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Ashley’s Nitty Gritty Debt Details


Hi friends! Too early to consider you friends??? I don’t think so, so let’s go with it!

First and foremost – thanks for expressing an interest in hearing more from me! I’ve already gotten a couple of great comments referring me to additional debt-reduction resources and I am really excited about this next chapter of life!

In my first post, I shared with you my debt story – the events that led me to becoming seriously in debt. But I didn’t really share much about my current debt situation, our monthly budget, and debt-reduction goals. I’d like to take the opportunity to do that here. Grab a cup of coffee and a snack because this is going to be a long one. Let’s dive in!


My #1 goal is to get rid of all my credit card debt FAST! Like, yesterday! As I mentioned in my intro post, I have about $10,000 of credit debt (exact details coming, below in this post).  My goal is to be FREE of credit card debt in one year or less. One year seems like a nice, round number.

Just so you know, I do plan to pay off ALL my debt (and there’s a lot). But at this point, I’m thinking it could take 10+ years to get rid of it all, so I want the focus for the blog to be on blasting through my credit card “toxic” debt.

That being said, you need to know my FULL debt situation so you have a picture of where I’m coming from. Due to other minimum obligations, I’ll still have to be paying for portions of my other debt and I want to “keep it real” so you all know the full scope of my current situation. Also, one commenter asked if I would be willing to blog until all the debt (except the student loans) are gone. This will definitely take an extra couple of years and the credit cards remain my #1 goal, but I’m open to sharing my journey in eradicating all of our other debts, too (except the student loans – those could literally take a decade). So here’s our current debt situation, in all of its awful glory.

Current Debts

These are listed according to interest rate:  highest to lowest. Numbers reflect February-end balances.



Current Balance

Capital One CC17.9%$413.27
Wells Fargo CC13.65%$7697.59
Sallie Mae – Federal Student Loans8.25%$4687.05
Carmax – Car Loan7.75%$24040.68
Bank of America CC7.24%$2219.90
ACS – Student Loans7.24%$21035.00
Sallie Mae – Department of Education Student Loans7%$69191.00
License Fees0%$5808.00
Mattress Firm0% until Sept 1, 2014$1381.00
Medical Bills0%Approx. $9,000.00

I want to explain these items, but first let’s look at totals. This is how things shake out:

Total Debt:  $145,473.49 (Good Lord! This even caught ME a little off-guard! I’m on top of our budget, but I guess I just haven’t added things up like this recently.)

What I really want to focus on:

Total CC Debt:  $10,330.76

So, can I explain these things?

  • Credit Cards: The credit cards don’t require much explanation. I’ve got to get out of this debt NOW! I definitely feel the fire under my butt!
  • Student Loans: The student loans certainly make up the largest portion of my debt – really an obscene amount (a good $95,000!). In the comments someone asked me if all the education was necessary – could I have stopped with just my Masters instead of pursuing my Ph.D.? I think this is an important point to highlight here. My “dream job” is to be a professor. For that position you do need a Ph.D. I have been lucky to know almost my full life that this was the job I eventually wanted. Unfortunately, the job market is tight in my field. At this point, my employment opportunities have all been in areas that only require a M.A. (not a Ph.D.) Soooo, at this point it looks like my Ph.D. could have been pointless. I am still active in academia and continue applying for full-time positions so *fingers crossed* hopefully I can still land that “dream job” at some point. But hiring tends to occur in Nov-Dec for the following academic year (starting in August) and I didn’t get hired during this last “hiring season”…..so my next time up at bat won’t be until Nov-Dec 2014 for positions starting August 2015. In other words, I’ve got a full other year+ of this part-time stuff. In the meantime, I cannot afford the monthly payments on my school loans. It would cost almost $1,000 monthly (basically all of our “extra” income above just the cost of our monthly bills), so they sit in deferment. Side note – I plan to eventually consolidate all student loans into a single loan, but once you consolidate you have to start making payments…..which I don’t and can’t do currently. So that’s why there are so many different student loans listed.
  • CarMax: In terms of the car loan, I was very torn on this one. Recall that I only had a Kia Spectra prior. I loved that little Kia – it was good to me. But someone rear-ended me and totaled the car right at the same time that I was pregnant (and found out we were expecting twins), so we were already planning to get another car. The totaled car just hurried along our search. We did get money from the other person’s insurance (they were at fault), and we ended up buying a used 2011 Ford Explorer….which seems like a “reasonable” vehicle….but it still cost $25K (when did cars become so expensive???) We added on the warranties, tax, title & license, and even with our down payment from the Kia wreck, we still had to finance almost $30K. I had SERIOUS buyers remorse afterward. I felt like we had rushed into the decision (we kind of did…we had no car and were in a hurry) and made a terrible financial decision. I HATE having this much car loan debt (after having no car loan in almost a decade!) On the plus side, I love the car  and its great for our family…but on the “cons” side, it cost a fortune and we owe more than its currently worth, so no point in selling. My hope is to get our credit card debt lower, improve our credit scores (which aren’t bad, but we’ve had a terrible debt-to-credit ratio which affects it), and try to refinance the car loan through a local credit union at a lower interest rate. Good idea/bad idea? I’ve never done something like that before, so advice is appreciated.
  • License Fees: This is a judgment-free zone, right??? : )  Honestly, I thought about hiding this debt by lumping it with the “medical” bills, but that would be dishonest and I think this could provide a learning opportunity for some readers…  Remember I mentioned our ages (I’m 30, my husband is 31). Back a decade ago when my husband was 21 he got a D.U.I. (driving under the influence of alcohol). Being young and irresponsible, he never took care of all the fees he owed. His license was suspended for not paying the fees, and fees were thrown on top of fees and things just got out of control. Only within the past few years have we really started trying to tackle this debt (which amounted to over $10,000 at its peak). Payments all have a service charge, but the debt is technically interest-free. He has to continue making payments to keep his license, but the minimum payments are low so we’ve only been paying minimums since we have high-interest credit card debt to deal with. Good lesson though – the incredibly stupid decisions you make as a “kid” can catch up to you even a decade (or more) later as an adult. It is NEVER wise to drink and drive. Just don’t do it. Cabs are so much cheaper. And it’s never worth it to put your life and the lives of others at risk.
  • Mattress Firm:  We’re dumb. Not much to say here. We financed a new bed to the tune of $2,500.00 at the end of last summer. As long as we pay it off by September 1st, it will be interest-free. As a result, we’ve just been paying minimums (putting our money toward higher interest CCs instead), though we’ll have to make a large payment in the summer (July-August) in order to have it paid in full by the first of September. We fully intend on doing this so we avoid the huge fees and penalties that strike if you don’t pay off during the “no interest” time frame.
  • Medical Bills:  I don’t have an exact number for this, because the chips are still falling so we don’t know exactly how things will shake out. Long story short, we DO have insurance, but our out-of-pocket max is $8,000 for an individual ($10,000 for the family). At the end of 2013 Chris was hit with a terrible mystery illness. He didn’t work for 2 months (devastating, financially speaking) and was in and out of the hospital multiple times. He had to see several specialists and was even referred to the Mayo Clinic. He had a huge battery of expensive tests run and no one was ever able to figure out what was wrong with him. His final diagnosis was “atypical meningitis,” meaning they knew he had an extremely high infection in his spinal fluid (which indicates meningitis), but he tested negative for all the “typical” forms of meningitis. We know for sure we hit our out-of-pocket max of $8,000, but we are still responsible for all the co-pays from his multiple hospital trips and specialist appointments. Also, the Mayo Clinic was out-of-network, so we owe them for their pricey consultation. We’re still getting bills and trying to figure all that out so I don’t have an exact number. Fortunately, medical debt is interest-free. We owe most of the debt to a single hospital (about $6500), which agreed to take a low monthly payment of $25. I know that will take FOREVER to pay off, but it’s interest-free and I’m more focused on credit card debt at this time. We will also need to start making payments to other medical entities (other area hospitals, the Mayo Clinic, etc.) soon, too. That hasn’t all been set up yet.

