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49 and ready to go but...
Old 11-07-2012, 02:42 AM   #1
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49 and ready to go but...

But I am the only part of my life that is ready to retire. I am looking forward to advice, encouragement, straight talk, good jokes... all fine with me!

My retirement funds to date are painfully thin - a chunk in the university retirement system that may be around $10K, an IRA savings account with about $5K, a Sharebuilder IRA with about $1500 depending on how the market flops around. In other words, there isn't a whole lot for someone as old as I am who would like to be off and running sooner rather than later.

My debt load has increased by nearly $20K this year due to some legal issues. Until May, I actually saw light at the end of that tunnel but, as they say, it was definitely a train headed my way. So I am looking for advice on how to kick about $40K worth of debt to the curb while simultaneously building retirement funds and paying to live on about $2000 a month. That is actually a really comfortable amount for me except for all the debt stuff that sucks up nearly half of it every month.

I know there's a way. I just don't know if there's a way to make it happen faster and have better results at the end. Debt-free is going to be awesome, without a doubt. But having the opportunity to enjoy life after debt is what I'm hoping to learn here.
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Old 11-07-2012, 07:36 AM   #2
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Do you have any traditional (defined benefit) pensions available to you at some time in the future?

Have you checked how much you have accrued under Social Security?
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Old 11-07-2012, 09:08 AM   #3
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From what you've provided, you are not anywhere near ready to retire. Sorry, just trying to be candid.

You may want to see if there is any way to restructure your debt so the interest is lower. but barring that, I suspect that the best investment return available to you is to dedicate as much cash flow as you can to paying down the debt and then focus on retirement savings.

If you have access to a 401k, 403b or similar retirement savings program that includes a match, it might be better to divert some cash flow to that to get the match, but otherwise I would focus on debt reduction.

As gauss mentions, you may also want to check to see what will be available to you in terms of pensions or SS when you retire for planning purposes.
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Old 11-07-2012, 09:24 AM   #4
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dekuj63, I'm a 1963er too. And I'm sorry to hear about your predicament because I know that ER feeling welling up in at our age. But as pb4uski says, the straight talk is you are not ready.

But all is not lost. You need to sit down right now and look at where your cash flow is going, and how you can improve it. If you've read these boards, you may have seen LBYM. This is Live BELOW Your Means. So many live Beyond. Start living BELOW.

Some suggestions:
  • Take advantage of every possible "match" type benefit your j*b provides. If there is an employee match on some savings plan, contribute at least that much. I see pb4uski mentions this too.
  • Look at your debt. Which one has the highest interest rate? Start paying that one down.
  • Get serious about spending, friend. I mean serious. No crap. No $5 coffees. Do they have free coffee at work? Use it. Don't buy it on the way there. Bring your lunch. You get the point, there are many, many, many ways we can p!ss away our cash. You have to look at all of them and get very, very serious about it.
  • Is credit card debt part of the problem? If so, put them away. Freeze them in a block of ice, or something. Give yourself a small allowance and work with that every week. CASH ONLY. Try it. I did this my first 3 years out of college when I started working, and that's the primary reason I'm ahead of the game today.
  • Think you need a new couch? New car? New house? You probably don't.


Good luck.
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Old 11-07-2012, 10:15 AM   #5
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Hi, all! Thanks for the straight talk. Where I want to be and where I have ended up are through a long series of life missteps. I'm hoping I can be an example of what not to do for my kids.

I will check into Social Security. I have two divorces under my belt and no idea if there is anything I will recover from the multiple years I took care of kids/barely worked. The rumor (from my attorney) is that is automatically calculated but I'm not stupid enough to hold my breath on that. This is all on me and I'm ready to take it.

Credit card debt is definitely a problem are now. I was almost free and clear when some serious and expensive legal issues arose in May of this year. Paying down the debt up to that point left me with no savings (other than the IRA accounts) so back into the credit card soup I went. To compound the agony, the legal wrangling has required multiple trips from Texas to Maine and that has all been courtesy of plastic promise to pay. And it ain't over yet.

My job was part time no benefits for three years. I have been fulltime since the end of June. I work at a state university so there is no such thing as matching but the retirement system is pretty good. One of those missteps I've made is that I've lost about two years of my service time because when I worked here previously and left, I was told by the HR department that I had to take my retirement out of the system. I have since bought back my time but they discounted two years of my prior service using rules designed to keep the money in their bank and out of mine. Again...

