This post contains a referral link which, if you use it, gives me a boost at no cost to yourself anonymously!
I'm not new to this living frugally stuff. I remember being just out of college and wondering what the heck I was going to do if I couldn't find a job to pay the student loans. I remember wondering what I was going to do if I couldn't pay the car payment to get me to the job that would enable me to pay the student loans.
I also remember the several years post-college divorce that devastated my finances and left me not even wanting to work in order to pay said car and school bills.
Who said personal finance, or divorce, was easy? Someone did, somewhere, I'm SURE. They can shut up.
I just had a meeting with a financial "consultant" today - Not to be confused with a financial advisor - BTW. You have to have a LOT more money in your retirement account to merit one of those ($250K+, I'm told). I very calmly told her that we would likely not see that kind of money out of me because I'd started so late in the retirement account business. She seemed to take this very personally, like a challenge to make that account PAY till it got to Financial Advisor level. "Rock on, you bad bitch!", I wanted to yell.
For anyone post-divorce, I've been around long enough to see it over and over and (ugh) over again. There is a definite trajectory toward recovery. I swear, there is! You might be in the messiest divorce, but there is hope. This doesn't last forever. I'm not just speaking from personal experience. I'm an observer. I truly try to learn by watching others and, unfortunately, I've had the opportunity to watch too many friends and loved ones' lives implode around their ears to ignore the tidal wave.
Seven years. From the signing of the official papers to when you start to begin to notice feeling like yourself again, emotionally, physically, financially... Seven years. You might be more aware of it than others and feel better sooner, or maybe later on you'll (in hindsight) notice that things were actually getting better for you around that time. I'm not trying to be a soothsayer, or make any promises. It's just an anecdotal observation based on my experiences with myself and those around me. Maybe you can corroborate? I hope not. But for those of you in the thick of it, hopefully knowing that the misery will end will give you hope.
On to the financial recovery bit. I know I'll probably take some flak for this, but I can't recommend Dave Ramsey enough for getting out of that beginning debt. It's a baby step program he pedals, and yes, it more than likely will make the more savvy finance folks turn up their noses, but his program really helped me when I had nowhere to turn. Here is how I did it:
I had a credit card (yes, luckily only one), plus my school debt, plus my car, plus food, housing, electricity and internet (yes, an essential, even way the heck back then in year 20-blankety-blank). I knew the credit card was the highest interest I was paying at 29.9% (YIKES) and my credit was shot to hell. I was making the minimum payment because I was jobless at the time and had only savings. My car payment was way more than I was comfortable with and I _briefly_ considered selling it for something cheaper (NOT - it was a nearly new Toyota!).
Step one: I got a job. It was not glamorous. It paid the bills. It was not what I wanted to do with my life. It did not pay a lot. It paid SOMEthing. I was depressed. It sucked. I hated it. I did it ANYWAY!
Step two: I felt better when my first paycheck came in.
Step three: I spent NOTHING. Did not pay any bills (crazy? Yes.) Things went sideways for a bit. Okay, I bought Ramen. A girl has to eat. Except the car, I paid the car to stay out of repo. And it was only a few weeks, not months! You still need to pay rent!
Step three: I spent nothing for several paychecks (weekly). Just let them pile up. That number felt great. Like really great. I felt better.
Step four: I started going for walks and started thinking about my finances. I came up with a plan and hit the interwebs.
Step five: Found Dave Ramsey's "Snowball" method.
Step six: Started paying off that credit card in "huge" chunks (seemed huge, not so much looking back).
Step seven: It took forever, but I managed to pay it off after a bunch of months of more than the minimum. I was used to paying the (important!) same amount out of my paycheck to the credit card company, so I started paying myself into a savings account till the end of the billing cycle for my car. I then started paying more than the minimum on my car. Thankfully, those weeks of paying nothing had not put me behind in car payments. The key was, everything I had spent on the credit card, I spent on the car. I was ahead on the car payments.
Step eight: For the college bill because there was no incentive to pay that off early, I just paid it. Every month. No defaults. Which saved my butt this year. My loans have been officially forgiven! "You've worked for a non-profit long enough", says the Federal Government, "You're Welcome, here's a refund for your over-payments!"
There are lots of folks with way complicated finances out there, but there are also lots who just don't know where to start. Start with the smallest bill/minimum amount due, I can almost guarantee it's that damn credit card bill.
Many years on, I don't have a credit card bill anymore because I pay it every month. I also always make sure that, and I can't say this loud enough:
I PAY MYSELF FIRST!
My first bill is always to my savings account. I also use CapitalOne360 Performance Savings for easy use and access and a whopping interest rate! I learned the hard way that I will always need a car and great credit. I was an early subscriber to ING because of the great interest rates at the time, and the fact that I could divide up my savings into nifty little savings "pots" and label them things like, "Vacation", "Car", and "Gifts". CapitalOne bought them out and I opened a credit card which is attached to my savings account, which makes it super easy to pay quickly. Additionally - when I opened the credit card, I earned the 75,000 travel rewards miles that we will eventually use to go visit family abroad. Here is the referral link, if you are inclined to open a Cap One card - I'll get 50K bonus miles and you'll be on your way to 75K (worth $750.00 on flights which is what we use them for)!
So, who has the money to just go out and buy a car without a loan? Who wants to spend that kind of money from their hard-earned savings? Not me. I will always need a car, it will always be revolving debt (that car will never, ever, get more valuable, and it will always be "like a credit card" loan). SO, I pay my car off as fast as I can, then start paying a down payment into a savings account in the amount I was making a car payment for. I might not use that savings to buy the car, but it makes me feel good to know that I won't have a humongous car bill the next time around. (All of this predicated on the fact that we never lease due to where we live - It would not make sense for us, which it might for you!)
I also pay myself first for a vacation fund, as well as a gifts fund, and a "Misc." for those surprise items like snow tires and other wild and crazy expenses. Gifts, especially, always catch me off guard at Christmas. We always overspend. *Sigh*
I also make sure my employer, and I am now gainfully employed (first priority is always BENEFITS), offers retirement preferably with a match to retirement. I was late to this game, yes, but it's something. The consultant is optimistic. I will be too, I guess. We all have to be.
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