“Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.”
-Otto von Bismark
Monthly Financial Reckoning:
Welcome to my monthly financial reckoning. Here is a short report on my monthly debt totals. It may be low yield information for most readers but there is something about a slow motion train wreck that makes people curious. The main purpose of this post is so that you may learn from my mistakes. Perhaps years from now when I have cleaned up my act I will stop posting updates because my debt will be gone!
2016 Will Be A Year To Remember
2016 will hopefully be the high water mark for our debt load. We maxed out on the HELOC in the process of our renovation and eventually had to tap our Personal line of credit to pay the contractors and finish our renovation. Our strategy going forward is called: No more home renovations until I get my feet back under me!
The bulk of our debt is what most personal finance gurus would call “good debt”. This is the crux of our problem, even though our debt is “good debt.” Our debt load is high enough that it is very uncomfortable and risky. It’s kind of like the baked potato chips problem; a couple is ok, but don’t eat the whole bag.
Where our debt is:
- Mortgage: In typical doctor fashion we bought a pricey house in a nice neighborhood. We justified the purchase to ourselves very nicely but the fact remains that our home purchase was at the top of the recommended range for our income at the time.
- Student Loans: It has now been 12 years since my last student loan draw was applied to pay for my medical school tuition. 12 years later we are still paying this debt off.
- HELOC: One of the benefits of buying an old home with “character” is that it usually means there are lots of things that need to be fixed. Unfortunately, a little updating ended up putting in almost as much money as the home was worth to bring it up to modern standards like: “no more knob and tube wires!”
- Personal Line Of Credit: I had opened this line of credit shortly after opening my HELOC to use as an emergency fund or overflow fund if the renovation ran over. Well, no surprise the renovation ran over and we had to tap into this account to pay the bills. We may have to tap into this again next month to pay the private school tuition.
Putting it all together
By the nature of starting this blog, I hope that this means I am starting to put it all together. I am certainly ready to start digging myself out of the hole I have gotten myself into although we have a few bumps in the road ahead of us with some designated outlays coming up to finish the project and education expenses.
Warnings & Examples
A Wise Man Learns from the Mistakes of Others: Be Wise and Sign Up