A Christmas Miracle! And then some...

Much has happened since my last post, some good, some bad, but overall I think we have reason to celebrate.

On December, 4th our car broke down again. Of course, we had just poured $2500 into the car back in September, so to have it break again so soon was disheartening. We basically had three weeks to get it fixed before Christmas and I had to be back at work. After several attempts to fix it ourselves, we found that we still couldn't get it running, and if we took it to a shop it would take several days before we got it back. Plus, we hadn't had the cash in hand to take it to a shop previously anyways. We were out of time, and since my job is finally picking up again, I knew I needed a reliable car to get me to work. We made the decision to buy a new car.

Up until now, I have been vehemently against buying a new car because I didn't want to add any payments to our budget, and I definitely did not want to see our insurance go up. However, after getting a few quotes on insurance, pricing out cars and doing a lot of research, we managed to find something that would not put us too far off budget. I worked strictly on what our maximum payment could be each month, and arranged everything else around that number. So, in the end we took on a fairly large new debt that we will be making payments on for the next 5 years.

On the other hand, when I  took this job I planned on only making $4-600/month. Instead, I have been consistently making twice that amount. I took this job with the intention of applying my entire income to paying off our student loans. So, being that I am making roughly $1000-1200/month (except for the down time in December), I am able to make the car payment and make up the difference in insurance, and still apply the same amount to our student loans. Naturally, I would have loved to use the entire thing for debt instead of only half, but the point is that I even with this purchase, my original plan has not been affected. Plus, I am moving up in my company again starting next week, so I may still be able to apply even more to the student loans than I had planned for. The downside is that we will have to wait a minimum of six months before applying for the mortgage on the house, but as long as we are paying rent on time my mother doesn't seem too bothered by when we decide to actually buy the house from her.

I will also note that our Explorer is getting very close to 200k miles, and it is starting to show it's age. We have been a single car family for 5 years now, and it has had its ups and downs. After checking the price of insurance with and without the Explorer on there, it turns out that the Explorer will only change the insurance rate by $24/month, so we have decided to keep it. There are no payments on the Explorer, and it will be nice to have a backup vehicle, or just a second vehicle for Jason on his days off since I am never home on those days. However, the Explorer still isn't running, so we will eventually have to take it to a shop to get it going again, but at least now the pressure is off, and we have some time to get it done.

Now for the biggest news of all!!! I have known for several years that we owed Jason's parents quite a large sum of money. Most of this was accrued while Jason was in school the first time, before we started dating. However, we also owed them a little bit from Jason's court fees and for helping us buy the Explorer in the first place. The total amount of that debt was just over $16000. We had arranged to make payments to them for $300 a month, for the next few years to get it paid down, and those payments were scheduled to start January 1st of 2013. (This is partially why I had such a set budget for buying the car, because I knew the credit report would not show this debt and the payments we are making on it, and I didn't want to get pushed into something more expensive.)

At any rate, after all of the Christmas festivities were over, Jason's dad informed us that they went through all of the debt we owed and forgave anything that was a result of Jason going to school, and called it an investment in his future. The end result is that we now owe roughly $11000 less in debt all in one big act of kindness. So, we are on a new payment plan with them, and the first payment has been made. We are facing a debt of only $5250 now instead of $16000. This pushes our debt payoff date forward substantially!!!!

I have been reading all about the huge parties that people are throwing to celebrate being debt free after years of making payments. I think we are going to have to plan for something similar when we are through with this all because I am ready to celebrate!!!

A Christmas Revelation

When I set out on this mission I had certain expectations. When I read other people's blogs about getting out of debt and extreme frugality it seemed that they all reached some sort of revelation about money that improved their lives. Many of them came to realize that they were just as happy with less stuff as they had been with more, or that the sense of security they got from being out of debt outweighed the good feelings of having a brand new car or a great big house. On the other hand, I felt like I had already reached some of those revelations on my own before starting this blog, so I wasn't sure I would find many posts to make about changing your attitude towards money or possessions. Nevertheless, here I am today...

Since Logan's birth, he has managed to collect quite an impressive stash of stuff. Mainly toys and clothes, of course. I will admit that for Logan's first Christmas all he got from us was a stuffed dinosaur. For his first birthday he got a box of diapers. Jason and I have always shared a bit of guilt over the fact that we could never afford to get Logan the kinds of toys and clothes that everyone else was buying him for his birthday and Christmas. (Of course, it seems that the grandparents just can't help themselves.) In any case, he does have quite a few clothes and a lot of toys that he received from the family, and he is more than happy to play with just the boxes and completely ignore the toys themselves. And every night when I tuck him in I cross through a veritable maze of this stuff just trying to reach his bed. 

Alas, with Christmas approaching, and Logan's birthday just behind us, he has a whole bunch more stuff in his room. He went with my mom again for a couple weeks for some more Granny Time, and in the mean time I decided to go through his room and find the toys and clothes that he doesn't use and give them away. The end result is a giant pile of toys and clothes in the middle of my living room. However, our car broke down again last week so I have no way to transport these toys to Goodwill or anywhere else at this point. Instead, I decided to just post them for free on craigslist and see if any other families were in need of some help this time of year. 

And now it strikes me. Logan is privileged. Logan has more toys and clothes than he knows what to do with. But he isn't privileged because of us, as we have struggled for most of his life just to stay above water. He is privileged because of his extended family. I have received half a dozen responses to my craigslist ad, and then I pulled it down so that those few families would actually have a chance to see if there is anything they want or need before I have 50 more responses in my inbox. They are trying to save Christmas for their kids, and are praying for someone to come along who just has enough extra to spare them a bit. 

In the last few weeks things have taken a bizarre turn for us. Jason has been put on mandatory 6 days a week at work. It is inconvenient and sort of frustrating that it is happening at Christmas time, while I am off of work and ready to spend time with my family watching movies and cuddling on the couch. On the other hand, it has been beneficial financially because the extra income is off-setting my temporary loss of work. I also found out that I am being promoted again starting January 1st, and will be a team leader, which comes with a pay raise. Hooray! And Jason is interviewing for another job with his current company, getting out of the field and back into an office environment. We aren't sure if it will be a pay increase or if he will have to take a pay cut for the position yet, but the job would offer him a much more reliable schedule, and a steady income year round instead of the ups and downs that happen for technicians. Between the two of us, we managed to start our Christmas shopping early and actually get the things we wanted to this year for everyone, and especially Logan (since we owe him for a couple years). 

Naturally, our car broke down just before my birthday, as it does every year. We still don't have it put back together since it has been so cold and we were waiting on parts, but since I haven't been working it isn't hindering me too much yet. It is incredibly frustrating that every time we think about buying a second car, our first car breaks down and we spend all of our spare income on fixing that and are never able to save enough to actually put towards another car. And I have absolutely no intention of taking out a car loan that is going to hang over our heads until after we get more of these student loans paid off and the house is officially in our names. 

So, it may seem anti-climactic, but my big revelation is that we are just average. As a family, we have high points and low points. We still struggle with some expenses, but other times we are able to provide far more than other families can afford. We have a ton of debt, but we aren't sinking. We have a car that breaks down from time to time and ruins our day. We have toddler that throws our cell phones in the toilet, and has a knack for destroying furniture. 

This revelation is not particularly earth shattering. It doesn't change my belief that we need to focus on getting rid of our debt. It doesn't change my goal of getting the mortgage on this house. Instead it is a sort of affirmation for me. That the work is starting to pay off. That we are able to finally buy Christmas and birthday presents for Logan. That this house is just the right size, and even if we could afford a bigger or nicer house, we don't need to because this is within our reach. That someday, we may buy a second car, and our first car may be reliable too, but it will probably still break down from time to time and make me want to scream. And most of all that there are going to be low points where we struggle, but that we always make it through, and that each day we go to work and bring home a paycheck we are using it to improve our situation. 

Can't Make A Bonus Payment? Try Bi-Weekly!

In my last post I mentioned, the idea of getting on a bi-weekly payment plan. To be honest, I have always paid rent in bi-weekly installments so that we didn't have to take a huge hit on one paycheck and then have to make the second check of the month last the rest of the time. So, for our $750/month rent, I pay $375 from the first check and $375 from the second check. Now, as long as I am renting, this doesn't make any different at all in my debt. However, on the average 30 year mortgage, it is possible to cut 5 years off of your loan by paying bi-weekly instead of monthly, AND you can save tons of money in interest!!!

