Sticking my head in the sand

Probably the biggest roadblock to getting my finances in order, is my tendency to stick my head in the sand. Much like Scarlett O'hara, I'll worry about it tomorrow.

Last year I went to the emergency room for chest pains. At the time I did not want to go but my daughter was freaking out, so I went.

My insurance had a $2700 deductible, so nothing was covered. I started getting bills and was outraged. I was in the emergency room for exactly 26 minutes and the bills totaled almost $2000. The only thing they did was hook me up to a portable EKG machine for three minutes, say it wasn't a heart attack and then I left.

They wanted to run additional tests but I refused, I knew I could get those tests through my doctor if I needed them. It still cost so much money!

I paid a few of the smaller bills, but in typical fashion, ignored the largest one. Instead of calling and making payment arrangements I ignored it.

Then I got a letter in the mail that the bill has gone to collections. Shit. For a few days, I did what I do best, I ignored it. I finally put some money in an emergency account and with all the weird stuff going on with Covid-19, I didn't want to part with it.

If only I got the letter before I sent my stimulus check to pay off Kohls. Then I realized that if I hadn't paid that bill I would still be paying on it for who knows how long.

So, I took a deep breath and paid the collection account off with my savings. It hurt and shook my stability a bit, but I did it.

I guess that's another habit I need to improve, stop ignoring bills and thinking they will go away. As frustrating as it was to have to part with some of my savings, I know it's my own fault. I will stop sticking my head in the sand.

It does feel good not to have that hanging over my head anymore. Also, I still have a job, so I can build my savings back up.

I paid off my Kohl's card

I did it! I paid off my Kohl's card! It was super stressful. It's so easy to justify that monthly payment. It's easy, doesn't require much effort and really, it's not a lot of money. It would have been very easy to continue making that payment forever. It was much harder to give them $1700 all at once.

Also, department store credit cards are the absolute worst. The interest rate on that was so high that most of my payment just went to interest. I used a repayment calculator to determine my payoff. If I would have made minimum payments it would have take 36 months and I would have paid $855 in interest. If I paid $100 a month, which is what I've been doing, it would have taken 22 months and I would have paid $461 in interest.

I paced the house for about an hour before I was able to push the button to pay off that debt. All the worst case scenarios ran through my head. What if I lost my job? What if I got sick- I just started a new job so I won't have health insurance for two months. What if my car breaks down? A million what if's went through my head.

Ultimately, I knew I needed to get rid of this debt. Eventually I would like to buy a small house in an area with a lower cost of living. In order to do that, I need to improve my credit score. Going from 77% credit utilization ( amount of debt in relation to total credit limit) to 66%, is not a huge leap, but it's a start. Hopefully I'll see a few point increase on my credit score.

Also, every $100 I can remove from my monthly living expenses reduces what I need to have saved for retirement. It's a small win, but at the same time, it's a huge win!

I've never paid off a credit card before. That lovely American dream said Charge It! And I did, over and over again. I'm excited to finally be taking steps towards a debt free life.

The credit card trap

After getting divorced and filing for bankruptcy I was so proud to get approved for a credit card with a $300 limit. I thought that meant I was on the path to fixing my money problems. I was only going to use that card for emergencies.

Funny how many "emergencies" there are when you have a credit card to use. Soon I was living at the $300 max, paying minimum payments. The credit card company so kindly kept increasing my limit and I kept increasing the amount of debt I carried on the card, all while making minimum payments.

Right now I have two cards, Kohls and a MasterCard, neither are maxed out but they could be at any time. My spending habits are terrible. I can't tell you how many Christmas' I ran that Kohls' card up to it's limit, overpaying for things and then paying interest on that increased cost.

The MasterCard is no better. Let's go to Mexico! Put it on the card. My daughter is getting married! Put it on the card. Let's go to Disneyland! Put it on the card. Right now I catch myself trying to decide if now would be a good time to book a trip to Disneyland. As you can see, I suffer from a large amount of  "emergencies."

Time to get honest.

My Kohl's charge. Is it just me or do department store credit cards seem like a rite of passage to adulthood? I was so excited when I got that card with it's $500 limit. Now the limit is $3000 and my balance is $1699.92.

I can't believe I'm admitting this but I just looked at the interest rate on my Kohl's card for the first time. It's 26.74%. What in the actual hell? I have not purchased anything at Kohl's in over a year but I paid $607 in interest in 2019. This needs to stop.

