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2015 Financial Planning & Goals

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Warning: This post is a bit of a doozy! Reminds me of when I first started blogging and would basically write a novel for each post! But everything is related so instead of breaking it up into separate smaller-sized posts you’ve got one monster post to contend with. Maybe make yourself a cup of coffee and settle in with a little snack. This is gonna take awhile!

One of the things I did over my winter blogging break was to analyze my 2014 spending and do some planning for 2015 budgeting and savings needs. I’m trying to shake up my budget categories a bit for 2015. For one, I want to do away with my “miscellaneous” budget all together. I want everything categorized. This will make it infinitely easier in future months/years to look back and easily see exactly where my money has gone (as opposed to this year…where I had to look at each month’s spending individually and start to categorize things on my own).

 

Basically, I wanted to see where this “miscellaneous” money was going and see if I could plan and budget for it. In addition to my normal budget categories (see latest budget here), here are some new categories I’ve come up with:

  • Gift-giving. I’ve greatly reduced the amount I’ve been spending on gifts since starting to blog here at BAD, but it’s not down to zero! This needs its own category.
  • House maintenance. Looking at the past year, this is mostly gardening-related stuff (some tools, plants, mulch), but it also includes things like light bulbs and cleaning supplies. There’s nothing too major cost-wise, but still enough random miscellaneous expenses to justify its own category.
  • Phone/Computer Items and Repairs. I broke my phone twice this year. I now have a serious heavy-duty case on it, but should the unthinkable happen again (fingers crossed), I decided to make this it’s own budgeted category. In addition to phone repairs, this year I had to buy a new charger for my computer and an external hard drive to back up my work, so expenses like that fall into this category as well.
  • Holiday expenses. Non gift-giving holiday related expenses. Things like Halloween costumes, 4th of July sparklers, and holiday decorations. This was also a relatively small category of spending.
  • Clothing purchases. I’ve actually successfully avoided the clothing-shopping bug this holiday season. I’ve mentioned before I’m not a big shopper in general, but I usually have one or two big shopping splurges a year where I’ll spend over $100+. This year I’ve done really well with making do with what I have and only filling in with absolute necessities (like when I had to buy a new pair of pants when my old ones had already been mended twice and were falling apart). Again – a small category in terms of money spent.
  • Work-Related. This was primarily for parking-related expenses when I would drive to campus for meetings. I haven’t been going to campus as regularly in recent months so some of these expenses have fallen away, but this also includes anything specifically work-related (e.g., licensing for special data analytic software, printer paper, ink cartridges, etc.)
  • One-Time Expenses. This was a tiny, tiny category but there were still a couple random things that came up that don’t fall within any other category. I’m calling them one-time expenses.

Please note, I will certainly NOT be spending money in each of these categories every month! For instance, I only spent money on work-related purchases 6 months out of this past year; only spent money on holiday expenses 3 months out of the past year, etc. But these will be categories that may pop up from time to time along with my regular budget categories, depending on what that month demands. Instead of having such a rigid, set number of budget categories, my new 2015 budget will be more fluid depending on that specific month’s needs. I think this will be a much better system overall.

What Else is Changing?

I did a careful analysis of all my monthly savings categories. It’s obvious that we were not budgeting enough toward dental and car maintenance, for instance. By tallying up our actual expenses for the full year, I was able to get a better picture of our real needs in these areas. Let me address each one individually:

 

