Update and dilemma. . . .

Hey there folks!

Long time no blog!  This summer has flown by - I'm still working like a dawg, but I can sense that the end is nigh!

I now owe $29,318 on my student loans!!  Here's a more organized update (and then I'll explain my dilemma):

Here's where things stand now, in early-mid September 2012:

Second Mortgage Debt: $31,400::::$25,176

Student Loan Debt: $61,762::::$29,318

Primary Mortgage Debt: $167,500::::$154,209


Here's what it looked like in late May 2012:

Second Mortgage Debt: $31,400::::$25,442

Student Loan Debt: $61,762::::$39,070

Primary Mortgage Debt: $167,500::::$155,191


That second mortgage really needs to DIE, by the way.  The balance never goes down!

So here's the dilemma:  I find that with the current stock market (which is doing pretty well, all things considered) I could sell ALL of my stock and pay off ALL of my remaining student loan balance.  As in, TODAY (or, end of the week, assuming that kind of thing takes a few days).

I was intending to pay down my loans to $20,000 by January 2013 (totally doable) and then use $20K of the stock to pay the rest of it, thereby retaining about $8K for future use (or if I needed it to pay taxes).  Assuming, of course, that the stock market doesn't tank between now and January.

Psychologically, having a bit of stock left over makes me feel all warm and fuzzy inside, though logically I know that the stock is NOT going to gain 8.25% a month as my student loans do.  Or 8.9% a month as my second mortgage does. So the smart thing to do is pay the student loan off now, and take the tax hit this year  Since it's considered capital gains (I think), it would be 15% on the 'gain' regardless of how much other income I bring in this year (and I'm closing in on $100K this year so my income taxes will be high).  (BUT WAIT:  I just had a thought.  Since my student loan rate is 8.25% and the taxes are 15%, won't I pay more in taxes than I will in interest if I sell up now? ARGH!  Why didn't I major in Accounting or Finance?).

So essentially my logical self is battling with my emotional self about this.  I know what Dave Ramsey would say:  Sell now and get out of debt - then start on the second mortgage.  My new-to-saving self wants a little nest egg, though.

Also, and I don't think I've mentioned this, but I also picked up an auto loan in the last year.  My 15 year old beater finally bit the dust - I'm not worried about the car loan (2.9% interest) mostly because I bought a used, reliable, low-mileage, in-demand car that will keep its value for years should I choose to sell it.  And with my current extra income I can pay off that car loan in about 4 months.  No worries there. 

Anyhoo, here are my options as I see them:

• Sell ~ $28,000 in stock now and pay off all (or almost all) of student loan debt; would then need to spend the rest of the year saving for taxes;
• Sell ~ $20,000 in stock now and pay off almost all of student loan debt, using the rest of the year to pay the rest of it off.  Downside:  have to pay capital gains tax for 2012 when I'm already having to save for extra federal and state taxes;
• Pay down the student loan debt to $20,000 by January 2013 and then sell $20K in stock and pay the capital gains in 2013 when I may be making less money (and therefore won't have to save as much for my 'regular' taxes).

What would you do?

An update to celebrate the new year. . . .

Greetings! We we begin the new year, I wanted to update my debt repayment status. I've made a dent in my student loan debt, though it has come at the cost of my mortgage debt, unfortunately.

Even so, I'm happy with the progress I've made and am excited to watch my student loan debt decrease even more quickly in 2012. I can't imagine the relief that I will feel when this burden is removed from my life forever!

See my last post for my 2012 goals, while you're here!

Here's where my debt stands now, at the end of 2011:

Second Mortgage Debt: $31,400::::$25,763

Student Loan Debt: $61,762::::$49,438

Primary Mortgage Debt: $167,500::::$156,344

And here's where I was in mid-October:

Second Mortgage Debt: $31,400::::$25,888

Student Loan Debt: $61,762::::$51,881

Primary Mortgage Debt: $167,500::::$156,757

Clearly, my first and second mortgages are primarily interest payments, which is truly painful to see. I am hopeful that when my student loan debt is repaid, I can throw some extra money at these bills to ensure that they decrease more quickly than they have over the last year.

