Can you tell it’s June?

January started this blog off hot with timely posts and weekly updates on how things are going, how the budget is working, “it’s hard but we’ll get there”, la la la, tra la laaaaaa!

Well, it’s mid-year now and you can tell by the cobwebs scattered all over this place, don’t you think? It’s time to get more focused and I’m not just talking about blogging!

The budget this month isn’t going all that well. And I have to point at myself and say it’s all my fault. I have been buying things that aren’t in the budget. There! I said it! It is ALL MY FAULT.

Now, time for the excuses!! (New! Improved, Excuses!)

It’s hard sticking to a budget! Whine, whimper moan! We wanted/needed (ok, more on the wanted side) some new pool toys once summer hit hard, both kids needed new shoes for the summer. Did I need to buy 2 pairs of sandals for my daughter? No, no, probably not. However, I’m not going to feel guilty - You wouldn’t either if you’ve had to hunt all over the house for that ONE pair of sandals, wishing that there was another pair to use as a backup!

Of course, now I just hunt all over the house for both pairs instead of one. Ahem.

Another over budget item — my own personal fun money. I was futzing around with the new Quicken 2008 (another purchase that was not budgeted for) and neglected to keep close tabs on my own ‘fun money’ category and damn it all if i’m not over by like $40. It was that night out with girlfriends. Drinks, movie, popcorn, more drinks after — it really added up, and I didn’t even notice.

Other overspent categories:

Gifts: Should have allotted more for Father’s day and various birthday parties the kids get invited to.

Dining out: We’ve done more fast food than we should, add that to more spent at dinner for Father day.. doh.

Kid’s activities: This one just creeps up on you. I tend to lump all kid stuff in here, so the DVD of the kids at their closing program was in here, as well as the swimming lessons, as well as the sunscreen fee at the kid’s school… some things we can budget for (swimming lessons) but other things just crop up unexpectedly.

GAS: Uhh… HELLO! Gas prices are insane. I budgeted a LOT for gas this month, and technically we haven’t overspent this category yet, but I’m not sure we’re going to make it. I think in January, I budgeted $400 for gas. In May, we spent closer to $600. In June, we’re shooting towards $700, easy. YEOUCH. I want a hybrid.

Even with the overspending, we’re having a fantastic month debt-wise.

We’ve had a lot of reimbursements from our FSAs (and I earmark all FSA money to go toward debt).

I got paid for a freelance gig I had in april-may.

We received our tax stimulus check.

However, with the overspending, I’ve been kind of wary of just paying the minimums and letting the extra sit in our HY checking, earning interest, waiting for the day our 0% interest rates run out to pay everything. It’s too EASY to just fiddle our budget around, take some AWAY from the debt category and put some INTO the overspent categories to make it all nice and neat, to the detriment of our debt paydown!!

I had this uneasiness right from the beginning of June, probably because July was so crazy with the spending (even thought it was budgeted for). So, because of the butterflies in my stomach, and my DETERMINATION that we don’t steal from peter to pay paul … When money came in, I deposited it, and then promptly made a credit card payment for the same amount. If the money is GONE, you can’t borrow from it, right?

I think I am feeling a little less uneasy now. The thought of the stimulus check sitting in our checking earning interest doesn’t give me butterflies anymore, so I will probably let it sit there instead of rushing it off to the debt paydown plan. However, I reserve the right to rush it off to the nearest credit card debt if the butterflies start to form again.

So, even though I didn’t let some of the debt money sit around earning interest, we have a good bit of our income sitting there, as we now use our amex blue cash card for everything. Last month we earned about $15 in interest, and we didn’t fund the account until mid month, so we should at least break $20 at the end of June.

Well, that’s a long update - long in words, and long overdue. Time to get the motivation back and keep at it! Blogging, budgeting, EVERYTHING!

As always… please comment! It makes me feel like I’m not talking to an empty room. *Tap tap tap* Hello? Anyone out there?

-99k

GOAL ACHIEVED: NO MORE CREDIT CARD INTEREST

So when we last left our heroine, there was much dithering and swooning over whether or not to stick the heft of the credit card payments into high yield savings while only paying the minimums on the cards themselves. Then the point quickly became moot, since our heroine noticed a hefty non-capped 3% balance transfer fee, and the whole idea was dropped.

