I posted a while back about the My Mile Marker website. It’s a simple online application for tracking fuel efficiency and fuel costs. Today, Clever Dude wrote an interesting article about the rising costs of fuel and that made me think this is a good time to review my history. After tracking my fuel costs for almost two months I have a decent amount of data to review.

My first recorded fill-up was on September 28, 2007 and I paid only $2.519 per gallon. My most recent fill-up was today, November 16, 2007 and I paid $2.939 per gallon. I don’t always use the same station, but I do always make an effort to go where the prices are on the lower end. That is a 16.7% increase in less than two months. If only my salary increased at such a rate!

So now the good news. My fuel efficiency has also increased, starting at 28.86 miles per gallon and hitting 29.97 miles per gallon on my last fill-up. That’s an increase of 3.8%, sadly not keeping up with the rise in prices. I’m not sure what I’m doing differently to increase my efficiency, but maybe just having this extra awareness in the back of my mind helps me to drive a little more efficiently. Now that I’m so close to 30 miles per gallon I want to see if I can break it!

You don’t need to use MyMileMarker.com to track your fuel efficiency, it’s just an easy to use tool and I like it very much so far. I’m on the Internet all the time so it’s not really any extra effort for me. I make sure to get a receipt when I buy gas and I write my odometer reading on the receipt and enter the information later on the website when it’s convenient. Whatever you do, I do think this is valuable data to have and if you see a drop in your mileage you can do something about it right away.

This isn’t an attempt to whine about fuel prices, I generally don’t give them much thought because I have to get to work so I have to pay the going rate. However, it is good to look back and see the trends and know where you stand. I just hope prices start to trend back down soon so we have a little more spending money for the holidays.

By Eden, Thu 15 Nov 2007, Categories: Finance, Spending

Review of Your Money or Your Life, by Joe Dominguez and Vicki Robin

Book’s website – www.yourmoneyoryourlife.org

Amazon.com link – Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence

I actually started reading this book around the start of the year, but stopped after a couple of chapters because I found it too dull. Thanks to Trent at The Simple Dollar running an online book club with this book I decided to try reading it again. I think it’s true that this book gets off to a slow start, but I also think I gave up too soon before because I had no problem reading through the whole book this time.

Bottom line, this is a must-read personal finance book no matter where you are currently with your money. If you want to know more before you read it, I’ll cover the main themes of the book below.

Are you making a living or making a dying?
The first important theme deals with how we trade our life energy for money and figuring out just what it is we do with that money and why. Do you work 50-60 hours a week just to keep up with the bills and have money to blow on having ‘fun’ on the weekend? Do you know how many hours of your life you are actually giving up for the ‘stuff’ you own? Do you know how much you actually earn per hour at your job? This section shows you how to calculate your real hourly wage, which is likely much lower than you think, and how to start tracking every penny you spend and creating a budget. This section is laying the foundation for a sound financial plan, however the process of determining your real hourly wage and figuring out how many hours of you life you trade for ‘stuff’ was eye-opening for me.

How much is enough? Finding fulfillment.
The next big theme is figuring out what is ‘enough’ in your life. What do you spend money on that provides fulfillment and what do you spend money on that works against finding fulfillment? Not only does this apply to how you spend your money, but also to how you spend your time (life energy). Is your job fulfilling? Do you have to spend money and time doing things for your job that you wouldn’t do otherwise? These are important questions to answer because they lead to the ultimate question of determining what you should be doing to make a living and how you need to think differently about it.

Tracking your progress
You could do this on a computer, you could do this on a paper wall chart (as the book suggests), but the key is to somehow track your progress and keep a visual reminder. I use a number of things to track my progress- this website, an Excel spreadsheet, Quicken, and a whiteboard on my refrigerator with my current total debt and how much I have paid down on it since starting my financial turnaround. Whatever you do, do something and make it easy to see on a daily basis. Not only is this an empowering step on it’s own, but it leads to the next great theme, the Crossover Point.

