<< Back to all Blogs
Login or Create your own free blog
Layout:
Home > Category: Credit Cards
 

Viewing the 'Credit Cards' Category

Chase Freedom $200 Cash Back Offer

June 4th, 2015 at 03:51 pm

I received a "Refer-A-Fried" offer from Chase Freedom card where a new cardholder can get $200 cash back for spending $500 in purchases in the first three months. I would get $50 for every referral who applies, is approved, and uses the card by 9/23/15. The offer expires 6/15/15.

Chase Freedom also gives 1% unlimited cash back (well, it's rewards points that you can use for various things, including cash back) on purchases, and has special quarterly categories that give 5% cash back (up to $1,500) -- some generic categories such as gas stations, restaurants, or grocery stores, and then specific retailers such as Kohl's or Starbucks.

You have to receive an email from Chase to qualify for the offer -- they state that they will use your email only for the purpose of sending this offer and will not provide it to any third parties.

If anyone is interested, I would need your first name and email address -- leave the in a comment and I will delete it when I've sent the invite, or if personal messaging works through the forums you can PM me there. They say you will receive the email within seven days.

(If anyone has a Chase card, you might want to check to see if you have the offer, too. It was just a small image on the upper right side of the Accounts screen when I went to Chase online.)

Chase Freedom Rewards

January 15th, 2015 at 05:08 am

The first Chase Freedom Rewards points for 2015 hit. I'm staying with my estimate of about $50 per month in rewards, and this month was slightly over at $53.19.

Since we went on a bit of a movie binge over the holidays (and I have two more tentatively planned), I'm going to set aside another $100 from the rewards for a movie gift card. I haven't decided on the remainder yet!

Starting Balance: $0.00
Ending Balance: $53.19

Movie Card Fund
Goal - $100
Balance - $53.19
Remaining - $46.81

November Look Back / December Look Ahead

December 6th, 2014 at 12:14 am

The look back/look ahead is just my way to try to keep myself on track with my saving and spending. I have an Excel spreadsheet I love for tracking my debt paydown but it doesn't translate well to saving and spending; I find I'm more about words than numbers for those areas.

November
I mentioned last month that we did a debt consolidation, so it's been nice to see all those zeroes on the cards we paid off with the new loan. Plus, since the new loan is in S's name only and most of the cards we paid off were either mine alone or joint, my credit score has skyrocketed -- up around 40 points, according to the score from Barclay. (Discover's update should show up later this month.) S's score hasn't taken too much of a hit, either, because he doesn't have a lot of debt other than the mortgage.

Meanwhile I'd set some money aside for some home repairs; we got the materials needed on a decent sale and ended up with 0% financing until January 2016. I shuffled the full amount over to my ING savings account, although we do have minimum payments to make so by the time the promotional rate expires, we'll only owe half the balance. I didn't think about that until after I did the transfer, but then I figured we can probably cash flow the payment amount anyway and if not, I've given myself permission to take that amount out of ING if I need it. Now I'm trying to decide if I should leave it at ING at 0.75% interest, or open an account at Synchrony for 1% interest. The difference in a year is really going to be minimal, but since ideally I'll only use half the money, the other half may stay in the account for a much longer time period. Just not sure it's worth the effort for a quarter of a percent on really a rather small amount. (Moving it from my regular bank was an easier decision, 0.1% at Chase vs 0.75% at ING.)

Anyway, I ended up paying $3,039 in total debt in November, $768 in interest and paid $141 extra to my avalanche. The avalanche amounts are going to be quite a bit smaller now with the new loan, but again it doesn't affect my final payoff date.

December
Gift giving this month, of course. I have the $500 I set aside from our Chase rewards to hopefully cover our costs. I also have a handful of membership renewals and trophy pledges due this month, but of course those are known and planned.

It does look like we're going to have to do something about the wall furnace in our Florida room -- it's on a separate system from the rest of the house, but the room is right next to the room we spend much of our time in so the cold seeps in if it's not heated. It started making a horrendous noise the other night. Turns out some part needs to be replaced; they had some doubt about whether they could find it but finally did a few states away. Cost to replace is about $1000; cost for a new furnace is about $2500. This is the third or fourth time we've had a major problem with this furnace since it was installed (which I think was in 2009) -- they completely replaced it once, but even the new one has had some big issues. I'm really not sure about spending another $1000 on it. I think we're going to have a couple of other companies come out and give some advice on what they recommend -- it may be that a wall furnace isn't even our best option at this point. Whatever we do, it seems we're looking at a minimum of $1000 and probably at least $1800 for anything other than repairing what's there. *sigh* Oh well -- that's what the emergency fund is for, right? (And I might use the reno money instead, pay it back every month to be sure I have what I need when it comes due, and keep the e-fund intact.)

Other than that, hopefully things will be on a more even keel this month. I'm just getting my new Excel worksheet set up for 2015 bill tracking, which is actually a bit therapeutic, especially since I can delete so many payments from last year (for the couple of cards we totally paid off and the others we consolidated).

Hope you all have a wonderful holiday season!

New Citi Double Cash Back Card

October 31st, 2014 at 01:55 pm

I saw a commercial last night for Citi's newest rewards card, called "Double Cash Back". You get 1% cash back with every purchase, unlimited. You also get 1% cash back for every payment you make to the card, again unlimited. (So essentially an unlimited 2% cash back card, if you pay it off every month.)

I'm not in a position to open another credit card at the moment, but thought some of you might be interested. Smile

http://tinyurl.com/k7y52z5


Medical Billing Tomfoolery

October 22nd, 2014 at 07:57 pm

S had some medical issues earlier in the year, and the bills from one place are still coming through. Frustratingly, they age the bills by the service date rather than the date they sent us the bill, which means that even though it takes them three months to submit to our insurance and get paid and then figure out what we owe, the first time they send us the bill it shows as 90 days past due. Then they weren't crediting some of our payments, or some of the insurance company's payments, and so of course soon we got the "we're going to send you to collections if you don't pay right away" bill.

I really didn't want to stretch to pay the full bill at once, so I called and worked out a payment plan of $255 per month. The first payment came due, I (and I know this was my big mistake) filled out the billing slip with my credit card info (it's the Freedom card we pay off every month), wrote $255.00 in the "Amount Paid" box (and even wrote "as agreed" next to the box), signed and mailed it in.

They charged my card $586.16.

I sent an online communication to them noting the discrepancy and requesting a refund of $331.16 within 10 days. It has now been 15 days and no refund.

I'm trying to decide if it's worth it to dispute the charge with Chase, or if I should just let it go. I can afford the payment (the total bill was higher, the $586 must have been one of their weird aging things), really. It's a legitimate medical bill so I'll have to pay it at some point regardless. I'm just irked because I only authorized $255 -- it's the principle of the thing. I don't know if charging more is illegal, but it does appear to be a violation of their agreement with Visa.

What do you think? Let it go as a lesson learned never to give credit card info to a medical biller, or dispute it and make them abide by the terms of their agreements, with me and the Visa people?

Chase Freedom Rewards

October 15th, 2014 at 02:50 am

Chase Freedom Rewards points came in today. I've estimated about $50 per month in rewards, and this month was a little over at $63.98. The 5% category through September was gas, and I had another 450-miles-in-three-days weekend at the end of the month, which boosted up gas spending.

