July Update

I haven't gotten back to write like I keep telling myself that I'm going to. This month has been kind of crazy with everything that has been going on.

I did consolidate my student loans, and when I got the new loan amount, it looks like they did not apply my June payment. I contacted Mohela about it several weeks ago and did not get a response, so I have asked for a copy of my payment history in hopes that I can see actual amounts of my loans at the time of consolidation. I did not expect that Mohela would delete my loan history from their website as soon as the loan was consolidated, so I foolishly did not print off my summary sheet before the consolidation occurred. Direct Loan Servicing is no help because they weren't servicing the loan at that time and Mohela has been no help because they are unresponsive.

I ended up changing the repayment plan to the graduated repayment plan because it reduced my payments $60 a month and only added about $500 extra interest to the total cost of my loan. I plan to put the difference towards higher interest credit cards, which we are still on target to pay off next year. My husband also got a bonus in this paycheck, so that will help.

We are still waiting on our refund from the county auditor, from where they lowered the value of our house for 2010 and 2011. Based on approximate taxes for our value, we should be receiving about $500 or $600 back. The county said it would be approximately 60 days, but did not clarify whether it would be 60 days from the decision, or 60 days from the date they responded. Either way, I still have not seen the updated value reflected on their website and it's been about 90 days since the decision was made. I guess it's time to harrass them again. You know they would not be as understanding if I were late on my tax payments.

We're also still wrapped up in the nightmare that is refinancing our home with US Bank.

We applied for the refinance in April and were told that we would be under a 90 day ratelock, but that generally the refinances were processed within about 60 days. I received the application paperwork and returned it, along with all supplemental documents requested. A week or so later, I was told that, although I had submitted the signed paperwork to request a transcript of my previous two years tax returns and my previous two years W-2's, they now needed a copy of my actual tax return. I was angry. ANGRY. Because they hadn't requested these documents at the time we were applying, so I felt they were just delaying the refinance process, and because they already received the information from our tax transcripts, so I felt like they were... I don't know, trying to catch us in a lie? I'm not sure. I returned the tax returns anyway and they responded back that they needed all of the supporting pages. Um, why?? Like most normal individuals in the 21st century, I filed electronically, with documents that were provided to me electronically. I had already printed off the electronic copies of my tax returns and signed them, backdating them more than a year, and now I was trying to gather other supporting documents. US Bank seriously, SERIOUSLY needs to update their processes for modern technology.

Anyway, all of the documents were finally received by US Bank, it went through underwriting and was in scheduling when our area was hit by strong storms, bringing strong winds, hail, power outages, etc. A few days later, we got a call from US Bank that our refinance had been pulled back from scheduling because we were now being subjected to a driveby inspection to ensure that our home was still standing and had not been damaged. I was annoyed, but understood.

Last week, we got a phone call from an appraisal company wanting to schedule an appraisal. I was taken by surprise because we had been told two months ago that we would not need an appraisal because they were using automated values. I went ballistic. I called US Bank and our loan processor was out of the office for the week, I complained on their facebook page, I got ahold of a supervisor who told me it was their direction that everybody within the affected area had to have a full appraisal. The more I thought about it, the more angry I got, so I complained further about how we'd been jerked around with all of the additional paperwork after we started the application process and now, because of their incompetence we were going to be subjected to an appraisal that was going to cost us an additional $400 because they dragged the process out so long. I got another phone call from the supervisor indicating that the appraisal was required by Fannie Mae, who backs our mortgage. The thing is, I have a coworker who is refinancing with her loan held by Fannie Mae and she is not being subjected to an appraisal, so I think US Bank is full of it.

Anyway, the appraiser came out on Wednesday and was there for less than 10 minutes. The US Bank supervisor told me we needed to be at $88,000 for the value of our home. It came back at $85,000. She indicated that the difference in value did not impact our refinance, so we will be moving forward and closing next week. I will be glad to see the drop in payment, even though I know the majority of the drop is because we're going back to a 30 year loan. My hope is, with the way property values have been increasing in our neighborhood, we will get close to breaking even by next year. I don't mind taking a small loss, as long as it doesn't break us. We're hoping with the opening of a casino a few miles down the road, that our property will see a dramatic increase in value late this year and early next.

We're going to use the reduction in mortgage payment to pay down credit card debt, and then probably put half towards paying down principle on this loan and half towards saving for a down payment on a new home. We're getting closer to being on level footing and getting ourselves out from under the mountain of debt we have accumulated.

A Little Early

I may have celebrated a little too early last week. As it turns out, if you include my 401k loan, I am still over $200,000 in debt. However, I did pay off more than $700 in debt this month, and that includes what we charged for our vacation.

Yay, right!? Okay, so I know we shouldn’t have charged our vacation, but I know that my husband is getting a bonus this month and another in three months, so we’ll be able to pay it off by summer. I know we would be further ahead if we had just not taken a vacation, but we enjoyed ourselves and it was really good for us to get away as a family.

But we have gotten some good news and some “good” news in the past couple of days that may bode well for our financial future as it relates to our house. I called my current mortgage lender about refinancing and found out that I can refinance to 4.5%, as opposed to the current 6.0%. There are about $2400 in fees, including appraisal, credit report, closing costs, etc. This will lower our monthly mortgage payment about $140 a month. Because I currently have PMI on my home, they will not let me reduce my mortgage term from 30 years to 15 or 20 years. I’m not sure of the logic of this, aside from the fact that it keeps me paying PMI longer. It doesn’t matter though, because I’m going to continue paying the same amount towards my mortgage to pay my principle off quicker and ultimately get out of PMI quicker.

The other “good” news, that I put in parenthesis because it’s not really good news, but it’s better than the alternative, is that we received word on our appeal of our property value. They decreased our property value 25% for 2010, and 5% for 2011, so we should be receiving a refund of overpaid property taxes and will be paying less going forward.

The combination of these two items means we will likely see a nearly $200 decrease in our monthly mortgage payment. While we’re still stuck in a home that we hate, the extra money means that we can pay off our debt faster.

And finally, here is our current debt picture.

