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 Post subject: Getting to zero and upwards
PostPosted: Mon Jan 02, 2012 1:32 pm 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
I’d love to assassinate my student debts. Or really just obliterate them.
And that is what I have been doing in the last few years. I now have two debts of about 20k euro’s (25k dollars) making a total of 40k euros left ($50k). Plan was that this should be about 15k less this year. But last year I knowingly quit my job and was unemployed for three months, went on holiday during that time. (To keep my sanity, I do not know how people get by being unemployed, I went crazy after a month already, I love to work.) Both the unemployment and holiday cost money (in total about 5k euro for the three months) but this was calculated, budgeted and decided to be for the best in the long run. I was very unhappy in my previous job and now have a nicer one that pays better as well.

Unfortunately when I came back from holiday there was a unpleasant letter from the tax administration about my 2008 taxes. Apparently I had to pay back 5000 euri. (1 euro, 2 euri as its lovingly called here) That really hit me hard, as it went right back into my student loan (which is an open line of credit). Bringing me back to a total of 0 reduction of debt last year. Now I’m fighting with the tax administration to get the reduction that was cancelled for 2007 (which applied to 2008) back for 2011 (since 2008 is now final). The good thing is as I paid more taxes in 2011 (52%) I can get a lot more reduction (= money back) than the 5k I had to pay last year by their mistake. The key word being IF. If they get everything sorted out in time. If so, that’d should be about 9k euri in tax returns which goes nicely towards my student loans.

Whether or not I get the taxbreak I’ll need to pay back more. Half or my loan is with the government. Needs to be paid back in 15 years (13 left) and has very lenient conditions, meaning if I’m unemployed, I can stop paying back temporarily, I can have the amount altered, and if I would get disabled it might be cancelled out completely. Also, it’s not inheritable, so if something would happen to me it won’t inconvenience my family. So, this loan is currently last on my list, even though the interest is slightly higher.

The first (and only other) loan was a bank loan but since recently is a loan I have with my boyfriend for 25k dollars. I pay him a higher interest than he would get otherwise, and I pay a lower interest than I would pay otherwise. So it’s a win-win. We’ve agreed on an amount of nothing per month, so I can build up an emergency fund as well. At the same time it’s a clear intention to pay back in a reasonable time. To ensure there’s no bad feelings about this I keep open my line of credit that I can use at any time to pay him back if there’s any problems. I wrote up a nice contract which we got reviewed by a friend. It helps that we’re both very practical about money. We signed a prenuptial to take care of this type of stuff. I don’t want him to pay for my study. It is an investment choice I made, and I only reap the benefits of it. So it makes no sense for him to need to pay for it.
---
Hmm, it feel strangely liberating to just type it all out, making the story a bit longer than I intended :D
-
--
Basically I have no short term problems with my debt, I can easily make the minimum payments required. But I hate the psychological burden it brings. I want to feel free to spend some money on a holiday. Even though I know I’ve saved for it, it feels like I shouldn’t have nice things while still having this debt.
---
Steps taken to increase payments:
Setup automatic payments. All fixed costs, savings and debt payments are withdrawn from my account the day I get paid. Also, a fixed amount for variable costs like food and such (which is quite a fixed number). Which makes sure I have a bit of pocket money left, but don’t have much money on hand to spend.

Handed in my company car. (Which is a very common things here to have.) Instead of driving the new company car with gas paid for by the company I drive my very old car with loads of dents. This means I don’t pay income tax over 25% of the value of a new car every year. And instead I get a large increase in wages. This results in a net difference of +/- 300 euri a month after taxes, maintenance and gas.

Need to earn extras. I do not allow myself to buy nice things just cause I want them. I need to earn them, first by actually working, but next by working out. This severely limits the amount of stuff I can just by and is good for my health. Luckily I am disciplined enough to do so. So, 12 times working out = +/- 4 weeks would be a nice shower gel.

Got a subscription on the magazine I buy every month and decided I wouldn’t do without.

And I cancelled my library card since I’m always late handing in books. The fees from that make it better to reread most books and buy some second hand ones.
---
My goal for this year is to pay off 10.00 euros of debt (ie $15k) and getting my emergency fund sorted out. With my current salary, and living conditions that should be realisitc. This is actually what I’ve been paying for the last year, excluding the emergency fund, which will come from the extra money from the company car.

