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Poorer Than You is on Hiatus

With a heavy, conflicted heart full of mixed feelings, I’m announcing that this blog is going on an indefinite hiatus. And no, it’s not an April Fools’ joke this time – even though it turned out to be true for a while last time!

Yes, I get that the timing is unfortunate and that some of you will still believe that this is an April Fools’ joke. But that’s the reason I’m publishing this post today (March 31st), to dispel most of the doubt regarding the legitimacy of this. And those of you who still believe this to be a prank, well, you’ll see when no new posts go up, unfortunately.

This is all happening because I am starting a new job, one where writing for Poorer Than You would be a conflict of interest. It was not an easy decision to take the job given this condition, but I did think long and hard about what I want and need in life, and made the decision to sacrifice PTY for my career. It’s somewhat funny and a little ironic – PTY is definitely the one thing I can point to and say “that is what launched my career,” and now, it isn’t allowed to help me any more. But sometimes, that is how life goes.

Thankfully, the archives of PTY will remain online – so you will be able to browse all of the old posts, articles, and net worth updates. There’s some really great stuff in there, so I hope while you’re here reading this, you’ll poke around (via the categories in the left sidebar).

As a part of the hiatus, comment posting will be turned off. This is because it would also be a conflict of interest for me to reply to comments on the blog and answer questions. And I would really hate for someone to post a question and wait forever for an answer that I’m not allowed to give, so I will simply be shutting comments off to prevent this. This, perhaps, is the saddest part for me – I will truly miss the great comments and discussions this community engages in.

Will this blog ever come back? I truly don’t know. Probably? I can’t say what the future holds, but I do know this about myself: if it’s ever not a conflict of interest any more, then I will post again. When or whether that will ever happen is what’s unknown, though. If you want to be here for the possible resurgence, I recommend signing up for the email subscription feature with an email address you plan to keep checking for years to come. That way, if/when PTY has new posts, they will be emailed to you, so you’ll know when I’m back.

Take care of yourselves, read lots of other personal finance blogs while I’m gone, and be good to each other.

With <3,
Stephanie

Net Worth Update: February 2014

Prepare yourself for a lot of exclamation points, bold text, italics, and maybe even some ALL CAPS… because this is the most exciting Net Worth update in Poorer Than You history, and I’m super stoked about it. So forget about this intro… LET’S GET TO IT!!!

Change: +$7,456 or +136.33%

February Net Worth: $1,987

Net Worth Graph February 2014

YOU GUYS. LOOK AT IT! There’s a new line! A line that indicates the difference between negative and positive! AND MY NET WORTH LINE CROSSED THAT LINE! What, what, WHAT is this, I don’t even?!?

Stephanie, WHERE DID ALL THIS MONEY COME FROM?!?

The obvious one: the cash increase of over $8,000. Unfortunately I can’t actually provide much insight into this, as all I really feel comfortable saying is that some checks that were owed to me came in. And I cashed them. This filled up my Emergency Fund, most of my Wedding Fund, and even my regular savings goals for the time I’m expecting to be unemployed/underemployed.

I won $500 in Capital One 360’s “What are you #SAVING4” contest, just by tweeting a picture of my fiancé and myself, telling them I was saving up for our wedding. Haven’t I said that Capital One 360 is my favorite bank? LOVE IT. And that $500 will certainly be helpful for our wedding, so I’m quite a happy camper.

My car increased in value again. This is just one of those fluke things – some times of year, a 2004 Toyota Camry is just worth more than other times. I get the value from Kelley Blue Book every month, not from any “depreciation” method or anything like that – so it’s helpful to think of my car’s value like stock values: it goes up and down with the market.

Speaking of the stock market: I had a pretty good month there, in my retirement accounts anyway. Also bolstering that value is some cash that I put aside in a savings account. Remember when I used to put all my retirement savings in a savings account? (Yeah, that’s a link to a Net Worth Update from 2008. Old school.)

For the time being, that practice is back. With the whole “unemployment/underemployment” thing I’ve got going on right now, it seems too risky to put money directly into my Roth IRA, where it’ll be locked up. Putting it in a savings account “holding pattern” means I can get at it if I completely drain my emergency fund, or I can move it to my Roth once I get a job.

So you might be wondering why I keep writing it as “unemployed/underemployed.” The truth is, I’m actually not completely unemployed at the moment – just “underemployed” (working less than full time). I picked up a freelance project just last week (one that I’m super excited about, by the by), and I’m hunting some leads on more freelance work. All while interviewing and job hunting for full-time work. Not really a surprise, as I’m just not a person that can sit still without a project to work on for more than, uh, 2 seconds.

So about that “Positive Net Worth by September 2014” goal…

Yeah, so, back in October of 2012, I set a goal for myself to have a positive net worth by September 16th, 2014. I guess this update means that I, technically, have achieved that goal. Woohoo! Dance party!

But, you know, it probably only really counts if I can keep it positive through September. Or, if it does dip back down in the negatives (I am underemployed, after all), get it back up into the positive numbers again by that day in September. But whatever – this is a really good milestone on my financial journey, and I intend to continue my dance party.

