My Biggest Budget Busters

Ana at Debt-Free Revolution posted a meme on her biggest budget busters. Instead of tagging people, she said anyone who wanted to could tag them self, so Tag! I'm it. :)

I do very little impulse buying anymore, so I don't really have the "little things add up" type busters anymore, but here are my three biggest budget busters:

1. Student Loans: Seriously, I must love education. A lot. To the tune of $100,000. Although this isn't exactly a "budget buster" in the sense that I impulse spend randomly, it is the single biggest expense in my budget, so I'm putting it here. At $660 a month, my education costs more than my rent each month. It's truly disturbing how little I thought about paying it back while I was accumulating it.

2. TV on DVD sets: This is one that I impulse often, but I've gotten much better about it since my financial revolution. I had a weak moment with Veronica Mars Season Three in January, but other than that I've abstained completely. It helped that I got a few at Christmas, and my birthday is coming up, but I think I may have to use some of my blow money to acquire Prison Break Season Two. The upside is that I've waited so long to buy it that I can get it on Amazon for about $25 rather than $45 when it first came out. A lesson in delayed gratification.

3. Plane Tickets: Although this is a budget buster, it's one that I feel is fully justified. I live in Southern California, but my whole family lives in Western Washington, so I budget for three trips per year to visit my family on holidays and other special occasions. This year I'm going for my sister's wedding in August, as well as Thanksgiving and Christmas. It costs about $300 to $400 per trip, so it's expensive, but you just can't put a price on going home for the holidays. It's a song for a reason.

I'll tag Carol of Debt Free in the Ozarks. What are your biggest budget busters?

Apologies and Updates

Apologies for the lack of posts the last couple of days. I've felt like I don't really have anything to say, although that's not completely true. I guess I just don't have anything topical to say, i.e. I've been lacking specific topics or overarching ideas for posts. This blog, however, was never meant to contain great philosophical or financial material, so that's really not an excuse. This blog was meant to chronicle my journey toward debt freedom and beyond, and certainly I can find something to say about that.

On that note, I'd like to share some exciting news. As of Friday, I completed one of my goal progress bars! After receiving a lot of the money I've made from my December Alternative Income goal (which is also nearly complete - see next paragraph), I sent a final payment of $488.67 to AES and they are now out of my life forever! That company has been particularly irritating to work with; they have terrible customer service, and they were very unaccommodating when I tried to get a forbearance or deferment during a financial hardship a couple years ago, so it's nice to be rid of them. Best of all, I have $190 to add to my debt snowball!

On the December Alternative Income side of things, the progress bar only reflects what has actually been deposited into my bank account thus far, but the real total is closer to $1200! My parents sold some of my furniture that was still at their place from when I moved, which was $150. I sold a couple things on eBay for over $300, and that money should be arriving in my account from PayPal today or tomorrow. Last but not least, I have over $600 in payments from Amazon that will be deposited next Monday! I'll keep updating the progress bar as things come in, but it should reach 100% in the next 24 hours.

That's all the updates I have for now. Keep the encouragement coming! I love reading your comments!

December Alternative Income Update

My $600 December alternative income goal is going EXTREMELY well. As you can see from the side bar, I've made about $240 so far, but that doesn't include a couple things I'm expecting soon. Here's the breakdown:

• Half Price Books - $58
• DVDs sold on Amazon.com - $182 (after fees and shipping)
  
• Christmas bonus from work - $200
• eBay auction - currently at $264 with four days left (before fees and shipping)
  

Total: $690 (after eBay fees and shipping)

And it could still climb higher. I've got another eBay auction with no bids yet, but similar auctions have sold for around $100 and there's still four days left. I've also got a few more things waiting for the right buyer on Amazon.com, as well as my skis that are up for sale on Craig's List. The total could potentially get above $1000!

Where's all that money going? The first chunk is going to AES. That company has been particularly irritating to work with, so when I send the final payment in the next few days I'll feel a huge sense of satisfaction. The rest of the money will be used to beef up my emergency fund. It's not at full capacity yet, and after fixing my computer I'll really want to get it back up to a comfortable level.

Onward with the money-making!

How Did I Get Here? – Part V: Student Loan Consolidation Is a Pain in the—yeah, that

After creating a budget and eliminating a few things from it, I ended up with a small debt snowball. Obviously the bigger I could make the snowball, the faster I could get out of debt, so I went through each item on my budget to see if I could save any more money.

The biggest monster was my student loans – the bane of my existence for the past couple of years. I had had about twelve different loans from five different companies, and it was almost impossible to keep track of them all. Some of them had nearly identical minimum payments, some of the companies had almost identical names (ACS and AES), and some of the loans would come from the same company, but at different times of the month, on separate bills, and with varying account numbers.

Before my financial revolution, the student loans were my worst nightmare. My mom and I spent hours trying to sort everything out, and I cried over the stacks and stacks of paperwork on her kitchen table more than once. We consolidated a couple years ago, but not everything got included, and I accrued more loans later, so things were still a mess.

After my financial revolution, I felt more of an attack mentality, and I was determined to not only save money, but to understand my loans and simplify things once and for all.

The combined total of the minimum payments was roughly $950 – almost twice my rent—and the amount was going to go up as more grace periods ended in the near future. Although I wanted to save money in the short term by lowering my monthly payment, the last thing I wanted to do was pay more money in the long run, so forbearance and deferment weren’t options. Instead, I looked into consolidation.

The federal loans were fairly easy. Everything was done over the computer, and I ended up with a 5.65% interest rate on a 25 year loan. The interest rate was about the same as the averages of the rates on my previously unconsolidated loans, but the longer term made the monthly payment lower. If I make only the minimum payments, I’ll pay more interest in the long run, but I’ll most likely make extra payments in the future to lessen the effects.

The private loans were more of a challenge. I researched rate quotes from a couple companies, and armed with that information, I called Sallie Mae.

I got a bit of a run around from the first person I talked to. He wouldn’t give me an interest rate quote and said that I’d have to go through the entire application process to find out what my rate would be.

I asked for a supervisor, who gave me the same story until I mentioned the quote I’d gotten from another company. Suddenly, she was all about the numbers. She gave me the exact rates for each credit level of the borrower and co-borrower, the best of which was 8.75%. I knew my parents’ (the co-signers) credit was good, and I figured we would qualify for that lowest rate.

When the paperwork was all said and done, the rate was 8.25% – half a percent lower than what she’d quoted. Fabulous!

The rate on the private loans is variable, but only based on the index – Sallie Mae’s margin is fixed. Also, if the rate adjusts, they prorate the amount so your payment only adjusts once a year, which makes it a lot easier to budget. It’s not ideal, but it’s light years better than before, and I plan to be rid of it in six years or less.

The whole process is slower than a ten year itch, so dispersal seemed to take forever, but the last piece of the puzzle fell into place on Wednesday when ACS received and processed Sallie Mae’s payment.

Both ACS and AES had accrued interest during the application process and dispersal period, so there was still a bit left on each loan. ACS had about $16 left so I sent the payment on Wednesday and I’m DONE with that one. AES was $1,008.80, so that’s at the top of the debt snowball now and should be done by January – I’ve already paid it down to $817.89.

The whole thing was a HUGE headache, but lowering my monthly payment by almost $300 and reducing my budget by ten lines was definitely worth it.

This post is part of my Financial Revolution Series, which is my personal financial story. Each post gives a piece of the story, detailing how I got into debt and how I turned things around.

Next time on TVG&M: The Pruning Gets Easier