New Milestone with the Chase Card Dec. '09 Updates!

Chase Card #1 - $123.00 paid. Remaining balance = $6,057.00




Chase Card #2 - I was able to use the first 4 Snowflakes to reduce this balance $135.93 during December. Remaining balance = $3,342.27





But the best part of this update is that it brings total debt reduction since starting the blog past the $50K mark!! Granted, $45,739.46 was from my Mother-in-law's estate. I'm just so glad we didn't squander it away, but significantly reduced the debt load and my stress levels.

Bank VISA Update - Dec. '09

More nominal progress on this balance. I'm only paying the minimum payment each month, but the balance is steadily decreasing. $85.25 paid in December which leaves the balance at $3,307.74.

HELOC Update - Dec. '09

Since I refinanced the HELOC at the end of November, there is a month's delay before I'll be billed for the new payment. I did throw an extra $17 toward the principal though, so the HELOC balance is down to $73,166.93.

Thank You Thank You Borrower!!

Now I just have to remember what I did!

My Financial Goal for 2010

If you've read my profile over there on the sidebar, you see that I started this blog because I was fed up with the fact that these debts are keeping me from being able to build wealth for the future.

In my former life (a/k/a Before Kids), I was an avid saver. I remember the pain of cutting back my 401K contributions and my stock investments to pay for diapers and daycare. I will never never ever regret the tradeoff because there are just too many things money cannot buy. Those little hugs I get at bedtime and sweet conversations we have during the day are all worth the stagnant net worth I've dealt with the past few years.

But, at the moment, the debts are manageable, and I'm ready to start thinking again about making some headway on that net worth number. Of course, the market conditions of the stock exchanges and real estate affect net worth. However, they are beyond my control. I am fairly comfortable with how my investments are allocated, and I just have to ride out the ebbs and flows of the markets. What I choose to save or invest from current cash flow IS in my control, and that is what I'll be tracking.

My goal for 2010 is to increase the dollar amount that I am actively adding to that net worth each month. That can be by paying down debt or by adding dollars from current income into financial assets. If I reinvest my stock dividends to purchase additional shares that is adding to the asset side. If I increase my emergency fund, that adds to the asset side. If I pay off a chunk of debt, it decreases the liabilities but increases net worth.

My goal for 2010 is to make sure that $15,000 of current annual cash flow goes directly to net worth. I am only including money that I have (or could have) direct access to. For example, mutual fund dividends inside an IRA that are reinvested will not count since I cannot access those earnings without triggering a taxable distribution. But I will include the stock dividends since I could easily opt out of the dividend reinvestment plans and receive checks each quarter.

I'm hoping I'll learn how to embed an Excel spreadsheet in my post someday. In the meantime, here are the categories I'll use to track this monthly:

ASSETS:
Emergency Fund interest reinvested
Cash Additions to Emergency Fund
Rental E-fund interest reinvested
Cash Added to Rental E-fund
Less: Rental E-fund withdrawals
Stock dividends reinvested
Additions to stock purchase plans
Additions to IRAs/Roth IRAs

DEBTS:
Principal paid-Primary Mtg.
Principal paid-HELOC
Principal paid-Chase Card #1
Principal paid-Chase Card #2
Principal paid-Bank VISA
Principal paid-Kroger card
Principal paid-Capital one card
Principal paid-Money Mkt. Loan

TOTAL ADDED TO NET WORTH

Here's to hoping that this time next year that last number will be $15,000!!!

A Mental Bucket problem

I'm the first to admit that I have issues with my financial "buckets" or compartments. In my mind, there are many different buckets. I've already told you about the bucket of money given to me by my Dad.

Defining these buckets is not always a bad thing. When I've gotten distributions from employer pension plans, I've never had a problem rolling over 100% to an IRA because in my mind it was pension money. Therefore, my brain thinks it should always and forever remain pension money.

The problem I'm having now has resulted from a comment SS4BC made on this post. Mathematically, I know she's right about not paying extra on the Rental HELOC (4.99% for 15 years) while I still have credit card interest at much higher rates (ranging from 4.99% to 11.99%). Why does my mind make me want to use the rental income only for expenses that relate directly to the rental property?

I have an extra $205 in the rental "account" this month that I'll be sending to a savings account that was set up solely as an Emergency Fund for that property. My goal is to fully fund that account with 6 months of rental property expenses (including annual property taxes) plus the tenant deposit that I might have to return at the end of the lease. Right now, I'm about $1,500 shy of the goal so the $205 will help with that shortfall. But I'm already tormenting myself with the decision I'll have to make if that Emergency Fund ever reaches fully funded status.

Will I be able to actually use any extra rental income to pay off the credit card bills? I'm not sure, but I'd love to know if anyone else struggles with decisions that aren't mathematically correct but give you peace of mind.

Operation Restore Order & Kroger Credit Card update -Dec. '09

Once all the sleepyheads get up and mom has enough coffee in her bloodstream, Operation Restore Order (ORO) will commence. Meanwhile, part of ORO is running the final tallies on the Christmas budget. My prediction is that we spent every dime of our $1,260 budget. In spite of spending less on gifts, we overspent on the extras....postage for shipping, wrapping, and blowing our food budget for the time savings of take-out and pizza delivery. I don't think we'll see an increase in our credit card balances, but the jury is still out. I really want to get the final numbers crunched ASAP.

I did realize that I neglected to post the last update on the Kroger credit card. This is the one I'm continuing to use to pay for our groceries and gas. I'm still paying off the charges within a day or two of purchase so that by the end of the billing cycle, I've charged and paid at least the balance shown on the last statement. By doing this, I've avoided being charged any interest on the balance for a few months now. I was able to add $14.17 to our payments to bring the new balance down to $663.93.

Activity on the last statement:

Previous Balance $678.10
Payments/Credits -$1,117.88
Transactions $1,103.71
FINANCE CHARGES $0.00
New Balance $663.93

Slowly, but surely, this balance is going down. And slow is just fine with me as long as I'm avoiding interest charges!

