Out of a Job!

I am currently out of a job! It doesn't help that I was sick for two weeks but I have been severely depressed about the situation. I have already exhausted my $4,000 emergency fund (I also had car troubles that reduced the emergency fund earlier)since I had to use it to pay my mortgage.

I am furiously applying for jobs in the environmental field but I have little hope that I would be paid the same amount. It would probably be $30,000/yr less but at this point, I am desperate for any job. I am going to have to use credit cards to buy interview clothes too. I am even thinking about getting any job, such as a retail job, just so that we do not starve and pay for lights, food, gas, etc. In addition, emergency surgeries had resulted a large medical debt that I had financed some on credit cards and some directly with the hospital. It's around $30,000. This is not including the $13,000 credit card debt that remains still(original amount was $15,000 when I took this loan out late last year).

So, the currently debt stands at around $45,000 and climbing due to the job situation. I pray that I can find a job soon but it's been a long time since I had been unemployed and can not help but feel hopeless. It is amazing how things can go from manageable to disastrous. The subject of declaring bankruptcy had entered my mind, of course. However, I do not want to declare bankruptcy unless I can't find a job for more than six months at least. I want to at least fight for getting a normal life back and pay back what I owe.

I just have to remember to not implode! I will update the debt progress and emergency fund pages soon with all the breakdowns.

Taking out a loan from retirement to pay off credit debt

This week, I got a loan from my 457b plan to pay off my credit card debt. I know that this is a big no for a lot of people.

[[ Why I chose to use my retirement to pay off credit debt? ]]

1) I am facing quite a reduction in take home pay

2)the 457b plan currently has a 4.5% interest rate versus my credit card's interest rates, some of which runs close to 23% interest rate.

3)I am on a 5-year pay off plan and even if I pay the minimum payment each month, there's an end in sight versus the "21" years it would have taken me to pay off my credit cards if I just made the monthly minimum payments.

4) The monthly payment would be consolidated to $277.00 per month versus being close to $500.00 each month.

[[ The Catch? ]]

1) You can't pay more than the minimum each month. It's a set payment. This means that even if I can pay more than the minimum each month (not likely in the near future), I wouldn't be able to apply the extra amount. I would have to save the extra "payments" in the savings account until I can have enough to pay off the entire loan.

2) There is a $50.00 processing fee that the plan administrator takes out from the retirement account as well as $50 per year (for five years) for annual maintenance fee for the loan. That sucks too.

3) Third catch is that I'd be losing shares that were bought at lower share amounts to buy back shares that probably would be higher. AND I would be paying back the amount contributed with before-tax dollars with after-tax dollars.


There was an online calculator that I used through my retirement plan (not sure how accurate it is..) to calculate what my estimated loss through the plan versus if I had not taken the loan out.

Variables set were if I were to keep contributions the same as always, if I continue to contribute until 65, and if the market performs at 6% annual returns or more.

I would lose approximately $9,000 in market gains by the time of retirement with the loan taken out versus no loan. That is less than what I would pay in interest during the next five years, if I were to make minimal payments.

Maybe over the next five years, my share buy dates would be on down days and after the next five years, the economy does very well and the share prices rocket!

Adding An Authorized Credit Card User

Adding An Authorized Credit Card user increases the credit score for the added user still. At least, in my experience.

I added S.O, who had practically non-existent credit score, about six months ago to two of my credit cards. One of them was a Citi Platinum Dividend card and the other was a Citi Thank You card. It was easy to set up over the phone or online. All I had to give was his name, date of birth, and social security number.

I've done some research online about adding authorized users and whether if it would help their credit scores at all. What I found was not decisive. In fact, there was information online about how it doesn't help anymore since the credit card companies have caught on people doing this. I figured it wouldn't hurt to see if it would make a difference.

In my case, at least, my S.O.'s credit score, six months after I added him to two of my credit cards, his credit score is now 680, according to Equifax. That's not bad for someone whose credit score couldn't be found or established before. He is also able to qualify for a $500 Bank of America credit card recently, which he pays off each month with minimal use. Our plan is to take him off my credit cards once he establishes one year on his own Bank of America credit card. 

Our experience: adding him as an authorized user on my Citi credit cards worked. His credit score increased in a short time. We were surprised.

Has anyone had a different experience while adding an authorized user on your credit card with the goal of increasing that said person's credit score?

21 years until credit card debt freedom?

If I continue to pay minimum payments on my credit cards, the $21,000 credit card debt currently will take 21 years to pay off!

I have hand written the amounts of debts I owe on a paper debt tracker table so that the significant other can view it as well. Every day, we will be viewing when the bills are due and how much debt will still be left. It's hanging with a thumb tack on a wall of the home office.

Currently, we are just paying the minimum payments because money is tight. In order to prevent further debt accrument, we are focusing on bringing the Emergency Fund to $5,000 first.

21 years of credit card prison?? This just means we have to reach our short term Emergency Savings goal quickly so that we can start focusing on paying extra to the debt. I'm going to scan the debt load tracker forms and post them on here as a follow up post. I might think about duplicating the paper version in an electronic form so that I can easily keep track and upload on the blog. But I do want and need to keep it simple and have S.O. have easy access as well at the end of the day where it can stare back at us from the wall, reminding us about them. That way, also, we can take encouragement from little payments we have made each month as we walk around the place. It might even serve to deter us from going out and buying that $175 concert ticket that we obviously can not afford.

The simpler it is, the better for us. I don't want us to start hating the "chore" of updating two forms. Knowing ourselves, we need to associate as little workload with our debt tracking activities.Start simple.

Reduced Work Hours = More Debt

I have been having a few problems with my job that I am at reduced work hours. This means my debt has been climbing. Inconsistent rental income doesn't help either.

Currently my debt is at $22,000 again. I tried to say no to cash advance on my credit cards but I really didn't want to borrow money from family members. This entire situation is the most stressful situation I have been in.

I will change the debt bar again. I hope to pay down about $1,800 before the end of August but I feel as if I need to rebuild my emergecy fund up first since I'm pretty sure something else may go wrong (job layoff/health problems) and I'd be increasing debt even more. If I pay down $1,800 by the end of August, it would be to get rid of one of the credit card balances. Yes, currently, I have five credit card balances. I was doing so well before!! It's shameful.

Build an Emergency fund or pay extra toward Debt beyond the stupid minimum payments I'm making to five different credit cards?

Decisions. Decisions!

Credit Card Debt Pay Off Progress Jan 2013

Credit Card Debt Pay Off Progress: January 2013

Since November, 2012, I've paid down $1,454 toward the $16,000 credit card debt. That is alot of money put towards the credit card debt for me but I haven't been able to build up my Emergency Fund at all.

My next step with the Credit Card Debt pay off plan is: