Unusual Spending for September

I actually can’t think of any… That doesn’t mean there aren’t or won’t be any, but that I can’t think of any!

The Boy took his school pictures before school at freshman orientation and we haven’t been sent home anything to buy them yet. I’m not really quite sure when that will be.

The Girl’s school pictures are on August 31 this year, so not a September expense.

Any expenses I can think of are all for before or after September.

Here’s hoping to an extremely frugal No-Spend September!

Planning for Christmas

I have not planned for Christmas this year like I should have. However, I’m starting to plan now. Better late than never, right?

My union recently came to an agreement with our district for a raise, part of which was retroactive to last year. We also negotiated a higher cap on our healthcare costs. After all is said and done, I am expecting a retro check of about $1000. We also have about $200 in Amazon gift cards waiting to be redeemed.

Part of my retro check will be used to top my emergency fund back over $10000 and then the rest will be used for Christmas shopping.

All told, I should have about $900 to work with for Christmas, which isn’t too bad as I’ve already purchased several gifts. I’m done with my dad, almost done with my mom, and have bought about 15 other peoples gifts. I’m estimating I have about 40 people left to buy for. (I know that sounds like a ton, and it is!)

I’m planning to do joint gifts for couple this year. Once the retro check actually comes through (probably in late October or November) I will actually be able to make the purchases and finish up Christmas shopping.

The only problem with my plan? I’m spending money I don’t have. This is all hypothetical. My union needs to approve the contract. My district needs to disburse the retro checks in a “timely” manner and I would need to be diligent with the money I receive.

If I stick to this plan, our Christmas shopping will be paid for in cash. We will not add to our debt for Christmas this year and that would be awesome.

For once, I hope my plan works out exactly as it is planned! I hope we get the money when we should and it’s as much as I’m expecting and it’s enough to cover the rest of our Christmas shopping!

As always, wish us luck!

Getting Out of Debt vs Living Life

It’s so easy to say “cut back, spend less” but so hard to do.

In addition to wanting to pay off debt, we want to live our life.

Admittedly, if we stopped doing anything fun or ever having treats, we would get out of debt faster… but what kind of life would we live? So many financial blogs talk about buying second hand or paying off their house in 5 years, or getting debt free in just 9 months, etc. I feel like so many of these are unrealistic examples. Where we live, in the central valley of California, we have very few second hand stores and even fewer that ever have anything worthwhile. Also, the cost of living and house prices are astronomical! According to a recent article, in order to buy a house in San Jose or San Francisco (each pretty easily accessible from where we live) the average median income needed was $213,000/per year, for a monthly mortgage of over $6000 a month. With monthly mortgages that high, there is no way we can pay our house off in 5 years. People/bloggers who do that don’t live in California or near the Bay Area; those are always people in the South or Mid-West. And don’t get me wrong, that is awesome for them, but not realistic where we live. Even people who get out of debt in 9 months don’t have the amount of debt or obligations we have.

I don’t want to come off like I’m whining or complaining or even trying to say it’s not our own fault because we absolutely dug this hole for ourselves; but we are also trying to dig ourselves out too. And it’s our fault, not the fault of our children so we don’t think they should suffer when it was our doing. Just because we got ourselves into debt doesn’t mean The Boy shouldn’t be able to play football and The Girl shouldn’t be able to dance, or they shouldn’t be able to go to birthday parties they are invited to or get new clothes for the first day of school, or have a new game or toy, or, or, or… The Kids shouldn’t pay for our mistakes.

Having said that, I don’t want my kids to come off sounding spoiled because they do hear the word “no”. They do have chores. They do hear “we can’t afford that right now”. They do hear “we have to save up for it”. And they do hear “if you want it so badly, buy it for yourself”. But we do provide all needs for our children and we try to provide experiences for them. We go places and we do things as a family: zoos, hiking, vacations, etc.

For us, that is where getting out of debt gets difficult; where getting out of debt, frugality, and life meet.

For that last few weeks (I know it’s not been a super long time) we have been doing better. We haven’t been perfect, but we have been making improvements.

Our debt is the highest it has been in 7 years and that is depressing! But hopefully it is the highest it will ever be and we will start making progress while still living life. We are hoping to have a very frugal No-Spend September with some plans to do some fun, but inexpensive, family time. We plan to go to a couple of national parks, some hiking, and a few day trips, but all of it should be done pretty frugally.

We want to get out of debt but we also want to live our lives and make memories with The Kids.

Wish us luck… We are going to decrease our debt next month but we are also going to make some family memories in the process! We will keep searching for the happy medium where getting out of debt meets life!

Solar

I know this post was a long time coming as I told you several months ago I would write a whole post devoted to solar… a long time coming, but here it finally is!

Since I let the cat out of the bag in a previous post, I guess I’ll fill you in on our decision to go solar.

