Author Topic: I Feel Blind to My Own Finances  (Read 6106 times)

auracathartes

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I Feel Blind to My Own Finances
« on: March 01, 2013, 01:05:45 PM »
Dear Mustachians,

An ailing yet aspiring Mustachian wants your help. I would love any help you are willing to grant your gifts upon my less knowledgeable person. I've done the best I can with what I know, but if you are able to lend some advice, I'd be more than willing to accept it and hope others can learn from my story. I've looked at the numbers so much that I can no longer see anything new or fresh about it. I'm hoping that new eyes can help me see things I'm overlooking.

I was happily trying to live the Mustachian life before I even knew about MMM (debt free and saving) a couple of years ago when health disaster struck. I became very ill and also re-injured my chronic back issue at the same time (can you say bad luck?). All said and done, I had several thousands of dollars in medical debt and no way to pay it. I applied for assistance and got a little bit of help, and paid out everything I had in savings, but still ended up with $10,000 in medical debt which was demanded to be paid.

The hospitals wanted that I get one of their "care credit cards" at nearly 30% interest (ouch!!!). I went debt shopping and applied for a few credit cards and loans to see what kind of interest rates I qualified for. One credit card at 10.99% and one at 18.99% were the best I could get (I wish at least one would have come back with one year no interest, but no such luck). All the loans I could get were over 20% (ick). I put the majority of it on the first card with the lower interest and the remainder on the second card. I then put everything extra into paying this off and not accumulating any savings. I managed to pay a little less than $5000 of the debt in a year and a half.

However, another event socked me right in the finances. While driving on a very busy interstate, someone sideswiped my car when they didn't look before changing lanes (I was rolled and should technically be dead), then drove off. They were followed by a good samaritan who saw the whole thing, got ticketed, went to court and lost, and their insurance company is still refusing to pay me for my car eight months later (I'm more than a little bitter and I've hired a lawyer, willing to work pro bono, to try and get recompense but he said it might take years). I tried going carless, but my health issues prohibit walking/biking, public transportation is useless here (I can't get to work when I need to or get home when I'm done), and bumming rides was becoming more and more difficult. So I went and again researched. I got a used, gas-friendly car with a loan in January of this year.

So, after all is said and done, here is where I stand with my debt:

Card 1: $3829.95 at 10.99%

Card 2: $1314.72 at 18.99%

Loan: $1959.58 at 11.09%

Total debt: $7104.25

Here is where I need your help: Can I be doing even better? I want this debt gone.

Breakdown of my finances:

Personal: Female, 28, United States

Income: $1500/month after taxes and medical insurance deducted, salaried working 70 hours a week. Ya, it's a lot of hours for little pay. I'm one of those lucky people that was able to get the job they've wanted their entire life. I'd rather not leave my dream to go somewhere else just to make more money. Just this month I've considered starting a (very small) business selling my homemade body care products (I make my own cause they're so expensive at the store) that everybody really loves (I give them as gifts instead of buying gifts for Christmas/birthdays). I have no idea how to do such things, so that's yet another facet of research I need to get into.

Savings: None. I only have what I get paid every month.

Expenses:

Rent: $500/month all utilities included

Phone: $25/month. I tried just using pre-paid phones, but I was going through minutes and texts so fast I wasn't saving anything (my family is obnoxiously over-informative). I'm currently a part of a plan with my entire family with unlimited talk and text (no data, that shit's stupid), which ends up being about $10/month cheaper.

Internet/Cable: Don't have any. I use the free internet at the library (two minutes from work) if I need it.

Insurance: Car and renters at $90/month. I'm never having less than full coverage again after the mess I just went through with my last car. No one will ever convince me to get liability coverage again, as I would have had this whole car debacle settled already according to both my insurance agent and the lawyer. Apparently only having liability is a great way for the other insurance agency to give you the big screw you and make you hire a lawyer. Bitter, party of one?

Medical: $147 a month. I have physical therapy/manual therapy four times a month. Since this is finally making a difference in my quality life, I will not cut it out. Hopefully, my therapy guy will get me healthy enough that I can ride a bike again soon. I wasn't walking a year ago, and he has me not only walking but lifting weights. Plus, due to his care I've been pain medication free for almost a year. This expense also includes free run of the gym, so I can get in extra PT as needed without paying for more sessions.

