tell all tuesday righting the ship

January 22nd, 2008

Tell All Tuesday – Righting The Ship

My goal for this month is to identify and put aside $1000 I can throw at my debt by the time the remainder of my car repair bill ($800) comes, so I can pay that off, pay off the $155.17 left on the Citicard, and move forward with NO MORE CREDIT CARD DEBT. I’m not sure that I can get to $1000, but it is looking more and more like I can get to at least $800, and the budgeted $200 towards credit card debt in my debt snowball should take care of the rest. That $200 will then move down the line to be budgeted towards my spouse’s student loan, but I am getting ahead of myself.

So, where is it going to come from? Last week I got some survey payouts and my spouse got money for selling a weight bench. Those together totaled $106. I moved that to my emergency fund awaiting receiving the car bill, so my emergency fund is now at $407. $300 of that will stay in the emergency fund, the $107 will go towards the debt.

I started tutoring chemistry online this month, and I have made about $400 so far doing that. I hope to make another $200 in the next 9 days, which might be a little unrealistic, but I am pretty positive that I can make at least $150. So I am going to call that $550. I get paid from tutoring at the beginning of next month, so that brings my total so far up to $657 to throw at the car repair debt.

I have $50 pending in survey payments. Not all of that will arrive before the repair debt is due I am sure, but the majority of it is from payouts in December, so that should come sometime soon. I am going to round the debt payoff amount up to $700 including the survey money. Obviously these are rough figures.

I also should get at least $100 in blog advertising revenue (thanks BlogHer!) at the end of this month, even after I subtract out the 30% that I save back for taxes. That brings the total to $800 – and will be enough to pay off the car repair debt. I am ever hopeful that I will generate even more revenue somewhere (mostly I am trying to tutor as much as possible and hoping to earn more there) and knock out the remaining credit card debt at the same time, but I am learning patience a little at a time.

Once all this is accomplished, I will rebuild the emergency fund to $1000 (February’s stretch goal), and then start implementing a strategy for paying off my spouse’s student loan as I start saving back money to pay for my wisdom teeth removal. I’ll have a lot more to say about that in February as we further develop it, but I think we will be taking a more conservative approach with the student loan and building up a secondary emergency fund in an ING account and then every so often, using the majority of it to pay off a big chunk of the student loan debt. It will cost us a little more in interest, but also give us more protection in the case of a large emergency happening. The snowflaking will continue! It will just snowflake into a savings account initially, like I am doing right now with the car repair debt. I’ve also considered the idea of moving my spouse’s student loan debt largely to a 0% credit card. My gut hates that idea though. My brain says we have a 0% no balance transfer fee offer (I just got an email about it a few days ago) for 12 months that I can move up to $8500 with, and that is a whole lot better than paying 9% interest (current interest on student loan) even taking into consideration the fact that the student loan interest is tax deductible. But. My gut hates it. But maybe my gut is just too accustomed to Sallie Mae and is lulling me into a financial mistake? I don’t know. I am still sleeping on it.

The only tangible progress on the debt front this past week was paying my minimum payment on the car loan:

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

Current total as of 01/22/08: $27,499.57

Principal paid to date $9752.14

Broken down into:

  • Auto Repair: $800 (new as of 01/11/08)
  • Credit Card: $155.17
  • Student loan: $11,716.07
  • Spouse student loan: $11,691.64
  • Car loan: $3136.69 (made $228.32 min payment, $217.66 applied to principal)

% original debt paid off according to NCN Network Chart: 24.56 (last week 23.96)

Emergency fund total: $407

I neglected to point out last week that my spouse’s student loan has finally passed mine and is now a lower balance. Even though he pays higher interest, his minimum payments are higher so it was only a matter of time. He’s much further into his 15 year repayment plan than I am since he didn’t go to grad school and defer his like I did. His original starting balance was 25% higher than mine which is why it took so long for him to catch up. But the goal is to get that paid off well before the 15 year payment plan is up (and mine too!).

On with the snowflaking! No more credit card debt, here I come, and I am determined to do everything in my power to make it STICK this time. (Now you can see why my gut wrenches at the idea of moving student loan debt to a credit card, no matter how much more favorable the interest rates.)

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21 Responses to “Tell All Tuesday – Righting The Ship”

  1. Great work on the tutoring income! That is really paying off.

  2. crazypumpkin Says:

    January 22nd, 2008 at 4:26 pm

    If you don’t mind sharing, who did you get the 0% no transfer fee offer from? I’ve been looking for one for quite some time (the no transfer fee is the hard one), but haven’t found one. Thanks!

  3. A citicard – specifically the AT&T universal card. That is who I got it from originally too, and now they want to give me another one. lol

  4. Darnit all some days you really amaze and inspire me. I’m off to try a little snowflaking myself. :)

  5. Looked into the tutoring thing, even put you down as the reference.

    Alas, they don’t want any of weird Linux user on staff. I had tutored in college, post-college, and taught in the middle east for six years.

    Oh well.

