C'mon Get Happy

I am in such a great mood this morning. I would be in a better mood if I hadn't acted without thinking, as far as spending my bonus money, but I am in a pretty good mood.

My original plan was to apply my entire bonus and our entire tax return to our two Best Buy cards so that I would eliminate those two payments. I paid off the smaller of the two cards, and I paid off the two purchases on the other card whose promotional interest rates were about to expire. Even though none of the purchases were accumulating interest, I thought that it would be good to eliminate those two payments so I could apply them to other debt.

I have a credit union credit card that we use for our day to day purchases because it offers cash back, so I didn't want to apply it to that card because we're likely to run it back up next month and the benefit is short lived.

I have a Discover card that I transferred balances to in December, but I didn't want to put the bonus towards that because it pretty much would have defeated the balance transfers for the 0% interest for 15 months.

Our Target credit card was already paid off, our credit card with our other credit union was already paid off, and we're on a fixed payment for my consolidation loan.

Doh! My consolidation loan, the loan with the highest interest rate (10.49%). I should have put my bonus towards the consolidation loan. While the thought of eliminating two credit card balances was appealing, the majority of the purchases did not start accruing interest until 2013. The minimum payments were very minimum ($25 and $31), and they were accruing $0 in interest. Applying my bonus to the consolidation loan would have decreased the balance, decreasing the interest that is accruing on the loan, and would have put me in the position to pay the loan off at some point this year. The money that is currently going towards the loan could have then been applied to the Best Buy balances, and they still would have been paid off before they began accruing interest.

Lesson learned.

I can't get the money back that I've already paid out, however the balance of my bonus, plus our tax return that we will hopefully receive in March, will instead be applied to the consolidation loan. Paying off just over 30% of the balance of the loan will greatly decrease the interest that is accruing and in December, I will use our savings accounts to pay off the balance of the loan. And just like that, we will get $177.68 a month back in our pockets every month. Or more accurately, we will get $177.68 to apply towards the Discover Card. Depending on how my bonus looks in December, I will either use the remainder of our savings account to pay off the Discover Card, or if my bonus is looking amazing, I will pay off the balance of the Discover Card next February when I receive my bonus.

The money that I am currently putting towards the consolidation loan ($177.68) and the Discover Card ($244) each month, will pay off the balance of the Best Buy card before any of the remaining purchases begin accruing interest next year. By next July, all of our credit cards will be paid off, except one, and our consolidation loan will be gone.

And, I am going to resume contributing to my Roth 401(k) next month when my raise goes into effect. I will not be contributing at the level that I wanted to (6%) because realistically, we can't afford to right now, but I will be contributing at 3%, which is something, and when I pay off the bulk of my debt by this time next year, I will be able to increase my contributions.

None of this takes into account any raise or bonus that my husband will receive in the coming year. He receives monthly bonuses based on production and quarterly bonuses based on job safety, as well as an annual bonus based on a combination of both. It has been hit or miss whether he has gotten raises from year to year, because he works for a small company, so I never count on his paycheck going up.

I think we have decided to forgo the expensive vacation this year, in favor of saving for a Disney trip next year. If we go on vacation, it will be significantly less expensive than previous years, an less expensive than we had planned with the Disney vacation.

So yeah, right now I'm feeling pretty okay with where our finances are headed, as long as I can reign in my husband's spending. I've been making strides not to go to the store unless I need something so that I do not spend impulsively. My next goal is to create grocery shopping lists so that I do not wonder the aisles aimlessly looking for something to cook and end up coming home with a car full of snack foods and no real meals to speak of.

To close, here is the picture of our current debt distribution, after paying all bills for February. As you can see, the overall percentage of debt that is attributable to credit cards has increased, as has the overall credit card total. This is as a result of my husband buying video games, etc on an impulse.

Christmas, the Budget Buster

Oh.My.Gosh.

How on earth did this happen?

We planned to spend $200 per child on gifts, plus stocking stuffers, and hoped to come in at about $500 total for their Christmas gifts.

But we have no self control.
No legitimate budget.
No concept of how much we're spending.
No restraint.
Nobody to reign in our spending habits.

My husband made me sit down and write a list of everything I bought for the kids and how much it cost, so he knew how much money he had to play with. As I wrote it down, and my daughters list covered the entire front of a sheet of notebook paper, plus some of the back, I realized we had a problem. A huge problem. A $700 problem.

