The time brunch fixed everything

Two weekends ago I went out to the Lyndale Tap House for brunch with two of my favorite friends. I had a Groupon from an old birthday present so that made it even sweeter. As we were brunching, we were talking about needing to buy cars, because both my friend and I were looking for a new one.

My friend, Jamie, is from Illinois and is not a great driver (self-proclaimed), especially in the MN snow. She has a 2008 Ford Focus and wanted something more heavy duty with all-wheel drive. As I listened, I had a light bulb moment. I should buy her car.

I asked her 20 questions and found that there's only 75,000 miles on it. It has remote-start. It has some cool stereo bells and whistles. It gets great gas mileage. And she was simply hoping to trade it in to the dealer for whatever they will give her. Even by paying more than the dealer, I was still going to get a great deal!

Jamie even took the car to a mechanic to make sure everything checked out. The brakes need some work and we agreed to split the cost. This deal couldn't have gone more smoothly!

Best of all, it was much closer to my comfort zone of a car payment. Yes, I would still need a loan but it would be much more affordable than something much newer. And car insurance would be more affordable too. What a huge sigh of relief!


Since I wasn't needing such a high loan, I was approved for the $6,500 I was looking to take out, despite my credit issues. Technically I paid $5750 for the car but I had to consider taxes and fees, fixing the brakes and few maintenance expenses. The dealer was willing to give her roughly $5,000 at best and the car values at up to $8,000.

So without further adieu,  I am pleased to introduce you to my new car!

Meet Lloyd Christmas! Fitting name, as he is my Christmas present to myself, he's red, and Dumb and Dumber is one of the funniest classics of all time :)

Now Jamie is thrilled with her brand new Chevy Equinox and I am loving Lloyd. You can even imagine us doing a happy dance, jumping around the Chevy parking lot when we both got new cars!

It really was the best deal I could have found and I plan to run this car for as long as it will last. Now to navigate selling my old car and continuing with the spending challenge!! 

When Life Hands You Lemons...

Thank you for all the advice and perspective on what car to buy. This is the first time I've been looking at buying a car and making the right choice is nearly paralyzing.

Here are the dirty deets on what I'm looking at, numbers wise. The most I'm comfortable paying on a monthly basis is $225/month. I can't emphasize enough how that is the absolute most I'm willing to pay and even the idea of that amount makes me want to throw up. I understand that is not a huge car payment compared to many but for my situation, that's where I'm at.

That averages out to a car loan of $10,000. When I look at used cars for $10,000 or less, it's nerve wracking. A car in that range will be older, roughly 2008 at best. And it will have a lot of miles, nearly 100,000 in most cases. By the time I paid off a 4 year loan, it would be time to get a new car. Stretching my budget and financial comfort zone so much while still driving a car that could come across several problems at any time just didn't feel ok. Even thinking about it now puts knots in my stomach.

However. If I bumped my budget up to $14,000 I could afford a 2013 car (used of course) with 40,000 miles. A car like that could last me 10 years at least. If I had a 4 year loan, I would have at least 6 years of no car payment. But that bumps my monthly payment up to $305. *Excuse me while I dry heave*

So this dilemma lead me to my last post where I simply don't know what to do. But then life made the decision for me.

I went over to a local credit union where I found the rate of 2.99% to get pre-approved. They dropped a big bomb on me that my credit is all screwed up from 2 unpaid bills that I never received. Apparently all my moving around has left a few bills that did not get forwarded. When a bill is mailed to you, you have 30 days to pay it. There is no legal requirement for them to call you or email you before it gets sent to collections. Who knew?

Between those hard credit hits and my high debt ratio with student loans, it puts me in the "maybe" category for qualifying for a loan. If I tested it and applied anyway, the poor credit would hurt the terms of my loan at best. At worst, I would not qualify and I would have another soft hit on my credit from the application. I guess that solves my problem before it began.

After a few incredibly frustrated Lauren Conrad tears, I called the collectors and got the bills paid from the parking lot of the credit union. The pleasant man named Mr. Royal explained that it will take 45 days for my credit to be redeemed. December 19th to be exact.

