Debt Dumpers 2020

[Shughart]

Well it's been a month, so I thought I'd post an update as to what we've accomplished since I have resurfaced with some goals for the year!

2020 goals
Financial
*Set aside $1000 each for each the kids 529 plans (deposit right away/or wait till market recovers, they have lost money so far this year)
*Make extra mortgage payment (hoping to do this later in the year with a bonus)
4k/15k paid off *Pay off 15K in credit card debt (this one might be lofty but I half *almost half of it right now, but holding onto it jic DH's job situation changes before this ends*

Personal
*Run 3 days a week Sun/Tues/Thurs
6/30 lbs lost *Lose 30 more lbs.

The running one may not stick, I am just NOT loving doing it outside, and I would really really love a treadmill, but it's not a cost I can stomach right now, while we're trying to pay down cards/debt and plan for other things.

 

[rg35]

Well it's been a month, so I thought I'd post an update as to what we've accomplished since I have resurfaced with some goals for the year!

2020 goals
Financial
*Set aside $1000 each for each the kids 529 plans (deposit right away/or wait till market recovers, they have lost money so far this year)
*Make extra mortgage payment (hoping to do this later in the year with a bonus)
4k/15k paid off *Pay off 15K in credit card debt (this one might be lofty but I half *almost half of it right now, but holding onto it jic DH's job situation changes before this ends*

Personal
*Run 3 days a week Sun/Tues/Thurs
6/30 lbs lost *Lose 30 more lbs.

The running one may not stick, I am just NOT loving doing it outside, and I would really really love a treadmill, but it's not a cost I can stomach right now, while we're trying to pay down cards/debt and plan for other things.

For the 529 plans you should buy when the market is low. Don't wait on buying until the market recovers. If you do that, then you will have missed out on any gains.

Also for the mortage payment - if you're able to - you come out a little better if you pay a little extra towards principal each month than making one lump extra payment, simply because you'll save interest incrementally as you make the smaller extra payments each month. But I'm also going to assume our mortgage interest rate is MUCH MUCH lower than your CC interest. You'd be better off paying down your CC debt faster rather than making extra mortgage payments.

 

[afan]

The interest will only pay to one "bucket", you have to select which bucket you want it to go into. You access this under the settings button within the buckets area.

Thanks! Gives me more to think about since I'd need to move the interest around each month or be ok with it only helping one acct.

 

[DisneyMandC]

For those that use ally for savings and use the buckets. Does the interest split itself into the buckets when it pays based off how much each bucket made?

I'm trying to figure out what savings acct to do and could move some of my other savings over as well for the higher rate. I'd need the buckets for that to work though. Otherwise I'll just open one for the car and keep what I've got. My credit union pays good interest on the first 500 in the primary savings and very little on my 2nd savings. So it would make sense to move all but 500 from my emergency savings and most of my 2nd acct which is vacay/fun so they male more. I know I could track one acct on a spreadsheet but I don't want to do that, track enough that way already

No it doesn't. I was planning to do the same thing and set up a student loan bucket that I deposited my next six months payments into and then later realized that lol.

 

[jen7233]

I set up the buckets in Ally to give it a try. Didn't think about the bucket the interest would go in until mentioned here, thanks. Didn't play much there other than set up the buckets. Also, noted that whenever one transfers from Ally to another bank, have to make sure it's going to come out of the bucket you want, so the order should be set before you hit the transfer button. Haven't personally pushed out of Ally yet to main checking since setting up these buckets since nothing is coming due I need to pay for from Ally, but it looks easy.

 

[pblack]

It's the end of May which means we're almost halfway through the year! My DH had a $500 essential workers bonus on his paycheck that we weren't expecting or anticipating. Between what I was already gonna pay, this extra bit of money, and our room-mate's rent check my student loan will be completely paid off! I will be making the final payment today and I will never have to pay it again!

I know I've mentioned before that we've been sort of searching for a replacement car for me. Our plan was to wait until the end of the year before we actually pulled the trigger on it. Well we've been kind of looking over the past month or so at some used highlanders and we've come across 2 that just didn't meet my specifications, but his friend (who works at Toyota) took in a 2017 highlander over Memorial Day weekend. It's a limited platinum model, 30-something thousand miles on it, and it's black on black (which is my 1st choice). We're not certain of the price yet as it hasn't actually hit the lot since it's being detailed and what not, but it should be around the price we were wanting to spend. So if we like it when we look at it and the price is right, I will be getting a new car sooner rather than later. Fingers crossed!

