Residents in our area are often sent letters asking to reduce water use. Thanks to ‘Navy showers’, reduction in roommates, and landscaping akin to the dust bowl, we personally cut our water usage by 50%. According to water company reports, our fellow residents cut their water usage by nearly 10%.

I received a letter titled ‘Water Rate Increase’ with my bill. The water company is raising rates in part because of… get this…

Lower water sales.

Um. Didn’t you ask me to stop using water? And now I have to pay more because I actually stopped using it?

Our 50% reduction in water usage resulted in… a bill that was 5.5% less than last month’s.

Striking oil in California won’t make you rich – but striking water just might.

It’s times like these that you just have to laugh.

The big question…

How long can we hold on without my husband’s job?

Our initial numbers (without unemployment benefits) put us at 8 weeks. Our reductions to debt paired with our cash in savings and unemployment benefits put us at…

9 months.

Had this happened before we had taken control… had this happened before we made the decision to live below our means and reduce debt… we would have made it through a month, maybe two tops.

But now, we’re looking at 9 safe months. 9 months to find a job before things get hairy. Sure we won’t make progress other than minimums and we certainly won’t eat anything other than Ramen noodles but, we can hold on.

I have four words to say –

Thank. You. Dave. Ramsey.

1 – If you are hoping for a huge change… this is not the answer. Not all changes are permanent and/or large. Some adjustments may last as little as 3 months.

2 – Loan modifications are not quick. If you can’t wait the standard 9 weeks for the review of your file and another 5-9 weeks for paperwork processing, you don’t have enough time and you may want to move forward with other options like a short sale or foreclosure.

3 – Give an accurate listing of all your expenses. Don’t exaggerate but don’t minimize either. Have a good understanding of exactly how much you are paying. Keep this information available for when you call the bank.

4 – You will be rejected if you have recently made large purchases or if your credit score is low. You shouldn’t be making large purchases anyway so I can’t say as if I blame the banks for this stipulation.

5 – If you have a second mortgage with another lender, they will likely require you to get approved for the Making Home Affordable Program on your first loan before they will consider a change to your second mortgage. If you are accepted for the program on your first loan, it’s easy to submit the same paperwork for your second mortgage.

6 – This should not be your only option. It’s worth a try, but don’t fool yourself into thinking this will solve your problems.

7 – If your home is not a Fannie Mae/Freddie Mac mortgage, this program does not apply to you… BUT some lenders are still willing to modify other types of loans.

8 – This is a voluntary program. No one HAS to help you. Sure it’s good business sense to lessen foreclosures on the banks part, but if you are a problem child, don’t expect any help. Banks don’t want to keep you as a customer anyway. Be kind, courteous, and polite even if you are frustrated.

According to the bank’s calculations, my husband and I qualify. We are now in the first 9 week waiting period while they review our files. We have stellar credit scores and we haven’t made large purchases in a long time. We are good candidates for an interest rate reduction from the over 7% it is currently, down to the market rates of 5-6%.

Do I really think it will really happen?

No. But it’s worth a try.

First, we cut our dental and vision insurance. This is something that can easily be re-instated but the $25 a month can help me now.

Second, I cancelled all my appointments health related or otherwise. None of my appointments were an emergency and I requested that my doctor renew my prescriptions without the annual check-up since the last 6 years have been clear of any problems. These appointments and tests run in the neighborhood of $500.

Third, I called my cable company to cancel our cable, reduce our internet speed, and reduce our phone service. I explained our situation and was surprised when they offered reduced internet costs, reduced phone costs, and added free services and free channels for a 12 month period. I would tell you how much I’m paying – but I’m afraid they’ll figure out they made a huge mistake and ‘correct’ the discount… or fire the guy who gave it to me. I would have cut out the internet and phone entirely but my husband needs internet for school purposes and job searching late at night when he gets home (free internet at the library is closed) and I’m uncomfortable without a home phone for emergencies.

Fourth, I contacted my student loan company for a deferment.

Fifth, my husband and I contacted friends and family and let them know we’d be available for odd jobs. Since unemployment doesn’t start for nearly a month after a job loss, my husband has done everything from pulling weeds to insulating walls. I have been helping a company with paperwork at night after work. We use this money for groceries and for the important bills like electric and water. At no time should you feel you are ‘too good’ for any type of job.

Sixth, we cut off all our subscriptions and memberships. If you’re like us, you may not even remember you have some of them since they are automatically billed to your credit card and you may not look at each item on your online statement. Some examples: gym memberships, club memberships, magazine and newspaper subscriptions (some automatically renew unless you cancel). Savings – $50 a month.

Seventh, we’ve been using more public transportation. It takes twice as long to get somewhere, it’s uncomfortable, and it’s far from fun, but it saves $50-$75 a month.

It’s not a lot, but each item buys us a little more time.

and applying for the Making Home Affordable program.

Yesterday, I left work early and made THE call. My call started at 5:07 p.m. and ended at 5:57 p.m.

I called the Making Home Affordable number on my Bank of America mortgage website and waited 17 minutes on hold. Someone answered and transferred my call since my mortgage used to be a Countrywide mortgage and they had a separate division.

I’m fairly certain they routed my call around the world because really, what else can explain the 24 minute hold time and the gentleman who sounded like had lunch in Bangladesh. He asked for my name, account number, checked my account, thanked me for paying on time, and told me I would be transferred yet again to a representative. 9 minutes later, a message said, ‘Our office is now closed. Please call back another time.’

I would give you advice on dealing with the Making Home Affordable program but since I didn’t talk to anyone, I will tell you this… you need more than an hour.

Dear Bank of America… I had far better things to do than spend 50 minutes of my life listening to Kenny G. and the recorded reminder that someone will be with me shortly. Obviously you and I have VERY different definitions of ‘shortly’ AND, I had to drink three glasses of Chianti just to keep my ears from bleeding.
Ugh. Kenny G.

I’ll let you know how it goes… if I ever get through.

That was a mistake.

Today, my husband’s co-worker was laid off and another was reduced to part-time without benefits. It looks like less than a 3 month count down until my husband gets the axe.

I am terrified.

At this point, since we had to clear out part of our savings, we can only last 8 weeks without his paycheck.

That number sends a terrifying chill through my bones.

I’m focusing on the good though:

1. He still has a job today.
2. I lost my job last year and we survived.
3. We’re both healthy.
4. The new seasons of Private Practice and Grey’s Anatomy have started.

