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, fuck. 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 shit! 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 so it ending up being a lot more withholdings 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!
Showing posts with label credit cards. Show all posts
Showing posts with label credit cards. Show all posts
Thursday, December 6, 2012
Saturday, November 24, 2012
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.
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.
Thursday, November 22, 2012
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”.
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.
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.
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.
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.
Thursday, November 1, 2012
(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!
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!
Tuesday, October 23, 2012
Realism or Another Cop-out?
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!
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 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! :)
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