That is right. My five year old is receiving $700 in gifts for Christmas, including all new bedding for her room, a Nintendo 3DS with three games, and a whole lot of Lalaloopsy dolls (Misty Mysterious, Marina Anchors, Rosy Bumps & Bruises, Suzette La Sweet, Silly Hair Jewel, and approximately 10 mini's). There is more, but I can't remember it all. In comparison, my son had very little, so my husband went crazy buying him stuff this weekend.

That does not include items I plan to make them (tee pee's, pillows, my daughters dress up costume).

I added up our current credit card totals. We put $3000 on credit cards this month.

We have not bought for the adults in our family yet. And I don't know if I'm supposed to be buying for nieces and nephews.

And suddenly I feel like my throat is closing up and I'm getting panicky because I know I have a serious shopping problem.

I vented about this problem to some of my friends, and ultimately felt like I was being attacked back. I had already acknowledged that I had a problem, and I felt like they were just piling on.

Anyway, I told John that going forward, we're going to have to limit it. I'm going to start a Christmas club after the first of the year and we are NOT spending anymore than we save for Christmas next year.

I had been feeling so excited because we were going to have credit card bills paid off once we got my bonus and tax return at the first of the year, but now my bonus is paying for Christmas and we're going to owe on taxes, so now I just feel completely overwhelmed. I'm thinking about getting a part time job, just to pay down credit card debt.

And on that note, here's what our debt looks like as we end November.

No Counting, Just Trying

I can't keep counting the days that we've been paying off debt when we realistically have not been paying off debt during much of that time. I haven't written lately because I feel like a big, fat failure. We've only added to our debt.

I think last time I wrote, we were getting or had just gotten a consolidation loan to pay off some of our credit cards, or maybe I hadn't even done that yet. Anyway, we consolidated a ton of our debt and promptly went out and ran up those cards all over again. As much as I talk about wanting to pay off debt, I can't stop spending money. And then I blame it on my husband. Looking at our expenditures, it's mostly me. It's my random trips to Kohl's, my daily lunches with coworkers, buying toys for the kids just to buy for them. I like to spend money because I work hard for it and feel like I deserve it.

But, we're no better off now than we were before. We're treading water. We make minimum payments on credit cards and then use those cards to pay for the things that we need and want, so every month our bills are staying at exactly the same level.

We made the decision last week that we were going to use our savings account to pay off credit card debt. Clearly, it's not going to cover all of it because we have so much debt and so little money, but we're paying off our Target credit card, our Kohl's card (which we used to buy a new vacuum when our old one burned up last week), and the bulk of the balance on one of our credit union cards. Basically, it puts us back to where we were when we consolidated our debt in the first place.

We will mostly tread water through the end of the year, trying to save enough money to pay for Christmas and limiting what we purchase this year, and then when we get our bonuses and tax return after the first of the year, we'll pay another large chunk of our debt. Then finally, next summer, we'll use all of the savings we've accumulated to pay off the remainder of our credit card debt. It will leave us with two car loans, my student loans, and our mortgage, but we won't have revolving debt anymore.

This also means I'm taking my lunch four days a week and limiting my lunch excursions to Friday's. We're trying to eat out less as a family too, for our health and our wallets. I got a raise last month, which my husband doesn't know. It only added $40 a paycheck, but that's a tank of gas for my car. I should get another raise after the first of the year.

I never expected this to be so hard. I didn't expect it to be so much work. Hopefully by next summer, I'll be reporting how we're in such a better place than we are right now. I want to save for our retirement, and I'd like to buy a bigger house, but how are we supposed to do that when we can't even discipline ourselves right now?

Day 354: May Totals and Random Updates

I believe when we last left off, I had recently had an interview and was waiting for word as to whether I would get a promotion to a new position, or whether my job audit would net me a promotion in my current role.

I'm sad to say that neither happened. The job I had interviewed for decided that I did not have enough experience, which I guess I can see since everybody else they interviewed was a business analyst and I am just in sales support. It doesn't make it any less disappointing though. HR responded to my job audit by stating that, although I'm doing more work than required for my position, the extra work that I'm doing is not required for my current position and is simply an added benefit that I bring to the job, so they told my manager that my job could not be reclassified.

