Two years!

 

 

Happy Anniversary!

 

 

We celebrated two years of non-usage of credit cards in August.  If you can think of a better way to say that, please share, because that sounds like the worst. grammar. ever.  But - we are still going strong!  At least in that department we are doing awesome. 

 

We still struggle on a daily basis of getting a handle on keeping to the budget.  We still have no emergency fund because we have no budget.  And this fall is the absolute worst.  So many new activities to fund and all of the little extras that you don't think about that go along with them... I can't keep it all straight.  We have YNAB, but I haven't cracked it open since... March??  April??  I am once again balancing the checkbook by periodically checking the account via the online banking.  That is no way to take control of you money.

 

So Happy Two Years of not learning a damn thing.  :/

 

At least we haven't added to the mess!

Consolidating

 

 

I haven't posted much because dogedly paying your bills every month isn't that exciting.  Well, until you start making some headway, at least.  So what has been happening lately?

 

1.  Well, after a year or so of being lazy and putting it off, I finally shipped off all of my jewelry cast-offs to a company called Gold Stash.  It came highly recommended by Dave Ramsey.  I had several pieces - some earrings, bracelets, necklaces given to me by my ex that I knew I absolutely did not want to keep.  I also had no idea what they were really worth, but I am too reluctant to spend much time putting effort into trying to get the best deal.  The Gold Stash method of getting rid of your unwanted gold is painless and pretty easy.  Was it worth it?  Well, given what I had sent them - 2 pr. earrings, 4 necklaces, 2 bracelets and 2 rings, I only garnered about $120.  Nothing worth running to the blog to write about, but it was better than letting these unwanted items languish in my dresser drawer for another 10 years.  I don't feel ripped off, but given the price of gold right now, I was expecting something more in the $200 range.

 

2. We are now celebrating 18 mo. of credit-free living.  We paid off the second of Dean's three credit cards and closed one of them since it required an annual fee.  We will begin using the one that is paid off on a quarterly or monthly basis by using it on something small and paying it off immediately.  Our loan officer said that we don't want the card to go completely inactive, because for purposes of raising the credit score, active credit that is paid in full every month looks really, really good.  We are considering maybe putting something really small like Netflix on there, and then paying it immediately.

 

3. I called my credit card company last week to request that they lower my interest rate.  I've had this account for about 20 years now, so I have a long history with them.  Most of it good, with a few mistakes here and there, and because of those mistakes, I got penalized with a ridiculous rate of 29.99% a few years back.  I got that reduced after some tough negotiating, and I've been stuck paying 19.99% for almost two years now.  I called about a year ago, and they refused to budge, even though my payment history for the prior year was spotless.  So, I thought it was time to try again.  I got nowhere (of course - they don't ever give in immediately) with the first person I talked to, so I requested her manager.  In the span of a couple minutes, he came on the line and agreed that they would reduce my rate to 12.99%.  It's that easy!  Don't ever take 'no' for an answer.  If you keep up with on-time payments AND your credit/loan payment history with other lenders looks good as well (on-time payments and so forth), you should be able to make your case and get the rate reduction that you are looking for.  It is worth the phone call - so be patient, be persistent and don't delay!  This move alone, when we plugged the numbers into the remaining snowball payment spreadsheet, saved several hundred dollars in interest and moved up our debt-free date by a month.

 

4. Debt consolidation.  The day after my phone call to the credit card company, I went into our bank to make a deposit for Jordan.  The teller asked me what rates we were currently paying on our credit cards and car loan.  Was it prying?  Yes.  Was I irritated?  Hell no - I was proud of the fact that I had scored a huge win against the evil credit card people, so I was only too happy to share!  He asked if I would be interested in exploring the possibility of reducing our auto loan rate.  Sure - call me up!  So, the next day a loan officer from the bank called me and we set up an appointment for later in the week.  We have been paying on our van loan for about four years now.  We will be using the van as collateral to secure a debt consolidation loan at a 4.99% interest rate.  We will be using the funds to pay off the remaining balance on the van loan (7.25%), the last of Dean's credit cards (17.99%), and about a third of my remaining credit card balance (now 12.99%).  By shuffling our debts around like this and consolidating them, we will be saving an additional two thousand in interest and moving up our debt pay-off date by another month.  Another bonus is that Dean will no longer have any revolving debt, and come September, our next debt target - my credit card - will be paid off in full, which means I will no longer have any revolving debt either.  This fact alone will boost our credit scores by around 70-80 points, putting us back in the range of 750-780.  I don't know how to express how HUGE this is.  We will be officially in the market for a new home at the beginning of next year, and our debt-payoff date is that October, so things are really, really looking up. 

