Apr 09 2012

Dorothy part 3: Not in Kansas anymore — it’s sweet home Chicago


We first heard from Dorothy in August 2011. Back then, she was living in Kansas and dreaming of moving back to Chicago. Well, her plans moved forward and she’s back in the windy city and having a wonderful time. After several months of transition (and one more move to another apartment) it sounds like she’s ready to get back on the debt-payoff track.

Here’s an update of her numbers and her story. I’ll write a post tomorrow with some ideas for her to consider.

The numbers:

  • Savings ($30 August) April: $300 difference of $270
  • Car loan ($6,549 August) April: $4,934 difference of $1,615
  • Chase credit card ($2,703 August) April: $2,621 difference of $82
  • Citi card (didn’t exist in August) April: $2,989
  • Sallie Mae ($11,884 August) April: $10,677 difference of $1,207
  • Federal student loan ($3,395 August) April: $2,986 difference of $409
Total debt: $24,207 (improved by $326 since August)
Monthly take-home pay: $2,850

Chicago Skyline 2008

Dorothy writes:

I can’t believe it’s been more than seven months since that original cry for help! Re-reading my story was really difficult. Maybe that’s why I’ve been putting this off for so long … My life has changed dramatically, my finances not so much.I moved back to Chicago in November!

I’ve been at my new job for five months and it’s a complete 180. I’m so happy, my coworkers are stellar, and I feel so surrounded by love and support. In Kansas I had few friends and a crappy ex-boyfriend. Here, my social life is filled to the brim and I never knew I could be this happy.

With my new job came a small raise—$45,000 up from $39,000. However, Chicago is much, much more expensive and the move put me even more in debt. I get paid the last day of the month, which has taken some getting used to and given me a valuable lesson in budgeting. I’ve been living with family for a discounted rate of $500/month, and spending an additional $250 a month on storage, but starting May 1 I’ll be living in a new apartment where I will pay $800 a month for rent, not including utilities.

The good news is I paid the first month’s rent, credit fee, and move-in fee (for a total of $1,050) out of pocket. I had stashed a grand or so in my savings account. As you know with my Kansas apartment I charged all of that. I won’t pay rent until June 1 so that’s nice.

I canceled the Victoria’s Secret credit card per your advice in August. I also transferred my Chase credit card balance onto a no-interest, free balance transfer Citibank card. All was well until…the move. I had to charge my entire move ~$1,500 to my Chase credit card, and then had it linked to storage at $250 a month, and let’s just say both of my credit cards aren’t doing well.

This is the last month I will be using the Chase card for the furniture storage payment. I will then focus on paying them down exclusively and not using them.

Monthly expenses:

  • Rent/storage: $750 a month, $800 a month (no storage) starting June 1. I did not pay rent this month because I’m doing a favor for my family, and I already paid May’s rent. I hope to use this extra money to pay for my movers and buying some essentials for my new apartment (shower curtain, trashcans, etc.)
  • Car insurance: $81
  • Gym membership: $80 (told ya Chicago is expensive…and this rate will jump up to $120 after my 26th birthday in December, at which point I will need to find a new gym.)
  • Utilities: None at the moment, that will change in May, but they will be split with a roommate.
  • Groceries: Hard to say, I do a big grocery trip twice a month and spend probably $70-90 each time.
  • Gas: UGH. It’s $4.59 a gallon here in Chicago. I do drive to work (way on the south side) and use just under a gallon a day. Public transportation is $5 a day, so I figure with wear and tear factored in, I’m spending about $5 a day driving. If gas prices get much higher, I will start taking public transportation every day. My new apartment is much more conveniently located to a train.

Other: I shop SO MUCH LESS now, despite the fact that I’m surrounded by all my favorite stores. I do spend more money on food and entertainment because as I mentioned above, my social life is pretty busy and usually related to food and drinks. I am not a big partier though, so I don’t have to worry about spending a ton of money on the weekends on alcohol and cabs like a lot of my friends.

Another note, I did claim my move on my taxes and got about $1,800 back, but I used most of that to get new tires for my car (those suckers are expensive!), and an oil change and filters. The rest was used to buy a ticket to visit a close friend in Los Angeles. I hate spending money on car stuff, so that seemed like the best way to do it.

