View Full Version : The austerity measures! And the numbers. Yikes... true confessions

1-6-11, 2:36am
I've been geeking out over the Ramsey workbook. I pulled up some of his vids on Youtube, and wow, is he a G.U.Y. I am quite excited about The Plan, and luckily we're already on the road with the 1K in savings. Despite our dramatic cultural and political differences, I really like the system he's developed. So, this weekend my DH & I are pulling out all the stops and planning how to assassinate the rest of our debt.

I've listed all the debt, all 405K of it, and I am damn ready to dispatch it. My intent is to kill 20K (cc debt & car loan) in the next 1.5 years. Then the scary 105K student loans in 10 years - yes, that is correct. Holy Sh*t Batman. Luckily, I have access to an income based repayment plan; and a new plan for us non-profit workers to pay 120 payments and then drop the rest - when the Dept. of Education gets the rules written for this new plan, which better be frickin' soon. So in ten years, when I am 65, I can lay to rest my student loans. I have calculated that I will pay off the principle entirely, and a small part of the interest under this plan. I definitely want to pay it off, and make good on my promises. And finally, the balance of 280K (mortgage) in 15 years. And save for retirement whilst doing this all.

I was insane when I signed those student loan promissory notes, and yes I was off the planet each time I deferred for the last 15 years, and yes, about half of the debt is interest. This is true confessions time, because if I do not say it all out loud, it will continue to haunt me & make me certifiably nuts.

The good news: my very small retirement account has gotten back up to its value of 4 years ago, lucky for me. I have decent health, a decent job, a wonderful husband (who is 14 years younger & has way more time to save for retirement), and no kids left to raise. Time for a 2nd job (I am half time right now).

I am shame-facedly coming to money sobriety late in my adult life, and shocked by my lack of financial literacy and my magical thinking. I mean, who the fu(k did I think I was?? Like the rules of math don't apply to me?!? Sheesh.

So, I just ran a spreadsheet of last years expenses, and I have identified about $800 a month of expenses to kill. We're already making big payments on the CC debt (down from 30K 2 years ago to 12K today including a windfall we threw at it all), so this will help immensely. I am pep talking myself here... it scares me. Being broke and old scares me more, however. I am trying, too, to stop beating myself up for the insanity of it all. And I also gained back the weight (20#) I lost last year. Dammit all.

Thanks for listening.

1-6-11, 7:51am
What's that saying: "Sometimes you have to take the bull by the tail and face up to the situation?" Sounds like you've got a real good handle about where you are at now. :0

But now that you've named your "monsters under the bed", think carefully about some way of visualizing each debt. Is there some way you can show it in your living space as a reminder? Most people aren't motivated by a column of figures...

Also think very carefully about the second job. It won't help if your RHW from an additional job is negative.

All that said, I expect you can do it. You already have the hardest part done: acknowledging reality! :+1:

1-6-11, 8:07am
I am a huge fan of Dave Ramsey and whenever you are feeling defeated, go to his site. The Total Money Makeover (also by DR) is very inspiring. Just like a little pep talk in a book! Good luck, you have many motivators!

1-6-11, 8:32am
It will take a while to get over the shock but what might be helpful, now that you have a good picture of where you are is to start with some positivity in your life.

Every day get up and say to yourself "I can do it"
Follow your plan and I think as you move along you will see every little chunk that you defeat will move you forward. Keep moving forward. One baby step at a time. One dollar at a time.
Is your spouse on board? We are all used to strolling down the grocery aisles and through stores getting whatever we want, impulse buying, wasting. Most of us have enough clothes for five people (in some countries 20). If you smoke or drink alcohol this is the time to stop. They are extras you don't need to survive.
Working half time probably isn't an option for you right now- work when you are young and healthy and able to do it.
Anyway set small goals and meet them then set new goals. You can do it. Post each victory no matter how small it seems.

