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Double-Charged

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I mentioned that last month was the first month of my IBR payment for my ACS student loan, but this month (August) would be the first month of payment for my Sallie Mae loan. When I looked online at the beginning of the month, it said I’d been approved for IBR (income-based repayment), but still showed my loan status as in deferment. I called to get it straightened out since I wanted to go ahead and start the IBR program immediately. The representative I spoke with switched “off” my deferment so my payment would be due this month (as I’d wanted). I asked if I could go online and enroll in the auto-pay program (if you enroll, they offer .25% off the APR). The representative said I could do so, but it would be too late for this month and wouldn’t go into effect until September so I would still need to make my normal payment online and the auto-pay would begin the following month.

Sounds great!

So I did just as I was instructed. I signed up for auto-pay which did, indeed, say the processing took several days. As my due date was imminent, I also made a one-time payment for my August IBR payment.

A few days pass. And then Sallie Mae auto-deducts $250 (my IBR payment) from my checking account. In other words…I got double charged.

Fortunately, since we’re living on last month’s income we had enough funds in my checking account that this wasn’t a problem in terms of causing us to overdraft or anything. However, this means that instead of the normal $250 payment, I paid TWO $250 payments this month (= $500!!)

What would you do?

I was hoping to have about $250 leftover at the end of the month, which I would have applied as an additional debt payment anyway….but I would have applied it toward the car, NOT the student loans. Is it worth the time, effort, and hassle to call Sallie Mae, argue with them, and try to get reimbursed for the charge (which will probably take a week to straighten out and an additional 2 weeks to get a check in the mail…just in time for me to turn around and have to give it back to them for my September payment).

If I didn’t have the money I would certainly call and argue over it. But we are fortunate to have the extra money at this point and would have used it toward debt anyway. Soooo, do you just live with the double-charge knowing that at least you’re making progress on your debt? Or do you fight it out?

Either way, at least the money is going toward some form of debt payment but its frustrating when things like this happen. I’m already pressed for time in my life, I hate when things like this pop up that require more time and attention.


Ashley’s August Debt Update

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It’s been awhile since my last debt update! (See previous from 1.5 months ago here)

Updating all the numbers really makes me feel at peace with my decision to switch my student loans from deferment into income based repayment (IBR). We’ve been putting so much money toward debt, and yet the overall figure of money owed has barely dented because the student loan balances have been continuing to rise (since they continue accumulating interest). My ACS loan IBR went into effect in July, but August will be the first month of IBR for my Sallie Mae loans. So hopefully this will put an end to the climbing balances since unpaid interest will be forgiven (on the subsidized loans).

With that said, let’s look at my big debt picture. Note that the balances reflect the amount owed at the end of July/beginning of August (after July payments had been made, before any August payments have been made).

PlaceCurrent BalanceAPRMinimum DueJuly Payment Made 
Capital One CC$017.9%--
Mattress Firm$00%--
Wells Fargo CC$013.65%--
BoA CC$07.24%--
License Fees$40152.7%551069
PenFed Car Loan$223772.49%411411
Sallie Mae - Federal Student Loans$44598.25%6262
Sallie Mae - Dept of Ed$56668.5%00
ACS Student Loans$211647.24%246247
Sallie Mae - Dept of Ed$661147%00
Medical Bills$69310%150150
Totals$1307269241939

*Note: The “July payment made” in the license fee category only reflects the regular snowball payment for July. An additional $500 was put toward license fees from June’s surplus funds that are not included in the monthly payment figure.

I asked for your feedback regarding focusing my snowball toward my car loan (what I’m calling my “race to 20K“) or my higher-interest Sallie Mae student loans. Although there were advocates of each, I think most people were advocates of focusing on the student loan debt first. However, ALL said that whatever I decide to focus on (either the car or the student loans), that I should not split my causes (and try to pay money toward each). Everyone was pretty much in agreement that I should pay minimums of whatever is the non-focus and put all extra money toward the one current priority.

