💸 The Debt Diaries (6): April 2018
This month in money, mess, and progress.
April was a fairly typical month on the debt front, with a few small wins, some continuing frustrations, and plenty of determination.
Our biggest priorities remain the Visa card and the high-interest personal loan. We paid more than the minimum on both, avoided adding any meaningful new debt, and continued chipping away at every other balance.
There are still a few things we need to clean up, including an automatically charged gym membership that keeps sneaking onto the Visa. Even so, I am beginning to feel slightly more in control of where our money is going.
The progress may be slow, but we are building better habits one payment at a time.
💳 Debt Overview
Payment: −$250.00
Interest: +$196.40
Ending Balance: $14,853.07
Payment: −$105.00
Interest: +$9.01
New Charges: +$81.60
Our monthly YMCA membership was still being charged to this card.
Ending Balance: $1,017.66
Payment: −$233.79
Interest: +$19.08
Ending Balance: $5,386.36
Payment: −$171.26
Interest: +$55.17
Ending Balance: $5,969.02
Payment: −$796.56
Interest and Escrow: +$678.04
Ending Balance: $74,123.33
Payment: −$400.92
Interest: +$240.07
Ending Balance: $51,128.87
📊 Grand Total Snapshot
Current Total: $152,478.31
💸 Where the Payments Went
We paid a total of $1,957.53 toward our debts during April.
That means only 34.6% of what we paid actually reduced the debt itself.
All I have to say is: ugh.
✅ Wins This Month
- We did not add any new debt beyond the automatically charged YMCA membership.
- We paid more than the required minimum on the Visa card and personal loan.
- Every balance decreased during the month.
⚠️ What I Struggled With
- We spent more than I would have liked on dining out.
- The YMCA membership was still being charged to the Visa instead of coming directly from checking.
💭 Real Talk
I would describe April as a typical debt-payment month for us. We made progress, but nothing dramatic happened. The balances moved in the right direction, even if some of them barely moved at all.
My first priority is eliminating the Visa card because the balance is relatively low. Our required minimum payment was only $29, but we paid $105. Unfortunately, the monthly YMCA membership of $81.60 was still being charged to the card, so I knew I needed to pay at least $100 just to make the balance decrease.
I need to switch that membership to an automatic withdrawal from our checking account. Once that happens, it should finally disappear from future debt reports. I also want to begin paying considerably more than $100 per month toward the Visa because it remains our primary focus.
The only other account we paid above the minimum on was the personal loan. Its required payment is approximately $233, but we round it up and pay $250 each month.
For now, any extra debt-payoff money will go toward the Visa. Once that card is gone, the amount we were paying there will roll into the personal loan. We are essentially using the debt snowball method, starting with the smallest balance and then redirecting each freed-up payment toward the next one.
The personal-loan interest continues to frustrate me. The interest rate is approximately 11%, yet nearly our entire $250 payment appeared to disappear into interest this month. The balance decreased by only $53.60.
I assume installment-loan interest is calculated differently from credit-card interest, or that the timing of the payment and daily interest accrual affected the first statement. Our Visa carried a balance of more than $1,000 but charged only $9.01 in interest, while the personal loan charged $196.40.
The mortgage produces a similar feeling. Even with a relatively low interest rate, only a small part of the payment reduces the principal during the earlier years of the loan. Over time, more of each payment should shift toward principal, but watching so much money go elsewhere right now is painful.
As far as spending goes, April was fairly good. Aside from the YMCA membership, we did not use the Visa or add any other new debt. That is exactly what I want to see.
We did spend quite a bit on dining out. Jerry and I like to go out for dinner on Saturdays because our work schedules mean weekends are the main time we have together. I do not necessarily want to eliminate that tradition, but we may need to choose less expensive restaurants or find cheaper ways to enjoy the time.
I would love to reach a month in which we reduce our total debt by at least $1,000. At $678.16, we are getting closer, but I do not expect to reach that milestone consistently until next year.
Right now, we are also preparing financially for the new baby, Caleb’s preschool tuition, and my maternity leave. Those priorities limit how much extra money we can throw toward debt, even when I would love to move faster.
For May, I am raising the goal to at least $800 in total debt reduction. It will be a five-paycheck month for us, which should leave a little extra money available at the end of the month.
Hopefully, we can put it to work.
Explore the full series on the Debt Diaries landing page.
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