Free and Clear of the IRS!

I'm so ecstatic! I've owed money to the IRS for the past three years. (No, my W4 is correct. I always set it to 0-1, so that's not the reason I end up owing) Anyway, I completed my taxes online with turbotax last month. Since I incorporated my side business, I was able to itemize more than the regular stuff like education, property taxes, charity, mortgage interest, etc. The business expenses sure did help, deduction wise.

When I was through with my taxes, I found out that I would get a refund of $2k. I called the IRS to check up on my installment agreement that I had for 2006 and 2008. They informed me that I had just paid off 2006. I figured I only owed around $700 for 2008. Low and behold, I was also told that I had a balance for 2007. lol Anyway, my refund was used to cover the 2007 and 2008 balance. I checked my bank account this morning, and the $500 difference was credited to my account. I'm so happy that I don't owe them anymore. The penalties and interest is nothing to play with!!

I was planning to apply the $500 to one of my bills, but I really want to get laminate flooring installed in my living room and hall. What do you think? Decisions, decisions...

Looking for Another Used Car :(

I turned my car in to the dealer last week, and he had his mechanic look at it. I stayed at his place for a few hours, but the mechanic couldn't figure it out. Since I didn't have another car, the owner let me use one of his used cars as a loaner.

We talked about our options before I left, and he said that he was really sorry that I was having these issues. He said he would pay 50% of the cost to fix my car. Although I believe he should pay the entire cost, I'm grateful. Afterall, I did buy a used car as-is.

Okay, so the owner called one day last week, and told me his mechanic took my car to Auto Zone to get it checked. They told him I needed to have 4-5 sensors replaced. Um...what? What does sensors have to do with oil leaking and smoke covering the car? Sensors have to do with electrical stuff in the car. I'm no mechanic, but I have enough sense to know that. Anyway, I questioned him about it, and he said, 'the gasket is also not on there correctly'. Okay, at this point, I'm positive that his mechanic is really clueless.

I've been following up with him, and finally got to the bottom of things on Tuesday. The problem was exactly what my mechanic said, the supercharger. It needed to be replaced. The owner said it would cost $850, and we'd split the cost. He agreed to pay for the entire thing upfront, and bill my portion in June. We were set to get it fixed the next day. Funny thing, he asked if he was able to find something else that he could guarantee would be in great shape, if I would accept it. I said, 'heck yes!' That's where we're at right now. He's trying to find me another vehicle without any problems. Thank God! I'll let you guys know how it goes.

My New Side Gig

When I went to get liability insurance for my Volvo, the insurance guy mentioned someone in the building that needed computer assistance. I gave him my card to pass on to the guy. I received a call almost immediately.

This guy is renting an office in the same building, and has a clothing company that he's starting up online. It's the Butt Ugly Clothing Company. My client mentioned that he had created a website himself since funds were limited, and he was trying to figure out how to make it live. lol He had all the files, but wasn't sure how to get it to the hosting site. I tried to talk him through it free of charge, but he was getting a little frustrated and asked if I would do it. I quoted him $55. (yes, I know it's only a 5 minute task).

After meeting with him that day, he decided to hire me as a consultant to make his site operational, and to help with the business side of things. I had him sign my consultant agreement, and agree to my $45 p/h fee. This is business afterall.

I'm finally to the point where I'm able to add the shopping cart to the website, but I personally believe that it needs a lot of work. There wasn't a lot of planning involved, so we'll see what happens. As long as I'm getting paid, I'm happy!

What do you guys think of the inventory? I'd love to get feedback to share with him.

My New "Used" Car

My mechanic called me to tell me that he found the perfect car for me. It was a 2001 Volvo S40 with 56k miles. When I test drove it, the ride was really smooth. I really liked it. The dealership wanted $4600, but I talked him down to $3800. I only had $2500, but he said he would allow me to make monthly payments.

Before purchasing this car, I had my mechanic extensively check it out. I only purchased it after he said it was in good condition. The night that I drove it away, I noticed that there was a bit of smoke coming out of the muffler. My mechanic assured me that it was probably because it hadn't been driven in a while, and that the smoke would probably go away after a while.

