I am kind of disappointed this morning since I found out yesterday that the refinance on the rental homes would not work. Apparently, my credit score is not good enough. Ever since 2008, it has been incredibly difficult to get credit so I will be focusing on getting out of debt instead.
Ultimately, it turns out that the net impact on the monthly cash flow won’t be all that different without the refinance. That is because I had to have 2 appraisals and one came in below the expected amount. As a result, I had set aside $10,000 to bring to closing in order to save about $650-$700 per month through decreased payments.
Now that the refinance won’t be going through, I will using that money to pay down a credit card balance in order to save over $2300 per year in interest. Once I get this card paid off which should be in the next few months, I will save almost $800 per month in cash flow which can be added back into the budget. So all is not lost with plan B.
Then once that card is paid off and I get a little more credit card debt eliminated, my credit score may very well be in a better place that I could refi the rental houses, decrease my interest rate and my term. I don’t anticipate rates moving up any time soon. I would think that I have a year or more to get a better interest rate.
If not and rates start to increase, that would mean that the economy is heating up which will only help my retirement account investments in the stock market. So I look at it as a win-win.
With this behind me for the time being, I can now focus on getting the business transaction complete and meeting my 2 goals for this year which are losing weight and paying off debt. In fact, I am about to launch a blog solely devoted to working my way out of debt which should bring some increased accountability and motivation to the equation.
I will let you know when it is up and running.
Here are the recent carnivals that have included articles from my blogs:
Wow, I can’t believe how busy it has been last week and this week. I will have to write a post about it sometime to explain what has been going on. Suffice it to say, that it is certainly interesting and will make for lots of good posts in the future. As a result of all that has been happening, I am just now getting to the obligatory goals post for 2013.
It should be a pretty easy post though, because I only have 2 main goals: Pay off some debt and lose some weight.
1. Pay Off Debt
I am having a new blog designed to help with this goal and will probably put more information on that site once it is up and running, but I am wanting to pay off quite a bit of debt this year which should help with the monthly cash flow. I have put together a spreadsheet and a plan and so far, January is going according to plan. It should be a lock for the first half of the year. I am a little more concerned as we get into summer.
You see, the plan is to pay off a certain amount of debt each month and maintain a cushion since my income can fluctuate somewhat from paycheck to paycheck and the budget is pretty tight although it is better than last year. I have enough in the cushion to make it through at least May even if the income comes up short or I have an emergency. But, I want to be able to continue the momentum as long as possible so I will be keeping a close eye on the extra funds.
2. Lose Weight
Unfortunately, yesterday I was the heaviest I have ever been in my adult life. Terrible, I know. I suspect that it has something to do with the amount of stress that the debt had been having on me throughout the last half of the year. Now that I have a little breathing room and a plan for creating more room, I should be able to focus more on my health. I do continue to lift weights and plan on playing softball in the spring and summer, so I have to get to a better playing weight by losing 15 pounds by May. That is only about a pound or a little more per week, so it should be quite feasible.
The way I look at it, focusing on just 2 main goals for 2013 will increase my odds of success. I really don’t have any blogging goals for this year since I am really just going to consider it a hobby and will write when I have something to say and feel like I have the time.
If what I am working on pans out, then I will have enough to do and can make money at the same time.
Those words always seem to bring up negative feelings and connotations when I hear them as if someone hasn’t really sent you the money that they owe and are simply buying time to keep you from hassling them. I had a renter who was real good at saying those words. Interestingly enough, the postmark was always a day or three later from our initial conversation. Needless to say, I wasn’t too disappointed when he moved out.
But now those words are taking on a different meaning for me. I am saying them myself and am actually pleased to be saying, “The check is in the mail.” That’s because I am the one sending the check. And the recipient is the IRS.
This morning I was able to make out the last check payable to the United States Treasury that I will have to write for the tax years of 2010 and 2011. From now on, I am planning on being caught up and putting this ugly chapter of my financial life behind me. I am not quite ready to discuss how I got myself 6 figures in the hole, but it wasn’t pretty. However, I can say that I have learned from my mistake and continue to learn daily.
I ended up having to cash out my retirement accounts from a previous employer (I still have a newer account). My accountant sent in the money for the taxes and the penalty and deductions this year should have kept up with any tax liability for 2012, so I am hoping that I will never have to owe that much in my life again.
Even though the check was quite large, I had a big smile on my face and feel much relief. Now it is time to tackle some other debts and see what I can get done over the next few years. Paying off debt should free up some funds in the budget and allow me to make some positive progress in net worth even if I am not investing a lot in assets. Instead I will be paying off liabilities and increasing my cash flow and net worth from that side of the equation.
Tracking My Progress
I plan on starting a new blog to help track my progress and bring some public accountability to my actions. I ordered the domain name this evening and am having Andrea from Nuts and Bolts Media help out with getting the site looking good along with all the other mundane things that I figured out I don’t want to do. I would much rather write. Not that I am the greatest writer, but I enjoy it so much more.
Once the site is up (hopefully by 2013), I plan on making a post or two per week. I can explain some more about my goals for debt reduction over the next few years and you can follow my progress if you wish. I am looking forward to it, especially the part about paying off debt. By knocking out the IRS debt and a few others, my monthly expenses are less than my income on paper at least.
And thus ends four years of contacting the IRS and spending hours on hold and getting transferred from department to department to explain myself and keep the hounds at bay. Just think of all the extra time I will have.
Readers: Ever been in debt to the IRS?
On a more pleasant note….
Here are some of the carnivals in the past few weeks that have included some of my content: