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Help me make the right choice...

post #1 of 20
Thread Starter 
We just did our taxes and we are getting a big return. We have over $10,000 in debt. I want to put most all of it towards our debt. We both need new glasses and the van needs some new belts, but other than that, I want to pay down the debt. I know for a fact that I can get everything paid off by October if we are tight for the next 9 months (it seems like a long time, but I know if we do this, it will free up so much money for other things).
Anyway, I just need to stay strong. It is so hard when things are tight for so long and then this huge chunk of change falls in your lap, you just wanna have fun. The problem is we do that ll the time. We have had chance after chance to handle our money better. If we can just keep on track for a little bit longer we can be free of this debt.
Anyway, I am looking for words of incourgement! Help me do the right thing!

post #2 of 20
sounds like you already know waht to do
post #3 of 20
You're thinking the right way ~ get out of debt. It is a sink hole you need to get out of. And for added incentive: in 2006 you can increase your deductions and raise your take-home pay. If you live as if you were still on your current take-home income, and put the rest into savings, you'll have a bigger chunk of change at the end of the year than if you'd gotten a tax refund.

Here's to you!
post #4 of 20
Thread Starter 
True. Our goal is by 2007 to be putting at least 10% of dh's pay into his 401K (his work also contributes.) We can't do that now with all this darn debt.
I know I have a plan... I just need to follow thru, which is the hard part.

post #5 of 20
You are in the same situation as us. I've already adjusted our withholdings so that we get more back this year but I still need to be strong when the IRS direct deposit comes. We got one last year too and we just blew through it and I don't want to do that this year. I can have all our consumer debt wiped out by November which will feel good and I try to remind myself that it will feel better than blowing the $$ right now.

post #6 of 20
Thread Starter 
I read somewhere to actually adjust your withholding so that you get very little back as a tax return, so you have more to live off of during the year, considering the governement doesn't pay interest on what you put in. Then you take that extra (whatever it is) that you are getting and put it into a savings account. (As in what "extra" you are getting thru out the year, not your return. ) Does that make since?

post #7 of 20
Pretend like that money never existed. The first thing you should do is pay down your debt, how ever much you have set aside for that. You are saving money if you pay of debt because you won't be paying that interest for as long. Of course get your necessities like fixing the van. I know it is so easy to want to spend that money when you struggle every month, but you will really benefit from not having that debt. Be strong Mama!!
post #8 of 20
I agree with the pp's ... you already know what to do & I think you're right on track.

Just wanted to also suggest a book...Your Money or Your Life, the author is Dominguez I think. Anyhoo, it gives a great perspective on the role money plays in your life & the choices that money (or the lack thereof) has you make. I'm sure your library has copy ( so you don't have to buy one!)
post #9 of 20
Wanted to add a website for your money or your life...
post #10 of 20
I have a different approach. If having that money "burning a hole in your pocket" is just too tempting and too hard to control, then maybe put ALL of it towards debt and then use credit cards to pay for the necessities (this plan only works if it's credit card debt you need to pay off.) Essentially, you're buying what you need right now and putting the rest towards debt, but it might "feel" different this way.

Of course, this could backfire if "using the credit card at all makes it feel OK to use the credit card again" and it won't be helpful debt-wise if you have other debts that are lower in interest than the credit card you'd be using (you want to pay off the highest interest rate debts first.) I'm just throwing this idea out to get some ideas flowing- sometimes just looking at the money in a different way can help you feel better about not spending it.
post #11 of 20
Thread Starter 
The debt is credit card. I am so embarrassed about it.
Anyway, I am feeling very strong about this, this time. I am paying off the debt (OR at least paying some of it off).
Also Your Money or Your Life... some friends and I read their book and did their work book for awhile, it was helpful, but I have a problem with being told how to deal with my money from people who never had kids (Or didn't deal with their money thing till after they had kids... It is just me not a judgement. I have a friend how swears by the book.) I like the "Tightwad" lady because she has a family. It just feels better to me to have someone on my page and know how it is with kids.
I did get Frugal Living for Dummies at the library. It has some great ideas, and I can read it sort of stop and go with the kids all around.
Anyway, thanks for the support, now I just need to talk to DH and get him on my page too.

post #12 of 20
I agree with what you said about the YMOYL people not having kids, but I found it very helpful in terms of making better decisions about money, attaching a dollar value to your time & offering a different perspective to consumerism.

I think one way to help get your husband on the same page is to sit down & determine what your goals are as a family, and how the debt is preventing you from achieving that. There was a great commercial a few years ago...a couple gets a new credit card in the mail & the man starts listing all the things they should get. He asks the wife what she wants & she says something like 'a house' & they throw/put the card away.

Good luck!
post #13 of 20
I just got some new glasses at costco, and they were a great deal (I didn't have any other helpful tips ) If you have one anywhere near you, after the cost of membership you might still save if you both need them!

