Layout:
Home > Category: Credit Cards

Viewing the 'Credit Cards' Category

The Wind in Our Sails

June 28th, 2014 at 05:09 pm

Gosh it's been forever since I wrote! Actually, I did write a post a few months back, but it got deleted accidentally and I was too annoyed to retype it (don't know why, but I always have to post a new entry twice for it to work correctly). Going to be more careful this time!

Part of why I haven't written for a while is that, to be honest, we haven't been working very hard on our TMM since April. We started hubby's 401K at the end of March and are adding the full amount each month to get the maximum company max (6% for us, 4.5% for them). It feels great to have started that, and with the matching it is growing nicely. But it is also untappable money that has really lowered how much extra we have to throw at other goals each month, and that has slowed some of our momentum.

The other thing that has taken some wind out of our sales is medical related, which is what the post that got deleted was about. Basically, our identicals twins have been diagnosed with asperger's (ASD) and we suddenly have very high medical costs that were not factored in to our original planning. Long story short, despite our medical insurance, back in April we thought we were going to start needing about twice as much as we had budgeted for medical expenses each year (including 2013, which we were still getting bills for). So, $10K/yr instead of $5K budgeted. And what with the prior year, the current year, and trying to better prepare for the coming year (2015), we were trying to figure out where the hell to come up with $15K all of a sudden.

We started by getting a no monthly interest balance txfr on a CC for one year (though the txfr itself cost 3% that we paid off right away). Our thinking being that while, yes, it is a credit card, we have regular payroll deductions deposited to our HSA that can be used to pay it off over the course of the year. We also started setting aside an additional $315 each month to be more ready for next year. Which still left us short $5K, but we downgraded our expected May car purchase by $10K to help it all work out better eventually.

The good news, come May we found out that due to having a certified "mental disability", the boys qualify for some federal medical disability funding that is going to help us out. I'm still not sure how it's all going to work out eventually, since everything takes a year and a day to get "processed", but my best guess is that it will be better than our worst fears, but worse than before this all started. In the meantime, we are still working on paying off the CC balance txfr and saving for next year, but we're assuming that the money from the gov't will at least cover last year's extra medical expenses (about $5,900).

Unfortunately, this all began to balloon as we were preparing to make the "new" car purchase we've been planning for over a year now (to replace our 1999 family SUV). Had it not been for already promising my daughter the old SUV come this summer, so that she could look for a summer job over her college break, and sign for a new lease for housing next year without having to be limited by bus transportation issues, we may have tried to put that off for another year. Though in the end, it's probably good that we didn't because within a month of our purchase, the SUV came up with another $1800 in repairs it could use (only $600 of which was decided was worth it, and which has been a good lesson in helping our daughter plan for financial emergencies!).

Anyways, another long story short, we love our new car (which is actually 3 years old, but that's the newest car I've ever owned!). It was about $15K total and we had save about $4K prior to purchase. We also dipped into our emergency fund a little to get our monthly payments down to about $175, which felt safe and doable. We're working on restocking our emergency fund (still about $1800 to go) and plan to pay off whatever balance is remaining on the car come Feb 2015 when hubby gets his annual bonus. The car we got is rated as very reliable and is in great running condition (pre-certified even, and with a 7 year warranty), and I feel like it will be great family car for years to come.

So, it's been a pretty financially disorienting few months. Really hard to gain traction when we're still dealing with some medical unknowns. Looking ahead to about $2350 in tuition/books that will be due in a couple months too for my fall term of school. We have enough if we dip into our emergency fund again, (and I certainly don't want to be taking out any more school loans at this point when we still have $100K of them that we've barely make a dent in), but in all likelihood we will have to, at least a little bit. Hoping that by the end of the summer we'll have a better sense of our financial position again so that we can feel more confident about where we're steering.

Commencing Baby Step 3

November 24th, 2013 at 05:49 pm

We've finally finished wading through all the home maintenance projects (including an unexpected $1000 repair on the roof a couple weeks ago) and even set aside $1000 for Christmas. We've reached our family health deductible for the year and are scheduling appts like mad for these next few weeks to take full advantage of paying only 20% rather than 100% for the rest of the year. And we were also incredibly blessed to have my aunt unexpectedly send me a check to cover my first semester of tuition and books for the community college I will be starting at in Jan. And so, with that all finally behind us, it's time to commence on our TMM baby step 3 (beef up emergency fund to cover 3-6 months of expenses).

It has been almost 4 months since we finished baby step 2, so I am relieved to finally be getting back on track again. We made a lot of prudent purchases and repairs, but as the money kept flowing out rather than in, I worried that our financial plan had become derailed. Apparently though, even without CC debt, we do still have some motivation and dedication to this plan after all. And it's time to buckle down again.

My main goal for this coming financial year is to see our next worth begin to rise finally. Although given it is currently -$46K, it might be more accurate to say we want to see our gaping net worth hole begin to be filled in. It's actually much better now that it was a year ago. Partly because of paying off the CC's and car loan. But also in a large part due to home values bouncing back again finally, and we can't really take credit for that. Plus that part could go again as easy as it came.

But I was realizing the other day that we are at an exciting point none that less because from here on out, we will mainly be investing in ourselves. Even the $25K we hope to save for a "new" vehicle over the next year and a half will be savings converted into an asset, rather than simply blown out the window. And yes, yes, I know their will be depreciation, but you get my point. We're finally investing in our own net worth. And that is exciting!

Plus, during the open enrollment period this year we made sure to max out our HSA contribution for next year, as well as bump up the life insurance and disability policies a little bit. And it feels wonderful to know we are getting an adequate financial safety net into place. Almost like we're becoming real adults finally!

From this point on though, we're going to be breaking a bit from strict compliance to the TMM plan. For instance, we're going to start baby step 4 (retirement savings) as soon as we get $5000 towards baby step 3. Which should be by the end of Jan if we practice restraint over Xmas. We are way too old to be putting it off any longer and we're going to be doing baby step 3 for quite some time. We want our final emergency fund to be around $20K, but we need to buy a car along the way, so almost as soon as we get it we're going to empty it out and start again.

I consider this an EF worthy purchase though because, as discussed previously, our current family vehicle is a 1999 and has over 225K miles. It's just not going to be around much longer, and when it does finally die, it will certainly be an emergency. After doing a lot of research we decided that the most financially wise options were to either buy a cheap 7-8 year old car in decent condition and plan to cover fairly regular repairs until we can afford an upgrade. Or to buy a reliable low mileage 1-2 year old vehicle that shouldn't need much work for a few years, and which would be just as affordable as long as we keep driving it at least 10 years. And given how very tired we are of highly used vehicles at this point, we have decided to go for the 2nd option.

We're going to save as much as we can for it until May and then get a loan for the remainder. We want to give the old one to our daughter when she comes home from college for the summer so that she will have her own vehicle to get to and from her summer job. And then we're going to pay off the car loan as fast as possible, though right now it's looking like Feb 2015 before we get there.

So that's the plan right now. Hubby is in the process of applying for new jobs that pays more though, and if one of them pans out, maybe we can even do this without a car loan. Hoping for the best!

TMM Year 2

October 20th, 2013 at 05:58 pm

It's been forever, I know. Not sure what the deal is with all this crazy /// nonsense in my info section since I left either. Anywho...

This Oct marks the beginning of the second year for hubby and I's Total Money Makeover. And how far have we gotten in a year? Well, considerably farther than we pictured ourselves one year ago for sure. We originally thought we'd be nearing the end of our credit card payments about now, and just starting to work on the car loan. The was before we discovered what the power of a budget and willpower can actually do. So instead we finished both by the end of July.

On the other hand...we are considerably less far than we had pictured ourselves being by now last June. Our revised goal was to have the initial $5000 for our emergency fund fully stocked by now, as well as kicking off the retirement 401k we need so badly and also making headway towards the "new" car we need. Instead we are in a much more dangerous no man's land somewhere between Baby Step 2 and Baby Step 3. I don't feel we are derailed from our TMM, but we do need to start getting this show on the road again soon.

So what have we been doing instead of all those June goals? Well, a lot of home stuff actually. Things we put off forever while dealing with our CC debt. We finally got a new toilet for downstairs (which lowered out water bill by $35/month!). We got a few trees cut down that had died and got our gutters cleaned out. We are also getting a large rip in our kitchen linolium repaired as well as some baseboards re-added that we never replaced after our mold damage issue a couple years ago.

We're getting our radon remitigation system installed this week ($1200). And we also had to take care of a couple big car repairs as well as buying hubby a new suit for job interviewing after all the weight he lost. Additionally, we finally replaced a few items that were wearing out. Like hubby's desk chair that was held together by duct tape and the kitchen rug that was coming apart at the seams. And we also spent more than typical on entertainment too, given it was summer and we had more family outings than usual.

Some of that stuff qualifies as emergency fund type things. Some doesn't. But it's all stuff we've been wanting to take care of forever and I'm glad we did it. By the end of this month we should be done with all that and ready to begin on Baby Step 3 for real. Trouble is, the boys are finally in preschool and I am finally going back to school myself to begin a second career. My first tuition/books payment will be due this Dec (just in time for Xmas) and is probably going to be around $2000. Long story short, I don't think we're going to be able to start the 401k until about Jan instead of Sept like we had planned and that sucks.

Regardless, compared to where we saw ourselves a year ago, we are doing much, much better indeed. Hopefully by this time next year we will be finished with Baby Step 4 and be looking ahead to a bright financial future!

End of Month Slow Down

June 24th, 2013 at 07:18 pm

The end of this month has been a bit of a let down in terms of the last leg of our debt payoff plan. We did make a $592 payment at the beginning of the month towards our last old credit card. But between the plumbing issues and car issues we had mid-month, there isn't anything left to do more. We just barely succeeded in not having to tap the emergency fund for the repairs, and now we're wiped. But even that is a success compared to our old way of life.

Still though, I think we will be able to send in another big chunk towards the fridge on the 5th of July. And our new estimated final payoff day is Aug 2. And then hubby can finally get that laptop he's been pining over for so long. Wink

Another bit of good news; we canceled 3 old credit cards this month and are about to close another as well. We applied for one new one with our warehouse discount store so that we can get the cash back on our purchases there. And we are keeping one other one to make sure we have enough available credit to keep our credit score rating up should something befall us before our souped up emergency fund is fully formed. But the plan from this point out is to pay them off at the end of each billing cycle and never carry a balance.

Now to just keep on trucking...

We Did It!!!

June 11th, 2013 at 07:54 pm

Just a quick note to say: We Paid Off Our LAST Credit Card last week!! We reached our goal a full 7 months early! I am so happy to be done!!

