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Home > I Looked!!! OUCH!!! PAINFUL!!!!!!

I Looked!!! OUCH!!! PAINFUL!!!!!!

January 9th, 2011 at 12:47 pm

DAY SIX of writing down expenditures. Went to Walmart yesterday with a food list and came home with exactly what was on the list! Yea!

Also, started checking off some of my 2011 goals. I looked up ALL our account info and did a NET WORTH STATEMENT. I have to admit what it showed me was hard to take.

I had actually done a NW statement 4 months ago when we were thinking about hiring a financial planner to help us w/retirement accounts so I had something to compare. After supposedly saving my husband's salary and living off mine, our networth yesterday was only a little more than it was 4 months ago!

Here is why:
1) My DH bought another car and we went from 1 to 2 car payments (from $6000 debt to $12,384.39). This was for a third "hobby" car so it was NOT an essential purchase).
2) Due to being terrified w/the stock market, much of our retirement funds have been sitting in CASH earning nothing (need to address that issue).
3) We would have had more but we just GAVE one of our sons a $10,000 no interest loan (OUCH!!)

I also started an acct at MINT.COM...DOUBLE OUCH!!!!

Here's what I learned there:

1) I can't ever erase my before Christmas spending spree from our VISA FF charge card, even though I have paid all but $1,400 of it off in full! THIS IS PAINFUL!!!! I mean I did pay our house taxes of $4,400 through that VISA, but have YOU ever had a $20,000 VISA for one month?!!?? Seeing the numbers, I really had to take a hard look at that. VERY hard to swallow!! I had gotten a $5K Christmas bonus but all that went to the great CHASE VISA and more!
2) To have $80K in retirement funds each year, we will need to save $2.3 million!!!! We have about $850K in our retirement now and 15 years to go but there's almost no hope of it growing to that amount. I MUST STOP SQUANDERING MONEY!!!! (Even though I thought we had LOTS of money, every cent really DOES count.)

WHAT I LEARNED:
1) The initial excitement of spending money frivolously is not greater than the ANGST of
viewing the financial damage it creates.
2) Thank God we have good incomes, but if that weren't the case we would probably be bankrupt.
3) My spending sprees are really MUCH worse on paper than I had thought. The pre-Christmas one was VERY bad, but when I landscaped the backyard a couple of summers ago that one was equally damaging (just HAD to have 25 rose bushes) and redecorating the house three years ago...don't want to even THINK about that one!
4) I have a real spending problem. It's really not funny at all. It's actually kind of terrifying.

GOOD NEWS THOUGH. I am on DAY SIX of FINANCIAL ABSTINENCE. One day at a time I can tame this beast. For me, amazingly enough, I think going off sugar really helped me. That's a blog for another day, but I did lots of research on this when I was spending like a crazy fool last month...I truly couldn't get off Ebay...very scary.

I thought maybe blogging this would be enough, but I think my girlfriend and I really should get a Debtor's Anonymous meeting started in our town as we had hoped. Does anyone out there have experience with the DA program?

Sorry for the length of this entry. Learned TOO much yesterday! Although looking at the damage is sobering, at least I DID look. Maybe my experience can help some other sufferer. (it's kind of hard to call myself a sufferer when I did it to myself)

12 Responses to “I Looked!!! OUCH!!! PAINFUL!!!!!! ”

  1. Ima saver Says:
    1294588305

    Just take it one day at a time as you are doing now. I am sure you will see much improvement soon. If it is any help to you, my dh is a car nut too!! We have 5 right now; months ago, we had 6 vehicles for two people! He likes corvettes and we have 3 of them plus a 1933 Ford Victoria. (plus his work van which he needs)

  2. creditcardfree Says:
    1294588773

    Congratulations on facing something very hard. Knowing the truth is a BIG step. You should be very proud of that. It may be ugly, but now you know what lead to the debt and you can start to make changes. It's all going to be okay.

  3. Looking Forward Says:
    1294592572

    Great post! It was great to read what you learned about yourself. Smile

  4. Savings Queen Says:
    1294594653

    Thanks so much everyone for your encouragement. I feel like a very irresponsible person. I guess the first step is facing it though. It's funny, but in all my years of "phases", until very recently I never put it together that it was REALLY about spending money. You are right. Staying on it one day at a time is the only way to turn this around.