I am thankful my car still runs relatively well and I'm praying every day that my car works one more day as I get closer to December 19th. I think chances are good but as always with a 198,000 mile car, ya just never know. It helps that I've been listening to Amy Poehler's new book on CD so it makes me enjoy my time driving whenever necessary.

In the meantime, in true Katie fashion, I came up with a plan. The spending challenge is still completely in tact and in fact, even more important than ever. Instead of putting all my extra money towards debt, I will be saving every single penny I can find until December 19th. The goal is to save enough to get my expected loan amount down from $14,000 to as close to $10,000 as I can get. That way I can get a longer lasting car without going drastically over my comfortable monthly payment.

I'm expecting to save at least $2,000 with the hopes that it could be more. Whatever I can save myself now will ultimately reduce my monthly payments and leave room for extra money to go towards my student loans.

It bugs me that the spending challenge is being rerouted a bit. I hate that I'm tacking on more debt but I'm determined to get rid of it all one way or another. I am not giving up and trust me, I'm learning a lot along the way. I have to come to terms with the fact that I will be entering my 30's with debt, unless I win the lottery that I don't play.

So that's the scoop. The count is on and I'm being more frugal than ever to make this as painless of a blow as it needs to be. In fact, I found a quarter on the front walk and you bet I snatched that up!

HELP - I need your advice!

Good morning, blog world!

I mentioned in my monthly update post that it's time to buy a new car. Unfortunately, that means I'm adding on a car payment in the midst of trying to get rid of debt. It's safe to say this is not a happy decision for me but unfortunately it is necessary.

As I look at what I can afford, I am completely torn. A newer, nicer, reliable car will likely last me 10-15 years, but it hits the max of my budget, which is already as tight as can be thanks to this spending challenge. This loan will last 3-4 years, which means I couldn't incur any further expenses for the next 3-4 years unless my income drastically improved and I would barely make a dent in additional debt payments with my paycheck alone.

However, if I look at an older car with higher mileage on it, it will cost me a few thousand less total but will likely only last 5 years max and the chances of it requiring repairs is obviously higher.

Thankfully, I have found a wonderful credit union who is offering 2.99% interest on any car loan I get, which is the best deal I've found so far. That's the only silver lining I have found so far.

I am frustrated to be adding to my debt when I am trying so hard to reduce it. I'm frustrated that I have worked several jobs for my entire adult life and yet I'm always pinching to make ends meet. I'm frustrated that in all my years of learning about finance, I'm still in this situation. There are so many times I could have been smarter and I'm kicking myself for not applying what I've learned. I'm scared that I will take on more debt, be in over my head and not be able to get myself out of it. I'm scared that I'll take out a loan and something horrible will happen to the car and I'll be in big trouble financially.

I am trying really hard to set aside my emotions and do the smart thing. But to be honest, I'm not sure what that is.

Have you bought a used car? What models are good? How much mileage is too much? What would you do??

Spending Challenge: October Totals

October 1st Balances
Amex: $1,545.79 $0
Mastercard: $5,714.27
Sallie Mae: $14,123.57 $11,472
Chase: $19,907.33
Sallie Mae: $24,754.52

November 1st Balances
Amex: $1,545.79 $0
Mastercard: $5,714.27 $3,760.59
Sallie Mae: $14,123.57 $11,472
Chase: $19,907.33
Sallie Mae: $24,754.52


That's a total of $2,088 this month!
I babysat (a lot!), wrote resumes, earned a bigger bonus at work, worked on Gradible.com, dog sat, and stuck to the spending challenge rules to make this possible. It takes some pretty serious effort to always prepare your meals or to pick up side jobs after a long work day but numbers like that are worth it.

The hardest part about the challenge this month was: 
I got pretty overwhelmed one night thinking about how much debt I'm in. I got frustrated that I have been working at this goal for years and if I had done things differently, I could have been out of debt by now or at least much closer. I was annoyed that even with an entire year of this spending challenge, I will probably still have $40,000 in debt based on really rough estimates. It would take another 2 years of a spending challenge to be debt free. That really sucks.

