Author Topic: Case Study - pay off debt or save for retirement?  (Read 12544 times)

Omy

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Re: Case Study - pay off debt or save for retirement?
« Reply #50 on: January 20, 2020, 03:46:37 PM »
If you put $2400/month toward credit cards, $10k will go toward the balance and $19k will go toward interest this year. It will take 6 years and $70k! in interest to pay off this debt - so you really have $170k in credit card payments ahead of you. Every additional dollar you can put toward this debt will go toward principal - and will reduce the time (and interest) it takes to pay off this debt.

That's why posters aren't reacting well when you aren't willing to reduce in some areas and start treating this like the "hair on fire" emergency that we see. A "life is short" attitude is part of the reason you find yourself in this position and you need to be willing to rewire your brain (and start saving every penny) if you want to get through this quickly.

Personally, I think jumping into a Case Study isn't the best thing for somebody who doesn't understand the MMM approach. There will be a lot of brutal posters and "face punches" and the "tough love" you encounter may be overwhelming. I recommend reading all of the MMM posts to see if his advice even resonates with you.

I also recommend consolidating all of the credit card debt into a personal loan. Is there a parent or rich Auntie who would be willing to charge you 5 or 6 percent interest? If so, you could bang this out in 2-3 years and "only" pay $5-$10k in interest charges.

Barton20

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Re: Case Study - pay off debt or save for retirement?
« Reply #51 on: January 20, 2020, 03:52:20 PM »
You keep responding as though cable is the only suggestion you've rejected.  It's not.

Also, I think it might be interesting and helpful for you to run some compounding number.  See for yourself how much less you end up paying on the debt if you add, an additional $100, $300 and $500 per month.  or if you plop down $2000 or more up front (from something like the sale of a car.)

I think it's crucial that you realize that the steps that feel more drastic to you don't need to be permanent.  What if you canceled cable for 1 year?  or 6 months?  What if you went down to one car (run errands when your wife isn't working, drop her at work once every other week and run errands that day, actually try the bike thing, and remember than an occasional uber ride is cheaper than insuring a second car, never mind the money you save on interest by selling the car and using that toward debt) for one year, or better yet until you hit a goal of paying down $X debt, at which point you buy a small beater.  Again, go back to the compounding math.  You suck this up for a relatively short time.  You suck up not having cable for a relatively short time. 

While many of the change you make should be lifetime goals, not all of them have to be. Is not going without cable for one year really worth spending an extra six months of your life working? (No idea on the exact numbers, with the compounding and various interest rates.)  Is spending one year with only one car not worth months of working?  These things aren't permanent commitments.  That might help make them seem more palatable.

Yes, it's worth working an additional six months. I enjoy cable. My wife enjoys cable. Cable is staying. I am not going to ride a bike in a place where we there is snow and ice on the ground 6 months of the year. I am not going to do that. As I said, I will look into selling my car and getting a beater, but not a bike.
« Last Edit: January 20, 2020, 04:02:28 PM by Barton20 »

Barton20

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Re: Case Study - pay off debt or save for retirement?
« Reply #52 on: January 20, 2020, 03:54:27 PM »
Wow, good luck.  Read my case study... my So and I make similar money as you, and have for a long time.  Even with that, and zero debt except for mortgage, with no cable TV, cheap prepaid cellphone plans, etc., we still are far away from fire.  And I have never paid a penny in credit card interest, ever.

You have a long ways to go and you've got great advice so far.  Keep it up and hope to see some real progress soon.

I'm not thinking about FIRE. I know that's way, way, way, way off. Our goal may be the FI in about 25-30 years. I literally just began my career, despite my older age.
« Last Edit: January 20, 2020, 04:01:57 PM by Barton20 »

Barton20

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Re: Case Study - pay off debt or save for retirement?
« Reply #53 on: January 20, 2020, 04:00:29 PM »
I definitely read "irresponsible spending." That's why I was looking for a clarification! If your trouble spending in the past was shopping for clothes and eating out constantly, that's where to be on guard. But if it was on vacations or fancy gyms or something, that's good to know. All you said is it wasn't fancy toys.

I mean, maybe 5k each for interview travelling and the move? that still leaves 90k. If you don't want to get into it, that's cool. It seems like you've made the turn and have 6 months of no credit spending behind you. But it's always good to know your weaknesses, especially when you're trying to white knuckle a big habit change.

I guess I didn't see the difference between clothes, eating out, and vacations and fancy gyms. But if it matters, it was actually a combination of all four. Some fancy clothes/shoes (though less this and more the eating out), eating out A LOT as I addressed in earlier posts, one overseas vacation and one vacation in Canada, and gym membership that was too expensive and that we canceled about 8 months ago). We were just irresponsible. The debt was accumulated over many years and paying minimum due.

ReadyOrNot

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Re: Case Study - pay off debt or save for retirement?
« Reply #54 on: January 20, 2020, 04:01:17 PM »
Yes, it's work working an additional six months working. Yes. I enjoy cable. My wife enjoys cable. Cable is staying. I am not going to ride a bike in a place where we there is snow and ice on the ground 6 months of the year. I am not going to do that. As I said, I will look into selling my car and getting a beater, but not a bike.
At $154 for cable & internet, it's actually not that bad as a whole.  However, one thing to realize is how much is is really costing you since you're paying interest on credit cards.

Say you have 25% APR on credit card, a $154 bill can actually cost $170 due to compound interest if you only pay 10% of the balance per month.  https://financialmentor.com/calculator/credit-card-interest-calculator  this is a pretty good calculator to see how much your debit is costing you in terms of real spend today.

This is why even though I have made over $200k for a while now, I have refused to pay a penny in credit card interest.  It's honestly a lot easier to be richer saving 25% APR in my spending, than to do all the hard work to make $100 per hour at my hourly rate.  It's hard to out-earn bad spending, as they say.  Even with my relative frugal habits, I am still not as wealthy as I really ought to be.

Barton20

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Re: Case Study - pay off debt or save for retirement?
« Reply #55 on: January 20, 2020, 04:10:43 PM »
If you put $2400/month toward credit cards, $10k will go toward the balance and $19k will go toward interest this year. It will take 6 years and $70k! in interest to pay off this debt - so you really have $170k in credit card payments ahead of you. Every additional dollar you can put toward this debt will go toward principal - and will reduce the time (and interest) it takes to pay off this debt.

That's why posters aren't reacting well when you aren't willing to reduce in some areas and start treating this like the "hair on fire" emergency that we see. A "life is short" attitude is part of the reason you find yourself in this position and you need to be willing to rewire your brain (and start saving every penny) if you want to get through this quickly.

Personally, I think jumping into a Case Study isn't the best thing for somebody who doesn't understand the MMM approach. There will be a lot of brutal posters and "face punches" and the "tough love" you encounter may be overwhelming. I recommend reading all of the MMM posts to see if his advice even resonates with you.

I also recommend consolidating all of the credit card debt into a personal loan. Is there a parent or rich Auntie who would be willing to charge you 5 or 6 percent interest? If so, you could bang this out in 2-3 years and "only" pay $5-$10k in interest charges.

I do not have anyone rich in my life. That's the problem. I was raised with parents who lived paycheck to paycheck on minimum wage. That's how I always lived as well. Now I've just started a job/career where my income more than doubled overnight.

Just to give you an update: I posted this yesterday. Since then, I've transferred my AmEx debt to 0% interest card (for 15 months), I've looked over my lease for a way to get out of it and move some place cheaper, my wife has been looking on Craig's List for a beater we could buy and sell my car, I've gathered the last four grocery receipts (all I've found so far) so we can itemize and track what we buy.

