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 Post subject: annibe11e's journal-open to advice!
PostPosted: Tue Nov 27, 2012 10:25 am 

Joined: Mon Nov 26, 2012 10:18 am
Posts: 31
I'll try to post everything I can think of that is relevant.
Age: 34
Education: AAS in Accounting
Employment: Full time
Earnings: $15/hr
Other income: $120/mo net
Savings:
Retirement: none
Emergency fund: $28 (I just paid out $1000 insurance deductible)
Debts:
CC debt: $700
Tuition: $1123
Student Loans: $40,000
Auto loan: $4,800

A little background...
Without getting into too much boring detail, I've had a lot of obstacles to the financial life I want; some beyond my control and some self-imposed. I've been working part-time for the last 7 years while raising a child and going to school. I took almost every cent of student loans offered and practically lived on them (and wasted some on feel-good spending), which is why they are so high for a two-year degree. I got a full-time job a few months ago and I'm ready to get down to business.

Financial goals (in no particular order, as I'd like some feedback for sorting them out)
1. Continue my education-this requires paying off my tuition so I can register for classes. I plan at this point to finish my gen ed. credits, then decide what to do. I have an opportunity to roll all of my two-year college credits into a 4 year, but it's pricey and I've burned up my financial aid. I'm not sure of other options at this point.

2. Pay off debt. This is pretty vague as I don't know how to prioritize this. The student loan debt is large and the interest rate is around 6% (newly consolidated)but I also don't want to put everything on hold while I pay it. The CC debt will be relatively easy. I would like to pay off my car soon also as my waranty has expired and I don't want to pay for repairs on top of the loan.

3. Buy a house! This has been something I've wanted for a long time but I've always felt as if I were moving farther and farther away rather than nearing this goal. I've become impatient!

4. Visit family. I have family members I haven't seen in years because of not having money to travel. I simply must make this a priority somehow!

5. Get retirement savings rolling!!

That's all I can think of right now. Here's my current budget:

Student loan 170
Rent 400
Gas-auto 250
Phone 100
Car 189
Insurance 176
Electric 43
Gas 26
CC 1 minimum 25
Tuition minimum 25
CC 2 minimum 20
Irregular 202
Cash 300
Remainder 211

Irregular Expenses Included:
Tires
Brakes
Oil changes
Repairs
Registration
Dental cleanings
Prescriptions
Doctor
Vet
Christmas
Summer
Spring break
Those last three are my visits with my son, so are necessary. It covers extra cost of him being here (food! OMG he eats so much!!) plus some travel and parking costs and Christmas gifts for close family.

Cash category covers groceries, cat food and litter, personal care, household stuff, clothes, ect. I'm used to being poor, so I actually pull this off pretty well.

Remainder is for debt/savings/goals, etc. This is where I would love some input.

Well, did I forget anything?


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 Post subject: Re: annibe11e's journal-open to advice!
PostPosted: Tue Nov 27, 2012 3:32 pm 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
Hi and welcome!
I'm about to run out for the evening, so I'll try to look at your post a little later, but didn't want to leave you hanging. :)


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 Post subject: Re: annibe11e's journal-open to advice!
PostPosted: Tue Nov 27, 2012 5:30 pm 

Joined: Wed May 30, 2012 11:56 am
Posts: 134
Some feedback on your financial goals:

1. If a 4-year degree will help your career then it's probably worth pursuing, but be smart about it. Look into in-state public schools and non-profit private schools. Figure out if you can cash flow a tuition by going part time (while working full time), and definitely look into scholarship and grant opportunities. Don't rush into this, wait until you can afford it - many schools will take credits that are up to 10 years old or older.

2. You don't list your CC debt interest rates, but if they're as high as most cards are it's probably worth paying them of ASAP, especially if it'll be "easy" as you say and you won't be charging anything else to them. As for the car, do you have enough equity to sell it, pay off the loan and buy an older, cheaper vehicle? That would get rid of the loan, then you could reduce your insurance to liability and you could set aside the payments you're making now to go to repairs, next vehicle purchase, other debt, etc. Another option could be losing the car all together, depending on where you live.

3. Work up the numbers for owning a home in your area. How much would a home you want to buy cost? How much would you need to save for a down payment, how much would the principal/interest/insurance/tax/HOA/maintenance/etc cost per month, and can you afford it? Once you have these answers you can determine if it's feasible or if you need to put this goal aside for a while longer. And remember that there are many downsides to home ownership as well.

