Six Figures and Broke - Getting Out of Debt » Debt Reduction

September 1 – Baby Step 2 Update

BigSpender — Wed, 01 Sep 2010 12:00:10 +0000

The beginning of September is here, which means now it is time for me to post my Baby Step 2 progress update. August was a weird month because it was the first calendar month in the new fiscal year at my husband’s company and so we weren’t sure when and how certain commissions and bonuses would be paid out. It turns out that we only received the standard Q4 2010 commission payout and that the rest should be coming in the next few paychecks.

January 1, 2010 – $70,744.32 (I admit to having this number memorized)
January 31, 2010 – $66,775.51 (5.7% paid off)
February 24, 2010 – $66,173.36 (6.5% paid off – we paid cash for a $10k air conditioning unit during February)
March 23, 2010 – $64,857.78 (8.4% paid off)
April 30, 2010 – $61,637.78 (12.9% paid off)
May 15, 2010 – $59,907.40 (15.3% paid off – I measured this mid-month because we broke into the $50s!)
May 31, 2010 – $52,466.34 (25.8% paid off – we cashed in a small non-retirement mutual fund account and my husband’s commission was larger than expected)
July 5, 2010 – $49,672.57 (29.8% paid off)
July 31, 2010 – $47, 342.92 (33.1% paid off)
August 31, 2010 – $40,688.78 (42.5% paid off)

Here’s to a prosperous September and maybe even reaching that halfway mark!

Today is National Second Hand Wardrobe Day

BigSpender — Wed, 25 Aug 2010 14:58:46 +0000

Resale stores are a great way for you to save money on your clothing budget, especially when you are trying to get out of debt. Did you know that there is a day designated to raise awareness about second hand clothing? I didn’t. However, today is National Second Hand Wardrobe Day. That’s right, a day to celebrate second hand wardrobes.

There are many benefits to second hand clothing: you save money, choosing resale clothes is a more eco-concious choice as it puts reuse into practice, resale stores provide employment opportunities for at-risk populations, and resale clothes are a great fundraiser for the organizations involved.

The following is a small announcement from the U.S. Census Bureau regarding National Second Hand Wardrobe Day.

Americans love a bargain as well as the hunt for a good deal but many people draw the line at buying used clothing. That’s why this is National Second Hand Wardrobe Day. The idea is to encourage thrift store donations and to remove the stigma of buying previously used clothing and accessories by noting their economic and ecological benefits. Across the U.S., there are nearly 92,000 stores selling used merchandise, usually including clothing, and they have annual sales of nearly $10 billion. Some are commercial ventures; many are run by nonprofit organizations. About 80 percent of such stores do not have paid employees.

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July 31 – Baby Step 2 Update

BigSpender — Thu, 12 Aug 2010 17:17:15 +0000

Okay I realize that today is August 12 and not July 31 but I did update my Baby Step 2 progress on July 31, I just forgot to post a blog entry. We’re working on transitioning back into the school year and after school activities so the update just slipped my mind.

January 1, 2010 – $70,744.32 (I admit to having this number memorized)
January 31, 2010 – $66,775.51 (5.7% paid off)
February 24, 2010 – $66,173.36 (6.5% paid off – we paid cash for a $10k air conditioning unit during February)
March 23, 2010 – $64,857.78 (8.4% paid off)
April 30, 2010 – $61,637.78 (12.9% paid off)
May 15, 2010 – $59,907.40 (15.3% paid off – I measured this mid-month because we broke into the $50s!)
May 31, 2010 – $52,466.34 (25.8% paid off – we cashed in a small non-retirement mutual fund account and my husband’s commission was larger than expected)
July 5, 2010 – $49,672.57 (29.8% paid off)
July 31, 2010 – $47, 342.92 (33.1% paid off)

I’m anxiously awaiting next week’s paycheck as we’re expecting both the fourth quarter commission payout as well as the end of the year commission payout on my husband’s paycheck. His company’s fiscal year ended on 7/31/10 and word on the streets is that the company had a stellar year and so we’re all expecting a higher than normal payout. I won’t know the exact figure until the paycheck hits the checking account (not good for someone as impatient as I am) but in true nerd-like fashion I’ve got a few different scenarios planned out depending on the amount of the final check. However, all of these scenarios involve dumping the entire commission check onto Baby Step 2. I hope that my August 31 update sees a big jump in percentage paid off!

