A New Month

September ushered in, seeing several new medical bills come in, as well as the slide into over $12,000 again in credit card debt.  I am determined not to let the credit card debt pass the car debt we have, which means that I’ll need to make at least $340 worth of payments against credit cards over and above the interest charges to stay ahead.  Is it doable?  Possibly.  The medical debt is now made up of 7 bills, and so far, only one of those bills has a monthly obligation.

I am really hoping to send a few dollars in on the medical debt, but put the bulk of my debt reduction against the credit cards.  Once the credit cards are dealt with, then we can begin the process of paying off the medical debts.

It is a very long road we have begun to travel on, and we started our journey at a time when, for many people, drastic measures are required just to keep afloat.

I have begun the process of rebuilding our emergency fund, and am very slowly but surely making progress there.  We are within just a few dollars of getting to 25% of our $1,000 goal.

Hopefully, this month will see us better off than the past two have, at least in regard to everything except medical debt.

We’ll see, I guess.

Another Bill… and My Thoughts on Public Health Care

Well, we got another bill today – this time from the ambulance service.  It was less than I thought it would be (under $1700), but I found out that for $55/year, one can have unlimited emergency services (and, if uninsured, a 60% discount on services.  That means it would take me about 8 years to make that up, if it ever happens again.  So, that’s worth considering.

I don’t expect that there will be a discount available on the bill, but I’ve asked for any that might be available, and also asked if there was a month-to-month plan that i could get on.  I have also done this on the radiology bill we got for the CAT scan and X-ray.

Our medical bills are now over $5,000, and that’s after pre-paying the labor and delivery and putting $2,000 on the credit card for the emergency visit.

We also got a call from the hospital we went to for the birth, and they informed me that I still had a balance of over $9,000 for the birth.  So we still have to get that resolved.  The big question is whether the pre-pay covered mom and baby, because the $14,000 bill for my wife was reduced, but the $9,000 bill for the baby was not.  It was my understanding that the bill from the hospital was taken care of, but the business office doesn’t currently see it that way.

Scary as having all that medical debt is, even with all the facts lined out as they are, I still cannot get behind a public plan for health insurance.  I don’t believe that the hospitals and doctors are as much to blame for the high cost of medical as pharmaceutical companies and insurance companies.

Some of my problems with the public plan as it is being proposed right now are due to the speed at which a 1,000+ page document is getting pushed through.  Last time we did that, we sent money to banks without much accountability at all, and are surprised that the 800 billion dollars seemed to have little to no measurable effect.  For another, any plan on the table does not include the people making the decisions.  I would be far more agreeable to a plan that the ones with the power to produce such a plan were under it as well.  If they are not willing to go under such a plan, why should we have to?

Also, I look at a bankrupt Social Security, a nearly bankrupt Medicaid/Medicare program, the huge amounts of fraud and wasteful spending, and it does not inspire confidence in me that a new program along those same lines (but expanded) will be any more efficient or any less wrought with fraud.

The combination of those three factors cause me to pause on the current plan being proposed.  Even in my position, in which a government plan could potentially make a lot of this medical debt go away, I can’t put my support behind it.  Do I have an answer for the solution?  No, I don’t.  If the pharmaceuticals and health insurance companies are behind the plan, then I will have to be against it.  I don’t believe that either of those occupations work with the average American’s success in mind.

A Guest Post

Living Almost Large gave me an opportunity to blog about my recent medical experience.  Be sure to check it out!

August Update

Well, we are 5 days into the new month, and the medical bills have started trickling in.  I’ve added a new field to our debt reduction, but, like the Mortgage, I’m not updating our Overall Consumer Debt field with it.  As I negotiate with the medical community on our debts there, I’ll adjust.  Also, whenever we make payments against that debt, I’ll update the bar.

I was tempted to move our medical debts that I put on the credit cards recently over to that bar, but since they are already on the credit cards, they pretty much qualify as credit card debt.  Any additions to the credit cards from the medical debt will be reflected in the credit cards and subtracted from the medical debt.

I hope that makes sense.

I gambled, and I lost. Big time.

I was 100% focused on getting out of debt.  I admit it.  Several times, I was given the opportunity to change some things, but I didn’t want to spend the money, and detract from the pace at which I was eliminating my debt.

But a house and a baby are big detractors, anyway.  And I failed to make those connections.

We have no insurance on my wife, and no insurance on the baby.  So we are paying all of these expenses out of pocket.  To make matters worse, my wife had an eclamptic seizure on Monday afternoon, something that happens in only rare cases after the birth.  An ambulance ride, 3 additional nights in the hospital, and thousands of dollars later, I arrive at the end of this week not really knowing where to go from here.

The baby had already run up costs significantly, so our return to the hospital put an already drastic situation into dire straits.  We will, of course, be negotiating with the doctors, the hospital, and everybody else that comes running to us for money, but, at the same time, it appears that we will also be making drastic lifestyle changes in the coming weeks.

First thing on the list, though, is to get through the current crisis.  Wife and baby are fine, but this process can take 6 weeks to work through.  Thankfully, they are both at home, and most of what needs to be done is simply rest & recover.

I don’t know the damages yet, and it could be months before all of this gets figured out, but there will be a major revamping of the family finances, for sure.

I am not complaining.  There is no question in my mind that whatever sacrifices I must make are worth it, because I have my wife and baby.  And, in the big scheme of things, that’s really what matters.

Well, that pretty much settles it.

Our budget has been blown.  Completely, totally, and without hope of recovery (fast, anyway).  We had our baby, but there were some complications.  I still haven’t received all the doctor’s bills, etc., and the way that payments are done now (at least at this hospital), there is no sending the proverbial $25/month to the hospital for the next 36 years to pay it off.  They said I could either put it on a credit card, and they would give me a discount (about 70%), or they could allow me to send in whatever I could, but it would be for the full amount, and at 18% interest.  So I slapped down my credit card, and was happy that I’ll only be paying about 15% interest.