Gas/Car: I'm fairly close to work at a 7 mile round trip. I'm getting to where I can walk to the store (2 mile round trip) sometimes if the weather is good (my asthma doesn't allow for outdoor activities if it's cold). Plus, once a month I make a 200 mile round trip to visit my grandmother. I spend about $80/month on gas as far as I've calculated the last two months so far with this new car. I'm really hoping that I'll be able to start riding a bike again this summer as health improves. I can't bike much in the winter months, but I can save money in the summer to help buffer my winter gas expenditures. Also, can you recommend a bike that doesn't require leaning forward? One where I can sit up straight would be great (leaning forward is hard on my back and recumbents are just as painful). The car I picked was a 2000 Saturn LS2 with 30,000 miles that gets 30 mpg and no problems according to two different mechanics. Blue book was $5460, and I got it for $2000, including dealer fees and taxes.

Groceries: About $140 a month. This includes my asthma medications (about $40/month). I include medications here cause I get them at the pharmacy at the grocery store. Sorry if that's weird. This also includes supplies to make all my own body care products and food for my four cats. I don't eat out.

Laundry: My house doesn't come with laundry. I do most of my laundry at friend's houses when I can mooch time from them. I end up spending about $5-10 a month to do laundry at the laundromat.

Misc/Entertainment: I get free books and movies from the library. I have a $10 a month allowance for "fun" stuff.  I do not shop for clothes. I do not go to movie theaters. I ask for all my needs for Christmas. If something breaks/wears out before then, I do without. I cut my own hair. I'm hoping that this summer I can take my first hike in years. :-)

Total expenses: $1012 depending on gas/grocery.

This leaves $498 a month to work with to pay off debts.

What my plan has been since I bought the car in January: Pay $150 a month on each card and the minimum loan payment of $65.82 for a total of $365.82 a month. This leaves $132.18 a month left over for additional expenses (car registration fees, pet licensing fees, and doctor trips as needed). If I do not need that money for additional expenses, it will go to the loan at the end of the month when I get paid my next paycheck. I figure when I finish off the lowest card, I'll focus all $300 on the remaining card. Then, when that is paid off, everything goes to the loan. If I did the calculations right, I should have everything paid off in two years. Although, I might be wrong. I'm not great at using amortization calculators.

Is there anything you can see as a blinding error? Can I improve anywhere? I'm seriously tired of paying off credit cards, and staring at my own finances for so long has not only made me cross eyed but blind to my own predicament.

Sincerely,

An Aspiring Mustachian

jrhampt

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Re: I Feel Blind to My Own Finances
« Reply #1 on: March 01, 2013, 01:39:55 PM »
Okay, I'm dying of curiosity.  What kind of field are you in where you can work 70 hours a week (!!!) and net only $1500/mo? 

mustachecat

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Re: I Feel Blind to My Own Finances
« Reply #2 on: March 01, 2013, 01:47:47 PM »
Hi, auracathartes!

It sounds like you've been through... a lot, to put it mildly. I'm sorry you've had a tough time of it.

You have your expenses dialed down to the bone. I mean, you spend less than MMM on a per-person basis!

What's your ultimate goal? From the sound of it, you love your job. From my perspective, I can't imagine loving anything enough to do it 70 hours a week at $4.95/hour, after taxes and deductions, so you must REALLY love your job. So, do you want to retire early? Have greater security through financial independence? Build up a 'stashe large enough to weather future health problems?

After your debts are paid (less than a year and a half from now, at your current rate), you'll be saving 30+% of your take-home, putting you on track to be financially independent in 28 years. If you're okay with that, then you're on the right track.

If you're not okay with that, really, the most meaning variable for you is income. I think it's awesome that you're thinking about setting up a side business, since any additional money would be really impactful to your situation. Homemade body care products also sound like you could make them to order (i.e., not have to spend a ton of money upfront).

At the same time... while I don't get this sense from your posting at all, I just want to say that if you're physically or emotionally tired--again, you've been through a lot--it's okay not to be hustling like crazy right now. Be kind to yourself, and take care of yourself. You will be out of debt within a year and a half. It's happening. You're going to be fine.

Finally, how's your credit? If it's good, then it might be worth it to borrow money via a peer-to-peer lending site. It'll beat the rate on your cards and loan for sure.

auracathartes

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Re: I Feel Blind to My Own Finances
« Reply #3 on: March 01, 2013, 02:18:33 PM »
Okay, I'm dying of curiosity.  What kind of field are you in where you can work 70 hours a week (!!!) and net only $1500/mo?

I work for a non-profit, which is basically saying, "I'm taking a vow of poverty." It's the coolest, most awesome job in the world. I don't want to leave it, as it's everything I've wanted to do since I was wee bitty. I kind of consider my job my "entertainment" as it were. Positions such as I am in do not occur very often...maybe one or two open up each year in the US. The fact that I got this job is something of a miracle, so I am extremely reluctant to release it.

auracathartes

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Re: I Feel Blind to My Own Finances
« Reply #4 on: March 01, 2013, 02:34:11 PM »
Hi, auracathartes!

