Update: 1 month in.

Standard

I haven’t been keeping this thing updated regularly.
There are a number of reasons (which can be read “excuses”) for this.  They include:

  • A general lack of motivation to do anything in the weeks following the election
  • A greater interest in activities other than maintaining my blog – interests that include crocheting, cooking, eating, watching Netflix

Now don’t get too excited. I’m not promising that “I’m back” or anything like that. I’m certain that I’ll fall off the blog-wagon again soon, but it has been some time since my last personal finance  post and I think an update is owed.

My credit union denied my debt consolidation loan application. And I’m not at all surprised. I’m not even bummed because I never thought that they would accept it. I have poor credit (it’s actually in the “fair” range, but at the very very low end of it) and I already owe them like 9 thousand dollars for my car. I understand completely for anybody to look at that situation and think Let’s definitely not give this woman another 14k.

Last post I also wrote about a few overdrafts I incurred. No, I don’t have any new ones to write about (*pats self on back*). But I did have a conversation with my gentleman about it.  He gave me really simple and straightforward advice that you might think wouldn’t be necessary considering I’m a college educated adult – but no I actually needed someone to sit me down and tell me I can use my credit cards if I absolutely have an expense that my checking account can’t handle because the interest on the CC is way more affordable than multiple $27 NSF fees.

You know, that’s just some shit they don’t bother to teach you in college.

Okay, so here’s just a round up of some personal finance wins I’ve made in the past month:

  • Up to date on all accounts that previously had past due balances (internet, CareCredit, furniture)
  • Consumer debt down $894.16
    from $14,210.38 to $13,316.22 this is not including what I owe my friend for Coachella)

So I didn’t quite make the $1000 payment down on my debt as planned, but VERY CLOSE !
Hey, I wonder if I can put something in my sidebar that has all my debt at a glance… Will look into that later.

I remain very optimistic about The Plan. I’m too excited about paying off my debt that I don’t worry too much about how I don’t have money to spend on other things.

I suppose I can write an upcoming post, getting real about the emotions that money issues evoke. That’ll be a fun one -__-
Until then, I’m leaving this post off with generally positive feelings.

Also, since I probably won’t post again until after – Happy Thanksgiving and be safe with your Black Friday shopping! People be cray.

Advertisements

Post-race thoughts:

Standard
If anything, the results of this election has revealed a close mindedness coming from all parties. what scared me the most was seeing how quickly I was to jump to judging those who didn’t share my vote, and seeing that ugliness in myself that was so ready to revert to a primal Us-versus-Them mindset.
 
There is a huge divide in this country, particularly between the “big cities” along the nations coasts and the rural areas of the “flyover states.” Within one nation, we’re living in completely different worlds – so moving forward I think the question we need to ask is how can we best come to understand the root of each others needs and concerns, underneath all the superficial judgment and harsh language that can sometimes be used to express them?
 
Personally, I need to stay optimistic and remember that one elected official does not preside over this country alone. We are still a democracy, not a dictatorship. So I’ll be crossing my fingers,hoping for the best and trying to trust the system.
 
“Let us have faith in each other, let us not grow weary, let us not lose heart.”
 

Update: 2 weeks in.

Standard

The night The Plan was conceived was either a Friday or a Saturday.  Already I forget.
But my next payday was the following Wednesday, so we’ll call that the the day The Plan took effect.

Mind you, before The Plan, things were looking very bleak for me. All my credit cards were maxed out and I was regularly overdrawing my account – typically $200-300, but I’d seen it hit the $350s.

At the time The Plan was hatched I was at the reddest I’d ever seen my checking account. I didn’t even know my credit union would allow me to get that negative – around $500.

The Plan was to pay off $1000 in consumer debt per month.  My paycheck was the 2nd of the month, and a third of it was gone the moment it was deposited.  So my first paycheck on The Plan could not go as planned due to outstanding circumstances.  But I planned to still keep my spending in check so that I wouldn’t go deeper in the red on the next go.

Spoiler alert – I still hit the red.

I’m no angel, and I won’t try to pretend that this wasn’t my fault. All the faults were mine.
A number of things:

  1. Forgetting overdue balances.
    In my dark days, I had let a few bills go unpaid.One missed payment on 3 accounts, so it definitely could have been worse – but still.  I didn’t calculate these overdue balances into my budget.
  2. Overspending.
    Just outrightly spending money where I didn’t need to. I bought like 6 fish tacos. Whyyyyyyyy.
  3. Car Registration.
    Okay this one, I’m gonna say is not really my FAULT. I don’t count this one as a mistake or a miscalculation.  I’m gonna say this one is just circumstantial.  My registration renewal was due and I wasn’t going to NOT pay it.