I will probably suspend updating for a while, at least until I somewhat recover from the reeling I’ve done over the past several days.  Emotional decisions are never good (at least, that’s been my experience), so I want to let things calm down, and allow the logical side of my brain to start functioning again before we get too far down the road.

I will keep updating the debt and savings charts, just to keep myself on top of where we stand, though.

c'est la vie.

Term Life Insurance

I recently bought a term life insurance policy, and, in the process, learned some very good things about how it works, and how I should plan for it.  Listening to Dave Ramsey, the Primerica agent, and several others talk about insurance has helped me develop my own plan for term life insurance.

Some recommend 8-10 times your annual income as the determining factor in insurance (this, I believe, is a simplified version of Dave Ramsey’s approach).  While there is nothing inherently wrong in this approach, and it keeps things extremely simple, there is no real room to tailor the policy to your life, and so you just end up with a random amount of cash, arguably able to cover your family’s living expenses for 7-10 years (depending on the additional cost of the funeral, etc.).

Before we get into evaluating the factors I took under consideration for determining how much and how long my insurance should cover me, there are several things to keep in mind:

1. Life Insurance should cover your spouse and children in the case of your death.  At the point of retirement, my income will be (ideally) passive, so I don't need to plan for term life insurance beyond retirement age.  In most cases, this means having a policy that will be effective until age 60-70.
2. The younger a person is, and the shorter the term, the lower the cost will be for the policy.
3. Health makes a huge difference in the price of the policy.  If you are a smoker, or have a family history of cancer/heart problems, your policy will cost much, much more.

So with these thoughts in mind, I used the following factors to determine our plan:

• I am 35 years of age, leaving me 30 years to retirement.
• We just purchased a house, with a 30 year mortgage.
• I anticipate being in non-mortgage debt for less than 5 years.
• My wife is pregnant with our first child.

These factors played heavily on the length and amount of insurance that we purchased:

1. In the event of my death, my wife would need enough money to pay off all debts (including the house), plus have enough to live on for a while (5 to 10 years) so that she would have some time to begin generating an income.  Eliminating the house debt lowers her income requirement significantly, giving her an easier path to supplementing the income.
2. In the event of my wife’s death, I would need enough money to provide care for our child, in addition to the money I already make.
3. In 10 years, neither of us will have any kind of consumer debt.  Also, our income should be higher and our living expenses lower (inflation adjusted) than they are today.

Bottom line, we settled on a 30-year policy that had enough coverage for me that it would wipe out all debt obligations, pay for the funeral, and still have about 10 years of living expenses, if something were to happen to me tomorrow.  (Of course, as time goes on, our debt will be smaller, but there may be more dependents, so I decided on a single 30-year policy).  For my wife, we decided on a policy that would pay off the mortgage, cover burial, and take care of child care expenses for about 5 years.  We didn’t find it necessary to cover the consumer debt on her policy, since I am the primary wage earner.

Had our circumstances been different, what we settled on would have been different as well.  Instead of having no insurance in place, it would have been wise for me, in my 20s, to purchase about a 10-15 year policy covering all of my consumer debt, paying for the funeral, and a little extra.  Once I got married, I should have purchased a policy for my wife (and revised mine), taking my wife’s situation into account.  Since she brought her student loans into the marriage, and I brought my credit cards and vehicles in, we would need a policy that paid all of that off (plus a little).

Those policies are relatively cheap, because the amounts are not usually very high, the terms are short, and we were younger.

Now that our age and level of responsibility has increased, it was time to purchase a policy that would at least financially take care of our debt obligation.

Naturally, the policies now cost more than they would have when we were 10 years younger, but they would not have carried us all the way to retirement.  In the same breath, I did not want to purchase a policy that would cover us, but would seriously impede our ability to reduce our debt.  If our standard of living changes, I will probably re-evaluate and either change or add to our policy.  (Given inflation the way it is, and just the general tenor of things, I doubt I’ll ever decrease our coverage)

So, in summation, the way I picked Term Life was not based upon income, but expenses.  Rather than looking at life insurance as a replacement to income, I view it as a way to weather a storm.  A strong storm, to be sure, and one that I hope neither my wife nor I have to face.

Update Thursday: 2nd Week of July

We made up some ground this week.  Not much, and after all the money that has been spent (to date) on the pregnancy, I’m really not surprised…  (Kids cost a bundle, and he’s not even here yet!)

Start of the Month:	$3,932
Start of the Week:	3,945
Now:	3,914
Total Paid Off This Week:	31
Total Paid Off:	18
Goal:	80
Left to Pay Off for Goal:	62

 

If we can keep up the pace of $30+ a week this month, we’ll make our goal.  It is beginning to look more and more that I’ll need to get something going in the evenings, though.  The recession added to my debt isn’t helping anything.

Update Thursday: 1st Week of July

Well, nothing like starting the month in the hole!  I didn’t get a chance for a payment to hit, and one of the credit cards charged interest yesterday, so we start with a $13 hit to our goal.  Here’s the numbers:

Start of the Month:	$3,932
Start of the Week:	3,932
Now:	3,945
Total Paid Off This Week:	-13
Total Paid Off:	-13
Goal:	80
Left to Pay Off for Goal:	93

 

At least we are pretty well caught up everywhere else.  Medical could use some help, since I wasn’t anticipating a $55 bill for asthma medication this month, and we’ve apparently been spending more on gas lately, but everything else is just about even.  If we can get a little better handle on our grocery budget, we should be fine.  Hopefully by next week, we’ll have made decent positive progress against our goal, too.

July Goals

Well, we made our goal for June, even if only just barely.  This month will more than likely see the birth of our son, so I’m going extremely conservative on our debt reduction, and we’ll see what happens from there.

We had a few setbacks last month – nothing too major, and nothing impossible, but I’d still like to get a month in like the latter part of last year.  Chances are good that I’m going to be looking for second job again here pretty quick.

