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Ashley’s March 2017 Debt Update

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March was a whirl-wind of a month! I was gone for a couple days in Texas, the girls had an entire week off school, and it felt like we were being pulled in a million different directions by all of our disparate responsibilities. I’m glad to be back in more of a routine this month and am already looking forward to May. For us in academia, it signifies the end of another academic year and the beginning of a MUCH NEEDED “break” in terms of course-load, etc. (working at a university, I’ll probably always talk about “years” in terms of academic rather than fiscal or calendar years, lol). But May is important for another reason, too. For the past 3 months (including April), I’ve been paying these HUGE payments toward our medical debt. I did so in exchange for a debt forgiveness of about 33% of our medical debt. So come May, we’ll have an extra $1200 that can go towards other debt and we’ll have one fewer debt to report in our debt spreadsheet. It always feels good to knock a debt off, and I can’t wait.

Here’s where we stood as of April 1st, after all of March’s debt payments had posted:

PlaceCurrent BalanceAPRLast Payment MadeLast Payment Date Original debt, March 2014
Navient - Federal 2 (unsubsidized)$11,0925.8083March82433 (all school loans, combined)
Navient - Federal 3 (subsidized)$86085.8025March
Navient - 2 (subsidized)$85136.5534March
Navient - 7 (subsidized)$72126.5529March
Navient - 8 (subsidized)$63856.5525March
Navient - 9 (subsidized)$85146.5534March
Navient - 10 (unsubsidized)$97926.5569March
Balance Transfer Student Loan #2$10000% (through Sept 2017)$400March$7650
Balance Transfer Student Loan #3$44440% (through October 2018)$150March$4594
Medical Bills$31540% (must be paid by April)$1216March$9000
Balance Transfer student loan #1$00% -Paid off in March 2016$5937
PenFed Car Loan$02.49%-Paid off in January 2016$24040
License Fees$02.5%-Paid off in April 2015$5808
BoA CC$07.24%-Paid off in June 2014$2220
Mattress Firm$00%-Paid off in May 2014$1381
Wells Fargo CC$013.65%-Paid off in May 2014$7697
Capital One CC$017.9%-Paid off in March 2014$413
Totals$68,714 (Feb balance = 70,444)$2065Starting Debt = $145,472

Navient Payments

With our recent IRS tax trouble, I’ve been making lower sized debt payments in an effort to try to save up for the upcoming IRS bill. I’m paying minimum payments on all of my subsidized student loans and only an extra $50 above the minimum for my two unsubsidized student loans. As a quick reminder, I’m on the IBR repayment plan so my unpaid interest is forgiven on subsidized loans, but not for unsubsidized (which is why I’m prioritizing them a little). I was concerned when my balances had increased a little this month for the subsidized loans so I called Navient and they explains that the government subsidy (which covers any unpaid interest) is only paid once per quarter. So it looks like the balances have increased a little, but that capitalized interest will be covered at the end of the next quarter. Feels kind of scamy, but nothing I can do about that.

Balance Transfer #2

I’ve reduced the amount I’m paying on Balance Transfer #2 down to $400/month. Continuing at that rate, it will be gone by June. At that point, I may try to initiate another balance transfer to move some more debt away from Navient. That being said, I’ve noticed that my recent balance transfer offers have had a bit higher transfer rate than in the past year, so I’d only do so if it’s still a good savings overall. I’ll wait and see when we get to that point. I also wanted to clarify something I’d had wrong before. Originally when I created my debt table I had listed that this bill was due earlier (based off a 12-month timeframe), but I had conflicting notes in YNAB because there I had it listed as being an 18-month timeframe. When we were hit by the IRS taxes, I called for clarification (otherwise, we were on track to pay it off within 12 months, but I wanted to know if we had the extra 6 months wiggle room). Turns out the special offer IS good for 18-months, which is why I’ve been able to decrease my payment amounts. I’ll still have it paid off well before the special 0% APR promo period expires. Sorry for any confusion to anyone who may have noticed!

Balance Transfer #3

This is my newest balance transfer. I paid $150 last month, but only have $75 scheduled for this month. Again, I’m paying less so that I can try to scrounge up cash for the IRS.

IRS

Everything financial is now tainted by the whole IRS tax issue I’ve talked about previously (see here or here). I’m embarrassed and feel a bit ashamed to be in this position, but I have to say that the tax debt has officially INCREASED our debt and will be setting us back in our progression. At this point, I’m honestly too embarrassed to even give the total amount (though we have finally finished everything with our CPA, so we now have official numbers). I was thinking it would be right around 10k and, if so, I was really trying to scrimp, save, and hustle up any funds and try to pay them in full by the April 18th deadline. When confronted with the true, final amount that we owe, I know there’s no way we’ll have the money together by April 18th. Instead, I’m going to have to set up a payment plan with the IRS and will officially be adding a debt to our list of debts. I’ve been dreading discussing it here because it’s just SO stupid and was 100% our fault. There’s no excuses. We just messed up and now we owe Uncle Sam the big bucks.