 

This has, at times, felt like an endless slog that was getting us nowhere, but we are finally seeing the results of living on a budget.  Had we stuck to our budget with absolute rigidity we might have kept our original payoff date of July '14, but we've needed wiggle-room every now and then.  We've still got this final goal to meet, but with the end in sight, it will be easier to say 'no' to the financial wants and desires that have sent us off-track in the past.

 

 



Our first year of Financial Peace...

I am very pleased to report that this first year has been a tremendous success in the effort to curtail our spending and gain control of our finances.  I am proud to say that we have now gone an entire year without using our credit cards.  Not even once.  Yay!!!!!  We removed them from our wallets a year ago - and have never looked back.  That.  Feels.  Awesome.  Neither of us ever felt the urge to dig out one of the cards - even when phenomenal sales and promotions for this, that and the other was going on - and we have FPU to thank for that.  Dave Ramsey's very frank talk about the evils of credit have truly sunk in.  Now, we are dealing with the conundrum of what to do with the couple of accounts that were paid off this past year.  Do we close them or keep the open credit so that our FICO score looks better?  Not sure what to do.  My gut tells me to close them and get rid of the evidence!!

So what was the year like?  We have been working the program - although our best months were early on - while we were actually taking the Financial Peace University Class, last Aug., Sept, and Oct.   After the class ended, we slowly slipped off the bandwagon as far as totally keeping on top of what our accounts were doing at all times. This means that we still struggle with keeping up with the checking account balance and getting bills paid on time - simply because we get buried in mail everyday, and I can't keep up with all of the paperwork involved. In order to prevent stuff from being late, all of our credit card payments and bills where the amount due is constant are all automated. It's the utility bills that are killing us because the amounts are always changing, and I just let the mail pile up... and you get the idea.

Paperwork is my biggest nemesis. When you add the financial stuff on top of the medical stuff (six family members tend to generate a lot of dr. appointments throughout the year..) on top of the homeschool stuff... it is the financial stuff that always gets the short end of the stick in my case. Which is wrong. Ensuring our solvency should be the number one priority, but sadly it isn't.

Finding an accounting method that works for us is still on our to-do list. Dean created an excellent cash-flow worksheet for us - and it works - when we use it. The problem is, we have so many different 'bills' every month - the debt, utilities, classes, memberships and other expenses that the list is long, and detailed. It's the details that make it difficult to keep up with it every paycheck cycle. The system is at its optimum when we use it - and when we don't, it's anybody's guess how much is left in the bank - and I hate that.

We've built up and blown through our emergency fund three times this year. BUT. It's proof that it works. If it wasn't there, the only survival option would have been credit.  So babystep #1, build an emergency fund of $1,000 is the key to making it work.

We've also set up a pretty detailed "Commission" (read - 'allowance') system for the kids to help them learn the financial ropes as well. It is newly implemented, so I want to see how it works before I say anything about it. We also purchased Financial Peace Junior for the kids, and will be working through that this fall.

So! Obviously, judging from the volume of my posting, finances aren't that exciting to talk about - especially when you're not rolling in the dough! :) The good thing is that they are never far from my mind. Our budget is tight, tight, tight, and there were some pretty hefty budget busters in play last year. Christmas was one of them, home projects and activities such as scouting, karate and so forth.

It's been a good year, and I really look forward to this coming year and seeing the domino effect of the snowball we started last year.  It's rolling fast and furious, and a lot of debt will be retired this year - we can't wait!

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.