In the meantime, I’m setting a relatively low goal, just to be sure that we catch up on things this month.

So, my goal for July is $80 against the credit cards.  I’d really like to do at least that much, even on slow months.  Of course, this really means more than $80, because of the interest that gets put on the cards every month.

Update Thursday: 4th Week of June

Yech.  What a week.  I’ve started the “Couch-to-5k” program, and was on week 2 when one of my knees started acting up.  After talking with a few people, it was decided that it was my 12+ year old tennis shoes that were causing the problem.  Correcting for my foot cost me nearly $110, but hopefully this will allow me to continue on the program.  So that set me back a bit on catching up this week.  Still, we made our goal for debt reduction, so it wasn’t all bad…

Start of the Month:	$4,049
Start of the Week:	3,988
Now:	3,932
Total Paid Off This Week:	56
Total Paid Off:	117
Goal:	117
Left to Pay Off for Goal:	-0-

 

Now if we can just get caught up on bills.  I think I am about ready to invest in a timer for the sprinkler.  Two nights since we’ve moved in, I’ve forgotten about the sprinkler in the front yard.  I’m sure our water bill will be through the roof this month.

Update Thursday: 3rd Week of June

Well, this week saw my savings account getting zapped for service charges (due, I believe, for the balance dropping below $100).  As a result, although there was still forward progress made, it still wasn’t as much as I’d hoped.

Initially, our balance in our checking account dropped below $1,000 for the first time since fall of last year.  Coupled with the fact that we have no emergency fund in place makes things a bit sticky.  However, even with the transfer, we also had some extra income, and it allowed us to get current in all but two categories.  I anticipate getting caught up in those by week 1 of July.

Also, my current plan is to see about getting some passive streams of income going.  I’m not exactly sure what I’m going to do just yet, but I do know that I’m not happy with the amount of progress being made – I’d like to have an extra $1,000/month to throw against debt, and be done with it in the next 2-3 years.

Start of the Month:	$4,049
Start of the Week:	4,017
Now:	3,988
Total Paid Off This Week:	29
Total Paid Off:	61
Goal:	117
Left to Pay Off for Goal:	56

 

The economy being what it is, I’m grateful I’ve got a job and that the numbers continue to decrease, though.

 

Update Thursday: 2nd Week of June

Somehow, in the midst of everything, I forgot that we were taking an overnight trip out of town for my wife’s sister’s wedding.  So there was a lot of eating out, and a hotel stay thrown into our plans.  Needless to say, this was another pretty pathetic week.  All in all, though, I’m not displeased.  We still paid for the weekend and paid down our debt.  In addition, we made some good progress towards improving our checking account, so we are only down in 4 categories now, instead of 6.  I’m hoping to make some good progress against the debt this next week, and hopefully put two of the categories back in the black.  Then, in the final week of June, I want to get the final two categories back, and finish off the debt reduction goal.

Start of the Month:	$4,049
Start of the Week:	4,034
Now:	4,017
Total Paid Off This Week:	17
Total Paid Off:	32
Goal:	117
Left to Pay Off for Goal:	85

 

I’ve been Tagged!

This is seeming to make its rounds in the PF Blogosphere, so I’ll bite…

The Rules:

1. Link to your original tagger(s) and list these rules in your post.
2. Share seven facts about yourself in the post.
3. Tag seven people at the end of your post by leaving their names and links to their blogs.
4. Let them know they’ve been tagged.

The Original Tagger

• Money Funk tagged me in this post…

Seven Facts

1. My wife is expecting a baby next month.  I already presume that this will have an immense effect on our debt reduction.  (It is already beginning to show signs)
2. We were putting the better part of 50% of my gross income against debt until December.  At that point, we started saving for the baby and the house.
3. I have recently begun the “Couch to 5k” program.  Interested in seeing if there is a correlation between fitness discipline and money discipline.
4. Up until the end of last year, I had more debt than gross yearly income.  Up until the beginning of the year before that, my debt was more than twice my yearly income.
5. I have a turntable, and use it on occasion, but look forward to the day that I have an amplifier to go through, vs. the computer.
6. Sad thing is, if we could sell all our media for face value, we would not have a debt problem whatsoever, telling me that I am heavily overinvested in CDs, DVDs, and record albums.
7. I don’t have great confidence that the answer to our nation’s fiscal problems is spending more money.

My Tags

1. Undercover Vixen at Debt and the City
2. Mrs. Accountability at Out of Debt Again
3. T.W. at A Fool and His Money
4. Ron at Post Divorce – Reclaiming My Financial Life
5. Tammie at Booting Our Debt for Good
6. Staci at Staci’s Money Help
7. Andrea at Ditch My Debt

Update Thursday: 1st Week of June

Well, the interest charges hit the credit card this week, so over $25 of our reduction went to pay those back down.  yech.  Spending money every month in interest is definitely no fun.  But at least that card’s interest charges are out of the way for the month, and the rest of the debt reduction will be to actually reduce debt, instead of just cover the expenses.

Start of the Month:	$4,049
Start of the Week:	4,049
Now:	4,034
Total Paid Off This Week:	15
Total Paid Off:	15
Goal:	117
Left to Pay Off for Goal:	102

 

Hopefully, next week, we’ll have less than $4,000 in CC debt.

June Goals

With only 1 more month until the arrival of the baby, we’ve got to buckle down and really get things straightened out.

I think that part of our problem last month was that we made good progress at the beginning of the month and then burned out once the unexpected popped up at the end of the month.  After the unexpected hit us, we completely fell apart, abandoning budget, debt snowballing, and reason in order to get what we wanted when we wanted it.  The thing to do now is remember the experience, learn from it, and go on.

I read a blog post recently from Alan Schram over at Saving for Serenity (great blog – if you don’t subscribe, you should) explaining his personal goals on how much to spend repaying debt.  He makes several good points, but the part of the post that really caught my attention was when he said:

Saving For Serenity is about achieving a financial life free from stress or strain. Obviously, having no debt would be a significant stress release! However, I am not willing to sacrifice quality of life to become obsessed with debt repayment.