Feel free to dance with me in the comments!

Also, if you’d like to see how I stack up against other personal finance bloggers, be sure to check out The Ultimate List of Blogger Net Worths over on Rockstar Finance!

How Much Should You Spend on Renting an Apartment?

Unfurnished Apt for Rent by turkeychik on flickr

True story: back in July, I got a notice that my rent was being raised. I’d lived in the apartment for almost two years, and they pulled this trick on me the previous year: raising my rent by $104/month.

The first time, I just accepted the rate increase. After all, I’d received a sign-on deal of “$50 off each month’s rent!” when I first moved in, so it only seemed like an additional $54/month rent increase (above the deal wearing off).

But after the second year, they wanted to raise it another $114/month! And actually, they offered an “alternative” as well: to install all new appliances in the apartment, and in doing so, raise the rent $141/month (thanks?).

Since the first rent increase, I’d taken some of the burden off myself by moving my boyfriend into the apartment and splitting the rent a bit. But with the additional rent increases, the question became:

Could we afford to spend an additional $1368-$1692 (total) on rent in 2014?

What about Buying?

In some cases, the adage that “you’re throwing money away when you rent” can actually be true. In other cases? Not so much. If you’ve got money saved up for a down payment, there’s only  one way to be sure whether buying or renting will save you money: run the numbers.

Don’t feel daunted by the idea of running the numbers, because The New York Times has a super handy-dandy Renting vs. Buying Calculator which can do most of the work for you!

Do a quick search on Zillow for a place that you would actually be interested in buying (be realistic), then enter the purchase price for that into the Times calculator, along with the rent on apartments you’re looking at (or your current rent, if you’re not shopping yet).

In my case? The calculator spit out a pretty clear answer:

“If you stay in your home for 5 years, renting is better. It will cost you $13,412 less than buying, an average savings of $2,682 each year.”

Ouch! $2,682 more per year – and that was based on a comparison to my raised-rent number for 2014! That means it would be an increase of $4,374 per year. Yeah… that’s not in the cards.

So if you’re like me, and you determine that renting is better than buying (for your situation), now how do you figure out how much you can afford to pay in rent?

Rules-of-Thumb for Calculating Rent Affordability

#1: The Rules Apartment Complexes Use: 33% of Gross Income, or Annual Income Divided by 40

If you’re just looking for a really quick calculation, something very general, these are the rules-of-thumb for you.

Method A: Just take the total you make in a month, before taxes or retirement contributions or anything is taken out of your paycheck, and multiply it by 0.33 to get the maximum rent you can afford. So if you make $50,000 a year:

($50,000 divided by 12 months) = $4,166.66 per month

$4,166.66 times 0.33 = $1375.00 per month in rent, maximum.

Method B: Take the total you make in a year and divide it by 40. In our $50,000/year salary example…

$50,000 divided by 40 = $1250.00 per month in rent, maximum.

I find that Method A tends to overestimate how much you can actually afford, for most people. So why use it? Because it’s the rule that some apartment complexes will use to check and see if you can afford the apartment (as far as they’re concerned). It’s what my last apartment used when I signed the lease, and there are plenty of other leasing companies that use this rule, as well.

So this rule is good for finding the very maximum amount of rent you can consider and hope to be approved for the apartment. But I can tell you that all things considered, $1375/month seems awfully high to me for someone making $50,000/year.

Method B is still a little high, but again, useful because you know an apartment complex might be using it as their formula for what you can afford. So if this is all the calculating you want to do, I recommend Method B. It’s easier math (fewer steps!) and it’s not as overly-optimistic as Method A.

#2: Debt-To-Income Front End Ratio: 28% of Gross Income

If you were buying a home instead of renting, this is one of the calculations that banks might use to come up with the mortgage payment you could afford. So it’s useful for our purposes – we’ll just substitute in “rent” where a mortgage would be!

But wait, there’s more! For this debt-to-income (DTI) “front end” calculation, that number would include homeowners insurance for anyone calculating it for a mortgage. So you should include renters insurance, instead. My own renters insurance costs me about $150/year, so feel free to steal that number as a baseline, if you don’t know what your renters insurance will cost you.

For our $50,000/year ($4,166.66/month) example:

$4,166.66/month times 0.28 = $1166.66 per month total rental costs

$1166.66/month minus $12.50/month renters insurance = $1145.16 per month in rent, maximum.

A pretty simple formula, and the resulting number seems much more appropriate for someone making $50,000/year. But can we find an even better formula?

#3: Debt-To-Income Back End Ratio: Total Debt Payments <36% of Gross Income

We touched on this calculation back when we had this same discussion about how much you should spend on a car. As I noted then, the problem with this calc is that if you apply Calc #2 (DTI Front End Ratio) as well, that leaves only 8% of your income for all debt payments other than housing. This still seems insane to me – are banks assuming no one ever has any student loans or a car payment that’s more than $100/month?

