Christmas

For the first time ever this year, we created a sinking fund for Christmas, and it is one of the best financial decisions we have ever made! Truthfully, I don’t know why we never did it before!

Christmas is expensive. And it’s not a surprise, but every year we treated it like it was. Every year we would scramble to be able to pay for things and add to our debt. This year, it looks like things might be a little different. Every month we have budgeted $200 to put in an envelope for Christmas, then as we have needed it, there has been money for us to use as we have found the perfect gift or just the right stocking stuffer. It’s been wonderful.

We have a huge family and shop for EVERYONE. In total, including small gifts for co-workers. We shop for about 65-70 people. Most people think that’s ridiculous. And I get it, I do. But it’s how we do Christmas. Because of this, in order to augment our Christmas fund, we redeem our health insurance points for Amazon gift cards and any points we earn through our credit card get redeemed for cash too. This year, that worked out to an additional $700 to put into our Christmas fund.

In total, we have very near $3000 to use for Christmas. This is not only for gifts and stocking stuffers, but also for our Christmas party invitations and food, and our Christmas traditions.

This is the first year that we have ever had a sinking fund for Christmas, and it has been life changing. However, I don’t yet know if it’s going to be enough. For most people, $3000 would more than cover their Christmas expenses. I don’t know if it will cover ours. But I do know it’s a good start.

Seeing how we finish the year and get through Christmas will determine if we set aside enough money each month or if we need to increase our budget for next year. But any way you cut it, we are in a better position to pay for Christmas than we ever have been before. We have a little Christmas nest egg to draw from and some deposits still to be made towards our sinking fund before the end of the year.

Even with the myriad of ways we were derailed this year, we have managed to decrease our debt, create a sinking fund for Christmas, and contribute to our retirements.  It’s not perfect, but it’s progress.

Dreaming

Dreaming…

With our unexpected refinance, comes a little unexpected money. Or at least that’s what we’ve been told. Due to the refinance, we should have one skipped mortgage payment. That means we have about a $3000 windfall coming our way, potentially.

$3000… what could we do with that money? Pay off debt. Go on a small family vacation. Buy a nice piece of jewelry. Use it towards Christmas. Honestly, the possibilities are endless. And I have been thinking about what we should do with that money.

First of all, we need to bump our emergency fund back up to $10,000. It has slowly been eroded away and right now only has about $7900. (With The Husband’s extra paycheck in November we are taking $1000 of that paycheck and putting it into savings, still leaving us about $1000 short of $10,000.) So, right off the bat, if we do get to skip one mortgage payment and have that extra money to spend, the first thing we will do is put $1000 in savings. This will bring our emergency fund up to *$10,000, which is where we like it to hover while we are paying off debt.

*Side note: $10,000 is not a 3 – 6 month emergency fund like all the experts say we should have. We just can’t afford that while we are getting out of debt. However, $10,000 will pay all of our bills for 2 months. Of course, we are talking bare bones expenses, but we could last 2 months with absolutely zero income on this emergency fund. $10,000 would also cover most other emergencies: new washing machine, new air conditioning unit, something for our pool, a medical emergency for one of The Kids. You get the point. It will be nice to have, what we consider, a fully funded mini-emergency fund again.

Assuming this all falls out the way we expect it to, that would leave us with $2000 to decided what to do with. After funding our emergency fund, the remainder of the money will most likely go towards our credit card debt. $2000 is a huge chunk of money and, coupled with our normal monthly payments, will make a bid difference on our credit card balance.

We are trying to build a financially stable house; like we’ve never had before. Getting out of debt is one major way to do that. But, so is having a financial safety net. We do not want to have to charge every little emergency that comes our way. Paying off debt and saving for an emergency are two ways we are actually helping ourselves.

At this point, it is just dreaming. We don’t have the money and don’t know for sure if we are going to get it. Our refinance closes at a weird time so we might actually be paying our mortgage every month with no “skipped” months. But, it’s fun to dream and fun to think about how we could use extra money.

Debt and savings, that’s how I want to spend any windfall we might get. Debt and savings. Pretty boring I know, but that is where our hearts are and where our goals are.

"Unexpected" Refinance

We are refinancing our house… sort of unexpectedly but sort of not. I know that probably doesn’t make sense to anyone, so let me explain.

The Husband and I have been talking about refinancing for probably close to 6 months now, however we haven’t really done anything about it. When we bought our house, we only had 10% to put down so we took out 2 loans: one at 80% and one at 10%. I am sick of paying 2 loans! We paid two loans the entire time we were in our old house… 13 years! And have been paying two loans since we moved into this house 2 and a half years ago.

Our house has appreciated enough, that we now have over 20% equity and we have been saying “we need to refinance, we need to refinance” but we haven’t made any concrete moves towards doing so. Enter a random form letter in the mail from our main loan servicer. It was about lowering our interest rate.

After opening it, I left it on the counter for The Husband to see. He took it and called the next day. The loan officer took down some of our information and ran our credit to see what we qualified for. (*Just an aside, my credit is pretty good at 808 and for once it’s higher than The Husband’s whose was 793.) We qualified for a zero-cost refinance that would lower our interest rate by .5%. I know that doesn’t sound like much, but that .5% would have lowered our total monthly payment by about $170. And the best thing of all, is that our loan would not start over. It would amortize over 27.75 years, which is what we have left to pay on our current loan.

After talking about it, we decided to look into our bank’s rates as well as finding out the rates with our mortgage lender for a traditional loan with fees. Our mortgage lender was able to be competitive with the banks rates and still amortize the loan over <28 years. They offered a mortgage rate 1% lower than what we are paying now, that would amortize at the same time as our current loan, and bring us to only having one loan to pay instead of two. And all of this for $300 less than we are paying right now!