First of all, believe me, I know it sounds counterintuitive to take on more debt when we are already so deep in debt; but in the long run, it’s definitely going to save us money.

We actually started to look into solar because some guy was going door-to-door pitching solar and we said we’d be interested to see how solar would work for us and to find out how much it would cost. (In December and January, we had some astronomically high electric bills… like $725 high!)

He worked up a proposal and presented us with a plan that covered our ENTIRE roof and had a bargain-basement price of $73,000. After seeing the look on our face, he must have realized that was never going to happen because he then told us with some “special pricing that he would need to get approval for” he could get the cost down to $57,000. That was still a no-go for us. We didn’t tell him outright no, but we did tell him we needed to meet with some more companies and get some more quotes.

And boy, are we glad we did!

After our first meeting, where we were quoted with special pricing of $57,000, The Husband quickly contacted other solar companies and we had to meet with them in a compressed timeline, which actually worked in our favor because it kept us from lollygagging!

We met with three more companies and they all came in with a much lower cost. They all ranged from $27,000 - $35,000. Much more reasonable. And these quotes did not include the 30% refund from the federal government (and the other quote DID).

We spend about 1.5 – 2 hours with each company that we met with; and although I wouldn’t call us experts by any means, our knowledge of solar did grow exponentially!

Each of the companies had pros and cons and then we were left to decide what was the most important to us. They each had different financing options (both in terms and length), they all used different solar panels, they all had warranties (at least to some extent), and they all had “plan” for our house and our usage.

In the end, we went with a company that quoted us $33,000. But they did throw in “free” rodent netting! We decided to do a 10 year loan at 2.99%. Our payments are going to be $234 a month, which is considerably less that the $725 we paid in December, and even less than our average PG&E payment of $400 per month.

Going back to the pool pump issue… our pool pump was old and not energy efficient, therefor it was costing us a lot of money to run it and if we didn’t upgrade it, it would require a larger solar package and thus a more expensive package. By upgrading our pump now, at a cost of (roughly) $2000, we lowered the monthly payment on the loan by $65 every month. Spread out over a year, that is a savings of $780, and over three years, it’s a savings of over $2300. Essentially, the pool pump will pay for itself in less than 3 years and after that we are “making money”. Believe me, I know I’m rationalizing this!

When all is said and done, upgrading to solar, including the new pump and tax incentives, we will be paying about $25,000. The solar alone will run us $23,000. That is what we will be financing over 10 years. The payments are more than reasonable and our goal is to pay it off in no more than 7 years. The first year we are going to be very cautious and set any “extra payments” aside until we get our “true bill” from PG&E. We don’t want to be caught in a pickle when the true bill shows up.

Hopefully, this will affect our budget in a positive way and we will be able to send more money towards our credit card debt each month!

*I actually wrote this post about 3 months ago and never published it. Since then, we have started paying for our solar and seen a drastic change in our PG&E bill. Our bill averaged $350 a month for PG&E with some months higher and some months lower. Our solar has now been hooked up since the end of June. Our last PG&E bill was $36. Coupling that with our monthly solar payment of $234 makes for a total of $270. Monthly, that is an average savings of $80 per month. That adds up to almost $1000 a year. And once our solar is paid off, IN 10 YEARS (eek), it will be a savings of $300 a month and over $3500 per year. Long term it definitely will save us a lot of money!

With our first, ridiculously high, solar quote our breakeven year wasn’t until year 19 and the warranty was only 20 years. With the quote we went with, our breakeven year is year 8 and it came with a 25 year warranty.

In the long run, it should be a good choice for us, but in the short run it just added to our debt. And it did add to our debt about $23000! But ironically, by adding to our debt we are saving $80 a month. I know it doesn’t make sense or sound right, but by the numbers, we have $80 more dollars to send to our credit card every month.

This was a super long post, maybe the longest I’ve ever written, so if you stuck around until the end, thank you!

August Debt Update

The last few months have not been kind to our budget but as I’ve been saying, I am recommitting to getting out of debt. I’m actually afraid to find out what our credit card debt stands at. For the last two months, I have been sticking my head in the sand and figuring if I don’t check it, I can play ignorant for a little longer. I know that is no sort of plan!

The debt we owe our children has continued to (ever so slowly) decrease. We borrowed almost $1500 from each child and have paid back $1000 to each of them, which means we are two-thirds of the way through paying them back! Although once we have fully paid them back, we will continue to deposit $50 into their bank accounts, I will be so happy when I can no longer consider them a debt! Our car loan has continued to decrease as well. We have a 0% loan so it’s nice to see the payment actually affect the bottom line.

