Greetings fellow Fools, I have an update to the crisis I was in. I am still in debt far more than I would like to be, but I have eliminated almost all credit card debt. I only have one credit card now and it has a balance of $7500 at 6% interest. It is the next thing I am going to snowball. Now all I have to worry about is the debt consolidation loans I have gotten years ago that didn't help with squat. I have two of those and they have pretty high interest rates on them. I am going to try to take advantage of some 0% credit card offers and start the BT game with autopayments to add some security. One of the Debt Consolidation Loans is at 12% and the starting balance was $28,000. I have it down to less than $18,000 now and I have had it for a while. Well, I bought my first car on this loan 10 years ago and keep adding on to it to pay off my credit cards in college and when I got deployed to Korea. The other one is a HELOC that I put my vehicle loan on (stupid). It is at $42,000 and is a tax shelter thing, but I really need to pay it off. So that is all I have left...Three more things and then it is bye-bye debt (Well, non-mortgage debt anyway). I love the posts I read everyday. It keeps me motivated and focused here in Iraq. SGT Sutton aka Apachemech
Sorry, the time limit was up at the internet cafe. The HELOC was a really bad idea, but I had no choice in order to make ends meet. I had put all of my credit cards (higher than 15%) and a vehicle loan and some other consumer loans with high interest rates together so I could set up a snowball with more than $75 a paycheck payment. I had to put the vehicle on it to make it worth while. I turned an approx. $750 a month ordeal into a $450 a month payment to free up some cash flow as well as gave me some more income tax return money at the end of the year for further payoff. I had around $18,000 or so in credit card debt on six different cards. I now have $7500 on one, soon to be paid off. I had an orthodontist bill of $4000, $3500 freezer full of food and a 2nd vehicle loan for DWs car. One debt consolidation loan $28,000 and a $42000 HELOC. I have left the HELOC in an interest only mode and have made the min payments on the debt consolidation loan bringing it down to $18000 or so. Bottom line is: 6 months worth of work translates into $80,000 worth of debt turned into $67,000.Next steps: 1.) I plan to pay off the credit card completely and use it for everyday purchases (I.E. gas and groceries), paying off balance completely every paycheck without exception. 2.) Break up the $18,000 consumer loan using 0% BT method and setting up auto pay to add security. I am going to be careful with this one so as to not take in too much and not be able to pay off the balance in the amount of time the offer is good for 0%. Does anyone have any additional tips on this one? 3.) My e-fund is set at $2000 with an automatic payment of $50 a month allotment to build it up even more without seeing the difference (Some of my pay raise). 4.) My Xmas fund is set at $1000 a year through an automatic payment of $84 a month allotment to cut some of the end of the year Xmas spending (also some of my annual pay raise) 5.) My TSP (Thrift Savings Plan-401k) allotment was doubled using the rest of my pay raise. It is currently at 4% (was 2%). 6.) I need reconfigure my monthly budget when I get home from Iraq in a couple of weeks to see if I can squeeze anymore money out of it. I think I am going to cancel the Insurance Annuity (well, its actually a variable universal life insurance policy with tax sheltered investment capability)...$132/month. I need to go back to basic cable without the internet...$115/month. Cancel the cell phones and stick to our house phone...$115/month. Finally, I need to learn how to set up a menu to where I won't have to go to the grocery store and spend my life savings for things I don't even use most of the time. Any help with that last one will be greatly appreciated. I think I will also post this one of LBYM board. 7.) I need to refinance the HELOC to a lower interest rate from 12.5% interest only to a regular one that takes some of the principal with each payment. I also need to call to lower my credit card interest rate. 8.) In addition to all of that, when I get home, I am going to witness the miracle of birth for the first time with my second baby. My first was born while I was in Iraq the first time. I still idolize my wife for that one. I was on the phone, but all I heard was A LOT of cursing...lol. My daycare bill goes up, but I think I can handle that one with just the cell phone cancellation and maybe half of the cable bill.I have roughly 13 years left in the military and my goal is to be debt free with at least 2/3 of my mortgage paid off ($200,000 to start with). I don't know how I managed to get into this much debt, but I have learned that credit cards are EVIL when used in the wrong way. I go to college for free in the military, so I would like to earn my degree in Aviation Management along with my A&P license (equivalent to ASE for automobiles, but for aircraft), and my FAA license as well.Sorry this turned into a book, but I can see a glint of a light at the end of the tunnel and I am in a chipper mood. I would like to thank all of the great help I have recieved at this board and I look forward to reading in the future. Apachemech
Hi Apachemech - Like you don't have enough to worry about being in Iraq!! Congratulations on being so focused and your great progress so far. Kudos for taking advantage of the TSP, and all your other military benefits like the free (or reduced) college tuition. It is so much easier on the deployed spouse knowing that things are being taken care of at home with a dependable (and loyal) spouse. You've obviously seen all the pitfalls of excessive debt; you'll never look at a new car the same way (can I get a used one and still be happy??). Having an e-fund is paramount to peace of mind and financial security.Also, there is the Living Below Your Means board. Hope we see you there as well! (http://boards.fool.com/Messages.asp?mid=23627860&bid=100158) with lots of good ideas and information.And heartfelt thanks from a grateful nation--jennie
Keep at it, SGT Sutton. And bless you for your service.
