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Archive for July, 2009

He made it!!!

July 31st, 2009 at 05:37 pm

DH made Chief!!! And he also made it in the top tier, meaning he'll get paid sooner than later (If he was in the bottom tier it could take up to a year to get paid).

We found out he made it & that he got into the top tier and first words out of my mouth were "GREAT! This means we can get out of debt sooner!" Well, that wasn't my ONLY response but my response to him getting paid sooner.

But I also said that because just before I told him "If I told you we could be debt free in 3 years if we sacrificed a bit, would you be on board?" Of course he asked "What would we sacrifice?" but he got on board with me.

We went out to eat to celebrate. He picked Olive Garden, but I paid in cash with the $100. That left $25 left to buy my daughter her birthday present.

This month's budget was tight... especially now because we'll have to spend $1500 on DH's new uniforms for Chief upfront... so that with braces, school stuff for the kids, and tuition. August looks like it will set us back but we are going to do our best to not lose focus.

So after that we went to Target & bought the three kids their school supplies. I allotted $270 out of August's budget for kids school supplies & clothes. School supplies alone was $101, but it came out of the debit card. I did not use the credit card today. That leaves $170 for shoes & clothes. We probably won't buy them a whole new wardrobe for now but we will buy them what they NEED for now.

Now the induction process starts. Approximately 6 weeks and its been said I likely won't see DH much.

Not sure how this will work because I have class on the 4th, 6th, 11th, and a dental appointment on the 22nd. I'm going to ask around and see if friends will help watch the kids... but worst case scenario is I will have to pay $10/hr for someone to watch the kids. During my classes that is easily $30-$40 per class.

Then my dental appointment is going to be 2-3 hours.

Oh well, him making Chief means an extra $300/month and additional money for the housing allowance, etc. It may be a pain now - but it will pay off.

Cost of making Chief - $1500 + $160 for childcare in exchange for an extra $300/mo + extra in housing allowance, etc

Seems worth it to me! =)

For those not affiliated with the Navy, making Chief is HUGE... it only happens once every fiscal year for a few select. You have to take a test to become eligible then submit a package, a board reviews it & after convening & releasing results... there is approximately 6 weeks of an induction period. Someone once told me Congress is in charge of how many people are promoted to Chief and above... that or to demote someone from the ranking of Chief would involve Congress... I don't really know. I guess making Chief is like making tenure at a university or making partner at a firm.

Today's Action Steps

July 31st, 2009 at 09:16 am

So yesterday I called to cancel my student loans

Today I stopped contributions to DH's and my Roth IRAs at TD Ameritrade (it was just in an account earning .5%) and transferred that money into our other Roth IRA account.

I also declined the loan approval - to my surprise the lady said "I'm sorry to hear that"

And I thought "Sorry? Don't be sorry, I'm ecstatic"... but of course I just explained to her that we were trying to refocus our priorities and getting out of debt was a bigger priority than buying a new car.

"Oh well, we can help you get a consumer loan or a HELOC"

"No thanks, we should have this paid off fairly quickly and plan to purchase a car after that."

With DR's plan I'm supposed to sell my van cause I can't pay it off in 18-20 months... instead I'm looking at 36-40 months.

But I'm really struggling with that part. I love my van for its reliability, safety, and the fact I never want to buy another one. I plan to keep this vehicle till it dies on us & I mean it... I'm not ever buying another van. I'm thinking worse case, maybe when DH deploys again we'll sell his car and use the money to pay off the van. Then when he gets back we can buy him a car in cash... he wants a new vehicle anyway & I don't see the point in having a new vehicle financed just sitting in the driveway.

I'm buddying up with my best friends too. I sent them a spreadsheet of my finances showing how I plan to pay this off. And yes, this also means now they know EXACTLY how much I am in debt down to the penny. But these are friends that I have known since I was 11 & my other friend since, well, before we were born because our Dads bodyguarded Elvis together.