It’s all about priorities.

Sure, if I had no debt and had no plans or acquiring new debt, my credit score wouldn’t matter…

Or would it?

I was reading Parade magazine this week and was reminded of a very important reason to keep up those scores – employment. Employers are using credit scores as another way to narrow down candidates. In this rough job market, that’s the last thing you want to worry about.

My current employer ran a credit check on me prior to offering employment. I had been unemployed for 2 months but had managed to pay my bills. Had my credit score fallen, I likely would have been passed over.

Congress is considering blocking this practice but right now, it’s very legal.

Do you think credit checks are a fair way to judge potential employees?

You can read the article at Parade.com/creditscore

I left to housesit for a co-worker and came home to …

My husband explained that he had discovered mold under the floor and in the walls and decided to replace everything to be safe.

So why… why… why… did I assume that when we intended to insulate the separation closet wall in a 50 year old house, that we would simply be able to insulate the closet wall?

This is our spare bedroom as of today…

A few days ago, my husband asked if he could insulate all four walls. We both agreed that as long as we had one wall down, we should take down the remaining three walls, fix the electrical, and fix the phone line. Total tab so far? $142. I am so very thankful to be married to a talented construction man.

When making decisions like these, it’s hard not to want to put it off until later or take the easy way out. What we constantly have to consider is: Is this going to cost more later if avoided?

My nearly $200 electric bill tells me… I should have done this two years ago.

The good news? Energy improvements, including insulation, are tax deductable. Yes!

Want more info? Go to: energystar.gov/taxcredits

Dave Ramsey suggests paying the extra amount on your lowest debt (which would be the student loan) but the minimum payment on our truck is more 4 times higher than the student loan. Plus, the interest rate on the truck is twice as much.

Another good reason to pay more on the truck is to quickly rid ourselves of the hefty payment. In the event of job loss, a student loan can be deferred due to financial hardship – auto loans are not nearly as forgiving.

We’re hoping to have the truck paid off in 10 months or less.

Here we go!

Total Starting Debt: $38,495.86
Total Paid: $16,727.33
Total Remaining: $21,768.53

Breakdown of Remaining Debt –
Truck: $11,934.57
Student Loan: $9,833.96

We’re nearly halfway there. I got an updated payoff date according to our Debt Snowball Calculator on DaveRamsey.com…

December 2010.

We shaved off 4 months so far. Can I get a Woo Hoo?

I’m fortunate to be married to a hardworking construction genius who can do the work himself (plus, my husband looks irresistible in safety goggles). We only have to pay for the materials which should run about $100.

Why are we insulating? Our house was built in the 1950’s and no insulation was used on any interior or exterior walls. Our heating and cooling bills are much higher than they need to be. The initial expense of the upgrade will be quickly paid for in lower electric bills plus, it’s better for the environment. And… our new roommates are newlyweds – that’s reason enough in itself.

It always seems like when we have an opportunity to get ahead, the necessities of life burn through the cash. Between tuition costs, new dog vet bills, and the two weddings, we have had to pony up more than $3,000 in the last two months.

These expenses would have buried us in the past, but careful planning and frugal spending have kept our heads above water.

A COLLECTIONS AGENCY!

‘This message is for Rebekah’s husband [obviously they stated my husband’s full name], we have an urgent matter to discuss with you. We’re calling from Blankety Blank Collections, please call us immediately!’

I called my husband in a panic. ‘Honey, you’ve got something in COLLECTIONS! Can you call them the second you get home!!??’

I dialed again.

*ring*

‘Hon, don’t give them your Social Security Number!’

*ring*

‘Hon, don’t give them your credit card number!’

*ring*

‘Tell them we want something in writing or an office address!’

To which he finally said, ‘Sweetheart, I can’t call them unless you stop calling me.’

Oh. Oops.

A few minutes later, he called me back and said…

‘Same name, wrong person.’

Hey Collections folks, thanks for making not only people with who can’t pay their bills miserable but also everyone else who shares their name.

I can only hope they won’t be calling back.

We don’t see each other often. Perhaps that’s why our marriage is so great. We don’t have time to fight – heck we’re just so darn excited to see one another we don’t really… um… talk much.

He took a rare three nights off last week and we went running and cycling together every day. We made dinner. We walked the dogs. We watched movies. We remembered what it was like to be married.

I couldn’t help but think about how wonderful it was to have him around – to see him relax, even for just a night or two. He must have been thinking the same thing. He said, ‘I want to work less and live my life more.’ He has decided to work 6 days per week and 2 nights per week – and yes, that’s a cut-back (he was working 6 days and 6 nights).

I can’t agree with him more. As he toils to pay our debt, I can’t help but wonder if our self-inflicted punishment of hard labor is worse than the crime of spending. I wonder if one day, we’ll look back and regret the time we missed when our life was just us. We can cover our bills plus some without the extra work so we’ve decided to slow down.

So… we will pay things off more slowly BUT I have my husband back – and I’ve missed him dearly.

Financially, the smart thing would have been to keep my family a one dog family but every time I came home and saw my remaining dog mope around the house, I knew I couldn’t leave things the way they were. When he stopped eating and whined constantly, I was reduced to tears on a daily basis.

I spent a week searching shelters but couldn’t seem to find a dog that fit our dynamic. I don’t believe in buying dogs for short term commitments and knew bringing home anything but a perfect fit would be a bad idea. I decided to stop at one more, knowing if I didn’t find the right dog, I’d simply give up.

Then I met Hutch.

I was still in the habit at crying at the sight of dogs and sat on the floor thinking I’d never find another I could love at much as my last. Hutch took one look at me, crawled into my lap, and promptly fell asleep.

Needless to say, he came home with me.

Financially, I made a mistake. A dog is a financial responsibility – even if he is replacing another. Physically and emotionally, I did what my heart (any my other dog) needed.

If you see a redhead jogging down the street with two wagging tailed dogs and a grin the size of Texas… that’s probably me.

Why don’t you sell the truck?

I neglected to explain the reason we’re carrying the truck payment. It’s funny that no one noticed the debt on the truck earlier. It wasn’t until we paid down enough on the rest of our debt to make the truck HALF our total debt that someone asked about it.

My husband had a Chevy that gave out on us a few years ago and he’s one of those few people who actually need a full size truck for work. He tows trailers, fills it with concrete, moves landscaping, etc. A reliable full sized truck isn’t an option… it’s a requirement. We financed a Toyota truck for 26K two years ago and at the time, it was a great deal – or at least that’s what everyone likes to think after leaving a used car dealer.

