Monday, May 18, 2015

So you want to be an artist…

When we moved from Massachusetts to Kentucky a year ago the plan was for S to stay home with our sons and rebuild his pottery business. In the past year we’ve both learned a ton about the difficulties stay at home parents face, especially those that are also trying to build a business. To say we were na├»ve when we went into this would be an understatement. Incredibly, S has been able to rebuild his studio, launch his website, and begin producing work for sale… all while providing wonderful care for our sons and without the benefit of significant start-up capital.

Building up to and shortly after his launch at the end of last year, we were feeling really optimistic. He literally sold out of his inventory during the holidays and quickly put that income back into supplies to continue building the business. Then the long, colder than normal winter set in and we were quickly confronted by the fact that our rental property and it’s uninsulated garage where he set up his studio, wouldn’t allow him to make work not to mention the fact that it doesn’t have the electrical service required to run his electric kilns he usually uses for the first firing of his work. He struggled all winter to try and insulate and build a wood burning heater and set up a small studio inside the house but progress really stalled out for a few months.

Once the weather started turning, he started producing work again and was finally able to do gas kiln firings. Upon opening the gas kiln he discovered that the firing had not gone well and most of the work was unsellable. He did some repair work on the kiln, tweaked his glaze recipes, produced more work and did another gas kiln firing. Again, almost a total loss. Yesterday, he was trying to figure out what the problem could be and began to disassemble his kiln to do a complete examination and assessment. I was watching from the kitchen. When he pulled the last ring of the modular kiln up, the entire floor of the kiln gave away. The whole bottom of the kiln had degraded to the point of crumbling away and now sits as a pile of rubble in his kiln shed. So now we have two electric kilns that are unusable at our rental and a completely dead gas kiln.

We spent most of yesterday morning feeling pretty awful about the situation. All of the hard work he has done over the last year to overcome all the ridiculous obstacles trying to build a business with no capital and two toddlers on hand has come to a screeching halt. At this point we have to make a decision about proceeding, options range from scrapping the whole business idea to using the emergency savings to build a cheap make-do new kiln or, on the really big financial impact side, taking out a business loan to get him the equipment and studio space that would really support art as a business.


How do we proceed? At this point we have very little (financially speaking) invested, do we put the idea on the shelf for a few years so S can seek other income opportunities while we continue to focus on debt? Do we dip into emergency savings and continue to trickle money into the business as a bare minimum approach? Do we go “all-in” and move to another location that would better support a pottery studio, or rent studio space, or buy a place and build a permanent kiln and studio? It’s so hard to decide what to do, we want desperately to be out of debt but we also want to raise our sons at home and both have careers doing what we love to do. 

Friday, May 15, 2015

Doing the shuffle

Over the course of our debt pay-off journey we've shuffled debt around numerous times to take advantage of lower interest rates, to lower our monthly payments, and to consolidate debts. The last shuffle we did consolidated a high interest credit card with a defaulted loan at an 8.39% interest rate through Lending Club. Before that, we had done a balance transfer on another credit card debt to secure a 0% interest rate until June 2015. Now, with the promotional 0% rate coming to an end it’s time to come up with a plan to pay off the remaining $4,200.

Our options include:
1.   Doing another balance transfer on the credit card (we have two that we have just transferred debt back and forth between) which would secure a 0% rate for another year but cost us a transfer fee and potentially set us up for another transfer in the future if we can’t get it paid off in a year.
2.   Leaving it where it is and continuing to pay it off as quickly as possible. The interest rate would be high somewhere between 8.99% and 15.99%.
3.   Taking out another Lending Club loan. We could probably get a lower interest rate around 6% for a three year loan which would make payments affordable and easy enough. This would also cost us a fee.
4.   Consolidating it with the larger Lending Club loan for a lower rate for a three year loan. This would be a more aggressive pay-off for all consumer debt and would also cost us a fee.


My next step is to explore cost and feasibility of each option this weekend. 

Tuesday, March 31, 2015

End of 1st Q 2015 Report

Starting point (Oct 2011):

Student Loan 1 (My fed loan): $38,339
Student Loan 2 (S' state loan): $21,719
Student Loan 3 (S' fed loan): $5,454
Car Loan: $11,684
Credit Card 1: $10,577
Credit Card 2: $3,635
Credit Card 3: $0
Misc. small debts (S' small debts in collections): $5,443
Medical expenses: $3,672
Parents: $600

Total: $101,123

And here's where we are today:

Student Loan 1: $34,501
Student Loan 2: $18,860
Student Loan 3: $0
Car Loan: $0
Credit Card 1: $0
Credit Card 2: $0
Credit Card 3: $4,344
Misc. small debts: $4,349
Medical expenses: $1,544
Parents: $0
Consolidation Loan: $8,610

Total: $72,208

Paid off to date: $28,915 paid off + $1,426 in savings

So far 2015 is heading in a much better direction than last year. We are making slow but steady progress on the debt pay-off and have maintained the $1000 emergency fund plus we still have $400 in savings towards DS L’s surgery bills.

