I’ve Paid For This Twice Already…

Archive for the ‘debt reduction’ Category

I just wrote about my budget busters, just in time for something completely different to waltz right in and bust my budget wide open. It is related to one of the things I mentioned, the lack of experience budgeting - but it isn’t something I was thinking about when I wrote that post.

Argh! Well, now that that is out of my system, on to the explanation.

Wednesday night we had the blower in our furnace running to circulate some air throughout the house. When my spouse turned it off (at the thermostat) before bed, it didn’t turn off. Not being the technically savvy type, we hypothesized it was the thermostat going bad, and went to bed. Yesterday morning, I called our service company and they came out to check things out.

The technician came, and while he was troubleshooting the furnace, the fan turned itself off. Nice timing. The good news is that the technician says the thermostat is fine. The bad news is, he thinks the board in our furnace is going bad. What he said is that he thinks the relay that turns the fan on and off got stuck. The technician said he thought it would be okay until the fall, because it was the heat relay and not the cold relay. But the fan mysteriously came on again last night, so it probably isn’t okay. The only way to completely fix it is to replace the board, or replace the furnace.

The furnace is 22 years old. It has already outlasted its typical lifespan by 2 years and making a big investment of a new board in it would not be a smart long term move. Basically, this is a sign of things to come. A warning, if you will. Hey, I really wanted a more energy-efficient furnace, after all…

Coupled with the fact that I had a medical procedure on Tuesday that is sure to be expensive, we’ve decided to be proactive and shift the priority from debt repayment to saving for a short while until we get some things worked out. At this point, unless we find out the furnace needs to be replaced immediately, the debt snowball or $810.40 will continue to go towards debt repayment, plus a small bit so that we can make double payments to the spouse’s student loan (the debt snowball has $437.59 per month toward the student loan and we will up that to about $470) but all other snowflakes will be going into our savings account for a new furnace plus medical expenses. We’ll know more about the medical expense part after next week when I talk to my doctor about the results of the tests I had. But just the tests will cost money that we would rather save now versus take out of our emergency fund if we don’t have to.

This is all up for adjustment, and we may end up saving everything past the minimum debt payments if we need to of course, especially if the furnace continues to misbehave. It would be nice to continue the debt reduction in some fashion and continue to make the student loan double payments, but I am okay with not doing that if our finances warrant it. Dependent on the results of the tests I had, and our research into a new furnace, we may up the amount we need to save even more. But right now, we are guessing we’ll need about $5000 for the furnace and my tests. Once we put our economic stimulus check into savings, as well as my spouse’s additional paycheck in May (he is paid biweekly and May is a three paycheck month), plus what we have in savings already, we need to save about another $1000 to $1500. If we haven’t replaced the furnace by then, (and that number remains appropriate), we can shift back into significant debt overpayment and slay the student loan. We managed the huge car repair, we’ll manage this too. I knew things were sailing along too smoothly, and there were bound to be more bumps in the road. I was just hoping to get rid of the spouse’s student loan before we hit another one. So it turns out we may become consumers with the economic stimulus check after all, because it seems it will ultimately go towards a new furnace. The world has a funny idea of irony, that’s for sure.

Roll with the punches, I keep telling myself. This whole debt repayment thing is a huge game of adaptation. But, once more… Argh!

The technician who came for the furnace call checked my a/c unit as well and called the whole trip my yearly a/c service, so that was nice. At least I didn’t have to pay anything for that. However, the call I make this morning to have them come back… I assume I will have to pay for. But something better actually be completely diagnosed and fixed this time. Or something.

Argh!

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When I was walking into Walmart this weekend to finish my grocery shopping, four young men were getting into a car, each with a sub and drink from Subway in their hands (there is a Subway inside our local Walmart). It literally stopped me in my tracks. I have never wanted anything in my life as purely as I wanted a sub from Subway in that moment. It was then I realized that maybe, just maybe, I had set the bar just a little too high for all of us as far as debt reduction was concerned.

