Two years!

 

 

Happy Anniversary!

 

 

We celebrated two years of non-usage of credit cards in August.  If you can think of a better way to say that, please share, because that sounds like the worst. grammar. ever.  But - we are still going strong!  At least in that department we are doing awesome. 

 

We still struggle on a daily basis of getting a handle on keeping to the budget.  We still have no emergency fund because we have no budget.  And this fall is the absolute worst.  So many new activities to fund and all of the little extras that you don't think about that go along with them... I can't keep it all straight.  We have YNAB, but I haven't cracked it open since... March??  April??  I am once again balancing the checkbook by periodically checking the account via the online banking.  That is no way to take control of you money.

 

So Happy Two Years of not learning a damn thing.  :/

 

At least we haven't added to the mess!

Consolidating

 

 

I haven't posted much because dogedly paying your bills every month isn't that exciting.  Well, until you start making some headway, at least.  So what has been happening lately?

 

1.  Well, after a year or so of being lazy and putting it off, I finally shipped off all of my jewelry cast-offs to a company called Gold Stash.  It came highly recommended by Dave Ramsey.  I had several pieces - some earrings, bracelets, necklaces given to me by my ex that I knew I absolutely did not want to keep.  I also had no idea what they were really worth, but I am too reluctant to spend much time putting effort into trying to get the best deal.  The Gold Stash method of getting rid of your unwanted gold is painless and pretty easy.  Was it worth it?  Well, given what I had sent them - 2 pr. earrings, 4 necklaces, 2 bracelets and 2 rings, I only garnered about $120.  Nothing worth running to the blog to write about, but it was better than letting these unwanted items languish in my dresser drawer for another 10 years.  I don't feel ripped off, but given the price of gold right now, I was expecting something more in the $200 range.

 

2. We are now celebrating 18 mo. of credit-free living.  We paid off the second of Dean's three credit cards and closed one of them since it required an annual fee.  We will begin using the one that is paid off on a quarterly or monthly basis by using it on something small and paying it off immediately.  Our loan officer said that we don't want the card to go completely inactive, because for purposes of raising the credit score, active credit that is paid in full every month looks really, really good.  We are considering maybe putting something really small like Netflix on there, and then paying it immediately.

 

3. I called my credit card company last week to request that they lower my interest rate.  I've had this account for about 20 years now, so I have a long history with them.  Most of it good, with a few mistakes here and there, and because of those mistakes, I got penalized with a ridiculous rate of 29.99% a few years back.  I got that reduced after some tough negotiating, and I've been stuck paying 19.99% for almost two years now.  I called about a year ago, and they refused to budge, even though my payment history for the prior year was spotless.  So, I thought it was time to try again.  I got nowhere (of course - they don't ever give in immediately) with the first person I talked to, so I requested her manager.  In the span of a couple minutes, he came on the line and agreed that they would reduce my rate to 12.99%.  It's that easy!  Don't ever take 'no' for an answer.  If you keep up with on-time payments AND your credit/loan payment history with other lenders looks good as well (on-time payments and so forth), you should be able to make your case and get the rate reduction that you are looking for.  It is worth the phone call - so be patient, be persistent and don't delay!  This move alone, when we plugged the numbers into the remaining snowball payment spreadsheet, saved several hundred dollars in interest and moved up our debt-free date by a month.

 

4. Debt consolidation.  The day after my phone call to the credit card company, I went into our bank to make a deposit for Jordan.  The teller asked me what rates we were currently paying on our credit cards and car loan.  Was it prying?  Yes.  Was I irritated?  Hell no - I was proud of the fact that I had scored a huge win against the evil credit card people, so I was only too happy to share!  He asked if I would be interested in exploring the possibility of reducing our auto loan rate.  Sure - call me up!  So, the next day a loan officer from the bank called me and we set up an appointment for later in the week.  We have been paying on our van loan for about four years now.  We will be using the van as collateral to secure a debt consolidation loan at a 4.99% interest rate.  We will be using the funds to pay off the remaining balance on the van loan (7.25%), the last of Dean's credit cards (17.99%), and about a third of my remaining credit card balance (now 12.99%).  By shuffling our debts around like this and consolidating them, we will be saving an additional two thousand in interest and moving up our debt pay-off date by another month.  Another bonus is that Dean will no longer have any revolving debt, and come September, our next debt target - my credit card - will be paid off in full, which means I will no longer have any revolving debt either.  This fact alone will boost our credit scores by around 70-80 points, putting us back in the range of 750-780.  I don't know how to express how HUGE this is.  We will be officially in the market for a new home at the beginning of next year, and our debt-payoff date is that October, so things are really, really looking up. 

