HisHersMoney

We are almost debt free!! I can’t wait until we can say we are completely debt free. We have about $600 left on the credit card to pay and less then $2000 left on His student loan. We will be paying off the rest of the credit card in this upcoming month and have already stated paying an additional $100 a month on the student loan making our payments around $175 a month.

Side note: We do have a car loan. We made a decision over a year ago to have one car loan at a time. We would finance the car for four years and when it was paid off we would replace the other car. So yes, we will always have a car loan to pay on but we plan on driving each car for eight years. It’s the cost of having two cars for us. YMMV (your milage may vary).

So far since we have started this blog we have paid off one car loan, two other student loans and over $14,000 in credit card debt. It wasn’t easy but I don’t feel like we’ve had to give everything up to do it. Just buckled down and made it our priority.

Next goal is really working on the savings account!

Well we finally received a payment we have been waiting for from His past-past employer paying his unused vacation time. After taxes the amount is about $3700. We instantly put $3400 towards the stupid credit card bill bringing it down to just under $1300.

We kept the other $300 in the checking account. His just started a new job and his last paycheck is not quite a full paycheck so this kind of evens everything out.

Keep an eye peeled for an upcoming “we’ve payed it off” email which we hope will be arriving soon!

In my previous post I wrote about our new car and the associated ridiculously large loan associated with it. We financed $37k, none of which was any negative equity. We traded in His’ car which had the most miles out of our current cars and was also starting to need some work. While He was sad to see his car go He understood the rationale and our trade in value was a wash for what was owed on the car.

We did a 4 year loan on the new car. Why a 4 year rather than a 3 year of 5 year? My rationale is as follows: When purchasing a new car most people take a 5 year loan on it. Well, since the car is already about a year old that leaves 4 years on what would have been the original loan. I think that you shouldn’t exceed the original standard 5 year loan period and if the car is older than 5 years then you should pay cash for it or be doing an extremely short loan.

By keeping within that 5 year financing period the goal is to make sure the car is at least worth what you owe on it. Of course if you by a car brand new you’re immediately up side down on it which is why we look for a car that’s about 1 year old.

Our other car is a 2004 model and was originally purchased in March of 2004 for around $30k by it’s previous owner. I purchased it in Sept of 2005 for $18k. I originally did a 3.5 year loan on the car which I actually refinanced with my credit union when they were offering some great interest rates. They were only allowing even year terms with the offer so it changed the length of my loan but I’m happy to report that the car will actually be paid off in 3 years, 3 months!

The originally warranty expired in March of 2008 and we actually did buy an extended warranty. We shopped around and ended up going with an extension of the bumper to bumper coverage from the manufacturer which they offered with 10 months of interest free financing (I think we had to pay a $25 fee or something for the financing). Our payments were $140 for 10 months and the car is now covered for another 3 years with more than enough miles included.

We plan on keeping this car until at least the extended warranty is up if not until it dies!

As we prepare to close out 2008 and begin 2009 it’s time to look at what we’ve accomplished this year and our goals for next year. Back in March when we started this blog Hers had just over $19,700 in debt. Of which, $11,186 was student loan debt. I’m happy to report that all of Hers student loan debt has been erased!

How did we do it? We had two months of free rent as part of our move-in deal at our apartment which we took in Sept and Oct which freed up a big chunk of money. We also put every spare dollar towards it every month and when I received my yearly bonus in Oct I took 100% of it and paid the balance off. I can’t even begin to tell you how great it felt!

Our car debt was $8,528. We just made our regular payments of towards this debt and we currently owe about $4,400. I should be receiving another bonus in Dec and plan on paying this debt off completely. When trying to figure out where to apply my bonus funds we looked at all of our balances and all of our monthly payments and decided that completely eliminating the car debt on that car would have the biggest impact on our monthly cash flow.

So, you would think I would be able to claim debt freedom on the Hers side of things. Not so fast. There was a rather large purchase made shortly after we got married in August. You see, we bought this convertible BMW. The one we purchased is about a year old and originally costs about $55k and we paid around $43k for it. While still a substantially huge amount of money at least some one else ate the first $12k of depreciation. We did a four year loan for $37k and paid the rest cash. The payment is absolutely ridiculous (around $900 a month) but I absolutely love it.

So while many things have been paid off, we go into 2009 with a car loan of just over $35k.

Our cell phone bill is out of control!

There I said it. With four lines currently on our plan, one of which is a blackberry and another an iPhone I’m sure you can understand how it can quickly sky rocket. Our plan currently has 1400 anytime minutes (we are on At&T/Cingular) which after reviewing the last six months worth of bills we never go over let alone even get close to. If we switch to the next lowest plan which has 700 minutes we will save $20/month. I have been hesitant to change our minutes for many months because of the drastic difference in number of minutes. I’m sure the companies do this on purpose.

We used to get a nice corporate discount on our monthly bill but once we added the iPhone we had to forfeit any and all corporate discounts unfortunately . But, His really likes his iPhone and doesn’t seem to want to give it up. I have a blackberry which I absolutely adore so between the text messaging and the blackberry plan it adds a fair amount to the bill as well.

Everyone in the personal finance blogosphere has a budget or has written about budgeting many times so I’m sure this isn’t a new concept to anyone reading this. For us here at HisHersMoney this is the first time we are working on a joint budget.

