January 2013 Debt Update

All I can say is FML.

There's good news and bad news.  What's the good news?  Since I got married in 2012, I can file jointly and I'm in a significantly lower tax bracket.  I also get to take advantage of my student loan interest deduction again now that I'm within the married limits.  What does this all amount to.  Approximately 10 grand in a tax refund.  Ridiculous.  I've gotta change my withholding at work, but just bear with me.  10,000.  That's over 1/6th of my existing credit card debt.  Or it's 1/5th of my student loan debt.  I know.  It sucks to have over 100k in student loans & credit card debt.  That's not the reason for FML.

There's a saying that it's not how much you make, but how much you keep/spend.  I used to dream about making 6 figures.  Well guess what.   I just got my W2s and 2012 yielded me 106,000.  What. The. Fuck.  106k and I'm still living paycheck to paycheck and my wife's picking up odd shifts here and there for a hundred here and a hundred there to cover our monthly expenses?  Most of you out there would see 100k+ and go, well this guy is a touch nuthead.  He's making 6 figs and is scraping by to pay his bills?  What a pity.

So what are some of the things that I've promised my wife?

• I'll take the first 1k and she can have anything over that from the tax returns.  Fuck.  I'm barely going to pay down debt.
• I'll fly her back home every several months to see her family.

She's helping by making more money, but she's totally not helping by wanting to buy new shit.  What are the things she wants to buy?  I compiled a list and figured that conservatively getting everything she wants will cost 6k.  She's kind of verbally commited to putting maybe ~1-2k from taxes into her debts, but, that leaves 2k left from 10k.  Of course she wants to save that 2k for a vacation.  God Damnit.  10k and my debt is going to go from maybe ~58k to 56k.  What a fucking joke.

January sucked ass.  I spent way too much money on my wife's wants and needs.  We NEED this thing.  We NEED that thing.  So I floated our trip to my wife's parents place on my 4k credit card that I paid off.  Guess what.  I maxed it out again.  Please shoot me in the head.  The plan way maybe to spend about ~1k or so.  4k spent on what?  Bullshit.  Presents, Gas, Travel.  Ugh....

How the fuck do you communicate with a spouse that claims to be commited to saving money, paying down debt, working extra hours to bring in more money, but wants to spend spend spend.

My current revolving & short term (med bills) debt totals have been trending as follows:

Month	Chase 2%	Chase 3%	Discov 0%	Boa 20%	Cap1 18%	OldNavy 25%	Citi Dia 6%	Chase Amzn 20%	Citi Plat	Advanta 8%	Barclays 18%	Cap1 18%	Kay 25%	GE Amzn	Hosp	Cap1 12%	Total
2012-06	N/A																63139
2012-07	N/A																56709
2012-08	N/A																57386
2012-09	N/A																58353
2012-10	N/A																59132
2012-11	16290	12806	1660	7214	4376	2455	2380	1960	1518	1547	1573	1200	766	542	450	200	57275
2012-12	16027	12669	1580	7143	4926	2318	2357	2040	1503	1547	1392	1200	0	520	420	200	55738
2013-01	15895	12417	1500	7200	4952	2320	2311	4098	1473	1498	1399	1179	0	662	370	263	58266

So I've made about $1400 in payments.  I'd guess that about $700 went to interest.  The debt load increased from 55.7k to 58.2k so my total debt increased $2528 for January.  So I credit carded over $3k.  Jesus Christ.  Someone kill me now.

December 2012 Debt Update

Time flies these days.  I guess the weeks are a blur when you're just saving up money to pay down stuff.  I have so many friggin cards that I can't even fit them within the column below.  Ugh.

My current revolving & short term (med bills) debt totals have been trending as follows:

Month	Chase 2%	Chase 3%	Discov 0%	Boa 20%	Cap1 18%	OldNavy 25%	Citi Dia 6%	Chase Amzn 20%	Citi Plat	Advanta 8%	Barclays 18%	Cap1 18%	Kay 25%	GE Amzn	Hosp	Cap1 12%	Total
2012-06	N/A																63139
2012-07	N/A																56709
2012-08	N/A																57386
2012-09	N/A																58353
2012-10	N/A																59132
2012-11	16290	12806	1660	7214	4376	2455	2380	1960	1518	1547	1573	1200	766	542	450	200	57275
2012-12	16027	12669	1580	7143	4926	2318	2357	2040	1503	1547	1392	1200	0	520	420	200	55738

We can see the ~$1400/mo allocated to debt doing it's deed here.  Due to interest and all, I paid a bit more that $1400, but it's on a good track.

Let's see what I did.

