creating a debt free life

Posts tagged ‘cutting up credit cards’

Too long without posting !!

I could not believe when I looked and January was my last post !! Wow. We have had a busy year or two.

In 2012 we made the choice to let our daughter and her husband and kids, who had been living with us for a few years after moving to Texas from Calif to restart thier lives, rent our current home. We had owned the house for ten years at that point, and had wanted to move up North an hour away to live closer to my husbands work and see how we liked it up there and figured it would put our house in safe hands, and give them a huge break on rent as our mortgage was well below current rents in the area and they got a much bigger house.

We signed a 14 month lease on a nice apt and settled in much closer to work so my husband could get up an hour later, leave much later , and get home much earlier, shaving about and hour and a half a day off his comute. We loved the pool, and the lovely views off our balcony, we had a creek bed between us the apartments on the other side of the complex

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It was a lovely apartment with a lot of room and other than some neighbor issues , normal in an apartment with others so close, it was relatively quiet, and very comfortable. We even got some snow to enjoy that winter !!

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We purchased new sofas which we did pay off during one year promotional so we paid no interest

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and found this lovely table and chair set, with two leaves , not shown, for a few hundred dollars at a thrift store, so we were living in a lovely place, with some beautiful new things and enjoying our life.

 

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Then the holidays came around and I realized how far away an hour is. I rarely saw everyone, and missed our small town Christmas events we loved so much, and the holidays were just not as fun as normal and we knew we would have to go back. We loved the apartment but we missed our house so much .

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It is old, needs SOOOO much work, but it was ours and we love it. But, the problem was, at that point in time, our kids could not leave it. Our son in laws family had joined them from Calif, to see if they would like to live in Texas. So, no one would have rented to that many people and pets. So, we had a few options.

 

Stay put, not an option, as much as we loved it up there, ( and miss it now ) we  missed our kids, grandkids, house and our cute little town more .

rent a house in town, but with rents so high we really did not want to do that.

Buy a second house to live in while the kids rented ours

BINGO.

So, we thought, it will never happen. We had just purchased a brand new Passet and had a five hundred dollar payment. Not to mention we already owned a house.

But somehow, some way , we bought a house. Cute three bed, one bath house, We figured we would be in it  until the kids could buy a house with his parents,  a couple of years, which was the plan. Then we would rent it out.  We moved in the start of Aug 2013

 

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Well, by November it was clear his folks were not staying and thier plan was to move back to Calif in Jan. So, over Thanksgiving weekend we had the kids over without his parents and jokingly, sort  of, asked if after his parents left they wanted to trade houses. They were so excited and we made the plan to switch houses in the spring after we got a fence up around the property for security and safety for thier kids and pets.

So, middle March 2014 We took one day to switch houses. It took 12 hours almost to the minute and we were back in our beloved house.

So, we have been back in our cute 90  year old cottage for six months now and we plan to get back to our debt repayment again. We spent way too mcuh money on these moves and when we moved into the new house, we bought all new appliances as we had left the washer dryer here for the kids, rented a set at the apartment and then also needed a fridge and bought an amazing one for the new house . The kids have been paying us for the appliances a couple of hundred a month, so that helps at least. They have them almost paid for, at the price we gave them.

So, six months later, we have a ton more debt,  and a house we have to do a lot of fixing up to, which we would have anyway, but  now we see it every day !! No regrets, we are so happy to be home. It feels wonderful. But we are not happy about the debt we see ourselves in .

So, that is our last two  years, and now here we are plannit to restart  our debt snowball again.

We did pay off a lot of stuff before we moved out of the apartment, several credit cards that we have never used again, but we borrowed heavily to get into the house, and now we are starting over with a huge car debt and credit cards we ran up for the move and the appliances and all the little stuff we had to do when we moved ino a house that was very outdated.

The kids are still renting the house, but are in the process of figuring out how to buy it from us. We thought it was an assumable loan, but it is not. According to zillow in one year it is worth a ton less than when we bought it, which does not add up as they said the same price as the appraisal at the time, but now it says it was worth a lot  less when we bought it, so I am confused by that.

