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2010 Debt Reduction Challenge - Discussions

11K views 147 replies 36 participants last post by  Greebo 
#1 ·
Welcome to the 2010 Frugal Village Debt Reduction Challenge!!

This is the official discussion thread for the 2010 Debt Reduction Challenge. Any comments or questions about the 2010 Debt Reduction Challenge should be posted in this thread. Posts made to the 2010 Debt Reduction Challenge - Totals thread will be moved to this thread.

Challenge Rules

The goal of the 2010 Debt Reduction Challenge is to encourage all Frugal Villagers to make 2010 a financial success by eliminating as much debt as possible. In almost no circumstances but a very few is paying interest a wise thing to do with money, and it is never a good thing to be beholden to others, and so nothing could be more frugal than to eliminate debt!

For the purposes of this years challenge, some terms have been defined and rules set to make the challenge a bit more precise in terms of the elimination of actual debt.

Debt
A debt is defined as:

  1. A formal agreement between a borrower and a lender; or
  2. A balance owed for a transaction which could not be paid for in full at the time of the transaction or within the normal terms of the transaction.
So that means a formal loan - credit card, mortgage, car, whatever, or a bill that you couldn't pay when it came due and is thus eligible to go to collections, whether or not it has actually done so.

Valid Debts
  1. Any debt already existing as of January 1, 2010 at 12:01 AM; or
  2. Any debt accrued in 2010 that has been owing for more than 30 days.
This means if you charge something on a credit card and pay it off that month, it doesn't count - you're just using the CC as a substitute for cash temporarily.

Qualifying Amounts

  1. Principal reduction.
  2. Interest paid.
Principal reduction is what really matters. When you have debt, interest is based upon the principal. If your bill is $100 and your principal portion is $30, the $70 in interest was accumulated in that statement period. Since that $70 is recent debt, it doesn't qualify as real debt reduction.

The amount of interest paid *will* be tracked - but the reason for tracking that amount is not to qualify as "debt reduction" but to show just how much money Frugal Village is throwing down the drain every year in new interest accumulated.

New Debt

Any new debt taken on by members participating in the challenge should be posted here. This new debt will reduce our debt reduction total. We cannot force you to tell us if you've added new debt, but within the challenge threads, no criticism of those adding debt will be allowed.

Posting Payments Made

Because principal reduction is the truly important amount, this amount is *required* as part of your post. You may choose to include how much was paid in interest, fees, etc. if you wish, but if you do not clearly include the amount paid towards actual principal, your post will not be counted.

Suggested style of posting:

Jan 2, 2010
Debt - Home First Mortgage
Total Payment: $1,000
Principal: $102.73
Interest: $801.12
Escrow: $96.15
That will clearly spell out what the debt was for, how much was principal, how much was interest, and whatever else you want to include is welcome, but remember, only P & I will be tracked.

Also acceptable:
Jan 2: $102.73 towards principal on 1st mortgage.

or

Jan 2: Paid a total of $307.01 to principal on multiple debts
Not acceptable:
Just sent a check for $500 to my credit card
Does not identify principal amount.

I realize that this challenge is going to require more effort on everyone's part. It will be worth it both for FV, and for you.

It'll be worth it for FV because everyone will get a much clearer sense of just how much money goes towards interest that could instead be going towards our futures.

It'll be worth it for YOU because if you don't already pay attention to this, it will enlighten you and motivate you to KILL THAT DEBT!
 
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#41 ·
We are refinancing our principal residence in order to roll the heloc and 1st mortgage into 1 fixed rate loan. This will mean no more variable rate interest only heloc, and we'll save a great deal long term on interest paid out.

So for the bad news...

The downside is, the costs of the refinance are rolling into the mortgage, so that will cause the amount of debt we owe in total to increase.

In short - the refi costs will eliminate a big chunk of our principal reduction so far in 2010.

Sorry guys - but Greebo and Ceashels are single-handedly undermining our FV group progress for the year in the completely selfish interest in advancing our individual situation over the next 30. ;)
 
#42 ·
Greebo, it sounds like you're making the best decision for the long run. Congrats on being able to eliminate the variable interest only loan!

I was wondering, have you thought about slowing down your snowball for a few months and piling up cash to be able to pay closing costs without rolling them into the loan? I'm sure you've thought of that and run all the numbers on the comparative interest in either situation :)
 
#43 ·
We considered it but decided against it for a few reasons:
1) Rates are at the lowest levels in recorded history
2) More foreclosures are coming, IMO
3) The HELOC is variable rate

The combination of the first two means that in a few more months, we might again not be able to get the value on the house we need to do the refinance. Add in the 3rd and if rates go thru the roof like some suggest, we'd be over a barrel. I don't think they will, but I'm also not playing the odds.

We could bring more cash to the table, but not without halting our retirement contributions again and draining a substantial portion of the EF.

