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Posts tagged with: paying off debts

Ashley’s January 2017 Debt Update

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First, thanks for all the great comments and advice on my Medical Debt Collector Dilemma post!

If you haven’t read the comments, then I’ll give you the update:  I was able to negotiate our medical bill down into 3 equal sized payments to be paid across the next 3 months (February through April), and then the medical debt will be GONE and nearly $2,000 will be forgiven. Some commenters noted how this will ding our credit, but seeing as we’re unlikely to be needing any new lines of credit anytime soon, I’m not too worried about the ramifications. I feel like we’re pretty well “set” with our current debts (great mortgage rate, good credit card balance transfer options for paying off student loan debt) – we won’t be adding any additional debts, hopefully EVER!

I’m kind of excited about being rid of this medical debt. We prioritized it below everything else so far simply because it was at a 0% interest rate. But with the offer to forgive $2,000 of the debt, it had to be bumped up to the top of our priority list (which will change the “debt payment” proportions that I had just posted in our 2017 budget. Oh well, budgets need to be flexible!).

I know there are strong feelings on both sides of the fence regarding whether it is morally “okay” to negotiate down debts as opposed to paying the bill in full. We would have paid the bill in full. That was always our intention. But we also weren’t in any hurry about it with so much student loan debt racking up in excess of 6% APR. The offer to settle for less than was owed was solely initiated from the medical debt collection agency, itself. So I feel like it was a fair transaction. The medical company will receive their payment (much sooner than they would have otherwise, at that), and we will soon be able to cross off one more debt from our  list of debts!!!

One other thing I wanted to mention was regarding credit card balance transfer options. When I realized I would be unable to refinance my student loans away from Navient with one of the big/respected student loan consolidation companies, some of you recommended continuing to do credit card balance transfers. So I applied for a new credit card and promptly transferred another student loan away from Navient. Again – a super controversial thing in the world of debt repayment. I wouldn’t recommend this option for everyone, but I’ve been doing it a couple years now and have had great success with it. I literally only use the credit card for balance transfers (it’s not even in my wallet – it would otherwise be cut up and destroyed because it serves no purpose otherwise). So now I’ve got TWO credit cards designated specifically for doing balance transfers. The balance transfer fees have been low (between 2-3%) and I receive 0% APR as long as balances are paid in full by the due date (which I closely track and monitor and have never had a problem with). So….it works for us. Unconventional? Yes. Would I recommend it for everyone? No. But it’s working for us.

And so with some explanation of our debts (and, specifically, the new credit card balance transfer debt you’ll see), I present to you January’s Debt Spreadsheet:

PlaceCurrent BalanceAPRLast Payment MadeLast Payment Date Original debt, March 2014
Navient - Federal 2 (unsubsidized)$110985.8042January82433 (all school loans, combined)
Navient - Federal 3 (subsidized)$86245.8025January
Navient - 2 (subsidized)$85316.5525January
Navient - 7 (subsidized)$72266.5521January
Navient - 8 (subsidized)$63986.5519January
Navient - 9 (subsidized)$85316.5525January
Navient - 10 (unsubsidized)$97726.552018January
Balance Transfer Student Loan #2$22000% (through April 2017)$800January$7650
Balance Transfer Student Loan #3$45940% (through October 2018)
Medical Bills$55860% (must be paid by April)$25January$9000
Balance Transfer student loan #1$00% -Paid off in March 2016$5937
PenFed Car Loan$02.49%-Paid off in January 2016$24040
License Fees$02.5%-Paid off in April 2015$5808
BoA CC$07.24%-Paid off in June 2014$2220
Mattress Firm$00%-Paid off in May 2014$1381
Wells Fargo CC$013.65%-Paid off in May 2014$7697
Capital One CC$017.9%-Paid off in March 2014$413
Totals$72,560 (Dec balance = 75,171)$3000Starting Debt = $145,472

When I first started blogging back in April 2014, I had $145,472 total debt.

As of January 31, 2017, with a margin of under $200, we have finally hit our half-way mark! We now have $72,560 in debt.

Oh my gosh, guys! I can’t tell you what a huge milestone this is for us! I’ve been blogging for nearly 3 years and we have JUST NOW hit our half-way mark in terms of debt reduction. We likely have another 2.5 years to go (maybe less), so we’re over half-way in terms of the time spent in debt reduction mode. I just cannot even believe it. All the changes in the past three years, all the sacrifices, all the splurges, all the savings and the spending and the analyzing numbers over and over and over again. It just feels fantastic.

