Originally published October 2008.

My friend Genny is hosting a thoughtful project this month, based on a book she read entitled, One Month to Live. Although I certainly won’t know when my 30 day clock will begin, it’s an interesting prospect to consider how I’d use my time.

In high school I made a “life list” and I’ve considered writing a reprise to that — all the destinations I’ve yet to travel, and the goals I’ve yet to achieve. But this project is quite different. With only 30 days, I find myself thinking more about what I wouldn’t do, than what I would do.

I wouldn’t
…go anywhere, see things or fill my life with adventure, like I would on a bucket list that I might take decades to cross off. I wouldn’t achieve, reach goals or buy things.

I wouldn’t watch the news, or listen to anyone who shared the negative side of it.

I wouldn’t answer the phone or sort my email inbox.

I wouldn’t resent, regret, worry, or feel obligated, angry or hurt.

I would
…pick and choose the small things that have brought me joy.

I’d live at the cabin, like we do in the summer.

I’d fill the freezer with filet mignon and shrimp, make fancy dinners with my daughter and bake chocolate chip cookies from scratch with my son.

I’d rise early and go to bed late, watch the sun illuminate the lake as I drank coffee with my husband, and watch it blaze red at dusk as we sipped Merlot.

I’d go for walks.

I’d toast marshmallows with my kids and ride bikes to Dairy Queen.

I’d blog every day, leaving my own “Last Lecture.”

I’d take pictures.

If friends and family visited, we’d talk and laugh, and share good news.

I wouldn’t talk about dying in 30 days.

And I’d thank God if he let my last 30 days be healthy ones.

What would you do with your time, if you knew you only had 30 days to live?

If you’ve been reading this series, you know our goal is to have our second mortgage paid off within a year. Part One in this series is here.

You may think our plan is silly, or unattainable. You may think we’ve been frivolous in the past – or that the cuts we’re making are ludicrous. Whatever frame of reference you’ve come from, I hope I’ve offered some food for thought.

A FEW LESSONS WE’VE LEARNED

We tend to spend what we have – in order to make mortgage-paydown a priority, we need to budget it like a bill.

If we didn’t look at the cumulative savings, we wouldn’t choose to tighten the belt at all. Saving ten dollars here and there did not offer us enough incentive to bother with a budget. A complete budget recalibration was in order. When I did the math to look at annual savings in multiple areas of the budget, I finally understood how much money was slipping through the cracks.

We don’t miss what we’ve cut out of the budget. So the fact some of the cuts are short-term (like travel) should make this whole process far simpler than we thought it would be.

Our pay-down went faster once the loan amount was less. The bank gets most of your payment early in the amortization, so the quicker you can reduce the balance, the better.

For instance:
• If you owe 100,000 at a rate of 5% and amortized at 15 years, only $375 of your $800 payment goes toward the principle on your loan.
• If you’ve paid it down to $50,000, $575 goes to principle.
• At $25,000, $685 of your $800 payment pays down your loan.

An excellent credit score translates to thousands saved in closing costs. Know your score and if it’s low, figure out what’s bogging you down.

Spreadsheets can be FUN - especially when you watch the loan balance decrease by leaps and bounds. The decreasing loan amount and budgeted monthly expenditures are tangible outcomes that validate your efforts when achieved.

Some budget cuts should be permanent. Some can be temporary. Both are good.

Ours is just a smaller second mortgage. But you have to start somewhere, right? Other families may need to start by paying off their car loans or credit card debt. Will we pay it off in a year? I hope so. Either way, we know we’ll have developed habits that last a lifetime – and we’ll have passed on these habits to our kids.

Our first mortgage? Well that’s a different story – and one that looks to be about 15 years from its conclusion. But with our new habits in place, after we reach our first goal, I bet we’ll find room in the budget for accelerating these payments as well – while loosening up on some of the sacrifices too.

Thank you for joining me on my Mortgage Payoff 101 series. What is your debt-control goal?