It will actually save us more than $300 per month because we pay $375 per month on our HELOC, plus a little extra on our first. Going forward, we will still continue to pay the extra on our first and round up to the nearest hundred but won’t have to pay our HELOC. That is $375 more each month to go towards our credit card debt!

Because we are staying with the same loan servicer, our mortgage will not start over. (Which I am so thankful for because we are already behind the 8-ball on our mortgage and didn’t want to start all over again in our 40s!) It has also made the entire loan process pretty painless. We haven’t needed to provide any bank statements, retirement accounts, proof of work or residency. There are a few things we do need to provide, however. We needed to give them a copy of our contract with solar to prove there isn’t a lien on the house and a few more, relatively minor documents.  As our mortgage is currently with them it has been so easy! We started the loan process last week and have been able to, and will be able to, sign everything electronically.

We have never refinanced a loan before so we don’t know what the “normal” process is, but this process has been so simple. And worth it. We are going to save over $300 every month, over $72,000 over the life of the loan (more if we pay extra each month), and still pay it off in the same timeline as our original loan through them.

For us, that form letter couldn’t have come at a better time.

Our Money Journey - Part Three

Age 38 – 40

Here is the last installment of my series detailing our financial journey. Parts one and two can be found here and here, respectively.

We put our house on the market on a Thursday, had an open house the following Saturday, 4 offers by Monday evening, accepted an offer on Tuesday, and on Wednesday morning we were on a plane to Washington D.C. for 10 days. It was a whirlwind for sure!

Our house sold very quickly and for over the asking price. Now, we had to find a new place to live, which was beyond stressful. We were very picky and wanted to buy our forever home the second time around. We didn’t want to buy a house that didn’t fit our needs and that we would have to leave in a few years.

We had several MUST HAVES and many WOULD LIKES on our new home wish list.

MUST HAVES

One story

Quiet street

2 Bathrooms

Decent sized Yard

Fireplace

Soaking bathtub in the Master

Attached Garage

Space for computer in the common area

WOULD LIKES

Christmas Tree window

Open Concept Living

Pool

Updated Electrical and Plumbing

Pantry

Bookshelf in the kitchen for cookbooks

Eat-in kitchen

Surprisingly, after months of searching, we finally found the perfect home for us. It ticked every box in every category we had, and then some! But it came at a price.

In the purchase of our second home, again we did not buy above our means, but it was expensive. Now we had to pay our new and increased mortgage and pay increased bills to go along with our shiny new house. All this was on top of the $13,000 worth of credit card debt we had racked up during our kitchen remodel for the old house. Even with all these new bills, we never changed our lifestyle. We continued to buy whatever we wanted and put it on the credit card.

During this time, our credit card ballooned to $21,600. We just kept charging and burying our heads in the sand.

Although we were in heavy debt, we weren’t exactly living paycheck to paycheck during this time. We do (and did) have some money in the bank and we are contributing to our retirement. We don’t have nearly as large as an emergency fund as we would like, but we have about 2 months’ worth of expenses in the bank if something were to happen. Additionally, we are diligently adding to our retirement. As a teacher, I have a mandatory 10% of my paycheck taken out for retirement and I contribute another 6% above that to a 403b (however, starting next month, I plan to up my percentage an additional 5% so I will be putting 11% into my 403b on top of the 10% put into my CALSTRS account). The Husband is contributing 13% a month to his retirement and he has a 3% match from his employer. On top of that, his employer gives 6% profit sharing every year. Next year we are hoping to max out The Husband’s retirement and then will work to max out mine. We are not quite there yet as we have credit card debt we need to get rid of.

You know most of our current stats. We are trying to get out of debt. In the past, we relied on 401Ks or pensions we cashed out to pay off debt. Now, we are digging ourselves out of debt one spoonful at a time. Currently we have about $18,000 of consumer debt, of which, $16,000 is on our credit card.

Over the past year, that’s a decrease of over $5000. It’s not as much as we’d like, but it’s progress. And it’s progress that we’ve made by paying down our debt and budgeting and by working hard.

That’s it. That’s where we are and where we’ve been financially. Hopefully we are heading to debt freedom!

This was a great post to write because it has been so reflective. It made me revisit our mistakes and celebrate our successes. It made me take stock of where we are and helped me to focus on where we want to go.

This is our financial journey. It doesn’t end here, we have a long way to go, but it has been an interesting trip down memory lane.

October Debt Update

This is only my second debt update since March! EEEEKKKK! I’m really trying to get back into blogging about my progress, keeping myself accountable, and getting out of debt! We actually did pretty well last month, decreasing our debt by 11.5%! I wish every month was that great! You can find our last debt update here.

I’m a little bummed because this update isn’t going to be as good as I had originally hoped. We did make progress on our debt, but we were derailed by some other things. My mom owes us several hundred dollars for different things we’ve purchased for her online or at stores (all for Christmas), and my sister owes us $200 for show tickets that I thought she would have paid us back by now. I’m not worried, I know we will be paid back everything we are owed, but that just means we charged some stuff on our credit card that wasn’t paid off like we thought it would be, and because of that, we didn’t make some of the goals I had planned for us. I just need to remember that our debt went in the right direction and we still decreased our total debt.

This debt update is based on our current totals from our last update. I do these mid-month because our credit card closes on the 15^th. I can’t wait for the day when we are consumer debt free and I can do our financial savings updates at the beginning of each month!