Of course, now that the old debt is done, it is time to acknowledge the new debt for the fridge we purchased on store credit. It has no interest for 6 months and we plan to be done in half that time. I have updated my debt stats accordingly. This debt milestone would feel a lot more exciting though if we didn't now have this to take care of that debt too. But at least it's debt for only one physical object that we use literally every day, rather than for a whole bunch of things transferred from card to card for so long that we had no idea what it was we were even paying for anymore. It is also nice to look at my wedding ring now and know that it is completely paid for. Smile

We may or may not make much headway on the fridge debt this month. Depends how my home business goes this month; this tends to be a slow time of year. Our car was in need of a $675 repair this week and we have a plumbing issue too now that is probably going to be at least $300. But guess what? For the first time, we don't have to tap into our emergency fund to pay for that. The mechanic told us the amount and we just sighed and said, well, at least we know we've got it. That is a very nice feeling.

Really looking forward to the end of the summer when we will have taken care of the back log of expenses we put off forever while doing our debt payoff. Because that's when the real fun begins. The accumulation phase that will (finally!) prepare us for our future.

A Talk with Hubby

May 27th, 2013 at 05:15 am

Many of you have pointed out to me that my hubby seems to be a reluctant partner in this Total Money Makeover of ours. To which I could not agree more. And it's certainly not as if that's something he and I haven't discussed. But its been a difficult topic for him. He feels like he works and works and works and yet has nothing to show for it (there's some truth to that right now). And generally speaking, since he lets me decide how to spend most of the money even though he makes most of the money, I try not to be too hard on him.

I did get annoyed enough the other night to bring it up again though. I was trying to have just a strategic, non-emotional discussion about what we should prioritize first once we finish paying off the last* credit card next month (*please ignore the fridge for now. I need that to be separate so I can be done, or I will implode.) But it once again turned in to a whine fest.

I managed to mostly keep my cool and said that while this certainly is hard, and there certainly is reason to whine about it occasionally, that shouldn't have to be the case every time money is discussed. That it made me feel like I was making him do this even though he has agreed many times that he feels it is what's best for us as well. That in order to feel like partners in it, I needed to just be able to talk strategy with him sometimes so that we could figure out how to best prioritize things together. I didn't say it all quite that nicely, but I did my best.

He didn't take it all that well at the time (it had been a long day and perhaps was not the best time to bring it up in retrospect). But later that night he did seem to come around some. And since then he has actually been much better. He even offered to put off getting the new laptop he so wants until the fridge payoff is done. We talked about how we might generate a report for him to look over after each paycheck so that he has a better understanding of how the numbers are moving (we're nerds like that). I told him that I was actually frustrated about it all the time too, and that if I didn't have my spreadsheet to look over and fiddle with almost daily I would probably be a wreck. Simple tasks like changing box shading from yellow to green to show it's completed do wonders for keeping me sane.

So, hopefully that was the talk that will finally change things. And we are so, so close. One more paycheck (don't talk to me about the fridge yet). It's really hard to not fixate on it. To a level of being unhealthy probably, but it's just been soooo long and part of me just can't believe that we're really about to frickin' do this. I keep checking and re-checking because it seems surreal. As if any moment a large, unforeseen expense will rise up and swallow us whole. But so far, the spreadsheet says we're on track. It says we're okay. Just one more paycheck...



So Close, Yet So Far

May 15th, 2013 at 04:54 am

We are so, so close to our credit card debt payoff. Only $1482 more to go! (Not counting the new fridge, as discussed). Our expected payoff date is June 7th but the closer we get, the more things that seem to be creeping up. Frown Our printer has stopped working, and our router is acting up and has to be restarted multiple times a day. We have 3 medical bills that came in at once and only enough money in the HSA for 2 of them (even after setting up payment plans). Our family car's air conditioner seems to need recharging. We have a plumbing issue with the water line to our new fridge. And to top it all off, we just found out our home has moderately high levels (6.2 pCi/L) of radon gas (common in this area) and that we need to install a mitigation system, which is going to run about $1600. We have $1000 in our emergency fund.

Hubby is chomping at the bit for the new lap top he's been promised when our last credit card is taken care of. And it would really help him with the side job he does that has helped pay down this debt faster. I don't think he's going to take no for an answer again if we have to push that last payment off a bit longer. But I really don't want to add anything else to credit. We need to take care of the new fridge still as it is.

I'm trying to decide what we can put off, and what we must do. I never pay bills late, so I think I will have an anxiety attack if I don't take care of the dental bill. Though I am going to call tomorrow and beg for a later due date (sad). As long as we don't start hitting 90's constantly it seems like we should be able to squeak by on the car's air conditioner for another month or so. My 2 year old boys sure looked hot back there today though. They were so flushed I was worried about over heating.

If hubby is going to demand the lap top then maybe he will have to wait on the fridge water line instead. We managed to get water from the sink for the last how many years. Shouldn't kill us to go a little longer. Hopefully we can figure out what's wrong with the printer and as long as the router doesn't completely die, we can deal with restarting it constantly a month or so longer. The radon mitigation system is the one that has me stuck though.

My daughter's bedroom is in the basement where the concentration is the highest. If she hadn't just gotten home for the summer from college then I think we would definitely put this off a few months. But she is home, and she sleeps down there (well, when she's not at her boyfriend's at least.) Long term exposure to radon increases your chances of lung cancer. 3 months isn't really that long of exposure (though this must have been a problem before too). To be honest, her risk of getting colon cancer from not eating any fruits and vegetables is probably higher, but I just don't feel good about it. Whether or not we take care of that right away though will probably be the difference between finishing the debt payoff in June or not.

Need to have a discussion with hubby I think. Hopefully one that entails more problem solving than whining.

Inching Ever Closer & A New Fridge!

May 1st, 2013 at 03:47 am

One more month of operation wipe out credit card/car debt completed. And as long and tedious as it has been, we are in the final stretch now. Only $3341 left. In fact, we have an estimated payoff date of June 7th! Just gotta keep putting one foot in front of the other for a little longer...

Actually, I have a confession. Two days ago, we bought a fridge. With a store credit card. So, to be completely honest about it, out debt total is actually at $5279.08 now. I know, I know, we maybe shouldn't have. We're so close. But- we were absolutely going to do this as soon as possible after we finished in June, and -the store had a sale on them this month that saved us $200, and- there's no interest for 6 months and we should have it paid off 3-4 months from now. And also- we were sick to death of that stupid drawer always falling down and pulverizing our fruit! And just to throw in one more good excuse, it was so ancient that I'm certain our energy bill will go down by a noticeable amount once the new eco-friendly one arrives. And it's bigger. It might actually fit all our stuff! Wink

This doesn't actually change our payment plan at all really because given there's no interest, we're still going to put all our focus into the last credit card first and then start paying for the new lap top and fridge we need. We'll finish paying it off in the same time we would have saved for it, but this way I get the new fridge while we're doing it. At this point, I trust myself to deal with this new debt ASAP, so I am not too worried about it. I don't plan on paying interest to credit card companies EVER again.

So, one more month down. And I keep wondering, what will it feel like when the last debt is paid? If we were planning on adding all the extra money we'll have to our regular spending, I'd probably assume it'd feel pretty awesome. Instead we're mostly going to be doing much more practical things with it, like starting a 401k, increasing contributions to our HSA and saving for a new family car. So in terms of spending, it won't feel that much different. But I would assume there will be a mental shift of some sort? A different feeling when you know you are finally creating a hill rather than digging out of a hole? I don't know for sure. I guess we'll see when we get there. I sure hope it feels different! Would love to hear how it was for others when they reached this turning point.

Financial Goals

April 10th, 2013 at 03:50 am

Last post

Text is http://annereesedebtblog.savingadvice.com/2013/03/30/save-now-live-later_101898/ and Link is
http://annereesedebtblog.savingadvice.com/2013/03/30/save-no..., I was feeling pretty down about the state of our penny pinching lives right now. We've made great progress, but it's been all work, little play for quite a while now. This past couple weeks, I've been "running the numbers" and trying to figure out IF/WHEN and HOW MUCH fun money we might be able to squeeze in, while trying to meet our many financial goals over these next few years.

We're still putting most everything extra on hold until we finish paying off the credit cards in the next couple months or so. But I would like to start going on date night's out once every couple months again despite not being there yet. I'm fine with it just being something like TGIF's and a movie. Right now even McDonald's would be a splurge for us so that sounds great to me! But I want to get an actual baby sitter and not have to cook the meal myself. To watch an actual new release in movie seats rather than a rental on the couch. And to be able to start spending time with hubby before 8pm when the boys are finally in bed and our eyes are already getting droopy. This particular splurge, I am not willing to put off any longer. Even it it adds a little extra time to our goal. I need a life again. And once every two months hardly seems over the top.

The trickier part is what to allow when we do finally finish paying off all this debt. Not throwing hundreds, and even thousands into our credit cards each month will certainly free up some funds! But as discussed
Text is http://annereesedebtblog.savingadvice.com/2013/03/25/march-madness-ends_101832/ and Link is
http://annereesedebtblog.savingadvice.com/2013/03/25/march-m..., there are a lot of prudent ways those funds could and should be allocated. So we decided to determine which financial goals were our most important ones to meet in the first year after paying off our credit card/car loan debts. And to set aside the money for those things each month first. Here's what we came up with:

1) To replace the ancient fridge that is probably costing us a small fortune to operate and can barely hold a food safe temperature anymore. Also, all of the drawers are broken and every time the cheese drawer is pulled out it smooshes everything below. This was the single hardest item for me not to "splurge" on spending to replace.



2) Replace hubby's ancient desktop computer that needs rebooting at least once a day to even barely run these days. Preferably with a moderately priced and more portable laptop. Hopefully before, rather than after it bites the dust, but it's going to be close.

3) Get that $800 car repair for hubby's car that our mechanic mentioned is going to sneak up on us any day now.

4) Start putting in the maximum employer matching 401K contribution. At least it's pre-tax and won't be quite as big a chunk as it seems, but like it or not, it's the most important thing we can be spending our money on at this point.

5) Increase emergency fund from $1000 to $5000. Still far short of our long term goal, but it should be enough to cover, say, an ancient furnace that we were just glad made it through one more winter. Thankfully hubby's job is very stable right now.

6) Come re-enrollment this fall, up our HSA contributions to max that out too. That will be more than double what we're doing now but not doing so has totally bit us in the butt this year with unforeseen dental expenses (given that dental insurance is pretty much a joke). Long story short, I am going to be without a bottom right tooth for a while, and I would like to get that fixed soon.

