please ignore

[stemikger]

Originally posted by DVCgirl
Hey, I get that it's depressing to be in debt. I also understand that sometimes when you're in a hole and you can't see your way out that you figure, "hey...what the heck, I really want to go to Disney World, and damn the finances....I'm going." I understand that. I guess I wish that she had come in saying that to begin with.

Well said DVCgirl.

In my study of personal finance over the last several years, I find that people who are in serious money problems, are very immature when it comes to dealing with money. It never ceases to amaze me how people will be in such dire straits and put their financial future in jepordy and not postpone a vacation until things get back on track.

The bottom line if you are not willing to live below your means, then you are not ready to rebuild your family tree when it comes to money.

Remember personal finance is 20% knowledge and 80% behavior. It is not brain surgery, but it's amazing on how many people don't do what they need to in order to live a more stress free live.

I like this phrase by Dave Ramsey, it goes like this:

You have to live like no one else - so later you can live like no one else.

Translation: Put off instant gratification today and invest your money so later on when all your normal (debt ridden) friends are struggling you will be taking great trips to Disney and not struggling with money.

 

[Lisa loves Pooh]

PeaceGirl,

First of all, good for you to have never missed a payment or to even have made a late payment! That told me a lot about how bad (or not) your situation is and more importantly that you are responsible in making your monthly payments.
*snipped for space*
Anyway, more for you to think about too. Good luck again and please post when you have had time to think about everything.

I apologize to the OP for appearing judgemental as SleepyatDVC has articulated much better what is on my mind and what I feel we have all been trying to get accross.

 

[Lisa loves Pooh]

I love the David Bach books as well. They're full of really useful information.

I was just reading SleepyatDVC's post (nice post BTW), and while I agree that the OP probably isn't in imminent danger of Bankruptcy, one little mishap...one little slip-up....like an injury or job loss and well, game over. The OP mentioned in the September thread that she and DH both work in the telecom industry where job security isn't exactly a sure bet these days.

I guess what has happened with this thread that some of us simply got frustrated with the OP. There was an entirely different thread going on and the OP started her own(her right to do so) to draw attention to her financial issues. The plea was incredibly exuberant and appeared to truly be seeking some good and honest feedback. While she did ask for everyone to "be gentle", what she didn't say was that she was only looking for responses like..."Hey PG, don't get down, you can do it!!" and little else. As the thread went on some remembered an almost identical plea for help last September. The posts are nearly verbatim if you read them.

That thread contained 10 full pages of responses and advice which the OP gleefully accepted. I'm sure she made some changes, saw a little light in the monthly budget and decided to use the extra dough to make two trips to Disney World for a total of 14 days. Hey, it's a free country, do what you want with your money...no problem.

But then, she comes back in...with a nearly identical plea for help and fails to mention the previous post in September or the trips to WDW, or the fact that she had indeed been talking about and searching for AP rates for a trip this November just a few days ago. Now of course she says that there are no plans for a November trip. Personally, that's when I shook my head. Was I judging her, yes I probably was, because it sure as heck seemed to me that it was deja vu all over again. It seemed to me that she was saying that she needed help in order to get her finances in order when in fact she was looking for advice in order to find the funds for a trip to WDW that she can't afford.

Hey, I get that it's depressing to be in debt. I also understand that sometimes when you're in a hole and you can't see your way out that you figure, "hey...what the heck, I really want to go to Disney World, and damn the finances....I'm going." I understand that. I guess I wish that she had come in saying that to begin with.

Well said DVCGirl

OP--I hope you take these posts to heart.

 

[dvcgirl]

Everyone's been talking about millionaires, so here is a scary thought:

The company I work for is in the process of switching 401(k) plans and as a result, they had a financial advisor come in and give a seminar about investing. A few years ago, I read that people should plan to have about $1 million in order to retire at a middle-class level. Well, the financial advisor we met with last week said that figure is now $2 million.

I guess a million dollars isn't considered "a lot" of money anymore -- although I certainly wouldn't turn up my nose if $1 million landed on my doorstep. Can you imagine the things we'll be posting in 30 years if this is true? "DH and I only have $1.75 million. How will we survive, let alone go to WDW?" I just can't wrap my brain around everyone *needing* to be a multi-millionaire.

Anyway, in light of this, I am faithfully contributing to my 401(k), up to the full amount my company will match. It's free money that I know I will need in the future. (When our other debt is paid off, I will contribute the maximum allowable percentage.) OP, I suggest if there's any way to juggle your contributions so that you and DH can both contribute the maximum that your company will match, you should do so. If DH is already contributing more than that, he should drop down to the maximum match amount and maybe that will give you some extra take-home pay?

