Slow progress, but forward motion nonetheless

CC1 progress

$1,272.98 starting balance
– $6.94 earnings

= $1,266.04 current balance (20.34% paid)

I found another reason to get out of debt as quickly as possible. Blunt Money’s post on how interest rates are calculated shows that most credit cards charge a daily periodic rate, meaning that I am accumulating interest every single day. The term APR is misleading because you would think that it’s an annual percentage rate but it’s not.

Sure enough. I looked up my last statement on this credit card and they are charging interest every single day. That means that today I’m being charged interest on the interest that they charged yesterday. Compound interest strikes hard. I feel justified sending multiple payments every week if possible. It will save us money on interest because our daily balance will be lower.

We were hit hard with expenses last week. Four new tires plus alignment (which we desperately needed) cost us $416.75. Ouch! We have a $58 mail in rebate but that money can’t go to the credit card until I get a check, which usually takes 4-6 weeks. Oh, well. At least we had the money in the bank and could pay cash even without touching our savings account.

Groceries were also a big expense because we needed a few things that aren’t weekly purchases – olive oil, kitty litter, two bags of cat food, and a couple other odds and ends that couldn’t wait. We spent most of the grocery budget on staples, building up our pantry again. I’m probably going to have to use the rest of our snowball for September ($40) to buy additional food. We don’t have enough to last two weeks.

I keep reminding myself that we are making progress, even though it doesn’t seem like it some weeks. It’s a blessing to be able to cash flow expenses rather than dip into savings or use the credit cards. All of our bills are being paid on time and we even have extra money some weeks. I have to look at the big picture, not just at the previous week. The big picture looks so much better! God is very good.

Shopping for tires

We are trying to balance debt pay off with taking care of car maintenance, clothing needs, etc. It’s really hard spending money when we’re so focused on getting out of debt. Each month, we take a look at our finances, determine what our snowball will be, and decide if there’s anything we need that month. This month, we were planning on new tires. Next month, we will be ordering hubby a six month supply of contacts. December will be all about credit card progress, unless an emergency arises before the end of the year.

We’ve known we need new tires for awhile. We have two tires on the car that are a year or so old, one that is several years old, and one tire from when we financed it in 2005! The plan is to replace all four tires so that they match and will wear evenly.

Hubby had a client appointment this afternoon and walked out to the car only to find that one of our tires was flat. Interesting timing, as we’re currently searching for good deals and can afford the tires tomorrow! Hubby changed the tire out for the donut and realized that we had no tread left on that tire and that’s why it finally gave out. We are overdue!

It’s confusing shopping for tires. I’m looking at an ad from Tire Pros that has free installation, free balancing, and sale prices on the tires. Pepboys Auto is offering that if you buy any three installed tires, you get the fourth for free and, if I’m reading the website correctly, they offer free installation. Discount Tire Company has a $40 mail in rebate on one of their tire brands but charges for installation. Walmart has decent prices on tires and $5 installation fees but I don’t really trust Walmart to take care of my car. All of the companies charge outrageous prices for disposing the tires but I’m having troubles locating a company that recycles the tires so that we can avoid the disposal fee.

I think we might have to just pick a company and go with it and hope we got the best deal. They all carry different tires, so how are we supposed to compare? I’m so confused!

Mini-milestone and goals revisited

Last week’s progress on CC1:

$1,448.98 starting balance
– $176.00 contract paycheck

$1,272.98 current balance (20% paid)

We’re finally making some progress on this credit card! I received my paycheck last week for time completed in August. It’s the first of several large paychecks, my next coming 10/1.

This week hubby and I will be shopping for new tires for our car. We are overdue and the goal is to pay for four new tires by the end of September. We have to wait until his next paycheck (Friday) to have the cash, but that’s where most of our snowball will be directed this month. Unfortunately, we can’t neglect essential car maintenance just because we’re focused on paying off our credit cards.

Hubby and I have decided that we’re going to start trying for a baby when all the consumer debt is paid off. I’m so excited about this as we now have a concrete goal of when we’re going to start growing our family. Before, we just talked about “when we can afford it,” “when the debt is paid off.” Well, we have $69,500 in total debt and that pay off is years away.

We’re following Dave Ramsey’s baby steps:

1 – $1,000 emergency fund DONE
2 – Pay off all debt except the house
3 – Build an emergency fund that covers 3-6 months of expenses
4 – Retirement savings
5 – College funds for kids
6 – Pay off home early
7 – Give like you’ve never given before

Because we have no house and no plans to buy one… we’re rearranging the steps a bit so that we can start growing our family:

1 – $1,000 emergency fund DONE
2 – Pay off all consumer debt (credit cards and car)
3 – Build an emergency fund that covers 3-6 months of expenses
3a – Start trying for a baby while building our emergency fund
4 – Retirement savings
5 – Save up a minimum 30% down payment on a house
5a – College funds for kids
6 – Pay off home early
7 – Give like you’ve never given before

That’s the plan for now, though things will probably change once our consumer debt is paid off. What’s left for consumer debt?

CC1 – $1,272.98
CC2 – $3,037.29
CC3 – $4,363.78
Auto loan – $4,565.83
CC4 – $9,105.16

We are $22,345.04 away from having our first child! I am very excited. That’s so much more optimistic than the original figure of $69,444.98 for our total debt.

