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Budgeting = A Work in Progress


Before blogging here, I’d had a budget but I’ve mentioned that I didn’t really “stick” to it very well. Basically, if I wanted to buy something (within reason) I would just do it…it didn’t really matter if I was already over budget for the month.

I’ve been trying to modify this behavior (through use of the money envelope system). But if there’s one thing I feel I’ve learned since starting this debt reduction journey, it’s that the budget is like a living, breathing thing. It needs to constantly be monitored and adjusted as necessary to work well.

To jog your memory, here was my previous budget (notice the new line-item for my gym membership):

Item Budgeted
Rent $1055
Electricity $150
Water bill $75
Gas bill $25
Sprint (2 lines) $115
Cable/Internet $85
Car Insurance $90
Health Insurance $350
Waste Management $35
Debt $1500
Gym $50
Miscellaneous $250
Groceries $380
Baby Purchases $600
Gasoline $100
Savings for Irregular Purchases $265
Total: $5125

There are a couple categories that I want to revise moving forward. First, I’m going to have to bump my grocery budget back up to $400. This is what it had been set at before I started blogging and I was hopeful to reduce this number but have failed every single month. Instead of continuing to beat myself up about it every month, I’m going to set the budget at a more realistic number for our family. Back to $400.


The other changes all have to do with savings.


Here was my old break-down of savings:

$40 for semi-annual fees (car title/registration fees)

$50 for car maintenance (oil changes, savings for new work truck)

$125 for dental/vision (just increased from $50 last month)

$25 for travel and Christmas

$25 for 3-6 month expenses


And here are the changes I want to make:

Increase the semi-annual fees savings to $45/month. My “semi-annual” fees were only calculated to include annual car registration costs. Just the other day I got a $50 bill to renew my Costco membership. Oops. So I’m adding the $5/month to cover this expense (and provide a small buffer).

I’m starting a savings for veterinary expenses of $10/month. This came up because our dog (who is like our first “child” – you can see him in my author photo with me) got extremely sick this week. Luckily he pulled through, but my fear at the thought of an emergency vet visit made me realize…we need some type of funds for this. The reality is, our dog is getting old (major sad face!). He turned 9 this year, and he’s a large dog (large dogs tend to have shorter life-spans than small dogs). I hope he’ll be with us for years and years to come. But the fact is that we may need to have some money set aside for eventual vet expenses for old dog problems and end of life expenses (breaks my heart to even say that….but it’d be unwise to ignore the realities of life). Note that his food and regular annual check-ups will continue to come from the “miscellaneous” budget, so this is more of an emergency savings for unanticipated vet bills.

I’m starting a small savings for baby birthday expenses of $10/month. I was conflicted on this one. If I’m going to save for the girls’ birthday, why not also start a savings for all kinds of gift-giving occasions (like family birthdays, shower gifts, etc.) But the dollar amount spent for those is much less, so I think those should continue to come from my “miscellaneous” budget. I could perhaps even reduce the miscellaneous budget since I’ll be appropriating money monthly for all types of expenses that would otherwise be paid with “miscellaneous” funds. I want to monitor this for a month or so before officially deciding whether to lower the miscellaneous budget.

And one last (relatively big) change: I’m going to start setting aside $100 monthly with the intention of eventually investing in a Roth IRA. Per this conversation when I paid off our credit cards and started contemplating the need for retirement savings, the majority of commenters said we should NOT wait on this until we’re completely debt-free. But, I also want some time to do research into different options with different places and feel comfortable about where we invest. In the meantime, it’s easy for me to open a sub-account of my Capital One 360 online savings (<refer a friend link) titled “savings for 2014 Roth IRA.” I will probably stash some money there until the new year (I hadn’t known before people commented, but you can fund a 2014 Roth IRA until April 15, 2015). Then sometime probably in the March time-frame I’ll open up a Roth and make a large contribution (not just the money saved here, but probably adding some surplus funds from February and March, too). I’d love to max out our contribution at $5500. My savings by that time will only amount to about $900 (in March 2015), so I don’t know if we’ll be able to scratch up enough surplus funds to hit the $5500. If I were to set the money aside monthly ($5500 divided by 9 months = $611/month), it amounts to more than I feel comfortable saving right now. Ultimately, this is not a savings/retirement blog….it’s a get out of debt blog. I do feel that there’s a place for retirement savings and it’s an important component of the conversation, but I still have so much debt to focus on that I don’t want to be saving at that level while I’m still trying to shovel my way out of debt.