So I got no more money. However, after three years, my husband finally got a $0.75 an hour raise. I personally feel it should have been more, given that they haven't given raises in three years, but I'm glad he got something. His company has now started offering a retirement plan too, so we will be filling out the paperwork to start contributions to that as well. It will be a hit to our take home pay, but I'll be glad that he's saving something for retirement. I will likely start contributing again after the first of the year, possibly with my merit raise next year.

While it's disappointing that my current department gave me nothing for my efforts, my manager did say that she could give me a merit raise at my midyear review, and another one next spring. I'm anxious to see what kind of increase I get at midyear.

My student loan payment is going to go up $10 a month after my August payment, as part of my graduated repayment plan.

I have noticed that several readers have ended up on my blog for searching the term "What is a grandfathered repayment plan." From what I understand, there was a revision in the student loan terms, both pertaining to interest rates and payment terms for student loans. I believe this was in 2006, but don't hold me to it. At the time, it seemed like a great idea, because it made all student loans fixed rate, instead of variable, and was locked in at the "low" interest rate of 6.some-odd percent. As we all know, when the economy tanked, this "low rate" was no longer a low rate, but I guess that's how things work. From comparing my payments on my current (grandfathered) repayment plan and the new repayment plans, it appears that the new plans have smaller incremental increases on the graduated plan, but the loan is stretched out for a longer period of time. I believe when I signed my loan paperwork, the longest a loan could be repaid on was 20 years. Now it is 25. Similarly, extended repayment plans can last for 25 years, instead of 20.

I think this is kind of a catch 22 for consumers. When I began repayment on my loans about five years ago, I only had 20 years to pay them off. Yes, my payments are going to increase every two years so I will be paying larger payments towards the end of my repayment period, but I only have 15 more years of paying on them. I have been considering consolidating my loans that were not included in the initial consolidation so all of my loans will be locked in at the same rate, however I believe that this resets my payments to another 25 years (unless I make additional payments on the principal) and I end up paying more interest in the long run. Do I consolidate an lock in the 2.something interest rates on my currently variable loans, or do I leave the two separate and pay them off in 15 years?

If I were making any headway on our debt payment plan, I would leave them as is. My student loans would be paid off in less than 10 years, and if my interest rate on the variable loan skyrocketed, it is legitimately small enough that I could pay it off with a tax return or bonus. But I also know that we always have those returns and bonus's spent before they're even deposited. I hate making grown up decisions.

I actually think I'm becoming a little too obsessive about money, bills, debt and the like. I already have a whole payment plan mapped out for our bills for 2012, and we're not even half way through 2011 yet. I mapped out all of the bills we have to pay, based payments on our current salaries (assuming no increase in salary), assuming no decrease in our mortgage (which we should see because of our decreased homeowners insurance premium), and assuming we continue paying the same monthly payments on credit cards, even as the balances and minimum payments decrease.

And you know what? We have a lot of extra money left after paying bills. Now, it doesn't take into account groceries or gas or any other necessities, but I know approximately how much we spend on these items in a given week or month, and they can fluctuate based on what disposable income we have left after paying bills, but I have to say that unless something catastrophic happens (*knock on wood*), 2012 should be a great year for us financially.

We have 22 weeks where we will have more than $150 after paying bills, 7 of which we will have more than $200, 4 of which we'll have more than $300, and 2 of which we'll have more than $400.

I hope that it actually comes to fruition. That is a lot of extra money to pay towards credit cards. On my spreadsheet, I assumed $200 in spending money (for gas, groceries, and miscellaneous spending) and for weeks with more than $200, I will put everything over $200 in our savings account.

Like I said, I'm a little obsessed about it, and a little crazy for devoting so much time for it, but I think seeing it in black and white helps keep me on track for paying things off in a timely fashion. If I can see where the progress is being made, I'm more likely to stick with it.

Ok, so that's enough rambling I guess. Now I will leave you with pictures of our May debt. This does NOT take into account the money we spent on vacation, as it was not accumulated until June.

As you can see, there wasn't much change in the overall composition of the debt, or the amount of debt paid off.

Day 311: April Debt Totals and Just Waiting

I'm at a loss. I don't know how to decrease our debt level when we're having a hard time meeting our monthly obligations. We pay down credit cards, or pay them off by the end of the month, but then the next month we don't have enough money to pay for gas, or food, and it has to go on our credit cards. One of the credit cards I paid off last month with our tax return now has an almost $800 balance. I was going to pay it off before the payment due date, but then realized that I did not account for our water bill in my budget this month, so there goes that plan. As gas prices continue to increase, our ability to pay off our debt is going to be dramatically impacted. They are predicting that $4.00 a gallon gas will come to our town this weekend based on the $111 a barrel oil. It's very disheartening that the harder we try to get ahead, the more it seems like something is trying to keep us down. We've already seen our grocery bill nearly double in the past year, and that's buying the same items we were buying before.

