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Monthly Income

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Remember when I first “auditioned” to start blogging, and I said our monthly take-home pay averaged $5,000/month?

Then, aside from that first month, our income has been WELL over the $5,000 mark and every month I talk about how this is very atypical and much higher than average. I have stressed this because I don’t want readers to think I was lying in my original post. I certainly was not. I track all of our income and expenses (even before starting to be strict about a budget), so here’s a little snippet of our (net) income for 2013 versus 2014 comparing the months since I started blogging here about our debt.

 

  2013 2014
February $3795 $5465
March $882 $7595
April $5232 $8290
May $4883 $10965

 

We had several months with abysmal income in 2013. I was still a graduate student so I made very little, and Chris’ income could fluctuate wildly. In March 2013 he actually had a net negative income for the month due to a myriad of business expenses, so our income was tiny. There were also a handful of months with income only in the $2,000ish range. By comparison, you can see that our 2014 income has been steadily rising every month. One reader asked a great question – “how will you keep your income up?” I want to address that here.

There are a couple important changes that have taken place that will hopefully provide a big positive impact on our income. First, I’ve already mentioned how I have taken on additional work. This is great because it has helped balance out some of the “ups” and “downs” of our unsteady income. Just as an aside, I did not get paid this month from either University A or University B (my two contract-based jobs). I’ve continued doing work but this is just a timing thing with the schedule of payments. But, instead of making nothing, I was able to bring home that giant paycheck I mentioned. So our income had a bit of a “buffer” even though I didn’t get my two regular paychecks. I have also continued to take on little side-ventures to earn a hundred dollars extra here or there. Everything adds up over time. So I have taken great strides to increase my income.

In addition to the pay I generate, my husband has also taken some strides toward increasing his income. Remember that he owns a small wood-flooring business. Until recently, it has only been him and one other employee and he has done everything himself (e.g., placing bids, doing scheduling, and completing the actual work). But at the end of March he hired two additional workers. Now he has 2 “crews” of people to complete jobs. Instead of only being able to do a single job at a time, he can be on a job with his “helper” (it’s called a “helper” in his field, but you could also call the person an apprentice or simply an employee), while another crew (“boss” and “helper”) works simultaneously on a different job. By being able to work on multiple jobs at a time, my husband has increased his business profits and has started bringing home additional money.

Nothing is guaranteed and things can certainly change. For instance, all of the research I do for University B is grant-funded by large government grants. When the funds are gone, they have no way to pay me. So far, they have excelled at obtaining grants so my work has been steady, but there is no guarantee of future work

And my husband’s job has even more potential volatility. The second crew he has working for him currently have been great. They do good quality work in a timely manner and my husband has been pleased with their progress. But, without going into too much detail, my husband had tried to expand his business once before (about two years ago), with disastrous consequences. He hired too many people too quickly and was unable to oversee everyone properly. People did poor work and it ended up costing my husband thousands of dollars to replace entire floors (since he warrantees his company’s work). This was a painful lesson to learn. He had to let everyone go (except his one “helper”) and go back to a small 2-person business. He’s trying not to repeat mistakes and this time around he took great time and care to select a skilled and highly qualified person to run the second crew. So far there haven’t been any problems, but there are still no guarantees (and, of course, even good employees can always quit or leave, so even if the crew does good work the income generated from them is still not guaranteed).

Where does this leave us in terms of our income?

Well, we’re not really sure what our new monthly “average” income is. The plan is to continue operating based on our standard budget, which assumed we made only $5,000/month (although, note, we have increased money allocated toward debt and savings so our total budgeted expenses actually amount to $5272/month). The hope is that if we can keep our spending down and continue bringing home a larger-than-usual income then we can keep funneling extra money toward debt every month.

For reference:  Our new budget (reflecting some of the changes mentioned this morning)

Place Funds Budgeted
Rent 1055
Electricity 150
Water 75
Natural gas 25
Sprint (2 lines) 115
Cable/Internet 85
Car Insurance 90
Health Insurance 350
Trash 35
Debt 1697
Miscellaneous 250
Groceries 380
Baby Purchases 600
Gasoline 100
Saving for Irregular Expenses 265
Total Budgeted 5272

What does all this mean for the month of May?

