Thursday, June 28, 2012

2 Weeks Later

As promised, here is a two week update to “if you don’t have any money …”
Two weeks is a short period of time, sure, but I’m still proud of myself and my husband for staying very focused on our financial goals so far. We should hear from our bank today to find out if we were approved for a loan. The loan will be used to pay off our tax debts and some of my student loans. We see this as an opportunity to pay off our most stressful debts quicker and will work hard to pay back the bank as early as possible. The loan will be in my name because I have better credit. I have never applied for a loan before and it’s a little intimidating, although I do feel pretty confident that we will be approved.
As a part of the loan application process my credit score was checked and is currently sitting pretty at 731. According to the letter I received this is better than 58% of US consumers! The loan application also forced us to get all of our numbers together in terms of our debts. As of June 26, 2012 we have $14,207.46 in debt. Very scary to see it as one large sum. Here’s the breakdown:
$7,003.95 is IRS debt
$5,901.82 is Student Loans
$950.00 is State tax debt
& $351.69 is Credit Card debt
The number seems high, but when you started doing calculations, it won’t actually take us too long to pay off. We have been averaging about $507 in debt payments monthly - $181 to student loans, $150 to state taxes, $137 to the IRS, and $40 to the credit card. By buckling down (as discussed in "...square one" and “The Plan”) we can make higher payments than that. $507 per month gets us out of debt in more than two years, but less than three. I am very hopeful that we can be strict with our spending and really knock this debt out quickly. I dream of buying a car with cash, saving for a house, having a big fat emergency fund, and traveling to Europe!
Our savings account did creep up slightly since I originally posted. It’s now $285.43. Still small and not much of a security blanket. Progress may continue to be slow here as our budget is tightened.
The major reason for our very tight budget for July is trying to afford plane tickets for the children to come visit us in August, and then the costs of having them with us as well (food, entertainment, time off work). We have to be very tough on ourselves (little to no spending outside of necessities) because plane tickets are not cheap in the summertime (or ever). After we afford this visit, I hope we learn to be more spending conscious throughout the entire year, as these visits will always be happening and preparing in advance would greatly reduce our stress.
I have been faithfully tracking my spending, which is always helpful. I plan on keeping that up long term. It will come in very handy when we sit down to create a budget again. Speaking a budget, I have gone back to a limit on grocery spending. The amount is generous, we just need to learn to eat what we buy and to not buy new food just out of boredom. When I have a spending limit I use my cell phone’s calculator to add things up as I put them in my shopping cart and almost always end up under budget. I’m still not quite to the point of meal planning and cooking nice meals yet, but I’d like to get there eventually.
I have held myself accountable and I’m proud. I shared my goals and fears with my husband and my online debt support group. But the work is not done … I must keep working hard at this, the payoff will be worth the sacrifice.

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