Hallelujah!!!!

by

I know you guys are probably getting tired of hearing about all my Navient issues (trust me – I’m totally sick of it, so I know you all are too).

So when I had my most recent Navient processing mistake, I made a single call to try to correct the error and had pretty much resolved myself to give up on it. If it wasn’t fixed I was just going to leave it alone and kiss the money goodbye

(Side note: I wrote about the error in the comments to this post. If you didn’t see there, the error was pretty minor. I was having so many issues with the balance transfer and it took so long to process that I had to make a full payment on the loan before the transfer went through. When the transfer finally went through, they removed the payment I’d made to the now-paid-off loan and applied it equally across all of my loans. BUT right now my minimum payments do not even cover the interest, and unpaid interest in forgiven on subsidized loans, so equally distributing my extra payment essentially means the money is just gone – it went straight toward interest that I otherwise wouldn’t have even had to pay. The total amount was only $30, so I was set to just get over it and move on with my life instead of fighting over it).

WELLLLLLL – drum roll, please – after only a SINGLE call (versus the 7 or 8 calls I had to make regarding my balance transfer), the funds have been ACCURATELY reapplied toward the loan I specified (my lowest balance unsubsidized loan).

I seriously could not believe my eyes when I logged into my account and saw that (1) the change had been made, and (2) it had been made correctly! Cue the angels singing “Hallelujah!” I mean, I know it was only 30 bucks, but it felt like a major “win” against Navient in the face of all my recent Navient struggles. Wahoo!!!!

What’s your most recent minor “win” in the debt payoff struggle?


Tax Setback

by

Husband and I are both self-employed and, therefore, pay our own taxes (as opposed to having taxes withheld from our paycheck). We file “married filing jointly” and I knew that for 2014 we’d be teetering between two tax brackets: between paying 15% and 25%. (Side note: Doesn’t that seem like a huge jump? I don’t want to get political or anything, but the next bracket goes from 25% to 28%, which seems more reasonable. But the 15% to 25% jump hurts! Ouch!). As a result, the amount we paid for estimated quarterly taxes varied (I typically paid about 20ish percent of our income). Well, go figure, that wasn’t enough. And now we’re left with a pretty hefty sized tax bill.

So that’s fun. And something we’ll be dealing with in the coming months. I’ve never had taxes be part of the blog before (I’ve always reported our income “after taxes” – said in quotations, since clearly we weren’t withholding enough for taxes). So, although our tax bill is obviously a new debt, I’m going to keep going how I have been and simply pay that bill off the top of our income rather than putting a new line item (titled taxes) in our monthly debt list.

The big bummer, of course, is that I’ve been crossing my fingers for a pretty profitable next couple of months as income increases a bit. It’s not a guarantee, but last year hubs’ business was booming over the summer. And although I continue to get paid the same as always (same amount per class), the classes I teach over summer are condensed so instead of having my pay spread across four different months I get two lump sums, making two summer months (June and July) look really good for income. (Again – same actual pay per class, but it’s double the sized paycheck as during the Fall or Spring semesters). I still hope to make some big progress with other debts, but this is certainly a bit of a setback as we pay back Uncle Sam to the tune of $3500. Yes. *Groan!!!!* We’ve owed before (we owed a little bit last year), but never to the extent of owing multiple thousands of dollars.

I do have a plan though. I’ve already set aside some money from this month’s income that I’m going to put toward taxes. If I spread this out over three months, the hit won’t be as hard. We have about that amount of time to pay (longer if we pay additional penalties, but I’d like to avoid that and just pay this off ASAP), so about a thousand a month is going to be coming off the top of our income for the next few months. Disperse the pain a bit instead of being hit all at once.

I guess it’s a good thing. New tax bracket means we’ve had a higher income. That’s an awesome thing for us small-business owners! I only hope to continue seeing our income rise across time, so I better get used to seeing a growing level of taxation. ; )

Did you owe the government any money this tax season? If so, how did/do you plan to pay for it?

Did you get a refund? If so, what’d you do with it?


Adam and Emily Financial Update

by

Hello! I’d like to continue our update since we stepped away from blogging here in February 2014.   Here’s what has been going on with our real estate and our debt.

Real Estate
If you followed our journey previously, you’ll know that we own 2 rental properties (3 units) out of state, and also have a rented guest house at our primary home. 2014 was not a very successful year for us with our investment properties. One unit sat empty for several months during the winter, and one renter abandoned her unit, which ended up needing quite a bit of maintenance and repair.  My reserve funds just covered the out of pocket payments I had to make on my properties.