Debt is getting paid off as fast as I can and still afford rent and groceries and insurance. That pretty much covers my extravagances. It's painful and aggravating.

I did take the step of joining the 403b program with my employer once it became available. I'm trying to keep everything together but I feel financially like I just graduated from college. Except old.

Again, I appreciate the welcome and the words of wisdom and look forward to gathering more knowledge from everyone here!
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Old 11-07-2012, 10:30 AM   #6
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Hey dekuji63 you mention something interesting. You said "take care of kids and barely worked".

Well, well. Don't underestimate your SS benefit! I know we are reiterating, but it is important. If your marriage(s) were 10 years or longer, you may have a spousal benefit. I have a friend in a similar situation as you. She's 62 and lost her job. Basically no savings. Her SS benefit is very small. But lo and behold, her benefit from her ex is much better.

Read about it here: Retirement Planner: Benefits For Your Divorced Spouse

Now, even if SS pans out, the advice about LBYM still stands because hopefully you can have more than SS. Sounds like you are thinking about it and making an effort to DO IT. That's an important first step.
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Old 11-07-2012, 10:54 AM   #7
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Thanks for the link! I have a tendency to live by "you made your bed so lie in it" and don't always find this kind of information. I appreciate it!
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Old 11-07-2012, 10:54 AM   #8
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dekuji63, welcome to the forum. You have a tough road ahead but you also have some advantages. You have a job, you have a goal, and you are still young. Many of our members have managed through circumstances just as challenging, so it can be done.

Paying down your debt is a top priority. You need to examine your weekly and monthly expenses to see where you can free more cash, to be used to pay down debt. Once you do that, you can use that cash to increase your savings. Do you keep a record of your expenses and track them week to week?
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Old 11-07-2012, 08:46 PM   #9
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Thank you, Michael, for the welcome and the advice. My patience is a bit thin with all the things that keep derailing me right when I think I'm on the edge of making some headway for the future. I have not kept a journal of expenses but have been using Mint.com for about two years. It has been helpful in some ways but can be rather non-specific and I haven't always taken the time to split out transactions (e.g., groceries and household items at Target bought in one go).

I decided this month (I only get paid on the 1st) that I would allot myself $60 cash for the month to buy non-grocery 'stuff' except for gas. It definitely makes a difference when you work with cash and have that visible limitation available to you.
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Old 11-07-2012, 09:04 PM   #10
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Quote:
Originally Posted by dekuji63 View Post
...I did take the step of joining the 403b program with my employer once it became available. ....
I typically wouldn't suggest this but - IF YOU CAN BE DISCIPLINED - you might be better off forgetting about the 403b for now and using the cash flow going into the 403b to accelerate paying down your credit card debt.

The reasoning is that I'm guessing that you are not in a high tax bracket so any tax savings from contributing to the 403b are not hugely significant and what you are paying in credit card interest probably far exceeds any investment return that you would get from 403b investments.

YMMV
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Old 11-07-2012, 09:19 PM   #11
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Thanks, pb! I did wrestle with putting anything into any kind of savings. I took a debt-free and prosperous living class about 20 years ago that advocated what you have said and I've tried to live by that concept. What pushed me into the plan was how I had barely saved anything at all in my push to pay down debt so when this legal awfulness hit, I had no backup. I had not followed the standard of having a several-month expense savings set before I started paying as fast and hard as I could. I realize putting money in the 403b doesn't mean I have that cushion either but it is going to be there for when I may have no income at all. At least, that was my line of reasoning.
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Old 11-07-2012, 10:54 PM   #12
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dekuji63, I'm also new here, but my husband and I are about to pay off the last $10,000 in debt we have. I learned about Dave Ramsey's Total Money Makeover last September, and by living on a budget and systematically knocking out our debts one by one, we will have paid off about $48,000 in about 15 months. Time varies due to amount of debt, income, and amount of expenses, of course, but I've found it to be a great program. I would suggest at least reading his book (get it from a library) to learn about his philosophy. But it's mostly: get on a budget, LBYM, pay off your debt (guaranteed % return on your money when you no longer pay interest on CCs), then save a 3-6 month emergency fund, then save for retirement.

