Tax Refund Time!

[Ima saver]

I agree with Jim, you have to fund your own retirement first!

[timetosave]

disneysteve - I am going to save every penny I have left over for dd's education...that is after I've paid my bills and have paid towards my debt...what is left over will go to her. I am not saying I am going to ignore my debt...I just have to save for her future.

It is amazing how much I have monthly now that I am caught up on my bills. Digging out kept me back...a lesson well learned. Keeping up/staying ahead will save me in the longrun. Now I can put pen to paper and come up with a budget that allows me to pay down debt as well as save for dd. My retirement (Fidelity Acct) comes directly out of my pay...75.00 bi-weekly, that will continue.

I am working on the budget now. I hope to have it posted by the end of next week. I look forward to input...and thanks for sticking with me guys...this has been an amazing few months with you...looking back at where I was and where I am now...I can sleep at night for the first time in years. Now I have to start planning for the future.


Thanks
G

[shelbylovesmelby]

I agree with Jim, you have to fund your own retirement first!

That is true. Provided you have some $ to save for retirement in your budget. TG for 401K's it's the only way my dh would ever be able to save anything!

[myself]

I am at 0 deductions. I like getting the money back at the end of the year not to mention I'm so afraid of owing...I understand that money could be earning interest/doing good for my family during the year but I'm not a good saver and if I spend the money as I get it and owe at the end I'm in trouble. I really like having a chunck of change to pay debt down with...makes me feel as if I've accomplished something.

Let's see ... money back at the end of the year, or $500/month extra onto the car payment (or whichever has the highest interest rate).

Ignoring the "interest free loan to the government" thought, you might want to consider how much you can save by paying either the car loan off early. The student loan (assuming it's not a very high rate) is an above the line tax deduction, which means it lowers your adjusted gross income (or AGI). So, if you pay $800 in interest on the student loan, you'll be taxes on $800 less of your pay.


For what it's worth, you said you are "not a good saver". So, don't save, adjust your withholdings so that you get $400-$500 extra each month, and pay that much extra on the car loan.
Or my personal favorite would be to sell the $24,000 method of transportation, and get a cheaper mode of transportation and pay off your remaining transportation costs as soon as you can. I just recently bought a 2006 Corolla (with only 700 original miles - it was a car the dealer used for folks that had their vehicle in for servicing) for $14,000. And yes, my wife and I have 4 kids which is why we also have a van.

Look at it in with the eyes of how much your spending for a simple way to get from point A to point B.
Your situation if the vehicle is used for 10 years:
$24,000 car loan after interest will probably be around $38,000 after you add interest (of course it may be more than that).
$38,000/120 = $316/month

I just saw on another thread that you're $24,000 loan isn't a temporary loan. It's a lease. So, unless you don't buy the vehicle outright, guess what ... it's either another lease, or another loan. Personally I'd opt to finish the lease without paying the loan down early, and using the proceeds to purchase an inexpensive replacement vehicle IN CASH when the lease is up.
How could you do this:
$5,000 from your tax return this year, and $6,000 from the tax return next year.

[myself]

Autoxer - what do you mean she will be burdened with all my bills if I can't work? My debt is not transferable to her...I don't understand what this means.

Well, what Autoxer most likely means is that if you still owe a lot of money when you want to retire, you may have paid for your daughter's education at your own expense of having to work, instead of working because you want to.

[Ima saver]

I have never had a leased vehicle. What happens when the lease is up? Do you own the car or do you have to then buy it?? How will she come up with the cash for that??

[myself]

I have never had a leased vehicle. What happens when the lease is up? Do you own the car or do you have to then buy it?? How will she come up with the cash for that??

Leasing is basically renting a car.

1. You have to pay for the routine maintenance just like you would if you purchased a vehicle
2. You have to repair/replace tires as necessary, just like you would if you purchased a vehicle

You typically have the option to purchase the vehicle at the end of the lease for a fixed amount (called residual value), but each lease is different.
I once had a discussion with a co-worker who insisted that he was better off leasing his vehicle (because the payment was $175/month less by leasing), in comparison to purchasing the vehicle outright. His biggest argument was that he didn't want to pay for the depreciation of the vehicle over the same time . But when I pointed out that his lease payments plus the residual cost him the same amount (or more in his case) than if he bought the car using a conventional loan, he insisted that he didn't like paying for a depreciating asset.

[disneysteve]

I have never had a leased vehicle. What happens when the lease is up? Do you own the car or do you have to then buy it?

Lease is a fancy term for Rental. You pay a monthly fee to use the car. When the lease period is up, you have to give back the car. You own nothing. You do have the option of purchasing the car at that point but you aren't obligated to do so.