However, coming into 2015, all units are rented to tenants who are paying on time and are reliable. We currently cash flow almost $900 per month on the out of state properties and are also building equity both in appreciation and mortgage pay downs. This year could end up being really good for us in that regard, or it could go south if the current tenants decide to leave or any major repairs come up. So far, the investments haven’t returned what I hoped, but it’s finally starting to look like the potential is there for really solid returns this year. As a reminder, I run all the income and payments from the rental properties through a separate bank account and do not touch the money (there’s not much there anyway, just enough to make a couple payments on the properties currently). Even though we had a rough 2014, I still like rental properties because you make money in 3 ways: rental income, property appreciation, and equity building. If we can keep our head above water with tenants on these two properties, we should have a nice value built up in a few years.

On the other hand, it looks like our decision to buy a house in Austin in 2013 is really working out in our favor. Austin is a hot market, and I just saw today that asking prices in our zip code are up 10% in the last year. I also heard that the population in our specific area is growing faster than anywhere else in the state, so our property value should really benefit over the next few years. To buy the house, we had to spend about $20,000 that otherwise would have been invested in retirement, but after only 2 years, I estimate we have about $43,000 in equity in the house, as well as a guest house rental that brings in a bit of money each month. If we hold on to this house for another 5 years, we should be able to walk away with over $100,000 if we sell.

Just a reminder that we chose not to track our mortgage debt on this blog; it’s just too big and too long of a payoff. To provide a little clarity, our house was expensive and came with a big payment. After subtracting the rental income we make from the guest house, we are paying about $1300 out-of-pocket each month on our house, which is very reasonable in the Austin market and for our income level. For each $1300 out-of-pocket payment, we reduce our mortgage principal by about $500, and we should be gaining around $600/month in appreciation on average. Although it felt insane to buy a house so far above our budget at first, I think it’s turning out to be a great choice.

Debt Status
Ok, at long last, time for a debt update! When we left you in February 2014, our debt stood at $92,920 and our savings was at $8200. Due to the encouragement and challenge of the readers here, we made the commitment to pay off the rest of this debt in 2 years and be debt-free by December 2015. At the time, we were putting about $3500 per month toward debt.

I’m excited to say that we have stayed on track with our payoff goals! We have continued to throw as much as we can at our debt and have made great progress. Here is a picture of our progress since last year:


 

Debt in February 2014
Stafford Loan #3: $15532
Discover Student Loan: $40035
Citi Graduate Loan: $37353
Total: $92,920
Debt in April 2015
Stafford Loan #3: $0
Discover Student Loan: $0
Citi Graduate Loan: $33807
Total: $33,807
celebrate

Total paid off since February 2014: $59,113!

Current savings: about $12,000.

Since we started paying off debt in 2010, we’ve paid off over $143,000 of credit card, auto loan, and student loan debt!


One strategy I started last year was to exploit my company’s employee stock purchase plan. This plan allows employees to use up to $7500 of salary every 6 months to purchase company stock at 85% of the market price. So I redirected some of the money I was using for loan payment and put $1250 per month into the ESPP. As soon as the shares were purchased, I sold them and pocketed the 15% gain (it actually came out to a little bit more because the shares went up a bit). So, $7500 turned into over $9000 over that period, which helped reduce our debt even faster. Also, it’s so gratifying to make a payment of over $9000 all at once.I also used the majority of my performance bonuses to pay down debt. My company pays out bonuses twice a year, targeted at 15% of my salary. Some of this money was used for one-time expenses like holiday travel and a big veterinarian bill we had last year, but a lot of it went right to the debt. The bonus program, along with other money we were able to save, is mostly how we funded the “Race to $15K.”

Besides the ESPP and bonus program incentives, we consistently paid over $2200/month on our loans from our monthly salary.If our current path continues, with one additional ESPP payout, bonus, and our regular monthly payments, we are on track to pay off the very last student loan by the end of this year! (OK, so it may be January of next year, but who’s counting?) Once the debt is paid off, the majority of my bonus, ESPP, and stock compensation will be saved for retirement.That’s our exciting debt update! But there are a couple more areas to cover, so we’ll be back with another post or two to tie up the loose ends.


An update from Adam and Emily

by

Hello everyone! For those of you who don’t know, my wife Emily and I are former bloggers here at Blogging Away Debt. We handed over the reins in February 2014 while we were in the long, hard slog of our debt payoff. I have really enjoyed reading and commenting on the stories from the new bloggers here. Ashley and Jeffrey asked if we’d like to provide an update for the readers. So, thanks to those of you who’ve asked, and thanks to Jeffrey and Ashley for facilitating the opportunity.