All that in 24 hours. So I am interested in what people are saying. I'm not sure how else I can prove that. I may reject some advice because it just doesn't work for us, but I am appreciative for the advice and I think most of the posters can see that, even if some declare that I'm "just not interested in cutting spending" because I don't get rid of cable or am not willing to ride my bike in the winter through snow banks.

freya

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Re: Case Study - pay off debt or save for retirement?
« Reply #56 on: January 20, 2020, 04:23:21 PM »
I'm not thinking about FIRE. I know that's way, way, way, way off. Our goal may be the FI in about 25-30 years. I literally just began my career, despite my older age.

Read my last post???

You're saying you plan to retire somewhere between age 67 and 72.  By my back of the envelope calculation you will become financially independent not earlier than age 62 - assuming earnings & spending remain constant in real terms.  Congrats on not spending anything on the cards for 6 months, but...at some point you'll want to eat out again and buy new clothes and travel, right?  That would kick you back below a 50% savings rate, which would extend your time to FI.  Unfortunately there's not a whole lot of wiggle room between age 62 (FI) and 67 (retirement).  And given health issues, can you really count on working until you're past 70?  Will you even want to?

Assuming nothing happens to affect your earning power in the meantime, this won't be a disaster as you'll presumably have Social Security, but it also won't be early retirement in any sense.   It's important to clarify exactly what your goals are because it wasn't all that clear.

p.s. glad to here you're doing the 0% transfer and tracking some spending.  And yes, do get out from under that rent bill, that's your biggest albatross.  Somewhere closer to work so the train fare goes away as well?
« Last Edit: January 20, 2020, 04:26:12 PM by freya »

Barton20

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Re: Case Study - pay off debt or save for retirement?
« Reply #57 on: January 20, 2020, 04:35:03 PM »
I'm not thinking about FIRE. I know that's way, way, way, way off. Our goal may be the FI in about 25-30 years. I literally just began my career, despite my older age.

Read my last post???

You're saying you plan to retire somewhere between age 67 and 72.  By my back of the envelope calculation you will become financially independent not earlier than age 62 - assuming earnings & spending remain constant in real terms.  Congrats on not spending anything on the cards for 6 months, but...at some point you'll want to eat out again and buy new clothes and travel, right?  That would kick you back below a 50% savings rate, which would extend your time to FI.  Unfortunately there's not a whole lot of wiggle room between age 62 (FI) and 67 (retirement).  And given health issues, can you really count on working until you're past 70?  Will you even want to?

Assuming nothing happens to affect your earning power in the meantime, this won't be a disaster as you'll presumably have Social Security, but it also won't be early retirement in any sense.   It's important to clarify exactly what your goals are because it wasn't all that clear.

p.s. glad to here you're doing the 0% transfer and tracking some spending.  And yes, do get out from under that rent bill, that's your biggest albatross.  Somewhere closer to work so the train fare goes away as well?

I will not be able to move closer to work if rent is expected to go down. My goal was never early retirement. My goal was just retirement. I'm comfortable working until age 70. My earnings will go up, not down, barring disability or death (hence, the insurance).

DaMa

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Re: Case Study - pay off debt or save for retirement?
« Reply #58 on: January 20, 2020, 05:01:32 PM »
DH and I went 16 years with only one car.  He drove a company truck and brought it home every day, but could not use it for any personal use.  He would plan his errands and things for when I was home.  If he wanted the car on my work day, he would drive me to work and pick me up (very rare).  There were a couple of weekend girls' trips when I rented a car, and he kept ours.  And we had 3 children and all the extra running around that entailed.  By the time we could afford a 2nd car, we weren't willing to trade the money for the little bit of convenience. (And when we could afford it was after we paid off our CC and student loan debt.)

A lot of this is just thinking beyond the obvious or what is considered "normal."  You can get use to these changes very quickly.  They seem hard, but you can change your mindset so that they become easy and even preferred. 

I was in Florida for a month last August, and I had cable, but no streaming.  I had to watch what was on, and everything had commercials.  It was awful.  My mindset has completely changed.   I cut the cable 6 years ago. 

ReadyOrNot

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Re: Case Study - pay off debt or save for retirement?
« Reply #59 on: January 20, 2020, 05:07:08 PM »
DH and I went 16 years with only one car.  He drove a company truck and brought it home every day, but could not use it for any personal use.  He would plan his errands and things for when I was home.  If he wanted the car on my work day, he would drive me to work and pick me up (very rare).  There were a couple of weekend girls' trips when I rented a car, and he kept ours.  And we had 3 children and all the extra running around that entailed.  By the time we could afford a 2nd car, we weren't willing to trade the money for the little bit of convenience. (And when we could afford it was after we paid off our CC and student loan debt.)

A lot of this is just thinking beyond the obvious or what is considered "normal."  You can get use to these changes very quickly.  They seem hard, but you can change your mindset so that they become easy and even preferred. 

I was in Florida for a month last August, and I had cable, but no streaming.  I had to watch what was on, and everything had commercials.  It was awful.  My mindset has completely changed.   I cut the cable 6 years ago.
Cutting cable TV was a god send for us.   When I cut it, my SO complained about losing "Dance Moms", "Cake Boss", "Project Runway", etc etc.  My child complained about losing Disney, Nickelodeon, etc etc.  We've adapted ever since, and we only have access to Cable TV when we visit relatives.  I notice my SO never turns on the TV any more to watch Cable TV, but will watch Youtube or Netflix or something instead on the iPad.  I'm trying to steer my SO into watching better content, and there are so much better options online than cable TV.

AnnaGrowsAMustache

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Re: Case Study - pay off debt or save for retirement?
« Reply #60 on: January 20, 2020, 05:14:34 PM »
If you put $2400/month toward credit cards, $10k will go toward the balance and $19k will go toward interest this year. It will take 6 years and $70k! in interest to pay off this debt - so you really have $170k in credit card payments ahead of you. Every additional dollar you can put toward this debt will go toward principal - and will reduce the time (and interest) it takes to pay off this debt.

That's why posters aren't reacting well when you aren't willing to reduce in some areas and start treating this like the "hair on fire" emergency that we see. A "life is short" attitude is part of the reason you find yourself in this position and you need to be willing to rewire your brain (and start saving every penny) if you want to get through this quickly.

Personally, I think jumping into a Case Study isn't the best thing for somebody who doesn't understand the MMM approach. There will be a lot of brutal posters and "face punches" and the "tough love" you encounter may be overwhelming. I recommend reading all of the MMM posts to see if his advice even resonates with you.

I also recommend consolidating all of the credit card debt into a personal loan. Is there a parent or rich Auntie who would be willing to charge you 5 or 6 percent interest? If so, you could bang this out in 2-3 years and "only" pay $5-$10k in interest charges.

I do not have anyone rich in my life. That's the problem. I was raised with parents who lived paycheck to paycheck on minimum wage. That's how I always lived as well. Now I've just started a job/career where my income more than doubled overnight.

Just to give you an update: I posted this yesterday. Since then, I've transferred my AmEx debt to 0% interest card (for 15 months), I've looked over my lease for a way to get out of it and move some place cheaper, my wife has been looking on Craig's List for a beater we could buy and sell my car, I've gathered the last four grocery receipts (all I've found so far) so we can itemize and track what we buy.