7) Save about $12,500 for a "new" car. Again, preferably before the current one dies but that will also be cutting it close. In truth, we are going to rely on hubby's bonus next spring for about half of this. At the fortune 500 company he works for, it's a pretty sure bet. We even know pretty much how much it will be. If we're wrong though, we'd still rather get a small car loan that we paid off ASAP rather than wait any longer for any of these other things.


So those are the goals. There will be no family vacations in the foreseeable future, and we're going to keep date nights out at once every other month for now as well. We also will have not yet started saving for me to go back to school, and that will certainly need to be a priority in the year following. To say nothing of our longer term investing goals.

But thankfully, there is some wiggle room in there. A little cash for lunch with friends. Maybe a shirt from Kohl's and a new book once a month. Perhaps I can finally replace that pitcher I use every day that I'm missing the lid for? And we're definitely starting our Audible subscription again. We're going to have more fun. Ahh, the good life! Let me never take these small luxuries for granted again!

Save Now, Live Later

March 30th, 2013 at 03:46 pm

We're making awesome progress on our debt. In the last 6 months we have paid off $16,406 in credit cards/car loans and we now have only $5900 to go. On paper, it looks really good. In life- it looks kind of bleak.

I have always struggled with living my life more in the past or future than in the present. The Now. I am good at putting off short term reward for long term gain. Hubby has a harder time with this, which is one reason he is so good for me in this regard. He helps to balance me out and remind me that life IS now. In turn, I help to give him direction so that he moves towards his longer term goals. This tug of war plays out in our total money makeover all the time, as it does with most everything in our marriage.

Recently though, I have hit an emotional wall that makes me realize I need to start focusing more on the Now. To put it bluntly, I am not enjoying my life right now. I miss working and having space for intellectual pursuits in my life outside of two year old play dates and fish sticks. I feel that me being home is what's best for them and I love them to pieces. But I am coming to accept that it is not what's best for me. None the less, they don't have a lot of part-time options for women with PhDs in science fields, and I didn't like what I did much before anyways, and I will need to be retrained before I can begin a new career path. Which will only be affordable if we stick to our financial plan and cut expenses now. For now, and the next few years, I'm stuck here.

And hubby and I have been working our butts off for this money makeover. I run after our darling boys all day while he works his day job. And then by night, once the boys are tucked in, we both spend at least half the nights a week doing our side jobs, which has created the surplus for our finances. But we have almost no time for ourselves or each other. We've turned all date nights into at home affairs and cut all plans for family vacations. We don't buy clothes, or toys or really anything that's not required. We stick to the plan. And it blows.

Part of why we have felt the need to push this hard in the short term is that we have been treading water financially for years now. With every increase in funds getting eaten up by something else unplanned for, I watched my goal of going back to school slip further and further away. We were always barely making ends meet. Always "a little bit short this month but next month should be better." Looking into the near future we could already see the big raise hubby was expecting being eaten up by needing to replace the family car that is on its last leg. And we have nothing for retirement. We needed to do something Now.

So we're doing this. And the credit cards part of it is almost done. Which is awesome. But if we don't want to just replace all that work with another car loan then we need to start saving pretty aggressively for a car as well. And there are a whole ton a medical expenses that have crept up recently that I don't even want to think about factoring in to the plan yet. And yet - life is NOW. Not when we finish saving for a "new" car or finally start that retirement fund or get money pulled together for me to go back to school. But now. And Now - I am miserable.

Clearly there has to be some balance here. It does no good to live high on the hog now and just be miserable in the future instead. But it is not healthy to put off everything Now for a future that may never come either. They used to say money doesn't buy you happiness. Though they're finding that's not actually true! (

Text is http://www.forbes.com/sites/learnvest/2013/01/25/money-does-buy-happiness-we-were-shocked-too/ and Link is
http://www.forbes.com/sites/learnvest/2013/01/25/money-does-...,
Text is http://www.time.com/time/magazine/article/0,9171,2019628,00.html and Link is
http://www.time.com/time/magazine/article/0,9171,2019628,00....,
Text is http://www.wired.com/business/2012/12/wealth-happiness/ and Link is
http://www.wired.com/business/2012/12/wealth-happiness/). Regardless, I have never been a collector of things for my happiness. But money does buy experiences. And experiences are the stuff of life in my opinion.

In times past, I know it has definitely made me happier to have a fun family vacation to look forward to, or a fancy night out with hubby taking in dinner, wine and a show somewhere. It made me happy when I was able to splurge on a massage or a special outing with the boys. Though these things are fleeting without knowing they are financially backed by having the longer term goals of ones life fully funded as well. Again, I recognize there must be balance. But right now the balance is clearly too far to the future game, and we need to adjust that.

In the very short term we are going to restart monthly date night outs, though nothing too fancy until the credit cards are done (only 3 more months!). Then, we'll have to decide what additional changes we can make at that point, and which ones we need to put off at least until a new car, and the increased emergency fund, and the 401K and all that have been saved for. I don't know what the right balance is here because all these things are important. But my emotional outlook is making it very clear to me that our current answer is not where it needs to be right now. I will be working on sorting that out this coming month.

PS Please, please, pretty please, do not respond to this post with a list of low cost entertainment options that I could "fix" my problem with. And no, we do not have good options with family or friends for child care swapping right now. I am aware that these options exist and we are considering them too, but we want to feel able to enjoy some of the "finer" things in life as well. This is really more about giving myself permission to enjoy than it is about the actual solution. Once I feel it's allowed, coming up with the options should be the fun part!

March Madness Ends

March 26th, 2013 at 01:15 am

Well, probably not the March Madness you're thinking of. But our March madness - the one where all the money came in, that one is finally wrapping up. And we have *mostly* been very, very good.

As you'll recall, hubby got a $5K bonus in Feb, a raise that translates in to $250 extra per paycheck starting mid-March, and a tax return total around $6200. Yeah, it was pretty sweet. But, unlike every other year in prior history, we applied ALL this money towards our debts. The checks came in, and I mailed another out.

And now, that's it. No more extra money. But only ONE credit card left! Wow. And I think we have about an extra $1000 left over from this month's budget that I'll be able to put towards it at month's end. If we keep sticking to the plan, I believe we'll be done with baby step 2 finally come July. Thank. Goodness. Cause we are sooooo sick of this.

Granted, we're not out of the water yet. Before I feel good about where we're at, we're going to need to save up for a "new" family car (preferably BEFORE the old one dies), start contributing enough to hubby's 401K to take full advantage of the employer matching, and save up at least $15K into an emergency fund. I feel like those are the bare minimum financial things I need to feel like a financially respectable adult. Hubby agrees, and until we reach those goals, we are both willing to do some more sacrificing (some of us less reluctantly than others, but we're not naming names here!).

Really though, that's just the bottom line because eventually, when the boys are finally in school I want to go back to school myself and start a second career. And given that we've barely made a dent in my previous student loans, I'd rather not take out more if possible. And we want to pay off our mortgage. And before too terribly much longer hubby will need a newer car too. And it's going to take a lot more than just hubby's 401K to make up for the Absolutely Nothing we have saved for retirement yet.

But, all in good time. The good news is that I think we will actually have reached my bottom line by this time next year, and that will be amazing. Hubby and I do have a few rewards we will be giving ourselves along the way as we reach our intermediate goals. To start with, once the credit cards are finished, our monthly entertainment budget goes up. We get to start having real date nights again! Also, there will be a new refrigerator and a new lap top ASAP, both of which will replace objects that we are just praying will hold out until July right now. But for now, baby step 2 continues...

Making Progress

March 2nd, 2013 at 11:07 pm

I am frustrated that I have not been able to keep up with this blog very well lately due to some other projects I have been working on. I think it is a really good outlet for the stress this financial overhaul creates in our lives sometimes. And I think its a really good tool for keeping us accountable. Should be able to put more time into it again by the end of this month though I think, so I'll have to be content with that for now.

As for where we're at right now, do you see that side bar?! Talk about progress! Yes, the windfall has finally begun. Hubby got his bonus from work, which was about $5K after taxes got done with it. Originally, I had planned on paying off credit cards first with that, but after reading A LOT of material of financial planning recently, I decided a better use would be to pay off the car first, due to its higher interest rate. So, that one is done! And that payoff alone increases our monthly income by $198/month. Yay!

We also got our state return, a little under $500, and with that and some other surplus, I did pay off 1 of our 4 credit cards as well, though that one only increases out bottom line by about $30/month so not as exciting. But still progress! Supposedly, the IRS is going to finally start processing returns for people with mortgage interest credits within the next week. So hopefully, we will get that soon too (assuming no audit as discussed previously:

Text is http://annereesedebtblog.savingadvice.com/2013/02/09/death-and-taxes_100945/ and Link is
http://annereesedebtblog.savingadvice.com/2013/02/09/death-a...). And when we do, I plan to knock off a couple more cards, this raising our bottom line another $180/month. Wow, were we ever wasting a lot of money of this crap.

After that, it will just be the one big one left, which I'm hoping to have taken care of by the end of the summer, maybe sooner depending on how my business goes (summers tend to be slower). And then, we finally get to start the more fun part of personal finance: investing in ourselves.

Certainly we still have a lot of debt to pay off, between my student loans and our mortgage. Actually, even after paying off the the rest of the credit cards, I was disappointed to find that our net worth will still be around -$84K. Ouch. Though it is above the -$100K mark now for the first time in years. But as one financial planner I read stated, we're working really hard just to be worthless right now (ie $0 net worth).

None the less, after receiving some comments about how silly we are to not be taking advantage of the 401K matching hubby's company offers, I did a bit of research and decided in the end that, yes, we are being incredibly stupid not taking this free money and we need to get on that train ASAP, Dave Ramsey be damned. If we were being completely logical rather than emotional about it in fact, we would probably be prioritizing that even above our credit cards given that they have very low promotional interest rates. After much discussion though, we have decided we simply cannot bring ourselves to make this credit card thing go any slower. We feel spread much too thin as it is, and we need to be done with those debts and never use credit that way again. Our emotional sanity depends on it. Especially given how close we are.

If it were going to be something that was a few years away from being accomplished, like our mortgage and student loans, it might make sense to do it with more of a long view in mind. But we are literally within 3-5 months of our goal and our monthly income will increase by another $300 compared to now, once we sunset this. And that will certainly help our long term bottom line as well. That's our thinking at least. But at least we're almost there!

Anyways, very happy to be making some definite progress finally and looking forward to a 3 paycheck March this month as well!

