Running List of FTJ Boot Camp Assignments - Page 2

Kim · 01-10-2009, 08:28 AM

Day Ten and Eleven

Your Priority Assignment this weekend is to catch up with what I've already thrown your way. There's a reason this is called a Boot Camp. We're definitely trying to make some big strides in a short period of time. However, I want to also ensure your success so I'll give you the weekend to catch up and regroup. Come Monday, we're going to be hitting some of the financial projects pretty hard once again... so be prepared!

So far, you should:

*Be on the second week of a 3-week spending freeze
*Have a Net Worth Statement
*Have started a Gratitude or "5 Things" Journal to track the positive things in your life on a daily basis
*Have a Family Mission Statement
*Have a list of 100 dreams and a working list of 25 goals for the year, broken down into manageable steps
*Know what your current cost of living is based on the past six months expenses

As a fun BONUS ASSIGNMENT for those who are caught up or feeling especially ambitious, we're going to be creating Dream Boards or Vision Boards. If you're inside with kids today, have them create one too. You may get a kick out of what they add! I did this with my daughter last year, and most of her things came straight out of the toy catalogs we had around the house.

You can even create a FAMILY VISION BOARD based on your mission statement.

Bonus Assigmnment: Create a Vision Board

You can do this with a bulletin board or with a big piece of tagboard or cardboard. Your assignment is to take magazines, photographs, computer printouts, quotes, words, and other images that represent visions of what you would like to accomplish in your life and attach them to your board. If you want to go to Italy, cut out an image of Tuscany (or Milan, Venice, etc). If you want to develop better relationships with your siblings, include pictures of you together in happy times. If you'd like to read more, include pictures of the books you'd like to read, and so on.

If you don't have enought to work with at home already, you can frequently find old magazines in the magazine exchange area of your library for this. You can also create printouts of photographs, inspirational quotes and affirmation statements right on your computers

Keep your board in a place that you see every day. I keep mine right by my computer. Some people keep images on their computer desktop and see them every time they boot up their computer in the morning. When you look at the images, allow yourself to really FEEL yourself accomplishing them. Let your emotion fuel the fire and truly MOTIVATE you.

This is what mine looked like last year:

Kim · **Day Twelve**

Know Your FICO Score

Your FICO score (more commonly known as your credit score) tells potential lenders how much of a credit risk you are. It is calculated by the Fair Isaac Corporation (where its name comes from) and can range from 300 to 850. The higher your score, the better your credit is. It is based on the amount of debt you have, how promptly you’ve made your payments in the past, your credit history and a range of other variables.

Here is a breakdown:
1. Payment history: 35%
2. Amounts owed: 30%
3. Length of credit history: 15%
4. New credit: 10%
5. Types of credit use: 10%

It’s a good idea to check it routinely (once a year) to ensure that it’s accurate, even if you don’t anticipate applying for a loan in the near future. If you’re in debt, it can be a tool to gauge progress and also negotiate lower rates. Prospective employers and landlords may check it to see how responsible you are in making your payments.

There are three main credit reporting bureaus:
Experian
Transunion
Equifax
You’re entitled to one free report from each agency during the year. The three credit reporting bureaus have a website and toll-free telephone number through which you can order your free annual report.

Online: www.annualcreditreport.com*
Via Phone: 877-322-8228
Via the Mail: http://www.ftc.gov/bcp/conline/inclu...tformfinal.pdf

*Avoid signing up for ongoing credit monitoring when you check your credit score online.

Did you know? Potential employers, landlords and even utility/internet/cable providers may check your FICO score to see if you are a credit risk and to see how responsible you've been in making payments.

Assignment: Find out your current FICO score. It could already be available via your credit card company online. Or, if you applied for a loan last year for a car, mortgage or refinance it should be included with that paperwork.

