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Anxiety over debt and no retirement

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  • Anxiety over debt and no retirement

    Hi All Ė I noticed Iíve been suffering from anxiety over our debt and having mini panic attacks because I canít seem to stay optimistic that weíll ever be OK. My husband said we need to stay focused and that weíll be OK. Hoping for some guidance and/or support from this group because you have been helpful to previous posters.

    Our situation is my husband and I are both 35 and we have $16k left to pay off in debt. We make $8,000 a month (after taxes). Sometimes my husband can make more OT at work or take side jobs and that helps too. We have improved on writing out our budget every month and pay with cash since we cannot be trusted with our debit card. We only have 1 credit card now (with zero balance) and thatís used for our daycare bill only and paid off every month. This card accumulates Jetblue points. Our daycare bill for two kids is $2,200 so thatís been making things MUCH slower to pay off.

    We started off with $60k 4 years ago and $10k of unexpected expenses that we cash flowed. We were a bit sloppy with our debt payoff plan in the beginning and continued to spend and make excuses. We have gotten our act together and now have $16k left to pay ($9k student loan and $7k car loan). We follow the Dave Ramsey Baby Steps.

    My anxiety starts when I think about all the rest of the things we have to save for and weíre going to be 36 at the end of the year. We only have $30k in retirement but have stopped that to help pay off debt (neither company contributes anyway). After debt is paid we have to save 3-6 months of expenses and then re-start retirement. We will also need a new car in about 2-3 years and have to figure out how to save for that.

    UGH Ė this is all overwhelming me. Are we going to be able to save enough for retirement if we work until at least 65? We are not going to depend on social security because who knows if itíll be around by the time we retire. I do have to remember that in 2 years our daycare will go down in Ĺ when our oldest goes to elementary school and then 3 years after weíll have no daycare bills so thatíll free up $2,200 a month.

    Help. :-)

  • #2
    Will you have enough for retirement? That remains to be seen, but with only $16K left on your debt snowball, you are in a very good position considering you have $8000 worth of income. The daycare is expensive, isn't it?

    You need to trust the process and consider every expense in your budget. You mention a new car in 2-3 years. You might consider whether that is even an option. Or if new is really right if you are behind on retirement savings. Do not put retirement savings on hold in order to save for a vehicle. I personally drive a 10 year old Honda Odyssey and plan to have it for at least another five years.

    Maybe you can look at the anxiety as motivation to keep to the plan and follow the steps and make wise spending decisions in the future that keep you out of debt.

    You have done really well so far! Keep up the good work.
    My other blog is Your Organized Friend.


    • #3
      We only have 1 credit card now (with zero balance) and thatís used for our daycare bill only and paid off every month. This card accumulates Jetblue points. Our daycare bill for two kids is $2,200 so thatís been making things MUCH slower to pay off.
      Just trying to understand. Is it the day care that makes it so hard to pay things off or putting it on the credit card and then each month barely having the money to pay it off so other debts are being paid? I of course, have no idea why you need Jetblue points. What I would like to know is how much you are earning when you have to subtract the cost of daycare against what you earn as well as all the extra expenses of working. The cost of travel, clothes that you can only where to work, more meals out at lunch or after work because both of you are too tired to cook, that sort of thing. I think it takes some looking into as your daycare is more than 1/4 of your take home income.

      It is possible to save so much more when one of you isn't working because you are doing things, or can be doing things, like cooking from scratch and doing up large batches of food that will separate into 3-4 meals each, like homemade spaghetti sauce. No house cleaning help if you have that.

      One of the big benefits is the ability to sty home with your children, teach them their colors, etc. on your own. Teach them during trips to the yard and around the neighborhood. If you really need some income, pick up another kiddo or two to care for along with yours, two isn't that much more work, and since you know what it cost for daycare in the area, you know what you could pick up in a month.

