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!

Unusual Spending for August

I'm actually doing something right this time! I'm writing this post before I create my August budget!

Things I need to plan for in August are: back-to-school haircuts, school pictures, ring repairs, and a soccer tournament for me.

We have plenty of money in our "hair" envelope, so haircuts will be covered with that, with plenty of money to spare.

School pictures should also be covered out of our school envelope. However, we might have more costs associated with back-to-school than we think. The Boy is starting high school this year and I'm not sure if there are any related costs. We haven't gotten much information from the school which is frustrating! My friend also has a kid who is going to be a freshman and she feels the same way: that the lack of communication or information is ridiculous! I guess the only saving grace is that neither of us know any information.

Right before my trip to Japan, the shank on my wedding band broke. I took it into a jeweler to have it fixed and the estimate for that is $350 plus tax. However, on top of that, the prongs on the diamonds all need to be re-tipped and that's another $450. Yikes! I also brought in another ring, but to fix that one will only cost $65. Due to this unexpected expense, our debt payoff is going to be very negligable this month. :( Most of the money that would have gone towards debt payoff now has to be diverted to paying for the repair costs for my rings. It's totally worth it because it's my wedding ring, but it's also totally bad timing.

The bonus to all of this is that we will be able to afford it. I will just fund less money into all my envelopes and less money towards debt... And I will not be putting the purchase on my credit card,

I feel like now that I have recommitted to debt payoff, expenses are coming out of the woodwork. I know that is not true and that the reality is that the expenses were there but now that I'm focusing on paying off debt again I'm just more aware because I'm not putting anymore on credit!

Hopefully I've thought of all our unusual expenses for August and there are no surprises throughout the month. But even if there are, we have an emergency fund (for real emergencies) and we can just adjust our budget. No more credit. We will make it work.

Peace Out, Credit Card

Well, I did it... I took my credit card out of my wallet.

First of all, I know that doesn't sound like a big deal, but to me, it feels like a commitment. Secondly, I am switching back to my Dave Ramsey envelope wallet. When I went to Japan, I switched wallets to a more convenient wallet for travelling and have been using that all summer. It's actually a new Dave Ramsey wallet that I've had for a couple years in preparation for when my finally bit the dust. My old one is barely hanging on. So I figure new plan and budget, shiny new wallet with blank envelopes to encourage using it!

I'm going to have the same categories; but I'm going to try to realistically fund them so I won't "need" a credit card to make up the shortfall.

The most difficult part of truly going to an all cash budget will be having to tell my kids no. I will hate having to say no to my kids because of past choices that we made with our finances. However, this will only be short term. Once we are out of credit card debt, we will have so much more freedom with our choices and our finances.

I'm actually excited to go to the bank today and deposit all the checks I have ($700+), pull out the cash to fill my envelopes ($1200), and send a big payment towards our credit card ($1600).

I know my progress has actually been backwards this summer so I'm going to give myself a couple months to get back on track before I start doing debt updates again. I will keep track of where I am, but I'm not going to share it with the world quite yet. I am, however, going to try to get back to writing "unusual spending" posts for each month!

I am newly committed to a life getting out of debt! Wish me luck!

Random Stuff

I did not make an actual budget for July and in no way did that help in my quest to get out of debt!

We have two more paychecks this month: The Husband gets paid tomorrow and I get paid on July 31st. I actually sat down and budgeted the money we have coming in.

First I allocated money towards our mortgage payment. That is actually the only bill we have due during the next two weeks before our next  pay check arrives.

After that, I funded my envelopes for the month. I allocated our bi-weekly $300 towards gas. I have increased our grocery budget by $50 every two weeks to $300 because like most people, we were consistently going over in groceries. I also gave $100 to "fill" each of our remaining envelopes: Essentials (which could also be called Target), Hair, Clothes, School, and Kids' Activities.

My goal over the next month is to get back on the budgeting bandwagon and to fund our envelopes. It does slow down our snowball process, but it also keeps us from accruing more debt!

After tomorrow, (which I know sounds like a cop-out, but I have to wait until I have some money in the bank and in our envelopes), I am taking my credit card out of my wallet.  Right now, I just can't trust myself with it. For a long time, I was able to charge and pay it off each month. Currently, I/we are charging more than we can pay off each month, so out of my wallet it goes!

Between the next two paychecks, I allocated $1150 to go towards our credit card. I also have several checks, almost $500, that I will be depositing and sending all of that towards our credit card as well.

As we have children, a dog, cars, and a house, I don't feel comfortable having only a $1000 emergency fund. Right now, my comfort level is $10,000. We recently fell below that number, to about $9200. Because of this, I am also depositing more than my normal $50 a month to our savings account. With these paychecks, I will be adding $325 to our savings bringing us to just over $9500. I will keep adding more than $50 until I can get us back over the $10,000, hopefully by next month and then all "extra" money will go towards our credit card as our snowball!

Anyway, this was just a short rambling update with no apparent focus about our current plans.

Sorry It's Been a Month!

Again, it's been another month... I'm sorry.

For most people, summer is relaxing and the season when they have more time. For me, as a teacher, summer is crazy. My work out routines get interrupted, my eating patterns are all off, and so are my finances.

Summer is when I don't have to have a schedule. And I don't.

We have traveled a ton this summer. The Boy and I went to Japan for 10 days, The girl went to Paris for 10 days, The girl and I spent a week in Oregon visiting family, and all three of us spent a week in San Diego visiting my best friend from high school. Sadly, The Husband wasn't able to come for any of it... :(

All that travel has made havoc with my schedules. Including my budgeting. I didn't even write a budget for July, which is awful. On the plus side, however, I did make sure to pay my bills and then paid for a ton of things with my debit card.

Debt is still my enemy. And debt is still winning our battle.

I had some epiphanies over the summer, though. After The Husband's payday this coming Friday. I am getting back to the envelope system. I am also taking my credit card out of my wallet. I'm not going to go to the extent to freeze it like some people do, but I am going to make it less accessible.

I don't even have a debt update. I have some work to do before I'm willing to post numbers again. That right there should tell you something about where my debt stands. I'm usually willing to share the numbers: the good, the bad, and the ugly.

The one plus side of our finances is where we stand in regards to what we owe our kids. We borrowed $1500 from each of our kids over a year ago. Our payback has been SLOW but steady. We pay them back $50 a month. Each kid has been paid back $950. We have almost paid back 2/3 of what we owe them. I know I still have work to do there, but we are seeing progress.  The kids know that we borrowed money from them, and that we are paying them back. However, I have felt so ashamed that we haven't taken them to the bank to deposit their savings in FOREVER! Once we get them back over the $1000, I want to take them to deposit their savings... so pretty soon.

Anyway, not much of an update, just talking about date.

Until next time.