Category Archives: Debt

Why I Don’t Stress About My $23,000 Pile Of Debt

The following is a guest post Daniel Packer from Sweating the Big Stuff. Be sure to check out his site!

I’m in quite a bit of debt, but it doesn’t really bother me. I know that I won’t be getting out any time soon, but I’m ok with it. I don’t need to worry, I don’t need to make drastic changes to my life, and I don’t need to take a second job. Why?

I Have a Plan

I have a budget and I know that I’ll be paying off this pile of debt for the next few years, but my plan is to have a positive net income in 18 months. If I continue to save and pay off loans at my current rate, I’ll creep into positive territory around July 2011. I am responsible and know that I need to save before I spend, and this has allowed me to tackle my debt slowly but surely. I don’t feel overwhelmed because I know that I will eventually dig my way out of debt. If I stick to my plan, what do I have to be worried about?

I Live a Decent Quality of Life

Since graduating from college in May, I have slowly weaned myself off of my pasta and grilled cheese diet. I spend some money on fun experiences with friends, and eat out occasionally. I am not depriving myself from having fun, and am able to enjoy myself despite being on a strict savings plan. Since I don’t feel like my debt is weighing me down, I don’t stress over it.

I Automatically Save and Pay Off My Loans

I set up my finances to be on auto-pilot. I don’t need to constantly look at my checking account to see if there is enough money to pay the bills. After my paycheck gets deposited, money is automatically transferred to my various accounts – savings, investing, loans, etc. I never really see this money in my checking account and have learned to live on about half of my take-home income. Automatic bill-pay lets me relax while knowing that my bills will be paid on time without even having to push a button.

I Knew What I Was Getting Myself Into

In deciding to go to college, I made a decision to pay for it afterward. These loans average about 2.8%, which is nothing compared to some credit card rates. As the economy improves, the rates will increase, but by the time that happens, I will have cut off a large chunk of the debt. I don’t regret getting myself into this situation, and if I could do it again, I would make the same decisions.

I’ve read a lot about how finances can affect people physically and emotionally, and I know how easy it is to be stressed about our financial situations. There have been times when the simple decision of whether or not to buy a candy bar from CVS has make me stress out. Take time to make a plan and you’ll be able to relax, spend a lot less time worrying about that candy bar, and focus on the things that matter.

2010 Financial Resolutions

It’s a new year and time for some resolutions. My wife and I have decided to go all financial resolutions this year in anticipation for some major debt butt kicking. We obviously want to complete EACH of these resolutions by year end. To be honest with you, I know we can do it. If we don’t, I want each and every one of you to call me a liar at the end of the year. Honestly. Do it.

1. Pay Off the Family Loan

This family loan we have is bugging the hell out of us. We know there’s no interest and we can pay it back at our leisure but it’s just ugly (sorry, couldn’t think of any other word for it). So, we are pledging that it will be completely gone (all $16,500 of it) by the end of 2010.

2. Accumulate No Additional Debt

This is a BIG one and should be on everyones list. One of the first steps in getting out of debt is not adding to it. If you only pay the minimum payments on your debts every month, but also don’t add any additional amount, you are making headway. That’s just my humble opinion.

This one will not be hard for us to complete. However, there are a few things that we would like to still do during the year that may require some planning. For example, my wife wants to take a master’s level class in the summer. We will not be taking out student loans but we will need to sock away some cash for the occasion.

3. Still Enjoy Some Good Old Fashion Relaxation

As you are probably aware, my wife and I want to continue to enjoy some things in life. We don’t want to be couped up in the house every week watching Redbox movies and eating Mac & Cheese non-stop. So, in order to get some relaxation, we want to take a trip to the beach. Mind you, I will be scouring for some amazing deals for the trip. We won’t be just throwing money at this trip. We want to do it frugally.

Actually, we have some family in NC that want to possibly rent a beach house with us. My wife’s family may also join us and it could really help out financially.

4. Relocate From My Job or Find Something Else

Some of you may know this, but others do not. I currently work and live in a different state during the week. I absolutely hate being away from my wife. It’s also a huge financial drain on us. It costs me an additional $400 in rent per month that we could be throwing at debt. Not to mention the added gas, groceries and parking expense.

I am currently in the process of applying for a position in the same company I work for now that is closer to home. It pays about 10% more and I won’t have to pay additional rent. It would help us eliminate that family loan a lot faster!

The hire date for the new job is in March. If I do not get it, I may have to start looking elsewhere for something. It’s just too hard to maintain two separate lives during the week. Even if I have to take less pay, it may be my only option.

5. Stick to the Budget

A big goal that we have in 2010 is sticking to our budget. We are currently using Mvelopes, which allows us both to view the budget when we are apart (it’s online). It’s a cool little program that is based on the envelope system. You place your money in “virtual envelopes” to spend in different categories. It has really helped us stay focused and pay off debt. If you are looking for a budgeting program, I would advise you to at least give them a shot. There is a 30-day trial included.

There really isn’t any way for you to monitor out budget, but I will be forthcoming with you if we get sidetracked from this goal.

Happy New Year! What are you financial goals?