By the way, I second the suggestion about financial planners. Laws vary by state, but in several states that I've lived in, they do not make a dime off of you for their time. They are paid by the investment groups that they get their clients to invest in. You might want to see how they are paid in your state and consider it.

Oh yes, a million dollars really isn't a lot of money anymore, not when you have to live off of it for a number of years. For a couple making 100K a year combined (not all that much these days either), 2 million would definitely be the number you'd need to save for retirement. And that would be to live off of about 75% of your current take-home salary at that level. I really do believe that there are going to be a huge amount of people in big trouble another 25 years from now with respect to retirement.

Pensions are a luxury of the past, and well, most people just aren't saving or investing. The earlier you started saving, the better off you are. But it's not too late to catch up if you buckle down and put your nose to the grindstone. I've recommended Bach's "Start Late, Finish Rich". Of course, even the mid 30's is considered starting late, but he does talk about some scenarios with people in their 40s and even 50s and how they can catch up with retirement savings. Again, it's not going to be easy if you're starting that late in life, but it's not impossible.

 

[crisi]

Dump is for sale but not the easest to sell because the dealer has a 0 interest deal going on.

I'm going to give you the most constructive advice I can on this one peice of information.

I have no idea what the dumptruck is worth. Nor do I know what interest rates are currently for that type of equipment. I'm going to go over some financial accounting and economic ideas.

If I have a car with a blue book value of $10,000 and I want to sell it, I am better off selling it today than next month. Things like cars depreciate in value over time - it will be worth less in a year. A car originally worth 15,000 with a 7 year economic life, straight line depreciated is worth $2143 less each year you own it. So a quick sale of something depreciating is in my best interests.

There is an accounting/finance concept known as present value. If a car is selling at a dealership for $10,000, and they will give me 0% interest for 60 months, and the prevailing rate of interest is 5%, then they are really selling me the car for $7,837. (Thats $/((1+interest rate)^number of years). If I'm going to buy that same car from a newspaper ad, I'm only going to want to pay $7,837 for it (and likely less, there is some risk with a private party transaction that is mitigated when going through a dealer and that has some value to me as a purchaser).

There is a concept called economic utility. Currently if I have an old beater in my driveway I'm not using, its bringing in no money. But because it is a piece of equipment that needs to be maintained (a car can't sit idle with gas and oil in it), it costs me something to own it. Maybe a few hundred a year. It has negative economic utility to me. I'd be better off selling it for $1 than letting it sit, costing me maintenance and depreciating. (Granted, I'm are better off figuring out what the optimal price is and selling it for that).

The dump truck may be hard to sell at the price you want to get for it. Nothing is hard to sell at a price below its worth - bargain hunters will find it and snatch it up in minutes. And everything sells for the right price. Microeconomics in a nutshell. The hard part is finding the right price.

(That is why eBay is such a fantastic thing. Everything sells for its own "right price.")

 

[tlbwriter]

Are you serious? You think I can't feed us? I said:

OK, this was what it looked like ON PAPER for that month at that moment! Now, I didn't say this is how every month is for us. What it means is "the other things that happen" are causing a big problem. Makes sense too! If the car didn't need repair and a dentist visit needed at the same time in this month, then we wouldn't be short. Not having money aside for these is ONE problem that I can tackle.

Once again, we only know what you tell us. Your original post said for the first time, you had no access to loans. And that you had done the numbers and were $400 short even before buying groceries. Nowhere in that post did it say this applied to this month only. In fact, everything you said implied this was a long-term problem - that you had been borrowing money to live on, and you had finally run out of money to borrow. You said you had lived this way for a long time and now it was time to live a different way. So it's silly for you to get up in arms at the suggestion that you can't afford to put food on the table, since YOU are the one who told us that.

And, again, with your husband's income... you told us that $X is X% of his income. It's pretty easy to figure his salary from that. If it's wrong, maybe you made a mistake when you gave those numbers.

Anway, back to the suggestions. You've told us what you *don't* spend money on. You'd get more ideas if you told us what you *do* spend money on. In fact, you could probably get some very good advice if you could provide some actual numbers - income, taxes, expenses, assets. Not everyone likes to reveal that information, of course, so we'd all understand if you declined. But you might be surprised at the amount of help you could get. And help is what you want, right?

 

[disneysteve]

You've told us what you *don't* spend money on. You'd get more ideas if you told us what you *do* spend money on.

I agree. We could be much more helpful if we knew where your money was going.

Just to use a non-money analogy, I counsel many people on diet and nutrition. When I ask, "What do you eat for breakfast?" I often get an answer like, "I don't eat eggs." Well that's nice, so "What do you eat for breakfast?" "Oh, I don't eat bacon." Great, so "WHAT DO YOU EAT FOR BREAKFAST?" See the point? Sometimes they go through a whole list of what they don't eat before finally revealing that what they DO eat is 3 donuts every morning. That's when I'm finally able to help counsel them on better choices.

