The balance between paying down debt and savings

[jp1]

Catherine, if you don't mind me asking, I'm curious what are your big "outgo's" now? I thought the jersey house was basically the last big outgo you had besides whatever you're paying for your Vermont house. I was so happy to hear that Jersey house had ended with success, but I'm surprised, and somewhat saddened, to hear that that didn't end your financial worries. You've been working so hard for so long that it would make me really happy to hear that you could finally rest and enjoy at least a semi retirement with your DH. And apologies if you've already talked about this and I just wasn't paying attention...

[catherine]

Catherine, if you don't mind me asking, I'm curious what are your big "outgo's" now? I thought the jersey house was basically the last big outgo you had besides whatever you're paying for your Vermont house. I was so happy to hear that Jersey house had ended with success, but I'm surprised, and somewhat saddened, to hear that that didn't end your financial worries. You've been working so hard for so long that it would make me really happy to hear that you could finally rest and enjoy at least a semi retirement with your DH. And apologies if you've already talked about this and I just wasn't paying attention...

Jp1.. thanks for your concern, and I don't mind answering at all.

The house wasn't really holding me back because my son paid for everything when we moved out and he rented it from us. It was only holding us back in that it was an asset that wasn't liquid--so we had nothing for emergencies, large outlays, etc.

As you know, I have had an ambivalent relationship with money and have made some really STUPID mistakes and large errors in judgement as well as dumb bad luck (most notably the 2008 housing bust, when my grand plan to take out a jumbo mortgage on my MIL's house so that we could pay cash for the foreclosure next door for her to spend her last years in exploded in my face. All told, that period between 2007 and 2010 cost me probably 500k.). There are 2-3 other main reasons that I'm not retirement-ready, but they come down to my relationship with money vs the other people in my life.. 'nuf said.

So now, I have proceeds in the bank. That's good. But here are the big outgo's as you put it--:

Rough numbers...
Normal stuff:
Mortgage, utilities, cable/internet: 2000.
Basic food, clothing, home expenses: 1000
Insurance (life, health, auto) 800
Transportation: 400

As you can see, if this were all I had, which is all I need, basically, I'd be fine on SS alone, and just use the proceeds of the house as emergency funds. BUT here are the other biggies:
Boat 900 (loan, docking, gas, etc.)
Debt minimums: 1500
DH "sin tax" (smoking various things). 1200
Everything else: Entertainment, gifts, major repairs in car and house: 1000-1500.
I can manage all this with my average past income--although last year was a very bad year from both an income AND an outgo perspective.

I know this looks appalling to most of you, especially given I have very little saved for retirement. I can't and won't justify anything. As the Queen said, "Never complain, never explain." I know what's stupid and what's not and this is where I am. There are no victims, only volunteers. I am lucky to have a job where I can make $150/hour sitting in my pajamas. I'm just hoping that part of my luck doesn't expire until I do.

I am, at this late stage trying yet another financial rehab... I've joined a program that I find to be very helpful in helping me face all my realities and deal with them appropriately.

[Tradd]

Catherine, all I’ll say is your budget looks a lot different than my pared down one. But it’s also just me, so groceries and such will cost you more.

[catherine]

Catherine, all I’ll say is your budget looks a lot different than my pared down one. But it’s also just me, so groceries and such will cost you more.

If I were single, my budget and expenditures would be significantly different, that's true.

[Tybee]

I like the way you have divided this into the two realms--sort of the basic needs first, then the other. I need to do this as we talk about getting rid of this house and/or moving. I think our basics line up with yours.

With respect to the second realm of spending, what if you went to a financial planner and laid out the whole picture, with the two realms of spending, debt, assets, etc. now that you have the money from the house. Talk about what you can realistically earn and how long you want to work. Maybe all the debt could be rolled into one debt at lower interest rate? I think you need a bigger picture overview and someone looking at the situation with fresh eyes? Maybe? Like is the boat debt included in the 900 or is part of the minimum 1500 payments--questions like that, that put it all into one bottom line?

[Tradd]

Well I’ve got some interesting work news!

Import manager at my company just resigned. I was offered the position but turned it down. I don’t have the patience to deal with half the import staff (absolutely dumb asses!) and I’d rather stick a fork in my eye than deal with all the accounting issues. But I’m getting another $10K bump and I’m also negotiating for a few more vacation days. I wouldn’t be eligible for another week for another two years. Raise goes into effect 3/1, so I get it on March 15th pay.

[catherine]

Well I’ve got some interesting work news!

Import manager at my company just resigned. I was offered the position but turned it down. I don’t have the patience to deal with half the import staff (absolutely dumb asses!) and I’d rather stick a fork in my eye than deal with all the accounting issues. But I’m getting another $10K bump and I’m also negotiating for a few more vacation days. I wouldn’t be eligible for another week for another two years. Raise goes into effect 3/1, so I get it on March 15th pay.

Congratulations!! That is awesome!

[Tradd]

Congratulations!! That is awesome!

Thank you! This will put me at $95K, $30K more than when I was laid off due to Covid in March 2020.

[catherine]

I like the way you have divided this into the two realms--sort of the basic needs first, then the other. I need to do this as we talk about getting rid of this house and/or moving. I think our basics line up with yours.

With respect to the second realm of spending, what if you went to a financial planner and laid out the whole picture, with the two realms of spending, debt, assets, etc. now that you have the money from the house. Talk about what you can realistically earn and how long you want to work. Maybe all the debt could be rolled into one debt at lower interest rate? I think you need a bigger picture overview and someone looking at the situation with fresh eyes? Maybe? Like is the boat debt included in the 900 or is part of the minimum 1500 payments--questions like that, that put it all into one bottom line?

I think the financial planner is a great idea... I'm hoping my new program will serve as my personal financial planner. the program has "office hours" as well as weekly Zoom calls where people can submit a question or situation to get feedback on from a financial coach. I'm still evaluating the credentials of these finance experts and then I'll decide if I need advice from a different level of expertise.

I've thought of debt consolidation, and that is a last resort. I could probably tap the equity of my house for that, but I do NOT want to risk the roof over my head to fix my debt problem. I'd rather default on the debt and have them come after me. At that point, I'd have my lawyer son negotiate with creditors on my behalf. But I'm not ready for that step yet!

At this point, according to my Debt Snowball calculator, I can be done with the debt in 26 months, and then save money while paying down the mortgage--since my mortgage is only 3.5, I'd rather save money that will yield higher interest rate. That ALL assumes I'll be in good enough health AND people will still want me to work for them. I just may be the Joe Biden of market research! As the Stoics always say, "Amor Fati" (Love your fate)

[Tradd]

Owners were shocked I refused the promotion. I told them exactly why - no temperament for it and the accounting issues would make me stick a fork in my eye.