So Sick of Debt

So I finally made a visual representation of my debts, savings goals and achievements, courtesy of Ticker Factory. Like it? Meanwhile I also updated the real state of my emergency fund (post-car repairs) and found it wasn’t as bad as I’d thought! I need to find  $470 to get back to where I was (closing in on $1020). Then I’ll change to my next e-fund goal of $5000. I’m feeling good again - I know it’s all in sight.

 Not sure if I am finally catching on about what it means to be frugal, but for the first time I am really thinking about whether or not I need some of the things I want to save for. I still want to do the travel stuff and things related to experiences (like celebrating my graduation) but I’ve been lusting after all this furniture lately, desperately trying to figure out how to afford it. Now I’m thinking: what exactly is wrong with what we’ve got? Sure it’s not my style and it is getting older, but it isn’t shabby and it isn’t awful. It’s probably a bit bland for my taste but there’s plenty of time to express myself in future, when I can afford it. I think I would rather think about doing stuff with my family than buying stuff. Hopefully this feeling won’t pass!

I keep track of my net worth on networthIQ, but have never been able to make it public because I opened it with a name that is a bit too … well, public.  One day I intend to transfer the data to my debtfretter moniker but haven’t gotten around to it recently.

Suffice to say, including our retirement accounts, our net worth is $68,195. I have to say, we’ve had a stellar run this year. In January, our net worth rose $3116, and in February it rose $1780. In March it went up about $900 and in April, the amount was $2110. This progress has mostly been due to our efforts to pay $500/week off debt, which is more successful some months than others.

However, we are facing our first ever month where our net worth might drop. When I say `the first time’, I of course only mean since I started keeping track! Before June 2007, our NW dropped all the time - that was the problem!

But this month, car repairs are likely to rob us of most of our emergency fund - our billpaying account (which isn’t included in my net worth figures) just doesn’t have enough to cover it. As well as that, I won’t be contributing to the car loan for the next two weeks as I save for our party costs instead. And clearly, that money won’t contribute to our long-term future!

That still leaves 2 weeks of (hopefully) $500 car loan payments for the month. Plus hopefully I can redo some of the damage to the emergency fund before May is over. I’d like to at least stay stable in our net worth and not go backwards, but I don’t know how possible that is.

One thing I have noticed - as soon as I pay off any debt, I like to update my sidebars on this site. But now that our EF is taking a hit, do you notice I haven’t touched the sidebar to `report’ the damage. Hmmm, pretending the money’s still there doesn’t change reality! I’ll get to it … soon!

By the way, did I happen to mention that I’m SO SICK OF DEBT????

Well, it turns out my hubby’s car needs more work and there is now way we will avoid eating in to our emergency fund. Funnily enough, after being so adamant I didn’t want to use that money no matter what, I finally realised that it’s OK to do so. That’s what it’s there for! I had been thinking I would rather put the repairs on the credit card and pay the bill off quickly - how weird is that?

Anyway, things are a bit tight - there’s been a lot of little niggly items lately that have eaten into our budget, and despite only working one shift on my last pay cycle, last week I was determined to pay the full $500 off. We actually ended up going into the red by $7.70 in our operating account because of that (the account fees came due when I wasn’t expecting them) so I probably shouldn’t have pushed things so hard. However, what was worse was that we had our usual $6 monthly account fee, but there was also $18 in non-bank ATM fees! That’s terrible and we will have to get our act together - infact, I’m the worst culprit at this, so it’s my new challenge - ATM fees must be no more than $4 this month.

Anyway, hopefully everything will keep going well. Our home situation is SOOO good now. We are definitely staying and even my FIL is enjoying the new system. We all have our space and we all seem much happier!

My husband has just informed me that two front tyres for his 4×4 vehicle, plus repair/replacement of something called `cv boots’, is going to cost about $500!!! Yikes! Luckily, we do have a billpaying account but it is pretty low already this month and I also have annual car registration due! Something has to give … not sure whether I’ll be able to cover all bills this month without breaking into the emergency fund (at least for a while) but if so, that’s what it’s there for. The other alternative is to cut into debt repayments (but in my mind, this isn’t really an option :).

It’s taken a lot of effort to make our usual $500 debt repayment this week because I only did one shift at work (not my usual two). But we just had a quiet weekend at home to allow us to use our fun money towards debt. This is one reason I maintain a pretty substantial $150 fun/miscellaneous section in my weekly budget - it helps sometimes when other parts of the budget fall shorter than I’d like.

As for money generally, I am really trying hard to stay focused on my goals for this year and not worry too much about what will happen next year.  I already know my goals for 2009: I really want to boost our EF substantially, and begin our home deposit savings. I’d also like to start contributing a small amount to a managed fund, with the goal of slowly increasing the monthly contributions over time. My husband and I both also plan to begin salary sacrificing a bit extra into our retirement funds.  And I intend to get our wills sorted and invest in some life insurance for me.

