Japan is Expensive!

Last year The Boy and I were afforded the opportunity to travel to Japan as part of our city’s Sister City organization. It was a wonderful experience, truly once in a lifetime, and even though we are in debt, I’m so glad we went. This year, The Daughter is going on the same trip.

The program is actually a home exchange program, 10 Japanese students travel to America for 9 days in March, and then our 10 kids travel to Japan in June. This past weekend we hosted a student from Japan. She was wonderful! I loved having her and it we made so many wonderful memories. But, they weren’t frugal memories.

Although they spend 5 nights at our house, we really only “get” them from Friday night to Monday morning. The Sister City Association calendars the rest of their time.

On Friday night we took her bowling and to In’n’Out. Cha-ching!

On Saturday, we took her to the Santa Cruz Beach Boardwalk and Blaze Pizza. Cha-ching!

Sunday was more frugal and we spent the day at The Daughter’s dance competition and we only had to buy food that day. Food for 5 people… cha-ching!

We also bought her many souvenirs: several tee shirts, many different candies, a small-stuffed animal, and a couple gifts for her to bring home to her parents. Cha-ching!

She was beyond appreciative and gracious but it was a spendy weekend to say the least!

I don’t know how much debt we are going to pay off this month! I think we are going to come very close to breaking even on our credit card, which, in a way, is a win. We should be able to pay off everything we charged on the card, but we won’t make much headway on our debt.

In addition to treating our foreign exchange student, we are sending our daughter to Japan in a few months. We are fundraising for the trip but we pay all the fees upfront and then get reimbursed if we fundraise over our need. We also pay for airfare, spending money, and gifts for The Daughter to take when she goes to stay with her host family.

Her airfare was $1500 and we will send her with (at least) $250 of spending money. Since we found out she was accepted into the program to go to Japan, we have been buying gifts for her host family, so we are mostly done with that aspect of it.

It has been a wonderful experience for my children and I’m so grateful they have this opportunity, but it is expensive; both the hosting and the sending!

Plugging Away

As far as our debt and debt payoff goes, we are just kind of plugging away. We haven’t made any significant strides, but neither have we made any huge goofs.

We did have a very expensive weekend but paid for that using our savings. To that end, we do need to work on replenishing our savings a little bit now. Some of our expensive weekend will also be paid for using our Christmas money as we bought some gifts over the weekend.

Last month was our best debt payoff month ever, which will be followed by one of our worst! Right now, we are just plodding along. Our anniversary is next month, as is my birthday, and Mother’s Day. My poor husband, right?

The Husband bought all my gifts this past weekend. He bought me gifts for my 40^th and everything else. It ended up being an expensive weekend. Because of these expenses, our credit card debt is barely going to go down. We no longer owe our kids any money (YAY!!!) so that is $100 of debt that we aren’t paying off. We will make our normal progress on our car payment, however. I think we are only going to decrease our debt by 1-2%, however, I’m thankful that there will be a decrease.

With our May debt report, I’m hoping it will be better and I’m hoping we will be able to get our credit card debt into the $15,000. (Honestly, that’s such a crazy thing to say, “I’m hoping we can get our credit card debt into the $15,000?”

Net Worth vs. Debt Worth (updated 4/11/19)

I was writing a blog post the other day and as I was writing about my debt, the idea of a “debt worth” came to me. Now I imagine somewhere in the blogoshere and the internet somebody has coined and copyrighted that phrase, but it was the first time it occurred to me. And it got me thinking, what is my net worth compared to my debt worth.

Let’s start with a simple definition.

To me, a net worth is everything you have, all your assets: house, car, bank accounts, jewelry, cash on hand, etc.

Debt worth is everything you owe, and some of those things could be repeats: house, car, credit card debt, solar loans, 401K loans, personal loans, etc., any money that you owe anybody else.

Sometimes in our society, I think people confuse net worth and debt worth with their personal worth. People who have a huge net worth are not better people than people who have a lot of debt. Financial wealth does not equate to “good people”.

Lately, I have been comparing my worth, net worth and my debt worth.

Worth:

4 cars                             $20,000

1 house                        $591,000

1 401K                          $210,000         

1 403B                            $60,000

Bank accounts                $12,000

                                    ________

                                    $893,000

On the surface, it looks like we have a very healthy financial worth, but I only showed you one side of the picture. This only takes into account our assets, and assets are only half of what determines a net worth.

