Money (Debt Frugality Minimalism)

My Financial Goal for 2013

Posted on by Double Debt Single Woman

I have two massive debts, but only one financial goal for 2013.

As you already know from my first post, I have $110,000 in student loan debt and $30,000 in credit card debt. I’ll explain how the debt accumulated to these levels in another post. Suffice it to say that the vast majority of debt accrued in my final two years of grad school when I was unemployed or underemployed after the economy tanked. In any event, this is the debt I am facing.

My goal for 2013 is to become credit card debt free.

This debt of $30,000 will be paid off by the end of the year. It is both the smaller of the two debts, and also the one with the higher interest rate, so it makes sense for this one to die first. And die it will. It carries a 19.99% interest rate. That’s right. (They raised my rate from 13.99% to 19.99% immediately before Obama’s credit card reform went into effect. I, and millions of other Americans, have been over the proverbial barrel ever since.) It’s time for some Kill Bill revenge er, to repay Citibank for all they’ve done to for me over the years.

How will I accomplish this?  I’ll do this in a series of steps that I will explain throughout the year. In general, my plan is to cut my expenses way down and throw all of my available money at this debt.

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I’m implementing a 2013 spending freeze (moneyning) or spending fast (andthenwesaved).

  1. I’m moving out of my posh downtown shoebox studio apartment. I will rent a room in an old, small, three-bedroom home with two roommates in a rough neighborhood.   Savings: $1,000 per month. I took inspiration from blogger Rosetta (among many others) for getting rid of crap, renting a room, and living light.
  2. I will be starting a second job, if all goes well, in February (or March at the latest). This has the potential to bring in an extra $800 per month. I’m not going to count this as a secure income source until I’ve been in the job for a couple of months, as it appears to have a fairly high turn over rate. Note: This is in the education arena where I started putting in applications 6-8 months ago so it’s not like I just decided to get a $800 per month side job last week. The timing just happened to work out. So for now I will not include this in the repayment plan, but if it works out, it will help me to get out of debt much faster.

I bring home $3,700 per month. My goal is to live on $700 per month and throw $3,000 toward debt.  The monthly budget that I will need to stick to is ultra simple because I am single and have no dependents. Yes, it is simple, but draconian er, challenging.

$700 per month budget.

Rent: $425 per month rent (all utilities and internet included)
Phone: $65 per month (I’m looking at ways to reduce this. Yes, it is an iPhone.)
Transportation: $0  (I get a free public transit pass from my employer)
Food: $190 per month   (Don’t know if this is even possible. Look for separate posts on this.)
Clothing/Misc.: $20 per month

I know this budget may look insane to some people, but it’s what I am willing to try my best to stick to until this high interest credit card debt is gone. When the credit card debt is gone i can add a bit more padding to the budget.  And if the second job is a keeper then I will have even more to work with. Only time will tell. Rest assured that this is a means to an end. I have no plans to start dumpster diving, although I don’t judge people who do.

Well, that’s my 2013 financial goal. What is yours?

Live like no one else (now), so that later you can live like no one else.   Dave Ramsey

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“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)

2013: Out with the Old and in with the New

Posted on by Double Debt Single Woman

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This will indeed be a new year. This will be the first year of my financial future. After my rude awakening with respect to my finances and debt, I FINALLY started to make some real changes in my life.

I moved to this West Coast city two years ago to start a new job. Instead of continuing to live like a grad student, I inflated my lifestyle. Life mistake #412. I moved into a posh apartment building in the heart of downtown. I couldn’t afford furniture or a car or travel or nice clothing, but I didn’t care. I loved my posh digs. It took me two years of living paycheck to paycheck to buy furniture for a studio apartment. And the kicker, I’ve had my student loans in forbearance this entire time. Yes, I put my massive student loans in forbearance, accumulating interest continuously, so that I could buy nice furniture for an overpriced shoebox apartment. The stupidity!

Today I marvel at how much my thinking has changed and evolved. This has undoubtedly come from reading many personal finance blogs and listening to the gurus. I had the head knowledge of what I should be doing with my money, but I wasn’t uncomfortable enough to change.  I wasn’t fully realizing what I was giving up to live like that (opportunity cost). All I could afford to do was work and come home to my posh apartment. Occasionally, I’ll have a rough day at work – taking crap from clients, my manager, etc., and I’ll fantasize about leaving and finding another job, but I quickly realize that I can’t take the risk of leaving. I  am wholly dependent on my employer for my livelihood. So I keep my mouth shut and my head down in those situations at work. I hate it.

