The December Budget

I haven't posted an actual numbers budget here yet, but I figure given how careful we will need to be these next few months, December is a good time to start. Explanations to follow. Here goes:

Income: Hubby's Job (after tax): $5313 Hubby's Hobby Income: $220 My "Job": $120 Child Support Back-pay: $106 Total Income: $5759 Expenses: Mortgage/Insurance: $1509 Auto Insurance: $73 Credit Card 1: $60 Student Loan: $619 Mozy: $10 Credit Card 2: $42 Gym Membership: $102 Credit Card 3: $119 Auto Loan: $198 Credit Card 4: $78 City Utilities: $82 Cell Phone Service: $151 Natural Gas: $90 Electric: $170 Garbage: $59 Groceries: $1250 Gasoline: $320 Leaf Removal Service: $150 Misc: $500 Entertainment: $250 Christmas: $600 Total Expenses: $6532 Difference: -$773

Okay, so before my non-existent audience jumps down my neck about a few items on there, allow me to explain myself. First of all, our gym membership. A bit costly, I agree, and that is certainly one of those things they always recommend canceling at the beginning of any big get out of debt plan. But the assumption is usually that you're not using it enough for it to be worth it. And nothing could be farther from the truth in our case. You see, our gym provides 2 free hours of child care per day for stay at home mommies like me to take advantage of and not go crazy. Either my husband or I, and not uncommonly both, take a trip to the gym pretty much Every Single Day. No, I am not exaggerating, and we have both been doing this for over a year now so I'm pretty sure its not a phase. Additionally, since we started going to the gym, we have lost a combined total of over 100 pounds. This has brought both our BMIs into the healthy range and allows us to get a $1200/yr reduction in our health insurance premium costs. And guess what? That pays for the gym. So I think that's a valid expense.

The leaf removal service. Well, all I can say in defense is that my husband spent just about every moment of his weekend free time for a month last year trying to take care of this on his own, and we still did a completely half ass job. With two small boys who cannot be kept contained for any length of time without a fence, (nor kept in the cold that long), we just don't have the time for this right now. An extravagance, yes, but so, so worth it.
To be honest though, this is really an extension of the lawn mowing service we had this past summer. Also something we felt we did not have time for, though not as time consuming as the leaves I'll admit. And we had not yet started our Total Money Makeover then. Not sure what we're going to do about that next lawn season yet. If the boys are at the point where they can be outside with me while I do it, it might be possible again. I am hoping my business will pick up again by then though so that we won't need to feel bad about making that splurge again. Because we loved it and our yard looks so much better now.
One final note, while he does a great job, our lawn guy is horrible with his billing. We haven't yet actually received this leaf removal bill, and I have a feeling I am going to have to remind him he added us to his leaf list. He is a decent guy and I would not want to take advantage of him - but - if he did forget again, I may wait to remind him until late February or so. ;)

Entertainment - that's the allowance hubby and I give ourselves so that we have at least a little fun money. I've actually cut this budget category down quite a bit from what it used to be because we've both been pretty good at cutting it back and we have agreed to let go of date nights out for a year. But if I give hubby any less than what it currently is, he will not be willing to do this anymore. He's struggling as it is. So that's that.

Yes, we have expensive iPhone data plans. All I can say is that we live on them. There was a time not long ago that I felt they were completely unnecessary (hubby likes to remind me of that from time to time). But now, everything from our recipes, to workout routines, to social networking, to downtime gaming is on them and I'm not even sure what I would do without mine anymore. For better or worse, my phone is like an extension of myself at this point. So extravagant or not, we're not getting rid of that. We did cancel our home phone a while back though.

Garbage - just a note that that is for two months worth of service.

Gasoline - This one might be considerably lower. Will depend on whether I need to get my daughter from college at the end of the semester or not. Its amazing how much less we spend on gas than we used to though now that we don't go anywhere! Still figuring out what a good number for it is now.

Groceries - as I've mentioned, we're working on it. We've started shopping at a discount ware house store every couple weeks for many things, but we're still using our more expensive grocery delivery service for most perishable things, though we have almost halved our bill most weeks with the cost reducing measures we're taking. I think there's more we can do here, but Xmas and having 5 grocery days in Dec. instead of 4 is going to make this month hard. Someday the boys will be big enough to make store shopping feel more doable again too I'm sure, but by then hopefully we'll be out of this mess.