Now for the MasterCard. The interest rate on this card is 14.40%, the interest for cash advances is much higher but I've never taken a cash advance so I guess that's one thing I've done right. My credit limit is $7900 and my balance is $6813.20. They also charge a $59 annual fee.

I've always paid a little more than the minimum on my MasterCard, but I need to focus on Kohl's first. Each card shows that the interest accrued every month is half of what the minimum payment is. It's the old two steps forward, one step back. I need to fix that.

I'm working on creating an emergency fund so I won't be so tempted to use my credit card. It's much easier to swipe that plastic than to hand over actual cash.

I do have a reoccurring charge of $49 a month for a self publishing course that gets charged to my card every month. It seemed like a good idea at the time, but now I'm cringing. I should have had that monthly payment come out of my checking account but I didn't want to have another bill to pay- not very smart. There are four months left of that payment, then it will be done.

I plan to use my stimulus check and some of my savings to pay off the Kohls' card. Even as I say that I  have a list of things in my head that I would love to spend that stimulus check on.

I need to get it together!

Where to start?

Now that I am seriously thinking about retirement, I need to find some help. I've found some blogs and podcasts that promote, what they call FI or financial independence.

The first step is to reduce your current expenses so I took a look at my bank statements, and although my monthly bills aren't high, my spending is out of control. Every time I got to Walmart or Target I'm spending over $100, and I have nothing to show for it. That needs to stop.

I've looked at my bills and really, my expenses aren't that high, I don't have cable or a car payment. There are still some things I can get rid of, so here goes!

Here are the immediate changes I've made:

• renting a basement from my daughter and son in law- this is saving me about 30% over what I was spending on my tiny apartment. I know this isn't viable for everyone but for me, it's going to save about $300 a month
• cancelled- Spotify and my gym membership- between the two of those that's about $40 a month.

That's $340 towards my debt. Now to be honest, last year my car was paid off, but I did not use that $250 a month to pay debt, I just spent it. Now I need to find that money and use it as well.

Even though I've cut my expenses, over time, I haven't made an forward progress. Sometimes I'll make a $500 payment towards my credit card but then I always seem to just charge it right back up.

I am making a promise to myself to do better. I need to get rid of all debt so I can start saving for the future.

Wish me luck!

The fast train to middle age

I've been doing some thinking about how I got to where I am. I'm still not sure how the years have flown by so quickly or what I was doing with the time I should have been planning, but here I am. Living paycheck to paycheck without any savings.

In my thirties I thought I was living the American dream. I was married, we had a child, we bought a house, we both worked and were spending money and accumulating debt, just like the neighbors. It was everything I had ever dreamed of as a little girl. I thought it was how things were supposed to be, what I was supposed to be doing.

Then I got divorced. As part of that divorce I got half of the debt but now had less than half the income . I also had full custody of our ten year old daughter. 

I was a single mom, trying to pay off the debt that we had accumulated during our marriage and trying to raise my child. Just finding an apartment that I could afford, in a good school district, was a challenge. The burden of the debt from my marriage was overwhelming and I had to file bankruptcy to get out from under that mountain of debt.

After filing bankruptcy I found a much better paying job. Things were looking up. I cashed in my 401k, it was very small, I didn't open it until after the divorce, for a down payment on a house. That was the goal that I set for myself when I got divorced, I wanted my daughter to have a real home. She was so sad leaving the only home she remembered and I wanted to give that to her again.

The house was perfect, much bigger than what the two of us needed but it was a starter home in a cookie cutter neighborhood. It was within walking distance of the middle and high schools and close to work.

I was, once again, living the good life. I made a good income and spent it all, plus some extra, just to keep the credit card companies from financial ruin. Then the market crashed.

I struggled through several more years paying that mortgage, doing everything I was supposed to do. I was not accumulating much debt, mostly because those credit card companies didn't trust me very much,  but I was not saving anything either. 

Then I lost my job. I had a little bit of money, in savings not a lot, enough to keep us from being homeless. Then I lost my job and my house fell apart, all at the same time.

In June my swamp cooler quit working. Some people have central air, I had a swamp cooler. They aren't very complicated so the fix wasn't terribly expensive but it ate into my savings just the same because I was unemployed.

A few days later the water company knocked on my front door and said that I had a leak somewhere because my water usage was through the roof, like several hundred dollars over the normal cost.

The water main had to be dug up. Just my luck the leak wasn't on the county side, it was on my side of the meter which meant it was my problem. After digging that same hole three times and throwing the rest of my savings down it, the water main was fixed.

