Yet another step in the Dave Ramsey process is looking at your current mortgage. Fortunately, we are well within the 25% limit of what he recommends so we aren't even considering selling our home. (Your house payment shouldn't be more than 25% of your monthly take home pay.)
Currently, we are almost 7 years into our 30 year mortgage at a 6.125% interest rate. That was a very good rate 7 years ago, but now is quite high. We are refinancing at 3.75% and taking a 15 year fixed which will increase our payment by only about $40 a month. It's amazing to think that we will shave 8 years off of our mortgage by just refinancing to a lower rate!
Refinancing is not for the faint of heart though! It's been a long process and even though we're looking at closing in one week, there is still work to be done.
Our house did not quite appraise for what we had hoped (it was about $10K lower) however, we were happy to find out that we're not "underwater" on it. ("Underwater" meaning we owe more than it's worth.)
It costs about $2,500 to close a new mortgage and we are trying to decide just how much of that we want to pay out-of-pocket so we're not borrowing as much over the 15 year period. It's hard to decide whether to plop down cash or keep it to put toward the debt snowball. I think the hardest thing is finding time where Aaron and I are available to have an indepth conversation about what we want to do! It just seems that we are both working non-stop these days. I guess that's the power of gazelle intensity. :)
Tuesday, March 18, 2014
Saturday, March 8, 2014
It's Raining, It's Pouring, the Old Man is Snoring!
When Aaron and I began working on our budget back in November, my mom told me that once I had my emergency fund it place to get ready - it was going to rain. I thought to myself, surely not...the baby emergency fund is supposed to be my murphy-proofing! Boy oh boy was I wrong! As always, my mom was right. :)
Since getting that fund together, we have had to tap into it three or four times. The next time, I'm afraid, is going to be a DOOSEY! Back in September we got a letter from our county saying that the ditch that runs across our side yard needed to be cleaned out. We had sixty days to clean it.
The kids and I worked tirelessly to get the ditch emptied out. We raked out all of the leaves and picked up any trash we could find. I called the man in charge and left a message telling him the work was done. He in turn told me he'd be in my neighborhood soon and would let me know if we did enough. I never heard from him.
Two days ago (on my anniversary, no less) we got a letter from the county attorney saying we did not complete the work and if it wasn't completed in twenty days, they would hire a contractor to do the work and slap a lien on our house. I contacted the guy and he said he'd come out today to meet with me about it.
It turns out, we have about two dozen trees that we have to cut down along with a ton of smaller bushes and other vegetation. The county engineer said it'll cost a couple thousand dollars to hire the work done. Instant stress. :(
I'm hoping Aaron will get on board and do the work before they hire a contractor. I hate to bug him, but it's just work that I can't do.
I tend to stress out about these kinds of things so I'm trying not to. Wish me luck... ;)
Update! Update! Update!
I realized I never finished and published this post, so I thought I'd go ahead, but I'm happy that I can give a positive update to it!
Aaron plugged in BIG TIME and cut all of the trees down in less than a week. Our awesome friend from church, Teresa, helped us with the whole project. We have a ton of firewood stacked up for the upcoming bonfire seasons....okay we probably have three or four year's worth....and a cleaned out ditch.
I handed the dealings over to Aaron and he has dealt with the county engineer since I met with him and was upset by what all we had to do. Aaron has been awesome, not just with the work, but with following up with the man.
It turns out the house on the other side of the ditch is bank owned and the bank has completely ignored the county's request to clean the ditch out. The engineer came and looked at our work and he told Aaron he was signing off on our part of the work! This means that when the contractor comes out next week, the lien will be put on the other house, not ours. Yay!!
Since getting that fund together, we have had to tap into it three or four times. The next time, I'm afraid, is going to be a DOOSEY! Back in September we got a letter from our county saying that the ditch that runs across our side yard needed to be cleaned out. We had sixty days to clean it.
The kids and I worked tirelessly to get the ditch emptied out. We raked out all of the leaves and picked up any trash we could find. I called the man in charge and left a message telling him the work was done. He in turn told me he'd be in my neighborhood soon and would let me know if we did enough. I never heard from him.
Two days ago (on my anniversary, no less) we got a letter from the county attorney saying we did not complete the work and if it wasn't completed in twenty days, they would hire a contractor to do the work and slap a lien on our house. I contacted the guy and he said he'd come out today to meet with me about it.
It turns out, we have about two dozen trees that we have to cut down along with a ton of smaller bushes and other vegetation. The county engineer said it'll cost a couple thousand dollars to hire the work done. Instant stress. :(
I'm hoping Aaron will get on board and do the work before they hire a contractor. I hate to bug him, but it's just work that I can't do.
