52-Week Savings Challenge
Week 16 (saved to Week 21)

The Freedom card rounding hit for this week. It was a bit more than I expected, so I got to knock out another of the 'higher' numbers.

Snowflakes
Freedom Card Rounding - $40.89

Total Snowflakes: $40.89
Rounding (from reserve): $0.11

Beginning Balance: $629
Deposit: $41
Ending Balance: $670

Reserve: $0.36 - $0.11 = $0.25

This puts me at almost 48% of the Challenge, and we're just past 30% through the year.

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Meanwhile, I've been spending out of control! It's really mostly planned expenses, getting ready for two back-to-back vacations, but still, there's been a lot of money going out lately! Some of it I was able to put on my PayPal credit, which gives me six months of no interest, and the rest is on the Freedom card (which is paid off monthly) so at least I'll be getting 1% back on that. I may have to dip into my slush fund savings when the bill comes due, but I've never gone this far into the year without dipping into that fund in the past, so I'm not too upset about it!

Part of the problem is that the first trip is to Napa for S's work President's Club. While the trip itself is pretty much all expenses paid for both of us, it's "resort business casual" (whatever that means!) and "suit and tie required" dress, which is not the norm for either of us. S only has one nice suit, and he's worn it to the past several work events, so he wanted something new. He really wanted something tailored, since as a competitive cyclist he's hard to fit (big legs, small waist and hips, broad shoulders). He ended up getting a really good price, for what he got, but it was still twice what I probably would have spent!

Then we hit Kohl's for "resort business casual" wear for me, and a nice dress for the suit-and-tie event, since all I have are very dowdy skirts (it's a passive-aggressive thing since my boss won't let me wear slacks) and capris. Of course due to S's schedule we went when I didn't have any percent-off coupons. It was late and I wasn't in the mood to try anything on, so I did that at home, and of course the fancy dress I bought was just horrible once I put it on. I went by myself another night and got a couple other dresses, and a couple of replacements for some other things that didn't fit. Two days later, of course, was the "lowest prices of the season" sale, and $10 cash back for every $50 spent. Given the boatloads of money we'd just spent, I wasn't about to just let that go!

I did find an online-only coupon for 15% off (there as a big dry spell with Kohl's coupons for a while!), so I spent most of Friday morning re-buying everything we'd purchased and were keeping, plus a couple of other little things I'd forgotten earlier. When all was said and done, I ended up saving an *additional* $250 to what we'd originally spent, *plus* I got $90 in Kohl's cash. So I really made out on the savings, but I still spent quite a lot to get there! (I've returned some of the original purchases already, and the rest will go back once the online orders arrive.)

Hopefully, we should have very minimal spending the end of April/beginning of May. The work trip is basically all expenses paid, except souvenirs and if we want to do anything during the few hours of 'free time' we have. My pilgrimage is the next week and I've had the money set aside for that for a while now. Then we don't have much until the middle of the month, with our anniversary; I'm using the Freedom card rewards for the anniversary dinner, which is the bulk of that expense (the gifts are already paid for). I'll be out of town again at the end of the month, but it should be a low-cost trip. I'm going to try to get us focused on a frugal June, though!

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Funny (non-financial) story. When our grandma died several years ago, my sister and I went down to visit with our grandpa, and stayed at their house (which my aunt and uncle had bought from them as a vacation home, when my grandparents moved into a senior/long-term care facility). We were looking through old photo albums and ran across a picture of my grandpa when he was in the Navy, and both said, "Oooh, dreamy!" (Which I guess is kind of weird to say about your grandpa, but whatever.)

We got together with my cousin a couple of weeks ago, after my aunt & uncle's funeral, before she want back down south. (She's now living in the house down there.) My sister mentioned that if she ran across the photo, we'd love a copy. She laughed and said, "I know exactly which picture you're talking about, I have it on my work desk!" When she got back home she sent my sister the picture and sure enough, it's the same one.

What do you think? He was a dreamboat, wasn't he? Even for a grandpa!

I mentioned the other day that I was changing our withholding and 401(k) contributions, and that it was going to be a big bite out of our monthly budget. I also mentioned that I got a raise and S will undoubtedly get a small one, too, which will help offset the changes. Still, I was looking at a decrease of about $525 per month and for the last couple of weeks it has been really kind of freaking me out.

Then all of a sudden yesterday the light bulb went on. I wasn't looking at the difference in income from our current situation to the new one -- I was looking at the difference of our income with the raises without making any other changes, compared to the income with the raises and changing the other things. The reality is that the raises really do offset quite a lot of the changes. We'll only be taking home $118 less per month, which is very manageable!

They installed the new wall heater yesterday. My only regret is that we didn't just do it a couple of months ago. It's a much bigger unit (well, it's distributed differently; the old one was mostly outside, this one is mostly inside) but still pretty unobtrusive, and it is whisper-quiet. Even on its best day, the old unit was loud enough to hear in the next room. This one you have to be practically standing next to it before you can hear it.

Today is Fat Tuesday -- also known as Paczki Day here. (I'm not actually a paczki fan, but I like to say "Happy Paczki Day". ) Tomorrow Lent begins, and again this year, although we don't actually 'do' Lent in my religion, I've decided to give up something that will make a financial difference. Last year it was CVS, and half of those savings (based on the average from the previous two or three months) went to the 52-Week Mega Challenge.

This year I've decided to give up buying lunches, except of course during my regular grocery shopping. Which means I'll need to plan ahead a little bit better, since I often either run out for lunch, grab a can of soup at CVS, or stop by the store on the way to work and pick up something. I've wanted to work on this anyway, and have been doing a little better already, but Lent is a good solid jump start. It's a hard number to pin down, because some days I do bring lunch and some days I have a $1 can of soup, but even figuring an average of $7.50 per lunch three days a week, that's saving $90 a month -- almost the entire shortfall from above. I'm not drinking pop as much, either (as in, almost never but I refuse to completely eliminate the possibility), which probably saves at least $30 a month, and makes up the rest of the shortfall.

I am reserving the right to one lunch out during Lent, though, because I was too busy today to do a Fat Tuesday celebratory lunch!

I've started several 2014 wrap-up/2015 goals posts, and never get around to publishing them, because a) I start yammering on and b) it gets too depressing!

Some days I feel great about where I am -- I've paid off a lot of credit card debt and have a good start on an emergency fund -- but then I do my yearly budget projections and end up $10-15K in the hole by the end of the year. (I overestimate spending and underestimate income, but still....)

Then I did our taxes and we really need to change our withholding! We had claimed a high number of exemptions for a while, because with the rental we had a fairly decent loss to write off, but we don't get the full amount anymore and it's really affecting our bottom line. We owed around $2,800 last year; we have a small refund this year but only because we had a lot of stuff donated to charity, from his parents and my grandparents (finally cleaning out the basement, garage, and attic!). We won't have that next year, and without it we'd owe about $5,000 so it's time to make a change!

I'm also having us increase our retirement contributions; we're both putting in just the minimum to get the match right now. We aren't able to contribute directly to an IRA or Roth; a backdoor Roth won't work for S because has an existing IRA. I could do one -- I have a teeny tiny IRA and the tax on a conversion would be negligible -- but at this point, having it come directly out of my paycheck, and reducing my taxable income, is preferable. (Plus I actually think we'll be in a lower tax bracket when we retire, so tax-deferred is our better option at this point.)