These changes bring our monthly savings to this:

Monthly Savings

$45 for semi-annual fees (car title/registration fees & Costco membership)

$50 for car maintenance (and savings for new work truck)

$125 for dental/vision

$25 for travel and Christmas

$25 for 3-6 month expenses

$10 for baby birthday expenses

$10 for veterinary expenses

$100 savings for 2014 Roth IRA

Total Monthly Savings: $390 (up from $265/month)


Even seeing that amount of money (nearly $400/month) go to savings instead of toward debt kind of hurts. But thinking long-term, having these savings are going to help me prevent accumulating future debt when the unexpected arises. Also, there’s no law that this money has to stay in savings. If, for instance, we build up the veterinary expenses savings and never use it or have no need for it, of course this money can be used toward debt (or toward the 2014 Roth IRA savings, or whatever else we like). But it gives me great peace of mind to have everything accounted for like this.


So there you have it, another revised budget. Hopefully the next revision I make will be to reduce the amount appropriated toward “miscellaneous” and increase the amount toward debt. Here’s hoping!

Updated Budget

Item Old Budget New Budget
Rent $1055 $1055
Electricity $150 $150
Water bill $75 $75
Gas bill $25 $25
Sprint (2 lines) $115 $115
Cable/Internet $85 $85
Car Insurance $90 $90
Health Insurance $350 $350
Waste Management $35 $35
Debt $1500 $1500
Gym $50 $50
Miscellaneous $250 $250
Groceries $380 $400
Baby Purchases $600 $600
Gasoline $100 $100
Savings for Irregular Purchases $265  $390
Total: $5125 $5270

What do you think about my planned monthly savings? Is there too much or too little to each category? Are there any other categories you would suggest to include or any you would exclude?

Ashley’s June Debt Update


Happy Monday! How about a little mid-month debt update, shall we?

I’ve listed things in order of our planned repayment schedule (according to my new plan of action):

PlaceCurrent BalanceAPRMinimum DueJune Payment Made 
Capital One CC$017.9%--
Wells Fargo CC$013.65%--
BoA CC$07.24%351005
License Fees$55432.7%5585
Sallie Mae - Federal Student Loans$44748.25%6262
Sallie Mae - Dept of Ed$55788.5%00
PenFed Car Loan$227422.49%411411
ACS Student Loans$213887.24%2525
Sallie Mae - Dept of Ed$652367%00
Medical Bills$81030%150150

I’ve been snowballing payments as I go and the snowball has reached a pretty good size!

$450 (from Capital One CC)

$350 (from WF CC)

$100 (from Mattress Firm account)

$60 (from refinancing the car, which now has a lower payment)

$35 (from Wells Fargo)

= Total “Snowball” payment of $995 (we’ll round up to $1,000/month)

The first debt I want to focus on is the license fees. We have been paying $55/month toward it, so our payments starting in July will be $1055. In addition to that, we’re still expecting to have “leftover” money at the end of June so hopefully we’ll be able to make additional snowflake payments in addition to putting some away for savings (an as-of-yet undetermined amount).

Per this conversation, we’re going to start stashing a little money aside, using leftover funds from the end of the month (as opposed to writing a line-item into the budget). At this point, I’m just going to store it in my Capital One 360 savings account. I want some time to do a little research into various options, but my intent is to open a Roth IRA at some point and begin planning for retirement. I want to gain a little better traction on our current debts right now, but I don’t want to put the Roth off too long either. So at some point retirement will, indeed, become a line item in our budget. Currently, we’ll just keep stashing a little here and there into our CapOne360 savings.

