From a Hole to a Hill

I've written before about my struggles with debt and credit, and my attempts to remedy a screwed-up financial past. In a nutshell, at a bad point in my life, I got in over my head with debt. I once had my phone turned off and once had my ATM card eaten because I was so overdrawn on my bank account. I used to be ashamed to put those things out there for all to see, but I think more and more people are coming out of the "debt closet." And I see myself as a lesson others can learn.



I am proud and ecstatic to say that I have once and for all paid off all my unsecured debt.



While I still have a car loan (which I would label acceptable, typical debt), last month I wrote the last check to pay off the personal loan I had taken out to consolidate my credit card debt. The debt had been five figures. And it's all gone now!



I've been steadily paying on this loan for several years now. In the meantime, I got rid of all my credit cards, and got a new one with a tiny limit ($300) so I could work to rebuild my credit. I pay it off every month. I've also done a number of other things that years ago I never imagined I could accomplish:

1. I put 6% of my salary into a 401(k) plan.


2. I put an additional 3% of my take-home pay into a Roth IRA.


3. I put 10% of my take-home pay into an emergency fund.


4. I invested around a thousand dollars in the stock market shortly after the "crash" and have seen my money grow by 70%.

The best thing about having my debt paid off is that, instead of filling in a hole, I can start building up. I ran some numbers a little while ago. I do that when I'm either extremely worried about money or extremely excited. This time I am excited. This is what I realized:

• If I take the monthly payment I had been making on my personal loan and now put it towards my car, I will pay off my car four years early. The interest I'll save is in the thousands.


• When I pay off my car, I can put the combined loan-car payment into the bank each month (it's not like I'll miss the money; I've been writing it off for years). If I do that for three years after the car is paid off, I'll have enough money for the down payment on a house.

The down payment on a house. By myself. In the next five years. And I'm not talking about some 3% down payment for an FHA loan. I'm talking about 20%.

It's an almost unbelievable thought for me. I just want everyone who reads this (all four of you) that it can be done, with patience, dedication, and discipline. The rewards--financially, emotionally, spiritually--are great.

A Brief Commentary on my Previous Tax Post

I know I posted all that without supporting my negative opinion of the taxes. So here's a very, very brief commentary.

1) They are not all bad. I will support any increase in tobacco taxes simply because, come on: quit already, you douche. You're killing yourself. It's a deterrant tax, and that's okay with me. Simimlarly, I support taxes that help balance out environmental impact.

But many of these are excessive, inappropriate taxes for taxes' sake. I agree with Lisa: you want to tax gastric bypass surgery? How about putting an extra tax on trans-fat containing food, instead? (deterrant tax)

2) They just raised our sales tax by 20%. That wasn't enough?

3) The Maryland State Legislature has been debating naming a state dessert.

Maryland State Legislature, don't you dare add more taxes so you and your wankerous companions can charge the state $17,184 a day to debate cake.

Simultaneously, another bill argues that 31 percent of Marylanders get no exercise, that almost a quarter of the state's adults are rated as obese, and that designating walking as the state exercise would help promote a healthy lifestyle. Um, how about not designating a state dessert then??

This is the bullshit they're spending our tax dollars on.

Until they come up with better ways to spend my money, I'm going to continue to begrudge giving it to them.

The MD State Legislature is Screwing Up

Taxes, Taxes, and More Taxes (2008 Edition)

From The Maryland Republican Party Research Department Visit the MDGOP Web site (

www.mdgop.org

)

During the 2007 Special Session, Democrats pushed through the largest tax hike in Maryland history.

Now, in the 2008 Session, they have found even more ways to take hard-earned money from working families. If the Democrats are successful, the government would start taxing teeth whitening, laser eye surgery, body piercing, and eight other services. Consumers would be required to pay more for heating and cooling systems for their homes, tires for their cars, and premiums for their health insurance due to new taxes. Democrats have even reintroduced legislation to take the balance from gift certificates and gift cards if consumers do not use them.

With gas prices on the rise, another hike in electric rates expected this summer, and the cost of consumer goods at all-time highs, working families need relief – not more taxes

.

Following is a list of new taxes being contemplated during the 2008 Session. Names in parenthesis represent the sponsors of the respective bills.

Income and Consumption Taxes

1.

State Income Tax Surcharge

– SB 1004 (Jones)

a) Increases the highest state income tax bracket from 5.5% to 6.5%

b) About $231.8 million in new taxes expected in the first year

2.

State Income Tax Surcharge

- HB 737 (Elliott, et al)

a) Imposes a state income tax surcharge of $1,000 per single and $2,000 per couple for not having health care insurance, if the person’s income is at least $50,000 ($100,000 for couples)

b) About $43.2 million in new taxes expected in the first year

3.

