Tuesday, June 10, 2014

Morale booster from unexpected source

It's no secret that I've been a little down on the debt front since we moved.  In my last post I talked about how we were getting back on track which was immensely helpful in regaining a positive feeling about our debt reduction efforts.  Something else happened last week that was also key to my turnaround in attitude...

Someone left me a comment on one of my posts!  The comment went something like this:  "Dear Person in Debt, I want to inform you of an amazing opportunity to borrow money at an insanely low interest rate from my top notch international firm."  Except the actual comment was full of improper grammar and misspellings. Sounds a little too good to be true and a little too much like the e-mails I get from time to time from royal foreigners who would like to send me millions of dollars for helping them with some small task.  (I did not publish the comment if you were wondering or looking for it, btw)

Anyhoo, why did that give me a morale boost, you ask?  Because it reminded me that my bottom was not as bad as it could have been.  I realized I had a problem before the problem got so out of control that I had missed payments, bankruptcy, ruined credit, collections, turned to cash advance places or shady loan propositions, or started hitting up relatives for loans (minus the small $600 my parents lent me).  Looking back I know I was on the brink of those things when I started this journey back in 2011.  I could have just as easily stayed on the path I was on.  In many ways staying on the path I had been on would have been way easier, changing my long ingrained habits and discovering uncomfortable truths about myself has been a difficult journey.  

It reminds me of something a friend once told me about struggling with addiction, she believed you didn't have to hit bottom to make a change, that the struggle was more like an elevator where you could choose to get off on any floor instead a free falling all the way to the sub-sub-basement.  Although her situation was different than mine, that analogy has stuck with me and seems fitting of my journey.  I'm thankful that I got off the elevator three years ago and have been "climbing the stairs" back up to the top floor ever since.  There will be times that I have to stop and take a breather but eventually I'll make it!

Wednesday, June 4, 2014

Getting back on track

Since the move in March we've been going through a lot of adjustments in our lives and specifically in our financial situation.  There have been plenty of hurdles but I think we're finally back on solid footing. Here's the run down of how we've getting back on track and how we're moving forward:

1. Consolidated the high interest credit card debt we racked up during the move/ adjustment period and S' higher interest student loan into one loan from Lending Club.  We were able to reduce the overall APR and, by going with a 5 year loan, reduce the monthly payment to this debt.  This allows us to allocate more of our budget to higher priority savings and debt reduction.

2. Put my student loan in forbearance.  This is our lowest interest rate debt at 2.5% but one of the largest minimum monthly payments, by putting it on hold we are able to put more each month to our higher priorities.

3. Lower medical bill payment. We're not paying any interest on the medical debt from the boys' birth and while it's super annoying to have this little $300 debt still hanging around, it's more important right now to focus efforts elsewhere.  I've heard somewhere that as long as you send something in, the medical billing won't send you to collections.  I'm hoping that's true because until the medical billing people tell me otherwise they are only getting a $25 payment each month!

4. Build up our emergency savings to $1000.  The three previous steps freed up an extra $330 to pour elsewhere.  By end of summer we should have our emergency fund re-established (barring any emergencies along the way!) and be ready to hit the debt hard.

5. Our first priority debt is the remaining $6,270 in credit card debt.  This debt was refinanced through a balance transfer last year to a 0% APR that expires in June of 2015.  Our goal is to have as much paid off before the interest rate goes back up to 8.99%.  I'm projecting that we should at least be able to pay off 60% of the debt before the rate hikes.  Once that rate expires we may look for another balance transfer offer or refinance it with the debt from step 1 above with a shorter repayment period/ lower interest rate or maybe we'll just keep paying it at the higher rate.  We'll examine all options and pick the lowest cost option next year.

Feels good to have a plan in place again!