the past 30 mins!

Here & Back Again

Thanks to the Interstate Highway System, it is now possible to travel across the country from coast to coast without seeing anything. -Charles Kuralt

The past few weeks have been quite busy for us as seen in our decreased amount of postings. We have been traveling the past 2 weekends for vacation as well as family obligations. We are planning on heading out again this upcoming weekend for Jazz Fest in New Orleans! We have a couple of current topics on our minds, just have not had the time to write them up yet. We are looking forward to the early part of May when things settle down for a little while until our summer traveling season starts up again. So, thanks for reading, and bear with us while we continue to go here and back again!

Where Does yours Rank? And Does It Really Matter?

In continuing with our comments about our work, Money has just put together a list of the Top 50 Best Jobs In America. We are please to discover that our profession ranks rather high on the list. The synopsis of the profession is very general, but that statement is probably true for every profession listed. It is interesting to see the progression of one's career. We can truly remember sitting in the university library on a Friday night going on the 6th consecutive hour of studying asking ourselves if this would be worth it. To be honest, we still ask ourselves that question. Our education was very expensive as can be seen by our current student loan debt, yet we both would answer ultimately yes if ask would we do it again. However, at the end of the day, the positives still outweigh the negatives. And for us, the best part is that we love the fact that on a daily basis we are making a positive difference in the lives of perfect strangers.

After finishing the Money article it occurred to me that the worth of one's profession really can not be summarized by a few different categories, but rather a profession that allows for complete growth. One can not just measure the financial rewards or the annual job openings and declare a winner. We believe that for each person, the most rewarding profession allows one to grow as a complete person: financially, socially, spiritually, and mentally .

Good News From Work

"A Sign in an office: This job is only a test, had it been an actual job, you would have received raises, bonuses and promotions!

Well, we received good news this week from work. As you may remember, both Mr. & Mrs. Medicated work for the same company, and therefore, many financial merits that are achieved by the both of us become available to us at the same time. We discovered that we would each be receiving a 3% pay raise over the next fiscal year as well as a cash merit reward that will be seen in our next paycheck. Overall, we are extremely please with our current employer and the annual increases in pay we are awarded.

We plan to use this extra money to help pay off our debt reduction and continue to save any additional money. One great advice we hear to do with raises is to increase one's 403(b) contribution, however, we are currently each contributingng the maximum allowed for our 403(b) accounts. If there is a negative from this (and trust me, there is not), but we will most likely will not be eligible for a Roth IRA in 2006 due to this pay increase.

Nice To Be Back!

For the Easter Weekend, we decided to go on a cruise with our family. We left last Thursday morning and returned Monday morning. The cruise we went on was the Carnival Ecstasy. We had a great time with our family enjoying the Easter holiday, however, we were disappointed with the overall experience of Carnival.

Our main complaint with the cruise was the amenities the ship offered. We felt that the ship had limited activities that did not involve spending more money. Our expectations were that an all-inclusive trip would include many different activities to spend one's time while out at sea, quality dining selections, and impeccable service. Instead, we felt that Carnival offered no activities other than sitting around drinking very high priced drinks or making a donation to the casino, less than average dining selections, and excluding our waiters at dinner, a staff that either could not answer our questions or just did not seem to care to.

Although the cruise did not meet our expectations, we did have a great time with our family, and in the end, what we paid for the trip was definitely worth the experience. In hindsight, we would most likely look at the amenities of the ship more instead of just the price of the trip. Many friends and family that we discussed this with have stated that one should not base this experience on all cruise lines, and that we may be more satisfied with one of the more prominent lines. We would love to hear comments about other's experience with Carnival and other cruise lines.

Going Sailing!

In the early part of February, we decided that we needed a vacation from the daily grind of life. We found a great deal on a cruise that leaves from a city fairly close to us. We went out on a limb and decided to go ahead and book the deal! The deal was so good that our family from the Northeast decided to join us on the cruise and will be joining us for this trip. We definitely are looking forward to this little vacation! So, Thursday we embark on our voyage and will be back at the beginning of the next week! So, to all of our readers, have a great Easter and we'll talk more next week!

Cutting Those Bills - Netflix Gets Net'fixed

We love Netflix. Yes, at times, it feels that we get 'long wait' listed for the new releases. Yes, at times, they seem to suspiciously slow down there 'processing & sending' of DVD's. Yet, one of our favorite enjoyment is to sit down in front of the big screen, make a bowl of popcorn, and watch a good movie. We enjoy it so much that we prefer to watch movies at home rather than going to the movies. Besides, at our house, we don't have the distraction of ringing cell phones, annoying talkers during the movie, people yelling at the characters (FYI: they can't hear you), and the staggering costs of going to the movies (currently around $25 for tickets, popcorn, and a drink! And Hollywood still can't figure out why people are not going to the movies for terribly writing and acting movies!)