I have my six-month evaluation and salary review coming up in July. I don’t know how it works here, but there could be a slight raise, which would be the difference in whether I get DVR or stay at my gym past December.

Alright, let me know if I’ve left anything out. My main goals are to pay off my credit cards, especially the Citibank one before March 2013. And I’d like to build my savings back to $1,000 or more. I know the numbers don’t really show it, but generally I feel much more financially stable than I did before.

[Kacie again: Feel free to jump in the comments section to share some thoughts with Dorothy, and remember to come back tomorrow for my follow-up ideas] {Photo Tom C}

Mar 03 2010

Part 2: Some thoughts and suggestions for my friend in debt


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

In my last post, we met my friend Courtney and heard about her debt story and her plans to get out of it.

I am not a financial advisor of any sort. I’m just a gal with a blog and an opinion. So Courtney (and anyone else out there) keep that in mind, k?

First, I want to commend Courtney for seeing the need to get out of debt and taking steps to get there. It won’t be an easy journey, but it will be worth it!

I suggested that Courtney and her hubby read Dave Ramsey’s The Total Money Makeover. It’s a highly positive book and I think the getting-out-of-debt advice is solid. It’s also helpful to listen to his radio program which is available on his web site.

I’d like to encourage her to follow Dave’s baby steps. To start out, I hope Courtney gets that baby emergency fund of at least $1,000 in the bank as soon as possible — even before the sale of her house. Honestly, even a little more might be beneficial since it will take awhile to get to the full emergency fund step. For Courtney’s situation, I would suggest $5,000 to start out (or even more if it makes you more comfortable) so that you’ll have a little breathing room in case of job loss, insurance claim or other financial setback.

That way, you won’t need to resort to your credit cards if something pops up. Remember, even while you’re building up your savings, you’ll still be paying the minimum on your debts so they will start to move in the right direction.

Then, start your debt snowball. List your debts from smallest to largest. Here are Courtney’s:

  • Kohl’s: $395.20
  • Discover: $537.16
  • Capital One: $725.45
  • Menard’s: $2,100
  • Visa: $2,530.82
  • Signature loan: $2,729.23
  • Discover #2: $3,500
  • Dodge: $3,295.40
  • Toyota: $11,503.06
  • Sallie Mae: $27,379.43
  • Total: $54,695.75

You might notice I listed the Dodge a notch below a credit card, even though the credit card has a slightly higher balance. I think when the balances are so close, it’s better to pay down a credit card vs. a fixed loan like a car. Especially since Courtney wants this credit card debt outta here fast!

I have a feeling she’ll be able to wipe out those first cards pretty fast. As she ticks away each card, she can then apply the minimum payment and all of her extra money to the next card on the list. It really does snowball and builds momentum like nothing else!

I suggested that she call each card company and ask for a better interest rate. She was told that her credit score was just too good, and that they couldn’t. Oh, typical of them to be jerks.

I’m proud that Courtney lowered her cell phone plan and saved an extra $22/month by doing so. Call your cable/internet provider and see if they can lower your plan in some way, but canceling it outright might be a little rough.

Next, since they don’t have a precise budget just yet, I suggested that she simply track her spending so she can get a baseline for what’s reasonable. Mint.com is an excellent tool to track your spending if you’re using debit cards. I’m assuming Courtney is banishing her credit cards from her wallet and not using them anymore — so debit cards and cold hard cash it is for you, missy!

Finally, Courtney mentioned how she enjoys buying stuff. I’d like to challenge you to sell anything you’d be willing to part with. For one thing, it’ll help with your pending move, and for another — it’s extra cash for your debt snowball! Ebay it, list it on craigslist, or hold one of the season’s first yard sales.

Courtney — do you think selling $500 worth of stuff is within reach?  If so, that’s half of your baby emergency fund right there!

Stay out of stores unless you have a true purpose. Consider shopping thrift stores. I know Bloomington thrift stores aren’t all that great, but sometimes good deals pop up!

You can take a post-it note and wrap it around your debit card. Keep an inspirational tidbit on the post-it so you’ll be reminded of your goals each time you shop.

You can do this, Courtney! And ya know what — I think you can do it faster than five years. You’ll be surprised how fast things start moving once you get going! YAY!

Hey! I'm Kacie, wife and mother of 3. 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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