99k by 2011

Well, it’s official. I’m worried about a possible tax bill. I think it might be as much as 5k, but I really am not sure. I used Jesse’s tax spreadsheet that comes as a “bonus” with YNAB Pro, and I know that it is more of a guideline then anything else, and I did notice there’s nowhere to enter in one’s child care expenses, so that might help things along to lessen a possible bill, but as it is, it’s better to be well prepared for the worst then count on it not being bad.

So, that changes things with the upcoming bonus my husband will be receiving in March. We are going still going to take 1k and blow it (wheee!) But the rest, we will be sticking in savings until we know what’s up with the taxes.

I was also planning on trying to start putting a paycheck each month from “supplemental” to “primary” (part of the YNAB functionality to get you living on last month’s income,) but have changed my mind in that regard as well. Instead, I will just sock money away into a “buffer” category, which is kind of the same thing, but with the benefit of me being able to see the balance in that category and know that it’s there for possible tax bill use as well. If we do have a bill, we’ll probably fund one our IRAs to lessen it’s affect as well, even though that will mean even more money out of pocket. I would rather have more money out of pocket (as long as we have it) and give less to the government, you know what I mean?!

So basically, the plan is to wait and see. We are going to go to a CPA this year also. I think our finances are getting complicated enough to warrant the professional help and save us the headache of slogging through turbo tax. Of course, I still need to get all the info he will need, so there will still be some slogging and math to do. (day care costs minus the cost of kindergarten minus theFSA costs, etc.).

So.. I guess I’m going to be opening a high interest savings account in preparation of stashing bonus money away. I will be sad not to see a huge chunk knocked out of the debt on my spreadsheet.. but hopefully it is just delayed.

I have made a (google docs) spreadsheet which kind of “counts down” the progress I’ve made (err, WILL be making) on our debt. This one above is just for our credit card debt. You can see that I gave a few columns for each credit card, 1 column for the payments, another column for the running balance kind of like a register, and then added a third column to show the actual interest for past months. For months that have already been completed, I put those numbers in bold.

I’ve already found that my method of calculating the interest in the running balance column leaves something to be desired, but it wasn’t too far off, so I am not worrying about it. (I did the calculation like this: (Previous Balance - payment) * 1.012 = new month’s end balance. Then, when the month actually is over and the statement comes, I fill in with the actual new balance and actual finance charge.

(I am WAY far off calculating the interest on our home ec loan, but as it calculates the balance a little HIGHER than it actually is at the end of the month, I feel pretty good putting in the groovy lower number each month, so that’s ok too. Amortization, how you boggle me…)

I find myself checking this spreadsheet out all the time, making little tweaks here and there. Initially we decided that we could throw $1000/ month toward debt, so I populated the spreadsheet with that in mind. The “total paid” column just calculates what the total payments were for the month, which helps me out in the figgerin’. I can glance at it and see if the total monthly figure is what it should be or if i put in too many 0s or something.

Then I got to thinking that we should be getting a FSA dependent care reimbursement each month to the tune of $421 a month. This is kind of “outside” money, as it doesn’t come in from paychecks, so I decided we could throw all that at the debt too, thus our monthly total payment will be $1421.

And the tweaking continues! My husband gets paid every two weeks which results in 26 paychecks a year instead of 24. Realizing that, I decided that the months that he gets 3 paychecks instead of 2, we would just stick that “extra” paycheck toward the debt - thus you can see that for May and Oct the total payments include an extra $1700.

Then I also realized that because there are 26 paychecks for him and he’s doing the FSA plan through his work, the original $421 FSA number is wrong, it’s actually $385 with 2 months (may and oct) being 577. I decided we can try to cough up the extra $36 each month anyway.

I have a master spreadsheet that includes not only the credit cards but the car loan and the home equity loan as well, and what with all my tweaking and fiddling and trying to think up ways to “find” some money, my spreadsheet says that we could be COMPLETELY out of this mess by JULY 2010 — a good 5 months earlier than my original December 2010 estimate/goal.

Now, I know that things can happen, and is actually likely TO happen… But I am feeling pretty good about the original goal of debt-free by 2011 - especially with a 5 month cushion!

I heart spreadsheets. I really do. I could take them home and snuggle them all night long.

Ahem.

We closed on our refinance on Friday evening. We had a 5/1 ARM at 4.75 that was due to adjust next february. We’re not going anywhere for the foreseeable future, so I know that getting into a 30 yr fixed was the right thing to do, but I still can’t shake the “did we do the right thing?” feeling. Plus, just the stress of getting it all DONE - sending paperwork to the credit union, calling and checking up on things, fax this, fax that.. I was wigging out! It’s done now. Yay!