 

This has, at times, felt like an endless slog that was getting us nowhere, but we are finally seeing the results of living on a budget.  Had we stuck to our budget with absolute rigidity we might have kept our original payoff date of July '14, but we've needed wiggle-room every now and then.  We've still got this final goal to meet, but with the end in sight, it will be easier to say 'no' to the financial wants and desires that have sent us off-track in the past.

 

 



Our first year of Financial Peace...

I am very pleased to report that this first year has been a tremendous success in the effort to curtail our spending and gain control of our finances.  I am proud to say that we have now gone an entire year without using our credit cards.  Not even once.  Yay!!!!!  We removed them from our wallets a year ago - and have never looked back.  That.  Feels.  Awesome.  Neither of us ever felt the urge to dig out one of the cards - even when phenomenal sales and promotions for this, that and the other was going on - and we have FPU to thank for that.  Dave Ramsey's very frank talk about the evils of credit have truly sunk in.  Now, we are dealing with the conundrum of what to do with the couple of accounts that were paid off this past year.  Do we close them or keep the open credit so that our FICO score looks better?  Not sure what to do.  My gut tells me to close them and get rid of the evidence!!

So what was the year like?  We have been working the program - although our best months were early on - while we were actually taking the Financial Peace University Class, last Aug., Sept, and Oct.   After the class ended, we slowly slipped off the bandwagon as far as totally keeping on top of what our accounts were doing at all times. This means that we still struggle with keeping up with the checking account balance and getting bills paid on time - simply because we get buried in mail everyday, and I can't keep up with all of the paperwork involved. In order to prevent stuff from being late, all of our credit card payments and bills where the amount due is constant are all automated. It's the utility bills that are killing us because the amounts are always changing, and I just let the mail pile up... and you get the idea.

Paperwork is my biggest nemesis. When you add the financial stuff on top of the medical stuff (six family members tend to generate a lot of dr. appointments throughout the year..) on top of the homeschool stuff... it is the financial stuff that always gets the short end of the stick in my case. Which is wrong. Ensuring our solvency should be the number one priority, but sadly it isn't.

Finding an accounting method that works for us is still on our to-do list. Dean created an excellent cash-flow worksheet for us - and it works - when we use it. The problem is, we have so many different 'bills' every month - the debt, utilities, classes, memberships and other expenses that the list is long, and detailed. It's the details that make it difficult to keep up with it every paycheck cycle. The system is at its optimum when we use it - and when we don't, it's anybody's guess how much is left in the bank - and I hate that.

We've built up and blown through our emergency fund three times this year. BUT. It's proof that it works. If it wasn't there, the only survival option would have been credit.  So babystep #1, build an emergency fund of $1,000 is the key to making it work.

We've also set up a pretty detailed "Commission" (read - 'allowance') system for the kids to help them learn the financial ropes as well. It is newly implemented, so I want to see how it works before I say anything about it. We also purchased Financial Peace Junior for the kids, and will be working through that this fall.

So! Obviously, judging from the volume of my posting, finances aren't that exciting to talk about - especially when you're not rolling in the dough! :) The good thing is that they are never far from my mind. Our budget is tight, tight, tight, and there were some pretty hefty budget busters in play last year. Christmas was one of them, home projects and activities such as scouting, karate and so forth.

It's been a good year, and I really look forward to this coming year and seeing the domino effect of the snowball we started last year.  It's rolling fast and furious, and a lot of debt will be retired this year - we can't wait!

Get out of the rut!