The problem we are encountering is, we cannot sell it to them via a home mortgage, as we will lose money. We will have closing costs that we just cannot justify as we will be losing a lot to sell them this house, , some of which we just did not realize but we cannot lose more. So, I am not sure what they will want to do, rent for a while and see if things go up, do a owner finanicing plan, we are just not sure . They want to talk to some banks, but we told them, we cannot sell it to you if it costs us more money. They love the house, they want to buy it really bad. So, we will have to see how we get this situation fixed, but they agree it has to be fair to both sides. When we thought it was assumable it would have been, no cost to us, low cost to them, so we will see. They do not plan on doing anything for a while, they have to figure out what they want and it will be at least the start of the year before we discuss it more. If they were to finance it, thier costs will be much higher as well , closing, down and all that. We cannot help them, both because, we cannot help them and the bank said, we cannot help them, and they have to pay us back at least our down payment as that was the agreement. So, not really sure how it will all go, but I know we will find a way to work it out for all involved.

So, for now, our priority is to get back to our debt snowball in the next  few months, after bringing our savings back up to where we need it  to be. We have about 1500 but we need a lot as emergency because  if my husbands mother , who still lives in Calif ever needs him to go out there for her if she has an emergency or sadly one day when  she passes and he has to spend weeks out there taking care of things with his sister, we have to have a months worth of money in the bank to give him time to do so and it not affect us at all. Work will give him the unpaid time off, but we need the money to cover our expenses . So, I think we are going to do a full months expensies, plus travel expenses, which might be as much as five grand, which would make us feel so much better.We do not plan on needing it for years, she is not 80 yet, and in good health , but we have to be sure we are covered just in case.  Another thing we plan to do is just add a bit to the mortgage each month to get the principal down a bit each month. We have owned it 12 years but refinanced a couple of times to get better terms, not to take out money, you cannot do that in Texas without a ton of equity which we have never had,  adding to the  mortgage, so we still owe a lot and still owe on our PMI for another 14,500 to get to that 22 percent to drop it. So, we have a lot of work to do. 40 bucks a month brings it to 200 a month toward the priciple . That is our goal, to get us 2400 minimum paid off per year.

It is becoming increasingly clear , with retirement just 17 years away if he works until 70, that will have to really work hard to get out of debt, pay off the mortgage and save for retirement. That is for another post, but these concerns have gotten us back on path to saving and paying down debt.

So, life kind of took us on a loop, or we took ourselves on a loop I suppose, they were decsions we made. For now, we own the two houses and look forward to finding a way to sell the one to our kids. If they chose to not buy it, we will rent it to them until they move and buy else where and then rent it out for income as the rent would be more than the mortgage by quite a bit.

We plan to stuff away as much money as we can to get that five grand and then start paying off one debt at a time, as fast as we can per the debt snowball. We do have some promotional   balances to watch so we have some things that may have to be paid out of order  or maybe even before savings are exactly where we want them to be, to keep from getting hit with interest, but only one is due by the end of the year for a few hundred and the rest do not start to  hit until march next  year so we are keeping our eyes on these things and plan to knock each one out before they cost us money.

So, that is where we are at, and I hope to be posting some real debt repayment as well as savings each month. We are very determined and I plan to start reading all the wonderful personal finance blogs I follow and just work hard !!

Thanks for stopping by !!

Stephie

 

 

 

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A fresh new financial start

This is how my  husband David and I feel today. We are being given  a fresh new start !!  We had such a great conversations with our debt coaches . Jeff and Robin at Debt Free Squad, I hope everyone interested in getting debt free will check out thier site, so many awesome videos and information there, LInk is to the right of this post.

The hardest instruction to follow so far, was no debt talk Sunday. Sorry, Jeff and Robin, we tried so hard, but we broke that rule about ten times yesterday, we woudl catch ourselves and say, oh, we are not supposed to talk about debt today but then , we would do it  again !!

We are so excited and full of hope and energy to get started, it was hard to not talk about this new journey we are on !!

So, what we have done so far to help break up with debt is,

Start writing down every single penny we spend. , no excpetions except for our blow money, more about that in a minute.

CUT UP  CREDIT CARDS !!  We were told we could keep one, until our emergency fund is where it needs to be, but the rest, all c hopped up and I picutred them on one of my first posts here !!

