Tuesday, July 16, 2013

Barely Treading Water

As my regular readers know, I often post about how I am trying to get out of debt, and how frustrated I am at how difficult it has been to make any progress.  It seems simple enough: draw up a budget, and don't spend more money than you make, and put any extra money against the debt.  But life is never that simple.  For over 12 years now, I have been 2-3 years away from being debt free.  The out of budget expenses just never freaking stop.  How the hell do these idiots that call in to Dave Ramsey on Fridays to yell, "I'M DEBT FREE!!!!" manage to do it?  If their child or wife requires a bunch of medical expense, how do they pay for it?  If their vehicles break down and require expensive repairs, how do they pay for it?  How does any one get two or three years in a row of NO EXTRA EXPENSES so that they are able to catch up???  I only ask because I sure as hell haven't been able to do this.

Damn it, just damn it.  And damn Dave Ramsey too, the smug son of a bitch.


Giraffe said...

Right there with you.

To be perfectly honest, I have not been the best at managing my finances. I am actually going backwards right now, but I am executing a plan to turn that around.

Medical expense is huge. I have to buy insurance out of pocket so I actually am cash flow negative. For this reason, we are done having kids, and are going to switch to a high deductible lower cost plan without maternaty coverage. If Obama allows it that is. The worst part about this is that even though I have insurance, I still owed about 6.5k to the hospital.

By the way, we filled out some hardship papers this spring and the hospital completely forgave our debt. We were not expecting that. We still owe a bunch as our bill was split up to the anesthetist, clinic etc. But half of our medical debt went away.

Anyway, I am going to consolidate my debt by refinancing my mortgage. It will be a long time before I'm debt free, but at least I'll be moving forward again.

Astrosmith said...

So we saved up a bit of money to go to Texas a couple of months ago, and while down there my wife's truck breaks down. I had to put the repair, several thousand dollars, on a credit card. The rear differential was completely busted.

I suppose I should never go down to Texas to visit our family, so that they never get to meet our infant daughter. I suppose that we shouldn't have gotten pregnant last year either, because that same infant daughter cost many thousands of dollars in medical costs during the pregnancy and just after birth. I suppose that I and my family should just sit at home with the lights out, twiddling our thumbs, eating rice and beans, because anything else costs money.

I already refinanced almost two years ago. We paid off that same truck, so that's good, but now have to pay off the repair cost. I have tens of thousands in debt that I have not been able to dig out from no matter how hard I try.

This is just freaking ridiculous, and it makes me angry, but there's no one to be angry at.

Res Ipsa said...


Dave would say to build up 3 to 6 months worth of an emergency fund before going after the debt.

Giraffe said...

As I said, Astro. Same boat, although I've been blessed recently.

I will be able to pay off all our old debt, but my infant daughter needs tubes put in her ears and the Mrs. is getting an MRI to see if she has MS. So three forward, two back.

Cheer up. We will take just as much with us when we leave this earth as Bill Gates.

Giraffe said...

I mean I can pay off my old medical debt, not all my old debt.

Astrosmith said...

No, the 3-6 months expenses is after paying off debt.

I will never get there, not without a significant amount of additional income.

What brings about this post today? My old minivan is in the shop with transmission problems... it's been paid for for a long time, and I don't really want to replace it.

I guess I could have money and no family, or family and no money. I prefer the latter.

WaterBoy said...

I would suggest thinking about borrowing from your 401(k) if you have one and you are able. Take out enough to pay off all of your credit card(s) and other high-interest debts, if any. This has several advantages:

1. You usually pay a lower interest rate on such a loan than on credit cards, HELOC or 2nd mortgage, etc.
2. The interest you do pay goes back to yourself, rather than to a bank or finance company. If you're going to end up paying interest, why not pay it to yourself?
3. While you may lose out on potential value increase on assets in your account which were sold to fund the loan, you also may lose out on a massive loss due to a market crash. Since the market is back to higher territory, the potential for the latter seems to be greater than for the former. This is the epitome of "buy low, sell high".
4. If you have multiple sources of debt, consolidating them all into one payment typically leaves you a little more wiggle room in your budget to cover future unexpected expenses. If you're lucky enough in the future to not have any of those, you can use it to make extra payments on your 401(k) loan at any time without penalty. If you do, you have some extra money set aside to cover them.

This is general advice which may or may not apply to your specific circumstances. For instance, if you need the flexibility to skip a payment on one or more accounts every now and then, this option does not allow for that.

Just some food for thought.

Res Ipsa said...

What WB said.

Astrosmith said...

Already did the 401k loan...

The extra expenses that I can't budget for just don't stop, that's my problem.

Got applications in at the Apple Store, at a grocery store, looking into getting a real estate license, and looking at finding another job altogether, though I decided against moving to West Virginia.

Mrs. Astro will be bringing in a bit of money doing a one day a week homeschool program.

I'm also trying to find a regular overtime gig at my current job, but those are not easy to find. Thanks, management!

Shibes Meadow said...

1. Work three jobs. Live in a small, cheap house.

2. Sit at home. Do not eat out. Do not go to movies. Do nothing but work, eat and sleep.

3. Cancel cable TV and all other non-vital expenses.

4. Buy all clothing at thrift stores. Buy only Japanese used cars, which, unlike American cars, are well-engineered and do not break easily.

5. Eat basic foods: fresh vegetables and meat. Do not buy processed foods of any kind. No chips, no dips, no instant anything. Cook at home and eat at home.

6. Stop drinking margaritas. Stop drinking everything. Stop smoking, and any other luxury consumption.

7. Stop going on vacations. Stop visiting relatives. Stay the F at home.

8. Most states cover medical care for uninsured minor children. Enroll yours in this coverage. Yes, it is going on welfare. Do it anyway. If you get sick, go Mexican: go to the ER and stick me (the taxpayer) with the bill. I don't mind.

9. Don't borrow money. For anything. Ever. Save up and buy with cash.

10. Quit whining. Suffering for one's childrens' sake is the duty and privilege of every real man.

I sympathize, but you have got to log off the Internet, turn off the talk radio, get your stuff together, and focus 100% on the task at hand: caring for your family. Do all these things I listed above and you will eventually get ahead. It will take a long time and it will be no fun for a long time. You will find, however, that the lifestyle I suggest becomes curiously satisfying after a while.

And how do I know these things will work? Because they worked for me.

Astrosmith said...

Good points, all, Shibes.