The last 14 months have been very active for us indeed! There are so many things to update on that I’m going to split it into multiple posts. Just a warning, this first post will have very little to do with our debt payoff, but a debt update is right around the corner! I’m going to start off with one of the more fun topics – Goats!

Our Little Homestead
First, for some fun things. We told you in this post and this post about our decision to get a couple of mini-goats in summer 2013 for brush control in our back yard. The goats were wonderful lawn mowers and ate our jungle down to almost nothing, exactly what we hoped for. Billy and Olive also did what goats do, and in March 2014, the goat stork brought us Caper! This was quite the experience, seeing this little furball come into the world and grow up in our back yard. Then, surprisingly in October, we came home to more bleating from an unexpected arrival, P-a-a-a-a-atty Mayonnaise.

Caper   . Pa-a-a-a-tty Mayonnaise

Having the goats was great fun and they served a wonderful purpose ($75 each instead of a $1500 lawn tractor). But they tore up a couple of planters on our patio, and eventually discovered our bedroom window, where they started providing wake up calls about 6 am. On the day that the goats started bleating at 3:30am, I listed them for sale immediately. So we sold our 4 goats for about the same that we originally bought 2 for, and had a year of free lawn mowing in between.

We expanded into chickens last year as well! Our little flock of 5 hens was so much fun! We got beautiful brown and even blue eggs that tasted wonderful! I built my own coop in the back to add room for even more laying hens and even a couple ducks, but we suffered a couple losses to raccoons and our flock became scared of the coop, and decided to take up residence on our back porch. No matter how hard I’ve tried, I have been unable to train them back to the newly reinforced coop. So just this week, we gave the remaining ladies to the neighbor and we will have to start over with new birds. Building a coop was fun, as someone who never had a lot of training or guidance in handy work. I learned a lot, and was able to build the coop for probably around $200. It sounds like a lot, but it’s essentially an 8′ x 8′ shed that will add some value to the property as an outbuilding.

eggbowl ___
coop __ coop3

After 3 seasons, I’ve finally gotten the hang of gardening in Texas. What I finally figured out is that there are 2 short growing seasons, fall/winter, and spring/summer, instead of one long growing season like a lot of the country has. You need to plant in a very specific window for your garden to have a shot at producing well in the right weather. And you have to pay attention to your soil health. 2015 was shaping up to be our best year so far, with abundant salad greens, broccoli, cauliflower, beans, strawberries, peas, potatoes, onions, carrots, and radishes. Until last weekend, a deer got through the cheap mesh fence netting I put out and basically destroyed the entire garden in one day. I have onions, potatoes, and radishes remaining. The pumpkins and squash may also survive. Because we live on top of a limestone bedrock, setting fence posts here is extremely difficult, or expensive if you hire it out. So I made freestanding fence posts and used cheap netting for the deer fence, and I’m regretting my choice to cut corners to save money on this project. I will need to put a more reliable fence up if I want anything to ever come of this gardening.

garden3

Barnhearted Life Goals

___ Our experiences with homesteading on a very small scale have also helped Emily and I clarify our long term goals together. We have a vision to run a joyful farm and apple orchard at some point in the future. In the Midwest, it is popular to go apple-picking in the fall, and also get your pumpkins, go on hayrides, and drink apple cider. We’d like to own a U-Pick orchard and pumpkin patch, but expand the operation into an organic fruit and vegetable farm, cider mill, dairy/creamery, petting zoo, and hospitality business with a bed and breakfast, retreat center, and educational classes for folks to come stay, learn, and experience traditional living first hand.

To accomplish these goals, we will need to get our finances and retirement funds in order during the next few years so that we can afford to live on less money as we take the risk of starting up our farm. Being not only debt-free, but also building the foundation for our retirement fund, will be very important goals for us so that we can enable this future together. To offer some details, I think we will need about $2.5M in our nest egg in order to retire on time. My goal is to be debt-free, and also have enough retirement savings by the time we are 38-40 years old that our investments should grow (with conservative assumptions) to be at least $2.5M by the time we are 60-65. That way, if we are never able to save another dime from future jobs or farms or businesses, we will still be able to retire comfortably if we stay out of debt.

Thanks for reading this initial update! In the next post I’ll get into more financial details.


