I’ve Paid For This Twice Already…

Archive for the ‘numbers’ Category

Usually, it is Tell All Tuesday, but I had a dentist appointment yesterday morning that put me in a foul mood for the rest of the day, and I wasn’t feeling quite well on top of that.  So Tell All Wednesday it is!

Generally, the news is good.  Although we are not making progress at the rate we did in 2008, we are still making slow and steady progress at reducing our remaining non-mortgage debt.  I paid my $300 budgeted minimum payment to my student loan this week, which brings the overall balance to $9313.94 (which, since that is the last debt left, is also the amount of our remaining non-mortgage debt).  I also moved $500 into our savings account last week, which brings our emergency fund balance to $1500.  I have a little more than that available that I could put into savings, but we have a repair to one of our porch pillars we need to do next month so I’ve started budgeting extra money that comes in towards that.  I don’t want to pull money out of our emergency fund for something that I know is coming up, but if I put all our available money into savings, that is exactly what I will end up doing.  So it is just being budgeted separately and our porch won’t slide off its foundation this year.  :)  We also owe about $500 in taxes that we’ll have to pay in April, so that is also being saved for separately and is affecting the amount I put into our emergency fund right now.  There is, as many people have observed in life, always something.

Our number one focus right now as far as finances is getting our emergency fund up to $2500. Our goal is to accomplish that by the end of April, which may or may not be doable depending on what else life throws at us in that time.  I’ve kind of come to a sort of peace with that, though.  I’ve been fighting and fighting in my head against the goals I’ve set up for us, and although I still believe in our goals and working to accomplish them, I’ve also realized that sometimes, life just keeps throwing things at you.  It has taught me a bit about being flexible and making decisions based on the big picture.  Our first goal, when I started this blog, was to have all of our non-mortgage debt paid off by December 2010, and even with our series of setbacks and uncertainty, we’re still well able to make that goal.  Obviously, in a perfect world I’d like to accomplish things sooner than that, but we’re taking it one step at a time right now.

I’ve been asked a number of times about our current payoff strategy with my student loan and why we continue to make $300 payments to it when the actual minimum amount due each month is around $145.  And the answer, honestly, is simple - motivation.  Paying double the minimum payment each month is much more motivating to me than paying just the minimum.  And with motivation, I become less discouraged even when we aren’t making the level of progress I’d like.  A lot of this entire debt elimination journey has been learning how to negotiate the balance between what makes the most sense strictly from a numbers standpoint, and what keeps us motivated to keep making progress and continue.  Sometimes those two things have been the same thing.  And sometimes, we’ve made adjustments to keep things going even when we’ve felt discouraged.  It is all a balance, and a learning experience, and to keep my own financial sanity, I make double minimum payments.  We could, of course, stop doing that if we needed to, but for now it is what makes the most overall sense for us.  Motivation.

Don’t let me get started on the financial ramifications of the dental appointment.  Let’s just say a few snowflakes will be flying towards the dentist office this spring as well.  But they did say that my flossing skills have greatly improved. 

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When life throws you curveballs, when all is said and done all you really can do is get back up and start working towards that goal again.  Sometimes it seems like a continuous cycle - save up some money in the emergency fund, have an emergency, empty out emergency fund, rinse and repeat.  But in the end, we’ve been making great progress over the past 2 years towards our ultimate goal of being debt free, and that is what matters.

Our first priority right now is to get our emergency fund to $2500.  With a $250 transfer I made this morning, it is back up to the original $1000.  At the end of the week I get paid, so I may be able to transfer some more money in then.  I don’t know if we will be able to get it up to the full $2500 by the end of the month, but looking at my projected income for this month I am cautiously optimistic that we will be able to get it to at least $2000, barring any more unforeseen emergencies.

Our next priority is to save $10000 for a new-to-us vehicle.  Our primary vehicle has shown itself to be less than reliable, and we would like to be able to replace it without incurring additional debt, were it to have any more serious problems.   We will not start saving for this until we get the emergency fund to $2500, so it still stands at $0 right now.  This fund will also double as a backup emergency fund in the case of a very expensive emergency, but it will remain earmarked for use to purchase a new-to-us vehicle.

Our final current financial priority is to pay off our remaining non-mortgage debt, my student loan.  I made a $300 payment to this today, which is double the actual minimum, and what we’ve decided to pay to it each month until we complete the above two savings priorities (or we change the order of the priorities).   This brings the current balance owed on the loan to $9553.46.  This means that according to my NCN Network chart, we have paid off 73.79% of the total non-mortgage debt we had as of June 2007.

Nothing exciting or earth shattering happened this week, and at this point, I consider that a good thing!   I am considering re-prioritizing the student loan above saving for a new-to-us car, but I think that might be just because the Saturn has behaved for the last month.  We’ll see.  I get antsy about the debt still hanging over our head and unwilling to let it just sit with me for too long.

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So I drew that line in the sand and basically restarted my entire budget and tracking of spending as of February 1st.  I’d say I was getting back on track, but the track feels so far away right now that I have to find it first.  The past few weeks have been emotionally draining ones, and although I haven’t been spending money willy nilly or anything, between the plane ticket, flowers for the funeral, food while I was gone, and other associated travel/trip expenses, I spent most of our $1000 emergency fund.

But now I am back, and slowly becoming reacquainted with life here at home.  I figured out where we stand as far as our current financial picture, and we’re moving forward.  I put $750 back into our emergency fund, and our goal is still to have $2500 there, so I will be prioritizing all of our snowflaking efforts towards growing that as quickly as possible.  Since I was away for a week and didn’t work as much the next week as I usually do, my earnings for January were much less than they have been, so I fell short of my goal to have $1500 from January to put into the emergency fund and had to settle for $750.  Since I took everything out of the emergency fund for my trip, that puts the current total at $750, which is $1750 shy of our $2500 goal.

After our emergency fund is at $2500, the next priority remains to build our savings for a new (to us) car to $10000, and then pay off the last remaining non-mortgage debt, the student loan, as quickly as possible.  Since we haven’t completed the new emergency fund target yet, we haven’t made any progress thus far towards these two goals.  I paid $300 towards my student loan last month and will do the same this month, which is slightly more than double the minimum payment.  After the emergency fund is at $2500, all snowflakes will go towards building the new (to us) car fund as quickly as possible.

Next week I will have made the student loan payment, so then there will be some debt progress.  Yay!   I am also anxious to do our taxes because I have a fund set aside to pay my self-employment taxes from tutoring and the blog, and if we actually owe less than I have set aside, that will also go into the emergency fund.  I am still waiting on two 1099 forms before I can do that though, but hopefully they will arrive this week.

So in summary:

• Emergency Fund:  $750 (goal $2500) February target
• New to us car fund:  $0  (goal $10000)
• Student loan:  $9875 (goal $0)

On to February!  I am looking forward to resetting and just getting back into things.  Everything still feels so disconnected right now and I’d like to start to actually care about my financial goals again.  Baby steps.

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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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