[October's Autumn]

As one person put it: When it rains it pours.

In December we looked at our finances and realized that we were more in debt now than we were a year ago! I know how it happened but can't believe that we let it happen! I guess this is common/normal when going into a professional level job and suddenly earning more. Anyhow, we set up a budget to pay off the debt. Within 18 months or less we should only have our car payment and my students loans (which are something like a mortgage -- 30 years!)

My step-son (14) moved in with us early January which is good -- he needed help in school and support as a human being which he wasn't getting. Of course even Eustress is stress. And of course it has caused my husband and I to make major changes.
[No more walking around the apartment naked, stuff like that ] Seriously, it affects communication as we can't easily discuss things as we could before like the stuff that follows this paragraph.

I am in my second year of (contract) teaching. And now the governor wants to cut back budgets by 10% which is a huge amount in education as we barely make it... I can't tell you how much I spend for my students. It is ridiculous. So even worse I'm facing the possibility of getting laid off. So much for paying off debts and getting ourselves on our financial feet.

I went out to my car last night to go to an appointment and my brakes have no tension in them! This has happened before (8 year old car) so I figured we'd do the brake fluid thing. So my husband and I run out to the store tonight and the car won't start. At first we thought it was the battery. But the battery seems to be fine. So now we are trying to figure out how in the heck we are going to pay for car repairs! We can't afford a car payment now but if the repairs essentially total the car (over $4000) then it doesn't make sense to fix it. We have to get it towed. We are thinking it is best to take it to a Honda dealership because then we might get something for a trade in and try and buy something. Of course we can't do anything in the area of buying a new car until after March 15 which is when my school district has to let me know if I *might* get laid off -- officially. Oh, and are credit cards are basically maxed out but we do have about $1000 in tax return sitting in the bank (which was supposed to pay off a bill).

I swear, I hate money. It makes life way too complicated.

For those of you who got this far, thank you for "listening" I just really needed to vent and get this all off my chest!

[mystictrek]

I don't know if this will help or not but I will share anyway.

As the 90s came to an end, my wife and I were in serious debt. Our son had died in 1994 which kep Mary from work for more than a year. Our budget was totally based on 2 full time workers -- minister and teacher. So, the debt began to accumulate in 1993 and 1994. It got worse as my daughter went to college (1992-1996) and Mary went for a Ph.D in Nursing (1992, 1995-1999). I kept the growing debt a secret until the day that we filled out an application for a loan for a new car in 1999. Mary was furious! But I still feel good about it because she probably would have stopped her Ph.D work and gotten a job. I knew that her salary as a Professor would be much higher than her previous salaries (or mine for that matter!).

But,

The first year of her work as a Professor showed no decrease in our debt. When I didn't keep her informed of this, she once again was furious. She wanted to go for bankruptcy but I didn't want to do that. I was pretty confident we could begin to reduce our debt if we worked at it and she agreed to try. She went out and bought QUICKEN. We created a plan to eliminate our credit card debt in 4 years.

Within a couple of months, we knew we were on the right track. We reduced debt much more rapidly than the plan called for and could still go out to eat once in a while and take some great vacations. We also began to put a lot of extra money into a 401 K plan for retirement. That reduces taxes significantly.

Now, our only debt is our house mortgage which we hope to pay off completely by the time Mary retires. I retired 5 years ago which was a dream come true. Without QUICKEN and a solid plan for debt reduction and then saving for retirement, that dream would not have been realized.

I remember feeling weighed down by that debt. As soon as we developed a plan and quickly got ahead of the plan, that weight fell off my shoulder in an instant. It was even miraculous.

One more thought.

We didn't stop using a credit card but decided to pay off one credit card (British Airways Chase VISA) every month and get miles for future trips. Since August 2000, I have never allowed any credit card debt to accumulate on that card and we use it for just about everything. I pay a $65 annual fee and nothing else but the cost of our purchases.

This post has been edited by mystictrek: 22 February 2008 - 12:45 PM

[McKenna]

October, on Feb 21 2008, 10:59 PM, said:

As one person put it: When it rains it pours.

