I have made a (google docs) spreadsheet which kind of “counts down” the progress I’ve made (err, WILL be making) on our debt. This one above is just for our credit card debt. You can see that I gave a few columns for each credit card, 1 column for the payments, another column for the running balance kind of like a register, and then added a third column to show the actual interest for past months. For months that have already been completed, I put those numbers in bold.

I’ve already found that my method of calculating the interest in the running balance column leaves something to be desired, but it wasn’t too far off, so I am not worrying about it. (I did the calculation like this: (Previous Balance - payment) * 1.012 = new month’s end balance. Then, when the month actually is over and the statement comes, I fill in with the actual new balance and actual finance charge.

(I am WAY far off calculating the interest on our home ec loan, but as it calculates the balance a little HIGHER than it actually is at the end of the month, I feel pretty good putting in the groovy lower number each month, so that’s ok too. Amortization, how you boggle me…)

I find myself checking this spreadsheet out all the time, making little tweaks here and there. Initially we decided that we could throw $1000/ month toward debt, so I populated the spreadsheet with that in mind. The “total paid” column just calculates what the total payments were for the month, which helps me out in the figgerin’. I can glance at it and see if the total monthly figure is what it should be or if i put in too many 0s or something.

Then I got to thinking that we should be getting a FSA dependent care reimbursement each month to the tune of $421 a month. This is kind of “outside” money, as it doesn’t come in from paychecks, so I decided we could throw all that at the debt too, thus our monthly total payment will be $1421.

And the tweaking continues! My husband gets paid every two weeks which results in 26 paychecks a year instead of 24. Realizing that, I decided that the months that he gets 3 paychecks instead of 2, we would just stick that “extra” paycheck toward the debt - thus you can see that for May and Oct the total payments include an extra $1700.

Then I also realized that because there are 26 paychecks for him and he’s doing the FSA plan through his work, the original $421 FSA number is wrong, it’s actually $385 with 2 months (may and oct) being 577. I decided we can try to cough up the extra $36 each month anyway.

I have a master spreadsheet that includes not only the credit cards but the car loan and the home equity loan as well, and what with all my tweaking and fiddling and trying to think up ways to “find” some money, my spreadsheet says that we could be COMPLETELY out of this mess by JULY 2010 — a good 5 months earlier than my original December 2010 estimate/goal.

Now, I know that things can happen, and is actually likely TO happen… But I am feeling pretty good about the original goal of debt-free by 2011 - especially with a 5 month cushion!

I heart spreadsheets. I really do. I could take them home and snuggle them all night long.

Ahem.

We closed on our refinance on Friday evening. We had a 5/1 ARM at 4.75 that was due to adjust next february. We’re not going anywhere for the foreseeable future, so I know that getting into a 30 yr fixed was the right thing to do, but I still can’t shake the “did we do the right thing?” feeling. Plus, just the stress of getting it all DONE - sending paperwork to the credit union, calling and checking up on things, fax this, fax that.. I was wigging out! It’s done now. Yay!

We should be getting around $1600 back from escrow on the old mortgage. I am going to enter it as supplemental income, and then when the last paycheck of the month comes in, I will be entering that one as “primary”, which kind of makes us 1/4 on the way to Rule #1. It’s tempting to NOT do this, and just plug it into the debt, but I know that operating under rule #1 will be a big benefit to our family.

I scheduled only minimums to our credit cards this month, due to the closing and saving up for closing costs, however, I also put in a reimbursement claim for our dependent care FSA, which I decided early on in this “let’s get rid of all this debt” journey, that all FSA checks would go toward debt.

So $384 got sent to citibank. Nice :) Makes that escrow check not going toward debt a smidge better.

Can’t wait for bonus time. - after that, I should be able to enter 1 or 2 more paychecks as “primary” instead of “supplemental”.

Once again…. Just wondering if I’m talking in the dark here.. or if anyone is reading this?

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?

Obviously, our long term goal is to pay off all debt aside from our mortgage.

I’ve already broken this down in terms of what debt gets paid off first. I am aiming to get all credit card debt paid off by next March.

However, before I go whole hog on the debt snowball, we need to get some savings in place first. Because both my husband and I work, and because our monthly expenses are fairly high, I want to get $2000 set away in a savings account for emergencies. That’s high priority.

Secondly, I want to get a buffer in place so we can use YNAB’s rule #1. Between the two of us, we bring in around $7500 a month. This is not equal to our expenses, so I know we wouldn’t need that full amount as a buffer.. Also, I don’t mind building up to that gradually. Already there is cash building in our checking account due to budgeting money in categories for yearly expenses money that is earmarked, but won’t be spent for several months.

