Making Progress

I am making progress.

I haven’t transferred money from my savings account to my checking account since May. For many months, I was taking money out of savings EVERY single month. I’m very happy that we haven’t taken from our savings in 5 months; and not only that, but we’ve actually added to our balance over the last several months.

Even with all the debt we have, I like to have a $10000 emergency fund. We are not quite there, but we are within a few hundred dollars (this should be topped off when we receive our credit from our Japan trip). For several months our savings account was steadily decreasing. I’m happy to see we didn’t take any money from our savings account. I know many people think $10000 is excessive when we are still in debt, but we have so many liabilities that I want to make sure we are covered in the case of a true emergency. We own a house. Roofs spring leaks, pipes burst, washers and dryers break. $10000 ensures that we could cover all of these things, even if they happened at the same time. We also have kids. Our kids are active in sports and $10000 ensures that we would be able to get them any medical care necessary in the event of an accident. We have cars. As everyone knows, cars are expensive. We have to be able to get to work and to get kids to school; $10000 makes sure that if something were to happen to one of our cars, we could still get where we need to be.

More than just adding to our own savings, we also haven’t borrowed any more money from our kids since before we moved over a year and a half ago. Granted, we haven’t even finished paying them back, but we still haven’t used any more of their money. Of the nearly $1500 we borrowed from each kid, we have paid back $1050. We still owe each kid $450, but we are getting there. In fact, after we get our credit card balance below $18000 (with the goal of this being done by 12/31/18) our next goal will be to pay the kids back. I decided I don’t want this bill hanging around our necks for the next 9 months ($450 remaining/$50 per month).

I am making progress. It’s not monumental. It’s not earth-shattering, but it is progress in the right direction. Slow and steady wins the race. I often need to remind myself of this. We didn’t get into debt overnight so we certainly aren’t going to get out of debt overnight.

Our credit card debt is going down. Our savings balance is going up. Our envelopes are being filled. Progress!!!

Why I'm ANGRY

In my last post, I told you I was ANGRY, but I didn’t go into a lot of details as to why, other than the fact that I don’t think it is right.

When I say “right”, I mean literally moral.

I have a story where I could have been justified in walking away from our debt, or at least refinancing it to a lower amount. In fact, many people told us we should just walk away, rent a house for a few years, and then buy a house when it falls off of our credit.

You see, we bought our first house, a two bedroom, one bathroom house in 2004 for $320,000. Our plan was to live in it for a couple or few years and then sell it and use the equity to buy a bigger house. At the time of our purchase, we had a son and were pregnant with our second child. (We didn’t know at the time if we were having a boy or a girl. It was a girl.)

But a funny thing happened to our plan, with the recession that hit in 2007, it fell apart… miserably!

The house that we still owed hundreds of thousands of dollars on was suddenly only worth $90,000. We had no equity to use to purchase a bigger house. People were walking away from their homes left and right or refinancing for less than they owed, or shortselling their homes because “it wasn’t fair”.

Regardless of the market, when people bought their homes, they made a commitment to pay for it; not to only pay for it when they were happy and the market was good.

I was an ideal candidate to walk away from my mortgage. I was living with a son and a daughter in a 2 bedroom home, but we made a commitment and neither The Husband nor I could morally walk away from our home because we felt we had an obligation to pay our debts.

Instead of walking away like millions of people did, we made the best of a tough situation. We remodeled the house we were living in to make it more what we wanted. (We were unable to add on, but we remodeled every room in the house including the kitchen and bathroom, replaced all the windows, re-wired and re-plumbed the house, and made tons of smaller updates.)

By the time the market turned around, we were able to sell our home for a small profit (only $25000 more than we paid for it) and purchase a perfect-for-us-forever home with the proceeds. But we lived in that 2 bedroom house for 12.5 years because we made a moral obligation and commitment to pay for it, no matter how much it sucked or how unfair we thought it was.

That is why I am angry when people settle their debts for pennies on the dollar. They used the money, spent the money, enjoyed the nice things and nice trips and then don’t “think it’s fair” to have to pay it back. I have been on both sides of the equation and I feel like honoring your financial obligations is the right thing to do: even if it takes years, even if it’s hard, even if you don’t want to. I feel the same way about people griping about student loans. There are ways to make college cheaper, but if you choose to take out $80,000 for your private school education, then you don’t get to complain about having to pay it back!

