99k by 2011

I apologize for the lack of end of the month numbers. I have a good excuse! I bought a domain and have been fiddling around with getting the new blog up and running.

Why buy a domain? Well, the main reason is I like to have control over the look and feel, etc. I will be able to pick my own theme and adapt it to my needs.. And also, while I won’t complain about the “free” aspect of the YNAB hosted blogs, I work in the web field and I was getting tired of the long URL and wanted something a little more professional and clean.

So head on over to http://www.99kby2011.com/ - I will have a new post up by the end of the day!

Let me just start this off by saying, I still love you, YNAB. I do.

So why do I feel so GUILTY???

Because I installed quicken.

DON’T LEAVE ME YNAB! I PROMISE I WAS THINKING OF YOU THE WHOLE TIME! *sniff*

OK, let me back up.

We are not operating on a buffer yet. For those of you who do not know, Rule #1 of the YNAB methodology is to live on LAST month’s income. It is ingenius, really. If you’re living on the last month’s income, then you’re not touching this month’s income as it gets deposited and there’s never any fear of anything bouncing or being out of whack. No waiting until paydate X to pay bill Y, etc.

when you are living on last month’s income, this extra padding of money in your spending account is called the “buffer,” because it buffers you from that $0 balance.

Now, we are not living on last month’s income yet, and honestly, at least until we pay off our credit card debt, I don’t see this happening. We have the opportunity to build up to it, but at this point, I’d rather put everything we can towards debt, even if that means we don’t have a buffer. I think after the credit cards are gone next march, we may take a month and do it, but right now - no buffer. And also, our paydates are spaced pretty well so that for the most part, there usually isn’t any intense juggling going on, mostly, I just have to be careful about the beginning of the month when a lot of things are due/paid.

So I sat down today to enter in the last few days worth of transactions into YNAB and just check up on finance things in general, when I realized I made a mistake.

In YNAB, it’s easy to forget about your running checking account balance, because the only balance for the account is up in the tab for the account that you’re in, rather than a running balance in the actual register. Our mortgage payment is going to be high next month because we just refinanced and instead of prepaying the interest that would be accrued up to our first payment, that interest is due in our first payment.

So, I was going to time things carefully and wait until after my husband’s paycheck hits the checking account (on the 3rd) and then send the mortgage payment. However, I had already entered the mortgage payment into my bank’s online bill pay for 4/1, and unfortunately, it is now “processing” which means I can’t modify the date on it. Doh.

So I kind of scrambled a bit, not totally sure whether the plethora of things coming due at the beginning of the month would interfere with the mortgage payment going through. Even when I enter things ahead of time into my checking register in YNAB, without a running balance, it’s hard to see how things are going to play out.

So I installed quicken, I am sorry to say. I still love you YNAB, but there are some things that quicken just does better. And when I was entering all my past transactions and carefully cross-checking with YNAB to get it in the right category — I found a few errors that I had made in YNAB. One transaction I had never entered, and another I had entered twice.

So I guess now, I am going to be a dual software user - both quicken and YNAB. On a whim, I checked out the budgeting screen in quicken, and was quickly underwhelmed. YNAB does awesome budgeting, hands down. Now if it only would download transactions automatically, reconcile, and show a running balance, I will go back to being faithful to YNAB, and YNAB only.

Until then… I have to sneak out and meet my dark quicken lover in the dead of night, in seedy motels, and quickly shower afterward to get rid of my shame…

*Ahem* Sorry, got a little off track there

I still love you YNAB.

ps - no quick transfers from e*trade account necessary, looks like the mini buffer in our checking account from our savings categories, as well as category overages are enough to keep us from going in the red until some paychecks hit.

Look at me, I’m a blog-posting poster person. Two in one day!

So, when I was persuing the whole “I don’t wanna pay interest!” thing, another idea kind of poked it’s way into my mind that I shoved onto the back burner, at least until all the balance shuffling has stopped. I brought it up my husband, who agreed to do it, and then I immediately changed my mind and said we shouldn’t do it. I am nothing if not fickle. So here I am, writing it all out to you people, because you know, the internet always gives good advice!

RL (who comments here now and then, hi RL!) sent in her debt situation to Free Money Finance, who posted it on the blog and asked his readers for suggestions. There were a lot of suggestions- A LOT! It’s kind of interesting to see how many different possible scenarios there are for a situation! It was one of the many suggestions for her that has been tinkering around in my noggin. (I posted my thoughts over there too, just FYI.)