I tend to stress out about these kinds of things so I'm trying not to. Wish me luck... ;)
Update! Update! Update!
I realized I never finished and published this post, so I thought I'd go ahead, but I'm happy that I can give a positive update to it!
Aaron plugged in BIG TIME and cut all of the trees down in less than a week. Our awesome friend from church, Teresa, helped us with the whole project. We have a ton of firewood stacked up for the upcoming bonfire seasons....okay we probably have three or four year's worth....and a cleaned out ditch.
I handed the dealings over to Aaron and he has dealt with the county engineer since I met with him and was upset by what all we had to do. Aaron has been awesome, not just with the work, but with following up with the man.
It turns out the house on the other side of the ditch is bank owned and the bank has completely ignored the county's request to clean the ditch out. The engineer came and looked at our work and he told Aaron he was signing off on our part of the work! This means that when the contractor comes out next week, the lien will be put on the other house, not ours. Yay!!
"The quickest way to building wealth is having no payments." -Dave Ramsey
It's Saturday morning and Aaron is working all weekend so I stayed in bed a little longer listening to Dave Ramsey's podcast. I especially liked this quote from the show: "The quickest way to building wealth is having no payments." This is ringing especially true for me lately as I've had a couple older people "poo poo" me for having consumer debt. Of course, they think the mortgage is fine, but "they never use credit cards and if they did, they'd pay them off the very next month." Yeah, yeah. You're cooler than me.
I've learned that the very next question to ask when someone talks down to me because I have credit card debt is to ask about their savings. Guess what? I've yet to find anyone with a "pile of money" as Dave likes to call it.
I'm realizing that even though I thought this program was about getting out of debt, it's not. That's just one step along the way. You have to clean up your mess so the money you earn has your name on it, not Bank of America's, Chase, Discover, etc. Once the debt is clear, all of that money you were paying to them, you can now pay to yourself. (After giving, of course.)
Right now, my minimum payments on my credit cards and cars is almost a thousand dollars a month. $1,000! If I didn't have those payment going out, I could invest that money, and within very little time, have a BIG pile of money.
To those who don't have credit card debt, car payments, and even student loans (fortunately I don't have this one, but a lot of folks do)....kudos to you! I mean, really! I'm impressed. I wish I could say the same thing. But I've learned that's not the whole battle...by ANY means. The whole idea of paying off the debt is to get it out of the way so you can build wealth, live and give like no one else.
I'm no longer going to feel bad about my consumer debt. And I'm not going to let people poo poo me. When you know better, you do better. Now I know better and we are doing better.
I totalled up some nerdy figures and since November, we have paid off 5% of our TOTAL debt...mortgage included! We've also paid off over 15% of our credit card debt!
Our target debt right now is Lowe's Consumer Credit Card and we used this card last fall to buy materials to build a barn for Aaron. We started with a balance of $3,735.83 and we now owe a flat $2,300 - that's over 38% paid! I was hoping to have it paid off by Aaron's birthday (April 15th) but we've had some emergencies we've had to cash flow, so I'm not sure we'll be able to. I've been thinking of some things to sell to get the balance down quicker but the next round of cuts will hurt. ;)
I've learned that the very next question to ask when someone talks down to me because I have credit card debt is to ask about their savings. Guess what? I've yet to find anyone with a "pile of money" as Dave likes to call it.
I'm realizing that even though I thought this program was about getting out of debt, it's not. That's just one step along the way. You have to clean up your mess so the money you earn has your name on it, not Bank of America's, Chase, Discover, etc. Once the debt is clear, all of that money you were paying to them, you can now pay to yourself. (After giving, of course.)
Right now, my minimum payments on my credit cards and cars is almost a thousand dollars a month. $1,000! If I didn't have those payment going out, I could invest that money, and within very little time, have a BIG pile of money.
To those who don't have credit card debt, car payments, and even student loans (fortunately I don't have this one, but a lot of folks do)....kudos to you! I mean, really! I'm impressed. I wish I could say the same thing. But I've learned that's not the whole battle...by ANY means. The whole idea of paying off the debt is to get it out of the way so you can build wealth, live and give like no one else.
I'm no longer going to feel bad about my consumer debt. And I'm not going to let people poo poo me. When you know better, you do better. Now I know better and we are doing better.
I totalled up some nerdy figures and since November, we have paid off 5% of our TOTAL debt...mortgage included! We've also paid off over 15% of our credit card debt!
Our target debt right now is Lowe's Consumer Credit Card and we used this card last fall to buy materials to build a barn for Aaron. We started with a balance of $3,735.83 and we now owe a flat $2,300 - that's over 38% paid! I was hoping to have it paid off by Aaron's birthday (April 15th) but we've had some emergencies we've had to cash flow, so I'm not sure we'll be able to. I've been thinking of some things to sell to get the balance down quicker but the next round of cuts will hurt. ;)
Friday, February 14, 2014
Bye Bye Bank of America Visa!