I get angry when I hear people whining or complaining about paying back debt that they willingly took on. I get angry when they settle their debts for pennies on the dollar and then talk about “how much debt they paid off”. I get angry when people take the easy way out because getting out of debt is hard work. I’m not saying getting out of debt is easy, because it’s not. But if you got yourself into a mess, it’s your responsibility to then get yourself out of said mess!

*I also want to include I am not talking about people who lost their jobs and could not financially afford their homes/debts anymore. I’m frustrated with people who made a conscious choice to walk away because “it wasn’t fair”.

Debt Update

Our last debt update wasn’t too bad. We paid off 2.7% of our debt total. I’m hoping to do even better this month!

Going forward, however, things are going to look a little different because we are redoing debt. By different, I’m hoping that our debt is going to start dropping faster! We are hoping to be out of debt in 13 months, so, by November 2019. The new plan hasn’t really kicked into overdrive yet as The Husband’s 401k contribution hasn’t affected his paycheck yet and my change will not go into effect until my October 31^st paycheck. But change, it is a coming!

Okay, on to our debt update!

The debt we owe our children has continued to (ever so slowly) decrease. We borrowed almost $1500 from each child and have paid back $1100 to each of them, which means we are over two-thirds of the way through paying them back! Although once we have fully paid them back, we will continue to deposit $50 into their bank accounts, I will be so happy when I can no longer consider them a debt! Our car loan has continued to decrease as well. We have a 0% loan so it’s nice to see the payment actually affect the bottom line; to that end, I don’t really focus on paying extra towards our car payment because it’s at 0% interest. I know that goes against what Dave Ramsey teaches, but I can’t see paying more interest on my credit card balance just to get an interest free loan paid off quicker.

I was doing really well using a cash-only diet for a couple months. I fell off-the-wagon so to speak. My credit card found its way back into my wallet and I have used if for small, frivolous purchases. I need to take it out of my wallet again and focus on using only the cash I have on hand.  But I am happy to say that for the second month in a row, our overall debt decreased! (I am so happy to get to be writing that instead of having to say again that our debt went up!)

Here are our current debt totals:

            $20,124.54       Credit Card at 16.24% interest

            $400                 The Girl

            $400                 The Boy

            $5820.00          Car Loan at 0% interest

          

Our total debt stands at: $26,744.54. YIKES! (This stinks… many of these charges will be paid off, but they were added at the very end of our billing cycle before I could process the payment through my bank. And a couple hundred dollars of our new balance are charges I made for my mom, who will pay me back; but again, after the billing cycle closes. Oh well, I will just hope that the progress really shows in our next debt update!) I can hardly wrap my head around that number. I absolutely HATE seeing a 2 as the first number on our credit card and I can’t wait until my next update when I’m sure it will be back under $20,000 and at least our credit card debt will only have a 1 in the front! In the grand scheme of things, the actual amount of debt is not that much less but psychologically there is a huge difference! I’m hoping for a much bigger decrease next month!

Plus side: our debt dropped from 27K-something to 26K-something. We paid off almost $900 of debt in actual dollars, which amounted to almost 3.1% of our total debt, which is more than last month. We continue to make progress on both our car loan and the loan to The Kids, and the fact that we haven’t borrowed any more money from The Kids and haven’t transferred money over from our savings account in over 5 months!

Down side: we didn’t pay off a total of $1000 which was what I was hoping for, and of course that several hundreds of dollars went towards interest on our credit instead of towards the principal.

Looking forward to: getting our credit card debt below $20,000 and working towards my goal of under $18000 by 12/31/18 (which with our new debt plan should not be a problem). Making continued progress on our car loan and decreasing our overall debt from 26K-something to 25K-something.

Obviously all my financial goals for the year have been thrown out the window. There are only 3 months of the year left and I’m nowhere near where I wanted to be. However, I can’t change the past, all I can do is improve my future. Since our credit card debt is still over $20000, my goal for the end of 2018 is to be under $18000 in credit card debt. My other debts will continue to decrease at their slow and steady pace, but I am going to payoff $3000 in credit card debt by the end of the year.

