Total Money Makeover Update: April 2008

It’s been four months since Chris and I began our slightly modified Total Money Makeover plan, and despite our lack of what author Dave Ramsey dubs “gazelle intensity,” we’ve made some decent progress toward eliminating out non-mortgage debt. If you count the $4200 home equity line of credit we knocked out from September 2007-January 2008 for our new air conditioner, we have paid off $17,830 in non-primary mortgage debt so far.

I say that we aren’t gazelle intense because we haven’t done most of the things that Ramsey’s less fortunate listeners often have to do in order to dig themselves out of debt:

– Work a second or third part-time job
– Sell off leveraged big ticket items
– Cut off ALL entertainment and travel
– Eat a lot of rice and beans

Because our debt was largely comprised of low-interest rate student, auto, and home loans, not credit card balances, and we are fortunate enough to have a dual income household that brings in enough to cover basic living expenses, retirement funding, a reasonable amount of entertainment spending, and debt payments on those loans without ever being at risk of falling behind, we have been able to throw a lot of money at our debt snowball without changing our lifestyle very much. Granted, I have had tightwad impulses since early childhood, and Chris has been pretty responsible with his finances since an ex-girlfriend set him straight years ago, so you could say that the only thing holding us back from paying my car and his student loan off early was complacency. It was easy to just keep on making those minimum payments according to the bank’s schedule, especially since we were doing all the right things in terms of retirement savings and budgeting.

We also had no big ticket toys like boats or over-priced new cars to sell off, but we’ve done pretty well just by doing the following:

– Temporarily reduced retirement savings to just 4% of our gross income (down from 15% for Chris and 20% for me)
– Cut back on movie theater outings and used the 12 free Blockbuster rental coupons I earned via e-Rewards instead
– Cut back on dining out
– Chris started making his own sandwiches for lunch at least 2-3 days per week and brews his own coffee at home instead of buying some on the road
– Reduced untracked spending on hobbies, clothing, electronics, games, and other non-essentials.
– Put any bonus income (tax refunds, sales commissions, mileage bonuses, gifts, etc.) toward the snowball

Here’s where we failed to be gazelles: Some of the extra things that we did spend on probably could save us several months on the debt snowball, but we made the choice to budget for these items and deal with the extra 2 months it would cost us.

– Chris built a new desktop computer system with $1200 from our 2007 tax refund.
– I set aside $800 for the Pink Dumbbells/John Stone Fitness Bahamas cruise in August.
– I threw in $400 for a new mattress and box spring set in February. (The old mattress was sagging badly and made my back hurt every day. I consider this preventive health care. Chris’s mother threw in another $300 toward this as a gift.)
– Chris paid for the roundtrip airfare for us to visit his father in Alabama (~$400) and for his friends’ out of town wedding in June (another $400).
– Chris spent $350 or so on the materials needed to re-pave our small walled courtyard.

Reducing our retirement contributions for 2008 has probably made the biggest difference in our progress, followed by our unspoken agreement to control impulse spending on both lattes and gazingus pins. Although we both budget around $50/month for fun money, neither of us has spent much of our allowances. We’ve decided to really take advantage of the forgotten entertainment and hobby materials we have on hand instead of accumulating more. Chris has been geeking out with D&D and cards (World of Warcraft collectible card game, not poker) at his friends’ houses instead of going out and spending money on movies and dining out. I’ve been outfitting myself and Chris with home-sewn clothes made strictly from my existing stash of fabric, patterns, notions, and oversized free t-shirts. We both check out books and audio books from the library instead of purchasing them from Amazon.com.

I haven’t bought a Wii yet, and Chris hasn’t acquired a new car stereo system. No new fitness gear has appeared in the house since I the Cardio Coach New Year’s deal in January.

And you know what? We haven’t been bored at all.

$31,782 more until financial freedom!