Primary Mortgage Update - Dec. '09

Not much time to post these days, but I can let you know that another $344.77 has been shaved off this loan. New balance is $253,613.51.

Capital One Update - Dec. '09

More slow and steady progress on this small balance. I'm just so not inclined to pay extra on this one since it has that fixed 4.99% rate. $11.55 paid. New balance = $1,083.66.

This is when it gets scary!

Based on my past experience, the stars are lining up for me to blow the budget this month. There is so much to do in the next 8 days! There are teacher gifts to have ready in the next two days, other gifts to finish, a disaster of a house to clean before my parents arrive next Tuesday, wrapping, last bit of shopping, cards to write out and packages to get in the mail. And oh yeah...I have to work too!

This is where I am inclined to order pizza, pick up take-out, send my husband to the grocery store (that's always a big mistake!)... anything to save me a few minutes of time.

I did check accounts online this morning and there is still cash in the bank and I haven't missed any payments. That's all I can hope for today!

I'm just praying I come out on the other side relatively unscathed from the holiday hustle and bustle.

What I Want for My Birthday!

Yes...it is my birthday which would/could be easily forgotten, except for my kids. THEY are the ones that make a big deal out of it! And so I relish it. Actually, it is better than the alternative of NOT having a birthday!

But, it does get a middle-age mom to thinking especially when the years seem to fly by faster and faster. It makes you realize just how few years are left to get debts paid off and build up that retirement savings. Since I have such small children, you might be surprised to learn that this is #47 for me. Yes, I was a late bloomer in the becoming-a-mom department having my first at age 39 and the other at 42.

Anyway, I've decided that for the next BIG one (50), I'd really like to have those credit cards balances demolished. This seems so daunting. I really don't have the current cash flow to do it in three years. In my job, I could work massive amounts of overtime. However, my maternal instincts tell me that's not the best idea. I didn't have kids for them to have a mom who works all the time! But maybe I don't pay extra on the rental mortgage and send that extra $200 a month to the credit cards. Or maybe we sell the rental unit and pay the credit cards off with that equity. Or I might just hold out hope for massive amounts of extra snowflakes.

So I'm putting this out there. I might or might not make the goal. But wouldn't it be a wonderful birthday gift to start off my 50's with no debt except the mortgages! I've heard you have a better chance of reaching a goal if you put it in writing, so here it is! Check back in 3 years...and we'll see where it stands.

Trying to Win!

Dave Ramsey has been having some awesome giveaways this month! Today's (Day 15) giveaway is $5,000 cash!! I've already entered, but I'm guessing if you read this blog you could find a worthy place for an extra $5K! Go enter today, then check his site again tomorrow and the next day and every day until it's over!

Hmmm...which part of my past would I knock out with an extra $5,000? Definitely Chase Card #2. It's carrying the highest interest rate, and they've reduced my rewards program. This is certainly the highest target on my list.

Do you have a Debt Free Goal?

When AJ at I Owe so Much posted about his debt free goal, it got me thinking. I know...that thinking thing is dangerous. But just what would I do with our budget if we didn't have those credit card payments?

Well, part of what is now allocated to debt would be directed to savings -- either IRAs or into stocks or even boosting the emergency fund.

But today I'm thinking how wonderful it would be to take some of that money to hire someone to clean my house twice a month. Working full-time and having two small children doesn't leave a whole lot of extra time to keep up with all the housework...at least not to the standards I aspire to. Being able to afford to pay someone to take these chores off my hands would give me more time to spend quality time with my family, pursue some hobbies of my own, and maybe even sleep. Wouldn't that be wonderful?

Christmas Budget Update

There are 18 shopping days left, and I'm well on my way to being finished. This is very unusual for me, but I am reaping the benefits of shopping early.

I refuse to shop on Black Friday, but I've shopped before Thanksgiving and during the week after. I was able to go back and get price adjustments on a couple of things bought at ToysRUs which went on sale just days after I purchased them.

Kroger is running a special through the 13th on certain gift cards...buy $100 worth, get $10 off your purchase. I also had a coupon for $5 off the purchase of 2 gift cards if you used your Kroger Mastercard. So this afternoon, during my grocery run, I picked up 2 $50 gift cards for Sears and Best Buy (for my father and husband, respectively) and they cost me $85. This is probably what I would have bought for them anyway! And I saved gas by not making another trip to the mall.

I also ran across a deal at Borders.com for $60 of gift cards for $50. And I traded in $15.00 of E-rewards for Borders bucks. There was another $25 savings.

According to my spreadsheet, I've spent 55% of my Christmas budget. But I know I'm at least 75-80% done with the shopping. Now, if I can just keep the cost of those last minute stocking stuffers down and get all the handmade items on my list finished.

Items I still need to make:

Pajamas for both kids
a Password Journal for dd
a few sets of note cards for teachers, bus driver, etc.
some decorated candles (like these)
and some gift card holders like these

I've already decided that with the amount that I come in under budget, 50% is going to the debt and the 50% will be used at the After-Christmas sales for some updated Christmas decorations. We really need to replace some of the ratty-tatty things we've been using for years. Usually I work the day after Christmas, but with it falling on Saturday I should be able to find time to scoop up some bargains over the weekend.

Rental Property Refinanced!

Remember when I talked about combining the loans on the rental property into one?

With the offer from my HELOC lender, I was able to accomplish the very same result without all the hassle of going through a refi.

I didn't have to worry about the stricter lending guidelines for investment property. I didn't have to prove that the property is producing monthly income. I didn't have to accept a higher interest rate that most investment properties come with. And the setup fee for the loan conversion was only $100 instead of $2-3K that would have been inevitable with a traditional refinance.

The major bulk of my mother-in-law's estate was distributed in mid-November. My husband and I agreed that we would use $38,739.46 of his distribution to pay down on the rental property loans.

So we used the $38,739.46 by sending $26,133.27 to pay off the First Mortgage and sent $12,606.19 to the HELOC.

