My Debt Blog

Things are going down but nowhere as quickly as I would like it to. I’m at least where I was before June and all those events happened. Instead of trying to pay off debt I am trying to avoid increasing it. On the other hand my wife isn’t helping us opening a store credit card and buying a bunch of clothes with it. Debt reduction seems counter productive when this happens. Here’s where I currently stand:

I’m glad I got the Zales account down to the 1k because that means it will fall below that next month. If I could figure out a way to budget four focused payments of $250 I could kill that by the end of the year. I also opened a new credit card myself that offers 0% APR for 12 months and $100 gift card with initial purchase. So when I get the card I’ll have to wait before doing the balance transfer to it and buy gas or something with it, pay it off, collect my gift card, and then transfer a balance to it. It will be nice to not pay interest and focus every dollar on principle. Just have to figure out what to do about this store card my wife opened now.

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My wife has been doing her student teaching this week and trying to get the whole teacher role down. At any rate, she stayed after school for awhile yesterday to go over plans of what she will be doing for the semester. She is only obligated to be a student teacher for the fall semester and then she is done in December. After that it’s time for her to start finding a job.

This is where it gets interesting. Apparently a science teacher in the same group as the teacher my wife is student teaching under will be going on maternity leave. They are going to need someone to put in their place and my wife has a biology degree already and will have her education masters completed in December. From what she told me it sounds like they want to transition her right into a teaching role as a science teacher when she is done. I’m trying not to get too excited or jump to conclusions about this, but I think this is a very positive thing.

What was funny was I held back my reaction as best I could. My response was along the lines of that I felt that sounds like a good opening. Then she comes out with a compromising statement that if we did stay in our house longer, she would like to replace our kitchen/foyer flooring with linoleum. I estimate the cost of this to be about $500-700 which I would be willing to commit to in the event we hold off selling the house for awhile. This type of stuff my Dad and I could install, as we have done before.

She went downtown this past weekend to go shopping with her friends, which is good because I think she needed some social time with other females. At the same time her friend takes the taxi to places because parking is expensive. Apartments in the area we can afford to live are much smaller and everything much more crowded. I’m not sure if she wants to live close to her friends and the city based only on the idea of making more money when things will cost more overall.

We still have to make it through these next couple months on a tight budget. This is going to be a real challenge to be able to swing all of our expenses and still be able to do anything. What is going to be difficult is not going out to eat and forcing us to eat at home. We need to make it through these final months of her finishing school without an income. If this job is waiting for her when she is done, I think that is her finish line she needs to cross.

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Based on a book of the same name, The Ultimate Gift is an amazing film. My wife and I watched this together and weren’t really sure what to expect because neither of us had even heard of the story before. The story itself is very simple and I think that is why it kept our attention the entire time. The film is simple, amazing, and sad at times. Here’s the synopsis of the film:

When his wealthy grandfather dies, trust fund baby Jason Stevens anticipates a big inheritance. Instead, his grandfather has devised a crash course on life with twelve tasks – or “gifts” – designed to challenge Jason in improbable ways, sending him on a journey of self-discovery and forcing him to determine what is most important in life: money or happiness.

This young guy who felt money was the only thing that matters in life has his world shaken up. He has no idea what he is agreeing to or if he will even be able to succeed. At the same time he realizes there is more to life than money. Not that this really spoils the movie, the 12 gifts are as follows: The Gift of Work, the Gift of Money, The Gift of Friends, The Gift of Learning, The Gift of Problems, The Gift of Family, The Gift of Laughter, The Gift of Dreams, The Gift of Giving, The Gift of Gratitude, The Gift of a Day, The Gift of Love, and at the end is The Ultimate Gift.

I encourage everyone to see this movie. There is much more to life than money. It is hard to explain things like this to people who cannot understand it. Some things must be experienced in order to learn something about it. I think movies like this should be seen by as many people as possible, including children.

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There is so much scare out there about the sub prime mortgage lending damaging the economy. What confuses me is why so much blame is being put on the sub prime loans when it should also be shared by the consumer who signed up for that loan. For anyone who has ever bought a house, there is so much paperwork involved and it is a process to get the financing in order. At closing it can be exciting to just get through that paperwork so you can get the house. Did you have a real estate attorney at closing explaining and showing you exactly what you were signing? I did and know exactly what I am dealing with regarding my loans.

If someone buys a house they simply cannot afford, should it become a problem for the government to bale out people using taxpayer dollars? Our government will bale out corporations due to limited liability, sends money overseas as aide for other countries, but can’t help the average Joe save their home? The government is not going to make a person more responsible by helping them save their home. Regulation isn’t going to fix the existing problems of people trying to borrow 500k and pay 1k a month. It all seems fine until the payments adjust out of control and there is no way to handle the new payment.

When I got my house a year and a half ago, my credit was good and the time seemed right because I was getting married. Instead of doing one lump loan for 30 years, I did 100% financing through 2 separate loans. My first is a 80% 7 year ARM at a much lower rate than the fixed loan, lower payment, and no PMI. The second is a 20% HELOC which made up for the difference and structured the loans so I would not have to pay closing costs. This seems stupid to me now to have done it this way when I had 10k sitting in the bank. I did end up paying off my car and going on a completely paid for honeymoon, so what’s done is done.
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I have been pretty upset with my wife since last night. She is going to be student teaching soon and has some time off until the school year starts. This week she has gone out shopping for clothes and setting things up for school every day. Our ‘budget’ has some room for her to be able to spend some money on clothes, but what happens when it’s gone? That is where the fighting started.