For close to 9 months now, we’ve had absolutely zero budget for eating out. We have eaten out on occasion, when we have been traveling and had no other options, and when my parents came to visit last July, but generally we have been very focused and good about not violating the eating out rule and have not set foot in a restaurant. And in that moment in front of Walmart I realized that I was walking a very thin line between total commitment and throwing in the towel. It is not that we were a family that ate out all the time. In fact, we usually went out 2 times a month or less. But we did occasionally eat out, and the cravings for food not cooked by me have grown stronger and stronger lately. Last week I was about 5 seconds away from ordering a latte at the Starbucks inside Target. This week I wanted to knock over some poor unsuspecting boy to get his Subway sub. I have a problem.

I didn’t order a sub that day, but I haven’t forgotten about it either. I’ve started to wonder if my desire for things I’ve eliminated from our budget is from a lack of focus on the student loan payoff, or my psyche crying out saying “Make life worth living! I want a treat!”. I had been thinking that because the credit card was paid off, I’d lost my drive a little bit, but after making the first student loan overpayment this weekend (more on that this afternoon) I realized I still have this desire to be debt free inside me. But I also have a desire to live a little more than we have been.

Before I crash and burn and do something crazy, I need to build a little wiggle room into our budget. If I have a little space to be crazy (not a lot, and not specifically for food, but just a little space) it might be easier to focus the rest of my energy on debt reduction and stay the path. If I set that wiggle at a specific parameter, I can think carefully about what I want to do with it, and save it up if I want to use it for something bigger, but not go crazy and completely blow the budget on a whim. At least, that is what I hope. And of course, I’d give my spouse the same wiggle room. He hasn’t complained but I know he’s been more than patient over not having any spending money.

Or maybe I just need to actually spend my birthday money this year (my birthday is at the end of March and my parents usually send a small check) on me and not on debt reduction. Or at least, give myself the option to do so.

Wiggle. Just a wee bit of wiggle, before Target and I have a not so minor meeting.

Note: For those wondering from yesterday, my freezer is in fact 0 degrees F, once I followed the instructions and left the thermometer between two frozen items for a few hours. So for now, the freezer is okay.

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I received an email this afternoon from Sallie Mae in response to my inquiry about how to make online payments to principal. It said:

If you are submitting a payment via Online Billing that is equal to two or more monthly payments, you will be directed to a page where you can choose whether the payment is to be used to prepay the principal or to pay your account ahead.

So I guess that is the answer - I need to make a payment that is equal to two or more monthly payments at a time. My spouse’s minimum monthly payment is about $238, so I need to make extra payments equal to at least $476 to trigger the screen that allows me to designate it as extra principal payments.

As long as the email is accurate, that is.

So my goal now is to generate at least $500 a month in snowflaking money so that I can make an additional payment every month and designate it to principal. I will still be putting the money into my designated ING subaccount, and then withdrawing it in $500 chunks to make principal payments.

Well, as long as the first time I try it, things work as planned, of course.

Our federal and state tax refunds just hit our checking account today, so I’ll be sorting that out tomorrow when they move from “pending” status, putting enough in our emergency fund to bring it back to $1000, and using part of the rest to begin funding the student loan paydown ING subaccount. On to phase two of SMARP - successfully paying down the principal balance!  :cheer:

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Is that title odd enough for you?

SMARP is my own little acronym for “Sallie Mae Accelerated Repayment Plan“. I did think for a while about coming up with a “T” word for the end so it would cleverly be “SMART” but, well, I dare to be different.

Before I get into starting the student loan accelerated repayment, I want to address my remaining debts a little bit. We have three main debts remaining (besides our mortgage). They are:

• Spouse Student Loan: $11,537.66 @ 9% interest
• My Student Loan: $11,636.71 @ 7% interest
• Car Loan: $3136.69 @ 4% interest

Although I talk about the Debt Snowball , as defined by Dave Ramsey, in my debt repayment plans, I don’t follow the snowball strictly to the order he does it (lowest to highest balance). I am an interest order kind of gal, and I address my debts by which has the highest interest. So even though my car loan has the smallest balance, I won’t pay extra to the car loan at all before it gets paid off just by time passing (unless I get some kind of huge windfall). The credit cards had the highest interest (even though the credit card debt was at 0%, that was a temporary rate and would eventually reset to ~12%) so I attacked that debt first. Now that the credit card debt is paid off entirely (yay!) I am on to attacking my spouse’s student loan.