Let me tell you, when I call Bank of America to check the balance, that was the sweetest automated message I ever heard when the computer said, "Your loan has been paid in full." Look at this pretty ticker now! *BIG SMILE*






And here is what the HELOC looks like after adding the $100 fee:




Then I had the HELOC lender convert $73,000 of the balance to a 4.99% fixed rate amortized over 180 months. The monthly payment will be approximately $577.00. The other option was to set it up on a 10 yr. loan with a payment of $773.92. My intention is to make monthly payments of $774 based on the 10-year amortization. The property will cash flow with the $774 payment assuming the only other expenses I have each month are association dues, insurance and real estate taxes. But I like the flexibility of having a lower payment if there are months that I am between tenants, have major repairs, etc.

I'm still not sure what direction we'll go in with this property. Depending on what our current tenants decide to do at the end of their lease and depending on real estate market recovery, we might decide to put it back up for sale. If we do, we haven't invested much into getting these new loan terms put in place.

If we keep it and are able to pay it off in 10 years, it would be a nice little source of college funding when my 2nd grader is looking at college tuition in the year 2020.

Either way, I am so happy with this loan. If I have to be in debt, at least I now know that the interest rate is fixed and the payment is affordable. Oh! and don't forget the $500 Visa gift card reward the HELOC lender is giving me in a month or two!

A few quick updates

Seems like life is running at warp speed, so I'm combining a few updates into one post. Nothing major here, just slow (but steady) progress towards these stinkin' balances!

$126 paid on Chase Card #1 - new balance $6,180.00




$87.22 paid on Bank Visa - new balance $3,392.99




$5.23 paid back to the Money Market Loan - new balance $4,647.98



I'm having a little happy dance, since this brings the credit card totals under $15,000 and over $1,000 less than when I started this journey!

The Forecast calls for Snowflakes!

Snowflakes in the PF world are those little bits of extra money you receive, then, purposely and deliberately, apply toward your debt. It's easy to fritter these away if you don't give them a name and a new home as soon as they are received. Here's an excellent primer if this is a new term to you.

Dave Ramsey also has a theory that when you start paying attention to your finances, you will be blessed with more to work with. I'm sure it has to do with the New Testament parable of the talents. Let's just say whether it's due to Biblical philosophy or whether I've just had a string of good luck, I'm expecting a BLIZZARD!! Either way, I'm genuinely thankful to God.

I've tried to make notes on my list of follow-up items a la David Allen's Getting Things Done, but I'm posting them here so you can see just what this forecast looks like. Some of it will probably not arrive for 45-60 days, so you have to keep me accountable to actually snowflake these to my debt and not let them melt away without making any real impact.

1. Door prize from a vendor at a professional conference I attended a couple of weeks ago - $50 American Express gift card -Received today 12/1/09.

2. Requested check on 11/30/09 from Opinion Outpost - $6.10

3. Rebate for using Paypal on a purchase from Best Buy in mid November - $20.00 into my Paypal account

4. Rewards earned on Chase Card #2 (need to redeem) - $59.51

5. Bonus from ING Direct for opening Electric Orange checking account on Black Friday - $121.00

6. Reward for converting HELOC into a fixed rate loan - $500.00 VISA gift card

If you've been adding in your head, this is $756.61 !!!

If I use my blizzard wisely, I can reduce the credit card debt by over 5%! I am SOOOO excited. Gotta run and dig out the snowboots and long johns!

Chase Card #2 - November '09 update

Just another smidgen taken off the balance of this one...$45.46 more paid leaving the balance at $3,478.20.

Hindsight is 20/20 and Sickening!

I am spending a major part of this long holiday weekend reorganizing my office/craft room combo. I've been purging the filing cabinet by moving permanent records up to the attic and doing lots of shredding and purging.

I ran across some files with old tax returns. When I flipped through a few pages of the 1999 return, my eyes landed on Schedule D-Capital Gains and Losses. Here is the last entry on that page.

8 oz. Gold
Date sold - 8/25/99
Sales proceeds - $1,920

This was inherited from dh's father in 1997. Value at the date of his death was $2,375. Neither of us remember why we sold it or what we used the money for.

Needless to say, it would have been better if, in 1999, we had just forgotten we owned it, since at Friday's closing price of $1,176.70 per ounce it would be worth $9,413.60 today! ***MAJOR SIGH***

HELOC Update - November '09

The November statement shows that we were able to pay down another $1000.00 from my MIL's estate and $6.30 of online survey income from Opinion Outpost. New balance = $85,690.12.

I've already initiated the process of converting a portion of this loan to a fixed rate. Hopefully, the paperwork will be signed soon. And my worries of that adjustable rate will be gone.

Want an extra $121?

Have you seen the ING Direct Black Friday sale? Now this is my kind of savings!

Get a $121 Account Opening Bonus

Here's how:

1. Open an Electric Orange checking with Reference Code EOSAVE.
2. Use your Debit Card to make 3 signature transactions (you know, the ones you have to actually sign) within the first 45 days.
3. On day 50, we'll put $121 in your account. You have to open today to get the $121 bonus.


I've been an ING Savings customer for years, but I've never opened an electronic checking account there. That is, until today.

I went ahead and transferred some of that money sitting in an ING Savings account set aside for Christmas spending. Once the debit card arrives, I'll use it for at least 3 qualifying purchases for Christmas purchases. And in January, when the $121 bonus arrives, I'm going to use that money to pay down on my debt. Doesn't get much easier than that!

Hurry! This offer ends tonight at 11:59PM ET.

Dear Chase - don't change my terms

Since most of our extended family is out of town this year, we opted for a small scale traditional dinner at home for just the four of us. The kitchen is already cleaned up. DH is watching football, I've got the kids hooked on a Brady Bunch marathon, and I'm going through a stack of mail.

