Debt Dumpers 2020

[ruadisneyfan2]

I used to have many separate savings accounts with USAA for short and mid-range savings goals. But, then decided that looked too confusing to me and went to one savings with Ally, again I use it for short and mid-range savings goals (and also to earn just a bit of interest), and separated categories with Excel spreadsheet. I'm trying out this feature with Ally, not sure if I will like it or not. One thing I don't like is interest in one "bucket". I wanted to try out the feature and see how I feel about it.

Since I am most comfortable in my personal finance with streamlining accounts and simplicity, I tend to think ultimately I will ditch the buckets also.
I'll share my categories:
1. Vacation, 2. Car/Rent Insurance, 3. Car Repair, 4. Membership/Registrations, 5. Christmas, 6. Dog/Vet Care, 7. Big Items (Furniture/Electronic Replacement), 8. House Downpayment, and 9. ROTH IRA

Here are mine:

1. J_____'s Slush Fund
2. Panama Canal Cruise
3. Escrow
4. Car Insurance Fund
5. (County)/(Twp.) Sewer Fund
6. Laser/Welding School
7. Low Pay-Covid/Christmas
8. Covid-Low Pay
9. K_____'s Car Ins.

Number 1 is hubby's $ from side jobs. (I get his OT, he gets side job $.) It used to be our emergency fund until I made a proper one.
Numbers 2, 6, & 8 will eventually be something else and 7 will revert back to just Christmas.
I put some of dh's pay designated as Snowball and some extra savings in 8 at beginning of Covid crisis and started being forced to take days off and initially I didn't want to use up my vac hours so I took them unpaid. Once I was out every day and unemployment deposits started rolling in, I put them there. Then when it would be my normal payday, I take from there. Since I took from there quite frequently for other things too, I spread it over 2 accounts so they wouldn't harass me for exceeding 6 withdrawals per month.

Number 8 belongs to Ds20. He prefers his car ins $ to go out of sight. It's his money but it's joint acct with me.)

Ok, here is where I feel really old. I've never learned how (officially) to use a spreadsheet and I tried following a Youtube video so I could track our net worth each month. Less than a minute into this video it was all way over my head. I was able to create the spreadsheet but I didn't really keep up with it. It became another neglected chore and eventually I deleted it.
I'm a visual kind of person. I like seeing everything separate when I log in. So this is perfect for me.

I also have a Varo savings account that I opened by accident when opening a Varo checking account (to receive a bonus) and it turns out that their savings interest rate is higher than Ally right now. 1.41%. (They also offer a higher rate if you have $1000 direct deposited + have several ATM transactions per month. I should, but I can't be bothered with all of that.) I use it for things that will be just sitting for a longer time. I wrote out a Discover balance transfer check (0% for 12 mos.) for ds20's welding school. The money is in Ally because he hasn't started yet. I am paying it back as my current snowball but keeping it my Varo account until next May when it's due. I was already charged the BT fee so I might as well let it earn a little something to offset the fee. I am keeping track of the fee charged vs. interest earned just out of curiosity.

 

[ruadisneyfan2]

you can do a lump sum now and reap savings for sure. the idea is rather than putting so much aside a month to save for a lump sum payment on a mortgage you could put the identical amount towards the principle each month (so as an example-$500 per month towards principle vs. saving it up for 6 months and applying $3000 towards principle all at once). we used this practice with every minute amount of extra money we came into to pay off our 30 year in less than 8-if the balanced payment plan on our power bill adjusted down by $15 per month-we threw it at the mortgage principle, got some kind of stupid few dollars in a class action check-threw it at mortgage, came under on the grocery budget by $50 in a month-mortgage. it's amazing how much it saves over time.

go to bankrate or another site that has mortgage amortization calculators and play with them. try entering that 8K to see how many months/years it will cut off the life of the mortgage. try seeing what even $50 a month applied just to principle will do. it's addictive to see those months, then years drop off.