162 euros per month minimum payment government loan (total 1944 euro )
670 euros per month other loan (total 8056)
300 euros per month emergency fund (3600)
Total per month: 1132 euro or $1700


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 Post subject: Re: Getting to zero and upwards
PostPosted: Wed Jan 04, 2012 2:03 am 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
I've been pondering this a bit for the last few days.

What is enough to pay of your debt?
My minimum payments are 162 euros a month. I've been consistently paying off more than that. Current automatic payments are at 600 euro's a month.

But I could also easily get another 100 euro's from somewhere to pay off more debt.

When is it enough? When do you say, that other money is for me. That's why I work hard?

Monthly Budget:
Income: €2504
Fixed costs + groceries into joint checking account: €635
Government Loan payments €162
Private Loan payments €670
Health insurance €97
Car insurance, taxes + gas €150
Car maintenance fund €50
Travel+fun savings+ EF €300
Clothes budget (mostly work related) €150
Hairdresser (again, due to work) €80
Beauty products (again, only used for work) €30
Work lunch + some extra groceries €100
Sport expenses (clothes, gym, race fees) €80

As I don't have the complete budget at hand right now I'm sure I've missed some items, or got the numbers slightly wrong. And also, it's very easy to pick out some categories that I could save on. Although quite some of the expenses are work related.

But should I make myself suffer if I am already paying a lot more than the minimum payments? Obviously I realise I'll be out of debt sooner the more I pay per month. But then what? My big goal isn't to retire at 40 and squeeze out every penny until then. I'd actually happily work until 95. I love work. And as I don't have or want any kids I also plan to die leaving exactly nothing or slightly less since I had fun with every last dime :)

Seeing fun and travel and experiences are my 'big' goal in life it should make sense to make this distinction already while paying debt. So what's a fair amount to pay towards debt? Or should I really be somewhat more committed to killing of this debt?

---
The mortgage payments are part of the 635 fixed costs and groceries. My boyfriend pays 635 as well. Paying extra on a mortgage is hardly ever worth it in NL. You cannot make an extra payment on the principal without breaking open the contract. Which basically means they'll add a percent or two to your interest, or you'll pay a fine of easily a thousand euros.


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 Post subject: Re: Getting to zero and upwards
PostPosted: Wed Jan 04, 2012 6:12 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1716
Location: Ottawa, Canada
Sonja wrote:
I'd actually happily work until 95.


Why do 20-somethings always think they can predict how they'll feel 50 years hence? How can you possibly be certain that 50 years from now, you'll still want to punch a clock?

And what makes you think you'll even have the option? What if you get injured? What if you discover that nobody wants to hire a tired, slow senior citizen? What if your health gives out and you're unable to work?

Don't you think it might make sense to have a "Plan B?"


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 Post subject: Re: Getting to zero and upwards
PostPosted: Wed Jan 04, 2012 9:16 am 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
I'm not actually a 20-something :)

I can't be certain I'll still want to work at 70. Then again, I'm not sure I'll be alive at 70 either. Nor that pensions still exists. And yes, I get that not all of these have the same chance of happening, and I understand the value of a plan B. That's why I'm not saying I'll not save for a pension (As I am, but it doesn't come from my disposable income, and I can't decide to stop it either.) but I also can't see saving for some grand future as my goal either, as it's not.

What I do know however is how I feel at this moment. And at this moment my goals are to spend time traveling, and having fun in live, which includes work. I do not plan to go for an early retirement. Which seems to be what a lot of people here strive for. So is it worth it to sqeeze more money out of my budget for debt reduction? Sure, mathematically it makes sense to pay off everything you can asap due to compounding. The same way it makes sense later on to save everything for the glory of compounding. But then what?

I want to feel safe in spending money on nice things now as well as paying off my debts.

Now I think of it I'm probaly asking about the 50-30-20 budget or something like it. 50 of stuff you need. 20% on the debts/savings and 30% on other stuff. Looking at it that way, (670+162+300 = 1132= +/- 45% of income) I'm actually spending about 45% on debt/savings, which should definately be enough.