On a more positive note, I switched insurance companies. I have been with State Farm since I first started driving 15 years ago. I've always had auto insurance with them, and then renters insurance when I had my own place, and more recently, homeowners insurance. They've usually been pretty good to us, so I never had a reason to shop elsewhere. Well, last January we had to file a claim because the county flooded our basement. Six months prior to that, we had filed a claim on a busted ac/furnace unit, thinking the whole thing would have to be replaced to the tune of $5000. They repaired it, instead of replacing it, so our claim was for a measly $800, so it wasn't even worth it. Anyway, last year, on renewal, State Farm raised our homeowners premium nearly $100 because of our claims history. Two months ago, we received notice that they were increasing our deductible from $500 to 1% of our replacement value, which was nearly triple the deductible we already had on record. I called our agents office, furious, asking how much the deductible was going to be and advising that we would be shopping our insurance elsewhere. They told me they would see if they could decrease our deductible to $1000 and that the reduced coverage would mean lower premium. Wrong. When we received our renewal invoice, our premium went up nearly 25%. So, I started shopping my insurance.

In the interest of full disclosure, I work for Nationwide insurance. I have worked here for nearly 5.5 years, but never switched from State Farm because I liked the way I had been treated by them and the last time I was quoted with Nationwide, they were nearly double State Farms rates. Upon receiving our renewal notice, I called Nationwide. The result? Our homeowners premium is down $105 over 2010 premium (down nearly $250 from what we would have been paying with State Farm). Our auto insurance? Down about $20 a month, so almost $250 for the year. By switching to Nationwide, we saved almost $500 in premium this year. I guess the commercials don't lie.

They will reassess our mortgage payments in July. Hopefully by then, the County Auditor will have reassessed our property value for tax purposes as well, and we should definitely see a decrease in property taxes due to the reduced value of our home. I sent in the paperwork this year to have them reassess, after seeing a more than 30% decrease in property value. The house next door to ours is currently on the market for $35,000 (foreclosure) and has been for several months with no sale. I've finally just stopped looking at house values in our neighborhood because it's too depressing. I'm pretty convinced we're never going to be able to move.

We did decide to take a vacation this year. I booked the room a few weeks ago and got it for 15% off the lowest advertised price, plus they waived the resort fee and parking fees. After dividing the cost with my sister and mom, who are going along and sharing the condo with us, it worked out to less than $1000 for the week for the hotel room. We should have the entire cost of the room paid off before we leave for vacation. We're trying to have a garage sale before we go, but it got rained out last time.

I interviewed earlier this week for a higher paying job. Upon learning that I was interviewing, my supervisor at my current job approached me and told me that she knew I was doing more than required by my job description, so she wanted to perform a job audit to try and get me a promotion and a raise. I should know if I get a second interview by the end of the week (or possibly Monday), and I don't know how long it's going to take to hear back on the job audit, so right now I'm on pins and needles waiting to see if I will get another raise, this time in the way of a promotion.

Anyway, I promised our current debt totals, so here they are. As you can see, we did increase in credit card debt. Our credit cards now compose 9% of our overall debt load, as opposed to 8% in both February and March. I'm hoping that interest rates stay low until they determine the new student loan interest rates next month (I think it's next month), that way I can reconsolidate and reduce my payments further.

Day 170: No Good

I didn’t want to post this entry this month. I kind of want to beat myself after looking at it, honestly. Here is our debt for this month, including the money we’ve spent on Christmas so far.

So what can we discern from this image?

I am lousy at paying off debt. We have added over $17,000 in debt since June. We have added over $3000 in credit card debt since June. We have added over $2500 of that credit card debt in just the past month. From last month to this month, we have added nearly $2000 in overall debt.

Taking stock in our current financial picture, I think it suffices to say that I am not meant to be a debt counselor. Our balance transfer from our Target card did us no good. Not only did it max out our credit union card, but the Target card is now nearly maxed out again.

