Tomato Barnacle 

June Check-in

Accomplishments

• I have only ONE remaining consumer debt of about 15,000
• Closed a credit card (to avoid paying an annual fee)

Personal Loan: 23,537 now 15,106

Personal Loan (2): 4,573   GONE in April

Personal Loan (3): 4,208 GONE in June

0 Int CC: 4,763  GONE in March

Goals

1. Finish remaining consumer debt 15,106
2. 401K loan: 47,957.00 - save for payoff or find a way to refinance. 

TOTAL Freedom Fund 63,063

Tomato Barnacle WAHOO!! That's a lot of progress!

Tomato Barnacle Awesome!! I closed one credit card too to avoid paying the annual fees since I got a new one with zero fees a year and better rewards. I closed it and redeemed all the travel points as gift cards since I won't be flying anywhere in the next year. I'd rather have the gift cards now that the world is slowly opening up again. :)

NamastScrooge 

I'm working to save up the money I need to pay off my phone as well. I know that some may say, because it has no interest, to just pay off the installments over time. But, like you, I want the security of not owing that money and can then put the $30 a month towards my goals. Also, when I do pay the phone off, I am going to switch carriers and go from about $70 a month for my phone line to about $25-45.

I was going to wait a few months to finally pay the installment and switch carriers. But after reading your post, I think I will see about doing all this at the end of May. Thanks for the inspiration to finally pull the trigger on all this. 😄

NamastScrooge I'm so excited for you! Paying the car note 3 years early and the personal loan 4 years early must feel amazing. I'm currently working on paying off my phone also. Thank you for sharing that this isn't a silly debt to be paying off. Like you said it's interest free, but no matter how you look at it it's still debt. Wishing you the best on your adventure. 

Peripherie nice!

Corruptress Thank you! Exciting indeed! Yeah debt is debt right? I keep finding myself having to go against the grain of debt being the norm in all these little ways. It’s not like it’s always the wrong thing, but to think of it more as a dire exception vs. everyday rule. 

NamastScrooge If the money isn't better spent on other debt, one thing you might consider is adding a new phone category to your budget.  Then putting all or part of the $30 you were paying per month towards your current phone in that category.  $30 a month means in a year you have $360 and that will get a decent phone.  Not the newest iPhone, but no phone that is easily broken or lost is worth 4 figures to me, anyway.  We've been saving $20 a month since we bought our son's phone a year ago and will have enough to purchase a nice refurb for our daughter when she theoretically enters middle school.  If school ever restarts.  Computer equipment and phones are a true expense in our household in any case.  

Technicolor Cheetah yes! Totally. I actually have new computer and new phone (and new car) in my budget as true expenses but they are on hold during the pandemic as I prioritize getting my savings built up to 3 months at least. Then I’ll go back to filling all my categories as usual. 👍

Orchid Display oops - made my snowball payment before my automatic minimum payment and so I paid a second time lol. Here are the amended totals after that second payment went through:

Balance from last month: $2793.00
Paid down this month: $327.00
New balance: $2466.00
Debt Smackdown Totals: $2466.00/$3885.24 = 36.53%

Duncan you are correct - but what each person is comfortable with may be different, too. In the US credit card companies actually prefer to see SOME credit utilization - roughly around 10%. When my BF's total debt actually dropped below 10% of his available credit, his score dropped. It has since gone back up again, but overall it dropped.
Here in the US, especially, it's all about gaming the system. You've got to know how the system works in order to take advantage of it, and have it work FOR YOU. It's possible, but you've got to understand it before that happens, otherwise they're going to take advantage of you instead.

farfromtheusual Wow, that's good to know.  We do use credit cards but I've been keeping them at 0 balance by paying before the closing date.  I'll pay attention now when I get my debt down below 10% and start paying after the closing date so it gets reported.  

Duncan Yes, I understand the home mortgage might be a good thing, I used to be able to deduct my interest, but since the tax laws changed in the US it's worse for me to itemize rather than take the standard deduction so  that's not a benefit for me anymore.

