Desperately in Debt

Can't live without my technology...

2012-01-25T09:46:00.001-08:00

I’ve been with T-mobile for as long as I can remember andhave always been satisfied with their service, phones, and plans. Every few years or so I end up signing a newcontract with them to get a better phone. Usually around that time I take a look at whatother companies are offering and, in the past, T-mobile has always seemed togive me the most for my money. I amcurrently out of contract with them but my phone is fine and I have beensatisfied with my plan so I wasn’t really thinking about changinganything. However, since I am on themission to scrutinize every last penny I spend each month I decided it’s timeto really explore all the cell phone options including switching to a familyplan which S and I have been talking about for a year but never doing anythingabout!

Let me just say how freaking confusing the cell phoneindustry has become! My first stop wasto my trusty old T-mobile which , at least the last time I went in, had ahandful of plans to choose from and seemed pretty straightforward. Not anymore! Now they have value plans, and discounted phone plans, and a la carte optionsfor everything. The poor kid trying toexplain what the equivalent of my old plan is and how all the different choicescould affect the bottom line was getting noticeably flustered by the time Isaid thank you and left (just as confused as when he started talking).

After looking at ALL our options, which was exhaustingand took weeks to analyze everything we’ve decided to stick with T-mobile. We’ve combined our plans into a family planthat costs $15 less than I was paying for just my phone plan. With the extra savings from our cell phonebills we went ahead and got internet service at home which neither of us havehad for years.

I want to feel guilty about getting internet service athome, I mean we’ve been surviving just fine without it for years and it doesn’tfit with the reduce everything mentality but I just don’t… I love being able tostream movies and music again, I love that I can skype video chat with myfriends and family again, and I love that I can waste hours online again on webgames, youtube, and blogs. I don’t feelguilty at all… besides we did reduce the overall amount we were spending by 15whole dollars so that has to count for something, right?

2012 Resolutions

2012-01-13T08:28:00.001-08:00

I’m a big fan of making New Year’s Resolutions. For several years I’ve diligently sat down inJanuary and written out my resolutions on a sheet of colorful cardstock. Once the sheet is full of all my goals anddreams I proudly place it on the stack of other paperwork that needs to beaddressed where it slowly fades from my memory and eventually gets filed awaywith the resolution sheets from years past.

This January I pulled out all those old sheets andreviewed what my priorities were in the past. One category of resolutions could be lumped together as personal improvementgoals like quitting smoking (took a few years but was eventually successful),running a 10k (did it), and eating healthier (not so much). Thereare also a few items in the “projects that I want to complete” category likerefinishing the old dresser and reupholstering the couch of which I’ve got aroughly 50% follow-through rating. Notsurprising to me, I’ve always had craft project ADD so I end up starting moreprojects than humanly possible to finish. It would be nice to actually wrap up some of the projects I’ve gotlaying around that never seem to get done considering I’ve usually bought allthe required supplies.

There is one last category that appears on several of myyears past New Year’s sheets which is really shameful… the “things I want tobuy” category which were often inappropriately labeled as “needs” including aflat panel tv, new stereo, new car… you see where I’m going with this. The worst part is that almost everything thatfalls into the “things I want to buy” category was fulfilled. I’m pretty disgusted with myself on this one,it’s pretty hard to deny that I’ve got a problem when I’ve got actualdocumented proof that I put “things” in front of all my other dreams and goals.

This year I am vowing to put my personal growth and myfinancial health ahead of tangible objects… Here are the top 5 goals I want toaccomplish in 2012:

1. Pay off credit card debt which is roughly 10k

2. Focus my creative energies on completingprojects that I already have the supplies for

3. Clean up my diet… I want to cut my dependence onprocessed food and junk food/ soda which is good for my health and also goodfor my finances!

4. Brush up on my basic Japanese language skillsand sign up for the fall intermediate class

5. Start walking every day with the dogs… they arein need of more exercise just as much as I am!

Here’s to the beginning of a New Year… I’ve got some hardwork ahead of me but I’ll be better for it if I can just stick to mypriorities!

To do a balance transfer or not

2012-01-05T12:48:00.000-08:00

My credit card balance of 10k is currently sitting on acard with a promotional 0% interest rate from a previous balance transfer thatis set to expire this month. In thepast I would have just transferred the balance to one of my other cards and notthought about my credit card debt until the new promotional rate wasexpiring. This time my choice is not soclean cut. First of all, I am determinedto pay off the whole balance by the end of this year so does it make economicsense to pay the transfer fees vs. the higher interest rate? Secondly, neither of my other cards have ahigh enough limit to transfer the entire balance so does it make sense to splitmy balance amongst multiple cards? Andlastly, are there other impacts that I should be considering… I’ve heard thatdoing balance transfers is bad on the credit score so what’s the real truthbehind it?

