How do I stop obsessing over my finances?
May 4, 2009 7:47 AM Subscribe
The closer I get to finishing this debt off, the more it seems to bother me. Help?
About four or five years ago I took on a rather sizeable debt that I've nearly paid off a couple of times, only to repeatedly find myself back in a similar situation (though thankfully on a smaller scale). Each time that I've consolidated my debts, I've continued using one or more credit cards and have inevitably fallen into the same traps; one card starts to creep up, so I switch to another thinking it'll be easier to pay off the first if it's got a lower balance, and from there I spiral into disaster. The previous attempt to settle this was dashed as I entered into a relationship that initially brought with it far too many visits to local restaurants and eateries.
Fast forward to today. I've reeled in spending significantly; we cook at home a lot more often, more rarely eat at restaurants (at most once a week, down from four or five), and I brown-bag lunch at work (whereas I'd once upon a time spent anywhere from $15 to 20 at local delis). I drive less frequently, although overall I don't think our quality of life has changed much. I don't often shoot down activities on the basis of their cost; we've adjusted accordingly (she's in a similar financial predicament, though more a result of school loans) and enjoy eachother's company enough that nights at home are well spent and thoroughly enjoyable.
Of my four credit cards, I've paid off two entirely, a third is nearly paid off (under $100) and the fourth carries a large balance (around $5500), most of which is the result of earlier consolidation with 0% APR until October. I'm gainfully employed so paying this off along with my other bills does not seem like an insurmountable task. I've been working on paying off my credit cards one at a time, mostly for morale, but I've noticed that I've been focused far too much on these finances. I keep a running spreadsheet of all of my upcoming payments and bills and have charted this out until mid-August, around which time I think I'll be able to pay off the last credit card and finally return to paying each month in full (or possibly switching entirely over to cash or debit).
In the meantime, this remaining debt vexes me and I check my spreadsheet dozens of times a day, searching for any way which would allow me to pay off the debt sooner. I've resorted to selling various things on craigslist, including my home PC and home audio system (a pretty big deal for a software engineer by trade). Anything to help pay this down sooner. I haven't slept very soundly in months and I can't help but think that's related. Any suggestions on how I might go about stopping this obsession with my finances? I'd love to get the satisfaction of closing the other cards, as if that'd be some kind of silly moral victory, but I've read about the issues with that. So here I am with far too much credit, too much debt, and a calendar telling me I'll still be staring at debt for the next couple of months. The closer I get to finishing this off, the more it seems to bother me. Help?
About four or five years ago I took on a rather sizeable debt that I've nearly paid off a couple of times, only to repeatedly find myself back in a similar situation (though thankfully on a smaller scale). Each time that I've consolidated my debts, I've continued using one or more credit cards and have inevitably fallen into the same traps; one card starts to creep up, so I switch to another thinking it'll be easier to pay off the first if it's got a lower balance, and from there I spiral into disaster. The previous attempt to settle this was dashed as I entered into a relationship that initially brought with it far too many visits to local restaurants and eateries.
Fast forward to today. I've reeled in spending significantly; we cook at home a lot more often, more rarely eat at restaurants (at most once a week, down from four or five), and I brown-bag lunch at work (whereas I'd once upon a time spent anywhere from $15 to 20 at local delis). I drive less frequently, although overall I don't think our quality of life has changed much. I don't often shoot down activities on the basis of their cost; we've adjusted accordingly (she's in a similar financial predicament, though more a result of school loans) and enjoy eachother's company enough that nights at home are well spent and thoroughly enjoyable.
Of my four credit cards, I've paid off two entirely, a third is nearly paid off (under $100) and the fourth carries a large balance (around $5500), most of which is the result of earlier consolidation with 0% APR until October. I'm gainfully employed so paying this off along with my other bills does not seem like an insurmountable task. I've been working on paying off my credit cards one at a time, mostly for morale, but I've noticed that I've been focused far too much on these finances. I keep a running spreadsheet of all of my upcoming payments and bills and have charted this out until mid-August, around which time I think I'll be able to pay off the last credit card and finally return to paying each month in full (or possibly switching entirely over to cash or debit).
