I’ll admit, it was a rash decision hiring her in the first place. I was in the midst of leaving my full-time job – and all its lucrative benefits – when I suddenly felt as if all the commercials reminding me to rollover my old 401(k) were speaking directly to me. When a friend recommended her financial planner, I took a bold, daring leap of faith. Scratch that – I took a stupid leap.

I landed in a pile of mud.

My Investment Portfolio

In addition to rolling over my 401(k) from my old job, I also let my new financial planner talk me into opening a series of new retirement accounts. She had me fill out a short questionnaire to gauge my tolerance for risk, then set me up with a spousal Roth IRA and a pair of 529 accounts for my children. In all, I decided to put $100 a month into my new Roth and $25 a month into each of the 529 plans. I wouldn’t be contributing to my traditional IRA, since I would be unable to tax advantage of its tax benefits, since I didn’t have a paycheck from which to pull out pre-tax contributions.

At the time – November of 2010 – my traditional IRA was worth $13,800. Since then, here’s how my accounts have grown over the past 18 months… or not:

• Traditional IRA (initial value – $13,800): $14,400
• Daughter’s 529 (initial value – $0*): $713
• Son’s 529 (initial value -$0**): $527
• Roth (initial value – $0***): $918

Legend:

* – In addition to contributing $25/month to this 529, I also added in my daughter’s Christmas money from relatives, resulting in an additional $300 in contributions

** – I couldn’t contribute to my son’s 529 until after his birth in May 2011. On top of the $25/month I put in from that point on, I also put in $250 in baptism and Christmas money he received last year

*** – After my husband’s work offered him a matching Roth IRA in July 2011, I scaled back my original $75/month investment in my spousal Roth to just $25, putting the difference into my husband’s Roth instead

My Contact With My Financial Planner

My planner – we’ll call her Ms. N – calls once a quarter to check in on us to see if we have any questions. I usually say no. What I should say is:

Why has my IRA only seen a 4% return over the last 18 months, while the Dow has seen returns more than quadruple that?

How have my children’s 529s actually LOST money?

Why has my Roth only earned $18 beyond what I’ve put into it?

Instead, I remain quiet. I try to be a good investor who patiently waits to for long-term results on her investments, instead of demanding immediate returns. I fear I am failing myself.

Why I Need To Move On

The problem is, I really like my financial planner. She’s a sweet lady. She always asks about my children. She invites us to her family’s annual holiday open house. She sends us birthday calls.

But our financial relationship isn’t working out. I’m up to my eyeballs in financial headlines every day because of my job as a freelance writer. Factor in my two children, my household, and my other freelance gig as a media research analyst, and I don’t have time to manage my own finances. I don’t have time to do the research to decide what’s best for my portfolio. That’s why I hired a financial planner; that’s why I pay her to manage my finances for me. If I had the time to do it myself, I would.

My father – who is a CFP, short for certified financial planner – also hires someone else to manage his investments. It may sound redundant, especially for a man who is so aptly qualified to do it himself, but he likes to get someone else’s perspective on his money management techniques. I’ve seen my father’s relationship with his CFP firsthand. Rather than sending my father financial literature on a mutual fund – which he doesn’t have time to read in the first place – his CFP makes a five-minute phone call to discuss it in person. If he can’t get ahold of my dad, he simply makes the move that he knows from years of experience is in my father’s best interest.

This is what I need – someone who is going to take control of my finances, who is going to not only answer the questions for me, but is going to ask them for me as well. Maybe it’s the lazy woman’s approach – although if you call me lazy, I’ll Ann Romney you to the moon (that’s to say, don’t insinuate that a mother is lazy – EVER) – but I need someone to be more proactive about my finances, not just about my family.

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Well, I did it, the last major hurdle I needed to jump to be debt-free has been jumped. No more vehicle loan.

That's right, on May 28th I strutted through those bank doors, looked the teller right in the eye and said, "You feelin' lucky punk?", to which the teller replied with a pathetic whimper and immediately proceeded to wet himself. This caused the cute girl behind the "Loan Officer" desk to swoon with immediate feelings of immense attraction towards me and my anti-debt attitude, which is what prompted her to ride off with me into the sunset… in my paid-off truck, of course.

