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Monica Bielanko
A chronicle since 2005 of my marriage & move to Brooklyn in my twenties; becoming a mother in my thirties; moving to Pennsylvania and learning to amicably coparent after divorce in my forties while living 3 doors down from my ex-husband in a small country town.
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Tuesday
Feb232010

I'll Show You Mine If You Show Me Yours

After years of financially irresponsible behavior I've become pretty much obsessed with money management. Specifically, not spending any. Because I love to read details of other people's financial lives, I'm going to share details of mine. I like to know how much people spend on groceries, car payments, mortgages, rent. I like to know how much credit card or student loan debt they have. Hell, I want to know what your credit rating it is. It's porn to me but instead of wondering what it's like when you have sex with your significant other I want to know your financial arrangement.

Speaking of sex... Have you ever done that? Envisioned certain people having sex? I do. But not in a pervy way. I guess it's pretty pervy any way you look at it but it's more of a sociological wonderment, if that makes any sense at all. Depending on who you think about (the buttoned up human resources lady or the really old security guard) it can be a fairly interesting way to pass the time. Damn. No matter how I write this paragraph I sound like a big, perverted, sex fiend.

Moving right along... I suppose finances are supposed to be a personal matter. And we're sort of trained that being poor is an embarrassing situation in which to find yourself. Unless you choose not to have a job and are a general waste of space, I disagree. If you've never been poor I think you're lacking a certain, important perspective. Think: Paris Hilton. Also, some of the hardest workers in the world will always be poor. In fact, often the harder the labor the less you make. The more you make the more you delegate and the easier your job is.

In the interest of properly documenting this whole move to Mom's situation I am going to fully disclose our finances so that perhaps you can appreciate my plan a little more. I have yet to reveal all facets of The Plan, but I will. All in due time. I've never been rich, but I've been poor and right now I'm neither. I don't aspire to be rich or own a big home or fancy cars. I just want to be comfortable and prepared for emergencies. That said, have a gander. Here's where we stood in July-ish when I started this Money Makeover deal. Also, as a quick aside, what you see below is still pretty good for me. Throughout my twenties I generally had a couple credit cards. One for clothing and I always had one at a local furniture store where I was forever paying off a couch, TV, washer/dryer or some such item that I probably could've done without.

DEBT:

CREDIT CARD - $2,000 PAID!!!
OWE MY DAD - $1,000 PAID MARCH 12
HOSPITAL BILL FOR VIOLET'S BIRTH - $1,500 PAID MARCH 5
HONDA PILOT - $13,000
SUZUKI VERONA - $7,000
MONICA STUDENT LOAN - $6,000
SERGE STUDENT LOAN - $29,000

Our total debt on the planet earth, not counting Serge's student loan was right around 30,000 dollars. The student loan nearly doubles the debt but I don't really think about that. I figure the loan is just going to be a way of life for a while. The payments are manageable and are automatically deducted from our account each month so I just kind of put it out of my head. Serge nearly got his degree before he joined his band, but while he was in the band he pretty much forgot about the loan so they added a whole bunch of interest to it.

February is a wash even though we didn't have rent this month. Moving expenses as well as the car crash were as much as rent would've been although I did manage to pay off the credit card. March will be a good month. We get a tax return of $2,400 which will go toward the balance on the hospital bill and to replenish our $1,000 emergency fund. Also, instead of paying rent in March I'll pay back that $1,000 I owe my dad. That leaves us with just the two cars and the two student loans.

I definitely plan to pay off the Suzuki this year. After that I'm not sure what my best step is. I could knock out my student loan fairly easily, but those monthly payments are only $80 and the interest rate is low. Instead I was thinking of trying to pay off the Honda. At $330 a month the payments are really high and it would be good to own the vehicle outright and not worry about car payments at all anymore. But I'd also like to get several thousand dollars tucked away in a savings account, possibly for a down payment on a home... Paying off the Honda wouldn't let me get much put aside but would free up a lot of extra money each month which would allow us to afford a larger house payment. But we can't buy a house without a down payment! Catch 22.

Thoughts, anyone?

Are you on any kind of Money Makeover program? How much is in your savings account? Do you have an emergency fund? What are you saving for? I know it's hugely personal information and not everyone is comfortable sharing, but if you don't mind, I'd love to hear your stories.

Reader Comments (55)

Congratulations on making a plan and working the plan, i t is literally paying off! I'm in such denial about my financial situation that I'm not prepared to even think about your queries. Instead, I want to offer some unsolicited about student loans. I recommend that you continue to make the monthly student loan payments. God forbid you pass away, the student loan debt passes away with you. That is why you should never consolidate your student loans into a mortgage or with another person because the debt expires with you. The loan rates are low. Plus, if you plan to go sans credit card, it is good for your credit rating to be paying off a long term debt on time, like your student loans. If you want to accelerate the payments, put an extra payment toward principal each year.

February 23, 2010 | Unregistered CommenterSaffoula

Well done Monica!

I have no student debt, no credit cards, no car loans, no debt whatsoever and I have never had any...I am very careful with money and I have lived a good life but have always lived within my means, paid for everything with my own wages and a little help from my parents when I was a student.

EXCEPT...yes there is a huge exception...my mortgage is the equivalent to $750,000 and we pay nearly $5,000 a month in morgage & utility bills!!

I like to think about it as investment rather than debt, but the truth is...it is debt! I have a wonderful home but I don't have any other luxuries.

February 23, 2010 | Unregistered Commenterme

Yes, don't pay off the student loan. As mentioned above, this debt expires with death in most instances plus it will probably help your credit score if you will just pay it on time each month. If it makes you feel better, pay $100 a month and every four months you will have knocked a month off the date of the final payment. Or some variation of that.

I would make an effort to pay off the Honda. Once it is paid off, you can most likely reduce the cost of your insurance so you will be saving money in that area as well. However, I would save the money in a savings account until I am able to pay the debt in full. I am assuming you will be allotting a large sum each month to pay off the Honda ($1000+) and you will still be making your regular monthly payments. That way, if an emergency comes up or one of you becomes unemployed, you will have that money as a backup. And if nothing comes up, pay it off in full and go drink some wine. I would use this same method for paying off the Suzuki. Yes, you won't get the instant gratification of making a huge dent in the debt each month, but you will feel much more safe and secure and you will be prepared for the worst case scenario.

