The Bright Side of Debt

As soon as I post this, I am turning my computer off…for the entire weekend.  On top of a 40 hour work week, 24 hours at a hotel, and sitting in my recliner at night with my laptop, I am on the computer way too much.  My brain is turning to fluff.  So, I have decided that this weekend I would just turn it off.  Of course, I have to work tonight and tomorrow night at the hotel and will be on the computer for work related issues.  But, I am taking a book to read.  In between guests, I usually am on the Internet;  tonight I will read my book.

Have a good weekend everybody.

There is only one thing better than a Friday…a payday Friday. Actually, every Friday is a payday Friday for us. We both get paid every two weeks, but Hubby is one Friday, and I’m the next. I’ve always wondered if it would be better if we both got paid on the same Friday. That’s not going to happen anytime soon, so I guess we are stuck alternating Fridays for the time being.

I posted for the first time last week what we spend our money on. This takes guts because you set yourself up for some criticism, and I have very thin skin.

I got paid today and here is where my money went.

• $425 to the credit union to cover 1/2 mortgage payment and savings for property taxes–which come due next month for my truck.
• $159.28 Discover ($42.28 was in our 5/16 budget and $117 was transferred from my ING snowflake account to the bill account to apply towards Discover)
• $200 Bank of America credit card
• $223.31 student loan
• $65 Terminex–quarterly pest control treatment–we live in the country and have a lot of issues with creepy crawly things
• $158.01 AT&T cell phones
• $43.63 Hubby’s life insurance policy (I’m sure that this might generate some criticism. I’ve been trying to get him to cancel because I think it’s a waste of money with the type of policy it is, but he feels it’s necessary)
• $114.28 to hold back to go towards truck payment next week

We currently have $516.23 in the emergency fund. By the end of the month, I should have just over $1500. This will exceed the goal that I set for May ($1200)

because I took out $117 to apply to the Discover card today.

I have a ton of sub-accounts with ING that hold various amounts for various things. I took one that I no longer needed and designated it the Snowflake account after I joined the Snowflake Revolution started by PaidTwice. I have slowly been snowflaking little payments to my sub-account until it reached $100 so that I can apply it to whichever card I was currently trying to pay off. Some snowflakers, such as PaidTwice, snowflake their money immediately; I chose to snowflake my payment when the account reached $100. I’m not sure why I decided on $100. It makes more sense, mathematically, to do it as you get it so the snowflakes reduce your credit card debt and you incur less finance charges. As crazy as my life is, it is just easier for me to apply the payment to my debt at one time rather than several times throughout the month.

I started out with about $8.00 in the snowflake account and since March, I have added $71.90 in Half.com sales, $14.32 because I felt like it, $.17 in interest earned, and, just last week to get me over $100, $23.31.

With this last transfer of $23.31, I have discovered a new way to find snowflakes. I usually budget a set amount every month for water, electricity, and phones. These three bills always vary from month to month. I budget the set amount and then adjust it up or down when I get my bill. Usually, if the actual bill falls below my budgeted amount, the difference goes back in to the kitty for discretionary spending. The way I got my $23.31 is that I had $150 budget for electricity this past month and the bill was only $126.69. This month, I have $175 budgeted because it’s getting warmer outside and we are running the air a little more. Anything below that will go to the snowflake account. The other two are minimal in amount, less than $2.00. But, as I found out, minimal adds up.

The key to being a successful snowflaker is to move the money out as soon as you get it. The snowflake should either be applied to your debt/savings or moved to another account immediately. I can’t tell you how many small windfalls that I have received in the past months that sat in my account and got eaten up by the discretionary spending monster. I have lost hundreds of dollars in snowflake money because it sat in my bill account. As soon as the deposit clears my account, I now move it immediately to the ING Snowflake account.

I also have a few other snowflakes coming soon. eBates just deposited to PayPal $25.43, and I am now waiting on that to be transferred to my bill account. I also earned $25 for signing up with Revolution Money Exchange. I’m not sure if I will use them anytime soon, but I did get $25 for joining. I have $20 in cash that my mother gave me. I have a aircard that my husband won that I need to put on eBay. That will fetch about $50, I hope. I also have some survey income that I need to see if I can get transferred to me. So with all this, I should have another $100 by the end of the month.

