And Off We Go!

Here is what I typed this morning regarding our debt situation.

     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!

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