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 Post subject: Zero Net Worth
PostPosted: Sun Jun 10, 2007 4:03 pm 

Joined: Sun Jun 10, 2007 3:19 pm
Posts: 620
Hi, all! I'm new.

I figure out my net worth at least once a year, sometimes a little more often. The last time I did it, I was worth $10, plus whatever change is in the couch cushions! This doesn't sound good, but I think it's awesome. I'm 31, started out with zero parental help (my parents owed me money when I went to college), and had to use credit cards to make ends meet after school. I say "had to," when that probably isn't true, but I didn't know how to live on less than $15K/year. After several years of that, my debt got as high as 23K at the beginning of 2004.

In December 2003, I got a good job, in what will actually be my career (regardless of whether I stay with this employer). I did know how to live within my new means, and started working on the debt. Those were the days of stupidly cheap balance transfer rates, and I knew I was good with bills, so I moved all my balances -- including, eventually, my 7.5% student loans. (That's one of those don't-try-this-at-home things....) I have yet to miss a payment, so most of my bad consumer debt is at a lower rate than my savings account. The exception is at 4.9%; I have only $2500 left on that card.

I saved up an emergency fund at ING. It's at $5K. I also started a 401(k) and then in 2006 a Roth IRA. I'm now putting 10% of my salary into the 401k and fully funding the Roth.

A lot of people recommend paying down a lot more debt than I did before saving up that much of an emergency fund, or putting that much into retirement. However, for me it was better to have the emergency fund. It was a good thing I did -- I was hit by a car (as a pedestrian in a crosswalk) in January. While I walked away and wasn't badly hurt, I did need to take some time off work. The disability payments became extremely confused, and at one point my workplace was 7K behind on my pay. Despite that, I didn't miss any of my payments or add up any more debt. Once things were straightened out, I was able to replenish the emergency fund.

I'm starting with the student loans again, for a graduate school degree; my work reimburses most of the tuition, but not until after the course is over. The student loans are at 6.8%, but they are deferred until I graduate or stop taking classes.

Adding up all my debts (credit cards and school loans) and all my assets (retirement fund and cash), I break even. How cool is that?


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 Post subject: Goals
PostPosted: Sun Jun 10, 2007 4:19 pm 

Joined: Sun Jun 10, 2007 3:19 pm
Posts: 620
Short-term goals (less than 1 year):
    Pay off the 4.9% credit card
    Fully fund Roth IRA for 2007
Mid-term goals (1-5 years)
    Pay off all credit-card debt
    Maintain retirement funding
    Finish graduate degree
Long-term goals
    Pay off student loans
    Buy a house


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PostPosted: Mon Jun 11, 2007 11:15 am 

Joined: Tue Apr 17, 2007 9:34 am
Posts: 124
Location: Deep in the heart'a
Daedala, I hear you on the student loans. I came away from undergrad with modest loans - about 3K - but my graudate degree has cost much more. I have had to finance most of it, and I have a little over 7K to pay. I graduate in December. Good luck on grad school!

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PostPosted: Mon Jun 11, 2007 2:09 pm 
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Joined: Thu Mar 29, 2007 4:58 pm
Posts: 948
Location: Portland, Oregon
my parents owed me money when I went to college

I love this, but only on paper. In reality, I'm sure it wasn't fun for anybody. But as an idea, it's fun.

I'm one of those who thinks an emergency fund has to come first, for the very reasons you describe. I advocate a smallish emergency fund to start, then debt repayments, then a bigger emergency fund. (I'm a big believer in the Dave Ramsey approach to kick-starting life.)


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PostPosted: Mon Jun 11, 2007 3:09 pm 

Joined: Sun Jun 10, 2007 3:19 pm
Posts: 620
jdroth wrote:
my parents owed me money when I went to college

I love this, but only on paper. In reality, I'm sure it wasn't fun for anybody. But as an idea, it's fun.