But let’s do the math with our $50,000/year earner example, just to see how it shakes out. To make things easy, we’ll use my exact numbers from my real life for the other debt payments:

$4,166.66/month times 0.36 =  $1500/month for all debt payments, including rent

$1500/month
- $194.02 (car payment for a used 2004 Camry)
- $284.52 (student loan payments)
- $12.50 (renters insurance)
- $6.61 (car property tax – yeah, that’s a thing I have to pay in Virginia)
——————–
$1002.35 per month in rent, maximum.

Does that sound reasonable to you? It might – depends completely on the region you’re living in. What it means is that where I’m living (northern Virginia, just outside of Washington, D.C.) you can’t get a studio or 1-bedroom apartment on $50,000/year (without a roommate, and using this calculation, of course).

It also means that a bank would probably not approve me for a mortgage around here, if I were making $50,000 or less, based on my other debts. But in another part of the country, that might be plenty for rent or mortgage payments.

If you’re using this formula, you’ll need to do a lot of adjusting for your own situation. For example, if you don’t have a car (and thus no car payment), but you rely on public transportation, you’ll want to include some or all of what you pay for public transit when you do the math.

And the winning formula is…

Personally, I like rule #2 (DTI Front End, 28% of gross income) the best. It’s a really simple calculation that gives you a realistic answer, fast. I think the formulas in #1 are too optimistic about how much a person can pay, which could leave you renting an apartment you can’t actually afford.

And while I like that #3 takes into account how much you are spending monthly on your other debts, I think that for most people it’ll end up being too restrictive. But, there’s hope for it still – if you adjust the percentage to something that give you a bit more leeway (40% of gross income for all debt repayments, maybe?), you might just find a number that suits you better.

(Photo credit: turkeychik on flickr)

I Sold My Hair on Ebay

Do you ever look around your home, at all the varied things you own, and think “There’s just so much stuff here… I bet I could pare it down and that at least some of it would be worth some cash.”

Or maybe someone (like one of us crazy personal finance bloggers) said that you can pick up some extra cash unloading some of your unused junk on eBay. It’s a nice thought, right? Get rid of something you’re not using, pocket the cash.

Well, something along those lines happened to me. Sort of.

Warning: If the title of this post grossed you out, you’re probably not going to like the rest of what follows. Especially the fact that there are pictures. Don’t say I didn’t warn you!

Huh? What? You Sold WHAT on eBay?

My hair. See, what originally happened is that I decided to take my hair from long (three-quarters of the way down my back) to shortish (just below my ears) – and to donate, instead of discarding, the cut-off hair. I kept the sawed-off ponytail, with the intention of donating it to Locks of Love.

When I did a Google search to find out how to send my hair in, however, I found that there is some controversy out there regarding Locks of Love. Unable to pin down exactly the right place to donate my hair to (at that time), I started researching the alternative: selling it.

At first, I was a little discouraged. Though long enough to meet most requirements, my hair has what some websites designated as a “fatal flaw:” it’s curly. Straight hair is, according to many online guides to hair selling, the most sought-after and highly-priced type of hair.

But still, my hair met all of the other requirements for a good sale, namely:

  • Clean
  • Undyed
  • Long enough (10 inches or more)
  • Chemical free (in my case, completely free of harsh chemical use, since I practice no-shampoo washing)
  • Free of heat damage (I do not use hair dryers, curling irons, or straightening irons)
  • From a non-smoker who doesn’t take any drugs

So with my ponytail in hand, I logged on to make my first-ever eBay listing.

Actually Selling My Hair on eBay

First, I considered the fact that there are sites dedicated solely to the listing of hair for sale – sort of eBay or Craigslist specifically for hair. But these sites charge you money to list your hair, and since this isn’t likely to be something I do very often, I felt that the no-cost initial listing of eBay was the best bet.

I found this guide called “Selling Hair Facts” written and posted by Karen Shelton on a message board on HairBoutique.com. It’s quite comprehensive, and she won my heart by starting the post off with an explanation of my favorite O’Henry short story, “The Gift of the Magi.”

One of the things Karen Shelton’s post addressed was the risk of not getting paid for your hair, with some services. This is the reason I decided to use eBay and take only PayPal as payment, since PayPal offers some protection for sellers that you would not get by accepting a personal check or money order.

Another thing Shelton’s article pointed out was that hair with a “natural wave” in it might actually garner some real attention and cash, so I went for it.

I took several pictures of the ponytail of hair itself, next to a ruler (to demonstrate the length), one in indirect sunlight and one with the camera flash, to give a good idea of the color.

One thing that I also had was a picture (that didn’t show my face) of how the hair had looked on my head, immediately before I cut it. It was a coincidence that I even had the photo, but it worked out well -  I think people buying hair want to see it in its natural environment.

With these pictures, I wrote up a detailed description of my hair, its length, its color, and all the attributes that I listed about (undyed, no chemicals, etc.) and put it up on eBay with the title “11″ Ponytail of Honey Blonde Curly/Wavy Human Hair” and an opening bid of just $0.99.

