Wednesday, August 24, 2011

In Which We Plan for the Future

I owe $41,131.87 in debt.

Yes, that's right. Forty-one thousand one hundred thirty-one dollars and eighty-seven cents.

This time last year that number was just under $50,000. I will take a moment and commend myself for such noticeable debt repayment...but now onto new business.

I still owe $41,131.87. At the moment I invest $879 every month in my ongoing battle with debt. Ongoing because this is my monthly installment. Battle because it isn't easily vanquished, though I (loyal knight and defender of the Wallet that I am) throw money at it relentlessly in hopes of defeating this long shadowed foe.

According to this very useful debt calculator
Your plan summary
•  If you pay $879.00 a month, it will take you 4 years and 4 months to pay off your credit cards.
•  Based on your current combined balance of $40,131.87, you will pay a total of $4,926.52 in interest.
To be clear, the debt I have is not due to credit cards but rather school (and more specifically my bachelor degree). I used to have credit card debt, and I think I have learnt my lesson (with 18% interest). Looking at that plan summary, I have to admit that these are figures I am quite happy to have in my life at this point. Entirely, completely, and 100% debt-free by the time I am 32? Yes, please!!

I do, however, have a rather large problem with this plan. Namely, when I move to Seattle I will not (presumably) have a job. This is a rather secure presumption as, for the first month or so, I may not have a Social Security Number and will thus not be legally entitled to work in the States. How to get one? Apply once I move. My hubby has pointed out to me a number of times that I will not have the same financial obligations as we will be maintaining one household, not the two we have kept for the duration of our relationship. Rent alone represents a savings of $700. Yet savings mean little when you have no income and are obligated to make rather substantial payments.

Budgeting is one of my passions. I discovered it when I lived in Japan, applied for a Masters degree and found myself enrolled in a program where I didn't qualify for student loans, scholarships, or financial aid. In Japan you could not carry a balance on your Visa -- the money was automatically deducted from your account each month. I was not eligible for loans of any kind. What then occurred to me was that I could possibly pay for my tuition and books out of pocket.

In retrospect this should have been my first thought, not the novel solution I took it to be.

Any time I have wanted to learn about a topic, I turn to books (and frequently Amazon). I ordered a book called Everything Personal Finances in Your 20s and 30s, a book that promised to erase my debt, personalize my budget (after teaching me what a budget was, of course), and secure my financial future. Keener I was, I highlighted practically everything, made notes, and started to budget.

Thus, I learned how to budget.

I think the biggest obstacle I had to overcome was the shame I felt for how I had(n't) managed my funds. I honestly had no idea what I was doing, or that I could have been doing better. Now I do, and I've been living by my budget since. Never perfectly. I have strayed from it, and I don't follow the golden rule of a safety net, but my budget has worked for me as I have worked for it.

When I think now of moving to the States, one of my first concerns is budgetary. My hubby cannot support both of us and our debt at the same time. I have calculated a way to have savings enough to cover my debt payments (at the minimum payments) until 2012June. That means I will have savings enough to cover four months of debt. I will be entirely relying my hubby for every other aspect of living.

Until I find a job.

The economy in the States is not doing so hot, and the jobs I find pay $12 an hour, if that. My hubby has pointed out that my take home after taxes in the States will be nearly the same as I take home now if I have a full-time job that pays me $10/ per hour. Qualifications and ego aside (though I find it difficult to think I might have to accept a position paying minimum wage), the take home would be enough to for us to survive financially. Mentally and emotionally? I don't know how I'd respond. In my mind I feel I ought not accept a position paying less than $40,000/ year. This is based on my qualifications, experience, and sense of worth. I feel it to be an under-rated yet acceptable; it is also arbitrary. I don't know the first bit about how to determine my worth.

I've looked at a website called Payscale. On the site I discovered a case manager in social services based in Seattle, Washington can expect to make between $12.31 and $19.83 an hour, and to have such a position one most likely requires a degree in social work. I make over $22/ per hour now, and I'm still being paid training wages. I need to figure out what is reasonable and adjust my expectations (and hopes) accordingly.

Going back to the original thought about being debt-free. My goal for debt-freedom is reliant on ongoing monthly payments of $879. A few life choices are going to make this difficult, two of which come immediately to mind: 1) imminent unemployment and 2) adding more human members to our pack. The impact of imminent unemployment is clear. No money, no debt payments, and if I don't find work quickly, we'll be in a bad situation. The former of these life choices is more immediate and far more concerning than the latter, but the latter is, um, approaching.

Don't break out the baby anything just yet. It's years (yes, years) away, but recently I've been thinking about how we're going to manage a bigger pack. From a biological, physical, and personal standpoint, I'd rather not be pregnant after 34, and we've talked about adding two children to our family. The options here are endless, but if we decide to have our own and not adopt, I want a three year pause between one pregnancy and the next, if I am capable of being pregnant.

Thirty four--no, 33 minus three. That brings us to the lovely number of 30, or 29 seeing as pregnancy is a full nine month ordeal.

A child in its first year will cost approximately $10,000. At that point we'd be on a single income. Despite my (many) qualms about stay-at-home parenting (sacrificing/ losing sense of self and potential, not growing as an individual), I'd be home (hopefully with Gabe for as long as he could be paid to stay away from work) to take care of the child. What that means is we'd need at least $10,000 more to adjust for the single income.

It is my intention that by that point both our menial (non-mortgage) debts be paid before we put ourselves in such a situation.

I will now disclose that $41,131.87 is not the sum of our pack debt. We must add an additional $14,925 (plus interest) to understand the full picture. Our total now comes to $56, that other interest. Shall we add the $10,000 we want to save (let's not even think about a down payment for a house yet and pretend for a moment there will be equity enough in the home we have now)?

The goal now becomes this: put $66,056.87 towards our 23 months. That's about $2872/ per month.

Yes, I have gone loopy.

Loopier still because I think the majority of this is not only doable, but REASONABLE.

If I can get a job where the take home pay is $2000/ per month, I'll be able to put that money towards debt, which means in 23 months we will have tackled approximately $46,000. Okay, so that's not quite accurate because I'm only paying $879 a month now, which will continue for the next seven months. Let's subtract $7,847. Still, that's almost $40,000. No small feat! Not quite the goal, but...progress. Not to mention it would have the added benefit of keeping us living on one income. Hopefully with great comfort.

Yes, I am loopy. I blame a lack of sleep, to which I continue to contribute by staying up past the designated 9:00pm pack bedtime. The dogs have already expressed their discontent at their routine being so rudely disregarded.

 I will now abide by the rules of the pack and take my silly self to bed.

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