(Let’s just drop the third person now, shall we, because I SO can’t carry that off through the whole post.) When I noticed the fee, I went scouring the internet for any 0% no fee balance transfer offers, and came up with a ONE very lonely offer. Every other offer either had the $75 min BT fee, or was not for 12 months - it’s amazing really, as I can remember when we were shredding tons of these offers not so long ago. So after some scouring, I found the Citi Professional card with 0% and no fees for the first 12 months. I went ahead and applied, and promptly forgot about it until I received my shiny new card in the mail with a limit of $15,000 about a week ago.

I promptly put in a balance transfer for our remaining usaa mastercard, and am currently waiting for that to go through (any day now).

When it does, all our credit card debt will be at 0%. Here’s the breakdown, in order of which 0% rate expires first:

citi home rebate mc: $7,278
rate adjusts 12/08

discover: $6,355
rate adjusts 3/09

citi professional mc: 13,230
rate adjusts 4/09

We will be able to pay off each one of these cards before they adjust. I’m very excited to not be paying any more credit card interest!

A few remaining questions we’re going to readdress sometime:

Should we start closing cards as they are paid off?

We have 2 cards that are at a 0 balance now, USAA mastercard, and Citibank American Express. We are not going to close our USAA mc, as it has always been our primary card, has the highest credit limit, and has the longest history. The AMEX however, was opened one year ago? two years ago? (I can’t remember, I probably should check) and I don’t really see us using it ever again. For now, we’re leaving it open, as apart from the usaa card, it’s the card with the next longest history. We don’t even have cards to it, so there’s no danger of a balance running up. The other cards we have open (citi home rebate, citi professional, discover) have even shorter histories and are also questionable on whether we should keep them open or not.

I’m not sure we should even worry about hurting our FICO score. The fact is, we just refinanced our home in February and are not planning on moving for some time, we purchased my husband’s car last year and my car won’t need replacing for a few more years at least (knock on wood) - and when we do replace it, hopefully we will save up and do it with cash. I don’t see any future loans happening in our future, and if that’s the case, who cares if our credit score goes down a bit? As we pay down more cards, then the debt to credit limit ratio would get better and better, even if we hack the total credit limit down by closing a card or two.

All good points to deliberate on.. guess we will see.

Should we go back to the “sock the extra debt money into HY savings” plan?

I am thinking yes. But I have no problem letting things settle down first. We’re smack dab in the middle of birthday season (just our household, 2 over and 2 more to go) and we started the kids’ sports season (evening practices, saturday games) which means I don’t have as much time to loll around in the evenings poring over spreadsheets. I’m content to let the balance transfer go through and revisit this then.

And finally, should we start using our rewards card?

RL has piqued my interest in her comments about their month-to-month spending using a HY checking, putting expenses on a good rewards credit card during the month so the checking balance builds up and earns interest, and then of course paying it off in full each month.

We’ve already decided to start using our USAA rewards card (pretty much 1% cash back) but the HY checking account idea sounds good as well. (Charles Schwab offers a good one, although it’s down to 2.26% interest now.) Not sure we’re ready to change checking accounts, but it is on the table for discussion.

Well that’s it for now.

Any comments on the move and new design would be welcome!
(Yes, I’m vain and am wondering if anyone is out there.)

-99k

Hello all, and welcome to the new location. I was getting tired of the limitations of the free blog on the YNAB site, and decided to dive in and register a real domain. Somehow, it makes it all seem more real, don’t you think?

So, let’s get right to the March numbers, shall we? March was a very good month for us!

JUST THE CREDIT CARDS, PLEASE:

In March:
we paid $3,680 on our cards,
$145 was charged in finance charges,

for a total of $3,535 debt paydown.

Our new credit card debt total is $26,818.

(WOO TO THE HOO!)

THE ENTIRE PICTURE:

* Includes a $75 balance transfer fee.

For a month by month picture of our progress, see the Monthly Totals page.

We are now at a total of $92.4K. Next month, we should just stick our noses under the 80k mark.

Feelin’ pretty good over here!

-99k

Thank you for the comments on the last couple posts.

