Friday, March 11, 2011

A Decision

As you know, I've been saving like mad. I want to move. There are no opportunities here. The job market is terrible. I don't have skills or experience to land a dream job elsewhere and the job market is pretty much dreadful everywhere. However, there are areas hiring more often for service type jobs in which I do have experience.

I was planning to move this spring. It may not happen as soon as I thought because we have made other changes. These changes that popped up are quite pleasant indeed. I love spending time with my eldest daughter and grandbaby. We were missing out on a lot being several states away. We were missing out on his spontaneous dancing whenever there is music, his extreme love of blueberries (just hand over the blueberries and nobody gets hurt), and his love/tease relationship with the dog. I'm glad I was still here and able to help my kids when they needed it. I have no regrets.

Here's the decision. I have the emergency fund, and I have my remaining debt. I could cancel my debt in one fell swoop and still have a little bit left over. I could put away much more in savings over the next few months being debt free and build up the savings again and not have to pay any more in interest. I just won't have my instant escape fund if anything pops up, I will be stuck here. We have jobs, we have shelter, we have family. Everything is good, so why am I worried?

I've been able to create this cushion at the same time as paying way more than the minimum amount due on my bills. My husband and I have done this together each with a part time job making little more than minimum wage. It is something to be proud of. I am proud. I also know that I can build up my savings again. I have skills now, so why am I worried over this? I could be done with this and call myself debt free right now. DEBT FREE!

I think what worries me about reducing my savings is that I won't have it there just in case. Just having it sit there gives me imaginary options. If I wanted to I could pay my bills ahead of time and take a month long camping trip through several states. Without the savings I would have to go into more debt for a week long vacation.

I also realize my debt free status could very well be short term because realistically I may have to use credit at some point in the future, although I will consider all other options first. On the other hand I may be able to avoid the credit monster completely.

So here's where I need the help guys. I'm taking this weekend to consider it, and on Tuesday I'm either going to transfer a large chunk of savings to checking and pay off everything and breathe a little easier, or I'm going to keep plugging away as usual and give the credit company even more interest but have a larger emergency fund available just in case.

I'll be honest, I'm leaning sixty percent in favor of being done with it and just forty percent in favor of how I've been doing it. I know I can build it back up, even sooner without the debt payments. I just need some positive energy and comments, lots and lots of comments. Please chime in and tell me what you would do. I know it is my husbands and my decision, I just don't want to rush into it without considering every angle. Give me your thoughts, please really, the dog is sick of me talking it over with her and she doesn't have an opinion one way or the other.


  1. Here are two quotes I have picked out of your post: "also realize my debt free status could very well be short term because realistically I may have to use credit at some point in the future...." and "I'm leaning sixty percent in favor of being done with it and just forty percent in favor of how I've been doing it."

    I think you are smart to realize that you need to have some money on hand. Having real cash money at your disposal is not the same thing as being able to tap into credit. I believe it's better to have some money, than to have nearly none, and rely on the ability to borrow, should the need arise.

    That said, I don't keep a lot of money on hand (outside of my investments, so I guess I really do, now that I think of it.) I love to keep (or at least, I strive to get) debts paid off, and I don't love the feeling of money in the bank, so I tend to focus on paying, and I understand that urge you have. But just remember that you have to look out for yourself before you look out for the Bank of X, Bank of Y, and Bank of Z. They would just love it if you wrote them some big fat checks. And they'd eat them up and forget about the money (and about you) immediately.

    But you have to look out for yourself, so keep some money at the ready. Here's an idea: Since you're leaning, how about instead of being all-or-nothing about this, take a moderate view. Take 60% of the money and pay off a chunk. Then guard the rest of the money, forget it is there, but be glad you have some security, and keep plugging away at decimating the rest of the debt.

    Really, either way you want to do it will probably be OK, but you might want to consider a compromise, that's all I'm saying.

  2. You should feel SO proud of yourself for reaching the point you CAN pay off your debt! =) Fantastic job!!! =) You've worked so hard!

    You said you'd have a little leftover if you paid everything off... If it's enough to cover a month of groceries or a small car repair (that sort of thing), I think I'd pay off the debt in full. Then with what you would have used for debt payments, rebuild your emergency fund ASAP.

    Keep up the great work! And posts! =)

  3. OBOY am I ever proud of you for your money management skills and your willingness to do whatever it takes to be debt free, live within your means and make your dreams come true.

    Whenever I have a major decision to make-whether it's money issues or what color shirt to wear-I pay really close attention to the middle of me, where I know things are true. If things FEEL true to me then I go with that. If not, I wait to see if my feelings change.

    This is not very sound financial advice, is it?

    I want PEACE for you. If you feel more peace by paying most things off, leaving a nest egg and working at the rest of it, go that route. Whatever really, truly makes your heart go pitty pat is going to give you peace in the long term.

    Only you and your husband can make those choices and so long as you both speak with one voice, you should make the correct decision for YOU.

    BTW, I love you madly. You inspire me to new heights with every post.

