A Snowball's Chance in...

The bad news:

• Due to certain changes (to pay schedule, benefits alterations, and - mostly - losing a freelance gig), our monthly income has been reduced by $551 per month.
• This change reduces our debt snowball from $718 a month to $167 a month.
• Plus, we've had to stop the snowball repeatedly to cover other expenses. Like $1,300 to fix the van. Like to have a baby (the LAST baby, silly, not a NEW baby - yet, ha). Like to reshingle the house this summer. Like the curtains I bought and haven't hung up. Gah.
• Meanwhile, we've run up against our biggest debt yet, the student loans. They currently have a balance of $15,553. It's like chipping away at a granite wall with a fork. A plastic fork.

The good news:

• Boy am I glad we were snowballing that money in the first place! Imagine if I had to cut $551 out of our actual budget.
• I'm also glad we were snowballing at all, since we're in a much better financial situation than we were two years ago.
• Those expenses? The van, the grumpy baby, the curtains? We've cashflowed them. No new debt, and that's a great thing, yes?

While I'd like to be making more/faster progress on paying off the debt, I think it's time to redefine "success" around here. Sometimes, in some seasons of our lives (and the economy), just keeping our heads above water is a success. Glug glug.

Debt Update

Today, I paid off our van loan. Yay!

We'll be taking yet another break from paying down our debt so that we can save up some money to reshingle our roof. Because we do it like this.

After that, we're on to tackle our student loans, which should take 17 1/2 months. Unless I get pregnant again. ;) So. Yeah.

Financial Update

Final Stats:

I found out I was pregnant in February 2008.

Between February and M's birth in October, we saved $3,779, or roughly 19% of our take-home pay during the period we were saving. My plan was to estimate our lost income and medical expenses and save double that amount.

We spent:

• $900.15 in medical expenses (these include all of the West Nile hospitalization expenses, because I'm not sure how to separate them, plus I think the birth cost less because we'd reached our deductible by that time)
• $1131.95 in lost income for my maternity leave
• $251 in "stuff" to prepare for the baby (okay, obviously we spent more than that, but this is what wasn't cash-flowed out of our normal income)
• $507 just by not being on a budget during my maternity leave - lots of eating out, fancy coffee, etc.

We still have $988 left from what we originally saved. Wa-hoo! The plan? We'll sit on it until after Christmas, to make sure we have enough in case we're surprised with any medical bills or other expenses (plus to cover readjusting back to our normal budget), then use it to pay down debt!

Was Raining; Now Pouring

The hospital bills have started coming. Yikes. But thanks to insurance, an almost $10,000 hospital stay (for the West Nile) came in at a measly $600. Wow. But they're still coming. That's what kills us every time we have a baby, just when we think we've got everyone paid off, another bill shows up.

For no reason other than wanting to get an Amazon gift certificate, we used our credit card for the trip we took out of town before M's arrival and paid it off right away. All except for $17 in charges that came in the next month. Which we paid. However, the credit card company "didn't receive" our payment until 10 days after we mailed it. So, $25 gift certificate = $25 in late charges. Sigh. So much for playing with snakes, right?

Also, we've got a slow leak in a tire in our car and the check engine light is on in our van. And we'll deal with that... sometime.

Finally, last night I couldn't find my wallet. Anywhere. And then I remembered. I'd been at Wal-Mart, just ready to take my wallet out of the seat of the shopping cart, when I noticed an infant car seat in the car across from mine. And then I worried that someone had left their baby in the car. And then I thought about how I'd feel if something happened to a baby left in a car if I'd done nothing. So I peeked in the car. The car seat was empty. Then I noticed my own son had climbed into the driver's seat of my car while I'd been worrying about someone else's kid. And by the time I'd dealt with that, well, I'd left my wallet in the cart. Thankfully, some good Samaratin had found my wallet and returned it to customer service. And I THANK YOU!

It's amazing how once things get off track financially, they kind of attract more things. But I guess this will all work out!

Below: me and Miss Baby M, who won't be put down. Like, ever.

Well Hai

We won't be paying down debt OR saving for the baby this month. Instead, we're taking that extra cash and SuperDad and I are going to get away for some alone time before the baby comes and we never ever leave the house ever again.

Frugal? No.
Gluten free? Most definitely not.
Important? Yes.

Here's to detours! :)

Happy Blogiversary to Me!

It was one year ago today that I started this blog. We were not doing well financially. Every month we were spending more than we were making, and using the credit card to make up the difference. If our car broke down we had to make sure to choose a mechanic who would take a credit card. I didn't know where our money was going, and mostly I blamed being gluten free. Our groceries were more expensive than other people's. How were we *expected* to get by?