Fast forward a few years, a few gas hikes, and a few construction related dents later and suddenly…

The truck is more than just a little upside-down – it’s hanging from its toe nails.

We’d MAYBE be able to sell it to someone for 8K… if we made them test drive it in the dark and promise them it got 58 miles to the gallon completely powered by canola oil. But since we’re honest folks, that’s not an option. Plus, we’d have to buy another full sized truck reliable enough to take the 25 – 30 thousand miles a year he drives for work.

Take the nearly 5 thousand we’d have to pay for our upside-down loan and add it to the cost of another truck and it just doesn’t make sense. I’d rather bite the bullet, pay if off by mid-year next year, and have a truck I know works for us.

Our previous vacation trips were fun but the nasty ‘debt hangover’ when we came home always sucked (excuse my language, but I’m being dreadfully honest).

When we arrived home from beach camping, I flipped on my computer and closed my eyes after typing my password for online banking.

Tick. Tick. Tick.

Why is it when you are broke and running the risk of overdrafts, the bank websites turn to sludge? It’s as if they get a sick satisfaction in making your pain last longer.

The screen finally popped up and… I screamed.

We only spent $38 for the week (I’ll update you later on how we shamelessly saved money in ridiculous ways).

I’m fairly certain we spend more than that when we aren’t on vacation.

Cheers to my first ‘debt hangover’ free vacation!

I am very disappointed.

This event led to the following changes:

1. More involvement by both of us. Often in relationships, one person manages the finances. When things don’t go well and money is too tight, this person feels the stress, the pressure, and the responsibility for the mess. We have both decided to dedicate and hour each week to review each transaction. Now we have more checks and balances on each others spending – otherwise, we’ll have another bad month.

2. We are refocusing our goals and setting rewards. Our next payoff is still a ways away and we’re getting frustrated and bored. We decided to give ourselves something to look forward to after our next payoff. It’s nothing huge, maybe a dinner out or a trip to the theater, but rewards between payoffs has become something we need to stay motivated.

3. Reconsidering our numbers. We went back to make sure our numbers were working for our ever changing budget. We’ve been underspending on gas and overspending on miscellaneous necessities (car repairs, house repairs, etc.). We decided to adjust our numbers and perhaps pay a little less on our credit card so we can stop panicking when things aren’t balancing. Leaving the numbers the same would be great, but it’s obviously not working and it’s causing frustration.

4. We have decided to spread our focus. It’s easy to let finances consume our thoughts and lives. Rather than let this stress grow, we decided to let ourselves enjoy other things in life. Running, swimming, yoga, gardening groups, and organizing the garage help to keep our mind free of the finance clutter in our brains.

When there are long distances between payoffs, it’s important to work at what is frustrating you. You can’t solve everything, and it will be painful, but taking steps to at least reduce stress will help to prevent burnout. I’d rather take things a bit more slowly than give up entirely.

What have you done to motivate yourself and prevent burnout?

In short? A lot!

A few benefits of exercising (tip of the iceburg)?
Reduced blood pressure
Reduced feelings of depression and anxiety
Helps to control weight
Helps to build and maintain healthy joints, muscles, and bones
Reduced risk of diabetes

What do these have to do with finances?
Have you had to pay for doctors and medication recently?!? Ouch!! Also, exercise helps you sleep, puts you in a better mood, helps your self confidence, and gives you energy – all very important things in the work world where your paycheck comes from! Plus, people with a BMI of less than 22 get sick less often and miss less work.

I’ve been fortunate to have been physically active and healthy for most of my life. Running a marathon is just another way to push myself and stay active. Sure my sore legged walk makes Frankenstein look like a graceful ballerina but it’s important to encourage you to gain control in your finances AND in your health – they are closely connected.

Tomorrow is Saturday, take a walk with your dog, play with your kids, or ride your bike. Take a break from staring at that checkbook and balancing numbers to get some fresh air.

It’s good for you.

Some free sites to help you out?

www.Mapmyride.com
I use this site to calculate mileage and read elevation changes on my bike rides/runs.

www.Mypyramid.gov
This free site helps to guide you on better eating habits.

I’m warning you… these sites can be ADDICTIVE!!

What is your favorite FREE health related site?

I can breathe a temporary sigh of relief.

I keep hearing about layoffs across the country. I lost my job when the business closed 7 months ago, my husband’s company is on the brink, and my new job is unstable. My father and brother are without jobs. Are we just in bad industries or are you struggling to keep your job too?

I’ve been debt free before.

There was a moment, for about 3 days, in college when I had no debt. My car was paid off, my credit card had no balance, and I didn’t have a mortgage.

Then, I came close again after we closed on our house. We had been saving for a year and the money returned to us from escrow was used to pay off my husband’s credit line.

That credit card debt freedom lasted a few weeks before we decided to remodel our master bathroom and take a trip to Hawaii.

My finances are like a yo-yo diet. Sure I’d love to eat healthy all the time but rolled tacos with Mexican guacamole? I can’t resist.

Just like weight loss, a diet is silly. The only real option for permanent results is a lifestyle change. Staying thin requires eating less than or equal to what you need – staying financially healthy means spending less than you make. Sure it looks easy on paper, but only those who have suffered through it (and continue to suffer through it daily) know how hard the struggle can be.

This is the longest I’ve been on a financial diet – and I know I’ve got what it takes to keep the ‘weight’ off.

Yeah, the change is lame – but the results… those are what I’m grinning at each month when the credit card statement arrives.

One day… it will say…

$0

Which is harder for you: Losing weight? or losing debt?

Whenever someone on the show says something clever, an elevator in the background dings. Not a big deal… unless you work in a building with elevators. Now every time the elevator dings, I act like Pavlov’s Dog and wait for someone to say something clever.

I’m onto you Executive Producer Betsy Beers. Thanks to you, TV watching has caused a semi-normal person like me to live in a complete state of confusion for 10 floor dings up… and 10 floor dings down each day! But while you’re out creating chaos in the world, I was wondering if you’d take some precious time from your schedule and somehow work your Pavlovian magic on my finances. I’d like to be completely numb to the charms of the evil ones, ie… Target, Macy’s, and their best friend Nordstom.

Come on Betsy! A little help please!?

DING!

