Thursday, March 31, 2011

Yep, the truth is pretty ugly

I agree with Sarah.

As it is for so many who are considered admirably responsible, the debt train around here has been on the brink of derailing for some time. We were just too otherwise preoccupied to notice.

Taking care of others. Trying to get kids thru college, major sport, expensive passion/major. Spending pretend money for essential job-related expenses. Old-house-itis. Medical and dental expenses. Endless gas/car maintenance bills for insanely long work commutes. Two small side businesses crumpled the past two years by the economy and Mother Nature's brutal winter pranks. Dealing with no paychecks many summer months.

Etc., etc., etc.

What doesn't land on the list are items that frequently qualify as culprits: vacations (our last 'vacation' was a cross-country trip 18 years ago to introduce our children to their great-grandparents; since then, traveling to watch our college student's games sufficed), electronic toys, fancy house and/or cars, state-of-the-art anything.

At this point, though, it doesn't matter where the debt originated or what caused it to drag us down so far. The point is that we have finally taken notice and are taking hold.

The hardest part has definitely been seeing the numbers on paper and sharing them - with anyone. When I first added up our debts last year in our (failed) attempt to refinance our house, I thought I must have inadvertently hit an extra digit. I calculated again. And again. And when I realized all those numbers belonged to US, I felt ill.

I then had to share them with my husband, who stared at me incredulously - to put it mildly - for minutes before he could speak. I reminded him that we had worked brilliantly together when faced with an unthinkable situation years before, and we would do it again ("for richer, for poorer... remember, honey?").

When I regained some composure, it was time to share the numbers with outsiders, namely, the ones who tried to figure out a way to make the numbers 'work' for the (attempted) refinancing. Miraculously, it would have worked, too, had we been able to persuade all the financial aid lenders to put our accounts on hold for a year. Two said sure, the third said we qualified for 18 months... but they only approved it at 6-month intervals. Period.

Fast-forward to February, when I simply ran out of steam and pennies and started looking for a white flag... which in turn raised plenty of red flags on our accounts.

What I have learned these past two months in dealing with the creditors at the wrong end of our financial stick is that two things have so far worked in our favor: our (previous) excellent payment history and the communication that I've initiated in all cases. Have I enjoyed it? No. But I've been pleasantly surprised that almost all of the reps (the ones I can hear and/or understand) have seemed nice. Some have seemed exceptionally sensible and understanding and genuinely eager to find some way to help.

With five 'plans' in place, there are nine to go. And, no, that's not all - the rest are just still current.

Yep, the truth (aka perilously close to rock bottom) is pretty ugly.

But the truth shall set you free.


Wednesday, March 30, 2011

Facing the ugly truth

I don't know what I expected when Jenny and I decided to embark on this blogging adventure, other than I hoped it would help keep me on track in my quest to get rid of the debt that is holding us back. What I didn't expect was the quick welcome from others in what I understand is affectionately known as the "PF blogging community." (I think PF stands for personal finance. If I'm wrong, somebody tell me what it is.)

Today I took the advice of Sarah, who suggested giving a more detailed breakdown of my debts under a separate tab so that anyone who stops by could keep us straight. It was a scary sight to see all the debts listed. Humbling too. I have a lot of work to do. As a disclaimer, I did not list the mortgage on our home or one student loan that is not in repayment yet. I did list the remaining debts, all of which we are actively working on. It's quite a list.

I guess it's a sign of how deep we were in that I had never made such a list, even for myself. In general, I am organized to the point of annoying. I'm an everything-has-a-place kind of gal and I can put my hand on anything in my house that anyone is looking for in a matter of seconds. But clearly I had buried my head in the sand when it came to the debt.

That ends today. It's out there for all to see, including me. I'll update it somewhere around the 15th of every month so I (and you) can see the progress, slow as it may seem. We quit using credit cards in November and four of the accounts are now closed anyway and in a BLP. At least the debt won't be going up.

Thanks for the support. I can tell I'm going to like it here.


Tuesday, March 29, 2011

Let's Make a Deal!

Before I dig up something from the depths of the freezer and tackle probable freezer burn, I thought I would take this opportunity to report on the credit card offers we've had and/or accepted in our quest to keep ourselves from fully sinking in the quicksand of debt.

