Year-End Review

While there’s still a little more than a month left of it, I’d like to look back at the goals I set for the year and how I did on them. In hindsight, I could have set the bar a little higher. In light of that, I’ll also evaluate some achievements that I didn’t particularly set as goals for the year.

On December 23, 2009, I wrote the following in my notebook:

Things to do in 2010

1. Pay off my credit card
2. Nurture a profitable skill
3. Find and practice a pleasurable talent [hobby]
4. Get my own place

For a couple pages, I expounded on each a little further, but for the most part, they are pretty cut and dry. The first one I took care of pretty quickly. It wasn’t a huge balance, and I had it paid off in a couple of months. However, I was in a car accident not to long after and even though it wasn’t my fault, I ended up incurring another balance. I soon paid that off though, and as of today have a zero-balance.

The second I feel like I accomplished my goal and then some. I began to pick up PHP after having not programmed for several years. I got it back quickly and began to learn more and more material throughout the spring and summer. I also started to brush up my other web dev skills, learning HTML5 and getting familiar with jQuery. During the summer, I set another goal for myself: to get a job using it by the end of the summer. The week before school started, I had a successful interview with the president of a creative agency in town and landed a paid internship doing web development.

The third goal, I’m trying to look at in two ways. I enjoy doing web development so much, that when I’m working on my own projects (e.g. Trestle), it’s fun. However, it’s also a work-related skill, and I think I was intending more of a hobby-for-hobby’s-sake type talent. I probably could have done a little better to achieve this goal to the letter, but I no longer feel the void of fun or happiness that I was trying to fill, so one way or another, in spirit I think I achieved this one.

Getting my own place didn’t take very long. I had my own apartment by the end of the winter. It was pretty nice to live alone. I found it easier to concentrate and be productive than I had when living with roommates. That didn’t last too long though. My brother and my girlfriend have moved in with me, and I’m sharing my living space again. This time it’s not such a problem though. Space is a little cramped, but there’s no roommate drama. Consequently, I’m enjoying company, lower rent and am still able to concentrate and be productive.

Something that I didn’t really set as a goal (but really should have) was to go on a vacation. Being stationary in Atlanta after traveling abroad for a few years was more painful than I can describe. I one tried to leave in 2009 only to have my plans fall through. However, this year I got to go on a trip to Chicago with my girlfriend for three days. It’s wasn’t quite a month backpacking Europe, but after being stuck here for three years, it was a tsunami of fresh air.

All-in-all, this year has been great. The best I’ve had since crash landing back home from Ecuador. Especially scoring the web development gig. After delivering pizza for over two years, and doing even worse work before that, using the skills I’ve spent time and effort learning feels great. I finally have a sense of work satisfaction and the promise of rewards from self-improvement. Let’s face it, you can’t really hope to augment your income delivering pizza by watching webcasts or reading a book. The potential to improve my living conditions just by soaking up knowledge is exciting to me.

I’ll be spending some time before January picking my battles for 2011. I think the lesson learned here is that I can definitely set some loftier goals, especially since I have more momentum than I had last year.

Phase One: Knock Out My Debt

Being debt free is an important component to my vision of the Carry On Life. Being burdened with payments severely limits my options. I can’t decide to take off and backpack for a couple months when my lease is up, career change is more difficult, being sick for a week is hardly an option, the list goes on and on. Basically, I have no choice but to make sure I am able to make my payments every month, and every impediment to drawing income can become a crisis if I’m unable to pay. This adds a lot of  weight to my proverbial backpack. Not to mention, it’s not only draining me of my current resources and energy; with interest, it’s already siphoning away at my future.

The Problem

My relationship with debt started just before going on a trip to Europe in the fall of ’06. I had attended two classes during the summer semester and then decided not to continue school at the time. I failed to pay my tuition and flouted bills they kept sending that grew more and more stern each time. When I got home the following winter, my mom told me that a collection agency had been calling for me. This was the first time I’d ever actually dealt with owing anyone a large amount of money. And worse, I had no job.

For a couple months, I kept the collection calls at bay. When I finally got a job, I cracked and let the setup an automatic bank draft, sparing myself from any credit damage. It was anything but a pleasant experience. I worked, and made sure to keep enough cash in my account to cover the automatic drafts until the tuition bill of almost $1,000 was paid off and then took off for another trip, this time to Ecuador in the fall of ’07.

