Paying your car loan off early

Paying your car loan off early is a pretty good idea if you’re trying to be frugal. If you’re like me, you probably have a car loan you shouldn’t have at all! You were impatient, didn’t save up, decided to get rid of the jalopy that you had because it just didn’t suit you anymore. It was a mistake that the you of today, filled with knowledge of personal finance and a sense of responsibility and frugality, would never let happen. Old you didn’t know, so we obviously have to forgive them.

So now that we have this whole car loan business, it’s time to figure out how to pay off the car early. The obvious solution here is to simply pay more (duh!). This is my general strategy however my loan is a bit large. As of today, we’re looking at a car loan of $21,790.65. I know, I’m being a bit more precise than I need to but I’m a bit of a freak like that. So, let’s take a look here at some different payment strategies, different amounts, and see how long it will take me to pay off my loan. Remember, one of my goals for the year is to pay off at least half of my car loan. So let’s see here, what are the basics of the loan:

Principal Balance (01/30/2013): $21,790.65

Interest Rate: 4.99%

Payment: $471.15 a month

So, as of today there are 49 payments remaining on the loan if I do nothing to pay it off early. Yikes, four years. That’s nothing to sneeze about. What’s even worse is the total amount of interest I will have paid on the loan: $3,500! That’s no small sum of money to someone like me. I’m still at the point where that can actually make a huge difference in my Net Worth. So, let’s do a quick calculation to see how the term will change if I up the payment to $571.15 a month:

New Term: 40 Months

So, by applying an additional $100 a month, I just decreased my payoff time on the loan by 9 months. Now let’s see what happens if I throw $300 at the problem to try to knock it down even more.

New Term: 29 Months

Wow. So, I’m not quite doubling my payment but by adding $300 a month to the payment, cash I have sitting around, I can 100% pay this off in 29 months. That’s a pretty damn good deal if you ask me!

As you can tell, having to pay nearly $500 a month ($5,652 a year or $34,788.23 if invested at 6% every month over the same term as the loan) absolutely kills me. It kills me to the point that even though I LOVE my car (an Acura RDX that is obscenely nice and reliable), I just can’t stand paying so much each month and putting my financial future in such jeopardy. I mean, I can AFFORD to spend this much on a car each month. However, I definitely do not enjoy doing this. I’d much rather be pouring this into my Vanguard account or be building up my Dividend Empire. Alas, I’m trapped in this consumer cycle and will be for a while yet. If I can accomplish my goal of paying off half by the end of this year, then I think I’ll go out and buy a new (used) car with just cash and trade in value. If I can do that and get rid of my car payment by 2014, I’ll be a happy camper! Until next time everyone!

We have a new apartment!

Well, sort of.  The girlfriend and I signed a lease at an amazing place near to work which is going to change our living situation pretty significantly.  First off, the apartment is about $450 more expensive than our previous apartment.  However, now we will live in a much safer neighborhood (I won’t tell you how many times the police helicopter has shined its light on our building after a couple of gunshots) and it’s only four blocks away from work.  Considering that my car is a bit more of a gas guzzler than I’d like, this is a pretty substantial change.  This could save close toe $200 a month combined for myself and my girlfriend, plus all the extra calories we will burn off!

Second, the apartment doesn’t have mold!  It’s a two year old building that was built as high end condos.  When the real estate market fell through in LA, the condo market pretty much died.  Not wanting to lose their investment, the developers have decided to turn the property into apartments until the market is back up.  Eventually they will turn it back into condos, giving the current tenants dibs.  Truth be told, they’re more than nice enough to buy.  If the day comes, I might take the plunge.

This apartment does have a couple of negative qualities though.  At our last place, we only paid for electricity.  The water was free (no leak pun intended).  Here, we will be responsible for Water, Gas, and Electric.  That could add a bit much to the budget, although we currently budget for $150 a month in utilities, an amount that is WAY higher than what we have ever used.  Hopefully budgeting high here will prove to be a good move.  I have no idea what the costs for water and for gas are here in LA but I’ll put it this way: I probably need to cut down on the length of showers.

The other negative quality is the price, obviously.  Spending almost $1700 a month on a place you don’t own is nearly criminal.  But we don’t really have a choice.  This is going to force us to rebudget a bit although in actuality, it’s just going to force us to implement some long coming budget changes.  First and foremost, we’re going to be cutting down on going out to eat, even more than before.  Now that we will live just four blocks from work, we’ll go home everyday and make our own lunches.  Chances are we can save an extra couple hundred dollars a month doing this, giving us more wiggle room when it comes to savings or paying down our student (and car) loans.  While I will miss pizza, sushi, and really good indian food, I think the scale will appreciate the uptick in healthy home cooking.

