Monday, October 20, 2014

Three years of debt reduction

Today marks the third anniversary of my beginning this blog and my debt reduction journey. It's been a tough year financially: S and I made an expensive move, transitioned to one income, have been investing in his business, and racked up some more medical debt. All told we increased our debt a little over $1,600 in the past year. I've been trying to stay the course and see the positives in the setbacks we've had over the last year and remind myself that we will get back on track. 

Although debt reduction did not happen here are some of the more positive things that did occur in our financial world:

  • We've made a transition to one income and aren't starving, deprived, or destitute. Making the leap to one income to allow S the opportunity to restart his ceramics business and stay home with our boys was a major hurdle this past year. I had major anxiety that we wouldn’t be able to make it work, that we wouldn’t be able or willing to make the sacrifices we would need to make in order for it to work. I was worried that ultimately the boys would end up back in some cut-rate daycare and S would be forced to abandon his dream and take some minimum wage dead end job just to make ends meet. Fortunately, we have made the adjustment relatively well and have been living on one salary without feeling too deprived with all the cuts we have had to make although it has added to the halt in debt reduction and increased debt.
  • S’ business is fully funded and ready to launch. S has been working diligently on getting his business back up and running, which required a significant amount of our discretionary funds that otherwise would have gone into debt reduction or at least not accruing the new debt.  But now the business is fully funded and is going to be “launched” right before the holiday shopping season. We have high hopes that the business will be able to support itself in its infancy and eventually will bring in a profit.  In the meantime, now that the biggest hurdle is almost over S has been talking about getting an evening/ weekend job to bring in some extra income but still be able to be with the boys during the day.
  • We should see a reduction in our taxes this year from the moving expenses which were not covered by my employer as well as the business investments. Although any tax return wouldn’t happen until early next year, it’s still on the horizon and can go towards debt reduction.
The road ahead is going to be tough as we still have a ton of debt to tackle but I'm hopeful that the last of the debt increases are behind us and we will start making headway on debt reduction again.

Wednesday, October 15, 2014

Yard sale prepping

This weekend I'm participating in a yard sale with my mom and one of my sisters. I'd like to say I'm looking forward to it but I'm really not. It seemed like a great idea when I agreed to it a month ago, I had been on a purging binge for a couple months and was ready to get rid of more stuff. But then life happened and I just haven't had as much time to go through all our stuff as I would have liked.

I do have quite a bit of stuff set aside and tagged. I already had boxes of baby stuff ready to go and I've made my way through all of my clothing, shoes, and accessories. I've managed to sift through some kitchen wares, books, my sewing and craft supplies, and grabbed random stuff from around the house. What I haven't tackled is the attic, which became a catch all for random boxes from the move that were not critical to unpack and were getting in the way. Since we've now lived in our new place for 6 months it's fair to say that we don't need most or any of the stuff in these boxes.

I'm going to try to get through as much as possible before Friday evening, when I have to pack up the car and head to my moms (an hour and a half away). Since most of the stuff I've pulled together is small, cheap, and not the best type stuff for yard sales, I'll be glad if I can walk away with $20 extra bucks. I guess I'll just keep the stuff labeled and in boxes and have another yard sale in the spring. Surely I'll be able to get through all of our belongings over the next 6 months.

Wednesday, October 8, 2014

What to do with won money?

I didn’t win anything but I did recently enter an online sweepstakes and it got me dreaming about what I would do if I won the $350k cash prize. Just for giggles, let’s assume I won and now have $350,000 in cash. And since we’re dreaming let’s say that’s after taxes…

The #1 first thing I would do with my cash is get a mani/ pedi. Kidding, sort of. It is the one thing from my easy spending life that I really do miss. The real first thing I would do is, duh, pay off all debts! Secondly, I would set aside 6 months living expenses in an emergency fund, finding the highest yield savings account available or perhaps a CD ladder. $100 K would go straight into college savings for the boys and another $100 k would go into retirement accounts for S and me.

I’d also want to set aside a 20% down payment on a house so there’s another 40k (a 200k house in this area would be more than enough for us to grow in). The remainder I would invest, something about peer to peer lending appeals to me, perhaps because we got our consolidation loans through peer to peer to help us out of our debt mess.

$77,117.00 Debt
$24,000.00 Emergency Savings
$100,000.00 College Fund
$100,000.00 Retirement
$40,000.00 House
$8,883.00 Invest
$350,000.00 Total

But wait, all the money is going to debt or to some sort of savings?  Where’s the party, where’s the new car and big screen, what about the mani/ pedi? Yep, I feel pretty comfortable saying that I would put everything into savings after the debt is gone. After a decade of owing money all over the place and having gone through several major life events that would have been a lot less traumatic had there been savings to fall back on, I absolutely would put it all towards financial stability. Besides, paying off the debt would free up at least $800 a month to put towards having a bit more spending cash each month for the luxuries in life.

Now if only I could just win that cash… until then I just have to keep doing this the old-fashioned way and keep chipping away at the debt.

Tuesday, September 30, 2014

3rd Q 2014 Report

Starting point:

Student Loan 1 (My fed loan): $38,339
Student Loan 2 (S' state loan): $21,719
Student Loan 3 (S' fed loan): $5,454
Car Loan: $11,684
Credit Card 1: $10,577
Credit Card 2: $3,635
Credit Card 3: $0
Misc. small debts (S' small debts in collections): $5,443
Medical expenses: $3,672
Parents: $600

Total: $101,123

And here's were we are today:

Student Loan 1: $35,319
Student Loan 2: $19,837
Student Loan 3: $0
Car Loan: $0
Credit Card 1: $0
Credit Card 2: $0
Credit Card 3: $5,939
Misc. small debts: $4,349
Medical expenses: $2,218
Parents: $0
Consolidation Loan: $9,458

Total: $77,120

Paid off to date: $24,003 paid off + $655 in savings

Let's get the bad news out of the way: we increased our debt for the second quarter in a row. We're another $688 higher than we were last quarter. The good news is: that's all we increased despite having over $2,300 in medical bills this past quarter. If I'm trying to see the glass half full, it's also good that all of the medical debt we've added over the last quarter is interest free and is in the process of being consolidated into one low monthly payment.

