Giving the gift of debt

Photo by Eric Swanson

Tim's mom called us the other day to check in, and to wish him a happy birthday. (Four days and counting, for those of you watching your calendars.) She also informed him that she was dropping $100 into the account for the combination of Tim's birthday and our Christmas presents.


Tim's mom tends to give cash because she figures we can best decide what we want. In addition, it means she doesn't have to go out shopping. With her congestive heart failure, surgically repaired knees and bad hip, Nadine has trouble walking any real distance.


We definitely appreciate the influx of cash. Tim will take his $50 from the birthday money and probably buy himself a video game. Our combined Christmas money will probably go to cover any gap between our Swagbucks and the cost of the iPod Touch.


Still, as nice as it is to get money, I always feel weird taking gifts from Nadine. As I've mentioned before, Tim's parents are not in a good financial situation. They have exactly $0 in retirement funds. His mom is on disability and gets around $1,100 a month. But she won't get Medicare until this summer. Meanwhile, his dad is unemployed. So they are living on under $3,000 a month (and just their space rent is $500, who knows how much the mortgage is). They still owe money to the IRS, too, and some undisclosed amount to a credit card.


I think my hesitation is pretty understandable. I was raised to be frugal and careful with money. More to the point, I was raised to discourage gifts that I didn't think the person could afford. At the very least, to make it clear I wasn't asking for/expecting anything.


There are at least a couple of bloggers who have weighed in on this subject. One had a relative who, despite massive amounts of debt, always spends lavishly on gifts. She had mixed feelings about it.


Tim, on the other hand, has no qualms with accepting the money. He figures if someone wants to give us something, it's silly to turn it down. I'm sure it helps that his parents spend so much of their time, energy and money on his brother, Matt. I think Tim sees gifts as their chance to show him that they're willing to spend money on him, too. In addition, Tim's pretty sure that if they don't spend it on him, it will end up going to Matt one way or another.


I guess I understand this outlook. But it's hard for me to shut the guilt complex off. I just keep thinking of how much more Nadine probably needs this money. We're not doing well and, yeah, we have a lot of debt. But we have things to fall back on. She doesn't. She has to make the $1,100 last all month, while still paying some household bills and any of her own medical costs.


In the end, I suppose, it comes down to the usual lessons I have to learn:

1. I have far too much guilt and should just let things go sometimes.
   
2. I can't control other people or how they spend their money.
   
3. Just because they aren't the choices I would make, doesn't mean they are wrong.
   
4. It probably makes her happy to be able to give us something.
   

So once again I will probably be taking a cue from Tim and just enjoying the moment. I will thank her graciously and will be sure to tell her what the money ends up buying. That way, she can know just how helpful her gift was.


Do you have any similar situations in your own life? How do (or would) you handle them?

Is getting deeper into debt ever justifiable?

Photo by Gloria Payne

I think there are some arguments to be made that it is. But it's rare.


There are some obvious cases, such as medical costs, where money is not the most important item on the agenda. And certainly, you can make a case for student loans, although these are increasingly coming under fire. (To be fair, the criticism is generally aimed at students who emerge from graduate school so deeply in debt that their loan payments suck up most of their pay.)


Still, are there other cases?


This is the thought that bounced around my cranium this past weekend. Because we're moving to Arizona.


Not immediately, so don't get up on those soapboxes just yet. But the idea of just saying, "What the hell!" and taking off... It was alluring. Well, for everything except the actual, horrible process of packing up whatever you don't sell and lugging it across the country.


The reason we're considering Arizona is that Tim's skin was nearly flare-up free during the two times he lived there. Rash free, even.


Let me put this in perspective. Whenever we'd meet a new doctor, Tim would mention his eczema. The doctor would glance over and say, "Yeah, I see it's flared up pretty badly right now." Tim would give a small smirk and break the news that this was a good day for his skin. Put another way, every single doctor and pharmacist has told us that Tim's case is the worst (or, very occasionally, one of the worst) they had ever seen.


Meanwhile, as summer creeps on and the humidity rises, Tim's skin is getting worse. And I watch my husband be nearly constantly uncomfortable.


So, as much as I love the Seattle area, I realized we have to get the heck out of Washington. The sooner the better.


Unfortunately, there are a few very compelling reasons why we can't move just yet:

1. We owe $6707 on our Citi card (yes, I know I need to update my ticker) and $385 on another that was 0 percent.
2. Tim's rediscovered student loan (link) is still at $4100 -- about $600 of which will fall off once the loan is rehabbed.
3. We owe parents a total of $5,000.
4. We'd need a reasonable down payment for a car. Bus is not an option down there.
   
5. We'd need first/last/deposit for a new place
6. We'd need money to cover the move.
   

Certainly, it's not the best list in the whole wide world. Especially considering that we can only throw about $300-400 a month against it.


