My situation

**waterbaby77** · 02-10-2011, 08:23 PM

So, in the interest of full disclosure, I would like to gather your feedback on my plan.

I would like to work the Dave Ramsey steps but I am not fully sure I am applying them to my situation correctly. A lot of my circumstances would cause a diehard by-the-book Dave follower to rip out their hair.

For example, I'm married and my husband and I have not combined our finances. He is a saver. I have a load of debt. Originally, my student loans were in default and we were afraid the goverment would take his tax refunds as well. Now (due to a generous gift from my inlaws) my loans are out of default and I am making payments on them every month, so this is no longer an issue.

We continue to have separate bank accounts. I like my bank, they have really great online banking that allows me to set up budgets and track my spending. He loves his credit union. I would be willing to open a joint account at the credit union and put the money for household bills and joint expenses into it, however, I believe I owe that credit union money from years ago when I overdrew my account buying coffee (to the tune of $181!).

A lot of my debts are sleeping. I have not had a credit card or used credit for 5 years. I managed to avoid having a credit card while I was in college, and for the first few years out of college. But after I had a job making decent money (for me) I fell into the whole "need-to-build-your-credit" trap and got 2 credit cards.

Fortunately they both had really low limits. Unfortunately, my wages and credit cards were not enough to support my lifestyle and I took out payday loans to bridge the gaps. I do not even want to think of the money I paid in interest to those life-suckers! In 2006, I lost the good job, and even though I was getting unemployment checks of $300 a week and had cable (WITH HBO), I just stopped making payments on my credit cards and payday loans.

Fast forward to now. When I got engaged a few years ago, I really wanted to get out of debt so I have a good credit score again and not have to pay extra fees whenever we move, etc. I started reading books on saving money and getting out of debt. I read just about every book in the library! I was somewhat put off by the TMMO book because of the cheesy grinning Dave headshot, but I read it and it was the only one that really made sense and seemed simple enough to follow. I paid off a few small debts of less than $100, cashflowed a bunch of dental work, and continued to make my student loan payments.

Now I am trying to save up enough money to pay off the next debt, which is bigger. Technically, the next debt in my snowball is $181 to the credit union. But I really want to pay the $268 first. The $268 is a library fine that I have owed to my college for 10 years, ever since my roommate moved across the country with my library books packed in her boxes! I have to pay it before the college will release my transcript, and I really want to go back to school!

Here are my debts from smallest to largest:

$181 - Credit Union Overdraft Fees (sleeping)
$268 - College Library Fines (sleeping)
$400 - Aspire Visa (sleeping)
$400 - Capitol One (sleeping)
$400 - Cash Store (sleeping)
$5000 - Wells Fargo Personal Loan (sleeping, at least 10 yrs old)
$27,536 (remaining)/$44,382(amt when I began to get out of default) - Student Loans (monthly payment $220).

What should I do? Fresh eyes/insight appreciated.

**krbshappy71** · 02-10-2011, 09:21 PM

What do you mean by sleeping? You are making minimum payments? No payments? They went to collections?

Do you know what interest rates these have been charging you as they "sleep"? I guess I'm not grasping the sleeping part yet, sorry.

Dave Ramsey way is to have a baby emergency fund of $1,000, do you and your husband have that? You say your finances are separate but if you had a real emergency, say, car broke down, do you two need to have your own emergency fund or would the husband cover that for you?

That's great you are on board to clean stuff up!

**Greebo** · 02-10-2011, 09:38 PM

Have you read the book, "The Total Money Makeover"?

**waterbaby77** · 02-10-2011, 10:19 PM

Originally Posted by waterbaby77

I started reading books on saving money and getting out of debt. I read just about every book in the library! I was somewhat put off by the TMMO book because of the cheesy grinning Dave headshot, but I read it and it was the only one that really made sense and seemed simple enough to follow.

Yes, Greebo, I have read the book!

By "sleeping", I mean that I know they are out there (they show up on my credit report). I have letters that I recieved a few years ago from 3 collection agencies offering to settle for the above amounts. The collection agencies don't call me or anything.

I had a BEF but it was wiped out by cashflowing my dental work. I am working on building it up now. I have a FSA for health related expenses now. I have about $300 in savings. I want to throw a snowball! My husband has a FFEF, to use if we lost our jobs, got sick, had a baby, etc. I do not drive. My husband pays for all auto-related expenses.

**waterbaby77** · 02-11-2011, 02:57 AM

So, any ideas? Should I throw the snowball and pay off the $268 library fine so the college will release my transcript and I can go back to school for my master's degree? Should I contact the librarian and see if I can get this removed, due to extenuating circumstances?

Or should I keep saving for a BEF?

Or should I contact the credit union and find out how to get rid of the $181 dollar fee?

