Victory! CitiBank Personal Credit Card Paid Off!

Woohoo!  This is our first real debt removal victory.  Yesterday I put the final $114 towards this credit card with my husband watching.  It feels good!

Our December bill listed our balance at $2261.81.  We’ve been putting everything we can towards this debt.  I am simply amazed that in 4 months worth of payments, we eliminated over two thousand dollars! It really makes me think we can continue to do this.

So what we have left as far as credit cards is around $10,500 on the other Citibank and $6000 on the Chase card.  I’m unsure which one to work on next.  The Citibank has far more and a higher interest rate.  Plus our shipping costs for our ebay liquidation are still being charged on this card, so I want to make sure we don’t get too close to the limit (we have about $2000 left on our limit.)  But the Chase card would be eliminated much faster, and I think our low interest rate expires in November.

It feels wonderful to have one fewer bill each month.  With recession looming in the future, I don’t want any debt hanging over my head – it’s just one more thing that could really ruin a person!

February-March 2008 Progress Post

So I’ve decided that since we’re already halfway through March, this is going to reflect everything we’ve paid up until today. (And seriously, where does the time go?)

Personal Credit Cards:

Citibank: Was: $1212.73
Now: $114.17

This was all snowflaking from our business sales on ebay! Wow! That’s $1098.56! (And today I transferred that last $114 from my Paypal account. As soon as it is in our checking account I’ll pay this card off.)

Business Credit Cards:

Suntrust:
Transferred to our Business Citibank for a better interest rate and a much better bank.

Chase: Was: $6138.80
Now: $6040.50 (I paid $150, finance charges of $24.79 )

Citibank: Was: $10,556.49
Now: $10,617.85 (I made a payment of $330.00, finance charges of $50.44 – and the reason it went up so much is because we charged 340.92 to pay for shipping for the business)

Total Credit Card Debt:
Original Debt: $18, 954.86
Last Month: $17,481.67
Current: $16,772.52
Monthly Difference: $709.15
Total Paid Off: $2182.34

Accessible Savings Account:
Current: $7,396.96

The huge amount in our savings came from a refinancing – All but about two hundred of this is earmarked for our new septic system. We still need to come up with another $6000 or so to cover costs. We’ve been talking about, and I’m not sure what the plan is, except to save as much as possible. It’s likely we’ll have to finance it, because if we put this off anymore to get more money together, we will get in trouble with the county health department – they have a law here that all septic systems must pass a particular test or be replaced when the home changes owners, and our’s is old enough it’s almost guaranteed to fail.

So I may not be posting much, but I’m still getting rid of this debt!

January Progress Post (5 days late!)

Let’s see how we did in January:

Personal Credit Cards:

Citibank: Was: $1787.71
Now: $1212.73

We paid off $615.00 on this card this month – $165 of that was snowflaking, mostly from selling our product on Ebay. We also charged $40.02 on the card – all but $6.99 were interest charges.  $6.79 of that were for February’s interest charges, so that number has been inflated a tad.

Business Credit Cards:

Suntrust:
Transferred to our Business Citibank for a better interest rate and a much better bank.

Chase: Was: $6236.37
Now: $6138.80 (I paid $125, finance charges of $27.43 )

Citibank: Was: $4927.42
Now: $10,130.14 (This reflects the old Suntrust balance.  I was able to transfer my balance and go from a 14.29% interest rate to a 4.99% interest rate.  I made a payment of $100 to this card, and finance charges were $27.47 – reflecting the old balance.)

Total Credit Card Debt:
Original Debt:                 $18, 954.86
Last Month:                     $18,326.75
Current:                            $17,481.67
Monthly Difference:   $845.08
Total Paid Off:               $1473.19

Accessible Savings Account:
Current: $212.46

(We also have a saving account at our bank in North Carolina that has about $3000 in it.  That’s our current emergency fund – it came from a Certificate of Deposit that finally came due.)

I’m pleased!  This certainly offsets the heartache of the upside-down house loan!  I feel like we’ve been making progress, and it helps that we’ve been able to put extra towards our debt from liquidating our products on Ebay.  We’ve had to pay a lot of the fees and put money in our Stamps.com account for shipping, but we won’t have as many of those costs in the future.  I have another $120 in the process of transferring to our bank account to be put toward the personal Citibank, and another $80 already accumulated in our Paypal!

So all in all, I finally feel like we’re making progress on our credit card debt, if nothing else!  It feels wonderful!

Unhappy about Necessary Debts

I admit it.  It’s been over a week since I’ve posted.

This past week has been frustrating – and disheartening.

On the positive side – we close on our house in NC on Friday!  That’s nearly $180,000 of debt gone!

However…we have to bring $10,677.82 to closing.  Ouch.  (I did an estimate before and I was way off.  I didn’t include the 2o08 taxes we would owe, the final mortgage interest payment, or the deed and register stamp fees.  All told, that was about another $2000 we have to bring to the table.)

