Hello, all. Hope today is going well for you guys.
I have made a few changes the past two days since I was in shock with the amount of loans I had. Also, I read an article about crazy things people did in order to pay off debt on makingsenseofcents.com (https://www.makingsenseofcents.com/2018/05/strategies-to-pay-off-debt.html). After reading this article, I realized how little effort I was putting in towards my finances. I was inspired.
One thing I started doing was to reduce the number of times I was going out to cafes for my study sessions. My friend and I started going to different coffee shops every weekday in order to work on our projects ever since summer started. However, I decided that I have enough Korean instant coffee sticks at home, so I cleaned out my table to have my own work space. I'm virtually saving around $5 everyday (not including the lunch money I would spend since we would stay out for the entire day).
Another thing was actively searching and reading successful and established financial blogs. Somehow, I did not know where to start looking for these blogs, so I started listening to a podcast called Optimal Finance Daily. This is a podcast that narrates successful financial bloggers' posts everyday from Monday to Friday. By listening to this, I was able to not only learn about cool personal financial facts but also discovered many financial bloggers that were out there. So now, I'm in the process of reading their posts to learn about other ways to increase my income.
Well, that's it for today. I feel like this post is mostly a report on what I've been doing today (like a diary) but the real reason for this blog is to track down my personal finances so that I can be more comfortable with these types of posts from now on. Cheers to me who's always trying to improve and you guys who are working hard to improve your financial situations!
Showing posts with label financial independence. Show all posts
Showing posts with label financial independence. Show all posts
Thursday, May 31, 2018
Wednesday, May 30, 2018
Student Loan
So... I finally signed into my fedloan servicing account. HAHAHA. Joke's on me, talking about personal finance when I didn't even know how much I owe.
Right now, I currently have an auto loan and student loans. Since I am responsible for making payments for my car at the moment, I am well aware of my situation with that. However, for my student loans, I have been putting them off because I was too scared to know. I don't know what it was back then (even a few weeks ago), and a part of me didn't want to check because I felt like I would be too stressed out about something that I can't pay off at the moment. But recently, something changed. I decided that if I'm going to take my personal finances seriously, that I need to face the facts, and I did.
As of right now, my student loan is $116,625.85😵 . And I have one more year to go till I graduate! OH HO HO. Now that I checked my debt amount, I'm surprised about how not-stressed out I am about this. I'm in shock, yes, but not stressed out.
This puts everything in a different perspective. I've been slacking off lately with my money and this number really makes me think about what situation I'm in and how much effort I need to put in. In one of the posts, I mentioned that my goal was to pay my student loans off by 2021.
Okay, I CAN DO THIS. I believe in myself. I have 4 years to go now, and I will make this work. I'm going to brainstorm tonight.
Right now, I currently have an auto loan and student loans. Since I am responsible for making payments for my car at the moment, I am well aware of my situation with that. However, for my student loans, I have been putting them off because I was too scared to know. I don't know what it was back then (even a few weeks ago), and a part of me didn't want to check because I felt like I would be too stressed out about something that I can't pay off at the moment. But recently, something changed. I decided that if I'm going to take my personal finances seriously, that I need to face the facts, and I did.
As of right now, my student loan is $116,625.85😵 . And I have one more year to go till I graduate! OH HO HO. Now that I checked my debt amount, I'm surprised about how not-stressed out I am about this. I'm in shock, yes, but not stressed out.
This puts everything in a different perspective. I've been slacking off lately with my money and this number really makes me think about what situation I'm in and how much effort I need to put in. In one of the posts, I mentioned that my goal was to pay my student loans off by 2021.
Okay, I CAN DO THIS. I believe in myself. I have 4 years to go now, and I will make this work. I'm going to brainstorm tonight.
Tuesday, May 29, 2018
More Financially Conscious
I slipped with my receipt journal. However, after doing it for a month, I became more aware of my financial situation. I noticed things that I would've missed before and I put more effort into reducing the unnecessary expenses with the things I now notice. So what are they?
