by Ashley
I’ve seen lots of comments (on all the bloggers) asking for more openness and transparency. Hopefully this post provides you with that (but, as a result, its a long one so maybe get a quick snack ready!):
April Debt Amounts and Payments
| Place | APR | March End Balance | April End Balance | Monthly Payment |
| Capital One CC | 17.9% | $0 | $0 | $0 |
| Wells Fargo CC | 13.65% | $7429 | $5705 | $800 |
| Bank of America CC | 7.24% | $2198 | $2175 | $35 |
| Carmax Car Loan | 7.75% | $23736 | $23385 | $470 |
| License Fees | 2.7% | $5720 | $5672 | $55 |
| Mattress Firm | 0% until Sept 1st | $1281 | $181 | $100 |
| Medical Bills | 0% | $8328 | $8228 | $75 |
| Total | $48692 | $45346 | $1535 |
(See the starting balances from when I first started blogging here) A couple notes: Remember that I’m also paying low monthly payments toward my student loans (not in table, but can be seen here. Amounts to $87/month), so our monthly debt payment actually amounts to $1622 (not $1535). Additionally, we made 2 big snowflake payments at the beginning of the month (with extra money from last month since we had a higher income than normal – discussed here). We paid $2,000 in snowflake payments ($1,000 each toward Mattress Firm and Wells Fargo), for a total of just over $3500 toward debt in the month of April!!! (that’s the $1622 “regular” payments + $2,000 in snowflake payments).
April turned out to be another good month financially. Our take-home pay after taxes was $8290. I just want to say that these really good months are NOT “normal” for us. Our annual average is right at about $5,000/month so this was one of our best months….ever! We’re going to talk about what to do with the surplus and will update with our May Debt Update (since the snowflake payments won’t occur until during the month of May). Right now, I’m thinking 2/3 or 3/4 will probably go straight toward debt (paying off Mattress Firm and the rest to Wells Fargo), and the other 1/3 (or 1/4) will go toward making a debt-sinking fund. This is something Adam and Emily did and a commenter suggested it, too. The reason is that summer is Chris’ “busy” time at work and I worry about what happens when winter rolls around and we start having more “lean” months again. The idea is that we keep some money in a savings account but once it reaches a certain dollar amount, I make a big snowflake payment. In hypotheticals, I could save a portion of our income until we get to $5,000 then take half ($2500) and put toward debt, then save back up again and repeat. That way we always have some extra cash on hand in case Chris’ business has a slow month, but if things continue going well we can siphon some off and put toward debt, instead. I will update (in the May Debt Update) with exactly how this surplus was handled. I hope this isn’t confusing. Basically, anything “left over” after paying our basic bills has been used as 1-time “snowflake” payments toward debt, but it doesn’t get applied until the following month (since our income is variable, we wait until the month is completely over to assess how much “left over” we have, so our snowflake payments are always a month behind the pay, if that makes sense). Now, onto the budget:
How We Fared in April
We ended up coming in at- or under-budget in all categories except one.
| Category | Budgeted | Actual Spending |
| Rent | 1055 | 1055 |
| Electricity | 100 | 62 |
| Water Bill | 75 | 53 |
| Gas bill | 75 | 25 |
| Sprint (2 phones) | 150 | 150* |
| Cable/Internet | 85 | 85 |
| Car Insurance | 90 | 90 |
| Health Insurance | 350 | 350 |
| Waste Management (trash) | 35 | 35 |
| Debt Payments | 1500 | 1622** |
| Groceries | 400 | 398 |
| Baby Purchases | 600 | 566 |
| Gasoline | 100 | 57 |
| Miscellaneous | 250 | 355 |
| Savings for Irregular Bills | 190 | 190 |
| Total | 5055 | 5093 |
*Remember, I got a deal on our phones, but I won’t see the savings until our next bill.
