Debt Dumpers - 2019

[Txsldr79]

Not me, my husband. Yes, he will be 41 when he retires from the military. The pension payments start immediately, with annual cost of living raises. As the calculation goes, if he collects the pension for 40 years, they will pay out approx $4M before taxes. Very low cost health insurance for life for him and all his dependents is also part of the package. If he lives beyond 81, the payments just keep going, so potentially, it is worth even more. As his spouse, if he passes before me, I will continue to collect 55%

Your husband must be the youngest General Officer in about 60 years. You aren’t getting a 4 M pension and need to have a serious discussion about finances with your husband.

 

[jen7233]

Speaking of staying strong, I was able to resist buying a car and taking out a loan for it!
I was so tempted yesterday after stumbling onto this. I have just under $15k saved and I'd borrow $2K from dh's slush fund so really not a lot to finance after I trade in my car. They were closed yesterday and we were planning to go today because we're off for MLK but then dh got called into work for an emergency.

You saved a lot and good you had a reason to not purchase today! I'm sure you have a savings goal amount for the car in mind. I took a car loan in the fall for 48 months, now think I can focus next year and pay it in 24-36 once the balance comes down more, and I have a reason to get a savings funded first.

Some of you were on here talking about Dave Ramsey, and I got curious and started reading a few things on him and joined a super strict Facebook group of his and decided to dump my savings onto my debt. I just went from ~20k in debt to only owing on my mortgage (but now I’m savings-broke!).

For people that need a plan for basic getting out of debt, I feel like you can't go wrong following his get out of debt advice. I don't follow his steps, but I listen to his podcast on occasion as its one of my subscriptions. I used to listen to him way back in the day in the late 90s on the radio in the afternoon and was more following of the no credit card idea during that time, I had none. Yes, your credit score will drop for closing accounts, as you know from the books or from your group you're in. I personally want to keep a good credit score, but I know the reasons he's mentioned why one doesn't.

Wow that's amazing, that you can get a full pension at 41! I'm not going to pretend I know anything about the military (I'm from north of the border and well ya) but that's great, I didn't realize that most people don't stay with it, sounds like quite an achievement. I bet it will be quite life changing for you both when he's done!

No, most don't stay in until retirement eligibility, and retirement pay is variable for each based on certain factors.

 

[Katie Little]

If only we knew that 3 yrs later that new roof would get crushed by a tree, I would have held out!

OH NO!!!! Glad you're able to laugh at it now - Man that must have been the worst!!

 

[barkley]

Some of you were on here talking about Dave Ramsey, and I got curious and started reading a few things on him and joined a super strict Facebook group of his and decided to dump my savings onto my debt. I just went from ~20k in debt to only owing on my mortgage (but now I’m savings-broke!). I’m still not completely sure how I feel about it, but mathematically it made sense. I also cut up all of my credit cards and closed the accounts (because I have no self-control). I’m sure my credit score is about to drop, but according to his method, you don’t eventually need a score anyway. I bought a brand new car last year and already have my mortgage, so should be good to go. Now just to rebuild my savings and get the house paid off!

i agree with most of his ideas but i don't go along with not having a single credit card. dave ramsey might be able to rent a car w/o one but i've found it to be difficult. i also don't like to use my debit card on-line b/c if it's compromised it's attached to my bank accounts. the additional advantage is w/some the warranty is doubled on a purchase (helped TREMENDOUSLY when we purchased a several thousands of dollars whole house generator that had a mechanical issue right as the manufacturer's warranty ended-the amex warranty picked up the entire bill). we use them and pay them off immediately so if we can't pay cash for an item-it doesn't get bought on the credit card.

congrats on paying off all that debt-feels great right???? now start paying yourself to build some savings back up. i know it's tempting to go after the mortgage but esp. if you aren't going to have a credit card for an emergency you have to have an emergency fund built up. x number of month of expenses (some say 3, some say 6), and then there's dave's recommendation of another $1000 in a separate account. again-not an area of agreement for me. in that account i don't want a penny less than my highest insurance deductible (in our case homeowners). sure we may pull from it for unexpected expenses in a given month and then build it back up but i want to make sure that if we have to put in a claim we are good to go for our portion.

