99k by 2011

It has been a busy few weeks with birthdays and work and car stuff, but I have not forgotten about the little 99kby2001 blog in blog-land. I feel as if I’ve left a couple things hanging that I should probably finish up.

Our power bill came in at $350. $100 lower, but still not fabulous. It is not as high on my radar now, but I think we may call our power company and have someone come do an energy audit. I wonder if our (faux wood 2″ slatted) blinds are not as good at holding heat in/out as I think they are. I am happy that it wasn’t another $450 bill though. Very happy.

We received our escrow refund check, and promptly replaced the clutch in my SUV. It was in dire need. It was even starting to STINK. My husband drove it one weekend on an errand that needed a bigger car this his sportymobile, and the first words out of his mouth were, “We’re replacing that clutch MONDAY.” It’s amusing to think that at the beginning of this year, I might be able to wait until the end of summer to have this done. My husband’s car is getting new tires this weekend. Nice to get these things out of the way with “earmarked” money.

The april budget. We tweaked and twokked and twakked and it is generally working now. Part of the problem is that when I enter in future paychecks for estimating purposes, I always enter them low. If I usually am paid 1,792, I will just enter 1700. Multiply that by 4 paychecks, and the “estimate” is off by a decent chunk of change.

Our taxes are done. Luckily not the $5k tax bill I was dreading, but we do owe $3600. We will be getting $1,000 back from our state, which will be nice (and be directed straight to debt, when it comes in!) To have our taxes prepared for us, it cost us $360. I am a little uncertain it was worth it, but my husband has pointed out that it would have taken me HOURS and HOURS to do it myself. We have a freelance business and a partnership to figure in. Also, our last year’s return was lost, the hard drive it was on crashed, and we had to get copies of our tax transcripts to recreate those, which probably inflated the preparer’s cost somewhat. Hopefully next year it won’t be that much. All in all, especially with the missing returns from last year, it really was worth $360 to just not worry about it! AT ALL!

So, with that computed, we are free to deal with the bonus my husband received at the beginning of this month. As you recall, we were just letting it sit until the taxes had been done, as we were unsure of what we would owe.

So, on to the bonus. First of all, for some reason I had it in my mind that it would be around $12k. That wasn’t even what we got last year (~$10K), so I got a little nutty in the head there, overestimating.

Second of all, it was lower this year. It is determined partly by employee performance, and partly by company performance, and the company didn’t perform as outstandingly as it did last year (like, last year it met it’s goals by 120%, and this year only 110% or something crazy like that.) So the total bonus amount was about $9k.

So where does it all go?

• $2K of that will stay in our etrade savings account as an emergency fund.
• ~$4k of that goes to tax and tax prep ($360),
• $500 was “blow” money (already spent, and consequently, LOWER than the original $1k we had planned, yay us!), which leaves
• ~$2.5K for debt.

So, I am currently moving money around, waiting for it to clear, and then I’ll send off the tax returns and pay a big chunk on our debt. That will feel GOOD.

I have more to share, but I think I’ll wait and post it tomorrow. So tune in tomorrow for how we are going to try to get out of paying interest!

My husband and I both work full time salaried jobs, which means there’s no variations in our income to worry about.

Entering in our april paychecks into YNAB and doing a quick runthrough for april, entering categories willy nilly, I came up alarmingly in the negative. For those who do not know how YNAB works, you enter in your income, and it becomes the “available” balance with which to budget. Then you enter in dollar amounts in your budget categories, and as you do so, it subtracts those amounts from the available balance. You continue to enter until your available balance is down to 0.

When I was done entering budgeted categoryamounts, the available balance was around -$1000. NOT GOOD.

Now, I had been fairly generous in places, so I did a quick re-run through and try to hack off some of the excess. Good, but I only managed to get it down to about -400.

The biggest culprits:

• Mortgage payment: we have a larger payment than usual on our mortgage. We refinanced in february, and instead of having us prepay the interest in our closing costs, they tack that on to the first payment. It’s about $500 more than it will be in May.
• Savings goals: There are several things we’re saving for with monthly budgeted amounts, even though they won’t be paid/used until later.
  • car tax: We have $70 going into a car tax category for a estimated $700 bill that will be due in october.
  • tuition: my husband is completing his bachelor’s degree at night, taking 1-2 classes a semester. His employer pays for a good bit of it, but as he starts taking more general electives, they will cover less of those costs. We have $375 going to tuition each month.
  • christmas: we know it’s coming! We’re putting $110 toward our christmas category so we’ll have a tidy sum at the end of the year for all the festivities.
• Debt Reduction: When we started getting serious about budgeting, we decided we could throw $1k/month at our debt.

Please understand: I’m not saying I want to cut back on our savings or debt reduction. AND I’m not saying that the rest of the budget couldn’t use a little trimming. I just want to be sure to recognize (to myself & my husband, at least) that these are not insignificant portions of our budget. Tuition, Savings, and Debt reduction add up to $1555. Tag that with the addition $500 bucks going toward the mortgage payment, and you’ve got over $2k. Yeouch.

I’m mostly thinking about our debt number. When we decided to put $1k toward debt a month, I HAD NOT YET figured out what we should be saving for tuition costs, or other yearly expenses. Could it be that we were too hasty in picking this amount? I hope not, because I WANT TO PAY OFF THIS DEBT!! Unfortunately for our debt, that is the category that it is the easiest to lower down.

We have a busy rest of the week in front of us, as well as a busy weekend planned, but maybe Sunday night, Husband and I can settle in and take a look at April and see if we can figure something out.

JUST THE CREDIT CARDS, PLEASE

At the beginning of February, we had $31,511 in credit card debt.

In February:

we paid $1,267 on our cards,
$139 was charged in finance charges
for a total of $1,084 debt paydown.

