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|Sat, 05-31-2003 - 12:09pm|
I usually hang out at surviving divorce.
My story...I've never been a good money manager and it didn't become a serious problem until well into my adult married life. I'm now divorced and recovering from the financial disaster. I was married to a good guy with mental illness who I could never get on the same page with me where spending was concerned. He thought of himself as affluent and spent like a rich man. Depsite lots of education and good jobs we always lived beyond our means. I can't put all the blame on husband, I always allowed the spending to go on. But it caught up to us in a big way when he began having employment problems (he has mental illness and it got out of control). He was fired from a job and that put us into an immediate crisis. We had three mortgages on our house with payments totalling $4,000 per month. We couldn't manage on just my income. This became the tipping point for what had been a troubled situation for a very long time. I divorced him.
We sold the house for $100K more than what we had paid for it just two years earlier (I'm in CA). But thanks to high interest, substantial prepay penalties, closing costs and real estate agent commissions, the price came short by $27,000 (at a whopping 19.95% interest). I got all that debt in exchange for keeping 100% of my retirement. I also had close to $18,000 in credit card debt. That was the situation in November 2002 when the divorce was final.
I did a significant reality check and realized I needed to make a lot of changes. I put together a budget with the single-minded goal of paying down debt as quickly as possible. I built an Excel worrkbook where I budget amounts per spending category and track EVERY expenditure. It's working! I am proud to say that I've completely paid off three smaller, but high rate debts ($500 Capital One, $500 Limited Too, and $1,100 Circuit City) and my balance on the $27,000 short sale debt now stands at $19,500. All this plus I have sole custody of DD and I pay my X spousal support. Bottom line, despite very high interest rates, my debt has gone from $45,300 to $36,500 in just seven months.
To add to the stress, I was facing a job layoff. Just before my divorce was final I was informed that my position with a state university would go unfunded after June 30, 2003. I had nine months to find a new job. Higher education is depressed nation-wide, and jobs for upper level administrators like me are few and far between (and NOWHERE to be found in CA). I'm happy to say that I did find a new job. I'll be taking a 33% pay cut, but I'm moving to central VA where the cost of living is significantly lower. I won't be able to pay as aggressively on my debts, but I'll still pay them down regularly and surely.
One thing that will help is that I'll rollover my state retirement (I am a few months shy of being vested) into my TIAA-CREF retirement account where I can borrow against the roll-over amount at 6.7% interest rate. I'll refinance as much of the 19.95% short-sale debt as I can.
As for my X, he's still not employed, he qualifies for disability but won't take it because he refuses to see his doctors (major denial), he's moving into a shelter next month, and my attorney tells me his debt has grown by $20K since we separated a year ago.
Suze Orman has been a source of inspiration.
The big change has been devising a spreadsheet tool to track EVERY penny of spending to work out a livable budget that aggressively targets debt.
I hope to learn a lot of cost-saving measures here, and I hope to contribute support where possible.