Jun 28 2010

Part 5: Update on Courtney’s debt reduction

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See part 1, part 2, part 3, part 4, part 5, part 6 and part 7.

Courtney and her husband are doing a fantastic job paying off their consumer debt! She recently sent the last payment for her Menard’s credit card, which had an obscenely high interest rate (don’t all store cards?).

Here are the numbers. In plain text are the balances as of March, and in bold are the current figures:

  1. Kohl’s credit card: $395.20 Now: $0
  2. Discover card: $537.15 Now: $0
  3. Capital One: $725.45 Now: $0
  4. Menard’s: $2,100 Now: $0
  5. Visa: $2,530 Now: $2,522
  6. Signature loan: $2,729 Now: $2,477
  7. Discover #2: $5,400 Now: $5,206
  8. Dodge: $3,295 Now: $1,813
  9. Toyota: $11,503 Now: $10,758
  10. Sallie Mae: $27,379 Now: $26,732

Total debt in March: $56,595

Total debt in June: $49,508

Total paid so far: $7,087

When updating these figures, I noticed that a few of the balances changed minimally — and one went up. The Visa went up a little from last month, and the Discover #2 card stayed pretty much the same. I’m guessing the interest is such that the minimum payment isn’t doing much to reduce the balance at this point. Fortunately, that Visa card is next on Courtney’s list and I’m sure it’ll be paid off soon. Do you see why it sucks to carry a credit card balance?

Their adjustable rate mortgage (I know, I know) recently dropped down to 3.1% which means their monthly payment also went down $127. They will throw that into their debt snowball.

In the meantime, their house is still on the market. If it doesn’t sell, they’ll investigate refinancing to a fixed-rate mortgage. While 3.1% is lovely, it could also get ugly if when rates jump.

Here’s some more thoughts from Courtney. I bolded a few items:

We still have a long way to go for sure, but we’re still motivated!

The biggest challenge has been guessing when to pay over our budgeted amount towards debt and when to hold off. It seems we’ve been having a LOT of somewhat unexpected and expensive things the last few months… I had my wisdom teeth out ($750), I broke my windshield ($100), my husband had to get two crowns ($600), his truck is going in tomorrow for a new muffler/brakes/rotors (est. $850).

So far we have not had to touch our $1,000 emergency fund and have paid for all of these unexpected things with our ‘extra’ income each month.  Since we’ve paid off the highest interest credit cards I’m sort of keeping it as a safety net for the unexpected, but not calling it an emergency fund.

It still feels really good to see how much debt we’ve been able to pay off in just 4 months! My husband and I have changed our spending habits and how we communicate better and check in with each other before we spend anything outside of our usual budgeted amounts. Now whenever I go shopping (my husband is an impulse buyer or buys enough food for one day only so I do all the grocery shopping) and get home my husband looks at the goods and tries to guess how much I’ve spent and saved! He’s getting pretty good at guessing these days, but we both know that before couponing/sales/this budget transformation I’d be spending almost two times as much!

I average about $120 per grocery trip and save usually $50 with sales/coupons, which is fun! Mostly my family and friends are supportive… I have a lot of friends who are now starting to take budgeting more seriously and realizing that even though you make $50,000 a  year with your first job out of college doesn’t mean you’re rich and can spend money on anything! Others really just don’t get couponing or saving money and see that we “have plenty of money” because they focus on the “it’s only x dollars a month” for a loan. I used to be the EXACT same way (really only 4 months ago? seems like longer!) and I know everyone has to make their own choices in their own time. I do wish my family listened to my theories and ways to save a bit more because I think they could really benefit (my sisters each have children).

So, if we keep plugging away and putting extra money when we have it towards the debt it seems that we could be starting 2011 with just the car loan, student loans and house as our debt! I NEVER would have thought in 10 months we could pay off $17,000 worth of debt! THINKING OF THAT FEELS AMAZING!

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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