My Debt Blog

I have watched this website closely for when they would actually release this tool. If you have time go check out Mint.com if you’re curious about their new free online money management tool. I’ll give my experience thus far and probably provide a follow up in a month to see how it is working for me. My backup plan is to continue to keep my Excel spreadsheets updated of course.

Signed up an account and after logon I was taken to the tab to add Accounts. So far I have 8 of them in there and the tool creates a secure connection and gathers your transactions. Then I went to my Overview tab to view the summary. There is a getting started area that lets you see how you could save money (for products they probably endorse which is how they make money), setup alerts to track bill due dates, or look at spending trends. So far so good.

After all the initial setup, I clicked the Transactions tab which basically lumps all your accounts into one big pool. A lot of my transactions have no category and there is some updating that has to be done to teach it what those transactions are for. You can filter the view based on the account you want to look at though, which helps since I track regular transactions on my checking account. Spending Trends tab shows me a neat pie graph of the amounts and percentage of my available cash is being spent in different categories.

Finally their Ways to Save tab is where they make the money through this tool. It suggested I transfer my balance from my 9.9% APR card to a 13% card with a cash back bonus of $110. I think I’ll just avoid the extra finance charges by not doing this. I probably won’t use this tab but I understand why they have put it in there. Overall I think this tool is neat and we’ll see how it goes for a month.

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My wife has been doing her student teaching this week and trying to get the whole teacher role down. At any rate, she stayed after school for awhile yesterday to go over plans of what she will be doing for the semester. She is only obligated to be a student teacher for the fall semester and then she is done in December. After that it’s time for her to start finding a job.

This is where it gets interesting. Apparently a science teacher in the same group as the teacher my wife is student teaching under will be going on maternity leave. They are going to need someone to put in their place and my wife has a biology degree already and will have her education masters completed in December. From what she told me it sounds like they want to transition her right into a teaching role as a science teacher when she is done. I’m trying not to get too excited or jump to conclusions about this, but I think this is a very positive thing.

What was funny was I held back my reaction as best I could. My response was along the lines of that I felt that sounds like a good opening. Then she comes out with a compromising statement that if we did stay in our house longer, she would like to replace our kitchen/foyer flooring with linoleum. I estimate the cost of this to be about $500-700 which I would be willing to commit to in the event we hold off selling the house for awhile. This type of stuff my Dad and I could install, as we have done before.

She went downtown this past weekend to go shopping with her friends, which is good because I think she needed some social time with other females. At the same time her friend takes the taxi to places because parking is expensive. Apartments in the area we can afford to live are much smaller and everything much more crowded. I’m not sure if she wants to live close to her friends and the city based only on the idea of making more money when things will cost more overall.

We still have to make it through these next couple months on a tight budget. This is going to be a real challenge to be able to swing all of our expenses and still be able to do anything. What is going to be difficult is not going out to eat and forcing us to eat at home. We need to make it through these final months of her finishing school without an income. If this job is waiting for her when she is done, I think that is her finish line she needs to cross.

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This past weekend was the time for garage sales for my area. We pulled all or junk out of the basement and storage, brought it upstairs, got it set up on tables and tagged. Saturday morning came, it was raining and nobody near us had their garage door open either. I accidentally scheduled a dentist appointment that Saturday too and was going to cancel it but decided to go because I could at least get something done that day. Dentist didn’t cost me any money because I had a credit, but got some ugly news that I’ll discuss later on the blog.

When Sunday came around, the weather was still lousy and nobody had their garage doors open in the morning. By about 11:00 am there was one small one around the corner of our subdivision, they were just sitting there watching cars. We never even opened the garage door because the last thing I wanted to do was just passively sit there waiting for someone to come by.

All is not a loss though. My wife called her parents and their area has a garage sale day (my parents already had theirs) and we could haul our stuff down there to sell it in August. We’re going down there in about 1 week so we won’t have to store too much stuff in our basement waiting to get rid of it. Out of sight, out of mind is what I’m after, but the extra cash would have been nice.

On the subject of extra cash though, my wife received ALL of her paychecks in a lump sum for the last 4-5 pay periods today. She got a bit wide eyed when she looked at the pay stub we got in the mail Saturday. I told her the majority of this money must be held in savings to cover things for this summer. There is a few ways to handle this. Keep her ‘paycheck’ the same amount as if nothing changed, or her paycheck could take a slight cut to help make that money last us another month depending on how much to cut. I’m trying my best to get her more involved with the money stuff because she does not want to deal with it. The bills was one of those things I wanted her to sit down with me to look at, but because I have always just taken care of it, that’s what she expected me to do. I have to get these things paid and in the mail today though so they make it on time. Maybe next month will be better, at least the emergency fund is refunded back to 1k and the car insurance will get paid. It is nice to feel that we will make it this month after the way it started out.

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Along with the accomplishments I have made in my life, graduating college, getting married, buying a house, one of them may have been a mistake. Last year we made the choice to get out of renting an apartment and buy a house. This decision was proposed by my wife at the time and I was reluctant to make such a major move because of the cost increase. I think a warning flag should have gone off here.

We went to the bank to get pre-qualified so we could figure out what we could afford. I knew nothing about mortgages or how the process worked and basically learned as much as I could so I knew what was going on. Somewhere I heard that you should buy the most house for the money, so we used the upper limit of what the bank said we could afford. Being first time home buyers, what we wanted and what was available did not always match. Eventually we found the right house, got a pre-approval for a loan, and went into contract on it.

