The digout continues

Photo: krossbow via Flikr

I'm not just talking about the 20 inches of snow that that got dumped on us today. No, I mean the excruciatingly slow process of digging out of debt.

There are hopeful signs. I suspect that as soon as I file my 2010 federal taxes my back taxes due the IRS will be behind us. Our car payments will end in May. Through frugal alternatives and generous gifts from friends, my kids are starting to have a life again.

My daughter goes in for her first orthodontist appointment tomorrow. We're saving thousands of dollars by going to a university dental school instead of a private doctor.

I'm a month away from retiring my last 29% interest balance on a credit card (thanks for nothing, CitiBank).

I finally got the courage to look at our credit scores. We're actually in the A or B category in almost everything, but we get an "F" in debt utilization. But at least we know the worst.

I've increased my 401K contribution to 12%. (I'll be 50 this year, so retirement looms).

I got the washing machine fixed, and even had the piano tuned for the first time in over a year.

Many of our kids' presents this year were hand made, refurbished or otherwise bargains. We even managed to send Christmas presents to our distant family this year.

Mr. Poorhouse and I are both in stable jobs. And Mr. Poorhouse has begun to take absolute delight in clipping coupons.

I've become a fan of The Fly Lady, who is gradually helping me to develop sorely needed neatness habits. I'm thinking she will also save me money in the long run but helping me to plan meals and find stuff that I would otherwise buy replacements for.

And yet...

We're so weary. It's going to be at least another 3 years until we're completely debt free. Unless of course we end up having to replace the 10 year old minivan in the driveway before then. 

I haven't managed to lose weight or increase my exercise. In fact, my weight is taking its toll on my knees, and I'm starting to worry about that. I don't have the money to join a club that has a pool where gravity might cease to be my enemy. I'm in a Catch-22. Can't exercise because of the pain--Pain because I weigh too much. 

So, everything is the same, but not so dire. Stamina's what we need now. 

Amex puts Polly in the doghouse

Image via Wikipedia

Having another cash flow problem.  Due to an expensive transmission repair which you can read about here if you're interested, I don't have the cash right now I thought I had to pay for the Poorhouse children's childcare this summer. I'll have it in two weeks when I next get paid. The problem is that there is only one viable option for the last few weeks of summer around here. Last year, we got closed out of the program because we registered too late, and had no child care.

(Remind me to do a rant on child care scheduling sometime. But not today. Today I rant on American Express.)

My American Express card proclaims that I've been a cardmember since 1984. Apparently that and a Diet Coke will give you a caffeine buzz for half an hour.

Two years ago, I was late on my Amex payments, along with all my other payments. I brought them current. American Express lowered my spending limit to $1000. This was a problem, because I used it mostly for business travel, which nearly always costs more than $1000. But I could kinda see their issue. They wanted to make sure they got their money.  So I stopped using the card, because it wasn't helpful to me.

About a year ago I called them and asked them to increase my spending limit. I have a job, and I can pay off my bills now. No, they said, we need at least a 6 month history of on-time bill payments. So I went back to not using it.

Fast forward to this morning, I whipped my card out of the back of my wallet and tried to use it to pay for camp for this summer. Declined. Hmm, I thought, thought I, Perhaps it's that pesky $1000 limit. I tried another transaction, this time, with only a few of the camp weeks charged. Declined.

So I went online to see my account status. Imagine my surprise to discover that my card had been cancelled!

Jason, the American name of a card services rep from India that I got on the phone, told me that they had cancelled the card in January for inactivity. Could they reinstate it?  No, because the reinstatement request was not within 3 months of cancellation. In a plot worthy of Joseph Heller, Jason suggested I apply for a new card. I did. My application was declined.

This nightmare will never ever end, will it? I'm paying off my debt. All of my bills and various payment plans are current. I have a good job. My husband is employed.  We are trying so hard, but we just can't catch a break.

Which little piggy? Pay off debt? Or save for college?

