A Sale, A Purchase, A Debt Erased

And we're back for the second time this month!  This time with feeling!

While we've been making good progress on our debt snowball we felt that we could be doing more.  We also felt that driving two cars that get average to below average gas mileage wasn't the best thing, and considering used car values are higher than normal now, we decided to sell Kristi's car.

A bit of history on her 2004 Subaru Impressa TS.  It is Turbo Sport (hence the TS) with a 2.5L engine and, of course, All Wheel Drive.  In 2010 she purchased it for $8,500 from a guy who drove it over from Boston (coincidentally she now sings in the same choir with him!).  He listed it below blue book because of some cosmetic blemishes and because he just wanted to sell it quickly.  The car had just 35K miles on it.  She happily purchased it and has loved it every minute since then.  Except for the gas mileage.  She gets about 23 MPG combined city/highway, and about 28 just highway.  Not bad, but not great.  Still, in 2 years she put 46K miles on it.  Riley did some cosmetic damage on the interior (he chewed up the stereo and the turn signal lever), and we carted the dog/cat/gear around in it.  Needless to say, we used it and drove it hard.  It went to Utah, to California, to Idaho, to Washington, and all over Oregon.  It has been a great car, but it was time to downsize and help push us toward our Debt Free goal.

She listed the car at a ridiculous price on Craigslist, $9,995.  Blue book had the car $7,500 for private party in Good condition.  The Dealer Price in the same condition was around $12,000, so she picked a spot somewhere south of the middle.  The interest was very high, which surprised us considering the price.  However, most people flaked or wanted to pay closer to blue book, which wasn't surprising.  We figured we'd hold out for a little while and then drop the price to about $8,500 and see if we could sell it for that.  If not we probably would have just kept the car.  But, luckily for us, the interest was still there and we found someone to buy the Subaru for $8,700.  We probably could have held out for $9,000, but it wasn't really worth the hassle.

While Kristi had the car up for sale we were also looking for a suitable replacement.  We wanted to stay in the $2,500 or less price range.  It didn't make sense to sell the car and then buy a car that didn't leave us enough money to pay off a student loan, which was the whole point of this whole thing.  We were aiming for a Geo Metro or something similar.  However, the prices for Geo Metros are all much higher than they should be because the gas prices have gone way up ($4.19/gallon at the moment and rising).  Honda Civics, Hyundai Accents, and other similar small cars are all selling much higher than their KBB value because of their gas saving value.  We checked a few cars out, but they were not in great shape or they were just overpriced.  For example, this Geo has a KBB around $2,300 from a dealer, and it's going for $4,900.  Crazy, right?

So Kristi contacted Scott, Ben's roommate, who was selling his 2000 Ford Focus.  The original idea for selling the car came from seeing his Focus was for sale anyway, so she decided to see if he still had it.  As our luck would have it, he did!  So we set up a time to see the car and take it for a spin.

Kristi fell in love.  We talked it over and bought the car.  We bought it for $1800.  Buying from someone we know has been nice as there have been a few questions after the purchase we've been able to get answers to.  The car came with snow tires installed, but we had to purchase regular tires (about $380), so we're still in under our budget for the car.

Using the rest of the proceeds from the car we were able to pay off my last remaining Gate Loan of $4,830!  We have one of Kristi's student loans left before we tackle the Last Loan.  There's a chance we can pay off Kristi's loan next month because of her two paychecks, but we might hold off to make sure the summer isn't a disaster.  What's the point in paying off a student loan if we're just going to charge up a credit card because we have no cash?

We also decided to get a new mattress, which we have been putting off for a few years.  We found a King Size Malm frame in the IKEA As-Is section and snagged it and everything needed for the setup (slats, midbeam) for $155.  The whole setup new would have been over $350.  So, with frame in hand we set out to get a new mattress.  We tried a few mattresses out at Sleep Country and then went with a memory foam mattress from Costco that has great reviews and was only $900 (compared to a similar model at Sleep Country being $2,500).  We'll be getting the mattress in a few days and we'll see how it goes.  We're not worried because Costco has an awesome return policy, so if we don't like the mattress it won't be an issue to return it at all.

Wow... this has turned into a long post, so I'll draw it to a close.  We've mowed down another loan, taken care of a pressing need, and have lowered our total student loan debt to just a hair over $28,000.  After next month we'll be below $25,000.  If we can stay focused we'll be Debt Free in time to celebrate our 2 year wedding anniversary, which would be quite the celebration indeed.

Another one bites the dust!

We paid off another loan yesterday!  It was one of Kristi's loans for her MAT program and it had a very high interest rate (6.8%) so we're glad it's done.

We now have only 3 loans left to pay off, and we fully expect to pay off one of them next month.  The List below has been updated to reflect out progress.

1. The Truck
• PAID! (Nov 11)
2. Gate Loans
• PAID!! (Dec 11)
• PAID!!! (Jan 12)
• PAID!!!! (Feb 12)
• $4,823 - EPD:  June 2012
3. ECSI
• PAID!!!!! (Feb 12)
4. Stafford Loans
• PAID!!!!!! (April 2012)
• $5460 - EPD:  October 2012
5. Federal Direct Loan
• $22,622 - EPD:  June 2013

The List looks a bit funky, right?  Why/how are we paying off a loan in June but then not again until October?  Well, The List is just that, a list.  What it's not telling you is our income situation or how we will still money at the end of this month to contribute to the Gate Loan  The reason we're going to be able to pay off the loan next month, but not again until October is because of how Kristi gets paid.  Typically she gets paid at the end of the month, but in June school ends on the 14th, so she'll get paid then for the month of June.  

In years past we have saved money each month to cover the two months Kristi doesn't get paid, August and September.  That means that normally her June paycheck would sit in a savings account and be used to cover July.  This summer she is working summer school and will be getting the equivalent of about 70% of a normal paycheck for her, which we will use to cover August and September, along with my paycheck.  A byproduct of this is that we will only be making minimum payments on our loans in August and September.  

Now, since she's effectively receiving two paychecks in June, we'll go ahead and payoff the Gate Loan then, rather than just having the money sit in an account until July.  It'll be nice to have an extra thing to celebrate on the cruise, too.  

