One tip that Mr. Ramsey offers that I find especially interesting is that to know if you’re saving enough, you need to take the amount you have saved in your nest egg (savings/retirement) and multiply it by .08.

If you can live off the resulting figure, then you’re saving enough. If not, you’d better step it up (after paying off your debts of course).

I was surprised. I consider our savings rather paltry, but we actually *could* live off the results. Granted, we’d cut the cable and be living on rice and beans, but we would only have to cut our household expenses by another $300, which wouldn’t be hard.

What they say in the Total Money Makeover is true–the closer you get, the easier it becomes. We now are on the last of our “snowballs” (only one remaining debt to pay off), and it’s disappearing quickly because every extra resource can be dedicated there.

We haven’t followed one of the guidelines–we haven’t stopped saving. We’re still saving for retirement and for planned major expenses (one daughter’s adoption finalization, etc). If we’d stopped this, we could speed up the process even more.

If you’re just starting your Total Money Makeover, or considering starting the program, don’t loose heart. It goes so much faster than you’d expect. Good luck!

This is part 10 of a 30 part series on financial literacy for the month of April, Financial Literacy Month.

Seriously though, I got involved in my retirement planning, and household budgeting. We paid off our cars early and “burned the candle at both ends” to pay down our home mortgage (something we’re grateful now as most of our neighbors are upside down in their mortgages).

In my research of personal finance, I’ve studied the PF theories of two “gurus” of personal finance; Dave Ramsey and Suze Orman.

Dave Ramsey’s philosophy is a bit more stringent. He doesn’t believe in debt. He says never take more than a 15 year mortgage, and never, EVER use a credit card. I especially like his book “The Total Money Makeover,” which I downloaded as an ebook from Audible.com.

Suze Orman’s philosophy is a little more relaxed in that student loan debt is “acceptable” debt, and that a credit card used for job search expenses is OK. I found her philosophy and strategy very helpful in my first few years on my own. I especially like her book “Money For the Young, Fabulous and Broke!”

I find my own personal finance philosophy right in-between these two–shunning credit cards, but accepting mortgages and student loan debts. Mr. Ramsey encourages parents to pay for their children’s college, I’m of the opinion that they appreciate it more when they put themselves through.

I encourage you to check out the library or iTunes and their Web sites for some good ideas and information. Dave Ramsey has a daily podcast available for free from iTunes. I especially enjoy the Friday shows where he invites callers to call and scream “I’m Debt Free!” with him on the air when they’ve paid off their last debt.

Happy learning!

This is part 3 of 21 of “21 days of financial literacy” for April, which is Financial Literacy Month.

Thanks also for those of you who’ve visited my advertisers–I’ve had some ad revenue come in lately and as I’ve mentioned before, all my ad revenue gets “debt snowballed” towards the balance of our adoption debt from adopting our last precious daughter.

Our house won’t be underwater, and we’ll still have plenty of equity. Also, we’ll be building equity like crazy, with more than half of our monthly payment landing in equity–not interest.

One surprise in this process was that so many of the companies we talked to wouldn’t recommend their mortgage accelerator program–because it was administered by another company and you had to pay a fee to enroll, essentialy the other company works like a payday lender and loans the mortgage the difference between the two payments. We searched out the right accelerator program with the same zeal that we searched out interest rates.

Another interesting surprise was that because of our recent debt-busting efforts (two credit cards and two vehicles and an adoption loan paid off) we were able to qualify for our refinance based ONLY on my husabnd’s income. This we’re told was because of our excellent credit scores and our low debt-to-income ratio. The mortgage consultant said adding the verification process of my self-employment income wouldn’t get us a lower rate as we already qualified for the lowest available rate. Saves us a lot of headache, and provides a lot of peace of mind.

I’m working on an article for the Prosper Lending Review, which profiles a financial startup called SmartHippo Don’t confuse this with SmartyPig, another brilliant-banking-mammal.

SmartHippo.com does for mortgage shopping what Travelocity does for vacation planning. This clever Web site allows banks to post their mortgage rates, but also crawls the web for rates. Finally, it lets users add the rates that they got–and also invites feedback and comments on lenders. Talk about transparency!

