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 Post subject: Dunky's Family Debt Reduction
PostPosted: Tue Nov 29, 2011 12:22 pm 

Joined: Thu Jan 10, 2008 12:24 pm
Posts: 23
Location: Utah
I have done one of these before, it has been years though. So i figured that I would start another one for this coming year. I posted this on my personal blog today, figured that it would be good to paste it here as well.

I will be the first to admit it, I am not very good at money. I have always liked earning and spending money as fast as I can. I would put away the minimal amount my parents had asked that I do. I would pay my tithing and then the rest of the money was mine, and I would go out and spend it. Looking back at it now, really not the smartest thing one could do. When I got home off my mission I decided that I needed to change my habits. It worked. I had a couple of thousand dollars in the bank. I was excited and glad to have it. The money was for school and just as a cushion. It felt nice. Looking back at it now I honestly do not know what happened to my habits. I married a wonderful women who keeps a better idea of keeping things cheap. I on the other hand have fallen into the habits of before my mission. I am not going to say that marriage has been easy for us financially though. Medical bills seem to be the thing that haunt us at every corner. We have high insurance costs now and even when we were first married they were not cheap. The co pays always kill us. But what can we do? With our luck we would be sunk without the insurance. We have always tried to be financially minded and not get ourselves into trouble. We always tried to make the best choice. But we are not perfect and we screw up. Here are a couple things that we have done. At the time thinking that it would help.

1) We got an offer in the mail for a balance transfer for a credit card with a lower interest then we were currently having. Score transfer the max over and I thought we could handle it. Needless to say we are still paying the minimum on that card today.

2) We had a lot of misc. bills from our first two years of marriage. We had talked about getting them all paid off but keeping track was turning into more a nightmare then I wanted. So we went to the bank and consolidated everything into one nice loan. We had a “clean” slate. We did well with this, and I do not regret having it as it is a good tool to use. But I did not change my habits on my spending. And we are back to where we were before.

3) This one is more me then my wife, not living within our means.

Looking at our financial picture I put more of the blame on where we are then her. I am the one that was use to living care free, after all the money was in the bank. Now we are at a pivotal point where I need to change so WE can be in a better spot down the road. My credit is screwed up and I feel i have brought my wife's down with me. We want to move into a house one day and in order to do that I need to change and get us into a place were we feel better. I have decided that the day of our financially turn around will start on December 1, 2011 (Who needs to wait till New Years right?) Here are a few steps that I have done to help with this journey.

1) I have created a budget sheet for our income. We have finally worked something out that works for us. We have two bank accounts with the same credit union. In my account we pay all of the fixed monthly bills. My wife's account we use as the everything else account. When i get paid we have a fixed amount that goes into her account. Lately I have been putting anything extra from the checks into her account to help with Christmas stuff. This will soon end though as we have decided that we are going to take any extra from the checks and put towards our debt. I am blessed that i get the chance to work as much overtime as I like. So that is helpful to us with paying things down. It has seemed to work for the past few months, if I do not pull my card out for stuff.

2) I have put the debt bills into a calculator and determined how much we are in debt. The total debt that we have is for $20,370.90. Ouch that hurts to see the number, but good to have it out there in the open. The one that really hurts though is the monthly payment of $567.00. Just to give you an idea our mortgage is only $715.00. Ya that number is the one that really kills me. But it is time to change that. Here is where we are at with some of the numbers.

Debtor

Total Amount

Interest

Payment

Credit Card 1
$4,162.01

22.9%

$125.00

Credit Card 2
$1,317.90

15.24%

$30.00

Consolidation
$6,390.77

12.25%

$159.00

Car Loan
$7,911.52

6.75%

$213.00

Quick Cash 1
$91.19

18%

$15.00

Quick Cash 2
$497.51

8.25%

$25.00

Total

$20,370.90


$567.00

Like I mentioned, the numbers are not pretty but it is what it is. With the same sheet I was able to figure out the best way to pay off the debt. Looking at it the best way will be the debt snowball. I am not surprised by this as many financial writers, gurus push this. As it is very easy to start to see success. Here is what we have to pay the debt off.

Debtor

Total Interest

Months to Pay Off

Month Paid Off

Credit Card 1 $2,319.53 44 Aug-2015
Credit Card 2 $373.54 34 Oct-2014
Consolidation $1,834.92 46 Oct-2015
Car Loan $988.32 42 Jun-2015
Quick Cash 1 $5.17 7 Jul-2012
Quick Cash 2 32.01 16 Apr-2013
Total

$5,553.49


Wow that really does hit home with how long it will take to get out of debt with just that. That is a very long time. It is amazing how easy it all racked up though. Granted, the numbers that are in there is if i were to just pay the bills with no extra snowball. Looking at my budget and my goal, i would like to put about 50 bucks more a month to help with getting things paid off sooner. Here is how it would look if I can put that much to the debt.

