• November 1, 2014
November 01, 2014, 5:52:41 AM *
Welcome, Guest. Please login or register.

Login with your Chronicle username and password
News: For all you tweeters, follow The Chronicle on Twitter.
 
Pages: [1] 2 3 ... 100
  Print  
Author Topic: Into the Black - The Dig Ourselves Out of Debt Support Thread  (Read 396091 times)
ellaminnowphd
Curiously Strong
Distinguished Senior Member
*****
Posts: 3,824


« on: February 04, 2011, 10:55:22 AM »

Staypuff's post about crippling debt really speaks to me.  I'm not in the same dire straits myself, but I am carrying a considerable amount of debt (credit cards, car payment, student loans) that will, on occasion, cause me a sleepless night. 

We've had many a thread about how to get out of debt and the advice has been good (Thanks, Clean, et al.!).  So this thread is different, I hope, in that it will encourage brethren and sistren debtors to heed the sound advice that has been posted.

I am having a serious case of the wants this past week (That darn Title Nine catalog) and I will not will not will not buy anything.  I have made a solemn promise not to purchase any more clothes for a whole year.  To do this, I am canceling all catalogs.  They sit there, on my coffee table, mocking me.  Into the recycle bin you go, foul temptors!
Logged

sugaree
shakin' it since 2007 and only a
Distinguished Senior Member
*****
Posts: 3,869


« Reply #1 on: February 04, 2011, 11:07:59 AM »

LMNO - watch a Hoarders marathon. That should get your over your "case of the wants" right now ;-).

But seriously, I have been digging awhile now and I am only just (after 7 years) starting to get out of the pile. There is an end in sight, in terms of paying off consumer debt. Student loans are another matter, but I made peace with those a long time ago and I know that they are not going anywhere fast, in spite of the monthly payments. It's tough. But my hope is newly renewed now that I can finally see some significant progress.
Logged

where's the bourbon?
ellaminnowphd
Curiously Strong
Distinguished Senior Member
*****
Posts: 3,824


« Reply #2 on: February 04, 2011, 11:14:34 AM »

That's great, Sugaree, that you're starting to see some sunlight.  I put student loans in the same category as my mortgage - a necessary evil and a fact of life.  They don't stress me out much. 

Hoarders - check!  I did a somewhat thorough purge of my crap closets and noticed that I have been buying multiple versions of the same items.  Why do I need three pairs of red shoes???  Five black sweaters...really? 

I am a clothes hoarder.  Bring in the camera crew.   
Logged

prytania3
Distinguished Senior Member
*****
Posts: 44,063

Prytania, the Foracle


« Reply #3 on: February 04, 2011, 11:56:38 AM »

I have gotten out of mega debt twice. Like 100K (not including mortgages and car loans). One time, I refinanced a house to pay off the debt (15 years ago); the other time was about 7 years ago, and I settled with some of the credit card companies.

I had so much credit, it wasn't funny, and I spent like there was no tomorrow. It's part of being bipolar. We have a tendency to go on spending sprees or buy weird big ticket items. For example, once I was going to buy a lawn mower, and instead I bought an 18' boat.

That aside, proper debt has allowed me to have a fairly high net worth. At this point, I'm way in the black, but my balance sheet is skewed because all of my assets are long term at this point. I now have four houses in Virginia, which all have high equity and are not far from being paid off, and my retirement.  I have nothing in the stock market right now.

Still, cash flow remains a problem. I am Clean's worst nightmare on that score. I got nailed by the IRS for not paying taxes two years ago. For years, I put exempt on my W-4 and paid the piper at the end of the year, and you know what? They didn't care as long as you paid with your return because they got some penalty and interest on the money. But every year I made a bit more money and the next thing you know I'm in a high income bracket and can't pay at the end of the year. So I have been paying off a couple years of back taxes (I filed, I just didn't pay) and I now have no exemptions on my W-4, so I feel like all I'm doing is paying taxes. I still owe the state some money, but that will be paid off in a few months, and then I'm done.

Meanwhile, despite a high net worth on my balance sheet, I have little cash to speak of until this tax thing gets finally settled.

But I've changed the way I live. I have no credit cards, and I'm strictly on a cash and carry basis. If you really want to stay out of debt, get rid of the credit cards. Keep one for emergencies only, and remember that a dress that costs $100 to buy on credit, in the end, could end up costing $500 if you don't pay the bill immediately.

