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

Viewing the 'Debt' Category

52 Week Savings Challenge & Ramblings

July 8th, 2015 at 08:57 am

52-Week Savings Challenge
Week 27 (saved to Week 29)

* The month-end snowflakes hit last week, they're small but they add up!

* I finally used my Chase Freedom rewards for the planned AMC (movie) gift card purchase. I got the cards at Cardpool.com so saved $19.50 (on $100 worth of cards); that extra is going to this challenge. (Just in time, too, as hubs and I went to two movies at the end of June -- a special screening of "Jaws", S's all-time favorite movie and one he'd never seen in the theater, and "Jurassic World", which I thought was almost as good as the first one.)

* Our electric bill budget plan amount decreased quite a bit, so I'm adding the first month savings here.

* I'm a notary for work, we offer it as part of the service we provide our clients, so we don't charge a fee. I had client leave me a "tip", though (he actually snuck it onto my desk after I'd refused it), so that's also going here.

ING Interest - $2.03
MSD Interest - $6.42
Chase Interest - $0.01
Chase Rounding - $13.18
Electric Bill - $54.00
Movie Cards - $19.50
Notary Tip - $20.00

Total Snowflakes: $115.14
Rounding (to reserve): $0.14

Beginning Balance: $877
Deposit: $115
Ending Balance: $992

Reserve: $0.55 + $0.14 = $0.69

This puts me at just about 72% of the Challenge, and we're about 52% through the year.


I'm still feeling generally anxious about finances, which I don't expect to ease up for a few months now. I do feel better knowing I have some money in my EF if I really really need it. (I'm trying to avoid that as much as I can, though!) One bit of good news is that our property taxes came in about $800 less than I was thinking they'd be. (I think I was using the entire year's amount for the projected summer bill, because it's not actually too far off from last year; clearly I didn't look back when I did the projection!)

I had mentioned earlier that we have a balloon payment on a HELOC coming due in October. Last week we got a notice from the loan servicing company that in September our loan would switch from an interest-only adjustable-rate HELOC to a fixed-rate, principal and interest payment. Which is great if that's what happens (and the payment and interest rate are reasonable), but our loan agreement doesn't actually have that provision in it. When I'd asked the company about it a month or two ago (this is I think the third company that has serviced this loan, so they're not the original lender), they said whatever the loan documents stated was how it would be handled. So clearly one hand is unaware of what the other hand is doing. I think I'll probably wait until the August bill comes, which I'm hoping will have more details on the new payment structure, and then see where to go from there. It would be so nice not to have to worry about refinancing this!

In anticipation of refinancing, though, and some other things going on, I've been look at my and S's credit scores. My are actually pretty good, averaging around the mid-700s. (Right now I've got 11 different scores from various places, which of course use different scoring models so it's not an entirely accurate picture, but I figure the average is still probably pretty close. I do pay more attention to the scores provided by my credit cards, though, as I think they're closer to what an actual lender would use.) S's are not so great, in the mid-600s, so I'm working on that. His biggest 'ding' is balances too close to the limit. Well, that's because he's had a bunch of 0% balance transfer offers that we've used to pay off higher-interest cards. It's frustrating that credit reports/scores don't look at these things in context! Wink A couple of the 0% offers are due to expire in the next month or two, so I'm looking to pay those off a little early (we have the money set aside), and then I'll probably see about transferring the others to my accounts (that are only in my name) to get them off of his credit. That should boost his score quite a bit, I'd think.

The only other negatives that show up are some inquiries, mostly from when we were looking at refinancing last year, but I know that when they're within a certain time frame lenders lump them together, so instead of 5 inquiries he'd really only have 2. It will be interesting to see just how much of an effect this will have on his score -- and on mine, as I expect a bit of a ding. Still, from what I've read, if we do a refinance, it's better to have two 700 scores than one 650 and one 750, because they use the lowest score to determine the loan terms.

In other news, we finally got our community garden planted, about a month late! We moved to a new spot, which ended up being a mistake because it's in a low area, and we've had a lot of rain. Mud, mud, mud. They couldn't even rototill it until two weeks after the garden opened. So, who knows whether we'll end up with any actual produce this year (although I do think there's a green pepper ready to pick!). It's a bummer because we bought a lot of tomato plants this year, and several heirloom varieties. We've haven't had a lot of heat, though, so no one's tomatoes are doing very well so far. Fingers crossed for a hot, dry July and August!

