Been a busy 6 months

I knew it had been awhile since I posted anything but was pretty shocked when I looked at the date of my last post! Soooo much has happened since July 31st and it's high time I get some record of the changes on here!

Let's start with the biggie: I got a promotion at work and we moved again! Probably right around the time that I last posted, my company advertised a position in the Louisville office (about an hour and half from where we were living). I immediately put my name in the ring even though it would have been a lateral move professionally. Moving to Louisville would get us in the same city as my family, a larger and more active market for S' work, and a more metropolitan lifestyle that we were used to having. Over the course of the conversations with my bosses about possibly moving, the manager of the Louisville office turned in her notice. So the conversations turned into a promotion opportunity rather than a lateral move! 

The negotiations took the month of August and we spent the month of September moving. Meanwhile, my workload increased quite a bit and I have been really overwhelmed by the new job... hence the lack of posts here even though there are a TON of things going on in our financial and debt world.  I would love to report that the majority of these financial things have been positive but that's just not the case. I'll do my best to summarize what's been happening the last three months but the truth is, I've been so busy and overwhelmed at work and with the move that the finances are a bit out of control right now. Now that we're settled in it's time to get our financial house back in order.

The big positive financial impact is the promotion which puts an extra $360 in the budget each month plus a phone reimbursement and some moving expenses. There is also the expectation (built into the offer) that there will be an additional increase after 6 months on the job. On the flip side of the move, we decided to overlap our rental houses by a month to give us some breathing room on making the move. I received some moving expenses but only enough to cover the actual move so the cost of having two places plus utilities for both for a month was on us. And since we still haven't replenished our emergency fund the cost for the overlap (around $1,300) was financed.

Another factor of the promotion is that I was immediately in front of clients on a daily basis and the atmosphere with the Louisville clients is more business attire than my past office. In the past I could get away with a couple dressier outfits and just dress nicer on days that I would be meeting with a client. Now I need to dress nice everyday so my wardrobe needed some immediate upgrading. I went ahead and purchased a few essentials, spending around $200, to stretch the more casual wear I have and will be adding a piece or two to my professional wear each month for the next few months.

Another big financial item we have been dealing with for the past few months is vehicle repairs. One of our cars started shifting very poorly and we were concerned the transmission was going out. Thankfully it is not the transmission but instead a number of smaller repairs plus some general maintenance that needed to get done. The price tag on all these repairs is approaching $1,500, all of which has been on the credit card. Additionally, I was rear-ended on the way to work right before the move by a hit and run driver. Since we don't have comprehensive the repairs to the bumpers (back where I got hit and also front where I was pushed into the car ahead of me) will be out of pocket if we decide to get the car fixed. 

I was fortunate to get a nice bonus this past week so we were able to replenish the emergency fund, put a bit aside for some upcoming one time expenses, and pay off some debt. But it wasn't enough to pay off everything so we're ending the year slightly more in debt than we were last year. I'm trying not to be too disappointed, the past 6 months have been pretty crazy and I think we are in a very good place to make some serious progress in 2016. 

I'll post again soon with our year-end finance report and our new budget going into 2016.

Spare change challenge update

Last July I started a “Spare Change Challenge”. Basically, for the last year, any money that I’ve found (outside of my house, car, and laundry), I’ve put in a jar. This experiment could also be aptly named “I am looking for ways to break up the monotony of slowly paying off the debt.”

Anyhoo, besides just setting aside any spare change, I also challenged myself to increase my chances of finding spare change. I started walking more, taking a short walk before work, on lunch if I could get away from my desk, and in the evenings with my boys. I also started paying more attention to my surroundings when I was walking. I quickly realized that I spend a LOT of time daydreaming, texting, looking at social media updates, and generally NOT paying attention to my surroundings when I’m walking about. It has been really refreshing to walk around and observe my surroundings. AND it has paid off….

In the past year, I’ve found $21.63 worth of dropped money including a $5 in a storm drain inlet, another $5 in a wad along a sidewalk, and a soggy $1 bill at the playground. My little experiment added more to my wallet than the interest on my emergency fund with the added benefit of getting me walking regularly. Aside from the cash I also found some cool and expensive sunglasses, a couple small car toys, a fitbit/ bracelet (the actual fitbit was broken but I kept the bracelet so I can have a spare), and a gas gift card with $2.96 left on it.