The Crossover Point
This is the most exciting part of the book. If you are tracking your income and expenses like the previous section told you to do, you will be able to add a third component to your chart, which is income from investing or any source of passive income. The goal here is to add your passive income to the income and expense chart (it is likely a tiny number at the bottom of the chart now), but to project it out into the future and find a point where that passive income number crosses over your expense number. This is the crossover point, the point at which you no longer need to go out and earn an ‘active’ income. If you are anything like me, that crossover point is a very long way off right now, but it is the ultimate goal of taking control of your money and finding financial freedom.

Summary
The book isn’t perfect, and I would guess you could cut about 50 pages out to make it really great, but the overall message was truly life-changing for me. I highly recommend it for anyone who thinks that maybe they could be doing better with balancing money and life.

By Eden, Mon 12 Nov 2007, 5 Comments, Categories: Books, Finance

My Money Blog highlighted this article, 10 Great Reasons to Carry a Big, Long Mortgage, published by Ric Edelman under a section of the website titled Education. I don’t believe that My Money Blog was endorsing this author or article, but simply sharing the information. I’ve included both references only to show how I discovered it.

Before I go any farther, just think about the phrase “10 great reasons to carry a big, long mortgage”. How do you react to that title? Does it sound wise? Does it sound logical? I know what I think, but lets look at some of the information from the article to see if it sheds any more light on the subject.

Never own your home outright. Instead, get a big 30-year mortgage, and never pay it off – regardless of your age and income.

In today’s economic environment, a big, 30-year mortgage is the best thing you can have.

So: Never pay off the mortgage. Reject 15-year loans, never make extra payments, and forget about those biweekly mortgage payment plans.

First, understand that everything you know about mortgages and particularly what you fear about them is wrong. The myths you believe were told to you, bless their hearts, by your well-meaning parents and grandparents. They told you that mortgages are dangerous, that having one means you can lose your home. They told you this because they remember the Depression era, a time when millions of Americans lost their homes.

How do those excerpts sound to you? Wise? Logical? Here is what seems to be the main argument presented- things are different this time. Where have we heard that before? Right around the top of every stock market bubble is when you will regularly hear that phrase. Basically, everyone before was wrong, but now we have it all figured out because we are so much more advanced than those silly little people before us (you know, like the generation of Americans who actually had a positive savings rate).

Still, mortgages are expensive, and you’d rather avoid paying all that interest. That’s why you like the idea of sending in extra cash with your monthly payments. You know that paying off the mortgage early will save you huge amounts in interest charges. Although that’s true, you need to turn that coin over, because there’s another side you have overlooked.

Here it seems the author admits that having a mortgage isn’t a good thing, but wait…now he will tell us why it is. Confused  yet?

That’s why owning your home outright is like having money buried under a mattress. Since the house will grow with or without a mortgage, any equity you currently have in the house is, essentially, earning no interest. You wouldn’t stuff ten grand under your mattress, so why stash two hundred thousand into the walls of the house? Having a long-term mortgage lets your equity grow while your home’s value grows.

I don’t think you can compare cash to a home, but lets play along- IF you had ten grand under your mattress, would you go to the bank and take out a loan against it so you could invest it? Now this argument is a bit tricky because stuffing cash under your mattress isn’t really wise either, but you don’t need a mortgage to let your equity grow! That makes no sense at all.

There’s no way you can avoid debt in today’s society. Cars and college let alone big screen TV’s virtually require you to have loans. And you’ll find that mortgages offer you perhaps the cheapest way to borrow.

This one  really takes the cake This quote is so funny it got me wondering if this article was in fact an anti-debt satire piece of some sort. Did I read this right- “There’s no way you can avoid debt in today’s society“? I think Visa and Mastercard would love that quote. If you really think this is true, please stop offering ‘financial advice’ to anyone in any way, shape, or form.

Not only are mortgage loans low in cost, the interest you pay is tax-deductible. You can save as much as 35 cents in taxes for every dollar you pay in interest.