No, I am not going to reveal my housing costs. Asking a San Diegan to reveal her mortgage payment is like asking a New York housewife to reveal her age. The only thing likely to happen is a giant string of lies.

I’m also not going to reveal our charitable giving amounts. What we decide to give is a very personal decision and it’s not an amount I’m willing to change just to pay more on bills.

Savings: $50
Electricity/Gas: $105
Cell Phones: $100
Cable/Internet/Phone: $100
Grocery: $300
Gas: $260
Laundry: $10
Toiletries: $11
Clothing/House Repairs/Animal Care/Spending Money: $200
Water: $70
Trash: $18

All remaining money is used to pay our mortgage, our credit card, our student loans, and my husband’s truck.

So. Am I normal by the numbers? What does your budget look like?

Um.

I hate to disagree with a professional financial advisor but…

He’s dead wrong (and is obviously invested in Starbucks).

At least when it comes to me anyway.

I don’t buy big items. I bought my dining room set for $75 off Craigslist five years ago. My couches are ten years old. My bed is a hand me down from my sister. How do I spend my money?

According to my online banking… I spend it in tidy $20 increments over… and over… and over again. My money doesn’t flood out, it trickles. The article recommended taking 24 hours to consider every purchase over $100. Good advice, but the last purchase I made over $100 was months ago. It’s not the $100 purchases that are killing me!

I feel like the article should have simply said, ‘Watch where the bulk of your money is going and try to find ways to save from there.’

My goal this month is to watch my ‘trickle’ problem. I’ve gotten to the point that I have to seriously consider every item I purchase AND if I wait long enough, will it go on sale? will the newspaper run a coupon?… or will I forget I even wanted it in the first place?

Is your problem a trickle? Or a flood?

So here’s an open note to my mother – and I’ll try my best not to sound like a Boyz to Men song.

Mom,

Thank you for teaching me that children don’t need money to be happy. You made sure I knew love from my family was worth far more than the cash so frequently doled out to my friends from their uninvolved parents. I had the happiest childhood (and heck, adulthood) a kid could ask for and it was never because you showered me with the finest things in life – you knew you couldn’t buy joy. You showed me love, compassion, kindness, and at times… the back of your hand when I deserved it.

Thank you for teaching me responsibility. You didn’t teach me how to get into a financial mess, but you taught me how to own up to my mistakes and pay for them no matter how much it hurts. And speaking of taking responsibility… um… yes, I was the one who left the candle burning and set the counter on fire 11 years ago. Sorry about that.

Thank you for your faith in me. When we went on that college campus tour and I saw the $26,000 a year price tag, I told you it was a nice dream but it would never happen. You looked at me like I was insane and spent the next few hours with the financial aid department. They told me I had to keep a nearly perfect GPA and you told me you knew I could do it… and I did… but only because you believed in me more than I believed in myself.

I wish every kid could have a mother like you. The world would be a great place.

I love you mom

But I guess that’s part of a journey.  It can’t be all fun right?

I worked a tough job for a ‘big box store’ to pay the bills while applying for any decent job available. I finally landed a great job in December. 

I’ve struggled with unexpected expenses – like a monthly $150 property tax hike and a 1% sales tax hike…

I’ve made lifestyle changes – the biggest one is my use of public transportation…

I’ve struggled with monotony…

And I paid off my car.

Here is where I am on my debt journey.  Somehow, we’ve squeezed $10,000 toward our debt – $30,000 to go.  Sure I’d like it to be more, but $10,000 isn’t a bad number.

I can’t wait to finish this journey and finally become…

DEBT FREE!!

The national news show NOW on PBS is looking for a student graduate who is in debt, about $50,000 or more, and fits one of the following two profiles:

1) A recent graduate (0-2 years out, give or take) who has been unable to find a job in his or her chosen profession because of the recession and is having difficulty or is totally unable to make their student loan payments.

2) Someone with an advanced degree who is about 5 years out of school and has been hit hard by the recession – possibly lost his or her job or is woefully underemployed, maybe trying to support a family, who is considering bankruptcy.

If you are interested in being interviewed for a documentary that will look at the student loan and recession crisis in the US, please contact us right away. The show will air on Channel 13 in late May, so
we’d need to hear from you immediately. Please contact Elyse Eisenberg at NOW – (212) 560 8567- if you are interested in doing the interview. You can also send an email to – eisenberge@thirteen.org.

Please contact Elyse if interested in talking about your story.

While our relationship has been great and I have appreciated your monthly letters of good tidings, I’m afraid I have to end things. You see, I recently met with my tax man and he told me we’re getting back a small chunk of cash which means… all the money I’ve been saving can finally be used to rid myself of you.

I know you have lots of friends like me and you probably won’t miss me but I’m sure you’ll miss the nearly two years of interest I would still owe you if we continued to be friends.

Please don’t take this personally, your service has been exceptional. We’ve actually got along quite well the past few years but it’s not you… it’s me.

I wish you the best in your future endeavors… none of which will involve me.

All my love, but none of my cash,

Rebekah

Some people have bad teeth.

And even still, some people have teeth that make Steve Buscemi look like a Colegate smile model.

I’m in the last category.

Oh, you can’t tell to look at me. I have a beautiful smile – but I’ve spent more on my teeth than most people spend on their first home.

Either:

A) My dentist was an elephant poacher in her previous life and she can’t rid herself of the desire to create enough pure ivory piano keys out of my teeth to furnish a grand piano… or two.

Or

B) My tooth enamel is as effective at preventing cavities as a double fudge cake is to weight loss.

I brush, I floss, and I rinse twice daily. I avoid soda and sugar. BUT… according to my dentist, some people are destined to have bad teeth.

And I am destined to pay her dental school loans.

Obviously my dental woes affect my ability to pay off debt. I recently finished paying off a $1,500 dental loan, but there is always more work to be done.

I also recently interviewed for a job with one of the most inclusive dental plans I’ve ever seen.

They reviewed the information with me at the end of the interview and I’m hoping they didn’t notice I had stars, exclamation points, and highlighted sections around the ‘Dental Benefits’ section.

Ahh. To be free of dental debt – past and future – would help a lot.

Her advice makes perfect sense. Credit cards companies have been unpredictable lately with closing accounts or reducing credit limits. If you pay off your balance, you may not have a credit card to use in the event of an emergency. I have a lot of respect for Suze for changing her stance.