More Thinking

Tonight I've started thinking that maybe I'll take a loan out of my 401(k) to pay off the consolidation loan and one of my student loans. I'm trying to think through the tax ramifications of paying off a student loan early, and really, all of the ramifications of a 401(k) loan. The loan would not be that much, as I have not saved much for retirement, but it would be enough combined with my savings account and tax return to pay off my consolidation loan (10.49% interest rate) and my student loan (5%). By paying off the two and paying back the 401(k), I would save $70 a month, or $630 between next month and the end of the year. Again, this is money that I could put directly towards other debt. So I'd miss out on about $100 worth of tax deduction, but I'd pay $630 less in interest, so I think it's worth it. I just want to make sure I have my numbers right before I request the 401(k) loan because I'd hate to take out the loan to pay off these debts only to not have enough to pay off the two debts I'm planning to pay off and still be making the same number of loan payments.

I can not believe how much time I spend thinking about money. It is 1:30 on a Saturday morning, and I'm sitting here thinking about how best to pay off my credit card debt. I can not imagine how much of my life I'm going to get back once these debts are paid off. Maybe then I'll start spending all of my spare time thinking about how to save money instead.

I finally filed my tax return, so that's a step in the right direction as far as actually accumulating the money that is needed to pay this debt off. I have got to remember what I feel right now next time I want to take out a boatload of debt. Yeah.

Hello 2012

I have told my husband repeatedly, 2012 is the year we pay off our credit card debt. We might not be able to pay off the student loans, cars, house, or signature loan, but in 2012, we are going to pay off our credit cards.

I have started taking some steps to pay them off. I opened a Discover Card and transferred some of my balances to it at 0% interest for 18 months. They each came with a 3% balance transfer fee, but the balance transfer fee on each equals one months interest, so I'm still not going to end up paying as much on the debt. After transferring as much of the balances as I could (I was not able to transfer them all because the credit line was not high enough), I drained our savings accounts so I can pay off the remaining balances on a couple of the cards. We will still have a pretty significant amount of debt accruing interest, but I'm trying to position us so that we can pay it off this year.

I was not 100% what the balances were on the credit cards as I set up the balance transfers so what I did was this:

Estimated that our Target card had a balance of about $3500, but was not sure of the exact amount, so I transferred $3000 to the Discover card and used a portion of our savings to pay the remaining balance.
One of our Credit Union cards had a balance of about $2100, but I wasn't sure of the exact amount, so I transferred $2100 and used savings to pay the remaining balance.
I used savings to pay off our Kohl's card and my Victoria's Secret credit card.

My husband's paycheck should be pretty big next week, since he worked the full week, plus got paid for an extra day for Christmas and for New Years, so 20 hours extra on top of the full two weeks worth of work, plus he'll be receiving a bonus (possibly two, depending how long it takes for them to pay the second). My bonus will come in February and it is pretty sizable this year.

I think between the two, we should be able to pay off all of our credit card debt that is currently accruing interest. We will have a Discover Card and two Best Buy cards that have debt that are accruing 0% interest, which we should be able too pay off throughout the year and should be, hopefully, credit card debt free by the end of 2012.

The biggest challenge for us is that we don't want to stop spending. We have real issues controlling our spending. Even as we've had the conversations as they've related to what we need to do to pay off the debt, we're still talking about taking a Disney vacation, which would have to be charged, and we still make random trips to the store whenever we're bored and just buy whatever. We still can't exhibit the will power we need to be successful in this resolution, so that may take a lot more time and effort than even I expect.

I have to accept that we will have slip ups and we will probably make mistakes along the way and we may even fail as the calendar flips to 2013, but if we can make strides this year, then it will go a long way in improving our financial position and getting us to the point where we are eventually debt free.

Day 374: More than a year, and no closer to being paid off

I have read a lot of doom and gloom articles online lately. How can you not, though, given the current economic situation. But more important than the articles themselves are the comments that follow them. They truly paint a picture of the American psychie, or do they?

Last week, I read an article about how the personal savings rate should be 16-20%. Although it did not state whether that was 16-20% of gross or net pay, I don't think it was really relavent. My initial thought was "How on earth is anybody supposed to save 16-20% of their pay??" And then, I looked at my own personal finances. I currently throw $200 a paycheck into my savings account, and another $25 per pay into each of my children's savings accounts. There is very little return on investment right now, but I am not confident enough in our economy to save money any other way. After combining mine and my husband's salaries, I discovered that I am currently saving about 15% of my gross income and about 9% of our combined gross income. That doesn't sound like much, in comparison to the recommended 16% savings rate but, there are weeks that we have extra money after paying bills. I leave $100 in our checking account to spend for the week and throw the rest into a savings account. I do this on two different bank accounts. By the end of the year, I will have saved approximately 11% of our gross income, based on current projections and IF we face no emergencies that require withdrawal from those accounts.

Based on last years tax return and my current withholdings, I estimate we will receive a $2000-$2500 tax return this year. It is considerably less than the $4000 we received last year, but that's because the other half of that money is already being put into savings. This is the first year I have claimed more than zero exemptions, but I kept reading about how I should get that money now and not let the federal government have it for free, so I did what was suggested. Next year, I'll bump it up and hopefully break even.

Once we pay off some of our credit cards, loans, etc, we will have eliminated about $500 in expenditures, half of which can go into savings as well.

In taking steps to consolidate our debt, I applied for a consolidation loan. I didn't originally plan to, I just contacted my credit union to find out the terms of the consolidation loan, but when they gave me a call to discuss the terms of the loan, they pulled up my account and filled out the application. I was approved immediately, and within two hours, had the money deposited into my account for me to distribute as needed. I paid off one credit card, a loan, and the majority of a second credit card. That second credit card will be paid off this month as well.

I went back and forth on the consolidation loan, because there is an early pre-payment fee that if it is paid off in less than 2.5 years, I am charged a $50 fee. I did a quick look at how much I was paying in interest on these cards and loans, and determined that it was well worth it, even with a $50 prepayment fee. We will likely pay a chunk of the loan off with my bonus next year, and continue to make monthly payments before and after that time. If I ever get the raise that I am expecting (hoping for), it will help significantly.

I also decided on the consolidation loan because I have learned that if we have a zero balance on a credit card, we are a lot less likely to use it. Something about putting a balance on a card that was previously paid off just bothers me psychologically, but if there is a balance, I know I'm making a payment on that card anyway, so I am more inclined to use it for random spending. At least with the consolidation loan, I will not be able to amass any more debt on it. There is a fixed amount that I will be paying on for a predetermined amount of time and once it's paid off, it's paid off.