I hope to update more frequently this year, though can't make any promises given my hectic work schedule. Have a wonderful start to 2012!!

Infrequent update. . . .

If you're wondering where I've been in the last six months, I picked up another job, which has just about stretched me to the limit. I'm working a LOT but am also making a nice dent in my student loan debt, though I've still got quite a ways to go. Here's where I was the last time I checked in with you all:

Debt Reduction Progress
Second Mortgage Debt: $31,400::::$26,257 84%
Student Loan Debt: $61,762::::$56,387 91%
Primary Mortgage Debt: $167,500::::$158,016 94%

And here's where I'm at now (focusing primarily on student loan debt):
Second Mortgage Debt: $31,400::::$25,888 82%
Student Loan Debt: $61,762::::$51,881 84%
Primary Mortgage Debt: $167,500::::$156,757 94%

Little by little, I'm getting there; and since I picked up a new job in late spring/early summer, hopefully my student loan debt will decrease even quicker over the next year. About 20% of my payments are going to service interest only right now, so that's a bit frustrating, but that number will also decrease as my balance goes down.

I have no idea when I'll have a chance to update again, but will try at least every couple of months. . . .

I hope you're all continuing to survive the recession (that supposedly ended two years ago)!

Frugal doubt. . . .

I sort of knew this was coming. Inevitably at some point after I've made a decision I start to question myself. In this case, I'm questioning whether I should pay off my second mortgage first, or wait on that and pay towards my student loan instead.

I keep thinking that I may be throwing good money after bad by paying down my second mortgage. After all, if (and this is a big IF) the housing market ever recovers (or just stops resulting in decreasing value) then I may be able to sell my house without creating equity by paying off my second mortgage debt. Right? Here's what I read in a recent US News article about who will continue to struggle in 2011:

Homeowners. Americans have lost about $9 trillion worth of household wealth since 2007, largely because of falling home values. The rout isn't over, unfortunately. Most forecasters think home values will decline another 5 to 10 percent in 2011, as high unemployment causes more foreclosures and a glut of homes pushes prices down. The good news, if there is any, is that the housing market may finally hit bottom in 2011, with home values stabilizing after five years of declines. That doesn't mean home prices will shoot up any time soon. But once buyers believe that prices have stopped falling, they'll be more inclined to buy, the first step back toward a healthy housing market. Stabilizing home values will also help owners do better financial planning, since they'll have a firm idea what their home is worth.

Sigh.

Meanwhile, I could be working on that student loan, almost half of which may be paid off by the generous gift of a family member. Meaning that I could, potentially, have my student loan paid off by mid-2012. At which time I may be able to sell my house and just break even. Right?

Or is this just a case of 'six of one, half-dozen of the other'?

Student loan shenanigans. . . .

A few weeks ago, I mentioned that there might be a change in my student loan balance due to an inheritance (of sorts) that a close relative received. Actually, the 'close relative' is my father. Many (many) years ago when I was making some bad decisions in high school, my dad said, quote: "you get into college, and we'll find a way to pay for it". What I didn't realize at the time was that this meant students loans - for me.

After my first graduate degree was finished, my dad commented that when he received an expected inheritance, he would help me with my student loan balance (which was around $50,000 at that time). Over the years since then, I've not counted on that happening, for various reasons. One of those reasons is that I consider these loans to be 'mine', and therefore my responsibility to pay off.

However, just recently, my dad started the conversation again about how he could help me with my student loan balance. The scheme he's come up with has its merits and its downsides. Basically, he will transfer some stock to me equal to about half the balance of my current student loans. Then it will be my decision whether to sell that stock immediately (taking a capital gains tax hit), or to hold the stock with the assumption that the shares will 'split' as they've done in the past (this is stock from a major U.S. company) and will eventually - in who knows how many years - be worth much more.

