End of 2014 Report

Starting point:

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 were we are today:

Student Loan 1: $34,961

Student Loan 2: $19,351

Student Loan 3: $0

Car Loan: $0

Credit Card 1: $0

Credit Card 2: $0

Credit Card 3: $4,730

Misc. small debts: $4,349

Medical expenses: $1,887

Parents: $0

Consolidation Loan: $9,037

Total: $74,315

Paid off to date: $26,808 paid off + $1,348 in savings

The final quarter of 2014 got us moving back in the right direction. After three quarters of debt increases, I was feeling like we may never get back on track and that we might have made the wrong decision in changing up our lives so dramatically with the move. But here we are at the end of 2014 and I have hope again that we can pay off our debt! We’re ending the year with roughly $1000 more in debt than at the same time last year. It’s disappointing but given the year we had I’m ready to get over it, forgive the past and just focus on what we can accomplish in 2015.

Year in review

I had three goals for 2014:

No.1: Stick with a tiny, one salary budget so S could stay home with the boys and restart his pottery studio.

No 2: Get emergency fund back up to $1000.

No 3: Pay off remainder of medical bills (which was $550 when I made the goal), pay off as much cc debt as possible, and continue to chip away at all other debts with minimum payments for a grand total of $7,000 in total debt reduction.

Looking back on the year, I have to laugh at how naïve I was when I made goal number 1. The transition to one income was much more difficult than I had ever imagined. It required a level of cooperation and communication between S and I that was way beyond our ability when the goal was made. It took months of growing pains before I really felt like we were in synch about the budget and many more months after that before we could reign in our spending to conform with the new budget. We were also ridiculously naïve about how much work S would really be able to get done with the boys at home and how much time/ money it would really take to get a business off the ground. Taking the year as a whole, we bombed goal number 1. But in the final quarter we were able to launch S’ business, have been able to stick with our budget and start making a dent in debt again. We have also grown immensely in our relationship, as parents, and as financially responsible people so I’m thinking we didn’t totally fail at goal number 1.

We met goal number 2 in the final quarter, which is such a relief. Overall we are doing a much better job at forecasting, budgeting, and saving for upcoming major, one-time expenses but it’s good to have some money set aside for real emergencies like the ones we have faced this year.

Lastly, there’s no way to sugar coat goal number 3: we failed miserably. We failed to understand what goal number 1 meant and ended up acquiring new debt trying to figure it out. We failed at estimating just how much the move would cost us and acquired new debt trying to make the transition. We wiped out our emergency fund in the move which meant we had no way to pay for the unexpected medical expenses and acquired new medical debt. It just wasn’t a great year financially until the last quarter, when we finally got our act together. I guess I should be thankful we are ending the year with only an additional $1000 in debt given all the failures along the way.

2014 was a major learning experience, yes, we increased our debt, but in the end I am proud of how well we have dealt with the setbacks. I am anticipating 2015 will be a great year for us, we’ll continue to grow and learn how to manage this new lifestyle, we’ll start seeing major decreases in debt again, and we’ll better predict and manage upcoming expense. Here’s hoping for an uneventful year, at least in the financial aspect!

Busy, busy, busy

I don’t think I’ve ever been busier in my life than I am these days. In some ways it’s good, it’s nice to feel productive and it distracts me from the fact that I’m not making much progress on the debt.  In other ways it’s bad, I am experiencing some negative side effects on my health and tend to feel overwhelmed a bit more lately particularly about our tight finances. But there’s not much I can do about it at the moment so I’m just trying to roll with it and hope that someday soon I’ll be able to relax a bit. Here’s what is keeping me busy these days…

Boys: They are 18 months and just a whirlwind of activity. They are truly becoming little independent people and, even though I’ve said this about every stage they’ve gone through, so far this is my favorite stage! Keeping up with them is exhausting and exhilarating all at once.

Family: The move to be closer to my family has been wonderful in most respects but it has added a whole level of demand on my time that I wasn’t considering. Seems like most weekends have some sort of family gathering going on and there’s a level of expectation that we will be attending all of them even though we live an hour and a half away. Lately I’ve been saying “no” more frequently and with a lot less guilt. I figure they were used to only seeing us a couple times a year, they will survive if they only see us a couple times a month!

Work: Business is booming, which is great but also stressful. Work days are flying by lately in a flurry of deadlines and 8 hour days are stretching into 10-12 hour days a little too frequently these days. Thankfully, we’ve brought on another person so once they are up to speed it should help calm the rest of our work loads.

Side work: December is my busiest time of the year for my etsy businesses. I participate in holiday craft fairs and typically see a pretty big increase in online sales both of which add to the strain on my time. I usually close down the shops for a few weeks once the Christmas rush is over and right now I’m just counting down the days until I can shut that part of my life down for a few weeks!

Daily Life: Living on such a tight budget means every dollar has to go as far as possible.  Even though I’ve learned a lot in my relatively short quest to pay off my debt, frugal living still doesn’t come naturally.  Also, I think frugal living just takes more time, a lot of my money used to go to convenience like prepared food or replacing things instead of fixing. Either way, I spend a considerable amount of time planning, reviewing, and researching ways in which to make my dollar stretch. Hunting down deals, making things myself that I otherwise just would have bought prepared, repairing things that I would have replaced, and all of the other things I have to do now to get more for my dollar keep me busy. Plus all the hustling to sell off stuff we don’t need any more like outgrown clothes or bring in money in some other way adds to the strain.

I’m thinking that I might just reserve the month of January as a “no family events, no side jobs, and no hustling” month.

Three years of debt reduction

Today marks the third anniversary of my beginning this blog and my debt reduction journey. It's been a tough year financially: S and I made an expensive move, transitioned to one income, have been investing in his business, and racked up some more medical debt. All told we increased our debt a little over $1,600 in the past year. I've been trying to stay the course and see the positives in the setbacks we've had over the last year and remind myself that we will get back on track. 

