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Archive for August, 2009

September Budget Part I

August 31st, 2009 at 02:25 pm

September is shaping up to be a great month in our household income wise so we should be able to do a lot of good with our money. We get paid biweekly on Weds so we're looking at 3 paydays in September and a bonus in the middle of the month to boost our income even more. I usually do our budgets per pay period and any bills that are due within the pay period get paid. We have a few things we need to pickup online so those will be budgeted into this pay period's budget.

Here's how it looks right now:

09/02 - 09/15
Income: $4741

Electric: $242
The Maids: $140
Netflix: $12
Equifax: $7

Cash: $500
This covers food, clothing, entertainment, medical copays and any other discretionary expenses we have during the two weeks. We do this stuff in cash only because it works really well for us.

Son's birthday: $150
His 16th birthday was on August 25th and we need to deposit $100 to his checking account (was a gift from us.) We also are going to purchase him a dock for the car for his Ipod for $50.

Amazon: $10
This is for a replacement Tassimo filter.

HVAC Filters: $69
This buys us two replacement HVAC filters. I vac'd out the one we had in there but it is so bad I'm going to have to replace it. It's been in there for almost a year now so it's time.

So far we've spent a total of $1130 and that leaves us with $3611 to use as we see fit.

What's really crazy is the only thing we actually HAVE to pay on this list is the electric bill. The rest of the list (other than the cash...which we could cut down in half) is wants. Now that we're debt free we feel we can open up the discretionary spending a bit more but we're still retaining 75 percent of this biweekly income. That's not a bad thing.

We still have some long term goals to work on as well. My wife's wedding ring is still at the jewelers and I believe it'll take $2700 to pick it up now that it's been repaired. FYI to everyone make sure you have a proper rider for jewelry on your homeowner's insurance policy. We only had a small reimbursement and we now have the rider but you have to get it appraised and get it on your insurance properly. Check with your agent as to what you need to do to do it right.

We also need to pay off our son's Spain Trip which I mentioned in an earlier post. That'll be exciting to see that gone.

We're also going to be funding Roth 401k's (15-20 percent of net income with a 25 percent match to a traditional 401k by the company), saving for cash flowing college (we start paying the piper in Fall 2010) and accelerating our mortgage payoff (increasing the amount to principal) so it's not like that money doesn't have anywhere to go. We have a long haul ahead of us but we're excited at the prospects of being able to knock all of this stuff out.

Smile

First cool debt free expense

August 24th, 2009 at 07:17 pm

I just wanted to share the first cool thing we were able to do after clearing all of our non-mortgage debt. We were able to pay cash (well..debit card from our checking account) for our son (turns 16 tomorrow) to trek out of the USA to Europe in April with his classmates through a school trip. They'll be over there for 11 days total and the balance is due in full by December 19th. Well we've paid nearly $2000 out of the $3000 it cost already ($1750 of that $2000 in the last 4 days) and we'll be able to pay the remaining balance in full on September 2nd without batting an eye. A full three months + before the balance is due!

The best part is having the cash to do it instead of going into debt to do it. I can remember a time when that $1750 was going to minimum payments on credit cards. No more! Now it goes to things we WANT to do instead of obligations we HAVE to do. Yippie!

So for anyone mired in debt and wondering if it's worth the effort and sacrifice to bulldoze your way out...I can say absolutely! You can pay for a trip without paying more than the trip costs in credit card interest and fees. Smile

A thank you to everyone who followed our road to debt freedom

August 17th, 2009 at 11:41 am

I just wanted to send out a "thank you" for everyone here who gave us advice and ideas from the time I started this blog 2.5 years ago. We spent the last 4+ years wading around in over $75,000 of credit card debt and could never figure a way out (at its peak in April of 2008 it was at $110,000) and it took a lot of focus to finally just cut down the lifestyle and get it all paid off. I want to answer a few of the replies in the announcement here so here goes.

To everyone who sent congrats THANK YOU!! We really do appreciate it.