Consider this: if you are paid every other week, you will receive 2 paychecks per month on average. However, there are always exactly 2 months out of the year where you will receive a third paycheck. So, when I pay my rent bi-weekly, the effect is that at the end of the year I have paid an extra full month of rent because I still set aside that $375 every paycheck, whether I got 2 checks or 3 in that particular month. When it comes to debt, that means that you made a full month extra payment just by splitting your regular payment in two and paying that amount every time you get paid. Now, you would think that this would not make such a big difference because it is only one extra payment in a year, so it would theoretically take you 12 years to make 12 full extra payments, and cut off a year, but this is a logical fallacy of sorts. In fact, making bi-weekly payments actually has an even bigger impact on your loan because it disrupts the interest accrual on your loan every 14 days.

What I mean by disrupting the interest cycle is that over the course of a single month you may accrue X amount of interest normally on your loan. By splitting your payment,  you are only accruing 1/2X for the first half of the month, and then your payment is paying off that interest and partially being applied to your principal as well. So for the second half of the month, your interest is even smaller because it is based on a smaller principal loan amount. That means that every 14 days you are paying off the interest and putting a dent in the principal that lowers your interest for the next 14 day period. At first this may seem like you are making a tiny difference, perhaps only a few cents at a time. On the other hand, on a 30 year mortgage of a $200,000 house, it can add up to nearly $34000 in savings over the course of the entire loan.

Now, there is no reason this won't work on student loans like it works on mortgages. In fact, I found that I was able to search for "biweekly payment calculator" on yahoo, and came up with a few different choices. I re-purposed them by putting in our student loan information instead of mortgage information, and was able to see how much I would save by using this method even on the smaller scale. For instance, the AES loan (which now sits at $27,929 and 6.71%) is estimated to be paid off in 2029 on the current repayment plan. With the snowball method I was able to save 7 years on that and move it up to 2022. And with the bi-weekly payment plan I can potentially cut another 2 1/2 years off!!!!  That is 9 1/2 years off of a loan that was on a 25 year repayment plan originally! The bi-weekly payment plan will save us $2400 in interest by itself, without counting the interest saved by the snowball method.

This doesn't just apply to big loans either. It can be used for anything at all. Naturally, the bigger your starting balance is, the bigger a difference it will make, but any time and money you can save is completely worth it to me!

Anyways, the point of this post is that even if you are not able to set aside a lot of extra money to make bonus payments with the snowball method, you may be able to make a substantial difference just by splitting your payment between two checks instead of paying it all at once. (I have also found that if you split your payment, you are more likely to make a small bonus payment of $5 or $10 each time because you won't be taking such a huge hit to any single check.)

The New Plan: 2013

As we draw closer to the end of the year, I think it is time to evaluate ourselves on our progress and think about how we can do even better moving forward. There were certainly some things that went well this year, but there were other areas where we failed almost completely. Here are the areas where I think we could improve the most:

1) Consistency of Savings
2) No New Credit Card Debt
3) Improved Payment Plan

First of all, Jason and I have already come a long way in the teamwork department. To begin with, this debt payoff plan was a product of my own wishful thinking, whereas Jason was mostly indifferent to my intentions. In fact, I believe he resented my pet project for a while because he felt unfairly targeted for mistakes he made in his past. Alas, my intention was not to paint him as the bad guy, but to demonstrate how some common misconceptions of debt can lead to much larger problems long-term, and specifically to explain some of the numbers we are dealing with here.

This year, I decided that Jason needs to be a bigger part of the conversation. We sat down together with all of the numbers and looked at everything together. We discussed major purchases in terms of wants and needs, and we made decisions about what our primary goal is. So here we are, looking forward to 2013, and hoping to stick to this newly renovated plan.

1) In the savings department, I would say we failed miserably for the year of 2012. I believe we started this mission near the end of May or beginning of April, and set a goal of roughly $300/month for savings. It is now the end of November and we have only $5 in savings. In all fairness, our car broke down and cost ~$2500 to repair, which drained everything we did have saved AND took all of the money that normally would have gone to an extra loan payment. This series of events was pretty demoralizing after so many months of great progress, which led to us not picking up where we left off. (Go ahead, take away all my gold stars. :( )  It has also presented us with another problem as we wind up the year. We need to have the money for closing costs on the house ready at the beginning of the year, and there is just no way that we are going to be able to save up enough in time, so we are pretty much left with just our tax returns to hopefully carry that weight. BUT, it's never too late to get started, so we are already making progress on this goal again, and even if we don't have as much as I had originally planned, we will have some.

2) Credit card debt became a problem for us around the same time the car broke down. Since all of our cash was going into the car, we were dependent on the credit card for everyday expenses for a while, and even raised the limit to $400 to get by. I also ended up buying a new computer on a separate card (which is actually in my own name and serving to raise my credit score before we attempt to qualify for the mortgage). On the plus side I did pay off the entire balance on the $400 card today, which was nearly maxed, and it is going into the safe to be locked away for a few months. My new card is also locked away and is being paid off $100 at a time, and should be completely paid off by the middle of January. We plan on using these cards once a month for small purchases to keep the accounts open and building credit history, but also paying them off every month so that they are not carrying any large balance. We accidentally made the mistake of not using the jewelry store credit card for too long, and they closed our account for us which was effectively a negative mark on Jason's credit report for having an account that was open for too short of a time. Woops.

3) Further research has given me additional insight into the loan paydown process. I plan to share this new method of speeding up your payoffs in my next post, so I won't ramble about it here, but I will say that this new method works with or without a bonus payment, and may be a viable solution for people who just can't squeeze any more out of their regular monthly budget to pay extra on a loan. It really is simple, and it comes down to making bi-weekly payments instead of monthly payments, but I will go into further detail later.


So these are the three areas that we think we can do better in, and make the biggest difference. I also plan on being more consistent with my blog again now that things are back in order around here. On another note,  since the car broke down and we spent a small fortune on fixing it, and then we quit making our bonus payments on the loans, we actually did use that money to get all of our Christmas shopping out of the way, so from here on out, our budget is actually back to normal, and we don't have to set anything else aside for holidays!

Alas, our primary goal remains to pay off all of our debt, and to qualify for the mortgage near the beginning of the year, and now we are ready to give it another shot!


Happy Holidays!!!

August: The Beginning

It is currently August 9th. I have to say that I still have not come to a final decision on how I should pay off the loans now that everything is on deferment, but I did decide to put the extra money toward our current loan payoff goal for this month so that the money doesn't get spent on anything else before I come up with a new official plan.

So here is an updated graph to show our progress:

Since we normally pay $230 + $133 in the beginning of the month on our regular repayment schedule, that is the amount that I paid on this loan for the month. Of that, only a few dollars went to paying interest, so the final amount applied to the principal of the loan is $358 and some change. It made a HUGE dent though!!! Plus, in the second half of the month, we would normally pay $230 to the AES loan, and I still have a $100 bonus payment to apply for the month. If all is looking well next week on payday I will put that $330 toward this loan too! Which will drop our balance below the $1000 mark! If I do this for one more month, we will have this loan paid off by the first week of October!!!

So, let's face it, I'm impatient and I just want this to be paid off all the way. I could continue to split our payments 12 ways to cover all of the interest that is accruing, but right now I want to see something disappear from our list. *Gold Star* for me! And our next loan is another small one like this, so I might continue on this course until that one is paid off also. It'll only be a couple more months, and we will have 2 loans paid off completely. After that things will slow down though, so I might have to re-evaluate my strategy when I reach that point.

I have to admit that the savings goal is not going at all to plan. It is frustrating to me that I haven't stuck to that goal, and I am trying to make up for it now. Luckily, my paychecks have been consistently more than I expected, so I think I will be able to pick up some of the slack in the next few weeks. On the down side, I only have a few more months of solid work before the Christmas festivities set in, which means I will be losing my income temporarily until the first of the year. I'm going to be playing catch-up all the way til April if I'm not careful.

On the plus side, the summer semester has ended, and the fall semester is about to begin. We should both be getting grant disbursements to help pay for textbooks and other school stuff for the coming semester. I am hoping that I will have enough left over to put into savings and try to make up part of what I missed. These disbursements are supposed to be coming out tomorrow, but it seems like the school is having problems processing things since they changed all of their web stuff. As long as it gets here before the 20th, we should be good.

End of July Update

Well, we have nearly reached the end of July, and I have put off making this post until I could see what our actual total was after the bonus payment for the month. The updated graph is showing nice progress. Of course, it would be nice if it was moving FASTER, but I will just have to wait til next month for that. 

