Back in the saddle

http://www.flickr.com/photos/katkamin/6462625847/

The holidays were brutal.  But I am here to say that we made it through without using our credit cards to make up the difference.  We did, however, decimate our emergency fund.  Making kids happy on Christmas morning is an emergency right?

We didn't go overboard, (really!) but we didn't go into the holiday season with a plan, either.  There was no time to prepare.  We worked hard all fall to build up that emergency fund, start up the debt snowball and shove it down the hill.  There were no pennies left to even think about Christmas. 

So here we are and the chips are falling.  We have a whopping twelve cents left in our savings account, so we are back to square one.  The good thing is that we are not experiencing the post-holiday blues like we have in the past - by opening up the credit card statements, one after one, and being consumed with remorse.  For that I am very, very thankful.  We have not used credit since August, and it feels sooo good!

We finally pushed up our sleeves and had the long-needed budgetary meeting this past weekend.  We haven't had a plan since the beginning of November, and it is nice to see where we are heading.  It is a busy time right now... karate lessons are going up in price as Jordan has moved up a level, lots of activites with scouts for both Jordan and Rylan are adding up to dollars here, dollars there... and we don't want to be caught empty-handed.

Relearning the lesson to just say 'no'

Dean and Jordan will be foregoing a boy scout ski trip this coming weekend because we had an emergency repair to the dryer last weekend.  Dean did the work and saved us a boatload of money, but the part was just expensive enough that there is little left beyond grocery and gas money for the rest of the week.  Dean would have had to pay for the lift tickets this past Monday to hold their spot, and there just wasn't enough left.  We had to back out... but that is the kind of decision-making that has to happen if you are going to commit to getting out of debt. 

I am having to say 'no' to a painting lesson with friends this coming Friday night, because - again, there isn't that much room for error during the next pay period.  We have already mapped out the cash flow, and it is apparent that hardly anything can be shunted back into the emergency fund.  We are being hit hard with annual drudgery like vehicle tags, vet visits and the like...

Getting out of debt is not a quick thing.  The process for us will take a long, long time.  This coming holiday season, though, we are going to be prepared with A PLAN.  I don't like looking into an empty wallet and feeling the fear, day in and day out, that we are just an emergency away from serious trouble.



I just spent $4K and I was so relieved. What is wrong with me?

Orthodontia is expensive.

Thank you mom and dad for providing the funds to fix my teeth all those years ago.  I now feel your pain.  I don't know how much it impacted you financially, but I am sure it wasn't easy.  So thank you.

Almost three years ago the dentist warned us that Jordan was going to need some ortho work.  He suggested first trying a nite guide.  It would cost $3200 for all of the dental work and the actual appliance.  They would require the entire amount up front.  We had a $1500 lifetime ortho benefit, but the remaining amount was more than we had left available in our ADP account.  It would have to wait until the next January when ADP started over.  We recalculated how much to divert to ADP.  He got the appliance next January. 

Fast forward almost two years and the appliance was not doing what needed to be done.  The dentist gave me a referral almost a year ago to go consult with the orthodontist to see if we needed to do something different.  I didn't make the call.  I kept forgetting, but then it also got to the point that Jordan wasn't wearing his nite guard like he was supposed to.  I told him we would not be consulting with an orthodontist (and spending loads of money) if he wasn't going to make the effort to take care of his teeth.  So, he quickly resumed wearing it.  Most mornings I found it lying next to his pillow, so I am not surprised it didn't help..

I called the orthodontist in November, after the dentist said at the check-up visit in October that it was time to get the ball rolling.  I called to schedule a consultation, and the first opening was in January.

About that time, (mid-November) Dean informed me that we had $1100 left in our ADP account.  We had over-estimated how much we would need for this year, and if you don't use it you lose it - despite the fact that it is your money to begin with!  I got orthotics, but, dang it, that was covered.  I made a dentist appointment for me - which hasn't happend yet.  Then, the orthodontist called back and said that they had a cancellation, and could get us in at the end of the week.  yesssss!  A way to use the money!!!

Appointment day came, and we went in to the rather posh waiting room.  Surprisingly enough, there is no little kids corner.  There is a nice theater room, with several chairs.  There is a nice gaming room with 6 different gaming stations.  No kid corner.  Apparently the constant stream of teenagers coming through at any given moment have NO younger brothers and sisters.  I checked Jordan in, got the paperwork, took the little kids and went back out to the car.  I can't concentrate on paperwork and keep track of kids.  When Jordan finished the consult and came back out, I went back in, and 'consulted' with the finance lady.  She showed me a neat video showing exactly what they would need to do to Jordan's teeth.  She showed me the treatment plan.  She explained the finances.  I was sooo relieved.

