Author Archive for BigSpender
Debt After Divorce
As I’ve mentioned previously, I listen to the Dave Ramsey Show podcasts on a regular basis. Although I don’t always agree with what Dave says, I do feel motivated by listening so continue. Several times a week, he will get a call from a person who is either divorced, or going through a divorce, and is looking for financial advice. He is always spot on with that advice, the creditors don’t care what the divorce decree says and that financial agreement between you and the creditor supersedes the divorce decree.
I know I’ve mentioned this before, but back in the 1990s I was a collection representative for Discover Card. I started out working accounts that were 30 days late and ended up working charge-off accounts and doing pre-legal screening on the high-number accounts for possible litigation. As part of our training, we were responsible to keep up to date on the federal regulations as well as what information was in the card member agreements. The divorce topic came up often and sure enough, when you signed up for a Discover Card you stated that you were responsible for the debt in the case of a divorce, regardless of what a judge said.
Today in my Google Alerts I received a link to an article from Kiplinger.com entitled “Handling Debt After a Divorce” in the “Ask Kim” section. Author Kimberly Lankford offers some great advice, here is an excerpt:
Unfortunately, there’s nothing you can do about the harm that was already done to your credit report. A divorce decree is an agreement between the divorcing couple, but “it does nothing to separate their assets, accounts or financial obligations,” says Maxine Sweet, vice-president of consumer education for Experian.
Despite the decree, your name is still on the loan, so you’re liable for all the payments, and the mortgage company is unlikely to remove the delinquency from your report.
Read the entire story here: Handling Debt After a Divorce.
2008 Economic Stimulus Payment Information
The time is quickly approaching for the 2008 Economic Stimulus Payments to be processed. Tomorrow is tax day and the deadline to file your 2007 Income Tax. Even those individuals who wouldn’t usually file a tax return (some disabled individuals, veterans, etc) need to be sure to file for 2007 as the 2008 Economic Stimulus Payments will only be sent to individuals who filed a 2007 Income Tax return.
Site Redesign
Six Figures and Broke has been redesigned to provide information in a more clear and concise manner. Look for up-to-date information on the topics of consumer debt and personal finance plus continue to follow me in my journey to get, and stay out, of debt!
Housing Market Woes
I live in one of the areas of the country that have been hardest hit by the “housing crisis.” We don’t have a sub-prime or an adjustable-rate mortgage and despite having a fixed-rate home equity loan, we still have about $20,000 equity in our house. A year ago we had about $50,000 in equity. We were originally planning to move to a different suburb in 2009 but now I’m not so sure it is going to happen. First, I don’t know that our area has seen rock bottom as far as prices go. We don’t *have* to move and while it is a great time to buy it is an absolutely horrible time to sell.
So we’re debating whether to put the house on the market in January of 2009 and hope it sells before school starts in Fall 2009. It may, it may not. The other option is to stay in the house until 2011. In that time hopefully things will recover a bit, we’ll likely have paid off all of our credit card debt and our car’s payoff is in May of 2011 (if we keep it and don’t pay it off earlier).
The other wrench that his been thrown into the plans is that some mortgage lenders have actually blacklisted our area! In other words, fewer loans are being made for houses in our area and those that are being made need quite a bit more of a down payment. With only $20k in equity there is no way we’ll be able to pay our closing costs and have even a 10% down payment. Our ideal house, one that fits our wants and in the school boundaries that we want, runs about $350k in this market (our current house is worth about $275k so not a huge difference). There is no way we can squeeze out a $35k down payment in the next 18 months unless my freelance writing career really takes off hehe.
If we wait until 2011 it is likely that our $350k house will be $500k. House prices were we live definitely aren’t cheap! However in those three years, if things start to look up, we’ll have a better chance of clearing $50k on the sale of our house for a 10% down payment. That still leaves us with another 10% to deal with in order to skip the PMI. I tell you, paying a mortgage without PMI is nice!
Decisions, decisions. I figure we’ll go ahead and plan on putting the house on the market in January and make the necessary repairs/upgrades over the next 10 months. Then we’ll let the market conditions guide our decision.
Whew!
Georgia High Schools Add More Personal Finance Lessons
Personal finance lessons…high school. Wow, you don’t often see those two phrases together in the same sentence. Times are certainly changing; in a recent article published WSB-TV Atlanta website, Georgia’s high school economics instruction has been rewritten to include personal finance lessons. From the Action News 2 article:
“As a society, we need to do everything we can to increase financial literacy. The need to understand the range of products, mortgage and credit cards is so pressing.”
Kudos to the superintendent of schools in Georgia, Kathy Cox, for making this important change to the high school curriculum. When students go to college they are often bombarded with credit card offers. From banks next door to dormitories to credit card company tables on campus, credit card offers are abundant. I remember my first credit card, a Bank One Visa student card with a limit of $500 of which I promptly took out a $400 cash advance so three of my friends and myself could fly to California for a football game. Due to extenuating circumstances I didn’t get to go on the trip and amazingly none of my friends paid me back.
I wasn’t a stupid person. I was 18 and attending college on a full-ride academic scholarship. What I didn’t have was street-smarts, those came later and after many, many mistakes. I think that offering personal finance lessons in high school, combined with parental instruction, will set these students up for a more successful life. Now I don’t think credit cards are the devil, I think they have a purpose and must be used wisely. However, very few 18 year-olds are prepared for the cause and effect that credit cards come with.