So it is fairly obviously why we like Netflix. It is hassle-free other than dropping the envelops into a mailbox to mail back to Netflix and opening the envelope to watch the movie. Unfortunately, with our recent effort to cut the fat from our recurring bills, we realize that paying $32/month for Netflix is just too much. Because of this, we have down-graded our subscription to just 2 movies out-at-a-time. This will change our monthly bill to roughly $17/month. The difference is a 47% savings. We are excited with this due to another recurring bill down by 20% or more.

Cutting Those Bills - Can You Hear Me Now?

Telephone, n. An invention of the devil which abrogates some of the advantages of making a disagreeable person keep his distance. -Ambrose Bierce

We recently read and heard many good things about Vonage. One of those good things was the cost. We currently have digital phone service through our cable provider. We signed up on a package deal that included digital cable, digital phone, and broadband internet for $99/month for six months. February was our last month of this special, and the month of March revealed a whopping $175/month for these services. We knew the bill was going to be obviously more than the special, but $175 for all of these services is just ridiculous.

We signed up for the Basic 500 Plan for $14.99/month. For our situation, we do not use our house phone for that many things other than to have a local number. Due to this, we are sure that we do not need more than 500 minutes for outgoing calls per month. We thought of just eliminating the house phone, but decided that we do not want to give out our cell phone numbers when a phone number is needed. We feel that for $18/month (including taxes), this is a great deal considering the fact that we get all the features plus long distance.

In the end, we lowered our phone bill 38%! We are excited with that fact that we lower another recurring bill by 20% or more!

Expenses For March 2006

Very similar to other bloggers, we use this blog for two main factors:

1. To allow others to accompany us by being able to read and comment on our path towards financial freedom.
2. For us to be able to see where we are going on this financial 'path' by seeing where we have been.

In saying that, this post falls under Category 2 of those factors. Our monthly expenses for March were:

As you can see, our budget calls for a monthly expense amount of $3,345. We were 19.41% above this number. Factors that attribute to this is the fact that many of the expenses that were paid for in March were services that were provided in the month of February. We started this blog in March, and we are hoping that many of our actions to 'cut the fat' from our expenses will begin to be seen in the month of April. We plan on changing our budget monthly based on upcoming expected expenses, however, we would like our expenses to remain less than $3,500/month. Many of our expense lowering can be found in post titled Cutting Those Bills

Cutting Those Bills - Car Insurance

"You know, somebody actually complimented me on my driving today. They left a little note on the windshield that said 'Parking Fine!' -Tommy Cooper

After re-aligning our renter's and personal property insurance, we decided that we needed to update our car insurance. After searching many insurance websites, and getting numerous quotes, the 2 best quotes came from the company the Mr. Medicated was with and the company that Mrs. Medicated was with. In the end, Mrs. Medicated company was able to quote us a price 20% lower than all other quotes. We decided to make the switch and we are now currently on one policy. We are definitely excited about the fact of lowering another reoccuring expense by 20%.

Net Worth - March 2006

In response to the fact that the month of March is over, and that many post their net worth faster than the speed of sound, we decided to do the same. First, we must say a quick thank you to 2 Retire At 50. 2 Retire had an excellent excel net worth worksheet. We liked it so much that we decided to use a similar format. So, thank you. Here is our net worth for March:

A couple of comments for this month.

• Our net worth increased 6.73% in the month of March. We are happy with this number, but feel we can improve it closer to 9-10%/month
• The month of March we paid $2,032.66 towards debt. Factors that cause this number to be lower than expected was additional insure added, paying off living expenses from February, and surgery for our 1 pet. We plan to have this number between $3,500 to $4,250 per month.
• Car Loan #2 was not paid due to a 6-month deferment by the bank to make the loan a full 5 years. We did not realize this, and will begin repayment immediately.

We are on track for our current goals of 2006. We hope to continue to keep moving forward; slowly but surely.

Do You Hear The Train(Wreck) A'Coming?

"I hear the train a comin'; it's rollin' 'round the bend!" -Johnny Cash

One of our financial fears is the status of the economy in the next 20 years. Baby Boomers are getting close to retirement age, and with that, comes many individuals that are not prepared for retirement. However, it seems that many are not worried about it, so maybe we should not worry for them. Yet, it makes us wonder who is going to be paying for their care as well as all the other bills we are passing on to the next generation, such as the National Deficit.