Of course none of this helps our monthly bottom line any, but it's a necessary evil. We do have lots of areas where we can cut back, and I've already identified about $5,000 I won't be spending on a particular hobby this year. I also haven't included any side gigs I can pick up. Still, my focus has changed a bit for 2015, and rather than working quite so heavily on eliminating debt, I'm going to work more on not incurring additional debt.

I have a refinance to do mid-year, and potentially another one in the fourth quarter. The first will definitely ease up cash flow, and significantly lower our highest interest rate. (The second will probably end up being neutral overall.) I also have a small 0% balance transfer offer through August 2016. That combined with the refi will put my highest credit card interest rate at 3.99%, so I'm a little more comfortable about scaling back on repayments than I would be with the 24.99% I had a couple of years ago! (I will still pay some extra to the cards; paying just the minimums means I'm in debt until 2030! As of now this change will extend my payoff by one year.)

Unfortunately, we have decided that we really do have to replace the wall furnace that died on us back in November. We've been limping along with an electric space heater, but it doesn't do much on these sub-zero nights, and it's expensive to run! So that's $2,500 out of the EF -- the only good aspect being that at least I had the funds set aside!

My 2015 goal, then, will be to replace the $2,500 and get the EF back up to $5,000. Since I'm still finishing up the 52 Week Mega Challenge ($1,890) and doing the regular 52 Week Challenge ($1,378), I'll easily meet and exceed that goal. My original goal of $7,500 in the EF is a little ambitious now (given I still need to save up $3,700 for property taxes in September), but I think I'll stretch the EF goal to $6,000. That's only another $232 I need to come up with, which seems do-able.

(Actually my EF goal hasn't changed -- save up $2,500 this year -- it's just the final account balance that's changed because of the heater.)

Anyway, my other goal of paying off $17,500 in credit card debt is adjusted down to paying off $12,000. That includes a few 0% balance transfers that will come due this year. It doesn't include the one card I'll pay off with the refinance, since I'll still owe that money, just not on a credit card.

To end on a happier note, I did negotiate a 7% pay raise (which is a lot less than it sounds like!), which will help offset my increased 401(k) and withholding. S should get his standard 2% increase, which will help a bit, too.

The look back/look ahead is just my way to try to keep myself on track with my saving and spending. I have an Excel spreadsheet I love for tracking my debt paydown but it doesn't translate well to saving and spending; I find I'm more about words than numbers for those areas.

November
I mentioned last month that we did a debt consolidation, so it's been nice to see all those zeroes on the cards we paid off with the new loan. Plus, since the new loan is in S's name only and most of the cards we paid off were either mine alone or joint, my credit score has skyrocketed -- up around 40 points, according to the score from Barclay. (Discover's update should show up later this month.) S's score hasn't taken too much of a hit, either, because he doesn't have a lot of debt other than the mortgage.

Meanwhile I'd set some money aside for some home repairs; we got the materials needed on a decent sale and ended up with 0% financing until January 2016. I shuffled the full amount over to my ING savings account, although we do have minimum payments to make so by the time the promotional rate expires, we'll only owe half the balance. I didn't think about that until after I did the transfer, but then I figured we can probably cash flow the payment amount anyway and if not, I've given myself permission to take that amount out of ING if I need it. Now I'm trying to decide if I should leave it at ING at 0.75% interest, or open an account at Synchrony for 1% interest. The difference in a year is really going to be minimal, but since ideally I'll only use half the money, the other half may stay in the account for a much longer time period. Just not sure it's worth the effort for a quarter of a percent on really a rather small amount. (Moving it from my regular bank was an easier decision, 0.1% at Chase vs 0.75% at ING.)

Anyway, I ended up paying $3,039 in total debt in November, $768 in interest and paid $141 extra to my avalanche. The avalanche amounts are going to be quite a bit smaller now with the new loan, but again it doesn't affect my final payoff date.

December
Gift giving this month, of course. I have the $500 I set aside from our Chase rewards to hopefully cover our costs. I also have a handful of membership renewals and trophy pledges due this month, but of course those are known and planned.

It does look like we're going to have to do something about the wall furnace in our Florida room -- it's on a separate system from the rest of the house, but the room is right next to the room we spend much of our time in so the cold seeps in if it's not heated. It started making a horrendous noise the other night. Turns out some part needs to be replaced; they had some doubt about whether they could find it but finally did a few states away. Cost to replace is about $1000; cost for a new furnace is about $2500. This is the third or fourth time we've had a major problem with this furnace since it was installed (which I think was in 2009) -- they completely replaced it once, but even the new one has had some big issues. I'm really not sure about spending another $1000 on it. I think we're going to have a couple of other companies come out and give some advice on what they recommend -- it may be that a wall furnace isn't even our best option at this point. Whatever we do, it seems we're looking at a minimum of $1000 and probably at least $1800 for anything other than repairing what's there. *sigh* Oh well -- that's what the emergency fund is for, right? (And I might use the reno money instead, pay it back every month to be sure I have what I need when it comes due, and keep the e-fund intact.)

Other than that, hopefully things will be on a more even keel this month. I'm just getting my new Excel worksheet set up for 2015 bill tracking, which is actually a bit therapeutic, especially since I can delete so many payments from last year (for the couple of cards we totally paid off and the others we consolidated).

Hope you all have a wonderful holiday season!

The look back/look ahead is just my way to try to keep myself on track with my saving and spending. I have an Excel spreadsheet I love for tracking my debt paydown but it doesn't translate well to saving and spending; I find I'm more about words than numbers for those areas.

October
October ended up being a big "financial" month, mostly because I spent the vast majority of the month looking at our finances and budget and debt and all that fun stuff. I don't keep to a "budget", per se. I know how much is going to come in each month (aside from snowflakes) and how much has to go out, and I keep up with that every few days (kind of like balancing a checkbook, but I do it in Excel). Most of our daily expenses go on the Freedom card, which we pay off before interest hits, and there's a lot of flex there. Our October Freedom spending was way out of control, though, about $2K more than usual. (Some of that was the $586 medical bill I ranted about a while back, and another $500 ended up being refunded, but still, we spent a lot more than I expected.)

So I got it into my head to go back through the last year and total up all of our transactions, in broad categories, and see just how were were doing in general. I had myself quite freaked out for a while, too, because any way I looked at it (last three months, last six months, last 12 months) it averaged out that we were spending $3,500 more per month than we brought in. (Which on the one hand wouldn't surprise me, sometimes, but I just couldn't imagine how that could be possible when we still had money leftover almost every paycheck. It's just not sustainable, right?) It was, of course, a bonehead error on my part; we've done some debt consolidation and 0% balance transfer checks over the last year, and I deleted the loan/check deposits from our income -- but I'd forgotten to delete the corresponding card payoffs from the expenses. Oops!

Once I fixed that things look a lot better, although still tighter than I would have thought. (I suspect that's because of the averaging, though; we had some big expenses at the beginning of the year, but some big paychecks to cover them.) There's a lot we can trim, though -- we spend an obscene amount on eating out, I found, and most of it is lunches. S is on the road a lot for work so there's not much to do there, but I almost never bring a lunch to work. That would probably save $100/month, easily, so that will be my focus for November. (We rarely have leftovers from dinner, but I may start tweaking recipes when it's possible so that we do. My biggest problem is I'm always running late in the mornings, so packing a lunch is usually not on the agenda. Leftovers I can pack up the night before and just grab and go.)

