Beginning a Financial Journey

**disneysteve** · 01-19-2010, 04:29 AM

Welcome. I look forward to seeing your income, expense and debt info so we can all start helping you on your journey.

**anewday44** · 01-19-2010, 05:15 AM

Thank you Steve. I already feel better about sharing my situation.

Income:

36K annual salary with commission. I've been at my company for about 6 months. Realistic commission for this year is about 5K. But my monthly income sits at 36K.

Monthly Expenses:

Rent - $413
Auto Ins - $90
Utilities - $125
Gym - $20

TOTAL MONTHLY: $648

Debt & Monthly Payments:

Credit Card 1 - $5,594 @ 13.24% (monthly is approx. $120)
Credit Card 2 - $6,751 @ 6% (monthly is approx. $110)
Credit Card 3 - $900 @ 0% (Balance Transfer to be paid in full by 3/10/10)
Student Loan - $64,000 @ approx. 4% (montly is approx. $624)

TOTAL MONTHLY DEBT PAYMENTS: $854

TOTAL MONTHLY - EXPENSES + DEBT= $1,502

I'm wondering if I should / can look into deferring my student loan payments for a year or so - this way I could attack my credit card debt?

I've got about $2,000 sitting in an online savings account. About half of that is going to be used to pay off Credit Card 3 balance transfer in March.

I've always thought that I know what I'm doing relative to paying this down. Pay off the higher rate card first, and don't be foolish and go to an internet gambling site.

Lastnight I wrote myself a little letter, declaring today as the day I begin living the rest of my life financially sound. Every day should be better than the last if I can maintain this mentality. I haven't ever reached out before - so I look forward to hearing outside opinions and advice. Thank you in advance.

Let me know if I've left out any info!

**anewday44** · 01-19-2010, 07:08 AM

After putting more thought into my situation. I've decided to take a forbearance out on my student loan for six months. This will free up an additional $624 /mo. that I can put towards my credit cards.

In reflecting on my financial situation, no surprise and it's obvious, but my behavior is to blame. I know that is always the case, but I suppose not everybody realizes they and only they are to blame.

With that being said, instead of waiting until March to pay off the $900 that I owe on the balance transfer card - I am thinking about just getting rid of that, paying it off with part of the $2K that I have saved, and closing the card.

Thoughts on today's developments?

**almostalumping** · 01-19-2010, 09:44 AM

I wouldn't advise putting your student loans in forbearance, unless you still pay the interest that accrues every month (I estimated about $213.33/month).

During forbearance, interest continues to accrue every month (even if your loans are subsidized staffords!). The worst part is that the interest accrued during the forbearance period is capitalized (added to the principle of the loan at the end of the forbearance). You would then be paying interest on original principle + accrued interest during forbearance. This is how student loan amounts can skyrocket.

How much extra a month do you have to put towards debt reduction? How much do you spend per month on food, entertainment, etc?

I would call your credit card company #1 and ask for a rate reduction. Maybe they can lower it from the 13.24%, even if it's just for a promotional period. I would stop using the credit cards.

Are you anticipating a tax refund that could go towards paying off the debt?

Good luck, and congrats on getting started. That's always the hardest part.

**anewday44** · 01-19-2010, 09:50 AM

Originally posted by almostalumping View Post

I wouldn't advise putting your student loans in forbearance, unless you still pay the interest that accrues every month (I estimated about $213.33/month).

During forbearance, interest continues to accrue every month (even if your loans are subsidized staffords!). The worst part is that the interest accrued during the forbearance period is capitalized (added to the principle of the loan at the end of the forbearance). You would then be paying interest on original principle + accrued interest during forbearance. This is how student loan amounts can skyrocket.

How much extra a month do you have to put towards debt reduction? How much do you spend per month on food, entertainment, etc?

I would call your credit card company #1 and ask for a rate reduction. Maybe they can lower it from the 13.24%, even if it's just for a promotional period. I would stop using the credit cards.

Are you anticipating a tax refund that could go towards paying off the debt?

Good luck, and congrats on getting started. That's always the hardest part.

Thank you for your input. I am estimating an additional $1,300 to $1,500 to apply towards debt per month. I spend very, very little on entertainment, zero on clothes (i'm a goodwill kind of guy), probably $150 on food.

By my estimate, I believe I can pay off the entire balance of the card with the higher rate by June or July of this year. That's putting that avg. of $1,400 /mo. against that card balance.

My tax return will be minimal this year. I had been laid off and I've always received a very small return in the past.

Again, thx for the input. Much appreciated.

**anewday44** · 01-19-2010, 08:42 PM

A new day is a great one! Developed a comprehensive budget today. By my estimates, I should have my credit card debts paid in full by January 2011.

**Slandgie** · 01-22-2010, 07:11 AM

Wow, that's quite a goal! Keep us posted on your progress!

**anewday44** · 01-22-2010, 09:04 PM

Originally posted by Slandgie View Post

Wow, that's quite a goal! Keep us posted on your progress!

Will do! Thanks for the comment. I've actually started a blog for myself to get more involved in and provide an additional vehicle for growth in this process.

I don't have enough posts to show the link yet, but as soon as I do I will be glad to share!