March Madness, April's Slow Progress

March was a very full month, to say the least.

There was the final installment of the cruise, Kristi's trip to LA/Las Vegas, my trip to Orlando, plane tickets to San Francisco, a tattoo, and Gamestorm.  There were numerous ways to spend extra money throughout the month, and I believe we found all of them.

While were able to pay about 2200 towards loans in March, we spent more than we should have and our Debt Snowball will suffer now in April.  I think we'll be able to contribute about 1000 towards loans this month (which is about one-third of what we should be able to do, on a normal, thrifty month).

Kristi and I discussed our spending and I found we had slipped into our old habits for the month.  We weren't discussing much about the budget, we weren't keeping great track of our spending, and we were using our cards a lot, instead of getting cash and spending from envelopes.  3 ingredients to an over-budget month, to be sure.

And it probably won't slow down.  I'm going to Germany, and while I'll be covered for most expenses while I'm there, I still plan on seeing some sights on my own which will cost some money.  We're also planning to fix our lawn with sod, which will cost a couple hundred dollars.  By the end of the month I'm hoping we'll return to some normalcy, and get back on track.

However, we're still on track to be Debt Free by June of 2013, which is still 2 months ahead of our initial schedule of August 2013.  We had a great run for a few months, and we lost our way a bit here in March/April, but we'll refocus and get back on track.

The slow March begins...

The last 4 months have been great, haven't they?  In each of the last 4 months we've paid off a loan!  It seems so crazy sitting here thinking about it.

In November we paid off the truck.

In December and January we paid off two of the Gate loans .

In February we paid off the ECSI loan and the third Gate loan.

In short, we killed it.  We really focused, even while going through the holiday season, and we met our goals.  And now comes the hard part.  

The remainder of our loans are all multi-month projects.  We knew this was coming, but it does derail the momentum a bit.  Paying off a loan was a nice way to end each of the last few months.  It allowed us to build a lot of momentum and fine-tune our spending habits that will propel us through the slow March that's upon us.  (See what I did there?)  Our next estimated payoff date (EPD) is April, and that will be one of Kristi's Stafford Loans ($4600 @ 6.8% Interest).  

Let's recap The List, shall we?

The List

1. The Truck
• $2,256 - PAID! (Nov 11)
2. Gate Loans
• $2,604 - PAID!! (Dec 11)
• $2,628 - PAID!!! (Jan 12)
• $2,799 - PAID!!!! (Feb 12)
• $4,978 - EPD:  June 2012
3. ECSI
• $5,486 - PAID!!!! (Feb 12)
4. Stafford Loans
• $4600 - EPD:  April 2012
• $5848 - EPD:  October 2012
5. Federal Direct Loan
• $22,495 - EPD:  July 2013

The more observant of you will notice a large gap between EPD of the Gate and second Stafford loan.  In previous years we stored money over the school year to cover the two months Kristi doesn't get a paycheck.  We realized that this money we were saving would almost all go to loans anyway, so we decided to stop saving and start using it towards loans now.  However, the drawback is that in August and September we won't have a snowball.  We'll make the minimum payments, but that's it.  Kristi is doing summer school this year, so that may change, but right now we're not planning having large snowball funds in August and September.

I'm incredibly happy with our current progress.  In the last 4 months we've paid off roughly $15,780 in loans.  I am amazed at that total.  I knew we were capable of this, but seeing it in print is still jaw-dropping.  It's also amazing that we're in month 5 of a 22 month plan, almost 1/4 done.  I say 22 months because with our progress so far we've cut a few months off the total time (even including the Aug/Sep no extra payment months).  


I want to thank everyone for the support.  It's really great to know we're on the right track and that everyone understands and supports us.  It's been hard saying no to a lot of the fun stuff we've had to cut back on, but in the end we'll be able to do so much more that it'll all be worth it.  Besides, we still have Alaska 2012 to let our hair down a bit on, so we can recharge and refocus when that trip is over.  It's very exciting to see where we were, and where we are headed.  Let's do this!

February Progress! "It's not you, it's me"

Loan Update:

Hooray for Tax Season!  Like I said earlier we got $3265 of our money back from our loan to the government.  Combining that with our refund from the refinance ($789) and the house payment we're skipping because of the refiance ($765), and our normal monthly contribution of about $2500 we had about $7319.

SO!  We paid off the ECSI loan which was $5140.82.  Yay!

We also paid the AMEX ($863) which had the Cruise Deposit, the Home Inspection, and Kristi's flight to LA.  We use the AMEX for these purchases for the protection the credit card offers, and we never carry a balance since we pay it off at the end of the month.

Additionally, we had about $370 left over in January that we carried over into February to pay loans with.  Also, Kristi found out that she will be teaching summer school this year, so she'll have another paycheck in July that we will use to cover expenses in August and September (the two months she doesn't get paid for the year).  This means the money we've been saving for those months we can use to pay off a loan this month.  So, with some luck and thrifty spending we'll be able to pay off the Gate 3 Loan.  I'll post when/if we do it this month or decide to play it safe and do it in March.

"It's not you, it's me!"

This week we went to Bank of America and to Umpqua and closed a bunch of accounts and consolidated others.  We opened an Umpqua account because it gave us a discount on the closing costs and we thought it would be easier to pay the mortgage with an Umpqua account.  While we were thrilled with the service we received, Umpqua is severely lacking in their online services and it's a pain in the ass to use your phone to access your account (only 1 phone can be linked to an account).  For the way we do our banking it simply wasn't going to work for us.  We cancelled our Umpqua accounts and got rid of a bunch of extraneous BoA accounts.  We know only have 1 joint checking account and 2 savings accounts. 

However, the real story came when we cancelled our Visas with BoA.  We never used them (only use the AMEX), so we decided to finally cancel them.  The banker called the Visa people to cancel my card.  She chatted with the rep and closed my account, no questions asked, except "Why?" and our answer. "we don't use credit cards anymore."  No problem there.