All this will mean our lifestyle won’t change much when I start working, but it will be very exciting to move forward anyway. But for now, I must just focus on this last debt!!

OK, so back just before 2007 ended I published a list of financial goals for the year.

These underwent a lot of alterations in the early months of the year, but in late February I settled on these goals. They looked a bit shaky when it seemed more likely that we would leave our current home, but with things looking pretty good in that respect these days, this is the current list, and where we are with each (listed in order of priority):

Goal 1: Pay off car debt: Currently $6495 owed. If I can keep up our current repayment level, on track to pay this off on or about the 1st anniversary of this blog (early July)! That will make us consumer debt free!

Goal 2: Boost EF to $5000: Currently $1017 in situ, I expect to use tax/family payment rebates (about $2000) plus some of my child care rebate to add nearly $4000 in total. This is unlikely to be achieved till about mid-September.

Goal 3: Pay for our joint party: My 30th birthday snuck by in the past week or so (ha!), and my hubby has a similar big one coming up, so we are celebrating together. $1000 should cover some champagne for the toasts, plus food etc.  We are having the party in the backyard, so we are keeping costs down, but there are lots of guests, many from interstate (meaning it’s a big deal). To come up with the money, we will suspend car payments for 2 weeks (or 3 if necessary) just before the big event.

Goal 4: Contribute $500 to a relative’s birthday function: Thi is something we committed to a long time ago, and something we really want to do. My tutoring work at the university should pay for this outright without affecting our weekly budgets.

Goal 5: Fly south to see a friend’s baby: This is budgeted to cost $3000. Between the remainder of my child care rebate ($1500) and the money projected to be incoming from the sale of our health insurer ($2000 - see previous post), this might be covered without affecting weekly budgets.

Goal 6: Graduation expenses: Between the grad ball, gown hire, getting a dress to wear and general celebrations (plus I’m unlikely to do any casual work that week), I think this will cost at least $1000. I will budget for it from weekly surplus funds (all debt will be paid off by then).

Goal 7: Buy my next car outright. Though my husband’s car will be paid off, mine is in such a poor state that I think I am best off saving to buy a relatively recent Corolla, then keep it for as long as possible. In Australia, an ‘06 model might be obtainable for $15,000 (after all on-road costs). When I crunch the numbers, I end up about $9000 short on this goal (having met all previous goals). I could just extend this goal into 2009, but I feel that by then I’ll be working full-time, I’ll need a good car and our focus then really needs to be on a house deposit. So I am just going to leave this goal sitting here, and see what comes up over the year. Anything could happen to make this more achievable. Case in point: my previous post about the funds fom my health insurer!

As you can see, a lot of my goals are not based around getting into a better financial position - not in so many words, anyway. I think it’s important to use your budget to continue to live life a little. For me, this means paying strict attention to where the dollars go, in order to ensure they go where they are most needed and/or wanted.

Do you have any financial goals for the year?

We got an unexpected and rather large package from our health insurer yesterday. Turns out that inside was a letter and a prospectus. Our insurer is to be bought out by another company, and if the plan goes ahead, each `contributor’ will receive a payment based on how long they’ve been with the company and what kind of cover they’ve held in that time. In our case, the estimated payment will be $2100! We will remain covered by the same brand, with the same conditions, and the same regular payments.

In Australia, private health cover just essentially buys you the chance to be seen more quickly and in more comfortable surrounds, but it is worth having. (We have `universal’ health cover for all citizens but there can be delays for non-emergency treatment).

Anyway, our insurer is a not-for-profit but this change will mean it will become a for-profit agency. The obvious question is what this buy-out will do to our premium. An independent administrator has ascertained it is unlikely to affect premiums significantly (partly because of the government interventions involved), though I guess that’s not set in stone.

My husband and I talked about it and we said it was essentially `free money’ from our perspective, and if the premiums go up too much we will just have to consider moving to a competitor.

So hopefully, we will receive $2100 sometime during the year! If you’d told me in January to expect a cash payout  from one of our regular monthly creditors this year, I would have laughed. I guess we’ll be sure when it actually arrives. I have some ideas for where that money could go.

Which reminds me … I plan to update my 2008 goals, and where I am with them, in an upcoming post.

I’ve been tagged by Dolly Iris to share 7 random things about myself. I’m pretty boring but I’ve got a few:

1) I’m a bit obsessive-compulsive about silly stuff. Like if I’m in a chair with my feet up, and one hits the floor, I have to tap the floor with the other foot too. Then I have to tap the other way `so the other foot gets to go first’. I know … don’t judge me, people!

