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Hump Day is Hope Day!

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I’m so excited to have been chosen as one of the new BAD bloggers and I think this new format is going to be great! I figure I will start building on my introduction to my debt with some debt details and noticed many of comments liked to have an image of the blogger so I thought I would start out with that….

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I am so proud to be a mom and my kids bring me such joy and purpose and are definitely my motivation for putting all this out there. I have to get out of debt and to do so I must be kept accountable. I need all the advice, help and tough love I can get to do it! Here’s the breakdown of my debt and the remaining number of payments/interest to be paid off if I continue on my current path:

Creditors Amt Owed Total Interest Pymts Left Payoff Date Interest Rate
Retail Card #1                413.00                       – 1 Apr-14 0%
Property Tax                700.00                       – 2 May-14 0%
Loan from Dad              3,830.00                       – 6 Sep-14 0%
Credit Card              4,974.00                440.68 10 Jan-15 13.9%
Retail Card #2              2,264.80                499.76 12 Mar-15 25.99%
Car Payment            31,138.00              2,800.77 25 Apr-16 6.79%
Line of Credit              1,248.00                  58.25 6 Sep-14 15.95%
Student Loan            31,687.00              2,622.91 42 Sep-17 2.88%

 

Total Debt: $78,518

I have already made March payments (including paying off my highest interest debt – YEAH!) so these numbers will be the same going into April minus interest accrual.

You can see from you my chart that I am not paying off higher interest debts first, but rather focusing on the personal and smallest amounts. After those 3 are done, I will target my highest interest one and move forward from there. I am very open to hearing suggestions on changing strategies.

So where did the debt come from you ask?

  • Retail Card #1 – is a store card (gives me a 5% discount) linked to my checking account which I used so I wouldn’t incur any debt. Lack of record keeping forced an overdraw of my account and they graciously turned it into a credit situation and I have til next month to pay it off with no penalty.
  • Property Tax – the car tax bill due every 6 months.  This bill kills me every time, but now I’ve put it in my monthly budget and will be prepared the next time around.
  • Loan from Dad – this was an inadvertent loan when I lost a large client last fall (good testimony for the need of an emergency fund,) that I am very anxious to pay in full due to the personal nature.
  • Retail Card #2 – for the most part this was unavoidable spending as it is for equipment used in my business.  I’m in a really good place right now and anticipate my current tools will last for several years, so getting this paid off will allow me to put some aside for when I do need to replace or upgrade something.
  • Credit Card – I was in a great place with this card two years ago.  Had it mostly paid off and felt good having it for an “emergency.” Unfortunately, I let my desire for experience for my kids out weigh good money sense and used it to take a trip to Floriday – Disney, Universal, etc. It’s a decision I will not repeat. I go back and forth over regretting it as I do believe it probably will be the last time we go since my kids are growing up so fast, but we probably could have lived without it too.
  • Car Loan – I know I am going to get the most comments for that one.  My car has a story all of it’s own that will come another time.  But I’ll put this perspective out there now.  I drive a 2013 commercial passenger van (the Beast.) I chose a newer car because I am a single mom with no “car support” around (did not want to say male, but that’s what it is in my mind,) and am scared to death of car trouble. I chose this huge, gas guzzling beast because I have 4 children of my own, another 1 whom is with us all the time, and my twins have a biological brother and sister who are with us 1 or 2 weekends a month…that’s 8 people on a pretty normal basis.  And oftentimes, I watch other people’s kids, carpool with others and we are certified to foster two more if the need arises.  As much as I would like to sell it and go small and old and cheap, I have not been able to wrap my head around that.
  • Line of Credit – I hope you will agree that this, my newest debt was  good choice. When the adoption of the boys started last summer, I knew I was going to have to have a bigger car (I will tell the whole car debacle another time.)  At the time, I had a 2012 Honda Crosstour.  So I found my Beast but when it came down to trading in the old, well, I just couldn’t take what they were offering so I held on to it and put it up for sale privately.  Fast forward, 5 months and I got my best offer, $2K less than what I owed.  This line of credit paid the difference for me to get rid of that additional car payment, insurance payment, property tax payment.
  • Student Loan – this loan is from grad school only.  My parents got me through my bachelors degree with new debt.  I was SO naive as to what was happening, and now I am so grateful. It was still a horrible decision to take it out in the first place.  I was single, working full time and making decent money.  I could have paid for it without the loan. But I was not educated, I lived paycheck to paycheck and while I didn’t run up debts, I did spend all my income, thus the student loans.