Here is the specific comment that has been “festering“, but so you don’t have to clicking around, the jist of it is, put the debt snowball into a high interest savings account while only paying the minimums on the (0%) cards. So the cards are staying current, but the balances are not going down drastically. Instead, the money that WOULD be going to the cards is sitting and earning interest month after month, and then whisked out before the 0% rate expires on the card and is used to pay it off.

In theory, it seems like a good plan. If debt A, B & C is at 0% interest, why not take the money you would be paying on them and earn 4% (although our etrade is now down to 3.5%, grr) and then lump sum it at the end of the 0% period?

Now, first off… I have only a very general idea of how savings interest is calculated. I understand the basics of daily compound interest and the whole average daily balance business, but I am not sure if my simple understanding really allows me to work through the numbers in an accurate fashion.

Secondly, the payoff dates we’re talking here is not far away. $16k will be due in Oct, and it’s not like we have 16k just sitting around now, that could earn interest the entire time.

And third, there is the feeling you get when you see that balance go down down down each month. This is outside of the numbers and not really quantifiable, it just feels AWESOME. The equation I would have to work in my head is whether X amount in interest earned is really worth giving up that feeling of watching the debt go down. I am pretty geeky with my spreadsheets and looking to cut out paying interest finance charges and getting the numbers to work in the best possible manner… but I’m not sure I’m geeky enough to give up that “YES!” feeling when I make a payment. Especially if we’re talking piddly numbers here.

But you never know until you work the numbers, so, I’m going to have a go at it, and lordie lordie help me because I know this will probably be screwed up big-time!

Tomorrow: the number crunching results.

We recently sat down and looked at all the interest we’re paying on credit card debt and tried to figure out how we could cut it down.

First, we called the 2 cards that have an interest rate (the 3rd of our cards is already at 0%) to see if they could lower the rate. They both would not - although, both pointed out that the rate for this month would be lower, since the prime rate had dropped. They were correct, each fell a bit, so that the 2 cards are at 11% and 10%, but we still weren’t happy with this.

So I looked around for any 0% balance transfer offers, found one for discover, and applied. We were approved, and the $6.5 balance on our citi amex (previously at 11%) has now been moved over to this new discover card. The discover card 0% rate is good until next april. Now with the citi amex card balance at 0, we can move our $16k usaa mc balance over to citi amex, using their 0% balance transfer offer which will be good until this October.

A couple of thoughts about all this swapping around.

First off, I realize that some people are not keen on the 0% balance swapping. That’s fine, stick with your beliefs, whatever you feel is right. I don’t like paying interest, period. If I can find a way to NOT pay interest, I’m going to use it! Now, having said that, it is true that in the past, we have transfered a balance over to a new 0% card, and then run up the balance on the old card. Not good. THIS is the practice that one should not be keen on - with good reason. It got us into this mess! We are on a plan now, and there will be no more debt racking up!

Next: Credit cards are tricksy. They like to play favorites with the balances. Take the citi amex. We had a balance of 6.5k on there at about 11%, with a credit limit of $20k. They have offered us additional 0% balance transfers. Sounds great, right? that’s 14k of unused credit we could be using at 0%. Perfect!

Not so fast! If we had transferred a balance while we had a balance NOT at 0% (the $6.5k was at around 11%) — then every payment we sent in would automatically go toward the 0% balance, and NONE toward the 11% balance. That would mean that the $6.5k balance at 11% would NOT GET PAID DOWN AT ALL, until the 14k at 0% balance was GONE. That would be a lot of months, with a LOT of interest each month, which is the entire reason we’re doing all this swapperoo-ing — to AVOID INTEREST. No thank you, Citibank, get another shmuck to fall for it.

So, we are now currently WAITING. The $6.5k balance has been transferred, and I’ve even sent in about $60 so that the balance on the card is a CREDIT of around $60 (I’m anticipating the finance charge). I am waiting until after the next statement to instigate the next balance transfer, just to make SURE that there will be NO BALANCE that may incur finance charges during the time we have a 0% balance as well. In the meantime, I’ve switched our main debt snowball payments from the $6.5k balance on the citi amex (that is now on the discover card) to the $16k balance on the usaa mc, which will be moving over to the citi amex. Pay down the one with the interest charges first, is my philosophy.

