New Debt

I haven't posted in three months and my finances reflect my lack of focus. I've been on this debt-free quest for two and a half years and I really lost focus. I think several factors contributed to my relapse into spending, including the long-time in this step of debt repayment. Dave Ramsey recommends trying to finish Baby Step 2 in 18-24 months. I can see the wisdom in that.
My new debt is a car loan. I bought a 2004 Dodge Stratus, mainly for my son to use. Sharing a car was proving difficult once school and cross country were in full swing, so after much deliberation and car shopping I found a car that should last him through college. He is thrilled and I am able to make plans more freely.
My total debt is now just under $4000. Not where I wanted to be, but on the bright side, it is less than this time last year!
Time to refocus--plan meals, apply for a summer job.

Mortgage Company Gone?

When I bought my house last November, I went to a small, local bank for my mortgage. I got great personal, fast service. The loan officer, my Realtor and the appraiser all worked together to get everything done in a timely manner.
That was all great, but my mortgage was really not with my local bank, it was with a financial company in Florida, Taylor, Bean, and Whittaker. I have paid my mortgage online through the Taylor, Bean website since January. No problems until yesterday. I logged on their website to find this disturbing message:
Unfortunately, at this time we are unable to offer an online payment option.
Please mail your payment to the following address:
Taylor, Bean & Whitaker Mortgage Corp.
Attn: Cashiering
1417 N. Magnolia Ave.
Ocala, FL 34475
Also, please be sure your loan number is written on your check and include any special
payment instructions such as additional payments to principal or escrow.
If you have recently received notification your loan was transferred to a new servicer,
please disregard these payment instructions and follow the instructions outlined in the transfer notice.

Taylor, Bean & Whitaker Mortgage Corp. has officially ceased a majority of its operations on
August 5, 2009; however, we will continue functioning in a reduced capacity until all
loans have been transitioned to new servicers.

. I immediately started trying to find out what had happened. It seems that Taylor, Bean has a large share of HUD financed mortgages. The company did not file the correct reports with HUD, so HUD suspended Taylor, Bean from writing HUD loans on August 4. Taylor, Bean is being made an example:

"Today, we suspend one company but there is a very clear message that should be heard throughout the FHA lending world - operate within our standards or we won't do business with you," said HUD Secretary Shaun Donovan.

The fallout from this decision seems immense to me. Taylor, Bean shut down operations the next day. Over 1000 people immediately lost their jobs. 30,000 (estimated) people whose loans would have closed this month, have to start completely over with another company. The hurt and frustration of those people is very evident on the message boards.

I'm not sure what this all means for my loan. It was probably transferred to Bank of America. My payment isn't due until Sept. 1, so I'll wait to see if I get an official notice before trying to make a payment.

It seems to me that this power play between HUD and Taylor, Bean could have been handled much better. Thousands of people were caught in the crossfire with no recourse.
Dave Ramsey's 100% down idea is looking better and better.

Total Money Makeover Encouragement in the Babysteps

I've been rereading Total Money Makeover in order to stay focused and motivated. I'm on Babystep 2 (Pay off all debt except for mortgage). I've found a little inspiration. From TMMO:


Close your eyes and think about what it will be like when you reach this Baby Step (# 3)....When you reach this step, you have $1000 in cash and no debt except your home mortgage.



When I close my eyes and imagine what it will feel like to have a $1000 emergency fund and no debt except mortgage, I am flooded with emotion: relief, gratitude, hopefulness.

Thank you, Dave Ramsey!

Two Years ago

In late June, 2007, I read Dave Ramsey's Total Money Makeover. Before reading this book, I really thought that I was in pretty good shape financially because I was able to make my monthly payments. I had 2 zero interest credit cards that I had used for big purchases, one CC with a $1000 balance that I was unsuccessfully trying to pay down, and one card that I paid in full each month. I also had a $3000 car loan.


What I didn't realize was that I was getting farther and farther in debt each month. I was spending more than I brought in. I was pretty upset and ashamed that I hadn't seen what was happening.When I calmed down, I started on Dave's Babysteps. For the first few months, I got even further in debt because I wasn't used to living on that month's income.

My journey has been pretty long, but I can see light at the end. I think that in 4 months, I will be finished with Babystep 2. Lessons I'm learning along the way--tracking my spending is important for me because I tend to be unrealistic in my estimates, saving for unexpected expenses and irregular expenses decreases stress, and accountability really helps me stay on track.

