Month 3 – Spending Outta Control

Well, we fell off the bandwagon.

monthly spending update

We didn’t make much progress this month due to a few factors:

  • A trip to The Wizarding World of Harry Potter in Orlando, FL  (Great trip, huge nerds)
  • Booking hotels for friends weddings on Priceline ($600)
  • Car Insurance for the next 6 months ($750)
  • Excessive Food & Dining Spending due to travel/weekend activities

Oops.  It’s just a major bummer since last month we were *ahead* of our goals. Now, we put ourselves in a situation where we need to payoff nearly $9000 in debt next month to stay on track – yikes!

My New Years Resolution – No Travel

The biggest obstacle to our debt payoff goal this month was travel. We always try to save money when we travel.  We use miles and points for 90% of our flights and hotels. We use coupon codes, Priceline, and shop around for discounts when we can’t use points.  For our latest trip to Universal Studios, we even received discounted tickets to the park since we were going with our friend who is an NBC employee.  Despite all of our attempts to save money on travel, we still ended up spending major moolah due to eating out and other costs.

In 2012, I received the Southwest Companion Pass which allowed Mr. Debt Albatross to travel with me on any Southwest flight for free for two years.  I learned travel hacking skills on blogs such as boardingarea.com and even attended Frequent Traveler University to learn tips. I learned about gift card churning, manufactured spending, mattress running, credit card bonuses, online shopping and cash back portals. With a little bit of effort, we earned hundreds of thousands of airline miles and hotel points in a very short time frame. Thus, we traveled almost every few months during those two years (with points and miles) but still spent more money that we needed to spend between eating out, resort fees, airport parking, rental cars, etc.

While I don’t regret those trips, I know that avoiding travel is best for my wallet in the short term. For this reason, my New Years’ Resolution for the past two years has been to NOT Travel. I made it decently far this year – late March – but then I got the itch and the Orlando trip happened.

We have some weddings coming up where we need to travel but besides those occasions, we are not traveling.  Let’s hope I stay strong in this goal – this is a hard one for me.

Month 3 Spending Struggles

As mentioned above, it wasn’t a great month for our spending.

Category Spending
Home $2,673
Food & Dining $1,233
Travel $774
Auto & Transport $1,494
Bills & Utilities $627
Pets $315
Uncategorized $257
Health & Fitness $158
Education (Loans) $369
Gifts & Donations $75
Total $7,974

On the Bright Side – Our Income is Increasing

My annual raise kicked in April 15th which was nice. I also received a verbal job offer for an internal promotion!  This promotion would mean greater responsibility, more money, and the possibility to relocate to an area with a lower cost of living. I took a lesson from Sheryl Sandberg and am now waiting to hear back tomorrow on my negotiated offer.  Don’t be afraid to #Ask4More, Ladies!

A Tale of 8 Student Loans

I did the math this morning and it’s depressing.  Mr Debt Albatross and I have been paying our student loans for years and have made very little progress on the principal balance.  I feel like we’re trapped in a 5th grade math problem.  A frog falls into a well with a ladder.  He can climb two rungs every day but then must drop back one rung.  How long will it take him to get out of the well?

 

Mr Debt Albatross graduated in May of 2008.  Six-and-a-half years later, he has only paid $2,128 towards the principal balance.

 

Loan Rate Original Current Paid
1 4.17% $30,593 $32,610 -$2,017
2 6.55% $3,500 $1,784 $1,716
3 6.55% $5,500 $3,071 $2,429
$39,593 $37,465 $2,128

 

I graduated in May of 2011.  Three-and-a-half years later, I have paid $5,803 towards the principal balance.

 

Loan Rate Original Current Paid
1 6.80% $5,491 $4,415 $1,076
2 6.80% $6,500 $5,391 $1,109
3 6.80% $7,500 $6,437 $1,063
4 4.50% $2,009 $1,454 $555
5 4.50% $2,000 $0 $2,000
$23,500 $17,697 $5,803

 

Depressing.  We’ve never missed a payment and we’ve gotten nowhere.

 

The Game Plan:

1.  My loans automatically went into deferment when I started grad school last year.  I logged in to my accounts one day and noticed that my status had changed automatically.  I never notified my loan servicer that I was back in school,  it just happened.  I’m guessing that the school sends out the notification.  At the time, I was relieved to be rid of the monthly payment but I realize now it’s a bad thing.  Due to the deferment, I am losing out on the .25% interest rate deduction, making no progress on the balance, and racking up major interest. (3 out of my 4 remaining loans are unsubsidized. My one subsidized loan went to 0 interest during deferment but its also my smallest loan so its not worth staying in this status). Mr Debt Albatross’s loans went into deferment during grad school which is one of the reasons why he has made little progress on his loans.  Deferment makes no sense for me right now.  Time to change my status back.

2.  Pay off the minimums until our high interest credit card debt is gone.  As much as the loan interest is a bummer, it’s nothing compared to the APRs on our credit cards.  We need to get rid of that credit card debt first.

3.  Attack the loans with everything we have.  My car loan and our 0% interest store credit cards take a backseat.  Bye bye, loans!