We were all set to go forward with our plan, when I noticed something (thank goodness). The offer on the citibank mc had NO CAP on the balance transfer fee. So if we had gone ahead and transfered $15k, the fee would have been $450. NO THANK YOU. We called, and the best they could offer was to credit our account half the fee, after the transfer had gone through. I don’t want to do it at $225, either, so this is a no go. We have already transfered a chunk of our debt to a 0% discover card, and we’re calling that good for now. We may look into this further in the future. So for now, we will continue paying straight onto our last card not at 0%, which is our usaa mc at about ~10%, for 13k (put the bonus money onto it already).

The numbers are looking VERY good for march, I’m happy to say. I am still waiting for our usaa mc statement so I can see the interest charges for it and finalize my spreadsheet for March. I’m so excited that we paid $3,830 toward credit card debt in March - yeah to the hoo to the yeah-hoo-hoo!

You see before you… (well, you’re reading on your screen, at least..) a lady most informed on the calculations of interest. You’d think that this would be easy to find, but Google wanted to point me to lots of calculators that would do it for me (but only based on a year) but nothing that would tell me HOW to figure it out myself.. But I finally found this very easy to read and understand tutorial of sorts. I highly recommend it.

So using my newfound knowledge, I set to work. I decided to run numbers just based on the 16k balance that will be on our citi amex card, which the 0% rate expires in October. The goal is to get it paid off by October. However, the balance won’t be 16k in April, it will be $13,250k, due to a big payment courtesy of my husband’s bonus.

Behold, the “just pay it down already!” scenario A:

So you know where those bigger numbers are coming from, $1300 is going to come from the regular debt snowball.

We will be receiving $1k back from our state taxes, and my husband gets an extra paycheck in april, so April’s numbers are 1300 + 1000+ 1800 = $4100.

In May, we’re expecting the tax stimulus check: 1300 + 1600 = $2900.

The rest of the months are “normal”.


Next, scenario B, let’s call it the, “Stuff it into savings instead” scenario:

Obviously, we will need to pay the minimum on the card, which I am going to say is $250. Now that I think about it, that’s probably high, but oh well. You can see the running balance for the card on the right, in yellow.

On the left in green, you can see the savings account. Each month, the month that would have gone to debt (minus $250), is instead put into savings. The bright green column is the interest earned for that month, with a tally of all the interest earned at the very bottom of that column ($189). The middle column is the running balance, adding the deposit as well as the interest from the previous month.

So when October comes, instead of making a deposit into the savings account, there will instead be a withdrawal of $10,700, and then that money, paired with the same $1050 debt payment we see in scenario A, is enough to pay off the amex balance in it’s entirety.

And the result? Instead of the 2k we started out with, we have $2189 - $189 in interest. Which we could then use to pay off our other debt.

THE RESULTS:
I’m nervous about my numbers. I calculated the interest using this formula:

.035 (our interest rate) x balance x 31/365 (a month’s worth of a year’s interest)

So if you take the initial $2000, it works out like this:

.035 x 2000 x .0849 = 5.94, or as my google doc spreadsheet rounded it off, $6.

If anyone wants to check and/or correct me, feel free (all THREE of my readers, haha!)

If the numbers are somewhat accurate… I am a little surprised. A benefit of almost $200 bucks in only 7 months is nothing to sniff at, in my opinion. This is looking like a decent scenario! Which makes me think I must have screwed something up somewhere! If I am … in the ballpark of accurate, then perhaps we shouldn’t even put the $2.5K from the bonus towards the debt this month - I could stuff it back into savings and transfer over a 16k balance to the 0% card instead of 13ishk and reap even better interest benefits.

This is definitely something to mull over. I’d welcome any thoughts and comments.

Look at me, I’m a blog-posting poster person. Two in one day!

So, when I was persuing the whole “I don’t wanna pay interest!” thing, another idea kind of poked it’s way into my mind that I shoved onto the back burner, at least until all the balance shuffling has stopped. I brought it up my husband, who agreed to do it, and then I immediately changed my mind and said we shouldn’t do it. I am nothing if not fickle. So here I am, writing it all out to you people, because you know, the internet always gives good advice!

RL (who comments here now and then, hi RL!) sent in her debt situation to Free Money Finance, who posted it on the blog and asked his readers for suggestions. There were a lot of suggestions- A LOT! It’s kind of interesting to see how many different possible scenarios there are for a situation! It was one of the many suggestions for her that has been tinkering around in my noggin. (I posted my thoughts over there too, just FYI.)

