Year In Review

Well, there are about 2 weeks left in 2010.  Just like everyone else on the net, I’d like to go over where I started the year at, and where I finished the year, just to track my progress (and hopefully to give you all hope). Hopefully my numbers for the year will help you realize that getting out of debt is possible, and is also a worthwhile goal.  I’m sure that looking back I’ll notice spots where I took the wrong turn, but overall I think that I’ll be satisfied with the way that the year turned out.

2010 included a few firsts for me, and I’ll list them below:

Many of these firsts altered my way of thinking completely – I never thought I’d be able to get out of credit card debt, and with a bit of hard work, focus and sacrifice, I was able to do it!  Very exciting stuff.  I was also able to connect with an amazing community of PF bloggers, both in and out of the yakezie.  You all have provided me with a lot of tips for frugal living, different ways to attack debt, and different strategies for financial management and saving.  Obviously I can’t completely adopt your strategy to a T (this is personal finance, after all), I took bits and pieces of everyones tips/tricks and incorporated them into my own strategy.  With out further ado, lets look at where I started 2010, and where I ended it.

Debts:

Even though I’d been working to pay off my debts for 6 months by the time January 2010 rolled around, I needed a new ride and had to make a decision that ended almost doubling down my debt.  I wouldn’t take it back, but it surely made this quest quite a bit longer.

My Debt in January consisted of 3 Credit cards, 1 Vehicle and 3 student loans (1 undergraduate, 2 graduate) broken down in the following way:

  • Credit Cards: $6,026
  • Vehicle: $21,502
  • Student Loans: $25,046

There were certain caveats to this, mainly that I had just bought a truck, got slapped with a sales tax bill (that I was unaware of and had to put on a credit card), and student loans that I had just found out that I had.  Excuses aside, the final number was:

  • Total (Jan, 2010) $52,574 (!!!)

Update to December 31, 2010.  I’ve been working 2 jobs for the whole year, which greatly increased my debt paying down abilities.  It has also increased my time on the road and miles traveled and I’ve had moments where I just want to be like everyone else and live where I work and not spend a bunch of time on the road, but I have to leave that for another day.

I’ve done a few things that slowed down my debt repayment, but I wouldn’t take them back.  I went to Hotlanta for a quick vacation, saw some great stuff and had some great eats.  I went to Washington, DC to use an old gift card for the airlines and take advantage of a free ticket promotion.  I volunteered at the rodeo (which was a blast).  While none of these things really helped me pay off debt, they did give me a break from the extremes that I was living in and allow me some new scenes to find some deals and have some fun.  While all of this probably amounted to 1,000 in spending, I always came back with renewed focus and wouldn’t trade these trips for anything.

Even though they added a bit of time to my debt repayment time, they were still worth it.  When I started paying off debt, I barely knew where to start, given the fact that I had 6 different things to pay off (which I soon increased to 7 with a car loan), but as recently as last month, I started to wonder aloud which debt that I should pay off next (this one or this one), based on cash flow projections and amount of time to slay the beast.  Here’s where we are now:

  • Credit Cards: $0 (read about it here)
  • Vehicle: $17,967
  • Student Loan: $16,563

With some spare time this year (I dont really remember when, but I think it was in june), I looked at where I was in a handful of areas and decided on some goals for the year in a handful of categories.  The one I set for my total debt level was $37,500 (at or under), and figured that if I stretched, I could make it.  Well, as time would tell, I turned out to be wrong, and met that goal at the end of october.  I guess next time I need to set some more ambitious goals (or waste more money….wait, no).  As it currently stands, the total amount of my debt is:

  • Total Debt (Dec 2010): $34,530

This means that I was able to pay off $18,044 of debt in 2010!  This just over 1/3rd of my total debt, and I’m pretty excited about it.  Now that I know what happened this year, it will help me plan for next year and establish some goals to keep me focused on my repayment and getting to the level of zero!

How did you do this year?  Did you build up reserves, pay off debt, or do neither or both?  What are you looking to do next year?

November 2010 Monthly Review

At the end of every month, I go over how much I was able to pay down my different debts for the month.  I think it gives readers a nice picture and shows that not all personal finance writers are debt free and stacking large amounts into savings every month.  Like some of you, I’ve still got student and vehicle debt.

