Goals September 19, 2008

One thing that I’ve come to realize in the last few months is that I am more than a little overwhelemed by my financial situation, and the number of moving parts. I keep constantly reevaluating what I am doing, what I should be doing, what the best way to get this all paid off really is. I’ve decided that I need to stop looking at the big, overall debt picture for a little bit, and try and focus on one thing at a time.

So, what are my overall, high level goals?

1. Pay off all Credit Card Debt
2. Pay off all School Loan Debt
3. Save money for the future/a house – $25,000

Pay off all Credit Card Debt

This is certainly the most concrete of my goals. I just finished paying off my J. Crew card, and am now, finally, store-card free. This leaves me with an interesting dilema – do I attack the smallest debt first, or the one with the worst interest rate? I’ve decided to do sort of a combination of both. My Goals are as follows:

1. Pay off Chase Card – $1238.10 @ 29.99%
2. Pay off Target – apprx $500 @ 18.99%
3. Pay off Bank of America – $1953.56 @ 29.99%
4. Pay off Capital One – $3449.88 @3.99%
5. Pay off American Express – $7033.87 @11.99%
6. Pay off Citi – $15208 @16.99%
7. Pay off USBank – $21698.08 half at 0%, half at 10.99

I am hoping that once I have a few of these taken care of, without having created more debt to replace them, that I will get some offers for cards with 0% rates, and I can start the money movement game again, to save myself some interest. I keep trying to find the “quick fix”, the easy solution that will get me out of debt – and it just isn’t there. I need to be patient, and vigilant, and realize that it took me a long time to accumulate all this debt, and its going to take me a long time to pay it all off. I’m currently projecting that the USBank debt will be cleared sometime in the middle of 2012.

Pay off all School Loan Debt

I have 2 main sources of student loan debt – somewhere around $65,000 worth of federal loans, consolidated at 6.99%, and approximately $25,000 worth of private education loans, currently unconsolidated and at variable interest rates ranging from 7 – 11%. I can take 60 months of voluntary forebearance on the federal loans, and 24 months on the private loans. I put the federal loans into forebearance for a year last month, and my plan is to keep them there until 2012. I plan not to put the private loans into forebearance, and am currently paying around $176 a month for them. My plan is that after my credit card debt is retired, I attack the private loans, and have them paid off within less than a year – so, early in 2013. I also have one smaller federal loan that somehow didn’t make it into the consolidation. This loan is only at 5% interest, and its only for a few thousand dollars. I am currently paying $40/month towards this loan, which auto deducts out of my checking account every month. By the time I start attacking the private loans, I should have that smaller loan almost paid off anyway – if not, I will throw the extra money at it first, just to simplify my life a little bit.

Save $25,000

This is where things get…tricky. BF and I have had a lot of conversations about our relationship, and the future, and what our plans are. Right now, I would expect that he will propose sometime in the next year. Give us a year to plan the wedding, and that puts it sometime in the (hopefully) fall of 2010. We’ve just gone through watching his parents struggle to pay for his sister’s wedding, and we both agree that that isn’t something we would want to burden either sets of parents with. We are hoping that both sides will contribute some monetary amount towards the festivities, and that we will pay for the majority of it ourselves. We are also in total agreement that this doesn’t need to be the blow-out of the century, and that smaller is better. We desperately want to be able to afford a house sometime in the next 2-3 years.

I get paid twice a month, on the 15th and the 30th. I currently have an auto-deduct of $10/pay period from my checking to my ING savings. I’ve also anticipated what a very minimal raise (3% a year) for the next few years will get me, and rather than adding that new income into my budget, have allocated it all to go straight to savings. Now, clearly, this isn’t going to get me $25,000 in the next 3 years, but it is a sizeable start. I’ve also made up my mind that I must get a part-time job, and that if I sock away $125 extra a week, I will be able to meet this goal. Its hard to know if that is the right thing to do – to save money when you are in debt. I’ve got to assume, though, that a couple with a significant downpayment, plus $10,000 in debt, is a more attractive loan candidate than a debt-free one with no money saved.

So, my goals here are:

1. Get a part-time job
2. Save $125 a week extra in my ING savings
3. Have $25,000 in my wedding/house fund by 12/31/2011

Writing all this out is a bit scary, to say the least. But, at least I know where I stand, and what my plans for the future are. I have to escape this omnipresent feeling that the future is coming, and realize that the future is here, now – and I can do something about it!

Boredom May 20, 2008

I’m having the world’s most boring day at work. Our brand new server has some sort of major problem, and all of our files have been offline for the better part of the last two days. Its extremely frustrating, because I literally have about an hour worth of work to do on a particular project, and then its done, but I can’t do any reviews to it until this server comes back online. So, I’ve been killing time most of the day, working on other, ancillary projects, as well as a little personal project I’ve been meaning to spend some time on.