Lo and behold! A little flyer from Chase regarding an Important Change in Terms Notice. Remember this sweetheart of a deal? 15 months at ZERO interest, then a fixed 6.99% APR. Well, just as I anticipated now that we're getting close to the end of the ZERO rate, they are changing the account to a variable rate. Beginning in January when the zero rate runs out, it would be 8.99% but would follow any increases/decreases to the prime rate. I was a little surprised to actually be able to talk to a real person on Thanksgiving Day, but I did and immediately rejected the change in terms. Therefore, the account will be closed immediately. But I will be able to pay off the balance at the fixed 6.99% rate I signed up for.

Add to my list one more thing to be thankful for: The ability to pay off my past at relatively low rates without feeling like I'm being jerked around by the credit card companies.

Tips for Not Getting into a Spending Frenzy during the Holidays

It's so hard! This time of year we are bombarded with advertisements, beautiful decorations, holiday music piped through the store speakers. All to entice us to spend our hard-earned dollars to create that magical season for our family and friends. Yes...absolutely magical....except for the checkbook!

I typically watch myself turn into a "spender" during the month of December. Any other month, I would research, bargain-hunt, and coupon. Maybe it's the fact that so much has to be done in just a few short weeks, but my frugal ways usually fly out the window! I don't want my extended family to think I'm a "cheapskate". I want my kids to still believe in the magic...and so far they do! I don't think the people on my gift-giving list should suffer just because I've made mistakes with the credit cards in the past.

How do we fight all these behaviors when we're trying to pay off our debt? I'm posting this today on the eve of the eve of shopping mania, and we'll re-check throughout the holiday season to see if I can come out without any more debt!

1. Make a budget! This is probably the most important part of the whole process. List everyone you will be giving gifts to and a maximum dollar amount for that person.

2. Save throughout the year. It's kind of late for this if you didn't start this a year ago. But each month, I set aside one-twelfth of my Christmas budget in a savings account. I'm not sure if my budget is too high (might be) or not, but I have saved $105 every month since last Christmas which gives me $1260 to spend during the holidays. This includes any decorations we buy for our home, the cost of Christmas cards and postage, and all gifts.

3. This is where I hit my downfall....updating the budget at the end of each shopping excursion. Life seems to get so busy that I don't take the time to check my receipts against the budget. Many years, I don't add it all up until AFTER Christmas. That kind of defeats the purpose, huh?

4. Shop early. I have noticed that some of the better deals happen before Thanksgiving. I've taken advantage of Lands End free shipping for a couple of gifts during November. I don't know what will happen this year, but I remember kicking myself last year for waiting until December and paying full shipping when they had offered free shipping just a few weeks earlier.

I am really hoping that I can come out on the other side UNDER budget, and be able to use part of that money I've saved to apply toward my debt. Updates will follow. In the meantime, please add your tips for not getting into the spending frenzy!!! I can use all the help I can get!

Primary Mortgage Update - Nov. '09

WooHoo! The balance on this loan fell below $254,000.00 this month. Amount applied to principal was $343.48. New balance = $253,958.28. Remaining term = 29 years, 6 months.

The extra cost of being busy!

My week has been nuts! We had alot going on today in the house...rearranging a couple of rooms, and we had to make space for a ping pong table one of my co-workers was wanting to get rid of. As fate would have it, that's exactly what dh and I had already decided to get each other for our December birthdays. We had even scoped out the Black Friday ads, and planned for dh to be at Sears at 4AM to score a good deal. But used is great, free is better!

With all that was going on, I just couldn't force myself to leave the house today....and let $3 of Walgreen's Register Rewards expired. That's like throwing $3 down the drain! Maybe I'll just focus on how much we saved on the ping pong table.

Rental Mortgage Update - Nov. '09

Statements have arrived for the mortgages. Last month, $532.19 was shaved off the balance of this one!

This has been such a manageable loan for over 6 years, I can hardly believe I'm thinking about refinancing it into the fixed rate portion of the HELOC. I'm having a hard time deciding whether I should suck it up for the next 45 months to pay this loan off in full, or combine this with the HELOC balance when I convert it to a fixed rate for the next 10 or 15 years. I haven't made a final decision, so stay tuned!

UPDATED: Just heard that the Dems have all 60 votes for cloture on the Health Care Bill. I'm guessing Demcare is going to pass since, as I understand it, they will only need 51 votes to actually pass a bill. The inevitable higher taxes and higher insurance premiums have me scared to death. I'm leaning toward refinancing and lowering my monthly fixed costs.

The Snail is creeping - Capital One Nov. '09 update

Another month, another $11.35 off the balance of this one!

Extra Money I'm not sending to the Creditors

I can't remember exactly when my father started sharing his AT&T dividends with me. I know it was before the Ma Bell divestiture in 1984. And I'm thankful that I did inherit at least of a bit of his 'savings' gene. I have never spent any of the money he sends to me quarterly. It has always gone to savings. In the early years, I put it in a regular savings account. I've also bought U.S. EE Savings Bonds, a Tennessee zero coupon bond, shares of SBC Communications (now AT&T)...all which I still own today. I even used some of that money to buy shares of Qwest Communications and Washington Mutual which turned out to be not such wise decisions, but I was investing it and NOT SPENDING!

When I received my check from Dad earlier this month, I checked the current rate on I-Bonds. For the six months ending April 30, 2010 they are paying 3.36%. Getting a Treasury Direct account set up takes a little time for them to mail you a verification card in the mail. But once the account is set up, it's so easy to buy Savings Bonds! And I choose to let them hold my bonds electronically. No more worries about keeping up with those little paper bonds! I just placed my order tonight for a $100 I-bond. I know I won't get rich off 3.36%, but I love adding to that little nest egg that I know I've received from my father.

Back in the Saddle

Well, I never really got off the saddle. The horse just took off like a wild mustang for a few days! Life has been extra busy this week! I have lots of catching up to do this weekend, so hopefully you'll see multiple progress reports and I can catch up on your blogs too!

We DID end up closing on MIL's house on Monday! That is such a relief. Being an executor is more stressful than I ever realized it would be. Having the house sold (AND being able to use a part of dh's portion to pay off debt) is such a weight off my shoulders.