For various and sundry reasons, we still have a ton of credit card debt. We are going to keep decreasing our credit card balance until it reaches $0! Even though we are mired in debt, at least our car loan has continued to decrease. 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.

Although we are not paying off our debt as fast as I would like, I am happy to say that for the second month in a row, our overall debt decreased! Usually we are not making giant leaps and bounds in our debt repayment, but believe that slow and steady wins the race, but last month was actually pretty good as far as debt progress goes. I’m hoping this month’s progress looks pretty good too. Let’s get to the numbers!

Here are our current debt totals:

            $15,395.43      Credit Card at 16.74% interest

            $1645.00         Car Loan at 0% interest    

      

Our total debt stands at: $17,040.43 YIKES! It’s still a lot of debt, but I love seeing that we are making progress! I wish I had known how close we were to getting under $17,000 in debt, I would have tried to schedule another payment to get there, but I can only do what I can do. All we can do is just keep plugging away. We dug our hole one shopping trip at a time and all we can do is pay it back one month at a time.

Plus side: we started actively tracking our debt again! Our debt decreased! We paid off almost $1000 of debt, $969.85 exactly, which amounted to about 5.4% of our total debt. The fact that we haven’t borrowed any more money from The Kids is a plus. We continue to make progress towards our retirement and to contribute $50 a month to our kids’ bank accounts.  This debt update has our lowest credit card balance and debt totals since our September 2017 debt update. For 2 years, our debt was a roller coaster, down and up and around. No more. This update shows we are making progress. Actually, compared to September 2017, our credit card debt is higher, but our overall debt is less. We are making progress, albeit slow. Hopefully we can ramp up our progress and NOT increase our debt again!

Down side: No matter how much debt we pay off, it’s never enough. We also had a few months of backsliding and not keeping track of where we were that we are still trying to recover from. L Also, we did still charge on our credit card. Of course I also hate that several hundreds of dollars went towards interest on our credit instead of towards the principal. Because we are owed some money, we didn’t decrease our balance on our credit card as much as I would have liked. It’s actually a little depressing to see how long we have been on this roller coaster called debt freedom. We made some poor choices and have been living in a debt cycle for too long!

Looking forward to: getting our credit card debt below $15,000 and keeping it that way, also making continued progress on our car loan. I’m also looking forward to staying on the debt pay-off and blogging band wagon! I was off of it for too long and it feels good to be making progress again! If we have an exceptionally good month of debt payoff, we should be able to get down into the $13Ks with our credit card debt. (It’s so crazy to say that I would be excited to be in the $13K range!) Hopefully, we will be paid back by the people who owe us money and we will be able to send that money right to the credit card. I am also looking forward to getting our total debt below $17,000 and maybe falling somewhere in the $15K range for our total debt if we have another good month of payoff. The most difficult part of this plan is the timing. We are inching nearer and nearer to Christmas: the most expensive time of the year. I have a little “Christmas nest egg” but I don’t know how far it’s going to carry us. I still have a lot of presents to buy, a party to plan for, and traditions to keep. We’ll see how we do.

Clearly, 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.

I hope your debt freedom journey is smooth, uneventful, and beyond successful

Our Money Journey - Part Two

Here is part two of our financial journey. If you are at all interested, you can find part one here.

Age 27 - 32

At this point, I went to work full-time as a teacher. We didn’t have to pay for day care as my mom watched our kids. But the kids were also getting older and getting involved in more activities.

By now, we pretty much stopped adding to our debt, as I was making more money, but we didn’t make much progress on it either.

We were able to pay cash for almost everything we needed or bought, but our payments towards debt were minimal. We made payments and, in fact, even made small dents in the debt, but we never really made much progress. We were treading water and still living paycheck to paycheck. We didn’t put any money into savings and were not actively contributing to our retirement, other than what was involuntarily taken out of my paycheck. The Husband was still working for the same large company and they did offer a pension plan that he was fully vested in.

Age 32 – 37

At this point, The Husband switched jobs. Leaving a stable company in the middle of the Great Recession was crazy in my book, but we prayed about it and really felt like it was the best option for our family.

He got a huge pay raise but took a cut in his vacation time. It was a trade-off we were willing to make.

Because he was fully vested in his pension at his old job, we decided to cash that out to pay off our credit card debt and be able to start fresh.

During this time, we also bought a new car for The Husband. Nothing fancy, but something to get him reliably to work every day. We put a minimal amount of money down and took out an interest free loan for about $20,000. Another debt to add to the pile.

With the pay raise, we were able to travel more and start doing major home renovations. We were able to pay for these all with cash. We charged a lot on our credit card each month but had no problem paying the balance in full every month.

Although we were living within our means, we were JUST living within our means. We did contribute to our retirements, but we didn’t put anything in savings. We didn’t save for a rainy day and were still living paycheck to paycheck. This would eventually come back to bite us when we decided to remodel the kitchen at our old house.

Up to this point, all of the remodeling we had done was paid for in full by the end of the project. We were able to cash flow everything. We didn’t understand how expensive a kitchen remodel would really be. We charged everything, just as we had done in years past, but everything was so expensive, that we couldn’t pay it off each month. And the balance started to grow.

It grew to over $13000. (Small aside here. We also had a balance on another credit card that we were paying off slow and steady. The balance had gotten down to a little over $4000 so I took money that should have gone towards our kitchen remodel and put it towards paying off the other card. It didn’t change our debt total, just the way our debt was structured.)

For us, this really became a period of two steps forward and one step back.

