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First Paycheck = FAIL!!!

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I received my first full paycheck at my new rate of pay. I was shocked that it was much lower than I had anticipated (even after using a couple online calculator programs to try to accurately predict take-home pay).  My expectation was that I’d earn somewhere between $5-6,000/month take-home.  The reason for the large range is that I have a LOT of money coming out in pre-tax deductions, including:  medical and dental insurance, Flex Spending Savings accounts for health and dependent care, and 7% retirement investment (required and matched by my employer). In total, I have 20% of my check removed pre-tax. Taxes remove another 20% of my paycheck. So when looking at my base weekly salary compared to my take-home pay, I’m only actually bringing home 60% of what I earn (to be fair, I’m saving money by being able to pay a portion of medical and childcare from our FSA with pre-tax dollars, but our FSA has caps that we exceed, so some of those expenses are still paid out of my take-home pay post-tax).

After all deductions, my first full paycheck was for a total of $2269. I get paid bi-weekly, so we’re talking about $4500/month for most months (except for the odd month with 3 pay periods). This was a huge shock, given that we’ve been quite accustomed to budgeting for literally double that income amount.

I’ve never shared exact income numbers before on the blog because it made my husband feel uncomfortable for his business earnings to be shared and analyzed. But now that he’s shut his doors down and it’s all me – I feel fine with sharing my personal income. Guess what, y’all….my salary is $95,423/year. That’s with my big raise. I was originally hired at $55,000 two years ago. I guess there’s some disconnect in my brain or something because I thought $95k sounded like “BIG MONEY.” When I got my raise I was overjoyed – I was expecting a huge, wild difference in my rate of take-home pay. Under $5,000/month was NOT what I was expecting. Call me spoiled or privileged of whatever else you want (and I own that I am some of those things – I’m lucky to have the job I do), but this was a huge shock.

So although it feels like “starting over” (although it’s not!!! We’re still down nearly $80k in debt over the last 3 years), it’s definitely a come-to-Jesus moment. Hubs and I have had to totally start over on our budget with fresh eyes. Thinking about how to continue making progress on our debt reduction journey while simply surviving (here, we thought we’d be “thriving” with this huge raise). Some tough realizations have been made:

  • Hubs must keep earning an income somehow. Hubs has run a successful flooring business for almost a decade, but recently quit to go back to school. Many people have commented that he should keep his business going for some side-income, but it just doesn’t work that way. Unless you’ve owned a business in the construction trade before, you probably don’t realize how expensive it is just to maintain the proper insurances, licenses, etc. Hubs is NOT the type to do business under the table without the appropriate certifications. It’s a big problem in his industry (and where we live, in particular), and he was not about to go that route. But to just keep his insurances and licenses up to date cost several thousand a year. When we looked at what he was bringing in part-time versus the costs to keep the company legal, it just wasn’t enough to make it worthwhile. And, maybe surprisingly, the flooring trade is not as flexible with a school schedule as we need. Hubs’ first semester back was this past Spring and he had many stressful calls from employees (or worse, home-owners) with issues that demanded immediate attention, while he was still stuck in class for many hours to come. All in all, this was a losing proposition for our family. So now we’re trying to think of more flexible and accommodating ways that hubs can earn some side-money while in school. So far brainstorming has included: driving for uber or lyft, doing some type of food delivery, and perhaps trying to become a personal trainer. Remember – hubs has been big into health and fitness the last couple years, so the latter is his preferred method, but it will also take the longest to get started and requires additional research first. Any other ideas?
  • Food consumption has to get under control. A friend recently posted on facebook to inquire about how much her friends’ families pay per month for groceries. The most common number I saw was $250/week. I have to say, for the past couple of years since I’ve been working 2 jobs, our food budget has been way over $1,000/month (including groceries + eating out). I mean, $1,000/month was a GOOD month. But remembering back to when I first started blogging, it hasn’t always been this way! In fact, my original grocery budget was only $400/month!!! And I stuck to it! To be fair, it was never easy. I would spend a TON of time researching sales, carefully planning meals around sale items and food we already had in our pantry or freezer. I would easily have to go to 2-3 stores per week to get the best priced items (Walmart does their ad matching, but our local Walmart doesn’t have great quality produce). I’d also make a ton of items from scratch. Everything from breads and homemade granola bars to fruit leather and yogurt – even baby wipes I made myself for cheaper than could be bought bulk at Costco. Between ad searching, meal planning, grocery shopping, food prepping, and scratch baking, I probably spent a good 10-15 hours/week on my efforts. It paid off big-time in terms of money saved, but I just simply lacked the time when I started working full time (plus kept my part-time job, on the side). When I accepted my big raise I had to sign a non-compete so I had to leave my part-time job. So even though I still work full-time, I have significantly more time in the early morning/evening/weekend hours to try to devote to some of my old grocery-saving ways. I don’t know that it’s reasonable to get back to only $400/month. But I think if I shoot for $550-600/month (again – that’s for all food: groceries + eating out), it would be a huge savings over our current spending. I’m going to give it an honest effort for the month of August and see how I do.
  • The budget, in general, needs to be slashed. It’s scary how easy it’s been for things to creep up over time. When I first started blogging all our gifts were in the $10-15/range. Recently our gift-giving has been closer to $25-35+/gift. Hubs and I have both rejoined a gym. It’s very important to hubs (and he spends legitimately a ton of time there), but maybe I’ll cancel my own membership to try to save some money since I’m perfectly happy to run outdoors for free as my preferred form of exercise. I also had a friend recently mention that some health insurance companies offer discounts for gym memberships? I need to call Blue Cross, Blue Shield to inquire about this. Spending across the board needs to come down.
  • Debt payments??? Probably the hardest thing to accept is that our debt payments are going to drastically decrease. We’d grown accustomed to throwing thousands a month toward debt! I’m talking many months where we were paying $2500-$3000/month toward debt!!! Obviously if I’m only bringing home $4,500, there’s no room for a $3,000 debt payment. It’s just not possible. So we have to adjust expectations, adjust our 2017 financial goals, and just keep plowing forward, making as much progress as possible with what we have to work with.

So, ultimately, we need to cut our expenses AND try to find a way to increase our income. There’s not much wiggle room for me (since I can’t pick up side work in my current industry), but I think we can try to find solutions to get hubs some part-time side gigs. My focus will be best spent on trying to reduce our food expenses, since that tends to be our #1 monthly expense (cumulatively speaking. And yes, I know how ridiculous that sounds, but it’s true).

So there you go – I’ve laid it all out on the table. Next up will be formulating a solid budget plan and figuring out how to juggle our debt payments. Especially now that we owe $1,000/month to the IRS from our poor planning last year. Ugh! But baby steps here – if I think about everything at once I become overwhelmed so it’s one thing at a time. We now have a solid “income” figure so we know what we’ll be working with in terms of take-home pay. Now it’s time to figure out how to make our outflow match with our inflow and to find additional areas to cut back.

 

How much does your household spend per month on groceries (and how many people are in the household)? How do you save money on your food budget?


Hope’s Fall 2017 Monthly Budget

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Without further ado, my new monthly budget.

DescriptionMonthly Budget
Total$2,819
Rent$650
Groceries$600
Health Insurance$305
Gymnastics$300
Auto (gas & maintenance)$300
Utilities$250
Entertainment$200
Auto/Rent Insurance$130
Gym Membership$50
Netflix$12
Bill (paid annually)
Life Insurance$22

Some important things to note.  This budget does not include my business expenses, or rather bills I pay out of my business account and use for tax purposes including but not limited to my cell phone bill ($286 monthly,) Adobe Suite membership ($29 monthly,) Microsoft Office ($99 annually,) Dropbox ($99 annually) and so on.  I have completely separated my personal and business expenses since I am working full time as a employee while continuing to work as a contractor.

My income is still pretty variable but the bulk of my income comes from my full time corporate job and a steady consulting job where I work 25ish hours per week.  I currently have 4 sources of steady income and continue to pick up odd jobs. My  income since March of this year has averaged about $6,000 per month.  This is post-deductions for my W-2 full time job and pre-deductions and tax for my consulting jobs.

