I ran a calculation on my financial situation the other day.
I am trying really, really hard to take a long-term view when digging out of the mess Ex left me in. (Yes, it is a mess I allowed myself to be buried in by looking the other way. I know I share some of the blame.)
To be quite honest, I am horrified at how he arranged things. But each small victory means so much more when I see how bad things were.
I ran a fifteen-year, back-of-the-envelope calculation. I hate debt; I would have had none if I'd had my way. But that was not to be.
We owned a house. We still own the house together, but he "got" it in the asset division. This was fine with me. Last year, we were facing $430,000 in payments on that house over the next 15 years. The reality is that it would never have been paid off that quickly -- it would have cost more over more time -- but we are playing a math game here.
We owned a camp. We still own the camp together, but I "got" it in the asset division. This was also fine with me and like the house, the title will soon be changed. Last year, our share of the payments over the next 15 years totalled $150,000.
We had debts I didn't know about. Credit cards were maxed out and only the minimum payments were being made. The cost over fifteen years would be $130,000. And I doubt they would have actually been paid off in fifteen years.
We had lines of credit I didn't know about. Those, let's be realistic, would never have been paid off if I hadn't discovered them. But in an imaginary world where we made payments for 15 years and then somehow found the money to pay them off, the total would have been $135,000.
So that is a total of...carry the hundred...$845,000 to be paid over fifteen years.
Every time I add up the numbers, I want to throw up, but it's even worse when I consider the interest that he never minded paying.
Interest is not considered in asset division. It is a fairly simple calculation: take the value of the asset and subtract the amount owing to find the amount to be divided in half. In real life, it is difficult to literally divide most assets -- you can't take half of a house -- so they are divided as best as they can be and then one spouse makes an "equalization payment" to the other to make everything exactly equal.
I took the camp. I took my credit card. I took the lines of credit. Together, they would have come to $315,000 in payments over fifteen years. You may be shouting that this is not half of $845,000, but remember that was a fifteen-year calculation for debts at different interest rates, and did not include the value of the assets associated with the debts. There was less equity in the camp.
$315,000 over fifteen years is $1750 a month. Yes, let's all throw up again. Especially since I did not end up with a home to live in. This was going to be on top of all of my monthly expenses.
I haven't got $1750 a month, especially since in addition to taking half of the debt I am required to give Ex half of my pension. (Yet another story for another day.) I have to save money if I ever hope to retire. I have $1200 a month to put toward debt reduction.
I rolled the credit-card and line-of-credit balances into a loan to be paid back in five years at $800 a month. At that rate, I would pay a total of $52,000 over five years. I am "allowed" (HA!) to make extra payments, so at $1200 a month I can get rid of it in four years. Unlike a mortgage, repaying a loan more quickly does not have a dramatic effect on the amount to be repaid. But it does get rid of it more quickly. Which is a good thing, because I have to pay for the camp somehow.
I rolled the camp into two separate debts: one $90,000 loan to be paid in six years at $1200 a month as soon as the other loan is paid off, and one $12,000 debt to be paid immediately. (Ugh.)
But there is good news. I didn't walk away from my marriage with half of $845,000 in debt over 15 years, I walked away with $315,000 in debt over 15 years. And I was able to turn that into $154,000 to be repaid over ten years. As of today, there is $125,000 left to pay. Most of it is backed by real estate I own. The rest is the price of my own bad decisions.
Gulp. I can do this.
I am trying really, really hard to take a long-term view when digging out of the mess Ex left me in. (Yes, it is a mess I allowed myself to be buried in by looking the other way. I know I share some of the blame.)
To be quite honest, I am horrified at how he arranged things. But each small victory means so much more when I see how bad things were.
I ran a fifteen-year, back-of-the-envelope calculation. I hate debt; I would have had none if I'd had my way. But that was not to be.
We owned a house. We still own the house together, but he "got" it in the asset division. This was fine with me. Last year, we were facing $430,000 in payments on that house over the next 15 years. The reality is that it would never have been paid off that quickly -- it would have cost more over more time -- but we are playing a math game here.
We owned a camp. We still own the camp together, but I "got" it in the asset division. This was also fine with me and like the house, the title will soon be changed. Last year, our share of the payments over the next 15 years totalled $150,000.
We had debts I didn't know about. Credit cards were maxed out and only the minimum payments were being made. The cost over fifteen years would be $130,000. And I doubt they would have actually been paid off in fifteen years.
We had lines of credit I didn't know about. Those, let's be realistic, would never have been paid off if I hadn't discovered them. But in an imaginary world where we made payments for 15 years and then somehow found the money to pay them off, the total would have been $135,000.
So that is a total of...carry the hundred...$845,000 to be paid over fifteen years.
