Budget FAIL. And a debt update.

Hmm… Mid-June and I’m finally ready to talk about May? Yea. It’s been a few of those weeks.

Debt Update

Not very exciting. We’re in minimum mode right now. As in, just making minimum payments. Our debt snowball is just sitting there, in limbo. Waiting for a couple of major life changes (aka Selling a house and Moving cross-country) that may or may not completely eradicate two huge debts.

But our consumer debt is still gone! (Have I mentioned that lately? )

But we still have lots of mortgage debt!

As of May 2010:

1. First Mortgage:  $170,440.66
2. Second Mortgage:  $31,427.28
3. Rental Property:  $108,585.56

Total Debt:  $310,453.50

This is a difference of $560.56 from the $311,014.06 owed in primary and rental mortgage debt at the end of April.

Payments Breakdown:

1. First Mortgage: $1538.63
2. Second Mortgage: $283.90
3. Rental Property: $758.00

Total Monthly Payments: $2580.53

Are you paying attention? Over $2000 of these payments is going toward interest. Yuck.

Have you ever run the numbers on your regular monthly payments to figure out how much actually goes toward paying off the debt and not just toward the interest to thank that nice bank for loaning you the money? It’s a good exercise. But you might want to sit down first.

What Would Dave Ramsey Do?

If we did not have a house to sell and weren’t moving before the year was out, we would be tackling our second mortgage. According to Dave Ramsey…

“Generally speaking, if your second mortgage is more than 50 percent of your gross annual income, you should not put it in the Debt Snowball.”

(The Total Money Makeover p. 130)

Our second mortgage is less than 50 percent of our gross annual income, which would normally put it in step two of The Seven Baby Steps, if you’re following Dave Ramsey’s Journey to Financial Peace.

These are not Normal Times

Clearly, we need to focus on bulking up our savings right now rather than paying off more debt in the event that we need to bring some cash to the closing table. And we are — but not nearly with the zeal that we were paying off our debt.

I don’t know if it’s the change of John coming home from his deployment, the frenetic stress of finding out we’re moving a year earlier than originally scheduled, or just the laziness of resting on our laurels of paying off the almost $20,000 we had in consumer debt in less than a year. But our budgeting is shot all to Hades. Poof! It’s gone. We’ve been spending money left and right like it’s going out of style. And it’s mostly on food (though not all).

During our debt snowball last year, I took great pride and relief in how much we saved (and therefore debt eliminated) by not eating out. Like, at all. We went at least six months without so much as ordering out a pizza.

Enter May

I knew I was going to let up on the eating out once our initial snowball was done. And when I found out we were moving and I had to scramble to get this house up for sale, I told myself I was really going to relax and let us enjoy some time eating out and getting ice cream and whatnot and not worry so much about our budget for once.

And then Pandora’s Box blew wide open.

I don’t at all begrudge the graduation gifts that came with May (I am the aunt of two high school graduates. *gulp*) or the new toys that I got my younger son or the music CD(s) that I bought my daughter or the summer class I signed my teenager up for to get him a head start on some high school credit. And I’m certainly not regretting our new mattress. It’s the mindless-ness of all the other little things. All the other stuff that came up that found me saying, “Sure, why not.” No budget, no planning. It’s telling that I can’t even readily give a number to it all.

And the eating out? I wish I could say that we just enjoyed ourselves for a time then reined ourselves in. We did spend $183.35 on takeout or eating out for the month of May, after all.

But I just ran some numbers for June. Which is only half over. And so far we have spent $192.61 just on eating out. Yes, John is home and we’ve been doing things as a family. But almost $200? I’m just not sure how I feel about that. Food is a huge budget buster for families. (For everyone?) After doing so well on it for so long (I’m strictly referring to the cost of eating out here) I hate to see it take over our budget and keep us from meeting our other financial goals as soon as we could otherwise.

I can definitely see how difficult it is to break a habit of eating out regularly. Just in these few weeks of doing it again with the kids, they have caught on and are asking for it more and more. And it starts feeling so easy. Oy, vey.

Finances as a Couple

Overall, John and I are doing a much better job of discussing and planning for bigger-ticket items: It’s the little things that seem to be out of control. And I’m afraid I am to blame. (Can you say Thrift Store?)

It’s clear that I need to re-motivate myself. And that John and I are overdue for a proper sit-down: Although we’re preparing better for bigger purchases (such as new tires for the car this month — $609.62. Ooch.) we have yet to sit down side-by-side and number crunch and geeky-talk financial priorities since he’s been home.

It’s also clear that John has not been consumed by the numbers as I have. I suppose you could say he’s had other things on his mind, like his recent deployment and his upcoming school and his upcoming promotion (yea!) and this study program he’s supposed to be completing because of the promotion and everything else that goes along with the pesky business of earning a living. But just today (or yesterday?) he called me from work where he was filling out a survey form, and he asked me for the amount we owed in consumer debt. “Consumer debt? You mean that stuff we just paid off?”

So tell me, how could he have missed that? I think we’ve got some work to do. Oy, vey.

Tagged as: budgeting, Dave Ramsey, Debt