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.

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.

KaBOOM!!



Every good debt snowball needs a good stick of dynamite to set it off.  The faster you can get it rolling, the faster it will grow.   In July we got wind that a stick of dynamite was coming our way.. we just didn't know exactly when.  Dean is an electrical engineer and works for a good company.  We have been blessed many times over in recent years that as round after round of layoffs were announced, Dean was always spared.  But less hands on deck means more work for everyone else, so Dean and his fellow team have had to work extra hard on their different projects.  The company has been good though, and has rewarded the hard work with an annual profit-sharing bonus last year and this year.  Now I wish I was talking about a lot of money here, but it comes out somewhere in the 3 - 4 K range.  Last year we paid off a credit card and took a short vacation.  And then we promptly racked up charges on the credit card over the past year because we hadn't changed our ways.  Oh well - at least we have nice vacation memories - nothing to sniff at.  But nothing to show for it either.  We had no idea if he was going to get another one this year, but as luck would have it - yes!  Then we 'met' Dave Ramsey.  We have seen the light so to speak, and have been humbled.

For the past month, we have lived on a very hairy edge.  We have had to use every financial life line we had to get by.  We cashed in stock options.  ($300 - big deal.... but it paid for groceries and gas), we cashed out a small investment fund... ($125), we had to spend our birthday money to keep the balance in the checking account to keep from going negative (when things get better, we both promised ourselves that we would spend that birthday money on something fun, as it was intended).  As we used each life line, I could hear a ricochet in my head as if a taut wire was cut and the ends were flying apart with a loud crack.  We were NOT going to use our credit cards.  Because we couldn't.  They were each within $100 of their limits.  The past six months have not been kind.  So many 'things' have come up, each with a pressing need, and our spending far out-paced any time in the past.  Our day of reconciliation had come - and yes we were humbled.  A couple of days here and there I fed the kids and only nibbled myself.  We cleaned out the cupboards.  We rationed milk, eggs, flour, sugar and the gas in the car.  It was raw, hard and intense.  And I never felt so alive!

I won't say that I ENJOY this experience, but it certainly brings a clarity to your life that was previously unknown to either of us.  I mentioned to Dean how frightened I was when we cut our last life line last week (the stock option) and he said that he felt like it was a freeing experience.  It was a testament to our faith.  God was guiding this experience, and asking us to trust that if we let go, that we would at last be truly free to take this problem by the horns and really deal with it.  Okay - just a moment here, because Dean never talks like this.  Only one other time that I can think of, when Dean mentioned divine intervention as the way we were brought together in the first place.  I'm sure that Dean's family thinks that I have drummed religion out of Dean's life.  I haven't.  I didn't drum it out of mine either.  It just sort of 'happened' - for both of us.  When you feel dead inside, the spark of faith starts to sputter.  We both have strayed from feeling 'moved' by much of anything, until now.  The process is working, we always manage to find a dollar or two in the time of need, and we have to have faith that it will continue.  And for that, I give thanks and feel truly humbled.

The day that the stock option money was supposed to be transferred to our account (last Friday), we had already experience a slight reprieve from the day before, when I sold about three things from Craig's List.  We had $45 dollars and we felt rich!  lol...  Then Dean checked the bank balance that morning, to see if it was there yet, because the city bill HAD to be paid ASAP.  You can't deal with the rest of your troubles when you don't have power or water.  Low and behold... there was the bonus.  The heavens opened up and 380,000 pennies came raining down.  What a gift!  And we were not about to waste it.  On with the program!

Baby Step #1

The first step to Financial Peace (besides STOP using the credit cards) is to put away an emergency fund.  The typical amount is one thousand dollars.  This way, if a true emergency crops up, you don't run to your credit cards to cover it.  Done.

Baby Step #2

Pay off your debt using the Debt snowball method.  We paid off every item that we were behind on.  Luckily, we were only behind a month on about four things, so it didn't take too much.  Then, we took aim at the first debt on our list.  Checking account overdraft.  This little cretin is such a pain.  We pay it off, and it just comes back.  Again and again.  We are going to see if we can just get this option removed from our account altogether so it doesn't happen again.  Or at least decrease the amount that is available.  Next, we took aim at the next debt on the list.  One of Dean's credit cards.  We threw one thousand at it.  The next regularly scheduled payment is due at the end of September.  Here is where the debt snowball method comes in.  The overdraft loan payment was $30 each month.  Now we don't have to make that $30 dollar payment anymore, but we keep it in the budget anyway, and apply it in addition to the next credit card's minimum payment of $88.  So we now pay $30 + $88 towards that card.  When that card is paid off - hopefully by early spring, we will put $30 + $88 + minimum towards the next card.  The the snowball just continues to grow and grow.  In the meantime, any extra money that comes our way, or that is not spoken for in the budget will be thrown at the current debt target.