It was going to be $250 plus at pearle vision (I even had a coupon for $100 OFF!) And I spent $159 at Costco. I needed high-index lenses, and I splurged and got the no glare coating for $29. So shop around, I was amazed at the cost difference. (that didn't include an eye exam, my health ins paid for that through an opthalmologist)
post #14 of 20
Thread Starter 
Man that seesm like alot. I have been thinking about going back to contact lens. I miss seeing my face. LOL

My dh and I read alot of Buddhism a few years ago, and that helped alot my my money/stuff cravings.

post #15 of 20
I think you have to do the van belts first. If they quit on you while you are driving, you are going to be paying a lot more later.

Then get your glasses if you really are in need. If you can't see well, you should not be driving - an accident will not help that debt.

The rest can go towards debt or towards getting yourself an emergency cushion. It really depends on your financial and emotional situation.

Then adjust your withholdings and use the ENTIRE amount every paycheck to pay down debt (exception being any % of your income that you give to charity). You cannot afford to put it in savings right now. What is the credit card interest you are paying? In savings you are going to earn 0.25-0.5%, which is nothing.

When you are done paying off that debt, take that same "withholdings adjustment" and put the entire amount into 401K or emergency cushion funds. Several years ago I had 3 immediate and critical financial goals: get the 401K's going at the maximum withholdings allowed, get our charitable giving up to a certain percent, and get our emergency funds to a certain amount. Until those three things were realized, we would live on the same amount every month and every pay raise would go entirely to those financial goals. We carry no debt except our house, or that would have been the first thing I would have taken care of. We are nearing completion of those goals and I am now setting up our next financial goals which include getting our Roth accounts completely funded each year, building vacation funds (we have taken only one vacation that cost us more than $250 in the last 10 years), getting a house maintenance fund built up, and starting to remodel. This goal set will take us many years, but the key is to set the goals and start on them. The time will pass no matter what.
post #16 of 20
Thread Starter 
Those are great ideas. Thank you.

post #17 of 20
I agree with everything everyone has said except for two things.

I really want to honor your feeling about wanting to have some fun with the big chunk coming in. I think you can do alot to balance all the needs, glasses, seat belts, and then, of course, the bulk going to eliminate the pressure of that debt.

But I don't see any reason why you shouldn't celebrate the way you are taking care of your finances by taking a tiny bit of the chunk and going out for a family dinner or something.

I would also recommend that you give part of it to someone less fortunate than yourselves. When we're so pressured by these difficult financial situations, it's hard to think about other people who have it even harder. A small donation - even $25 - helps ease up the feeling that things are so tight for us, we can't help others. But we can really and it plants a fantastic seed in our hearts to believe that we can get out of debt AND be in a position to take care of our less fortunate community members. I think it's very empowering to look money in the face like that and not let it steal our power of humanity.

I spent 10 years as single mom struggling after every penny and I really made my kids feel bad (I wasn't trying to but they could see my struggles)when they needed clothes or school funds because I let money rule my mind. Now I let feeling happy rule my mind and even though we don't make a dime more than we did then, we seem to be able to pay all our bills, give to others, and stay out of debt. In my "old age" I hate to see younger folks struggling with money. Keep some balance, take a deep breath, and buy what you need, pay off some debt, celebrate your commitment to being debt free, and feel the ease of mind to be able to halp someone less fortunate than yourself.

I congratulate your commitment. I'm really happy that you'll be getting closer to your goals!
post #18 of 20

you can also join Reds thread

for support

post #19 of 20
Please consider reading "how to get what you want in life with the money you already have". She recommends getting the savings going while making minimum payments of debt. Before any one blasts this idea please consider that most of us have credit card debt because we didn't have savings to cover the new tires, new glasses, braces down payment OR we were too impatient to wait 3 weeks to save the money to buy the new bed or new table. When we have money in savings, maybe in an account that isn't "too" convenient, we tend see more options/choices.

With my tax return SOME will go to cc debt, some will go to needs put off and MOST will go in savings so next Christmas I won't have to charge it. I'm paying minimum plus $10 on the credit card - mostly to remind myself that it's all too easy to use and it's a PITA to pay every month. The balance will go down (slowly), I'll be building my savings - increasing my options, and I'll be less likely to continue to use the cc since I'll have money for emergencies.

Also as a pp said, look at your withholding and increase the number so more of your pay is available to you each month.

post #20 of 20

this doesn't have to be true

"n savings you are going to earn 0.25-0.5%" in a brick mortar bank yes

but with ING or emigrant direct you get a much better rate.
Right now ING is doing 4.75% on deposits from Jan 15-April 15. It will then go down to its original 3.80%
And its not easier to make a withdrawal like a brick and mortar bank so you can do the eastern thing of think about it three days...
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