Another fun thing that I learned, that has bolstered my confidence a little, is that we have finally reached a point financially where we're not spending more than we're making. I know it seems a little backwards to be putting money into savings when we were using credit cards to meet basic financial needs, but I felt like (and still do) that if either of us were to lose our jobs, I would rather have money in the bank than a paid off credit card. I can negotiate with a lender, but if I have a $0 balance credit card and no income, it won't be long before access to my card is shut off. So I have been using my lowest interest credit card to pay for basic necessities, like gas and groceries, and then making the same $250 payment every month.

That said, here is a picture of my current debt totals for June.

Day 354: May Totals and Random Updates

I believe when we last left off, I had recently had an interview and was waiting for word as to whether I would get a promotion to a new position, or whether my job audit would net me a promotion in my current role.

I'm sad to say that neither happened. The job I had interviewed for decided that I did not have enough experience, which I guess I can see since everybody else they interviewed was a business analyst and I am just in sales support. It doesn't make it any less disappointing though. HR responded to my job audit by stating that, although I'm doing more work than required for my position, the extra work that I'm doing is not required for my current position and is simply an added benefit that I bring to the job, so they told my manager that my job could not be reclassified.

So I got no more money. However, after three years, my husband finally got a $0.75 an hour raise. I personally feel it should have been more, given that they haven't given raises in three years, but I'm glad he got something. His company has now started offering a retirement plan too, so we will be filling out the paperwork to start contributions to that as well. It will be a hit to our take home pay, but I'll be glad that he's saving something for retirement. I will likely start contributing again after the first of the year, possibly with my merit raise next year.

While it's disappointing that my current department gave me nothing for my efforts, my manager did say that she could give me a merit raise at my midyear review, and another one next spring. I'm anxious to see what kind of increase I get at midyear.

My student loan payment is going to go up $10 a month after my August payment, as part of my graduated repayment plan.

I have noticed that several readers have ended up on my blog for searching the term "What is a grandfathered repayment plan." From what I understand, there was a revision in the student loan terms, both pertaining to interest rates and payment terms for student loans. I believe this was in 2006, but don't hold me to it. At the time, it seemed like a great idea, because it made all student loans fixed rate, instead of variable, and was locked in at the "low" interest rate of 6.some-odd percent. As we all know, when the economy tanked, this "low rate" was no longer a low rate, but I guess that's how things work. From comparing my payments on my current (grandfathered) repayment plan and the new repayment plans, it appears that the new plans have smaller incremental increases on the graduated plan, but the loan is stretched out for a longer period of time. I believe when I signed my loan paperwork, the longest a loan could be repaid on was 20 years. Now it is 25. Similarly, extended repayment plans can last for 25 years, instead of 20.

I think this is kind of a catch 22 for consumers. When I began repayment on my loans about five years ago, I only had 20 years to pay them off. Yes, my payments are going to increase every two years so I will be paying larger payments towards the end of my repayment period, but I only have 15 more years of paying on them. I have been considering consolidating my loans that were not included in the initial consolidation so all of my loans will be locked in at the same rate, however I believe that this resets my payments to another 25 years (unless I make additional payments on the principal) and I end up paying more interest in the long run. Do I consolidate an lock in the 2.something interest rates on my currently variable loans, or do I leave the two separate and pay them off in 15 years?

If I were making any headway on our debt payment plan, I would leave them as is. My student loans would be paid off in less than 10 years, and if my interest rate on the variable loan skyrocketed, it is legitimately small enough that I could pay it off with a tax return or bonus. But I also know that we always have those returns and bonus's spent before they're even deposited. I hate making grown up decisions.

I actually think I'm becoming a little too obsessive about money, bills, debt and the like. I already have a whole payment plan mapped out for our bills for 2012, and we're not even half way through 2011 yet. I mapped out all of the bills we have to pay, based payments on our current salaries (assuming no increase in salary), assuming no decrease in our mortgage (which we should see because of our decreased homeowners insurance premium), and assuming we continue paying the same monthly payments on credit cards, even as the balances and minimum payments decrease.

And you know what? We have a lot of extra money left after paying bills. Now, it doesn't take into account groceries or gas or any other necessities, but I know approximately how much we spend on these items in a given week or month, and they can fluctuate based on what disposable income we have left after paying bills, but I have to say that unless something catastrophic happens (*knock on wood*), 2012 should be a great year for us financially.

We have 22 weeks where we will have more than $150 after paying bills, 7 of which we will have more than $200, 4 of which we'll have more than $300, and 2 of which we'll have more than $400.

I hope that it actually comes to fruition. That is a lot of extra money to pay towards credit cards. On my spreadsheet, I assumed $200 in spending money (for gas, groceries, and miscellaneous spending) and for weeks with more than $200, I will put everything over $200 in our savings account.

Like I said, I'm a little obsessed about it, and a little crazy for devoting so much time for it, but I think seeing it in black and white helps keep me on track for paying things off in a timely fashion. If I can see where the progress is being made, I'm more likely to stick with it.

Ok, so that's enough rambling I guess. Now I will leave you with pictures of our May debt. This does NOT take into account the money we spent on vacation, as it was not accumulated until June.

As you can see, there wasn't much change in the overall composition of the debt, or the amount of debt paid off.

Day 311: April Debt Totals and Just Waiting

I'm at a loss. I don't know how to decrease our debt level when we're having a hard time meeting our monthly obligations. We pay down credit cards, or pay them off by the end of the month, but then the next month we don't have enough money to pay for gas, or food, and it has to go on our credit cards. One of the credit cards I paid off last month with our tax return now has an almost $800 balance. I was going to pay it off before the payment due date, but then realized that I did not account for our water bill in my budget this month, so there goes that plan. As gas prices continue to increase, our ability to pay off our debt is going to be dramatically impacted. They are predicting that $4.00 a gallon gas will come to our town this weekend based on the $111 a barrel oil. It's very disheartening that the harder we try to get ahead, the more it seems like something is trying to keep us down. We've already seen our grocery bill nearly double in the past year, and that's buying the same items we were buying before.