The merits of this plan are that at a minimum, I'll have about $25,000 to pay down my student loan balance if I'm willing to sell the stock immediately and take the tax hit. The downside? Knowing whether to sell right away or wait and see what happens with this stock. If I wait for the stock to split (and there's no guarantee that this will happen soon, though it looks like a possibility given the direction the stock is heading) and ultimately gain value again, I could have more of my balance paid off than if I were to sell right away.

What a conundrum! Looks like I've got some thinking (and learning) to do! In the meantime, I'm going to continue working on my second mortgage debt while paying at least the interest (but probably a little more than that) on my student loan balance.

Taking responsibility. . . .

I hope you all had a wonderful Thanksgiving holiday!

While sitting in an airport waiting for an airplane (and making use of free wifi) I came across a website created by a young woman who owes almost $200,000 in student loan debt! Now, far be it from me to judge anyone else's debt, but I just can't wrap my brain around this one. I think all of this debt is from a bachelor's degree (nope, she's not a lawyer or doctor, as far as I can tell; apparently she wasn't a computer science graduate, since the links to other media sites on her blog don't work).

In any case, what intrigued me about her website is that she is asking for donations from people so that she can pay off her debt! And incredibly she's gotten a little over $6,000! I don't know how much of that came from family and friends, but the fact that she's 'made' over $6,000 in donations is pretty incredible. Her website is called 'TwoHUNDREDthou" and apparently she's getting all kinds of media attention.

Now, as a cautionary tale to would-be student loan takers, I like the idea of her website. If this keeps even one person from signing on the dotted line so they can attend an overpriced school or avoid working like a maniac or go on a really cool Spring Break trip every year, then the website is a success.

However, as a way to pay off debt that this woman knowingly took on, I'm sort of appalled. Or maybe a little jealous, as I work literally SEVEN days a week to right my wrongs and create a more stable financial future for myself.

What are your thoughts?

New developments. . .

Wondering where Finally Frugal has been lo these many months? Well, I've just snagged my third part time job (making four jobs total: one full time, three part time). So as you can imagine, I'm just a little busy these days. The month of October was really tricky and I wasn't sure I was going to survive it, to be honest.

In an effort to pay off my second mortgage (which will help me to build some equity rather than remaining "underwater" in terms of what I owe versus how much my house is now worth), I've added a part time teaching gig (at a local college) as well as a part time online teaching gig in addition to my online research position. The full time job remains the same, in spite of my graduation with a second master's in June. I'll probably stay there until I've met my next financial goal, and then after that, who knows?

My very, very, VERY optimistic plan is to have the second mortgage (all $30,000 of it) paid off in a little more than one year. As I say, that's incredibly optimistic - I'm not making THAT much at my three jobs. But I want to aim high, rather than succumbing to the idea that I can't do it. It's tough having all these jobs, but also challenging (in a good way), and hey, I can do anything for a year, right?

I'm also chipping away at the student loans ($60,000) although a recent death in the family that resulted in an inheritance (not to me, however) may result in a bit of that debt going away a little quicker than I anticipated. Maybe I WON'T be paying that off until I'm 90!!

Later this week, I'll post a little secret plan that I've been fantasizing about. I've not shared it with any of my friends and family, but what better place to let the cat out of the bag (and maybe get some objective feedback. . . .) than my trusty blog?

I can't promise daily posts (did I ever post on a daily basis?) but if my plans come to fruition, I'd like to renew my relationship with the Finally Frugal blog - it (and my faithful readers) helped keep my sanity while I made the transition from a credit-card carrying shopaholic to a frugal gal who actually THINKS before making purchases (and in cash, these days!)

More to come!

Super Frugal-istic. . . .

I've been doing some thinking about this $60,000 student loan bill, which is growing like a monster each minute I put off my repayment. I want to pay this sucker off as soon as I possibly can, and I'm just starting to consider what I'm willing to do to achieve that.

