My Debt Payoff for 2008
So I have the approximate data for how much debt I paid off in 2008.
Car Loan:
Started – $8,347.40
Ended – $2,289.46
Total debt paid off – $6,057.94
Student Loans:
Started - $18,032.51
Ended – $17,285.56
Total debt paid off – $746.95
Total combined debt paid off – $6,804.89
When I started 2008, I had almost exactly $3000 in savings and not much else. Some of the money that was added to that savings along the way (to add up to the $5000 I paid my parents in November) came from my tax return in May and the stimulus package, but the rest of the debt payoff came from my regular monthly payments. Obviously it’s still slow-going, but it’s nice to think that I can get my debt down about $3800 dollars less each year…and possibly even more. Yay!
My End-of-October Recap!
Let’s begin with my October goals:
Goal #1: Eat on less than $2.50 / day. Passed! Adding up my grocery purchases, and eating out / ordering food, my total came to $28.97…unless you want to count drinking at the Maryland Renn Festival, but I’m not. That was for entertainment, not food.
Goal #2: Earn extra money. Passed! I didn’t work for my dad like I intended, but I did get a bonus!
Goal #3: Spend less than I earn! Passed! My grand total for income minus expenses was $460.50!
Goal #4: Save money. Passed? I mean, I’m saving that money, yeah. I guess this kinda went with Goal #3.
On the other hand, I didn’t give as much to my church as I planned because I only attended Mass at my own church once during the entire month. The other times I attended B’s church. So to make up for that, they’ll be getting a lot more this month.
Now onto my Net Worth. My retirement accounts went down a bunch, just like everyone else’s have (keep in mind that I put more in this month than usual because of money taken from my bonus and it still went down). My assets went down considerably, but my debt went down by approximately $5,143 because of my payment to Mom and Dad. I’m still very happy about getting such a huge chunk out of the way. So my net worth actually raised by $346, while my raise (after taxes and such) was less than that. All in all, not bad.
Now I just have to worry about Christmas!
My Expenses, 31 October 2008
Up-to-Date Expenses:
Gas x 8: $334.00
Car Tax and Decal fee: $89.38
Bank fee: $25.00
Maryland Renaissance Festival: $48
Parking: $1.50
EZPass x 4: $140
Car Loan: $88.71
Student Loan: $174.01
Church/Charity: $130.00
Groceries: $15.42
Gas bill: $25.28
Internet: $44.99
Panera: $6.55
Verizon: $59.52
Power: $31.73
Baptism Gift: $13.18
Metro Pass: $10.00
Soda at MCM: $2.00
Rent/Water/Fees/Cable: $1055.83
Dinner at RC’s house: $5.00
Estimate for CVS: $15.00
Income: $2775.60
Expenses: $2315.10
Net Effect: $460.50
I’m going to Mass tonight (I think) for the All Saint’s Day Vigil Mass, so I’ll be giving even more money to the Church! I don’t know yet how much (well, I kinda do), but I’ll wait until I’ve actually done it to record it here.
Though I’ll count it for November, today is a day I’ve been waiting on for a long time: the day I pay my parents $5000 and bring my car loan total down to $2366.34.
After I resigned from teaching at the end of the 2006-07 school year and remained unemployed (except for working at my father’s office for a week or two) for six months, there were times when I wondered if I’d ever get the $5000 in time for 1 November 2008. For the longest time I kept $3000 in my Vanguard Money Market account and I knew that if I had to dip into that money, I would feel really broke. Instead, I got a job just in time to not have to do that. Then in May I received my tax refund and my stimulus check and was able to put those into my Vanguard account, too. Soon I built up the $5000 that I needed and then I ignored it. I let it sit until I pulled it out so that I could have it in my checking account, ready for this day.
So I’m pretty proud of myself. Even though my net worth isn’t increasing, my debt is decreasing. And $20,000 in debt is so much better than $25,000. I THINK that my new total of debt after today’s payments clear will be: $19,789.91. And that thrills me.
My Debts
Sometimes I wonder what would be so bad about paying the exact monthly rate for my car payment and student loans until they’re all paid up, the car by November 2010 and my student loans by December 2021. I’d be able to save more money, especially as I earned more money, spend a little more on myself, etc.
The interest I’d pay would be ridiculous, of course. You can look down on my sidebar to see my count of what I owe on each loan, and the student loan is a LOT…in my eyes, anyway. I know that most people who take out student loans have a much higher balance than I do.
B and I have discussed marriage (though that won’t be for a while yet) and how it wouldn’t take long to pay off my loans. He has minimal debt at this point, but he’s considering getting his Masters and perhaps a Doctorate. I told him that if we were married, I would of course help him pay for school. Both of my aunts married poor men (my aunts were poor, too, but had decent jobs) who worked part-time or full-time jobs while getting advanced degrees. My aunts worked full-time and helped pay the way. One aunt sold an old sports car that she adored for extra money, too. My uncles got those degrees, got better jobs and both my aunts stopped working as soon as they had children, partially because that was a priority to them, but mostly because they helped make it so their husbands could support them and the kids.
B said that he wouldn’t want me to pay for his Masters, but he’d let me help with the doctorate. I don’t see how it makes much difference except that he might find a job that will help pay for the Masters. Regardless of that, he’ll have to take out student loans to help pay. I don’t want us to be paying my loans AND his at the same time, so I’d like to get rid of my loans as soon as possible.