At the end of our kitchen remodel, we decided to sell our house. (There were many factors that played into this decision, I swear! For many reasons it really was the right decision for us to sell when we did.)

Stay tuned for the last installment of our money journey. For me, it was an interesting walk down memory lane.

Debt Payoff Chart

A blog I follow, Medium Sized Family, created a “money saving chart” years ago. I liked it. I like it so much, in fact, that I’ve tried to complete it… more than once. And I’ve never completed it. I start one each year with the best of intentions and then three or four months into the year I forget about it. Then I feel so far behind that I can’t catch up, and I let it completely fall by the wayside. I think that happens for a couple of reasons: one, I don’t have enough left over money each week to cross off a square and so I get discouraged, and two, I have so much debt that I want to put all my “extra” money towards debt.

So that got me thinking, what would motivate me? I decided to make my own chart, but instead of a money saving chart, I made a “debt payoff chart”.

Each chart is equal to paying off $2000 in debt. Since I started using them with about $18,000 in debt, I figure I will need to fill in about 10 charts in all (after stupid tax, aka interest is factored in) until I’m debt free. This is also assuming that my debt continues to go in the right direction and that I don’t add any more debt to our already high debt totals.

Since I just got back on the paying-off-debt wagon, I started to fill a chart based on my current totals. It was pretty cool to fill in an entire chart and then some on my first month back.  On our last debt update we paid off over $2200 in debt! In one month! I’m super proud and super excited that we are one chart down with “only” nine to go!

Next month (about 13 days from now, per our credit card billing cycle) won’t be as good, but we are still making progress. I’m already doing calculations in my head to see if I will be able to complete our second chart this month. (Spoiler alert – I don’t think we are quite going to be able to swing it this month, but that’s just more motivation for next month.)

I’m hoping having this little chart to color in each month will be motivation for me to work on getting out of debt! It’s a small thing, but it’s a visual representation of our progress. I’m sick of sending $1500 - $2000 towards debt every month and I can’t wait for the day that we can put that money in the bank. Or buy a new mattress. Or take The Kids clothes and shoes shopping without having to scrimp and save or wonder where the money is going to come from.

The last couple months we have made huge strides! I hope we can keep doing that and that this little chart will help to spur me on! I’m also really excited for the day this “debt payoff chart” can become a “money saving chart”!

As always, wish us luck; as I wish you the best of luck in your debt freedom journey!

Our Money Journey - Part One

I was reading another blog, The 76K Project, and she and I are of a similar age.  Months ago she took a walk down memory lane, she wrote about life and financial journey; I thought I’d do the same for my 40^th year.

She only wrote about her last decade, I think I’ll write about my last two decades, as I feel that’s really when our financial story begins.

When I started this entry, I thought it would be short and sweet, but as I wrote it, the post got longer and longer. Because of how long this post became I decided to break it up into three posts. This post was a long time coming. I started it nearly a year ago and there it languished in my “drafts”, mostly done, but waiting for the last couple of years to be filled in. I don’t know why but I put off writing it. When I opened it and decided to finish it today, I really enjoyed going back and reading what I wrote and finishing it up. But, honestly, our financial journey is still in progress.

Like I said, I never imagined this would grow into a three part series, but once I got started, I just kept writing! This is part one of our financial journey. Parts two and three will be coming in future weeks. Part one details our journey from age 20 to 28. Part two will be about our finances from age 28 to 38 and part three will be about our finances over the last couple of years.

At age 20, I was living at home and attending community college. My parents couldn’t afford to help me financially so I was on the hook for all college expenses myself. (*Note, I was able to live at home, rent-free and that in itself is a form of major help!) I played soccer and my coach there really liked me and helped me to get a full-ride athletic scholarship.  I lived at school from ages 21 – 22 and left college debt free. At the same time, The Husband lived at home and worked at a crummy job that paid tuition reimbursement, so he also left college debt free.

Age 22 – 25

I moved home when my athletic eligibility ran out, not because I couldn’t have finished my education, but because I was so homesick I was ready to be home. By this time, my dad had retired and ironically made more money retired than he made working so he was able to help me financially with the rest of my school.

While I was away at school, The Husband graduated college and got a job working in IT for a large, Bay Area-based company. It was close to home and the most money he had ever made.

Also, 5 months after moving back home, The Husband and I got married. We got married on the cheap… before it was trendy to do so. We spent $7500 on our entire wedding: dress/tux, venue, DJ, flowers, food, photographer, everything. However we didn’t have the money to do that at the time. We cashed out a small 401K The Husband had had to pay for the wedding.

We moved in with my parents while I finished college and got my credential.

We also had our first child.

Age 25 – 27

We lived with my parents for just over two years.

Then we bought our first house. We had no money in savings and no down payment. No problem, right?

We borrowed $6000 from my sister and her husband to “have in the bank” as savings when we bought our house.

At this time mortgage companies were doing lots of shady things and because we had good credit, we qualified for a 0% down, interest only loan, with a variable rate. In fact, we had two loans: one at 80% and one at 20%, both interest only.

When we bought our home, we didn’t buy more than we could afford, however, we had all these new bills we’d never had to pay before and I was only working retail 50%. I worked two days one week and three days the next. Any money we needed over and above our earnings was put on the credit card.

Our credit cards were nearly maxed out and we were living paycheck to paycheck. We had to pay my sister and brother-in-law back and money was tight. We were never late on any bills and never went over the limit on our credit card, but our financial situation was rough!

Tune in next week to read the next step in our journey!

The No-Spend September that wasn’t…

This was an interesting month for sure! For the past seven years, our family has done a “No-Spend September”. You can read about some previous years and installments here, here, or here, just to get an idea of what we do and why we do it.