4. What is that somehow? Again, start making a concrete plan. How much will it cost to drive or fly? How much time can you take off work? If you're hourly, can you work extra for a few weeks to make up for taking a week off? If you know that it will cost X to make the trip, and can save Y each month, then set a goal to visit in X/Y months.

5. Start small. If you don't get matching retirement at work open a Roth IRA and start putting $10-20/month, or whatever you want, just to get it in there. As more money becomes available, either because your debts are paid off, or you get a raise, or whatever, start increasing it. Get in the habit of contributing to retirement now, even if it isn't much, however I wouldn't make it a priority just yet.

I'd put a lot of focus right now on rebuilding your emergency savings. Conventional wisdom suggests 3-6 months of expenses, but many also like the "baby e-fund" of $1000. The idea is that you should be able to handle emergencies without adding to your debt. After that it depends, what do you want? Some people hate debt, they hate seeing that money going away to something they won't get any more benefit from. If that's you, cut back on everything you can and start pounding away on your loans. I'm more middle of the road, I pay extra to my loans but also set aside money for savings. You could also try making more money by bookkeeping, babysitting, etc on the side, more money means more options.

A couple of notes on your budget- $100 for phone? Even if you have a smartphone you should be able to reduce this, and if that includes your son he should have a very basic plan (if any) unless he's paying for his own. And $176 for insurance? If that's car insurance, can you shop around for lower rates? If your son is on the policy, can he pay for his share or be removed? If that's health insurance, never mind.


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 Post subject: thanks!
PostPosted: Tue Nov 27, 2012 11:05 pm 

Joined: Mon Nov 26, 2012 10:18 am
Posts: 31
Catchingup, thanks so much for your thorough feedback! The hardest thing for me is how slowly everything has to happen. As a single mom and a college student, I’ve always had my money come to me in big chunks, either from a student loan or big tax refunds. I’ve never saved up to buy something or pay something off gradually. My money situation has always been a series of floods and draughts.

1. I feel like school should be the big priority because the sooner I do, the sooner I will have a high-paying job. Patience is not my strong suit. Also, to be honest, I miss accounting classes. I’m completely lost without them  I’ll try to relax.

2. I have $500 @ 10% and about $175 @ 18%

3. I honestly never gave a thought to selling my car. I’ll have to mull that one over.

4. I always feel like I need *extra* money for travelling. But you’re right, I have to budget it in. I can’t wait for a magic travel fairy, can I?
5. I’ll be eligible for the 401k at my job in March with a 2% match. Should I wait for that?

You’re right about the emergency fund. Again, this is me being impatient. I want all my small debts gone, but I know they will come back if I don’t have that emergency money stowed.

I keep hearing about people having much lower phone bills, but apparently in my area, service for a smartphone runs right around $100 (I shopped around last time my contract was up) There is one option for right around $90, but the service is not quite as good and I work out in the country. I’ll shop around again before my next contract renewal.

I just added my older son to my insurance and did some shopping around and this was the lowest rate. He is paying, but I categorized the entire amount as my expense since it comes out of my checking. When he gives me the money, I’ll count it as extra income. His first payment to me is due on Dec 15th.

So, any ideas on how to allocate my $211 remainder?


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 Post subject: Re: annibe11e's journal-open to advice!
PostPosted: Wed Nov 28, 2012 7:17 am 

Joined: Mon Nov 01, 2010 5:15 pm
Posts: 1227
Do you get any kind of child support from the father(s) of the kids?


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 Post subject: Re: annibe11e's journal-open to advice!
PostPosted: Wed Nov 28, 2012 7:35 am 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 210
Welcome!

You were asking how to allocate your extra $211 per month. I would first build up the emergency fund so you won't have to rely on credit cards when something comes up. Then pay off the tuition and credit card debts.

You seem really eager to continue with school. Does your employer offer tuition reimbursement? What is your ultimate goal as far as school goes? Bachelor's degree in Accounting? CPA?

When I first started paying attention to finances, I had a million different goals. Eventually, I realized it was easier to focus on one thing at a time. You have a lot of goals, but once some of the smaller ones are taken care of, it will be easier to face those bigger ones.

And I can't help but say that you should keep trying on that cell phone bill. I also live in the country/not much service/etc, but I found a pre-paid company that uses Verizon cell towers and I've only spent $80 on it this whole year. (I decided that hitting my financial goals was more important to me than having a smartphone, but their smartphone plans are still a lot cheaper than going with one of the big carriers.)