Now an update to my goals from the beginning of the year:

• Pay off remaining $2000 CC debt from new sectional.....done as of 4/1/20
• Pay off remaining $1625 of DH's student loans......done as of 2/1/20
• Save $1000 towards emergency fund.....$25 shy of this goal which should be met on 6/15/20
• Increase retirement contributions for DH and myself.....has not happened yet, maybe more towards the end of the year
• Decrease my student loan of $12,100 by at least a couple grand......FULLY PAID OFF AS OF TODAY!!!!!!!!! This was fully paid off in 6 months. I never thought I'd see the day and I never thought I'd pay it off this quickly
• Pay off $2000 for our Nov cruise......done-money set aside and ready to be paid off.
• Save up enough money for WDW portion of the trip......This is also essentially done, but I will continue adding money to our travel savings.

It looks like I might need to make some new goals!

 

[imbatman]

@pblack

 

[FQLover]

Way to go, @pblack! That is just incredible! I think that you absolutely should get that Highlander to celebrate your huge debt reduction success.

 

[jen7233]

It's the end of May which means we're almost halfway through the year! My DH had a $500 essential workers bonus on his paycheck that we weren't expecting or anticipating. Between what I was already gonna pay, this extra bit of money, and our room-mate's rent check my student loan will be completely paid off! I will be making the final payment today and I will never have to pay it again!

Great job on getting that student loan DONE!!

 

[DisneyMandC]

It's the end of May which means we're almost halfway through the year! My DH had a $500 essential workers bonus on his paycheck that we weren't expecting or anticipating. Between what I was already gonna pay, this extra bit of money, and our room-mate's rent check my student loan will be completely paid off! I will be making the final payment today and I will never have to pay it again!

I know I've mentioned before that we've been sort of searching for a replacement car for me. Our plan was to wait until the end of the year before we actually pulled the trigger on it. Well we've been kind of looking over the past month or so at some used highlanders and we've come across 2 that just didn't meet my specifications, but his friend (who works at Toyota) took in a 2017 highlander over Memorial Day weekend. It's a limited platinum model, 30-something thousand miles on it, and it's black on black (which is my 1st choice). We're not certain of the price yet as it hasn't actually hit the lot since it's being detailed and what not, but it should be around the price we were wanting to spend. So if we like it when we look at it and the price is right, I will be getting a new car sooner rather than later. Fingers crossed!

Now an update to my goals from the beginning of the year:

• Pay off remaining $2000 CC debt from new sectional.....done as of 4/1/20
• Pay off remaining $1625 of DH's student loans......done as of 2/1/20
• Save $1000 towards emergency fund.....$25 shy of this goal which should be met on 6/15/20
• Increase retirement contributions for DH and myself.....has not happened yet, maybe more towards the end of the year
• Decrease my student loan of $12,100 by at least a couple grand......FULLY PAID OFF AS OF TODAY!!!!!!!!! This was fully paid off in 6 months. I never thought I'd see the day and I never thought I'd pay it off this quickly
• Pay off $2000 for our Nov cruise......done-money set aside and ready to be paid off.
• Save up enough money for WDW portion of the trip......This is also essentially done, but I will continue adding money to our travel savings.

It looks like I might need to make some new goals!

Awesome!! Congrats!!

 

[ruadisneyfan2]

For the 529 plans you should buy when the market is low. Don't wait on buying until the market recovers. If you do that, then you will have missed out on any gains.

Also for the mortage payment - if you're able to - you come out a little better if you pay a little extra towards principal each month than making one lump extra payment, simply because you'll save interest incrementally as you make the smaller extra payments each month. But I'm also going to assume our mortgage interest rate is MUCH MUCH lower than your CC interest. You'd be better off paying down your CC debt faster rather than making extra mortgage payments.

This was my thoughts as well. When the market is "low" it means you pay less per share. Once it recovers, you'll put the same amount of $ in but you're then buying fewer shares because you'd be paying more for each share. Ds23 is kicking himself that he didn't invest more when it was low.