Every day what might help is to read the frugals thread for great ideas. Learn to cook from scratch. Get your entertainment from the library. Go for walks for exercise. Find some no cost things to entertain yourselves. Invite friends over for cards for example. Get books from the library that will enforce your mantra. The tightwad gazette. Mary Hunts series including "debt free living." All the Dave Ramsey books. We are all brainwashed into thinking we need all this stuff in our lives. We don't need most of it. We need peace of mind. We need to always be moving forward in the right direction, not digging a deeper hole.

You can do it.

1-6-11, 9:23am
In some ways, I have always found it easier to be frugal when resources were very limited (as long as basic needs were taken care of, of course)--when I was on half-salary for about six months, I had a good time searching out inexpensive produce markets, getting creative with the pantry, researching free events etc. because it was a challenge. I actually have really good memories of those grad school years when I had NO money. One hint that made the lean times easier...I had a fun fund. Not very much, just $5 a week, or $20/month (I am single). But it was enough for a weekly latte, or one movie a month (esp since I had free time to go to matinees during the day) without guilt and it seemed to make it easier to make good decisions the rest of the time; I loved planning how I was going to use it!

Good luck! You will feel so much better now that you are working on the debt instead of fearing it...

1-6-11, 10:23am
There's no shame in facing a situation and fixing it. I'm thrilled you are so enthusiastic to put your finances into shape. It's a good thing!

1-6-11, 1:07pm
Do make sure the debts are worth paying. Ok, there may be no way out of student loan debts (although maybe if you went into inner city teaching or something? :) I'm not sure how those things work). But the mortgage: if you bought at the peak and the mortgage is worth much more than the house is worth, consider whether it is really worth paying (morally controversial I know). If the mortgage does make sense financially then carry on (of course there are a lot of cheaper places to live than Seattle, so you may want to seriously consider that, but if you stay for emotional reasons and the like I understand. We aren't just little economizing machines after all, other factors do factor in. And Seattle is certainly beautiful). It just really is an astounding amount of debt.

1-6-11, 2:45pm
We had great luck with Dave's methods. One thing that helped me so much was his enthusiasm. I listened to his show as much as I could, and I burned CDs from his site (this was quite a while ago) to listen to on our car trips. That way my husband got to hear him, too. Just hearing other people's successes was really motivational in keeping us going on our plan. I also read and re-read his books. And it did work. We were in a mess, worked very hard, and we got out of it.

It's wonderful that you're facing up to this, a huge step. I know you can do it. Best of luck to you, and please keep posting all your successes along the way!

1-6-11, 2:51pm
Thanks all - yes my husband is heartily on board. The mortgage is affordable, and the killer is really the student loan stuff. Which with the repayment option for nonprofit workers will actually be reduced to about 60K, but I listed it at its current amount for the sharp edge of reality.

Jonathan, I don't understand this sentence: "Also think very carefully about the second job. It won't help if your RHW from an additional job is negative." What is RHW?

My current job is at a good place, and in fundraising that's hard to come by, so I'm not leaving it soon. However, I am considering asking to go full time at a reduced salary rate until we can raise the $$ to pay me a FTE salary. I'm making 37,5k half time, with full benes, and would consider going to 50k full time instead of 75k this year, then busting my butt and getting the $$ in the door to get me to 75k next year.

We're meeting our bills and paying hefty extra payments on the CC's already, so a second job or extra income would go right to the other debt. I'll be spreadsheeting scenarios this weekend... and posting the goals and progress charts prominently in the kitchen, where we really live. Hmmm... that might explain the 20# weight gain...

Dharma Bum
1-6-11, 2:56pm
What is RHW?

Real Hourly Wage. See: http://www.getrichslowly.org/blog/2008/10/20/how-to-compute-your-real-hourly-wage/

1-6-11, 3:58pm
Oh right. Thanks for the reminder. Actually, I'm thinking about working at the local food co-op where we shop to get a discount on our groceries. :) It's close by, under 3 miles, and is a fun place. Low wages, but it might be a good fit.