Student Loans:

Earlier this month, someone I know (who is about 6 years older than me) posted on facebook that she had paid off her student loan.  I was happy for her, but I am going to work as hard as possible so that I wont be paying them off until I’m 31.  I’m that they will be gone when I’m 27 (about 18 months from now)

Nelnet Student Loan $ 0 ($0)  I paid this one off last month after a few weeks of very long hours at work.  It’s been nice to see it go, although I haven’t really seen much of an impact on my finances (yet).

Direct Loan  $5,929 6,189 ($260).  This one has been moving down about 250 per month for a while.  My parents help out with this one and I make my regular payments.  This loan is now my top priority, and although my ambitious goal of paying this off at the end of the year is out of the question, I’m still going to work hard at it.  I am getting a snowball payment ready for this loan, and while I don’t know the exact amount yet, it’s looking to be between $1,200 and $1,600.  That will be making progress, to be sure. Update: I sent my payment to this loan on 12/3/10, and it was $1400 even.  After gaming out my finances for the month, I’ll probably be able to make another payment (though not as substantial) to the loan next week.

Great Lakes Loan $ 12,459 12,537 ($78)  Just sent my regular minimum payment to this loan.  It looks like about half of the payment that Im making to this is going to interest and half is going to the principal – that sucks.  What can you do, though?  I’m thinking of moving this one to the end of my priority list, but it will be difficult because of the amount of interest that I pay on it every week.

Truck Debt:

This is for my vehicle.  I had already started trying to become debt free when I bought this, so I was quite torn as to wether or not to take on new debt while I was trying to eliminate other debt.  If you want to read more about it, check herehere and here.  Despite most of the advice I heard, I went ahead and took out a loan on this.   I made the right move.  It has been much easier to gear up on my other debt when I know exactly how much i’m going to spend to keep the car running every month.  The amount may be high, but that peace of mind is near priceless.

Last month, I mused on what to do with this loan – while it’s a large loan, paying it off would free up a huge amount of cash flow for me on a monthly basis.  If you’re interested in reading more, you can here.  There will also be a follow up to that post coming soon.

Ford Credit: $ 18,269 ($282): Just made the regular monthly payment on this loan. This is becoming an even more interesting case as the time goes by.  As those of you who read regularly know, I drive a lot to & from work.  I’ve owned this car for less than a year and there is almost 35,000 miles on it.  I haven’t taken any long road trips in it, that’s just standard driving to/from work and driving around town when needed.  I will be taking a trip this weekend in it, and that will be another 1,000 miles or so.  The 3 year, 36,000 mile warranty that’s saved my butt before will be gone a week from now.

Total Debt Level: $36,657 ($570) As I mentioned earlier, I haven’t made a snowball payment yet, so that’s why this number is so much smaller than normal.  Unfortunately, it also points out something slightly disheartening: If I only made the minimum payments, almost 20% of my pay goes to paying for my past.  Someday soon it will go to saving for my future.

New in Monthly Review:  My Payoff Plan (Subject to change).  This is the order that I’m currently going to pay off my debts in.  It doesn’t quite go from smallest to largest, but I think its the best for me (at this time).

  1. Direct Loan
  2. Truck Loan
  3. Final Student Loan

October 2010 Monthly Review

Student Loans:

I just wish these loans would go away.  I don’t want them anymore and I don’t want to deal with them anymore, so I’m trying to pay them off as quick as I can.

Nelnet Student Loan $ 0 ($1,750)  I posted about this friday, but I’m pretty excited to have this one all finished.  It has been named “Payoff Target” in Mint since the beginning of July.  It only took me 3.5 months to pay this off….Awesome.  At the right is a screenshot of what my loans look like in mint now.   I also renamed the loan, letting it know how I feel about it now.

Direct Loan  $6,189 ($256).  This one has been moving down about 250 per month for a while.  It’s nice to be able to set this one in my sights, and I think last months goal (End of December) may have been a little unrealistic, but what the hey.  I’ll try and probably fail, but you cant fault me for trying!

Great Lakes Loan $ 12,537 ($150)  Just sent my regular minimum payment to this loan.  However, mint is again having trouble with the amounts.  The amount shown at right is not correct.

Truck Debt:

This is for my vehicle.  I had already started trying to become debt free when I bought this, so I was quite torn as to wether or not to take on new debt while I was trying to eliminate other debt.  If you want to read more about it, check herehere and here.  Despite most of the advice I heard, I went ahead and took out a loan on this.   I made the right move.  It has been much easier to gear up on my other debt when I know exactly how much i’m going to spend to keep the car running every month.  The amount may be high, but that peace of mind is near priceless.