Well, That's A Mighty Big Wrench....

February 27th, 2015 at 01:53 pm

I just got a call from my insurance agent's assistant (homeowners insurance on our primary residence). She wanted to give me a heads up that the home office had sent out an underwriter, who has decided that we need a new roof, and they will be sending us a letter to that effect. Apparently some shingles are curling in one area.

Now, to be honest, we've known the roof would need replacing *someday* and since my grandpa died 14 years ago, the roof is at least that old -- and it may have been last replaced before my grandma died in 1995. So they may not be too off-base, but even the assistant said in most of the pictures she saw the roof looked fine. We have a few homes in our neighborhood that desperately need a new roof, and there's a substantial difference between theirs and ours.

I guess the next step (well, after the snow melts!) is to get a certified roofing inspector to tell us how much life they feel the roof has left, and/or if it can be spot-repaired to get a few more years out of it. Apparently this is not an uncommon thing for insurance companies to do, and often if an inspector says the roof has a few more years in it the insurance will accept that.

If they don't, however, or if the inspector agrees that the roof needs to be replaced immediately, we're looking at about a $15K job. More than I have in the EF by a wide margin! I do have some options in mind already, none of them ideal and all of them involving adding debt somewhere. *sigh*

S is of course livid, and wants to switch insurance companies. Shopping around might not be a bad idea regardless (although they'll give us a 20% discount on our premiums the first year, then 19% the second year, etc.) but now that they've noted it needs replacing, any other insurance company will have the same requirement. I also do really appreciate the fact that the local office called to let me know the letter was on the way, rather than just letting me be blindsided by it. I would have totally lost it. They also are giving us a year to get it replaced -- very generous, as in some discussions I saw people were given 60 days.

I knew I shouldn't have answered that phone call!

Catching Up

February 14th, 2015 at 08:35 am

I've started several 2014 wrap-up/2015 goals posts, and never get around to publishing them, because a) I start yammering on and b) it gets too depressing!

Some days I feel great about where I am -- I've paid off a lot of credit card debt and have a good start on an emergency fund -- but then I do my yearly budget projections and end up $10-15K in the hole by the end of the year. (I overestimate spending and underestimate income, but still....)

Then I did our taxes and we really need to change our withholding! We had claimed a high number of exemptions for a while, because with the rental we had a fairly decent loss to write off, but we don't get the full amount anymore and it's really affecting our bottom line. We owed around $2,800 last year; we have a small refund this year but only because we had a lot of stuff donated to charity, from his parents and my grandparents (finally cleaning out the basement, garage, and attic!). We won't have that next year, and without it we'd owe about $5,000 so it's time to make a change!

I'm also having us increase our retirement contributions; we're both putting in just the minimum to get the match right now. We aren't able to contribute directly to an IRA or Roth; a backdoor Roth won't work for S because has an existing IRA. I could do one -- I have a teeny tiny IRA and the tax on a conversion would be negligible -- but at this point, having it come directly out of my paycheck, and reducing my taxable income, is preferable. (Plus I actually think we'll be in a lower tax bracket when we retire, so tax-deferred is our better option at this point.)

Of course none of this helps our monthly bottom line any, but it's a necessary evil. We do have lots of areas where we can cut back, and I've already identified about $5,000 I won't be spending on a particular hobby this year. I also haven't included any side gigs I can pick up. Still, my focus has changed a bit for 2015, and rather than working quite so heavily on eliminating debt, I'm going to work more on not incurring additional debt.

I have a refinance to do mid-year, and potentially another one in the fourth quarter. The first will definitely ease up cash flow, and significantly lower our highest interest rate. (The second will probably end up being neutral overall.) I also have a small 0% balance transfer offer through August 2016. That combined with the refi will put my highest credit card interest rate at 3.99%, so I'm a little more comfortable about scaling back on repayments than I would be with the 24.99% I had a couple of years ago! (I will still pay some extra to the cards; paying just the minimums means I'm in debt until 2030! As of now this change will extend my payoff by one year.)

Unfortunately, we have decided that we really do have to replace the wall furnace that died on us back in November. We've been limping along with an electric space heater, but it doesn't do much on these sub-zero nights, and it's expensive to run! So that's $2,500 out of the EF -- the only good aspect being that at least I had the funds set aside!