Our constant struggle is our credit card. I have only been trying to do a cash only budget for 3 weeks and The Husband is not on board, but I’m hoping to see some slow progress. Our credit card debt had increased mightily since my last debt update, but our loan to our kids and the car loan are slowly decreasing. However, the decrease is definitely slower than the increase, hence the overall debt hike!

Here are our current debt totals:

            $20845.56         Credit Card at 15.74% interest

            $500                 The Girl

            $500                 The Boy

            $6510.00           Car Loan at 0% interest

Our total debt stands at: $28,355.56. YIKES! I can hardly wrap my head around that number. I absolutely HATE seeing a 2 as the first number on our credit card and that is my first priority… get that number back under $20000. In the grand scheme of things, the actual amount of debt is not that much less but psychologically there is a huge difference!

Obviously all my financial goals for the year have been thrown out the window. There are only 4 months of the year left and I’m nowhere near where I wanted to be. However, I can’t change the past, all I can do is improve my future. Since our credit card debt is nearly $21000, my goal for the end of 2018 is to be under $18000 in credit card debt. My other debts will continue to decrease at their slow and steady pace, but I am going to payoff $3000 in credit card debt by the end of the year. That’s my goal. This is another one of these realistic stretch goals.

In order to be successful, some things will have to fall in place for us. My raise and retro pay will have to go into effect as that is how I am planning to pay for Christmas this year, coupled with some Amazon gift cards. November’s three paycheck month extra check will be able to primarily go towards credit card debt. And The Husband will have to fully max out his 401K two weeks into December as we are anticipating so we will get extra money in his paychecks in the end of December.

Obviously, I’m not in an ideal situation. But if I have to get out of debt one baby step at a time, I can do that.

Look out goal #1: below $18000 in credit card debt by 12/31/18… I’m coming for you!

No Credit Card

It’s three weeks ago today that I took the credit card out of my wallet and haven’t used it. I know that doesn’t sound like much, but it is progress.

The Husband continues to use credit, but I was definitely the primary culprit of that debt albeit always for things for the family and never just for extravagant gifts for myself.

I’m hoping that by taking the option away, I will become more mindful of my spending and so far it has been working.

We have done a lot of spending since I took that card out of my wallet: back-to-school manis/pedis, haircuts, school supply shopping, tons of grocery shopping, and back-to-school shoes for The Kids. And because I budgeted for it, it was all paid for in cash! Admittedly, we haven’t made as much progress towards our credit card debt as I would like, but I haven’t added anymore to my credit card debt either. We are also able to fund a very expensive jewelry repair… in cash.

When we go to the store, I have been more prone to only get what we planned for or only what has been on my list. I have been much more cognizant of what I was buying and how I was going to pay for it since I didn’t have a credit card to fall back on.

Taking the credit card out of my wallet is forcing me to pay close attention to what I’m buying and whether or not it’s something I really need or just an impulsive want. It’s also forced me to be a better budgeter; I need to have money available for planned expenses because I’m not putting them on credit.

It’s definitely early days yet in my renewed quest for debt freedom, but I’m optimistic that we are going to get it right this time. Taking the credit card out of my wallet is just one part of our quest. Budgeting and paying cash are another part. And discipline, discipline is the most important part of this quest and I’m hoping I can exercise enough discipline that I will start gaining traction!

Debt and Retirement

We have debt but we still put away 25% of our income into retirement.

I know that’s counter intuitive and I know that goes against everything Dave Ramsey says… That’s the one part of his plan that I disagree with. I get the whole “getting out of debt faster” thing, but we can’t give up that many more years of contributing to our retirement.

We are coming up “over the hill” and about to be sliding down the slope towards retirement. Yes we have debt (lots of it) but we also need to be planning for our future. As we don’t want to have to work into our 70’s, we are planning for retirement now.

For various reasons in the past, we cashed out some or all of our retirement/pension accounts. Now, we are playing catch up.

Compared to most people our age, we are doing well, but looking at the statistics, that’s not saying much.

The Husband has a 3% match at his work, so when he first started there (7 years ago today, eek!) he contributed 3% to get the match. We have steadily increased his contributions with every raise he has received and his company automatically (with his permission) increased his contributions by 1% a year on his anniversary date. This year, we will fully max out The Husband’s retirement. He will contribute the maximum allotment of $18500 and his work will continue to contribute 3%. On top of that, they contribute an additional 6% profit-sharing with his first paycheck of each year (for a total contribution of 9% on their part).

On my side, things are a little different because I am a teacher. Because I am a part of CalSTRS, roughly 10% of my paycheck is automatically deducted for retirement. In addition to that, my district contributes nearly 11%. I contribute another $1000 above and beyond those contributions towards my retirement.

I know this is counter intuitive to Dave Ramsey’s plans as he says you should stop all retirement contributions (save any company match) until you are out of debt. I get it. I even understand how the math works. I pay way higher interest on my credit card debt than I will ever make on my retirement. But. There’s always a but. But I know I will get out of credit card debt and I know any time I lose not contributing to my retirement, I will never get back.

