Monday, February 28, 2011

8 Things We Will Do With Our Tax Refund

Yep...we're expecting a refund this year. Like always. I know people will argue that getting a refund is like loaning money to the government interest free. And they are right. But I still like my refund. And frankly, the last few years have each been so different from the last, I'm afraid to make adjustments to try to balance it up so we're closer to the actual amount we owe for the year. So for now, I'll take the refund. This year it is for just over $4300.

This is what we're doing with it.

  1. Replenishing the Emergency Fund. Our e-fund was knocked down from $1500 to $500 during a few rough months of having to pay for things with seriously reduced income. That's what the fund is for, but now it is time to restock it. -$1000
  2. Getting the dog groomed. The dog is a shih-tzu and needs to be groomed. We are not capable. She needs trimming, shampooing, special skin treatment stuff, and nails clipped. This total package costs about $70 and hasn't been done since like November. -$70
  3. Getting the wife groomed. Okay...not really groomed, but I needed a haircut and this was be my chance. -$30 (with tip) Is it just me or is it depressing that the dog requires more care than I do?
  4. Paying for the tax filing. We use TurboTax Deluxe and this year it cost $103 because we had to file in three states (while Chip was working last year he had to fill in at a store in South Carolina for a little while causing us to pay SC state taxes). -$103
  5. Date night. Chip and I have agreed that we are going on a real date when the entire refund gets in. The works...full night out, dinner, dessert maybe, paying for a sitter, the whole deal. It's been over a year since we've done this and we need it desperately. estimated -$150 (counting sitter)
  6. Horde in the Emergency Fund. Chip is still not in the Army yet (he has to go back to MEPS), so we are still without income on one side of the equation. I really just want to sock the remainder away until we KNOW we can move it to the credit card balance.
  7. Buy canvas photos. Back in October 2010 we had some beautiful pictures taken by a professional photographer who happens to be a neighbor and friend as well. She did a fantastic job. There were a few prints that I wanted to buy and at least 2 (maybe 3) that I wanted to have turned into framed canvas prints. But just when I was about to order, Chip lost his job. The order was put on hold. Our photographer friend did a WONDERFUL thing and gave us some of my favorites in 8 x 10 and smaller for us to enjoy. It brought me to tears. But I still want to order those canvas prints from her. After we're all clear on the Chip has a job deal, I want to order these and have them framed. Estimated damaged -$600
  8. Pay off Debt! When Chip is getting an income again and we feel comfortable enough to do it, we will pay off debt with the remaining money. If we do not have to use any of it out of the temporarily fat emergency fund, this will leave $2337 to send to the credit card. I wish the whole $4300 could go, but this is what is more realistic.

I know...many of these are unnecessary and the money is best spent sending it all to debt. But we've been doing a pretty good job of paying off that beast, and we'd just like to splurge on a bit of it.

What do you think of our spending? Are you getting a refund? If so, what will you do with it?

Thursday, February 24, 2011

A Financial Victory! Celebrating a Net Worth Milestone.

If you've followed this blog long at all, you will know that our household has done some stupid things with money. I mean some really, really stupid things. We've been scammed. We're in far too much debt, and now we're paying for it.

But there is one area where we've actually been smart. And today I want to announce that those smart decisions made early on are worth celebrating today!

Stay with me for a moment here while I give you some backstory....

I graduated college and entered the workforce at the age of 21. I was young and stupid. It's okay...most of us are at that time in our lives. One of the wisest things I did though was to start investing in the company-sponsored 401k as soon as I was allowed by company policy. They had an outstanding matching policy and I fully took advantage of (I invested the full 8% that they matched dollar for dollar).

When we moved to Savannah and I changed jobs, we rolled our retirement savings into IRAs (Roth and Traditional) and I started a 401k here at my new employer. They have a match that is not as good as my previous employer, but is still free money that I wanted to take advantage of. They match 50 cents on the dollar up to 10%. I continued the 8% investment that I was accustomed to. Yeah...I was missing out on some free money, but that is the decision I made and it worked well for a while.

I am now 31 years old and still a long way from retirement, so that means that although now I've cut my contributions back to 1% (to avoid the stop/restart investment paperwork but to maximize what I could send to debt repayment), I have always invested aggressively, knowing that the market would fluctuate. I would lose money. I would gain money. I'm still young enough, though, to ride it out, so I do.

One year, I lost a LOT of money (was that 2008, I think?). Last year...gained it all back. It's still growing today.

So what does all of this mean today?

Well, because we have become wiser and started knocking out our debt aggressively and because those investments are still growing and providing passive income for (not much) later in life...


As of this week, our net worth topped $100,000!

$101,008.53 to be exact.


YIPPEE!!!

What does this include?

This includes the following assets: home, cars, retirement accounts, and cash.
It also includes the following debts: mortgage, timeshare, and 3 credit cards (one with $0 balance).

We have no car loans. We have no personal loans. We have no student loans. We have no medical debts. Those have all been paid off.

In the last 16 months, we have paid off $19,254.20 in debt and our net worth has increased by $39,287.85.

Did you notice that our net worth increased by more than $20K more than our debt repayment? That's our retirement funds working FOR us, people!

So if you haven't started saving for retirement yet, just because you're young...don't think it will not make a difference. It will make ALL the difference.

We're living proof!

Have you ever calculated your net worth? Were you happy or upset by what you found?