Free emergency fund and shopping sales

Dave Ramsey is giving away a $999 emergency fund. I didn’t find out about this until after it started, but he’s giving away an emergency fund every day until 9/17/09. You can enter each day for a chance to win. We already have an emergency fund in place ($1,000) but I’m still entering the drawing. If we win, we’ll use it to pay down our credit card.

I had an excellent shopping day. We don’t usually shop at Albertson’s, but they were having some good sales that I couldn’t pass up. They have selected cereals on sale for $1.50 each box, taco shells for $1.25 a box, and enchilada sauce for $1.25 a can. For the Mexican food, you could buy any combination of taco shells, enchilada sauce, and another product and the price would come out to 6 for $1.25 each plus a coupon for $3.00 off your next Albertson’s purchase.

I purchased:
1 box multi grain Cheerios
1 box Golden Grahams (hubby’s request)
2 packages of taco seasoning (free – “buy 2 boxes of taco shells, receive a free package of taco seasoning”)
4 boxes of taco shells
2 cans of enchilada sauce

Grand total: $9.62!! I also received a coupon for $3.00 off my next order. I saved 63% ($16.70) on this trip.

After work, hubby and I returned to Albertson’s to use the coupons I received this morning. The first coupon was for $1.50 off the purchase of three boxes of cereal. The second coupon was the $3.00 reward coupon off the next shopping trip. Because the boxes were $1.50 each, we got all three for free! We now have three extra boxes of Cheerios in our pantry.

Responsibility and Accountability

This week’s credit card activity:

$1,489.38 starting balance
– $31.00 September minimum payment
– $9.40 earnings

= $1,448.98 current balance (8.8% paid)

I am seeing very little movement on this balance, but it will speed up! I should be able to make a snowball payment at the end of the month and I have a paycheck coming this week.

Last week I mentioned that I would be interested in knowing how much interest we’ll be saving by paying this credit card off in the next three months. I found this calculator, which says that we will pay $403 in interest if we only pay minimums. I believe that we should be paying about $60 in interest over the next three months and will thus save $343 by paying the credit card off early.

We actually have more than one credit card.
CC1 – $1,448.98
CC2 – $3,037.29
CC3 – $4,363.78
CC4 – $9,105.16

I refuse to calculate how much interest we’ll be paying with all four cards. It would be too depressing. However, when I found the calculator earlier this week, I couldn’t help but plug in the numbers for CC4. Ouch. I shouldn’t have looked. Our highest balance credit card is also the one with the highest interest.

$9,105.16 balance
$231.00 monthly payment
18.24% interest rate
61 months until pay off, if only paying minimums

You will pay $5,069 in interest plus your balance for a total of $14,174.16.

Depressing. Very, very depressing. That’s why I titled this post “Responsibility and Accountability.” We have to face the music and pay the penalty for making bad financial decisions. I wish the price wasn’t so high, but this is a permanent lesson. Never again will I waste my money like this! All these numbers don’t even include all the payments and interest I’ve made over the past several years. What a waste! We could have done so many positive things with the money, but instead, we’re lining the pockets of the banks. Never again. And the worst part of all of this? Hubby and I have no idea what we charged on the cards!

This week’s step toward freedom

$1,521.38 starting balance
– $30.00 contract paycheck
– $2.00 online survey reward

= $1,489.38 current balance

According to bankrate, we’re now down to 57 months until payoff. We eliminated a month from our payoff in one week and have paid off 6.3% of our initial balance. We’re making progress, though I can’t really see how we’re going to pay off this balance by November 30th. Thankfully I have some bigger paychecks coming, starting the 15th of this month.

I love statistics. I should figure out how to calculate the amount of interest we’re saving by paying early and often. Interest over a period of 57 months is huge, even when your APR is only 10.24%!

Moving toward financial freedom

$1,589.25 starting balance
– $26.79 sales
– $41.08 August snowball

= $1,521.38 current balance

Bankrate: It will take you 58 months to pay off your credit card.

In one week, we paid off 4.3% of our balance and advanced our scheduled payoff date by two months!

This upcoming week, I will be concentrating on working as many hours as possible. My contract job pays on a 30 day schedule so the pay period ending tomorrow will be paid out the first week of October. I wish it was more immediate but at least I should be receiving a paycheck soon for work completed at the end of July!

Deliver yourself like a gazelle…

What will it take to pay off my credit card?

Credit card balance: $1,589.25
Interest rate: 10.24%
Minimum payment: $33

It will take you 60 months to pay off your credit card.

“Give no sleep to your eyes, nor slumber to your eyelids. Deliver yourself like a gazelle from the hand of the hunter, and like a bird from the hand of the fowler” (Proverbs 6:4-5).

Hubby and I have been following Dave Ramsey’s baby steps for three years but suffered from several job losses as well as a temporary lack of discipline. Sorry, Mr. Cheetah. This gazelle has woken up and taken off running!

Our goal: to pay off the entire $1,589.25 balance by the end of November.

Ambitious? Yes. Doable? Yes. With much scrimping, a ton of contract hours, and some dedication, we’ll be waving goodbye to Mr. Cheetah. Sorry, but we’re no longer a willing dinner!

Motivation courtesy of bankrate and Dave Ramsey.