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Dear Ralph.....

January 4th, 2008 at 11:26 am

Ralph asked me why I didn't pay off my massive debt with my massive savings, so I thought I would share my response with all of you in case any of you are wondering the same thing.

The reasons are many.

1. I'm old and want to make sure I have some savings to fall back on so I don't end up eating Alpo later in life.

2. Much of that savings is tied up in 401Ks, investments, etc., and the tax hit would not be worth it.

3. I'm still old and I won't be able to build my retirement back up should I dip into it.

4. My thinking is that until I retire the massive savings is only to be used in the case of a true emergency (i.e. I or my husband are not able to work and the insurance company doesn't dish out the disability pay fast enough; or disgruntled underlings take my husband hostage and I have to provide a ransom to get him back -- or to get them to keep him).

My self-created debt isn't an emergency. It's a mistake, but I am paying it off using my own hard-earned money.

People who know my husband and I -- but not about my debt -- always ask why I work. By all appearances, I should be one of those women who lunch/play tennis/get daily blowouts/etc. But I work because I am a compulsive debtor in recovery who is trying to make my wrongs right. Working allows me -- not my husband -- to deal with my problems. (My husband, by the way, has been encouraging me not to work as well, but understands why I keep at it.)

I have often thought what I would do if I suddenly got a $167,313.77 windfall. Would I automatically pay off all my debt? Well, DUH, YES!!! I'm not that much of an idiot after all. But I know that a windfall is not going to make my debting problem go away. It's always going to be there. All I can do is work my 12-step program one day at a time, not debt in any way shape or form, stay away from my triggers (i.e. credit cards), live within my means and still have a life while doing all this.

So that, dear Ralph, is my answer. Anything else????

5 Responses to “Dear Ralph.....”

  1. Ima saver Says:

    Thank you for telling us this. How old are you??

  2. compulsive debtor Says:

    Old enough not to share my age.

  3. Ralph Says:

    Well thanks, CD. I didn't expect a headline! I hope I wasn't too forward, but I was curious. Since you said it didn't include pension funds, I guess I assumed it was after tax money. I feel your pain - I will soon be there with college debt starting to accumulate, so I am even going the wrong direction! And at first I thought I would pull some retirement money out for college, but since everyone advises against that, and it would cost me in tax and reduced financial aid, the only alternative for me is to take on debt. So I'm basically waving to you going out of the hole on my way in. Frown Thanks for answering.

  4. compulsive debtor Says:

    I've got loads of college debt thanks to the adult stepson, Ralph. There's also some from my own education, but it's nothing in comparison to his. I also have a 7 year old, so college debt may never go away for me. Of course, next time I will do it my way and not the way of a judge and a disgruntled ex-wife. ...

  5. betagirl Says:

    Another reason for not using your savings to pay off your debt - you need a contingency fund. If you use it all at once to pay off your debt, the next time you have an emergency, you won't have any contingency fund to draw on. Paying off debt all at once is also in the category of an "all or nothing" mentality, and in 12-step recovery, we want to avoid that. Paying off debt gradually also allows you to have a lot of time to change your habits, which paying it off all at once does not allow.

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