We struggled a lot with how to deal with this.  The closing attorney didn’t get the exact numbers to us until this morning (we knew it’d be between $8000 and $12,000.)  We had already talked to our bank about doing a short term loan until we refinance in a couple weeks (more about that later) but there was no way they’d be able to process the money in time.  After hearing about our situation, both lenders we spoke to though that we should consider doing  a cash advance or using a balance transfer check on our credit cards – because it was the only way we were going to get the money wired to the closing attorney on time to close.

Thankfully, my husband talked to a businessman in our church about our situation and he and his wife offered to lend us the money for the next two weeks.  We’re hoping to have it directly wired from his account to the attorney.  We will be paying all fees, of course, and we want to offer them the interest we would have otherwise paid.  I also told my husband that although there is no way I’d let the debt go unpaid, I wanted to write out a promissory note.  It would make me feel better knowing that they have legal recourse against us if we didn’t pay.  I absolutely hate the thought of borrowing from a friend!

But there’s more:

We not only owe this amount, but by law, all homes sold in our county now have to comply with new septic laws, which means that most people will have to install new septic systems.  We knew this when we purchased the house, and we got quite a bit off the price because of it.  We were expecting our old house to sell with cash to spare, which we would use to pay for the septic.  Unfortunately, the market being what it is, we had to sell for nearly $50,000 less than what we originally asked, so we don’t have the funds we expected to have.  Oh, well!   It’s truly a case of “You win some, you lose some.”

So between the new septic system and the money we need to pay off our old loan, we are going to need about $25,000.  There’s no way around it, and we can’t wait on either.

But here’s where “we won some” – mortgage interest rates are low right now.  We just locked in at 5.65% for a 30 year fixed, which is quite a bit lower than our current 6.875% 7 year ARM.  It will take less than 2 years to break even after the closing costs.

So we plan to refinance, but we will actually be refinancing for more than we owe. We’ll refinance for around $122,000 and take the extra $25,000 to pay for the septic and to pay back our friend.  This will happen as soon as we get the appraisal and the settlement statement for the closing on Friday.  That day we’ll wire the money we owe back to our friend and stick the rest in savings until the septic company bills us.

Not the ideal.  I hate adding more debt, but I knew this was coming.  Still, it’s disheartening.  It’s just more debt.   It will also raise our mortgage payment to about $900 a month, which will make things a little tighter.  Thankfully, we are close to getting another card paid off, which I’ll post about soon in my January Progress Post – 5 days late!

We Have an Offer on Our House!

We received our first offer on our house in NC today, and after much thought and negotiation, we accepted it.  I’m happy, and I’m not. 

Why not?  Well, the initial offer was for $175,000 on an asking price of $199,900.  By the time we finished negotiating, the agreed upon price had risen to $185,500.

Because of the market right now and the fact that our house in NC will need some fairly substantial routine maintenance in the next year or two (a new roof, new air conditioning unit) my husband and I felt like it was a fair amount to ask, but with one problem:  in order to pay off our mortgage on that house (which is actually a bridge loan of $180,000) and pay the realtors ($11,130 at 6% commission,) we really needed to get about $5,630 more than what we agreed upon. 

We were praying hard about it! 

Then I realized how narrow-minded we were being about this – we were only looking at the fact we would still owe $5630 on the house.  And that it was “more” debt.  But it wasn’t.  In reality, we were selling something that had become a liability – between the sinking market and our $953 a month payments (which start February 1st.)

We weren’t looking at it properly.  We should have looked at the bigger picture.  We are $317,344.57 in debt, including both mortgages.  After commission, we’ll have $174,370 to put towards our debts – actually, just this one, massive debt.  It  will be a major blow to the debt monster, bringing our total down to $142,974.57.

 Now, I’ll admit some of this number crunching is purely to make me feel better.  I still feel like we are adding to our debt by having to come up with this $5630, most likely by taking out a home equity loan on our current house or by charging it on a credit card.  I hate both options, although we are leaning toward the home equity loan for obvious reasons. 

We do have some money from a CD that just came due; about $3000.  We’ll have to pay for the mortgage for the first 12 days of February out of that, and then we were hoping to put the rest in our emergency fund.  While I still believe we will use it for our emergency fund, it’s always an option to use it to pay down the money we’ll be short when we go to closing.

I’d really like to hear other people’s opinions about this money. 

What would you do with the $3000 in this situation?  Emergency fund (which contains $100 right now)?  Pay down debt?  Bring it to closing? Something else?

Victory! (Well, a little one, anyway!)

So a lot has happened financially in the last couple of days. Several are victories, so I wanted to share!

The bad pennies:

1.During the title transfer of our house, among several glaring mistakes our title company made, they filled out paperwork stating that we didn’t want to continue to farm the property and receive an agricultural tax credit, despite our telling them the opposite. I’ve been talking to the County Tax Office, and it doesn’t appear that we will be able to continue to receive the tax credit unless the property has an income of $2500 (3 acres of feed corn? I don’t think it will make that much!) The savings per year is about $130. The worst part for us is that if you quit farming and thus quit receiving the tax credit, you also have to pay back taxes for the past three years – so we have to pay $368 extra on our taxes for 2007 – the amount the previous owners saved. So I’ve been whining a bit around the house about the fact we have to pay other people’s taxes because of the local laws. 🙂

My husband is going to call the title company about it, though I refuse to deal with them anymore after spending three months straightening out all their other major mistakes. I’d rather pay the money! (But that is a story in itself!)