It sounds like you've been through... a lot, to put it mildly. I'm sorry you've had a tough time of it.

What's your ultimate goal?

After your debts are paid (less than a year and a half from now, at your current rate), you'll be saving 30+% of your take-home, putting you on track to be financially independent in 28 years. If you're okay with that, then you're on the right track.

If you're not okay with that, really, the most meaning variable for you is income. I think it's awesome that you're thinking about setting up a side business, since any additional money would be really impactful to your situation. Homemade body care products also sound like you could make them to order (i.e., not have to spend a ton of money upfront).

At the same time... while I don't get this sense from your posting at all, I just want to say that if you're physically or emotionally tired--again, you've been through a lot--it's okay not to be hustling like crazy right now. Be kind to yourself, and take care of yourself. You will be out of debt within a year and a half. It's happening. You're going to be fine.

Finally, how's your credit? If it's good, then it might be worth it to borrow money via a peer-to-peer lending site. It'll beat the rate on your cards and loan for sure.

It has been a rough few years, but I have decided not to dwell and am moving on (besides still working on the car debacle).

My goal #1 is to get this debt out of my hair. It feels like a huge weight around my shoulders, and it's driving me bonkers. I've had to cut back...everything in order to get it out of my life, and I want it to happen faster.

Ultimate Goal: To continue saving. Once this debt is payed, I'm probably going to add in an entertainment expense of $50-80 a month and continue to save the rest. I'm not a healthy person, and hospital visits and medication happen frequently. I'd like to not have another episode of hospitals and specialists breathing down my neck and sending me bills covered in red.

My goal is not retirement. I love my job way to much to ever retire. That'd be like...finding the most fun thing in the world to do and then suddenly decide to not do it. That's silly. I'd much rather go back to saving so I don't have to be afraid that the next medical bill is going to swallow me whole.

Luckily, the work my therapy guy is doing has me healthier than I've been in years. Let's hope this continues and I'll be hospital free. :-)

I have no experience with peer-to-peer lending. Can you point me to a resource that I can learn more about it? (Like a MMM article or a reliable webpage?) I have a credit score of 757, but I'm unsure as to what that means.

I'm good at budgeting and crap at credit cards and lending. That's where I need you guys to help me out. I don't know what's out there and have no idea where to start.

smalllife

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Re: I Feel Blind to My Own Finances
« Reply #5 on: March 01, 2013, 02:40:36 PM »
I would look into selling your homemade products on Etsy - it seems to be a fairly easy/free(?) and common platform for that sort of thing. 

I would also try calling and negotiating your medical debt with the hospitals - but if I'm reading you right you already paid full price with credit cards.  Do you get any special offers from your bank: 0% transfers, etc.  Any property to get a secured loan with a lower rate?  Family member able to loan you money (with interest)? Just throwing out ideas, I don't have a lot of experience with loans.

auracathartes

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Re: I Feel Blind to My Own Finances
« Reply #6 on: March 01, 2013, 02:53:40 PM »
I looked briefly into Etsy and realized I needed to get a business license. It's something I'm seriously considering, but needs lots more research.

Negotiating with the hospitals was completely useless. They simply threatened to send the bills to collections. I applied for state-funded help, and got some. However, it wasn't enough to pay the whole bill. I was left with the option of putting it on credit cards/loan or going to collections. The "going to collections" part seemed terrifying, so I paid it.

I haven't gotten any special offers from my current credit cards or bank. I get offers from other cards at 0% but  it scares me because after the 0% for a year the rates jump up to almost 30%, so in a year I'd have to yet again move my balances to avoid that interest. Is that worth it? Maybe keep my current cards to transfer back to (they have no fees and the interest rates are locked for life)?

I don't own any property, so I don't think I can get the loan you're talking about.

I can't borrow any money from my family.

etselec

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Re: I Feel Blind to My Own Finances
« Reply #7 on: March 01, 2013, 02:55:07 PM »
You're doing great expense-wise and I think that loving your job so much is a wonderful thing.

A few minor notes:

You say you pay $150/month to each of your cards. Mathematically, it would be more efficient to pay just the minimum payment to the lower-interest card and the car loan, and put all the rest into paying off the card with the highest interest. Then when the high-interest card is paid off, put all the extra towards the loan, then do the 10.99% card last. Ultimately it may make a small difference, but every penny counts and it sounds like you might be able to adjust your plan to accommodate that.