Every time I add up the numbers, I want to throw up, but it's even worse when I consider the interest that he never minded paying.
Interest is not considered in asset division. It is a fairly simple calculation: take the value of the asset and subtract the amount owing to find the amount to be divided in half. In real life, it is difficult to literally divide most assets -- you can't take half of a house -- so they are divided as best as they can be and then one spouse makes an "equalization payment" to the other to make everything exactly equal.
I took the camp. I took my credit card. I took the lines of credit. Together, they would have come to $315,000 in payments over fifteen years. You may be shouting that this is not half of $845,000, but remember that was a fifteen-year calculation for debts at different interest rates, and did not include the value of the assets associated with the debts. There was less equity in the camp.
$315,000 over fifteen years is $1750 a month. Yes, let's all throw up again. Especially since I did not end up with a home to live in. This was going to be on top of all of my monthly expenses.
I haven't got $1750 a month, especially since in addition to taking half of the debt I am required to give Ex half of my pension. (Yet another story for another day.) I have to save money if I ever hope to retire. I have $1200 a month to put toward debt reduction.
I rolled the credit-card and line-of-credit balances into a loan to be paid back in five years at $800 a month. At that rate, I would pay a total of $52,000 over five years. I am "allowed" (HA!) to make extra payments, so at $1200 a month I can get rid of it in four years. Unlike a mortgage, repaying a loan more quickly does not have a dramatic effect on the amount to be repaid. But it does get rid of it more quickly. Which is a good thing, because I have to pay for the camp somehow.
I rolled the camp into two separate debts: one $90,000 loan to be paid in six years at $1200 a month as soon as the other loan is paid off, and one $12,000 debt to be paid immediately. (Ugh.)
But there is good news. I didn't walk away from my marriage with half of $845,000 in debt over 15 years, I walked away with $315,000 in debt over 15 years. And I was able to turn that into $154,000 to be repaid over ten years. As of today, there is $125,000 left to pay. Most of it is backed by real estate I own. The rest is the price of my own bad decisions.
Gulp. I can do this.
When I left the north, I left with a fair bit of debt -- considering the money I was making (which wasn't NOTHING, but wasn't what a lot of northerners make) and the relatively short amount of time I was there. I think if you include my student loan I had in the neighbourhood of 25,000? That might be a bit of an over-estimate. But for a lady with zero assets, save a $3,000 10-year-old car, that is more than enough debt.
ReplyDeleteAbout 3 months before I left (and before I knew I was being laid off) I entered a Debt Management Program with a non-profit credit counselling society. The agreement was they would negotiate the essential elimination of my credit card interest, I would pay them a lump sum every month (just over 400) and by the time 6 years was up I would be debt free (except for my student loan).
Watching that $18,000 debt balance was one of my favourite things. I would get a statement every month, just like a credit card payment, but better. Because instead of going up (and giving me anxiety attacks) it kept decreasing.
It was 4 years in May and I made my final payment last March.
It wasn't an EASY 4 years. I learned to live without credit cards. I travelled less, or the trips I made were to see family, or road trips. There were weeks when I quite literally had less than 5 dollars in the bank (not counting the savings bonds I buy but only access for major expenses) but it really wasn't that bad.
I didn't save anything for retirement or any long term savings, but that's something I've vowed to do after my next major purchase in the new year (a car).
I now have a thousand or two left on my student loan, but am for the most part, debt-free.
I spent years digging myself into a debt-hole and was so paralyzed with fear I didn't know how to deal with it. I hated my debt but I didn't know how to take action.
Yours is more daunting, for sure, but the most empowering part is taking action. It's not easy -- and if you need anything (I'm not sure how I would be able to help BUT the offer is there) let me know, but you can do it.
And watching that number dwindle month by month is so rewarding.
You can do it :)
I feel your nausea.
ReplyDeleteBut I also see your strength--you WILL do this.
I always feel better with a plan. I see you do too. :)
ReplyDeleteIt's all in my head, but somehow, knowing that I got it down to the amount I thought I had to pay on the camp made it better. I am still very angry that I had to take any of his debts at all.
ReplyDeleteFrig, I am even angry that you had to take on his debts. It seems ridiculous to me. Is it okay that I wish a nasty worm would crawl up his man bits and make them fester and maybe fall off?
ReplyDeleteGlad you have a plan.
When I divorced Chicken's father in 1999 I was 25 years old and did not know getting property in a divorce means nothing if the title is not changed. So when H1 stopped paying the mortgage and didn't tell me and all the letters went to him, I got screwed and had a foreclosure on my credit. Gee thanks for that! It sounds like you're doing this the smart way. Just slog through it and you'll get there!
ReplyDelete