This is just what I would personally do. I am sure someone else will think this is stupid and tell you to pay as much on the vehicles as possible each month so that you don't pay as much interest. I would rather pay a bit more interest and have the security of a large savings account for emergency purposes. Plus, you will be drawing some interest on the money in your savings account, so that will cut out some of the interest on the loan.

February 23, 2010 | Unregistered CommenterE.

How in the heck are your student loans so low? Mine are 164$ + 395$ a month!

February 23, 2010 | Unregistered Commenterjeneria

I'm lucky, my grandparents were very frugal with their money, and it afforded me a sizeable downpayment so my husband and I are able to buy a fantastic starter home that could take us many years past starter- we close tomorrow! I would recommend saving for a downpayment vs. paying off the car. In this economy it is all about the downpayment. In addition, the higher your downpayment the lower your mortgage so it is really a win win. As you plan, keep in mind there are A LOT of other items you'll have to pay for when you buy a house, taxes, lawyer fees, mortgage fees, title searches, etc. It adds up and you may end up needing a lot more money than you thought. Very worth it in the end, but a huge investment.
I applaud your financial action and that you'll be raising your daughter with a no debt is good motto- so important and how I was raised which has enabled me to be able to buy a house- and have near perfect credit!
For the last few years we've been saving whatever we can (living in NYC it isn't easy!) to put towards the house, and now we'll start saving for all the things to buy!
I love hearing your updates, reminds me how important it is to focus on the bigger financial picture.

February 23, 2010 | Unregistered CommenterAdrienne

Interesting, as I am doing exactly the same at present, and my wife is off work at the mo on maternity leave, so wages considerably lower than usual. We moved house a year ago, got pregnant, and so money is very tight. I too have had decades of debts, ALWAYS credit cards, loans, student loans, store cards etc.....and now I look at how important my daughter is to me, I want rid of it all. Totaaly and finally, never to go back to debts. There is a sense of pride in knowing who you are, and what you can afford, and this is made so much easier with the excuse of children, because you have that reason to save, and not spend frivolously on useless crap like ipods, SatNavs etc..

Believe me, I used to be the worst culprit. In fact most of my debt I cannot even account where it has been spent, probably holidays from 10 years ago, enticing gadgets like ipods, electrical equipment, new cars, the list goes on and on...I know, I've done it. Thats even worse when you cant account for what you've bought!!

Without droning on and on about the past, I will tell you what I've done about it...

I know I am in the UK, and some of this wont work, but surely there is something similar you could look into?

Ebay. Sell everything, everything you dont need, not touched for 6 months, anything thats not nailed down. Basically your in debt so you need to sell it.
Savings, get rid of them, if your in debt, the cost of the debt is more than the interest on your savings so use savings to pay off debt. if you need a rainy day/emergency fund then borrow it back, you've lost nothing if you do.
Very strict budget, eg we do our grocerys online, and stick to our set amount, anything over get deleted off before we checkout.
We have changed gas and electric supplier to save money
I have changed my bank account to save money, and got £100 for doing so.

Recently I have used gift money for Birthdays and Christmas to pay off credit cards/store cards. I have some inheritance money which I wanted to spend on something really nice, but decided I could do that next year when I was in credit and enjoy it. Used inheritance to pay off debt, used ebay sales to pay off debt.

In the UK we have a great resource called http://www.moneysavingexpert.com/ and I use this every time I am about to buy something, or need advice. Read his section on debt http://www.moneysavingexpert.com/cards/?tab=3

Also, every time I shop online, even if its gas or electric, or bank accounts I go via a cashback website, (google Topcashback or Quidco) where I get cashback on the purchases I make, so far in the last 6 weeks I've made £240 for doing nothing but my usual shopping!!

and before I ramble on and on! Other things to do are cancel any useless direct debits to gym's you dont use, or other monthly commitments, or downgrade the packages at least.!!

I now have about £400 left, and when its this low you can taste the satisfaction. I always used to feel that when you had 10,000 of debt, then what difference does adding another £100..?? Nothing right? Its so insignificant, might as well, as I'm never gonna pay off the debt, whats the point? Once you get to a realistic amount, you then realise that all that money you've just paid off, COULD HAVE BEEN SAVINGS INSTEAD!!! And thats just the worst part about debt!!!

Now I want to save for Maias future, and live within my means, sounds all very good doesn't it? I just had enough of it.

BTW, Love your Flickr stream (I have one too! Dan Hardwick) and love reading this blog. I feel like I should be keeping one like a diary, to record my feelings since Maia has been born.

February 23, 2010 | Unregistered CommenterBluedan

Also remember that when you take out a mortgage, the amount they will lend you is based on your earnings, but they will also deduct your debts, so if you can be debt free on paper when you apply for a mortgage, you will be much better off.

February 23, 2010 | Unregistered CommenterBluedan

We did it pretty much in Dave Ramsey order. Debt Snowball (and we did go with smallest to largest; we felt like the psychological impact was more important than the interest math in our case), then $10,000 emergency fund, then down payment, then mortgage. We move into the house next month and start saving for retirement (we're still in our mid-20s).

We did pay off our student loans, but for our own peace of mind ... The argument re: interest rate (and death) is a good one.

I guess I'd vote for the Ramsey method in your case, simply because it all went faster than we expected. We don't have a kiddo but we do have rent ... Still, you find ways to trim and -- probably more importantly -- you find ways to bring in extra income. Each step happened more quickly than our calculations suggested.

We started in August 2006 and paid off our debt (about $15,000) in March 2008. Fully-funded the emergency fund in February 2009. Went under contract on the house in November 2009 (new construction, so we're not in yet). We had always planned for a 20% DP but decided to go with something much smaller; each $1,000 we saved would have knocked about 8 bucks off our monthly payment, and we would have missed something of a perfect storm, market and interest rate-wise.

That's our story ... I like reading them, too, so I hope you enjoy. It really seems like you're doing a great job ... I know it's tough. Keep going! You'll get there.