Feb Zero Dollar Budget

February 9th, 2013 at 05:43 pm

Income:

Hubby's Job (after tax): $5271
Hubby's Hobby Income: $550*
My PT-WFH Job: $670*
Hubby's Bonus (after tax): $5104
(*subject to change, though usually for the better!)

Total Monthly Income: $11598 (umm...holy crap!)

Expenses:

Non-Fixed Expenses:
Groceries: $861
Gasoline: $188
Misc: $500
Entertainment: $250
Gifts: $10 (Valentine's Day Treat!)

Fixed Expenses:
Mortgage/Insurance: $1509
Student Loan: $619
Utilities (water/sewer, gas, electric, etc): $349
Services (phone, computer backup, garbage, cable*, etc.): $285
(*reimbursed through hubby's company)
Leftover Leaf Cleanup Bill: $150*
(*he still has not billed us and I'm not calling again. This is his last chance.)
Auto Insurance: $73
Credit Cards (minimum payments): $299
Auto Loan: $198
Early Childhood Program (spring session fee): $120

Total Expenses: $5525

Difference (to be applied towards credit cards): $6073 (woo hoo!)


Still need to do an accounting for how we did in Jan but I think I'm out of time this morning so it looks like it will have to wait again.

Hubby Got Promoted!!!

February 9th, 2013 at 04:55 pm

The day we have been waiting for all year is finally here! Many of you pointed out previously that in the future we should probably not count so many of our eggs before they hatch so to speak. And yes, I know what you mean. I tend to always be about 5 years ahead of myself. That works well for some things in life, though not for others. This one was particularly hard because we *thought* this promotion was going to happen last year. His boss had suggested as much. Then we came to find that the company likes to get new managers feet wet for a year by giving them most of the new duties they will have, without the pay increase until the following year, after they see how it goes.

I get the logic that they don't want to end up promoting people who aren't going to be a good fit for management. But man that was an annoying year. We had thought it was already in the bag. And Hubby worked his butt off and understandably felt uncompensated for it. But no more! He broke the six figure income ceiling in fact! Well, more like scuffed it: he's getting exactly $100K now. But he also got a sweet $8000 bonus, though that'll be about $5100 once taxes get pulled out. Additionally, he gets an office and a garage parking spot. And he will now be eligible for even larger bonuses going forward. Possibly as much as 15% if he keeps "exceeding expectations".

But okay, okay, let's not go there yet. Let's let next years chickens come next year. How 'bout them eggs this year though! Wink We should be getting the bonus check next week. And once we do, CC#1 and #2 that you see on the side bar there should finally be gone! And just in time too, one of our balance txfr promotions is about to expire.

It may seem like a simple thing to send in a big check like this to a credit card that needs paying, but for us, this in and of itself is a debt victory. We were never disciplined enough to make that much headway before. We *might* have ended up paying off the smaller of the two. But we certainly wouldn't have knocked out that second one also (with some spare to throw at the third as well). So this is a big money management win for us.

Additionally, we should start seeing about $250 more each paycheck after taxes, and that will certainly help as well. Credit Card Free 2013, here we come!

Parallel Lives

January 27th, 2013 at 08:01 pm

For the most part, I like Dave Ramsey's TMM plan. We're working hard on baby step 2 (debt snowball for non-house/student loan debts) and are hoping to be on to baby step 3 (beef up the $1000 emergency fund from baby step 1) before the end of the year. This is our 4th month on this plan. Unfortunately, I feel like our accumulated debt snowball at this point could still easily fit in the palm of one hand. And just last month we had to regress to baby step 1 for a bit while we took care of some car/business income troubles we had.

And now this month yet again, one of our cars is going to keep us from being able to get traction on our debt snowball yet again. This is the 3rd month out of the last 4 that we have had car expenses over $800, and is already easily more than we paid the entire year before. WTF? We were long overdue though for 4 new tires that we were hoping to put off until next month's tax return came in. An unexpected flat (and consequent tow) made that happen this month instead though and altogether we are out another $850. The only good thing I can say about this is that we managed to trim enough excess off our spending this month that we did not have to tap in to the emergency fund to pay for that again. But I'm not sure how much extra there will be now to apply to our credit cards once again.

So we will probably continue to pay only slightly above the minimums on all our cards for yet another month. Luckily they are all on no interest promotional periods right now, but those will gradually expire this year and balance transfers cost 3-4% of the balance. In truth, it is not as bad as all that because we do have our big tax return and hubby's bonus coming our way soon, and once we get those we should be about 2/3 of the way done already. But I guess I feel like that's cheating.

I wanted this debt snowball to get started through our own budgeting successes and not just a once a year cash windfall. And I suppose one could argue that that's still true here. In a parallel life, one where we did not start our Total Money Makeover, I am certain hubby and I's straits would be much more dire right now. We would have spent a lot more money than we should have on other things and we would have ended up adding more to credit cards when the emergencies came in. We would have planned to throw and little at the credit cards with our tax return/bonus, but also prioritized a new fridge and laptop above our debt payoffs. We would have had a lot more fun going on monthly date night like we used to, but we'd also be a lot more in debt and certainly no closer to our long term financial goals.

At least that's what I like to tell myself. And its probably true. But who knows what my old self would have done for sure. I'm not a complete idiot, just a little desirous of short term rewards at the expense of long term gains. And I was a little fuzzy on the overall game plan long term. But still, on weeks like this, I wish there were a way to see my bank accounts in that parallel life next to this one, so I could know that we truly are making progress.

End of month accounting to follow soon.

Jan Zero Dollar Budget

January 6th, 2013 at 03:54 am

Here's this month's fully allocated spending plan:

Income:

Hubby's Job (after tax): $5271
Hubby's Hobby Income: $520*
My PT-WFH Job: $385*
Last Month's Extra (held for EF): $593
(*subject to change, though usually for the better!)

Total Monthly Income: $6769

Expenses:

Non-Fixed Expenses (i.e. the things we can control the most from month to month):
Groceries: $861 (striving for the USDA's moderate spending plan this month!)
Gasoline: $230
Misc: $700
Entertainment: $250
Gifts: $50
Emergency Fund*: $990
(*only this month since we need to restock it)

Fixed Expenses:
Mortgage/Insurance: $1509
Student Loan: $619
Utilities (water/sewer, gas, electric, etc): $342
Services (phone, computer backup, cable*, etc.: $386
(*reimbursed through hubby's company)
Leftover Leaf Cleanup Bill: $150
Auto Insurance: $73
Credit Cards (minimum payments): $299
Auto Loan: $198

Total Expenses: $6657

Difference (to be applied towards credit cards): $112

Here's to staying on track!

Our Debt Snowball

January 5th, 2013 at 07:06 am

This is it! The year we're going to conquer our credit card and car loan debt. Time to layout the plan so I can hold myself to it!

We are still only 3 months in to our Total Money Makeover. So far, getting our debt "snowball" rolling has been really slow going due to a number of unfortunate factors. Child support back-pay ended last month, and as glad as I am to finally be done with my ex-husband, it left a new $500 hole in our budget. We knew this was coming though, and could have handled it alone, but unfortunately, it overlapped with a slow quarter for me in my home business. I have been making only about 1/3 of my usual profits for this time of year. And then to make matters worse, just a month before Xmas my normally biggest contract of the year cancelled on me due to going out of business. That left us short another $1600, and was pretty much our Xmas "budget" out the window. The same week our newer car need a $1000 repair. Needless to say, its been rough.

The amazing part of all this though, (as I tried to explain to hubby tonight when he got all forlorn about how little actual credit card progress we've made so far), is that we have not dug ourselves in any deeper for once! Had we not started a budget and drastically reduced our spending in recent months, these problems would have crept up on as as they always did. With us already overspent and not knowing where we were going to come up with these extra funds. I would not have been at all surprised if we ended up putting at least $1000 or so on a credit card, even after wiping our emergency fund out. Nor would we have had any plan to restock the emergency fund before our tax return came in late Feb. But that's not how we're doing things these days.

Today, I can honestly say that we have not used a credit card in over a year, even for emergencies. That's a first. And that as of this Monday, despite Xmas being barely over, our emergency fund will be restocked with $1000. And that even after all that, if we stick to our budget, we may still have about $50 extra to put towards credit cards in Jan. That may not be much, but it's a heck of a lot better than where we would have been before all this.

But then Feb is where the real fun begins. The month we finally start getting some momentum on this debt snowball. Because due to circumstances previously discussed, we will be getting a huge tax return. Probably around $8000. And then come March hubby should be getting his annual bonus, which will probably be around $4500. And then in Apr., hubby's new promotion raise will kick in and he should start bringing home about $500 more a month (which BTW, cancels out that child support that ended. Sweet.).

In the past, we would have initially *said* we were going to put a large amount of this extra towards our credit cards. But as it got closer, our wish list would have grown and grown. We may have ended up throwing $1500 towards it, but the rest would have gotten set aside for "in case" or spent this way or that. Our goal this year though, is to send no less than $13,000 to our credit cards for the months of Feb & March combined. Hold me to this!

By the end of all this fortune we should have wiped out three of our four credit cards and will already be about 2/3 of the way to our 2013 debt goal. From that point on it will be more slow and steady progress. If we stick to it though, that last credit card should be gone by the end of June, and our car loan will follow at the end of Sept. And that will be it! Almost one year after we started to the date. And then on to baby step 3 we'll go!

If we stick to this plan, about 28% of our take home pay over the course of a year will go towards our credit card and car loan debts. Compare that with the only 7% progress we were making before. (And we were wondering why we were never getting anywhere?) A four fold increase. Not too shabby for only 3 months of restructuring. And who knows what else we'll come up with by then?

All of this, of course, is subject to change. I'll feel a lot more confident once the tax return, bonus and raise are in hand. Until then, they are only projections, not realities. (At least the fiscal cliff is done!) Also, who knows what else will happen with cars and appliances and goodness knows what else in the months ahead. I have estimated my business income a little on the low side to help offset this, but it being on the low side has been a reality for me as well lately, though one that is starting to improve. If necessary, we still have a 3 month buffer to make it to the end of 2013 credit card/car loan debt free!

All said and done, we have a plan, and now its time to get to it.

Post Christmas Update

December 27th, 2012 at 02:31 am

Well, we managed to get through Dec., the month I projected to be the tightest in our near future, with less financial distress than anticipated. The new side work hobby and I both had come in helped a lot. Jan. will still be a little tight, but without Xmas (and hopefully not another $1000 car repair), certainly much easier. And then come Feb we should finally be able to start making some real headway of this credit card/car loan debt. Can't wait to knock the first of those cards to the ground! Assuming we don't jump off a national fiscal cliff for more than a week or so. I predict a deal within 2 weeks from today. Who's with me?