In December we looked at our finances and realized that we were more in debt now than we were a year ago! I know how it happened but can't believe that we let it happen! I guess this is common/normal when going into a professional level job and suddenly earning more. Anyhow, we set up a budget to pay off the debt. Within 18 months or less we should only have our car payment and my students loans (which are something like a mortgage -- 30 years!)

My step-son (14) moved in with us early January which is good -- he needed help in school and support as a human being which he wasn't getting. Of course even Eustress is stress. And of course it has caused my husband and I to make major changes.
[No more walking around the apartment naked, stuff like that ] Seriously, it affects communication as we can't easily discuss things as we could before like the stuff that follows this paragraph.

I am in my second year of (contract) teaching. And now the governor wants to cut back budgets by 10% which is a huge amount in education as we barely make it... I can't tell you how much I spend for my students. It is ridiculous. So even worse I'm facing the possibility of getting laid off. So much for paying off debts and getting ourselves on our financial feet.

I went out to my car last night to go to an appointment and my brakes have no tension in them! This has happened before (8 year old car) so I figured we'd do the brake fluid thing. So my husband and I run out to the store tonight and the car won't start. At first we thought it was the battery. But the battery seems to be fine. So now we are trying to figure out how in the heck we are going to pay for car repairs! We can't afford a car payment now but if the repairs essentially total the car (over $4000) then it doesn't make sense to fix it. We have to get it towed. We are thinking it is best to take it to a Honda dealership because then we might get something for a trade in and try and buy something. Of course we can't do anything in the area of buying a new car until after March 15 which is when my school district has to let me know if I *might* get laid off -- officially. Oh, and are credit cards are basically maxed out but we do have about $1000 in tax return sitting in the bank (which was supposed to pay off a bill).

I swear, I hate money. It makes life way too complicated.

For those of you who got this far, thank you for "listening" I just really needed to vent and get this all off my chest!

I don't know what to say, OA, other than that I feel for you, and I hope all this will be resolved over the next few months. Bad things have a bad habit of all happening at once...but it'll all work out. Just hang in there and keep us posted! I'll keep you in my thoughts and prayers.

[October's Autumn]

Thanks to both of you. I really appreciate your responses.

I feel like we need to step back and take a breath before we make any decisions as far as cars go. I know from past experience that a year from now it will all be okay. It is just overwhelming at the moment. I picked up a book about "The Highly Sensitive Person" Not the original but a follow up. One of the bits of information I've picked up from it is the tendency to ruminate. It makes things worse (emotionally) and can also be the catalyst for making bad decisions...

So, Mysticterk, we are following your plan of debt reduction. We will only have one credit card for emergencies, plane tickets, and those things which need them and live completely off of "cash" (debit card) as soon as we get out of this. Sometimes the hard part is to not get in again! Kind of like losing weight and not gaining it back.

[Cynthia]

So sorry OA! Been there.... hated it too!!!

You also might want to check out daveramsey.com (books:financial Peace, More than enough). Common sense approach to getting out of debt and living on what you make, but he really focuses on using the process to improve and strengthen your marriage instead of tearing it apart.

Thanks for the inspiring story Mystic!

Godspeed

[October's Autumn]

Thanks, Cynthia! I'll check it out. I have a lot of anxiety when it comes to money. Financial Peace sounds like a good fit!


PS I looked at our public libraries and they carry three of his books!

This post has been edited by October's Autumn: 22 February 2008 - 07:05 PM

[canajan, eh?]

OA,

Don't know whether this idea would help, but this is a tip that served me well: In your budget, decide how much you can afford on average for food, gas, small sundry items. Each week, take only that amount out of your account in cash. Use cash to buy your weekly food, gas, and sundries. When you tell yourself you can only spend the amount you have in cash for the whole week, it really helps you focus your spending, and forces you to ask yourself if you really need that magazine and store-bought coffee this morning. Some weeks, you won't have extra cash for treats like a movie rental, but you'll feel good about helping yourself avoid "creeping debt." That way, you won't feel so stressed out if you have to use your card for emergencies like unexpected car repairs.

(Hmmm . . . maybe the "cash for gas" thing won't work where you live, though. I've been in parts of the U.S. where everybody has to use a card for gas -- this was a bit of a shock for me, but I guess that's the way it is).