Baby Step
Amount
Target
Complete
Actions
1. $1000 to start emergency fund
$1000
1/25/08
1/25/08
Contributed a combination of wedding gift money, personal savings, and bonus commissions to a shared savings account earning 3.75% APY
2. Pay off all debt (except the home) using a Debt Snowball
$49612
2/1/10
2008 Debt Snowball

2009 Debt Snowball
  • Maggie Visa
$600
9/1/07
9/1/07
Made two $300 payments to clear the balance, then retired card to safe.
  • Discover (Leftover wedding expenses)
$862
1/10/08
1/12/08
Paid balance in full in January 2008; card still actively used for gasoline ONLY. Balance paid in full each month going forward.
  • Chris Visa
$1000
1/15/08
1/15/08
Paid balance in full in January 2008. Card retired to safe.
  • Amex (travel, Ikea couches…)
$1944
1/21/08
1/20/08
Paid statement balance in full in January 2008. Card still actively used for recurring utility bills, but will be paid in full each month going forward.
  • HELOC (new A/C in 6/07)
$4200
1/23/08
1/23/08
Chris and I both cut off federal income tax withholding from 9/07 – 12/07 after calculating that we were both overpaying. The excess money in our paychecks was used to make aggressive $1000 payments on the HELOC every month.
  • Maggie Car Loan
$3490
5/1/08
Remaining amount: $559. Paid extra $1500 from 2007 tax refund and $500 from personal checking account on 4/17/08. Paying one more payment of $559 in May 2008. I already made a large extra payment of $1500 on the car soon after the initial purchase.
  • Chris Student Loan
$12000
6/1/08
Remaining amount: $6550. Chris was able to contribute an additional $2100 on top of his originally-budgeted payments these past few months, which might allow us to pay off the student loan a month earlier depending on when we receive our economic stimulus check for $1200. Combined payments of $1970-$2420/month until the loan is paid off around 6/2008; under the original loan terms and payments of only $220/month, it would be another 5 years before we would be clear!
  • 2nd Mortgage
$25516
2/1/10
Putting this one on hold until after the $10,000 emergency savings account and 2008 Roth IRAs are fully funded. Regular minimum payments of $205 through 1/2009, then payments of $2006 from 2/2009 until 2/2010
3. 3 to 6 months of expenses in savings
$10000
9/1/08
3 deposits of $2774/month and one deposit of $820
4. Invest 15% of household income into Roth IRAs and pre-tax retirement accounts
15%
of gross income
2/1/09 (ongoing)
Fully retroactively fund both household Roth IRAs for 2008 at $5000/each from 10/08-1/09. Reinstate monthly Roth IRA contributions for 2009 @ $454.55/month each from 2/2009-12/2009. Increase 401(k) contribution to 5% (currently at 4%). Regular monthly Roth contributions of $466.66 each starting 1/2010.
5. College funding for children
TBD
…Er…No kids yet. Need to see if an education savings account can be started without actual offspring.
6. Pay off home early
$135880
3/1/16
Research refinance into 15 year fixed rate mortgage and/or set up extra principal only payments of $1400/month to pay off home within 6 years.
7. Build wealth by investing
TBD

Taking Baby Steps & Rolling the Debt Snowball

As most of you know, my husband and I have been following the steps in Dave Ramsey’s Total Money Makeover (TMM) book since the start of the year. Actually, we inadvertently got started last September with a more limited plan to aggressively pay off the $4200 we put on our HELOC in June when our A/C had to be replaced, but I was introduced to both Dominguez and Robin’s Your Money or Your Life and Ramsey’s book not long after that and started planning our TMM almost immediately when I realized how much of our combined income was going toward payments on debt…and how long it would take to be debt-free except for our primary mortgage if we only paid what was required in our banks’ coupon books. (Seventeen years, in case you were interested, because we took out a 20-year piggyback mortgage at 6.75% in 2005 when we bought our house. The next longest payment cycle would be Chris’s student loans, which have somewhere in the neighborhood of 55 monthly payments remaining.)

I also ran some projections as to how much we would have left over each month from our take home pay for savings, retirement, investments, and fun money if we only had to pay for a $1200 mortgage payment, $400 in utilities, and $200 for food.