Now, with that being said, I already know there are changes coming to this budget…first, my deferment ends on my student loans in September at which time I will start paying a minimum of $305 per month AND per my last post, I am beginning to invest in my company sponsored 401K beginning this next pay period.

I did read all your advice and while I get more educated and review all options, I did cut back my 401K from my originally planned 20% to 10%.  I am going to look at Roth IRAs, etc. over the next couple of months, and continue to build my local savings account.

I think most of my budget is self-explanatory, but here are a few notes:

  • I now have to pay for Little Gymnasts training. Ouch!  No more barter. The monthly cost is not quite $300 but I put some buffer in there to help cover the meet fees which will run most of the winter while he is competing.
  • While my commute to work is only 12 miles, I have a two hour round trip 3-4 times a week for gymnast training, thus the higher gas cost.
  • I opted out of the company sponsored health insurance due to its cost and limitations and instead chose to go with a Christian based medical sharing company.  That is the month healthcare cost for the four of us (History Buff is now working full time.)  I do have dental and vision through my corporate job for a very reasonable cost for the entire family.
  • I know $200 is a lot for entertainment. It’s really more a buffer for odds and ends right now.  Sports for the kids and misc housing costs as we continue to settle into our new home. (For instance, I have to buy Sea Cadet a bed this month before he returns from being gone all summer, working at summer camp.)

I will try to be responsive to questions. I know I have tightening up to do. I’ve recently pulled all my credit reports – ugh! So will get a debt update up in the next couple of weeks.


The True Cost of a Deck

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Thanks for all the comments on my latest post about motivation. I’ve taken the comments to heart and am really doing some serious pondering and life planning for moving forward. I’m trying to minimize the financial bleeding this summer, and then jump back full-force in August with some renewed energy. I wanted to try to go gung-ho this month, but with my lower pay and some unexpected expenses (see below) I just don’t think I can even reasonably expect to try to create a $3,000/month budget for the month of July. We’re going to take on more debt. Sigh. But in August I’ll have my first full month of new salary and our bills will have hopefully stabilized enough for us to create a new budget. From what I’ve figured, I think my take-home pay will be around $6,000/month when my new raise goes into effect. So far the budgets I’ve been playing with are still around the $7,000ish range, so I’ve got to figure out how to come up with an extra $1,000 month (or, alternatively, how to cut an extra $1,000/month from the budget). I’ll write up a post soliciting advice soon.

In the meantime, let me tell you about my latest unexpected expense in a story I call “The True Cost of a Deck.”

My mom and stepdad still live in the same home that I was raised in from the time I was 10-years-old. The house is in a highly sought-after area in Austin, TX and has appreciated well during the time they’ve owned it. It’s beautiful and I love it, but it no longer serves my mom and stepdad’s needs. It’s too large, taxes are too high, and it’s too-tall (two story, when they’d prefer a single story).

The plan has been to put the house on the market this coming spring. My mom, a real estate broker, has tried to dedicate much of the last year to putting in updates that were needed to bring the house up to modern-day and to maximize the amount they can list it for when it goes on the market. They’ve done updates in the bathrooms, the kitchen, and with the floors. The last remaining big thing has been the deck.

My mom’s house is built on the side of a hill. When you walk in the front door it’s at ground level, but then the ground slopes steeply so when you walk to the back door of the house (still on the first floor), all the sudden you’re an entire story above ground. They’ve had a back deck that you could walk out on with stairs leading down to the backyard grass below.

The deck is entirely made of wood and it has been heavily used and abused across time. At this point, parts of the deck are warped and rotted and it is unsafe to be on. Many of the surrounding homes had similar problems and all have had their decks redone at some point in the past 5-10 years. My mom, the last hold-out on the street, felt the time was finally right to replace their deck as it could raise safety concerns for potential homebuyers.