Here are a few tips I can give after my year of finding spare change:

·         Walk more!!

·         Increase path of travel such as parking farther away from building entries and creating walking loops instead of walking back and forth along the same route.

·         Walk along the edge of the sidewalk and pay attention to the edge of the road at the curb line especially at paid parking spots

·         Walk where people partied the night before… I feel pretty confident in saying that the $5s I found were dropped after an evening of excess as they were found around known nightlife spots.

·         Also, pay attention in places where people frequently have cash out like shops, festivals, parking meters, etc.

·         Keep your eyes open and mind on the surroundings, I was surprised at how easily I space out when I’m walking about and had to make a concerted effort to stay alert to my surroundings.  

Budget Assessment 5: Debt and revised budget

To rehash the previous assessment points, we were trying to come up with enough to cover the following:

$260 for pre-school

$140 additional for medical expenses/ savings

$150 for IRA plan

So far we’ve cut $45 from utilities budget by enrolling in balanced billing, getting water leaks fixed, and other energy saving techniques. We are working on cutting at least $30 in the diaper funding by starting potty training DS B (who proudly made his first pee pee in the potty this past weekend). We’ll be tracking our grocery and fun money expenditures closely over the next two months and seeing how we can reign in our spending or possibly even make cuts. And, for now, the $8 Netflix stays…. Got major pushback on proposing that cut!

The last budget area to assess is our minimum debt payments. Our minimum payments are as follows:

$205 consolidation loan

$183 to my parents

$225 my student loan

$210 S’ student loan

We’ve received all of the new medical bills from DS L’s seizures and owe $1,909 to many different organizations so there are many different minimum payments.

We’ve decided to put the two student loans in deferment and use my anticipated end of year bonus to cover the accumulated interest. This frees up $435 in our budget to cover the pre-school and medical savings. We’ve negotiated with two of the smaller medical bills organizations to get payment plans set up and will owe $114 for the next five months to pay those two off. There are four additional accounts that are all under the same parent company but since they are different departments, they cannot be combined and the minimum payments are unaffordable. We have been advised to let these four accounts go into default at which time they will be sent to the parent companies central billing department. Once the central billing department has all four, they can combine and offer more flexibility in repayment length. I’m anticipating this process will take several more months and hopefully our first payment will be due after we pay off the first two bills.

The adjusted budget we’re working towards is as follows:

$1,170  29%      Rent & Utilities: gas, electric, sewer, water

   $580  15%      Insurance: Health, life, disability

   $270    7%     Cars: insurance and fuel

   $135    3%     Tech: phones, internet, Netflix

   $620  15%      Household: Groceries, diapers, toiletries, pets, etc

   $180    5%     Extraneous/ Fun: haircuts, clothing, dining out, projects, gifts

   $200    5%     Medical/ Savings

   $260    7%     Pre-school

   $585  14%      Debt: minimum payments

$4,000              Total after tax income

The goal is to have fully implemented all of the cuts and re-organization from our assessment by the end of this quarter, September 30. We will need to re-assess at the end of the year when our loans are close to coming out of deferment. For now, retirement savings is still off the table but is a high priority once we get a handle on this medical debt.

Budget Assessment 4: Household Costs and Extraneous/ Fun Money

The $650/ month Household Category has a number of individual items so I’ll break down this category and assess each item separately. Included under household are groceries, toiletries, diapers and baby items, and pets. We also have $180/ month for extraneous/ fun money. Currently it breaks out like this:

  $60 diapers, wipes, diaper cream

  $25 pet food, cat litter

$565 groceries, toiletries, laundry, cleaning supplies, general house upkeep

$180 gifts, clothes, haircuts, projects, dining out

In the first category, $60 for diapers and such, one of our boys is showing readiness to begin potty training. Of course this will be a process and we can’t really put a target date on when he’ll be out of disposable diapers but I can expect sometime this year we’ll at least be able to cut this number in half. Who knows, maybe both boys will be done with diapers by the end of the year. Once we begin the potty training process, I’ll also introduce reusable cloth training pants so at the very least we’ll see a minor reduction in the amount we’re spending on diapers. We already buy the absolute cheapest diapers we can find so getting them out of diapers is the only way we can save any more in this category.