It was pretty staggering–somewhere in the neighborhood of $4000 EACH MONTH.

I’d always thought that we were doing pretty well considering that we were bringing in around $90-$100k/year in combined gross income in the relatively cheap central Florida area and weren’t into expensive hobbies or ostentatious displays of wealth in our home, cars, or clothing. Both of us contributed between 12%-20% of our incomes into our 401(k)s and Roth IRA accounts like the cynical, Social Security-doubting Gen-X’ers that we are. We always had enough to cover our living expenses, a reasonable amount of shared entertainment, and one or two trips to visit family each year, but we didn’t have any non-retirement savings at all for emergencies (see above note about having to borrow $4200 against our house to pay for a new air conditioner…) and no concrete plan for how to save up the money for a kitchen renovation and the delayed Mediterranean honeymoon cruise we’d still like to take at some point. We should have been able to save a LOT more than we did, but we had become so complacent with our finances and so accustomed to monthly debt payments that we never took a look at the overall big picture.

Curious about how long it would actually take us to clear everything but the primary mortgage if we followed Ramsey’s Baby Steps to Financial Freedom and suspended retirement contributions for a year or two, I took a look at our average take home pay, fixed expenses, and debt obligations and calculated that we could easily pay off everything except the primary mortgage in 26 months starting in January 2008.

Two years, two months versus seventeen years!

And this was possible even taking into account continued 4% minimum contributions to our 401(k) accounts to receive our company matches and monthly allowances for some entertainment, one or two dinners out, and regular contributions to an irregular expenses fund to cover things like holiday and birthday presents, family visits, and car insurance. I felt both chagrined and elated; chagrined that we would have blithely gone on paying the minimums on our car, student, and home loans forever, and elated that a bit of time spent budgeting and planning could put us in a great place financially within 2 years if we just stopped settling for “good enough” and really aimed for “ass-kicking awesome.”

(We’d also like to have one or two Brilliant, Scholarship-Winning, Stunningly Attractive Half-Asian Offspring before I turn 37 and the chances of a high-risk pregnancy start to increase dramatically, so knocking the monthly expenses down by half before I have to take a break from my career to spawn would be nothing short of genius.)

So here I present to you our current progress toward financial nirvana. Completed line items will have a strikethrough and a completion date. Notes/plans for each item will be in the Actions column, and each TMM Baby Step is shown in boldface font.

Baby Step
Amount
Target
Complete
Actions
1. $1000 to start emergency fund
$1000
1/25/08
1/25/08
Contributed a combination of wedding gift money, personal savings, and bonus commissions to a shared savings account earning 3.75% APY
2. Pay off all debt (except the home) using a Debt Snowball
$49612
2/1/10
  • Maggie Visa
$600
9/1/07
9/1/07
Made two $300 payments to clear the balance, then retired card to safe.
  • Discover (Leftover wedding expenses)
$862
1/10/08
1/12/08
Paid balance in full in January 2008; card still actively used for gasoline ONLY. Balance paid in full each month going forward.
  • Chris Visa
$1000
1/15/08
1/15/08
Paid balance in full in January 2008. Card retired to safe.
  • Amex (travel, Ikea couches…)
$1944
1/21/08
1/20/08
Paid statement balance in full in January 2008. Card still actively used for recurring utility bills, but will be paid in full each month going forward.
  • HELOC (new A/C in 6/07)
$4200
1/23/08
1/23/08
Chris and I both cut off federal income tax withholding from 9/07 – 12/07 after calculating that we were both overpaying. The excess money in our paychecks was used to make aggressive $1000 payments on the HELOC every month.
  • Maggie Car Loan
$3490
6/1/08
Pay $2000 from 2007 tax refund on 3/10/08. Paying $353/month for 4 more payments until car is paid off 6/1/08. I already made a large extra payment of $1500 on the car.
  • Chris Student Loan
$12000
7/1/08
Combined payments of $1470-$2020/month until the loan is paid off around 7/2008; under the original loan terms and payments of only $220/month, it would be another 5 years before we would be clear!
  • 2nd Mortgage
$25516
2/1/10
Putting this one on hold until after the $10,000 emergency savings account and 2008 Roth IRAs are fully funded. Regular minimum payments of $205 through 3/2009, then payments of $2006 until 2/2010
3. 3 to 6 months of expenses in savings
$10000
11/1/08
4 deposits of $2320/month
4. Invest 15% of household income into Roth IRAs and pre-tax retirement accounts
15%
of gross income
3/1/09 (ongoing)
Fully retroactively fund both household Roth IRAs for 2008 at $5000/each from 12/08-3/09. Reinstate monthly Roth IRA contributions for 2009 @ $555/month for 2009. Increase 401(k) contribution to 5% (currently at 4%). Regular monthly Roth contributions of $466.66 starting 1/2010.
5. College funding for children
TBD
…Er…No kids yet. Need to see if an education savings account can be started without actual offspring.
6. Pay off home early
$135880
3/1/16
Research refinance into 15 year fixed rate mortgage and/or set up extra principal only payments of $1400/month to pay off home within 6 years.
7. Build wealth by investing
TBD