I got a lot of great tips for cutting Christmas expenses in my blog comments. Unfortunately, the posts they referred to were old (from my old blog) and by the time I received them, we had already purchased everything but for the stockings. We did manage to keep within the budget we allotted ourselves though. And we also managed to temper costs a little by purposely asking family members who wanted gift suggestions for items that would have normally come out of the miscellaneous budget. So hubby got a not very exciting, but quite practical and needed belt, while I got sports bra and dust proof pillow cases (among other more fun things as well), and we were both pretty happy with it.

So strange to remember that as recently as 4 years ago, we were still willing to break out the credit cards for Christmas purchases this time of year, citing plans to pay it off "some time later". The idea of going further into to debt for something so non-essential is incredibly disturbing to me now. I am not entirely sure when this point of view changed for me but I am glad to realize it has. Now I just need to work more on better prioritizing the spending of money I do have as well.

As for our tapped out emergency fund...I don't want to get too ahead of myself given that the end of the month is still a few days away. I feel like this just invites disaster to come. But I *think*, that maybe, just possibly, if luck continues to shine upon us, we will be able to put about $650 back into it next week. And I feel fairly confident (but in a not at all cocky way fairies of fate!) that we will be able to put the remaining $350 back in by the end of Jan. as well. And once that's out of the way we are back to baby step 2 again! (Please forgive my paranoid ravings. There's just been too many bad turns of late.)

I'm interested to see what our grocery bill will be this week as well given it will be our first shopping trip at our superstore instead of the grocery delivery service. And given that I have put on at least 3 lbs in Xmas cookies alone over the past two weeks, perhaps we should go light on supplies this coming week anyways. Though not until after the annual family fondue dinner next week! Gosh I love the food this time of year. Smile

Hope everyone is having a wonderful holiday!

Taking the Bad with the Good

December 13th, 2012 at 07:36 pm

(Last old entry!)

I haven't posted our month's end update yet because our financial situation this past week has been so in flux. In a recent post I talked a bit about hoping our Xmas shortfall might "magically" fix itself. And believe it or not, we actually have had a fair bit of good fortune magic come our way recently in terms of income.

Hubby's writing/website management hobby is really taking off! He's just landed a new deal that should pay a minimum of $300/month starting next week, and possibly up to $500 or more. And that's in addition to the $220 he was already making through another deal, plus some smaller bits on the side. All together that is more than enough to make up for the back pay child support that is now ending (last check tomorrow!) and also enough to bridge the income gap we were expecting for Dec/Jan.

Additionally, I've had a little bit of work come my way as well! My worse case budget scenario was assuming I would continue to have only about $140/month of income (that used to be more like $600). For at least Dec/Jan though, I think I can count on that being around $400 instead, so that's another extra $260 that also kind of feels like it just magically appeared in time for Christmas.

Were in not for the car repair that suddenly fell into our laps as well then, we would probably feel we were raking in the dough. But alas, this was no ordinary car repair. This was a $992 doosey. I'm not even sure we've paid that much for a car repair before. Usually when the repairs start getting that expensive and close together, the car is old enough that we decide its probably not worth it and time for a newer one instead. But this is hubby's car and we are still making car payments on it as it is. It's also the newer of our two vehicles and therefore not allowed to reach the end of its life first!

Anyways, that completely cleaned out the emergency fund. All but $10.17. So that's a little scary. Cause it's a good two and a half months until tax rebate season. Additionally, our discretionary account has only $4.81 in it, while even our fixed checking, which we use for things like the mortgage, has only $728.42. Not cool. Luckily, hubby gets paid tomorrow, though there are still lots more gifts to get. I should point out here that the order these fluctuations came in as was: my income increase (Oh, good, that will help a little), then the car (Oh, f**k. We're screwed again.), then hubby's income increase (Woo hoooo!!! We're saved!). It's been a long week.

We ended last month with about $260 surplus, which we would have liked to use to pay down our credit card debts given that that is the point of this whole thing. Unfortunately, as the month ended, we were projecting a $750 shortfall for Dec./Jan., so I felt I needed to hold on to that extra to help somehow bridge the gap. When my extra income came in, we had high hopes that end of Dec or at least Jan. might afford us some surplus after all. But then the car crapped out, and Dave Ramsey says our first priority now should be going back to baby step 1 to replenish the emergency fund. I'm not quite sure yet where that puts us in terms of catching up again, but it may well be Feb still. In the meantime, we will continue making our roughly $500/month in minimum payments.

More good news; some very preliminary numbers I ran in the newly released 2012 Turbotax seem to predict that we will be getting back around $8000 this year! Holy s**t! I think that's even bigger than when we got our first time home buyer's credit, though I might be wrong about that. We only claimed 4 deductions rather than 5 on hubby's W-4, so as to cancel out my estimated business taxes, but I didn't make very much compared to normal, so it ending up being a lot more withholding than we really needed. Plus, we get some kind of a $2000 education credit for my daughter starting college, since she is still a dependent on our taxes for this year. Yay!! Until the car died, we were considering buying a new fridge with some of that. But at this point, we may just muddle through and try to just get done with this ASAP. Hopefully by next Xmas we'll be on baby step 3!

Cancelling Christmas (Except Not!)

December 13th, 2012 at 07:31 pm

(Only a couple old ones left...)

So bad news this week. That big job I usually get this time of year that has paid for the last couple Christmases will not be happening this year. Or anymore at all actually; it appears they have gone out of business. And given how much we were counting on it, that is quite a bummer.

The net effect of this is that Dec and Jan are not going to be just tight as I've mentioned, they are going to be negative in terms of cash flow. Even putting off getting the new tires we need, and even adding in the savings we scraped out of this month, I estimate we are still going to be about $500 short by the end of Jan. And given that bonuses and tax returns won't come in until the later half of Feb, the first half of that month is not going to be pretty either. Things have already felt so tight on this Total Money Makeover that it's hard for me to even picture how much more this is going to suck now.

Given all this, and in the spirit of maintaining gazelle intensity for our debts (I mentioned I hated that phrase, right?), it seems we probably should cancel Xmas this year. Or presents at least, that is. In fact, that would simple act alone would about take care of that $500 shortfall we have (so would winning that $500 million Powerball right now, but I digress). But we are not going to do that. Does this mean we are not really serious about our Total Money Makeover? I don't know, perhaps. But I just can't. It would be too sad for me and I think my husband would just lose it. We would lose our drive to do this because it just wouldn't feel worth it anymore. We're going to be smart about it and stick to our budget, but we're going to have Xmas, so tough.

So where is this $500 going to magically appear from then you ask? That's a good question. Cause we do have $1000 sitting in our emergency fund still, but we all know how Dave Ramsey feels about acting as if Xmas is an emergency. Well, one solution is that it might magically appear. Okay, okay, not magically. But so far hubby's side writing hobby has been bringing in a little more money than expected each month. I think its quite possible we could end up with up to $250 more from that then I currently have budgeted. Also, I could get another job through my business (hah!). I mean, probably not this month, but it could happen. At one time, I made over $20K/yr with this little side gig. (Will probably be lucky to hit even $6K this year.)

Other, less magical avenues include the possibility of me getting a very part-time job in the evenings. I'm looking into this and will in fact be putting in an application by the end of the week I hope. Not sure I will do it for any longer than necessary, but I feel I must do something. It just sucks because I will probably make only a quarter as much per hour for my efforts doing that then for my business. But a quarter as much still meets the gap my business is just not producing right now. I really hope that changes again eventually. Frown

If worse comes to worse though and none of those things pan out, I guess we will be tapping into the emergency fund. All I can say in our defense is that I promise we will pay it back in February. Needless to say, there will be no extra credit card/car payments for the next 3 months. Our minimum payments total to almost $500/month though, and our credit cards are all no interest promotions, so as long as we don't use those, we'll still be chipping away at it.

How We Got Into This Mess

December 13th, 2012 at 07:28 pm

Sometimes I’m a little surprised to find myself with debt troubles, because back when my husband (then boyfriend) and I were both working 6 years ago, there was a point where we were making quite a bit of money. During that two year period, we managed to pay off all the credit cards we had at that time (due to divorces and our big move west for my job) as well as the remainder of hubby’s student loan. We did not, however, manage to save a dime towards retirement or anything else. And we went on at least two fancy trips. And ate out a lot. And didn't even look at price tags in certain stores. We also did not own a home at that point, and were paying a small fortune to rent a very nice one (we needed one with with space for our huge dog to run!), while paying only the minimum on my student loans.

Each month we wondered how we could possibly make so much money (some months we brought in more than $10K total - after taxes) and still have nothing left to save towards a house or retirement by the end of the month. I have a few defenses for this. One is that I was less than two years out of graduate school (finally!) and after having been a young, poor, and mostly single mom for that difficult 11 year period, I had a big wish list for life. I needed some fun time. Additionally, my field was very specialized, and required us to live in a very expensive area on the west coast. We were both completely shell shocked by the cost of living adjustment our first year. The price of things like cheese always floored me. Plus, Hubby and I weren't actually married yet at that point, and despite entering our 30's, we were simply not ready yet to buckle down and get serious about financial planning.

So that’s my list of reasons, minus a lot of things I could say about hind sight that you can fill in for me if you like. That period of my life ended almost 5 years ago when hubby and I made the difficult, but long coming decision for me to quit my job (or really career in this case) and move back to our hometown in the Midwest. At that point, we did begin to reign it in a bit in preparation for the 60% reduction in income we would be undergoing in a few short months. We stop planning for the next big vacation and started planning for the journey home instead. We cut back on spending, and put a little away each month for the huge moving expenses we knew from experience that we would be racking up soon. Not nearly enough, but it helped. And I began to look into information on starting a new home business.

We made a mix of good and bad financial decisions over the next few years, but also worked very hard. That first year back, I often spent upwards of 50 hours a week laying the groundwork to get my business up and running, and even took on housecleaning jobs in the meantime until my cash flow became more regular. Thankfully, hubby's job was able to come with him on our move, but the recession had just kicked in and there would be no cost of living raises that year. We had a few thousand in credit card debt again from the move we had to pay on, but we put my student loans on temporary forbearance (which sadly wiped out all progress we had made thus far). My daughter had hit the difficult teenage years, and no matter how much we made, it could never be enough to acquire all the things she was certain she needed (and that every other person she knew already had). Additionally, I felt bad downgrading her too much from what she had become used to at that point, given that the second move was hard enough on her, and certainly not what she had wanted or expected. In all honesty, we had a bit of a hard time adjusting to all of that ourselves actually, and though our rent was much cheaper than it had been out west, it was still much more expensive that what we probably should have taken on. But we felt we needed to step into our new cost of living situation gradually, so as not to give up everything we'd had all at once.