I knew back in January that we were going to do our best to meet our credit card payoff goal date of May 2009. I wanted to do it without having to pull from our savings. But after crunching the numbers we can come up with $1,500 for sure this month.

Since we are so close, we are going to pay as much as we can towards our credit card debt and pay off the rest with our savings. I’m going to see how many tricks we can pull out of our hat (extra hours, selling stuff, etc.) to keep our savings as intact as possible. But as of April 30th, we want to be credit card debt-free and will pull from our savings as needed.

Let me just say that I do not recommend that you pull from savings to pay credit card debt unless you really think through everything. If it wasn’t for our business, we would more than likely have followed Suze’s new advice. As I previously mentioned, once our credit card debt is paid off I was going to retire from writing on this blog and a new blogger will begin with their debt story. The time that is used for this blog is really needed for our business to expand.

Our story is far from being over and I know some of you mentioned how nice it would be if I still gave updates somewhere. Well, you can change retiring from this blog to “semi-retiring.” I will not be posting daily, but I can post when the mood strikes when there is an interesting update. The posts will not be as detailed as before, but if our decision to use our savings to pay off the last of our debt bites us in the butt – you’ll hear about it right here.

I sure hope it doesn’t, though. The plan is to replenish the money that we end up “borrowing” the next month. We’ll kick our income into high gear and we’ll put off the home repairs that we need for a little bit longer. It will be all about our savings account for a while.

Nothing in life is ever guaranteed. You can budget until you turn blue in the face but life can never be completely planned. Taking everything into consideration, we think this is the best choice for us.

I have a friend who is in a similar situation (has enough savings to pay off credit card debt but opts not to based on fear of emergency). Can you explain the reasoning to me? … If an emergency arises, why couldn’t you use a credit card?

For our situation, the mathematical thing to do is to leave our savings alone. Our debt is at 0% and will be for a little while yet. So we are earning money on our savings (although the average interest rate is well below 2% right now). If we were paying interest on our credit card balance, we probably would have used our savings to pay off the last of it. We’ve paid enough in finance charges through the years and I don’t want to pay a penny more if it can be avoided.

There are emotional reasons as well. I like having money in our savings account that is ours…all ours. We use it and we don’t owe anything to use it. There is something I find very empowering about that. The other day I started thinking about how much we should aim to save up for a good emergency fund. $10,000 popped in my mind and I realized how many emergencies that could cover. That would be an awesome safety-net.

Then there is another emotional reason. I have concerns about the transition phase we will have to go through once our credit card debt is paid off. We’ll still have student loans and a mortgage, but we are going to spend some money on things we have been putting off while in debt reduction mode. There is always the concern that our old habits could resurface. Going into this transition, I think I would rather have some money in the bank in case we stumble a little bit.

Back when we started our debt reduction journey, I was anti-emergency fund. If we had an emergency, we would use our credit cards. Gradually we started up a little account then added more and more to it. It became a “financial blankie” of sorts. The economy may be going a little crazy but we have some cash in the bank. It’s comforting.

I did take a look at our finances today. This weekend my husband and I will discuss and decide what we would like to do. We will be able to pay a chunk of our debt off, but we will have to pull some money from our savings to finish off the rest. We’ll take a look at the pros and cons to figure out what is the best route for our family.

I didn’t get a fast talker this time but I did get a persistent person trying to sell me a program that would make my monthly payment if I lose my job, etc. The charge for this program depends on the balance on your card and this card is the one with the last of our credit card debt.

I’m not interested in a program like that and told the woman, “No thank you.” She went on again. I said, “No.” Then she got a little personal. “Do you have anything that will pay off your balance if you happen to lose your job?”

I am not a quick thinker. If my fifth grade teacher hadn’t of zapped the word, “Um…” from my vocabulary, I would be saying it all of the time (thanks, Mrs. R!). I don’t know where it came from, but I had a quick answer for her…

“My emergency fund.”

Dead silence on her end. I don’t think she expected to hear that. I didn’t expect to myself to say that! After a few seconds, she said, “Ok.” She didn’t discuss the program again and our call ended shortly after that.

I know we have more in savings than credit card debt. The whole thing is still a little surreal even though I’ve written about it on here and discussed it with my husband. Saying it out loud to someone else other than my husband made it really sink in. I can definitely understand why some people who have paid off their debt call into a radio show to yell that they are debt free.

Stuff used to rule our life. A holiday coming up – well, gotta go buy some decorations. Fisher Price came out with a new Little People set today – well, that is a must have addition to our son’s toys that already fill his room. We didn’t have money in our checking account for it so on the credit cards it went.

We don’t put things like that on our card anymore. It’s not just because we are trying to reduce debt. It’s because we know that we don’t need all of that stuff for happiness. The book Debt is Slavery actually was a big eye-opener when it came to stuff (if you haven’t read it, I highly recommend it – see if your library has a copy to borrow). I felt sad selling most of our stuff. It wasn’t because I was going to miss it – it was because we spent so much money on it.

An interesting change is one that I’ve tried writing about before, but couldn’t find the words. I still can’t quite seem to get it out. So I’ll give an example of what changed. We knew that reusable shopping bags were out there but never gave them a second thought. We’d get plastic bags and toss them in the trash (less a few we kept around the house for various uses – but we didn’t use many). It was really starting to bug the both of us so we paid the money to have some reusable bags.

It’s almost like since we were cutting the wasteful spending we were doing – we started cutting other waste from our lives as well. I wish I could convey this better – I’m not sure I fully understand it yet LOL.

Even though our goal was to pay off credit card debt, we have received so much more in return. We are a much happier family overall. That is a wonderful benefit

Three years. It amazes me that we have kept with this for so long. Back then, I thought it would take forever to pay off $37K in credit card debt, even with setting a goal date of May 2009. Those three years have flown by. I wish we starting reducing our debt much sooner!

I’m sometimes asked to reveal one piece of advice when it comes to debt reduction. My answer varied. At first, I said that it was important to keep motivated. Later on, I said, “Spend less than you earn.” Now, I say…”Just start – don’t wait another day.” It’s so easy to put off because it seems like it will take forever. Even if you only put $20 extra a month towards your debt. Just start. Say enough is enough and start making that difference.

All this week, I’ll be taking a look at what has changed. I’ll also reflect back on how we have changed – we aren’t exactly the same people any more.

I’d like to thank all of you for reading. Your comments and emails have helped me through some tough periods. I get teary-eyed thinking that we are almost done. We are so close. Once our credit card debt is gone we can let out a huge sigh of relief and then head on to the next chapter of our financial lives.