In the meantime, this remaining debt vexes me and I check my spreadsheet dozens of times a day, searching for any way which would allow me to pay off the debt sooner. I've resorted to selling various things on craigslist, including my home PC and home audio system (a pretty big deal for a software engineer by trade). Anything to help pay this down sooner. I haven't slept very soundly in months and I can't help but think that's related. Any suggestions on how I might go about stopping this obsession with my finances? I'd love to get the satisfaction of closing the other cards, as if that'd be some kind of silly moral victory, but I've read about the issues with that. So here I am with far too much credit, too much debt, and a calendar telling me I'll still be staring at debt for the next couple of months. The closer I get to finishing this off, the more it seems to bother me. Help?
Best answer: Any suggestions on how I might go about stopping this obsession with my finances?
First of all congrats on limiting your spending and paying down your cards, you've won most of the battle already if you can stick to that. Also, once you pay off those cards, make sure you switch over to using all of that extra money to build up your short term emergency fund and long term retirement savings rather than just increasing your spending.
As far not obsessing about it goes, is it possible to get more of your finances on "auto-pilot"? For example, if you want to pay off your last card by August, just calculate how much you'll need to pay every month/week/paycheck and set up an automatic recurring payment on your credit card company's website. At any rate, a lot of people would trade a few months of obsessing over debt in exchange for never having to worry about debt again, so if you can make it through this and get on track to be financially healthy in the future you should consider yourself lucky.
posted by burnmp3s at 8:02 AM on May 4, 2009
First of all congrats on limiting your spending and paying down your cards, you've won most of the battle already if you can stick to that. Also, once you pay off those cards, make sure you switch over to using all of that extra money to build up your short term emergency fund and long term retirement savings rather than just increasing your spending.
As far not obsessing about it goes, is it possible to get more of your finances on "auto-pilot"? For example, if you want to pay off your last card by August, just calculate how much you'll need to pay every month/week/paycheck and set up an automatic recurring payment on your credit card company's website. At any rate, a lot of people would trade a few months of obsessing over debt in exchange for never having to worry about debt again, so if you can make it through this and get on track to be financially healthy in the future you should consider yourself lucky.
posted by burnmp3s at 8:02 AM on May 4, 2009
Any suggestions on how I might go about stopping this obsession with my finances?
Why? This is a good thing. Once you get your card paid off you'll be able to start saving money and eventually get $5k in the bank. Once you get over a certain amount in the bank you'll probably start worrying less. Right now you have a fixed goal, to pay off your cards. Once that's done and you have what feels like a comfortable margin, you'll no longer have any fixed target, so psychologically that might have an impact.
posted by delmoi at 8:06 AM on May 4, 2009
Why? This is a good thing. Once you get your card paid off you'll be able to start saving money and eventually get $5k in the bank. Once you get over a certain amount in the bank you'll probably start worrying less. Right now you have a fixed goal, to pay off your cards. Once that's done and you have what feels like a comfortable margin, you'll no longer have any fixed target, so psychologically that might have an impact.
posted by delmoi at 8:06 AM on May 4, 2009
Use your plan that you charted out to set up an automatic payment at the credit card's website. Then set it and forget it.
posted by Theloupgarou at 8:21 AM on May 4, 2009
posted by Theloupgarou at 8:21 AM on May 4, 2009
I experienced the same feelings when I got closer to finally paying off my credit card debt. It was like graduating college after 20years of school. It's a big deal and I worked hard to get debt free after years of living beyond my means. I was also obsessive, checking my accounts everyday and trying to figure out how to pay it off faster the closer to my target date. I was also equally paranoid I would lose my job at the last minute and that I wouldn't make it. I got through it, met my goal, and then spent the following months throwing the same amount of money into savings. I was able to breathe again after that and now have a reasonable savings plan. I sleep better in general now and I say it was definitely worth the anxiety. More people should be anxious about their financial status.
As far as suggestions for being less obsessive, put yourself on a weekly or bi-weekly plan. Not allowing yourself to look at the numbers more than once a week or once every two weeks, since you KNOW that the numbers won't have changed unless you made a payment or you recieved income. However, having it open all the time helped me keep focus every time I wanted to buy plane tickets, expensive concert tickets, etc. Its the equivalent to having motivational posters taped all over your apartment.
