The Money Game

09/20/2005

Tuesday

Arwyn is keeping our oldest home from school today as she suspects he might have strep since his best friend at school had it. What this means for me (and my story) is that she’s going to be more stressed than usual when I get home. Is it worth dealing with? Sometimes avoidance is just a lot easier. Plus I can try to have a more supstantial blog entry.

Desperate Husband is presently planning on using the snowball method of getting out of debt. Basically, paying off the lowest balanced debt first, and then rolling that payment into the next debt payment until they are all paid off. Some of you are going to say that it makes more sense to pay off the higher interest rate first, regardless of balance. Mathematically speaking, it does, but if we could do the math we wouldn’t be in debt up to our eyeballs, now would we?

Waging war on debt is a major priority in the Jones household, at least for me. I’ve spent much of my energy selling Arwyn on the seriousness of our financial position. I can’t blame her completely for where we are, even though she’s in for $10K to Visa. I’ve frittered some money on that debt, but I have a card of my own which has a balance of less than $1K. Since it happens to be the smallest of all of our debts, it needs to be killed off first. At $300 a month, we’re looking at about 4 months worth of work. Then there is a truck loan with $5K or so that could be gotten rid of. Adding the $300 after my card is paid off to the $275 regular payment brings $575 to bear on that loan. Then that $575 gets shifted to the next target, added to the next loan which might be Arwyn’s Visa.

One problem with this plan is that I’m looking at another 4 months of serious pain before that first debt is killed off. With 10 more days left in the month, we are out of money. I might have $40 left in the account. I have a fund of emergency money but it isn’t very accessible. We did this drill last month, too. I bought gas and groceries and said that was it for the next 10 days. We made it to payday with $10 in the bank. I might have an opportunity for some extra money next month, but that’s not helping us this month. Can we keep Murphy away until payday?

I figured out that $20 out of every $100 I earn is going to interest on the debt we are servicing. Over 60% of my gross is going towards debt, which doesn’t leave much for the daily grind. Which means that almost 80% of my paycheck is going directly to someone else. I suppose it always eventually goes to someone else, but instead of investing it, or even having something to show for it, we are struggling for stuff like medication and food.

Credit card debt has been a serious mistake for us. Going into debt for a vehicle wasn’t so smart, either. Yes, I’d have repair bills on an older car but insurance would be less, too. And right now, insurance is another debt that I haven’t even counted in the grand total. And the cost of registration. Georgia has an Ad Valorum tax, which is a property tax on vehicles. Nevermind you already paid the sales tax. You pay every year according to the value of the vehicle. New cars pay much more than old ones. This is a pretty nice revenue stream for the state government, but puts an extra pinch in the cost of driving.

Another error that I eventually intend to repair is the term of our home loan. We did the 30 year fixed, but should have found some way to do a 15 or even 20 year loan. I suppose I could accomplish the same sort of thing by making extra payments but our past behavioral pattern isn’t a promising indication of being able to keep that much of a committment for that long of time. But we’ll see.

Arwyn has worried a bit over our finances and has begun looking at options for earning some money at home or maybe taking a full-time job of some sort. A part of me would like to see her get off her ass and contribute to the cause. However, another part of me knows that in the bigger scheme of things, her ability to earn money is our biggest and best reserve that I am not willing to tap into at this point. I’d rather we cut back the waste and make it on mostly one income, if at all possible. If something happened to me, having an even more bloated lifestyle would hurt more than help. At this point, her ability to step in and fill the gap is an important bit of extra security. If she was already working full-time and we were in this mess, there would be no reserve. Right now, I’d rather see the boys get regular supervision and attention more than amassing wealth. And since we’ve done so poorly with the little we have, having more income would merely mean we’d have an increased capacity for shouldering more debt. And that is the wrong direction. Debt has nearly swallowed us up, and will take everything we have to kick ourselves out. Debt is bad. Debt is wrong. Debt is stupid. Debt is sinful. The borrower is a slave to the lender.

It takes so much less to live if a body doesn’t have any payments. Imagine having the house, the car and education all paid for. Maybe a few hundred a month to maintain and insure the stuff. And that’s it. I think it is the lifestyle debt that makes both parents of a family working seen as such a necessity. And that’s the hardest sell I have to make to Arwyn. Being willing to sacrifice today in order to have a more secure and stable tomorrow, at least financially speaking. Money isn’t everything, but it seems to make almost everything run smoother.

D.

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6 Responses to The Money Game

  1. DH says:

    That’s exactly what I want to accomplish, Digger.

    Our numbers are higher than yours 😦 but the goal is the same.

    You have to start somewhere.

    My wife is doing the same thing…looking at what she can do from home, etc. If we didn’t have our youngest, I’d be pushing her to find a job to bring in extra income, but right now that just doesn’t make sense.

    You’re doing the right thing. Feel free to vent my way anytime.

  2. Square1 says:

    I envy your left over $10. That is all I will say.

  3. morgen z says:

    I feel your pain Digger.I think so many people in our age bracket have given in to the instant gratification. I know that for me the concept of saving money and then buying something is totally unheard of.

    And now, with the divorce and single parenthood, my world of hurt is only gonna get worse I’m afraid.

    I’ve heard of the debt reduction plan you are going with. I’m sure if you can be dedicated to it in real life it will work well for you.

  4. Tajalude says:

    I’ve personally never had any debt, but when Hubs & I got married, we had credit cards and other things to pay off. And without a doubt, smallest debt first. If nothing else, it creates a feeling of accomplishment to see an entire debt wiped off the list. And once it’s all gone, you’ll do your damndest to never have it again.

  5. Digger Jones says:

    While my raw numbers are probably a lot smaller than yours, DH, my income is probably lower, too. And with one child with special needs (autism) that puts more of a strain. But it’s the percentages that I see as particularly ghastly. Over 60% is going towards servicing debt. Just by getting rid of it, I’ll be giving myself a hefty raise!

    Well strike my $10, Square. My kids both have Strep throat, so that windfall surplus went to the pharmacy. And I’m watching the needle on the fuel tank.

    And Morgan, there is a bit more of a method to my madness. If we’re going to cut loose from each other, it makes more sense if we can be in a financially healthier state. Not that I’m planniing on it, but if want to buy another house, it would be nice to have that ability. We can’t even start saving or investing because we are still so strapped. And trapped.

    You have the right attitude, Tajalude. Keep the debt off your back and you’ll be so much better for it.

    D.

  6. The plan DH & Digger are doing is what my wofe and I did a few years ago. We took a big chunk of our income tax check and paid off the smallest loan. That monthly payment went to the next smallest while paying minimum on the last bill. When tax time came the following year the balance on card 2 was small enough to pay of with the tax money. Then 12 months later all were paye off. 7 months later my wifes mom died and my wife used the insurance money to pay off her Explorer. We were debt free. That was 2 years ago this month. Then in Nov. we had to put a tranny (the 3rd) in the paid off truck. To get the money we borrowed money against the Explorer. then more things broke around the house. Till we get back to today. We are where we were 5 years ago. After I get paid on the 15 we have 70 bucks to last untill the 1st. It’s ben 5 months since my Toyota has seen a full tank of gas.

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