Why 99 cents? Because it was an experiment, first and foremost. More than making money off it, I wanted to see how high it might go. There were a few bids in the first few days – getting the price up into the teens. I was pretty pleased with that – it seemed like it was at least going to be worth my while to have listed it, considering the hair itself was something I “got for free.” That’s the nice thing about selling your hair – it’s almost 100% pure profit!

There were a few people who had put the listing on their “watch list,” and for the next few days, nothing happened. Then suddenly, as my listing neared its end, the bids began to shoot up dramatically (nothing out of the ordinary for an online auction!).

The winning bid when it closed was $166.50! From that, $5.13 went to PayPal fees, and $5.34 for shipping via eBay’s partnership with the US Postal Service. So for my trouble of keeping the ponytail, photographing it, listing it, and shipping it (maybe two hours of work, tops?), I got a cool $156.03.

Lessons Learned

All-in-all, I was pretty happy with the experience. The only downside was that a few people in my personal life were grossed out by the concept – my boyfriend/now-fiancé was especially not happy about having the disembodied ponytail in the apartment!

The “catch” is that I can really only grow my hair long enough for this every two years or so. It’s actually been almost two years since this particular incident happened (took me a while to write about it, obviously!), so I could do it again soon, if I wanted. But you have to really want to cut your hair and sell it for this to work. Since my wedding is coming up later this year, that’s not a position I’m in right now.

But who knows, maybe as soon as the wedding is done, I’ll chop my ponytail off once again and sell it to recoup some wedding costs!

Net Worth Update: January 2014

I’m officially declaring this “The Most Topsy-Turvy Month Ever.” Why? Because even though the worth of my assets went down in several key categories, the reasons those decreased were not bad; and even though my total net worth increased this month, the reason it did so is bad. Welcome to Bizarro World, folks!

Change: +$1,117 or +16.96%

January Net Worth: -$5,469

January 2014 Net Worth Graph

The Good-Bad (Where I Lost Money)

My cash reserves went down by a staggering $3150 dollars in January. That’s because I finally paid out money for two things I’ve been saving up for: my upcoming vacation in Ireland (now paid in full!) and some wedding expenses. So no big deal there – I saved up the money, then used the saved money to pay for these things. Awesome.

My retirement accounts also lost just north of $500 over the month, but that really doesn’t bother me. The markets are down as a whole, so it’s not surprising. I’m in it for the long-haul when it comes to retirement, anyway, so a one month swing is not really a problem.

The Bad-Good (Where I Made Money)

It makes me extremely nervous and anxious to even write about this. It’s not that I did anything wrong – it’s just because it’s a very uncomfortable situation.

The “Other” line of my assets on my net worth balance sheet is now sitting at $4,465. Some of it is my Lending Club account, which grew a little over the month. Some of it is my fiancé’s half of the rent money, which I forgot to collect from him in January.  Those things are fine – good, even.

But the rest of that money is an uncashed check for my accrued PTO (Paid Time Off) from my job, because I was laid off at the end of the day this past Friday.

It’s tough. Obviously, I can’t say much about what happened, but I can say that I am still very emotionally raw. And being unemployed affects everything in my financial world: the wedding, my upcoming trip to Ireland, my Emergency Fund, my retirement savings, my “positive net worth by September” goal, my ability to make payment on my debts (student loans and car payment), my ability to make rent… it’s all in varying amounts of jeopardy in the foreseeable future.

But I’m trying to stay positive and, most of all, proactive. Here’s my current Emergency “I’ve Been Laid Off” Money Plan:

  1. Halt all wedding plans that include an outlay of money. I have some DIY projects I can work on that we already own the materials for, but anything that involves spending money? That’ll have to wait. I was about one day away from ordering my dress, even. The only thing I will make an exception for is anything surrounding the “legal” parts of the wedding – the marriage license/officiant – because the marriage is happening no matter what our money situation is!
  2. Halt all retirement savings (outside of a savings account). I have a high-yield online savings account specifically to catch money before depositing it into my Roth IRA. But putting money into the IRA itself would freeze up that cash, which I can’t risk right now. Still, I can put some money aside in the savings account, where it’s still perfectly “liquid.” When I get a new job, then I can make the transfer from the savings account to the actual IRA, if I haven’t used up that savings.
  3. No eating out, unless it’s a networking meal. Gonna have to cancel some dinner plans this week, because I need to stretch the money I have for an indefinite amount of time. But I will absolutely make an exception to take someone out for lunch or coffee to discuss my job hunt.
  4. Apply for Unemployment Insurance payments. I’m actually half done with this step – I started the application the day after I was let go. Just need to update my résumé and upload it.
  5. Make job-hunting my new full-time job. Not only does the Commonwealth of Virginia require that I do this to qualify for unemployment; it’s just common sense. My job right now is to find a new job.

Needless to say, if you know of a company looking for a spunky, energetic spreadsheet wizard with strong merchandise planning, company culture, and customer service experience, contact me.