Welcome!
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Old 11-07-2012, 11:05 PM   #13
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Welcome! Everyone has great advice, and mostly i would advise checking into your social security, based on your husband's record, if you were married 10 years. It could be much more than yours.
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Old 11-08-2012, 10:49 AM   #14
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Hello Deku and keep the positive spirit going! Obviously getting the debt paid down is of prime importance. You mentioned the use of CC's. Are they the primary holder of all your debt? What are your interest rates? I say this only as CC's can either be an enemy in debt reduction, or a friend in relation the interest rate you are charged which obviously effects the speed in which you can pay it down. I have been a life long user of CC's and never wanted to hassle with the banks, but they could never beat the rate anyway. I have always used 0% transfers and moved them around, to keep the rate at that level. I don't have a lifestyle of debt, just used them strategically. Don't settle for 13-20% interest on your cards if you presently are.
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Old 11-08-2012, 12:04 PM   #15
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I like Mulligan's suggestion of 0% transfers to reduce your interest rate (so more of your payments will apply to digging you out of the hole) if you have the credit score to get them (suspect you do).

Another alternative would be a debt consolidation loan from Lending Club or Prosper as I would think the rate would be less than credit card rates.
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Old 11-09-2012, 06:03 PM   #16
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I agree with this.
Quote:
Originally Posted by pb4uski View Post
From what you've provided, you are not anywhere near ready to retire. Sorry, just trying to be candid.
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Old 11-15-2012, 01:13 PM   #17
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Quote:
Originally Posted by jexy103 View Post
dekuji63, I'm also new here, but my husband and I are about to pay off the last $10,000 in debt we have. I learned about Dave Ramsey's Total Money Makeover last September, and by living on a budget and systematically knocking out our debts one by one, we will have paid off about $48,000 in about 15 months. Time varies due to amount of debt, income, and amount of expenses, of course, but I've found it to be a great program. I would suggest at least reading his book (get it from a library) to learn about his philosophy. But it's mostly: get on a budget, LBYM, pay off your debt (guaranteed % return on your money when you no longer pay interest on CCs), then save a 3-6 month emergency fund, then save for retirement.

Welcome!
+1

The thing you need is a plan. DR has a plan that if followed will work. It is not majic or pie in the sky just a step by step (baby steps) plan.

You can get a copy of the Total Money Makeover either used on amazon or on the Dave Ramsey website.

The other thing that is helpful to me is to put as much effort in knowing what to do with money as you do in knowing how to make it. This forum is a great place to get educated but I don't think it is named correctly. I think it should be Life Management.

I know how it feels to have the wind knocked out of you but the sooner you take control the better you and your children will be.

You can do it.
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Old 11-15-2012, 01:26 PM   #18
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Great advice above. One thing I might add- do not marry again unless you have seen your enamorata's audited financial statement and she is loaded.

Then tell her that prenups are against your religion.

Ha
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Old 11-15-2012, 02:28 PM   #19
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Hey, everyone! Got so busy at work that I've missed reading all your posts for a while!

Thanks again for all the words o' wisdom. The debt-free and prosperous living class I took years ago is comparable to the Dave Ramsay plan which is pretty much how I got out of debt, excepting student loan - last one to go - when all the other sh..tuff hit the fan. I have looked over DR's website in the past and will go back again. I think I need that good solid in-my-face list of steps because I'm kind of reeling right now.

I've also just learned that I'll be taking on another $3K in CC debt in the next few weeks so that doesn't help. If only I could be a kid again living at home and just use all of my paycheck to pay this stuff off... :-D

I've been hesitant to use 0% balance transfers because it seems like the intro period is much shorter, there is an annual fee for the card, and the interest rates are much higher than what I've got now. Regardless, default is not an option. I am paying down balances and that means a lot to me. I have two credit cards and one student loan. That's more than enough for me. I will have to suck it up and do the minimum payment snowball, though. That chafes me but I know it works. Getting even one of those cards clear (again) will be far more exciting than dealing with my mental roadblock over making minimum payments.

Once I get to the point where I can focus on building savings, I hope I will have gathered enough information here from y'all to hit the ground running!
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