MORTGAGE PAYOFF 101 SERIES:
Getting Started
Monthly Charges
The Credit Card
Sell Your Stuff
Lessons Learned

This is Part Four of my series outlining our plan for paying off our second mortgage in the next year. Part One is here.

If you’ve been following along on my series, it’s quite possible you find yourself in a similar situation to mine: you spent a lot of years accumulating stuff you don’t need or want anymore.

The good news is that surprisingly, some of your stash may still have value. And while one item may only be worth $10 or even $50, together all your unused valuables could equal a couple mortgage payments.

You might be surprised at how much “junk” you have sitting around, taking up space, which is of value to someone. Whether you use a garage sale, eBay or Craigslist to hawk your wares, just do it.

Over the course of a month, we purged from our household a long list of motorcycle apparel (husband had already sold the cycle), homeschooling curriculum materials, kids clothing, a guitar, piano keyboard and LOST videos. Grand total? More than $1000 – two second-mortgage payments.

TIPS:

Inventory your no-longer-needed items. Remember to check the garage, closets, kids’ toyboxes and attic.

Research the value. Search eBay under “completed items” to value your goods. Choose a price that will sell – your stuff was just gathering dust before you did inventory.

Host a garage sale and invite neighbors to join in on the sale. Even if they don’t bring items to sell, they may bring their cash to buy – and they’ll tell their friends.

Try eBay for smaller items that would get bidders nation-wide, but consider listing fees, sale fees and PayPal fees when you price the item. Be very careful about your description and make sure electronic items function.

Use Craigslist for almost anything. You may want to relist unsold items after a week – older listings usually remain ignored.

Spread the word on social networking sites! I sold two items to friends when I directed them to my Craigslist listing via Facebook.

Good luck!

How do you sell your stuff?

MORTGAGE PAYOFF 101 SERIES:
Getting Started
Monthly Charges
The Credit Card
Sell Your Stuff
Lessons Learned

This is part three of my series showing how we’ll pay off our second mortgage in the next year. Part one is here.

We live on our credit card.

Everything we purchase goes on it – even our utility bills — and we pay it off in full when we receive the bill each month. We’ve done this for years, and will all travel for free to Ft. Myers this winter as a result of the miles we’ve racked up.

But over the years, the monthly credit card bill has continued to grow. Just like everything in our budget, gradual increases have sneaked up on us – partly because of the cost of living and our growing family, but partly because we’ve gotten lax about our budget. I’m embarrassed to say that the monthly statement that would never reach $1500 per month with our young family rarely stayed under $2500 per month in the past few years.

I dissected the past year’s statements to figure out where the money was really going, and found that gas took up a large chunk (my husband commutes a distance to work) and utilities and groceries were another large chunk. The rest seemed to be a scattered array of whatever we decided to buy that month. Vacation and summer months were especially heavy on “whatever”. While there wasn’t much we could do about the gas and utilities, we developed a plan for the rest.

SHOP AT ALDI AND TRADER JOE’S
While I’ve always been a frugal shopper and created a weekly menu based on what’s on sale that week, nothing could prepare me for the incredible savings offered by Aldi. I easily save 25% off my groceries every time I shop there. If I do this even twice per month (the nearest Aldi is about 20 minutes from home) I figure I save about $60 per month -$720 per year.

My sister-in-law told me about Trader Joe’s too, which offers a more interesting variety, and discount prices on high quality food with no preservatives – often organic. I probably pay the same as I would at my local store, but I feel good about the product I’m buying, and I save at least 50% on wine if I buy any Three-Buck-Chuck:) I still buy meat at our local grocer, and fill in all the blanks at Aldi and Trader Joe’s.

