Reasons for being debt-free. - Page 2

[tiqa]

I like that!  That's actually a really good idea, I haven't considered it.  Thanks. :)

[tiqa]

And yes, the elliptical is for health reasons.  DH needs to use one for blood pressure and knee issues, and he can't use one in a community facility as he doesn't leave the house.

The computer is trickier because it's a bad habit for him, he spends at least 12 hours a day on it, and it has to be a top-notch computer... so not just a 300$ practical one but one that is a minimum of 2000 on sale.  (He actually knows his stuff and can assemble one for relatively cheap for the quality, and wait for sales to get it, etc.  But it is NOT cheap.  But since he spends all day every day on it, it seems like it's as necessary for him as it can be, I guess.  Rather, I can see why HE sees it as a necessity... even though I am baffled as to what's wrong with the 2 year old one that works just fine.  (He is going to give his old one to me as my laptop is pretty much worn to shreds, I've used it so much.  But I'm considering just selling his hand-me-down and buying myself a cheaper computer, since I don't need a fancy one... and then pocketing the change for, yeah, savings...)

[tiqa]

Originally Posted by mnnice 

I know it's not part of your question, but I would strongly disagree that you do not need to save for retirement.  DH is disabled not you and you could easily live another sixty years. You should qualify for an IRA of some sort. You should check you might even qualify for the Saver's Credit.

I doubt I would live another sixty years, but that's neither here nor there.  Regardless, I would continue to get social security and VA benefits after his death.  Not like I'm thrilled about that prospect, of course, and I wouldn't be content to just sit at home and collect those benefits for convenience.  But it would also be true that if he wasn't alive, and I wasn't retirement age yet, I would be able to work, because I would no longer need to stay home with him.  Maybe I wouldn't be able to start a fabulous spectacular career later in life, but I imagine I would be able to earn enough to supplement savings, considering the bills themselves (which were low to begin with) would be covered.  (We specifically worked out different financial scenarios like this before we settled on our house; what if he died, what if I died, what if SS tanked, etc.  Not to say bills can and never will go up, inflation won't be a factor, etc., but we did lay out a zillion different scenarios before deciding on a property.) 

I imagine if DH wasn't around, and especially if the kids were already grown, I would also move to a much smaller house or something like that, so the bills would be even lower...  I dunno, maybe I'm justifying too much.  Truth is, I can't see into the future here, and I don't know really what would make most sense.  I don't know how long he will live, how long I will live, whether the kids would still be minors... there are too many intangibles for me to really wrap my head around.  But I guess right now, while retirement savings make sense in a way, it's not our #1 priority right now.

[trekkingirl]

like I said "at first" I thought troll.

You know on a frugality and finances board posting a thread about what's the point of being debt free. Then once I read through the thread I realized that you sound a lot like my younger sister who is a great saver but doesn't have time under her belt. That's why I guessed you were young. I'm 31 and my DH is 34 so it sounds like were about the same age. Sorry to offend you it's just that since MDC got on FB the number of trollers is just insane and it takes away from a really good board.

[mnnice]

Originally Posted by tiqa 

Originally Posted by mnnice 

I doubt I would live another sixty years, but that's neither here nor there.  Regardless, I would continue to get social security and VA benefits after his death.  Not like I'm thrilled about that prospect, of course, and I wouldn't be content to just sit at home and collect those benefits for convenience.  But it would also be true that if he wasn't alive, and I wasn't retirement age yet, I would be able to work, because I would no longer need to stay home with him.  Maybe I wouldn't be able to start a fabulous spectacular career later in life, but I imagine I would be able to earn enough to supplement savings, considering the bills themselves (which were low to begin with) would be covered.  (We specifically worked out different financial scenarios like this before we settled on our house; what if he died, what if I died, what if SS tanked, etc.  Not to say bills can and never will go up, inflation won't be a factor, etc., but we did lay out a zillion different scenarios before deciding on a property.) 

I imagine if DH wasn't around, and especially if the kids were already grown, I would also move to a much smaller house or something like that, so the bills would be even lower...  I dunno, maybe I'm justifying too much.  Truth is, I can't see into the future here, and I don't know really what would make most sense.  I don't know how long he will live, how long I will live, whether the kids would still be minors... there are too many intangibles for me to really wrap my head around.  But I guess right now, while retirement savings make sense in a way, it's not our #1 priority right now.