Grey Tux yes, it's actually better to be able to show that you have debt, and can manage it than having zero debt.

And I do know the tax laws changed, and you can't deduct quite as much for the mortgage interest as you used to, so for some people it doesn't have as much advantage as it used to.
It's a really personal decision how to manage debt. But I absolutely agree that having it isn't necessarily a bad thing. Having unmanaged debt is a bad thing!

Duncan My belief is that no debt is a good debt. And this pandemic illustrates that beautifully. No mortgage means no mortgage payments. No mortgage payments means no risk. No risk means less stress. 

MXMOM possibly... but also potentially less pay off, and less control.

Duncan here in NZ the mortgage interest is not deductible - unless the house is used for a business in which case only the portion that is used for the business is deductible. Overall, the gain is minimal as I can claim one room or about 11% of the interest, but still have the balance of the payments sucking away at our overall budget. It depends on the country and their tax laws, plus the usage of the home etc.

WairereRose same in Canada. 

MXMOM 

You could go half to snowball and half to a pandemic emergency fund until  things get back to the normal-ish.  

Orchid Guitar make sure you actually set the saved amounts into the budget. I’ve missed that step before and then didn’t have the funds available. 

MXMOM  Just now seeing this :) Yes! A very good tip! We have been setting aside the amount each month in it's own bucket. There are certainly advantages/disadvantages to holding onto the funds. We ended up downgrading our goal by $1.5k due to medical bills & the need for a work-at-home space. We're happy with these decisions and made them intentionally. However, as the amount grows, it is very tempting to use it for much needed repairs on the house. We're still holding strong, though!

Cyan Yeti it may not be the most elegant way, but when you are on the discussion page in Windows use CTRL - F for find and then type you name in the search box.  

Cyan Yeti You can click on your name in the top right corner of the forum, and on View profile, or click on your name in a thread. It has a list of your previous posts, which can help with tracking that down if searching doesn't do the trick!

Nicole & @MXMOM thank  you both.  Very easy both ways😃

I had not posted for May yet.  I paid  $2338.02 to debt so far in May.  That will be all for this month😞.    Again, I hope to get rid of 1 or 2 small debts in June.  Here's HOPING!!!

Nicole Cyan Yeti  the only problem with that method is you post a lot (like too much) then that list of posts can get long. 
 

Hot Pink Admiral That's a fantastic milestone!! I love seeing that line cross into the black, it feels SO good!

Hot Pink Admiral I'm still looking forward to the day I'm worth "nothing" - and, shortly after that, worth something. Congratulations! 🎉

Faness a financial adviser I worked with said they would always celebrate whenever a client became “worthless” hahaha

Hot Pink Admiral net worth question for everyone- do you include the value of your house? If so, do you use purchase price? Current value from Zillow? Without my house my net worth is very negative but if I include a guess at my home value, I’m positive. I don’t know if it’s cheating to include my house?

Steel Blue Sound it’s not “cheating”. Some put the house in the net worth number but remember to also put the mortgage in. Either both in or both out.  You can put both in as tracking accounts if you want. I leave them both out for a couple of reasons.
First the mortgage is not getting any special attention right now as I’m still paying down debt so I just treat the mortgage payment as an expense for now. When I used quicken I had the mortgage in and broke the payments between interest and principal but it confused my husband to only see the interest expense rather than the whole payment.  

second, until we do a big downsize for retirement (if we do) then the house isn’t really an appreciating asset for me because of we sell it, I have to buy another one to replace it. So to me until I can free up some of that asset I don’t even think about it. 

MXMOM yes i have the mortgage included, which is what makes it so negative. Good thought on keeping the asset/debt either both in or both out. Same for my car value/car loan, I guess. They’re all just in as tracking accounts. 

Steel Blue Sound Interesting question! I do not have a mortgage (I rent) so no mortgage in YNAB for me. I do include my retirement account, which very much helped me get to a net worth of$0.

