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Incapacitation and Inevitable Incidents

December 27th, 2014 at 11:30 pm

This month has been a whirlwind of financial gains, learning, and reality checks all of which I am grateful for. I think I am almost done finalizing my 2015 goals thanks to the input on these boards and the books I have been reading. Surprisingly it has been reading Suze Orman’s book Women & Money that made me realize that preparing for the unavoidable is a huge part of financial planning when I guess it always seemed like something else to me. What I am not sure, but something else. I have always known it was important to designate beneficiaries for things, that I will care for my mom in her golden years, and I should ponder my own end of life care but since I am only in my 30s I have not really figured out all the details yet.

The book discusses the benefit of having a will, a revocable living trust with an incapacity clause, an executor for your estate, an advanced directive, and a durable power of attorney for health care. There are likely other options or documents not discussed, but just this much information was about all I could take in. Why this type of preparation is helpful makes sense especially since I have repeatedly seen the agony families go through without this type of planning. I realize I do not have to rush to do this stuff as my health is fine, I have practically no assets right now, and no one is currently dependent on my income. I do think it is good to have this topic floating around in my head though.

You know what is terrifying? The fact that when my situation changes and the need for these documents becomes more urgent I do not have anyone to handle any of these things if something did happen to me. When it comes to my mom I can count on her to want to do the right thing, but to be completely lost in all the documents, legalese, and grief that she will just fall apart and do nothing. Generally in times of crisis I handle everything and she is comfortable letting me make all the decisions and explaining options to her. There is no other me in our family. I have a sister, but I would not trust her with a rock let alone my estate, health, or finances. I have a large extended family, but we are not close-knit and instead just see each other a couple times a year. They are not really trustworthy anyway. I do not have any close friends that I could ask to handle these kinds of circumstances either.

What do single people do in these situations? Sure things could change in the future and I may get married, but what if I do not or I outlive my husband? It seems like regardless I am supposed to have this person who will handle my affairs and fight for my best interests and I have no idea where such a person is supposed to come from.

Planning and Preparing

December 1st, 2014 at 08:42 pm

I need order. When I was always broke it did not seem to matter that I sort of tracked expenses on random scraps of paper or haphazardly in my head. I already knew there was not going to be enough money so why bother getting more organized? I tried setting up a budget many times and always failed. I would get frustrated that every single penny had to go somewhere and never anywhere fun. Then I would get more frustrated by the never ending emergencies that threw the whole budget out of whack. It was suffocating and eventually I could not take it anymore and would ignore what my budget said and do whatever I wanted. This of course created bigger problems.

Suze Orman says budgets are like diets, which we all know are strict and not fun. Instead of budgeting she suggests just tracking your expenses because that will tell us if we are living within or above our means. Considering how frequently I use cash and either do not ask for or lose receipts this will not be easy, but I am determined to try. I have found a simple spreadsheet (courtesy of SquawkFox) that I was able to modify to my expenses and another for tracking debt repayments (courtesy of Vertex) via snowball, avalanche, snowflake, or a custom method. December will be kind of a practice run to not only get into the habit of using them, but also to make sure I modified them correctly for my needs.

So here is what else I have done to develop my financial plan:
-Pulled all 3 credit reports. Admittedly I only read one of them and then got tired, but I will get to the others.
-Got my credit score from VantageScore and laughed because in the last 4 years it has gone up 5 points.
-Signed up to have 9% of my income go into my retirement account at work (this is the minimum for the company match).
-Decided to use the avalanche method for debt repayment until my title loan is paid off, hopefully by the end of the year. A number of my debts are under 2k and no longer on monthly repayment schedules so it may make sense to continue avalanching, but just pay each one in full.
-Caught up on 2 household bills, with 3 still behind.
-Signed both of my student loans up for Income Based Repayment and they were approved for monthly payments of $0 (consolidating them would actually cost me money in the long run so I declined to do that). I have decided to not fixate on these for a few months while I focus my attention on the worse debts/household bills and an EF.
-Decided to start with the Dave Ramsey 1k EF because I might be able to swing that before the new year.

There are still a lot of things left to do, but I at least feel like I have started. I figure this month may be a little hectic as I adjust my goals, gain more information about my situation, and just keep learning.

The Indebted and the Irresponsible

November 30th, 2014 at 02:05 pm

It was around my 28th birthday when I woke up in the wee hours of the morning soaked in sweat. Absolutely nothing was going on, but I was filled with dread and it didn't take long to figure out why. My life was a complete and utter mess. Two years prior I'd been laid off from the first full time job I had that felt as if I was starting a career with advancement opportunities. I was able to afford a tiny apartment alone, making my debt payments with ease, had health insurance, and living comfortably within my means. I had made some financial mistakes with credit cards and a private loan (no not a student loan) during my college years, but was happily getting on track. In hindsight I should have started saving as well. Then came my pink slip, immediately followed by the Great Recession. *sigh*

The next two years became a whirlwind of job hunting, inconsistent temp work, crappy seasonal/part time jobs, food closets, utility shut offs, no car insurance, and unemployment checks. It wasn't long before I got behind on bills, missed debt payments, and it didn't seem to matter how frugal I tried to be there was never enough money. I tried to reason with the collectors, but they refused to work with me. I had proof that I was living below the poverty line and zero assets and they didn't care. The last debtor I called was my student loan and I was in tears expecting yet another refusal to help. The kind woman I spoke to helped me put my loan in forbearance and told me I should have called as soon as I got my pink slip because they would have helped me. Thankfully I was not in default and they hadn't reported the late payments to my credit reports. This may sound silly, but I was relieved to still have one account in good standing.

