March 2010 :: Goals

Our goal for March is to pay $1,264 toward our debt. Taking into account the interest that will be charged ($263) , the net will be $1,003

So our totals at the end of March should be:

Credit Card Debt    ::  $ 32,265.89
Taxes Owed              ::  $          00.00
Personal Loans        ::  $          00.00

Total Debt*              ::  $ 32,265.89

*does not include school loans

And now for the Savings Goals – at the end of March, we aim to have:

Regular Savings  :: $     140
Family Leave       :: $  1,147
Emergency           :: $     517

Total Savings      :: $   1,804

According to MSN Money, our debt-free date is now :: January 24, 2012

But I’m not really feeling patient enough to wait for 22 months, so we are pushing our debt-free goal to November, 2011 – which is 20 months away!

February 2010 :: Report

Debt Reduction

Our goals for February were:

Credit Card Debt    ::  $ 36,770.86
Taxes Owed           ::  $   2,433.58
Personal Loans       ::  $       00.00

Total Debt*              ::  $ 39,209.44

And here is where we were after 2.28.2010:

Credit Card Debt    ::  $33,268.89
Taxes Owed           ::   $       00.00
Personal Loans      ::   $       00.00

Total Debt*             :: $33,268.89

*does not include school loans

Great month in the debt reduction department!!! Our goal was that we would pay $1,264 toward our debt, with a net will be $875. With our huge tax return, we were able to pay off over 17% of our current debt this month! Whoooo-hoo!

Budget

We were only about $300 over budget this month, but this was again mostly due to the fact that I started a new diet program and we are purchasing a few specialized foods.

Savings

Savings Goals for Februrary:

Regular Savings  :: $      65
Family Leave       :: $ 1,047
Emergency           :: $    485

Total Savings      :: $   1,597

Where we landed at the end of February:

Regular Savings  :: $   111
Family Leave       :: $  797
Emergency           :: $  502

Total Savings      :: $ 1,410

Not as good as we wanted, but we are still saving, so that is good.

Success :: 2.19.2010

This has been one of those days that I have been waiting for – a day where we were able to make a significant dent in our debt!

I never thought I’d be happy that our AGI (Adjusted Gross Income) went down from last year, until I realized that our tax bill was also less than last year (even though our withholding was about the same) and that it would result in a large federal refund. So once we got the notice from the IRS  and the state about processing our returns, we started planning how we would be applying the money to our debt (this is where it gets exciting).

So, today, we paid off:

ALL of our back TAXES

THREE Credit cards

Whoo-hoo!

We are now down to 4 debts total! I’ll post the real numbers at the end of the month, but we just paid off over $6,000 of debt in one fell swoop

This feels absolutely amazing and I’m so glad we made the tough decision to follow through with our debt reduction instead of what we might have done in the past – buy fun things and go on vacation.

Now, MSN Money tells me that our debt-free date is…Jan 24, 2012 – that’s less than two years!! But I tell you what; I think we can do it in less – I think we can get there by Nov 24, 2011 – 1 year, 8 months.

How did you spend your refund?

Can I please have the interest on my Tax Rebate?

Last night we finished up our taxes and pressed “send” on the e-file button in our tax program.

We *should* be getting over $6,000 in refunds this year, which should take out the remainder of our tax bill and (hopefully) two of the credit cards!

Obviously, we didn’t expect that our Federal return was so big for 2009, and I know that we were trying to make sure that we had some refund coming our way, so that we could apply that towards our tax debt, but we had no idea that some of the deductions and credits that fell in our favor were going to apply.

Since I know I can’t *really* have the interest on the money that the GOV has been holding for me, I think we should be taking a closer look at what is happening in our income this year and see if we can reduce just a little bit of our withholding so that the rest of the year is a little bit easier on the budget.

Although, I have to say, it is nice to have a big chunk of money to just put toward the debt-reduction – I can’t wait to see  our next debt-free date (I hope to have that ready in the next two weeks)!!!!

Have you filed yet?

Cancellation of Debt

Back in January of 2009, as we were deciding if we were going to file bankruptcy or not, we had been talking to my husband’s creditors, which was really easy to do as they were calling us at least once every day. I encouraged him to let them know that we were close to filing and to ask them if they would be willing to 1) drop the principle, and 2) drop the interest rate. One of our creditors proposed a significant settlement deal that was really hard, but resulted in a cancellation of debt.

At the time, I was advised by a family member to look out for tax forms to include in our 2009 tax return, but that we shouldn’t be concerned about it affecting our taxes. This family member happens to work very closely with the IRS, so I trust them to steer me in the right direction.

When I started working on our taxes last month, I had forgotten that we were advised to take care of that debt cancellation form in a specific way. Luckily, when I got it in the mail, I talked to the family member and she clarified that:

If you are insolvent at the time that your debt is cancelled, you do NOT have to include the cancellation in your income (*)

You have to fill out a special form (IRS Form 982  - Reduction of Tax Attributes Due to Discharge of Indebtedness) and have records that show that you were, in fact, insolvent at the time of cancellation. In our case, were were (sadly) VERY insolvent – we had over $60K in debt and no real assets (under $20K worth of personal property), so we qualify for this.

So, we are able to take the $4,500+ that was written off and leave it out of our income, which helped to make our potential tax return even greater (yahoo!)…

We didn’t include this amount in our starting amount (and some of out other debts), because we started the blog after we had already started paying off our debt,  so the reality is that we actually started this journey at over $70K…yikes… but to know that we have reduced our debt by more than $30K in a year – that tells me that we can get to the end…

* I am not a tax advisor and every person’s situation is different. Consult your tax professional for information about your taxes.

