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I got back into debt when I got divorced about 3 years ago. I have a house that I bought about a year after the divorce (he kept the house and everything in it). I bought when the prices were super low and so was the financing. The payments are cheaper than rent and the finance rate is 3%. I'm not worried about paying it off right away and I already have equity.

I was making less than 1/2 of what I make now, and I had to use credit to make ends meet and furnish the new house after my divorce. I let it snowball. I know...bad, bad, bad.
The plan is to be debt free in less than three years. I may be able to swing it in two and a half years if I add in tax refunds, but I never count on those.

This is while still putting some in savings every month. (I know, Dave Ramsey says not to, but I worry the roof will go or the AC will die or something. A $1k e-fund isn't comfortable for me.)

I have a $10k signature loan. (I bought my mother a car and gave her some money to help until my fathers will and their savings account is out of probate. He just died last month. It's a brand new loan)

I have 2 cards with $0 balances and one with about $10k.

I owe about $16k on my car still (had to get a new one after the divorce, as the other was in his name.)

So, I'm going back to school part time, to get the GI Bill and all of that will go to the credit card, along with a bit from my paycheck. My GI Bill runs out in September.

I will pay the regular loan payment and car payment until the credit card is finish. I will have a $0 balance by December.

Then I'll put whatever I was paying on the credit card toward the loan.

The car and loan will both be paid off around mid-2016.

Wish me luck!! I've never made my budget out two years in advance.
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Yay! for you - you can do this!

(insert pom pom routine here)
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I have a $10k signature loan. (I bought my mother a car and gave her some money to help until my fathers will and their savings account is out of probate. He just died last month. It's a brand new loan)

I have 2 cards with $0 balances and one with about $10k.

I owe about $16k on my car still (had to get a new one after the divorce, as the other was in his name.)


Sorry for your loss.

So, if I read this correctly, you have:

Sig loan        $10,000
Car loan $16,000
CC 1 $0
CC 2 $0
CC 3 $10,000

Total $36,000


So, I'm going back to school part time, to get the GI Bill and all of that will go to the credit card, along with a bit from my paycheck. My GI Bill runs out in September.

I will pay the regular loan payment and car payment until the credit card is finish. I will have a $0 balance by December.

Then I'll put whatever I was paying on the credit card toward the loan.

The car and loan will both be paid off around mid-2016.


Sorry, I'm not seeing how your math is working, unless both your car loan and your signature loan were going to be paid off in late 2016 or early 2017 anyway.

You are getting extra money from the GI Bill that will run out in September. With that extra money, you are going to be able to pay off about $10k in credit card principal, while making minimum payments on your car loan and your signature loan, right?

How much of the money that you are using to pay off the credit card bill will be coming from the GI Bill? And what will replace the GI Bill money once it runs out? Because that's what I'm not getting - if the money available to pay off debts is decreasing, how are you going to put what you were paying toward the credit card into paying off the signature loan? You might be able to put what had been the minimum payment of, say, $100 - $300, toward the signature loan, but on a balance of $10k, that's not going to pay the debt down a lot faster.

AJ
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FlippoHip,

Sorry for your loss.

Forgive me, but I'm going to leave most of your post to others to respond to. aj485 is particularly good at addressing budgeting issues.

However I do have one concern. You wrote, I have a $10k signature loan. (I bought my mother a car and gave her some money to help until my fathers will and their savings account is out of probate. He just died last month. It's a brand new loan)

First, I don't understand what your father dying has to do with your mother needing a new-to-her car? And why did it become your responsibility to acquire it for her? And if she got along without one before, why did she need one now? Assuming your mother was still married to your father (not always valid), it seems likely that things like his vehicle(s) might pass directly to your mom outside of probate. If they weren't married, was she really dependent on him anyway?

As for the need for cash, I kind of get that. A death of a spouse often creates a financial hardship for the surviving spouse - especially if they failed to make "advance arrangements". (I'm actually kind of on the fence about making them.) But why couldn't she borrow this money in her own name?

