Yesterday when I posted my latest post, I was reminded of all the things that frustrate me about blogging – the technological side. I’ll be the first to admit that technology has far outpaced me – when I was a kid with my Commodore 64 I was cutting edge (really!) but as things have become more complicated I have somehow become… less so. I posted that post originally at about 1:30 pm, and when it posted it went from the nice, ordered thing I had created with formatting and spacing to a big blob of type that had no form, rhyme or reason. After almost 3 hours of tinkering, re-editing, and basically pulling my hair out, I finally got it to behave. Losing a comment in the process by mistake.
Ah, computer technology. How you thwart me so.
Luckily, I found paying down my student loan this month not as complex. After starting with four debts 2 years ago – a credit card, a car loan, and two student loans (one for me and one for my spouse), we’re down to just my student loan. After paying $800 towards it this month (and $1000 last month) it is down to $5392.09. A far cry from the over $12000 it was at two years ago.
This means we’ve paid off a little over $31000 of our debt as it stood in June 2007. Our total percentage of debt paid off is now 85.21%, which means we only have ~15% to go!
To pay that off by the end of the year, with only 3 months of payments left, we’d have to average almost $1800 a month in payments, which unless some crazy economic thing happens to shower money upon us, is not going to happen. But, paying half that each month, or about $900, may indeed be doable. Paying off the student loan by March 2010 doesn’t sound too bad to me.
Of course, something could happen to derail that – but for today I am an optimist, and I’l got this thing in my sights. No more Ms. Nice Gal. or something.
And now to see if posting deletes all my formatting…. Heh.
Today is my son’s fifth birthday. To celebrate my mom came to visit from the east coast, and we had cake, a few presents, and fun with family. My son said it was the best day ever. I hope that he continues to enjoy the simple things in life for years to come. And I kept my house from being overwhelmed with a huge crop of new toys, selecting things that matter and will last over a lot of little trinkets. A win-win for me!
For newer readers of the blog, Tell All Tuesday is where I recap what’s changed as far as our debt situation since the last update. I used to do it every Tuesday, or close to it, but once I got down to the student loan, I can only make payments to it once a month without them advancing my due dates, and I want everything that possibly can be applied directly to principal, so I only make a payment once a month. So Tell All Tuesday has become more of a monthly affair. But, hey, today is still Tuesday.
Since last month, we got an unexpected refund of part of our escrow account because our property taxes have gone down. That added to the budgeted amount we pay monthly to the student loan was almost $1500, so I rounded up to make it even. When looking at my actual amount owed on the loan, I wanted to bump it up even more to cross another thousand milestone, but we weren’t able to do that this month, so we still owe just over $7000, to be exact, $7097.86. That payment put us at having paid off 80.53% of the total non-mortgage debt amount we owed (credit card, 2 student loans and car loan) two years ago, when I started this blog in June of 2007. Less than 20% to go!
The home stretch has taken longer in some ways than some of the middle steps did – it seemed we ran into a streak of good luck for a while and were able to make a lot of progress, and then hit some harder times where our progress has somewhat stalled. But it is still moving forward, even with the adjustments we’ve made to saving a bit more preemptively against needing a new-to-us car or any financial setbacks on the work front. And although $7000 still seems like a whole lot to me, paying off 80% of the original ~$36000 in two years makes the final 20% seem more than achievable. Our current amount paid off is now $29353.85, and my goal is to not only knock the student loan under $7000 next month (which would happen with even our minimum payment), but to knock that paid off number up to over $30000. Our budgeted amount (due to the change in our mortgage payment) is $543.66, so I’ll only have to snowflake at a minimum about another $150. We can tighten our belts more than we have been, and we can make this happen. And from there it seems all downhill… that works for me.
No huge changes here this month – we’ve started more aggressively paying down our student loan and putting the new-to-us car idea as a secondary goal. Since we have two cars, and we don’t drive that much compared to the “average” driver (less than 10000 and closer to 5000 miles per year for each car, generally), we’ve decided that even if one of them does something drastic, we’ll have options to consider before having to make a decision. So the bigger share of our $800 snowball goes to the debt ($500) and the lesser share to the car fund. For now.
I made the $500 payment to the student loan this week, bringing the total of that debt to $8529.00. This brings the total amount we’ve paid off since June 2007 to $27922.71, which means we have paid off 76.6% of our original debt, illustrated on my NCN Network Chart. I am hoping to send a little more to the student loan this month as well, but that will depend on how many hours I tutor and teach taekwondo – the economic slump cuts into those some. Holding the emergency fund steady at $2500 is my main goal for the month and that looks like it is definitely possible, but hopefully a bit of snowflaking can happen as well. Goal for June: Under $8000!