I think I still prefer to pay the car off first (and be free of consumer debt forever!!!!!!!). I mentioned that I have been making minimum payments toward 3 different medical entities for bills incurred during my husband’s mystery illness (from back in Nov-Dec 2013 timeframe). Two should be paid in full within about another 4-ish months and will free up $150 in payments. Instead of snowballing that toward the car, I may move that money toward the student loans. That way I’m not putting extra money toward the student loans, but its like I’m just moving my minimum payment from one entity to another. I’m not married to this idea, but its something I’ve been batting around.

But before I can turn my attention to the next debt down the list (either the car or the student loans), we first have to eradicate the license fees. Husband and I are having a budget meeting tonight to see where we’re at financially after such a painfully expensive month of July. I plan to have a budget update up by Monday.

Hope you all have a great weekend!

Let me know what you think if you haven’t chimed in yet – focus on student loans or on the car? I keep going back-and-forth (obviously), but I’m still leaning toward tackling the car. I know its a higher amount and lower APR, but it just feels like something tangible that, once paid, we can say is OURS (as opposed to student loans….which I pay and feel like nothing has changed since I’ve got my degree either way). I think the psychological boost of crossing another debt off the list is nice, but I also think the car is a much more rewarding goal. Decisions, decisions…

 


Ashley’s Financial Goals

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With all my making and changing goals, I wanted to give a quick re-cap of my current financial plan of action (see last full plan of action post here, and an update with details about my race to 20K here).

So here are my current goals, in order of priority:

  1. License fees. We still owe approximately $4,000. The original goal was to try to have it paid off by August 2014. I’m still holding onto hope that this could happen, particularly if we reduce our checking account buffer. (Goal date = August 2014)
  2. Car loan. This is my officially named “Race to 20K” since we owe a little over $20,000 on the car still. My goal is to pay approximately $3,000/month toward the car after the license is paid in full, which would take about 7 months after it becomes the focus (Goal date = March 2015)
  3. Sallie Mae 8.5% and 8.25% student loans. About $5,000 is owed toward each of these loans. Since I’m starting to make payments toward my student loans now (the ACS student loans started this month and Sallie Mae repayments start in August), I’m hoping I can actually have these loan paid off while I’m working on my race to 20K. I don’t know what the “rules” are with income-based-repayment, in terms of if I can choose where the money goes (e.g., focus it on one loan, or if its equally dispersed across all loans). My guess is the latter (equal dispersement), but I’m still hoping to add a little extra money here and there and chip away at these higher interest rate loans concurrently with my race to 20K goal. (Goal date = ???)
  4. ACS and remaining Sallie Mae student loans. These loans have a lower APR than the above loans, and they also have much higher balances (ACS was a single loan for over $20,000 for example). So they get prioritized slightly below the higher interest/lower balance loans above. (Goal date = ???)
  5. Remaining medical bills. I have diligently been making our monthly payments (remember, I have monthly payments to 3 different entities), and have realized that 2 out of the 3 will be paid off in just a matter of months. Once paid in full, I plan to snowball those funds toward whatever debt I’m focusing on at the time (likely the Race to 20K). My guess is that by the time we get down to paying off the remaining medical bills, only a single bill will remain and it will hopefully have shrunk down to only a few thousand by that point. (Goal date = ???)

So that’s my thinking.

One question – what would you do about the higher-interest student loans (item #3)? Would you put any extra toward those loans while still working on the Race to 20K or do you think I should focus exclusively on the car loan race? I know Ramsey suggests one thing at a time (focused attention), but those interest rates are pretty high for student loans and the balances are low enough that I’d like to still chip away at them here and there….still putting the majority of our funds toward the car, but maybe an extra $50 or $100/month toward the student loans, if we have extra funds available???

Thoughts? Opinions?

Also – a quick update…. I got notice that my Skype interview is going to be TOMORROW! Eeek!!! I’ll probably peek in tomorrow afternoon to let you know how it went. In the mean time, fingers crossed!!!


Ashley’s June Debt Update

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Happy Monday! How about a little mid-month debt update, shall we?

