The Best Laid Plans

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Who has time to do this blogging thing again? Certainly not me, it seems! Forgive me for the lack of updates over the past ___ months. A lot of life has happened since then.

LOOKING BACK

January 2014–We owed slightly north of $87,000, a little more than $39,000 of which was due to credit cards, a personal loan, and my student loan.

May 2014–The figures as of my previous post showed a total debt of just under $82,000, and the non-mortgage debt total was around $34,900. We had paid off a little more than $5000 total, 80% or more of which was our non-mortgage total.

July 2014–This was our low water mark for the year. As I’ll explain, life intervened after this. Our overall debt reached a new all-time low, at $79,259.36. Our non-mortgage debt was also an all-time low, at $32,557.17. Things were progressing very well!

ENTER NON-STANDARD APPLIANCES

One of our Christmas presents was money towards a new stovetop for our kitchen. As I mentioned in a previous post, we are trying to sell our house. One drawback to our kitchen is the fact that our double oven, stovetop, and range hood are ALL avocado green. This stylish throwback is apparently not in vogue among the home buying crowd, and we’ve had trouble with one of our burners running really hot and another running on the not-so-hot side. So, back in February we decided to replace our cooktop with one of those ceramic flat-top models. We went to Sears early in the year, took advantage of a great sale, and got the stovetop we thought we needed. We got such a great deal, we decided to go ahead and replace the double oven, too. What we did not realize in all our measuring and what-not was that NONE of our kitchen appliances are standard size. Not a single one. Our washer/dryer combo had to be the super-skinny type, of which they only sell one model. Our dishwasher had to be the super-skinny type, of which they only sell one model. So…we get home and measure our double oven (we hadn’t planned to replace it, so we didn’t measure ahead of time). The new one we had ordered was WAY too big to fit. I called to cancel that order, but we went ahead and took delivery on the stovetop. As the installers went to put it in, we discovered that the cooktop would not fit the hole that was cut out for it, and it could not be cut bigger due to the setup of our cabinets. So–we had to cancel that order. We missed out on the big sale, and my wife was rather disappointed. For our anniversary in mid-July, I decided to try and find the right size cooktop for her. I know they say never to buy major appliances for your wife on an anniversary, but trust me, she was very happy. I was slightly less happy, as we had missed out on the great sale earlier in the year, and because there was only ONE MODEL of cooktop in the size we needed. ONE! Not only was it not on sale, it was double the price of the standard-size models. It had to go on the credit card, but that was okay. We were doing really well, and though it would slow our debt progress by a month, we’d be all right.

WE’RE HAVING A BABY!

Towards the end of July, we found out our prayers were answered and my wife was pregnant with our second child! We were ecstatic, and my 4-year old daughter couldn’t wait to have a “little sister AND a little brother”. We quickly convinced her she only wanted one baby, which she agreed to, as long as it was a baby sister. Thankfully, the doctor found just one baby, and it did turn out to be a little girl. She is due at the end of March. I knew going into the year that if another child came along, it would have a major impact on our budget and plans, and it has. Doctor visits don’t come cheap, and we haven’t begun to pay for all the hospital stuff yet. Needless to say, our debt level begins to creep up again.

YEAR END RECAP

As of today, we owe a total of $80,241.68, and the non-mortgage level is $34,662.34. We were running a $6700 new balance on a credit card, so I had to do another 0% offer until August 2016 and redouble my efforts not to run a balance in the coming year. The good news is that we paid off close to $7000 from the beginning of the year to the end of the year. That didn’t meet our goal of $12,000, but it was still 3 and a half times more than we’ve ever paid off our debt in a single year. To put it in perspective, from September 2010 to January 2014, we had paid down around $6000 of our debt. In a single year, we topped that!