The first question was pretty easy to answer using thecalculators on bankrate.com:

If I keep the balance where it is I am guaranteed to pay$970 in interest over the course of the next 12 months with monthly payments of$936 which is a pretty steep number to come up with each month.

If I balance transfer from Card 1, I could do $4,800 toCard 2 (0% till 10/12 then 8.99%) and $5,200 to Card 3 (5.99% for 12 months). I would be paying $192 in fees and approx.$200 in interest over the next 12 months. Obviously the cheaper option is to transfer the balance.

But by splitting the balance and transferring to Cards 2and 3 I essentially max those cards out and leave my highest interest card theonly fall back option I have… this sounds dangerous to me for so manyreasons! First, because I don’t have asavings account as a fall back I frequently have to put business expenses on acard and then wait for a reimbursement. Second, if something financially major were to happen I would be stuckrelying on my worst card. Lastly, Card 3has the best rewards program around and I use it for everything I would normallybuy like gas, groceries, pet food and then cash in the points so I would belosing the financial return on all my expenditures while the balance transfersits on it. It doesn’t seem to make muchsense to me to do both balance transfers.

And what about the last question… does it hurt my creditto keep shuffling around the debt? Ifound these articles helpful: http://www.gotcredit.com/how-balance-transfers-affect-your-creditand http://articles.moneycentral.msn.com/Banking/YourCreditRating/WeirdStuffThatHurtsYourCredit.aspx

Since I’m not opening a new account to transfer thebalance just taking advantage of my existing cards offers, I won’t get dingedfor that. However, it sounds like by transferringmy balance to lower limit cards and maxing them out could have a negativeimpact. I'm not planning on buying a house or car within the next few years though so I'm not really that concerned with a few points off the credit score.

I think the best bet for me is to transfer half thebalance to Card 2 and keep Card 3 paid off… now I just hope they approve thetransfer!

Results of my debt reduction efforts for 2011

2012-01-03T11:10:00.000-08:00

In October I decided it was time to make some seriouschanges to my habits so that I could pay off my debt. I set out a plan to look critically at everyaspect of my expenses to find out where I could spend less and to come up withways to make extra cash. I cut about $300out of my regular monthly spending and brought in an extra $200 a month bydoing sewing jobs and concentrating on my Etsy site. That added up to around $1500 to put towardsmy debt during the last three months just by making changes to mylifestyle! Plus I had the regularly budgeted amounts that I was paying off each month and, very thankfully, I also got ayear-end bonus at work which I put towards debt. In all I paid off just over $5000 off my debtin the past three months. While Irealize it’s not going to be possible to keep up that pace (inevitably therewill be some big expenses that I can’t avoid like new tires and I don’t thinkmy company is going to be handing out bonuses every quarter!), it really feelsgreat that I’ve been able to get off to a solid start! I only wish I had come to this realizationyears ago instead of avoiding my finances!

Here’s a breakdown of what I did over the last threemonths to reduce spending and increase debt reduction:

Here’s my estimate of what I cut from my spending:

$115 from my non-essential spending (ie. Eating out,buying snacks at work, going out for a drink, etc)

$50 from my pet costs (switch to cheaper food/ flea treatment options, coupons,sales, and reducing the toys/ treats fund)

$15 from my cell phone plan (ended up switching to adifferent plan with T-mobile which was cheaper)

$50 from the grocery bill (coupons, sales, and strictmeal planning)

$100 from the energy costs (being diligent about reducingconsumption)

Here’s where I started:

October 2011:
Student Loan: $38,339 @ 2.5%

Car Loan: $11,684 @ 3.9%

Credit Card 1: $10,577 @ 0% untilJanuary when my balance transfer reverts to 16.99%

Credit Card 2: $3,635 @ 15.4%

Parents: $600

Total: $64,835

And here’s where I ended 2011:

Dec 31, 2011:

Student Loan: $37,946

Car Loan: $11,275

Credit Card 1: $10,263

Credit Card 2: $0

Parents: $300

Total: $59,784

Paid off: $5,051

Looking forward to a financially fit 2012!!

