Thursday, May 09, 2013

Show me the money

Something comes along and suddenly it's all about blogging. Weeks, months sometimes can go by when I just don't have the heart or the urge to pass anything along here. Other times, like this, there is simply so much I want to share with the two or three people who come by here, or with myself down the line.

This is about the money.

I moved into the condo in June, 2011. Now, I can remember getting a casual, boilerplate message from my bank soon afterward offering me a line of credit... five or ten thousand dollars initially; I'm not sure which... which probably goes out automatically from some computer to anyone with my financial particulars. I remember I snorted at; I'd only just paid off a long-standing credit card debt just around the time I decided to buy the condo, and the last thing I wanted was that temptation again. Almost right off the bat, though, Twinkle got sick. When I was hearing that feline transfusions were in the hundreds of dollars, and she'd need at least a few, I knew I was going to need to take them up on that offer. Honestly, I don't know how people in the States manage. It was bad enough with a beloved pet... what if it's your actually flesh-and-blood child, or your spouse? It genuinely amazes me there aren't riots in the streets for a universal health care scheme there... what I wouldn't give for one for pets! But I digress.

Anyway, of course, it didn't work out. I spent around $14,000 trying to give Twinkle her chance to get past five or six, but it was all too hard on her and she died anyway. And I've been carrying that on the line of credit ever since. At first I was paying $250 a pay on it (not counting the monthly interest they automatically withdrew from my chequing account, which by now has almost certainly topped $1000 all-told), thinking I'd pay it off over about two years. But me being me, I found it all too easy to cheat here and there and buy this little thing and that little thing, and it really never got down much below about ten grand. Then Max got sick, and even though there was little we could do for him, the tests and stuff, they added up. I don't remember exactly how much but it was probably about two thousand dollars. Two months later, Bonnie and her first brush with cancer.

I thought it was around the time that happened that I made the adjustments, but in looking at my pay statements, I can see it was actually in September, before anything was at issue with Bonnie, that I tried to get serious about paying the line of credit off. I gritted my teeth and cancelled my retirement savings contributions... which represented about 11% of my income, and were partially matched by the company. But then I could go full bore. Now I was shoveling $500 a pay against the line of credit like a stoker on the Titanic after the iceberg hit, and though I spent perhaps a thousand dollars of it on other incidentals since then, it's been going down. Just before Bonnie's surgery a couple of weeks back, it was just about to cross the ten thousand threshold again. Well, when I pay for her ashes and euthanasia in a week or two, it'll be back up over $13,000 again.

So, as previously stated, this evening at 6 I'll be going back to my bank and signing an application to have my bank assume my mortgage. I'll get creamed by the people who hold it now, but the interest savings over 5 years will cancel that out. Meanwhile, if we've worked the numbers out correctly, the bulk of my line of credit will be paid off, leaving something like $4,000 outstanding. That's a far more comfortable number and I'm going to try very hard to retire that as quickly as I can, because at that point, that $1000 every two pays becomes mine again.

My intention, then, is to put all the retirement deduction numbers I dialed to 0 last September back up where they were, which means roughly half what I'm now throwing to the line of credit. Then I've got something else to work with, and this time, instead of just letting it evaporate, I'd like to do something with it. My plan, right now, is to take about $100 a pay and put it into my own savings account; something readily accessible, but something I'll be just a little reluctant to touch because it'll be so satisfying watching it growing larger. And I want to take about $75 a pay or so and apply that to my mortgage payments above and beyond what I have to. Amounting to almost $2000 a year, that could really help bring down the amount of time I'm paying that off, particularly since, if I understood what the bank's financial adviser said, that excess is applied directly to the principal. That leaves about another $50 or so a pay that I can use for just living expenses. The budget I put myself on last fall was probably not realistic... I routinely exceeded it, and in truth, it was $100 a pay less than I was allowing myself when I was digging myself out of debt ten years ago. Even with another $100 a month or so I might still have to change these numbers... but the $200 a month in savings will mean I can gauge that without incurring interest penalties.

About three and a half years from now, the car should be paid off, and then almost $300 a month will become available for investment and savings... at least while the car holds out.

It's rough to say it, but as I've been slowly coming to terms with the stark reality that Bonnie really wasn't going to see 2014, it's been in the back of my mind that her passing was probably going to represent a  financial watershed moment. I don't like thinking of it in that kind of predatory way, but it's true. I'm grateful to Dig and his missus for suggesting the solution I'm going to try this evening that's taken what was going to be another 13-month Volga boatman slog, at least, of living as much like a monk as I could stand while putting nothing aside for the future, and potentially shortening that to something I might get paid off before the second anniversary of Twinkle's death.

I've had a lot of adjusting to do in the past few years, financially speaking... paying off and getting rid of my credit card with the aid of Larry's subletting my spare room; stepping up to a mortgage and condo fees; and then taking on this albatross of a line of credit that's largely built on the bones of my psuedo-children, loved and lost. While it hasn't completely cured me of avarice, I'd like to think it's made me more realistic. I'd like to start being responsible on my own, without the whip of crushing debt and the self-imposed austerity of necessity driving it for a change (but hey; at least I've had that much discipline). And this is what I'm setting out to do by laying it all out here.


jim said...

I got out of debt, except for my house, in 2011. It is GLORIOUS.

Thinking about what happens when the last elderly pet dies is pretty normal. When Gracie dies (she's 16!) I plan to take up all my old ratty carpets, refinish the hardwood floors that lurk underneath, and put down big area rugs. I can't WAIT. But of course, I will miss Gracie!

barefoot hiker said...

Sixteen. That's magnificent, Jim. What I wouldn't give right now. I understand the desire to break out and revamp... oh, but don't be too eager. <:)