EAT ALL OUR FOOD
Perhaps this goal became easier once our kids were older and regularly emptying the fridge, but I know now we make a point of using up our food before buying more. There were years when we never ate leftovers – the containers would grow mold behind the pickles until somebody threw them out. Now we consider leftovers a luxury – a freebie meal that we didn’t have to pay for or prepare. We also skip the weekly grocery run about once every two months, to force ourselves to eat what we have. This is rarely difficult – in an emergency we’ll stop at the gas station for milk.

Approximate savings – $100 every-other month ($600 per year).

SHOP LESS
I know it sounds ridiculously over-simplified, but the mere fact we’ve stayed home a lot has saved us untold hundreds. We don’t go to a store unless there’s something specific we need – and we try to put off that purchase until there are a few things on our list. We combine that with other errand-running we’ve postponed for a few weeks and voila – three shopping trips avoided. I figure we easily save $25 each time we don’t go into a store. Lets say $50 per month – $600 per year.

POSTPONE THE PURCHASE
Depression-era folks will say, “Duh!” But those of us who’ve raised families on credit have moved away from the notion of putting off a purchase until you have the cash. We’ve convinced ourselves that since we pay off the credit card bill every month, it’s like having the cash to buy the things we want. But it really isn’t the same. What we’ve discovered is that putting off a purchase until we have the cash gives us time to realize whether or not we truly still want it.

This is a critical lesson for our kids. My daughter made an impulse-buy of a Nintendo DS (she had the cash) because her friends had them. Now she doesn’t use it at all and knows it was a waste of money. How many times have we done this?

Another phenomenon I’ve noticed is that sometimes the item we crave will miraculously land in our lap and cost next-to-nothing, because we’ve mentioned we’re looking for one. This happens a LOT. I wonder how many times I bought something I wouldn’t have needed to buy – just because I was in a hurry?

Last month I was thinking we should take advantage of fall sales on patio chairs. But I decided to wait. And guess what? A neighbor put a set of six out next to the road for free.

Likewise, I didn’t rush out to buy a laptop after mine started to fail. It turned out my awesome computer tech guys fixed it by replacing a missing screw. (I am not making this up!!)

And the hotel room we didn’t book on Lake Superior we didn’t have to book, when my in-laws discovered they had an extra pull-out couch in their suite. We pitched in with steaks on the grill.

Hmmm. Makes you wonder, doesn’t it?

I would say this is easily a $50-100 savings per month in our household – $1000 per year.

TAKE A HIATUS ON IMPROVEMENTS
During the “upgrade years” it made sense that we spend a good chunk of cash on nicer things than we had. The now-threadbare couch we bought as newlyweds wasn’t high quality when we bought it, so you can imagine what it looked like after 10 years. And the 1970’s bathroom was, well, gross. Now, however we don’t really have that excuse. We have a comfortable home, newer cars and decent furniture. Could we find nicer? Of course. Is it necessary? Not at all.

Sometimes projects have to be done. But sometimes they don’t. Our current project hiatus includes putting off landscaping our house. The cedar bark around the perimeter will have to do for now – although we may plant a few bushes. Expense postponed – $3000.

SAY “NO” TO CRAIGSLIST
My husband’s favorite site offers a wealth of goodies. But just because the thing’s a great deal, doesn’t mean we should buy it. There are lots of them these days, and we can’t possibly pay for all the great stuff people are dumping. He loves to look, so that’s what he does. I’ve discovered my role is to just say, “No.” Unnecessary purchases avoided – $1000 per year.

SKIP A TRIP
I consider this a major sacrifice – far more than the material items – because I love traveling with my family. But since we are very focused on paying off this second mortgage, I know it’s just a short-term sacrifice. We’ve committed to continue with our annual winter pilgrimage to Florida, but have tightened the vacation budget, cut weeks to short weekends and skipped summer travel completely. Our school won’t have a scheduled spring break next spring, so that helps to focus our goal too. After we pay off this loan we can reconsider the travel budget.

Annual savings – $3,000.

The value of setting a credit card budget and living within it? about $10,000 per year.