**This was our “normal” debt payments (minimums for everything except Wells Fargo bill), but does not include large 1-time snowflake payments (because those were paid using leftover funds from March)
Quick re-cap: In April we made $8290 – $5093 = a surplus for the month of $3197
As you can see, we barely slid in under budget with groceries, and I want to try to reduce this category so I’ll have to pay close attention to figure out why we’re barely making budget ($400/month). I’ve switched to making so much homemade (bread, bagels, tortillas) and DIY (cleaning spray, baby wipes) that I feel like we should be spending less on groceries, but for some reason we’re not. I’m going to examine this closely during May and figure out WHY. Soooo, the one category where we went over-budget: “miscellaneous.” I budgeted $250/month (down from $350 last month) for this category and broke it down into 4 sub-categories:
| Category | Budgeted | Actual Spending |
| Entertainment | $20 | $19 |
| Eating Out | $75 | $110 |
| Personal Maintenance | $30 | $7 |
| Other | $125 | $219 |
| Total | $250 | $355 |
Clearly we went way over budget (by more than $100!), with the culprits being “eating out” and “other.” I think some of this was growing pains. I just slashed the budget in this category by almost a third, and you can see that our spending was definitely in-line with our “old” budget(<<link to old budget).
I’ll admit it – I hate the envelope system. I don’t know why (bulky? annoying? inconvenient?). But I have to admit, I think it may help with this situation. If I look in my envelope for “eating out” and there’s only $5, I can’t say “screw it, order a pizza” when I’m exhausted and don’t want to cook (confession: that happened once last month). Instead, I’ll suck it up and make dinner. If for whatever reason I really can’t handle it then we’ll eat PB&Js and live another day. It’s a mindset-change from what I’m used to but it needs to be done.
So….May = Month of the Money Envelopes I’ll let you know how it goes.
Envelopes:
- Groceries = $380 (trying to cut it by $20, down from $400)
- Entertainment = $20
- Eating Out = $75
- Personal Maintenance = $20 (trying to cut it by $10, down from $30)
- Other = $125
Have you tried the envelope system? If so, did it work for you? What other system(s) do you have in-place to curb over-spending? Given our current debts and APRs, (and also knowing our variable income and wish to do a debt-sinking fund) how would you appropriate the surplus $3200 from April?
Hi, I’m Ashley! Arizonan on paper, Texan at heart. Lover of running, blogging, and all things cheeeeese. Freshly 40, married mother of two, working in academia. Trying to finally (finally!) pay off that ridiculous 6-digit student loan debt!
Thanks for the very transparent and coherent update. I think the debt sinking fund is a very good idea, given the not-so-predictable income of your husband. With the surplus from April I’d put (what doesn’t go into the debt sinking fund) towards Wells Fargo. This APR really makes me cringe – so I hope you won’t have to deal with it much longer. Good luck!
I totally agree the APR is cringe-worthy! Ick! I’ll be so happy to see it go!!!
I believe you have 2 kids right? The twin babies. Is their baby food included in the grocery budget? Because if it is I think that $400 is doing a GREAT job! I know folks that spend $200 on just themselves. You don’t want to reduce to the point you can’t get good options. And your take-home income is enough to support that in my opinion.
Wow, you are going to wipe out that mattress loan soon! Most be so motivational.
I think you are using the snowball method on your debt if I remember correctly but I would suggest you up the BOA payment to $100 since the interest rate on that amount is not really insignificant. You would still be putting majority to WF but at least making a dent on that BOA. I’m not sure what your monthly interest is compared to the current $35 payment you are making but the difference can’t be a lot. That’s the modified snowball method i took on my debt.
Good job!
Thanks! We do have twins, but they’re toddlers now (will be 2 in June), so they aren’t eating specific “baby” food (like out of jars or formula or anything). That actually reduced our spending because we just feed them whatever we’re eating, and they don’t eat a lot so even though there are 2 they only eat about 1/4 or 1/2 of an adult sized portion of food. Sometimes they surprise us and will really gobble something down, but for the most part their dent in our food/grocery budget is miniscule.
And, yes – planning to wipe out the Mattress loan this month and can’t wait!!!
Great job – very exciting to see all your debt numbers going down!