Another challenge was having some serious car troubles. An entire post will be coming on this soon but long story short, I'll be buying a new (to me) car next week. Adding on a car loan was a big blow to my motivation and I ended up spending outside of my challenge as a result. However, it's a new month and I'm not giving up!

What I learned from the challenge this month was:
I had to change my perspective in order to be ok with this mountain I'm climbing. With this challenge, plus efforts down the road, I will still probably be debt free before 30. There's nothing I can do to fix the errors of my past but I can be proud that I am fixing issues that caused this debt and I'm working every day to get out of it. I am making some pretty big dents and if I take it one day at a time, I'll enjoy the little victories. After all, how do you eat an elephant? One bite at a time.

I also found that I was way to relaxed on my spending in October. I was so strict in September that I had plenty of money left over. As a result, I gave myself more freedom and it turned into too much. It feels a lot like the 3 bears - one month was too little, one month was too much, now this month will be juuuusst right, right?? 

The best part about the challenge this month was:
Looking at my finances when I realized I would need to factor in a car payment and seeing that I can make it work, thanks to the spending challenge. It will slow down my debt repayment but it doesn't completely ruin everything. If I were to have needed a car payment even 6 months ago, I would have been in big trouble!

2 months down, 10 to go!

How to pay off student loans faster

The spending challenge is still going strong and there are no signs of caving. It feels great to be making such progress! But I am a doer. My paychecks only come twice a month and my extra income does not result in daily payments to my debt. So the days in between can feel unproductive, even if not spending money is actually very beneficial to getting out of debt.

I was starting to get antsy that I won't be able to make another debt payment until payday next week. That feeling usually spirals into thinking if I can't make immediate progress, why not go spend money? I know it's not logical but impatience never is.

Thankfully, I came across a company called Gradible. They provide you with tasks that help local businesses in return for money that goes straight to your student loans! Tasks vary from writing content, like a blog post, to posting services to Craigslist. The tasks are worth LoanCreds, 100 LoanCreds = $10. Easy!

When I registered, 3 tasks in 30ish minutes and earned $16 off my student loans. It's not a ton of money but it can really add up and shrink your debt! It will especially help ward off those impatient feelings of not being able to immediately see numbers go down.

This is not a sponsored post by any means but I do believe in sharing how to pay off debt! If you want to do the same, sign up here and we'll both get $5 off our loans!

Have a great weekend!

But what if you get a hole in your yoga pants?

As I explained the spending challenge to my friends, I told them I wasn't allowed to buy clothes for a whole year. One friend asked, "But what if you get a hole in your yoga pants or something you can't easily repair??"

Normally, if I got a hole in my beloved yoga pants I would have gone out and bought another pair. I would have found a Buy 1, Get 1 50% off coupon and then I have 2 new pairs of yoga pants. Did you know I already have several pairs? Same with jeans, sweaters, tank tops, shoes, dresses, etc.

I have enough clothes to not do laundry for probably 2 months without repeating outfits. It's ridiculous. Not only do all these clothes take up so much space but it takes forever to make a decision on what to wear each day. If I think jeans and a sweater sound good, that could still mean several variations. If a dress sounds good, I freeze debating a sun dress or maxi. And then what shoes go with what outfit??

I know this is typical girl stuff but it takes up a decent chunk of time each day making this relatively minor decision. And then I become late for work and rush myself into a decision that I don't even love sometimes.

Part of this spending challenge is focusing on my priorities. Spending money on clothes I don't need is certainly something I want to quit. I also want to get precious time back into my day that is normally wasted on clothes. Time wasted picking out outfits, loads of laundry, picking up the clothes all over my floor or putting laundry away. It's getting old.

Coincidentally, last week I did get a hole in my yoga pants. As stretchy as they are, thankfully it was not due to an expanding waistband. The seam caught on a filing cabinet and it split right down my thigh. The paperclip I used to keep my pants together made for a really cute look.

