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? I thought I was ready to make some sacrifices. Did I go too easy on us? And 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 specific 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 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. Not to mention all the things I don't even know about yet. 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 we could afford that much "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. Its 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!
Tuesday, October 23, 2012
Wednesday, October 17, 2012
Pulling the Trigger on Debt
I've been scouring the internet lately for blogs on normal families like mine trying to get out of debt (wow, did I just say I have a "normal" family? Now that's news.) And I can't quite find what I'm looking for (though perhaps someone can make a friendly comment suggestion?) which I guess is part of why I've decided to write about our debt experience. Now obviously, there are a ton of get-out-of-debt blogs out there, many of which seem quite good for the audience they're aiming for. One of which that comes close to what I'm looking for is PaidTwice. Another mom with an unused PhD (and lots of student loans to prove it), discussing both the practical and emotional issues of dealing with debt. My main problem with this blog is simply that its not current. As of 12/20/10 they succeeded in their goal of becoming debt free. And that is Awesome. I want to be them someday! But for now, I am at a very different place in this journey. And I'm looking for blogs about people in the same boat.
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 for that 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 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 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 insurance deductible 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 years "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 is completely wisely. My point is that it was always there when we needed it, and 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 only 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 this time is that out zero dollar budget has revealed to us 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.
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 for that 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 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 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 insurance deductible 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 years "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 is completely wisely. My point is that it was always there when we needed it, and 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 only 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 this time is that out zero dollar budget has revealed to us 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.
Tuesday, October 16, 2012
Another Family Debt Blog
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."
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. And since, like so many debt slashers before me, I have have just finished Dave Ramsey's "Total Money Makeover" book, I am now in the mood to take a much more extreme (i.e. honest) stance about our current situation.
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 have not a dime saved for retirement or college for our boys, and we will probably end up co-signing on $30,000 in student loans by the time my daughter graduates from college (though hopefully that will be her problem, not mine). We are in deep shit folks. I mentioned we're 30 something, right? And let's just say that we're closer to the later end of that then the beginning.
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 honest about this because I am 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 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! :)
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. And since, like so many debt slashers before me, I have have just finished Dave Ramsey's "Total Money Makeover" book, I am now in the mood to take a much more extreme (i.e. honest) stance about our current situation.
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 have not a dime saved for retirement or college for our boys, and we will probably end up co-signing on $30,000 in student loans by the time my daughter graduates from college (though hopefully that will be her problem, not mine). We are in deep shit folks. I mentioned we're 30 something, right? And let's just say that we're closer to the later end of that then the beginning.
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 honest about this because I am 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 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! :)
What Am I Doing Here Anyways?
I have been toying with the idea of starting an anonymous blog for a very long time. Journaling has always been a catharsis for me. But I know that it is often even more powerful when honest thought and emotion can be seen and/or heard instead. And I know that this catharsis is most pronounced with done with as much openness and honesty as possible. Thus, it is absolutely necessary that this blog be completely anonymous. In fact, I am not even going to tell my husband...
I feel a little bad about that. I do not generally keep things from him. And I have, at least, told him in the past that I have always thought about doing something like this. I don't think he would be shocked if he found out I was. But I certainly don't think he would want anyone to know personal things about him, or us, anymore than I would. And I want to be able to write about us when I need to, and to say what I really think and feel. Certainly you will know all sorts of personal things about me if you chose to read this blog (though how anyone will ever find it, I have no idea) but you won't actually know its me. Even if we met in person. And that's what I feel like I need here.
So who am I anyway? What can I tell you that reveals me internally but not externally? Well, to start with, I am a thirty something stay at home mom of three. I was a young mom for my oldest daughter, married fresh out of high school. And now I am a somewhat older and remarried mom for my twin toddler boys. I have a PhD in a physical science that now sits on the shelf, and only wispy dreams about what I will do next career-wise. I have a husband I have been with over 7 years now, and a marriage that feels solid, if not always exciting. I love reading, cooking, gardening, music and above all, learning. I spend a lot of my energy raising kids, exercising, cooking and lately, trying to figure out how to conquer debt (more on that later). I dislike cleaning, superficial chatter and cola beverages. I tend to get pissy about perceived chore unfairness and I waste far too much time on my iPhone. I am spiritual but not religious. I am a self described social liberal but fiscal moderate (not sure others would agree). I am concerned about the environment, the obesity epidemic, Iran getting nukes, retirement, whether my daughter and I will ever get along again, and the number of mint M&M's I have consumed this week. I may talk from time to time about any or all of those things.
I have no idea yet how often I will post, whether this will really become something, or whether it will putter out in a few weeks. I'm not sure I will ever have any followers, nor how many I would want, nor who would be interested in my ramblings. But I feel the need to be here none the less. To throw my truths out into the wider world and see what happens. And this is where I begin.
I feel a little bad about that. I do not generally keep things from him. And I have, at least, told him in the past that I have always thought about doing something like this. I don't think he would be shocked if he found out I was. But I certainly don't think he would want anyone to know personal things about him, or us, anymore than I would. And I want to be able to write about us when I need to, and to say what I really think and feel. Certainly you will know all sorts of personal things about me if you chose to read this blog (though how anyone will ever find it, I have no idea) but you won't actually know its me. Even if we met in person. And that's what I feel like I need here.
So who am I anyway? What can I tell you that reveals me internally but not externally? Well, to start with, I am a thirty something stay at home mom of three. I was a young mom for my oldest daughter, married fresh out of high school. And now I am a somewhat older and remarried mom for my twin toddler boys. I have a PhD in a physical science that now sits on the shelf, and only wispy dreams about what I will do next career-wise. I have a husband I have been with over 7 years now, and a marriage that feels solid, if not always exciting. I love reading, cooking, gardening, music and above all, learning. I spend a lot of my energy raising kids, exercising, cooking and lately, trying to figure out how to conquer debt (more on that later). I dislike cleaning, superficial chatter and cola beverages. I tend to get pissy about perceived chore unfairness and I waste far too much time on my iPhone. I am spiritual but not religious. I am a self described social liberal but fiscal moderate (not sure others would agree). I am concerned about the environment, the obesity epidemic, Iran getting nukes, retirement, whether my daughter and I will ever get along again, and the number of mint M&M's I have consumed this week. I may talk from time to time about any or all of those things.
I have no idea yet how often I will post, whether this will really become something, or whether it will putter out in a few weeks. I'm not sure I will ever have any followers, nor how many I would want, nor who would be interested in my ramblings. But I feel the need to be here none the less. To throw my truths out into the wider world and see what happens. And this is where I begin.
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