We are foolish. We are never going to get out of this debt trap. I’m ready to return my washer and dryer. My husband is using that purchase as an excuse to go out and buy himself an expensive Christmas gift, even though the conversation we had when we bought the washer and dryer was “If we buy this, then we’ll just buy small gifts for each other.” I should have known that he’d want everything to be “fair and equal.”

This is why I don’t let my husband know the state of our financial affairs if we get extra money. He will never know how much of a bonus I bring in. He won’t know how big our tax return is. He won’t know anything about money I’m putting into savings. Is it horrible that I’m thinking about withdrawing our kid’s savings accounts to pay off our debt? I feel like, if I do that and I’m not paying interest on credit card debt, that we can replenish their savings accounts quickly.

Does it make me a bad mom for withdrawing their savings when they’ve earned less than a dollar of interest YTD on either account? I just kind of think that’s the only way we’re going to get rid of our debt. But what if that doesn’t work either? I feel like we’re drowning.

On a slightly less desperate note, I joined Swagbucks three weeks ago and have since earned enough swag bucks for three $5 Amazon gift cards. If you're interested in doing things to earn Swagbucks (which can ultimately be cashed in for real gifts), please click the button to the right to sign up using me as a referral. I also cashed out all of my survey winnings last week so I can put that towards paying off Christmas. It was only about $60, but $60 is better than nothing, right?

Day 159: Why?

Why do we keep doing these things?

We went and bought a washer and dryer last week. To be fair, it was an amazing price. A Samsung steam washer and steam dryer, king sized capacity, for about $1300, plus we got a $130 gift card back on the purchase. I love the set, and I’ve been looking at upgrading our washer and dryer for about three and a half years now (since we bought the house), and like I said, phenomenal price! We put them on our Best Buy credit card at 18 months with 0% interest and justified it because of the no interest financing.

To be honest, I also justified it because of the Energy Star price tag that says it uses $12 a year to operate based on a $0.10/kilowatt energy rate, versus our old washer that used $77 per year based on a $0.07/kilowatt hour energy rate. The sales man also told us that while traditional washers use close to 50 gallons of water per wash, the set we bought is probably closer to 16. Given that we were doing probably 8 loads of laundry a week, that’s a substantial savings. Oh, and since this is a king capacity set, we’re not doing as many loads as we were before. Well, we are this week, because I’m so in love with the set that I can’t stop washing laundry, but once the novelty wears off, we’ll probably be down to four loads a week, maybe five. I’m anxious to see next month’s electric bill, just to see if the cost savings are that substantial, and then our water bill in two months.

I’ve seen a difference in our electric bill since I hung blinds and curtains in our daughter’s bedroom last month, but I don’t know if it’s because the weather is warmer than this time last year, or if it’s because the heavy curtains legitimately make a difference. I should have hung the heavy curtains in my son’s room too, so maybe I’ll see if I can find the liner that you attach to the back of existing panels. The true test will be in January, which has traditionally been our highest energy month over the three and a half years we’ve lived in this house. I signed us up for the budget payment plan in May for our electric, and right now we’re running a surplus of over $170 for the past six months. If the energy efficient measures we’ve taken do what they’re supposed to, perhaps our electric bill will be closer to $120 a month next year, instead of $160. Hopefully, it will be even lower than that.

In good news, I found out that my bonus next year actually comes the second pay day in February, instead of April as I had thought. I will actually receive two bonuses next year, a large one in February, and a significantly smaller one in April, because I changed jobs three months into the year and I get bonuses from both departments. We should see our reimbursement from the county in the next month, the bonus in February, the tax return in March, and the second bonus in April, then my husband should receive his bonus in June, and I should receive a pay increase in March, so hopefully in four or five months, I can stop obsessing over where the money is going to come from and instead obsess over how we’re never getting back to this place again.

Also, I signed up for swagbucks. If you're interested in doing random things like using a search engine, taking surveys, answering polls, and watching videos for points that can be redeemed for prizes, please consider signing up using my referal. I have been doing it for less than a week and have already earned enough points for a $5 gift card from Amazon. I appreciate your help. http://www.swagbucks.com/refer/justaname

Day 129: Rambling about the Past and the Future

I read this article on Yahoo yesterday, regarding 401(k) matching. As I wrote about a month or so ago, I discontinued my 401(k) contributions temporarily because we needed the additional income to help pay our bills and I was facing a consistent negative rate of return on my investment.

Reading the comments on this article (which is no small feat, given the numerous server errors that plague Yahoo articles), made me really think about my investment philosophy and planning for our future retirement.

