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 Post subject: Journey into debt reduction (Round 2)
PostPosted: Sun Dec 04, 2011 9:41 am 

Joined: Tue Apr 15, 2008 6:48 am
Posts: 526
Location: Arkansas
Time for round two.

I spent some time the other day and worked on some financial spreadsheets. Looks like I fell off the wagon and hit my head. From the looks of it I fell hard.

Later tonight I'll get some numbers up so I can document my new starting position for this journey. Lord knows it aint good, but it is what it is.

On an up side (if you want to look at it that way)... I sold my business so I dont have to worry about those expenses anymore.

According to my spreadsheets... I should have a -196.00 left at the end of this month after bills are paid. Guess I'll be pulling that out of savings to cover my stupidity.

This go round I have added something a bit different to my spreadsheets. I now have a line graph that shows my progress over time. I am hoping that will help keep me motivated by being able to see my debt line go down and my savings line go up. It will be a good day when those actually intersect.

I've also got a detailed plan wrote out on paper that will allow me to get my credit card debt paid in full in 37 months. The main problem I have is that plan takes all available $$$ which may set me up for another fall.

I hate to do it, but I am going to sign up for some overtime at work which if I can get it... will allow me to stick to the plan without killing myself money wise. Hopefully that will help me stay on track and maybe (depending on how much I get) help me get paid off early.

Anyhow... Im back for round 2 and hope this time I can get things moving in the right direction.

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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Sun Dec 04, 2011 12:12 pm 

Joined: Fri Jul 10, 2009 6:57 am
Posts: 384
Good for you for sitting down and working out how to give it another go!

You might be on to something there when you say having no extra money could set you up for another fall. I had trouble with that when I was paying down my CC; I'd leave myself nothing extra, and then when something unavoidable came up -- argh, I'd have to put it on a credit card, undoing some of the progress I had just made. I had to learn to estimate my expenses realistically and leave myself a cushion out of every paycheck, even if it meant it would take a bit longer to pay off the CC. I still get overly ambitious sometimes, now that it's the mortgage I am attacking. But reality quickly sets in. I feel a bit guilty about having a cushion, but that's what works for me.


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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Sun Dec 04, 2011 12:30 pm 

Joined: Tue Apr 15, 2008 6:48 am
Posts: 526
Location: Arkansas
CecilyC wrote:
Good for you for sitting down and working out how to give it another go!

You might be on to something there when you say having no extra money could set you up for another fall. I had trouble with that when I was paying down my CC; I'd leave myself nothing extra, and then when something unavoidable came up -- argh, I'd have to put it on a credit card, undoing some of the progress I had just made. I had to learn to estimate my expenses realistically and leave myself a cushion out of every paycheck, even if it meant it would take a bit longer to pay off the CC. I still get overly ambitious sometimes, now that it's the mortgage I am attacking. But reality quickly sets in. I feel a bit guilty about having a cushion, but that's what works for me.


My main problem is I am working to overcome the "I want it... so Im gonna buy it" mentality. I think that was the problem the last go round. I cut my finances to the bone.. and when I slipped... I slipped big.

My current plan is also cut to the bone, so I may end up tweeking it just a bit.... even it that means it takes me a little more than 37 months to get rid of my credit card debt. I have to accept the fact that it has taken me a long time to get myself into this financial shape... it will take me a while to get out, and if I try to rush things.. it will just keep ending in failure. Not only do I need to work on the financial aspect of things... but also the mental aspect of things.

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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Sun Dec 04, 2011 3:00 pm 

Joined: Wed Oct 07, 2009 4:16 pm
Posts: 961
Welcome back :clap:

Lean back in your chair, let's have a chit chat you and I.

Last time cutting to the bone did not work. Let's go with another plan of action.

It took a long time to get into debt, assume it will take a long time to get out of debt.

Can you work minimum payments within your regular paycheck?

In regards to overtime, pick a certain amount your willing to go over and stick to it. Allow yourself the time and space to live while paying down your debt.

Your overtime checks should be seen as an added bonus you shuffling towards debt. I made the mistake of using expected overtime income to go towards my debts but you know what? It was awful.

Don't feel the need to make yourself suffer by going hardcore (cutting your budget to the bone). Figure out or put up a budget to get help on allocating your money towards debt.

Let's treat debt payment as a marathon your planning to run as opposed to a sprint.

Last time you posted there were talks about a significant other with babies on the way. Hope everything is going well.

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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Sun Dec 04, 2011 4:08 pm 

Joined: Tue Apr 15, 2008 6:48 am
Posts: 526
Location: Arkansas
Nope... no significant other with babies on the way anymore. That is a very long story and one I would just soon not relive.