NEW YEAR, NEW CHALLENGES

2015 looks to drastically alter the look of our finances. A few days ago, I found out my car has a blown gasket or cracked head. Repair quotes came in around $1500, which is far more than the car is worth. Rather than throw more money into an already ailing car, we figured that it would be best to go ahead and let my car go, let me take over driving her ’00 Dodge Neon, and get her a new Nissan Altima. With another baby on the way, and with my car already having broken down going to two doctor’s appointments out of town, we thought it was time to have a reliable car in the family, one my wife could drive for the next 10-15 years. In November, I made the last $422 payment on one of our 0% card balances. I had planned to roll that into other debt payments, but instead, it will have to go on a car payment. Our goal for the year ahead is to pay off another $7000 of our existing debt, not keep any balances on our credit cards, and not add to our debt except for doctor’s bills and the car loan. In all likelihood, our debt repayment plan will balloon from 3 years to 6 years, or perhaps even 9. However, we remain committed to the final goal of debt freedom, and we will continue to track our progress and report back here every week…or month…or 6 months…or year!

I Want to be the Lord of the Flies

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What was to be a weekly blog has turned into the sort of sporadic thing I figured it would be.  March, April, and May were full of work and other activities that took my mind away from the world of personal finance.  I did a horrible job in keeping track of what we spent in April and May, only getting it down in the spreadsheet a week or so after the month ended.  I’m trying to do better this month.  Fortunately in all the hubbub, I didn’t miss any bill payments, and the debt totals continued to head down.  This post was to be about couponing and the ridiculously low-priced tank of gas I got at the end of March, but I feel a general update is warranted here.  I’ll talk about couponing next time–you know, 4 months from now!

I am a couple of days away from updating our debt totals through early June, but as far as the months of April and May went, we were able to reduce our total debt by another nearly $2700.  We are at a new all-time low debt total–$81,969.64, with the promise of going below $80,000 by July 10th!

The non-mortgage debt total is the amount we are aggressively attacking, hopefully to be rid of in another 2 and a half years.  That stands close to an all-time low–$34,904.65.  We have axed $2336 off that since March.  We look forward to the time when we no longer spend $1875 a month towards debt, but until then, we continue down the path towards defeating the debt tsetse and becoming the lord of the flies!

This Week, I Played With Legos

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This week, I played with Legos. I’ve been toying around (pun absolutely intended) with the idea of a visual representation of our debt, ever since I ran across it in someone else’s blog (http://sixfiguresfiveyears.wordpress.com/).  That person started out using a paper chain as a visualization.  My wife kiddingly suggested that I buy flyswatters and put them on the wall, in keeping with my debt metaphor.  Not wanting to be stuck with 87 (or 8700!) flyswatters, I decided to build my own, with Legos.

I don’t have an artistic bone in my body, and my architectural skills (even with Legos) are sorely lacking, as well.  What emerged was Picasso’s interpretation in Legos of a flyswatter.  I worked hard to get holes in the upper part.  However ugly and unlike a fly swatter that it ended up, it works.

Each dot on the Lego represents $20 of our non-mortgage debt—this is the debt we hope to be rid of by December 2016, if all goes well.  Every time we pay down a credit card, personal loan, or student loan, we get to remove the appropriate amount of Lego dots.  Surely there’s a technical term for that—on dice, they would be “pips”…not sure what they are in Legos.  In any event, this tall Lego sculpture will be reduced to a pile of individual bricks once more after the debt is paid off, or as soon as my wife gets tired of having it out, or once my daughter discovers that Legos are really fun to play with.

I took pictures of it along the way, first representing our non-mortgage debt as of January 10th, 2014, a total of $39,132.89.

This "flyswatter" represent our non-mortgage debt, to the tune of more than $39,000.

This “flyswatter” represents our non-mortgage debt, to the tune of more than $39,000.

I then removed 46 “dots” from the sculpture (the ones you see on the floor in front of my “flyswatter”), because we paid off $932.28 as of February 10th, 2014.  That left a total of $38,200.61.

46 "dots" removed after paying our non-mortgage debt down by more than $900.