My stepdad, a very intelligent academic-type who likes to think himself a DIY-er, spent months thinking up plans for the deck. Finally, they decided to shell out the money to have a professional draft the plans and provide a list of materials needed to complete the project. The plan was for my stepdad to do the work himself. Once plans were procured, my stepdad went to work. Literally on Day #1, before anything else had been done, he got up on a ladder to cut down the limbs of an overhanging tree. When the large branch fell, it took out the ladder my stepdad had been standing on. Chainsaw in hand, all 3 (stepdad, ladder, and limb) fell to the ground. What could have ended in serious disaster (I shutter to even consider the possibilities), ended up not too terrible. My stepdad sustained a severe tear of his rotator cuff that would require surgery. After meeting with multiple specialists (he didn’t want to accept the truth), he begrudgingly agreed to hire out the rest of the work, given that he required immediate surgery and a lengthy recovery. Any plans for future deck-building were gone. In fact, he was told, the muscles in his arm/shoulder would likely never be the same again.

My Stepdad’s surgery was this past Friday afternoon. Early Saturday morning, my sister (an RN) went to visit and check on my stepdad’s bandages/dressing. While there, my Mom encouraged everyone to go outside to see the progress being made on the back deck – now being completed by a hired contractor. Outside, everyone admired the deck. It’s costing an arm-and-a-leg ($20k compared to the $5-7k DIY estimate), but it’s going up quickly and looks beautiful!

Everyone started walking back around the big hill toward the front of the house when my mom tripped on a piece of debris from the construction, fell, and landed hard on her arm. My sister said the “pop” was audible and unmistakable. My mom’s arm was bent backward and sideways, an unnatural direction that can not occur with healthy, intact bones. An x-ray at the ER later verified the extent of the break. My mom was in so much pain that she almost passed out a couple of times: during examination and immobilization.

Screen Shot 2017-07-05 at 2.56.53 PM

My mom had surgery today. Now both people (Mom & Stepdad) have an arm immobilized, recovering from very recent surgery. Neither can drive due to high dosage pain medicine, nor can they do much of anything on their own. In the time between my Mom’s break (on Saturday) and her surgery (today), my Mom has been in such excruciating pain that she’ been nearly helpless, even with her good arm. Meanwhile, my stepdad’s surgery went well but he’s been battling nausea and vomiting due to the pain medicine he’s on (even after having the doctor call in a lower dosage pain medicine). It’s just a mess.

My sister, now 7 months pregnant, is the true hero of the story. She took off almost a full week last month to help move my dad to his new facility. And she’s taken off almost a full week this month to help with my Mom and Stepdad. She’s gone over daily to make meals, take out trash, clean dishes, etc. etc. She had taken over a case of waters and literally had to pre-open all of the bottles because neither parent could seem to do it one-handed. I mean, it’d be comical if it weren’t my parents!

So this deck that was only going to cost about $5,000 to replace will now likely end up costing over $30,000. It’s about $20,000 for the deck itself, then the out-of-pocket max will be hit for both parents due to their ER visits and surgeries, not to mention loss of work (for them and for my sister). I booked a flight and will be arriving on Friday afternoon. I don’t have the money to go and I really don’t have the time, either. But I have to be there for my family. I just have to.

I’ll be in Austin from Friday-Monday. I’ll be back in Tucson in the office on Tuesday, and then I immediately leave for a work conference trip from Wednesday through Saturday. Then the plan is to round the family up and hit Disney later that week.

So the month of July is turning out to be totally nuts. And it’s costing an arm and a leg two arms! (groan, har har).

At least we have our health freedom, right?

Stay safe out there, DIY-ers! I’ll catch you from Austin on the flipside!


Money in the Bank

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I feel like I’ve hit a milestone today that I hadn’t really thought of…money in the bank.

I’m not talking about the 10% I’ve been setting aside in a hard to reach savings account. I’m talking about there being several hundred dollars in my primary daily living account that is not earmarked for some upcoming bill or that I’m watching like a hawk to make sure I can cover something that is coming up.  And the cool thing is, I get paid today too.

As this realization hit this morning, I was able to take a really deep breathe. And smile.

I’ve started working on a budget — really! And am also starting to think about giving back. I’ve had the opportunity of late to give back in small ways, but after what we have been through the last two years and all the blessings we received from others I really want to give back in some real tangible ways, not just sending a check to some big charity.  Something like paying someone’s electric bill as someone did from the BAD community did for us a few months. Or taking some kids back to school shopping. You get my drift. I know I have to put this in my budget AND I still have some debt to dig into.