Mystictrek, I love your idea about using a single card and getting points or airmiles for it.

Mystictrek, I was also stunned to learn about the death of your son. Hey, my heart totally goes out to you and your family. And I adore the way you took on an extra burden of worry for a short while so your wife would know she had the emotional support she needed to do her Ph.D.

Jen

[October's Autumn]

Jen, We kind of do it that way. We budget out our food and gas money that way. It helps tremendously. We got into trouble with the "extras" and not budgeting for emergencies. By the time we realized how much debt we had, we were out of luck! I have to remind myself that I have plenty of "stuff" and that it doesn't make me happy. The stuff that does help me feel fulfilled is that which allows me to create and I have enough of that to last me until we have gotten ourselves out of debt (barring getting laid-off)! I've rediscovered the library for checking out book instead of buying them which fulfills my need for intellectual stimulation. I'm reading Spong right now. I had to put him down after 2 chapters so I could absorb what I had read.

[October's Autumn]

One stress is being taken care of. We took the car in and the only reason it was having problems starting is a bad battery. It did start this morning but the breaks were still out. As it turns out the brakes are leaking fluid (keep in mind this is an almost 8 year old car) from the calipers on the front brakes and something similar on the back. Thankfully we have just enough cash (mostly) and credit (a little) to pay the bill to get it completely fixed! We also need two new tires (which we suspected). We found a mechanic through a friend and they have been really great. Completely different experience then I've ever had with mechanics in the past. This sets a back a bit on paying off our debt but we are very grateful that we don't have to try and survive with one car, buy a new car, or borrow money to get this car fixed! All possibilities we were considering.

[Cynthia]

Great news OA! Glad you got it taken care of without too much fuss!

[McKenna]

October, on Feb 25 2008, 06:03 PM, said:

One stress is being taken care of. We took the car in and the only reason it was having problems starting is a bad battery. It did start this morning but the breaks were still out. As it turns out the brakes are leaking fluid (keep in mind this is an almost 8 year old car) from the calipers on the front brakes and something similar on the back. Thankfully we have just enough cash (mostly) and credit (a little) to pay the bill to get it completely fixed! We also need two new tires (which we suspected). We found a mechanic through a friend and they have been really great. Completely different experience then I've ever had with mechanics in the past. This sets a back a bit on paying off our debt but we are very grateful that we don't have to try and survive with one car, buy a new car, or borrow money to get this car fixed! All possibilities we were considering.

That's great news! I'm glad to hear it

Which Spong book are you reading now?

[October's Autumn]

I just finished "This Hebrew Lord." Started "Resurrection: Myth or Reality?"

Thanks for keeping tabs on me. It helps to have a place to vent and people responding. Takes some of the stress away!

[McKenna]

October, on Feb 25 2008, 08:26 PM, said:

I just finished "This Hebrew Lord." Started "Resurrection: Myth or Reality?"

You enjoyed "This Hebrew Lord"? I think I own that one, maybe I should get around to reading it soon Let us know how "Resurrection" is, I've had my eye on that one as well.

October, on Feb 25 2008, 08:26 PM, said:

Thanks for keeping tabs on me. It helps to have a place to vent and people responding. Takes some of the stress away!

Glad to hear it!

[October's Autumn]

Yup, enjoyed "Hebrew Lord." I really like Spong because he changes voices when he is voicing his opinion vs. educating. So far I'm liking "Resurrection" too!

[mystictrek]

October, on Feb 22 2008, 03:20 PM, said:

Thanks to both of you. I really appreciate your responses.

I feel like we need to step back and take a breath before we make any decisions as far as cars go. I know from past experience that a year from now it will all be okay. It is just overwhelming at the moment. I picked up a book about "The Highly Sensitive Person" Not the original but a follow up. One of the bits of information I've picked up from it is the tendency to ruminate. It makes things worse (emotionally) and can also be the catalyst for making bad decisions...

So, Mysticterk, we are following your plan of debt reduction. We will only have one credit card for emergencies, plane tickets, and those things which need them and live completely off of "cash" (debit card) as soon as we get out of this. Sometimes the hard part is to not get in again! Kind of like losing weight and not gaining it back.

