This & That: Stick With It Edition
Posted by Gail | Filed under Take Control, This & That
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.
October 25, 2012 at 10:11 am
I feel that the 21 year old who is on stress leave should look into getting help for depression. I struggled with depression throughout University, which caused me to have trouble sleeping, eating, exercising, and I had no will to do anything. A lot of people would contribute that to stress but perhaps there is an underlying medical issue that a change in attitude alone cannot fix. Just my two cents.
October 25, 2012 at 12:23 pm
P’s question really highlights the potential problem with one half of a partnership not working outside the home. The ‘one parent works outside/one parent works inside’ the home dynamic can work really well and can be a wonderful luxury for some families (my mother was a stay at home mom, and it was great). But if it’s not done right, (ie: when one parent is forced to ask the other parent for money), the power imbalance can destroy families.
Having one income for a family only works when there’s only one pot of ‘family money’. In P’s situation, it seems like ‘yours, mine, and ours’ has been corrupted into ‘yours and ours, but no mine’ – something I think Gail missed in her response. P’s comment about not arguing, and instead just going with the flow might be quite telling – he’s calling the shots, because in both their minds, it’s his money. That’s a recipe for disaster that should convince her to get a job outside the home ASAP.
I like Gail’s advice about using different coloured pens for each person’s spending, but I would go further and use three colours. So often in these situations, family spending is attributed to the stay at home parent (“see you do spend 75% of the budget; you need to spend less”, not taking into account that the 75% includes groceries, kids clothes, school field trips, light bulbs, . . . ). One colour for you, one colour for him, and one colour for family/household expenses. Once you have an accurate look at where the money is going and where it’s being wasted (if it’s being wasted), then you can see where it can be cut back.
Of course, there will be arguments about what goes into what category and whether some expenses are necessary. One parent might want to claim the new power drill (when there are already 3 in the garage) is a household expense, and one parent might want to claim the new couch (unneeded and unilaterally purchased) is a household expense.
Maybe P will discover she really is overspending on household expenses, maybe her husband will discover that he’s overspending on personal expenses, or maybe both, or neither. But the resulting discussion will at least be based on reality, and not preconceived notions.
October 25, 2012 at 12:57 pm
I totally agree with your post Megan. There definitely seems to be a power imbalance in P’s situation that worries me far more than the money issue.
October 25, 2012 at 1:06 pm
Portia’s letter reminds me so much of myself a few years ago. I knew we had to eliminate our debt just couldn’t figure out how to get there. The answer for us was Gail’s book (Debt Free Forever). Get it and follow the exercises. I’m amazed at how much clarity DH and I have now that we know how to handle our money.
October 25, 2012 at 1:26 pm
It’s amazing how powerful it is to track your spending for awhile and see where your money is actually going. My husband blew most of his pre-marriage money on just doing fairly ordinary things too often. I spent too much on bargains I couldn’t pass up. Just sitting down and seeing how much of the expense is completely within your control can be all the incentive people need to change their spending habits.
October 25, 2012 at 2:36 pm
To the 21 year old having issues. You need to learn how to manage. I would go to the doctor and get some bloodwork done, even a lack of supplements can trigger such things. I would also maybe look into depression and sign up for a yoga class or something that relaxes you. Yes it costs a bit of money but to be able to handle stress and life and not have to miss work or school its worth the cost.
To P. I think you need to do two budgets. Get him to make one up for everything he needs while at work, and one for everything you need. If there is extra divide it between the two of you. Put the money for his in his account and he’s responsible for it and your responsible for yours and household in your account. Then take the coloured pens and track everyone. And I agree you need three of them because household spending is not YOUR spending (unless its excessive). Then after a month or two you have both tracked what you spent and figured out some holes. It’ll take a few months to work it all out but I would do it.
I would also make an agreement that you cannot bail the other one out. If one is running out they will have to figure it out on their own.