I’ve listed things in order of our planned repayment schedule (according to my new plan of action):

PlaceCurrent BalanceAPRMinimum DueJune Payment Made 
Capital One CC$017.9%--
Wells Fargo CC$013.65%--
BoA CC$07.24%351005
License Fees$55432.7%5585
Sallie Mae - Federal Student Loans$44748.25%6262
Sallie Mae - Dept of Ed$55788.5%00
PenFed Car Loan$227422.49%411411
ACS Student Loans$213887.24%2525
Sallie Mae - Dept of Ed$652367%00
Medical Bills$81030%150150
Totals$1330647381738

I’ve been snowballing payments as I go and the snowball has reached a pretty good size!

$450 (from Capital One CC)

$350 (from WF CC)

$100 (from Mattress Firm account)

$60 (from refinancing the car, which now has a lower payment)

$35 (from Wells Fargo)

= Total “Snowball” payment of $995 (we’ll round up to $1,000/month)

The first debt I want to focus on is the license fees. We have been paying $55/month toward it, so our payments starting in July will be $1055. In addition to that, we’re still expecting to have “leftover” money at the end of June so hopefully we’ll be able to make additional snowflake payments in addition to putting some away for savings (an as-of-yet undetermined amount).

Per this conversation, we’re going to start stashing a little money aside, using leftover funds from the end of the month (as opposed to writing a line-item into the budget). At this point, I’m just going to store it in my Capital One 360 savings account. I want some time to do a little research into various options, but my intent is to open a Roth IRA at some point and begin planning for retirement. I want to gain a little better traction on our current debts right now, but I don’t want to put the Roth off too long either. So at some point retirement will, indeed, become a line item in our budget. Currently, we’ll just keep stashing a little here and there into our CapOne360 savings.

Also – and this is random – but on Sallie Mae’s website I decided to click on the “payment history” tab to see more info about my 8.25% APR student loan. I have always only looked at the overall number (total debt due), but when I clicked on payment history it tells you, broken down, how much of your monthly payments are going toward principle (principal?)  versus interest. Can I say how disgusted I was to see that out of every $62 payment, approximately $32 went to principle….the other $30 toward interest?!? WTF? How is this even possible? I know they stack the interest up-front so I’m sure it all makes sense numbers-wise, but that feels like a 50% APR!? Disgusting. I cannot wait to target those two high interest student loan debts. Can you believe – when I’ve worked my way through them (and am down the list to the car in terms of the order of repayment), my monthly snowball payment for the car will be over $1500!?! The power of the snowball is real, my friends! Very, very real! Never did I ever think I’d be making regular monthly car payments of $1500!!! At that rate (along with an extra snowflake payment here and there), it really is reasonable to have it paid in full within a year from the time we start focusing on it for debt repayment (remember, that’s the goal….I plan to start focusing on the car debt in February 2015 and the goal is to have it paid in full by February 2016). Of course, my other loans come out of deferment in February so we’ll see what happens. If we can’t make all the minimum payments the funds for the minimum obligations will have to come from our snowball. : (

I don’t want to see that happen. I want these debts gone with a  quickness! I know we still have an unfathomable amount of debt, overall, but it really feels like we’ve been making great progress. It’s very encouraging!

 

 

 


What’s Next?

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Did you catch the big news that we are credit card debt-free????

A couple of commenters asked the same question: What’s Next?

I have struggled with this and gone back-and-forth with the various options about a dozen times.

Even though I had committed to a plan of action, I really secretly wish I could target the car next and have no more “consumer” debts (though still plenty of student loans and other debts). But after talking to the husband, I think we’ve made some decisions.