We did well! Best month on record for our pay! We earned $10965. Subtract $8967 (for our expenses…note this is a hugely inflated number due to massive debt payments, plus going over on our monthly envelopes), and we are left with $1998 surplus for the month of May. Two things to note:

  1. This means I don’t have to dip into June money in order to “pay myself back” for the huge payment I sent to Wells Fargo in May (recall that I had sent a huge check and thought that if our May surplus wasn’t enough to justify it, that I would use funds from June to “pay myself back.” Since our income was high enough in May, I won’t have to dip into June funds to cover this money).
  2. Even after paying a HUGE quantity toward debt, we still have some excess to the tune of $1998. Guess what guys….this means BoA is 100% for sure GONE this month! I currently owe $2154. I have the $1005 regular payment + I can use $1149 from the May surplus to pay off Bank of America in full. I’ll still be left with an extra $849 that I believe will be sent to savings (though it may also be allocated toward debt. Need to have a budget meeting with the hubs).

I cannot believe I am so close to being credit-card debt free!!! This is a huge accomplishment and one that deserves a bit of celebration. I talked to my husband about it and although definitive plans have not been set yet, I think we’re going to take a mini-trip to visit family in Utah for 4th of July. My Dad has been asking us to come and graciously offered to cover gas money (plus allow us to stay with him, instead of getting a hotel). With gas covered the costs would be relatively minimal. The largest cost would be in missed work for the husband (although, he does have that second crew now, so he will continue bringing in at least some income). We’ll discuss the details, but I think we may plan that as a celebration of being out of credit card debt. We still have a LONG way to go until we can say we’re totally debt free, but this is a big milestone and I want to celebrate it in some way. A short family trip to Utah seems like a good way to do it without breaking the bank.

Whew! That was a long one! If you stuck around the whole time you deserve a gold star!

Give me your thoughts!

Our variable income has been on the rise. How/when would you conclude what your new “normal” is? If we can say “we now make an average of $6,000 or $7,000 per month” (or whatever) then we can allocate more funds directly toward debt (rather than waiting until the end of the month to make snowflake payments). How would you handle this? How long does it take to determine our new normal?


Ashley’s May Budget Update

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Ashley’s May Budget Update

I recently gave a debt update so I won’t rehash those details here. Instead, let’s talk about how we did on our budget for the month of May.

Item Budgeted Actual
Rent $1055 $1055
Electricity $100 $79
Water bill $75 $57
Gas bill $75 $18
Sprint (2 lines) $150 $115
Cable/Internet $85 $85
Car Insurance $90 $90
Health Insurance $350 $350
Waste Management $35 $35
Debt $1500  $5453
Miscellaneous $250  $425
Groceries $380 $406
Baby Purchases $600 $500
Gasoline $100 $109
Savings for Irregular Purchases $190 $190
Total: $5035  $8967

 

So let’s talk about this stuff…..

Rent is “set.”

Our electric bill was within budget, but I already got the bill for this month and its over $100. It surprised me how much it jumped, but I think its only going to continue to rise across the summer months. I’m going to alter the budget for the summer months, increasing the amount allocated toward electricity to $150, and decreasing the amount allocated toward gas to $25 (same dollar amount, overall, but redistributing the funds away from gas and toward electric).

Water budget stays as-is.

Gas budget decreases to $25/month (see above).

Sprint budget will decrease to $115. I’m a little disappointed because I jumped through some hoops to lower this bill and was told it was lowered to $100….but then taxes and fees get added on and the final amount was actually $115. Still lower than the old bill, but not by as much as I’d hoped.

Cable/internet stays as-is.

Car insurance stays as-is.

Health insurance stays as-is.

Waste management (trash) stays as-is.

Debt. Can we get a moment of silence in appreciation of the DISGUSTING amount of money applied toward debt during the month of May? I mean….seriously. I looked at our monthly income for the past year, and the amount we paid toward debt was more than our TOTAL MONTHLY INCOME for the following months: January 2013, March – April 2013, June – July 2013, and Sept 2013 through Feb 2014. Insane.

