July Financial Update: Bye Bye Credit Card Debt

Did you miss my monthly financial updates? I was too embarrassed about our credit card debt to post one last month. Now that I’ve come clean about it, and we received The Check, I’m breathing a sigh of relief over most of that mess.

I would like to say that we’re putting it all behind us, but I realized that, particularly until Little Stapler goes to kindergarten, we will have to watch our spending like hawks. To that end, we are using the cash envelope system for managing our spending. It forces us to prospectively look at our monthly income and tailor our spending to that month’s income.

How’s it going? Within the first day of using the envelope system, I felt the pinch. I had a list of toiletries and household supplies I had to get, and only $30 to do it. With such a tight budget, it was actually easy to say “no” to anything not on my list. When it comes down to spending money on facial cleanser or self-tanner, cleanliness wins over vanity.

Using cash for our budgeting instantly separates the wheat from the chaff. I’m not going to waste my money on something I might use; something I didn’t think about until I saw it in the store.

In other news, I started a new job. I am so relieved to have a regular salary instead of trying to puzzle together an income each week. I’m also thrilled to have a 401(k) again, with a 3% match! Opting for a 3% match is a no-brainer for me, but I’m happy to go through the pro’s and con’s in a later post if you’re interested.

July Net Worth Update:

Cash:  – $3,963.65. 

Credit Cards: – $14,358.57. The Check wipes away the credit card debt, but for some reason Mint.com hasn’t been able to update the balances. I was really looking forward to grabbing a screenshot of $0 on our credit cards. Maybe next month?

Regardless, this is probably the lowest balance we have had on our credit cards in a decade.

Loans: -$2992.13. As a new homeowner, I have been enjoying seeing our mortgage go down so much more quickly than our student loan debt. I don’t believe that renting is “throwing your money away,” because there are plenty of homeownership expenses that aren’t recouped (taxes, insurance, and interest to name a few), but the mortgage payments are increasing our net worth by over $10,000 a year (as long as our home value stays stable).  

Investments:  – $574.34.   

Net Worth: + $8,874.63.  Nice to see that The Check did actually increase our net worth by about $5,000, even if much of it went to the credit cards (and despite losing almost $600 from market fluctuation). 

June Goals:

• • Survive: SUCCESS!  
  • Draft a Business Plan: FAIL!
  • Request Flex and HSA Reimbursements: SUCCESS! I figured out our HSA reimbursement account and am really pissed I didn’t do it sooner! It’s so easy to use. I can send checks directly to the doctor or I can pay in the office and get reimbursed with a direct deposit to my account. Really, really easy. I just wish we weren’t burning through it. Falling down the stairs, being allergic to everything, and having an infant mean we’re constantly at the doctor.
  • Personal Finances Hard Look: Switching to the cash envelope system forced me to take this hard look and make sure that our budget is balanced. We had the home energy audit and there were no thunderbolts of inspiration on how to save money on energy costs, although there are some low-cost ways to save $40 a year or so. With my new job, I’ll save $30 a week in parking; Mr. Stapler is saving almost $100 a month by taking a bus that has free parking.

July Goals:

• • Survive: Baby Stapler is starting to sleep through the night, but he’s waking up at 4:30 am. So, we’re still trying to get into this parenting groove.  
  • Draft a Business Plan: Still on the list. Womp womp.  
  • Fix Mr. Stapler’s Student Loan Payments. Mr. Stapler recently started earning too much to qualify for income-based repayment, and FedLoan put him on a 10-year repayment plan. His $70,000+ student loans, however, are eligible for a 30-year repayment plan. With a 4.5% interest rate, we have little incentive to prioritize those loans over my 6% loans. Plus, the 10-year repayments are twice as much as what we were paying before.
  • Stick to the cash envelope system until Little Stapler gets to kindergarten. Once Little Stapler starts kindergarten, we’ll be able to take a $1,200 per month sigh of relief. Until then, we have to batten down the hatches. 
  • Cancel my Jet Blue credit card. I opened this credit card so I could travel hack my way to FinCon14. It worked! I have over 30,000 rewards points, which I plan to use to get to FinCon15 as well. But if I don’t cancel this month, on the anniversary of opening the card, I’ll get charged an annual fee.
  • Q3 and Q4 Goals: At the beginning of the year, I suspected that my annual goals might change through the year, so I resolved to do a mid-year goal-setting. I was right: The new house definitely threw us a curveball! Here are my goals for the rest of the year:
    • July: Business Plan. Definitely still important, and I want to have this completed this month.
    • August: Put money in an Emergency Fund. $1,000 to start would be great.
    • September: Go back to paying off a student loan at the beginning of the month. I’m pretty sure that I’m still going to pay off a student loan (as opposed to the mortgage), but I’m not yet sure which one.  
    • October:  Either make an extra payment on a student loan or save for a capital expenditure (we currently drive a 1999 Corolla and I worry that it’s going to kick the bucket when we are least prepared to buy a replacement car).
    • November: Either a student loan payment or save for capital expenses.
    • December: Have a $1,000 Emergency Fund, a $1,000 capital expenditures fund, and pay at least $1,000 extra towards a debt.

Have you ever turned down a matched 401(k)? Why?