I’m excited! Now it’s time to look at some numbers for some extra motivation for the home stretch…

When it comes to debt, I am not anti-debt. Do I like being in debt? Heck no. Especially since it was due to us being irresponsible and spending more than we made. While I’d love to blame the credit card companies for our debt…I can’t. They didn’t make me use their cards. I did that. I swiped it each time or plugged the numbers into the computer to make an online purchase. They didn’t do that. Sure, they have questionable practices. You miss a payment and your interest rate can skyrocket. I don’t agree with their business practices and I think they are shady. I’ve always felt that if I concentrated on that and gave them the blame – we wouldn’t learn our lesson. So I’ve focused on the fact that we used the cards when we didn’t have to.

When it comes to student loan debt, I’m not against that either. Tuition and room and board can be expensive. To have that money up front at 18 can be hard. I probably could have taken out less in student loan money if I saved some money while working the summer before college. I didn’t. I spent it and because of that I took out more in student loans than I had to. So I don’t regret all of the student loans I took out.

For mortgage debt, given our income it would be tough to purchase a house mortgage-free. So I am not anti-mortgage debt. It would take us many years to do that. I think the thing to do is to still try to get the best deal when shopping for a mortgage and to not buy more home than you can comfortably afford.

Lastly, for auto loan debt, I am not against that either. I don’t want another auto loan, but I also don’t want to make a mistake of buying an inexpensive used vehicle. The last one we bought was such a horrible vehicle – it only lasted a few months. Like with a mortgage, you still have to be responsible and understand what you are getting into with an auto loan and the car you are purchasing.

I don’t want to have debt. But I have to be realistic and responsible. I bolded responsible there because I think it sums up the one thing we lacked for so many years. We weren’t very responsible with our purchases. We settled on a high mortgage interest rate because we thought it was the best we could do (although we didn’t agree to an ARM that was offered to us – whew!). Same goes for our last car loan. The interest was high, but it was the first auto loan we got without a co-signer so we took it. Thank goodness we agreed to the five year loan versus the 6 year that was dangled in front of us.

We’ve made bad choices in the past. We have learned a lot and with that knowledge are going to make the best out of the money we make and spend. We may not be able to have the best scenario (no debt at all), but we will make the best choice given all of the resources we have. We will be smarter consumers. We are shifting our finances to be more proactive than reactive.

Such is the case with saving up for a new car (which doesn’t necessarily mean brand new – just new to us). Our car probably has many years left to it. It’s a darn good car and although I really didn’t like that car at first, I have a lot of respect for it now. We will start saving up the money for our next car purchase. Here is where my realistic tendencies come in (some may say pessimistic, but I view it as realistic in this case). What happens if our car has to be replaced sooner than expected? We can settle for a cheap used car using funds saved up until that point, but that is not always the best choice.

Our goal is to make the best choices given all of the resources we have. We also want to get to the point where we have more resources since that gives us more options. After being so far in the hole, I feel I am being realistic with even hinting at the possibility of another auto loan. When faced with a problem, I like to look at all of the choices and not exclude any unless it is determined that it is not the best choice. I will not avoid debt if it ends up being the best choice for the situation.

We are actually going through this process right now due to some substantial upcoming medical costs that are not covered by our health insurance. We could pay in full and deplete our savings. We could enter into a payment agreement with the medical provider and have medical debt. We could research to see if there are any programs we can qualify for to help with the cost – maybe even get new health insurance. Etc., etc. We could even decide to not have the medical cost at all (it is not life-threatening, but does affect quality of life). There are many choices we can make and we will dig into each one to determine the best choice given the resources we have.

Going deeper into debt is not an option I like, but it is an option that I have chosen to keep as an option until it is determined to not be the best choice.

“This year, we’ve decided to just go for broke. Yeah, the economy might be in bad shape, and times might be tight, but putting another four or five hundred dollars to the debt we already owe isn’t going to make that much of a difference…”

[Via NorthJersey.com]

Here’s my confession – I don’t know how many times I’ve felt that way. I know it was a lot and I acted on it a lot. After all, we were over $37,000 in credit card debt way back then. But the thing is – I still deal with those thoughts. Why not charge a few hundred on our cards and then turn around and pay it off in a few months? We are in debt so what is a few hundred more tacked onto it?

Even though I still get those thoughts, I can talk myself of them pretty easily now. How? Well, I think back to how our debt started. My credit card only had a limit of $500 and my thought was that I could pay it off in a few months. I did pay money towards the card, but I kept using it. Then the credit limit was raised. So I charged more. I dug a pretty big financial hole on my own and then the bad habits continued after I got married and had access to more available credit. Very vicious cycle (*shiver*).

Anyways, I think about that and how stuck we felt at times due to our debt. I don’t want to be there again. I am so glad we are where we are right now financially with everything going on with the economy. Back in April of 2006, our total debt payments were $1,753/month. Today, they are $729/month (mortgage, school loans and our credit card). That is a difference of $1,024!

Because we are no longer paying for all of that debt, we have extra money for other things – like health insurance and life insurance. We also have money to pay for things that come up like car repairs or medical bills. If we don’t have enough in our checking account, we have a savings account to pull from. I think about my stress levels back then compared to now. I really like how much better I feel now that our financial situation is better.

Sure, there are times where I think about going for broke. But we’ve been there before and I don’t want to go back there again. Some of you have shared with me how great it feels to be debt free. I believe it and that helps to keep me going with this until every last cent of our credit card debt is paid off.

Now onto the round-up:

First up is JD at Need To Be Debt Free. I think I really feel a connection with JD because he’s in Michigan and he shares exactly what’s on his mind. He’s had a lot of hardships, but gets himself and dusts himself off after hitting those bumps on the debt reduction road. Recently JW was thinking about time management. That’s one of my weak spots, so I found his schedule interesting. I think I’m going to need to do something like that.

Grace at GRACEful Retirement shares a co-worker’s experience with American Express. They called and demanded an additional payment, above and beyond the normal monthly payment. If that additional payment wasn’t paid – the card would be suspended. All I can say is ?????

Him & Her at Make Love Not Debt are taking some steps to clean up and started canceling credit cards. They report that none of them fought to keep them as a customer. I’ve decided that it’s time to simplify our lives and start canceling some of our cards.