On a more positive note, I switched insurance companies. I have been with State Farm since I first started driving 15 years ago. I've always had auto insurance with them, and then renters insurance when I had my own place, and more recently, homeowners insurance. They've usually been pretty good to us, so I never had a reason to shop elsewhere. Well, last January we had to file a claim because the county flooded our basement. Six months prior to that, we had filed a claim on a busted ac/furnace unit, thinking the whole thing would have to be replaced to the tune of $5000. They repaired it, instead of replacing it, so our claim was for a measly $800, so it wasn't even worth it. Anyway, last year, on renewal, State Farm raised our homeowners premium nearly $100 because of our claims history. Two months ago, we received notice that they were increasing our deductible from $500 to 1% of our replacement value, which was nearly triple the deductible we already had on record. I called our agents office, furious, asking how much the deductible was going to be and advising that we would be shopping our insurance elsewhere. They told me they would see if they could decrease our deductible to $1000 and that the reduced coverage would mean lower premium. Wrong. When we received our renewal invoice, our premium went up nearly 25%. So, I started shopping my insurance.

In the interest of full disclosure, I work for Nationwide insurance. I have worked here for nearly 5.5 years, but never switched from State Farm because I liked the way I had been treated by them and the last time I was quoted with Nationwide, they were nearly double State Farms rates. Upon receiving our renewal notice, I called Nationwide. The result? Our homeowners premium is down $105 over 2010 premium (down nearly $250 from what we would have been paying with State Farm). Our auto insurance? Down about $20 a month, so almost $250 for the year. By switching to Nationwide, we saved almost $500 in premium this year. I guess the commercials don't lie.

They will reassess our mortgage payments in July. Hopefully by then, the County Auditor will have reassessed our property value for tax purposes as well, and we should definitely see a decrease in property taxes due to the reduced value of our home. I sent in the paperwork this year to have them reassess, after seeing a more than 30% decrease in property value. The house next door to ours is currently on the market for $35,000 (foreclosure) and has been for several months with no sale. I've finally just stopped looking at house values in our neighborhood because it's too depressing. I'm pretty convinced we're never going to be able to move.

We did decide to take a vacation this year. I booked the room a few weeks ago and got it for 15% off the lowest advertised price, plus they waived the resort fee and parking fees. After dividing the cost with my sister and mom, who are going along and sharing the condo with us, it worked out to less than $1000 for the week for the hotel room. We should have the entire cost of the room paid off before we leave for vacation. We're trying to have a garage sale before we go, but it got rained out last time.

I interviewed earlier this week for a higher paying job. Upon learning that I was interviewing, my supervisor at my current job approached me and told me that she knew I was doing more than required by my job description, so she wanted to perform a job audit to try and get me a promotion and a raise. I should know if I get a second interview by the end of the week (or possibly Monday), and I don't know how long it's going to take to hear back on the job audit, so right now I'm on pins and needles waiting to see if I will get another raise, this time in the way of a promotion.

Anyway, I promised our current debt totals, so here they are. As you can see, we did increase in credit card debt. Our credit cards now compose 9% of our overall debt load, as opposed to 8% in both February and March. I'm hoping that interest rates stay low until they determine the new student loan interest rates next month (I think it's next month), that way I can reconsolidate and reduce my payments further.

Day 258: Yay for Tax Returns

I didn't realize it's been nearly two months since I've updated, but that just means that todays update is even better than usual.

We got our tax return on Friday. We also got my bonus on Thursday. Our state return will be here on Tuesday, and my second bonus will be here in two weeks. My husband's employer has started paying monthly performance based bonuses, which means an average of an extra $100 a month, and I will find out on Tuesday what my raise will be for this year. It is a very happy time in our household, even though we have nothing fun or exciting planned for this money. Well, I guess it depends on your definition of fun and exciting.

Friday, I dropped our entire tax return and my bonus onto my credit card with our Credit Union. It cut the balance in half. Why would I do this, you may ask, when our Target card has more than double the interest rate. Well, my credit union is currently offering 2% cash back on balance transfers. Now that I've paid down half of the balance on that card, my credit union will be initiating a balance transfer on the two credit cards that we will be paying off. In addition to paying off two credit cards, I will be getting $100 cash back, deposited into a high interest (10% +) savings account.

In addition to eliminating a quarter of our credit card debt, my husband and I finally sat down and had a conversation about our financial goals. This is the first time I feel like we are working together, instead of against each other.

I decided to create a pie chart of our current debt so that we have a visual representation of the distribution of our debt. I based it off of the chart I've been using since last June to keep track of our debt amount.

I think it might be good for both my husband and I to be able to visually see our debt decrease. When we start accumulating savings, I'll add that too, so we can see our debt decrease and our savings increase.

I actually feel good about where we're headed, and I feel positive about the future.

Day 213: Optimistic

I’m beginning to feel genuinely positive about our finances for the first time in a long time. It’s too soon to be throwing a party or declaring victory, but I am finally seeing the potential for improvement over the next six months. The first step I’ll be making is paying $600 towards my Best Buy card this week. That will pay off one of our purchases that was no interest for 18 months before any interest accrues. In February, I will be receiving my bonus, which after taxes will give me about $1100 to go towards credit cards. I will probably put the entire thing towards our Target card, since it has the 24% interest rate.


Our tax return will likely be delayed, because of the changes to the tax laws at the end of last year, since we may itemize. As long as the Best Buy purchase is paid off though, I don’t mind waiting a few extra weeks to get my refund. Our refund will pay off the remainder of the Target card, and will also pay off the balance of my Best Buy card. I also sold my broken down old car for $300, so that will be put towards debt too.

By April, we should have two credit cards completely paid off.

Now, in the meantime, I am building savings. I am putting the difference between last year’s insurance premiums and this year’s insurance premium into a separate savings account. I also increased my exemptions for tax purposes and am putting that difference into savings for the next year. I am also putting money into our regular savings account by over-contributing towards our mortgage payment. By the end of December, we will have about $8500 in savings. I’m going to use that to pay off our remaining Best Buy card and our CU 1 card. That will leave us with one credit card balance going into 2012. That makes me really, really excited. And seeing step by step how we’re paying off these balances makes me very confident that we can follow through with it.

Also, I will likely consolidate all of my student loans in June this year. I anticipate that loan rates will increase this year and I would like to have all three student loans into one single payment. My other option is to not consolidate them, but to instead wait until spring of 2012 and pay the two smaller loans off with savings and our tax return. I have six months to think that over, and see what the interest rate will be for next year.

So long as everything goes according to plan, by this time next year, we will have paid off over $26,000 in debt. And, we will still have money in savings. That, my dear readers, makes me very, very happy. And more than that, it makes me very motivated and determined.