I don’t know if I’ve spilled any personal information about myself, but I am 29 years old and my husband is in his mid-30s. I make approximately $42,000 a year plus bonuses (which have ranged anywhere from $500 up to an anticipated bonus this year of closer to $1500). My husband is on an hourly wage and generally has a gross income between $21,000-$25,000 and has not seen a raise in three years. Given our yearly salaries, I find it very sad that we have no savings accounts to speak of.

I put $25 per paycheck into each of our children’s savings accounts and then transfer those funds into small, short term CD’s whenever the savings account balances reach $500. I keep the CD’s small, and occasionally have multiple CD’s with different maturity dates, usually only buying 3 month CD’s due to the low savings rate. If the savings rate ever increases (which I anticipate it will in the future), I may buy more long term CD’s. My children know these bank accounts exist, even if they don’t fully understand them. In addition to my automatic contributions every two weeks, we also put any change and cash they receive into their piggy banks, and when the piggy banks get full, we take the piggy’s to the bank, dump the change into the change machine, and deposit that money into their savings accounts as well. When they get older, I will teach them how money is used to buy things, and we will maybe put half of their change into savings, and the rest of it will be used to buy things they want. I will also give them an allowance for doing chores around the house; something I never received growing up.

I think a lot of my financial immaturity can be traced back to my parents and how I was raised. I don’t want to blame my parents, because they did the best they could, given their financial position. They were both teenagers when I was born and my mom dropped out of school at 16. My dad graduated, but always worked hard, manual labor jobs just to make ends meet. They had five kids, and then divorced, and spent the next 14 years arguing over money, child support, medical bills, and everything else. I remember my dad, over and over again, telling me and my siblings how my mom was being unreasonable, expecting him to pay half of the medical and dental bills when he already paid child support, even though that was what the court order stated. I remember him showing me his paychecks and telling me, “This is how much I bring home, and this is how much I pay your mom, and how much does that leave me with? Do you think that it’s fair that I should have to pay her more for doctors and dentist bills?” Similarly, I remember copying every check that my dad sent my mom for child support so she would have proof for the courts that he wasn’t paying his fair share, and knowing how much she was bringing in, and how much the mortgage was, and really having no clue on utilities or car payments. Based on what I know now, as an adult, it’s no wonder our home was foreclosed on when I was 17 years old.

When we bought our house, we made an effort to determine how much home we could afford. I never wanted my children to feel the sense of loss that I did when we lost our home. It was as if I went off to college, and never had a home to go back to. Apartments never felt like home, and I moved every year so I didn’t really accumulate much from year to year. My first apartment was furnished, but my second was not, and the only furniture I owned was a queen sized bed and a 19” tv. I sat the tv on a box and didn’t have cable. My living room was empty. Same with my second apartment, until my (now) husband bought me a tv stand to set my tv on for my birthday. It wasn’t until I moved in with my husband that I actually had furniture in my living room, and even then we had a broken down couch that he’d gotten from friends, or family, or somewhere, and a dresser that had broken handles. We got a free washer and dryer when we signed a 15 month lease with the apartment complex, which worked great for us at the time. We got an old desk from a friend that was moving and furniture from friends and family when they replaced theirs.

So as we were saving to buy a house, we calculated how much we were spending on rent, and we put whatever we could into savings every month. We kept track of what we were able to save, what we were spending on extraneous items, and where we could save more. When we met with a mortgage broker, we told him we could afford no more than $950 a month for our mortgage, interest, and insurance; knowing that we could afford closer to $1000, but not wanting to push our budget. He told us that with the amount we were looking to spend, we could only afford a $100,000 house, but that with our income, we qualified for $160,000 home. We disagreed, telling him that $1000 would be pushing our budget and he told us that we would see raises and be able to afford more in the future. I am glad we didn’t listen to him.

We looked at homes between $99,000 and $113,000, and ultimately bought the most expensive one that we looked at, but it had four bedrooms and one and a half baths, and did not need near the work that the others we saw needed. It was, for all intents and purposes, move in ready.

When we bought our home is when finances started going downhill for us. We bought a new couch, new bed, new tv, new tv stands. It was almost as if when we were told we could afford more house, we thought we could afford more stuff to go in it. Of course, we had no more cash, and since our mortgage payment was at the top of our limit, everything went on credit. At a time when many people were losing their job and defaulting on debt payments, we were a great asset to companies looking to make a profit, like banks. We bought and bought and made the minimum payments and finally, at Christmas last year, hit a point where we were questioning how we were going to buy gifts for everybody that we were supposed to buy for. We had been buying with the assumption that our tax return would bail us out, that bonuses would hold us over, that all of the spending that we did throughout the year would be wiped out with the influx of cash in the spring.