[Ima saver]

Thank you both, I get it now. You pay all that money monthly and when you have finished your lease, you walk away, but have no car. so then you have to start all over with no downpayment to buy a new car.
Now I know why Clark Howard calls leasing, "fleecing" and reccommends that you never do that.

[cptacek]

disneysteve - I am going to save every penny I have left over for dd's education...that is after I've paid my bills and have paid towards my debt...what is left over will go to her. I am not saying I am going to ignore my debt...I just have to save for her future.

I think the problem here is that disneysteve doesn't see any of the money as "left over," while you do. With your plan, you are going to pay the minimum on your debts, and then put any "extra" money towards your DD education. But disneysteve (and many others agree) want you to pay the minimum on your debts and then put the rest of the money towards the highest interest debt so you can PAY THEM OFF, get out of debt and still can help you daughter in the future.

Did you know that there are things called PLUS loans especially for parents to help pay for school if their kids can't get enough student loans / grants / scholarships to cover college? Those loans are in your name, not your daughters, so you would still be footing the bill. Just because you are not saving money now for college for her doesn't mean that you can't help her get to college, even the college of her dreams. If you get your debt under control now, pay off some of that $75,000 between now and then, you will be able to get that loan when the time comes, and in a better financial position.

Also, if your daughter has to take out student loans, you can still help her pay for them. You can give her the money to pay for them later IF YOUR FINANCIAL HOUSE IS IN ORDER.

It also sounds like you expected your parents to help you with college and they didn't. That must have been painful for you, but you have to remember...you are not your parents and your child is not you. You can start fresh and make the RIGHT decision, instead of just the opposite decision your parents made.

[timetosave]

I find all the assumptions here concerning my dd and my parenting amusing.

I know about plus loans, I'm upset with my parents because they put my brothers through school but told my sister and I that we had to do it all by ourselves (we weren't worth the effort I guess). My dd wants to go to college and will go to college.


I never stated that I was going to pay only the minimum on my debts (I'm actually going to start making two car payments a month in order to pay the car off in full before the Smartbuy is over...but thank you so much for assuming so much...

G

[disneysteve]

I'm actually going to start making two car payments a month in order to pay the car off in full before the Smartbuy is over

I'm not clear on why you want to make double payments on the car while you have all the credit card debt that you aren't paying on at all. Wouldn't it be better to start attacking that debt, which is probably the worst as far as your credit is concerned?

[jIM_Ohio]

I find all the assumptions here concerning my dd and my parenting amusing.

I know about plus loans, I'm upset with my parents because they put my brothers through school but told my sister and I that we had to do it all by ourselves (we weren't worth the effort I guess). My dd wants to go to college and will go to college.


I never stated that I was going to pay only the minimum on my debts (I'm actually going to start making two car payments a month in order to pay the car off in full before the Smartbuy is over...but thank you so much for assuming so much...

G

I think the issue was OP asked for advice, got some which was not exactly her intent/desire... and cherry picked certain pieces. This is OK, but I wouldn't expect advice to change because OP did not like certain things which were said. This thread is coming fuill circle (advice is repeating itself).

Obviously we wish you the best and you have made progress to get to this point. But the enemy of success is prior success. I would not get complacent... speaking from experience, when the debt is paid off (even the written off debt), you will see benefits psychologically and financially you might not be grasping. Add into this you want a "7k" income tax cushion which would drastically change your situation significantly in less than 12 months (if implemented now). The changes would include becoming more disciplined with your finances, having debt paid off, and being financially stable for DD.

Here's a few random thoughts:
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If you have poor credit, financing dd's education might not be an option on the table. It takes 7 years for credit to repait itself (things to fall off credit report), correct? Meaning if you paid the written off debt this year, you might see more doors open (in forms of loans and credit) which you cannot consider now with a poor credit score.

If the car is really a lease, pre paying it is not an effective use of money. My understanding with leases is many companies (like Honda) do not charge an interest rate on a lease (it a "lease factor"). This cannot be "paid off sooner" like a typical loan/debt. I would look into what your circumstance is.
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It is obvious you love your daughter and would sacrafice for her. I truly admire that. Be careful sacraficing too much right now or at any one time. You could do better than you already have, and much (all?) of the advice I am reading is solid. The fustrating part is seeing you suggest "I don't WANT to do 'this' or 'that'.

[timetosave]

I'm not clear on why you want to make double payments on the car while you have all the credit card debt that you aren't paying on at all. Wouldn't it be better to start attacking that debt, which is probably the worst as far as your credit is concerned?

