This & That: Stick With It Edition
Portia wrote: I feel like I am on a hamster wheel! No matter how I try, I am not getting anywhere with getting my finances where they should be. The funny thing too is that I am not a shopper; I do not have a lot of stuff…..so I am wondering where is my money going. Well, to my debt, but the sad thing is that the debt is not getting smaller. Sigh…..This is where I am very confused. I have one student loan, two credit cards and one bank loan, which totals $19,000. It makes me feel ill seeing that number. The interest on these loans range from 5%to 19%, which has the lowest balance. I would love nothing more than to be out of the red, but out of the red with the tools and knowledge of never going there again.
Girl, you sound so desperate. Don’t give up. You have to do some hard work. You need to do a spending analysis to see where your money has been going. Sure, you may not have a lot of stuff, but if you have no money, clearly you’ve been spending it all. So where is it going? You also need to do a debt repayment plan that has an actually end date. That means paying more than the minimum. And you need to make a budget to hang it all together. $19K in debt may seem huge to you, but it’s not the end of the world. But it is time to take care of the problem now.
Elaine wrote: So it’s 3:30 am here in the Nations Capital and I can’t sleep. I’ve been reading blog after blog after blog about how to repair finances and get out of debt. Then I stumbled upon your website and since I watch ‘Till Debt Do Us Part all the time, I thought maybe you could answer a question for me. Do I go back to school and finish my college certificate and take on student debt or get government financial aid until I can go back to work and pay off all my debt?
Okay that’s the question and these are the circumstances. In January of this year, I moved out on my own for the first time. My roommate was a girl I didn’t know to well but I thought we got along fine. Not so much. By April I needed to get away from her. Being that we worked together. I quit my job and got a nice 9-5 with a bank (a month later). I had to dip into my savings a bit during the transition. Then I moved in with my boyfriend into a house owned and rented out by my parents. We pay $200 each and the rest is supplemented by two other renters. Anyways, this is the hard part. In late June I went on unpaid medical leave because of stress (no joke). I applied for EI Medical Benefit but nearly 3 months later, I haven’t seen a cent. I’m going to my bank tomorrow to withdraw the last of my 3 month emergency fund. I am half way to completing an accounting certificate that I’ve been fiddling with part-time.
I’m only 21 and I feel like my world has ended and I’m insanely confused. If you decided to lend me your 2 cents, I will be forever in your debt.
Gail says: You can hardly give up at 21. Life still has loads of crap to throw at you, and it just wouldn’t be fair to the rest of us to have to absorb your fair share of the caca. You have a long and very productive life ahead of you. You’re strong, smart and funny. You just need to remember that. You should follow up with EI to see what’s taking so long, but it’ll be along and you can use it to rebuild the emergency fund you used in the meantime. That’s why we have emergency funds. As for the going back to school question, if this is going to give you the ability to earn a good income and make a decent life for yourself, I don’t see why you wouldn’t. You don’t say how much debt you have right now. You’ve certainly managed to reduce your overheads to a very low level. The key now will be to stop fiddling and get that damn certificate done. You also have to find a way to cope with your stress. Girl, if you’re burned out at 21, you’re in for a very long and torturous life. I suggest, instead, that you take up meditation, get some exercise, and start eating right, and then adjust your thought processes so that you’re focusing on positive things.
Make sure that before you take on a whopping amount of debt for school that you know just how much you’ll have to pay back each month to dig yourself out of the hole once you get a job. Set a limit for the amount of debt you’ll acquire based on the payments you’ll have to make to get back out of debt. So if it takes $xxx a month to get out of debt if you owe $yyy, and that’s all you could ever manage, don’t bite off more than you can chew.
BTW, there’s no interest on my 2 cents.
Charmaine wrote: I accumulated a pretty decent debt on a credit line (20000$) while completing my studies. I tried to work at the same time but my course of studies limited the amount of income I could generate while going to school. I now hold a pretty steady job and earn a reasonable salary, but I still find myself unable to reduce my debt, because I can still afford to make only minimum payments. I don’t splurge or spend money unnecessarily. I also live with my boyfriend and pay him minimal contributions for staying in his house. Are there any ways I can be rid of my debt, any investments I can make or arrangements I could work out to reduce my debt? At the rate I’m going, it will be more than 10 years before I see a difference in my account statement. I feel discouraged about my situation. Please help!