    Mother Connie

  4. I like the compromise idea. Just accelerate a little bit on the debt repayment and keep the rest for the security it brings you. You decide the "little bit more". It's important to have liquid cash in case of emergency and it helps you sleep at night. About the moving idea, where would you go? I live in the frozen north of MN and I just hate the winter. But we seem to have lower than average unemployment. For me it doesn't help though as I have been looking for a teaching job here for 2 years. I guess I would move to wherever I could get a job and just put up with the weather. For me, economic security is first. Wherever you can find that is where you should go. Much as I hate winter, if I got a job in Fargo I would go.

  5. Did you say what the interest rate is on the debt? (I read very quickly), If it's a significant rate, then I would get rid of the debt. Couldn't you just re-borrow the money if an emergency occurred? I would keep out enough for a car repair!

  6. I go with compromising also. Pay off some of the debt but leave a generous amount in savings. I don't know specifically what kind of debt you're talking about. Credit cards? Car loan? Personal loan? How about you pay off one or two to free up more cash to put in savings? From what you've written, it's not a good idea for you to have so little cash on hand.
    I had a similar decision to make about 10 years ago. My grandmother died and left me $5000. I had roughly $8000 in cc debt at the time and really wanted to get as much paid off as possible in one fell swoop. I put $1500 towards the debt and put the rest in savings. It was the best decision for me at the time. I continued to pay well over the minimum on that card.
    When my mom died a couple of years later and left me around $5000, I paid off the rest of the debt. Of course, I'm not saying that you should hope or expect relatives to die and leave you money! ;o) I am saying that you just don't know what will happen, so hang on to as much cash as you can.
    Good luck with your decision.

  7. Well, I am one of those people who always likes a cushion for emergencies. We paid off our mortgage last summer...and no sooner had we done that than our vehicle began to present us with EXPENSIVE repairs. We ended up having to purchase a new vehicle. I hate to be a Debby Downer, but I'd keep plodding, safe in the knowledge that I have a cushion.

  8. this is such a difficult decision. I would continue with what you are doing. I know that Dave Ramsey says to put every $$ to debt and I understand........however, what happens if you have an emergency or something unexpected to come up? If your savings is basically gone, then you will have to use credit cards. I know it may be a tad bit longer to get the debt down but you will have a larger ef

  9. First of all, I think you have done an incredible job in saving, especially with so little. I was in a situation where we came into a large sum of money from my husband's bonus. I could have put it into savings (since we had none) or pay off all of our debt. I chose to pay off all the debt and haven't regretted it. I was able to save so much each month because my cash was freed up. I would lean towards getting rid of all of your debt (but leave at least $1000 in savings).

  10. As another poster commented, I would suggest only using part of the savings to pay down the debt. Now that you have a house full again, expenses could increase. Do your son and daughter have jobs to help with household expenses? Also, since you and your husband both only work part-time and have no health insurance, it's even more important that you have a financial cushion. You don't know when hours could be cut, layoffs could occur, or perhaps a medical situation that requires you do use that emergency fund. I recommend keeping more money on hand just in case. Yes, paying the debt will allow you to save more in the long run, but how long will it take to rebuild the cushion? It all depends on how much debt you're paying off and how quickly you can resave it.

  11. I completely agree with "444". Pay off about half the debt but KEEP half for savings. Otherwise you leave yourselves vulnerable.

  12. I've had this dilemma as well and did exactly as 444 said. I gave half to debt and kept the other half because there is ALWAYS an emergency. ALWAYS.

  13. somehow my other reply did not post. You have done an amazing job!!! I know you have written about your quest for frugal living etc..........but I for one would love some details since you've done so well on so litt.e

  14. Even before I read the comments, I was thinking "do some of each." That leaves you some cushion but also knocks the debt down further. Everyone who reminded you there is always an emergency is right--there always is and we can't always plan for them! Paying down a portion of your debt with a "lump sum"amount would allow you to get debt free faster. You'd still have "some" emergency savings, and you would go on adding to that as you have been--and then when debt free, you can add that much more.

    Keep up the GREAT work!

  15. First of all congratulations! Long ago I heard you should keep 6 months worth of living expenses in savings. That's my comfort zone. Pay the bills with the rest.
    You've done so well so far that I'm sure you'll make the best decision for your situation.


  16. I cannot stand owing money so I'd probably go with paying all the debt off. All the money you save after that is yours to use any way you want to. You don't owe anyone and you aren't accruing interest anymore. Just my .02.

  17. I'm a few days late since I've been out of town, but you did say you wanted a lot of comments. So...

    Like most here, I recommend that you not look at it as an all or nothing issue. Keep a good chunk of that emergency fund intact, and use the rest to pay down your debt. That will bring you much closer to your goal, but also protect you if a major expense pops up. And one always does.

  18. Oh good for you WP!
    I like the middle of the road options mentioned above. Having said that, I'm sitting on cash myself because the debt I have is for my house and if I pay it off, I can't get it back out again and I get afraid that something bad might happen and I'll need it some day. But it's at a low rate. There's a certain emotional security I get from having cash in the bank, a kind of "I am safe, I will not be homeless and we will not be hungry ever again." And I seem to get a kick out of it going up in a way that seeing debt go down never did - there's something to be said for that too. :-)