Starting Balance: $692.78
Ending Balance: $756.76

Gift Fund
Goal - $500
Balance - $500.00
Remaining - $0.00

Movie Card Fund
Goal - $100
Balance - $100.00
Remaining - $0.00

Excess
Beginning Balance: $92.78
Current Rewards: $63.98
Ending Balance: $156.76

At this point I'm just going to let the excess build up, and then see where/if I need it at the end of the year (gifts, 52 Week Challenge, etc.)

Impatient!

September 11th, 2014 at 05:06 pm

I have recently begun to completely understand the value of "snowballing" debt payoff vs. "avalanching" it. While I know the avalanche makes more financial sense and that's the plan I have set up, I'm smack in the middle of a five-year plan and am just itching for those payoffs to start!

I did pay off one card in July, a few months early, but it was a low-interest, low-balance, low payment card, so while paying it off felt good, it didn't really pack much punch. A smiley face, rather than a gold star, I guess.

Looking at my payoff schedule, though, I have my first avalanched balance due to be paid off in February 2015. (And that balance should only be around $90 so I will probably just pay the whole thing off in January.) I also have one of my hardship repayments that will be paid off in February, just by doing the minimums. Then I have cards getting paid off in March, April, June, August, and October.

(I may even do some debt consolidation to a lower interest rate, so some of those may be technically paid off even sooner, but I want to make sure I'm doing the logical thing and not the emotional thing, there.)

From there I have a couple more cards and a P2P loan, which will all be done by June 2016. (And then of course I have 401(k) loans and personal loans and real estate loans....)

So I'm far from being anywhere near debt-free, but I am so, so ready to be credit card debt free!!
I can't even explain -- and probably don't need to, really, for most people here -- how exciting it is to see the end of credit card debt in sight, after having it hanging over my head for the last 20 years. I find myself obsessively checking my bank account and Mint to be sure I've credited every penny correctly and the payments are on the right schedule, etc. I'm sure subconsciously I'm hoping I'll check and the balance will miraculously be zero!

Off to sing myself a little Carly Simon song and maybe have a little ketchup.... Wink

August Look Back / September Look Ahead

September 7th, 2014 at 06:51 pm

Slightly behind on this, what else is new?

The look back/look head is just my way to try to keep myself on track with my saving and spending. I have an Excel spreadsheet I love for tracking my debt paydown but it doesn't translate well to saving and spending; I find I'm more about words than numbers for those areas.

August
August is property tax month for our home, which means the bank account takes a pretty big hit. It's a known and planned-for expense, but it still twinges a little bit not to see that nice big savings balance!

The garden is limping along -- other people have said this year is even worse than last year for gardening (and last year they said it was the worst ever), so I guess we're not doing too badly. The tomatoes are finally starting to take off, and we're actually looking like we may have more than we can consume before they go bad -- something we didn't at all have to worry about last year! None of us is really interested in canning, so we're going to look into possible ways to freeze them.

I passed my second licensing exam at the end of the month, so I guess in about 30 days I'll be officially licensed. At some point that's supposed to translate to a financial benefit, but I'm not sure exactly when that will happen.

On the debt front, I paid off $2,532 in debt in August, paid out $777 in interest, and put $291 extra to my current avalanche debt.

September
Rental property taxes are due at the end of September; that's another bite out of the savings account, but only about half as much as our home taxes. There's really not much going else on for September, as far as I can foresee. I may spend a chunk more than planned on yard maintenance.

We have a 'landscape' area behind our fenced yard that has run wild the last several years; we cleared it out last year but of course it all came back again. At this point it's beyond what we could do in a weekend, so I'm going to get a few quotes to have it a) cleared out and b) weed-blocked and either mulched or (better) filled in with rock, and the one area that's visible to the neighborhood given some design other than 'big pine tree and whatever weeds grow around it'. (The big pine tree needs to come down, actually.) I doubt I'll be willing to pay for it all, but I might at least shell out to have it cleared. (I have some money leftover from the rental a/c that didn't end up needing replacement, and a plan to save back up for replacing it in 2015.) The backup plan is to let the bulk of it die off over the winter, and do the cleanup/fill in the spring.

Good Credit Card Day

August 28th, 2014 at 04:10 pm

Well, I know credit card debt can never really be "good", but I logged into my bank today and found that the balances on my two in-repayment credit cards with them are both below $1000. Yay! (These two are actually on the bottom of my avalanche plan, because they're at a low "hardship" rate, and will actually be paid off in the next six months just with the minimum payments. Still, it's nice to get down to three digits!)

And, they raised the limit on my paid-off-each-month card (by a few thousand dollars) -- which I know in the grand scheme of things just means I have more available credit, but it also lowers my utilization ratio. (We generally have a balance on it that at times gets somewhat near the limit; the new limit means our typical balance will be at around 50% utilization, still a little higher than ideal but much better than 90%.)

I'm also seeing it as meaning they have faith in me, that since I've been good at paying my card they're rewarding me with more credit. Smile (I know the reality is that they're hoping I'll use the additional credit and then be unable to pay it back in full, thus having to pay interest, so that they'll make money -- but I choose to believe otherwise!)

Based on my past habits, of course, that's exactly what would have happened -- I wouldn't be as strict about paying on the card every week, I'd let the balance creep up, and then "suddenly" I'd be unable to pay off the statement balance each month. Which means I need to be extra-vigilant for the next several months -- but recognizing the danger is half way toward avoiding it, right?

Catching Up

August 1st, 2014 at 10:53 pm

The month of July really got away from me. I spent the first half studying for my licensing exam, and the second half recovering from the studying! I'm feeling a little bit back on my feet, finally.

July Look Back / August Look Ahead

The look back/look head is just my way to try to keep myself on track with my saving and spending. I have an Excel spreadsheet I love for tracking my debt paydown but it doesn't translate well to saving and spending; I find I'm more about words than numbers for those areas.

July
July was a good month overall, our family garden is growing (slowly, but much better than last year), and I passed my exam (phew!) - on the first try.

I did end up having the faucet/knobs (controls? handles?) in my shower replaced, as well as many of the pipes, due to major leaking, to the tune of $850 (ouch!). There are some 'good' things about it, though; first, I found the access panel in the linen closet, which at first they didn't think was there, so it cost about $2,000 less than they originally anticipated. (They had quoted the job about a year ago, when we had them do a temporary fix to some minor leaking, knowing it would have to be replaced in the not-so-distant future.) Also, we've been setting aside money for general household updates (rental and personal), some of which are optional, so I was able to cash-flow the expense and will replace the funds over the next few months. Finally, without the leaking (it was leaking into the tub for a long time, until it finally started leaking out of the tub and into the basement) we'll be saving water -- how much remains to be seen, but I've definitely noticed a difference in both water pressure and how long the hot water lasts.

On the debt front, I paid off $2,548 in debt in July, paid out $760 in interest (nice to see that number drop below $800!), and put $160 extra to my current avalanche debt.

August
I have a second licensing exam at the end of this month, and if I pass that I'll be able to complete my license. It's not supposed to be as difficult as the exam I took in July (though still a challenge); the bonus there is that a few areas I studied for the July exam are topics that will be on the August exam.

It's S's birthday this month and while he claims he doesn't like birthdays, I was already instructed to get tickets to a play for that night. (His birthday is on a Saturday, conveniently.) There's a restaurant we've been wanting to try not too far from the theater, so we'll go there for dinner - expensive, but S got a good bonus this month so we'll use part of that.