Kim · **Day Thirteen**

Analyzing your FICO Score

Now that you have your magic number, what do you do with it? Here’s a general breakdown of how your FICO score is interpreted:

Excellent: Over 750
Very Good: 720 or more
Acceptable: 660 to 720
Uncertain: 620 to 660
Risky: less than 620
Poor: Less than 590
Very Poor: Less than 550

Most Americans have FICO scores in the 600s and 700s. The boundary between a standard loan and a higher cost loan, also known as a subprime loan, is generally considered to be a credit score of 620. Any score less than 500 will generally mean you’re declined for any type of credit. In today's economy, that number may actually be a bit higher in some cases.

Re-Negotiate Rates
If your FICO score is 720 and above, you may be able to re-negotiate your credit card rates. Don’t waste any more money on interest than you have to. Grab your credit card statements and call lenders to re-negotiate lower rates.

Fix Inaccuracies
The FCRA (Fair Credit Reporting Act) protects your right to have inaccuracies in your credit report removed. http://www.ftc.gov/os/statutes/031224fcra.pdf

If you do find something suspicious or inaccurate on your report, notify both the credit bureau who provided the report and also the company where it came from. Include relevant information to support your claims such as cancelled checks and send them via certified mail or another shipping method that requires a signature and delivery confirmation.

Get Your FICO Score Up
Since your FICO score is heavily weighted towards recent activity (the prior 6 months) you can get it up in a relatively short period of time. Focus on the steps outlined here:
• Open a savings account if you don’t have one
• Settle any debts in collection
• Correct inaccuracies
• Keep credit card balances low instead of maxing out your accounts (balances kept over 75% of the limit are considered high)
• Pay more than the minimum balance each month
• Keep accounts open instead of closing them once debt has been paid off
• Avoid checking your FICO score too frequently. Anything more than once or twice a year could raise red flags and impact your score.

Don’t fall victim to scams that promise they will lower your credit score for a fee. Anything that they can do, you can also do on your own – and at no cost to you. Raising your credit simply takes time and effort.

Kim · **Day Fourteen**

Get a Handle on Your Debt

Don’t Take on New Debt
You can’t get out of a hole if you continue to dig. Stop all unnecessary spending and retire your credit cards until you can pay them off. Don’t take on any new loans either (if your car breaks down, repair it). From now until your credit cards are paid in full, you should only be using cash for what you need.

Cut up all your credit cards except for one to keep for emergencies, and leave it out of your wallet to avoid temptations. Don’t close the accounts entirely – that could impact your credit score negatively. Avoid putting it on ice as well, which could damage the magnetic strip.

Lower Your Rates
As we discussed already, if you have a good FICO score (720 or higher) you may be able to qualify for lower credit card rates. Make sure you call all your lenders to request one. Sometimes it’s as simple as making a phone call. Because of so much competition in the credit card industry, your company will want to retain you as a customer.

Here’s a sample script:

“Hello, this is (Your Name). I’ve been a good customer and have been getting offers in the mail from other credit card companies with lower APRs. I would like a lower rate, otherwise I will cancel my account with you and get another card. Is there anything you can do to help me out?”
More than half the time, customers who call end up with lower rates. If you don’t get the answer you want the first time you call, try another day. If that still doesn’t work, you may be tempted to shop around for a new card. This should only be done with extreme care and with full knowledge of possible pitfalls such as:

• Balance transfer fees
• Short introductory period low APRs
• Transferring too often can lower your credit score
• Low credit limits can lower your credit score
• Be wary of the Universal Default clause which states that if you are late in paying any bill, your APR on an unrelated card could rise

As always, read the fine print. In the end, the hassle, fees, and uncertainly of transferring balances often isn’t worth it.

Assignment: Create a Debt Spreadsheet
Collect all your current credit card statements and other bills in which you carry a balance. Create a spreadsheet (Excel works well) so that you can track your progress as you pay down your debt. Here is a sample of how to set up your spreadsheet:

Column A: Name of the Creditor/Account
Column B: Interest Rate
Column C: Balance Remaining
Column D: Minimum Monthly Payment
Column E: Budgeted Monthly Payment

Add the totals in columns C, D. You’ll then have a clear picture of your total amount of debt and the minimum amount required to stay current with your payments. In the next step, we’ll look at how much to allocate to each bill (column E) to come up with your debt repayment plan. However, it will be your goal to put as much extra money as possible towards your monthly debt payments.