I really think its a big mistake for you to be loaning anyone money when your financial picture is less than clear. My rule of thumb with loans to friends and family: If you can't afford to give it away, you can't afford to loan it either. In this case, it seems unclear that you can afford to give that money away - mainly because you had to take out a signature loan to do it.

So is your mother going to be paying you back? I assume you're counting on that. But probate can take a while - in fact I've seen it take years. It can also suck up much of the assets the estate had - especially if your father had any debts or if there is anything complicated in his estate. (Or if he names an estate lawyer friend who's a little unethical.) In probate, your father's debts come first; the estate's expenses come second (includes court costs, legal fees and other expenses). The heirs get to split whatever is left. Whether there is anything left or worth splitting isn't always obvious at first - at least not if he wasn't clearly wealthy when he died.

- Joel
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So is your mother going to be paying you back?
Probably not. She may pay me back, but I am willing to write it off. I'm not counting on getting that money back, but I will sleep better. She raised me and gave me everything she possibly could, even if that meant she did without.

First, I don't understand what your father dying has to do with your mother needing a new-to-her car?
Unless he died in a car crash that totaled the car. (OK, he didn't. It was a sudden illness...but that would be a very good reason why she needs a new car.)
She needs a new car because the 1992 Geo Tracker she is driving is a death-trap. It was dad's car, and he hated it and it was always breaking down, but he couldn't afford a new one. She is a 76 year old diabetic with a heart condition and it's left her stranded more that a dozen times. I don't live close enough to come get her when it breaks down (I am 3 counties away) and he isn't around to help her now. The new car was $6k.
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Ooooooooohhh... I get what you are asking.

Well, it's complicated.

The GI Bill is about $1k a month. Add that to the $300 I was going to put in from my pay. That's ~$1100 toward the $10k credit card (The interest payments are going to make it over $10k by the time it's paid off. I don't know how much more. I over budget rather than break it down that much. The interest rate is 7.9% and I paid about $80 in interest last month.)
When my daughter is with her dad for the summer, I won't have child support, so it will dip down to just paying $1k a month for a couple of months. That'll drag it out too.


I don't need the GI Bill to live off of. I do fine. This is just extra money. There won't be any replacement, but there will be about $500 extra a month to put toward the loan even after the GI Bill is gone.

I had already budgeted $300 a month on top of the $1k GIB for the CC and I'll put $200 a month less in savings. I just want to pad the savings up a bit first. I hate it being so low.

Sooooo I'll put the extra $500 toward the signature loan. Yes, the car will be minimum payments, because the signature loan is like 12% interest, but the car is only 3% interest and will be mostly principle at that point anyway. I'll pay down the loan rather than the car and they will both be paid off around mid 2016
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Errr, I meant..."That's ~$11,000 toward the $10k credit card ...I'm sleepy.
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FlippoHip,

You wrote, Unless he died in a car crash that totaled the car. (OK, he didn't. It was a sudden illness...but that would be a very good reason why she needs a new car.)

She needs a new car because the 1992 Geo Tracker she is driving is a death-trap. It was dad's car, and he hated it and it was always breaking down, but he couldn't afford a new one. She is a 76 year old diabetic with a heart condition and it's left her stranded more that a dozen times. I don't live close enough to come get her when it breaks down (I am 3 counties away) and he isn't around to help her now. The new car was $6k.


Actually totaling the car wouldn't be a sure-fire reason. If he had collision insurance, the insurance company would pay to replace it. At a minimum, the insurance company would owe his estate for the loss. Or the insurance of the person that hit him would, even if he'd died as a result. Of course he might have only carried liability, but that's not advisable unless he also had funds to buy something as a replacement. (I'm assuming he'd have had those funds in a joint account that would have transferred to your mother at death.)