Friday the 13th

Yep! I had a bad feeling about setting the closing the MIL's home on Friday the 13th. Sure enough, the appraiser had used the term "condo" instead of "P.U.D." and the lender would not release the funds. Why the lender waited until today to let anyone know this is beyond me. They've only had the appraisal in hand for two weeks! The appraiser was out of the office today, but everyone has assured me it will be corrected on Monday, and the buyer will be able to complete the settlement Monday afternoon.

Avoiding interest on the credit card balance

A second month of avoiding interest on the balance of the Kroger credit card. The hardest part about this is remembering to make the payments immediately. I try to clean out the receipts from my purse every day (or every day that I've actually spent money). I record them on my Microsoft Money software, update my Excel spreadsheet with this month's budget, and then log on to the credit card payment site and transfer the payment. I have noticed that when life gets really crazy (which it has been the past week or so), I get behind on this by 3 or 4 days. That's not been a problem yet, but I just have to make sure that 3 or 4 days doesn't turn in to 3 or 4 weeks. If it does, my strategy is shot.

The current statement from this credit card shows:

Previous Balance $713.93
Payments/Credits -$819.65
Transactions $783.82
FINANCE CHARGES $0.00
New Balance $678.10

As you can see, I did find an extra $35.83 to apply to the balance of this loan bringing my new total to $678.10. That little calculator on the ticker is just moving on down the line!!

HELP!!!! It's Decision Time!

I know I've already expressed my fear at the thought of interest rates rising. Last month, I even blogged about developing a plan to convert the HELOC to a fixed-rate for my peace of mind in case the finance gurus predicting inflation and high interest rates are right. Even if we don't see double-digit rates again, it seems kind of silly for a rational, otherwise logical-thinking person to hope that interest rates would remain at historic lows for any extended length of time.

So now that an answer has seemingly dropped in my lap, why does it scare me so much?

And yes, I'm talking about the HELOC. That $86K balance on the line of credit tied to our rental property. The one with that enviable rate of prime minus one-half (currently 2.75%).

My late MIL's home is set for closing at the end of next week, and I think with our proceeds (after splitting with all the other siblings) we'll be able to knock the balance on this one down to the $45,000 range...which is less than half of where it started. I want to jump for joy since that will actually pull the property into a positive cash flow situation. Even letting me build up a little more savings for the inevitable repairs and maintenance all properties have.

So wouldn't you know it? My HELOC lender sends out this offer to convert all OR part of your LOC balance to a fixed 4.99% rate amortized up to 15 years. No hassle, no re-applications, no appraisals, just a $100 set-up fee. I called the toll-free number today, and they said I would just need to stop by the local bank branch to sign an authorization. And, as part of this special offer, they're even going to throw in a $500 Visa Gift Card if I do this before the end of November!

But arrrgh...that means I have to pay 2.24% more in interest each month plus the principal portion since it will be on a 15-year amortization. I know (or at least I think) it's the right thing to do, but it means my payment will actually go up $150-160 from what I've been paying these past few months instead of being cut in half. That means I'll need to continue to fund this property each month until the first mortgage is paid off in exactly 46 more payments.

Does this sound like the perfect answer to my dilemma? As I've typed this out, I think maybe it is (and oh my, someday I'll have to tell you about all the coincidences that led us to our current home---definitely a God-thing). The offer arrives within the same time frame that the balance is reduced using the money from the sale of MIL's home (fingers crossed for getting everyone to the closing table). There are no significant closing costs so it wouldn't feel like I wasted money refinancing it if we decided to sell the property when our tenants' lease runs out. When and if interest rates start rising, I KNOW I'd sleep better with the assurance of a fixed payment that is actually paying off principal too!

I'd love to hear your opinions. Is this the right thing to do?

Money Market Loan update

Because I was able to get in a couple of hours of overtime in last month, I chose to send $47.30 on this loan back to my money market account.

I'm not sure what the right word is to express my feeling about ignoring this for so long. Is it denial? Refusal to admit one of those stupid mistakes? Regardless of what it is, I'm now determined to pay myself back and get that emergency fund back where it ought to be.

The new balance that I owe my money market account is $4653.21.

Chase Card #1 - October update

Knocked another $128.00 off the balance this month. New balance = $6,306.00

I think the turtle is a good icon for this one....slow but steady progress.

Bank Visa - October '09 update

Another bill in the mail today! More small baby step progress. Subtract $83.80 this month for a new balance of $3,480.21.

Chase Card #2 - October Update

Progress is progress so matter how small. The balance is going down ever so slightly, but I'll take that versus a rising balance any day! Take $75.09 off the balance of this one! New balance = $3,523.66

This is so inspiring!

Check out the video on Musings of a Midlife Mom's blog.

I haven't set any goals for a time frame to be out of this debt, but if someone told me I could do it (all except the primary mortage) in a little over four years, I would fall out in disbelief!

Quick post - Cross your fingers for us!

I'm running crazy today. Each kid has a party and we're soon heading out for trunk or treat. I'm very behind in email and blog reading.

But, while I was at the dance team party I got a call from our realtor for MIL's home. We have an offer for our full listing price! The buyer is only asking for $4K towards closing costs and a home warranty which we already purchased when we put it on the market. He is pre-approved for his mortgage and can close in three weeks!!!

Of course, we still need to get through an inspection, appraisal and to the closing table. But this is awesome awesome news!!!!

Thought for the day

Proverbs 22:7, “The rich rules over the poor, and the borrower is servant to the lender.” (NKJV)

Interest is not really my problem

Just for kicks, I thought I'd add up the interest charges on each of these debts for the past month. It's not nearly as bad as I thought, but considering the fixed rate mortgages are both at 4.5%, the HELOC is at 2.75% and I have a zero promo rate on a couple of the credit cards it shouldn't be too terrible.