Hotel Tax

- HB 178 (Barve, et al)/SB 131 (King, et al)

a) Authorizes municipalities to impose a maximum 2% hotel tax

b) Additional $3.2 million in taxes expected per year

4.

Alcohol Tax Increase

- HB 904 (Gutierrez, et al)

a) More than doubles alcohol tax from $1.50 to $3.50 for distilled spirits, $0.40 to $1.00 for wine, and $0.09 to $0.25 for beer

b) Approximately $43.9 million in new taxes expected in the first year

5.

Alcohol Tax Increase

- HB 1310 (Bronrott, et al)/ SB 562 (Madaleno, et al)

a) Triples alcohol tax from $1.50 to $4.50 for distilled spirits, $.40 to $1.20 for wine, and $.09 to $.27 for beer

b) Approximately $57.5 million in new taxes in the first year

6. Alcohol Tax Increase

- SB 232 (Forehand)

a) Triples alcohol tax from $1.50 to $4.50 for distilled spirits and $0.40 to $1.20 for wine, and raises the beer tax by 600%, from $0.09 to $0.54

b) Approximately $86 million in new taxes expected in the first full year in effect

7.

Tobacco Tax Increase

– HB 1095 (Rosenberg, et al)/ SB 513 (McFadden)

a) Increases the tax for tobacco products other than cigarettes from 15% to 25% of the wholesale price

8.

Tobacco Paraphernalia Tax

– SB 363 (Muse)

a) Imposes a $20 surcharge on the purchase of tobacco paraphernalia

9.

“Little Cigar” Tax Increase

– HB 617 (Tarrant, et al)

a) Redefines cigarettes to include “little cigars” so the higher cigarette tax applies to “little cigars”

b) About $1.9 million in new tax revenue expected in first year

10.

Moist Snuff and “Little Cigar” Tax Increase

– SB 383 (Currie and McFadden)

a) Increases moist snuff tax from 15% of wholesale value to 54-cents per ounce

b) Redefines cigarettes to include “little cigars” so the higher cigarette tax applies to “little cigars”

c) About $3.9 million in new tax revenue expected in first year

11.

Ammunition Tax

- HB 517 (Burns, et al)

a) Requires a new tax of 5-cents per round of encoded ammunition (in addition to the new 6% sales tax)

Gas and Vehicle-Related Taxes

12.

Gas Tax Increase

– SB 567 (Garagiola, et al)

a) Increases the gas tax by 33% (from 23.5-cents per gallon to 31.5-cents per gallon)

b) Repeals the computer services tax and shifts the tax burden to gas consumers

13.

Fuel Efficiency Vehicle Surcharge

– HB 338 (Cardin, et al)

a) Imposes a $250 surcharge on each new automobile if the fuel economy rating of the automobile is less than or equal to 15 miles per gallon

14.

Tire Tax

– HB 338 (Cardin, et al)

a) Imposes a $10 surcharge on each tire sold other than an energy-efficient tire

Property Taxes

15.

Property Tax Increase

– HB 512 (McIntosh)/ SB 302 (Conway)

a) Imposes an additional state property tax of $0.02 per $100 of assessed value for most property and $0.05 per $100 of assessed value for operating real property of a public utility

b) About $130.7 million in new taxes expected in the first year

16.

HVAC Tax

– HB 338 (Cardin, et al)

a) Imposes a $100 surcharge on the sale of any residential heating or cooling system other than an energy-efficient heating or cooling system or solar energy property

17.

Building Excise Tax

- HB 663 (Barve, et al)

a) Authorizes municipalities to impose building excise taxes – in addition to the building excise taxes already imposed by counties

18.

Fertilizer Application Impact Fee

- HB 466 (Kullen)

a) Requires that homeowners pay a new fee of 10% of the total cost of applying fertilizer to residential land

19.

Recordation Tax Increase

- HB 260 (Kaiser, et al)/ SB 559 (Madaleno, et al)

a) Would subject indemnity mortgages to the recordation tax

b) Montgomery County expects $30 million in taxes, a 30% increase over current collections

c) Harford County expects $750,000 in taxes, a 4% increase over current collections

d) Other counties still calculating their specific increase

Health Care-Related Taxes

20.

Health Insurance Premium Tax

– HB 1093 (Morhaim)

a) 50% increase in the health insurance premium tax from 2% to 3%

b) Additional $20.3 million in taxes in the first year

21.

Mandatory Employer-Provided Health Insurance

– HB 1540 (Benson, et al)

a) Mandates that employers provide health insurance coverage at an expense to the employer of at least 7.5% of wages paid to employees

b) In the alternative, the employer will be required to pay into the state’s Health Trust Fund

22.