Will There Be a Double Dip in the Housing Market?

BigSpender — Fri, 30 Jul 2010 12:00:09 +0000

I’ve been reading about fears about a double dip recession but I recently began to read about a double dip in the housing market. I live in one of the states most severely affected by the housing bust and so this has me a bit worried. We have plans to move next summer and if the housing market takes a double dip, we are going to need to reassess our plans.

I’m not an alarmist, I don’t think the economy will collapse and I don’t have six months of food rations stored but I am a realist and I do see the possibility of another tank in the housing market. We saw some growth earlier this year but as soon as the federal tax credit for new homebuyers ended, our market started to trend downward yet again.

Here is an excerpt of an article that appeared last month on the Bloomberg Businessweek site:

The U.S. housing market will experience a second recession, forcing banks to post additional loan-loss reserves, analyst Meredith Whitney said.

“Most investors are not baking in a double-dip in housing,” Whitney, founder of New York-based Meredith Whitney Advisory Group, said today in an interview on CNBC. “You’re going to see banks post additional reserves associated with this double-dip in housing, and that means weak performance going forward.”

Our payment on our existing mortgage is well within our means and so from a financial perspective we can absolutely wait out the housing crisis storm. However, the kids have some special health care needs and would be better served in a different school district. Due to these health care needs, we can’t enroll them under an out of boundary exemption. The school they attend now is great but isn’t set up to properly address their needs. I hope that the forecast of a double dip housing market doesn’t come to fruition.

Photo: The Truth About…/Flickr

Housing Starts Are Down in July 2010

$500k in Student Loan Debt

BigSpender — Fri, 23 Jul 2010 17:46:16 +0000

While I know that some people pursuing a career in medicine or law can have a few hundred thousand in student loan debt, I was surprised to receive this article about one doctor with $500k in student loan debt. Some people consider student loans to be “good debt” – a low fixed interest rate, a reasonable monthly payment, and the money goes towards furthering your career. However, $500k in student loan debt, even for a doctor, is out of this world. Unfortunately, it is a reality for Dr. Michelle Bisutti.

When Michelle Bisutti, a 41-year-old family practitioner in Columbus, Ohio, finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000.

It is the result of loan payment deferrals that Bisutti got while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency.

“Maybe half of it was my fault because I didn’t look at the fine print,” Bisutti says. “But this is just outrageous now.” Source: MSN Money

What struck me about this article is that Bisutti isn’t a neurosurgeon or in a field that comes with a $400k annual salary. Instead, she is a family practitioner. According to a quick search on Salary.com, family practitioners in the Columbus region earn anywhere from $130,000/yr to $215,000/yr. While this may seem like a massive salary, this is before malpractice insurance and other fees. With a $500k+ student loan debt, Bisutti is in the for the long haul in terms of repayment.

I am not making any statements about her choice to take out loans and the fact that she let it slip, things happen to everyone however the fact that it is OK that one collection fee can be greater than some household’s annual income is absurd. This brings up a new topic – student loan reform. Right now, student loans go with many people to their graves. They are not dischargeable in a bankruptcy and so three things are certain – death, taxes, and student loan debt.

I’m interested in hearing what your thoughts are on the matter. Do you have student loan debt? Do you think student loans should be dischargeable in a bankruptcy if a consumer meets all of the other bankruptcy requirements? Is a $53,000 collection fee absolutely insane?