On the incredulous side, Sarah and I are both blown away by some of our respective ludicrous offers:
1. For a great reduction in interest to 9.9%, all you have to do is pay $1219! Yes, that's 1,219 dollars. 'Nuf said.
2. For a reduction in interest to 0% (now you're talkin'), your payment will be just $333 a month (um, that's MORE than I can't pay now).
3. Etc. - If you'll pay $XXXXXXX today, that will:
"Save your credit score!"
"Keep your account out of collections!"
"Enable you to continue using your card!"
"Stop the phone calls!" (Well, okay, gotta admit that one sounds nice)

On the positive side, I have accepted four plans so far. I'm not completely comfortable that the payments will be easy, but we will find a way to tend to them:
1. Bank card: Payment is now 68% of what it was with 2% interest (from 19.24) for 60 months, at which time the balance will be paid in full. The catch - I have to remember to call and renew in February. I will. Draft payment.
2. Department store bank card: Payment is now half of what it was with 3% interest (from 23.24), to be renewed every 12 months. Also a draft payment.
3. Department store bank card #2: Payment will be less than half what it was at 9.9% interest (from 23.24) for 6 months. It can be renewed for another 6 months at that time. At the end of 12 months, we'll see where we stand. The rep, who was very nice and sensible, assured me they would work with us. This plan begins in May; for April, we are to pay what we can. Because I have been paying online for a few years, this is not a draft payment. If I miss a payment, we will be unable to requalify. I won't miss.
4. 'Discount' department store: Payment will be 36% of what it was. The interest remains awful at 22.9%, but the finance charges will be halved. At the end of 6 months, if we are still having trouble, they will divide the remaining balance by 40 to get our monthly payment for the next 40 months... at which time the balance will be paid in full. Only the first payment is a draft.

I have opened a separate bank account for the draft payments and have reminder notes ("Put money in," "Draft on ___ day") on neon note cards placed in the appropriate spots in the bill stack. It seems a bit nervewracking to know we can't goof up, but the relief that we do have a plan - if only for four cards so far - helps offset the stress. That stress, anyway.

We have quite a few accounts without plans, but I'm confident that we'll be able to work out something acceptable. Maybe not easy, but doable. We'll make it work, as the alternative of bankruptcy sounds like even less fun.

Yep, let's make a deal.


Food for thought

Given that our budget is, um, tight, I've been looking at our variable expenses and trying to see where we have room to cut. Let's see. Eating out? Yeah, haven't done that in ... oh, never mind. Manicures and pedicures? Ha, ha, ha, ha! Entertainment? Does a trip to Walmart count? That leaves food.

Groceries are definitely a budget buster for us. We eat at home, pack lunches and I have teenagers who like to snack. A lot. I've always had a hard time figuring out what I should be spending, though. So I headed over to the government site to see what the brilliant folks there might have to say. I added up what it says I should be spending on a thrifty budget. Four people, $152 a week. That's the thrifty budget? I do better than that without even trying. Just for kicks, I tallied up the liberal budget. A whopping $302 a week. Filet Mignon anyone?

So that didn't help. Back to the drawing board. I do the basics. I clip coupons, but don't use bunches because the generic brands are usually cheaper. I buy boneless chicken breasts for $1.79 a pound (I guess this is a splurge - I could use cheaper cuts or debone myself). We eat ground beef once or twice a week. Breakfast is whatever cereal is on sale. Apples and bananas are staples. In summer, we expand to what's in season. I know there are areas I can cut. But I don't want to end up with a pantry full of food no one will eat, either. I need to be more vigilant about this. Maybe that will be my goal for April.

At least the government thinks I'm doing fine. Comforting thought, huh?


Thursday, March 24, 2011

Success - and a lesson learned

We have three Chase credit cards. I know, I know. I had called Chase to try to get one of them on a hardship program a couple weeks ago and was flatly denied. About that time, the next month's statements started showing up, and there simply wasn't enough money to pay them. So I paid the smaller one's minimum in full, and a good chunk of the minimum to the next one. The one for which Chase refused to help got nothing.

Today, Chase called. Rather, my very own account manager called wanting to help me. (I may be dumb, but I am not THAT dumb.) I gave my standard sob story and reassured her that I want to pay them, I just can't pay them that enormous amount every month. She says she wants to see if she can get us into a balance liquidation program. I tell her Chase denied me that very thing not too long ago. She asks a few questions and realizes that the third card is a Disney card. And even though it's a Chase, it is its own creature and she can't even see it on her computer. She suggests that if she can qualify us on the other two, that would give me bargaining material for that card. Well, OK.

We spent awhile going over numbers, with me feeding her our income/debt monthlies. She pretty quickly saw the problem and just as quickly said she could certainly fix us up.

The bottom line is that two cards now have an interest rate of 2%, a fixed monthly payment, and will be paid off in five years.

I've learned that it's true. You have to be behind on the payments before they're concerned about you. Well, if that's what it takes ...

I'm slowly making my way down the list. Maybe there will be an end in sight, after all. Five years isn't that far away, right? Meantime, I have a name, a phone number and an extension for my account manager, Jackie. I'm going to call it a success.