Today, I looked at my "day job" income (which is 20% lower than it was last year). With 10% going to my 403b, I'm bringing home just over $1800 a month. I logged into my trusty Excel spreadsheet to see what my life would look life if I were 'forced' to live off of just that income (thereby allowing me to send all the income from second jobs to good ole Sallie Mae). Here's what it looks like:

Pretty barebones, eh? I know that in order to make this work, I need complete confidence in my ability to live on $1800 a month, but this just looks unrealistic! Then again, I'm so tired of that $60K hanging over my head.

Since I stopped monitoring every penny I spend, I'll need to begin paying attention again, or this austerity plan will never work. So, starting next month (July 1st) I'll see just how frugal I can be!

A new chapter. . . .

School's out! Meaning, I've finished my graduate program and am now weighing my options (which are somewhat limited in this anemic economy). I will continue my previous job (now at part-time status) as well as my night job, and am trying to pick up teaching gigs on the side. It's tough, since I have little experience; I've really had to promote myself, which is not a 'natural' for me!

I'm so impatient to begin the next chapter of my financial life, yet am finding that the opportunities aren't just dropping into my lap as I'd hoped, so I'm having to learn a little patience and humility (as my many job applications are either ignored or denied). Baby steps!

As far as my financial life, what's on my mind now is the $60,000 in student loan debt that I'm carrying (and which is growing, growing, growing as that interest accrues!) I've been listening to Dave Ramsey's show on my morning MAX commute, which is helping inspire me, but to be entirely honest, the prospect of paying off that much debt is just . . . . daunting! I vacillate between: "I can DO this!" and "There is NO WAY I can do this!" If I could sell my house for what I owe, life would be much, much less complicated (I'm sure many Americans are in the same bind). I literally fantasize about selling my house and living in a cheap apartment, constantly running the numbers in my head, calculating how much extra I'd have each month to pay down that student loan debt.

So that's my current dilemma: how to pay off $60,000 in the shortest possible time on about a $45,000 year salary (including the second job), with about 55% of my take-home pay going towards my mortgage. Yikes! And I've already whittled my budget down as much as I can. Should I bite the bullet and try to find a roommate? I love my privacy, but having an extra $400 or so a month would be bliss!

Hibernation. . . .

I suppose I shouldn't title this blog post 'hibernation', as that would imply that I've been sleeping away the past six or seven months. No, I've been busy -- and that's why my hiatus has stretched as long as it has. Not that it's technically over, just yet; but I did at least want to sign back in and let anyone who's still out there (um, anyone still out there?) know that I'm alive and well! It's just that, with working almost 70 hours a week at the day job, the night job, the unpaid internship, along various attempts at socializing, life has been wacky and hectic. Two more months and I'll be calling myself a graduate school survivor -- and one without any additional school debt (let us not forget that $55K in previous student loans I'll be working on as soon as I graduate).

There has been one rather big surprise in my financial life, though. I spent at least a year padding my savings account in preparation for the year of living super-frugally. I figured out how much less money I'd be making in my last year of school, and built a savings account that almost approximated the amount of money I'd need over a nine month period. The surprise? Almost the entire savings account is still in existence!

Somehow, I managed to live on 25% less income without digging into the savings account. I had to replace my computer, and that was really my only big expense. Other than that, I pay my bills each month, on time and in full, and rarely do I think longingly of the things I could buy with the $2500 that still sits in savings -- earning a now-paltry 1.1% interest (down from the high of about 3.75% when I opened the account years ago, pre-recession). I used my credit card over the holidays for travel and gifts, and have managed to pay down the balance to a respectable $250, again without dipping into my savings accounts.

I've been puzzling over this lack of reliance on my savings account, and mentioned this to a coworker. She pointed out that I had already adjusted my spending habits when I was in 'savings mode', putting every spare penny into the bank. My spending habits have remained the same, but I'm just not saving at the same high rate I was before. That's what explains my still-healthy account balances!