Unfortunately, the whole car insurance renewal kind of threw us for a loop this month. Everything was paid on time, but I still haven't managed to put anything toward my $350/month savings goal. I know!!!! I'm really worried that it isn't going to happen this month. :(  On the plus side, I did pay off the balance on the credit card that I created last month from my lawn supply shopping. So, I guess it's a good thing, although that $200 could have gone to savings instead. 

I do still have one paycheck from my job coming in a few days, so that may be our one saving grace. I still have one bill to pay by the first of August, and this will be my only chance to do that, but if my check is over the $450 mark I will probably be able to pay that bill and put at least $250 into savings, which is better than nothing at all. Just have to wait and see, of course.

On a high note for the month, my raise went into effect as of July 21st!!! I only managed to jump one rank instead of the two they had predicted for me, but I will be up for review in another 6 weeks, and things are on track for me to make the next rank then. *Fingers crossed!*  

Once again I had an awesome shopping trip for this paycheck and managed to only spend $110 and bought enough food to get us through three weeks. A lot of fantastic deals that I just could not pass up, and we are starting to get a little bit of a stockpile for once, instead of having only one option the day before payday. It's a nice feeling!

My last post talked a bit about our loans going on In School Deferment. In the past this has only worked for about 50% of our loans due to paperwork issues. This time, surprisingly, all of our loans went on deferment! I am still a little perturbed by this because it makes things a bit more difficult to figure when it comes to all the different payments and interest, etc. However it does allow for a new option: We were paying a total of $594/month toward student loans up until this month. I am going to round this to an even $600. Plus the $100/month bonus payment. SO I now have the option of applying $700/month to a single loan without making any payments on the other loans. This is good and bad because some of the other loans are unsubsidized and will accrue interest pretty rapidly. On the other hand, I will be able to pay off the smallest loans in just two to three months each, which is a HUGE motivator!

Now, it is time to see how disciplined I can be. The problem with not having required payments on all of these loans is that the money is technically free to float around in my account until I put it toward something. It is going to take a lot of willpower to use that money for these loans every month instead of buying a new couch or a new car, or pretty much anything else in the world that I could think of to spend it on instead. I am really really hoping I can pull this off through sheer determination. 

Another issue that has come up lately is how we are going to be able to pay Jason's parents $200 a month starting January 1st. We have discussed the possibility of only paying $200 a month toward our student loans, and paying them $500 a month for the next few months until the first of the year in order to get a head start on that. It is $12000+ that we owe them, and it will take two full years to pay them off even at $500 a month without accounting for the 6% interest that they charge us. Once again, we are considering ways to maximize our income and just get this off of our plates so that it isn't weighing on us and becoming a source of family drama. So far, no real decision has been made. However, we have determined that whatever portion of our tax return does not go to the closing costs on the house will go to them instead. This may be a disappointingly small amount of money, but over time this one debt has come to be a much larger burden than we had anticipated, and it needs to go away soon! Unfortunately, that will also push out our goals for our student loans by quite a bit. 

It is all soo frustrating. I swear I will start making decisions soon. 

A Week of Unplanned Changes

We are nearing the middle of July. I can honestly say that I am starting to panic a little bit right now about our budget. The numbers say we haven’t gone completely off course, but my mind is telling me something else. Jason’s first paycheck of the month was a little bit lower than we expect during our summer “busy season”. It wasn’t a huge hit, but it came at a bad time. Simultaneously I had almost a full week off of work during the week of July 4^th because we have very few clients around holidays. I have not yet seen my first check of July, but it is coming tomorrow. I don’t expect much.  And, of course, I realized at the last minute that our car insurance renewal is due August 1^st instead of September 1^st as I had previously thought, which left me only one month to come up with the extra $500.

So here I am today, looking over everything. Luckily with the money left over at the end of June from my final paycheck I did manage to pay quite a bit of the bills for July. Our rent was already paid out of savings since we had set that aside for the move anyways. I paid all of our student loans in advance, except for the AES loan. Pretty much anything that was due in the first half of the month was paid by the first week of July. Jason’s paycheck came on the 6^th and we have been steadily dwindling away what was left of it. I paid the first half of August rent ($375), the phone bill, the remaining Xcel bill from our old apartment, set-up fees and 1^st month of internet here at the house. Plus there was groceries and gas money and babysitting. As of today we have $167.74 in checking. Whew.

Tomorrow my check comes in. I am only expecting about $290. Of course, my checks are usually a little bit higher ($20-30) due to our incentive bonuses and travel time. But I really don’t want to start depending on the money that I don’t know I’ve earned. So if I take $150 of this week’s leftovers and add it to my paycheck tomorrow I should have about $450 to put toward insurance. Now, to be clear here, I could always just pay the insurance in installments, but it would cost us $150 extra over the next 6 months. I like my discount for paying in full and it is one less thing that I have to worry about on a monthly basis.

Anyways, I still have not seen the water bill for the month, and I have yet to see a gas/electric bill for the house, and that is why I am starting to panic. I have actually been trying to revive our lawn and garden which has meant a lot of time with the sprinklers running. We picked up an AC unit to cool upstairs, and we only run it at night when we are getting ready for bed, but I still have no idea how much that is costing us.

It is also worth mentioning that a strange turn of events with our school paperwork has led to some of our student loans going into ‘In-School Deferment’. I had anticipated that we would have loans do this, but for some reason the AES loan went into deferment this time, when it had previously been ineligible to do so last semester. On the flip side, some of the loans that went on deferment last time did not do so this time. I don’t know why this happens, or what the deciding factor is. I’m pretty sure it is a matter of people sending the paperwork to only one or two of the lenders instead of all 3 or some other form of mis-communication. This brings me to a cross-roads with my debt journey. The AES loan being on deferment saves us $230 a month, but at the same time interest is accruing at a rate of ~$155 a month. We have been making payments on this loan for several years and have not even touched the principal yet, so it is almost gut-wrenching that the loan is back on deferment and we still are not making progress.

I have to make a decision. I have no intention of just pocketing that money. It will still be applied to the loans, but I can continue to make $230 payments on the loan as normal, and will make progress on the loan slowly and steadily. My other option is to lower my payment to only cover the interest each month, and apply the remainder to my current snowball on my first loan payoff. I am really, really torn here. I refuse to let any more interest accrue on that loan and remain unpaid. I am desperate to see some difference in the principal, however small. The first option means that our first loan payoff will not happen until July of 2013, but the amount of the AES loan will drop from $26,700.06 to $25,806 in that 1 year period.  The second option will allow us to pay $75 extra on our primary loan payoff each month, which means that the first loan will be paid off in March of 2013, but the AES loan will only drop by about $4 over that 8 month time period. In either case the AES loan will wind up being paid off at the exact same time, so that really isn’t a factor. I just think it would be nice to start seeing some bigger numbers come off of the smaller loans, and really start to watch the loans go away in the much closer future.  There is a third option, I can take the full $230 payment from the AES loan and apply it to the current loan payoff, which is soooo very tempting. It would mean our first loan would be paid off in November of this year, and our second loan would be paid off in March of 2013. That is two loans paid off by the time we get our tax return next year. This will be a pretty big boost for Jason’s credit score, and a huge bonus when it comes time to apply for the mortgage because our debt-to-income ratio will be much better. On the downside, the interest on the AES loan would be totally out of control in no time. Once again, it really would not affect our ultimate payoff for the AES loan at all, but just the thought of that untouched interest accruing makes me nervous. I must decide. 


I also have not dealt with that payment on the credit card yet, now that I made the mistake of nearly maxing it out again with all of the supplies for our yard. And I have yet to set aside the $350 for savings and $100 for the monthly bonus payment on the loans. Oi. Things are going to be close this month I think. 

Bi-Weekly Grocery Trip

I just wanted to post a few images today of my grocery shopping receipt from yesterday afternoon. As I said   before, my goal is to keep my bi-weekly shopping trip to less than $125. This week I came in at $120.79.

In this trip I managed to pick up 4 12-packs of soda. I know that I am trying to cut back on it, but generally when it is on sale Jason and I each pick up 2 of our favorite kinds. This just means that mine have to last me longer. I also got gummy snacks for Logan, which I almost never buy, and Pop-tarts, as well as some granola bars for him for breakfast. The kid does not like cereal, otherwise that would be a much simpler solution. Logan also got some string cheese and crackers for snacks. Keeping a variety of snacks and breakfast foods in the house is mandatory to avoid his little nuclear meltdowns, and to prevent him from getting burnt out on any one thing (ie. cereal).

