'Good' debt vs. 'Bad' debt
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| Mon, 08-30-2004 - 9:50am |
Some nice lady would come on the board and say, 'oh dear, I owe $xxx for my brand new lincoln continental, and $xxx for my new vacation villa in Spain' and I'd say to myself, 'lady, get over it'.
Here I am though, debt free for months, and buying a new car. 'Oh dear, I'll have debt again'...tee hee hee!
According to Jerrold Mundis though, this is 'good' debt, because my car is the collatoral on the loan. If I don't pay, they get the car back. So it's more of a swap than a debt. Swapping a loan for a car.
It's still debt to me though, and I want to wipe it out as fast as I can, so I'll be snowflaking my dance income to the car payments. Car payments!?!?! I haven't had a car payment in 4 years!! ugh...
Glad to be back??
Have a great day,
Lee Ann

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Hi Lee Ann,
FWIW.....I have a question.
Always Seeking Forever Learning
First I pulled my head out of the sand and realized that I didn't know squat about money, and that I'd have to educate myself. I think it happened when I added up the interest I was paying on credit cards, around $400/month, with nothing to show for it. It was 4th of July weekend in 2002. I logged on here, and it was recommended that I read Jerrold Mundis' book, "How to get out of debt, stay out of debt, and live prosperously". So I read the whole thing that weekend, relaxing in my rocking chair on my front porch and reading. I made a committment to myself that I would do just what the title of his book says. It was my Independence from Financial Ignorance Day!
I have a part-time job teaching dancing, and I make about $10K a year doing that. But, I had been spending all that income on dance lessons for myself, and shoes, and advertising, etc. So I stopped taking lessons, stopped paper advertising and just had a website for $4.95/month. I put almost all my dance income toward debt at first. But then I realized I wasn't living prosperously, so someone on the Compulsive Spenders Board mentioned the 'Rule of Thirds'. I started taking the dance income, and put 1/3 into savings, 1/3 toward debt, and spent 1/3. My debt was going away more slowly, but I wasn't going into deprivation mode, and then splurging. And, I was building a safety cushion at the same time.
Then I got two inheritances, one in 2003, and another in 2004, each for $10K. So I finished paying off my debt, made some major purchases (dining room set, front loading washer/dryer) had a safety cushion of $10K in the bank, and everything's been fine. I got laid off last December, but was taking in as much on unemployment as I was making working and commuting 55 hours a week!
So, I lived frugally, but not ridiculously frugally, logged on here every day, and read some recommended books. Mary Hunt and Suze Orman are other authors worth going to the library to borrow.
Now I've taken half my savings for a downpayment on a 2004 Saturn. My monthly payments are the same amount I have earmarked to put into savings each month, so worst-case, I could use savings to make car payments if I had to. We also have five vehicles (I have one, my husband has four), so his could be sold too.
I just sold my old car last night, and DH wanted me to take the money and make 4.5 months worth of payments up front, but I think I'll stick with the 'rule of thirds'. I'd like a new sewing machine and lawn mower with $516.66, put $516.66 into savings, and put an extra $516.66 into my first car payment.
Tonight I'm meeting with my financial planner. My retirement savings dwindled to next-to-nothing, like a lot of other peoples', over the past couple of years. I've been taking control of my finances, instead of letting them control me, and this is one of the final items on my list - convince this guy, who makes his living off MY money, to put it where I tell him to. He's talked me out of it the past few years "oh, the market's bouncing back, blah blah blah". Tonight I'm putting my foot down. And Dh will be there with me too, he's pretty big, ha ha ha!!
Lee Ann
Lee Ann
www.werenotafraid.com
Don't you just love your Saturn!? I sold my 1995 last night for $1550. It has 144,416 miles on it, and still purrs. Well, it purrs now that DH replaced the fuel filter and EGR valve last week, getting those hamsters out of the wheel when we were going up hills, ha ha!!
I also started alternating 89 grade gasoline every few tanks with the recommended 87 grade, and it seemed to help.
Good luck with yours!
Lee Ann
Lee Ann
www.werenotafraid.com
I enjoyed reading your post. It's always good to hear from people who've 'been there'. I'm glad things have turned around for you, and you're doing better.
In addition to my part time teaching job, I work full time as a secretary just north of Boston. As a secretary, I can get a job just about anywhere. When I was laid off last winter, I collected as much on unemployment as I made working and commuting 55 hours a week! I also temped for a while, which got me out of the house and away from online shopping.
I have 16 months of car payments in the bank right now. And worst case, DH has a full-time job and no car payments, and has offered to pay some of my car loan for me. I'm confident I can do it myself though.
Maybe it's because I've only had three new cars in my lifetime, but even though I know about the depreciation the minute I drive off the lot, I really didn't want a demo model or even a turned-in low-mileage leased car. I wanted brand spanking new, but ended up with 201 miles on it, because they had to drive it up from Hyannis (Cape Cod). Right now they're putting in leather seats, so I'm driving DH's huge pickup truck for the next three days (and yes, I'm sure I look RIDICULOUS in it, sliding in and out in my skirt, ha ha ha!!)
Thanks again for your thoughts. Have a great day!
Lee Ann
Lee Ann
www.werenotafraid.com
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