Wrong Path?

This post I decided to dedicate to the topic of people in my life making poor financial decisions.

Situation 1

One of my friends recently moved from out of state to the DFW area. She has been looking for work for the past few months. Thanks to her connections, she will likely be getting a well paying job within the next few months. The couple took out a 401(k) loan that they plan to pay back over the next few months. Without the 401(k) money as a resource they would be on seriously shaky financial ground. Flash forward to today, they just moved into a luxury apartment for the rent is $1300 dollars per month (my apt is a comparable size, in a slightly less desirable location but still 5 minutes away and $773). Eventually they plan on purchasing a house, but today she doesn’t have a job and for all intents and purposes he doesn’t have a job.

A few years ago they owned a home in another state that went through a short sale because of the downturn in the real estate market. For as long as I’ve known them the husband has not had a full-time job to help support his wife, instead he chose to pursue his passion for theology which doesn’t really pay well and he earns nothing from. I think most people would have a come to Jesus moment where they would work a job that is not ideal but helps their family hit their financial goals. This has not been the case.

The wife is also providing financial assistance to her parents and brother. My guess is this has amounted to over $100k over the past decade. It’s very noble that she’s cares so much about her family, but I don’t think she is concerned enough about herself.

It’s not my place to cast judgment on my friends, but I wish I was able to impart wisdom on them. They haven’t realized it now but I think they’re setting themselves up for financial failure in the long run. looking at the power of compounding, the importance of having a sizable nest egg and not living beyond your means, They’re failing on multiple counts. On the bright side I think she will be back on target in the next 2-3 years. I have tried to help the husband with finding a job but haven’t been so successful at that. He doesn’t seem very motivated and I can’t force someone to be driven. Sure I believe in the power of faith but also that god allows us to help ourselves.

Situation 2

One of my other friends recently confided in me she has over $120,000 dollars in student loan debt. At what interest rates you might ask? Between 5-9%. Currently she is on the income-based repayment plan, commonly referred to as IBR. She quit her stressful corporate job and instead works as a babysitter. Although she’s well paid for what she does, she’s making minimum payments on her loans while interest accrues. Combined she and her husband grossed over $100k last year. Gross vs net though, two very different things.

Let’s look at a compounding. Starting out with a $120k balance and paying $300/mo. I don’t know exactly how much she pays but it’s probably less than that. I used this calculator so no idea how accurate the numbers really are.
Year 1 : $127,505
Year 2 : $135,713
Year 3 : $144,692
Year 4 : $154,512
Year 5 : $165,254
Year 6 : $177,004
Year 7 : $189,856
Year 8 : $203,914
Year 9 : $219,290
Year 10 : $236,109

Luckily in her case she is set to inherit 2 houses in the US and another in another country. Down to road she could sell those and be student free. Not everyone has this luxury and what does that leave her with? An underfunded retirement plan, no real estate and probably some hefty tax bills. She’s given up hope and is just paying what she can for now.

My father died with serious debt. Over $50k as I recall, mostly from medical expenses. I wasn’t blessed with a silver spoon in my mouth. I’m not perfect. I love my friends and family and wish the best for them. Seeing my father poor from the age of 2 up until I was 20 left a lasting impression on me. He didn’t have any much control over his situation, due to his renal failure. As long as I am able to I’m gonna fight damn hard to learn from all of this. To do otherwise would just be plain ignorant Life is more than money, but a few poor decisions can haunt us for a lifetime.

Unexpected Expenses

As much as I want to pay off Sallie Mae it’s time to beef up my emergency fund. For the month of January I’ll pay paying just the minimum $452 for the month. Between bills from the holidays and my pending medical bills it’s spreading me thin.

Today I was wheezing heavily and coughing at work. This has never happened to me before and lasted for a full 45 minutes. Luckily my job has a clinic on-site. I went down there and both people who worked there and those waiting felt really bad for me. So I was seen a full hour before my appointment. Chest x-ray ruled out pneumonia, tested negative for flu and negative for strep. Got a nebulizer treatment for a half hour, blood work drawn and two injections in my backside. I immediately started to feel better. My prescriptions were only $12. Went home and did 0 work afterward.

My current health plan has a $4000 deductible. That is going to $2000 in about two weeks. Still not enough to make a big difference in what I will end up owing. I hope most of the stuff at the clinic is covered by my co-pay but I cannot say so for sure. The x-rays will be a couple hundred dollars I figure.

Currently I have $197 in my bank account so an emergency fund is non-existant. I need to pull back at least for a month to do some damage control. Credit card balance is just under $700, close to $900 after pending transactions hit. That will be paid off in full after my next paycheck. I put the ATT ($87), Verizon ($150) and electricity bill (not yet added but $212) on it.

It’s a wakeup call that health is important and having insurance matters. Coming out of the holidays without super much massive damage (though I spent more than I wanted to) and that makes me happy. That’s all for now.

 

Update: Maybe the X-Rays aren’t as much as I thought. I see an estimated cost online of $32 for the center I went to.