So Sick of Debt

I am going to talk about the fact I have been feeling a bit down about my finances, yet I am acutely aware that I have things very good compared to a lot of people out there. I am really feeling for JW over at Need to be Debt Free, because he is working so hard to reduce his debt and outside circumstances just seem to continue giving him a really hard time. I admire that he continues to have the energy to get up and do two jobs. We’re all supporting you JW!

The thing is, we all know that we are lucky in a lot of ways, but it doesn’t stop us from having off days (or off weeks!).  I know, when I look back to where we were a few months ago, that we have come a long way. But part of me wants to be rid of the debt now. As in NOW! However, as a few PF commentators have said recently, it is this debt reduction journey that will teach them - and me - why we need to avoid bad debt in the future. It’s still hard sometimes to put in the hard yards though. I keep trying to think of ways to get rid of the debt quicker, but I know (for example) that no matter how hard I work it it is going to take me two years to pay off the car loan - minimum. I guess one way to look at it is that I could divert some of the regular contributions to home deposit savings to pay off the car sooner (probably makes better sense in purely financial terms), but we really want to be able to move eventually, so showing a savings history is important.

As Lynnae at Being Frugal said recently, I can see all this as a choice. And I have to admit that helps. But I see all my contemporaries looking fashionable, and part of me wants to say `who cares, let’s spend’. The other side of that coin is, I already did that and look where it got me.

I know that next week I’ll be a bit brighter. I watched the Suze Orman Show last night and instead of focusing on the people who had big dollars in their savings account I tried to be more objective. A noticed the other people, the ones who actually had bigger debts than me and we’re a lot older … and who wanted to put more stuff on credit.

I shouldn’t compare myself to others (especially others in another country) but sometimes it’s hard not to. I don’t like myself much when I get like this, so maybe it’s better if I log off and come back when I’m in a better frame of mind, and feeling a bit more thankful for all that I have.

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.