Why I spent the last part of this month begging someone to put me $36,000 further in the hole.
So, first some good news.
Medium, you paid me $3.18 for last month’s writing, most of which was my May check-in post.
You like me! You really, really like me!
I expect good things to come, especially since I have also gotten back to offering advice, such as this recent post on how micro-tasking might make you some actual bucks.
The other good news is that we are surviving a temporary yet severe reduction in income of $1,600 per month this summer with class and panache. That’s a third of our income, to those of you keeping the abacus busy at home. While we are not saving money, and in fact we have cut into our modest savings to survive, it’s good to have some savings to cut into, and we are not doing further harm.
The final bit of good news, with a serious amount of spin applied to make it good, is that the GINORMOUS debt we are taking on this summer was all planned, and things are largely proceeding as we hoped. We have already reduced our roof repair debt by $900 because it is interest-free until October 2020. Our home equity line of credit is still pretty bruised, down only a few hundred dollars from the high of $25,000, but we are on pace. We’re carrying a small amount of credit card debt right now, about $500 or so at any given time, but that problem will be resolved in September when our income picks up again. I’m also mastering an understanding of how credit cards work, including the all-important difference between a statement balance and a current balance.
The last two pieces of the debt puzzle are a ParentPLUS loan for this coming year, and possibly another next year. This year’s loan would be for (gulp) $36,000, bringing our net worth near the negative numbers for the first time in many years. In all this time, with everything else that sucked, I could at least say that our debt did not exceed our assets. For the next several years, barring a miracle, that might not be true.
I did have the benefit of financial counseling last fall, which I’d put off for years because I could not afford it. I was lucky enough to have a close family member cover it, and we leapt at the chance. That counseling is the reason we got a home equity loan from a credit union to restructure our debt and have a cushion for home repairs. It’s also the reason I can see a light at the end of this dismal tunnel. In theory, when my husband leaves school and is able to earn even a modest full-time salary, and assuming I work at a job like the one I have until age 70, we might actually die without debt. Might.
The (Legal) Tender Trap.
When two people love each other very much, they seldom think about what it’s going to cost to send their little Too Much Chardonnay on That Ski Trip to college 18+ years later. Let me tell you, in case you have not yet grokked to this: It Costs Approximately a Lot.
USA Today estimates that a middle-class family will spend more than $233,000 to raise each child. I believe it. College alone is astronomical, even at state schools now. My son is receiving more than 50% of his college tuition as a scholarship or loans at a private university, which still leaves us with a ton to cover. We saved and saved, his grandparents saved and saved, for 18 years, and still that only bought us two years of college.
So I just applied — and barely got — a ParentPLUS Loan for junior year, and probably need one for senior year, too. It’s insanely easy to apply for, and carries interest rates well below those of private loans (I believe the current rate is 7%, and the cap is 10.5% by law). You do not even need particularly strong credit to get a ParentPLUS loan, and because it is a federal loan, it can be discharged at your death, so that it won’t burden your successors. There is also now some protection built in in case your child’s college closes or just sucks, and there are repayment plan options, plus forbearance and deferral options, in case of hardship.
There are some difficult bits and some drawbacks, however.
Several steps to get a ParentPLUS loan.
Step 0: Know that this does not have to be you, to begin with. Although it takes planning and determination — and sometimes interruptions — your child can still get an excellent education without much or any debt. In fact, I had plans in place for my home-schooled son to go straight to community college first and then on to a four-year, not necessarily the one he chose. That’s just one of several ways to avoid the bind we are choosing to be in.
While not exactly thrilled with the choices our family has made instead, I understand the reasons (too personal to share here) and I also get that there are many ways to avoid this stress.
Still need to proceed? Okay.
Step 1: Don’t do what I did.
I’ve done almost everything right: my credit rating is close to 800 right now, and I have paid my debts on time for years — for the most part. It’s the other side of that most part that’s getting me now.
The one thing the federal government hates to see is an old delinquency. I have a debt of about $8,000 to Social Security for overpayment of my widow’s benefits after I was remarried, and in December 2016 I let the payments lapse for long enough to trigger a delinquency notice on my credit report. I actually did not discover it until 2018 because it never interfered with my getting credit. Because I’d gotten on a payment plan immediately in 2017, and because the debt is completely interest-free, I’ve drawn out the payment far too long. Also, because Social Security’s arcane system make it possible only to pay by phone (no automated option), I have missed payment deadline dates a few times. So guess what? I was denied a ParentPLUS loan even though my credit is excellent, and I had to go through an appeals process.
Step 2: If you did what I did, prepare to haggle
The appeals process was straightforward and sensible. If you have had a delinquency, you must show that it is paid in full or that you are on a payment plan and have made your payments consistently for six months — a test I also flunked, but because I could show 12 months worth of mostly on-time payments, and I had an understanding counselor on the other end of the emails, I was finally approved.