Since this income tax fiasco (two years of back taxes when you're in a high bracket is a substantial chunk of money), I have been living like a pauper. A pauper I tell you. I'm renting an extra small apartment, and I use no credit. I make do with my paycheck (which is small due to all the taxes I've had withheld and the taxes I'm paying), and it's not easy. I made a little bit on the options market last year, but I'm so crunched for cash now, I can't afford a loss.

But, there is light at the end of the tunnel. The state has almost concluded getting its pound of flesh, and soon the cash will start rolling in, and I'm hoping to buy a new place in Connecticut within a year of April 15. Or else I'll refund my stock account. My tax refund from the feds will finish paying off my state taxes, if I don't finish paying them off before.

Buying on credit (other than mortgages) will really cut into your net worth. Judging from the way I'm living right now, people would be damned surprised to find out how much money I'm worth because I'm worth quite a lot. Somewhere along the way, I decided it was better to look poor and actually have a high net worth as opposed to looking rich and having jack s***.  Also, I'm paying the taxes with my paycheck. I am not incurring more debt--robbing Peter to pay Paul, so when it's over it's over, and I can start adding to my net worth.

Meanwhile, I have $126 until payday next Thursday and a basket of change.
Logged

I'm not a narcissist. I'm just angry and violent.
sugaree
shakin' it since 2007 and only a
Distinguished Senior Member
*****
Posts: 3,869


« Reply #4 on: February 04, 2011, 11:59:50 AM »

Thanks LMNO - it does feel good. Although I'm sure Suze Orman, or her Canadian (more entertaining, IMO) equivalent Gail Voz-Oxlade (sp?) would be horrified at the amount of time it is taking me to do it. But Suze and Gail are both rich, so they can kiss my ass. (yes, yes, I know their backstories. Whatever. I'm not so eager to get out of debt that I am willing to sacrifice everything in order to do it).

on preview: I am certain Clean would be horrified about my personal finances as well.
Logged

where's the bourbon?
ellaminnowphd
Curiously Strong
Distinguished Senior Member
*****
Posts: 3,824


« Reply #5 on: February 04, 2011, 12:09:35 PM »

on preview: I am certain Clean would be horrified about my personal finances as well.

Yeah, well Clean is not a mortal among us. 

And Pry, as dramatic as your relationship with finances has been, I am in awe of your ability to tackle such seemingly insurmountable debt.  I am also envious of where you are now.  I know you say you have $126 and a basket of change, but that means you know how much you actually have.  My finances are so out of whack I have no idea how much money I actually have/owe.  That's the first item of business for me this weekend.  That, and taxes. 

Logged

dept_geek
SPAF by decree, documentor of local meetups, and
Distinguished Senior Member
*****
Posts: 8,331

through a glass darkly....


« Reply #6 on: February 04, 2011, 12:18:51 PM »

The good news is -- it is do-able. I spent a lot of years on a less than $15K / year income in a very expensive city and then a full year of not working got me in serious debt. Fast forward two new careers (and a lot of schooling) and I only have a mortgage (and that will be paid off early, because I can) and all my credit cards are paid off.

Step one was to write it all out and make a plan. The harder step was to stick to it.
Logged

I would love to change the world, but they won't give me the source code.

Quote from: testingthewaters
When in doubt, add chocolate.
zarathustra
Because the Chron says I'm a
Distinguished Senior Member
*****
Posts: 10,441

Procrastifabulous by nature.


« Reply #7 on: February 04, 2011, 12:25:22 PM »

Hi. My name is zara and I have a LOT of credit card debt.  

I got out of debt once by doing cc consolidation.  The minute I was  through with cc consolidation in 2005, I bought a house. Suze Orman and Dave Ramsey would've said "NO," but it was a huge boost to my standard of living and productivity, since an apartment meant I couldn't practice at home.  But I've been pretty cash poor, and while I was finishing the doctorate (and time was more important than money), I racked up a lot more debt.  

I know in the next 5 years, things around my still new house are going to start needing attention, and my car will eventually have to be replaced, so I'm looking at my cc debt and it's GOT TO GO.  I'm not crippled yet, but I'm a little hamstrung.  

I need to make a budget.  I don't buy Starbucks, and I got rid of cable and I have the $1000 in savings, but I have to find other things I can cut. I can't manage Clean's envelope method.  I think I'm going to find I spend too much at the grocery store.

