The end of another quarter

The end of another quarter is here which means it's time to tally up my efforts and see how well I did for the past three months.  I know a lot of other debt reduction bloggers that I follow seem to update their numbers more frequently but for me every three months is already a lot to handle.  Even though I am tackling the debt and am always happy to see the amounts I have paid off, I still don't like to look at my bloated account balances.  I'm hoping the residual dread will wear off the longer I keep at this and the lower my balances get.  

Plus, when I totaled my debts this quarter, I realized that I am super close to having paid off $10k since last October!  A year ago I would have thought that kind of debt pay-off was impossible and I'm still a little dazed that I've come this far already.  I can't wait to post that I've hit the $10k mark which should be very soon!  Here's looking forward to the next three months!

And the grand total is:
 

Student Loan: $37,172

Car Loan: $9,942

Credit Card 1: $3,908

Credit Card 2: $4,693

Credit Card 3: $0

Parents: $0

Total: $55,715

Here’s my starting point back in October 2011:

Student Loan: $38,339

Car Loan: $11,684

Credit Card 1: $10,577

Credit Card 2: $3,635

Credit Card 3: $0

Parents: $600

Total: $64,835

Paid off to date:

4th Q 2011: $5,051 + $0 in savings

1st Q 2012: $1,298 + $150 in savings

2nd Q 2012: $2,771 + $506 in savings

My net worth

Something that I’ve been doing along with tracking my debt and debt reduction progress, is tracking my net worth.  What prompted me to do it in the first place was this desire to prove that my huge amount of debt had actually bought me something.  What I ended up proving to myself was that I had wasted a ton of money on nothing.  I’m young in my career so I don’t have much set aside in retirement and my personal savings was at $0.  I owe as much on my car as it is worth and my personal items don’t amount to much when compared to my huge debt.  My net worth was 10’s of thousands of dollars in the negative.  I was worthless…. actually I was worse than worthless.   

When I started this process I was so ashamed of where I was that I never shared with any friends or family my financial situation.  That included not telling anyone that I had started a real plan of debt pay-off and a blog to record my progress.  The biggest reason I didn’t want to share this information was not because I was worried they would judge me based on the amount of debt I had racked up, it was because I was worried what they would think if I completely failed to keep whittling away at my debt… I have a history of jumping gung-ho into a project, be it tangible or self-improvement and then giving up when things get tough or just losing interest altogether when something new comes along.

But given that I have been sticking to this goal and gaining steam every step of the way, I decided it was time to start sharing my efforts with those closest to me.  It felt great to admit to people that I had been struggling and was not proud of my past debt-ing ways but was overcoming my debt and really accomplishing something.  I didn’t really give too much detail about the actual numbers and the only person I gave the blog address to was my middle sister who is similarly trying to dig her way out of debt but it still felt great to get it out there. 

When I was talking to my mom about it I told her that I was looking forward to the day that my net worth would break even, that I would officially be worth nothing financially speaking and we got a good laugh at that.  She, of course, assured me that I would never be “worthless” but it was just so freeing to be able to talk openly about my debt problems and my attempt to overcome the debt with someone so close to me.  And now that I’m out in the open to my friends and family it gives me the added push to stay on track!  

To invest in my 401(k) or not...

Tomorrow will officially mark my one year anniversary at my new job which means that besides having been in this roller coaster of a stressful job for a whole year, I am now eligible for company 401(k) matching.  The big question is "should I go for it?"  The company matches up to 4% if I contribute 5% which is probably the only way I'm going to get any more money out of this company given everything that has gone on lately.


According to Dave Ramsey I am better off putting all of my financial resources towards paying off my debt in as short amount a time as possible.  And I can really understand why that advice makes sense.  However, I have not been able to contribute to a retirement plan for almost 4 years: three because of constant pay cuts at my last job that sent me re-arranging my finances ever couple months to stay above water and the last year because I wasn't yet eligible to participate.  If I stick to my current debt pay-off plan it will be another 5 years before I'll be debt-free and that doesn't take into account all the "what-ifs" that could happen in that amount of time... like me or S losing a job or starting a family.


So that makes almost a decade of no retirement savings which I think even Dave Ramsey would say is too long to put off planning for retirement.  Perhaps I need to look at my debt in terms of "good" debt vs. "bad" debt: http://money.cnn.com/magazines/moneymag/money101/lesson9/index2.htm.  My "good" debt is my student loan, it's the bulk of my debt but it's at a really low interest rate and it helped me get the jobs that will eventually pay it off.  My "bad" debt includes my credit cards with their high interest rates and my car loan even though the interest rate on that is low.


I should be able to pay off the "bad" debt within the next two years.  That seems like an amount of time to continue putting off saving for retirement that I can feel comfortable with.  


What would you do?  Push off saving until all debt is paid?  Start saving now regardless of debt?  Or split the difference and pay off the "bad" debt before saving?