It's no secret that we are on a tight budget (especially since I've blabbed on and on about it on the www and even dedicated an entire blog to it...).  So it has become routine for family members to fill me in when this or that store is having a sale.  A big one came up recently, when my SIL called to say that Sears was putting a lot of their Land's End stuff on clearance. (thanks for thinking of me Michelle!)  I love Land's End!  I started doing calculations in my head.  Some of our clothing needs are critical... Jordan didn't get a new wardrobe last fall because everything still fit... now he has had a growth spurt and we are in trouble.  Same with Rylan.  The shirts still fit for the most part, but her pants are an issue.  And she has no winter coat.  And Jordan only has two pair of shoes: crocs and hiking boots.  That is a problem.   Thank goodness that Owen and Colin are just swimming in clothes - many, many thanks to some wonderful friends (Amanda and Dalliss) who have been frequently passing on clothing, coats and hiking boots to me - you are a godsend!!)

So I am doing the calculations: our needs are great.  But the money... hmm.  We sat down a month ago and planned out the next three paychecks.  We are really getting the swing of working the cashflow down to the penny.  Unplanned Halloween expenses (mainly food) threw a nasty twist into the budget, so I know there is no wiggle room.  We had set aside $100 from that cash flow to tackle the three biggest clothing concerns: a winter coat for Rylan, tennis shoes for Jordan and a pair of pants for Jordan.  When we plan out this month's two paychecks tonight at our budget meeting, we can see when we can put some more money aside for clothing.   

In the past, when I got wind of a big sale, I would just yank out the credit card in a flash and reap the rewards.  The savings!  The big haul!  LOOK at how much stuff we got for just $XX!!  Yes, I have taken advantage of many deals in the past.  And now the credit card company is taking advantage of my inability to show restraint.  To the tune of $460 a month in interest.

We went to our last Financial Peace University class last week.  We jumped in on the third class, so it has been ten weeks of some pretty intense learning.  I am sad the class is done.  It felt like a support group... like an AA meeting or something.  We could all commiserate about having to live on a budget.  I feel a little worried about not having the weekly support anymore, and that it might be easy to slip into some old habits.  The class is thirteen weeks for a reason: it takes that long to establish a habit.  We have gotten into the habit of not even considering the credit cards as an option.  If it is not on the budget sheet, we don't buy it.  I didn't budget extra money for clothes, therefore I did not go down to Sears to check out the sale.  I felt bad, but I didn't go because if I had spent that money, it would have meant that something else couldn't be purchased.  When the cash is gone, it's gone.  It is amazing though, how deeply entrenched that habit of using the credit card is.  That neural pathway of using the card as a way to acquire goods has been trodden down.  Much like the Oregon Trail.  You can still see the wagon wheel ruts.  The credit card ruts will remain for a long, long time.  Probably as long as it will take to pay off the stupid things.

Thanks, but no thanks

I have mindfully practiced the habit of checking the bank balance and credit accounts on a daily basis to guard against theft.  There has been an alarming increase in identity thefts/fraudulent use of debit cards in the past few weeks in our neck of the woods.  My aunt was a victim.  Our bank account is easy to check because we have reduced our debit card use to about 5 transactions (not including bill pay) a month.  I'm not kidding.

So yesterday, when I checked my credit card, which carries the biggest, ugliest balance of them all, I was surprised to see that they had increased my credit limit.  By A LOT.  ummmm... thanks?  Don't these people know I am (for all intensive purposes) unemployed?

So I called them up.  I politely asked if they would consider reducing my interest rate (19.9%) instead.  The lady put me on hold, turned around to consult with her imaginary manager, and then came back and told me 'no'.  Really?  Even though I've paid over the minimum and on time for over 12 months??  No.  You suck, Visa!!  But then she gave what she thought was a tantalizing offer: 0% interest for the next 12 months on all new purchases.  ooooo.  I informed her that this particular deal was of no interest to me because I was not planning on using my card.  ever.  again.  To which I was met with silence..

People, I'll say it again...  Debt.   is.   stupid.

Now I need to brush up on my negotiating skills and call back.  And talk to the fictious manager.  Because I've been a responsible bill payer.  I want my reduced-rate reward.  Not more debt.