Revenue Highs and Woes

The good news first.

Health insurance with my new job kicks in next week, which means I can ditch my mediocre individual insurance that I pay out of pocket!

I’m going to start teaching a class on Thursday nights at my pole fitness studio!

….And that’s about it.

Now the bad news.

I took the most expensive health insurance plan. I thought it was $160 a month, which would have still been cheaper than what I’ve been paying out of pocket for my individual plan. I found some documents to suggest that it’s actually $160 a paycheck. Holy shit! I emailed HR today to try to resolve it. We’ll see. 😦

I no sooner gain a dance class than I will probably lose one. Went to teach my tap classes, and my beginner class which hasn’t run in years only had one kid and we were both miserable the whole class. If there are no other students signed up, the class will get ditched. I’m hoping the hole can be filled with private dance student lessons, but we will see. In some ways I’m not too disappointed though because teaching three dance classes a night can be absolutely exhausting even if it’ll mean less money for my bottom line.

Other prospects yet?

None, I have absolutely no prospects for more additional income. I have great intentions going into the weekends to look and research ideas, but then I get out of bed on Saturdays and Sundays and have absolutely no motivation to do anything. Lack of motivation and caring got me into the mess I’m in now, so I had better find some soon.

It’s not much of a post tonight. I figured a decent public self-shaming might rev me up a bit. I’m looking forward to posting my debt numbers in a few days and sharing the progress. But don’t expect any progress notes on my budget, I still suck at staying in the lines and September illustrated that to me.
Until next time!

Don’t Make My Mistakes, aka If I Could Turn Back Time

I saw a comment on another blog today that I think makes a good backdrop to write something on my own blog for parents of current or future college students, or the students themselves. Here, I will lay out how I would do college finance differently if I could.

1. No credit cards
I wish I had never gotten a credit card in college. It was by far the worst mistake of my entire college career. I definitely had the “well, I’ll put on my credit card and pay it off eventually” mentality. That eventually was almost 10 years in my case because every time I saw something I wanted, on to the credit card it went, no second thought, and I always paid the minimum. Bad, bad idea.

When might a credit card be okay
Credit cards aren’t necessarily the devil. We need credit to build up our scores so that we are credit worthy for when we decide to do a big purchase, I.e. a car or home. But, make sure you or your child has a low limit credit card (and don’t allow the credit card to increase the limit automatically) and make the student get into the habit of paying the balance in full monthly, not you parents, them. Teach them financial responsibility.

Another side note
You don’t need a credit card to build credit. Buying anything that requires a loan works too. Many car manufacturers have first time buyer programs that offer low APRs. Taking out a small student loan works as well.

2. Not using my loans for things other than school and housing
I’m definitely guilty of using my loans for more than tuition, books and a place to live. Again, I convinced myself it would be okay because I would eventually pay it back. See the mind set I had? It really has set me up for a long fight against my debt.

I should have calculated each semester how much I needed for tuition, books and housing then returned the rest. I would probably only have about 2/3 of the student loan debt that I have now. Make this a family activity if you’re a parent with a college student.

3. Get an internship
Strange, out of place advice, right? Here’s my thought process: it will increase the likelihood of a job right out of graduation and allow you to have better earning potential. Better earning potential= greater ease in repaying student debt.

4. Make paying back any debt post graduation your top priority
Pretty self explanatory. Don’t go out and buy a car or move into a luxury apartment straight out the gate. Take the aggressive stance toward student debt and make that your absolute top priority to kill right out of undergrad.

5. Pay off debt before grad school
If you decide to go to grad school, wait until you’ve paid off your undergrad student debt. I can’t think of any grad program you have to do right after undergrad. It’s nice to go straight to grad school right after undergrad, but you’re only accruing more debt if you sit on any undergrad debt while in grad school. You build interest on unsubsidized loans no matter what, kids. Just do yourself the favor and wait a few years.

Admittedly, I had very little student loan debt after undergrad as my parents paid for a vast majority of undergrad. But, I was irresponsible with credit, bought a car after I graduate (used, not new, but still) and didn’t plan properly for or during grad school. I wish I could go back in time and change it, but it is what it is and I’m at least taking responsibility now. And I can help save others from making the same mistakes.

Oh, and parents, you should start saving for your child’s education when they are born, not wait to worry about it until they are already there, no matter how little you make.

One Down!

Yesterday, I paid off the medical bill! Wahoo!!!!!!!!! It was definitely an exciting moment. I didn’t necessarily like paying so much money of course, but at least it’s one less bill I have to think about, one less debt that needs to be repaid. I have also made September’s payments on the other three, so we’re down to about $6825 approximately. That will be about $175 lower next week once I am reimbursed for my business travel expenses.