Statistically if you are 35 you will live another 45 years. I think about this more than most since I watched dh's one set of grandparents outlive their money and we live right down the road from dh other grandma who will be 95 next month. Anyway no one can see the future but it looks better for those that plan ahead.

I also have a former housemate that has been on disability since 1995. In her case it is a fixed per cent of her salary at the time she was disabled. Inflation has eaten away at her income considerable in the proceeding 17 years. I thought it was a very good income in 1996. I would hate to have to live on it in her fairly expensive city now.

SS is index to inflation. Are the va benefits?

[tiqa]

Originally Posted by trekkingirl 

like I said "at first" I thought troll.

You know on a frugality and finances board posting a thread about what's the point of being debt free. Then once I read through the thread I realized that you sound a lot like my younger sister who is a great saver but doesn't have time under her belt. That's why I guessed you were young. I'm 31 and my DH is 34 so it sounds like were about the same age. Sorry to offend you it's just that since MDC got on FB the number of trollers is just insane and it takes away from a really good board.

I agree that the make-up of the posters has changed in the last couple of years.  MDC is just not what it used to be.  As for the rest... well, I guess I can now rest assured that I just sound uneducated/immature instead of a troll.  That's... progress?    

Originally Posted by mnnice 


Statistically if you are 35 you will live another 45 years. I think about this more than most since I watched dh's one set of grandparents outlive their money and we live right down the road from dh other grandma who will be 95 next month. Anyway no one can see the future but it looks better for those that plan ahead.
I also have a former housemate that has been on disability since 1995. In her case it is a fixed per cent of her salary at the time she was disabled. Inflation has eaten away at her income considerable in the proceeding 17 years. I thought it was a very good income in 1996. I would hate to have to live on it in her fairly expensive city now.
SS is index to inflation. Are the va benefits?

Yes, the VA benefits also get a raise each year due to inflation. There was only one year in the past six that we didn't get a "raise". Of course, it doesn't scale exactly to "real" inflation, but it does get a bit of a change each year.

The reason I said I doubt I'll live that long is because I have several chronic/autoimmune illnesses that will probably affect my lifespan.  They're not likely to mess with me in the near future, but I definitely won't be pushing 95.  And even if not for those issues, I have absolutely horrible genetics and none of my family is known for longevity.  They don't live unhealthy lives necessarily, they're not overweight chainsmoking couch potatoes or anything, but we have some bad stuff in our genes. 

That said... what you said makes sense.  It doesn't make sense to ignore savings altogether.  I'm just not sure how retirement savings would add into our life right now.  In previous years, when we didn't have any spare money at all, it just wasn't an issue to think about.  Since we've had a pretty generous cushion lately, it's been something I've been actively trying to think of.  But, at this point, I think it would make more sense to prioritize other types of savings issues (like paying off the last of our mortgage, saving for a car when this one can't be used anymore so we can pay cash for it again, investing in our children's current lives, putting in a garden, that sort of thing).  In a year or two we will probably revisit the retirement issue, but right this second it doesn't make much sense to wrap my mind around "retiring" when realistically I might not even live that long.  And due to inflation, etc., it's also harder to think about.  The benefits do scale but putting money aside in a savings account may be worth very little if the economy tanks.  I... I just don't know, really.  It's definitely something to mull over.

[katelove]

To me, the fact that you don't know what the future holds is an even better reason for saving. Whatever my circumstances I can't imagine being sorry I had some spare money in the bank.

Regarding retirement savings, if you don't live long enough to use them then you could will them to your children. I imagine they would appreciate an unexpected inheritance to help them out when they have their own families, mortgage payments etc.

[tiqa]

Well, I'm right there with you in believing that having savings is important.  We put away about 50% of our income right now in savings.  When we get to a healthy enough level (which... honestly I think we're at a healthy level now, but a bit more put away is the goal) we will probably reduce that amount and start paying off the mortgage faster.  Our last house was paid off and I liked owning it outright.  We have only a small payment now (much less than we would if we were renting, etc.) but it'd still be nice to pay it off faster.

But my question to you is, why *retirement* savings in particular?  It's not like we'll hit a magical age and "retire".  (Unless I went back to work at some point and then chose to retire, but that's different.)  I'm just not sure why that route is better than having long-term / short-term / emergency / discretionary / house repair / etc savings.