As far as dinners go I picked up some little packets of burrito materials. I had never seen these before, but they are made by Old El Paso and they are with the taco shells. They are just little packets that can be microwaved and put into tortillas or taco shells. They had a few flavors and they were BOGO, so I gave it a shot. Hopefully they don't taste like cat food. But if they happen to be edible and as easy as they look, they may become a staple for us, since I know that the key to us not going out to eat is to have readily available dinners on hand. These only take 60 seconds to microwave, so that is even faster than the time it takes to go through the drivethru.

I also took a chance on a few new kinds of boxed dinners, just add chicken. I maintain the fact that we are not going back to Hamburger Helper. There are so many other boxed dinners that are actually really yummy. I won't say they are gourmet, but they are definitely more exciting than noodles + hamburger + random sauce. This week I am trying a Sweet & Sour chicken meal made by La Choy. Once again, I can only hope that it tastes decent enough to make me want to buy it again. And of course, we stocked up on Mac & Cheese, both the Kraft variety and the Velveeta kind. Logan doesn't mind eating the Kraft stuff for lunches and it is cheap. However, for family meals, Velveeta's family size of shells & cheese is much tastier, and makes more. I also cheated a little bit and picked up a frozen lasagna for $7 and a Voila frozen meal for $5. The Voila meals come in two sizes. The smaller size is about $4.50 normally, or as high as $7 when they aren't on sale, and it really isn't enough to feed more than 2 people. But they just came out with a family size that is WAY more than enough to feed us. We have leftovers every single time, and since they are new they are on pretty good sales right now down to $5. It looks like they are normally priced at about $9 without a club card. Unfortunately I have only seen them in Safeways. I have not been able to find the family size at Walmart or Target to date.

In the meat department yesterday I managed to track down the clearance section which didn't have a whole lot in it, but I still made a few good picks. Sirloin and blade steaks were on clearance for 50% off, and were on a club card sale as well. So I paid $5 for one package of steaks and just less than $2 for the other one. Bratwurst were BOGO, pretty typical for the summer BBQs, so I got a couple different kinds of those for only $5.49. The only really expensive purchase in meat was pork chops. They had gigantic packages of chops that were only on a small discount, but I went ahead and picked one up. It ended up costing me $15.31 for the whole thing, but they are 1 inch thick bone-in pork chops, and I was able to separate them into 4 bags of 2 chops each once I got them home. So when you look at it as 4 meals, the average was only $3.82 per dinner. Logan doesn't eat a whole lot so I just share mine with him normally and we have more than enough for everyone.

I also managed to make a discovery yesterday at our new Safeway store, which our old store did not have. Clearance Seafood!!! Now, Jason isn't particularly fond of seafood other than shrimp and lobster, but I still picked up a few things that I was not expecting at all. A half pound of fresh medium sized shrimp only cost me $1.96. A pound of fresh crab meat only cost me $1.80, and a single serving sized salmon steak cost me about $1.75. I'm not sure what I plan to make with these things, but I am super excited to have a resource for seafood again!!!!

So looking back at what I picked up I have a total of 16 dinners, which is more than enough to get us through the next 2 weeks. I consider this kind of lucky, because we did get so many pork chops I will be able to spread them out more instead of having to eat them twice a week just to get to the next paycheck. Whew. I picked up plenty of snacks for Logan and restocked on soda while it was at a fair price (any time I can pay less than $3.50 for a 12-pack I consider a good deal. When it isn't on sale it is $6.29, and I refuse to buy it.). I also picked up some blueberries and a big watermelon to take to a family gathering last night, plus a few cans of veggies for side dishes.

I suppose you could say that this trip was a little bit lopsided. I actually did spring for more snack foods than I would normally buy, but we were completely out, and Logan doesn't make it through the day without at least one small snack at some point. Usually when I buy snack food it lasts a long time though. However, I only had to buy 4 cans of veggies because we had a whole bunch of canned and frozen veggies left over from my last shopping trip. Plus, we always have tons of rice and pasta type of things to go as sides as well.

So, now that I have rambled endlessly, here are the two photos of my receipt that I wanted to share:

The photo above shows how much I saved just with my club card, and my total savings from paper coupons. The 50% clearance coupons are in the paper coupons category, and I did not have any other coupons with me at all, so these were all savings that I found inside the store without any pre-planning. 33% of my total bill is not bad!!

This is just showing the 50% coupons on the meat and seafood that were applied. The reduction on produce was for the watermelon because it came up wrong in the computer and they had to manually adjust for the club card price. 

In a Moment of Weakness...

So we have officially moved into the house, and have managed to get most everything unpacked and put away already. We still need to invest in a few more bookshelves and that sort of stuff for organizational purposes, but at least we aren't living out of boxes.

At any rate, I had forgotten to mention that I had made an extra $100 payment on our credit card last month, because my final paycheck was a bit more than expected. So from the $300 limit I had managed to bring the balance down to just the $100 mark. I was super excited.

But then one day I came home from work and looked at our front yard. *Insert dramatic music here* We hadn't done much with the yard since we moved in since we don't have a lot of the tools necessary. With the little bit of extra money from my paycheck on the 29th of June I decided to go ahead and invest in a weed whacker. The thing is, there were big prickly weeds that were as tall as the hand rail going up the front steps. There were weeds devouring our mailbox, and taking over our sidewalk and driveway. I just could not bare looking at it anymore.

Meanwhile, the little bit of lawn in the front of the house was becoming more and more brown as the days went by. I thought to myself that if I could salvage the grass before it was completely dead it would save us a huge headache for next year. So I began watering the lawn. Yet again, I felt horrible about watering the lawn when there were so many weeds that were already out of control and also soaking up this water. So we went to work. With the weed whacker we trimmed pretty much everything in the front lawn, and edged. The yard itself looks a thousand times better.

But I couldn't stop there! Oh no! Then I had to go back to the store to buy a little hand rake (cultivator) because the garden in the front of the house was full of dead weeds and trash and other odd plants that hadn't survived. So I tore all of that out. Then we went back and bought a regular yard rake for all the dead leaves and whatnot that were still in the grass. Plus, we needed weed killer, and a small bottle of turf builder/weed control. And by the way, our shovel was broken so we needed one of those too. And while I'm at it, the garden now looks completely barren, so why not pick up a few baby bushes to fill it in, and soil/potting mix to go with it.

To be fair, all trees and bushes were 75% off at the hardware store the other day so we did get a really good deal. It was mostly the tools that cost us. And we still aren't done yet. We have to go back and pick up mulch still, but that is only $10 for 4 bags, which will be plenty for our little garden, and then some, and won't break our bank any more than I already have.

In my moment of weakness I spent about $150 over the course of the day and multiple trips to the hardware store. All of it went onto the card because my paycheck had already been spent making up the difference from my June savings goal and buying the weed whacker, as well as a GPS for my car.  Again, I don't make all that much money, my paychecks are only a few hundred dollars, which is sufficient to cover my savings goal and the bonus payment on our loans plus daycare, so it's not terribly shocking that my paycheck was gone.

I do feel guilty about putting so much on the card again now that we are on this budget and working toward paying things off. However, after a day of work and 2 days of watering, we are certainly not the worst yard on the block anymore. I don't have to hang my head in shame every time one of my neighbors drives past. And I promise that I will make up for it...eventually...

Unfortunately, my timing for this interferes with another detail that I had forgotten about. It is time for us to renew our car insurance. I thought that we had to renew by the end of August for a September 1st deadline. It is actually August 1st that our current cards expire, which threw a huge wrench into my plans for the month. We do usually pay 6 months at a time because it ends up saving us about $115 over the course of that 6 month period. But my timing is off and now I am trying to figure out how to make it happen this month without touching our savings. Ooops.


On another note, since this week is a holiday I am only working 3 days, which is going to be a pretty big hit to my paycheck. Likewise, our paycheck tomorrow is going to be a bit light because Jason hasn't had very much work these last 2 weeks. I am estimating Jason's paycheck at almost exactly $1200. It isn't the lowest check we've ever seen, but it does hurt, considering the fact that he should be in "busy season" at work, and his normal paychecks during the summer are closer to $1500-1600. We'll just have to juggle things a little bit to make it work.