I checked to see if we qualified for food stamps or WIC. (Answer = almost.) I looked into Consumer Credit Counseling. Deferring our student loans. Or selling our house.

Instead, I started listening to Dave Ramsey. And I realized that, yeah, our budget is pretty small, but it's doable. We just had to make it work. So we:

1. Started actually budgeting. As in living within our means.
2. Began living on a cash budget.
3. Stopped caring what other people had, and thinking we were doing something wrong if we couldn't afford that too. (Well, until I lost my mind and bought a leather couch. Oops.)

But I still don't know how to insert a table into Blogger. So you get this:

July 9, 2007 - July 9, 2008

Debt: $104, 307 - $100,311
Savings: $0 - $2,898
Monthly Expenses: $2,145 - $2,390
Monthly Saving/Debt Repay Goal: $131 (emergency fund) - $697 (baby fund)
Take Home Pay: $2,417 - $3,349*

Achieved This Year:

1. Paid off $3,996 in debt
2. Built up our $1000 emergency fund
3. Weathered an additional $245 in monthly expenses (gas, cable, mortgage, and student loan payments all went up)
4. Made major purchases (van, bed, couch, fridge, two air conditioners) of $8,900 and our total debt still went down
5. On track to save enough so that having a baby will (for the first time) not put us into debt

* How we increased our take home pay:

1. Cut back on life insurance $65/month (perhaps not advisable)
2. Changed our tax withholdings so that we won't get the big return this year $300/month
3. I started doing some freelance writing work from home $367/month
4. I started working at Weight Watchers $80/month
5. Annual raise $149/month

Slowly we're on our way to becoming a gluten free AND debt free family!

As an anniversary present, I'd love to get lots of comments! :) Even if you've never commented before, please comment now! Well, if you're going to be nice, that is.

Snowballs in June

The debt snowball (see sidebar) is looking pretty pathetic this month. The principal on our debt only went down a measly $241. Even worse, we only saved $170 in the baby fund.

However, I've also been doing some spending on the baby (see sidebar again). I paid our doula. I paid the big hairy $421 bill from the doctor. And I'm getting pretty antsy to start getting this bought and ready for the baby. Not that there is very much that we need, but most of you know the feeling, I think! So far, I've washed and folded all of the baby girl clothes in the 0-6 months sizes, so that's helping. Not that I have anywhere to store them (hint, hint, Mom). :)

Buying and Selling Cars - Without a Dealer

I may have mentioned that we recently bought our minivan by going through a consignment lot rather than a traditional dealer.

• We paid $2000 less than "suggested retail value."


• We got a Carfax report on it. We signed up for the one-year subscription, which cost $5 more.


• We had done A LOT of research. The Internet is a wonderful thing. There is no reason to go in blind when you're buying a car - compare prices, read reviews on different models, know what you're doing.


• The consignment lot was really helpful in making sure we had all the paperwork required completed, so that was great!

I may also have mentioned, or maybe not, that we sold the car we were replacing, ourselves.

• We got $500 more for our car than we were offered in trade.


• We listed on Craigslist, at my work, and in the local paper. It was the newspaper ad that sold it, by the way.


• We asked less than book value. We could do that, we didn't owe any money on it! :)


• We used our Carfax subscription (see above) to print out a report for all potential sellers.


• It took us two days to sell the car. Well, and answering A LOT of phone calls. During nap time. (For what it's worth, we should have listed the gas mileage and WHY we were selling, since EVERY caller asked that.)


• We ended up selling to a mechanic who sells cars now and then. He fixed it up, and priced it $3000 higher than what we did, with a one-year warranty. Wow. I wonder how many repairs a person could pay for in a year with $3000?

Overall, we were thrilled with the way this transaction worked out for us, financially. We've got $2000 left on our van loan, which we will just make the minimum payments on until after the baby arrives, then we'll knock that debt right out our lives!

Wait, was this blog supposed to be about gluten? Hm. Well, both vehicles are completely gluten free.

YAY!

Heather was right! Our tax rebate came today, and it was $1800, not the $1200 I was expecting. WOO!*

The $1200 I was planning on was set to go right toward our van loan, and was considered as part of the purchase. So, now what do we do with the extra $600?

1. Apply it toward the van, leaving us with only a $1400 balance and moving us closer toward debt-free, our next long-term goal?
2. Save it for the baby. Which would be very responsible of us. And, of course, if we didn't need it, it could then go toward the van. But I'd find a way to need it. :)
3. Paint the house. It needs it. Badly. We're planning to do that this summer anyway, though didn't have solid plans on how to pay for it. And we can't agree on colors. And, no fun.
4. Redecorate my livingroom. Which falls solidly in the "want" and not "need" category. But... fun, right?

What would you do? If you got a rebate, what *did* you do? I'd love to know!