While I love the debt sinking fund idea, I think you have a great opportunity – use the extra $3,200 and knock out both the mattress debt AND the BOA! I know the interest rate on BOA is lower than Wells Fargo, but wouldn’t it be wonderful to get rid of those two pesky bills and then focus with laser intensity on WF? At that point you would have almost $1,000 a month to put toward WF and get it gone in 5-6 months!!!!
p.s. I also think $400 a month for groceries is fine. You may be spending a bit more than you thought just stocking up on flour, etc for all your homemade meals, which is wonderful! I used to stress about our grocery budget because it was the one big thing I could control, then our family was getting miserable eating too much pasta (cheap) and cereal (cheap with coupons) so I had to relax and buy more fresh veggies and fruit – it’s all a balance.
Thanks for all the numbers!
I think you may be right about the budget. I went to Costco a couple times last month for pantry staples (flour, pasta), so that could be where some of the money went (even though its cheap, when bought in bulk it still adds up!)
I also think you’re right that we can’t reduce it too much further. Right now I’m only trying to cut it by $5/week ($20 over the course of the month), and I think that’s “doable.” I know some families are able to survive on $300/month for families of 4 and 5 (though, for the most part they have gardens and we do not). I just hate doing so much DIY and not having it amount to any savings! So, I’m going to put in the effort and see if I can squeeze just a few more dollars out of groceries to put toward debt. We’ll see how it goes.
I’d be totally inclined to wipe out the mattress loan and BOA as well just to consolidate the number of payments you have to make each month. The 6% difference in interest rates isn’t that big and I’m not sure what the difference in savings would be.
Yeah, you’re right that it’s not a huge difference. We pay approximately $85/month in interest to WF and about $25/month to BoA (off the top of my head, so these are rough estimates, but in this “ball-park”). So if we wipe out BoA, thus reducing WF payment, it would only amount to about a $50-$60 difference in interest, balanced with the fact that we then wipe out one more bill (which is definitely motivating!) But I have an intense dislike of WF right now, so I tend to prefer throwing the money at them just to try to get rid of it sooner. We’re also expecting May to be a good month income-wise (*knock on wood*), so I’m scared of jinxing myself, but there’s a chance WF could be gone by June! EEEK!
Just want to say that for all the disagreements we had early on, you’re doing an AWESOME job!! Keep up the great payoff pace!! April was also an usually high income month for myself and was able to cut my debt by $2800. Seems like you’ve really grabbed the bull by the horns, so to speak.
Thanks, Matt – and good job to you, too!!! It’s still a little frustrating, though. It’s one thing to make more money (which we’ve been doing and that’s awesome!), but I’ve also been trying to cut our expenses and have been struggling more with this. I managed to get our insurance down and our phone bill down, but I REALLY want to get this “miscellaneous” column under control! I think it makes it even harder to cut spending when you have a good income month because you almost feel more leeway to spend a little extra that you might not have otherwise (I keep saying “you”….but I mean “ME”). So we’ll see how this month goes. So far, the envelopes (annoying as they are) seem to be working.
You guys killed it on utility usage this month. Hopefully you’ll have some nice spring weather to keep you under budget another month or two! I seriously think your revolving credit lines are going to be GONE by July and you’ll be able to refinance that car loan in short order.
OMG, you think by JULY!? That would be so incredibly amazing!!! I’ve been calculating closer to November (but that’s not including if we keep having a good income that allows us to make extra snowflake payments). In regard to the weather…..not so much. : ( Its been 99* the past couple days here in Tucson and our A/C has been switched on so I’m assuming the electric bill is going to slowly rise over the course of the next few months. Last year we maxed out will bills around $260(!!!!) but I’m going to really try not to let it get that high this year. We shall see…..
I think July will happen for the Wells Fargo, BOA, and the Mattress firm.
The licenses fees/medical bills will probably take longer, but I imagine it’s hard to get motivated by any of those with the low interest rate. Refinancing the car loan is really going to change your cash flows and you’ll probably want to really think about when to start adding the student loan payoff into the mix.
I think if you can really focus on the credit card debt and shoot for a July payoff, you’ll be out of the emergency zone. Then you and your husband can come to an agreement on what to prioritize next.
A couple more thoughts:
It’s worth waiting to refinance the car until BOA, Wells Fargo, and the mattress loan are paid off. Make sure your credit report reflects the full payoffs and you’ll see your score jump quite a bit. Discuss with your husband how you want to handle the payments on that. You might be able to opt for a higher payment and a shorter loan term and plan to pay the car loan off in 24 months.