I took it for a test drive this week and it helped me come to some decisions regarding if we refinance our condo or not. Here’s what I found helpful:
First, it allowed me to “window shop” mortgages anonymously. This means your FICO score won’t be pinged by a prospective lender.

Second, once I entered my info (Refi, what the property is worth, what amount to refi and what loan term I want) it spat back dozens of very attractive options. In order to sort them I had two handy little slider tools that allowed me to narrow my closing costs range and my interest rate range to what looked attractive to me.

In my mental calculations of if I should refinance or not, I’d underestimated closing costs by a lot. Until I can get a rate .25% lower than what I was seeing this week, I’m going to stay put. However, SmartHippo saved me the FICO inquiry for later–when I decide if I want to sell my condo or refinance it into a shorter-term-loan.

I’m making a note on my calendar to visit SmartHippo once a month for a while and keep an eye out for that slightly-better rate. I hope you’ll give it a try.

If you want to follow SmartHippo news, they’re on Twitter as @SmartHippo.
If you want my latest info and updates, I’m on Twitter as @Jessc098.

I suggested, why not attack his mortgage from both ends? Rob and I have been doing this as we’ve been able. Now that we’re a few years into our mortgage, it’s a little harder to do, but we’ve definetly seen a substantial difference and saved a lot of money. I suggest that if you’ve got a little extra cash, your house is a good place to store up some equity and bust that debt a little sooner.

Here’s how you do it:

Picture a taper candle laying on its side. The wax is your debt. Now, light both ends and watch it burn. In year 15, you’ll be mortgage-debt free.

Each month you get a mortgage statement and it’s usually broken out between principal and interest, and escrow and sometimes Private Mortgage Insurance (PMI).
All you have to do is double the amount of principal paid. You usually have to write this specifically, or even a 2nd check if this isn’t the option (with the memo: apply to principal), otherwise they’ll allocate it to escrow.

As an example, our first year in our house the mortgage payment was about $1,150 per month, with just $150 going towards principal, another $150 going to PMI. PMI doesn’t benefit us–it just protects our lender–but we still had to pay it until we prooved credit-worthy and built up some equity in our home, either with cash or real estate appreciation.

Every month we paid our mortgage payment and an additional $150 or so on the principal balance. This essentially erased the current payment, and the last payment in 30 years. The next month it shortened the term of our loan also by two months. Add up that $150 multiplied by 30 years of compound interest at 4.5% and you’ll see we’ve made some substantial savings with a very small investment!

Because you’re erasing interest, your principal amounts will go up each month and your interest will go down. The earlier you are in your loan, the easier this system will be.

One or two years into following this system (or three years after you start your loan) you should call your lender and see if they’ll let you drop your PMI. We paid $300 for an appraisal and were allowed to drop our PMI at 2 years. If after dropping PMI, you also put the PMI also towards your principal (3 principal payments per month), you’ll be “in the money” in no time at all!

Side note: if you count on mortgage interest as being a great big tax-deduction for you, this may not help you–remember, it reduces the amount of interest. I personally would rather have cash than a tax deduction anyday, but talk to a financial professional if this may drastically affect your personal finances.

Just my $.02 for today. I hope it helps you out. It’s sure saved us a bundle.

One of the things I’ve decided to tackle is households’ financial situation. This was especially critical now in the face of my less-than-reliable income and a new business startup. As an “under-30” family of four, we have some debt. A couple of college educations, a mortgage, two adoptions that zapped our finances but filled our hearts. We were not in financial peril, but we sure could have been uncomfortable if we had not been paying attention when the layoff hit.

The surprise in this project was how we were able to cut our household expenditures by one-third without really trying (or even noticing, for that matter).

Armed with this new information (and cash as a result!), we rushed forth and started getting out of debt. Using only free resources from the Web and strict budgeting, we’ve paid off two of three credit cards, one adoption loan and all of the college loan. Woot! Not bad for three months, huh?

