I’ve Paid For This Twice Already…

Archive for the ‘numbers’ Category

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. 

June seems, looking at my budget sheet, like it is the month of being in the red.  We actually didn’t end up in the red for the month – we still spent less than we earned – but we have slightly less left at the end for debt reduction than I forecasted based on my snowflake earnings.   Two columns in my budget are significantly in the red – the groceries and gasoline.  The price of gasoline just keeps going up so I know why that is, but I was surprised by the groceries.  it always seemed like I was coming in very close to budget every week so how could I have spent $124 more this month than I budgeted?  When digging into the numbers, I figured it out – I did go spend $30 on a huge chicken sale, which was part of it, but the other culprits were my medical procedures, and in the case of my wisdom teeth, not planning well in advance.  First I had my wisdom teeth out, and instead of planning ahead and buying myself soft foods for after, I sent my spouse out to get me things, and he spent a lot more than I bargained for.  I’m not at all irritated by his doing so – I should have bought in advance and planned better.  Then, for my colonoscopy, I had to buy several medications beforehand and I bought them out of my grocery budget because they were over the counter medicines (over the counter meds come out of my grocery budget usually).  I also bought a number of clear fluids to entertain myself with since that was all I was going to be able to eat for a whole day.  Usually I would just drink water for liquid, so that added some cost.  I didn’t eat any solid food, but I bought a lot of white grape juice and popsicles and vegetable broth.

This doesn’t completely explain being so far over budget but it does explain a good portion of it.  My son’s birthday was also in June and the ice cream and other party supplies for his little celebration also came from the grocery budget, so that’s another factor.  Regardless, July is going to be the month I spend less than my budget on groceries.   Or, failing that, I am going to keep a much tighter reign on the groceries and keep myself as close to budget as possible.  I know the cost of groceries has gone up in general, but I haven’t really sat down and crunched all the numbers to see how much of that is the cause of my overspending last month versus just poor planning.

All in all – taking our June income and subtracting from it everything we spent or moved into savings, we have $533.37 left over as our initial surplus.  Subtract from that $132.50 budgeted for irregular expenses that carries over into next month, and we have $400.87 left as our actual surplus.  I forecasted we should have $439.93 left for snowflaking to the student loan, so I came close but I am disappointed we didn’t hit that mark.   Even with going significantly over budget in groceries and gasoline, we did manage to come close to breaking even, and that is due to both some performance bonuses for me at work as well as our utilities bill being almost $100 under budget.   I am going to take the extra $39 from our July utilities budget, which I also anticipate to be under budget this month, and still apply the full $439.93 to my spouse’s student loan along with our $437.59 budgeted minimum payment in a few weeks.  Hopefully I will have some blog income and survey payouts to add to that and hit my $1000/month goal.

Our emergency savings account now stands at $1753.24.  I have paid for the wisdom teeth removal but not yet for the colonoscopy.  Hopefully our portion (which will be 30% of the negotiated cost from the insurance company) will be less than $750.  Because everything medically checked out fine, I haven’t decided what we’re going to do about the emergency fund.  $1000 will definitely stay put there, but whatever over that remains, I may put towards debt elimination, or I may just keep it in the emergency fund as an extra buffer.  I’m not sure.  For July’s snowflakes, I am shifting back to debt elimination mode, and all my snowflake earnings will go directly to debt versus split 50/50 with savings.  This should help knock down the student loan significantly this month – it would be nice to get it to under $5000.  And get our percentage of debt paid off to 50% would be amazing.  We’d have to pay about $1800-$2000 to debt this month to do those things, which I think is not completely likely but definitely possible.  Next week I’ll have gotten some earnings and maybe made some payments so we’ll see where things stand then.

I started writing this blog on June 19th, 2007, exactly one year ago today.  At the time, I started it rather impulsively to help me organize my thoughts about debt reduction and keep me motivated to continue even after the newness of all the ideas I was trying to implement wore off.

I honestly could never have imagined what a labor of love and support this has turned into.  I truly get excited every day about writing posts, reading comments, thinking about new ideas, participating in the personal finance community, and keeping my focus and drive about reducing my debt.

My spouse and I were talking a few days ago about how my blog’s first anniversary was coming up, and he said to me that when I first told him I had a plan for us to be completely out of all non-mortgage debt by December 2010, he thought I was crazy.  Which, looking back, I realize now is why he basically focused on our credit card debt for the first few months when he was talking about our debt at all, and never really mentioned the car or the student loans.  The credit card debt, I think he was reasonably sure we could eliminate by 2010.    But he doesn’t think I am crazy any more, not by a long shot.