No debt talk Sunday, okay, crashed and burned on this one, but we will get there !! I have a feeling if we have to be bad at one, this is the one to  mess up on !!

Read the first two chapters of Dave Ramseys, Total Money Makeover, I got my reading done, we had our grandkids over and David was only able to read chapter one but will do chapter two today.  We got these instrucions on Sat evening in full swing with the kids, but next two chapters will be read on time.

Watch our weekly videos for the 30 day challenge every monday, get to watch number two today, can’t wait, somethign new to learn I am sure !!

Down load the spread sheets and learn to use them, Robin has emailed me some hard copes, which I will print out and use today, David should be able to get the program pulled up we need to use them online in the next day or two and then we will transfer that info on the hard copies onto our pages on the computer.

Jeff and Robin explained that we have to tell every penny of our money were it is to be spent, no exceptions, groceries, savings for certain categories, vacations, car expenses, Christmas, not just the obvious bill and expenses !!  As they explained, these things do not sneak up on you, Christmas is Dec 25 every year, your cars registration is due, the same day every year, and so is your inspection, at the very least, the same month.  Vacations are rarely just taken on a whim, you plan ahead so you need to plan the money part too. If you do not have enough money saved, you simply do not take your vacation. They explain it as your vacation following you home, and that is never fun !!

So, we are going to be  allocating money into differant categories so we can save for vacations, doctor bills, car expenses, and eventually more for clothes and other things, Christmas and … wait for it..

groceries, entertaiment and what they call,  blow money.
yes, you can plan some entertainment into the budget When I questioned it, Jeff said, you have to, or you will spend it anyway. So  with thier help we decided on a very modest 100 a month for entertainment, 25 a week, but that is plenty. Enough to have a date night meal together once a week if we are really careful, or enough to go out to a few thrift stores or yard sales, one of  our favorate things to do, but now we have a limit. Once that money is gone,  We are done, no more spending. so, we need to think carefully before we spend it.

Blow money, a small amount, will get a bit more as time goes on, but for now, five bucks a week each. Not a lot. but it is money for a diet coke for me, or a cup of coffee for David or any little thing, no questions asked. My blow money is mine, Davids is Davids. The entertainment is both of ours, we have to decide that together, but my blow money is the money I have that I do not have to explain. We can save it up, and then have a bit more put away if we have something a bit more expensive we want to do, or we can blow it as we get it. Love that !!

I have to admit that David and I have never fought over money. Really never.  In 32 years, we have had a few arguements,of course,  but never over money.I cannot explain why, but we do not fight or argue often anyway, but if we ever argued about money, it had to have been rare, neither of us ever remember a money fight. I have been in charge of the money, Davids choice, he worked, I was home with the kids, I had the time to make out bills and all that, and so he gave it to me. A couple of times I tried to get him to do it, but it always came back to me. Neither of us were better at it than the other, I was a bit more dilligent, but I had more time. As dilligent as I am, we are still way in debt and for many years paid bills late and had poor credit scores. We often had more month than money and have lived check to check for pretty much our entire 31 year marriage.

I am not sure what really woke us up, but we did wake up. I think buying our new car and finding out the reason we did not get a interest rate of half what we dened up with, was because we have too much debt. Our credit score is good, but your debt to income is a huge part of your score, I believe it is 30 percent. So, you can see how, even a great score can be pulled down a lot by having a ton of debt.

It is a vicious cycle of debt and high interest rates and seeing the balances going up and up every year. It is ironic to us that the people who can least afford high interest are given high interest and those who  can afford it and have more income and less debt and need that loan the least, get low interest rates. It makes it seem impossible to get ahead , and it is, until you get a plan. The other ironic thing is, once we pay off our debt, our  interest rate will go way up, allowing us access to the lowest interest rates, but we will not be taking advantage of them for anything else but refinancing our car down and refinancing our house payment down. Once the car and house are paid off, and Oh yes, those are in our future plans, no paying off the house 26 and change years from now as the mortage says, no refi and pay off asap.  We want to live in a world where we are completely debt free !!

So, I do  know at times we were upset over our money, or lack of it, but we never told it where to go, never budgeted for future expenses and certainly never saved any money for emergencies, which is the next thing,

Start an emergency fund, get at least 1000 up to 2000 into asap. We will have the first thousand stashed in the bank this week.