Net Worth Update: December 2013

HERPY DEW BEER! (Translation: Happy New Year!) It’s been a whirlwind December (as it usually is), so I can hardly believe that it’s time for this month end/year end update already! You might remember from November’s update that I was worried about December possibly (probably!) being a down month. Let’s check in and see if that’s what happened:

Change: +$2,142 or +24.54%

December Net Worth: -$6,586

Net Worth Graph - December 2013

That’s pretty far from a “down month,” wouldn’t you say? Woohoo! Much of that gain comes from a bump in the value of my retirement accounts, but I’ll take it!

Also in December, the video game fundraising group (yes, that’s a thing) that I founded and organize raised $4134 for the organization charity: water, to provide clean water to people who need it in Cambodia and Ethiopia. So I’m feeling pretty good about that! I spent all the money in my “Charity” savings account on the fundraiser (mostly on supplies and food for the volunteers), and I still came out with a positive increase to my net worth? WIN WIN WIN!

8.5 months to go to get to my “Positive Net Worth” goal, and now $6,586 is the amount I need (or, I suppose, $6,586 + $1!). That’s about $775/month that I need in net worth increases to get there. Not too bad, I’d say – so long as this pesky wedding thing doesn’t cost me too much along the way.

Speaking of the wedding, based on our total budget and what we’ve spent so far, and what’s in our Wedding saving account as of now, we need to put aside another $1452.99 at this point (yeah, the 99 cents is really how the numbers came out!), and the goal is to have that money all set aside by April, so that’s $363.25/month between the two of us – totally do-able, I think.

$775.00/month in general net worth increase + $363.25/month in wedding savings (at least until April) = $1138.25/month that I need to squirrel away. I only averaged $1021.42/month in net worth increases in the months of 2013, so it might be a little tough to do… but then again, the wedding savings is between two of us, and only until April. So I’m optimistic that I’ll get it done.

Stay tuned, because I’ll do a Savings Snowball update soon, as well!

Questions? Critiques? Words of encouragement? Leave them in the comments!

Net Worth Update: November 2013

Happy Holidays! I’m in full-on holiday-crazy mode at work, my Christmas tree is up and decorated at home, and I’ve got an 18-pound turkey in my freezer (hey, it was $0.59/pound!), so we’re definitely due for an update on how my Net Worth came out in November.

Change: +$2,288 or +20.77%

November Net Worth: -$8,728

November 2013 Net Worth GraphWell, well, well! Would you look at that? The number might still be negative, but it’s up to four digits! We’re in the home stretch of my goal to get my net worth in the positive numbers by September 2014. Which is good news, since that’s only 9 months away!

Still, there are some things going on here that will affect my net worth in the coming months:

Retirement Savings

I’m happy to report the value of my retirement accounts came within $25 of $20,000 in November! That’s obviously subject to the whims of the stock market, so I can only be proud of those gains up to a point.

Still, it means it took me a year and two months to get my retirement funds from $10,000 to $20,000 – so now the goal will be to get to $30,000 within one year from now. Totally do-able, I think. Though it does mean I’ll be working on two challenges at once: Positive Net Worth by September, and $30,000 in Retirement by November. Thankfully, those two goals go hand-in-hand!

Cash Savings

The other large gain I made this month was in my cash accounts – so, savings for goals that are less than five years away. The largest gains were in the Wedding fund and my Travel fund. This is both good and bad, in a way: The reason I’m focusing on these two is that each has a large expenditure planned for 2014.

By January I will have to hand over all of my Travel savings for my upcoming international trip in March (care to guess where I’m headed?) and the Wedding savings will be drained pretty consistently as we approach the big day in August.

So my net worth gains in these categories are only temporary – but that’s okay. The whole point of saving up for travel and the wedding is so that I can spend on these things. It’ll just be a little psychologically painful to see the numbers go down.

I’m also draining my Charity savings account entirely in the month of December, as I do most years. I run a video game marathon fundraiser at the end of December, so whatever’s left in the account will be donated to that and to other causes I support. I don’t do all this donating in December for tax reasons (I do not have enough deductions to itemize my taxes, you see) – I just do it because that’s how I roll.

Basically, between paying for my trip, wedding expenses, the charity drive, and Christmas, I expect December to be a down month, net-worth-wise. Still, it’s exciting to see that I did manage to get it up above negative $10,000 this year!

Questions? Critiques? Words of encouragement? Leave them in the comments!

Net Worth Update: September-October 2013

The past two months have been rough for me – financially, and otherwise. I had to move under not-very-ideal circumstances, and money for the move itself was tight. As August came to a close, I made a prediction that my net worth could go down as much as $2000 total because of the ordeal. Here’s how that actually panned out:

September: +$92 or +0.85%
October: -$316 or -2.95%

Current Net Worth: -$11,016

October 2013 Net Worth Graph

So, negative $224 overall – which is, admittedly, about one-tenth of the damage I was expecting/fearing because of the move. And my original fears weren’t unfounded: we had a move a month early, thus paying rent on two apartments for the entire month of October (just to secure the new apartment), and we had to lay down another month’s rent in security deposit, without getting anything back from the old apartment (because the apartment only took a $100 security deposit from me in the first place). I was also terrified that we’d owe some huge amount in cleaning or repair fees to the old apartment, based on some bad reviews that have shown up online saying that happened to others that moved out of our old complex.