In other news, we went bowling through the Kids Bowl Free program I mentioned, and at least here, it is not a scam, it was really free, all the shoe rentals were free (we bought the family pass for my spouse and I to bowl) and we had a lot of fun. And we’re doing it again tomorrow. After which I will share some news about Capital One I received today. I think we have a decision to make about them, even though we don’t owe them anything.
This month marked a psychological victory of the small (but good) kind. My student loan now stands at $8996.18, which means it is under another milestone number. Barely under $9000, but under it is and I take any victories I can get! To accomplish this, we paid $400 towards the student loan this month instead of $300. Since we are upping that starting in May to a minimum of $500 per month, this was practice, in a way. Since the student loan is our last remaining non-mortgage debt, that is also the remaining amount of our original $36451.71 debt, which means that 75.32% has been paid off since June of 2007. A lot more than I ever imagined accomplishing in two years – and June 2009 isn’t even here yet.
I’ve set up an automatic withdrawal to our “new to us car” fund for $300/month starting in mid-May. This fund will basically double as a backup emergency fund if the $2500 we have saved (well, will have saved by tomorrow when my spouse gets paid and I top it up to that) isn’t enough for some kind of major emergency, but I am hoping it can continue to grow and serve the purpose I have assigned it. The 1996 Toyota is still going strong at 205K miles, and the 2001 Saturn, at just over 100K, is behaving for the moment. For the moment being the operative word, but I am hopeful, since we do not drive them very much compared to the average consumer, they will both hold up for at least the remainder of the year. Or even for 2010 and 2011! Heh. A girl can dream.
Debt down, savings up – April turned out to be a decent month. On to May, with no predictions… predictions seem to be my downfall in 2009. The debt will be conquered yet!
When we originally started seriously getting out of debt, we set our emergency fund at $1000 kind of arbitrarily. There was a reason specific to our family – I had had about $1000 for the past two years in our savings account and it was usually enough to bail us out of any problems, but mostly, it was honestly because I’d heard that number thrown around so much (thanks to Dave Ramsey) that we chose it.
When $1000 was serving us as a default emergency fund in the two years prior to this blog, our family and home situation was quite different than it is now. We had one child and we rented an apartment. Now we have two children and we own a home, which adds its own set of challenges. Several times in the past two years we’ve been hit by unexpected situations that the $1000 wasn’t enough to cover (new furnace, replacing car engine), and a few other times we’ve completely emptied the fund to meet the challenge of an emergency (when my dad passed away, different car repairs, home repairs).
So we made the decision for 2009 to raise the emergency fund to $2500. I naively thought that wouldn’t be too difficult – it hadn’t taken too long to get to $1000 and when we’d had to use it we’d built it up again quickly. But almost like the world was challenging us, increasing to $2500 has been full of setbacks. Not only in draining the emergency fund when emergencies have happened, but also having to divert money that would go towards the emergency fund to pay for things that have come up (most recently, taxes that I’d underestimated, and a repair to our front porch which had a rotted-out post so the roof would not start to sag.) And with the worsening of the economy, we’ve had income setbacks – I am earning less than I was a year ago with my different freelance efforts, and my spouse’s salary has been frozen for the forseeable future.
We’ve been able to maintain the status quo without going into more debt, for which I am thankful. And I’m not unhappy or complaining – it is more bemusement. And we forge on! However, my priorities for after the emergency fund have begun to shift. The emergency fund stands at $2200 as of now. Will it stay there? Who knows. But I anticipate being able to reach the desired $2500 in May. At that point, we were going to start saving for a new-to-us car. But I think we’re not, yet.
I started this blog to help us get out of debt. And it has, greatly. I’ve shifted priority in 2009 from eliminating debt to saving money, and I’ve come to the realization that it is time to shift it back. We’re on the home stretch, with one non-mortgage debt remaining of about $9000. Yes, the Saturn could die. Yes, we could need to replace it. That is still true – but at the same time, eliminating our debt is also an important priority and for now, we’re going back to it. Finances is part practical and part psychological – and my brain needs to focus on debt elimination right now for the simple fact it is concrete and in the here and now.
So the student loan will soon come under attack. We’ve been paying $300 a month towards the loan so far in 2009. The rest of our budgeted towards debt repayment amount, at least $500 and sometimes more, has gone to the emergency fund. But now we’re going to flip that. $300 a month will go into our “long term savings” which is a new-to-us car fund right now. And then, $500 or more per month will go towards the student loan. Hopefully more, but that depends on my income earning ability. I’m working on it, though. Viva la snowflakes!
Debt updates and a new timeline next week! I need to play with numbers and work out some scenarios. I know that many of you will find this crazy, and others will find it right on, and that is okay – agreement is optional.
What’s your emergency fund minimum magic number and what factors play into that? What comes next – debt repayment or other priorities?