July 5 – Baby Step 2 Update

BigSpender — Mon, 05 Jul 2010 19:53:31 +0000

Today I’m going to post our second update on our Baby Step 2 progress. We are almost 30% done with our debt snowball! We had a fantastic month thanks to a much better than expected commission check that my husband received. As the nation’s unemployment crisis continues, we count our blessings everyday that we’ve been one of the lucky families to not only remain employed through the recession but to earn raises as well.

January 1, 2010 – $70,744.32 (I admit to having this number memorized)
January 31, 2010 – $66,775.51 (5.7% paid off)
February 24, 2010 – $66,173.36 (6.5% paid off – we paid cash for a $10k air conditioning unit during February)
March 23, 2010 – $64,857.78 (8.4% paid off)
April 30, 2010 – $61,637.78 (12.9% paid off)
May 15, 2010 – $59,907.40 (15.3% paid off – I measured this mid-month because we broke into the $50s!)
May 31, 2010 – $52,466.34 (25.8% paid off – we cashed in a small non-retirement mutual fund account and my husband’s commission was larger than expected)
July 5, 2010 – $49,672.57 (29.8% paid off)

I was hoping to reach the $40k’s by July 1st and we did achieve this goal – yay! I had a slower than normal month in June and only made about $400 extra. This was my fault, though, as I didn’t take advantage of all the work that was made available. The kids had their dance recital and it was just a very chaotic month. I’m planning on capitalizing on July opportunities so that we can speed up our debt snowball again.

Debt Counselors Sponsor Get Out of Debt Contest

BigSpender — Thu, 10 Jun 2010 12:00:35 +0000

As a member of the media, I receive hundreds of press releases each week. Today one came through that really caught my eye. The title of the email was “Non Profit Launches Contest to Pay Off Debt.” Great! Anything to help people get motivated to pay off debt is awesome. However, the contest is sponsored by the American Debt Counseling agency.

American Debt Counseling is a credit couneseling organization and not a debt settlement company but almost everything a credit counselor can do, you can do for yourself. Although I think it is great that this contest is out there I find it interesting that it is sponsored by an organization that benefits, directly, from consumers in debt.

Here’s a copy of the press release:

CONSUMERS CAN WIN $5,000 TO HELP PAY OFF CREDIT CARD DEBT

National Non-Profit Credit Counselors at American Debt Counseling Launch “Here’s Me Debt Free” Online Video Contest

SUNRISE, Fla. (June 9, 2010) – With more than 54 million US households struggling to pay off an average of $16,000 in credit card debt according to the Federal Reserve’s 2010 report on consumer credit, the non-profit credit counselors at American Debt Counseling are inspiring consumers to shed their debt and offering to jump start their efforts through the nationwide “Here’s Me Debt Free” campaign running online at americandebtcounseling.org/heresmedebtfree.

American Debt Counseling is calling on consumers in debt to submit a funny and creative video portraying how they would feel if they were suddenly debt free. Three winners will be selected. A grand prize of $5,000, a second place prize of $1,000 and a third place prize of $500 will be awarded in the form of direct payments toward winners’ existing credit card balances.

Alan Silverberg, founder and CEO of American Debt Counseling, a 501 (c) (3) not-for-profit credit counseling agency, said, “I am hopeful that our Here’s Me Debt Free campaign will inspire America’s consumers to imagine a life free from crushing credit card debt. Last year alone, our credit counselors helped clients pay off more than $37 million in credit card debt.”

Anyone 18 years or older living in the US with an excess of $500 in credit card debt is invited to use a camcorder, camera or mobile device to record and submit a video clip no longer than three minutes. Videos will be judged on originality, creativity, adherence to theme and number of page views generated.

The contest runs through 11:59 p.m. Eastern Time on July 31, 2010. Winning videos will be announced in September and available for online viewing at americandebtcounseling.org/heresmedebtfree and on the American Debt Counseling Facebook page.

