Tuesday, May 22, 2012

Shouldn't I Have Done Better Than This By Now?

Warning! If you don't like whines, you should stop reading now.

I just had a $3500 emergency come up (at a time when I have less than $200 in my emergency account), so I know that my end-of-the-month wrap-up will not be a pretty sight. But more than that, also coming up is my 5-year anniversary of my very first post.

You'd think that five years would be more than enough time to get rid of debt, increase retirement savings, and generally be in fine shape, wouldn't you? Even with a recession smack in the middle, at least the debt should have come down, right? Well, it did come down some, but not nearly as much as it should have over a five year span. My total indebtedness has reduced only by $2105 per year, for a grand total of $10529. Likewise, my retirement savings have increased, but again, not as much as I would have predicted. I currently have $69,000 more in my 401(k) than I had in 2007, thanks to pre-tax deductions from my pay (which pay has not gone up at all in five years!). I will say that I'm glad I did not stop my retirement contributions to make increased payments on my debts--I know myself well enough to think that I would have found excuses to use that money elsewhere, in which case, my retirement fund would be seriously short about now.

So what has been my problem? Well, life did not stand still during the past five years. There was college for a child and grandchild; a new roof, replacement windows and a new furnace for the rental property; my only vehicle that died and had to be replaced; the comings and goings from my home of various adult children and grandchildren; etc. But none of these were unusual life events. These expenses could have and should have been part of my budget. If only I could get far enough ahead of current expenses to actually budget for visits from Murphy.

I'll probably be in a better mood tomorrow, but in the meantime, the whine wins!



17 comments:

Anonymous said...

What can you do to move forward? Are there any temporary things you can do to hardcore focus on debt reduction? Increase income, sell things, cut back on something?

Out My window said...

It takes a long time to get out of debt. Much longer than any of us anticipate. If we had no responsibilities and could live without children we could probably save more, but who wants to do that? Don't tempt me!:)

Another Reader said...

Your children are adults. The grandchildren are their responsibility. The kids and grandkids need to grow up and stop coming to you for everything. If you cut the money cord, you would help them learn to manage their lives and have enough money to pay off your debts.

Look at the future. You will not be able to help them on your meager retirement. When you pass on, your assets will be used up on irresponsible behavior, not managed to produce an income for the inheritors. You might want to look into a special needs trust to help with that, but it won't change the behavior.

Your kids and grandkids will end up being the responsibility of the taxpayers, at a time when our wasteful government will be cutting entitlements and eliminating safety nets. Your kids will not be able to manage under these conditions. Is that the outcome you want?

Grace. said...

Another Reader--if my children were "normal," I might agree with you. But I adopted them with varying degrees of physical, mental and emotional issues that continue to impact their adulthood. All of them have managed, for the most part, to live on their own, but as for money savvy--not so much. My will includes a Special Needs Trust. As for my "meager retirement," I'm probably a bit defensive but it should enable me to have at least $50,000 per year in retirement--which does not meet my personal definition of "meager."

Out My Window--If I had no kids? Lordy, I'd be a zillionaire by now!

Florence said...

Grace, you were a single parent of 5 children, by the time you retire you will have a paid for home, rental property, $50,000 a year income and no debt. Honey, that's an accomplishment of no mean size!!

Grace. said...

Ah Florence--you do make me feel better. Though at my current rate, I'll be 92 before I can retire! Having my house paid off in two years will definitely free up $1200+ per month to apply to debts.

Tessie said...

You're not whining! This is whining: "I'm $100,000.00 in (non-mortgage, non-student-loan debt) and I NEED a housekeeper to come clean my house and all the stuff I bought with credit cards."

See? There's a difference. Not that the above scenario is reality. I mean, that would just be too crazy.

But, yeah, any little amounts that can be set aside here and there do come in handy when those unexpected expenses arise. Those little amounts really DO add up quickly, you'd be surprised.

For instance, treat yourself like Walmart's favorite charity, The Children's Miracle Network. They always ask me, "Would you like to round your purchases up and donate the difference?". You can do that yourself whenever you buy something at the store with cash. Say your purchase is $2.05. Round up to the nearest one dollar (good; save .95), five dollar (better; save 2.95), ten dollar (best; save 7.95) or twenty dollar (ok, we are now entering mind-blowing saving territory; save 17.95). Put your "round-up savings" in your piggy bank, and it will add up fast. It's fun, too.

It might not pay for a new roof, but it might be enough for an unexpected car repair, deductible, or oops! I forgot flowers for secretary's day.

Jane said...

I hear ya! How do you plan to cover this emergency?? I don't have that kind of money just sitting around either! I have paid off a lot of debt but my savings are sadly lacking because of it. It's all in finding the right balance, which is different for everyone. $50,000/year for retirement is more than ample by my frugal book too!

Maureen said...

My if I was hit by Murphy for that amountt I would stay in bed pull the blankets up over my head and cry. I am just not financially stable enough for that kind of emergency...

Janette said...

I, personally, think you are living a good life.
There are time to sow and times to reap. Everything has a season.
That you are aware of the debt and working to a goal...it is that season!

Anonymous said...

You are rich anyway, Grace - you have children and grandchildren to love, and who love you back (at least most of them, most of the time, like everybody else). You've got a roof over your head, your health, employment, reliable transportation, and you've got us!
At the same time, I can commiserate. There's nothing quite like feeling that the load you've been dragging inch by inch up the hill has had another big rock added to it, and the top of the hill seems further away than ever.

Diane C said...

Saving 69k over five years is nothing to sneeze at! If I may ask, what is the interest rate on your mortgage? Would it make sense to ratchet up the savings and just pay off the mortgage at a non-accelerated rate? I apologize if you've covered this elsewhere. As to your debt, at least it hasn't increased while you were squirreling away that 69K.

priskill said...

So agree with Florence, Janette, et al -- you have done pretty amazingly, and the fact that you have allows you to meet this #@%&*! visit from Murphy with relative calm and ability to weather it -- that's a huge testament to the debt reduction and care you have taken for 5 years.

Sorry, though for the damned surprise. It's so typical, isn't it? Good luck.

LC said...

Unfortunately Murphy is an expensive guest and there seems to be no way to limit his inconsiderate assaults on one's hospitality. Just have to make that Murphy fund . . . uh, emergency fund a priority.

Terry said...

I might suggest that you strip out $14k from the $69k retirement fund and buy an already occupied rental property. This will bring you anywhere from an additional $250 to $300 each month and give you some other tax deductions as well. As for the tax bill incurred for the withdrawal - I can give you $2k when you close. So it's diversifying your retirement funds into real estate and providing a real time income stream.

Terry said...

Wow - I hope you are working with a great tax guy - the roof, windows and furnace all depreciate at a faster/higher rate than the rest of your rental property. This means more money in your pocket at tax time. You can google cost segregation. Also if you make less than $100k you can claim passive losses up to $25K. Take a look at some content written by Garrett Sutton and Tom Wheelwright to maximize your tax deductions on your rental property.

Grace. said...

I don't have what it takes to be a real estate investor. My one rental property is the first home I ever bought and lived in for nearly 20 years. Also, my retirement funds are around $250,000 (less this past week!)--the $69,000 was how much it has increased in the past five years.