$340.50 Middle of the Month Payment
My husband’s company usually gives a hefty annual bonus to employees (several thousand dollars); 2007 wasn’t the best year for the company so we weren’t expecting a bonus. Well the company felt bad so we ended up with a small bonus - $340.50 after tax. Not one to look a gift horse in the mouth we were thankful. The money hit the checking account today and I just got done paying $340.50 on my Venetian Card. I tell ya, it feels good to know that I’m really making a positive change in our lives.
Dave Ramsey comments about people changing the family tree from the roots on up. That is what I’m doing. Well my sister isn’t a spendy gal, she’s actually a tightwad. Looks like I got all the spending genes in our family hehe.
NCN Blog’s Festival of Frugality
When you have a spare minute, take the time to read one of the articles posted today on the No Credit Need Blog’s Festival of Frugality. I’ve been reading the NCN Blog for a few months and always find very useful information posted. I think the reason I like it so much is that the owner of the site is a *real* person who has walked the get out of debt journey with his own two feet. He’s a dad (and sounds like a great dad based on the NCN Podcasts I’ve listened to), a hard worker, a down-to-earth kinda guy. Yes I’ve made all of these assumptions based on a blog and a podcast. Even if I’m wrong (as a woman, I reserve the right to be wrong from time-to-time) he still helps motivate me and that is important.
Okay back to the main topic - the Festival of Frugality. Take a few minutes of spare time and read an article, next time you have a few spare minutes read another one. These are fantastic posts made by REAL people like you and me. I’m not done reading all of them yet but so far a few of them have stood out - here are my favorites:
Saving Strategy: Eat Before You Go Out - This sounds like a good idea, why haven’t I thought of it? hehe I know when I have a day of errands planned, especially if I have two children in tow, it is easy to just stop off for a ‘bite to eat.’ Eating at home, before the errands, is not only going to save money but I’ll have less cranky kids - hungry kids are not conducive to productive errand-running. Thanks for the great tip from the Million Dollar Journey blog.
10 Common Expenses To Avoid If You Want To Really Save Money posted over at Money Blue Book has some great and easy to implement ideas to help cut excessive spending. I’ve taken notes!
We’ve had some good news in the Six Figures and Broke house, hubby had his annual review and is getting about a 5% raise. The company he works for absorbed the increased health care costs for 2008 so we didn’t see an increase in insurance on our part. So yay, a 5% raise - more money for our debt snowball.
Tax Refund Deposited and Most Used to Pay Down Debt
We are using the “debt snowball” method of attacking our debt. Some financial gurus suggest paying the highest interest rate debt first (Suze Orman) as it saves you money in the long run. Others suggest paying your smallest bill first as it will motivate you to keep “gazelle intense” as you pay it off (Dave Ramsey). We’re kind of doing a bit of both. All or our little payments are going on to the highest interest rate card (a whopping 7.99%); so if I sell some books on half.com, once the money is deposited into my account I log on to the website and make a payment in the exact amount. With our “lump sum” type payments we’re paying off smaller cards.
photo credit: danesparza
We received our tax refunds this past week, a total of almost $7,000 between state and federal. Obviously our withholding was wacky so I’ve adjusted it accordingly. We took $5100 and paid off one card completely, woohooo. In the past we’d have spent all of the money on something completely frivolous. This year we’re only taking part of it for frivolousness. :) The other $1900 or so is set aside for a three night trip to Vegas.
My husband has three nights comp’d at the Wynn Las Vegas so we’ve scheduled my parents and sister to watch the kiddos and we’re going out of town for tons ‘o fun. Of course those that are following Ramsey’s plan would scoff at such silliness but I heard Ramsey on the radio the other day say that if the money for the vacation wasn’t an exorbitant amount when compared to annual income it is OK to put the snowball on hold if the vacation is paid for in cash. I believe the caller was wanting to celebrate a 10 year wedding anniversary; well hubby and I have been together for ten years now (married for 7.5) so yes, we’re going to Vegas to celebrate our own 10 year anniversary of sorts.
photo credit: Zesmerelda
I have a pie chart up over at NCN Network showing the progress on our debt. This isn’t *all* of our debt - I didn’t include our car nor my student loans. Two years ago we purchased a “luxury sports coupe” - love that car, I call it my mini-van. I can’t bring myself to put it up for sale although the $800/month it would free up would certainly make paying down the debt go much more quickly. Perhaps I’ll have a change of heart in the coming months, we’re still new to this change of lifestyle.
Getting Out of Debt
Welcome to 6FiguresNBroke.com - that stands for “six figures and broke.” I am a stay-at-home-mom to two young children and my husband is an engineer-type who earns a six figure income, annually. We have mountains of debt and have vowed to make a lifestyle change - stop spending and start getting serious about paying down this debt. Thankfully we are not in dire straits. We have a fixed-rate home mortgage with a great interest rate, a fantastic interest rate on our car loan and credit cards, and both have good credit scores. However, we have realized that we need to stop the financial bleeding and start getting serious about getting out of debt. Once we’re out of debt then it will be even easier to plan for the future.