I’ve Paid For This Twice Already…

Archive for the ‘NCN Charts’ Category

Even though our situation has changed greatly since June of 2007 when I started this blog, we have purposely kept many parameters the same in how we deal with our money.  For example, we owe less debt because we’ve paid off the credit card.  However, we’ve kept the debt minimum payment the same amount in our budget each month that it was before the credit card was paid off, and applied that extra $200 that was going to the credit card each month to my spouse’s student loan.    I now consistently earn more money per month than I did in June 2007, but we’ve kept my monthly contribution to the general budget the same as it was in June 2007, and all money above and beyond that goes directly to our snowflake fund to pay off my spouse’s student loan.

We do all this because it is the essence of successfully using the debt snowball and snowflaking together for maximum impact.  The snowball picks up speed (and it has!) as other debts are paid off and those minimum payments rolled into a new debt target.  Snowflaking works when you consistently collect those snowflakes you earn and apply them to your goal (be it debt, savings, investing, or something else) instead of just letting them melt into the general budget.  If you start spending that money in your budget, then you become dependent on it to make your budget.

So, I am trying as hard as I can, and tweaking as much as I can, to keep both these things happening.  We base our budget on the original amount we were earning in June 2007, and we keep all extra earnings above that flowing into our snowflaking fund.  But, I must admit, it is getting harder to do so.  In June, I said one of my reasons for wanting to get out of debt was how tight our budget was and how close our spending vs earning numbers were.  We needed breathing room.  And although I have, in fact, created that breathing room, I’m not allowing us to use it yet so that we can keep making significant progress.  And the reality is, prices on gasoline and food as well as many other things have gone up, and our budget is squealing for mercy.  I sat down today to pay bills and balance everything, and after everything is said and done for the beginning of September, we have about a $59 cushion (above minimum projected gas and food expenses) to last until our next paychecks.  It should be okay, but it makes me nervous.  I went ahead and paid all the snowflakes to the student loan however, because that money becoming part of our budget is a last resort for me.  I’m going to have to reevaluate how much money I contribute to our budget by next year though, and we’ll see.  I might also have to stop snowflaking my spouse’s last raise.

Here are our current numbers as of today, after paying my minimum student loan payment and applying the minimum plus snowflakes to my spouse’s student loan:

• Debt at start of blog (6/19/07) : $36,451.71
• Current total as of 09/09/08: $15,260.46
• Principal paid to date: $21,191.25
• Broken down into:
  • Credit Card: PAID OFF 2/7/08
  • Student loan (at 7%): $11,084.68 (paid $144.50 today)
  • Spouse student loan (at 9%): $2579.15  (paid $1131.41 today)
  • Car loan (at 4%): $1596.63
• NCN Network Chart percentage of debt paid:  58.14%

The spouse student loan payment was $437.59 budgeted minimum plus $693.82 snowflake amount that included all my earnings from the end of last month and the beginning of this one, minus the $500 I contribute to the budget every month.  I earned less from tutoring because it was summer, so hopefully I can bump that number up a little this month.  We have past the $20,000 mark of debt paid off!  I do not think that we will be able to pay off the student loan by October like I was originally hoping, but we are on track to definitely have it paid off by the end of the year.

On to next week – I’ll pay the car payment and knock the debt down a little bit more.  Is your budget squealing?  Good luck with handling the pinch!

I can’t believe it is September already!  I guess that old saying about how time flies when you are having fun is true after all.  We’re now settling into our fall routine, with my son back in school and my afternoons home with my daughter alone.

This is the interesting budgeting in-between time.  Since we are still living paycheck to paycheck (although we do now have some back-up funds in case of an emergency) when I pay things is mostly dependent on when my spouse gets paid.   On top of that, the debt target right now (my spouse’s student loan) has a lot more conditions and regulations about how to pay extra money towards it.  With our credit card, I just threw an extra payment onto it whenever I earned some extra money.  So there is this in-between time, in-between paychecks and in-between payments when things are somewhat on hold as far as progress goes.  I still earn extra money (about $300 right now waiting to be put towards the student loan) but it sits in our savings account designated for this purpose and waits for the next time I make a student loan payment.  Which won’t be until next week.  So the overall debt payment numbers are the same as the last time I reported them two weeks ago.  Since my spouse (and I) get paid this Friday, that will change this weekend, but not before.