**disneysteve** · 01-23-2010, 04:51 AM

Originally posted by anewday44 View Post

Monthly Expenses:

Rent - $413
Auto Ins - $90
Utilities - $125
Gym - $20

TOTAL MONTHLY: $648

I'm just getting back to this thread. There is a HUGE problem here. You list only 4 monthly expenses. That is wrong. There is no way those are your only expenses. Before you do anything else, you need to have an accurate record of your spending.

You list auto insurance but no auto-related expenses like gas, registration or maintenance. I assume you eat so where is your food budget? Clothing? Any job-related costs? Internet access (unless that is in the utilities amount)? Newspaper or magazine subscriptions? Entertainment? Medical? Renters insurance?

If you don't have an accurate record of your spending, you need to make one. For the next month, write down every penny you spend on absolutely anything. Be sure to add in the monthly portion of any expenses that don't get paid monthly, like insurance premiums and such.

Once you know where your money is going, you can figure out how to better manage it and how best to attack your debt.

**minnie1928** · 01-23-2010, 04:41 PM

Originally posted by disneysteve View Post

I'm just getting back to this thread. There is a HUGE problem here. You list only 4 monthly expenses. That is wrong. There is no way those are your only expenses. Before you do anything else, you need to have an accurate record of your spending.

I agree, this is simply a partial picture you have painted. If you don't already, you need to track ALL your expenses. Use Quicken, excel, pencil and paper, whatever... but you need to do this.

**anewday44** · 01-23-2010, 05:09 PM

Originally posted by disneysteve View Post

I'm just getting back to this thread. There is a HUGE problem here. You list only 4 monthly expenses. That is wrong. There is no way those are your only expenses. Before you do anything else, you need to have an accurate record of your spending.

You list auto insurance but no auto-related expenses like gas, registration or maintenance. I assume you eat so where is your food budget? Clothing? Any job-related costs? Internet access (unless that is in the utilities amount)? Newspaper or magazine subscriptions? Entertainment? Medical? Renters insurance?

If you don't have an accurate record of your spending, you need to make one. For the next month, write down every penny you spend on absolutely anything. Be sure to add in the monthly portion of any expenses that don't get paid monthly, like insurance premiums and such.

Once you know where your money is going, you can figure out how to better manage it and how best to attack your debt.

You are correct, I definitely wasn't thorough. I have gone through my last two months of spending to get a better view of all of my expenses.

Here goes (based on a 2 month average):

Rent: $412.50
Auto Ins: $90
Utilities (water, internet/cable, electric): $130
Gas: $0 (I get paid mileage for work and I use my own car, this usually evens out)
Auto Related/ Oil Changes: $75
Entertainment / Going out: $80
Restaurants: $100
Groceries: $120

TOTAL: $1,107

I know that still looks weak, but I seriously do not spend money on much else. I don't subscribe to anything on a monthly basis. I just canceled my gym membership this week.

Here's what I've been doing lately, which probably isn't the right thing to do. I'll pay all of my monthly expenses, and then apply the rest towards my credit card debt. I'll typically leave $200 or so in my checking account just in case I need cash (I rarely need cash.) So usually the money I spend on groceries, entertainment, and going out to eat goes right back on to the credit card.

I do as much as I can on my own to save money other ways. I cut my own hair, change my own oil, do most maintenance on my car, don't buy clothes, typically only drink water and milk, don't smoke, don't really drink, etc.

I hope I've added a few more brushstrokes to this painting of my debt and expenses.

**minnie1928** · 01-24-2010, 06:35 AM

I would recommend that you use a debit card to pay for your expenses during the month, instead of the credit card. I think it might be giving you a false sense of accomplishment if you are making a $500 payment each month, but in reality you've charged $300 in fresh charges to that card. Keep the credit card debt pure and stop adding to it. I think if you are using cash/debit card that you'll be more careful/aware of your expenses.

Once you are debt free, credit cards can be a great tool to rack up rewards if you never carry a balance (or pay interest/fees). But you aren't there yet, so I think you should stop using the card.

**anewday44** · 01-26-2010, 07:23 AM

Originally posted by anewday44 View Post

You are correct, I definitely wasn't thorough. I have gone through my last two months of spending to get a better view of all of my expenses.

Here goes (based on a 2 month average):

Rent: $412.50
Auto Ins: $90
Utilities (water, internet/cable, electric): $130
Gas: $0 (I get paid mileage for work and I use my own car, this usually evens out)
Auto Related/ Oil Changes: $75
Entertainment / Going out: $80
Restaurants: $100
Groceries: $120

TOTAL: $1,107

I know that still looks weak, but I seriously do not spend money on much else. I don't subscribe to anything on a monthly basis. I just canceled my gym membership this week.

Here's what I've been doing lately, which probably isn't the right thing to do. I'll pay all of my monthly expenses, and then apply the rest towards my credit card debt. I'll typically leave $200 or so in my checking account just in case I need cash (I rarely need cash.) So usually the money I spend on groceries, entertainment, and going out to eat goes right back on to the credit card.

I do as much as I can on my own to save money other ways. I cut my own hair, change my own oil, do most maintenance on my car, don't buy clothes, typically only drink water and milk, don't smoke, don't really drink, etc.

I hope I've added a few more brushstrokes to this painting of my debt and expenses.

I'd like to add that I've had a spending problem in one area. Gambling. Which I have quit and am dedicated to being disciplined. Therefore, when I cut that problem out, I'm left with what appears to be very minimal expenses.

My goal remains to have all of my credit card debt paid off by Jan. 1 2011.

Beginning a Financial Journey