Tag Archives: Debt

Disneyland Annual Pass?

Tomorrow my family is going to Disneyland – known as “The Happiest Place on Earth” – translates to “The Most Expensive Place on Earth” @ $70+ a ticket! Southern California Residents offer a plan – fund an annual Disneyland pass by making monthly payments (the Disneyland terms are really reasonable, too). I was actually seriously considering this option!

Disneyland Halloween

Fortunately for me three things happened to me within the last couple days that deterred me from this offer:

  1. A good coworker friend of mine said, “if you have to pay a monthly amount to fund a Disneyland pass then you don’t deserve to go anyway”. Straight forward, no games. If you have to pay a monthly balance then you don’t have the money in the first place to buy an annual pass.
  2. I decided to regroup my finance spreadsheet, check the balances, rediscover the atrocious bad-debt-to-income-ratio (ouch), and see how gosh fricken much I owe on my student loans. Financial tip: don’t take out a student loan unless you absolutely need it! Trust me, it will save some un-necessary pain later.
  3. I read Adam Baker’s current post at Man vs. Debt. Him and his wife, Courtney, have their rules/values in place.

    • 1.Never do anything that requires the use of NEW debt.
      2.Never let our emergency fund dip below $5000.
      3.Always at least pay the minimums. None of that ‘deferring’ student loan crap.
      4.Travel and experience the world as frugally as possible.
      5.Build a mobile income of at least $3000/month. (It’s no secret I plan for MvD to be a big part of this)
      6.Have at least one of us staying home with Milligan.
      7.Pay extra on student loans.

    And I thought to myself, “Mr. SeaDog & I need our own rules!”. And so I copy and revised Adam’s rules to fit my our needs. This is a rough draft, but here it is:

    • 1.Never do anything that requires the use of NEW debt.
      2.Never let our emergency fund dip below $1000.
      3.Always at least pay the minimums. None of that ‘deferring’ student loan stuff.
      4.Build a mobile income of at least $1000/month.
      5.Pay extra on car loan (car loan upside down $2,800 and I want out of my $400 monthly payment ASAP)

End Result

Monthly payments for an annual Disneyland pass clearly violate #3’s event, priority #1 – Never do anything that requires the use of NEW debt. *saved*

So with that… what financial priorities define your list?

Drowning in a Sea of Debt

waves
My family has paid down nearly $10,000 in 6 months. I should be proud of our accomplishment, right? Then why do still feel so bogged down & burdened? I know why. It is because our 6 month adventure is actually a 10 month journey mimicked the rolling of the sea. Up, down, up, down… Yet, all I want to make it do is go down!

This proves tough with a family of four with one teenager. Or with the family that wants to embark for Hawaii next spring break but isn’t taking the steps to make it happen (they just think it will happen). Or the family that doesn’t realize the cost impact of everything we spend on (dinner, landscaping projects, birthday parties, etc…). Oh, I am to blame in this family of four, too. Don’t think I am excluding myself in this momentary blah.

I need help. I need your advice.

  • How do you get a family of four to see the financial impacts of your debt repayment program?
  • How do you get a family of four to come together and realize we still have $79,768.59 to still pay down?
  • How do you continue to feel like you are living a life while staying frugal as can be to become debt free?

This is the new importance of my blog right? Learning to overcome the consumer society lifestyle in order to become debt free (and maintain that status). And although I am up for the challenge I need your guidance, tips, and/or advice. I look forward to your enlightening responses to help me regroup my debt repayment journey.

~ Money Funk

Tinkering with the bank accounts

I think I have done a couple of great things. I have tinkered with my bank accounts and made a more systematic structure for my PF journey and I have shrunk my teal notebook to a size of 4″x6″. Here are the pros:

  • I can no longer exceed or borrow from my other accounts for my weekly ‘cash allowance’ funds (aka: funds used on groceries, gas, entertainment, and other). Motto: if the funds aren’t there…then you ain’t gettin’ it (my kids will love that one)
  • What ever is in the ‘bill pay’ pot is used exclusively for that reason, to pay bills; snowball; avalanche.
  • The savings… just that savings where it holds my Emergency Fund & Hawaii Fund
  • My teal notebook now is 10 times lighter and fits in any purse

You say: “How did you do such a thing? Did you use your automatic shrinking machine?”
I say: “No silly, that is what computers are for!”


Here is what I did:

  • Bank Account 1: Paycheck is direct deposited. Leave in my weekly cash allowance, transfer 7.9% into Savings Account, tranfer remainding funds into Bank Account 2 for paying bills.
  • Bank Account 2: Bill Pay funds (love the Bill Pay feature!). Few clicks of the keyboard and my bills are sent out every Friday. What ever is left over gets used in next weeks bill pay.
  • Savings Account: Holds my Emergency Fund, Hawaii Fund, and accepts my 7.9% weekly transfer
  • Formated my PDF Bill Pay Pages to print 4 on a page, cut, stacked small pages and did a little arts and crafts by using a manilla folder as a cover, staple all together and now you have a 4″x6″ PF Folder (pic to follow soon). I’m sure with time I could get pretty creative with the cover.