Then!  Then she had to call back to cancel Kristi's.  She got a different rep this time, a real go getter who didn't want to have to cancel the account.  Eventually the banker passed the phone to Kristi who dodged some questions, and finally after a few minutes, Kristi said, "It's not you, it's me."  The banker and I laughed so loudly that Kristi had to cover the receiver.  We laughed about it for a good few minutes afterward and then left.  Just remember, when you want to cancel your credit card, you have to use the classic breakup line, "It's not you, it's me!"

February is Rocking!

I just wanted to write a quick post about how awesome February is shaping up to be for the debt snowball.

We sent in our taxes last week and expect our refund to arrive next week.  Our refund was about $3300, which will go directly to loans.

In addition to that, we refinanced our home from a 30 year fixed @ 5.0% to a 15 year fixed at 3.25%.  Currently our house payment, included private mortgage insurance (PMI), taxes, and home-owner's insurance totals roughly $765.  It's going to go up to $925 (and we're eliminating PMI), but our loan term has been cut in half.  I don't have the exact numbers in front of me, but the amount we're saving in interest is ginormous.  However, the other benefit of refinancing our home loan is that we get to skip a full 2 months of house payments, so all the saved money goes to loans.

But wait, there's more.  Not only are we getting a great interest rate on our house, but because our loan-to-value (how much you owe compared to how much your house is worth on the market) is low we're actually getting money back from the refinance this month to further put towards loans.

So, all in all we'll have about $6000-$6500 to put towards loans this month.  We've decided to pay off my ECSI loan which rests at about $5200 and then put the rest towards the lowest Gate loan remaining.  The main reasons for skipping to this loan is 1) It has the third highest monthly payment ($80) and the second highest interest (5%) of all our remaining loans.  2) It doesn't sync with Mint.com, so it's a logistical pain.  And 3) I'm sick and tired of having to use their website that was set up in what feels like the 90s.

And also, since there's no house payment due next month either we'll have enough money to knock out the smallest remaining Gate loan AND pay the balance due for the cruise.    

I'm very excited about how this is shaping up.  Sometimes I'm too excited.  I look at the calendar and want it to move faster, I want to be done with our loans.  But I know we're headed in the right direction, and I know that we're ahead of our projections, so I will try and slow down and enjoy the experience of destroying our debt.

January Progress

So, it turns out January has been busy!  Or I keep forgetting to blog.  One or the other, you decide...

The important news of the month:  We paid off yet another DEBT!  Woohoo!  Which means, if you're playing along at home, we've paid off 3 loans in the last 3 months.  We just bowled a turkey!

I wish I could adequately describe how good it feels to be chewing through our debt.  In fact, with just a few more days to go in January we are sticking to our budget and will be on pace to pay off another loan in February.  We have like $30 bucks left for the rest of the month, but we have no needs, except possibly gas, until February, so we should be good to go.

February is going to be a tough month.  Fact: 34052 of our friends have birthdays that month, so the opportunity to spend money will be high, but our friends understand our goals and are very supportive in our quest.  So if we have to be lame and stay home or go out and have water instead of beers, I know they'll be fully supportive.  Besides, when we're done, after all the sacrifices we make, we'll have a giant party to celebrate.

In addition to paying off a loan this month, we also spoke with my friend Dave Lind about refinancing to a 15 year mortgage.  After some consideration, we decided to go for it.  Rates were, when we locked in our rate, just above the all time lows.  In fact, shortly after we locked in our rate, at 3.25%, rates went up.  We had an appraisal on Tuesday, and our loan will be going through soon.  In the end, we'll end up paying about $120 more a month, but we'll pay off our house 15 years earlier.  Sounds good to me.

Next month's loan is approximately $2800, which is going to push us to the edge of our finances.  We also have to pay for the cruise deposit, which is going to make February crazy tight.  Wish us luck!

New Years "Game Plans"

Every year around this time people declare they need to change.  This past year they've done to much of X and resolve to do more of Y.  For most people these are goals to work towards, or habits they wish to change, or even new rules for the way they wish to run their lives.

In the end though, these resolutions end up as empty words.  I know many have for me.  And the reason that these resolutions end up falling by the wayside is that for me they are simply something we do at this time of year.  There's no urgency, there's no real desire, there's no gameplan.  You've heard it said that the road to hell is paved with good intentions, and well that's what's going on here.  For years I've said I'm going to workout more or I'm going to spend more time doing this or that while spending less time doing that or this.

So this year I'm not making resolutions.  I'm sick and tired of saying one thing and then doing another. More importantly I'm sick and tired of failing at my "resolutions."  An idea without a plan of action is just an idea, but an idea with a plan of action becomes a goal which becomes inspiration.


1) Pay off Debt!
This is pretty obvious.  I mentioned in my last post that we're on pace to pay off 6 loans this year, which is wonderful, but those 6 require tight spending and sticking to The Plan.  To that I'm going to stick to the following gameplan:

• No fast food.  This will shore up a major area where we overspend on our budget: Recreation - which covers eating out and activities like movies.  I'm hopeful we can cut this budget down by 25% this year by simply not spending money on fast food.
• No purchases outside the budget:  Over the course of the last 6 months we've spent money that we didn't need to on various items for the house, for ourselves, for whatever.  The fact is that we could have been much better with our budget and purchases.  This year we'll include large purchases in the budget from the outset so we've planned for every dollar.  As a quick example we need to replace our refridgerator (or get it repaired).  We can add this to a budget and know exactly where the money is coming from.
• Weekly Budget Checkups:  We've also noticed that we're not as diligent at recording our expenses as we could be.  This means that we often find we've spent more money than we have accounted for or that we have more money than our budget says we should.  I believe if we talk about it and do a weekly count we'll be able stick to our budget better.  We also need to be more diligent about entering transactions into our budget app, EEBA.

2) No Uneccesary House Improvements
This doesn't really need detailed steps.  The fact is that both of us tend to spend money on things for the house, most of which is usually not needed.  So unless we need to replace a window, or like I said above, the fridge, we don't spend the money.  Easier said than done, but if we're committed we can make it happen.  This is the one I'm the worst at.  The other day I bought a new wireless router and modem (without consulting or informing Kristi) and it led to a fight because I tried to hide the purhase, and when confronted I lied about.  This is a big problem for me and something I need to work on.