Now that we were back in the much more affordable and homey midwest, we finally felt able to settle down and begin working towards our future together. We got officially engaged and started looking into homes and saving for a down payment. I settled in to my new work routine and despite how much tighter things were, we managed to put away at least $700/month during most of that first year. And though I feel our wedding was perfect, it was a small, elegant but inexpensive, at home affair that did not set us back too much more. Can't say the same for my amazing ring though. (I made it clear there was no way we were spending less than he spent on his ex and I still do not regret that!) We also had a short, but sweet honeymoon that added a little more. And within two months of all that shenanigans, we dropped all our saving and then some into our new house.

Despite putting a little more on the cards to get all settled in, I think our house was a good purchase. A huge step down from what we'd had out west, and more than $1000 per month less than our rent had been even after moving back to the midwest. But a respectable, comfortable, suburban home in a good neighborhood none the less, with a payment we could afford. We bought it at what was the market low (at that point) and with a great fixed interest rate, and it has plenty of room for a family. Therefore, we immediately jumped into the next stage of our long term life plan - babies! And what with that first "Holy Shit" ultrasound, and the later preterm birth that twins tend to bring, less than 12 mos after we said "I do" we had two of them! Not to mention a lot of unexpected time off from work (and savings) on my part due to bed rest.

Somewhere in all of that, there was also a long distance wedding trip, a number of car issues and more than one or two home owner issues as well. We did not have an emergency fund yet at that point, so anything extra was a problem. Plus, my daughter had turned 16 and began driving, and no matter how crappy a car you give them, the insurance still sucks. Its no secret that kids tend to be the most expensive at the bookends of your 18 years with them, and unfortunately we had some on each end. I had to keep my work hours while I was breastfeeding (and not sleeping) to less than half of what they had been pre-baby. We started getting a grocery delivery service rather than shopping ourselves, despite the extra expense, cause we couldn't figure out how to manage life without hating each other otherwise. And as thankful as we were for hubby's work from home job that came with us on our big move, it was far from competitive in pay (though excellent in health coverage thank goodness), and yet we just didn't feel like we could manage him finding something out of the home until we got closer to the boys first birthday.

Lest I mislead you, there were some toys in there too. We got a new flat screen tv, and we had cable, netflix and audible subscriptions. We both got iPhone 3's when the 4's came out and have since upgraded. We got a new laptop when the old one died. We ate out a couple times a week at least. We took a couple modest vacations. We purchased memberships to the zoo and museum. We weren't partying, but we weren't suffering.

None the less, fast forward to about 18 mos. later and we have finally begun to catch our breath again. Hubby did find a new job outside the home that pays much better (though that required me to cut my hours even more initially, and necessitated another car purchase). We stopped hemorrhaging expenses and started simply treading water instead. I think its been over a year since we even used a credit card,which means we have mostly gotten the hang of living within our means (pre-child support loss at least!). And we did finally get an emergency fund going. But its been pretty clear that we haven't made much of any real progress towards wiping out the debt we accumulated either. And as we slowly inch towards the end of our 30's, it is clear that the time to start planning for our financial future is now. Like, so right now, its yesterday.

So that's how we got here. Nothing completely stupid I don't think (well, maybe the ring. But since I'd do that one again, I don't think it counts), though lots of things we could have done a bit better. And today, on this Thanksgiving Day 2012, I am thankful that hubby and I have both the means and dedication to tackle this massive financial overhaul, so that our future can be a bright one.

Mid-month Checkup

December 13th, 2012 at 07:24 pm

(Another old one from Nov)

We're half way though November and so I figured it'd be a good time to check in and see how on track we are. We're doing okay. The highlights:

Shopping: $454/$500
Entertainment: $109/$300
Groceries+ (includes misc things too): $626/$1200

While not included in the total above, we just finished grocery shopping for the week of Thanksgiving and still managed to keep the weekly total within $200 (no big box warehouse visit this week) so that's a good sign! I eventually want to lower the grocery budget a bit, but next month just happens to be another month with 5 grocery days instead of 4, plus Xmas, so I don't think it will be happening that month. Jan. for sure though!

Our shopping budget looks a little sad but it should be clarified that about $120 of that is for the Apple tv and antennae that have allowed us to cancel our cable service as of last Thurs. (Woo hoo!) Still a splurge, but one that will pay for itself within two month. Also, another $214 of it was from hubby's new iPhone 5 splurge, which he got $98 back for by selling his old phone. Though only as an amazon credit so we'll be using that for Xmas rather than credit cards.

The only number of here that really irks me is the entertainment budget. Despite that being the only flexible category we're not over in. What irks me is that hubby and I are each supposed to get $100/month individually do do with as well will ($20/wk), plus another $100 for joint splurges. Its half way though the month so that should be about $50 each individually at this point. Looking over the transactions though, I would say about $8 of that is mine, maybe $30 is joint and the rest is his. And that's just the things that weren't paid with by cash. And I wouldn't say this is atypical. I minded less when we weren't being so serious about this. But despite how pissy he gets sometimes about lack of funds, clearly I am sacrificing more here than he is.

Regardless, these next two months are going to be a lot of sacrifice for both of us. I have only 1 1/2 child support back pay checks left! That is about $500 less a month we are going to have to adjust to during a period when my home business is making about $500 less per month than usual as well. I have one big job that often comes in just before Xmas which I am anxiously waiting to hear on next week. If that doesn't come through though, Xmas is going to be rough this year and we may not be getting new tires for the SUV after all. I may even get a second part-time job soon. Just not sure how to meet the Dec/Jan gap otherwise. Gonna be a rough couple months until the tax return comes in, but we are not giving up!

The Big Picture

December 13th, 2012 at 04:00 am

This may be simply an exercise in idealistic dreaming, but I want to paint for you (or maybe mostly just me) a picture of how I see this new financial plan unfolding for us in the coming years. Cause I have big, unrealized but hopefully not unrealistic, dreams. In Dave Ramsey's book, he tells you that it takes most people about seven years to reach Baby Step 7: Build Wealth. Longer still to get to the Pinnacle Point where your money finally starts working harder than you have to. Certainly, that is the long term goal. And the short term goal is the credit card/car payment debt payoff I've already outlined. But it'd be nice to have a picture of our mid-term plan as well. Especially given that I don't think we will be following the Baby Steps precisely.

So, one year out, give or take a few months, and hopefully our small debts (non-mortgage/student loan) will be paid off. At that point we will hopefully be more used to getting by with a lot less monthly discretionary income. Maybe we can at least add enough back in to be able to go on monthly date nights again though. But I don't want to get too slack because we still have a lot or work to do. Baby Step 3 is to Finish the Emergency Fund, which he defines as 3-6 mos. worth of expenses. For us, that would roughly be $15K-$30K.

Projecting out both raises and expenses, once we get our small debts paid off, I think we could save roughly $25K/yr. So, that should take us 7-14 mos. depending on how much cushion we want. My thought is that we should save as much as possible, setting aside the minimum $15K to touch only for emergencies, but then factor in the fact that our family SUV will be 15 years old (already has 223K miles) by then. I am fine with driving it until it dies, but its pretty much a given that that is going to be before too much longer (please, please, please not this year!). I am also fine with not getting a new car when it does die. But I would prefer to get something gently used with at least a few more bells and whistles than our current one has. I think we could probably get something 5-6 years old for between $15-$20K.

That's not the only big ticket item we need to save for though. In a few more years, the boys will be ready to start school and I will be more than ready to jump back on the career train. But that is probably going to require a bit of retraining on my part, and I am not willing to take out any more student loans. (Above and beyond the $105K I already put my foot down on of course). So, if I want to go back, which I very much do right now, we will need to save for that too. I am conservatively estimating about $20K for that right now, plus after school daycare (maybe $5K? Though that will be more of an on-going expense), but given the rising cost of education these days, who knows?

The point of all this speculating is to point out that with these extra purchases, the time it takes up to save about $30K for an emergency fund is going to be more like 2-3/4 to 3 years rather than 14 mos. That's a long time. And who knows how many set backs there might be in the meantime. At some point, hubby's car will need to be replaced as well, though it is 5 years newer than the SUV at least. But I guess I'm okay with it as long as we get to Baby Step 4: Retirement Investing, by the time I re-graduate, which I am predicting will be in 5-6 years. If we get to that step before I graduate, then I guess we will start putting at least the company matching amount into hubby's 401K. Actually, if we don't get to that step before 40, we probably should do a lot more than that, and I kind of doubt we will. Once I do graduate and start working again though, we are going to kick step 4's butt.

And then we get to Baby Step 5: College Funding for the kids. Except we're going to re-package that one as college payoff for the adults. By then my daughter will be done with college (or darn well better be at least). Until we get fabulously wealthy, I have done the best I can for her by insisting that she go to a school where she would graduate with a maximum of $40K in debt. Still a lot I know, but less than half as much than me, and within the amount considered reasonable by the income to debt calculators. She hated me for it at the time, but now seems mostly happy.

I am hoping that with a new masters degree I will be able to make at least $50K, although about half of that will probably have to go towards retirement, and the rest will get taxed. But lets just say that after stocking up our emergency fund, we have about $25K/yr extra from hubby's income and $25K/yr from mine. So $50K/yr extra after I start working to do with what we will. (OMG, is that really possible?) What to do with all that cash?? Pay off my damn student loans!! If we stick to the plan, that should take us only two more years. At that point, we can look into some minimal investing for the boys' college (and maybe some back pay for my daughter). But they are going to be expected to chip in as well because we are heading off to...

...Baby Step 6: Pay Off the Mortgage! Honestly, not quite sure what's going to happen when we get to this step because you see, before we focus on paying off the mortgage, we'd like to focus instead of getting the house we'd really like to have. The exciting thing is, once the student loan is paid off, we could afford about $600 more per month for a mortgage without changing anything else. Assuming the market continues to improve, we should also have a fair amount of equity at this point, having lived here for about 11 years. I am not sure yet whether we would rather buy or remodel. It will probably depend a lot on the location of our jobs at that point. There are some things I really like about both this home and this area, but our home was built in the 1960's and it really needs some updating. I think it would take between $175K-$200K to get it to where we want it, and only about 60% of that could be recouped in re-sale value. Whether or not that's worth it will depend largely on what we could get for the same value given the housing market at the time.