Talking about finances with my partner

S and I have not really learned how to talk about money in a productive way in the two years we’ve been together.  This is partly because I’m ashamed of the debt situation I’ve created for myself and avoid discussing my financial woes with anyone, including him.  Actually, I haven’t even mentioned that I am writing this blog to anyone because of how ugly the truth about my finances looks all written out.  I realize that I’d probably be better off with some support from S, friends and family and maybe the time is coming soon that I share my struggles with them but for now I’m keeping it to myself until I have some real successes under my belt.

Another big reason we struggle to discuss finances is his own situation which is, in some ways, as bad as mine.  He ended up saddled with an underwater mortgage during the recession, struggled to keep up with rising utilities and insurance for two years, and eventually started falling behind.  After losing his job, the house was soon to follow, and here we are today… he’s lost everything and all I have is a gigantic pile of debt.  That, coupled with the fact that we are both extremely independent people who regard turning to others for help as some sort of weakness and you can see why we struggle to have productive conversations about our finances.

But life has slowly started to turn around for us, we took a leap of faith leaving Florida and coming up to Boston for my new job.  He has landed a great job as well and our restrictive financial situation is slowly easing up.  Since October I have been working at changing the things about me that hold me in this debt cycle and am feeling generally positive that I can make lasting changes.  But even with all this positive change we still avoid the financial discussions at all costs. 

I understand the “whys” to this situation but I have no idea how to address them.  I want us to be able to work at this together, without arguing, so that we can do the things we’ve always wanted: travel, marriage, kids, another house someday… and a long ways away, a nice comfortable retirement.  I think I’ll devote the rest of April to exploring ways in which couples address money positively.  I think it’s long overdue that S and I learn to open up to each other about money.

Oops, that was embarrassing

I've been really diligent about keeping a spreadsheet up-to-date with my current balance and any expected expenditures and deposits for the coming months.  Sort of like a balanced check book for the computer age, I check my balances online, make sure payments are set up or went through on time, and it all gets tracked in one place.  This has been really crucial since I've started tackling my debt since I need to know how much I can pay off each bill while making sure there's enough left over for all the other bills.  There have been a couple times in the past months that my account has dipped too close to $0 for comfort but I've stayed out of the danger zone by carefully planning when I send bills off so I don't bounce my account.... except for today.

I knew I was "in the red" coming up soon based on a review of my spreadsheet last week and I had planned on transferring some cash from my newly padded savings account.  For some reason I thought I had more time because I opened up my spreadsheet this morning when I got to work and realized that today was the day I would bounce my account unless I deposited some money.  Too late to do a transfer from my savings (which I have safely out of easy reach at my credit union) to my big bank checking account, I counted up the cash in my pocket and realized I was still $7 short of covering the bill.  Fortunately, I keep a little wallet of quarters in my car for parking meters so I ran out and breathed a huge sigh of relief that I had $9 in quarters.

I hustled into the bank with my coin purse and $13 in cash with a fear they wouldn't take my coins since they weren't rolled up.  Thankfully the bank was practically empty when I dumped my coin purse on the counter with a look of desperation.  I know I shouldn't feel so embarrassed but I work in one of the wealthiest towns in the area and I could just imagine the thoughts of the rich people around me.  The teller agreed to take the change since it was quarters and not 900 pennies but I could tell he was feeling sorry for me.  So even though it was an embarrassing encounter, now I won't bounce my account and I've learned that I really need to leave some wiggle room in my budget.  

End of first quarter 2012

Now that it April is well underway it’s time to face the music about my debt reduction efforts for the past three months.  First quarter 2012 is not going down in any books as a huge success for my finances but it wasn’t as bad as I thought it was going to be either.  I struggled with keeping my bad spending (and bad diet) habits in check and I had several moments where I just felt like waving the white flag and admitting defeat.  Fortunately, a few really great things happened during the last three months that will help me gain some momentum in the coming quarter.  The biggest was S landing a killer job with killer pay… now we can equally split the household expenses which frees up more of my money towards debt reduction! 

Besides the meager amount of debt paid off I did have some other achievements to help me become debt free:

• Took a look at some of the triggers that unleash my spending fury and am working on making lifestyle and habit changes to help me avoid disaster in the future.
• Wrote out a list of major expenses I have coming up and worked them into my budget so they won’t sneak up on me anymore.
• Changed my direct deposit at work so that a small amount goes automatically into savings to build up that emergency fund.
• Paid off the small debt to my folks which significantly reduced the “shame factor” I carry around with me.

All in all here’s where I am today:

Student Loan: $37,611

Car Loan: $10,600

Credit Card 1: $4,746

Credit Card 2: $4,893

Credit Card 3: $636

Parents: $0

Total: $58,486

Here’s my starting point back in October 2011:

Student Loan: $38,339

Car Loan: $11,684

Credit Card 1: $10,577

Credit Card 2: $3,635

Credit Card 3: $0

Parents: $600

Total: $64,835

Paid off to date:

4^th Q 2011: $5,051

1^st Q 2012: $1,298 + $150 in savings