And if we decide to stay in the same house for the long run and pay it off early by making an extra monthly payment from just half of the freed up cash after we finish our Debt Snowball in February 2010, we could conceivably own our home outright within 5-6 years. Wow.

Payment
Options
Start
Date
Loan
Balance
Total
Interest Paid
Payoff
Date
Original
30-year Fixed Rate Mortgage
12/1/05
$144000
$166806
12/1/35
Accelerated
Payments (+$1400/month) starting 3/2010
3/1/10
$135880
$61141
3/1/16
Savings
$105665
in interest savings and 19 years, 9 months of time*

* Calculators used: Bankrate’s Mortgage Calculator to get the figures for the original mortgage terms and an amortization table, and Debt-Proof Living’s Mortgage Payoff Goal Calculator.

1/25/08 Log: $150 Billion Stimulus Package

I weighed in at 142.0 lbs flat this morning, so the fat is definitely burning off again, albeit slowly. I’m starting to notice the changes in my arms and midsection now, so I’m happy. PMS water retention is most likely at play right now, too, which means that I’ll very likely be sub-141 in a week.

Yesterday’s meals were right on target, and I got in 30 minutes of inline skating during lunch for my workout. Today I will have the house to myself when I get home, so I plan to do my TT 2k3 workout A there with bodyweight circuits for my intervals. During lunch I think I will take a shot at doing my annual birthday pushup challenge of 10 pushups per year of life, so I have 330 reps to do this year. Maybe when I turn 50 I’ll start REDUCING the number by 10 every year, hehe.

So it seems that the House has cobbled together a $150 billion economic stimulus package that they hope to get signed next month that will affect some 117 million families.

Washington Sets $150 Billion Plan To Jolt Economy

Senate Pressured To OK Stimulus Deal

From the first article in the Wall Street Journal:

One important provision temporarily raises the dollar limit on mortgages that can be bought or guaranteed by government-sponsored mortgage giants Fannie Mae and Freddie Mac. The current limit of $417,000 would rise above $600,000 and perhaps as high as $730,000 in the most expensive areas, congressional leaders said.

The centerpiece of the package is $100 billion in tax credits for an estimated 117 million families this spring. Most individuals who pay income taxes would get $600; working couples would receive $1,200. Workers who make at least $3,000 but don’t pay income taxes would get checks of $300 to $600. People in both groups would get $300 credits for each of their children.

Top Democrats said they intend to send a bill to President Bush by Feb. 15. If that happens, rebate checks or electronic transfers would probably arrive between May and July.

Businesses would be able to deduct an additional 50% of the cost of certain investments in 2008. In addition, small businesses would be able to write off more expenses from their taxes: $250,000, up from $125,000.

The checks would be gradually phased out for wealthier taxpayers. Couples with income of more than $174,000 would get nothing, unless they have children.

The Internal Revenue Service expects to be able to begin mailing out checks and making electronic transfers by May, said Mr. Paulson. He told reporters the “lion’s share” of payments would be completed within the following 10 weeks.