**kita** · 02-11-2011, 05:51 AM

I would not go back to school until you have the finances in better order which means that it doesn't matter...both fines will be cleaned up shortly.
If, in order to get a better paying job you need your transcripts, then pay off the library first.
Otherwise work the baby steps. smallest to largest. How big is your snowball? These small ones should be gone quickly...
Others with more marriage exp. can comment on the merging og the finances but I find it odd that you have not merged your finances because of the preference for a bank. Does your husband know about aLL of your debt? And he still has a FFEF?
And hello from Portland! Isn't it great?

**Greebo** · 02-11-2011, 07:43 AM

Dave generally recommends that you let sleeping debts lie - deal with the active debts first, then circle back.

How large is your snowball?

**Virginia Gentleman** · 02-11-2011, 08:37 AM

Originally Posted by waterbaby77

So, any ideas? Should I throw the snowball and pay off the $268 library fine so the college will release my transcript and I can go back to school for my master's degree? Should I contact the librarian and see if I can get this removed, due to extenuating circumstances?

Or should I keep saving for a BEF?

Or should I contact the credit union and find out how to get rid of the $181 dollar fee?

These are close enough that the order doesn't really matter. But how are you planning to pay for your master's program? I most definitely would NOT borrow more money for it, and I don't think I'd stop working (right now) to complete it, either. Once you've cleaned up your mess and are on better footing, then going back to school makes a lot more sense, IMO.

ETA: If your husband already has a FFEF, I can't see any reason for you to build a BEF right now. If your finances are so separate that you can't access his emergency funds in an emergency, then you need more than financial counseling.

**Winkie** · 02-11-2011, 10:06 AM

It is my understanding that debts will fall off your credit report after 7 years of no activity. Some debts of course will stay with you forever (like IRS & child support). The limit may be dictated by state law. If you contact any of the places you are in debt to, then the 7 year clock starts again. I agree with whoever said to work on the active accounts now.

As to the separate accounts, my DH & I were older & it was second marriage for both of us. We decided at the onset that we would maintain our separate funds. We have a joint account that is the "General Fund" which we both contribute equally to. We each have our own credit card & we take care of that personally. We have a joint savings that we use for vacations. The money deposited in the savings has come from the occasional tax refund. We have joint debt on the house & that's it. Each of us has a decent savings account & neither of us are big spenders. It has worked for us, for various reasons, but I know if wouldn't work for everyone, especially when money is tight.

**luminajd** · 02-11-2011, 10:11 AM

If you are thinking about going back to school in the situation you are in, you need to read TMMO again.

Should I contact the librarian and see if I can get this removed, due to extenuating circumstances?

What are your circumstances? You owe them money, pay them.

**waterbaby77** · 02-11-2011, 10:59 AM

Luminajd, the circumstances would be that the books were taken from Oregon to Pennsylvania by an ex roommate and I had no way of getting them back. Also, this debt is almost 10 years old. But I do want very much to pay it. It's just been my experience that libraries can be somewhat flexible about such things and I was wondering if I should try to negotiate it.

Greebo, I don't have a very big snowball at all right now. It is about 70 or 80 dollars a month.

So, from what I am understanding here, I should not try to get a Masters degree? I make $10.25 an hour. I thought that Dave would tell me to get a bigger shovel, but I guess advanced degrees are no guarantee of a higher income. I just thought that I might be able to make more money if I changed fields. I was planning on working part time while I went back to school.

**bumplett** · 02-11-2011, 11:01 AM

IMO-

let sleeping debts lie.

don't touch them with a 10 ft pole.

The only exception would be the college library. Pay it off, in full, but I agree with others that said you should NOT go back to school if the only way to pay for it is student loans.

so, if I'm understanding your question; my answer is

1. save $1000.
2. pay the library
3. pay your student loans

good luck getting a better job. but if you do, my suggestion would be to get a better job FIRST, then ask for tuition reimbursement.

**bumplett** · 02-11-2011, 11:04 AM

oops, I also meant to add that I think you should run a current credit report.

See what's active, and work on those.

**waterbaby77** · 02-11-2011, 11:04 AM

In response to Kita, yes, my husband does know about all my debt.

I guess we are just more comfortable with separate accounts. We have both been independent for a while. I don't know, maybe deep down he is afraid I'll take his debit card to the mall and buy a bunch of designer clothes or something

**khaski** · 02-11-2011, 02:02 PM

I have tried, and witnesses, many serious/married couples doing their 'own' money- it doesn't work. You need to make a budget together, it is a joint effort to get debts paid off and such...it is no longer his+hers, but YOURS...and both of you should make an effort, together, to clear up nay debts as fast as you can. I am not suggesting no one can have their own accounts, but my impression from your postings is that you two are single entities co-mingling funds for the 'big' bills, but not working together to get ahead in general.