My Debt Blog

Normally I’m a very patient person and don’t mind waiting for good things to happen. We have some credit card debt on each of us which has gone way down this year, but the momentum was short lived. While I am currently in a payment plan on my student loans, my wife has her loans in a grace or forbearance. At least we are not paying off a car on top of it all. The mortgage is still there and it would be great to pay it down, but everything has to happen in a particular order.

I’ve made several snowball type of spreadsheets to determine what I would need to pay on each card to get rid of it by a certain time. Sadly this payment process is over a 2 year span and it’s frustrating that it will take that long to get rid of credit cards. We’re not using them but it doesn’t feel like we’re paying them down and off quickly enough because each has a balance in the 4 figure range. I considered some of those 0% transfer cards but the savings on the interest is very minimal to surf balances all the time. When a challenging month comes up where there are increased expenses, we can’t make the payment on the spreadsheet. This just makes the plan stretch out longer and that just makes the debt even more depressing.

We have got to get these credit cards gone in order to tackle the crap out of the student loans. My wife is getting these statements from her student loans and it shows how much was borrowed, how much interest will be paid over the payment time frame, and the grand total of the two. In most cases the number is more than double what was originally borrowed. She has a 283 month payment plan which is 23 years and 7 months if we just keep paying what they ask for every month. My loans are on a 120 month or 10 year plan, which is also a long time to pay off a loan. It seems to me the larger the loan the longer you can pay on it to keep making them more money. When the credit cards are paid off, I plan to double the payments on all the loans to at least cut the time down to less than half, and pile up on the weaker smaller balances. The frustration right now is the credit cards are not paid and we’re not even making payments to her loans. The interest on her loans is only going up every month we have to drag this out, and I don’t make enough money to make payments on them. All of our debt is too much for me to completely service on my income alone.

On a positive note my house value is starting to finally come back up from the bottom. It is almost to a break even point where it is worth what I owe. In a few more months it may even start to be worth more than what I owe and my equity in it can actually increase. The market is still soft but there are houses in the community that are starting to sell. If my wife gets a job that requires us to relocate, I think we might be able to sell for enough to clear what we owe on it. Paying the realtors and other fees is another story.

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As the weekend approaches I can at least rest assured that the end of the month is Monday. At the start of each month I have a paycheck and listing of known expenses and some estimated ones. I’m always on edge as the money starts to run low in the middle and the end of a month. I’m not sure if something bad is going to happen or there will be an unforeseen expense that jumps on me at the wrong time.

June had some rough challenges due to having to go through a root canal and paying the car insurance bill. This was a challenge however at the same time my wife brought home some extra money this month from her new job. This check was for roughly half a week’s worth of training time and helped us buffer some of these increased expenses. Unfortunately even with the extra money and expenses we weren’t able to really tackle the debt load. July is a new month though and we have a vacation planned towards the end of it. Since we’ll be gone for a week of July, some expenses will be reduced. The last thing I want to do is go into debt or blow away the emergency fund in a month we went on vacation.

I’m in the process of creating a post on the various dental work I have had done. This stuff is expensive even with insurance, but it had to be done right away. My insurance changed and it isn’t easy to front the cost while waiting on a check in the mail to put those funds back in my account. I think I’m going to try a different dentist after this last procedure is finished.

Last thing I’m excited about is the annual Taste of Chicago starts this weekend. We got our Taste tickets early during their presale for $6 per strip of 12, 4 strips at a time. Since we were unable to go last year due to a wedding, it should be a good time this year.

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I’ve put this off for quite some time but I was looking at the tread on the front tires of my car the other day. The tread wear is very low, probably 2/32 even though I don’t have an official gauge to verify that. While I’m still able to drive the car just fine, it still makes me nervous that the front tires really need to be replaced. I decided to look up what some tires would cost me to replace them.

The tires themselves run $91 a pop, just the tire. This place also has to add on fees to protect the environment, disposal, and installation of the tire itself. There’s an optional coverage or warranty that if something happens to the tire like a hole or sidewall damage, they will replace it. I have bought a tire from this store before, a month later hit a piece of scrap metal that was lodged in the tire causing a slow leak, and they replaced the damaged tire with a brand new one.

When all is said and done it will cost me $263.66 to replace the two front tires. I may have to resort to the EF to handle this expense and then balance it out next month. If I don’t replace these soon my concern is having a blowout or losing control when it rains, which would cost me much more later. I think I need to figure out some sort of way to account for car maintenance and repairs since the vehicles are starting to get older, and it takes more than gas and oil to keep them going.

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I’ve been debating for a few months of switching things up with how to handle the finances. Right now my wife and I only have one joint checking account where everything goes in, and everything comes out. While this has worked for quite awhile, it does create a challenge when one of us needs something or wants to do something, yet the bills have to be considered too. I know some people who do a yours and mine account and pay for half the bills. While it may seem to work for them, it feels very separated instead of working together.