My 2015 goal, then, will be to replace the $2,500 and get the EF back up to $5,000. Since I'm still finishing up the 52 Week Mega Challenge ($1,890) and doing the regular 52 Week Challenge ($1,378), I'll easily meet and exceed that goal. My original goal of $7,500 in the EF is a little ambitious now (given I still need to save up $3,700 for property taxes in September), but I think I'll stretch the EF goal to $6,000. That's only another $232 I need to come up with, which seems do-able.

(Actually my EF goal hasn't changed -- save up $2,500 this year -- it's just the final account balance that's changed because of the heater.)

Anyway, my other goal of paying off $17,500 in credit card debt is adjusted down to paying off $12,000. That includes a few 0% balance transfers that will come due this year. It doesn't include the one card I'll pay off with the refinance, since I'll still owe that money, just not on a credit card.

To end on a happier note, I did negotiate a 7% pay raise (which is a lot less than it sounds like!), which will help offset my increased 401(k) and withholding. S should get his standard 2% increase, which will help a bit, too.

December Look Back / January Look Ahead

January 4th, 2015 at 08:23 pm

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.

I ended up opening a savings account at My Savings Direct for 1.05% interest. (I had some other reno funds set aside that I figured I might as well get into something paying more than 0.01%.) I tried to open a GE Capital account, which is paying the same rate as MSD, but for some reason they wouldn't let me (the letter they sent explaining why they wouldn't really didn't explain anything!). Now I've got to decide whether I want to transfer the emergency fund and the reno fund over to MSD; interest-wise I should but for some reason I'm reluctant to close my Capital One 360 account. I guess because I've had it since it was ING and they were paying the best interest rates around -- part sentimental and part hoping they'll step up their game, I guess. The smart thing is probably to leave a small amount in there and move the rest over, and if the interest rate becomes more favorable I'll just move it back.

I had decided to set aside $500 of my Chase Rewards for Christmas and birthdays this year. We ended up scaling back on gifts in my family -- not really for any financial reason, but we all have so much stuff, and nothing really that we want or need that we wouldn't just buy ourselves. (I'd like a fitness tracker, for example, but I need to do some research and decide which will best suit my needs, and then decide which 'fits' best. My mom did give me some cash that will cover most of the expense and I'll wait for a good sale.) At any rate, when all is said and done I'll end up at about $380 on gifts. I think I'll put the extra $120 toward the Mega Savings Challenge.

I ended up paying $2,384 in total debt in December, $1,013 in interest and nothing to my avalanche. The debt consolidation we did a couple of months ago was via a peer to peer loan, which has a fixed term rather than revolving like the credit cards we consolidated. As a result, our total minimum payments across all of our debts has increased by about $200 per month (with a faster payoff date). Which means technically I won't be paying extra on my avalanche for a few months, and then it will be small amounts for a few months. (I was paying around $150-200 extra.) I have a few 0% rates expiring in the spring/summer that I'll pay off, so those minimums will then become extra for the avalanche.

January should be a fairly low-key month, recovering from the holidays and gearing up for our busy seasons at work. We're going to have to do something about the wall furnace in our Florida room; it quit working about a month ago. We've been using an electric space heater, but temps are dropping and I'm not sure that's going to be adequate for the entire winter. I'm looking at some non-venting heaters that hook up to the gas line; the reviews are great and people are using them to heat 1,000 square foot bungalows, but they cost about $200-300. The quote we got to replace the (natural gas) wall furnace was I think $2,500. I'm a little skeptical that something that's 1/10 the cost will work just as well (or better, actually, since the wall furnace was a bit of a lemon!). We'll be doing some more research, and ensuring it's returnable if we do end up getting it. Hopefully those will be all of our major expenses for the month, except for some belated Christmas gifts to ourselves for which we'd already set aside funds.

November Look Back / December Look Ahead

December 5th, 2014 at 04:14 pm

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.

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.

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!

October Look Back / November Look Ahead

November 3rd, 2014 at 08:52 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.