The net impact is that long term we save less interest on the loan than if we had brought cash, but still more than if we stayed with the current loan.
 
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#44 ·
We got the new bill for the Harley yesterday. They changed the format and I'm so happy they did. The old one just gave us the principal total owed. The new one now has the break down of the payment so I won't have to figure out the principal and interest. I think all of our interest bearing bills now have both principal and interest on the statement. Nice.

Cat
 
#45 ·
How would I post payments I make on Credit cards if I'm not actually paying on each card (I pay one monthly payment) I am in Debt consolation I do see statements but no interest or principle, all Credit cards are closed and not usable.
And my Mortgage is through a private lender I don't know what my interest or principle is .TIA for any help on this
 
#46 ·
How would I post payments I make on Credit cards if I'm not actually paying on each card (I pay one monthly payment) I am in Debt consolation I do see statements but no interest or principle, all Credit cards are closed and not usable.
Your statement should show your balance due from month to month - the amount of decrease is the principal amount. The rest is interest.

And my Mortgage is through a private lender I don't know what my interest or principle is .TIA for any help on this
When did you start the mortgage, for how much and at what rate? We can link you to a calculator to help you estimate your amortization schedule.
 
#47 ·
Greebo my statements do not show interest because while in DMP I do not see that part I only see the amount due the DMP company cut the interest rate I can only go on what it is suppose to be which would not be exact .I guess it would be hard for me to do this challenge not knowing lol .
We started this Mortgage 3 years ago we have 8 years left at 350 a month.
Thanks Scoob
 
#48 ·
They don't show you your current balance at all? Weird!
 
#49 ·
I want in on this challenge as well and will be updating within the next couple of days, thanks all.
 
#50 ·
Greebo, I haven't included the mortgage payment for the business because it is auto deduct, has NEVER been broken down. No statement except for end of the year and still no breakdown. Just balance at end of year.
We have called to get it off auto deduct and monthly billing to start by snail mail. However they won't even give us the loan number. Said they can't. We will see if they even actually do the money snail mail.
Why won't they give us the loan number and why has it never been broken down principal vs interest. Will not tell us. Understand you don't really know but any ideas why?
 
#51 ·
Hell I dunno - who'd you take the loan out with, The Godfather Bank?
 
#52 ·
Oh man, can't believe I didn't even get that dig in. Yes, Bank of Hell.

Know you don't know but just wondering if you had an idea of why.
 
#53 ·
I cannot imagine. Can you log into see the loan online or anything?

These "user unfriendly" statement and system reports amaze me. I have a hard time believing they're that bad - I almost want to ask peopel for their login info to see for myself, I swear...
 
#54 ·
Yeah, an "overview" only. This is TOTALLY all there is and there is no monthly anything. As you can see there is no account number either. So the accountant works off the bottom yearly interest crap. I need an account number and they won't give it either. They say they can't. But I also cannot break down principal and interest. I understand what some of these posters are saying.
Sending in 2 posts.

Current principal balance:
$34,889.31
Original loan amount:
$48,960.00

Term:
180 months
Date of loan origination:
10/28/2003
Loan purpose:
OTHER BUS PURPO
 
#55 ·
Estimated payoff amount:
$35,532.61 *
Payoff good through:
01/22/2010 *

Next payment amount:
$911.70
Next payment due date:
01/28/2010

Past due amount:
$0.00
Late charges due:
$0.00
Last payment amount:
$447.11

Last payment date:
12/28/2009
Interest rate:
8.25 %

Interest paid year-to-date:
$0.00

Interest paid last year:
$2,637.47


This is all it says online. All we have to go by . period
 
#58 ·
Current principal balance:
$34,889.31
Interest rate:
8.25 %


This is all it says online. All we have to go by . period
You have enough.

34889.31*0.0825/12 = $239.864 - the interest portion of your next payment
 
#56 ·
I'm always amazed at the lack of information that is given my companies we have loans/accounts through. I have a few accounts that will take payments online, but provide no other information. My mortgage is like that. I can pay online and view past payments, but that's it. So, my mortgage is $1281 and I pay it in increments throughout the month. I have to wait until the next month to get the statement and make sure everything was applied correctly. Having payments applied correctly doesn't seem to be a guarantee with Wells Fargo.
 
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#57 ·
Also have never understood why it always says next payment amount is 911.70. Payment is 447.11 Always.

Estimated payoff amount:
$35,532.61 *

Payoff good through:
01/22/2010 *

Next payment amount:
$911.70
Next payment due date:
01/28/2010

Past due amount:
$0.00

Late charges due:
$0.00
Last payment amount:
$447.11

 
#61 ·
Niko,
I bank with Bank of Hell and I can view my P and I.

Go to the "transaction History" link on the Acct Summary page.
Ours is called account details. This is what I copied and pasted. I don't understand none of it. I just left the bank it orginated at and they don't show it period. Nothing. Nada.
 