All that in 24 hours. So I am interested in what people are saying. I'm not sure how else I can prove that. I may reject some advice because it just doesn't work for us, but I am appreciative for the advice and I think most of the posters can see that, even if some declare that I'm "just not interested in cutting spending" because I don't get rid of cable or am not willing to ride my bike in the winter through snow banks.

Excellent! Now make a plan by which that debt is paid in full by the end of the 15 months. And the savings you had needs to be dumped into the CC debt as well.

I'm kind of hoping that this will grow for you. I know you think I'm being overly harsh, but I'm really not. Perhaps once you see the progress in paying off each card and having money that previously went into one repayment freed up for another, faster repayment, and feel the absolute relief of NOT being in debt, perhaps then you'll "get" why $400 a year makes a difference.

Personally, I wouldn't ride a bike through snowdrifts either. You know what? I have netflix and a bunch of other silly entertainment crap. I don't pay a cent for them because I'm using someone's spare profiles. And they don't pay a cent for them - they're reimbursed as an expense. Long story. The point is to be smart about getting stuff you want, and that starts by being painfully aware of the opportunity cost of every cent you spend.

Gremlin

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Re: Case Study - pay off debt or save for retirement?
« Reply #61 on: January 20, 2020, 05:19:45 PM »
If you put $2400/month toward credit cards, $10k will go toward the balance and $19k will go toward interest this year. It will take 6 years and $70k! in interest to pay off this debt - so you really have $170k in credit card payments ahead of you. Every additional dollar you can put toward this debt will go toward principal - and will reduce the time (and interest) it takes to pay off this debt.

That's why posters aren't reacting well when you aren't willing to reduce in some areas and start treating this like the "hair on fire" emergency that we see. A "life is short" attitude is part of the reason you find yourself in this position and you need to be willing to rewire your brain (and start saving every penny) if you want to get through this quickly.

Personally, I think jumping into a Case Study isn't the best thing for somebody who doesn't understand the MMM approach. There will be a lot of brutal posters and "face punches" and the "tough love" you encounter may be overwhelming. I recommend reading all of the MMM posts to see if his advice even resonates with you.

I also recommend consolidating all of the credit card debt into a personal loan. Is there a parent or rich Auntie who would be willing to charge you 5 or 6 percent interest? If so, you could bang this out in 2-3 years and "only" pay $5-$10k in interest charges.

I do not have anyone rich in my life. That's the problem. I was raised with parents who lived paycheck to paycheck on minimum wage. That's how I always lived as well. Now I've just started a job/career where my income more than doubled overnight.

Just to give you an update: I posted this yesterday. Since then, I've transferred my AmEx debt to 0% interest card (for 15 months), I've looked over my lease for a way to get out of it and move some place cheaper, my wife has been looking on Craig's List for a beater we could buy and sell my car, I've gathered the last four grocery receipts (all I've found so far) so we can itemize and track what we buy.

All that in 24 hours. So I am interested in what people are saying. I'm not sure how else I can prove that. I may reject some advice because it just doesn't work for us, but I am appreciative for the advice and I think most of the posters can see that, even if some declare that I'm "just not interested in cutting spending" because I don't get rid of cable or am not willing to ride my bike in the winter through snow banks.

Great work on the progress you've made and the decisions you're contemplating.  No one here needs you to prove anything back to us.  By all means, your sacred cows are your sacred cows.  We all have them.  Just make sure you are honest with yourself what they cost you and that you are prepared to make the trade-off that comes with them.

One of the issues with a history of "irresponsible spending" as you call it, is that it becomes easy to make financial decisions that trade away what you might want most in favour of what you want now.  I'm hearing from your posts that your wife wants to know she has a secure retirement coming, not an early retirement, but a financially secure one.  Just make sure that if that's a sacred cow for her, that it's appropriately prioritised.  Similarly with you and paying off your debt.

Map out a financial path to being debt-free and with a suitable nest egg for retirement.  How much will you put aside from where?  What will your finances look like in 12 months time if you do?  Keep the sacred cows but fit them into your budget.  Having a plan takes away a huge chunk of the mental anguish with this sort of thing.  I know myself and Mrs Gremlin found that once there was a plan a whole lot of other stresses just faded away.

Simpli-Fi

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Re: Case Study - pay off debt or save for retirement?
« Reply #62 on: January 20, 2020, 05:42:36 PM »
Barton20 - great progress!  And I'm sorry you have to keep repeating yourself, haha!  But there is a better painted picture now.

A tool I recently discovered is Personal Capital, internet search and you'll find it...it's totally free; they may call and what to sell you advice...don't have to answer the call.

Anyway, you can enter all your cc accounts and it'll pull data, and track this for you.  It also has a debt pay down widget you can explore.

Adding your saving, 401ks,etc you can stay motivated by watching yourself pull yourself into positive net worth.  I believe using this tool will be eye opening (and very easy) and then you will start to make the changes necessary.

I'm happy you and your wife have work that is satisfying for you both...as this would really be miserable if you for enslaved to something you hated.

Like I said...you stumbled into the right corner of the internet for help; great start

DaMa

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Re: Case Study - pay off debt or save for retirement?
« Reply #63 on: January 20, 2020, 05:47:54 PM »
DH and I went 16 years with only one car.  He drove a company truck and brought it home every day, but could not use it for any personal use.  He would plan his errands and things for when I was home.  If he wanted the car on my work day, he would drive me to work and pick me up (very rare).  There were a couple of weekend girls' trips when I rented a car, and he kept ours.  And we had 3 children and all the extra running around that entailed.  By the time we could afford a 2nd car, we weren't willing to trade the money for the little bit of convenience. (And when we could afford it was after we paid off our CC and student loan debt.)

A lot of this is just thinking beyond the obvious or what is considered "normal."  You can get use to these changes very quickly.  They seem hard, but you can change your mindset so that they become easy and even preferred. 

I was in Florida for a month last August, and I had cable, but no streaming.  I had to watch what was on, and everything had commercials.  It was awful.  My mindset has completely changed.   I cut the cable 6 years ago.
Cutting cable TV was a god send for us.   When I cut it, my SO complained about losing "Dance Moms", "Cake Boss", "Project Runway", etc etc.  My child complained about losing Disney, Nickelodeon, etc etc.  We've adapted ever since, and we only have access to Cable TV when we visit relatives.  I notice my SO never turns on the TV any more to watch Cable TV, but will watch Youtube or Netflix or something instead on the iPad.  I'm trying to steer my SO into watching better content, and there are so much better options online than cable TV.

Mine was The Walking Dead.  Can't stream it real time anywhere.  I have to wait for each new season to come out on Netflix.  Everything else I was able to find somewhere.  Project Runway is on Hulu now.

Here's my take on cable...

Barton20, have you used an indoor antenna?  If you are in a HCOL, you probably get a lot of channels.  I get 20-40 channels on broadcast TV with a Mohu Leaf indoor antenna.  DH liked to channel surf and watch sports, so that worked for him.  Your viewing habits sound like the way DH watched TV.  He didn't like it at first, but he got used to it.  He grew to really like binge watching one show (like on Netflix), mixed with the occasional movie, and channel surfing broadcast.  (I hated when he surfed.)

I have Amazon Prime (may cancel soon).  I cycle through other streaming services to watch my shows and new stuff.  I take each one for a month or two, then cancel and move to the next.  The schedule usually ties to a show...Hulu (Handmaid's Tale), HBO (GoT), Netflix (The Crown and Walking Dead), Starz (Outlander), and CBS All Access (Big Bang Theory, Survivor, Star Trek).  I'll binge watch what I want on each service.  I watch what I want, when I want.  NO commercials (yes, I pay extra for Hulu and CBS).