Property taxes on our home are due at the end of the month -- that will be a big chunk out of the savings account balance, but of course the reason we have so much in the savings account is because we set it aside for the taxes. (Taxes on the rental are due at the end of September; another chunk out of savings, but half as much as the August bill. It's nice to actually have the money in the bank, though -- too many years we didn't plan ahead and had to borrow or use credit cards (or one year just not pay them for a few months until a big bonus came through).

Other than that, I don't see much going on in August. My niece starts kindergarten at the end of the month (or maybe the beginning of September, they recently changed the laws about the first day of school and I don't remember on which side of Labor Day it landed.) I picked up a cute little "Frozen" nail polish set with a tin to keep them in (she's all about both "Frozen" and nail polish these days) at the Five Below (it was $5). I'll probably tell my sister to give it to her if she's a good girl on the first day of school. (Or, on whatever day she gets a good report if the first day is a bust! She's usually pretty good, honestly, but it's a new school so who knows how that will affect her.)



52-Week Mega Savings Challenge
Week 30 [started late, now on my week 24]

Obviously these cover several weeks, but I'm just lumping them all together rather than doing multiple updates. The refund was for some concert tickets S bought, he ended up getting a different package so they refunded the original. The gift card was for Barnes & Noble -- I got two books, "S" by J.J. Abrams, and then I spent $3.99 on a biography of Warren Buffett to get free shipping (which would otherwise have been $3.99). The refund for my physical therapy co-pay, that I paid and then the insurance ended up paying the whole thing, finally came through. I had $10.29 in "keep the change" rounding on the checking account. (Next month I might try it on the Freedom card activity -- we use that a heck of a lot more!) The dinner refund is money my mom gave me for her birthday dinner (I cooked for her); I had intended to pay the whole thing but my sister and I took her out for lunch twice during her birthday week, so she insisted on paying for the dinner. Interest is in the ING/Capital One account, which is where the 52-Week Challenge money goes.

Snowflakes
Pact: $2.18
Pact: $1.95
Refund: $52.00
Book Review: $15.01
Book Review: $25.00
Gift Card: $25.00
Rounding: $10.29
Pact: $1.40
Pact: $1.88
Insurance Refund: $203.00
Dinner Refund: $50.00
Interest: $1.06
Total Snowflakes: $388.76
Rounding (from reserve): $1.24

Beginning Balance: $1855
Deposit: $390
Ending Balance: $2245

Reserve: $2.85 - $1.24 = $1.61

This puts me within $500 of the "double challenge" (I finished the single challenge a while ago), and almost at 1/3 of the Mega challenge.

June Look Back / July Look Ahead

July 7th, 2014 at 11:55 pm

The look back/look head is just my way to try to keep myself on track with my saving and spending. I have an Excel spreadsheet I love for tracking my debt paydown but it doesn't translate well to saving and spending; I find I'm more about words than numbers for those areas.

June
The good news for June was that my $625 client bill finally got paid! (I posted about it in my last 52 Week Mega Savings Challenge update.) I still haven't received the $200 refund from the physical therapy place, so I'll need to give them a call.

Our vacation went well, I made turtle brownies for the reunion that were a big hit so now I'm "in" with the family (this was the first time I'd met most of them, and only the second or third time for the rest). The critters didn't give anyone too hard of a time, which means they'll probably be allowed back if we try to get away together again.

The air conditioner at the rental is working perfectly (knock wood!) so hopefully it won't need replacement this year. I've started diverting the money I had saved for that to the other repairs that are needed. I had a good talk with the tenant, too, and we're on the same page about what needs to be done and spacing it out a bit so that it's not too much of a financial burden in any one month.

Our garden is in and already doing better than last year, which is promising. Still not as well as some of the more experienced gardeners', but we're still learning. (We're also trying to be less chemically inclined, so for example while lots of people use Sevin dust, we're using diatomaceous earth.) My biggest thrill is that a few of the tomatoes I started from seeds seem to be coming along. Of course the day we were planting the seed pods got all mixed up, so I have no idea what variety they are! Most of the seeds I started were heirloom, so if we end up with tomatoes I should be able to figure out what kind they are from their appearance.

On the financial front, I paid off $2,398 in debt, paid $810 in interest, and diverted my extra $149 from my avalanche card to the small balance I posted about a while back, so that card is now Paid In Full! Yippee! Smile One less payment to make, and an additional $23 a month to avalanche!

Oh -- Social Security apparently paid attention to the letter I sent in May, and at the end of June finally requested back all of the deposits they'd made to my MIL's account. (It looks like the money hasn't actually left the account yet, but I do see the request.) Government efficiency at its finest!

July
The first half of this month is focused on my career, for a change. My boss wants me to take a licensing exam, so this week I'm in review classes and then take the test next week. It's apparently a very intense test, and a significant number of people don't pass it the first time, so I'm nervous about it but also open to the fact that I might need to retake it. (I'm not sure if that's going to be more or less helpful to my studying, but it is what it is at this point!)

Once I pass this exam, there's another that's a bit lower-key, and then I've been told I'll get a bonus and an increase in pay. (We'll see how that shakes out, of course!) The long outlook is that once I'm licensed, I'll be able to take over (buy out) the business when my boss retires/dies/becomes disabled, which is a win-win all the way around. Not that I'm hoping for anything to happen to him, but he's 82 years old (but in excellent health) so it's definitely something he's thought about.

At any rate, the rest of July should be pretty laid back; it's a slow time at work and nothing much going on socially or with the family except my mom's birthday at the end of the month. I'm looking forward to having some time to relax again!

Those "Almost Paid Off" Debts

May 21st, 2014 at 08:00 pm

I'm working on paying off credit card debt, I have a plan in place and its going well, and I'm also able to save for upcoming expenses, a small emergency fund, etc. I just got the latest statement from one of my Chase cards, and the balance is under $200.

I have money in the bank. It is earmarked for property taxes, but I know I can make up $200 before they come due. The Chase card is second to last in my debt avalanche repayment plan, because the interest rate is only 6%. (In fact, it will be paid off just with the minimum payments before I even get to avalanche it.) It's only costing me $1 a month or so in interest, and the payment is $23.

If I pay off the card and put the $23 toward building my savings back up, it would take me 8.6 months to repay myself. If I keep paying the minimum on the card, I'll have it paid off in nine months. The interest on my savings account is nothing to speak of, so I'm not really losing anything there; paying on the card for the next nine months would cost me less than $9, so not really losing much there, either.

My inclination is to pay it off, add the $23 to my avalanche, and find a way to make up the $197 through side gigs, selling some stuff, whatever.

What do you do with those straggling little debts? Is there a threshold amount where you decide it's worth it to just pay them off and deplete your savings a bit?

Chase Freedom Rewards Update

May 15th, 2014 at 03:24 pm

The Chase Freedom Rewards points came through today. I've estimated that we'd get about $50 per month in rewards, but this month was quite a bit higher, $90.06. It helps that the 5% category for this quarter is restaurants, and we do a lot of eating out in May (my vacation and Mothers' Day for this period; our anniversary and my birthday (though we might not pay for that one) for the next).

Gift Fund
Goal - $500
Balance - $437.76
Remaining - $62.24

Movie Card Fund
Goal - $100
Balance - $0
Remaining - $100

I may have the gift fund fully funded by next month, and then can start on the movie card, which should be funded by August, I'd think, at the latest. After that, I think I'll use 50% of the rewards for the gift fund, since the $500 was random and didn't include our anniversary gifts to each other or our dinner (our annual splurge!). The other 50% will go to the 52-Week Challenge.