Until the plan is final, it is difficult for congressional budget experts to estimate the impact it will have on the federal deficit. But Senate Budget Committee Democrats said Wednesday that a $140 billion stimulus package would add about $100 billion to the deficit in fiscal year 2008, which began in October, bringing the total budget shortfall for the year to about $350 billion.

There you have it. Most of us will be eligible for the $600 per working adult rebate in May, assuming the president signs the bill, but our country as a whole is going to go another $100 billion in debt to pay for it.

What will you do with your $600, $1200, or more (if you have kids)? Do you plan to spend it and stimulate the economy, save it for a rainy day, or pay off existing loans and debts?

=======================
WORKOUT
=======================
– TT for Fat Loss 2K3 Workout A (40 min)

A1) Chin-ups (3×6 @ Bodyweight)
A2) DB Chest Press (3×6 @ 40 lbs)
B1) DB Row (3×10 @ 37.5 lbs)
B2) DB Low-Incline Press (3×10 @ 37.5 lbs)
C1) Decline Push-ups (3×12)
C2) DB Incline Biceps Curl (3×12 @ 17.5)

– Bodyweight circuit intervals x 6 (20 min)

=======================
NUTRITION
=======================
M1) 60g oats and raisins, 3 egg whites
M2) Homemade trail mix (1/2 oz. walnuts, 20 g raisins, 3 dried apricots, 1/4 c. Fiber One cereal)
M3) 4 oz. whiting filet, 1 c. veggie mix, 1/2 c. Kashi 7-grain pilaf
M4) 1 c. Go Lean Crunch, 1 scoop protein powder
M5) 1/2 c. 1% cottage cheese, 10g walnuts, 3 strawberries
M6) 4 oz. whiting filet, 1 c. sauteed spinach, 1/2 oz. walnuts

Supplements: multivitamin, calcium 600 mg + D, vitamin C, 5g l-glutamine, 3 fish oil caps, 3 Digest-All caps

12/6/07 Log: Xmas Skates and Baby Steps

Calories were a bit high yesterday at 1705 cal (35% carb/40% pro/25% fat), but still within the range recommended in Dr. Mohr’s guidelines for a 140 lb female. I had some extra BBQ pork last night when I got home, alas, probably rationalized subconsciously as a reward for skipping the holiday party at my office complex after work and avoiding the alcohol, candy, desserts, and deep-fried, greasy appetizers that are always served there. I’m just glad I opted for protein instead of the crunchy, sugary carbs that were calling to me. I’m cycling intake a bit lower today to balance the extra calories out. It’s recovery workout/non-strength only today, so this shouldn’t affect training intensity.

Monday’ DOMS is going away pretty quickly now. I got in 30 minutes of Yourself Fitness Cardio cranked up to high intensity this morning, and I will be doing an evening stationary bike session at the gym (intervals plus a bit of steady state to get my total minutes up to 30) after work. I’m generally a morning exerciser, but I’ve noticed that I have a lot more energy for hard cardio sessions (interval or medium to high intensity steady-state) after work when I am not in a fasted state. All I do when I go home on Thursday nights is watch CSI anyway, so I might as well do it at the gym with my butt planted on a stationary bicycle seat, right?

140.0 lbs this morning and still slightly puffy from water retention though I’m down 4.4 lbs of water weight from Sunday thanks to some epic water-chugging and very clean eats. I’m shooting for 136.x by the end of the month.

In other fitness news, the two pairs of inline skates I ordered Sunday from Summitonline.com should arrive today. They are non-surprise, mutual gifts from my husband to me and vice versa, so we won’t actually get to USE them until Christmas, but I’m looking forward to having a non-impact, outdoor form of cardio that I can do with my husband in the coming year. Gym cardio machines are really getting old, and as much as I like bodyweight circuits for their do-it-anywhere convenience, sometimes it’s just easier and more fun to do something that doesn’t require quite so much thought and gets you outside in the fresh air.