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PostPosted: Wed Nov 28, 2012 8:58 pm 

Joined: Mon Nov 26, 2012 10:18 am
Posts: 31
Tightwad-no, the children don’t live with me. One is 18 and I just finished paying child support for him! Whew! I don’t have to pay support for the younger one, just have money for his visits :D

Fiddlefaddle- I’m definitely eager to finish school. I got a very late start and had a lot of setbacks. I feel like I finally got my stride toward the end of my associate’s degree and I wanted to keep my momentum going. Also, I had an interesting opportunity in which a university I don’t have access to decided to offer a Bachelor’s in accounting at my two-year college, night classes only! The problem is, it starts in January and runs 20 months consecutively. I can’t enroll because of my unpaid tuition and my financial aid is dry. I was trying to scrape together the money to get started when I hit a deer last month and had to come up with $1000. Thankfully, I had some in my EF but things still got tight. Now, I’m trying to get the tuition paid down because they might start a second session for this program in September. My employer does not offer tuition reimbursement, but they are very flexible on hours for the purpose of education.

So, I wanted to clarify, you think I should put the entire $211 into the emergency fund, then the other things one at a time? Not break it down between them?

I love my iphone. It helps tremendously in staying organized, but I will keep shopping for better deals.

Thanks for the feedback!


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 Post subject: Re: annibe11e's journal-open to advice!
PostPosted: Thu Nov 29, 2012 11:14 am 

Joined: Mon Jul 25, 2011 12:52 pm
Posts: 19
Options for that extra $211:

A) Put it all towards your emergency fund until it reaches $1k, then switch to using it to blast away that credit card debt

B) Split it in two, using half to build up your emergency fund and the other half to double your minimum credit card payments (or get rid of the higher interest one more quickly).

Once the emergency fund is at $1k and the credit cards are paid off, you could start aggressively paying that tuition, and/or use some of it to make a few larger retirement contributions once the 2% match kicks in. Plus once the cards are paid off you'll have an little extra every month with no more of those minimum payments.

Personally, I wouldn't sell the car. It's worth the peace of mind to have a reliable vehicle as opposed to a cheaper one, especially if you're traveling a lot out in the boonies.

Good Luck!


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 Post subject: Re: annibe11e's journal-open to advice!
PostPosted: Fri Nov 30, 2012 4:11 am 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
I have to disagree with Jennifer on one thing (or maybe it was option B). If you have 175 on your credit card, I would pay that off, and put the extra couple bucks in your e-fund. Then the following month, put 200 or whatever on the second credit card, and move the other 11 to your efund.

Now that you are monitoring your finances, I'm sure you can find a few extra dollars here and there (don't get a coffee on Wednesday) and put all your extra money towards that second card. Once card two is done, focus on building your efund. You're going to feel like you're running in circles waiting for that 1k efund to build while your interest is also building on your cards.


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 Post subject: Re: annibe11e's journal-open to advice!
PostPosted: Fri Nov 30, 2012 8:29 am 

Joined: Mon Nov 26, 2012 10:18 am
Posts: 31
This is really great! I love all the feedback and discussion.

I just realized I'm putting travelling to visit family on the backburner AGAIN! I didn't budget it in or include it anywhere. I must find a way to save for visits to family in CA and TX. I have nieces I've never met, ranging in age from 4 to 16!

So, I have $211 a month that is not allocated to anything.
I need to prioritize!!
Here's one thing that I'm struggling with-education. I mentioned earlier that I have an opportunity to pursue my bachelor's in accounting in a unique manner that is absolutely ideal. This is a new program that is being testing so there is no assurance tht it will continue to be available. I absolutely cannot do anything toward this until my overdue tuition is paid. I can't get a transcript to the new college so they can even tell me for sure which classes I need. Planning for this is at an absolute standstill. I may have a chance to attend in September, again only after paying off the tuition, which is $1211.23. Some have advised waiting on this but I really don't know if that's the right thing to do. I have a really strong feeling of urgency about getting back into school. BTW, there is no interest or late fees on the tuition.

So, right now I'm trying to prioritize and budget the following:
School
Travel
CC debt
EF
Down payment
Auto loan
Student loan


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 Post subject: Re: annibe11e's journal-open to advice!
PostPosted: Fri Nov 30, 2012 10:35 am 

Joined: Wed May 30, 2012 11:56 am
Posts: 134
School is not a quick fix, it's a long and sometimes expensive process that could pay off after 2 years. If it will greatly increase your earning potential then it should be a priority but I would still pay off those credit cards first, once they're gone your extra $211 turns into $256, an increase of almost 25%. You'll also stop collecting interest on those balances. Besides, you have to have the tuition paid off before you can apply, right? Unless you have a large sum coming in you haven't mentioned you won't have enough to start by January 20. Also, that's just one program. If you do well learning independently I recommend looking up online options, I graduated from Western Governors University (wgu.edu) which was all online and perfect for people who work full time. If you have any questions about it feel free to ask, I really loved that school. And if you're in a hurry it's possible to finish classes much faster than usual in their program, I did 50 credits in one year.