Also – and this is random – but on Sallie Mae’s website I decided to click on the “payment history” tab to see more info about my 8.25% APR student loan. I have always only looked at the overall number (total debt due), but when I clicked on payment history it tells you, broken down, how much of your monthly payments are going toward principle (principal?)  versus interest. Can I say how disgusted I was to see that out of every $62 payment, approximately $32 went to principle….the other $30 toward interest?!? WTF? How is this even possible? I know they stack the interest up-front so I’m sure it all makes sense numbers-wise, but that feels like a 50% APR!? Disgusting. I cannot wait to target those two high interest student loan debts. Can you believe – when I’ve worked my way through them (and am down the list to the car in terms of the order of repayment), my monthly snowball payment for the car will be over $1500!?! The power of the snowball is real, my friends! Very, very real! Never did I ever think I’d be making regular monthly car payments of $1500!!! At that rate (along with an extra snowflake payment here and there), it really is reasonable to have it paid in full within a year from the time we start focusing on it for debt repayment (remember, that’s the goal….I plan to start focusing on the car debt in February 2015 and the goal is to have it paid in full by February 2016). Of course, my other loans come out of deferment in February so we’ll see what happens. If we can’t make all the minimum payments the funds for the minimum obligations will have to come from our snowball. : (

I don’t want to see that happen. I want these debts gone with a  quickness! I know we still have an unfathomable amount of debt, overall, but it really feels like we’ve been making great progress. It’s very encouraging!




Long Term Planning


I am really proud of ourselves! When 2014 began, I made a full list of “goals” (I prefer the word “goal” over “resolution”). This is a technique I actually learned from a career workshop I took a few years back, called “Career Mapping” (but I applied the same principles to all aspects of my life).

Basically, you think of your longer term goals (can be 10 year, 5 year, or 1 year). I started with 1-year goals in categories such as: financial, family/relationships, career, hobbies, etc. The idea is that you first come up with concrete “long term” goals. Then you “map out” your entire year by breaking up the big goals into smaller chunks. For me, I broke down the goals by month so every month I know a small, reasonable goal that I want to attain (with the idea being that all the small goals ultimately lead to fulfillment of the bigger, long-term goal).

Anyway, when I first did my 2014 Goals (Life Mapping, if you will), I did not think we would be able to pay off our credit cards by the end of the year. With about $1,000 per month for debt payments, coupled with $10,000 of credit card debt, plus additional other debts to account for, I thought it was an impossible goal. We would be close, but not quite out of credit card debt yet.

When I started blogging here (in March) I set the official goal date: March 2015.

And here we are….the beginning of June 2014. And I can officially say “We are credit card debt-free!!!!!!”

It’s a fantastic feeling!

But being me, I’m always looking ahead. I wish the credit cards were our biggest obstacle, but unfortunately, that’s just the tip of the debt iceberg. The cold, hard truth is that we still have over $100,000 of debt. About $95,000 of student loans, $22,000 of car loan, and $8,000 of medical debt (note, these are approximate numbers that are being rounded off….my last “official” debt update was here and I’ll do another one probably next week).

With this amount of debt, its difficult to put everything on “hold” until the debt is gone, because we’re looking at YEARS worth of repayment.

So I want to submit a question to readers: At what point do we begin long-term savings for retirement?

I know the Dave Ramsey school of thought is not to begin retirement savings until one is debt-free. However, there seems to be some ambiguity, because I’ve also heard (on the radio show) Dave tell people that if their debt repayment is going to take a significant amount of time (though what constitutes “significant” is not clearly defined), that they should not forego retirement savings for the entire time.

Currently we are 30 and 31, respectively, and have a reasonable EF (approx. $11,000), but no official “retirement” savings – no 401K, Roth IRA, etc.

This also begs the question of what constitutes an EF versus retirement. Some of our funds (about $6,000), which I have considered part of our “EF” is actually tied up in money market mutual funds. Although technically liquid, if we were to dip into it we would have to pay taxes on money made from their sale (dividends are currently reinvested) and my plan has been to NOT touch the money. Given these circumstances, wouldn’t this be better referenced as “retirement” funds as opposed to an emergency fund?

Right now I think we would like to keep up our Gazelle intensity with debt repayment. We need to knock down some of our debts so that once my school loan deferment period ends (February 2015), we will comfortably be able to make the huge payments. But at that point, I’ve always said I don’t feel the same “intensity” to eradicate the student loans as I have with our other debts. Would it be wise, at that point, to begin saving some toward retirement?