Thanks to a sore shoulder from our accident in December, I received a settlement from the other guy's insurance company. We were able to pay off our Bank of America Visa with it - two months ahead of schedule! Aaron and I are SO excited! The first few debts we paid off were rather small. I think QVC was around $40, Old Navy was around $80 and our dentist bill was just over $200. We were able to knock those out fairly quickly but we had to really work at the BoA bill. It was over $3,100 when we began our debt snowball! Having that first big one gone feels good! We had it paid down about 1/3 to $2034 when I got the settlement, which wasn't much more than that amount.
There was no question on what to do with the money. Jake (my oldest son) asked me what I would have done with that money had I not been following Dave Ramsey's plan. I told him I'd probably buy the materials needed to reroof our house and finish fencing in our backyard. The rest, I'd spend at Hobby Lobby, of course. ;)
We don't really need a new roof - I just don't like the roof we have. (I know....vanity, vanity!) Half of my little ranch-style house is shingled. The front half has a red rolled fiberglass roofing product that is downright ugly. Yes, you understood correctly....only half of the roof is covered in the red. It's terrible. Seriously. I asked Aaron if we could just take off the red stuff so the whole thing was shingled. He explained that we can't do that because it is screwed down and if we take it off, those holes will leak. Since the roof doesn't currently leak, it is not high on Aaron's priority list to re-do. I will have to wait . . . unless it starts leaking.
Seriously, it's kind of funny to think how differently I feel about money and how my thought process has changed. Whenever I come into money, my first thought is to put it on debt. Whenever I get an unexpected bill, my first thought is Oh no! This will slow down my debt snowball!
Who am I and where did the old me go? :)
Thursday, February 6, 2014
Blow Money aka Pocket Money
If you follow Dave Ramsey, you know there is a budget line called blow money. Some folks call it pocket money, others call it his & hers money. The idea is that you can spend your blow money on whatever you'd like without busting your budget. Dave advises that you take your blow money out in cash rather than use a debit card.
When we first created our budget, I wanted blow money. Aaron did not want us to take any; he wanted it all to go to the debt. I wanted to take out $20 per pay period to split, which would have given us each $10 every two weeks. After realizing that if I had blow money, I would definitely spend it, and after crunching the numbers ($20 x 26 pay periods) I realized that was a lot of money that could go to paying down debt and I changed my mind.
Last night at our third FPU class the topic of blow money came up. Our coordinator (who is my dad) asked if anyone was not allowing for blow money in their budget. Aaron and I were the only ones! It started quite a big discussion and everyone seemed to be of the mindset that we should take blow money. No one really said anything to convince me to take it, but I am open to the idea if Aaron is. For now, I think we will continue to leave that budget line at zero and have every dollar go to the debt snowball. I will be so glad when the last credit card is paid! :)
When we first created our budget, I wanted blow money. Aaron did not want us to take any; he wanted it all to go to the debt. I wanted to take out $20 per pay period to split, which would have given us each $10 every two weeks. After realizing that if I had blow money, I would definitely spend it, and after crunching the numbers ($20 x 26 pay periods) I realized that was a lot of money that could go to paying down debt and I changed my mind.
Last night at our third FPU class the topic of blow money came up. Our coordinator (who is my dad) asked if anyone was not allowing for blow money in their budget. Aaron and I were the only ones! It started quite a big discussion and everyone seemed to be of the mindset that we should take blow money. No one really said anything to convince me to take it, but I am open to the idea if Aaron is. For now, I think we will continue to leave that budget line at zero and have every dollar go to the debt snowball. I will be so glad when the last credit card is paid! :)
Wednesday, February 5, 2014
Tax Trouble...Double Trouble!
So I've been working on our taxes and I am a bit disappointed this year. Typically, we don't usually owe taxes so anything we've paid in over the prior year, we get back in a return. Furthermore, because of the Earned Income Credit and the Child Tax Credit, we get more back than what we paid in. It appears that is the case with the Federal taxes, however the NC state taxes has become a thorn in my side. :/
Last year on my 2012 state return, I took a credit called the Credit for Children with Disabilities. It is a credit designed to offset education costs for children with special needs. I researched it and found that Brady was a great candidate for the credit. He has cerebral palsy (diagoned at 10 months old) and, as a result, he also has severe dyslexia. He has always been homeschooled but was tested by a school psychologist a couple of years ago so I had all of the paperwork to prove his disability. I listed all of our homeschool expenses as well as his private reading tutor's charges and took the credit.