 

[ruadisneyfan2]

I set up the buckets in Ally to give it a try. Didn't think about the bucket the interest would go in until mentioned here, thanks. Didn't play much there other than set up the buckets. Also, noted that whenever one transfers from Ally to another bank, have to make sure it's going to come out of the bucket you want, so the order should be set before you hit the transfer button. Haven't personally pushed out of Ally yet to main checking since setting up these buckets since nothing is coming due I need to pay for from Ally, but it looks easy.

This seems to complicate things more than just having separate accounts. I have around 8 savings accounts and give them different nicknames. Some never change, such as Car Ins, Sewer and Escrow. Some change more often, depending how long I need to hold the money there such Laser Hair fund, Christmas, and whatever the current snowball goal. They all earn their own interest, all get 6 withdrawals per month, and I always know what is going where when scheduling a transfer and don't have to worry about any default settings. If the buckets are helpful for people then it's great that it does, but for me it only complicates something that is already simple .

 

[ruadisneyfan2]

Also for the mortage payment - if you're able to - you come out a little better if you pay a little extra towards principal each month than making one lump extra payment, simply because you'll save interest incrementally as you make the smaller extra payments each month.

I've read this elsewhere too and don't really understand it. Can you explain this more? Is there a way to calculate how much extra to pay to maximize savings?
We owe around $105k and have 8 years remaining at 3%. We also have $8k set aside for a 14-nt cruise through the Panama Canal in Feb that we've always wanted to do but now I'm on the fence. My heart says make happy memories while we can. My brain says you've had plenty of good trips; pay it off. Heart and brain are in constant tug of war.
If I were to apply the $8k to our mortgage, and lump sum is not the best approach, how do I calculate how much per month, to have the best results?

 

[jen7233]

This seems to complicate things more than just having separate accounts. I have around 8 savings accounts and give them different nicknames. Some never change, such as Car Ins, Sewer and Escrow. Some change more often, depending how long I need to hold the money there such Laser Hair fund, Christmas, and whatever the current snowball goal. They all earn their own interest, all get 6 withdrawals per month, and I always know what is going where when scheduling a transfer and don't have to worry about any default settings. If the buckets are helpful for people then it's great that it does, but for me it only complicates something that is already simple .

I used to have many separate savings accounts with USAA for short and mid-range savings goals. But, then decided that looked too confusing to me and went to one savings with Ally, again I use it for short and mid-range savings goals (and also to earn just a bit of interest), and separated categories with Excel spreadsheet. I'm trying out this feature with Ally, not sure if I will like it or not. One thing I don't like is interest in one "bucket". I wanted to try out the feature and see how I feel about it.

Since I am most comfortable in my personal finance with streamlining accounts and simplicity, I tend to think ultimately I will ditch the buckets also.
I'll share my categories:
1. Vacation, 2. Car/Rent Insurance, 3. Car Repair, 4. Membership/Registrations, 5. Christmas, 6. Dog/Vet Care, 7. Big Items (Furniture/Electronic Replacement), 8. House Downpayment, and 9. ROTH IRA

 

[barkley]

I've read this elsewhere too and don't really understand it. Can you explain this more? Is there a way to calculate how much extra to pay to maximize savings?
We owe around $105k and have 8 years remaining at 3%. We also have $8k set aside for a 14-nt cruise through the Panama Canal in Feb that we've always wanted to do but now I'm on the fence. My heart says make happy memories while we can. My brain says you've had plenty of good trips; pay it off. Heart and brain are in constant tug of war.
If I were to apply the $8k to our mortgage, and lump sum is not the best approach, how do I calculate how much per month, to have the best results?

you can do a lump sum now and reap savings for sure. the idea is rather than putting so much aside a month to save for a lump sum payment on a mortgage you could put the identical amount towards the principle each month (so as an example-$500 per month towards principle vs. saving it up for 6 months and applying $3000 towards principle all at once). we used this practice with every minute amount of extra money we came into to pay off our 30 year in less than 8-if the balanced payment plan on our power bill adjusted down by $15 per month-we threw it at the mortgage principle, got some kind of stupid few dollars in a class action check-threw it at mortgage, came under on the grocery budget by $50 in a month-mortgage. it's amazing how much it saves over time.

go to bankrate or another site that has mortgage amortization calculators and play with them. try entering that 8K to see how many months/years it will cut off the life of the mortgage. try seeing what even $50 a month applied just to principle will do. it's addictive to see those months, then years drop off.