#63 ·
For the 1st 2 years of Niko's loan.
forgive the formatting.

Date / Int / Sch balance / Actual balance/ Sch payment/ Interest / Principal
1 09/09 8.25% 48,960.00 48,960.00 (474.98) (336.60) (138.38)
2 10/09 8.25% 48,821.62 48,821.62 (474.98) (335.65) (139.33)
3 11/09 8.25% 48,682.29 48,682.29 (474.98) (334.69) (140.29)
4 12/09 8.25% 48,542.00 48,542.00 (474.98) (333.73) (141.25)
5 01/10 8.25% 48,400.74 48,400.74 (474.98) (332.76) (142.23)
6 02/10 8.25% 48,258.52 48,258.52 (474.98) (331.78) (143.20)
7 03/10 8.25% 48,115.31 48,115.31 (474.98) (330.79) (144.19)
8 04/10 8.25% 47,971.13 47,971.13 (474.98) (329.80) (145.18)
9 05/10 8.25% 47,825.95 47,825.95 (474.98) (328.80) (146.18)
10 06/10 8.25% 47,679.77 47,679.77 (474.98) (327.80) (147.18)
11 07/10 8.25% 47,532.59 47,532.59 (474.98) (326.79) (148.19)
12 08/10 8.25% 47,384.39 47,384.39 (474.98) (325.77) (149.21)
13 09/10 8.25% 47,235.18 47,235.18 (474.98) (324.74) (150.24)
14 10/10 8.25% 47,084.94 47,084.94 (474.98) (323.71) (151.27)
15 11/10 8.25% 46,933.67 46,933.67 (474.98) (322.67) (152.31)
16 12/10 8.25% 46,781.36 46,781.36 (474.98) (321.62) (153.36)
17 01/11 8.25% 46,628.00 46,628.00 (474.98) (320.57) (154.41)
18 02/11 8.25% 46,473.59 46,473.59 (474.98) (319.51) (155.47)
19 03/11 8.25% 46,318.11 46,318.11 (474.98) (318.44) (156.54)
20 04/11 8.25% 46,161.57 46,161.57 (474.98) (317.36) (157.62)
21 05/11 8.25% 46,003.95 46,003.95 (474.98) (316.28) (158.70)
22 06/11 8.25% 45,845.24 45,845.24 (474.98) (315.19) (159.79)
23 07/11 8.25% 45,685.45 45,685.45 (474.98) (314.09) (160.89)
24 08/11 8.25% 45,524.56 45,524.56 (474.98) (312.98) (162.00)
 
#64 ·
Thanks Russ, I really appreciate it. Very much. I printed it out.
 
#67 ·
No, never refinanced and has always been $447.11
 
#69 ·
It's a fixed. Yes have the papers. Have been all over them the past couple days looking for an account number. None there. The payment has been $447.11 since the day it started. I, myself, can't figure any of this out. I have been ALL over the papers.
 
#70 ·
It might be called a Loan Number.
 
#72 ·
Finally got someone at the bank yesterday while they weren't busy to dig. The problem with getting the account number or loan number was while the loan papers say mortgage it isn't listed at Bank of Hell under mortgage loan. It was listed under installment loan. So don't really know what it is.

Got the account number
 
#71 ·
not to interrupt the flow of convesation (by the way NIKOSANS, sorry for your troubles) but we live near two counties and can choose hospitals. I just learned today that the hospital closest is no longer setting up payment plans. If you can't pay to whole amount off automatically they are sending the claim to their bill collector and charging 19% interest each month!!!!!

I have always been one of those who said you should pay as much as you can to the doctors just to get out from under the bill (my mom will pay $10 a month for life if they let her) but I can't imagine giving you no set up. It will be cheaper to put bills on a credit card (mine is 7%). Oh, well. I guess we will be driving to the other hospital.
 
#73 ·
not to interrupt the flow of convesation (by the way NIKOSANS, sorry for your troubles) but we live near two counties and can choose hospitals. I just learned today that the hospital closest is no longer setting up payment plans. If you can't pay to whole amount off automatically they are sending the claim to their bill collector and charging 19% interest each month!!!!!

I have always been one of those who said you should pay as much as you can to the doctors just to get out from under the bill (my mom will pay $10 a month for life if they let her) but I can't imagine giving you no set up. It will be cheaper to put bills on a credit card (mine is 7%). Oh, well. I guess we will be driving to the other hospital.
Thank you very much.

Do they have a patients bill of rights hanging on the wall? We do not refuse treatment because of inability to pay type thing.

Did this come from the hospital itself? Double check.
 
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#74 ·
Thanks, I will look into it! Good news is the other hospital isn't too far of a drive-30 minutes. Glad you are making progress on your problem.
 
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#75 ·
Your welcome and do check to see if they have it posted. It is normally in admissions. But glad the other one is not to far.
Never know when it might come in handy to just have the heads up.
 
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