Anyway, it sounds like your mom had a good reason for needing a new car. I'm not sure it's a good reason for you to buy it for her, but its already done. I just don't think it's smart for people to be helping other people, when they don't have their own house in order. And it just makes it harder for you to get your house in order at this point.

Also why didn't you consider taking a loan out against your mom's new car? You can borrow against used cars you know. And there's a good chance you could get a better rate than the 12% APR on that personal loan. Even if the car is in your mother's name, just have her take the loan out and you make the payments. It could save you some cash. And yes, most banks and credit unions will let you borrow against a used car even after you've purchased it - it just has to be new enough and be worth enough to make it worthwhile to them.

- Joel
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Also why didn't you consider taking a loan out against your mom's new car? You can borrow against used cars you know. And there's a good chance you could get a better rate than the 12% APR on that personal loan. Even if the car is in your mother's name, just have her take the loan out and you make the payments. It could save you some cash. And yes, most banks and credit unions will let you borrow against a used car even after you've purchased it - it just has to be new enough and be worth enough to make it worthwhile to them.

This can actually still be done as cars can be refinanced, so it may be worthwhile for the OP to check into rates to have her mom refinance the car, use those proceeds to pay off the signature loan, and the OP makes the lower payments on the mom's car loan. This would free up some cash to be used to pay off some of the other debts faster, still leaves mom with a newer car, and puts the OP in a better place financially.
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The GI Bill is about $1k a month. Add that to the $300 I was going to put in from my pay. That's ~$1100 toward the $10k credit card

So the $1k from the GI bill plus $300 from your paycheck - that is $1400. Yet, you say that provides $1100/month toward the credit card debt? So the other $300 is the signature loan payment?

(The interest payments are going to make it over $10k by the time it's paid off. I don't know how much more. I over budget rather than break it down that much. The interest rate is 7.9% and I paid about $80 in interest last month.)
When my daughter is with her dad for the summer, I won't have child support, so it will dip down to just paying $1k a month for a couple of months. That'll drag it out too.


Are there offsetting expenses that you won't have to pay because you won't be getting child support? Or do you have to pay him child support those months?

Also, is it the $1400 (credit card and signature loan) that will drop to $1000 or the $1100 (credit card only) that will drop to $1000? If it's the $1400, I'm still not getting the math of how you will have the credit card paid off by December, unless you actually get a fairly substantial tax refund. Because after September, you will have $400 to split between the credit card and the signature loan. If the signature loan payment is $300, then you only have $100 to put toward the credit card after September.

I don't need the GI Bill to live off of. I do fine. This is just extra money. There won't be any replacement, but there will be about $500 extra a month to put toward the loan even after the GI Bill is gone.

Is that really $500 'extra' or is it $500 'total' (including the minimum payment)?

If it's $500 total, I'm not so sure that I would dismiss the GI Bill money so lightly.

the signature loan is like 12% interest

If the signature loan rate is 12% and the card loan rate is 7.9%, why are you snowballing the card? If you can pay off the $10k card by December, then you should be able to pay off the $10k signature loan by December instead, saving yourself interest because you are paying off the higher rate loan.

AJ
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Ah, sheesh. I spent half an hour typing a response, but it's just too wordy and too personal. Anyway. The shorter version.

I just don't think it's smart for people to be helping other people, when they don't have their own house in order. And it just makes it harder for you to get your house in order at this point.

I know. I preach the same thing to my friends who are constantly giving their adult kids money, when they would help the kids more by letting them fix their own problems.
But, there is much more to this and those children are able bodied and can take on a second job or whatever. They just don't want to.

Mom can't work. She takes care of my disabled brother. I don't live close enough to help with day to day stuff, but a reliable car is a huge help. She can't get a job. She may be able to get a loan, but the life insurance (once it pays out) and the savings (once she can get to it) are all she will have, along with 50% of my dad's pension and her social security...for the rest of her life. Again, she isn't a young adult who just doesn't want to help herself. She lives frugally. She has a paid-off house. But there won't be any more income. That's it.