In the $25 pet category, we are at the bare minimum. We have found the Costco food is comparable in quality to the more expensive foods we were using and it’s about half the price. This is a category that I would love to increase when it becomes possible because right now we are not doing any monthly heartworm or flea prevention and have nothing being set aside for vet bills. For now, I just don’t see how we can increase the money in this category.

The next category, $565 household and grocery, is one that we tend to go over on each month. To be perfectly honest, my record keeping in this category is not great as it tends to get blurred with the next category. My initial thoughts were that this category needed to be increased but I’m thinking what I really need to do is keep a better track on the next two categories to really assess where we are going over and why. I know we could do some things better in this category. I’d like to see us cutting down on the pre-packaged foods like individually wrapped cheesesticks, frozen meals like those I take to work as a back-up meal, and other processed foods. We could also have more vegetarian meals, it seems like we’ve increased our meat intake over the past year and particularly once I started meal prepping, as almost all recipes I’ve tried center around a meat. For the next couple months, I will be more diligent about tracking expenses in this and the next category and do a better assessment afterwards.

The last category is the $180 “fun money” which covers gift giving, clothes, haircuts, dining out, and the occasional date night. As I discussed above, we go over in this category a lot. When I look at it on paper, I think $180 is a lot to be spending each month on extraneous stuff. But when I break it down into what it can actually cover, it doesn’t seem like much at all. Here’s an example of what $180 could cover in a month:

$20 1 take-out/ fast food meal out

$15 1 haircut

$30 gift for someone’s birthday/baby shower/wedding (this summer has been especially heavy on the special events)

$80 10 lunches out at approx. $8 each (we always try to pack food when we’re going out/ to work but aren’t always prepared)

$10 clothing item for 1 of us

$25 date night: movie tickets, drinks and popcorn

Perhaps I’m not prioritizing my debt pay-off appropriately and we should be forgoing most of the things on the list above. I think tracking for the next couple months to see how we really are spending in the grocery and extraneous category will help me understand where we can truly cut.

Budget Assessment 3: Housing, Insurance, Cars and Technology

I started a budget assessment in my last couple posts and today I’ll continue by looking at the first four categories in our budget: Household, Insurance, Cars, and Technology. These four categories make up 55% of our monthly expenses

The Housing categories include our rent, gas, electric, water, and sewer utilities. There’s very little we can do to reduce this category at the moment.  We are fairly diligent about energy savings although there are a few ways we could cut back a little more including:

-       Fixing the broken dryer timer, we have to set an alarm to remember to turn the dryer off since the timer is broken and there have definitely been a few times we forgot and over-dried our clothes/ wasted a bunch of electricity.

-       Fixing the small leak in our shower faucet and toilet. I’ve put in a work order with the rental management company so that should be fixed soon.

-       We can always look into moving into a cheaper place but probably won’t consider this until our lease is coming up next March as the termination penalty would outweigh any monthly savings.

-       More cold water washing, more line drying, shorter and cooler showers and other energy cutting things we can do to help reduce our energy use each month.

The Insurance category includes health, short and long term disability, life and rental insurances. I don’t feel that we are over-insured as we have very modest coverage for life and rental insurance; health insurance is what it is through my employer. Perhaps the disability insurance is a variable that could be cut however I think that would be a last resort and I honestly feel like keeping the insurance is a higher priority to me than paying off debt. It’s a fairly low cost of $31 a month and since my income is our only income and I have already experienced something (the pregnancy) that took me out of work, I feel it’s important to keep as a safety net until we are able to set aside a more substantial emergency fund.