*For the record, I don't necessarily agree with this whole "tax rebate to get the economy going" plan. Not that I'll return the money or anything like that. Let's not be silly. But, how about instead of telling everyone to go blow money at Wal-Mart, perhaps something like tightening lending practices might be a better step? Because I think if people weren't lent money they couldn't afford to repay in the first place (sub-prime mortgages, credit cards for everyone, etc.), they'd probably be better off financially, no? Call me crazy.

How about something positive instead?

I just did the math. And if we stay on track, save for the baby, and return to the debt snowball by November, we should have all of our debt (except for our house!) paid off by the time the baby is 16 months old! WOO!!!!

Here's hoping!

List of Unrelated Things

1. My first trimester ends tomorrow! Wow, does it ever go quickly the third time around! (And yes, I know I'm huge for 12 weeks. You have NO IDEA how huge I will get!)

2. We sold our car! Good-bye $2000 worth of debt!

3. The debt snowball is officially on hold for awhile. Other than the tax rebate, which will also be applied to debt, all extra money from now until baby #3 arrives will be stored up to pay for said baby.

Minivan Driver

So we bought a minivan yesterday. This one right here.

I think we got a great deal - it's older, a 2001, but with only 28,000 miles on it. The final negotiated price was $8,500 - of which we had $4,785 in cash (thank you, tax return). The rest came from our home equity line of credit. I know, I know, but I think we can have it paid off in the next couple of months, since:

• We still have one of our cars to sell for $3,000-$3,500 (you want a slightly used Dodge Stratus, don't you, yes you do! Haven't you always wanted to shout, "I drive a Dodge Stratus!"? Yes, yes you have wanted that.)
• We'll hopefully be getting a $1,200 tax rebate in Mayish?

This will melt the debt snowball a bit, but I'm thrilled with the purchase, I feel like we have a real handle on a short-term debt, and I think we've got something reliable to transport our whole family.

Yay!

Buying a Minivan

We're working toward buying a minivan. Driving two little ones and/or tons of camera equipment around in a Toyota Corolla is... interesting. And our second vehicle is needing to be replaced.

The plan was spurred by a commenter several months ago as I was discussing our plans for the tax return.

So here is where we're at:
$4269 tax refund
$2000 trade-in value (Ouch! When I started looking, this was more like $3000.)
$500-$800 savings
$1200 tax rebate, possibly

= about $8,000

So, what do we do?

Part of me (you know, the part that listens to Dave Ramsey every day) says to buy what we can buy outright.

BUT, the part of me that drove junky cars for years does NOT want to go back there, and envisions myself stranded on a highway with babies or stuck at Wal-Mart with a vehicle that won't start. Or spending all of our debt snowball money on van repairs.

SuperDad wants to buy a nicer van, and take out a small loan - $4000-$6000 or so. Which would add at least couple of years to our debt snowball.

So, what would YOU do?

Better Budget Challenge #4: Budgeting Odds and Ends

Check it out here.
1. Request your credit report.
Check. It's been a few years since I've done this, so I was a little worried about what might be out there. But ours are pretty simple. Our mortgage. Our student loans. Our credit cards. And that's it. And, accurate, as far as I can tell.

The fear that we'll lose our minds some weekend and go way into debt is always at the back of my head. So I've decided I'm going to:
a) Keep only one credit card. And I'm going to lower that credit limit from $10,000 to $2,000. That should be enough to cover any real emergencies.
b) Cancel all of the other cards. There are three more. I'll let you know how that goes. Any tips?
Of course, it's easy enough to request new credit, but this is what I feel like doing right now.

2. How is our budget system working for us?
I do feel like my budgeting system works pretty well for us. Of course, it's always the *sticking to it* that's the problem, more than the actual method of planning and tracking. The cash system has done us well in this area. Our envelopes are looking kind of raggy, though. Wish I hadn't given my Crown Financial envelope system away a few years ago. (Um, the last time we did this, ha.)

3. How do I want to improve our spending habits?
Firstly, I don't want any surprises. We are already saving for next year's Christmas and tax fees and some other stuff that always seemed to catch us off guard and completely ruin our budget. Secondly, I want to stop running out of money before we run out of week/pay period/month. This has a lot to do with self-discipline, which is an area I'm continually working on (and continually falling short of my goals).

I've always had a policy of not stocking up on food. Firstly, clutter is my bitter enemy. Secondly, I like to use up what's in my cupboard because that reduces this week's grocery bill. But I think I need to rethink this policy, because if (ahem, when) we run out of money and food before the week is up, some food in the pantry would be pretty nice. During my last shopping trip, I added an extra jar of spaghetti sauce and 3 pounds of hamburger (at 1.49/pound - woo!) and 4 cans of veggies. I hope to keep doing this so that, little by little, I have a decent back-up system.