We are the same way with our snowball. When I get reimbursed $8.50 from our flex spending acct, it goes to our snowball. Every little bit. It sure does add up. We are on the fence about taking this 14-nt Panama Canal cruise booked for next February. We've always wanted to be able to do one but kids in school made it impossible. I got a great discounted rate by booking it while onboard another cruise. Lots of ports we've never been to and of course to see the PC itself would be great. Ds20 even is excited to go if he is able to get off work, who knows. (When a 20 yr old wants to spend 16+ days with parents is really saying a lot.) The thing is we've had plenty of other wonderful vacations. How much more do we need? Dh is 62 so retirement is not far away. He doesn't have a specific age in mind for when he wants to retire and he knows how bored he gets with more than 3 days off. Still, it would be ideal to not have a mortgage when he does. We currently have 8 years remaining. My one coworker who became a widow at 62 says absolutely take the cruise, enjoy time with dh, you can always make more $. My grandmother also became a widow at 62 and would always tell me, "Do it while you can. Don't wait until retirement together; no guarantees that will happen."
I've been using this:
https://www.free-online-calculator-use.com/rapid-debt-reduction-calculator.html
We currently have $8k in our PC cruise fund and $21k in our Vanguard. (essentially our emergency fund)
If we plunked all of that down on our mortgage and applied all of our snowball ($2500/month) it would take only 22 more payments to be done. That is one year from February! Instead of 8 yrs!
Our regular payment is $1282 per month so to free up that much $, it would not take much time to build up more savings. We'd still have the $2500 snowball to add to that, so it would be $3782 per month going to savings, all without any lifestyle change or pay increases. At that rate, it would take 5.5 months to save up our Vanguard again.
I keep hoping something beyond my control will make it so that we can't take this cruise, such as DCL cancelling all long cruises, or I can't for some reason save enough vacay time. Then the burden to make the decision will be off my back.

 

[ruadisneyfan2]

I agree to an extent. I have 2 savings accts with my credit union but the primary earns a better rate. While it's technically 2 accounts since it's with the same place it's like allys buckets. Now if ally distrubuted the interest among the buckets I'd have gone with them because I would have moved most of my current savings. But since it doesn't I opened one with amex because they had a slightly better rate, no minimum and no fees. For now I don't want more accts and logins. I've read a little about being able to do more with amex so I'll look into that. I'd wanted ease rather than my money all over the place to get diff accts.

So it's like they penalize you for separating the funds.
Each Ally account earns its own interest. They all earn the same rate and they all get the interest deposited on the same day. I had the same set up with Capital One 360 but I left them when I found out Ally had a similar set up but earned 50% higher interest rate. If I found another bank tomorrow with the same set up but better interest rate, I'd move again.

 

[afan]

So it's like they penalize you for separating the funds.

No because the main only earns the better rate on the first 500. It's a credit union, member owned. I earn a decent interest on my checking account, also first 500. I'm quite happy with it and don't mind the way it's set up. Again I don't want a million savings accounts just to get better interest or have to track it all on a spreadsheet. More power to those of you that do. I don't have enough money in any of them that the added inconvenience to me is worth the 10 bucks I'd make in a year by doing it.

 

[ruadisneyfan2]

No because the main only earns the better rate on the first 500. It's a credit union, member owned. I earn a decent interest on my checking account, also first 500. I'm quite happy with it and don't mind the way it's set up. Again I don't want a million savings accounts just to get better interest or have to track it all on a spreadsheet. More power to those of you that do. I don't have enough money in any of them that the added inconvenience to me is worth the 10 bucks I'd make in a year by doing it.

I get it. Do what works for you.

 

[comicguy]

There are so many ways to keep track of money it can be mind boogeling! I use seperate accounts within the capital one online system: I am a visual person so seeing where each account is at makes me happy

J's account (my sons emergency fund)
New car fund
Corevette fund (one day I will have this car!)
wdw fund (yearly trip money)
DVC fund (future purchace of a DVC property, only buying if I can put down 50% or more at time of purchase)
House fund (for future repairs/maintaince)
vacation fund (non wdw travel)
travel fund (quick get aways)
Tax $ (account for refunds, rebates, etc.. just undirected liquid money)

Then of course we have our emaergency fund at the local credit union

 

[thiabelle]

I love CapOne360. Let's be honest- interest is so low that it doesn't really matter where the money is located.
My accounts are:
1. Rainy Day- this is our emergency funds account
2. Puppy Fund- this is for our doggos care (we chose not to go with pet health insurance and self fund)
3. C and E Hair Fund- It takes money to look good!
4. Contacts- because last year my DD's eyes changed twice- and glasses/contacts are expensive
5. Health Fund- I stopped contributing to the FSA because my DH became eligible for an HSA- so this kinda replaces it (without the tax advantage)
6. Christmas- reminds me of the Christmas Club I had when I was kid
7. Vacation Dreams- for any and all travel that is for fun (have to see the relatives travel- unexpected would come from Rainy Day)
8. Taxes- for tax prep or if we get hit with any ridiculous payments- this hasn't happened in a few years but I keep the account

Literally one of my greatest joys is moving the money into the accounts every two weeks. I know they can be automated (the Rainy Day is because it come's from DH's account) but I love doing it and having to THINK about it every payday. It's better for me to NOT forget!!