If you haven’t yet discovered snowflaking, I encourage to read PaidTwice’s primer on snowflaking and join the revolution. Snowflaking is not partial to any amount or to where you apply it, whether it be to debt or savings. It just wants to be kept rolling to make one big snowball and knock out your debt or build up your savings.

It all boils down to you making every penny have a job and work for you. Now…go work it.

Continuing the series on The Debtor’s Toolkit, I’ll take a look at tactics 3 and 4 together since I think they are closely connected.

Tactic #3: Get caught up
I spent the last few months of last year trying to stay ahead of my bills. They were chomping at my heels and were almost to the point of really getting ahead of me. The boat payment and the two car payments were always late but still within the grace period so I avoided late charges. The medical bills were racking up. I made a couple of credit card payments right at the due date. It was very hard to build a comfortable cushion between the paychecks and the due dates. I still cut it very close to payment due dates at times, and I’m still living paycheck to paycheck. But, I do have a little buffer zone now albeit a small buffer zone.

My husband has accumulated a lot of medical bills. Most have not had a payment on them in some time. I was making $5 payments to each for the longest time. Since our budget can only accommodate $55 a month towards past medical bills, I’ve decided to concentrate on one at a time until things improve for us. The most important bills are the ones that affect our every day lives…such as the mortgage, utilities, car payments, food and gas, and so on. We have prioritized our debts, and I’m sorry to say that the medical bills are the last on the list. However, that does not mean that I will ignore them forever, but what good does it do me to pay medical bills and then not have money for groceries or for gas?

I am very grateful that we did not get too terribly behind on our bills. It’s taken me several months to get a buffer zone between pay dates and due dates. Whereas several months ago, I was making car payments in the grace period, I am now making them at least two weeks before the due date. My ultimate hope is that on the first of the month, I can sit down and pay all of the bills and not have to worry about them again until the next month. That is a good ways off, but that is definitely the direction that I am heading.

Tactic #4: Negotiate
I haven’t had much luck with negotiating with my credit cards. I believe it is mainly because I didn’t have any leverage. Here I was making minimum payments on a card that was maxed to the hilt with a credit score in the toilet. I suppose I was kidding myself that they would be willing to work with me. The last card that I tried to negotiate an upcoming increase in the interest rate, I ended up having to close because they wouldn’t budge…even a little.

Credit card companies drive me insane. I realize that they are a business and exist to make a profit for their shareholders. What makes me the maddest is that good people like myself that are trying to make amends for their mistakes and to turn their life around and keep atop of their bills are given insane interest rate hikes that make it almost impossible to get out from under the debt. Again, I know that is the nature of the beast, but it still doesn’t make it the right thing to do for all people.

In the Fall, I will most likely be in a better position to negotiate a decrease in some of my credit card rates, even if it is just a small amount. The one that I would like to see come down is Bank of America. I have a great rate with Citibank (7.9%) and a decent rate with Capital One (14.99%). Still, even a small increase will make a tremendous difference in the finance charges.

Tactic #1 Know what you owe
Tactic #2 Figure out a plan
Tactic #3 Get caught up
Tactic #4 Negotiate
Tactic #5 Consolidate
Tactic #6 Get some inspiration
Tactic #7 Don’t rack up more debt — have an emergency fund first
Tactic #8 Automate you minimum payments
Tactic #9 Trim away some fat
Tactic #10 Snowflake
Tactic #11 Watch your progress
Tactic #12 Don’t let up

The good news is that I went to my job interview yesterday evening.  The bad news is that I can’t remember a thing about it.  My post yesterday talked about the headaches that I have had the last few days from not being able to wear my glasses because the lens popped out.  My headache had lighted up a little bit yesterday afternoon, and I was so thankful because I just didn’t think I could make it through an interview with my head pounding as it was.  I had that feeling like I was recovering from a week long drunk.

I left work and went over to the office where my interview was.  I was still feeling somewhat okay, still was dealing with that hangover feeling.  I met with the Provost and a couple other folks, and we were discussing the job that I was interviewing for.  As I sat there, my neck started getting really tight and the back of my head just started the most awful throbbing.  I swear that I thought I was going to stroke out right there in the Provost Office.  From that point on, I can’t tell you anything that was said.  I just remember getting back to my truck thinking I was going to be sick.  I was so nauseated and just wanted to get home.  I ended up taking some migraine medicine and took a nice little nap.  I still feel like I have that hangover feeling.  It just will not go away.