Phew! Talk about putting it all out there! Can we talk assets now??? This one doesn’t require a whole table, though.

Current Assets:

Checking/Savings:  $4,000

Capital One 360 Savings:  $1750

Money Market: $6,000

Total Assets:  $11,750

A little explanation…

  • Checking/Savings:  I like to keep $4,000 in my personal checking and savings accounts. I tend to keep it in my savings and transfer it to checking as bills are due. I keep $4,000 (on average) because that’s about a month worth of our living expenses. The account may be a little lower or higher depending on the time of the month and billing cycle of our bills.
  • Capital One 360: I use Capital One 360 for my longer-term savings (things I’m not planning to dip into anytime soon). It’s an online-only account with higher interest rates than most banks can offer. I just started this account 3 months ago so the balance is very low right now, but I’m hoping to make lots of separate sub-accounts for specific savings purposes (e.g., house down payment, car repairs/new car fund, dental/vision/health expenses). Oh, did I mention that I have no retirement? Nor does my husband. I know this is terrible! Dave Ramsey recommends paying off debt prior to worrying about stocking retirements savings, and we’ve kind of taken that approach, though we do have this savings account.
  • Money Market account: I’ve been building this up steadily all through graduate school (after first depleting it with our move to Tucson). For a long time we lived entirely on Chris’ income and I deposited the entirety of my paychecks into the account. At this point I don’t do anything with it. I consider it to be for extreme emergencies only. Not just “oh crap, we don’t have money for rent”….I would figure something else out by shuffling other monies around. The money market, as far as I’m concerned, does not exist. I pretend it is not even there. Also, when I started our Capital One 360 account I stopped funding the money market, so it literally just sits there untouched.

So there you have it. I had planned to share our budget, but this post has gotten too long so I’ll leave the budget for an afternoon post.

Please share your thoughts on our current situation. It occurs to me that we have enough assets to entirely pay our credit card debt now. I know this is what the guy from NoMoreHarvardDebt.com did (liquidate assets, pay debt). That’s very frightening to me, though, given our variable income and the fact that we have children. If something terrible were to happen, I feel like we need that safety net to survive (as it is, that’s only 2.5 months of living expenses!). But I’d be open to hearing other suggestions. Should I be thinking about using some of that money to pay down debt?? How much should we have in savings?




Check back this afternoon for a post with our monthly budget!


  • Reply Juhli |

    I’d suggest you calculate the “interest rate” you are paying on the licensing fees using the service charge as the interest amount just in case it is significant. I’d also highly suggest you read through http://www.frugalqueen.co.uk/ to see what they were willing to do to get out of debt. Your car situation is another area that really takes rethinking. That is a huge debt given your situation even if you are upside down. It also sounds like an expensive car to operate. I’d highly suggest thinking about options for lowering you auto expense along with paying off your highest interest debts. The other area to consider of course is how to increase your income and do it quickly. Sell things. Take on more work. You have had some difficult and unavoidable circumstances with your husband’s medical costs but perhaps you can negotiate lower balances similar to what an insurance company would pay under their contract. I congratulate you for being willing to put your situation out there and hope you find ways to make progress quickly.

    • Reply Ashley |

      Thanks for the resource! You’re right I’ve just discounted the service fee (its a couple bucks each payment), but that could really amount to a lot over the course of repayment. Many of your questions/comments will be answered in time – I definitely DO plan to take on additional work, selling items, and have already been working toward sticking within a strict budget to lower our expenses. Details will be coming in due time : )

  • Reply gloria-victoria |

    Take the money out of savings and pay off the Capitol One CC and the Mattress right now.

    • Reply Kristina |

      I agree x10.

      I know TX offers a program for suspended licenses; you still have to pay, but the overall bill is largely reduced. Maybe look into that?

    • Reply Ashley |

      Cap One will be knocked out asap. I don’t know that I agree paying Matt Firm right now when I could continue making payments to high interest CCs in the mean time (and just make 1 large payment before our interest-free period ends). Lots to think about…

      • Reply Lisa Parsons |

        Because it’s so small. Just get rid of it and move on to your other debts. You have the money to pay off the mattress. Additionally, if you had your current assets last summer, I would argue that you never needed to finance it in the first place. Financing a mattress is very odd to me. Sorry, I don’t get it.

