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.

Monday, January 26, 2015

Tax return dilemma

I have been working on our taxes this week and am expecting a sizeable return mostly due to the major move expenses last year. I had been mentally reserving the tax return to pay for some upcoming medical expenses we are going to incur next month when one of our boys has a procedure. I know we can expect at least the $1000 deductible and possibly another $1000 in co-insurance. The bills will start coming in towards the end of March and we can reasonably put them off for another couple months before we have to either pay in full or set up a payment plan. So let’s say they are due at the beginning of June which gives plenty of time for all the tax returns to have been paid out.
June is also when the remainder of our credit card debt (currently $4,300) goes from 0% interest to 8.99% interest. I’m highly motivated to pay the credit card off this year and particularly motivated to pay off as much as possible before it starts accruing interest. Putting the tax return money towards could knock out a significant portion of the debt in addition to the minimum payments and whatever extra we can squeeze out of our budget each month.

So do we pay off medical expenses or do we pay down the credit card debt?

Pros for paying off medical expenses

No new debts. If we didn’t pay off the medical expenses we would be adding a new debt to the list which would be damaging to the mental game of crossing off the debts.

No increase in minimum payments each month. Our budget is really, really tight each month. An increase in the minimum amounts we owe on debt would be a hardship and would make it more difficult to come up with “extra” payments to continue to chip away at the remaining credit card debt.

Pros for paying down credit card debt

Paying off the credit card will be a huge accomplishment for me as I’ve been juggling credit card debt for my entire adult life. Using the returns to pay it down will help us get it done as fast as possible and give me a boost to keep at all the other debts.

Credit card debt is going to start accruing interest, the medical debt will not.

Medical expenses are not on the credit report while the credit card debt is a negative mark on the report. We’re not planning on taking out any additional loans at this point so this may be a neutral point but it’s still nice to have better credit in case the need arises.


Both options offer positives and negatives. I’ve got some time to decide, especially since I still have to complete the taxes before I can expect the returns to start coming in. I’m keeping my fingers crossed that the returns exceed my expectations and the medical bills are under what I am expecting, that way I could pay off the bills and still have some leftover for the credit card debt!

Friday, January 16, 2015

Stockpile gone wild

A couple days ago S came home from a run to the grocery store with a new bottle of lotion among the other food needs. Normally I try to keep my crazy a little better in check for him and the boys but for whatever reason that bottle of lotion threw me into a tizzy. Here’s the overriding issue: I loathe stockpiling. There are so many reasons I am against stockpiling. The biggest is that in my adult life I have moved, on average, a smidge over once a year. Some of the moves have been across town but several have been cross country. Especially on the bigger moves, having to pack and then having to possibly upsize the truck to hold stuff that we were just stockpiling annoys me. Inevitably, I end up giving away a bunch of stuff that I should never have purchased in the first place. Money wasted.

Another reason I don’t like stockpiling is that I really don’t like clutter nor do I want to pay for extra square footage just so I can have my own personal storeroom. Having to mentally keep track of what I have and how much and where it’s stored is just a layer of mental clutter that I also don’t want. Lastly, I don’t like spending money on something that’s just going to sit around. I’d prefer to have my limited amounts of money go towards paying off debt and reducing the amount I throw away on interest every month.

With that said there are a couple caveats. Things that we go through super-fast like diapers or toilet paper I don’t mind having a little extra stashed at the house. Especially if I find a fantastic bargain on diapers, having a stockpile is ok. For everything else, I feel we can wait until we are getting pretty low before I start looking for good deals to get a back-up to stick in the closet.

So back to the lotion. We have many, many, MANY other bottles of lotion lying around that he could have used up before we needed a new bottle. We have little tiny bottles we snag from hotels as well as some that were from my maternity room when I was on hospital bed rest. We have several fancy lotions that I received during pregnancy, post-partum, and for other random gifts. We have at least three, half used bottles of baby specific lotions. We have hand-creams, face creams with sunscreen, face cream without sunscreen, face cream specifically marketed for men, balms, and healing ointment tins and the list goes on and on. The thing is: our rate of lotion acquisition far exceeds our lotion use! And I can’t throw perfectly good things away.  