I also use the library to get DVDs.  I put them on hold and pick them up when available.  DH and I used to go in and get a stack for weekend when we wanted to be couch potatoes.  Our system also has a lot of series TV.  I watched all of ER a few years ago when none of the streaming had it.

I've not encountered anything I couldn't get using one of these methods.

roomtempmayo

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Re: Case Study - pay off debt or save for retirement?
« Reply #64 on: January 20, 2020, 06:01:10 PM »
@Barton20 I might be totally wrong, but your narrative sounds like a blue collar kid who just finished his medical residency.

Regardless of the specifics, you've now made it.  Really made it. 

Most people are bluffing, but you're not.  For you, it's real.

And the good news is that you don't have to pretend or posture anymore.  Appearances do... not... matter.  There's nobody you need to impress.  You have a crazy-good job, and that's now your ticket to social status.  Your car doesn't matter.  Your house doesn't matter.  The stature afforded by your professional position is all that matters socially.  Once you get your head around the fact that nobody who matters will ever judge you based on conspicuous consumption again, you'll be free to live your best life joyfully.

There is nobody in the world left to impress with stuff.  If you can internalize that reality, life will be entirely different for you.

jeroly

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Re: Case Study - pay off debt or save for retirement?
« Reply #65 on: January 20, 2020, 06:05:21 PM »
Mine was The Walking Dead.  Can't stream it real time anywhere.  I have to wait for each new season to come out on Netflix.  Everything else I was able to find somewhere.  Project Runway is on Hulu now.

The Walking Dead is on YouTube TV. $50 plus an internet connection (or you can skip the internet connection at home and watch on your phone).

BECABECA

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Re: Case Study - pay off debt or save for retirement?
« Reply #66 on: January 20, 2020, 06:11:40 PM »
...
Just to give you an update: I posted this yesterday. Since then, I've transferred my AmEx debt to 0% interest card (for 15 months), I've looked over my lease for a way to get out of it and move some place cheaper, my wife has been looking on Craig's List for a beater we could buy and sell my car, I've gathered the last four grocery receipts (all I've found so far) so we can itemize and track what we buy.
...

Awesome!

What’s the fine print terms on that balance transfer? Often times it’s zero percent interest for 15 months but if you pay it off on the first day after the 15 months then they charge you back interest at the regular rate for the whole 15months+1day. If that is how this one works, you’re gonna want to be sure to have it paid off before the introductory term is up. So you’ll want to see how much money you have left to dump into the debts once you up your 401k contribution to the company match and once you pay all your expenses and the credit card minimums. Then ideally that amount x15 months will add up to more than your Amex balance was, and you can put the first few contributions to the next highest interest rate card. But plan that out so you don’t end the 15 months with a balance and then end up paying 15 months of interest on what’s left.

Also, so you don’t screw over your credit score (especially so you can get another zero interest balance transfer promotional card or two), instead of cancelling each card you zero out, I think you’ll just want to keep it open but not use it anymore. Unless there’s an annual fee... then you’ll want to call the card company and ask them to product change it into a no annual fee card. That way you’ll retain your credit history on the card and the same amount of credit but not have anymore annual fee, all without a hard pull to your credit.

Villanelle

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Re: Case Study - pay off debt or save for retirement?
« Reply #67 on: January 20, 2020, 06:30:51 PM »
Just be mindful that young you is making deals and commitments for elderly you.  It's easy to  say now that working until 67 is no problem, but tat answer may change and you are giving yourself no flexibility.  Likewise, if either of you loses a job, you are in very bad shape very quickly because you have huge debt servicing commitments. 

Not everyone has to be hard core about this stuff.  Frankly, I'm far less intense than many here.  Nothing wrong with that.  But I think you are being a bit naive about the prospects of finding another job if you lose one, about working full time (and keeping your job) at 65+, etc.  My MIL was recently laid off and she's fairly sure (but of course can't prove) that ageism played a major role in it.  She was old, and experienced, which meant expensive.  Lay her off and hire a 25 year old for 30% yes?  Of course.  She wanted to keep her job, but frankly she's old and it was draining on her to sit behind a desk 40+ hours a week, in addition to commute times.  When she was 30 or 40, she probably thought, "Eh, I'll be fine working until I'm 70+.  And it will be worth it to have some luxuries now.  I suspect if she could rewind, she would have a very different perspective. 

So it's fine not to want to live in a van by the river so you can get this debt paid off in 15 months.  But make sure you are being realistic about your future. 

Barton20

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Re: Case Study - pay off debt or save for retirement?
« Reply #68 on: January 20, 2020, 06:43:50 PM »
Just be mindful that young you is making deals and commitments for elderly you.  It's easy to  say now that working until 67 is no problem, but tat answer may change and you are giving yourself no flexibility.  Likewise, if either of you loses a job, you are in very bad shape very quickly because you have huge debt servicing commitments. 

Not everyone has to be hard core about this stuff.  Frankly, I'm far less intense than many here.  Nothing wrong with that.  But I think you are being a bit naive about the prospects of finding another job if you lose one, about working full time (and keeping your job) at 65+, etc.  My MIL was recently laid off and she's fairly sure (but of course can't prove) that ageism played a major role in it.  She was old, and experienced, which meant expensive.  Lay her off and hire a 25 year old for 30% yes?  Of course.  She wanted to keep her job, but frankly she's old and it was draining on her to sit behind a desk 40+ hours a week, in addition to commute times.  When she was 30 or 40, she probably thought, "Eh, I'll be fine working until I'm 70+.  And it will be worth it to have some luxuries now.  I suspect if she could rewind, she would have a very different perspective. 

So it's fine not to want to live in a van by the river so you can get this debt paid off in 15 months.  But make sure you are being realistic about your future.

I am being realistic. I will not have any trouble finding a job if I lose this one or one in the future.

Barton20

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Re: Case Study - pay off debt or save for retirement?
« Reply #69 on: January 20, 2020, 06:45:51 PM »
...
Just to give you an update: I posted this yesterday. Since then, I've transferred my AmEx debt to 0% interest card (for 15 months), I've looked over my lease for a way to get out of it and move some place cheaper, my wife has been looking on Craig's List for a beater we could buy and sell my car, I've gathered the last four grocery receipts (all I've found so far) so we can itemize and track what we buy.
...

Awesome!

What’s the fine print terms on that balance transfer? Often times it’s zero percent interest for 15 months but if you pay it off on the first day after the 15 months then they charge you back interest at the regular rate for the whole 15months+1day. If that is how this one works, you’re gonna want to be sure to have it paid off before the introductory term is up. So you’ll want to see how much money you have left to dump into the debts once you up your 401k contribution to the company match and once you pay all your expenses and the credit card minimums. Then ideally that amount x15 months will add up to more than your Amex balance was, and you can put the first few contributions to the next highest interest rate card. But plan that out so you don’t end the 15 months with a balance and then end up paying 15 months of interest on what’s left.

Also, so you don’t screw over your credit score (especially so you can get another zero interest balance transfer promotional card or two), instead of cancelling each card you zero out, I think you’ll just want to keep it open but not use it anymore. Unless there’s an annual fee... then you’ll want to call the card company and ask them to product change it into a no annual fee card. That way you’ll retain your credit history on the card and the same amount of credit but not have anymore annual fee, all without a hard pull to your credit.