Image by voobie via Flickr

So here's a question I haven't been able to work out. My two kids are smart (or I like to think so) and I predict expensive tuition bills in our future, starting in about 6 years.

We have been saving for college (with some help from Grandma and Grandpa) since they were born.  What with the volatility in the markets and in our incomes, there isn't much in those 529 accounts.

We're in serious debt to the IRS, the State Department of Revenue, credit card issuers, business and mortgage lenders. Our current priority is to pay off the tax bills first and then start making a dent in the other debt.

We are contributing about 10% to my 401K plan at work, with a generous company match. (That seems like the right thing to do and keeps the taxes down on our current income).

So a friend of mind suggested that we'd be better off taking the money going to the 529 college savings plans (which grows tax-free) and using it to pay off our back taxes or other debt. That the more money the kids have when they go to college, the less financial aid they will get. We're not paying much into those accounts, but we're paying some, just to keep the habit going.

I've googled about this, but haven't seen it addressed by any of the debt-reduction strategists.

Thoughts?

Negotiating a New Salary--Believing You're Worth It

This post has been included in the Carnival of Debt Reduction: Thanksgiving Edition hosted by Mighty Bargain Hunter. Do stop by and check out the other financially savvy advice. I'm also very pleased that it has been selected by Political Calculations as a one of the best posts of the week for their On the Moneyed Midways feature, where you can see highlights of other financial blog carnivals.

I just came across a cool site, http://www.indeed.com/salary, where you can plug in a zip code and a job title and get an instant report of salaries from recently advertised jobs at that location.

Other than being nosy, this tool is enormously helpful in providing third-party objective data in salary negotiations. For more on why this is important, I highly recommend the negotiating classic Getting To Yes.

When I accepted my new job a few weeks ago, I was working through a retained recruiter. So she was going to get paid no matter who they hired. It was her job to screen applicants and "package" them for the employer. (Packaging in this case meant reformatting my carefully formatted resume into the recruiter's house style and asking me to write a summary of my experience for her to submit.) Part of the screening was to see if the salary was in the ballpark.

I'm sure you all know that as much as you like a recruiter, he or she is being paid by the employer, and everything you tell them goes straight to the employer. They are the employer's "agent."

In my screening call with the recruiter, she asked me how much I was making at my old job. I decided to tell her.

Then I pulled a trick. The hiring company was a not-for-profit organization. Tax returns (Form 990s) for not-for-profit organizations are available, for free, at Guidestar. And 990 forms list the highest-paid employees of an organization--with their salaries.

So, I did what any good negotiator would. I looked up my predecessor's salary. And found that she had been making substantially more than the hiring range they had given me.

So, when I got my job offer, I asked for more. I asked for less than what my predecessor had been making but more than they offered me. The recruiter was a little bent out of shape because she knew they had offered me more than I was making, and she knew I wanted the job, so she thought she was done. It was uncomfortable for a few minutes. I explained that I had a lot of experience, that I'd be expecting a raise in a few months for my existing job, and that I was disappointed that there wasn't more of a bump in salary in their offer. She asked me what I was looking for. I named a number.

I let the silence go. She said she'd ask. There was a time delay. The employer came back with a "split the difference" offer--all brokered through the recruiter. To be honest I was almost ready to say I'd take it. But the recruiter did something strange. She said she would go back and ask for the full amount again. She did. I got it.

Those 10 minutes or so of extreme discomfort with somebody I will probably rarely if ever speak with again went further toward decreasing my debt than a whole year of penny pinching would have.

Which Debt to Pay Off First--Not so Controversial After All

I had another thought about my earlier post about debt reduction strategies. Paying the highest interest rate debt first shouldn't really be inconsistent with paying the smallest balance first. I don't know what the rest of you do, but if I have a high-interest rate on a credit card and the credit issuer won't do anything about it, I transfer as much as possible to a lower-rate card. So by definition, my higher rate cards are also my smallest balances. Don't know why I didn't think of that before. Duh.

Futher Reading:
Five Essential Skills for Living with Plastic from Get Rich Slowly (This article is for people who are not in trouble.)