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“Fun” Little Freak Out

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Let me share with you a story about an all-out “FREAK OUT” moment I recently had regarding my pay.

In terms of back-story, I am on a 9-month contract which ends May 19. When my new contract goes into effect I’ll be switching to a 12-month contract. But that contract does not go into effect until the start of the fiscal year, July 1st. In the interim (May 20-June 30), I will be receiving pay designated as “supplemental compensation” at my current rate of pay (my raise doesn’t go into effect until the new contract).

Since the academic year is soon ending, I emailed our business manager last week asking if I needed to complete any paperwork/what I need to do to get the supplemental compensation to kick in. There was a bit of a process involved last summer and I can’t remember the exact steps.

The business manager replies back basically saying (paraphrasing), “I have no record of you receiving supplemental compensation this summer. Your new contract starts July 1st.”

And I’m like, “WHAT THE WHAT?!?!?!?!” (insert the Scream emoji face)

I’m instantly reviewing old emails and re-living old conversations in my mind. Is it possible that I misunderstood? That I simply thought I would be receiving supplemental compensation but that I’ll actually be going AN ENTIRE 6 WEEK PERIOD WITH NO PAY WHATSOEVER?!?!?!

I call my husband in a panic. How are we going to survive? Here, I was just saying how these next two months are going to be super tight…I didn’t realize we’d literally have NO INCOME during this entire time period! We (stupidly, in hindsight) sent our entire $5,500 emergency fund to the IRS when we were setting up/establishing a payment plan for our 2016 taxes. What were we thinking?! The IRS felt like an emergency at the time, but with the gift of hindsight, I now realize we never should’ve entirely wiped out all liquid savings. What are going to do?!

Deep breath in. Deep breath out.

I allowed my heart-rate to come down. I emailed my boss to gently inquire into this issue. Was I mistaken? Or am I supposed to be working for the next 6 weeks, as I had planned (not to mention, I’ve got work meetings piled a mile high on my calendar, and all kinds of tasks to accomplish over that time).

My boss was at a conference at the time so it took what felt like an eternity for her to respond. My initial email was sent around 2pm in an afternoon and I didn’t hear back until nearly noon the next day. It was just a simple clerical error. YES, I am supposed to be working (as planned). And YES,  I will be receiving supplemental compensation under my current rate of pay until my new contract goes into effect on July 1st (at which point my nice raise will go into effect).

Just breathe.

I have taken a couple lessons from this experience. First and foremost – we made a horrendous mistake in completely wiping out our EF. We need to get back to at least a “baby” $1,000 EF ASAP!!! Not sure how that’s going to happen given that we’re still grappling just to tread water and not lose ground over the summer. Either way, regardless, we need to have at least a starter EF to help us if, heaven forbid, we face a similar crisis in the future.  Second, rather than rushing to panic – maybe just reach out to my boss immediately and try to save the panic for later. In this case, I would’ve been able to sort out the situation and no panic was needed at all. Also, I’m glad I was proactive in reaching out to the business manager BEFORE the semester ended. It would’ve been a terrible surprise to have the semester end and then all the sudden have NO MORE PAYCHECKS when I was depending on them to pay our bills and feed our family! Yikes!

 

Have you had any financial “close calls” recently?


Well Crap

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It’s been a long time since we’ve had a major financial set-back. A really long time.

In fact, everything has been going rather smooth over the course of the past year or so. Income is up, outflow is down, we just hit the half-way point in our debt reduction journey. Life is good!

Until…..tax time.

We met with a CPA on Friday. Turns out we didn’t have all our sh-t together so we have to round up the last of our documents and get them over to the office early next week. So we don’t have official numbers, but it’s looking like it’s gonna be bad. Like….possibly in the 5-digits level of “bad.” Yeah. We may owe the IRS to the tune of over $10,000. How the f do we owe so much? I don’t even know where to begin.  I  thought my payments through my full-time job would help offset things more than they did. Clearly.

We have a LOT of deductions to claim. We also have tax credits we can claim. We’re not out of hope.

But it felt like I’d been punched in the gut after our CPA meeting. We don’t have $10,000. Not in cash. To owe that much would officially move us BACKWARD in our debt progression. The first backward movement since we started our debt payoff process nearly 3 years ago. We’ve had months of stagnation, but we’ve never gone BACKWARD. Never ADDED to our debt (mortgage not included). But my plan (to have cash or put it on a credit card to buy us an extra month) isn’t going to work if we’re talking about that much money.

We’re scrambling to think of a plan so we can pay with cash and not have to set up a payment plan (accompanied by penalties and interest) with the IRS.

In the meantime, we’ll be having another meeting (or two) with the CPA to figure out exact numbers and the best course of action. I’ve also suspended all non-essential debt-payments so we can pile up some cash. Unfortunately, given my recent agreement with the medical bill place, I’m committed to minimum sized payments of $1215/month through April. That, in addition to my minimum student loan payments, puts us at a minimum of about $2000/month. We’ve only been budgeting $3,000/month toward debt and having a minimum payment of $2000 only leaves us about $1,000/month of “wiggle room” to try to stockpile cash for our upcoming IRS debt payment. It’s not nearly enough. Particularly if we owe in the tens of thousands of dollars. omg. Just saying it makes me sick to my stomach. I hope to God it doesn’t turn out that bad. But, as the saying goes, hope for the best and plan for the worst. So all non-essential spending is DONE. In the meantime, we will hoard and stockpile money as best as we can. We do have an EF ($5,500) and a couple various savings accounts. Though it’s a bit like stealing from Peter to pay Paul. It’s certainly not ideal. But neither is the thought of acquiring more debt. It gives me a headache to even consider the thought.

Many of you had warned that we should beef up our EF now that we’re homeowners. This wasn’t the intended purpose (most commenters were thinking more in-line with needing to repair/replace an old roof or HVAC, etc.)….but now that we’re in this situation, it’s sure making me think about how great it would be to have a full $10,000 EF. This IRS tax problem would be solved (and then the “problem” of re-stocking the EF is much easier and less stressful).

So that’s my “well crap” update. I will bring you a February debt-update (which, as mentioned, is lower than the originally planned $3,000 due to the need to save all non-essential payments for our upcoming tax bill). In the meantime, I’ll just keep putting one foot in front of the other. Hoping for the best. Preparing for the worst. Ugh!


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