October ended up being a big "financial" month, mostly because I spent the vast majority of the month looking at our finances and budget and debt and all that fun stuff. I don't keep to a "budget", per se. I know how much is going to come in each month (aside from snowflakes) and how much has to go out, and I keep up with that every few days (kind of like balancing a checkbook, but I do it in Excel). Most of our daily expenses go on the Freedom card, which we pay off before interest hits, and there's a lot of flex there. Our October Freedom spending was way out of control, though, about $2K more than usual. (Some of that was the $586 medical bill I ranted about a while back, and another $500 ended up being refunded, but still, we spent a lot more than I expected.)

So I got it into my head to go back through the last year and total up all of our transactions, in broad categories, and see just how were were doing in general. I had myself quite freaked out for a while, too, because any way I looked at it (last three months, last six months, last 12 months) it averaged out that we were spending $3,500 more per month than we brought in. (Which on the one hand wouldn't surprise me, sometimes, but I just couldn't imagine how that could be possible when we still had money leftover almost every paycheck. It's just not sustainable, right?) It was, of course, a bonehead error on my part; we've done some debt consolidation and 0% balance transfer checks over the last year, and I deleted the loan/check deposits from our income -- but I'd forgotten to delete the corresponding card payoffs from the expenses. Oops!

Once I fixed that things look a lot better, although still tighter than I would have thought. (I suspect that's because of the averaging, though; we had some big expenses at the beginning of the year, but some big paychecks to cover them.) There's a lot we can trim, though -- we spend an obscene amount on eating out, I found, and most of it is lunches. S is on the road a lot for work so there's not much to do there, but I almost never bring a lunch to work. That would probably save $100/month, easily, so that will be my focus for November. (We rarely have leftovers from dinner, but I may start tweaking recipes when it's possible so that we do. My biggest problem is I'm always running late in the mornings, so packing a lunch is usually not on the agenda. Leftovers I can pack up the night before and just grab and go.)

Debt-wise, I paid off $2,373 in debt in October, paid out $935 in interest, and put $230 extra to my current avalanche debt.

We ended up doing another debt consolidation, the loan closed on October 31 so this weekend I made all the payoff payments. (I told S to check out the account online after the loan principal hit, because our balance probably won't be that high again for at least a decade! Kind of scary, though, to see the balance drop by several thousands of dollars overnight, even though I was expecting it.) This doesn't really affect my payoff time, which is about two years out, but will save about $3,800 in interest. I also took the $500 refund we got and paid off one of my lower-interest cards. It was due to be paid off in February, so I really didn't save much in interest, but the monthly payment was $133 so now I have that much more to put toward the other debt.

We finally gave in and turned on the heat Saturday night. I usually struggle to make it to October 1 before I get too cold, but we had so many 70-degree days in October this year I just couldn't justify turning it on for the 2-3 50-degree days in between. (Plus we have very warm snuggly bedding, and if I'm sitting on the couch I have a triple-layer fleece blanket plus any number of warm and toasty critters on my lap.) We had snow on Halloween night, though, and driving home from dinner at my mom's on Saturday is was I think 29 degrees, so we figured it was time!

Not much else going on for November. My niece turns 5 at the end of the month; my sister has asked that some of her "presents" be money, since they are going to start her on a "budget" plan (allocating for spending, saving, giving, etc.). She's having a party for the first time this year (she started kindergarten so it's with the kids in her class); I'll be helping out with that and since I'm not really a big fan of kids, I'll consider that part of my present, too! Wink We don't spend a lot on birthdays so that will be an easy cash flow. Thanksgiving is at my sister's and we share expenses (my mom, sis, and us) so it's another easy cash flow. Then it's just gearing up for Christmas and year-end stuff, and starting all over again in 2015!

Medical Billing Tomfoolery

October 22nd, 2014 at 12:57 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?

September Look Back / October Look Ahead

October 1st, 2014 at 01:02 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.

I can't believe it's October already! Where has the time gone?

Pretty quiet month, financially. The rental taxes were paid, and the normal bills, etc. I procrastinated calling about the landscaping; I may see about it this month but at this point it might be easier to just wait until spring.

We cleaned out the garden last weekend, so now I've got to figure out how to store or freeze what we harvested. (It's mostly onions and potatoes, which are fairly easy, a few carrots, and one big stalk of Brussels sprouts.)

Debt-wise, I paid off $2,456 in debt in August, paid out $853 in interest, and put $282 extra to my current avalanche debt.

