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Our Last Debt and Contract

February 1st, 2016 at 09:13 pm

Our only debt right now is the 0% interest loan from my mother for all the medical expenses she helped us cover when I had six surgeries in five years. I call it our Medical Mortgage for those new to the game. It currently sits at $45,000. For the last 10 months we were paying it back at a reduced rate, her idea, not ours, of $500 a month. This allowed us to save $5000 towards our down payment, but of course increased our pay off date.

Well, now we are going back to paying off $1000 per month. Mom needs to put a new roof on the addition of her house this summer and she just had to pay $10,200 so that the heating guys can come and fix her ducts under the house and put down new Visqueen. There were mice nests in most of her registers. Aw, fun. I told her she needs to get a cat (or three). Old houses have mice and this house is old.

While it was nice to put that money in savings, I was never thrilled about it increasing the payoff date. Well, now we are back to a better payoff schedule. We have 45 payments to go. That is 3 years and 10 months of payments, which gives us a payoff date of November of 2019.

She doesn't want it any faster as besides this money, social security is her only income (though she owns the house and cars in full and has no debt). She likes being guaranteed a certain amount each month. Though I may insist when we get closer to the end, just to be done with it.

Assuming all goes well with DH's contract at least, we'll be done with the payoff before 2020 which is good. He has guaranteed work through June. He was supposed to find out in the beginning of March whether or not his company got the new contract, but it has been extended a couple of weeks, so now we might not know until the end of March.

I passionately dislike living in limbo. In the past when his old company lost the contract he was able to slide into place with the new company and will likely be able to do that again. But we don't know. And not knowing drives me crazy.

On the bright side, we have almost $16K in the Emergency Fund and $38,500 in the down payment fund, so if it did take him a while to find a new job if things didn't go as planned, we will be fine. It will set our plans back a lot, but we will be fine.

I did a job loss budget and we could bring our living expenses down to $3000 a month if we had to for 18 months, cutting out physical therapy, cutting our grocery budget in half, cutting out all savings, cutting out the kids allowances, cutting out the chiropractor, but still paying back Mom. We would be going into garden season, so we might even be able to cut our grocery budget by more than half for a while.

I don't like the idea of it, but it is better for me to plan for contingencies so I don't have to panic later on.

4 Responses to “Our Last Debt and Contract”

  1. ceejay74 Says:

    $3K is a really good bare-bones budget for a whole family! Our bare-bones estimate is $4600.

  2. snafu Says:

    Good idea if DH's income is attached to oil patch. With the drop in oil revenue and lack of support for any of the several pipelines our economy is in free fall. Thousands of job losses announced nearly daily and we wait for the declarations of bankruptcy likely somewhere in that process. The smaller, higher risk, less strongly financed support businesses likely had their interim loans called, cancelled or refused. News is worse for smaller production firms. When they fall, their long list of contractors housing, banking, food services, transportation, accounting, legal cannot collect on services already provided domino like. The repercussions vibrate through our economy to our new, pretty Prime Minister. There is no help, he is still in campaign mode in spite of winning the October election.

  3. FrugalTexan75 Says:

    That's a good idea to have a barebones figure in mind. Hopefully you won't have need of it.

  4. livingalmostlarge Says:

    Good to have a plan for job loss. Sounds like a solid EF and down payment. I can see why your mom likes have a fixed income coming in.

    Snafu, I hate to point this out but the canadian economy especially alberta has been in a downward spiral for oil for well over a year. I know because many friends have been laid off and others are worried even before this new prime minister. Probably because oil issue this new PM got in. Hard to win when layoffs are happening. I wonder if that's what happening in the US this year?

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