Day 159: Why?

Why do we keep doing these things?

We went and bought a washer and dryer last week. To be fair, it was an amazing price. A Samsung steam washer and steam dryer, king sized capacity, for about $1300, plus we got a $130 gift card back on the purchase. I love the set, and I’ve been looking at upgrading our washer and dryer for about three and a half years now (since we bought the house), and like I said, phenomenal price! We put them on our Best Buy credit card at 18 months with 0% interest and justified it because of the no interest financing.

To be honest, I also justified it because of the Energy Star price tag that says it uses $12 a year to operate based on a $0.10/kilowatt energy rate, versus our old washer that used $77 per year based on a $0.07/kilowatt hour energy rate. The sales man also told us that while traditional washers use close to 50 gallons of water per wash, the set we bought is probably closer to 16. Given that we were doing probably 8 loads of laundry a week, that’s a substantial savings. Oh, and since this is a king capacity set, we’re not doing as many loads as we were before. Well, we are this week, because I’m so in love with the set that I can’t stop washing laundry, but once the novelty wears off, we’ll probably be down to four loads a week, maybe five. I’m anxious to see next month’s electric bill, just to see if the cost savings are that substantial, and then our water bill in two months.

I’ve seen a difference in our electric bill since I hung blinds and curtains in our daughter’s bedroom last month, but I don’t know if it’s because the weather is warmer than this time last year, or if it’s because the heavy curtains legitimately make a difference. I should have hung the heavy curtains in my son’s room too, so maybe I’ll see if I can find the liner that you attach to the back of existing panels. The true test will be in January, which has traditionally been our highest energy month over the three and a half years we’ve lived in this house. I signed us up for the budget payment plan in May for our electric, and right now we’re running a surplus of over $170 for the past six months. If the energy efficient measures we’ve taken do what they’re supposed to, perhaps our electric bill will be closer to $120 a month next year, instead of $160. Hopefully, it will be even lower than that.

In good news, I found out that my bonus next year actually comes the second pay day in February, instead of April as I had thought. I will actually receive two bonuses next year, a large one in February, and a significantly smaller one in April, because I changed jobs three months into the year and I get bonuses from both departments. We should see our reimbursement from the county in the next month, the bonus in February, the tax return in March, and the second bonus in April, then my husband should receive his bonus in June, and I should receive a pay increase in March, so hopefully in four or five months, I can stop obsessing over where the money is going to come from and instead obsess over how we’re never getting back to this place again.

Also, I signed up for swagbucks. If you're interested in doing random things like using a search engine, taking surveys, answering polls, and watching videos for points that can be redeemed for prizes, please consider signing up using my referal. I have been doing it for less than a week and have already earned enough points for a $5 gift card from Amazon. I appreciate your help. http://www.swagbucks.com/refer/justaname

Day 149: Annual Enrollment

I completed my Annual Enrollment last week. I went back and forth many times, worrying about what it was going to do to our bottom line if I took the steps I wanted to take. Ultimately, I knew I had to make a decision and I decided that it was better to save money on the premium and go with the High Deductible plan. I contributed $900 annually to our HSA, which will be matched 100% by my employer. That only works out to $75 per month. When I plugged it into our monthly spreadsheet for next year, it did take us negative for a few weeks, but I have a few months until I have to worry about that.

I don’t know if I’ve shared or not, but because I’m so obsessed with improving our financial lot, I’ve created a spreadsheet. It originally started with just listing monthly bills and their due dates, that way I could check off items that I paid and I’d know what was still outstanding. As we’ve gotten further into debt and been teetering closer to the edge, I added columns with each weeks pay date. I now break down exactly what is coming out of each paycheck based on what we need to pay our bills. I added a conditional format to let me know when our balance for the week is below $0. In 2011, we have 14 weeks that are below $0, and two months that are cumulatively below $0, however, we have several months at the beginning of the year that leave us with $300-$500 extra after paying bills, which means probably $50-$150 after paying for gas and groceries, so hopefully it won’t be too much of a hit.

While completing my annual enrollment, I established a separate savings account. Since I am only contributing $75 a month towards our HSA, I have decided to have a separate savings/checking account for the additional premium, to balance everything out. I will be contributing every two weeks to this savings account. It is tied to a checking account because if we have to pay medical bills, I want easy access to this money. But, if we don’t have medical bills or a financial emergency, the debit card for this account is going to stay locked in our fireproof lock box. Assuming we have no medical emergencies, we would accumulate $2600 in this savings account, $900 of my own contributions to our HSA, and $1160 in company funds in our HSA by the end of next year. That’s $4660 that can go towards medical bills if we ever needed to pay our deductible.

I know putting the $2660 in the savings account is not the best financial decision since it is not tax free, however, since we do not have an emergency fund and the $200+ monthly hit would have been too great for us, I think this is a great option for this year. This money can serve as both our medical savings, and our emergency fund, should we have an emergency that demanded this money. If I contributed it all to an HSA, we’d only be able to use it for medical expenses.

My other plan is that I’m going to increase my exemptions to 3 and change my status to married, and contribute the difference to a secondary savings account. My credit union allows you to create multiple savings accounts for multiple purposes. My plan is to divert the money that we were previously paying in excess towards our federal taxes into this savings account. Every $500, I will put into a CD, staggering the maturity dates. This will allow me to earn interest on money I was previously loaning to the government interest free. If I owe taxes at year end, I will have that money sitting in a savings account/CD and it won’t hurt our financial position to pay it. If our taxes stay at the same level, we would still see a tax return, it would just be a lot smaller, and we’d have earned interest on the difference throughout the year.

I’m not going to lie, these changes make me very, very nervous. I’m used to knowing that I have a small deductible and that most everything is covered by my insurance. I’m used to knowing that I’m going to receive a large tax return at the end of the year. The thought of not receiving that lump sum of money makes me very nervous. But we have to stop living like we are, and having money in savings, even if it is an emergency fund, will reduce a lot of the stress in our marriage.

I really just want us to be happy again. And I want to be in a place that I can teach my kids to be responsible with their money so they don’t go through the same mess when they get older. Like I’ve said before, my parents didn’t really teach me anything about money, at least not anything good. I want to change that with my kids.

