We were on the CareOne program for a year and five months. During that time, our minimum payments were less than what they would have been if we’d just kept paying the cards on our own. I don’t want to be specific about a lot of the numbers, so I hope this is still understandable. We had two cards, one was very large and the other was around $1000 when we started with the program. If you kept up with the comments at the older post, you’ll know that we had a somewhat rocky start getting going with CareOne. But once that was through, they were deducting a monthly payment on the 15th and sending some to each creditor, putting $5 into some “discount” program, and keeping something like $30-35 a month for their doing the service.

In the beginning I didn’t know what the $5 thing was for but when I figured it out, I canceled it as it’s not mandatory, and then put that $5 towards the big card, so we were paying the same but it was slightly more effective. During these 17 months, the smaller card only went down to the $700-range and the other one went down a couple of thousand. The interest on the smaller card would be assigned each month, something like $13 and then they’d credit us back half of that. I have no idea why they were doing it that way. The other card was charging us something like 8.00% interest instead of the 14.99% before getting on the program. Not the best, but better, but the interest was still adding to the debt all the time.

Despite our payments being lower than what they would have been, the automatic payments were always killing us. It just came at the wrong time of the month, for one and it didn’t matter if it was the middle of the week and I’d already paid bills the previous weekend or whatever. If there wasn’t enough money in our account the bank would deposit $200-400 into our account from a reserve line. Only… this reserve line didn’t come from existing money, it was just like another credit card. So by the end of those 17 months, we had built up almost $5000 on that! This would also happen – and still can happen – because the way banks handle deposits and “business hours” and all that jazz. He deposits his check after the end of the business day after he gets off work but it will take it all weekend and sometimes until the end of Tuesday to “clear.” It’s ridiculous. So they hold that money in there and even though we have the money, they say we don’t have it! It’s “pending.” So then we hit a pretend $0 and they deposit money in there. However, NOW, we have had our first-ever savings account for a year that we deposit to weekly so if that happens, I have money to immediately pay it back and keep that reserve line from building back up. But at this time, all the payments that we had were killing us.

So we finally did what I’d wanted to do in the first place: got a home equity loan. Actually, I’d wanted to just refinance the house and include that debt (for one payment for everything) or do a loan but he never would go for it. In my mind, it’s the logical step but he wasn’t able to wrap his head around it.

I know it sounds unreal, paying off debt with a loan, but, for one, the interest is lower, the payments are lower, that all helps right there, not to mention that we are no longer paying $30-35 a month directly to CareOne for keeping us in the program. We can afford these payments and we pay extra on the principle. Granted, the CareOne program claimed we could pay all that stuff in 5 years but we kept hitting that reserve so we were pretty much going no place fast. Now, in ten years, the house will be paid off (if we stay here that long) and that’s the maximum this loan would carry out if we pay minimum.

So in November, we finally signed with our bank for a loan to cover all three of those aspects: the two cards and that reserve account. We signed on the day after our CareOne payment went but the bank didn’t have us pay for 30 days, so it worked out and we ended up with small credits on both of the cards which I had to get them to cut back to me. That was actually sort of interesting. Apparently, even if the account is closed (which they have been since we were on the program if not before) and you have a credit, those nasty credit card companies will not automatically refund you what is yours without you actively calling in and telling them to do it. So I had to call them both and say, “hey, I want my money, you jerks!” Also, one of the cards, the big one, continues to send us statements for $0 and 0 activity and I still have an online login despite my telling them to cut it out. They can’t seem to understand that the account is closed and I want nothing more to do with them.

So, our loan. The payment for that is automatic, but it’s only about 54% of what we were paying before. So we can handle it, and then, like I mentioned before, we pay more on the principle each month. We’ve only paid three months now, December, January, and February. We did really good in January and paid a good amount more on principle than our minimum payment. The thing to watch out for is that now that I paid extra in February, it’s telling me we have no payment due until April. Apparently what happened was it took the auto payment and then three days later I payed extra on principle and then another, what I thought was a minimum payment. So it’s taking that as being our March payment already so I’ll need to make sure I remember to pay it instead of relying on an auto payment that’s not going to happen. The only thing I regret though, is that while I can set up an auto deduct from our checking into our savings (and that’s how we do it), the bank’s website won’t let me set up a schedule to pay extra on the loan. But I’ve been remembering well so far.

The key is to pay more on principle. When you pay extra on your loans (we do this on our house loan, too) even if it’s just an extra $10 a month, make sure that you designate it to pay on principle. Otherwise, if they have no policy that anything extra applies to principle, there’s a chance you’re just paying more on interest. The way I understand it, you pay a little principle and a lot of interest in the early days of a loan, by paying minimum payments. So by designating to principle, especially early on, you’re lowering the amount that interest is calculated by.