Good luck, you're almost there!
posted by getmetoSF at 8:33 AM on May 4, 2009
As far as suggestions for being less obsessive, put yourself on a weekly or bi-weekly plan. Not allowing yourself to look at the numbers more than once a week or once every two weeks, since you KNOW that the numbers won't have changed unless you made a payment or you recieved income. However, having it open all the time helped me keep focus every time I wanted to buy plane tickets, expensive concert tickets, etc. Its the equivalent to having motivational posters taped all over your apartment.
Good luck, you're almost there!
posted by getmetoSF at 8:33 AM on May 4, 2009
I went through something similar on my (long, long) journey to get out of debt. The debt was from a marriage that had been long over so that didn't help things.
I don't think trying to find ways to pay it down more quickly is a bad thing, and I don't think having the next 6 months or so planned out as far as payments are concerned is a bad thing either. Try to focus on your progress so far and remember that this is a process. Do the best you can do today, and the next day, and the day after that and focus on your accomplishments so far.
Re: closing the other cards once they are paid off - just decrease the available credit on them if you feel the need to take charge here. I used CCCS so a lot of my cards were automatically closed either way.
posted by getawaysticks at 8:34 AM on May 4, 2009
I don't think trying to find ways to pay it down more quickly is a bad thing, and I don't think having the next 6 months or so planned out as far as payments are concerned is a bad thing either. Try to focus on your progress so far and remember that this is a process. Do the best you can do today, and the next day, and the day after that and focus on your accomplishments so far.
Re: closing the other cards once they are paid off - just decrease the available credit on them if you feel the need to take charge here. I used CCCS so a lot of my cards were automatically closed either way.
posted by getawaysticks at 8:34 AM on May 4, 2009
I'd love to get the satisfaction of closing the other cards, as if that'd be some kind of silly moral victory, but I've read about the issues with that.
I'm interested in what those issues are. We've just paid off two high-balance, high-APR cards and are closing those accounts. We'll keep two cards (yep, we had four open lines while my wife was in school) which have low APRs and rewards programs we like. It's not silly - it's a huge moral victory. It's you getting control of the situation.
Another thing we did that was very helpful was to set a budget for spending. You've already done the calculations for bills, so add lifestyle into the picture. Pay yourself an allowance in cash at the beginning of the month and you won't need to use the credit cards for the occasional trip to the deli or a movie. It's another level of control. (Plus, it looks awesome to have a wad of cash in your wallet.) You'll be surprised how careful you become when you have a finite amount of cash to spend.
I think this is similar to losing the last few pounds on a weight loss program - very difficult and lots of discipline necessary. Sounds like you're doing it, though.
posted by assoctw at 8:51 AM on May 4, 2009
I'm interested in what those issues are. We've just paid off two high-balance, high-APR cards and are closing those accounts. We'll keep two cards (yep, we had four open lines while my wife was in school) which have low APRs and rewards programs we like. It's not silly - it's a huge moral victory. It's you getting control of the situation.
Another thing we did that was very helpful was to set a budget for spending. You've already done the calculations for bills, so add lifestyle into the picture. Pay yourself an allowance in cash at the beginning of the month and you won't need to use the credit cards for the occasional trip to the deli or a movie. It's another level of control. (Plus, it looks awesome to have a wad of cash in your wallet.) You'll be surprised how careful you become when you have a finite amount of cash to spend.
I think this is similar to losing the last few pounds on a weight loss program - very difficult and lots of discipline necessary. Sounds like you're doing it, though.
posted by assoctw at 8:51 AM on May 4, 2009
I'd love to get the satisfaction of closing the other cards, as if that'd be some kind of silly moral victory, but I've read about the issues with that.
I'm interested in what those issues are.
The issue with closing cards is, your FICO score may decrease a bit. There are a couple reasons for this:
First, utilization is a big part of your credit score. Closing cards decreases your available credit, making the balances that report every month (and unless you pay your balance before your statement cuts, your balance is reported as owing whether or not you pay it in full) a larger percentage of your availalbe credit. Ex: you have $10K of total available credit. You have a $1K balance reported, so 10% of your credit is being used. Now say you close a couple credit cards and your new available credit is $5K. Now that same $1K is 20% utilization instead of 10%. Your FICO score will decrease when utilization is higher.
