March 2016 Snowflaking Report

Welcome to the March 2016 Snowflaking Report!

As a reminder, I’m doing this once a month for the following reasons:

  1. We pay our minimum payment automatically around the 13th of every month, and I send our extra payment as soon as the payment posts to improve the likelihood that our Snowflaking payment will go entirely to the principal and not to interest.
  2. My monthly recaps are kind of long, so I’d like to take out some of the details to streamline them.
  3. Snowflaking will make or break the achievement of our 2016 Mintly Goal(s)!

Beginning this month, we are supposed to be budgeting $1504 per month as additional payments to these loans, but as that money is budgeted as part of our strategy to meet our goal, I don’t consider it “snowflaking,” really; however, I’m including it here for the sake of simplicity since it gets included in our big lump payment anyway.

What is Snowflaking?

“Snowflaking” can be defined as putting all of your extra income (often in small amounts) to your debt. For instance, if you do an odd job or have a side hustle, that money would go to your debt. If your mom sends you money for your birthday, you can send that money to your debt. If you get a refund on an item, that money can go to your debt. For more, see this.

Mintly Snowflaking 2016 by the numbers:

  • $239 – amount needed per month to pay off all of H’s loans by our target of February 2017 (for more information on our debt, including the amount, please see this)
  • $1091 – amount needed per month to pay off all four of our loans by our target of February 2017 (definitely our “stretch” goal!)

March 2016 Minimum Payment

I include this information because our snowflaking will continue to decrease the amount of interest we pay every time we make a payment, and tracking that decrease helps me see that we’re making a difference, even when it seems like we’re barely making a dent each month!

  • $391.83 – minimum payment we sent
  • $258.70 (66%) – amount that went to principal
  • $133.13 (34%) – amount that went to interest

March 2016 Snowflaking:

  • $3,156.82 – amount we sent
  • $3,156.82 (100%) – amount that went to principal
  • $0 (0%) – amount that went to interest

March 2016 Snowflaking Breakdown:

  • $1,264 – Federal Tax Refund
  • $150 – Swagbucks (<– referral link)
  • $6.96 – Consignment
  • $50 – H’s side hustle
  • $277 – from money we saved to go to 2015 taxes for H’s side hustle that wasn’t needed (since we got a refund)
  • $50 – American Express points (used for statement credit, then transferred equivalent from checking to Debt Eradication)
  • $60 – from Mary Kay orders
  • $236 – state refund (arrived almost a month later than our Federal refund!)
  • $5 – my mom reimbursed me for a gift for L and rounded up – I snowflaked the difference!

and

  • $1,057.86 – Budgeted extra Debt Eradication payment (this was all we could afford this month, as we had some expenses related to H’s job that we haven’t been reimbursed for yet)

Reflection:

Our current total student loan debt: $34,243.33! That’s a change of about $10,000 from September, which is pretty decent, I’d say!

screenshot.png

I wanted to put more to this, but until H has his signed contract in hand for his job, I didn’t feel good about putting all of the extra money we saved for emergencies into our loans. If we put that money towards our loans next month, we could be on track to have H’s loans paid off by November 2016, with my loans being paid off sometime in April or May of 2017. I would really rather not, since our big goal is to have ALL of the loans paid off by February 2016, but this is already looking better than I was expecting even last month, so I’m pretty excited!

 

 

Advertisements

Question: Why not use savings to pay off debt?

On my last post, the CFO Mom asked a question in her comment: “How do you resist the urge to not use savings to pay off debt?”

I thought I’d take a post to write a response, as my answer to her comment could probably have gone on for quite a while. 🙂

So, here’s the deal – we currently have about $18,000 in a Money Market account. This is comprised of three different “funds” (I break them down in a spreadsheet that I update when we add or take money away from the account):

  • House / Car fund
  • Debt Eradication
  • Emergency fund

The House / Car fund has about $9,000 in it. This money came from selling our house, which somehow resulted in us making a bit of profit! Any interest we make off of the entire account goes in that category each month, but otherwise, we are not adding to this category.

The Debt Eradication fund is where I hold the money that I snowflake each month which will then get sent on as an extra payment to H’s Student Loans each month. Currently it has about $3,000 in it, and it is destined for that extra payment which will happen in the middle of the month (after the minimum payment is processed, so that we get the maximum amount of the payment going towards the principal).

The Emergency Fund has about $5,700 in it, because that was the number we needed to bring the total amount of money in the account up to $15,000 (minus any funds being held for Debt Eradication). This really means that even though we’ve earmarked $9,000 in this fund for a house or car, we are ready to use it as an emergency fund, if needed.

Now, to actually answer CFO Mom’s question…!