I don't have much planned for October, either. S and I usually go to dinner and a movie on Halloween (we're not into kids), but he's going to be out of town this year. I may still go to the movies myself if there's something decent to see (beats sitting at home in the dark hiding from the trick-or-treaters Wink ), and since I have a gift card for the movies and I'll have popcorn for dinner, it won't cost anything and we'll save the $50 or so we would have spent at a restaurant.

S will also get a decent-sized commission payment at the end of October. He's been wanting some new gear for his hobby, so some of it may go toward that (or he might use some of his end-of-year bonus instead, depending on the timing; six of one, half-dozen of the other, really). I'll set aside our winter taxes, they're not due until February 2015 and it's the 'small' tax, which actually I can often cash flow, but I might as well just set it aside if I have it. The rest will probably go into a 'slush fund' for various things that no doubt will crop up around the house, the landscaping if I decide to do it now, etc.


September 11th, 2014 at 10:06 am

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 11:51 am

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 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.

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 09:10 am

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 03:53 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 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.

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.

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 04:55 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.

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!

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!

May Look Back / June Look Ahead

June 2nd, 2014 at 08:29 am

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. I was going to combine this with my 52-Week Mega Challenge update, since I figured they'd both be short, but apparently I had more to say in this one than I expected! Wink

Not a whole lot going on in May; it's a high-spend month for several reasons (my annual 'pilgrimage', our anniversary, and my birthday, plus getting ready for the family garden) but we plan for it and set aside money from my overtime (Feb - April).

Overall in May I paid off $2,292 in non-real estate loans, paid $770 in interest, and paid $158 extra to my 'avalanche' credit card. I wrote yet another letter to Social Security informing them of my mother-in-law's death (in August of 2012) and requesting that they stop depositing her monthly benefits into her checking account. (There's almost $30,000 in there now -- no wonder the system is going bankrupt!) I also informed them that this was our last attempt at remedying the situation -- they've been informed at least three times by three different people (including the funeral home), the bank was instructed to return the first two deposits and close the account back in October 2012, we've tried calling multiple times but can never get through (when we do get through, it's hold-hold-hold-hold and then they disconnect us). So, it's on them, and I'm not even going to worry about it any more. (We don't have any access to the bank account, it's in her name only, so there's not much else I can do regardless.)

We have another vacation planned this month, for S's family reunion (among other things). It's unusual for us both to go anywhere together that's not a day trip, because of the critters. We're dividing them up among friends so that no one has more than they can handle. (Once we get this debt paid off and a good EF built up, I'm going to start saving up to buy a big cargo van so we can just bring them all with us. Since we don't go too often it's not that big of a hardship to ask friends to babysit, but it's six trips getting them there and back and about 20 hours of driving total! It does save tremendously on boarding fees, though; we'd be looking at four figures, easily.)

We're staying with family for the duration of our trip and S has a company car so doesn't pay for gas (they take a set amount out of each check to cover personal use of the vehicle), so our actual vacation expenses should be minimal.

I am expecting some big snowflakes this month. Of course, one I've been expecting for a few months now (payment for a side gig), but I'm moving up the ladder now and should have a resolution soon. The other is $200 from a round of physical therapy I had last year; I paid a $20 per session co-pay, but then the insurance company ended up paying the entire bill. I heard back from them last week that they'll be processing the refund and I should see it in a few weeks.

On the down side, the tenants at the rental let me know about several areas that need repair at the house. (Honestly most of them are items that needed repair when we moved out 12 years ago.) They do most of the work on the house themselves -- they plan to buy it at some point (and I'm not pushing them, honestly, because a) they're like family and b) the longer they wait the better for me, because the mortgage will go down and the home's value will go up) -- but they're in a tight situation financially right now and can't afford to pay for the repairs and pay the rent. So they'll likely only pay a portion of the rent for the next several months, while they tackle these repairs, and I'll need to make up the difference since the rent is used to repay family loans. (It should only be a few hundred dollars each month, which I may be able to cash flow from S's bonuses, side gigs, etc., but if not I've asked them to find out about recharging the a/c one more year instead of replacing it, and then I can use some of the money I had set aside for the new a/c now, and start saving again to replace the a/c next June.)