DH and I are coming up on our yearly budget meeting so we will see if any buckets get added or changed. I don't expect this will be a big shake year (last year was!)

 

[pblack]

@ruadisneyfan2 I know you weren't necessarily asking for opinions, but I would take the cruise. Life is just too short. I wouldn't want to put off taking the cruise (unless absolutely necessary) and then something tragic happens which results in not being able to ever go. I'm sure you'll do whatever feels best to you.

 

[jen7233]

Ok, here is where I feel really old. I've never learned how (officially) to use a spreadsheet and I tried following a Youtube video so I could track our net worth each month. Less than a minute into this video it was all way over my head. I was able to create the spreadsheet but I didn't really keep up with it. It became another neglected chore and eventually I deleted it.
I'm a visual kind of person. I like seeing everything separate when I log in. So this is perfect for me.

I feel old on many computer or tech things. I used to have to use Excel daily when I was working, we used spreadsheets for tracking everything we did. But, definitely no mega master at it, I got by enough!

@pblack, I forgot to mention I think the Highlander is a great car!

I think it's interesting, the various savings goals we all have.

On a mid year check in with June 1st tomorrow, all my short and mid range savings categories are looking pretty good since not doing anything. My mom's final expenses ended up a lot less, had money returned, after making some different decisions on final resting, and about at a point to move forward with just thinking of her memory rather than caught up in all the decisions and expenditures that go with final arrangements, and I'm ready for this shift so I can just be at a point to missing her memory rather than stress of the above. Emergency fund completed after just relabeling our taxable mutual fund for emergency/home. Maybe going to WDW from our cancelled spring trip shifted to late summer, but that is so up in the air, but I already have the changed plane tickets and park tickets from earlier in the year, now to decide go or no go based on what happens with this new reservation system and the park hours, have a bit of time to decide before needing to cancel altogether. Maintaining regular car payment, not paying down extra on it, and rather keeping a larger savings for some time.

 

[MerissaAndMomLoveDis]

2020 Goals 5 month check in:

Cash flow all of daughter's college tuition/fees/room/board/flights. No student loans! DONE (So far). Ended up with $900 in southwest flight funds and $580 in Alaska Airlines flight funds In daughter’s name due to cancelled Spring Break trip, cancelled trip back home for friends’ high school graduation, and cancelled end of school year flight back home. I also got back a small amount of cash from my daughter’s university for not being on campus since April for Spring Quarter—I put that towards debt (see below).

Incur no new debt, even while I am off work without pay recovering from back surgery. DONE (so far). I got to return to work the last week of January AND my employer donated some sick time that covered me after I ran out of all paid leave, so I never actually ended up being off without pay. VERY thankful for that!

Pay off $12,000 in debt during 2020. ALMOST DONE—I have $1100 to go, which I plan to pay after my next pay period. I put my stimulus check and the small refund I received from DD room and board toward debt, so I am further along than planned!

Earn $300 from my employer's wellness incentive program. IN PROGRESS—gathering the points needed through various activities. Have until Oct 31st to finish.

Sell extra car sitting on driveway -- daughter does not need a car at her university in California (and I am not sure this one is reliable enough to make it that far anyway). NO PROGRESS. Still sitting there.... She is home from college due to COVID-19, but has driven ONCE since she got here on April 3 (a quick drive to the post office mail drop).

I am grateful for the “accountability but kindness“ I find here.

 

[pblack]

2020 Goals 5 month check in:

Cash flow all of daughter's college tuition/fees/room/board/flights. No student loans! DONE (So far). Ended up with $900 in southwest flight funds and $580 in Alaska Airlines flight funds In daughter’s name due to cancelled Spring Break trip, cancelled trip back home for friends’ high school graduation, and cancelled end of school year flight back home. I also got back a small amount of cash from my daughter’s university for not being on campus since April for Spring Quarter—I put that towards debt (see below).