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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Sun Dec 04, 2011 4:48 pm 

Joined: Tue Apr 15, 2008 6:48 am
Posts: 526
Location: Arkansas
I can not be held accountable for your sudden bout of depression from reading these numbers. I am dealing with my own bout and I don't need any extra right now.

These are the numbers as of November 2011 and a new starting point for this journey I am on.

Total credit card debt > 35653.14

CC1 -- 765.64 >> min payment 35.00 >> interest 15.07
CC2 -- 3420.83 >> min payment 107.00 >> interest 63.69
CC3 -- 7385.28 >> min paymnet 148.00 >> interest 74.71
CC4 -- 5651.89 >> min payment 112.00 >> interest 70.07
CC5 -- 361.44 >> min payment 15.00 >> interest 4.54
CC6 -- 5562.48 >> min payment 125.00 >> interest 70.23
CUL -- 12505.58 >> min payment 448.00 >> interest 172.28

Total min payments for the month -- 990.00
Total interest charged for the month -- 466.05

Below is the numbers from my budget... there is no fat to trim as I have already done that. So I just have to live and work with what I have.

2860.10 << Income
990.00 << CC min payments
1027.69 << House, utilities, insurance, etc
------------
842.41 << left to live on during the month
840.00 << budgeted accounts (groceries, gas, pets, Roth, debt reduction)
------------
2.41 << actually left over at the end of the month!

If I have learned one thing... it's if I want to get my debt paid down I have to treat the debt reduction like a bill. That is why it is lumped into the budgeted accounts.

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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Sun Dec 04, 2011 5:01 pm 

Joined: Mon Aug 08, 2011 9:13 pm
Posts: 182
Location: Brisbane, Australia
Tight.

What's the left to live on for the rest of the month cash going to be spent on? I.e. if it's not budgeted for specifics, e.g. alcohol, entertainment and so on, then it can get frittered away too easily. If you can nail down a specific use for the cash, then it's easier to see where you cash goes each month, and whether or not you need to spend it on what you spent it on.

Have you reassessed your insurance situation lately? Combining policies into the one company, only having the bare minimum coverage, i.e. you don't have dependants from what I recall, so life insurance would be a waste, increasing the amount you'd pay if you did claim on insurance, that can reduce your monthly bill as well.

You still running the two vehicles? Still need to run the two vehicles?

Looks like overtime is your way out of this in the short term. How you pay down extra cash off your CC is up to you, Snowball method, highest interest first, whatever ticks the box for you. But taking into account those numbers I'd be snowballing the hell out of the lower value CC's with Overtime cash and steam rolling through the rest of them as best I could.


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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Sun Dec 04, 2011 5:39 pm 

Joined: Tue Apr 15, 2008 6:48 am
Posts: 526
Location: Arkansas
Now on to my plan of action to make this debt go away.

First on the chopping block is CC5. That wont open up much but it should be gone before the end of this year. It's numbers dont really figure into my 2012 Roadmap to Debt Freedom.

All of the figures below were derrived from my November numbers.

First to tackle is CC1. By paying principal of 19.93 towards the debt, plus 100.00 from the debt reduction account, plus 150.00 from my Roth account (suspending my contributions for the time being... still putting into my 401k), plus the money from two holiday pays... I should have this debt paid off by the end of Feb 2012.

From there I will tackle CC2. By paying the min payments while working on the CC1, I should have brought the balance down to around 3334.21. By paying the principal of 43.31 towards the debt, plus 100.00 from debt reduction, plus 150.00 from the Roth account, plus the 35.00 from CC1, plus 5 holiday pays I should have CC2 paid off by the end of Oct 2012.

With both of those gone that opens up $142.00 a month in min payments.

Here is where some folks may be shaking their heads and stomping there feet. After I get both CC1 and CC2 paid off I plan on tackling CUL. This will take me into 2013

The reason for this is because I have over 180,000 miles on my car, and I put on close to 100 miles a day driving back and forth to work. I have to face reality that at some point in the future I am going to need to replace it. By going ahead and getting the CUL paid for... that will open up $590 a month. Which would be a giant sigh of relief when I do need to pony up for a new ride.

If I can maintain that level of dicipline... I will have the CUL paid off by November of 2013.

I also plan on getting my eFund back up to $1000 (currently 154) and my savings account up to $500 (currently 20).

All of the above will be a tall order to fill for 2012.

If I only paid the min payments on everything (and not adding to it) I should reduce my debt by 6726.72 which would be a nice start.

By paying off CC1, CC2, & CC5 I will completely remove 4547.91 from my debt load, and by paying min payments on the rest of the debts I will remove 5967.84 from my debt load for a total 2012 reduction of 10515.75.

