Financial Austerity

[Magic Johnson]

This is a great story; it sounds as though the new job came along at just the right time.

Do you have any pension benefits from your years at the university? What about at your current job, are you accruing pension benefits?

I have my 403(b) from the university. After I raided it to pay off my debt/penalties/taxes, I have about, and after I settled with my ex-wife on the asset split, $217K left in that account, there is no pension associated with the university. I have what they call a "three-tier" retirement with the USDA. One tier is a traditional pension. I think I'm vested after three years, and it pays about $18K per year. There's also a 401(k)-type program that I contribute to with employer match. And then I also contribute to and receive Soc. Sec. benefits.

I have another source of retirement income. My parents own my family's 200-acre farm. About 170 acres of that is "tillable" and rented out to a local farmer. I already know that my parents plan to bequeath the farm to me when they pass. I don't know what my parents get for rent right now, but because of my profession, I know that the current rental rate for ground of that quality is in the $150-$200 per acre range, and I expect that value to increase by the time I would inherit the land.

[Magic Johnson]

Was she a good mother before all of the divorce ugliness? Put the needs of her children first?

Yes, absolutely. She just hates me that much.

[sblatner]

I was a freshman at MSU when Magic announced that he was HIV positive. It was a really sad time on campus. In 1991, being HIV positive was akin to a death sentence.

I was just thinking about that day earlier this week. I was at work and we all watched the news conference. Yes, it was a death sentence. He sure seems healthy so has been doing something right and has been pretty lucky!

[sblatner]

That's true, but just to play Devil's Advocate, OP stated his credit card is 8.99%.

The company match is typically 50 cents on the dollar, so an immediate and guaranteed 50% return, along with the upfront tax break on his contributions.

Is it worth giving up a 50% return to avoid paying 9% credit card interest?

I'm not pushing either way, but you do need to look at both sides.

disneysteve, I totally get what you are saying. If his bills were under control and he had a way to pay down debt, I would say keep up with retirement. At this point, he doesn't know what the future holds in regards to lawyer bills, etc., so I say cancel the 401k for this year until he knows the details.

[Petunia 100]

Yes, absolutely. She just hates me that much.

That's really unfortunate. I hope in time she will see that what matters isn't what you want or what she wants, but whatever is best for your children. It is best for your children to have relationships with both parents, and that means time with each parent.

[Magic Johnson]

I’ve got some updates.

I met with my attorney face to face for the first time this morning. We talked for about an hour and a half, so it was expensive, but a productive meeting.

I shopped around for better rates on my auto and renter’s insurance.

I looked into reducing my retirement contribution. When I say reduce, I mean by like 90%. Reducing it to zero just makes me sick. The bureaucracy of the federal government is vast, and I’ll have to contact HR to do it. It’s not just as simple as going to a web site to make the changes, but I will contact HR as soon as I’m done with this post.

I contacted my credit union yesterday about increasing the limit of my cheaper credit card. I requested a $10K limit, and they approved a limit of $6,500. Hopefully all of my legal bills will come in at that figure or less.

My credit union also sent me a copy of my credit report, which I guess always happens when you apply for a loan/credit limit increase. According to Experian, my credit score is 785. I’m pleased with that number.

[Magic Johnson]

That's really unfortunate. I hope in time she will see that what matters isn't what you want or what she wants, but whatever is best for your children. It is best for your children to have relationships with both parents, and that means time with each parent.

Right. I’m convinced that she truly believes I’m a bad person, and she wants to minimize her (our) children’s exposure to bad people.

[Petunia 100]

I have my 403(b) from the university. After I raided it to pay off my debt/penalties/taxes, I have about, and after I settled with my ex-wife on the asset split, $217K left in that account, there is no pension associated with the university. I have what they call a "three-tier" retirement with the USDA. One tier is a traditional pension. I think I'm vested after three years, and it pays about $18K per year. There's also a 401(k)-type program that I contribute to with employer match. And then I also contribute to and receive Soc. Sec. benefits.

I have another source of retirement income. My parents own my family's 200-acre farm. About 170 acres of that is "tillable" and rented out to a local farmer. I already know that my parents plan to bequeath the farm to me when they pass. I don't know what my parents get for rent right now, but because of my profession, I know that the current rental rate for ground of that quality is in the $150-$200 per acre range, and I expect that value to increase by the time I would inherit the land.

This is good news as far as your retirement goes. Your basic living expenses will be covered from your pension, SS benefits, and rental income. Withdrawals from your own savings will be gravy. Since this is the case, I agree with sblatner that focusing on your current situation with negative cash flow is a higher priority than additional retirement savings.

I earn almost exactly what you earn, and I could not juggle all of your current expenses. This has to be very stressful for you.