I can't quit my job and move there. That would be stupid. There isn't enough room for them to move here and that would be WAY more than $10k in the long run, plus I would lose what's left of my mind.

The debt from her car and the cash I gave her will work out to be cheaper for me in the long run. It also helps her to be safe.

I was alone with my dad when he died and I made a promise to take care of her. He couldn't die in peace until he knew she was going to be OK. Sometimes we have to help the people we love, and it cost money. That just happens. Whether I was in good financial shape or not, turning my back or telling her to figure it out on her own would be heartless and not teaching her a lesson, like it does with young adults. She doesn't need a lesson. She's managed for the last 76 years without asking anyone for anything.
I give it freely and with no expectations for it to be repaid. She didn't ask me for a car. I gave it to her because I don't want her to be broken down on the side of the road and get mugged, or try to walk for help and have her heart go. I am taking care of her.

I don't regret the $10k loan. I have figured a way to pay everything off, get my debt-free life on, but it will take time and I'm OK with that. Just drop the "You shouldn't help your mom when you can't afford it" shtick, because it's not going to change anything, especially not my mind. She isn't a mooch. She isn't a young adult. She is just an elderly women, who needed help.

I do appreciate that you are looking out for what's best for ME. That's why I come here. But that $10k loan bought her a car, will get her through a few months of expenses and gave me more piece of mind than I can ever put a dollar figure on.
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Mom can't work. She takes care of my disabled brother.

This is a point that worries me. It is likely that your brother could outlive your mother. After her death is not a good time for him to be transitioned to a group home. Is there a plan for his long term care?
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You aren't following or I'm not being clear (probably the later). I'm not comfortable disclosing my income to you, Mr. Stranger on the Internets, but it's enough.
The only way for you to understand, I guess, would be if you saw my projected budget spreadsheets, and I'm definitely not comfortable with that

It's all going to work out. My math is fine. Thank you very much for your concern. I really do appreciate it and I know you are just making sure I'm looking at everything correctly. Got it covered :)
WhooHooo....2016 debt free!!
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This is a point that worries me. It is likely that your brother could outlive your mother. After her death is not a good time for him to be transitioned to a group home. Is there a plan for his long term care?

He is physically disabled (destroyed kneecap. Walks with a cane now) and there was some minor brain damage (car accident). He can function a bit. He held a job as a cashier for a while, but it was too physically demanding (they wouldn't let him have a chair.) He could do something else, but chooses not to.
The brain damage left him with memory problems, so he can't judge time very well. I will call and tell him we are coming to visit in two hours, but when we get there he thinks the conversation was a week ago (and he's mad). He will ask the same question over and over, because he doesn't remember asking it 5 minutes ago. He tells the same story over and over. Several times a day. He gets easily frustrated and lashes out. He isn't pleasant to be around most of the time and I do not want him to live with us.

He can take care of himself for short periods of time. A week or so is his limit. He has two sons, who he could move in with if he had to. They live in a different state.

He would probably be OK in a group home, but wouldn't like it. I tried to get him to move to some apartments that are for disabled veterans. 30% of your income and an efficiency apartment all to yourself. He thought they were too small.

My point of view on helping with my brother is different than with my mom. He CAN do things, he chooses not to. The memory problem is the biggie, and so is the anger management.
He could get help with the anger issues. He chooses not to. He is very self absorbed and I wish he would move out of my moms house. But, she's OK with it, so I stay out of it. It's her house and her life.
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He could get help with the anger issues. He chooses not to. He is very self absorbed and I wish he would move out of my moms house. But, she's OK with it, so I stay out of it. It's her house and her life.

Understand, and good luck. He is and going to be challenging.

The anger issues go along with the brain damage. I wouldn't expect that there would be much that can be done.

The brain damage left him with memory problems, so he can't judge time very well. I will call and tell him we are coming to visit in two hours, but when we get there he thinks the conversation was a week ago (and he's mad). He will ask the same question over and over, because he doesn't remember asking it 5 minutes ago.

