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Posts tagged with: paying debt

May 2016 Debt Update

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Late is better than never! Plus, my debt payments are all scheduled for middle-to-end of the month so these are all still true numbers, no additional payments have been made in June yet. Here ya go:

PlaceCurrent BalanceAPRLast Payment MadeLast Payment Date Original debt, March 2014
Navient$725356.55%$980May$74218
ACS Student Loans$85966.55%$20May$8215
Balance Transfer Student Loan #2$73500% (through April 2017)$300May$7650
Medical Bills$58110%$25May$9000
Balance Transfer student loan #1$00% -Paid off in March 2016$5937
PenFed Car Loan-2.49%-Paid off in January 2016$24040
License Fees-2.5%-Paid off in April 2015$5808
BoA CC-7.24%-Paid off in June 2014$2220
Mattress Firm-0%-Paid off in May 2014$1381
Wells Fargo CC-13.65%-Paid off in May 2014$7697
Capital One CC-17.9%-Paid off in March 2014$413
Totals$94292 (April balance = 95,250)$1325Starting Debt = $145,472

The past couple months (April & May) had smaller debt payments than what I’d originally planed. One of our 2016 goals is to pay $30,000 toward debt in total. Here’s a table showing planned and actual debt payments:

Month 2015 2016 GOALS 2016
January $1678 Goal: $3500 $4013
February $1822 Goal: $1000 $1261
March $653 Goal:  $1000 $2134
April $1796 Goal:  $2000 $1521
May $1708 Goal: $2000 $1325
June $725 Goal:  $4000  
July $2125 Goal: $4000  
August $2250 Goal: $2500  
September $2575 Goal: $2500  
October $5513 Goal: $2500  
November $2751 Goal: $2500  
December $2522 Goal: $2500  
Total $26118 Goal: $30,000  

At this point (Jan-May), our goal was to have paid $9,500 in debt so far. Our actual payments put us at $10,254. So even though our recent payments have been below our goal, overall we’re still on track to hit our annual goals. Just as a note, the reason why the goal is set so high for June and July is because I get big checks from my part-time job these two months (instead of spreading out the payment across 4 months, which would be normal sized, I don’t get paid in May or August at all, but instead I get double-sized payments in June & July). Right now it feels scary/intimidating/impossible to be making a $4,000 debt payment (though, to be fair, I haven’t been paid yet this month so that’s probably why). I still want to be cautious and re-allocate some funds back to our emergency fund after having to raid it for life’s recent emergencies.  But I still think (fingers crossed) we should manage to make some pretty hefty sized debt payments, too. Time will tell and I’ll keep you updated! : )

Hope you all have a great weekend!

 


7 Things To Do After Getting a Raise

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By Holly Tomlinson

If you’ve recently received a raise, or you’re planning on having the talk with the powers that be soon, congratulations. This is an exciting step in any professional career, and the money earned shouldn’t be regarded lightly.

Look at Your Budget

You’ll need to look back at your budget and do some spring cleaning of sorts. Assess your budget as it is now and determine where you could decrease unnecessary spending. Take a look at your credit card statements from the past few months and take note of any purchases that you could have done without. Once you’ve reviewed your budget, consider where you could put your raise funds and make the biggest practical difference. Be sure not to automatically spend your raise without deciding the best place in your budget is should go.

Emergency Savings Fund

If you don’t have an emergency savings fund, then now is the time to create one. I would recommend having a six-month cushion in case of job loss or emergency. The expenses your emergency savings fund should be able to cover are extensive; from rent, mortgages, and utilities to food expenses, even health care to transportation. There seems to be a never-ending list of items you’ll be responsible for even in the unlikely case you lose your job. Establish automatic transfers when receiving your paycheck; you won’t miss the extra money that automatically goes into your savings account, but you will be glad you have it when a rainy day inevitably comes.

Pay Off Pre-Existing Debt

If you have debt hanging over your head, use the extra funds you’ve been given to start paying off those accounts, focusing first on the ones that are charging high-interest rates. The sooner you get out of debt, the less you will pay over time in interest, and your credit score can start improving the second you settle your debts. Some choose to pay off accounts in the opposite manner; by knocking off smaller debts, your list of accounts gets smaller quicker and may make the debt seem less overwhelming. If your debt is serious, then your raise should definitely go towards paying back what you owe to get you out of hot water with the IRS. If you’re in need of financial advice how to settle outstanding balances with the IRS, use a company like CTax to figure out the best option for you.

Give Back

Now that you’ve been given more, make sure you give back if you have the extra funds available within your budget. Donating to charitable organizations makes you eligible for tax deductions and will relieve the negative effects of decreased deductions and credits that may have come with your change in pay grade.

