Debt Deliberations

June 7, 2014 by debt debs 48 Comments

I said I would do my debt updates on a regular basis to have good comparatives, so since it’s been a month since the last update, I aim to please!

Speaking of which, I wasn’t too pleased about the chart format that I’ve used in my debt updates so far.  I decided to change it up, but what with getting distracted analyzing the numbers, having 2 (only 2!) glasses of wine last night and spending time researching alternatives for front lawns (other than grass!), I’m still not sure if I like what I’ve got.  But anyhoo, here goes…. and I may exercise my women’s prerogative to change her mind later.

Debt Decline

The colourful graph above is based on the figures in the chart further below for actuals this year up to June, combined with a projected forecast for the remainder of the year. Since I just created this forecast by type of debt today, I don’t have any past forecasts, but I plan to chart the actual achievement against the above forecast, so I can see if we are on track for debt repayment.

We actually averaged just over $60K annual debt repayment for the two years ended March 2014, which was pretty awesome.  I wanted to compare how we are doing so far this year, and was wondering if we will be able to similarly, pay off $60K for this year.

On a fiscal year 2014 annual basis, my forecast shows us just shy of this at $56,871.   The next topic will give you a little clue as to why that is.  Still, it’s in the ballpark, so I’m not going to fret about it too much.  So we will push to meet the $60K and also set a stretch goal of $65K.  Now wouldn’t that be awesome?

Debt Increase

See the little dip up in March?  You almost missed it, didn’t you?  That is due to an extremely large credit card bill of $5K which included $3K for The Irishman’s annual insurance premium.  This, coupled with the fact that due to his lower than normal income in Q1, meant we could not pay as much debt off as planned.

But looks like we are back on track!  After only one week in June so far, he’s earned $900 which is only $300 short of his biweekly target of $1,200.  Any extra that he makes above the monthly minimum of $2,400 goes into debt repayment, over and above what we have already planned.  If that works in our favour, the future graphs that you see like the one above should show the forecasted debt repayment diverging from the actual debt repayment.  One can only hope!  And pray!  And work hard!!!

Spending impacts on Debt

I also watch our monthly spending against budget, as this is one of the key elements to be able to make debt repayment as planned.  I’m not going to do a budgeted expense analysis here today, but that could be something I cover in the future.

I got  a lot of great feedback in my last post asking about what we should focus on next in our debt repayment journey.   Thank you all for your responses!  🙂    I really appreciate you taking the time to do so.  Sometimes, you just need an outsider’s perspective, when you get so embedded in the muck and can’t see the forest for the trees and start floundering, as I like to say.

So many said to lower the grocery bill and cut the cable.  My investing buddies were also big on opening our own investment accounts and managing our portfolios on our own.   Well guess, what?  We’re going to do all three of them!!  Look for more on these topics, which for us, will be quite challenging for various different reasons.  Of course, some will take more time than others to execute, but that’s why we call this a journey!

Detailed Debt Analysis

We’ve paid down debt to the tune of $28,771 this year so far and the trend of decline of debt continues since we first started our debt recovery journey.  The figures below show every month this year and the first column is from our D-Day.   Yesterday was the 70th anniversary of D-Day and I had it on my mind all day.   There’s nothing that can be done about the past, but we need to learn for the future, and remember all those who fought for our freedom.  I mean no disrespect calling our Debt Discovery Day our D-Day.  It feels both catastrophic and liberating, which could also be said about June 6, 1944.  For this reason, I felt it fit, and, let’s face it, there’s a whole lotta double ‘D’s’ going on here and that’s all I’m going to say about that.

Onward to the analysis, our freedom awaits us!

Notice there is a big time gap between Mar 2012 and Dec 2013. I wasn’t tracking in the same manner so I don’t readily have those figures. It was only when I started this blog in March 2014, that I pulled together the ‘big picture’. It was quite satisfying actually to look back at the progress.

