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Bad News

August 12th, 2013 at 11:59 am

I finally did hear from my insurance. They were contacted by the car rental company. I will have to pay the $1000 deductible and loss of use charges that the company incurred for taking the vehicle out of circulation. The insurance does not cover that.

All the work I did in the last month is now undone. The money will have to come out of my meager savings, and split between two credit cards.

The silver lining is that they called me this morning. At least I did not spend the weekend worrying about it. Financial stuff seems pretty bleak right now. I think I am going to take a break from thinking about it too much for now.

More Snowflakes

August 7th, 2013 at 08:39 am

I like doing this snowflake thing. It feels like such an accomplishment when I am able to add a little something to the list.

I added $56.50 to the EF:

$19.00 - Secret Shops
$27.25 - Secret Shop Pizza + Bonus
$5.00 - Survey Cash
$5.25 - Coin Jar

Beginning of the Month Updates

August 5th, 2013 at 10:26 am

This month, I am mostly on plan thus far - I paid my sister back her $800. She was really sweet and offered to let me have it for longer if I wanted to, but I insisted that I pay it back and I am glad. I am paying minimum on all my debts except the highest interest Discover card. I sent $700 to the Discover card this morning. A few more cards will be paid for later this month on AutoPay. The only thing that could have been different was some impulse spending a trip to the coast last weekend. I had planned on sending a little bit more to Discover, but I can't now. I will be tightening my belt for the rest of the month to keep on track.

I have not heard from the rental car company yet. My insurance agent called me last Friday and said that she had not heard from them yet either. She said that she had then called them up to ask what was going on. If I could have reached through the phone and smacked her, I would have done so. Why could she not just leave the whole matter be? I hope that in case the rental car company has "forgotten" about this, they won't now go and search for damages to the car having been prompted by her! I live in a constant state of fearful anticipation that they are going to send me a hefty bill. How long do you think I should wait before feeling like the whole thing is behind me? It has been almost 2 weeks now since I returned the car.

August Goals

August 1st, 2013 at 08:47 am

My August goals are:

[ ] Pay sister back $800
[ ] Contribute any snowflakes/extras to EF - Build $200 in EF
[ ] Bring lunch to work every day - I am usually pretty good about this
[ ] Don't gamble
[ ] Follow zero-based budget and send everything over to CCs
[ ] Walk 4x/week
[ ] Go to the gym 4x/week

Hit a Snag!

July 24th, 2013 at 03:12 pm

Why is it that when I start to get back on track and save money, something awful happens? D and I went on our trip out of town. We had a good trip, we were frugal, and I was motivated to keep working on continuing to save. However, the trip did not end well.

We had rented a car for the trip. On our way back, on a sharp curve on a narrow highway, a largish rock had rolled over onto the road and we scraped the side of the car with it. It could not have been avoided unless I had swerved the car into the opposing lane of traffic or had been going at a much, much lower speed. I took the car to an auto body shop for an estimate - the scratches are only cosmetic, but are on both doors on the passenger side, and the estimate came to about $2000. My insurance has a deductible of $1000, so I will have to pay the full $1000! The one accident I get into in over 7 years has to happen with a rental car! I would not have minded so much if it was my own car - I can deal with scrapes on it.

I understand why I need an emergency fund. It would have been helpful to have one. And I am trying to have one. But, it is very frustrating that when I start to try to scrimp and save in order to avoid debt, something like this happens and I end up deeper in debt. We had paid for this rental using our debit card (stupidly), and so there isn't even the extra coverage that a credit car might offer to a rental car. D and I will both pitch in to pay this amount, but I will be paying the major share.

I can't explain how sad I am about the whole thing. I almost want to give up. I won't, but I want to!

My Budget and Debts

July 9th, 2013 at 02:22 pm

Ok, as promised, here is a list of what my debts, income and budget are going to be. I will also post on the forums to get additional feedback.

