by Hope
I am hitting the ground running. Because my new work is contract based and I have learned over the years…I am working on a monthly retainer agreement and will be paid in advance each month. Since I started work this week, I have already been paid for the 9 days this month.
As soon as it hit my bank…I scheduled to pay off one of my credit cards. Woot, woot! My lowest balance card is at $0! And I am going to cancel the card to avoid any temptation in the future.
| Debt Description | October, 2023 Total | Interest Rate | Minimum Payment | Current Total |
|---|---|---|---|---|
| Personal Loan #1 | $2,500 | 0% | $2,500 | |
| Personal Loan #2 | $2,500 | 0% | $2,500 | |
| Dad - New Furnace | $2,600 | 0% | $2,600 | |
| CC - AMEX | $894 | 29.24% | $0 | $0 |
| CC - Wander | $1,630 | 29.24% | $124 | $1,735 |
| CC - USAA | $5,000 | 19.15% | $135 | $4,966 |
| CC - Amazon | $1,497 | 29.99% | $53 | $1,481 |
| CC - Sams | $1,106 | 29.99% | $40 | $1,133 |
| CC - Frontier | $3,857 | 29.99% | $131 | $3,676 |
| Car Loan | $19,581 | 12.69% | Gymnast Pays | $17,635 |
| Student Loans | $22,121 | 2.875% | In Deferrment | $22,186 |
| CC - Apple** | $500 | Paid off every month | $0 | |
| Total | $61,186 | $60,412 |
Updates
I was a little disappointed to see that my overall total has not really gone down since October. But I did add the $2,600 that I now owe my dad; otherwise, it would have showed some movement. I am playing around with my forecast spreadsheet to see how I can balance paying off debt along with getting ahead on some things.
Since this is only a 6 month contract, I am being pretty conservative. My financial goals as of right now for these 6 months are:
- Pay my mortgage payments through the end of the year.
- Pay off 2 credit cards – 1 is done as of this post and I think I am going to pay off my second lowest balance as well.
- Pay off my two personal loans at $500 per month beginning in April. I’ve already touched base with one of them and she’s good with it. Going to reach out to the other and get his okay. (Or better yet, get him to commit to a web build to cancel that debt. We will see.)
None of my part time income is in my forecast as it’s not steady. (Made less than $200 in January.) So for now, that money will just dump into savings to help rebuild my cushion.
Hope is a creative, solutions-focused business manager helping clients grow their business and work more efficiently by leveraging expertise in project management, digital marketing, & tech solutions. She’s recently become an empty nester as her 5 foster/adoptive kids have spread their wings. She lives with her 5 dogs in a small town in NE Georgia and prefers the mountains to the beaches any day. She struggles with the travel bug and is doing her best to help each of her kids as their finish schooling and become independent (but it’s hard!) She has run her own consulting company for almost twenty years! Hope began sharing her journey with the BAD community in the Spring of 2015 and feels like she has finally in a place to really focus on making wise financial decisions.
Hope,
I see your point about wanting to have the mortgage payments taken care of but what about keeping some money in a savings account? I don’t think I would recommend prepaying your mortgage when you have so much high interest debt and so much else could go wrong.
I think it’s a mindset thing, knowing my home is safe should I have to start over again after this 6 months. *crossing fingers that is not the case
I’d rather fall behind on credit card debt versus my home. But it’s definitely still a work in progress as far as figuring out course of action. But paying off one debt just felt SO GOOD!
Are you able to prepay mortgage payments or are you talking about setting the money aside for the rest of the year? I would also say I think you could take out 3 of the cards, since you have 3 under 2k, and with getting 6k a month with a tight budget, it should be possible. Have you ran the numbers through your budget?
Yes, I’ve got my expenses forecasted through the whole of the year. Bare bones.
I want to prepay the mortgage so it’s just done.
And I also feel like I need to prioritize paying back the personal loans over the CCs.
But again, still early and I’m definitely gung ho to get as much paid off as I can.