Goodbye, Good Friend!

by

A little background information about me (this may be a review for long time readers) – husband and I are originally from Texas, then moved to southern Florida (for my Masters degree), and finally out to Arizona (for my PhD). We’ve now been here (Tucson, AZ) for nearly 6 years. But one of the bad things about moving to a place specifically for grad school and then staying there is that all your friends eventually move away! They graduate and get jobs or drop out and move back home. Either way, they leave.

So although I had a lot of grad school buddies my first few years here, the further I get away from grad school (I’ve been done for nearly 2 years now), the fewer friends I have left as they all leave.

I still have a handful of more casual friends/neighbors, but I’ve got 2 really good/close friends in the area. Sadly, one of them is leaving on March 1st  (edited, for mistake): May 1st.  This is a friend I’ve mentioned several times on the blog. We get together about once a week to do a workout (walk/jog a pretty river trail in town), and she’s the friend who got married this past October.

I’ve known for awhile now (and just haven’t mentioned it here), but her new husband scored a new job that will cause them to relocate this summer. His contract doesn’t officially start until June 1st, but they’ve bought a house in their new city so they’re getting a U-Haul on May 1st, driving cross-country, and taking a few weeks to get settled in before his job begins. Hopefully I’ll see my friend again. I’m not doing a lot of “fun” travel these days so it’s unlikely I’ll fly to visit her in her new city. But we’re in the same basic field so hopefully our paths will cross at academic conferences. Also, her parents currently live in Tucson so hopefully I’ll still get to see her every once in awhile if she chooses to come visit them here.

Regardless, it will probably be quite awhile until I get to see my good friend again. So this month has been a bit more spendy than usual in terms of eating out.

First, I went out with my friend and her husband to celebrate her husband’s successful dissertation defense (they met in grad school, so he’s in the same program we had been in).

Second, she expressed interest in having a little going away party. The timing didn’t work out as she’d hoped with everything going on so, in lieu of an actual party, I told her I’d love to take her out for a “going away” lunch the day before they pick up the U-Haul.

To try to offset these expenses a bit, I’ve really tried to reign in my family’s eating out. We try to stick to a $100 monthly budget and this usually equals one time eating out as a family (as a real restaurant), a pizza night, and another cheap food night (like Mexican take-out). The budget also includes if I run through Wendy’s for a strawberry lemonade (my favorite) or if the family goes to Sonic for an after-dinner ice cream treat. You get the idea.

At any rate, I’ve gone out of my way to really make everything at home and avoid eating out at all. I think this has helped to off-set some of these other eating out costs that I’m incurring this month. But the going away lunch has yet to happen so I do have one more potentially spendy meal out. Luckily, lunch is generally not as pricey as dinner but I still wouldn’t be surprised if the single meal ends up being $50. Might not seem like a lot for a going away celebration of sorts, but it’s 50% of my entire month’s budget for eating out, so it makes me nervous about potentially going a little over in that budget category (and trying to find another category to cut-back in this late in the month is a bit of a challenge, too).

At any rate, I’ll keep you updated with how it goes. I can’t believe how quickly this month has flown by! Just as March seemed to draaaaaaaag on, this month has just disappeared! I guess its a good thing – I’m already looking toward next month and being able to make a larger car payment now that those pesky license fees are gone! Yippee!!!

What do you do to celebrate a good friend when he/she moves away?

And  – just for fun – what’s your eating out budget set at for your family (and what’s your family size)? Just curious and nosy on that one. ; )


Don’t Copy My Lucky Escape

by

I always wanted to travel from a very young age. Even though color television was relatively new there were plenty of movies at the cinema and color magazines with articles on faraway places to feed my mind. I was never quite sure how I would realize my dreams. After all commercial passenger flight was not like it is today. As time passed it became obvious that many of these places were indeed in reach. An uncle actually spent some time in the Merchant Marine. He crossed the Pacific many times visiting lots of countries in South East Asia though he was rarely in port for long enough to actually explore many of those countries in depth. I didn’t see myself as a seaman, but his stories reinforced my desire to travel. It would be all about earning the money and finding the time.

Not without Problems

Years on I have pretty much fulfilled my dreams, but it has not been without problems along the way. There is plenty of temptation which sometimes manages to push common sense to one side. As the real estate market grew common sense should dictate that the equity created should be used sensibly; retirement is an obvious thing to consider. I must confess that at times remortgaging funded travel which although immensely enjoyable brought no financial return.

Credit Cards

Most people have succumbed to credit cards. They offered readymade credit limits. They should really be used for convenience. Instead, I managed to build up some core debt; balances on a range of cards and each of those cards were costing me penal interest at the end of each month.