2. Our electrical bill was much higher than expected – $255 – $55 over budget. It used to be that we would be disappointed at this amount, but we’d just pay it. Since we actually started paying more attention to staying in our budget, I feel more stressed out about this, because I know how much we can’t or can’t afford. But we’ll use the money normally for the home improvement budget this month.

Now, since I sound like a whiner…

Lots of big and little good things have happened, too!

1. I received two checks today from Pinecone Research for surveys I completed – $10 total.

2. I also should receive a $20 check from MySurvey soon, as well as one from Moola. I’m going to snowflake the MySurvey check and cash the one from Moola for some fun money.

3. We were absolutely blessed for Christmas – family and friends who knew we really wanted to fix up our house – bring it out of the 1960s – were very generous in Home Depot gift cards. My mom and dad also gave us a large sum of money on a Visa Gift card (beware the fees!) so we could get one of several larger items we need. Because of this, we’ve eliminated our “home improvement” portion of the budget and that money will be going to food, savings, or something else – we haven’t decided yet. This month it’ll be our electric bill.

4. We just found out today that my husband will be getting a pay increase of 3-5%. That’s an additional $60 to $100 a month, which will really help.

5.My husband and I decided to transfer the entire balance of our Suntrust credit card to our business Citibank card. This started because the payment is due in the beginning of the month, with all of our mortgage and utility bills, and it was difficult to figure out how to pay it every month, because of all the other bills.

We called to ask if we could have the date moved or the minimum payment reduced and they refused to budge. On top of that, this afternoon, after three years of being an authorized user on the account, I was told that I was not an authorized user, and never was. (And this isn’t the first time between this card and a SunTrust checking account.)

Now I’m blabbering, so long story short, what SunTrust refused to do, Citibank did. They were willing to transfer the entire balance onto our business Citibank for a 4.99% promotional rate that will last until we pay it off. We still have to pay the 3% transfer fee (though I did try to get them to waive it) but it will still be cheaper in the long run than paying 14.29% and trying to come up with it at the same time as all our housing bills. Thank you, Rich, for your help!

This is a relief for me, because I don’t have to deal with finding money for an extra minimum payment. It doesn’t change the time it will take to pay off our debts according to the Snowball Debt Calculator, but it actually reduced the interest we’d earn by just a little. 🙂

6. After my previous success with Citibank, I decided to call them again tonight about our personal card’s higher interest rate. I wanted to ask them to match my other Citibank rate – 9.9% The Customer Service Representative told me she couldn’t match the rate, but she could give us 4.9% for the next 9 billing cycles. Hey, I’ll take it! It’ll be paid off in a couple of months anyway.

She also reminded us that we had Cash Back rewards in our account to the tune of $78. She said she’d have a check sent out to us!

So not bad, over all. We’re making progress.

December Progress Post

Let’s see how we did in December:

Personal Credit Cards:

Citibank: Was: $2261.81
Now: $1787.71

We paid off $626.39 on this card this month – $20 of that was snowflaking, and $6.39 was a returned item at Walmart. We also charged $152.29 on the card – all automatic debits but mostly our cell phone bill ($130, half of which my father-in-law reimburses us because they are on our family plan,) which will be a paper bill next month.

Business Credit Cards:

Suntrust:
Was: $5375.25
Now: $5375.25 (I just realized that I had paid $300 to this before I started this blog, so the initial amount reflected this month’s payment.)

Chase: Was: $6366.37
Now: $6,236.37 ( I paid $130)

Citibank: Was: $4951.43
Now: $4,927.42 (I paid $115 to this card in December.) More automatic debits kept this one from being lower – this time the shipping program I use for my business, and I had to pre-buy postage, which should last a while. But those purchases pretty much ate up most of my payment.)

Total Credit Card Debt: Was: $18, 954.86
Now: $18,326.75
Difference: $628.11

I’m disappointed that the difference is so small.  The purchases were what caused the problem.  Next month our phone bill will be paid with cash, so we should only see about $55 in purchases (our sponsored child ($32), the business stamps program ($16), and one subscription that can’t be done in any other way($7.))  Still, we need to find ways to reduce those or remove them from our cards and pay in cash.  Or keep that money aside specifically for those items on the credit cards.

I didn’t get much snowflaking done – I blame that partially on Christmas and partially on me. There were several things I was going to sell and never got around to it. Plus having started in the middle of the month, I wasn’t able to stack up an impressive snowflaking pile (ball?) to awe you all. 😛

January we start our spending plan and our debt reduction plan in full force. We tried to stay within our plans this month, but since we had spent half the month not paying too much attention to what we were doing, we had pretty much already blown it.

But we’re on our way, and if we continue on this path, we will eventually pay off our cards.  Our goal is to pay them off as fast as possible, however, so we’ll be looking for ways to reduce expenses and reuse what we have, as well as maximize our income.  Because if this month is indicative of anything, we won’t be getting to our goals fast if we don’t continue to change for the better!