2.04.2015

New Beginnings

On January 5, 2014, my parents rushed me to the hospital where I was admitted into ICU with double pneumonia. While there I was diagnosed with some other chronic conditions, including depression. Ten days later I was discharged, on supplemental oxygen. Two weeks after that I went back to work part time and didn't get back to full time for a few more weeks. I got off daytime oxygen in March, I think, and night time oxygen in December.

This kind of experience makes a girl question her life, you know? This is what I realized: I was seriously incredibly unhappy. Not one single thing about my life felt like it was hopeful or good. I was miserable, dealing with severe anxiety issues, stressed out over my crazy job, not sleeping, and completely avoiding money problems. So I decided I needed to make some changes. Life is too short to be so trapped by misery.

Step one: take charge of my health. This one was kind of forced on me, to be honest. I'm making progress, I think, not as much as I would like sometimes, but most importantly, I see all my doctors regularly and am no longer living in denial about my medical issues.  Also, I changed jobs to a less stressful position. It wasn't easy to do, because I loved parts of my job, but the pressure of deadlines wasn't doing anything to help my anxiety issues and my happiness.

Step two, and this is the HUGE one: take charge of my finances.  And that is what this blog is going to help me with. Even if no one reads it, I feel the need to talk about what I'm doing, to celebrate small victories, to plan out things. Just talk, without boring my family and close friends (everyone loves to talk about budgets, right?).

So here we go!

My situation: I'm 39 and I haven't saved a single penny for retirement. I'm single, happily so, but it is hard financially to have a single income. I make under $30,000 a year and I have a poor FICO score, primarily because of my horrible debt to credit ratio. Before I started concentrating on this, I committed myself to a trip in June, which I don't entirely have the money for yet, but will. I had to buy a car in mid-2013. And I have that hospital bill (I am SO grateful for my health insurance!) to finish paying off.

I got my Master's degree in 2007, right before the economy imploded, and it took over a year to find a job (not in my field). At the time my student loan companies refused to consolidate loans, and my loan payments would be about $800/month. So I spent a year freaking out about defaulting, got several economic hardship forbearances, and finally, in desperation, starting taking 6 credit hours a semester at my local community college, paying out of pocket on a monthly payment plan. That qualified me for an in-school deferment on my student loans, and so I remained in good standing, thank goodness. I did that until this past semester, when I FINALLY faced my debt and researched my consolidation and repayment options. I received a loan consolidation and am now on an income-based repayment program, but my loan debt is almost $85,000. And, as you can imagine, I have credit card debt from my years of avoiding responsibility for this mess.

But here is the good news. I can fix this! And this is how I'm going to do it.

First, I listed ALL my debts, balances, interest rates, and minimum payments. If you research debt reduction plans, you'll find that there are two common approaches. First is a "snowball," where you pay off your smallest balance first and then tackle the next smallest, etc, so your motivation is paying off some things right away to keep you going. The second is the "avalanche" where you start with the highest interest bills first, no matter what the balance is. I also have the complication of paying for the trip in June, and I need to start an emergency fund before reducing my debt. I also have a small bill that needs to be paid off by June in order to avoid paying interest. 

That last item pretty much decided what my plan was. I'm already paying off that credit card, while saving everything I can for the trip. Once the trip is over I will spend about two months building up my emergency fund, and then will start on my hospital bill (the next smallest bill), which I can pay off in October. Then I can add another $1000 to my emergency fund before paying off the next bill.

I'm actually a little torn about the hospital bill, to be honest. It is the next smallest debt, but it is also interest free. I'm on a payment plan and if I continue on that I will pay it off in April 2016. But if I just keep with the payments and start on the highest interest credit card, then I won't finish it this year, and paying off something this year would feel really good. Still, I have a few months to decide for sure.

 If you've made it this far, thank you! I hope you follow along as I take control of my life, and I hope you find it helpful either as inspiration or a cautionary tale! Please stick around, and let me know what you think.







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