The Key to Grocery Budgeting

So there have been a few questions about how to keep grocery budgets low, and I will tell you that this is still a struggle for us from time to time. Let's face it, we can't all be extreme couponers! In fact, I did several months of coupon clipping and researching deals trying to figure out how to cut my grocery bill the way they do on that TV show and I just couldn't do it. After two months of arduously studying deals and clipping coupons, organizing them into little folders, I only managed to do one shopping trip that came even remotely close, and to be honest, it was stuff we didn't need!  I got 10 boxes of pasta and 5 boxes of brownies for $7! At the time I was excited, but that was the only good haul I had after two months, and the more I thought about it the worse I felt because I don't need 5 boxes of brownies. The pasta we do actually use and we still have 3 boxes left a year later.

Anyways, I want to share a few things I have learned about grocery shopping and budgeting for food.

1) Coupons aren't for me.  The more coupons I clip, the more money I spend on stuff that I would never buy normally. They don't send out coupons for the cheap stuff that I typically buy, so using a coupon just means that I have to pay more before I can get that $.50 off. The only exception I will say here is that Safeway often has coupons for $10 off if you spend $100 in a single trip or some variation of this deal. I do use these coupons because they have a cash value and they apply to my overall bill instead of being brand/item specific. If you are good at using coupons and can control yourself, unlike me, go for it, but I wouldn't sweat it if it is a hassle.


2) Club cards make up for not having coupons! As I said in response to a previous comment, having a club card to your local grocery store is a HUGE help. They do club card specials which can get you some pretty awesome deals even without coupons. The things we see the biggest deals on are soda and meat. We drink a TON of soda here, and with the club card we can usually get B2G2 deals. Recently there have even been a lot of B2G2 + a free bag of chips! Since we don't have a junk food budget for chips or sweets, this kind of fills the void. It is also notable here that most of the club cards now have online functionality or smartphone apps that allow you to load coupons directly onto your card online and then they are automatically applied at the register. I consider these different from regular coupons because I don't feel as compelled to go out searching for the items on these digital coupons. Instead I load them onto my card and forget about them, any time I get a discount from them is a bonus I wasn't expecting. Some people argue that going to Walmart or other similar big box stores is cheaper than going specifically to the grocery store. I disagree for a few reasons. Primarily, I hardly ever see any deals on groceries at Walmart that are significantly less than what I pay at the regular grocery store. Secondly, my club card gives me fuel points which save me money on putting gas in the car. Third, I pass 8 different grocery stores on my way to the closest Walmart, so the drive alone makes it not worth my time.  

3) Outside, top and bottom. Believe it or not, companies spend a lot of time analyzing shopping patterns before they place products on their shelves. There is a methodology behind product placement that will make your head spin. The best way to avoid being drawn into this marketing scheme is to stick to the outside of the store. Consider this: stores are generally organized so that dairy, fruit, breads and meat are around the outside. These are the essential parts of any diet (arguably bread could be removed, but I happen to like my carbs, thank you very much). The inside aisles of the store contain things like boxed meals, canned (and sweetened) fruits and veggies and junk foods. Now, I understand that you can't completely avoid walking down the aisles (how would I get my soda!?), but you can definitely eliminate a large part of your bill by not walking up and down every single one. You need ketchup? Only go as far down the aisle as you absolutely have to to grab that big red bottle. And when you get there keep in mind that marketers place the most expensive name brand items in the center of the shelves at eye level. Discounted and generic brands are either on the top shelf (out of reach for poor little me) or on the very bottom shelf (who looks down there anyways?). Knowing this has actually brought me to realize that there are store brand varieties of nearly everything, even things that I had only ever known by their name brand.

4) Clearance groceries! One of the best kept secrets in grocery shopping!!!!! Now, I will start off by saying that I will not buy clearance dairy products for any reason, only because we do not use them quick enough and they gross me out. However, the very FIRST thing I do when I go grocery shopping is rush to the refrigerated meat section at the back of the store. Somewhere, hidden, no matter how small is clearance meats. The variety changes weekly, and I never see ground beef in there. We have gotten 3 pounds of beef and pork ribs for $3.40. Two weeks ago I managed to snag 2 gigantic rib-eye steaks and a couple of NY strip steaks for a total of $7. 4 lbs of chicken breasts for $3? Score! So, as you can see, shopping the clearance meat has actually increased our quality of eating because we are no longer on the Hamburger Helper diet. I wish I had saved my receipt from my last shopping trip to share with you all so you could see my savings on meat alone. I will put it this way, I saved $66 alone on just meat, which was over 80% savings on those items. First my club card discount was applied, followed by the clearance coupons that are stamped on the packages, ranging from 30-50% off each. As soon as I bring this stuff home I break out the Ziploc baggies and separate everything into portions for our family. This way a single package can be split into multiple meals and stretch us through 2 weeks at a time.

A few last minute tips: Go shopping by yourself. Bringing Logan and Jason to the store with me almost always leads to excess stuff. They just can't keep their hands away from the snacks! Take a list. Stick to the list. My mom used to say that if it wasn't on the list when she walked into the store it wasn't going to end up in the cart (of course, we could always just add stuff to the list in the store, but that's cheating!).

Now For A Personal Challenge

After reviewing our grocery bills for the last month or so I have decided that we drink entirely too much soda. It really isn't good for us at all, and it is taking up a massive chunk of our budget. We buy soda whether it is on sale or not, so it fluctuates from about $12 a week upwards of $25. In a budget of only $125 every two weeks for groceries this is completely out of proportion, and can probably explain the lack of fresh fruits that I would much rather have in the house. So I have issued a personal challenge. I am going to cut down to only 1 can of soda a day. In theory 1 12-pack of soda should last me all but the last 2 days of a 2 week period. This will be about half the amount of soda that I normally go through. On the downside, Jason isn't on board with this one, so he may take up my slack and just drink the extra soda himself. :( I think I will have to hide it from him somewhere (Haha!). This will eliminate extra trips to the store just to restock on soda, and force to drink more water, which I have always been terrible about. 

Maybe someday I will be able to cut soda completely out of my diet, but today is not that day.

So, what other tips do you have for grocery shopping? Other questions about shopping for certain items? How about vices that you could cut back on to save yourself some money?! 

End of Month 1 Progress Report

Well it has been a chaotic month around here for us. Moving has caused a bit of a disruption in our normal spending and shopping habits, which has made an impact on our previously planned budget, despite efforts on my part to avoid it. So, here is where we currently sit:

On our first loan we have made more progress than anticipated. I made the regular $25 payment on the first of June, followed by our $100 bonus payment for the month. This bonus payment counted for July's payment and made it so that the next payment wouldn't be due until August first. Well, out of habit, I went ahead and made another $25 payment yesterday in preparation for the regular July 1st payment. The end result is that we don't have an actual payment due again until September first now, and the $25 payment from this week was applied just like a bonus payment!

Of course, I have every intention of continuing to make the regular $25 payment at the beginning of every single month, as well as the $100 bonus payment, so it is looking like this loan may go down even faster than I thought! It is amazing the difference I am already seeing in the amount of the payment that is applied to interest every single time. Before, $9 out of every $25 was being applied to interest. Now we are closer to $4-5. Part of this is caused by the lower principal amount, but some of it is also caused by making 2 payments in a month so that the interest for the month is split between them. Even if it doesn't make a huge difference in the actual amount of interest being paid overall, it is still giving me a positive boost just because I can see that a larger percentage of every payment is being applied to the principal.

Naturally, all of the other regular payments were made on our loans for July 1st as well (except for AES because it is due in the second half of the month). I have not totaled the amount of change overall yet, but I am assuming it is close to the .4% difference seen after the 1st of June, so I am probably safe to say that we are barely approaching the 1% mark at this point for overall debt paid off going into July. It is a seemingly small number, but to think, as we get each loan paid off and snowball these payments together we will begin paying off chunks of our loans 5 and 10 percent at a time near the end! I can't wait!!!

The one downfall this month with moving was that I did not budget NEARLY enough money for gas as I should have. Typically $50 in gas will get me through at least 1 week, but since we have been making three or four trips a day back and forth to the apartment and having to put gas in the moving truck things got out of control quickly. I ended up having to pull $100 out of savings (OUCH!) to cover the cost of fuel for all those trips. So even though I hit my monthly target of $350 in savings, I definitely took a big step back on this one, and I will have to make up for it in the very near future. The good news is that I used Jason's paycheck to pay the first half of July's bills, but I still have a paycheck coming in this Friday which technically still counts as June, so I may be able to squeeze $100 out of this check to put back into savings and be on time for my goal.  It's not a perfect solution but it's better than falling behind!

So let's look forward to another month of making progress, making our goals and hopefully not having any more reasons to take money out of savings!!!!

