Today was a rough day. Plain and simple. I think the reality of it all is sinking in. Or maybe not. Nevertheless, it was a rough one.
I woke up this morning to the sound of rain. That’s not too bad. I like the rain. But this didn’t sound like it normally does. This sounded more like rain sounds when you are outside. And that was a little bit disturbing. I looked around to see if I was outside, and I wasn’t. So I got up to go investigate. Outside it was raining so hard I could only see about twenty feet, and the wind was blowing so hard that the rain was coming in sideways. And the front door was wide open.
The dog was in the living room, so I knew that nobody had come in the house. So I checked on the kids and they were both nestled all snug in their beds. So I just shut the door and locked the deadbolt. It seems that the wind was too much for what’s left of our doorknob. The little part that holds the doorknob latch part into the frame is very old.
So I knew I would have to replace it. That’s not so much of an issue. I’m really handy around the house. It was just a matter of having the money to get a new doorknob. And I think that was the root of my bad day.
Having already had to fill my wife’s prescription, I was left with about fifty bucks left in my checking account. Of course, that’s enough for a doorknob, but I still have to go to work all week, and I have to pay to park at work, which comes out to about twenty five dollars a week, and I will still need gas money. I think we are still OK on food.
So I faced the reality that I wouldn’t have enough money to fix the doorknob and still make it through the workweek.
It’s not that I haven’t been broke before. I’ve been very, very broke before. It’s just that this time it happened to occur to me that I was a lot happier day in and day out when I was blissfully ignorant and in debt, as opposed to sending in all of my extra money to get out of debt.
Ignorance is bliss, so it seems.
But of course, I have a thousand dollars in my EF, and I think that front doors qualify. And gas money probably qualifies, too. In the end, I transferred a hundred dollars from my EF into checking, and I’m guessing that will get me through until payday. And I guess that’s what the EF is for, after all. It’s just a lot different than how I am used to doing things, and it takes some adjustment.
(shrug)
The recent payment to Sallie Mae has posted to my account. My balance is now officially below eight thousand dollars. Way below. The new balance is 7662.08 which I have updated the sidebar to represent. I don’t intend to update the rest of the sidebar totals until next payday, when I will be making my normal monthly payments, since this takes so long to do and I will have to do it all over again in a week anyhow. I think I will update the balances on the credit cards once per month whenever I make my payments, and I will update the student loans twice per month whenever the payment is posted to my account.
The overall current balance, however, will not reflect the changes to my student loan payments until the next time I update the credit cards.
Heck, that sounds confusing even to me, and I’m the one that wrote it. I have it all straight in my mind though. 
I got an offer for a balance transfer, so I took them up on it. It only has a $3000 limit, but it’s zero percent until ‘09, so I transferred 2800 from B of A over to this new Citi Card. I also intend to put my income tax refund, if any, onto it, too. That will bring it down enough to be able to pay it off relatively quickly. I think after I do that I will probably transfer the entire balance of the Air Conditioner debt over to the B of A card, since they continuously offer me 1.8% interest on transfers. But I’ll see what they are offering once the balance is paid off completely. I don’t want to transfer anything onto it before it is paid in full, because then they apply all of your payments to the lower interest rate debt first and hold onto the higher. It’s kind of screwy that way. But one day at a time I will continue doing this.
It’s been a heck of a weekend. I had a full work schedule on Friday, Saturday, and Sunday. I got in 36 hours for the week.
My son had his thirteenth birthday on Sunday. I told him that I had to work that day and that I couldn’t get out of it. He was OK with that. For his birthday I took him up to the store and let him pick out his own stuff. I had $300 budgeted and spent about $290 all told. Not all of it was for his birthday though.
Even so, we were within budget and he was really happy with what all he got.
I still have a hundred bucks left to last me another week and a half. It’s a bit spooky though, because I’m used to having a bigger buffer in my checking account. Although I still have a half a tank of gas left, and the pantry is still full. I don’t really have much to buy for the rest of the pay period.
But still, having only a hundred bucks to last me is a scary proposition. And that’s when I realize the value of the Full Emergency Fund. It gives me a feeling of peace that I have a thousand bucks that I can fall back on in case anything should happen.
I’ve been doing a lot of thinking about the order that I should pay things off.
I am really starting to hate B of A, and I want to pay them off next. But I don’t think I will. There is another account that I have that is on six months same-as-cash, and the six months is over in mid-February. So I need to get them paid so that I can avoid the interest that will have accrued if I don’t pay them off.
