I’ve Paid For This Twice Already…

Archive for the ‘NCN Charts’ Category

Our total non-mortgage debt is now in the four figure range.

When I said that last night to my spouse, he added “For now”, because he is more pessimistic about the future life span of the Saturn than I am.  But I am trying hard to be optimistic about the Saturn surviving another year, and honestly, if it survives 6 months without any more major issues, we may be able to escape any debt in purchasing a new to us car.  If there isn’t anything else major going on.   It could happen.

As an aside, I complained to Saturn corporate about the lousy vehicle that is my primary car, as I did last year when the engine died.  This time they felt slightly more sorry for me (or wanted more to get rid of me) so they gave me a year’s membership in GM Motor Club to placate me.  Since I wasn’t expecting a single thing, it did somewhat placate me.  And for the next year, if the car breaks down I can call them to tow it, so there’s that.

Back to the debt demolition!  Yesterday I made my “new” $300 payment to my student loan.  We are still building up our emergency fund, so I probably should have just paid my $145 minimum payment, but I am stubborn like that.  I like to feel like I am making progress.  This knocked the balance of my student loan down into the four figure range, and since it is our last remaining non-mortgage debt, that makes our debt total in the four figure range as well.  Here are the numbers:

• Debt at start of blog (6/19/07) : $36,451.71
• Current total as of 01/13/09: $9798.95
• Principal paid to date: $26,652.76
• Broken down into:
  • Student loan (at 7%): $9798.95
  • Credit Card: PAID OFF 2/7/08
  • Spouse student loan(at 9%): PAID OFF 10/7/08
  • Car loan(at 4%): PAID OFF 11/14/08
• NCN Network Chart % debt paid off:  73.12 (last update, 72.48)

This month, the priority is to get our emergency fund to $2500.  Then, everything beyond that $300 monthly student loan payment will go to my newly established ING subaccount, the “new car fund”.  I am aiming for at least $1500 per month (starting in February) deposited in that account.  That has a strong possibility of not being met every month, but that is the goal.  With the economic slowdown, I’ve had less tutoring hours available to me, and my internet properties are not earning as much money as they had been.  Couple that with the blasted snow here that has canceled taekwondo classes a few times already in this new year, and my earnings aren’t quite as high as they used to be.  But we will do our best to save every penny that comes to us that we can and put it away for a new to us car.  Once we get that fund to about $9000, we’ll shift gears to paying off the student loan at a much faster rate and save $300 a month towards the car.

Our emergency fund is currently at $1000.  We should be able to get it to at least $2000 by the end of the month, but I am not sure about $2500.  We’ll see.  On to next month and another month of four figure debt!

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My finances are a mess on paper right now.  Nothing we can’t recover from and move forward from, but life has been throwing a few curveballs our way in the past month.  Most notably my lovely car, which has cost us way too much this year already, now has nice new back brakes and rotors, a new seal on the power steering pump, and a new oxygen sensor for the engine.  Add that to the new tires on my spouse’s car and the timing belt my car will get replaced this month (both planned expenses) and our car maintenance budget this month and last month has been totally blown.

Which necessitated my re-allocating the Christmas budget last month temporarily to the cars.  But I am still having Christmas, so that money is going to have to come out of the money that I try my hardest to reserve just for debt elimination - my income.  We are getting closer and closer to the point that we can pay all our bills and other expenses from my spouse’s income alone, and that is my goal every month.  But sometimes, that doesn’t happen.  So since I am not sure how much of my “alternative” income (taekwondo, tutoring, and this blog) is going to be able to go towards debt elimination vs Christmas presents, traveling, and other related expenses, I need to hold off on the debt elimination using that money until the end of the month.  But I don’t want to wait until the end of the month to pay anything above the minimum on my student loan, so I came up with a compromise.

Our debt snowball - the money we have budgeted every month for debt elimination - is $810.41.  Originally that included the minimum payments for both student loans, the car, and $200 towards our credit card.  Now that the only non-mortgage debt remaining is my student loan, that entire $810.41 in the budget goes towards that.  On top of that payment, we have been able, using my income, to snowflake above and beyond that minimum amount anywhere from $100 to over $1000 depending on the month, for the past year and a half.   This month, I am completely unsure what we are going to be able to use towards debt of that income and what will need to go towards Christmas.  So even though it will end up advancing my payment due date (and I hate doing that), I am breaking my student loan payment this month into two payments - one now for the budgeted amount of $810.41, and then one after Christmas at the end of the month for any snowflakes I can scrape together.

