DD’s Annual Debt Checkup

Posted by Debt Destroyer on January 21, 2010

Tonight at dinner I told me wife that we were down to only $3500 left on her student loan. She gave a chuckle and said that she has forgotten almost everything she learned in college. I told her that was alright since the stuff she did remember was probably out of date anyway.

I figured it being January and all that it was time I gave a look to see how we are sitting debt-wise. Last January when I did this we still had $99,625 in debt. This was comprised of:

$94,274 - Mortgage
$5,350 - Student Loan

As of today we now owe……..drumroll……$96,055, which is comprised of:

$92,534 - Mortgage
$3,521 - Student Loan

So in the last 12 months we paid down $3,500+ of debt.

Pathetic!

Even though I’m going back to school and barely working, I still thought we’d do better than that. But looking back, I don’t see why I should be disappointed. You have to make payments to actually pay the debt!

When our mortgage increased, I started only paying the minimum (I use to pay a couple of bucks extra before to make it a round number). Which meant that our only hope of seeing any improvement was in paying down the student loan.

We started out in good shape in 2009. I routinely paid an extra $75-100 a month. But then for some reason in the summer I stopped this and went down to only paying $20-$50 extra. And that is how we ended up only taking a $3,500 bite out of our debt.

What’s sad is that by this time next year I’ll have my own student loan to pay back. I really wanted to be done with Mrs DD’s loan before mine kicked in. That definitely won’t happen with my willy nilly payback plan.

So I came up with a new one.

Starting this month I’m going use a system where I designate $500 a month for our electric bill and our student loan payment combined. For example in January the electric bill is $380, so I paid $120 on the student loan to come up with the $500.

Last year we spent a combined $4620 on these two categories ($2575 on electricity and $2045 on the student loan). So committing to increase this total to $6000 next year is a pretty big jump. But I think it will be worth it.

Admittedly there is a slight problem with my plan. What happens when I get socked with super high electric bills? If that happens (which I’m pretty sure it will next month) I plan on paying the minimum on the loan and then make up the spending difference in future months when our electric bills are lowered. So while a few month’s total might be over $500, the total spent on the year for these two categories will be $6000.

If I stick to this plan, it would be smart to utilize the budget option that my energy company offers so my payments would be stable and I’d know what they’d be in advance. But where is the fun in that?

So, what do you think? Am I crazy? Or crazy like a fox?

Do any of you have any irregular debt payment/saving plans that you feel like sharing with the rest of us? Do you think that the “goofy” nature of a plan helps or hinders the results?

I can see it both ways.

By making an individual plan it could provide extra motivation by giving a feeling of ownership over the idea, instead of just using a tried and true method such as the debt snowball.
But I also think strange plans could be a sign of a lack of focus and discipline, so a person could find themselves getting off track easily.

Hopefully #1 will be the case for us.

Until next time,

-DD

» Filed Under Debt Elimination

DD’s Monthly Expenses - December 2009

Posted by Debt Destroyer on January 10, 2010

Happy New Year!

I don’t know about you, but I have been having a difficult time getting back into rhythm after the holidays. Hopefully I can get back on track soon. Until then here is my family’s spending report for last month.

$840.39 - Mortgage
$759.20 - Health Insurance
$637.27 - Christmas Presents
$472.44 - Groceries
$450.00 - Preschool
$223.42 - Household Misc
$211.99 - flip video camera
$155.83 - Gas
$152.66 - Dog
$150.00 - Student Loan
$148.35 - Boots
$146.64 - Electricity
$145.79 - Bed
$103.65 - Phone & Internet
$70.00 - Donations
$66.78 - Clothes
$65.20 - B-Day Gifts
$63.67 - Garage Door Repair
$55.00 - Babysitting
$53.32 - Utilities (Water, Sewer, Garbage)
$53.00 - Yoga classes
$50.98 - Dinning Out
$44.52 - Dance class (2 months)
$25.00 - Club membership
$14.00 - Haircut
$13.86 - i-tunes
$13.45 - Kids care

For a grand total of $5161.41! We have absolutely no business spending this much. When I told Mrs DD the damage, her response was,”Wow.”

Biggest Budget Busters:

$637.27 - Christmas Presents - If you combine this total with what we spent last month ($152.56) We almost spent $800 on Christmas gifts this year. Last year we only spent $600. A big difference is that we spent a lot on our kids this year. It seemed like there was always one more thing to get. Another reason why this seems high is that we bought presents for 25 people this year. We need to shave this number down next year. We were able to cut out a few, but they were replaced with others.
$223.42 - Household Misc - I should’ve kept track, but well over half of this was for Christmas decorations. We hit up the after Christmas 50% off sale, so I guess that means that we’ll be set up for next year.
$211.99 - flip video camera - My wife doesn’t make very many impulse purchases, so I won’t jump down her throat when she does. Gwyneth Paltrow blogged about these cameras, and it made my wife realize that we don’t video tape our kids enough. We did use it for the holidays, hopefully we’ll use it all year long.
$148.35 - Boots - Mrs DD takes another hit. But this is South Dakota and you need a good pair of boots for winter. She’s been complaining about hers for years so she went out and got herself a pair. I didn’t even notice until the we went back to the store and the sales clerk asked her how her boots were treating her.
$145.79 - Bed - We decided it was time for our 2-year old son to get out of the crib. So a quick trip to the furniture store(twin mattress), then the Hardware store (plywood board instead of box spring), and one last trip to Target (Race Car sheets) made this rite of passage complete.

Biggest Budget Breakthroughs:

$146.64 - Electricity - Since we spent over 5k last month I don’t think there are any budget breakthroughs, but somehow our electricity came in at a reasonable amount. This will change next month because thanks to the Christmas blizzard we are now living in an icebox(had a record low of -30 degrees two days ago), but I will enjoy the lower bills while they last (won’t be long).

~Let’s do the Time Warp~

Last December we only spent $3903.52, so clearly the wheels fell off this year. Sure last year we didn’t pay for our health insurance, but quite a few other categories were higher last year (Daycare, Groceries, Electricity). We just plain spent a lot this year.

In fact in 2009 we spent $54,659.91 ($4554.99/month). I’d like to see this number drop closer to $50,000 next year, so we need to reduce our spending to the $4200/month range. It’s going to be difficult, especially seeing as how we spent $4300 or less in only 5 of the 12 months in 2009. But I think it’s doable.

It’s fortuitous timing that The Simple Dollar is running a series on how to trim the family budget. Although in our case the best advice would probably be to stop buying so much stuff.

Until next time,

-DD

» Filed Under Spending