Consider Retirement

Once you’ve determined how your raise can be factored into your daily and monthly expenses, give a glance to the future. Putting more money in your retirement fund means you’ll have higher retirement income and potentially be able to retire sooner than expected. Consider contributing to a Roth IRA. You’ll pay upfront taxes on your contributions, but once you pull it out, you can grab it tax-free. If your employer matches your 401k contributions, make sure you put more into when possible.

Make Strategic Purchases

Just because you now have more money, it doesn’t mean you should spend it on anything. Rather than hit the ground running by throwing your hard-earned income towards frivolous purchases, it’s imperative to think before you buy. Try to make purchases that will pay you back in the long run. Maybe it’s time to get a new energy efficient appliance that will pay for itself with the amount of energy it saves in the long run. As you look at purchases you want to make, prioritize those which have the potential to save you money in the long run.

What Not to Do

There are several things you shouldn’t do, at least not in the first few weeks and months of receiving your raise. Signing the lease on a more expensive apartment or home, funding a business venture, and loaning out money may seem doable once you’re making more money, but these expenditures can actually come back to bite you. Be responsible with your raise, and don’t spend more simply because you have more money coming into your account.


Ashley’s July 2015 Debt Update

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And, just like that, it’s time for another debt update!

This month has flown by! I think between our trip back to Texas the first week of the month and starting work in the middle of the month, I feel like I’ve barely batted my eyes and the month is nearly gone! But I’m happy to report that even with as fast as the month feels like it’s gone by, I’ve still made some decent progress on my debts. Keep in mind, I haven’t received a paycheck yet from my new job and we live on last month’s income, so there will be a month lag behind when I start receiving income and when I’m able to really bump up my debt payments. So this debt update only accounts for our regular income (from hubs’ business and my part-time job).

PlaceCurrent BalanceAPRLast Payment MadeLast Payment Date Original debt, March 2014
Capital One CC-17.9%-Paid off in March 2014$413
Mattress Firm-0%-Paid off in May 2014$1381
Wells Fargo CC-13.65%-Paid off in May 2014$7697
BoA CC-7.24%-Paid off in June 2014$2220
License Fees-2.5%-Paid off in April 2015$5808
Navient - Federal Student Loan$36638.25%$266July$4687
ACS Student Loans$210397.24%$77June$21035
Navient - Dept of Education student loans$666146.55%$257July$63254
PenFed Car Loan$136652.49%$1000July$24040
Balance Transfer student loan (Former Navient 1-01)$48370% (through April 2016)$500July$5937
Medical Bills$60610%$25July$9000
Totals$115,871 (June balance = 118,051; May balance = 117,815)$2125Starting Debt = $145,472

Do you remember how last month I complained about my student loan balances going up, in spite of the fact that I’d made extra payments?? I’m still so confused about the whole situation (and, take this as another reason why you should avoid student loan debt like the plague!) because I had the same thing happen with BOTH of my loan service providers. That indicates to me that this is not an error on the part of my student loan company, but on the part of the national government (since my loans are government-backed). Does this even make sense? I must admit ignorance in that I don’t know how all the backchannel stuff works between governmental agencies and the student loan companies. But regardless, last month BOTH of my companies reported that my balances had gone up. This month, it looks like whatever error existed has been corrected because now both balances have gone DOWN more than they should have with just this month’s payments. It looks, to me, like whatever interest was added last month (which shouldn’t be added to any subsidized loans since I’m on Income-Based Repayment), has been removed and I’m back to the normal sized balances. So I guess that’s a sigh of relief.

You’ll also notice that I’ve made higher payments to my Navient loans – particularly the Federal loan. The federal loan is my highest APR loan. The minimum payment is only $16, but I’ve routinely been paying $116 for months. This month, however, I decided to really bump it up a bit more – to $266 (that’s the $16 minimum + $250 extra). I maintain primary focus on getting rid of the car debt (sooooo close to being at the half-way mark with the car debt and it’s going to go quick from there!!!), but I also wanted to beef up my Navient federal loan payment a bit, too, given the low balance and high interest rate. Forward progress!

I can’t wait to see what progress we can make once my new full-time job paychecks start rolling in! Wahoo!!!

And last note related to the job – I still haven’t been able to meet with the department head to ask about keeping my part-time job. A new department head has just taken office (so it’s not the same person who hired me anymore), and we were supposed to meet this week but I was emailed by the administrative assistant and told we’d have to push the meeting back to mid-August. I haven’t even met the department head yet (I think she’s working from home this summer because my office is right down from hers and I haven’t seen her), so I’m waiting to ask about it until we meet in-person. In the meantime I continue to work both jobs (doing the part-time job early morning and late evening). When I was hired I was currently teaching online for my part-time job and everyone knew about it so I’m assuming that my summer teaching is okay, though I’ll feel much better once I get official approval (fingers crossed) that I can continue teaching future semesters, too. I don’t expect my fall part-time contract until August, so the timing should work out in terms of asking permission and officially committing to continue teaching part-time.

