First and foremost... Savings Plan!
I spent several hours coming up with a monthly goal - to put away $200 a month into our various savings accounts. That may not seem like a lot to some, but I have d.e.b.t. (blech!). So, a good portion of our income has to go to that as well.
* * * * * * * * * * * * * * * * * * * *
I know I said before, that I would keep this blog focused on savings, but I feel like I should give some additional background information.
In July of this year, we fell behind. A lot. I haven't been able to pay our one car, and some of our credit cards. I recently had a friend go through bankruptcy (with a much larger debt pile than us) - and it seemed easy, and fast and "cool". I called and got an appointment. The husband and I felt a little relieved... we could start over, we could BUY groceries. The "salesman" sold us. We signed on the dotted line, offered up 4 post-dated checks for the payment plan, all this even though we were told that they didn't know what to do with us. Our income was high, but we were over the allotted amount (in terms of monthly bills) by $500. So, it wasn't a pretty picture, but they couldn't tell us if we could file Chapter 13 or 7, or either at all. Regardless, we agreed to a $990 (discounted from $1200) Pre-Bankruptcy review.
The first of my payment plan checks cleared on October 15. And then I got to thinking. This is SERIOUS stuff. Never again will I be able to check mark "No" on the "Have you ever filed bankruptcy" question. I am in the banking industry - this could cause issues when applying for jobs. When would we be able to finally buy a house? What are we DOING?
We have about 10K in Credit Card debt (up $10K from 2 years ago when we had zero), and another 5-6K in medical bills (son was born premature - lots of medical bills!)
I called the lawyers on Monday, and told them we wanted to cancel. They asked what my plans were (seeing as I was 70 days late on our cards and 90 on our car). I told them we would do what we needed to - it just didn't involve BK. I don't feel we have tried to remedy the situation at all - that we jumped straight to BK. In my defense, I felt hopeless...I have been given notice at work (we were acquired by a big bank) - thankfully, I have until 9/2009 to find a new job - but it was still very fresh at the time, and I was ready to give up.
So, with the Pre-BK review cancelled (and after a cancellation fee of $250 - even though they had yet to do ANYTHING) I called Consumer Credit Counseling [CCCS]. They can help, and they won't kill my credit too much (or anymore that I already have).
And then I got a call from one of my credit card companies. They offered to allow me to make two $25 payments a month until I was caught up. Then two more of my cards called... I only had to pay the minimums that were behind - $30 on one, $42 on the other. They would worry about the over limit charges later. Suddenly, things didn't look so scary. These numbers were smaller than the DUE NOW amounts that screamed at me each month.
My husband and I decided to put our big people underoos on - and do what we could to fix our mess. (I cancelled the meeting with CCCS)
Some positives that have happened - he got promoted ($$$), we moved closer to our family and work, we pay less in daycare (thanks to his sister watching the little one).
We have decided to let go of our 4 year old car. It was a bad deal to begin with - our final payment is going to be around 3-4K due to the way the contract was written and our late payments(we got it when we didn't have awesome car credit). The payments are $455 a month - and we still owe $13K. I don't know if it's the RIGHT thing to do, but it's what we have decided to do. I cannot come up with the $1700 due, and they will not budge on offering to defer the payments or extend the contract.
So- that's where we are. I will be making small payments on each of the cards on Friday. I just had to pay $172 to the dentist for my daughter (3 baby teeth had to be pulled). That's tough...
It's going to be hard, but in the end - we will have accomplished something on our own. It may take a while to get caught up completely, and back on track with our credit - but I am in it to win it. I think we will be sitting pretty in 5 years. That's our 5 year plan. To be sitting pretty! =) And as the title of my blog states - NO PAIN, NO GAIN!
In the meantime... we will build our EF, sell what we can, save where we can, use coupons, and just plain do without.
That Dirty, Four-Letter Word
November 12th, 2008 at 05:08 pm
November 12th, 2008 at 05:39 pm 1226511586
So, it sounds like you are current with your debts now. The car was taken to satisfy the $1700 debt?
I think you are trying to save for too many goals all at once. In my opinion, it would be better to allocate the full $200 to the EF...you would have a baby one ($1000)complete in April 2008! If you continue to add to it for another 8 months you would have $2600 by December 2009. I think that would feel so good, don't you? I'm pulling for you!
November 12th, 2008 at 05:44 pm 1226511875
In regards to the car, it isn't gone yet... and there will be an amount leftover (I guess after they sell it) that I will be responsible for. So, it's not pretty, but I don't know what else to do.
November 12th, 2008 at 05:51 pm 1226512274
I understand the medical bills. After my second son was born, he had seizures. He have health insurance, but the cost to us was over 30k. I entered 2008 with 18k in medical debt and then in June got hit with another $4,500 from 2007. I had less CC debt (entered 2008 with 6k) and had debt on 2 vehicles. After everything was done, I entered the year with over $49k in debt. Not to mention, I didn't have a will or life insurance.
I only say this because I was desperate last year at this time, looking for a way to get out. Running down all my options.
For me what worked was Dave Ramsey's plan. Even though I haven't followed it exactly the way he lays out, I still believe in the merit of his ideas.
He talks about focusing on one goal at a time and prioritizing those goals. For instance why are you saving for Hawaii, Disney, a house, and kids when you emergency fund is only $25.21. If you rolled all these account to your EF, you would have $132.35.
I am not trying to belittle you in any way. I truly believe you can work through this, but I believe you need to focus your limited resources and prioritize your goals.
November 12th, 2008 at 06:53 pm 1226516030
November 12th, 2008 at 08:04 pm 1226520293
i know its probably sounding harsh that all these people are telling you not to do what you are doing, but everyone's been there before, and everyone's seen it happen to friends as well. you have to have someone that says 'look, you can't go to disneyland, you have no money and too much debt'.
November 12th, 2008 at 08:18 pm 1226521137
I agree that you should build up your emergency fund right now. I also understand that you might be using the Disney and Hawaii savings to motivate you to save, though. Good luck!
November 12th, 2008 at 09:29 pm 1226525360
Anyways, I am so glad things are getting better and are working out for you. It is a tough long road, but hand it there!