Overall, I paid $1,309.68 in interest for the month. If you use an average outstanding balance of $390K, that works out to about a 4% annual rate. I know I should be thankful that it's as low as it is. But there's that part of me that wishes I had that $1,309.68 (or $43.65 per day) to spend on what I want to spend it on instead of handing it over to the bank! And how depressing to quantify just how many hours I need to work each and every day just to pay interest!!!

HELOC Update October '09

Ahhh...the dreaded HELOC! The good news is that we were able to apply another $3,000 out of a distribution from my mother-in-law's estate. I also paid an extra $6 from online survey income. Actually it was supposed to be $5, but I hit the wrong key when I was making the online transfer. I'm thankful it was just a $1 mistake and that my flying fingers didn't try to add a bunch of zero's on the end. LOL

That brings the principal balance down to $86,696.42! WooHoo! This baby is going down! I just wish we could get a buyer for my mother-in-law's home so we could pay it down even further and I could formulate my long-term plan for dealing with this loan.

Accountability

I've been on hyper-focus about these debts for two months now. The first month, I kept up with it on a homemade spreadsheet. The second month, I started this blog. Even though there may only be two or three readers out there, I've found that the accountability of the blog is making me search harder for snowflakes and pay in those snowflakes immediately so that I can have "tangible" progress. For example, this past month I got a small reimbursement out of my Flexible Spending Account for some medical expenses. Hyper-focusing on the debt helped me direct part of that reimbursement to my credit card balances. If I had been in a less than intense mode, I might have just spent that money on the "need of the day".

Proof in the pudding? The first month, I paid $166 towards the credit cards. Last month, I paid $399. That's quite a difference! And with our tight budget it would not have been possible without finding some extra dollars to throw toward the debt. Thanks for your comments because they help to keep me accountable, to search for those extra dollars and actually use them to pay off some debt!

Now if I could just keep my daughter's school and extra-curricular activities from asking for money every other day....

Capital One Card October Update

The snail is definitely the appropriate icon for this ticker. I'm only making the minimum payment since this card has a fixed 4.99% rate. A whopping $11.60 was applied to the balance this month, leaving the amount due of $1,106.56. I'm sure you'll be seeing this snail for a long, long time!

Primary Mortgage Update

Once again I'm resorting to viewing my statement online, but at least I can update the totals. $342.20 of the last payment was applied to the principal bringing the balance down to $254,301.76. Reiterating that this mortgage is the least of my worries. It has a fixed 4.5% rate. It's manageable. We love our home even if it is 40 years old and slightly outdated. Bottom line...paying for this house is much cheaper than paying private school tuition which is what we were facing in our old location! And the next update will bring this balance under $254,000!

Rental Mortgage Update

I'm still waiting for statements to arrive in the mail, but I checked online and found a copy of the statement that the postman is holding hostage at the moment. I need the motivation of seeing those balances go down even if by only the slightest amount.

Of course, the rental mortgage balance is the one that is dropping the fastest (percentage wise). $530.21 of the last payment was applied to the principal, leaving the balance of this loan at $26,665.46. It's also nice that my tenants are essentially paying this one for me!

Because I'm tired of waiting for updates

Still waiting for a few statements to arrive in the mail so I can update some balances. And for some reason I woke up at 4:30 this morning with no desire to go back to sleep! So I made a ticker for the totals. This might end up being the slowest moving ticker in the history of debt reduction.

Got money left at the end of the month?

My budget cycle runs from the 15th of one month to the 14th of the next. I get paid semi-monthly, and starting my budget on the 15th just works better for me. So I'm at the end of the budget cycle, and I have money left in the auto category. This is for gasoline, oil changes, etc. Right now, I budget $210/month for this expense. I set this amount back in the summer of 2008 when gas was over $4 a gallon, and I have not adjusted it even though gas prices have fallen significantly. When I filled up on Monday, I only paid $2.149 per gallon thanks to that 15 cent discount I get with my Kroger credit card. This is probably the ONLY category in my budget that I always have money left at the end of the month (unless I have a repair bill).

I only spent $99.89 for gasoline the past 30 days, and I have $110.11 left over.

Should I send it to one of the debts? Maybe. But, instead I send it to the savings account for the "new" car fund. No...I am not shopping for a new vehicle. I really hope the one I'm driving will last several more years. It already has almost 125K miles on it, but it's a good ride and I hope it stays that way. However, I know it won't last forever, so I try to set aside money every month for that next vehicle. So tomorrow, I'm transferring $110 to the new car fund.

This is probably a post for another day, but don't forget about those big ticket items down the road! Otherwise, when they rear their ugly heads, you'll end up incurring more debt.

Where to send the Snowflakes?

Another survey check from Opinion Outpost came in the mail today! Only $6.30, but every little bit helps. I'll deposit it in my bank account tomorrow and immediately transfer it to the HELOC balance. Some might question why I'm sending extra payments to the HELOC since I'm only paying 2.75% interest on the balance. I'll be the first to admit that sometimes my thinking borders on crazy, but if worse came to worse....I'm more interested in protecting a property that I've owned for almost 19 years than I am worried about whether the credit card companies get their money.

Don't get me wrong...I fully intend to pay back every dollar of my past. I'm just playing the pessimist and thinking worse case scenario. And given today's economic environment and this administration that keeps spending even more freely than I have, worse case scenarios are not that hard to come up with!!

Going Against Conventional Wisdom...continuing to use my credit cards

Yes...even with the mess I'm in, I'm still using a couple of the credit cards. But, I'm only using them for purchases that I can (and do) immediately make an online payment when I get home. I'm not giving myself the temptation of holding onto those dollars for 30-45 days until the payment is due. By following this strategy, I'm still earning rewards credits and in the case of my Kroger card I was actually able to avoid any monthly interest charges since my payments totaled more than the balance shown on the previous statement.