Debt-wise, I paid off $2,373 in debt in October, paid out $935 in interest, and put $230 extra to my current avalanche debt.

November
We ended up doing another debt consolidation, the loan closed on October 31 so this weekend I made all the payoff payments. (I told S to check out the account online after the loan principal hit, because our balance probably won't be that high again for at least a decade! Kind of scary, though, to see the balance drop by several thousands of dollars overnight, even though I was expecting it.) This doesn't really affect my payoff time, which is about two years out, but will save about $3,800 in interest. I also took the $500 refund we got and paid off one of my lower-interest cards. It was due to be paid off in February, so I really didn't save much in interest, but the monthly payment was $133 so now I have that much more to put toward the other debt.

We finally gave in and turned on the heat Saturday night. I usually struggle to make it to October 1 before I get too cold, but we had so many 70-degree days in October this year I just couldn't justify turning it on for the 2-3 50-degree days in between. (Plus we have very warm snuggly bedding, and if I'm sitting on the couch I have a triple-layer fleece blanket plus any number of warm and toasty critters on my lap.) We had snow on Halloween night, though, and driving home from dinner at my mom's on Saturday is was I think 29 degrees, so we figured it was time!

Not much else going on for November. My niece turns 5 at the end of the month; my sister has asked that some of her "presents" be money, since they are going to start her on a "budget" plan (allocating for spending, saving, giving, etc.). She's having a party for the first time this year (she started kindergarten so it's with the kids in her class); I'll be helping out with that and since I'm not really a big fan of kids, I'll consider that part of my present, too! We don't spend a lot on birthdays so that will be an easy cash flow. Thanksgiving is at my sister's and we share expenses (my mom, sis, and us) so it's another easy cash flow. Then it's just gearing up for Christmas and year-end stuff, and starting all over again in 2015!

The look back/look head is just my way to try to keep myself on track with my saving and spending. I have an Excel spreadsheet I love for tracking my debt paydown but it doesn't translate well to saving and spending; I find I'm more about words than numbers for those areas.

I can't believe it's October already! Where has the time gone?

September
Pretty quiet month, financially. The rental taxes were paid, and the normal bills, etc. I procrastinated calling about the landscaping; I may see about it this month but at this point it might be easier to just wait until spring.

We cleaned out the garden last weekend, so now I've got to figure out how to store or freeze what we harvested. (It's mostly onions and potatoes, which are fairly easy, a few carrots, and one big stalk of Brussels sprouts.)

Debt-wise, I paid off $2,456 in debt in August, paid out $853 in interest, and put $282 extra to my current avalanche debt.

October
I don't have much planned for October, either. S and I usually go to dinner and a movie on Halloween (we're not into kids), but he's going to be out of town this year. I may still go to the movies myself if there's something decent to see (beats sitting at home in the dark hiding from the trick-or-treaters ), and since I have a gift card for the movies and I'll have popcorn for dinner, it won't cost anything and we'll save the $50 or so we would have spent at a restaurant.

S will also get a decent-sized commission payment at the end of October. He's been wanting some new gear for his hobby, so some of it may go toward that (or he might use some of his end-of-year bonus instead, depending on the timing; six of one, half-dozen of the other, really). I'll set aside our winter taxes, they're not due until February 2015 and it's the 'small' tax, which actually I can often cash flow, but I might as well just set it aside if I have it. The rest will probably go into a 'slush fund' for various things that no doubt will crop up around the house, the landscaping if I decide to do it now, etc.

Slightly behind on this, what else is new?

The look back/look head is just my way to try to keep myself on track with my saving and spending. I have an Excel spreadsheet I love for tracking my debt paydown but it doesn't translate well to saving and spending; I find I'm more about words than numbers for those areas.

August
August is property tax month for our home, which means the bank account takes a pretty big hit. It's a known and planned-for expense, but it still twinges a little bit not to see that nice big savings balance!

The garden is limping along -- other people have said this year is even worse than last year for gardening (and last year they said it was the worst ever), so I guess we're not doing too badly. The tomatoes are finally starting to take off, and we're actually looking like we may have more than we can consume before they go bad -- something we didn't at all have to worry about last year! None of us is really interested in canning, so we're going to look into possible ways to freeze them.

I passed my second licensing exam at the end of the month, so I guess in about 30 days I'll be officially licensed. At some point that's supposed to translate to a financial benefit, but I'm not sure exactly when that will happen.

On the debt front, I paid off $2,532 in debt in August, paid out $777 in interest, and put $291 extra to my current avalanche debt.

September
Rental property taxes are due at the end of September; that's another bite out of the savings account, but only about half as much as our home taxes. There's really not much going else on for September, as far as I can foresee. I may spend a chunk more than planned on yard maintenance.

We have a 'landscape' area behind our fenced yard that has run wild the last several years; we cleared it out last year but of course it all came back again. At this point it's beyond what we could do in a weekend, so I'm going to get a few quotes to have it a) cleared out and b) weed-blocked and either mulched or (better) filled in with rock, and the one area that's visible to the neighborhood given some design other than 'big pine tree and whatever weeds grow around it'. (The big pine tree needs to come down, actually.) I doubt I'll be willing to pay for it all, but I might at least shell out to have it cleared. (I have some money leftover from the rental a/c that didn't end up needing replacement, and a plan to save back up for replacing it in 2015.) The backup plan is to let the bulk of it die off over the winter, and do the cleanup/fill in the spring.

The month of July really got away from me. I spent the first half studying for my licensing exam, and the second half recovering from the studying! I'm feeling a little bit back on my feet, finally.

July Look Back / August Look Ahead

The look back/look head is just my way to try to keep myself on track with my saving and spending. I have an Excel spreadsheet I love for tracking my debt paydown but it doesn't translate well to saving and spending; I find I'm more about words than numbers for those areas.

July
July was a good month overall, our family garden is growing (slowly, but much better than last year), and I passed my exam (phew!) - on the first try.

I did end up having the faucet/knobs (controls? handles?) in my shower replaced, as well as many of the pipes, due to major leaking, to the tune of $850 (ouch!). There are some 'good' things about it, though; first, I found the access panel in the linen closet, which at first they didn't think was there, so it cost about $2,000 less than they originally anticipated. (They had quoted the job about a year ago, when we had them do a temporary fix to some minor leaking, knowing it would have to be replaced in the not-so-distant future.) Also, we've been setting aside money for general household updates (rental and personal), some of which are optional, so I was able to cash-flow the expense and will replace the funds over the next few months. Finally, without the leaking (it was leaking into the tub for a long time, until it finally started leaking out of the tub and into the basement) we'll be saving water -- how much remains to be seen, but I've definitely noticed a difference in both water pressure and how long the hot water lasts.

On the debt front, I paid off $2,548 in debt in July, paid out $760 in interest (nice to see that number drop below $800!), and put $160 extra to my current avalanche debt.

August
I have a second licensing exam at the end of this month, and if I pass that I'll be able to complete my license. It's not supposed to be as difficult as the exam I took in July (though still a challenge); the bonus there is that a few areas I studied for the July exam are topics that will be on the August exam.