We should be getting around $1600 back from escrow on the old mortgage. I am going to enter it as supplemental income, and then when the last paycheck of the month comes in, I will be entering that one as “primary”, which kind of makes us 1/4 on the way to Rule #1. It’s tempting to NOT do this, and just plug it into the debt, but I know that operating under rule #1 will be a big benefit to our family.

I scheduled only minimums to our credit cards this month, due to the closing and saving up for closing costs, however, I also put in a reimbursement claim for our dependent care FSA, which I decided early on in this “let’s get rid of all this debt” journey, that all FSA checks would go toward debt.

So $384 got sent to citibank. Nice Makes that escrow check not going toward debt a smidge better.

Can’t wait for bonus time. - after that, I should be able to enter 1 or 2 more paychecks as “primary” instead of “supplemental”.

Once again…. Just wondering if I’m talking in the dark here.. or if anyone is reading this?

I posted my January update, but only dealt with the credit cards. We are, of course, making our usual payments to car loan, and home equity loan as well.. so this blog is about the 99k of debt - let’s get a full update on the $99k of debt, shall we?

Obviously, our long term goal is to pay off all debt aside from our mortgage.

I’ve already broken this down in terms of what debt gets paid off first. I am aiming to get all credit card debt paid off by next March.

However, before I go whole hog on the debt snowball, we need to get some savings in place first. Because both my husband and I work, and because our monthly expenses are fairly high, I want to get $2000 set away in a savings account for emergencies. That’s high priority.

Secondly, I want to get a buffer in place so we can use YNAB’s rule #1. Between the two of us, we bring in around $7500 a month. This is not equal to our expenses, so I know we wouldn’t need that full amount as a buffer.. Also, I don’t mind building up to that gradually. Already there is cash building in our checking account due to budgeting money in categories for yearly expenses money that is earmarked, but won’t be spent for several months.

And this is a very short term goal, but as I’ve mentioned previously, we are refinancing our 1st mortgage to a 30 fixed (currently, it’s a 5/1 arm and would adjust next year. With interest rates as low as they’ve been, we decided to go for it now) I am socking money away to bring to our closing, which actually, is happening on Friday (barring anything disastrous happening). I put $1500 away last month, and have earmarked another $1500 in February’s budget so we will be bringing $3k to closing. Other closing costs and prepaids will be rolled into the mortgage. (BTW, how antsy am I to get that final closing cost sheet? Answer: VERY ANTSY.)

So, my short term goals:

-$3k to take to closing (which is this friday, so this one is about to come fruition)
-$2k in emergency savings
-build up a buffer
My husband gets a bonus at the end of February/beginning of March every year, and lucky for us, it’s a good chunk of change! In the past, we have used it on things we want. This year, we’ve decided we want to be out of debt more than we want more “stuff”. HOWEVER.. we did decide that we would take $1,000 (total, not each of us) and blow it on fun stuff. I am going to get a flash for my camera (about $250), and he is going to get a PS3 (I think around $400, but honestly, I have no idea). I am hoping that a few hundred left over we can put toward car tires, but we will see.

We have decided that the rest of the bonus will be divied up as follows:

$2000 will go to savings,
$2000 will go toward building a buffer,
the rest will go toward debt.

I am especially glad that we haven’t put a number on the amount going to debt, because then if the bonus comes in at MORE than we thought it would, we would be tempted to lump the “extra” into the fun money. I have tentatively planned on $8,000 going toward debt, as $12,000 is around what last year’s bonus came out to. Again, if there is more, a few hundred going toward car tires would not be amiss with me!

So the buffer I’m still a little fuzzy on when exactly we’ll have a full one. I managed to sock away $1500 in Jan. and Feb., for the closing costs. In March, we’ll have $2k toward the buffer from the bonus, we’ll be getting $1500 back from escrow on our old mortgage, and if I can stuff another $1500 into that category (as I showed I could do in jan and feb) in March, then we could be operating on $5k worth of buffer money in April and put all April paychecks in the “primary” category instead of “supplemental”.

This sounds GREAT, but at the same time, it would put a bit of a damper on the debt snowball. We would only be able to do the minimums march and april if I went with that plan, meaning we wouldn’t really kickstart the snowball until MAY. Ergh. Anyway, I’m just not sure. Given that we managed to pay off $750 in January even with socking away $1500.. maybe we can do both. I guess we’ll see.