For one glorious afternoon and evening (last Friday) I felt like a huge weight had been lifted.  We even went out to eat.  And then felt immediately guilty the next day when we paid every thing we could and realized that our food budget for the rest of the week was going to be strained.  I spent 3 hours just shopping King Soopers for produce and Walmart for everything else.  I only had $150 in our grocery cash envelope, and there I was going up and down the aisles, with a calculator, trying to make it all fit.  I put eleven items back.  I still came out $11 over, and had to take it from the gas cash envelope.  That means we are back to gas rationing.  Sucks.  But I like being back on the hairy edge.  It keeps you honest!

It is the best feeling to finally get our snowball rolling. 

It feels dy-no-mite!!

(okay, that was cheesey...)

CHEETAH! Ruuuuuuuuuuun!

If you know of Dave Ramsey...you know what I just said.

If you don't know of Dave Ramsey - get to know him.

TODAY



"Owe no one anything except to love one another." - Romans 13:8

Last week my mom gave me the second-most precious gift in my life.  (The first of course being my life). That may sound dramatic, but you will understand what I mean in a moment.  Mom offered to watch the kids if Dean and I wanted to go down to our church and sit in on a session of Financial Peace University.  I didn't even hesitate.

We may not be the most regular (ahem) of church-goers, but we have heard of Dave Ramsey.  I have seen his name mentioned in blog after blog - glowing reviews about how his financial advice turned their lives around and gave them their freedom from debt.   I skirted around investigating his ideas, but I always shied away because I feared that this was one of 'those' programs... 'Jesus said to do this', 'Jesus said to do that', 'Salavation cannot be yours if you are in debt...' 'You must tithe your first-born to get right with God'... okay, okay, I know I am being facetious, but when the social media-driven Christian Conservative message pendulum swings so far to the right (at times), you can't help but feel alienated and...well, like a loser if you just don't feel the same.  This isn't a religion/spiritual blog, but isn't it funny (ridiculous?) how religion and finances (and politics too, for that matter) get all tangled up with each other?

I am happy to report that it is not one of those programs.  He is funny.  He mentions God.  He mentions Bible passages.  Yet - it is the kind of message I understand and feel at home listening too.  I wish he were a minister as well - I would go every Sunday.  (Now that is saying something)  The Bible passages are advice from the ages that still rings true today.  Here is the most pertinent...

"The rich rules over the poor, and the borrower is servant to the lender." - Proverbs 22:7

Okay - I need to breathe for a moment because I have just quoted the Bible.  Twice.  Not my style, but you have to understand where I have been, and where I want to go...

Where I have been:

How old were you when you got your first credit card?  I opened my checking account when I was 16.  I don't recall exactly when I got my Visa bankcard, but I am guessing it was around 18.  I knew a little bit about credit - some from tidbits shared by different teachers in high school, and some from my parents, and some from my friends.  Guess whose advice was the worst?  Guess who I listened too?  At my Visa card's website, I can see every transaction since 2001.  I have shredded the statements that go beyond seven years, but I can still go and visit with my stupidity any time I want.  I can revel in all that I am still paying for.  Wedding flowers ($600) for my first wedding.  A painting on my wall for my 30th birthday ($300).  A honeymoon in Mexico ($2500).  Emergency surgery for the stupid cat that ate a pin ($1,000).

