So Sick of Debt

Well I’ve been quiet for a week … so you know there’s been so much upheaval that it isn’t worth doing updates because everything could change at any moment.

However, I can say that we have been trialling new living arrangements while we wait for the house we like to come available. We’re still saving to move, but we are already over the moon with the effort my FIL has made. I don’t think he’s ever been forced to consider other people’s needs before in this way. But he has made a huge effort to give us some privacy (one of the big problems before) and has been stellar in his attempts to reconcile the situation.

However, there are 4 weeks to go till we can sign on to move into the house, so there is plenty of time for the honeymoon period to wear off.

If things stay like this? …. I’d be more than happy to stay.

I’m not getting my hopes up yet though.

OK, so now we have to figure out how this move is going to work. First of all, here’s a scan of our finances:

• $1012 in our EF
• $1025 in our bill paying account
• Able to save $500/week till we move

So then, there’s the new digs. We have put in an application in for either of two houses that are not yet vacant. Both have three bedrooms, airconditioning and polished floors but one is $AUS320 (available next week) and the other is $340/wk (available early May). We prefer the second house - it is nicer and the long lead-in gives us time to save our bond and some of the expenses of moving.

We have had some good luck: just as we are now moving out from here, my mother happens to be downsizing from her home into a much smaller unit in the city. She has collected some beautiful furniture over the years, very little of which is going to fit into her new home, so guess who is going to be the recipient of much of it? Amongst these items is a beautiful Balinese carved wooden day bed, which she has given me as an early graduation present. Needless to say I am thrilled. But we will also be able to benefit from a lovely comfortable couch, a dining table with some old but nice chairs, a desk, an outdoor table setting, some basic storage units and a heap of small decorative items. We’ll also receive a heap of plants to spruce up our back patio (really just a square of paving). We got rid of a lot of our basic items when we moved in here a few years ago, so it is fantastic that we won’t feel the need to go buying `stuff’ to fill our new place (we won’t really have the money to do that anyway!). The only thing we will need is a washing machine, but we may be able to use some funds from our billpaying account for this.

So anyway, it seems like we will have the cash to pay for our bond and our first 2 weeks of rent (needed in advance), plus all costs related to the joint party we are having in May. We shouldn’t need to cut in to our EF - fingers crossed!

Our debt repayment schedule is going back to basics (just over minimum payments on the car loan), but I am hoping the lump sums I had planned to use to boost our emergency fund later in the year can instead be used to wipe out this debt. And just to feel like we are getting somewhere, we will put $20 a week towards the EF once we are settled in.

 It is disappointing to halt our quickie debt repayment system but I am confident we’ll find alternative ways to cut the debt … if a little more slowly than we had planned.

Negotiations broke down again a few days ago, so we are definitely leaving. Suddenly now (ie today), my FIL has realised we are REALLY seriously leaving and now he is `distraught’. However, I’ve seen this before and once we settle in again to stay, I suspect things will go back to normal.

I have contacted an agent about a house we like and are waiting to see if we will be accepted as tenants. It’s time to return to the land of the living (though we will also be somewhat less financially free!).

Oh, well. Them’s the breaks!

Well, a few days have gone by and the storm has blown over, though our resolve hasn’t. We are still very sure we will be moving out in the near future, though it looks like my hubby and those around us have brokered a short-term deal.

We sat my FIL down and explained the lay of the land. We laid it all out on the table - and I think it was the first time he realised we were serious about what we need … and that we really were planning to leave.

Then my sister-in-law dropped over and took him for a drive. She laid it all out on the table too, about the few options he has if we can’t stay. And I know a few of his friends have gently nudged him to think about what we’re asking for and why we might feel the way we do.

Then finally my husband sat him down again and outlined once again everything we thought, but this time we focused on why we thought the changes could actually be good for him.

It sounds like we may be getting somewhere. However, we’ve been at this point before and - partly becuase we didn’t keep the pressure on - it all fell in a heap.

So in other words, my FIL has agreed to the changes we had sought, but we have not yet agreed that this means we will stay long term. If it all works and he sticks to his end of the bargain, we will seriously consider staying. But if everything just goes back the way it was, well, we know we did everything we could but it’s time to go. We’ll probably give this 4-6 months, and see how it works out. It’ll be a lot less than that if it becomes clear it’s not working.

The other thing is,  we have convinced him to start planning for the future. We may have to move for work in the future and so, he needs to start looking around now at the retirement home options regardless of whether or not we stay for the short term. That way, if things do end up needing to change drastically, he has somewhere to go.

So all this means I will keep up the debt repayment effort but will also need to boost our EF a bit faster in case we need to move. I guess that’s all we can do.