1. Eating out.
Don't get me wrong, I still eat out a lot. However, my choice of places I go to or the selection of the dish that I order is totally different. If I am eating out, I go to places where I wouldn't use over $8 most of the time. If I end up going to a restaurant with more expensive dishes, then I try to go for an appetizer (since my portion is small) or pick something that is on the cheaper side.
2. Coffee.
Once again, I still go to coffee shops most days out of the week since my apartment is packed with moving boxes (temporarilyy staying here) and I can't focus in this mess. So I go to coffee shops to get my daily work done. This means $$$ on my drinks. So what I started doing is to get drip coffee, which tends to be the cheapest drink at a cafe. I love the sweet lattes, which makes the whole converting process a bit challenging, but regular coffee is better for my health anyways.
3. Clearance section.
Whenever I go grocery shopping or buy necessities, I go to the clearance section first to check if they have the items that I need. Now, this only works when I write down a list of things that I need before going to stores. Otherwise, I will be going through the section and grabbing many things I don't need.
4. Clothes.
Since I'm moving, I went through all my clothes and piled up the clothing items that I don't wear anymore. Then I took them to a second hand clothing store and sold whatever I could and donated the rest. Another thing I do is to go to an actual retail store to buy clothes and check out the clearance section. As you guys know, retail stores are struggling with sales so they have a lot more deals going on and they have different sales than their online stores. Sometimes, the online stores have cheaper deals (which is why I always check before I buy anything), but I usually find cheaper things at an actual store.
I still have a lot of work to do for fixing my financial habits but at this point, I decided that it will be a slow working process. Thank you guys for reading this post and cheers to your efforts for your financial goals.
1. Eating out.
Don't get me wrong, I still eat out a lot. However, my choice of places I go to or the selection of the dish that I order is totally different. If I am eating out, I go to places where I wouldn't use over $8 most of the time. If I end up going to a restaurant with more expensive dishes, then I try to go for an appetizer (since my portion is small) or pick something that is on the cheaper side.
2. Coffee.
Once again, I still go to coffee shops most days out of the week since my apartment is packed with moving boxes (temporarilyy staying here) and I can't focus in this mess. So I go to coffee shops to get my daily work done. This means $$$ on my drinks. So what I started doing is to get drip coffee, which tends to be the cheapest drink at a cafe. I love the sweet lattes, which makes the whole converting process a bit challenging, but regular coffee is better for my health anyways.
3. Clearance section.
Whenever I go grocery shopping or buy necessities, I go to the clearance section first to check if they have the items that I need. Now, this only works when I write down a list of things that I need before going to stores. Otherwise, I will be going through the section and grabbing many things I don't need.
4. Clothes.
Since I'm moving, I went through all my clothes and piled up the clothing items that I don't wear anymore. Then I took them to a second hand clothing store and sold whatever I could and donated the rest. Another thing I do is to go to an actual retail store to buy clothes and check out the clearance section. As you guys know, retail stores are struggling with sales so they have a lot more deals going on and they have different sales than their online stores. Sometimes, the online stores have cheaper deals (which is why I always check before I buy anything), but I usually find cheaper things at an actual store.
I still have a lot of work to do for fixing my financial habits but at this point, I decided that it will be a slow working process. Thank you guys for reading this post and cheers to your efforts for your financial goals.
Wednesday, May 16, 2018
Moving with Little Money
School's over and the moving season has officially started for those in college/universities/etc. I was lucky enough to not have to move for the past 3 years but now my time's up. I will be out of the country before my lease ends so I am in the process of moving my stuff into my friend's apartment.
Here are a few things I am doing to save money on moving:
1. Figure out your moving car situation. If you own a truck/minivan, that's amazing. Borrow your friend's car and move your stuff and treat your friend out. Or, if you have a friend who is also moving, then you guys can rent a truck together and split the cost. Even if it's only $20 to rent a u-haul, once you add up all the miles, insurance, and gas, they add up. So consider asking a friend before you move.