If you want a PDF Bill Pay Page, email me: [email protected] . Please put “Bill Pay” in the subject line. Unfortunately, google docs does not allow me to publish PDF pages.

Verdict: I think I just made my life alot easier. My “notebook” and my mind is now lighter, too. I eliminated the need for a spending log, because now that Bank Account 1 is only for my Cash Allowance…when that runs out, it’s gone! 🙂

Have a great Easter weekend!

Milestone(s) w/ a funny story

Minor as it may be… we made milestone(s)!

In July I started with $82,985.14 of debt. The proceeding months we tacked on more debt due to school, etc… And we were also building our $1,000 EF account. So, during this time debt wasn’t being paid down.
I just realized that while updating my excel spreadsheet, we have gone below our original debt. We are now at $81,435.77.
Yeah!

Also, my husband finally got his break fixed on his motorcycle. We had set aside $1000.00 to cover this fix. Well, here is how it went (remember motorcycle guys are flaking. may work in your favor):

    Bike guy said he was going to charge him $200 and to pick it up Saturday at 12p.
    Hubby called at 12p. No answer, of course.
    Hubby called, called, and called. Finally gave up mad.
    Hubby & I went out on his bday date to movies at 4pm.
    Guess what?
    Yup, bike guy called at 4:15pm. Movie starts at 4:40pm.
    Impecable timing. Wouldn’t you say?
    Picked up motorcycle.

    Remember motorcycle guys are flaky.
    Bike guy does not write things down.
    Hubby says, “you said $140, right?” and hands him that amount.
    Bike guy looks at him with a funny look and says, “that’s what I said?”
    Hubby, “yes”
    Bike guy, “okay, then!”
    Hubby saves $60 and we go on date (w/o movie). 🙂

Yes, my husband feels guilty about it. But here is why I told him to get rid of feeling guilty. When we had the motorcycle put together, the bike guy told us $6000. When it was through he took us for $10,500. And that wasn’t due to ‘additions’. I would have put up a fight, but its either pay the money and get the bike or don’t pay the money and the guy has a $28,000 bike. What do you do?!

Like I said, the bike guy makes up numbers. Horrible business man, but a really good custom bike mechanic. So, I feel like we just got back a little of what we were overtaken for.

What did I do with the other $800?
$100 Christmas
$288.29 replenished our EF account back to up $1K
$411.71 balance remaining. I haven’t calculated a move for it, yet.

We will probably pay off the JCP bill we racked up during Christmas. I think it’ll be a good move. 😉

Make it a great day! ~MF

Click Here to Subscribe to Money Funk by Email or by RSS feed

Snowball – What’s your method?

Click Here to Subscribe to Money Funk by Email or by RSS feed

I’ve had this Vertex42.com link on my blog before without actually ever trying it out. And now that it is a holiday weekend, I have time to try it out (and I linked it back onto my blog).

It is very easy to download and use. Just plug in the numbers and sort as you will… Wha-la!

For approx $79,643.15 of debt, here is what will happen if I payoff by:

  • highest to lowest monthly payment: $11,416.24 interest paid

  • snowball (Dave Ramsey Method): $12,972.89 interest paid

  • Highest to Lowest APR: $11,116.36 interest paid

Either of the 3 methods will be PIF in March 2013.

  • 3 Major CC/Auto Loan paid off the end of 2010 (car target date April 2010).
  • 1 HELOC PIF end of 2011
  • 2 School Loans PIF June 2012 & March 2013

Interesting configurations. My take: I am going with paying the highest payments first. I like the fact that my Auto Loan will be knocked down as one of the first. Especially considering cars depreciated so fast! I am at 65,000 miles on an upside down car loan. It is important to me to knock down that loan in case of the need to sell the car.

Have fun with the spreadsheet! I’d love to hear what order you are paying your debts and why you chose to go that way. 🙂

Happy Weekend!

Student Loan Payment

Click Here to Subscribe to Money Funk by Email or by RSS feed

So apparently, unbeknownst to me I had one last Student Loan check coming to me for $2205.00. I thought that I rec’d all money loaned to me and I was to start my journey in repaying the student loan. What I didn’t see was the second 1/2 of the disbursement was to be mailed December 17th equalling… you guessed it, $2205.00.

To Cancel or Not to Cancel is the question.

Well, I didn’t cancel and I will tell you why.