Yes, you nailed it. We have a plan for 2K a month to this CC alone, so it should be paid off in 7 months. Then we battle another one and so on. Thanks for the advice!

Villanelle

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Re: Case Study - pay off debt or save for retirement?
« Reply #70 on: January 20, 2020, 07:13:00 PM »
Just be mindful that young you is making deals and commitments for elderly you.  It's easy to  say now that working until 67 is no problem, but tat answer may change and you are giving yourself no flexibility.  Likewise, if either of you loses a job, you are in very bad shape very quickly because you have huge debt servicing commitments. 

Not everyone has to be hard core about this stuff.  Frankly, I'm far less intense than many here.  Nothing wrong with that.  But I think you are being a bit naive about the prospects of finding another job if you lose one, about working full time (and keeping your job) at 65+, etc.  My MIL was recently laid off and she's fairly sure (but of course can't prove) that ageism played a major role in it.  She was old, and experienced, which meant expensive.  Lay her off and hire a 25 year old for 30% yes?  Of course.  She wanted to keep her job, but frankly she's old and it was draining on her to sit behind a desk 40+ hours a week, in addition to commute times.  When she was 30 or 40, she probably thought, "Eh, I'll be fine working until I'm 70+.  And it will be worth it to have some luxuries now.  I suspect if she could rewind, she would have a very different perspective. 

So it's fine not to want to live in a van by the river so you can get this debt paid off in 15 months.  But make sure you are being realistic about your future.

I am being realistic. I will not have any trouble finding a job if I lose this one or one in the future.

You ignored the major part of my post about working well into your 60s.  Are you being realistic there?  You have solid reason to believe you will be healthy, will still be easily employable, and will be content working full time?

You wonder why you are getting some pushback--it's responses like that.  It would be one thing if you said, "Look, I realize that I'm taking on a big risk by pushing some decisions off onto my senior-self.  I'm not thrilled with that, and maybe I can change it going forward, but for now we are making a lot of changes and we need to let the dust subtle before we make some that feel even more extreme."

But basically, "I can always find a job, even in 30+ years, and I know I'll be fine working as a 60+yo  and my wife will be, too"?  Of course in a place where flawed thinking is called out you are going to get push back.

All that said, you have done some great things.  You've made some great progress toward righting this ship.  I wish you the best. 

Barton20

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Re: Case Study - pay off debt or save for retirement?
« Reply #71 on: January 20, 2020, 07:29:46 PM »
Just be mindful that young you is making deals and commitments for elderly you.  It's easy to  say now that working until 67 is no problem, but tat answer may change and you are giving yourself no flexibility.  Likewise, if either of you loses a job, you are in very bad shape very quickly because you have huge debt servicing commitments. 

Not everyone has to be hard core about this stuff.  Frankly, I'm far less intense than many here.  Nothing wrong with that.  But I think you are being a bit naive about the prospects of finding another job if you lose one, about working full time (and keeping your job) at 65+, etc.  My MIL was recently laid off and she's fairly sure (but of course can't prove) that ageism played a major role in it.  She was old, and experienced, which meant expensive.  Lay her off and hire a 25 year old for 30% yes?  Of course.  She wanted to keep her job, but frankly she's old and it was draining on her to sit behind a desk 40+ hours a week, in addition to commute times.  When she was 30 or 40, she probably thought, "Eh, I'll be fine working until I'm 70+.  And it will be worth it to have some luxuries now.  I suspect if she could rewind, she would have a very different perspective. 

So it's fine not to want to live in a van by the river so you can get this debt paid off in 15 months.  But make sure you are being realistic about your future.

I am being realistic. I will not have any trouble finding a job if I lose this one or one in the future.

You ignored the major part of my post about working well into your 60s.  Are you being realistic there?  You have solid reason to believe you will be healthy, will still be easily employable, and will be content working full time?

You wonder why you are getting some pushback--it's responses like that.  It would be one thing if you said, "Look, I realize that I'm taking on a big risk by pushing some decisions off onto my senior-self.  I'm not thrilled with that, and maybe I can change it going forward, but for now we are making a lot of changes and we need to let the dust subtle before we make some that feel even more extreme."

But basically, "I can always find a job, even in 30+ years, and I know I'll be fine working as a 60+yo  and my wife will be, too"?  Of course in a place where flawed thinking is called out you are going to get push back.

All that said, you have done some great things.  You've made some great progress toward righting this ship.  I wish you the best.

I guess I'm just sick of repeating myself over and over again. As I said, I know I will always be employed. I just know this based on my line of work. And if I'm too disabled, well, that's why I have disability insurance which is occupation specific. If I'm 55 and thinking "gosh, I wish I didn't have to work," who cares? There have been plenty of times in my 42 years that I didn't want to have to work but I did so anyway. I've been working since age 14 and I will continue to work as long as I need to.

AnnaGrowsAMustache

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Re: Case Study - pay off debt or save for retirement?
« Reply #72 on: January 20, 2020, 10:07:03 PM »
Just be mindful that young you is making deals and commitments for elderly you.  It's easy to  say now that working until 67 is no problem, but tat answer may change and you are giving yourself no flexibility.  Likewise, if either of you loses a job, you are in very bad shape very quickly because you have huge debt servicing commitments. 

Not everyone has to be hard core about this stuff.  Frankly, I'm far less intense than many here.  Nothing wrong with that.  But I think you are being a bit naive about the prospects of finding another job if you lose one, about working full time (and keeping your job) at 65+, etc.  My MIL was recently laid off and she's fairly sure (but of course can't prove) that ageism played a major role in it.  She was old, and experienced, which meant expensive.  Lay her off and hire a 25 year old for 30% yes?  Of course.  She wanted to keep her job, but frankly she's old and it was draining on her to sit behind a desk 40+ hours a week, in addition to commute times.  When she was 30 or 40, she probably thought, "Eh, I'll be fine working until I'm 70+.  And it will be worth it to have some luxuries now.  I suspect if she could rewind, she would have a very different perspective. 

So it's fine not to want to live in a van by the river so you can get this debt paid off in 15 months.  But make sure you are being realistic about your future.

I am being realistic. I will not have any trouble finding a job if I lose this one or one in the future.

You ignored the major part of my post about working well into your 60s.  Are you being realistic there?  You have solid reason to believe you will be healthy, will still be easily employable, and will be content working full time?

You wonder why you are getting some pushback--it's responses like that.  It would be one thing if you said, "Look, I realize that I'm taking on a big risk by pushing some decisions off onto my senior-self.  I'm not thrilled with that, and maybe I can change it going forward, but for now we are making a lot of changes and we need to let the dust subtle before we make some that feel even more extreme."

But basically, "I can always find a job, even in 30+ years, and I know I'll be fine working as a 60+yo  and my wife will be, too"?  Of course in a place where flawed thinking is called out you are going to get push back.

All that said, you have done some great things.  You've made some great progress toward righting this ship.  I wish you the best.

I guess I'm just sick of repeating myself over and over again. As I said, I know I will always be employed. I just know this based on my line of work. And if I'm too disabled, well, that's why I have disability insurance which is occupation specific. If I'm 55 and thinking "gosh, I wish I didn't have to work," who cares? There have been plenty of times in my 42 years that I didn't want to have to work but I did so anyway. I've been working since age 14 and I will continue to work as long as I need to.

Have you heard the expression make hay while the sun shines? None of us know what will happen in the future. No matter how confident you are on your occupation being around in the future, you have no idea at all how it might be impacted by technology, politics, war, all sorts of things. I'm 47. I didn't grow up with the internet or IT, and I do know people my own age who simply don't have a clue. They make less now than they did 20 years ago because they couldn't keep up. It's bizarre as fuck, but it happens and it happens regularly. Ok, it's unlikely. But do as much as you can NOW. Your future self will thank you.