In terms of miscellaneous and groceries, I went “over budget” in both of these areas (mostly because of my one day falling off the wagon). I’m going to give it one more month trying to stay within these budgeted amounts. If I fail again (what will be the third month in a row), then I may bump my grocery budget back up to $400. I’m really trying to stick to $380 or below!

This is the first month in a long time I went over on gasoline (but not by much). I don’t do a lot of driving so this doesn’t concern me too much, and the amount budgeted ($100) will stay the same.

In regard to savings for irregular purchases, I’m going to increase this a little. After our discussions about dental health, I think I need to start setting aside a little more money for upcoming dental visits for the husband. As a reminder, we have been saving $190/month:

  • $40 for semi-annual fees (car title/registration fees)
  • $50 for car maintenance (oil changes, saving extra for any necessary repairs and for potential new-to-us used truck fund for husband….probably won’t be needed until winter).
  • $50 for dental/vision….will increase to $125/month
  • $25 for travel and Christmas
  • $25 for 3-6 month expenses

My plan is to increase this amount from $190/mont to $265/month (an extra $75/month for dental).

 

Finally,  let’s break apart the “debt” figure to see why this is so high!

First, let me give an update on the snowflake payments I made from our April surplus (note, these funds are NOT included in the May figures because this money is from April surplus funds).

At the end of the month, we had $3197 leftover.

After talking to the husband we allocated the funds as such:

  • $1,000 toward our 3-6 month savings (I know readers have disliked this in the past, but husband is really pro-savings so this was a compromise, rather than allocating all toward debt).
  • $1560 toward Wells Fargo
  • $181 toward Mattress Firm (paid off account)
  • $460 toward back taxes. I never mentioned it, but similar to Steph, we pay estimated quarterly taxes. Key word being “estimated.” We weren’t too far off, but we did owe a little money, so we paid toward taxes out of the surplus.

Note…I realize this actually totals to $3201 (not $3197), and I never accounted for this $4 overage anywhere in our budget. Soooo, yeah. I wasn’t worried about it since its only $4. Not a big deal.

Here are our May debt payments:

  • Wells Fargo = $4140 (that’s an $800 “regular” payment + a $3340 “I cant take it anymore, must pay this off” payment).
  • Sallie Mae Federal (8.25% APR) student loan = 62
  • Carmax car loan = $470
  • Bank of America = $35
  • ACS Student loan = $25
  • License Fees = $55
  • Medical Debt = $666 (<yikes!)

A little update on the medical debt drama. I have now established payment plans for 3 separate entities at $25, $50, and $75 respectively (amounting to $150/month).

Do you remember all the drama I was having with our insurance company and the Mayo Clinic? Well finally I received a response…..the insurance agent we had spoken with (who said a flat rate of $100 would be applied toward the bill) was wrong. That’s only for out-of-network hospital stays. Ours was an out-of-network consultation. No money is granted for that. So after literally 5 months of back-and-forth, we were left empty handed. I called Mayo Clinic and asked if they would give me a reduced bill if I paid in full. They could do 10% (I pressed for more, but no luck), so I whipped out my debit card and paid off the entirety of the $516 bill. This was certainly rash and probably not in our best financial interest since this debt is interest-free and I could have applied that money toward our Bank of America credit card. But I was so exasperated and irritated with all the time and energy I’ve spent on this bill that I just couldn’t take it and I wanted it out of my life forever. Would I do it again? I don’t know….I’d probably put the money toward BoA. Did it feel good in the moment? You betcha!

So there’s that.

Future debt payments will be as follows:

  • Sallie Mae Federal Loans (8.25%) = 62
  • Carmax = 470….PenFed = 400 (after just refinancing we have a new lienholder and a lower monthly payment)
  • Bank of America =  1005 (snowballing payments: $800 from WF, $100 from Mattress Firm, $35 from BoA, and 70 from the car refinance since our payments are now lower)
  • ACS Student Loan = 25
  • License fees = 55
  • Medial Debt = 150

Total debt payments = $1697/month

And any surplus will be allocated toward BoA. My goal is to eradicate it THIS MONTH (June) so I’m hoping for some leftover funds at the end of the month to do so. You can see all my revised financial goals here.