2) Purchase Discussions
The aforementioned fight notwithstanding, this is something that I need to work on. Kristi is the natural saver and I'm the natural spender, which can cause some friction if we're not clear with each other. The fact is that I need to be more open about how I want to spend our budgeted money. The gameplan for this is simple: talk about our money before it gets spent and make sure we're each on board.

That's about it for the money gameplans. I'm thinking about my personal resolutions/gameplans still, and when I've settled on them I'll post them here.

On the Road Again!

I'm on my way to California for the Christmas and Kristi and I have been listening to a lot of people call in to the Dave Ramsey show with huge problems.  Problems with their husband/wife/significant other/family.  Problems with their management of money.  Debt problems, health problems, car problems.  It really makes me appreciate all that I have, and all the plans I have to continue the success we've achieved in 2011.

First of all, let's begin with my lovely wife Kristi.  We've been together for 7 and a half years, but we've only been married since May 2011 and I couldn't be happier.  Statistically the number 1 reason for divorce is money issues.  As the saying goes, "It's not 'till death do you part,' but rather "till debt due you part."  I am so incredibly fortunate that Kristi and I are on the same trail together.  She has been working on me for awhile, but I had to come around on my own.  And I'm so happy that I did.  Kristi and I have struggled with finances in the past, but we're both on board, we've circled the wagons, and we're on our way.  I don't think I could do it without her, and I'm so glad I'll never have to.

Secondly, I want to reflect a bit on how much 2011 has changed my life.  I think this will always be a year I look back on and marvel at just how fortunate I've been.  The year started off with landing a job at Optimize Technologies and I love my job.  Every day I go to work for a locally-owned company that cares about me and that wants me to succeed.  I enjoy everyone I work with, the atmosphere fits my personality perfectly, and the only direction I've gone in the almost year I've been there is up.  I've heard some whispers on the next step at Optimize, and I'm catiously optimistic about my review next month.  Stay tuned for an update on that front.

The year continued with my wedding and subsequent honeymoon.  I'll always remember my wedding as one of the happiest moments in my life.  I was surrounded by my closest friends and family as I made the committment to Kristi and I will be eternally grateful for all the help and memories everyone there shared in.  And then there was the honeymoon!  Words can't explain how great that was, and I'll always remember it. 

As the year continued I made new friends and deepened other friendships on and off the softball field.  I couldn't ask for a better group of guys to spend a few nights a week with.  I'm looking forward to the 2012 season that starts in a few weeks (cold!!).

In September Kristi resumed school and thus far has had a much better year than last year.  She's comfortable in her role and the kids are much better behaved for her because she has the confidence that comes from someone who knows their position and how to get the most out of the kids she has.  It's really been helpful for our relationship as she's not bringing home bad experiences every day.  To me she is happier than sh's been in a long time with being a teacher.

In October we had the priviledge to stand witness at our best friends' wedding.  The lead up, the ceremony, and the reception were great and I really enjoyed meeting Tamara's friends and family, many for the first time.  I am so happy for them and I know now that the clock is ticking before our lives are full of baby joy.

And finally I want to look back on the debts we paid off this year, and the debts we're on track to paying off next year.  This year we paid off a small student loan that my mother had to co-sign for when I was in college.  This was very important to me because I didn't want my mom to have to assume any risk on behalf.  She was gracious to do so when I was in college, but I no longer wanted to have her in that position nor do I ever intend to put ANYONE in that position again.  After that we took care of some other small loans/credit card debts.  We (or rather, I) wasn't as committed as I am now, otherwise we would have done much more.  We had a balance on a Home Depot card for our carpets (at 0% interest for 12 months) and I had a balance on a ShaneCo card for the wedding gift I gave Kristi (also at 0% interest).  Even though they were 0% interest, the priciniple of being beholden to a credit card company frustrated us to no end.  Part of the plan is to cash roll everything, so we knocked out those debts quickly.  We also took care of the truck and the first of 4 Gate Loans through American Education Services, the recent one happening last week!

For 2012 we're on track to pay off the following loans:
January 2012:  Gate 2 ($2500ish)
March 2012: Gate 3 ($2800ish)
May 2012: Gate 4 ($5000ish)
July 2012: ECSI ($5300ish)
September 2012: K Loan 1 ($4800ish)
December 2012: K Loan 2 ($5500ish)

Wow...  Just looking at that makes me smile.  We're on track to knock out 6 (SIX!!) loans this year based on our currect incomes and payment plan.  That's awesome and I can't wait for 2012 so we can meet this challenge head on.

Merry Christmas everyone and may the New Year bring you new joys and adventures!

Christmas is Coming!

Wow, it's been awhile since I last posted.... Things kind of got away from me but I since I paid off another loan this week I thought I'd better get back to posting on a regular basis.

We paid off the truck last month which as I've said was a great feeling.  At the moment we're working on the next loan down the list which is the first gate loan.  We have just paid that loan off so in January we'll be working on the second gate loan.

Quick list review:

• The Truck: DONE!
• Gate 1: DONE!
• Gate 2: $2628
• Gate 3: $2798
• Gate 4: $4909
• ECSI: $5290
• K Loan: $10710
• FSA Loan:: $23000

Christmas Mishaps

So... Christmas time is always interesting.  And by interesting I mean I spend too much money.  Let's start in the beginning, shall we?

I wanted a tablet.  In order to buy the tablet I told Kristi I would sell some board games in order to pay for it.  I would also look for the best deal I could find, which naturally came on Black Friday.  I did a bunch of research and decided to purchase the ASUS Transformer with a Keyboard Dock (so it becomes a little netbook).  On Black Friday the tablet was $250 and the dock was $100, totally $350.  

I sold a slew of games and ended making $360 give or take a dollar so I had the whole thing paid for.  Great!  I was buying something I wanted without going into debt, definitely on the right track.

However, I ended up overspending for the month because I bought a second, smaller tablet for Kristi.  I also bought a bunch of accessories/cases for both tablets, memory cards, and cables.  Furthermore, I went in with Adam, Kristi's brother and my new brother-in-law for a second present for Kristi, her new Kitchenaid Stand Mixer.  So, what was originally supposed to be a zero sum purchase ended up being a -$600 or so venture.... ooops...