We had no fees for signing the loan, nothing added in there, just that little bit of credit I got back from the credit cards. (We didn’t know what the new total was going to be after the last CareOne payments were made because of the interest that would be assessed, therefore we paid more.) I think I bought a tank of gas with our refunds, heh. The only fee we could ever incur on this loan is an early pay-off fee. If we pay it off before the 3 year mark, we have to pay something like $250. I don’t see that happening myself, but if nothing else, if we think we’re getting close, we can just start paying only minimum until December 2010.

Oh, and since this is a home equity loan, if we sell the house, the loan has to be paid off. Actually, that was my original desire – sell the house, pay the debt, too, move. Heh. And with what we owe on the house and the debt and what the house is worth (and how its value is going up all the time with inflation and the work we’re doing to it, no matter how small), we should easily be able to pay both of those. I don’t know how much of a down payment we’d have for something else, but we’d have something.

So that’s the deal there.

I’m sure there are lots of people that have been helped with debt management programs but we just apparently weren’t destined to be some of those people. Granted, I guess it did help for a while there, but it seemed to me we were just going nowhere with it and that this is the MUCH better solution for us. If I had it to do over, there are lots of little things here and there I think we could have done differently to avoid getting into this situation in the first place. However, some of the things that helped start the snowball effect with the credit cards were unavoidable, things such as our not having dental insurance and Steve needing some emergency dental work, etc.

Not sure where life will take us in the future, but how nice it will be when we’ve gotten rid of the debt!

Addendum: I also forgot to mention that while we were on the debt management program, our credit scores were dropping a bit here and there. Obviously not enough to deny us loans or anything like that and I still think that they’re above average – we both had very good credit to start out. But it happened and I can’t imagine what it might have done to our credit if we’d stayed in the program until complete pay-off. I think that’s one of those things they don’t tell you when you get started in those programs.

The first is a deposit of $477.27. It is right next to Steve’s last paycheck deposit and I have no idea what it is. So I click to view it and the name is in a female’s handwriting. You can just tell, you know? And the name itself? My brother-in-law! So I’m like, craaaaap, they screwed up and put his deposit in our account. But then I look at the account number and it is our account number, matches what my checks say. So now I’m wondering if Steve had some “extra” money he deposited and they screwed up and wrote the wrong name on it. I messaged him but he’s in school today so no answer yet. But if this is our deposit, I don’t know where the money came from in the first place!

The second has to do with our cell phone bill. I looked at the bill pay and the bank was telling me we owed $177.37, due Tuesday. I’m thinking that’s kind of high, even though it’s really not (we have five phones and family messaging on our plan) so I log into Cingular’s website. There I am told we owe only $7.24! Apparently, I paid last month’s bill twice in a matter of two weeks and what is left for this month is $7.24. Oops. That could have explained some things not adding up like they should have, but, hey, I can handle $7.24 for this month. :)

Weird stuff happens like that, though, when you pay online through your bank for everything. The phone bill this month, for example. I paid it something like a day late and we were billed for next month, so our bank subtracts last month’s payment from the total due but still reads that it’s late and due 10/16 instead of in November like it should be. Keeps throwing me off, but I know that’s for next month. It’s also trying to fool me into thinking the satellite bill is late; even though it’s not due yet, it’s appearing in red.

So now I sit and wait and see who responds first about that deposit, Steve or my brother-in-law. One of them had to have made the deposit!

I need to remember later to call ATT and see if we can combine all our bills. We have four services through them and three bills. Or, that is, if they still do the combined billing with Dish Network. Phone, internet, cell… it’s crazy. I wonder if they really do “save” you money by billing together like they always claim…

Update — yeahhhh, that is my brother-in-law’s money.  He says it was some new person there.  I guess it’s easier to just write him a check than to make the bank fix the mistake, that would probably take longer.  However, I think I might at least let them know about it. My brother-in-law is lucky we’re so nice.  ;-)  Hhahaha

I was just able to delete the due dates of the Best Buy credit card and the old central bill account for Little Light from calendar. (I plot not only every place I have to be but the days the bills are due and what bills I’m going to pay each week – doing this has really helped out!)

Monthly bills for Little Light now? Two and a half. ;-)

The half is the computer I had to buy last December, it’s half business and half personal use so I trade off how it’s paid on each month. And if things keep going like they are, I should have it paid off before the interest kicks in. I’ve been pretty surprised on the headway I’ve made so far, actually.

But anyway, I actually have a credit on the Best Buy card of $100.88. Long story. I’ll get it back, of course, but it sucks that I have to wait another 30 days. I called about it today when I realized that, having canceled then paid off the card last week, to see what they were going to do about it. The guy almost acted like they would have done nothing had I not called! He then said they’ll be mailing me a check. So once I get that check, I will finally and officially be absolutely done with Worst Buy!