46 “dots” removed after paying our non-mortgage debt down by more than $900.

I then removed 53 more dots, as another $1056.93 came off.  Our total stands at $37,143.68 as of March 10th, 2014.

53 more "dots" gone from the flyswatter sculpture--paid down more than $1000 over the past month!

53 more “dots” gone from the flyswatter sculpture–paid down more than $1000 over the past month!

This is very encouraging.  In 2 months, we have reduced our overall debt level to an all-time low of $84,666.49.  We have paid down $2346.29 of our debt in that short period of time.  The journey is long, and we are in the opening miles of it, but seeing these figures consistently going down is exciting.  We have three things to look forward to at the end of this 3-year process:

1)      Being completely debt-free except for the mortgage

2)      Rewarding ourselves with a cruise when this part of the debt is paid off

3)      Having sufficiently solid financial footing to replace our aging vehicles with a new Nissan Altima for my wife and a pre-owned something-or-other for me.  (I have no particular loyalty or desire when it comes to cars, much like clothes.  Another similarity—I’ll wear things from my wardrobe until they fall apart, the same way that I’ll drive a car until it dies.)

Coming next time:  Beginning my couponing adventure, and getting a ridiculously cheap tank of gas.

Mosquito netting and bug spray–Our plan for getting out of debt

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It’s been three weeks since the last post–a combination of work, a snow storm, Valentine’s and my daughter’s 4th birthday all conspired to keep me away.  In the meantime, our family has been sticking to the plan–our 5-to-10-year path out of debt.  I do a lot of reading, so the basics of the plan are not unique to me, though its application may is.  I’m enough of a nonconformist that to fully obey a single financial guru’s advice does not appeal to me–there’s a certain independent streak that makes me want to do some things on my own.

To understand the plan, we have to understand where we have been, and how far we have come already.  I’ve been tracking my own finances and debt levels for a number of years, but only since late 2010 did I think to track my wife’s and my debt TOGETHER.  That’s a concept–joint finances!  It wasn’t because we weren’t working together or hadn’t already pooled our finances.  I just brought more personal debt to the marriage, so I was largely focused on tracking that at the start.

In any event, I started tracking OUR debt in September of 2010.  At that point, we owed $93,106.61, including mortgage, student loans, and credit card debt.  Nearly 60.4% of that total was due to the mortgage.  The non-mortgage debt level stood at $36,885.73.

Fast forward nearly 3-1/2 years, and our total debt dropped to $87,012.78 to start the year.  However, the house now represented only 55% of our total debt, meaning the non-mortgage debt had risen to $39,132.89.  The only reductions to our debt total were because we were paying down the mortgage.  That’s not the situation we really wanted to be in–we wanted to see both totals dropping.

Enter:  The Plan. 

If debt is akin to a disease-carrying fly, this would serve as our mosquito netting, insecticide, and high-powered medication to fight off and thwart further infection.

The Mosquito Net

We put step one in place early last year.  We realized we weren’t making any progress paying $1200 to the credit card companies and still seeing the debt totals creep upward, so we pursued and obtained a personal loan consolidating close to $30,000 of our debt.  This would ensure that over 5 years, we would pay off that amount of debt, and it would cut our debt payments in half.  However, that left the problem of an additional $3600 in credit card debt, and we once again found ourselves with our debt level climbing.  That’s when we added…

The Insecticide

Late in 2013, we utilized one of my favorite tactics, the 0% balance transfer offer.  For a 3% fee, much lower than the 8-29% interest we were paying on the individual cards, we were able to put nearly $4500 on a 0% offer through May 2015.  By not using that card anymore, that became another big chunk of debt that would be paid off inside a year and a half.  However, three months of expenses and Christmas soon came, and we saw our debt total rise again.  That was when we knew we had a problem, and so we instituted…

The High-Powered Medication

Once again, I had to put around $4500 on a 0% transfer offer through November 2014.  This finally got the rest of our balances to 0.  This was key to the plan, because our first round of antibiotics, if you will, is to keep 0 balances on all credit cards in use.  Using them is okay, but by the end of the month, whatever is on them has to be paid off.  How do we know that we have enough money to pay them off?