Overall, I have shaved around $900 off of my debt already, and if I hadn’t used my CC2 to pay for my business trip expenses, it would be over a $1000. Not too shabby, but still, exactly like targeted so I still need to find ways to shave money off my budget and make more money.

Ideas

Until the other day, I had forgotten about a website I had joined over a year ago. It brought in around $500 for me the past year, and it’s so simple to do. Market research participant! Basically, I get sent a screening email every couple of months asking me questions regarding certain topics. The people who need the participants screen that initial email and then call to set up a time for you to come in and participate in the actual research study. They ask questions, I answer, and off I go with a check for $100+ in hand. A couple of times I was invited to participate, showed up and then they didn’t need me, but they still paid me the money because I went and was available. I got a screening email the other day, but I haven’t heard if I was chosen for participation yet. I think today I’ll look into joining more market research companies lists.

I still haven’t pursued private dance instruction, but I think I need to start teaching my regular classes before I pursue the idea any further. I have enough on my plate as it is without adding burn out to the mix. As great as debt payoff and the reduced stress from doing that is, I know I’ll be more stressed if I over-extend myself so I will be treading lightly. I guess I am relying on that ace in the hole to deliver, but I need to actually do my part to get it to come through.

Other Good Things

As it turns out, I am already being given benefits at my new job! I don’t know if my health insurance will kick in sooner rather than later though (which of course I’m hoping for sooner so that I can ditch my expensive premium). I am at least accruing vacation and sick leave and was paid for the holiday last week, which I definitely was not expecting to happen so it was a nice bonus to see in my paycheck yesterday. This actually puts my mind at great ease because it’ll mean that by the time my wedding rolls around, I hopefully will have enough time accrued to cover all the days off I’ll need.
Hope everyone else is having a great week! I’m looking forward to many more exciting ones to come as I pay off my debt! 🙂

Ahead of the Game and Taking Advantage of Business Travel

Ahead of the Game….Kind of

Today, while I was sitting in a room of over 300 people listening to lectures and information, I let my mind wander from time to time, and me being me, it of course wandered to my debt pay down plan. The main thing I figured out is that if I wait until payday this Friday, I can pay off the rest of the medical bill. WAHOO!!! But, when I inputted the numbers into my spreadsheet, it didn’t change much in the speed that I’ll pay down my debt if I continue in my normal pay down manner. At this point, I feel confident that I can definitely payoff Credit Card 1 by Christmas, and probably Credit Card 2 as well, projected that I earn as much as I anticipate from teaching dance. I still haven’t figured out how I’m going to make that extra $3000 I need to kill the rest of the Cosmetic Loan. I’m on a trip for work right now, so I haven’t had much of a chance to figure it out or pursue either of my ideas. It’s part of the plan for this weekend though, we’ll see what I else can think of or how to pursue my ideas…

Taking Advantage of Business Travel

For the first time ever, I am on a business trip! Stupid to be excited about, I know, but it builds up my self-importance. ;D

My company didn’t give me a credit card or cash to pay for my expenses. Instead, I have to use my own cash and credit cards to pay and keep track of all of my receipts. How is this an advantage? Credit card points. One of my credit cards gets me cash back, so I’ve been using it to pay for a majority of my expenses while I’m on this trip so that I get the cash back. It’s like getting free money! Granted, I will have to make the conscientious effort to immediately deposit the money paid back to me and pay that money off of my credit card, but it’s the 0% APR card, so I don’t have to worry about interest, just not letting my balance increase.

Another advantage of business travel? Each day I’m away, I’m eating and traveling on someone else’s dime, so that means a few days that I don’t have to pay for anything, saving my food and gas budget a little money! I did think about going out and taking a dance class which would have been on my own dime, but decided against it so that I can stay on target with my money.

A silver lining to every cloud, just have to know how to take advantage of it!

addendum

After I wrote the post, I realized some of my numbers are off. I actually will have to come up with an additional $500+ to pay off CC2 by Christmas. Oh, what a buzz kill.

Budgets, Bonuses and Cutbacks

I’ve given the why and the what, now it’s time for (most) of the how.

Budget

Beyond my dedicated debt pay down money, which is approximately $1050 total/ $800 for the first 4 debts, I have very few expenses since my fiancé takes care of all the utilities and such. Here is a list of each fixed monthly expense:

Health insurance: $227
Car insurance: $103.31
Cell Phone: $72.43
My budget for everything else (food, gas and entertainment): respectively $225, $125 and $50, for a total of $400

Total: $802.74

If I could shave off those few cents off the monthly budget, I would have a nice even $800 budget. On dance class free months, I make approximately $1920.00 after taxes. When I am teaching, I make an extra $100-400 a month dependent upon how many classes I have that month. If there are a lot of holidays in a month, I don’t have as many classes. I’ll be missing the first week coming up because of a work trip, so I won’t make much for September, but should bring home a few hundred extra a month after that. That means I should have an extra $120-$500 a month that isn’t dedicated to anything through May.