What’s your secret to cutting the credit card bill?

MORTGAGE PAYOFF 101 SERIES:
Getting Started
Monthly Charges
The Credit Card
Sell Your Stuff
Lessons Learned

In Part One of Mortgage Payoff 101, I explained our family’s goal of paying off our second mortgage within the next 12 months.

In this second part of the series, I’d like to address one of the principles that has helped us to make this goal a very real possibility – evaluating monthly charges.

I discovered we needed to look at every monthly expense. When I did so, I found easy cuts. Although $20-30 doesn’t seem like much, calculating the cumulative expense over twelve months gives a more honest account. A double-digit expense in a month easily turns into triple digits in a year.

Cable/satellite TV
We had pay-TV at two places (house and cabin). When we quit both, it was a nice bump in the budget, even after purchasing roof antennas. Although I was nervous about this change- expecting Disney withdrawal — our family never missed it. Here’s the article I wrote last year, as we learned to quit cable. Easily a savings of $50 per month ($600 per year).

Unused cell phone minutes
Every family has different needs, but if you research your statements, you’ll be able to determine how many minutes your family actually uses. Although nobody wants to accidentally go over on minutes, paying an extra $10-20 per month for minutes you don’t need is foolish – and adds up to hundreds over the course of a year.

We’re also considering canceling our second line after the AT&T contract is up the end of October. My husband’s reception is poor on the way to work, anyway. That additional line costs us $30 per month – $360 per year. And we may try to negotiate with our current provider or another one – who knows what kind of a deal I could get if I play my cards right.

Similarly, our savings was in not purchasing a third phone contract. We decided that at whatever point our children “need” a phone, they’ll pay the extra charge themselves, out of their own allowance. Even inexpensive add-on contracts that cost only an extra $10 per month turn into an additional $120 on your annual budget.

Network connection on my Blackberry
In the past, I considered the ability to access email on my phone an absolute necessity, but after I started bringing my laptop (with wireless Internet) on trips, I discovered I didn’t need that access on my phone. I cut the network access and discovered I appreciate the fact I’m no longer distracted by the constant buzzing on my cell phone. Savings – $30 per month ($360 per year).

Voicemail and other hard-line extras
Sometimes the bundled services are a better deal, but often they’re not. I chose to skip the $7 additional package on our phone service, required in order to have Voicemail. Although it seems like a miniscule savings, it does add up to $84 in a year. Most people call my cell anyway, and this way I don’t have so many phone calls to return. If we feel the need to record messages in the future, we’ll get an answering machine.

Scrutinize your credit card statements
I discovered (and canceled) a recurring $15.99 charge on our business credit card, six months after it started. Apparently I’d signed up for a free one-month trial at stamps.com, and they’d begun charging me thereafter, even though I’d decided to never use the service.

Refinance Your Mortgage
When the rates were really low last winter, we refinanced at a cool 4.5%. I don’t know that we’ll ever see those rates again, but if you do the math and you can recoup the refinance charges within a year (because of the lower payments), it can be worth it. We also took a leap and went to a 15 year mortgage, when we’d amortized at 30 years previously. Although our monthly charge went up by $400, we thought our budget could handle it. Over the course of the mortgage, we could save $75,000.

Direct Deposit into Savings
I also started to automatically direct $300 from my paycheck into savings. Initially this was just an arbitrary amount that I hoped we could save – knowing I would still have access to it if necessary. As it turns out, it was reasonable if I treated it like just another monthly expense. And it kept us from re-spending what we’d just saved in the cuts mentioned above.

Just these considerations alone save us more than $1,500 per year. Small monthly savings seem much more significant when you add them up over the course of 12 months. This savings alone was the equivalent to more than 2 second-mortgage payments.

See you next week for part three in this series – the credit card bill.

MORTGAGE PAYOFF 101 SERIES:
Getting Started
Monthly Charges
The Credit Card
Sell Your Stuff
Lessons Learned