We planned to do it again this year, but were unsuccessful for so many reasons: my dad’s illness, The Boy lost some football equipment, unexpected company over for dinner, an unexpected potluck we needed to bring something for. Quite honestly, the list of reasons and excuses could go on and on.

We went into No-Spend September with the best of intentions, however we didn’t PLAN for it. In years passed we have meal planned and wrote down schedules. We knew what days we needed to use the slow cooker, what days needed to be “quick” dinners, and what days we had extra time. We made sure The Kids were bringing their lunches to school every day. We planned. This year we fell into the category of “failing to plan was planning to fail.

During No-Spend September, we usually set a grocery budget $100 less than are normal monthly grocery budget of $600, so it would have been set at $500. We also really try to check our gas consumption. We don’t buy convenience food. We don’t buy clothes or shoes. We don’t buy toiletries or the like at Target. We really curb our spending and send all extra monies toward debt.

This year we were beyond unsuccessful. We had so many different mishaps we needed to take care of throughout the month. This was by far our least successful No-Spend September. And it hurt.

We definitely curbed our spending and were actually able to send a good chunk of change towards our credit card debt, to the tune of almost $2500 this month alone, but if we had been more diligent with our planning and in our spending, we could have paid off even more this month!

Next year, we will try again. We should be in a less precarious family situation and be better able to plan.

This month wasn’t all bad, but I guess the tough part is that it wasn’t all good. We did make progress on our debt. We actually made pretty good progress on our debt, but I can’t help thinking how much we could have paid off if we had really had a No-Spend September.

2019 Financial Goals Check-In

Let me start by saying, I really DON’T want to do this.  I haven’t checked in with my goals since the since February. At that point we were only 8 weeks into the year. Since then, things went sideways in a major way and our finances became an afterthought. I’m dreading seeing what progress we haven’t made on our goals.

To recap, my 2019 goals are pretty basic and all include improving our financial situation.

I came up with 6 financial goals I wanted to meet in 2019. Some are repeats, some are new, but I feel they are all realistic. (I wrote this line originally before my dad’s cancer diagnosis and understanding how that would change our lives.)

2019 Goals

·                  Decrease debt/no new debt

·                  Pay kids back (including interest)

·                  Pay off car by 12/31/2019 (about 2-3 months early)

·                  Credit card debt under $10000

·                  Save/budget for Christmas

·                  Stick to cash only budget

Goal 1: Decrease debt/no new debt PASS

So far, so good. We haven’t added any new debts and from our last 2018 debt update to now, we have decreased our total debt by $6673.41 and all things considered, I feel pretty good about that! We still have a lot to do and a lot of progress to catch up on, but our debt is trending the right way.

Even with minimal attention paid to our finances, we have made progress towards paying off our debt and I feel happy about that.

Goal 2: Pay kids back (including interest) PASS

So happy to report that we paid our kids back in full and with interest! Even after they were paid off, we have continued to add $50 a month to their accounts. It’s not much, but it’s something!

And they are no longer a debt!!!

Goal 3: Pay off car by 12/31/2019 NOT ON TRACK

We are not on track to be successful with this goal, and I think that’s okay. We pay interest on our credit cards so we send any extra money towards that debt and are not focusing on paying off our car early. Not long after my original goal check-in in February, I decided against this goal. I decided it was more important to focus on paying our credit cards down because of the interest, so although we are not on track with this goal, I feel okay about it.

Goal 4: Credit card debt under $10000 NOT ON TRACK

Overall, we have decreased our credit card debt by almost $3000.00, $2933.41 exactly. I’m glad we have made progress, but we are not on track to be under $10,000 by the end of the year. We have a little over 3 months remaining, and I plan to make progress, but realistically, it would be super difficult to get under $10,000 by then.

At this point, I’m hoping we can keep making progress and keep decreasing our debt. I’m not going to give up on this goal, but I’m not going to beat myself up if we don’t meet it.

In order to meet this goal, we would need to pay off just over $2000 per month, plus interest. I don’t see it happening. But I do see progress continuing to be made.

Goal 5: Save/budget for Christmas PASS

This goal has been going great! Every month I have faithfully put $200 into our Christmas envelope and we have had the money there to use as needed. I have loved having some money set aside to use for Christmas gifts and stocking stuffers. I seriously don’t know why I didn’t start doing this sooner.

The Husband has also redeemed $200 in Amazon gift cards from his works employee incentive program that he has used towards Christmas presents.

Lastly, we have almost $400 in points from our credit card that we are going to redeem. These will be used for Christmas as needed. I’m planning to use this money to buy our Christmas party invitations and for food for our party. Again, it won’t cover it all, but it will be a good start.

Goal 6: Stick to a cash only budget NOT ON TRACK

Although I am not “passing” this goal, I also feel like I am not completely failing at it either. Overall, I am using cash and funding my budget envelopes, but I have had a couple of slip-ups. Several times I have opted to use my debit card (from one of two different banks) and I think that’s good because whatever I’m buying is actually paid for.

Since I recently got back on the get-out-of-debt wagon, I have tried really hard to make sure I have the money to pay for anything that has been charged. For example, The Boy just needed something for football and although we charged the item, I immediately took the money out of our “kids’ activities” envelope and put a post-it note on it to send it to the credit card. It’s not ideal and we still have a long way to go, but it’s progress.

Overall, I would give myself a B- for my financial goals for 2019. With the chaos of our life over the last three months, I’m not totally unhappy with where I’m at and feel like I am making strides towards our financial freedom.