And this is a very short term goal, but as I’ve mentioned previously, we are refinancing our 1st mortgage to a 30 fixed (currently, it’s a 5/1 arm and would adjust next year. With interest rates as low as they’ve been, we decided to go for it now) I am socking money away to bring to our closing, which actually, is happening on Friday (barring anything disastrous happening). I put $1500 away last month, and have earmarked another $1500 in February’s budget so we will be bringing $3k to closing. Other closing costs and prepaids will be rolled into the mortgage. (BTW, how antsy am I to get that final closing cost sheet? Answer: VERY ANTSY.)

So, my short term goals:

-$3k to take to closing (which is this friday, so this one is about to come fruition)
-$2k in emergency savings
-build up a buffer

My husband gets a bonus at the end of February/beginning of March every year, and lucky for us, it’s a good chunk of change! In the past, we have used it on things we want. This year, we’ve decided we want to be out of debt more than we want more “stuff”. HOWEVER.. we did decide that we would take $1,000 (total, not each of us) and blow it on fun stuff. I am going to get a flash for my camera (about $250), and he is going to get a PS3 (I think around $400, but honestly, I have no idea). I am hoping that a few hundred left over we can put toward car tires, but we will see.

We have decided that the rest of the bonus will be divied up as follows:

$2000 will go to savings,
$2000 will go toward building a buffer,
the rest will go toward debt.

I am especially glad that we haven’t put a number on the amount going to debt, because then if the bonus comes in at MORE than we thought it would, we would be tempted to lump the “extra” into the fun money. I have tentatively planned on $8,000 going toward debt, as $12,000 is around what last year’s bonus came out to. Again, if there is more, a few hundred going toward car tires would not be amiss with me!

So the buffer I’m still a little fuzzy on when exactly we’ll have a full one. I managed to sock away $1500 in Jan. and Feb., for the closing costs. In March, we’ll have $2k toward the buffer from the bonus, we’ll be getting $1500 back from escrow on our old mortgage, and if I can stuff another $1500 into that category (as I showed I could do in jan and feb) in March, then we could be operating on $5k worth of buffer money in April and put all April paychecks in the “primary” category instead of “supplemental”.

This sounds GREAT, but at the same time, it would put a bit of a damper on the debt snowball. We would only be able to do the minimums march and april if I went with that plan, meaning we wouldn’t really kickstart the snowball until MAY. Ergh. Anyway, I’m just not sure. Given that we managed to pay off $750 in January even with socking away $1500.. maybe we can do both. I guess we’ll see.

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.

So I’m a big fan of all the rules with YNAB. I feel like I knew many of them and was doing weird versions of them. For example, our 2 biggest outflows each month is our mortgage and our kids’ tuition (kindergarten for my son and all day care for both). Both are due at the beginning of the month, so I always put aside half of each payment with each of our paychecks the month before. I am paid twice a month, and my husband is paid every 2 weeks (which is usually 2x a month). Then, by the time the new month comes, those payments are sitting waiting to be paid.

What was really a pain in the ass though, was the semantics of it all. We had a savings account which our bank switched over to a checking, because I was making too many transfers in and out of it. I physically placed that earmarked money out of our checking into the “old savings” account in order for it to be “safe” for mortgage and school tuition.

I love that YNAB lets me earmark money for things and I don’t have to physically move that money anywhere. I was already *kind of* living on last month’s income, with this habit. Wahoo!

This is my journey to get rid of our non-mortgage debt. I am a working wife and mother of two (3yo daughter and 5yo son) and I handle the family’s money.

Well, things have crept up! Most definitely! We knew things weren’t going well. I knew. But I stuck my head in the sand and ignored. Each month, when we ran out of money in our checking account, I would say, “Use the credit card, we’re out of money,” but never pay that balance down. Several years ago, we got a home equity loan to do some work on our basement and decided to also pay off credit card debt with it. 50 thousand dollar HEL, but only 20 of it was for the house. We didn’t change our system, and just racked up more debt on the now zeroed out card. Last year, we also bought my husband a practically new car. So we have 44k on our home equity loan, 19k on a car loan, and *clears throat* 34k in credit card debt. I’ve worked the numbers and thanks to both of us making a good living, and my husband’s yearly bonuses, I figured that we can have this (the credit cards, I mean) paid off BY THE END OF NEXT YEAR.

So here we go! Wish us luck.