For those of you who are playing along with me and have set goals, how much progress did you make at the end of this month?

June Update

All of our loan payments have been posted to our accounts and I have updated my graphics! It was a *small* dent this month, but I am still feeling pretty good about seeing one loan drop by more than $100 for the first time in a while.

The graph above shows our regular payment of $24.76 + $100 bonus payment for the month. Of course, some of it went to interest, but the rest was applied directly to the principal.  The table shows our previous month's balance for our loans and our new current balances. The total progress for the month is only $302.57, which amounts to only 0.4% of our total debt. Since it was such a small number, I didn't even bother to update the percentage graph for our total debt paid off, and even if I did, you wouldn't be able to see it at all. Anyways, our total debt for the month dropped from $70757.78 to $70455.21.  

This month also marks the first month that our AES payment jumped from $155 to $230 a month. The $155/month payment was on an interest only repayment plan, which meant that our loan was staying even but not going down at all. Even with our higher payment of $230 we still have a little bit of interest to pay off before any of our payment will start to be applied to the principal. I think it is about $380 of interest that needs to be paid. So, since our bill went up by $75, it will be about 5 months before we see a difference in our principal on that loan. I'm not terribly happy about this, but for a while we had to do everything we could to reduce our payments just to get by, and since the AES loan will never go on full deferment, interest-only was the only option that we had. Right now we also have the choice to pay off the $380 instantly so that we can begin seeing a difference in the principal right away, but that would mean cutting $380 out of our budget from somewhere else, and I haven't quite figured out how to make that happen just yet. Apply our $100 bonus payment to that amount for the next couple of months until it is gone, and then go back to paying off the smallest loan? I think that would make me lose my focus. Hmmm... something to investigate further.

I also managed to pay off a significant portion of our $300 credit card balance this month, and the remaining $150 of savings will be put aside tomorrow when my paycheck shows up. Yay for completing my monthly goal for savings and a bonus debt payment!!!! On the downside, our excess spending is all out of whack for the month because we are getting ready to move and have put a significant amount of money into getting the house ready to be lived in. Cleaning supplies and tools to fix things have cost us a huge chunk of change. Luckily, we did get a bit of a refund on our federal grants for this semester, so it hasn't made a huge impact on the rest of our budget yet. I would love to keep it that way!!! Also on the downside is that both Jason and my phones are broken. We are due for a free upgrade, but even with the free phone upgrade there is an upgrade fee for the account and we have to pay shipping for the new phones. $25/each, but seriously none of the buttons on our phones work anymore. :( 

Ooooh! Another positive just came to mind. We are changing internet services when we move, which is frustrating, but will also drop our internet bill from $72/month down to $36/month for the next 6 months! Woohoo! 

Have you made any progress on your loans yet?!

Going Into Our First Full Month

Well I began this blog at the end of May, and by that point there was no way I was going to be able to complete my monthly goal of a $100 bonus payment and $350 into savings. This month is a whole different story! As of today I sent in our first $100 payment to Sallie Mae. They have upgraded their site once again so now when you send an extra payment it asks you which loan to apply it to AND it asks whether you want to apply it to the principal or next month's payment! This cuts out the extra step of having to send an email explaining how to apply the bonus payment! Woo-hoo!

As of today I have also put $200 into savings. I will have to put the last $150 into saving over the next couple of weeks.The good news is that our paychecks alternate, so we end up getting paid every single Friday. That leaves us with 1 more check from Jason's job, and 2 more checks from my job this month. My checks are nowhere near what Jason's are, but the extra $200-300 every other week is a huge help in this project! We also lucked out this week and I managed to work several night jobs and on Jason's days off, so we ended up only needing the babysitter for 1 day, which means we paid $20 for this weeks babysitting instead of $100.

I also work for an incentive based company, so I am evaluated on the 7th and 13th week of every quarter to see if I am reaching the next level of goals. If I am, I will be bumped up a pay grade instantly. Unfortunately, I started working in the 7th week of the quarter so there wasn't really a chance to get bumped up then. However, in the last 4 weeks I have consistently improved on my numbers, and have been rewarded with a small bonus on my first full paycheck as well as a lot of extra hours. I have been asked to pick up several extra jobs in the upcoming weeks, and have been placed on a committed full time team. I have also been working 1-on-1 with a training supervisor the last couple of nights because my manager believes that if I can ramp up quickly enough I will be eligible to jump 2 pay grades instead of just 1!  That means a $1.50/hr raise instead of just $.50 for the first pay raise. Considering this is an hourly job on the lower end of the pay scale, this is a massive raise. My last hourly job where I got a raise, the raise was only $.13 and it came after a year of work. I am super excited about the potential to set even higher goals for paying off our loans!!!

On the downside, I am completely exhausted. Between cleaning and getting ready to move, the extra hours at work, full time school and Logan there has been very little sit-down time. I have a few friends who are considering going back to school and are unsure of how to juggle family/school/work all at once. The key is using your time effectively and knowing your limits. Last semester I took too many classes and ended up not doing very well in 2 of them (read: complete failure). This semester I dropped back down to only 3 classes. I take my text books with me to work and do my assigned reading on my 10 minute breaks and 30 minute lunch break. I come home and hang out with Logan and do house stuff, and then as soon as Logan goes to bed, I get online and start doing my other assignments. It is hard to stay on top of things, but I have also lowered my expectations for school a little bit. As it is frequently put to me "What do you call a med student who graduates last in his class?" A: A Doctor. I don't shoot for straight A's. I don't have the time or energy to be a perfectionist in school at this point. As long as I am making some progress towards graduating I am  happy. I don't need to take 18 credits in a semester to make it happen.

So this is my update so far. I will update my graphs and whatnot as soon as the payment has been posted to the loans. I will have to adjust our savings back down because we will have to pay July rent in 2 places, so instead of having $750 + $200 we will only have the $200 that I just put in, which sets us back a little bit on the savings goal, BUT since my job is looking like it might bring in a lot more money than I initially planned for, we may come out ahead!

Have you set monthly goals? Have you figured out a budget?

"Money Doesn't Buy Happiness..." But it Sure Can Help

I continue to read blogs by other people struggling to pay off their debt, and once in a while I find something that really strikes me. I just finished reading a story about downsizing everything in your life and learning to live simpler. The idea is that you will adapt to living this way, and you will end up just as happy as you were with all of your stuff. Now, coming from someone who has a ton of toys and extra stuff in their life, it is totally believable. However, even he said that he was pretty miserable for the first 3 months, he missed his cars and trips to see friends and other hobbies. By month four he was just getting used to some of those changes, but not entirely.

However, the whole reason I'm writing this blog is because I don't have 3 extra cars to sell and I'm not trying to cut extra vacations out of my budget. I'm trying to pay extra out of the little bit that we do have, and while that means cutting back on fast food, it's nothing really drastic. In some cases, I agree that downsizing is better. After moving my furniture 5 or 6 times over the last few years we have decided to just sell the bedroom set. It is extremely heavy, and the house has a lot of stairs to get up to the master bedroom. I don't want to even think about it. Jason's dad had a spare bed frame sitting in his hay loft, which he is giving to us. He also gave us a box spring because ours decided to splinter and break several times in the last month. The money that we get from selling the bedroom set will be put toward buying a new (smaller) dresser, and perhaps have a little bit left over for anything else we need to buy last minute, like a night stand.

But there is some furniture I will not give up. I will have a computer desk and a computer. Jason and I both depend on the internet for work. Our only entertainment is completely centered around online gaming, which is $15/month each. We will also have bookshelves. One of THE MOST important parts of growing up to me was reading tons and tons of books about all kinds of things, fiction or non-fiction, poetry or philosophical essays. I read everything. Jason reads everything. And it is extremely important to us that Logan grows up learning to read and be interested in reading. Our combined library is enough to fill at least four 7' tall bookshelves, and we continue to buy books. Sure we have a kindle, and we do have a small library on that as well. But I love our bookshelves, and we actually need to buy more because we don't have enough space on ours anymore. Logan will also have his own bookshelf eventually with his kiddy books on it, which we have a growing stock of. Jason and I typically read different kinds of books at different times, so even though we have all of these books and continue to buy more, I have read less than half the ones we have. Someday maybe when Logan is grown up and not interested in our outdated sci-fi I will consider donating them, but for the time being they are a part of our home and will continue to be. And when I say we continue to buy books I mean we bought a ton when Borders went out of business, and if either of us is following a particular series we usually pick up the remaining books if it is worth finishing, so it's not a huge expense for us, but it is ongoing.