I think the point is valid, at least for us.  The whole point of reducing my debt was to be able to not think about money every second of every day and how it was dragging me down.  I think in my push to get out of debt the past two years (since we have paid off more than $46,000), I lost the purpose of getting out of debt.  Since we have been so “gazelle-intense”, we have paid down debt at an enormous rate, averaging over $50/day for 880 days, including holidays and weekends.  But that intensity is beginning to burn us out, since we have only progressed 3/5ths of the way through our debt.  Because of this, my goal for June is going to be a bit different.

Due to the last week, I’ve now got the balance of my credit cards spread across three different cards.  So, a total of five consumer debt vehicles.  I am going to aim to put $550 against the five, which, although it horribly reduces the amount I’m paying against the cards, it will allow some overflow to 1) rebuild my emergency fund from “breaking the glass” to cover most of the screw-up of last month (thanks, Jim), and 2) allow some “flex” to the rest of our budget so that we, hopefully, don’t have a repeat.

I am going to see an allergist on Tuesday, and don’t really have the money set aside for that, either, but hopefully there will be enough flex that we can pay for whatever the insurance doesn’t get.

The payment on the car and the student loans equal $433, so our goal against the credit cards is only $117.  However, there are a few holes in our budget that we will plug up this month, and hopefully make some progress to restoring our emergency fund as well.

Update Thursday: 4th Week of May

Not a good week at all.  We ended up spending way over and above what we actually paid off.  Fortunately, now we won’t have to buy tires for the car for a while, but it is frustrating when I don’t see any progress, or even backpedal.  My wife’s birthday was this week, too, so we ended up going to a nice place (not as expensive as last year’s anniversary dinner, but still pricey), and I got her a good, compact camera.  I got a great deal on the camera, but it wasn’t in the budget.  Unfortunately, neither were tires, and so this week undid all the progress we’ve made this month.  Unless I dip into the emergency fund to pay for the tires.  So frustrating.

Start of the Month:	$4,280
Start of the Week:	4,012
Now:	4,573
Total Paid Off This Week:	-561
Total Paid Off:	-293
Goal:	428
Left to Pay Off for Goal:	721

 

That just burns me up.

Update Thursday: 3rd Week of May

Well, this week went better, but still not good enough to reach the goals.  To further complicate issues, vehicular malfunctions created a mess.

Start of the Month:	$4,280
Start of the Week:	4,096
Now:	4,012
Total Paid Off This Week:	84
Total Paid Off:	268
Goal:	428
Left to Pay Off for Goal:	160

I thought I was going to have some extra money through selling a ticket that I wasn’t going to use…  Sold it for $40, got back to the truck, and it wouldn’t start.  Fortunately, my insurance covered the towing, but it was well after midnight before we got to bed.  The next morning, the dealership ran diagnostics and discovered it was a short in the battery.  They sold me an 8-year battery – diagnostics and battery cost me $135 with a $20 mail-in rebate.  Our Fusion was in the shop as well for an air conditioning problem, but they called and told us that there was very little tread left on our tires, so those needed replacing as well.  After the service and tires, the total soared to nearly $600, so we’ve overspent our budget by about $700, and only gotten an extra $40 in.  This is killing our budget this month, but perhaps we’ll figure a way out of that.

I’m beginning to get burned out on attacking the debt so heavily – truth be told, last year I was running out of steam, even after seeing the incredible progress we’ve made.  I’m just getting tired of the little rewards, and then spending all our discretionary income on things we need vs. having enough left over after debt reduction and paying the bills to do something fun.  And I shouldn’t say that – we’ve bought a house, gotten some extras – a 24” monitor dipped to $200, so I got it…  but by and large, there has been too little to really do something enjoyable with the money.

I’m sure the price we pay today will be worthwhile tomorrow – and I know we’ve come over halfway in less than two and a half years…  but I still wish I could treat my wife to a trip to Mexico for a few days – or even just spend some time away from finances and worry…

On another note, my asthma is back, so I’m sure that will play into the finances before long…

Update Thursday: 2nd Week of May

Ugh.  This week did not go as planned.  There were a few unexpected expenses, and that pretty well threw our entire week off…

Start of the Month:	$4,280
Start of the Week:	4,100
Now:	4,096
Total Paid Off This Week:	4
Total Paid Off:	184
Goal:	428
Left to Pay Off for Goal:	244

Now that we’ve only got two weeks left, the progress made this week really ups the ante, so to speak.  Now, I must come up with more than $120 both weeks to hit the goal.

Amazing how the truck payment just absorbed into our general expenses – I am allocating more for groceries since the wife not working will mean a hit there, but still!  Hopefully more progress is made next week…

Update Thursday: 1st Week of May

This was a decent week – if we can keep on top of everything else going on in our lives, we should still make our goals…

Start of the Month:	$4,280
Now:	4,100
Total Paid Off:	180
Goal:	428
Left to Pay Off for Goal:	248

Fortunately, a little extra income came in from my wife’s dwindling job, helping us get a good jump start on the month.  We only have 3 more weeks, and I’ve got less than $130 allocated, so we still have a ways to go, but, with her income, we should be able to get close or possibly even beat that goal.  Getting the total balance below $4,000 will put us back where we were the 2nd week of December, except that we now have a paid off truck in the mix.

One of the disgusting things about this is that our interest charges for the month on the two cards were over $32, which totals the amount of interest I was paying on the truck, which had almost twice the balance!

I’m very motivated to getting that balance down, especially since I could pay for a MUCH nicer internet connection or over half of a fiber TV package w/ DVR for that price…  youch!