I received the statement in the mail today and it shows:

Previous Balance $958.23
Payments/Credits -$1,061.76
Transactions $817.46
FINANCE CHARGES $0.00
New Balance $713.93

I was able to immediately pay the $817.46 of current month's charges plus $244.30 towards the balance on this card. At this point in my life, I am so focused on debt balances that I'm taking the extra time to track this, make 10 or 11 online payments during the month. If I find that life is getting too busy to keep up with this, I'll just quit using the card and go back to paying cash or writing checks. But if I can save even $10/month in interest it's worth it to me right now to be hyper-focused.

The good news is that this balance dropped $244.30 this month! Woo Hoo!

Goodies in my Mailbox

It's a good thing there were a few goodies in my mailbox. Otherwise, I might be starting to panic about the so far unseen rent check from our tenants. Hopefully, that rent check shows up tomorrow or Wednesday!

But in the mailbox was a birthday card sent to my 4yo from his great-aunt and great-uncle. I opened the envelope and was able to hide the enclosed $25 ToysRUs gift card before I showed him the card. He certainly doesn't need any more toys anytime soon, so I'll be saving that gift card for a little cushion for his Christmas budget! SCORE!

I also received 3 (YES...THREE!!!) checks for online surveys. I've been snowflaking all the survey income to the HELOC, but I'm thinking I might use these to start whittling away at Chase Card #2. It carries the highest interest rate of all my debt, and I'm feeling strong urges to see some progress on the balance no matter how small. The 3 checks I received total a whopping $37.65, but hey, that's over 1% of the balance on that card.

Trying to celebrate on a budget

My youngest celebrated his 4th birthday today! I am trying to stick to such a tight budget, but a birthday really IS a big deal especially if you're 4. I was determined to make his day special while staying within my budget.

Luckily, last month I found a few gift cards that were given to my children last Christmas. I've been using my daughter's to buy gifts for her friends when she is invited to birthday parties. But I had $50 of ToysRUs cards for my son. So I used his to buy his presents. We also "splurged" on a $20 Buzz Lightyear costume which can double as his Halloween attire. I made his cake and decorated it with some small Toy Story figures I got with the gift cards. And we used part of our eating out budget and some coupons to visit Chuck E Cheese this afternoon.

It took a little creativity to pull this off, but the four-year old had a great day! And momma is happy that she didn't bust the budget to make sure he had a very special celebration!

Trying to develop a plan

After reading Liz Weston's article last week, I posted my blurb about inflation fears on Twitter. Liz actually tweeted me back suggesting that I might want to think about trying to get fixed rates on some of these loans. Then she blogged about getting a fixed rate.

That got me thinking....

We are expecting to get another $30-40K out of my husband's inheritance depending on when and how much his mother's home sells for. As soon as those dollars have been paid to the HELOC balance, I would like to start investigating a refinance of the mortgages on the rental property. I can't remember all the "rules" for mortgages on non-owner occupied properties, but I should have more than 40% equity. I know the rate will be higher than an owner occupied mortgage, but I don't know how much higher I should expect. Does anyone have any advice or insight on getting a mortgage for a rental property? In the meantime, I'll keep plugging away on these debts to make sure my credit score is worthy of a refinance when the time is right.

A small change of heart on the Money Market Loan

As I was typing out my explanation of the loan to myself, I realized how truly insane this is. I've kept up with this debt balance for almost two years but I had taken no action to pay myself back in over 18 months! How crazy is that? I'm just fooling myself to think that I have 3 months of expenses set aside in an emergency fund. If an emergency actually happened the amount of money I might need is not really all there! Cash flow is really tight, but I was able to squeak a measly $10.99 to put back into the Money Market Fund towards this loan to myself. The new balance is $4700.51.

Inflation Fears

I just read Liz Weston's article on coping with inflation: http://tinyurl.com/ycdtzup

Totally reaffirms that I need to dump as much of this variable interest rate debt as possible!!! Scary to think about the monthly payments if the prime rate goes back up to 21.5%.

Chase Card #1 Update

Love love love that right now 100% of my payment goes to the balance. I will really hate when this ZERO interest promotion runs out. Paid another $131 on this balance during September, leaving a balance of $6,434.

Bank VISA September update

Just got the statement in the mail today for the Bank VISA. New balance is $3,564.01. Hopefully, there will be more progress on this debt next month!

A "No-Change" Update on Chase Card #2

As I said before, I am only paying the interest charge and the current charges on this card right now. At least that way, paying the current charges as they are incurred meets the minimum payment and the balance is not going up. This month's statement shows a balance of $3598.75.

Holding my breath

Even though experts don't anticipate the Fed to raise interest rates until sometime in 2010, I still hold my breath every month until they announce the results of their meeting. An increase in the prime rate would really hurt my efforts to pay down this debt! Just a couple more hours until I know whether I can breath a little easier for yet another month.

The Grand Totals

So there it is all laid out for the world to see! The starting balance of $396,113.59 that has been ever so slightly reduced to $392,069.89. I have a long way to go!!!!!

The Money Market Loan

The last loan to list is not owed to anyone except myself. It was borrowed from my Money Market account to pay off a credit card balance a couple of years ago. Because I'm insane, I refuse to admit that I used money from my emergency fund for anything other than an emergency so I keep track of it. Like I said, I'm insane. But if someone handed me $110,000 today I would pay myself back.

The current balance of this debt is $4,711.50.

Kroger Credit Card

Other than the HELOC, this one is currently the one I'm most driven to see a zero balance on. Is it because it has the lowest balance? Is it because I'm ticked they raised my interest rate from 7.49% to 11.24%? I don't know, but I'm the most mad at this one and have the crosshairs of my scope set on it.

I still use this card at least twice a week, but I am now transferring the amount that has been charged every two or three days. In fact, last week I think I had a payment posted to this card every day during the week! The good thing about this strategy is that if I can get the balance low enough where I am paying (using my current spending) throughout the month the amount of the last statement balance or more, I won't incur ANY interest charges. It's still a little too high for me to do that since I use this card only for groceries and gasoline at Kroger. I do earn some rewards on groceries and a 15 cent off per gallon on each fill up of gasoline. Hopefully, next month I won't have to pay interest on this card.