Anyway, we’re going to be moving in to the new place on the 9th of February.  This is not too bad, especially since we leave for Hawaii in two days and will be gone all next weekend!  I’ll try to have some posts go up over the week but we’ll see!  Until next time!

The Art of Moving

Moving from one place to another, whether across the country or across the hall, is always a ridiculous experience.  And I should know, I’ve done both actually.  Right now, the girlfriend and I are in the process of packing up our apartment to move in temporarily with her parents, saving money for a few months before we set back out into an actual nice apartment.  At the same time, I was doing my taxes (I know, I’m like Ned Flanders) and the deduction for moving expenses came up.

So, I got to thinking about the costs of moving, how much it can cost and where are the areas you can really save some money.  Let’s look at a couple of the options I have for moving:

A.  Professional Movers:  We’re talking the licensed and bonded kind, have their own truck and perhaps even a webpage.  Definitely on Angie’s List.  The cost here?  $85/hr for two gentleman with a minimum of three hours.  Minimum Cost: $255

B.  The Not so professional movers: These guys, well, they don’t have a website.  Maybe they advertised on Craigslist or you got a “business” card from there earlier.  The point is, this is an underground, cash only operation.  So you’d expect the cost to be significantly less, right?  Not so much.  These guys cost $65/hr with the same minimum of three hours.  Minimum Cost: $195

C.  Uhaul and some friends: This is a pretty good option.  The Uhaul costs $50 for the day plus a charge per miles and filling up the tank.  Overall, this will be cheaper than either pro option.  Minimum Cost: $100

D.  Several Friends and someone’s truck: This is probably the cheapest option out of everything.  Realistically all you have to do is buy a 30 rack of beer and a couple of pizzas.  This will cost maybe $50 total.  If you buy nice beer.  Minimum Cost: $50

After careful consideration and the realization that I don’t know anyone in LA that owns a truck, I ended up settling on option C.  Yeah, Uhaul’s kind of suck and they are obscenely hard to drive (or fun, if you’re me) but at this point I don’t have another choice.  I’d rather save some money and do Uhaul than pay someone else to move my stuff around.  Especially the sketchy movers.  That definitely was not my idea of a good time.

On that note, I need to go put half of my belongings on craigslist!

I just broke my lease!

I just broke my lease and it feels amazing!  Mostly because I’m actually getting out of it without owing anything to my landlord, despite there being eight months remaining on the lease.  Am I magic?  Maybe.  Is my girlfriend a kick-ass attorney in addition to being a badass cook?  Absolutely.  I know this ventures off the normal path I go down but this is something that has been occupying my time for quite a while.

When the girlfriend and I moved into our new place, we really expected it to be a good solid apartment.  While it wasn’t in the best neighborhood of LA, it was a fairly well maintained building, had responsive management, and was fairly cheap for what we were getting.  Despite some of the downsides, we were really excited.  Then the rainy season started here in LA.

Waking up in the middle of the night to dripping, your first thought is usually that it’s a sink.  So you get up out of bed, walk with your eyes closed to the nearest sink and try to fix the faucet.  You then walk back to bed assuming you’ve done the job.  It was at the walking to the sink part that I realized the water was in the bedroom.  And there was a lot of it.  The girlfriend and I quickly woke up and turned into disaster experts.  By this I mean we grabbed all the plastic bins and towels we could find and hastily arranged them under where we thought the leak was.  At this point, we figured we had done the best we could and went back to sleep.

In the morning we alerted our landlord about the problem, who quickly dispatched the handyman (once the rain was going) to fix the problem.  At this point, things were OK in the apartment.  It was still fairly musty, suggesting some not so friendly mold, but there wasn’t any water anymore.  That is, until the 22nd of December.

Once again, the leak struck at night.  This time it was in a smaller area but way more water was coming down.  I decided that in order to keep it from spreading and to focus it on one spot, I’d drill a hole in the ceiling and then put a screw next to it, giving the water a path down to the bucket.  Holy cow!  An actual stream of water came out and went on four just under thirty seconds.  After another day, the leak had finally stopped.  Over five gallons of water had leaked from our ceiling.

At this point, we were livid.  It obviously wasn’t fixed and there was a whole lot of water that had been up in our ceiling.  That meant one thing: mold.  Ugh.

After a few weeks of going back and forth with the management company trying to get a mold inspection we finally gave up and told them we would like to be let out of our lease.  Now I’m not a landlord like Mr. Money Mustache but this is not something that ever happens.  And truth be told, I think it’s mostly the result of a bad situation combined with a great good cop bad cop routine (I will let you guess which one I was).

So, there you have it.  I’ll write in more detail later as to the process we went through with management in order to help other people out with this but in general, try to not get mad at management!  They’re just employee’s typically and will try reasonably hard (by law) to help you out.