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If you have any questions please ask…I’m just feeling my way on what to put out there.

~hope


34 Comments

  • Reply Moe |

    First off Hope – I love the pictures. Seriously they are great. My debt is equal to yours with the difference of a few dollars. I think we will both be successful – whats done is done and lets move on. Good luck to you and your family.

    • Reply Hope |

      Thanks, Moe. It is hard to not look back and second guess decisions I made especially looking at the daunting task of getting rid of the debt, but you are probably right…what’s the saying “no use crying over spilled milk.” That fits here, right?

  • Reply Theresa |

    You mentioned “property” tax. Do you mean property tax or car registration tax? Are you a homeowner? Can you share your interest rates for your debts?

    Glad you are here Hope!

    • Reply Hope |

      Thanks for having me. I am very excited about this experience, well, especially the final results that I envision!

      It actually is ;labeled property tax on the bill, but it is on cars not home.

      I will update the post with the interest rates, I forgot to add that.

  • Reply Lily |

    That family picture is amazing! Seriously. If that’s not in a frame on your wall, I’ll be so sad.

    Can you explain the car tax? Is that specific to your state?

    • Reply Hope |

      Thank you! I have been blessed to have a standing barter with a professional photographer in our area for several years and am always please with her work. This was the first year in a long time, I joined the pictures though.

      Yes, VA charges bi-annual property tax on any cars registered in your name.

      • Reply Laura |

        My state has something similar they call it personal property tax. Comes once a year and covers cars,boats, motorcycles, etc that you own

      • Reply Jen From Boston |

        MA has an annual excise tax on cars. It’s tied to the car’s estimated value (I think a % of the blue book) so it decreases each year for the first 1-5 years of the car’s age, and then it remains the same.

  • Reply AY |

    Hi Hope! Welcome and thanks for your post! Just a quick question–I was a little confused by your breakdown of numbers. Is the second column of numbers the interest due? Also why do the first three debts have a dash–so no interest on those? Maybe I am reading it wrong. Thanks!

    • Reply Hope |

      Sorry for the confusion…let me try to clear that up.

      The first three debts have no interest or fees at this time.

      The second column shows the total interest that will be paid on the loan if I stick to the consecutive number of payments listed in the 4th column.

      I am using a debt reduction calculator I found at http://www.vertex42.com/Calculators/debt-reduction-calculator.html I just plopped my numbers in there and it did the rest.

      I am going to update the post with the interest rates in a minute.

      Hope this helps.

      • Reply AY |

        Great, yes that answered my questions! I like having the payoff date listed–that is pretty motivating!

  • Reply Den |

    Welcome Hope! Thanks for putting it all out there!

    Will you be providing a budget soon? I’m curious how much each month you pay towards debt? Also, do you have an emergency fund?

    I wouldn’t worry about the having a big car – sounds like you need it. Sometimes life circumstances call for unfrugal choices and that’s ok too. Don’t sweat it.

    Also, my suggestion would be that after you’ve paid off the top 3 debts to then pay off your small $1,200 line of credit….then attack those big bills!

    • Reply Hope |

      Hi Den,

      My budget will go up this afternoon. I do not have an emergency fund. I go back and forth on that one and will address it in a future post. However, I did have a small one and then my youngest broke his arm this past New Year’s weekend, so it was used up in its entirety.

      I looked at that $1200 one as well and will definitely consider changing the order before my April posts go up and see what it does.

      Thanks!

  • Reply Rachel |

    Can you give the titles to the rows in your chart? Also, the interest rates? The line of credit is so small … I’d suggest knocking that our after you’ve done the first three. It frees up 60 dollars a month to snowball! If the snowball method is working for you, why not stick with it?

    • Reply Hope |

      Thanks for the suggestion, I’m updated the table with column titles and added the interest rate. I hope that makes it more clear.

      You are the second one to suggest that line of credit as my next debt to tackle after the top three…I will update my order for my April update and see how it looks.

      Thanks!

      • Reply Rachel |

        Thanks! Now that I see that your Retail Card #2 has the highest interest rate and a relatively small balance, I’d probably do as you said in the post above …. the three loans, then Retail Card #2, then Line of Credit, then credit card. You have a great! rate on your student loans…a good 75k of mine are at 7.9%. ouch!

  • Reply Walnut |

    You’ll have some awesome early wins on your debt payoff in the next few months with some of those low balances hanging around. Do your kids know that you’re paying off debt? Are they helping come up with innovative ways to save or make extra money? Not that they will be paying off the car loan, but kids can always be tasked with earning extra money to cover their “wants”, which in turn takes a little stress off your budget.