You’ll also want to discuss the emotional cost behind the license fees and medical bills. Would there be weight off of your husbands shoulders to payoff those license fees and officially close that chapter of his life?
Where does savings fit into your plan? After the credit cards are gone and the car is refinanced, maybe putting significant cash into an emergency fund is the right option for your family. Since the medical condition was never fully resolved, this might be very important in helping you and your husband to sleep a little easier at night.
At the end of the day, my most encouraging message to you is to see how many options you have in a post-credit card debt environment.
Wow, you have so many great things mentioned here for us to consider! Maybe in the coming weeks I’ll write up a post with more information regarding my student loans. The “deferment” ends on them (1 ends in October, the other in January I believe), so we’re going to HAVE to start making larger payments toward those (which will necessarily lower payments toward car and/or other debt). But I like your suggestion to take a look at our options and see what works best. Maybe spending more toward debt now will allow us to put more in savings later (in unfortunate case of health emergency). Also, I kind of hinted at this in one post, but my husband has a considerable amount of dental work that needs to be done (like….to the tune of thousands of dollars). We have been putting it off and will probably continue to do so until the credit card debt is gone (barring any dental emergencies….he once had a terrible infection that required immediate attention and cost $1,000). But that’s something that needs to be brought off the back-burner at some point and actually addressed. I really love being able to get the suggestions/advice of readers so it might be nice to lay it all out there and get some other perspectives on where our funds should go after the CCs are gone…
Also, regarding the car refinance….I’m really glad you mentioned this. I was honestly planning to try to go refinance sometime this week but it really makes sense to try to wait another couple months and REALLY focus on getting rid of our credit debt. The huge improvement in credit score should really impact the APR we could get on the car loan. This gives me a lot to think about (in terms of putting the excess from April more toward CC debt instead of debt-sinking fund as a means of getting there faster and, hopefully getting a better rate on car refinance)
About the cooling costs, I live in Phoenix so I’ve learned a few things about minimizing them over the years. I believe you’re fairly new to AZ so maybe you haven’t tried these yet.
First of all, if you haven’t yet, find out if you can change your usage plan. When we changed ours last year, it resulted in about a $30 savings just that first month. Our plan costs more from noon-7pm with a huge spike for the on-peak hour each month when we use the most electricity, so we’ve arranged our lives so that we use almost no electricity during those times. I’m the only one at home, so I keep the a/c at 84, take cool showers or shower before noon, don’t make meals that require the oven, etc. You would think the a/c would be the biggest culprit, but with a teenager who prefers long, hot showers I found out that it’s actually the hot water that really makes the biggest difference. But even with a $400 electric bill last June (due to the teenager/shower situation) I still hear about so many people in cold areas who pay much more than that per month in winter, so I try to stay positive about it.
Wow, I haven’t heard of this type of program but I’ll look into it! Thanks for the tip! (And – OUCH about the $400 electric bill! Yikes!)
Vouching for heating bills in cold areas suck too. You’re flipping on the AC, while up here in WI, we’re still running the heat. It’s been mid 40’s for the most part up until the last day or two. Finally got up to upper 60’s and we’ve turned off the heat and popped a couple of windows. Air!!! Fresh, glorious air!!! 🙂 I fully expect the heat to be needed again before we get to any consistently warm weather.
Ugh! I’m sure you’ll hear me complaining during the summer when its over 100 degrees for 60 consecutive days, but I still definitely prefer the heat over the cold. I don’t think I could do a really brutal Wisconsin winter!
Yep. The heat’s back on again. 🙁 I’m not a fan of the cold, but I can’t handle the high UV down south either. I’ve been burnt twice already this year! My husband actually moved here from Upper Michigan because of the milder winters. It’s all relative I suppose.
Very true. Our A/C is currently running so the whole Heat vs. A/C probably comes out about even I suppose
Ashley, terrific progress and a well written post. Hope you guys have many more great months ahead!
Thanks, Joe!
Keep at it, you are doing great!
I’ve tried many things over the years to curb over-spending. I find that it takes a little while to get adjusted to the new method, and then I tire of it (or start HATING it) and then I move on to something else rather than fall off the wagon.