While this obviously wasn't ideal, it turned out to be not that bad in the end.  We had the benefit of John's rent ($300) and Adam paying me half of the mixer ($100) so it actually wasn't the end of the world.  The problem is that what I'm doing now is justifying my bad spending in December.  I will use this month as a lesson in overspending and falling short of my goals.  We could have put more towards the Loan List, but the money got spent on things.  Lesson learned.

Paid off the Truck!

A few weeks ago we paid off the truck!  I know I said I'd post after it happened, but my life has been busy the last few weeks and I haven't had time to sit down and post about it.

I'm very happy to be making progress towards our goal of being debt free.  Paying off the truck was a wonderful experience.  We drove down to Salem on Friday afternoon, October 30th.  The traffic was surprisingly light and we made good time.  We drove straight to Oregon Community Credit Union and plopped down the final $941 dollars left on the loan in cash.  The teller smiled and congratulated us on paying the loan off and wished us luck with the debt snowball.  There were cookies and candy in the lobby, too, so we helped ourselves to some while we waited in line.

The title to the truck arrived in the mail about a week later.  This is the first time I've ever had the title to a vehicle I bought myself.  It was a very gratifying experience.  I'm not sure I can adequately describe it, but I felt power and ownership over my life.  You might think that buying my house or some of the other things I own would have given me the same feeling, but this is really the first major purchase since I've had my new job and since we've been married, so it felt different.  I realize that we "bought" the truck last year before our marriage, but since we didn't actually own it (the bank did), paying off the loan felt like purchasing it and now I own it.  It's in my name.  It feels great.

November's Budget

I promised I'd go into detail on our budget at the beginning of each month and so here I am.  Most of the Total Money Makeover is about discipline, self-control, and sticking to your well laid plans.  This involves sticking to a budget each month so that all the extra money is focused on your debts.

I'd like to state that we are in remarkably great shape compared to the average person on Ramsey's plan, at least in my opinion.  Kristi and I have began the habit of listening to his radio show podcast on the way to work and it seems to us that most people are in a much worse situation than us.  For example, we have $0 credit card debt, whereas many people seem to have ten, twenty, or fifty or more thousand dollars in credit card debt alone.  A lot of people also seem to have giant car/truck payments, a home equity credit line, or even a second mortgage on their home.  I feel lucky, honestly, that up to this point we've been relatively responsible with our money.

That's not to say I was responsible all the time.  In college, and while I lived on my own, I wasn't always the best handler of my money.  I spent money on all kinds of things, and usually there was always too much month and not enough money.  Because I was irresponsible, I racked up some credit card debt, to the tune of about $2500 or so.  Again, not a crazy amount, but still more than I ever plan on having again.

The budget, I've found, has really helped me stay focused, and instead of spending money frivolously and on impulse, it's made me examine my purchases more closely.  The first thing that pops into my mind is board and video games.  There are several games I know I would have bought in the past that I have refrained from buying because it's not in the budget and because I have a goal to work toward.  I plan on saving a portion of my budgeted money each month to buy things for me, and I'll write a post about some of those things in the coming weeks.

Now, to the budget:

Pets - $35.00

• We dropped this budget down to $35 mainly because we no longer have to buy a bag of dog food each month.  A bag of food for Kitty lasts a very long time, so we will adjust the budget during the months we have to buy a bag for her.  The same is true for liter, as we usually buy it when it's on sale at Costco and we stock up.  
• We plan on buying Sam a new bed and some new toys this month with the money.
• Any money at the end of the month gets put into a larger pet fund that would be used for bigger purchases or vet visits.

Clothing - $50.00

• This is a budget item that is a little different from the rest.  Sometimes this is used, and sometimes it's not.  For example, in October we overspent the budget buying costumes for Halloween, mainly because we didn't think about costumes at the beginning of the month.  We use this for any and all clothing purchases.
• What differentiates this from the other categories is that it's a rollover budget.  Any money unspent is added to the category for next month.  So if we don't spend any money in November, we'll have $100 to spend in December, and so on.

Recreation - $125.00

• This drops from $180 in October since we don't have Halloween and we aren't hosting Wine and Dine.  Recreation covers pretty much everything we do for fun.  Whether that's buying a Groupon, going to a movie, or going wine tasting, this has us covered.  We overspent in October, so this month we'll make a more concerted effort to stay on budget.  We'll be helped by having family in town for one weekend and won't be going out and spending money.
  

Personal - $150.00

• This budget covers our household expenses like toothpaste, dish soap, and the like.  It also covers personal wants like boardgames and supplies (for me) and tea cups and books (for Kristi).  We use this budget up regularly at Costco buying our supplies in bulk.  
• Each month we get a "Personal 25" so that we can buy things we want individually.  This helps us in 2 ways: It lets us buy a little something here and there for each of us so we can prevent splurge spending.  It also let's us save up for things we want down the road.  I want to get a tablet, so in a few months of saving I'll be able to get one.  I can easily get one tomorrow, but I'd have to not pay down debt as much to do it, so with the slow trickle of savings I can get something I want without sacrificing our ultimate goal of being debt free.

Food - $400.00

• This, along with our Transportation budget are the two largest budgets.  We usually spend about $250-$300 on our food each month since we plan our meals (most of the time) and can buy food in bulk and on sale in order to stay on budget.  This budget also covers any food I buy for lunches at work since we have a full kitchen it's super easy to buy a bunch of lunch foods and store it at work to make during my lunch breaks.
• This month we have increased the budget to cover Thanksgiving purchases. Mainly delicious jellied cranberry sauce, not that whole-berry blasphemy.  And a turkey, I guess. A big one. For the leftovers.

Transportation - $300.00

• This is our other main budget area.  We have been able to cut this down significantly since Kristi started school again since we can carpool to work again which greatly reduces our transportation costs.  Softball is over as well which has cut out 1-2 long trips a week out of my driving and saved a lot on the gas budget.  
• We also incorporate maintenance and parking into this budget, so sometimes this budget will be four, five, six hundred dollars when we know there is a maintenance need like oil change, new tires, etc.

