No Counting, Just Trying

I can't keep counting the days that we've been paying off debt when we realistically have not been paying off debt during much of that time. I haven't written lately because I feel like a big, fat failure. We've only added to our debt.

I think last time I wrote, we were getting or had just gotten a consolidation loan to pay off some of our credit cards, or maybe I hadn't even done that yet. Anyway, we consolidated a ton of our debt and promptly went out and ran up those cards all over again. As much as I talk about wanting to pay off debt, I can't stop spending money. And then I blame it on my husband. Looking at our expenditures, it's mostly me. It's my random trips to Kohl's, my daily lunches with coworkers, buying toys for the kids just to buy for them. I like to spend money because I work hard for it and feel like I deserve it.

But, we're no better off now than we were before. We're treading water. We make minimum payments on credit cards and then use those cards to pay for the things that we need and want, so every month our bills are staying at exactly the same level.

We made the decision last week that we were going to use our savings account to pay off credit card debt. Clearly, it's not going to cover all of it because we have so much debt and so little money, but we're paying off our Target credit card, our Kohl's card (which we used to buy a new vacuum when our old one burned up last week), and the bulk of the balance on one of our credit union cards. Basically, it puts us back to where we were when we consolidated our debt in the first place.

We will mostly tread water through the end of the year, trying to save enough money to pay for Christmas and limiting what we purchase this year, and then when we get our bonuses and tax return after the first of the year, we'll pay another large chunk of our debt. Then finally, next summer, we'll use all of the savings we've accumulated to pay off the remainder of our credit card debt. It will leave us with two car loans, my student loans, and our mortgage, but we won't have revolving debt anymore.

This also means I'm taking my lunch four days a week and limiting my lunch excursions to Friday's. We're trying to eat out less as a family too, for our health and our wallets. I got a raise last month, which my husband doesn't know. It only added $40 a paycheck, but that's a tank of gas for my car. I should get another raise after the first of the year.

I never expected this to be so hard. I didn't expect it to be so much work. Hopefully by next summer, I'll be reporting how we're in such a better place than we are right now. I want to save for our retirement, and I'd like to buy a bigger house, but how are we supposed to do that when we can't even discipline ourselves right now?

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 55 Continued: A little good news

I got a call from my credit union. They were not able to give us the full amount we were requesting for the credit limit increase, however they were able to to raise the limit to $10,000 and we transferred $2000 of the balance from the Target card, leaving us with $2733.75 on the Target card, and a $9,420 balance on the credit union card. They're also lowering my interest rate to 7.99%, so I lost a percentage point. My credit score was 740, so I am feeling pretty good right now.

We're trying to decide if we try again for a personal loan for the other $2700 so we're not paying anything to Target. If not, we'll just throw the rest of our money at that outstanding balance and get it paid off. Transferring a little more than 42% of the balance will help decrease the amount of interest we're paying on the Target card, so it will give a little extra to go towards principal.

Now, we just need the mortgage company to give us a call back. Fingers crossed.

Day 19: Changing Your Mind

I read and article this morning referencing 10 sings that you're headed for a debt disaster .

1. Your bank account is consistently overdrawn.
2. Your credit card balances are rising.
3. You're only making minimum payments on your credit cards.
4. You and your partner are arguing about money.
5. Your savings account is busted.
6. You're juggling your monthly bill payments.
7. You don't know how much you owe.
8. You're keeping secrets.
9. You've got a credit card collection.
10. You're near the limit on your credit cards.

I meet eight of the ten signs, or met eight of the ten before starting our debt payoff process. Our credit card balances were rising (not anymore), we are making the minimum payments on all but two of our credit cards, we argue about money, our saving accounts are busted, we're juggling monthly bill payments (although not to the extent in the article, we now know how much we owe, we've got a credit card collection, and we're near the limits on most of our credit cards.

Reading that article led me to an article about Debt Relief Firms and how they put debtors in a deeper financial hole. I don't use debt relief programs, and in most instances, I don't like debt relief programs. After reading the article in the New York Times, I like them even less.

In the interest of full disclosure, I have to tell you that I briefly (two weeks) worked at Consumer Credit Counseling Service. CCCS is different than the debt relief programs that this article talks about in that they negotiate lower interest rates and payments on your debts, collect your payment from you, and distribute it to your creditors according to your established payoff plan. There is no saving until you have enough to negotiate with your creditors before payments are made. Consumer Credit Counseling Service is a non-profit credit counseling agency. They have counselors in their office and you come in and meet with them in person. They have low fees ($25 set up and $25 per month) but do have a process to waive these fees if you're in a financial hardship situation.

A quick search for their website shows me that they're now known as Apprisen Financial Advocates. Again, I used to work for this company, but I have no personal interest in their success or failure at this point, as I have not worked there in over ten years and have no affiliation with them.

I have not personally considered working with this company. Why? While I feel that they can be beneficial for individuals who have a hard time juggling their monthly debt payments and budgeting their monthly expenses, I believe that if you are motivated, dedicated, and educated, you can pay your debts off yourself without costing $25 a month in account service fees. The problem is that many people with massive debt, such as myself, are in that position because they couldn't stop themselves from using credit in the first place. If you can't change the root cause of your financial problems, you are doomed to repeat them.

Just this past week or two, my husband and I were discussing taking a vacation to Florida. My mom, sister, and niece are going next month. We went last year and took them with us, and we both wanted to go again this year. Even with our credit cards maxed out and working to pay the balances off, I have been trying for weeks to come up with a way to afford this vacation. To me, it didn't matter that we're sitting on $20,000 in credit card debt, or that we're trying to pay those balances off, or we're a flat tire away from being broke; all I wanted was to go on vacation, however I could make it happen. I was even considering applying for another credit card just so we could go. Logic finally kicked in this morning and I realized that this need for instant gratification is what got us in this position in the first place.

My husband, while apologizing for us not being able to go on vacation this year, said that maybe starting now, we put $50 a paycheck into a savings account for a vacation fund for next year, that way we can afford a real vacation without scrimping and saving. I guess he's right, although I would never tell him that, however the beach we want to stay at is on the Gulf coast and I'm afraid that this time next year, it'll be saturated with oil.

We were talking this weekend and I told him, "Do you realize, if we pay off these credit cards, we'll save $825 per month in minimum payments? $825!" He replied with, "Yeah, that sounds great and all, but we use these credit cards for everything. We'll never pay them off if we don't stop using them." To which I answered, "We haven't used them since I told you we're broke. We can live without them, we just have to learn how to."

It's amazing what you don't need when you put your mind to it.