It’s been a very bad day. To cut a long story short, my husband and I have realised we can not continue to live in this house with my father-in-law, certainly not without a firm exit date and strategy anyway.

In brief, my FIL went back on an agreement we had made about the living arrangements in the house. This is typical of his attitude, which is one of saying this is our home (as a group), but using his actions to show he sees it very much as `his house’.

Of course, it is his house (of course we recognise that), but he is now physically and mentally incapable of living here on his own. So if we go, so will he … most likely to a nursing home. This is not what he wants or what we want, but what can we do?

I know he wants everything to remain the same as it was (he’s lived here for most of his life), but the reality is that it can’t and we can no longer keep our lives on hold to stay here with him, especially when we feel so disrespected by his attitude and actions.

It’s a shame for us too … living here has helped us change our financial situation, and we are moving back into a housing market that is at its peak. Rent and house prices are obscene right now.

But I’d rather rent a `crappy but happy’ home than live in one where my family isn’t comfortable and we don’t have a voice in what goes on.

It’s unfortunate but true. On the upside, we are at least going to see through our debt repayment schedule and ensure we move without borrowing for bond or moving costs. But then we’re out of here. Perhaps it is for the best.

Well I could be … or I could just be giving in to my usual consumer tendencies. It’s my week off and I’ve been itching to go out and start purchasing the items needed for our room and the office. Thing is, I promised myself I’d pay off our debt before I did any of this. Not only that, but our other priority is saving for our joint birthday party, so furniture should be right down on my wish list.

Sometimes, the way my focus drifts so easily, I start thinking maybe I don’t really want to be out of debt. You know, in the same way they say that some obese people are actually subconsciously terrified of being thin because they fear the attention that comes with being attractive and noticed by the opposite sex? Maybe I don’t want to be debt-free because then I’d really have the chance to plan ahead. Maybe I don’t trust myself. It’s easy being in debt, because you have no choice but to pay off what you owe and you don’t have to think about what else you’d be doing with your money.

I’m trying to think of reasons I might subconsciously want to delay paying off my debt. Well, first and most obviously, it’s a hell of a lot easier to be in debt and get what you want straight away! But what else … I’m wondering what my subsconscious thoughts are about money and debt, and if these have anything to do with my money mood swings. Here’s my initial thoughts:

Money is hard work.

You can’t trust in money. It’s easy to lose.

There’s never enough.

How will I know which house to buy, or how much to pay?

Should I spend money on fun things or start saving once the debt is gone?

How would I know if something was a good investment? What if I lost it all?

Those are just a few things I typed without censoring myself. I’m surprised … I guess I thought I was more confident about my ability to manage my money. I notice there aren’t really any positive comments there. Is this how I really feel or just how I feel today?

Maybe all this has nothing to do with why I have been close to sabotaging myself in the past few days. In any case, I might have to keep myself away from retail opportunities over the next week or so and wait for these consumer desires to wear off!

I am going to add a blog to my Blog Roll called The Butler Project. I have to say there are some amazing posts on this site, including this amazing interview with a millionaire furniture store owner.  This post is so inspiring!

This guy, MR, has just done the hard yards over the years to get where he is today. His strategy has been plain - pay off debt quickly then do as he and his wife did - `save like bandits’.  Don’t invest in stuff you don’t understand. Look for opportunities in everything.

Honestly, go and have a look at this two-part interview transcript. Others might prefer a different approach but you can’t knock what this guy has achieved.

Well, I submitted my post `Trying to Have Patience’ to the 143rd Carnival of Personal Finance, which this week was hosted by Four Pillars. Happily, my post was accepted and is up with all the others!

In honour of Four Pillars’ heritage, it’s the `Oh Canada’ edition and there are plenty of other good posts listed. I particularly liked Value For Your Life, who posted on how to get your spouse involved in personal finance. I haven’t really had any problems in this area -  luckily, even though my husband is not into PF at all, he is more than happy to go with the flow, knowing we are heading in the right direction … well, most of the time anyway.

And there’s another interesting post from Not the Jet Set, an American blogger who shares the story of some friends who seem to be ignoring the credit crunch and buying a home (plus extras) with no money down, smack bang inn the middle of the subprime dramas. I think my jaw would be on the floor too.

Anyway, take a leisurely look, as there are many more offerings that might be more relevant to your own situation. Happy reading!

Well, it won’t make a difference until October but I got some very good news when I heard a newscast today. It turns out that I can expect close to $1500 more in childcare rebates than I was expecting.

In Australia, some of our childcare costs are covered week to week by the government.  That is, the government pays the childcare centre some of the bill, depending on your income and whether or not you are studying/working or at home full time. Then our last government introduced a system where you receive 30 per cent of what you paid out through the year in out-of-pocket expenses.