For me that's not a bad start for a years worth of work.. providing I can force myself to stick to the plan.

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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Sun Dec 04, 2011 5:57 pm 

Joined: Tue Apr 15, 2008 6:48 am
Posts: 526
Location: Arkansas
geoff_tewierik wrote:
Tight.

What's the left to live on for the rest of the month cash going to be spent on? I.e. if it's not budgeted for specifics, e.g. alcohol, entertainment and so on, then it can get frittered away too easily. If you can nail down a specific use for the cash, then it's easier to see where you cash goes each month, and whether or not you need to spend it on what you spent it on.


Ummm... I dont think I'd get much alkeehaul or entertainment out of

2.41 << actually left over at the end of the month!

Although I think you may have been talking about the 842.41 :P

On my spreadsheet... I have my income at the top (line for each paycheck amount) and then I break it down into monthly bills. Once I subtract that from my income it gives me my remaining $$$ to work with per month.

From there I break it down even further. I have 7 budgeted accounts that money goes into. A set amount per paycheck per account. Like $90 per check into the auto fund for gas. The money never physically leaves my checking account... but it is relocated on paper. Therefore I dont see it.. and don't think I have extra in my checking account.

Once I add up all those funds it comes up to 840 a month... so I subtract that from what's left over from paying the necessary monthly bills to keep everyone happy and I come up with a whopping 2.41 actually left over at the end of the month!

Now truth be told... even with only 2.41 showing I'm not hurting real bad because between my debt reduction and Roth funds... I have 300 sitting there.



Quote:
Have you reassessed your insurance situation lately? Combining policies into the one company, only having the bare minimum coverage, i.e. you don't have dependants from what I recall, so life insurance would be a waste, increasing the amount you'd pay if you did claim on insurance, that can reduce your monthly bill as well.

You still running the two vehicles? Still need to run the two vehicles?


Both my vehicles and home is thru the same provider so I am maximizing the availabe discounts. I have only required coverage on my truck and full coverage on my car since it's the daily driver, and I have the deductable set at $500 I think.

Some might think life insurance would be a waste.. but it's only costing me $33 a quarter... and you never know.... someday I might get hitched and need that coverage.

I am still running both vehicles and will continue to do so. Both are paid for... and my car is my daily driver since it gets around 30mpg. My truck only gets around 10mpg but I need it to haul stuff and for the winter time. The 4x4 may not keep me from sliding off icy roads.. but it will help me get out of the ditch once I get there (usually :lol: ).

Quote:
Looks like overtime is your way out of this in the short term. How you pay down extra cash off your CC is up to you, Snowball method, highest interest first, whatever ticks the box for you. But taking into account those numbers I'd be snowballing the hell out of the lower value CC's with Overtime cash and steam rolling through the rest of them as best I could.


I agree.. once I get the 3 lowest off of me... then I'll have some breathing room. I did sign up for some overtime at work.. now I just have to wait to be called. I really am going to hate doing the OT, but at 200+ bring home per 8hr shift.. Id be a fool not to.

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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Mon Dec 05, 2011 5:02 am 

Joined: Fri Jul 10, 2009 6:57 am
Posts: 384
Aagh, only 2.41 left at the end of each month. For me that would be a recipe for disaster! True, you can choose to treat the $100 debt reduction and the $150 from your Roth as cushion, but then you are running in place with the debt and eating away at your Roth.

Judging by my own experience, I would suggest that after CC5 is paid off, you add the $15 minimum payment to a "cushion" fund, in a little ING savings account or a savings account linked to checking so that the deposit can be automatic and you never see the money. Same with the $35 from CC1 once it's paid off. Yes, the extra $50 per month will slow your payoff plan down a little, but by the end of the year you will have $600 or so worth of cushion. You never know what is going to come up. I know it sounds contradictory, but saving up a cushion is actually a necessary part of debt reduction in my experience. Without it, I kept putting more stuff on the CCs. Like holiday presents.

Good luck and keep posting your progress for us. Being publicly accountable can be a big motivator.


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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Mon Dec 05, 2011 8:53 am 

Joined: Tue Apr 15, 2008 6:48 am
Posts: 526
Location: Arkansas
CecilyC wrote:
Aagh, only 2.41 left at the end of each month. For me that would be a recipe for disaster! True, you can choose to treat the $100 debt reduction and the $150 from your Roth as cushion, but then you are running in place with the debt and eating away at your Roth.


With my December numbers... it IS a disaster since those numbers currently reflect a -196.00. Part of that is because I dont have the actual paycheck amounts inputted into the spreadsheets. My paychecks for some reason fluxuates (sp?) so I currently just have a close guess inputted.