Yep! What a deal! If you think that is a good idea then please start sending your checks to me and I will pay you 35 cents for every dollar you send me!!!!

Honestly, that’s about all I can take of the article. Please visit the link and read the whole thing and please tell me where I am wrong because I just don’t see any sound arguments to support the title. Just think about the advice and see if it really makes sense to you. Don’t let someone tell you you aren’t sophisticated enough to understand it- apply simple logic and reason and draw your own conclusions.

By Eden, Sun 28 Oct 2007, 6 Comments, Categories: Debt, Finance

About this- My humble submission to the Get Rich Slowly writing project. Winning the contest would be cool, but I’m happy to participate just because I’m a big fan of J.D. and the Get Rich Slowly website.

I wish I could share a story about how I am debt free and on my way to a comfortable retirement. Sadly, I’m not even close. I have a large, mountain of debt to bury before I can write that story. So how can I share a personal finance success story? I believe that even through the early stages of my plan to get out of debt I have achieved some notable successes.

My total debt is going down now instead of up- this is a huge change! For years my debt number has only gone higher and higher. I kept spending more than I earned and hoping that some day I’d make enough money to pay for it all. Pretty much the typical American way, but thanks to Dave Ramsey and the personal finance blog world I realized that I didn’t have to be typical. I could get out of debt! I started that process by making a budget and spending less than I earned. That simple step was enough to reverse the never ending debt trend that I was on for so many years. Now there is hope.

I went from $0.00 in a savings account to $1,000- that is a huge change! I’ve never had savings before. I spent every dollar I could! It’s a really good feeling too. It feels good to know that I can save money and that I have money available when an emergency strikes. Now there is no need to have a credit card. I just can’t justify it at all- and that is a good thing.

Instead of spending money until my checking account is empty, I plan where every dollar will go at the start of the month- making a detailed budget was really life changing for me. I used to just spend money without any direction or plan, then wonder why I didn’t have money when I needed it or why I kept getting hit with overdraft fees. Now, I have dollars allocated for every monthly need. I know that the bills will get paid and I know how much money I can spend at the grocery store or anywhere else I go. If you haven’t tried a budget yet, I strongly encourage you to do it. It’s an incredibly empowering tool. I can’t imagine living life without one now.

I make some smart decisions with my money now- of course I’m not perfect yet, but I’ve come a long way. I don’t see something I want and rush out and buy it. If I want something, I take some time to think about why I really want it and look for ways that I could get the best possible deal. This usually leads me to not make a purchase at all. I think about how I can simplify my life and be frugal. I have embraced frugality! I thought that was something only ‘cheap’ people did before. Now I get it! Now I see the benefits for my life in general and specifically with my money.

I am losing weight- okay, that isn’t a personal finance success story, but it is because of my focus on getting my finances in order that I feel motivated to lose weight again. Weight is something I have struggled with from time to time, but I strongly believe that the behaviors that put me deeply in debt are at fault for the weight gain as well. It wouldn’t make sense to change my life and win with money and continue to gain weight at the same time.

Like I said at the start, I have a long way to go, but I already have a solid foundation of successes to build my future on. I didn’t get into debt overnight and I won’t get out of debt overnight, but I have hope for the future and I know that some day I’ll be writing another personal finance success story.

By Eden, Thu 18 Oct 2007, 10 Comments, Categories: Debt, Finance

It’s not all gone, but I had an unexpected trip to the dentist today that cost $659. That was with a discount! I really wish I could be paying off debt with that money, but I was in a lot of pain and I knew I was going to have to get the dental work done some day. I’m glad I had the money to handle it. Just about any other time in my life I would have been putting that on a credit card.

I didn’t have to pull all of that out of the emergency account and I’ll be able to re-fund it before the end of the month. It just means less money paid on debt. Unfortunate, but that’s life. It felt good to be able to handle the expense with cash. If you don’t have one yet, I highly recommend a basic $1,000 emergency fund as a top priority for getting out of debt.

By Eden, Thu 18 Oct 2007, 1 Comment, Categories: Emergency fund, Finance