[SunRise]

Perhaps an advantage of "retirement savings" is for tax breaks right now and compound interest growth over a longer period of time for later.  Maybe the tax breaks are not useful for you, but it is fun to watch interest or dividends accumulate (not so fun when it crashes though); In my 30's I didnt see the point of saving for retirement, but in my 40's its become more appealing.  But, also have a chunk of liquid cash saved is good for security. And mid term savings is a good goal too. (And a paid of mortgage)

[tiqa]

Yeah, the tax breaks wouldn't apply for us. The interest rate might be a bit better. I guess I'd have to look into that. I'm just not sure it would really make sense right now. I'm not closed to it, I just have to do more research.

[ilovemygirl]

Originally Posted by tiqa 
But my question to you is, why *retirement* savings in particular?  It's not like we'll hit a magical age and "retire".  (Unless I went back to work at some point and then chose to retire, but that's different.)  I'm just not sure why that route is better than having long-term / short-term / emergency / discretionary / house repair / etc savings.

I think you are in an extremely unique situation. For most people, saving for retirement is essential because we are working now to prepare for a time when we won't be able to and/or would really like to not have to. It's to have security at a time when it will be hard to work extra or even at all to make up the difference for what we need to get by. You never know what will happen in twenty or thirty or forty years. Personally, I have very little faith that social security, medicaid, SSI and maybe even VA benefits will be available forever or even for much longer and saving for retirement takes away the uncertainty of that. It's kind of nerve racking to make plans based on things that may not be available when we need them. 

That said, if you feel saving for your retirement isn't a priority for your situation and you would rather have emergency funds and pay off your home, I don't see anything wrong with prioritizing those instead. We all need to do what we think is best. I could be wrong but isn't it in the Dave Ramsey plan to do those things first before saving for retirement anyway?

[crunchy_mommy]

Well you could always start off with an itsy-bitsy retirement account, and add more later when you have more leeway. If you are contributing 50% of your income to savings, why not divert just 1% of that into a retirement account to start? This would give you a bit of a cushion if the SS program tanks, or for some bizarre reason you become ineligible or something, or if your caretaker benefits end, and like a PP said, you could always will it to your children if you don't get to use it, or hey, even have that money to take a nice trip or splurge a little when you're old & gray and tired of counting every last penny.

I do think that from the sounds of it you are doing OK financially -- staying afloat -- but not really thriving, not quite yet. I think it's easy to consider retirement etc. when you are doing well financially, but if you are still struggling and scrimping it just seems crazy to save for the future when you really need that money in the present. I think if you can't afford to buy DH the elliptical he needs, I'd prioritize something like that over saving for retirement. You said you don't do cable, stick to a strict food budget, etc. Once you've paid off your debts, why not allow yourself just a tiny bit of breathing room? I just don't think that your savings system (saving only for emergencies & absolute essentials) really makes sense long-term, and I suspect that's why your DH is having a hard time with not being able to put things on the credit card. If you don't want to save for non-essentials, then maybe DH can get an "allowance" of money to save/spend the way he wants, or a pre-filled debit card with a small portion of the savings on it? (And I don't mean to imply that you are restricting his spending or that he can only spend what you choose to allot him!!) You can keep living with the bare minimum for a very long time, and some people are perfectly happy doing so, but others just need a bit more breathing room. DH & I have been living like that for years but we both would really appreciate just a tiny, tiny bit extra to be able to do small things like go out to eat once in a while or buy clothes that fit properly & don't have holes or get a laptop or take a small vacation. You need to budget for things like that, if not for your own happiness & peace of mind, at least for your DH's.

[tiqa]

Well, he has $200 a month to spend on whatever he likes - and he usually ends up spending about twice that due to his cigarette/coffee/video game vices. 

I also have $200 to spend but I actually usually buy stuff for the kids with it and/or put most of it aside.  I just don't buy a whole lot with it.  Maybe an ebook here and there, or something for the garden, or the house (like strawberry mugs, yay).  But mostly I end up covering for his overspending...

We both agreed to that part of the budget before we bought the house.  But he just doesn't have a concept of saving.  (Like say, I saved up parts of my free money to spend on Xmas presents.  We both agreed to this back in Feb., that holiday gifts would be saved for.)  When the holidays rolled around... yep, I ended up buying the gifts for the kids, and my mother, and HIS mother, and HIS brother... because he had spent all of his money.  If he wanted to save up for a computer, I would be more than willing to match him halfway from the household budget, but he blows it all.  And there's only so much leeway I can give him in the budget.  When he has something he needs, like new clothes, he typically gets them, even if he didn't set aside anything for it.  Hell, if he lost his gloves I'm not going to make him go out to shovel snow in zero degrees without a new pair, etc.  But it's just that.  When he spends over the cash envelope he gets, he feels fine whipping out the card and charging something at the end of the month.  (More like the 10th of the month, actually.)  We usually have that covered, but it still bugs me.  And now instead of having an incentive to stay debt-free, he thinks that we're doing so well that we might as well charge the new computer etc to the credit card instead of learning a little self-discipline and saving up for it.