Running out of the necessities

2011-12-16T09:23:00.001-08:00

My new resolve to cut the amount of money I am spending atthe grocery was put to the test this past week as I prepared my shoppinglist. Why is it that all the littlenecessary items around the house run out at the same time? How is it possible to be out of toilet paper,deodorant, hand soap, laundry detergent, some of the cleaning supplies, pet food, 5 different spices we use allthe time, AND a handful of the condiments we regularly use?! My trip to the grocery was incrediblydepressing, I spent a ton of money and once everything was unloaded the fridgestill looked barren!

The price of my fuzzy friends

2011-12-13T09:18:00.001-08:00

While going through the process of combing my monthlybudget for ways to reduce costs I took a good hard look at how much my two cats,two lizards, and one dog cost me and the result was shocking! I calculated the cost of food per day plusthe monthly heartworm and flea meds and annual vaccinations and licensing fees…the end result: I pay around $115 bucks a month to keep these critters with aroof over their heads! A note here: myboyfriend also has two dogs but we mostly keep our finances separate so my monthlyestimate only includes my pets. Another note: Yes, I realize we have more petsthan other couples would ever want but that’s what happens when two animallovers fall in love and combine households! And we’ve firmly agreed that there will not be any new additions to ourfamily unless it is an addition that shares our genes and will someday pick outa good nursing home to ship us off to!

Given the financial situation I am in, I know some peoplewould advise finding new homes for my pets (i.e. my middle sister, the onlyperson in my family who knows what kind of hole I’ve dug myself into and also aself-professed pet hater) but I simply cannot bring myself to even think aboutthat option. They may cost mefinancially but their companionship, devotion, and affection is something thatI can’t put a price tag on.

I can, however, make some adjustments to their lifestyleslike switching their foods to a less expensive brand. Also, since I recently moved from Florida,where I treated year-round for flea prevention, to Boston (I’m pretty sure the fleas don’t like the coldany more than I do) I can cut back flea prevention for a good part of the year. With all the adjustments, I am looking at asavings of about $50 a month which equates to $600 more I can pay-off my debtin the coming year!

Next on the list

2011-11-28T13:02:00.001-08:00

It's hard to believe that November is almost over! I've now been on the debt-reduction mission for a little over a month and I've created a game plan, examined some of my bad habits, and paid paid down a little bit of debt. I am hopeful that I can pick up steam through the end of 2011 and into the new year!

The next thing on my financial to-do list is to reducemy monthly expenses. Over the nextcouple weeks I’m going to pick through every aspect of my monthly expenses forways to reduce the amount I’m spending and therefore increase the amount I haveleft over for debt reduction. I alreadylooked into how much I am spending on non-essential small items like soda andeating out and can cut out at least $115 a month from non-essentialsspending. I’m hoping that I can cut atleast that much from the amount I spend on essentials!

Here’s my checklist of the essential items that I'll hopefully be able to reduce:

Living expenses: food, toiletries, gas, parking

Pet supplies

Electric and Gas

Cell phone

Car insurance

Getting the cold is expensive

2011-11-15T08:42:00.001-08:00

I’m the kind of person that refuses to admit I am sick andam notorious for blaming symptoms of illness on anything other than actual sickness. Obviously since I can’t even admit I am sickin the first place, I don’t get treatment until I get to the point that I’mcompletely miserable and making everyone around me miserable as well (once Iadmit defeat I turn into a pathetic mess of whimpering, needy helplessness). I got to that point last week.

I spent at least a full week blaming my cough, headache,and fatigue on the weather, the time change, the volume of the tv, thebrightness of the sun, and pretty much anything else I encountered with theexception of the bug that had taken down at least three of my coworkers. But early last week, the congestion set inand I ran out of excuses. So with my whiteflag raised and my head feeling like it was about to pop I hit the cold and fluaisle at the drugstore and got the medicine a coworker recommended. The first meds didn’t work as well as I hopedand the congestion got worse so back to the store for something different.

After another day of increasing pressure and another boxof tissues I went back to the store for the heaviest thing they have: Mucinex DExtra Strength. It was ridiculouslyexpensive for an over the counter cold med but so worth it. Not only did I start feeling better quicklybut I apparently really enjoyed the buzz as well, telling S that I felt fuzzylike our cat and laughing hysterically at every joke in a movie wewatched. After taking it for two nightsand spending all of Saturday in a Mucinex induced haze I woke on Sunday feelingbetter than I had in weeks.

All in all, I think I took four trips to the drugstoreand spent at least $50 on meds, tissues, cough drops, and orange juice. I can’t imagine how much this simple coldwould have cost me if I had gone to the doctor and gotten a prescription med aswell!