In any case, I'll be moving into another financial phase in a couple of months when I graduate; as I mentioned, I'll be starting to pay down that beast of a student loan debt, I'll need to consider what (if anything) to do with my house (sell? rent? stay? move?), and looking around for jobs that pay a little better than the one I have -- which may or may not find me relocating.

Stay tuned!
p.s. hope you all have been successful in your own financial journeys during the past few months! I'm looking forward to finding the time to browse the blogs and forums again, and reconnecting with my online support group!

Emergency Fund update. . . .

The week before last, I wrote about using my credit card to pay for a rather hefty veterinarian bill (one of my cats was suffering from some sort of allergic reaction, which, now that I am purchasing Very Expensive Food seems to have cleared up). These days, anything over $100 on my credit card bill bothers me, and I figured that at 9.99% interest, taking the money out of my emergency fund (which only gets 1.5% interest at the moment) would result in a savings of 8.49%.

Although I'm loathe to use the EF for something that really should have been expected (I plan to begin both a car maintenance savings account and a pet maintenance account in the future---after I'm finished with school, most likely), I'm even more hesitant to keep a large balance on my credit card.

So, I decided that the $330+ was going to come out of my emergency fund. End of story.

What I didn't factor in, though, is that May is one of those magical months that occurs just twice a year, in which I get not two but THREE paychecks from the night job!!! Woo hoo!!! What this means is that my first May paycheck went directly to the credit card. I still have a bit left to pay on this card due to some small indiscretions (items---like my McAfee Virus Protection program---for which I'll get a full rebate later) but it's less worrisome than it was.

Yay for the night job! I'm feeling very optimistic about my finances, in spite of that student loan debt looming over my head. I'm confident that if I can manage to decimate my credit card debt, control my spending, and increase my savings, I can---and WILL---conquer my other debt too!

Stimulating student loan debt. . . .

Although generally I attempt to deny the existence of my student loan debt (approaching $60,000), every once in awhile I'll come across an interesting article or opinion piece by or about another Sallie Mae serf. This CNN piece was written by a new college graduate, named Samantha Hillstrom, who now works as a production assistant for CNN.

The title, Student Loan Nightmare: Help Wanted was initially very intriguing. My student loan debt seems to pop up in my nightmares more often than I'd like, and I'd also like some help! The article seemed to be going in the direction of wondering why it is that homeowners are receiving the lions' share of stimulus assistance. This is something I've often wondered myself---if thousands of student loan debtors had some or all of their loan balances forgiven, just think of all that extra money that would go directly into the economy (or in my case, into my savings accounts. . .) Wouldn't that have the effect of stimulating the economy?

Unfortunately, as I continued reading the CNN article, I noticed that the author---rather than focusing on what she could do to encourage lawmakers to throw some stimulus money her way---fell back on moaning about how much money she owes ($115,000) due to her private university degree (in New York City, no less), and how 'uneducated' she was when she signed the paperwork on those loans.

Samantha says:

"Some might say, “Sam, you shouldn’t have gone to a private school in New York City if you wouldn’t be able to pay it off.” Well, I made a lot of mistakes when signing up for my loans, but I was uneducated on the process and on the repayment and now I’m stuck."

(Snarky note: for $115,000, I would expect Samantha to be a better writer, but that's neither here nor there).

I have to say, as someone who owes a seemingly ginormous amount of money to the U.S. government, with only a very small chance of making more than $60,000 a year in my field (I'm not even close to that now), I can relate to Samantha's pain. And I do believe our economy would benefit from a little student loan forgiveness (to err is human, to forgive is divine, right)?

But that might be where the similarities between Samantha and me end. I don't blame anyone other than myself for the mistakes that I made when signing away my life to Sallie Mae. I decided not to consider what my life after graduation would be like, with $50K in debt (the amount as grown over the years rather than decreasing, as you can see). I made that choice.

To sit around and whine about it now makes absolutely no sense to me whatsoever. Also, while I would love a little student loan stimulus, I really don't think other people should have to pay higher taxes to cover for my mistakes.