Financial and Personal goals: 2013 edition

2012 was a pretty good year for me.  I had another successful year at the job and I was able to really reign in my budget and seriously improve my net worth.  Overall, I achieved many of the milestones I was gunning for when I started this blog.  Between my Vanguard account, my checking and my savings, I have my three month emergency fund pretty well set.  I’ve whittled my debt down to my student loans and my car loan.  I didn’t get my Net Worth to be positive but at this point, I have that firmly in my sights for 2013.  So, here are my goals for 2013!

1.  Positive Net Worth – That’s it, I’m going to make it!  I’m only about $11K away at this point and with the way I was knocking off my debt last year, I should be able to get this taken care of before too long.  Needless to say, I’m excited about this.

2.  Begin really saving for a house I’ve spoken about this before and while I’m still terrified of it a little bit, I definitely want to do it.  The thing holding me back at this point would be my lack of a down payment and the insane housing prices in LA.  Prices have started to go up like crazy here, to the tune of a 25% increase for some people in the last year.  I might have missed the bandwagon a bit which is one of the reasons I’m just saving to buy a house, not actually buy one.

3.  Pay off half or all of my car loan – This loan kills me.  It eats up a huge chunk of my income each month, way more than it should, because I didn’t heed my own car buying advice (more on this later).  If I pay an additional $400 a month, I should be able to pay it off in 27 months.  Who knows, if I get a bonus this year (fingers crossed!) I can apply it to this and really knock off a good chunk of it.  We’ll see!

4. Take better care of myself physically – I’ve really fallen off the work out and eat well wagon in the past few years.  CrossFit really got me back on track but since I left the gym I have had a hard time keeping up.  I definitely need to do this though, I can’t allow myself to get out of shape, sick, etc.  It’ll be a downward spiral for the rest of my life.  So, I need to apply the same discipline here as I do in my financial life.

Well, 2013 is going to be an exciting year.  Who knows what it really has in store but as long as I have goals and know where I am trying to go I can forge a path for myself.  Until next time everyone!  Have a great weekend!

Net Worth Update for a new year

It’s been a few months since I’ve written but I’m back!  Happy New Year, Festivus, Kwanza, etc to everyone.  I’m hoping that all my readers had a great end to 2012 and it wasn’t nearly as crazy busy as mine!  Between work, my new apartment, and the holidays, I nearly lost my mind.  Fortunately, my wallet didn’t suffer TOO much over this time.  With that said, let’s take a look at my Net Worth (Template courtesy of J. Money at Budgets are Sexy).

Net Worth

Overall, things have improved from September to December!  My net worth has gone by by almost $3.5K and we’re getting awfully close to the negative $10K threshold.  That would be a big step for me!  I started the year around negative $24K and with a potential increase in salary coming my way, I think I should be able get into the positive net worth area later this year!  Let’s break down the categories and see where I improved and where I can use more work:

Checking Account: A half decent improvement, it’s a bit more than I’d like to keep in my spending money.  Ideally, I’ll always keep this under $2000, moving the excess every month to either my ING or to my Vanguard.

Savings Accounts:  Yikes.  These guys took a bit of a hit as we bought some furniture and the Christmas season got into full tilt.  A trip to Texas for Thanksgiving with family also nicked it up a bit.  Hopefully this will be noticeably bigger by the end of 2013, as I have doubled the amount I intend to put away each month.

401K: This just keeps trucking away.  It’s already the biggest part of my net worth and I just upped my contribution for 2013, which will be matched by my company.  I’m set up reasonably aggressively in it but I’m not too worried about it.  It’s money I won’t be using for a while, so it can match the market for now.

Vanguard:  I’m reasonably happy with this and with Vanguard.  The progress here is good.  Not great but good.  Considering I didn’t even have this at the beginning of last year, I’ll consider this a victory.  A very, very small one.  Since I’m trying to move towards a positive Net Worth, I’ve double my monthly investment into here as well!

The Acura: This decline is to be expected.  I wish it wasn’t so under water but hopefully my loan will catch up faster than the depreciation can move.

Overall, my assets didn’t go up very much.  The depreciation of the Acura took out any of the real oomph I might have had.  Fortunately, I killed it in the debt reduction the past three months.  As of December 31, 2012 I am Credit Card Debt Free.  I’ve knocked my student loans and my car loan down a decent amount and will be contributing more to this after the first quarter is up.  For the next three months, the money formerly known as credit card payments will now go into the savings and the Vanguard fund.  I’d say that I’m making good progress on getting to a positive Net Worth.  Hopefully I can move this even further along in the coming months.

Tomorrow I’ll be posting my goals for 2013 in both my personal finance life and just my regular life.  If you have any suggestions, leave them here!