I am enjoying this journey and I have made progress in reducing my debt. Hmm...maybe the journey is more important than the final outcome. Interesting....

YNAB for the New Year

One reoccurring problem I have with budgeting is mentally spending allocated money more than once. Since this is physically impossible, my debt-reduction plan is not very realistic. For example, when I first began trying to pay off my debt in June 2007, I estimated that I would be debt-free in December 2008. While I have made great progress--reducing debt by $7500, my estimates were way off! I need a system that keeps me accountable. My budgeting tools in the past were pencil and paper first, then last April I found an Excel worksheet from Mr. Debtbeater based on bi-monthly pay. I was diligent about planning my budget, but not so diligent about entering actual expenditures. I tried jars and envelopes, but was still able to avoid the consequences of overspending. In September, I looked at spreadsheets to track expenses, but my brain was so stressed with school and then moving that I couldn't get started with anything new.

I first saw YNAB online awhile ago and was intrigued by it, so I decided to give the Excel version a try. YNAB stands for You Need a Budget, and is based on 4 Rules of Cash Flow that merge nicely with Dave Ramsey's Baby Steps and the envelope system. What I like about it is that if I overspend in one category, I have to figure out a way to "fix it" either this month or the next. I can spend less in that category next month, or move money from another category. My budget will be a better reflection of my actual spending.

I'm sure I will make mistakes and miscalculations, but with the YNAB software, at least I'll be aware of them and be more likely to correct my errors. I am excited to try January's numbers.

Does anyone else use YNAB?

Debt Reduction Progress

As I try to work out my goals for 2009, I want to evaluate my financial success and failures for 2008.

At the beginning of 2008, I had $11,700 of non-mortgage debt, and a $162,000 mortgage. During this year, I have paid $5500 to debt, sold my house and purchased a smaller one. My current status is:

Credit card debt:
Dec. 2008 $6200

Emergency fund:
Dec. 2008 $850

Mortgage:
Dec. 2008 $117, 000 (I need to look up the exact figure)


I am pleased with my progress in 2008. I have not been "gazelle" intense in paying off debt because another of my goals is to enjoy life now with my children and friends. Some of my splurges were: buying a share of a 20-year old boat, going to Ocean City with friends from college, going to Charlotte for a cross-country race.


I want to continue to be able to have dinner out with friends and to perhaps plan a trip to NYC in the summer to visit DD2. I want to budget for these important expenses as I plan for 2009. Realistic planning is a challenge for me. I think I need more accountability in my budget. I really want to find a system that works for me.

Help for the debt-free journey

I discovered the personal finance blogging world last year about this time. These are some resources that were helpful to me.

Dave Ramsey's Total Money Makeover opened my eyes to the possibility that I could successfully take control of my finances. Mary Hunt's Debt Proof Living is another website with good information. I recommend checking out books by both authors if you need a vision for your financial future.

Bob at Christianpf has a series on getting out of debt as well as spreadsheets to download.Ncn at nocreditneeded has a series called debt reduction 101.

Lynne at Beingfrugal has practical tips to reduce spending and live within your budget.



The first debt reduction blog I started to read was JW at Need to be debt-free. He and his family have made great progress while dealing with some setbacks along the way.

I have been inspired and encouraged by the other blogs on my side bar, but these were the ones I started with in December 2007. They helped encourage me on my journey in 2008.
I haven't been perfect, but I have made progress in 2008--I have a plan. I have paid $5500 to debt reduction. I have been able to pay for several unexpected expenses without going further in debt.

Looking forward-becoming debt-free in 2009

In August, my goal was to pay off my credit card debt by May 1 of 2009. With the expenses of buying a house and moving, I'm a little behind where I wanted to be at the end of 2008. I currently owe $5700. That means I would have to pay $1400/month in order to make my goal of May 1st--not possible.
I must revise my pay off goal, but the end is definitely in sight. I really think I can be debt-free in 6 months! Wow! I'm looking forward to Baby Step 3--saving a fully funded 3 month emergency fund
I still have to make a budget for January and the New Year. I'm not sure how the utilities will run for the new house, so I'll have to estimate the gas, electric and water bills for 2009. I'm looking forward to crunching the numbers.