February 23, 2010 | Unregistered Commentersquandra

Oh, yeah ... Paid off cars are worth the wait! So nice to have that money. We still save $300 per month for the next one, because we don't ever want to have a payment again. And our mortgage will be about 30% of take-home pay; I found that I was really uncomfortable with more than that, although I think my boyfriend could have handled it emotionally. :) We'll be putting 15% gross in our retirement funds and Roth IRAs.

February 23, 2010 | Unregistered Commentersquandra

I'm currently living with my parents to save money for a house. I recently went through the same dilemma. Do I pay off my car first or my student loan? My student loan balance is *ahem* $55,000. (Thankyouverymuchmaster'sdegree.) My car is 17,000. I decided to tackle the car first and pay it off in two years. I'm paying just a little under double payments at 700 a month. When my car is paid off, I will roll over the 700 I had been paying in car payments to the student loan. I decided to pay off the car first because 1. it was the lowest balance and easiest to tackle 2. student loan interest is tax deductible. I already have a sizable savings for my new house (22K), but that grows each month as I stay with my parents. I'm not about to put all that toward my debt because I want and NEED to get out of my parents' house. My budget for the house will allow me to continue making the same payments on my car to reach my goal.

February 23, 2010 | Unregistered CommenterSarahO

I will not tell you how much student loan debt we have because it is an unfathomable amount. Mine is around $40k and totally manageable, but my husband... well, let's just say he's about to finish school this spring. With multiple impressive degrees, but we're 30 and he's just about to finish. No matter how many fancy scholarships you have, you have to live on something for all those years.

We have killed almost all of our credit card debt with some serious budgeting on my husband's part. We still have some loans I'd like to destroy, but that's the next step. It's a bigger priority to beef up our savings account. First it was the vacation fund, then the wedding fund, then the baby fund, and now it's the moving fund for our move this summer. Also trying to be good about putting a little bit in the baby's college account every month.

What I'm stuck on is trying to figure out how we can take down expenses since we're probably moving to a city with a much higher cost of living. I feel comfortable with our current habits, but I am not quite sure how we can most effectively pinch pennies once we make the change.

February 23, 2010 | Unregistered CommenterJessica

Good for you. You and my husband would get along famously. We are in a similar phase right now, minus the living with mom part-WORKING for my family is about all I can handle. However, we do live in a home that they own and get a fabulous deal on the rent/mortgage.

Anyhow, after we got married a year ago and combined all of our debts, wedding expenses, car payments, etc., he made it his personal mission to be debt free (or as close to as possible) before we start a family. Since then, we've been scrimping and saving to make this happen. We each get a (very small- let's say 1/3 of what we calculated we had been spending before) cash allowance at the beginning of the month that is to be put toward any discretionary spending- Starbucks, lunch, mani/pedis, happy hours, ANYTHING. That way, whatever comes out of the checking account on our debit cards (only groceries, gas, bills, etc.) can be easily categorized into our budget.

This has helped A LOT- in two ways. 1) Seeing where our money is going has been a lot easier, and 2) knowing that you only have X amount of cash for the rest of the month really makes you think twice before swinging through Coffee Bean on your way to work. From an admitted shop-o-holic, I really like this method. I believe my husband found the book Total Money Makeover a HUGE help, found here: http://www.daveramsey.com/store/Books/Workbooks/-i-the-total-money-makeover-workbook-i-/prod153.html

Best of luck and keep us posted!!

February 23, 2010 | Unregistered CommenterLauren Crider

And also, when you pay your dad back, give him a small token of your appreciation. I'm sure he knows that you are an appreciative daughter, but a six pack of his favorite beer or a gift certificate to his favorite restaurant or even a nice little letter of thanks will really let him know how much you appreciate that he was there for you in your time of need.

February 23, 2010 | Unregistered CommenterE.

We are 10 years from retirement with massive debt, around $117k plus mortgage of $440k (upside down), plus 3 car loans. Our combined income is $240k, we support three kids, two of whom will be graduating and going to college this year. We hired an attorney to prepare bankruptcy papers last fall - tip- never hire an attorney who uses hotmail as his email account. We have yet to see accurate filing papers, but as soon as we told our creditors we were filing Chapter 13 (paying it all back in 5 years, interest stops), we started getting offers to settle our debts (over $100k) at 15-25% of the total owed. Foolishly, we listened to our atty and did nothing. neither did he. Now we are at the total frustration point and contacting the vendors ourselves to try and get these settlement deals that were first offered months ago. Just settled a $28k credit card for $8700 and will take out hardship 401k withdrawals to pay off as much as we can. And maybe not have to file Chap 13. You are smart to stop the debt train now - we never did and look at what it's cost us.

February 23, 2010 | Unregistered Commenterjls

I think the general rule is to pay off what has the highest interest rate first, so that is probably your car? Once that/those are paid off, you can start thinking about larger amounts toward the student loans. That's what I would do...I think.

February 23, 2010 | Unregistered Commenterrachelgab

I'm currently working on paying off my credit cards too. So far I've paid off one of the three cards I have. I do have $2000 saved up for emergencies. My major problem is my student loan debt. I owe $100,000 in student loans, most of it is from law school. I love my job as a public defender but the price I pay for having a job I love is very low pay. This is especially true given the $900 student loan payments every month. I figure I'll be paying those loans off for at least 30 years...

February 23, 2010 | Unregistered CommenterAmber

I love the full disclosure! And as a show of appreciation, I'll do the same, since you asked. :)

A couple years ago my financial situation looked very very similar to yours. I had $13000 of credit card debt, a $9000 SUV with a car payment of $280, plus rent and utilities. I haven't had student loans or hospital bills, but that massive enormous credit card debt pretty much adds up to all the rest. I was SO frustrated and had no idea how I'd ever dig myself out.

I ended up selling my SUV and buying a $1000 beater 1988 toyota. It was a huge piece of humble pie, to drive around such a clunker, but it got me from point A to B, and eventually I really grew to love that little car. It treated me well, and freed up $8000 of debt and a huge chunk of monthly change, which then I put towards credit card debt.