The little things add up

2011-11-08T13:39:00.001-08:00

The last time I wrote, I set out a plan complete with goals and a to-do list for accomplishing my goals. One of the items on the to-do list was to give up or reduce non-essential things I regularly spend money on. Deep down I knew I was spending a small fortune dollar by dollar on things like my beloved Mountain Dew addiction, “forgetting” to make a breakfast or lunch and being “forced” to eat out, going out for a drink after work, etc. It’s so easy to ignore how much these little things add up when I’m only spending a couple bucks at a time but since I am determined to kick these habits, I took a few minutes and calculated how much money the little, non-essential things are costing me.

Here’s what I came up with as an estimate of my spending each week:

$12 for Mountain Dew, as much as I resist the urge I still usually end up getting one 20 oz bottle a day

$5 for a forgotten breakfast

$10 for a forgotten lunch

$25 for drinks or dinner out

$1 for a snack at work

That equals $53 a week or $230 a month or $2,756 a year! And that’s just for the stuff I regularly waste my money on, I don’t even want to know what the annual total would be if I add in all the bigger non-essential stuff I buy each year! I’m sure I could do a more accurate estimate by looking through my debit card statement but considering I am giving the bulk of the non-essentials up, a ball park figure will do.

It’s pretty unrealistic to think I’ll be able to give up ALL non-essentials but even if I reduce the spending by 50% that still equals an extra $115 each month I can use to pay off my debt. Next time I get the urge to reach for the Dew or rush out the door for work without food in hand I’ll remind myself that an extra $2,756 would be better spent on something I truly want… to be debt free!

Setting a game plan

2011-11-04T13:46:00.001-07:00

Although I haven’t been diligently writing about my efforts this week, I have been working hard on figuring out how to tackle my debt. I would really love to be debt free in five years but that seems like a pretty high bar to set since it equates to paying off over $1000 a month in debt! I figure if I shoot for that and don’t succeed I will still end up in a better than I am today. I always find it easier to take on a big challenge if I set clear goals and objectives so that’s what I’ve been working on this past week:

Goal One: By the end of 2012 pay off all credit card debt (~$14,000) and maintain a $1000 emergency fund so I don’t have to reach for the cards every time something goes wrong.

Goal Two: Pay off the car (should be around $8500 left of the loan by then) and increase savings to $2000 by end of 2013.

Goal Three: By the end of 2016 pay off my student loan (should be around 35k left at beginning of 2014) and become debt free for the first time in my adult life!!

I’ve come up with a financial to-do list to increase the amount of money I can use to pay down debt each month:

1. Thoroughly examine my monthly budget for any reductions which includes the grocery budget, pet care, utilities, cell phone, etc.

2. Give up (or at least substantially reduce) some of the non-essential things that I regularly waste money on which will include my Mountain Dew addiction, eating out, beer *sob, and anything else I uncover along the way! I have a feeling once I really calculate the cost per month that I spend on non-essential stuff it’ll be easier to say no to these things but I know myself well enough to know that this is going to be the hardest change to stick with!

3. Spend less on the things that I do need like clothes, shoes, haircuts, car maintenance, etc. I’m sure if I work at it I can be a lot thriftier than I am now.

4. Sell any junk I have lying around… I don’t know if this will really make an impact on my debt but it will definitely reduce some of the clutter around the house!

5. Make more money! The most preferable would be to do a really great job at work, impress my new boss, and get a ridiculously huge raise but obviously I can’t count on that so I’ll be looking into part time work and side jobs that can add a little to the pot each month.

It’s strange but for the first time in years I’m feeling kind of empowered when it comes to my finances. Even though I’m way down in a debt hole, I feel better having finally acknowledged it and setting a game plan for getting back out of debt. I know I’ve got a loooong way to go and some seriously bad habits to overcome but for now I’m going to let myself feel good about taking the first tiny step towards becoming debt free!

Read the fine print

2011-10-28T09:31:00.000-07:00

In my efforts to cut household costs I’m going to be making a concentrated attempt at utilizing coupons and watching for sales on regularly used items. My first opportunity to try out my new thrifty attitude came last night when I walked into CVS get some Halloween candy and saw that the laundry detergent we use was on sale for cheaper than I’d ever seen it. This was followed by noticing a sign that said something along the lines of spend $30 and get a $10 gift card. What luck! I loaded up my basket with all sorts of “on sale” items that we always need at the house including some first aid items that were advertised as buy one, get one 50% off.