On a more personal note, I’ve prescheduled this post because TODAY is my out-and-back trip to be with my Dad for an important doctor’s appointment. I’m not sure everything the appointment will entail (likely just a review of all previous tests and ordering one final additional test), but there’s a slim chance we could receive an official diagnosis. You may recall that I’ve said before I feel fairly confident I know what the diagnosis will be so this is just a matter of having it confirmed (side note: he was given a preliminary diagnosis already by another doctor, but this is a specialist, so we’re very interested in what he has to say). I feel like everything is “on hold” until we get the diagnosis and then the world will feel like its been turned upside-down, but at least we can start moving forward with the next steps and making a plan for the future.  I’ll have a lot more to say on the future financial implications once we know for sure-sure what the diagnosis is. So send happy/comforting/diagnosis-finding vibes my way : )  Not getting my hopes up for receiving a diagnosis just yet, but it sure would be nice if we get one today!

Happy Thursday, friends!


Disappointing Debt Payment

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First, thank you so much for all of your kind comments regarding our family health situation. I’ll try to keep you updated (especially in terms of finances) as I get more information.

In the meantime I wanted to tell you about how this situation, coupled with the no-income May, are going to affect debt payments this month.

It kills me to do this….but I’m going to have to pay only minimums.

We live on last month’s income, so having such a low income for the month of May is really hurting us in June. Hubs’ business drew no income last month (thankfully it didn’t cost us anything so he had enough income to cover his expenses, but no profits were earned). Also, remember how we owe the IRS money? Yeah. We already have some of the money set aside but I was going to use my May paycheck to cover the rest of the bill. BUT, since my paycheck was our only source of income for the month, I’ve put some aside for IRS bill, but I’ve kept some to help cover part of our expenses this month. And we’re raiding our EF hard-core. I’m trying to minimize the amount we have to withdraw from the EF (we’re trying to sell everything possible), but it could come close to being wiped out this month. A very scary feeling.

Given all this (and uncertain future spending) I think that it’s better to keep some money in the bank, pay minimums on current debt, and try to build some reserves this month. Debt payments will be as follows:

  •       PenFed (car payment) = $0 (I’m prepaid ‘till next April so no fees incurred)
  •       Student Loan Payments = $433 (minimum payments:  $77 to ACS ; $356 to Navient)
  •       Medical Bill = $25 (minimum)
  •       Balance transfer = $0 (no interest currently, but this means later payments will need to be higher to cover this month’s deficit)

That’s only $458 in debt payments this month!

I hate it! This is my lowest monthly debt payment in the 15 months I’ve been blogging here.

To compensate I’ve also taken away all monthly savings in their entirety. That means nothing toward:

  •       Cruise 2016 fund
  •       EF (in fact, we’re raiding the EF)
  •       Car repair fund
  •       Health/Dental/Vision fund
  •      Semi-annual fees fund

Usually I put several hundred toward savings each month (up to $1,000), but all savings is being suspended until we can get the financial bleeding to end.

So…minimum debt payments, no savings. Pretty much sums it up.

I’ve got to get back to work – Mondays are always a busy work day for me because assignments are due on Sundays. : ) Still thankful for my job!


Ashley’s March Debt Update

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It’s that time of month again….time for my monthly debt update!

As I warned you at the beginning of the month in this post, our income for this month is drastically lower than we’re used to (remember, we live on last month’s income so our income for March is actually the money we earned in February).

Our income is variable from month to month, but whereas we’ve averaged about $7,000ish/month, this month we only have about $4,500 to live on. A huge chunk of that is taken up with non-negotiable expenses (rent, preschool, etc.), so we’ve necessarily had to make much lower debt payments than we have in previous months.

Here’s how things look right now (remember, my ACS bill is paid at the very end of the month, so that’s why it says the last payment was from February):

PlaceCurrent BalanceAPRLast Payment MadeLast Payment Date Original debt, March 2014
Capital One CC-17.9%-Paid off in March 2014$413
Mattress Firm-0%-Paid off in May 2014$1381
Wells Fargo CC-13.65%-Paid off in May 2014$7697
BoA CC-7.24%-Paid off in June 2014$2220
License Fees$10922.5%$75March$5808
PenFed Car Loan$154892.49%$50March$24040
Navient - Federal Student Loans$42568.25%$116March$4687
Navient - Dept of Ed$724728.25-6.55%$260March$69191
ACS Student Loans$210407.24%$77February$21035
Medical Bills$62610%$75March$9000
Totals$120,610 (Last month = 120,800)$653Starting Debt = $145,472

If all goes well in terms of income for this month, I’m hoping to eradicate the last of the license fees next month. I should also be paying off the larger of the two medical bills (we currently pay 2 separate entities:  one $50/month, and one $25/month), so it would decrease that monthly expense down to only $25/month.