Of course my shopping spree should help this out too! :)

We keep plugging away at the Debt Snowball.

This month, we repaid $230 to the emergency fund, leaving us with only $145 to go until we hit our $1000 goal. Let's say we hadn't had the emergency fund when our car broke down in December, AT CHRISTMAS. First, we would have had to take the car to be fixed at a place that takes credit cards, instead of taking our neighbor up on his great offer to fix it for the cost of parts only. Because that's cost-effective, sure. And then, since we had a balance on the card anyway... well, it *is* Christmas, and... Yeah, I know where we'd be, right up to our eyeballs in credit debt again.

This month we also paid down $261 of our debt. Which is zero dollars above the minimum payments, but it still goes down. I find the more that I keep track of my debt, the more of a thrill I get with every dollar that it goes down.

Check Out the Debt Snowball

My goal this month had been to pay more toward debt than we did the month before. But, life happened, as it is wont to do. The brakes went out on our car. And then we got a flat tire and the tire guy was like, "People. Please, for your safety, don't just patch these again." So, we dipped into the emergency fund to fix our car. And while we didn't meet our debt-paydown goal, we also didn't have to use credit to pay to have our car fixed. And that's a success in my book.

We think we can have the emergency fund back on track by mid-January, and then we'll really get rolling on the debt paydown.

Decision

Thanks, everyone, for your comments on how to allocate our new, larger monthly budget.

I was truly leaning toward putting the entire thing toward debt. I mean, when you plan a portion of your money to go toward debt every month, that's all it is, a plan. Which means, if I really wanted to redo the livingroom this month, I could just reallocate that money this one month.

However, after reading so many excellent comments, I think I'm understanding a need for more balance in our budget. An extra $100 a month for food, gas, and clothes can go a long way, and WILL go a long way, since this is what I've decided to do.

It might make the blog less "thrilling" though. I know you were hanging on the edge of your seat waiting to see how we bought groceries for $40, right? Hee.

How to Allocate Extra Money

I mentioned previously that I just changed my withholdings so that we won't get the big tax return every year. Now I have to decide how to allocate this $400 every month.

Initially, of course, the idea was to use all of it to pay down debt.

BUT, part of me feels like maybe we should start saving for a vehicle, as one of our cars seems to be on it's last legs.

BUT, we could really use some more money allocated into the food, gas, and clothing budgets, just for a better comfort level there.

BUT, I really want to start redecorating the house, because I'm really sick of looking at the wallpaper the last owners picked out.

BUT, I feel like maybe we should continue to save for our taxes anyway, just in case my tax estimation skills aren't up to par.

BUT, of course, debt is supposed to be our #1 priority right now.

Scenario 1:
Entire $400 goes towards debt = Debt-free (other than house) in 22 months.

Scenario 2:
$300 toward debt, $100 to make budget more comfortable = Debt-free in 25 months.

Scenario 3:
$120 toward debt, save for car, budget increase, home improvements, and taxes = Debt-free in 33 months.

I'd really love some input on this. How would you allocate the $400? What would your priorities be?

When it rains, it pours

Bread machine: Died an untimely, smoky death. Thankfully, we can buy bread.
Car: Brakes out. Thankfully, our neighbor is mechanic and is helping us out in exchange for photography services. And thankfully we have a small emergency fund to deal with this. And thankfully SuperDad has been working a second job over Christmas. And thankfully we actually saved up for Christmas this year, so his income isn't already spent.
Garage: Has no electricity anymore. Thankfully, SuperDad showed me that it's possible to open and close a garage door by hand. Who knew?
Roof: Leaking. Maybe. Thankfully, we have saved money to fix it. And by "saved" I mean "allocated the tax return."
Car seat: Almost not fitting carpooling preschooler anymore. Thankfully, it still fits right now. Maybe she'll stop growing?
Clothes: Not fitting. Thankfully it's because I've lost weight!
DVD Player: Broken. Thankfully we have a VCR. (Okay, that one's a stretch, I know!)

This morning, I changed my W-4 so that I'll soon be bringing home more of my paycheck. I'm hoping this is a change that will give our budget a little more breathing space while more quickly paying down our debt.

Mistake

I made a mistake. I forgot to write in a $53.18 grocery receipt. And then I continued as though we actually still had that money. Ouch.

We do have that money, in our Christmas savings category. But that will need to be repaid. Out of money that would have gone to pay down debt.

It's disappointing and it makes me feel like we keep taking steps backwards. Our tight budget gets tiring after awhile. What makes it liveable is focusing on that debt-free goal. I like to write out what our budget would look like if we had no debt. But every small step back puts that goal farther away. And that's frustrating.