The $2205.00 was previously totalled on my spreadsheet for ‘Student Loan Debt’ (approx. $32,000 owed). So, it made more sense to me in using a lower APR student loan to counter act with the higher interest Credit Card bills. Now, because I already accounted for this money in my Track My Progress, it does bring the graph down a significant amount. I do enjoy watching the graph go down (as you will see on the 7th of January). 😉

What did I do with this money? I definitely calculated my move before paying things off.

Initially I thought of just paying down the 6th card, as it is naturally the current one on my list. But, in the end this would only free up $219 a month ($37 normal cc payment + $182 rollover cc payments) to rollover to the next card (7th card).

I wanted to make a larger move. Especially, because my husband and I have been considering buying a rental property. But realize that we need to pay off more debt quickly. Even though our credit scores are pretty good, our Bad-Debt-to-Income-Ratio (BD2IR) is much too big. If we are going to buy a rental property, we want to do it right.

original payment plan*

Anyhow, back to the story. I wanted to make a larger move. And here is how I did it:

updated payment plan*

I paid a last payment of $203.51 to my Ortho bill = PIF ($2205 – $231.05 = $2001.49)

This freed up $100 per month. This bill is not part of my CC repayment schedule. And this will go to increase our Weekly Cash Allowance Fund – which we use for groceries, gas, entertainment, and any other little expenses that come up.

I took $100 spending cash. ($2001.49 – $100 = $1901.49 left)
I paid my monthly FFCU visa payment of $65. ($1901.49 – $65 = $1836.49 left)
I paid $1836.49 to my FFCU signature loan that has a monthly payment of $299.
($2858.43 – $1836.49 = FFCU sign. loan new balance $1021.94)

Recap:

FORMER: BofA monthly payment $37 + $187 = $219.00 (once pd, $219 would rollover to the next CC bill)

UPDATED: FFCU signature loan monthly payment $299 + $187 = $486.00 (by paying this card off, I will have $486 to rollover to the next CC bill!!!)

The remainder of the FFCU signature loan will take me roughly 1 1/2 to 2 months to pay off the balance. I will then be able to rollover $267.00 more dollars per month onto the 7th Card using the Updated plan versus the Former plan ($486 – $219 = $267).

I hope this makes sense to you. I have yet to figure how much interest and time I will be saving, but I am sure it is significant enough validate the changes I have made. I will be sure to update you when I do figure it out!

Did everyone have a wonderful Christmas? I know I did. It is one of the two times a year that family members make those delicious, memorable dishes to eat. Since my family is soooo multicultural, I get to experience a lot of variety in our food dishes. It makes that all the more delicious. But, I am also aware that I am seriously going to need to diet after New Year’s Day! 🙂

Make it a great day! MF

*spreadsheet totals are not exact, but used more for reference material.

The Upside-Down Car Loan – Bleck!


Cars. Automobiles. Junkers. Bling. Gas Guzzlers. Tinker Toys.

First thing that comes to mind: “Chaching!”. Car maintenance, cost of the car, cost you pay the dealer. But, I live in California, commute 80 miles a day to work, and have children equates to “I need a car to drive the insane freeways, get to work in 20mph traffic, and will have wheels just incase something happens with the kids”.

Well, here is my issue. I bought a $14,000 car at 15.9% interest. When I finished paying it off, I will have paid $28,000 for the car. Dreadful, right? I know.

(Now I remember why I didn’t refinance! Light bulb moment! My car is upside down. I didn’t have the cash to pay the ‘extra’ on the car. So, I would need to refinance the car’s worth and take out a loan for the ‘extra’. Which would equate to the same, if not more, of an annual percentage rate. Hence the fact I didn’t refinance my car. Glad I figured that out!)

At this time, I owe $11,500 for the car and it is only worth $6,800. I am at a steady rate of owing $5,000 more than the car is worth.

Every once in a while, I began to ponder on my options of getting out of this upside-down car loan. So, this time I decided to search my options and this is what I found:

  • If you have a lot of car debt and you want to relieve yourself of a butt load of debt very quickly, then get rid of the flashy car(s). If tooling around in a sweet ride is more important than being financially healthy, then you need to seriously re-evaluate your priorities. Some people might not sell their car, because they do owe more than it is worth. However, if you owe $18,500 and you can sell the car for $16,000, go ahead and do it! If you don’t have the cash to cover the $2,500, then go to a local credit union and apply for an unsecured loan to cover the difference. You can get a loan for this range fairly easily. You’ll still have debt, but I’d rather have $2,500 in debt rather than $18,500. *I really don’t want to take out another loan. I will have to ponder this one. It’s pay $22K left remaining or pay $5K. The other problem is that I need money for another car. So, that is requesting another $5-$6K on top of the $5K loan. So, it would be pay $22K or $11K?