I'm one of those who thinks an emergency fund has to come first, for the very reasons you describe. I advocate a smallish emergency fund to start, then debt repayments, then a bigger emergency fund. (I'm a big believer in the Dave Ramsey approach to kick-starting life.)


The whole owing-me-money thing wasn't fun, no. I can do a wonderful walking-uphill-in-the-snow-barefoot type story. To this day, I have no real idea how much was borrowed from my college fund, or if it was all paid back. I was declared independent for purposes of financial aid, though, which helped a lot.

For me, I wanted a larger emergency fund. It's not that I'm risk-averse -- it's that I'm overly risk tolerant, and wanted to learn to make myself do better. Also, one of the biggest helps was watching the interest in my ING account grow, and it helps to have a fairly large balance for that. However, when your highest-rate debt is only 1/2% higher than your savings, you have a lot more leeway than if your debt is at regular usurious credit-card rates.


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 Post subject:
PostPosted: Mon Jun 11, 2007 5:13 pm 

Joined: Sat Apr 28, 2007 9:37 pm
Posts: 99
Location: Ottawa
It sounds like you are doing well. It won't be long before the debt is gone and with the good habits you are instilling, you'll make great progress on your other goals.


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PostPosted: Tue Jun 12, 2007 5:38 am 

Joined: Sun Apr 29, 2007 8:11 am
Posts: 1088
Location: Sunny Florida
"The whole owing-me-money thing wasn't fun, no. I can do a wonderful walking-uphill-in-the-snow-barefoot type story. To this day, I have no real idea how much was borrowed from my college fund, or if it was all paid back. I was declared independent for purposes of financial aid, though, which helped a lot. "

Curious about this situation, was the college fund set up by someone other than your parents (i.e. grandparents, trust fund, settlement, etc.)? If your parents set up the college fund for you isn't it their money until you go off to college. Just wondering, as we've been reading a lot about parents taking care of themselves before they fund college. Thanks.


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PostPosted: Tue Jun 12, 2007 9:21 pm 

Joined: Sun Jun 10, 2007 3:19 pm
Posts: 620
Sam wrote:
Curious about this situation, was the college fund set up by someone other than your parents (i.e. grandparents, trust fund, settlement, etc.)? If your parents set up the college fund for you isn't it their money until you go off to college. Just wondering, as we've been reading a lot about parents taking care of themselves before they fund college. Thanks.


My savings account was not funded by my parents. It was from my after-school jobs and Alaska Permanent Dividend fund, both of which I paid the taxes on. And Christmas presents from relatives and the like. It was only a few thousand dollars, and wouldn't have paid for college by any means, but it was money that I had owned (if not earned) and not spent, not my parents' money. I saved literally my entire childhood.

Besides, "taking care of themselves" did not include any provision for retirement. I will be helping with that, too.


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PostPosted: Wed Jun 13, 2007 8:21 am 
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Joined: Thu Apr 05, 2007 6:30 am
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Location: Houston, TX
Sorry if I'm being thick, but if it was yours I don't understand how your parents got ahold of it and how you don't know how much was taken/repaid. Did I miss something? (I'm not heading in the direction of squabbling with your parents over the money, I'm just thinking from an accounting point of view.)

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PostPosted: Wed Jun 13, 2007 9:52 am 

Joined: Sun Jun 10, 2007 3:19 pm
Posts: 620
tinyhands wrote:
Sorry if I'm being thick, but if it was yours I don't understand how your parents got ahold of it and how you don't know how much was taken/repaid. Did I miss something? (I'm not heading in the direction of squabbling with your parents over the money, I'm just thinking from an accounting point of view.)


They were my parents; minors have very few rights, and the savings account was joint. I am not even sure if minors are allowed their own savings accounts without a custodian. Regardless, I didn't have my own bank accounts until I went to live at a children's home.

As for the amounts, I was using the savings to pay medical expenses and tuition for college classes while in high school, so I wasn't clear how much was there.