    • Reply Hope |

      Yes, all the kids know that mom has focused our money on paying off debt and making good choices. I’m learning to say “there’s a better way to use our money right now” or “do you want to give up ???? in order to do that?” rather than “we don’t have the money for that.” I think it keeps things in perspective for them and for me. I have to get it through my head that all of this is a choice I made, continue to make or will make. It’s not that we don’t have it, it’s that in most cases, we’ve already used it. I don’t want that to be the case anymore, but I am still teaching myself that mindset and along the way, my kids, I hope.

      The older two are far more aware then the younger ones, and they’ve been responsible for their own personal hygiene and clothing purchases for over a year now. I was giving them an allowance but as of this month that has ceased. I will continue to provide paid work around the house to help them with their responsible purchases and we live in a great neighborhood where the neighbors are always willing to hire them to babysit, pull weeds, etc. (Even my little ones get in on the neighborhood jobs.)

      All of them have summer activities coming up and while I cover the needed expenses, they must all have their own spending money. The younger two are still better at saving then the older ones, but they all have a jar in their room for money and we have talked extensively about what they may want/need.

      I help where I can and where appropriate, but every purchase they make I remind them of their choices.

      I will talk more about the kids responsibilities in a future post.

      • Reply CanadianKate |

        You said, ” I’m learning to say “there’s a better way to use our money right now” or “do you want to give up ???? in order to do that?” rather than “we don’t have the money for that.”” That is a fabulous answer.

        Glad to see that finances are a family affair! It will not only help with them not guilttng you into making poor decisions but when they grow up they’ll know that openness over finances, and pulling together as a family is the ‘norm’, so it should help them in future relationships. BTW: just because they don’t understand or demonstrate that they understand that now, doesn’t mean the lesson isn’t being learned. It just isn’t being applied. Your job is to teach the lessons, their job is to apply them after learning them. Sometimes you have to wait VERY patiently for that!

        Big families can often be cost efficient. Some costs (health care and car size) are more, but others can be less (sharing clothes, built in playmates, help to earn money, built in babysitters.) Food is often less simply because taking a family of five (or more) out to eat is just too expensive (besides, lots of places don’t have tables for more than 4!)

        • Reply Hope |

          Our grocery budget is a whole other post…but suffice it to say, we take turns handling the grocery money each week (with mom guidance and input) and they all want to eat out. Lately that has come down to:
          1. Find places where the two youngest can eat free
          2. Drink water
          3. Go at lunch when there are lunch specials
          4. Use coupons
          5. Everyone pitch in a few bucks of their own money to go somewhere that costs more
          But I will write that up. It’s definitely one of the newer ways we are trying to 1) stay on a tight, very tight budget and 2) empower each other with control 1 week a month.

  • Reply Meghan |

    Hello Hope!

    Welcome to the blog. I just want to thank you for putting everything out there right up front. Your family is beautiful, I found myself smiling through your whole post! Clearly you have a beautiful soul and an amazing spirit, I really look forward to cheering you in your journey.

    Just a few questions:
    Who is your student loan through? Are you currently making payments on it? I ask because I know that government loans have become much more willing to work with you on lower payments, short term deference, etc. and with such a low interest rate that would be a great thing to take advantage of! (Two years ago my family hit a tough patch and I called and explained that we were struggling but expected it to work itself out in a few months, the person I spoke to generously placed us on hardship deference for double the time and we didn’t have to provide any documentation about it! We were able to resume our payments before the deference ended.)

    I am sure some folks may give you grief about the vehicle, say you could have bought something a couple years old, blah, blah, I am with you on the fear of breakdowns. I am just wondering if you are able to apply any of the value as a work-related tax write-off? Or when you have foster kids in your care?

    Thanks for adding the column with your interest rate. Is it possible to also add a column with your minimum monthly payments for each debt?

    I look forward to seeing budget, good luck in your journey!

    Cheers!

    -Meghan

    • Reply Hope |

      Hi Meghan,

      My student loan is through Nelnet and like you I have used the deferment option several times.

      Since I don’t actually travel for work very often, I don’t think I can use the vehicle as a write off and definitely not with foster kids as there is financial support provided for them by way of a monthly stipend.

      The monthly required payment for my loans will be available shortly when my budget posts. But as a advance notice, I currently have about $800 per month I can use towards “overpaying” debt in addition to the minimum payments.

      Thank you so much for your encouragement.