2. Boxes. I know it sounds very weird, but I usually ask retail stores for boxes. I used to work at one, so I know that they have many boxes stacked up somewhere waiting to be thrown out. Another trick I do is to cut amazon shipping boxes cleanly and save them in storage so that I can use them in the future. Also, don't throw away your boxes just because you're done moving, because from my experience of frequent moving, you will regret throwing them away. This is good for both the environment and your wallet.
3. Lock up your car/truck/minivan. I have heard of my friends' getting stolen when they left the truck open. Now if you are in a good neighborhood, this will not be a problem but if you are not, then it would be best to secure the car.
Another piece of advice I have: if you have the option, move things slowly. This does not particularly help with the financial aspect of moving, but this will definitely save you energy and make the moving process easier. Since I am not limited to a timeline, I am moving all of my stuff over a week so I can do little by little and not get burnt out in the desert.
Well, once I'm done with moving and start apartment hunting, I will update posts on moving and apartment hunting. If you are moving, hope you guys don't sweat too much. Cheers!
Here are a few things I am doing to save money on moving:
1. Figure out your moving car situation. If you own a truck/minivan, that's amazing. Borrow your friend's car and move your stuff and treat your friend out. Or, if you have a friend who is also moving, then you guys can rent a truck together and split the cost. Even if it's only $20 to rent a u-haul, once you add up all the miles, insurance, and gas, they add up. So consider asking a friend before you move.
2. Boxes. I know it sounds very weird, but I usually ask retail stores for boxes. I used to work at one, so I know that they have many boxes stacked up somewhere waiting to be thrown out. Another trick I do is to cut amazon shipping boxes cleanly and save them in storage so that I can use them in the future. Also, don't throw away your boxes just because you're done moving, because from my experience of frequent moving, you will regret throwing them away. This is good for both the environment and your wallet.
3. Lock up your car/truck/minivan. I have heard of my friends' getting stolen when they left the truck open. Now if you are in a good neighborhood, this will not be a problem but if you are not, then it would be best to secure the car.
Another piece of advice I have: if you have the option, move things slowly. This does not particularly help with the financial aspect of moving, but this will definitely save you energy and make the moving process easier. Since I am not limited to a timeline, I am moving all of my stuff over a week so I can do little by little and not get burnt out in the desert.
Well, once I'm done with moving and start apartment hunting, I will update posts on moving and apartment hunting. If you are moving, hope you guys don't sweat too much. Cheers!
Tuesday, May 15, 2018
My Financial Goals
So what exactly are my financial goals? I can't believe I've never talked about my goals on here when I started this blog.
Here are my long term goals:
1. Retire by 2027 or have the freedom of retiring in 2027 (I might choose not to).
2. Pay off my student loans by 2021.
3. Buy a condo/house by 2023.
Here are my short term goals:
1. Have a side income source by 2019.
-Be creative and use my creativity. I can use my hobby and see if I can sell its products online. I will continue to do my blog and start a Youtube channel about my passion on my financial independence.
2. Pay my auto loan off by 2019.
-$3,000 is left in my auto loan. I am using my auto loan pay off worksheet to recalculate and make sure to finish it off so that I won't have to worry about it by the time I graduate.
3. Save $1,000 and have an emergency fund of $1,000 by the end of 2018.
-Start saving $25 every week and increase the amount I am saving each month.
I added details on the short term goals so that I really follow my steps to reach these goals. Now that I actually wrote them out, I will revisit these goals in August and re-evaluate. It will be a fun and challenging journey and I am looking forward to see how far I can go. Why don't you guys write what your financial goals are so we can work towards them together. Cheers to our financial independence!
Here are my long term goals:
1. Retire by 2027 or have the freedom of retiring in 2027 (I might choose not to).
2. Pay off my student loans by 2021.
3. Buy a condo/house by 2023.
Here are my short term goals:
1. Have a side income source by 2019.
-Be creative and use my creativity. I can use my hobby and see if I can sell its products online. I will continue to do my blog and start a Youtube channel about my passion on my financial independence.
2. Pay my auto loan off by 2019.
-$3,000 is left in my auto loan. I am using my auto loan pay off worksheet to recalculate and make sure to finish it off so that I won't have to worry about it by the time I graduate.
