I’ve Paid For This Twice Already…

Archive for the ‘NCN Charts’ Category

This week I started rebuilding the student loan payoff fund, which I emptied out last week to make the first significant overpayment on the student loan. I am happy to report that the overpayment did go directly to principal as indicated, and the spouse’s student loan is in danger of being a four figure debt versus a five figure debt very soon. With that, let’s look at this week’s numbers:

• Debt at start of blog (6/19/07) : $36,451.71
• Current total as of 03/18/08: $24,846.25
• Principal paid to date $11,388.48
• Broken down into:
  • Student loan: $11,550.22
  • Spouse student loan: $10,596.32
  • Car loan: $2699.71 (made $228.32 min payment)
• Student loan payoff fund balance: $116.00
• % debt paid off (NCN Network Chart) : 31.84 (last week 31.24)

I’ve started a new category for these tell all posts with the balance of the payoff fund. Once the balance goes over $500, or when I make a monthly budgeted minimum payment of $437.59, I will take the money out of the payoff account and pay it to the student loan as well. Until then, it builds up as a backup emergency fund of sorts. I received $116 in survey payouts, survey referrals, and blog revenue in the past week which was put into the payoff account.

The only other payments I made this past week was the minimum payment to the auto loan of $228.32, dropping that balance down to $2699.71. The nice thing about that debt (if you can say anything nice about debt) is because the interest rate is so low (4%) most of my payment every month goes directly to principal. That should be paid off next March with the minimum payments alone.

I’ve been tutoring and taking some surveys and working on the blogs and also developing another income stream that I’ll discuss next week when everything is finalized, and hopefully we will continue to be able to take big chunks out of our debt! I don’t know if anything new will happen between this week and next week but there always seems to be something popping up, the more random plans I make the more results appear.

This past weekend, I started Phase 2 of my Sallie Mae Accelerated Repayment Plan (SMARP) by making the first significant overpayment to my spouse’s student loan. I’ll be on Phase 2 for a while because Phase 3 is looking at the payoff amount and paying it all off, which won’t come for a little while yet. Because that’s my only truly exciting news, let’s just get right to the numbers:

• Debt at start of blog (6/19/07) : $36,451.71
• Current total as of 03/10/08: $25,066.25
• Principal paid to date $11,168.48

• Broken down into:

• Student loan: $11,550.22 (made $144.50 minimum payment)
• Spouse student loan: $10,596.32 (made payment of $1015.31)
• Car loan: $2919.71

• % Debt paid off according to NCN Network Chart: 31.24% (last week 28.42%)

In addition to making the minimum payment to my student loan this week, I paid $1015.31 to my spouse’s student loan, which included his $237.59 minimum payment, the $200 in our debt snowball carried over from the credit card, and $577.72 in other snowflaking money. I only had about $300 in other snowflaking money before the weekend but I received some additional blog revenue and money from taking surveys which increased that amount to the $577.72 I was able to pay. From this point forward, I am going to use $437.59 as the “budgeted minimum” amount for repayment of the student loan so I don’t confuse myself. That’s how the debt snowball works, once one payment is eliminated it gets rolled into the next one, so the minimum payment I will make in any given month before snowflakes is $437.59.

The good news is that making this large of a payment did indeed trigger a screen that asked me if I wanted to advance my due date or apply the extra money directly to principal. It even had apply to principal as the default selection, so maybe Sallie Mae is improving on letting people prepay their loans. I was pleased, and yes, selected apply to principal. I may have been concerned for nothing because the selections explained that if I selected “advance my due date” the money would be applied to accrued interest and then to principal, so in effect it may have done a similar thing. I was wondering where Sallie Mae would hold my money instead of applying to principal, after all. We’ll see. I checked after the payment posted to the account and the overpayment portion was indeed applied to the principal balance.

I’m so excited! And I am very optimistic that in April we will get the principal balance on that student loan down to four figures, if not before. The percentage of debt paid off has now jumped into the 30% range and that feels significant too. It is very very close to 33.33%, or one third paid off. It seems like we were just at one fourth paid off a week or two ago. Be sure to click over and look at the chart, it is so pretty. I am biased though. I love the yellow growing and growing.

It is already March, yikes! Time is just flying by. Because it is March, this Tell All Tuesday will be more of a February wrapup than a weekly report. Not much has changed this week as far as the overall debt front, anyway, so it makes more sense to do a monthly review today.