Okay, I know that didn't make sense, nor did that actually happen, but it sounds slightly more dramatic than, "Hi, I'm here to pay off my loan, can I get the entire payoff amount please?"

Although I gotta admit, it was kind of exciting to write a $6,178.10 check. That's by far the largest check I've ever written. Below is my updated budget, with the parts that have changed highlighted in yellow.

Okay, so the first obvious change: no Dodge Dakota Payment, as indicated by the Rest In Peace. There have been some other budgetary changes however, that have nothing to do with me paying off any debt. The first one is the return of the internet bill. I inadvertently paid off about 6 month's worth of payments to my telecommunications company, and for a while there I had forgot that I actually would have to ever start paying it again. I was reminded pretty quick when a bill came in the mail (it's ironic that a company that provides internet service doesn't have an option to pay online).

The next change is in the Entertainment category. for a few months I had been coming very close to, or going a bit over, my old limit of $250.00, so I've increased it to $350.00 a month. Plus it's kind of hard to keep entertainment costs way down when you decide to break up with a girlfriend who likes to stay at home, rent redbox movies, and generally not spend money. Being on the prowl again isn't cheap (no, i'm not the kind of guy that actually talks like that. Really). Besides, I started to feel a little… cut off from the world, due to all of the events and gossip that my circle of friends engage in that I would choose to opt out of.

Seriously thinking about cancelling the YMCA membership, considering I haven't been there in about a month. It's just far to convenient to work out at work for free, and now that I'm back on second shift it'll be even easier to work out at work, considering I won't have to try and motivate myself to do so in the middle of the night anymore (like I had to do while on third shift).

After all these budget changes, I went from requiring 59.50% of my income to live to 57.41%. It's only a drop of 2.09%, but that extra $100 a month towards entertainment is worth to me, and there's not much I can do about that internet bill. I suppose I could get the cheapest plan they have and drop it down to only $30 a month, but that really is barebones internet service, and considering I have a blog and do so much else on the internet, that would just be too slow for me.

The Future Budget

The only thing left now to pay off is the credit card, which should be more than possible within 2 months. Then I will officially be 100% debt free. Between that and ending my YMCA membership, I have about $90 to trim from my budget. I could cut out the supplements and save a total of $240, but I'm not ready to do that yet. Everything else in my budget I'm pretty happy with. Now, if I could only find a way to eliminate that rent payment…

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So as of April 27^th, the little red Honda has officially found a new home in the wonderful Midwest state of Oklahoma.  For those of you that don’t know or haven’t heard, I’m currently in the process of killing off all of my debt and monthly expenses (as violently as possible, of course), that I possibly can, one by one, in the wake of a recently increased salary.

In one fell swoop, I eliminated $13,463 dollars of debt

I also erased $363.66 from my monthly expenses.

Check out my updated Financial Situation.

As much as I hated to see that car go (hey, I know it’s a Honda, but it was still fun to drive…), I immediately felt better about owning only one vehicle as soon as I got back to my apartment and found only my Dodge Dakota waiting for me.

It was a weird sell though. I had put the Honda on craigslist a while back and got no bites whatsoever, and then out of the blue this middle-aged woman calls me up, saying she wanted to come pick it up tomorrow, for exactly what I was asking, sight-unseen. She was really only calling to set up a time and double-check on the exact amount so that she could get a cashier’s check from her bank. She asked no questions about it whatsoever. Granted, my ad on Craigslist was overly-descriptive, but come on, who just buys a car like it’s a gallon of milk?

The next day, several hours before we were to meet at the bank (so that I could pay the loan off and they could give her a lien release),she called saying she was flying in from Ponca City, Oklahoma (a 2 hour drive from where I live), and that she would need a ride to the bank.

Immediately my thoughts turned to the Craigslist Killer. Why I jumped right to a murderer instead of a scammer I’m not sure… possibly an unstable psyche.