Steel Blue Sound I have my mortgage debt and home value in as tracking accounts which I reconcile a couple times a year.  For the latter number, I used the appraisal from a refinance I did a few months ago, but before that I was just throwing in the Redfin estimate. I did the same with my car, using Kelly Blue Book as a reference for the value, updating occasionally with the current mileage. 
 

I personally like doing this because I helps me see, if worse comes to worse and I have to sell my home and my car to go rent again and bike commute everywhere ;) I have the assets to survive. It reassures my catastrophic thinking, basically, which is worth it for me personally, a somewhat (or a lot) risk-averse person. I also track my IRA (but have learned in the times of COVID to stop reconciling/looking!) and another small retirement account. Again, helps with catastrophic thinking. 

Green Cleric one of the things I did when i got a raise is to figure out how much it was and then just make that amount an automatic payment to a debt. I set it up through the bank to go to the card on payday.  I didn't have to change the rest of my spending because the difference just went away and we were living on the same amount as before. 

I used this same plan last year when my EI/CPP contributions (Canadian payroll deductions) reached their max in July and sent it to one of the debts. It worked great. I then stopped the payments when the contributions restarted again in January. This change actually figures in my debt repayment plan. 

Navy Blue Pegasus Thank you! I'll definitely have to take that advice. Best to automate it out of my hands, I love this idea. 

Green Cleric Glad to help! Automating any regular increases really helps. Then, when the debt is paid off you have that much extra to live on which seems like an extra bonus! :)

Navy Blue Pegasus Love that perspective of it being an extra bonus at the end. going to definitely be automating things for myself. 

Navy Blue Pegasus Such a good idea! Thanks! :)

Little Green Ghoul 

YTD I have paid off $10,685 (72.15% of my goal)

Keith Borders did you make that chart yourself, or does the debt challenge spreadsheet do that?!

Keith Borders PS congrats!!! (Should have said that first, I just got distracted by the nice chart, haha)

Steel Blue Sound I made it myself using the Numbers app on my iPad. 

Steel Blue Sound Thank you!! Appreciate it!

Keith Borders Congratulations!!!

Violet Drill Thanks!

Keith Borders Congratulations!!

Keith Borders Congratulations! I'm tackling a car loan this year as well and this is total motivation!

Veronica Thanks so much, and go get’em!!!

Diane Wow! Congrats on the peace of mind, and I hope things turn around for you (and everyone) soon.

You can edit your original goal to add the student loans that you didn't originally include. This will give you a clearer picture of what you've paid.

Diane I'm so sorry you're facing these troubles right now. I'm glad you've both come up with a plan that feels right and lines up with your priorities. 

As for the spreadsheet, it will work either way! If you still plan on crushing the original goal, it's okay to change the intended debt payoff to include the loans.

EP So glad you finally got through your unemployment and were able to catch up!! That had to be really scary!

farfromtheusual Thank you!! It was, frankly, awful. I'm really grateful I was able to finally get the system to acknowledge me. I guess if there's any silver lining to my period of post-grad unemployment last fall/winter, I did figure out ways to squeak out enough money to pay the bare minimum on our bills. I'm not sure what we'd have done, otherwise. 

Unfortunately, there are still so many who can't get through to unemployment programs, both in my state and in plenty of others... I've tried to "pay it forward" by sharing what worked for me whenever I see folks in my state posting about their difficulties, but my heart just breaks for those who can't get through. Ugh.

MoneyMonster I agree, it's kind of exciting seeing money in your account get bigger when there's been a minimum there for so long.

Ivory Wildebeest That's a conundrum. I hate these types of decisions.
One bit of info that I don't think you mentioned - what is the interest rates on the debt that you currently have? That info has an impact on my decision of what to pay first.

farfromtheusual 

I owe:

$6,672 @5.99% (258.55/mth)  which will be paid off Sept 2022 (this was consildation of a high-interest student loan and unexpected house repairs when I bought my house).

$48,452 @2.95% (472/mth) which should be paid off in May 2027 (this is student loans).

I would be paying  ~6% on a used car. New cars would run about 0 to 2.49% in my area.

