Debt Update

This was not the best month for debt payoff, nor did I expect it to be. We travelled to Washington D.C. last month and because of that, my whole hope was that, after interest, our credit card debt did not rise. We paid our normal payments to the remainder of our creditors, so we will see a small decrease there.

Our trip ate up the vast majority of our debt payment. However, we didn’t go into any more debt to take the trip, and that was my goal. Next month our debt repayment should be more impressive and help make up for this slow month. Next month, we have no mortgage payment, due to the fact that we sold our house and are not in the new house yet, so our credit card debt payment should be big! Next month, we should be able to bring our credit card debt down under $10,000! Here’s to hoping!

As of my last update in March, we owed of $26549.32. 

Here are our current debt totals:

            $11439.33        Credit Card at 15.49% - current minimum payment is $279

            $1300               The Boy (To pay off our other credit card, we borrowed from him.)

            $1300               The Girl (To pay off our other credit card, we borrowed from her.)

            $11710.25        Car loan at 0% - payment is $345

Our current debt stands at $25749.58

We paid off $799.74, or 3% of our debt total; that’s even including stupid tax, aka, interest. I definitely wish it had been more, but some months are better than others and we financed a 10 day trip to D.C. without adding to our debt. I have to take the wins where I can find them. (And we’re still not willing to give up making memories and giving the kids experiences to get out of debt. Maybe people would call us stupid, but that’s our choice.)

Overall, our debt decreased. That is a trend we hope to continue. Next month, I’m hoping for a much larger decrease in our debt. I would love to be able to decrease our overall debt by 10%. I would love to gain some real traction and start knocking some debt out!

Next month I’m really hoping to be under $10000 of credit card debt when I do my debt progress report. That is my main financial goal for the month of June. I’m also hoping to be able to cash flow all our needs, not including furniture, for the new house… eyes on the prize!

We are continuing to make slow progress every paycheck, one per month for me and two per month for The Husband, towards savings and paying our children back. We put $50, per paycheck, into savings. We are ever so slowly building our emergency fund and adding money to The Kids’ accounts. At this rate it would take forever to pay them back, but at least we are making strides. Once our credit card debt is cleared out, we will be able to pay them back quickly.

When planning our June budget, I continued trying to fund our different budget categories, which has been the problem in the past. I didn’t fund those categories, but the kids still need clothes, hair needs to be cut, and toilet paper needs to be bought. Although by funding these we pay off debt more slowly, it also keeps us from accruing more debt because we have, at least some of, the money we need to buy essentials. For the month of June, we have tentatively allocated $800 to different budget categories, not including food or gas. In all honesty, it’s probably not enough, but at least it’s a start. As we pay off more and more debt, we will be able to fully fund all our envelopes.  Many of those envelopes are starting to have a balance carry over from month to month, which will really help as we need to start spending money from those categories.

Tidbits

Our life is going a million miles a minute right now; and we would love for it to slow down.

This kind of pace is not kind to our budget.

This past week, we didn't get home until 8:45 (at the earliest) every night. Weeks like that are hard to plan for. We ended up eating dinner out more than we would have liked. We are all exhausted and the laundry is piling up on the sofa. We had one kids with late baseball games, one kid with late dance nights, open-house at The Kids' school, and inspections on the new house. This week has been a whirlwind and a blur.

We only have 2 weeks of school left, and 3 weeks left before we move, but we are hoping once summer comes our life will slow down a little bit. Between packing and life, we are not left with any extra time right now.

Speaking of packing, we haven'd done nearly as much as we should. We really need to start working on getting things packed up, but with the above kind of weeks, when we finally get home, we collapse on the couch until we stumble to our bed! This weekend is a wash with both a baseball game and a dance competition, but maybe we can pack a little up next week.

In other news, the inspections on the new house are moving right along.  We found out the roof needs repairs to the tune of $2900... which sucks. However, since we are thinking (hoping?) the appraisal comes in under our asking price, some needed repairs does give us some bargaining leverage. The home inspection itself seemed to go well and didn't reveal anything in the way of hidden secrets, so that's good. Now we are just waiting to hear back from the pest inspection.

I sent a tiny payment of $12.66 to our debt. The other day I logged into my online banking and found I had a deposit of $12.66 from my school district for class coverage. I figured it was "found" money, not part of my budget, and therefore, fair game to go towards debt. I know it isn't much, but every little bit helps and brings us one step closer to getting out of debt!

Anyway, excuse my rambling. I just had a bunch of little things I wanted to share! Hope anyone reading this has a great weekend!

Our Offer was Accepted - Part 2

In my last post, I detailed how we finally put an offer on a house and how we had to walk away from it because the terms of the seller’s counter offer were not something we could live with. Here’s the rest of the story.