Anyway, turns out this lady had got her Father-in-law to fly her down in this little single-prop plane, and she was going to drive the Honda back to Oklahoma. All of the sudden it made complete sense. Yup, I had been scared that a little middle-aged woman was going to kill me. Go ahead and laugh.

After sitting in the bank for something like 3 hours, it was all said and done, I had eliminated 61.2% of my debt.

All that remains now is about $2,300 on my credit card, and the $6,000 I owe on the Dodge Dakota, and then I will be among the proud, lucky few Americans that have absolutely no debt whatsoever (and yes, I include mortgages in debt…not that I have one).

I might even call into the Dave Ramsey show and do one of those crazy “I’m Debt Free!!!!!” screams. Or maybe not.

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To see all entries in the on-going saga of My Financial Situation, click here.

My Current Financial Situation

Okay, so in an attempt to put my money where my mouth is, I thought I would spell out every little detail about my financial situation at this time. This will allow me to track my progress and to look back and see how far I have come, providing inspiration and motiviation down the line.

Recent Financial Changes

Recently, I just went another $6,000 in debt with the purchase of a 2005 Dodge Dakota. This seems like a bad thing, except when considering that the plan is to sell my current vehicle, a 2007 Honda Civic Si, which I owe around $13,700 on. Once sold, assuming I get out of it only what I owe, I’ll be saving $7700.

Once the Honda is sold, I’ll have the $6,000 to pay off on the truck, and $2300 on my Discover credit card, for a grand total of $8,300 worth of debt. Luckily, I’ve come into a bit of extra cash lately, and I predict that I will be able to pay off that entire amount within 3 months.

But, until the Honda sells and I pay off the truck and the credit card, my monthly budget looks a little something like this…

Current Budget

Make your Own Budget Here!

I’m making it, but there certainly is room for a lot of improvement. Currently I live on 72.41% of my income, leaving me with $883.00 dollars a month to save and invest. Now obviously this amount fluctuates a bit every month, especially when the once-a-year expenses crop up, such as vehicle registration, maintenance, college books, holiday and birthday gifts, and other not too common expenses, but typically I do okay.

I currently have every penny I’ve spent within the past 7 months recorded, and what I plan on doing after having one complete year of expenses recorded is average out the expenses that don’t occur on a monthly basis to figure out how much to stash away every month for these things, but that’s another topic altogether.

The Future Budget

Here’s where it gets fun (for us financial nerds anyway). The whole goal of my financial life right now is to trim down that budget as much as humanly possible, which means like I mentioned before, selling the Honda and paying off the credit card mainly. This alone would save me $413 a month, plus the amount that my insurance would drop with having only one car on my policy. Sure, the truck is less gas efficient than the Honda, but my insurance will be lower overall than it was with just the Honda on my policy, and it’ll be nice to have a pick-up to move the occasional couch around.

The Projected Budget 

This is what my budget will look like after the Honda is sold, the Dodge is paid off, my insurance drops, my credit card is payed off, and I get rid of my YMCA membership that I don’t use (I have a 24-hour gym at work). I could even go furthur and eliminate another $150 a month by not buying any supplements (in addition to a finance nerd, I’m a borderline body-builder, and as such, I require lots and lots of protein powder…).

Basically, I’ll have no bills, and even after all of the actual mandatory bills (bills that I consider mandatory because they come in the mail, or online, with a definite, set amount), subjective bills (bills that I have at least some control over the amount of), and entertainment, I’m still going to have around $1,600.00 a month to save and invest. Once again, that number will fluctuate, but $1,600 looks a lot better than $883.00.

Eventually I will arrive at my goal of not having a single penny of debt, and really I'm pretty lucky to only have the small amount that I do. For those with large amounts of debt, or just those needing some more tips to reduce whatever debt they have, check out my previous post on Methods of Debt Reduction, and for specific ways to reduce credit card debt, check out How to Pay off and Eliminate Credit Card Debt. 

Anyway, I know this is pretty basic, but it's a starting point, and I’ll post updates in the future as to where I am on my journey from my current budget to the projected one.