On the personal finance front, Chris and I have decided to work Ramsey’s Baby Steps as written and suspend our retirement contributions starting January 1, 2008 until we get all of our non-mortgage debt paid off and a $10,000 emergency fund established. This should only take 16 months (~April 2009) at most–it may go faster depending on whether Chris pulls in any large sales commissions and/or if I return to doing more freelance illustration work–and with over $100,000 already in our combined retirement accounts, the temporary break from contributing shouldn’t hurt us too much. I’ll simply be even more motivated to get steps two (Pay off all debt using the Debt Snowball) and three (3 to 6 months of expenses in savings) finished as soon as possible so I can try to make the April 2009 deadline for funding my 2008 Roth IRA.

Woohoo! I love having a goal, a plan, and a challenge!

======================
WORKOUTS
======================
– Yourself Fitness Cardio (30 min)
– Walk (25 min @ 4 mph)
– Stationary Bike Intervals (1 min @ L9/1 min @ L13 x 6) + 15 min medium intensity steady-state (L9) (30 min total)

======================
NUTRITION
======================
M1: 3 egg whites, 1/2 c. spinach, 45 g. oat cereal, 1/3 c. light soy milk
M2: Pineapple soy protein smoothie
M3: 4 oz. sauteed tilapia, 3/4 c. asparagus veggie mix, 1/2 small banana, 2 small orange
M4: 1 c. light soy milk, 3/4 scoop mocha protein powder, 1/2 oz. walnuts
M5: 3 oz. chicken breast, 3/4 c. asparagus veggie mix, 1/2 oz. walnuts
M6: 3 egg white/1 whole egg omelette with 1 T. ketchup and 1/2 c. spinach

Water + Green Tea: 16+ cups

Supplements: 1 multivitamin, 1 calcium 500 mg + D, 6 fish oil capsules, 1 vitamin C, 5g l-glutamine

Financial and Physical Peace

I’ve been listening to and reading the writings of financial talk show host and author Dave Ramsey recently, and it has really struck me how many of the things he says about financial responsibility and freedom correlate to fat loss and fitness as well. I’m in decent shape both financially and physically thanks in equal parts to a no-frills, frugal upbringing, a series of smart, informed choices in money and lifestyle, and a decent amount of self-motivation, but I wouldn’t say that I have reached my ultimate goals in either arena yet.

At various times, in my own sometimes hard core, sometimes laid-back way, I have come close to being completely debt-free or reaching that elusive 15% body fat/130 lbs. I’ve even hung out at both of those milestones for a few months at a time…. But then something always comes up–a $1000 car repair that had to go back on a credit card because I didn’t have an emergency fund yet, a big crunch at work that derailed my workouts, an unexpected out-of-state wedding that set me back both financially and fitness-wise–and I am back to trying to reach that $0 debt baseline and 16% body fat again instead of being able to move forward by SAVING up for emergencies and actually training to IMPROVE performance.

On the occasions I’ve actually reached both goals, they didn’t stick for more than a few months because I hadn’t completely changed all of my old ways. I’ve never fully fallen back into stupidity, but I keep giving myself too much leeway with impulse gadget/book/software/game purchases, “cleanish” or downright bad food choices, and inconsistent workouts before I’d maintained my financial and physical statuses for a stable three month minimum. I’ve had too much of a “Yay! I’ve reached my goal! Now I can let up!” attitude, when I really should have been saying, “Yay! I’ve reached my goal! Let me get used to maintaining this for another 6 months to make sure I have enough savings to withstand the next unexpected car repair and that I have a grasp of how much I should eat and work out to keep my physique the way I like it before I start easing up on everything all at once.”

Ramsey says that you must live like no one else (meaning working your butt off and doing without the frills for a while) now so you can LIVE like no one else (meaning financially secure and enjoying all of those things you sacrificed before…but without debt this time) later.

I think this rationale can and should be applied to fat loss. What it boils down to is that neither financial freedom nor a lean, fit physique is achieved without hard work, sacrifice, and a willingness to go against the American norm. (This last item shouldn’t trouble you overly much since the “norm” these days is fat and broke!)