Samantha asks:

"I chose to go to a private school and I chose to work in a field where the starting salaries are low. Does that mean that I chose to live a life of struggle, wondering how I am going to pay my rent, afford the basics of living and still stay in my chosen career field…all while putting up with high interest rates and an amount of debt that brings me to tears?"

Well, actually Samantha, the answer to that question is YES. So suck it up and join the club. And maybe consider moving out of pricey Manhattan to someplace like Dubuque, Iowa so you can afford the rent AND your student loan payments.

Frugal exercise, part deux. . . .

I've been largely silent over the past several days, primarily because the thought of logging in and viewing that gigantic number that represents my student loan debt makes me kind of sick. However, I guess the first step to conquering any obstacle is actually facing it, making peace with it, and studying it to determine how best to get past it. That will be a long process, I know, and my student loan debt won't be something that will go away in a month, or a year, or even probably five years.

In the meantime, I need to keep adding to my savings (which will carry me through next year when I won't be able to work full time, due to school commitments) and keeping my expenditures low.

A few months ago, I wrote about my need for more exercise---as the days have gotten shorter (and darker and less sunny), that need has just become much greater! I often hibernate in the winter, and this year is no exception. I've not motivated myself to get exercise DVD's out of the library, and running outside has been spotty at best. For that reason, I decided to renew my membership to the gym---although I did it frugally: I waited until the gym had a 'no initiation fee' special, saving me $50! So, after a year of frugality, I'm adding a regular, $30 expense back into my budget. I feel like my health (and my mood) requires this.

To offset this, I'm going to try to decrease the amount I'm spending on groceries, as this number as inched past $125 over the last few months, as I've waited to tally my expenditures until the end of the month, rather than keeping track as I go along. Maybe I'll start publishing my budget again, to keep myself a bit more accountable. Did any of you find that interesting, at all? If so, perhaps I'll start that again as of January 1.

Ouch.

Well, I did it. I logged into my SallieMae account (I had to create a new password, it had been so long). The amount I owe on my student loan is just a bit more than I had anticipated. My indebtedness to the U.S. government is:

$56,915.91

I'm not really sure how to go about tackling this, because it's just so overwhelming to me. Of course, while I'm dithering about, getting another degree (paying for it myself, this time), and generally trying to ignore the elephant in the room, interest is accruing on this bad boy.

In fact, if I were to make the 'required' $437.33 payment for the next 21 years, I would end up paying a total of $112,453.65. Which is simply unacceptable. By my rough calculations, I would have to pay almost $400 a month just to cover the interest payments alone (my consolidated interest rate is at 8.25%, which cannot be changed).

So, I'm trying not to cry at this point. I know, deep down, that this is just going to take a degree of creativity (and lots and lots of time), as well as some major changes in terms of my income and my expenditures.

Right after I go out and buy and devour a bar of organic chocolate, I think I need to spend some time searching the blogosphere for those motivating success stories, from 'real people' like me who overcame the odds and paid off similar (and even larger) debts than mine.

Frugality continued. . . .

Whew! Well, I've reveled in my lack of credit card debt over the past three days, since Thanksgiving. Now, it's time to plan for the future, which is going to require continuing my frugal ways. I do still have that student loan debt, after all. I'm just not sure I'm going to start paying it off yet, for reasons I'll explain below:

In the Fall of 2009---almost a year from now---I'll most likely have to drop to 75% of full time at my day job, to account for an unpaid practicum experience that is required in my graduate program. I'll probably need two full days during the week for the entire academic year (2009-2010) to take care of this requirement. Which means, of course, that my income will plummet during that year. I've been avoiding thinking about this complication, because I really wasn't sure how I was going to be able to pay my mortgage and eat with a decreased income. However, now that I'm credit card debt-free, I feel like anything is possible!