Kim · **Day Fifteen**

Prioritize Paydowns

If you’re struggling with consumer debt, you need to prioritize debt repayment and come up with a plan. Trying to pay down debt without one is like going on a trip without a map. You may reach your destination eventually – but it will take longer to get there and you’ll undoubtedly get frustrated along the way.

Since creating a debt spreadsheet you should have a clear picture of what you’re dealing with. Do you have accounts that are past due? Make it a top priority to get these bills current. Are there any bills with exceedingly high rates? Those should be a top priority as well.

But, after the obvious, which debt should you tackle next? There’s no question that paying off your highest interest debt first makes more sense mathematically. At the end of the day, this method will always result in more money in the bank (Click here for additional reading). However, if you are the type that craves instant gratification (which could be why you’re in debt in the first place) the Snowball Method may be more psychologically rewarding. It’s up to you to decide which method makes the most sense given your own situation and level of motivation.

Here’s how they work:

Snowball Method
· Rank debts in order from the lowest balance to highest
· Make minimum payments on all your debt with the exception of the debt with the lowest balance
· Put any extra money towards the debt with the lowest balance until it has been paid in full
· Repeat the process by always applying extra money to the next debt with the lowest balance

Highest-Rate Method
· Rank debts in order from the highest interest rate to lowest
· Make minimum payments on all your debt with the exception of the debt with the highest interest rate
· Put any extra money towards the debt with the highest interest rate until it has been paid in full
· Repeat the process by always applying extra money to the next debt with the highest rate

How Long Will it Take?
http://www.bankrate.com/brm/calculators/debt-management.asp
http://www.bankrate.com/brm/calculators/creditcards/debt_payoff_calculator.asp

Assignment: Decide which debt repayment method to follow. Organize your debt spreadsheet according to the debt repayment plan you will follow, and calculate how long it will take to pay it off.

Web Resources: http://www.latimes.com/business/investing/la-credit-story12,1,246413.story

Kim · **FTJ Bootcamp: Days 16, 17 & 18**

Day 16: Re-Evaluate Expenses

Now that you’ve tracked your family’s spending, you can analyze your findings. If you don’t like what you see, you now have an opportunity to change things.

First, look at your fixed expenses -- the expenses that stay the same each month. Some will be hard to cut back on (mortgage, auto loans, etc.), but other fixed expenses such as cable, gym fees, lawn services, etc. may be easier to trim. Which monthly memberships can be eliminated? Is your cable/phone/internet package the right one for you? Could you get by with a less expensive version? Can you drop your landline altogether? Can you do-it-yourself?

Your variable expenses are often the easiest to cut back on. These are the categories that fluctuate each month such as groceries, clothing, gas, eating out, etc. Visit our Money Saving Tips forums for creative solutions to saving money in each of these categories.

Often times families lose sight of the big picture because they’re distracted by more urgent, compelling ways to spend their money. Is your spending in line with your financial goals and your family’s values? Don’t let things like lunches out or a salon pedicure habit get in the way of funding your child’s college education. Realize that when you cut back in certain areas, you will be able to apply your savings towards more important things such as paying off debt, building savings, or achieving your dreams.

Assignment: Identify 3-5 key spending areas that you’d like to trim and come up with creative solutions to cut back.

Kim · **Day 17**

Day 17: Avoid Budgeting Mistakes

Now that you’ve got a clear picture what you spend, what you earn, and where you can cut back you can create your budget. When creating a budget, a lot of families make critical mistakes. Don’t set yourself up for failure! Here are some tips to ensure your success:

Pay Yourself First
Despite record amounts of disposable income Americans had a negative savings rate in 2005-2006 for the first time since the great depression. Making saving automatic can help you beat the statistics and set aside more of your income for the future. If your employer offers an automatic deposit plan, allocate some of your earnings to go directly into a savings account. If you don’t see it, chances are you won’t miss it. If you don’t pay yourself first, you’re increasing the likelihood that you’ll use that money on other categories.