But it wasn't this that set my mind on overdrive. It was this fun, circle of facts:

• Tim's skin is so much better in AZ, he can work with almost no trouble
• With a full-time paycheck (and the cheaper rent), we could get out of debt quickly
• But we can't afford to move down there until we're further out of debt
• And we won't be out of debt for awhile, because his skin acts up so much
• And that won't change until we move down to AZ.
  

Talk about maddening!


Don't worry, I'm not going to rationalize a move at this point in time. Even if we could borrow/save up the money for a new place, we'd never be able to get financing for a reliable car. (Since we wouldn't know any mechanics, I'd probably just want to get a brand new one and keep it until it's absolutely dead.)


So we'd need around $1500-2000 for the apartment -- first & last month's rent, deposit and pet deposit -- plus a few thousand for a car downpayment, plus however much it would cost to move. Even being (extremely) conservative, that would be $5,000 we'd need just to get down there. And the cheaper rent would be negated by the car payment.


Still, there's part of me that keeps roving around the apartment, trying to figure out what we could get sell. Wondering if there's a point at which we could rationalize it, so that my husband can be comfortable in his own skin.


Not very smart from a personal finance perspective. It scares me a little, frankly, the idea of going further into debt. But there are times when money is a secondary concern.

Money comes and goes so quickly here!

Okay, all, thank you for your patience in the midst of my slight distractedness.



I'd like to start off on a positive note:



As of tomorrow afternoon, Tim's last student loan payment will go through.





So that is one major debt gone. Phew!


We've been paying this off pretty much since he moved in with me, back in July of '06. He was in collections on the debts, since he couldn't keep a job long with his health conditions. The original amount was something like $20,000.


One collections company agreed to settle for something around $5,000 when all was said and done (one big payment, two medium-sized ones). The Department of Education dropped some of the fees off once we got his account back in good standing.


But since June, we've been working at the last $2300. In 4 months, with only unemployment & disability, I'd say we're doing pretty well. (Gosh, but I love to toot this horn of mine!)


So, now we are down to brass tacks: credit cards. I'll be putting some progress bars up soon (Chase's website is fighting me when I try to log on) and then we can all keep track of the progress.


Suffice to say, there's a light at the end of the tunnel (and it's not an oncoming train).


We still have a long road ahead of us -- just over $12,000 to pay down. But clearly we have the means and stubbornness to do it.


For the other issues I talked about -- mainly time management -- Tim is going to help me. The work I picked up on a contract basis is often taking more than the quoted 2 hours. It has to do with social bookmarking and so is taking 3-4 hours, since socializing and building friends is integral.


So, from now on, Tim and I will have a strict "stop at 3" rule. I have to be done my work by 3 p.m. And I have to get away from the computer. Before I'm done my posting, I can't do anything else. It has to be like a regular job.


Then I have to stay away from the computer until after our walk at 4 p.m. This will help me get out and process some Vitamin D which is important to energy. Also, it will get me out of the house, which has been happening less and less. And the exercise should be good for my energy as well.


Finally, getting away for an hour or two should help me keep my day more separate and from feeling like everything is bleeding over into everything else. You have to love multitasking -- it's the only thing that allows you to do a ton of things badly (and all simultaneously!).


And, of course, we're hoping to be done cataloging Magic cards within one week. Then I can just spend a day or two noting different stores' prices. (I'm a huge spreadsheet geek.)


Then, whatever does sell will be sorted into common/uncommon and "rares" since some stores pay bulk prices for those. Luckily, rares are a different color, so they're easyish to spot. In other words, it's not quite as arduous as it sounds.


Why are we doing this? We're getting a 25% commission of the final price. And, about halfway in, we're at about $265. Normally it would be a little lower but Tim's friend owes us some money from when he crashed on our couch for three weeks. This is a way to settle everything all at once.


Finally, I've started doing some online survey programs as another way to earn money. I'm registered on a couple sites. They're all kind of repetitive, I have to say. But I will try and do a brief list of my experiences with that, if anyone wants me to.


Man, after reading this post, no wonder I'm so beat!


That said, I'm not ruling out the possibility that I have to up my medication dosage on my antidepressants. It's been about four years (I'm reluctant to ever bother) so it's something to keep an eye on.


Of course, in this economy, maybe you're only sick if you don't have angst-ridden malaise. Is anyone else reading about the bailout and wondering why the federal government and the corporations aren't being put on debt reduction plans?!


Thanks for listening to my various ramblings and I will try to have some more frugality-related posts again soon!

Get out of debt on $10 a day

This week's giveaway is a copy of Pay It Down by Jean Chazky. As always, there are five ways to enter. Check the giveaways page for more information!





Pay It Down by Jean Chatzky doesn't contain brilliant, revolutionary ways to get rid of debt. It doesn't have some secret to ridding yourself of debt in days, or even months. It doesn't even have all that many original ideas.


But I think it's a great book.


