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dancerjodiJetgrrl sent me a great spreadsheet for looking at debt payments, interest, etc.
If I paid things at the rate I've been doing (which *is* over the minimum payment each month) I'd be done paying off my 2 credit cards in 2008. Over that time I would have paid $35,000 in just interest alone.
This doesn't include my student loans and car loans (student loan should be paid off in 3 more years if I stick to schedule, car loan in 2 more if I stick to schedule).
Whee fun.
We need to figure out something smarter than what we've been doing to get this debt down. We can afford the payments, but we're throwing so much money away. This doesn't also include the credit cards that Brian has, or his car loan (or our mortgage). Me thinks we need to do less toy buying (ahem, Brian) and less spending over the weekends).
If I paid things at the rate I've been doing (which *is* over the minimum payment each month) I'd be done paying off my 2 credit cards in 2008. Over that time I would have paid $35,000 in just interest alone.
This doesn't include my student loans and car loans (student loan should be paid off in 3 more years if I stick to schedule, car loan in 2 more if I stick to schedule).
Whee fun.
We need to figure out something smarter than what we've been doing to get this debt down. We can afford the payments, but we're throwing so much money away. This doesn't also include the credit cards that Brian has, or his car loan (or our mortgage). Me thinks we need to do less toy buying (ahem, Brian) and less spending over the weekends).
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no subject
Date: 2004-09-28 05:38 am (UTC)We took all his spare income, and covered every one of those interest+ payments first. Then figured out the highest interest rate card, and pushed as much extra money into it as we could. The idea is to be paying down principle on all the cards so there's less to accrue interest on, but hitting the most expensive card the hardest.
Once you get one paid off completely, you can transfer bits of other cards to it every month and pay it off completely again. (Just make sure there are no fees involved for transferring balances, some cards charge for that.) That grace period between payments keeps you from accruing interest on that, and even if it's just a little bit, it matters.
Also, it sometimes really helps if you call cards to see if you can get your rates lowered. If you've got AAA, you can see about getting your car loan transferred to them, too, they've got great rates. (Or a credit union, if you belong to one.) Have you looked into consolidating your school loans? Rates are hovering around 3% right now, which is a great deal.
I hate money issues, I so feel your pain. :( *hugs*
Debt
Date: 2004-09-28 05:44 am (UTC)My car loan is from AAA.
My student loans are consolidated.
I think I just need to take that last step of cutting "fat" out of my budget so that I can put more towards cards. Buying 2 houses over a 2 year period while paying for Grad school wasn't really a huge help to this process either :)
Thanks for the tips!
no subject
Date: 2004-09-28 05:49 am (UTC)no subject
Date: 2004-09-28 06:05 am (UTC)Turns out we are in quite the same boat. Now I do not feel so fiscally dorky!
:)
Discipline
Date: 2004-09-28 06:14 am (UTC)It depends on what discipline means. We have excellent credit, we always make overpayments, we just have a lot of debt. Some of it came from me as an undergrad (its how I got through, only making $50 a week) and the rest came from being homeowners (a new stove here, a new fridge there, an AC here, some curtains there). when we bought the house we only had about $4k in credit card debt.
I don't regret it, I'm just looking forward to getting rid of it. We haven't used cards in a long time (save for $2k of my most recent tuition payment) and use cash for purchases . .. its just taking a long time to get rid of the balance.
Re: Discipline
Date: 2004-09-28 06:26 am (UTC)We really ARE in the same boat, tho... We overpay and have killer credit as well, and the interest really gets to me. We always seem to have something come along just as we are able to throw a wad of money at our balance. And we, like you, have elaborate, uber-cool hobbies. :) Well, if you can count rubicat as a hobby... god knows I don't do much else...
I was just so comforted to read your post because it is just good to know that we are not alone! :)
Re: Discipline
Date: 2004-09-28 06:39 am (UTC)I had two one of which got maxed out on taxes one year. (Plus a ~$7K loan I took out in my name to help clean up her credit. ~$4.5K left on that)
Over all it ended up taking me untill just last year to finally pay off both of those, with MANY missed/late payments, but it was that or not eat or pay rent, or some utility.... (I still have the loan to go, but I have a few other newer backed up items to clear out first...)