 

[FQLover]

I'll share my savings account categories, too. I have one at my home bank which serves as my Emergency fund. It used to be my only one, but then around 5-6 years ago (right after ING became Cap One 360), I started an online bunch of separately named accounts. You can move them around and I can also move from my at home checking account into these, or vice versa. It is so convenient. For some of them, I have automatic monthly payments going to them, and for others, I just put money in as I have some extra at the end of the month or as I anticipate a need coming up in the months to come. They all earn the interest, lower than Ally, but I really like the mechanics of it
and it has helped me save so much more intentionally.

1. Vacation
2. Car (repairs, down payment for a new car, plates fees--large here)
3. Other Travel (not vacation but for family needs, usually--like taking my daughter back and forth
to campus, or going out to visit a family member requiring airfare, etc.)
4. Vet care
5. Medical/Dental (deductibles, large bills, etc)
6. My brother's care (he is disabled)
7.Christmas
8. My daughter's wedding (just started a year or two ago, only has $600-700 in it--she had better wait a long time, haha).
9. Other (if a need comes up that does not fit in one of the other categories,--then I use this versus my emergency fund)

 

[afan]

This seems to complicate things more than just having separate accounts. I have around 8 savings accounts and give them different nicknames. Some never change, such as Car Ins, Sewer and Escrow. Some change more often, depending how long I need to hold the money there such Laser Hair fund, Christmas, and whatever the current snowball goal. They all earn their own interest, all get 6 withdrawals per month, and I always know what is going where when scheduling a transfer and don't have to worry about any default settings. If the buckets are helpful for people then it's great that it does, but for me it only complicates something that is already simple .

I agree to an extent. I have 2 savings accts with my credit union but the primary earns a better rate. While it's technically 2 accounts since it's with the same place it's like allys buckets. Now if ally distrubuted the interest among the buckets I'd have gone with them because I would have moved most of my current savings. But since it doesn't I opened one with amex because they had a slightly better rate, no minimum and no fees. For now I don't want more accts and logins. I've read a little about being able to do more with amex so I'll look into that. I'd wanted ease rather than my money all over the place to get diff accts.

 

[FQLover]

Thanks for the tip about bankrate.com @barkley. I did just go over there and play around with my mortgage and various extra payments, etc. I wish I had done this several years ago. I could not have done it a long time ago when I had daycare costs and a couple years of private schools, but I certainly could have jumped into doing this more recently--or even just done an extra $25 a month back then and I would be in a much better place, mortgage wise, than I am now. Now, I am close to retirement and not picturing myself in this house by then, and think I will need cash more than a paid off house. So much to weigh.

 

[dina444444]

I agree to an extent. I have 2 savings accts with my credit union but the primary earns a better rate. While it's technically 2 accounts since it's with the same place it's like allys buckets. Now if ally distrubuted the interest among the buckets I'd have gone with them because I would have moved most of my current savings. But since it doesn't I opened one with amex because they had a slightly better rate, no minimum and no fees. For now I don't want more accts and logins. I've read a little about being able to do more with amex so I'll look into that. I'd wanted ease rather than my money all over the place to get diff accts.

The bucket thing with interest just tells ally where to put the interest each month. The amount of interest earned is based on the total amount in that account and not on each separate bucket.

 

[piccolopat]

Thanks for the tip about bankrate.com @barkley. I did just go over there and play around with my mortgage and various extra payments, etc. I wish I had done this several years ago. I could not have done it a long time ago when I had daycare costs and a couple years of private schools, but I certainly could have jumped into doing this more recently--or even just done an extra $25 a month back then and I would be in a much better place, mortgage wise, than I am now. Now, I am close to retirement and not picturing myself in this house by then, and think I will need cash more than a paid off house. So much to weigh.

If you think you will need the cash in retirement and can afford the monthly mortgage payments once you no longer have a paycheck, I would hold on to the cash. It is difficult to get a mortgage once you retire, even if you have adequate assets, because many banks only look at your income. In fact, you might even consider a cash out refinancing now while you can and while interest rates are low. Just be sure that the new payments (including taxes and insurance) will work in your retirement budget. By the way, retirement is great!