Budgeting

Related to everything going on, we’ve really been trying to plan ahead and think about what our family budget will look like in the coming (academic) year. Hubs’ is still currently drawing a (very) small income from his business, but it will likely be gone in the next few months. By mid-summer my big raise will go into effect at my full-time job. Though at the same time, I’ll be losing my side-income from my part-time job. Our kids are starting kindergarten in the fall so our childcare bill will decrease in a couple months (note, in our state kindergarten is only “free” for half-day and we still need full-day childcare so our bill will not be eliminated, but it will be reduced a bit from our current spending). Basically – there are a lot of financial pieces to the puzzle and a lot of things to consider. It’s hard when we don’t have exact numbers, either (e.g., I’m trying to estimate what my net take-home pay will be once my raise goes into effect, but there are many factors involved since a mandatory 7% goes to retirement, and then I also contribute to an HSA and FSA, etc). I think we may have some financial growing pains on the horizon as we figure things out and try to make a path moving forward. I think our path will likely include tightening up our purse strings quite a bit from what we have in the past year. Not that I think we were frivolous in the past year by any means, but I think things are about to really be getting TIGHT. It’s not a bad thing, but it’s definitely disheartening given all our progress in the past year (which, now with the tax thing, feels like a lot less progress has been made since we owe all this money – ugh! So mad at myself!)

Anyway, that’s what’s up in my world.

Oh yeah, and the car situation. That’s still going on. Turns out my car had 2 different problems. One was a Ford issue (covered by Ford) and the other is a warranty issue (covered by my extended warranty). But it’s been a HUGE fiasco because I HAVE to have a car to get to-and-from work and it’s now been over a week with my car in the shop and it still isn’t fixed. But my warranty only covers 7 days max in a rental, so I’ve switched to a Ford rental vehicle and am trying to get Ford to cover the remainder of my days in a rental due to their issue (the Ford issue is actually what rendered my vehicle un-drivable). It’s been a whole mess and is taking up way too many hours in my day. And it will likely end up costing me some money after-all, not only for the warranty deductible, but if I end up having to pay for the rental (if Ford won’t cover it, etc.). Big pain-in-the-butt. But there are worse things in life and, again, I’m thankful no one got hurt and that we had the warranty, etc.

Gotta run for-reals now. I’m drowning in work so bad it’s not even funny. So to bring this post full-circle (as I mentioned in my opening paragraph) – I cannot wait for May!!! Is it the summer yet?? 😉

Hugs,

Ashley

Ashley

Texan at heart; Arizonan on paper. Lover of running, cheese, camping, and family (fur-family included!). Blogger, motivated to get out of debt YESTERDAY! Follow along with my journey!

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8 Comments

  • Reply Marie |

    I encourage you to give yourself grace. I have a very hard time doing so myself. But you have a ton on your plate. Juggling a full time job, part time jobs, marriage, twins, concerns about your Dad. I have a tendency to be super hard on myself. But I recommend you give yourself more charity.

    I caught our situation last October and we maxed out our HSA contributions and upped our retirement to combat the exponential increase in what we were going to owe at tax time. Then I increased what they were going to take out in wittholdings for taxes. And we still owed about a 1000. We had three months where our family made less money working insane hours than we had working normal hours due to everything getting taken out at tax time. It is quite surprising how taxes work in absolute dollars and you will be better prepared in the future for similar issues.

    It is disheartening after all the progress you guys made. Car issues are stinky. Our battery keeps dying and due to how much work we have to talk off for medical appointments we haven’t been able to take in in quite yet.

  • Reply Angie |

    You shouldn’t think of the tax debt as adding debt. Because if you had appropriately withheld your taxes, you wouldn’t have paid down the debt to the level it is today. It’s essentially a wash, since the I’m guessing the penalities and interest will still be in the same ballpark as your student loans. You’re really freaking busy and you overlooked it. I get it. But it shouldn’t be as big of a deal in future years with both your side incomes dropping off. Its a lesson learned as I’m sure you will never want to repeat the shock!

    Look at the positive, you can handle the temporary pain. But, having the extra cash on hand allowed you to move into a family home in 2016. Appreciate where you are and the circumstances that brought you there even if they aren’t the “right” way.

    That being said, I would advocate learning more about your tax situation. It’s no fun being left completely in the dark and having a big surprise (good or bad) at tax time. It will also help you move around your money better to keep your income more tax efficient.

  • Reply Holly Morales |

    Ashley
    My hubby and I are one a debt free goal too and have been for 2 years and should have been finished this year, but I did the same thing a couple years ago and had the same issue with a large tax bill, but you brush yourself off and get back on it.. So now our projection is Dec 2018 to only owe on the house.. I too have to tighten things up if we want to make up, but i always following your blog and it helps more then you know.. Chin up we will get there !!!

  • Reply TexasMom |

    I’d recommend you also look into any tax impact you will incur when you inherit from your father’s estate. There are a few things you can do to limit estate taxes. Keep up the good work and thanks for sharing your story. We can all learn from one another.

  • Reply Walnut |

    Money, Time, Sanity – Choose 2. As you continue to adjust with your fluctuating cash flow, remember that you can only have two of these. Any of them can be a worthy trade off for another. As long as you are living intentionally, within your means, and prioritizing what is most important to you, your husband and your girls, it’ll all be okay in the end.

    Don’t stress about the IRS debt. You worked with an accountant, set up a payment plan and you’ll put it behind you in due time. Importantly, you did not bury your head in the sand, you did not hide income, and in the end you’ll be able to sleep at night.

    Chin up Ashley! You’ve come so far.

  • Reply Erin |

    You can pretty easily figure out what your new net pay will be by plugging in all the variables (gross pay, allowances, retirement %, FSA/HSA, any other deductions) into a net pay calculator. Just google “net pay calculator” and it will give you some options. I’ve found paycheckcity.com is typically within $20 or so of what my paycheck ends up being. You can also fool around with that and try out different retirement percentages, HSA/FSA amounts, etc and see how it affects your net pay.

  • Reply C@thesingledollar |

    I know it sucks to owe a lot of money, but I think you shouldn’t stress about it too much. You know how much it is and hey, at this point you’re a pro at paying off debt. It’ll be over very quickly and you can get back to the student loans.

So, what do you think ?