  • Reply Angela |

    Just so I understand, you work part time, have twins, $145,000 in debt and no house or investments? I’m sorry but I don’t think you will ever get ahead of that debt. If you become a professor will you make substantially more income?

    • Reply Ashley |

      Lol, I definitely appreciate the sentiment, Angela! It TOTALLY feels that way sometimes to me, too. But we do actually have a fair amount of income going toward debt each month (see this afternoon’s post for exact numbers). Like I said, the student loans will take awhile. But if we work hard I think everything else could be gone within 2-3 years and if our income continues to rise then we’ll still be able to pay everything off. And, yes….if I were to get a professor position it would about double our take-home monthly pay.

  • Reply Great Lakes |

    Without knowing the details of your federal student loans, you may be able to get them on an income-based repayment plan (with or without consolidating, depending on when you borrowed them). That would cap your monthly payments at 10-15% of your discretionary income. I’d suggest looking here (http://studentaid.ed.gov/repay-loans/understand/plans/income-based) and here (http://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn) to see if your loans qualify.

    If you chose to consolidate your federal student loans, you’d still have the deferment/forbearance options you have now, so you might not have to make payments right away (or an income-based plan might qualify you for a $0 or very low payment). Your loan servicer(s) should be able to explain all these options to you.

  • Reply Den |

    I disagree about using your savings to pay off smaller debts. With kids that’s just too risky, plus it’s the easy way out….

    Instead, I would focus on getting on a solid budget, sell stuff, and start sending every extra penny to your lowest balance debt – snowball the Dave Ramsey way. You could have the two smallest debts paid off quickly while setting a solid basis of budgeting. After 6 months or so of this – if your budget is solid and you still want to use some savings to pay off debt, then you can…..but to do it immediately seems a bit rash.

    Good luck!

    • Reply Jen From Boston |

      I agree. I vew your savings accounts as your emergency fund, and with children that’s especially important!! Setting up a budget first with an eye to slashing expenses seems like the way to start in your situation.

    • Reply Ashley |

      Yeah I think this is an especially “sore subject” based on our very recent health crisis. And, as I stated…no one ever did figure out the exact problem. Thankfully my husband seems to be doing better now, but there’s no guarantee that whatever was wrong won’t strike again. And if it was some strange strain of meningitis, I’ve read that reoccurrences happen about 50% of the time (generally not right away, but it’s still a very real fear). His job is very physical (he does wood flooring), so if he were incapacitated it could be very detrimental to our family’s financial picture, being that he’s the primary earner.

      • Reply Juhli |

        Does your husband have any disability insurance? I would think this is critical since he is the primary wage earner. By the way, when I finished my Ph.D. there was a tight job market for faculty positions too. I took a full time corporate job instead as I needed to support myself and my young son. You may want to reconsider the type of work you are willing to do to enable you to better contribute to supporting your family. Also, if you get a faculty position elsewhere in the country you will have moving expenses and your husband’s work situation will change which might set you back financially.

        • Reply Ashley |

          My husband does not currently have disability insurance. I guess this is something we should think about given the nature of his job and the fact that he’s the primary earner. I’ve always heard that disability is very expensive (blah!) and I’ve been trying to limit additional monthly expenses, but it could be worthwhile in the long run.

          • Rachel |

            Disability insurance might be a monthly bill, but you can think of it reducing financial risk, especially since he is the primary earner.

            You would need to check the policy to see if pre-existing conditions that happened while NOT have disability insurance would an acceptable reason for taking disability leave if the condition were to re-occur.

          • Slinky |

            Most likely there will be a waiting period before the existing issue would be covered, but after that you’d have that safety net. Considering the likelihood of recurrence and the increased risk in not really knowing what the problem was and him being the primary earner with kids right now, I’d call this one a no brainer, absolutely must have. Since you have most of 3 months in savings, you could probably get just a long term policy.

            For reference –
            Mine runs around $50/month for an individual “cadillac” policy. Off the top of my head the payout is somewhere between $3k and $3.5k in nontaxable income, with an inflation adjustment. Obviously with differing age/gender/health/etc, your cost will vary, but a plan with fewer frills may be more economical as well.

  • Reply Joe |

    I agree with above: take some savings (I would suggest somewhere around $4000) and knock out the mattress and the Capitol One at the very least. Perhaps the BoA card as well. Normally I always go by interest rate but the minimum payments cash-flow consideration seems important here as well.

    Speaking of which, I know it’s coming, but the cash-flow is an important factor that would influence a lot of readers’ advice. I’m surmising from your savings that you are not taking on more debt on a “routine” month to month basis which is excellent!

    I’m also willing to bet, as Juhli points out above, that the effective interest rate on the license fees is not trivial. Please update with the effective rate (or post some sample numbers and we can figure it out together). This rate also “goes up” over time because you are paying the same service charges as the debt gets smaller!

    Looking forward to many further discussions, thanks for getting us off to a great start!

    • Reply Ashley |

      You’re right that we are in a position, currently, to be paying DOWN debt (rather than taking on additional debt). In regard to the service fees for the license – I’ll have to check it out and would be happy to post exact numbers. I’m not sure if its a flat fee or a percentage of the payment – it’s always been a couple bucks, but we tend to pay about the same amount each time so no idea what the fee is based on. It will require some research and I can post more numbers.

  • Reply debtor |

    I would take money out of my savings and pay the Wells Fargo off immediately. The reason being that that’s a lot of money to be sitting at such a high interest rate. I might also get rid of Capital one cc (but it’s a low amount so not priority to me).

    I understand wanting the safety net – but this wouldn’t deplete you totally. Once you post your budget I’d have a clearer idea but if you did this, you could probably bulk up your savings the following month.

    Once you do that, then you can start focusing on your car. I’m not an expert so I’m not positive what to do with that but that just seems like WAY too much money to owe on a car. I don’t know maybe others could chime in, maybe you could sell it even at a loss and buy something cheaper that would leave you with less debt?

    What type of part-time work do you do? Kids are demanding, and moreso twins…how old are they? would you have enough free time (and clarity of mind – twins!) to make some extra money on the side? Depending on what field you studied, couldn’t you get an adjunct position at a community college or sthg similar? Not sure how it all works in your state.

