Damning Debt

"Affluenza" = a painful, contagious, socially transmitted condition of overload, debt, anxiety and waste resulting from the dogged pursuit of more

It makes me sad to think that I, too, now suffer from this epidemic, this dis-ease. I blame society, in part, but I mostly blame myself. Somewhere between buying the house, getting a grown-up job, and having a baby, my resolve to spend frugally evaporated into thin air. And since I've always been in charge of the Closeman finances, when I start turning a blind eye, there's no backup accountability for our bank accounts. The hubby isn't necessarily an over-spender, per se, but he's a blind spender, in that he doesn't pay much attention to either or income nor spending. He's used to me leading the way here. And I don't blame him (much), I definitely set a solid precedent, and he has not previously had reason to be concerned. Before we even started dating, back when we were just friends who worked together at the Sierra Sun newspaper, he mentioned to me in passing that he wanted to travel more. That week, bossy as can be, I set aside two brown paper lunch bags in an office drawer - one for each of us - and told him to put at least 20 bucks cash in every week (I started doing the same, in my own brown lunch sack). Initially, the savings was not for us to take a trip together, but in the meantime, we fell in love and made plans to galavant off to South America together to spend 6 months attempting to learn Spanish in Argentina and Chile. Needless to say, it became my job and only my job to manage the finances, and since I've recently fallen down on said job, we're both paying the price, so to speak.

As one of the simple living gurus herself, Wanda Urbanska, says, "The hardest part of getting out of debt is that you have to pay for yesterday, today, and save for tomorrow."

Which brings us to the big reveal of our current debt status (drumroll, please) ...

... as of this very moment, we have a grand total of $1410.33 in our Bank of America checking account, $300 in our shared savings account, and $300 in my personal savings account. My dad just wrote us a check for $885 for what he owed us from several months of international fees on our phone bill (I at least have that on a lot of my peers, my dad's on our bill, rather than us mooching off him, per usual). We currently owe Capital One $4,627.45 (our credit limit is $5,000). And we owe ourselves another $3,000. Which brings me to our OnPoint credit union bank account. 

Although my parents did indeed help pay significantly for both my undergrad and grad school experiences, they were not able to pay for a four-year private school, a one-year post-bacc, and two-year graduate program. I consolidated my school loans last year and now owe a grand total of about $78,000, making payments at a rate of about $500/month. Following my grandparents' deaths, I inherited some money that is helping to make those monthly payments, hence the separate OnPoint account. It's separate in part because it's not Alex's debt, in part because family money is helping to pay down on those loans, and in part because it's just a bit less confusing to me. We are lucky that Alex is debt-free, mostly related to the fact that he played soccer at the state school, and thus his parents had the money to help pay for his in-state 18-month graduate program.

And then there's the retirement accounts. I'm so ignorant about this level of finance that I don't even know what to say. I do know that I have a Roth IRA that my parents at one point contributed to annually, and now that I have a big-girl job I have some modest retirement contribution.

Oh yeah, we also have a savings account at OnPoint for Francie, which has a whopping $100.23. Lucky girl, that'll get her far.

So what's a girl to do about this debt? This is really the first time in my life that I've actually carried a legit consumer debt, one that hasn't been paid off with some sort of an anticipated windfall such as a tax return or a Christmas gift or following a month of extra work.

According to Ms. Urbanska, the path to simple financial living includes adopting the "frugality mentality." She goes on to make the following specific recommendations for improved fiscal health:

- Pay credit card in full every month; if debt, do cash only diet until debt paid off

- Pay bills as quickly as possible

- Avoid recurring charges

- Delay purchases

- Quash impulse buying

- Rule out recreational shopping

- Say no to kids and friends

- Celebrate small infusions of cash

We used to be the people who paid off our credit card bill in full every.single.month. As of this writing, we have never missed a payment, but of late we have been paying off only about a quarter of the amount due. We are now accruing monthly interest/finance charges, in the ballpark of $9-$15 each billing cycle. And I don't know how our credit has been impacted, if at all.

As for other debts, we have only my school loans and our mortgage. We don't have any other credit cards. Not even a Target card, if you can believe it. We have never financed any furniture, electronics, or even cars. Not to say we haven't been thinking about it lately. It seems like the best way to buy things that we can't afford up front. Like a VW Passat Wagon TDI. Or that luxurious Macy's couch. But, if you re-read that statement - "buy things we can't afford" - that's the telltale sign that we can't afford it. Alternatively, we could put aside the amount of money we could rationalize for a monthly payment, and instead save (what a novel concept), and then purchase the item.

We always pay our bills as quickly as possible. I rely heavily on automated bill pay, email reminders, and scheduled payments in my iPhone calendar to remind me of our regular financial obligations. We have yet to fall down on any of those important payments. And I hope/plan for that to never happen.

Recurring costs don't apply to us. Except the $7.99 we pay monthly for online Netflix streaming. 

Delay purchases? We've fallen down here. Quash impulse buying? And here. Rule out recreational shopping? Yet again. We don't have much issue saying "no" to others in terms of purchases, shared experiences, or loans, so that doesn't really apply. And we rarely get small infusions of cash that we haven't already spent in advance, so that, too, doesn't apply.

But we need to revisit those areas where major changes are most definitely necessary - delaying purchases (alongside saving), and eliminating both recreational shopping and impulse purchases. This deserves a post or a few all on its own.