Ivory Wildebeest Those are good rates on the loans.

I think if it were me, I would take the $5000 and buy something newer to you, and then turn around and sell your current car, plus the tires, to replace at least $2000 of the emergency fund that you put into the newer car. Or use the $5000 and get a very small loan for a slightly better car (so maybe total cost being $8-10k, depending on what you can find) which would keep the payments pretty low every month, too.

We're in the same boat with the BF right now. He's driving my 2000 Explorer, which is about to fall apart around him, and has 230k miles on it. It's just not worth putting any effort into, and KBB puts the value at about $45.00. No lie. And right now, with the pandemic, and some dental work that he needs to pay off there is just no way we can afford a car payment, and while he has about the same amount of savings that you do, it's really not worth buying another beater again. So we're trying to gimp the explorer along so that we can stretch things out until he's got more money coming in again. We'll see what ends up happening, but yeah, not a fun position.

farfromtheusual  i would do just as you suggested if it were me! 

farfromtheusual same exact situation here. My husband’s car is on its last legs. Mechanic said it’s going to need 3k of work “within the next 0-3 years” so we’re just saving as much as we can til then, have about 4K so far. Hoping it lasts another year but who knows. The plan is to put everything we have down and if it’s not enough finance the rest and pay it off quickly.  As far as your questions- I think the savings by buying a used car outweigh the lower interest rates on a new car. (We were debating that the other day- does it makes sense to save (for example) 500/m until the car dies and buy then, or put what we have now down and finance while rates are low, and then continue to pay 500/mo towards the loan. I figure we’d be budgeting the same amount either way, so why not get a low rate..... but everyone said the rates aren’t even that great right now and to just keep saving. (I kept hearing about 0% but I didn’t realize that’s only for new cars, and I guess you can usually get a low rate like that?! I guess I’ve never bought a new car, lol) 

Steel Blue Sound Yeah, the BF was looking at that, too. They'll only give you 0% on a new car, and frankly, the cost of new cars is so outrageous it's not worth it. We don't have enough to put down to make the payments low enough that it would be helpful, which is frustrating, but it is what it is.

So we wait. And hope. And the explorer started doing something weird yesterday, so I think we're going to have to figure out how to make all of this work whether we like it or not. :(

Ivory Wildebeest I think I'd continue to make minimum payments on the loans due the interest being ok, get a used car for cash if at all possible using the emergency fund (think this could be considered an emergency) over taking on new debt/new monthly payments.  Replace the emergency fund as soon as you are able.  There may be some motivated sellers right now...there are some good cars out there just be sure to have your trusted mechanic check it out first.  May not be your "dream" car, but getting over the debt hump alone will make it worth it!  This all being said, I wouldn't deplete my emergency savings if you don't feel secure in your job/income right now given our current circumstances.  You've been wise to build that up!!

Sweet Tangerine I am pretty secure jobwise (hopefully didn't jinx it). I still have time to decide what to do. My wise old neighbour said the same thing about motivated sellers, so I am just going to wait a bit longer. I am actually not picky about cars and while I do have a dream car in mind, I know that I can't afford it at the moment and I plan to pay cash or near cash for it when I do... Thanks for the insight :) 

farfromtheusual Thanks.. I have been trying to figure out what to do.. thankfully I have a little bit of time (fingers crossed).

Ivory Wildebeest A little bit of time helps!

farfromtheusual  Bonus is that if I do have to wait a little while between cars, I am walking distance from work and stores.. just would be annoying on the cold wintery days or when it is raining.

Ivory Wildebeest hopefully you have mild weather for the next couple of months, unless you're down under somewhere and are in the midst of your winter. Glad you live within walking distance, that doesn't work for us here :(

GJ welcome GJ and good on you for jumping in.

GJ Welcome! Never too late! The Chinese proverb works for investing or paying off debt. When is the best time to plant a tree? 20 years ago. Next best time? Today! So today is the day for you! Move forward. :)

GJ Welcome to YNAB and to the Debt Smackdown!