If an appeal fails, or if you have no proof that you are addressing the delinquency, your next step will be to find an endorser, someone who can guarantee the loan. Or, swallow hard and pay the debt in full if you can.
Total debt: $467,905 (about $600 less than in May). This will balloon to $497,000 or more if all goes well this month. (That has to be the most cognitively dissonant thing I’ve said all day.)
Credit card & consumer debt, including our car loan: $7,606 (about $900 more than in May, still mostly our car loan and an interest-free credit card debt we have to pay off in 2020).
Net worth: $127,000. That’s up $4,000 since May despite everything!
Maintaining icy calm.
Someone in my family just died this weekend, and I got bad but manageable news about my health, so maybe that’s coloring my approach to the coming month. I just have faith that we will soldier through, somehow, and I’m really focused on being the best me I can be, debt or no debt. I don’t have the energy to fret right now.
The fact is that life does not stop for your goals, and so we are just going to keep moving through as best we can. I have to say, this surprise text this week that Medium is paying me a little for my production here as a blogger does have me very excited.
I’m also discovering a community here, which makes me feel less alone in the struggle with money. People like Tom Avila Tom Klitus Oren Cohen and Jennifer Chan, Ben Le Fort, Grokking Money, and janeruffino (some of whom are friends IRL who followed me here and cheer me on) .. well, they remind me to keep my head up and take my own advice:
Check-In on My 19 Goals for 2019
- Increase our saving rate to 10% by the end of the year (with a goal of 20% by the end of 2020). I’d say we’ve slipped almost off the map this summer. I am still saving in my 401K, so the percentage is around 2% at the moment.
- Make sure that every single debt goes down each month, if only by a dollar. This one is iffy this month. Overall debt continues to go down.
- Get my credit card debt usage to 50% (it was 66% on January 1). I’m at 42% now because the roof loan is considered a credit card. So I am meeting but not much exceeding this target.
- In hard numbers, pay down a total of $12,000 in all debt; $6,000 in consumer debt, which includes a car loan. Our decision to take on new debt this year makes this goal pretty hard to track. It’s not really a meaningful goal at the moment.
- Abolish two particularly annoying debts of $500 and $700 each. One is gone, and the other is at $300. So, it’ll be gone by September.
- Save a total of $3,000 in emergency funds this year. The summer has all but wiped us out. We will have to reboot this goal in September.
- Get a raise at work. I’m not covering this goal here anymore because I want to put distance between my work life and the blog, a little.
- Find the best possible solution to two goals that could stress us further: a roof replacement and keeping my son in college. In process. The roof is paid down by $900 so far. The debt for college is in process.
- Incur no more consumer debt this summer, which is our most difficult time. We have not fully succeeded here, but we are holding our own.
- Be more analog each day, and enjoy more hands-on pursuits like reading offline, playing cards and board games, journaling, and coloring. I have spent a lot more time walking or in the hammock reading this summer.
- Get more of the 3 M’s: Music, Museums, and Movies (the one splurge we have kept is the trio of Hulu/Amazon Prime/Netflix; we’ll see if all three survive our budget hacking; for now, I plan to maximize our vice). Haven’t done much this month. I still highly recommend Good Omens from last month.
- Perfect my handwriting, using the Spencer method, essentially a form of meditation for me. As I reported last month, I’ve gotta get back to this. I am gardening, which while very different, is similarly reconnecting my brain, body, and hands.
- Read more women and trans writers of color. I’m still reading Isabel Wilkerson’s The Warmth of Other Suns, although I am alternating it with a reread of Marcel Proust’s In Search of Lost Time. (affiliate links to IndieBound)
- Memorize two poems I have loved for years, which is way harder than you’d think. They are Jane Kenyon’s “Happiness” and Jane Hirshfield’s “Rebus.” I’m still way behind on this.
- Have a holiday fund that includes money to give to charity and to have a New Year’s Day party in 2020. Haven’t yet started this.
- Prepare a financial advice document for my son that is relevant to his needs and puts him on a smart path to not fuck up like his mama did. Still behind on this. Definitely gotta get on this.
- Articulate and keep alive the ideas of one day dedicating time to teaching ESL, teaching in prisons, teaching to people who are caregivers, teaching to people without homes, studying herbal medicine, practicing mindfulness, and perhaps learning Reiki at last. I still have it in mind.
- Have a garden plan and budget for spring 2020. I’ve planted clover and buckwheat to condition the soil, got some bricks on Freecycle to make a walkway, and have generally enjoyed these small hacks. Nothing further so far, but I am seeing daisies and Black-eyed Susans from previous seasons’ work come up. So that feels good.
- Initiate contributions to my company’s HSA plan by September. Holding space for this.
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