    Good luck!

    • Reply Ashley |

      Ugh, you’re so right about the car. It’s definitely an issue. I listen to Dave Ramsey’s radio show and I’ve heard his advice on the topic (too much car debt) – sell, even at a loss, buy something cheaper and deal with it until in a financial position to pay cash for something nicer. Something to think about, but I’m scared to pull the trigger just yet.

      Paying off WF (the largest CC debt) would, indeed free up a lot of money (and save a lot of interest). Before taking any large sum of $$ from savings to pay off debt its something I would need to discuss with my husband so I can’t say “I will” or “I won’t” either way just yet.

      In regard to the part-time work, I should definitely write a post about this. I don’t want to give specifics about my employers, but I work several part-time jobs that all give me the flexibility to work from home doing online work. It’s in academia so you can probably figure out the gist of it (online teaching, research, etc.). I used to teach adjunct at the community college, but after running some numbers, realized I was breaking even in regard to my pay versus cost of daycare. I had to quit (even though I LOVE teaching) because it didn’t make financial sense. I hope that when the girls are old enough to be in school I can go back to classroom-based teaching (or sooner – if I land a full-time position). I really miss that work!

      • Reply Rachel |

        You can definitely get a nice car with the size you need, just an older model. Still fits your criteria, off-loads some debt, still fulfills your need. I see this as a must.

        • Reply Mitz |

          But, keep in mind that if the car is under warranty and an older car breaks down that is harder to budget for. Is there a more affordable car with a lower payment option? I do realize you will take a hit on your current car for depreciation. Taking on a car loan should come down to personal needs, security, and what is important in the long run (paid off car that you know the maintenance history on that can be driven another 5 years without a loan). I don’t like Dave Ramsey’s philosophy of never taking on debt. I prefer Suze Orman’s model of take on debt responsibility when needed. but within more defined parameters (e.g., car loan that can be paid off in 3 years-then drive it into the ground). You are going to be presented with a lot of comments here about people on both extremes-it’s this way or the highway. You are trying to advance your career and raise a young family. You need to find balance and a happy medium that works for you and your family!

          • Ashley |

            I definitely agree! I’ve already seen just today some people say “Do this”, and I’ve thought “yeah, that makes sense!” Then others have commented “do that” and I’m like “ack, that makes sense, too!” Either way, there’s been a lot of food for thought and I see myself mulling these things over, having some discussions with my husband, and seeing where to go from here. Thanks for your perspective!

  • Reply highjump |

    You said your expenses are currently about $4k a month. I would figure out a more precise number for one month’s expenses, leave that amount in the money market as an Absolute Emergency fund, and then use the remainder to pay off the mattress and the Capital One card.

    I work in academia (not as faculty though, thank god!) and I feel you on the job market. Are you searching nationally? Best of luck.

    • Reply Ashley |

      Exact numbers in this afternoon’s blog post so check back soon.
      I am not searching nationally. It has definitely been the biggest hindrance to finding employment. However, this is something I absolutely refuse to do. My options are (1) find a job in our current city, (2) find a job where we have family (two different cities as options). Those are the only places I have been looking for employment and it’s something I feel very strongly about regardless of money. I have moved my husband across the country twice already where he has had to completely start over (he is self-employed). It’s a HUGE sacrifice on his part and I’m not willing to do it again, especially now that we have a family of our own. Also, if we were to move, he looses his job and it takes a good 3 years for him to re-build every time we move. So my income would have to be enough to justify loosing his income (and it would have to support our family in full for at least a few years until he can re-build again). Tough stuff. Luckily, I do have an income doing part-time work, and its something I could continue to expand. I need to write a post about it soon!

      • Reply scarr |

        I moved cross-country for my husband’s work twice. I had to pause finishing school indefinitely since the last move. I am not resentful because overall they were the right decisions for us, but I’d be lying if I didn’t admit that I wish it didn’t work out this way because I could have finished my degree and bla bla bla. I was never forced into moving, these were choices we made together. I appreciate you sharing this tidbit of your story, and it would be an interesting post if you are ever able to fit it into one of the “blog anything” days.

  • Reply Meghan |

    Hi Ashley!

    Welcome to the blog and thank you for putting everything right out there, it is very much appreciated! Looking at your numbers, if I were in your position, here is what I would do:

    I would start with liquidating the money market account and leave only $1000 in the Capital One account and use that money to pay off your Capital One credit card and the bulk of your Wells Fargo credit card. My reasoning is this: unless these savings accounts are netting you a higher monthly interest then you are paying on those cards, you should get rid of those bills. I understand your desire to have that emergency safety net (I also have two young children), but just because the cards are payed off does not mean you need to close the accounts. Why not keep a paid off credit card as your “use only for extreme emergencies” account until the debt is a bit more under control?

    According to my math, in order to pay off the mattress before September, you need to pay just over $276 a month for the next five months. Would the freed up credit card payments allow you to make these payments every month? Otherwise, it seems that come the end of August you will either need to dip into your money market account anyway or face the wrath that I have seen BAD readers put forth when you allow the interest to hit that account. I don’t know if I would consider dipping into that account to pay for a mattress an “extreme emergency” so it might be better to start making larger payments now.

    Also, if you pay off the credit cards now, you will sooner have a better debt to credit ratio for refinancing the vehicle. 🙂

    You mention having a variable income, is there a set amount that is pretty much guaranteed? Like a salary or such? (I realize this will probably show up in your later post today.) I ask because if you have a pretty set budget and a pretty set income that come close to matching, I would not keep quite so much in checking either. At the end of the month, those accounts should be pretty close to zero, that would be why you keep the emergency thousand in your 360 account. To add to this already long comment, I recently read an article by an author who said that after finding minor success in her twenties, she bought a house with a mortgage that was a bit out of her comfort zone in size (not because she was a PF blogger with bad financial sense but) because she knew that stretching to make that mortgage every month would make her work harder to continue reaching for success instead of becoming complacent that she had written one successful book. With that in mind, if your monthly budget is $4000 and your husbands take home pay is $3700, why not provide yourselves a bit of stress to make sure you make that extra $300 every month? (Just an example.)