So that is exactly what I have done so far.  I made a payment this morning of $810.41 to my student loan, applying the extra above the $144.50 minimum payment directly to the principal amount.  This brought our remaining non-mortgage debt amount to $10032.62.  Still five figures, and I could have paid a little extra to drop it under, but with the daily interest calculation thing it would have been symbolic at best.  At the end of the month I will hopefully have enough snowflakes to drop it low enough to stay under five figures permanently.  Our total non-mortgage debt paid off since June 2007 is now 72.48% (up from 70.4% at last update).

Making two payments in the same month is going to advance my next due date to February instead of January, but that’s okay.  I think it won’t make much difference as far as interest accruing on the principal in the long run, and I am hoping to be able to knock this debt out completely as fast as possible.  Which may mean the end of 2009, but maybe sooner depending on how things go on the income vs expenses front.

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The reality of having paid off my spouse’s student loan is setting in.  When I started making up my list of November’s bills and allocating them to paychecks, I didn’t have to include my spouse’s student loan.  When I was calculating the total amount left of our non-mortgage debts, I only had to add two together instead of three.  I was barely used to only having to add up three instead of four!

This paying off debt thing is addicting.   I may have to seriously revisit the idea of paying ahead on our mortgage once we are down to just mortgage debt and see if that would make sense for us.  I don’t think we can knock out a $100K+ mortgage in this short a time, and we have other savings goals that I think might be higher in priority, but the idea of trying to knock it down a bunch is tempting.

With that, I paid the minimum payments to my student loan and the car loan this past week, which is all we had left in the budget for debt reduction this month after knocking out the spouse student loan.   The numbers now look like this:

Debt at start of blog (6/19/07) : $36,451.71

Current total as of 10/21/08: $12,175.07

Principal paid to date $24,276.64

Broken down into:

• Credit Card: PAID OFF 2/7/08

• Student loan (at 7%): $11,025.19

• Spouse student loan (at 9%): PAID OFF 10/7/08

• Car loan (at 4%): $1149.88

NCN Network Chart:  66.6% of debt paid off

The goal is to find enough money by November 20th to pay off the car loan in its entirety.  Although I still lean towards my student loan first (probably because it is, after all, my student loan, and I am sick and tired of more than half my minimum payment every month going towards interest) I do see the benefit of creating increased flexibility by knocking out the smaller balance.  It will cost us an extra $6-7 in interest over the course of the rest of the payments doing it in the opposite order, but I am okay with that.

We have $437.59 in our debt snowball, freed up by paying off the credit card and spouse student loan.  Add that to the minimum payment on the car loan ($228.32), that’s $665.91.  We’ll need approximately $1154 to pay off the car loan, so that leaves $488.09 more we’ll have to come up with through snowflaking alternative income (blog revenue, survey payments, tutoring, and other miscellaneous things).  I think I will try and add a few extra tutoring hours in the next few weeks to add to that, and we may be able to knock out the car loan next month.  Now that I break down all the math, it seems more likely.  The power of that growing debt snowball.

As for my student loan, that will be a little while longer.  But once the car payment is gone, the entire budgeted $810.41 a month for debt repayment will go directly to my student loan.  Add on to that snowflakes of alternative income, and I am starting to feel pretty excited by the whole thing.  My spouse still owes me $7 for deviating from my highest-interest payment plan though.  I think he needs to sell something. 

And then we need to start saving for a new-to-us car so that once one of ours gives up, we don’t go back into debt.  :)  But for now, on to next week!

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Well, my spouse’s student loan, anyway.

October is a three paycheck month for both my spouse and I (I get paid at taekwondo on the same schedule my spouse gets paid at his job).  Since I budget on a monthly basis based on two paychecks for each of us,  in the two months a year we get three paychecks I treat those as an extra paycheck each.  So instead of incorporating them into our budget, I use them to further our financial goals. My spouse got three paychecks in April, but that was the month our furnace died, so instead of that extra paycheck going towards debt, it went towards a new furnace.