The Credit Card

I managed to not acquire any debt since my college bill until the Spring of ’08, when I found myself out of work (the inspiration for Job Loss on the Slim). I had a credit card with a $500 spending limit that I’d had since I was 18 and had never carried a balance on it. Up until then, I’d used it like a debit card and then transfered funds to it every week to pay it off entirely. I just thought it was a good way to show I can use credit and build a good score. However, when the income stopped, that $500 became tempting to use at very stressed points. I’m not sure where all of it went, some was reasonable (gas for getting to a job interview) some was wasteful. Regardless, by the time I found work, edging into fall, I had maxed it out and missed at least two month’s worth of payments.

It took me a while once I was working to get it paid down, but I did eventually do it. However, I failed to keep it that way. The same credit card that has plagued me since ’08 presently has a balance of $321.42, which I accumulated in relation to a wreck I was in a few months ago. The rental agency wanted a major card on file, so I warily pulled it from my wallet and handed it over, saying goodbye to my $0 balance. However, I expected to be reimbursed in full by the other driver’s insurance agency, so I wasn’t too worried. Ahh, in a perfect world… Long story short, they did not fully cover my rental costs, and the car I rented came back with a small ding in the top of the trunk that seemed to be caused by a rogue golfball, tacking on an unexpected $250!

The Car

I’m almost embarrassed to talk about the car. I’ve heard it over and over, “buying a car on a loan was the worst thing I’ve ever done!’ and it’s true. I’ve bought plenty of cars from individuals (we’re talking somewhere around 5-7 beater cars I’ve been through), and it’s almost a pleasure each time: negotiating a price in a neighborly manner, when the amount in question is only going to fluctuate a couple hundred either way. Car dealers are f’ing sharks. Not to offend any sharks reading, but it’s true. You get sized up the second you walk in. They do it for a living, and are thus expert at estimating your knowledge of price, interest, even how well you’ll negotiate.

I was in a bad spot. I was desperate to get a car, as my last beater had just died and I had pizza to deliver that week. I went to a buy-here-pay-here rip off lot without a thorough plan or anything. The most preparation I put into it was looking up the car in question’s Kelly Blue Book value via iPhone. Even after that, I blundered horribly. I had planned to talk tough and squeeze the price down and all that, but when it came time to talk, I somehow found myself feeling like the dealer was doing me a huge favor by giving me a chance even with my lack of credit history and modest income. My instinct was to not push my luck by bargaining. Looking back now I wonder how I was enchanted so severely that I agreed to a 25.9% APR loan for five years! I’m absolutely ashamed that I did such a thing, and it hurts to admit it publicly.

However, I’ve blundered and it’s a fact of the past that can’t be changed, only corrected from this point onward.

The Solution

As it stands, I have the above mentioned $321.42 on my credit card with an APR of 22.9% and today I called my auto loan people and asked the exact payoff amount, which is $11,514.66 at 25.9% (cringe) and $5,566 in student loans. Most of that is deferred until I graduate, however I have racked up $66 worth of interest on them in the past year.

The smartest way to tackle this would be to pay them one by one, highest interest loan first. That would result in saving the most money. However, I’m going to take J.D. from Get Rich Slowly’s advice. He suggests the debt snowball approach, attack debts in order of balance, smallest to greatest. The reason behind doing it this way is to give yourself the psychological boost every time you conquer another debt. However, considering I only have three sources of debt, I’m going to compromise between the two.

I’m going to tackle the credit card first, which would be J.D.’s way, just to give myself that quick boost. Not to mention, it’s not going to really take any time at all. I already have an automatic payment set to dump the entire $321.42 on it on the 20th. No more credit card. This leaves me with my student loan and my car.

I’m opting to pay off the car before the student loans. The student loans are mostly subsidized, and at this rate I’ll probably have racked up less than $600 of interest by the time I graduate. My car however, I’ve made $350 monthly payments for almost a year and have chiseled a mere $959.47 off the principal! Holy crap! Not to mention, the $218.33 per month full coverage insurance required per my loan terms makes this debt all the more costly.

Oh yeah, another thing before anyone starts to make suggestions: I’ve already considered selling the car, taking the loss and paying the rest of the loan off. A week after I stared to seriously think about doing this, someone pulled out in front of me causing more damage than the car is worth. Their insurance fixed it, but the resale value is kaput.

Using some calculators I found online, a few spreadsheet templates, etc., I’ve estimated that about $1060 per month on the car would have it paid off by next summer. I’m going to look at refinancing next month, because I’ll have made a year of faithful payments and I think my credit should be good enough to get me a decent loan now, but either way, it’s getting paid off. This is a lofty goal If I limit my spending very carefully and continue to seek out better income, I can definitely do it. So here’s my goal. By the time fall semester 2011 starts, I want to be free of my car loan by any means necessary.

So, here goes a fun year of slinging all my cash at debt and living cheap.