Build in Wiggle Room
If you’re inflexible when devising your budget, you’re setting yourself up for failure. Allow for a financial cushion in each category so when fluctuations occur you’ll be covered.

Budget for Emergencies/Irregular Expenses
Emergencies happen. Cars break down. Kids get sick. People lose jobs. Those are simple facts of life. It’s not a matter of IF they happen -- it’s more of a WHEN. Don’t act like a victim when life happens to you, but instead be prepared. Add a rainy day fund to you budget. If you don’t have one at all, it may help to start out with a goal of having $1,000 set aside. Then, as you build your fund and pay off debt, increase that goal to having three months’ of living expenses set aside. When you’re completely debt free and building up retirement savings as well, increase that goal to six months.

Budget for Irregular Expenses
Even though things like vacations, insurance payments and buying holiday gifts don’t happen every month, include them in your budget as well. Estimate your total yearly expenditure and divide by 12 to come up with your monthly budget.

Build in “Fun Money”
Some of the most successful budgets have a category for “fun money” – money that doesn’t have to be accounted for. It could be cash for sodas/snacks, lunches out, or whatever you want. This category can help prevent you from feeling “trapped” in your budget and having to account for every little expense. How much is in this category is really up to you and should fit your financial situation.

Kim · **Day 18**

Day 18: Create Your Budget

By now, your budget has practically created itself. To complete your budget, allocate the appropriate amount of money to each category based on the steps above, making sure the right column (expenses) doesn’t exceed the left column (income).

INCOME:
Wages
Overtime
Interest Income
Alimony
Rental Income
Other

EXPENSES:
Mortgage
Insurance
Utilities
Car Payments
Food
Transportation
Clothing
Savings Contributions
Childcare
Recreation and Entertainment
Medical and Dental
Home Maintenance
Vacations
Other

Once you devise your budget, you may find that you’re coming up short of income to cover your expenses. Assign priorities to each thing you’d like to accomplish so that you can make a clear decision about what is most important to you.

Come up with a System to Maintain
The best budgeting system is one that is easy for your family to follow, whether it’s the old-fashioned envelope system or something computer generated. Don’t try to force your family into a system they don’t understand or isn’t easy to use. The biggest key to your success is finding a system that works for you.

Software programs like Quicken or MS Money help make budgeting easy for many families. These programs offer great features that allow you to graph and chart progress; they can even connect with your online banking platforms and help improve your credit score. Chances are there is one pre-loaded on your computer.

If you’re not computer savvy, the envelope system still works for many families today. How it works: Grab an envelope for each category within in your budget. Inside, place the amount of cash that your budget allows each month. Once the cash is gone, you’re done spending.

Kim · 01-18-2009, 06:05 PM

Day Nineteen

Sorry for the delay in posting this, ladies! Here is the reason I asked you to have a small notebook ready, and fliers and grocery receipts saved. Before we end the spending freeze, you should start to create your own grocery price book. Make it your goal to have it started by the time the freeze is over and you begin to purchase more groceries.

A price book is a valuable tool if you like to stock up on great deals. For frugal moms, it’s a way to keep close tabs on prices in various stores over a period of time so that true bargains are easily spotted. It can also tell you which stores have the lowest everyday prices on the things you buy most often. Armed with this information, you’ll be able to spot a great deal when you see it.

For most, it is a small spiral notebook that can tuck nicely into your purse. Each page corresponds with a different product that you buy. The most important information to capture is the price as well as the store in which it was purchased. Beyond that, you may also want to include the size of the item as well as the brand name. How detailed you make your book is up to you.