Current

Saved

New

Plan

Explanation

Annual Expenses $100/mo $100/mo This is a perfect amount. It covers annual life insurance premium, car registrations, and Costco membership. It actually also left us a little bit extra leftover, but I’m not reducing the monthly amount saved because we’ll be adding life insurance for hubs soon, too.
Car Maintenance $100/mo $200/mo My calculations actually amounted to only $166/month needed for vehicle repairs, but I’m rounding up to $200/month because I know we will be needing to replace husband’s work truck at some point (probably this year), so I want to save a little extra. This will amount to $2400 saved for the year. Note that when we come up with an exact time frame to buy a new (new-to-us) work truck, this figure may need to be bumped up for a few months.
Dental/Vision/Health $125/mo $125+ ??? Our actual costs here would amount to needing $3651 for the year (just over $300/month). BUT, we’re going to purchase a dental discount plan in January and will see how much it will save us. Husband is going to go get a full exam and see exactly how much dental work he is quoted. I think we’ve covered the “big” stuff at this point (fingers crossed) and, in the meantime we’ll continue saving $125/month, but will adjust this number depending on his dental appointment with an in-network dentist.
Christmas/Travel $25/mo $25/mo Of course, this doesn’t fully cover our travel and/or Christmas-related expenses, but it was never intended to fully cover those costs. It does what it needs to do, which is to off-set some of the costs incurred. Any extra money needed will come from that month’s budget.
3-6 Months Expenses $25/mo $25/mo Ugh! Still owe you guys a post about the emergency fund. Right now, though, the amount being contributed will remain the same on a monthly basis.
Dog Expenses $10/mo $500/year Previously, I was only saving for potential vet expenses. I’m changing this category to cover food costs for the full year (about $50 every other month), plus the pet registration required by our county, and a couple hundred dollar buffer for potential vet expenses. I’ll likely fully fund this savings in January and just draw from it all year long.
Girls’ Birthday $10/mo $10/mo Staying the same
2014 Roth IRA $100/mo $100/mo Staying the same
TOTAL $495/mo  

$585/mo

 

(+ one-time $500 expense from the dog expenses category)

 

This brings me to…

My 2015 Financial Goals

In 2014 I paid monthly debt payments that equaled $25,091!!! This is actually a conservative number because it only includes the planned debt payments. Remember that before I was living on last month’s income I would often make debt payments bi-monthly: once was the planned debt payment (which this figure represents), and then I’d make a second payment at the end of the month with any extra “surplus” money from the month. (Side note for new readers: I did this because we have a variable income so I made conservative debt payments initially, then when I figured out exactly how much income we had for the month, I’d put any money leftover toward debt. Now that I live on last month’s income I know exactly how much money we have at the beginning of the month and, thus, have eliminated the need for any extra payments because I do a zero-based budget so there is no money leftover at the end of the month).

So my goal for 2015 is to pay at least $30,000 toward debt payments.

Whoa. That’s a big, huge number. $30,000 is a full annual salary for many people! To say we’ll put that much toward debt is certainly a lofty goal. But you have to shoot for the moon, right? ; )

What debts do I plan to eradicate from our lives with that $30,000???

Well, some of the money will be going toward minimum payments for all of our debts and interest, of course. But with extra debt money I plan to eliminate the license fees, car loan, and highest interest unsubsidized student loan. Then our only debts remaining will be medical bills and additional student loans. Don’t get me wrong – we’ll still have a ton of debt (I have almost $100,000 in student loans, alone), but it will feel so good to knock out some of these smaller debts in their entirety! So, so good, indeed.

How Will I Do This?

I’m a firm believer that all goals require careful and strategic planning. If you just pull a goal out of the air its really more of a hope or a dream. Goals, in my opinion, require more careful calculation than that.

So it might surprise you that my answer to this question (How Will I Do It?) is….”Who Knows!?” ; )

This year could potentially be full of many big changes. If I land a job here in Tucson then my salary will double and we won’t have any moving costs. Win! If I land a job elsewhere then my salary will more than double, but we lose husband’s salary and incur moving expenses. If I don’t land a job then I keep making what I’m currently making, try to find additional work, and husband focuses on building his business. Oh yeah, and I’d love to start saving for a house down payment at some point (once we know where we’ll be)! There are so many unknowns!

What I do know is that I want to keep working as hard as I can on reducing our debt. BUT, that being said, I do still plan to let up a little steam (just a teeny, tiny bit) in March 2015. Remember this whole post about finding balance??? It still stands. I don’t think I’ll give up the blogging (I love it and you guys too much), but don’t be surprised if you see a “date night” pop up in the budget every other month or so. That’s a big expense that we’ve done without for the majority of this past year (honestly, for the majority of the last 2.5 years since we had kids!!!). But I also think it’s important to nurture our relationship and while our kids have been infants/toddlers our marriage has taken a bit of a back seat. Don’t get me wrong – there’s no trouble in paradise or anything like that!!! But I think it’s time to make dating my husband and nurturing our relationship more of a priority in our lives. And even if we do so cheaply, it still costs money.