The idea I had was to have three accounts, a sort of yours, mine, and ours type of thing. Paychecks would be deposited into separate accounts and then a percentage of the monthly costs would be transferred to the one in the middle. The only question is when it comes to personal debt we both have, should those be considered a joint expense? I make quite a bit more than my wife is currently and if this were the case, I think she would have trouble keeping up with her payments. That would be the point where I feel she would begin to think that this is unfair to her and wanting to go back to the old way.

If we combined all our bills and household expenses as they are so we have no individual payments, roughly 70% of each of our income would take care of this. This would leave us each with the remaining left over. I would have several hundred per month and my wife only a few hundred left over. Since I naturally don’t live in the moment, but rather the future the bulk of ‘my’ money would go directly towards getting us out of debt.

Sometimes the best thing is to do nothing at all and leave it the way it is. Joint account just means we need to both work together to manage the money and meet our wants and needs. The basics just always have to come first like food, shelter, utilities, clothes, and transportation. Beyond this basic structure are luxuries that we choose to have: HDTV, cell phones, Internet, and the like. We also have the credit card debt we’re working on, and the student loans that have to be paid back. I’m just weighing the options here openly on the blog as thinking out loud. Feel free to leave a comment on the subject.

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Is it a bad thing to live paycheck to paycheck? I think it’s quite common that most people have a fixed income with variable expenses and debt. Lifestyle also needs to be a variable expense to balance out when expenses go up, plus income could feel tight for a bit. If there is a case where the expenses exceed the income after lifestyle has been cut down to nothing, I would consider that an emergency. An emergency fund can help get through the problem instead of doing what many people do, run it up on a credit card.

There are some priorities when it comes to what to do with the income. Our income at the beginning of the month handles the mortgage payment, which takes out half of it. The rest is allocated between fixed expenses like regular bills due before the 15th and the rest is for variable expenses. The mid-month paycheck goes towards the bulk of our monthly bills like utilities and payments towards debt. When the money comes in it is a good idea to have a plan of where it is going instead of wondering where it went.

I’ve also pondered what things will be like without having to pay for a single debt. If our income remained the same and we had absolutely no debt, outside of the mortgage, one pay period would cover expenses for the entire month. We would be able to save the entire second pay period in full. If there was no mortgage, we could save or invest the mortgage payment on top of the second pay period. There are people who live like this, and someday I want to be one of them. If we hit that point we would no longer be living from paycheck to paycheck, but rather focusing on living without worrying too much about the paycheck.

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My birthday was about two weeks ago and something I have wanted to try out was Quicken 2008. I had looked at this software for a few months and considered buying it near the tax time because of the rebates and such. When my birthday came around, and I don’t want or desire much, I received a copy of Quicken 2008 Deluxe. Installed it, got our primary accounts setup, and wondering where to go from there.

This weekend we went to Borders bookstore and I bought a guide on how to use Quicken. Going through this book I have made a lot of progress in the program now. I have entered all the transactions for May and up to the weekend for June, and am tempted to go back and manually enter stuff for January to April to track things on a YTD basis. What I really like about this program is the ability to easly see cash flow for the month. It has the income and the outgo boxes showing what income to expect and an idea of the bills and such, then it shows what is left over we could save (or use to pay off debt).

There is a budget feature in the program, but with only one month in there I’m not sure how it will calculate things. Plus a budget should not be a template that is going to be the same month to month. We haven’t had much luck with a budget, but things were easier to lay out when I put the bills in a list. This makes things rather clear when the bills come in, how much we have to spend to pay them, and then what is left over. One thing I think that Quicken will help us with is the ability to at least track how much is being spent on clothing and eating out.

Doing some quick math on what my wife will make from her summer job, it will be slightly more than what she currently earns at her current job. The flipside though is it will cost more in gas to get to the new job, so this will have to be tracked to see if there is any increase. If there is an increase it will help us pay debt and save more, as long as we keep things relatively the same as they are today. I’ll see if I can get a pie graph or something with where we are spending our money.

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A two days ago my wife and I hit the two year mark on our marriage. She is essentially working a job and a half this week, school in the morning and training for her summer job after that. With that being said, we decided it would be better to celebrate this time on the weekend. I think we’re going to go downtown Chicago and visit the Museum of Science and Industry which we haven’t been to in years. Best of all is she can get us in for free, along with some other places, as a perk of her new job. That evening we’re going out to dinner at the Olive Garden.

I remember last year the first anniversary was a huge stressful deal. We had to buy each other gifts, got a suite in a hotel, and ate at a very pricey restaurant. Last year the grand total of everything was probably over $500 and it just totally busted the month along with the car insurance bill. This year though we agreed that our home entertainment upgrade to HDTV was our gift to each other. So this weekend I’m estimating it will run at most $100, which still allows breathing room to deal with the car insurance bill this month.

When we started dating in college, every time we hit a year we would go out to a nice dinner. Six and a half years we’ve been together (two married) later I don’t see why it should be any different. I do think that when we hit a milestone, our ten year anniversary, we will take a vacation somewhere nice. What would be even better is to be debt free before that day comes. Most likely other things will happen along the way but it’s good to have a long term goal. We’ll stay DINKs for now though because neither of us desire family expansion right now. Two years married though and I think we have grown stronger than we were last year.

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