I'm lucky in that my needs are very low, not nearly 50%. Fixed costs + groceries and health insurance (635 + 97) are my only needs (including reservations for furniture, home repairs and such). Making about 30% of my income. And that leaves 25% for wants. And that's my main concern. Is it right to spend 600 euro's a month on wants? That's a lot of things I could easily save on and throw at my debt. Or really should I just stick to the 50-30-20-ish?

I'm guessing this is a question I'll need to answer for myself though..


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 Post subject: Re: Getting to zero and upwards
PostPosted: Wed Jan 04, 2012 10:18 am 

Joined: Mon Sep 21, 2009 9:04 am
Posts: 43
Sonja, you said you spent three months last year traveling and such and didn't meet your yearly goals for that reason - perhaps you should view this as a catch-up year? Alternatively, what are your travel goals (trips how often, to where), and how much money do you need to set aside to meet them?


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 Post subject: Re: Getting to zero and upwards
PostPosted: Wed Jan 04, 2012 8:00 pm 
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Joined: Mon Aug 15, 2011 8:28 pm
Posts: 62
Location: Brisbane, QLD Australia
Hey Sonja,
Dang, sounds like you have your hands full with those loans. I totally know what you mean, I've got USD $29k left to go and am frickin' exhausted working two jobs.

Anyway- I haven't heard of that 50/30/20 rule before, where'd you get that? It is definitely a personal decision for you. I just got so sick and tired of having this loan, that I decided to really tilt the equation heavily toward debt repayments and put off my discretionary spending 'til later. When my loan's gone, then it's fun time. But for the next 12 months until then, argh.
Keep up the good work!!
Best,

_________________
Jake
@DoMoneyBetter
domoneybetter.com

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 Post subject: Re: Getting to zero and upwards
PostPosted: Fri Jan 06, 2012 12:11 am 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
DoMoneyBetter wrote:
Hey Sonja,
Anyway- I haven't heard of that 50/30/20 rule before, where'd you get that?


From GRS actually, it's in various posts, but quite clear in this one: http://www.getrichslowly.org/blog/2011/ ... er-budget/

Wysteria wrote:
Sonja, you said you spent three months last year traveling and such and didn't meet your yearly goals for that reason - perhaps you should view this as a catch-up year? Alternatively, what are your travel goals (trips how often, to where), and how much money do you need to set aside to meet them?


Wysteria, that's actually a set of very good questions. Thank you! I spend 3 weeks travelling, during my 3 month unemployment, but regardless of the timing that did costs unbudgeted money (also, since I didn't have much of a budget).

Most of the debt that I didn't pay of as planned however was in taxes I had to pay back unexpectedly (and I think wrongly). I should (99% sure) get that back this year. But, eventhough I am fairly sure, it's still an assumption, and not money I actually have, or have any proof I will get.

---
April: Travel plans so far are a weekend to Madrid (ticket bought already, 120 euri round trip). Expect another +/- 200 euri for hotel, restaurant and other stuff there.

May: For work I need to be in Chicago for a week, and I’d love to stick a week or so after it to spend in the US. That might be in/near Chicago, or New York for example. Travel would be mostly free, with perhaps a small extra for the transfer. Seems a waste to not use that free flight to get in some tourist time as well. Let’s say 500? But as there’s no plan as yet, this is hard to guestimate

Juli: Weekend in Belgium. Travel costs are free, costs for the weekend are around 150 euro.

September: And then there’s the plan to go to the Tjech republic to visit my boyfriends tree. (For finding bugs in software they’re planting trees, so that’s why he’s got a tree in a very random location.) This would be a road trip, where part or all of the travel costs are from a company car, leaving just hotels restaurants and other fees. Costs are about 500 euros for the week. Also, I’d love to make a detour through Croatia on the way back.

October: Probably a weekend in Germany with a group of friends. We do this every year and budget is around 150 euros for the weekend.

Making the travel budget for the year:
Madrid: 320
Chicago: 500
Belgium: 150
Tjech: 500
Germany: 150
Total 1620

That brings my monthly budget for travelling to 150 euros.