Fortunately, I saw the problem growing and was able to rectify the situation before it got too serious and beyond control. The danger is that credit card balances can somehow escape being regarded as real debt because until the recession came many didn’t feel they would have to be paid back in full. The recession ended any feeling of complacency because as people’s finances crumbled demands often poured in. I had managed to negotiate a consolidation loan before the recession struck. I cut up all but two of my credit cards immediately and paid off every outstanding balance incurring such high-interest rates. It did mean for the next five years I had a fixed monthly payment to make; 60 months and all that money I had used to travel was paid back at a realistic interest rate.

Lessons

I’ve learned a few lessons in this exercise. Certainly I have enjoyed my travels and hope to continue to do more as retirement approaches. I’ve been fortunate that my income justified the consolidation loan because I certainly lacked some financial self-discipline at times. Credit card companies were perfectly happy to issue cards to anyone who wanted them. Indeed, they seemed to offer them without being asked. It is a trend that seems to be returning today even though the recession has only just receded. If anyone asks me now about cards I would certainly say that they should only be used for their convenience, and not a way to get a loan. Every monthly balance should be paid off in full; I do this now although it took me a while to realize its importance.

There is nothing wrong with borrowing money responsibly. There are loans available for those with the ability to pay the loan amount in full, and the interest rates can be less expensive than what you are paying on cards. That was what I found in my case. I was fortunate to have both a full-time monthly check and money made part-time with my online writing. I write on a variety of subjects based on what my clients want. In addition, if anyone invites me to write about finance, I volunteer advice for nothing. The recession produced many casualties. A huge proportion of them were not as complacent about borrowing as I was. Circumstances brought them down.

I think back and feel relieved that my complacency did not cause me more problems. I’ve seen most of the world and intend to continue to see more in the coming years. Credit could have been my downfall, yet borrowing solved my problem with a sensible consolidation loan. If you look at your own situation and see some of the warning signs that I have alluded to then seek advice. If you have the time and patience, you can do the research on your own, and you can end up apying a lot less on your debt over the long run as you pay it off.


A General Life Update – Rambling Style

by

Accept my apology up-front for this kind of rambling update.  I think Ashley sent us her cooties (ie allergies) and it’s been a miserable couple of weeks for those of us with allergies and those of us without listening to those that do have allergies.

As of this week, I have paid all this month’s bills and next month’s bills (ie rent + utilities + insurance.)  For the first time in I don’t know how long I am not waiting nail-bitingly to see when my checks arrive and prioritizing who to pay with this money and who to pay with a subsequent payment (remember, as contract labor I have no set pay dates and am really at the mercy of my clients time table.)

I still have 4 checks that should arrive before the end of the month or soon thereafter.  I will be socking away that money for June’s monthly bills and then proceeding with debt payments (remember we only paid the minimums this month to allow me to get to a place to live on last month’s income.)

We’ve spent all of our grocery allowance for this month and I’m hoping to save May’s until after our mini-vacation in mid-May.  We will have 2 months (April and May) of our Misc money to spend on our vacation.  And frankly, living with no extra has not been so hard.  I think having the incentive of what promises to be a really nice mini-vacation has made it much more bearable.

As  I mentioned last week, I have gotten two new work jobs…one project and one on-going.  I have decided to delve into that money a little bit and give eh kids a birthday party this year.  It will still be frugal, but with us being so close to being consumer debt free, this being “extra” money that is not currently incorporated in our budget and the kids being SO, SO good about our cutting back in all aspects of life, I think this is a great way to treat them.  I’m hoping that since they are not expecting a party, I can pull off some sort of surprise party…still frugal.  So I’m sure I’ll post on this once I get more of a solid idea.

We are wrapping up our school year this week with standardized testing.  So every morning the younger two kids go to a small private school who is also doing their testing.  For a nominal cost of $25 each, they sit in a classroom with kids their age and take their tests.  We’ve done it this way since they were K and 1st grade and it’s a week they look forward too as they get to be in a “classroom” and it symbolizes the end of their school year.  (We school year round, but our summer schedule is much looser and we will take the next few weeks off until after our mini-vacation.)  The twins can’t go to this same school as it only goes through middle school, so I order their tests from setontesting.com and I proctor them. That costs me $40 per child and it will take 2-3 days 2-3 hours per day.  Just a glimpse into our homeschooling world and costs associated with it.

I think that about sums it up on the financial end.  We are still staying busy with gymnastics 3 days a week, field hockey 2 days a week, Navy Sea Cadets 1 drill weekend a month and finishing up the high school lab sciences for the twins.


Pages:1234567...411