We still have some unknown bills for DS L’s surgery that we are waiting for and we still have an outstanding tax return coming to us. Once all the surgery bills are paid/ tax return is received, we’ve decided the balance will go towards the medical debt. I’ve been going back and forth on paying interest bearing credit card debt or paying no-interest medical debt. In the end, knocking out the medical debt ASAP won. The medical is a small enough number that we can get rid of it this year for a boost in our debt reduction mission. We’ll be able to snowball our payment towards the credit card and, on the really lean months, ease some of the burden on our budget.


I’ve also realized looking at this quarter’s numbers that we are nearing the 1/3 debt pay-off mark! If we stick with our projected payments through the next two quarters, we will be able to reach that goal by October which is the 4-year anniversary of the beginning of the debt reduction journey!

Monday, March 9, 2015

De-clutter

I spent this past month de-cluttering our house. I feel like this is a never-ending battle for me. I have trouble parting with things that have a potential future value, S is a borderline hoarder and we are both guilty of dragging home all sorts of found/ free stuff for projects we will never have time to complete, plus anyone living with kids knows how much clutter they generate. One of my goals for the year was to compress all selling of stuff to two months to coincide with the bi-annual kids consignment sales my twin parent group hosts. The spring sale is coming up which makes March one of the selling months but I realized I would first have to identify all the items I wanted to sell hence the month of February becoming a deep-cleaning and purging month. Besides, what else am I going to do when it’s stupid cold out.

In the past I’ve mostly organized and gotten rid of things as a reaction, like “oh crap, we’re moving again. Better try to get rid of some stuff” or I’m just irritated to the point of action by the amount of junk we accumulate such as the lotion incident. Since I’m really trying to turn over a new leaf this year, I decided to take a more organized approach to getting organized and getting rid of clutter.

I set out a systematic approach to make sure I didn’t give myself any wiggle room to back out of getting rid of stuff. I wrote out a list of each room in the house and made a checklist for each of the following steps under each room. I focused on one room at a time and chipped away at each step as time allowed.

Step One: Trash and recyclables. I went through all drawers, cabinets, stacks of stuff, closets, etc and got rid of anything that was trash/ recycling. This included expired coupons, food, or medicines, old notes, broken stuff.

Step Two: Home the homeless. Part of our problem is that we have a lot of stuff that doesn’t have a set “home” since our last move so things end up just getting stuck wherever there’s open space. I spent a good amount of time in each room relocating stuff to a more permanent home.

Step Three: The Purge. This was the hardest part. I set a goal of getting rid of 10 items per room. Some of the items included toiletries that I will never use, clothes that I will never fit in again, movies we can get online, books we can get in the library, etc. The removed items went into one of three categories: stuff to sell, stuff to give away, and stuff to toss.

Step Four: Organization wishlist. I jotted down some notes as I went room by room about any organizational items that would help keep the room in order better. I’ll keep my eyes peeled for free or super cheap items to meet those needs.


Felt really good to go through the house and get more organized and reduce some of the clutter. I’ll be repeating the exercise in the fall!

Thursday, February 19, 2015

Reality check

Since deciding to put all extra debt payments on hold until after we receive all of the medical bills from DS L’s procedure, I’ve been thinking about how little progress we’ve made in the last year. On one hand, I know that the decision was prudent in order to make sure we could cover the unknown expenses we will be incurring (tomorrow is the big surgery day). On the other hand, a big part of the debt pay-off mission is psychological and it kind of feels like putting extra payments on hold is damaging what little momentum we have left after last year’s debt increase.

After a few days of stewing on this, feeling like we were never going to get back on track and wavering on the decision we made, I realized I needed to adjust my perspective on the debt payments we make each month. Using the terms “minimum payments” and “extra payments” has been a great mental motivator to upping the amount we are paying each month. I feel really uncomfortable doing the “minimum” when it comes to anything in life. Every dollar of “extra” we have been able to pay is like a quantifiable measure of how much better than minimum we are achieving. So deciding to cut extra is like deciding to be an underachiever (at least in my mind).