I know some have commented that the second half of debt reduction would just fly by. That as soon as we hit the half-way “tipping point” things would start snowballing and debt would just melt away.

I’ve got so far still to go, but I am hopeful and excited about the future!

And I want the debt gone sooner than our projections have it. I want it gone yesterday. I’ve been doing a lot of thinking of ways to reduce savings categories (temporarily) in order to throw more toward the debt. And there’s still some work stuff up in the air that will impact this whole process. I’m optimistic. It’s hard not to be. I may not be able to quite see the light at the end of the tunnel yet, but at least we’ve crested the top of the mountain and are about to make our descent. I can’t wait for the journey downward!


Financial Goals Revisited

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Looking back at some old posts I see that I’ve had some lofty financial goals. It reminds me of this saying:

“Shoot for the moon. Even if you miss, you’ll land among the stars.”

(Google says the quote is by Normal Vincent Peale)

Well, I guess I’ll have to settle for the stars, because I’ve missed my moon. But that’s okay. Progress is still progress. I just wanted to look back and remind myself of where I’ve been and where I’m going….

In this post I had listed my goals in terms of debt repayment. You’ll notice that my goal date to be rid of our license fees was originally August 2014. August came and went, and we still have those monthly license payments.

In this later post I changed my mind and decided to put my Race to 20K (paying off the car loan) above everything else. At the time I was hoping to pay $3,000/month toward the car loan. Yeah….that hasn’t happened either (aside for I think one or two months??)

And recently I’ve hinted at maybe changing my plan of action again. Re-ordering my debt payoff journey. You guys are right. The APR on some of my student loans is outrageous. Why not knock it out and then turn my attention to the car? In the past few months when I haven’t been able to pay $4,000 or $5,000 toward debt it changes the whole payoff schedule. Why not earn some “easy” wins by knocking out some of the smaller debts instead of tackling the comparatively huge car loan that could takes months to pay off?

And then I walk into my kitchen and see my auto loan debt thermometer. And I am absolutely re-energized.

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I guess that’s the thing about personal finance. It’s personal.

No, it doesn’t make sense. Any financial guru you talk to will say I’m doing it wrong. Either you’ll hear from the Ramsey types who say my car loan is too big and I need to start by tackling a smaller loan. Or you’ll talk to a numbers person who will say the APR on my car loan is peanuts in comparison to the student loan APRs, so I should start with the highest APR. No one would say that tackling the car first is the “right” thing to do. Or would they?

Whatever is the most motivating might make the most sense, too. Right?

I mean, I want all of my debt gone. I’m so, so, so sick of it! Having the little financial set-backs this month (with the car repair and house flood) have just reaffirmed how much I hate this debt. It’s so burdensome! It’s like a noose around the neck that we just can’t get rid of! Getting rid of the debt, in so many ways, will feel like earning our freedom back!

But so much of the journey is psychological in nature. And even as I’m doubting myself and thinking, “maybe we should just kill that high interest student loan real quick”….I just keep coming back to my starting place. And I see our car. And I want it to be ours for real.

I know it’s not the popular decision. With all my recent payments and hard work recently we are no longer upside down on the loan, either. I know many would say we need to sell it and rid ourselves of the nearly 20 grand (now actually right at 18 grand) of debt in the snap of our fingers. But it’s just not that easy.

We love our car (actually an SUV, a 2011 Ford Explorer). With the long road-trips we take we need something large enough to accommodate two car seats, a double stroller, us, our dog, our luggage, and cooler of food/drinks/snacks. That’s really not do-able in a car or even a cross-over. A van could work, but it doesn’t feel right to make that type of trade. The way I see it, we’d be able to sell our SUV for $20k, buy a reasonable used van for $10k, which leaves us with $10k less debt (and a paid for van). But as soon as we’re done paying off other debts we’ll go right back to selling the van (plus putting in extra $$) in favor of finding another SUV. Why? Why not just pay it off and own it outright from the start and save ourselves the headache of all the buying and selling and trading of vehicles?

I didn’t want to have to put it all out there like this because it sounds like nothing but excuses and rationalizations. I know it will anger some of you. But we’ll just have to file this under the “agree to disagree” label and call it the “personal” part of personal finance.

So there you go. The plan remains.

But don’t be surprised if I end up wanting to come back to re-visit this again at some point in the future. It never hurts to reassess one’s goals, particularly in light of big income changes. Hopefully with all my applications we’ll be having another big income change sometime soon….only this time going upward! : )

What debt are you currently working on paying off? What method of debt repayment do you follow (smallest to largest? Highest APR first? Psychological satisfaction?)