Why do you feel such urgency to get back into school? Is it because you don't think your career will progress without a degree? That could be true depending on your field, but have you done research to be sure? As for being late to the game, so what? Not everyone graduates high school knowing what they want for a career, and many who do discover that they were wrong. Some don't figure it out until they're in the 40s, 50s or older. You have a plan, you have a job that gives you some extra money each month, that puts you ahead of a lot of people your age.

If you'll start getting a 401k match in a few months then sure, wait until then. The idea is to make sure you do start rather than get into the "I'll do it later" cycle.

As for the travel, have you worked up the numbers? I understand wanting to make it a priority but I would still put that CC debt first just because of the high interest and on your budget that $45 minimum payment could really make a difference.


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 Post subject: Re: annibe11e's journal-open to advice!
PostPosted: Fri Nov 30, 2012 2:07 pm 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
I think we have already prioritized for you in a sense. Get rid of the cards, and get your emergency fund built up.

THEN, you can make piles for travel and a pile for school. Catchingup is right in that that much money isn't going to appear overnight. Do you really think you'll have your other tuition paid off in time to get into that new school? If it's not realistic, you probably won't meet that goal, so you can't beat yourself over the head thinking about it.

You should find a way to get your tshirt business to get you additional money to put towards those other goals or get a second job. You don't really have enough extra money to meet all of your goals, so start tackling them one by one. It's not going to be a fast process...trust me and the others. I'm still trying to reach some of my goals and I'm not even a spender!


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 Post subject: Re: annibe11e's journal-open to advice!
PostPosted: Fri Nov 30, 2012 3:14 pm 

Joined: Mon Nov 26, 2012 10:18 am
Posts: 31
I do admit to being impatient. No, I can't pay off my tuition in time to get into the January term, but I could shoot for the September term, if I made it a big priority, even above my emergency fund! My sense of urgency comes in part from the fact that this is a new partnership between my two-year college and a university that I don't have access to otherwise, and its in a sort of testing phase. I did not have any feasible options for getting my bachelors in the foreseeable future until this program came along. If I knew they would continue this program indefinitely, I would set it lower on the list. I guess that's something I'm struggling with.


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 Post subject: Re: annibe11e's journal-open to advice!
PostPosted: Fri Nov 30, 2012 3:43 pm 

Joined: Wed May 30, 2012 11:56 am
Posts: 134
Why is that your only option for getting your BS? Many schools offer programs that work for working folk. The fact that your two year school - I'm guessing community college? - has a partnership with a 4-year suggests that it is regionally accredited and therefore most if not all of your credits should transfer to another regionally accredited school. I'm also curious why you don't have access to the university otherwise, when my old community college partnered with a university I was still able to apply directly to that same university (which I did since they didn't have my degree program in that partnership). In my last post I also mentioned WGU as an alternative if you can do online learning, there are other options out there as well.

You mentioned in another post your upcoming health insurance premiums will use up the rest of your unallocated money which means you really need to increase your income and/or reduce some expenses. You spend about the same as I do on food, pets, clothes and household, AND I have two large dogs to feed AND I budget $80/month for fast food; there could be some room to cutback there. Also, you mentioned that your son is paying you back for his share of insurance, what are you doing with that money? You don't want to count on it in case he misses a payment but you should still have a plan for it. If your student loans are federal, have you moved to an income based or graduated payment plan?

My biggest concern is that you are half a step away from living paycheck to paycheck with no reserves to fall back on if something happens. If you had a few months of expenses in savings and wanted to live on a tight budget for a year or two I'd be more supportive of your plan to jump back into school, but you don't have anything saved and if you pay off your tuition first you still won't have any savings.


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 Post subject: Re: annibe11e's journal-open to advice!
PostPosted: Sat Dec 01, 2012 2:37 am 

Joined: Sun May 29, 2011 4:50 am
Posts: 183
If you are applying to a 4 year university, you should check out any scholarships they might have for students in your situation (adult learner/nontraditional student). I'm 35 and currently working on my bachelors too.

I'm not sure if a book like this applies, but maybe check it out if it's in a local library or resources similar to it.
http://www.amazon.com/The-Students-Guide-Scholarships-Creative/dp/0615415989


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