After we walked away, we thought it was over and done with and were actually online again scouring new homes that came on the market. The next day we got a call from our realtor telling us the listing agent of the home had contacted her and asked if we were still interested. Our realtor told her yes, but not at those terms. We countered her counters with terms we were comfortable with, but we felt were fair to both parties. The listing agent let us know that at this point it was between us and one other offer.

The next day, The Husband and I were emailing back and forth. One of his emails told me that the house we had put an offer on showed as “pending” online. I responded that they must have gone with the other offer because if they had accepted ours, we would know. We were bummed. Then The Husband told me to check my email (personal account, not work) and that we wouldn’t need to go to any open houses that weekend.

Our offer was accepted! We are still in shock and we still can’t believe it! We have a long way to go in the escrow process as escrow was just opened. We still need to get through inspections and appraisals; but we are in escrow with an estimated closing date of early next month.

The home really is perfect for us. It is a 5 bedroom, 3 bathroom home on ONE STORY!!!! It was only built 16 years ago and has dual pane windows, an open concept, air conditioning, 2 car garage, a fireplace, and it is on a quiet street with no rear neighbors. It even has an in-ground pool and spa that The Husband wanted. It literally checked all of our boxes.  That’s not to say that there aren’t things we want to change in the house to make it our own, but the bones are all there.

We currently live in a very competitive housing market; and it is definitely a seller’s market. It took us a long time to find the perfect house and we feel so blessed that our offer was accepted on the only house we have wanted to put an offer on. We also feel so blessed that we didn’t settle on any old house and we waited to put an offer in until it was the right house for us.

Finding a new house has been a very stressful endeavor. The not-knowing-where-we-were-going-to-live had us on pins and needles. Now, assuming everything goes well with escrow, we will move straight from our current house to our new house.

Now we just have to pray that the escrow process goes smoothly, that the appraisal and appraisal amount is not an issue, and that the house passes all inspections.

*Side note: The buyer of our house has been so accommodating and generous with us throughout this time. She has changed closing dates for escrow, allowed us to rent back, and adjusted her schedule so we could move directly from one house to the next. 

Our Offer was Accepted - Part 1

We put an offer on a house… and even in this crazy market, it was accepted!

It has been a very long road! We began casually looking at houses in January, even before we listed our house. There weren’t many we were interested in.

We had some very specific criteria. In fact, as we looked at houses, we had to “lower” our criteria because we were unable to find something that ticked all of our boxes.

Here is a list of our wants:

·         Single story

·         Fireplace

·         Open concept living

·         Air conditioning

·         Dual pane windows

·         Minimum 3/2, but preferably a 4/2

·         Quiet street

·         2 car attached garage

·         Pool (for The Husband) Not a deal breaker, just a “it’d be nice”

Overall, we didn’t feel like we were too picky, but we also found that finding everything in one house was very difficult.

Once we put our house on the market, we began looking in earnest. That was in early April. We scoured homes online. We were in constant contact with our realtor. We went to so many open houses. We despaired of ever finding anything that would work for our family. We even lowered our expectations on our criteria. To me, the most important thing on our list was finding a single story, but we even started looking at two stories because single stories were almost non-existent in our market.

After looking for weeks, we really started to get worried about where we were going to live when we had to be out of our house. We were very blessed to have several different family members say we could live with them; and it got to the point where we thought that was going to have to be what we were going to have to do. There just weren’t any homes that met our needs.

We looked at so many houses online, and I looked at over 40 houses in person. We just weren’t finding what we wanted. 2 weeks ago, a single story home came on the market that both The Husband and I liked online. We immediately contacted our realtor about it and I was able to get into the home the first day it was on the market. I really liked it. It actually met all of our criteria.

The following Saturday, we went as a family to the open house. (We promised The Kids that we would show them any house before we put any offers in.) The Husband and The Kids liked the house as well as I did and we decided to put in an offer. The realtor at the open house told us that they already had a strong offer so to put in our best and highest offer. We did that. We offered over the asking price and did not ask for any concessions. We offered to put about 2% down in earnest money. In addition, we wrote a cover letter introducing ourselves and our family. We wrote about how much we loved the home, how many other houses we’d seen, and how perfect we thought this house would be for our family.

The owner countered our offer (actually, it was a multiple counter offer so she was countering our offer, along with other people’s) with counters that we felt were unfair and we weren’t comfortable accepting. (We completely understand wanting to get as much money as possible, but not to the extent of taking advantage of people; and that’s what we felt the counter offer was: trying to take advantage of us.) Even though we thought it was the perfect house for us, we knew with the terms she was offering it wasn't the right house for us and we had to walk away.

