Still pounding (the debt)!

Wow! It’s like I totally forgot about this blog…well, not “like.” I did forget about this blog for a year. But not paying off debt. Since last May, I’ve paid off almost $6,000 more in debt, bring my total of debt paid off to about $9,000, or almost 9% of my total debt.

I’ve also saved $750 in an emergency fund, which makes me feel more secure. I’ve had some downfalls…like using my credit card way too much. I almost maxed out the card earlier this year, and have steadily paid off small amounts to bring it under $600. I hope that by September, I will have paid off the card, but…

I’m also buying a house the end of June.  So that will throw a wrench in the pay off. But I’m excited about the purchase. Sort of. It’s been a really difficult process and I’ve reached stage burnout. I’ve made 4 offers and prepared a few more than that. I’ve had two accept. The first fell through during appraisal. The next two were not accepted and the fourth offer was accepted, and I”m waiting on appraisal right now.

In between, I’ve looked at dozens of houses and researched many more. I feel like I know alot about researching properties in the town that I’m trying to buy in, but don’t have the financial resources to afford the houses that work best for me. I also know alot about the FHA process. I might even become a realtor someday and share my knowledge. (Yeah right.)

Anyway, I’ll do my best to keep updating this blog in a more timely fashion. I’m still pounding away though!

Make New Friends Or Keep the Old?

Besides paying off debt, another financial hobby I started about a year ago, is investing. Mainly, I have been researching investments for my 401k at work, and for a rollover IRA that I opened with a retirement account at an old job.

One of the great parts of investing for me is that it rewards my tendency for inertia, because I am a buy-and-hold investor. I would love to be a big shot market timer, but I don’t know that much about much of anything on the market so I don’t go where only angels fear to tread. Anyway, I have diversified my portfolio and tweaked it on occassion per the amalgamated advice of the much more knowledgeable commentators at MSN Money and CNNMoney. But beyond that, I have resisted selling the funds in my portfolio, despite frequent desires to tweak my asset allocation.

BUT. Today, I watched a video of Suze Orman on CNNMOney telling me that buy-and-hold investing is (maybe) out…the active knowledgeable investor is in…this is the Dawn of a New Age of Market Investing. Yikes.

By and large, I like Suze’s advice. I don’t quibble with much, and I know she’s much more knowledgeable than I. That’s what scares me. She’s singing the praises of ETFs (okay), knowledgeable investors (okay), and ditching index funds while timing the market (what!?!).

ETFs (or exchange traded funds)…they seem a novel and unknown beast to me, although I like the idea of investing in certain sectors of industry. But I don’t really get the difference between ETFs and index funds that invest in certain industries. I have to do more research. Fine. I can do that. Later.

Knowledgeable investors. I aspire to do that. Later. I’m really busy with life right now. I’m investing 10% of my income while paying down consumer debt. What more do you want from me?

Ditching index funds while timing markets. This is so not my bag. This advice seems like financial suicide for me now. I’m not ready or clever enough to ditch my old trusty index funds, to start timing the market with savvy choices of ETFs. Can this wait until later? Is there a later? Do I need new investment friends??

Baseline

A little about me: I am a single female, late 20s (closer to 30 than I care to think). I’m heavily in debt, due mainly to student loans from law school.  More about that later…

In February, I added up all my debts and came up with a whopping $101,104. Roughly $85,000 was for student loans, $15,000 for my car loan, and the remainder in credit card debt. That really scared me. I knew that my debt was high, but had been living in ignorance for a couple of years while just sending in the payment each month. 

Anyway, I realized that I don’t want to live in debt, and I decided to make some changes. First priority was to pay off credit card debts, then set up an emergency fund, then start tackling the rest of my debts from there.  I have been struggling with that for the past three months, and here is my current debt:

Federal loan             $68,946.66 (2.625%)

Private loan 1            $6,846.66 (6% varies)

Car loan                   $14,718.32 (6.6%)

Private loan 2             $7,747.54 (6.9% varies)

Credit Card                   $458 (27% varies)

Total                         $98,484.82

I am happy to say that I’ve paid off almost $3,000 in a little over 3 months. I am hoping to start paying off in a rate of $1,000 per month, once I start snowballing payments. I am paying off debts in the reverse order that they are listed, based partly on interest rates, and partly on tax consequences for some of my student loans — some of them qualify for tax deductions for the interest I pay, some of them don’t. I hope that by the end of June 2008, I will have paid off my credit card completely. I’ll spend the rest of the year working on my emergency fund. At the start of the next year, I’ll start big payments on the student loan that doesn’t qualify for a deduction, then the car, and so on.  To be continued…