Feeling Optimistic

I’m feeling optimistic about our debt.

I don’t know why. Nothing has changed. No windfalls to put towards our debt.

Just steady progress and a feeling of hope.

Because life went sideways for a while, our debt journey was no longer a priority. I stopped tracking our debt. I stopped strictly following our budget. I “bounced” three (three!) checks. (They didn’t actually bounce as our bank covered the check for us, at a fee of $36 each! It was entirely my fault, I was just not in a place of caring where we were financially.)

I am feeling reinvigorated to get out of debt. Although we still owe a ton of money, I see a glimmer of light at the end of the tunnel.

Our credit card debt is the lowest it has been in 18 months and going down. We still owe $16,000 to our credit card, but we are making definite downward progress! In just a couple of months, we will have the lowest credit card debt that we have had in three years. It will be a milestone month for sure! I’m not counting my chickens, I’m just looking ahead to where we are going and where we will be soon.

In February 2016 we were still living in our old house and had just finished a kitchen remodel. We had over $13,000 of credit card debt and for several years, the outlook only got worse. Moving was very expensive and although our bills and obligations increased, we never changed out lifestyle. We continued to live “high on the hog” and didn’t adjust for an increase in our cost of living. Now, we are more comfortable with our monthly obligations and what we need to do.  I feel like we can get out of debt. We can be diligent with our finances.

The Husband came to me one year ago with a plan to get out of debt. It didn’t work out the way we would have liked, but in that one year, we have paid off $5600 worth of credit card debt, continued to make progress on our car loan, and made many “big” purchases. Our debt is down by over $5000 and it will keep going down. Even with purchases that we made: computer, phone, jewelry… we were able to make progress. We are going to continue making progress and we are going to get out of debt.

I feel rejuvenated and ready to get out of debt. I don’t know why or what it is, but I’m all in. Progress is the biggest motivator! We had a good month last month. I didn’t have a “monthly debt update” to compare it to, but I had my totals from the previous month. We paid of 11.5% of our debt in one month. I know that’s not a normal month and certainly not sustainable, but it is repeatable. It was also great to see those numbers in black and white and to know that we did that. We made that progress. Each month, we are going to owe less and less debt and eventually we will be able to payoff 10+% of our debt every month!

We will get there! We will get out of debt!

I found my motivation: progress. What’s yours?

Quick Post

This is going to be just a quick post…

I plan to do a debt update in just a couple of days. I think it might be slightly more positive than I expected. (Thank God for No-Spend September!)

My life has been crazy and debt payoff has not been a priority, but I still want to see the small blessings I see.

Recently, we bought tickets to a show for a group of 12 people. I commented to two of them that they owed me money. Both said I was wrong and they didn’t owe me anything. (They were not being rude or mean about it. They truly didn’t know.) Then their husbands stepped in and said, yes, we do. They paid me on the spot. That was unexpected and I was able to send the money right to our credit card.

I have also bought a lot of stuff for my mom recently. She is so busy caring for my dad right now that she doesn’t get out much. I love my mom but she usually takes months to pay me back. She paid me back everything she owed me within two weeks of my buying it and I was able to send the money straight to the credit card.

As it is September and inching closer to Christmas, I have found my “Christmas” envelope so helpful! It has never held more than about $600 at a time because as money goes in, money comes out. But, it has been so wonderful to be able to pay for things using the envelope. I don’t know why it took me nearly 40 years to plan for Christmas but I’m so glad I did and I will never go back to the old way! I love having a Christmas budget and having money to pay for the things we need to buy!

I feel like God has really blessed us the last week. Because it is No-Spend September, we were able to make a little progress on our credit card bill this month. Between being paid back a lot of the money we were owed and our payments we made a pretty good dent, but I knew I wanted to pay more, but I had no more funds coming in. I even thought about transferring money from our savings account but had to stop myself.  Fast forward a couple of days and I logged into my bank account and had more money than I expected, (which is always nice!). I received an “extra” paycheck from a day I worked last month that I forgot about! YAY!!!! $170 straight to the credit card! Then, we had to donate a car as it was breaking down more often than it worked, (☹, it was the first new car I ever bought and almost 17 years old. It was a great car!), when The Husband called to have it taken off of the insurance, they said we would be getting a refund check fro $298. It went straight to the credit card! Lastly, I had some returns that I needed to take back and I finally did that for another $49.

Each day when I pray, I pray to God about improving our financial situation and getting out of debt. I pray for wisdom and restraint with our finances. This last week I have tried and tried to figure out a way to come up with more money to give us a chance to bring our credit card bill under $16,000 when it closes. I had exhausted all the avenues I could think of and then God gave us a $515 swing in our finances! In just two days! It’s still going to be really close to see where our credit card actually closes at after interest, but because of these blessings, we have a chance of our balance being below $16,000. That will be the least money we have owed in credit card debt in about 18 months!

These are all small wins but added together made for some good financial progress!

Wow, this post ended up being longer, and more detailed, than I expected it to be!

Have you had any wins lately?

Debt Update September

This is my first debt update since March! EEEEKKKK! Unfortunately, things haven’t changed nearly as much as I would have liked, but on the plus side, we do have less debt than we did then. After this update, our debt increased. We made some big and unplanned purchases that we put on credit. Some of them were necessary and some of them were not, but they were all expensive.

We had a crazy summer and have been slowly digging our way out.

This debt update will be based on our current totals. I will compare our current credit card to debt to our last month’s statement. I will include our car loan. We do have a couple of other debts that I don’t really talk about here. We have a 401K loan on my husband’s account that we took out 2 ½ years ago when we planned to move. We also have a 10 year loan for our solar that we are only one year into paying. I probably should include these, but for whatever reason I don’t.