Unexpectedly, this has become a super long post so I decided to break it up into 2 parts. Stay tuned for Part 2 of Our Offer Was Accepted!

April's Unusual Spending Recap

As far as estimating unusual expenses for April, we did pretty well. I think being gone for fully 1/3 of the month and selling our house actually helped us out here. Obviously, if you’re gone, you aren’t going to have any unexpected spending at home; and we were so focused on readying/selling our house we didn’t have much time left for anything else.

The final numbers aren’t in yet, but it looks like we aren’t going to add to our credit card debt, even with our trip to D.C. We also aren’t going to decrease it by much either, but I’m counting this as a win. I’m looking at it as we were able to pay for our whole D.C. trip without adding to our debt. We covered air fare, hotel, rental car, food, souvenirs, and attractions without adding more debt! (This will be helped by the overtime The Husband received for being on a business trip, but still a win!)

Both our car registration and our property taxes were paid out of a separate account that we use strictly for budgeting purposes, so that was simple. The money accumulates in our yearly expenses account, and we spend it as necessary.

It was a pretty good month for “unusual expenses”. I estimated them pretty well and we were able to pay them. Nothing popped up during the month that busted our budget and that’s always nice to see.

It seems that every month, there’s something! Whether it’s a routine payment or something that came totally out of the blue, there’s always some “unusual spending” every month. I would love to have a normal month with no extra expenses and an easy budget. But, alas, that’s not the way it works.

I will continue to try to forecast any unusual spending and budget for it whenever possible.

Budgeting

We are continuing to budget Dave Ramsey style and use the envelope system. It’s so hard to budget this way because you want to send every spare dollar to debt. But, realistically, if you do that, you end up repeating the vicious cycle because, even when paying off debt, you need to buy “stuff”.

Our new budgeting cycle begins tomorrow and over ½ of our normal salary is going to envelopes. $300 is going towards food, (that’s more than usual because of our family May birthday parties which I will pay for half of), $300 towards gas, $100 towards our car repair envelope, and then $100 each into our hair care, clothes, and school envelopes. In fact, due to this, our payment towards our credit card is only $90 of our normal budgeted salary. (It will actually be more because The Husband has over 10 hours of overtime from our D.C. trip that is going to be on this check. That money is saving our bacon this month!)

For the last couple or few months we have been funding all of our budget categories and we are starting to see progress. Many of our envelopes are starting to carry over each month, which is nice because one month we might not need to buy much using our “essentials” envelope and then the next month we might need toilet paper, paper towels, dish soap, dog food, and razors!

The envelopes actually got to the point where I felt like I was carrying around too much cash. My wallet was pushing holding $1500+ dollars. Last week, I reduced the amount of cash I was holding in each envelope to $100. I created additional envelopes (that stay at home) that are labeled with the same names as the envelopes in my wallet. Anything over $100 for each envelope in my wallet, I took out and put in the new envelope that stays at home. (I know this is convoluted. I hope this is making sense to readers.) I kept the running total of each envelope going so I know how much money is actually available in each category, but I don’t have nearly as much cash on me.

In all our years of trying to follow Dave Ramsey, this has never happened before. I’m hoping to keep funding envelopes so as to charge less. For each envelope, we are going to choose a maximum amount that, once we reach, we will stop funding that envelope until we dip into it again.

Our car repair envelope is doing very well. For the last several weeks, we have decided that any money left over from our gas budgets would go into car repair. Eventually we would like to build that up to $2500. Right now, it is sitting at right around $1000. We will continue to budget money into that category, but until after our road trip this summer, any extra gas money is going to be directed into savings for gas on our road trip. Then, after our road trip, extra gas money will go back into our car repair fund until it is up to $2500.

Now, our only envelope that restarts each week and we can snowball towards debt is food. Most weeks, we don’t have much money left over, but every little bit helps.

I’m constantly hashing out numbers in my head to try to figure out how much money each envelope should “stop” at. I don’t want to leave too much money in any envelope that we are wasting opportunities for debt repayment, but I also don’t want to have too little money in our envelopes for the things we need.

These are the numbers I’m leaning towards (right now) for each category.

Essentials: $300

Hair: $300

Clothes: $500 (still toying around with this number… clothes and shoes can get expensive!)

School: $300 - $400

Kid’s Activities: $500 (I waiver a lot on this category, too, because our kids’ activities can get really expensive.)

Actually, for the first time (maybe ever!) we are carrying over money in our envelopes, mostly because we are actually funding them now. In some of the envelopes we are very close to meeting our “limit”.

And here are the numbers they are currently sitting at.