The reality is that over the years we have done a lot to refinance our debt and we’ve been fortunate in that we’ve been able to access low interest rates. Because of this our minimum payment makes a good dent in our principal balance each month. Our minimum payments total $771, $188 of which goes to interest. So each month we are paying off nearly $600 ($7,000 a year) on the principal and these numbers will only increase is the principal balance decreases.

Another reality is that when we started this journey we weren’t even making the minimum payments on some of our debt. All of the student loans were either in default or deferment, meaning they were growing instead of shrinking and digging us further into the hole. Before starting the debt reduction journey, we were in a downward spiral and truly believed that we would never get out of debt, that we would always be dragging around a 100k and growing ball and chain. Just being able to make the minimum payments on half the income we used to have is an incredible achievement for us let alone having paid off over 26% of the debt!

If we were to keep making only monthly payments of $770, holding our current minimum and snowballing the payments, we would be debt free in 9 years. Obviously our goal is to pay off the debt as soon as possible by making the extra payments. It still helps me feel better about making the minimum payment for a few months, realizing that we are still moving towards our goal even if it is a little slower than I would have liked. At least now, I can actually see an end in sight where a few short years ago I believed debt was a given part of life.

Monday, February 9, 2015

extra debt payments on hold

When I laid out my goals for the year I had wanted to push everything I could at the remaining cc debt to try and pay it off this year. This is a lofty goal and will require some major sacrificing and work, and it may not be achievable depending on what unknowns occur throughout the year. I was able to make a fairly sizeable payment in January but it doesn’t look like I’ll be able to pay any extra for February which has me wanting to re-examine the goal. Another factor I recently wrote about was upcoming medical expenses and whether to take on new medical debt in order to put our tax returns towards the cc.

The more I thought about it the more I felt like increasing the medical debt and putting the tax to our cc was not the best solution. Potentially raising our monthly minimum payments for some unknown amount of time would make our tight budget even tighter and probably make it harder to pay extra towards the remaining cc. This decision also got me thinking about our current medical debt.

While paying off the cc this year is a pretty tall order, paying off the remaining medical debt is totally achievable and will free up $86 per month to throw at the cc and give us a little more breathing room in our budget to deal with the unknowns. On the other hand, the promotional 0% interest rate on the cc expires in June. The longer it takes to pay it off the more we will pay in interest. I ran a conservative scenario were we increase the pay-off time on the cc to the end of 2016 and it will cost around $345 in interest.


For now, I’ve decided to take a wait and see approach. My reasoning is that neither the medical debt nor the cc are accruing interest, so only making the minimum payment for a few months will not cost us. Another driving factor here is the unknown cost of the upcoming medical expenses, I want to make sure we can cover every bill as they roll in. All additional payment money will go into our savings account and once all the new medical bills are paid, we will make a decision on which debt the remaining lump payment should be distributed to.

Wednesday, January 28, 2015

January recap

I’ve been taking January off from some of my usual habits. I’ve said “no” to a lot of family/ friend get-togethers, put very little effort into promoting my etsy businesses, and have done zero craiglisting/ ebaying or other methods of selling off our outgrown kids stuff and other junk. In turn, I’ve made zero dollars from my side businesses/ selling stuff off. I was worried that without the extra bit of income we would be in a really tight place this month. However, I discovered that my time was more valuable spent in the home reducing how much we spend, particularly in the food department.

The biggest reduction in our food expenses came from a food prep day at the beginning of the month when I put together 16 slow-cooker freezer recipes from the 5-dollar dinner mom Costco Plan. It didn’t go as smoothly as I had envisioned, I’ll write another post about the experience, but it was awesome having half of the months dinners already assembled. Also, the recipes were each for 4 portions and since the boys are still small enough to share a portion, there was always a leftover serving for me to take to work.

I also started batch assembling breakfast sandwiches and freezing them so I could have easy breakfast on the go as I run out the door each morning. By doing the food prepping I essentially eliminated the need to get take-out this month which has always been a part of our budget that I knew was excessive.

Aside from freeing up my time to allow more for food prepping, I found that I was a lot less stressed out and in general made more thoughtful choices on where/ how much to spend. I had more time to think about where and when purchases needed to be made. I also found that with more time spent doing things that benefitted me, like sewing my own projects instead of things for other people, I felt less inclined to make splurge purchases with the “I deserve this” mentality.


Bottom line, I think I’m going to carry the attitude forward into February. I need to spend some serious thought exploring how much of my valuable time gets spent on my side businesses, this blog, and all the other things I heap on my to-do list. Hopefully another month of being a homebody and doing some inward focusing well offer some clarity on the rest of the stuff I try to tackle.