This has turned out to be incredibly long so I’ll cut myself off here. Back this afternoon with an update on our income for the month of May.

Hope you all have a great Monday!!!

Any suggestions or advice for my current debt-reduction plans? Any areas where you see room for improvement?


Ashley’s New Plan of Action

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In case you’re a new reader – welcome! Thanks for stopping by!

To catch you up….

I first started blogging here in March (Intro post here).

At that time, my #1 goal = eradicate credit card debt IMMEDIATELY!

And, not to toot my own horn, but I’ve done a pretty good job (and thanks to YOU for all the invaluable advice along the way! I’ve learned so much already!)

So as a follow-up to this conversation and trying to decide the next course of action for my debt-reduction plan, I wanted to give you a quick follow-up, along with my new goals:

Order of Debt Repayment (now that WF is paid in full, woot woot!):

  1. Bank of America credit card (goal date = paid by July 2014)
  2. Sallie Mae 8.5% student loan (goal date = paid by September 2014)
  3. Sallie Mae 8.25% student loan (goal date = paid by November 2014)
  4. License fees (goal date = paid by January 2015)
  5. Carmax (goal date = paid by January 2016)
  6. Remaining student loans (no goal date yet because I want to reassess in January 2015)
  7. Medical bills (no goal date yet, see above)

I was originally going to pay the higher interest student debts first, but I can’t do it. I’ve GOT to pay off the credit card debt for my own personal satisfaction and sense of accomplishment.

Next, I will try to get rid of the two high-interest student loans. Getting rid of debts #1-3 will free up $218 in minimum monthly payments (which will be invaluable when my deferment ends on the student loans in February). I’m still a little undecided regarding #4 and #5. I feel like I’d get more personal satisfaction from paying more toward the Carmax loan, but the license has a balance of about $5,500 versus $23,000 for the car, so its a huge difference. We could feasibly pay off the license fees before my student loan deferment ends (in February), but in contrast, there’s NO CHANCE I’ll have the car paid off before deferment ends. Again – I’m trying to free up those minimum monthly payments so they can be applied to the student loans and other remaining debt.

Notice my new “goal dates” for paying off these debts. I have to say as a disclaimer that these are really optimistic dates. Keeping those dates will have us paying about $3,500 toward debt each month (as opposed to the $1500/month we have budgeted). This means we HAVE to keep pulling these big income months like we have the past couple months. This may be possible….I mentioned how “I’m getting a raise” (by teaching additional classes….which started this week so its already “in effect”). Additionally, my husband has hired a new crew of workers so his income will also receive a bump from the work this new crew is able to complete. But at the risk of sounding like a hypocrite (given this morning’s post)…I don’t want to count our chickens before the eggs hatch. I think it will take a few months of my new income + my husband’s new income for us to really know what what we’ll be bringing home each month (in terms of pay). I hope it stays steady with what its been the past couple months, but there’s no guarantee. Only time will tell.

So, yup. Just an update on my new plan of action and goal dates for debt-eradication. I really appreciate all the suggestions and feedback! For example, I had NO IDEA that student loans can’t be consolidated for a lower APR. No point in consolidating then! So those will all be staying separate. I do still plan on trying to refinance the car loan, but I want to wait until my recent huge Wells Fargo payment gets updated with the credit reporting agencies (as I believe it should help give my credit score a little bump).

Hope you all have a great Memorial Day weekend!

 

 


I couldn’t wait!!!

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I broke my cardinal rule. I counted my proverbial chickens before the eggs have hatched. And I’m taking a bit of a risk to do this, but…..

I JUST PAID OFF MY WELLS FARGO CREDIT CARD!!!!!!

(*cue the herald angels singing and imagine my euphoric screams here*)

 IMG_3361

This was a big – HUGE – deal.