    You also mentioned that the student loans are deferred, my only question about these is: are you still making the interest payments? Both to keep the interest from compounding and as a tax deduction I think that you should consider that if you have not already. (And thanks to Great Lakes for chiming in, I know that sometimes the labyrinth of trying to communicate with them can make it seem not worth the effort but maybe it might be something worth spending an afternoon doing?)

    The same might be said for the medical bills. I know they are doing you a solid by letting you make tiny payments, but I hope you will take an afternoon to go through them and check their accuracy. Yes, the odds are that they didn’t charge you for 300 bars of soap and such, but errors can occur in medical bills and it is important to look through them just as you would a credit card or bank statement.

    Finally, I also would be interested in hearing if you have ways of increasing the income, either by selling items, picking up spare work, etc. One of the things I loved about Beks (and even Claire) was that there was no paying work that she or her husband were too good for (a sore point for me right now as I watch two family members mooch off their elderly parents because they can’t find a “good enough” job.) Although, with young children I also understand that a job must provide enough money for two things: to make it financially worth taking when factoring in childcare costs, but also to make it financially worth leaving your children.

    One last thought, because I know having the children makes you a lot more hesitant to have a small emergency fund, are either of your parents (or another family member) in a position to help if the need arises? I don’t mean this as asking your parents for financial help now, but if in letting your emergency fund drop you suddenly do find yourself in a true financial emergency, would they be able to provide short-term help (with the intent that you would repay them)? I know that as my family works to pay off debt, the thought that in a true emergency my folks would come through is one of the things that helps me sleep a little bit better at night.

    Good luck in your journey as a BAD blogger, I will be cheering you on as you go!



    • Reply Ashley |

      Thanks for the comment Meghan! I think a lot more will be revealed from this afternoons post with my budget. We will be paying off CapOne ASAP! It’s an interesting idea about having family available in case of emergency. Honestly, not sure how I would handle that. When everyone knew what was going on with Chris a couple months ago they rushed to help and I just don’t feel comfortable potentially putting them in that position again. Chris and I both have somewhat “needy” siblings as it turns out, and I feel like our parents are already over-extended in trying to help everyone. If put in the position, I think I would prefer to use our CCs as our “emergency $” rather than put that burden on our parents (who would have to resort to the same thing – using CCs). I definitely have lots of ideas of how to increase income AND reduce our expenditures. These will have to be revealed in due time. Thanks for sticking with me in the meantime : )

  • Reply Angie |

    Anything >10% needs to be paid off ASAP. I would use all your savings to do this. My reasoning is that if an emergency does come up and you have no money, you would just put it on one of those cards at the same interest rate. Effectively there is no harm. And you are taking advantage of continually lower interest owed on the accounts.

    Yes, its scary to have a tiny emergency fund. But when you have debts there is a “cost” of having an emergency fund. To put numbers out there the cost is effectively the interest you are paying for that sum on your credit card highest rates. The “cost” of having 6k in your Money Market Account is the interest you are paying monthly to a creditor on that balance. Effectively, having 6k in that money market account is costing you $70 a month (Interest on $413.27@17.9% and $4,486.73@13.65%).

    That being said, topmost priority would be ensuring you have the balance for the mattress loan when it comes due. Also, knowing these 0% interest places are shady I would plan to pay it off a month early to prevent any funny business. Be aware that in terms of interest they are looking from the date of purchase NOT the payment due date of the 12th month statement

    • Reply Ashley |

      Hey Angie,
      I like the logic you have used. I am a #s person, so what you’ve said really makes sense. I’ll have to talk to my husband about it before actually transferring funds, but when you put it as you have so eloquently stated, it makes NO SENSE to have that money sitting in a money market with it could be reducing our debt and saving us $ on interest.

      Also, thanks for the tip on the mattress loan. They are so shady about that stuff! I have actually searched all over our bills and there is NO sale date listed anywhere, so I did exactly as you stated (assuming the 12th month statement). To be on the safe-side I’ll make sure it’s payed off in full in early summer instead of waiting until late summer. We do have the funds to do so (and could pay it in full if we wanted – you see our assets), but I’ve just been so laser-focused on the CCs that I was putting this off trying to pay toward our high-interest CC debt instead.

  • Reply Angie |

    Also, I would look into some type of payment on your student loans. Maybe look at the income based options. I’m sure you know this, but by not putting any payments in place you’re effectively increasing the balance $500 a month! Even if you just make it a goal to pay the interest you’re preventing that from compounding. Deferring your student loans one more year will add $6,500 to the balance. I know it won’t be easy at first with so many conflicting priorities, but when the time comes I would find a way to make interest only payments.

    • Reply Ashley |

      I know – the student loans make me feel sick to my stomach. You’ll see more in this afternoon’s budget post. We DO pay some toward the loans, but it doesn’t add up to the full amount of interest. My thought was that the interest rates are lower than our CC APRs, so we should pay off the higher APR stuff first. But you make a good point that its a TON of interest since the loans are so high, and they continue to compound, raising the amount due, etc etc etc. Really – makes me sick! : /

  • Reply tami |

    The car purchase and the bed purchase really stood out for me. I can see how you ended up buying a bed/mattress for $2500, but think you’ll have to avoid that situation in the future in order to pay off debt. How will you approach large purchases in the future? I struggle with this myself.

    • Reply Ashley |

      DEFINITELY!!! My husband and I have had LOTS of talks recently (since the BAD position came up) about NO MATTER WHAT……NO MORE MONTHLY PAYMENTS!!!!! We will live with what we have. We could have done without the new bed. It was 100% a luxury. We justified it, thinking we needed a bed for our guest room so we bought ourselves the new bed and moved the old one to the guest room. But in reality, we could have bought a cheap used bed off Craigslist for the guest room and kept our old bed. Or just used a blow up mattress for guests. Or whatever – it was unwise to make that purchase.
      That being said, the purchase was almost a full year ago (prior to our focused debt-reduction mission). I think that until we get out from under the weight of our debt, we just deal with what we have. Reduce, re-use, recycle! : ) I’m sure things will come up before we’re done paying off the student loans, but I am adamant about not making any large purchases until everything else (CC, mattress, car) is GONE!