First, we are not going to focus on the car yet. It’s just too scary. My student loan deferment ends in February and I don’t want to get stuck in a situation where our minimum obligations are so high that we can’t make them (which would force me to go into forbearance on my loans or get a deferment extension…neither of which I would like to do). Also, there is a huge difference in interest rates. My highest APR debt right now is for 2 of my student loans (at 8.5% and 8.25% respectively), versus the car that is only at 2.49% after I refinanced. We are still going to make the car priority over the student loans, in general (and will have it paid off well before the student loans are paid in full), but I want to knock out these two high-interest student loans to lower my monthly payment so, once deferment ends, we’ll be looking at a more reasonable payment. Additionally, the car loan is still pretty large (over $22,000) compared to the two smaller student loans (about $5,000 each), so I think I’ll benefit from the psychological “boost” of paying off another couple of smaller debts more quickly than I’d be able to pay off the car.

Second, husband wants to bump the license fees up our priority list. This is one of our lower “APR” debts (no actual APR, but small service fees that amount to 2.7% each transaction). I definitely support this and wanting to put that part of our lives behind us (more information in this post). It’s time to close that door.

Just FYI – I plan to do another debt update on Monday to give you more specifics on where we stand with everything (last debt update here).

Given all this, the new plan of action is as follows:

  1. License fees (goal date = August 2014)
  2. Sallie Mae 8.25% student loan (goal date = October 2014)
  3. Sallie Mae 8.5% student loan (goal date = December 2014)
  4. Car loan (now through PenFed; goal date = January 2016)
  5. Remaining student loans (will reassess in January 2015 to determine goal date)
  6. Remaining medial bills (will reassess in January 2015 to determine goal date).

If you read my old “plan of action” post (or even if you didn’t), you may be wondering why I have the 8.25% student loan prioritized above the 8.5% student loan (given that the two loans are comparably priced – about $5,000 each).

The reason is that the 8.25% student loan is a rare loan that is NOT in deferment. That means I’ve been making minimum payments toward it this whole time. I want to knock it out first so I can snowball those payments toward the next loan. If I were to focus on the higher interest loan first, its about the same amount so would be knocked out in about the same period of time, but I like the idea of having that monthly payment be added to my debt snowball (whereas, there is no current monthly payment on the 8.5% loan, so nothing to add to the snowball).

So that’s what I’m thinking in terms of our current plan of action, and an answer to the question “What’s next?”

However, I should caution that this is obviously subject to change. It seems that we keep changing our minds as things change (like when I prioritized my Bank of America credit card above the higher interest student loan, so I could have the psychological benefit of being credit card debt-free). So, we’ll see what happens but I feel pretty good about this plan.

What do you think? Would you change up the order of repayment?

Again – I’ll have a full debt update on Monday with fresh numbers but if you want rough estimates of debts you can check out this post from about a month ago.


Ashley’s May Budget Update

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Ashley’s May Budget Update

I recently gave a debt update so I won’t rehash those details here. Instead, let’s talk about how we did on our budget for the month of May.

Item Budgeted Actual
Rent $1055 $1055
Electricity $100 $79
Water bill $75 $57
Gas bill $75 $18
Sprint (2 lines) $150 $115
Cable/Internet $85 $85
Car Insurance $90 $90
Health Insurance $350 $350
Waste Management $35 $35
Debt $1500  $5453
Miscellaneous $250  $425
Groceries $380 $406
Baby Purchases $600 $500
Gasoline $100 $109
Savings for Irregular Purchases $190 $190
Total: $5035  $8967

 

So let’s talk about this stuff…..

Rent is “set.”

Our electric bill was within budget, but I already got the bill for this month and its over $100. It surprised me how much it jumped, but I think its only going to continue to rise across the summer months. I’m going to alter the budget for the summer months, increasing the amount allocated toward electricity to $150, and decreasing the amount allocated toward gas to $25 (same dollar amount, overall, but redistributing the funds away from gas and toward electric).

Water budget stays as-is.

Gas budget decreases to $25/month (see above).

Sprint budget will decrease to $115. I’m a little disappointed because I jumped through some hoops to lower this bill and was told it was lowered to $100….but then taxes and fees get added on and the final amount was actually $115. Still lower than the old bill, but not by as much as I’d hoped.

Cable/internet stays as-is.

Car insurance stays as-is.