I haven’t written out a complete budget for next payday yet, but I expect that I will pay them off at that time.
Nevertheless, it’s exciting knowing that I am getting things paid, and even though I still have a long road ahead of me, I have a lot of optimism about the whole deal. I can see how the debts will just fall off one by one until they are gone.
I think ntmom4 is right. I will just worry about my credit rating when the time comes. For now I will just keep paying on things one by one until they are gone. There’s less stress that way, because I don’t have to second guess myself.
And that being said, I’m not even all that worried about paying B of A off so fast. I will get to them soon enough, and when I do, I expect I will make short work of them.
And as far as all that food that I bought goes, we are eating better than we ever have, and if it holds out for a whole month (or for 4 weeks, actually) I’ll keep doing it this way. If I have to go back and go food shopping again though, I will work on some other way to do it. But I’ll cross that bridge when I get to it.
I’ve had a long, on-going debate with myself as to how to manage the food budget.
On the one hand, there is always a lot of flexibility in the food budget. You can buy hotdogs for $3.29 or you can buy them for $0.89
And I’m pretty sure that they both come from the same unnamed parts of the cow. (Shudder)
You can get hamburger helper or you can get T-Bones. There are a lot of choices to be made.
But because I grew up with not always enough to eat, I’ve always been hesitant to skimp on the food. I’ve taken the attitude that I’d rather pay on the debt for a longer period of time than to let my kids be hungry. So my food bill has always been somewhat of a higher number than what it could be.
But I still see a lot of areas where I could make cuts.
A lot of the excess could be easily solved by buying bigger, less frequently. By shopping less frequently there is less waste, because people tend to buy something that they don’t need every time they go into the store.
So I over-budgeted the food this time and stocked up.
I’ve seen people blog about shopping for the month, and I’m hoping that that is what I just did.
Of course, I’m sure that I’ll be back in the store before a month is over, since we will need the little things, such as bread, milk, or whatever. But as far as meal planning, I just bought a month’s worth of food.
I am now completely at capacity.
I have to admit, I am a bit nervous about it. I spent more than I am used to on food, because I am trying to make it twice as long. Some of the items that I bought will probably still be there longer than a month though.
I still have some bugs to work out to organize the menus for a month at a time, but I’m getting there.
Today is Payday and I worked some good overtime during the payweek.
After paying my mortgage payment and my insurance premiums and taking out for our living expenses, I actually have money left over. I have a whopping $1488 left over.
So let’s do this.
I transferred $542.00 into my savings account bringing my new balance to ONE THOUSAND DOLLARS!!
My Emergency Fund is now COMPLETE!!
(happy dance)
But what is this???
There is still money left over. In fact, there is still $946 left over. Something is going to get paid off today.
Let’s see. Who looks lucky? I want to put it all on my B of A account, but there is a debt that I have where you have to mail the payment in every month. It’s a major pain, because I usually don’t have stamps around the house, and they have mailed my payment coupon later and later every month until finally it is getting here so late that I only have one or two days to make the payment after I get the coupon. It drives me nuts. So then what are my choices? Let’s get rid of this sucker once and for all.
I’M MAD AS HELL, AND I’M NOT GOING TO TAKE IT ANYMORE!!!
Fry’s Electronics. Wonderful Products. Competitive Prices. Bad Debt.
Balance Owing: $632.71
Today’s Payment: $632.71
New Balance: ZERO! PAID IN FULL! KAPUT!
Goodbye Fry’s. Don’t let the door hit you on the way out.
That leaves me just over $300.00 in cash. Normally I would want to pay on another debt, but Sunday is my son’s birthday. I am going to keep this money out for his birthday. Last year we were paying off debt and the birthday’s were all very small, and I told him that I wasn’t going to spend a lot of money on birthdays, and he was very good about that. But at the time, I promised him that it would just be that one time. And since I promised, I will keep this money out for his birthday.
On another note, my birthday is tomorrow. I will be 29 again. And what do I want for my birthday?
Well, I just got it. I want to have a fully funded Emergency Fund. That’s my birthday gift to myself. $1000.00 in savings. And I got one less credit card, to boot.
That’s the best birthday present I have ever gotten.
I got a letter in the mail today from Dodge. It said, “Important information about your vehicle” on the front.
I thought it must be some kind of recall or something. Or at least that it could be. But no. It was an offer.