In the end I overdrafted twice. Once when my insurance payment was pulled ($75 when I had $45 in my account), and again bc I needed gas.  In retrospect, if I didn’t buy those fish tacos, I probably could have used the cash instead of overdrafting for the gas.
Shoulda coulda woulda.
I hope I learned a lesson here.  Something along the lines of: Don’t buy 6 fish tacos.

Payday is Friday and I’m -$119. (-30 difference, -27 NSF, -35 gas, -27 NSF).
Okay so it’s not good, but it’s better.

I recently also requested a forbearance on my student loans while I get some of my shit together.  I was behind 2 payments on them and I knew that paying 3 months off at once was just not going to happen.

My forbearance was granted and my payments won’t be due again until February. I’ll still be making payments on my student loan interest, but that’s only about 23% of what my typical full payment is. Admittedly, I feel a little weak having done this.  But I also feel like it needed to be done.  Also, having this monthly payment on hold for a bit will give me a chance to get out of this negative balance cycle.

I also realized that I misread one of my accounts and undercalculated my monthly dues by about $40. Not a huge oversight, but I had to edit some of the payments I had scheduled and it means that it will take me marginally longer to pay off my accounts. Mostly it was having to adjust my payments and my spreadsheets that was frustrating.  I’m still paying off the same amount on debt every month.

I was supposed to look into consolidating my debts. I hadn’t really. I’d done a quick Google search and found that balance transfers are usually accepted up to your credit limit.  All of my credit lines were maxed out so I just figured it wasn’t an option for me.  After my gentleman asked me about it again, I dug a little deeper. Mission Federal has this nifty debt consolidation calculator.  You enter in your current balances and interest rates, and your loan offer (or what you estimate your offer might be), so you can see whether consolidating your debt would be beneficial.

I found that if I can qualify for a loan with an interest rate lower than the interest rate on my highest balance credit card, it will be  VERY WORTH IT.  If I consolidated, I’d be able to pay the same amount I already plan to pay – but I’d pay it off more quickly because the overall debt would be less due to lower interest.  Or I could pay it off in the same amount of time as The Plan, with a lower monthly payment that would allow me more cash flow (GROCERIES AND FUN THINGS!).

I applied online for a debt consolidation loan with my credit union.  They’re also the financiers for my auto loan.  I applied on Thursday.. I haven’t received a notice of denial or approval yet. I figure if I get denied, my situation remains unaffected – I stick to The Plan.  But if I do get approved, I don’t think I’d take the route with more cash flow. The whole point of The Plan was to pay off my debt and pay it off quickly, so I don’t think consolidating my debt should sway me to take more time to shrink it down.

My gentleman had some other suggestions too. They include – selling my car so I can stop making auto loan payments and paying for insurance.  Just to provide some perspective, I only have to commute to work 2x a week. My other 3 workdays I can work from home or really anywhere.  Usually I just stay home or go to the Starbucks across the street.  So this recommendation is not as outlandish as it would be for daily commuters.  But I think about other times I use my car – grocery shopping, visiting family, driving to the beach.  Would I really want to take an Uber for all of those other instances? My car payments aren’t exactly cheap, but they’re not expensive either.  And while my new premium is significantly higher because I had a minor accident in September, I also can’t imagine not having a car.

He suggested I sell my furniture.  I won’t. I financed my furniture in March and I’m still paying it off.  I could sell my furniture and make some cash, and use the cash to pay off what I still owe.  But it wouldn’t solve a lot of my debt problems, and I would also then be just.. more unhappy because I’d lose my couches, and I wouldn’t have a living room, and in the end, I’d buy couches AGAIN.

He also asked me if I would get a night job.  My answer to that was just: No.  And the reason for that is very simply and very selfish.  I just don’t want to. I don’t want to come home from work and go to work. I don’t want to give up my weekends.

This post is getting a little depressing. Okay so let’s move on to some brighter things.

I allowed myself $40/week for groceries.  My grocery purchase last week was $55.
BUT WAIT.  Don’t strike that as a misstep.  My grocery purchase was $55 but has lasted me well over 1.5 weeks.  And the only thing I’m running low on is bread.   So let’s just make a prediction and say that I managed to spend only $60 on my groceries for two weeks. That’s $20 underbudget and $90 under what my gentleman would have allowed (remember, he wanted to give me $75 to spend per week?!).