Doing your price book in a spreadsheet format such as Excel is also a good idea. It can simplify the process greatly by creating a function where the cost per ounce is automatically calculated for you. If you have a PDA or Smart Phone (such as a Palm or BlackBerry) you can upload it for easy reference when you’re shopping.

Start with the 25-50 products your family uses most often. To get a good idea of which items to include, look at what’s currently in your pantry and start from there. Or, save your grocery cash register receipts for a period of time. Most of them will include information such as the brand/product purchased, the date, and some will even include the size of the product.

My spreadsheet includes these rows: item, store, date purchased. Many people also include the size of the item so that they can compute the price per ounce. You may find that most of the things you buy come in pretty standard sizes (for example a can of cream of mushroom soup, a block of cream cheese, etc.) and that this isn’t always necessary.

You may also want to include the brand name of products you buy in your price book, especially if you prefer one brand over another. That way, you can evaluate whether buying a name brand is worth paying the extra money, or in some cases you may notice that the brand name doesn’t cost any more than the generic counterpart.

As you do this over several months, your entries may slow down. You’ll notice that some prices don’t vary by much, others vary greatly. You’ll begin to memorize prices.

The longer you save the information, the greater the resource your spreadsheet becomes. You'll begin to notice that sometimes advertised sales aren't the best bargains. You'll see that some stores' everyday prices are lower than sale prices at other stores. If you save your information over the course of a year, you'll begin to see that certain times of the year are better times to buy than others.

Assignment: Create a Grocery Price Book

Kim · **FTJ Boot Camp: Day Twenty & Twenty-One**

Grocery Planning

When it comes to saving on groceries, it helps to be a proactive grocery shopper. That means knowing what the best prices are and building a stockpile of things you need when prices are rock bottom, rather than when you run out of something and have to buy it at full price.

Create a Master Meals List

Take your price book one step further by creating a list of the ten frugal meals your family eats most often. Write down all the ingredients necessary to make those dishes from start to finish. Don’t forget anything – if you make garlic bread to go with spaghetti dinners also include the bread, butter, garlic, etc. Come up with a master list of all ingredients. These are the items you should focus on when creating your price book.

Your master meals list will also give you insight as to how much meals actually cost when you’re making them at home. This list will allow you to analyze the cost of what you’re making to see if you’re making smart choices. Sometimes certain meals (especially casseroles and one-pot meals with many ingredients) are more expensive than you think. A simple meal of broiled fish and a steamed vegetable often costs less than a casserole made with canned soup, cheese, and pasta and other ingredients. Also, pay close attention to the meals you make that require you to buy more of an ingredient than you need. For example, when you make a roast or a stew do you often have leftover celery, carrots, or other veggies? Do they often go to waste or do you incorporate the extras in your menu plan?

Once you’ve completed your master meals list, you’ll want to keep close tabs on the prices of those items for the next several months so you can spot pricing trends. Grocery sale prices hit rock bottom every 12 weeks on non-perishables, and that’s the time you’ll want to stock up. Certain things like fresh produce often hit rock bottom once a year when they’re in season and can be more difficult to stockpile, but it still helps to monitor their prices as well. In some cases you’ll still be able to stockpile them if you can freeze, can or preserve them in some other way.

Create a Master Pantry List

Now that you have a master list of ten standby meals and the ingredients required to make them, you have a great start to your master pantry list. Now, add all the things you need for day-to-day cooking – basics such as milk, flour, eggs, sugar, onions, garlic, etc. Once you’ve added them, you have a master pantry list.

Organize your master pantry list by grocery store department (produce, canned goods, dairy, etc). Then, print out the list and keep it posted in your pantry. Write down the number of boxes/cans you have on hand and take special note when your supply is diminishing. When you take something out of your pantry, adjust your list accordingly. This will also help you see what you have on hand at a glance instead of rummaging through the shelves, making it easier to keep your pantry organized.

Your goal as a proactive shopper will be to familiarize yourself with the prices of the things on your pantry list so that you can buy them when they’re on sale, rather than when you run out.

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