Teeth Whitening Tax

– HB 614 (Ali)

a) Applies the 6% sales tax to teeth whitening services

23.

Laser Eye Surgery Tax

– HB 614 (Ali)

a) Applies the 6% sales tax to laser eye surgery

24.

Breast Reduction or Augmentation Tax

– HB 614 (Ali)

a) Applies the 6% sales tax to breast reduction or augmentation services

25.

Rhinoplasty Tax

– HB 614 (Ali)

a) Applies the 6% sales tax to rhinoplasty surgery

26.

Face Lift Tax

– HB 614 (Ali)

a) Applies the 6% sales tax to face lift surgery

27.

Liposuction Tax

– HB 614 (Ali)

a) Applies the 6% sales tax to liposuction surgery

28.

Gastric Bypass Surgery Tax

– HB 614 (Ali)

a) Applies the 6% sales tax to gastric bypass surgery

29.

Laser Hair Removal Tax

– HB 614 (Ali)

a) Applies the 6% sales tax to laser hair removal services

30.

Tanning Services Tax

– HB 250 (Morhaim, et al)

a) Applies the 6% sales tax to tanning services

b) About $545,600 in new tax revenue is expected in the first year

31.

Tattooing Tax

– HB 614 (Ali)

a) Applies the 6% sales tax to tattooing services

32.

Body Piercing Tax

– HB 614 (Ali)

a) Applies the 6% sales tax to body piercing services

Business-Related Taxes

33.

Mixed Martial Arts Tax

– HB 795 (Reznik, et al)/ SB 649 (Conway)

a) Imposes a new mixed martial arts license fee of $10 per participant, $15 per judge, and $25 per manager per year

b) Imposes a new tax on mixed martial arts admission fees of $200 or 10% of gross receipts, whichever is greater

c) Imposes a new tax on mixed martial arts television charges of 10% of gross receipts

34.

Unused Gift Card Assessment

– HB 613 (Pena-Melnyk, et al)/ SB 998 (Pugh and Harrington)

a) Requires companies to pay unused gift certificate and gift card balances to the state government

b) About $5.7 million to be collected by the government in 2009 and $55.7 million anticipated by 2013

35.

Commercial Bank Fee Increases

– HB 752 (Chair, Economic Matters Committee)

a) Substantially increases fees imposed on commercial banks, including a 1000% fee increase on a new commercial bank charter examination from $1,500 to $15,000

36.

Clean Air Permit Fee Increase

– SB 442 (Frosh, et al)

a) Doubles the maximum clean air permit fee from $25 to $50 per ton

b) More than doubles the maximum fee for a single source from $200,000 to $500,000 and in 2010 would remove the maximum fee for a single source altogether

37.

Greenhouse Gas Emissions Fee

– HB 712 (Barve, et al)/ SB 309 (Pinsky, et al)

a) Authorizes a greenhouse gas emissions fee with a maximum fee of four-cents per ton of carbon dioxide equivalent emitted

To My 26-Year-Old Friends (and those a wee bit older and younger)

You need to read this article. It's about how you can have a million dollars socked away by retirement by saving for only one year. Pretty impressive, if you can make the lifestyle adjustment.

Even at 26, we still feel like we are just starting out in life, but, as the article says, this is absolutely the prime time to start saving money. It will grow SO MUCH over time. Think about this: if you save the money you would have spent on a week-long vacation in Cancun this summer, by the time you retire, that money could BUY A SUMMER HOME in Cancun.

I'm not saying to save ALL your money and live like a hermit, but wouldn't you rather be able to quit working in 40 years entirely and just have FUN for the rest of your life? Those are the kind of things a lot of us 26-yr-olds don't (want to) think about. You don't want to have to have a job when you're 60 do you?? Just saying.

A few easy ways I save (and I know this is a reiteration of a previous post, but it bears repeating):

Every time I sell something on Etsy, I transfer that money directly into my savings account. It's "free" money. I won't miss it.

When I get a bonus at work, it goes right into the savings account. Again, it's extra, so I won't miss it.

If I resist my urge to buy something I really don't need (like an expensive dinner out), I take the money I would have spent and transfer it to my savings account. I normally would have spent it, so I still take it out of my checking account. But now it goes into savings, and I still have it, AND I'm earning interest on it.

Obviously, this is just a savings account. I'm a long way from maxing out my 401(k) contributions or even starting an IRA. But I am thinking about it and starting to put long-term practices into place.

Just sayin.

Money is the Root of All Great Annoyance

From 2003-2005, I really got myself into some financial trouble. Part of it was some mistakes I made; part of it was being naive and letting certain people take advantage of me. I don't really want to go into details out here in public, but let's just say it sucked.