“We will give you 100% of the amount that you owe on your car if you trade it in on a new vehicle. You will have zero out of pocket expense, and your payments will remain exactly the same as they are now, for the same amount of time, because your credit is better than it was when you first bought your car and we can offer you such a lower interest rate.”
Or something thereabout.
It sounded like a pretty good offer on the surface. Two weeks ago I would have taken it. Or at least looked into it more.
But not this time. I can see the fallacy plain as day. Can you spot the problem?
The problem is this: I have no intention of paying on my loan for the duration. I am going to pay it all off ahead of time, so if I were to get a new car at this time, it would increase my balance owing, and increase the time it takes to pay it all off. Not to mention that it would be stupid for me to buy a new car at this time in my life because it depreciates so quickly.
So no thank you, Dodge. I’m good.
B of A decided to raise my interest rate. From 12% to 21.9%.
I wasn’t late on a payment. I wasn’t over the limit. In fact, I’ve always been on time. They didn’t specify why they were doing it. They just did it.
So of course I immediately called them on the phone. They said that according to the Terms of Service, they could adjust the interest rate however they wanted. But that wasn’t my point. I wasn’t disputing the fact that they are allowed to change the interest rate. I called them to tell them that 21.9% is outrageous and that I wasn’t prepared to pay that much in interest. They agreed to lower the rate. To 18%.
I have approximately a $7500 balance with B of A. That works out to somewhere about a hundred dollars a month in interest. That’s just outrageous. I told them that I’ve never had an issue with them and that I would prefer to continue to do business with them, but that I was just not prepared to pay usurious interest rates.
I get offers all the time for zero percent balance transfers, and I’m prepared to use them if I need to.
So how did they respond to my latent threats? They offered me a debt consolidation loan. At 16% interest.
Well thank you, but no thank you, B of A.
My intention is to pay off one or two of my smallest debts which are just a pain to have to pay every month, and then move directly to the B of A account. I have a transfer available with zero percent for 12 months, with about a $3000 limit. After that is transferred, I will put them on top of my list of debts to pay off.
Once I pay them off, if they want to lower the interest rate below some of the other people, I would still be open to transferring back to them, but as it stands now, I intend to transfer some and pay some and eliminate that debt within the next two months.
Because really. 21.9%? You gotta be kidding me.
I could really use some advice here.
Later this week I will be getting paid, and I will be completing what would be called Dave Ramsey’s “Baby Step One”. That is, I will have $1000 in my Emergency Fund. After that I will be attacking the Credit Card Monsters.
My problem is that I don’t know which one(s) to attack first. Dave Ramsey says to go after the smallest balance.
But my quandary is that the Fed just slashed the interest rates by another 75 basis points. To me, this means that the time to refinance the house is coming up sometime later this year, or maybe early next year, when the Fed is done slashing.
With all of the sub-prime mortgage problems that the banks are having, I would think that they would be virtually begging for people to have traditional mortgages.
My current mortgage is at 7% and some change. I would think that if the going rate went back down to four or five percent that it would be a good idea to be in a position to refinance.
So what I was thinking is that if I while I am paying off the credit cards, if I were to start by paying on any card that is above forty percent balance to limit ratio, it will improve my credit score and make me qualify for a better rate if/when I do refinance my house. I have heard that when your balance on the credit card is above forty percent of the card’s limit, that is when you start to take a hit on your credit score. And while it wouldn’t speed up my debt snowball as much to pay a card down to thirty nine percent and then switch cards, it should drastically improve my credit score.
My current score is about 670. I’ve never had a late payment. The only damage to my score that I know of is that my balances are high compared to the limits. It has previously been as high as 740, when my balances were a bit lower. So I would think that by paying things down correctly, I could probably gain that 70 points back again on my score and then I would qualify for the best rates on my mortgage.
I currently have more than 20% equity in my house, so I don’t think the banks would be upset at all to lend to me. My credit union even sends me letters from time to time, which I haven’t even considered, since interest rates are too high right now. But as the Fed knocks them back down to where they used to be, I want to be able to do something about it this time.
So I need someone with a bit more education than I have to either tell me that this is a good plan, or tell me why it is not. I don’t consider myself to be particularly stupid, but I don’t have a lot of education in regards to Finance (which I’m rectifying).
I guess my biggest fear is that I will pay off the credit cards Dave Ramsey’s way, and the interest rates on mortgages will have dipped down and then gone back up already and I will have missed it.