The smoke never went away!!! As a matter of fact, I started noticing that there were oil stains in my garage coming from my car. I had to start turning off my car as soon as I got in the garage because the smell of the smoke was too overwhelming. The unfortunate thing is that the night I drove away with the car, my mechanic went on vacation the next day for 3 weeks. I called a Volvo dealership to see how much it would cost for them to take a look at it. They quoted me $150. I didn't want to pay that.

I didn't know what to do since I had purchased the car As-Is. Everywhere I drove it was soooo embarrassing to see the cloud of smoke following me. This guy was driving next to me in a convertible, and I saw him purposely driving way in the back to avoid the smoke. lol Another guy stopped me and pleased with me to get it looked at because he said, "you're too cute to be stranded on the road"! lmbo

As soon as my mechanic came back, I was in his shop! When he put the car up on the lift, we noticed that it was leaking a whole lot of oil. Oil was even in the exhaust. I was so pissed off with him because he told me this car was in good condition. He told me to go to the dealership and have them wash the engine (like they did before they sold it to hide the leak), so he could go back in to find the exact location of the oil leak. He figured it was coming from the super charger. According to him, if it was the super charger, he said it would cost a lot to fix, so I might as well sell it.

I went over to the dealership after I left the mechanic, and the owner's wife was there. She said she'd relay the message to her husband. I waited for his call, but no one called me back. My mechanic walked over, and explained the situation to the owner. After I spoke to my mechanic, he said the owner said he would help me out. Of course, the mechanic wasn't sure exactly what that meant.

I called the dealership yesterday, and the wife answered again. She contacted her husband, and asked me to bring the car in so they could figure out what's going on. When I brought it in yesterday, the owner and my mechanic was able to pinpoint the problem: the supercharger. The owner said that he would try to find another supercharger and have my mechanic fix it.

After leaving the owner, I had a conversation with my mechanic. He suggested that if the guy can't find a supercharger, that I should suggest that he replace the car with something comparable, since he does have other cars in his lot. We'll see what happens.

My Car History

I purchased my first car in 2003. It was a 2001 Kia Sephia. I remember paying $2500 cash, and it only had about 45k miles. The day that I purchased it I think my sister drove it home. lol I was around 20 y/o, and brand new to Houston. The freeways scared the living daylights out of me, and I wasn't familiar with driving on the right side of the road.

This car lasted me 5 years. It only started giving me problems towards the end because I was irresponsible, and didn't keep up with the regular maintenance. This was five long years of NO CAR NOTE!!!!

Okay..so with the death of my Kia looming in the horizon, I decided that I was going to upgrade. Why not, right? It was 5 years later. I had graduated from college with my undergraduate degree, and making decent money. In order to financially prepare myself for a new car, I decided to get a part-time job to pay off all my debt (excluding student loans of course). I posted an ad for my Kia on Craigslist, and was able to sell it for $1400. Not bad at all!

Since my sister was having such great success with leasing vehicles, I decided to go that route. (Remember I had never had a car note before) I started looking at all my options, and was really impressed with the 3 series BMW. I think the ultimate maintenance package sealed the deal for me.

A few people shared their horror stories with leasing. I was of the mindset that I wouldn't have to worry about paying for excess wear and tear and excess mileage because I would lease another BMW when my lease ended.

After paying off my debt and feeling comfortable enough with my lease payments, I decided on a car. I leased a 2007 328i BMW for 3 years. My monthly payments were 499.99. It wasn't bad in the beginning at all! I absolutely loved this car. It was such a smooth ride, and I loved the fact that I didn't have to pay to maintain it. Even after carefully researching this decision for a few months, there were some things that I didn't take into consideration. 1) The price of gas to fill this car was much different than my Kia. I think I could fill the Kia for $15-20. With my BMW, it took $40 to fill the tank. Another thing is that I only paid $55 liability insurance with my Kia. With my BMW, I had to pay more for higher coverage, so I ended up paying $135.