Our savings are not so hardline that they're ONLY for emergencies, but really for taxes/insurance, then emergencies, then for regular maintenance stuff (like next week we need to have the air ducts sanitized due to allergies, and buy new air purifiers... that's going to be at least $500 and there's plenty for that in there without it hurting the cushion by much at all.)  We are going to get the elliptical with that money as well, but I wanted to add in another month or two of savings because tax time is coming up.

ETA: We also do have one vacation savings.  A yearly vacation is something that is important to me to do together as a family, despite/especially because of DH's disabilities.  And this year we're going to do a vow renewal wherever we end up going, because we couldn't afford a real wedding the first time around.  And the kids are going to a local camp this year too for a week, and they're totally excited.  And we got a normal sized Christmas tree this year instead of the tacky two foot tall pink one from Walmart we usually had. So... yeah, there are some "splurges" in there, for sure.  Not extravagent, but definitely enough to look forward to.  We can afford them because of the food budget/Netflix/thrift stores/one car/etc.  We couldn't afford them beforehand, when our budget was so much tighter, but our bills have basically stayed the same since those days (and who knows, one day we might have our money reduced again, but we want to have a few nice memories while we can).

[crunchy_mommy]

Wow OK that totally changes things. I can't even imagine having $200/month to freely spend, that's like half our grocery budget lol!! And he could easily save up for a new computer with that if he tried. It sounds like he just has no financial sense whatsoever. Honestly, I'd cut up the credit card, or take his name off it & lock your card up somewhere for true emergencies.

It also maybe seems like you are enabling him, allowing him to overspend/spend more than his $200. I would sit down & tell him you're not going to be able to do that, and also make clear to him what things his half of the money needs to cover. Or maybe you each get $100 instead and the extra $300 is for kid/household/gifts, so it's more clear to both of you what that money is intended for and you don't have to worry about using your share to cover communal expenses. But either way, when his money runs out, that has to be IT, you can't keep using your share to make up the difference, and he can't be charging it when he runs out either. Well, he CAN, but it sounds like it will just lead to resentment & frustration & ultimately, major financial issues.

[tiqa]

Ironically, that's half our grocery budget too!  Well, I raised it to $500 over $400 when the food prices went up and that now incorporates a lot of the snack type things I buy for DH since I'm pregnant and don't feel like cooking.  After I get back to cooking normally, I imagine it will be back down around $400.  That's why I get so stabby about it... But he goes through at least two cartons of cigarettes a month at $100 each - so that's his budget right there.  When he was trying to quit, I was fine with taking his patches out of the household budget because it was a health related expense, but when he started smoking again I told him I wasn't paying for it.  (He swears he'll quit again after the baby is born, which I believe, but I don't know how long it'll last.)  He was staying within the $200 budget before then - even if he blew all of it on video games and coffee... well, he actually didn't even do that.  He didn't spend all his cash.  But his spending has crept up little by little as we have paid off more debt and been more relaxed overall.

One of the issues wrapped up into the caregiving thing is exactly that I'm the one in charge of the finances because he couldn't manage on his own.  He has proven this during a time we were separated briefly - that's when he really crashed.  And money issues were one of the things that we separated because of.  We didn't realize quite HOW sick he was until that period.  Since then, he has reduced his spending by a LOT.  I would like him to cut down even more, and yes of course I worry about enabling him.  I talk about this with his doctors on a regular basis.  None of them have any real answers for me either.  It *is* a fine line between enabling someone and basically letting some things slide because of mental health issues... And it's also hard to draw the line between what he is capable of and just being lazy about, and what he's truly incapable of.  But based on what he was like when he was left to his own devices, he wasn't coping at all then either.  At least he's trying now. 