Although debt reduction did not happen here are some of the more positive things that did occur in our financial world:

• We've made a transition to one income and aren't starving, deprived, or destitute. Making the leap to one income to allow S the opportunity to restart his ceramics business and stay home with our boys was a major hurdle this past year. I had major anxiety that we wouldn’t be able to make it work, that we wouldn’t be able or willing to make the sacrifices we would need to make in order for it to work. I was worried that ultimately the boys would end up back in some cut-rate daycare and S would be forced to abandon his dream and take some minimum wage dead end job just to make ends meet. Fortunately, we have made the adjustment relatively well and have been living on one salary without feeling too deprived with all the cuts we have had to make although it has added to the halt in debt reduction and increased debt.
• S’ business is fully funded and ready to launch. S has been working diligently on getting his business back up and running, which required a significant amount of our discretionary funds that otherwise would have gone into debt reduction or at least not accruing the new debt.  But now the business is fully funded and is going to be “launched” right before the holiday shopping season. We have high hopes that the business will be able to support itself in its infancy and eventually will bring in a profit.  In the meantime, now that the biggest hurdle is almost over S has been talking about getting an evening/ weekend job to bring in some extra income but still be able to be with the boys during the day.
• We should see a reduction in our taxes this year from the moving expenses which were not covered by my employer as well as the business investments. Although any tax return wouldn’t happen until early next year, it’s still on the horizon and can go towards debt reduction.

The road ahead is going to be tough as we still have a ton of debt to tackle but I'm hopeful that the last of the debt increases are behind us and we will start making headway on debt reduction again.

Yard sale prepping

This weekend I'm participating in a yard sale with my mom and one of my sisters. I'd like to say I'm looking forward to it but I'm really not. It seemed like a great idea when I agreed to it a month ago, I had been on a purging binge for a couple months and was ready to get rid of more stuff. But then life happened and I just haven't had as much time to go through all our stuff as I would have liked.

I do have quite a bit of stuff set aside and tagged. I already had boxes of baby stuff ready to go and I've made my way through all of my clothing, shoes, and accessories. I've managed to sift through some kitchen wares, books, my sewing and craft supplies, and grabbed random stuff from around the house. What I haven't tackled is the attic, which became a catch all for random boxes from the move that were not critical to unpack and were getting in the way. Since we've now lived in our new place for 6 months it's fair to say that we don't need most or any of the stuff in these boxes.

I'm going to try to get through as much as possible before Friday evening, when I have to pack up the car and head to my moms (an hour and a half away). Since most of the stuff I've pulled together is small, cheap, and not the best type stuff for yard sales, I'll be glad if I can walk away with $20 extra bucks. I guess I'll just keep the stuff labeled and in boxes and have another yard sale in the spring. Surely I'll be able to get through all of our belongings over the next 6 months.

What to do with won money?

I didn’t win anything but I did recently enter an online sweepstakes and it got me dreaming about what I would do if I won the $350k cash prize. Just for giggles, let’s assume I won and now have $350,000 in cash. And since we’re dreaming let’s say that’s after taxes…

The #1 first thing I would do with my cash is get a mani/ pedi. Kidding, sort of. It is the one thing from my easy spending life that I really do miss. The real first thing I would do is, duh, pay off all debts! Secondly, I would set aside 6 months living expenses in an emergency fund, finding the highest yield savings account available or perhaps a CD ladder. $100 K would go straight into college savings for the boys and another $100 k would go into retirement accounts for S and me.

I’d also want to set aside a 20% down payment on a house so there’s another 40k (a 200k house in this area would be more than enough for us to grow in). The remainder I would invest, something about peer to peer lending appeals to me, perhaps because we got our consolidation loans through peer to peer to help us out of our debt mess.

$77,117.00 Debt

$24,000.00 Emergency Savings

$100,000.00 College Fund

$100,000.00 Retirement

$40,000.00 House

$8,883.00 Invest

$350,000.00 Total

But wait, all the money is going to debt or to some sort of savings?  Where’s the party, where’s the new car and big screen, what about the mani/ pedi? Yep, I feel pretty comfortable saying that I would put everything into savings after the debt is gone. After a decade of owing money all over the place and having gone through several major life events that would have been a lot less traumatic had there been savings to fall back on, I absolutely would put it all towards financial stability. Besides, paying off the debt would free up at least $800 a month to put towards having a bit more spending cash each month for the luxuries in life.

Now if only I could just win that cash… until then I just have to keep doing this the old-fashioned way and keep chipping away at the debt.

3rd Q 2014 Report

Starting point:

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 were we are today:

Student Loan 1: $35,319
Student Loan 2: $19,837
Student Loan 3: $0

Car Loan: $0

Credit Card 1: $0

Credit Card 2: $0

Credit Card 3: $5,939
Misc. small debts: $4,349
Medical expenses: $2,218

Parents: $0
Consolidation Loan: $9,458

Total: $77,120

Paid off to date: $24,003 paid off + $655 in savings

Let's get the bad news out of the way: we increased our debt for the second quarter in a row. We're another $688 higher than we were last quarter. The good news is: that's all we increased despite having over $2,300 in medical bills this past quarter. If I'm trying to see the glass half full, it's also good that all of the medical debt we've added over the last quarter is interest free and is in the process of being consolidated into one low monthly payment.

Other good news, we've finally got some cash in savings, some of which is "emergency" and some of which is being set aside for our car insurance payment. Barring any major unforeseen events, I am hopeful that the coming quarter we will finally start making a dent in debt again as well as finally get our emergency fund back up to $1000.