MIL is in this shape. She has no short term memory and no ability to keep track of time. We are trying to setup a timer for short term events (someone is out shopping or will arrive in a few hours) so that she has some feedback for time. Hopefully this will mimimize the crazy time and keep her from assuming someone is dead because they haven't checked in with her in the last 5 minutes.
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The anger issues go along with the brain damage. I wouldn't expect that there would be much that can be done.

I don't think he can control the anger. But he could control how he reacts to it.
I know WHY he's mad. Not only does he have the brain damage that makes him lose time but he is in pain a lot of time and he lost everything he had worked for with that wreck and had to move in with his parents at 30 years old. That has to cause bitterness.

Also, he has no friends, because he doesn't go out, so he feels isolated. He was doing well when he had that job. He could socialize and he wasn't as mad, but now he's back to angry-middle-aged-guy-living-with-his-mom.

I've suggested he volunteer at the hospital or something...just to get out and have people to talk to.
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I think you mentioned he's a vet?

Volunteering at the local VA might do him a world of good.

Ishtar
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You aren't following or I'm not being clear (probably the later). I'm not comfortable disclosing my income to you, Mr. Stranger on the Internets, but it's enough.
The only way for you to understand, I guess, would be if you saw my projected budget spreadsheets, and I'm definitely not comfortable with that

It's all going to work out. My math is fine.


That would be Ms. Stranger... ;-)

I just didn't see that the numbers added up the way that they were being described, but if you're comfortable with the figures, that's what's important.

Based on what I understand from your description of the interest rate and timeframe, I do want to provide a couple of different interest cost scenarios. The assumptions may not actually fit your scenario, but I wanted to show you the difference it can make in the interest paid by choosing which loan to pay off first.

Assumptions:

CC 1: $10k at 7.9% interest with a $100/month minimum payment
Loan 1: $10k at 12% interest with a $200/month minimum payment

Monthly amount available for debt payoff:
Feb 14 - May 14 $1500
Jun 14 - Jul 14 $1000
Aug 14 - Sep 14 $1500
Oct 14 and on $500

Scenario 1 - pay $200/month minimum on Loan 1 until CC 1 paid off

- CC 1 paid off in Jan, 2015; interest cost is $325
- Loan 1 paid off in Aug, 2016; interest cost is $1986
- Total interest paid is $2311

Scenario 2 - pay $100/month minimum on CC 1 until Loan 1 paid off

- CC 1 paid off in Jul, 2016; interest cost is $1273
- Loan 1 paid off in Oct, 2013; interest cost is $456
- Total interest paid is $1729

Scenario 2 saves $582 in interest compared to Scenario 1.

AJ
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I am very sorry, Ms. Stranger :)

Scenario 2 - pay $100/month minimum on CC 1 until Loan 1 paid off

- CC 1 paid off in Jul, 2016; interest cost is $1273
- Loan 1 paid off in Oct, 2013; interest cost is $456
- Total interest paid is $1729

Scenario 2 saves $582 in interest compared to Scenario 1.


I see your point, and this is giving me something to think about.

I really hate that I have the credit card debt. The loan...well, that was for something that I felt good about. The credit card is maybe 30% necessity and 70% poor planning and buying things that I didn't need or that I could have bought a less expensive version of.

So, I feel like the credit card is dirty debt and I want it gone. Eliminated. Sleeping with the fishes.

But...$582 is $582....I'll think about this.
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...WAY more than $10k in the long run, plus I would lose what's left of my mind.

LOL! Yep, there's that.

YG
(has relatives)
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So, I feel like the credit card is dirty debt and I want it gone. Eliminated. Sleeping with the fishes.

But...$582 is $582....I'll think about this.


Well, the sleep at night factor is worth something, too. It's up to you to determine if it's worth $582.