Other good news, we've finally got some cash in savings, some of which is "emergency" and some of which is being set aside for our car insurance payment. Barring any major unforeseen events, I am hopeful that the coming quarter we will finally start making a dent in debt again as well as finally get our emergency fund back up to $1000.

Saturday, August 30, 2014

Unexpected bonus

I've been really busting my butt at work for the past couple months, working long hours and at a fairly frantic pace. My company has more work than we know what to do with and, so far, have not had any luck in finding another person to bring onto the team. S has been so patient with the overtime even though it often means super long days with two active toddlers and putting his own work on the back burner.

A couple days ago the three partners at the company pulled me into the only space in the office that has a door and closed it behind me. First thought, oh crap, I've been here almost 6 months, maybe they think I'm not measuring up to their expectations when they hired me!  Gulp!

The convo started with the usual review type questions, how do you feel you are settling in, how has the transition been, etc. Quickly though they started singing me praises and said they just wanted to take a break out of the busy schedule to let me know they appreciate the hard work... and if that wasn't enough of a boost for me, they handed me an envelope on my way out the door with a nice little bonus check in it.

It's been a long time since I've been in a work environment where I feel that my knowledge, efforts, and hard work are valued and even longer since I've received a random bonus. It really makes all the difficulties S and I have faced since the move seem like they are worth it! And honestly, the check couldn't have come at a better time. The boys are at the upper limit of the height class for their infant seats and it's time to get the bigger seats. With no savings and very little extra cash in our budget I didn't know how we were going to afford two expensive car seats that would fit in our compact cars.  

So $500 of the bonus is going into savings so we can finally have a little bit of an emergency fund and the rest will go to car seats! What a relief!

Tuesday, August 26, 2014

Selling spree

I’ve been on a selling spree this past month, going throughout the house and listing unused and unneeded stuff on Craigslist, Ebay, and at a children’s consignment event. Things I uncovered to get rid of included old video games, furniture, my wedding dress, and all the boys clothes, toys, and items that they’ve outgrown.

After all was said and done we brought in $293 which is great since we had some unexpected medical bills and auto parts that were needed over the past month. $100 went towards buying the clothes, shoes, and coats the boys need to get them through the fall and winter which we picked up used at the consignment event.

Some of the stuff I uncovered, like my wedding dress, didn’t sell during the course of the last month and while I still intend on selling this stuff, it’s a ton of work to stay on top of all the listings and people contacting me for more info. For now I need to focus my attention elsewhere for a while and maybe I can do another month selling spree towards the end of the year or perhaps near the spring children’s consignment event.

Wednesday, August 13, 2014

Medical debt

Life has been moving along at warp speed and I haven’t been able to post as much as I’d like about what’s happening financially in my life.  Little financial things have been going on like selling off stuff on craigslist/ ebay and preparing for the big kids consignment sale this weekend.  But also one major thing has occurred that really puts a kink in the financial plan: medical expenses.

One of the twins had a trip to the ER (he’s fine, just a little infection) which means a $150 co-pay and I ended up needing a minor surgery (I’m also fine).   Since we hadn’t met any of my deductible yet for the year and have a 20% patient responsibility we owe a little over $2,000 for that.  Unfortunately, the need for these medical services were totally unexpected and since we still don’t have any money set aside in an emergency fund this all means we have more debt now. 

I’m really bummed out about the med expenses for a number of reasons.  The first is that it just drives home how important the emergency fund really is and it has been so frustrating trying to get money set aside for emergencies. All that debt consolidating/ shuffling and putting my student loan in deferment a couple months ago have only allowed us to cover some of the smaller medical bills and other unexpected expenses we’ve had lately.  And every time I bring a little extra in via my side businesses or by selling something off we have some unexpected expense so nothing makes it into savings.   

I’m also bummed because we were only two monthly payments away from paying off all the medical debt from the boys’ birth.  Now we’re right back in medical debt and almost as much as we started with.  Just feels like another big step backwards.

The biggest reason I’m bummed out is that we can’t afford to make additional debt payments on anything right now.  We’re on an extremely tight budget as it is and there’s nothing left to pay towards new debt.  When I tried to set up payment plans for the medical debt, the minimum payments to the three different accounts that make up the bulk of the balance were no were near affordable with our budget.  And even though the three accounts are all through the same umbrella company because they are from different locations and people they can’t combine the accounts to try and get a lower monthly payment.

After talking with the billing department for a while and explaining our situation the lady suggested we take another approach.  Apparently after the bills go unpaid for two billing cycles they will be transferred to the internal collections department (which is not reported to the credit bureaus).  She advised us to let the bills go to internal collections at which point we can consolidate those three accounts into one.  She said that the collections department also has a lot more flexibility on repayment terms so we can get a much lower monthly payment.  The only saving grace in this situation is that by the time these new bills go to collections we will have made our last payment on the birth debt.  Hopefully we can get a repayment plan at or lower than the medical payments we are currently paying but we won't know that for another couple months.

I certainly hope I can start posting more positive news soon and start seeing some debt reduction again.