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Dec. 20th, 2008 @ 03:03 pm Intro & Advice Needed
Current Mood: contemplativecontemplative

Hello everyone!  My name is Heather, I'm 23 years old.  I work for Chase bank (formerly WaMu) in Portland, OR.  Here is my intro and some additional info on my savings/debt below.

Step One: $1,000.00 to start Emergency Fund - DONE
I currently have $3,244 in my Emergency Fund.  I also use this account to save my 3-6 months of expenses.  It's nowhere near where it should be, though.  I also automatically have $100 taken out of each paycheck that is split into my 3 different savings accounts which I will break down later.

Step Two: Pay off all debt using the Debt Snowball (Except the house)
Not quite sure if I agree with Dave that I should payoff the smallest debts first.  I'm more of a Suze Orman type who prefers to pay off the highest balance/high interest rate first.  I will go into more detail about my debts later.

Step Three: 3-6 months expenses in savings
Currently doing that.  See Step One.

Step Four: Invest 15% of household income in Roth IRA's and pre-tax retirement
I invest 3% into a company-matched 401k.  I know I should do more, but it just doesn't seem possible right now.

Step Five: College Funding
I am not planning on children for many years. 

Step Six: Pay off home early
Currently renting.  I would like to own a home in the next 3-5 years.

Step Seven: Build Wealth & Give (Mutual Funds / Real Estate / Charity)
I would LOVE to do more of this.  Just not in the cards for me right now.

I have a question for all of you that I will ask after I give you some background.  I've made $50,000 this year.  I am hourly + commission based.  So next year, my commission payout model may look different, especially since Chase has now purchased WaMu and things are going to start changing very soon.  My fiance and I are going to be moving to Boston in June or July 2009 and since there are no Chase banks in the Boston area, I will be unemployed for a period of time (hopefully not long since I have a lot of banking experience).  Luckily, we will be living with his parents for the time so we won't have to pay rent right away.  We want to get married before we move, nothing lavish or expensive, but something small for our families.

Currently, I am supporting our household.  My fiance was unemployed from June through November this year.  I am still taking care of all our household expenses because the only job he could find was working the graveyard shift for Wal-Mart making $10/hour.  He has A LOT of debt (more than me!).  This is a major reason why we are moving, because he believes the job opportunities are better for him in his hometown of Boston than they are here in Portland, OR.  And since I can find a banking job anywhere, it seems to make sense.

My question is: Since I know I will be moving and out of a job in about 7 months, should I try to payoff as much of my debt as possible or only pay the minimums and throw the rest in savings?  I'm torn as to what to do.  On one hand, I'd like to at least payoff my remaining credit card debt (which is low and I could definitely do that) and then focus on paying off a high-interest personal loan I have, that way I only have two monthly debt payments to make (car + personal loan).  On the other hand, I need as much money in savings as I can get because I will probably be the one also paying for our move across the country and I don't want to put that on my credit cards.  What should I do?

Here is  breakdown of my current savings/outstanding debt to give you a picture of what I'm working with.  FYI - I have no student loans.

Emergency Savings: $3,244.96 ($25 of each paycheck is deposited in this account)
Christmas Savings: $ 25.42 ($25 of each paycheck is deposited in this account)
General Savings: $310 ($50 of each paycheck is deposited in this account)
Total Savings: $3,580.38

Car Loan: $13,180 - 7% interest
Personal Loan: $9,941 - 19% interest X.X
WaMu Credit Card: $160 - 8% interest
Nordstrom Credit Card: $763 - 7% interest (you should know that the debt on this card is not from clothes, but from buying plane tickets so we can visit my fiance's family in a few weeks)
Total Debt: $24,044

About this Entry
al ♥ cuddle
Date:December 21st, 2008 02:51 am (UTC)
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How much can you put towards the debt each month?

I'd stop the savings transfer and pay off the WaMu CC and the Nordstrom card. Say that takes 2 months? You already have enough in savings to cover a couple of car payments and personal loan payments. So can you estimate how much it will take for you to move? Are you renting a U-Haul or selling everything you can and packing up the car? After those two small debts are paid off, I'd make sure you had enough in savings to cover the move and 3 months of living expenses.

Yeah the interest on the personal loan sucks but a couple of months of minimum payments isn't that big of deal.

Then once you find a job I'd follow Dave's advice and take everything in your savings over $1,000 and pay down the personal loan.
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Date:December 21st, 2008 03:14 am (UTC)
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Yeah, the WaMu card is super easy to get rid of. A month ago, I took almost $2,000 out of the General savings to get it paid down to where it is now, so that was a huge improvement. The Nordstrom debt is brand-new, as I just bought the plane tickets two weeks ago. I will probably take the money out of the general savings to pay off the WaMu card and put the rest towards Nordstrom.

I just get nervous taking money out of savings. It makes me feel comfortable knowing money is there, thus why I didn't use any of the money in the emergency fund to pay for the plane tickets.

I really want to get rid of that damn personal loan, it was such a mistake. I didn't realize the interest was going to be so high because I have great credit (before the PL I had a credit score of 800 with no late payments or delinquincies... now after the PL I still have a decent score of about 705 w/no late payments).

The minimum payment on my car is $286 (I pay an even $300 every month and I'm one month ahead on my payments) and the minimum on the PL is $236, but I pay $250 each month. So I am paying extra on those, just doesn't feel like I get anywhere.

As far as the move goes, I'm still deciding on if I want to sell everything or take it with me and put it in storage for a few months. I have no idea what storage costs, but I just bought this furniture brand-new (in cash, of course) in June, so I'd hate to get rid of it. We will be driving my car across country, that is certain.