• My Comcast & Verizon bills are 63 & 80 respectively.
• xferred 600 from Kay -> Cap1 (~5% interest savings)
• xferred ~40 from Kay -> Chase through the Comcast & Verizon bills (~5% interest savings)
• xferred ~100 from OldNavy -> Chase (~5% interest savings)
• Paid off the rest of Kay.
• Spent $100 on the Chase Amzn card on life stuff.  (trash bags, Pee Pads, USB Stick, Hot Cocoa)

I think the Chase spending could've been limited to just the trash bags and pee pads, but I've gotta keep the wife happy and I've gotta keep my personal files separate from work files on my laptop, so the 32GB USB stick for $16 was a small price to pay IMO.

On another note, I had a small epiphany today.  I've heard somewhere (probably Reddit), that the best thing for growing money is time.  While cooking, I had the same realization.  The longer the food sits in the oven, the longer it has to absorb heat.  Durrrrr, Obvious epiphany isn't it.  It was probably only euphoric for a moment, but alas these are the simple joys in life.

Smoking Crack in Moderation

I'm what most credit card companies would label high risk.  That's why they love to deny me credit even with my stellar payment history.  One of the key risk factors I see is a high revolving (credit card) debt ratio & lots of inquiries on a credit report.  I look like someone desperate for credit and since I'm maxed on on my current cards, I probably don't look like someone they would want to extend credit to. If I were them and I was looking at me judging purely based on my CC report, I would be leery to extend myself additional credit as well.

There's an asian proverb that roughly translates into, "tiny specs of dirt make up the mountain."  It's too easy to overlook several specs here and there, but the small specs add up and it ends up being important.  It's how my parents saved their thousands and how I need to proceed to get out my mess.

In finance, arbitrage is the strategy to take advantage of price differences.  Usually, one would sell a stock at one venue, while simultaneously purchasing that stock elsewhere at a different venue to buy low and sell high.  With the credit cards, it makes sense to migrate as much of the debt as possible to lower interest cards.  Being in the rut that I've been, I gave up on arbitrating to 0-2% interest rate deals as offers dried up.  With a little more wisdom from reddit, I've figured I should still take advantage of the rate differences albeit small.

I've figured that I can take the 25% paid to Kays & OldNavy and move them over to a 20% cards.  It's not that great of a deal, but 5% saved on ~$3200 is $160/yr spent on things other than interest.  The trick is not to incur any balance transfer fees, cash advance fees, etc.

As always, the devil is in the details.  I've opened myself up to a very dangerous game of reopening up old plastic that should not exist.  If straight no-fee balance transfers were possible, it would be a fairly simple proposition, however, BT's are not possible.  Thus what I must do is:

• Spend regular budget items on the lower interest card instead of cash.
• Use the extra cash to pay down the higher interest card

So let's say your budget looks like this:

• $1000 balance @ 20% @ $50/mo ($16/mo interest)
• $2000 balance @ 10% @ $100/mo ($16/mo interest)
• $500/mo groceries

On $150 payments, you're spending about $32/mo in interest.

If you could migrate that $1000 balance over to the 10% rate, you'd save $8/mo in interest.  Sure it's not a lot, but it's about $100 bucks.  So without any balance xfer option (try calling the bank first), what do you do?

• Buy $500 worth of groceries that you would have spent cash on on the %10 card
• Apply $500 (grocery cash) + $50 (regular monthly payment) to the $1000 balance
• Make the regular $100/mo payment to the 10% card.

Now you look like this:

• $450 +interest balance @20% ($7.5/mo interest)
• 2400 + interest balance @10% ($20/mo interest)
• 500/mo groceries

So now you've reduced the interest from $32/mo to 27.5/mo.  On the next month, you should be able to pay off the $450 balance with the grocery money and get all the debt into the lower interest rate card.  What's so dangerous about this is that now I've got to start swiping again.  It's like telling myself, a recovering crack addict to smoke new crack in moderation.

In the end it's all about TCO.  For my massive mountain, I'm going to use a hybrid strategy of snowballing debt to free up cash flow, then focus on the highest interest rate items to lower tco.  I suppose it goes against the mantra of keep it simple stupid, but this is simple enough.  Wish me luck.

Getting to Success

Here's some nice advice:  "Action Trumps Everything" from http://startupbros.com/the-only-thing-that-will-determine-your-success/

The things you measure are the things you get good at.  Constant awareness is the way forward.  I'm a bit obsessive at looking at my checking account & budget.  Even though I can't make any payments on whichever bills need to be paid, having that budget constantly in my face a nice reminder to take action in the form of not spending.

Ugh...  I hate having $200 worth of stuff in my Amazon cart.  To buy or not to buy is the question.

$63 12 sheet shredder
$24 Brita 5-pack of filters
$31 Swiffer Wet Mopping 12 Count 6 pack.
$25 Land o Lakes Cocoa
$33 Dog Pee Pads 150 count
$27 33 Gal Trash bags 90 count 1.2mil

Now to figure which items I can justify...  The question to ask is, "What is the impact of not getting it, and is there a work around?"