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I have been reading blogs such as Man vs. Debt. Bloggers like these have been able to travel extensively (my passion) and lead a lower stress life thanks to lack of debt and financial freedom. I realized that I would never be able to live that type of lifestyle while shackled to this mountain of debt. That made me sad. What made me angry was the realization of how much interest I’ve paid to make others wealthy and not myself.

I finally got uncomfortable. I got angry. I’m still angry. I’m done being a tool. I’m done being a profit center for corporate fat cats. I’m done funding everyone else’s retirement but my own.

When I am out of debt I vow to never pay another red cent in interest for ANYTHING.

I do not own a car, but in the future when I am able to afford one, it will be used, very small, economical, and paid for in full, in cash.  I don’t know if I’ll ever own a home or if I’ll ever want to, but if I do I will pay for that with cash, as it too would be very small, simple and functional.

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I’m done with consumerism and materialism. I’ve come to embrace simplicity, minimalism and frugality. While I still like nice things, my definition of nice has changed from what it once was.

I now realize that no fancy apartment or electronics or furnishings are worth what I’m losing. What am I losing? I’m not funding my retirement. I’m 37. I have no emergency saving, so I have no peace of mind. I can’t travel. I have old clothes that are so out of fashion that people stare at me sometimes. The list goes on. And #1, I don’t have control over my own life. It’s too risky to try for a new job in a new city or a different country. And when you can’t stand up for yourself or push-back in the workplace because you are entirely dependent on that job, a bit of your self-esteem crumbles away, little by little. To the financial powers that be. You can have your treadmill back. I’m done with all of it.

So, out with the old and in with the new!

It’s time to get on track and trying my best to catch up with my finances.  In my next post I’ll give a rundown of my current state and my goals for the new year.

What are you glad to leave behind in 2012? What are you ready to gain in 2013?

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“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)

My First Step (and it’s a doozy)…

Posted on by Double Debt Single Woman

I’m moving.

This. is. huge.

In my first post, I introduced my situation. For the past two years, I’ve been living in a posh downtown studio  in a new high-rise apartment building. I was in denial about my debt when I moved in. That will be the subject of other posts. Suffice it to say, that I loved this place. I loved the five star location, within walking distance of everything – museums, shops, theaters, a university etc. I loved the safety and calm. I loved the gorgeous view of the city right outside my window. I loved having my little nest, my safe haven, my oasis from the world. I have issues with social anxiety and am a very private person. Before moving here I had been in various roommate situations and disliked it. That is also the subject of future posts. I swore I’d NEVER go back to living with strangers.

I started to realize in the last few months finally that my debt was catching up with me. No amount of scrimping and saving would allow me to make any traction on my debts. I’ve stupidly had my student loan debt in forbearance for the past two years, while I scrimped and saved to furnish this apartment. Yes, really. Life mistake #457. I bargained (see 5 Stages of Grief) with myself that if I could just find a way to keep this apartment, my privacy, my oasis, then I would devote every spare penny to paying down debt. But I would learn that even that would no longer be enough. The very thing that I loved the most – debt would take that from me too.

I finally started doing the math and learned that I would not make it financially when my student loans come out of forbearance in March. So yes, I really loved the place I’m in now. LOVED. But, you know what? I love being out of debt even more. I’ve decided to leave.

I’m going to rent a room in a very small 3-bedroom / 1 bath house in a not-so-great neighborhood with two other women.

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This picture will not be my new room, but it is very similar looking. My new room will have a very old twin bed, a small old dresser and old desk with an old chair. That’s it. Three items. But then again, its so small that nothing else would fit. And I like it that way. This move is just what I need to shed all the crap that I spent years accumulating. As I have come to embrace minimalism over the past six months, I am looking forward to the purging process so that I can move as lightly as possible.

I will drop from $1365/mo. in rent and utilities down to $425/mo.  Yes, that’s $940 per mo. that I will be able to put toward my student loan monthly payment when it comes out of forbearance. As unappealing as my tiny cell room will be, what will keep me going is that I’m taking the first step in my three step plan to get out of debt. I’ll talk about the other two in future posts.

By the way, the picture above is of a jail cell. Debtor’s prison is real, and opportunity cost is a bitch.

As for now, let the selling, packing, and giving away begin. I can’t wait….

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“Debtor’s prison is real, and opportunity cost is a bitch.” (DDSW)