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.

~E

If you don't have any money ...

... don't watch My First Place, Househunters, or really ANY SHOW on HGTV. It's completely disheartening. Especially the episode that features an annoying 24 year old who can't decide how to best spend his $300,000 budget. Ugh. It's probably more enjoyable if you're not 30 years old with less than $300 in savings. :(

Time for some new financial goals, and some accountability.

1. Pay off debt. We have several types of debt.
a. Student Loans - All mine, and I've been paying them off faithfully and aggressively. Just recently made it under the $6000 mark! Still will take almost three full years to pay off at the current rate of progress, which feels like forever.
b. Credit Card - The only card my husband and I currently have. Intentionally obtained in his name, to help build his credit score. Sitting at just under $400 (with only a $500 credit limit), but paying the minimum of $15 most months. Interest rate is 17.9%! We were also charged a $15 late payment fee last month.
c. State Tax Debt - I do not have the exact number, but we recently managed to get under $1000! Yay! This feels manageable. We are on a payment plan of $150 per month. Should be paid off in approximately 6 months, or less if we are aggressive!
d. Federal Tax Debt - This is the worst and the scariest. I do not have the most recent number (all tax debt is under my husband's name). We should be under 5 or 6 thousand dollars. However, the IRS does not issue paper statements to us, and does not allow online payments. We receive stress-inducing certified mail from them fairly often. They change the amount owed often as well and it's difficult to keep track of where we stand. A nightmare, essentially (see goal #2).

2. Explore bank loan as a debt payoff option. 
We want to talk to a real live person at our local bank to discuss loan options. The idea is to take out a loan so that we can pay off our debt (especially tax debt) in one fell swoop. Remove the stress of multiple payments and our fear of the IRS, and only have to deal with paying back our local bank. Interest rates would hopefully be lower as well, but we will have to check with the bank to know for sure.
I want to assign the "talk to the bank" task to my husband.

3. Build savings. At this very second in time we have ... (drumroll please) ... $253.43. That's it. Unacceptable in my opinion. I have no sense of security, and no feeling of preparation for life's inevitable emergencies. Things like buying a home, having a child, taking a (belated) honeymoon, or buying a new car all feel impossible. I want contributing to our savings to happen regularly, and to increase over time.

4. Tracking spending. I did this religiously and obsessively in the past! But then we used my new job as an excuse to stop tracking, stop thinking, and abandon our budget (is that harsh?). We now know exactly what my paychecks are each month, so that can't be an excuse any longer. Not surprisingly, tracking keeps me on track. I'd like to track for 90 days straight to get a good picture of where we are and where our money is going (hint - Chipotle, Ledo's Pizza, Subway).

5. Reconsider a budget. My husband and I do not think about or handle money the same way, but we do our best to communicate and compromise. I'd like to revisit having a budget. I think buckling down for a few months can help us reach some goals sooner, and a budget is a great way to do this.

6. Be honest about my fears. I promise myself I will share with my husband my fears about starting a family with little to no emergency money in the bank.

Now for the accountability piece! I will share these goals. With my husband, and with my debt support board. And I will write about them again - not a year from now this time, but soon! I will mark my calendar and update again in two weeks.

Wish me luck!

~E