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How it All Began

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How it all began……

I was never good with credit. When I was 16, Lane Bryant sent me a credit card. I had ordered from there catalog for several years. I don’t remember filling out a credit application, just this very pretty purple piece of plastic coming in the mail, and I then could order clothes and pay a small $25 a month until they were paid off. Easy, right? I had my first charge off on my credit report at 18.

I was a single mother at the time, and on welfare. The next step was to go back to work, and I needed a car. But with a new job and a small awful credit file, I needed a co signer. I don’t know how I did it, but I talked my Dad into it. I bought a 1990 Ford and went to work 3rd shift.

I behaved at 1st, making payments on time, and then I moved out on my own. I lived in an apartment with my son, and my soon to be husband. (now my ex husband). Living on my own was hard, and things started to slide. First my car insurance didn’t get paid, then it was canceled. So the finance company added their insurance to the car. Then I fell behind in the payments. Eventually I had to give the car to my Dad, and borrow his paid off car to drive back and forth to work. He was nice about it, but swore he would never co sign for me again, and he never has. Not that I would ask.

When my ex and I got married, we moved south with the military. He then took over the bills. I had given my Dad his car back when we moved, so we were down to one vehicle. We decided to trade his truck in and buy 2 cars, one for each of us. His credit was good, so it was no problem.

Fast forward a few years, and we are out of the military and permanently living in the south. Thing are tight, and my ex and i fight about money a lot. Eventually we end up splitting the bills 50/50, and each of us have to pay out of our own paychecks. He doesn’t care about any credit cards, just that if they are in my name, I have to pay them myself. Me, having no self control with money, rack them up. We split in 2001, and he walked away with a paid off truck. I was left with 10,000 plus in credit card debt, student loans, and a single wide mobile home with a 20 year mortgage.

I then decided that I wanted a new car. The one I had was with a credit union, and I was upside down a lot. But it was in my ex husband’s name. So, I let it go back, and bought a car on my own. Took out more credit cards. Move to a rental house that was $250 more a month and let the single wide trailer go back to the bank.

Are you starting to see a trend?

Don’t get me wrong, I was making it, but by the skin of my nose. By then I was at my current job but a single mom of 2 kids. Do you know how embarrassing it is to have collection agencies call you at work, while you are a bill collector for your job? One time, they even faxed my boss about my debt. I blamed my ex husband, and prayed that they would stop one day.

Then the rental house caught fire. Thank goodness I had renters insurance. I had a ton of cash, and a spending habit that I had not fixed.I found a new place to live, a rent to own house. I had one year to rent, and I had to get the mortgage in my name. I did it in 6 months. That was the height of the housing bubble, and I got a 11.75 % variable APR mortgage on a $125,000 house. But I had a ton of money from the insurance, that made it easy. My spending habits didn’t change. My kids and I had more stuff then we knew what to do with.

I then met my current husband. He is 6 years younger than me, and still was living at home. We has a speedy courtship, 4 months from our 1st date to our marriage. The money from the fire had run out by then, and he didn’t have a well paying job, so I robbed Peter to pay Paul to pay for the big wedding we had. The mortgage company did the 1st loan modification on the mortgage within 6 months. They lowered my payment and my interest rate to 7.5 % fixed. I thought everything would work out.

Traded and bought a few vehicles, and racked up more debt. Was kinda of keeping my head above water, then my husband got sick. We then had huge medical bills that included a bill for a cornea transplant. Everything got past due, even the house again. We went and filled out the paperwork to file chapter 13 bankruptcy but didn’t have the filing fee until we got paid on Friday. Thursday, I went out my front door to goto work, and my car was gone. It had been repossessed in the middle of the night. So, I borrowed the filing fees to file a day early, and the next day, the lawyer got my car back from the bank.

Again, things were fine for about 6 months then hours were cut. My husband had to find a new job, and took a $2 an hour pay cut. That hurt. Our Chapter 13 payments were self pay, so we stopped them. And our plan was dismissed.

We went back to the attorney, and asked what to do. He said to keep the house, we would have to file chapter 13 again, but reduce what we were paying in the plan. We gave back my car, but kept my husbands truck. I went out and found a mini van on a buy here pay here lot and got that for transportation as our family by then had grown by our twins and we didn’t fit into the truck by then. This time my pay was garnished for the payments, and my take home was about $250 every two weeks. My husbands was about $600 every two weeks. Everything else went to bankruptcy. It was very tight. So tight, that I even went behind my husbands back and got 4 credit cards while in bankruptcy. See the trend.

Then the layoff. My health insurance at the time was 100% paid by my employer, but my husband carried the girls and himself. To add him and the kids to my heath insurance was $300 a paycheck. His unemployment was $115 a week, and I only was clearing $250 a paycheck. The bankruptcy payments had to stop. My attorney got the trustee to stop the garnishment, and I put everyone on my health insurance. We saved up and filed income taxes, and converted to a chapter 7. We bought 2 salvage titled cars, and let the truck and van go back to the banks. We did another modification that included stretching the mortgage to 40 years from 30 years, and kept the house. We were discharged from chapter 7 in July 2013.

Stay tuned for part two…


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?