Incur no new debt, even while I am off work without pay recovering from back surgery. DONE (so far). I got to return to work the last week of January AND my employer donated some sick time that covered me after I ran out of all paid leave, so I never actually ended up being off without pay. VERY thankful for that!

Pay off $12,000 in debt during 2020. ALMOST DONE—I have $1100 to go, which I plan to pay after my next pay period. I put my stimulus check and the small refund I received from DD room and board toward debt, so I am further along than planned!

Earn $300 from my employer's wellness incentive program. IN PROGRESS—gathering the points needed through various activities. Have until Oct 31st to finish.

Sell extra car sitting on driveway -- daughter does not need a car at her university in California (and I am not sure this one is reliable enough to make it that far anyway). NO PROGRESS. Still sitting there.... She is home from college due to COVID-19, but has driven ONCE since she got here on April 3 (a quick drive to the post office mail drop).

I am grateful for the “accountability but kindness“ I find here.

Great job on tackling that debt! When you pay off the last little bit its gonna be the best feeling!

 

[rg35]

I've read this elsewhere too and don't really understand it. Can you explain this more? Is there a way to calculate how much extra to pay to maximize savings?
We owe around $105k and have 8 years remaining at 3%. We also have $8k set aside for a 14-nt cruise through the Panama Canal in Feb that we've always wanted to do but now I'm on the fence. My heart says make happy memories while we can. My brain says you've had plenty of good trips; pay it off. Heart and brain are in constant tug of war.
If I were to apply the $8k to our mortgage, and lump sum is not the best approach, how do I calculate how much per month, to have the best results?

It's because you're paying down principal slightly each month. Since you're lowering your principal, you're paying less interest in subsequent months. By waiting to make a lump sum payment, you're paying more interest on a higher principal compared to making smaller extra payments each month.

If you were going to use the 8k from the cruise towards an extra mortgage payment, then you could just do that payment up front. In this case, since you already have that money on hand it wouldn't make sense to split it up into a monthly payment. The smaller monthly payments would be instead of saving money on the side and making one large payment at a later date. My apologies for not being more clear on that point - I don't think I realized that you already and a large sum set aside.

There probably are some "what if" calculators out there on the web. I use quicken to manage my personal finances and it has one though so I haven't sought out any web-based tools for that.

 

[piccolopat]

I've read this elsewhere too and don't really understand it. Can you explain this more? Is there a way to calculate how much extra to pay to maximize savings? We owe around $105k and have 8 years remaining at 3%. We also have $8k set aside for a 14-nt cruise through the Panama Canal in Feb that we've always wanted to do but now I'm on the fence. My heart says make happy memories while we can. My brain says you've had plenty of good trips; pay it off. Heart and brain are in constant tug of war.
If I were to apply the $8k to our mortgage, and lump sum is not the best approach, how do I calculate how much per month, to have the best results?

If you pay a little more each time, you are reducing the principal more quickly and as a result incurring less interest. You'll save more money making these additional payments now rather than saving up and making a future large additional payment once a year. However in your case, you already have that large payment at the ready. If you were to make that payment today rather than spreading that amount over the coming months, you would save more because it would decrease your principal now. If you do this, be sure you designate it as an additional payment to principal as without it some banks would simply credit your future mortgage payments instead. In this time of uncertainty, I wouldn't make that payment now but instead hold on to that money since we don't know when this pandemic (and now the riots) will release its grip on the economy.

 

[crazycatstacy]

My office is back to work as normal this week. Makes perfect sense considering we are finally getting cases! The good news is hopefully I will be occupied and not online shop! I follow people on Instagram that make specialty home décor and I've gone a little crazy!

 

[imbatman]

DH was laid off to PT today. I'm heartbroken. Between scheduling all of the new Dr. appointments and stress of this weekend, I didn't expect this. I need to sit down at the computer tonight and work a new budget up. I'm so grateful that I held off on paying off the CC. Would've left us cash strapped until the end of June. Not something I need to worry about with Stanford on Thursday. My oldest was also practically laid off because she works evenings at Target.

So I'm going to head home after work, make some killer nachos, and drink a Pepsi before I take a deep breath and work on the budget. Again. Really waiting for a million dollars to fall from the sky...

It'll all work out. I put the cart before the horse here. At least I caught it before it crushed me.

 

[pblack]

Sending hugs to you @imbatman

 

[ruadisneyfan2]

@ruadisneyfan2 I know you weren't necessarily asking for opinions, but I would take the cruise. Life is just too short. I wouldn't want to put off taking the cruise (unless absolutely necessary) and then something tragic happens which results in not being able to ever go. I'm sure you'll do whatever feels best to you.

