Wednesday, May 8, 2013

RESET - one year later

I have spent 3 days working on this post to shorten it.  With constant interruptions, this is the best it is going to get.  Sorry for the length!
Last year, we did a RESET of the the debt.  For tracking purposes, this was going to change the annual date of looking at the big picture, although I do continue to give a nod to the blogiversary too (in August).

So the RESET entailed taking a loan from G-man's retirement account, after paying off a different loan and waiting the 60 days, per regulations.  We never included that older loan in our debt number, although we do count this newer loan.  This all happened in late April 2012, and it was early May when we had officially paid things off with this loan.

The loan was for $38,000, which consolidated 3 CCs and Lending Club, and included some money for the new mattress we purchased last winter.  This loan is autodebited from G-man's bi-weekly paycheck, at $380.15 a payperiod.  The interest rate is 1.875% (I think!).  It is a 4 year loan, so if we do absolutely nothing but the minimal, it will be paid off in late April/early May 2016.

Because this loan has such a low interest rate, most of the payment goes to principal, which is just refunding our retirement account.  Previously, the interest rates on the CCs were 15.99, 11.99, and 9.24%.  So obviously, our new rate was WAY better!!!

Taking this money from our retirement account sparked alot of debate.  Very few people thought it was a good idea.  I will say, one year later, it absolutely was the right choice for us.  While our CC debt did go up (more in a minute), we were able to pay off just shy of $10,000 in the past year on this loan.  With the interest rates such as they were, there is no way that would have happened without the loan.

So where do we stand now?  Current numbers are posted on the side bar.

Retirement loan - One more paycheck (next week), and we will have paid off $10,000 of this loan!  We are very happy about this, and while it stinks that we pay just under $400 a payperiod, at least we are paying it back to ourselves, and not to a big credit card company.  We have toyed with changing the amount we pay (we can pay as much as we want, but the $380 is the minimum).  But for right now, it stays as is.  We would like to get a little further down the line before we make any changes.

Student loan - Not a whole lot to say on this.  The monthly payment is $229 at 3.375%.    This consolidated loan is technically is 2 loans, where one has a balance of $1200 (the very last of my undergrad degree), the remainder is my graduate school.  Long story why it isn't one in the same.  And if we were to pay extra to this loan, we would designate it to the little part.  But since we don't do is a non issue.  The payoff date is 2024, based on the minimum.  Um....that is the year my KIDS will graduate college.  No, that won't work.  There is NO WAY the loan will be around then.  Based on current plans, the whole kit and kaboodle will be paid off in 3-4 years, so I don't pay attention to the 2024, other than to remind me that I wish I understood all of this better when I was younger.

Car loan - Again, not much to say on this.  $230 is autodebited on a monthly basis, and is slated to be paid off  in late 2016 if we don't speed up the process.

Credit Card - This one is the thorn in my side.  It was under $1000 when we did the retirement consolidation loan.  And then there was a car repair.  And the *(^&*#$^ trip to see my parents.  And a few other slip ups.  And another car repair.  And here we are.  It is on its way back down, but it is frustrating that it was almost paid off and we used it again.  The slip ups are on us.  The car repairs....that is a function that we can't seem to go a decent amount of time without SOMETHING happening, despite saving for car repairs.  And the trip to my parents was certainly NOT vacation....but it was something that had to be done.

Dentist - This little darling bill was much smaller a year ago.  Then I needed a root canal and a crown.  Since our insurance didn't cover it, we had to foot the bill.  The first part of the money came from our FSA, which then dried up shortly after.  And we have been paying since.  But since our insurance doesn't cover even a cleaning, regular dental stuff contributed to the bill.  At least it is under $1000 now.

Bossy's supplies - Earlier this year, we received a financial waiver that reduced our bill by 60%.  We had a 100% waiver several years ago, but when the company changed hands....all that went away.  The bill continued to rise until the company changed hands again, and we got some much needed help.  One thing that has helped us this year is that Bossy is being weaned from this, so we aren't using as much.  However, we were able to order "extra" when we hit catastrophic at the end of 2012, and that extra has been carrying us this year.  We haven't needed to order food for him since December, and we probably have another 2 months worth before we have to order.