We do have some leftover buffer from this month that will help us out a little with that $773 difference, as well as some other possibilities I've discussed, but its going to be a tough month. Without Xmas in there, Jan should be a little better.

Cancelling Christmas (Except Not)

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. :(

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.

My Student Loan Baggage

One of the few topics in Dave Ramsey's Total Money Makeover that really irks me is his discussion of student loan debt. I'm not saying his points are all without merit. But when he talks about credit cards, he seems to understand that the mental/emotional game is just as important, perhaps even more important, than the financial one. And so he recommends paying off your lowest balance card before your highest interest card, purely so you can see results sooner. And I totally get that. But he does not allow for the same types of emotional weakness when it comes to student loans. Consider the rant of his in this link for instance. Ouch. That's all I can say. And since I am one of those previously professional, now stay-at-home mom's with over $100K in debt he's ranting about, it can't get much more personal than that.

When I look back over my life, there is only place I can think of that I maybe should/would have made a different decision about my education. And that was when I chose to keep pursuing a PhD in a field I wasn't sure was a good fit for me, instead of being willing to start graduate school over, or at least stop with a masters. Given that my graduate tuition was paid for, however, and that I was receiving a stipend for most of my living expenses, cutting out that leg of the journey wouldn't have changed that much. Maybe $20K less at best.

Growing up, we were poor. Like free school lunch, hand me down clothes from cousins, can't afford a school yearbook poor. I vividly remember my mom dividing one family size can of spaghettios between the 4 of my sisters and I, plus a glass of milk, for lunch. I was a small, hungry, skinny and very active kid, who hung out a lot at my friend's houses bumming snacks. My mom and dad fought constantly, and would have no matter what, but certainly a major theme of their blowouts was money. There was never enough of it, and it seemed that would never change. My mom often grew wistful in private about how, despite how smart she had been, she had dropped out of college after only a year or so at her first husband's insistence (my father) and never found her way back once the babies started coming with her second. And worse, how she could never leave her abusive second husband because she could never support the 5 of us on her own.

I'm not sure how directly it was ever stated, but I grew up with the clear impression that it was absolutely imperative that I go to college some day so that I would be able to support myself without a man. But that there would be absolutely no financial help for me to do so. This was further complicated by my step-father's abusive put downs of me compared to my sisters, and his continuous proclamations that I was never going to be good enough for anything.

Given the trouble I was often into growing up in a home like that, there were many years it seemed like he was right. There were many years I didn't bother with homework. For a period of time, I was suicidal. And I was pregnant before I was out of high school. But I harbored a deep, driving need to prove him wrong as well. And despite his insults otherwise, I was actually quite intelligent. And seriously driven to believe that there was a way out of my childhood and into the type of future I had always dreamed of. Halfway through high school, I turned over a new leaf and started to show what I was capable of academically, though my new daughter senior year complicated things a bit.

When I was applying to colleges, the last thing on my mind was the amount of money I was taking out in student loans. Certainly I qualified for every need based option possible, not to mention a few merit based ones as well. Imagining what that payback would look like 5 to 10 years down the road when I finally had a real job and was out of this mess seemed besides the point. My burning questions were: Am I really capable of this? A 4 year degree at a respectable university with a child? What if they see only what my step-dad saw? What if I am doomed to repeat the same life for my daughter as the one that was given to me?

But I got in and I did my best. My first year I did outstanding actually, but the second year my young marriage began to fall apart and afterwards, it took a couple years of struggle before my daughter and I found a new equilibrium. My last two years of undergrad I did much better for the most part, and somewhere during that time, I realized that to become anything more than a lab rat with my degree, I would need to apply for graduate school. In this sense, Dave's rant doesn't completely apply to me. I did understand that I needed to be highly marketable to pay for all this.

At that point in life, I was pretty clear that I wanted to be a working mother. I loved my daughter dearly, and was very much looking forward to being done with school and having more time eventually. But I was the kind of person who got depressed without something intellectual to pursue. Something for myself separate from my role as a mother. Perhaps partly because I had become a mother before I had gotten time to be just myself. As exhausting as it was during the semesters, school holidays were often worse because I just got so depressed with nothing to work towards.

If you had told me that I would one day choose to be a stay at home mom, I would have laughed in your face. Dave can say that young women without kids yet have no idea how they're going to feel when they do, but I think that's overly simplistic and implies we all want to stay at home deep down. I'm a stay at home mom now, and I'm still not always sure its what I want to be doing. Furthermore, I already had a child at that point. I did know what it was like. If I could have had the option to work only part time with a young family, that probably would have been my first choice. But that is not a realistic possibility in most fields, least of all mine, and I was not unrealistic. I figured with a PhD, I could make enough that my future husband could stay home if we wanted.