I’ve got one more curve-ball….

I’ve spoken before about retirement savings and how we’d like to start funding a Roth IRA. Although our contributions for 2014 are pretty measly, I’ve been talking more to hubs about it and we’ve come to an agreement about the matter. Once the highest interest student loan and license fees are paid in full, I want to bump up our Roth IRA contributions. Ideally, I’d like to work toward having fully funded Roths for both hubs and myself. We haven’t committed to an exact number yet at this point, so it may be that we double our current savings (go up to $200/month) or triple them (up to $300/month), or we could even aim to have fully funded Roths (about $458/month x 2, for each of us). We’re not there yet so I’m not sure how comfortable I’d be with saving that much while our existing debt is still incurring so much interest. It’s something we’ll think about more moving forward (and feel free to weigh in on the topic). But just let it be known – once these two fees are paid in full (license fees and highest interest unsubsidized student loan), our Roth contributions will be increased…while still trying to hit the $30,000 mark for debt payments this year.

So cross your fingers for us or wish us luck (or call us crazy).

No matter what 2015 holds in store, I feel like it will be a very good year!

What are your financial plans for 2015? Any big budget changes? Any lofty financial goals? What do you think of our goals and plans?


The Car is Sold! – $30K in Debt – Gone!

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The van has sold! The money part won’t be done til early next week with the holiday and all, but the buyer and I have come to an agreement. The bank and I have come to an agreement. And instructions for getting everything done has been sent to the buyer.

I know I’m not supposed to count my chickens before they hatch, but guys, this is HUGE! Almost $30K of my debt will be GONE!

I will definitely be posting a numbers update next week when all the dust settles, but I wanted to share this AMAZING news with you.

I will be driving a DEBT free car, with minimal insurance and gas costs for the forseeable future. I know you only know me via posts here, but I have to tell you, that this is a HUGE step for me. I will be adding AAA this week to help with my security issues as far as driving an older used car, and if you hear of major traffic jams due to inexperienced stick shift driver…well, that’s me.

But I can already feel the HUGE weight coming off my shoulders, and I simply can’t wait to redo my budget WITHOUT the costs of this car.

Ok, enough rambling. I’m going to go spend the rest of my Christmas Eve with my kiddos…we’ve been saving for a special meal out and I’ve got a family gift that we will open tonight that I think will be a blast.

We’ll talk soon, okay?

Merry Christmas!


Ashley’s December Debt Update

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Wow!

That is all I can say. Check this out…

PlaceCurrent BalanceAPRLast Payment MadeLast Payment Date (original debt, March 2014)
Capital One CC-17.9%-Paid off in March ($413)
Mattress Firm-0%-Paid off in May ($1381)
Wells Fargo CC-13.65%-Paid off in May ($7697)
BoA CC-7.24%-Paid off in June ($2220)
License Fees$27232.5%250*December ($5808)
PenFed Car Loan$169412.49%1400December ($24040)
Navient - Federal Student Loans$44228.25%16December ($4687)
Navient - Dept of Ed$720568.25-6.55%260December ($69191)
ACS Student Loans$210407.24%77November ($21035)
Medical Bills$64850%75December ($9000)
Totals$123, 667
(Last month = 126,285)
Starting Debt = $145,472

I’m glad you all urged me to include beginning balances, because otherwise I never would have noticed that this month (December) marks a big milestone! We’ve officially paid off over $20,000 in debt since I started blogging (back in March 2014).

I remember that when I hit the $10,000 mark it felt monumental. If that was monumental, then this is Herculean! I still have so far to go, but at the same time I’m so proud of how far we’ve already come! At the beginning of 2013 my goal was to be credit card debt-free by the end of the year. Little did I know we would nearly double that goal. We paid off the full $10,330 credit card balance within mere months after starting to blog. And now here I stand, only 9 months after starting to blog, a full $20K paid off. It feels so, so good.

And because I can’t afford to let up steam anytime soon, let’s talk about some of the things that jump out at me from looking at this table.