I would verify that you’re able to prepay your monthly mortgage payments. most companies will post any additional payments to your principal and still hold you to your monthly payment. I also find it curious that you have a large group of people here willing to give you valuable advice and you’re just dead set on doing your own thing. Don’t you think it might be worthwhile to pause and maybe post a quick question “what do you think I should do?” before just jumping right in?”
I am definitely listening. I think I made that clear in the comments…that the plan is a work in progress, but this was my thinking.
I am still looking at the forecast, options, and making decisions on what is right for me in the long run.
Never thought a mortgage company may not let me make the payments in advance, I will definitely have to research that.
I don’t know if mortgage companies are like loans from a car but my daughter overpaid her car loan and they still expected her to make her regular payments. At least call and ask, you don’t need any surprises.
Definitely agree to call and verify with the mortgage company. It would be terrible to send all that money in and then find out monthly mortgage payments were still expected.
I like earmarking your mortgage payments (and perhaps some other fixed expenses) through the end of the year, but put these into a savings account! A six month emergency fund of fixed expenses to draw from when income dries up would be huge for peace of mind. Chase Bank had some account bonuses for opening a new account, so maybe check those out. I opened my new account via a web form and got a
$300 bonus.
Please listen to what everyone is telling you about the mortgage. Put that money aside in a savings account monthly. You cannot pay “ahead”, you owe a payment every month no matter what you paid the month before. My mortgage is $3800, I pay at least $5000 each month. That doesn’t mean the next month they want $1200 less. If it is in a not easily accessible account then you can use it toward debt in 6 months if you are still working this job and can pay your mortgage from your paychecks.
I agree you should be paying the personal loans back as a top priority. I would not try to set up a retroactive trade, that is shady and will definitley cause ill will. Your family member knows yours skills and had they had an interest in that they would have suggested/offered it as a solution. Pay each person $500/month until they are both paid off and pay the remaining balances with the left over.
Forecasting has gotten you in trouble countless times. Do not forecast, work with what you currently have, not what you assume is coming in. I think you did a bout of this before, spending only last months pay. I hope this is the boost you need to finally gain some momentum.
Unlike others here, I am not going to jump on you for wanting to prepay your mortgage through the end of the year. I think it is very smart. Your house is your biggest asset and I think you are wise to want to protect it. But others here have offered good advice to verify with your bank that you can actually do this. You might be better off putting that money in a separate account and set up automatic mortgage payments from it (sort of a set and forget approach) – and with the money set aside it will be harder for you to spend it on other things.
One thing I wish you would talk about is why your mortgage payments went up last year. I know others have also asked about this. I suspect it may have been a requirement from the bank to keep from being foreclosed, but I wish you’d talk about this since it is part of the debt journey… might be useful information for some of your readers in the same boat as you.
I think things aren’t as dire as we thought. The overall total isn’t terrible, I’ve definitely seen worse. Because if gymnast is paying the car, then the true total for you is only around 42K. I know the car loan is in your name and all, but what you have to pay on your own is 42K. That’s totally doable.
BE SURE to ask about the mortgage prepayment. As others have said, it might not work like you think.
I’m estimating your monthly takehome will be around 4750 after taxes. Does that sound right to you? What amount are you forecasting is excess available every month to send to debt payments/mortgage prepayments?
On another note, I think you need to use stricter words around your money. Forecasting just sounds like a rough plan that will be thrown out the window any day now. Forecasting is generally meant for larger expenses like a car purchase or big maintenance. Not known expenses and bills.
I’m not sure what other word I would use. I literally have a spreadsheet with all my known and anticipated expenses based on date and amount along with all my known income and anticipated income.
It’s color coded to show whether the amount is exact or an estimate. And it lets me look out as far into the future as I want for planning.
Obviously, I don’t include emergencies as those are unknown, but it does include “transfer to savings” as a way to build those savings.
I also have it color coded for auto payments versus payments that I need to manually make by the due date.
And finally include the account or CC it is coming out of or going into so that I can make sure no account is every overdrawn.
It truly is forecasting to me, is there another term you would use for this tool?