I did make it to the movies once last month, so my current movie card balance is down to $62. I will be going again at the end of this month, but I don't see anything beyond that (yet) that I'm interested in seeing in the theater. If I do, though, I'll probably need to divert some of the gift fund money to get a new movie card. It all works out the same, just a different timeline. (Next year, if I repeat this, I'll fund the movie card first. Smile )

Catching Up - April/May and 52WMC Updates

May 12th, 2014 at 04:06 pm

I was on vacation last week (my annual pilgrimage to the Critter National Smile ) and even though I bring my laptop, there's so much going on I rarely get a chance to to use it!

April Look Back / May Look Ahead

April

The adjustments we made at the family financial summit to the March payments ended up being adjusted back, because the renters' catch-up payment arrived on March 31. It's minimal so I'm not bothering to go back and revise the March info; I've accrued a little less interest than I expected, so that's a good thing!

Overall in April I paid off $2,421 in non-real estate loans, and paid $777 in interest. I also paid $141 extra to my 'avalanche' credit card. (I think I said $141 extra in March -- that was actually $146 extra.)

May
I'm back to my normal hours this month, and of course it works out that the paydays are exactly two weeks each (I get paid twice a month), so the two May paychecks will be the lowest amount I get paid if I work every day. (I do have vacation pay, fortunately.) S got a small raise effective the last April check, and we're getting into his busy season so his monthly bonuses should be increasing. It tends to balance out, but I so look forward to the day when I don't have to worry about whether it will or it won't, because we have money in the bank and no huge debts hanging over our heads!

52 Week Mega Savings Challenge

Two weeks to update here. The first week I had a quickie side job that brought in $22, and returned bottles for $72. (Normally the bottle money is used as spending money on my trip, but between a "happy trip" gift from my mom and friends buying me dinner and drinks a few times, I actually didn't spend any of my own spending money!)

52-Week Mega Savings Challenge
Week 18 [started late, now on my week 10]

Snowflakes
Side Job: $22
Bottle Returns: $72
Total Snowflakes: $94
Rounding (from reserve): $1

Beginning Balance: $630
Deposit: $95
Ending Balance: $725

Reserve: $3.79 - $1 = $2.79

The following week was my actual vacation, so not much opportunity for snowflakes there (other than the above). I did meet another monthly goal for my Diet Bet, so that was $30.31 in winnings. I'm not counting the money I didn't spend on cool stuff I wanted to buy! Smile

52-Week Mega Savings Challenge
Week 19 [started late, now on my week 11]

Snowflakes
Diet Bet: $30.31
Total Snowflakes: $30.31
Rounding (to reserve): $0.31

Beginning Balance: $725
Deposit: $30
Ending Balance: $755

Reserve: $2.79 + $.31 = $3.10

Various Updates (Rewards, 52 Week Challenge, General)

April 15th, 2014 at 02:40 pm

Its Tax Day, which means the end of my 60-hour work weeks (yay!) but also the end of my overtime (boo!). Still, I'm pushing my mental and physical limits, so I welcome getting back to my 4-day work weeks, and my annual vacation in a couple of weeks.

We had a fairly major health issue with one of the critters last weekend, requiring unplanned surgery and overnight vet stays. The high end of the estimate was just about our entire emergency fund, but better that than not having the EF! She ended up staying at the vet an additional day, so I was expecting to hit the high end and perhaps go a bit over. Fortunately, I have a CareCredit card, which you can generally get at least six months at 0%; I figured I'd do that and set aside the money to pay it off, rather than depleting the EF and then building it back up. When I picked her up, though, the total cost was less than the low-end of the estimate! So I was able to just cash-flow it, since I have a little bit of overtime coming still. I won't be able to put as much in savings as I'd planned, but I still have the EF and no new balance on the CareCredit card.

The Chase Freedom Rewards points came through today, so I can update that amount. I'm estimating we'll get about $50 per month in rewards; this month was a little higher, $59.26.

Gift Fund
Goal - $500
Balance - $347.70
Remaining - $152.30

Movie Card Fund
Goal - $100
Balance - $0
Remaining - $100

We were planning on going to a movie Sunday, but the scheduling didn't work out, so I've still got $83 left on my current AMC gift card. I am going by myself to a movie on Friday -- one of my post-tax-season treats -- so that will knock it down a bit. I have $10 rewards on my AMC Stub Card, but my membership is due for renewal, so I'll use that plus $2 from the gift card. (I don't usually pay for rewards memberships, but this one truly does pay for itself and then some. My first year of membership was free, so in three years I've paid $24 in membership fees, and between rewards and savings on concessions I've made $127. It helps that my mom goes to the movies with a group of her friends once a month or so, and uses my Stubs card. And of course I haven't really 'paid' the $24, between the rewards and gift cards.)

Finally, it was a pretty poor week for the Savings Challenge. Things were so busy at work I really didn't have time for any side jobs, and no snowflakes spontaneously appeared. I did have a couple of returns and while they're not technically snowflakes, I had already counted that money as spent, so I'll include it here just so I have something!

52-Week Mega Savings Challenge
Week 15 [started late, my week 5]

Snowflakes
CVS Savings: $25
Returns: $41.19
Total Snowflakes: $61.19
Rounding (to reserve): $1.19

Beginning Balance: $410
Deposit: $60
Ending Balance: $470

Reserve: $0.35 + $1.19 = $1.54

March Look Back / April Look Ahead

April 3rd, 2014 at 04:30 pm

March
I have a home I'm renting out to someone who is practically family, so I'm very lenient with them if something comes up and they can't make the rent. They always send something, even if it's just $100, and make up the rest as soon as they can. However, that money goes directly to paying off my family loans, so technically if they're late with the rent, I miss payments on those loans. (The family is also understanding so it's not a huge deal, fortunately.) We had our annual family financial summit at the end of March, and so I adjusted the loan schedules to reflect those missing payments. (A little extra interest accrues, essentially.)

The end result is that it decreased my debt principal payoff for March, so I only ended up paying down $1,464 in principal (it should have been around $2,000). I also paid $801 in interest. (These amounts do not included real estate backed loans.) I also paid $141 extra to the current point of attack (highest-interest credit card).

I did join the DietBet 6-month challenge. The first round closes out this weekend and I'm on track to meet the goal, so I should get a little snowflake for that sometime in April. I also made a bet with Healthy Wage, another 10% in 6 months challenge. My initial investment in both was $275, but if I meet the goal (figuring low-average returns on the DietBet winnings), I should end up with around $600. That is more motivating than "health" "fitness" "smaller clothes" etc. -- I wish I'd found this 'dieting for money' thing a long time ago! I'll consider all of that money as snowflakes for my 52-week Mega Savings Challenge.

We also made a decision that probably almost everyone will say was the wrong one to make, but I'm not ready to talk about that just yet.... Smile

April
I have two more weeks of overtime at work, and then I'm back to my 'real' income. Fortunately we are able to set aside a lot of my overtime pay to cover upcoming expenses in the next several months. I do plan to revisit our budget once things slow down to see where we can cut our spending a bit -- really I think if we just got a little organized we could save a decent amount. (Mostly me, I guess, with breakfasts and lunches on work days. It's been better since I've been trying to eat healthily for the DietBet thing, but I don't always wake up in enough time to make a lunch so end up buying it at $5-8 a day. Lots to work on there!)