Day 129: Rambling about the Past and the Future

I read this article on Yahoo yesterday, regarding 401(k) matching. As I wrote about a month or so ago, I discontinued my 401(k) contributions temporarily because we needed the additional income to help pay our bills and I was facing a consistent negative rate of return on my investment.

Reading the comments on this article (which is no small feat, given the numerous server errors that plague Yahoo articles), made me really think about my investment philosophy and planning for our future retirement.

I don’t know if I’ve spilled any personal information about myself, but I am 29 years old and my husband is in his mid-30s. I make approximately $42,000 a year plus bonuses (which have ranged anywhere from $500 up to an anticipated bonus this year of closer to $1500). My husband is on an hourly wage and generally has a gross income between $21,000-$25,000 and has not seen a raise in three years. Given our yearly salaries, I find it very sad that we have no savings accounts to speak of.

I put $25 per paycheck into each of our children’s savings accounts and then transfer those funds into small, short term CD’s whenever the savings account balances reach $500. I keep the CD’s small, and occasionally have multiple CD’s with different maturity dates, usually only buying 3 month CD’s due to the low savings rate. If the savings rate ever increases (which I anticipate it will in the future), I may buy more long term CD’s. My children know these bank accounts exist, even if they don’t fully understand them. In addition to my automatic contributions every two weeks, we also put any change and cash they receive into their piggy banks, and when the piggy banks get full, we take the piggy’s to the bank, dump the change into the change machine, and deposit that money into their savings accounts as well. When they get older, I will teach them how money is used to buy things, and we will maybe put half of their change into savings, and the rest of it will be used to buy things they want. I will also give them an allowance for doing chores around the house; something I never received growing up.

I think a lot of my financial immaturity can be traced back to my parents and how I was raised. I don’t want to blame my parents, because they did the best they could, given their financial position. They were both teenagers when I was born and my mom dropped out of school at 16. My dad graduated, but always worked hard, manual labor jobs just to make ends meet. They had five kids, and then divorced, and spent the next 14 years arguing over money, child support, medical bills, and everything else. I remember my dad, over and over again, telling me and my siblings how my mom was being unreasonable, expecting him to pay half of the medical and dental bills when he already paid child support, even though that was what the court order stated. I remember him showing me his paychecks and telling me, “This is how much I bring home, and this is how much I pay your mom, and how much does that leave me with? Do you think that it’s fair that I should have to pay her more for doctors and dentist bills?” Similarly, I remember copying every check that my dad sent my mom for child support so she would have proof for the courts that he wasn’t paying his fair share, and knowing how much she was bringing in, and how much the mortgage was, and really having no clue on utilities or car payments. Based on what I know now, as an adult, it’s no wonder our home was foreclosed on when I was 17 years old.

When we bought our house, we made an effort to determine how much home we could afford. I never wanted my children to feel the sense of loss that I did when we lost our home. It was as if I went off to college, and never had a home to go back to. Apartments never felt like home, and I moved every year so I didn’t really accumulate much from year to year. My first apartment was furnished, but my second was not, and the only furniture I owned was a queen sized bed and a 19” tv. I sat the tv on a box and didn’t have cable. My living room was empty. Same with my second apartment, until my (now) husband bought me a tv stand to set my tv on for my birthday. It wasn’t until I moved in with my husband that I actually had furniture in my living room, and even then we had a broken down couch that he’d gotten from friends, or family, or somewhere, and a dresser that had broken handles. We got a free washer and dryer when we signed a 15 month lease with the apartment complex, which worked great for us at the time. We got an old desk from a friend that was moving and furniture from friends and family when they replaced theirs.

So as we were saving to buy a house, we calculated how much we were spending on rent, and we put whatever we could into savings every month. We kept track of what we were able to save, what we were spending on extraneous items, and where we could save more. When we met with a mortgage broker, we told him we could afford no more than $950 a month for our mortgage, interest, and insurance; knowing that we could afford closer to $1000, but not wanting to push our budget. He told us that with the amount we were looking to spend, we could only afford a $100,000 house, but that with our income, we qualified for $160,000 home. We disagreed, telling him that $1000 would be pushing our budget and he told us that we would see raises and be able to afford more in the future. I am glad we didn’t listen to him.

We looked at homes between $99,000 and $113,000, and ultimately bought the most expensive one that we looked at, but it had four bedrooms and one and a half baths, and did not need near the work that the others we saw needed. It was, for all intents and purposes, move in ready.

When we bought our home is when finances started going downhill for us. We bought a new couch, new bed, new tv, new tv stands. It was almost as if when we were told we could afford more house, we thought we could afford more stuff to go in it. Of course, we had no more cash, and since our mortgage payment was at the top of our limit, everything went on credit. At a time when many people were losing their job and defaulting on debt payments, we were a great asset to companies looking to make a profit, like banks. We bought and bought and made the minimum payments and finally, at Christmas last year, hit a point where we were questioning how we were going to buy gifts for everybody that we were supposed to buy for. We had been buying with the assumption that our tax return would bail us out, that bonuses would hold us over, that all of the spending that we did throughout the year would be wiped out with the influx of cash in the spring.

The problem was that with the credit card reform that went into effect earlier this year, some of our creditors, especially the ones with the biggest balances, decided to change their fixed rate cards into variable rates, and increased the interest rates to the point that 90%+ of our minimum payment was going towards interest. This led to higher minimum payments to cover the interest plus a minimum payment towards the balance, and without the tax return, we didn’t have the money to pay the balances down.

Then we were hit by problem after problem financially. Our air conditioner broke, twice. Our basement flooded with sewage. Our air conditioner broke again. The bottom of our car was rusted out and it would have cost more to repair than it was worth to keep it.

Through it all, though, we’ve managed to keep our heads above water. Our 2010 tax return went towards paying off the credit cards we used to fix our basement. Our 2011 tax return will go towards the other problems we’ve had crop up throughout the year.

Once we’ve made a sizable dent in our debt, I will start putting a percentage of our pay into savings for a rainy day fund, instead of throwing so much money towards the debt, that way we will have a cushion. We’re less stressed with an emergency fund.

And after we’ve made payments towards these credit cards and I feel that we have sufficiently gotten our heads above water, I will resume contributions to my company 401(k). My company matches 50 cents on the dollar up to 6% of my salary. I contribute to a Roth 401(k) because I’d like to think that I will be making more money when I retire than I do now, pushing me into a higher tax bracket. Even if I’m not making anymore, I will still probably be in a higher tax bracket due to inflation. After contributing to the maximum that my employer will match, I plan to contribute to a Roth IRA, eventually up to the maximum that I am allowed. I would eventually like to put some amount into the market for long term investing, not to play the market. I want to learn more about buying stock and diversifying my investments. My company also offers a pension, in addition to the 401(k), which I am well aware makes me very fortunate.