One of the friends is in the same boat as me... the other friend, she is the one who doesn't have debt & I've asked for her assistance in keeping us accountable. That friend's only debt is her condo, no student loans, car loans, and her husband is part owner at his company, she works at a college... they did receive a settlement. However, they were like this before the settlement. So I figure she would be great to keep us on track cause she also wants to see us succeed. Oh and did I mention we are all under 30?

So now, its waiting for the Chief results. They are supposed to come out sometime soon. We're really hoping DH made it, that would help us on the road to financial wealth track that we are starting.

I'm confident now we can make it, but we have to make some sacrifices. Like I said, I'm stopping our retirement contributions for now. We're currently saving $250/mo towards retirement which that $250/mo could pay off $1000 every four months to get us out of debt even faster.

We'll get there & if we have less debt or NO debt... then we won't need so much in retirement.

Murphy's First Visit after Plan B

July 31st, 2009 at 04:27 am

My oldest needs braces after all.

Meanwhile, yesterday I received a check from my CC for a balance transfer off or cash advance for 1.99% till November 2010 with a 3% transfer fee.

Here is what I have coming up:

$144 for four extractions for my daughter
$352 initially for the braces, then payments of $72 for 8 months
$2037 for 2 graduate degree courses for my master's
$150 (estimated) for books

This all happens to be in a month that I have 3 cavities (old cavities but the silver fillings are deteriorating) filled & I have to buy the three kids their back-to-school stuff and clothes. I alloted $213 for my dental work, and $270 for the kids' school stuff out of our budget. The stuff listed above was what I didn't have left in the budget (I.e., ran out of money).

Looks like we're shopping at Target and the clearance rack for new clothes. I just hope the $270 will be enough. Last year we spent $300 on clothes alone for them for back-to-school.

I looked in my wallet yesterday and completely forgot I had $50 in there. Imagine the pleasant surprise I had. That money, in conjunction with my birthday money (last Sunday), I have $100 in cash not in my EF.

I also have $1000 in my EF. Not quite enough to cover everything.

I'm thinking about taking that convenience check and using it to pay my tuition and books. Then using the EF & the $100 to pay for my oldest daughter's braces.

September's goal according to DR will be working on refunding that EF, then using whatever other money we can find to pay down the debt.

Action Steps I've already taken have been to call my university yesterday & confirm that I am canceling my student loans. May sound silly to put my tuition on a CC vs student loans, but my SL would be at 6.8% - not 1.99% and I know I'll have it paid off by November of 2010. We should be CC free by February 2011

The one thing about all this house stuff going wrong this year... it just means to me there is less likely to go wrong next year that isn't covered by warranty. We replumbed the rental... you can only do that so many times & it has a 25 year warranty. Same with the HVAC we had to replace, that has a 10 year warranty. The only thing left to do on the rental structurally would be the roof & that is still good for a few years.

We had to get new windows cause ours were leaking, they have a lifetime warranty too.

So really, all the stuff that did go wrong this year - in the end isn't all THAT bad, the bright side is that is that much less I have to worry about in the future. Meanwhile, going on DR's plan will hopefully keep us from having to go into debt again when stuff like that happens again.

BTW - According to DR's plan... and after doing projections for our budget, we should be debt free (except our mortgages on the rental & our house) in February 2013. So 3 1/2 years away. That is allowing us $200/mo of "wiggle room" in case something comes up so we don't have to use our EF and letting the kids buy lunch 1/2 of the time & planning for our 18 month old to go to preschool in 2011.

First Step in Plan B

July 30th, 2009 at 05:19 am

So I've read the first two chapters of Dave Ramsey's book

And the biggest thing that stuck out to me was about not borrowing your way out of debt. Debt just doesn't make sense at all.

In August, I was planning on receiving $9568 in student loans which $2000 would go to tuition and the other would go towards paying off/down my other CC card.

So today I asked myself if restructuring the debt (CC debt into student loan debt) - was really a good idea.

The CC debt is CC debt even if I put it into a student loan. However, if I'm not PAYING on a CC bill - I could delude myself into thinking "Oh, its just a student loan - it's good debt"

SO I'm not going to take out the student loans.