October 25, 2012 at 2:48 pm
P shouldn’t expect her husband to pay for everything. She needs to get a part time job or work from home so that she can still be a mom but also contribute financially without the family having huge daycare bills.
October 25, 2012 at 3:07 pm
Charmaine (or anyone else needing some extra income). Get yourself a few shifts a week pouring coffee or flipping burgers if necessary. Many places are open early/late so you can work around your “real” job’s schedule. It may not be glamorous, but it gets the debt paid off. Try to work somewhere that you won’t be tempted to spend your pay (if you love clothes, a job selling them might be counterproductive). Working somewhere that will feed you during your shift might even save you a little money. If you have a gas efficient car consider delivering pizza. My teenaged son has been doing this for 13 months and with only two shifts a week normally clears $125-150 after paying for gas ($500-600 per month). He tells me the one girl there who delivers makes the best tips in the place. It may be unfair, but you might as well benefit. He’s also noticed his tips are better when he’s dressed better. He started college this fall and has contributed half the $6000 tuition and half the $3000 laptop required. He has another $500 set aside for incidental books/supplies that may come up during the year. In the past year he also paid for his snowboard equipment, a new phone, monthly phone bill, highschool grad tickets, a couple of computer games, and a very occasional evening out to dinner or a movie with friends. He keeps an envelope for each school expense he’s expected to cover, one for fun, and one for his monthly phone bill. Each month he first sets aside the phone money, then he tops up his “fun money” to $100 if any was spent the prior month, then everything else goes into the tuition/books envelopes until he reaches the required amounts. January 2013 tuition isn’t due until mid November but he handed over his half a couple of weeks ago. He’s now saving for fall 2013 tuition. He’s so busy with school work and two shifts a week that he rarely has time for more than one evening with friends and they seem to prefer to gather at someone’s house, so other than contributing to the snacks he lives a very frugal life but still gets his school work done, pays his bills and sees his friends. He lives at home for free and we are paying for his bus pass. He eats at home and packs a lunch everyday. If he wants to each at school, he knows he’ll have to pay for that. In the first 8 weeks of school his total food expenses have been 2 Monster drinks for the days after being up all night with assignments. I think learning to balance fun/responsibilities and spending/saving at his age is an invaluable skill that will set him on a great path. In three years he’ll come out of college with zero debt and a good habbit of planning and saving in advance for future expenses.
Other suggestions for PT jobs/sources of extra income:
1. if you ski/snowboard, work at the hill (cashier, cafeteria, equipment rentals etc) and as a bonus you can ski for free or a very reduced price.
2. if you are crafty run a workshop for kids right before Halloween, Christmas, Valentines day, St Patrick’s day, Mother’s/Father’s day, Canada Day. I’ve paid $25-40 for my kids to go to a 3hr workshop and create something when they were young.
3. if you are into fitness get certified to teach classes or coach
4. if you have a lawnmower/snowblower offer your services to neighbors.
5. if you have elderly neighbours offer a grocery shopping service, or do some light housekeeping or cooking.
6. sell your unwanted stuff (ebay, craigslist or just garage sales).
7. determine how much you would spend on holiday gifts this year, and instead make everything (jams, baked goods, music CDs, give gift certificates for a house cleaning, a message, offer a closet or garage reorganization, or whatever is appropriate). Then put the money you would have spent on a store bought gift toward your debt. This year I’ll use up a bunch of Air Miles points to get gift cards for family and put the cash I would have spent on a gift into an extra mortgage payment.
8. if you have an entertainment budget, challenge yourself to find free/cheap activities and instead put that week or month’s amount toward the debt. Hiking in the fall leaves or throwing a frisbee at the park costs nothing. Meet friends for a game of football or street hockey. Pack a picnic. Check local museums and galleries, most offer free admission at least once a month. At Christmas, instead of asking for unecessary items, ask for movie/restaurant/bookstore vouchers (and put your budgetted amount to the debt).
