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Well friends, it’s been a long time since I’ve had the chance to sit on my couch and sip coffee. It’s a surreal feeling. And who would have thought you could ever feel uncomfortable in your own home? I can’t describe it. All I can think about is how much I have to do in the next few months because this place will no longer be home to us, and I resent it a bit. But it is home because home is where the heart is and Mike is my heart. Being reunited with my husband is exactly what I needed to make the Christmas season actually feel like Christmas. But that’s neither here nor there is it? The point of this post is to talk about debt! We’ll get to more life updates later.
So, it’s been about 4 months since I first opened up about how much debt we have. Kinda a big deal. I’m happy to say that joining the Air Force did exactly what I wanted it to as far as increasing our income. Unfortunately, we’ve had some unexpected expenses come up and I don’t think we’ve made as much headway as I would like. Still, I want to be honest about where we’re at and talk about the good and bad that has come out of the last three months.
First, let’s talk about…
1. We are going to fail at our Quiksilver goal.
If you remember my first debt post, I made a goal to have this credit card paid off by January. This was a big goal and it’s just not going to happen. I was able to pay a fair amount on it right after I graduated Basic Training, but some other things came up (like needing a plane ticket home for Christmas etc.) and we weren’t able to put as much money towards it as planned. Still, I’m not letting it get me down. We’re still making good progress on our debt with our increased income.
2. Mike was in another wreck and totaled the Jetta.
I hate writing about this. It makes me sick, but it is what it is and it’s something I had no control over. It seems as though debt is always one step forward, two steps back. My husband was not hurt, so there’s the positive. Our insurance company was great, but they didn’t give us near what the Jetta was worth (do they ever?) and we had to take out another loan to buy another car. The money they did give us is going straight into our emergency fund (more on this later). Since my husband seems accident prone, he got an older truck this time around. He feels safer, and I hope this helps remedy the bad luck my husband seems to have with cars.
Unfortunately, because our credit scores have decreased due to our high amount of credit debt, you will see that this new loan has a bit higher interest rate. I blame myself for this, but I can only move forward with the situation.
3. We need to buy a car for me.
I could have never foreseen what happened with the Jetta, so I can’t dwell on the fact that I sold my dear, sweet paid-off Monte Carlo right before BMT. My thought process originally was to have more debt paid off and more savings by the time this became necessary. We had always planned on getting me a newer vehicle after AF technical school because the Monte was hurting in its old age and we would be more financially ready. The type of vehicle we bought would be based on where our first duty station would be.
The fact of the matter is… we’re moving to Denver in early spring and I need an SUV to plow through snow. We need something reliable, preferably with AWD, that will last at least 15 years/150k miles. Anyone with a brain knows these types of rigs come with a hefty price tag, even when you buy used. So, I’m in every debt destroyer’s personal finance nightmare because we are going to have to bite the bullet and get ANOTHER car loan.
I’ve made it very clear in the past that buying a new car is a financial mistake. My husband learned that lesson the hard way, and his recent loss rubbed even more salt in that wound. However, I’m not against going into debt to get something safe, long-lasting, and dependable. I’ll go more in-depth about this later, since this post was not meant to be about cars, but just be prepared. More debt is coming. :/
1. We succeeded at our goal in paying $1500 of family debt.
This was the first thing I did after graduating BMT. While I would have loved to have this money for the credit cards, I feel good about paying this hefty sum back. The rest of the debt we owe family will be paid off in smaller chunks throughout the year.
2. We have paid off $2754 of debt since August.
This number looks pitiful, but let me explain why it isn’t. We’ve been working on our emergency fund. We also had to deal with a lot of little setbacks. When we bought Mike’s truck, it cost a little more than what we owed on the Jetta. So that has made it look like we paid off less debt, but if you’ll look at our numbers, you’ll see that the Quiksilver and family debt dropped significantly. A big chunk of what could have went to debt went to sales tax and licensing fees.
So yes, I’m a little disappointed in what that number looks like on paper, but the reality is we’ve had tons of money flowing out to different places because life happens.
3. Our emergency fund is at $3000.
Two months ago, our emergency fund had hit $500ish. Because we know we’re moving soon, we decided to pull the reins back on the debt pay-off and beef up our fund because we are going to need that cash come moving time (rental deposits, gas, etc).
The great thing about the Air Force is, they pay you 95% of what they would have paid a moving company – meaning you can actually MAKE money if you move yourself. You just have to have your own funds to make it happen first. So once we are refunded, we will put that money back into the e-fund and possibly throw a chunk of it at the debt. I haven’t decided yet.
For those who don’t know what this is, it’s an Act that was set forth by the government to reward/honor active military. This Act states that as long as a military member is active duty, they will receive certain benefits such as lowered interest rates (6% or less) and deferments on loans and credit cards they had BEFORE going active duty.
I did not know about this until Sallie Mae contacted me saying my private student loan rates had dropped to 5%. They were originally 11 and 9%. This was followed by a letter from AES. Isn’t it a miracle!? It feels like one! I was flabbergasted. They also refunded all the interest I paid from the time I went to BMT (about 3 months worth)!
After finding out that I was eligible for these benefits, I went for the big dogs. I applied online at CapitalOne and sure enough, our Quiksilver card went from 12.9 to 4%. I also applied for my Discover and Chase cards to be lowered. I have not heard back from them yet. I will be calling Citi next week.
If you can’t tell, this is a huge deal and is going to change how we’re paying off debt.
5. I finally closed that E*Trade account.
I was finally able to sell my mutual funds and close the IRA I had with E*Trade, thank the Lord. Once everything settles down, I’m going to open up a new Roth IRA account with Charles Schwab. Also, I’ll be opening a Thrift Savings Plan soon (a federal employee specific retirement account, like a 401K). So all good news on the retirement side of things.
You can see from this side-by-side comparison that many of our interest rates have dropped. This has been a blessing and unforeseen benefit of joining the Air Force.
A lot has happened this year, and Mike and I have made great strides in our life. Next year is going to be intense and full of change, but we are so excited to take on the challenges. We’re setting big financial goals for the next year, and God willing, we’ll reach them.
January 2016 Goals
1. Pay the Chase Card down to $600.
Since the SCRA benefits came into play, I’m changing our strategy a bit. The Chase card is near its limit, so while it’s not drawing interest, it is affecting our credit scores. I want to get it down to under 30% of its utilization so we can start boosting our scores. We plan to refinance the truck loan (and I imagine the next car loan we get) sometime this summer when our scores rise back up to the 750s. This was recommended by USAA, so I’m going to believe them when they say they will get us a better rate in six months.
2. Push our Emergency Fund up to $3500.
As I stated earlier, we’re at $3000 in our e-fund. I want to push it up just a tad more. This shouldn’t be too difficult because we are hoping to receive some Christmas money, and we always pay ourselves first from each paycheck.
That is all I have for now! If you actually read to the end of this post, THANK YOU! I know it was long, but I want everyone who reads to know the methods behind my madness. Things have been crazy the last couple of months, and I know I might not be doing everything exactly perfect, but I am making an effort.
We are striving to get this debt paid down in the smartest way possible, so if you have any tips, please share. I can’t wait to share our progress with you all next month.