We didn’t pay off as much debt as I would have liked in total dollars, but that’s always the case. Due to some unexpected expenses, we did not pay off as much debt as I wanted, but we did still manage to decrease our debt by nearly $900 so I’ll count that as a win.

Obviously, I’m not in an ideal situation. But if I have to get out of debt one baby step at a time, I can do that.

Also over the next month I will get back on the no-credit card-bandwagon and stick to our budget! This all combined with my only real financial goal right now, getting our credit card debt below $18000 by New Year’s Eve!

WOW! This was another long post! If you stayed around until the end, thank you! If you got bored and moved on, I totally understand.

Look out goal #1: below $18000 in credit card debt by 12/31/18… I’m coming for you!

Redoing Debt

Whelp, The Husband came to me the other day with a plan to help us get out of debt. He had a whole spread sheet ready to go and approached me with, “don’t say no before I tell you my ideas”.

He said since we have such a ginormous credit card balance, why don’t we drop our retirement deductions, just until we are credit card debt free, to get us out of debt faster. In many ways, this bums me out, but seeing the numbers laid out in his spread sheet was pretty cool.

At the rate we are going right, we are paying roughly $625 a month towards our credit card debt. At that pace, we wouldn’t get out of debt for 4 years, when our son would be starting his senior year… YIKES! With the numbers he laid out, we could decrease our retirement contributions by half and be out of debt in a year. WHOA! WHAT?

Although, there will be a hit to our retirement, it’s nice to have a light at the end of a very long tunnel!

The Husband was maxed out in his retirement deductions and we cut that in half. I was planning on upping my deductions to $1200 a month, but instead am dropping it to $600. It hurts, to be sure; but I do think it will be the best thing for our family.

Our minimum payments will go from $625 a month to over $1600 per month. Based on the spreadsheet he made (he’s totally a smart computer/excel nerd), we would be out of debt in 13 months from now. I’m hoping we can throw the odd extra cash towards our credit card throughout the year too and hoping we can get it down to 12 months to payoff.

I’m just so sick of not making progress and so thankful that he’s been crunching numbers and came up with a workable solution.

The plan is to halve our retirement contributions, pay off our credit card debt in a year, and then re-up our retirement contributions. The Husband will max out again and I will up my deduction to $1200 per month. Our retirements will take a hit. In that regard, we are definitely slowing progress but we are literally paying hundreds of dollars a month in credit card interest and we will be able to knock out our debt so much faster this way. And we will still be the ones paying it off. No easy way out. No hand-outs from anyone. No settling of debts. We will pay back every penny we borrowed and get ourselves out of debt!

This wasn’t the original plan, but plans change and we are going to get out of debt!

To Get Out of Debt Faster, Make More Money

People say this like it’s so easy, but it’s not. Especially in my profession. And especially if you value family time. And even more so again when you work in town and also play chauffeur to two busy teenagers.

As a teacher, opportunities to earn extra money are very hard to come by. I work a full time job and also spend extra hours at home planning and preparing lessons. The few (in my district, 3) extra possible pay days are spaced out throughout the year and I try to take advantage of them, but sometimes I can’t. This year, I was unable to take advantage of the first one because I was too far behind in preparing my classroom. (Being behind was not all my fault, my janitor never put my room back together. I went to school 3 different days and was unable to work in my room.)

It's also difficult to make extra money when you enjoy spending time with your family. I don’t want to give up time with my in order to earn more money. I understand that getting out of debt takes sacrifice; but as long as my kids want to spend time with The Husband and me, we want to be there. They are only “ours” for so long and we want to be with them as much as possible.

The last reason we can’t just “make more money” is I already have a second job… as an unpaid chauffeur. Both The Kids are teenagers and they live very busy lives. I am constantly dropping off and picking up at school, football, and dance. That doesn’t take into account in social activities that The Kids do (when they aren’t otherwise occupied with their extra-curricular activities).

I’ve said this before, but I feel it’s worth repeating. We got ourselves into this debt mess and it’s up to us to get ourselves out of it, without asking our kids to sacrifice. We want them to be kids and to have experiences that kids have, and they do. Having said that, they don’t get to do everything they want or buy everything they want. We’ve told them we have debt. We’ve told them if they want something badly enough, they can work to buy it themselves; but me picking up a second job would limit my time with them and their opportunities to do anything outside of school hours.

