17 November 2009

Thinking the Unthinkable

Please note: This post is about the insights I’ve gained through managing my own financial situation. It provides links to financial advice, but it does not provide financial advice.

When I resigned from my high-stress job in May 2008 and began my sabbatical, I thought I could find a new job whenever I chose—when I was rested and the novel was done. Now, 18 months later, with my savings long gone and my credit card debt creeping up, my perspective has changed, and the banks seem to have changed as well... or were they always this greedy? Is a 30% purchase APR even legal?

Until I’m out of debt and can tell the banks to shove it, I have to get through right now. And right now, like many people, I’m having to consider options I previously thought unthinkable, like cashing out my 401k or filing bankruptcy. I’m not quite to that point, but it was time, this week, to do some serious research and make some hard phone calls. I was dreading it, but I feel better after having done so. Here’s what I discovered:
  • Cashing out my 401k should be an absolute last resort, since 401k accounts are usually safe from bankruptcy filings, but I’m leaning toward bankruptcy being my last resort. Dave Ramsey’s The Truth About Bankruptcy (and related resources) were helpful to me, as was SmartMoney’s 10 Things Bankruptcy Court Won't Tell You.

  • Selling assets and continuing to live (frugally) on credit cards is my best option for now. I’m current on payments (I’ve been paying early and slightly above minimum), so I was able to negotiate lower rates with my credit providers by kindly explaining my situation without blaming, complaining, or meandering. I did use the word “ridiculous” once, but only because a rep suggested I pay off a $10K balance in 800 months. Other than that, I was nice.

  • Skipping my car payment in December will help a bit. Interest still accrues, and the payment gets tacked on to the end of my loan period, but if I get to keep my car, I’m happy to pay a smidge extra.

  • Since my COBRA coverage ends this month, I’ve been researching health insurance options. I started with CoverageForAll.org to see if I qualify for any special-case plans in my state (I don’t), then compared insurance plans at eHealthInsurance.com. I found a plan with Aetna that includes dental coverage, which I desperately need, at about half of what I was paying for COBRA.
I can’t go back and do things differently, but even if I could, I’m not sure I would want to. My time off to rest, recover, and write has led to personal enlightenment, which of course is priceless. I’ve learned the value of living below my means yet above the intoxicating influence of ego and advertising. I’ve learned that true joy comes from what I am—not what I have.


Trish and Rob MacGregor said...

Vanessa - one option. If health issues aren't one of your issues, drop the cobra. We haven't had health insurance for 20 years. Long ago, we realized it wasn't one of our issues. On the few we've needed to see doctors or dentists, we've paid cash and most doctors are willing to offer a discount for cash payments. It's a sad commentary on American life in the 21st century, but there you have it.

Is your novel finished? If so, maybe I can help. Drop me a line at: macgregors2@gmail.com

Trish and Rob MacGregor said...

You probably already know this, but it's possible to sell nonfiction based on a lengthy proposal. Most editors these days seem to prefer a proposal rather than the entire book. Good luck! Can't wait to see it on the shelves!

mario g. said...

I suggest Suze Orman's 2009 Action Plan. It's a book on 4 CD's. I borrowed it from our local library. She lays out different scenarios and action plans covering issues such as job loss, credit cards, health insurance, investing and retirement. I borrowed it for the saving for retirement part. Lots of good advice.

Vanessa said...

I'm a fan of Suze Orman so I'm surprised her 2009 Action Plan slipped by me. I didn't realize it included info about job loss. Thanks for letting me know! :)

Re your other comment (on your blog) about trading music tips, I was just using Sonar Producer today and was overwhelmed by all of the bells and whistles... and I was only working on vocal tracks. I am sooo not an audio engineer.

mario g. said...

Off topic... I like Audacity because one, it's free. Two, it's so easy to use and it comes pre-loaded with very basic plugins and yet you may add bells and whistles if you wish. Even Brian Wilson uses it. He has a demo on Youtube using Audacity.

Haha, I'm not a sound engineer either but I think we have an ear for what sounds best. It might just take us a bit longer to figure out what works on the technical side but that's where half the fun is... discovering that we can eventually do what the best of them (sound engineers) can.

But I am hoping I get my Christmas wish for a Line6 UX2 and a good condenser mic so I can churn out better sound.

Vanessa said...

Free? I like free. Free is good. :) I'll def'y check that out.

Condenser mics are awesome. Check out the Blue mics (higher end) and also the AKG Perception line. I have their 400 model and LOVE it. I only do vocals, but it has settings for different instruments. AKG makes great headphones too.

Anonymous said...

If you don't acknowledge the CC debt and they don't get it from you in 7 years it drops off your credit report. My sister has done this on a lot of her debt.

Bankruptcy isn't so bad. Paying back the CC companies is lame. Also credit reports are over rated. What you want to buy a new house? A new boat? naw. stiff em.