What percentages would you be putting toward retirement versus debt? Obviously, we’ll have minimum payment obligations so we’ll have to abide by that, but anything above minimums – would you put 50% toward retirement and 50% toward extra debt payments (as an example)??

I’m just trying to think these things through and come up with some sort of long-term “game plan” for what to do with our money.

Advice and suggestions welcome!

Why I’ve Decided to Start an Emergency Fund


Unlike the other bloggers, I have no savings, no emergency fund. I did, until my son broke his hand this past December, and now it’s gone.

And for the last few months I have flown by the seat of my pants, and that really stinks!  I mean, big time!  I always feel broke because after paying all the necessary monthly bills, keeping out just enough for the grocery budget, I throw everything I’ve got at debt. And then I’m broke…until a client pays me.  Now I’m really blessed to have mostly reliable clients who pay me at least within the standard Net 30, and some who pay within Net 10, so I “know” I have income coming, but I don’t always know exactly when.

So this week was one of those totally broke weeks.  I didn’t even have two dimes to rub together.  It was exponentially harder as I had to drive a lot due to standardized testing for the three youngest in a different city.  Needless to say, I ran out of gas. And I did not have the choice to stay home or bike to where I had to go (we can bike to pretty much anywhere we need to go.)  I even stooped so low that I asked my ex to pay his child support early (he’s really great about giving financial support to our kids, really great, the only issue is, it’s on his schedule, not mine and not always regular.)

So you can feel how desperate I was, right?  And you are probably saying “duh, Hope, start an emergency fund.”  And you would think that my incident last summer where we were out of toilet paper would have convinced me of the same thing.  Yeah, but no, I’m hard headed and stubborn and always see the glass half full and know everything is going to turn out alright.

But in this dark hour when I needed to get my kids to testing and had no gas, I searched through my wallet and found a $50 bill.  Evidently at some point, I knew I would need an emergency gas fund, and being the “out of sight, out of mind” kind of person I am, I put my “emergency $50” out of sight but right where it should be had I needed it. Joy, relief flooded and we finished out our testing week with no other financial crisis.

But I am now convinced, I need an emergency fund.  Two, in fact!  I am going to replace my “emergency $50” immediately and as I mentioned last week I am going to start funding a traditional emergency fund with a percentage from my new job.  It will go slow, it’s not my priority, but after the toilet paper, the broken hand and this most recent gas debacle (along with a few that I will not mention here,) I am convinced that it is necessary.  (And in using my new job’s money, well, it doesn’t affect my current debt payoff, yeah!!!)

The Tax Man Taketh


Ugh, taxes.  We have never owed before, but this year Uncle Sam held his hand out for about $2,300. It hurt, ya’ll. I can’t say that I didn’t have an inkling that this would happen.  For the last couple of years we have adjusted our withholding so that we would not get a refund at the end of the year.  I’d rather have that money year round than let the government hold on to it interest free for a year. Well, last year I did not figure it correctly and it kind of came back and bit me.  Luckily, we had what we needed to cover it.  It impacted our debt repayment plan a bit but I’m thankful that we had enough in savings to cover it. Hopefully this year I’ll do a better job with my figures!

State of Emergency (fund)


The final tally for our recent repairs/house issues is in. The well situation is touch and go at this point. There are some very expensive things we can try to improve our existing well that cost thousands of dollars. If those don’t work, we could get a new well drilled, which will be $15-$20k. I do NOT want to do this! Right now, the well is producing and seems to be keeping up with demand as long as we are very careful in our usage. So I’m thinking we should try to wait it out for a few months and see if we can get some rain. You can’t predict when the drought will resolve itself, but I also don’t want to take drastic action based on a problem that will probably fix itself eventually. It’s just a matter of how long we can make do in the drought. It’s hard to get good advice on this problem. The “Well Experts,” strangely enough, all seem to think that the services they provide, such as well drilling, well “rehab”, etc. are the answer to our problem. As they say, when all you have is a hammer, everything looks like a nail.

So here’s what we’ve got so far.