Anyways, back to the topic at hand. There are some parts of our life where we can downsize. Bedroom furniture is one of them. There are other areas where we can't. Having 1 car and having to orchestrate how to get Logan to daycare is a pain enough as it is. I wouldn't want to do it without a car, but then again I wouldn't be able to get to work without a car, so it might not even matter at that point. Nonetheless, we aren't getting rid of that. And we are actually upgrading from this apartment to a house.

For all the preaching about how money can't buy happiness I have to say, it does make a difference. We can adapt to living with less, and Jason and I have had our fair share of "less". On the other hand, privacy and stability don't have a price, but they can certainly be bought. Just last night I was sitting at the kitchen table in boxers and a bra when some stranger marched right into our apartment. This is not the first time this has happened. I hate feeling like I have to lock myself in or lock myself out. This apartment complex also has a knack for inventing "welfare" inspections for all sorts of things. Every single month somebody comes into our apartment and checks our bedding for bugs, or checks the blinds to make sure they aren't damaged, or checks the general "safety" of the apartment. I'm tired of it. I hate having to let these guys in to walk around and judge us every month in the name of "preventative maintenance". Any little thing they find that breaks their rules, they fine us for. It's not like they do a damage check when you move out and take the money out of your deposit. They just add a fine to your month's rent bill for whatever they say you've done wrong. So while upgrading to a house is not in the heart of living a simpler life, it does provide us with more stability and control in that we (hopefully) won't have strangers marching in on us all the time. (Plus it is providing us with an opportunity to actually save more money than we are in this apartment, and pay off debt faster.)

The other issue I find with this whole theory of not depending on money for happiness is a psychological one. I have always been taught about budgeting from a very early age. I have been instilled with a sense of urgency to pay off debt and to never let my bills be late. I consider these good qualities. On the flip side I suffer from really really bad anxiety and depression that is directly related to our financial problems. After we found out that our mortgage fell through last year I locked myself inside for a week and went through bouts of crying and screaming and just a complete lack of willingness to continue to work towards anything. There were days at a time when I couldn't force myself to get out of bed to deal with Logan or anything else. I just let it all slip through the cracks because there was no end in sight. At that point all I could see was that we already had a mountain of student loans, we were forced to find this apartment in 2 days, give up our pets, move yet again, all with the knowledge that in less than a year we would have to pack up and move. This apartment is costing us way more than our last several "homes", which meant that it would be even harder to save or to pay extra on loans.

I cannot handle the idea of moving over and over and over for countless years with no destination. I can't handle not having the freedom to put up pictures in my home. I can't handle having landlords coming and going, adding to my bill every month as they see fit. I can't handle not having animals because the deposits are so ridiculous. So what I'm saying is that while money may not buy happiness directly, it can provide me with stability, which keeps me from being a complete basket case. If you have 3 cars and one breaks down, you drive a different one. If you have 1 car and it breaks down, you miss a day of work, which eats into your paycheck, which makes you late on your bills, which frustrates most people, but sends me into a completely different state of meltdown. I don't want to live in a mansion with a pool (actually, I have expressly forbidden Jason from ever buying a pool). I don't want a fleet of cars. I don't want to go on a vacation every other weekend. All I want is to know that if one thing breaks it isn't going to send us into a financial tailspin, and that makes me happy.

How to Properly Apply Bonus Payments to Loans

In this post I would like to focus on the trivial little steps that you need to take to ensure that your bonus payments on your loans are being applied properly. Depending on who the lender is, they may have different policies on this procedure, but I will point out a few of the tips I have learned from our lenders.

Sallie Mae & Sallie Mae Serviced Loans

Jason and I have most of our student loans through Sallie Mae. We also have a few loans through the Department of Education, but they are serviced by the Sallie Mae website, meaning that the Sallie Mae servicing procedures apply to them. 

Sallie Mae is in a constant state of revamping their website, which means that some days it just doesn't work, and other days it works but will be completely different from the site you saw the day before when you logged in. It is frustrating, but a few factors have actually improved over the course of their revamps, and their rules have remained the same. 

1) Loans are due on the 1st of the month, but they aren't assessed a late fee until the 5th. Submitting a payment online can take up to 4 days unless you pay extra to have the payment rushed (Rushed service online? This is a nonsense charge that they take advantage of for people who have to wait until the last second. The reality is that if they weren't in the business of taking your money, they could do all payments on the "rush" schedule for free.). 

2) Just because you send them extra money, doesn't mean they will apply it. Sallie Mae's policy is that even if you send an extra $100 in with your regular payment they will hold onto the $100 and apply it to the next month's interest. They will not apply it to principal unless you specifically write them a letter or email indicating which loan it needs to be applied to, and when it should be applied. The Sallie Mae site is set up to charge you a set monthly amount based on your loan amounts, and it splits up the payment automatically. Therefore, if you make the bonus payment with your monthly payment it will not have a set destination unless you tell them where to put it.

My letter usually says something like this: "In reference to account number XXXXXXX,  loan number XX-XX (Sallie Mae or Dept of Edu), please apply all extra funds from the payment made on mm/dd/yyyy to the principal amount on the loan immediately." Since you already made your regular monthly payment you shouldn't have any extra interest to worry about, and the entire amount can be applied to principal. The word 'immediately' is very important in making sure that the money isn't just set aside for that loan at a later date. Both our Sallie Mae loans and our Dept of Edu loans share the same account number, but are serviced separately, so they actually have over-lapping loan numbers (ie We have two loans that go by 01-01, but one is SM, the other is DoE), so make sure you specify which of the two you are applying the money to.  Check back over the next week to make sure that it was applied correctly, and get in touch with them ASAP if there is an issue. I use only their service email address, and they tend to respond within 24-48 hours.

3) If you have already made your regular monthly payment and you decide to go back and make an additional payment later in the month, the Sallie Mae website now allows you to choose which loan to apply the payment too. Instead of going to the default setup that splits your payment evenly, the website will actually allow you to choose which loan or loans to apply the extra payment to, and how much of the payment to apply to each one! This is a huge improvement over their previous system, but just to be sure I still send them an email to make sure that the payment is applied immediately. Why risk it? 

Private Lenders

Our largest loan ($27k) is through a private lender. Each lender has their own website and their own rules. It is important for you to get in touch with them and research how to apply extra payments to your loans. AES is nice enough to have a button that will allow you to pay extra on your loan instantly. They don't hold the money for the next month or anything else that would prolong your payments. This is very convenient, but I can't say that all private lenders give you this option, so it is definitely worth looking into. There are still a few of them out there that have very primitive websites, and actually require a signed letter and a check when making extra payments because those payments are handled by a specific department, instead of the automated system for regular monthly payments. Stay informed, make sure your money is getting to the right place every single time. Nobody can afford to have their money disappear, or to have it put on hold to go towards the next month's interest. That would defeat the whole purpose of sending the bonus payment. 

New Goals

Hello everyone! I hope you all had a wonderful Memorial Day weekend!

Today I have decided to set another set of goals for us. Primarily, I need to put at least $350 into savings for the month of June in order to reach our savings goal. I also need to determine how much extra I want to pay towards student loans each month. The graph above shows the tiny bit of progress we made already just by making our regular June payment. Only $15 of that payment was applied to the principal, but we will definitely see more progress by the end of the month as soon as we figure out our bonus payment.

As far as savings goes, Jason and I are working on increasing our monthly income so that the $350 savings won't have to come out of our regular monthly budget. I know many people, us included, don't just have that money lying around.

The first step in this process was looking at our budget and determining places where we could be saving more, which I did last week. Eating out is our biggest weakness, and we have taken steps to reduce that portion of our budget drastically. I will admit right now that we don't plan on giving up all of our eating out budget, just cutting it back. I think of sticking to a budget a lot like sticking to a diet, cutting all of the foods you enjoy out of your diet leads to a very low success rate. We need to give ourselves a little bit of a treat once in a while to reduce the stress that extreme dieting and/or budgeting puts on us. As long as you can keep yourself on track 99% of the time, it's okay to make an exception once in a while. In fact, it can help you keep things in perspective and stay motivated.