Another question, which I think is really important to your financial health going forwards: what is your health insurance situation? Does work pay for health insurance, and if so, is that insurance comprehensive? On your income, you can save and save and save but, as you've figured out, medical expenses are astronomical and will just knock you down again and again. At your income and asset levels, in many states you'd qualify for a special category of Medicaid for people who work and also have disabilities/chronic health conditions. Feel free to PM me if you'd like more info.

mustachecat

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Re: I Feel Blind to My Own Finances
« Reply #8 on: March 01, 2013, 03:04:46 PM »
I work at a nonprofit too! How many years in are you? You don't have to give more details than you want to, but are you in the arts, social services, environmental causes, etc.? I'm assuming you're program staff (vs. admin or fundraising), since admin and fundraising folks like me usually aren't that rapturous about our jobs. ;) Also, are you really in love with the kind of work you do, or the specific organization you work for?

MMM has an article about P2P lending, but his perspective is (of course) as the lender: http://www.mrmoneymustache.com/2012/09/24/the-lending-club-experiment/

Here's a more general article about it: http://money.msn.com/credit-cards/borrowers-alternative-peer-lending

The two largest P2P sites are Lending Club and Prosper. You can get quotes from both and see what rates are available to you. A 757 credit score is great, so I think you'll get something competitive.

auracathartes

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Re: I Feel Blind to My Own Finances
« Reply #9 on: March 01, 2013, 03:05:07 PM »
Thank you for doing that math. Yet another thing I've looked at so many times I can't see the forest through the trees. I'll change my payment strategy this month, as that's an easy thing to change in the short term.

I tried to apply for medicaid/food stamps, but I apparently make $200 too much a month to qualify in my state. I don't know about disability. I don't know much about disability besides rumors, and one of those rumors is you can't work. I am getting better (I'm healthier than I've been in years) so I feel reluctant taking money for disability when I'm not really "disabled" and I can work. Maybe I'm too honest for my own good.

marty998

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Re: I Feel Blind to My Own Finances
« Reply #10 on: March 01, 2013, 03:06:37 PM »
Wow for your sake I hope all the bad luck is behind you.
It sounds like you've done a great job putting your life back together.

You're doing well paying back the debts but I fear the real blindness is this $5 an hour job. Even a not for profit should be able to pay you more than that, you're down at African rice farm wages there.

Balance transfer the cards to a 0% rate and the finishing line will be in sight pretty soon.

Best of luck

auracathartes

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Re: I Feel Blind to My Own Finances
« Reply #11 on: March 01, 2013, 03:12:25 PM »
I'm in wildlife, which means I work hands on with wild animals. Coolest. Job. Ever.

Thanks for the links on peer-to-peer lending. I'll be delving into those soon.

I'll also be reconsidering finding another credit card with 0% and moving the debt around as interest changes.

More research here I come...

tomsang

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Re: I Feel Blind to My Own Finances
« Reply #12 on: March 01, 2013, 03:45:01 PM »
You need a Raise!!! If you are working for a non profit, then go to guidestar.org and type in your employers' name.  You may need to register for free.  Go to the Form 990 & Doc tab and pull up the most recent year.  Check out their books.  As an example.  Woodland Park Zoo made $4 million in 2011.  For them to say that they can't afford to give you a raise is not genuine.     

If you are working the kind of hours that you are working and as loyal as you sound, I would ask to have a sit down with the boss.  Bosses don't like to lose quality people because of a few dollars an hour.  You should also do some due diligence on what others are paying prior to your sit down. I assume you are not receiving overtime for the 30 hours over 40.  Is that even legal?

Don't be held hostage on pay, because you love the job.  Check out other places so you can talk confidently about what you can get paid if you go to the dark side. 

I would also be very frank about your medical bills and need to make money and that you love your job, but you can't afford to continue doing it at the current rate.

You will be shocked at what happens when you approach the situation with all the facts and in a calm and reasoned manner. 

Good luck!

N.

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Re: I Feel Blind to My Own Finances
« Reply #13 on: March 01, 2013, 03:48:26 PM »
Just this month I've considered starting a (very small) business selling my homemade body care products (I make my own cause they're so expensive at the store) that everybody really loves (I give them as gifts instead of buying gifts for Christmas/birthdays). I have no idea how to do such things, so that's yet another facet of research I need to get into.

I make all of my own products as well. I don't have any intentions of selling my wares but I'd be happy to impart any knowledge I've gained through my own research though, if it would help. I'm Canadian, so probably won't be of much use in helping you with the business side of things (regulations are quite different, I understand), but I would be happy to share sources, ideas, tips, and tricks. Feel free to shoot me a PM and we can have a conversation if it interests you.

 

Wow, a phone plan for fifteen bucks!