Here's what I'm currently thinking I'll do to prepare for this. I'm going to try, starting on January 1, to live on just my salary from the day job. Then I can 'bank' the earnings from my night job, which will allow me to dip into that savings during the year that I can't work a full time paid job during the day. This is going to require some very creative budgeting, especially since I would like to now send 15% of my earnings into my 403(b) plan, since I dropped it to 1% while I was in debt-repayment mode.

Anyway, all of this means that my student loan debt repayment will most likely need to be put on hold, which bums me out. A commenter a few weeks ago mentioned her own student loan debt struggle, and it motivated me to start thinking about getting rid of this debt. At this point, I can't even bring myself to look at my account, to see how much I owe (last time I checked I think it was about $55K). I'm scared to know. That's how bad it is.

Who knows? Maybe the economy will miraculously recover in time for me to sell my house next summer, and this will all be moot. Then I could send that savings straight to my student loan, and really get started on becoming truly debt free! I'm not holding my breath on the economy, though. . . .

As you can see, this 'plan' is a bit of a work in progress; I admit that I haven't even really worked the numbers out yet with my zero based budget spreadsheet, nor have I made the change to my retirement savings. My objective this week is to get all of this worked out, so I can start the New Year with a new financial goal.

There is some good news. . . .

So, every time I think that the economic news couldn't get any worse, I click on another story that just makes me sick. I am a chronic 'worrier' (so much so that I have a library self-help DVD in my house right now entitled "WORRY"). However, based on a couple of comments from readers of Finally Frugal, I realized that we can probably find some good news in all the bad.

For example, some people are keeping things in perspective and doing just fine, like Marci:

"What's the worst that can happen? I could lose all my money, my IRAs, my PERS, and SS, and my job. I think I'll still be ok. The house is paid for - and my bare bones emergency budget is under $400/month, under $300 if I defer the property taxes for up to 4 yrs.. I don't think all the pieces of the pie would get lost at the same time. Therefore, I'm just not going to waste time worrying."

In response to my post about sending a $1,000 windfall to my credit card company, 'Melanie' had this to say:

"Way to go FF! Those "three check months" can be a real boon - I managed to eat up nearly that much student loan debt in just a few years by throwing every tax refund, "third check" and found dollar I could find at it. I'm now down to under $6k. Have faith, you're on the right track and I'm cheerin' you on."

This got me thinking: one of the things that keeps me motivated about paying off debt are the stories from other people about their journey toward financial independence. I LOVE hearing about folks like Melanie who have succeeded in doing just what I'm attempting! Someday soon, I'm going to compile a list of posts from across the blogosphere that highlight and celebrate people who are either close to meeting their debt-free goals, or have actually gotten there.

Here's an example of the type of story I'm talking about, posted on The Consumerist, and entitled: Reader pays off $14,330 in 20 months with our tips. This is a wonderful story, not just because it's a motivator, but because this reader shares her personal strategies, month-to-month, that enabled her to get out of debt.

I guess in the end, I can choose to focus on the gloom and doom, or I can choose to focus on getting myself to a place where I can say: "I'm ok", like Marci, or where I can say that I've paid off most of my student loan debt, like Melanie has. And then maybe my story will help others get motivated to pay their debts, and so on, and so on. . . . .

$1,000 lighter. . . . .

My credit card debt, that is! I sent off my electronic payment to American Express yesterday, and although it hasn't shown up on my online statement yet, once the payment is processed I'll owe a bit less than $550 to AMEX. It's a fabulous feeling!

I'm going to keep my emergency fund just where it is at $1,600, and try to send a bit more to AMEX this month from my regular pay (I just realized that in October, I'll receive three checks---rather than two---from my night job). That way, I'll still have a shot at killing my credit card debt by the beginning of November.

Another little bit of help I'll be receiving is the fact that I was offered a promotion and small raise (15%) from my night job! I just completed my first timesheet with the new pay, and although it's only a $2/hour raise, it really does add up!

I can finally imagine a time in the near future when I can breathe a little easier each month when the bills arrive---without my credit card debt, I can build up my emergency fund and then start working on that behemoth of debt: my student loans. I get tense just thinking about the $55,000 I owe to Uncle Sam, but I suppose if I can work at it little by little I'll eventually take care of it.