When H’s job was in question (the word on the street is that he is being recommended for hire – in the same position he’s been in for 8 years, but will now actually be a more stable position, yay! – still some hoops to jump through, though, so we’re not celebrating yet), we sat down and discussed how much cash we wanted on hand in case things went badly.

We figured out that if we cut out everything that we could (and even stopped student loan payments, which we could, since we’re technically paid through 2017 at this point) if things went south, we were comfortable with the number of $15,000.

So we weren’t tempted to pay down debt with it because we knew we might need it for something else – but this does bring up another thing that’s been floating around in my head for a while. Now that we’re pretty sure (fingers crossed!) that H’s job is relatively secure, what to do with that $5,700 that we’ve had sitting there for emergencies?

Do we use it for paying down debt (which was the original plan)?

Do we hold onto it to keep a nice-sized emergency fund because that $15,000 is awfully comforting to have around?

I don’t know yet, but as I hinted in my last post, house-hunting has come onto our radar, which I was certainly not prepared for…. Another post on that in the next couple of days! But I will say that I’m currently leaning towards going ahead and putting that $6,000 towards debt.

To muddy the waters, I’ve actually been considering holding on to that $3,000 earmarked for Debt Eradication this month. I mean, then we would have $18,000 and that would certainly be better than $15,000 if it came down to needing a downpayment…. Sigh. Our priorities are currently undecided, which is an uncomfortable place for me.

I hope that answers the question… at least for now. 🙂

Advice? 🙂

February 2016 Recap – $50,000 Paid off!

Welcome!

Each month I review how we did on our budget, whether we made our snowflaking goal, and how much we brought in consigning. That debt is going DOWN.

Big news: We hit $50,000+ of debt paid off!

February 2016 Budget Recap – How We Did

screenshot.png

These past two months have been a bit challenging. We went over budget again – a friend came to visit (which we didn’t budget for) so there was some more eating out than usual, we gave extra to a charity (not that it’s a bad thing, of course), our electricity cost more than usual (brrrrrr!), and our slush fund included hair care items (my mom paid for my actual hair cut and color, though, as a birthday present!), another donation (forgot to move it to the charitable category), Girl Scout cookies (we’re selling them, which means we’re also buying them… eep!), and a book for L at some point.

News on the food/grocery front – I am finally… FINALLY starting to meal plan this month. I have resisted it for so long! But I’m actually finding that weirdly… I enjoy it?! Not the planning part, to be honest (though that may grow on me), but the fact that I don’t have to think from night to night about what we will have or need to make. It’s really kind of amazing. Whether we are actually able to save money this way remains to be seen….

Month-to-Month Progress:

screenshot 2

The decrease in debt is good, but I sure wish most of my payments on Loans 3 and 4 wasn’t going to interest! They truly have barely budged at all because we’re not paying any extra (the interest rate on those is only 2+% compared to the 6+% on Loans 1 and 2.

How far we have come:

screenshot

BOOM! There it is!

(Edit: as a reminder, the total debt listed for 2014 is confusing because there is no longer listed all of the credit cards and car loan that we had at that time in this chart – I really need to find a better way of sharing this info, as this makes the math look totally weird.)

February 2016 Snowflaking

As a reminder, our goal for each month is to snowflake at least $239 to pay off H’s student loans by February 2017. (For more on our goals, see this.)

We snowflaked an extra student loan payment of $1,127.06  this month, as you saw in our February  2016 Snowflaking Report. (See the post for more details.)

February 2016 Consignment

  • $6.96
  • $64.66 (January)

Pitiful, I know – I wouldn’t have even picked up the amount had I not had a whole big load of stuff to bring (thank goodness!). I didn’t think I would have stuff to donate, but I went ahead and found L’s spring/summer clothes and went through them and took some. I also took some clothes from when I KonMari’ed my closet!

Other Money Details

  • H has his interview for keeping his job on Monday. Please send your good vibes!
  • We’ve got our emergency fund all set up (just in case things don’t go according to plan with H’s job), but we had to dip into our Sinking Fund quite a bit recently to cover the cost of H’s job-related conference expenses. Some of this will be reimbursed (fingers crossed that all of it will be!) but it makes for some tight times, since that left us with very little to work with.
  • Another category in our sinking fund that I wiped out last month was our car repair fund. Geez. I went to get it fixed at the dealership because it was a recall (which would have been free) and then they slammed me with this paper that had all of this crap on it that “needed to be fixed.” I let them replace the brake pads on the back brakes (which we knew were going to be a concern soon), but it was still pretty upsetting.
  • We haven’t gotten back our taxes from the state yet, but we did get our $1000+ back from Federal government. It is going entirely to student loans, of course! 🙂

We recently had the opportunity to buy a house again… and it really taught me something about my current feelings about our finances! I’m looking forward to writing a post on that soon….