Starting to write here has changed my life (I know this sounds cliche and silly given that it’s been 2 months, but I’m for real). I swear, if I had continued just as a reader (not contributing), there is NO WAY I would be here right now. These past couple months we’ve done pretty well with pay. So we’d be sporting flashy new clothes, or perhaps taking a fun summer vacation. We would put a little extra toward debt, too, but we certainly wouldn’t be throwing every single penny possible toward debt payments and, thus, be in our current position.

You don’t know how happy this makes me! Since I’ve started here: I paid off my Capital One credit card (once maxed out at $7500, balance when I started blogging in March = $413). Next, I paid off my Wells Fargo credit card (once maxed out at over $10,000, balance when I started blogging in March = $7700). Next on my radar is my last credit card, Bank of America. With “only” a balance of $2200, it should be gone within a month.

How did I do this?

First, we’ve been cutting back (I have a whole money-saving tricks series!).

But let’s not kid ourselves, this has primarily been due to increased income (well above our “average”). And every extra cent has been thrown toward debt.

How else did I do this?

Well…..I cheated the system a little. I couldn’t help it. For those with variable incomes, this is a “do what I say, not what I do” moment…..

I have mentioned before that we have a budget (for all of our minimum expenses and debt obligations). We wait until the month is completely over to determine how much “extra” is leftover, and we apply that money toward debt in the following month (as a one-time snowflake payment).

Wellllllll…….I didn’t do that this month. It was driving me CRAZY to see my checking account balance high enough to pay off the WF CC and I didn’t want to wait until May was over to apply the funds! So, this messes up my budget a little but I ended up doing two things I would generally advise AGAINST for anyone with variable incomes (1) I spent money that will hopefully be in surplus from this month (May) to apply toward the WF balance (even though we don’t know yet exactly how much surplus we will have), and (2) I used some logic to assume that, should our surplus not be as much as I’m guesstimating….then I can “borrow” the money from myself. Our current monthly payment to WF is $900, so basically I’m using the June money and applying it toward our balance NOW instead of waiting a week until June is officially here.

I was able to do this because we currently have these funds in my checking account. If something were to go wrong (i.e., husband has work problems/doesn’t have jobs the rest of the month/terrible problem that costs money instead of making money), then it is still “okay” because I had this money available in my Capital One 360 Savings (I talked about all my assets in this first post…we don’t have a ton, but we do have some liquid cash in a money market account + CapOne 360 savings).

This is definitely “counting my chickens before the eggs have hatched” because the month isn’t over yet….so I have no way of knowing whether our income will truly be high enough to justify a huge (almost $3500) payment toward this bill.

But I did it anyway.

So hopefully when the dust settles from May I’ll discover that I made a good decision (meaning, we had enough “extra” money to cover this expense). If not, then that just means that our savings has decreased a little and – oh well. I think it was worth it to get out from under the 13.65% APR credit card debt (side note:  Now all of our remaining debts are under a 10% APR. For some reason, this feels like a big threshold to cross – even though I won’t be satisfied until we have NO debts and aren’t paying ANY interest!)

Oh happy day!!!!

I am smiling from ear to ear! Bank of America….you’re next! Mwhahahaha!!!!! (<<<< I love my evil debt-paying laugh! Feels so good! ) : )

Thanks for all of your advice, suggestions, and support along the way!!!



Doin’ the Carlton

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I am dancing around ya’ll, and just so you’ll have a visual, you can imagine how Carlton dances from Fresh Prince of Bel-Air. Hey, that’s all the rhythm I’ve got! So, let me explain why my children are currently glad their friends can’t see me.

In one of my previous posts we got to talking in the comments about whether or not we should pay credit cards with crazy, stupid interest off first or our furniture loan which is interest free but due to possible trickery, could bite us in the end. Well, this is what happened…

photo (1)

and……

photo

The card that had almost $600 on it and the card with a little over $1,000 ? PAID!! I. AM. SO. EXCITED!