In November, Australia voted in a new government and I hadn’t known that one of their plans was to raise that 30 per cent to 50%.

Let me show you how this works.

The weekly fee for the `toddler room’ at our daycare centre is $AU240. 

The government has assessed our income as a couple and pays the centre $65, dropping the fee for me to pay (each and every week) to $175. Yes, that’s a chunk of change, given we’re on 1.25 incomes but the government’s bit helps.

Now, assuming I paid $175 for 50 weeks of the year (the centre closes for 2 weeks at Christmas). Over the year I would pay 50 x $175 = $8750.

Under the old system I would get $2625 back after the financial year (30%). But now I could expect $4375 (50%)!!

Now in reality, that’s not quite what I can expect this year. Our financial (tax) year runs from July to June, and in the second half of last year we only paid $110 a week (fewer days/week). 

But my refund should be something like this:

25 x $110 = $2750 (first half-year)

25 x $175 = $4375 (second half-year)

Total out-of-pocket for year = $7125

50% rebate = $3562.50!!

I had previously only budgeted $2000. If you’re wondering why they don’t just pay it for us week to week, I think it is so that childcare centres don’t up the charges so parents end up paying the same amount anyway.

This is exciting because I have been wondering how we will reach our rather ambitious financial goals this year -this will certainly help and reminds me that you never know what’s around the corner!

All that said, until it is officially passed in the budget I won’t be expecting the money … I could be disappointed. The newscast said the government was planning to honour the election promise but you never know how these things can be altered in the Treasury.

As soon as our debt is paid off, we’re actually planning to take a short break before launching into active saving, but don’t worry - we’ll still be needing discipline to achieve the short-term goal we want to achieve first. And then we’ll attempt gazelle intensity again.

As I’ve said before, we care for my father-in-law in his home. This mainly just means being around and taking care of his personal business - things like paying his bills, preparing dinner so he eats properly and staving back the charities that seem to call him 6 times a day. Generally, it’s not a big commitment.

But sometimes the situation isn’t easy. For one thing, he pretty much `owns’ the lounge room zone at night ie every night he watches old movies and sits in the dark. About 7.30pm, he turns all the lights off to save money on the electricity bill, which I should applaud. But he is really wasteful in other ways - like leaving his bedroom airconditioner on with the door open all day - so it drives me crazy that we can’t leave the area for 5 minutes without the light going off (he assumes we have gone to bed). In fact, sometimes it feels like we are being `put to bed’, though I know that is not his intention! Generally, once we’ve had tea, my hubby will watch TV in our room and I’ll do some computer work/study in the office, and/or one of us puts our son to bed.

Anyway, this can mean we end up with `cabin fever’ - confined to one of two small rooms night after night. This just means that we really do have to make the parts of the house that are `ours’ comfortable, otherwise we are going to end up hating it and moving out - not a good financial move for us until we have a home deposit and not a good social move for my FIL, who needs help to live at home.

So I guess the best answer is to bite the bullet and spend a little money while we’re here. I’m mostly talking about buying some furnishings that we can take with us when/if we leave, but which will make life more comfortable in the meantime. For example, I have a study, and often I like to be able to get comfortable to read a long passage from a textbook or even a novel. I can’t use the lounge chairs because there’s always a TV blaring there (and the lights are off!) and my office chair is a bit of a back-breaker. So I think it would be good to invest in an armchair that I can keep for years, recovering it when necessary.  I could even buy it cheaply secondhand and recover immediately. Whatever I buy, I am going to test it out fully, because comfort is going to be key!

I would also like to make my study look a little more inviting. Sometimes at night, I take one look at that room and just go to bed instead. I need some storage and organisation in there, plus a few little touches to express the fact that I do, actually, have a personality. These little touches don’t have to be expensive but I think they might be necessary.

In our bedroom, it would be good to buy a cabinet to sit the TV onn - it would help tidy up all the DVD wires etc (I find that mess of wires so depressing).

Finally, we are often left with the situation of having no space to have friends over and talk to them in privacy (without old movies blaring in the same room). So we would like to pave an area out the side of the house, so we could put our outdoor setting to good use and use this as a place to have a cuppa or a glass of wine with our friends.

Doing some of this stuff would be a nice reward for getting out of debt and I think it might improve our bottom line in the long run because we may be able stick it out her longer and save a better deposit + emergency fund.

I’ll just have to make sure I stick to my (new) rules before I go shopping:

• have the money upfront before I buy
• ask for a discount if buying multiple items in one store and/or paying cash
• look around for the best price, but don’t let price be the ONLY factor - I need to make sure I do end up with what I want or a happy medium

This just makes me want to pay the debt even faster!