Still, with $13000 of credit card debt, I felt helpless. I felt like I could only afford the monthly minimums and realized I'd never ever be out of debt at that rate.

I kind of lucked out with my solution, to be honest. It was 2005 and the housing market was about to explode. I realized that if I bought a little condo that was similar to my cost in rent, eventually the equity in that condo alone could pay off my debt. It's not always that easy, and it doesn't usually happen fast, but I bought a condo for $96000 right before everything boomed. Within 6 months it was worth $130000. I immediately refinanced and pulled out $13000 of equity to pay off all my debts. Then I rewarded myself by buying a car, and giving myself another car payment. (Doh! That was dumb.)

So that was largly luck, but the same method works every time, just not always as fast. Also, that was back when you could get 100% loans with no money down.

Then I got married, and with my wonderful husband I also married more debt. We then found Dave Ramsey and started the debt snowball, just like you are now.

Within one-two years, we were able to pay off every penny of his debt, my entire car ($9000), sold his car, ebayed & craigslisted all sorts of random crap, sacrificed and paid five times the minimums to all the debts... and eventually we finally had nothing but a mortgage to our names. Then this year we sold our condo for just enough profit to give us a down payment on the home we plan to live in for the next twenty years. With interest rates where they are, and builders desperate, we got a killer deal on a home we could afford.

But I really do owe it all to smart investments (real estate) and Dave Ramsey. And humble pie. :)

Now our finances look like this:
Mortgage: $1400
Car: Zero
Debt: Zero
Loans: Zero.

It took years and years, but it's so worth it! We still share one car, and it's a sacrifice, but it's worth it.

February 23, 2010 | Unregistered CommenterJenny

I think others have probably already said it, but I've always heard you should pay off the debt with the highest interest first, so I'd go with paying off your Honda first, before the student loan. My husband and I have two credit cards that add up to about $7,500 and his student loan, which is deferred right now, but it's around $53,000 total, or $286.00 per month. We deferred the student loan last year because he lost his job and we want to get the credit cards paid off before we go back to paying on that, so we're trying to pay as much as possible on those (a minimum of $300 a month). We're starting a letterpress business (along with our other jobs) so we're hoping to use a lot of that money to pay off debt. We would eventually like to buy some land and build a house, but debt comes first, then emergency fund, then down payment, so it will be a few years at least. We live in a loft right now and the rent is $1,000 a month, but our 1,200 pound press sort of determined where we could live.

Thanks for sharing all your financial info, it's really inspiring!

February 23, 2010 | Unregistered CommenterBailey

Here is my debt at the ripe age of 30

Credit Cards: $11,000
IRS: $950
Therapist: $300
Student loans: $68,000 (just finishing my masters)

Getting ready to start a new career where I will start at around $28,000 per year until I get licensed :(. I also am in dire need of a new car. Things could be worse. I am loving my new career path and am in love with a great man. I don't have the option of living with my family, so I will just trudge along. Good luck paying off the debt. You can do it!

February 23, 2010 | Unregistered CommenterSACW

If I die, my student loan dies too?

Hmph.

February 23, 2010 | Unregistered CommenterSerge

Here is a list of our finances:

House $186,000
Credit Cards $9,500 (All on one 0% interest card. I'll have to transfer the balance in July, but the fee will be less than monthly interest)
Car $6,000
Emergency Fund $250 (I transfer $14 each paycheck)

Right now we're buckling down in order to pay off the credit card as soon as possible. The advice that you should pay off higher interest rate debt first has made me think that maybe I should pay off my car first instead, but I'm so set on eliminating credit card debt. As soon as the debt is paid off we will put all of the extra money towards savings. My goal is to have the $1,000 emergency fund as well as $10,000 savings fund in case my husband or I ever lose a job. In addition, next year we want to have another child and I want to have the money for the hospital bills set aside. This is unsolicited, but AFLAC has awesome maternity insurance. If you have an easy time getting pregnant and your work will let you pay through a payroll deduction (if your work won't do this don't even bother, the coverage will not be the same) you should consider this. You have to be on the plan at least one month before you get pregnant (on it for a total of 10 months) and we were paid out around $6,000 dollars, which paid for my maternity leave. We paid $140 for 11 months so we made around $4,460. We have one daughter right now (16 months). I do contribute $100 to my 401k each month but both my husband and I have Roth IRA's that are not being contributed to, so that's another goal. As soon as the debt is gone, I'll probably split the extra money amongst all of these savings goals.

February 23, 2010 | Unregistered CommenterJen

My first thought was why on earth you put so much money into cars.

My rule is never to get into debt on depreciable items.and cars are top of that list.
So get rid of the Honda and just learn to make one car work until such a time as you can afford a second one.You can't afford two cars at this point in time

Then pay off all other debt before you worry about saving for a house deposit.

I'd suggest that you forget about saving for a house deposit this year.
And if you refuse to get rid of the second car then $30,000 is 600 bucks a week which i assume you could be able to do if you realy pushed it for one year.

As for the 29K student loan...wtf? and he didn't even finish the degree? ouch.

February 23, 2010 | Unregistered CommenterSarah

My credit rating is 770 (money shot!)

I'm closing on a house on Friday. My debt looks like this:

1. Credit Card (+$150 - yes, I actually have money on the card, I don't owe, don't ask, long story)
2. House Payment (beginning next month): $800
3. Child Support: $750
4. Day Care: $250
5. Therapist: $150
6. Utilities, internet... ?? Won't know for sure until I move into the house.


I feel pretty good about my situation. The day care goes away in a couple years. I have work that I need done on my truck (paid for, own the title) and that's going to be spendy. But I feel really good...

February 23, 2010 | Unregistered CommenterChris Holmes

My savings: 11,000 in the bank

1. student loans: 2,500 left
2. just made my last payment on a corolla yesterday! woohoo! it took 5 years, but I once heard Suzie Orman say that if your car payment schedule exceeds 3 years, then you really can't afford the car. Of course, I wasn't aware of that 5 years ago. Luckily, it's over now!
3. credit card debt: none (in fact, I used to have 3 credit cards and then cancelled two of them because i wasn't using them at all and just wanted to simplify)
4. i spend too much money on eating out, coffee shops, etc. (it's no good!)
5. i live in san francisco and keep my rent CHEAP. this is no easy task, but my husband and I just search and search for great places that are affordable and we are moving into a two bedroom soon that is 1600 a month. very cheap for San Francisco standards.
6. you had to pay over a thousand dollars for Violet's birth? even if you had insurance? wtf? why? i did not know. i am expecting a baby in June. glad to know!