It's S's birthday this month and while he claims he doesn't like birthdays, I was already instructed to get tickets to a play for that night. (His birthday is on a Saturday, conveniently.) There's a restaurant we've been wanting to try not too far from the theater, so we'll go there for dinner - expensive, but S got a good bonus this month so we'll use part of that.

Property taxes on our home are due at the end of the month -- that will be a big chunk out of the savings account balance, but of course the reason we have so much in the savings account is because we set it aside for the taxes. (Taxes on the rental are due at the end of September; another chunk out of savings, but half as much as the August bill. It's nice to actually have the money in the bank, though -- too many years we didn't plan ahead and had to borrow or use credit cards (or one year just not pay them for a few months until a big bonus came through).

Other than that, I don't see much going on in August. My niece starts kindergarten at the end of the month (or maybe the beginning of September, they recently changed the laws about the first day of school and I don't remember on which side of Labor Day it landed.) I picked up a cute little "Frozen" nail polish set with a tin to keep them in (she's all about both "Frozen" and nail polish these days) at the Five Below (it was $5). I'll probably tell my sister to give it to her if she's a good girl on the first day of school. (Or, on whatever day she gets a good report if the first day is a bust! She's usually pretty good, honestly, but it's a new school so who knows how that will affect her.)



52-Week Mega Savings Challenge
Week 30 [started late, now on my week 24]

Obviously these cover several weeks, but I'm just lumping them all together rather than doing multiple updates. The refund was for some concert tickets S bought, he ended up getting a different package so they refunded the original. The gift card was for Barnes & Noble -- I got two books, "S" by J.J. Abrams, and then I spent $3.99 on a biography of Warren Buffett to get free shipping (which would otherwise have been $3.99). The refund for my physical therapy co-pay, that I paid and then the insurance ended up paying the whole thing, finally came through. I had $10.29 in "keep the change" rounding on the checking account. (Next month I might try it on the Freedom card activity -- we use that a heck of a lot more!) The dinner refund is money my mom gave me for her birthday dinner (I cooked for her); I had intended to pay the whole thing but my sister and I took her out for lunch twice during her birthday week, so she insisted on paying for the dinner. Interest is in the ING/Capital One account, which is where the 52-Week Challenge money goes.

Snowflakes
Pact: $2.18
Pact: $1.95
Refund: $52.00
Book Review: $15.01
Book Review: $25.00
Gift Card: $25.00
Rounding: $10.29
Pact: $1.40
Pact: $1.88
Insurance Refund: $203.00
Dinner Refund: $50.00
Interest: $1.06
Total Snowflakes: $388.76
Rounding (from reserve): $1.24

Beginning Balance: $1855
Deposit: $390
Ending Balance: $2245

Reserve: $2.85 - $1.24 = $1.61

This puts me within $500 of the "double challenge" (I finished the single challenge a while ago), and almost at 1/3 of the Mega challenge.

The look back/look head is just my way to try to keep myself on track with my saving and spending. I have an Excel spreadsheet I love for tracking my debt paydown but it doesn't translate well to saving and spending; I find I'm more about words than numbers for those areas. I was going to combine this with my 52-Week Mega Challenge update, since I figured they'd both be short, but apparently I had more to say in this one than I expected!

May
Not a whole lot going on in May; it's a high-spend month for several reasons (my annual 'pilgrimage', our anniversary, and my birthday, plus getting ready for the family garden) but we plan for it and set aside money from my overtime (Feb - April).

Overall in May I paid off $2,292 in non-real estate loans, paid $770 in interest, and paid $158 extra to my 'avalanche' credit card. I wrote yet another letter to Social Security informing them of my mother-in-law's death (in August of 2012) and requesting that they stop depositing her monthly benefits into her checking account. (There's almost $30,000 in there now -- no wonder the system is going bankrupt!) I also informed them that this was our last attempt at remedying the situation -- they've been informed at least three times by three different people (including the funeral home), the bank was instructed to return the first two deposits and close the account back in October 2012, we've tried calling multiple times but can never get through (when we do get through, it's hold-hold-hold-hold and then they disconnect us). So, it's on them, and I'm not even going to worry about it any more. (We don't have any access to the bank account, it's in her name only, so there's not much else I can do regardless.)


June
We have another vacation planned this month, for S's family reunion (among other things). It's unusual for us both to go anywhere together that's not a day trip, because of the critters. We're dividing them up among friends so that no one has more than they can handle. (Once we get this debt paid off and a good EF built up, I'm going to start saving up to buy a big cargo van so we can just bring them all with us. Since we don't go too often it's not that big of a hardship to ask friends to babysit, but it's six trips getting them there and back and about 20 hours of driving total! It does save tremendously on boarding fees, though; we'd be looking at four figures, easily.)

We're staying with family for the duration of our trip and S has a company car so doesn't pay for gas (they take a set amount out of each check to cover personal use of the vehicle), so our actual vacation expenses should be minimal.

I am expecting some big snowflakes this month. Of course, one I've been expecting for a few months now (payment for a side gig), but I'm moving up the ladder now and should have a resolution soon. The other is $200 from a round of physical therapy I had last year; I paid a $20 per session co-pay, but then the insurance company ended up paying the entire bill. I heard back from them last week that they'll be processing the refund and I should see it in a few weeks.

On the down side, the tenants at the rental let me know about several areas that need repair at the house. (Honestly most of them are items that needed repair when we moved out 12 years ago.) They do most of the work on the house themselves -- they plan to buy it at some point (and I'm not pushing them, honestly, because a) they're like family and b) the longer they wait the better for me, because the mortgage will go down and the home's value will go up) -- but they're in a tight situation financially right now and can't afford to pay for the repairs and pay the rent. So they'll likely only pay a portion of the rent for the next several months, while they tackle these repairs, and I'll need to make up the difference since the rent is used to repay family loans. (It should only be a few hundred dollars each month, which I may be able to cash flow from S's bonuses, side gigs, etc., but if not I've asked them to find out about recharging the a/c one more year instead of replacing it, and then I can use some of the money I had set aside for the new a/c now, and start saving again to replace the a/c next June.)

We started on the family garden yesterday (late, we were waiting on the rototilling to get done) and hope to get the bulk of it finished up tonight, if the rain holds off. This is our second year at the community garden, and I'm really hoping it's better than last year was. We have a new plot, that's on a little bit higher ground (apparently our plot last year was in what used to be a riverbed), and the soil seems much better. To be fair, everyone at the garden said they had a bad year last year, we got quite a lot of rain and not many really sunny, hot days. This year they're predicting extreme heat, which I'm hoping also means lots of sun. I'm not sure what the rainfall prediction is, but water is free so it's just a matter of getting there as needed. (My sister lives a mile away and I drive by every day on my way home from work, so that's not a problem.)

I think that's (finally) it! More than I expected to write, but I guess I needed to get all of this out of my head.

LAL's blog entry reminded me (peripherally) of a conversation I had with my sister yesterday, and I figured I might as well get some thoughts from those of you here who have been through this. My niece (E) is 4 and a half, and starts kindergarten in the fall. When school starts, my sister is going to start giving E a small allowance and teaching her about finances.

Of course at E's age (nearly 5 by then), it will be simple, but we were discussing different ways to handle it. Sis doesn't want to just give E money as an "entitlement", so there will be 'chores' attached to it. She also doesn't want to 'pay' E for doing tasks that she should be doing anyway -- making her bed, putting away toys, cleaning her room, etc. Yard work -- picking up sticks, or helping rake leaves -- would be a 'payable extra'.