Now let’s take a look at the other side and see a more accurate picture.

Debt worth:

1 car loan                         $3700

1 house loan                 $455,000

1 401K loan                      $8500

1 Solar loan                    $26,000

Credit Card debt              $16,600

                                    ________

                                    $509,800

We have a lot of liabilities so our “worth” isn’t nearly as good as it looks.

Taking away our liabilities, or our debt worth, brings our total net worth down to around $383,200

These are all new, updated numbers for this post. Periodically, I think it’s important to look back at where we were just so we can see how far we’ve come. And we have come far.

Our net worth has increased by over $33,000 since I originally posted this in February of this year. That means we are going in the right direction. A lot of this is market fluctuations: especially for our retirement accounts, but some of it is progress. We are making progress. We are going to decrease our “debt worth” and continue to increase our net worth.

Debt worth is a bigger story than just numbers. Debt, and finances in general, bring so much emotion to the table that it becomes difficult to determine our true “debt worth”.

Debt makes me feel inadequate, ashamed, irresponsible. These feelings factor into my debt worth just as much as the actual numbers do.

Having debt doesn’t make you a bad person, but it often makes you feel like one.

Taking control of our finances and making progress towards our debt makes me feel like I’m getting it right. Making a plan for my money, and sticking to it, makes me feel like I am on the right track and makes the weight of my debt worth more manageable.

I am one of the lucky ones, even taking into account the huge amount of debt that we have, we have a positive net worth, that’s mostly in part to our retirement accounts. Our retirement accounts are nowhere near where we wish they were. In fact, we changed our contributions to help us get out of debt. I can’t wait until we are credit card debt free and can max out our contributions to our 401K again. Then we will really see our net worth grow!

Remember, you are not your debt, even if feels that way sometimes. Your debt worth does not determine your worth as a person, child, parent, friend. You are more than your debt.

Taxes Revisited

Well, we filed our taxes over the weekend. And it’s better (or worse depending on your thoughts on a tax refund) than I expected.

In my last post about our taxes I said it looked like we would be getting nearly $4000 back. Turns out it was more. We are getting over $4600 back. (Above and beyond out federal tax credit for getting solar.) This is our biggest tax refund ever. And it was beyond unexpected.

After the tax cuts of 2018, our paychecks increased to the tune of $200 per month. Right off the bat we were getting to keep more of our money. So when it was time to file taxes, I was sure we wouldn’t get much of a refund. But I was wrong.

Our refund is $4634. I still can’t believe it. It’s our largest refund to date. The Husband and I don’t try to receive a huge refund. In fact, our goal is to break even and we thought we would be pretty close to even this year. Actually, I think The Husband was afraid we might owe the IRS of the state and that’s why I think he was a little apprehensive to start our taxes. I’m pretty sure he was as shocked as I was.

Our plan for the money remains the same: The Girl’s airline ticket to Japan, renewing our theater tickets, and our summer travel plans, whatever they may be.

Although I don’t like giving the government an interest free loan for a year, I will enjoy all the benefits that loan will afford us. It will be nice to have the money to pay for these things as opposed to literally taking the money from our savings accounts.

Although we have debt (a lot of it) we also have savings. We are not living paycheck-to-paycheck per se. And although I put a lot of stock in Dave Ramsey and his financial teachings, we have a lot of liabilities that we need to be able to meet so, for us, money in savings is a must. What I am really appreciating about this refund right now is that it will allow us to keep the money in our savings while paying for things we need to pay for that we otherwise wouldn’t have enough money for.

Our tax refund is an unexpected, but appreciated, windfall.

Yo-Yo Debting

Our debt has continued to go down for 7 consecutive months. It doesn’t decrease each month by leaps and bounds but has been on a downward trajectory the whole time.

I’m afraid to jinx it, but I think we may have finally put our ways of yo-yo debting behind us.

You know, yo-yo debting; when your debt goes down one month, only to increase the next month, but then you have a good month for payoff and you repeat the cycle… again, and again, and again.

For the last 20 years of my life, that has been our cycle: up and down and never ending.

But, I think we have finally stepped out of the viscous cycle. We have decreased out debt, every month for eight months, with hard work and diligence. Our debt isn’t gone (oh, how I wish!), but our debt totals have shrank every month.

The last time we got out of debt, we used The Husband’s pension when he switched jobs. There was no hard work involved. That lasted for about five minutes before we tumbled ourselves back into debt.

This time has been different. There haven’t been any quick fixes; but there have been triumphs and setbacks. We’ve had months where we have made great strides and are paying off debt in leaps and bounds and we have had months where we’ve had to transfer money out of our savings to make sure out debt actually decreased. The difference between this time and last time is this time we are doing the work. Admittedly, some months are better than others, but through them all we’ve made progress.

Our total debt has not increased once since we got serious about paying off our debt in September, 2018.

The worst thing about our yo-yo debting was it was all caused by lack of self-control. We didn’t need most of the things we were buying, we just didn’t say no.  We chose to live outside of our means and spend money we didn’t have. Now, we are paying the price for that. But maybe, that will be the price that keeps us out of debt for good. Maybe, having to put in the work will make us realize we don’t want to have to work so hard again. It’s been difficult trying to live our life and pay off debt. I can’t wait until this debt is gone and we can live our life and plan for our future!

Yo-yo debting is a painful cycle and one you have to consciously choose to quit.  It took us over 20 years to decide it was a cycle we didn’t want to be in anymore. And it’s going to take us another 2+ years to actually get out of the cycle. But we’re here. We are scratching and clawing our way out of debt. We have decided yo-yo debting isn’t for us. We are getting out.

Getting out is hard. Especially when you’ve spent 20 years living above your means. Making an effort to live within your means and to budget and to plan takes self-control and I think we are finely there. The stress of debt just isn’t worth it. The stress of hoping we can make all our minimum payments and pay for The Kids activities and maybe have some fun along the way has become too much.

It’s past time for us to take control. To pay off debt and to yo-yo debt no more!

Debt Update March

Our last debt update was pretty darn good, and I don’t see how we are possibly going to beat that month any time soon! We made great progress and paid off almost $1500 in actual dollars and a whopping 6.1% of our total debt! Plus, this was the update where we finally fell under $18,000 of credit card debt! It was a great month and I only hope that we can keep the progress going! The Husband had a lot of overtime during the month that contributed to our progress and he had more overtime in the first period of this debt cycle so we’ll have to see where we fall!

The debt we owe our children has continued to (ever so slowly) decrease. We borrowed almost $1500 from each child and have paid back all of it, which means we are done! I’m so happy that we don’t owe them any more money! Although now that we have fully paid them back, we will continue to deposit $50 into their bank accounts, I’m so happy that 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; to that end, I don’t really focus on paying extra towards our car payment because it’s at 0% interest. I know that goes against what Dave Ramsey teaches, but I can’t see paying more interest on my credit card balance just to get an interest free loan paid off quicker.

Although we are not paying off our debt as fast as I would like, I am happy to say that for the seventh month in a row, our overall debt decreased! (I am so happy to get to be writing that instead of having to say that our debt went up!) Usually we are not making giant leaps and bounds in our debt repayment, but believe that slow and steady wins the race, but last month was awesome and this month we are hoping to see some real progress!  

Here are our current debt totals:

            $16,686.85      Credit Card at 16.24% interest

            $0                    The Girl

            $0                    The Boy

            $4085.00         Car Loan at 0% interest    

      

Our total debt stands at: $20,771.85 YIKES! I can hardly wrap my head around that number. I absolutely HATED seeing a 2 as the first number on our credit card and I hate seeing a 2 as the first number of our total consumer debt! I’m so happy that our credit card debt is back under $20,000 and at least our credit card debt only has a 1 in the front and I can’t wait until I can say the same thing for my total debt!!! We are inching closer and closer to falling under the $20,000 mark! I can’t wait!

This is our best month of debt payoff, ever! I know most months won’t be like this, but I’ll take them when I can get them!!!! After this month, our debts decreased from 4 debts to pay down to 2. We got rid of 2 debts this month!  I just need to remember that slow and steady wins the race. We are getting there. We are making progress and we will get out of debt. Next month won’t be as good, but we will decrease our debt.

Plus side: our debt decreased! We paid off almost $2000 of debt in actual dollars, which amounted to about 8.8% of our total debt. It was another good month! Mostly unexpectedly (and excitedly) skipping the $21Ks altogether and falling into the 20K-something range! I never even saw that happening! I saw how close we were and I decided to pay off our debt to The Kids! This has been our best month so far for debt payoff since we started to seriously prioritize getting out of debt! We continue to make progress on our car loan. I’m so excited we finished paying off our loan from The Kids! And the fact that we haven’t borrowed any more money from The Kids is a plus. All the hours of overtime really contributed to debt payoff and the fact that we could send all his overtime to debt. Overall, a great month!

