by Hope
I anticipate getting my first “big” paycheck towards the end of this week. Therefore, I am glad I asked about the credit card idea, mentioned my idea of prepaying my mortgage and so on. It will definitely be better for me to have a solid plan ahead of time versus deciding how to use it when it’s burning a hole in my hand.
These are the decisions I have made thus far for March:
- I am going to pay $1,515 to my mortgage. This is the remainder owed for March and then pay April’s payment in advance. This will put me on track to be one month ahead on my mortgage going forward. (And yes, I have confirmed that I can do this.)
- I must pay $1,756 to my insurance. I didn’t pay last month due to no income, but let them know and there is no penalty for being late as I made this arrangement with them. (Our insurance renews at the end of March and it has gone from $5,203 to $7,342 every six months. This is a huge jump. I’m planning to call to see if here is anything that can be done.)
- I will pay the minimum on all my credit card debt.
- I will put some money into some needed car maintenance. I’ve got an estimate for all the things that should be done. But haven’t decided what is a MUST. Total on that coming soon after I get some good advice.
- I will review and set aside anticipated taxes, etc.
Personal Debts
I have spoken with the two people who each loaned me $2,500 last fall. I will begin repaying them in April at $500 per month. They are both fine with that.
For the one that I hoped to pay off with a website project…To be clear, that is one of my brothers and he actually approached me a couple years ago about a complex web project. I did the research and gave him a quote for what he wants to do. It is a money making project for him. That quote was well above the loan amount. He mentioned the web project again when I asked about the loan. Fast forward to my call this week to let him know about my pay back plan; he does want to move forward with the web project, but he’s still not sure when. As a result, I am going to proceed with the payment plan and we will revisit his project when ready.
My dad understands that paying him back is not as high on the priority list with all my other debt, so for right now, I do not anticipate making any payments toward that loan.
I do not take these people or their generosity of loaning me the money for granted. I fully recognize how blessed I am to have had that resource. Not everyone does.
Credit Card Debt
I hear the BAD Community loud and clear on the idea of paying down the credit card debt across the board.
The results: Do not do it. Focus on one credit card at a time. And I believe the consensus was pay the highest interest debt first.
Most of my credit cards have approximately the same interest rate. So I’m floundering a bit between two cards to focus on. Let me share my thoughts and you help me decide:
- Sam’s Credit Card – Currently over the limit and requires approx. $50 payment each month. It does have the lowest balance (around $1,100) though and I believe I could pay it off in its entirety in April based on my forecast spreadsheet.
- Wander Credit Card – Requires approx. $75 payment each month and has the 3rd highest balance (around $1,700). This would take at least April and May to pay in full if I choose to focus on it.
The good thing about paying off the Wander card is that I am not tempted to use it at all. Same with the one I paid off this month. I’ve already disposed of the cards, do not have them connected to Apple Pay, etc. Literally very easy to forget they exist and close them out.
The Sam’s card has not been used in almost a year, and it’s been over the limit most of that time. It would be easy to pay off and feel really good. But I fear I would be tempted to use it as I still shop at Sam’s Club pretty regularly for things I buy in bulk (food and paper products) and gas savings.
In writing this, I think I need to pay enough to the Sam’s card to get it under the limit. But then focus on paying off the Wander card. Do you agree?
Hope is a creative, solutions-focused business manager helping clients grow their business and work more efficiently by leveraging expertise in project management, digital marketing, & tech solutions. She’s recently become an empty nester as her 5 foster/adoptive kids have spread their wings. She lives with her 3 dogs in a small town in NE Georgia and prefers the mountains to the beaches any day. She struggles with the travel bug and is doing her best to help each of her kids as their finish schooling and become independent (but it’s hard!) She has run her own consulting company for almost twenty years! Hope began sharing her journey with the BAD community in the Spring of 2015 and feels like she has finally in a place to really focus on making wise financial decisions.
Close the cards as you pay them off, then you won’t be tempted to use them again. Keep one, and only one, open for emergencies.
Did you address why your mortgage went up so much? It was around $650 before.
I am confused why you can’t pay off the Sam’s card because you would buy in bulk. Who are you buying for? Beauty who doesn’t eat much at home or yourself who said you can get by on $100 a month and let’s not forget all that free food you received. Just get rid of the card and not keep it open.
This is a good point. Plus, there’s no reason to be paying for a Sams club membership either.
I don’t shop at Sam’s so maybe I am missing something but it looks like you can use any credit card there. So even if you needed/wanted to keep the membership you wouldn’t need the card. Pay it off and close it.
Hope am I reading correctly that you pay over $1000 a month in insurance? This is crazy.
We have two adult drivers and two cars and pay about $200 a month (very good driving records). I would need to look back at escrow but insurance on our 1600 sqft house is definitely not $800 a month. If this is because of your kids being on the insurance policy it’s really time to tell them you can’t do it – even Princess.
It’s nice to see you planning ahead but not too far ahead! I agree with getting a bit ahead on the mortgage given all your struggles historically but I would tend to say stick to the 1 month for now.