For various and sundry reasons, we still have a ton of credit card debt. But, (for the millionth time we are starting again!) we are going to get out of credit card debt. We are going to keep decreasing our credit card balance until it reaches $0! Even though we are mired in debt, at least our car loan has continued to decrease. 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.

Although we are not paying off our debt as fast as I would like, I am happy to say that for the first month in a row, (hahaha) our overall debt decreased! (I am so happy to get to be writing that instead of having to say that our debt went up! Quite honestly, we kind of took a blogging and debt update hiatus when our debt was increasing, and not because it was increasing, life just went sideways!) Usually we are not making giant leaps and bounds in our debt repayment, but believe that slow and steady wins the race, but last month was actually pretty good as far as debt progress goes.

Our last credit card statement had a balance of $17,887.61. Being real here, it wasn’t pretty.  

Here are our current debt totals:

            $16,020.28     Credit Card at 16.74% interest

            $1990.00         Car Loan at 0% interest    

      

Our total debt stands at: $18,010.28. YIKES! I can still hardly wrap my head around that number, but at least we are finally under $20,000 in debt. It’s still a lot, but I’m a little sad that falling under the $20,000 mark happened without any fanfare. In fact, in all the craziness of our life, I didn’t even realize we had gotten below that number until I was writing this debt update. That’s just another reason that I think keeping this blog is so important. It keeps me aware and accountable!

Plus side: we started actively tracking our debt again! Our debt decreased! We paid off almost $1867.33 of credit card debt in actual dollars, plus another $345 towards our car, which amounted to about *11.5% of our total debt. With our last payment, we dropped another thousand on our car loan! The fact that we haven’t borrowed any more money from The Kids is a plus. We continue to make progress towards our retirement and to contribute $50 a month to our kids’ bank accounts.

*We actually had a great month for debt payoff! 11.5% is nothing to sneeze at! If we could do that every month, our debt would be gone in 9 months. If only… However, I’m pretty excited to see we had double digit decreases and am hoping to have another good month next month. We had some unexpected “windfalls” of money that helped get us here: a car insurance refund, an expected, but forgotten, small extra paycheck, some returns, and of course, No-Spend September. All-in-all, a pretty good month.

Down side: No matter how much debt we pay off, it’s never enough. We also had a few months of backsliding and not keeping track of where we were. L Also, we did still charge on our credit card. Of course I also hate 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 $16,000 and keeping it that way, also making continued progress on our car loan. I’m also looking forward to getting back on the debt pay-off and blogging band wagon! I was off of it for too long and it feels good to be making progress again! If we truly have an exceptional month of debt payoff, we could potentially skip the $15K range altogether and barely break into the $14K range. Honestly, that will be a stretch, but it won’t be impossible. I’m also hoping that with our next debt update, we can totally skip the $17K range and fall into the $16K range. Again, that is a stretch, but not totally unrealistic. Wish us luck!

Clearly, 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.

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

I'm Back... Again

Well, hello there. Remember me? Brunette Getting Out of Debt? I’m back…

All I can say is it’s been a doozy of a summer over here! Very early in my summer break, my dad was diagnosed with terminal cancer. Let’s just say that threw everything for a loop! Vacation plans, kids’ schedules, paying down debt, it all flew out the window and my summer was dedicated to helping my parents as much as I could in any way I could. My parents live about 30 minutes away from us and I was going out to their house to help them about 6 days a week. I would spend a couple of hours in traffic each day and anywhere from 6 – 8 hours at their house doing various chores for them or just keeping them company. Obviously, that left very little time for blogging.

Now that we are back in school, it brings routine back into my life. I have a regular lunch time where I can sit and jot a few lines. I have some dedicated time to pay bills and add up our debt (which, by the way, I really don’t want to do… I think we backslid over the last few months and I don’t think I want to see the results). Although because of work I become busier, I have specific time set aside to do things.

I’m hoping to get back into blogging. It probably won’t be consistent, and I don’t know how long or detailed my posts will be. But I want to get back to it and I want to feel accountable again. I want to get out of debt and I want to chronicle my journey.

The last few months we have made several large purchases that we didn’t plan for: a new phone (for me, because we gave The Daughter our old one), a new computer (because as The Husband put it, “ours was giving us the black screen of death”) a new ring (for our anniversary), concert and show tickets, the list goes on and on. Some of our purchases were necessary while other were completely frivolous and worse yet, we didn’t plan for those purchases so we put them on our credit card.

Our credit card balance had gone up since our last debt update and has almost sat stagnant over the last two statements. We have made payments, but we have charged so much that the payments have made a negligible difference in the actual balance.

BLEH! I’m so sick of debt! And the cycle I perpetuate to keep us in it!

BLEH! Hopefully my next post isn’t 3+ months away and hopefully it will be a little more positive!

Japan is Expensive!

Last year The Boy and I were afforded the opportunity to travel to Japan as part of our city’s Sister City organization. It was a wonderful experience, truly once in a lifetime, and even though we are in debt, I’m so glad we went. This year, The Daughter is going on the same trip.

The program is actually a home exchange program, 10 Japanese students travel to America for 9 days in March, and then our 10 kids travel to Japan in June. This past weekend we hosted a student from Japan. She was wonderful! I loved having her and it we made so many wonderful memories. But, they weren’t frugal memories.

Although they spend 5 nights at our house, we really only “get” them from Friday night to Monday morning. The Sister City Association calendars the rest of their time.