      Just throwing some ideas out as I know that when you are in debt, everything feels hopeless and impossible, but one of the things that it is hard to do is think of a better different life than one you are living. You have made great headway on paying off your debt if I am reading your post correctly. It is possible to gt rid of it. If you want to post your budget here we can try to help you, but that daycare bill is a big one. Without it you only need to make around $6K/m. As my youngest is almost 33, I don't know what kind of deductions you get for kids or towards daycare if any, so that $6K figure may flucuate in the long term. One of the things I used to do was try to figure out what expensis I could eliminate so that I could go down to part time work. I was in a position that I could have had to only work 3 days a week as a nurse, and could then spend the rest sleeping our starting my own business. That hope feel apart as did many other things in my life all at the same time. But the thing is you need to thing of different scenarios and how they might work out. Don't be afraid to say What happens if I quit my job? What happens if.......? and run a budget to see. Otherwise, it does look like you are doing very well.

      And I say we need a 'new' car when in reality I am saying we need a new for us, car. Our current one is paid off as a few months ago and is about 10 years old and we plan on running it till it is dead!


      • #4
        I should clarify that the $2,200 for daycare is for a 5 week month for two kids (includes a 10% discount). So for a 4 week month itís $1,760. Thatís the average price in this area. I have considered staying home BUT our income would literally be slashed in Ĺ. My husband and I make the same exact amount. So financially, itís better for me to work even though it emotionally breaks my heart to send the kids to daycare. We have no family nearby either to watch them.

        In regards to my daycare/credit card comment, I meant that if we didnít have the daycare bill I feel like we could pay debt off much quicker and get ramping up on our emergency fund and retirement. The only reason I have the daycare bill going on the credit card to accumulate points is because one day we would like to take a vacation (after debt) and this way we donít have to worry about paying for flights. Itís my way of dreaming I suppose.

        As for the ďnewĒ car, I should have said newer. My husbandís car is almost 10 years old and about 150k miles on it. It might last longer than 2-3 years but weíre trying preparing ourselves should it die sooner. At the moment it runs perfectly fine.

        I have broken down our bills below. My husband plans on picking up side jobs this summer so hopefully weíll have extra income coming in to speed the debt process quicker. If we paid off $44k out of the $60k so far, Iím sure weíll be debt free soon! I just wish we learned our lesson a little earlier in life and not in our mid-30s. Oh well, live and learn I suppose.
        Below is a breakdown of our monthly budget. I did not include our annual expenses such as life insurance renewals, Christmas gifts, etc. Let me know if you have any ideas of where we can cut costs (besides daycare).

        Monthly Take Home Pay:

        Husband: $4,000
        Me: $4,000
        Total: $8,000

        mortgage/rent: $1,909 ($258 PMI to go away in year 2020)
        garbage: $32
        cable/Netflix: $18 (Amazon and Netflix only, we donít have cable)
        phone: $9 (I need a landline since I work from home as a Recruiter)
        internet: $69
        cell phone: $50
        electric: $250 (varies but this is the absolute highest average weíve ever had)
        gas: n/a
        water: n/a (we have well water)
        alarm: n/a
        Garbage: $97 (quarterly)
        Oil: $180
        life insurance: $110
        car insurance: $132
        home insurance: $83
        daycare/preschool: $2,200 (for 2 kids, 5 week month)


        car loan: $310 ($7,145 total)
        student loan: $90 ($9,014 total)


        auto fuel: $160
        charity: n/a
        groceries/toiletries: $720
        eating out: n/a
        blow money: $80
        entertainment: n/a
        college savings: n/a
        retirement savings: n/a
        Diaper Auto Subscription: $33
        Formula: $160
        Costco: $9 ($110 annually) $10


        • #5
          What is a diaper auto subscription and a

          I just went through your expenses and if those include everything, you still have $1350 plus or minus a tad after your expenses are subtracted from the $8000. Either you forgot something big or is that the money you are putting on your debt?

          I would personally like to see you adding to your retirement funds as well even though it may mean a slower payoff of the debts. You didn't mention what your actual car payment and student loan payments were monthly which I guess is part of the 'slush' I noticed. $16K divided by 12 months needs at least $1333/month or $666/month for 2 years. The thing is, the longer that you have money in your retirement account the longer it has to grow. You are in the prime years for funding it and having the long time for growth.


