October 2008 Debt Report
Debt balances:
- Dentist (crown): $208
- Attorney: $449
- IRS: $2,667.40 (TY 2007)
- LDR: $2,735.00 (Louisiana Department of Revenue, TY 2007)
- Chase HELOC: $4,773.63
- CFCU Visa: $4,955.33
- Capital One HELOC: $21,434.99
First mortgage balance: $116,860
Debt Balance excluding co-signed student loans and first mortgage: $37,223
Total debt including first mortgage, excluding student loans: $154,083
Student Loans:
- Co-signed student loans, approximate balance: $45,238 (need a complete audit on these accounts; not sure this balance is correct or even close)
Possible total balance including 1st mortgage: $199,321
Discussion
Before I begin the discussion, I hope you noticed I placed a new widget in the sidebar that keeps a running total of the U.S. National debt, how much debt that translates into for each man, woman and child in the U.S. based on the current population which it also calculates continuously. Please leave me a comment and let me know what you think about our National debt. It shocks and amazes me at the same time. I’m still not quite sure what to think about it, but it sure has me thinking.
Total Balance Increased
My total balance owed went up this month because I got the bill for the state taxes I still owe for 2007. I haven’t set up a payment plan with the LDR yet. I will do that when they contact me about it, and they will, that’s the procedure. If I can get through my bankruptcy and have some money left over not having to pay my attorney and my dentist, I’ll pay off the IRS, then start on the LDR.
From my current calculations I’ve paid enough taxes in 2008 to neither owe nor be in a position to get a refund. I worked them several times and went back through paper records to be sure everything I’ve earned and every business expense is properly recorded in QuickBooks. That way I can rely on my profit and loss (income) statement. The taxes I’ve paid for 2008 are about equal with the taxes I owed on the gross amount less net ordinary expenses. If a tax cut comes my way and I get another refund, I’m sure the IRS will apply it to what I still owe.
Priority of Payments
I’m working on paying off my dentist first. We need him in case something happens with our teeth, so he gets paid. My attorney is next because I need to get this bankruptcy behind us so we can start over and move forward again.
As soon as the bankruptcy is completed I can start my emergency fund again. It will have to be a $7600 fund because my hurricane deductible is $7600. While building that fund, the IRS debt will be tackled with extreme prejudice, followed directly by the LDR debt.
Because of interest rate and minimum payment changes on my credit card balance, the balance has crept up. But I’m just paying the minimum due and focusing on the other debts. When I get the first 4 paid off, I’ll hit that debt hard and pay if off 5th. I’m sure I’ll still be building that hurricane deductible emergency fund.
The HELOCs will continue to receive minimum payments until my income goes up enough to finish building the hurricane deductible emergency fund. From recent experience, it looks like we have about 3 years in between major disasters, so I will have to put away $2534/yr for the next 3 years to have enough money in case of hurricane damage.
Income Fluctuations This Fall
Since my income has dropped so much after Gustav, my son qualifies for Medicaid again. I won’t have to pay out of pocket for his prescriptions as long as we qualify. I may be able to get reimbursements for my own medical expenses as well. I still earn enough that we will have to pay a premium to have Medicaid, but that’s fine with me. We are uninsurable otherwise at any cost because of pre-existing conditions. I’m praying very hard that the next President and Congress do something about people like us so we can buy affordable medical insurance that will cover our present conditions. This is one place where the free market system isn’t working at all, and it needs to be fixed.
My income may also qualify us for food stamps again in November. This month I made just over the maximum allowed to qualify. I still had some money left over from the emergency food stamps we got in September. I used all that up yesterday when I went for the first major grocery shopping trip I’ve made since before Hurricane Gustav. I didn’t want to put food in the refrigerator or freezer until I was pretty certain we wouldn’t be having another major hurricane this fall. I just bought enough perishables to last us 5-7 days, and then I went back to the store.
We’ve eaten a lot of box dinners that can be prepared using canned meat, and peanut butter sandwiches and crackers. My son is ecstatic we are back on our regular diet. He was getting tired of the limited diet non-perishable food requires. I was, too. We both really missed beans and rice. Unlike many who eat it because it’s cheap, red beans and rice are a weekly staple of the Louisiana culture, and we missed it a lot. A pound of dry beans makes a lot of cooked beans, so when I make them, I freeze at least one full dinner plus several individual servings for quick meals when we’re busy. I didn’t want to risk losing more food.
Hurricanes Are Less Likely Now
The Gulf waters have cooled about 15 degrees since August and we just had our first cold snap, so temperatures in the Gulf will cool a bit more. Cool water keeps hurricanes away, or weakens them considerably. Hurricanes are thermodynamically heat engines and cooler water and air make them far less efficient causing them to disorganize, downgrade and fall apart. We’re still cleaning debris out of the back third of our back yard, but we are extremely thankful and lucky that nothing was damaged besides my business income. I sure don’t have $7600 for my insurance deductible right now.
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Comment by Hillary Martin | October 20, 2008
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Comment by Eugene | October 21, 2008
I like your new widget that shows the US National Debt. What I don’t like it how high it is.