May Goals

Well, its time that I set some goals again.  I now have over $4,000 in credit card debt, so I’ve got to attack that.  For the time being, I’d like to at least see 10% worth of progress every month against that number.  That’s fairly aggressive, since I’m only allocating about $160 against that in my budget.  So, I’ll need to figure out how to get the additional $264.  This pays the credit cards off by March of 2010.  I’d really like to be done with the credit cards this year, and be down to the student loan, our car, and our house.  We’ll see how this all works out.

So, I’ve got $4,280 in credit card debt.  My goal for May 2009 is $428.  We’ll see if its a doable goal, and adjust June as necessary.

The truck is PAID OFF!!!

Well, I went down to the credit union yesterday evening after work and wrote the check that pays off the truck!  I should get the title in a couple of weeks after they process the loan.

In the process of paying the truck off, I learned a few things.  First, I saw the difference that freeing up an additional $200/month can do.  Secondly, I noticed that when I am in “spending mode” (buying things for the house), I am not keeping as close track on our money as I am when I am in “pay it off” mode.  This year, I haven’t been making any extra payments against the credit card debt – we’ve been getting settled in the new house, buying things in preparation for the baby, etc., etc.  Buying a little of this, a little of that, eating out “just this once” because we’re “too tired to cook” can really wreak havoc on one’s finances.

Now we are back in “pay it off” mode.  We’ve pre-paid for the pregnancy, so there is a little more expense right before the baby comes, but not much, and we’ve got about two months to go before those expenses hit, giving me plenty of time to save up for it.  I took the money that was going to the truck every month, and, for a while, intend on putting it against the credit cards.   (You’ll notice that the balance on the credit cards jumped a little over $2,400 in correlation of the truck dropping to zero.)

If some expense begins to overwhelm us, or we have to adjust our debt reduction number a bit because of some unexpected expense, then so be it – currently we should be able to pay the minimum monthly payment against the credit card every week.

Another thing I plan on doing is going back to my goal setting and Thursday updates.  Now that I should be sending more against the credit card than the minimum payment, I should set goals for that, and I think the Thursday updates really helped with that aspect of it.  Of course, with my wife’s job trickling down to nothing here in the next few weeks, and me only working the one job, the days of $500+ weeks are gone, but it should still help motivate.

The cool thing is, I fully own one of the two vehicles we drive now!!

The Weekend Referrals

Today I decided to do something a little different…  I’m taking the top 5 PF blog referrals that I’ve gotten and giving those links to you:

Be sure to check out their sites, and thanks to you guys for the traffic!!

Here they are, in order of visits:

Becoming Debt Free 2009 – A relatively new blog that began in October of 2008

Being Frugal – A wife and mother blogging about her journey to get out of debt

Penny Wise and Pound Foolish – A woman very, very close to achieving the goal of ZERO credit card debt

Debtor in the City – the undercover_vixen trying to eliminate over $70,000 in student loans and credit cards

Money Funk – a simple living/frugality blog about getting away from consumerism

Have a great Monday!

Where the Rubber Meets the Road

Well, today we got our tax return as a pending transaction in the bank.  Just over $7,300!!  The First-Time Homebuyer’s Credit that we took flipped our finances this year – instead of owing about $700, we got a LOT back.

But here’s where the rubber meets the road.  I’ve now got a few things on my Discover card that I wanted to push out a little to pay off.  About $2,000 worth – not a huge deal, but the house has cost a little more than I anticipated, and we’ve been getting some things for the baby that has helped that balance increase.

So, I can either pay for all the baby and house stuff, then get completely out of credit card debt with the remainder, and still have enough left over to really get set in several categories (like our emergency fund), or I can pay off the truck, freeing up $204/month.

Lately, I have been of the mindset to throw everything at the truck, free up the money every month, and then work on the other expenses as I can.  But now that the money is in the bank, I’m not so sure.

Stuck in the same position, what would you do?

Flexibility is Key

My wife and I have a cat.  This cat is just over a year old, but loves to play.  My wife was letting the cat chase a stick with feathers and a bell on the end of it the other day, and brought the stick up close to my chair.  At that same moment, I turned to ask her a question, and the cat was in mid-air within inches of my face!  Through some miraculous act of flexibility, the cat seems to turn in mid-air and avoided hitting me in the face.  She then ran out of the room like a scared rabbit, and calmly started cleaning herself in the the living room, as if nothing in the world had happened.

I was laughing so hard about it that I had trouble staying in the chair, but later got to thinking about it.  The cat has the ability to overcome difficult situations due in no small part to her flexibility.

That’s how I’d like my finances to be – flexible, and able to turn in mid-air.  Right now, my finances aren’t very flexible.  I’ve got a set amount that goes out every month – set expenses that drive what we do, and very much limits our discretionary spending.

So if my goal is flexibility, then, how do I attain that?  Obviously, having money provides flexibility, but, then, so does not having expenses.  In the short-term, having money will provide flexibility, but longer term, not having expenses is what will provide the most flexibility (at least in my mind).  Even if I have a hundred thousand dollars in the bank, if I’m spending $5,000/month, I’m only good for about a year and a half.  If I’m only spending $2,500/month, I’m good for almost 3 and a half years.  But the added benefit is that I get to a year and a half earning (and paying taxes on) half the money required in the $5,000 scenario.

With that said, my goal towards paying off debt is shifting slightly.  Rather than focusing on the credit cards and emergency fund (worthy goals, to be sure), I am going to focus most of my discretionary debt reduction towards paying off the Ranger, because that relieves me of a $200/month payment, and reduces my monthly payment obligation by about 13% (including only debt service – mortgage, student loan, car, credit card, and truck).  That’s a pretty good pay hike, especially these days.

Thursday Update: 1 Day Late Edition

This past week, I found out that I was in charge of doing the campaign video for our church’s new building – which should be exciting to do, but is going to require a lot of work – especially since the video will be played the weekend after Easter.  So all intents on getting an update done over here yesterday failed.  I spent most of the evening working on pictures, listening to the theme song, and storyboarding.