First, some background about my living situation. My partner and I live together in a rented apartment. He is disabled, and does a part-time job. Each month he brings in ~$800, and I earn ~$3600. We keep our finances separate. He has no debt, but has some medical and other expenses that I do not pay for. The lease is in my name and I pay the rent. We take turns paying for things like movie tickets, we chip in proportionally for any vacations that we take, and we go dutch when it comes to eating out. We go to the second-run theatre or get Redbox, and eat out using coupons or Groupon deals, so our spending in these categories is not too much (see budget). We share groceries – not in any particular way, but he buys some things and I buy other things as needed – it works out pretty evenly over the month.

The budget below only reflects MY income and spending. Also, it is a bare bones budget. I realize that other than the $100/mo that I want to send to the EF, I am not saving much more for unexpected events etc. However, with over $44000 in consumer debt, I want to attack that aggressively rather than have a lot sitting around in savings. If something unexpected happens and I need more than I have in my EF, I will borrow the money from my Personal Line of Credit and then pay it down ASAP. Once I am down to about half this debt, I will up the amount I send into the EF.

My employer pays a 6% employee contribution towards my retirement plan. They don’t match – they just pay 6% in and no more. I have not planned to add anything to the retirement plan until I pay down my debt. My employer also pays contributions into a retirement reserve account, and I will receive a pension at retirement that is calculated based on salary at retirement. I have 2 more years to go towards vesting for the pension.

Income: $3600
Rent: $749*
Internet: $15 (my share)
Car Insurance: $40
Utilities: $45 (usually ends up bring around $30-40)
Cell phone: $46
Gas: $80**
Groceries: $100 (my share)
Eating Out: $80 (my share)
Miscellaneous: $100***
Emergency Fund: $100
Debt Reduction: $2245 (see section on debt below)

* I live on the West Coast, and this amount of rent is pretty reasonably frugal for my area. I will be looking for something slightly cheaper to move into when my lease is up at the end of August, but I don’t know that I can lower this very much.
** This much works out for in town use. If I need more for out of town trips, I will budget for it or use Misc. money for smaller amounts that go over
*** Misc. covers most of my expenses that are not covered in the other categories. I rarely buy clothes that are not from thrift stores. I have no regular medical expenses.

Discover: $3033.67 (25.99% APR, need to pay this off first)
USBank 2: $7086.72 ($700 at 23.99% APR, the rest at 0% APR till 8/13, 15.99% after that)
USBank 3: $9188.27 (0% APR till 10/13, 15.99% after that)
Chase: $4869.50 (0% APR till 3/14. Hopefully it will be paid off by then)
Citi Expedia: $3335.00 (0% APR till 8/13. Hopefully will be paid off by the end of the year)
Personal LOC: $10441.84 (9% APR)
Car Loan: $6197.09 (3% APR)

The minimum payments on all of these combined come up to $815/mo. I plan on putting $2245/mo towards them all.

I will try to see if I can open new cards and transfer some of these to 0% balance rates. However, given my debt:income ratio, it is unlikely that I will be approved for new cards. I tried recently and was declined. I will try again every few months or so while I work on reducing these debts.

How I Sold Myself Into Financial Slavery

July 9th, 2013 at 02:22 pm

This is a long story.

I grew up in India in a family where money was not plentiful, but my parents were frugal and we had enough money for what we needed, but not always for what we wanted. One of the things I wish my parents had taught my sister and me is how to manage money. Instead, what happened was we told our parents what we needed, and if they made the decision about whether we got it or not. Until my late teens, I never had to manage money at all. When I finally did, I was uneducated about how it all worked.

I got my undergraduate degree on a scholarship. My parents gave me enough money to cover living expenses, and I never thought about money – everything was working just fine. Following this, I was accepted to a graduate program in the US. I received a partial scholarship, and flew to the US when I was 22 years old to start my grad program. That is when my financial woes really began.

My scholarship would pay for the tuition aspect of my education, but I was responsible for my living expenses, University fees, and non-tuition college expenses such as books, etc. As an international student, I was only allowed to work on campus legally for 20 hours, and I took an on-campus job which helped towards meeting some of these extra expenses. Things were looking not too bad when a series of things happened that put me into a chunk of debt.