So the fact that you two are on course for killing your debt by 2008 is damn increadable....
Now I try to pay at approx 10% of the cards max limit per month (so if they're asking for $60, I'm sending $300).... It's helping re-build the bad credit I've accrued....
Re: Discipline
Date: 2004-09-28 08:09 pm (UTC)Buying a house is so expensive. they tell ya it's cheaper than rent. Well it ain't. And on top of that, there's the huge amount of money you spend on the closing, on all the new bills you start to get as a homeowner, on repairs, and on providing all the things you got for free as a renter. For example, Alli realized on Tuesday morning that our showers did not come with curtain rods.
I'll just have to be more careful. Glad you posted this - it's a good motivator to try to stay ahead of debt. Not much you can do about it once you're there except what you're doing. You definitely seem to know what you're doing at the least.
Re: Discipline
Date: 2004-09-29 05:17 am (UTC)It really all depends. Our mortgage is cheaper than we'd be paying in rent. Also, you have to figure in the fat tax refund that you get (from deducting mortgate interest). We used to owe around $4k a year (they never tax Brian enough) now we get back $4k a year (keep in mind, we're taxed higher since we're married too.
All in all it think its more expensive, but its our money - we're paying ourselves in a lot of ways (rather than throwing cash to a landlord).
But yeah - we only had a few thousand in credit card debt when we bought. We have a lot more now :)
Amortization
Date: 2004-09-28 07:08 am (UTC)If you hadn't just bought in Waltham I'd tell you go for a home equity loan. You'd then pay off everything BUT the student loans, and deduct the interest on the mortgage, the loan, and the student loans (and yes there are rules about deducting interest from loans taken to cover debt, but those tend to play a little loose.)
I'm surprised you have that kind of debt - didn't you tell me you guys don't like to use cards?
I'd say review a typical monthly budget and look for leaks. You might want to reduce your "fun" budget, but the fact that you HAVE one is a step forward. Don't budget til it squeeks tho, it's harder to live with. Leave yourself some wiggle room, and savings room, so that B can take his savings budget, say, and pay for the Cons.
Sounds like you're doing the right thing, and I agree with calling your cards to get them to reduce your interest rate. You never know, it could work really well. That'll make your payments go further.
I don't know if this has been said, but when I pay my cards, I pay all the interest plus a principle amount. if i can stick to it, I know exactly when my cards are paid down. But, given my particular cash flow, it's not that easy. Once these get paid down, I'm not using them like I did again. It's too much.
*hugs* I know this stresses you out.
Re: Amortization
Date: 2004-09-28 07:34 am (UTC)I wouldn't want to take that risk . . . you never know when you'll need it (say, for something like a new roof) :)
"I'm surprised you have that kind of debt - didn't you tell me you guys don't like to use cards?"
We haven't for the most part for years . . . some of this is hanging on from undergrad years. Some is from our kitchen remodel in Framingham (just didn't have the cash on hand for those appliances).
"I'd say review a typical monthly budget and look for leaks. You might want to reduce your "fun" budget, but the fact that you HAVE one is a step forward."
Most of the leakage is for B's toys (honestly). I don't have a lot of money to throw at increases, since its rare I spend anything on me that's not for bills or our $100 per weekend weekend budget ($50 each). Some weekends we do go over . . . we need to get better about following things more strictly.
"Sounds like you're doing the right thing, and I agree with calling your cards to get them to reduce your interest rate."
Its Sears that kills me (almost 22%!) I've tried to get them to reduce before to no avail. That balance is lower, so I'm hoping to pay that down first.
"I don't know if this has been said, but when I pay my cards, I pay all the interest plus a principle amount."
I always do that (can't speak for B since he pays his).
"*hugs* I know this stresses you out."
Nah, it doesn't stress me out, its just annoying and very wasteful.
Re: Amortization
Date: 2004-09-28 07:52 am (UTC)You know, I was thinking "Gee I wonder if some of that was from the kitchen remodel?" Hee hee hee!