I also really like Dave Ramsey's idea of taking out only a 15 year mortgage and keeping your mortgage payment to less than 25% of your take home pay. Whether we decide to buy or remodel, I do very much want to keep those rules in mind. After all our hard work, I certainly do not want to end up house poor. It will be hard to feel like we can't afford just about whatever we want once we've taken care of all that other debt. And I do love big, pretty homes. Nonetheless, regardless of what we choose to do, at that point it should be a maximum of 15 years until we are entirely debt free, and if we continue with the $50K/yr rule, I think we could take that down to 6 years.

Which means this is more like a 14 year than a 7 years plan for us, but by the time we enter our 50's, it is very possible we will have no debt remaining (maybe we'll bump up the boys college fund at that point) and hopefully by the time we hit our 60's we will have reached that fabled Pinnacle Point which will leave us set for a long, happy retirement. Its certainly not a get rich quick scheme. which makes it seem somewhat more believable. Though it will certainly require a lot of dedication and sacrifice. But it seems like by the time the boys graduate from high school, we will finally have both the time AND money to do all sorts of things.

So that's the big picture. And now back to Baby Step 2.

Grocery Day

December 13th, 2012 at 03:59 am

It is sad, but I was actually having trouble sleeping last night due to worrying about grocery day today. I feel doomed to over spending failure. I did finally manage to go one week last week without visiting our discount warehouse store for supplies. (You know, that big box store that's supposed to be saving us money, but so far seems to be costing us more instead due to the bulk amounts.) But it seems like that just means there will be twice as much this week instead, so I'm not that impressed with myself anymore.

Other than our mortgage, groceries is our single biggest monthly expense (followed by my student loan), and I really feel that getting control of our finances is going to require some soul searching in this area. Looking over warehouse store list (20 items!), I would say that close to half these items are things that are going to last us for quite a long time, so perhaps it is once again that we are just still in the bulk up phase. We've been in this phase for a month and a half now then though. And we really need to be out of it by next month because I am projecting Dec and Jan to both be particularly tight. And then I look at the news and see things about food cost increases due to the drought this past summer, and fiscal cliff payroll tax increases, and I just want to scream a throw things. A little help please??

My husband is not much emotional support this week either as he seem to be struggling with it worse than me. I think it is mostly brought on by his job kind of sucking right now. But he got really annoyed the other day when I said he'd need to wait until pay day to get another new charger cord for his new iPhone (of course the old ones are no longer compatible) because we used up all of last paycheck's discretionary budget getting the phone itself. He got annoyed and said that it sucks to work hard all day at a job he doesn't like to make all this money, and yet still not have $20 for a phone cord at the end of the day if he wants one. To which I was like, well we do have enough, if you want to prioritize that over credit card debt, but we can't do both. He grumbled and went downstairs and was moody for the rest of the night even though he said he did think we were doing the right thing.

My thoughts from upstairs were along the lines of, "Come on. You got an iPhone 5 this month. I got an iPhone 4. That's certainly not nothing. And you only need to wait 1 extra day!" He's not normally that whiny (though money issues does seem to be one of his buttons) so I think it's mostly work. And I think it's more generally the idea of not having enough money period that bothers him a lot more than the phone cord specifically. None the less, its hard to feel like a motivated, goal in site, on the ball team when faced with tirades like that. Also had to explain to him this week that planning a meal with beef instead of chicken because that's what we still have in the freezer doesn't actually save us money if we still have either chicken or beef every time in roughly the same ratios. To actually save money, we have to use less meat. He is a smart man. I'm not sure why that was hard for him to hear.

I, personally, have still been feeling quite motivated and very happy that we are working on this. I just wish it were not so mind numbingly slow! I've seen a number of blogs that mention the idea of "snow flaking" your way through your debt snowball. That is, finding lots of small ways to contribute regularly to the total sum. I think I need to look into more ways to do that, because I really need to find more chances to celebrate in what will undoubtedly be a long and somewhat frustrating year. I also need to get more comfortable with throwing this extra money immediately towards debt instead of holding on to it "in case", because it always gets spent that way. For instance, I realized out of the blue the other day that our bank check cards have been racking up points in one of those rewards programs for months (if not years) now. Turned out we had a little over $100 in cash back savings. Half of that went directly towards a credit card, but half of it got used for things like diapers and wipes this week due to funds being low after the phones. Should have just sent it in.

As long as we truly stick to our budget, that extra should still be there at the end of the month to pay then. But we all know what often happens with things like that. And it was mailing in the buffer at the end of last month that caused us to be too short for the phone cord this week, and just look how my husband reacted. Its hard to not want to keep some on hand to avoid situations like that. I think perhaps we need to have a discussion about keeping our state of mind in the right place for each other during this "small account buffer" period of our finances. I know it makes him uneasy, which in turn makes me uneasy, but this is how it's going to be for the next few month if we are going to make any real progress. We need to be each other's cheerleaders more often. We are doing something awesome and very worthwhile!

I wish my next money goal could be getting our grocery bill under a certain amount, but to be honest, until we get done with these initial bulk purchases (maybe this week?) I just don't think I can budget as well as I would like for that yet. One thing I am finally going to bite the bullet on though: a "best" price spreadsheet for groceries. We have up to 5 different stores we get things from at this point (though only 3 main ones) and trying to keep track of which place is best for which thing is driving me crazy, especially when sales come up. Granted, the idea of being the kind of crazy, price checking, coupon clipping, store hopping lady who has a list like that also makes me cringe. But as mentioned before, groceries is really the number one things we need to get a handle on in this house. Something must be done.

I already have two items I'm going to price check at two places before I purchase this week. As well as two coupons I printed and then discarded when I discovered the store brand is cheaper anyway. I did totally fall for a $5 store card with diaper purchase, only to realize as I was getting in my car that they had just marked up their regular diaper price by $5 (Bastards!). Actually, I think that was the very moment I finally accepted that I needed to make this spreadsheet. To redeem myself, I made sure to cut up and freeze the two extra bananas I didn't use after all this week, so that I can use them next week instead. To me, these are the true Baby Steps of Dave Ramsey's process right now. Because the distance between this Baby Step and the next one in the Total Money Makeover book feels more like an Olympic hurdle to me right now. But I am slowly finding small victories in this stage, and there are many milestones yet to come.

(Number) Crunch Time!

December 13th, 2012 at 03:48 am

(From Nov.)

Its the first on the new month! Time to tally up last month and see how far we got! It didn't all go as stellar as I had hoped. But the most important number of everything I can tell you is this: $434.55. We paid $434.55 more this month towards our debt than we would have before we started this money makeover. That is not to say that is all we paid. We actually sent in a total of $935.79 including our minimum payments. Which means we now stand at a total credit card/car debt of $23,725.13.

I'm not gonna pretend that's awesome. But its certainly better. Especially when you consider that, just as I feared, we were hit with a double whammy this month in terms of car issues. Every time something acts up we seem to leave the repair shop down another $350. This month that happened twice, though the second time was a doosey - about $520. This last year we put away some extra money into our emergency fund to use when things like this came up. But being three quarters through the year at this point, we have already burned through most of it. Plus, I wanted to follow Dave Ramsey's advice of not keeping more than $1000 on hand so as to help light a fire under your debt motivation butt. Thus, $159.91 of the extra we paid off this month came from throwing in our "excess" savings.

Additionally, Ramsey makes the point that regular car maintenance and repairs are not really emergencies usually, but rather something you should be budgeting for. Given that out newest car is 8 years old, I'd have to agree with that to some extent. Twice in one month is a bit ridiculous (though it was only once for each car) but Quicken tells me that we spent $2453.88 last year on car repairs/maintenance and we're never really all that surprised when we need to bring in a car for some reason. I think it was a little higher last year given that my daughter's car was at the end of its life and luckily we no longer have that vehicle. Still, I decided that its something we should probably start budgeting for instead of always dipping in to the emergency fund. So I added a line item for it in our budget, which is unfortunately going to push off our debt end date by at least a month. Better to know about it now that be dejected by it later I suppose. And motivation for being able to get newer cars at the other end of all this!

Another thing that makes me feel not too bad about all this is that my Excel spreadsheet shows we actually brought in negative money this month. That's right, we actually had about $1300 less than we needed to cover all our expenses this month, and yet we still managed to reduce our credit card/car debt by 3.8%. Quicken also tells me that on average, we have spent about $1500/month on misc expenses and another $325/month on entertainment expenses this past year. This month though, we cut our misc expenses down to $471 and our entertainment down to $267. That's a 60% reduction, and I feel like it means we are serious about this, despite some hesitations.

It makes me realize as well that though the $1300 short fall probably would have happened no matter what, in previous times we would have just wondered what happened. Not being aware, we certainly would have dug ourselves in even further and made no additional debt progress what so ever. We may have even had to break out a credit card for that second car repair, thus again wiping out a considerable portion of what we paid off in the year leading up to this. Instead, I feel very aware now of just where our money is going and how it tends to get away from us. And we avoided more debt.

Our other biggest expense this month was groceries: a whopping $1700 got spent this way which was even more than the absurdly high $1250 I had initially budgeted for it. I think this will absolutely be lower next month. For one thing, there are only 4 grocery days instead of 5 next month. For another, I am getting better at finding less expensive substitutions and planning some things around what we already have. But mostly, I think we have already stocked up on just about everything possible from the discount wholesale store we have started doing half our grocery shopping at. We started shopping there at the beginning of Oct and it has taken longer than I thought it would to make the switch over. Each time you buy something in bulk, you save on the cost per unit, but you spend even more initially on the cost over all, since you're buying 4 times more. That added up a lot more than I realized it would.

If my home business continues to be sluggish, these next few months until Feb. are going to be hard. Especially come Dec. when my back child support finally ends (though Dec tends to be a good month for my business). That's about $500/month we are going to have to learn to do without. But come Feb, we should get a nice tax return. Then in March my husband's bonus will come, and if all goes as expected, in Apr. he should be getting a nice promotion, which will permanently make up the child support difference. Our goal at this point is still to be done with this step by the end of 2013. And then on to baby step 3!

Realism or Another Cop-out?

December 13th, 2012 at 03:38 am

(Another old one from Oct. that's a little out of date...)

I've been having a hard time finding the motivation to write again given the major Fail I feel like our money makeover ran into this week. It started out with good intentions. I wanted to feel more certain about Pulling the Trigger on our debt and making a big initial payment from my preliminary budget excess estimate. So I finally put it all down in a spreadsheet for the next year. All our fixed expenses, all our non-discretionary non-fixed expenses, and all the little extras we're still learning to trim. And I compared that with both our fixed and estimated sources of income. I've been doing this with Quicken for years actually, but somehow it looks different in Excel. Or at least, in this case, it looks much smaller. The excess that is. All I know is that somehow the $2000 I found before dissipated into only about $250. WTF?

