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Featuring Spice! -- The PolyFamily Web Comic

Polyamory for the Practical

Save on Debt Costs for the Poly Family

If your family's unsecured debt is more than 5% of the family income, the time has come to cut your cards. Now. No, you cannot cry, whine, insist you need credit cards for emergencies, try to weasel out of it by insisting you need a credit card to be able to rent a car (you don't). Just go get the scissors, (but make sure you don't use the fabric scissors, or you're courting a death wish), cut ALL the cards into tiny bits, throw them into a nice bonfire and walk away. I assure you you'll feel much better in the morning.

Before we go any further, I want to talk a little bit about unsecured debt. Mortgages and car loans aren't what we're talking about here. Those are secured debts. If you default on them and the company that gave the loan takes the car or the house, the loan is over. Unsecured debt is something like credit card debt, those horrid personal loans that charge as much as a credit card and loans from friends and family.

So, if your family earns more than $50,000 a year and you've got $2,500 or more in unsecured debt that you cannot pay off in full right now, get rid of your credit cards.   Yes, yes, yes, I am sure you can carry the minimum payments, but I can tell you right now that minimum payments on a credit card is shooting yourself in the foot.   If you don't believe me, fill out this little calculator.

Somewhere in your credit card disclosure statement the card company will tell you something like "your minimum payment will be 2% of the balance or $10, whichever is higher.  These are the figures you will enter in Column C and Column D respectively.

Dollar
Amount
Charged
Annual
Interest
Rate
C
Minimum
Payment
Percent
D
Minimum
Minimum
Payment
  Interest
Charges
Number of
Payments
Total #
of Years
 

If you are an average American, you probably carry far, far more than 5% of your income in debt. That's too much debt. You're just asking for trouble in a lot of ways -- especially as a poly family.

It is entirely possible that as a poly family -- especially if you are one that has kids or any ex-spouses to deal with, you are going to run into legal trouble. This kind of thing is expensive. Even if you do not, there are some professions in which it is possible for you to lose your job for "sexual impropriety". You cannot afford the financial insecurity of relying on future income to pay unsecured debt. Do yourself a favor and take care of it now.

Here's how you do it.

  1. Sit down with your family and total up all the debt.

    This may or may not be hard. Show everyone this article and tell them I said that no-one can hide any debt here. Polyamory is based on honesty and money is as intimate as sex in some ways. If you're not allowed to have affairs, you're not allowed to hide debt. Make a commitment to yourself not to scream at anyone over any debts that have been incurred -- even when you find out that damned car stereo was what made your Visa so maxed out that you were embarrassed when taking a client to lunch. Just write down the totals, the person or institution to whom it belongs, the account number, the phone number for customer service and the address where you send the payments.

  2. Decide on how much to commit to debt repayment.

    Make sure that you're being sensible here. Try to keep it around 5% of your monthly income. If you can't, make sure you're trimming the budget somewhere else. Do yourself another favor, though. Do not, do NOT, DO NOT cut out your entertainment budget to meet your debts. Reduce it by a percent or a percent and a half, if you want, but if you don't keep most of it, you're going to get out of control and splurge when you're sick of the Spartan life.

  3. Figure the percentages.

    What you're doing here is figuring out what percentage of your total debt each creditor is claiming. For instance, if you are $17,000 in debt and you owe MasterCard $5,600, you divide $5,600 by $17,000 to get 32.9%. So, let's say you've dedicated $350 a month to debt repayment. That means that you'd be paying MasterCard $115 a month.

  4. Write your creditors.

    Once you've finished all that, you need to go ahead and write all your creditors to let them know you are committed to debt repayment. This is a sample letter that my family sent out to its creditors. (All numbers, names and addresses are changed.)

    MasterCard
    666 Somewhere Drive
    Nowhere, NY 00000

    Dear Customer Service Representative,

    I am writing in regard to the account number (0123-4567-89AB-CDEF) with the balance of $5,600.

    In order to get out of debt and repay all that we owe, we have been working with a financial counselor. Because we earn $3400.00 per month, and our rent is $1200 per month, we have agreed that we can commit $350 per month to debt repayment.

    A balance of $5,600 represents 32.9% of our total debt. This means that we can commit to paying $115.00 the fifteenth of every month. As our financial situation improves, we will be able to commit more to debt repayment.

    Thank you for your attention to this matter.

    Sincerely,

    The Prince, The Beast, The Goddess of Giggle, and The Goddess of Java


    Honesty forces me to point out that some creditors are not going to be flexible about payments. Many will be, but some are going to insist on some minimum balance. Usually, this is not too hard to meet. But, you are going to have to trim somewhere in your budget. Do make sure you include in that letter the first payment in the amount you originally stated. This will prove you are serious. Also, it proves you are making an attempt to pay. If, God forbid, you ever have to go to court with this, you will have the fact that you are committed to repayment on your side. So do let your actions prove your commitment to repay what you have borrowed.

Do make sure that you are committing some money to savings. Using credit as a form of savings is a bad idea, anyway. I know some people like to carry a credit card with a few thousand on it as a way to handle emergencies, but it is far better to amass those few thousand in a savings account that earns you interest. Otherwise, you're going to spend the rest of your life in a sort of revolving door debt. Let's face it, emergencies are to crop up from time to time. Do you want to handle them or let Mommy Visa do it for you?





A portrait of the Goddess of Java rendered by the Goddess of Giggle


Copyright 2004, PolyFamilies, All Rights Reserved.




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