So what are your thoughts on the sponsorship of this program – cleverly disguised marketing ploy or altruism?

Three American Communities May Default on their Debt

BigSpender — Tue, 01 Jun 2010 12:00:05 +0000

Consumers aren’t the only ones being affected by high debt loads, some communities are also left scrambling to find a way to pay their debt. An article appeared last week on CNNMOney.com that discusses three American communities that may default on their debt – Detroit, MI, Jefferson County, AL and Harrisburg, PA.

Detroit, Michigan
With the near collapse of the American auto industry, Detroit was hit hard. Although Ford is doing great and GM and Chrysler are bouncing back, the city is not faring so well. According to the article, Detroit is on the verge of filing for bankruptcy but a recent municipal note sale staved off the immediate threat.

Jefferson County, Alabama
Kind of like the adjustable rate mortgage crisis, Jefferson County, Alabama is dealing with a floating-rate bond market. A Chapter 9 bankruptcy is looming for the state’s most populous county.

Harrisburg, Pennsylvania
Harrisburg is the capital of Pennsylvania. With a $65 million annual budget, the city is $3 million short to pay the $68 million in bond interest payments due this year. I wonder if city managers can get an extra job delivering pizzas?

May 31 – Baby Step 2 Update

BigSpender — Mon, 31 May 2010 12:00:20 +0000

Happy Memorial Day!

I haven’t updated our progress on Dave Ramsey’s Baby Step 2 yet but today I’d like to share where we are at. I was a bit hesitant, at first, because personal finance is often a taboo topic. However, I’ve found it helpful to hear more about other people’s journeys. I’m sharing my journey in hopes that it inspires someone else.

January 1, 2010 – $70,744.32 (I admit to having this number memorized)
January 31, 2010 – $66,775.51 (5.7% paid off)
February 24, 2010 – $66,173.36 (6.5% paid off – we paid cash for a $10k air conditioning unit during February)
March 23, 2010 – $64,857.78 (8.4% paid off)
April 30, 2010 – $61,637.78 (12.9% paid off)
May 15, 2010 – $59,907.40 (15.3% paid off – I measured this mid-month because we broke into the $50s!)
May 31, 2010 – $52,466.34 (25.8% paid off – we cashed in a small non-retirement mutual fund account and my husband’s commission was larger than expected)

Although we’ve had a fantastic 30 days with more than $9,000 paid off, our payoff rate will slow down again for June and July. I am hoping to see our total figure dip into the $40s by July 1, though! August is another commission month so we’ll see a bump in payoff percentages again by September 1.

Do You Need Help Getting Out of Debt?

BigSpender — Thu, 27 May 2010 12:00:51 +0000

Do you need help getting out of debt? If so, you’re not alone. There are a bevy of debt consolidation firms out there that are hoping you’ll head their way to get out of debt. However, these firms need operating funds and some of their budget is fueled by their customers. So in essence, you will be paying someone to help you get out of debt. Why not take that extra money and put it towards your own debt?

Getting out of debt can be intimidating. I’m not out of debt, yet, but I’m in the process. In a past life I was an in-house credit card collector for one of the largest credit card brands in the world. This was a J-O-B that I had in my early 20s. I took the job because it had instant health insurance and paid well. I wasn’t as ruthless and rude that Dave Ramsey describes but I was certainly pushy, it was my job.

Anyhow, I digress. I learned a lot about the credit card industry by being a collector. I’ve learned even more by being a patron of their services. So if you need help getting out of debt, let me assure you that this is a process you can complete on your own.

First, invest time in reading Dave Ramsey’s book The Total Money Makeover. The ideas he presents are straightforward and easy to implement. Second, sign up for his podcasts or find a local radio station that airs his show. When you listen to other people just like you going through the same thing you are going through, it helps.

You can get out of debt without paying someone else for his time and services. Invest the time in yourself and learn what you need to know in order to start getting out of debt today.