The current balance is $958.23.

Bank VISA

I opened a new checking account at a local bank recently, and they of course offered me their VISA with a ZERO promotional rate and a decent rate after the promotional period that is tied to the prime rate.

This account is so new, I don't really have any progress to show. The current balance is $3,575.78.

The Capital One Pet

Dave Ramsey has a quote about credit cards that hang around so long you think they're a pet! That is certainly where this one falls. I think we've owed on this longer than our youngest child has been alive...maybe even longer than our oldest child!!!

This is another one though that is not too high on my radar screen. The interest is fixed 4.99% because I opted out of a change in terms a couple of years ago. So once the card is paid off according to the original terms the account will be closed. The minimum payment is almost nothing, so I'm only paying about $11 towards the balance each month.

Thirty days ago, the balance was $1,129.26. The most recent statement showed a balance of $1,118.16. I calculated that at this rate, we'll have this paid off in 8 years. *sigh*

Chase Credit Card #2

This is probably the account I've had open the longest. It has had a pretty decent rewards program, but I did receive notice they are changing the rewards program at the end of October, so any benefits will be significantly reduced.

This one is not too high on my radar list to tackle. I'm just trying to pay the interest each month and pay off what I'm currently charging on the card. It carries an interest rate of 11.99%.

Thirty days ago, the balance was $3,620.62. The most recent statement showed a balance of $3,599.17. I don't expect to see a whole lot of movement on this debt for quite some time.

Chase Credit Card #1

Listing out these debts is about as depressing as all the rain we've been having lately. But I know that if you draw a line in the sand, don't acquire any more debt, and keep making payments (however minimum they might be), eventually there will be progress.

Chase Card #1 is the result of a balance transfer from another credit card late in the year of 2008. I have been making the minimum 2% payments each month. And lucky for me, the card is still at ZERO interest until January, 2010. At the time I signed up it was supposed to switch to a fixed 6.99% rate in January 2010. But with all the changes in the credit card industry this year, I'm not sure if they have changed the terms. I haven't been reading those inserts too closely since I really don't have any options except just to ride it out and pay it off.

Thirty days ago, the balance was $6,698. Currently, it is $6,565. And I will be transferring another payment in just a few more days. So maybe then we'll see a little more movement on the ticker line.

Oh Joy!

Just finished reading an article about saving for retirement. Based on my age and the current balances in 401K and IRAs, I need to be saving 18% of my salary. That is absolutely impossible until ALL these debts are paid off!!!

Where do you stand on retirement? Is it even a possibility?

The HELOC

I'd always heard that Home Equity Loans (HEL) were just missing the last "L" in their name. And that's truly how I've turned to feel about mine.

I need to remember the good things about this HELOC. It was only because we had LOTS of untapped equity in the old house that we were able to tap this to buy our new home. A whole different story about how we found and ended up buying the house we now live in, but it never would have been possible if the HELOC had not already been set up on the prior residence. Also, it's a superb rate....prime minus 0.5%. So for the past few months it's been at 2.75% interest only. Good things, right?

So why is this loan my scary one? What if interest rates skyrocket before I get the first mortgage on this property paid off? I really cannot afford for the rental property NOT to cash flow every month. The budget is way too tight to be pumping more money into it. Also, because this property is no longer our residence, the interest on this loan is mostly non-deductible. By following the interest tracing rules, I will be able to deduct a small portion of the interest. And that's no big deal when interest is at 2.75%, but what if interest rates go back to where they were in the early 80's? Anyone else remember 13% and 14% on mortgages? Personally, I think it might be on our horizon given the actions of the Federal Government in recent months.

Am I just borrowing trouble? Maybe or maybe not. I have been able to knock about $10K off this balance with some distributions from my mother-in-law's estate. She passed away this spring. And my husband had committed a portion of his inheritance to pay towards this loan when we made the decision to max it out and buy our new home.

Thirty days ago, the principal balance was $92,711.42. We have since paid $3,000.00 (from funds received from my mother-in-law's estate), $9.00 survey income from Opinion Outpost, and a monthly interest payment. The principal balance today is $89,702.42.

Another Mortgage

This is the mortgage on the rental property. It used to be our residence until we moved into our current home. We tried to sell the place, but in six months never even got an offer. Now I'm glad we didn't. I had lived there for 17 years, and once the kids are grown and gone and school districts don't mean as much to me, we might move back there. It's smaller and much easier to maintain. And as of right now, we have wonderful tenants. Last month's mortgage balance of $27.723.90 is manageable. The last time I refinanced I put it on a 10 year note with a fixed 4.5% interest rate. It will be paid off in about 4 years and the last payment knocked $528.23 off the principal balance. Today I owe $27,195.67. The only thing that worries me about this one is those two or three days at the beginning of the month waiting for the rent income to show up in my mailbox!

Time to List my Sins

I'm going to start with the largest debt, the primary mortgage. I actually don't even really mind this one. It's directly related to our home, and when I refinanced in April, 2009 the payment dropped over $200 a month. The good news is that I got a 4.5% fixed rate. The bad news is that there are 29 years, 8 months remaining. The balance is now $254,643.96.

I said before that I started tracking all these debts 30 days ago when the balance was $254,984.88 so $340.92 of the last payment was applied to principal.

It's time to face reality!

Yep! I actually faced the reality about 30 days ago. But the realization that digging my way out of this hole I've created is going to take a very long time has prompted me to start this blog about my journey back to a firmer financial foundation. My debt load is staggering. At least it is staggering to me. So much that I ignored it for many months. I didn't do a written budget. I just kept using the credit cards. I wasn't conscious about how many hours I chose to devote to my income-producing work. I was half-heartedly using my grocery shopping and couponing skills.

For thirty days I have followed a written budget, paid off each credit card charge within a day of the transaction, and am much more diligent about the time I'm devoting to my business. I can only hope that one day I will look back on this blog and actually see progress.