Actually, 2 things were important to me when we realized we had to get serious about budgeting and saving in August 2000. 1 -- I didn't want to file for bankruptcy or sign on to some kind of debt counselling program. 2 -- I did want to continue using a credit card for all purchases so we could get miles for travel and because I would have felt so defeated if we only used cash or checks. Another benefit is that credit card purchases are easy to track. I entered every purchase -- credit card, check, cash -- into the Quicken program. I still do except that I budget a $150 per month for personal cash expenses. If we go over, I put it in "miscellaneous expenses" which I budget at about $200 per month.

Every month became a victory even in the fall of 2000 as I carefully tracked every penny and saw that our debt was being reduced faster than our 4-year plan called for.

When you pay the full amount due on a credit card by the monthly due date, there is absolutely no finance charge.

The key is to track every penny, not to stop using a credit card. But just one credit card! Simply pay down all the other cards as quickly as possible. Both of you then need to look at the monthly statement of the one card you continue to use and see that every expense was budgeted. Mary learned to trust me again very quickly. I haven't paid a finance charge or a late fee on that one credit card in more than 7 years. All other accounts were closed when the balances were finally paid up.

We were at about 70,000 dollars in credit card debt in August 2000. By 2004, it was zero and it has stayed zero. The first few months are really important because that's when you get the finance charges to become more and more reasonable. Track the amount month after month and declare victory month after month as you find yourselves paying less and less money in finance charges to the credit card companies. Since we could budget a little money for dining out, we could celebrate each month at a restaurant. It also felt good to keep accumulating miles for trips. We love to travel.

The more we paid down the debt and paid every card on time, the lower the interest rates became. I think our average in 2000 was about 11 per cent. It went down to 7 within about 2 years and then ZERO when there was no more credit card debt (3 years). I felt such delight as I watched our monthly finance charge shrink from around $600 a month to about $400 a month in the first year and then about $200 a month by the end of the second year. A lot of money becomes available for things you want and need.

[October's Autumn]

That is inspiring. About half of our debt is credit card and the other half is Zero interest if paid by... We are focusing on those first then the CC. If I don't get laid off it should take about 18 months (barring any more emergencies). Once we are debt free I think we should look into a travel rewards one because we do travel to the East Coast about 1x a year!

[mystictrek]

October, on Feb 27 2008, 05:26 PM, said:

That is inspiring. About half of our debt is credit card and the other half is Zero interest if paid by... We are focusing on those first then the CC. If I don't get laid off it should take about 18 months (barring any more emergencies). Once we are debt free I think we should look into a travel rewards one because we do travel to the East Coast about 1x a year!

I'm probably giving too much advice since every one is different but I would pay off the highest interest card as much as possible and pay the minimum due on all others. That's the fastest way to get the monthly finance charges down which soon makes more money available to pay off the cards with less interest.

Don't ever be late on one of those special rates. One late payment allows them to go the highest interest rate for the rest of the loan. See the fine print. They also collect 3 per cent or more right at the start of those special offers. See the fine print.

I'm sure it will work out. Simply paying attention gets amazing results quickly. A few months of austerity (simplicity) followed by a discipline of staying within budget can change the balance sheet forever. It sure did for us.

[October's Autumn]

The reason we are paying off the Zero interest ones is because they accumulate interest so if they aren't paid off by such-and-such date we get hit with ALL the interest! I'm sure there is a way to figure it out to do that in combination with paying off higher interest cards but the energy hasn't been there to figure it out. The first goal was to make sure that all those Zero interest "unless" were paid off by their due date. They are also specific purchases (our bed, furniture, a computer) so once they are paid for they are done. Whereas when a credit card is paid down we could start using them, which is the problem we've had in the past. We do intend up to end up with one CC when all is said and done!

[October's Autumn]

I received my letter saying they want me back next year! I won't have tenure until July 1 so for this year and last year I've had to wait. They are looking at laying off 155 certificated employees and that shouldn't touch me because of the number of teachers hired after me... And considering the size of my district and the number of people retiring or going elsewhere they should not actually get laid off either although the stress is still there...

[Cynthia]

Hurray! Congratulations!!!