Tuesday, March 22, 2011

How do you eat an elephant?

One bite at a time.

I'm sitting here having tallied my debt to update my ticker. Seeing what I paid out and how little the total actually decreased is rather sickening. The lengthy list of creditors is rather sickening, too.

I've decided Dave Ramsey is probably right. He suggests taking Baby Steps. With this much debt, are there any other kind of steps? I think the point of his plan is this: In order to succeed, you need a realistic goal.

I look at the bottom line of my debt and can't see how it will ever be gone. That can't be my goal because I can't see the finish line.

My new mantra: Begin with an end in mind.

So I'll start with Discover. I owe them $2,962.76. Approximately. I'm going to work really hard on that one. And try to stay afloat with the other ones. I do believe that if I can knock off some of these zillion debts, things will start looking more manageable on paper. More realistic.

Begin with an end in mind.

Here we go ...


Offers we can't refuse. And some we can.

I've spent a good amount of almost every day these past few weeks working on our finances. Or lack of.

Between the endless stream of numbers for taxes and those for creditors, my head stays in spinning mode. It's not a happy place, but I do think it's a bit better than worrying EVERY DAY where the money for the bills is coming from. While I am thankful that we do have an income, I look forward to the day when I can appreciate the monthly paycheck, not bemoan the fact that it isn't nearly enough.

What I've been doing with our creditors who have been bumped way down the list is to make an online payment (more of a token, actually) and send an email to their Customer Support. That has resulted in emailed responses with phone numbers, which I document in my notes for each creditor for my next contact. Simple enough... until a letter arrives with another phone number, and I don't know if the letter has crossed paths with an email or phone call (i.e., which is the most current number). Or a rep calls with still another number. Or I call and get - surprise - a different number.

Spinning, spinning.

What I'm trying to do, although I don't enjoy it at all, is keep everyone updated by phone or email on a weekly or biweekly basis. Some reps have expressed understanding and appreciation that I'm calling them, others seem a bit more interested in 'saving your great credit history' (i.e., snag a payment any way they can).

Two offers, which the respective reps have treated as bargains, stand out. With one, our interest rate would be generously dropped to 7.99% (almost half the current rate), but there's a catch - we'd have to come up with $1219. As our payments were under $200, and we were 'only' a month behind, I have no idea how that figure came to be. Doesn't matter, either. I explained that if we had $1200, I probably wouldn't be on the phone with them.

In bargain offer #2, we were told we could have 0% for 61 months, with a payment of only $333/month... which is more than we were paying at the time. Once again, I explained that it was the monthly payments we couldn't handle until our side businesses were able to fund their own expenses again. And our unexpected medical bills were paid. And perhaps if gas quit being so outrageous, considering my husband's driving. Etc., etc., etc.

So far, we've managed to procure two 'plans' that we will make work. For one, our payment was halved, and the interest rate was whacked from 23.24% to 3%. We'll have to renew it in 12 months, and while they may think I'll forget about it, I've got notes all over. I will not forget.

In Plan #2, our payment was reduced over $50/month, and our interest rate was cut from 19.24% to 2%. Again, we will have to renew in 12 months. NO PROBLEM.

The good news is that with these plans in place, these two cards will be paid off in five years! And with the agreement, the phone calls cease.

The downside is that these plans both require bank drafts. As I felt uncomfortable with that but felt the necessity of accepting them, I simply opened up a separate account for these and any future workable plans that may require bank drafts. Only a bare bones balance will be kept there for the drafts.

What am I talking about? We don't have any other kind of balance....

So we have two relatively happy campers in this financial storm. The rest? Not so much, although it helps that we aren't the only ones struggling and that I do let them know I'm keeping notes and will update. And then do... like it or not.


Monday, March 21, 2011

How I saved $700

Maybe I should have said how I managed to not spend $700.

Last time we had our car in the shop for a routine oil change and such, the nice man at the dealership pointed out that our alternator was nearly kaput and that we would be wise to replace it pronto. He would be willing to do just that for the bargain-basement price of $698. We asked if this was something we really needed to do right away and he assured us that it was and said we would be sorry if we ended up on the side of the road.

But given that we had nowhere near to that kind of money at the time, we tucked that info away in the back of our minds and went back to our life of poverty. It's always been nagging at us, though, and with this year's tax return, we thought we might have it done. First, though, we decided to take the car to a local fix-it shop that a lot of our friends use. We were thinking he might give us a better price for such a job. And he sure did. He told us our alternator was just fine and showed no signs of needing replacing.

Part of me wants to be mad at the dealership. But the other part is jumping for joy that we don't have to spend that money right now and can put it toward debt instead.