 

[ruadisneyfan2]

homeowner's insurance is'nt covering any part of it?

if it were me i would pause b/c in my experience the cost of construction/repairs only goes up the longer it gets put off. the other issue is-if you can get someone in now and get it done you will likely get it done on a faster timeline. don't know what it's like where you live but around here we have a window of time each year when construction is in high demand (good weather, non frozen ground) such that late spring/summer jobs are booked the fall the year before. if you can get it done now you may prevent a many months long wait.

I can’t answer for pp but generally if the water was from weather, rain, snow etc you would need separate flood insurance to cover it. Typical homeowners ins would cover it if due to accident: pipe burst, toilet/shower/dishwasher leak etc.

 

[ruadisneyfan2]

i agree with most of his ideas but i don't go along with not having a single credit card. dave ramsey might be able to rent a car w/o one but i've found it to be difficult. i also don't like to use my debit card on-line b/c if it's compromised it's attached to my bank accounts. the additional advantage is w/some the warranty is doubled on a purchase (helped TREMENDOUSLY when we purchased a several thousands of dollars whole house generator that had a mechanical issue right as the manufacturer's warranty ended-the amex warranty picked up the entire bill). we use them and pay them off immediately so if we can't pay cash for an item-it doesn't get bought on the credit card.

congrats on paying off all that debt-feels great right???? now start paying yourself to build some savings back up. i know it's tempting to go after the mortgage but esp. if you aren't going to have a credit card for an emergency you have to have an emergency fund built up. x number of month of expenses (some say 3, some say 6), and then there's dave's recommendation of another $1000 in a separate account. again-not an area of agreement for me. in that account i don't want a penny less than my highest insurance deductible (in our case homeowners). sure we may pull from it for unexpected expenses in a given month and then build it back up but i want to make sure that if we have to put in a claim we are good to go for our portion.

I agree 100%.

 

[Katie Little]

homeowner's insurance is'nt covering any part of it?

if it were me i would pause b/c in my experience the cost of construction/repairs only goes up the longer it gets put off. the other issue is-if you can get someone in now and get it done you will likely get it done on a faster timeline. don't know what it's like where you live but around here we have a window of time each year when construction is in high demand (good weather, non frozen ground) such that late spring/summer jobs are booked the fall the year before. if you can get it done now you may prevent a many months long wait.

Homeowners doesn't cover anything because "Seepage is a maintenance issues.." It's only considered a flood if an existing body of water comes inside. And I totally understand what you mean about "High demand." It flooded during a freak rainstorm a few months ago that pretty much flooded whole town. That's why we are just now getting quotes! Everyone has been slammed!

 

[ruadisneyfan2]

OH NO!!!! Glad you're able to laugh at it now - Man that must have been the worst!!

Yes we laugh a lot about it now. We even feel we were lucky in so many ways. Back then was quite stressful. Adding to it was that we had just arrived at WDW the night before and were meeting friends at MK then a 3-nt cruise together. While waiting for a table at Ohana’s we got the call from a neighbor. We figured we’d deal with it when we got home until the photos rolled in. Omg. We quick ate and I never packed so fast in my life.
Still to this day I am so so thankful that ds22 (then 19) was not hurt. Had he been standing at the fridge he would have been impaled by the branch that pierced through the fridge door and took the door right off its hinges. Whew, just the thought makes me weak and I really need to stop thinking like that but it’s hard to block it all.

 

[Shughart]

@ruadisneyfan2

 

[crazycatstacy]

Advice please! Our basement flooded a few months ago and we have been slowly adding to a sinking fund to get it fixed. We have about $1300 saved and the quotes are coming in around $3000 - we are still shopping around but they’ve all been within $500 of each other so far.

If we completely pause our debt snowball in February we could be up to $2600. Would you pause the snowball and just get it taken care of? Or would you continue to slowly add to the sinking fund?