So I have a really positive outlook on my ability to underspend in the coming months. As long as I don’t buy 6 fish tacos, I’ll be fine.

Another good thing that’s got me excited and optimistic –  I had a meeting with my VP last week and he let me in on a little secret: a raise!  The secret won’t take effect until December, but it’s a good enough secret that I’m making plans for it now. It’s going to allow me to make larger payments on my debt per month, which of course drives down the amount of time it’s going to take me to pay it all off.

By my estimations, I’ll be able to pay off my 2 lowest balances by the end of December 😀
That’s almost a Christmas present in itself.

Taking advantage of Autopay.

Standard

In the spirit of Halloween, I thought I’d start with a scary story:

A girl sits alone in an otherwise empty living room on a cool and grey October morning.  She opens her online banking to get a pulse on her funds.  Her available balance appears normal.  She opens her pending transactions to find


a scheduled ACH withdrawal for ~$1800!!!!!

dun dun DUN!!!!

Okay – lame story. But honestly and terrifyingly true.  This happened to me just last Wednesday.  After getting on The Plan, I scheduled automatic payments on my credit accounts – but on one account I made a mistake in specifying how much I wanted to pay.

Turns out I didn’t need to freak out as much as I did. My bank wouldn’t process the payment since my checking account didn’t have sufficient funds to cover the transaction.  My next worry was that the creditor would continue to attempt to collect – driving up my returned check/overdraft fees on both my outstanding balance and my checking account.  I corrected my Autopay setup online and then gave them a call.  That creditor in particular will only attempt a charge a single time, so in the end things were totally fine.

Despite my scare, I fully take advantage of Autopay and scheduled payments for almost all of my expenses.

It’s pretty straightforward, but for anyone unfamiliar with how automatic or scheduled payments work they generally function like so:

  • A payment method is stored or saved to your account. Depending on the type of account, debit cards, checking accounts or credit cards may be accepted.  In my experience, credit cards are typically not acceptable forms of payment for utilities or for making payments on other credit accounts (loan payments, other credit cards).
  • A transaction is scheduled to make a payment on your account using the stored payment method.
  • Scheduled payments allow you to schedule a payment for a specified amount (minimum due, full balance, or specific amount) on a specified day.
  • Recurring payments authorize automated payments from your stored payment method.  Sometimes you can choose what day the transaction posts, but other times it will post on or before your due date.  Automatic payment practices differ from company to company and lender to lender, so be sure to read the details for your vendor or lender.
  • Like scheduled payments, automatic recurring payments may also allow you to choose a specified amount to be charged or withdrawn each month.  You may have the options to choose from your minimum due, full statement balance, or a specific dollar amount.

Can you guess where I messed up?

For a second I didn’t even understand why anyone would set up Autopay if they intended to pay off their statement in full.  My thought was – if you’re paying it all off, why would you need to pay it off again next month?

And then I remembered that not all borrowers behave equally.  While I am strictly paying down my debt, I forget that others use credit regularly. People often use credit cards to pay for their expenses, and then pay off their balance in full. This shows that they know how to responsibly use credit and can help to improve or maintain their credit score. Believe it or not, merely a year ago I used to be one of those people. I’ve strayed off the path – but I’m on my way towards getting it right again – and automatic payments are gonna help me do it.

The reason I like Autopay is that it prevents me from forgetting to make a payment on an account – which prevents me from getting charged late fees that will add to my overall debt.

Another reason I like Autopay is because it takes the money away from me. If I don’t have it, I can’t spend it.  I’d rather pay my bills and my creditors right away than to have money sitting in my checking account and mistakenly think I have extra funds to spend.  I always try to schedule my payments for the same date that my paycheck is deposited into my account.  At my point in life right now, the less I touch my money, the better.

For most of my credit lines, I have multiple payments scheduled a month. The main reason for this is CASH FLOW. Generally the first half of the month is more expensive due to rent so I tend to make my largest credit payments my 2nd paycheck of the month. However, most of my billing due dates also fall in the first half of the month, even after I’ve requested a different due date when possible.

Because of this, I have credit lines where I pay the minimum balance on the due date, and then make my larger payments when my 2nd paycheck comes in. Auto payments are especially handy for this because instead of having to handle 4 transactions for 2 accounts in 1 month, I set it and forget it.

Autopay is convenient, but you still need to be vigilant.
If you’re not paying attention during the setup process, you might miss something huge (like $1800 that you didn’t intend to authorize).

Even if you have autopay set up, you should still check your accounts regularly.
You’ll want to make sure that your payments are at least covering your minimum due, and that you’re not making payments on accounts that are already current and paid in full.  On my extreme budgeting plan for example, I should have 2 credit cards paid off in the next 4 months so I need to stop Autopay on those accounts when they’re brought down a zero balance.
Checking in on your accounts is also important because you might catch unexpected expenditures – such as forgotten subscription plans or fraudulent spending. By checking in on my accounts, I discovered that I was getting charged $17/month for a magazine subscription. I don’t even get any magazines. I don’t even like magazines.

Anyway –
I’m getting really hyped about paying all my debt down.
Once my debt becomes more manageable, I’d like to formulate some kind of Savings Plan.

 

Making a plan to stick to the plan.

Standard

The plan is actually quite simple. When I think of it, it’s just this:

Spend only $75 a week.

I don’t have to think about commands like Pay rent, Pay bills, Put gas in car.  Those are all things I just do because I know I need to do them. Those are easy.
More difficult commands: Don’t go out to eat with your coworkers for lunch. Don’t get a cinnamon dolce latte with soy.

I know I said in the last post: it’s easier to avoid impulsive buying when you put things in perspective. That’s still true. The grande CDL would cost me 10% of my $40 for groceries, so no I’m not buying that.  Yeah, I’m satisfied with myself for making The Right Decision. But of course I’m still salty because I’m craving some overpriced espresso in my mouth. Maybe the next day I do splurge and get a CDL. And maybe I get a bagel with cream cheese too. It’s a wild world, anything can happen.

So let’s recall another thing I said:
It gets really difficult to spend money when you don’t have any of it.

So this is my plan to stick to the plan.
Every paycheck I take out $150 in cash. This is my spending money for the next two weeks (I actually get paid twice monthly, so really I gotta make it last a little more than two weeks).
I split the $150 into 2 chunks of $75, one chunk per week.  I leave one bundle at home – I don’t touch it until week 1 is through.
I split the active $75 into $40 and $35. I try to go grocery shopping as early as possible and I try to stay within $40. If I go over, I pull from the $35.
Whatever’s left after I buy groceries, I call it my allowance. This is money for me to spend as I please. Of course, I’ll only have an allowance if I’m saving from my flexible expenses (more efficient grocery shopping). Having this allowance lets me go ahead and get that acai bowl if I really want it. Budgeting is like dieting – a trainer once told me: you can give yourself a cheat meal, just don’t give yourself a cheat week.

TL;DR:  Only carry your allowed spend. And carry it in cash.

The idea here is that I won’t spend more than $75/week because I won’t have any more than my weekly allowance on me. As I spend it away, my cash on hand dwindles, and I tangibly experience my spending.

This plan for a plan is not perfect. Of course I could lose willpower and dig into next weeks funds. I could get really messed up and use plastic (gasp!). But this plan-ception’s got some good logic behind it, and I think it can work.

Okay, so you might be asking: But Jasmine, what about your expenses? What about your debt?
Calm down. My expenses and my debts are getting paid, I promise.

Next post: Taking advantage of Autopay to pay down your debt.

Making a plan to pay back my debt.

Standard

I owed a lot of money, I knew that. But letting people know the details of it, the extent? That was hard. My debt made me feel weak. And even though I knew something had to be done about it, and I knew I needed help figuring it out, I didn’t want to appear weak.  I wanted help badly, but I didn’t want anyone to know how badly I needed it. It’s stupid, I know. But feelings.

So there we were, my gentleman and me, sitting at the table with all my money owed glowing from my laptop’s screen, and duplicated in his hand on the back of a blank envelope.

He wasn’t trying to make me feel bad, he insisted, “but holy shit. If I were you I’d be freaking out about this,”he said. “How are you not freaking out about this?”

After a few more talkings-to, he set out to help me make a plan:

1.) Determine your monthly income

First he asked me: “How much money do you make. What’s your monthly income.”

I make 47k/annually, paid out twice monthly. After taxes and dental and everything else, that comes out to $2,844/ month.

2.) Determine your fixed expenses.

Then, “What are your bills. What do you have to pay every single month. Not your credit cards, not that shit. We’ll get to that later.”