3. Save $1,000 and have an emergency fund of $1,000 by the end of 2018.
-Start saving $25 every week and increase the amount I am saving each month.
I added details on the short term goals so that I really follow my steps to reach these goals. Now that I actually wrote them out, I will revisit these goals in August and re-evaluate. It will be a fun and challenging journey and I am looking forward to see how far I can go. Why don't you guys write what your financial goals are so we can work towards them together. Cheers to our financial independence!
Thursday, April 19, 2018
Tax Day (give me my money back!)
It's been only 3 years since I started doing my own tax. I am not even sure how I did my first one, I don't even know where the report is. I always use a guidance program for tax report, particularly turbotax simply because that was the only program I knew about.
After the last year's tax report, I'm starting to realize the importance of keeping all my records with me, specifically my receipts. It has been difficult for me to estimate how much I spent for medical and educational purposes. Since it has been only recent that I started keeping track of my expenses, I had to travel back to 2017 to realize where I spent my money on.
First, I called several places, especially medical offices for the record of payments. It was somewhat difficult to track things down because I have been to so many different medical offices last year but it was doable (I'm so glad that I'm doing my receipt journal since I need to keep track of things). I went to pharmacy and showed my ID to get the record of last year's medications and payments. I called my insurance to get a report of last year's records.
Then, all the forms. I put all the forms together in a file organizer and have them together so I have an access to the forms I need for tax report.
The report. I would say that turbotax made it easy for me to follow the steps (although I'm not sure if I'm doing it right). So it took me about 3 hours to finish the report. I did the PLUS option since I wanted to be able to access my report in the future. I also noticed that if you use Ebates and haven't started using any tax report services, you should look into other options since they offer a pretty good return rate.
Anyways, one of the things I will definitely do in the future is to hire an accountant to check my taxes. I was listening to a podcast episode called 'How to Optimize Your Taxes and Make the System Work for You with Shane Mason' from Journey to Launch by Jamila Souffrant. Although the episode itself was not that relevant to my tax situation, but it was still nice to learn more about taxes and that there are actually good accountants out there (I had a horrible experience with my mother's tax accountant in the past). So when I actually get to the point where I can afford a personal accountant, I would like to learn about more about taxes and how shitty of a job I've been doing with my taxes, haha.
So this year's tax season is over for all of us and I'm glad it is. I will not look forward to doing it again next year but I am excited about improvements I will make next year and learning about taxes along the way. Cheers to those of you guys who waited till the last day to do the taxes just like me and we will do a better job next year!
After the last year's tax report, I'm starting to realize the importance of keeping all my records with me, specifically my receipts. It has been difficult for me to estimate how much I spent for medical and educational purposes. Since it has been only recent that I started keeping track of my expenses, I had to travel back to 2017 to realize where I spent my money on.
First, I called several places, especially medical offices for the record of payments. It was somewhat difficult to track things down because I have been to so many different medical offices last year but it was doable (I'm so glad that I'm doing my receipt journal since I need to keep track of things). I went to pharmacy and showed my ID to get the record of last year's medications and payments. I called my insurance to get a report of last year's records.
Then, all the forms. I put all the forms together in a file organizer and have them together so I have an access to the forms I need for tax report.
The report. I would say that turbotax made it easy for me to follow the steps (although I'm not sure if I'm doing it right). So it took me about 3 hours to finish the report. I did the PLUS option since I wanted to be able to access my report in the future. I also noticed that if you use Ebates and haven't started using any tax report services, you should look into other options since they offer a pretty good return rate.
Anyways, one of the things I will definitely do in the future is to hire an accountant to check my taxes. I was listening to a podcast episode called 'How to Optimize Your Taxes and Make the System Work for You with Shane Mason' from Journey to Launch by Jamila Souffrant. Although the episode itself was not that relevant to my tax situation, but it was still nice to learn more about taxes and that there are actually good accountants out there (I had a horrible experience with my mother's tax accountant in the past). So when I actually get to the point where I can afford a personal accountant, I would like to learn about more about taxes and how shitty of a job I've been doing with my taxes, haha.