Omy

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Re: Case Study - pay off debt or save for retirement?
« Reply #73 on: January 21, 2020, 07:24:35 AM »
Another thought...since your work gives you $500k in life insurance, can you drop your amount down to $500k for a total of $1m instead of $2m? And shorten the term to 15 years? Would that cut your monthly outlay significantly? $2m seems like a lot.

Dicey

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Re: Case Study - pay off debt or save for retirement?
« Reply #74 on: January 21, 2020, 08:05:25 AM »
I guess I'm just sick of repeating myself over and over again.
Compare the number of times you've had to repeat yourself to, say, the number of times you've mindlessly charged a restaurant meal to a credit card you couldn't pay off...

If you're sick of repeating yourself, you are in the wrong to post on a public forum. You asked for our help, not vice versa.

IMO, the thing that will help you the most is an attitude adjustment. Maybe start by being appreciative that busy people are taking their own time to help you, a total internet stranger, improve your financial life.

----------------------

I have cable now, seven years post-FIRE, and love, love, love it. But I sure as heck did not have it during my asset accumulation years. And that was long before any kind of streaming was available. I got movies/series from the library and something called Swap-A--DVD. It was slightly sub-optimal, but guess what? I didn't die. And I wasn't in a the middle of a massive debt emergency.

I want to address a different aspect of this cable addiction. If you didn't have it, even for a limited time, might it encourage you to get out of the apartment and do things that grow your social network? It ain't gonna get better if you sit inside watching TV night after night. Challenge yourselves to find free social activities.

In my quest for FIRE, I decided my book habit was costing too much. I started volunteering at the library book sales once a quarter. I got first pick of anything I wanted for $1. Late in the sale, a whole bag of books was $5, and if I helped with sale takedown, I could have anything I wanted for free. OMG, the librarians know all the free/cheap Things to Do. Our library even offers free passes to all kinds of great places. A librarian's suggestion led to volunteer ushering. Free theater? Yes, please.

Another reason I volunteered was to make more local friends. It's easier to meet new people if you have kids. Absent that, one needs to be a little more proactive, but it can still be achieved on the cheap. Ten or so years later,  I am very comfortably FIRE. I have a large social network, and see people I know everywhere I go in my community. It is awesome!

You can totally do this. If you can be a little less stubborn about the answers to the questions you've posed, you will do it faster and easier than you'd believe possible.

One last thought: Look into debt consolidation. Be careful and do your homework. I've always suspected there were hidden fees and gotchas, but have no first-hand experience. Also, much as I dislike Ramsey, his get-out-of debt shtick is pretty solid. Just don't fall for his investment advice. You have us for that ;-)

Laura33

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Re: Case Study - pay off debt or save for retirement?
« Reply #75 on: January 21, 2020, 08:34:05 AM »
While I appreciate your input, I simply disagree in some areas. Life is short and I think that different things make people happy.

. . . .

I guess I need to just say at this point that I'm 42 years old, working a good job for the first time in my life with a multiyear contract and I plan to enjoy my life while I pay down my debt. No more CCs. We buy everything in cash or debit card. The debt is being paid down just as my student loans were paid down to this last 30K. It'll take time. In the meantime, life is too short to cut down to bare bones unless absolutely necessary, is my philosophy. My only debate was in saving for retirement versus spending all excess money on debt.

First:  Big congratulations on your realization and change in attitude and on jumping in and making changes right now.  That is a very significant accomplishment, especially when you come from a background where everything you've done is unheard of.  You should rightfully be proud of yourself.

What I would encourage you to do now is take a hard, big-picture look at everything you will need to accomplish in the next @30 years.  You make a lot of money now, and that's awesome.  But you also have a big-ass hole you need to dig yourself out of, and a lot of retirement to save for, and you want a house, and all those things are going to cost money -- and you have fewer years in which to accomplish those things than someone who was lucky enough to hop on the big money train at 21 or 25.  I would suggest trying something like Cfiresim and playing around with different scenarios.

The response above struck me, because this is where I think you and your wife differ.  You want to live for today (within the bounds of reason and responsibility), and she feels insecure about tomorrow.  So one thing to keep in mind is that each of these decisions isn't just a tradeoff between buying X now and paying down Y in CC debt -- it's a tradeoff between buying X now and making your wife feel more secure.  So you may have to make some compromises between what you want, what your wife wants, and what is most financially beneficial in order to keep things in a balance that both of you can live happily with.

I think the response above exemplifies why you have received a lot of pushback from some of the posters.  From some of the early posts, it sounded like you were saying that your lifestyle was pretty much set -- that you'd be willing to tinker a little around the edges, but any significant changes weren't going to happen, and so the real choice was whether to use the money left over to pay down debt or make your wife happy.  And so everyone was jumping on to try to change that mindset, so that you could see that your desire to have X now should also be in question and balanced against everything else.  From your later posts, I think you've gotten that message.

But the other reason people harp on expenses is because controlling your lifestyle is far and away the most important thing you can do to improve your financial situation.  Say, for example, you need $60K/yr (over SS) in retirement.  That means over the next 25+ years, you'll need to save around $1.5M.  OTOH, if you need only $40K/yr in retirement, that means you only need to save $1M.  And that is a triple-whammy:  (1) you have $500K less you need to save; (2) you have lower annual costs now, so you have more money available to do productive things with; and (3) you can use that freed-up money to pay down your CC debt and save yourself 20-25% on that six-figures you owe.  So it's not really about the cable or the car or anything else in particular; it's the triple benefit each of those individual decisions provides. 

I'm not going to tell you what you should do; you're a grown-ass human, and you have the right to make the decisions that work for you and your family.  But I will recommend that you challenge your own thinking, because some of the stuff that we think we need, or that we think makes us happy, is both unnecessary and takes us away from things that would improve our lives immeasurably.  For example:  a life of watching TV until you can afford to eat out again is ultimately unsatisfying (ask me how I know! You've hit on my primary weakness there).  What else could you do with that time that is free?  Are there clubs you could join?  Sports leagues?  An evening on the patio or in front of the fire and a bottle of wine?  A charity you could volunteer for?  The question ultimately isn't whether you enjoy cable; it's whether there are other, cheaper things out there that might bring more value to your life and make it feel fuller, more enriching, less day-to-day drudgery.  The idea is to expand your mind and draw on your creativity to envision a life that is beyond the standard consumerism that we were all brought up with. 

Ok, I'll stop talking now.  ;-)  Good luck; as I said, you're off to a great start.  Keep reading, keep tracking, keep learning, keep adjusting.  You'll get there. 

Barton20

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Re: Case Study - pay off debt or save for retirement?
« Reply #76 on: January 21, 2020, 08:47:42 AM »
I guess I'm just sick of repeating myself over and over again.
Compare the number of times you've had to repeat yourself to, say, the number of times you've mindlessly charged a restaurant meal to a credit card you couldn't pay off...

If you're sick of repeating yourself, you are in the wrong to post on a public forum. You asked for our help, not vice versa.

IMO, the thing that will help you the most is an attitude adjustment. Maybe start by being appreciative that busy people are taking their own time to help you, a total internet stranger, improve your financial life.

Annnnnd having to repeat myself again to say that I AM appreciative. Most of the posters have been extremely helpful. Some have not. Just because I ask for help doesn't mean I have to take every single bit of advice.