Total cost of treatment was $5500.  They would give a $1500 credit for the nite guard as a thank you for the referral from the dentist.  We could use a big chunk of our remaining ADP for this year.  If there is any left after my dentist appointment, we can give them a call on Dec.30th and apply the rest - down to the penny.  Next year, we can make a big payment in January, using ADP.  The following year we can make another payment (much smaller) using ADP.  I was so relieved, I nearly cried.  I think I surprised the finance lady by how thrilled I was with the payment plan.

For two years now we have been sweating with how we would pay for this.  It wasn't nearly as much as I thought it was going to be.  It was such a relief that they didn't require it all at once.  They were so nice to give us a price break after spending all of that money on an appliance that didn't even work. 

After living on the financial brink for the last three months, it was a nice bit of news and a huge relief that, for the most part, we wouldn't feel it.  We have become so used to shunting 'x' amount of pre-tax dollars every paycheck off to ADP to cover the medical expenses that insurance doesn't cover (co-pays and medications) for a family of six, that we don't even notice it anymore.

I signed the paperwork and didn't even pause.  What is wrong with me?  We are agreeing to spend a lot of money here, and I am not even giving it a second thought?!  I am not even asking for second opinion?  I haven't even met the orthodontist that is going to be messing with Jordan's mouth!  It bothers me that there is such a disconnect here.  Since we are 'sheltered', in a way, from the actual sting of paying such a huge amount of money, it was so easy to just sign on the dotted line.  I have to keep reminding myself that yes... $4100 dollars will be coming out of our pockets over the next two years.  We have no more ortho coverage.  The usage of an ADP account makes it 'feel' like credit, even though every dollar in there was put in there, a little amount at a time, with each and every paycheck. 

This is a critical point that Dave Ramsey makes in his Financial Peace University course.  Through rampant over-consumption and abuse of credit, most of us have become immune to the 'pain' of big expenditures.  We don't even blink.  or pause.  or ask questions.  There is a lot more pain involved in handing over actual cash, than a piece of plastic.

A lot of my friends are going through the same experience right now.  We all have kids that have attained the age where braces are necessary.  It is a mutual financial pain that we all share.  I just have to keep reminding myself to also think about this from Jordan's perspective.  He's the one that has to go without popcorn for the next 18 months.  Or his all-time favorite candy, Hot Tamales.  Poor kid.

Saving up for the big stuff..



As I mentioned before, we started shifting money into our savings account to save up for upcoming expenditures.  One the items was the 60K mile service on our Honda van.  We are about to leave on a road trip, and the odometer reads 69K... so we were way overdue.

Our van is no longer under warranty (for the most part) and I am doing a happy dance.  I have had a great deal of difficulty with the dealership when it comes to getting oil changes or service.  They are over-the-top when it comes to amenities, but the customer service personnel is another issue.  They aren't exactly polite when it comes to being around kids.  Especially when you have four of them.  I took the van in for an oil change recently, so that I could redeem a punch card for a free one.  We were quoted 45 minutes for our wait time.  We were there 2 hours and 10 minutes.  For an oil change, people!!!  Four kids and a stressed-out mom, crammed into a 6x8 playroom, for 2 hours and 10 minutes.  I may or may not have been responsible for some verbal abuse as I was paying my bill.  The best way to get out on time is to take your cranky kids back out to the service desk area at the appointed time, and let them go full boar.  Then you politely ask, "Dude!  Where's my car?" 

This time we happily took our car to our regular mechanic, Tom.  Tom works only on imports, and I have been taking my cars to him since I was 16.  We had our old Subaru Forester up until this past April, when the head gasket blew climbing a mountain pass, so we haven't seen him in awhile.  It was actually one of his mechanics that took the vehicle off of our hands for $500.  We were thrilled!  We were facing the very real possibility that we would only be able to sell if for scrap - and get *maybe* $100 for it.  So, since our van is now out of warranty - I was all too happy to finally bring it around to see Tom.

Following advice we received from Financial Peace University, we called ahead a couple of months ago to find out what the estimated amount for the service would be so that we could begin saving.  We divided it up the amount, spread it out between the paychecks, and saved up the $400 we would need.  That was a generous estimate, but it was nice to know it would be there.