Well repair: $780
Water Delivery: $190 (4000 gallons)
Tenant Washer/Dryer (Austin): $547

When we bought the house, we had the Dave Ramsey $1000 emergency fund in the bank. As soon as we moved in, we had to replace the water softener ($500+). As you’ll remember, we have $300 in the monthly budget for increasing the emergency fund, but these recent issues have wiped it out. We have to start over. In the interest of full disclosure, we do have some other liquid funds in various places in the event of catastrophic disaster. I don’t really consider them “available,” but they do exist in the strictest sense of the word, so there are no surprises here:

1. The Indy rental house bank account has a few thousand dollars in it (as mentioned, this is part of our retirement, so we don’t plan to use it. But if our life falls apart it’s there)
2. Our monthly debt snowball (about $1200/month we are paying above the loan minimums)
3. Emily’s business account usually has a little money in there
4. Lastly, and we would never touch this, but it is there – the Austin tenants’ deposit. In Indiana at least (and probably in Texas too), the law requires this money to remain sequestered, so we won’t view this as available funds. But it is sitting in our savings account, and does protect us if the tenants decide to not pay rent or break their lease. (By the way, they’ve been great so far. They even paid September rent on the 1st of the month in person even though it was a holiday weekend.)

I’m glad for a couple of things. First, that we had at least some money in the bank to take care of these things. Second, that we have a buffer in our debt snowball that we can use if we need to. I’m thankful that so far, we haven’t had to take additional debt to deal with these problems.

Either way, it’s been a Murphy’s Law couple of months and it’s time to begin rebuilding our emergency fund. Now that we have a house, I’d like to get it to $5000 or so, but I anticipate that this will take some time. Some have suggested that we forego the debt snowball long enough to build the fund. I really want to stick to our schedule on debt payoff so I’m trying to balance both. November is coming up. It’s an extra paycheck month. Most of that is going to fund Christmas and holiday travel, but hopefully it will help us dig out a little bit.

Crappy Week


It’s been kind of a rough week financially. I am determined to stay positive but I can feel the stress dampening my motivation, attacking my immune system, and taking every bit of patience I have (which is not a lot to begin with). I’m not the kind of person that likes to dwell on problems, so instead of detailing all of the crappy stuff that happened this week, I’ll share what I’m grateful for.

1. Grateful we could get water delivered and get the well drilled out of our emergency fund.

2. Grateful to take care of the washer, alarm, and the other renter’s leaky dishwasher. I’ve had good landlords and bad, and I’m grateful to Adam for being the kind of landlord that keeps things in order for our renters (That’s a huge part of why I married him- he was my landlord and he was so thoughtful and kind to me and the other tenants. I couldn’t help but notice. That, and he had this amazing beard at the time…)

3. Grateful for support from my family. My sister offered for us to shower and do laundry at her house, and my parents offered a lot of encouragement. I know it’s genuine, too. I could run over to her house right now to do laundry and her whole family would welcome me.

4. Grateful that we’re not fighting, even with all that went on this week, including house guests for 4 days. We went to a free show last night and had a great inexpensive date night. Trying to keep communicating, stay positive, encourage the other person, and be generally thoughtful. Keyword, trying. 🙂

5. Grateful that I didn’t get sick until yesterday. We’ve been traveling a lot and busy with work, so getting sick now is much better than when I was off having fun.

6. Grateful for a good weekend of sales. People love buying furniture on Labor Day I guess, which was a blessing. I have one item leftover in my inventory and I’m gearing up to finish a few projects this week/weekend. I wish it would cool down… But you can’t have everything 🙂

7. Grateful to have nice and thoughtful renters. The renters in our guest house take the trash out for us and bring the can back in, they sometimes even bring the mail to our door. They rarely ask for anything, they’re friendly with us and they even like our dog. Score.

8. Grateful I got the dishes, a shower, and a couple loads of laundry done before our well gave out.

9. Grateful for a renewed focus on eating healthy and eating at home more often.
10. Haagen Das CARMEL CONE ICE CREAM. Don’t judge. It’s amazing and probably kept me from totally freaking out at least twice.

That’s this week’s list. There ere are many many more things I’m grateful for! What about you all? Did you have a good week? Do you have things you’re extra grateful for?