Using excel, I’ve projected out exactly what needs to be paid every month, and figured out when I will be able to be debt free. By my calculations, I should be consumer debt-free by February, 2011, if I stay the course. I’ve done projections like this before, but they are usually a bit too austere for reality. Its not an exact projection, obviously, but I think that it leaves plenty of room to adjust for unexpected inputs and outputs.

Assumptions:

• I’ve assumed the same base salary from now until 2011, which seems like a very conservative choice, given that we’ve been getting 3% raises every year, as well as the promise of a significant bonus at the end of this year, should the company goals be met.

• I’ve also assumed an additional $800 a month in income, starting 2 months from now. I fully intend to get a part time job to meet this goal, and I think that a part time job, as well as other sources of found/unexpected income will easily add this much to my monthly budget.

• I’ve factored in $600 a month for food/gas/transportation/cell phone/gym membership. This might sound like a lot, but my train pass alone right now is $235/month and my cell phone is $105/month. I’m working to reduce these amounts, and any extra will get transferred over to the debt repayment money.

• I’m leaving myself a cushion in my checking account. I know that it makes me queasy to not have at least $100 in there to cover any emergencies, so I’m deliberately not draining myself entirely.

• I’m not explicitly planning for any other significant influxes of money – tax refunds, bonuses, gifts, etc. I will factor that money in, and readjust, as it comes to me.

I’m not good with total rigidity in a budget/spending plan, so I think this method will work for me. Its got enough structure so that I’m not just flailing about, left to my own devices, but also enough flexibility that I should be able to make it work.

Snowflaking April 30, 2008

One of the most interesting and valuable concepts I’ve learned from reading personal finance blogs is that of snowflaking. Basically, its the idea that all sorts of found and extra money can be directed towards your debt, in small amounts. I like the idea, so I’ve set up a new Electric Orange checking account at ING Direct to hold all the extra bits of money that I can generate, and make sure that I funnel it all towards my debt. As of right now, the account has $192.00 in it – I transferred over $10 from my ING Savings account to get it opened, then added my $25 bonus from opening up a Revolution Money Exchange account, as well as $20 in referral money. I then got a $3 check from Pinecone Research, and my $134 State Tax refund. I’m planning to leave the initial $10 in the account (I have this fear that accounts with no balances will be closed), and add my federal refund and my stimulus payment to the account when they arrive.

I know it will be slow-going, but every little bit helps, right?

Adding up the numbers April 9, 2008

When I checked my Capital One card this morning, I noticed that the balance transfer request had finally cleared. I wanted to get a good idea of what exactly I was looking at in terms of Credit Cards and payments this coming pay period, so I ran through my usual account checking procedures. This resulted in that lovely total debt figure you see over there on the right hand side. Yeah, not thrilled. In any case, the numbers as they stack up today:

Card                       Balance        APR        Amount due   When?

Citi Card                 $9931.35    21.24%   $244.46          4/21
AT&T Universal       $2247.08    21.76%   $78.77            5/2
Capital One             $264.40      25.9%      $0                 4/28
Bank of America      $2036.13    4.92%      $0                 4/14
US Airways Visa       $481.98     29.99%     $0                4/27
Chase Amazon.com $85.57       29.99%     $0                4/15
American Express    $7470.19   14.24%     $0                4/3
J Crew card              $1475.03    20.99%    $0                4/19
Gap Card                 $687.47       21%        $0                4/9
Old Navy card         $450.40       21%        $0                4/28
Upromise Visa        $20.50        11.99%    $0                4/4
US Bank                  $22,820.67    0%        $0                4/16

As I mentioned, not terribly thrilled by it all. I can’t believe how financially stupid I’ve been. Regardless, I do have a pretty solid plan in place to get the Capital One card, the US Airways card, the Chase card, the UPromise card and the Old Navy card all paid in full over the next 2 pay periods. After that, things get a lot more interesting.

I’ve been operating under the idea that its going to be ok to just keep using the credit cards for the next few months, until BF and I move in together in September, and I get a better idea of what the financial picture is going to be. I had the realization today, though, that continuing to use the cards just isn’t going to work. I’ve figured out that I need approximately $850 a month to cover my basic, non-credit card and student loan expenses – including $235 for a monthly train pass, $44 a month to park my car at the train station, and $100 a week to feed myself and pay for social activities. However – my grand get get out of debt by December 2010 doesn’t really account for this extra $850. So, I need to make the part time job thing I’ve been dithering over for a few months a reality, particularly now that the summer is coming. And, honestly, having a part time job will help in other ways too, because it will mean less time for going out and spending money.