A financial post will be forthcoming, but I just wanted to let you know that today, I smiled when I thought of my finances rather than trembling with fear or stressing about every day obligations.


Ashley’s March 2017 Debt Update

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March was a whirl-wind of a month! I was gone for a couple days in Texas, the girls had an entire week off school, and it felt like we were being pulled in a million different directions by all of our disparate responsibilities. I’m glad to be back in more of a routine this month and am already looking forward to May. For us in academia, it signifies the end of another academic year and the beginning of a MUCH NEEDED “break” in terms of course-load, etc. (working at a university, I’ll probably always talk about “years” in terms of academic rather than fiscal or calendar years, lol). But May is important for another reason, too. For the past 3 months (including April), I’ve been paying these HUGE payments toward our medical debt. I did so in exchange for a debt forgiveness of about 33% of our medical debt. So come May, we’ll have an extra $1200 that can go towards other debt and we’ll have one fewer debt to report in our debt spreadsheet. It always feels good to knock a debt off, and I can’t wait.

Here’s where we stood as of April 1st, after all of March’s debt payments had posted:

PlaceCurrent BalanceAPRLast Payment MadeLast Payment Date Original debt, March 2014
Navient - Federal 2 (unsubsidized)$11,0925.8083March82433 (all school loans, combined)
Navient - Federal 3 (subsidized)$86085.8025March
Navient - 2 (subsidized)$85136.5534March
Navient - 7 (subsidized)$72126.5529March
Navient - 8 (subsidized)$63856.5525March
Navient - 9 (subsidized)$85146.5534March
Navient - 10 (unsubsidized)$97926.5569March
Balance Transfer Student Loan #2$10000% (through Sept 2017)$400March$7650
Balance Transfer Student Loan #3$44440% (through October 2018)$150March$4594
Medical Bills$31540% (must be paid by April)$1216March$9000
Balance Transfer student loan #1$00% -Paid off in March 2016$5937
PenFed Car Loan$02.49%-Paid off in January 2016$24040
License Fees$02.5%-Paid off in April 2015$5808
BoA CC$07.24%-Paid off in June 2014$2220
Mattress Firm$00%-Paid off in May 2014$1381
Wells Fargo CC$013.65%-Paid off in May 2014$7697
Capital One CC$017.9%-Paid off in March 2014$413
Totals$68,714 (Feb balance = 70,444)$2065Starting Debt = $145,472

Navient Payments

With our recent IRS tax trouble, I’ve been making lower sized debt payments in an effort to try to save up for the upcoming IRS bill. I’m paying minimum payments on all of my subsidized student loans and only an extra $50 above the minimum for my two unsubsidized student loans. As a quick reminder, I’m on the IBR repayment plan so my unpaid interest is forgiven on subsidized loans, but not for unsubsidized (which is why I’m prioritizing them a little). I was concerned when my balances had increased a little this month for the subsidized loans so I called Navient and they explains that the government subsidy (which covers any unpaid interest) is only paid once per quarter. So it looks like the balances have increased a little, but that capitalized interest will be covered at the end of the next quarter. Feels kind of scamy, but nothing I can do about that.

Balance Transfer #2

I’ve reduced the amount I’m paying on Balance Transfer #2 down to $400/month. Continuing at that rate, it will be gone by June. At that point, I may try to initiate another balance transfer to move some more debt away from Navient. That being said, I’ve noticed that my recent balance transfer offers have had a bit higher transfer rate than in the past year, so I’d only do so if it’s still a good savings overall. I’ll wait and see when we get to that point. I also wanted to clarify something I’d had wrong before. Originally when I created my debt table I had listed that this bill was due earlier (based off a 12-month timeframe), but I had conflicting notes in YNAB because there I had it listed as being an 18-month timeframe. When we were hit by the IRS taxes, I called for clarification (otherwise, we were on track to pay it off within 12 months, but I wanted to know if we had the extra 6 months wiggle room). Turns out the special offer IS good for 18-months, which is why I’ve been able to decrease my payment amounts. I’ll still have it paid off well before the special 0% APR promo period expires. Sorry for any confusion to anyone who may have noticed!