Phase 1: Establish a repayment method to reduce principal.

So on to SMARP. Phase one of accelerating the debt repayments to Sallie Mae is figuring out how to get Sallie Mae to apply extra payments to principal and not to advancing my next payment due date. I want to reduce my principal and therefore reduce the amount of interest I get charged, not just pay the total amount I would end up owing them after my entire loan term at a faster pace. I am not sure how they can get away with NOT reducing my principal when I send extra payments, but they can, and they do.

I have called Sallie Mae several times in the past to explore how to do this with online payments. Each time, I get a different answer, and each time, the answer is either irritating or incorrect. I have been told that the only way I can have my payment go to principal is to mail the payment and indicate such on the check (which I think is the actual answer), and I have also been told I can simply pay it online and it will automatically be applied to principal (NO - this does not work). In the FAQ on the Sallie Mae website, the only information about overpayments is they will advance your due date unless you indicate you want it applied to principal - but no explanation of how to actually do that through online payments. I have tried overpaying (by small amounts as an experiment) online, and it always gets applied to my next payment due, not reducing the principal amount.

Sallie Mae forced me into online payments by refusing to send me coupon books any longer once they found out my email address (I am happy to make online payments, but I was unhappy at being forced to do so), so I think it is pretty unfair of them to not provide some way of indicating with an online payment that the overpayment should go to principal. But they are the lender, and I am the borrower, and they own me until this process is complete, so… so be it. Today I started phase one by emailing their customer service department to determine definitively if there is any way of designating online overpayments to principal. Even if I am told there is, I will test it out with a small amount before I commit to a large overpayment, but for some reason I feel like an email might tell me more accurate information than a random phone person. I am probably wrong about that. I also asked for the address the overpayments need to be sent to if there is no online method for designating payments to principal and a list of EXACTLY what needs to be written on the check and included with the overpayment so that it goes to principal.

I know they’re not going to make it easy. I wish I could pay off the entire balance in one fell swoop. But that is probably not going to happen, so I’ll work within their system. I have faith I shall prevail.

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After thinking it over some more, and the urging of a few commenters on Tuesday, I decided to find someone to talk to regarding the $800 left in my car repair. I spent a good amount of time yesterday scouring the website of the bank that the line of credit for the car repair is through, and finally found a number I could call.

I couldn’t believe what happened when I called. I only got an automated system, but after entering our account number and the last four digits of my spouse’s social security number, the computer told me our balance. Which was not $800.00. It was, in fact, $0.00.

Um… huh? Well, that explains why I have received no statement from them - they didn’t have anything to send me a statement about. So then I started to get a weird panicky feeling that somehow, my spouse had paid the $800 with one of our credit cards by mistake. I knew he had in fact split the payment and that only the ~$2800 that was supposed to be paid by our debit card was paid that way, because I keep good tabs on all charges in and out of that account. But the credit cards, since they’ve been $0.00, I don’t really pay attention to.

Luckily, we only have three credit cards, and I have them all set up for online access. So within about 5 minutes, I knew that none of the three had had an $800 charge on them and they all were still at $0.00. That was nice, but… who did we owe $800 to?

I dug out our receipt for the repairs. Yes, a purchase that big, I keep the receipt for a long time. Stapled to the invoice was the receipt for our debit card payment, and with that was a receipt for the line of credit, which said to refer to the bank issuing it for the specifics of payment. So I’m back to square one. Saturn thinks the bank paid for it. The bank thinks we owe nothing. And I am sitting here thinking…

Yes, for a minute or two I considered just calling this a stroke of wonderous luck and leaving everything as is. But honestly, that would drive me nutty for maybe the rest of my life.

So I called the Saturn dealership and explained my dilemma. We still haven’t paid for $800 of our $3600 repair, and we would like to, but no one thinks we owe them money. The woman I talked to sounded very confused, but she knew who to transfer me to, which is really all that matters. Unfortunately, by this time, the woman in service I needed to talk to had left for the day, so I left her a voicemail explaining that frankly, I would like to give someone $800 and be done with this repair, please tell me who to give it to.

Hopefully she calls back today. In a perfect world, I could just pay the Saturn dealership directly today, say thanks, and cross it off my list.

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