Right now, we are about 5k less than where we were when I started this blog.  And 9k less than a year ago.  Based on the minimums, we will pay off at least another $11k just on the retirement, car, and student loans.  So by the end of the year, we should be at the lowest debt number we have had since starting the blog!!!

Our goal is to be under 60k by calendar year end.  We are optimistic that this is possible.  It really will be about our personal spending.  The 3 loans do what they do.  The credit card just needs to continue to go DOWN.  And dental emergencies need to stay away!!!

There ya go!!!!  Long winded, kind of boring, and not sexy at all.  Need to think of a financially sexy post, to spice things up......suggestions welcome!


  1. Well, it is the PF blogosphere, there's no need to be sexy or super interesting... it is numbers, and no matter what you do to them at the end of the day, they are still numbers. What does matter is the experience, and the choices you guys have made and what has worked and what hasn't. You mentioned many were against that retirement loan, but you went with it anyway and it helped you. Hopefully that can inspire other people in similar situations. Are we going to see you hit 60k by January? That'd be quite a celebration!

    1. Under 60k is the plan for Jan 1. Like I said, the 3 main loans will go down about 11k all on their own. It is just not adding anything new!!!

      There is the idea of converting the heat to gas from oil...and that would add to the debt, although the per month budget wouldn't change, as we would be paying the loan vs the oil bill. It is a work in progress.

  2. Sounds like you've got a good solid plan in place!

  3. Well I have notices your progress and it is like mine. It seems slow but it is speeding up. Most people who start into a debt recovery progtam, stall and do backward and then start actual slow progress. We can do this. I can't wait to see that $60,000. I will look for it every day!

    1. You said it. We started off strong, then life happened, and then we stalled and went backward (last year we were at 80k!). And now...progress.

      We will celebrate together when we kick it all to the curb!!!

      60k will be in December or I still have a little time before we get there.

  4. So what's the reward for $59,999?

    1. Oh you little sneaky one....there is actually another number I have in mind to celebrate. :) And isn't zero!

      60k in debt is still a ton of debt!!!

      But, yes, there will be a mini celebration in the future. It will most likely be related to the house, as we tend to want more for the house than we do as individuals.

      Stay tuned!

  5. This comment has been removed by the author.

  6. This is regarding the credit card (CC 4). I'm a big Dave Ramsey disciple, and since your Emergency Fund is nearing $2,000 (Baby Step 1), I would cut up that credit card as soon as you hit that mark. Don't close the account, but cut up the card. I say that because we kept doing the same thing, finding excuses to use that damn card.

  7. Hi Mysti, sorry the site doesn't let me comment on my phone, so I only manage to comment when I fire up the ancient laptop! Just popped in to say it looks like great progress and more to the point, everything's set "right" (interest rates etc.) so the progress *will* speed up. You will feel great once you crack the $60K mark!

  8. I also wanted to take a loan out against our 401k - also heard it was bad, but also received a lot of support. Unfortunately my husband wasn't one of the supporters. He doesn't want to touch it & since it IS his .... I guess we just mosey forward without it. I do feel your pain. I just started this debt journey & already feel stalled :(

  9. I would not list the 401K loan along with other debts, since it's not a true debt. You took money from your own account when you accessed that money, and you are replacing it over time; the "interest" is really just additional amounts you are adding to the account. On a balance sheet, the 401K is an asset and it's smaller after having accessed that money, so that should be the only way the transaction is noted. The smaller account balance shows where the money was shifted.

    Whether or not you list assets in your public accounting of your financial situation, don't show the 401K loan as a debt. It's implied that debt is owed to outside entities; debts to yourself aren't debts in the usual sense of the word. Give yourself credit for having brought your consumer debt down considerably.