The problem was that with the credit card reform that went into effect earlier this year, some of our creditors, especially the ones with the biggest balances, decided to change their fixed rate cards into variable rates, and increased the interest rates to the point that 90%+ of our minimum payment was going towards interest. This led to higher minimum payments to cover the interest plus a minimum payment towards the balance, and without the tax return, we didn’t have the money to pay the balances down.

Then we were hit by problem after problem financially. Our air conditioner broke, twice. Our basement flooded with sewage. Our air conditioner broke again. The bottom of our car was rusted out and it would have cost more to repair than it was worth to keep it.

Through it all, though, we’ve managed to keep our heads above water. Our 2010 tax return went towards paying off the credit cards we used to fix our basement. Our 2011 tax return will go towards the other problems we’ve had crop up throughout the year.

Once we’ve made a sizable dent in our debt, I will start putting a percentage of our pay into savings for a rainy day fund, instead of throwing so much money towards the debt, that way we will have a cushion. We’re less stressed with an emergency fund.

And after we’ve made payments towards these credit cards and I feel that we have sufficiently gotten our heads above water, I will resume contributions to my company 401(k). My company matches 50 cents on the dollar up to 6% of my salary. I contribute to a Roth 401(k) because I’d like to think that I will be making more money when I retire than I do now, pushing me into a higher tax bracket. Even if I’m not making anymore, I will still probably be in a higher tax bracket due to inflation. After contributing to the maximum that my employer will match, I plan to contribute to a Roth IRA, eventually up to the maximum that I am allowed. I would eventually like to put some amount into the market for long term investing, not to play the market. I want to learn more about buying stock and diversifying my investments. My company also offers a pension, in addition to the 401(k), which I am well aware makes me very fortunate.

Anyway, this discussion about planning for retirement has gotten very long winded and off track, but I guess I just needed a brain dump today. To sum it up, I want to diversify. I know that 401(k)’s aren’t guaranteed, so I’d like to also contribute to a Roth IRA and savings and CD’s, but I’d also like to try some long term investing in the stock market, and hopefully by time we retire, we’ll have paid off our mortgage and won’t be carrying debt, and we’ll be able to live comfortably without worrying where our next meal is coming from.

Day 128: Tiptoeing Forward

We’ve had a small step forward this month; or maybe a big step, depending on how you want to define it. Our debt actually went down across all categories, even credit cards. Only one credit card balances actually went up, but everything else was down. All told, we cut over $888 from our debt balance. It is a very exciting month for me, and the fact that my husband finally seems to be getting on board with some of my plans makes me very excited for us as a family and our financial picture.

We also got some good news from the county last week. They will be reimbursing us the out of pocket expenses that we incurred in January as a result of the county’s sanitary sewer flooding our basement. We will be receiving $1377 back from the county. My husband and I have discussed it and decided that $377 of that will be going towards credit card balances, and the other $1000 will go into a savings account for an emergency fund. We debated putting the entire amount towards a credit card, but decided that we are less stressed when we have an emergency cushion, even if it is only $1000.

We will be paying our Target credit card off in the spring, when we receive our tax return. Knowing that we give the government a “loan” every year doesn’t feel so bad when I know we’re getting a chunk back to apply towards our credit cards. I’ve already sat down and planned out where the money is going to go based on the expected refund. Last year we received a refund of over $4000. This year I anticipate it will be closer to $3000 because I’ve recently adjusted my withholding to put more money towards debt now, instead of waiting until tax time. I have abandoned my plan of paying off both Best Buy credit cards with the tax return because we’re not paying interest on them and I felt It was more important to pay the cards that we are paying interest on off.

I can’t wait to watch balances turn to $0. In March, the Target will be at $0, then in June, Best Buy #1 will be at $0, and then December will be Best Buy #2. With my anticipated bonus in April, we may even be able to pay down half the balance on CU 1 in the spring. The thought of eliminating that much debt makes me so giddy. More than that, the thought of being able to save money, instead of putting it all towards debt, makes me giddy.