The car was worked on yesterday, and I went back in the late afternoon to pick it up.  I was double-checking the bank balance on the way (my dad was driving), but just about had a mini-heart attack when I saw what was left in our checking account.  I was dropping off the mortgage payment that afternoon as well, (yeah - we were paying on the last day of the grace period...), and adding the two amounts together (mortgage and car)- it was more than was in the checking account.  WHAT???  I went into shock!  How could this have happened?  We have been so careful!  It took a full minute for me to realize that the money for the car service WAS there.  It was just over in the savings account.  We have been operating for so long (YEARS) with nothing but the minimum balance in the savings account ($25 bucks) that I completely forgot it was there.

Thank you Dave Ramsey!  What a feeling of relief to know that the money was there and that the money was meant for nothing else but the car service.  I wouldn't be shorting us for grocery or gas money, or be unable to pay some other bill because had I paid for the car service.  In the past, that was the vicious cycle.  Rob from one item to pay for another.

So, since it felt so good to have this money there and ready to go, and I like this feeling and I want to continue it, I called up Tom this morning and asked him when the next scheduled service is and what the cost estimate would be.  He told me 90K and around $1200.  It is a doozy of a service because a lot of things need to be replaced at that point.  That makes sense...  So.  We are at 69K right now.  We average 900 miles a month.  Each trip to OK is about 3K, and we go 2 -3 times a year.  We are not planning any other trips at this time because our focus is to pay off debt - not blow it on a trip.  So, I figure we will need this service in about 16 - 18 months.  Divide it out and I come up with $40 each paycheck.  That hurts a lot less than trying to come up with $1200 all at once.

So save your pennies - but give a name to each and every one and make a plan for those pennies!  The peace of mind is worth every penny.  :)

Penny for your thoughts??

(okay, that was corny)

How to reign in the desire to pile on the presents



It is so easy to go a little nuts when the holidays roll around... you pick up something here... you pick up something there.. and then you forget about half the stuff you bought already... and you forget the stuff you ordered online... you go into a store and see the toy display and change your whole game plan...

Sigh.

I don't remember how it came up in conversation, but a few years ago I got some advice from a fellow home schooling mom, Gail, about how to pare down the gifts and set the expectations to a more realistic level.  I've changed up the list somewhat to suit our kid's needs, but the premise remains the same.

Why was change necessary?



In years past, the kids have been spoiled.  Rotten.

You feel, as a parent, that if you don't have a humongous pile of presents for your children under the Christmas tree by Christmas Eve, you have failed.  Your children will hate you.  For years to come, they will sit on the couch in their therapist's office and lament at how stingy you were.

It's society's fault.  The commercials you see on T.V.  The displays in the stores.  The magazines and the websites.  They all show a disgusting amount of money being spent - all for a few moments of Hallmark Moment glory, before it disintegrates into "Where in the hell are we going to put all of this stuff??"  or "PUT AWAY YOUR @^#&$*% TOYS!!!"  All the while, your children are looking at you, completely bewildered, because they don't know exactly 'where' anything else can fit into the playroom.

So.  YES.  change was necessary.

Gail's list was simple, formulaic, and actually ingenious - because it took the craziness out of the season and gave you a concrete structure to go on.  Here is my version of the wish list that I go by...

Before Christmas...

1. An ornament.  Every child gets an ornament from us each year.  This is a family tradition that I grew up with, and I wanted to do it for my kids.  I keep a record of all the ornaments they either receive or make each year, so that they know when they got stuff.  When the time comes for them to leave home, they can take their ornaments and memories with them.  Makes me sad, but that is what I got to do at that age - and I love that I have all of those ornaments still on my tree, every Christmas.  The ornament, if possible, ties into what has captured the child's interest in the past year - a favorite character, activity, color, ect...  I do tend to splurge on this item.. in the past couple of years it has come from the Hallmark store (because, as a kid, mine did too...)  BUT.  Now that we are shopping for four - that means an easy $60 is dropped right there.  Ouch.