However, money is fungible, and the fact that you have debt from stuff that you don't feel so good about vs. debt from stuff that you feel good about doesn't change the fact that it is all debt, and costing you some of that fungible money. So, from a strictly mathematical standpoint, it makes sense to pay off the highest rate debt first.

For another possibility, I've been seeing some 0% - 3% until mid/late 2015 offers on credit cards lately. Do you have any offers available on either of your empty cards? Or would you be willing to sign up for a new card to get a promo rate? Transferring the signature loan to a 0%/low rate card would probably cost you $400 or so (4%). But if it will save you, say $1500 in interest, plus allow you to pay down the other credit card debt faster, it's probably worth it.

AJ
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FlippoHip,

You wrote, I really hate that I have the credit card debt. The loan...well, that was for something that I felt good about.

Many people associate debt with the thing that was acquired with the proceeds. It's fuzzy thinking and its wrong.

A debt is a debt regardless of how it was acquired. Neither good nor bad. The only measures of a debt are the terms. The most important term is usually the interest rate. Other important terms may include tax deductibility, promotional periods, variability of the rate, whether it was secured by property and whether the loan is one-time or a revolving line of credit. Except for the tax issue, these other terms affect risk associated with the loan and are features you can use to discount (or add a premium to) the cost of that loan. Most such risks (and the tax savings) have subjective value, meaning their value will vary by the situation the individual is in.

However for a rough comparisons, interest rate is usually good enough. Only when rates are similar do these other terms tend to become important. This is true even when comparing credit cards, personal loans, car loans and mortgages. They're all just debt.

- Joel
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If you can't let go of the 'good' debt/'bad' debt feeling- maybe you could use paying off the 'good' debt first as incentive to scrimp extra hard in order to get it paid off so you can get to paying off the 'bad' debt faster.
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I give it freely and with no expectations for it to be repaid. She didn't ask me for a car. I gave it to her because I don't want her to be broken down on the side of the road and get mugged, or try to walk for help and have her heart go. I am taking care of her.

Your mom is lucky to have such a great kid to help take care of her.

One question: since you essentially bought this car, could you have your name on the title along with hers? Like "FlipMom & Flip".

I have done this in the past with family members and (depending on the state), one owner couldn't sell/transfer the car without the other's approval. From my own experience with elderly friends & relatives, sometimes cars get "given away" to a friend or grandkid by the elderly person in ways that others within the family may not have planned. This seems to usually happen when the owner is getting too infirm to drive themself.
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I have done this in the past with family members and (depending on the state), one owner couldn't sell/transfer the car without the other's approval. From my own experience with elderly friends & relatives, sometimes cars get "given away" to a friend or grandkid by the elderly person in ways that others within the family may not have planned.

Being on the title adds liability and will require carrying insurance.
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One question: since you essentially bought this car, could you have your name on the title along with hers? Like "FlipMom & Flip".

I don't really want my name on it. I'm trying to keep finances separate, and once I give it to her, it's hers.

If she chooses to give it to my brother, then that's her choice. It will upset me, but I don't like to attach strings to gifts. Then it isn't really a gift.
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First, Divorce is almost always a bad financial decision for both parties. Second, my view on marriage: Do it once, do it right, and never have to do it again.

Gee kahuna, that's a real help.

Nancy
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Gee kahuna, that's a real help.

Ignore him Nancy. He's just a troll. Likes to start arguments. I imagine him as some overweight, never married, 50-something, living in Mom's basement with no friends and no talents, so he just trolls the internet for some type of human interaction.
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Likes to start arguments. I imagine him as some overweight, never married, 50-something, living in Mom's basement with no friends and no talents, so he just trolls the internet for some type of human interaction.

Last time I looked, he had a wife and three grown children, although he only talks about the daughter who is a lawyer. He just doesn't understand human relationships.

And from what I gather on another board, someone I p-boxed said that disagreeing with him, and trying to point out the fallacy in his argument, is typical female bullying behavior.

I'm clearly having a good day!

Nancy
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