But I'm wondering... its still $2000 I need to come up with. Do I take my $1000 EF and use that to pay towards my tuition and pay off the other $1000 in September? If I don't take SL out then I should have my EF back to $1000 in a month or so.

Thankfully I graduate this December =)

Trying this plan may definitely take me some time to adjust to... but I'm promising myself to stay committed. The good news is I'll have my AMEX paid off next month regardless of student loans or not.

THAT I'm doing completely on my own without having to restructure debt.

Picked up a copy of TMMO today

July 29th, 2009 at 06:03 pm

Sometimes I'm sure this whole thing feels like a big train wreck getting worse and worse. There really is only one direction if we keep going this way.

The biggest difference I've discovered over last year is... I didn't realize how much bigger a problem this is. We curbed a lot of our frivolous spending... stopped buying new cars & started budgeting more carefully. But we were never prepared for the emergencies or necessities that came up this year.

The end result? $38K in credit card debt alone thanks to repairs needed to be done on the rental, the windows being replaced in this house (and that was only the ones that NEEDED replaced - we still have 11 more windows to go), and yeah... 90% of the debt is due to that.

DH's car is starting to have issues. Its 6 y/o and needing a new clutch, brakes, struts, etc. I think last time we totaled the repairs it'd be $3-$4K.

That's when DH was wondering if we could get a new car.

This is where I'm thankful that although I'm not 100% where I want to be... we're closer. (And I mean this by, we make the right decision in the end... although I wish we wouldn't have even considered the bad decision to begin with)

I was approved for a loan for 36 months at 3.99%. We figured that with our trade, we wouldn't want to finance more than $19K.

Almost like a sign from God, the vehicle we wanted was just not available & the vehicles that were available had so many cons we never signed a deal.

That allowed DH & I more and more time to deliberate over the decision and looking at our cash flow.

I realized that although we were only budgeting $400/mo on food for a family of 6, we were really NEEDING at least $600/mo. Ideally, $700.

The truck he'd want would also get worse gas mileage. So that would add another $100/mo.

Yesterday I basically went up to DH and said, "If we get the car, I'm concerned that we won't be able to enjoy our life. We won't be able to buy the amount of food we want, won't be able to drive the vehicle anywhere, nor be able to do anything. I'd rather just give you the $3-$4K to keep the vehicle because I know keeping the car leaves us better off."

So we didn't get the truck. Instead that $700 we were GOING to spend on financing/gas on a new vehicle will go to increasing our food budget, providing a $200/mo allowance for unexpected things that we need & allow for a few things we want, and the rest to help pay off our debt more aggressively.

My biggest challenge is simply staying motivated. My second biggest challenge is my accounting background and reliance on financial gurus that debt can sometimes make sense - has also had me rationalizing my behavior.

So I started reading David Ramsey's stuff on his website. It was motivating to say the least.

So I picked up the book today. I haven't read it yet. I saw the price of the book ($22) and walked away wondering if it would end up like my Jean Chatzky, Suze Orman, and David Bach books... read once and sitting on a shelf, my life not much different because I've never changed my behavior. Actually, out of those books the book I think I'd be MUCH better off having never read was David Bach - his books are what made me want to own a home & rent one out. I'd probably never had the idea without reading Automatic Millionaire... although the automatic bill payment was probably the most beneficial thing I got out of it & now have around $23K in retirement accounts.

I picked up the milk, cereal, and cheese that I had to get as well - totaling up the cost in my head if I got the book w/the groceries. $35, that didn't seem so bad. So I bought it.

If in the end, I can stay motivated and this can actually help change our behavior - then $22 is well worth it. It's already helped me come up with a game plan to pay off 3 credit cards in the next 6 months just from the website... I figured maybe it would be worth a shot.

I've already reached baby step 1... I have $1000 in an EF.

Next month I'll pay off the AMEX.

By October I'll pay off my CC.

February I'll pay off my other CC (I just did a balance transfer from DH's card to mine for a lower interest rate on some of the balance).

And by February 2011, hopefully we'll be 100% CC free.