May the Bankers Quake in their Boots

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The credit card debt is down about $16,000 in three months, from $106,636 in November to $90,653 now at the beginning of February. And I only started focusing on this at the very end of the year. I’m already a wee bit under where I hoped to be now.

That means we can really kill it going forward.

Out of credit card debt by by February 2019.

Car loans paid off by the end of April 2019.

Emergency fund of $22,000 stocked up by June 2019.

Then we’ll tackle the home equity and mortgage, which we should be able to knock out in another four years, max.

A plan is a fearsome thing. Let’s all get one, follow it, and let the bankers quake in their boots.

 

The Day After The Talk

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I can’t tell you how much better I feel now that I’ve had the talk with the fella. Last night I went down to the TV room, where he sat flipping through channels, and said “we need to talk” and told him about the entire mess. This was not all exactly a secret; the ledger of our debts sits right there in the bill space. He just left it to me, all the responsibility and the blame. Yes, his spending is much more in line than mine; though it’s still too much. But with me in charge of groceries and kid expenses and my own predilections for designer accoutrements, I carry much responsibility.

This morning this is now entirely different. I gave him the virtual keys to the Mint account. Now he can see the whole ugly truth. I talked with him about my ideas for getting out of the mess: at the start of each month, first pay the basic bills; then set aside cash for what is budgeted for the month; then use the remainder to pay make minimal payments on all but one debt—and pour every last dollar into knocking down that one debt.

I feel hopeful; I am relieved; I am a million-fold better off.

Now my only little secret is that I’m blogging all this to the world.

On Dave Ramsey

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I get my little fix of debt-reduction enthusiasm now by watching Dave Ramsey at the end of the day. A month ago I hadn’t heard of this guy, testament to my left-wing bubble, and he’s over there in that right-wing bubble. He’s on the radio somewhere; I’m not sure where, since I’m busy on the left end of the dial listening to public radio. There seem to be parallel, non-intersecting worlds of the jesus-loving debt reductioners like Ramsey and the liberal elite who hardly ever pay attention to personal money matters.

Okay, many of my left-wing colleagues are very responsible, frugal, and cool with being on budget. But no one talks about it.

I’m just talking about me.

I love this Ramsey guy. I like how compassionate he is with a caller in dire straits. He toes an interesting line between being damning and being non-judgmental, insisting on responsibility but understanding when people have gotten themselves into deep kaka. Frankly, he’s the best kind of Christian. I’m no Christian, religiously, but I hope to live up to the best values that this Jesus dude lived by. So I’m all for these values.

I get worried when the mantra of living within one’s own means gets displaced on to the macro-level of politics. Austerity works great at the individual level when one is trying to climb out of debt, but it is a horrible policy at the national level. I’ve written about this academically, and I have family who have suffered personally under austerity politics; but I’m being pseudonymous here so I can’t tell you what. But ask any macro-economist and they’ll tell you that influxes of money have multiplier effects. Economies do well with infusions of resources that circulate; they whither when starved. That doesn’t happen in a household, but it’s vital in a large political economy. So, anyway, Ramsey’s rant about “socialism” just doesn’t do it for me.

Maybe part of the polarization in this country is tied up with this confusion between political economy and personal economy. The right want austerity at all levels, the left at no level. That’s just stupid. The left needs to appreciate the need for personal austerity and the right needs to appreciate the need for societal economic infusions. These are not mutually exclusive! They can live side by side.

So I’m basically ignoring Ramsey’s politics and taking with a grain of salt his particular religious view and all the subtle patriarchal shit on his show — like praising the “ladies” who decide to get a side job.

But I still love this dude, and probably much of what I love is the result of his Christianity and his politics. So I just have to sit with this mass of contradictions. He’s taught me how to think about paying off debt, how to live responsibly, and how to flourish.

Thanks, Dave.

 

Cash Money, Honey

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In a recent post I laid out three steps I need to take to get out of debt:

  1. Whenever I get a big splash of consulting income (about four times a year) or a tax return, push it to paying off debt.
  2. Every month after paying off bills and before paying any debt, leave enough money in our checking account to have on hand for the month’s spending needs, from groceries to music lessons to the yard guy to out-of-network doctors bills.
  3. Then put the remaining amount toward paying off the cards.

I’ve been doing one and three for years. But two? It never even occurred to me. Since way back, when we had some inheritance, we got in the habit of paying for everything with credit cards and then at the end of the month paying off every penny. Credit cards were simply a convenience. We were what’s known as transactors, though we kept dipping into that inheritance to pay off the cards every month. But then after 2008, that inheritance was gone, except for some retirement accounts.

And so we turned from being transactors into being revolvers, carrying debt that each month got bigger. Whenever I had an influx of income, whether from paychecks or consulting, I’d put as much as I could toward paying off the cards, leaving hardly anything at all in cash for groceries and other spending that month.

Cue the crashing sound of a ten-car pile-up an an icy interstate.

I was so intent on trying to pay things off that I didn’t leave enough for now—for not borrowing now.

On other things, I’m pretty smart. I’ve written lots of books and articles and given keynote speeches around the world. But on money I’m as stupid as can be.

So now, no matter how much I want to see that credit card debt drop in record time, I’ve started a little emergency fund and I’ve left more than enough money in the checking account to see us through the end of the month. Then with the next paycheck I’ll go back through steps one through three, and the next month I’ll do it again.

Resolutions from the 6%

Some people are skinny fat, I’m rich poor.

According to CNN Money, my household income is in the top 6% of the country. But for reasons I’ll detail later—like my insane credit card debt—it’s time to resolve to embark on a year of no shopping, that is, no shopping for clothes, bags, jewelry, or shoes, and to rein in my wanton grocery shopping.

Stopping frivolous spending is obviously worthwhile, especially given how many pairs of Fluevogs I own. But food? I’m going on a grocery budget because my family of 3, sometimes 4 when one kid is home from college, has been spending an obscene amount on groceries, on average about $1,800. Add in alcohol and restaurants, and it comes to an outrageous $2,700 per month.

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Compare that to what is supposedly the average of $151 per week (times 4.2 that’s $634/month)  or what one site recommends at $125 per person per month, which would for us be about $450 a month!!! Even the generous USDA site says that extravagant spending would amount to about $1,000 a month for our family. I don’t want to be extravagant, but I can’t begin to fathom how to spend as little as $600 per month on food and drink, so I am going to do my best to keep the food and dining bill to under $900 a month.

Resolved… Ready, set, go to

  • a year of no shopping for clothes, bags, jewelry, or shoes
  • a food and drink budget of $900 a month.

As of December 31, 2017, this is a brand new blog, so I have at the moment zero readers. But if one or two or more happen by, feel free to leave a comment, confidentiality guaranteed. Are you struggling with anything like this? Or am I truly alone with this embarrassing dilemma. Are you embarrassed by your extravagance? Or living beyond your means? Or maybe just super irritated that I am complaining about my first world problems?