But I definitely think theres sense in making (at least part of) this year a catch up year. Let me think about it some more on if and how I want to do this.


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 Post subject: Re: Getting to zero and upwards
PostPosted: Wed Jan 11, 2012 4:16 am 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
With some new laws coming into effect this januari, and a change in wages due to switching from a company lease car to using my own, some numbers will shift quite a bit.

But for now I've set up my emergency fund and automated&optimized my payments as much as possible. Meaning that debt payment & and savings are taken from my account before I ever notice it was there. And that all money for fixed payments goes to the right account as well. Leaving only the 'I can spend'-money in my account.

I've slightly bumped up my savings rather than my debt payments as I didn't have an emergency fund, or a seperate savings account until this month. Although I did 'save' money but in a non trackable way. This has now all gone to debt payment, hence the increased savings. Suffice to say, my confusion days are over and I've now got stuff sorted out to make sure I know what is in which bucket of money.

--
So the short update is that based on Wysteria's questions I'm making a bigger deposit into savings on the short term. And from Feb's payment onwards I'll take another look at the division of money over the various buckets as I won't know sooner how much money I'll actually get in.


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 Post subject: Re: Getting to zero and upwards
PostPosted: Fri Jan 20, 2012 6:21 am 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
Damn you interest!

Jan first I've refinanced my loan from the bank to my boyfriend/husband/partnerthing/love of my life.

So Jan first the amount due on my bank loan was 0 (jeej!)

Come Jan 20, it's 258 euro's again due to interest, that I'd completely forgotten about.

This annoyed me enough to immediately kill it off again. I had enough money in my checking account to pay this off. Which leaves 120 euro's in my checking account. That should be enough, easily to last until the 25th of the month. But still.. An unexpected bill could bring me into the red. *grmbl*

Anyway, bank debt is killed again, and very motivated me to but another 260 into debt that would've gone into savings otherwise.


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 Post subject: Re: Getting to zero and upwards
PostPosted: Sun Jan 22, 2012 8:01 am 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
Last year I got a gift certificate for 120 euros from my collegueas to celebrate my registered partnership (= marriage). This certificate is for a speciality store for all sort of cutlery, plates, eggholders, and everything else you might want to store in a cabinet in your kitchen. (Including lemmingshaped knifesharpeners?!). So boyfriend and me went to this store, and spent an hour and a half, looking at everything and trying to figure out what to spend this money on.

So, after 1,5 hours I left the shop with... nothing. I realized there wasn't anything I needed for in a random cubboard in the kitchen, nor that I wanted to spend 120 euro's on 3 wine glasses (why would anyone do that?!).

Anyway, I felt quite good and happy about the fact that I didn't need anything and didn't just got something for the hell of it :)
And that I managed to stay in a store for an hour and a half and still have a good mood (I hate shopping, if I spend more than 10 minutes in stores I tend to get irritated by everything and everyone).

basically a good day :)

Unfortunately my running shoes died and I needed to get new ones before my training on Saturday. So there was another 120 euros... But at least I won't ruin my knees, ankles or neck working out.


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 Post subject: Re: Getting to zero and upwards
PostPosted: Fri Jan 27, 2012 6:19 am 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
Ah, payday, always a nice day in the month ;)

Next month my flexible transport budget should be through giving an increase to my income. That's why I didn't get the company car (all paid for) but arrange my own transport instead. And the plan is to stick al that into debt. (byebye debt).

Everything I have left on my account at the end of the month goes into debt as well. For Jan this was nothing as I started my savings fund during this month. I had to pay some unexpected taxes (from 2006?! couldn't that be done sooner?) and I had to pay an interest payment to close transfer my debt. All in all, I'd already allocated my money to the right places before the end of the month was there.

I've been calculating when I'll be done with my private loan (don't care yet about the government one) and that should be in March 2014. Unless my taxbreak comes through (which it should!) it'll be August 2013. This is assuming I pay of 750 per month. Not yet there for this month, but I should have the 300 left at the 24th of Feb.