This past December, I was audited on that specific credit. I received a letter asking for additional information on Brady's disability and proof of expenses. I promptly responded with all the required information and heard back just last week that we were not eligible to take the credit. After talking with the auditor, I was told that the credit is only designed for children who have been in public school for at least two semesters and then pulled out because the public school was not able to service the child. (The way the credit is written is not very clear and it was an oversight error on my part.) As a result: I owe the state $599.12 in taxes from the 2012 tax year. Agh!!
Because I thought we would take the credit again in our 2013 taxes, I didn't ask Aaron to adjust our W4, which is the paycheck withholding form. Not enough taxes were withheld, so, for the 2013 tax year, I owe the state of North Carolina over $1,000. Combined, I have to pay in more than $1,600! Double agh!!
Our plan is to try to cash flow the $599 within the next month. Next, we will e-file our Federal return and holdout the amount we owe the state, then plop the remainder of the Federal refund on our debt. We are hopeful that by the time we receive it, we will be able to completely wipe out the Bank of America Visa, which is our target debt right now. We are sending anything and everything we can to that Visa and it's balance is just over $2,000. I'm hoping next paycheck we can get it down to where the return will wipe it out. If not, it'll be close!
I can't help but think that if I had gotten a surprise $600 bill this time last year, I would have cried. I literally couldn't handle the extra stress in our finances. This year, as much as it annoyed me, I took it with ease. There is something about having a handle on your finances, and having an ememgency fund, that just makes dealing with surprises easier. I'm so thankful for FPU, Dave Ramsey and his ministry. I'm also thankful the Lord directed me to him and his program!
Last year on my 2012 state return, I took a credit called the Credit for Children with Disabilities. It is a credit designed to offset education costs for children with special needs. I researched it and found that Brady was a great candidate for the credit. He has cerebral palsy (diagoned at 10 months old) and, as a result, he also has severe dyslexia. He has always been homeschooled but was tested by a school psychologist a couple of years ago so I had all of the paperwork to prove his disability. I listed all of our homeschool expenses as well as his private reading tutor's charges and took the credit.
This past December, I was audited on that specific credit. I received a letter asking for additional information on Brady's disability and proof of expenses. I promptly responded with all the required information and heard back just last week that we were not eligible to take the credit. After talking with the auditor, I was told that the credit is only designed for children who have been in public school for at least two semesters and then pulled out because the public school was not able to service the child. (The way the credit is written is not very clear and it was an oversight error on my part.) As a result: I owe the state $599.12 in taxes from the 2012 tax year. Agh!!
Because I thought we would take the credit again in our 2013 taxes, I didn't ask Aaron to adjust our W4, which is the paycheck withholding form. Not enough taxes were withheld, so, for the 2013 tax year, I owe the state of North Carolina over $1,000. Combined, I have to pay in more than $1,600! Double agh!!
Our plan is to try to cash flow the $599 within the next month. Next, we will e-file our Federal return and holdout the amount we owe the state, then plop the remainder of the Federal refund on our debt. We are hopeful that by the time we receive it, we will be able to completely wipe out the Bank of America Visa, which is our target debt right now. We are sending anything and everything we can to that Visa and it's balance is just over $2,000. I'm hoping next paycheck we can get it down to where the return will wipe it out. If not, it'll be close!
I can't help but think that if I had gotten a surprise $600 bill this time last year, I would have cried. I literally couldn't handle the extra stress in our finances. This year, as much as it annoyed me, I took it with ease. There is something about having a handle on your finances, and having an ememgency fund, that just makes dealing with surprises easier. I'm so thankful for FPU, Dave Ramsey and his ministry. I'm also thankful the Lord directed me to him and his program!
Shouldering the Debt
If the Federal tax return pays off our target debt (currently Bank of America Visa), the next one on the chopping block is $3,600 to Lowes Home Improvement which is Aaron's barn materials. That card is on an 18 month special 0% financing plan, however it is our next smallest debt and must die.
I think it's kind of ironic that my shoulder pain will almost completely pay off Aaron's barn, which is coming along nicely I might add. :)
Once the barn is finished, I get the shed (which is attached to The Chick Inn) all to myself, so I am profiting from the barn as well. I can't wait to clean the shed out and set up a cute space for me and the chickens! My favorite part of the shed is that there is a window to the coop from inside the shed so I can just open the window and have feathered friends join me inside. :) I'm going to paint it up cute and add a fabric skirt to the workbench so I can hide uglies behind it. I've got big plans for that little shed! (I've even dreamed of making it a sewing studio. LOL! It's 8 feet by 8 feet! That would be one tiny sewing space.....but I'd take it!) :)
Here's a picture of the barn in progress. Kip has been a great helper with the construction process. He is about fearless on the roof which makes this mama hen a nervous Nelly! :)
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