We got into a grey area with tasks like helping clean the house, doing the dishes, etc. On the one hand, those are things E should be doing as part of living in the house; on the other hand, dusting and vacuuming are pretty typical "chores", I'd think, or at least they were when we were growing up.

The other question was how much she should get. One book my sister was reading said kids should get half their age per week, at least at this age. So $2 or $2.50 per week -- which Sis feels is a lot. (Though I did suggest she start right off having E put 50% to savings, and then dividing the remaining 50% between spending and giving. They're not religious, so there isn't a 'tithe' requirement; I had suggested 25/25 but maybe 30% spending/20% giving would be more appropriate.)

We got an 'allowance' as kids but it was basically just enough to pay for lunch every day, until high school when we got $5 extra. I don't recall having any chores attached to it. My sister doesn't even remember getting an allowance, so we don't really have a lot of our own experience on which to draw!

What have you all done with your kids (or what did your parents do with you)? What worked and what definitely didn't? Do you pay for household chores, or just those that go above and beyond? What's an appropriate allowance for a 5 year old?

March
I have a home I'm renting out to someone who is practically family, so I'm very lenient with them if something comes up and they can't make the rent. They always send something, even if it's just $100, and make up the rest as soon as they can. However, that money goes directly to paying off my family loans, so technically if they're late with the rent, I miss payments on those loans. (The family is also understanding so it's not a huge deal, fortunately.) We had our annual family financial summit at the end of March, and so I adjusted the loan schedules to reflect those missing payments. (A little extra interest accrues, essentially.)

The end result is that it decreased my debt principal payoff for March, so I only ended up paying down $1,464 in principal (it should have been around $2,000). I also paid $801 in interest. (These amounts do not included real estate backed loans.) I also paid $141 extra to the current point of attack (highest-interest credit card).

I did join the DietBet 6-month challenge. The first round closes out this weekend and I'm on track to meet the goal, so I should get a little snowflake for that sometime in April. I also made a bet with Healthy Wage, another 10% in 6 months challenge. My initial investment in both was $275, but if I meet the goal (figuring low-average returns on the DietBet winnings), I should end up with around $600. That is more motivating than "health" "fitness" "smaller clothes" etc. -- I wish I'd found this 'dieting for money' thing a long time ago! I'll consider all of that money as snowflakes for my 52-week Mega Savings Challenge.

We also made a decision that probably almost everyone will say was the wrong one to make, but I'm not ready to talk about that just yet....

April
I have two more weeks of overtime at work, and then I'm back to my 'real' income. Fortunately we are able to set aside a lot of my overtime pay to cover upcoming expenses in the next several months. I do plan to revisit our budget once things slow down to see where we can cut our spending a bit -- really I think if we just got a little organized we could save a decent amount. (Mostly me, I guess, with breakfasts and lunches on work days. It's been better since I've been trying to eat healthily for the DietBet thing, but I don't always wake up in enough time to make a lunch so end up buying it at $5-8 a day. Lots to work on there!)

I'm also going to see if we can decrease our electric usage; we keep getting letters from the company saying we're using so much more electricity than our neighbors, which I'm sure is true. I know exactly why that is (40+ days in a row of round-the-clock below-freezing temperatures will do that!) and we've already decreased our usage by about 50% from last month, but I might try things like unplugging stuff rather than just turning it off (if the plug is easy to reach, that is!), putting things on a power strip and turning that off (if there are no clocks or programs to reset), etc. We do have one light on a timer and I need to adjust the timing for that now that the days are getting longer. I'll look at putting in those pigtail light bulbs wherever I can, too, since they supposedly save money. Our billing cycle starts on the 26th, so I've got some time to formulate a plan of attack, and then get everything in place. (And talk S into participating!)

What do you do to save on electricity? What tips or tricks have worked well for you? (Or alternatively, are there any you've found haven't really made that much difference?)

One of the things I'm actually doing right is not using credit cards. For a long time everything went on our debit (Visa check) cards, so the money was pulled right out of our account, and we were getting rewards for the spending. Then Chase discontinued the debit card rewards program. Boo.

After a few months of no rewards, though, on a whim I decided to apply for a Chase Freedom card, which gives 1% on everything, and 5% on quarterly categories. Since I'm in a hardship repayment plan on three Chase credit cards, I really didn't think I had a chance of getting the Freedom card, but I figured I might as well give it a shot. Lo and behold, they gave me a card!

This was also a test of our dedication to not incur more credit card debt. We made a deal that we would pay that card off as needed to ensure we never pay interest on it. (Since we use it constantly, it's never really 'paid off'. I keep the balance low and ensure I pay at least the last statement balance before the next due date.) I'm happy to say we've had it for over a year now and no interest paid yet!

At any rate, we're getting rewards again and have taken advantage of them from time to time (movie gift cards, restaurant gift cards, a TV and a new vacuum). I've gotten a little bit wiser now, though, and have decided it's in my better interest to take the cash as needed and purchase the item or gift cards with the Freedom card -- that way I get another 1% on the purchase that I'm paying for with the rewards. (I will check to be sure the price is comparable; it used to be that a $25 gift card cost the equivalent of $20 in points, but now it's been a dollar-to-dollar purchase.)

Somewhere I read that someone was using their rewards points to pay for Christmas, and I thought that was a great idea, so I'm setting that as my goal for the rewards money this year. (Christmas and birthdays.) We have a small family, so although I've never really added it all up, I'm guessing that $500 will more than cover our spending on these items for the year. So my first goal is $500 in the gift fund. Then I may set aside $100 for a movie gift card. (I honestly don't think I can actually pay for a movie again; I've been using rewards gift cards for close to a decade! I know it's the same thing in the long run, but psychologically it would just bug me.) We don't go to the movies very often, so $100 will last a while. (I just got a $100 gift card in November, and there's still $83 left on it.)

It looks like we average about 5,000 rewards a month, or $50, so that's $600 a year. However, I started out with $80 and apparently they give a 10% annual bonus, plus we had some large expenses in January/February, so I'm ahead of the game right now. I'll figure out what to do with the additional rewards once I get to that point!

Rewards Gift Fund
Goal - $500
Balance - $288.44
Remaining - $211.56

Movie Card Fund
Goal - $100
Balance - $0
Remaining - $100

[Gotta love the Lazarus add-on for Firefox -- this entry was lost in the 'catastrophic failure' of the server, but with one (right) click Lazarus was able to restore the whole thing! It's free, too, though the do occasionally ask for donations.]

I posted before that I have an indifferent attitude about debt. I just figure it's always going to be there, and now that I comfortably pay the minimums every month, I'm not too fussed about it. I'd like to get out of debt, sure, and I am working toward that -- but it's not a driving force for me, I'm not especially motivated to cut my spending down to nothing and throw every cent I have at the debt. I want to enjoy my life while I'm living it, within reason. (I'm not going to take a trip around the world or buy expensive cars, jewels, etc., but I might buy a $12 ring (marked down from $60, of course) just because I like it.)

I've been thinking about that lately, and wondering why my attitude is what it is. Part of it is my overall personality -- I'm not especially motivated to do anything, and would rather curl up on the couch with a good book than do most other things. (Translation -- I'm lazy!) I do think there are a few factors that have contributed, or at least if they were different maybe my attitude toward debt would be different, too.