Same with money. Until we know what you are spending money on, its hard to give suggestions that will be meaningful for you.

 

[Chicago526]

I've read this whole thing! Whew!

To the OP. I don't know how honest you are being, to us or yourself. So, I'm going to give you the benifit of the doubt and say you ARE being honest. With the info you've given, here's what I would do. I would follow Dave Ramsey's advice from his book "Money Makeover". Check it out from the library or spend the money to buy it, but I think you need this book. I'm going to post the first steps for free, so you can start this while you try to find a copy of the book.

Pay the minimum due on EVERYTHING. In other words, say you have 2 credit cards that the minimum payment is $125 and $175, but you pay $300 to one and $400 to the other. This next couple of billing cycles, pay the minimum ($300 between the two) and take the extra you were paying ($400) and put that in a simple savings account. Due this with all of your bills that you have a minimum on. Do this until you have between $1,000 and $2,000 in the bank (Ramsey recomends $1,000 but I personaly think that's low, $2,000 will cover just about anything short of a catastrophe but is still an easy amount to save up for most people in a short amount of time). IF you are already paying the minimum on all bills, then use overtime money. No overtime? Have a garage sale. Do what ever it takes to get some money in the bank. You must have an emergency fund for the rest of this plan to work. Sell the dump truck for a bargin price, tell your daughter that you feel real bad about it, but she has to give up all activities that cost you money. Tell your hubby his next OT check has to go into savings. Pick up extra shifts yourself. You're going to have to suck it up and make some real hard changes. It's gonna suck. But once you get some breathing room, you'll feel so much better! DO WHATEVER IT TAKES!!!! Why do you want to do all this? Keep reading!

The reason you want to do this, is so that the next time you have an emergency or an unexpected expence, (just like the one you had that you came up short $400 for the month) you WON'T be short and won't have to put the shortage on a credit card.

Once you have your starter emergency fund in place, take all that extra money you were using to save, and pay it towards the LOWEST balance bill you have, while continuing to make the minimum on all the others. Once you totaly pay off that bill, take the money you were paying to that one and put it towards your next lowest bill. Don't worry about interest rates, pay from lowest owed to highest owed. This is called 'debt snowballing" and it is a (relatively) quick way to pay off your debts and see real progress. Just like a dieter seeing 5 pounds drop off keeps her on the diet, seeing your loan balances shrink and disapear will help keep you on track.

While 'snowballing', if you have an emergency (car breaks down, for example) you pay for it out of the emergency fund. You then stop your snowballing and pay the minimum due on all accounts until you've fully replenished your emergency fund. Once full, you then pick up snowballing where you left off.

This is about the only quick way to get yourself in a posistion that temporary or emergency spending won't sink you. It is also one of the fastest ways to get yourself out of debt. By fastest I mean 1 to 5 years (or longer depending on how much in the hole you are).

 

[peacefulgirl]

please ignore

 

[peacefulgirl]

please ignore

 

[EthansMom]

Peacefulgirl,

As I have posted in the past, and as others have been posting, if you would like to tell us what your budget is, we'd be happy to point you towards areas where you might be able to improve.

 

[peacefulgirl]

please ignore

 

[ElizaB39]

I'm going to give you the most constructive advice I can on this one peice of information.

I have no idea what the dumptruck is worth. Nor do I know what interest rates are currently for that type of equipment. I'm going to go over some financial accounting and economic ideas.

If I have a car with a blue book value of $10,000 and I want to sell it, I am better off selling it today than next month. Things like cars depreciate in value over time - it will be worth less in a year. A car originally worth 15,000 with a 7 year economic life, straight line depreciated is worth $2143 less each year you own it. So a quick sale of something depreciating is in my best interests.

There is an accounting/finance concept known as present value. If a car is selling at a dealership for $10,000, and they will give me 0% interest for 60 months, and the prevailing rate of interest is 5%, then they are really selling me the car for $7,837. (Thats $/((1+interest rate)^number of years). If I'm going to buy that same car from a newspaper ad, I'm only going to want to pay $7,837 for it (and likely less, there is some risk with a private party transaction that is mitigated when going through a dealer and that has some value to me as a purchaser).

There is a concept called economic utility. Currently if I have an old beater in my driveway I'm not using, its bringing in no money. But because it is a piece of equipment that needs to be maintained (a car can't sit idle with gas and oil in it), it costs me something to own it. Maybe a few hundred a year. It has negative economic utility to me. I'd be better off selling it for $1 than letting it sit, costing me maintenance and depreciating. (Granted, I'm are better off figuring out what the optimal price is and selling it for that).