I’ve also continued to pay extra every month toward my highest interest student loan (Navient – Federal Loans). It’s a $16 minimum payment, and I’ve been paying $116 every month, including this month. However, I’ve paid minimums on my other student loans, medical bills, and license fees. The other BIG thing that probably sticks out is my PenFed car payment. My car payment is technically $450/month. However, I’ve been paying WAY more than the minimum for a long time in an effort to try to knock down that debt. Because of my pre-payments, no payment is due for over a year. I could have literally paid nothing this month and been fine. So I chose to decrease my normal payment to $50. This covers the interest (plus a little extra), and gave me more wiggle room so I was able to still make a larger student loan payment on my highest interest debt.

It’s a tough thing when you literally don’t have enough money to go around. This month has definitely made me feel grateful that I’ve been so on-top of our debt situation since starting to blog. Had I not been making extra payments on the car, we simply wouldn’t have had enough money for all of our minimum debt obligations. I would have had to turn to using a credit card just to buy groceries and put gas in the car (I’ve been there before and remember those days all too well. Scary stuff!)

Fortunately, I’m thinking that this lower level of income was only a one-time thing (fingers crossed). But, just-in-case, I really feel the need to safeguard us a bit. Getting rid of some of these monthly obligations (like the $75/month license fee and $50/month medical bill) will be really nice. And I CANNOT WAIT until the car payment is gone forever. Although I was able to cut back this month and not make the full payment without any penalties (again – since it’s been prepaid), being able to allocate that $450/month payment elsewhere will feel like a big weight lifted.

If you didn’t have enough money to cover all of your bills, do you know how you would handle it? Do you have any wiggle room with any of your debts?


Rewards and Celebrations

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I have some good news to share today! I am about to receive the largest paycheck of my life!!!

I have been working on a writing-related project for a loooooong time (10 months) and finally finished last week. (No, it was not a book). I wasn’t smart setting up my contract and I had agreed to not get paid at all until project completion (in my defense, I thought it would take a fraction of the total time invested). Anyway, 10 months later I’m about to receive a paycheck for several thousand dollars (more than 5, less than 10…but that’s “gross,” so I’ll need to pay taxes), which is by far and away the largest single paycheck I have ever received.

Good news: This means we are going to knock it out of the park this month in terms of our income. Last month was the most we’d ever made (in life), and this month is going to be even better! I tell you this because we’ve just “met” and I really want you to understand how NOT TYPICAL these huge pay months are for us.

But, that aside, I want to celebrate. It feels like a HUGE weight off my shoulders to have this project complete; in the past we would have done something fun – gotten a ‘sitter and gone to dinner.

But we pay babysitters $13/hour (is this normal?? I used to make $5/hr when I babysat but that was 20 years ago), plus a dinner-for-two can be in the range of $50, so we’re talking roughly $80-$100+ if we were to throw a movie into the mix, too.

What do you do to reward yourself when you’ve hit a big milestone? Ours has ALWAYS been going out to eat, but we need something new (read = cheaper!) I want to celebrate a little!


Visual Motivation: Debt Thermometer

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We have had a couple conversations lately where I’ve asked for tips on how you stay motivated in the debt-payoff process.

I received so many great tips and ideas and I thank you for them all!

One thing that I thought would work well for us was to have a visual image of our debt lowering every month.

I’m a little “old school” in some ways and a 3-D physical paper seemed to appeal to me more than a graphic on a computer screen.

So, I made a Wells Fargo CC Debt Thermometer!

IMG_3130

My arts and crafts skills leave much to be desired.

I have no idea why I did such random increments (increments of $1,000 in some places and only $500 in others), and I’m positive its not to scale. But I try.

On the right side I have the amount paid listed, capping out at $7,000 (for reference, I owed just under $7700 when I first started blogging in March); on the left side I have the amount due remaining. After my $800 May payment plus the $1,000 snowflake payment from March’s surplus, I’ve been able to color about $3,000 of debt paid off.

I am so excited to figure out how much we can put toward Wells Fargo from our April surplus! If our earnings stay steady, I should be able to have the card paid in full in less than 4 months (!!!!!!!) This is HUGE! And staying on this track will have us paying off our final credit card (Bank of America) by November or December (remember my “official” goal was March 2015, so this is really early)! CAN NOT WAIT!!!

 

I was originally going to make a debt thermometer with ALL of our debts, but I think I’m only going to make them 1-at-a-time for whatever debt we are currently focusing on. It makes it so much more motivating to see huge payments every month, instead of only small minimum payments being made. Plus, it will be fun with each new “debt focus” to make a new debt thermometer as a way to track our progress.

Thanks for all the suggestions and support along this process!

 


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