Balance Transfer #3

This is my newest balance transfer. I paid $150 last month, but only have $75 scheduled for this month. Again, I’m paying less so that I can try to scrounge up cash for the IRS.

IRS

Everything financial is now tainted by the whole IRS tax issue I’ve talked about previously (see here or here). I’m embarrassed and feel a bit ashamed to be in this position, but I have to say that the tax debt has officially INCREASED our debt and will be setting us back in our progression. At this point, I’m honestly too embarrassed to even give the total amount (though we have finally finished everything with our CPA, so we now have official numbers). I was thinking it would be right around 10k and, if so, I was really trying to scrimp, save, and hustle up any funds and try to pay them in full by the April 18th deadline. When confronted with the true, final amount that we owe, I know there’s no way we’ll have the money together by April 18th. Instead, I’m going to have to set up a payment plan with the IRS and will officially be adding a debt to our list of debts. I’ve been dreading discussing it here because it’s just SO stupid and was 100% our fault. There’s no excuses. We just messed up and now we owe Uncle Sam the big bucks.

Budgeting

Related to everything going on, we’ve really been trying to plan ahead and think about what our family budget will look like in the coming (academic) year. Hubs’ is still currently drawing a (very) small income from his business, but it will likely be gone in the next few months. By mid-summer my big raise will go into effect at my full-time job. Though at the same time, I’ll be losing my side-income from my part-time job. Our kids are starting kindergarten in the fall so our childcare bill will decrease in a couple months (note, in our state kindergarten is only “free” for half-day and we still need full-day childcare so our bill will not be eliminated, but it will be reduced a bit from our current spending). Basically – there are a lot of financial pieces to the puzzle and a lot of things to consider. It’s hard when we don’t have exact numbers, either (e.g., I’m trying to estimate what my net take-home pay will be once my raise goes into effect, but there are many factors involved since a mandatory 7% goes to retirement, and then I also contribute to an HSA and FSA, etc). I think we may have some financial growing pains on the horizon as we figure things out and try to make a path moving forward. I think our path will likely include tightening up our purse strings quite a bit from what we have in the past year. Not that I think we were frivolous in the past year by any means, but I think things are about to really be getting TIGHT. It’s not a bad thing, but it’s definitely disheartening given all our progress in the past year (which, now with the tax thing, feels like a lot less progress has been made since we owe all this money – ugh! So mad at myself!)

Anyway, that’s what’s up in my world.

Oh yeah, and the car situation. That’s still going on. Turns out my car had 2 different problems. One was a Ford issue (covered by Ford) and the other is a warranty issue (covered by my extended warranty). But it’s been a HUGE fiasco because I HAVE to have a car to get to-and-from work and it’s now been over a week with my car in the shop and it still isn’t fixed. But my warranty only covers 7 days max in a rental, so I’ve switched to a Ford rental vehicle and am trying to get Ford to cover the remainder of my days in a rental due to their issue (the Ford issue is actually what rendered my vehicle un-drivable). It’s been a whole mess and is taking up way too many hours in my day. And it will likely end up costing me some money after-all, not only for the warranty deductible, but if I end up having to pay for the rental (if Ford won’t cover it, etc.). Big pain-in-the-butt. But there are worse things in life and, again, I’m thankful no one got hurt and that we had the warranty, etc.

Gotta run for-reals now. I’m drowning in work so bad it’s not even funny. So to bring this post full-circle (as I mentioned in my opening paragraph) – I cannot wait for May!!! Is it the summer yet?? 😉

Hugs,

Ashley


Focus

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With so many disparate goals for this year, some that focus on debt-reduction and others focused more on savings, I felt a bit like we’ve been playing a game of tug-o-war. We want so many different things and, like a child, we want them all NOW!!!

Ugh. Why does adulting have to be so difficult?