Debt Update: December 31, 2009

The year has come to an end and I am pleased with our progress so far this year. Since we came out in July and totaled our debt, we have paid off approximately $7,200. Not too shabby. We are also proud to announce that we did not add any more debt during that time. We didn’t use a credit card, etc.

Now, onto our debt payments in December. We were able to pay off about $1,380! We feel that is a great total for a month were we saved all cash for Christmas and paid our six month car insurance payment.

Also during December, I was away for three weeks in Philadelphia for business. I paid some expenses out-of-pocket during that trip and have yet to be reimbursed. All of the reimbursements I receive in January will go straight towards our debt. It should be approximately $700. With that additional money and our debt snowball from January, we should have all of the personal loan gone by the end of the month. Here are our end of December numbers:

I have also created a page called “Our Debt” where you can check in on our progress more frequently. There is a graph (that looks a little wimpy right now) so you can have a more visual look at our debt progress.

My wife and I would also like to wish you a Happy New Year! We hope the new year brings you much joy and happiness. We will be sharing our financial resolutions with you on Wednesday.

My Call From a Debt Collector

Yep, it happened to me. Two weeks ago, while I was in my hotel room aimlessly staring at my TweetDeck, I got a phone call from a number that I didn’t know. Being the phone screener that I am, I let it go to voicemail. After what seemed like an eternity, I finally heard the sound that meant there was a message waiting to be heard. I decided to listen.

The first part of the message was a guy stating that this recording was for my ears only and if anyone not having the name Adam was listening, they were supposed to hang up. After about 15 seconds of that stuff, the guy stated who he was, where he worked and the fact that I owed them money. He left a reference number and told me to call them back. My first thought was that there was NO WAY I owed them anything. I have always paid my bills on time and if I did owe someone something, I would have taken care of it before it went to a collection agency.

Well, I waited about a week to call them back (surprisingly they didn’t call me back). I got someone right way and gave them my reference number. To my surprise, they didn’t ask me for any additional information before they got to the meaty stuff. Apparently, I owed my old apartment complex approximately $78. Really? It went to collections for $78?

My initial thought was “just give me the address so I can pay you with a money order”. However, I scrapped that thought and decided to fight. I told the woman that I wanted to check with the apartment complex to see what the charges were for. She told me I had a week and we hung up.

After that call, I immediately called my previous apartment complex (which happens to be halfway across the USA). To my surprise, they said that they would look into it and call me later that day.

A few hours later, I got the call back from the apartment complex. After some digging, they realized that they actually owed ME $78. Would you look at that, a $156 swing for little to no effort. I was completely relieved when I heard her say that. I went from feeling like a criminal to feeling like I just won the lottery.

I haven’t heard anything lately about this so I hope it’s getting taken care of. The apartment complex said that they would contact their headquarters and issue me a check. The collection agency said that they would verify my case with the apartment complex. Fingers crossed!

There were a couple of things that I learned from this whole ordeal:

1. Don’t Automatically Agree With the Collector

As I mentioned above, I almost caved immediately and paid them. I felt embarrassed that I had something in collections and just wanted it gone. Luckily, the collection company that had my case was rather friendly. Some collectors can be pushy and ruthless. Don’t let them push you around to the point that you just agree. Ask them to give you a detailed list of what the bill entails. Does it include late fees? Interest? Other charges? Make them prove it!

2. Don’t Give Them More Information Than Needed

Many collectors will want you to pay right away. In order to do that they will ask for you bank account information. Under no circumstances are you to give them that information! They will clean out your account no matter what you tell them to take out. If you agree with their assessment, send them a money order or certified check. When you mail it, make sure you send it certified mail so you have a signature showing they received it.

Well, there was my ordeal with a debt collector. Do you have any war stories of your own?

Debt Update: November 30, 2009

Well, another month has come and gone. I know this update is a little late, but we’ve been up to quite a bit lately. Also, if you haven’t heard, I am now a contributor over at Frugal Dad. I will be sharing even more insights to our debt repayment over there so make sure you subscribe to the site. Here are our end of November numbers:

The biggest thing to take away from this chart is that we paid off the Best Buy credit card! It was such an exhilarating feeling knowing that we do not owe them any additional money. The next debt to meet our wrath will be the personal loan. Hopefully we can get that taken care of this month due to an extra paycheck. After that we will begin attacking the family loan. Like I mentioned before, it is bugging us to the core.

Well, that’s it for now. Make sure you check out my posts Friday’s on Frugal Dad!

Debt Update: October 31, 2009

Welcome Frugal Dad readers! Chris will continue to post here on Your Money Relationship and he will be updating his debt amounts here. It may be beneficial to subscribe to this site so you can follow his progression. You can subscribe via RSS or via email.

Well, it’s been about 4 months since I shared with you our debt problems. I figured that it would be beneficial if I made a spreadsheet of what we have paid off to date. So here you go!

In total, we have paid off $4,465.99. Not bad but definitely not gazelle intense. There were quite a few “emergencies” during that time, so that could be the reason for such a lackluster performance. Here is a list of some things to slowed us down over the last 4 months:

  • We saved up a $1,000 emergency fund
  • The Mrs. needed $500 in car work
  • My car needed work at $600
  • New car registration for $400 (included inspection and 2 year registration)

In the next few months, we should have quite a bit of extra money to throw at debt. It should be interesting to see what happens!