Anyway, this discussion about planning for retirement has gotten very long winded and off track, but I guess I just needed a brain dump today. To sum it up, I want to diversify. I know that 401(k)’s aren’t guaranteed, so I’d like to also contribute to a Roth IRA and savings and CD’s, but I’d also like to try some long term investing in the stock market, and hopefully by time we retire, we’ll have paid off our mortgage and won’t be carrying debt, and we’ll be able to live comfortably without worrying where our next meal is coming from.

Day 128: Tiptoeing Forward

We’ve had a small step forward this month; or maybe a big step, depending on how you want to define it. Our debt actually went down across all categories, even credit cards. Only one credit card balances actually went up, but everything else was down. All told, we cut over $888 from our debt balance. It is a very exciting month for me, and the fact that my husband finally seems to be getting on board with some of my plans makes me very excited for us as a family and our financial picture.

We also got some good news from the county last week. They will be reimbursing us the out of pocket expenses that we incurred in January as a result of the county’s sanitary sewer flooding our basement. We will be receiving $1377 back from the county. My husband and I have discussed it and decided that $377 of that will be going towards credit card balances, and the other $1000 will go into a savings account for an emergency fund. We debated putting the entire amount towards a credit card, but decided that we are less stressed when we have an emergency cushion, even if it is only $1000.

We will be paying our Target credit card off in the spring, when we receive our tax return. Knowing that we give the government a “loan” every year doesn’t feel so bad when I know we’re getting a chunk back to apply towards our credit cards. I’ve already sat down and planned out where the money is going to go based on the expected refund. Last year we received a refund of over $4000. This year I anticipate it will be closer to $3000 because I’ve recently adjusted my withholding to put more money towards debt now, instead of waiting until tax time. I have abandoned my plan of paying off both Best Buy credit cards with the tax return because we’re not paying interest on them and I felt It was more important to pay the cards that we are paying interest on off.

I can’t wait to watch balances turn to $0. In March, the Target will be at $0, then in June, Best Buy #1 will be at $0, and then December will be Best Buy #2. With my anticipated bonus in April, we may even be able to pay down half the balance on CU 1 in the spring. The thought of eliminating that much debt makes me so giddy. More than that, the thought of being able to save money, instead of putting it all towards debt, makes me giddy.

We have been doing better than I anticipated at paying off debt and staying within our means. I may be able to resume contributions to my 401(k) after the first of the year. I just feel good.

Here is a picture of where the debt is as of the time that all October payments are made. The total for CU 2 is in gray because it has not yet been paid, but this is an estimate based on the minimum payment and total amount that will be applied towards interest.

Day 121: Little Failures

I haven’t had much to write, and I haven’t really wanted to reflect on my failures this month. Everything went up except for the two categories that could only go down. Credit card balances are up, we have our new car loan, and we’re pushing closer to $200,000 in debt than we ever have been before. Even though the balances on both of our Best Buy cards are going down, pretty much every other card has gone up.

My husband and I have been arguing about what exactly a budget it. He doesn’t seem to grasp the concept. He thinks that you can’t budget because “little things pop up” and I’ve told him repeatedly that the point of a budget is that those little things don’t pop up. He’s not talking about emergencies; he’s talking about wanting to go out on weekly shopping trips for non-necessities, like books, like clothes, like toys. As long as he thinks that a budget is supposed to be busted by these “little things that pop up” we will never get on track financially, no matter how hard I try.

I honestly don’t know how we’re paying for Christmas this year. I told my husband that we’re going to have to limit gifts to 5 per child. He thinks that means five big gifts. I told him this year is not the “Barbie jeep” kind of year. Last year we bought our daughter one of those Power Wheels Barbie jeeps and she hardly drives it. My plan for Christmas this year, is to sit down with sales ads and write a list of exactly what the kids are getting, and then go out the day after Thanksgiving to buy the things that are on deep discount. We’ll do the remainder of the shopping throughout the month of December, but will not deviate from the list. We can’t. We can’t afford it.

I’ve also been looking into Once a Month Cooking, or at least once a week; buying and cooking in bulk and freezing meals. Anything I can do to simplify my life and decrease our variable expenses (like groceries.)

Here is our snapshot of our outstanding balances after paying all bills for the month of September.

Day 97: Plugging Along

I haven’t had a lot to write about our debt payoff journey lately. As it stands, things are stagnant, but not, if that makes any sense.

I don’t have any big plans up my sleeve to eliminate half my debt overnight. I think we’ve made all of the big moves that we can, and now comes the time to follow through with our debt payoff plan. We just have to hammer away at it.

Effective my next paycheck, I will not be contributing to my 401(k). This is only a temporary bump, and I intend to start investing again in March when we receive our tax return. When we receive our tax return, we will be paying off three of our credit cards, eliminating nearly $300 a month in credit card payments. Once those three credit cards are paid off, our financial picture will look a lot brighter. I keep telling myself, “Six more months until we have some breathing room.” Not to say we’re going to go crazy with that breathing room, just that it will be a welcome change from our financial state for the past six months.

My husband is still a nonsmoker, for a month as of Wednesday, but he’s discouraged because we’re not seeing immediate financial returns on his quitting. I’ve tried explaining that we have benefited financially from it, because if it weren’t for him quitting, we’d be even further underwater with our bills than we are right now, but he wants to see positive growth in our savings account, not elimination of credit card spending.

I read financial articles every day, and see people complain that the economy isn’t getting any better and people are still broke. They blame the president, the banks, the realtors, but never seem to point the finger at themselves. It’s a bitter pill to swallow, knowing that we’ve lost $20,000 on our house in three years, knowing that we’re locked into a 6% interest rate, and we can’t get out of our home because we’ll never make back what we owe on it. But I don’t blame anybody else for our financial position except for myself. I don’t even blame my husband, because he told me three years ago that we should stay in an apartment and save money for a down payment, instead of putting nothing down on a house that we were only lukewarm on. Instead, I wanted out of an apartment, and here we sit.