We aren’t in any hurry to get it fixed, we don’t use the basement at all.. our only concern is mold (which admittedly is a major concern). I don’t want to pause the snowball though because we are making such good progress. However if we pause it, we’ll make better progress in March and April because we aren’t setting aside $500.

I would pause the snowball just to get it completed. I would be worried about and the longer it goes does it create more problems.

If it were my house, I'd pause the snowball and fix the basement because of the moisture issue and possibility of mold. What sort of work do they need to do?


Awesome savings, so pat on the back We are going in April. How many dining reservations do you have? I think I've got 5 at the moment for the entire week we are there, but mine are going to fluctuate based on what happens with FPs so I'm never really feeling locked into those type of reservations.

Now this is a good basement story! Sounds like it's coming right along.

We only have 4 reservations and I believe that is what we will keep. Now when we go back in December we will have a million and will be able to make up for it!

 

[Shughart]

Advice please! Our basement flooded a few months ago and we have been slowly adding to a sinking fund to get it fixed. We have about $1300 saved and the quotes are coming in around $3000 - we are still shopping around but they’ve all been within $500 of each other so far.

If we completely pause our debt snowball in February we could be up to $2600. Would you pause the snowball and just get it taken care of? Or would you continue to slowly add to the sinking fund?

We aren’t in any hurry to get it fixed, we don’t use the basement at all.. our only concern is mold (which admittedly is a major concern). I don’t want to pause the snowball though because we are making such good progress. However if we pause it, we’ll make better progress in March and April because we aren’t setting aside $500.

Pause snowballing and fix that basement for sure. Like everyone else has said, delaying that repair can only make it worse and more costly the longer it goes. This is coming from the queen of wet basements. I don't know what part of the country you live in, but here, March/April 'kicks off' wet basement season (although our last season never ended with a stupid weird winter here).

 

[Tygerlilly]

Tax return has been accepted. Now the wait for it to be processed and deposited, which should be mid-Feb since I have the child tax credit and EIC.
I should have approximately $3300 after filing fees get taken out. At this point I'm thinking my best course of action will be to pay off the furniture lease ($2000) and the remainder of the car insurance for the year ($1500. I'll be able to apply the normal monthly payment to the remainder of the tax return to finish that off.) Should open approximately $500 a month to our budget. Then March I will likely take that $500 and apply it to my normal loan payment and that should be the end of that. Add on to paying off DF's small loan last month and we will have opened up over $700 a month by April if this goes as planned! Fingers crossed no major craziness happens over the next month and a half.

 

[crazycatstacy]

Tax return has been accepted. Now the wait for it to be processed and deposited, which should be mid-Feb since I have the child tax credit and EIC.
I should have approximately $3300 after filing fees get taken out. At this point I'm thinking my best course of action will be to pay off the furniture lease ($2000) and the remainder of the car insurance for the year ($1500. I'll be able to apply the normal monthly payment to the remainder of the tax return to finish that off.) Should open approximately $500 a month to our budget. Then March I will likely take that $500 and apply it to my normal loan payment and that should be the end of that. Add on to paying off DF's small loan last month and we will have opened up over $700 a month by April if this goes as planned! Fingers crossed no major craziness happens over the next month and a half.

we don't ever get any money back but I am dying for my husband to get his W2 so I can see where we are at with the tax changes.

 

[DLgal]

Your husband must be the youngest General Officer in about 60 years. You aren’t getting a 4 M pension and need to have a serious discussion about finances with your husband.

Sorry, you're wrong. He will retire at 21 years, 6 months as an O-5. You can certainly use the publicly available calculator to see for yourself.

It's here
https://militarypay.defense.gov/calculators/active-duty-retirement/high-36-calculator/

His cumulative pay after 40 years, ASSUMING a 2% annual increase (sometimes it is more, sometimes less) will be $3,664,359.17. When you take into account the value of the included Tricare For Life coverage, the value of the retirement easily exceeds $4M in a 40 year window. And, this doesn't even account for VA disability payments, which he will likely qualify for in addition to his pension.