Comment by jw thornhill | October 29, 2008
JW,
I don’t like how high the national debt is either. I hope to live to see it go down without going back up. Maybe I’ll even live long enough to see it go away? I hope so.
Comment by joubess | November 1, 2008
what a fantastic resource this site is! I will visit as often as I can, you will be a great mentor for me
Comment by Char (Online Tutor/Academic Mentor) | November 11, 2008
Dear Sherri -
I just found your blog tonight and read through all the postings. I want to say how much I admire you for working through everything you’ve overcome and for trying so very hard to do the right thing by yourself, your son and your finances.
I’ve been using the Dave Ramsey approach for 14 months and it has helped us reduce our total debt by about 35%. So you can count me as a fan, but I’m also aware of the shortcomings of Dave’s approach. As you’ve discovered, all the planning in the world simply can’t overcome an income that’s too low to meet the basics of American life. After listening to many many hours of his show, I’ve noticed that most of the people he helps earn between $35K and $115K, with the majority above the median household income of about $48K. If you’re working multiple part time jobs or are earning at or below the median with a family to support and don’t have health, retirement or sick pay, you’re in real, constant danger of financial disaster. And what a disgrace that is for a great country like ours.
I’ve never heard Dave recommend bankruptcy to anyone and I think that’s a shame because some of the people who have called are clearly bankrupt. Telling them to hang on seems cruel because it’s probably just needlessly prolonging their debt slavery. What is the impact on those people of struggling with the terrible stress and pain of all that debt for a few more months or quarters? What will it do to their health, their marriages and their kids? This seems to be a blind spot of Dave’s and his more ardent followers.
I think your attitude toward letting go of the debts through bankruptcy is the right one. You’ve done all that’s humanly possible and you’ve done more than many people would. The banks and credit card companies are hardly innocent victims. For a great perspective on their behavior I’d recommend creditslips.org, a blog by a group of highly respected law professors specializing in bankruptcy law. I’d also strongly recommend “The Predator State” by James Galbraith.
There has been a total violation of the social contract in our country. Corporations have been allowed to prey on the people and government has utterly failed in its primary duty of protecting the citizenry. It will be fascinating to see how it all plays out.
Sorry I went on so long. I’ve really been touched by your story and wish you only the best.
Comment by CathyG | November 18, 2008
CathyG,
Thank you very much for your support. I will check out the resources you recommend.
The whole point of this blog is to tell my story as it happens, the decisions I make and why, and how things are going.
Dave Ramsey always says what’s going on in your house is more important than what’s going on in the White House. I have to disagree. They are at times equal because the President can appoint people to oversee entire areas of the country’s interests and if they turn a blind eye, as Treasury and the Federal Reserve have for so long, things like our current economy happen. This is a prime example that we need to mind the White House and Congress as closely as we mind our own houses.
Another thing Dave doesn’t discuss are people who are in poverty. He has nothing for them and nothing to say to them other than get another job. He fails to see that there is an entire class of people, especially single parents, who live below the poverty level. A single parent with one child making the minimum wage working 40 hours a week is below the poverty level. The minimum wage will only support a single person just above the poverty level, and that’s after they raised the minimum wage in July 2008.
There are certain things a government must do for its citizens, and education and fighting poverty are two of them. We’ve had wars on drugs, terrorism and communism; but we’ve never declared war on poverty or poor education. We need to. Living so close to poverty has taught me a life-time of lessons I never realized I would learn.
I am extremely interested in the large corporation and government violations of the social contract. Our government failed us criminally with massive deregulation of the banking industry and appointment of interested parties to oversee it. It was like letting the arsonists be the firefighters.
President-Elect Obama already has his hands full trying to sort through everything, let alone trying to do something about it. All we can do is elect candidates who will work for our interests as American citizens and hold them accountable. We can also volunteer in our communities and give as generously as we can manage. I look forward to the expansions of The Peace Corp, AmeriCorp and Teach for America under the Obama administration. We need to mobilize our most valuable resource, our citizens.
President-Elect Obama showed America and the world that America can elect a President who is accountable to its people. He is not bound by any other interests because the people funded his campaign, not lobbyists or special interest groups. He has a massive, grass-roots organization and I hope he puts us to work to help the country. I believe he will. He’s already making his weekly radio addresses available on YouTube, and on his website so people can find it and watch it easily.
I couldn’t contribute financially to Obama’s campaign, but I made a ton of phone calls to Indiana, and it turned blue because of people like me working one-on-one calling other voters. Right now, I can’t give anyone any money, but I can give some of my time and that’s what I do. My son and I volunteer at the local food bank and help people who come in apply for other assistance through the Department of Social Services. I also help them with budgeting if they need it. Just controlling what little money they have often helps.
Thanks again for writing and I hope you’ll visit regularly. Believe me, things are about to get even more interesting soon,
Sherri
Comment by joubess | November 18, 2008
Hi, Any chance for a November update?
Comment by DB | November 20, 2008
I’ll put up November when I finish paying the bills. I’m having to pay them in spurts this month because my income is still irregular.
I hope for a more stable income in December, and that is a good possibility because of mid-term exams. I always pick up extra hours in December for mid-terms and in May for finals.
Comment by joubess | November 21, 2008