SGT Sutton,Thank you for your continued service to this great nation and congratulation on having your second child.A couple thought occurred to me while reading your post:1) Is your budget prepared for all of the financial benefits you will be losing when you come home from down range, i.e. paying federal taxes again, losing hostile fire and family separation pay. I am sure it amounts to a good amount per month.2) You mentioned the annuity, is that from First Command, formerly known as USPA/IRA? If you are going to get out of it, which I would recommend, make sure to know all of the penalties that may apply.3) The balance tranfer you are considering from the debt consolidation is a good idea, however, are you planning on doing the whole amount? Those usually last for 12-15 months so you don't want to get caught with the balance when it adjusts to a higher rate.Perhaps you can balance transfer the amount you know you can pay off. Then combine the debt consolidation loan and the home equity onto your new home equity at the lower rate. Then move an appropriate amount over to a new balance transfer as you can.Good luck and again, thanks for continuing to serve.
wow! What an inspiration. Sometimes it seems like I'm making no progress on my debts, eve though I know I am. Then I read something like your post - you've done an amazing job!! I'm sure you've already looked into this, but just in case - don't ignore any benefits to which you may be entitled under the Soldier's and Sailor's Civil Relief Act.Keep up the fabulous work, and keep posting! You are a great motivator!And feel free to email me privately if there is anything I can send you or your unit - I'ma military brat and I know how much boxes from home can mean.-a-
jennie104, thank you for your kudos and I really appreciate your warm words toward me serving my nation. I am happy that all the people I talk to support the military when the news is so negative and a lot of what they have to say is the bad things going on over here and some of it isn't even true. Thanks again and I have Living Below Your Means on my Favorite list now. Eric
Thank you for your support.
1) Is your budget prepared for all of the financial benefits you will be losing when you come home from down range, i.e. paying federal taxes again, losing hostile fire and family separation pay. I am sure it amounts to a good amount per month.A.) yes. I have it all on an excel spreadsheet and it works out just fine. I have been keeping track of finances this way for a couple of years. If it hadn't been for this, I would have been bankrupt or just totally naive about how far along in debt I am in. I don't like quicken or money because I can't program the different ways of calculating interest and daily balances on it. I think I have a good way of doing it on excel, though.2) You mentioned the annuity, is that from First Command, formerly known as USPA/IRA? If you are going to get out of it, which I would recommend, make sure to know all of the penalties that may apply.A.) No, its not from First Command. It is from WRL or something like that. I don't have the info with me. I have waited through a gruelling year of waiting until the minimum waiting time to close the account and I can do it now with almost no penalties. I will still have some, but not a lot, anyway.3) The balance tranfer you are considering from the debt consolidation is a good idea, however, are you planning on doing the whole amount? Those usually last for 12-15 months so you don't want to get caught with the balance when it adjusts to a higher rate.A.) I am going to get just enough that I can handle the payoff in the amount of time the low BT rate is good for. Not only does this save money on interest, but also it gives the illusion that the debt consolidation loan is getting smaller quicker (for DW, anyway). Also, the interest on Loan 1 is pretty high, anyway (12.5%) and if the cc interest is lower after the time is up, well, I win, but I don't think it will.Thank you for your support and kind words. Eric
Thank you for all the kudos. When I first started to realize how much my debt to income ratio was, it felt like I was suffocating and my heart was going to explode. Since I handle all the finances in the household (except bill paying which is done automatically because of deployment purposes), I had to find a way to break the news to my then pregnant wife. She is an Irish-German redhead with a elevationally challenged (short) complex who has a short tempered fuse that has no warning whatsoever. I have an exact opposite temperment, so I guess we mesh somehow. I haven't figured out how, but it works just perfectly. Anyways, back on subject. She was floored and livid for weeks. I was feverishly trying to figure out a way to get out of this hole I dug for ourselves. I started to put it on an excel worksheet. She doesn't like computer printouts, so I could control how