Saturday, April 7, 2012

Taking stock of set-backs pt. 5: Life Necessities

Living below the poverty line means a lot of things. It means living from paycheck to paycheck often for months at a time. It means that the definition of "emergency" is a little more fluid. It means that every time someone wants to give us a Wal*Mart gift card for taking a survey, we jump at the opportunity. It means creating a sinking fund for things like $10 birthday gifts, $20 dinners, and being creative with the grocery budget. It also means that the government sends us a fairly sizable check each year. (We don't pay federal taxes during the year, and with all of the available credits there are we get upwards of $7-8000 between state and federal returns.)

When we were fully employed and making a median salary, these credits went onto our debt snowball and made a huge impact in our overall debt-to-income ratio. Now these large checks go towards the necessities of life: food, clothing, overdue repairs, et al. I'll admit that the frustration here is fairly minimal--not nonexistent, but less oppressive than say our student loan debt. For the most part, that tax credit each year does make a dent in our debts, but it also provides us with some much needed breathing room for our family finances. We know that we can take advantage of those checks to make sure the we and the girls have clothes that fit, the cars are in correct running condition, and those food stores are back to a comfortable level. Would I like to put all $7000 onto Emily's student loans and just get them out of the way: definitely! Does my family need to eat, be clothed, and have cars that run properly? Absolutely. So we compromise. It's not the most romantic or thrilling way to spend the spring, but it does make an impact on our mental as well as financial health.

So this year, if all goes according to plan, we will pay off the student loan from nowhere and drop Emily's student debt by $1-2000! Not bad for a family living below poverty.

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