Thankfully that last bit didn’t happen, which accounts for about $1300 of myFr “miscalculation.” After my fiancé and I spent many hours cleaning the old apartment (I spent four full hours on just the oven and stove!) and repairing the few tiny dings in the walls, the apartment looked “better than any others I’ve seen this autumn!” according to the apartment rep who did our walk-through. PHEW! Relief-o-rama!

From now on, we’ll actually save a bit of money when it comes to rent (thank goodness!):
Savings, new rent vs. 2012-2013 rent: $14/month
Included utility (Water & Sewer) in new rent: $25/month
Savings in shorter commutes for both of us: $28/month
New lease length: 2 years
Total overall savings for the new apartment: $1608

That savings will cancel out the extra month’s rent we had to pay for October, with a little bit left over as real savings (sadly, only a little bit – rent is expensive in the Washington DC suburbs!).

The Wedding

(Don’t worry if weddings aren’t your thing – I’m only going to talk about the financial aspects now!)

We set a budget for the wedding ($4,000), which is approximately 14% of the national average for what a wedding costs. As with most things here on Poorer Than You, that’s part choice, part necessity. We’re paying for the wedding by ourselves, with no outside financial help.

Since we’re footing the bill, we’re keeping the budget low both because we don’t have much more money than that to spend on the occasion, and because we have other things in our lives that we want to give financial priority to. You can get a good idea about what those “other things” are for me in the Savings Snowball, below.

Since the engagement, we’ve set a date (the end of August, 2014) and paid in full for a venue and a few incidental expenses, leaving us with about half of the total budget left for everything that isn’t the venue. $2,000 for food, drinks, decor, the legal paperwork, music, fancy clothes, and whatever else.

I’m not going to lie: being on such a tight budget in such an expensive area has been a source of high stress these last few months. I feel much better now that we’ve found (and secured) a venue within our budget, but it still feels like there’s a long road ahead of us with a lot of potential pitfalls on the way.

Savings Snowball Update

Especially thanks to the upcoming wedding, I’ve spent some time re-evaluating my savings goals and priorities. I use a “Savings Snowball” method to organize my savings, which works like this:

You list out all of your debts (or goals, in my case) in a priority order, each with a minimum payment that you have to contribute each month. Then, you take any extra money you have each month, and throw it at the goal on the top of the list, until that goal is entirely eliminated.

Once the top goal is gone, you contribute everything you can into the next goal on the list, and so on and so forth, your monthly payments “snowballing” and growing as you move down the list.

Last time we checked in on my Savings Snowball in March, nothing much had changed, because I was still waffling back and forth on whether to put my Wedding Savings or my Lending Club investments at the top of the list. Of course at that time, I didn’t know I was less than 18 months away from wedding bells! The choice seems obvious now, of course, but I hadn’t made up my mind then.

Also, my fiancé and I had several long talks about long-term goals, savings, and finances (and I highly recommend all engaged couples do the same). This lead to me finding a few new goals I wanted to work toward, to add to my snowball.

So now-a-days, the snowball looks like so:

Name Goal Total Progress Monthly Payment
Weddings $4,000 $2,331 All that I can*
Emergency Fund $5,000 $459 $50
Retirement $5,000/year $4,428 $286
Future Car Fund $10,000 $830 $50
Next Apartment $2,400 $366 $52*
Travel Rolling $1719 $208
Charity Fund Rolling $275 $30

*There is an additional person contributing monthly money to this category now, so it’s actually “my monthly payment plus what my fiancé can throw at it, too!”

I also added a few new savings account that aren’t on this Snowball list, because they’re “rolling expenses” instead of a savings goals:

Car Maintenance. I found that I wasn’t anticipating repairs on my car well, and every time something went wrong with my car, I’d end up wiping out my Emergency Fund to pay for it! So in addition to the new goals on here, I’ve started moving $50/month into the new Car Maintenance account.

Gifts. I’m a gifter. It’s one of my Love Languages (no joke), so I have a tendency to go overboard and (especially at Christmas) spend a bit too much gifting to my friends and family. Rather than see this send my spending a major curveball, I finally set up a savings account for gifts, and am putting $100/month there for now (Christmas is coming awfully quickly!).

These two don’t get a space on the list, because they don’t have concrete numbers where they become “achieved,” so they can’t be snowballed. I suppose that’s true for Travel and Charity, as well, but if I get to the point where those two are at the top of the list, I’ll give them concrete numerical goals to fix that issue!

I plan to revisit the Savings Snowball in January, when some of the goal amounts will likely change with the new year. There will also be some changes to the Wedding goal, as we send payments off to vendors to pay for the darn thing!

Net Worth Update: April-August 2013

First, a correction: in the last update, I left off one little digit while calculating my net worth, and the final number came out totally wrong. Instead of what I reported, March really looked like this: +$2,148 or +12.81%.

Ahem – sorry about that, folks. Now back to our irregularly-scheduled catch-up update!