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PostPosted: Thu Jun 14, 2007 10:50 am 

Joined: Sun Apr 15, 2007 1:33 pm
Posts: 42
Location: FL
I feel your pain. My grandparents sent my brother, sister, and I savings bonds every year for our birthdays and christmas. My parents set up savings accounts for each of us to put these in (in their names I think - maybe joint). We were so young we really didn't know much about it. Any extra money went into these accounts to use "some day" for college. It wouldn't have paid for college, but it would have helped. Actually, added to my scholarships it might have stopped me from needing student loans.

Well one day when I was old enough to ask about taking over the accounts, my parents informed me they had needed to take small loans from them to help through hard times. The money was gone. They said would pay us back "some day" when they had it. Needless to say, that never happened. They will not even talk about it. :(

I wish that they would have found a way to take control of their finances like you and everyone else on this board is trying to do :)


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 Post subject:
PostPosted: Thu Jun 14, 2007 6:38 pm 

Joined: Mon May 14, 2007 7:20 pm
Posts: 309
That is really surprising, but i guess in hard times... Wow though.

I had no money in a savings account from my jobs (well, very little) and none from relatives, so I never found out if my parents would have done this (they had some harder times.

Good luck with your goals!


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 Post subject: MacBook Emergency Fund
PostPosted: Mon Jun 18, 2007 3:15 pm 

Joined: Sun Jun 10, 2007 3:19 pm
Posts: 620
Emergency funds are wonderful. My laptop died on Saturday -- the infamous logic board issues of the Mac iBooks. The next day, I bought a new MacBook with cash. I'd budgeted to replace it with my fall student loans anyway; this is just a little early.

The laptop was three years old, out of extended warranty, and already pretty beat up; I'd replaced the LCD and cracked the case in a car accident. It wasn't worth trying to repair and worrying, especially not so close to finals week. I had backups and was able to recover the files changed since the backup -- if there are any files I don't have, I haven't missed them yet. Now that I have a working computer for school, I can either a) strip the laptop for eBay parts or b) tinker with it, fix it, and donate it. Laptops are inherently more fragile than desktops, and three years is a good run for a computer that lives in a backpack.

Mary had a little Mac
Its fleece was white as snow
And everywhere that Mary went
Her Mac was sure to go.


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 Post subject:
PostPosted: Mon Jun 18, 2007 3:17 pm 

Joined: Sun Jun 10, 2007 3:19 pm
Posts: 620
jgs9455 wrote:
I feel your pain. My grandparents sent my brother, sister, and I savings bonds every year for our birthdays and christmas. My parents set up savings accounts for each of us to put these in (in their names I think - maybe joint). We were so young we really didn't know much about it. Any extra money went into these accounts to use "some day" for college. It wouldn't have paid for college, but it would have helped. Actually, added to my scholarships it might have stopped me from needing student loans.

Well one day when I was old enough to ask about taking over the accounts, my parents informed me they had needed to take small loans from them to help through hard times. The money was gone. They said would pay us back "some day" when they had it. Needless to say, that never happened. They will not even talk about it. :(

I wish that they would have found a way to take control of their finances like you and everyone else on this board is trying to do :)


Yeah. The real damage wasn't so much to my finances, as to my belief that money would stay where I put it. I didn't save for a long time because I'd saved so long for nothing.

I think my niece's birthday present is going to be an ING bank account. I know my sister won't raid it.


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 Post subject:
PostPosted: Mon Jun 18, 2007 3:27 pm 
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Joined: Wed May 30, 2007 11:23 am
Posts: 859
Location: Portland, OR
Daedala wrote:
Yeah. The real damage wasn't so much to my finances, as to my belief that money would stay where I put it. I didn't save for a long time because I'd saved so long for nothing.

I think my niece's birthday present is going to be an ING bank account. I know my sister won't raid it.


How old is your neice? Maybe get her something where she'll get a bit more bang for her buck than a straight savings account?


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