I could blame the credit card companies for our outstanding financial debt load. They did, after all, increase our interest rates to 24%+ and convert our fixed cards to variable cards, but if we hadn’t used them irresponsibly in the first place, we wouldn’t have had as much debt for them to profit off of.

I could blame the student loan companies for not reigning in the amount of loans they were allowing me to take out, giving me more than three times tuition costs. I could blame the car company for selling us a lemon, or giving us a high interest loan…

You get the point.

But, it’s nobodies fault except ours. We’re the ones that got dollar signs in our eyes and thought we were made of money. The funny thing is, we’re not making anymore money than we were before. Our utilities are going up monthly. Our mortgage bill went up substantially, because of escrow. We’ve got a new, higher car payment, and a new higher insurance bill. And yet, we’re paying credit cards off. Funny how that can work, when you prioritize your spending, cut out fast food and cook at home, eliminate unnecessary shopping trips that you were only making for the sake of boredom. Looking at our financial picture, I am amazed how much money we were hemorrhaging.

Six months. It will only be six months until we have breathing room; until our credit cards aren’t maxed out, until we’re not scraping pennies just to make ends meet, until I can start sleeping at night without having nightmares of losing our home. Six months seems a long way off, but soon it will be Halloween, then Thanksgiving, and then Christmas.

Until then, I’ll just keep swimming.

Day 80: A Pretty Big Setback

Our debt headed the wrong direction in a big way last night. We bought a new car. A brand new car. Ultimately, it was the right decision. I need to keep telling myself that, because the new car payment makes me want to scream and throw myself off of a building, but it was a necessity.

A little over a month ago, we were told that our car had a rusted out cross member. We were quoted between $5-6k to fix it. We owed $8000 on the car. And it was only worth $5500 in trade. We looked at the numbers, tried to figure out what our best option was, and ultimately decided that we needed to get a new car. We wanted to keep the payments as close to our existing payments as possible, which meant $288 a month. After walking into several dealerships and being told that it was an impossibility for a new car, we started revising our numbers. After looking at our actual payment (we were paying on a biweekly basis) and realizing we were actually paying $313 a month, and seeing that our gas mileage would be cut in half with the new car, saving us about $50 a month (maybe more) in gas, I set our ceiling at $350 a month.

We were still being quoted in the $360-$370 range though, so I told my husband that we should wait until next month and see if there were any other incentives, lower interest rates, or Labor Day sales. I thought, when I left work yesterday, that we were waiting to buy a new car. However, one of the guys that we had been talking to called and told my husband that he could get us into the car we wanted for $350 a month, so we went up tot he dealership. Of course, we got there, and he told us the lowest he could go was $367. So, my husband decided to play hard ball and called the other dealership that we had visited and they said they could beat that. So the dealership we were at said they could go to $365, taking a loss on the car, and they would throw in the free Homelink mirror and oil changes for a month. The other dealership said they could beat that, and the men at the dealer we were standing in were irritating me anyway.

My husband decided that $2 was worth driving to the other dealership. I told him there was no way we were going back to the first dealership if we left. We got tot he second dealership and they quoted us $367 with no Homelink and no free oil changes. After buying Gap insurance because of the negative equity we were rolling into our loan, we ended up with a $378 a month car payment (nearly $30 more than my ceiling) for less of a car. I was, and still am, pretty irritated.

Ultimately, I know that we were lucky to get a new car for less than $400 a month. We are lucky to be out of the money pit that was our old car and we're lucky we got $5500 on it, given everything that was falling apart. I'm just angry that we could have got the car we really wanted, for less, at the first dealership, but my husband wanted to haggle over $2 and we ended up paying even more. I can tell you, when I buy my car (not the family car), I'm doing all of the talking and I'm deciding which car we buy.

I plugged the numbers into my debt snowball calculator and discovered that it will take a year longer to pay off this car than it would have taken to pay off our old car. With a 3.9% interest rate, by paying it off early, we'll be saving quite a bit of interest. Our old car loan was at 6.75%, so I don't feel so bad about the 3.9%. It's better than what either of our credit unions could have given us.

I'm just sucking hard on that $378 a month car payment.

Looking at the numbers, I hope it works out the way it looks on paper and we are only paying about $15 a month more for car ownership than we were, but that only works if the car gets the mileage they say it does.

I also made a decision that a lot of people will probably disagree with this morning. I stopped deductions from my paycheck for my 401(k). As I see it right now, I'm looking at negative return on investment consistently. I felt like I was throwing good money after bad, and feel like, after about six months of applying my 401(k) deductions to credit cards, we'll be in a better place financially so I can start contributing again. Right now, I just really want to get out of this debt that is plaguing us so I can stop worrying about making our monthly bills all of the time.

I put in a call to our mortgage company last week and they haven't called me back, so I'll have to follow up with them today. I also contacted my credit union to see if they happen to refinance upside down loans. I'm trying to streamline our finances as much as possible. It will relieve a lot of stress in the long run.

Day 72: Small Changes

I can not believe we are 72 days into trying to dig our way out of this mess. The days just blend together, and it feels like we're making no progress. I know we're making progress, because the numbers are obviously going down, but it's such small progress that it almost feels pointless.

I got our monthly statement for the Target card, which we transferred half the balance from. It was kind of disheartening to see that the minimum payment was still over $100 and we still paid $88+ in interest. I know they use an average daily balance method for computing interest, so we still paid interest on the huge balance for a third of the month, but it was a little discouraging. The fact that the minimum payment only went down $28 was kind of discouraging too. Hopefully September's statements give us a much better picture of what our new monthly payments will look like.

I got some advice about our mortgage, so I'm going to have to contact our lender this week to discuss some refinance or modification options with regards to our loans and the governmental programs that are in place. It looks like our mortgage is held by Fannie Mae, which opens up some new options for us. It looks like one of the options allows up to a 125% LTV refinance option, but it only makes sense if there aren't astronomical fees associated with it.

And one of the biggest things that has happened to help our financial picture? My husband quit smoking. He's going on day five without a cigarette. Eliminating that expense will make a pretty substantial ($350-$400) difference to our budget, not to mention he will be healthier and the kids won't see him smoking. He's angry with me right now, because of the way he quit smoking, but hopefully in the future he will realize that I only did it because I love him, and the good reasons (health, kids) weren't working, so fighting about money did. If he's healthier in the long run, I think I can deal with him resenting me for now.