I like round numbers and simplicity so the thing that’s worked the longest for me is $100 or less on groceries per week. Easy to remember, easy to track if I have to go to multiple stores. And if there is a surplus at the end of the month I can go buy that bulk Item or something else (like wine!). No envelopes, not carrying around my budget with me and it helps me buy the fresh on-sale food that week so I’m not stocking up on pizza or other garbage.
That’s a good point! I’m only 5 days deep into the envelopes and – although I still find them bulky and annoying – I think they’re actually working pretty well so far. With my groceries, I actually liked having an envelope to store my grocery list and a couple coupons that I had (otherwise, these things just flew around in my purse and/or sometimes got lost). I still have the urge to just pay by debit (its a habit), but so far so good with the cash/envelope system.
A really great job this month-both in debt payoff and clarity! I think you did a great job.
As for the surplus, since your 2014 goal is to pay off your credit cards, I’d say to stick to your goal. Pay off the mattress account and the Bank of America credit card and put the remainder to your Wells Fargo credit card. The $100 payment from the mattress and the $35 from your BOA cc would get added to your $800 so your new snowball payment becomes $935. While technically your Wells Fargo interest rate is higher, by paying off the BOA this month, you’re really only paying that higher interest rate for one month (since the BOA is now paid in full) so I feel good about getting those paid off which leaves you with one credit card to go. The momentum to pay off that card would be excellent.
I wouldn’t put anything into the debt sinking fund for now. Let everything ride for another three months and then you can revisit that decision. By then the Wells Fargo should be gone and you’d have that money that you were paying to this credit card debt ($935) that you could technically “use” for a lean month. I’d also continue breaking out the “Miscellaneous” category as you did above. And finally, I don’t quite remember what the “baby misc” category was…this is a big number so I think a breakdown would be good. Not sure if this is the childcare at $600/month. If so, it should be renamed, “childcare” for clarity. I think that is the one category that should be eliminated provided it’s childcare. I’d use the extra to make sure you have enough for groceries and electricity with the heat. I can’t imagine not using air conditioning in the summer but that’s just me. I bought a townhome last year and the air conditioner didn’t work so I sweated like crazy for a few weeks until I figured out a budget friendly solution.
I think the best advice is to stay focused on your goal of paying off the credit cards for 2014. Don’t jump around so much with your goals. Once the credit cards are paid off, you can take your time and figure out your next goal.
And finally, regarding eating out, there was a good post on a blog called, “Snyder’s Tell All”. She gives some great tips on eating out. If you click on the blog and click on the “finance” tab, she actually has some great tips overall regarding budgeting, groceries, etc. Her and her husband paid off a $110k mortgage in 33 months so they could meet their goal of her staying home with her kids (they weren’t born yet). They then saved for his dream car and he paid cash for a Corvette and then they had their kids. He’s a school teacher and she is a former schoolteacher who now stays home with their kids. I just found the blog but found it very inspiring. They eat out some 15 times a month if I recall on $100.
Wow! I’ll have to check out that blog!
And I have to say, I think you may be right about the debt-sinking fund. I’ve admitted it before (and will do so again), but it is so deeply ingrained in me to SAVE $$$ that I have a hard time getting all this money and then spending it just as quickly (granted, its spent on debt not on “partying”, but still). I want to just clutch some of it for savings in case something bad happens but you are 100% correct that this is side-tracking my goals and my laser-intensity to pay off credit cards NOW!
Regarding the baby purchases, you are correct that it is basically childcare. I pay $150/week and last month the provider was gone one day (which meant that week was only $100). The reason its a random number I had to buy some baby-specific supplies (sippy cups and bottle brush to clean the oddly-shaped cups), so I put that under the “baby purchase” column….though perhaps it really belongs under “groceries” or even “other.”
Just to break it down, we had 3 weeks at $150 and 1 week at 100 (= $550), then paid $16 is the baby-specific products, which is why the total amount for the month was $566.
I agree with Mary. Do not get side tracked. I would put it towards the mattress and wells or the mattress and BOA. Whatever feels better to you. Very soon you will only have the license fees, car, medical debt and student loans. That is what $950 in minimums? That will be a lot easier to handle during the lean months then what you were dealing with last winter.