Normally we are scheduled to pay approximately $1,600 biweekly towards debt.  Although not all of it goes to principal, it’s all at low rates, the highest being 2.89%.  In addition, we also pay $177 biweekly for a car payment at 0% interest.  So I guess you could say we pay in total about $1,750 every two weeks.  In addition, we try to pay an extra $2K per month, on top of that, but that is being extremely aggressive and assumes that The Irishman makes more than the minimum $2,400 budgeted per month.  So in a low month we would pay $3,500 towards debt and upwards to $5,500, but even as I write this, that seems surreal, so don’t quote me (yet! 😮 )  Notice how in February and March the reduction was not even meeting the $3,500, due to the lean Q1 period!

Diversion

I know that some of these figures may seem quite high to some readers, and you may think, gee, I wish I had that much money to throw at my debt.  I even wince sometimes when I present these numbers, because I think that people will say “Meh!  First world problems”.

Let me just say this, it’s all relative.  Meaning that my debt numbers are a lot higher than most of what I’ve seen publicly out here on the internet.   In addition, I think at $2,400/month, The Irishman is more middle to lower income, or certainly is not paid enough for how hard he works!

We are a lot older than most personal finance bloggers and should be retiring soon.  He is 61 and I am 54.  Yes, I know, with our income level, we are stupid to even get into this mess that we’re in.

But here’s the thing.  If we can get ourselves into this state, there is a whole lotta other people out there who are probably dancing at the devil’s door too.  Lifestyle inflation, wants not needs, call it what you want… but I’m here to tell you that if you take your eye off the ball and say “I deserve”, you will be facing the music at some point too.   My message is to prevent people from making the same ridiculous mistakes and help those who have fallen like we have.

Delta Dialogue

Okay, sorry for that diversion.  I just felt I needed to get it out there.  So back to my analysis.  The decrease from March to April, was due to payment of the big credit card bill mentioned above ($5K).  In April, The Irishman got a big commission, so we were able to play catch up and pay down our low-rate credit card to the tune of $6K, which is why the May figure is so much lower.  In May, we were able to ramp the payment back up on the low rate balance transfer credit card to $2K, on top of our normal debt repayment of $1,750 biweekly.  There is also one extra $1,600 mortgage payment in the June 6 balance, as our mortgage was paid yesterday.

So all in all, I think we are back on track.  The annual target of $60K is not in the bag by any means at this point.  We’ve still got 4 years to go.  My planning has us at May/June 2018 having it all paid off.  My stretch target is December 2017, but that is only a pipe dream at this point.

Diatribe on Dialect

I was cleaning up some things on my blog and noticed I should review my SPAM folder in case any legitimate comments got unintentionally put there.  But, nope, all SPAM and I decided I should delete all comments there because there was getting to be quite a few, and it would make future reviews much easier.  Before I did, I saved a few gems that are pretty representative of most of them, but some genuinely more humorous than others.  Url’s provided have obviously been removed by moi, some pointing to running shoe sites, or lewd sites and other things I can’t even recall.  It’s so obvious with most of these comments that English is not their first language, and some genuinely try and are better than others.  Anyways, I will dissect these comments in my own snarky manner, just because.

how to grow taller when your 14

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“how to grow taller when your 14”  Oh, the poor guys who googled this phrase.  Doesn’t your heart just melt for them?   This English in this one is actually probably the best I’ve seen in SPAM, even though the words and sentence structure is rather awkward.  I just love the the second last phrase though “To the next!”  Like ‘onward and upward‘ or ‘high ho cheerio!’.  Had me giggling. 😀

Richardsamuelmd.com/2011/11/22/how-to-treat-mild-Eczema/

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Oh, a medical related one.  I’ve probably googled “How to treat mild eczema” myself once.  Oh, I hope I don’t invite the SPAMLORDs in now.  Again, this one is not too too bad, until the end when he says “I wish to learn more things approximately it“.  Good sword, I can’t even think what word the good doctor even meant to use here.    Anyways, you keep learning new things there on your {internet} rounds there, Dr. Samuel.  Don’t come by here though.  Nothin’ to learn here.  Glad I’ve got my good buddy akismet on my side!