1-6-11, 6:07pm
GOOOOO redfox! Working at PCC is a great idea, I think -- I love the vibe there and if it brings in a little extra cash while reducing your food costs that is a great possibility.

I think your proposal for your job is great. Shows you are committed to the organization and not asking for anything you are not willing to put in the hard work to support. Do be sure to get some kind of guarantee that the higher salary will come in a year, though (maybe in six months if you can get the numbers up that quickly?)

Good luck and keep us posted on how things go!


1-6-11, 6:18pm
Hey, I'm a Ramsey disciple, too, and relate to those high numbers, redfox, so know that you're not alone. It's a very motivating program... and it works. I'm down $48,000 from last year. (total Baby Step 2 debt went from 194,000 to 146,000--but that doesn't include my DH business debt of 73,000 that I was dumb enough to sign off on, and I also have a $170,000 mortgage.)

I'm also late to the party, also counting my blessings and my good job, and also incredulous at how freely I opted for those handcuffs (that is, debt slavery)! I pledged to pay my kids' student loans, so that's a big chunk of my debt as well.

I listen to his podcasts in the car all the time, and learn and laugh constantly.

Have faith! We can do it!

1-6-11, 7:43pm
Wow, Catherine! Nice work - and thanks for the encouragement. I've asked my DH to go on an internet fast for a week with me, so we can test what it's like to do without internet at home. I can access it at work easily, though he cannot. I just keep thinking... when I am 85, will I recall all those hours watching Youtube vids fondly as I am eating cat food? I think not.

boss mare
1-7-11, 9:16pm
DH and I are going to be tightening our belts this year... I have always lived fugally Then I met DH and his money baggage/issues NO more!!!! we are doing this my way now. And I need to work on just letting him sulk and pout instead of trying to "make it better"

1-8-11, 10:20am
Remember the Dave Ramsey program is a doing program; just keep your sights on the end goal and keep doing. You will be fine!

Totally Debt Free since 2001

1-8-11, 8:40pm
So, most of the debt is student loans and mortgage. Don't beat yourself up too much, you were following what the "conventional wisdom" had been telling everyone-that those were "good debts". If your job is half time at 37.5 with full benefits, it might be better to get another part time job, since that would be not putting all your eggs in one basket. You'd have to make sure the second job is worthwhile of course, either in earnings or side benefits (such as reduced expenses for food as you mentioned with the co-op). Good luck! Reality is scary but the creepy feeling of not really knowing eats away more at your psyche I think.

1-10-11, 8:16am
Real Hourly Wage. Just because the coop is close by doesn't mean it's necessarily a good fit. If you spend so much time there that you get ill and can't work job #1 or your relationship starts to suffer, then it's still not a good fit. Think carefully and sign up for what you know you can get done and then expand slowly from there. You may also want to discuss this with your supervisor at job #1, just to make sure there isn't some odd expectation there.

DW and I both got second jobs to save the down payment for our first house. It sucked big time and hurt our relationship in some intangible ways, even though we saved big bucks and it helped when she got laid off from job #1. So keep your wits about you and be ready to cast off job #2 if it looks like it will cause more harm than good.

Good luck!

1-10-11, 4:29pm
I know you can do it! We slogged through DH's nearly 6 figure student loans and at the beginning it seemed so insurmountable. Having a plan, putting it on paper...that makes all the difference for me and motivation. Good luck to you!!!

1-17-11, 10:52am
Re: RHW "Real Hourly Wage". Rephrased, is it costing you too much to hold the second job? If you earn $250/week from a second job but have to spend $300/week in child care, extra dry-cleaning and gas, food, and so on, it's not worth it. Some folks don't think a second job is worth it even clearing $100/week after all extra expenses because of the time lost from more fulfilling activity.

And an observation from walking this same journey: the first few years may well seem to go slowly, almost a slog. Keep with the progress -- it speeds up gradually but inevitably, like any other snowball rolling downhill.