Our new credit card debt total is $30,428.

THE ENTIRE PICTURE

We are now at a total of $96.4K.

I used to schedule the bills carefully according to when we got paid. I also set up automatic transfers between our two checking accounts when we were paid to make sure mortgage & daycare tuition payments were ready and waiting when the first of the month came. The problem with this method was if we started to run short of money, I could always transfer some of it back (and often did).

The two debts that are currently scheduled to be paid off last (car loan & home eq) in our 3 year plan, are through our credit union, which we don’t use for our every day checking. So, we have the exact amount of those 2 payments direct deposited into our credit union account, and the payments are automatically taken out when they are due. Everything with those two loans are completely automatic and seperate from our daily banking, which is very nice. Even though these last two debts are somewhat more “legitimate” debts, we are still going to get those suckers gone. (Notice I only say “somewhat more.” I don’t like that debt, and I don’t want that debt, and we don’t plan on ever incurring that kind of debt again. However, in the level of “evilness,” in my mind, those two are less evil than the general credit card debt.)

I used quicken and would enter future transactions (bills as well as paychecks) so that I could see how the next couple weeks would pan out. I would notify my husband if it looked like we would need to tighten things up. However, inevitably, at some point during the month, I would say, “We’re out of money, better use the credit card until my paycheck hits on Thursday.”

It would (almost, but not really) be better if there were some big ticket tangible items we could point to and say, “Look, we have $30k in credit card debt because of X, Y & Z,” but there really isn’t. Our car debt is obvious - my husband is driving that debt around every day. Our home equity loan paid off some credit card debt at the time, as well as finished part of our basement. Groceries, eating out, clothes the kids didn’t really need, and other small items make up the bulk of it. The rest, yes, probably some computer purchases and vacation spending could be found on there. Not that we haven’t purchased some whiz-bang gadgets, but we probably bought them with money from our checking, and then ran out of money early, and would “live” on our credit cards until we caught up.

I guess really, it’s po-taye-to, po-tah-to, because it all added up to the same mess we’re in now.

So there’s the “before” our little “aha” moment. What have we changed?

Lawncare:

Last summer, we had someone mow our lawn for $20 each time. I was growing increasingly frustrated as it seemed to me they mowed way too often, and when they mowed twice in November (TWICE! IN NOVEMBER!) I finally moved “cancel lawn guy” from the bottom of my todo list to the tippy top and got it canceled. We’ll be mowing our own lawn this summer, and saving ~$80/month.

House Cleaning:

We had a house cleaning service come every 2 weeks, and let me tell you, this is a big sacrifice. With both of us working and 2 small children, I’d rather pay someone to scrub our toilets and oven then to spend the few hours we have together as a family cleaning. But we could not afford it, and so we canceled the service. We will be having them come in once or twice over the next few years, especially when we do any entertaining, but it will be budgeted for accordingly. We are cleaning our own house and saving ~$250 a month.

Eating Out:

My husband and I both work, and both used to eat out at lunch. He has always been much better in this regard, bringing in leftovers when he could and eating out only about 3 days per week. I was not nearly so attentive. I, not only bought lunch every day, I usually bought my breakfast on the way to work as well. My eating TWO MEALS out of the house a day cost us probably $12-13 a day. I was spending $230 a month on eating out. Add in the estimated expense of my husband’s eating out (3 days x $8 X 4 weeks) and our eating out was costing us $326/month.

Now, we both bring in our lunches. And if we forget, or want to go out with our co-workers in a group lunch, then it comes out of our own individual “fun money” budgeted amounts. So if I blow $10 on lunch that week, that’s less fun money I can use for the rest of the month. Ditto for my husband. It’s very motivating.

Menu Planning:

BEFORE: It’s the end of the day, I’ve just gotten home from work and my husband and the kids also just rolled in the door. “What’s for dinner?” he asks me. I stare at him blankly, and just shrug my shoulders. “Um… PBJs for the kids maybe?” I might say. “What about for us?” I have no answer. We’re both too tired to try to think about what to make for our sustenance.

This sort of scene no longer happens. Every Saturday we sit down and plan out the week’s menus. We decide who will be making it, what day. We scan through the fridge and pantry and determine what we need to purchase. Sometime over the weekend, we go shopping and get everything on our list. Now, when we come home, we know what we’re having, who’s making it, and we know we have everything we need to make it. We plan big meals for Sunday so we can take in the leftovers. We no longer have “kid dinners” and then eat our dinner later after they are in bed. We sit down and have a family dinner every night.

I’m not saying that we don’t still have surprises where we have to scrap what was planned for something else, but we are planning in advance and our grocery bill is pretty low! No longer are there trips to Super Target where I spend $200 on groceries, clothes, kitchen gadgets, and a miscelaneous toy for the kids and it all gets lumped into the “Groceries” category. We seperate everything out now, and toilet paper and kitty litter goes into “toiletries” and not into “groceries.” Clothes don’t get purchased unless something specific is needed and is budgeted for accordingly.

It’s hard to say how much we’re saving in our menu planning, but I think it’s got to be at least $500/month. Our grocery bill was $330 last month, with about $80 going to toiletries and household (for some reason, I like to keep household seperate. toiletries = handsoap, toilet paper, household = air filters). Not too bad!

All this is adding up. We never use our credit card anymore. Mine is still in my wallet, but I never touch it. I’m thinking about what we have coming up that will need to get paid for and planning ahead for it. All payments toward credit card debt would get eaten up with charges in the past, but now with our budget, goals and debt reduction plan in hand, we can make some real progress.

We had our own “wake up” moment at the beginning of the year and these things would have happened regardless, but I must say, YNAB has been an invaluable tool in really getting our budgeting goals accomplished.

ps- still waiting for our last credit card statement to post. BLARGH.