I thew them out when I got home and have easily been surviving with the other pairs I have.

I'll admit that there are times when I get an email for a fall special on sweaters with a fairly good coupon attached. I'll admit that I've wanted to browse the racks of Target several times already for a few cute new additions. But when I look at my closet, I can't stand the idea of another hanger being used.

So now, if anything happens to my clothes, I can either sew them with my sewing machine or I can throw them out. After all, I have several backups of whatever item to last me through the year. There is nothing irreplaceable in my wardrobe that would absolutely require me to buy clothes during this challenge, with the exception of bridesmaid dresses, which are covered in my Bridesmaid fund. 

I even want to downsize and donate a big bin to Good Will but I've been nervous because what if I get bored with my clothes this year and want to try some lesser worn outfits? But the simplistic approach will win me some time back in my day, which is worth a lot.

Spending Challenge: September Totals

I know I started on September 6th but I get paid on the 1st of each month so to make matters less complicated, I'm going to do my updates on the last day of the month. I will still finish on September 5th, 2015. 

Starting Balances
Amex: $1,545.79
Mastercard: $5,714.27
Sallie Mae: $14,123.57
Chase: $19,907.33
Sallie Mae: $24,754.52

October 6th Balances
Amex: $1,545.79 $0
Mastercard: $5,714.27 
Sallie Mae: $14,123.57 $11,472
Chase: $19,907.33
Sallie Mae: $24,754.52

That's a total of $4,518.32 this month! Doesn't that $0 balance look pretty??

I dog sat, babysat, wrote resumes, received bonuses at work, sold my kayak, received an inheritance, found plenty of affordable activities and stuck to the spending challenge rules to make this happen. This is certainly an abnormal month because I won't always have large items to sell and an inheritance doesn't happen every day. The momentum from this month has been incredible though!

Side note: Normally I would follow Dave Ramsey's snowball strategy and I would have made a dent in my Mastercard. However, the money from the inheritance was given to me by my parents who wanted to support my school debt. Understandably, they didn't want the money to pay off my excessive Target trips ;) Any debt payment going forward will follow the snowball plan.  

The hardest part about the challenge this month was: Honestly, it was hard to find a challenge this month. It wasn't always my preference to prep my meals and plan ahead to avoid eating out. But with my food budget, I was able to get a meal or two out without consequence. I suppose you could say I easily would have bought clothes from Target over the past few weeks. Their fall lines looked adorable and definitely my style. Occasionally people were busy doing things that cost more money than I wanted to spend. It left me doing activities solo on occasion, which isn't always fun. The mindset that this challenge is going to make my life better made the challenges worth it. I have a feeling most months won't be this easy though!

What I learned from the challenge this month was: There are tons of free things to do and so many people are on board with doing more affordable activities! I was worried that people would count me out and drift away from our friendship if I wasn't able to spend money and that has certainly not been the case at all so far. I'm learning my insecurities were what was holding me back rather than reality. I learned that it feels great to set a goal and stick to it, rather than sway with any negative feedback of others.

For so long my goal has been to be out of debt and it has consumed me, unsuccessfully. I'm learning that it's not about the numbers. I know that when I'm 100% debt free, my life won't change all that much. I'll have less stress and more options financially, no doubt. But the people that love me will care for me either way. 

One more lesson I learned - it was actually fairly easy to keep my spending money. By Sunday I still had $30 left. I splurged on Thai food delivered to my house. Ugh, the fees and tip alone cost $10. Looking back I'm bummed that I did it. I know in other months that $30 would really help. Lesson learned to save any leftover fun money for rainy days!

The best part about the challenge this month was: seeing how supportive people are. 95% of people I have talked to have been so encouraging and it makes this so much easier. Yes, seeing the $0 balance on my credit card felt pretty great and knowing I have less than $3,000 left in credit card debt is exciting. I honestly would have assumed that would have been the best part of the month.

1 month down, 11 to go! There are already some big things on the October schedule so I'm excited to see those numbers next month!