2. Advent goodies.  In the past I had three different Advent things that we do - this year we will have four, so each child takes a turn doing something different.  One is a felt calendar of a Christmas tree that has star-shaped buttons that mini-ornaments hang from.  The kids rotate turns hanging another ornament each day.  Another calendar is a wooden gingerbread house with numbered advent doors.  There is enough room to stuff four little chocolate candies in each compartment, or every few days or so I will put in dollar coins (I only fill the compartment early in the morning of the day of..).  The third is an advent candle that has the numbered days going down it - light it each day.  The final one is one I will start this year, if I can... - the Lego advent calendar.  I missed it last year because I hesitated and they sold out... not this year!!  Another advent thing to do is to use those little gauzy bags that you use at weddings or showers to put party favors in.  You can buy packages of them at craft stores for pretty cheap.  You fill up 24 bags with little trinkets, small toys, hair stuff or fun jewelry, coins or candy and then place them in a open-lid gift box.  Take out a bag a day.  My SIL did that for the kids about three years ago, and it was a BIG hit with the kids.  Another friend, Amanda, wraps up the family collection of Christmas story books every year, and each night, the kids take turns choosing one to unwrap and read.  No purchase necessary - except for the wrapping paper, which you can snag during end-of-season sales.

Christmas Eve..

• A new pair of pjs

Christmas Morning..

 (wrapped and under the tree)

• A book
• A game (sometimes this is a combined family gift)
• A toy
• A new outfit
• Something for art or crafting (model kit, paints, clay, playdoh)

(In the stocking)

• socks
• toothbrush and toothpaste
• nail polish, lip balm or hair accessories for Rylan
• body wash for Jordan
• Matchbox cars for Owen and Colin
• Candy
• DVD movie (if good deals are to be had...)

(From Santa)

• The one item they asked (begged) for the most, as long as the price is within reason

So... the list is set, and only ONE item per child per category is purchased.  I have, in the past, gone overboard stuffing the stockings with this and that and the other... the expense just goes through the roof.  I know exactly what I need and I make the best choices I can in each category - balancing needs vs. wants.  The biggest 'wow' factor is reserved for the Santa gift... leaving the magic exactly where it belongs.

Get out of the rut!



It's no secret that we are on a tight budget (especially since I've blabbed on and on about it on the www and even dedicated an entire blog to it...).  So it has become routine for family members to fill me in when this or that store is having a sale.  A big one came up recently, when my SIL called to say that Sears was putting a lot of their Land's End stuff on clearance. (thanks for thinking of me Michelle!)  I love Land's End!  I started doing calculations in my head.  Some of our clothing needs are critical... Jordan didn't get a new wardrobe last fall because everything still fit... now he has had a growth spurt and we are in trouble.  Same with Rylan.  The shirts still fit for the most part, but her pants are an issue.  And she has no winter coat.  And Jordan only has two pair of shoes: crocs and hiking boots.  That is a problem.   Thank goodness that Owen and Colin are just swimming in clothes - many, many thanks to some wonderful friends (Amanda and Dalliss) who have been frequently passing on clothing, coats and hiking boots to me - you are a godsend!!)

So I am doing the calculations: our needs are great.  But the money... hmm.  We sat down a month ago and planned out the next three paychecks.  We are really getting the swing of working the cashflow down to the penny.  Unplanned Halloween expenses (mainly food) threw a nasty twist into the budget, so I know there is no wiggle room.  We had set aside $100 from that cash flow to tackle the three biggest clothing concerns: a winter coat for Rylan, tennis shoes for Jordan and a pair of pants for Jordan.  When we plan out this month's two paychecks tonight at our budget meeting, we can see when we can put some more money aside for clothing.   

In the past, when I got wind of a big sale, I would just yank out the credit card in a flash and reap the rewards.  The savings!  The big haul!  LOOK at how much stuff we got for just $XX!!  Yes, I have taken advantage of many deals in the past.  And now the credit card company is taking advantage of my inability to show restraint.  To the tune of $460 a month in interest.

We went to our last Financial Peace University class last week.  We jumped in on the third class, so it has been ten weeks of some pretty intense learning.  I am sad the class is done.  It felt like a support group... like an AA meeting or something.  We could all commiserate about having to live on a budget.  I feel a little worried about not having the weekly support anymore, and that it might be easy to slip into some old habits.  The class is thirteen weeks for a reason: it takes that long to establish a habit.  We have gotten into the habit of not even considering the credit cards as an option.  If it is not on the budget sheet, we don't buy it.  I didn't budget extra money for clothes, therefore I did not go down to Sears to check out the sale.  I felt bad, but I didn't go because if I had spent that money, it would have meant that something else couldn't be purchased.  When the cash is gone, it's gone.  It is amazing though, how deeply entrenched that habit of using the credit card is.  That neural pathway of using the card as a way to acquire goods has been trodden down.  Much like the Oregon Trail.  You can still see the wagon wheel ruts.  The credit card ruts will remain for a long, long time.  Probably as long as it will take to pay off the stupid things.