Am I just that bad at this? I thought I was pretty good with math and estimating/projecting? Why do Quicken and Excel say such different things? The best I can come up with, (other than user error which I have repeatedly checked for) is that it has something to do with me doing month by month totals in Excel, whereas in Quicken its kind of a running average. For instance, the 30 day low balance projection in Quicken isn't much affected by the fact that grocery day will just happen to occur 5 time in Oct rather than 4 as usual. And the fact that some months get 2 paychecks, but a few months get 3 paychecks is sort of averaged out. In my spreadsheet though, each column gets only exactly what that month has (or doesn't) and so some months look much better than average, and others look much worse.

There's also a few things I realize now that I hadn't really included in Quicken. The new car tires we need before this winter. Xmas. The fact that, for whatever reason, my home business is totally sucking compared to normal right now. Basically all the things that tend to fluctuate a lot. I tend to use more average amounts in Quicken, but I wanted my spreadsheet to reflect the worst case scenario so that I would know what we could afford "no matter what". Be careful what you ask for.

Unfortunately, in terms of debt reducing motivation, these first few months seem kind of stacked against us. This month and Jan. look to be especially dismal, and Nov. and Dec. won't be much better. Feb and the spring should kick butt though, if we don't lose steam by then. Ugh. How to get this debt snow ball rolling? And not lose more traction in the meantime? The Total Money Makeover book answer is to start selling stuff. I repeat, Ugh. What if we're just...not that type? Lame, I know. Do I really want this or not? And if so, what am I willing to do for it? I'm still trying to answer that.

Hubby and I actually have talked a little about some things we could sell. Unfortunately, most of it would sell much better in the spring than now, but there are a few possibilities. I should stop sulking and start pricing. Sigh. Did I mention how little free time I have as it is, with two year old twin boys? This is seriously not how I want to be spending my time. There's a lot of things I don't like about the early part of this process though. Obviously, this isn't the fun part. The fun part is coming. Its just a few years out yet.

I need to keep the faith. I need to trust that this CAN happen for us. I need to believe that a stable, healthy and exciting financial future is a true possibility - no, Reality, for us. It's starting small. Very small. But it will get BIG. And it is going to start with this goal: No matter what else comes up this month, or how the numbers seem to change, I am going to pay at least $250 extra (above the $500 minimum we are required to pay already) towards our credit card debt by the end of this month. Hold me to it!

Pulling the Trigger on Debt

December 13th, 2012 at 03:30 am

(Another old one...)

This is the very first month of our Total Money Makeover. The very first time I have created a zero dollar budget, and I have to admit I was pleasantly surprised to find out how much wiggle room we have right now, even on the tighter months for my home business. There have certainly been times in my earlier life when there just wasn't enough, period, regardless of how well you spent it. And so to be where I am now, I am very grateful. It also makes me a little disgusted with myself. Laying it all out on paper makes it pretty hard to deny that this is something we could have been making headway on for a while now. We've been pretty good for two years or so about not digging ourselves in any deeper. But we haven't made any real progress on filling the hole. That gaping $327,000 hole I mentioned previously.

When I calculate it all out, even allowing for about $400 of discretionary "fun money", this month we have about $680 extra we could throw towards debt. And actually, given that we used to try to keep a $1000 buffer in our main checking account, we probably have another $700 I could throw towards it if we can handle living more dangerously. This year we even managed to scrape together an emergency fund from our tax return that has lasted us for most of the year. It originally had about $4000 in it, though we are now down to about $1160, with quite a few months to go before refilling. Dave Ramsey says that for "gazelle intensity" we only "need" $1000 though, so that's another $160 I could throw in. And this is in addition to the minimum payment total of about $486/month we make to our credit cards and car loan debts anyways.

I should be elated here. Despite feeling like there is never enough, Dave Ramsey and our zero dollar budget have revealed to us that we actually have about $2025 available this month to throw at our $26,000 credit card/car loan debt problem. We could be down to less than $24,000 in our first month! And I do know just where I will mail it (figuratively speaking with online banking that is) when it comes time. But I feel something much closer to trepidation than elation. What happens when I mail in this check, and a week later our refrigerator dies (not unlikely) or our car breaks down? Okay yes, we would still have a $1000 emergency fund and that would probably cover it. But what if something happens the next month again before we have a chance to replenish it?

I'll tell you exactly what happens, because its happened before. Last Oct./Nov with a flooding issue to be exact. And what happened was that all the hard work of the previous month's extra payments towards credit cards were erased when we had to dig them out again to cover the $1000 insurance deductible, non-covered repairs and appliance replacements. It was incredibly disheartening and it really brought our efforts to a halt for a few months while our bruised egos recovered. I was elated though, when we actually managed to put away quite a bit more than usual the following spring for the next year's "emergencies". And although our emergency fund has now depleted down to barely more than $1000, it has come in handy many a time. Both for car/house issues, as well as the times our budget got away from us a bit due to unplanned circumstances, or yes, an occasional bout of frivolity.

My point is not that we always spent our emergency fund completely wisely. My point is that it was always there when we needed it, and it buffered us from a lot of the financial ups and downs previous years have brought, especially with part of our income being from my self-employment. My point is that is was a major source of financial peace to me this past year. I understand that part of the point of keeping only $1000 on hand is to light a fire under your ass so that you take care of your debt as soon as possible. But I have seen plenty of other years in my life when having only $1000 (or far less) in savings simply got us into more debt, not less. Life is not going to hold up a giant umbrella for us while we work through this. How do I trust that it is safe to write this check?

I will attempt to answer my own question, though I welcome any suggestions from anyone else who might happen upon this as well. I think what is most different about it this time is that out zero dollar budget has shown that, at least for now, even during tight months with my business, our income is still more than our non-discretionary expenses. It may seem like there is never enough money, but there is. We just overspend sometimes when things are good and then have to catch up, so it doesn't feel that way. To help curb this bad habit of ours, we have opened a second checking account that we are using for discretionary expenses and transferring only as much money into it as we allotted to ourselves. Ultimately, we alone are in charge of whether or not we use our money only in the way we have assigned it. We will have to be honest with ourselves about whether or not the activation fees for our new iPhone contracts are going to make it hard to buy diapers when we need them. We are going to have to adjust to a lot less fun money. But the numbers don't lie. The money is there. We just need to spend it correctly.

Another Family Debt Blog

December 13th, 2012 at 03:21 am

(Can't decide if I will move all of these entries over or not, some are out of date now, but I figured I'd try to get at least the ones with the background info.)

I’m not a big 12 step follower or anything. But I do believe that two very important steps for beginning a major life change, of most any sort, are acceptance and admission. You need to truly accept that there is a problem with something in your life. No more excuses, no more minimizing. And then, to fully define what the problem is, you need an open admission of your mistakes and current status. To that end..."Hi. My name is Anne, and I have a problem with Debt."

To be fair, my husband and I have known and admitted this for years. And we are not the type to drive around in a fancy new car we're leasing while uncertain how we're going to pay our credit cards this month. Actually, our newest car is 8 years old. And we always have enough on hand to pay our bills (which according to all the political talk you hear lately means we are somehow better off than 2/3 of Americans?!?). But that is not to say we don't have our frivolities. We have a gym membership, grocery delivery and a lawn service. My husband has weaseled his way into getting an iPhone 5 soon, though I will be settling for the 4 (I only have a 3 right now!). We have a 36" flat screen TV and a new laptop. We're not suffering. We're just not winning any achievement awards either. We are very effectively treading water, as we have been for many years.

The description I just gave creates the same moderately dismal view of debt that I think a lot of Americans have. Kind of a necessary evil in which you "do the best you can", trying to make some responsible headway while still allowing yourself some enjoyment of "the good things in life". And I think it is this minimizing, moderate view that has kept my husband and I in this situation for much longer than we have really needed to be here. We're smart people. We make a decent income. We should not be here. And so, like so many debt slashers before me, I have have just finished Dave Ramsey's "Total Money Makeover" book, and I am now in the mood to take a much more extreme (i.e. honest) stance about our current situation. (I know some people here are not big fans of his, totally okay. I have my qualms too. But he's working well to motivate us right now.)

Let's just start with a number. $327,758. As of Oct. 1, 2012, that is where our total debt stands. About 60% of this belongs to our mortgage. Another 32% to my student loans. (Boo!) The remaining 8% is a combination of credit cards and car loan. Keep in mind that 8% of $327,758 is over $26,000. Keep in mind also that although we may not be suffering, this total number is still more than three times our combined yearly income. Ugh. To top it all off, we're in our mid 30's and have not a dime saved for retirement or college for our boys, and we will probably end up co-signing on $40,000 in student loans by the time my daughter graduates from college (though hopefully that will be her problem, not mine). We are in deep s**t folks.

Despite our seeming record to the contrary, I am actually a big believer in Ramsey's assertion that debt of just about any sort is just no good. That we have all bought into a lie that serves the lenders rather than ourselves. And that mostly, the only excuse for using credit cards is poor planning and difficulty with impulse control. Ouch. We suck. I have lots of good excuses for our credit card debt that I have pulled out in the past to soothe these sharp criticisms. And I will say at least that my husband and I are generally not people who use credit cards for shiny new toys or entertainment much less basics like groceries and clothes. Mostly, these were one time or unplanned emergency expenses (that being said, I can think of at least one exception to pretty much each one of those things I just mentioned.) None the less, even the unplanned things were mostly due to not saving for an emergency fund the way we should have to begin with. There was some impulsiveness in there as well for sure. (And a very shiny toy indeed in the form of a ring that now sits upon my wedding finger.)

I want to be completely, un-sugar-coated honest about this because I am [i]tired[/] of being in credit card debt. I am tired of wondering what on earth we would do if one of our cars died. I am tired of feeling trapped in my home by having no home equity. I am tired of feeling too daunted by my student loans to even begin handling my retirement. And I am sick to death of feeling like this will be the year we're finally going to start getting ahead a little, only to somehow have all the extra trickle away again with no lasting effect on the bottom line. I am ready to get serious about this. I am ready to start making some sacrifices. I am not sure about "gazelle intensity" (maybe just cause I really hate that phrase?) but I am willing to begin exploring options I haven't been willing to consider before.

But I need something to keep me motivated. And I need a way to work out the serious anxiety I am feeling about all this. And a place to put down some of the things I learn and maybe even help someone else in the process. Thus, I started a blog! Smile