Screen Shot 2017-03-22 at 1.51.03 PM

 

Source – Someone, buy this for me! ; )

When we got hit smack in the face with our looming IRS debt, it forced me to take a step back and re-assess our plans for the year. Some changes I have already implemented (which will go into effect in April) include:

  • Reducing my retirement contributions. My university requires a minimum 7% contribution. I had been investing an additional 3% of my salary (for 10% total), but given our need to get some liquid cash for the IRS (and for debt payments, as well), I called HR and reduced my contributions down to the minimum 7% required.
  • Eliminating extra mortgage payments. Though we closed in November, it still feels like we just barely got here! When I set up our mortgage auto-payments, I set them to include an extra $300 to go directly toward principal. Our required payment was $950, but we’ve been paying $1250. I called the bank and removed our extra principal payment, reducing our auto-draft down to the minimum $950/month that’s required.
  • Practicing patience. I already talked about how my daughter lost her water bottle. Instead of immediately replacing it, I’ve made her start using my water bottle as her own. Unless her old one miraculously turns up (no idea where it is – it’s been lost for 3 weeks now), she won’t be getting a new water bottle until the start of next school year. In the past, I would’ve just immediately purchased a new one. But now I’m examining every purchase and really making an effort to practice patience anytime I’m thinking of buying something that we don’t immediately need.

All of these changes are in an effort to FOCUS on one thing at a time. Dave Ramsey talks about the power of focus (which, I believe, helped motivate the way he designed the Baby Steps so one “goal” is being focused on at a time).

We just have to get out of debt. It’s got to be done. This month marks completion of my third full year of being on this debt-reduction journey. There have been lots of highs and lows and this HUGE tax bill has definitely got me a little down. But, if anything, it’s just made me strengthen my resolve that we need to get out of debt ASAP!!! We had two years of hard-core debt reduction (no frills), one year where we loosened the purse strings a bit, and this year will be a mix. We do have some fun things planned (still doing our first ever Mom-and-Dad getaway sans kids this summer! Eeeeee!!!!!!), but I’m really realizing how much SOONER we can be out of debt if we return to our steadfast FOCUS on the goal at hand. It’s a tough thing going through this journey for SOOOOOOOOOO long. But that’s what the deal is. We started this journey with nearly $150,000 in debt and only making about $50,000/year! Obviously with those numbers it was going to take some time. Things have changed – our income has gone up and our debt has shrunk as we’ve been making huge payments. But it’s time for a renewed focus. I don’t want to be doing this for another three years. That’s too long. I want to try to cut that time in half. If we can be debt-free in a year and a half, I would be overjoyed! I can see the light at the end of a tunnel if we’re only talking about another year and a half!!!

Some of this is just rambling thoughts. I’d like to write up a whole “3 Years Reflections” post with thoughts and reflections on the entire debt-reduction process, to date. But in the meantime, I just wanted to jump on here and say “Hi!!! and let you know about some of the upcoming changes I’ve made in an effort to increase our monthly take-home pay so we have extra cash to throw at debt. It needs to happen. I can’t wait to kick our debt’s butt. Next debt on the chopping block is our medical debt. By this time next month, it will be 100% GONE and then we’ll be on to just the student loans. Can’t wait!!!

Hope you’re having a great month!


Spring Break (+ Feb. Debt Update)

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Hi All!

Last year, my first year back to full-time work, my Spring Break happened to align with my kids’ Spring Break. I remember at the time colleagues mentioning how lucky that was and to appreciate it. So it was no real surprise when this year rolled around and, looking at our academic calendars, I realized our Spring Breaks did not align. Bugger!

But, I think we’re also making the best out of having separate Spring Breaks! This week is my school’s Spring Break (and hubs’ Spring Break as well). I’ll be back in Texas for a couple days to deal with some dad-related issues. But otherwise, hubs and I are looking forward to doing some serious manual labor out in our backyard. When we bought the house, it had nothing but chest-high weeds all through the back. We mowed them all down, but have done very little since then. Hubs has a friend who owns a landscape company and came over to take a look at our yard and offer some practical suggestions in terms of plants, placement, etc. So for the cost of some plants + weed killer + some hard work and elbow-grease, we’re hoping to get our backyard into a more presentable condition. We’ve allotted $200 to the project. It would be a project the girls could help us with…but will probably be easier without the interference, er, “help.” And I like that the couple days I’ll be gone are on days that they’re already in school. Makes it a bit easier for the hubs and makes me feel less guilt about being away (quick Dad update for those who have been following along and are interested – skip this part if you’re only here for the financial -my Dad, who has frontotemporal dementia, continues to decline. His speech is almost gone at this point and he lives in a constant state of agitation, presumably from the confusion and frustration associated with what’s happening to him. He’s been living in an independent living facility but we’ve been touring several assisted living and dedicated memory-care places. It’s a tough move to make but it’s coming up probably sooner rather than later so we’re trying to research and prepare accordingly. Being that the purpose of my trip is for things related to his care, my sister and I decided he would cover the cost of my airfare – something he would have done in the past if he had the mental capacity. I’ll be staying with my mom so I’ll have free lodging, and will only be paying my meals out of pocket which should be minimal. I’ll be there not quite 3 days.)

