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Posts tagged with: debt
Jul 1, 2014    |       31 comments

It Isn’t All About Income

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Yesterday I read something over at Budgets Are Sexy that really resonated with me.  J. Money read an article from Mr. Money Mustache (a pretty famous blog that I follow).  In this article MMM said:

“The most important thing to note is that cutting your spending rate is much more powerful than increasing your income.  The reason is that every permanent drop in your spending has a double effect:  it increases the amount of money you have left over to save each month, and it permanently decreases the amount you’ll need every month for the rest of your life.”  

I still stick to my guns in saying the easiest way to make fifty dollars is to save fifty dollars.  I had this mantra since I began my coupon journey about five years ago.  This was a time when I went from a single man living alone to having a built in family.  Feeding three people was an eye opener to say the least, especially when you were allotting yourself about $100 per month for food before.  Remember I was in the food industry, and usually always fed myself at work.

What this article did for me was realize that it really isn’t my income that is a problem here.  I have been making it work, and know full well that we could live on the income we do have.  It is really all about eliminating all the unnecessary monthly expenses.  

The biggest being DEBT.

Now I am not saying that I won’t challenge the other expenses, but debt is the biggest.  I have been paying anywhere from $800 to $1,000 every month for the last four and a half years, just on debt!  

What if I was using this amount to put away for savings and retirement?  I would be in a totally different situation than I am today.  

This is also not saying that I will not be looking for opportunities to increase my income.  Because let’s be honest the two go hand in hand.  If I increase my income it will be a much faster route to get out of debt and start becoming the provider that my family knows I am.  

So for the month of July I will be reviewing more of my expenses and seeing ways to cut them out of my life.  Who’s with me?

Jun 13, 2014    |       33 comments

Debt Update

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Sorry for the delay in getting this update up, but I’ve really been productive with the extra time (minus being sick, of course.)  To be honest, I feel like I’m starting all over again on this journey with revised debt, new debt and a new perspective. With that being said, while I typically have a plan, months in advance, I am really wanting the communities input on how I should tackle this debt now.

So here it is, listed from high interest rate to lowest with the Estimated Pay Off date blank as with your help I’m ready to re-prioritize my plan:

Debt as of June 10, 2014

Name Balance Interest Rate Minimum Payment Estimated Pay Off
Retail Card $3297 25.99% $99
Line of Credit $838 15.95% $218
Credit Card $5,080 13.9% $150
Car Loan – NV $31,043 6.79% $696
Student Loan $31,687 2.88% deferred
Joint Account $889 0% $0
Car Loan – Honda $1,900 0% ASAP

Details

Retail Card – This is a retail card that I use for my business. You’ll notice the balance has gone up several hundred dollars since I first listed this one. That was for ink for my laser printer I needed for a project, an unavoidable cost, but I am ready to be rid of this high interest debt! The minimum payment required doesn’t ever seem to make a dent so I need to really increase the monthly payment to see progress.

Line of Credit – This debt shrinks quickly as I make payments so I’m ready to finish it off and free up that $200 towards something else.

Credit CardAgain, the minimum payment doesn’t seem to make a dent here and I had started to free up some credit until this past month. I can go either way on this one as far as priorities go.

Car Loan – NV – This is our GIANT family car, a necessity but a huge money pit!

Student Loan – Speaks for itself.

Joint Account – This is new debt. I’ll explain it in my short and sweet version. During my marriage, I handled the money. Since my marriage ended, I have continued to pay 1) his life insurance and 2) his car insurance for one car that he kept but is in my name. The joint account was left open so that I could continue to pay these bills to make sure they were paid. At times, he would overdraw his personal accounts and then it would clear out this joint account (which only I used.) The account was overdrawn this last time by $1,300. I had enough and closed the account AND stopped paying his life insurance policy. I’ve paid down to the current amount this month and need to get it paid off to avoid affecting my relationship with the bank. This is just what it is. I will address the insurance stuff with a revised budget shortly.

Car Loan – Honda – Again, a short sweet version of this new debt…for the last year I have “stored” one of my parents’ cars since they moved to Texas. It was an informal agreement that the car would be made available for me to purchase for my twins when the time came that they were ready to sell it. (They left it here when they moved to Texas so when they came to visit we would have an extra car for them to use.) The time has come that 1) my twins have their learner’s permits and are now 9 months from getting a driver’s license (a privilege, not a right, but one I will be thrilled with as a single parent with lots of running around to do.) And 2) my dad wants me to pay for the car before the boys drive it for valid safety and insurance reasons.) We’ve agreed to $1,900 and he would like me to pay it off ASAP.

Note: I have removed the debt to my dad as we are both in agreement that I need to focus on my credit affecting debt in order to get in the position to refinance the house in my name.


Ok, so give it to me straight, what should my plan of action be? On a typical month my minimum payments are $1,163, I typically have a snowball payment anywhere between $200-400, sometimes more. I am listening EARS WIDE OPEN for your advice here.

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