Essentials: $163

Hair: $200 (but $300 tomorrow after I pull out money for this budget period)

Clothes: $0 (but $100 tomorrow after I pull out money for this budget period)

School: $100 (but $200 tomorrow after I pull out money for this budget period)

Kid’s Activities: $300

That’s where these numbers will sit until next month when we add some more money to these envelopes or we dip into them for needed purchases.

Tidbits

Well, this month our debt payoff is going to be nearly non-existent. But, in theory, our credit card balance shouldn’t rise at all; it’s just going to be pretty stagnant this month. The plus side of that is that it means we were able to pay for our whole Washington D.C. trip. We just weren’t able to throw any extra towards our debt.

Our credit card raised our credit limit. That hasn’t happened in years! We didn’t ask them, they just did it. It’s probably been at least 8 years since our credit limit has changed. Our limit was $218000 and now it’s $238000. I’m not sure what prompted the increase, but it doesn’t make a difference to us. We are definitely not going to use that as a reason to charge more. We are doing our best to get out of debt and an increased credit limit is not going to change that.

One of my goals has been to get our credit card usage down below 50%. We haven’t hit that goal yet, but we are still shooting for it. To that end, I will still calculate 50% usage on a limit of $21800 because that was my original goal. I will consider our credit ratio usage below 50% when we owe less than $10900. I will be happy when we “could” charge more than we owe on the balance. (Fingers crossed that will be in June!)

We put an offer on a house. I don’t want to say too much more about it because we are waiting to see. The house received multiple offers so we are trying not to get our hopes up. If our offer is accepted, I’ll write a detailed post about the process, but until then, pray that they accept our offer and send us good thoughts.

Yesterday on my walk at lunch, I found $10! I was so excited! When does that ever happen? I can’t even remember the last time I found anything more than a dime! I went to the bank yesterday to deposit some cash and checks and that $10 went with me. Then I came home and scheduled a $10 payment to our credit card. Every little bit helps and found money is found money! 

Envelope Success and Fail

I'm trying to work the envelope system. I'm not always successful, but I'm trying. I've talked about how I budget and my different envelope categories here and here.

Because spring is upon us, I knew The Kids' would be needing new summer clothes and shoes. Also, The Husband has been saying for months that he needed clothes for work, but we have been too busy with house stuff and kids' activities to get to the store to get him clothes. Anyhow, back to summer clothes. Knowing this expense would be coming, I have been trying to fund our clothing envelope.

Before leaving for our trip, I took The Girl to Justice. She got a new swimsuit and some new sports bras for dance to the tune of $50. I was able to pay cash. (Minor success.)

Yesterday was payday for me and we had budgeted another $100 to go into our clothes envelope. This brought the total up to $310. Last night, we finally made the time to get to the store. For whatever reason, The Boy has the most success finding shorts at Walmart. We found 6 pairs of shorts and two shirts for The Boy. He picked out 5 pairs of cargo/khaki shorts and one pair of athletic/basketball shorts. Those, in conjunction to what still fits him from last year should easily get him through the summer.

We also were able to get clothes for The Husband. He found 2 pairs of casual work pants. We decided to try the Walmart brand. They were only $12 a pair and they looked really nice on him. We're willing to give them a chance and see how they work out. The Husband also got a nice pair of work pants, 2 pairs of shorts, a pack of under tank tops, a pack of underwear and 2 leather dress belts for work.

Lastly, we checked out clothes for The Girl. She doesn't tend to have as much luck at Walmart as her brother does, but we found some stuff that works for her. She got a new dress, 7 tank tops, and 2 pairs of athletic shorts. 

Putting everything up on the belt at the register, I was a little afraid of  how much we spent. I knew we went well over our $310 budget, but I didn't know by how much. Almost everything we bought was a "need" so I stopped paying attention to how much we spent.

The grant total came to... $291! Obviously, this is my envelope success! I couldn't believe, with everything we bought, that we had enough cash to cover it! I was, and am, super excited.

But, now the fail... Then we went to Target. The Girl didn't get find any shorts she could wear to school at Walmart so we tried Target. There she found 3 pairs of shorts. The Boy also found a sweatshirt he really liked (and that looked really nice on him) that was on clearance. It was 50% off and only $12.50. We bought it a size bigger than he needs because he won't be wearing it until next fall/winter. Our clothing total at Target was about $46, so in the end, we went about $25 over our clothing budget. :(

The Kids' still need shoes for summer and I'm going to continue to fund our envelopes, but overall, I'm pretty happy with how well we did. This is by far the most money we've ever had in our clothes envelope and the least money we've ever had to compensate for, so it was both a success and a failure.

We are getting there. Slow and steady wins the race!