The dump truck may be hard to sell at the price you want to get for it. Nothing is hard to sell at a price below its worth - bargain hunters will find it and snatch it up in minutes. And everything sells for the right price. Microeconomics in a nutshell. The hard part is finding the right price.

(That is why eBay is such a fantastic thing. Everything sells for its own "right price.")

Excellent, excellent point. This is why I DO choose financing in some cases. Why pay cash if someone is going to give me 0% financing over the life of the loan? Of course, you want to make sure you are not paying MORE for the car/same item than if you WERE paying cash. That is when it works.

 

[peacefulgirl]

please ignore

 

[tlbwriter]

Excellent, excellent point. This is why I DO choose financing in some cases. Why pay cash if someone is going to give me 0% financing over the life of the loan? Of course, you want to make sure you are not paying MORE for the car/same item than if you WERE paying cash. That is when it works.

My dad usually pays cash for cars, but last year he financed because they were offering 0% on the vehicle he wanted - he says he's so uncomfortable actually having to make a payment! I'll be glad if I ever get to that point.

 

[crisi]

When you buy a car and they offer 0% financing, figure out the PV. Walk in and offer cash at present value. They will almost always take it. If they don't the next dealer will.

Its a better deal for them because they don't have the administrative costs of processing payments.

 

[peacefulgirl]

please ignore

 

[peacefulgirl]

please ignore

 

[peacefulgirl]

please ignore

 

[ajksmom]

peacefulgirl
Please keep in mind that not all of us following this thread believe you to be a liar, or stupid to have made the decision to take trips to WDW last year. We recognize you to be human, and understand that you've made mistakes with your finances, and that you are here to be encouraged to learn more about becoming financially stable. We've read where you cleared up the misconceptions and know that your budget was going along "fine" until some car repairs and dental work happening at about the same time put your finances into a "tailspin". You then realized that your current situation wasn't as "fine" as you thought and came here for a "jumpstart" on a better financial way of life.
You have recieved some great advice here, and I suggest you re-read this thread without feeling the need to defend yourself. You are only engaging in a battle with those who have judged you - and therefore you are wasting you time and "power" on "arguing" with them. Time and energy that would be better spent on your financial education and future budgeting.... Let your guard down and read their advice, trying to skip over the unnecessary comments/judgements along the way. While some posters may seem overly aggressive, and definately judgemental - I think that the suggestions they have offered could really help you. And keep in mind that you can't/won't be able to put all these suggestions to use in your future plan. And you're not wrong to keep things in your budget that others find to be "extras", things they can do without. What works for one doesn't necessarily work for all. For example, I live where I have confidence in my public school system, but if I didn't, I would have to make private tuition a priority.

And that is where I would direct you. That list of items in your excel worksheet should be prioritized immediately. Start with the necessities - home, vehicle and gasoline, food, electricity, home heating fuel, etc - please don't forget to try to budget some amount to an emergency fund as this is where your current problem stems from. Then add the extras - the cable TV, cell phones, activities for your DD, etc. At some point you will see where you are living beyond your means - when your income no longer covers these expenses. You may find yourself in a position where you are having to cut some things that you can't possibly imagine living without.
With my DH having been out of work for 12 weeks now and knowing that it'll be at least 6 more before he returns, we've been taking a hard look at our own budget. We've always found with having 2 teenage sons it was worthwhile to have totalphone. Well with the budget being as tight as it is (the plan was for DH to be out on medical leave for only 6-8 weeks) all of a sudden I can't justify totalphone any longer. We have cell phones so if there is a family emergency they know they can reach us on them. Same with extended cable, we only watch 4 channels on the family tier, I've reprogrammed the remote to not show these channels and I'm giving it a week to see if anyone notices. If not, that's gone too. With these two rather small sacrifices I will see just over $400 in savings in one year!! I'm using the clothesline only, not giving in to the demands of everyones pleas to buy an AC, so my electricity bill won't be high.
Price shopping for pool chemicals instead of running up the street to buy them. Oh, and the income tax refund that was supposed to help fund our trip to WDW next year? it's sitting in the bank for now in case we need it. I'm fairly certain that should we not touch it I will still be able to make our reservations for next year without a hitch...
Once you've pared down the extras, make a plan to get out of debt. Prepare a worksheet to show your loan repayment schedule (or PM me and I will be happy to make one for you - you'll just have to punch in your numbers) and apply the money you have saved by cutting items from your budget. Get out of debt!!
Then start to aggresively work on a savings plan that will fund your future retirement/goals/desires.

Imagine what a few more emergencies would do to your family, recognize that right now things have got to change.
The discomfort you feel - making these choices to save your finances - is nothing compared to what it would feel like to find yourself unable to pay those loans, or your mortgage. So while you still have choices, make them wisely. Keep an eye on your goals.

Good luck. We're here if you need us.