  • Reply scarr |

    I think you should keep your savings SAVED for the time being. Once you start kicking debt’s butt, you could reconsider dipping into it to pay off some balances. I just think you are in a delicate position right now especially since you have kids. You will get to a point where you will want to use that money toward your debt, and I think it is okay to not be there yet.

    Thanks for sharing the situation about your husband’s DUI. You certainly didn’t have to share that with us, I don’t know if I could have been so brave as to share it. I appreciate your honesty! And now to be honest with you 😉 . . . I think you need to get rid of that car and get rid of that car loan. It is WAY too much. I know you need a safe car for your family, but you cannot afford this one. I’d rather see you sell the car, pay off the loan and empty out your savings for a $10,000 family car.

    Thanks for sharing so much personal information. I really look forward to your posts, I think you are going to be a great blogger!

    • Reply scarr |

      and by rather I meant if you were going to do anything with your savings money, I’d rather see you fix that whole car situation 🙂

      • Reply Ashley |

        *sob* – I know, I know! I think deep down I knew I would get this advice from readers regarding the car. I listen to Dave Ramsey’s radio show and have heard him give this same advice to others. It’s so easy to understand from a logical/#s perspective when its someone else, but much harder when its YOU. Plus, for whatever reason, there’s almost an emotional attachment to it, also. This was our first car when our family expanded and it’s been good to us. But its very, very expensive. Just a little foreshadowing for next month’s debt update…..I just paid our registration for the coming year and….ouch!!! So yes…the car is a problem. It will require some thought and serious conversations with my husband (along with the emotional wrestling). I do appreciate your honesty though. I always value constructive criticism and I thank you for it!

        • Reply Juhli |

          How much is this “emotional attachment” costing you per year in interest, insurance, licensing, maintenance and payments. How much less would you be paying if you bought a Nissan Versa for example?

  • Reply TPol |

    Thanks for the nice, long and sincere post. I personally would not touch my savings because of twins and your husband’s mystery sickness. However, I would freeze purchasing anything beyond necessities till the end of the year. No new clothing items, no new books or DVDs and stuff like that. I would keep a small entertainment/fun budget in order not to feel deprived. You guys have excellent public libraries something we do not have over here.

    I agree with the above commenter on the car. That is a very big expense. I have never bought a car on credit so, I end up driving fairly reliable cars on the lower end. (2010 Nissan Note paid in cash)

  • Reply Hema |

    I was in the same upside down car loan situation like you and regretted every moment of it. But after waiting few years and a few trips to Carmax the day finally came when they offered 16K for our van and we owed 12K. We immediately went looking and leased a Honda Civic for $190 per month and sold the van to Carmax. BEST. DECISION.EVER. The gas savings alone is over $250 per month. I used to think that having kids meant “needing” a big van. Very wrong! I have three kids – 16,12 and 2 year olds and we’re perfectly happy with the Civic. We even drive to CA from AZ and spend around $100 for gas for the round trip. After selling the van we snowballed a total of $48000 debt (12K van and rest CC) into oblivion within a year by emptying out savings (except for $1000 EF), sticking to budget and being frugal. Dave Ramsey’s words “gazelle intense” stuck with me like glue and I threw every extra cent at the debt. We’re now happily debt free for about a month and you can absolutely get there! I totally disagree with the post that says you can’t get ahead of your debt.
    My two cents’ worth to you would be to empty Capital One savings AND withdraw $1000 from Money Market (that will still leave a good chunk in that account to help you feel safe about emergencies, since it looks like you’d like to have that). Use that money to wipe out BofA and Capital One CC. Then use those payments to snowball Wells Fargo. After September you will also have your Mattress Firm payment to add to the snowball. Wiping out two CCs right now and still having money in your MM will give you the necessary boost needed for gaining momentum in the snowball. Just my two cents’ worth.
    Good Luck and I wish you well!

    • Reply Ashley |

      Thanks Hema – I appreciate your comment so much! I LOVE hearing success stories from others (and congratulations on being debt-free!!!), particularly since you had a similar expensive vehicle situation!

  • Reply Hema |

    Oh, BTW car registration in AZ is “ouch” even for smaller cars if they’re new. The registration apparently goes down as years go by or that’s what I was told when I gaped at the almost $400 registration for a Honda Civic!

  • Reply Tami |

    If you haven’t tried already, you should definitely call your credit card companies and ask about repayment options. Some companies have payment plans that can reduce your interest rate and/or minimum payment. It can’t hurt to ask what the options are.

    • Reply Ashley |

      Interesting! I actually called last week to ask for lower interest rates and was turned down by all. However, I’m going to paying off Cap One soon and, when that’s done, we’ll be dipping just below 50% debt in our debt-to-credit ratio. I’m hoping that tips the scales in our favor and I can call back later next month and ask again. Never hurts to ask!

  • Reply Cathy C. |

    Ashley, kudos to you for posting your budget/debt numbers and the good, bad and the ugly! I’m looking forward to following your journey and I think you guys can do this! It’s nice that you don’t have a tremendous amount of cc debt. You’ve obviously already had a lot of differing opinions on your car situation and I’m torn about any advice on this one. While it is a lot of money on a car loan, vans and most vehicles these days cost a LOT of money. Since it’s new, reliable and large enough to fit your family’s needs over the long-term (and your upside down in it right now), I lean more towards wanting to see you pay it down, refinance and hold onto it.

    It’s so hard to find a used reliable vehicle that isn’t going to cost you large unexpected expenses when you can least afford it. Ask me how I know?? We thought we had bought a very nice 4 year old car, great gas mileage, paid cash and within one month of purchase it needed $1500 in repairs, 4 months later another $800 and just after the first year a new clutch for $2200. We repaired it and immediately sold it to Carmax as I’d had enough of the uncertainty and constant money bleed. All said and done, it cost us over $600 a month to own and it wasn’t all nice, shiny and new.

    Now, this definitely doesn’t happen to everyone but it was our experience and it seemed Murphy had taken up residence in our house for over a year. I guess I would say to think long and hard before you do anything with your van. There’s no rush to go get rid of it until you’ve maybe handled the cc debt?