Graduate school was hard though. Really hard. My fears about not being good enough were constantly at an edge when surrounded by so many other brilliant people. I had developed a fuzzy, idealistic picture of my doctoral field while leisurely pursuing undergraduate research with lower expectations I had no trouble meeting. This vision was shattered to make room for the more brutal and difficult reality of what higher academia really was. The relationship with my advisor slowly went from love to hate. Somewhere along the way, I began to question whether I was really doing this for myself, or just to prove that I could. Some days, I began to acknowledge that despite how far I had come, it was possible I was moving in the wrong direction.

That is the one point in my academic journey I regret. If I had been brave, or maybe even just less tired, I would have thrown in my first 2 1/2 years of research and allowed myself to start again in a new field. If I had done this, perhaps I would be happily pursuing my new career even now? I had an inkling of what at least some of those other possibilities could have been. It wouldn't have set me back more than a couple years (though that would have added even more to my debt!). But that light at the end of the tunnel I had been impossibly chasing for so long was finally so close. I had already passed my preliminary doctoral exam. I had my project all mapped out. I just needed to buckle down for 3 more years and do it.

And so that's what I did. I figured when I was done I could work on re-branding myself in an area of research I was more interested in for the job hunt. Instead, I found myself perfectly trained to do exactly the type of research I did not want to pursue. But it sure payed well. Even if it did necessitate moving halfway across the country.

It seemed like that would be enough, eventually. But it wasn't even close. And despite my husband (then boyfriend) being brave enough to come along with my daughter and I and start this new life together out west, it just never felt right there. We just couldn't get settled. We couldn't get to a place where the future we  had pictured together seemed possible. We couldn't define what needed to shift. And despite crossing the 30's threshold, we couldn't possibly imagine starting a family in that life and place.

Through all of this, my daughter moved into her teenage years, and despite being very close when she was younger, she suddenly wanted nothing to do with me. It became painfully obvious that though my school was finally done and I was ready to focus more fully on her, she no longer had any interest in focusing on me. That ship had sailed, so to speak, and I had missed my boat. That was hard. That was very hard. And it made me reflect a lot on my plans to start a family again soon. The role I wanted to play in my new children's life and the type of mother I wanted to be. As my regret grew, I also stopped giving a crap what other people thought about how capable I was. I had gotten a PhD for cripe sakes. What more could they expect of me? And it was my right to decide what I wanted to do with that degree from that point on. Obviously, it was always my right. But that was when I finally realized it.

So anyways, long story short, with my boyfriend's blessing, I quit my high paying job and decided to become a stay at home mother with over $100K in student loans instead. It was a rough few years of transition. At this point, my husband finally makes a pretty decent income. Almost as much as I used to (and adjusted for the midwest, probably a lot more). But with three kids, primarily one income, and a student loan payment of over $600/month, it never goes as far as it seems like it should. It's going to take us a while to get out of this mess. And though we are now over 4 years into this new life path, it's hard sometimes to accept where we are now compared to where we used to be. Hard to know that we will probably never live in a beautiful home/location like that one ever again. That it will be years, eons, before we can afford another fancy trip. That given the realities of our budget, money is going to continue to feel like a struggle for probably at least another 5 or so years until I'm working again. My husband and I find that hard. And depressing. And Dave would probably just say "What did you expect!?!"

...A chance to live a life much different than the one my parent's gave me I guess. A chance to feel like I had enough money to never be trapped in a relationship that was bad for me. A certainty that my children would always have enough to eat, as well as year books and new clothes and maybe even stories about trips to Disney World with our family last summer. I probably didn't need a $100K education to secure all those things, but it was an emotional journey for me that took a while to figure out.

For now, I comfort myself with the fact that though this is not always the life of my dreams, it is finally the life of my choice. I am choosing to be much poorer than I could be. I am choosing to temporarily give up most personal and intellectual pursuits (though I did start a secret blog!) so that I will have fewer regrets next time about the mother I am to my children. I could do it differently, and from time to time I check in and make sure this is what I still want. So far it is.