  • The best advice for someone who is upside down on an auto loan? Hang on to the car and keep on making payments. Keep the car they have, that’s probably their best financial bet. You’ll want to stick out the old loan until it’s paid for or, at the very least, until the amount you owe is roughly equal to the car’s market value. *The amount will never become roughly equal to the car’s market value. At least that I can see. Since, I’ve had the car it has always remained $5K above.

  • You may want to investigate refinancing your auto loan with a home equity loan, which will likely carry a lower interest rate. *Forget the home equity loan. No more loans! And I don’t need anymore New Debt!

  • If you refinance at a lower interest rate and keep your monthly payments the same, you will pay down the loan principal faster. If you can afford it, speed things up even more by shortening the term of the loan and increasing your monthly payments. *Speed things up… this is a possibility to consider. But, I am not sure I can since I am on a ‘schedule’. However, I could always move this up on the Snowball schedule to pay sooner than later.

After looking at my options on paper, this is what I figure: First, I don’t know that anyone would consider giving me ‘another’ loan for $11, 000. Nor do I really want to incur any new debt. I do not think at this time, I will be able to pay-off the extra $5, 000 at the same time buying a used car at approx $5,500 (come up with $10K on my own accord while Snowballing debt?!?!).

It seems my options stands at:

  • Hang onto the car, keep making the payments, and accelerate when possible (not the car, the loan ~ silly)
  • And, Move this up on the Snowball schedule. I really wonder the dent it would make in the interest payments? Will it be significant? I still need to figure that one out.

    • Well, as you can see: Cars can be a nuisance, if you let it. Someone with a Smart Money Mind (according to statistics) would have bought a used car (roughly 2 years old) and paid with Cash.

    So, let this be a hard lesson learned on my behalf. As, this one is my biggest financial blunders. But, now we all are grazing better pastures, right? We will heartily learn from our past mistakes, become debt free, and become Smart Money Minded people rich beyond belief!

    So, what’s is your biggest financial blunder? Or what was your biggest financial blunder? Come on… I know we all have them. :)~

    Click Here to Subscribe to Money Funk by Email or by RSS feed

    Family’s Debt – Revised and in planned Phases


    I had to revise our budget (again), go over it with a fine-tooth comb & put the debt repaying into phases. I was told that it takes 3-4 months to get the kinks out of a personal budget to make it work. If, I am still revising our family’s budget after that amount of time…then something is wrong. It will be almost a month…month tomorrow, in fact. I am getting better at this debt tracking thing. Condensed tracking in more efficient terms.

    Here are problems that arose recently (I think I have ADHD, I’m anxiety ridden, or just plain fidgety because I review things a lot to find nuainces [or change my blog header alot!]). Perhaps, that is why I am good at my job in cancer research.

    • We were ‘choking’ trying to keep within the cash allowance. Taking funds from our FF/EF to cover the negative cash allowance total.
    • My ‘other’ bills did not account for the fact I was putting money into savings or the freedom fund.
    • Essentially I am shorting the financial funds available for my family. Not good. How is that going to work?

    So, here is the revisions (w/intentions to increase EF/FF in the near future):

    • I had to cut my freedom fund from $91 per week to $50 per week
    • Reduce the savings Xfer from 10% per week to 5% per week (at least we are still saving)

    Here is the Phases of repayment I was talking about:

    • Phase 1: Currently, consists of 10 credit cards to be paid down. I am snowballing these now – paying the monthly payment amount necessary. Will continue to pay that same amount even though the debt amortization decreases the payment. When one CC is PIF, that payment will go to the next card. Thereby, compounding the payment. Till all are PIF (ah, financial freedom – well, closer).
    • Phase 2: There are 3 bills I pay proactively (hence, not requiring payment at this time)
    • These 3 bills are on hold until Phase 1 is PIF. Reason being, we cannot pay all these bills in one consecutive phase. It make take us a bit longer, but we can breath a little and keep our sanity. Plus, these 3 bills hold the lowest interest. So, we are okay.

    Now you understand why my percentage (on the left sidebar) decreased, because it is only accounting for the 10 credit cards – roughly $60K. The other 3 proactive, but still owed accounts tally approx. $25K.

    By decreasing our freedom fund & emergency fund, we are increasing our cash allowance to $400 a week. This seems to be our average weekly amount spent on groceries, gas for the cars, and minor expenditures. And our Freedom Fund & Emergency Fund will only be used they are meant to be used. We will not need to touch this to use as an overdraft account (smack the hand, shame on us).

    I will be starting this all with tomorrow’s budget. So, let’s see how this works for us. ~Cheers!

    ps – received my other OT check! Darn taxes again! You get like 60% back and 40% to taxes. Well, I claim 2. So, that might have something to do with it.

    How long did it take you to make your budget work for you????