Why? Because it breaks down the long, arduous process of debt reduction and comes out with bite-sized pieces.


Jean Chatzky is smart enough to know that Americans have short attention spans. (Heck, I barely made it to the end of that sentence!) But in 200 pages, she conveys a very workable system that could give a lot of people hope.


She tells us that, at $10 per day, 16% interest, we can pay off $8,000 of debt in under three years. It's catchy, as far as hooks go, and it's enough to keep most people going.


The thing is, $10 a day sounds like very little. Of course, finding that much each and every day is a lot harder than it sounds. Still, even to me, it sounds a lot easier than $300 a month.


The book goes through the various methods of finding the money, step-by-step. It may be a bit too much hand-holding for people already on track to pay off their loans. Still, I appreciated the number of real-life suggestions Chatzky provides. It's in no way exhaustive (and she admits this) but the author does still provide a workbook format, complete with examples of how to cut down in each category.


There were a few in there that I hadn't thought of, such as prescriptions by mail, which I have put on my to-do list. I also liked the idea of ranking fixed expenses as high/medium/low priority. I think a lot of people run into problems because their priorities are askew.


Finally, I liked that she gives people hope for the future -- not just debt-repayment, but having reak retirement funds in your 401(k). Using the S&P's lifetime average return (10.7%), she figures you can have over $23,000 in ten years, and over $64,000 in 15.


Obviously, these numbers may be a tad different in the short term. But for people of my generation, who have at least three decades before retirement, this seems like a safe enough bet.


There are a few other dated items in the book, which was written in 2004. The biggest example is her consolidation chapter, where she talks about refinancing your mortgage. She enthuses about two great agencies: Fannie Mae and Freddie Mac. Oops.


That said, the book is educational and full of hope. Her writing style is straight forward and she sprinkles in facts and life stories to keep things interesting. Perhaps the most "interesting" was her table of FICO scores: A chart breaking down interest rate by score range, and the corresponding interest paid over the life of a loan. Now I'm practically paranoid about my score.


Still, when she does resort to scare tactics, she doesn't leave you terrified and helpless. She offers a very comprehensive guide to raising your scores. I did learn some new things.


I have to say: I went into this book expecting a cheap gimmick and a rehashing of what I already knew. I was pleasantly surprised to be wrong.


That's not to say the book is entirely innovative. You will read some things you're practically sick of. There are only so many frugal ideas in the world, guys. But chances are that you will learn something, too. Or maybe you'll just come away with a less angst-inducing outlook for your debt.


Either way, I highly recommend this book.



While I am usually gung-ho about telling people to just borrow from the library, this book is full of places to write down your debt, scribble expenses saved, etc. So you may want to consider buying, unless you're handy with Excel or don't mind scribbling into a notebook -- both good alternatives. Or, you can read a library copy in order to decide whether you want to buy. (Full disclosure: I am an Amazon affiliate, which means if you click from my site and make a purchase, I do profit.)

Some goals

This is a short post today -- life is a tad hectic here and also a revised post of mine runs today on Smart Spending.


Brooke over at Dollar Frugal wrote an interesting piece the other day about "groundhog day goals." This means she revisits her goals (and, when needed, sets new ones) each month: 1/1, 2/2, 3/3... You get the idea.

So she reviewed her goals for August. She then asked readers what goals they would set for September 9th. I thought this was an inspired way to do goals (I'm a big fan of slow & steady wins the race...) and especially to keep yourself honest.

Here are the goals I am setting for 9/9:

1. Get Tim's student loans down to $750. They are currently $1430.14. In two days, we'll be making another $200 payment. And we're getting a $200 windfall that should hopefully get applied to the loan as well. That would bring the total down to $1030.14 (plus interest). So I think this is do-able or we'll be around $50 off.

2. Akin to Brooke's "get sugar out of my diet" goal... I've been reducing my sugar intake and really enjoying the results. I went 10 days last time before caving. The last two days of re-withdrawal have been miserable. My hands are shaking much more, I'm far more irritable partially because of blood sugar, and I'm tired. This just strengthens my resolve. I am definitely having sugar on my birthday, but I want to start increasing the periods I go without desserts/sweets. By 9/9 I would like to have worked up to 14 days.

3. I want to double my blog's average visits per day. It was, when I set this goal, 75 on average (including weekends) but I want it to be at least 150.

4. Take more walks: My blog obsession has meant too many hours playing online, reading other PF blogs and playing with clip art for my blog illustrations and buttons. I am going to try to take a walk in the evenings with my husband at least 5 days a week. It will get me some exercise and get me away from the computer.

5. Lose 2-3 lbs of fat. This will have to be an eyeball-it kind of a thing, because I work out with weights once a week and so weight loss isn't as easy to gauge. But I would like to have my pants fit a tad looser within one month.

So what are your goals? Let's keep this goal-setting alive.