Second, age of accounts is a FICO factor. This won't be a big deal immediately, because closing cards will not remove them from your credit report, but closed cards will eventually fall off your report in 10 years or so, while open accounts remain on your report. So in the future, your average account age will appear shorter if you close cards vs. keeping them open. The older your average account age is, the higher your FICO score.
posted by rabbitrabbit at 9:13 AM on May 4, 2009 [2 favorites]
I'm interested in what those issues are.
The issue with closing cards is, your FICO score may decrease a bit. There are a couple reasons for this:
First, utilization is a big part of your credit score. Closing cards decreases your available credit, making the balances that report every month (and unless you pay your balance before your statement cuts, your balance is reported as owing whether or not you pay it in full) a larger percentage of your availalbe credit. Ex: you have $10K of total available credit. You have a $1K balance reported, so 10% of your credit is being used. Now say you close a couple credit cards and your new available credit is $5K. Now that same $1K is 20% utilization instead of 10%. Your FICO score will decrease when utilization is higher.
Second, age of accounts is a FICO factor. This won't be a big deal immediately, because closing cards will not remove them from your credit report, but closed cards will eventually fall off your report in 10 years or so, while open accounts remain on your report. So in the future, your average account age will appear shorter if you close cards vs. keeping them open. The older your average account age is, the higher your FICO score.
posted by rabbitrabbit at 9:13 AM on May 4, 2009 [2 favorites]
I should add: even with the FICO hit for closing cards, I would absolutely not hesitate to close them if I thought I would have trouble resisting the urge to max them out. The credit score impact is minor compared to potential problems stemming from too much credit card debt. Some people cut up the cards but leave the accounts open, which is better for FICO -- but closing the accounts altogether will more effectively remove temptation to live beyond your means.
posted by rabbitrabbit at 9:24 AM on May 4, 2009
posted by rabbitrabbit at 9:24 AM on May 4, 2009
I'd love to get the satisfaction of closing the other cards, as if that'd be some kind of silly moral victory, but I've read about the issues with that.
Yes, as rabbitrabbit says, you may see a hit on your FICO score.
Feel free to close any unwanted cards AFTER you get rid of the debt. But for now, just use your scissors on the two paid off cards. It will be viscerally satisfying and you'll be unable to use them unless you go out of your way to ask for replacements from the credit card companies. But don't forget to close them when the time comes.
posted by maudlin at 9:24 AM on May 4, 2009 [1 favorite]
Yes, as rabbitrabbit says, you may see a hit on your FICO score.
Feel free to close any unwanted cards AFTER you get rid of the debt. But for now, just use your scissors on the two paid off cards. It will be viscerally satisfying and you'll be unable to use them unless you go out of your way to ask for replacements from the credit card companies. But don't forget to close them when the time comes.
posted by maudlin at 9:24 AM on May 4, 2009 [1 favorite]
Since I started reading Get Rich Slowly and other financial blogs about 13 months ago, I have become similarly obsessed with my finances. I logged into my bank accounts as much or more than I checked my email or Facebook. But I'm working on it! Lately, I've been trying to cut back to checking twice a day (in the morning to see what hit overnight; at night to see what happened during the day).
I second assoctw's detailed budgeting / cash only philosophy. Since my wife and I switched to the envelope method, the finances have been much more predictable. At any moment, I know *EXACTLY* how much money we have an can spend. No more surprises when my wife's (or my) credit card bill comes in.
Good luck - and congrats!
posted by steeb2er at 9:25 AM on May 4, 2009
I second assoctw's detailed budgeting / cash only philosophy. Since my wife and I switched to the envelope method, the finances have been much more predictable. At any moment, I know *EXACTLY* how much money we have an can spend. No more surprises when my wife's (or my) credit card bill comes in.
Good luck - and congrats!
posted by steeb2er at 9:25 AM on May 4, 2009
Nine-tenths of me agrees with the others who say "this is fine, normal, good." But here's a thought, if it helps. I work two jobs so I can save up money quickly for a house downpayment, and occasionally I'll slip into constantly checking my bank account or counting the bills I have on hand (and then laugh because I feel like Scrooge, counting his money). I've noticed that I do this when I'm exhausted, like after working 15 hour days three days in a row, so I've started to take it as a sign that I should ease off a bit. It makes sense, right, that when I'm exhausted, I feel more like "wow, what am I getting out of this?" and have to prove the benefits to myself. So, the question for you is -- what correlates with these behaviors? Is it possible you're driving yourself too hard? It doesn't sound like it, but maybe.