How We Got Into This Mess

I’ve been starting to find a lot of good debt blogs, which I’m hoping to provide links to on my own blog soon. One type of post I’ve noticed on some of these that I haven’t yet done here, is a debt history entry. Or as I’ve titled it here: “How We Got Into This Mess”.

Sometimes I’m a little surprised to find myself here, 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 begun 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 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.

Apparently We're Good at This

I keep trying to find more things we can do, something we must be missing, to make this debt thing go faster. So far, no luck. If anything, the book I checked out from the library recently (did you hear that, the library not the book store) called "Your Money: The Missing Manual" made me feel like we're taking this more seriously than I sometimes feel we are. Consider all these recommended measures we have implemented:

Cancelling cable: As of last week, Check! My husband's company pays for the internet portion of our bill already. And our recent purchase of an Apple tv will pay for itself in less than two months of not paying for cable. 

Get rid of home phone: We got rid of our home phone line a couple months ago since we were really only using our cell phones anyways. This has been causing us to use more of our cell phone roll over minutes though, so I'm hoping we won't have to up that eventually.

Cancel monthly subscriptions: To my surprise when we began this, hubby volunteered to cancel his Audible subscription until our debt was paid off and just re listen to old favorites instead. We also cancelled our Netflix a few months ago since we hardly ever used it and I've already decided not to renew Newsweek this coming year. Half the issues never get read anyways.

Make a Unit Price Grocery Spreadsheet: Still working on that but I have started to collect that info and I'm already getting the hang of when something is a good price. I have also learned to...

Use Coupons Wisely: I do not fall for buying things with coupons that a) I wouldn't usually get anyways b) are still more expensive than the store brand or another location. This also meets his suggestion to...

Discard Brand Loyalties: Even for toilet paper, I got over it.

Buy In Bulk - When it Makes Sense: Hello new big box warehouse store membership. Can't believe how much money we've saved there (per unit price at least!) so far.

Waste Not: Finally plugged in the big freezer downstairs again and started labeling and storing all left over canned and other items. I've even started buying things like yogurt in bulk, freezing it before it goes bad and then thawing it as needed. Its a little more liquidy than it would have been but still tastes fine (the boys don't know the difference!).

Shop Less: Not a problem. There's no money anyways and neither hubby or I were ever big shoppers. Probably the biggest success in this area though was when we separated our checking account into discretionary and non-discretionary expenses and then limited ourselves to a budgeted discretionary amount. In theory we were doing that before, but since I didn't track where each individual purchase went, it was hard to know how well we were sticking to it. I still don't always track it that closely. But now, when the discretionary money's gone, its gone. And so that takes care of that.

Replace Light Bulbs w/ Florescent: Done! We even got a Groupon for a home energy checkup a month or so ago in which we also got some weather stripping applied to a couple doors and well as thermometers to check refrigerator/freezer and water heater temps. We would have gotten more but they said we were already doing great on most everything else! Especially considering our gas energy company gave us a rebate to get our attic re-insulated this past summer which has already significantly impacted our energy bills.

Increase/decrease the setting on your programmable thermostat: We haven't made any huge sacrifices here compared to people I hear setting their winter thermostat to 65F or waiting until Halloween to even turn on heat but we have lowered our winter setting from 75F to 72F and raised our summer setting from 72F to 74F. It not much I know, but we do have two year old boys and I don't want them to be too cold or not sleep well. Bedroom space heaters make me nervous with such little ones (and I don't think they could be trusted with them once we switch to "big kid" beds), and we haven't had the money yet to invest in summer ceiling fans.

Play Board Games for Fun: We don't always play board games, but hubby and I have completely let go of our monthly night outs for the next year and turned all our date nights into at home affairs instead. We always make a nice dinner together after the boys are in bed and then talk or watch a movie or something.

So those are all the things we're doing right. Perhaps I will devote my next entry to all the things we could still improve though I worry it will just turn into a big excuse fest! ;)

Mid-Month Checkup

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: $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 $40 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. Ifthat 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 be getting a 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

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

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, and I really feel that getting control of our finances is going to require some soul seraching in this area. Looking over the list (20 items!), I would say that close to half the 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 (because 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 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 its mostly work. And I think its 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 (assuming we never let it spoil, which we don't). 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've 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 more into 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.

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. Case and point: 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 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 its going to be for the next few month if we are 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 my balance in this stage, and there are many milestones yet to come.

(Number) Crunch Time!

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. 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 had 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 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 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 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.

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.

Additionally, 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 piece by the end of 2013. And then on to baby step 3!