Our second big weakness is the amount of things that we charge to our credit card every month. Generally this card is only used for Jason's lunches or if he stops to get a drink during his work day. He is on the road much of the day and in a small van, so he doesn't have a convenient way of keeping fresh food or cold drinks with him. Unfortunately, since we haven't paid the card off in several months, the payments we have made have just kept us even, they haven't done anything to reduce our balance. In order to combat this spending, we have put the card away and Jason now has a cash allowance for these sorts of purchases. Now instead of having a $300 budget to spent at will, he now has $20 a week in cash. There are a couple of ways to handle this. 1) I just give Jason a $20 every Wednesday because that is the beginning of his work week. 2) In the past we resorted to using envelopes with each day of the week written on them, and a $5 bill in each one. Once again, this seems a little elementary, but it can go a long way towards monitoring your spending and preventing you from going over budget. Once the cash is gone, you can't keep spending it.

When it comes to increasing our monthly income, we started with me going back to work. This was actually a huge ordeal for us because childcare is so expensive, I had to really work to find a job that paid a minimum amount per hour that would pay for daycare and still have enough left over to make it worth my time. The other half of the equation was finding a babysitter who is in our immediate vicinity so that there isn't any extra travel to and from her house, plus she only charges us $20 a day to watch Logan. There are a TON of stay-at-home-mom's who are up for making an extra $60 a week or so to watch your kid since they will be home anyways. They typically charge less than a daycare center, and tend to be much more flexible with weekends and early mornings (which is a requirement for my job). At the end of it all, I will really only be making about $200-300 a month after paying for the babysitter, but that can go a long way towards our monthly savings goal, and won't cut into our original budget from Jason's paychecks. (The only issue is that I was forced to use one of those stupid ADP pay cards until my direct deposit goes into effect, and their system can't validate my identity for some reason, so it is acting as a savings account temporarily until I figure out how to get my money off of the card. *sigh*)

The second half of our plan to increase income is renting out the basement of the house we are moving into. We had planned on setting up our computers in the basement where it's cool, and using the larger open portion of the basement for Logan's toys. However, we have several friends looking for a place to live for a while, and in general people are paying up to $600 to rent a basement with a private bathroom. I don't expect to collect $600 a month since the basement is only partially finished, but anything above $300 is a significant dent in our rent and utilities. Having roommates is a pain sometimes, and some people just don't have the ability to house someone else, but we made the decision to give it a shot for a while and see how it goes. Even if it only lasts for a few months we can apply that extra money to loans and come close to paying off the smallest ones.

I would like to apply at least $100 extra per month to our student loans on a permanent basis. This will cut 5 years off of our current payment plan. If I could manage to put $250/month extra toward the loans we could cut an additional 3 years off of our payments. I don't think we can commit to $250/month until we reach our savings goal though, so I will settle for $100 in the short term. The thing is that even if you can't commit $100 extra per month to your loans, any amount makes a difference. In the past I have resorted to rounding our loans up to the next $5 increment just to be putting a little something extra in. The fact is, that extra $3-4 was going to be spent on junk food or something irrelevant, so putting it towards the loans does help. If you haven't already looked at the snowball spreadsheet and played around with it, there is a link in my previous post: Week 1 Goals: Update & Helpful Links. This will give you a month to month update on all of your loans and their balances along with calculating interest.

Following this post I am going to make another post about the specific methods of applying your bonus payments to your loans. There are many little details and secrets about this process that could keep you from paying down your loans effectively.

Week 1 Goals: Completion

My 3 goals for this week were as follows:

1) To prioritize our loans and find a way of graphically tracking our progress.

2) To set a savings goal for us to apply to the purchase of our house.

3) To audit our bank statements for the last few months and see where all of our extra money is going and how we can fix the problem.

Prioritizing

The first goal was fairly simple. I decided to work from smallest to biggest loan using the snowball method. While many people say that you will save more money by working from biggest to smallest, the success rate of that method is significantly lower than smallest to biggest. There is, of course, a human factor here, and just like anything else, we want to see that our hard work is making a difference. If I were to start by paying of our largest loan ($27k), it would take 4-5 years by itself. That would mean that we would have to keep ourselves on track for that long to see the first bit of difference in our budget. Rather, by starting with the smallest loans first we can knock some of them out pretty quickly, cross them off and see a short term difference, even if it is a small difference. This is reassuring and motivating because you start to see results much faster. Plus, by paying off the small loans first I can apply their payments to the larger loans as we go along. If I did things the other way around I would be making the smallest payment to the biggest loan and the biggest payments to the smallest loans, which seems like it would slow us down.

These graphs are posted full size in my previous post as well.

Saving

The second goal for the week was to set a reasonable savings goal for us. We are moving into the house as of July 1st, but we will be renting it from my mother to begin with. Once we have enough for closing costs, we will purchase the house from her. The price for the house is agreed at $140,000 which we were already pre-approved for last year. However, due to complications with Jason's job, we were unable to purchase last year. We plan to give it another shot, and this time we are going in with fewer loans, more savings and extra income. Another thing to keep in mind for us is that I just went back to work this month, so if we try to buy the house in the next 6 months my income will not be counted since my length of employment is not long enough to show a stable source of income. Therefore, it benefits us to wait until Dec/Jan anyways, and since the only remaining derogatory account on Jason's credit report will reach it's Statute of Limitations in January of 2013 it will also be removed at that time. Once we hit the end of January 2013 we will have all of our tax info (Jason's job and all of our loans post their tax forms online by Jan 31st of every year. The only thing we will be waiting for is my W-2 this year) so we should be able to do our taxes early in the year, which will either give us a boost to our savings or can be applied to student loans, or both! So we have several reasons to wait until the beginning of next year to pursue the actual purchase of the house. 

I decided to set our savings goal at $6000 for now. We have gotten several estimates on the closing costs and they have ranged from $4300 all the way up to $5600. Last year our closing costs would have been roughly $4400. I think these are fair estimates, and by going to $6000 we can have a little extra cash just in case. As far as dates go, I would like to be in the mortgage process by March of next year, which gives us 10 months. $6000 in 10 months would be $600 a month put into savings, and I am pretty sure we do not have that much extra cash in our budget to set aside. Instead I am figuring that we can put $2500 from our tax return into savings, which leaves us with $3500 over the next 10 months. $350 a month isn't so bad. For the last 4 years our tax return has been between $4-5000 every year, so only putting $2500 into savings should leave us plenty of wiggle room if our tax return comes back much less than expected. I don't foresee that happening though, since our situation has not changed at all. 

As you can see, we already have about $750 in savings at the moment as well, but I think that money is going to go toward the penalty for breaking our lease early next month. If that's the case then we will be working from zero here too, and I will adjust the graph accordingly.

Tracking

The third and final goal for the week was to track our spending over the last several months to see where we can really rein in. I was a little disappointed to find that A) our biggest weakness is eating out and B) that it was extremely difficult to track certain portions of our budget. Tax season just finished up and because of that we see a huge increase in savings during March, and then an even bigger decrease in savings in April. The issue is that we did our taxes early on and they were auto deposited into our savings account, but we had already budgeted our tax return to pay off 2 loans and to get the car fixed. We did pay off the two smallest loans we had, which saves us about $63 dollars a month on our student loan payments. The other huge chunk of money went to car repairs (new water pump, oil change, stabilizer bar links, alignment, tires). I also had trouble tracking gas purchases separate from grocery purchases because we generally buy gas at the Safeway gas station, which is also where we get our groceries. So when trying to organize this information I found that some of our gas purchases may be included with groceries, while others may be in the "Other" category, artificially making our grocery budget look outrageous. 

May is the first month in a while that had us back on our regular budget, but it doesn't account for money spent on babysitting or laundry, and I somehow managed to leave out our other utilities for all three months. We pay them with our rent and they have been about $160/month altogether. Even May had some erroneous spending with Mother's Day gifts and whatnot. It is also notable that we reached the end of our 6 month promo period for internet, so our rate went from $36/month to about $72/month.

What I have found is that we do have a weakness for fast food that generally means we eat out once a week. I would like to cut back on this because it isn't helping anything at all. The key to cutting back on this expense is to have food that is quick and easy in the house. We go out to eat when we don't feel like cooking, so having meals that don't require much effort could be a huge help on this front. I would also like to make an effort to pay off our little credit card so that we are not making multiple $100+ payments and still carrying a balance. It has been put away so we won't be adding anything to the balance of that card for a while, but it is important for us to carry a small balance on the card and continually make payments for Jason's credit score to continue rising. I would like to keep this under $100 for the entire month. Lastly, I would like to put money into savings and keep it there. My savings totals reflect that we have been putting money into savings, only to transfer it back out for one reason or another. This needs to stop. I'm sure I can find a solution in our "other" category by cutting out extra trips to the store for soda or miscellaneous shopping.