I treat the first paycheck of the three-paycheck month as the extra one, so it shifts us into handling future months better.  So on October 3rd we each got our “extra” paycheck.  I sat on them at first, moving them into savings and thinking about what I was going to do.  Then I decided I was going to be crazy and go ahead and do a big thing.  I moved the money back into checking, added that to our budgeted minimum payment for my spouse’s student loan, and added all the money I’d saved to snowflake in the past month.   I was going to pay off my spouse’s student loan.  It was kind of crazy to do so right this second, because my spouse is out of town this week on business, and it wouldn’t hurt anything to wait a few weeks and be sure.  But I am crazy like that, so this morning, I logged into Sallie Mae and authorized the payment to pay off the student loan in full.

When I logged in and looked at the 10-day payoff number, it said $2601.54, so I clicked on the “Make A Payment” button on the dropdown menu to make that payment.  But on that page, it told me the 4-day payoff was $2599.76.  So that is what I authorized to pay.  $2599.76.  I know it isn’t official yet because it takes a day or two to process, but it feels official.  One student loan - gone.  One more student loan and a little bit of a car loan to go.   Things will be very tightly controlled, money wise, the next two weeks until we get paid again because this was a big stretch to do even with the extra paychecks and the snowflake money, but if something comes up for my spouse in California (where he is on business this week) we do still have the $1000 emergency fund to fall back on.  I’m reasonably confident it won’t come down to that, but just in case.

With that, here’s what the numbers look like:

• Debt at start of blog (6/19/07) : $36,451.71
• Current total as of 10/07/08: $12,458.06
• Principal paid to date $23,993.65
• Broken down into:
  • Credit Card: PAID OFF 2/7/08
  • Student loan (at 7%): $11,084.68
  • Spouse student loan(at 9%): PAID OFF 10/7/08
  • Car loan(at 4%): $1373.38
• % of debt paid off according to NCN Network Chart: 65.82%

So next month, that’s $437.59 ($200 credit card budgeted minimum and $237.59 student loan minimum) that I used to be paying to my spouse’s student loan that gets snowballed into the next target debt payment.  Which debt that target is, is still under discussion, but I can hardly wait to make things happen. 

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This past week, all I did directly towards reducing our debt was made my monthly car payment.  That dropped our debt total about $200, and the numbers in summary stand as such:

• Debt at start of blog (6/19/07) : $36,451.71
• Current total as of 09/23/08: $15,037.21
• Principal paid to date $21,414.50
• Broken down into:
  • Credit Card: PAID OFF 2/7/08
  • Student loan (at 7%): $11,084.68
  • Spouse student loan(at 9%): $2579.15
  • Car loan (at 4%): $1373.38 (made $228.32 minimum payment this week)
• NCN Network Chart % debt paid off:  58.75%

So things are slowly progressing.  As far as money saved in my snowflake account to be applied to my spouse’s student loan next month, I currently only have $62, mostly from survey-taking payouts.  This is because all of my taekwondo income this month is being diverted to pay for an instructor seminar I am attending at the end of October.  I had started saving for this, but I was planning on attending next October instead of this one.  But my spouse thinks he’ll manage with the kids for 3 days on his own, and it would be better for me to attend this year because not having this particular certification is holding my earning potential back.   It will affect the debt reduction in the short term next month but next month is also my spouse’s 3 paycheck month so it should all even out.  I will have tutoring income and blog income to add to my snowflake fund before I make our next student loan payment in October.

A question has come up in comments about our future debt elimination strategy and I wanted to address it.    Once my spouse’s student loan is paid off (which I am hoping happens in November), there is a big divide between the balance of the car loan and the balance of my student loan, so will we go interest order or balance order for the remainder?  In December, most likely just applying the $437.59 we have budgeted in our debt snowball every month for my spouse’s student loan to the car loan might completely knock it out.  But I am going to do my best to resist that urge and apply it to my own student loan.  Why?  Because the 4% interest we pay on the car loan is much less than the 7% we pay on my student loan.

My spouse wants to quick one-two punch of eliminating two debts before 2009.  Of course, he’s also less emotionally bothered by my student loan.  So, I may lose this fight.  We’ll see.  Either way, good things will happen, and the car loan is scheduled to be completed in March anyhow.  And I would love to knock my student loan balance down to four figures by 2009.

So on to next week, at which I will not have made any more debt payments but hopefully I will have collected a few more snowflakes.  And since it will be the last day of the month, I should have an idea if I have any budget snowflakes to add to my debt-destroying snowball.

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