I'm also going to see if we can decrease our electric usage; we keep getting letters from the company saying we're using so much more electricity than our neighbors, which I'm sure is true. I know exactly why that is (40+ days in a row of round-the-clock below-freezing temperatures will do that!) and we've already decreased our usage by about 50% from last month, but I might try things like unplugging stuff rather than just turning it off (if the plug is easy to reach, that is!), putting things on a power strip and turning that off (if there are no clocks or programs to reset), etc. We do have one light on a timer and I need to adjust the timing for that now that the days are getting longer. I'll look at putting in those pigtail light bulbs wherever I can, too, since they supposedly save money. Our billing cycle starts on the 26th, so I've got some time to formulate a plan of attack, and then get everything in place. (And talk S into participating!)

What do you do to save on electricity? What tips or tricks have worked well for you? (Or alternatively, are there any you've found haven't really made that much difference?)

Rethinking My Payoff Plan

March 26th, 2014 at 03:19 pm

I have lots and lots of debt, but I'm on track to have it all paid off within 10-11 years, assuming minimal commissions on S's job and 1-2% annual pay increases only for the next 3 years. (S's income fluctuates; he does have a base and generally gets 3% COLA, but commissions vary by tens of thousands of dollars each year.)

Basically, I have the following types of debt:

Credit Cards and Lending Club Loan
401(k) Loans
Personal (Family) Loans
Real Estate Backed Loans

My plan has been to pay them off in that order, in essentially a snowball (or avalanche, I guess they're called now, since I'm paying the highest interest rates off first), and then I'll have nearly $5,000 a month freed up for savings, investing, etc.

After reading a bit here, and thinking about it, I may change that a bit. I'll still tackle the credit cards/LC loan aggressively (on schedule to be paid off 5/16, unless I'm able do a consolidation at a lower interest rate), and then the 401(k) loans (on schedule to be paid off 8/17, unless of course the credit cards get paid off sooner and then they'll be paid off sooner, too). Then I think I'll step back a bit, and build the emergency fund up to $15,000 and set up a $5,000 slush fund. That should take less than a year. Next I'll look at setting up Roth IRAs for S and me and get on a plan to fully fund those every year. Once that's done, I'll increase our 401(k) contributions back to the maximum (we're currently both only contributing what the company matches).

Ideally I'll still have some extra money at the end of the month once this all shakes out, and I'll start tackling the family loans. Unless the family gets impatient, which is conceivable, or the interest rates get too high. Interest is renegotiated annually, kind of a compromise between what the lender could get in a high-yield CD and what I would pay on a bank loan at the average interest rate. Right now it varies from 2-3% on a few different loans. Some of those will be paid off in the next couple of years, just from the regular payments, and that money goes to the next loan. It's basically a separate snowball/avalanche plan; the income from the rental is paid directly to the family so I never even see it, and it gets disbursed among the loans as we agree each year at the "Family Financial Summit" (FFS).

Once the family is taken care of, I can then tackle the real estate loans. (I should add, at this point S has a company car and we don't really see that changing, unless he takes a promotion -- knock wood, of course!! My car will be paid off by 2/17 (part of the family loan) and I expect to have it for several more years; if not, we have the option to buy S's company car when he gets a new one (that's how we got the car I'm driving now), which is about every two years, at a decent price.) First in line would be the rental, which may be sold by then. (They're on a 'lease to own' agreement, which actually was supposed to happen last year, but they've had some setbacks and aren't in a position to buy, and quite honestly I'm not in a hurry. The value is still below what I paid for it, though I think I'm just starting to tread water on the mortgage amount, and it's about half what it was when they started renting at the peak of the bubble.) If any money comes out of that sale, it would go toward the family loan.

By that point all of the unsecured debt will be off of my shoulders, we'll have a solid emergency fund, we'll be aggressively saving for retirement, and our only debt will be the mortgages. Which, frankly, sounds like both heaven and the impossible dream! I'll look at interest rates then, see about refinancing if it would be helpful (though my current rates aren't too horrible, 4.25-5.375%), and decide at that time which balance to pay off first or if I should pay extra on both. Excel is my best friend so I'll run the numbers and see what makes the most sense. I've got a little time to get there yet!

I've tried to not be too aggressive in planning these payoffs, and to not count on variable things like commissions and raises. Right now I still feel like I'm teetering on the edge -- a significant expense would be tough but probably manageable (>$5,000), but a major expense would be difficult, and of course a job loss would be catastrophic. Once I get these credit cards paid off, I'll breathe a lot easier. I'll actually have five paid off within a year, which will shave about $14,000 off my total cc debt and $450 off the minimum payment amounts. (Not that I plan on only paying the minimums, but it's nice to know that in the event of a catastrophe my obligations will be that much lower. It's still a lot to pay every month, don't get me wrong!)

It's kind of hard to believe, after all these years of debt hanging over me, that I might actually be free of it!

Chase Freedom Rewards

March 15th, 2014 at 01:33 pm

One of the things I'm actually doing right is not using credit cards. For a long time everything went on our debit (Visa check) cards, so the money was pulled right out of our account, and we were getting rewards for the spending. Then Chase discontinued the debit card rewards program. Boo.

After a few months of no rewards, though, on a whim I decided to apply for a Chase Freedom card, which gives 1% on everything, and 5% on quarterly categories. Since I'm in a hardship repayment plan on three Chase credit cards, I really didn't think I had a chance of getting the Freedom card, but I figured I might as well give it a shot. Lo and behold, they gave me a card!

This was also a test of our dedication to not incur more credit card debt. We made a deal that we would pay that card off as needed to ensure we never pay interest on it. (Since we use it constantly, it's never really 'paid off'. I keep the balance low and ensure I pay at least the last statement balance before the next due date.) I'm happy to say we've had it for over a year now and no interest paid yet!

At any rate, we're getting rewards again and have taken advantage of them from time to time (movie gift cards, restaurant gift cards, a TV and a new vacuum). I've gotten a little bit wiser now, though, and have decided it's in my better interest to take the cash as needed and purchase the item or gift cards with the Freedom card -- that way I get another 1% on the purchase that I'm paying for with the rewards. (I will check to be sure the price is comparable; it used to be that a $25 gift card cost the equivalent of $20 in points, but now it's been a dollar-to-dollar purchase.)

Somewhere I read that someone was using their rewards points to pay for Christmas, and I thought that was a great idea, so I'm setting that as my goal for the rewards money this year. (Christmas and birthdays.) We have a small family, so although I've never really added it all up, I'm guessing that $500 will more than cover our spending on these items for the year. So my first goal is $500 in the gift fund. Then I may set aside $100 for a movie gift card. (I honestly don't think I can actually pay for a movie again; I've been using rewards gift cards for close to a decade! I know it's the same thing in the long run, but psychologically it would just bug me.) We don't go to the movies very often, so $100 will last a while. (I just got a $100 gift card in November, and there's still $83 left on it.)

It looks like we average about 5,000 rewards a month, or $50, so that's $600 a year. However, I started out with $80 and apparently they give a 10% annual bonus, plus we had some large expenses in January/February, so I'm ahead of the game right now. I'll figure out what to do with the additional rewards once I get to that point!