I do cash for our grocery money only. I think it keeps us within a budget easily. I spend grocery money at Costco, the farmer’s market, a small local grocery store and a large grocery store. Using cash prevents me from putting it on an Amex card at Costco and it the only thing accepted at the farmer’s market. My husband is the one who pays the bills and he likes that there is one $200 withdrawal each payday from our checking account rather than numerous smaller withdrawals. I would give it a few months before you decide to ditch it.
Keep up the good work!
Ashley, you’re really doing great and I love the way you laid it all out nicely. It’s easy to read and very clear.
The only part I’m having a problem with, and this may just be me, are some of the numbers in the “April Debt Amounts and Payments.” I can’t get some of the totals to come out correctly.
For example, Wells Fargo CC has a March balance of $7429 and an April balance of $5705. You made a “snowball” payment of $1000 and the chart shows a monthly payment of $800, yet the difference between March and April is only $1724 and not $1800.
Normally, I’d think maybe it had something to do with the interest, but the Medical bill, which has no interest, shows a March balance of $8328 and an April balance of $8228, a difference of $100, but the payment is shown as only $75.
Is this a “Minimum Monthly Payment” column, or is this, except for the two you put “snowball” payments on, the entire payment for the month?
Over all, you’re doing a great job! And I love your thermometer! The important thing there is not that it be overly artistic and accurate to the nth degree, but that it do what it is meant to do: motivate.
Hey Jamie – I know the reason for the difference in what was paid and amount due….INTEREST!!! Boo! This is true of both CCs and the car loan.
In terms of the medical debt, you are totally right – I accidentally posted the ending balance as lower than what it really is. There is a reason for this though…..basically, the medical debt is a whole big mess right now. I thought I had gotten it all straightened out, but I kept getting bills from one specific entity that all looked the same (not showing any deduction for the amounts I had already paid). So I called and told them I would not be making more payments until I received an itemized receipt. It took 2 calls and 3 weeks for them to finally mail me an itemized bill and it still makes NO sense (the #s don’t add up, it doesn’t match up with other bills we’ve received, etc.). Long story short, I had made this table when I had intended to pay $100 toward medical debt, but then I didn’t and I forgot to revise with the correct “end balance.” I will say the medical debt is also the only “iffy” figure because all of the rest of the bills I can access online on any given day and know the EXACT amount due. This is not the case with the medical debt. And, in fact, with bills continuing to trickle in (now 5 months after services were rendered!!!) I fear that the total amount owed may actually be a couple HUNDRED more than what is listed in this table. I will do my best to sort everything out (again…grumble, grumble, I thought this was already done), but that’s the best I can explain it right now. Medical debt (forgiving as it is for being interest-free) sucks big time!
Also – I really did pay $75 toward medical debt (just wanted to clarify). I had intended to pay $100, but because I cut out that one entity we ended up paying $75.
I’d love for you to do a post for the readers/bloggers to chime in on what they pay for groceries to get and idea of the spectrum.
I am one person, who rarely eats out and find myself thrilled if I can keep that number under $300. With a monthly goal of $250 [which I almost never hit]. I eat almost no meat, limited dairy, and will lean towards choosing more organic if there is a relatively competitive price. I am not paying $6 for a 1/2 pint of berries in February. That amount does including cleaning and toiletries.
I use the envelope system and it works pretty well for me, when the cash is gone it’s gone = no more spending! Try it out. Can’t wait to hear if it works for you.
So far, so good. I still stand by the fact that its a bit bulky and annoying, but I think it could be worth it in the end. I’m planning to do a little update mid-way through the month to let people know how its going.
I have a son who will be 2 in September, so I know that sometimes there’s just no energy left to make dinner (I can’t even imagine with twins!). You may want to consider keeping a few pizzas in the freezer, so instead of saying “Screw it, order pizza,” you can say “Screw it, toss a pizza in the oven.” Sure, it’s not healthy, and sure, it’s not the best use of your grocery money, but $5 for a frozen pizza is still better than $10-$20 for a pizza from a restaurant.
That’s very true!
You could also do plain cheese and load it with veggies you like. I’ll usually do tomato or sometimes broccoli and chicken.