I’ve been trying to figure out if I said anything really stupid.  Lord, I hope not.  But regarding the job, I’m not sure it’s the job for me.  I don’t think I will see a huge pay increase, and even if there was a pay increase, I’m not sure if it’s the direction that I am looking to go.  We’ll see.

In March, I had the lovely experience of having to get eyeglasses. I had been having trouble focusing and had really horrible headaches and migraines. So, I got glasses. I actually look pretty cute in them and wore them faithfully every day. My headaches became less frequent and eventually went away.

Saturday, I was walking out the door to go to work at the hotel and grabbed my glasses on the way out the door. After I got to work, I was talking with the front desk manager. She kept looking at me with a bewildered look on her face, and she finally said something about me missing a lens in my glasses. I told her that I didn’t think so. I went up to touch my lens and poked myself in the eye. Sure enough, the right lens was gone from my glasses. My left eye is the useless eye, and my right eye is fine. So because it was my right eye, I didn’t even notice that the lens was gone.

I went back outside and looked on the ground and in my truck and couldn’t find my lens. I called Hubby and told him to check around the house and in the dining room as soon as he got home. I could just imagine one of the dogs eating my lens and us having to inspect poop for days…three Labs can put out a lot of poop by the way.

Hubby did find them when he got home. They were laying on the floor by the dining room table. I couldn’t get the lens to pop back in and have been trying to get back to the vision center all week to get them repaired. I am definitely going in the morning. My headache came back full-force on Sunday and has been getting progressively worse since then (which is going to be another post in the morning of my experience with my headache in the middle of a job interview). This is the first major headache that I have had since I started wearing my glasses. So, I suppose if I want to be headache free for the rest of my life, I need to wear my glasses.

Please oh please let these glasses be covered by warranty. Update:  I have always been told that I have a screw loose.  Now, I believe it.  The screw in the frames had loosened up so that’s why the lens fell out.  Good thing the lens wasn’t lost.

I came across this site today that has lots of useful information. It’s worth checking out. Another addition to my ever growing Google Reader.

I told my supervisor at the hotel last night that I needed to cut back on some hours.  Besides my house being a complete and utter disaster, I am totally exhausted.  So much so, that my work at my full-time job is beginning to suffer.  I find myself unable to focus and unproductive.  I had been working four days a week, approximately 30 hours.  I scaled that to three days a week to 22 hours a week.  I think now, I am going to work two days a week for 16 hours.  If I can continue to work Saturday and Sunday nights, that would work out good and still give us money for gas.  My grocery money will now need to come out of our bill budget and hopefully will give me a little more control over what we spend.

Transferring balances is a stressful deal. My last balance transfer has now posted to Best Buy, and I just paid the remaining interest charges $13.46.

To recap, I transferred two of my highest interest rate cards (Best Buy and Sams) to a 0% card. I came up about $700 short on the 0% card and transferred the remaining Best Buy balance to a card at 14.99% balance transfer rate.

This is where the credit cards stand now after shifting balances all around. These balances are off a little because I haven’t made payments yet on some and others, the statement is about to close and the finance charges will be added.

• Wal-Mart $0.00
• Radio Shack $190.85 (my birthday present at 0% to be paid off soon)
• Discover $4926.57 (0% for 13 months, then 14.99%)…snowballing
• Suntrust ~$1150 (21%)…pymt $30
  
• Chase #2 ~$1162.40 (20.4%)…pymt $35
  
• Wells Fargo ~$2240.48 (15.99%)–account closed…pymt $57
  
• Best Buy $0.00–balance transferred
• Sam’s Club $0.00–balance transferred
• Citibank ~$6023.30 (7.9%)…pymt $105
  
• Bank of America ~$7462.32 (18.99%)…pymt $200
  
• Capital One ~$9871.32 (14.99%)…pymt $200
  

Regardless if my credit is negatively affected, I plan on utilizing balance transfers as much as possible over the next couple of years. For the last three, I am always getting the convenience checks in the mail to do a balance transfer or go buy what I “need”. As soon as I have enough credit available on Discover and the bottom three, I am transferring all or part of Suntrust, Chase and Wells Fargo. I hope that by the end of the year, I am only dealing with 4 credit cards instead of the original 12 that I had a few months back. Just for my sanity, it will be so much better to pay a few balance transfer fees just to have four cards that I have to fool with.