My hsuband is WAY WAY WAY better with money than I am. He has no debt whatsoever and 50,000 in the bank. I am jealous, but thankful that he is my better financial half. Of course, lenders in San Francisco would probably still give us the cold shoulder if we wanted to buy a house. They want you to have like an extra 30,000 in your account even AFTER you have a down payment just to ensure that you're not a liability. Go to hell, I say!!

February 23, 2010 | Unregistered Commenterleyla

i am curious about other people who live in places like Manhattan and San Francisco: do we just surrender and give up on the "american dream" of home ownership?

February 23, 2010 | Unregistered Commenterleyla

Hey Monica! I am fascinated with money management too. I think I've done really well. I'm 28. I have $0 debt (no credit card debt or anything), have one car payment at $300 a month and have $50,000 in savings. My husband and I just put a huge chuck of change down on a house. We're really excited about it.

Now, let me ask you a question. I make good money, but my job is BORING! I could potentially get a job with a company I adore (my dream company), but I would cut my salary by more than half. Plus, I would have to drive across the valley from home to work. We're talking South Jordan to eastern Salt Lake. Would you take the job? Or is money and security more important?

February 23, 2010 | Unregistered CommenterEllaNora

Take the job! Your long term happiness is way more important, especially since you're in such good financial shape right now. And if you can learn to live with what you make on the new job before you have children, all the better. Do it! A South Jordan to SLC commute ain't THAT bad. In fact, most of my friends commute from there or Draper to SLC.

February 23, 2010 | Registered CommenterMonicaBielanko

FYI - I live in SF. I have no desire to own a home after watching what has happened to my parents (200k upside down). I love my rental house - my landlord is great, things break and they are magically fixed, it is rent controlled, and it is WAY more than I can afford to buy. My dream is to be able to travel, eat well, and enjoy life while working about half as much as I do now, and home ownership doesn't play into that too much as a city girl, though I do understand the desire.

I love the full disclosure Monica! I am in the early years of a career in law after putting myself through both private college and private law school, to the tune of so-much-debt-you-can't-even-imagine. I'm not even worrying about the majority of my law school student loans right now - one of them is fixed at a 2% interest rate, the other is a higher interest rate but stuck on a 10 year payment plan, so one way or another that sucker is gone 7 years from now, and I will worry about pushing it along more quickly once I'm done with the rest of it.

The rest of my debt is a combination of car (a prius that I bought a two years ago), private loans at moderate interest rates (think 5-6%) that I used to pay for college, and some credit card debt. Total it equals about $56k (scary). I was recently inspired to take up an action plan to have this debt paid off as quickly as possible. I make a very good salary and own a business on the side. My plan is to use all of the income from my second business for debt, along with any bonuses and tax refunds, and I'm budgeting an additional 400 per month as well to go towards debt payments. I have calculated that, assuming I get no bonus/second business income and just put the additional 400 per month towards my debt, that I can have it paid off by October of 2012. Assuming I make some reasonable bonuses and just a little income from my second job, that could be pushed back to February 2012. Assuming I get a pay raise this year and can find an additional 200-400 dollars to put towards the debt, it could be sooner, and I'm just going to re-assess on a month by month basis.

I realize that I could sell my car, move into a smaller apartment, stop dining out, and stop spending money in a lot of other ways, but I know myself and those extremes will not work for me right now (though I'm in awe of how brave you have been in making decisions to cut back!). I think this plan is pretty conservative, but will allow me to get everything paid off in a reasonable amount of time and still feel like I am enjoying the benefits of working 18 hour days. Looking forward to watching your money makeover journey and hearing more about the plan!

February 23, 2010 | Unregistered CommenterEmily

why did your husband delete his comment?

February 23, 2010 | Unregistered Commenterjess

I am fascinated by other people's financial situations as well. I grew up in a home with parents who although did well, were very irresponsible with money. They did however teach me an extremely valuable lesson at the age of 10. I remember coming across one of my fathers paystubs and realizing he made over $100k a year. I turned to my mother and stated if we had that much money I didn't see why I couldn't have that pair of Guess jeans I wanted. My father sat down at the table with our monthly bills and a calculator. He took that 100k and broke it down by taxes, mortgage, car payments, groceries, utilities, etc. He then took the remainder and broke it down over 12 months to show what was left each month before he saved for our schools, vacations and their retirement. He then asked if those $70 dollar jeans were important enough to take away from that monthly remaining balance, or if I wanted to put that money itowards more important things.

I may have taken that lesson too far in my life, but when we first got married and I was still in school, my husband made less than $20k and we still managed to save almost $400 a month. Now we make around $500k a year but I still ask myself every time I pick up anything whether I would rather that money go to something more important. We are 38, have no debt, college paid off for our children and our retirement fund almost ready. We don't squander money on the insignificant things but also do not scimp on life experiences. My fear/respect of the almighty dollar has driven us both to security. I thank my father for that early money lesson often.

February 23, 2010 | Unregistered Commentermeintexas

Leyla, I live in SF and can't even fathom owning a property... plu-ease. It's not the American Dream for me: unattainable.

I just bought a car! I bought a used Yaris, that I found on Craig's List (really!) It was very reasonably priced and will be easy to pay off as my dad fronted me the cash for the sale.

No real debt except to pay back my Pops.

February 23, 2010 | Unregistered CommenterKaren

I love that so many people are in therapy, willing to admit it, and budget for it! That's awesome!

February 23, 2010 | Unregistered Commenterrachelgab

meintexas - wow! that is awesome. what do you and your husband do for a living? you're badass.

February 23, 2010 | Unregistered Commenterleyla

Just wanted to say that I think its really helpful (and interesting) to hear all these perspectives and stories on debt...that's pretty brave of you lady, to be so honest about your finances! i think its awesome.