Continuing to watch my spending habits and learn more about frugal living strategies will help me keep my budget in line with my goal: to be debt free!

Frugal economy. . . . .

CNN has an ongoing series that profiles American families and how they're reacting to our slowing economy (i.e., the recession). It's called 'America's Money: In their own words' Today's profile caught my eye, because it's written by a man who is working a second job, to "pay the bills", just as I am.

I really wish these profiles were a little longer and more in-depth, because I'd love to know several things about this person: for example, just how much (or little) does a Vice President make? Is he truly living a "lower middle class" existence? Does the wife work? Do they have overwhelming student loans or other debt? A giant house? Is he driving a gas guzzler, since his gas bill is $170 a week (mine is $30 a month)?

I'm trying hard not to automatically judge this person and make assumptions about how his family is living. I look at my own situation (also working two jobs) and realize that everything is relative, after all. I have access to great public transportation (hence the lower gas bill) and make use of it. I have a wonderful public library where I can stock up on books, read magazines, and study in a warm and inviting atmosphere. I live in a tiny house, although with an admittedly too-large mortgage compared to my income. My car is old, but efficient and reliable. I have access to great health benefits, retirement plans, and tuition remission through my employment. Yes, I'm working two jobs, but I feel like I'm squarely middle-class.

It's interesting to read about how others are handling their own financial struggles, if only to help me realize that I'm not doing all that badly. . .

Vice president of information technology, 32, Denver, Colo.

We purchased a home last year and I'm proud to see my children live in a decent neighborhood close to a good public school and have a backyard to play in.

However, since moving, unexpected expenses and rising costs have created a situation of struggle. I do have a fixed-rate mortgage, but everything else is getting so expensive. Last week I spent $170 on gas alone. I've taken on a second job, and I know as long as our economy hangs in there and doesn't collapse, we'll be okay.

My biggest frustration is I work very hard to maintain a lower middle-class income and lifestyle. We don't go on vacations, or rent movies. We just hang out and do free or cheap stuff. But I still work a second job and I miss out on school events and struggle to feel okay explaining this to my son.

Frugally optimistic. . . .

I'm actually feeling rather optimistic about my finances (or, rather, my future finances) lately. Which is good, because sometimes I can become so depressed and hopeless about the sheer volume of my debt that I need to go out immediately and buy a pair of shoes or some Almond Roca to soothe my anxieties.

The reason for my optimism? Well, my March zero-based budget is done (and it doesn't look half as bad as I predicted), my April budget is shaping up, and I've decreased my 403b contributions to 1% of my salary until my credit card is paid off and my emergency fund has doubled (to at least $2,000, though hopefully more). I'm hoping to put $550 a month onto my credit card starting next month, which should shave a month off of my ETR (estimated time to repayment).

I took the step of creating an estimated future budget based on NO CREDIT PAYMENTS, and while I'll still struggle, I'll be able to sock more money away into my emergency fund in 2009, while beginning to tackle my student loans (currently around $55K) or double the payment on my second mortgage.

I've put a reminder on my electronic calendar for January of 2009, at which time I'll up my 403b to 5% and open a ROTH IRA for another 5-10%. Writing this post just gets me more excited to reach some of my financial goals!

Getting there. . . .

I've decided to start a monthly debt reduction chart, to help me stay on the path to paying off my credit cards (then it's on to the student loans and building up my emergency fund). I've had a bit of difficulty NOT spending my tax refund on frivolous items (such as clothing), but I did manage to put a chunk of money toward my credit card debt all the same.



I started February with $4,404.29 in credit debt. I plowed $1,079.63 into debt repayment (thanks, Uncle Sam, for my ginormous refund)! This leaves me with a total of $3,324.66 in remaining debt at the start of March. I'll update this chart again at the end of March to see how far I've gotten, so stay tuned!