Part of me is wondering if I should take a little bit from our savings account to knock our debt below the $8K mark to have some progress with our debt. If we didn’t have an estimated tax payment to make this month we could have made it under $8K. I’m really thankful we have the money to make that payment, though.

We still haven’t had a garage sale yet, but hopefully we can soon before it gets too cold. I have sold a few things here and there and have made about $70. We aren’t touching that money because it will be our change money for our garage sale. I may also try listing a couple things on eBay that I know will sell. We’ll see.

Our business is making a small amount of money right now, but we aren’t paying ourselves yet. I’d like to get the bank account built up a little bit more before we do that.

I’ll think about it for a few days. I just may pull some money out of our savings to give a little debt reduction “boost.” I feel pretty “blah” right now.

For some reason, I am getting really impatient lately and I can’t seem to shake it off. I feel like we have learned our lesson and I’m ready to move on with our lives. I thought this home stretch would be the easiest part. Perhaps it will actually be the hardest.

I wonder if we should take a small break and spend some money for a few things we want. While that sounds nice, I’m not so sure that will help. We want the debt gone, after all. Then I wonder whether we should muster up as much energy as possible and hit our debt really, really hard. Perhaps it is time to pull out every rabbit I have from the hat. That means selling as much as we can and maximizing our income to the fullest.

At the same time, I’m tired. I’m not sure how much more I can give right now. We do have some extra in our account right now so maybe it is time to take a small break and spend some money. We’ve done that at least once (maybe twice – I can’t recall at the moment). We are still in a good position to be able to pay off our debt by our goal date of May of next year.

There is one thing I would love to do, and that is to go camping. We have only done it once before we started this debt reduction journey. Some rest and relaxation in the woods would be nice. Perhaps that will be our splurge to help “refresh” ourselves. The more I think about it, the better it sounds. It is definitely along the lines of creating memories instead of more clutter

Recap at I Will Teach You To Be Rich

Ramit picks out the highlights and provides direct links to interesting sections. Once I have some more time, I plan on reading through the whole thing. I’m not sure if it’s a side effect of the new medications I am on or what – but I have been so tired the past few days. I lay down to relax and end up taking a 3+ hour nap. Fatigue is not a known side effect so I’ll be touching base about this with my doctor during our visit this week.

Looking through my old credit card statements, there were charges all over the board but a few showed up a lot:

• Fast food
• Gas
• Clothes
• Furniture
• Toys
• Electronics

The cash we had was used first and foremost to pay bills. After that, we used our credit cards. The embarassing thing about our debt is that I thought I was doing a good job of managing our finances. We were able to pay our bills and collectors were not knocking at our door.

I didn’t fully understand the fact that I was digging a HUGE debt hole that was costing us so much money. At the peak, our finance charges were running over $400/month. I can think of a lot better uses for $400/month than giving it to the credit card companies.

Since starting on this journey, there have been times where I can really feel a difference with how we spend money. Case in point – an LCD TV. I really would still like one, but we’ll wait. Once our debt is paid off perhaps we will start an LCD fund. Back then, I would have bought one without a second thought.

I have learned how to wait.

Debt Hater – $16,000 in credit card debt

I started this blog about three years ago in a panic. I was nearly $16G in credit card debt AND I had a nearly new car payment, new job and new expenses. Two jobs, two moves and the same car later, and I did it.

I messed up A LOT on the way.

I didn’t always do the brilliant financial thing.

Brainy Smurf – $28,000 in credit card debt

Today, it’s 100% gone.

The hockey jerseys are paid for. The vinyl siding is paid for. The roof is paid for. The furnace is paid for. The computers are paid for. The camera equipment is paid for. The BMW is paid for. Even the $7k vacation nearly a decade ago is paid for…

The Bizzaros – $24,700 in credit card debt

The Bizarros are out of debt. And have been for a about a month. I wanted to learn how to run up a tree and do a flip to celebrate, and I had planned to do the research, but let’s face it, I’m just not a tree-flipper.

Here are the bloggers from the previous list:

Defying Debt in 2 Years – $30,000 in debt

“I appreciate how I learned who my true friends are and how you can pretty accurately judge a person based on how they treat people who don’t wear fancy clothes or flash their money around. I appreciate the freedom that comes when you don’t have to struggle paycheck to paycheck to survive. I truly appreciate all the things that you can buy with money because I lived so long without having much.”

Beyond Broke – $29,000 in student loan debt

“It’s over, I finally did it.

I am debt free.

This means my paycheques are finally mine. They’re not earmarked to send to someone else. I can now put it straight into a savings account where I’m paid interest instead of being charged it!!”

No Credit Needed – $11,510.22 – various types of debt

“Free at last, free at last, it’s hard to believe but it feels so good, I am Free at last!

Bye, Bye Ford Motor Credit! Bye Bye Chase and Citi! Bye, Bye Credit Card Companies!!! Bye, Bye! Bye, Bye MasterCard and Visa! BYE, BYE!!!”

Chris sent me a link to Motley Fool’s How to Get out of Debt Seminar. It’s completely online and self-paced, so you can go through it at your convenience. They have the action steps listed, and it looks like you will go through getting ready to pay off your debt all the way to dealing with setbacks. I didn’t get a chance to go through it, but it looks like a great place to start learning how to deal with your debt. Thanks, Chris!

Beverly sent me a link to an interesting concept. There is a site out there called ShortCuts that will link more coupons to your store cards. From their store list, this is compatible with Kroger, Ralphs, Gerbes and more. I am unable to test this, because I don’t have any of those stores in my area. Are any of you using it? Thanks, Beverly for the link!

Lastly, here’s a contest I thought I would spread the word on. Intuit is giving away a free year of Quicken Online (and $350) every week until June 23. To enter, you need to add them as a friend on Facebook. I don’t have a Facebook account, but I may sign up to try to win Click here for more information.

First of all, I’ll answer some questions:

Arduous asked

…It seems to me that $833 a month is doable though, so I am looking forward to a big old blog party in May of 2009. How much per month have you been managing lately? It seems like you’ve been paying off much more than that.

Let’s see…I’ll look at the past five months:

November 2007 = $743
December 2007 = $1,843
January 2008 = $965
February 2008 = $2,300
March 2008 = $701

It seems like every other month we have a really good debt payoff month. The months that aren’t as great are the months where our health insurance premiums are due (we pay $800 every two months). We have been averaging about $1,300/month.