I graduated college about 9 months ago and after waiting table for about six months, i landed my dream job a few months ago doing child protective work. its tough, yeah and certainly not as lucrative as many other fields, but its working for the state and is wayyy more money than i ever made waiting tables! benefits don't hurt either. my debt is as follows:

four credit cards (eeek, i know): $5600
car loan: $9600, about $220 a month
student loans: $17,000

i guess its not a LOT LOT relative to what a lot of people may have in terms of debt...but i'm 23 and just starting out as a 'grown up' you know? The last few months i've been able to actually bring down my credit cards a bit, and i'm going to try to pay a bit extra on my car payment each month to take a year off my payment schedule. against my better judgement, i just put my student loans into forbearance for 6 months to free up some money to put towards the credit card debt. i have to pay them off using the psychological route - smallest ones first. on the bright side, i put my $400 tax refund into my savings account and have been successfully keeping it there, which for me is a pretty big feat.

anyways! i think its so great how much progress you have already made, in a pretty short amount of time too. keep working at it! and remember how great it will feel to be debt free - thats what keeps me moving :)

February 23, 2010 | Unregistered CommenterSara

This is really great information! I have never really understood the whole secrecy about money thing.. but then I don't feel ashamed ever that I earn less than the average person.. maybe the shame mainly comes from people who have more than most?
I live in Australia, so I'm sure things are different here in many ways.. student debt is certainly handled differently from my understanding of these comments.

We paid a minimal deposit on our own place last year ($11,000) and I am shocked, SHOCKED at how much interest we pay on the loan. Even with a first home buyers intro rate (about half a percent less than the regular rate for the first 3 years) from every $2000 we pay of our mortgage, $1500 is interest. If I had known that I think I would have tried to save a bigger deposit. Having said that, the market here in Aust just grows and grows and grows so quickly (for the last 5 years at least) that in the time it takes you to save an extra $10,000 property prices in the area you're looking in may well have gone up by $25,000. For me, it was sort of a case of get on the escalator while you can.

We do pay more than we would if we were renting in the same area, but we rent out our spare room to a friend to help with bills (it is an agreement that we pay the mortgage as normal, and his rent money is only to be spent on bills, so that if he moves out, our major payments remain the same. This is purely psychological but it works for us.

My partner is spendy and has two credit cards that are pretty much always maxed out, total of about $5000. I get freaked out when my one credit card (limit $2000) has a debt of over $1000. All my workmates today at work said they pay theirs off EVERY SINGLE MONTH and never pay interest. Amazing.

I've really liked reading everyone else's stories too.
Oh, and there is an amazing site here in australia that is becoming big else where as well, that is dedicated to helping people reduce debt. Check it out. (I'm not associated in any way btw)
http://www.simplesavings.com.au/

February 24, 2010 | Unregistered CommenterKelly

First off, congratulations on all the steps you've taken and are taking to control your finances.
I can not stress enough how important it is for you to have a SIZABLE emergency fund in place, especially in this effed up economy. I have always been a saver, have never spent more than I had, if I wanted something I spent months saving for it in advance. My husband is more of a spender but was never too out of control with his spending once we were married. We spent the first two years of our marriage paying off his credit card debt (about 15,000). We bought a small home when we got married (at the height of the effin boom). It does cost a lot more than you think it will to buy a home between closing costs, inspections, and downpayment. Really investigate the true cost of this waaaay in advance for the area in which you plan to live.

Two years ago I felt on top of the world when it came to money. My husband had an awesome job, I was working, we had ZERO debt, and a huge emergency fund ($70,000) that I planned on partially using for a downpayment on a slightly bigger/ nicer house in a couple years. We decided we were completely prepared financially to have a baby and for me to even be a stay at home mom. I was downright effin blissful.

The baby was born last spring and 4 weeks later my husband was let go from his job. He spent the entire summer looking for work. He must have gone on 50+ interviews. This past year has been a nightmare. He has changed careers and is now working a comission-only job which takes several years to build a client base. We have been living on our emergency fund and it's scary as hell to see it go so fast. I'm back at work again (which has been hard; I always planned to stay home with my baby), but I do not work in a field where I make a large salary. After day care there's such a small amount left, I feel lllike it's not even worth it.

I'm not sure what our next steps will be when our savings are gone. We could try to sell our home and move in with my parents, we might use my husband's 401 K ( which you are never supposed to touch)...I don't know. Again, this whole year has been a nightmare, but at the same time, I know other people have it a million times worse.

So, as I said, make sure you have a lot of emergency cash around.

February 24, 2010 | Unregistered CommenterSue

Thanks so much for sharing! I am getting married in 3 short months and worried about combining finances with my future husband. I am pretty good with money but he tends to live a little paycheck to paycheck, which worries me. At least he has agreed that I can handle all of the family finances!
I have no debt currently, it really scares me! I didn't even get my first credit card until I was 24, and even then I pay it off every month and don't accumulate interest.
My future husband has about $13,000 in student loan debt, so we will work together to pay that off. We just have one car and I bought it used and paid cash. We also both have automatic savings accounts set up to have an emergency fund.
Home ownership is a long ways off, especially since we live in Chicago and can't afford to buy anything here anyways. But we are okay with continuing to rent for the next few years. I've got about $10,000 saved as the beginning to a downpayment and hopefully we can continue to add.
So great to hear about what others are doing, especially in terms of saving more! I know that we could, we just have a hard time saying no to all the fun things to do in the city.

February 24, 2010 | Unregistered CommenterLindsey

In follow up to the student loan issue and specifically the public defender who posted, look into whether you qualify for loan forgiveness under the stimulus package. The package includes forgiveness for those who provide a public service, like social workers. Not sure if the deadlines have passed or what the qualifcations are, but my sister (who graduated almost 10 years ago) is looking to get a substantial chunk of change forgiven under the stim, fingers crossed and knock on wood.

February 24, 2010 | Unregistered CommenterSaffoula

From http://www.studentloanborrowerassistance.org/get-answers/

Will my student loan be discharged if I die?

If you have federal government loans, yes. This means that your estate will not have to pay back those student loans. Survivors can apply for a death discharge to cancel a borrower’s federal student loans.

