Coming clean

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.

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3 Comments »

  1. bjefferies said

    I will be taking your lead and doing the same. I owe my brother some money ($3k) that I need to add to my list of debts. I’m really enjoying reading your blog. I found your blog from JW’s blogroll this morning.

    Good Luck.

  2. debtfretter said

    Thanks for your comment. I appreciate the support as I’m only new at this!
    I have found the blog to be very good for focusing my thoughts, even if I don’t sound as clear when I’m writing.
    Family debt probably does exert the greatest personal toll of any debt. And even if it is completely angst-free, it’s still awfully nice to eventually be able to say: `thanks so much for the loan, and here is the money back’.

  3. Thank you for mentioning my blog. I enjoy reading your blog regularly and have put it on my blog roll a while back.

    Good Luck.

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