November Budget Total: $1060

At the end of the month I'll post an accurate breakdown of our expenses and how we stayed on budget.  I'm hoping that being out in the open with the budget will help us stay on track, as I really don't want to be writing how we went over budget each month because that won't help us progress towards our debt freedom.

October Debt Process, October Budget

October Snowball Progress

I plan to update each time we make a payment on a debt and to update the remaining.  This is the first of such updates. 

This month, as the previous list of debts indicated, we paid money toward the truck.  $1,420 to be exact.  As I said in my post about Riley, this is less than our goal of around $2,000 towards debts each month.

After the payment processes, we’ll have just about $940 left to pay on the truck, which we’ll finish up in November.  This is very exciting as not only will we own the truck, we’ll be able to adjust our insurance on it down from full coverage, which the bank requires for the loan, which will save us some money each month.  It may not be much, but every dollar counts when it’s going towards debts.

Also, we plan to make the trip to Salem to the Oregon Community Credit Union (the closest branch of the bank that our car loan is through) to pay the final $940 and be done with it.  I think it will be valuable and important to pay the final payments on each debt (whenever possible) in person for the sense of accomplishment and pride in our achievement.  I know it doesn’t seem important, but I feel like taking the final step in person will provide a much better sense of fulfillment.  We plan on doing that next week, so stay tuned for that report!

October Budget

I’ve been meaning to write a post about our Monthly Budget for some time now, but the end of the month is coming quickly so I won’t bother with a full post this month, but I will outline the budget we’ve lived under this month.

Typically our total spending money for the month is about $1,000 to $1,100.  This amount fluctuates up and down depending on the planned and unplanned activities over the course of a month.  Each month we sit down and see where we’ll be spending money and plan accordingly.  Unfortunately we didn’t adequately account for Halloween so we’ve over spent a bit on our clothing budget this month for our costumes.  I think also the trauma of re-homing Riley caused us to not want to cook and we ate out more, which literally ate up our Recreation budget.  However, being able to adjust the budget each month helps us to plan for events like holidays/birthdays so we’re not constantly overspending or eating out all the time since we have a budget to live within.

Budget

Pets                     $50.00          (food, toys, etc)

Clothing               $50.00          (sundries, clothes)

Recreation           $150.00        (eating out, movies, date nights)

Personal              $150.00        (household items, toiletries, etc)

Food                   $300.00        (breakfast/lunch/dinner items)

Transportation     $300.00        (gasoline mostly, parking, maintenance)

That is a typical budget we work from.  I’ll post a full overview of November’s budget next week so I can report at the end of the month on how we did.  Currently we’re not doing that great with October, having gone over budget in a few categories, but we’re still overall on track with our budget (we can shift some money from unspent categories to cover the over spending in others, but we try to avoid that since we’re overspending). I’ll post a recap of October next week as well. 

The Financial Impact of Re-Homing Riley

When we made the decision to re-home Riley, we didn't make the decision because of any financial considerations, but because it was the best decision for us, for him, for Samson, and for our family going forward.  However, looking back at the last year plus with Riley, and looking at our finances going forward, it's hard not to realize the added financial burden a second dog brings and how not having a second dog going forward will help us get debt free sooner.

When Riley and Sam had their latest and last fight, it caused a lot of heartache, a lot of stress, and a financial mini-emergency we weren't expecting, but we were prepared for.  Riley was injured during the fight and had to go to the emergency vet.  The visit cost around $200 which ate into our debt snowball for the month.  After the vet visit, we sought the help of an animal behaviorist.  We,  in our hearts, knew what the outcome was going to be, but I believe we both were denying it and had to hear it from a professional.  We called the Oregon Humane Society and they sent out their behaviorist to evaluate if Sam and Riley could continue living together and if their relationship could be rehabilitated.

The behaviorist was going to cost $350 for the appointment.  We had seeen signs of the relationship deteriorating and sought the services of a trainer in the past, but when he came to the house it was clear to us he didn't really know how to help us.  We were burned on that, so we decided the OHS behaviourist was the way to go, because after all you get what you pay for in all aspects of life.

After a 3 hour appointment of observation and interaction of the dogs individually and together, the behaviorist told us what we were expecting, but didn't want to hear.  The dogs would probably never be best friends, but they could live together if 1. They were kept in separate rooms and 2. When together each wore a muzzle to prevent any biting if they fought again.  In short, it would require careful management for the rest of their lives.

This wasn't acceptable to us for a number of reasons.  We didn't want to manage our dogs, we wanted a home with dogs living in peace.  We also didn't want to have to worry about Riley snapping and fighting other dogs at dog parks and gatherings, which he had done with increasing frequency in the last few months.  We also didn't want to have to keep one dog in a crate or in another room when we were home because that felt cruel to us.  We were scared too that the dogs would hurt each other again, and may injure each other even worse in the future.  And finally, we thought of the children we plan on having in a few years.  We didn't want to risk the dogs fighting and having a child get hurt because of it.  So after considering the alternatives, we decided to re-home Riley.  It was most definitely the toughest decision we've had to make as a couple.

We re-homed Riley on Wednesday to a nurse with a son.  He has a much larger yard all to himself, and a little boy to play with him all the time.  We know he will be happier as an only dog, and he has a boy to grow up with and love.  It was very sad, and Kristi and I both shed many tears the last few weeks as the day approached, but in the end we know it's the best decisions for all involved.

Since Riley has left the home Sam has been a new dog.  He has been better around other dogs, he has listened to commands more, and has definitely benefited from the extra attention we've showered on him since Riley has been gone.  We took him to the beach this weekend and he was excellent, always coming when called, played with other dogs, and made lots of new human friends.  This only reinforced the belief that we made the right decision.

Now, I said I'd talk about the financial impact of having a one dog versus two dog household.  First off, the food costs go down as Riley ate about 1/3 more food per day than Sam, which made us go through a bag of dog food about twice a month.  With just Sam, we'll be at less than one bag a month, and at $40/bag that adds up over the year.  Additionally, we'll need half as much flea medicine, which is quite expensive, too.  And also, the vet costs will go, too.