Quote:
Judging by my own experience, I would suggest that after CC5 is paid off, you add the $15 minimum payment to a "cushion" fund, in a little ING savings account or a savings account linked to checking so that the deposit can be automatic and you never see the money. Same with the $35 from CC1 once it's paid off. Yes, the extra $50 per month will slow your payoff plan down a little, but by the end of the year you will have $600 or so worth of cushion. You never know what is going to come up. I know it sounds contradictory, but saving up a cushion is actually a necessary part of debt reduction in my experience. Without it, I kept putting more stuff on the CCs. Like holiday presents.

Good luck and keep posting your progress for us. Being publicly accountable can be a big motivator.


I agree on CC5 and that was kinda part of my plan in a round about way. During my laying out my Roadmap... I never took into account the monthly min on CC5 since I hope to have it paid off before the first of the year. My plan was to just let that monthly fall back into my checking account to help improve my bottom line.

I also have some money that is supposed to be coming to me before the end of the year (how Im going to pay off CC5) and I will also use this to build up my savings to the $500 level I have slated as a goal.

This should give me some leadway to tackle my debt and have a bit to fall back on should something arrise.

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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Mon Dec 05, 2011 9:20 am 

Joined: Tue Apr 15, 2008 6:48 am
Posts: 526
Location: Arkansas
I would like your opinion on my current thoughts.


Earlier I posted that I am "also planning on getting my eFund back up to $1000 (currently 154) and my savings account up to $500 (currently 20)."

Here are my thoughts. My eFund is tied to my checking account which allows me easy access to transfer money from my checking account to it. Once my bottom line in the checking account gets greater than say $100 I plan on transferring the overage to my eFund. This fund will be to pay for major problems, and with it tied to my checking account will make those purchases possible in an emergency.

My savings account will be somewhat accessable but not tied to my checking account. My goals for this account is for minor stuff or just saving up for something that I really want. This will help me (hopefully) get over my instant gratification that got me into this mess to begin with. I plan on funding this account (other than the initial infusion) by saving up my change and cashing it in, and also by adding in any left over cash from my bi-weekly allowance for food and misc items.

I learned a while back that I cant trust myself to keep from going over using my debit card so now I take out $110 every two weeks to buy food and household items with. I am also going to force myself to use this money for the "I wanna" things. Or in this case... save up for the "I wanna" things. Hopefully this will help me get back on track and teach me a new way to think about my finances.

Oh.... and Im sure there are some folks wondering how I plan on getting that $100 in my checking account when according to the November numbers I only had 2.41 left. I work a shift job...and those numbers are from my base pay. I have decided to change shifts to one that will come with a differential pay. This will help add those needed funds into my checking accout that will eventually end up in the eFund.

In my way of thinking... these two things above will allow me to build up my savings and eFund while I am also paying off my debt.

What are your thoughts?

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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Tue Dec 06, 2011 7:33 am 

Joined: Tue Apr 15, 2008 6:48 am
Posts: 526
Location: Arkansas
I set down and rolled some coins last night. Time to add another $30 to the savings account. New Balance >$50

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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Tue Dec 06, 2011 1:53 pm 

Joined: Tue Apr 15, 2008 6:48 am
Posts: 526
Location: Arkansas
I'm probably gonna regret this... but I just agreed to some overtime. That will be an extra $200 after taxes coming my way.

Im debating if I want to toss it towards my debt or build my eFund. I'll have to see what I have where once the paycheck comes in.

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 Post subject: Re: Journey into debt reduction (Round 2)
PostPosted: Tue Dec 06, 2011 5:10 pm 

Joined: Tue Apr 15, 2008 6:48 am
Posts: 526
Location: Arkansas
I've added another section to my financial spreadsheet. I want to keep track of the total amount of overtime $$$ I get for 2012. I'm curious to see if I can get around 5,000 worth of overtime between now and Dec 2012. That 5,000 would be net.... not gross. That only comes out to 25 days of overtime which should be more than doable.

If I could double that to 50 days of overtime that would be super sweet. That would mean I could knock out 20,515.00 just in the first year of this journey. Then I'd only owe 15,828 the second year.

That should open up around $840 a month and that alone would knock out 10,080.00 which would leave me trying to find a way to destroy the remaining 5,748.

Take into account there are 10 paid holidays for us and that's an additional 1,375 knocked off the balance which leaves me 4,373. If I am willing to stick it out and bite the bullet for a second year and get as much overtime as possible.. then with 22 days of OT in 2013 I'll be credit card debt free a whole year early.

That sounds kinda nice actually. I realize these are just a bunch of numbers and speculation, but it gives me something to shoot for.

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