May 2016 Snowflaking Recap

 

Welcome to the May 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)!

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!)

May 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
  • $367.91 (94%) – amount that went to principal (last month: 69%)
  • $23.92 (6%) – amount that went to interest (last month: 31%)

May 2016 Snowflaking:

  • $2341.46 – total amount we sent (including $1492.86 that was budgeted)
  • $2341.46 (100%) – amount that went to principal
  • $0 (0%) – amount that went to interest

Current total student loan debt: $30,683.99 (including Navient and the Citibank card where we transferred about $9,000 of H’s loans)

May 2016 Snowflaking Breakdown:

  • $1492.86 (budgeted – it was supposed to be $1500 but we had to squeak out a few more dollars for some other budget items this month)
  • $100 –  Swagbucks (<– referral link)
  • $16.14 – Ebates (<– referral link)
  • $28.46 – Chase Rewards for Mary Kay card (does not go to Ultimate Travel rewards so I cashed it in!)
  • $575 – Citibank Thank You Points!

Reflection:

The amount of money that went to principal vs. interest this month on our minimum payment was way lower! Things are looking up! I have to say that I don’t love looking at a credit card balance of about $9,000 (and I’ll like it even less when our cash to credit debt ratio is worse after we send another big chunk of cash to Navient), but it’s worth it for now because we’re saving on interest. We don’t plan to make any big purchases where companies will be pulling our credit reports, so I’m willing to take the hit on my credit for the time being.

And… no. Still no contract. I might go crazy. H is supposed to talk to HR today. We’ll see what happens… but I have learned not to get my hopes up!

Our Changing Debt Strategy

Our debt strategy for 2016 (up to now) has been to devote $1500/month to pay down student loan debt, plus our $504 minimum payments, plus anything extra we can scrape together.

Our goal has been to pay off all four loans by February 2017, which, admittedly, would be quite a stretch, as it requires more than $1,000 beyond our $2,000 that we can budget towards debt repayment.

A few things have happened since January that have made us rethink our strategy, and it’s been kind of a rollercoaster (which has reflected the rollercoaster of crazy H’s job has been riding). So here’s some info (hold on!):

Buying a House: Thoughts

We saw that a house on our street was put up for sale. Since we would like to someday own a house in this neighborhood, this seemed a bit like a dream come true! We went to see the house and we decided it wasn’t the house for us, but it gave us the house-hunting bug and now we can’t stop looking at Zillow and Trulia. Ack!

H has been promised a job (finally! though, again, we still have yet to see the contract), which means that don’t technically need the $6,000 that we saved up as an “Oh, $hit Fund” in case H found himself unemployed this summer. So, yeah – that extra $6,000….

We did some math on how much we would pay in interest if we got the kind of house we’d like (well, within reason – we’ll never be able to afford the kind of house we’d love, and anyway it would not be a responsible use of our money to buy a 3,000 square foot house with double ovens and granite countertops and a library and a screened-in porch on a yard with a little creek running through it and… oh, wait… where was I?).

The end result is that if we bought a house now, we’d have to go for either 0% or 5% down with our house savings (which stands at about $9,000 at the moment), and it would be an ARM loan. I’m not super comfortable with that, but honestly, I’d be happy to do that if we found the perfect house for us in the perfect location in the perfect price range. (We would definitely refinance later on.)

However, if we stay in our rental (@ $800 a month for this area, it’s a steal!), then we can save up for a 20% downpayment and get a 30-year fixed rate mortgage. If we go with the latter option, we figure we’ll save about half a million dollars by the time we’re retired. Half a million!

We got pre-approved at our Credit Union for a mortgage, and the Loan Man (I’m sure he had a real title, but whatever) shared with me that unless we have 10% down, it’s not worth doing 5% down, and we’re better off saving that money for repairs, the expenses that come with moving and owning a home, and closing costs, because the interest rate hardly changes between putting 0% and 5% down.

That means that what we are holding on to right now (which is making us 1% in our credit union’s money market account) is going to do us more good in immediately paying off some of our loans rather than sitting in the account. Even if we found the perfect house in a month, we wouldn’t lose much by not having that money in the bank. (Note: we would still be hanging on to $5,000 in the bank to cover closing costs, which run about $3,500 with the credit union here, but could also be covered by the seller, depending on negotiations.)

I’m not saying that it’s a good idea to go out and buy a house right now. It really isn’t! But our plan at the moment is:

If we see something that we love and seems perfect, we will consider buying it. However, our priority is to pay off all student loans, then build up 20% for a downpayment as quickly as possible, using the same strategies we are using to pay down debt. We believe we can probably have 20% built up in 3 or 4 years after we complete our debt repayment, which looks like February 2020. (Ack! So far away….)