The credit card debt I have has all been charged off. The cards I had in good standing I paid off at the end of last year and cut them up....keeping the accounts so that I have positive credit (which was suggested here). I was directed by MANY here that my credit score should not be my priority right now...the goal is to be able to live credit free. I have to keep the current good credit good and focus on paying down the car payment and student loans. Once the car is paid off that frees up 500.00 monthly (that will be nice, I will then stash all of that into savings for self/dd).

I think the issue was OP asked for advice, got some which was not exactly her intent/desire... and cherry picked certain pieces. This is OK, but I wouldn't expect advice to change because OP did not like certain things which were said. This thread is coming fuill circle (advice is repeating itself).

I would be a fool to just take all the advice here and apply it to my situation. There are factors in my life that none of you know, some additional information that some of you know. But there are also conflicting opinions on how I should proceed...I honestly am the only one that knows what will work...at the end of the day I have to be comfortable with my decisions or this is not going to work. Cherry picked...of course.

Obviously we wish you the best and you have made progress to get to this point. But the enemy of success is prior success. I would not get complacent... speaking from experience, when the debt is paid off (even the written off debt), you will see benefits psychologically and financially you might not be grasping. Add into this you want a "7k" income tax cushion which would drastically change your situation significantly in less than 12 months (if implemented now). The changes would include becoming more disciplined with your finances, having debt paid off, and being financially stable for DD..

Though it is true that in the beginning and to some extent now I have fallen into complacency, I am honestly giving this effort. The fact that I am still here and not making major decisions before at least asking (retirement account is a good example) should be enough to show that I have not intention of continuing to make poor decisions. I have a 12 yo that will be looking to me very shortly, I need to be there for her.

Here's a few random thoughts:
--------------
If you have poor credit, financing dd's education might not be an option on the table. It takes 7 years for credit to repait itself (things to fall off credit report), correct? Meaning if you paid the written off debt this year, you might see more doors open (in forms of loans and credit) which you cannot consider now with a poor credit score..

The majority of my negative credit card accounts on my report will drop off this year or next year. There are three (all under 500.00) that I will pay off throughout this year. The judgments are small enough to be paid of well before dd is out of highschool (one will be done in June). Getting the car paid off will free up 500 monthly which will help in this goal.

If the car is really a lease, pre paying it is not an effective use of money. My understanding with leases is many companies (like Honda) do not charge an interest rate on a lease (it a "lease factor"). This cannot be "paid off sooner" like a typical loan/debt. I would look into what your circumstance is..

The car is a smartbuy (explained in my other vine) paying it off is a good idea and i can pay it off early.


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It is obvious you love your daughter and would sacrafice for her. I truly admire that. Be careful sacraficing too much right now or at any one time. You could do better than you already have, and much (all?) of the advice I am reading is solid. The fustrating part is seeing you suggest "I don't WANT to do 'this' or 'that'.

When I say I won't do something it is not a suggestion. I won't sell my car and get a used one. I won't stop my dd from riding, I won't change my deductions (at least not right now, maybe once I have money in the bank that I know will be there in the event of owing the government...well that is a different story), I won't make my dd work. These are not suggestions these are areas I will not change, period. So what I need to do is to find ways to get to my goals without changing those factors in my life. When I am more financially secure (which I am leaps and bounds better off now than I was when I came here) I will re-evaluate those won'ts.

I understand everybody here wants to see me succeed. I appreciate that and I keep coming back for more and more advice. I love this board. I, however, am still plagued with the 'old tapes' that keep running through my head...it would be foolish of me to think I can change this many years of misdirected thoughts about money in what 7 months...but I've come a long way and will continue. I am determined to make a difference in my childrens lives, not only as a loving devoted parent now, but in the future and if I can turn things around now, maybe, just maybe I will be able to affect the lives of my grandchildren. I'm in this forever. I am going to suceed and have to this point because of people like you.

I thank all of you.

[timetosave]

GMAC Smartbuy

SmartBuy is a purchase transaction that is like a lease because monthly payments can be lower than with traditional financing. That’s because the monthly payments are based on the portion of the vehicle you expect to use during the SmartBuy term plus a finance charge. However, with SmartBuy you own your vehicle.

At the end of your contract you have several options, including keeping your vehicle by making a final balloon payment or simply returning your vehicle and paying a disposal fee (if applicable).

SmartBuy is available in a limited number of states. Ask your GM dealership/retailer about availability.


Now I have to admit I have quite a bit more research to do on this but from what I've found so far I'm ok in this. It is not a lease, I do own the car.