But, progress was still made this week.  We haven’t gotten our taxes done yet (they are ready, just not submitted yet), but we did get our first house payment mailed off.  It will be very interesting to see how the next few months play out as we settle into the groove, but I think when all is said and done, we’ll be in a much better position at the end of the year than we were last year.

Once our finances settle down from the move, I’m going to be able to update this blog more frequently, and with better content (hopefully).  In the meantime, be sure and follow me on Twitter (see the link over there <---), and stay tuned for further updates!

Due Dates? What are those?

My filing system has been a disorganized disaster ever since we’ve moved, and I am still finding bills that are a month (or even more) late.  Some of these get assessed with a $5.00 late fee and then get listed as a “previous balance” on the next bill.  If I do this with only one bill per month, I’m still paying $60 a year for the privilege of only paying once every other month.  It can really start to stack up if we start talking about more than one bill, and especially so if we get to the bill that charges a percentage or higher late fee.

Some bills just got lost in the transition from one address to another, so it probably won’t be as big a deal from now on, but it is still frustrating that between last month and this month, I’ve spent about $20 on late fees  (No credit cards or consumer debt, because it is all on auto-pay).

To rectify this situation, I’ve decided that, no matter when the bill is due, I’m going to go ahead and pay it.  Right then, right there.  There is usually enough fluff in my checking account to handle a bill, even if it comes a few days earlier than it should, and I’m working on getting my short-term emergency fund back up to the place it needs to be so that I can handle paying even a large bill a week or two earlier than normal.

How do you handle bill payments?  Do you wait until the last minute?  Or do you pay the bill when it comes in?

Update Thursday: Too Long Gone Edition

I really need to get back on track with churning out the Thursday updates, if only to help spur me on to further accomplishments.  It has been pretty depressing to see our money go out the door to things other than debt reduction, especially after making such progress in the final months of 2008.

I do need to remember that I was working two jobs vs. the one I am working now.  Add to that the fact that we now are in a house vs. an apartment, and suddenly I begin to see clearly why we aren’t making any progress.  Then throw on top of that the fact that we are having to make purchases and sock away money for the pregnancy, and I begin to be surprised that we aren’t any further in the hole than we currently are.

The filing of the income taxes will help significantly, as we should be able to finish paying for the pregnancy, pay off the credit card, purchase the needed furniture, and still have enough left over to re-fund the short-term emergency fund, and set a little bit aside for the big emergency fund.

I’m ready to get that taken care of, if only to get back on top of our budget and really focus on some of these expenses.  Part of my solution was to run through our budget and begin to trim any unnecessary fat out of it.  I have been putting $3/week towards my XM Radio subscription.  But they are about to go up on prices and their books don’t look real promising anyway, so I cut it off.  True, it makes less than $200/year difference in our finances, but it is something that we can live without, so we are going to.  My goal this week is to go through the budget and begin to realistically attack the fat in it and free up some more money.

Catching Up

Many things have happened since my last “real” blog entry.  I wanted to get some things to settle down and be solid before I really posted anything.

The most significant thing that happened was that we bought a house!  We are very excited about this, but it comes with some trepidation as well.  The monthly payment is well within our means of handling, but there is a lot to a house that isn’t always obvious at the beginning.  The little expenses haven’t really let up since we got in the house, and by now, most of my “extra” savings has evaporated.  This will be a real test of my commitment to only buying things as we can afford them – I put over $1,000 on the credit card this past month, just in miscellaneous expenses (solar screens, blinds, water hoses, sprinklers, curtains, tools, etc., etc., etc.).  Fortunately, I had enough money set aside that none of this will stay on the credit card, but it does squeeze down the amount of money that I had set aside for the pregnancy.

We will get there, but the discipline needs to start now so that we don’t fall back on the credit cards as a means to survive.

I’m hoping to have enough time to sit down in the next few weeks, and get a budget filled out that will be fairly accurate.  As a result of all these expenses and not knowing exactly what our electric, gas, water, and garbage bills will look like, we’ve decided to hold off on getting internet access at the house.  This has been particularly hard on my wife, since many of her friends are spread all over the globe, and online is how she keeps up with them.  On the other hand, it has given us some real opportunities to get things done, rather than spending the time online.

Of course, through the middle of all this, President Obama signed the ARRA into law, meaning that we will qualify for the $8,000 credit as first time homebuyers.  I have mixed feelings about this, because I’m against the philosophy of allowing the government to finance my life, but, at the same time, the money could come in very useful.

We passed the halfway mark for the pregnancy, which serves as a continual reminder that baby expenses are not far off, both birth and ensuing expenses.  In this economy, I am sorely tempted to go back to work with a part-time evening & weekend job to help pay for all of this.

Fortunately, my wife is still working part-time every week, which should allow us to get caught up on everything within the month.

Over the course of the next few days, I’m going to add the mortgage to my debt picture, but I think I’m going to leave it out of my “Overall Debt” figuring, since, although my goal is to be completely out of debt eventually, the current goals are the elimination of the credit cards, student loans, and vehicles.

More Site Improvements

Over the past several days, I’ve set up a Twitter account (GoliathDebt), and a TwitterFeed account, which means that all of my blog posts should be updated on my twitter.

I attempted to post my last 5 updates on Twitter over on the sidebar, but I haven’t got that part working yet.

I am also considering moving (at least partly) from written blog to a podcast.  As my subscribers, what do you think?

SNL and the Economy

Saturday Night Live comes out with some real gems from time to time (although, admittedly, while the political jabs were funny last year, not much else was).  A short came out about three years ago, and Bob over at Christian Personal Finance reminded his subscribers about it.  Well worth the watch, the message is simple, straight-forward, funny, and just a little sad.  Sad that, in this day and age, people seem to have the same mentality as the couple.