We started on the family garden yesterday (late, we were waiting on the rototilling to get done) and hope to get the bulk of it finished up tonight, if the rain holds off. This is our second year at the community garden, and I'm really hoping it's better than last year was. We have a new plot, that's on a little bit higher ground (apparently our plot last year was in what used to be a riverbed), and the soil seems much better. To be fair, everyone at the garden said they had a bad year last year, we got quite a lot of rain and not many really sunny, hot days. This year they're predicting extreme heat, which I'm hoping also means lots of sun. I'm not sure what the rainfall prediction is, but water is free so it's just a matter of getting there as needed. (My sister lives a mile away and I drive by every day on my way home from work, so that's not a problem.)

I think that's (finally) it! More than I expected to write, but I guess I needed to get all of this out of my head. Smile

Those "Almost Paid Off" Debts

May 21st, 2014 at 01:00 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?

Catching Up - April/May and 52WMC Updates

May 12th, 2014 at 09:06 am

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


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.)

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]

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]

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

March Look Back / April Look Ahead

April 3rd, 2014 at 09:30 am

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

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 08:19 am

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!

February Look Back / March Look Ahead

March 5th, 2014 at 11:15 am

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.)

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).

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.

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!)

Attitudes About Debt

March 3rd, 2014 at 07:49 am

[Gotta love the Lazarus add-on for Firefox -- this entry was lost in the 'catastrophic failure' of the server, but with one (right) click Lazarus was able to restore the whole thing! It's free, too, though the do occasionally ask for donations.]

I posted before that I have an indifferent attitude about debt. I just figure it's always going to be there, and now that I comfortably pay the minimums every month, I'm not too fussed about it. I'd like to get out of debt, sure, and I am working toward that -- but it's not a driving force for me, I'm not especially motivated to cut my spending down to nothing and throw every cent I have at the debt. I want to enjoy my life while I'm living it, within reason. (I'm not going to take a trip around the world or buy expensive cars, jewels, etc., but I might buy a $12 ring (marked down from $60, of course) just because I like it.)

I've been thinking about that lately, and wondering why my attitude is what it is. Part of it is my overall personality -- I'm not especially motivated to do anything, and would rather curl up on the couch with a good book than do most other things. (Translation -- I'm lazy!) I do think there are a few factors that have contributed, or at least if they were different maybe my attitude toward debt would be different, too.

My Mom Is Frugal
That's putting it mildly. Smile She returns food she doesn't like, she will drive to four different stores to save 25 cents on a certain item at each, etc. Granted, she was divorced and raising two kids alone in her late 20s/early 30s, back when being divorced was unusual. (Her parents were nearby, and a great help to her, but still, I know it wasn't easy for her.) She had to pinch pennies to keep food on the table, especially since child support was unreliable. So my sister and I didn't always have the trendy toys or the Jordache jeans (I'm dating myself now!), because we just couldn't afford them. (Don't get me wrong -- we weren't living in poverty by any means. We had a nice home in a good neighborhood, I never really knew it was a struggle to put food on the table until I was much older, etc. Plenty of people had and have it far worse than we ever did; overall we were still very fortunate, I know.) As a result, I think as an adult I subconsciously rebel against any restrictions on my spending, because we were so restricted when I was young.

No One Taught Me About Budgeting
By the time I got to high school, they'd stopped offering personal finance classes at all, much less making them compulsory. This is probably one of the worst ideas ever. (I know my mom could have taught me -- she probably tried, but I was a typical teenager and no doubt thought she was just 'getting on my case'.) So off I went to college, with no real idea of how to manage money and lots and lots of companies wanting to give me credit cards. Is it any surprise I was in over my head in debt well before I graduated? (And I didn't have any student loans, so I don't even have that excuse!) We inherited/bought my grandparents' house after they died, along with all of their 'stuff', and as we were cleaning things out I found several of my grandmother's "household budgeting" notebooks. Just a steno pad, and her records of where their money went, but it was fascinating. Every transaction was written down (well, almost -- my grandpa got a weekly lunch allowance, and that was the only tracking of that amount), a running balance of all outstanding debts, weekly savings account updates, etc. It was a fascinating glimpse into their life back in the 40s, 50s, and 60s, and also illustrated a clear schism between what she was taught and what I was taught about personal finance.