Health insurance stays as-is.

Waste management (trash) stays as-is.

Debt. Can we get a moment of silence in appreciation of the DISGUSTING amount of money applied toward debt during the month of May? I mean….seriously. I looked at our monthly income for the past year, and the amount we paid toward debt was more than our TOTAL MONTHLY INCOME for the following months: January 2013, March – April 2013, June – July 2013, and Sept 2013 through Feb 2014. Insane.

In terms of miscellaneous and groceries, I went “over budget” in both of these areas (mostly because of my one day falling off the wagon). I’m going to give it one more month trying to stay within these budgeted amounts. If I fail again (what will be the third month in a row), then I may bump my grocery budget back up to $400. I’m really trying to stick to $380 or below!

This is the first month in a long time I went over on gasoline (but not by much). I don’t do a lot of driving so this doesn’t concern me too much, and the amount budgeted ($100) will stay the same.

In regard to savings for irregular purchases, I’m going to increase this a little. After our discussions about dental health, I think I need to start setting aside a little more money for upcoming dental visits for the husband. As a reminder, we have been saving $190/month:

  • $40 for semi-annual fees (car title/registration fees)
  • $50 for car maintenance (oil changes, saving extra for any necessary repairs and for potential new-to-us used truck fund for husband….probably won’t be needed until winter).
  • $50 for dental/vision….will increase to $125/month
  • $25 for travel and Christmas
  • $25 for 3-6 month expenses

My plan is to increase this amount from $190/mont to $265/month (an extra $75/month for dental).

 

Finally,  let’s break apart the “debt” figure to see why this is so high!

First, let me give an update on the snowflake payments I made from our April surplus (note, these funds are NOT included in the May figures because this money is from April surplus funds).

At the end of the month, we had $3197 leftover.

After talking to the husband we allocated the funds as such:

  • $1,000 toward our 3-6 month savings (I know readers have disliked this in the past, but husband is really pro-savings so this was a compromise, rather than allocating all toward debt).
  • $1560 toward Wells Fargo
  • $181 toward Mattress Firm (paid off account)
  • $460 toward back taxes. I never mentioned it, but similar to Steph, we pay estimated quarterly taxes. Key word being “estimated.” We weren’t too far off, but we did owe a little money, so we paid toward taxes out of the surplus.

Note…I realize this actually totals to $3201 (not $3197), and I never accounted for this $4 overage anywhere in our budget. Soooo, yeah. I wasn’t worried about it since its only $4. Not a big deal.

Here are our May debt payments:

  • Wells Fargo = $4140 (that’s an $800 “regular” payment + a $3340 “I cant take it anymore, must pay this off” payment).
  • Sallie Mae Federal (8.25% APR) student loan = 62
  • Carmax car loan = $470
  • Bank of America = $35
  • ACS Student loan = $25
  • License Fees = $55
  • Medical Debt = $666 (<yikes!)

A little update on the medical debt drama. I have now established payment plans for 3 separate entities at $25, $50, and $75 respectively (amounting to $150/month).

Do you remember all the drama I was having with our insurance company and the Mayo Clinic? Well finally I received a response…..the insurance agent we had spoken with (who said a flat rate of $100 would be applied toward the bill) was wrong. That’s only for out-of-network hospital stays. Ours was an out-of-network consultation. No money is granted for that. So after literally 5 months of back-and-forth, we were left empty handed. I called Mayo Clinic and asked if they would give me a reduced bill if I paid in full. They could do 10% (I pressed for more, but no luck), so I whipped out my debit card and paid off the entirety of the $516 bill. This was certainly rash and probably not in our best financial interest since this debt is interest-free and I could have applied that money toward our Bank of America credit card. But I was so exasperated and irritated with all the time and energy I’ve spent on this bill that I just couldn’t take it and I wanted it out of my life forever. Would I do it again? I don’t know….I’d probably put the money toward BoA. Did it feel good in the moment? You betcha!

So there’s that.

