So Sick of Debt

There have been a few changes on the sidebar over there on the right this week.

The best one is the presence of two `PAID OFF’ labels, though I really felt I had to leave the garden labour portion visible as a reminder to myself of the work ahead this summer.

This leaves us with only the car loan to go, which is pretty exciting and I still don’t know if we will aim to pay that off quickly (within 6 months) or get back on track for home ownership instead. That decision wil stay on the backburner for a while as we just accumulate some funds again (today, I have a feeling we will aim to pay the loan down first but this tend to change on a daily basis!). This is the only downside of paying off that family debt -we depleted our home deposit funds to do it.

However, otherwise I feel pretty good at the moment.  I have a LOT of work to do for uni, and my `fun’ time is popping on line to check my fave PF blogs and write a post.

Next week I have a friend coming up from down south for 4 days, which I can see will cost a bit in dinners out etc. However, I am on a bit of a health kick at the moment so I won’t be spending up too much. And I have already let her know that I’d rather spend a fair bit of time catching up with her at home. I will need to leave her to her own devices a bit because of the study I am trying to get done, but luckily she already let me know she would like to do some exploring on her own anyway, so that’s great as it works out well for both of us.

On a final note, it’s not finance-related but I want to share anyway. I have started my obstetric rotation at the hospital and the reason I haven’t blogged in a few days is that I spent from 8am Tuesday till 4am Wednesday in the birth suite, most of the time with a lovely young couple having their first baby. I was lucky enough to be present for the birth of their beautiful daughter, a magical experience that I will always remember. On a sadder note, my rotation involves spending some time in the neonatal intensive care unit at our hospital, which involves caring for some of the tiniest premature babies. One of the bubs in there at the moment was born at 26 weeks gestation - in case you didn’t know, babies are usually born at 39-40 weeks. The 26-week old is smaller than a tub of butter and her skin is still translucent, so you can actually see many of the blood vessels and organs inside her. Sometimes I feel so lucky to do what I do - sharing the best and worst of times with people can be difficult and emotional, but it is ultimately very rewarding!

I’ve added an extra debt item over on the right, which details some non-interest bearing debt that we owe to hubby’s dad (see Family Debt). It stems initially from a large purchase that we went halves in a few years ago, though most of that has been paid back. More than half of this amount owing now stems from funds my father-in-law paid to help us with a court case we went through over the past few years (we were suing over a money matter - we won, but there was no real financial gain once lawyers were paid). I know my dad-in-law has said not to worry about the extra - he has essentially written that part of the debt off. And because he’s elderly and fairly well off, he probably won’t realise when the balance we pay off DOES includes those funds.

I’ve been ignoring this family debt on this site because it is nowhere near as `important’ as the other debt. However, we have always planned to repay the full amount owing. As part of this attempt of ours to deal with debt we see it as important that we do stand on our own two feet. That doesn’t mean I’m not willing to accept help from family where they can do so. It’s just that when that happens, it’s best to do your best to repay the faith people have in you. If we repay it in full, we can feel ultimately proud. Also, you never know when you might need help again and those who’ve lost money in you in the past won’t see you as a good credit risk.

 I’ve decided to include this debt on this site from now on, as this is much more honest and will actually benefit me when I can look back in a few years’ time and see how far we have come. We are not currently paying this off (until recently we were paying $100 a week) because we have an alternative plan for its repayment, as follows. We want to save for our home deposit as quickly as possible. We aim is to save for all deposits, fees and moving expenses (see previous post) and then use the $7000 first home owners grant to repay this family debt. This way, we `look’ better to our lender as far as saving capacity goes and we won’t owe the debt after the home purchasde anyway because of the grant.

I think when you are adding up your net worth (I use NetWorthIQ.com to do this once a month for motivation), it is important to be honest with yourself. Otherwise, when you clear the debt you have listed online, the feeling of success will be hollow. I like how JW Thornhill over at Need to Be Debt Free (see Blogroll), lists all those little debts that everyone ignores or sticks on their credit card. He is nothing if not honest to his readers and himself. It’s inspiring.

All that said … and to change my tune a little re: `honesty’ , I’m NOT going to include my student debt of around $13,000 on this site as a running total. Part of the reason for that is because I am still studying, and therefore I am still accruing debt. Also in Australia the government subsidises the cost of studying and `lends’ you the remainder if need be. Though the amount owed is subject to consumer price index rises, the loan is interest-free. It also only has to be repaid once you reach an income level over about $30,ooo. And if you die before paying it off, your family does not owe anything - the debt is wiped. This is a debt I will repay slowly once I have finished uni, and there is not much I can do about it in the meantime, what with all my other debt reduction goals in place. So though I acknowledge its presence and I include it in my NetWorth profile, I am happy to leave it off here for now.