The Debt Re-Payment - Revolution

The second part of our re-evaluation of our debt repayment plan was to determine which plan was the best for us. We first determined a list of conditions to help us make the decision:

• We do not want to live so frugal that we resent it
• We would like to be debt free as soon as possible
• We want to be able to retire in our fifties
• We are willing to compromise being in debt in order to achieve other life experiences

With these guidelines, we re-aligned the table to be debt free in the shortest amount of time to the longest amount of time. The rearrangement looked like this:

As you can see, Debt Monster is correct in believing that for us to be completely debt free, we should follow Dave Ramsey's advice and stop our 403(b), use all of our emergency fund except $1000, and start pinching pennies. If we did that, we would be debt free in August of 2007. 16 months of hardship, but in the end, debt free. However, in looking at our conditions in doing, this represents only 1 of the 4. To be honest, we know we could not do this. Some things you can do, some things you can't. This is one we just don't think we can do. We know that we would probably kill ourselves if not each other if we were consistently worried about where we spent money. Due to this, we eliminated the 4 plans representing 'penny pinching!'

Our next focus was on whether we should stop the 403(b) plan. The plan does 2 things for us. The first, the obvious, is that we are able to save for retirement. In comparing plans with the 403(b) vs non-403(b) plans, the average time of debt free is anywhere from 17 months to 22 months (again, the penny pinching plan option has been removed). In that time period, money invested would be from $42,500 to $55,000. If we retire when we are 59yrs/old, that money would be worth $741,600 to $959,717 at 10% annual return. The second factor with the 403(b) is that it lowers our taxes from total taxes of incomes from 20% to 17%. It also should allow us to be eligible for the Roth IRA. Factoring in the Roth IRA for 2 years, the $16,000 invested would yield us $279,190 of after-tax money. With these factors, we decided to continue the 403(b).

The third item we focused on was the emergency fund. This emergency fund is important because of 2 factors. For one, we have very good jobs, however, we are living in the Southwest and would entertain a move back to the Northeast if the opportunity presented itself and seem worthwhile. We are currently not planning any move, but the emergency fund represents the ability to move even if we go a month without a paycheck. Second, we are strong believers in the importance of a emergency fund. Also, the difference in our calculations, for the remaining plans, is equal to one month payoff difference. Due to this, we are going to keep it.

The last area we focused on (with the remaining plans: current plan vs moderate living, 403(b) & emergency fund plan) was truly how much can we put to our debt per month. When we first figured $3,500, we decided that this amount represented a consistent amount that we could reach every month. With this, an extra $700/month would be available for savings, life events, and our enjoyment. As you can see, there is a statistical difference between paying $3,500 or $4,250/month, in that being debt free 5 months earlier. In seeing this, we decided to try to increase our debt repayment per month closer to $4,250.

As you can see, we definitely analyzed many different plans and determined that in the end, we could and should increase our debt repayment plan a month. Thanks to Debt Monster for her comments to help stimulate our thinking. After completing this exercise, the main thing we realized is that it is easy to determine how much you should pay towards debt, however, it really comes down to what you feel comfortable doing and what you can live with to make it possible.

The Debt Re-Payment: Reloaded

We recently received a comment from one of our friends in the NCN Network, Debt Monster, discussing our 2006 goals and if we knew of Dave Ramsey and this financial advice. As many of you know, Dave Ramsey is a financial counselor that is the host of the 'Dave Ramsey Show' that is syndicated throughout the country. His philosophy is broken down into 'Baby Steps' that allow one to achieve small, simple financial goals one step at a time. Through completion of many of these baby steps, one can achieve financial freedom over a period of time. (Read more of these baby steps here.) After reading our blog, Debt Monster recommended this plan for us. We definitely appreciate our readers comments, and this weekend, we sat down to re-evaluate our debt repayment plan.

In re-evaluating our plan, we decided to factor in many different ideas. We looked at 12 different plans. These 12 different plans are a combination of ideas that we took from many different sources. Some of the ideas came from what we have learned from Dave Ramsey, others from reading other blogs, and others from advice from friends and family.

In each plan, we looked at what our monthly debt repayment would be, whether we would use all available money except $1000 for a baby emergency fund for repayment, when the entire amount (-$122,345) would be completely paid off, total interest paid during the payoff time period, and payoff of our 2006 goal of $36,500.

Here is the evaluation of each plan:



In our next post, we will discuss our evaluation of this chart and our decision on which plan to proceed with.