I thought I could finally take a breath, then my dishwasher hose broke and my dishwasher leaked into the basement. The basement that I really only went into when I had to do laundry so by the time I realized that my dishwasher was leaking, the drywall and carpet in the room below the dishwasher had to be ripped out and replaced. 

Then, just for fun, we had a really bad storm and my fence blew over. I was out in the rain trying to get the fence to stand up enough to keep the neighbors dogs from destroying my yard. It didn't work.

At this point I was done. I had no money, no job, a house payment and all my bills, but all my savings was gone. So I called the bank. I don't know if that's what you are supposed to do but I told them I couldn't pay for the house anymore. I packed the few things I hadn't sold to pay for silly things like food and electricity and moved out. 

Of course my house went into foreclosure, that's what happens when you stop paying the mortgage. A realtor who specializes in things like this, tracked me down at my new apartment and asked me if he could sell the house for me. 

He told me I wouldn't get anything out of it of course which I didn't expect because I was upside down in it since the housing market crashed and still hadn't recovered. I didn't care if I got anything out of the house I just wanted out from under it. Fortunately within about four months he was able to sell it and somehow literally broke even. It was depressing, I had lived in that house for eight years and it was worth less than it was when I bought it.

So there I was in my tiny little apartment 700 square foot apartment, with no money. I taken the last money that I had to pay the security deposit and first month's rent on my apartment. 

I was able to find a job before my rent was due, so I was back on that treadmill, trying to keep my head above water. It's a little easier because of course my expenses were much less without the house.

I realized that I was in my 50's and I had no savings, no retirement, basically my net worth was in the negative. I was still paying on my car, owed about $6,000 in credit card debt and had nothing in my savings account. I made enough money but I also had really bad spending habits and really bad money management habits.

After paying my bills anything that was left I just spent. I would take my daughter out to dinner, eat lunch out at work every day,  buy myself new shoes, new clothes, buy my grandson whatever his little heart desired.. Bottom line, if I had money, I spent it. 

Then one day I got an email or something that triggered me to check out the Social Security website. I looked on that website out of curiosity, and found that because I was born after 1960, my retirement age is 67. If I retired prior to that I would only get a percentage of what at could get at 67, or my full retirement age. 

So what the heck is my full retirement benefit?  I logged in and created an account. I found that my full retirement benefit is actually half of my current income. Well with my current income I run out of money long before I run out of  month. There were still times when I was juggling bills so that they wouldn't be paid before my paycheck hit the bank and sometimes my checking account was overdrawn. And let's not forget the credit cards. They so helpfully kept increasing my limit. 

I was tired of living that way. Tired of not opening the mail because I didn't know what would be waiting for me in there.  And then the icing on the cake, I go to work and I get an email from my payroll department that says my wages are being garnished for an InstaCare bill from two years prior that I never paid. Yes, I was pretty financially responsible. 

I was determined to make some changes. Save some money! Retire early if I could! That was three years ago. And I'm sad to say, I didn't make the necessary changes. I looked into things like paying off my debt and investing money. I set some goals and started off strong, putting some money in my savings. But it never lasted, as soon as I would have a little in savings there would be something I wanted or "needed" so I'd pull the money out fully intending to put it back. It never happened and I forgot all about making changes.

Today, my car is paid off, not due to anything special on my part,  I just paid the payments long enough to pay it off. I have over $10k in credit card debt and still no savings.

I lived my whole life thinking I had plenty of time, so if I wanted to spend my money on random things, and trust me I'm a collector of random things, then why not? I thought I had plenty of time to plan for retirement.

Now I'm turning 56, and haven't planned at all. Am I too late? Did I wait too long? Is it possible to go from zero to retirement on a single, middle class wage? I'm going to see. The bottom line is I can't live off what Social Security will give me when I reach the magical age of 67 so it's now or never.

This blog will become my personal financial diary. What I'm doing and how I'm doing it. I'm hoping it will work out and then there will be a record to help other people who waited too long. I don't want to work until the day I die or be a burden to my daughter.

That's really my biggest fear. I don't want my daughter to have to take care of me while she is trying to raise her family. It's not fair to her. I've often told her, when the time comes, put me in a home. Someone has to pay for that home though, so I better get a move on.

Tomorrow, I'll catch up to where i am now and start making some changes. It's not going to be easy, but it is so very necessary.