April: +$1,378 or 9.42%
May: +$346 or 2.61%
June: +$233 or 1.81%
July: +$1,334 or 10.53%
August: +$540 or 4.77%

TOTAL Change since March: +$3,831 or 26.20%

Net Worth Graph August 2013

Your eyes do no deceive you! That is indeed positive growth in all five months, culminating in a 26% increase since March. Woohoo!

But before we all put on our celebration hats (which we’re all going to do no matter what because September is my birthday), the bad news is coming…

September is going to suck (other than my birthday). Our apartment complex raised the rent (again) this year, and raised it right out of our price range this time. There will be more about that in future posts, but the short story is:

We went pleaded with our apartment office to work with us (got nowhere), then shopped around, found a lovely new place closer to work for both of us (at a lower price than our current rent) – but in order to secure it, we’ll need to rent it a whole month before our current lease runs out (so pay an extra month’s rent), and also cough up a month’s rent for a security deposit, too.

So if we’re very, very careful, my net worth update next month will be no more than a $2,000 drop. Yeah. There goes most of the progress since March.

Therefore, no updates on Savings Snowballs or my Quest to Reach a Positive Net Worth by September 2014 this time around. Those sorts of things will be best examined after I see where I stand at the end of September.

To end on a high note (because one must always sandwich bad news in between two pieces of good news): I’m getting married! The Boyfriend (henceforth “The Fiancé”) proposed back in July. So there will be at least a few wedding financial updates here, though probably not too many (I have no intention of turning this into a wedding blog).

Got any really good wedding-on-a-budget or moving-on-a-budget advice for me?

Check Your Credit Score and Credit Report Today, for Free!

April is one of the months that I have designated to check my credit report. Since you’re allowed (by law) a free credit report annually from each of the 3 credit reporting agencies, that gives you an opportunity to check one report every four months. Here’s the schedule I recommend:

  • April (because everyone’s thinking about money anyways because of the tax deadline)
  • August (because it’s four months after April)
  • December (it’s another four months later, and also the end of the year, another convenient time)

So consider this your reminder for April to pull your credit report from one of the three agencies this month! You’ll need to assign one credit reporting agency to these months, to make it work, since you’re only allowed to pull each report once a year. So do something like this:

  • April – Experian
  • August – TransUnion
  • December – Equifax

Remember, despite what TV commercials starring singing characters might tell you, there’s only one authorized source for getting your federally-mandated free annual credit reports: AnnualCreditReport.com. You can verify this fact at the Federal Trade Commission’s website.

Getting Your Credit Report, 100% Free

Information You’ll Need to Have Handy

When pulling one of your 3 credit reports from AnnualCreditReport.com, you’ll be asked a short series of questions to prove your identity (so that, in theory, no one else can pull your reports).

You’ll need to know (or have handy to type in):

  • Your full name
  • Your Social Security Number
  • Your current address
  • Any addresses you’ve lived at in the last two years

Once you hand over this info, you’ll be given the opportunity to request your report from any of the 3 credit rating agencies:

  • Experian
  • TransUnion
  • Equifax

If this is your first time pulling your report, it doesn’t really matter which one you pull. For simplicity’s sake, I recommend pulling Experian, as it always seems to be at the top of the list, so it will be easier to remember that it’s the one you pulled if you forget. Now’s the time to establish your April/August/December calendar for pulling each of these.

Once you select a credit reporting agency to pull from, you will be asked a series of multiple-choice questions about your own credit history (or other things that might appear on your report, such as previous addresses and phone numbers, etc. etc.) to further prove your identity. Again, this is information you should already know or keep handy.

You may also be prompted to buy some “up-sell” products, like your credit score. Ignore everything they offer here – even if you do want to buy your credit score, they’re not likely to offer you the best of their best deals at this point. Do your research on the cheapest ways to get the score you want (see below) first.

Then, you should get access to your report! You should print a copy of both the receipt page (which you’ll get even though you didn’t pay anything) and your credit report itself. If you’re using Google Chrome or have a PDF printer installed (highly recommended!), you can print to PDF and save part of a tree – as long as your hard drive is secure and you do regular secure backups, of course. This is sensitive information that an identity thief would love to get their hands on!

What am I Looking for When I Look at my Credit Report?

Two things!

#1 – Errors

It’s a pain in the behind, but read your entire report and look for anything that’s inaccurate. You can dispute inaccuracies with the credit reporting agency to get them removed. Inaccuracies can hurt your credit score, prevent you from getting a loan, job, or insurance down the line, or just plain make it hard to get your report again in the future (thanks to those multiple-choice questions!).

If you do find any errors, there should be instructions within the report itself (or back on your receipt or confirmation page) on how to dispute them. If not, do a quick Google search for “disputing errors [name of credit reporting agency that you picked].”

Even if there aren’t any errors, there could still be bad stuff…

#2 – Areas for Improvement

While you’re reading your credit report, look out for anything you could be doing to improve your report. What can you do, exactly? Well, if you familiarize yourself with the 5 components of your credit score, you can identify ways to influence those components.