We have been doing better than I anticipated at paying off debt and staying within our means. I may be able to resume contributions to my 401(k) after the first of the year. I just feel good.

Here is a picture of where the debt is as of the time that all October payments are made. The total for CU 2 is in gray because it has not yet been paid, but this is an estimate based on the minimum payment and total amount that will be applied towards interest.

Day 121: Little Failures

I haven’t had much to write, and I haven’t really wanted to reflect on my failures this month. Everything went up except for the two categories that could only go down. Credit card balances are up, we have our new car loan, and we’re pushing closer to $200,000 in debt than we ever have been before. Even though the balances on both of our Best Buy cards are going down, pretty much every other card has gone up.

My husband and I have been arguing about what exactly a budget it. He doesn’t seem to grasp the concept. He thinks that you can’t budget because “little things pop up” and I’ve told him repeatedly that the point of a budget is that those little things don’t pop up. He’s not talking about emergencies; he’s talking about wanting to go out on weekly shopping trips for non-necessities, like books, like clothes, like toys. As long as he thinks that a budget is supposed to be busted by these “little things that pop up” we will never get on track financially, no matter how hard I try.

I honestly don’t know how we’re paying for Christmas this year. I told my husband that we’re going to have to limit gifts to 5 per child. He thinks that means five big gifts. I told him this year is not the “Barbie jeep” kind of year. Last year we bought our daughter one of those Power Wheels Barbie jeeps and she hardly drives it. My plan for Christmas this year, is to sit down with sales ads and write a list of exactly what the kids are getting, and then go out the day after Thanksgiving to buy the things that are on deep discount. We’ll do the remainder of the shopping throughout the month of December, but will not deviate from the list. We can’t. We can’t afford it.

I’ve also been looking into Once a Month Cooking, or at least once a week; buying and cooking in bulk and freezing meals. Anything I can do to simplify my life and decrease our variable expenses (like groceries.)

Here is our snapshot of our outstanding balances after paying all bills for the month of September.

Day 100: 100 Days In

I made a stupid decision this morning, or maybe not. I paid a collection account. I know the experts say not to pay collections, that in most instances they can be gotten out of, especially on a debt that is four years old; however, I really felt that I needed to pay the medical bills for when I had my daughter.

I didn’t even know that a new collection agency had the bills. They’ve been passed around a lot. When I first incurred them, I fought them because the hospital hadn’t processed our application for financial assistance, then I fought them because I simply didn’t have the money to pay them. We didn’t hear anything for years, and it wasn’t until this spring that we heard from another collection agency. I actually originally thought that the collections were from when I had my son, but upon further examination, realized that they were from 2006.

So, why did I pay them, knowing that conventional wisdom says that I could keep disputing the debts and having them passed around until the seven years that they wouldn’t be able to put them on my credit report anymore? Because I don’t want to fight them on a debt that I know is legitimate. I honestly thought I’d paid them in 2007. And, they discounted it to half of the outstanding balance.

I figured if I was going to pay off debts, paying off a medical bill that’s been haunting me for four years wouldn’t be a bad one to start with. At least I feel like that’s one albatross that is no longer hanging around my neck.

In our financial world, things kind of took a deep dive this weekend. I learned that my husband can’t be reigned in financially, and when he splurges, so do I. If I’m being honest with myself, I did need to two new pairs of shoes that I bought. Realistically, working in an office, I needed shoes that didn’t have holes in the soles. It was a financial expense that I had to incur. It hurt, but it needed to be done.

We bought our daughter a new bed this weekend. As I stated, she is four years old, and she was still sleeping in a crib. She was above the weight limit for the crib, and it’s actually recalled, so I knew I needed to get her a new one. I wish we would have had a way to get it home ourselves because we spent $40 on delivery. Hopefully when we return the recalled crib, we’ll get some money back to offset the expense.

We also bought birthday gifts for our daughter. I had planned to buy her one toy and some clothes. My husband went crazy and spent close to $130 on toys for her. I reminded him that Christmas is only three months away, but it didn’t matter.

So we completely undid all of the good we had done on paying off our debt in one weekend. Now we’re back to square one.

My mother, sister, and I are going to have a garage sale the first weekend of October, so hopefully I’ll make a little money and be able to put it directly towards credit card debt. First of the month, with winter clothes as we’re entering fall, and some homegoods that we no longer need… I think we’ll make decent money, at least. Last time I made $200 with one box of clothes. Hopefully I do at least that this time.