Continue reading »

My Impulse Buy Savings Plan

One of my unspoken personal vows to myself this year (call it an early New Year’s resolution) was to stop buying so much crap on impulse. More specifically, I am battening down the hatches on gazingus pin spending. I have mentioned before that I have enough frivolous crap acquired throughout my 20’s and even (alas) within the past 2 years as I crossed into my 30’s to entertain me for at least two years without the need to buy newer, shinier crap.

The majority of the crap I have accumulated falls into the following categories:

– Books, non-fiction (usually computer, cooking, craft, exercise, writing, or art instruction)
– Books, fiction (fantasy, sci-fi)
– Magazines (cooking, DIY projects, fitness, gaming)
– Video/Computer games
– Ebook/Audiobook downloads
– Clothing (clever, amusing t-shirts are my particular weakness)
– Fabric
– Clothing patterns
– Art supplies
– Computer stuff (computers, parts, peripherals, software)

While nearly all of these purchases were made at less than retail price since I do love a bargain and make full use of ebates.com, fatwallet.com, slickdeals.net, and google for the best deals on everything I buy, few were actual “needs” versus “wants”, and a good 80% of them probably have not been utilized at all within the past year. I hate to admit this, but I’d further estimate that 75% of the media items (books, magazines, games, and software) probably never got truly used for more than 10-20 minutes total each since I bought them.

I’m sure I would be fighting down nausea if I were to total up all the money I have spent on my underutilized crap.

That’s why I have been cutting back so much on my discretionary spending for the past three months, only allotting myself $20/month for fun money. I transfer this exact amount from my primary Wachovia checking account to my ING Direct Electric Orange checking account, and use the Electric Orange debit Mastercard to make non-essential purchases and to pay for the occasional lunch out with the guys at work. I don’t touch my primary checking account or any credit cards for this sort of stuff anymore, and it’s been amazing how much I haven’t been spending on crap since I switched to this method of enforced economy.

I’m taking this a step further now, however, with my Impulse Buy Savings Plan.

This is how it works:

Anytime I am gripped by a strong and legitimate desire to buy non-essential crap of any sort, I will transfer the full cost of the item including tax and shipping from my primary checking account into my Emigrant Direct personal savings account with a memo in Microsoft Money to remind me what item the money is for and let it sit there for one month. If I STILL want the crap a month later, I can, if I desire, transfer the money to my Electric Orange checking account to buy it. However, if the burning need for the piece of crap in question has subsided, I simply leave the transferred funds in my savings account to accrue more interest.

What exactly counts as a “strong and legitimate” desire to buy?

Though this guideline is subjective, crap that I am not actually serious about buying doesn’t have to be counted in this plan–so the cost of stuff like random Slickdeals.net bargains on Wii or Xbox 360 systems that I might look at but not really intend to buy won’t be transferred into savings. I have to have the crap in my online shopping cart, researched best prices and any savings codes for the merchant, filled in my payment info, and be on the cusp of hitting the “Confirm Order” button in the case of online purchases, or have been toting the item around for at least 20 minutes in a brick and mortar store with the full intent of purchasing it for the purchase price to make it into my savings account.

In this manner I plan to save up enough money to cover the expense of my ticket to the Pink Dumbbells/John Stone Fitness cruise next year.

I am morbidly curious about how long it will take me to build up the $350 needed for the cruise in this way.

I only started this plan two days ago, and already I have scheduled a $33 transfer to the savings account–$10 for NOT buying a copy of Patrones magazine (an imported Spanish pattern magazine) from a fellow sewing enthusiast, $13 for NOT buying two ebooks at Fictionwise.com despite the 100% Micropay rebate on one of them (the 2 ebooks are still sitting in my cart), and $10 for NOT going to see a vampire movie tonight with Chris that I KNOW I would hate. (I debated about the movie for a good 30 minutes, visited Rottentomatoes.com to research it, and seriously considered going just to be social, so I count this as “toting around the store” time.)

I’m almost 10% to my savings goal already!

How scary is that?