It’s not my intention to turn this into a debt blog, although I do admire some of the ones that are out there, like “Make Love, Not Debt” (could have used that one when I was married). There are enough people out there who can make the connection between my identity and this blog that it’s probably not a good idea. But I do want to make progress when it comes to my financial situation in 2008, so blogging about it — at least generally — might help, right?
How I Got Here
How come I am not where I want to be financially at the beginning of 2008? There are three major explanations: student loans; recent divorce + job loss; wrong attitudes about money. I want to make progress towards fixing all three in 08.
Student Loans:
I went to law school — a long time ago, it seems. My parents at the time could not help me much financially, and I went directly to law school after college, which meant I was generally eligible for the maximum financial aid packages offered. I borrowed as much as I could, thinking that I would be a lawyer, so wouldn’t have any trouble paying it off. What I didn’t realize at such a young age was that I would have a lot of trouble paying it off taking the kind of jobs that mattered to me — public interest-oriented positions. Once I got out, I was generally steadily employed, but made so little that I generally qualified for deferments and forbearances. When I maxed out on those, I finally started making payments, but even those have been sporadic, as I figured out a trick to miss a payment without affecting my credit rating.
No more — I’m going to make 12 payments in 2008, which will probably be the first year ever that this has happened. If I achieve some of my other goals, then I can start making payments that are greater than the minimum.
The last 2 1/2 years:
I went from a marriage where we were struggling financially, to a separation where I moved across the country, to a financial agreement with my ex-husband that he didn’t honor, to a job that took six months to pay me for my last month of work. Each time I thought I had recovered from the last blow, another one came along. There were times my life was like that annoying commercial: Help, I’ve fallen and I can’t get up!
Based upon love and his family’s lack of support for things like weddings and first home purchases, I assumed a lot of credit card debt — in my name. I thought having a house was a necessary precursor to having a family, rather than being one of the triggers that made him decide he wasn’t ready — for any of it. My parents helped out a lot to get me out of the situation and across the country, even though I know they really wanted me closer to home. Then he stopped paying — anything — and the bills he agreed to pay went into collections. Right about that time, my former employer went under, and although I got a new job right away, given that I was already so close to the margins, it impacted me pretty severely to not get paid. More family debt.
Wrong money attitudes:
Even if all of the above hadn’t happened, I expect that I would have a challenging time managing my money. Why? One, because I value experiences more than saving for a rainy day. If I have an opportunity to travel, or go to a concert, or eat an amazing meal, then I’m probably going to do it, even if it means I’m barely scraping by. Two, because my career choices to date have not been high-paying. One of the least important factors has been what a job pays, while one of the most has been the ability to make a difference or do something I love.
I don’t think I have to sell out just to better manage my financial stability. I’m now doing better than I ever have, and while I’m not 100% where I want to be, I feel like I’m getting there.
My goals for 2008:
1. Eliminate credit card debt. This is doable, using the “debt snowball” approach.
2. Cut family-related debt in half. If my ex lives up to our financial agreement, like he said he would, and I start making payments when my car is paid off this year, this is also doable. If he doesn’t, it’ll be more of a challenge, but still important.
3. Establish $1500 emergency fund. Yes, I know you’re supposed to have 3 to 6 months, but this will be an important start, coupled with paying down the credit cards (which also could be used for emergencies if needed.)
4. Make all student loan payments this year. I can do this — I’m making more than I ever have before.
5. Start investing in the 401(k) at work when I’m eligible (after 1 year of employment). Or put the same amount in a Roth or other IRA.
6. Make quarterly tax payments. I am now doing some consulting, so it’s important to keep up with the tax payments along the way.
7. No late payment fees, overdraft fees, or financial penalties of any kind for not paying what’s due by the time it’s due. They are just penalties for being stupid with money. I’m already paying some extreme interest rates due to my shredded credit — that’s enough.
By the end of the decade, I have the potential to be doing very well — by following these guidelines, I can get there. This will address all three of the factors that have been limiting me, and will represent key progress for me.