Recognizing that not everyone was so lucky as I to be laid off, I thought I’d share some time-saving and free tips to financial freedom. No scams, no catches, no hidden spam-engine. And you don’t have to download my free e-book. I don’t even have one.

Have fun, save money, spend less, retire early, and get out of debt. It’s working for us. Unless you email me, you’ll never even hear from me again. (Unless we’re friends or family of course). For the sake of easy reading, I’m breaking this into several posts. Follow the hyperlinks for a free and easy journey to financial freedom.

But please do me one favor. If you like this list, please pass it on.

Now, my family’s first five free steps to financial freedom.
1. Expense tracking
2. Budgeting/Cost cutting
3. Saving
4. Alternative Investements
5. Paying down debt (fast!)

CNN Money’s Get Out of Debt calculator:
Enter your debts (they’re optimistic as there’s only five lines but an option to add more). Choose from the following options:
1. Fixed Payments (how long ‘til I’m debt-free?)
2. Minimum payments (how long will it be and how much will I pay?)
3. Debt-free deadline (what do I have to do to be debt free by my desired date?)

This calculator is anonymous and produced by a reliable source (CNN). It is very, very easy to use. Unfortunately, one thing it fails to mention is that this payoff plan will only work if you put those cards through the shredder!

Living on a Dime:
You don’t have to get out all your statements, but you should know what you owe in total and the average interest rate. Plug those in the boxes and you can click “show me the light” which will say how long it will take and what it will cost to be rid of your debt. Another cathartic, though not very useful button is “take it all away” which simply clears the boxes. I realize this is likely so you can re-enter different information and try it again. I put in the same info and “took it all away” several times in lieu of paying a therapist today. I feel better already.

Bankrate.com’s Debt Calculator:

Bankrate.com is a Web site for those shopping for credit cards. If you feel like you’ll be compelled to try… don’t bother, use one of the earlier links. This is a pretty good calculator though. It also shows the interest rates of some other cards. I hope your rates are better than theirs. I know mine are.

What all of these fine organizations fail to do is to remind you to sit down and chop up that card. I’m saving my chopped up card chips for a craft project. Maybe a mobile, or a mosaic or a Christmas Tree ornament. I’m waiting for the inspiration to come to me. (I have strategically tossed some chips from each card in hopes of preventing my relapse into using the cards, but it feels so good to be this close to debt-free that I’ve never felt compelled to use the cards or order replacements.

Another thing that these sites fail to mention is that if you haven’t called in the past three months for a lower rate, you need to do it. Will your card company do a 0% balance transfer from another card? Will they reduce your interest rate for even a short time? I called back in December and got my rates lowered on almost all of my cards. One even told me to call back each month for a lower rate, and would you know, it’s working? My credit card interest rate is now between 5%-8% and it is 0% on one card until August.

Take a look at my post earlier about my results with this technique.

Not having any luck with credit card companies lowering their rates? Many people are using Lending Club to consolidate their credit cards into a single lower-rate loan. I’m an investor (yep, I invest in these kinds of consolidation loans!) with Lending Club, and I’m really happy with the company.

Also, if you’re looking to consolidate, be sure to get rid of those cards so you don’t just start over!

With this we paid off two credit cards, made a substantial payment on another and have a little left over for savings.

When I heard this week that many families who adopted from our agency are being turned down for their interest-free revolving loan program due to lack of funds (apparently many families have stopped paying due to hardship) I was sad.

I wrote a check for our balance $2,500 and drove it to the office the same day. Our loan had been $4,500 and we’d been paying back at $150 per month steadily.

This means I’ll be able to snowball the $150 per month in the future towards our remaining credit card debt, and that other families can benefit from the money we had outstanding on the loan. This is how real credit should work in my opinion.

I know I paid off an interest-free loan before an interest-laden credit card, which is rather foolish, but to me on this matter, it’s about principle, not principal.

Just my $.02 for today… or $2,500 as the case may be.

PS! it feels so good to be free of a debt like this that I’m actually thinking of paying off my student loan early too. Just $2,000 left to go on that one.