Debt snowball. Once we get that emergency fund set up, then we take the first debt on our list. Robin and Jeff recommend smallest to largest and we agreed that made sense. . A lot of people recommend highest interest rate first, but I think paying off the smaller balances first is much more movtiating and helps free up money toward the next. So we will pay min payment only all all credit bills but the smallest, and then any extra money we have gets thrown at that bill until it is gone. Then that minimum payment plus any extra goes to the next on the list !! Very easy to understand and motivating !! Once we see that first one disapear, that will be so exciting !! I can imagine as they each are knocked off, it will be more and more exciting to progress down the line.

So, anyway, this is what we are working on this new , fresh week. We have a plan in place to attack the debt and I will keep track here and record as each debt bites the dust.

I probably missed something, but I will be writing a lot more on all of this as we go !!

Thanks for stopping by !!

 

Breaking up with debt !!

Welcome to my new blog site. I have been blogging on my beading blog for a while and I am having fun there and will still be blogging there and working on my jewelry but I am starting this blog because I want a place to come to document our journey to being debt free.  My husband and I have gotten to the point in our lives where we want to be free of debt. We are tired of being broke because we have too many bills. It is a stupid way to live and we need to address it while we still have time . We are tired of living check to check. It is a rotten way to live. We do not want that to be our future, we want it to be our past.

We are in our early fifties and  have less than  twenty years until my husband will retire from his job. He has said for years he probably will never retire completely. He will retire from this job, but he and I both want to start a business and find something to do together to make money and keep us busy after he retires. We have to make sure we are debt free to have a secure retirement .

So, we decided to break up with debt. We are cutting our relaxtionship with debt off. We have cut up our cards and are going to take every penny we can make and throw it at this debt until it is gone. We are choosing to live a debt free life.

Can we do this overnight. Nope. In fact we have new debt to deal with. We recently bought a car. We had one car and I want a job so we bought a car. Did we need to buy as expensive a car as we did, 19 grand, but we bought a safe, certified used car, a service car only owned by the dealer ship and we wanted a safe, reliable car. Our payment is pretty high and honestly that is what kicked us in our back sides and got us looking at our debt. We have more month than money and we cannot live like this anymore.

We are very intelligent people, so why do we make such dumb decisions with money ? I do not know the answer. We pay all our bills and have a good credit score, which would be great if we were debt free. It is eye opening to be told you could have had a 2.25 percent car loan if our debt was paid off, and instead we have 4.8.  Good news is, get the debt paid, we can still get that great rate, so that got us going.

We are pretty typical . Some credit cards, a car loan, a signiture loan, furniture loan. Our debt is beginning to grow and once we really sat and looked at it, we got a bit worried. We are okay right now, but on the edge, it would not take much to topple us off that edge. That is no way to live.

So, we were lucky and got debt coaches and they are going to help us. We cut up our credit cards

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into tiny little bitty pieces and put them in this wine glass. I will keep them on display so I know every minute what I am working for. I even added a green wine charm  I made and even drew a money sign on with a gold sharpie  to symbolize our money  !! We are going to go at this debt with everything in us !! It does not stand a chance !!

We are going to be writing down in a notebook every dime we spend. Every single penny !!  We started that two days ago and have two entries already. Gasaline and a few groceries. Wrote them down, wrote they were debit card purchases and put the reciepts in a manilla evelope tucked into that notebook.

Starting this week on pay day we will take out cash for groceries and any spending money. Gas money is moved to a checking account we  use just for gasaline so my husband knows how much gas money he has for the week. All recipts go into the envelope and any purchases made written down in that book.

We have a lot to still learn. We have to sit down and talk to our coaches and will see what they advise us on our debt and emergency savings  and then go from there. We are just starting and taking baby steps. But cutting up our cards, writing it all down, and using cash that is predetermined for the weeks expenses is a start.

I will write about what we learn and the progress we are making. I will also write a post about our debt and what we owe but not today, I just want to get things started and get this blog up and public.

I hope to find other people out there who are paying off thier debt and  learn everything I can.

To quote Dave Ramsey,  Broke is normal, be weird,

We look forward to being werid !!