As the years went on, my spending increased, my mortgage ballooned, and things were getting a bit difficult. When I received a letter from BMW informing me of my lease end options, I made a difficult decision. I first started thinking that I could finance the BMW because I liked it so much. Guess what? Although I paid 499.99 for 3 years, I still had a $26k residual on the car. That really infuriated me! My credit union quoted me a payment of $585 for 5 years to finance it. I decided right away that I would turn in the BMW, and get something less expensive.

My thought process from there went in extreme directions. lol I told a really good friend of mine that I wanted to get something that I could pay for in cash, preferably about $5,000. After I started thinking about it and visiting dealerships, I was pretty adamant about getting a used 2006 Mercedes CLK500. It was about 23k. My payments would have been around $450. lol At that point, I clearly wasn't thinking logically. I couldn't see myself stepping down from my BMW to a hooptie. (yes, I know that's silly) As much as I searched, I couldn't find the car that I wanted. Somehow I ended up at an exotic car warehouse with a friend one night. I don't even know why the heck I was there. (Remember, I first started off wanting a hooptie).

On my way home that night, I started talking to another friend that talked some sense into me. He said, "why not pay cash for something now? Apply the money that you would have paid for your car note towards paying off your debt. If you did that for 2 years and saved some money, you'll be in a better position to get the car you really want. Why would you go and get another car note when you have debt you need to pay off?" This really resonated with me.

From that point onwards, I decided that I would get a used car for about $3000. This proved to be a very difficult task, but I did find something. I purchased a 2001 Volvo S40 at a used car place. It only had $56,000 miles! This car cost me a little more than I wanted to pay, but the owner worked with me. He wanted $4600, but I talked him down to $3,800. I paid $2,500 down, and set up a plan to pay something towards the balance monthly, and this plan didn't include interest.

Not Starting Out Well..

Have you ever noticed that once you put your mind to something, and have a solid plan of action that's when obstacles start popping up to deter you? I probably should have kept my goal to pay down my debt deeply ingrained in my mind. I was planning to start with my payoff plan next month, but that more likely won't happen.

I found out yesterday that one of my graduate classes that I completed last year can be transferred to my new school. Great news, right? Well....although I completed the entire semester, the class was never paid. I had to pay $662.11 yesterday in order to receive my transcript. I checked with my employer's tuition reimbursement program that offers $2500 per calendar year. Their cut-off is actually 6 weeks after the end of the semester, so I won't be getting reimbursed. :'( On top of that, I checked my bill for this semester, and the total was about $2950 for 9 hours. I was able to apply the $2500 for 2010, but I still have a $450 balance. I don't understand all of those stupid fees that these universities charge! I think I still need to find another way to make some extra income.

Arrghh!!! That money was taken out of my car fund. Now I have to find some unsuspecting person and hit them up for $662.

Tackling my Debt...the Strategy..

This is a screenshot of the calculator that I'm using to figure out an aggressive strategy to eliminate my debt. Check out my other blog posts to follow my challenge.

(click on the image to get a better view)


Here's the spreadsheet if you're interested.

http://spreadsheets.google.com/ccc?key=0AoyBCcc3F7JEdDNVWXhsTzdQT1pSNEppOHJCd21GSFE&hl=en

See ya next month! :)

I've Seen the Light!

This is a personal challenge for myself for 2010. I noticed last year that I was seriously digging myself into a financial pit, but I couldn't stop spending. My creditors were automatically increasing the limits on my credit cards almost monthly, and I just kept charging.
A really good friend of mine went over my budget with me last year, and we tried to find ways to reduce my debt. Back then, I decided to cut all miscellanous expenses. The only thing that stuck out as a sore thumb was the $500 car note I was paying on my BMW. I even considered getting a part time job to help bring in more income. Eliminating the misc expenses was a great help, but in the end, I still ended up charging things to my ccs again. Although I cut up some of my cards, I found out that I could still shop in some stores without physically having the card. lol I was addicted!!!