She came home with a few more bags then I had expected. At first I brushed it off because I just didn’t want to know what she spent on all this stuff. Later that night she modeled the various things she bought and I tried to keep my cool. Then the ultimate question came up: how much did all this cost? She told me not to worry about it which confused me at first, then she told me she opened a new credit card and charged about $250 on it. It feels every effort I make to pay off debt is shifted into a new debt.

This is when it got interesting because she told me that when she is done with student teaching and gets her job, she wants her own checking account to handle her money. I told her it is a good thing I’m not that selfish with my income in that I consider it both of ours since it pays the mortgage, bills, and general cost of living. It’s not like this stuff is invisible either because I show her the exact amounts of what all this stuff costs and the extra at the bottom is the only wiggle room we have. Its not that we don’t have enough money, there’s just not enough extra for her anymore.

It always seems like a simple solution is when there isn’t enough money for lifestyle, instead of cutting lifestyle for a period of time, try to make more money so the standard of living doesn’t change. We are effectively going nowhere quickly because any progress is balanced out by overspending. I’m also being compared to our friend who is in the banking industry and recently was promoted to a VP at the age of 25 (same age as me) and got a huge pay increase from his already large salary, which I’m not sure what to think about that. My wife wants me to keep pushing for promotions and pay increases and my response is always the same, it all takes time. It is starting to depress me when I’m trying so hard to make our lives better and she only sees success as job title and salary. She still doesn’t know for sure if teaching is what she wants to do for a career. I don’t know what to do anymore but things are really ugly right now.

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I decided to take a peak at my credit reports, and score for the fun of it. First off my credit score didn’t really change much, it’s at 700 as of today, although that doesn’t really matter much. What I was looking for was what was in my actual credit report.

Mortgages shows I have two which I do. According to the area that I could improve my score if I got more mortgages that would help. Not sure how that makes sense but I guess that is what the models suggest.

Revolving accounts (credit cards) I have 18 in total. There are 10 of them that are closed, or should be closed because they are not used or their history really has no actual value. I don’t want to close everything all at once because I think that might look bad. Some interesting stuff I found was I have an Old Navy store card I don’t remember opening or using from years ago. It has no balance but did have a high balance of $39 at one point. The other interesting one was a Sears card with a $7500 limit opened in 1996. I’m not sure how a 14 year old kid could open a credit card like that with a line that large. There’s only four cards with balances which I fully disclose their balances and limit every month.

Installment accounts there are 12 of these. Now 8 of these are either closed or need to be reported closed by all three bureaus. Two of those are closed car loans, the remaining are student loans that were consolidated/transferred but not properly reported as closed. The remaining 4 are my student loans and for some reason my gas company reports to TransUnion that I pay my gas bill. I have never seen anything like that before on a credit report.

Every account is current and there are no 30/60/90 days late. There are no other accounts or collections, nothing flagging a negative account.

Inquiries there are still a ton of them from when I shopped around for mortgages at the time I bought my house. The latest was from my bank in April when I opened up my emergency fund account to hide 1k cash from myself.

I need to draft some letters to contact the bureaus to have them update the status on some of these accounts. One reports something closed and the others think it’s open. There is stuff that is open on all three but I neither use nor need, so I will try to close those accounts myself. It takes a month or few to get these things resolved so I will revisit my credit report at a later time to make sure everything is cleaned up.

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We’re almost through this month of August and I think the money is going to get tight. Pretty much what my wife made for the summer has also been used as regular income. She is going into student teaching now and they (her teachers, advisors, etc) suggest that she not try to work while doing this. It is going to be almost like an unpaid internship where the gain is learning experience. I’m a little bit frustrated because we were having problems before, but now we’re going to have some serious problems if the spending isn’t controlled next month.

Priorities need to really be taken into consideration next month and the months that follow. I have that 1k sitting in an EF for emergencies, not for other things. There are two tires on my car I’m not sure how long they will last but will need to be replaced here soon. I am trying to plan $100 a tire for this month and next month so there will be some money there to fix that situation. What is going to be difficult next month until November or December is not running to the EF to fix a problem.

The other solution is for me to work more to make up for what my wife used to bring in. I can get a second job in my sleep, but the reason for a second job must be justified first. In the meantime I am going to resort to a pastime of doing website design/maintenance services that I did in high school and college. These jobs are small and random as I find them on Craigslist and knock them out quickly because I know what I’m doing.

I don’t think there’s going to be much in the terms of debt repayment for the next few months other than just holding the ship steady. The only positive thing right now is my wife is in her final stage for her masters degree. After that it means no more borrowing money for school through student loans. We could finally put an end to both of us using credit cards for any reason. I hope she lands a job quickly when she is done so that the household income bumps way up over what it has always been. My income has gone up over the two year period I have worked and expect it to increase even more. This time next year we should be on a better path to really focus on getting rid of debt.

My plastic pinch update will be coming shortly.

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