Debtor

Total Interest

Months to Pay Off

Month Paid Off

Credit Card 1 $1,784.76 33 Sep-2014
Credit Card 2 $204.71 18 Jun-2013
Consolidation $1702.52 41 May-2015
Car Loan $987.39 41 May-2015
Quick Cash 1 $1.78 2 Feb-2012
Quick Cash 2 $15.01 7 Jul-2012
Total

$4,696.17


That is a lot better to look at. Still a very long time to get it all paid down though. Just makes me feel upset that I allowed us to get where it all is. But the time has changed and we need to shake off all the things and get to a better spot. The nice positive thing with all this is IF we can stick with it we will be able to save $857.32 in interest in the next 4 years. That is a real good thing to keep in mind with it all.

Those figures that I have mentioned are reality. They hit me hard, but I realize that I have two choices. I can chose to do something about it or they can control my life by worrying about them and wondering what is going to happen to get them away. They really do haunt me. I hate looking at those numbers. Today is a new day and i will take the bull by the horns and do something about it. I hope to post more on what is going on. I feel this is very therapeutic for me to do. Join me on the ride and I hope we can see success, together!

_________________
Tony

“Never, never, never, never give up.” - Winston Churchill


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Tue Nov 29, 2011 2:51 pm 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
Hey and welcome back.
You don't mention anything about emergency funds, or retirements savings. Do you have these? How much do you have going into those accounts?

Another thing I don't see is your budget. You have a plan about your debts and how much you plan on paying, but is this ALL of your money? Maybe you can cancel your Netflix or stop eating out 3x a week (or whatever) in order to get some extra money.

There is no reason Quick Cash 1 shouldn't be paid off in December. I just talked to a coworker who told me how to make jam. Perhaps you can give homemade gifts this year or do secret santas instead of spending a ton on friends and family. Assorted cookies wrapped with a nice bow are such thoughtful an yummy gifts.

Your debt isn't that bad, and if you focus on reducing it, you'll be finished in no time. Soon all of your hard work will pay off and it'll be so worth it in the end.


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Tue Nov 29, 2011 5:01 pm 

Joined: Mon Aug 08, 2011 9:13 pm
Posts: 168
Location: Brisbane, Australia
I've just crunched the numbers in Excel and worked out you've got roughly the same result for the Snowball. The graph doesn't look pretty ;)

Image

My concern is, what's the rest of your budget? Do you have an EF? You mention wanting to move into a house one day, but also mention a mortgage of $715, yet you've not listed that as one of your debts. Are you currently paying off a unit or townhouse?

If we can see you budget we can point out where you could find more than the $50 you've said is available. Speaking of which, where'd the $50 come from? What have you sacrificed?


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Wed Nov 30, 2011 6:01 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1716
Location: Ottawa, Canada
Congrats on finally deciding to take a stand and tackle this debt. As others have mentioned, it would be helpful to see your budget. Also, what's your monthly income? It sounds like maybe you've got more of an income problem than a budget problem.


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Wed Nov 30, 2011 6:52 am 

Joined: Wed Oct 07, 2009 4:16 pm
Posts: 959
What's quickcash?
Welcome

_________________
Be what you want to attract.


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Wed Nov 30, 2011 7:09 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1716
Location: Ottawa, Canada
fantasma wrote:
What's quickcash?


A payday lender.


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Wed Nov 30, 2011 7:34 am 

Joined: Mon Nov 01, 2010 5:15 pm
Posts: 1119
kombat wrote:
fantasma wrote:
What's quickcash?


A payday lender.

Yikes!


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Wed Nov 30, 2011 7:45 am 

Joined: Thu Jan 10, 2008 12:24 pm
Posts: 23
Location: Utah
Thanks for the reply's. I am not going to lie, it is hard to have made choices in life and think I was making the smart move. But as i have gotten older i have realized they were not the best. In the next couple of days i am going to get my budget up. I have it all at home and that was all done in Google docs yesterday while i had some free time at work. But i am going to answer some basic questions right now.

peachy - Thanks! It is good to be back. When i was on here before i learned a lot and loved following these journals. It actually made me want to be better. Hopefully this time it all sticks. As of right now we do not have an emergency fund at all. Last night the wife and I discussed that we need to get one started or we are not going to last very long. I will start to work on that pretty soon. I am not counting on a Christmas bonus but if i do receive one then I will take ten percent and do something nice for the family and then put the rest into the bank to help start that. Ah, retirement. That one is easy too. Nothing. My older brother has been after me for a couple years now to get something going. I just need to bite the bullet and get signed up for it. Every year for our neighbor gifts we actually make sugar cookies, so the cost is really low as we buy stuff with the groceries. But you are right, we need to keep it low cost, which we have tried to do. Thanks for the encouragement on getting it paid down. You are right, it is not much it is just getting focused and getting it taken care of.