I am happy to report that at this point, not only have we eliminated our credit card debt, but we’ve, in total, eliminated $16,401.39 of our debt in the past year.  And in total, we’ve paid $19,338.48 towards debt (including interest) since June 2007.  Of that, $10,535.33 was the budgeted minimum payments of $810.41 per month and $8803.15 was snowflaked from a myriad of sources, as humble as taking online surveys for some additional pocket change and as big as adding another part time job. We’ve revamped our goal of December 2010 to December 2009 to have eliminated all of our non-mortgage debt, and so far are well within target to meet it.  As of June 19th, 2008, we have paid off 45% of the debt we had as of June 19th, 2007.

On January 1st, 2008, I set a stretch goal of paying $18,000 to debt in 2008.  So far we have, in 6 months, paid $8833.94 to debt.  That is almost exactly on pace to meet the $18,000 stretch goal, with 49% of that goal met in 6 months, and that was with both a car engine replacement and furnace replacement.  I think our stretch goal is well within our reach – only time will tell if we can meet it but I feel very optimistic.  And, as a bonus, meeting that would also mean my spouse’s entire student loan would be paid off.  Being down to only two debts…  I can barely imagine it.  But I want to!

All in all, it has been a great year.  Thank you all for joining me in this journey so far and sharing yourselves with me as well.  On to the next year, and the next chapter of our journey.  Who knows, I might have to start thinking about how to eliminate mortgage debt much sooner than I ever thought I would. 

Welcome to my weekly update of what’s been going on with our finances and what we’ve paid to debt this week, as well as what decisions we’ve been making as far as debt reduction, savings, and life in general as it relates to money! Some weeks are more exciting than others, and I think this one qualifies as a pretty exciting week. Which is usually true when it’s the week I pay bills.

After a lot of thought about what our priorities are for the future, and also factoring in the logistics of everything, we made the decision not to go to World Championships this year. This isn’t completely because of our debt, although it is a factor, but also because the competition this year is in the middle of the week vs the end of the week as it has been in years past. My spouse would have to take more time off from work and his vacation days are stretched thin as it is with having to take time off for my varied medical tests. And, logistically, I would be driving 12 hours in the car a day after I had a colonoscopy instead of three days after. Which seems a recipe for disaster in and of itself. I could reschedule the procedure, but it would be several months from now and I really would like to make sure nothing is seriously amiss in my colon sooner rather than later. So, basically, the stars are not aligned for it to happen this year.

And, honestly, I feel good about the decision. Yes, I want to be world champion, and yes, I want to just compete even if I don’t win. But I realized that even if I am never in the top ten again and I never have this chance again, I won’t regret the decision to not go this year, because it feels like the right choice for my entire family, not just me. And it feels like the right choice for me too. It wasn’t an easy decision, and I actually used a few list-making pros and cons programs to help me think more clearly about it (more on that later this week).

So, with that decision made, I took the snowflaking money I had been sitting on this past month, as well as the blog and taekwondo income that had come in this month, and put it towards my spouse’s student loan. It ended up being $883.31 on top of the regular payment we make of $437.59 each month, for a total of $1320.90 towards the student loan this month. I also made the minimum payments to our other two debts:

Current total as of 06/17/08: $20,050.32 (original $36,451.71)

Principal paid to date $16,401.39

Broken down into:

• Student loan (at 7%): $11,328.05 (paid min $144.50)

• Spouse student loan (at 9%): $6682.48 (paid $1320.90)

• Car loan (at 4%): $2039.79 (paid min $228.32)

NCN Network Chart: Paid 45% total since start of blog (last month 40%)

If we can pay off another 5% next month, we would hit the 50% mark just 13 months after I started this blog, which would be amazing. But I am not confident that we’ll have that much in income to pay. We also are hovering right on the edge of having paid our debt down to less than $20,000 – and will definitely hit that milestone next month. Hurrah! I had put $728 into our savings account (the matching $883.31 from our snowflakes minus the wisdom tooth copay), because we are still splitting our snowflakes 50:50 between debt and savings until our savings account is at $2000. And then yesterday, because every time I decide to make a large student loan payment, it seems something happens, we had to make an unexpected car repair that ended up being about $350. This came back out of our savings account, which now is still hovering around $1400 instead of approaching $2000. So we will still be splitting the snowflakes 50:50 and since tutoring is slowing down, part of the taekwondo income next month will probably be diverted into our budget versus saved for snowflakes. And there is the possible electrical panel upgrade (which has been behaving so far but we’ll see). I do have high hopes that we may get to 50% paid off by the end of summer.