A number of people have asked about the idea of moving the student loan to a credit card with a 0% transfer offer and then pay it off there.  It would make things simpler as far as making extra payments, and it would cut the interest considerably.  However, I haven’t seen a 0% balance transfer offer recently that didn’t have a 3% fee attached for the privilege of transferring the money.  And, we do get a tax break for the interest paid to our student loan, which gives us a little bit back.  Since I am hoping to have the student loan paid off in October (my spouse gets an extra paycheck then and I hoping it will put us over the edge) I am content to leave the loan at Sallie Mae I think.  I have pondered the idea with my own student loan, which is at 7% interest.  To transfer it all would have about $330 in fees (3% of $11,000) but it would probably be worth it as far as interest saved, as long as I can find the right offer.  There are pros and cons, most of them psychological, that I have to consider, but it is an idea that has more than crossed my mind.  The little things do add up, and for example, our overall paid off total has sat at JUST under $20,000 for two weeks now.  If I could pay more easily, I would have paid the extra $8 by now and boosted my morale a little bit.  And that $8 would not be earing interest right now.  There is something to be said for ease of payment.

As far as August as a whole, that went okay.  We overspent on our grocery budget by about $100 this month, and I am pretty sure that this is an increase that is here to stay.  After so much time studying our grocery spending (which I include toiletries, cleaning supplies, over the counter medicines, and other miscellaneous stuff like that) I think that I am going to have to admit some sort of defeat and raise the budget yet again from $80 to something closer to $100 per week.  Silly children who eat and prices that go up every single month.  Otherwise, however, we did stay in our budget by and large, and after carrying forward the money for irregular expenses I save each month, we ended up spending about $200 less than we earned.  So we’re still on target as far as the overall budget goes, and that $200 will be moved to our student loan payoff savings account and added to the payment I make next week.

On to September!  This month:  spouse student loan under $2000.  It shall happen.  And I shall rejoice. 

For those new to my blog, every Tuesday I write a feature called “Tell All Tuesday”, where I go through the progress we’ve made that week on reducing and eventually eliminating our debt.  I talk about the different payments we’ve made, and some of the different savings and alternative income I’ve come up with to generate those payments.  With being sick last week, and then my kids being sick this weekend (I like to share, what can I say) I haven’t had a lot of time to sit down and look at the budget and our debt payments.  This weekend, I managed to do all the number crunching so that I knew how much I could send to debt this month, but I didn’t get a chance to sit down and write it all down until now.  So welcome to Tell All Tuesday… on Thursday.  At least it is still alliterative. 

This past month, we got an expected windfall of sorts, the rebate for our new furnace came from our utility company.  I knew we were getting a $270 rebate for installing an energy-efficient furnace, but I didn’t know how long it would take.   It came at the end of July, so that got to boost our debt payments up a bit more for August.  I had planned all along to apply the rebate to my spouse’s student loan debt, and so I did.  The state of our debt this week looks like:

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

Current total as of 08/20/08: $16,458.76

Principal paid to date $19,992.95

Broken down into:

• Credit Card: PAID OFF 2/7/08

• Student loan (at 7%): $11,175.54 (paid $144.50 minimum)

• Spouse student loan (at 9%): $3686.59 (paid $1288.47)

• Car loan (at 4%): $1596.63 (paid $228.32 minimum)

NCN Network Chart:  54.85% of total debt paid off since start of blog.

That principal paid is ever so close to $20,000!!  That is simply astounding to me.  Twenty thousand dollars.  That would be a pretty nice new-to-me car.  Yikes.  My spouse’s student loan has the highest interest, so our snowflakes all go there right now.  Besides the budgeted minim of $437.59, I paid our furnace rebate to that debt, as well as money from taking surveys, money this blog earned through advertising, money I made tutoring, and some of my taekwondo income.  Overall, we have been able to consistently pay between $1000 and $1500 total every month to that debt, and I am hopeful that if we can continue that for 4 more months, we will have that debt completely paid off before the end of the year.