January 2010 :: Report

Debt Reduction

Our goals for January were:

Credit Card Debt    ::  $ 37,481.48
Taxes Owed              ::  $    2,609.66
Personal Loans        ::  $          0.00

Total Debt*              ::  $ 40,091.14

And here is where we were after 1.31.2010:

Credit Card Debt  ::  $37,469.86
Taxes Owed          ::   $  2,609.62
Personal Loans    ::   $       00.00

Total Debt*            :: $40,079.48

*does not include school loans

Good month in the debt reduction department!!! Our goal was that we would pay $1,260 toward debt, with a net reduction of $890. And we were able to beat our reduction by over $10!

Budget

We were about $750 over budget this month owing to another (arggggh) truck repair, as well as some elevated utilities that we needed to get caught up. We were only about $160 over on our monthly food budget, which is a marked improvement over some other months, but this was mostly due to the fact that I started a new diet program and we had to purchase a few specialized foods.

Savings

Savings Goals for January:

Regular Savings  :: $     30
Family Leave       :: $  690
Emergency           :: $  205

Total Savings      :: $  925

Where we landed at the end of January:

Regular Savings  :: $      49
Family Leave       :: $  697
Emergency           :: $  470

Total Savings      :: $ 1,216

We were able to replace some of the funds that we took out of our savings in December, so that gives me some comfort in case another emergency comes up.

February 2010 :: Goals

Our goal for February is to pay $1,264 toward our debt. Taking into account the interest that will be charged ($389) , the net will be $875

So our totals at the end of February should be:

Credit Card Debt    ::  $ 36,770.86
Taxes Owed              ::  $    2,433.58
Personal Loans        ::  $          0.00

Total Debt*              ::  $ 39,209.44

*does not include school loans

And now for the Savings Goals – at the end of February, we aim to have:

Regular Savings  :: $      65
Family Leave       :: $ 1,047
Emergency           :: $    485

Total Savings      :: $   1,597

According to MSN Money, our debt-free date is still :: June 24, 2012

But we are continuing to push to try and get it all paid off by February 2012, which is 5 months earlier – it would be so great to have everything paid off in two years!!!! I can just imagine it!

Break it down, again…

…ah, remember that lovely song from the 80′s? Tears for Fears, I think it was?

Anyway, I thought it might be illuminating for me to list the breakdown of our debt so it tells a more complete story.

Here are the totals at the beginning of January 2010.

Balance Bank of America 3226.68 Capital One 2565.14 Capital One #2 1167.30 Lane Bryant 1385.56 Sears 1077.25 MBNA 16641.03 Citi Bank
Direct Merchants
SearsPLUS 12132.52
0.00
0.00 Credit Card total 38195.48 IRS 2785.66 State Taxes 0.00 Tax total 2785.66 Grandpa 0.00 B&S 0.00 Personal Loan total 0.00 Total debt 40981.14

As you can see, we have a long way to go, but we are steadily attacking out debt and we’re looking forward to all of them being at zero ($0) balance.

The next two items that we are focusing on eliminating is our IRS bill (hoping to knock that one out in February/March w. our return) and Sears (which has an AWFUL 29.99% interest rate – thanks, Citibank – but we hope to be rid of it by the beginning of April).

January 2010 :: Goals

Our goal for January is to pay $1,264 toward our debt. Taking into account the interest that will be charged ($374) , the net will be $890.

So our totals at the end of January should be:

Credit Card Debt    ::  $ 37,481.48
Taxes Owed              ::  $    2,609.66
Personal Loans        ::  $          0.00

Total Debt*              ::  $ 40,091.14

*does not include school loans

And now for the Savings Goals – at the end of January, we aim to have:

Regular Savings  :: $     30
Family Leave       :: $  690
Emergency           :: $  205

Total Savings      :: $  925

According to MSN Money, our debt-free date is still :: June 24, 2012

But I think we can get it all paid off by February 2012, which is 5 months earlier, so we have June as our goal and February as our “push” goal.

December 2009 :: Report

Debt Reduction

Our goals for December were:

Credit Card Debt    ::  $ 38,275.93
Taxes Owed              ::  $    2,771.70
Personal Loans        ::  $          0.00

Total Debt*              ::  $ 41,047.62

And here is where we were after 12.31.09:

Credit Card Debt  ::  $38,195.48
Taxes Owed          ::   $   2,785.66
Personal Loans    ::   $       00.00

Total Debt*            :: $40,981.14

*does not include school loans

Good month in the debt reduction department!!! Our goal was that we would pay $1,260 toward debt, with a net reduction of $898. Our total reduction for the month was $964.  I took 1/2 of my bonus at work and applied it to one of our credit cards, so that accounts for the little extra.

Budget

This was a really rough month budget-wise. Part of it was residual moving/new-home costs ($600), some of it was an unexpected and expensive car-repair ($800+), some of it was a housewarming holiday party ($350) and some of it was that my mother was visiting for the first time in three years and we went a little overboard with the dining out.  I’ll write more about it in another post, but the bottom line is that we were over $3,000 over budget. Let’s take a moment and shake out heads in shame. Yeah. We deserve it.

Savings

Savings Goals for December:

Regular Savings  :: $    300
Family Leave       :: $ 1,250
Emergency           :: $    535

Total Savings       :: $ 2,085

Where we landed at the end of December:

Regular Savings  :: $       0
Family Leave       :: $  221
Emergency           :: $  205

Total Savings      :: $  426

You remember that extra money that we needed when we went over budget – yup – it came out of our savings, which is a better place for it to come out of than a credit card. Still, this is really embarrassing even if we are glad we had money in savings to cover these issues.