I Don't Have A Clear Self-Image
I think one of the biggest issues is that in my head, I'm still in my mid-20s. I have lots of time to pay off my debts, save up for retirement, etc. The reality is that I'm quickly approaching my mid-40s, and that 'far off' retirement age is a whole heck of a lot closer! This is probably my punishment for not having children -- at the very least, they insist on aging, so I'd have that constant reminder that I was aging, too. (I do have a niece now, whom I see fairly often, so maybe she'll help!) This is one of the reasons I'm overweight, too, of course -- I was skinny in my mid-20s!

A shrink would probably come up with some other, deep-rooted reasons for my nonchalance about debt, no doubt stemming from my parents' divorce when I was 3 years old. (My grandmother used to think I had abandonment issues because I use to put 'leashes' on all my stuffed animals. I assume that was actually just because I wasn't allowed to have a real dog.) To me, though, there's a certain amount of sense in the reasons I've listed, even if they're not especially deep.

*Update* There was a comment to the original post about retirement planning as a potential motivation to get out of debt. It's a good observation -- I have done some retirement planners, including the detailed one we use at work (I work in the financial services industry, ironically). There's such a wide variety there, of course -- about a $1.5 million difference in what they estimate I'd need to retire, depending on the calculator. So in some cases I'm doing well, in others I'd have to work until I'm 77 or so! I do stand to inherit a decent amount at some point; I don't want to depend on that, of course, but at work we do always include inheritances in our retirement projections. I'm estimating it low, without accounting for long-term growth, and subtracting the money I owe against it (which ideally will be paid back well before then). With that, I'm in good shape, but again, I don't like to depend on it. So perhaps I'll work on a 'motivation board' for our retirement, and link it up to my debt-repayment plan. Thanks for the thought!

Planning Ahead

February 26th, 2014 at 11:56 am

Something I am doing right this year is planning ahead for expenses I know are coming throughout the year. The year it's a Federal tax bill, a new air conditioner at the rental house, and property taxes for both our home and the rental. (The property taxes are an annual thing, of course, but I've never really planned for them before, just hoped something would come along to cover them. Got burned on it a few times, too, and ended up borrowing the money to pay them (still paying that back, three years later -- stupid!), or once we paid them a couple of months late, because we knew we'd have a big commission check coming in; that cost about $400 in late fees, but still probably less than the interest on borrowing the money. Still, even paying $400 is stupid for an expense that I've known will come up at the same time every year for 15+ years.)

Anyway -- I've got the money set aside already to cover the tax bill. I just added $500 to the savings, so now the a/c is about 2/3 funded and I won't need to pay that out until I'm guessing June or so. (I don't know, maybe there's value in having it done in April or May? Lower prices, probably less busy? I only have one quote so I'll need to have a couple more people out there to bid on it regardless. I may also see if we can get one more year of recharging it, but apparently the type of freon it takes is hard to come by these days.) Taxes are due the end of August and end of September, so I have lots of time to save, do some side jobs, etc.

Right now I'm at about 52% of where I need to be. Comes out to about $700 a month I need to set aside. I'm get overtime at work for the next six weeks, so that gives me a good opportunity to sock some money away. (Though now are also, of course, our high heating bill months; I know I could go on the budget plan, but honestly it's better for us to pay the high bills during my overtime and the $20-30 bills the rest of the year. Our dryer is gas, too, so we always have some usage.)

I do have $1200 set aside in a separate account, which technically is intended for reimbursements I'll owe some folks, but around $100 at a time and spread out over the next two years or longer. (Half of those might not ever be paid out.) So until I get a few other things set up, I'm considering that as my "emergency fund", mostly so that I'm not as tempted to dip into it. Even if I had to deplete it, it wouldn't be too difficult to come up with $100 here and there for the reimbursements. I'm not really comfortable at having only $1200 as an emergency fund, and will be looking at ways to beef that up without affecting my debt payoff plan.

Overall, I'm pleased with my progress in 2014. Of course it's very early in the year, but this is the first time I've really done a complete assessment of my financial situation. It's not pretty, but I'm confident I can make significant progress in turning it around within a few years. I'm using an Excel spreadsheet to keep track of my progress (as well as to calculate the additional payment I'm making each month); I'll update the monthly balances (based on the card statements) probably over the weekend, but I'm usually pretty close. Unofficially, it looks liked I paid off $2,332 of non-real-estate-backed debt this month. I'll take it!

Trying to Get It Right

February 20th, 2014 at 02:58 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 09:24 am

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.)