Parent PLUS loans may be discharged if the student for whom the parent received the loan dies. Also, the death of both parents with a PLUS loan (assuming both took out the loan) is grounds for the “death discharge.” The death of only one of the two obligated parents does not cancel a PLUS loan. There is no administrative discharge for private student loans if you die. Private loan debts will be handled the same way as other debts. That means that they will be part of your estate. This estate settlement process (also called probate) varies by state.

Can private student loans be canceled?

Yes, but only if the private lender has a cancellation program. Most do not.

Am I eligible for career-related loan forgiveness programs?

There are several career-related discharges that will cancel all or a portion of your loan if you work in certain professions, such as teaching. Some states also have loan forgiveness programs.

Can I cancel my loan if I’m working in a public service job?

Yes, if you are eligible for the public service loan forgiveness program. The Department of Education will be administering this program. You must have a Direct Loan to be eligible. Borrowers with other federal government loans can consolidate with Direct Loans in order to obtain this benefit. In order to qualify, you must not be in default and you must have made 120 monthly payments (10 years of payments) on your loans AFTER October 1, 2007. You must be employed in a public service job at the time of the forgiveness and must have been employed in a public service job during the period in which you made each of the 120 payments.

February 24, 2010 | Unregistered CommenterSaffoula

Lets see we have a Walmart card that I just checked this morning and we still owe $212 {from Christmas} we also have a card Dominic using for gas, cigs, and coffee it runs us about $150 per month but I always pay it off every month. I have two credit card but both have a zero balance :)

Dominic has an old truck but it's ours and no payments....and I have a Ford Expedition which I owe a little over $5000 on and can't wait till we pay it off. It's in good shape so I am going to keeo it until it dies on us.

But my big problem is all my medical bills from all this skin cancer being taken off, I have good insurance but still I have bills and am working hard to get them paid off. I think it is right around $2500 right now and I still have more appts. so I kind of feel like I can't keep up.

That is our debit in a nut shell....wow actully feels good sharing this information :)

February 24, 2010 | Unregistered CommenterShelly

Hi, this is all really very useful, and reading about your financial shape up inspired me to take a long hard look at how I deal with money and sort it out. I am 35 soon after all! I earn a really good salary, but with years of irresponsible spending in my 20s I left myself with a hefty personal loan of £17,000 total and about £6500 of credit card debt. As someone mentioned above, shockingly I have nothing remotely useful to show for it all, except some good memories and photos from my travels.
I live in London and didn't have the common sense to buy before owning property alone became completely unattainbale. Anyway, my personal loan was always on a fixed 4 yr plan that I thought would never end, but it does, this June. I will literally scream with delight at the last payment in June, it has been a heavy burden, knowing I have to pay that £400 per month. By changing my lifestyle over the past 3 months, I have put every single spare penny towards the credit card debt. And got that down to £4500. It's on a 0% interest balance transfer deal, so I am hoping I can pay off about £750 per month until its clear. Close to June. When I will, for the first time as an adult, have a debt free existence! I have learned my lesson the hard way and will never get myself into debt again. (except for a mortgage). Once this is all paid off, I plan to save save save, so I can go travelling for 6 months, before coming back and then saving for a deposit on a flat. Way out in the surburbs somewhere probably. I'm glad I have finally learned the value of money and not doing anything on the never never.
I have no savings and right now, it doesn't make sense to save anything when I should be doing everything to clear my debt. If an emergency came up, then I would borrow the money, but this is easier, as there is only me.
Ebay is great btw for selling anything and everything, people will buy all sorts! Give it a go.
Thanks for sharing, and good luck with the financial makeover. (And I should be very grateful we have a free National Health Care system).

February 24, 2010 | Unregistered CommenterStarla

Hi Monica,
Congrats on your new "Money Makeover" plan. I'm trying to do this myself. I don't have to much debt but my fiance does. I have about $1500 in credit card debt. I have your basic medical bills, and utilities (which truly such ass right now). I paid off my student loans and my car and I have an emergency/ wedding fund which I probably should have separated. Here's the thing though...

I need some advice. I'm more of a saver and fiance is a spender. We are both 31 and I currently rent an apartment with a roommate ($471 ea/month) and he lives at home. He's in the military (currently deployed) and never saw a need to move out because he never knew if he'd be deployed. It's always bothered me that he's still at home but that's besides the point. Anyways he pays his bills and then uses the rest of his money on hobbies or eating out. Oh and they aren't cheap hobbies. We're talking video games, paintball, fishing, lgadgets... blah blah blah. He will save when he truly truly needs to but it's a rarity. I finally taught him how to bargain shop more! Sometimes I wonder if he would save more if he saw what it's like to have all the bills that come along with being on your own. My questions are was it hard to get Serge on the bandwagon with this money makeover plan? If you don't mind me asking are you the one in the family that handles the financial stuff? Are you both savers? Do you guys fight about money a lot? I'm scared to death what it is going to be like once fiance and I get married. I mean right now he has no say in my money and I have no say in his. We are aware of each others debts. I just don't want him to regret me for wanting to save or me regret him for wanting to spend. Is there a happy medium out there? If so please blog about it. I NEED HELP!!!!!!!!
Thanks.
P.S. Love your blog. I always look forward to reading it. Your daughter is the cutest!

February 24, 2010 | Unregistered CommenterAmy S (OH)

Financial porn--HA! I thought I'd hop on with my two cents (pun intended)... this whole subject hits home with me because just this year our financial issues actually ended up leading us to start a small business. I wrote post about it but can't seem to link it. www.survivethemayhem.com/2010/01/economy-finances-that-new-thing.html
(Oh, and I was one of your Haiti Great Experiement contributors..didn't win but you know, it's an honor to be nominated. Just so you know who the heck I am since I may sound all commerical-ey!) Bottom line, the hubby and I created our own cash budget system, started making handy-dandy, cute organizer envelopes and launched a little business helping others with the many ideas we implemented to improve our own finances. Just wanted to share since I know where you are coming from!