From that point there were issues with getting all the details together and problems with the underwriting process. I had to make some moves, like paying down the loan of my car so the bank no longer considered it as a monthly payment. Eventually all the financing was cleared and we closed April last year.

We are debating selling the house because it is costing us around the 40-45% mark of our current monthly take home income. That is all the cost for our two mortgages, property taxes, and insurance. Everything is current and that is not the issue, but the payment is about twice what our rent used to be. The idea was this might be high right now but would balance out once she has an actual salary job starting her career once she’s done with school. A majority of the money is going to interest anyways because the mortgages are so fresh, so very little progress is being made to actually afford the house. This is where selling the house and renting in the downtown Chicago area comes in.

The other side of this question is my wife is not happy with where we live because she feels lonely, no social life or friends. Simply put, she refuses to live where we currently live because she is unhappy where we live. I think she feels that if we sold the house and moved into the city, she’ll be happy, have friends, and plenty of stuff to do. I’m very bittersweet about selling the house and moving downtown because it feels like we’re starting over. The benefits of being downtown though would be lower house payment (just rent and insurance) would save money to put towards debt, I could sell my car (which I love but would not be necessary) and we would save on insurance and gas cost, and that extra money could go towards debt.

I think we’re viewing the extra money that would come into play with selling the house and renting again in different directions. The way I see it is we could really make some progress in paying off our debt while my wife would feel the extra money is no longer dedicated to something and can improve our lifestyle. The house does not have much equity in it so after all the fees and such are said and done, I don’t think we would make anything off it which sucks. We have moved every single year since 2001 and I thought we were done moving for awhile. At the time we bought the house, I never intended to just turn around and sell it a year later, but it looks like it has come to that.

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I have been talking to my credit card companies for some time now trying to get myself better rates. One of the major problems I was having was my balances were too close to the limit in order to offer me a better interest rate. A technique I applied was to ask them for a credit line increase, sometimes this can offset the utilization to reduce the interest rate.

My Bank of America card got raised by 1k and I called this month and got the interest rate down to 17.24% APR which is much better than that 25.24% I had been paying. My Citi Dividend card got a nice $3600 increase bringing my utilization way down. Called them last night and asked them if they could reduce my 11.24% APR, they said no. I asked for a supervisor and sat on hold awhile, got a rate specialist and asked her for a lower rate. She told me I had a good rate, which I told her that is a decent rate, I want a great rate. After telling her that I get offers in the mail all the time for much better rates she finally threw 9.9% APR at me, sold!

Now I must admit the bad news regarding debt not the event. It is coming up to my one year wedding anniversary and we both would like to celebrate it in style since it is the very first one. We’re going to stay at a Jacuzzi suite and go to a fancy restaurant, and for now the plan is to hold over the cost on a credit card. I’m also trying to figure out what we should be spending on each other. I don’t want to start any fights over trying to budget this stuff. These minor increases are temporary and will be my focus to get rid of so I can get back on track. I’m also going to start setting some money aside now in preparation for Christmas so I try to avoid doing this in the future.

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I hear various offers and ads on how to get out of debt. There’s so many methods out there I figured I would give my analytical look at each one. Some of these I’m actually considering doing and others are not even worth my time looking further into.

Ways to get rid of credit card debt:

• Make the minimum payment each month - I was using this calculator over at Bankrate to figure out how long it would take to pay only the minimums to rid myself of credit card debt. Needless to say it would take over a decade and I would pay several times over what I actually owe present day.
• Pay off accounts from highest to lowest interest rate - If I look at the simple math, it would make sense in theory to pay less interest over a long timeline.
• Pay off accounts from lowest to highest balance - This is the “Dave Ramsey” system in a way, I read about this before so I cannot give him full credit, by paying off a small balance first and applying the payment to the next debt helps decrease principle faster which should in turn reduce and eliminate debt faster.
• Using home equity/consolidation loan - Taking the credit card debt and converting it from high interest unsecured to lower interest secured debt. Partial benefit of this is being able to use the interest paid as a tax deduction come tax time.
• Debt payment plan - Some companies out there will basically take over the credit card payments for you by paying them a lump sum every month. These services do cost you though, roughly 20% of the original debt you’re paying goes to them. Why pay someone else to make payments for you?
• Debt settlement - I hear so many offers where you can save, “up to 50% on the dollar” off your debt. The problem with these debt settlement services is you are paying them to build up a payoff in order to settle your debt. Most of the time this is done instead of just paying on the debt, which will destroy your credit. You can also handle debt settlement yourself without a need for a third party.
• Bankruptcy - Too much debt? Hit the reset button and get a clean start! Yeah right. Credit reports stay messed up for 7-10 years and it is a long struggle to re-establish credit. I think some people out there think this is some sort of safety net for their poor mistakes they made with credit.

I use a combination of some of these methods to get my debt under my control and not let it control me. As various credit card offers throwing the 0% interest come across my hands, I do consider the math in terms of if I were to transfer a balance to it I could pay pure principle on that debt and eliminate it faster. The other is to get the high interest debt into a secured loan or transfer it to one of those life of the balance cards. By converting the debt into other forms does not pay it off, but it helps motivate me to get it paid off faster and pay less interest. If I missed something by all means let me know.

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