  6. Just wanted to let you know much you inspire me by posting these daily tips, accountability and financial information. We just got a big lump sum from a business we closed last month and are putting almost all of it toward credit card debt, and will be paying off all but 1/2 of one credit card and a low-interest consumer loan. It will reduce our debt load tremendously and we will be able to snowflake that $1000+/month toward the other credit card and the loan. Boy does that feel good!

  7. How my student loan works is if you prepay any amount it doesn’t reduce your monthly loan obligation (minimum payment). So if your situation is the same as mine you would have the same payment to make to Sallie Mae + the minimum payment to make on the cc. Depending on the minimums you would need to make, switching it to the cc would save somewhere between $650-$800 on interest this year. Of course this would mean you would need to pay off the entire amount before the offer would expire or you would get shafted.

  8. Why not pay off the car loan next? I’m just guessing, but if you’ve had it for awhile the interest rate is likely to be higher than the rate on the student loans. I would imagine the payment is higher too since it’s amortized over a shorter period of time. The big benefit is taxes though. Student loan interest is an adjustment for tax purposes. The amount you pay in student loan interest each year comes off of your income dollar for dollar. This is a much better tax benefit than a deduction (like mortgage interest, where only a percentage is used to offset income). Interest paid on a car loan has no tax benefits.

  9. @Steve – car loan is 4%. Our lowest interest debt. The student loans are 9% (spouse) and 7% (me). We didn’t get them in the low interest heyday, we’re old. lol

    @Marie – Sallie Mae tells me they’ll apply any extra payments to reduce our next payment, not reduce our principal, or some stupid thing. Sallie Mae makes me mad. A lot. But… well, anyway. It’d be okay with me to continue paying off the minimum on student loan and extra to credit card. We managed to pay off $6000+ in cc debt last year in 7 months so I think $8500 is doable in 12.

    @Karla/Grace – you go girl! :)

    @ MrsMicah – you are pretty inspiring yourself :)

    @Marcus – sorry the tutoring didn’t want you :( . They run a specific microsoft-compatible classroom software, so they’re picky about that. :(

  10. Wow! You are doing a fantastic job! You seem to really be putting in a lot of effort and your hard work is paying off!

    Good For You!

    Take Care,

    LJ

  11. Since the student loan interest adds up DAILY I think it might be better to hit the principal with Sallie Mae. (Daily interest accrual formula: current principal balance x interest rate divided by 365.25) For me, student loan interest (7%) adds up much faster per month than the interest on my credit cards (0 – 3%) and exceeds the maximum annual tax deduction. You get to decide how extra payments are applied. Given my student loan balance is 3x higher than my credit card balance and at double the interest rate it makes sense for me to hit the principle. I am also pondering a transfer of student loan to a low interest credit card but the idea does scare me because I do not trust the credit card companies at all. Last year I only transferred an amount that I knew I could pay off in the 0% introductory period without reducing my student loan payment. I plan to chunk up my emergency fund before I do anymore balance transfers to the cards as it seems we must have defense strategies in place prior to taking the financial offensive!

  12. Won’t believe this but I just paid 1300 to repair my heater.

  13. This may be too much work, but it would be very interesting if you kept track of the amount of time you spent on surveys to earn a certain amount of money. I have been considering playing the survey game, but I have suspected that the conversion to an hourly wage would be so low that it would not be worth my time. I was hoping that an analysis from someone who is already doing it might prove me wrong. :)

  14. Brandon – I suspect you’re right. I don’t keep track so much as an hourly wage, but I have kept rough track and although sometimes it can be high ($8-10/hour) usually it is more like $3-4. Not even minimum wage. :)

    But – I don’t do surveys instead of other things I can do to make money. I do surveys when I have pockets of downtime I wouldn’t be doing anything productive anyway.

  15. You are very inspiring to me. I read your blog pretty much every day. I think we are close to the same age, and both have kids. You really seem to have jumped the car repair hurdle very easily, it might seem painful right now, but really you recovered very quickly. I love your snoflaking idea, I started doing it myself last month and I’ve already snowflaked over $300 to my CC that was “found” money and paid it right when I got the money. Thank you for your inspiration!

  16. Dawn – $300 is GREAT! Go you! That credit card will be destroyed by your efforts!

    I am 33. :) Knocking on the door of 34 right now, lol.

  17. Wow! That really is awe-inspiring.

    Am I understanding right: you’re thinking about taking the remainder of a student loan and moving it to a 0% APY credit card? That’s presumably an introductory rate, right? Wouldn’t that require you to pay off the loan fully before the intro rate expires, to avoid getting gouged with credit-card interest?

    Gosh, that seems like betting on the come. All it would take is one more car repair bill or the heater to go on the blink to really throw a monkey wrench into that scheme.

    Still…if you could make it work (by having a good emergency fund, for example), it’s mighty tempting. At 9% for the student loan, it would save a nice little chunk of dough.

  18. Amazing goal to raise $1,000 this month! It looks like you’ve got a great shot at reaching it. Good luck! ;)

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