Fast forward to December 2009. I made a decision to turn in my car since the lease was ending in January. I was totally pissed off that I had been paying a large amount each month, and after 3 yrs I didn't even own the car. I'm never going to lease another vehicle in my life!

Here's where it gets a little funny. lol My plan was to finance a car for about 30k. I started looking at CLK500s. When I couldn't really find what I wanted, I started thinking about the decision I was about to make. When my ex called me the richest poor person he knew, I had no idea what he was talking about, of course *inserts delusional smilie*. I figured if I financed the CLK, I would have an extra $100 that I could apply to my debt. One of my good friends hinted at me getting something below 5k, and I was really offended. I thought, 'me? drive in a hooptie? um..I don't think so.."

I was talking to a good friend of mine, and telling him about this really awesome exotic car dealership that I visited with an Associate the night before. They had Maseratis, Lamborghinis, Bentleys, Mercedes, BMWs, Maybachs, Rolls Royce, etc. (yea, I was wondering what I was doing up in there too! lol) Anyway, the light bulb finally went off in my head when a friend asked me these two questions. Why finance a vehicle for 30k+ when you'll still need to be thinking about paying off your debt, and the car loan? Why not purchase an inexpensive car, and apply the money you would have paid towards a car note towards your debt? The light bulb FINALLY went off, and I decided to go for it. lol Sometimes it takes a minute for me to get there, but thankfully I always do.. I've been searching high and low, and I'll more than likey get a 2002 Honda Accord Coupe for 3k.

To be honest, it's going to be a little difficult going from my Beamer to probably an old Honda. There will be no more 6 disc cd player, leather heated seats, bluetooth capabilities or navigation system etc. As a matter of fact, I'm sure a few people will be talking.. In the long run, I realize that being debt free matters more to me. I want to start taking vacations, remodeling/redecorating my house, and doing whatever I want with my money. It's amazing to see that if I didn't have to pay any money towards my debt, I'd be saving an extra $15,000 a year. That's soooo frustrating to see. I can't believe that I put myself in this position in the first place. Plus, I'm having to pay out of pocket for my graduate tuition because I refuse to get a loan, and I have to start saving for my study tour abroad. Those things mean much more to me than a car. Okay, so I'll be using the money that I was paying towards my car note, extra insurance coverage and apply it towards my debt.

Here's where I currently stand. I'm going to add an update post each month.

Express $1,600.00
Bill Me Later $856.00
Credit 6425 $4,100.00
Credit 4012 $2,100.00
Dell $1,800.00
Total $10,456.00

I had high balances for target, macys, and conns appliances, but I already paid those off! I also paid off my Bank of America cc that was over the limit. It had a high balance of $3k. I discontinued my maid service. I'm going to aggressively work on paying off my current balances. I've already looked at my budget, and cut off all miscellaneous expenses. I've cut up all the store cards. Some stores (express) don't physically need your card when you're shopping, so I'm going to make sure that I totally avoid them (I love that store though).

I plan to pay off my debt within 12 months by doing the following:

1. I disconnected my cable which was $90.
2. I switched to the unlimited mobile plan with Sprint. That's about $112 per month instead of the $300+ I was paying.
3. I'm contributing $300 towards a reserve account each month just in case something pops up. 4. With the additional money that I'll be saving without having a car note, I can apply $1000k each month towards my debt.

Here's a really great debt reduction calculator that a friend sent to me. Once you enter all your debt and interest rate, you could actually see how many months it'll take to pay off. It also helps you figure out if you should pay highest interest or lowest balance cards first.

http://spreadsheets.google.com/ccc?k...Cd21GSFE&hl=en

I know this is really personal information, but I don't mind sharing. I'm sure there are other members out there that are trying to achieve similiar results. Who likes to be in debt, right? I'm going to try to keep myself on track, and I'd love if you guys rode along this journey with me and kept me focused and accountable. If you happen to see me talking about buying anything too expensive, please dont' be scurred to call me out on it!

Pretty please?!