Future debt payments will be as follows:

  • Sallie Mae Federal Loans (8.25%) = 62
  • Carmax = 470….PenFed = 400 (after just refinancing we have a new lienholder and a lower monthly payment)
  • Bank of America =  1005 (snowballing payments: $800 from WF, $100 from Mattress Firm, $35 from BoA, and 70 from the car refinance since our payments are now lower)
  • ACS Student Loan = 25
  • License fees = 55
  • Medial Debt = 150

Total debt payments = $1697/month

And any surplus will be allocated toward BoA. My goal is to eradicate it THIS MONTH (June) so I’m hoping for some leftover funds at the end of the month to do so. You can see all my revised financial goals here.

This has turned out to be incredibly long so I’ll cut myself off here. Back this afternoon with an update on our income for the month of May.

Hope you all have a great Monday!!!

Any suggestions or advice for my current debt-reduction plans? Any areas where you see room for improvement?


Ashley’s New Plan of Action

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In case you’re a new reader – welcome! Thanks for stopping by!

To catch you up….

I first started blogging here in March (Intro post here).

At that time, my #1 goal = eradicate credit card debt IMMEDIATELY!

And, not to toot my own horn, but I’ve done a pretty good job (and thanks to YOU for all the invaluable advice along the way! I’ve learned so much already!)

So as a follow-up to this conversation and trying to decide the next course of action for my debt-reduction plan, I wanted to give you a quick follow-up, along with my new goals:

Order of Debt Repayment (now that WF is paid in full, woot woot!):

  1. Bank of America credit card (goal date = paid by July 2014)
  2. Sallie Mae 8.5% student loan (goal date = paid by September 2014)
  3. Sallie Mae 8.25% student loan (goal date = paid by November 2014)
  4. License fees (goal date = paid by January 2015)
  5. Carmax (goal date = paid by January 2016)
  6. Remaining student loans (no goal date yet because I want to reassess in January 2015)
  7. Medical bills (no goal date yet, see above)

I was originally going to pay the higher interest student debts first, but I can’t do it. I’ve GOT to pay off the credit card debt for my own personal satisfaction and sense of accomplishment.

Next, I will try to get rid of the two high-interest student loans. Getting rid of debts #1-3 will free up $218 in minimum monthly payments (which will be invaluable when my deferment ends on the student loans in February). I’m still a little undecided regarding #4 and #5. I feel like I’d get more personal satisfaction from paying more toward the Carmax loan, but the license has a balance of about $5,500 versus $23,000 for the car, so its a huge difference. We could feasibly pay off the license fees before my student loan deferment ends (in February), but in contrast, there’s NO CHANCE I’ll have the car paid off before deferment ends. Again – I’m trying to free up those minimum monthly payments so they can be applied to the student loans and other remaining debt.

Notice my new “goal dates” for paying off these debts. I have to say as a disclaimer that these are really optimistic dates. Keeping those dates will have us paying about $3,500 toward debt each month (as opposed to the $1500/month we have budgeted). This means we HAVE to keep pulling these big income months like we have the past couple months. This may be possible….I mentioned how “I’m getting a raise” (by teaching additional classes….which started this week so its already “in effect”). Additionally, my husband has hired a new crew of workers so his income will also receive a bump from the work this new crew is able to complete. But at the risk of sounding like a hypocrite (given this morning’s post)…I don’t want to count our chickens before the eggs hatch. I think it will take a few months of my new income + my husband’s new income for us to really know what what we’ll be bringing home each month (in terms of pay). I hope it stays steady with what its been the past couple months, but there’s no guarantee. Only time will tell.

So, yup. Just an update on my new plan of action and goal dates for debt-eradication. I really appreciate all the suggestions and feedback! For example, I had NO IDEA that student loans can’t be consolidated for a lower APR. No point in consolidating then! So those will all be staying separate. I do still plan on trying to refinance the car loan, but I want to wait until my recent huge Wells Fargo payment gets updated with the credit reporting agencies (as I believe it should help give my credit score a little bump).

Hope you all have a great Memorial Day weekend!