Those 5 components are (in order from most influential on your score, to least):

  1. On-time payment history
  2. Debt-to-credit ratio
  3. Length of credit history
  4. Variety of credit used
  5. Recent “hard” credit inquiries

Keep these things in mind while you look over the report. Just keep in mind that in most cases, there’s nothing you can do to “fix” what’s already on your report – you can only strive to do better in the future.

For most people, most of the time, pulling your credit reports one at a time, three times a year, to check them for reports and areas to improve, is all you really need. But if you’re curious about your credit score, or if you’re going to be shopping for a big loan (like a mortgage) in the near future, you may decide that you want access to that score.

How I Get My Credit Score for Free

Before we get into how I get my credit score without forking over any cash, it’s important to establish that there are many different credit scores out there. You may actually have as many as 100 different credit scores floating out there for you. Scary thought, huh?

Most people divide credit scores into two types:

  • FICO – credit scores based on one your three reports using the Fair Isaac Corporation’s algorithm (aka the five criteria for a good score I outlined above)
  • FAKO (pronounced “Fake-O”) – anything else

A FICO score is what a lender, employer, rental authority, or insurance agent is most likely to look at when they pull your credit score, so ideally that’s the credit score you want if you’re pulling your score to find out exactly what such a person will see.

Credit Karma

It’s a FAKO score (TransRisk Credit Score, an algorithm of TransUnion’s design based on your report from the same), but it’s free and you can request it from Credit Karma as often as daily without putting a “hard” inquiry on your credit report. You also get two more FAKO scores: your Auto Insurance Score and your VantageScore, as well as some tips for improving your score and some savings offers.

How accurate are these scores to your real TransUnion FICO score? Hard to say, unless you also pay for your FICO scores to compare. But, the real question is: does it really matter for your purposes?

If the only reason you want to see your credit score is to satisfy curiosity, and to keep an eye on the changes of it over time, then the TransRisk score will work just fine for that. Keep any eye on your score for any drastic changes, checking it at least as often as you pull your free reports (but monthly would be even better).

Get a Loan

This may seem counter-intuitive, but it can work! If you’re reasonably certain of your good credit score (by checking it on one of the other sources in this post, and checking your credit reports themselves), you can get your true FICO score for free while getting a loan.

How? You just ask!

When I bought my Camry last summer, the dealership helped me apply for a loan at several different financial institutions. When the offers came back a few days later, the finance guy at the dealership showed me the credit reports and scores that had come back when the banks evaluated me. Now, I could have just jotted down those numbers quickly, but I did one better:

I asked the dealership finance guy if I could have copies of all those papers! (It was definitely one of those it never hurts to ask moments.) He walked me back to their copier on the spot, giving me hard copies of my FICO and other credit scores from multiple agencies. Score!

This will also work when applying for a Peer-to-Peer loan from either Lending Club or Prosper; Jonathan over at My Money Blog has a guide on how to interpret your score based on the information you get while applying for a loan at either of these places.

The catch here is that your credit score will be a little dinged, since you’re doing what’s called a “hard inquiry” rather than the “soft inquiry” of checking you credit score just to check it. Oh, and you’re applying for a friggin loan, which you should never do unless you have a darn good reason, like needing to replace your dying car with an affordable, reliable, used one.

myFICO Free Trial

Get your FICO score, right from the source. When you sign up for myFICO’s Score Watch, you get a 10-day free trial that also gives you your FICO score (just the Equifax one, I believe) and your full Equifax credit report.

The catch on this one is simple: you’ll be charged $14.95/month for a minimum of 3 months if you don’t cancel within the 10 day free trial.

Credit Sesame

Another FAKO score like Credit Karma, Credit Sesame is based on your Experian report. It’s also free with no credit card required to sign up, and you’ll get free advice on saving money and improving your credit, too.

The catch? You can only get your score once a month- but if you’re just looking to see how your credit score is doing over time, do you really need it more often than that? No, ya don’t. This is a good addition to Credit Karma, since it diversifies your “score base” a bit here by giving you access to an Experian score vs. Credit Karma’s TransUnion-based score.

Bankrate’s FICO Score Estimator

A few quick questions about your credit history, and Bankrate.com’s FICO Score Estimator will spit out a fairly accurate guestimate of where your credit score is. The catch being that it is, of course, only an estimate.

Alternately, Just Bite the Bullet

If you really, truly, actually need your FICO scores because you’re taking out a big loan soon (such as a mortgage), than the best thing to do is to just pay for your FICO scores. In the grand scheme of things, the $15 or so you spend now will reap much larger benefits down the road.

You can use your FICO score to empower your search for the best loan with the lowest rate – but only if you know it! A FAKO score won’t cut it in this particular case, so it’s worth spending the cash when you are actually about to start shopping for a loan.

Remember to shop around for your FICO scores, as well! There’s no need to pay more than you have to, and considering I’ve seen ranges between $14.95 and $89.95 to get your three FICO scores, it really is worth it to do a little research. Check the websites of all three credit rating agencies, as well as myFICO, to see what they’re offering. Don’t forget to Google for coupon codes to each one!

Do you check your credit reports and credit scores as often as you should? Make a pledge to April/August/December in the comments!