Logged

The Squishiest!
oseph
Embracing the crazy
Distinguished Senior Member
*****
Posts: 4,266


« Reply #8 on: February 04, 2011, 12:59:59 PM »

Lord, I haven't been here in forever, but I'm joining this thread.  We have car payments on one car, student loans, and some credit card debt on a no-interest card.  Paid off the interest-bearing cards last month.  We resisted the siren call of the house and have decided to continue resisting until we are debt-free.  Our plan is 1) get rid of all non-student-loan debt; 2) eight months' expenses in emergency savings account (I think we have two months' right now, but that's two months without cutting expenses - we could stretch it to four if we had to); 3) put money in Little Oseph education/therapy account; 4) put money into retirement savings; 5) pay off student loans; 6) save for down payment on house + a year's property taxes, insurance costs, and maintenance costs; 7) buy very modest house.  We are hoping to get to number seven by 2020, but we are enforcing this order to ensure that savings come before spending.  There will be car payments somewhere in there, since one of our cars is nearing the end and will be ridiculously expensive to fix, but otherwise I hope to proceed as planned.
Logged

Oseph....you are right and you make sense.

For your future comments, I insult very directly.
wet_blanket
Some kind of
Distinguished Senior Member
*****
Posts: 7,025


« Reply #9 on: February 04, 2011, 1:22:40 PM »

I have student loans and credit card debt.  The loans won't start adding interest until I finish grad school, and at the moment I don't have to make payments.  The credit cards are down to about $3k now, but my income (grad stipend) barely lets me make the minimum payments.  So the balance is going down by about half of what I pay.

I'm undecided whether I should get a waitressing/retail job for a while to make my finances less precarious.  It would obviously slow down the degree.  I don't know how to weigh being debt free sooner and having a bit of a financial cushion against spending an extra year earning a stipend and part time wage instead of a salary.

Logged

Let us let wet_blanket have the last word.
madhatter
We proudly present the fora's Least
Member-Moderator
Distinguished Senior Member
*****
Posts: 8,100

Just killing time


« Reply #10 on: February 04, 2011, 1:26:02 PM »

You might want to ask the mods to move this thread to On the Money.

Good idea. Done.

I'm following with interest (heh -- I made a funny). I built up some debt in grad school -- about $11K of student loans, plus $20K of credit card debt. That was a combination of reasonable choices (sometimes the loans and stipends didn't make ends meet) and bad choices (did I really need a new computer or just want one?). Unfortunately, I compounded my error when I left grad school by living above my means, adding another $10K of credit card debt within a few years. (My new professional life meant I 'needed' a much bigger apartment, plus new furniture, plus new clothes...) When my car was totalled and I had to replace it, I realized I had to tackle the debt aggressively. The psychic toll of writing checks to five different credit card companies every month was weighing on me.

I wish there was a magic bullet, but there isn't. However, you can approach the problem from multiple angles. For me, that meant a combination of short-term tricks (e.g., consolidating credit card accounts into a new, low-interest account), cutting expenses (I moved into a new, much cheaper apartment), and increasing revenue (both simple stuff like selling things on eBay and more serious life changes like hunting for a new, better-paying job). I used the snowball strategy with the credit cards. Even with a drop in expenses and big increase in income, it still took about four years to completely dig out of the hole.

After that, life was roses for a while. The money freed up by not paying off debts went into savings. I built up a nice cash cushion and a down payment on a house. I was even able to start affording luxuries like vacations.

Being laid off at the start of the Great Recession ended that ride. I had an emergency fund -- and used it up. The housing market crash meant that every cent I had put into my house vanished like smoke. Over a year of unemployment for me, followed by almost two years of un- and under-employment for my spouse knocked down the rest of our savings, and we started going into debt again. We got up to about $20K in credit card debt again.

We started tracking our spending using iPhone apps and cutting down expenses. My spouse got a part-time job, and I got a small raise. The credit card debt is down to $14K now, and I think we're on track to eliminate it by fall, after which we can hopefully start rebuilding our savings. It sucks to be back down here again after working so hard to be prudent with our finances, but I know we have it better than many, many people. This recession has destroyed the best-laid plans of folks who were far better off than us.
Logged

"I may be an evil scientist, but it doesn't take a degree purchased from the Internet with your ex-wife's money to know how special and important you are to me." -- Dr. Doofenschmirtz
oseph
Embracing the crazy
Distinguished Senior Member
*****
Posts: 4,266


« Reply #11 on: February 04, 2011, 2:03:03 PM »


I'm undecided whether I should get a waitressing/retail job for a while to make my finances less precarious.  It would obviously slow down the degree.  I don't know how to weigh being debt free sooner and having a bit of a financial cushion against spending an extra year earning a stipend and part time wage instead of a salary.