Enter round 2 of the antibiotics–the budget.  We had never sat down and mapped out spending limits for the year, and quite honestly, we don’t really have a clue how much in each category we have spent in the past.  Because of that, w.e looked at our income, looked at the locked-in monthly expenses, and then tried to divvy up what was left over among the categories of our living expenses.  Included in the budget was enough money toward our 0% credit cards to get them paid off by December.  We also upped our monthly savings and our monthly giving, priorities we share.  The budget for this year is less geared towards harsh spending limits and more to understanding where our money is going and keeping us aware of the need to try to spend less.

Now the plan is in place, and as with all plans, it is subject to the rigors of reality.

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We really have no idea what this year might hold.  There is a small possibility we could move to a bigger house this year, and there is a better possibility we could add to our family this year.  We will navigate whatever changes come to our reality knowing that we have a plan in place, and if we have to tweak it, we will.

Feast of the Debt Tsetse: Or How Marriage and Costco Affected Our Bottom Line

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(continued from last week)

…Then, I met the woman who would become my wife.  It was intrigue at first sight, and following 8 months of confusion where we were dating but weren’t, I finally asked her out “for real”.  In my rudimentary budget of the previous year, I had not accounted for acts of God, such as finally finding the woman I’d been praying about for the past 5 years.  I considered that somewhat laughable, given that I didn’t know anyone in town and was not much of a social butterfly (ask her–it took her at least 3 full play practices before I would say anything to her that wasn’t in the script)!  Fast forwarding, love grew, we got married, combined finances, and then suddenly we had my debt and her debt.  We both had pretty big student loans, and she carried a balance on one credit card.  I considered her a bit of a lightweight–I carried three, and I continually shifted the balances around to whoever had a 0% balance transfer offer at the time.  “THIS time,” I would say, “I’ll stick to it and pay these things off.”  Well, life happened, and plans were hatched and then set aside.  We would pay things off, only to have unexpected medical expenses or car expenses or something else wipe out the progress we had made.  Then, Costco opened.   Again, I’m nothing if not a sucker for a great deal, and a great deal in bulk is the pinnacle.  Costco is second only to Barnes & Noble in my hierarchy of favorite places to shop.  I added a 4th credit card, because they only accept debit or American Express, and I was never fond of the debit card.  I still am not, to be honest.  I blame Clark Howard for that.  Anyway, I repeated the old excuse–“We’ll pay this off every month, and it won’t add to the burden.”   To be honest, we’ve done best with the American Express card–partly because they would only give me a $1000 limit at first, so we couldn’t get too high of a balance on it.  And, since we only use it for trips to Costco, which come, at most, once a month…usually once every two months, it is the least used.

That brings us close to the present day.  There have been bright spots–Katie’s student loans were forgiven, since she is a teacher in a high-need area.  Since I’ve kept track of our totals, we’ve managed to pay down $6000 over nearly 3-1/2 years.  However, pretty much all of that is due to mortgage and student loan payments.  Our other debts have increased over that time.  So…it has been resolved by both of us that this is the year to begin doing something about it.  Next week, I’ll outline our particular plan of attack.

Once Bitten, Twice Fly

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Happy Friday! I couldn’t resist the pun, despite it turning the title into nonsense. Last week, I introduced the metaphor of the tsetse fly as debt. Today is a look into how I encouraged that fly to land on me and take a bite.