it looked so she can read it. I finally figured a way to pay everything down, but it involved buying a house. I bought a house that she really liked (I left it up to her) for like $13,000 below the asking price and took advantage of the Military financing and had no down payment and they paid me like $865 for the closing fees. I got a screaming deal on the whole thing, DW got a new house and some of the cc's got paid off. About a month later, I had to get a second mortgage to free up some cash flow so I could start a snowball and still have enough money to make ends meet. This, of course was part of the plan. Now, I have things on an okay level where DW and I can see the debt coming down. Since the military doesn't pay very much, and I have a champagne taste with a beer budget, I had to do something fast or else owe everyone money for the rest of our lives. This all happened like a year and a half ago, so I just started, but I can see some light, or what looks like a light at the end of a very long tunnel. It could be post dramatic stress syndrome, but I don't think so. It is because of all the Fools I read about in the posts that made this happen and all the encouraging words you and everyone give me. You and all the Fools are the REAL motivators. Thank you all for the help and support and I will continue to keep my head down over here in Iraq and keep my head held high when not in danger...lol. Eric
Now, I have things on an okay level where DW and I can see the debt coming down. Since the military doesn't pay very much, and I have a champagne taste with a beer budget, I had to do something fast or else owe everyone money for the rest of our lives. This all happened like a year and a half ago, so I just started, but I can see some light, or what looks like a light at the end of a very long tunnel.It's wonderful to see things getting better and better. You're gaining control over your finances, rather than letting your finances gain control over you.I don't know if you're regular army, reserve, or guard, but we all know that it isn't a whole lot of fun being over there. And to be able to resolve so many issues related to your finances during that same period of time is great.And you'll be able to afford champagne again; you just have to save for it in advance.As the others said: thanks for serving.Nancy
Great work Eric. Good luck on your return. Airborne!
I'm impressed (maybe amazed is a better word) that you can control all of the household finances while deployed. Great job on the debt paydown and the new plan.Save travels, have a good reunion, and congrats on the 2nd baby-to-be. Thanks for all your hard work. You maintainers really get it done when it counts.mm(Blackhawk wife)
Congratulations on your plan, and your progress so far. I think it's great, and you sound really on top of the situation. As for the 0% BT idea, I think it's a good one. One thing to look out for is that the rate usually expires "the first billing cycle that includes the month of March" or whatever. So if I use one of those, I try to pay it off in one month less than the rate is good for--if it's good for 12 months, I figure monthly payments that will pay it off in 11 months. Also watch out for the BT fees, though if they're better than the rate you're paying, it may be worth it. And thanks for your service. I will keep you in my prayers. :-)--Booa
SGT Sutton,First, thank you for your service to our nation. Keep up your positive attitude. You WILL get there. DH and I were there several years ago and got out of it a lot more quickly than I had thought possible (with a little help from downrange pay). It sounds like you've got the right attitude, so just don't give up!About tranferring your consumer loan to low interest rate cards-- what is the current interest rate on your loan? Don't forget to consider the extra work that will come with keeping up with the payments to multiple different locations. It may be more gratifying if you keep it simple- forget the BTs and just pay off your loan, and see the overall debt get reduced by X amount every month- those little signs of progress make a big difference! That is, unless the interest rate is outrageous- then BT makes sense.As for squeezing your budget, the main thing that helped us was cooking at home ALL THE TIME. When you get home, you won't be getting free meals at the DFAC anymore, so be sure to adjust in your budget for that. But DH and I found that a little extra effort in planning meals saved a LOT of money by eliminating eating out. We ended up only buying enough produce to last for a few days at a time so we were going shopping every few days, but the trips were inexpensive. And we discovered how much we enjoyed cooking together!Other than that, it sounds like you're focused on all the right areas to cut your budget. Stick with it; you can do it!-Hauptstrasse94
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