H’s Student Loans: Plans

  • Extra payment of $11,000: $4,000 from our house fund (which also serves as our emergency fund for the time being) and $6,000 from our “Oh, $hit Fund” (once H has his contract) + money that I’ve snowflaked over the past month.
  • Extra payment of $575: H signed up for a Citi Thank You card (the same one I signed up for way back when), and we used it to rack up enough charges in the first three months to get the bonus points. Those points have been translated into a paper check that they sent to us. I filled out the account information (they just want the account number on the memo line, really) and added in a clear letter about how to apply the money to the loans, and then sent it off. (I’m keeping my fingers crossed that it gets applied next week, which should be soon after another minimum payment goes through, so the payment will end up being applied mostly to principal!)
  • 0% Interest Loan Transfer of $8,999: We have been getting those checks that advertise loan transfers for our many different credit cards. We decided finally to just bite the bullet and do one for as high as the credit limit would allow (within an acceptable timeframe). We used the Citi Simplicity card that we used a long time ago for H’s loan that was at over 8% interest (that post is here) – this is not the same Citi card that generated the Thank You points that I talked about above. More details:
    • The transfer fee was 3% (and the loan with Navient was at 6.88%).
    • 0% interest until July 1, 2017
    • We will save about $300 on that particular loan, but this leads me to the next part of our finances….

My Student Loans

  • We may even see greater savings on the Citi balance transfer for H’s loans, since we can then push to pay off my loans, which are at 2.something%, since now those loans will be the only ones we are paying interest on. If we pay them off first, we will save some cash there.

More Thoughts

  • We are in a holding pattern until H gets his contract signed – I don’t feel good about sending off $11,000 until we have it in hand!
  • Right now, we have enough from the $11,000 earmarked for loans plus the snowflaking for May that we could completely pay off H’s student loans! (Not forgetting, of course, that $9,000 remains on a credit card.) The issue is timing and when it will get resolved.
  • Because the timing is so unpredictable, I’m having trouble predicting where this will land us in our debt-payoff scheme. My hope is that we will pay off my loans by October  2016 and the Citi credit card by February 2017, but that’s still a bit of a stretch goal. A more easily attained goal is probably November for my loans and April for H’s loans.

So, that was a lot for an update, but I hope it’s not incredibly confusing. I don’t love having a $9,000 credit card balance just sitting there until we start paying it off, BUT seeing H’s loans with Navient go down by $9,000 was very satisfying. #*@% Navient!.

Any suggestions for us? I’m always interested in new ideas or strategies….

April 2016 Recap

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.

H’s job has supposedly been secured, but we still don’t have a contract! I can’t stand it. I’ve heard that HR at H’s institution is notoriously slow and awful, but this is really taking the cake. Way back in January, H said that the job situation would be resolved by May 1st at the very latest….. Well, we can see how that has gone….

April 2016 Budget Recap – How We Did

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Food – I planned for a lot this month as we had more eating out in the plans for the month than usual. In addition, I budgeted extra money for groceries because I knew I would be buying stuff for L’s birthday (May 1st!). We are still doing some meal planning – in fact, it’s a lot looser than what I originally started out doing. Now we have some meals we cycle through and then there’s one meal a week that I make that I double and then have food to bring for lunch, etc. The past two weeks have gone a bit closer to the way we used to do things (“What are we having tonight?” “I dunno, what do you want to have tonight?”) than I’d like – gotta get back on the horse there.

Home Services – They have been out to mow the yard but haven’t left us an invoice. So I had budgeted for it, but I had to roll that over into May’s budget because we haven’t paid them yet.

Kid’s Activities – This category included L’s birthday stuff this month because I wasn’t sure how much the location where we booked the party would end up costing us (by the time we figured out how many people would be there). It turned out to be much cheaper but the payment didn’t go through until after month’s end, so I rolled that extra over into May’s budget as well.

Month-to-Month Progress:

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How far we have come:

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April 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 $3,156.82 in March. Read more in the snowflaking post I did for April.

April 2016 Consignment

  • $0 (April)
  • $51.98 (March)
  • $6.96 (February)
  • $64.66 (January)

There’s about $17 sitting in the account at the consignment store – I just need to get over there and pick it up! Not sure it will happen in May either… busy month!

Other Money Details

  • We have made a couple of decisions that will impact our finances and how we approach our debt. One of the decisions was to use the emergency fund we built up in case H had to find a new job, which I’ve already mentioned before, but there are a couple more things we’ve decided to do that should expedite the repayment of our loans! I’m excited, but would feel so much better if we just had the $)%)^*&#$(*%#$ contract!
  • I’m doing some contract work for a large company in my field, which I’m very excited about! It really doesn’t pay much, but it’s good for our debt repayment AND my career. I’m excited! Each project takes about two weeks, but I’ve only been assigned one project so far. Keeping my fingers crossed that more come my way soon!

Happy May!