So this year's tax season is over for all of us and I'm glad it is. I will not look forward to doing it again next year but I am excited about improvements I will make next year and learning about taxes along the way. Cheers to those of you guys who waited till the last day to do the taxes just like me and we will do a better job next year!
Wednesday, April 18, 2018
Trapped
But it's okay. It's okay that I spent some time and money with my friends before we go into the real world. It's okay that I didn't feel like listening to educational daily Podcasts for my personal finance. It's okay that I stopped recording my finance journey on this blog. It's okay.
As long as I get back on track.
One of the things I have a tendency of doing is being too harsh on myself when I make a mistake and giving something up altogether. So this time, I will not do that. I will give myself a break so I can get back on my path to my financial independence.
Cheers to those of you guys who are struggling like me and we will get there.
Sunday, April 8, 2018
Unsubscribing from All Those Shopping E-mails
Promotional e-mails. I don't really get influenced by them since I don't check my other e-mail too often (If these e-mails were linked to my daily e-mail, I probably would spend a lot more money on online shopping). But it is quite annoying to see them pile up in my e-mail and make the unread e-mail count to be over 1,000 (my fault too cause I never delete them). I already went though a cycle of unsubscribing to these e-mails over one year ago and it was time for me to do it again. Some of them were never unsubscribed to although I had requested it (or they would start sending e-mails after a month) and I found that I had signed up to numerous online shopping websites within the past year (tsk, tsk...).
Anyways, it is quite a simple process to unsubscribe from all these shopping websites. The only hindrance is that, it's very time-consuming to go through all of them. Usually, if you click on the e-mail and scroll all the way down to the bottom, you will see a tiny, a very tiny, word "unsubscribe". Here are some examples:
No offense to Colourpop and LuLu's (I love their websites and products), but do you guys see how tiny the unsubscribe buttons are? That's usually the case. Once you click on them, some websites automatically unsubscribe you and some websites require you to take a few extra steps to be unsubscribed. Some of the websites are confusing, so make sure to read carefully before selecting unsubscribe. Some of them really don't want you to be free from their bombarding e-mails.
It took me a good 30 minutes to unsubscribe from all of them and I shall be free from them (for awhile). This will not only clear up your e-mail but also help you reduce the amount of time spent on shopping websites (aka less shopping).
Cheers to saving time and money!
E-mail: bchoisg1@gmail.com
Youtube: BreezyChoice
Instagram: breezychoice1
Saturday, April 7, 2018
Vacation Time! Cheap Flights
Hello, everyone. Summer break is coming up for you students and some of you guys are probably planning a trip or trips to go on during break. Well, for me, rather than a vacation, I have a rotation in South Korea so I will be going there this summer.
I actively started looking for a plane ticket 3 weeks ago although the rotation dates were decided a long time ago. My mom has been bothering me about this for awhile but I didn't buy the tickets until today. There are two reasons for this.
First, I am lazy, haha. I'm lazy, especially concerning things that my parents bother me about. It's just something about parents, when my parents tell me to do something, then I don't wanna do it. They have gotten better about bothering me and trust me to do my own thing as I got older, but they still worry.
Second, I learned that flights are at their cheapest 3 months before your flight date. I was planning to leave either in May or June so I waited until last month to search for my tickets.
While I was looking for my tickets, I selected certain days out of the week to book my flights. This is another thing I learned from a Business Insider video on how to get cheap flights. I selected Wednesday for departing and Friday for returning. Usually, Tuesdays and Wednesdays are the cheapest days to get plane tickets. The next are Thursdays and Saturdays. I had to choose Friday for my return date because I had no choice. I also found an article which talks about what dates are the cheapest to fly on (this article also has extra information).