2) I have been at university/college for 8 (count ‘em) years, and I did a night class that was four nights a week/three hours a night while working full-time the year before I started that. I’m over it!

3) When I was aged 10-13, I was obsessed with famous murder cases and murderers, and used to get all the gory details from library books etc. I also used to like horror movies but now that I work with casualties and go into surgery etc, I can’t stand watching these movies - I think it’s because the only way I cope with seeing these injuries and doing something to help is to NOT concentrate on the pain the person must have gone through when it happened.

4) I occasionally cut my own hair, which I get away with (usually) because it’s curly. I cut my brother’s hair all the time and am actually pretty good now at men’s cuts. But my husband doesn’t let me near him …

5) I’m 30 years old and have never lived outside my home town. It’s a reasonable size, so it’s not that bad. I’d like to travel and maybe live somewhere else for a while but I know I’ll end up back here eventually.

6) My mum and dad are among my best friends. As you can tell, that means we’re a close family.

7) My dream holiday would be a six-week Italy/France/Greek Islands getaway with a week in Egypt thrown in on the end. Not so random and weird but worth mentioning!

So now that I am done, I tag (only 3 bloggers):

The Good Life on a Budget

Ugly Debty

Eliminate my Debt

The Rules:

1. Link to your tagger and post these rules on your blog.

2. Share 7 facts about yourself on your blog. Some random, some weird.

3. Tag up to 7 people at the end of your post by leaving their names as well as links to their blogs.

4. Let them know they are tagged by leaving a comment on their blog. 

I received a letter from my credit card company that made me smile:

“We’ve noticed you haven’t been using your credit card much lately. We were wondering if maybe it was because you need a boost to your credit limit. How does $10,000 sound?”

And so it went on in the conversational tone that this particular company loves to use. The limit increase is pre-approved so all I’d need to do would be send back the bottom portion of the page.

Funnily enough I HAVE been using my card a lot but always making immediate repayments the same day. They just haven’t been making any money out of me, and therein lies their problem!

The letter made me smile because it even offered me the choice of a `lower limit’ - eg if, say, I didn’t want $10,000 but maybe I wanted $9,000, I would just write $9000 in the space provided.

I thought maybe I should reinterpret that for them and really ask them for a lower limit, say $2000! I’m sure this wasn’t what they had in mind!

You might have noticed I’ve not been posting as much. As well as the turmoil at home, I have been trying to be a little less `debt-focused’ because I think it was starting to get me down. I stopped having fun, which I think is NOT the idea of debt reduction. It wasn’t so much that I was trying to avoid spending money, just feeling like everything I do is so regimented - work, uni, household … I need to be a bit more spontaneous. And it doesn’t really take money to do that.
When we decided to move out I felt conflicted … being so `full-on’ about paying off debt meant we were in a much better position to move out than we would have been otherwise. Yet, now I was looking at having less available spare cash than ever! And I wouldn’t even be paying off debt with the money! Did this mean having even less fun?
If we do end up staying, I can still pay off big amounts of debt, yet still learn not to structure my WHOLE life around money. If we leave, I have to see going out less as the `price of freedom’. Chances are, we’ll enjoy being home more than ever. It’s all a matter of perspective.
In the meantime, I’ve been making an effort to go walking every day, I’ve also gone out and bought some jeans and shirts, because I was sick of looking like a homeless person when I’m not in my work clothes.
I’ve also planned some nights out eg a comedy act next week for me and my hubby to go and see. This all comes out of planned `fun/miscellaneous’ spending of $150/week. Living here, we can still put $3-400 on debt, and this money also acts as a `catch-all’; if something uinplanned comes up.
Part of the deal here at home under the `trial arrangements’ is a switch-around of bedrooms. Suddenly we all have a bit more privacy, and my mood has lifted a lot - even staying home is a bit more enjoyable now.
I don’t really know what the way forward is - the trial here is running really well.
A commentator suggested I get my EF up to $5000 before continuing the debt pay-off (in case we need to get out fast). That is the logical thing to do, and I will keep extra money aside in the short term instead of putting it on the debt (for the bond, rent in advance, moving costs etc). But if we decide to stay, I know I will move that cash over to the car loan. I just want to get rid of that debt so I can save that $5000 as a next priority.

On another matter, I checked my EF balance yesterday - it is sitting pretty at $1017. For the first time I am realising that receiving interest on money in the bank actually can and does add up over time. I am seeing compounding at work. Eg when I put the $1000 in originally, there was already about $3 in the account. After month 1, I received $4.20, for month 2 I received $4.50 and after month 3 I received $4.80. I know the interest is paltry when compared to what we are charged for our debts, but it is nice to see that balance just sitting there, doing nothing but making me a little money. It makes me think about what could be achieved with a bigger balance and better interest rate!