For the record, I am the one who has the talks about finances with my husband. He is mostly clueless until I clue him in. I have been handling our finances since we got married almost 20 years ago, but thanks for the assumption that I'm uninformed.

And just for fun, most General Officers don't retire at 20 years, because it's impossible. However, when they DO retire, at around 30 years, their pension is in the neighborhood of $7M. Just go ahead and plug in 0-7 with 30 years of service.

Nice first post, by the way.

 

[bdcp]

Sorry, you're wrong. He will retire at 21 years, 6 months as an O-5. You can certainly use the publicly available calculator to see for yourself.

It's here
https://militarypay.defense.gov/calculators/active-duty-retirement/high-36-calculator/

His cumulative pay after 40 years, ASSUMING a 2% annual increase (sometimes it is more, sometimes less) will be $3,664,359.17. When you take into account the value of the included Tricare For Life coverage, the value of the retirement easily exceeds $4M in a 40 year window. And, this doesn't even account for VA disability payments, which he will likely qualify for in addition to his pension.

For the record, I am the one who has the talks about finances with my husband. He is mostly clueless until I clue him in. I have been handling our finances since we got married almost 20 years ago, but thanks for the assumption that I'm uninformed.

And just for fun, most General Officers don't retire at 20 years, because it's impossible. However, when they DO retire, at around 30 years, their pension is in the neighborhood of $7M. Just go ahead and plug in 0-7 with 30 years of service.

Nice first post, by the way.

My husband retired as an O-6 with 30 years of service. 26 years as a reservist and 4 as active duty. He gets about 30K/year because as a reservist it's based on active duty points and drilling counts towards those unlike active duty that are day for day. The fact is very few people collect for 40 years. I don't think I've ever met anyone who worries about the total. Good luck with VA disability. They have really tightened the requirements and I know a lot of people who weren't even given a 0% rating. They were given no rating. Even a 0% rating qualifies you for certain things such as waivement of fees on VA loans so they rarely even give those anymore.

 

[DLgal]

My husband retired after 30 years as an O-6. 26 years as a reservist and 4 as active duty. He gets about 30K/year. The fact is very few people collect for 40 years. I don't think I've ever met anyone who worries about the total. Good luck with VA disability. They have really tightened the requirements and I know a lot of people who weren't even given a 0% rating. They were given no rating. Even a 0% rating qualifies you for certain things such as waivement of fees on VA loans so they rarely even give those anymore.

Reserve retirement is a totally different thing, though. The way it is calculated and paid out is different, and you don't collect it until age 60.

Lots of people "worry about the total." It is a primary driver in retention strategies and discussions.

Right off the bat, my husband will be getting almost $60k per year. I know many people don't collect for 40 years, but I also know that, statistically, living to 81 is not some crazy, off the wall idea. Our generation has a life expectancy of 87 and he doesn't have any chronic conditions that will shorten his life expectancy significantly.

The VA thing, we are well aware of how it works. He would currently rate somewhere around 50% for the issues he has that are combat related. He may qualify for more due to some additional issues he has. But, we aren't "counting" on that at all. We known how that process goes. Although, from what we have seen lately with people we know, the VA has been VERY lenient on ratings. We have an acquantaince that was given an 80% rating that he actually appealed because it would limit his civilian career opportunities as a pilot. He had privately hired doctors do an assessment and got the VA to downgrade him to 30%. So, there isn't very much consistency in how the VA does things.

 

[bdcp]

Reserve retirement is a totally different thing, though. The way it is calculated and paid out is different, and you don't collect it until age 60.

Lots of people "worry about the total." It is a primary driver in retention strategies and discussions.

Right off the bat, my husband will be getting almost $60k per year. I know many people don't collect for 40 years, but I also know that, statistically, living to 81 is not some crazy, off the wall idea. Our generation has a life expectancy of 87 and he doesn't have any chronic conditions that will shorten his life expectancy significantly.