This is really just our first cut at things and I’m sure there are many places we could really trim the fat. A few things I would like to point out:

1. We have given ourselves $100 a week as our own money. Each can do whatever they would like with their money no questions asked. But when it’s gone, it’s gone. If there’s something we want and it costs over $100 then it will require a little saving.
   • For instance, in July I (Hers) plan on going to the beach for a long weekend with some girlfriends. The costs will include the shared hotel room, gas, food and entertainment. I will need to continue to save up over the next month to cover my trip expenses.
2. There’s no credit card usage. (Nothing else to really say here)
3. Not counting the cars we have roughly $15k in debt. I’ll do an exact calculation and payment plan in a few days. We currently have $1100 a month budgeted to go towards this. I expect that we should be able to pay more each month by cutting back in some other areas but I know that at least this minimum amount is budgeted.
4. Both cars are scheduled to be paid off within a year and a half so we are most likely going to let that debt and payments ride it’s course. The interest rates are decent on them and we have absolutely no intentions of buying any new vehicles at this point.
5. Her monthly income shown is after a $1200/month 401k contribution
6. This should easily increase our net worth by about $55,000 over the next year. Good yes, but not great, not exceptional, not on track to being where I would like to be……

So, the basics are shown below. We welcome and feedback, questions or comments you might have as we work to refine out budget. I will be doing a follow up post on the savings part which we did some updates on as a result of a recent financial advisor visit (yes I found a new advisor)as well as a post regarding an updated debt summary which we really need to look at ourselves.

Well, the remaining balance was only $311 but it felt so good when I made the last payment online today it felt so good. I had the payments set up to debit out of my checking account automatically each month which made it really easy to avoid any late payments or missed payments. Unfortunately having the payment taken out each month automatically also makes it hard to make extra payments since you aren’t making a manual payment each month.

The key for me was having online access to my account where I could make extra payments online easily and quickly. Every once in awhile I would go online to check my balance and would be compelled to make some sort of extra payment while I was one there.

So, in the last few months I have been making payments in excess of $300 and now it’s GONE!!!! One down and three to go! So the most important things to do:

1. Set up your payments automatically, even one late or missed payment can negate a entire month’s payment.

2. Set up online access to your account to view it at all times.

3. Log on online and view it often, while you’re there make an extra payment!

After reading about the Debt Snowflaking process over on I’ve Paid for This Twice Already I decided to give it a try. If you look on my ABOUT page you will see a simple break down of my current debts. I basically have some student load debt and my car loan. My car loan is manageable with a payment of $455 and a balance of about $8100 currently. My student loans, while manageable, are really just getting on my nerves!

I really had every intention of getting them paid off within ten years of graduating. That ten years is pretty much up now, and they’re not paid off. One of them is my portion of my grad school. My company paid the difference ( I still have to finish my thesis and pay $3300 upon it’s submittal, but I have that money in savings) which really helped out.

I still have about $5500 left in undergraduate loan debt. I basically want this debt gone NOW! Even though my graduate school loan has the highest interest at 11% and I’ve paid it down from $9000 to $5700 it just wasn’t giving me the emotional satisfaction I really need in my debt repayment process.

I’ve really never made any huge effort to pay extra on my student loans before now so I have a little catching up to do. I attacked the two smallest ones which we both just under $1000 each. In the past few months I’ve been making extra payments on both of them and now I only owe $310 on one of them and $385 on the other. I see no reason why both of these can’t be paid off next month since my regular payment would be around $100 each anyways. I know it will be a great feeling to just finish both of them up.

So, what is my personal recommendation? Pay your lowest debt off first to get the feeling of accomplishment and then re-evaluate from there. I think I will work on my highest interest one once these two small ones are done to reduce my interest.

I am a little behind that I don’t have a good automated way to track my money. I literally work with an old fashioned check book register and so far it’s worked pretty well for me. Every time I get paid I write it in and subtract all of the bills that have to be paid from that check and then I know exactly how much I have left over. I have all of my savings and investments taken out automatically so whatever is left over, no matter how much or how little that check, that’s what I have for spending money and money to pay extra on my bills.

This month was pretty average in term of extra money so I made paid a little bit extra on my debt.

Student Loan 1: Due $78 Paid $278

Student Loan 2: Due $139 Paid $138

Student Loan 3: Due $118 Paid $118

Student Loan 4: Due $99 Paid $100

Car Loan: Due $455 Paid $455

So, it wasn’t too much extra paid but hey, $200 extra is $200 extra! My goal for next month is to double that and pay $400 extra. We’ll see how I do!

So we all know that it’s smart to have an emergency account. And it seems that most people recommend to have 3 to 6 months of your salary set aside. For those of us in debt it can be a delicate balance between saving and paying down debt. Do you save, do you put all your extra money towards debt, or do you try and do both at the same time? The third choice is the one that I have made.

I am putting money into savings at the same time as I am using the snowflake method of paying down my debt. Is that the best approach in a purely monetary sense? No. However, it gives me the self-satisfaction of seeing my savings grow and debts paid down to zero.

Another reason for my method is that besides the mental aspect, there is also the specter of small unexpected expenses. Just yesterday I did not have much change with me to park on the street for an appointment that was scheduled for 1:30pm. Needless to say, I was still waiting until almost 2 before I even got into the office. By that time my meter had run out and since I happened to be parked within a 1/2 block of the courthouse and police station, of COURSE I GOT A TICKET! The expense is not large. I can afford the $25 fine. But I don’t want to pay it and of course if I had a tight budget it is possible that it could create a problem.

Moral of the story? Besides taking enough change to pay for parking? Don’t focus entirely on your debt. The last thing you want to do is pay extra on say your credit card only to be forced to take a cash advance on the same card the following week. Give yourself a little breathing room.