More important, though, than the monthly upkeep of Sam, is the freedom only having 1 dog affords us in daily life.  For example, it's much easier to take Sam with us than it was to take both Sam and Riley.  Also, it's much easier to have someone dogsit Sam than it would be to dogsit both Sam and Riley.  Sam is also much better when left to his own devices; he doesn't chew, doesn't damage the house, and doesn't eliminate in the house, either.  When we want to travel, having only Sam will allow us to either use a dog-friendly hotel or to board him cheaper than boarding Sam and Riley.  And finally, it's much easier to fit one dog on the bed than two dogs!

I know we will miss Riley, I know we will struggle with our decision, even when we know and can already see it's for the best, but we will be better for it, both financially and more importantly emotionally. 

The Loans

The List

1. The Truck
• $2,256
• Estimated Payoff Date (EPD): November 2011
• We decided to upgrade my truck from a 1993 GMC Sonoma to a 2001 Chevy S10.  It's bigger, it has 4WD, and it can get us, our stuff, and the dogs around easily.
2. Gate Loans
1. $2,604
2. $2,628 
3. $2,799
4. $4,978
• These are some small loans from Willamette that were mostly for living expenses and books.
3. ECSI
• $5,486
• This is a student loan from Willamette
4. Stafford Loan
• $10,942
• This is Kristi's loan for her MAT program at Willamette.
5. FSA
• $22,495
• This is several federal student loans consolidated into one loan payment.  Had I to do it over again I wouldn't have consolidated and kept them separate as they would have been smaller loans we could have paid off individually as time goes by to keep us motivated.  As it stands now this loan looms large at the end of trail. 

Grand Total: $54,000 and change

This is the goal: Debt Free in 2 years or less.  Piece of cake.

Each month is a new challenge, especially as the holidays approach.  Kristi and I recreate our budget each month based on upcoming events and past budget history.  For example, next month we'll increase our food budget because we'll be hosting Thanksgiving for Kristi's family and therefore will have to buy turkey and most of the food to make the side dishes.  In December we'll increase our Auto Expenses because of our planned trip to California to visit my family.  

However, the plan each month is to contribute about $2000 towards loans.  This includes their minimum payments and our Debt Snowball money.  The minimum payments are fixed, but the Debt Snowball will fluctuate each month depending on our budget and if any needs/emergencies pop up.  This month we had to take Riley to the vet, so our contribution will be about $1500 instead of $2000, but hopefully we'll average $2K and above.

As we work our way through the list I'll make a post when each debt is paid off and how we reacted to paying it off.  I'll also update the remaining debts and post a goal for the next pay off date.

Feel free to play the home game along with us as we begin our Oregon Trail to Debt Freedom.

Drinking the Kool-Aid

When Kristi first told me about Dave Ramsey and the "Total Money Makeover" I wasn't sold.  I thought that all the debt we had was "good" debt.  I had some debt on credit cards, but nothing crazy like the people I always see on TV or hear about in the news and on the radio with $10,000+ in debt on credit cards.  I didn't have crazy personal loans or lots of financed toys like motorcycles, but I also didn't really have any plan.  I didn't know I needed one.

Before this time I was working for the Oregon Social Learning Center and the University of Oregon doing psychology research.  The pay wasn't great but it was a fun job and I enjoyed what I was doing.  After a while though the hours began to dwindle and the fun evaporated.  I started looking for jobs more in line with my degree in Biochemistry, but I lacked the relevant lab experience and my overall job hunt effort wasn't great.  As my job satisfaction and income decreased, my debt increased and I became aware of my definite lack of savings and future plan. 

By this point Kristi and I were engaged, we had discovered the Good Neighbor Next Door program which allowed us to buy our first home, and I was still unhappy with my career.  I was thankful that I had employment, such as it was, considering the high unemployment rate and the declining economy, but I knew it could only last so long given my deteriorating happiness and paychecks.  In May of 2010 I found a posting for a sales/chemist position at Optimize Technologies.  I applied and had 2 interviews with the company before I was told that they had hired another person who had more experience in the lab.  Since I had 0 work experience in a lab, I could hardly blame them.  Still, it was a very low point for me since I thought I had the job locked up after I gave a great set of interviews, in my opinion.  However, life had chosen to bless me in other ways as we moved into our new house in June of 2010 and we were less than a year from our wedding date. 

After that low point I began to work closely with Paul, a close friend who had gone to business school and done the job hunt circuit before.  We worked on my resume, focused my job search with clear and defined goals, and he held me accountable each week for my progress.  I had a few interviews for other positions, one of which I turned down because I knew the company wasn't a fit for me personally and another that wasn't a fit for me financially. As the search continued my hours were cut down to a point at OSLC where I was no longer getting benefits, and it was at this point that Kristi mentioned Dave Ramsey.  When she mentioned the plan I was skeptical to say the least, but honestly I was simply afraid that my meager income wouldn't be enough to put a dent into our student loans and help us.  I was scared that I would be a failure and put our soon to be marriage at risk because I couldn't hold up my half of the bargain.  My greatest fear in life is to be helpless, and in all honestly I was feeling pretty helpless at this point.  Nonetheless, I agreed that we should give it a try, but I was never totally committed to it.  In fact, shortly after we started the program we bought my truck and took on a car loan.  Not an auspicious start, to say the least.

However, life has a funny way of working itself out if you roll with the punches.  Shortly after the dawn of 2011 I received an email from Optimize Technologies asking my to come back and interview again for a new position that had opened up.  I was ecstatic, but I was also guarded because I didn't want to get my hopes up to high and then end up disappointed again.  After the email I searched high and low for a public posting of their newly open position and couldn't find it anywhere.  My guard began to lower and I grew excited about the interview.  I practiced with Jeff and prepped for the interview by buying a new suit (on credit, gasp) and studying.  I interviewed for and was offered the position the same day, and I took it happily. 

My income more than doubled with my new position considering it was full time employment with a higher salary, and the heavy burden of not being able to help with the finances was lifted.  Since January of 2011 we have paid off more than $10,000 in debt, but still I wasn't committed wholly to the plan.  I never made saving a priority and we spent money that we didn't need to spend on various wants and desires.