As a side note: For the longest time, I have had a credit limit well over $3000 for my Best Buy credit card, which I have had for 15+ years. As soon as that first balance transfer posted, they knocked my credit limit down to $705. Now that the second transfer has posted and I’ve paid my interest, it will probably go down to $5.00. But know what??? I don’t give a flying fig. They can have the blasted thing.

Happy Monday Everyone!!!

This is the second of a twelve post series where I look at each of the tactics Trent at The Simple Dollar outlined as necessary in getting out of debt. His article struck such a chord with me that I thought it worthwhile to write an individual post on each one so I can come to grips with my shortcomings with debt repayment and maybe discover some positives of areas where I am doing good.

Yesterday, I posted on the first tactic of knowing exactly what you owe. There is one after-thought that came to me about tactic one…it gives a measure of success. If you look at my BSoD Finance page, I have the date in August that I added up all our debt and the total that we owed. I then update that monthly and put the percentage change. However small, it is still an encouragement and a motivator to see that number change (for the better) and can visually see my success.

Today, I look at tactic #2, figure out a plan. I must say this is not an easy one.

Tactic #2: Figure out a plan
After having the debt written down in black and white, I knew that we had to do something. I could no longer ignore that the debt existed. It was now reality, and I could no longer lie to myself that everything was just fine. It was far from fine.

The Fall was a tough time for us. Hubby was still recuperating from his back injury and had not gone back to work. We were down to practically nothing. Most of the credit card payments were cutting it very close every month to the due date, and I was making installment loan payments in the grace period. I started doing research on the Internet and came across this whole world of Personal Finance bloggers. We’re In Debt was the first blog I ever came across. I was a lurker for a long time to this site and eventually branched off to others. My Google Reader is so full of PF blogs because I find inspiration in all of them.

I didn’t have a plan last Fall, but I decided that until I got one, I would start blogging to have an outlet for myself and to have some sort of accountability, even if it was accountability to myself. I had no clue that I would actually have readers and that they would be interested in what I wrote.

I feel like I have been on a non-stop roller coaster for months. I can truly say that this has been a learning experience. My debt-free plan has changed several times to the point where my wishy-washy self is getting on my nerves. I start one plan and then I would see what someone else was doing. I would try that for awhile, and it wouldn’t work for me, so I would try something else. It was all quite annoying and overwhelming. I think as I get more financially mature, my focus needs to narrow so that I am not trying to do everything at one time. One step at a time.

I’m still not convinced that I have a solid plan of action, and I’m still a little wishy-washy. I set weekly and monthly goals and never follow-up with them. I change them midstream. I add more. I delete some. I set a budget, but then I ignore it or don’t figure out a way to cut the costs if I go over budget (groceries–huge culprit). I lack consistency in my personal finance, and I believe the lack of consistency has probably hindered me from accomplishing more since I began to seriously pay off debt. I lack consistency. Let me repeat…I lack consistency. I have the heart, the determination, the common sense, the intelligence, but I am not consistent.

There are a lot of great plans out there to become debt-free. Eventually, if you follow any of them, you will get out of debt. One may take a little longer or another may not minimize your out-of-pocket interest costs. Regardless, with determination and consistency, I can have debt-free living.

During the rest of May I will be writing the BSoD business plan. Every successful business has a business plan, right? That’s one of the many things I learned and actually did in Busienss school. I’ve heard many times that a household should be ran as a business…looking for ways to cut costs, be efficient, maximize opportunities, and create shareholder wealth. A business plan will hopefully cut down on the chaos of our lives and our finances. I’m sure that when I present this to my high-school educated husband, he will look at me like I’ve gone mad. But, one day, he will appreciate all my effort as we are sitting on some exotic beach sipping daiquiris. Lord, I hope I still look decent in a bikini then.