    • Reply Ashley |

      Yikes!!! That sounds like a nightmare of a car situation! I still need to talk it over with my husband and actually crunch my numbers, but I think my comments have made it obvious that I’m a little partial tower keeping it. It could also make a big difference if we’re able to lower the interest rate, too. I don’t think we’ll make any immediate decisions one way or the other right this second. We rushed into purchasing it, I’d like to take it slower when determining what to do from here.

  • Reply jaye |

    Hi Ashley:
    Much of what I was going to say to you has been said already – mainly that I think you should look at what you earn on interest in savings vs. what you are paying in interest on credit. It doesn’t make sense to me to lose money on CC’s when you could pay them off. I would keep a modest emergency fund and start rebuilding it immediately as part of your snowball.

    Regarding the car – I think you need to get rid of it. There are lots of reliable used cars out there and the Ford Explorer isn’t one of them. I just checked Consumer Reports for your car and it got a dismal ratings for all of the following: transmission major, transmission minor, engine cooling, drive system and electrical system. They gave it an abysmal “used car prediction”. On top of that, you must be paying a ton for gas. This just isn’t a good investment. How upside down are you? Is it feasible to get out? Sorry to sound like a mom but… next time, you MUST do your homework!
    FYI – a few years ago, when my minivan became more expensive to fix than it was worth, we got an affordable lease on a new Honda Pilot. Worst decision ever. Though the mileage rating was about 16-20 mpg, I was really getting 12 and was paying a TON for gas. After about 6 months, I returned to the dealership and had a fit. They took it back after I paid them about $400. Best decision in my life! I bought a used highly rated minivan with good resale (though I intend to drive it into the ground!) and am very happy with it.
    Regarding healthcare – is your current insurer the best plan for you? Are you sure you can’t find another with lower out-of-pocket rates? Are you using an HSA? If you funded one, at least the money you spent would be tax deductible. Have you tried negotiating the bills with the hospitals? I’ve heard people have had success with that, though I haven’t!
    Finally – is there work you could do to support your husband’s business? Could you put together and drop off marketing materials, make a website, do cold calling for him, deal with billing, etc., to free him up to do more work?
    Okay… enough. Thanks for sharing with us and best of luck!

    • Reply Ashley |

      Wow, so much goodness was packed into this comment that I want to address!
      1 – I had no idea the Ford Explorer got such poor Consumer Reports. We have always “trusted” the brand because we’ve had a lot in our family (my stepdad has had one for 10+ years, my husband drove them when he was younger and they’ve always worked well for us). I now know that financial advisers tend to recommend AVOIDING extra warranties on cars, but the extended warranties we bought actually cover the things you mention. When I was 16 I was burned badly on a car I’d only owned for 6 months when the electrical system went out and it was so costly to fix I wanted to make sure we were covered with this car.
      2.Our healthcare does seem very reasonable to me. We were “grandfathered” in after the Affordable Care Act went through and any new insurances would cost us more (for example, our current insurance doesn’t cover prenatal care, which is now required – so we are able to “save” in that way…at least for another year). I had a couple people comment about checking hospital bills and trying to negotiate, etc., but I don’t think this really applies to our situation. The total bills were in the half-million dollar range. My husband had an EXTENSIVE battery of expensive tests run (many multiple times) – CTs, MRIs, spinal taps, extended hospital stays, every blood work test known to man…I can’t even remember them all right now. My point is that even if I were to try to negotiate, I am positive we would still be over our annual cap ($8,000 max), so it would make no difference in the end. We do not currently have a HSA and after this incidence I thought we should start one but just haven’t yet. I need to get on the ball with that.
      3. I could certainly do more for my husband’s business. Its challenging because I’m still trying to invest in my own career, too. At this point my “investments” require time but have little pay-off at this time (in terms of money)…but could pay off BIG in the future if I am able to land my “dream job.” So I struggle trying to balance my actual paid-work, my non-paid self-investments, and any investments in my husband’s business (on top of being a Mom, too). I’m sure these will be things that are brought up and discussed as we move along this process!

      • Reply hannah |

        I think it is still worth trying to negotiate your bills. My husband was diagnosed with cancer and over the course of one year had minor surgery, major surgery, several hospital stays, and several rounds of chemo.
        That is not cheap!
        Thankfully we had an out of pocket cap also, and when all the random bills finally arrived, I contacted every business and asked about negotiating bills.
        Some flat out said no, but many were willing to work with me. With your income you probably wouldn’t qualify for income based discounts, but there are others.
        I had many places knock off 10% or more if I paid in full ( smaller amounts of several hundred $$). Others were put on payment plans, and one payment plan we were still paying on when we got slammed with bills from the chemo.
        I called them up and explained that we’d just been hit with several thousand in more bills, and could we discount our remaining amount at all? She looked at our payment history and knocked off a % if we paid in full right then!
        So please, don’t give up on the negotiating. Medical companies want your money! They are used to hounding people for it, and will gladly work with people who call them up and offer $$. It’s definitely worth a try.

        • Reply Ashley |

          Thanks for the advice! I can’t even imagine the stress you and your husband must be going through! I absolutely HATE dealing with the medical companies. I’ve heard that people tend to have more luck if they go in-person, but we have so many different medical debts with so many different places that it seems daunting. Even trying to make phone calls is a lot. But its certainly worth it to get some of the debt reduced. I’ll definitely give it a shot! Thanks again!

  • Reply AS |

    So unlike many of the other commenters, my take is do nothing with the car right now.

    Yes, its 24K which is a TON of cash to owe. Its an SUV so it’s a gas guzzler. But to sell it and buy something cheaper is probably a $5-10K transaction if you factor in the fact that you are underwater, and will have to incur sales taxes, registration fees etc on the new one and the dealership will play you on your trade in. Plus the new car may come with just as bad an interest rate as your current 7.75%, or worse, since your debt-to-credit isn’t that good. Yes you could clear some cash but I don’t think this helps until several months from now, I think some of the other moves, like paying down your credit card with some of your savings are also very effective and far less difficult to accept on your first day.

    Personally I would be looking to simplify and automate. For peace of mind, I would pay off that mattress bill now. Yes you could squeeze out 4 more months of interest free, and use that money to credit cards. You’d save about $65 (using $1400 @ 14% for 4 months which is the approximate tradeoff).