Next week is our girls’ Spring Break. In the future, I hope that we can plan family vacations (or even staycations) during Spring Break week, but with our looming tax debt ahead, that’s certainly not in the cards this year. Instead, we’re lucky to be able to hodgepodge together some childcare without having to pay extra to a babysitter. Hubs has class Mon/Wed (but is available other days) and I teach on Tues/Thurs (but am available other days), so between us, we’ll be able to always have one parent home with the kiddos.

I’m still on operation minimal-spending, too. It’s not a complete spending freeze because we still have to purchase essentials like food, fuel, etc. But I have been extra mindful about every dollar being spent. As an example, one of my daughters lost her water bottle for the second time this school year. Last time, I just jumped on Amazon and bought her a new one. This time around, I’m making her take my water bottle as a back-up. I explained that we can’t just get something new every time we lose our old item. It’s been a nice lesson in natural consequences and how its important to keep track of our things. It’s a bit of a punishment because my water bottle isn’t a nice or “cool” as the kid version, but at least it’s an adequate replacement so she’s not going without one. I’m really trying to scrimp and save and see if we can pay our full tax debt ourselves rather than relying on borrowing. I really want it PAID IN FULL by the deadline. I did talk to my sister, however, and if I need to borrow money from my dad it would be an option available to us. I really want to avoid this. It’s such “messy” terrain and I just don’t like the feeling. But I would be able to save the interest + penalties associated with an IRS payment plan. Something to think about, should it come to that (I still don’t have exact figures from our accountant).

In the meantime, I want to share my February 2017 Debt Update. As mentioned in a previous post, the debt payment was less than my originally intended $3,000 payment because I decided to just pay debt minimums toward my student loans so I can try to save up the extra money to put toward our IRS debt. Here you go:

PlaceCurrent BalanceAPRLast Payment MadeLast Payment Date Original debt, March 2014
Navient - Federal 2 (unsubsidized)$11,1055.8034February82433 (all school loans, combined)
Navient - Federal 3 (subsidized)$86085.8025February
Navient - 2 (subsidized)$84966.5533February
Navient - 7 (subsidized)$71976.5529February
Navient - 8 (subsidized)$63726.5525February
Navient - 9 (subsidized)$84976.5534February
Navient - 10 (unsubsidized)$98056.5519February
Balance Transfer Student Loan #2$14000% (through Sept 2017)$800February$7650
Balance Transfer Student Loan #3$45940% (through October 2018)$0N/A
Medical Bills$43700% (must be paid by April)$1216February$9000
Balance Transfer student loan #1$00% -Paid off in March 2016$5937
PenFed Car Loan$02.49%-Paid off in January 2016$24040
License Fees$02.5%-Paid off in April 2015$5808
BoA CC$07.24%-Paid off in June 2014$2220
Mattress Firm$00%-Paid off in May 2014$1381
Wells Fargo CC$013.65%-Paid off in May 2014$7697
Capital One CC$017.9%-Paid off in March 2014$413
Totals$70,444 (Jan balance = 72,560)$2215Starting Debt = $145,472

This month (March), I’m putting less toward the balance transfer card – only $400 instead of the $800 I gave in February. I do NOT want to add “IRS” to the debt spreadsheet, so I’m just stockpiling money in hopes we can pay them their money and not move backward in our debt progression. That will mean lower debt payments for the next couple months (March & April). Even small progress is moving in the right direction.

Have you had any financial set-backs lately?

 

 


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