Rewards Gift Fund
Goal - $500
Balance - $288.44
Remaining - $211.56

Movie Card Fund
Goal - $100
Balance - $0
Remaining - $100

February Look Back / March Look Ahead

March 5th, 2014 at 07:15 pm

I'm going to try to do monthly reviews/projections to see if it helps me stay on track (I'm good about the debt paydown, but tend to let the savings side of things slide.)

February
I though I'd end up having paid off about $2300 in debt principal, but I forgot about some Bill Me Later purchases I made. They're 0% interest for six months, at which time I'll pay them off, but they're still technically debt. So I only ended up paying off $1990 in debt principal. Then, based on comments on one of my other posts, I set up my Excel spreadsheet to calculate the interest I've paid each month. Not including mortgage interest, this month's total is about $871. Ouch!

That said, I did pay $74 extra on the highest-interest card (that was a little low, actually, but I had a 0% BML amount due so that payment was higher than usual).

March
I've decided to attempt the 52-Week Mega Savings Challenge. I'm quite a bit behind, though, and there are some big amounts to catch up! I'm going to give it my best shot, and if I miss I should still hit the "double" challenge (which is probably called something else). I'm only going to fund this with snowflakes, which does not include hubby's (we'll call him S, just to save typing!) commissions, or checking account sweeps. Those will go toward upcoming planned expenses like summer property taxes, new a/c at the rental, etc. It will include money I make from my side gigs.

I'm also debating joining the DietBet 6-month "Transformer" challenge. It's $125 (if I pay up front, $150 if I pay month-to-month -- hm, can I count that $25 as a snowflake?) and if you meet the goals (monthly and overall, which ends up at 10% weight lost) you are guaranteed to at least get your money back. (They of course take a fee from the winning, but have pledged that they will reduce or eliminate their cut to be sure everyone that meets the goals gets their money back, which I really liked.) This may be a 'doing it wrong' thing again, since there's no guaranteed return on the investment (they say on average people get 1.5-2x their money back), and I could theoretically invest the money somewhere and make a small return (around $3 at 5%?) -- but I would consider it an investment in my health, since I really do need to lose (far more than) 10% of my weight. If anyone has done a DietBet before, I'd love to know what you thought of it.

Snowflakes
I finally finished up and set out an invoice that should have gone two months ago. That will really jump-start my 52-week challenge, since it's for $625.

I "found" money in a couple of savings accounts I'd set up at ING (now Capital One 360) -- I'd forgotten about them until I was working on our taxes, and they came up under the Interest schedule. So I logged in to see that there really wasn't that much interest to report Wink but the two accounts had $67.31 and $54.06 in them. Coincidentally, that same day we got letters from Capital One stating that the accounts were at risk of being transferred to the state as abandoned property. So that's the $120 square checked off. Smile I think I'll use one of those accounts as my 52-Week savings account, too -- that gets it out of my easy reach and will keep those accounts from going dormant again. (I should probably combine them, really; I have one in my name and one joint, but there's no real reason to have two.) (I'm going to call them ING accounts, because Capital One 360 is too much to type!)

I also need to track down the EOBs from some physical therapy I had last year. I paid the $20/visit co-pay, but if I'm reading things right it looks like my insurance company paid for the full cost of the visit (we have Health Reimbursement Account, and it looks like the co-pays were paid from that account). So I need to verify that, and then call the PT place and ask for my $200 back.

52-Week Mega Savings Challenge
Starting late, on week 10!

Beginning Balance: $0
ING Joint Account: $67.31
ING Solo Account: $54.06
Ending Balance: $120
Reserve: $1.37 (In case I need it to round out a future week!)

Trying to Get It Right

February 20th, 2014 at 10:58 pm

Now that I've detailed all the ways I've done it wrong, both getting into and getting out of debt, it's time to talk about what I'm doing now to try to get it right. I'll still be doing some things wrong, because I'm just not willing to make the massive sacrifices I'd need to in order to do it 100% right, but I have a plan, and a goal, and have made a lot of progress already. So, here are some of the things I've done right:

Stayed Current on Payments
Except for a handful of late payments when I just got disorganized and forgot to pay the bill, after the fiasco with my college credit cards I've pretty much always paid at least the minimum, on time or within 30 days of being late. (They don't ding your credit report for being 25 days late! Still get hit with late fees, though.) Of course, two of the three times I was more than 30 days later were on the same card, so that doesn't look so great on my credit report, but those are starting to fall off now, finally.


Negotiated With Credit Card Companies
When hubby was living in another state, I contacted all of my credit card companies and asked for assistance. A couple of them wouldn't do anything since I was paying the minimum. (How strange is that, I call to try to make arrangements to keep paying in good faith and they won't do anything to help me until I've defaulted with them.) The others -- Citi and Chase -- put me on a 'hardship program', which lowered my interest rates, closed the cards, and put me on a 6-year repayment plan. Both offer auto-pay options so that was a one-and-done deal. Interest rates are 7.24% and 6%, down from 19-22%.

Found Ways to Earn Extra Income
I haven't been utilizing it much lately, but I now have a handful of options for some extra income if I need it. It's very dependent on how much time I put in, but at the peak of my production I was bringing in an extra $400-500 a month, while still working full time and enjoying free time on the weekends.

Took Advantage of Lower Interest Rate Offers
For some reason, credit card companies still wanted to give me money, so I've done a handful of balance transfers to lower interest rate cards (including the transfer fee in the calculation -- an interest rate decrease of 2% when there's a 3% balance transfer fee doesn't always make sense!). We also got an unsecured personal loan from Discover that knocked out some higher rate cards (that has since been paid off with one of the 401(k) loans, for 1/3 the interest and 1/3 the monthly payment), and I recently got a personal loan from Lending Club that, if I use the full amount of time to pay it (I plan on paying it off earlier), will save me three years of payments and about $12,000 in interest.

Started Snowballing Debt Payments
Once I rearranged all my debt, my payments decreased quite a bit. While I'd like to say I'm putting all of that decrease toward paying off the debt, the reality is that a significant portion of it is going toward our monthly expenses. The upside is that I can afford our monthly expenses now! I have dedicated a specific dollar amount per month to credit card debt, and a nifty Excel spreadsheet to keep track of it. (Seriously, if I could get paid for the time I've spend making Excel spreadsheets for my various budgeting/financial uses, I could retire now!) I subtract all my minimum payments from that amount, and whatever is left over goes as an additional payment to my highest interest rate card. Once that's paid off (right now on track for January 2015) I will snowball to the next card, etc. I'm also increasing the dedicated amount by $200 per month each year, assuming COLA increases at work (or additional side jobs, if need be).

Faced My Financial Reality
I finally sat down and calculated my total assets, liabilities, and net worth. It was pretty sobering. On paper it doesn't look all that bad, really -- we have a positive net worth, at any rate, and it's over $50K. That's not including the family loans, though -- add those in and we're very negative in net worth! Granted, if we don't get these family loans paid off -- and we are paying on them every month, with interest -- it will eventually come out of my inheritance, but part of owning up to what I owe includes even those debts that no one other than my family and I will ever know about.