Ahhh, feels good :)

Now that Steve is working for the union and has gotten a couple of raises, we are doing better. However, the credit cards were already big and that debt has begun to drown us. A few weeks ago, we had a week without a paycheck, and while we knew that was coming (it’s kinda confusing how they do vacation pay) and had prepared by paying some of the bills earlier in the month than we normally would have, it totally kicked our butts. I can’t figure it out, either, since we had paid those bills already, but we ended up having to use the credit card several times for gas and once for groceries. Because of that, it seems our bill has jumped incredibly. I guess interest is the culprit.

So we figured that was the last straw – we had to do something before we completely drown. I looked at four different companies before finally going with CareOne. They all seem the same to me, but something tells me to try them, so we are. I am currently waiting for my “welcome packet” which will include things for us to sign and fax back. Guess I have to find a place to fax from. My mom’s… or preferrably somewhere closer… :\

Part of the application process asked for montly bills as well as income. The online calculators go to work for you and were very quick to inform me that by default, we should be $200-250 in debt each month. Like I didn’t know that. How do you think the credit cards got so high in the first place? :P But we will be fine, really, if we could just get rid of the credit card payments. Plus, we are expecting another raise this summer sometime. Thankfully.

So I look around us, for ways to stop spending so much money. Cell phone? Under contract. Besides, it’s a necessity and if cancelled really wouldn’t save that much money. Gas, electric, water… can’t cut any of those. Phone bill? It’s already lower than most people’s. Hosting, domains? Doesn’t count – business expense, not included in this program, plus, it’s already all paid for. Blah, blah, blah.

Well. The biggest downside I see to this so far is that they require you to do automatic withdrawl to pay them, and they turn around and pay the creditors. We are not used to automatic withdrawl. I do pay 90% of bills online, but none of the are automatic. I am used to being in control. But we’ll make it work.

According to these guys, we will save oer $17,000 in interest and will be all paid off in 5 years, as opposed to 21 if you pay minimum credit card payments and don’t add to the cards.

Oh, there is one thing I’m afraid of. While on this program you cannot aquire any more debt (duh, of course) but what scares me is if we have a bad week or something and have to have gas for Steve to go to work or something and have no money. I guess we will take it day by day and hope that doesn’t happen, as we are now forced to always live within our means, no backups allowed.

So here goes nothing.

We haven’t bounced a check in… probably four years. The first one made Steve really mad…

We hadn’t been married real long yet, but he’d already been in the bank and given them a change of address and added me to the account. He was standing right there when the lady changed his address from his parents’ house to our house.

When this check bounced, they sent a notice to his parents’ house. And because they don’t open our mail that arrives there and we didn’t see them right away, the check went through again and bounced again. So this check bounced first because of an error on our part in balancing the checkbook or something and the second time because of the fees attached. At that time, the fees were $15 per check, so we had $30 automatically deducted from money we didn’t have.

Then we found out about it. We got a notice in the mail at our house that our “case” was going to the prosecuting attorney for a bad check and we’d better pay up if we didn’t want this to happen. This was all over a $6.42 check that bounced by something like 20¢ and a stupid bank employee who apparently took it upon themselves to change our address back to his parents’ address! This is what happens in a small town of ignorant people. His name and address comes up and someone says to themselves, “no, I know who that is and he doesn’t live there, I’ll fix it.” Moron.

So Steve took everything we had, which I guess at that time was just the letter from the prosecuting attorney, and went down to the bank and gave them lots of crap. He says he really gave it to them, anyway. And in the end they promised to cover any check that was bounced (which we hoped would never happen again), gave us back the fees we’d incurred, and changed the address again.

The second check we bounced was short by something like $8. I think that was due to someone who we’d given a check but they took a really long time to cash it. How that works, I don’t know, but if they wait too long to cash it, even though I would have deducted it from our register, it can bounce.

So Saturday, we came home to a notice that a $30.99 check we’d written had bounced by something like $10.42.

This time, it’s my fault.

I forgot to deduct a debit card charge from the weekend before.

I am so mad at myself. I usually keep such good records! I’ve had bank people tell me this when they’ve taken a look at my register – that my columns are neat, my math correct, etc. So this just blows my mind how I completely forgot to deduct this one!

Because of the charge that wasn’t accounted for and the $25 charge that was incurred from the bounce, we had to figure out something quick so we could pay mortgage. Mortgage is due the first of the month but we next to never pay it on time. That’s okay, it’s not late until the 20th. :) So we had to borrow $50 from the Little Light money from the weekend. It’s strange how things work out!

Ah I know that when you live paycheck-to-paycheck, things like this are bound to happen, but it still sucks!!