Shredder
The Shredder isn't urgent, but is needed one day.  For now, I can continue to bring my shredder headed items to work.

Brita
Ugh, I hate buying marked up filters.  This link shows how to replace the carbon for cheap.  The eBay store on the article looks dead, so I'm going to hunt around for some cheap NSF carbon.  I really just need to bite the bullet and buy a reverse osmosis unit for the ~150-200 it costs.

Swiffer
This is my wife's doing.  These things are way too expensive for my blood, but since she's the one that does the cleaning, I guess I will have to cave on these.  Personally, i'm a fan of just getting a pack of microfiber towels and some water & soap to clean the floors.  Actually, now that I'm thinking of it, a water soap mixture on a microfiber towel should be a perfect replacement for the swiffer mop!  My wife is totally going to object...

Land o Lakes Cocoa
36 packs for $25.  At first I thought this was a huge 500 pack or something.  Only 36 packs, coming in at 70 cents a packet.  Seems a bit steep for my blood.  Now to go hunting for a better hot cocoa deal.

Dog Pee Pads
150 pads for $33.  This is definitely justifiable.  I just got a second companion, and now they are pooping and peeing at 3x the rate of when it was just 1 dog.  I'm flying through pee pads now.  The impact of no pee pads?  Urine EVERYWHERE.

Trash Bags
The kirkland brand had excellent reviews.  90 bags for $27 sounds like a deal.

So looks like the only items I can really justify are the pee pads & trash bags.  I might have to pick up the swiffer & cocoa at my wife's request though.  Wish me luck.

Store Cards are Evil

Even if you shred your store card, your ID is sufficient to look up the number and charge it.  What's worst is that most of the discounts and specials don't apply unless you're using your store card.  I wonder what the statistics look like for interest paid when determining a sale.

Women and their Victoria's Secret.  I'm sure they will be my doom because they are always giving away free panties.

Getting into this mess

So the question invariably comes up, "How did you get yourself into 60k into debt?"  There's another relevant QA.  "How did you go bankrupt? Slowly, then suddenly."

So looking back on some of the balances, it's at least somewhat assuring if you can attach a number to something concrete.  Mostly, these balances are a result of stupid decisions.  In reality, they are the result the statistical rule that says that people spend more with plastic than with cash. Durrrr.

Decision #1 - $16290
My parents had a Chase card with a 2% until paid off offer on a card with a 30k line. Though I would have significantly higher payments, it made sense to move about 25k of ~9% student loan debt into a 2% until paid off offer, even with the 3% up to $200 xfer fee.  In reality, my student loan payment on a ~50k balance is about $500/month, but in reality, I'm paying closer to $850/month as I pay this particular Chase card down.

Stoooooopid Decision #2 - $12806
My parents had a second Chase card with a 3% until paid off offer on a card with another high line.  This essentially was me refinancing a 6% 18k car @ 3%.  This was also a fantastic deal, however, I fudged up several years ago.

• Took another 12k out on the car @ 5%
• Paid off 12k worth of debt.
• Paid down car to around 8k
• Sold the car for the balance as I had a second car.

This 12k is a stupid me paying off a car I no longer enjoy or own.  *tear*

College Idiot Decision #3 - ~$12k
I graduated in 07 with about 12k in debt.  I figured I'd pay this stuff off once I got a real job and got paid the big bucks.  In reality, the big bucks also coincided with the 2008 crash bringing down my parents support cushion.

Pre-2007 Parental Conversations
"Hey, I need $800 for shits and giggles, food, gas, living, etc."  "Okay son, I'll deposit the $ in your account later today."  I wake up tomorrow morning and my bank account has gone from a $15 balance to over 4 figures.

Post-2007 Parental Conversation
"Hey, I'm hurting on repaying school debt."  "Sorry son, think you could take over the mortgage on the house, since you're the one living there?" "Shhiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiit."

Ridiculous Decisions #3 - XXX - ~$12k
For al the other 2-5k balances, thats what you call SPENDING CREEEEEP.  iPads, iPhones, Groceries, Gas, laptops, camera gear, etc etc.  I can account for about 8k.  Everything else was just going out to eat, gas for going out and spending money I didn't have to keep up appearances.

• $5k camera gear - At least I had crap to show for some of the balances.  I eventually sold the gear and netted around ~3k to pay for the wedding.
• $3k life necessities - Probably for the last year or so, I've been spending on average $300/month to cover groceries & gas.

Everything else is well.... unaccounted for.  Much of the electronics were purchased with cash or 0% financing offers that were paid off within the 0% period.  I'm really trying to think whether I could have survived without the credit.  I'm pretty positive that I could have survived.  It would have been slightly embarrassing and I'd have had to have done a ridiculous acrobatic juggle, but I think it could have been done.  Why?  Here's a short story.