This month, the difference between our income and our expenses was a positive $394.32. That included moving $921.87 to savings, which brought our emergency fund back up to the $1000 level, as well as receiving our tax return, and paying off both our credit card and the $800 remaining on our car repair.

Of that $394.32, $185 is carried over in our budget for irregular expenses (car repairs, annual expenses) and $100.00 is reserved to purchase some items we need for house maintenance (mulch, a fertilizer spreader, a drill), which leaves $109.32 as our February surplus.

I’m really excited that even in a month where we made some big payments, we managed to have a surplus. That $109.32 is earmarked to go towards the student loan payoff and will be added to the $200.78 already in the student loan payoff account. With the $200 from our budget from our debt snowball assigned to extra student loan payments, the total is slightly over the $500 target for extra loan payments ($510.10) and so will be paid to the student loan as an extra payment this month once my spouse gets paid on Friday. First student loan extra payment – $510.10 this week! Hurrah!

Our emergency fund is back to $1000, and we’re about to make an extra student loan payment to principal. Life feels back on track as far as debt reduction is concerned. Future snowflakes this month will go to our emergency fund to save for my wisdom teeth removal ($150/month until September) and then the student loan payoff account to start collecting the next $500. Next week the NCN Chart % debt paid off will jump up again, and I can’t wait. According to my rough calculations, the paid percentage should jump up into the 30% range. Excellent.

Well, this week has been nothing like I originally had planned. My son brought how the flu from preschool, and it was a houseguest I was NOT happy to see. His illness started Thursday, and by Saturday I was miserably sick as well, and my spouse joined the party Sunday. My daughter just started her run with the flu Tuesday, so we’re not over it yet, but my son and spouse are both well and back to their normal routines. I was unlucky enough to develop a secondary bacterial infection besides, so a trip to urgent care and some antibiotics later, and I am finally beginning to feel better. Not good, but better. I have a weekend of resting as much as possible planned and hopefully by the end of it, my entire family will be well again.

This week showed me how nice it is to generally have your finances in order so that you can largely ignore them for a week with no ill affects. I did have to log into online banking and pay two bills, and write a check for the mortgage, but otherwise, I haven’t done anything. But since I knew about how much money we had before I got ill, and what should be paid, the rest could just wait without me worrying about things bouncing or other problems. I am very grateful for that, because there were a few days where I couldn’t be upright for more than a few minutes without feeling like I was going to collapse.

I hate the flu. Honestly, I hate it. But anyway.

So the net result of this is that the only change in the debt picture this past week is that we paid our car payment. This weekend I need to sort out a number of things and see if we can make a extra student loan payment, or if I just need to move the money into the ING student loan payoff subaccount. I have had about $250 come in in the past week or so from surveys I’d taken, survey referrals, and some other miscellaneous blog-related income, and as soon as I go to the bank to deposit the checks I will determine where to send that money dependent on what else we have to snowflake at that point. We also received our tax refund, and originally I was thinking it could go towards the student loan but in my flu-addled delirium I forgot that we have to bring our emergency fund back up to $1000 from the $450 it is at right now. I should be able to do that but not much else with that money.

So our current numbers:

• Debt at start of blog (6/19/07) : $36,451.71
• Current total as of 02/28/08: $26,094.08
• Principal paid to date $10,140.65
• Broken down into:
  • Credit Card: PAID OFF 2/7/08
  • Student loan: $11,636.71
  • Spouse student loan: $11,537.66
  • Car loan: $2919.71 (paid minimum payment of $228.32)
• Current % of debt paid off according to NCN Network Chart: 28.42% (last week 27.82%)

The car loan, our smallest current debt, has dropped below the $3000 mark so that is very exciting! Its interest rate is only 4% (versus the 9% on spouse’s student loan) which is why we are attacking the student loan next. I’m going to work out some goals for the student loan payoff very soon and start really focusing on how we can get that done with the same intensity as we did the credit card. I want that balance to drop into 4-figure land, and soon!

This past week, the big news is we said bye bye to the car repair bill. It was sort of an… adventure to pay off, but we were finally successful after many phone calls and a trip to the dealership the car was repaired at. My spouse then called that evening to close the line of credit account completely, so the car repair is simply a distant memory now.