Here is the specific comment that has been “festering“, but so you don’t have to clicking around, the jist of it is, put the debt snowball into a high interest savings account while only paying the minimums on the (0%) cards. So the cards are staying current, but the balances are not going down drastically. Instead, the money that WOULD be going to the cards is sitting and earning interest month after month, and then whisked out before the 0% rate expires on the card and is used to pay it off.

In theory, it seems like a good plan. If debt A, B & C is at 0% interest, why not take the money you would be paying on them and earn 4% (although our etrade is now down to 3.5%, grr) and then lump sum it at the end of the 0% period?

Now, first off… I have only a very general idea of how savings interest is calculated. I understand the basics of daily compound interest and the whole average daily balance business, but I am not sure if my simple understanding really allows me to work through the numbers in an accurate fashion.

Secondly, the payoff dates we’re talking here is not far away. $16k will be due in Oct, and it’s not like we have 16k just sitting around now, that could earn interest the entire time.

And third, there is the feeling you get when you see that balance go down down down each month. This is outside of the numbers and not really quantifiable, it just feels AWESOME. The equation I would have to work in my head is whether X amount in interest earned is really worth giving up that feeling of watching the debt go down. I am pretty geeky with my spreadsheets and looking to cut out paying interest finance charges and getting the numbers to work in the best possible manner… but I’m not sure I’m geeky enough to give up that “YES!” feeling when I make a payment. Especially if we’re talking piddly numbers here.

But you never know until you work the numbers, so, I’m going to have a go at it, and lordie lordie help me because I know this will probably be screwed up big-time!

Tomorrow: the number crunching results.

JUST THE CREDIT CARDS, PLEASE

At the beginning of February, we had $31,511 in credit card debt.

In February:

we paid $1,267 on our cards,
$139 was charged in finance charges
for a total of $1,084 debt paydown.

Our new credit card debt total is $30,428.

THE ENTIRE PICTURE

We are now at a total of $96.4K.

I posted my January update, but only dealt with the credit cards. We are, of course, making our usual payments to car loan, and home equity loan as well.. so this blog is about the 99k of debt - let’s get a full update on the $99k of debt, shall we?

Beginning the year, we had $32,456 in credit card debt.

In January:

we paid $1,204 total on our cards*
$258 were charged to us via finance charges
for a total of $945 debt paydown.

and now our credit card debt total is $31,511.

* $450 of this total was redeeming our cc points for cash back and just having them put it as a credit on the card.

Just a note, this total amount paid is a lowish number. We are refinancing our ARM in February, and we saved $1500 in January to go toward refi closing costs (which we’re also doing again in February, for $3k to take to closing).

It does make me excited to think that we managed to sock away $1500, AND throw $754 (not counting the “free” $450 from the points) at debt last month. That’s $2254 total! After we get our savings established, as well as a buffer, (and some tires for my husband’s car, which are sucking the life out of our budget) we can probably throw a good chunk at this each month.

I am apprehensive that we miscalculated on our withholding last year and will get hit with a tax bill come April. At the very least, if we DO have a bill to pay in april, it’s good to know that we can handle it and it won’t become more debt. What it means for out debt repayment plan, I guess we’ll have to see.

And lastly — is anyone out there reading this? Just wondering…

I’m all ready to post some January totals, but a-duh.. it might be useful if I posted what the 97k in debt actually looks like. So here goes:

We have 3 credit cards, one of which I recently opened for it’s 0% percentage balance transfer qualities. Here are the January totals:

12% citi amex $7,408
11% usaa mc $17,548
0% citi mc $7500
TOTAL: $32,456
Next up:

car loan: $19,945
home eq: $47,042

total debt: $99,443

(I just realized I need to rename the blog!)

So, the first step is our credit card debt. I am going to attack each debt according to interest rate, and thanks to an annual bonus my husband gets each year, I think we can get all credit cards paid off in a little over a year, March 2009. At that point, I’ll throw all the money that was going towards credit debt to the car loan, and then when it’s paid off, we’ll hit the home equity loan.

I realize we are going to have to be very aggressive to get all this paid off by December 2010, but I think we can do it. Next up - January update.