geoff - Thanks for the graph, glad to have a visual of what it all looks like. Right now we live in a condo that we purchased in early 2007. It was just before the market got out of control and i thought we got a pretty good deal with it. It was a rental property before so it needed some work done to it, which i am very easily able to take care of. We used a first time home buyer program our state has that put us on a fixed 30 year loan, the only down side was it does have a second for the closing costs. I have not included that into the debt as for right now because it is comparable to what we would be paying in rent. So in all technicality my mortgage is right around 745, the correct number will be shown when i get the budget up.

kombat - You are right, I know that we have an income problem. We went from having two incomes in 2009 to living off of mine. I lost a job in April of that year and we decided that we would keep my wife at home, she had done previously after our daughter was born. It is not the easiest thing and i have thought of a part time job several times. But my employer expects me to stay till 5 and does not matter what time i come in at. Right now i work 9-10 hour days and that extra hours is actually a part time job. I have been trying to find a better job with better benefits, problem is with working in construction right now is not the best. I have had interviews with some government contract manufacturing places but nothing has come about. Plus, as i send out resumes i feel that they are weak. I need to get a better resume and keep hitting that hard. It is my goal to get a better job next year. We shall see.

fantasma - Quick cash is something that our credit unions offer us. It is a loan that is for a small amount that is tied to our checking account. Both are pretty much maxed out right now.

Hopefully that does answer some of your questions. As I mentioned in the beginning I will try to get the budget up so you can look at that. Thanks again for all your input. I do have one question for everyone out there. I have a meeting today regarding our health insurance with my employer. I received a letter informing us that we are going to be using a HSA, but i have NO clue how it seems to work. Any and all information would be greatly appreciated. Until next time.

_________________
Tony

“Never, never, never, never give up.” - Winston Churchill


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Thu Dec 01, 2011 3:59 pm 

Joined: Thu Jan 10, 2008 12:24 pm
Posts: 23
Location: Utah
Tomorrow is pay day for me. With the thanksgiving holiday from my calculations it is smaller then normal, but still above my budget. I looked at what things i can pay with this check and i can get a lot of the smaller stuff paid off early in the month so the next check will allow me to apply debt reduction in January. Hopefully i can post some progress numbers tomorrow, however it may just be the minimum with a couple extra thrown in there.

Many of you have asked for the monthly budget so i am going to post it here. Not going to lie, putting this out there has me nervous. But I told myself this time I was not going to shrug things off.

Income
$2,500 (This is my budget amount. Overtime gets tricky)

Housing
Mortgage 1 - $ 714.30
Mortgage 2 - $ 30.47
Insurance - $ 12.09
HOA - $ 138.00
Electricity - $ 125.00
Phones - $ 80.00
Internet - $ 40.94
Netflix - $ 8.54
Total - $1,149.34

Auto
Car Payment $ 213.00
Insurance $ 68.67
Gas $ 160.00
Total $441.67

Bills
Consolidation $ 159.00
Quick cash 2 $ 25.00
Quick Cash 1 $ 15.00
CC 2 $ 30.00
CC 1 $ 125.00
Total $ 354.00

Misc
Grocery $ 300.00
Tithing $ 250.00
Total $ 550.00

Total
Total Bills $ 2495.01
Total Income $ 2500.00
Leftover $ 4.99

I know it does not leave us a lot of room for things. The nice thing is we are not in the hole, but does not leave us with a ton of wiggle room. Here are some extras for you. The company i work for gives us a safety bonus each month for 20 bucks if there are no record able accidents. My wife and I have decided that this will be part of the 50 bucks a month for the snowball. It is given out the first week of the month for the previous month. I pretty much can plan on this as in the time i have been here i have only not received it twice. Our gas money is the tricky one right now. It goes up and down but i am hoping to fine tune that number. I drive 22 miles round trip each day to work and have an economic car. My wife does not drive during the week as she likes to stay home. I feel safe that i can get some extra money from that, but want to put it away for repairs in the future. With my income there and working overtime i am able to get the extra thirty for the snowball very easily.

Hopefully that will give you something to chew on for a bit. I appreciate all the feed back that i have received, and continue to get as well.

_________________
Tony

“Never, never, never, never give up.” - Winston Churchill


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Thu Dec 01, 2011 6:47 pm 

Joined: Mon Aug 08, 2011 9:13 pm
Posts: 168
Location: Brisbane, Australia
Thanks for putting up the budget.