Just “making more money” isn’t as easy as it sounds. It’s not that we aren’t committed to getting out of debt, because we are. But we are also committed to spending time with The Kids and giving them the best life that we can.

Life is a balancing act and we haven’t been very good at balancing the scales, but we are trying. I’m setting small goals to help us dig out of this very deep hole that we dug for ourselves. I just wish getting out of debt was as easy as “making more money”.

Small Goal #1: Less than $18000 in credit card debt by 12/31/2018… I’m coming for you so look out!

Small Wins

We’ve had a few small wins lately…

First of all with the exception of one small mistake (mine) we haven’t charged anything on the credit card; and the one charge I made (stupid) I paid off immediately!  We still have some monthly charges that are associated with our credit card and those will continue to go on the card, but other than that, we have not been charging on it.

Another win is that we started our Christmas budget. I received a check for $290 and I deposited it at the bank and immediately headed over to the ATM and took out $300. That money is now sitting in an envelope in a drawer at home waiting to be used for its intended purpose. As I receive my retro checks, we will continue to add to the envelope.

The Boy hasn’t played soccer in a couple of years but wants to try-out for his high school soccer team. Which meant we were going to have to buy him cleats. I was dreading this because I didn’t want to spend a lot of money on cleats in case he didn’t make the team; but at the same time, I didn’t just want to buy him super cheap-o cleats that would hurt his feet. Enter my brother who found a BRAND NEW pair of Adidas cleats in the middle of the street when he was driving on his mail route. They were size 11.5. He tried them on but they were too big for him (as he wears a size 9.5 – 10). Then he offered them to my son. They are his size! I was super excited. He got a nice pair of cleats and I didn’t have to pay for them! That solved one dilemma!

My last small win for this post has to do with a nail in my tire. The Husband went outside to get something the other day and he came back in the house and told me we had to switch cars the following week because I got something in my tire and he would take it to get fixed. The small win is that because we bought my tires from America’s Tire Company, they will repair tires for free. They pulled out the nail and plugged it… and we didn’t have to pay anything!

Sometimes, when you are getting out of debt, it’s the little things that help you get through it. I’m glad I have any sort of wins to celebrate, be it small or otherwise!

I’m still trying to see the light at the end of the tunnel and recognizing small victories is one way to help me do it!

ANGRY

I (thought I) just found a new blog to read… Then, about 5-7 posts in, starting from the beginning, I found out I was wrong.

The blogger goes on to say that one of their credit cards was charged off and she settled the bill for 45% of the total. To me, that is not getting out of debt. To me, that’s taking the easy way out.

I get that they were deep in debt. I get that it was a lot of money. I get that they have dreams and goals. Believe me. I. Get. It.

As I too am in their situation. The difference though, is I plan to actually work hard to pay my debt off. I have set a mini-goal, with a due date, that I am trying to achieve and once I achieve that, I’ll set another mini goal and then another until I’m debt free.

The Husband and I dug this hole ourselves, one purchase at a time; now we are filling it back in one shovelful, or sometimes spoonful, at a time. I think it’s unfair to not pay back the full amount if you are able. And truthfully, this blogger’s fiancé did have some medical issues; but she also went on to say that the debt was from her previous relationship that ENDED OVER 6 YEARS AGO. 

Annoyingly, she also goes on to blog about how much money they are SAVING by doing this. I wouldn’t call it a savings. Truthfully, it feels like it’s theft. I’m going to use your money to buy stuff I don’t need and can’t afford and then not pay you back for it and say how much I saved on it! It’s crazy!

I don’t think it’s right to call yourself a debt blog if you aren’t making the responsible choice and actually paying off your debt. It’s much easier to get someone (a company) to charge off your debt and settle for pennies on the dollar.

Not to mention, I don’t think anyone who does that will “learn their lesson” and stay out of debt!

Although we have found ourselves back in debt, it’s due more too changed circumstances than anything else. Our new normal was very tough to get adjusted to. Buying our new house was expensive; but we are paying back every penny we borrowed; and slowly learning to live within our means. We are paying our debt back.