Upon leaving the store with all of my great buys, I started scanning my receipt to see what my total savings were and realized in my quest for great savings I may have missed some of the finer details of the sale! Firstly, my first aid items were all full showing as full price, apparently there was no mix and match on the 50% deal. As if that wasn't enough, when I got home I realized my boyfriend must have bought some first aid stuff recently so we now have way more than we need! Lastly, only $7 of my $40 purchase applied to the gift card deal! I suppose I could have gone in and returned most of it but I was too embarrassed by my blunder. This morning I stopped in again (it’s right across from my job) and picked up the store circular for an explanation of where I went wrong… I had to comb through it a bit but all of my mistakes could have been avoided had I read the ad first. At least I had earned a few extra care bucks on the purchase so it wasn’t a complete wash!

Although my first attempt at leading a more money-savvy lifestyle was not a success per se. I did learn some valuable lessons. One, a little advance planning would probably be a better approach to sale shopping to figure out what we really do need. Two, I need to stop and read the fine print!

Funny how ingrained spending is

2011-10-24T13:50:00.000-07:00

The thing about this decision to pay off my debt and blog about the experience is that I have no idea what I am doing. I’m new to blogging, both writing one and reading other peoples’ blogs, and I’m obviously incompetent at money management so I’m not really sure what I need to do to get the ball rolling in the right direction. I’ve been searching the web for tips and came across some great blogs like: http://www.bloggingawaydebt.com/ and http://www.debtreduction101.com/ but what I think I really need is a step by step guide to starting the process.

A memory of a past co-worker of mine came to mind as inspiration. He and his wife had some 165k in debt and following some kind of program, I think by Dave Ramsey, were able to cut their spending and pay off all their debt in the matter of a few years. This may be a little bit of an exaggeration but I do clearly remember him eating mac and cheese for lunch almost every day for a year and thinking “if that’s what it takes to pay off debt, count me out”. Anyways, back to the point… I have a lead to follow. So what do I do? I fire up Amazon and start piling financial help books, particularly the ones by Dave Ramsey, into my cart. I even find “The Complete Idiot’s Guide to Getting out of Debt”. The irony of my actions don’t hit me until I go to check-out utilizing one touch purchasing linked to my high interest credit card. Do I really need to go further into debt to learn how to get out of debt? I quickly cleared my basket and will be hitting up the local library on my way home from work…

Owning up to what I owe

2011-10-23T07:00:00.001-07:00

To be truly honest,it wasn't until I finished graduate school in 2006 that I even took a real lookat the debt I had accumulated through my seven years of higher education. At that time, I was carrying $55k in studentloans and credit card debt but I brushed it off... of course I had debt,everyone had debt, who could get through college and grad school withoutit! When I graduated it was the heightof the market and I had landed a fantastic job so I felt confident that my debtwould pretty much take care of itself. Fast forward to today: $65k debt in school loans, credit cards, a carloan and, most recently and most shamefully, a loan from the Bank of Mom andDad.

Coming to realizethat in the five years since graduation I have actually increased my debt loadis a painful pill to swallow. I wouldlove to sit here and blame this on the economy or any number of other thingsthat have occurred over the past five years but the economy didn’t take out acar loan or whip out the credit card every time the going gets tough. It’s time to own up to what I owe and thehabits that keep me in debt.

I guess with that said it’s time to lay outwhat I owe for the world to see *gulp*:

Student Loan: $38,339@ 2.5%

Car Loan: $11,684 @3.9%

Credit Card 1: $10,577@ 0% until January when my balance transfer reverts to 16.99%

Credit Card 2: $3,635@ 15.4%

Parents: $600

Total: $64,835

I have a confession to make…

2011-10-20T10:08:00.000-07:00

I am hopelessly, shamefully, desperately in debt. There, I said it. There’s no taking it back and there’s no hiding from the fact anymore. I've had this growing uneasy feeling for the last several years about the mountain of debt I’ve buried myself under. What started as a small, nagging concern that was easily pacified (mostly through retail therapy) or ignored altogether has manifested into continuous guilt, shame, anxiety, and depression as well as the physical ailments that go hand in hand with stress and tension. I am struggling to pay my bills, ashamed when my friends and family members find out any of the facts about my personal finances, and guilt stricken over every dollar I spend on something “non-essential”.

Something has got to give and I can guarantee that it won’t be my creditors. So that leaves it up to me to figure out how I got here and how I can get back out. That’s where this blog comes in. My hopes are that through this forum I can keep myself honest and accountable as well as document what will hopefully be a journey to becoming debt free. Let the road to recovery begin…