Danielle asked:

Where did the $600 come from? Did you sell something?

It’s funny because I try not to give out too much specific financial information on here. I have to guard it somewhat. But, when I pay off a chunk of debt you can be pretty certain a pay day occurred not too long ago. I forecast our cash flow months in advance, so I can gauge how much money we have for everything except our debt. Extra money is sent to the credit card before it can spend it somewhere else.

In this case, I also sold some advertising on my other blog. So that is part of it as well. It is also the off-month where we don’t have to pay our health insurance premium

Now for an update on my husband’s job search.

There are still some resumes floating out there, but the jobs to apply to within his field are very slim. Maybe it’s a reflection of the economy right now. So we discussed it, and came to a decision. We are going to stay put where we are and bring to life the idea I had over a year ago. My husband will be doing the majority of the work and is not seeking employment elsewhere.

As a refresher, my idea involved about $500 as seed money to buy what we need. It’s a far cry from the $10,000 we spent towards our first business attempt (that didn’t get off the ground). We also were able to use CASH this time around, which is always a plus.

I think you know that it’s hard for me to part with a chunk of change like that. That’s why we didn’t do anything related to my idea for a year. I have had one serious case of debt tunnel vision. But a chat with someone woke us both up. We’ve already lost a year that we could have been working on it. We can’t lose any more.

In case that little birdie that woke us up is reading…thank you

How will this affect our debt reduction right now? Probably not too much. Our income should stay fairly constant at this point and all of the numbers I crunched show that we will be able to meet the $833/month payments to our debt (on average). My idea should start helping with income in six months or so.

I’m excited, because for the first time in quite a while I feel like we are looking to the future.

Congrats to The Bizzaros!

The Bizarros are out of debt….But the beauty of it is, the mind-blowing amount of hard work that had propelled us to the surface also just kept on truckin’, and now we’re solidly in the black and heading to Australia for two weeks in May, using real, honest to God cash.

I don’t know about you, but I get teary-eyed reading that. Thank you Basil and Bianca for sharing your story!

Now for some other links.

Financial Literacy Month has a collection of tips from many personal finance bloggers. They included one of mine about simplifying my life by selling my bald eagle collection.

I’ve also written a few articles for the Prosper blog that have been published. I am a satisfied Prosper borrower and they hired me to write for them. Extra money is always a good thing

How Much Money Could I Save by Using Prosper? – I went crazy with plugging the numbers and creating graphs again LOL.

How Low Can You Go? Playing Spending Limbo – When I really started thinking about our spending, I realized we’re playing a game of how low can you go.

Coming up this weekend, I plan on responding to a lot of your comments. I’ve been pretty busy this week so I haven’t been able to keep up as much as I’d like to. There’s also a lot to give updates on!

Danielle left a comment on yesterday’s post:

Hmmm…What about taking $1599 out of savings and putting it towards your debt? You’d still have $1609 in savings…. C’mon, you know you want to…

Oh yes…I am very tempted to do it and have thought about it. I really want to hit that big 4 figure debt milestone. At the same time, though, I really like that money in our savings account. If something happened, it would cover a month and a half of our expenses. It means that we are not living paycheck to paycheck anymore and I love that.

With paying off our debt, we are paying for our past financial mistakes. With having money in our savings account, we are building for our future. Our savings account is a reminder of how far we have come. As much as I’d like to hit that debt milestone, it will have to wait a little bit longer.

Now…ask me again when we only have $3,000 left to pay towards our credit cards and we have $3,000 in savings.

When the light starts to flash, you had better have the cash.

That’s the reality for millions of subprime borrowers whose used car purchase is contingent upon having an unusual option: a little box mounted underneath the dashboard that forces them to make their payments on time.

[Via Yahoo.com]

If you don’t pay…your car gets shut off and won’t start. The only way to get it back is to make your payment and receive a special code. If you don’t pay, then the repo man comes for a visit.

I don’t think it’s necessarily a bad thing. When my husband and I bought our first vehicle together, our credit wasn’t that great at the time but we did end up getting a loan with the help of a co-signer. If we had the option of having one of those boxes instead of having a co-signer, I would have gone for the box.

What about you? What do you think of the boxes?

I think this weekend there will be an update over there.

Here are some articles that caught my eye this week:

One year…$12,000 in debt…gone!. Congrats Starving Artist!!

DebtKid gives some tips on how to find peace during financial turmoil. Sometimes it is tough to ease your mind when things are tough financially (I’m still an ear wiggler!)

LuLuGal wanted some dirt on me and asked me some questions. Thanks for the opportunity!

Lastly, a blogger who was a huge inspiration for me is back to blogging!

For now, here’s some articles that caught my eye this week:

Over at We’re In Debt, someone tried to jack their credit card. Scary!

Cleverdude is running a series on ways to save money. He even mentioned one that we are trying, blocking off unused rooms. Which reminds me, it’s probably a good time to see how our electric/gas costs are doing this year compared to last year.

Jesse is holding a credit card cut-up contest. Top prize? An iPod nano (plus some other neat things).

For one, it really shows how much money we aren’t spending. We are doing something right to have that much money as “extra” money. Secondly, I can give a “take that!” to my credit card. That always feels a little good.

I’m happy to report that we have broken down below the $14,000 mark. Our credit card debt is now at $13,699.

It’s hard to describe how I feel right now. I think one of my favorite quotes helps to sum it up:

“What this power is, I cannot say. All I know is that it exists, and it becomes available only when you are in that state of mind in which you know exactly what you want, and are fully determined not to quit until you get it.”

- Alexander Graham Bell

I’m in that state of mind. I want our credit card debt paid off!

As for me, the rest wasn’t all that restful. I kept waking up and I was dreaming of a project I’m working on going haywire at work. It almost makes me wonder what lies there for me tomorrow morning. As suspected, I was running a fever and I always have some horrible dreams when I have a fever.

I hope I feel better tomorrow. As horrible as I feel right now…it was worth it for yesterday

I am a little late in sharing some articles that caught my eye this week. Being sick has put me a bit behind with everything.

Cody shares that bad habits = bad debt. I’d have to agree.

JW celebrates one year of paying off their debt. Congrats, JW! I know you wanted it all paid off by this time, but you guys are doing awesome!!

For those in the job market, you may want to check out Matt’s ongoing series about job searching.

Lastly, Jim has an article on simplifying your personal finances. I’m thinking of doing this shortly by closing some of our credit cards.