Thanks, but no thanks

I have mindfully practiced the habit of checking the bank balance and credit accounts on a daily basis to guard against theft.  There has been an alarming increase in identity thefts/fraudulent use of debit cards in the past few weeks in our neck of the woods.  My aunt was a victim.  Our bank account is easy to check because we have reduced our debit card use to about 5 transactions (not including bill pay) a month.  I'm not kidding.

So yesterday, when I checked my credit card, which carries the biggest, ugliest balance of them all, I was surprised to see that they had increased my credit limit.  By A LOT.  ummmm... thanks?  Don't these people know I am (for all intensive purposes) unemployed?

So I called them up.  I politely asked if they would consider reducing my interest rate (19.9%) instead.  The lady put me on hold, turned around to consult with her imaginary manager, and then came back and told me 'no'.  Really?  Even though I've paid over the minimum and on time for over 12 months??  No.  You suck, Visa!!  But then she gave what she thought was a tantalizing offer: 0% interest for the next 12 months on all new purchases.  ooooo.  I informed her that this particular deal was of no interest to me because I was not planning on using my card.  ever.  again.  To which I was met with silence..

People, I'll say it again...  Debt.   is.   stupid.

Now I need to brush up on my negotiating skills and call back.  And talk to the fictious manager.  Because I've been a responsible bill payer.  I want my reduced-rate reward.  Not more debt.

Financial Planning: Holiday expenditures for the Fall



Have a plan for your money, or it will make the plans for you

(and you may not like those plans, particularly...)

Simple Mom posted a reminder about Holiday Budget Planning recently - and it was time to get started.  Well, it is too late for us to plan for this round of holidays, but it got me thinking and planning for next year.  Fly Lady also got me thinking about how to plan for holidays in the first place - only do what the family actually wants to do - not because you think you ought to.

So to pass the time on a longer car trip we took this past weekend, I wrote out a list (with every one's input) of the Fall/Halloween Activities that we like doing and want to do every year - or at least while the kids are young.

* Pumpkin patch visit.  (We always go to the same one - Bartel's Farm)

* Gleaning (again, we always go to the same farm - Miller Farms)

* Treatsylvania (a local, just-for-little-kids Trick-or-Treating event)

* Centennial Village (a local, just-for-little-kids Trick-or-Treating event )

* Trick-or-Treat Street at Dean's workplace

* Halloween trick-or-treating

* Pumpkin carving

* Fall colors drive/elk bugling

* Visit to the Denver Zoo

* Trunk-or-Treat at our church

* Make caramel apples

* Oktoberfest family gathering

* Apple cider & popcorn family game night

* Toasted pumpkin seeds

* Parties and the food items we bring along

Then, I priced out each activity.  Trick-or-Treating also means costumes and candy.  We make our own costumes, but sometimes I still need to purchase a few things.. material, paint, ect... 

The total was just under $300.  That is a lot of money to just come up with on the fly... yet you don't think about it as the fall season approaches.  We started actively zero-based budgeting in September, so we planned for about half of these items.  The other half - mainly the food items, were not really well thought out, so our food budget took a real hit the last half of this month.  Oops.  Live and learn.  So, beginning next month, $25 will be budgeted each month to go towards the Fall/Halloween fund.

So this is where true discipline takes place.  The money that we save towards long-term planned expenditures needs to reside in a safe place - our savings account - and not be touched.  We need to create virtual envelopes within our savings account so that we know how much of the savings is allocated to what expense item.

Enter the savings account spreadsheet.  As we begin each virtual envelope, we just add it to the list.  We have created a few this past month...

* 60K car service that will be performed next month, the week before we leave for OKC for Thanksgiving

* fuel/eating expenses for our trip to OKC

* Annual license plate tags, due in Jan.

* Furnace maintenance check next month

Unfortunately, there is only so much $$ to go around, so there is no way to set up something now for the xmas holidays. I honestly don't know where we will come up with the funds necessary for that.  I'll have to think about that tomorrow.  Or the day after that.  Or... the day after that.  Sigh.