  5. Petunia 100 Says:
    1294597690

    You're wrong about there being no hope of reaching 2.3 million. Smile
    If you earn a 7% return on 850k for a period of 15 years, it grows to 2,345,876.81.

    If you earn a 6% return, it grows to 2,037,074.46.

    If you earn an 8% return, it grows to 2,696,343.75.

    Those numbers do not include any new contributions.

    You will not get those returns from cash.

    My advice: continue contributing. Move your money into a sensible mix of low-cost stock and bond mutual funds. Averaging 7% or so is very, very possible.

  6. Savings Queen Says:
    1294600212

    Petunia, What great advice. I had no idea. One problem though is that having had our retirement accounts in stock funds and plummet during the tech bubble and then pulling them back to cash just before this latest downturn, I have become very scared of the stock market. My husband has his half totally in bond funds which have actually been doing well at 6%-8%. Mine is mostly in cash and I have been getting less fearful. I guess it is time to get back in again...no actually it was time a year ago, but I do need to get back in the game soon because cash is not doing us any good. Thanks for that info!

  7. Petunia 100 Says:
    1294607699

    It was my pleasure, I love to crunch numbers.

    BTW, bonds and interest rates have an inverse relationship. When interest rates fall, the value of a bond goes up. When interest rates rise, the value of a bond goes down. Given current interest rates, it is more likely that bond prices will drop than that they will rise in the coming years. The longer a bond's maturity, the more interest rate changes affect the value. Therefore, I would avoid long-term bonds at this time. Shorter maturities should be able to tread water or grow modestly provided interest rates rise slowly. Longer maturities will likely not fare so well.

  8. Savings Queen Says:
    1294609548

    Wow Petunia, that is very interesting. With interest rates so low it looks like in the future bonds have no place to go but down. I never knew that. Thanks!

  9. patientsaver Says:
    1294613315

    How did you determine that you'll need $80K in retirement? That would seem like a lot, considering that you already paid off your mortgage.

    I know a lot of brokerages say you need about 85% of your current income in retirement, but I think you could get by with less and still be comfortable.

  10. Savings Queen Says:
    1294616990

    Hi patientsaver, That's a good question. We have been trying to live on what I bring home ...around $5,400 a month. We created a budget to meet that amount. We were on it for a few months before Christmas and it worked well until I went on the MAJOR spending spree around Christmas and blew it to heck! I think to get the 80K I just figured we needed about 5K/mo. or 60K a year after taxes so I figured I would need at least $80-$90K before taxes.

    We do not live a very frugal lifestyle though, and I hope to learn to be better.

    I forgot about social security. My husband and my statements say right now we would each get between $2,300 and $3,200 each depending on when we retire...age 68+ or 70. This sounds great if S.S. works out (??). If our incomes go down between now and then will we get less? Do you know how that works? If social security really does work out like they say, I will not need the 80K I think I will.

    When I went to that financial planner lady 4 months ago, she implied that we would barely have enough, but she was also a lady who wanted to manage our retirement accounts and charge us 1-2% interest off the top! On that count I am torn because she did seem to know what she was doing, but I always hear you shouldn't use someone who takes a percentage. Any thoughts on that one?? (sorry for all the questions)

    I know we will get social security and I did not take that into account at all.

    Right now our monthly budget amount is about $4,900. I say that like I really know. I have only had about 3 total months that I tracked it. I bring home about that amount and then we created the budget around that. This year maybe I need to keep writing things down and see where we come out on that.

  11. ceejay74 Says:
    1294639512

    Sounds like you're much better off than you thought at first!

    One suggestion: Could you sell the $10K of jewelry you just bought? Even if you took a loss by selling it at a pawn shop or on eBay, you could recoup much of the loan to your son. If you've had other spending sprees as you say, you might have even more valuable stuff to get rid of.

  12. Shiela Says:
    1294717028

    I agree with Ceejay about selling some of the stuff you bought before Christmas. Good way to declutter, not just your house but your life also.

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