Most of the leakage is for B's toys (honestly). I don't have a lot of money to throw at increases, since its rare I spend anything on me that's not for bills or our $100 per weekend weekend budget ($50 each). Some weekends we do go over . . . we need to get better about following things more strictly
B needs a toy budget. It's not exactly fair to cut them out, he works pretty hard. I'm trying to set myself a DVD budget. Like $20 a week. (That's what I'm trying to do for me, no more than one a week. Mostly, it's so I can save up for the expensive things, like box sets) I can either spend it on something I want, or save up for something like that InuYasha box set I bought. That might work for B as well.
Its Sears that kills me (almost 22%!) I've tried to get them to reduce before to no avail. That balance is lower, so I'm hoping to pay that down first.
OUCH! Yeah, that sucks, but you want to keep that active, even if you pay it off. Sears has a high profile with other cards, if you successfully have a Sears card, you're a low risk. I'd pay that puppy down damn fast, even to taking a new lower rate card to pay it ALL off. That is also a possiblility, getting a low intro rate card, but I know you don't want to consider that. Perhaps one of your other cards would allow you to transfer a balance, and give you 0% for a while. Yes it means a bigger balance on that card, but at the lower rate it can't help but save you money.
Interest is evil, and i hate living with it myself right now. I had it all down, and stuff over the past few months I'm maxed again. Thankfully, "maxed" is low since I keep my limits low.
Gah - fie on Sears! I had no idea it was that high!
Re: Amortization
Date: 2004-09-28 08:04 am (UTC)We also had a "personal stuff" budget of $50 a week (on top of the weekend budget). Its rare that B sticks to it. I admit I go over sometimes too . . . most times though I can't afford the $50 for myself since I'm spending it on other things that aren't budgeted for (like say, the wedding gift I have to buy for this weekend, or the $150 "graduation fee" that Umass Boston wants in addition to the almost $4k I just sent them for tuition).
In some ways it was easier when I was poor, since I didn't have to choose where to send the extra money :) I don't want to go back there, but my options were definitely simpler :)
no subject
Date: 2004-09-28 07:11 am (UTC)no subject
Date: 2004-09-28 07:33 am (UTC)no subject
Date: 2004-09-28 07:34 am (UTC)Interest
Date: 2004-09-28 07:47 am (UTC)Around 14 on a Chase Mastercard and around 22 (!) on a Sears card. Yes, I know the Sears is high (but they won't reduce it - such is the way with store cards most times it seems).
The lower balance is on that one, so I'm working on chipping that down first. When we bought our 1st house there was no balance - so increases were racked up from the kitchen remodel (just didn't have the cash for the stove, fridge, microwave and stove hood).
Re: Interest
Date: 2004-09-28 08:05 am (UTC)Have you tried to lower the Chase rate? 14% still seems high. If you have a decent credit score, they should be able to lower it. As long as you've been paying on time, Chase will want to keep you as a customer. You can check what other places are offering at:
http://www.bankrate.com/brm/rate/brm_ccsearch_lowrate.asp
Re: Interest
Date: 2004-09-28 08:08 am (UTC)no subject
Date: 2004-09-28 08:04 am (UTC)Good luck!
Debt
Date: 2004-09-28 08:06 am (UTC)Oh I knew this. I thought I needed something more organized than a stack of bill statements though to paint a whole picture for my other half :) I'm just now focusing on knocking this out (since before I was more focused on moving to a higher priced area, and paying tuition - so extra money was reserved for other things).
Thanks again! It was a great help :)
no subject
Date: 2004-09-28 11:46 am (UTC)If you have the discipline to keep track of the interest free periods and to transfer as soon as they run out, this approach can save you a lot of money on interest payments.
-L
cards
Date: 2004-09-28 11:56 am (UTC)I've done this in the past - given the credit debt we have on top of 2 car loans and a mortgage, I'm not sure how transferring to no interest cards would work (i.e. I'm not sure people would give us more cards).
Its definitely something to think of though. Thanks! :)