I’d also like to get rid of the debts because I don’t want to rely on this relationship working. I mean, I’m pretty sure that it will, but I don’t want to be a woman who spends frivolously because she thinks her husband will one day see to the savings and debt paying. It will probably be a good two years before we get married (IF we get married) and I’d love to have all my debts paid by then, but I know that it’s unrealistic for me to pay off over $25,000 in two years. I’ll pay off $5000 in about two months, but even then $20,000 in a year and a halfish is unrealistic for me given my current expenses and current salary. Four thousand a year might be doable, but I don’t know. We’ll see how it goes.
My Student Loan Woes
I was playing around on my student loan servicing website and saw that I’m still on track for a .25% reduction in interest if I continue to pay on time for the next 18 months, so I was pleased (but not surprised) about that.
Here’s what I’m not thrilled about: In the past year I’ve paid $2088.12 in student loans, but my principal was only reduced by $600.74. Now I know that that is the way that it works and that everytime I make a payment I pay a tiny bit less interest and a tiny bit more principal and I only started paying this off 18 months ago, but it still sucks. I will keep myself from being brash about this and increasing payments before I know whether I can afford to do it.
Right now I need to concentrate on paying off my car loan to my parents. Even though it is at 6% interest (rather than 7.25% on a higher amount of money), once it’s out of the way I’ll be able to concentrate solely on the student loans. My target date for the car being paid off is November 2010, assuming I don’t adjust my payments, which I will.
My problem is that I look too much to the future. I want to do NOW things that MUST wait until I can afford to do them, like paying down my debt at a faster rate. I want to get everywhere faster: It’s why I speed on roadways. It’s like I have a list of life events in front of me, and my goal is to get every single one crossed off as soon as possible. The longer one takes, the more frusterated I become.
That’s not going to change about me, so I’ll see what I can do with my budget to adjust for faster loan repayment.
My Net Worth-April
I’ve updated my Net Worth since it’s the first of the month. For some reason, it won’t show up as a picture on my side bar, so I have a link to my page under the blogroll. I may end up moving it to a more prominent spot. Right now you can access it here. My net worth has risen $1,978 in the last month to -$9,406. This is for a few reasons:
1. Last month I didn’t take into account my 401K from my current employer. At this point, I’m only contributing 3% of my salary (they match 50% up to that point), so it’s less than $800, but it’s still something.
2. I contributed $1000 to a traditional IRA and it’s already gained more than $20 in interest.
3. I changed my car loan agreement with my dad, lowering my interest rate to 6% and extending the length of the loan. My car loan total is a little misleading because I have down the entire balance plus the interest I’ll be paying, assuming I pay exactly $88.71/month (until November 2010), $5000 November 2008, and $500 November 2010. So my balance is lower than indicated, but I don’t keep my amortization schedule sheet on hand to determine exactly what my balance is each month. I might start doing that in November after I pay the big lump sum. My student loan balance is calculated for me, so that is correct.
Soon I should be receiving my $600 tax rebate and my over $1600 tax refund, which will be nice. I’ve thought about changing my withholding, but I haven’t yet worked a full January-December year yet, so I think that I’ll wait until next year to look at that.
This month I’m also going to track what I spend, which I’m looking forward to and dreading all at once.
My Car Loan
When I bought my 1999 Toyota 4Runner in 2006, the best interest rate I could have gotten with my credit score was 9%. I didn’t have BAD credit, I just hadn’t had enough for a long enough time. At the time, I didn’t realize that getting a car loan would have actually helped my credit score by having different types of credit; that’s why I took a loan from my parents at a great deal.
I borrowed $5000 at no interest to be paid in full November 2008, and $5500 at 7% interest for three years, to be completed in November 2009. My monthly payment became $169.82, not including the $200/month or so that I *should* have been putting aside each month, specifically for the $5000 balloon payment.
I was putting money aside; in fact, I saved a LOT during that ten months as a teacher. But when I was out of work for essentially six months, my savings dried up quickly. I now don’t have enough for that November balloon payment and I have to work to get to that point.
I decided to refinance my loan with my lender, Dad. Yesterday, we worked out a new schedule and a new interest rate. I had 18 more payments left, so I increased it to 30, with a 31st balloon payment of $500. The interest rate changed to 6%, which leaves me with a monthly payment of $88.71. I already have over $3400 in my Vanguard Money Market account, with $200 automatically going in each month. By November, I will have over $5000 ready to go if I also put in the $81.11 I’m saving each month.
The only problem with my Money Market account is that I have to keep at least $3000 in it, which I will be unable to do at that time. When I get to November, I will close the account (sadly) and move my money into a high yield savings account like the ING Direct one everyone’s been talking about, until I have that $3000 again. Since I’ll still be saving $281.11/month, hopefully it’ll take under a year. Also, hopefully by that time I’ll already have received a raise that beats the rise in my cost of living, so that I’ll be able to save even more.
My Story
This all seemed relatively fine; I got a used car in wonderful condition for a fairly good price and I knew that I could make the payments with my fancy new salary. Except that I hated teaching. At the end of the year I resigned with no intention of ever returning. Previously, I’d been smart enough to choose the 10-month payment plan (instead of the 12) to make sure the money grew interest in my account instead of Fairfax County’s, and I’d set aside that extra money in a separate account. I foolishly decided to wait on finding a new job while I enjoyed the summer and recovered from a stressful year. That led to me being out of a job until mid-December. I had to live on my savings until that point and my expenses were increasing while I had barely any money coming in.
That September I moved out of a 2-bedroom apartment I shared with a roommate into a one bedroom which cost a lot more; my roommate was getting married and I didn’t have anyone to live with to share expenses. I realize I could have lived with a stranger, but in the past I had such a horrible living situation that I’d rather struggle financially for a while than struggle emotionally.
So here I am in April, with more debt than assets. My biggest trouble is sticking to a budget, so that is what I will start working on first.