If you put your mind to it, you probably have some skill or service that would be valuable to others. Everytime you reduce or eliminate a planned expense, immediately send the amount saved to your debt. If you’re serious about getting out of debt there are endless possibilities.
October 25, 2012 at 6:04 pm
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October 25, 2012 at 6:42 pm
Many families are able to keep one parent at home full-time and not fall into debt. Many families have two working parents and are digging themselves in deeper and deeper every month. Telling P she has to stop mooching from her husband and get a job is totally uncalled for. You have no idea what their family dynamics or priorities are.
October 26, 2012 at 12:03 am
What Julie Bo said, would also like to add, there would likely still be a problem here if the wife had an income of “her own”. It seems to be more of a communication breakdown, and likely unless that is fixed there would be more incorrect assumptions on both sides about the new income as well.
October 26, 2012 at 3:13 am
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October 26, 2012 at 11:05 am
Tracking the spending would help most of them out! In Charmaine’s case, I don’t know what her income is, but with her boyfriend covering most of the expenses she should be able to get that dept paid off, even if she’s not making much. I moved in with my husand (then boyfriend) right after college, and he paid most of te household bills. I had about $12,700 in student loans and around another $5000 in credit/LC dept (also school related) and when I started my job my salary was only $31,000 as entry level positions do not pay well until you prove yourself. I got it all paid off in about 3.5 years, and it could have been earlier but I took a trip to Scotland and got married in that time. I was able to do this because I tracked and budgeted every cent! If I spent so much as $1 on a coffee I put it in my spreadsheet. That way I knew out of each pay how much had to go where, I also had a set amount for spending and “planned spending”, I also contributed to my RRSPs during this time, though that’s not in the budget as it comes off before I even get my pay. To get that dept paid off they really need to create a budget and give dept repayment priority.
As for P as others commented she needs to track all the spending, as “hers”, “his” and “household”, to first of all show her husband that the household spending is not hers along, and also to see if there is indeed any spending issues. It does sound like there is a lack of communication there. Before my husband and I combined our finances (once my student dept was gone) I made it clear that it was to be condsider “ours”, even though at the time he made more than me. At the time we were planning on me staying home with any children we had and I was NOT going to put myself in the position where I had to ask for “his” money, since having one of us here to raise our children was what we both wanted. P and her husband really need to talk about things more, she said she “just goes with the flow” which to me sounds like she is letting him call all the shots.
October 26, 2012 at 11:43 am
JMK – Congralations to your son! What a driven young man with a good work ethic. Great job teaching him the value of hard work.
Shauna – Great tip to get blood work done. Something like low iron can really affect how a person deals with stress.
We all have vices and areas in our lives where we truly could cut back. It’s important to be realistic when trying to slash your debt or at least avoid going further in the hole. Ask youself hard questions because little things add up really quickly.
- Do I need cable?
-Do I need to go to the club each weekend or would I be happy going once or twice a month?
-Do I drink every weekend? Even a cheep bottle of wine adds up -$10 bottle twice a week is $1040 year.
-Do I smoke? Can I quit?
-Do I need to have a car?
-Do I have items that no longer serve me? Can I sell them?
-Do I take advantage of the library for books & dvds instead of buying them?
-Do I REALLY need the data pkg on my cell phone?
-Do I go to the gym?
-Do I need to renew that subscription that I don’t read anyway?
-Can I make my own coffee at work?
October 27, 2012 at 3:24 am
Neatly written.I love the way you have written it.Thanks for sharing this kind of data.
October 27, 2012 at 9:53 am
For the young lady on stress leave. In experience of watching people in the work force, if and when you get back to work 99% of the time when you get back to work your boss will be looking for a way to fire you OR move you to a department where he doesnt have to be responsible for you. Each and every action in the work force especially something as big as taking a medical stress leave has a reaction. Your boss could ultimately be held responsible for your medical stress leave by his company and I promise you he or she doesnt want you as their problem. I hope in the future, I think you sound very smart with your money that you get your stress under control.