However, you HAVE to figure out this insurance issue. You are spending more in insurance than in housing. I understand why you are doing it, but if your kids are not paying their own insurance, then you have to figure out either a cheaper way to cover everyone or they need to stop driving. Adult decisions, adult consequences. You flat out cannot afford to spend $1000/month on insurance alone. Maybe figure out how much each kid is costing and they pay that portion. I’m sure most of it is likely gymnast and given his history maybe you don’t make him pay everything all at once but there HAS to be a light at the end of this tunnel for you.
Otherwise, this looks like a good start!
Pay off the Sams card first and then close the account. That way it won’t be a temptation.
It’s definitely worth having a broker or using an aggregator do the leg work on pricing out all your car insurance scenarios including kids on their own policies (even if you still pay the bill for them.). That total is banana crackers. It’s an interesting layer to the credit score conversation, as it does play a role in your auto insurance pricing.
I’m guessing your rates on insurance are going up as a result of the late payments and lower credit score. When is the last time you shopped around for insurance companies? I would recommend doing some quotes or calling a broker to get some new rates.
How did the discussions with your kids getting their own insurance go? If I remember correctly the twins got their own car insurance pretty early on. You will never catch up or get ahead until you can get this expense under control one way or another.
Hi Hope. Yay you! When I asked around about paying off two credit cards that had the same interest rate, paying off the lowest balance is the answer I got. Once paid off, that money goes to the other debt.
When you pay your April mortgage, be sure to either pay it when it’s due, or let them know what that payment is for. Don’t let them get confused that it isn’t just a random extra payment between payments.
Do you have a solid plan for the money you’re not earmarking for debt/bills?
Your insurance payment? OMG. Danggg! Michigan seems to have one of the highest rates around and we pay 1900 a year for 2 vehicles full coverage with roadside assistance.
Pay off the $1100 Sams Club credit card as soon as you can. Interest charges alone are nearly $30/mo which will be gone for good once you clear this one. Don’t wait until the payment due date if you can, the sooner you pay the less daily interest you run up.
Then move to the next one. You can do it, just punch them out one at a time.
How many cars are you paying insurance for? That’s an awful lot.
There are 4 drivers, 3 cars. Gymnast pays the entirety of his portion.
Hats off to Gymnast. He seems to be adjusting to the daily financial grind and keeping his head above water.
Yes, he is doing a great job. And starting to think about selling his car.
He’s always been the kid that learned best by doing. It’s hard to watch our kids go through tough. But I am certain that my kids will do better than I have.
I mean…. This paycheck is spent already. $1500 to the mortgage plus about $500 in CC minimums plus $1750 to car insurance (OMG). If the check is $6000 and you set aside 25% for taxes, that leaves $4500. You’ve earmarked $3750 already. So…. $750 for everything else including the necessary car maintenance? I’d reconsider prepaying a montage of the mortgage.
Have there been additional car accidents? It seems weird that it just increased.
Our insurance went up with the explanation that it was going up everywhere. Two drivers with excellent driving records, three expensive vehicles, great credit. And we don’t pay half of what yours is.
Pay off Sam’s Club and have it done with. Not sure you need a membership for bulk items if it’s just you for the most part. Don’t step over a dollar to pick up a dime. Or don’t SPEND a dollar to SAVE a dime.
I’m surprised BAD members are against bulk shopping. I save a significant amount of money on food shopping there…not only the bulk items like toilet paper, paper towels, bacon, cheese, etc. that I use regularly. But also on just basic food…meat, produce, and dairy items.
It is really the reason I’m able to keep my food budget so low.
When I had a Sam’s membership, I compared everything I bought from there to Walmart. Toilet paper, meat, cheese, and frozen foods were more there. you can easily compare them in their online carts. (I don’t remember all the items and how they panned out.. peanut butter and hersheys syrup was cheaper at Sam’s when they had sale.. but driving an hour one way to get there wasn’t a good use of gas money)
I’m surprised you’re saving that much with just one person eating. Costco didn’t make a lot of sense for me until I had more mouths to feed unless I really stayed on top of my freezer game.
I’ve done the math, multiple ways, and not only does it save me money, but it also keeps me from having to shop as often. I freeze everything, even my bread. Then weekly pull out what I need.
I typically eat a full breakfast and then a full afternoon meal. Most often the same thing. It’s allowed me to keep my food budget really low.
Can you please write a post explaining why your mortgage payment has gone up so much?
The increase of the mortgage is the result of a negotiation last fall to roll my arrears into a new loan agreement. In addition to rolling the past due amounts and a couple of future payments into the terms, I shortened the loan life from the traditional 30 years.
Yay Hope! You’re doing well. I hate to add more and I know there is only so much money, but…you should be setting aside a little for an emergency fund. Maybe you could use the money from the catering job for that. And – what happened with health insurance? You were looking for that and you can’t afford to be without it.
Yes, my part time fast food job is rolling into a savings account. It’s not in my forecast or budget at all. I’m not looking at it or using it or planning on it.
Just letting it collect.
I agree on the Sam’s card – if you’re mostly home alone, you are either buying groceries for up to three months at a to make it beneficial, or you’re not. It’s over the limit, and I think you could wait for sales or buy gift cards for yourself to use there from time to time. But you need to pay it off, and close it. And focus on ensuring you have more income lined up, the 6 months will fly by.