I’ve Paid For This Twice Already…

Archive for the ‘numbers’ Category

Not the entire debt total - that would be incredible and I would be throwing a (frugal) party - but this week the spouse’s student loan total crossed the four figure mark. It’s amazing - I never considered before I started this blog that we’d ever get to the point of paying off the student loans early. But with my new part-time position as well as the other things I have been doing to earn snowflakes, we are making huge progress on my spouse’s student loan and I hope to have it completely paid off this year. Even with the new position that is a bit of a stretch right now based on our current pace, but it is definitely much more possible than I ever thought it was.

So on to this week’s numbers:

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

Current total as of 04/05/08: $23,555.86

Principal paid to date: $12,895.85

Broken down into:

• Credit Card: PAID OFF 2/7/08

• Student loan: $11,467.76 (made $144.50 minimum payment)

• Spouse student loan: $9388.39 (made $1281.54 payment)

• Car loan: $2699.71

% of debt paid off (from NCN Network Chart) : 35.38% (last week 31.84%).

I’ve had a kind of weird side effect to starting on the student loans - I am having pangs of jealousy about the fact that my spouse’s student loans are disappearing and mine are basically standing still. It is a totally irrational feeling - we chose this order together based on interest rates, but still I have the feeling. I told my spouse about it and he said we can switch to my student loan but then he doesn’t want to hear me complaining that we’re wasting money on interest. We are going to stay the course and pay them off in interest-rate order, but now I know what it feels like to attack a debt that isn’t really your most hated one left.

Our percentage paid off is now a bit over 35%, and I loved the new graph so much I printed it out and put it on my desk. There is just so much yellow (paid off)! The graphic is really starting to feel motivating.

One side effect of putting the snowflaking money into a separate account to collect it and then using it all at once a single time a month, is that I start to forget where the money came from in the first place by the time I use it to pay down debt. I could look it up on our budget sheet under income and figure it out, but I am semi-lazy. I know this $1281.54 payment is a combination of my new position, blogging, MySurvey payouts, and maybe some other miscellaneous survey sites, as well as our $437.59 budgeted minimum. Oh, and the $0.11 in interest the money that was waiting in the savings account earned last month. If we can continue to make ~$1300 payments each month, we should be able to knock the spouse student loan debt out by December. Onward and upward!

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March was an interesting month. This is the first month since my contracting position ended abruptly in October that we got completely back on track with diverting all of the blogging and other “alternative” income, save tutoring, solely to debt reduction. In November and December, that income had to fill the gap left by the contracting position, and then in January and February it was diverted in part or in whole to the car repairs. In March, only my spouse’s salary and my tutoring income were put into our budget to meet expenses, while all other income was snowflaked to my spouse’s student loan or put into the student loan payoff savings fund to snowflake in April. Which had an interesting result:

• All sources of inflow exceeded all sources of outflow (including money to savings or snowflaking) by $289.72.
• We need to carry over $201.45 for irregular expenses into April.
• That leaves a $88.27 surplus, it seems.

However, that inflow includes a $100 check I received yesterday for my birthday from my parents. That is going to be moved to a savings account until I decide what I want to do with it (in the spirit of giving myself wiggle room) so in fact, we’re actually $11.73 away from having a balanced budget this month. Which honestly, is better than I expected. I wasn’t able to tutor as much in February as I did in January and only earned ~$400 instead of $600. Since the budget depends on me bringing in $500/month to contribute to the budget to be able to have enough to carry over month to month for irregular expenses, the fact that it didn’t balance is not surprising, and only came so close because I was able to really cut back some other categories, especially the miscellaneous one. We did spend less than we earned, but we don’t have quite enough left over to cover what we need to save in our irregular categories. So we’ll have to save an additional $11.73 in April for irregular expenses.

We’ll be in the same position in April as we were in March, I again only earned about $400 from tutoring, so I may have to divert $100 of the taekwondo income to our budget. Since taekwondo is what is causing me to be able to tutor less than I was, it is the obvious place to make up the budget shortfall.

As far as the debt reduction front, I was able to transfer $98.48 to the student loan payoff fund, which brings the total in that fund to $214.48. Since it is the beginning of the month, I will be receiving payouts for different blog-related revenue this week, so I am hoping to be able to make another $1000 payment to the student loan next week (budgeted minimum of $437.59 plus ~$550-600 of alternative income). That will bring the student loan total to a 4 figure number. Hurrah!

Looking ahead, we should receive our economic stimulus check in the first half of May, and May is also one of my spouse’s two “three paycheck” months. Since I will be bringing in taekwondo income at that point as well, I am cautiously optimistic that we may be able to pay $4000 towards the student loan that month. That would put a huge dent in that debt and bring us a whole lot closer to being able to focus on our other financial goals. It is almost scary for me to even think too hard about being able to make that happen. But first, we will enjoy April.

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As I shared yesterday, I am starting a new position today running a taekwondo school that my head instructor owns. Since that has the potential to have a huge impact on our finances (and should have, for us, a pretty big effect right from the start regardless) instead of going through the debt repayment progress for this week (which there has actually not been any) I thought I would talk more about the financial impact of my new position and some new goals for our debt payoff scenario because of it.

Generally, after taxes I should be earning a base of about $400 per month right now for teaching at the new location and generally keeping the school neat and clean. That is because the school is only open 3 days a week for a few hours a day right now, because there are only a few students (the school has only been open for about a month). As I recruit new students, we’ll expand the hours as well as the number of classes, so that base will go up. I am also paid on an incentive structure for meeting a number of goals, the biggest of those is to bring in new students. I am provided with flyers and other forms of advertisement, I just have to put in the time to try and advertise the school and recruit students. At a conservative estimate, if I meet my baseline goals, I should earn at least $200 more a month after taxes from that. I am hoping to far exceed those goals but for now I am going to use a monthly salary of $600/month for my debt repayment calculations. Right now, all of that income will be earmarked to debt reduction. If, in the future, I need to stop tutoring because of time demands, I will have to reallocate some of that money into our general budget (our budget depends on me bringing in $500/month right now and I meet that primarily through my tutoring income) but if that happens, I should be earning more from taekwondo than these estimates. So I am going to leave the goal calculations at an additional $600/month for debt snowflaking from this position.

Using the snowball calculator, I calculated the effect of paying $1600/month to debt ($810.41 snowball minimum, an additional ~$190 from other sources, and $600 from this position). I did try to import the pretty chart but I am useless at those types of things, so I’ll just go over the major highlights:

• My spouse’s student loan should be paid off by December 2008. His projected payoff date right now by Sallie Mae paying only minimums is 03/19/2013, so that would be almost 4 1/2 years ahead of schedule.
• My student loan would be paid off in August 2009 (Sallie Mae projects 6/16/2017, so that would be about 8 years ahead of schedule).
• The car loan would be paid off on schedule in March 2009.

This would put us in a position to spend the rest of 2009 and 2010, which were to be more debt reduction years, to aggressively save a 6 month emergency fund, bump up retirement savings, and start saving for two new (to us) cars for when ours kick the bucket.

I of course do not know how the position will work out yet, and if I will be successful at the growing of the school part, but I have confidence that I can do it. I am going to wait to formally revise our goals until at least midyear, because I want to see the reality of our income situation before I do so, and tutoring is also a factor - I won’t be tutoring much in the summer when it is slow, and money from other sources will have to be reallocated to continue meeting our budget. But I am pretty hopeful that we will make a large amount of progress, and I *really* want to have my spouse’s student loan paid off this year. But the future from here is looking rather bright.

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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.

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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.

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