Gail says: Y’know, m’love, $20,000 in debt is not a huge obstacle to overcome, and I’m sure if a smart girl like you really put your mind to it, you would be able to come up with a plan. Very often people SAY they want to get out of debt. But they do not want to have to DO what it takes. If you are paying your boyfriend a minimal contribution to staying in his house and still don’t have enough money to knock that debt down, then either you don’t earn enough — despite what you think — or you’re wasting money on crap. Have you tracked your spending? Have you made a debt repayment plan so that you know what it would take to get out of debt in the amount of time you think is reasonable? If you’re just looking at those statements and shaking your head, you’re not going to get anywhere. Head-shaking doesn’t pay off debt. And I’m not sure what “investments” you think will pay off your debt magically because you don’t have any money to invest.
Step one is to figure out how much it’ll take to get that $20K paid off in three years or less. Take your monthly interest and add it to $20,000 ÷ 36 = $555. That’s the answer.
Now you have some big-girl decisions to make. Will you cut your spending way back to be able to come up with the amount you need to become debt free? Or will you go out and get a second job? Or maybe you’ll do a combination of the two. Only you can decide what you’re prepared to do to get that debt paid off. You could also choose to just throw your arms up and remain discouraged. Are you ready to show what stern stuff you’re made of and do what you need to do to take control of your money and your future?
P wrote: We need help before things do go to far in the hole. We don’t argue or fight about anything really, even money matters are not fought about. (We usually talk about everything, or I just go with the flow.) I am a stay at home mom, and my husband works away from home. He is home every 7 days or so and only than home for 4 days unless on holidays. Now this leaves it to me to take care of most of the finances, and leaves me feeling a little out of place with the aspect of I have to ask for money to be placed into our joint account for bills and groceries. I feel as though it is my fault when his account is drained. I just want to know how to budget better with his account and the joint account. As well I need my husband to have a wake up call and see that is it not me spending all the money. Please Help Gail, for I fear if this goes on we will be in the hole to far, and money issues will become marital issues….
Gail says: Stop spinning and look at the problem straight on. Ask yourself these questions?
1. Am I being given enough money each month to manage the expenses I’m expected to pay from the house account? If you are not, you and Hubby have to talk about that. If you are, then you just need to be managing the money more efficiently.
2. Do you have a budget and are you tracking your expenses to ensure you are staying on budget? You need a notebook and a pencil, that is all. At the beginning of each pay, deduct the bills you know you have to make a payment for: utilities, rent/mortgage, car payment, etc. The remaining money is what you have to work with for things like food, clothing, gifts, fun. Each time you spend a penny, write it in your spending notebook and deduct it from the balance. At the end of each month, allocate all your spending to the various categories of your budget. Now you can see how you’re doing. In the meantime, because you are tracking your spending, you won’t spend more money than you have in your account.
If you believe that your husband’s spending is the problem, then I suggest you track the spending in two different colours so you can then add up at the end of the month what you spent versus what he spent. This will help you both see where the money is going and who is actually spending it. At that point it’s time for a heart-to-heart and some honesty about what you’re going to do to make this part of your life work.
Freda wrote: I’m a mom of 2 and have been separated on and off for 1 1/2 years. My kids mean everything to me, I really don’t want go through a divorce. We are not perfect parents, but good parents and I don’t want my family to be another statistic. Our kids live with me and not their other mother. She is not a bad mom, just terrible with money. Our biggest marriage problem was money. I thought I could work a little more hours or take on more work just to make money to get by, but we are always broke. She just can’t seem to stop spending. It’s gotten so bad, sometimes I wonder how we’ll eat.
Gail Says: Your letter breaks my heart. I can’t save your marriage, my love. You and your ex have to decide that the marriage and the children are more important than buying stupid crap. You have to be a team, working together to get it done. You have to be disciplined and determined to have a life that’s about joy and happiness and not the latest thing you can buy. I hear the pain in your tone, the desire to make things be right. But sometimes you can’t make things be right if the other person isn’t prepared to do what needs to be done. If you think you and your ex-wife might have a chance, seek some counseling. If she won’t participate and you both can’t get on the same page when it comes to how you’ll live together and care for those children, then you may be better parents separate than together.