Moonwaves

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Re: Case Study - pay off debt or save for retirement?
« Reply #77 on: January 21, 2020, 08:51:05 AM »
Congratulations on such a huge bump in income - that will allow you to make good progress quickly on your debt. Others have covered the retirement savings vs. paying off debt aspects.

I just wanted to also say congratulations on tackling your debt - it is easier than it seems like it should be to spend carelessly, not particularly feel like you're going overboard, and end up with large amounts of debt. I didn't have as much debt as you but I have my earnings have always been closer to the level of your wife's rather than yours, so having a fifth of your level of debt was still a lot. And it felt at many stages that I would never manage to clear it all, once interest starts accumulating it feels like it will never stop. But it is possible and I'm sure you'll get there.

In the meantime, if you haven't already done so, I would really recommend reading the MMM blog. The forums are great but I think you can get a lot more out of them once you've gotten to know the whole thinking behind MMM. I would also recommend reading Your Money or Your Life. I haven't done so but I don't think I've ever heard anyone say that it is not useful. You're not just getting out of debt, you're changing your relationship to money and in order to do that sustainably (eight months is pretty good going already, so I have very high hopes for you) for the long-term, it would be well worthwhile for you and your wife to have ongoing discussions about money and what it means to you and how you want your life to look. Getting input from different places like MMM and YMOYL and anywhere else you find could offer some different perspectives to help you reach decisions on what life after living paycheck to paycheck looks like to you.

If you want to keep working till you're 70, being FI won't stop you. But being FI gives you the choice of whether to do so or not, so do keep it in mind. Good luck with your journey.

Moonwaves

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Re: Case Study - pay off debt or save for retirement?
« Reply #78 on: January 21, 2020, 08:58:57 AM »
Oh, I forgot to add, don't be put off by MMM's attitude to television. It is very different to yours (and mine, although I might be a bit closer to him than to you) and might irritate you a bit (it does me, but partly because I kind of agree with him but still watch far too much). The important thing to remember is that disagreeing with something he thinks or says does not negate the overwhelmingly useful things he has to say.

Omy

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Re: Case Study - pay off debt or save for retirement?
« Reply #79 on: January 21, 2020, 10:51:46 AM »
Congratulations on such a huge bump in income - that will allow you to make good progress quickly on your debt. Others have covered the retirement savings vs. paying off debt aspects.

I just wanted to also say congratulations on tackling your debt - it is easier than it seems like it should be to spend carelessly, not particularly feel like you're going overboard, and end up with large amounts of debt. I didn't have as much debt as you but I have my earnings have always been closer to the level of your wife's rather than yours, so having a fifth of your level of debt was still a lot. And it felt at many stages that I would never manage to clear it all, once interest starts accumulating it feels like it will never stop. But it is possible and I'm sure you'll get there.

In the meantime, if you haven't already done so, I would really recommend reading the MMM blog. The forums are great but I think you can get a lot more out of them once you've gotten to know the whole thinking behind MMM. I would also recommend reading Your Money or Your Life. I haven't done so but I don't think I've ever heard anyone say that it is not useful. You're not just getting out of debt, you're changing your relationship to money and in order to do that sustainably (eight months is pretty good going already, so I have very high hopes for you) for the long-term, it would be well worthwhile for you and your wife to have ongoing discussions about money and what it means to you and how you want your life to look. Getting input from different places like MMM and YMOYL and anywhere else you find could offer some different perspectives to help you reach decisions on what life after living paycheck to paycheck looks like to you.

If you want to keep working till you're 70, being FI won't stop you. But being FI gives you the choice of whether to do so or not, so do keep it in mind. Good luck with your journey.
At the risk of repeating myself, this is great advice. More reading and less defensiveness will help you progress more quickly.

Villanelle

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Re: Case Study - pay off debt or save for retirement?
« Reply #80 on: January 21, 2020, 11:21:28 AM »
I recommend checking out the Motley Fool boards. 

exige

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Re: Case Study - pay off debt or save for retirement?
« Reply #81 on: January 21, 2020, 02:01:06 PM »
you assume it will be up to you to work until 70 and that you will always find another job..... I would think more about that

roomtempmayo

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Re: Case Study - pay off debt or save for retirement?
« Reply #82 on: January 21, 2020, 03:00:10 PM »
Not one of us is guaranteed a job in 20 or 30 years time, and certainly not on the existing terms.

Keep in mind that any occupation with a six figure income has a giant target on its back for automation, outsourcing, and old fashioned price controls.  There's a lot more incentive to cut doctor or banker compensation by 10% than there is to cut garbageman salaries by 10%.

I personally like my job, and I could see working until I'm 70 or beyond, as many people in my field currently do.  However, I'm here because I realize my retirement date might not be within my control.

Dicey

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Re: Case Study - pay off debt or save for retirement?
« Reply #83 on: January 21, 2020, 03:08:31 PM »
I guess I'm just sick of repeating myself over and over again.
Compare the number of times you've had to repeat yourself to, say, the number of times you've mindlessly charged a restaurant meal to a credit card you couldn't pay off...

If you're sick of repeating yourself, you are in the wrong to post on a public forum. You asked for our help, not vice versa.

IMO, the thing that will help you the most is an attitude adjustment. Maybe start by being appreciative that busy people are taking their own time to help you, a total internet stranger, improve your financial life.

Annnnnd having to repeat myself again to say that I AM appreciative. Most of the posters have been extremely helpful. Some have not. Just because I ask for help doesn't mean I have to take every single bit of advice.
Uh, you could take what you want without complaining about the rest. None of us knows you IRL. Did you think you were going to like every single suggestion you knew you were going to receive by posting your story here? Being gracious about it and moving along without complaint will get you a lot more help in the long run.

Peach

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Re: Case Study - pay off debt or save for retirement?
« Reply #84 on: January 22, 2020, 07:59:41 AM »
You might consider trying to negotiate with your apartment complex to see if they'll allow you to move to a 1 bedroom apartment.  They may allow you to transfer your 2 bedroom lease over to a 1 bedroom saving you a nice amount monthly.

I agree with another poster who said to think about lowering the amount of your life insurance.  I'm assuming the goal is to make sure that your wife would be able to pay off the bills and have some to spare rather than having enough to set her up for her entire life.

As others have said, refinancing your high percent cards should be a priority. 

It's good that you recognize that there are areas you can cut back.  I'm not going to give you a hard time about cable because that seems to be your major entertainment.  What I will say is find another area where you can cut back significantly to pay for that cable.  Groceries are a great place to start because it's easy to shop sales (check sales flyers online and plan accordingly) and use coupons (many are digital now if you create an account at the supermarket site.)

I would also save the 3% that your company matches in a retirement account. You're giving up a lot of money and compounding time if you don't contribute now. Keep it at 3% until your debts are mostly paid off then up it dramatically.

It's good you are trying to get things under control now, and I wish you the best.  You're making very good money and should be able to knock out these debts if you follow the advice in this thread.

WSUCoug1994

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Re: Case Study - pay off debt or save for retirement?
« Reply #85 on: January 22, 2020, 09:47:37 AM »
OP - For what it is worth - the reason you are likely getting such an "engaging" response from the forum is that we don't often get this opportunity to truly help someone like yourself.  High Debt, Medium/High spending and High Income - these are the problems we know how to solve.  I also think it takes time to acclimate to the changes people are recommending. 