So yeah, I want to actively NOT enable him... But on the other hand, it's hard to navigate telling your own spouse what he can and cannot spend money on.  He doesn't "get" it completely.  There are some battles I pick but sometimes it's just not worth the argument, or me being put in the place of the nagging mother, etc.  Yes, I know it's unhealthy, but what's the alternative - neverending fights, his resentment that he can't spend "his" money the way he wants, etc.  Even back when we weren't even married - so, like 2006? I appealed to one of his therapists telling them he blew $12K in less than two months with nothing to show for it, and their attitude was to shrug and say that they're his benefits and he can do whatever he wants with them.  Technically we can afford his spending habits, and in his mind he doesn't get why he can't have the "toys" that other men buy (oh, you mean the men who have good paying jobs?) so he views it as he's already sacrificing a lot for us, and he does it for the most part cheerfully... but he really can't stick to the budget put in front of him, and that's hard.

I think it's a better policy overall to try to get him on board *willingly* (such as the original issue in the thread... what are tangible reasons I can convince him with) goes over much better than saying, "here, honey, hand over your credit card; you're totally cut off, and oh, sorry, I know it's *technically* your money, but you're out of luck."  I'd rather catch more flies with honey than vinegar, etc.  Turning it into a power struggle would only make him dig his heels in harder.  He already has a loss of a lot of self-esteem by not being able to provide for us traditionally, and he faces a lot of, well, humiliation that he can't have a real job.  Seeing the benefits as "his" money that he's giving to us helps him cope a little bit at least.  If I said, no, you're not allowed to make decisions about how it's spent anymore... or whatever... it wouldn't go over well.  He'd probably comply, but I don't want to approach it in that way.

(FWIW I do sit him down regularly, at least once a month, and talk to him about where we went over the budget, about why he can't do that, SHOW him where I have to make up for it, etc.  He always says that next month will be better, but then... next month will come and he'll have blown his money in the first week or two despite my reminding him that we're only on day 9 or whatever.  Since his memory isn't the greatest, I figured giving him the cash would be the most helpful, that way he can visually see how much he has... but it still doesn't click.  And sometimes he's disoriented as to the date so he'll think we're further along in the month than we are, etc.)

Edited by tiqa - 12/20/12 at 6:35pm

[crunchy_mommy]

I'm sorry that you're in such a bind, that sounds really tough. I was going to ask whether the money issues were somehow related to his illness/disability. That makes it doubly hard. And I know when my DH was laid off, even though he was receiving unemployment, he was incredibly depressed & ashamed of not being able to provide for us by working. So I get what you're saying & can see how my suggestions would be a blow to his self-esteem.

What if his cigarette money comes out of the family budget, and then he gets his $200 separate from that? (I had no idea cigarettes were that expensive!!) No sense in setting him up to fail. It sounds like that's why he's not able to stick to the budget & if he's not able to quit right now then it might at least cut down on the financial tensions in the meantime... And since he seems to struggle with a monthly budget, would it work better for him to have $50/week (or even $20 every 3 days) instead of $200/month? Then it might be easier for him to keep track of it.

Anyway, do you feel like you've gotten any good answers about being debt-free? Or do you think everything we've all mentioned will be kind of meaningless to him? I'm not sure what other answers to suggest. For me it's all about security & not owing anyone anything & not paying extra via interest. I don't know if there really are many other reasons. Most in the US do use credit cards/consumer loans/etc. & I guess it works out for them, so it's not that there's anything necessarily wrong with it, but I'd much rather spend $100 on something than the $200 it could cost with interest.

[erigeron]

Agreed with crunchymommy. It does sound to me too like he could use more wiggle room. Maybe he will be more amenable to letting you oversee the budget on the big things if he has a little more money to live as he pleases day to day. If his whole budget is taken up with cigarettes and nothing  bad happens when he overspends, then clearly something isn't working. 

I totaled up all our debt--over 400k--and showed the number to my husband and he just shrugged, and he said, further, that he thinks debt is just part of life. Gah. I mean, we had an approximate idea of how much the debt was so this wasn't a total shocker, but still. 

[mnnice]

Originally Posted by tiqa 

Yeah, the tax breaks wouldn't apply for us. The interest rate might be a bit better. I guess I'd have to look into that. I'm just not sure it would really make sense right now. I'm not closed to it, I just have to do more research.

I would think if you have little or no tax liability you could/should apply for the saver's credit.  This link described it pretty good 

http://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/What-Is-The-Savers-Credit-/INF15617.html

I totally get that homesteading takes time, emotional energy and money too.  I just spent $50 on the gizmo you need to keep your poultry waterer from freezing.  DH and I also really should buy a small tractor (a new one the size we need with a cab is $40K)