Created a Realistic Plan With an End Date
One of the reasons I'm starting this blog is that I've finally got a plan to get out of debt, and it's sooner than I honestly thought it would be. There is a light at the end of the tunnel, but I want to be sure to keep on track and be accountable to someone, even if it's only faceless strangers on the Interwebs. (I can't admit to my family how in debt we are. Even hubby only has a vague idea, mostly because he tends to over-react and get all doom and gloom about things. He knows we have a lot of debt, and he knows we're working toward paying it off and what the basic timeline is; the details are a little fuzzy, but we talk about big spending and how we're going to afford things.)

Left Commissions (Mostly) Out of the Budget
One of the biggest mistakes I made at first was counting on hubby's commissions as part of our income. That was great until he changed to a job that didn't pay commissions! Now that he's getting commissions again, I'm only counting on a portion of them as income. I took the average monthly commission he's made over the last four years, not including his year-end bonus (which has ranged from $0 to almost a full year's salary), and figured we could safely count on half that amount as part of our budgeted income. (That amount is also not completely beyond the realm of my ability to make up with side jobs, if need be.)

Finally, the biggest thing I've done right is...

Stopped Using Credit Cards
Well, sort of. I do use my Kohl's charge for the discounts, and sometimes Bill Me Later for the six-month interest-free financing, but those are amounts that I plan for and know I can pay off when the bill comes due. Other than that, we pay for just about everything on our Chase Freedom card, which is a rewards card. Technically I "carry a balance" on the card, but it's always new debt -- I'm not paying in March for the gas I put in my car in January. I pay a chunk on it every week or two, and there aren't any interest charges, because I pay off the statement balance throughout month. (For example, if the February statement closing balance was $2300, I'd be sure to pay at least $2300 on the card before the March closing date. I generally pay well more than that, because I want to keep the balance manageable and at a level where I could pay it off entirely, if I needed to.) Meanwhile we average about $75-150 in rewards every month; we've used those in the past for a new vacuum cleaner (sorely needed), TV (total want), movie tickets ($100 gift card should last a year or so, we don't go to the movies often), our anniversary dinner, etc., but this year I might let the rewards build up and use them for birthday and Christmas gifts instead.

I am happy to say that, other than the exceptions above, I haven't used a credit card in well over a year. That is a huge improvement for me! I was a little leery of the Freedom card, given my past history with building up credit balances, but I've made a real effort to keep it paid off and it's working.

Barring any catastrophe, I was on track to have all of my credit cards and the Lenders Club loan paid off by May 2016 ($50K) and the 401(k) loans paid off by August 2017 ($56K). The family loans should be paid off by June 2020 ($135K). Then I could knock out my mortgage by February 2024 (19 years early!). That's also assuming only COLA increases; I'm actually looking at a possible large bonus and salary increase this year, which could accelerate things exponentially, but I don't want to count on that until/unless it actually happens.

However, that was before I realized (last night) that the HELOC on our main home will be coming due in a year and a half. (I'm glad I thought to check the paperwork -- the whole balloon payment thing was not made clear to me on closing!) So I will need to make some adjustments and/or shift that loan to somewhere else if possible. (Hubs has good credit and most of the cards we've paid off were in his name, so he could probably get a loan from Prosper or Lending Club if we need to go that route. I had the HELOC scheduled for payoff in April 2018, but it will be due in full in October 2015.) A new loan will probably have a higher interest rate, but we'll be able to throw lots of extra at it within the first year, so it should be paid off fairly quickly.

Mistake In The Making?
Remember in my last entry when I said a potential mistake might be coming up that will end up better for us in the long run? There's a home up for sale that my husband is itching to buy -- it's where we're planning to retire, and it's right next door to his cousin. It's a bank-owned property, so from the looks of things is listed at 3/4 to 1/2 of its market value. Of course we'd get an appraisal first, and an inspection, before we even seriously consider it. Taking on more debt is one of the last things we need to do, honestly, but it is a pretty good opportunity. What's more, my mom has been wanting a 'vacation home' and we have talked about getting a family home in this area. The ideal -- though I'm not sure how on-board my mom will be about it -- would be for her to pay cash for the home (easier to get the offer accepted, I've heard, with a bank-owned property when you pay cash), and then we would finance it, taking some additional (assuming it appraises high enough and there's some equity there) to pay off the credit cards and HELOC. The monthly payment would come out of the currently assigned credit card payment, and the rest of that would go to the Lender's Club loan (paid off July 2015). That would let us pay off the 401(k) loans in February 2017 and the family loans by November 2019. Then we'd tackle the 'vacation home' loan, paying that off by July 2022, and our primary mortgage paid by October 2025. While it's an extra 18 months on the primary mortgage, it's also an additional $125K (or more, by that time) in assets with the vacation home. (This is all assuming hubs and I take on the entire cost of the vacation home; mom might offer to pay 1/4 of it herself, since she'd be free to use it whenever she wanted.)

Again, more debt is the last thing we need, but the long run is looking more and more attractive. I know you're not supposed to tie up unsecured debt in your home -- and I've made that mistake many times in the past! -- but the interest rate is still considerably lower and again, we'll have a nice increase in assets when all is said and done. The home undoubtedly needs some work (paint job, new floors, I'd like to add a bathroom at some point since there's only one), but since it will be a vacation home for the next 10 years or so, at least, it's not anything that we'll have to do right away. With a cousin next door to keep an eye on the place (a cousin who, I might add, is very motivated to get us to move down there!), and lots of "kinfolk" in the area to help with any projects -- and a new roof in the last year or two -- on the surface it seems like a reasonable fixer-upper over time. (It will all depend on the appraisal and inspection, really.) While we'll still ideally buy a larger piece of land and build our ideal retirement home someday, this will give us a vacation home in the mean time, a place to stay when we do first retire and are building, and ideally an appreciable asset (that we can live in for two years before we finally sell it and avoid capital gains taxes). Hubs is down in that area every year, as well, for family reunions and his 'fun stuff time', so having a place for him to stay will ease the burden on family and hotel room fees! (Oh -- and the property taxes? $400 a year. Not even a consideration, really.)

Anyway, that's where we are at this moment in time. I am working on building up an emergency fund -- I had $4700 but then we ended up owing $2800 to the IRS (bad planning, but it shouldn't happen again this year). We will have property taxes due in the fall, about $3700 between the two houses (home and rental), and the rental will probably need a new air conditioner this year ($3500) -- it's losing freon, and apparently the new units don't use that type of freon so it's hard to find these days. (Still, I'm going to see if I can get it recharged one more time to get another year out of it, but if I can't I'm saving up for that expense now.) I'm allocating the rest of the $4700 as $1000 in an 'emergency fund' and $900 for the a/c, but honestly in an emergency I could probably use the Freedom card and with commission/side jobs pick up the $1000 during the 25-day grace period. Still, by the end of this year I'd like to have at least $5000 stashed away until I get the debts paid off, and then work toward increasing it to 6 months of expenses. Hubby's commissions and any 'leftover' from the checking account at the end of each pay period will go toward all of that -- a/c, taxes, and emergency fund. We'll get there, I know it!

Doing It All Wrong

February 20th, 2014 at 05:24 pm

As my username/blog title suggests, this blog will be a lesson in how *not* to budget, manage credit cards, pay off debt, etc. That old adage, "Do as I say, and not as I do" applies quite well here. I know exactly how to effectively and responsibly use credit cards, I know how to budget and scrimp and save and pay off debt, I know how to snowball and consolidate and all of the things you do when you want to get out of debt. Actually doing those things, however, somehow manages to escape me. It's a lack of willpower (which pervades all areas of my life, not just finances!) and the knowledge that I have a safety net (family) if things really get bad (a blessing and a curse!).