Keep up the good work - keep up the positive attitude and keep making these recommended changes as you can absorb them.  I sense you are making positive change and you will look back 1-3 years from now and see that these people have changed the arc of your life for the better.  I can see the light at the end of the tunnel for you - I just hope you can.

Bumbles8

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Re: Case Study - pay off debt or save for retirement?
« Reply #86 on: January 22, 2020, 10:33:27 AM »
To the OP - congratulations on making it this far with your questions.  Lots of people in similar situations come on this forum and promptly leave because they want to put their head back into a hole. You have answered all the questions thrown at you multiple times and kept coming back.  You also have taken action (0% interest CC, looking at grocery expenses, etc).

I am NOT here to tell you to cut your cable.  You and your wife want it, so keep it. 

But, some other ideas and thoughts.

1) put in 3% to your 401k to get the match. Especially if this helps solve your wive’s concerns.  If she has fewer concerns, she will better stay the course. (You talked about this, I just wanted to reiterate)

2) everything is negotiable.  Call the CC companies, ask for lower rates.  Ask if there are any promotional items.  Talk to the manager.  “Have you ever helped someone in the past like me?”   “Have you ever made an exception?”
Explain your situation.  “I have a lot of debt but have a new job and am really focused on paying you back.  What have you done in the past to help someone like me?”
Be gracious of the customer service representative’s time.
Also, google other tips and tricks for this.

3) Your rent.  You have looked into the lease and said you would talk to the office.  I would ask similar questions to what’s in number two.  See if you can find some common ground and come up with a solution. 
The rent is a huge expense.  If you can move and lower it 10-30%, then that’s way more saved than your cable. 

4) finally, congrats on your new job.  Sounds like a great industry.

Best of luck in the future

freya

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Re: Case Study - pay off debt or save for retirement?
« Reply #87 on: January 22, 2020, 05:44:44 PM »
As I said, I know I will always be employed. I just know this based on my line of work.

This is quite a breathtakingly confident stance.  You know the saying about how the only certainties in life are death and taxes?

If you're in medicine, you may not yet realize that burnout is rampant and rapidly increasing, due to ever-increasing administrative and regulatory burdens, increased productivity requirements, and falling reimbursements.  No one I know thinks that pay is going anywhere but down, and about half of US physicians are thinking about quitting.  Other highly paid jobs are not much different, so whether you're in medicine or not doesn't really matter.

I had a similar attitude as you when I first started out, but I've changed my thinking quite a bit.  I have come to believe that becoming financially independent as soon as possible, whether or not you choose to stop working, should be an important goal for everyone.  More important than cable TV, even.  This is why my posts have emphasized cutting costs, as that's your best defense.

Also, the power of minimizing expenses is tremendous, as Laura33 stated - and often overlooked because it's not sexy.  Once, my department made a big deal out of offering a small bonus in exchange for greater productivity.  So I calculated the per-hour benefit of the bonus after tax, and compared that with the (tax-free) bonus I could "earn" by making my own lunch every day.  Guess what?  Making my own lunch won hands down.  A friend and I were possibly the only people in the dept who realized this, because most people don't know how to analyze these things correctly. I always used to buy lunch every day.  Now I wouldn't dream of doing that.





ATR

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Re: Case Study - pay off debt or save for retirement?
« Reply #88 on: January 24, 2020, 03:07:48 PM »
PTF

halftimeprof

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Re: Case Study - pay off debt or save for retirement?
« Reply #89 on: January 28, 2020, 04:15:16 PM »
"We tried streaming briefly last year but it just didn't work for us. We have too many varied tastes and like to just chill out in front of the TV channel surfing and finding movies or shows to watch. My wife watches a lot of Lifetime and TLC and Hallmark Channel. I watch a lot of cable news and History Channel stuff. We both agreed we wanted cable back after a few weeks without it."

Instead of cable, try subscribing to Sling's streaming service.  It's more expensive than Netflix or Hulu, but much less than your monthly Cable bill, and it has all of the Cable channels you mentioned plus many more.  You can either watch programs live (surf to see what is on) or stream many of the offerings from different channels on your own schedule.  And you can cancel and/or resume any time, with no contract.

Barton20

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Re: Case Study - pay off debt or save for retirement?
« Reply #90 on: February 06, 2021, 05:38:09 PM »
UPDATE!

Hello kind folks. I just wanted to give an update on where we are a little over a year since my first post.

Credit card debt is almost entirely gone. We will be making the final payment in March.

Retirement accounts: only 80K now (up from 50K last year), but we will be saving aggressively once the rest of the debt is paid off.

Household spending has come down. We didn't get rid of cable (just couldn't do it), but we made other compromises. Notably, food budget went from $800/mth to $300/mth. I took up some extra shifts at work due to the pandemic which also helped.

After making our last CC payment, we plan to save for retirement aggressively and save everything else for our house downpayment. We have also been re-considering our stand on a child. Last year, I had said we weren't going to have one, but now we're considering adoption. We also thought about surrogacy, which is hella expensive. Anyone here with experience in those areas?

Anyway, just wanted to provide an update and listen to any other advice you have.


meandmyfamily

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Re: Case Study - pay off debt or save for retirement?
« Reply #91 on: February 06, 2021, 08:42:34 PM »
Wow-what an amazing change!  Nice job!  You got this!  Keep up the good work! 

BikeFanatic

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Re: Case Study - pay off debt or save for retirement?
« Reply #92 on: February 10, 2021, 04:55:59 AM »
You did well coming here to address the dept issue, I think the first step is to recognize that you have an issue and you have.
I used the 0% loans from cards to pay off debt, of course there is a 3-5% fee that is interest up front, however that is 3% interest verses 19.7% a huge difference. Once you pay off a card this way, and please keep the dept on there until close to the end and attack the higher interest rate cards, you will be down to half your debt in no time. I also agree with others you can maybe get a consolidation loan.

100K is alot of debt but people get into trouble when they are unemployed or under employed and I have in the past run up CC debt due to these issues, but you are now on the right track.

As far as cable is concerned, I know you have said no to that, however I was advised by a forum member that in the US there is a streaming service called locast.org that will get you alot of local stations. This is how I am going to cut my mothers 200 cable bill to 60.

Dee18

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Re: Case Study - pay off debt or save for retirement?
« Reply #93 on: February 11, 2021, 05:48:44 AM »
A minor point (sorry if this was mentioned and I missed it):  Be sure to factor in survivors' benefits from Social Security when calculating your life insurance needs. I wasn't aware of them until two friends became widows.

Memo

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Re: Case Study - pay off debt or save for retirement?
« Reply #94 on: February 13, 2021, 12:15:31 PM »
I just came across your case study & read it straight through. What an amazing update! You absolutely sliced it - congratulations!! Your change in food budget in particular is very dramatic.

Re surrogacy etc this probably isn't the thread for it just cause it will get a bit buried. Maybe move your questions on to another thread. There is a thread in the journals called Fertility, Baby & Pregnancy Chat for example which may help move you in the right direction. All the best!

Barton20

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Re: Case Study - pay off debt or save for retirement?
« Reply #95 on: February 15, 2021, 07:25:43 AM »
I just came across your case study & read it straight through. What an amazing update! You absolutely sliced it - congratulations!! Your change in food budget in particular is very dramatic.

Re surrogacy etc this probably isn't the thread for it just cause it will get a bit buried. Maybe move your questions on to another thread. There is a thread in the journals called Fertility, Baby & Pregnancy Chat for example which may help move you in the right direction. All the best!

Thanks!! Will look into it!


 

Wow, a phone plan for fifteen bucks!