First, automatic, gut response is: GET RID OF NETFLIX!!!

Second, cut the tithing, you're the one in debt.

Third, reassess your insurances, you should be able to get a better deal, by either increasing your out of pocket, making for a lower monthly bill or by going with the one company for all insurances.


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Fri Dec 02, 2011 6:17 am 

Joined: Sun Nov 18, 2007 2:11 pm
Posts: 10
geoff_tewierik wrote:
Thanks for putting up the budget.

First, automatic, gut response is: GET RID OF NETFLIX!!!

Second, cut the tithing, you're the one in debt.

Third, reassess your insurances, you should be able to get a better deal, by either increasing your out of pocket, making for a lower monthly bill or by going with the one company for all insurances.


I don't think cutting the $250 tithe is possible, If you couldn't tell from dunkydude location, I believe he is Mormon and is required by his church to give 10% of his pay, he could probably tell you better then I can.


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Fri Dec 02, 2011 8:12 am 

Joined: Thu Jan 10, 2008 12:24 pm
Posts: 23
Location: Utah
Thanks for the quick response to the budget Geoff. I appreciate your responses as well. When looking at our budget we have no entertainment, movies out and such. I would cut netflix but that is our entertainment. Also, we have found that if we did not have that for our evenings we would actually be headed out of the house for things to do at night. Would the 8.54 help with paying down? Ya it would. But that is our entertainment for the month. We do not go out to see movies etc. Where we live we are unable to receive reception for over the air TV.

In response to your second response. As scarface did point out that i do live in Utah and am a member of The Church of Jesus Christ of Latter Day Saints (Mormon). It is not my intent of this journal to preach or push my religion, but as a place that i can come and share my ups, downs and triumphs working on getting out of debt. As well as to receive the incredible support from people who have been and are going through the same process as we are. Our church has no paid clergy or minister. We are a volunteer church. (My wife and i actually teach 6,7, and 8 year old in Primary) Our bishop does not receive any of the tithes we pay. The tithes that we pay help build church buildings, temples and what ever else our Prophet sees fit. It is not a requirement that we pay tithes but both my wife and i feel strongly that if we do not pay it we are missing out on blessings that could come our way. One thing that we have learned is for a few months we did not pay our tithes and noticed that we did not make ends meet. As soon as we did start to pay again we started to fair better. Again my intention is not to preach. But i appreciate the opportunity to share tithes about our church.

Thanks for the thought on the car insurance. Right now we have two vehicles insured. One is a 2003 Honda Pilot (My wife's car and the one the loan is for) and the second is for a 2005 Ford Focus (Which has been paid off for over a year and a half). I work with a insurance broker for both of our insurances. We have them both with the same company too. May just need to have him look to see if we are getting a good deal. Since we have had this policy each year we go without an incident we receive a 2% discount. I will look into it though.

Well today is pay day. I am hoping to update on our progress, just need to figure out how much the check is for. I will update later.

_________________
Tony

“Never, never, never, never give up.” - Winston Churchill


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Fri Dec 02, 2011 8:23 am 

Joined: Wed Oct 07, 2009 4:16 pm
Posts: 959
8.45 Netflix, leave it alone. It would be too drastic to cut off your "tv/cable" option. Would you be willing to cut the amount of the tithe down? Is the minimum amount for you to tithe 10% or less? If you do go that route which debt would the money go towards? Can you two look for other sources of income? Babysitting, pet sitting, house cleaning or if your handy, carpet cleaning...etc.

_________________
Be what you want to attract.


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Fri Dec 02, 2011 3:07 pm 

Joined: Mon Sep 21, 2009 9:04 am
Posts: 43
You've probably already considered this, but if you're living on one income and your wife doesn't need the car during the week, do you need two cars? Could you sell one of them and use the proceeds to pay your debts off sooner? How's public transit in your area?


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 Post subject: Re: Dunky's Family Debt Reduction
PostPosted: Fri Dec 02, 2011 5:13 pm 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
After looking at your budget, I think your gas is a little high at 160/month. I drive 40 miles round trip plus drive a lot of other places and spend about 25-30/week. If your wife isn't driving, there's no reason your gas bill should be so high if your car really does get good gas mileage. 20 miles roundtrip is very low. You're lucky.

I think you should keep Netflix for the reasons stated above.

I also think your groceries are pretty high, but I know some people only eat organics or name brand stuff and really like cooking and making fancy meals. See if you can trim that a bit.

Other than that, I think your wife should look into doing something at home to make some income. With no kids, what IS she doing? ha ha.


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