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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!

 

 


Frustrated with Great Lakes!

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I mentioned several months ago that my Stafford Loans were transferred to Great Lakes for servicing.  Pay close attention, because this will be one of the only times you’ll ever hear me saying the government did something better.

I have 2 categories of Stafford Loans, subsidized and unsubsidized.  Under each category, I took 2 individual loans during school, for a total of 4 loans.  With me so far?

When the loans were serviced directly by the Department of Education, they were arranged into “groups,” and payments were calculated and applied to each group.  You could pay extra on any group you wanted, right online, point and click.  I could also rearrange the loans into groups in whatever fashion I desired.  This was helpful, because I could break out one individual loan into its own group and snowball that loan with extra payments.  You could always see the balance, principal, and interest on each loan or loan group, payments were applied within a day or two.  It was very easy.

Since my loans were transferred to Great Lakes, the online experience has been decidedly lacking.  The online portal only shows the total balance off all loans.  You can see that there are subsidized and unsubsidized loans rolling up but you can’t do anything with those “sub-loans” online.  Furthermore, the individual loans that made up the 2 groups are now completely gone online.  If I want to apply a payment to one of the four individual loans, I have to call in to customer service.  The automated phone attendant makes me enter in about 6 pieces of information and then wait on hold for a rep.

Then, the kicker – the customer service has been so frustrating!  Since my subsidized loans had smaller balances, I wanted to attack those first.  Every time I tried to do this, the rep would argue with me – “Most people want to pay down their unsubsidized balance first.”  I understand why they say this, but I have to tell them 4 times that I am paying off the smallest balance first.  (Truthfully, the unsubsidized vs. subsidized decision doesn’t make a difference for me anymore – only if I lose my job and qualify for a deferral).  Then, they take the payment over the phone, and it takes about a week to apply to the balance, but it spreads the payment across all the loans.  At this point, a human has to intervene and re-apply the payment to the individual loan I requested.  That results in another 4 day wait and sometimes another follow up phone call.  Lately, they want to argue with me, “Why do you want to apply to a single loan – they are all the same interest rate!”  2 reasons: because it’s more motivating to attack a $9000 balance than a big hairy $20k balance.  And because each loan I eliminate lowers the monthly payment required in case we get in a situation where we are only able to make minimum payments (but only if I call in and ask them to recalculate the payment).

So – if you have any choice in the matter, avoid Great Lakes as a loan servicer!  I will be stuck with them for a while since they have both my Stafford and my Discover loans.  Ugh.  Can’t wait to get rid of these guys.

 


And Now It’s Time for a Breakdown (Part 1)

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Name that tune.

Now that we’ve done the formal introductions, it’s time to get you acquainted with our debt situation.  We’ve been working on our mountain of debt for 3 years so far, and our goal is to make our last payment on my 35th birthday in July, 2017.

At this point in the journey, we’ve paid off all of our cars, some credit cards, and our undergraduate loans.  Still to go, we have 2 credit cards that are a testament to our ongoing financial lack of discipline, and my remaining graduate school loans.  Here are  the debts we’ve paid off so far.

Emily Credit Line $180
Orchard Bank Card $250
Short-term Loan $500
Prudential Insurance $1,000
Citi Private Student Loan $3,070
Ford Focus $9,365
Emily Dept. of Ed. $7,000
Emily Sallie Mae $6,350
Citi Credit Card $2,400
Lexus RX300 $5,000
Adam Sallie Mae $15,200
Total Paid – July 2013 $50,315

Emily’s credit line was a revolving loan she took on with her bank after college. Thankfully we knocked that out right away, along with the dreaded Orchard Bank card.

Short-term loan: During my first year of graduate school, my loans for the entire semester were disbursed at the beginning, and it was my job to budget my living expenses until the next disbursement in January.  As I approached Christmas my first year, I realized I wasn’t going to make it! This was one of the most stressful times of my entire life. I was worried I might not be able to go home for Christmas, get anyone any gifts, or anything else.  For the first time in my adult life, my bank account approached $0. I’m grateful that my school offered a $500 bridge loan that got me through the holidays, but it was on our snowball list when I graduated.  I definitely knew at that point that I didn’t want to be in that position ever again, to the extent that I could control it.

Prudential Insurance:  Chalk this up to the stupid tax.  My parents bought me a whole life policy when I was a baby. They paid the premiums and the policy was worth about $5000 when I was in high school. I wrecked my car during high school and had to get some repairs, and my mom suggested I borrow against this policy.  She paid the interest on the debt every year (about $30) until I was 26. I finally said I wanted to get that weight off my shoulders and paid that stupid debt back, cashed out the remaining policy amount and paid off some of our other debts. I’m glad to be rid of it.

Citi Private Loan: The hits keep coming. My junior year of college, I had the opportunity to study at Oxford University for 4 weeks during the summer. Of course my family couldn’t pay for this, so Uncle Citibank came to the rescue. It was a great study abroad program, but every month making that payment for several years so I could do a cool extracurricular was just maddening.  Thankfully we got that one eliminated.

Cars: These stories are worth a post of their own. We currently have a 2009 Ford Focus with 60k miles and a 2002 Lexus RX300 with 174k miles. We hope these cars last us until we are out of debt so we can buy our future cars in cash.

Credit card:  stupid stuff that I thought couldn’t wait, like school expenses, interview suits, a plane ticket for the holidays here and there, and suddenly we have a big credit card balance.  We’ll talk more about this as we go.

Student Loans:  Both Emily and I attended small private liberal arts schools.  She had more help from her family than I did, but we both ended up with about $15k in loans.  This May, 9 years after I graduated, I finally paid off that bachelor’s degree.

That’s the story on what we’ve paid so far! Next time we’ll get into the tsunami wall of remaining debt we have to tackle!


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