          • #6
            Do you want to stay at home? If you don't work. If you wanted to stay at home, you have a difference of $2240. That doesn't count the lower tax bracket you'll be in by staying at home. And the fact at around $65k gross income you'll be better off and qualify I would be for two child tax credits $1000 each so $2000 tax credit instead of $130k gross income.

            If you want to work. Then work. Otherwise I'm going to guess the difference between staying at home and working can be made up by going to work nights or weekends doing something easy.

            MonkeyMama, am I wrong? I bet if you told us your gross income you'd be shocked at what happens when you get rid of daycare and taxes going down. But the house would be expensive on one income.
            LivingAlmostLarge Blog


            • #7

              We have a monthly diaper subscription with Amazon which is at a discounted rate. The more monthly Amazon subscriptions you have, the higher the discount. And is an online exercising app that Iím using to help me lose weight. It has a bunch of workout videos (cheaper than a gym membership). However, most of their videos I seem to be finding online for free on youtube so Iíll probably be cancelling that soon.

              As for our leftover amount each month, you are correct and itís about $1k - $1,500 left over. However, thatís on the high end. It depends on what additional things we need to budget for that month. So, for example, if my annual life insurance bill of $400 is due that month, our left over amount will be lower naturally. We have cut our expenses relatively lower to try to get our debt out of the way faster. Iím still looking at ways to improve on cutting costs. I posted on another debt free board and some folks recommended a few places to shop for cheaper food in my area that I havenít thought of so that might help.

              And I think youíre right, we will have to start contributing to our retirement now rather than waiting another 10 months until all debt is paid off. At least the car loan will naturally go away once the life of the loan is finished. That appears to be the general consensus between both debt boards. My husband and I will have to sit down to discuss this weekend and get that set up. Our car loan is $310 per month and my student loan payment is $90 per month.
              I appreciate your feedback and trying to help me.


              Iím 50/50 about staying at home regardless how hormonal I am at the moment. We live far from everything and my boys gets so much more social interaction at daycare. It helps that I work from home now so they donít have to be there that long and I can be there in 10 minutes to get them should they get sick or whatever and not have to worry about my job since Iím virtual. So for now, I think Iíll continue working especially since my oldest is already in all day pre-school.

              And youíre right, if we lived on 1 income our mortgage would be too high. Weíve been casually looking at cheaper homes are in our area but so nothing has been financially worthwhile to make the move. Our home also didnít jump that much in equity since homes are not flying off the market like hot cakes here.


              • #8
                Okay so the diaper service is for disposables? I wasn't sure if it was a service that washed and dried cloth diapers. I breast feed and used cloth diapers and am always shocked at the cost of disposables and formulas especially since my 'baby' is around your age! Most of my life I was always on a tight budget and especially during the years I had my two boys. I suppose that you can't use cloth diapers at daycare, so that even if you were willing you couldn't use cloth diapers full time.

                When I see those 'facts' that it takes umpteen many dollars to raise a child to 18, I know they didn't get their facts or question me about it. So many things are considered so necessary to raise and have for kids these days that are totally unnecessary. But then I 'needed' thing that mothers 50 years before me never had, like more than three diapers (one to wash, one to dry, and one on baby). I liked having a couple of dozen handy. What this tells me is that some expenses are not necessarily needed items, but are our choice. The hardest thing when dealing with a budget is deciding what is or isn't a needed item for you.

                I just read an article on line about a family that is four generations of disabled people. It was not one to make you feel sorry for the folks but makes steam come out my ears. Along with their $300 cellphone bill they also are owing for one of the kids cheerleading. Growing up assuming something like paying for cheerleading lessons or whatever were available when I was young, I would have never asked for that as I knew we were too poor for such nonsense. I know parents like to keep the finances out of the brains of their little ones, but most kids aren't stupid and if mom is having trouble paying for food, then how does she afford cheerleading lessons? Some families even with no food consider some things necessities and others don't, so you must decide if you will be following the Jones or not. I realize that you are nowhere near cheerleading age, but just a thought to keep in mind. Just because everyone else is doing it, doesn't mean your family will be doing it.