So there I was at 28 lying awake wondering what to do next. I had a degree and plenty of work experience, but jobs were scarce. I couldn't rely on my always strapped family and didn't qualify for most social services because I made too much money or didn't have kids. *sigh* At some point I think I just went into extreme survival mode and literally focused on what I absolutely had to. I stopped opening the mail, stopped answering the phone, stopped making debt payments, and began juggling bills. I turned to payday loans to help make ends meet, but if my temp assignment ended suddenly I couldn't repay on time and accrued penalty fees plus the nsf fees at my bank. Eventually the bank closed my checking account and I couldn't blame them. This then meant paying check cashing and money order fees which ate into my already too low income.

I continued to barely keep my head above water until I realized I just couldn't keep doing it. The economy hadn't improved much for the type of work I'd always done and I hated it anyway. I was sick of not having health benefits, sick of the collectors, and just flat out sick of being broke. I had to figure out what I really wanted to do and make it work. During my figure it out phase I opened another checking account and got in the payday loan trap again (I'd discovered online ones by this point). Then I opened a couple of credit cards thinking I understood how they worked (I didn't) and would be able to use those instead of payday loans. Temp work had gotten steadier, I hadn't used payday loans in months, and I finally felt like things were looking up. I organized my debts in age order and tackled them one at a time, newest first. In hindsight I realize that was not the best system, but at the time I felt great about doing something.

Fast forward to age 30 and my car (yes one of the debtors that wouldn't work with me previously and I still hadn't dealt with yet) took a crap and my apartment became a health hazard so I had to move suddenly. Around this time I also stumbled upon my dream career, which would mean returning to school. I managed to weather the bumps and temp work remained steady so I decided to begin putting my return to school plan into action.

Yes I know some of you are thinking I had no business going back to school when I had debts to deal with and yes I had that same thought many times. The thing is I wasn't going to get more financially stable with the path I was on and a permanent full time job hadn't come since my lay off a few years before. The job prospects were better in the career I wanted to change into, it was a 2 year program, and I'd be a million times happier. Yes I'd have to take out more student loans, but I'd be able to work full time throughout. There was also this strong sense (I couldn't explain it, I just knew) that this was the right move to make. So I took the risk and went back to school.

I loved being in school and couldn't wait to graduate and land a new job. I opted to only borrow federal loans (just like I did the one year in undergrad I borrowed) and only the amount needed to cover tuition and fees. Everything else I financed through my hodgepodge of temping, unemployment, and seasonal/part time gigs. Family surprised me by stepping up and helping with groceries, gas money, and even a gently used car.

Then things took a turn yet again when my temp assignment ended suddenly and my unemployment claim was "pending" longer than normal with no acceptable explanation. A payday loan wasn't going to work so I went for a title loan on the car I was just given. Yes yes I know. That was stupid and I shouldn't have done it, but at the time it was the best of a handful of horrible options. I went on to max out my credit cards and had yet another checking account closed due to nsf funds. I also got tax forms regarding my other car being charged off. So yeah things were pretty bad.

It would be a few months before unemployment paid me and I landed a new temp job. I was back in extreme survival mode and focusing on finishing school, repaying my title loan, and covering basic necessities but there wasn't enough money. I went on like this for a year before I felt I couldn't keep up anymore. The thought of dropping out of school and not making it into my new career was heartbreaking, but I was drowning and flat out exhausted.

It was 2013, about two weeks before Christmas, and yet another temp job ended suddenly. I was prepared to admit defeat when something amazing happened. I got a job! A permanent full time job with free medical! And it was in my new career that I was going to school for! The pay wasn't great, but I was so grateful to get off the temp wheel and do something I enjoyed that I figured I could use it as a stepping stone. I started in January and they accommodated my school schedule too.

2014 turned out to be the year the tides changed for me in so many ways. I started to get caught up on bills, decided to educate myself about finances, and took a second job. I opened a new checking account and this time didn't even order checks to keep me from turning to payday loans. What a relief to stop paying check cashing fees, although I still paid money order fees. I was just doing things one step at a time and reminding myself that things were going to get better when I was done with school.

Once I finished school (woohoo!) I did the one thing I wish someone had told me to do in undergrad.... research salaries so you know if you're being underpaid. Once I learned what an appropriate salary range was for my education and experience I tailored my job search and refused to settle. I was already in a low paying job and had spent the decade before in them. I had earned and deserved better.

That determination paid off because I landed a permanent full time job in my field that pays well above the expected salary range. On top of that I still have my second job, which means I am in a great position not just to get caught up but ahead. Even though the year is ending I feel this is the perfect time for me to lay the groundwork for an amazing 2015. I'll only be 33 next year so all is definitely not lost. I've got a few things in the works, am doing lots of research, and getting organized so I'll share more about that in future entries.