Ford Credit: $ 18,551 ($290): It’s interesting to watch the amount of money that gets applied to principal each month.  It seems to be very heavily dependent on what day I make my payment in the month.  It looks like I submitted my payment a little early on this one as well, as the principal went down $9 more than it did last month.  Mint has also been having problems updating this loan, and I dont know how long it’s been going on, but it’s been stuck at that number for months.  I don’t know how to fix it, and I’ve tried looking in their support forums for tips, to no avail.

Total Debt Level: $37,277 ($2383) WA-HOOOOOOO! I was able to reach my goal of getting my total debt level down below 37,500 by the end of the year.  I don’t think I’ll set a new number, but I’ll just keep going at it full bore and see where I end up.  I do have some things to think about though, mostly what to focus on after my direct loan.  The student loan balance is lower, but paying off the truck would do wonders for me with cash flow, because the monthly payment is more than double my student loan.  Add in the insurance savings i’d net from not having all coverage on the vehicle, and I’d be raking in almost 3x more cash.  It’s something i’ll need to think about.

This month has been very tedious.  I was working 80 hour weeks for most of the month, and things got quite crazy.  I was able to stay on top of things (for the most part) and even get in some quality time with friends and family.  The long workdays sucked, but the paycheck (when it comes) will be awesome, and will be my “stick of dynamite” for the Direct Loan.  There’s going to be a lot going on with the holidays working up, but hopefully I’ll be able to get a lot of work in (last year, January was my highest grossing month, by a long shot).  I’m looking for another repeat performance.

How are you doing towards paying off your debt?

How to Payoff your Nelnet Student Loan

Well, it’s time again to do one of my favorite things: Write up a post on making a final debt payment.  I did one for when I finally paid off my last credit card here and now I can do one for my Nelnet Student Loan.  (I’m talking strictly the steps needed to take to pay off the loan.  If you want to know How to Pay off debt, check out this post)

This loan and I have kind of had a rough history.  When I first had to start paying back my student loans, I thought I only had 2, and didn’t know about this one until I got a missed payment note in the mail.  Whoops! I remembered taking it out, but I had figured that it had been lumped in with my other loans.  Unfortunately it wasn’t, and that is one thing that really bothers me about student loans.  Many students have payee’s coming out their hind parts, and consolidation isnt always the right move.  It wasn’t for me because I was planning on paying them off in a few years, and once I did that, it wouldn’t matter.  I also had some very low interest rates on my student debt, and some were subsidized as well.  I would rather just pay 1 person, but that’s just me.

With this loan specifically, I’ve gotten questions on it before regarding the payoff schedule.  In short, a reader wanted to know what nelnet did if extra was paid on the loan.  Short answer: They moved your next due date forward to get their (interest) money.  He also asked me what happens when you pay off the loan.  Here’s what I did to to pay it off.  (I tried calling, but was told to go online)

First, you need to log in to your nelnet account.  You should already know how to do this if you’ve been making payments to your loan thus far.  Once you’re logged in, go to the My account tab, and you should see this:

Pay off nelnet

As you can see, after I made the big payment at the beginning of this month, it pushed my due date into 2014.   I don’t want this stupid little thing hanging over my head (and accruing interest) until then.  I want to pay it off.  Above the box, you’ll see I’ve circled the “click here” to obtain your 10 day payoff quote.  Once you do that, it will take you to another page that will tell you how much you  need to pay them in the next 10 days for them to consider the loan paid in full.  It takes into account interest that has accrued on the loan that is outstanding, estimated interest over the 10 day period (I’m assuming this was more relevant when people paid bills by paper check and snail mail) and the current principal balance on the loan.  Here’s what mine looks like:

Pay Nelnet

So, I can happily say that I submitted the online payment on 10.21, and it has cleared the bank.  Since this is the first student loan that I’ve ever paid off (but  not the last, rrrrgh) I was curious as to what would happen next.  Would I get a letter from the servicer saying that it has been paid off ?  (Not sure, but I don’t think so)  Would my credit report score improve? (not sure on that either) Would I have not sent the right amount and owe them something ridiculous like 32 cents?  (not at all).   After the payment clearing the account, here’s what my “My Account” section looks like:

Nelnet Loans

I now have a $0 amount outstanding – it’s awesome!  Here’s another shot of the group summary.  This is what you’ll want to see when you’ve sent them the final payment.  Notice on the “status” it says PIF by borrower, Paid In Full.  Not sure why it still shows me needing to make a 38 dollar payment, though.  Here’s the shot:

nelnet4

There is the process to pay off your student loans.  Make sure to keep your focus and you’ll be here in no time!  Good luck, and if you have any questions, contact me or leave them in the comments.  I’d be happy to answer them.