Flash forward to last week.  I realized that we hadn't hit any of the goals we had set when we got back from our honeymoon.  First of all, it was entirely possible for us to have had the truck paid off by September, but we had fallen woefully behind.  In fact, we hadn't really made a large dent in our debts in the last two months.  We looked at our budgets and saw that our money just went here and there on it's own, we didn't have a plan to spend it wisely so it left on it's own accord.  We were no longer in control of our money as we had been when we cruised through 10K in debt even as our wedding approached.  Something had to change, and that something was me.

I read the Dave Ramsey's book, something I had been procrastinating for too long, and I realized that I was guilty of a lot of bad money behaviors.  I wasn't saving, like I've said, and more importantly I wasn't being careful with my money.  It seemed to walk away 5, 10, 20 dollars at a time to things I didn't need.  I was tired of seeing our plan at the beginning of the month go totally by the wayside at the end of the month.  There always seemed to be too much month and not enough left in our cash budget, which made us use the debit card, which dwindled our debt snowball fund.  Most importantly, I realized, as Ramsey says, "I was sick and tired of being sick and tired!"

I fully committed to the plan.  I made a spreadsheet with all of our debts and realistic targets for paying off each one if we contribute every spare dollar and cent we can find to paying them off.  The truck will be paid for in November, and other small loans will follow shortly after.  I believe we can be debt free in 2 years, except for the house, if we can attack the debt with single minded focus and resolve.  I'm ready, Kristi is ready, and we're both on the same page and committed which will make all the world of difference.

Welcome Aboard!

Welcome aboard our travels along the Oregon Trail to Debt Freedom.  My wife, Kristi, and I have recently re-motivated ourselves to follow Dave Ramsey's Total Money Makeover to pay off our debt as quickly as possible.  This blog will cover any and all topics related to our journey towards our ultimate goal: debt freedom.  I'll post about our progress, our trials and tribulations, and our wins.  Feel free to follow along, or better yet, hop on board and complete the journey with us.  The destination is financial freedom, and the more the merrier on the trip.

The Total Money Makeover

Let's take a quick moment to talk about the Total Money Makeover.  The author, Dave Ramsey, will be the first to tell you his idea's aren't new, but they are successful when done right.  The key, as Ramsey puts it, is the focus behind the plan.  You must be "gazelle intense" for the Total Money Makeover to work perfectly.  If you're lackadaisicle, haphazard, or uncomitted, it will fail and you'll end up back where you started.  The key principles of the plan are as follows:

• All Debt is Bad: Ramsey believes that all debt is bad, with the exception of a house that's payments are 25% of your income or less AND on a 15 year mortgage.  The goal of the makeover is to 1) eliminate the mental reliance on debt, and 2) eliminate all debt from your life.
• Your are the Problem: It's not the car's fault, it's not the credit card company's fault, it's not the bank's fault.  You are the cause of your debt, and only by modifying your spending behavior can you fix it.
• Baby Steps are the Key: Ramsey names his 7 steps to financial freedom Baby Steps after the fake book in What About Bob? a hilarious movie starting Bill Murray and Richard Dreyfuss.  He quotes the movie and believes "you can get anywhere if you simply go one step at a time."  That's the key to the whole plan.  Attack each step with incredible determination and unflappable focus and you'll succeed.
• Baby Step 1: Save $1000 Emergency Cash
• Baby Step 2: Debt Snowball
• Baby Step 3: Finish the Emergency Fund
• Baby Step 4: Invest 15% into Retirement
• Baby Step 5: Save for College
• Baby Step 6: Pay off your Home Mortgage
• Baby Step 7: Build Wealth
• Money has 3 Uses: 
• Spend: You need to spend your money wisely, on housing, bills, food, transportation, etc.  Eventually when you're debt free you'll be able to spend money on FUN things, too.  While you're eliminating debt fun is cut way way down, but not to nothing because everybody needs to enjoy life, not be so guilty about going to a movie.  As long as it's budgeted for and accounted for, go for it.
• Invest: The second use of money is to invest in your retirement.  This is where the phrase Ramsey likes to use comes up often "live like no one else so later you can live like no one else."  The first step after you eliminate your debt and build an emergency fund is to invest 15% into your retirement.  He loves mutual funds because they have a high average gain over their lifetime.  What he also suggests is to learn about investing.  Always manage your money yourself, even if you have a broker, always research and be sure the decision is sound before signing the check.
• Give: Ramsey's last use for money is giving it away.  Whether that's giving your time at a soup kitchen, buying bikes and coats for kids in need at Christmas, or giving to charitable organizations, the point is to give.  The peace of mind you feel from giving helps.  I know right now I'm not in the financial position to give money, but I do give blood as often as I can.  Hopefully in the future I'll be able to start a scholarship at my high school which is one my dreams.

Those are the key principles that I took from his book, The Total Money Makeover.  The book is full of quotable sentences and success stories.  At it's core it's a motivational book that seeks to change the readers behavior about and towards money.  If you can look yourself in the mirror and change your behavior, you can be successful at anything, especially becoming debt free.  Finally, there is one principle that get's it own category:

The Debt Snowball

The debt snowball is Baby Step 2.   Baby Step 1 is accomplished by saving an Emergency Fund of $1000.  Baby Step 2 is getting rid of your debt once and for all.  Many of you already know what the debt snowball method is, but for those that don't here's a quick description:

1. List all your debts in order from lowest balance remaining to highest balance remaining. Do not even look at interest rates unless you have two loans that have approximately equal balances, then list the higher balances first.
2. Make minimum payments on all of the debts except for the debt at the top of the list.  This debt you attack with all the spare money you can muster every month until it's gone.
3. As you pay off each debt, take it's minimum payment along with what you were paying on top and apply it to the next one down the list.  In this way the payments will grow as you pay off each debt.
4. Watch as each month you knock off debts and your payment gets larger and larger, creating a cash snowball that obliterates all debt in it's path.

If you have the determination and the focus, you can pay off a lot of debt in a very short amount of time.  That's what we're trying to do now.  We've been loosely following this plan for a few months and have paid off some debts, but haven't been as aggressive as we need to be.  

We're changing that now.  Follow along and see our progress!