How easy would it be to call the credit card, ask them to close the account, and to settle for 40 – 50%? In fact, we actually have enough money in the bank to do that right now. But it’s not the right thing. It’s certainly the easy thing, but I would need to live with myself and my conscience afterwards!

Sorry. Thank you for indulging me. Rant over.

Final No-Spend Update

I think I might have exceeded my No-Spend food budget between last weekend and yesterday. And we were doing so well, too.

We had $289.70 remaining in our budget. I went to a local shop in town and bought scones and clotted cream. The total there was $27.98, leaving us with $261.72. Then we went to Target over the weekend to buy some appetizers to bring to a small dinner party and we spent another $13.49, bringing our running total down to $248.23.

It’s this next trip that really got us. We went to Costco yesterday and spent a fortune. We needed a lot and bought even more.  We were getting low on snacks (things for lunches at school) and, truthfully, could have waited until October, but we just bought what we needed because we had the money. (Although our goal is $500 for No-Spend month, we had money left over in the envelope from August that carried over. That is how we literally had the cash on hand.) At Costco, we bought 10 gallons of milk, yogurt, sliced cheese, 4 loaves of bread, 2 packs of baby bel cheese, granola bars, granola biscuits, cereal bars, almonds, trail mix, cheese-its, grab bag chips, salami, butter, wheat thins, 2 boxes of cereal, and several kinds of fruit. We also bought a few things we will save for our Christmas party, but we wanted to start buying them now, so we could spread the cost out over several months. At Costco, we spent a total of $262.35, so we did exceed out No-Spend goal. However, if you subtract what we bought for the Christmas party, which totaled $21.37, we were a little closer to our budget. Taking those out of the equation actually would have left us with about $7.25. (But actually, we then had a small Target trip where we spent another $13.55 so we still would have been over budget.)

We didn’t buy anything at Costco that wasn’t food and that is another win in my book.

Oh well, another No-Spend September, another month going over our grocery budget. I will continue to work on our grocery budget and continue to carry over any money from month-to-month. I would like to have just one No-Spend September where I actually stay within budget. J

Hopefully I won’t need to buy any more food for the month of September.

Overall, our No-Spend month was still a success because we sent more money towards debt than we normally do. We spent less money on groceries than we normally do. And we were able to pay for some unexpected expenses in cash rather than reaching for the credit card.

We bought very little that wasn’t food during No-Spend September. We did not get any massages or haircuts. We didn’t go clothes/shoes shopping. We didn’t buy and dish or laundry detergent. We didn’t buy toilet paper or paper towels. We actually did really well this month.

We bought some things that were needed, however. The Girl needed new pointe shoes for ballet and we bought those. She also needed a shirt for Leadership, and obviously we bought that. There might have been another odd thing here or there, but overall, we really didn’t buy much during our No-Spend month. It was really just that blasted Costco trip that messed us up! HAH! J

Regardless, the biggest win here is that we got farther out of debt because of our no-spend month. It might not have been by much, but it was definitely more than it would have been if we hadn’t have had a no-spend month!

Best Laid Plans

I have all these plans of where I want my money to go, and that’s just what they turn out to be… plans.

I have heard (really read) this from so many different blogs, once you start working on getting out of debt, people needing money and bills come out of the wood word, but I don’t agree with that. I think when you start paying off debt and stop swiping your credit card, you pay more attention to where your money is going and you try to figure out how to meet your needs with cash. It’s not that more people are clamoring for your money, it’s that you are making a conscious effort to put your money (not your credit card) where it needs to be.

With my upcoming paycheck, I was supposed to make another payment to the credit card in the amount of $535. Then we got a bill from the lawyer who is doing our trust. We need to give her a check for $376 for title and filing fees. This is another case where I’m so glad we had the money to pay this “bill”; but I’m sad we can’t send as much to the credit card as we intended.

I have already sent two payments to the credit card this month totaling $759. Our minimum payment is $496. I will still make another payment of $159. And then one more payment of $166 before the billing cycle closes. I will make a total of $1084 in payments. In one sense I feel like that’s awesome. In another sense I’m bummed it’s not the $1500 I was anticipating.

I need to try to look on the bright side, though, and be glad we have the cash to pay the bill and that we are still making progress on our credit card debt.