I expect to be out of credit card debt in a year to a year and a half, if that helps any.
I finished out the work week and I’m tired. I normally work on Friday, Saturday, and Sunday every week, for twelve hours per day. Then I have four days off. But of course since I work the night shift and the rest of the free world is on more of a daytime schedule, Monday is a useless day for me. I try to sleep a little and stay awake a little and hope that somehow I will be able to sleep well tonight so that I can wake up on Tuesday and have a real day off.
Monday is a good day for laundry. Or reading. Or rolling up pennies. Or any other mindless task. What it’s not good for is making budgets. Or planning things out in general. It’s not a good day for making major life decisions. Or any other decisions, for that matter.
But as it happens, there are always a few hours on Monday night where I am awake and the rest of the family is asleep. It leads to some interesting thinking sessions. I don’t think that Mondays are good days for philosophizing. Especially about debt. My attitude is that if I knew anything about money I wouldn’t be in debt to start with. But sometimes there is a quiet moment of inspiration and everything that’s been going on just suddenly makes sense. And that’s kind of where I am today.
As I was sitting here, I started thinking. It’s not really about the debt. It’s not a numbers thing at all. It’s all about behavior. If it were simply about numbers, every time I got a raise my debt level would fall. The problem isn’t whether or not I make enough money. It’s a problem with behavior.
Somewhere along the line I seem to have accepted that being in debt is acceptable behavior. That it’s OK to buy stuff when you don’t have the money to pay for it right now. It seems that debt is insidious. I’m sure that there are people out there who had major life catastrophes where they suddenly had to take on a lot of debt in a short period of time. But that didn’t happen to me. I built up my debt slowly over a number of years. Other than my car and my student loans, most of my debts have been incurred in very small amounts, multiplied by a number of years. I always mean to pay it off on payday, but somehow it just never works out that way. And the hundreds of dollars turned into thousands…and now tens of thousand…of dollars.
So it seems to me (and remember, I’m no money expert) that simply by reversing the behavior, the debt will disappear as well. By simply living below my means I can apply extra to the principle debt balance and it will slowly melt away.
It’s a simple concept, really. But putting it into practice remains the tricky part. The problems seem to come when you have unexpected expenses. The unexpected flat tire. The broken garbage disposal. The burned out headlight. Little things that weren’t in your budget. I think when I am finished building my EF to $1000, I will also build in a slight buffer to my checking account. Maybe two hundred dollars or so of “just in case” money. Things that don’t really qualify as an emergency, but that require some attention, nonetheless.
Maybe it will be easier to think about when it’s not Monday. Or maybe I’ll wake up tomorrow going “What was I thinking?”
Oh well. Whatever.
And somewhat unrelated, it’s only a few more days until payday, and I’m looking forward to being able to knock out my EF and move on to some evil debts. I never really did get around to calculating what I should expect on my paycheck. I can usually figure out my net to within ten or twenty dollars. I just have been so busy working lately that I haven’t spent much time counting chickens. But if I net a thousand dollars above what it takes to pay the bills, I’ll be happy with the results. I didn’t work as many hours as I had hoped in the second week of the pay period, but I more than made up for it in the first week.
It’s a funny feeling knowing that my debts will soon be dropping off. It’s as if I’ve been given a second lease, so to speak. There’s a strange sense of hope right there on the fringes. But there’s the other part of me that is a doubting Thomas. As if I expect to shoot myself in the foot any time I get ahead. I keep thinking that if I can just have one good year that I will be set for the rest of my life. 2007 was definitely not my year.
And as I look forward to 2008, it seems like a long way to go to put this debt out of its misery. But as I look back on 2007 I realize that a year is actually not that long of a time. I don’t think I can pay everything off completely in a year, but I know that I can get the lion’s share of it. Especially those pesky student loans, which I have grown to hate.
I don’t think it would behoove me to concentrate so much on maximizing my income so much as controlling my spending. On a normal year I can make right at six figures, so my debt level is very manageable. I’m afraid that if I work too many hours that I will burn myself out along the way. I think that slow and steady is what will win this race. Set a sustainable pace and keep at it until I am finished. Even if I had to stretch it out to two years, it would be easier than killing myself to pay it off in one. At least that’s what is making sense right now. But I’m tired right now and I’m glad that I am not going to work tonight. Maybe if I were better rested then extra shifts would sound like a good idea.
Nevertheless, hello.
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