And on the topic of our debt. I've decided I'll be updating my ticker once a month. Maybe it will look better that way.


Thursday, March 10, 2011

Big sister, big debt

As usual, little sis Sarah is more efficient than I am. I’m the dreamer, the eternal optimist. I do get things done, but Sarah’s always at least a step ahead. Usually more.

For one, she already has a debt ticker! Unfortunately, those numbers look awfully familiar.

Like Sarah and her family, my family is also gasping for air in the world of monthly payments. We don’t have much to show for it, either. Our ‘good’ car is 10 years old and has passed 100k three times, thanks to carpool duties in earlier days and a long work commute for my husband these days. Oil changes, tires, and $$$ gas bills are a given. A scary given.

Our two side businesses have struggled under the weight of the shaky economy and Mother Nature. An optimist, I feel confident that they’ll both start perking up alongside the spring flowers, but I’m smart enough not to bet on anything.

College bills, still in deferment, loom in the shadows. Unexpected medical and dental bills, though not nearly as hefty as Sarah’s, jumped out unexpectedly last year and will remind us for some time that we have no clue what’s around the corner. Not that we needed any reminders.

While we have managed to stay afloat during previous tough times by hook or crook (no, I’m not really a crook!), we have finally plowed into the proverbial brick wall, fallen into the dry well. There is simply no longer enough money to cover the steep monthly payments loaded with insane interest rates.

When my husband and I saw the figures on paper, it was a miracle we didn’t add ‘heart attacks’ to our pile of woes. The amount was so staggering, I had to check the totals four more times. And it was beyond embarrassing.

As exhausting as it’s been to gather the figures and organize my notes in order to broach the credit card companies I’m now dealing with, it’s not nearly as much so as wondering where the money’s coming from to pay the bills. Every. Single. Day.

Like Sarah, I’ve been interested in Dave Ramsey for a while, but I’ve never taken the ‘DR’ plunge on an official basis. Dave talks about baby steps in getting things turned around, and while I am an optimist, I’m also a realist. ‘Baby steps’ is an understatement.

Dealing with customer service/assistance reps on the phone has been more tolerable than I expected. To their credit, almost all have come across as human and understanding. I'll be sharing my experiences here and will hopefully have some current figures for my very own ticker before long.

Like Sarah said, we’d love to learn from you and with you, so please don't hesitate to share tips and success stories!

It takes a village to do more than raise a child.


Don't they WANT their money?

We have debt. A lot of it. Just take a look at the ticker. That's consumer debt. Doesn't include the mortgage. We don't have a six-figure income - far from it. Our debt comes from a lot of things. Medical expenses. College. Kids. Stupidity.

But we're trying to dig our way out now. We quit using credit cards five months ago. That means our debt total isn't rising, but it also means we don't have enough money at the end of the month to make all the minimum payments. Now we pay cash for the petty stuff. Like groceries.

I've been reading and listening to Dave Ramsey and have been following his advice as best I can. I've been contacting creditors and asking to be enrolled in their hardship programs due to the crazy medical bills we have - and will continue to accumulate for many years to come. My first call was to Bank of America and the representative was surprisingly helpful. She took down the pertinent information and offered me a plan on the spot. It lowered the interest rate (not as low as I would have liked, but I'm taking what I can get at this point) and gave us a fixed payment. The card was closed (shows up as consumer request on the credit report) and will be paid off in 60 months. The monthly payment is $75 lower than the previous minimum, so it was progress.

With that first success under my belt, I dialed Chase. Now, Dave has warned about Chase. But I figured since BOA worked with me, Chase would be delighted to do the same. Yeah, right. I gave them all the same information I gave BOA. The debt to Chase is bigger, so the payment is outrageous. I figured this was a no-brainer.

I got the answer today. No, they can't help me. I point out that I will not be able to make the minimum payment. If we were dealing face-to-face, I feel sure the rep would have shrugged.

I can't give them the minimum. So I guess I'll pay what I can and wait for their call. And explain the situation all over again. Until they get it.

This really sucks.


Monday, March 7, 2011

Debt is not our friend

This is it. The official beginning of what will be a long and likely painful journey to dig ourselves out of crushing debt. It is time to take back our lives.

It's not that we have much to show for it. Our debt was amassed by a history of low income and seriously outrageous medical expenses ... and everything else in between.

So my sister and I have decided to chronicle our trip, roadblocks and all.

My name is Sarah. I'm a stay-at-home mom and CEO of the household. I'll tell you more as time goes on. In the days ahead, I'll be posting my goals and tracking my progress. We are hoping to learn from those who have gone before us and those who are right where we are.

I hope you'll come along for the ride.