Down side: No matter how much debt we pay off, it’s never enough. L Also, we did still charge on our credit card; not a lot, but enough. Of course I also hate that several hundreds of dollars went towards interest on our credit instead of towards the principal. Because I didn’t realize how close we were, we couldn’t pay off $2000 total. Even paying our kids back in full, we were $5 short of paying off $2000. But, again, I’ll take it. I think it’s a win to even get close to $2000.

Looking forward to: getting our credit card debt below $16,000 Making continued progress on our car loan and actually dropping another thousand on our loan (through no effort of our own, just normal payments). Definitely looking forward to decreasing our overall debt from 20K-something to 19K-something and finally getting our total debt under $20000. We should be able to do that next month! I’m really hoping!!!! I’m also looking forward to fully funding our envelopes and continuing our use of a cash only mainly budget! I see a tiny glimmer of hope of reaching a total “debt worth” of less than $20,000. I know I’m still a little bit away, but I can see us creeping up on it. I’m hoping my debt update next month can shout the news of having less than $20000 in debt!

I posted my 2019 financial goals. They are all doable if I work at them. And if I am successful with each one, I will definitely improve my financial situation by the end of the year. Getting out of debt is such a gigantic goal of mine! Debt affects almost all of my decisions: food, vacation, transportation… it’s crazy how much our past mistakes are affecting our future choices.

Clearly, 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.

WOW! Another long post!  If you stayed around until the end, thank you! If you got bored and moved on, I totally understand.

Projected Tax Refund

Well… it looks like we are going to get a tax refund. Quite unexpectedly, I might add.

We have enjoyed getting more money in our paychecks every two weeks and have used that money pretty diligently. With each paycheck we were able to increase our debt payments, but because of that, we weren’t expecting a tax refund this year. (*Aside from the 30% federal rebate we were going to get on our solar, which, as part of our contract, will be paid directly to the solar company.)

After our initial run through of our taxes, it looks like we will be getting nearly $4000 back all told between federal and state. That is on top of the $10,100 that we are getting as a rebate on the solar. I’m still shocked at the projected amount of our refund. Although it’s slightly less than last year’s refund, last year there weren’t tax cuts that put an extra $2500 in our pockets over the course of the year. Somehow, I feel like we won the tax lottery! We got more money in our paychecks each month and we are getting a pretty sizable refund!

That is so much more than I was expecting. I was expecting somewhere in the $1000 range, maybe! Now, having said that, we haven’t actually filed our taxes yet as The Husband wants to run through them again to make sure that all the numbers were inputted correctly and that there are no errors. I will do an update when everything is actually filed and on the up and up.

Now for the plan we have for our tax refund. Don’t judge me, but we aren’t planning on sending any of it towards our debt. First of all, yes, I realize that would be the smartest thing for us to do with our money. Secondly, I’m okay with not doing the smartest thing. And lastly, we do have a plan and are not just going to fritter it all away!

We have a lot of expenses coming up in the next few months. All of these are “extras” and things we don’t need, (but are going to do anyway). And the entirety of our refund, and then some, will go towards paying for these things. The Girl is going to Japan in June and we will need to pay for airfare, some new clothes, and gifts for her to take over with her. Our season tickets to the theater will come up for renewal in June-ish and we will use our refund to pay for that. Lastly, we will use the remainder of our tax refund to take a vacation over the summer. (We don’t know where we are going or what we are doing, but our tax refund is how we are going to pay for it and we do know we are going somewhere.)

I know none of these are necessary expenses. I know that almost $4000 could go a long way towards getting us out of credit card debt. But I also know, and have said over and over again, that although getting out of debt is a huge priority for us, it’s not the only priority. We still want to live our life and give our kids experiences while we dig ourselves out of the mess we made. That may not be your debt philosophy, but it is ours.

Once we actually receive our tax refund, it will be shuffled straight into savings and then used as it’s needed. The Girl’s airline ticket will need to be paid in the next four weeks or so. As I said earlier we will renew our theater tickets around June and then we will take a family vacation in July. This will completely tap out our refund but to get to do all these things will be money well spent! During this time, we will also continue to contribute to our savings account at our usual rate.