A few other questions for you as you try to work out what this obsession is and how to loosen it up a little bit -- what does having this debt paid off mean to you? (You can finally get married? You're no longer the screw-up you once were? You're ahead of your sister, who is normally the "good kid?") Is there something there that you're obsessed with? Or, are you obsessed with this as a way to avoid something else? Are you the type of person who tends to obsess about things, and if so, would finding something else to obsess about help?
posted by salvia at 9:28 AM on May 4, 2009 [3 favorites]
A few other questions for you as you try to work out what this obsession is and how to loosen it up a little bit -- what does having this debt paid off mean to you? (You can finally get married? You're no longer the screw-up you once were? You're ahead of your sister, who is normally the "good kid?") Is there something there that you're obsessed with? Or, are you obsessed with this as a way to avoid something else? Are you the type of person who tends to obsess about things, and if so, would finding something else to obsess about help?
posted by salvia at 9:28 AM on May 4, 2009 [3 favorites]
Best answer: First, great job on having a plan to get out of debt!
I think pseudostrabismus has a good idea above: pay off on schedule, but chip in a little on top of that. I have a little savings jar that I've been building up a few dollars at a time, and it's pretty satisfying.
If you can calculate that you'll have your debt paid off in mid-August, then it sounds like you have a budget, or are 90% of the way there. So what if you formalized that as "I have $X per week to spend on food, entertainment, etc", and then only took out that much at the beginning of each week. Whatever you have left over at the end of the week goes to paying off the credit card, and you withdraw that $X again to start the new week.
Then, if you are feeling anxious about the overhanging debt and checking the spreadsheet, you can just take a $10 out of your wallet and set it aside until the end of the week. Immediately you've done something about the debt, and maybe you can go back to thinking about something else.
It also makes the trade-off between debt and luxury purchase much more concrete. It's perfectly okay to choose luxury over chipping in a few bucks towards the debt, but at least the decision is front and center. I find I'm okay treating myself to something as long as I acknowledge that's what I'm doing, rather than guiltily sliding my card.
One final advantage of living cash only is you get to search the change you get back for pre-1965 quarters and dimes, which are worth about 8x their face-value because of their silver content! At least, I enjoy doing that. . . :-)
posted by losvedir at 11:46 AM on May 4, 2009 [1 favorite]
I think pseudostrabismus has a good idea above: pay off on schedule, but chip in a little on top of that. I have a little savings jar that I've been building up a few dollars at a time, and it's pretty satisfying.
If you can calculate that you'll have your debt paid off in mid-August, then it sounds like you have a budget, or are 90% of the way there. So what if you formalized that as "I have $X per week to spend on food, entertainment, etc", and then only took out that much at the beginning of each week. Whatever you have left over at the end of the week goes to paying off the credit card, and you withdraw that $X again to start the new week.
Then, if you are feeling anxious about the overhanging debt and checking the spreadsheet, you can just take a $10 out of your wallet and set it aside until the end of the week. Immediately you've done something about the debt, and maybe you can go back to thinking about something else.
It also makes the trade-off between debt and luxury purchase much more concrete. It's perfectly okay to choose luxury over chipping in a few bucks towards the debt, but at least the decision is front and center. I find I'm okay treating myself to something as long as I acknowledge that's what I'm doing, rather than guiltily sliding my card.
One final advantage of living cash only is you get to search the change you get back for pre-1965 quarters and dimes, which are worth about 8x their face-value because of their silver content! At least, I enjoy doing that. . . :-)
posted by losvedir at 11:46 AM on May 4, 2009 [1 favorite]
Firstly, don't consolidate debts - the end result is almost always bad for you and good for the lenders, even if it seems like a fantastic "0%" deal.
As to the obsession issue, setting up fully automated payments and ignoring it for the time being is the way to go, as long as you don't charge anything else to a credit card.
posted by gwenzel at 2:08 PM on May 4, 2009
As to the obsession issue, setting up fully automated payments and ignoring it for the time being is the way to go, as long as you don't charge anything else to a credit card.
posted by gwenzel at 2:08 PM on May 4, 2009
You will have to look inward and see if there is something that the end of this debt marks for you besides no longer being in debt.