Anyway,

Savings and reservations: + 350
Government loan: - 162
Private loan: - 450


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 Post subject: Re: Getting to zero and upwards
PostPosted: Tue Feb 07, 2012 5:01 am 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
On another note:

I've had a check-up with the doctor yesterday and he thinks I'm depressed. I'd rather not admit it, but quite likely he's right. Crying on a daily basis can't be a good thing right? /:

Anyway, the proposed remedy is to go see a psychologist and deal with past issues and blame everything on my parents (my bias about psychologists). There's the type of psychologists that are covered by insurance, and the private ones, which I need to pay myself. Now here's the catch. The insurance ones have a waitinglist of at least 3 months, but more likely 6 months. The private ones I'd probably be able to get to by next week.

So what is my mental health worth, how much worse would it get if I wait 3 to 6 months, compared to the quite high cost of a private consultation. I can free the money from my budget, so I'm leaning toward the private one. Better get it over with...


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 Post subject: Re: Getting to zero and upwards
PostPosted: Tue Feb 07, 2012 6:47 am 

Joined: Wed Oct 07, 2009 4:16 pm
Posts: 959
Sonja wrote:
On another note:

I've had a check-up with the doctor yesterday and he thinks I'm depressed. I'd rather not admit it, but quite likely he's right. Crying on a daily basis can't be a good thing right? /:

Anyway, the proposed remedy is to go see a psychologist and deal with past issues and blame everything on my parents (my bias about psychologists). There's the type of psychologists that are covered by insurance, and the private ones, which I need to pay myself. Now here's the catch. The insurance ones have a waitinglist of at least 3 months, but more likely 6 months. The private ones I'd probably be able to get to by next week.

So what is my mental health worth, how much worse would it get if I wait 3 to 6 months, compared to the quite high cost of a private consultation. I can free the money from my budget, so I'm leaning toward the private one. Better get it over with...


Go see one with an open mind, there should not be a blame game.

You are worth the time and effort, I say go for the private one first; put yourself on the waiting list and see if the psychologist your using also sees patients on the insurance provided by your job.

_________________
Be what you want to attract.


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 Post subject: Re: Getting to zero and upwards
PostPosted: Tue Feb 07, 2012 12:58 pm 

Joined: Fri Nov 25, 2011 1:06 am
Posts: 50
Fantasma has good advice.

Sometimes it takes a few tries to find a psychologist that you feel comfortable with. If you can start seeing a private psych now and put yourself on the waiting list for the public service, if you find you don't click with your private psych you will be further along on the waiting list for the free service.

If you do decide to wait, talk to your doctor about what other strategies and complementary treatments may be helpful in the interim (e.g. lifestyle changes, exercise, medication).

A booklet like this, or similar resources from your own country, might be a good starting point:
http://www.beyondblue.org.au/index.aspx?link_id=&tmp=FileDownload&fid=1406

Be kind to yourself, and good luck.


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 Post subject: Re: Getting to zero and upwards
PostPosted: Wed Feb 15, 2012 5:53 am 

Joined: Sun Jan 01, 2012 9:50 am
Posts: 98
Thanks for the kind words!

I removed the previous post as it had nothing to do with finances.

So, another month, another pay day. Over here almost everyone gets paid by month. Nice thing is that it´s easy to schedule. I get money on the 24th (or 25th if 24 is a Sunday) of every month. I pay my bills on the 26th automatically. Realistically, if I would not look at my bills for 6 months there's probably just 1 or 2 that I've missed. I really like that as I'm terrible at consequently doing such things.

So, another month, I've had money left over last month which went straight into my debt, making for a payment of 1000 euros this month. That's also because my flexible transport budget came through. I decided to not drive a company car, which saves about 200 euro in taxes right away. Also, the costs of the lease car I now get paid out, which is nice. (Of course, taxes come out of that again as well). In effect that's an extra 550 euro's net a month. From this comes costs as well of course, car insurance, road taxes, reservations for repair and replace and, importantly gasoline. Which costs $9.14 per gallon at the moment. (Apparently this is about 2.5 times as high as in the US...). But even with that I'm still better of taking care of my own transportation.

So, more money in. But also, more money out as I´ve increased the funbudget. But I´m not spending more than I have, am making at least minimum payments on loans so still going in the right direction.


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