I laugh when I read that the average US household has $6,000-8,000 in credit card/unsecured debt. I have more than 10x that amount, not including loans from family (which is itself about 15x that amount). You would think I'd be panicked, depressed, stressed, *something*, but I'm not, most days. Debt is a fact of life, something I've pretty much always had to deal with, like grocery shopping or laundry. Clearly, I need an attitude adjustment! I do have a plan, which I will get to momentarily, but even then, I'm doing it all wrong.

First, how did I get into the situation I'm in, with around $250,000 in unsecured debt? Well, it took a little time, but very little effort.

What I Couldn't Really Help

A significant portion of my debt is due to factors mostly outside of my control. I most certainly could have managed the situations differently, but the situations themselves just happened.

First, my husband and I moved into a family-owned house. For the first few years, it wasn't a bad deal -- we paid the bills and taxes, but no rent and the house was paid for. We tried selling the other house but not aggressively, so we were carrying two "homesteads", although only one mortgage. After a few years, we had to settle up on the inheritance, which meant we took out a mortgage on the house and paid off the family on their portion of its inherited value. So now we had two mortgages, plus two HELOCs.

Then, my husband lost his job, and got a new one in a different state. Since it was a short-term stay (and then we'd be relocated), and since I had a job and family and critters that would have been a major hassle to move, I stayed. So now we had three homesteads and rent.

Fortunately, the relocation fell through and hubby got a job back here. Meanwhile I'd found a renter for the other home, with a 'rent to buy' plan for five years out. The rent money went to paying some of the family loans (which were used to buy that house in the first place) so we still had two homesteads, two mortgages, two HELOCs. Then the economy crashed and the renters, while still paying the rent, are not in a position to buy, probably for several more years. They're like family and it's fine, really, because technically once we sell that house, the family loans come due, but it's still two homesteads, two mortgages, and two HELOCs. (The renters do pay all the utilities except water, so that helps a bit.)

Over the next five years, we've had four surgeries, all in different years, of course (so medical deductibles/co-pays of around $6,000 per year), two funerals that we ended up paying half and all of (around $15,000 total), and a handful of non-routine critter-related medical expenses that total about $15,000. Some of that went on cards; some of that we took IRA withdrawals to pay (and, of course, paid the 10% penalties to do so).

Since we were essentially living paycheck to paycheck for most of that time (and practically still are, really), most of that debt went on credit cards. Plus when we were first living together I was the sole earner, not earning much, so many months the only way we could eat was by putting food on the credit cards. (I read a blog recently where the overwhelming majority felt it was much easier to spend cash, or to lose track of cash spending, than it was to buy things on credit. I am exactly the opposite. I can take $40 out of the bank and still have $30 left at the end of two weeks, because I hate to part with my cash, but credit? No problem, that's not 'real money', right? Again, pretty clear I need to change the way I think about money and debt!)

What I Did Wrong

Oh, so many things! First and foremost, I went to college (not a bad thing, really) and got tons of offers for credit cards, which I of course accepted (bad, bad, bad idea) and of course used (even worse idea) and then of course couldn't pay off. I ended up settling those debts after graduation.

When I bought my first home, I was gifted money from my family for the downpayment, which because of the way the loan was set up I actually ended up using to pay off the credit card debt and car loan I'd acquired since settling the other debts. Of course, then I just built those credit card debts back up.

About five years after I bought that house, I got talked into refinancing it. Which, of course, also involved paying off credit card debt I'd racked up and the loan on the new car I'd bought in the mean time. This was at the height of the mortgage lending frenzy, so I ended up financing 100% of the home's equity, between the mortgage and the HELOC. I paid off higher-interest debt, sure, but increased what I owed on the house by about $30K. (Then, of course, the housing bubble burst and the home's value decreased by more than half.)

Two years later we had to take out the mortgage on the house we were living in. This time we only financed about 90% of the home's value, but again used a big chunk to pay off credit card debt (seeing a trend, here?) and student loan debt. Mortgage and HELOC, of course. Housing bubble burst, house is just starting to be worth the mortgage amount (the HELOC is something else entirely!)

Mistake #1
The biggest mistake, of course, is that I paid off my credit card debt three times, and kept using the credit cards. You'd think I would have learned after the first time!

Mistake #2
I used IRA funds to pay off debts. Truth be told, though, I probably did end up saving money in the long run. Most of that happened shortly before the economy (and markets) crashed, and I lost about 38% in my 401(k) at the time. So even with the 10% penalty and the 15% income tax, I eliminated some bills at 29-32% interest and avoided a 38% loss in the IRA. Still, it's not the way you're supposed to do things!

Then, I didn't fully understand the terms of the HELOCs. They had a 10-year draw period (not a concern, since we maxed them out from the start), interest-only payments (again, not a big concern, I thought we'd have the first house sold by then), and -- the part I missed -- a balloon due at the end of the 10 years. Typically those are just converted to a 30-year fixed, P&I payment loan, apparently, but since the first house is no longer my primary residence, they wouldn't do anything for me. Which led to...

Mistake #3
Taking a 401(k) loan to pay off debt. Two, actually, one from hubby's and one from mine. Again, though, I think we'll come out ahead on this. Unlike the IRA withdrawals, there's no penalty or tax on the 401(k) loans. We're paying ourselves back with interest, which is only slightly lower than the average return on S&P500 investments, and we knocked out some higher-interest debt (25-29% on some credit cards -- we took the one 401(k) loan before we knew about the HELOC coming due). Yes, the interest we're paying in is after-tax money, and will be taxed again when we withdraw it -- but it still adds up to less than the credit card interest rate.

We've made other mistakes, too, along the way, Such as:

Mistake #4
Used large bonuses to buy "stuff" rather than pay down debt. Sometimes this was necessary stuff -- a water heater, or new siding on the rental property that just (fortunately) happened to coincide with a big commission month. (Hubby works on salary, but with commission that varies wildly.) The worst was a bonus that was almost a full year's salary, half of which we spent on a 'toy' for hubby. Granted, he uses the thing almost daily and will have gotten more than its worth out of it, but in the long run we would have been much better off using that money to pay off debts. I admittedly feel guilty, however, telling he he can't buy things he wants with his own money, especially since I don't tend to curtail my own spending that much. Which ties in nicely to...

Mistake #5
We have not remotely adjusted our lifestyle in an effort to pay off our debt. As I said, I know I should. I could drop the home phone, eliminate the movie channels, stop drinking pop, bring lunch from home every day, shop more at Costco, and so on and so on. Lots of fat we could trim from our budget. And we might, at some point, especially now that we're talking about it and setting goals. On the other hand, I don't want to deprive myself. I want to enjoy my life, within reason, while also working on getting rid of this debt. If hubs or I die tomorrow, life insurance will take care of the debt -- what's the point of living a miserable life in the meantime? (I know, that's rationalization. I get it. Part of it is rebellion, too, from my childhood when my mom did have to scrimp and save and budget to put food on the table. Still, I'm not at the point where knowing what to do and knowing why I don't want to do it is enough to actually persuade me to do it!).

Whew! This has gotten far longer than I'd intended, so I'm going to end it here. I'll be back for another entry about the few things I'm doing right, and the plan for the future. (Though there's another mistake on the horizon that, if it pans out, might just end up saving us in the long run.)