In the Car category we have insurance, fuel and a small amount for maintenance. We perform almost all of our general maintenance for tire rotations and oil changes so there’s no reductions there. Bigger repair jobs we usually save up for out of our variable income and do it ourselves if possible. We have the lowest insurance rate I’ve been able to find so we’re also stuck there. The only thing I can think of that could help reduce these expenses is:

-       Riding our bikes more. I am working up to being able to bike ride to work and hopefully will feel comfortable in my ability by the end of summer. This is probably the least bike-friendly place I’ve ever lived (both my sister and my father have been hit by vehicles in this town) and my lack of confidence and skill on a bicycle need some more work before I’m willing to head out into serious rush hour traffic.

-       Walking or biking to the grocery more. There’s a store within walking distance and a bigger store within biking distance.

-       Be more diligent about combining errands and reduce the number of trips we take over to visit my family (about an hour and a half away from us).

For Technology we’ve got our cell phones, internet, and Netflix. We recently switched our internet provider and have the lowest rate we could find. We’re also fairly diligent about checking around for better cell phone rates but always end up staying with T-Mobile as the lowest cost provider. The last item in the category is Netflix. At $8 a month and our only set entertainment budget item, I hate to say goodbye to our cheap entertainment but I think we can cut it without too much pain.

In summary, I’d like to achieve at least a $10 cut in our utilities, a $10 cut in our fuel use, and the $8 cut for Netflix and get that $28 dollars allotted elsewhere.

Budget Assessment 2: What’s missing in the budget?

Before I really dive into each category and assess what we’re spending our money on, I’d like to take a moment to talk about what is currently missing from our budget. Several biggies jump right out from our recent experiences.

First, we do not have enough budgeted for medical expenses each month. I looked at the last three years and we needed an average of $200 a month for medical expenses. Our current budget has a mere $60 a month allocated towards medical expenses and that’s also supposed to cover savings if our emergency fund needs replenishing. So there’s the big, huge, right-there-in-my-face, obvious reason we continue to stay in medical debt despite “paying off” the debt a couple times. We need to stop planning for a great, healthy, uneventful year and start planning for more medical expenses.

Another biggie, we do not have anything budgeted for pre-school and yet we will owe $260 a month starting in August and continuing through April. Really, this will be an ongoing expense since we intend on keeping them in pre-school until they enter the public school system. There is the possible exception that next year one or both will be accepted into the early public pre-school program due to their developmental delays and there will not be a cost associated with pre-school. I don’t want to plan on that though because I am very hopeful all the hard work we are doing will have them caught back up with their peers soon. The most conservative approach is to plan on spending $2,800 a year on pre-school and start budgeting for it in a monthly basis.

I’ve become skeptical that $1,000 is enough of an emergency fund, seems like the emergencies we have carry a bigger price tag. The other concern I have looming in the back of my mind is what happens if I lose my job for some reason. $1,000 would not cover that type of emergency. We need to re-assess if we really feel comfortable having only $1,000 in the bank to fall back on and balance that against our debt free goals.

The last issue that’s been looming in my mind for the last year is retirement. S has absolutely nothing saved and I have a meager $15k in an IRA that I rolled over from previous employers. I have not enrolled into my current company’s plan which matches 3%.  We’d need to squeeze another $150 out of the budget each month in order to be able to at least put in the minimum for the company match.

So there are the items I’d really like to have in the budget as soon as possible.

2nd 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: $34,042

Student Loan 2: $18,367

Student Loan 3: $0

Car Loan: $0

Credit Card 1: $0

Credit Card 2: $0

Credit Card 3: $0

Misc. small debts: $4,349

Medical expenses: $1,861

Parents: $4,200

Consolidation Loan: $8,173

Total: $70,992

Paid off to date: $30,131 paid off + $733 in savings

Not as much progress as I would have liked but I suppose I should be happy to be moving in the right direction.

Budget Assessment 1

There have been a number of things that have occurred recently that have brought a budget re-assessment to the top of our financial to-do list. The biggies were deciding to enroll the boys in pre-school as early as possible, paying off our medical debt (again) only to have a medical emergency put us right back in debt (again), practically wiping out the e-fund to support S’ business, and the realization that we have been overspending on certain budgetary items for months which had been masked by the complicated system we created for ourselves with the credit card.