Where Would I be Without 2 jobs?

Unfortunately, this is all very difficult to predict due to the fact that I would have been making different decisions if I had less income, starting with the car, and who knows how far the reach would extend from there.  I’ve tried my best, though.

As I was driving into work the other morning, I was thinking about my jobs.  I’ve been working in the “real world” for over a year now, and have had 2 jobs for most of that time.  When I found a new job, my original job said it was ok for me to stay and work afternoons/nights and weekends for a while.  I wanted to get rid of my debt fast, so I figured that I may as well give it a swing.  I also realized that this was probably the best time for me to do so, as I don’t have children that need to be cared for.  It also works well because once I get out of debt, it will be easier for me to build savings (from increased cash flow) and stay out of debt.  I also figured that I may not always have as much energy as I do now to work as often as I do.

I began to wonder where I would be if I had only 1 job this entire time.  While my expenses would have gone down slightly, it wouldn’t have been much.  I’ll assume that my car would still need to be replaced and that every other major thing would hold constant.  These numbers will most likely turn out to be quite speculative, as my purchasing and behaviors would have changed if I had less available cash.

Going back to my monthly review in November 2009 on this, the first thing I noticed is that my budget is very, very different now.  I pay a lot more for car insurance (here are some car insurance quotes if you need them) and gas, to name 1 thing.  The other thing that I noticed is that I was still in my post graduation 6 month grace period for my student loans (It ended in December), so those did not even make the list!  There was $4,800+ worth of credit card debt left at that time.  I don’t remember what the minimum (combined) monthly payment was for these 3 cards, but I think it was around $200.

After this, my blogging gets fairly thin, but in my next update at the end of February had actually brought my credit cards up to 6,000 total after an adventure in vehicle sales tax.  I paid that off right after I charged it, and I was sitting with about 4,000 on credit cards still.  Unfortunately, I had taken on a lot more water than I had anticipated.  I now had 3 student loans to pay monthly (total: $300) and a car (plus more expensive insurance, total $500).  At this point, loans alone were running me about $815 per month.  It should be noted that if I only had 1 job at the time, my car purchase would have been much different than it actually was.

I think that I would have limited a car payment to 200/mo, bringing my total monthly debt to 700.  With that, there would have been about $400 worth of payments to start my debt snowball with.  The way my snowball has been working so far, there has only been 1 month (in 12) where I’ve applied less than 1,000 to my debt.  Its usually been closer to 1200 to whatever was the focus of my snowball.  Just by that rough estimation, the second job has helped me move 3 times faster than I would have been able to otherwise.  Given the hole I was digging out of, this is no small feat, and could mean freedom from debt years earlier.

I’ll be able to start saving more years earlier, and allow compound interest to work in my favor longer.

It’s been worth it to me.  Are you willing to sacrifice to slay your debt?

PS – I don’t even work as much as some of the other bloggers.  Jeff at Deliver Away Debt is killing it too, digging out of a much larger hole much quicker than I am.  Godspeed, brother.

What Would You Do With 10,000?

I recently saw this article on CNNmoney about what you should do with 10,000 right now.  They have this question for those of you that are loaded (What to do with 50k) and those of you that are itching to torch that emergency fund (what to do with 1k).  Some of the entries sounded a bit frivilous (at least for me) but I could see the value in a lot of them.  First, they mention that because of the tough economic times, people have a lot of cash squirreled away right now (I really don’t know if that’s accurate), but here is the list:

  1. Buy Museum Quality Art – Yes, the art market has taken a beating, and yes you’ll probably be able to get some good deals and could turn them into “investments”.  On the other hand, you’d have to take care of it and look at it all the time.  For me, I wouldn’t drop 10k here.
  2. Do Some Good – They suggest donating it to a charity as well.  I think if I had no debts and was stable in my financial situation, I’d definitely consider this.  For me personally, I’d like the money to stay in my community so I’d pick a local charity, but any charity that you identify with would be great.
  3. Invest in Stocks – They specifically  mention blue chips like Utilities and Telecom because they are necessities in this day and age.  I agree, and typically these stocks pay dividends and are reasonably priced (AT&T/Verizon are, anyway).
  4. Build a T-Bill Ladder – Also, a good idea to watch your money grow.  You simply buy 5 $2,000 dollar t-bills: one for 1 year, one for 2 years, one for 3 years, one for 4 years and one for 5 years.  Once each one matures, use your principal + interest to buy a 5 year note.  In 5 years, you’ll have a bill maturing every year.
  5. Buy a Target Date Retirement Fund – Great Idea.  Make sure to keep the fees low, and you’ll be set with cash when you’re ready to play bridge all day.
  6. Play a Hunch – This is essentially betting a portion of your portfolio (keep it small people, 5-7% max) on an area you believe will grow quickly.  Emerging foreign markets?  Basket weaving supplies?  Red (on the roulette wheel)(Just kidding).  Play the hunch with your 10k.  You could end up a winner!
  7. Pay off your kid – Also a great option.  Offer to get your kid set up in an apartment (preferably as far from you as possible) and pay the security deposit and some rent.  Slip the youngster the rest in c-notes and tell him not to spend it all in 1 place.  Use the remaining money to build a man cave.
  8. Grab some tax credits – Great Idea.  Lower your energy bills by replacing windows, adding more insulation, installing a programmable thermostat.  These will help  you use less energy, live greener and save some good money in the winter!
  9. Buy Growth Stocks – Good option.
  10. Put it in your IRA – If you’re married, you’ll have enough to max out your spouse’s IRA as well.

Unfortunately for me, I’d probably use the money to pay down debt.  I may take a bit out (500-1000) and use it to go on vacation, but I may not.  However, if I didn’t have to do that, I’d probably go for the energy tax credits first.  There’s always more you can to to conserve energy (or generate it) in your own home.

What’s the Best on this list?  The Worst?
What would you do with the money?

September 2010 Monthly Review

Student Loans:

I just wish these loans would go away.  I don’t want them anymore and I don’t want to deal with them anymore, so I’m trying to pay them down as quick as I can.

Nelnet Student Loan $ 397 ($1,350)  While I have not sent this yet, this is what I’m expecting to send in a few days.  Unfortunately I couldn’t squeeze an extra $400 out of last months budget (I should have worked an extra 30 hours), but I’ll be able to take care of this by the month’s end, and then it’s on to the next one!

Direct Loan  $6,439 ($253).  I’ve been paying my new payment ($77) to this, and my parents help me out with this as well.  I recently figured out that if you’re going to make 2 payments to a student loan, it’s best to do them one right after the other.  The reason for this is that they clear out the interest then apply the remaining to principal (I have a full post on the topic here).  If your next payment is a day or two away, you will be paying more of the money to principal than to interest.  I’ll start snowballing this next month, with a goal of having it gone by Christmas.

Great Lakes Loan $ 12,635 ($150)  When I originally checked on this in mint, it said I owed more than I did last month.  I didn’t think that could be true (and would be hugely demoralizing if it was) so I went to the borrowers website.   It had the true amount, but I’m beginning to notice mint does not always play nicely with debt.  That’s a good enough reason for me to get out of debt!

Truck Debt:

This is for my vehicle.  I had already started trying to become debt free when I bought this, so I was quite torn as to wether or not to take on new debt while I was trying to eliminate other debt.  If you want to read more about it, check herehere and here.  Despite most of the advice I heard, I went ahead and took out a loan on this.   I made the right move.

Ford Credit: $ 18,841 ($281): It’s interesting to watch the amount of money that gets applied to principal each month.  It seems to be very heavily dependent on what day I make my payment in the month.  It’s due on the 15th, and sometimes I pay it the first week of the month, sometimes the second.  I applied $7 more to principal last month than I did this month because of it.   Kind of a lot when you’re thinking about it.

Total Debt Level: $38,042 ($2,499) I was kind of shocked to see that I made this much progress, but I’m no where near out of the woods.   It does look like I’ll reach my goal of having my total debt level under 37,500! (actually, if I didnt make that by the end of the month, I’d consider myself a huge failure.

Last month I went on a small vacation at the beginning of the month, so I didn’t get to pay down as much as I would have liked to.  This month was nice because I got a lot of hours at my second job and I was fairly tight with my spending.  The month after this should be pretty good too as my second job has gotten rather busy and I’ll probably be spending more time there (read the entire weekends) for a bit until  a project wraps up.  On the upside, my snowball is gaining traction and will soon move on to a new target!

How are you doing towards paying off your debt?