Let’s talk about how this was possible, shall we?  My husband has a job that rarely gets overtime.  They have been swamped lately so, he has been working a few hours extra a week to help out. We knew that he would have enough overtime on one check to pay off a good chunk of that smaller balance.  What we did not know is that the weather in our area was gonna go nutso crazy and, fortunately for us, his work is greatly impacted by weather. They sent him out of town, which just so happened to fall on a weekend so, there was lots of overtime. They taxed the heck out of us but in the end it was enough to pay off both cards.

I’m not gonna lie ya’ll, there’s a part of me that really wanted to pay off the small card, put a little on the other card, and have fun with the rest. But, I know that sticking with this is going to benefit us so very much. I also have another confession that I’ll get more into this afternoon.  The crux of it is that we have not been sticking to our budget as strict as we were before.  I’m hoping that these two victories over our credit demons will help us get back on track.

So, what do ya’ll think, was it a good decision to pay these cards off? Or should we have put it towards the furniture loan?


Fighting Mad

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Arrrrgh, I am SO MAD at Wells Fargo!

As you may recall, I recently paid off my Capital One credit card (which had been my highest APR), and have moved onto focusing on my Wells Fargo credit card (my second highest APR).

A few days ago I received a credit card offer from another bank. It offered 0% APR as an introductory rate for the first 24 months. To be clear, IN NO WAY do I want to open a new credit card account. But I thought maybe I could use this letter as leverage. I called Wells Fargo to see if I could negotiate a lower interest rate.

I’ve read advice on how to approach the subject, and I tried to reason with them.

“Hi! I’ve been with you guys for over a decade and really like you! But I just got this 0% APR offer for 24 months. Can you match this deal on my current credit card or, if not, do anything to lower my current APR?”

What should have been a simple call turned into a total nightmare!

I was transfered multiple times. At first, they tried to send me to the sales department, so they could get me a new credit card with an introductory APR (to which I respond “No, I don’t want a new credit card. If I were to do that, I’d just go with this other bank’s offer.”)

Then eventually I’m just told “No, we do not lower APRs….ever.”

Ummm, excuse me? Never? What are you talking about? You don’t do periodic credit reviews and adjust APR as a result? I know my APR was hiked up in the past (as a result of one of these reviews), you never lower it again when credit improves????

“Can I talk to a manager?”

*Another transfer and loooooong wait*

Finally…I’m talking to the person who can make some decisions!

And, again, I’m told no. There is nothing they can do.

GRRRRRRRR!!!!!! I swear I was on the phone close to an hour by the time everything was said and done!

There is one thing that jumped out as interesting. One of the people I spoke with had said something that indadvertedly implied that maybe something could be done if I went into an actual branch. I could be reading into the conversation because she certainly wasn’t giving me advice or trying to help me out, but during our conversation about “how on Earth do you never lower APRs? I swear this has been done before!?!” One of the girl’s replies was something along the lines of “No, never, not as long as I’ve worked here. Maybe if you’ve gone to a branch they could’ve lowered your APR in the past??” It was more of a question than a statement, but still….

I’m tired of my efforts resulting in wasted time (Exhibit A:  Trying to negotiate credit card APR; Exhibit B:  Trying to negotiate lower medical bills), but this APR is so outrageously high that it could be worthwhile to go into a branch if it actually makes a difference (and has the potential to be extra-frustrating if it results in nothing).

Has anyone else had SUCCESS getting a credit card company to lower your APR? Is there any difference if you go into the branch as opposed to calling the company? Advice? Tips?

 

Edited to add:

So many people are saying I should take the 0% offer that I wanted to say something further….

The offer was one of those mass offers that lots of people get. They would still have to run my credit to see if I qualify (and I may not). Also, I’m trying not to run my credit right now because I want to try to refinance my car loan for a lower APR in the next month or two. Last March when we bought the car our credit was dinged from multiple inquiries (shopping around to get the car – I’ve always heard you have a 72-hour window to shop around, but our credit still took a hit regardless). So I’m trying to avoid having my credit run right now.

I love the advice and suggestions! Given this information, would you still suggest I apply for the 0% card?? Should I wait until after I try to refinance the car? Not sure if those offers expire??


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