February 1, 2017
By Scott Lewis
After last status update it's hard to decide what is most important
for the coming 2017. I have made long term plans in the past, and they
rarely ever come to fruition. The worst of those was the debt reduction
I expected to do with the equity my ex-wife and I were to get out of the
sale of our house in 2015.
We poured a significant amount of money into the house to prepare it for selling, then had to lower the price, and take an offer that was not ideal. This meant that my debt went up prior to selling the house, and there was less money after selling the house to pay off the increased debt. Ouch!
So, I am reluctant to make plans based on the fact that my current debt consolidation loan will be paid off on 12/26/2017. Whoo-Hoo! At least that's a nice Christmas present to myself. It will not come in time to make any plans for 2017.
It would be crazy for me to plan for 2018 now. In 2019 I will have to start paying on student loans for my son, so I need to get my finances shored up as much as possible over the next two years.
I am on the fence if I should get another debt consolidation loan. My gut says yes. A fixed loan will have a definite end date when the debt will be paid off. Also, I would be taking this loan against my 401K, so I would be paying myself back. Plus the interest rate is very reasonable at 4.5%. That is very good for a loan with no collateral.
On the flip side, it goes against the Dave Ramsey approach: pay the minimum on all credit cards except the one with the lowest balance. That lowest balance gets as much as you can afford to pay. When it is paid off the entire amount gets added to the next lowest card, and so on until all debt is cleared.
The biggest benefit to the Ramsey approach is its flexibility. You first put $1,000 in a saving account you have ready access to. If you need anything that you would typically put on a credit card, you would use that $1,000. Then you would pay the minimum on even the lowest balanced credit card until you restore the $1,000 in your savings. Then return to paying as much as possible on the credit cards.
As an added benefit to the Ramsey plan, I could apply profits from my photography work toward a credit card, paying down the balance even faster. This could lead to getting out of debt sooner.
Of course, once you have your debt under control you can try applying for credit cards with 0% interest for 12-18 months (or whatever) and transfer a balance and cut up a card. This should help as long as you are diligent and don't slip up. Less interest will help pay it off faster. But slipping up will drastically set you back.
I am not sure I am disciplined enough to do all that, hence the reason I am contemplating getting a new debt consolidation loan in Jan 2018. With a new loan I would literally cut up all credit cards except one. Like everyone says, that one card would be for emergencies only. OK. I would use it for travel. It is far easier to use a credit card to rent a car than a debit card. Also, there is more security in using a credit card. You can always dispute a fraudulent charge on a credit card. You can't always get the money back from a fraudulent charge against a debit card since the money, and bad guys, are long gone. So it would be used for online purchases and such, and likely continuing charges such as my Netflix and Photoshop CC subscriptions.
2017 is going to be a game of waiting. If I do the loan in Jan 2018, followed by some amount of income tax refund, and a [hopeful] bonus from my job, I should be off to a great start in 2018. That is the time I will be looking at buying two cars. Something to replace my Ford Focus as my daily driver, and a possible classic. Because it is so far into the future I can't imagine what that will look like. I have been looking at cars online, because... like GIECO... that is what I do. However, in so looking, I am seeing cars I really like that are viable daily drivers, but could come with a large maintenance cost (read: Porsche). I might need to have my Focus for a backup car. Which might make it tough to have a classic as well. My garage could be get too full. Talk about 1st world problems.
So... let's just see what happens in February of this year.
Back in the Spring of 2016 I tweaked my deduction status to provide a higher paycheck, with the idea of a smaller income tax refund. There is no hard and fast rule for that. I can't just change the number of deductions (per paycheck) and know exactly what that will do to my refund. If I have to pay this year I am going to hate myself, and have to reverse what I did making me poorer paycheck to paycheck.
Also, when I did the tweaking it was while I had 2 sons living with me. One son moved back in with his mother, so I am losing a deduction there. However, I bought a house so I am gaining a deduction. Which is the larger deduction, a kid or a house? I am impatiently waiting for the tax paperwork from my mortgage company as I write this.
OK. I have said a lot but did not say anything I would LIKE to do in 2017, even if it won't happen. Here are a few things I am hoping for:
* A Trip to Northern California - my girlfriend loves to travel. I want to take a nice trip with her. We have gone out of town 4 times for very short trips. I would like to take a week or so and go to California. I am thinking of flying into San Francisco. Spend some time there, rent a car and go up to Napa Valley for a bit. Then head down to Monterey for a couple of days. Granted, she may want to go somewhere else. A tropical beach resort where they bring you foo-foo drinks with fancy umbrellas all day long. I could to that too. Also, she has hinted at Italy!
* A New Camera - If you have been reading this column you know I use an old Canon T2i as my only camera in my part time work as an "Automotive Enthusiast Photographer" (www.scottlewisphotos.com). My gut says get the new Canon 5D Mark IV. It is a significant upgrade in resolution, which I need for the large printing I do on a regular bases. But it is expensive, and I wonder if there aren't better options. Sony's mirrorless cameras are awfully tempting, and the Canon 7D Mark II is a great affordable camera, but still a crop sensor camera with too little resolution. I really want to step up to a full frame camera. The Canon 5DSr is 50 MP, but slower than the Mark IV. And do I really need 50 MP, even if I do print large. Oh, and Canon is expecting to release the 6D Mark II this year. The 6D is more consumer friendly and affordable than the 5D line. If that continues the 6D Mark II might be the best fit. Just based on model designation it slots right between the 5D and 7D lines, so it makes sense that it could be idea for my needs. The current 6D's focus system is a deal breaker for me and teh track day shooting I do. If the 6D Mark II gets the focus system from the 7D2 or 5D4, and at least 28 MP it will likely be the camera I buy. Time will tell.
* Patio Furniture - I would like to put a small table and chair set on my back patio... with shade. Is that shade as simple as a large umbrella, or maybe a canopy, or triangular sun shade sails, or... whatever won't piss off the homeowner association, and is reasonably priced.
* Bedroom Furniture - A couple of nightstands and Headboard for my room.
* Blinds/Curtains - for the living room to cut down on reflections in the TV and darken the room when watching TV/Movies, as well as insulating curtains for the master bedroom to cut down on heat (the afternoon sun comes directly into my bedroom).
* Speakers for the living room - These would be higher quality to improve the quality of music listening initially, and also be the start of beefing up my home theater.
* Web site decision - I still can't send emails out with links to my own web site. Spam filters stop the email (on email servers). Yikes! My domain name comes up for renewal in May (I think). I will either drop it and the site will go away, or I will get a new domain name and move everything over. I have not decided yet. My photography site with Zenfolio renews around the same time (May or June). Since I only do custom printing and don't sell anything on my site, I will be looking into stepping down the site to a lower level. I don't need the e-commerce. I need to see if a lower tier of service will still allow me to have my own domain name. I do not want to have Zenfolio in the name. I make just have to go with another company (yes, Squarespace is on my radar).
That's all I can think of at the moment. I'll keep you posted.