creating a debt free life

Posts tagged ‘high payments’

One step back …

Since my last post we have moved into a home we purchased. For some reason this move h as been one of our hardest yet !! We had rented an apartment closer to work to see if we would like it, and we did not . Our home is being rented by our daughter and her family so we bought a second home.

We did a lot of the things you are not supposed to pull this off. Took out a 401 k loan, Suze Orman would skin us alive for that, but we only had 20 grand in the account and borrowing half allowed us to pay off the old loan and pay for the closing we had to pay and the five percent down on our 104 grand house. We had to pay to rent the truck and gas and all of that, and whew, it was a mess.

We had no washer and dryer, no fridge, so we got out our Best Buy cards and bought them with 36 months no interest.  We hope to get them gone in about 24. We just got a zero interest card for 18 months with a way lower interest rate after those 18 months if we do not manage to pay off the three  cards we plan to transfer , although we should have no problem doing so. We will divide the balance by 18 months and get it paid off.

So, we are backwards a bit, but still just as determined to pay off debt. Just a detour, or as I put as the title , a few steps back. In  March we will pay off our largest payment, his credit union loan with his bonus and that will free up almost 300 bucks a month  to pay down the new credit card and when that is paid off it will all go to the Best Buy account since that has the longest no interest amount and by March of 2015 whatever is left his bonus will take care of  and leave enough to tackle anything else we have not paid yet. The car is the last thing we will tackle, but once all the other debt is gone, we hope to take that six year loan and turn it into a four year loan, maybe even a bit less. I would love to make it three, but four is most probable at this point.

So, we took a few steps back, but we will get caught up very fast and get back on track. The whole point was the mortgage on this new house is only 750.00 a  month, to rent it would be  300 more a month. So, whatever it took us to pull this off, we are happy to own the house we live in, well, the bank owns it, but at least we are not renting !! We are paying much  less than rent would be, and very happy to be back in our home town and close to our family again !!

I will be posting on a more regular basis,  but I have been posting on my beading post a bit more regularly if you want to check it out. IT is not always beads, but usually is !!

Thanks for stopping by !!

Stephie

Advertisements

Budget every penny

This week, a bit late, we are doing our March budget with the Spend Every Penny  budget. With this way of budgeting you tell every single penny where it is going for the month, and when you are done adding up what you are spending on each item, and subtract it from your projected income,  zero should be left over.

We are getting a late start. We were warned it takes up to three months to get this down, but between our car accident, my husband being sick, dealing with the  paperwork for the accident, and having grand kids over pretty much three weekends in a row, we got side tracked big time.

Next week, our coach Robin, will have our weekly spread sheet done for the month. That will make next months projections fairly seamless as most of our bills stay about the same.

We will have in that budget, all bills, both the household type, rent, utilities and etc, and the credit bills, along with allotted food, gasaline, our personal blow money, our combined entertainment money, which is not a lot now, but wil get better over time. Paying off debt is the most important thing right now. Also,category savings,  some allotted for future vacations and medical bills. In time we will have more categories, but for now, we are starting with the basics.

I am excited to get moving and see what we can get paid off and our goal for every penny to be paid off but our house, is end of April 2014 but we will try hard to get it done sooner !!

After adding it all up with current  balances we have a total of $18,748.74 in debt, not including the house. The house is 100,896.83 which gives us a grand total of  $119,597.57. Of course we only plan to get the non mortgage debt paid off in 16 months, then we will start working on that mortgage. Once the debt is gone, we can really start doing some damage to that loan as well.

We are shooting high, but I think it is possible to do this. If we do not quite make it, we will be very close .

I will update each month on how much debt we have paid off for the month before, in other words, first week of April, I will post what we paid off in March and so on , with our new balance. These will be in the monthly update category.

So, we are pretty excited and look forward to breaking up with our  debt forever !! What a wonderful day it will be, the first day we wake up debt free !

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 !!

 

Getting real with our debt

Getting real is the first thing we had to do. Add up our debt and see what exactly we are dealing with.

After adding up our credit cards we found we owed  $8,632.04 . Not that bad really, but then we had to add in,

a signiture loan we owe on at a credit union                $5,982.33 that is getting a bit bigger now

our total of debt so far is                                                   $14,614.37  wow, that is a lot, then we have to

add the new car we just bought,                                      $23,756.81  this is the loan amount, with interest it says we will pay 27,197.94 lets hope not !!

our total now is                                                                   $38,371.18 and if we have to pay all the interest on the car it will be $41,812.31

this scares the heck out of me. That is a lot of money for stuff that is not worth what we owe on it. We do own a  home, we are renting it out to our oldest daughter and family for a while, and we are renting up closer to my hubbys work, but when they move out in the next  year or so, we will move back in.

Our mortgage is                                                                 $101,050 , not too bad but all of it added together is

$139,421.68

I know for a lot of people they owe more than that on their house alone, but it is a lot for us. My husband makes good income but with our credit payments and life expenses, we are very tight. I just think what it would be like to have those payments freed up.

all together, all our debt payments come to  $901.00 without the house, and add that in and it is aprox  $1873.00 per month, that is a lot of money. I can only imagine, after a lifetime of rent and mortgages AND bills,  what it must feel like to wake up every morning and not owe anyone a dime other than  utilities . How awesome must that feel ?

We want to know that feeling. So, we are going to listen to our coaches, do what they advise us to do and kick our debt to the curb once and for all.

Our wonderful debt coaches have a website you can check out, I will put a link after I post this . they have a 30 day challenge you can take and we started that this week.

Their names are Jeff and Robin and if you want to get out of debt, check out thier site and see what they can do for you !! I will be writing more about them and our journey to being debt free with them, but I wanted to introduce them for now and just put our debt on the site as promised.

I will post updates each week on our progress, and a monthly update as well. I will post what we learn as we learn it and share everything so maybe we can help someone else in the same place we are !!

Well, I am going to post this and then get that link up as fast as I can. Please check the site out, they have a story of thier own they share there and they are extremely inspirational !!

thanks for stopping by !!

Stephie