Debt free at last

I am happy to say that, finally, I am debt-free. It feels good!

My goal for 2009 is to stay away from credit cards, as tempting as they are, and find myself with some actual savings at the end of this year.

Stay tuned!

Screw you, Citibank.

Citi (NYSE: C): your stock price is trading at $7.20 a share, and I hope it goes to zero. I hate you.

I just got a letter from these bastards saying they want to increase my interest rate 5.5% to a total of 18.99% from 12.49%. No, I haven't missed a payment, on this card or any other debt.

When I called to complain, they simply said they need to raise rates because there's a financial crisis, they need money, and other people are defaulting a lot. I'm so mad at Citi that I'm not going to use their card again. If I have to use a card, I'll find a new one from www.cardratings.com or some other comparison webpage. These guys lost me as a customer, and I'm someone who's historically carried a balance and paid it off at the end of the year (or nearly so).

I've been successfully paying down my debt and at the end of the year I'm going to review and adjust my budget so I'm not in this mess again next year. I declared moral victory over my HSBC card 2 months ago (paying it off in full) and I've been steadily working on my Citi card (I only have 2 cards, total -- thankfully!) so by the end of the year I should have a zero balance. Finally.

Oh, and I've been watching a lot of Dave Ramsey on TV. He gives me inspiration.

Still working on debt...

Wow. Its September and I'm still paying off these debts. Things are tough here in Manhattan. You need a LOT of income just to scrape by modestly here. I've survived through the summer without digging my financial hole any deeper.

I saved a lot of money by taking advantage of free visits to family members' pool clubs instead of heading out to the Hamptons (and in this economy, who can afford to splurge?).

The little woman's birthday is this month and you know what that means -- she wants jewelry, of course! Apparently she hasn't noticed that we're in a recession. And we did blow a chunk of change on a vacation. I couldn't get away with skipping vacation, so I tried to keep it economical instead.

The irony is that with the recent focus on the presidential campaigns, I'm thinking ahead to what next year will be like. Although I live in a space that measures less than 1000 square feet, Senator Obama says I'm "rich" and that he wants to raise my taxes next year. Terrific. I guess he doesn't understand that even though I may look "wealthy" on paper, the cost of living here is through the roof. You order 1 cocktail at the bar in this city and you may be looking at over $20. In New York City, Dollars might as well be Pesos.

Continued debt reduction and Personal Finance Reading

The fight against debt continues. I got an extra paycheck this month because there were 5 weeks in July, and did what I could do limit expenses. I had some modest success, and my credit card balances were reduced a bit to $4387.76. Still quite a way to go, and summer is an expensive time of year due to travel expenses and social gatherings.

I read a fantastic book over July 4th Weekend: The Automatic Millionaire Homeowner by Richard Bach. Very prescient too, since he wrote it prior to the subprime crisis, and makes several comments that seem to anticipate the short term collapse of the housing bubble.

While this book is primarily oriented to non-homeowners, as a homeowner I found it very helpful too. The book's main point is that paying a mortgage each month is a means of forced savings (as you pay down principle), and has nice additional tax benefits (you can write off mortgage interest, reducing your tax liability). While you have the home, you have the benefit of living there, plus in the long term, you can expect the property to appreciate. In contrast, after 30 years of renting, you've spent perhaps hundreds of thousands of dollars, with nothing to show for it at the end.

The next most interesting point was that if you live in your home and it appreciates, instead of selling it, you should convert it to a rental property, refinance to cash out some home equity and use that to acquire a new home for you to live in, while the old property continues to appreciate at a tenant's expense. Obviously, it may take several years for appreciation to increase your equity enough for this to be possible. But if it happens, you can expect market rents to make up for the larger principal mortgage balance, while you keep building equity as you use your tenant's payments to pay the mortgage. And if market rents continue to increase, eventually your tenant is not only paying off your mortgage on the first property, but providing income to pay down your new mortgage. Very interesting stuff. I recommend you read this book, especially if you're currently a renter.

Debt!

Debt! Specifically, credit card debt. We all have it (well most of us). Nobody wants it. At least I sure don't! So it suddently dawned on me that I have quite a bit of credit card debt (after adding up multiple balances) -- so I'm trying to get rid of it now. The main issue? As a guy, I'm expected to pay for everything. And that occasionally means I spend more in a month than I earn. And if there are a few months like that in a row, it starts to snowball. And I'm deep in snow. About $5815.64 worth. So how to tackle it?

First , obviously, I'm trying to limit expenses so I can avoid putting more on my two credit cards. I canceled some magazine subscriptions for things I don't really care about. I'm trying not to go out for dinner/drinks as much (like everyone else in this economy, I guess). I returned a few pairs of unused shoes I ordered online (Zappos has a very gracious return policy).

Second, I called Citibank and asked them to lower my interest rate. They lowered my rate 3 percentage points from 18% to 15%. My other credit card is at HSBC (also at 15%). I'm going to try to talk them down next.

Third, I'm trying to chip away at the amount owed each month by $200-300, with the idea that I'll get rid of the rest at the end of the year if I get a bonus.

Fourth, I checked and I had enough reward points to get some cash rewards (about $400). So instead of saving up miles for a free trip, or some trinkets, I'll apply the cash rewards to my balance owing.

I'll track progress here for the rest of the year.

Rollover IRA at Fidelity

I rolled over my IRA from a previous employer's 401(k). Fidelity (http://www.fidelity.com/) made it really easy. I just went in and opened up an IRA account with them.

They suggested I put my money in a 2050 target fund. But I did some checking around, and I decided to put the money into two different funds:

30% FSIIX SPARTAN INTL INDEX INVESTOR CLASS
70% FSTMX SPRTN TOTAL MKT INDX INVESTOR CLASS

The International fund gives me exposure to growing economies overseas, and provides some cushion against the falling dollar.

The Total Market Index fund provides diversification.

Both funds have relatively low expense ratios, and if you have more money to invest, you can upgrade to the Advantage Class funds instead of the Investor Class (which have even lower expense ratios).

New theme for this blog

I realized recently that I have less than 30 years left before I would like to retire. And I've decided that I want to be wealthy when I retire, and not work like a dog until I drop.

That means I have a lot of work to do. I've decided to take stock of where I am, organize myself, and get my financial situation in order. After that, I will set discrete goals, and track my progress towards them here on the blog.

Plus, I hear blogging is the cool thing to do, and that some people actually make money at it. So I'd like to learn how it works, and perhaps improve my writing at the same time.