  • Reply Mary |

    Welcome Hope. Thank you for sharing your current situation. You will have a team of cheerleaders rooting you on and helping you along the way. Question – have you looked at re-financing your auto loan. I know many of our banks/credit unions right now are offering 1.9% or so on auto loans – even for used vehicles. Have you called your credit card companies to see if they would consider lowering your interest rate? If it is a store credit card, they probably won’t but could you transfer that amount to a lower interest card to save some in interest payments along the way. I’m not a big proponent of transferring balances because sometimes it backfires but with that interest rate, other options may provide enough of a savings to make it worthwhile. Good luck from SC.

    • Reply Hope |

      Hi Mary,

      I have thought several times about refinancing my car loan with my local credit union (where my line of credit is currently,) but have been working on getting a better credit score with on time payments, etc. since I took a couple of dings over the last six months with the loss of some income. I will definitely revisit that, perhaps at the end of the summer when 4 of my debts are gone.

      I haven’t even called about Retail Card #2, but you are right, I should. I’ve been a long time customer and good customer to them. I’ll put it on my to do list over the next couple of weeks and will keep you posted.

      Thanks for the suggestions!

      • Reply Theresa |

        I agree- I think you need to get that interest rate 26% down. Any chance you would consider a balance transfer? You could run the numbers to see if it would make sense to pay a balance transfer fee or sometimes Discover offers us no fee but a 5% rate. Maybe something to consider.

        • Reply Hope |

          Funny you mentioned that…got an email today after responding somewhere about waiting on that, about a balance transfer rate of 3.9% but it was only good for 6 months. I’m pretty hesitant about that right now, but will keep it in mind.

  • Reply OC Budgete |

    The poses that your two sons made in the first picture cracked me so much. What fun to see first thing in the morning, lol. That’s probably the best family picture I have been so far in life.

    • Reply Hope |

      I’m so glad you liked it. I debated long and hard the serious ones, but really the silly ones capture us better. While this debt is like a very dark storm cloud hanging over my head and causing knots in my stomach and causing insurmountable amounts of worry at times, my children bring so much joy that it balances out…and oftentimes, the smiles on their faces, the excitement in their screams and the roar of their laughter is like the sun blocking out the storm completely.

      I know the storm is there, but I am prepared to do what I have to tackle it…and now! (Ok, maybe a little overboard on this reply it’s truly how I feel about this at this time in my life.)

  • Reply scarr |

    Beautiful pictures of your family! Welcome to the blog! As other commenters have stated, it looks like you will have a few small wins really soon! When I was paying off my debt, I used a similar formula as you: I opted to pay off small amounts first and work my way up to the large amounts. Having those small wins, especially at first, really keeps you motivated!

    I understand your car issue, I just wish there was a cheaper alternative! Like the same model, only a few years older? I have driven used cars my whole driving life, and only once did I get burned – but I negotiated with the dealer and was able to get them to pay for half of the repairs. Since you need a larger car for all the kids, downsizing is obviously not an option…hmm I think put the car business on the back burner for now. I am a hard-butt when it comes to paying too much for cars. It’s not that you shouldn’t have a nice, working, reliable car; I just hate thinking about how cars loose value every month but that car payment it stays the same no matter how much depreciation has occured.

    Again, thanks for the numbers and welcome! Can’t wait to hear more from you!

    • Reply Hope |

      Hi Scarr,

      You have NO idea how excited I am for this opportunity. It has added a whole other level of accountability already for my decisions and drive to really get this done.

      Thank you for your words, the encouragement of this community is a needed factor for me right now.

  • Reply Sharon C. |

    Hi Hope! So glad you’re one of the BAD bloggers. You have an interesting story and I’m cheering you on! I think it’s great you have your kids working with you on this journey. They will learn a lot from you and hopefully carry the lessons into adulthood.
    Good luck to you & your family – you can do it!

    • Reply Hope |

      Thanks, Sharon. I hope that learning from my experience will teach them to do better than me. And that being open in my discussions with them will not stress them but just make them conscious of their own money choices.

  • Reply Jocelyn |

    Hi Hope! I just wanted to tell you that I’m excited you’re writing for the blog. 🙂

  • Reply Irma |

    Nice photo! Glad the kids are involved and I think you have some good answers to help them learn to make codices in their lives. I like that you are getting the smaller debt paid off and will have those “wins” to give you a boost and then be able to increase payments in other places. I would set aside some of that extra debt money in an emergency fund, even $50 or $75 a month is a start. Best wishes!

So, what do you think ?