I know, I know. In my last post, WEEKS ago, I said I’d update soon, specifically regarding some of the troubles detailed in this post.
Just so you know, After I wrote that post, I promptly went and stuck my head in the sand and ignored the budget and putting transactions into quicken/YNAB completely. July was great for toy buying! But not so great for getting out of debt :(
As mentioned in my “trouble” post, we have a big budget buster. The taxes that are being withheld from our paychecks are not enough to pay the taxes taht will be due next april. To the tune of about $1000 a month.
I don’t know about you, but I can’t just take $1000 bucks away from the income I budget and still sock money at debt.
The first thing that went through my mind was of course, my big master plan. Pay off all our debt by 2011. That plan depends on a certain amount going toward debt each month. I worked my spreadsheet over and over and saw this plan totally going down the pooper. It was really depressing. I mean, hello! I registered a domain name and everything! 99k by 2011! THAT IS THE PLAN!! WE CANNOT NOT MAKE THE PLAN! The weekend I was trying to work all this through, I couldn’t sleep, actually got pretty sick with a sore throat and was just really not doing good.
My husband was disappointed of course, but was not distressed. Certainly not as distressed as I was. He expressed it this way, “Honestly, I’m not that worried about the car and home equity debt. I just want our credit cards PAID OFF.”
We will still be able to pay off our credit cards sometime next year, I’m just not sure when exactly. I wasn’t about to give up so quickly, though. I started thinking about our 401k’s. I listen to Dave Ramsey a lot, and he always advocates putting all retirement saving on hold while you get out of debt. We had not done that - 3 years is a long time to put off retirement saving. I enjoy listening to the Dave Ramsey show, but obviously, I don’t agree with everything he advocates (hi there american express!) (dave’s opinion: credit cards = big big no no)
Desperate to cling to THE PLAN! THE PLAN WE CAN’T ABANDON THE PLAN! I investigated what our scenario would be if we dropped all retirement savings and put it toward debt. — What I found, OF COURSE, was that any extra money we got in our paychecks would just be taxed more to the point that our checks would hardly be any bigger. And also, since our withholdings are off anyway, it just meant that we would have an even bigger tax bill next year.
It really cemented to me how awesome retirement savings are! I then TOTALLY turned a corner. Screw the plan. RETIREMENT is the new plan! (Have I mentioned I can be a very fickle girl?) I went gallivanting off in the complete opposite direction — what if I UPPED the % of my paycheck (my husband’s is already at his company max of 7%, blech) so that by the end of the year I would have reached the limit for 401k contributions? While I still think this was an awesome idea, it would result in a lower tax bill, but not by enough to make it so we could actually live on the resulting check I would get, and debt? FUHGEDDABOUTIT!
In the end, I did raise my contribution percentage a bit. And for our estimated 2008 taxes, instead of doing a dollar amount additional withholding on our W-4 for the extra taxes, we changed nothing on our W-4s, instead, we are saving the extra money each month - that way we’ll have the money for the taxes next year, and we’ll get the interest income. We won’t have any penalties for doing this, so why let the government have it until it’s due? Yay for interest!
So our 3 year plan is still very much in the air. After a month of not thinking about it whatsoever (and oh lord our totally blown budget shows it), I can see that .. well, I was getting a bit obsessive about everything. I was poring over our budget, over our debt spreadsheet, WAY too often. However, ignoring everything is not the answer either! But not being able to sleep, and getting sick over this was a little extreme. And I had been forgeting that we won’t be living with 1k less each month FOREVER… it’s this extreme right NOW, because it’s halfway through the year! In January, we will both get our W-4 set up properly, and I am going to set up my 401k withholdings so that by the end of the year I’ll have hit the federal limit, and we can see where that puts us.
Next up: our blown budget, and iphones! did we? didn’t we? Stay tuned!
Comments
Hi 99k - Haven’t seen you in a while. I hope you’re still plugging away at your debt and will update soon! Good luck!