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The psychological burden of debt

June 9th, 2008 at 08:06 am

I have stuck my head into the sand lately pertaining to the big picture of our financial life. I get bogged down by the little things and have this black/white all-or-nothing mentality. I have a list of things that I should do and justify not doing because I confess I am a "chronic starter over" as I mentioned in some of my previous posts.

I paid off half of our debt (roughly)last week. We acquired this debt when DH was unemployed and we had $10K in real estate taxes, $3K parochial school tuition, and COBRA to the tune of $1,086. I have enough money in the bank to pay off the remaining debt but I have clung to that money for dear life as a safety net for "JUST IN CASE". I am using it to pay off the remining debt so I can really start over with a clean slate.

I have halted the traditional IRA contributions to Vangard and decresed the contributions to the HSA by 1/2 so I can get a better grip on things. I decreased DH's 401K contribution to 6%. Why? I have done this in order to have three months of as much money as possible. I am going to ladder three 1 month CDs for our EF. I have to pay some medical bills (small but several) that I make minimum payments on.

I need to incorporate some Mary Hunt for a freedom account which is where I am thrown for a loop at times. I reread Dave Ramsey and felt OK about suspending payments for the next few months.

I can ideally get things on track and then use the rental property income simply for savings/far future expenses (like 09-10 school year and 10 property taxes).

In order to move on, I am paying off everything - the $700 on Kohl's, the medical bills $500, the remaining balance on AmEx blue to the tune of 3.99% incterest. By July 1st, I will have it all paid off. Scary, but exciting.

I did have DH check into his company's severance package - and it is 2 months - so that helped me overcome some of my angst!

2 Responses to “The psychological burden of debt”

  1. merch Says:

    Good for you. Look at being scared as your sanity check, jus don't let it rule you. Being scared also causes you to focus.

    Get these paid off and get onto the next phase of your life.

  2. Petunia Says:

    Nothing wrong with trying to account for as many reasonably possible scenarios as possible. ("Reasonably" possible scenarios, not "all" possible. If I had to account for all possible scenarious I would never get out of bed in the morning.) If A (or B or C) were to happen, what would we do? can be a very helpful exercise. When you decide that the risk is worth it you'll sleep better at night knowing you made a good decision.

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