First, I signed up for some credit cards because a booth on campus was running some special and they told me it would help me build a credit history. In India, less than 1% of the people use credit cards. I had no idea how to use one. I was stupid and treated them like free cash. I used the cards to the tune of about $5000, forgot to make payments, my APR shot up, and I was in debt that I could not afford to repay. By the time I learned how to use credit cards properly, I was in trouble and had no idea how to get out of it. I kept making minimum payments. But I was too proud and ashamed to ask for help, and since I was only making minimum payments on cards with APRs of 27.99%, my debt kept growing.

Secondly, I was in a relationship that was going pretty well. We were both students, but he had less money than I did. He was going to graduate sooner than I did. He was a smart guy and we had no doubt that he would get a good job as soon as he graduated. So, we were reckless in our spending (on my credit cards) with the plan that he would start paying off what we thought of as “our debt” as soon as he got his job. But less than a year before he graduated, he cheated on me and we broke up. I was saddled with the debt that he showed no inclination of helping with – another several thousand on my debt list. This was totally avoidable. But I was stupid and young and having fun and being in love seemed more important at the time than being sensible and frugal did. Needless to say, I have learned my lesson!

Thirdly, I made a major shift in my career. I realized that after I graduated, I would be doing a job that I would not like. I made the decision to change my major after spending 6 years of my life in school working towards being an engineer. I made this decision against the advice of my parents and other friends. This meant going back to school for what would only ultimately lead to a lower paying job than if I had continued on as an engineer. Despite the additional cost to me, I have not regretted this decision. I love what I do, and I know I would have been miserable had I not changed career paths. However, as an international student in the US, I could not apply for federal financial aid, and so all of my educational expenses went on my credit cards also.

Fourthly, I bought a car. This is my lowest interest debt, and I needed a car, so there was no way around it I suppose.

The real trouble started however, after I graduated 5 years later. By this time, I was laden with consumer debt. But I had a job that paid me well. Not too well, but certainly more than the part time jobs that I had had while I was a student. It started out well, and I was determined to pay off my credit card debts. That is when I discovered gambling!

This is horribly difficult to write. I am so ashamed of my gambling habit. It seemed at first to help – I could “earn” money this way and pay my debt off sooner. However, soon my bets started getting larger, and so did my losses. I tried many times to quit, but like any other addiction, I felt “powerless” over this habit. I read somewhere that what sets gambling apart from other addictions is that if you are gambling in order to pay your bills, the addictive behavior itself can seem like the solution. This makes it an extremely difficult behavior to change.

I hit rock bottom at the end of last month when I had maxed out all my credit cards and my personal line of credit at the bank. In order to make ends meet, I had to borrow money from my sister (but I did not tell her the reason I had to borrow the money). I felt more ashamed of myself then than I have ever felt in my life. I resolved to quit and am “sober” now. I need accountability, and my hope is that by posting my spending on this blog, I can be accountable.

I feel a sense of hesitation to post this entry. I have a feeling that I might go in and “delete” it if I feel too ashamed. Anyway, there it is – my stupid story of my stupid choices!

No One Knows How Much Debt I Have

July 9th, 2013 at 02:21 pm

I worked myself into $44,300 of consumer debt because of stupid choices starting in my mid-twenties and leading up to now - when I am 34 years old. I am ashamed of this debt and cannot bear to think of how I have been hurting myself and those who are close to me by making choices that will eat up the bulk of my finances for the next several years.

I want to be honest here because I have not been able to be honest about this with anyone - including my partner, my sister and my parents. The most I have told people is that I have considerable consumer debt. My partner thinks it is about $33,000. I feel so ashamed! How could I make choices that would put me in a position to have to lie to people I care about?

I resolve to never again be in a position like this. I will work towards eliminating this debt. Thankfully, I have a job that pays well enough where if I scrimp and save and live frugally, I should be able to pay this debt off in about 3 years. I hope sooner than that too. Please lend me your support. I need every bit of it that I can get.