Here’s the link…

Insurance Premiums

Remember to shop your insurance premiums on occasion.  I have been with GEICO for nearly five years…  I like the company well enough, but have had ZERO claims in that time, so I haven’t “seen them in action”.  They may be a great company to deal with when you have an accident, but I continually hope that I never have to find out how good or bad the insurance company is…

Anyway, I have a friend who is an independent agent, and when we bought the house, I decided to get him to quote the house insurance for us.  He asked if he could quote the two cars as well, and I told him that would be fine.  He looked at our limits, and decided to double them.  Then he added car rental on.  My thought was that everything he was doing was just going to end up convincing me to go somewhere else…  The quote came in, and it was less than $300 a year more than GEICO.  Except that included the house, whereas GEICO was only on the two cars.

So I called up GEICO to see what they could do.  I told them I got a better rate for twice the coverage, and the quote for the insurance on the house sounded very reasonable, but I wanted to see what they could do.  They informed me that because I’ve been a customer for nearly five years, I would be eligible for “Accident Forgiveness”.  Meaning that if I had a wreck, my insurance wouldn’t go up.

Huh.  wow.   I mean, really?!?  That’s all you can do?  Why would I want to pay about $500 a year MORE money for half the coverage on the off-chance that I file a claim and be protected from my insurance would going up?  Chances are, even if I filed a claim, it wouldn’t jump that high…  And even if it did, I could always go back to the level of coverage I was getting before the change!

So, lesson learned.  Who knows how long I’ve been paying out the nose for insurance, just because I never got them to re-quote me.

Moving…

My posts of late have been, well, nonexistent.  We are in the process of moving from the apartment to the house, and, honestly, my debt reduction and savings have been replaced with getting this little thing, or incurring that expense, etc.

I am hoping, by the middle of next month, to settle down into a routine.  I would like to get back to fighting debt, as well as saving up for the baby.

The $8,000 First-Time Homebuyer Credit that was included in the ARRA will help us out by getting some things set pretty quickly after we file our ‘08 taxes, so I would like to get that done by the middle of March as well, and hopefully have our refund in hand by April 15th.

I’ll try to keep the blog updated, and by next month be in a bit more of a groove as far as the updates go.

Some Site Stuff…

I made a couple of changes behind the scenes over the weekend, and I wanted to address the site stuff, so I thought this would be a good time to do that…

First of all, I use Feedburner for my RSS feed, and they have recently been acquired by Google, so my RSS feed had to be updated.  It really shouldn’t cause any problems, but I did have to re-sync the feed when I moved it, so if you noticed a glitch or two in your feed, that’s why.

I’ve had several requests for the code for my debt charts.  Alas, I cannot claim credit.  In fact, I can’t even claim to know the guy (Matthew Harvey over at smallish.com) that provided the code.  Early on, one of my very first readers was Mrs. Accountability over at the Out of Debt Again blog.  At the time, she had a debt chart similar to the one I have now, and she volunteered the code to create one, so thanks to her, I now have the opportunity to share…

In Blogger, create a new “gadget” of HTML/JavaScript, and put the following code in the window:

<!-- Progess bar widget, by Matthew Harvey (matt at smallish.com) --> <!-- Licensed under a Creative Commons Attribution-Share Alike 2.5 License (http://creativecommons.org/licenses/by-sa/2.5/) --> <style type="text/css">   div.smallish-progress-wrapper   { /* Don't change the following lines. */     position: relative; border: 1px solid black; }   div.smallish-progress-bar   { /* Don't change the following lines. */     position: absolute; top: 0; left: 0; height: 100%; }   div.smallish-progress-text   { /* Don't change the following lines. */     text-align: center; position: relative;     /* Add your customizations after this line. */ } </style> <!-- Progess bar widget, by Matthew Harvey (matt at smallish.com) --> <!-- Licensed under a Creative Commons Attribution-Share Alike 2.5 License (http://creativecommons.org/licenses/by-sa/2.5/) --> <script type="text/javascript">   function drawProgressBar(color, width, percent) { var pixels = width * (percent / 100);   document.write('<div style="width: ' + width + 'px" class="smallish-progress-wrapper">');   document.write('<div style="width: ' + pixels + 'px; background-color: ' + color + ';" class="smallish-progress-bar"></div>');   document.write('<div style="width: ' + width + 'px" class="smallish-progress-text">' + percent + '%</div>');   document.write('</div>'); } </script> <span style="font-weight:bold;">Overall Debt</span> <br/>Current Balance: $38,695<script type="text/javascript">drawProgressBar('#223344', 200, 50.4);</script> $77,962 &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp $0 <p> <p> <span style="font-weight:bold;">Credit Cards</span> <br/>Current Balance: $1,899<script type="text/javascript">drawProgressBar('#223344', 200, 93.6);</script> $29,767 &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp $0 <p> <p> <span style="font-weight:bold;">Student Loans</span> <br/>Current Balance: $13,905<script type="text/javascript">drawProgressBar('#223344', 200, 7.3);</script> $15,120 &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp $0 <p> <p> <span style="font-weight:bold;">Ford Ranger</span> <br/>Current Balance: $7,931<script type="text/javascript">drawProgressBar('#223344', 200, 21.3);</script> $10,076 &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp $0 <p> <p> <span style="font-weight:bold;">Ford Fusion</span> <br/>Current Balance: $14,960<script type="text/javascript">drawProgressBar('#223344', 200, 35.3);</script> $23,120 &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp $0</p></p></p></p></p></p></p></p>

 

Of course, if you have a different number of debts, you can adjust accordingly.

The parts you can change are contained in the script that draws the progress bar… 

<script type="text/javascript">drawProgressBar('#223344', 200, 35.3);</script>

#223344 is the color code, 200 is the pixel width, and 35.3 is the percent to the goal.

If you are counting up, then you just replace the big number with 0, and put your goal at the end.

The formula for calculating percentage is easy…  your overall progress divided by the starting point of the debt.  If you are using it as a savings goal, then it would be the current balance divided by the goal.

I hope that helps anybody trying to create their own progress bars!