Another thing I did for finding cheap plane tickets was to use Google flights. This is actually really neat. It makes my search so simple yet effective. You search for a flight and a really cool function they have is "track prices". If you were looking at certain flight tickets and want to keep an eye on the price, you simply click on "track prices" and they automatically send you an e-mail every time there is a price change. Actually, when I decided to purchase my tickets, the price went up by $300 right after I had logged in a few days prior. So I went to my e-mail and checked how price changes had been, and I knew that they would lower the price in a few days (I was right, luckily). I kept checking my e-mails and when I saw that there was a price change, I went ahead and purchased my tickets. I saved $300, thanks to Google flights.
Although this does not apply to me yet since I haven't accumulated enough mileage points, I highly recommend that you guys try to use one airline for rewards. Or you can use multiple airlines, but make sure that they are partners so you can use your rewards points. I had to fly long flights ever since I was young and my parents would always look for the cheapest prices instead of saving my miles by sticking with one airline or its partner airlines (I would have so many points saved up if it wasn't for this). So please be smart!
Anyways, hope you guys are excited to plan fun trips over the summer. Although I'm traveling to do some schoolwork, I'm grateful that I will have an opportunity to travel to South Korea. Cheers!
E-mail: bchoisg1@gmail.com
Youtube: BreezyChoice
Instagram: breezychoice1
Friday, April 6, 2018
Financial Mistakes I'm Making
As much as I try to improve my personal finance, I still make so many mistakes.
Here are a few:
1. Savings account: remember how I did a research on savings accounts? I still haven't made my savings account. Here is my thought process. I currently don't work and don't have direct deposits set up to my checking account. The bank I'm trying to open the savings account with has a deal where they give you $300 for opening up a savings account if you have a direct deposit set up with them. So that's why I didn't make one because at the time, I was debating if I should go back to my part time job or not. But I decided not to (or should I????). Then I got lazy and here I am, still not saving. I shall do this tomorrow.
2. Tax report: I have been planning to do my tax report way ahead of time but I only started yesterday. I'm usually not this bad with my tax report but I am being lazy this year! I don't know what it is... I guess I wanted to research more about taxes before I started doing mine to ensure I'm not making any mistakes on mine, but now that I kinda studied (aka listening to one-hour-long podcasts about taxes), I don't think I know anything more about my taxes (the podcast episode didn't talk much about filing tax reports as a student). I guess I will finish this this week too.
3. Coffee, tea, and other beverages: ahhhhhhh!!!!!!!! This is the point I struggle the most with. I hate using tumblers because it's hard to see if they are clean or not, it's hard to clean them, I hate when they stain and when they smell, I hate carrying them around, and even if I finish everything in there and put it in my backpack, the chance of it spilling something in my backpack is high....The list goes on! I actually tried to carry a mug around but not having a lid became a problem in my car. Some day, I will find THE perfect tumbler, but until then, I'm going to struggle with this. Another thing is that my boyfriend and I enjoy spending time at cafes. We love getting a cup of coffee at a quiet cafe we go to and spend time together studying. I'm going to try to limit this to 3 times a week so we don't spend much money on this anymore.
4. Receipts: I must admit, I hate looking at my bank account especially when I'm not making any money and am only spending it. This is why I haven't organized my receipts every day. I usually wait 3-4 days and then do them all. I'm kind of getting better at checking my bank account balance though...
Excuses, excuses, excuses. But hey, I started somewhere and I'm aware of my mistakes. So now, the next step is to improve myself. I can do it. What are some of the financial mistakes you make everyday and how are you trying to improve them? Let me know, please, so I can learn from you guys. Anyways, cheers to all of you guys who are working your asses off to achieve your financial goals and we can do this!
Email: bchoisg1@gmail.com
Youtube: BreezyChoice
Instagram: breezychoice1
Saturday, March 24, 2018
My Auto Loan
It's been almost 4 years since I got my car. According to the plan I had when I first purchased this car, I was supposed to be done with the payments this May. But... I don't think it's going to happen. I was traveling a lot every year and my trip to Italy last year wrecked my finances. Now that the last year of my graduate program is nearing (aka I won't be able to work at all), I'm kinda getting nervous about still having to pay a large amount of money every month.
Because of this, I made my own auto loan pay off sheet so that I would be able to keep track of my payments and stay close to my goal timeline. I'm still going to shoot for my original plan of paying everything off in May. In front of each "2018", I'm writing in the months of the year, so please fill them out according to your plan.