The debate here right now is funding Christmas.  My spouse is paid bi-weekly, so there are 2 months a year he gets 3 paychecks instead of two.  In the past, we have used the one that comes near the end of the year to pay for all things Christmas.  This year, however, we’d like to try and pay the majority of that paycheck towards debt (his 3 paycheck month is October).  But then we’d have to use my alternative income in November to pay for Christmas, because we haven’t saved money for Christmas gifts.  So it kind of amounts to the same thing.  But if the October paycheck could push us over the edge to having the student loan paid off in October… well, that would be tempting.  So, we’ll see.  the “better” plan would have been to save up for Christmas gifts but – we chose not to do that because we knew we’d have some options.  We’d rather have reduced our debt load now and deal with Christmas later.  Scrooge, I am. 

Late last week I made our car loan payment for this month, and with that, passed the 50% mark for paying off the non-mortgage debt we had as of June 2007.  That June was a landmark turning point for me, for I started this blog, and with that started seriously keeping track of how much debt we had, our progress we made towards paying it off.  At that time, we owed just shy of $36,500 split between a credit card, two student loans, and a car loan.  Then, my aim was just to get out of debt – I had no real aim or plan for staying out of debt after that.  It was enough for me just to aim at a life where this $36K+ was paid off and I could start from zero.

Now, a little more than a year later, we’ve passed the halfway point to that goal.  We’ve paid off over $18,000 in debt, including all of our credit card debt and the majority of my spouse’s student loan debt.  But instead of just setting my sights on paying off our current debt as the endpoint, I’ve expanded my goals to come up with and implement a plan for staying out of debt in the future – paying cash for cars, home improvements, and eventually paying off our home as well.  Hand in hand with that is a savings plan to provide for our family in good times and bad.

This journey has done more than help us to get out of debt.  It has made us more financially aware.  And that gives us the tools to make positive progress not just on debt elimination, but into the future.  Our lives past debt are looking pretty good.

With that, here is the summary of our progress so far:

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

Current total as of 07/21/08: $18,007.78

Principal paid to date $18,443.93

For the first time, the principal paid to date exceeds the current total remaining.   Our NCN Network Chart shows 50.4% of debt paid off.  And with that, I refocus for the push to the finish line – I think we can beat that 13 month halfway mark. 

As I write this, it is still barely Tuesday, although it’ll already be Wednesday by the time most of you read it.  Earlier this afternoon, I made the minimum payment of $144.50 to my student loan, and a $1800 payment to my spouse’s student loan, to bring our percent of total debt eliminated since June 2007 to 49.99%.  I probably could not be closer to 50% eliminated if I had tried.  I knew it would be close, so I pored over our budget sheet and squeezed everything I could everywhere I could to put the maximum amount towards that loan this month.  I don’t at all feel like we fell short, for later this week I will make our car loan payment, which will firmly push us into 50% paid off territory. 

I was able to squeeze some extra money out of our budget because I have a small cushion in our emergency fund, so if I’ve underestimated our expenses for the rest of the month, I know I have access to money to cover it.  We’ve been fortunate enough to be able to put the vast majority of the income I earn solely to debt elimination, and come closer and closer to actually being able to live on just my spouse’s salary, which is our ultimate goal.  Not that I intend on not earning money in the future, but we want to be able to completely meet our budget just with my spouse’s salary so we have more flexibility.

The numbers break down as follows:

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

Current total as of 07/15/08: $18,229.39

Principal paid to date: $18,222.32

Broken down into:

• Credit Card: PAID OFF 2/7/08

• Student loan (at 7%): $11,253.14 (made minimum$144.50 payment)

• Spouse student loan (at 9%): $4936.46 (made $1800 payment, including $437.59 budgeted minimum)

• Car loan (at 4%): $2039.79

NCN Network Chart:  49.99% paid off

Crossing that 50% threshold officially will feel, well, amazing I think.  I am already tingly thinking about it.  I might have to buzz by the bank Wednesday morning and drop off my payment.