My parents are relatively successful immigrants.  Oddly, their siblings that also immigrated to the States are also successful as well. 6 figure annual incomes, business owners, nice house & cars with excellent credit, etc etc.  So I ask my parents one day, "The stat on business is that there's only 1 standing after 10 years or so and all others go away.  How is it that there's 6 businesses that all lasted more than 10 years by our various family members and are still going?"

"We came to America with nothing.  We couldn't be employed since our degrees don't mean anything and we can't speak the language.  It was either get on by or die."

And how apt that advice is.  There's the other story of the general who had his Army burn their ships before battle.  As life has shown, we have tremendous amount of resilience to scrounge together what we can to survive.

My credit cards are shredded.  The only backup I have is any cash that I may be able to save.  I built in a budget buffer, but the emergency fund has to start stat.  I guess I'm a bit impatient and would have rather have paid off debts than save for an emergency fund.  My credit is still good.  There's no derogatory entries, late payments, judgements, etc.  Just a very high credit utilization ratio that needs to come down.  So it sucks to get declined for new credit to try to play the low interest balance transfer game, but it's finally caught up with me.

For those with spouses battling the money game, there was a visible turning point for my wife.  It was when I shred all the cards.  That's when she finally got on board and knew I was talking business.  There was a little bitching here and there about, "See, we don't have a card to put it on and you have no cash." "OMG we can't pay for gas and we're 800 miles from home without GAS MONEY to get BACK!"

Several weeks later the tone changed, "I'm so glad we paid for the trip in cash.  There's no looming CC balance to pay off."

November 2012 Debt Update

Congrats to Obama on reelection.  Good thing I voted for him.  Now let's get down to business.

My current revolving & short term (med bills) debt totals have been trending as follows:

• $63139  2012-06
• $56709  2012-07
• $57386  2012-08
• $58353  2012-09
• $59132  2012-10

• $57275  2012-11 <~ Yay!!!

Damn, paying off shit makes me feel good, though part of the payoff isn't quite "real", it's a step in the right direction.  I've been able to pay off $1857 in real debt.  How much did I pay in interest?  I really don't want to look, but It's at least $400-500 down the drain.  So what happened this month?

• Refinanced house from 5.8% to 4.25% going from a 1200/mo to 1018/mo payment.  Free'd up about $200/mo in cash flow, but I increased my 401k from 1% to 4% to take advantage of my employers matching.  So cashflow remains exactly the same.
• Received about $3k in cash out from the refinance.
• Received another $3k bonus ($1800 after taxes) from work.

I had an extra $4800 to play with this month, and why did my total balance only go down $1800?  This is where it went:

• $1000 catch up on last month's bills. (grrrrrrrrrr, ugh)
• $2000 added to budget cushion.  My 2x paychecks in November will pay for December's bills.  I used to have it where the prior month's last paycheck & current month's first paycheck paid for the current month.  Now I have a full month's buffer.  In a sense, it's also my kind of my $1k emergency fund without putting aside an emergency fund.

This left $1800 to pay down extra principle and pay down the credit cards.

Here's the current state of my revolving debt.

• 16290 Chase @ 2% till payoff
• 12806 Chase @ 3% till payoff
• 1660   Discover @ 0% till 10/2012 (not sure after)
• 7214   BoA @ 20%
• 4376   Cap1 @ 17.9%
• 2455   OldNavy @ 25%
• 2380   Citi Diamond @ 6.24%
• 1960   Chase Amazon @ 20.24%
• 1518   Citi Plat @ 12.24%
• 1547   Advanta @ 8%
• 1573   Barclays @ 18%
• 1200   Cap1 @17.9%
• 766     Kay @ 25%
• 542     GE Amazon @ 0% till 06/2013
• 450     Hospital @ 0%
• 200     Cap1 @ 11.9%

The following were paid off providing $195/mo in extra cashflow.  The conventional Dave Ramsey wisdom says to take that $195/mo and snowball it into an entry above, but since my budget is upside down, the debt snowball begins now.  In my budget, I've committed $1400/mo in the pay down debt column.  http://unbury.me says that I should be paid off in December of 2015 sometime.  I'm hoping that it's sooner.  Come March, I should be able to kill at least 10k worth of these pesky things if I don't get fired.

• 422 Chase @ 30% ($25/mo)
• 325 Home Depot @ 0% (50/mo)
• 280 Macys @ 25% (25/mo)
• 65 Macys @25% (25/mo)
• 150 Hospital @ 0% (30/mo)
• 120 Hospital @ 0% (40/mo)

Now to stay strong and not spend $ on bullshit stuff!  My wife did just call asking me to pick up some mint choc chip icecream.  There goes $5 =P