We are not saving much money right now, other than our retirement, and are basically living at our means, which isn’t ideal. We have college coming up in 4 and 5 years and although I don’t think it’s our responsibility to pay for our kids’ college, we do want to be able to help as much as possible. We are hoping that by paying off debt a little more slowly and maxing out our retirement accounts now, we will be stable enough in our future that we can help with college expenses.

*Random Update: My union has reached a tentative agreement with our district. Assuming it’s approved, we will get a $1250 increase to our benefits cap, a 1.56% raise retroactive to last year, and a 3.44% raise for this year and going forward. I plan to up my 403B contributions by $115 per month and then “keep” the rest of the raise for our monthly budgets. (I am expecting an additional $165 per month, net. Hopefully, the majority of this can go towards debt.)

Two Steps Forward, One Step Back

Just like I said in my last post, I feel like I am taking two steps forward and one step back.

I worked a day over the summer doing interviews for open positions at my school site and I got paid for it! Yeah! I made $223! However, I accidentally overdrafted my checking account (which I NEVER do, I probably haven’t done that in 5+ years), and have to pay a $36 fee.

I’m so annoyed by the overdraft because I transferred $50 one day early into each of The Kids’ accounts. If I had actually waited until payday, I would have been fine. I didn’t realize all of our checks hadn’t cleared and I had an outstanding check.

The Husband also must have had a small bit of overtime because his check was slightly higher than normal. This helped offset the overdraft fee; but I’m still so bitter about it!!!!

Once I opened my account and saw how much my little extra check was, I went online and sent a $200 payment to the credit card. Though I’m happy I can send a little unexpected extra this month, thus two steps forward, I’m very upset by the overdraft fee, thus one step back.

I know every little bit helps in my quest for debt freedom, I just wish I hadn’t had such a spendy summer.

I finally peeked at our credit card balance and it wasn’t pretty. It’s over $20,000! Yikes, I can’t even believe it. I am really hoping that after all the payments and interest in the next two months that I can bring it back below $20,000. The card closes in a couple days and then I’ll get a statement a couple days after that. I’m just hoping that it stays below $21000 after finance charges. Either way, my goal by the end of September, or my October statement, is below $20,000 and as a stretch goal, below $19000. I know that doesn’t sound like much, but right now, any downward progress would be just that, progress.

I know it doesn’t look like it, or probably read like it, but I am working hard to lower our credit card debt. I have paid cash for many things over the last month that I would have charged just a few short weeks ago. I have also done without some things that aren’t necessities. I have said no to myself many times. (Less so to The Husband and Kids, but baby steps.) I am trying hard to determine the difference between needs and wants and only buying those decided as needs.

I even went to the mall with The Daughter over the weekend and only bought planned for expenses: insulated water bottle, toiletries, and food. In fact, I went into a shoe store and didn’t even buy any shoes, though I was tempted. (Shoes are my vice.)

Baby steps… literally.

Getting Back on the Wagon

Well, getting back on the wagon really hasn’t left much room in the budget for debt repayment.

This month we had an unusual expense to the tune of $800.  The shank of my wedding ring had to be replaced and then all the prongs had to be re-tipped. Obviously the expense is worth it as it is my wedding ring, but had I known just how costly it was going to be I might have waited a little while to get it fixed so I could save up the money. I expected the cost to be more in the $300 - $400 range. By minimally funding our envelopes, I was able to come up with the cash to cover the cost.

I took the kids to get our annual manis-pedis this year just like we have every year right before school starts. I wasn’t sure how I was going to pay for it without putting it on credit, but I was able to pay for it using our “hair” envelope. Although not hair, it definitely was grooming. Going forward, I think I am going to squirrel away $25 a paycheck to go towards our annual nail trip.

In an effort to NOT use credit, I have shifted money all over the place this month! I’m hoping to get back on track and have money actually going towards what it is supposed to be going towards. Other than some things that had to be ordered online for The Boy’s high school registration: PE clothes, yearbook, ASB card, I haven’t charged anything. In fact, my credit card has been on the counter for going on two weeks. Unfortunately, I can’t say the same thing for my husband’s. I know I am not being upfront with our debt, but he is charging something every day. Lately, I feel like he is spending money like it’s water!

I am currently in the stages of two steps forward, one step back when it comes to paying off our debt. I am no longer charging anything, but my husband is. I have cash to pay for an expensive repair, but I’m not making much headway towards our debt. I was able to finagle our envelopes this month to cover all our necessary spending, but because of this many of our envelopes took unexpected hits.

Oh well, all I can do is persevere.

PS For more reasons than I care to count, I am eagerly awaiting No Spend September!