**It was a dark and stormy night…I had just been approved by the credit card company to own my first card. It’s always good for the self esteem to be approved by anyone, even if it is a heartless financial institution. The lure? Points towards gift certificates at my favorite Christian bookstore. “It won’t be a problem,” I told myself, as lightning flashed and thunder, as is its way, followed. I grew up listening to Larry Burkett’s show on handling money, and I had begun listening to Clark Howard, so I knew the dangers and pitfalls that credit cards can present. “As long as I pay the balance off in full each month, all will be well,” I reassured myself, as rivulets of rain descended on my window. And all was well, until the time for college was over and I began the process of landing a full-time job in radio. Soon enough, I had found my job, but it would necessitate moving an hour and a half from home and furnishing whatever space I found in which to live. Fortunately, there was a furniture store going out of business in my hometown, and I was able to buy enough furniture to furnish my rental house for about $1200. The deals were too good to pass up. *lightning crash, thunder roll* I didn’t have the money THEN, but I’d just landed a full-time job, and I’d be able to pay it off in short order. We rent the U-Haul, some good friends help me move things into the house, and life is good. I look around–hmmm…no washer and dryer. No lawn mower. I should probably buy one of those, because I’m new to this town and don’t want to be found chopped up in pieces at the Laundromat and stuffed into a clothes dryer because I accidentally said the wrong thing to a drug kingpin or vacuum cleaner salesman. So…off to purchase a subscription to Consumer Reports to research the best washers and dryers and lawnmowers (no travel was actually involved–I owned a computer, after all!) Then, after my research, off to the store’s website to buy the model that was recommended (still using the credit card–it’s safer for online purchases and I’m still getting points for free books!) Before long, I was staring at a balance around $5000, but I still wasn’t worried, because my job appeared secure and I would pay it all off in short order. *lightning, thunder, rain, pea-sized hail* When I landed the job, I thought I had been pretty savvy in my salary negotiations, factoring in everything I thought would happen, as well as extra for debt payment. However, then, as now, I wasn’t very good at organization, and I certainly wasn’t that great at keeping track of where I was spending money. My taste for DVDs and books and my fondness for a great deal all contributed to a comfortable lifestyle, one I was loathe to sacrifice. I knew I needed to pay everything off, but as long as I wasn’t missing any payments, everything was okay. *tropical storm warning* Then, I met the woman who would become my wife***.

TO BE CONTINUED

**Certain elements of the story have been changed to add weather-related drama and to compensate for a poor memory, because I don’t actually remember when I got my first credit card, nor if I was carrying a balance prior to getting ready to move. I most assuredly was afterwards!

***She has made my life infinitely better in so many ways, so despite the abrupt ending, don’t read into it that the aforementioned tropical storm warning will be upgraded in next week’s post. Besides, she has forbidden me to go into any of her spending habits!

Debt…monkey? Debt…albatross? Ahh…Debt tsetse.

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The tsetse fly isn’t the most elegant metaphor for debt you’ll find out there. The idea of the “monkey on the back” seems apt, as does Coleridge’s albatross around the neck. However, debt isn’t quite so poetic. The tsetse fly bites its victims and lives on the blood it consumes. It gets infected when eating from its victims and then passes those infections on to others, including humans. Sleeping sickness, as this infection is known in humans, is fatal unless treated. Here goes my attempt at tortured metaphor. Debt sneaks into our lives, buzzing around like an annoying fly. We don’t think much of it at first; in fact, we may regard it as necessary in order to get an education, get a house, get a car, etc. Before you know it, though, this annoying debt fly has bitten us, and we are thousands, or tens of thousands, in debt. Ouch! It’s okay though, we think. Once we get a steady job, or a raise, or whatever we tell ourselves will be the magic solution… Then that happens, or doesn’t…and suddenly this mildly annoying debt fly bite is spreading its infection. The debt is growing, its impact is growing, and suddenly we look around and realize we need help or our financial lives will die. There we have it…the debt tsetse, or debTsetse for short.
My hope here is to chronicle my family’s journey out of debt, perhaps offer hope or useless advice to the three people who stumble upon this site looking for another lolcat, and/or earn large sums of money from an unknown benefactor, perhaps the dying widow of a former military leader from Nigeria.
Buzz, buzz, buzz, swat!