Ah, debt. I obsess over it daily & love that finances are porn for you. Here's our situation (it is loads better than it used to be since my husband and I set up & followed a serious budget for the past 2 years).
SUBARU OUTBACK - $13,600 (we are a one-car family)
MY STUDENT LOAN - $12,000
HIS STUDENT LOAN - $25,000
CREDIT CARD - $900 (will be paid off in March!)
SAVINGS - $1,100 (saving for baby #1)

+ $200,000 MORTGAGE which we are currently refinancing to lock in a lower interest rate.

UGH. Tough to look at it all, but we ARE making progress!! You are doing a great job & I'm impressed with your decision to move in with your Mom to make progress even more quickly than you would've been able to while paying for your own place. Any and all sacrifices will be well worth it in the end! Right?!

February 24, 2010 | Unregistered CommenterHeather

When I moved to NYC I had nearly 13K in credit card debt and over 50K in student loan debt. My move expenses and lack of job for the first few months I lived in NY added another 3 K to my credit card debt (and that was even after going through about 5 K I had saved to move!). I lived with Drew rent-free for the first year and half (I bought all the groceries and made small household purchases here and there) while I chipped away at my credit card debt. I got lucky and scored a good job about a year after I moved and was able to make huge payments to my credit card -- more than I'd have spent on rent if I were paying that. I was able to pay off the whole thing shortly before we got married last July.

Then, after the wedding Drew offered to pay off my student loan, which I'd also been making very big monthly payments on (like 600 bucks a month). He's very good with money, comes from a family that started investing for him when he was a baby and had a little nest egg he told me about just weeks before our wedding. I was lucky — and extremely grateful -- that he could afford to pay off my remaining 50k+ student loan debt. I felt a little strange about it at first, but then realized as a married couple, it was no longer just MY debt, but his as well and it simply made sense to pay it off if we could afford to. After years of being so broke and worrying about money constantly, it's been an adjustment -- a happy adjustment! -- to get used to being debt-free. Now I happily pay half our monthly expenses and contribute to a joint savings account we opened right after we were married. I feel like I learned a lot of lessons being poor that will serve us well in the future as we start a family and have to budget our money carefully.

One thing I did when I was broke and needed extra money was sign up to do focus groups. I googled market research agencies in my area and called and asked to be put intheir database. I estimate that over the years, I probably made around 7 grand doing them -- $75 here, another $100 there. It adds up. You and Serge should look into it. Just make sure that when they ask when the last time was that you did one, you say it's been over six months. It may be little white lie, but it really doesn't hurt anyone and it's not like it changes your opinion, which is all they're after anyway...

February 24, 2010 | Unregistered Commentercitywendy

Oh! And the reason my credit card was so high to begin with wasn't because I was a big spender, but because I'd lived on plastic during several periods of unemployment and got saddled with unexpected car repairs I wasn't prepared for. FYI. Now I realize how important it is to have an emergency fund -- and not just $1000, but, like, enough to cover at least 6 months of living expenses.

February 24, 2010 | Unregistered Commentercitywendy

One more thing! Now that I'm no longer struggling with money (I'm not rich by any means, but just not struggling anymore), I try to pay it forward in little ways. I donate to charities and causes I believe in, I give money to street/subway performers I enjoy, and I leave big tips for people who deserve them. Last week, I even left a 100% tip for the first time for a waiter who was extremely friendly and good at his job. I remember when I worked for tips and how much something like that would have meant. And though it may not go with your whole "don't spend money" theme, I do believe in financial karma. I think if you're generous with what you have, the universe will reward you. I have found that to be true for me, anyway.

February 24, 2010 | Unregistered Commentercitywendy

Good Job!!

I suggest paying off your cars and everything else and leave the student loan debt last on the list.

When I purchased my house, 14 years ago so things might be vastly different, I could not have ANY debt (no credit card, no car, no collections, etc...) with the exception of student loan debt (didn't have any but was told that was the ONLY acceptable debt).

Pay the car off first, don't accumulate any further debt, pay the minimum on your student loan debt and start to save (once the car and all other debt is paid). When the credit card offers start rolling in mark them "return to sender" (that way they have to dispose of the stupid plastic promo card they include inside)!

I was also told that not having auto debt is a positive on your credit rating - can't remember the logic as if there is logic to credit ratings!!

February 24, 2010 | Unregistered CommenterGreenInOC

I think it is so, so great what you are doing.

We have the mortgage (158K) and student loans (20K), which seems like a lot. But the student loans I just don't count because the interest rate is locked in lower than anything I'll ever borrow again. We don't have anything on our cars or credit cards. So that seems good right? Except, we are pretty much upside down on our house. We bought at the wrong time/place and every time I make a payment, I get irritated about it. We have about 9K in an emergency fund and several other accounts for retirement (but I don't even look at the statements other than to occasionally rebalance the investments because I don't want to think of it as money I have). But I still feel like the only times we contribute to our emergency fund is when we get a tax refund or a bonus at work. So I think we have work to do and it totally inspires me what you are doing.

February 24, 2010 | Unregistered Commenterjen

In 2006 I was smothered in about 15K of credit card debt, a 350$ car payment, 6k student loans, rent, insurance, and all the rest. I was behind on almost all of the payments and my car almost got taken from me by the finance company.

I decided to quit my job and move to Korea to teach English. I got rid of the car (no need in Korea), didn't have to pay rent, health insurance, or taxes, and started paying things off. I moved to Saudi Arabia last year to make more than twice what I was making in Korea, 3 times if you count benefits.

Nearly 4 years later after leaving the US, I have a savings of about 2K, credit card debt of about 4K (with a super low interest rate), and nearly 3K of student loans. They will all be paid off by June.

Leaving the US was the best thing I could do! Paying for a car and health insurance were the biggest hurdles to getting myself out of debt. Like most people, I paid over 200$ per month of my own money for health insurance alone, about 100$ for car insurance, and of course car payment, gas, and maintenance! Most other countries (at least all the ones I've been to) have much better healthcare and it's practically free. I don't know if I'll ever be able to justify living in the states again, at least not from a financial perspective. I'll have to be satisfied with spending a few of my 5-months annual vacation there. :)

February 25, 2010 | Unregistered Commenterblondieofarabia

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