Tactic #1 Know what you owe
Tactic #2 Figure out a plan
Tactic #3 Get caught up
Tactic #4 Negotiate
Tactic #5 Consolidate
Tactic #6 Get some inspiration
Tactic #7 Don’t rack up more debt — have an emergency fund first
Tactic #8 Automate you minimum payments
Tactic #9 Trim away some fat
Tactic #10 Snowflake
Tactic #11 Watch your progress
Tactic #12 Don’t let up

Of all the personal finance blogs out there (and we are talking thousands), the one that has made the most impact in my life is Trent, at The Simple Dollar. Nine times out of ten, his articles directly pertain to me and my life,  so much it hurts at times.

Yesterday, he posted an excellent article about the twelve most effective tactics to use when you are trying to get out from under a mountain of debt.  When it comes down to it, paying off debt is not rocket science.  But, it does take some common sense, a lot of determination, and most importantly, consistency. I have the determination; I have some common-sense.  The problem that I see with myself is that I do not have consistency.

As I read Trent’s post, I thought about each tactic that he listed and what I was doing in my own debt-ridden life to become debt-free.  Some tactics, I am failing miserably at; others, I am doing okay.  Over the next week, I am taking a good, hard look at each one of these tactics and see where I am at with each one and what I can do to improve.

Tactic #1:  Know what you owe.
Besides wasteful spending, I really believe that the reason why we have accumulated so much debt is that we never knew exactly what we owed in total.  For years, I had no clue.  I knew on some of my individual debt but knowing the pieces did not give a clear, entire picture.  I paid the minimum payments on all of my bills and never thought about them again until the next month rolled around.  I lived years like this and continually racked up more and more debt.

It was not until I sat down last Fall and wrote down every debt from the mortgage to student loans to my little store credit card did I have a clue of the enormity of our debt.  I was shocked to see the display on my calculator total over a quarter of a million dollars in debt.  A quarter of a million dollars!!!  That’s a lot of money when our total gross income was less than $50,000 at the time and Hubby didn’t have an income coming in due to medical leave.

Now, I keep a spreadsheet that I update at least twice a month.  Keeping this record also allows me to stay on top of credit line increases, interest rate changes, and to remind myself continually the amount of our debt.  My spreadsheet includes:

• the debt name
• the credit limit, if it’s a credit card
• the interest rate
• the approximate statement date and due date
• the minimum payment due
• the current balance owed

I have recently added, in a quest to shock myself in to reality, the actual finance charges that I paid.  Last month, I discovered that 53% of my April payments went to pay the principal on credit cards, which means that 47% of my money when to pay finance charges.

It was that day last Fall when I had a complete picture of our debt that I knew I had to turn my life around.  There were several weeks that went by that I walked around in a stupor because I just didn’t have a clue on what to do or where to begin.  I tried to talk to Hubby, but like me before this time, I don’t think he wanted to admit our situation.  I really believe that he is still trying to avoid our situation.  It’s overwhelming to be burden down like this, but until there is a true picture of debt in front of you (or in my case, for the world to see), you will never, ever be able to overcome the debt and be debt-free.

As I mentioned earlier, over the next week, I plan on doing a post on each of these…if only for me to seriously think about each one and see where I am falling short and where I need improvement.

Tactic #2   Figure out a plan
Tactic #3   Get caught up
Tactic #4   Negotiate
Tactic #5   Consolidate
Tactic #6   Get some inspiration
Tactic #7   Don’t rack up more debt — have an emergency fund first
Tactic #8   Automate you minimum payments
Tactic #9   Trim away some fat
Tactic #10  Snowflake
Tactic #11  Watch your progress
Tactic #12  Don’t let up

With a pay increase nowhere in sight, I had decided that I was going to start exploring other opportunities. I applied for three different jobs and then stopped when I finally did get my increase. Two jobs were with my current employer in different divisions and the third was at a university in another state. The interview process with job 1 with my current employer seems to have come to a halt. I have an interview scheduled with job 2 next Tuesday. Job 3, in the next state two hours away, was a long-shot. After I applied for it, I thought to myself that I had a better chance of getting that position as Minnie Mouse had to become President of the USA.