Thanks. I totally agree.
Then next week, I will start feeling guilty again and say put it on the mortgage. A week later, I'm back to wanting the cruise again. All through my flip flops, dh keeps saying, 'Sure, whatever you want to do."
The first 9 years of my career I worked in our trauma center. In a blink, shi... stuff happens and people's lives are gone or tragically altered. Besides seeing the injuries, I'd also often witness the families coming in later, see their 22 yr son just diagnosed as probably paralyzed from the neck down, and they just falling down crying. So sad. I'd wish I could just go disappear to escape. Working in xray, it wasn't even my job to have to talk to the families but if I had to be in that area for other things, it's hard to avoid. It really affected me after a while. So much sadness and it never ends.
I always felt like you should never put things off but then guilt kicks in. Financial security is a great feeling too. I started to really feel the need for that after I turned 50. It was a slow, creeping thing, not all of a sudden, the day after my birthday.
Both are very valid points. I still have a lot of time. Eventually I will have to decide.

 

[ruadisneyfan2]

If you pay a little more each time, you are reducing the principal more quickly and as a result incurring less interest. You'll save more money making these additional payments now rather than saving up and making a future large additional payment once a year. However in your case, you already have that large payment at the ready. If you were to make that payment today rather than spreading that amount over the coming months, you would save more because it would decrease your principal now. If you do this, be sure you designate it as an additional payment to principal as without it some banks would simply credit your future mortgage payments instead. In this time of uncertainty, I wouldn't make that payment now but instead hold on to that money since we don't know when this pandemic (and now the riots) will release its grip on the economy.

It's because you're paying down principal slightly each month. Since you're lowering your principal, you're paying less interest in subsequent months. By waiting to make a lump sum payment, you're paying more interest on a higher principal compared to making smaller extra payments each month.

If you were going to use the 8k from the cruise towards an extra mortgage payment, then you could just do that payment up front. In this case, since you already have that money on hand it wouldn't make sense to split it up into a monthly payment. The smaller monthly payments would be instead of saving money on the side and making one large payment at a later date. My apologies for not being more clear on that point - I don't think I realized that you already and a large sum set aside.

There probably are some "what if" calculators out there on the web. I use quicken to manage my personal finances and it has one though so I haven't sought out any web-based tools for that.

This is what made sense to me, to just pay it all at once to principal-only. Then I read somewhere about how making extra payments each month is better than lump sum. I must have had it confused. Yes, the less time your principal balance is at a higher amount, the less interest you pay. For that reason, I always pay our mortgage extra early, around 20th-25th. When I signed up for autopay several years ago, it was around the 5th of the month and I called them to ask why they haven't taken my payment. They said I have a 10 day grace period and it won't be marked late. Still, you are waiting too long and it will result in more interest being charged. They actually took the money on the 10th. I dropped that auto pay crap like a hot potato.
Just from paying dh's truck payment a week early for 4 years, (back in the coupon book days) the last coupon said we will bill you. It was $50 less than the other months and they told me it was from paying early. That was a used truck for 4 years. Imagine the impact that has over 15 or 30 on the cost of a house!

 

[ruadisneyfan2]

@ruadisneyfan2 I know you weren't necessarily asking for opinions, but I would take the cruise. Life is just too short. I wouldn't want to put off taking the cruise (unless absolutely necessary) and then something tragic happens which results in not being able to ever go. I'm sure you'll do whatever feels best to you.

Regret is an awful feeling.

 

[ruadisneyfan2]

DH was laid off to PT today. I'm heartbroken. Between scheduling all of the new Dr. appointments and stress of this weekend, I didn't expect this. I need to sit down at the computer tonight and work a new budget up. I'm so grateful that I held off on paying off the CC. Would've left us cash strapped until the end of June. Not something I need to worry about with Stanford on Thursday. My oldest was also practically laid off because she works evenings at Target.

So I'm going to head home after work, make some killer nachos, and drink a Pepsi before I take a deep breath and work on the budget. Again. Really waiting for a million dollars to fall from the sky...

It'll all work out. I put the cart before the horse here. At least I caught it before it crushed me.

I'm sorry you're going through this now.
If it's related to Covid, he should be able to apply for unemployment for having reduced hours.