My Mom Is Frugal
That's putting it mildly. She returns food she doesn't like, she will drive to four different stores to save 25 cents on a certain item at each, etc. Granted, she was divorced and raising two kids alone in her late 20s/early 30s, back when being divorced was unusual. (Her parents were nearby, and a great help to her, but still, I know it wasn't easy for her.) She had to pinch pennies to keep food on the table, especially since child support was unreliable. So my sister and I didn't always have the trendy toys or the Jordache jeans (I'm dating myself now!), because we just couldn't afford them. (Don't get me wrong -- we weren't living in poverty by any means. We had a nice home in a good neighborhood, I never really knew it was a struggle to put food on the table until I was much older, etc. Plenty of people had and have it far worse than we ever did; overall we were still very fortunate, I know.) As a result, I think as an adult I subconsciously rebel against any restrictions on my spending, because we were so restricted when I was young.

No One Taught Me About Budgeting
By the time I got to high school, they'd stopped offering personal finance classes at all, much less making them compulsory. This is probably one of the worst ideas ever. (I know my mom could have taught me -- she probably tried, but I was a typical teenager and no doubt thought she was just 'getting on my case'.) So off I went to college, with no real idea of how to manage money and lots and lots of companies wanting to give me credit cards. Is it any surprise I was in over my head in debt well before I graduated? (And I didn't have any student loans, so I don't even have that excuse!) We inherited/bought my grandparents' house after they died, along with all of their 'stuff', and as we were cleaning things out I found several of my grandmother's "household budgeting" notebooks. Just a steno pad, and her records of where their money went, but it was fascinating. Every transaction was written down (well, almost -- my grandpa got a weekly lunch allowance, and that was the only tracking of that amount), a running balance of all outstanding debts, weekly savings account updates, etc. It was a fascinating glimpse into their life back in the 40s, 50s, and 60s, and also illustrated a clear schism between what she was taught and what I was taught about personal finance.

I Don't Have A Clear Self-Image
I think one of the biggest issues is that in my head, I'm still in my mid-20s. I have lots of time to pay off my debts, save up for retirement, etc. The reality is that I'm quickly approaching my mid-40s, and that 'far off' retirement age is a whole heck of a lot closer! This is probably my punishment for not having children -- at the very least, they insist on aging, so I'd have that constant reminder that I was aging, too. (I do have a niece now, whom I see fairly often, so maybe she'll help!) This is one of the reasons I'm overweight, too, of course -- I was skinny in my mid-20s!

A shrink would probably come up with some other, deep-rooted reasons for my nonchalance about debt, no doubt stemming from my parents' divorce when I was 3 years old. (My grandmother used to think I had abandonment issues because I use to put 'leashes' on all my stuffed animals. I assume that was actually just because I wasn't allowed to have a real dog.) To me, though, there's a certain amount of sense in the reasons I've listed, even if they're not especially deep.

*Update* There was a comment to the original post about retirement planning as a potential motivation to get out of debt. It's a good observation -- I have done some retirement planners, including the detailed one we use at work (I work in the financial services industry, ironically). There's such a wide variety there, of course -- about a $1.5 million difference in what they estimate I'd need to retire, depending on the calculator. So in some cases I'm doing well, in others I'd have to work until I'm 77 or so! I do stand to inherit a decent amount at some point; I don't want to depend on that, of course, but at work we do always include inheritances in our retirement projections. I'm estimating it low, without accounting for long-term growth, and subtracting the money I owe against it (which ideally will be paid back well before then). With that, I'm in good shape, but again, I don't like to depend on it. So perhaps I'll work on a 'motivation board' for our retirement, and link it up to my debt-repayment plan. Thanks for the thought!

Now that I've detailed all the ways I've done it wrong, both getting into and getting out of debt, it's time to talk about what I'm doing now to try to get it right. I'll still be doing some things wrong, because I'm just not willing to make the massive sacrifices I'd need to in order to do it 100% right, but I have a plan, and a goal, and have made a lot of progress already. So, here are some of the things I've done right:

Stayed Current on Payments
Except for a handful of late payments when I just got disorganized and forgot to pay the bill, after the fiasco with my college credit cards I've pretty much always paid at least the minimum, on time or within 30 days of being late. (They don't ding your credit report for being 25 days late! Still get hit with late fees, though.) Of course, two of the three times I was more than 30 days later were on the same card, so that doesn't look so great on my credit report, but those are starting to fall off now, finally.


Negotiated With Credit Card Companies
When hubby was living in another state, I contacted all of my credit card companies and asked for assistance. A couple of them wouldn't do anything since I was paying the minimum. (How strange is that, I call to try to make arrangements to keep paying in good faith and they won't do anything to help me until I've defaulted with them.) The others -- Citi and Chase -- put me on a 'hardship program', which lowered my interest rates, closed the cards, and put me on a 6-year repayment plan. Both offer auto-pay options so that was a one-and-done deal. Interest rates are 7.24% and 6%, down from 19-22%.

Found Ways to Earn Extra Income
I haven't been utilizing it much lately, but I now have a handful of options for some extra income if I need it. It's very dependent on how much time I put in, but at the peak of my production I was bringing in an extra $400-500 a month, while still working full time and enjoying free time on the weekends.

Took Advantage of Lower Interest Rate Offers
For some reason, credit card companies still wanted to give me money, so I've done a handful of balance transfers to lower interest rate cards (including the transfer fee in the calculation -- an interest rate decrease of 2% when there's a 3% balance transfer fee doesn't always make sense!). We also got an unsecured personal loan from Discover that knocked out some higher rate cards (that has since been paid off with one of the 401(k) loans, for 1/3 the interest and 1/3 the monthly payment), and I recently got a personal loan from Lending Club that, if I use the full amount of time to pay it (I plan on paying it off earlier), will save me three years of payments and about $12,000 in interest.

Started Snowballing Debt Payments
Once I rearranged all my debt, my payments decreased quite a bit. While I'd like to say I'm putting all of that decrease toward paying off the debt, the reality is that a significant portion of it is going toward our monthly expenses. The upside is that I can afford our monthly expenses now! I have dedicated a specific dollar amount per month to credit card debt, and a nifty Excel spreadsheet to keep track of it. (Seriously, if I could get paid for the time I've spend making Excel spreadsheets for my various budgeting/financial uses, I could retire now!) I subtract all my minimum payments from that amount, and whatever is left over goes as an additional payment to my highest interest rate card. Once that's paid off (right now on track for January 2015) I will snowball to the next card, etc. I'm also increasing the dedicated amount by $200 per month each year, assuming COLA increases at work (or additional side jobs, if need be).

Faced My Financial Reality
I finally sat down and calculated my total assets, liabilities, and net worth. It was pretty sobering. On paper it doesn't look all that bad, really -- we have a positive net worth, at any rate, and it's over $50K. That's not including the family loans, though -- add those in and we're very negative in net worth! Granted, if we don't get these family loans paid off -- and we are paying on them every month, with interest -- it will eventually come out of my inheritance, but part of owning up to what I owe includes even those debts that no one other than my family and I will ever know about.