To crazyliblady: What we ended up doing to figure out how much we had to throw at our debt was to go line by line through each and every item we were spending money on and really decide if there was something we could do to cut it down. We ended up trimming out a lot of things we thought we couldn't live without and we basically used a zero based budget approach to make sure all the money was allocated before payday so there were no surprises. We did keep some money to the side for emergencies but not a lot because we didn't want to continue to get eaten up by interest. I would just list everything out and prioritize everything you spend money on each month and you can find all kinds of places to save. When it comes to credit cards make sure you don't use them (it's easier to pay them off when they're not nibbling back at you) and another thing we did to earn extra income was to sell little stuff around the house on ebay and craigslist. We made selling stuff we didn't need our 2nd job and were able to really help supplement our income that way (especially in the beginning.) Just try to focus as much of the extra $ as possible at the card and shut the card down so you don't incur any more payment than you have to. Smile

fern: There wasn't really any trick to what we did. It was really just focusing as much extra income as possible at the lowest balance at the time. We had tried paying it off by interest rate before but really just kept spinning our wheels so we flipped to try lowest balance and that seemed to do the trick. We had three cards with $27,000+ balances but knocking them down one at a time really energized us to continue throwing as much disposable income at them as possible (we ended up putting about 50 percent of our income to the debt while we were working to pay it off. The really cool thing about that was we realized we could support the household on one income since my wife and I make around the same amount of money.) We did a lot of coupon shopping and sale shopping and cut out a lot of the stuff we did on cards before like vacations (we did go on one vacation but we had $10,000 in non-refundable reservations so we went and just used cash while we were away.) The cards went locked up in the drawer and then we closed a bunch of them down (we had way too many credit cards) because we were getting all kinds of fees (annual fees, monthly fees, etc) and it just didn't make sense to keep them open.

campfrugal: The synopsis is we paid off $117k in credit card debt over the last 15.5 months ($110k in APril 2008 + $7k in interest.) We did it by cutting down our lifestyle and just lining up the cards and paying them off one at a time. We availed ourselves of as much extra income as we could by cutting down lifestyle and budgeting our income to the last penny. Smile

Don't worry I don't plan on leaving anytime soon now that the debt is gone. I'll continue to update the blog and try to add some words as to what we did and how we did it to get here. Again thank you everyone for the kudos and congrats as we are so happy to be done with debt!



We finally did it...debt is all paid off!

August 16th, 2009 at 09:43 pm

Debt Tracker (08/14/09)
$0.00

Well we did it! We received a bonus deposit of $5000 on Friday and cleared the last $3815.04 from our debt. We are now debt free minus our mortgage! It's been a long battle between us and our debt load (which ended up being $117.5k) but we have finally climbed to the top of the mountain.

It's really nice to know that all of our income will be ours to keep. We're going to be able to pay cash on Weds for our son to go to Spain with his class a full three months before the payment is actually due. We paid cash and bought a patio table for our back patio (we had lost three due to wind) and this one has a heavy custom stone top so it'll be plenty heavy for the hilltop winds. We'll also be able to cash flow our daughter's college education starting next fall AND our son's in a couple of years. We are so excited!

All I can say is to anyone who is frustrated with debt just get on a budget and keep the faith! You can do this. If we can do it anyone can. Trust me on that. Smile

WOO HOO!!!

This is the end of the debt reduction tracker! Not sorry to see it go at all.

Less than a month to debt freedom

August 5th, 2009 at 02:28 pm

I can't believe we're less than one month away from having paid off ALL of our non-mortgage debts! $117k and change will FINALLY be gone after all this time (about 16 months of really cutting back and staying focused!)

We made a payment today of $2800+ on the last card and our total balance left to pay is now under $4k so we can really see that light shining at the end of the tunnel! It'll be bittersweet but I really can't wait to be rid of a debt reduction tracker category. Smile

Here's the update:

Debt Tracker (08/05/09)
Card 1: $3815.04 (8.99)

Woo hoo! September 2nd looks like the date!