Here are things I learned for the past 4 years by making payments (must read the last one!):
1. Refinance.
I didn't learn about this until later but there is a minimum amount of debt you have to have in order to apply for a refinance. I always considered refinancing my loan but got too lazy with it. By the time I was looking for a refinancing opportunity, they couldn't offer me anything because the minimum amount of auto loans you had to have was $5,000. So look into your loan contract and consider refinancing it to get a better interest rate.
2. Negotiate.
When I went to my bank, I was going to transfer my auto loan to a federal credit union since I heard that they usually offer the lower interest rates and because my bank was not offering an interest rate that was lower than what I already had. BUT you can negotiate with a banker. When I told the banker that I was going to transfer my loan, she said that she would be able to look into something that would offer me a lower interest rate although it was not "officially" offered to everyone. So talk to them! (I wasn't able to get the refinance due to the low amount of debt that I had).
3. Transfer.
Just like refinancing, look for another option for your car loan. You can look into federal credit unions or another bank. There are many options out there that can offer you a better interest rate. Please research before you go in though, since applications can affect your credit score.
4. Learn: Regular Payment vs. Principal Payment.
There are many things I wished I had googled before I was at the end stage of my car loan. One of them is types of payments in loans. "Regular payment" is a regular payment you are supposed to pay and your regular payment pays off your interest first and then your actual loan. But your principal payment is the amount you actually borrowed and what your interest rate is based on (I didn't know about this until this week?!?).
For example, you owe me 100 apples and your interest rate is 5%, which means your interest is 5 apples the first month. You have to make a payment of 10 apples every month. If you make the regular payment, the 10 apples you pay goes towards your interest first, and then towards the 100 apples you borrowed. In this case, only 5 out of the 10 apples you pay are going towards your actual loan. So now, you owe me 95 apples with a 5% interest rate (which equates to 4.75 apples) for the next month. Got it?
Okay. Then what if you pay me 20 apples the first month instead of 10 apples? Then you are paying me the first month's interest and actual loan and the second month's interest and actual loan. So you paid me 5 interest apples and 5 actual loan apples, then, 4.75 interest apples and 5.25 actual loan apples. Another thing about this is that you don't have to make any payments until the third month.
But if you pay me 20 apples and pay the extra amount to the principal payment, then you are paying the first month's interest, 5 apples, and putting the rest into the actual loan, 15 apples. This leaves you with 85 apples that you owe me. The second month, you will owe me 85 apples with the interest being 4.25 apples. Although you made a payment with extra apples, you still have to pay the second month's payment since the extra was not applied to the next month's regular payment.
If that was too difficult to understand look at the pros and cons of paying extra into regular vs principal payments:
Regular payment:
-pro: you don't have to make a payment until you are actually due since you paid your next month's required payment
-con: you pay more interest overall
Principal Payment
-pro: you pay less interest overall
-con: you have to make monthly payments no matter how much you pay
5. Consider.
Refinancing and transferring your auto loan can affect your credit score. I'm not sure how much of an effect this has on your credit score. This is one post I found so far: https://www.supermoney.com/2016/12/refinancing-car-loan-hurt-credit-score/. I will do more research and write a post on it.
Once again, cheers to those of you guys who are as lost as me in this finance game and let's work hard towards our goals!
Because of this, I made my own auto loan pay off sheet so that I would be able to keep track of my payments and stay close to my goal timeline. I'm still going to shoot for my original plan of paying everything off in May. In front of each "2018", I'm writing in the months of the year, so please fill them out according to your plan.
Here are things I learned for the past 4 years by making payments (must read the last one!):
1. Refinance.
I didn't learn about this until later but there is a minimum amount of debt you have to have in order to apply for a refinance. I always considered refinancing my loan but got too lazy with it. By the time I was looking for a refinancing opportunity, they couldn't offer me anything because the minimum amount of auto loans you had to have was $5,000. So look into your loan contract and consider refinancing it to get a better interest rate.