Created a Realistic Plan With an End Date
One of the reasons I'm starting this blog is that I've finally got a plan to get out of debt, and it's sooner than I honestly thought it would be. There is a light at the end of the tunnel, but I want to be sure to keep on track and be accountable to someone, even if it's only faceless strangers on the Interwebs. (I can't admit to my family how in debt we are. Even hubby only has a vague idea, mostly because he tends to over-react and get all doom and gloom about things. He knows we have a lot of debt, and he knows we're working toward paying it off and what the basic timeline is; the details are a little fuzzy, but we talk about big spending and how we're going to afford things.)

Left Commissions (Mostly) Out of the Budget
One of the biggest mistakes I made at first was counting on hubby's commissions as part of our income. That was great until he changed to a job that didn't pay commissions! Now that he's getting commissions again, I'm only counting on a portion of them as income. I took the average monthly commission he's made over the last four years, not including his year-end bonus (which has ranged from $0 to almost a full year's salary), and figured we could safely count on half that amount as part of our budgeted income. (That amount is also not completely beyond the realm of my ability to make up with side jobs, if need be.)

Finally, the biggest thing I've done right is...

Stopped Using Credit Cards
Well, sort of. I do use my Kohl's charge for the discounts, and sometimes Bill Me Later for the six-month interest-free financing, but those are amounts that I plan for and know I can pay off when the bill comes due. Other than that, we pay for just about everything on our Chase Freedom card, which is a rewards card. Technically I "carry a balance" on the card, but it's always new debt -- I'm not paying in March for the gas I put in my car in January. I pay a chunk on it every week or two, and there aren't any interest charges, because I pay off the statement balance throughout month. (For example, if the February statement closing balance was $2300, I'd be sure to pay at least $2300 on the card before the March closing date. I generally pay well more than that, because I want to keep the balance manageable and at a level where I could pay it off entirely, if I needed to.) Meanwhile we average about $75-150 in rewards every month; we've used those in the past for a new vacuum cleaner (sorely needed), TV (total want), movie tickets ($100 gift card should last a year or so, we don't go to the movies often), our anniversary dinner, etc., but this year I might let the rewards build up and use them for birthday and Christmas gifts instead.

I am happy to say that, other than the exceptions above, I haven't used a credit card in well over a year. That is a huge improvement for me! I was a little leery of the Freedom card, given my past history with building up credit balances, but I've made a real effort to keep it paid off and it's working.

Barring any catastrophe, I was on track to have all of my credit cards and the Lenders Club loan paid off by May 2016 ($50K) and the 401(k) loans paid off by August 2017 ($56K). The family loans should be paid off by June 2020 ($135K). Then I could knock out my mortgage by February 2024 (19 years early!). That's also assuming only COLA increases; I'm actually looking at a possible large bonus and salary increase this year, which could accelerate things exponentially, but I don't want to count on that until/unless it actually happens.

However, that was before I realized (last night) that the HELOC on our main home will be coming due in a year and a half. (I'm glad I thought to check the paperwork -- the whole balloon payment thing was not made clear to me on closing!) So I will need to make some adjustments and/or shift that loan to somewhere else if possible. (Hubs has good credit and most of the cards we've paid off were in his name, so he could probably get a loan from Prosper or Lending Club if we need to go that route. I had the HELOC scheduled for payoff in April 2018, but it will be due in full in October 2015.) A new loan will probably have a higher interest rate, but we'll be able to throw lots of extra at it within the first year, so it should be paid off fairly quickly.

Mistake In The Making?
Remember in my last entry when I said a potential mistake might be coming up that will end up better for us in the long run? There's a home up for sale that my husband is itching to buy -- it's where we're planning to retire, and it's right next door to his cousin. It's a bank-owned property, so from the looks of things is listed at 3/4 to 1/2 of its market value. Of course we'd get an appraisal first, and an inspection, before we even seriously consider it. Taking on more debt is one of the last things we need to do, honestly, but it is a pretty good opportunity. What's more, my mom has been wanting a 'vacation home' and we have talked about getting a family home in this area. The ideal -- though I'm not sure how on-board my mom will be about it -- would be for her to pay cash for the home (easier to get the offer accepted, I've heard, with a bank-owned property when you pay cash), and then we would finance it, taking some additional (assuming it appraises high enough and there's some equity there) to pay off the credit cards and HELOC. The monthly payment would come out of the currently assigned credit card payment, and the rest of that would go to the Lender's Club loan (paid off July 2015). That would let us pay off the 401(k) loans in February 2017 and the family loans by November 2019. Then we'd tackle the 'vacation home' loan, paying that off by July 2022, and our primary mortgage paid by October 2025. While it's an extra 18 months on the primary mortgage, it's also an additional $125K (or more, by that time) in assets with the vacation home. (This is all assuming hubs and I take on the entire cost of the vacation home; mom might offer to pay 1/4 of it herself, since she'd be free to use it whenever she wanted.)

Again, more debt is the last thing we need, but the long run is looking more and more attractive. I know you're not supposed to tie up unsecured debt in your home -- and I've made that mistake many times in the past! -- but the interest rate is still considerably lower and again, we'll have a nice increase in assets when all is said and done. The home undoubtedly needs some work (paint job, new floors, I'd like to add a bathroom at some point since there's only one), but since it will be a vacation home for the next 10 years or so, at least, it's not anything that we'll have to do right away. With a cousin next door to keep an eye on the place (a cousin who, I might add, is very motivated to get us to move down there!), and lots of "kinfolk" in the area to help with any projects -- and a new roof in the last year or two -- on the surface it seems like a reasonable fixer-upper over time. (It will all depend on the appraisal and inspection, really.) While we'll still ideally buy a larger piece of land and build our ideal retirement home someday, this will give us a vacation home in the mean time, a place to stay when we do first retire and are building, and ideally an appreciable asset (that we can live in for two years before we finally sell it and avoid capital gains taxes). Hubs is down in that area every year, as well, for family reunions and his 'fun stuff time', so having a place for him to stay will ease the burden on family and hotel room fees! (Oh -- and the property taxes? $400 a year. Not even a consideration, really.)

Anyway, that's where we are at this moment in time. I am working on building up an emergency fund -- I had $4700 but then we ended up owing $2800 to the IRS (bad planning, but it shouldn't happen again this year). We will have property taxes due in the fall, about $3700 between the two houses (home and rental), and the rental will probably need a new air conditioner this year ($3500) -- it's losing freon, and apparently the new units don't use that type of freon so it's hard to find these days. (Still, I'm going to see if I can get it recharged one more time to get another year out of it, but if I can't I'm saving up for that expense now.) I'm allocating the rest of the $4700 as $1000 in an 'emergency fund' and $900 for the a/c, but honestly in an emergency I could probably use the Freedom card and with commission/side jobs pick up the $1000 during the 25-day grace period. Still, by the end of this year I'd like to have at least $5000 stashed away until I get the debts paid off, and then work toward increasing it to 6 months of expenses. Hubby's commissions and any 'leftover' from the checking account at the end of each pay period will go toward all of that -- a/c, taxes, and emergency fund. We'll get there, I know it!

As my username/blog title suggests, this blog will be a lesson in how *not* to budget, manage credit cards, pay off debt, etc. That old adage, "Do as I say, and not as I do" applies quite well here. I know exactly how to effectively and responsibly use credit cards, I know how to budget and scrimp and save and pay off debt, I know how to snowball and consolidate and all of the things you do when you want to get out of debt. Actually doing those things, however, somehow manages to escape me. It's a lack of willpower (which pervades all areas of my life, not just finances!) and the knowledge that I have a safety net (family) if things really get bad (a blessing and a curse!).