I’ve written more about each of these factors in other posts as they were occurring but as they say, hindsight is 20/20. Regarding the boys’ preschool and S’ business, I have no second thoughts that we made the right decision although how to pay for them is still up in the air. As for the medical debt and the credit card, they reveal a major flaw in our debt repayment plan and current budget: we just don’t have enough budgeted to cover our medical expenses and our household/ grocery expenses. Our mission to pay off our debt but having a limited income to do so was forcing us to cut budget items that, now obvious, couldn’t take any more cutting. What we ended up doing was “robbing Peter to pay Paul”.

Here’s the budget that we were trying to adhere to (and failing) by amount, percentage of after tax income, and category:

$1,215  30%      Rent & Utilities: gas, electric, sewer, water

   $580  15%      Insurance: Health, life, disability

   $270    7%     Cars: insurance and fuel

   $135    3%     Tech: phones, internet, Netflix

   $650  16%      Household: Groceries, diapers, toiletries, pets, etc

   $180    5%     Extraneous/ Fun: haircuts, clothing, dining out, projects

     $60    2%     Medical/ Savings

   $910  23%      Debt: minimum payments

$4,000              Total after tax income

The only income we can count on is my bi-monthly pay check so that is what our monthly budget was based on. Extra income from my etsy sites, selling stuff off, tax returns, etc. go towards saving for one-time items that we need, like new tires. Once there’s enough set aside for the item, we make the purchase. We did a fairly good job of estimating what one-time items we might need and what extra income we can expect so far this year except that our extra income is frequently needed to cover the overages in our budget and we added a biggie with the pre-school decision.

I’m pretty much maxed out on bringing more income to the table. S is currently not bringing any income as he continues to focus on building his business up. Given the pitfalls we’ve faced trying to get his business up and running, we expect that his business will not be a significant contributor to the budget this year as most income will be put back into the business. Hopefully, next year we will start to see some profit. Options here include S holding on the business so he can find evening and weekend work to bring in some income or finding full time work which means the boys would have to go into daycare. Currently, we plan on sticking with the original plan of S focusing primarily on our sons (especially in light of the delays one of the boys is experiencing) and part-time on his business.

This is turning into a lengthy post so I’m going to end here. I’ll follow-up later with an assessment of each of our budget categories and how we might make adjustments to get our spending and budget aligned.

Credit card use

Throughout this process of paying off the debt there’s one cardinal sin we’ve always broken: we still use a credit card for regular monthly purchases which we pay in full every month. There are several justifications for our breaking the no credit rule and I’m sure most people will disagree with our decision. The method has been working for us for years, until recently. Before I get into our current plight, let me at least explain our justifications for continuing to use the credit card:

1.   It’s easier to pay one lump sum for a bunch of the little bills we pay each month. Our internet, phones, Netflix, medical debt, and utilities are all set up to auto-pay on the credit card. Since all these bills pretty much the same from month to month, it’s easiest for me to budget one larger payment and only have to remember to set up one payment each month.

2.   We get cash back rewards. It’s not much (2%) but right now, with such a slim income, any little extra helps.

3.   We also put the big items we’ve saved up for on the card to get the extra cash back.

4.   It gives us a wee bit of security in addition to our emergency fund. We pay the cc bill on the day it is released so there are several weeks of padding before the actual due date in case something comes up where we need to put that money elsewhere while we hustle up the cash to cover the unexpected instead of hitting our e-fund.

So now our current situation:

Earlier this year, we decided that we should try out paying for other things besides those listed above with the card to maximize the cash back. So we started putting everyday expenditures on the card like groceries, gas, diapers, etc. The idea was that we would take our cash for those budgeted items and put it in a reserve account so we could cover the expenses when the credit card bill was due. This worked reasonably well at first but it was complicated for me to keep track of everything since these other budget items where often variable and purchases are frequent and throughout the week. I was spending way too much time trying to figure out what expenses had occurred since the last time I transferred cash.  Also, psychologically, I did not like the feeling I got looking at a steadily increasing cc balance each month, even though the cash was there waiting to pay it off.