2. Negotiate.
When I went to my bank, I was going to transfer my auto loan to a federal credit union since I heard that they usually offer the lower interest rates and because my bank was not offering an interest rate that was lower than what I already had. BUT you can negotiate with a banker. When I told the banker that I was going to transfer my loan, she said that she would be able to look into something that would offer me a lower interest rate although it was not "officially" offered to everyone. So talk to them! (I wasn't able to get the refinance due to the low amount of debt that I had).
3. Transfer.
Just like refinancing, look for another option for your car loan. You can look into federal credit unions or another bank. There are many options out there that can offer you a better interest rate. Please research before you go in though, since applications can affect your credit score.
4. Learn: Regular Payment vs. Principal Payment.
There are many things I wished I had googled before I was at the end stage of my car loan. One of them is types of payments in loans. "Regular payment" is a regular payment you are supposed to pay and your regular payment pays off your interest first and then your actual loan. But your principal payment is the amount you actually borrowed and what your interest rate is based on (I didn't know about this until this week?!?).
For example, you owe me 100 apples and your interest rate is 5%, which means your interest is 5 apples the first month. You have to make a payment of 10 apples every month. If you make the regular payment, the 10 apples you pay goes towards your interest first, and then towards the 100 apples you borrowed. In this case, only 5 out of the 10 apples you pay are going towards your actual loan. So now, you owe me 95 apples with a 5% interest rate (which equates to 4.75 apples) for the next month. Got it?
Okay. Then what if you pay me 20 apples the first month instead of 10 apples? Then you are paying me the first month's interest and actual loan and the second month's interest and actual loan. So you paid me 5 interest apples and 5 actual loan apples, then, 4.75 interest apples and 5.25 actual loan apples. Another thing about this is that you don't have to make any payments until the third month.
But if you pay me 20 apples and pay the extra amount to the principal payment, then you are paying the first month's interest, 5 apples, and putting the rest into the actual loan, 15 apples. This leaves you with 85 apples that you owe me. The second month, you will owe me 85 apples with the interest being 4.25 apples. Although you made a payment with extra apples, you still have to pay the second month's payment since the extra was not applied to the next month's regular payment.
If that was too difficult to understand look at the pros and cons of paying extra into regular vs principal payments:
Regular payment:
-pro: you don't have to make a payment until you are actually due since you paid your next month's required payment
-con: you pay more interest overall
Principal Payment
-pro: you pay less interest overall
-con: you have to make monthly payments no matter how much you pay
5. Consider.
Refinancing and transferring your auto loan can affect your credit score. I'm not sure how much of an effect this has on your credit score. This is one post I found so far: https://www.supermoney.com/2016/12/refinancing-car-loan-hurt-credit-score/. I will do more research and write a post on it.
Once again, cheers to those of you guys who are as lost as me in this finance game and let's work hard towards our goals!
Thursday, March 15, 2018
Receipt Journal Update (1 week later)
It has been over a week since I started my receipt journal. Not going to lie, even a simple thing like gluing your receipts on a notebook was hard to keep up with. There were days I forgot to do so and had to do two days worth of receipts. 56 more days to go (takes 66 days to build a habit) to be comfortable with this.
Warning: my handwriting and organization skills are not the best in the world. But here is a photo of my journal.
Excuse me for all the blurred out parts. I don't want to give out any private information and I am super paranoid about that kind of stuff so I had to do what made me feel comfortable.
So as you can see it's simple. This is the first step towards my financial independence. This is it! My daily journal. I didn't include how much money I have left in my bank account either (more like I forgot to), which seems a bit stupid now that I think about it (I will include this from now).
Then I organize this into an excel every Saturday. Like this:
Wow, I spent a lot of money this past week (sad all over again). I will work on reducing my shopping money.
Now, the excel spreadsheet provides several pre-made templates on budgeting, so feel free to use them. I wanted to start my own and customize it later.
It feels like I have a long way ahead of me, but hey, I've already taken the first step. Cheers to everyone and let's buckle down on the buck!
Subscribe to:
Posts (Atom)