Basically, that adds another $1500 to the debt pay down goal. That puts approximately $3900 towards paying down that $7715.48. That leaves me another $3815.48 to kill. Hmmmm…

Bonuses

I have 3 months to close that gap. Where the heck am I going to come up with over $3800?!?

Well, if I teach 5 private dance lessons a week at $50 an hour, that’s an extra $3000 from now to Christmas. I would have to teach out of my home though, so that will add to the challenge.

I also have an ace in the hole that should kill the debt quickly, but because of the nature of it and the uncertainty that I’ll actually get it, I am not going to count on it at this point. I can’t discuss it much either, but if it happens, I’ll let you all know. It would be a HUGE bonus if it does happen.

Cutbacks

Of course, I need to look at cutting back.

Some expenses aren’t going anywhere. The cell phone won’t go any lower- I’m on the cheapest plan I can be on with my smartphone.

Car insurance I might be able to cut- I’ve been hit twice in less than a year, so I don’t want to reduce coverage and of course filing claims makes your insurance go up. The only way it’ll go down is if I can find an insurer that’ll give me the same coverage at a lower rate, but I imagine it would only be a few dollars.

Health insurance has the biggest potential savings. I get a better rate with my new employer, but I’m not sure when it’ll kick in. I was a contractor for several months, so they may consider my probation time served. At the very least, it’ll kick in by November and I’ll be saving between $50-60 a month on it.

I’ll also be able to cut my gas budget. I don’t have an exact idea of how much yet, but I have been able to drive my car to and from work 5 times and the store three times only using a quarter of a tank of gas. Once I start teaching regularly, my usage won’t be that low, but I’m still seeing a potential savings of over $25 a month.

Food costs can be cut if I’m a smart consumer and only purchase stuff that’s on sale, buy produce that’s in season (therefore cheaper), stop buying junk food and use coupons. I also share food costs with my fiancé, so that helps. I could save another $25 or more a month here.

Entertainment…well, the simple answer is to not go out and completely save that money. And that’s actually not a hard task for me. My friends and I are all more the types to have parties at our houses, not go to clubs and bars and waste money there. So, played smart, this is a potential $50 a month savings.

Analysis

If I’m able to apply all of those budget cuts immediately, I could save over $150 a month, or $450 from here to Christmas. Add to that finding additional income in the form of private dance instruction, I only would have to find another $350 somewhere. I honestly don’t know where- I don’t own a second car, I don’t have expensive toys and clothes lying around, so that’s a no go. I could take on another job, but I have to have some time to myself and with my fiancé.

Looks like a little creativity will need to be in order.

The Debt Numbers

I would like to start off by saying that I really never wanted to put this out there, but here goes nothin’.

(Green indicates the bills I’ve paid.)

That is the graphic I created to track each of my debts and what a payoff would look like if I snowballed.

Medical Bill-$600

I have had a horrendous sleep disorder for over 17 years. Last November, after I got health insurance, I had two sleep studies done- an overnight study and a sleep latency study. I thought it would be all good regarding my insurance paying for it, but I was wrong! They classified it as a pre-existing condition, and I have to pay out of pocket. Originally it was a $3000 bill that arrived in May, after I started the blog, but they cut it almost in half and I’ve been paying about $300 a month to pay it off. August was tighter than planned, so I didn’t make a payment in August, but I’ll pay this month and next and it’ll be gone.

Credit Cards 1 and 2-$1450.17 and $1800

One of the cards is in an introductory 0% APR period until next April, while the other is definitely not. I’ve been paying Credit Card 1 well above the minimum so as to keep the interest down, especially since the Medical bill and Credit Card 2 do not accrue interest.

Cosmetic Loan-$3865.31

Yup, I’m vain. I had plastic surgery because it was cheaper than I thought and it was an ego boost I’ve been waiting to pursue for years. I smile every time I see myself profile in photos or videos because my schnoz is gone! This was back in January, before I considered the other things that should have been on high priority to pay off. I justified it by saying to myself that I may not get a chance after I have kids, so I did it. And honestly, I really don’t regret it and of all the bills, it stresses me out the least to think about. I pay slightly higher (read= a few cents) than my minimum payment.

Student Loan-$73572

I am one of the many who use Income Contingent Repayment (ICR) to determine my monthly payments each year. There are some advantages and there are some disadvantages.

Advantages

  • Each monthly payment is determined based on your income. So, if you don’t make much money, your payment will be lower than standard repayment.
  • If you ever come on hard times, having a lower payment can alleviate some stress.
  • If you still have a balance after 25 years, it is discharged (but that remainder is taxable at that point, so if the remainder of your loan is discharged, you have to pay taxes on it as if it were income).