I laugh when I read that the average US household has $6,000-8,000 in credit card/unsecured debt. I have more than 10x that amount, not including loans from family (which is itself about 15x that amount). You would think I'd be panicked, depressed, stressed, *something*, but I'm not, most days. Debt is a fact of life, something I've pretty much always had to deal with, like grocery shopping or laundry. Clearly, I need an attitude adjustment! I do have a plan, which I will get to momentarily, but even then, I'm doing it all wrong.

First, how did I get into the situation I'm in, with around $250,000 in unsecured debt? Well, it took a little time, but very little effort.

What I Couldn't Really Help

A significant portion of my debt is due to factors mostly outside of my control. I most certainly could have managed the situations differently, but the situations themselves just happened.

First, my husband and I moved into a family-owned house. For the first few years, it wasn't a bad deal -- we paid the bills and taxes, but no rent and the house was paid for. We tried selling the other house but not aggressively, so we were carrying two "homesteads", although only one mortgage. After a few years, we had to settle up on the inheritance, which meant we took out a mortgage on the house and paid off the family on their portion of its inherited value. So now we had two mortgages, plus two HELOCs.

Then, my husband lost his job, and got a new one in a different state. Since it was a short-term stay (and then we'd be relocated), and since I had a job and family and critters that would have been a major hassle to move, I stayed. So now we had three homesteads and rent.

Fortunately, the relocation fell through and hubby got a job back here. Meanwhile I'd found a renter for the other home, with a 'rent to buy' plan for five years out. The rent money went to paying some of the family loans (which were used to buy that house in the first place) so we still had two homesteads, two mortgages, two HELOCs. Then the economy crashed and the renters, while still paying the rent, are not in a position to buy, probably for several more years. They're like family and it's fine, really, because technically once we sell that house, the family loans come due, but it's still two homesteads, two mortgages, and two HELOCs. (The renters do pay all the utilities except water, so that helps a bit.)

Over the next five years, we've had four surgeries, all in different years, of course (so medical deductibles/co-pays of around $6,000 per year), two funerals that we ended up paying half and all of (around $15,000 total), and a handful of non-routine critter-related medical expenses that total about $15,000. Some of that went on cards; some of that we took IRA withdrawals to pay (and, of course, paid the 10% penalties to do so).

Since we were essentially living paycheck to paycheck for most of that time (and practically still are, really), most of that debt went on credit cards. Plus when we were first living together I was the sole earner, not earning much, so many months the only way we could eat was by putting food on the credit cards. (I read a blog recently where the overwhelming majority felt it was much easier to spend cash, or to lose track of cash spending, than it was to buy things on credit. I am exactly the opposite. I can take $40 out of the bank and still have $30 left at the end of two weeks, because I hate to part with my cash, but credit? No problem, that's not 'real money', right? Again, pretty clear I need to change the way I think about money and debt!)

What I Did Wrong

Oh, so many things! First and foremost, I went to college (not a bad thing, really) and got tons of offers for credit cards, which I of course accepted (bad, bad, bad idea) and of course used (even worse idea) and then of course couldn't pay off. I ended up settling those debts after graduation.

When I bought my first home, I was gifted money from my family for the downpayment, which because of the way the loan was set up I actually ended up using to pay off the credit card debt and car loan I'd acquired since settling the other debts. Of course, then I just built those credit card debts back up.

About five years after I bought that house, I got talked into refinancing it. Which, of course, also involved paying off credit card debt I'd racked up and the loan on the new car I'd bought in the mean time. This was at the height of the mortgage lending frenzy, so I ended up financing 100% of the home's equity, between the mortgage and the HELOC. I paid off higher-interest debt, sure, but increased what I owed on the house by about $30K. (Then, of course, the housing bubble burst and the home's value decreased by more than half.)

Two years later we had to take out the mortgage on the house we were living in. This time we only financed about 90% of the home's value, but again used a big chunk to pay off credit card debt (seeing a trend, here?) and student loan debt. Mortgage and HELOC, of course. Housing bubble burst, house is just starting to be worth the mortgage amount (the HELOC is something else entirely!)

Mistake #1
The biggest mistake, of course, is that I paid off my credit card debt three times, and kept using the credit cards. You'd think I would have learned after the first time!

Mistake #2
I used IRA funds to pay off debts. Truth be told, though, I probably did end up saving money in the long run. Most of that happened shortly before the economy (and markets) crashed, and I lost about 38% in my 401(k) at the time. So even with the 10% penalty and the 15% income tax, I eliminated some bills at 29-32% interest and avoided a 38% loss in the IRA. Still, it's not the way you're supposed to do things!

Then, I didn't fully understand the terms of the HELOCs. They had a 10-year draw period (not a concern, since we maxed them out from the start), interest-only payments (again, not a big concern, I thought we'd have the first house sold by then), and -- the part I missed -- a balloon due at the end of the 10 years. Typically those are just converted to a 30-year fixed, P&I payment loan, apparently, but since the first house is no longer my primary residence, they wouldn't do anything for me. Which led to...

Mistake #3
Taking a 401(k) loan to pay off debt. Two, actually, one from hubby's and one from mine. Again, though, I think we'll come out ahead on this. Unlike the IRA withdrawals, there's no penalty or tax on the 401(k) loans. We're paying ourselves back with interest, which is only slightly lower than the average return on S&P500 investments, and we knocked out some higher-interest debt (25-29% on some credit cards -- we took the one 401(k) loan before we knew about the HELOC coming due). Yes, the interest we're paying in is after-tax money, and will be taxed again when we withdraw it -- but it still adds up to less than the credit card interest rate.

We've made other mistakes, too, along the way, Such as:

Mistake #4
Used large bonuses to buy "stuff" rather than pay down debt. Sometimes this was necessary stuff -- a water heater, or new siding on the rental property that just (fortunately) happened to coincide with a big commission month. (Hubby works on salary, but with commission that varies wildly.) The worst was a bonus that was almost a full year's salary, half of which we spent on a 'toy' for hubby. Granted, he uses the thing almost daily and will have gotten more than its worth out of it, but in the long run we would have been much better off using that money to pay off debts. I admittedly feel guilty, however, telling he he can't buy things he wants with his own money, especially since I don't tend to curtail my own spending that much. Which ties in nicely to...

Mistake #5
We have not remotely adjusted our lifestyle in an effort to pay off our debt. As I said, I know I should. I could drop the home phone, eliminate the movie channels, stop drinking pop, bring lunch from home every day, shop more at Costco, and so on and so on. Lots of fat we could trim from our budget. And we might, at some point, especially now that we're talking about it and setting goals. On the other hand, I don't want to deprive myself. I want to enjoy my life, within reason, while also working on getting rid of this debt. If hubs or I die tomorrow, life insurance will take care of the debt -- what's the point of living a miserable life in the meantime? (I know, that's rationalization. I get it. Part of it is rebellion, too, from my childhood when my mom did have to scrimp and save and budget to put food on the table. Still, I'm not at the point where knowing what to do and knowing why I don't want to do it is enough to actually persuade me to do it!).

Whew! This has gotten far longer than I'd intended, so I'm going to end it here. I'll be back for another entry about the few things I'm doing right, and the plan for the future. (Though there's another mistake on the horizon that, if it pans out, might just end up saving us in the long run.)