This means we are done with credit card debt completely. My spouse is really excited about that fact, I am too but I think it hasn’t sunk in completely. I kind of just started setting my sights on dealing with the next debt in line without reflecting too much on the fact we’ve finally destroyed the credit card debt that has been with us for a good portion of our adult lives. My goal is to get us into a stable and healthy enough financial position that it never comes back.

So, how to do that? Well, we need an emergency fund. As the car repair proved, $1000 is not a large enough emergency fund for the place in life we are now. I knew that, but I was playing the odds and this time, I didn’t beat them. So now we are going to take a multi-layered approach. First, we will have the $1000 emergency fund in our savings account that is linked to our checking account for easy access. Just having the money in a separate account is enough for me to not spend it unless an emergency arises, so it is okay that I have easy access to it. The second layer is going to be the student loan payoff account. I am creating an ING subaccount to save up snowflakes for the student loan payoff. I can’t make tiny payments over and over to Sallie Mae each month, because they are a huge pain to get to credit to principal. But I know myself, and when I don’t have a specific place to put all snowflakes, they tend to get sucked up and disappear. So I am creating the subaccount to hold the snowflakes until I use them. Depending on how fast they accrue, my plan is to, once a month, make a significant overpayment to the student loan. I am hoping I can save up somewhere between $500-$1000 per month for this – which is ambitious and will depend on how much alternative income I generate. My spouse may also get a raise in May which would help too. While that money is accruing every month, that will serve as a backup in case of an emergency. It will vary, so it won’t always be a lot of money, but it will help.

My third layer of emergency preparedness while reducing debt is my “long term” savings account. I put $25/month into that right now, it is earmarked for home improvement items (like a new furnace and new refrigerator, both are 20+ years old) but it serves backup to the emergency fund in a pinch. When the car repair happened it had about $250 in it, and I emptied it out and started over this month. I’m at $25. But every bit helps! And my fourth and final layer of emergency money is my blog account – I save 30% of all revenue to pay my taxes. Over the course of the year that will add up and I can also use that as backup funds, as I did when the car repair happened, I just need to keep track and pay it back. When I make estimated tax payments, that will be reduced, but I end up over-saving a bit in regards to how much tax I actually owe, so there should always be some cushion there.

These measures are still not an adequate emergency fund as far as the long term is concerned, but they are acceptable to me for the short term. Depending on the progress we make on the student loan this year, I may start adjusting the emergency fund upwards as well at the end of the year. Our actual “expenses”, not including snowflake debt repayment (but including minimum payments) are about $2000/month, and eliminating the debt minimum payments would reduce that to about $1400/month (including the mortgage). In the long term, we would like 6 months of expenses saved (so $1400 x 6 or ~$9000), plus another $5000 saved for house-related necessary upgrades and repairs. $14,000 of savings total seems like a huge amount to me, but we can do it! Just, not yet. But at the end of the year, when the warranty on the car’s new engine expires and we start a new winter with a 22 year old furnace, we may start upping the emergency fund to a eventual short term goal of $3000 just in case.

With all that said, here are the numbers for this week:

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

Current total as of 02/14/08: $26,311.06

Principal paid to date $10,140.65

Broken down into:

• Auto Repair: PAID IN FULL 2/14/08

• Credit Card: PAID OFF 2/7/08

• Student loan: $11,636.71

• Spouse student loan: $11,537.66

• Car loan: $3136.69

% paid off according to NCN Network Chart: 27.82%!!!

We are over the 25% mark on debt repayment!! Yay. Super-observant people will notice I didn’t add the car repair payoff amount ($800) to the principal paid number, just took it out of the total debt outstanding number. I did that because the car repair was not part of the original principal debt when I started this blog, and since it actually never technically ended up a “debt”, it is simpler to just make it go away completely than have the principal paid plus amount owed add up to $800 more than the original debt.

Over $10,000 of debt paid off. If we can pay off that much in less than a year, it should be simple to save a $14,000 emergency fund when we put our minds to it, right?

Next target, my spouse’s student loan, which is at 9% interest. I’ve started investigating how to pay that off most efficiently and with maximum benefit to our finances, and I will report back with what I find. Our emergency fund right now is only at ~$450, but according to the IRS schedule, we should get our tax refund back this Friday (we filed electronically last week), and that is enough (our return was accepted and we should get back about $680) to restore our emergency fund to $1000, plus buy a new backup power supply for my spouse’s computer, since that committed power-supply suicide this week. It is always something…