First, how depressing is it that my student loan balance has grown?! For months, my payments were not even large enough to cover the interest, so the loan balances just grew and grew. My payments still aren’t any larger (I’m focusing first on paying down other debts), but I’m now on Income-Based Repayment, so my unpaid interest is forgiven for all subsidized loans. Just for transparency’s sake, I do have a couple unsubsidized loans that will continue to grow in balance (due to accumulating interest), but I’m still resolved to focus on other debts first.

Second, look at those payoff dates. My first few months blogging I was paying things off left and right! Now I’m working on larger balanced items, and it’s been a full 6-months since my last payoff. I go around and around on the order of my debt payoff, always coming back around to determining that the car needs to be my main focus (for personal satisfaction reasons). But a quick, easy win would really be nice.

And so I’ve placed an asterisk next to the license fees payment.

I don’t want to say I’ve made my mind up 100% (I keep waffling on these payment order issues), but I think I might shake things up a bit in January and make a larger license fee payment instead of putting extra money toward the car.

I can practically hear the groans. I know, I know. If I keep splitting priorities and waffling back and forth then NOTHING gets done. I really need to just pick something and focus. But clearly I’m struggling with this.

I’ll think about it more in the coming month (the next license payment won’t be due for nearly a full month), and make some decision about where to go with this.

If you were to ask me:  “Which is more motivating? Paying off the car or the license fees?”

I would answer:  “The car. 100% for sure, the car.”

But…..that satisfaction is still a long way off. The license fees, although perhaps less satisfying, could be tackled in just a couple short months. And that’s the type of pay-it-off satisfaction I’m really craving after 6 months with no pay-offs.

So, yeah. Decisions, decisions.

What would you do??? I know I ask this nearly every month, but humor me and give me your opinion on the matter! ; )


The Car

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So I’m here for your advice today. We’ve had our van listed for sale for almost 4 months now, I believe, minus that month it was in the shop was being rear-ended. And while I’ve gotten a few inquiries, but nothing really solid. Then this week, I had a super low ball offer…like 33% less then what I’m asking…no thank you!

Being a commercial vehicle, it’s harder to place a value on it so I went to my bank and asked their help. They valued it at about $25K. I own right at $27K.

So here’s the question…do I continue to list it for sale and just keep on or do I explore downsizing to a used car and perhaps roll the portion I am “upside” down into a new auto loan? I’ve looked (just online) at used cars and I see two viable options:

5+ year older Honda Element
Plus: Price around $12K, great gas mileage, low maintenance
Down: Only seats 4, there are 5 of us. But we do have the ’96 Honda Accord that seats 5 and is paid off. History Buff will get his license in March. Would have to rent a vehicle for any longer distance driving, which we are certainly not doing alot of but it will happen on occassion.

4+ year older Honda Pilot
Plus: Good gas mileage (much better than current vehicle,) low maintenance based on reputation, 3 row seating so seats all of us and some extras when needed (which we actually have ALOT)
Bad: Price around $18K, and I HATE 3 row seating, it’s very inconvenient for getting in and out.

I’m certainly not rushing into any decision. And as mentioned on several occassions recently, I don’t really trust my judgment. So I’m asking for your opinions.

Just a refreshed on current vehicle situation.
Car #1: New, Financed, large commercial van that I purchased to accomodate our growing family. Currently financed $27K, insurance runs about $100 per month, taxes are about $400 per year, monthly payment is $696. Regular oil changes and tire rotations, no other maintenance expected for forseeable future.
Car #2: Older Honda Accord, in good shape, owned outright. Insurance about $20 per month and taxes will be around $50 year. Just got inspection and oil change, will need new tires and to recondition headlights in coming months but no other maintenance known. This will become the twins car as they get their licenses (starting in March.) Oh, and it is a stick shift which I have VERY limited experience with.

Ok, I think that gives you all relevant information. What do you advise?


Consolidation Station???

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The title of this post has nothing to do with anything, except it reminded me of the lyrics “conjunction junction, what’s your function” (from the School House Rock theme song).

This is a quickie post, but something that may solve some of the high student loan APR issues that I’ve been talking about recently (see discussion here, see list of debts and APRs here).

Any readers consolidate their student loans?

Have good experiences? Bad experiences? What are your thoughts??