Finally: the $16K balance will only have a 0% interest rate until OCTOBER. That is REALLY pushing it. Hopefully we can get that paid down before it reverts back to an interest rate, but even if we don’t quite make it, we will still have saved a bundle on interest. It seems like an awful lot to pay off by October, until we do a few calculations.

Some artillery in our arsenal:

• one month (i think it’s May) we’ll have 3 paychecks from my husband instead of the usual 2, he gets paid bi-weekly
• we’re expecting $1k back from our state taxes, and
• of course can we all say together, TAX STIMULUS! That’s another $1600 that will be going toward debt

So along with our usual debt snowball, we’ll have an additional $4400 going to debt between now and October (and that’s not counting the $2.5K from the bonus that’s heading over to debt this month!) It may be crazy, but my goal is to get that 16k GONE by october! Let’s run some numbers to see if it’s doable:

Seven months between March and October to pay off $9100:

$9100 / 7 months = $1300 a month.

That is doable, baby. Very doable. We may have to crank it up a notch, but we can do it!

So the moral to this post is: Credit card companies are tricksy, we must watches them, yes we must!!

It has been a busy few weeks with birthdays and work and car stuff, but I have not forgotten about the little 99kby2001 blog in blog-land. I feel as if I’ve left a couple things hanging that I should probably finish up.

Our power bill came in at $350. $100 lower, but still not fabulous. It is not as high on my radar now, but I think we may call our power company and have someone come do an energy audit. I wonder if our (faux wood 2″ slatted) blinds are not as good at holding heat in/out as I think they are. I am happy that it wasn’t another $450 bill though. Very happy.

We received our escrow refund check, and promptly replaced the clutch in my SUV. It was in dire need. It was even starting to STINK. My husband drove it one weekend on an errand that needed a bigger car this his sportymobile, and the first words out of his mouth were, “We’re replacing that clutch MONDAY.” It’s amusing to think that at the beginning of this year, I might be able to wait until the end of summer to have this done. My husband’s car is getting new tires this weekend. Nice to get these things out of the way with “earmarked” money.

The april budget. We tweaked and twokked and twakked and it is generally working now. Part of the problem is that when I enter in future paychecks for estimating purposes, I always enter them low. If I usually am paid 1,792, I will just enter 1700. Multiply that by 4 paychecks, and the “estimate” is off by a decent chunk of change.

Our taxes are done. Luckily not the $5k tax bill I was dreading, but we do owe $3600. We will be getting $1,000 back from our state, which will be nice (and be directed straight to debt, when it comes in!) To have our taxes prepared for us, it cost us $360. I am a little uncertain it was worth it, but my husband has pointed out that it would have taken me HOURS and HOURS to do it myself. We have a freelance business and a partnership to figure in. Also, our last year’s return was lost, the hard drive it was on crashed, and we had to get copies of our tax transcripts to recreate those, which probably inflated the preparer’s cost somewhat. Hopefully next year it won’t be that much. All in all, especially with the missing returns from last year, it really was worth $360 to just not worry about it! AT ALL!

So, with that computed, we are free to deal with the bonus my husband received at the beginning of this month. As you recall, we were just letting it sit until the taxes had been done, as we were unsure of what we would owe.

So, on to the bonus. First of all, for some reason I had it in my mind that it would be around $12k. That wasn’t even what we got last year (~$10K), so I got a little nutty in the head there, overestimating.

Second of all, it was lower this year. It is determined partly by employee performance, and partly by company performance, and the company didn’t perform as outstandingly as it did last year (like, last year it met it’s goals by 120%, and this year only 110% or something crazy like that.) So the total bonus amount was about $9k.

So where does it all go?

• $2K of that will stay in our etrade savings account as an emergency fund.
• ~$4k of that goes to tax and tax prep ($360),
• $500 was “blow” money (already spent, and consequently, LOWER than the original $1k we had planned, yay us!), which leaves
• ~$2.5K for debt.

So, I am currently moving money around, waiting for it to clear, and then I’ll send off the tax returns and pay a big chunk on our debt. That will feel GOOD.

I have more to share, but I think I’ll wait and post it tomorrow. So tune in tomorrow for how we are going to try to get out of paying interest!