The VA thing, we are well aware of how it works. He would currently rate somewhere around 50% for the issues he has that are combat related. He may qualify for more due to some additional issues he has. But, we aren't "counting" on that at all. We known how that process goes. Although, from what we have seen lately with people we know, the VA has been VERY lenient on ratings. We have an acquantaince that was given an 80% rating that he actually appealed because it would limit his civilian career opportunities as a pilot. He had privately hired doctors do an assessment and got the VA to downgrade him to 30%. So, there isn't very much consistency in how the VA does things.

Having done 4 years active in the US Navy as a Surface Warfare Officer, he made the decision to not be gone for 8-9 months a year and went into the reserves for which he was paid in every billet he was in (not always the case). Best decision he ever made. He made a nice extra income on top of his full time job during that time. Honestly though, we've never done the math on how much he made during that time. I know many who stayed active and several at the 0-7 level. I think you missed my point. I wasn't arguing with you. Reserve pay is calculated by active points and isn't collected until age 60 (in most cases, BTW, there are exceptions depending on how much active time you do if recalled) but it's paid out the same way. Not sure what you mean that it's "paid out different". I'm very proud of my DH making it to 0-6 as very few make it to that point. Most everyone I know who retired as an officer did it at the 0-5 level, even in the reserves.

Retirement pay on top of our jobs has not only given us no debt except our house but allowed us to take several vacations a year and the years he was in reserves gave us some extra to put into investments so we're probably not far off from where we would have been had he stayed active.

We also have access to Tricare which we currently use as our secondary insurance. I had my gallbladder out this past Aug and it cost us nothing out of pocket thanks to both insurances.

 

[DLgal]

Having done 4 years active in the US Navy as a Surface Warfare Officer, he made the decision to not be gone for 8-9 months a year and went into the reserves for which he was paid in every billet he was in (not always the case). Best decision he ever made. He made a nice extra income on top of his full time job during that time. Honestly though, we've never done the math on how much he made during that time. I know many who stayed active and several at the 0-7 level. I think you missed my point. I wasn't arguing with you. Reserve pay is calculated by active points and isn't collected until age 60 (in most cases, BTW, there are exceptions depending on how much active time you do if recalled) but it's paid out the same way. Not sure what you mean that it's "paid out different". I'm very proud of my DH making it to 0-6 as very few make it to that point. Most everyone I know who retired as an officer did it at the 0-5 level, even in the reserves.

Retirement pay on top of our jobs has not only given us no debt except our house but allowed us to take several vacations a year and the years he was in reserves gave us some extra to put into investments so we're probably not far off from where we would have been had he stayed active.

We also have access to Tricare which we currently use as our secondary insurance. I had my gallbladder out this past Aug and it cost us nothing out of pocket thanks to both insurances.

By "paid out differently", I meant that you have to wait until 60 to collect reserve retirement vs. having it paid out starting immediately upon separation when you are active duty. The additional years of retirement pay make a difference in the total compensation amount. Also, the points system for reserves is a different calculation than the system used for active duty retirement and usually results in a lower percentage than the straight 2.5% multiplier per active duty year that active duty retirees get.

We are also going to consider retirement pay "extra income." My husband will start a new career upon his military retirement. Our hope is to invest 100% of the pension payment and live off our other job incomes. I will be going back to work in 2 years once my kids are more independent at home alone. It will be nice to have a safety net, though, and we hope to be able to do a lot of traveling that we had to put on hold because the military lifestyle isn't usually compatible with taking days off whenever you want.

 

[DLgal]

I got an email this morning that my W-2 is now available from my employer. Yay! I sit down to finalize and file our taxes and go to sign in and ADP is down. BOO!

I want to get our taxes filed a.s.a.p. so that they will be done as soon as the IRS begins accepting returns.

 

[jen7233]

Lots of people "worry about the total." It is a primary driver in retention strategies and discussions.

It's a unique way of looking at it, I've never heard anyone look at the grand total for all potential living years in the past prior to the online calculators. It's good they have all this available. But, now one can have the grand picture of how retirement can look with the DoD calculators available online to do all the retirement potentials, we've used it. Although, the end numbers just got a quick look, it was more so the immediate numbers. In time all the numbers will matter, with cost of living adjustments. It's an interesting way to look at it.