Disadvantage

  • You may pay less than what the monthly interest is, so you may never make a dent into the principal.

Just because you have a determined payment doesn’t mean you have to pay ONLY that much. You can pay more. Right now, I pay the amount calculated based on my income plus a few extra dollars, but that is only paying interest. I have not made a single dent into my principal since I started repaying two years ago. This was a God send deal for me though when I went into repayment and didn’t have a full-time job. I was hardly making ends meet, and having a high student loan payment wasn’t helping matters. I consolidated my loans, applied for ICR and honestly have the peace of mind that if hard times ever hit again, I can revert to a lower payment.

Analysis

The total damage: $81287.48. EEK!

That’s a 20% down payment on a decent house in my area. That’s buying 3 brand spanking new cars. That could finance both of my future kids educations. That’s just way too much money to be indebted.

The Payoff Goal

For right now, I’m only giving a target payoff date for the medical bill, credit cards 1 and 2 and the cosmetic loan. If I continue to pay as I’m paying like it’s portrayed in the grid, we are looking at a May payoff. But, my wedding is in June, so my non-aggressive goal is by my birthday in March so that I can have some financial leeway to help pay for the wedding. BUT, I also want to do some home improvements before we sell the house next summer, so I’d like to have a little bit more extra money lying around if needed.

SOOOOOO…

My goal is to pay those 4 debts all off by Christmas!!!!!!!!!!

Today is September 4 and those 4 debts total $7715.48. Christmas is 3 and a half months away. I make around $2000 a month after taxes.

Oh boy.

Why I Want to Get Out of Debt

First, to restart this journey, it’s time to look at why I want to get out of debt.

  1. Peace of Mind
  2. Enjoy Life
  3. Save for the Future
  4. Reduce Relational Stress

Point 1: Peace of Mind

I think anyone who wants to get rid of their debt wants to regain peace of mind. If you’re not constantly stressing and worrying about money, then you have more mental space to think about more important things! Not to mention the less stress we feel in our lives, the better our health!

Point 2: Enjoy Life

I’m into some crazy stuff. Pole fitness, aerial silks, Parkour, Krav Maga, yoga and dance. I really like to try, learn and experience all those fun, physical activities. But, they cost money!!  If my money is constantly being eaten up by debt, I’ll never really get the chance to throw myself into these physical pursuits.

I also have some bucket list places I would love to visit. Many of the Asian countries, Europe, parts of Africa…there are some beautiful sites to see in these places that should be on everyone’s list. But, of course, it costs $$$!.

Point 3: Save for the Future

This has a few different parts.

First, let’s talk about me. I don’t want to be that senior citizen struggling to make ends meet. I want to have a comfortable retirement once I hit retirement age (which I suspect will be 70 by the time our generation gets there). I’d rather have interest work for me rather than against me, which is what is happening as I continue to make minimal payments on my debt (I actually don’t pay the minimum, but we’ll discuss that in another post).

Two, let’s talk about more stuff that hasn’t even happened yet. A home and kids. I plan on having a couple of kids starting in the next two years, but before that happens, fiance insists that we need to get a bigger house first. I think once a few things happen in our area, he’ll get a decent equity on the house, but it still makes me nervous to take on a higher mortgage payment, which is what will need to happen to get that larger house so I would like to have some more money socked away before we buy.

And, then, having kids isn’t cheap. Of course being pregnant costs money, all those pre-natal vitamins, doc visits and the delivery itself cost an arm and a leg. Once baby is born, we’ll have to buy more groceries and clothing; divert more money to medical expenses; education, extra curricular activities and related extras to keep the kids entertained and smart. Plus, I would like to fund my children’s college education, so we have to save for that as well. It’ll cause a lot of stress if I’m in debt and trying to create a future for myself and my kids.

Point 4: Reduce Relationship Stress

I don’t want to be one of those people who divorce because of money. I think this is a multi-dimensional issue beyond just not agreeing with your spouse on how to save and spend your money. If you’re under financial stress, you’re less likely to have relations with your spouse, you’re more likely to become angry with your spouse and you’ll end up saying and doing stupid things because of that stress. Fiance hates debt, having a mortgage stresses him out, so I don’t need to add to that stress. It’s time to end my cycle of poor money management and start getting out of debt and create a strong, financially comfortable relationship.

 

I think Joe is right. Having clear goals in place will make getting through this game easier. I always think about these goals individually, but I’ve never put them into a nicely wrapped package to look at and aim for when I’m starting to lose track. I will hopefully remember this post and read it when I start to take my eyes off the prize, or prizes as this case may be!