Are you close to finishing?  Are you making good progress?  If the answer to both is yes, I think you should finish as fast as you can.  I have seen so many people crash and burn the other way.  If you still have a few years left on the degree, then it might be worth it - otherwise I would say no.  Maybe someone who made the part-time job/finishing thing work could weigh in to give you a different perspective.  But I did some consulting to make ends meet while I was finishing, and as interesting and well-paying as the work was, the end result was that I took way too long to finish and had a year where I stopped receiving university support and had to pay my own way, dissertation fees and all.
Logged

Oseph....you are right and you make sense.

For your future comments, I insult very directly.
larryc
Troll Proof
Distinguished Senior Member
*****
Posts: 23,004

Be excellent to each other.


WWW
« Reply #12 on: February 04, 2011, 3:11:15 PM »

We had about $40k in credit card debt at one point, plus moderate student loans, college tuition for two kids and day care for the third. We did many of the things listed above, including laying off the credit cards and negotiating with the banks for lower rates.

But what really got us in the black was increasing our income. We wrote some successful grants for my college, then formed an LLC as grant writers and evaluators. I started calling old friends from grad school--"Hey, have you heard of this grant program? Want one?" and it just took off. By that time I was tenured and if my scholarly productivity dropped a bit no one noticed. I am in the humanities so if I could do it anyone can.
Logged

Trolling for sex is not what this forum is all about.
zuzu_
Frakking
Distinguished Senior Member
*****
Posts: 4,408


« Reply #13 on: February 04, 2011, 4:01:54 PM »

About four years ago, we had about 40K on my credit cards plus about 40K in students loans (between both my husband and I). Pretty much all of that CC debt was financing my maternity "leave" (which in reality was one semester adjuncting 2 courses instead of six courses) while my husband worked a  $12/hr job (with awesome health care) and attended grad school full time AND financing a four-month span of no employment for both of us and a cross-country move for my TT job. During most of this time, we were able to defer student loans due to financial hardship.

Once I started my TT job, we stopped using credit, lived on my salary, and paid the minimums. Thankfully, the CC debt was at low rates (4.9%-7.9%) so we were able to barely stay on top of it.

Once my husband got a job two years ago, we paid day care from his salary, and then the remainder of his paycheck went to pay off CC debt. We are now down to about 15K in credit card debt, and almost all of that is still at 4.9%. I expect these cards will be down to 0% before the end of the year.

We've had our credit checked a few times, and the lowest FICO score I've had during all of this was 740.

The end is in sight! So long as my untenured husband makes it through the next round of school district budget cuts. But even if he does get let go, there will be no crisis. Our lifestyle is such that we can totally live on my salary.
Logged
concordancia
Distinguished Senior Member
*****
Posts: 13,889


« Reply #14 on: February 04, 2011, 4:33:45 PM »

Like others here, I figure the student loans and mortgage are here to stay. My costs on the condo are about $400 more than the last apartment, but I am in a better location, with more space and much nicer finishes - my costs are pretty equal to rental on this kind of apartment in this area.

However... I did not take out student loans my last year of the PhD - for some reason I though I could make it; then I got a low paying VAP at a cost prohibitive location. Financially, it was just as bad as being a grad student, while I lived in a smaller apartment that I had ever lived in during my PhD. All of that credit card debt was consolidated into one of those loans that used to be really easy to get, which actually results in a pretty small payment with extremely low interest because of the timing.

The first time I got my savings up, I bough a new computer - not exactly frivolous, and I have solid reasons for using Mac.

The next time I got my savings up, I replaced the 10 year old car - with a hybrid.

The next time I got my savings up, I bought a condo - I did get $8000 from the government as long as I live here for 2 more years, so this was probably a good thing. I am still not sure it was the best decision, financially.

I manage to pay off the cc every month, even when I had surgery. I usually manage to put a little something into savings, but I am no where close to 8 months. I really want to get close to that and start saving so that when this car is 10-15 years old I can just buy a new one, without another loan.
Logged

I like money.  I like to buy stuff and experiences with money.  
Pages: [1] 2 3 ... 100
  Print  
 
Jump to:  

Powered by MySQL Powered by PHP Powered by SMF 1.1.9 | SMF © 2006-2008, Simple Machines LLC Valid XHTML 1.0! Valid CSS!
  • 1255 Twenty-Third St., N.W.
  • Washington, D.C. 20037
subscribe today

Get the insight you need for success in academe.