But I'm sure I'll have lots to report about my spending after
Happy Thanksgiving everyone!
I have three questions that I thought you would be the best one to ask. Forgive me if any of them are dumb!
1) Does it not seem that it should be made legal (if it isn't), to roll one's 401k money over into student loans?
2) Is 100k the "usual" amount for an education these days? I realize that is a very broad question but it just seems that unless you're talking PHD, to end up with that much in student loans must mean living pretty high on the hog in the process. (!)
What say you oh money guru?!
P.S. I enjoy your articles immensely!
Since I live in a 1 BR, I've kept my coverage limits minimal:
Personal Property: $27,000,
Additional Living Expenses: The least of the following:
Rather, I'm writing because a recent discussion with my ex hit a raw nerve. It seems that after all these years, I’m still dishonest about my dirty
little huge credit card debt.
As you may know, some banks have proposed forgiving up to 40% of credit card debts owed by risky borrowers. As this LA Times article points out, the banks haven't suddenly turned altruistic on us. (Oh heavens no. Otherwise it would mean that the End of Days is near and I would have to repent for my sins.)
Rather, the banks are taking this action because they see the risky borrower as a serious bankruptcy risk where they could potentially recover nothing. The banks would rather get something rather than nothing, so this probably makes some business sense for them.
[Breaking News: The bank regulators have rejected this proposal.]
Anyhow, my ex-boyfriend and I debated whether the proposal was "right". I argued that this promoted a moral hazard, or more accurately, that it rewarded risky borrowing habits. Where's the incentive to do the right thing?
My ex countered that it's still good to be financially responsible, regardless of the handouts going to people with high credit card balances. And of course, being the left-brained, logical, smartypants that he is (no, I wasn’t dating Mr. Spock), his arguments were unassailable.
What got to me, though, was his following statement:
It's reasonable to assume that even the reduced debt level is much higher than what would be considered normal or prudent in a financial-planning sense. For example, you and I would never find ourselves with such debt levels of toxic debt. So, in a sense the person receiving the handout is getting free money, but they had to go into tons of debt to get that.
Now, if they bought something with the [debt] which retained its value or appreciated (which of course they did not haha) then it's conceivable that they will have beaten the system. But as I mentioned, of course they did not.
So I don't think that I personally have an issue with them being helped. The situation they are in, and the lifestyle choices they have made make their future financial outlook much worse than mine, regardless of the amount or frequency of handouts that they get.
I debated whether I should ‘fess up about my existing credit card debt. I was in deep credit card debt when I dated him (approximately 7 years ago) and I still am. It certainly would have given me street cred to tell him, “I’m $12,000 in credit card debt but I intend to pay every stinking cent even if they offered to write off a portion!”
But I just couldn’t. It’s not like I need to impress him now, but the words just couldn't come out.
What’s odd, though, is that I’m not ashamed to tell my friends and family, including my ex, that I’m $123,000 in debt (which is true). But I also let them assume that it’s mostly my student loan and some car loan. (For some unknown reason, I’m not ashamed about my car loan even though it’s technically a “bad loan”.)
I wonder if this dishonesty a form of denial? I'm honest with myself and that's what counts, right? Afterall, it's my own demon I have to vanquish. Is there any reason to telling my friends and family about my credit card debts?
I have alot in common with her, and know how she feels. I too was a loan processor for more than 5 years, when I was laid off last year. I went from making 50k a year to making barely 27k a year. I was forced to enter a new career because there were just no processing jobs. ...These are scary times. But strangely enough, donating this money gave me some emotional peace since it dawned on me that donating to charity is one way to stimulate the economy. After all, a non-profit organization is not likely to hoarde donations to improve its balance sheet. Rather, the charitable organization will likely spend the donation in furtherance of its cause. It's a win-win situation. I'm glad I made this resolution.
1. I sleep with a blankie. Yes, I know – I’m a grown woman but lemme explain. I’m not what you call an “elegant sleeper,” since I usually sleep with my mouth wide open. My blankie is economical since it prevents unnecessary drool staining on my pillow case and pillow. And have you recently priced out pillows? Good Lord. You’d think they’re made out of spun gold or something!
2. I try to avoid as much aluminum products as possible, including aluminum foil and canned drinks. I don’t know if this is true, but there appears to be anecdotal evidence linking aluminum exposure with Alzheimer’s. My dad suffers from dementia (possibly as a pre-cursor to Alzheimer’s), so I am very sensitive to this issue. I now cook with reusable stainless steel pans and I drink very little soda, which is economical, healthy and environmentally conscientious. The worst part of avoiding aluminum, though, is that I now have to endure sweaty armpits since all antiperspirants contain aluminum. :-(
3. I grow my hair out every couple of years and then donate it to Locks of Love. I usually wait until my hair grows past my breasts, which means the length of the hair that I donate gets longer and longer every time. Heh heh. By growing my hair out for this purpose, I’ve saved on reduced number of salon visits.
4. Although I’ve lived in the U.S. since I was 3 months old, I didn’t get my U.S. citizenship until 2001. (Not sure why it took me that long.) Now that I’m a citizen, I can vote on issues that affect my personal finance as well as the economy. And, yes, I voted this year! (My favorite phrase: “I’m an AmeriCAN, not an AmeriCAN’T.”)
5. I love being single. I have no desire to marry or to have children. I think this stems from the trauma of watching “Mommie Dearest” at a tender, impressionable age. (A little bit of useless, unconfirmed trivia: Christina Crawford allegedly attended my high school.) Ummm… I think the link between saving money and being childless is pretty clear.
6. I don’t own an iPod or a digital camera (except for the cr&ppy one on my cell phone). Why, oh why, didn’t I commit to frugality until AFTER I bought these with my credit card??
7. I self groom. Sorry for the TMI.
I don’t think I’m going to tag anyone. But if anyone wants to be tagged, let me know. :-D
|Starting Debt||Last Month||This Month||Difference|
|LAST MONTH||THIS MONTH||DIFFERENCE|
|LAST MONTH||THIS MONTH||DIFFERENCE|
As indicated in my prior posts, I:
I'm not expecting to, nor will I, get rich from these efforts. But they're all small baby steps in my long-term retirement planning and net worth building.
The breakdown of my net worth can be seen here.
(See my prior posts re: my FICO score)CreditKarma (As of 9/3/2011): 804
Private Student Loans
Starting Amount: $49,528.99
% Completed: 100%
Federal Student Loans
Starting Amount: $55,852.68
% Completed: 12.8%
Car Loan - PAID OFF!
Starting Amount: $9,779.33
% Completed: 100%
Starting Amount: $13,610.75
% Completed: 100%
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