                While we can make suggestions, the final decisions always come down to you and your hubby. My older son and his wife just got a new old house in the last year and are working hard at paying off his student loans etc. but he makes decent money and they spend what they want. The younger son barely gets by, but he does get by and doesn't even own a credit card. He is still paying on his car but his student loans are gone. He wants to move to closer to his job which would save him a lot on gasoline to get back and forth to work. He follows the David Ramsey system himself so is trying hard to get himself to a better place financially. You and you husband at the same age range are very much better off than they are. It is easy to come here and see some that have close to or more than a million towards retirement and get frantic thinking you will never get there. Slow and steady wins the race. I'm 61 and you have more in retirement than I do, but then I have been on disability for around 15 years and so it is squeezing blood out of a stone to find money to tuck away, but I've been doing it. I'm proud of where we are and so should you be. You are much further ahead of most Americans at this point. We are further ahead of most Americans as well when it comes to retirements funds since way too many don't have a penny in savings and are living paycheck to paycheck.


                • #9
                  Based on everything I'd have to say that 1 income is possible. But it seems like you enjoy your job so it's worth it. In the future it'll be easier after daycare stops.
                  LivingAlmostLarge Blog


                  • #10
                    I do enjoy my job. And because it offers me a lot of flexability, my babies can sleep in and we can roll into daycare whenever we're ready and I just catch up with work once I get home. For now, we'll do everything in our power to save and finish the debt payoff.

                    Thanks all again for the advice and encouraging words.


                    • #11
                      I know I am late to the party, but I have a few thoughts.

                      You say in a few years your daycare bill will be gone. Is that really true? Around here, it is not. There is still before school child care, after school child care, school holidays, winter break, and summer break. None of these are free. You will certainly be spending much less, but do not count on your child care expense being $0 until your children are out of elementary school at least.

                      I absolutely think you should be funding retirement now. I also think it is critical that you have a reasonable investment plan and that you avoid high fee investment vehicles, such as those sold by "ELPs". Your money cannot grow for you the way it should when it is being constantly eroded by high fees.

                      Your budget does not have a lot of fat; I think you're doing a great job and you've made great progress.

                      Edit: I hope you will stick around on these forums. You have a lot of financial sense and thus a lot to offer others.


                      • #12
                        Another voice asking you find even a modest sum to contribute to retirement savings since the whole point is compounding over a long period of time. This is particularly important if there is any contribution offered by an employer. You have already explained some income can be reallocated once child care costs reduce and surely income will increase going forward.

                        Of course you understand that sums continue to compound even after you begin to draw down in your senior years.


                        • #13
                          @Petunia 100

                          Thanks for your feedback.

                          I currently work from home so I guess Iím also assuming that I will still be working from home when the kids are in elementary school. So bus pick up will be about 8:30am and they wonít get home until 4ish by the time the bus drops them off. So I wouldnít need before or after care because Iím home anyway. The only cost that would be added on is breaks as you said or summer camp. However, I know itís terrible to assume because anything can happen. I could get laid off, find a new job, etc.

                          And my husband and I will be evaluating our retirement funding options when we do our next monthly budget. So weíll be starting 401k by next month!

                          And side note, I called an insurance broker who is going to be able to save us $700 a year on new car and home insurance! Iím going to call another broker today to see if they can save us more than that. Iím a roll with cutting down costs now! You guys got me amped up.

                          And I will most definitely will stick around to help others on this forum where I can. :-)


                          • #14
                            I'm not sure what else I can add but maybe by menu planning and freezing meals/snacks etc that will save you money as you can write a list and only shop for what is on the list...get rid of the app...that saves you $120 a much as you want to get rid of the debt I would also start putting some money in your ice acct (emergency fund) so if anything does come up you have some savings as well as working on the debt....see which one has the highest interest rate and pay that one off first...can save you a few dollars...remember each payment you make is a little less you owe...and you will get there...good luck...don't be out a 1-2 year plan then a 5 year plan then a 10 year plan you have something to look forward to and it will help you stay on track and maybe not feel so anxious


                            • #15
                              Nothing will go away just like that, and if the anxiety has shown itself once, it will do it a hundred more times if you don't stop it in time. There are a lot of options, but it's definitely not easy to forget about it, as if you didn't experience anything. Panic attacks and anxiety are the path to depression, and this is much more difficult, so you should seek help from nature.