DEBT IS STUPID

Every few months my credit card company was so kind as to raise my limit.  How nice of them.  My limit is currently at $18,300.  I owe $18,170.  Did I mention that I, myself, am not employed?  I don't put stupid stuff on my card.  My card's purpose for us, for the past three years, is to make up for the extra days left of the pay period, when there are more days than money.  We gotta eat.  We gotta get gas.  Yet the stupid comes from not having a plan when we get the paycheck in the first place.  If you don't rule your money, it will rule you.  We would always marvel at how the entire check would disappear in a matter of 24 hours after receiving it.  (Bills!  I swear!)  Then we had 13 more days to figure out how to survive until the next one came.  Debt currently acquires 45% of the monthly take-home pay.  That is utter stupidity and it is no way to live a life.  I don't want to serve this master anymore.  You can't imagine the stress it places on our lives.  I won't say that our marriage is stressed - thankfully we are both on the same page - we just never knew how to break the cycle.  Until now.

We expect that it will take around 36 months to work our debt snowball. 

Total credit card debt $27,000

Student Loan $5,000

Second Mortgage $27,000

Car $16,000

401-K loans $4,000

Personal loan $15,000 (?)

These numbers piss me off.  I haven't looked at it quite this way.  Ever.  I was afraid to.  We aren't extravagant people.  We just made a lot of little mistakes along the way - and they have added up into pretty big and nasty numbers.  We married the wrong people the first time around.  Funny how you have to take a financial hit to get out of a marriage.  The second mortgage you see up there?  I took it out two months after my first husband left me.  I had to pay my parents off for our wedding expenses ($12,000).  I had to pay him his share of the home equity (minus his half of the wedding expenses), so the house would become mine alone ($14,000).  Had I known then what I found out about him later, I would have sued the bastard for adultery and he would have paid ME!  Instead, I get the insulting luxury of continuing to pay this debt month after month (which has only gone down by $1,000 in seven years), while he blew his windfall on a new pick-up truck.  Jerk.

See?  Debt just eats away at your soul.  The student loan for the degree for the career that I don't have.  Stupid.  The personal loan to pay the lawyer to get custody of the child.  Not stupid, just heart-wrenching.

You may ask (I know my mother does) why are you putting such personal stuff on your blog?  Because I am mad.  Because I want my life to change.  Because a lot of my personal hurts are tied up with all of the bullshit I just talked about.  I won't heal unless we deal with this mess - and it helps to write out my hurts.  Because we won't move forward and be able to provide our children with the experiences they should have when we are scrounging for loose change every month.  Because I know it will make a difference for us, and I hope that the experiences that I share will help others.  Maybe you?

"Deliver yourself like a gazelle from the hand of the hunter, and like a bird from the hand of the fowler."

-Proverbs 6:5

You are the gazelle, running for your life.  The cheetah represents debt.  It will hunt you down.  It will follow you all the days of your life - if you let it.  Run like a gazelle!  RUN!  Focus with all your energy and might to get away.  Focus on ridding yourself of the chains of debt.  All good things are possible when you believe it.  Prayer helps too.  I may have to rethink my personal position on that one...

The Art of Gift Giving

My 40th birthday (at the time of this post) has recently come and gone.  My family had asked what I would like to receive for birthday gifts.  Long ago, I decided I wanted an iPhone when my new-every-two time period was up with Verizon, so I could ditch the droid that Dean passed on to me a couple of years ago.  So what did I want?  iTunes Gift cards so I could get some long-awaited music and so forth...

Here is the nice thing about my gift choice:  it doesn't take up space.  (well, okay - it takes up a little space inside my purse).  It doesn't need to be dusted, washed, stored...  See where I am going with this?  It is not a 'thing' per se.  We have way to many 'things' in our house.  Accquiring 'things' is how we got into present problem finacial situation in the first place.

Several interesting gift-giving issues came to light this birthday:

• When purchasing a gift for someone- ask for guidance, then follow it as best as you are able
• Don't push a certain type of gift just because it will help your social agenda
• Don't offer to take the person shopping for their gift, yet leave them with no idea about how much you planned to spend - that is a very uncomfortable situation
• Don't spend more than you can afford
• When in doubt, give cash.  It's not tacky - it's perfect!
• You can never go wrong with chocolate
• Surprises are a good thing - yet expect that there will be some anxiety involoved.  Especially when dealing with an introvert...

(Consider yourself lucky.  I orginally wrote this post ten days ago when I was in the initial throes of working through an intensely unpleasant experience involving.. well.. a certain person's idea of giving me a birthday gift.  Not a happy experience.  It all went wrong with items 2 and 3 listed above.) 

PS - Always follow good blogging advice.  Let particulary acidic blog posts lay low for a few days until you are in a much calmer emotional state.