Anyway, as part of a greater self-improvement plan, I am trying to get my finances in order this month. Included in this task:

1) Adjust my tax withholdings to ensure I neither owe money to the government nor am owed money by the government next January (I did that in 2007 and it was great to come out even).
2) Start my 401(k) and contributing 5% of my pre-tax salary to it (my company matches 100% up to 3% of my salary and 50% from 4 to 5%).
3) Open a savings account and route 2% of my take-home pay directly into it every paycheck. 3a) Find a savings account with the best rate of return I can get.
4) Find a better bank to house my checking account (SunTrust has largely not been my friend, and I'm kind of done with them).
5) Start a Roth IRA and contribute as much as I can stand.
6) Stop buying stuff; thrift/make what I need (i.e., live more cheaply and more sustainably).
7) Eat out less often and stop picking up the tab when I can't really afford it (i.e., carry more cash and just pay my portion).
8) Consider moving in with a roommate to save money (my rent has become too exhorbitant to handle alone anymore)
9) Consider moving down to Baltimore to save gas on driving down to see my boyfriend and friends; work from home 2-4 days per month

Progress:
1) Done.
2) Done.
3) Done. Between 1, 2, & 3, my take-home pay is $400 less per month than it was about two months ago. This sucks. But I'm actually richer because of it - I just have to keep reminding myself of that. And less money in the checking account means less inclination to needlessly spend. In fact, now every time I find some extra money (I sell a plush, I stop myself from buying something expensive that I don't really need, a friend pays for dinner, etc.), I take that amount and immediately transfer it into my savings account. It's kind of like dumping your spare change into a jar - only way better. It's money I probably would have spent on something dumb, or at the very least would have sat dormant in my checking account for a while, and it's money I won't miss because it's "extra." I have to tell you: it feels GOOD.
3a) This was actually the impetus for this post, which was begun in an extreme state of agitation. I have since calmed down. I will return to this subject.
4) See 3a.
5) I've realized my apartment is sucking me dry and I won't be able to do this unless and until I complete items 6-9
6) I've so far been very successful in this. However, my continued vices include: art supplies, crafting supplies, tights (I don't want used tights!!), presents for my boyfriend, gasoline.
7) I've been very good about this. Carrying cash is still foreign to me, but I'm getting more used to it.
8) In progress. I sign my three-month lease this weekend, which will bring me up to August, at which point I am planning to move to Baltimore. I have a prospective roommate.
9) see 8)

3a) and 4) redux

OMG, I was so pissed off when I started this post. The reason is as follows: I found a bank that is offering 4% APR on savings accounts with no monthly fees or minimum balances when you link it to a checking account through them as well. I thought that sounded great. It would be an opportunity to move both my checking and savings over to a new bank and start afresh. Their deals look really good.

So I started the process. I linked my old SunTrust account over to them, and scheduled a transfer of funds to get my checking account started. After everything was approved and started, I would transfer my current savings account over to the new, higher yielding savings account, then start direct depositing my pay into both accounts. The whole process was supposed to take "3-4 days."

This was almost two weeks ago. Wamu confirmed and approved my outside funding source (via two microdeposits) but then gave me an error message saying my account information was wrong and I needed to cancel and reschedule my initial deposit. Okay, no big deal. I cancel it, then go to the "Transfer Funds" page, except I get an error message that says, "Sorry, you cannot transfer funds on this type of account." What?? It's an online-only account. That makes no sense. Wamu doesn't even have any branches in Maryland.

So I go to their contact page and select the "Send Us A Message" option. This gives me a form which I fill out with my problem, then click "send." I get the error message, "Please input a valid message in the message field." So apparently my message isn't valid enough for them. I get this error no matter WHAT I put in the message field. I want to punch my computer.

Wamu does not provide an email address, only this form, so I decide I need to call them. I call them, and the robot lady informs me that I will not be able to do any telephone banking unless I have my "telephone access code." I do not have one of these. They have never given me one. I didn't know such things exist. I try to get to the option I need, only to be denied access because I don't have a code. Wonderful.

I cannot send a message to this bank. I cannot call them. Since their closest branch is in NEW JERSEY, my only recourse at this point is to send them a letter. Are you kidding me? Not only will that take several days to get there, I can't (or won't) include any account information because of security issues. Then I'll have to wait for THEM to contact ME, and who knows how long that could take.

At this point, I could give two shits about getting the account open and running. I just want that stuff closed and my information deleted, and I will go back to the bank with the slightly lower interest rate that has taken care of me from the outset.

What a frustrating experience. No wonder no one ever wants to change banks...