My rent, my car payment, car insurance. My cell phone bill, my internet, electric.
“What else?” Netflix, hulu, gym membership.
“Cancel that shit,” he said. “You don’t need it.”

I pay my friend every month for Coachella.
“Poor people don’t get to go to Coachella,” he told me. I said nothing.
“Student loans,” he continued. “Yes?” Yes.

We took my monthly income. Subtracted all my monthly expenses – my rent, utilities, internet, phone bill, my car, insurance. I kept Coachella.

3.) Determine your flexible expenses.

We took what was left. “How much do you spend on groceries a week?
I’d spent $40ish the last time I’d gone.
“Let’s just say $75. So we’ll give you $300 a month for food.”

I also need gas. I fill up.. Idk every 8, 9 days?

4.) Do the maths.

After all that we looked at what was left.
About $1000. I understood it as 70% of a paycheck. He explained instead that it’s 35% of my income, and to provide some comfort he said it’s not that bad.

I don’t think he asked me if I can do it. I think he said it’s what I have to do.


A few things I learned that night and in the following days:

  • Good intentions don’t pay bills. Acknowledging a problem is not in itself a solution. I needed a plan, with numbers and limits.
  • Overestimate your spending. Limiting my food budget to $40/week would be more challenging and more miserable. Giving the wiggle room of $75 is realistic and even leaves room for optimism. (I try to stick to the $40 anyway, and don’t freak out if I go a bit over as long as I’m within that $75.)
  • Have some perspective. My coworkers invited me to grab acai bowls with them for lunch. While it sounded tempting, I had already packed a lunch and an $8 bowl did not sound like it was worth 20% of my self-imposed food budget. Thinking about your spending this way can help you avoid impulse purchases.

TL;DR

Make Your Own Plan:

  1. Determine your monthly income – After taxes, what is your take home pay each month?
  2. Determine your fixed expenses – These are the absolute necessities that keep a roof over your head, the lights on in your home, etc
  3. Determine your flexible expenses – These are also necessities, but you have a bit more control in the ultimate cost. For me it’s just gas and groceries.
  4. The magic formula: Value 1 – Value 2 – Value 3 = USE THIS AMOUNT TO PAY OFF YOUR DEBT.

(Please note that I am broke as a hiliariously unfunny joke, so I don’t factor in / allow for discretionary or frivolous spending. This is a plan for hardxcore debt reduction so bear with me.)


The real figures:

$2,844 monthly income.

– $690 rent
– $56 internet
– $15 electric
(residential expenses: $761)
– $301 car payment
– $75 car insurance
– $66 cell phone bill
(mobile expenses, pun intended: $442)
-$122 coachella

-$1,324 fixed expenses.

-($75 x 4) groceries
-($35 x 4) gas

-$440 flexible expenses.

$2,844 – $1,324 – $440 =

$1080

Rounding this down to $1000 means I have $80/month that I can save. BONUS!
The plan isn’t at all disheartening. In fact, for me it’s exciting to have rules and I am relieved to have put this all out on the table, literally. Finally someone had looked at my mess and was just real about it. Was just like, Yeah this is fucked up, and this is gonna be tight, but you can make it out of this. I was, and still am, filled with a refreshed optimism and I feel so ready to start tackling this money monster.

Next post: Making a plan to stick to the plan.

All the money that I owe.

Standard

What are your debts, he says.

I walk away.
Where are you going?
To my laptop. I’ve got a spreadsheet.

We started by going through all the money I owe, from my largest balance and down, the way its sorted in my spreadsheet.
As of 10/24/16:

Student loans: $18,580.60
Auto loan: $9,593.02
Not-so-scary debt total: $28,173.62

Visa1: $7,062.88
Personal loan: $2,858.15
CareCredit: $1,874.50
Furniture: $1,104.98
Visa2: $861.58
Coachella 2017: $610.00
Mastercard: $449.32
Holy-shit-wtf consumer debt total: $14,785.41

Total debt: $42,959.03


Now, I don’t have a transcript from that night. Just a memory of how the conversation generally went, a gist.  So here’s a paraphrase of what he told me:

Student loans, car loans. Those are whatever. I mean, yeah, you have to pay them and you will eventually, but those aren’t bad.
What’s bad is all your credit cards and Coachella, what the fuck.
What are you doing. What are you doing right now to fix this?

I mean I had been doing something, but I’d known that it wasn’t enough.
I don’t really remember saying anything in response.
Next post: We Make A Plan.