After a few months, I also realized that we were spending a little bit more on the credit card than we were setting aside and had been “dipping into” the next month’s cash reserves. The date that we were paying the card was also slowly creeping towards the due date. Basically, our little experiment failed. We are ok at paying set amounts and for large, saved for items on the cc but the smaller day to day stuff leaves too much room for error and overspending. So we’ll be transitioning back to our old method which will take a couple months since we overspent for several months.

Besides the basic lesson that making our finances more complicated like this DOES NOT help in the long run, there are also a couple other issues at play here that I’ll need to examine.

-    Were we going over budget each month because the cc was tempting us back to our old ways and giving us false security to overspend? Yes, I think we were guilty of this for at least a little bit of the overspending.

-    Were we going over budget each month because we don’t have enough budgeted to cover our expenses? I think this is a major factor, we’ve been so focused on “paying off the debt” that we are putting ourselves in a situation where we can’t cover the regular expenses.

-    Should we have dipped into the e-fund for some of the things that went on the cc? Yes, we definitely had a few totally unexpected things come up that should have been e-funded. We need to get comfortable with the idea that the e-fund is there to help us when we need it not some sacred account that’s untouchable.

Moral of the story, it’s time to get back to basics, assess the budget and simplify the finances. 

Early Pre-School

I’ve been meaning to write this post for quite a while but better late than never I guess. We enrolled the boys to start in pre-school this fall. Since Kentucky doesn’t have open public pre-school and since, even if the State did, most don’t start until 3 years old, we’ve had to enroll them in a private pre-school that offers a 2 year old program. We struggled with the decision given that we really can’t afford to send them to school so it will definitely mean cutting back on our debt pay-off. However…

I’m not sure I’ve ever written about the boys’ development delays since they haven’t had a financial impact on us in the past. Both boys have a speech delay and one also appears to have some other possibly sensory delays that we are still working to uncover. For the past six months we’ve been working with a speech therapist through the State First Steps program which helps cover the cost after our insurance for weekly therapy. DS B is making pretty good progress in getting caught up but DS L is still lagging behind hence us deciding they need as much additional help as possible. The bottom line is that we feel that we should supplement the therapy sessions to help them overcome the developmental delays as quickly as they can and catch up to their peers before kindergarten.

Given that the cost for pre-school has to come out of our already strained budget we had to go with the most economical route possible which narrowed down the field to a handful of options. Of those options, a cooperative preschool really rose to the top for us. To keep tuition costs down, parents are required to assist in the classroom a set number of days in each semester. This really appealed to us as a way to get a great quality education but also to experience first-hand a pre-school type curriculum and schedule which, in turn, helps us to improve their learning environment at home. The school is also pretty convenient to our house which will allow me to take them to school on my way to work on the days S is not working in the classroom. Another added bonus is that, on the days S is not working the classroom, he will be able to have more time to focus on his business.

Quick update

A lot has been happening lately in our lives that impacts our finances but I haven’t had a lot of time to write about it. Figured a quick bullet point synopsis would be better than nothing at all:

• We decided to use the emergency fund to put towards S’s kiln rebuild. He will have to work on it in phases as we didn’t have enough to purchase all the supplies outright but ultimately we can’t justify taking out a large business loan at this point.

• My parents offered to give us a loan for the credit card balance we were about to refinance. They offered the $4,200 needed at a 4.5% interest rate for a term of 24 months. Gets them a better return than some other short term, stable investment opportunities they were exploring and it gives us a better interest rate than we would have been able to get elsewhere.

• My parents also received some inheritance money from my grandmother’s estate and, graciously, decided to pass on a portion of it to me and my sisters. We were able to pay off the remaining medical debt we owe and minimize the impact that S’ kiln rebuild had on our emergency fund.

• Paying off the medical debt felt great and was even more important due to the fact that our DS L was admitted to the hospital over the holiday weekend with a high fever and seizure. He was cleared and the doctors believe it was a “typical” fever seizure so there shouldn’t be any long-term repercussions to his health. Given that we had already met his deductible for the year with his surgery, I’m hopeful the bills will be minimal and not have a long-term impact on our financial health.

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 naïve 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. 

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. 

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!

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!

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.

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.

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.

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!

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!

2015 Planning: Income Goals

I received a great raise at the end of 2014 which came into effect for my January 1^st 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.