I’ve heard that you can only consolidate a single time, but that would be okay with me. My credit has vastly improved across the last year as I’ve paid down my debts so I think I’d qualify for a lower APR. I don’t know the ins-and-outs. Would this impact my income-based repayment? Can I consolidate through the same company I already have or do I have to use some outside company? How does all this work???

For the record, IF (big if) this happens, I would absolutely 100% only do this in order to lower my APRs. I would not start spending money elsewhere or think this means I can pay less toward my student loans. It’s strictly an interest rate thing.

Thoughts? Experiences? Advice?

I assume I’d need to start by calling and speaking to a representative at one of my loan companies (I have two companies:  Navient and ACS). Before I even take that next step I’d just like to poll the audience (YOU!!) and get your opinions on the matter.

Thanks in advance!!!


Double-Charged

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I mentioned that last month was the first month of my IBR payment for my ACS student loan, but this month (August) would be the first month of payment for my Sallie Mae loan. When I looked online at the beginning of the month, it said I’d been approved for IBR (income-based repayment), but still showed my loan status as in deferment. I called to get it straightened out since I wanted to go ahead and start the IBR program immediately. The representative I spoke with switched “off” my deferment so my payment would be due this month (as I’d wanted). I asked if I could go online and enroll in the auto-pay program (if you enroll, they offer .25% off the APR). The representative said I could do so, but it would be too late for this month and wouldn’t go into effect until September so I would still need to make my normal payment online and the auto-pay would begin the following month.

Sounds great!

So I did just as I was instructed. I signed up for auto-pay which did, indeed, say the processing took several days. As my due date was imminent, I also made a one-time payment for my August IBR payment.

A few days pass. And then Sallie Mae auto-deducts $250 (my IBR payment) from my checking account. In other words…I got double charged.

Fortunately, since we’re living on last month’s income we had enough funds in my checking account that this wasn’t a problem in terms of causing us to overdraft or anything. However, this means that instead of the normal $250 payment, I paid TWO $250 payments this month (= $500!!)

What would you do?

I was hoping to have about $250 leftover at the end of the month, which I would have applied as an additional debt payment anyway….but I would have applied it toward the car, NOT the student loans. Is it worth the time, effort, and hassle to call Sallie Mae, argue with them, and try to get reimbursed for the charge (which will probably take a week to straighten out and an additional 2 weeks to get a check in the mail…just in time for me to turn around and have to give it back to them for my September payment).

If I didn’t have the money I would certainly call and argue over it. But we are fortunate to have the extra money at this point and would have used it toward debt anyway. Soooo, do you just live with the double-charge knowing that at least you’re making progress on your debt? Or do you fight it out?

Either way, at least the money is going toward some form of debt payment but its frustrating when things like this happen. I’m already pressed for time in my life, I hate when things like this pop up that require more time and attention.


Staying Motivated

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It’s happening…

I decided to focus on the car in our current debt repayment strategy. That means it is going to be the recipient of our monthly snowball (fyi, the snowball was $1055, but that’s added on top of the existing car payment of $411, making the minimum monthly car payment = $1466, which I’ve just rounded up to $1500). We will also pay additional monies toward the car if we end up having money leftover at the end of each month. Since we’re now living on last month’s income and pre-budgeting our entire month, I don’t anticipate that we’ll have large surpluses at the end of the month. However, I do try to err on the side of caution when planning the budget (particularly in reference to utilities or other variable expenses) so I do hope to have at least a couple hundred leftover at the month’s end.

Aaaaaaanyway….

I decided to make another one of THESE bad boys to help with the motivation.

IMG_4345

I apologize for the unsightly food splatter. The thermometer lives in our kitchen and it appears it has been splattered once or twice with food or water. Ick!

I had made this thermometer back when I made the one for my Wells Fargo credit card, but its been growing so, so slowly. Now that we’ll be making larger payments I can’t wait to watch the red grow! We do have a good amount of debt to cover, but if we really buckle down I’m sure we’ll get there in no time. After all, when I started my Wells Fargo thermometer we still owed $7,000 on it and we managed to pay it off in just two months!

Can’t wait to pay off the car ASAP!!!

Is there one debt you CAN’T WAIT (or couldn’t wait) to pay off? My first big one was the Wells Fargo card. The car is definitely the next in my line of fire!