Edited at 2008-12-21 03:16 am (UTC)
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Date:December 21st, 2008 06:04 am (UTC)
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If you rent a truck - do NOT rent from U-Haul! Their trucks are chronically unsafe. Check in to Budget instead.

I second getting rid of the two lowest loans now. Also, if you know when you're moving, start looking for a job now. With the economy in the shape it is, it's never too early to get a jump start. (I know some people who looked for months to find a decent job.) Also, if you're moving for the job market, why not wait until your man finds a job? With the internet, it's pretty easy to do a job search from afar. Also, you'll know if the market really is better in Boston, or if it's just as bad and you should save the money from moving across the country.

Either way, good luck! I hope it all works out well.
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Date:December 21st, 2008 04:37 pm (UTC)
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Thanks for the advice on not going with U-Haul. I'll look into it. ;)

I do plan on submitting my resume to several banks in the area before we move. My fiance has a couple of relatives in the banking industry that are already asking for my resume. I just have to sit down and do it.

As far as his job goes, he is a licensed electrician with the state of Mass., but when he moved out to Oregon, he found out the license couldn't carry over and he didn't want to go through the pain of getting another license. So he can either go back to Boston and work their as an electrician or he's thought about joining the law enforcement field, but we'll see. At least he can always do the electrician stuff because his father is a contractor.
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Date:January 2nd, 2009 02:10 am (UTC)
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Since this is a Dave Ramsey forum, Im going to answer as Dave would :) please know Im not being unkind...

You owe way too much on your car. Dave would tell you to sell the car and buy a beater. Then you can roll that payment money unti your snowball.

The reason you feel like you aren't getting anywhere, is that you are all over the board. You can't be gazelle intense about getting rid of debt while you are putting money into your savings. *However* you see a storm coming. (your move) So Dave would tell you to pay your minimum on EVERYTHING (no more rounding your payments up)and then stockpile everything else into your emergency fund. And I mean everything else. Just because its going into your EF rather than your debt, that doesn't mean you can be lax.

So here is what I would do.
1-I would stop dividing your savings into 3, and dump it all into one big emergency fund.

2-I would stop the retirement fund. Being matched 3% isnt enough considering the interest you are paying on your debt. Use that money towards your debt instead.

3- You should consider selling your car.

4- Pay the minimum on everything (again..no rounding up) and put ALL excess money into your emergency fund. Sell what you can, cut corners, use cash to pay for everything.

5- If it were *me* I would start by taking the money you have in savings now, and paying off your two smallest debts. If nothing else, it will boost your spirits and give you some progress.

I know this group is pretty inactive, if you'd like to talk about it more feel free to email me Carii410 -at- aol -dot- com
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Date:January 4th, 2009 04:33 am (UTC)
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I just moved to Boston a few months ago, so once you get here... welcome!

I would say definitely get rid of the car. Public transportation here is great, and you can look for a job that would allow you to use it. Parking costs an arm and a leg if you are in the city as well.

Does your fiance KNOW he'll have a job? Have you guys thought about him going ahead and getting a job before you move out too? The cost of living is much higher here and with no jobs and limited savings that could be scary. Let alone the costs of moving itself. I loved from Illinois and it cost me over 3k and that was moving one room of furniture.

I do think the job market is good here, I'd just make sure you'll both be able to get something before moving. I used a "head hunter" to find me my job before I got here. I had several interviews the day after I arrived and had started my job by the second week I was here.

I rambled... a lot... good luck to you though!!
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Date:April 20th, 2009 03:12 am (UTC)
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Hope this isn't too hard to hear, but I would put off the wedding.

(I read your income wrong at first...) Even with the possibility of change, I wouldn't give up your job in this market (or even during a strong market) without something more definite in Boston. While separation might be hard, the best thing financially would be to send your fiance on ahead. Tell him to start job hunting, for himself *and* for you. He can send you applications, listings for openings, etc. Hopefully he'll find that job he's hoping for and start helping out on the finances. (Are you listing his debt as well? Because once you're married it'll become yours too.)

Focus on cutting costs, go ahead and nip the credit card debt since that one's easier, but leave the cards open. (Normally I'm an anti-card person, but in your case, as long as you can keep the balance low and there isn't a high annual fee, I'd keep it for emergencies...also it will help to have the card open if you're hoping to buy a home in the next few years...FICO is weird that way. But having available credit that you're not using looks good for some reason.)

Continue paying the minimum (or whatever you're currently paying) on the car payment, but focus on paying down the Personal Loan (19% is crazy).

Once either you or he secure a good job in Boston, THEN plan the wedding and the move. Personally, I'd want my spouse to be completely debt free before we get married, but I'm sensing that might be too long of a wait for you. Just remember that you're taking on his debt as well as him.

Anyway, you listed Ramsey's baby steps above. Those are meant to be done in sequence not all at the same time. However, I do think gradually adding to your savings like you're doing even while you're paying down debt is a GOOD idea. You're on steps 2&3 now, worry about 4-7 later (and don't worry about 5 at all until the kids come). After your debt is gone, you can hit the savings really hard, and then move on to the next steps, upping the retirement won't be so hard at that point.

After you have the job secured, and you're ready to move to Boston, then think about selling the car and planning wedding particulars. Boston is a beautiful place with a great transportation system, but it's also rather expensive (not sure how Portland compares, but I'd try to find something that compares costs of living).

I'm not saying you should definitely sell the car, just that that would be the point where you should sit down and think hard about it.

And on the home, try to have a 20% down payment saved up before looking to buy.

Best of luck to you.