After going through all the lotion we had (to prove to S why we didn’t need another bottle) I started collecting all the other toiletries that have been accumulating. More gifts of fancy soaps and shaving creams. Body wash (I accidentally did a BOGO when we already had an extra, oops), various shampoo and conditioner including hotel bottles, and a whole array of little toothpastes and flosses from the dentist samples. All of this I arranged on our vanity and made S come and look (he humored me by looking astounded at how much stuff we had accumulated, or maybe he was just astounded at my level of craziness). I declared that we wouldn’t need to buy another toiletry item for at least a year.


I made the declaration in the midst of my mania but now I really am wondering if we could get by a whole year without buying another toiletry. So here it is, mid-January, and we’ve purchased one bottle of (unneeded) lotion. Let’s see just how long our current stockpile will last us!

Monday, January 12, 2015

2015 Planning: Income Goals

I received a great raise at the end of 2014 which came into effect for my January 1st paycheck. However, I had to adjust my federal withholding for 2015 which led to an increase in taxes taken out. Also, the company has added disability insurance in the benefits package which I elected to enroll in so that reduces my take home pay as well. I end up with a net loss of $13 a paycheck or $26 a month which makes me so grateful for the raise because I was expecting a $200 a month loss.

Looking back on last year I feel like I spent a LOT of time trying to hustle extra money through my side etsy businesses, yard sales, consignment sales, craigslist sales, etc. Sure, all the extra work brought in a little extra money but I know that it led to some increased spending too. Being super busy all the time led to a lot more prepackaged food/ eating out, buying needed items at a higher price either because I didn’t have time to research a better price or because I didn’t have time to go to multiple stores, and just general “too tired to fight my inner battle and say no to things I want but don’t need” purchases.

In retrospect, my time might have been more valuable had I spent it on diligently reducing how much we spend across the budget instead of bringing in more. I’m not saying I won’t do anything in 2015 to bring in a little extra, especially when it comes to getting rid of unused kids stuff. I am saying that I need to place a higher priority on reducing expenditures particularly in the food categories.

Income Goals:

Spend more time stretching existing dollars and less time making extra dollars. I’ll write more when I look at budgeting goals.

Compress selling into two months, ie one month in spring and one month in fall do all craigslisting, ebaying, yard selling, consigning, etc instead of dragging it out all year which got really tiring.

Be a better employee. I feel extremely fortunate to have landed in such a great company. There are several areas that I’d like to focus on for my own professional growth but it will also translate into being more valuable to the company and perhaps more bonus/ raises in the future.

Friday, January 9, 2015

2015 Planning: Budget Goals

Last year was a major transition for us, going from two incomes to one and putting money towards starting a new business. There was a lot of scrambling to adjust and to make ends meet each month. There was a lot of money shuffling and juggling to get bills paid and deal with some of the unforeseen events. Add in all the extra hours spent at my “real” job, my side jobs, and hustling money and it led to a lot less tracking of actual expenses than I would have liked and a whole lot more spending than we should have done.

For 2015, I intend to do a better job of tracking exactly where all the dollars are going. Hopefully, I can uncover some ways to reduce expenditures by taking a closer look at how and on what we are spending our hard earned money on. I would have thought by three years into the budget/ debt reduction mission things would have been set, instead I have learned over the years that there is a constant need to track, assess, reallocate, and reduce as possible.

Budget Goals:

Track actual expenditures across our budget categories for each month and make adjustments/ goals for each coming month.

Do a thorough review off all budget line items for reductions. Focus on bulk meal planning, reducing grocery costs, eliminating food wastes (it drives me crazy having to toss things that have gone bad sitting in our fridge), and cutting back eating out.

Cut spending on wants. Slowly but surely some of my old habits of giving into my wants has crept back into my lifestyle. Time to buckle down and keep my eye on the debt elimination prize.