Update Thursday: Socking It Away Edition

It’s been several weeks since I’ve posted an actual update, but for those of you looking at the bar graphs on the side, you’ll notice that there’s been little change in January.

However, there is more to the story than just the charts…  I have over $5k socked away in my checking account, I’m just keeping it there for the house closing and the moving expenses that will inevitably come up during that process.  We’ve already had a few expenses this month that would have slowed our progress anyway, coupled with the fact that my wife’s income has slowed a bit due to the weather and holidays this month.  We still have enough in the bank that I could completely wipe out the credit card – I’m just waiting for a few things to happen before I aggressively pay it down.

Still, month-to-date, I’ve paid nearly $400 off the credit card, and plan on putting at least that much against it each month, still getting it paid off by the time the baby comes.

The Inauguration wasn’t the only change…

I don’t want to bore you with the lack of progress I’ve made against my debt by doing an update – basically, everything has just been stored up in my checking account as we prepare to move on to the next stage of our life.

The pregnancy has a good chunk of change stored away for it, and, hopefully, the extra I’m saving up won’t be needed.  If it is, then that’s what the fund is for.  I don’t know that I’ve ever had as much cash in the bank as I have right now.  I’m not counting very much towards my emergency fund until after the baby is born, just in case the money is needed.  Once the baby is born and all the essentials are taken care of, then I’ll probably move the money to a MMA or something to separate it from my everyday finances.

Our lease is ending on February 28th.  This makes our second year at these apartments, which isn’t a bad deal, but there are several problems that keep recurring that aren’t taken care of, even though we’ve mentioned the problems.  So we are moving.  The question was:  where?  I decided that if my wife is pregnant, we might as well go for a bigger place while we are at it.  Upgrading the apartment size and quality was the least I felt we should do.  Spending more money per month on rent, while slowing our debt progress, is definitely doable, especially considering the amount of progress we have made.  Budgeting the amount for a nicer, larger apartment put us about even with a decent house payment.  This led me, once again, down the path of buying a house.  Sure, we’d end up spending a little more each month, but it would be ours.

So that’s what we’ve decided.  We are buying a house.  The house has been located, and the interest rate has been locked (5.25%).

I understand that buying a house while in debt is unacceptable to most PF bloggers, but I also feel that there was more to the equation than simply finances.  It was time to begin thinking a little further into the future, and not be so focused on the present that I end up aggressively paying down debt vs. doing what I feel is best for my family.  Don’t get me wrong – a majority of the time, the aggressiveness I’ve shown in paying down debt has been the best thing for our family.  I just feel that the priorities have shifted a bit with the pregnancy, and I’m adjusting our lives to re-align around those priorities.

I know that in this single blog entry, I’ll lose most Dave Ramsey fans – and I know that this is not something that he would do – in fact, he would rail against it.  That’s ok – my purpose of this blog is first of all to have a history of what has happened in my debt-reducing life, and this is part of it.  Of course, I’ll have to add another row on my debt reduction scheme, but, in the end, I feel that my family is better served by this than by spending about the same amount of money on an apartment and having nothing to show for it.  (The mortgage will actually be less than I what I could get an apartment for – the taxes and insurance put me about $100/month more expensive than the apartment  With the tax deductions and exemptions that I’ll get, it might end up being about the same.)

So that’s the big news of the past few weeks.  We have another two and a half weeks until we close, and at that point, we will really have a lot to do.

50%!!!!

Today, we hit 50% of our debt paid off…  took us 739 days to get to this point, but we did it!  Sending the final $300 to get us to that point was well worth it!

We have significantly slowed our progress for the time being – choosing to work on building up our accounts and get a better emergency fund in place, but even that hasn’t been as fast as I would like – I got used to my second job’s income, which isn’t there any more, and my wife went back to work this week on Wednesday, after being off for two and a half weeks, so we’ve been operating on a single income this year.

Pay attention to your statements!

Back in April, I found a better deal for my truck, so I started the process of moving my loan to the bank with the better deal.  The credit union asked if they could match or at least get close to the same rate if I would consider staying.  I said that would be fine, and we signed an addendum to my loan dropping the rate from 7.99% to 5.89%…  After I signed it, things got busy, and I never actually looked at my monthly statement.  Until I had a week and a half off, and started to catch up on filing (I’m the world’s worst procrastinator when it comes to filing, I know).  I noticed on the statement that the annual percentage rate was still showing 7.99%.  So I headed down to the credit union where I had the loan with the signed addendum and my statements.  Sure enough, the rate never got changed.  They said they would make the change, and also research it out to credit my account for the difference in interest.  The difference came to just over $120!

Be sure to keep an eye on your interest rates and pay attention to your statements.  Chances are it was simply an oversight on their part, but if I hadn’t caught it, I could have paid off the truck on the wrong interest rate and paid an extra four or five hundred dollars over the life of the loan!

End of Year 2008, Goal Setting 2009 Report

Well, it’s the beginning of 2009, so, to commemorate that, I’ve decided to set down exactly what we accomplished in 2008.

During the course of the year, the credit cards were our biggest focus.  We eliminated all the credit cards, with only one exception.  Here are our numbers:

Credit Card Debt:  $2,281.00
Truck Loan:  $8,217.62
Student Loan:  $13,953.26
Car Loan:  $15,299.68

Our total debt, in two years, has dropped from $77,962 down to $39,752.  That means that we’ve made just over $14,000 worth of progress against our debt in 2 years, so just a little over $1,000 per month.

Here are our goals for 2009:

1.  Pay off the final credit card
2.  Build an emergency fund of $10,000
3.  Move
4.  Have a baby
5.  Get a will in place
6.  Get term-life insurance in place

Right now, those are our objectives, although, not necessarily in that order.  There is also the possibility of consolidating the remaining loans into a single loan at a better interest rate/payment (although, the Student Loan is the only one left with an interest rate over 6.0%)

It is definitely going to be an interesting year, with the combination of the economy and the personal life changes…