On Friday night we took her bowling and to In’n’Out. Cha-ching!

On Saturday, we took her to the Santa Cruz Beach Boardwalk and Blaze Pizza. Cha-ching!

Sunday was more frugal and we spent the day at The Daughter’s dance competition and we only had to buy food that day. Food for 5 people… cha-ching!

We also bought her many souvenirs: several tee shirts, many different candies, a small-stuffed animal, and a couple gifts for her to bring home to her parents. Cha-ching!

She was beyond appreciative and gracious but it was a spendy weekend to say the least!

I don’t know how much debt we are going to pay off this month! I think we are going to come very close to breaking even on our credit card, which, in a way, is a win. We should be able to pay off everything we charged on the card, but we won’t make much headway on our debt.

In addition to treating our foreign exchange student, we are sending our daughter to Japan in a few months. We are fundraising for the trip but we pay all the fees upfront and then get reimbursed if we fundraise over our need. We also pay for airfare, spending money, and gifts for The Daughter to take when she goes to stay with her host family.

Her airfare was $1500 and we will send her with (at least) $250 of spending money. Since we found out she was accepted into the program to go to Japan, we have been buying gifts for her host family, so we are mostly done with that aspect of it.

It has been a wonderful experience for my children and I’m so grateful they have this opportunity, but it is expensive; both the hosting and the sending!

Plugging Away

As far as our debt and debt payoff goes, we are just kind of plugging away. We haven’t made any significant strides, but neither have we made any huge goofs.

We did have a very expensive weekend but paid for that using our savings. To that end, we do need to work on replenishing our savings a little bit now. Some of our expensive weekend will also be paid for using our Christmas money as we bought some gifts over the weekend.

Last month was our best debt payoff month ever, which will be followed by one of our worst! Right now, we are just plodding along. Our anniversary is next month, as is my birthday, and Mother’s Day. My poor husband, right?

The Husband bought all my gifts this past weekend. He bought me gifts for my 40^th and everything else. It ended up being an expensive weekend. Because of these expenses, our credit card debt is barely going to go down. We no longer owe our kids any money (YAY!!!) so that is $100 of debt that we aren’t paying off. We will make our normal progress on our car payment, however. I think we are only going to decrease our debt by 1-2%, however, I’m thankful that there will be a decrease.

With our May debt report, I’m hoping it will be better and I’m hoping we will be able to get our credit card debt into the $15,000. (Honestly, that’s such a crazy thing to say, “I’m hoping we can get our credit card debt into the $15,000?”

Net Worth vs. Debt Worth (updated 4/11/19)

I was writing a blog post the other day and as I was writing about my debt, the idea of a “debt worth” came to me. Now I imagine somewhere in the blogoshere and the internet somebody has coined and copyrighted that phrase, but it was the first time it occurred to me. And it got me thinking, what is my net worth compared to my debt worth.

Let’s start with a simple definition.

To me, a net worth is everything you have, all your assets: house, car, bank accounts, jewelry, cash on hand, etc.

Debt worth is everything you owe, and some of those things could be repeats: house, car, credit card debt, solar loans, 401K loans, personal loans, etc., any money that you owe anybody else.

Sometimes in our society, I think people confuse net worth and debt worth with their personal worth. People who have a huge net worth are not better people than people who have a lot of debt. Financial wealth does not equate to “good people”.

Lately, I have been comparing my worth, net worth and my debt worth.

Worth:

4 cars                             $20,000

1 house                        $591,000

1 401K                          $210,000         

1 403B                            $60,000

Bank accounts                $12,000

                                    ________

                                    $893,000

On the surface, it looks like we have a very healthy financial worth, but I only showed you one side of the picture. This only takes into account our assets, and assets are only half of what determines a net worth.

Now let’s take a look at the other side and see a more accurate picture.

Debt worth:

1 car loan                         $3700

1 house loan                 $455,000

1 401K loan                      $8500

1 Solar loan                    $26,000

Credit Card debt              $16,600

                                    ________

                                    $509,800

We have a lot of liabilities so our “worth” isn’t nearly as good as it looks.

Taking away our liabilities, or our debt worth, brings our total net worth down to around $383,200

These are all new, updated numbers for this post. Periodically, I think it’s important to look back at where we were just so we can see how far we’ve come. And we have come far.

Our net worth has increased by over $33,000 since I originally posted this in February of this year. That means we are going in the right direction. A lot of this is market fluctuations: especially for our retirement accounts, but some of it is progress. We are making progress. We are going to decrease our “debt worth” and continue to increase our net worth.

Debt worth is a bigger story than just numbers. Debt, and finances in general, bring so much emotion to the table that it becomes difficult to determine our true “debt worth”.

Debt makes me feel inadequate, ashamed, irresponsible. These feelings factor into my debt worth just as much as the actual numbers do.

Having debt doesn’t make you a bad person, but it often makes you feel like one.

Taking control of our finances and making progress towards our debt makes me feel like I’m getting it right. Making a plan for my money, and sticking to it, makes me feel like I am on the right track and makes the weight of my debt worth more manageable.

I am one of the lucky ones, even taking into account the huge amount of debt that we have, we have a positive net worth, that’s mostly in part to our retirement accounts. Our retirement accounts are nowhere near where we wish they were. In fact, we changed our contributions to help us get out of debt. I can’t wait until we are credit card debt free and can max out our contributions to our 401K again. Then we will really see our net worth grow!

Remember, you are not your debt, even if feels that way sometimes. Your debt worth does not determine your worth as a person, child, parent, friend. You are more than your debt.