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.