My cell phone battery had went dead Wednesday, and I didn’t put it back on charge until this afternoon. My co-worker said that she had left me a message, so I checked and I had 5 messages. Three were from my mother (wondering if I was ever going to call her), one from my co-worker, and the other was from job 3. They are interested in bringing me in for an interview.

With it being Saturday, I knew that this person would not be in the office, but I called any way to let her know that I did get her message and that I would be calling her back Monday morning. This would be an exciting opportunity and would open a lot of doors for me to continue a career in higher ed. There is one thing holding me back…my debt. I just can’t even fathom how I would handle a move two hours away with all of this debt. I have tossed around the idea of living there during the week and coming home on the weekend or driving back and forth for a few months.  The salary would have to be enough to make it worth while.  Another reason why debt really sucks.

I think the best thing for me to do is not to think about it yet. There’s no need to get freaked out over something that may not even happen. Cross that bridge when I get there is what I keep telling myself.

Hubby got paid today. It was considerably more than he normally brings in. He usually brings in $850 on average. This time, it was $1258.35.

I’ve never posted where we spend our paychecks, so I thought I would do it and see how it played out. I’m not sure how other people budget, but living paycheck to paycheck, I list in an Excel spreadsheet what we owe for the month and then allocate each paycheck to pay each bill. I guess that’s the norm. Some weeks, I have to hold money back to next payday to get the entire bill. I used to do this with my credit card payments, but recently, I had the realization that this was a stupid idea and now pay multiple times online whenever I get money regardless of the amount.

I had $46.74 left over from last week, and I had $8.90 come in from Half.com from book sales the last half of April.

My outflows are:

$8.90 to my ING Snowflake account
$25.00 my medication
$73.06 to AT&T (This is not normal. It is usually around $57. My husband signed up for something online (Email Discounts) that tacked on a recurring charge $14.95 this month. I immediately got on the phone with them last night and told them this should be removed now, and they said that they would and apply a credit that should appear on our next bill. Also, we still haven’t seen the credit that the AT&T dude said a couple of months ago that we would give when we wanted to cancel our land line. I called AT&T this morning and the person that we originally spoke to didn’t commit the change. The person that I spoke to this morning was very apologetic, so now we have a $20 credit for the next six months for our hassle.)
$47.68 to my 0% Discover Card
$9.06 partial payment to CC#4
$50.00 toward 2 past medical bills…one paid off and partial payment to the 2nd
$250.00 Boat payment (ergghhhh!)
$398.00 Debt Consolidation loan (another erggghhhh!)
$28.98 Taste of Home Annual Cookbook (I had a subscription to receive this and Quick Cooking automatically. I have recently canceled both of those subscriptions but still had to pay for the one I got last month)
$23.31 Another snowflake transfer that I need to make just because I wanted an even $400 in my checking account.

The exciting news is that I have $400 left after paying bills. I’m not quite sure what to do with it, but I need to decide quick before it disappears. Update: $300 is being transferred to my Emigrant account to go in the E-fund. I really need to get that built back up before the roof caves in or some other unexpected event.  I’ve kept $100 in the checking to go grocery shopping next week.

I was folding laundry and took a break to check my Google Reader. I came across this story that I thought I would share. It is supposedly a true story. Enjoy.

I have a problem. Well, it’s not really a problem, but a dilemma. Okay…it’s not really a dilemma because I know right from wrong, well sometimes.

I have signed up for probably 7 or 8 different survey websites to help fund my debt snowflake account. One in particular, I answer the first few questions honestly, and I get a response back that I didn’t meet the criteria they were looking for. After getting turned down for every one that I have been sent over the last month, I decided to see what would happen if I answered the survey questions like I thought they would want me to answer. The first one, I went through like a charm and got my $1.00 credit. I thought it was a fluke, so on the next one I was sent , I did the same thing. Now, I have $2.00. Okay, this is just luck, so I did three more answering with the answers I thought they were looking for and now I have $5.00. The 6th one, I went back to my honest Abe self, and I was told that I didn’t meet the criteria.

So to my faithful readers that do surveys…do you complete them with integrity or do you fudge a little bit knowing that they will never know (even though you agreed to their conditions of answering truthfully) so you can make a few bucks to pay off your debt or fund that trip to Hawaii?