And, don't fear credit cards. They are a tool, to be used or abused.
posted by gjc at 4:32 PM on May 4, 2009
And, don't fear credit cards. They are a tool, to be used or abused.
posted by gjc at 4:32 PM on May 4, 2009
Response by poster: Thanks for your input and encouragement, folks! I'll look into my options for setting up automated payments, although I'm definitely a fan of pseudostrabismus' idea (making a small payment for peace of mind whenever I'm obsessing).
@gwenzel: Do you think debt consolidation is typically bad only because most people don't pay off the debt during the introductory offer period? Or is there some other reason I'm unaware of; I've done well with balance transfers in the past and this last credit card is actually the result of one, ending in October, by which time I should have it paid off entirely.
@salvia: I don't think that I'm driving myself too hard, although I have to admit that some of the impetus to get debt free is the realization that at some point in the not too distant future I will likely be getting married. Mostly I'm just hoping for peace of mind; I've always known my father to be a worrrier, the sort to lay awake at night.. and that used to be me with regard to school. Six years since college and I suppose the worry has simply transitioned to something else.
posted by Raze2k at 5:01 AM on May 5, 2009
@gwenzel: Do you think debt consolidation is typically bad only because most people don't pay off the debt during the introductory offer period? Or is there some other reason I'm unaware of; I've done well with balance transfers in the past and this last credit card is actually the result of one, ending in October, by which time I should have it paid off entirely.
@salvia: I don't think that I'm driving myself too hard, although I have to admit that some of the impetus to get debt free is the realization that at some point in the not too distant future I will likely be getting married. Mostly I'm just hoping for peace of mind; I've always known my father to be a worrrier, the sort to lay awake at night.. and that used to be me with regard to school. Six years since college and I suppose the worry has simply transitioned to something else.
posted by Raze2k at 5:01 AM on May 5, 2009
Each time that I've consolidated my debts, I've continued using one or more credit cards and have inevitably fallen into the same traps;
Maybe part of your worry is based on fear of your own recidivism -- falling back on the old pattern that got you into this mess in the first place. I would like to second a previous poster on the advantage of using only cash. It is a lot easier to make sure you don't go over your monthly budget because you don't have to keep track of every little thing you spend money on. But when the money is gone, it is gone. Using just cash isn't a cure-all because you have to FORCE yourself to stay just within your money limits. The first month I did this, I ran out of money with a week to go, and had to eat potatoes and whatever else was left in my pantry until payday. But the little pain I forced on myself paid off and made it easier to make myself plan in the long run.
If you're looking for a straight forward (worry-free) financial plan, I cannot recommend more highly a book called All Your Worth by Elizabeth Warren. She's a Harvard law prof. and her book is great in putting together an easy, sustainable financial plan that you can use for the rest of your life. There's also lots of advice on financial areas like life insurance, 401ks, IRAs, etc. Currently, Ms. Warren runs the Congressional Oversight of TARP (bailout) funds or something, so hopefully her expertise in financial planning also covers governments...
posted by cronology at 12:55 PM on May 5, 2009
Maybe part of your worry is based on fear of your own recidivism -- falling back on the old pattern that got you into this mess in the first place. I would like to second a previous poster on the advantage of using only cash. It is a lot easier to make sure you don't go over your monthly budget because you don't have to keep track of every little thing you spend money on. But when the money is gone, it is gone. Using just cash isn't a cure-all because you have to FORCE yourself to stay just within your money limits. The first month I did this, I ran out of money with a week to go, and had to eat potatoes and whatever else was left in my pantry until payday. But the little pain I forced on myself paid off and made it easier to make myself plan in the long run.
If you're looking for a straight forward (worry-free) financial plan, I cannot recommend more highly a book called All Your Worth by Elizabeth Warren. She's a Harvard law prof. and her book is great in putting together an easy, sustainable financial plan that you can use for the rest of your life. There's also lots of advice on financial areas like life insurance, 401ks, IRAs, etc. Currently, Ms. Warren runs the Congressional Oversight of TARP (bailout) funds or something, so hopefully her expertise in financial planning also covers governments...
posted by cronology at 12:55 PM on May 5, 2009
This thread is closed to new comments.
posted by pseudostrabismus at 7:54 AM on May 4, 2009 [2 favorites]