    But if you just pay that off now, you have one less thing to worry about. I don’t know how much free time you have to manage your bills, but the fewer moving parts to worry about the easier it will get.

    So the next one would be the $413 cc bill. Just pay it off, with savings. You can then snowball that minimum payment to another bill [better] or replenish your savings fund [worse] at your discretion.

    One other suggestion – pay your credit card bills as soon as you can, don’t wait until the payment due date, pay it as soon as you get the bill if your cash flow allows. You’ll save interest every single month. Interest is calculated on your average daily balance, so the earlier you pay the lower the base for interest computation. Pay electronically if you can, using the credit card company’s site — payments can be credited as early as the same day rather than waiting 3-5 days for your bank’s ‘online bill pay’ or the mail. You can even make multiple payments each month (timed to paychecks) if you want to — but that is adding complexity not reducing it, so that could end up being too much to worry about unless you have predicable cash flow and can set up multiple automatic payments each month.

    • Reply Ashley |

      Gah! I feel like an idiot! I’ve been holding payments to mail in until just before the due date (like a week in advance) ON PURPOSE thinking I was “saving money”….I guess I thought interest was compounded monthly?? Yikes! This is a change I will be making ASAP!! Also – I have some very “old school” tendencies and one of them is that (for whatever reason) I really like writing and mailing paper checks. Somehow I feel more “on top” of my budget and bills and everything. But this is something I’ve already thought about changing. You make a great point about it being an immediate payment that way, but I was also thinking that I FLY through stamps so it would save me on postage, too. Great advice, thanks for the comment!

      • Reply AS |

        Check the terms of each account – interest on credit cards is usually calculated daily and added to your statement monthly, whereas auto / home loans – and maybe your education loans – is usually calculated monthly. So the benefit of paying early usually applies to credit cards, but not home / auto.

  • Reply jaye |

    I just re-read what I wrote about the HSA and I realize I wrote that the money you spent would be tax deductible – not true! I meant to say pre-tax dollars. Sorry about that.

  • Reply Slinky |

    I just wanted to say – Awesome start to the new bloggers series. It’s really nice to get a honest, complete, and detailed post to give us an idea of where you are now and how you got there. I’m looking forward to the budget post and to hearing how you and your husband decide to move forward!

  • Reply ECD |

    I can’t wait to follow your journey to freedom from debt! I am in almost an identical situation to you (minus the twins). Newly married, almost 30, PhD, recently relocated for work. 🙂 I also went to grad school with ZERO debt and managed to rack up just over $60k of consumer debt (ouch!) during grad school and my first year out of school. I finally came to grips with my debt and am motivated for it to go away so I can start the rest of my life – buy a house, start a family… My journey started November 2013 and I’m proud to have paid down nearly 15%. Good luck – I have a feeling you are going to rock at paying down your debt!!

    • Reply Ashley |

      Thanks! And congrats to you on your successes so far! I’m excited to share my journey!

  • Reply Lisa Parsons |

    Wow. A lot to process.

    Please don’t get offended. I’m just offering my honest opinion here.

    I would take the debts, smallest to largest, and pay them off that way, like Dave Ramsey recommends. You definitely have them organized now, so it will make the snowball method easier.

    I am in a bit of a mess myself. I am looking back and kicking myself realizing I could have had half of my student loans paid off by now, even with my crappy minimum wage job, if I’d been a bit smarter about things.

    Financing a bed IS dumb. I tend to agree with a blogger who said that other than a house an an education (and I’m not even sure about THOSE), it’s never smart to make payments on things. I guess I’m just curious as to why, when you’re in such a dire financial situation, you would choose to buy such an expensive bed? I found a bed for around $300 new at a local mattress store that I’m planning to buy when I move out of where I am now. I mean no offense, so please don’t take it that way, and I’m definitely not all that smart with money myself, so maybe I have no room to talk. I’ve never financed a bed, or a computer, or a couch though. My debt has been solely my student loans and some credit cards. I did file for bankruptcy in 2012 on some cards I ran up when I was 21-22 and stupid. Since then, I haven’t paid late on any credit cards. I did have some unpaid utilities that went a bit wonky though. Luckily I got them removed from two of my credit reports.

    My sympathies on the Sallie Mae loans. That must really stink. The one good thing about my icky pile of student debt is that it’s all federal, which means I have a decent chance of knocking it down once I’m making better money.

    Overall, your situation is definitely more than I could handle. I want to gently suggest that perhaps your husband should be responsible for his DUI debt. It’s his responsibility, so it shouldn’t be included in your debt. You didn’t drive under the influence, after all, he did. The medical debt is a bit trickier. Since it wasn’t his fault he got sick, that’s a bit different.

    I would consider selling the car and getting a cheaper one.

    And what did you buy those credit cards? I bought furniture, food, clothes, and other dumb stuff with the ones I had in the past, but I never charged more than about $11000. It tripled with fees and finance charges.

    Anyway, I hope this is taken in the spirit it was meant, curiosity. I may or may not be reading this blog regularly. I wish you the best in paying off your debt.

    • Reply Ashley |

      Thanks for the thoughtful comment. I totally agree on the bed thing! Our last bed was purchased in 2005 for $350 and has lasted us since then. We got our current bed through MattressFirm and I was SHOCKED that all the beds were in the $2500ish range (and up!) Obviously we could have gone somewhere else and gotten a much better deal, but we weren’t on our debt-reduction journey yet and…I don’t know…I really don’t have any excuses or good rationale. We were dumb. In terms of the DUI debt, I totally agree it is his debt and not mine (from a legal perspective). But we’re married and since he’s making the money, he technically IS the one paying for it (I just handle how the money gets allocated – a topic for another post). In terms of the credit cards, it was mostly living expenses. Groceries, gasoline, etc. I mentioned in my Intro post one big (and very stupid) purchase was a $4,000 car. On a CC. I’m not even sure that’s legal??? But it happened. Other than that, everything was small stuff that added up over time. I definitely appreciate your comment and want to thank you for it – not offended in the least! We definitely made some dumb decisions and are trying to dig our way out. It’s an uphill battle, but one that we’re committed to seeing through to the bitter (happy?) end!

So, what do you think ?