Photo credit: RambergMediaImages

Wednesday, February 23, 2011

Before You Forward That Email....

I know. You think it is worth passing along. It stirred something within you. It featured some political leader, celebrity, moving story about someone I've never heard of, some life altering information, or some prediction about the future of our country.

It is packed with stories that would rouse me--that would make me want to act or share.

I understand. It touched you and it might do the same for me.

But before you forward that email story along though, please verify it on Snopes. I thought everyone knew about Snopes, so this would seem to be an obvious type of post. But based on the number of silly forwards I still receive, people either do not know about it or just simply do not use it enough. Snopes exists to stifle the urban legends that have gone viral thanks to the world getting smaller via technology.

Maybe it was a shockingly unbelievable story. Maybe it is a quote or action by a lawmaker. I don't care what it is. Verify it on Snopes before you pass it along. Not verifying it is the equivalent to gossiping. Stop it.

Everyone in your contact list will thank you for not passing along rubbish. And if you want to take the extra step, reply to all on the email you received and let them all know that it was verified to be untrue via snopes and include the link.

Using Snopes works for me. See what works for others by heading over to We Are THAT Family.

Photo credit: OmirOnia

Monday, February 14, 2011

Prolonging the Life of Your Towels

We have towels that were given to us as wedding gifts 10 years ago. They are still in fantastic condition. In fact, so many are in such great condition, that some of them on the bottom of the pile have never been used! I do not know if we will ever have to buy new towels as this rate!

So how do we make our towels last so long? Here are a few tips:

  1. Wash every 5-7 uses. That's right...we use towels for about a week and hang them up to dry. The less laundering, the longer the life.
  2. Hang to dry completely. If you do not wash after each use, make sure you hang the towels in a way to allow them to dry completely. If they are still wet a few hours later, you need to find another way or place to hang them or they are just going to reek soon. Make sure the entire towel is exposed to air for drying purposes. If you can hang near sunlight, this will help.
  3. Wash on the warmest setting allowed by the colors of the towels. I know...this goes against the conservation teachings, but the more germs and stains you get out of your towels, the longer they will last. Promise.
  4. Do NOT use fabric softener. I've covered this before on this blog, but I will say it again. Do NOT use fabric softener on your towels. This includes liquid softener for the wash, dryer sheets, or those terrible, terrible dryer bars that one particular company promotes (terrible because fabric softener damages some clothes and this is a semi-permanent fixture to your dryer). The chemicals that make your towels soft also make them non-absorbent. Ever tried to use a towel that will not soak up water? It will not remove water from your wet body either. That's a sign that they have been washed and/or dried with fabric softener. There is no way to fix this...you just have to toss them.
  5. Get the funk out. Also preached on this blog before, there are times when your towels just get this smell. It permeates the towel and no amount of regular washing will remove it. But you do not have to throw in the towel (I'm so punny) or buy some special cleaning products. Here's how to get rid of it: white vinegar. Wash your towels with vinegar rather than detergent in one load and dry as usual. Smell gone. And no...your towels will not smell like vinegar when they dry.
  6. Hang out to dry. This is one that we do not do because we have no where to hang up clothes, but line drying instead of machine drying will save your towels (and some electricity as well!).

So that's it. Use these steps and I promise that your towels will last longer too!

Photo credit: heltje

Monday, February 7, 2011

Gaining Control - The Sixth Step - REALLY Having Control

So, I've walked you through how to change your financial future in a brief summary kind of way. But you will never make this work without this piece of advice.

You must change your mindset.

Seriously...if you work hard and get completely out of debt but never change your mindset about how to use you money (rather than letting it use you) and never decide what you want your money to do for you, you will end up right back where you are.

If you need help getting started, I highly suggest Total Money Makeover by Dave Ramsey. So many people will tell you about this book that it almost seems cliche, but from experience I can tell you that it changed my outlook on our money and our financial future. He is such a motivator, which is why so many sing his praises.

Amazingly, this struggle through debt repayment will likely make the change for you. The harder it is to do, the more of an impact it will make. Windfalls make debt repayment easier and much more manageable, but they do not help you learn HOW to manage your money. Trust me. We know from experience.

Personal TRUE story:

In 2006 we were deep in debt. We had about $40K in student loans, $15K in a timeshare, and about $20K in credit card debt as well as $20K in car debt. We received an inheritance and paid off everything but the timeshare (don't remember the (il)logic behind that one, but it was what we decided) and put approximately $15K in a money market account for savings. We were (almost) debt free and could have managed to pay off that other $15K either with that savings or within the year. But we didn't. We hadn't changed anything about our habits.

In 2007 we moved to Savannah. From that time to October 2009 we managed to rack up another $45K in consumer debt. The sad news is, I can hardly tell you what we spent that on. Some furniture for the new house I know, but no more than $5000. About $5000 for storm doors and such. And $6000 for a new transmission and catalytic converter for my son. But otherwise...no clue. That's ridiculous that we had that much debt and no idea where it came from.

We didn't learn anything from that windfall, so we ended up right back up where we were. And now we're walking the long, tough road. I promise you though, because of the struggle and the work it takes, I promise this time, it will stick.

So make sure this is a lifestyle change for you. Not that you can never enjoy nice things again. Not that you can never afford extras again. You will be able to, but you will (hopefully) be much more mindful about your spending thanks to the school of hard knocks.

Now, tighten those boot straps and join us on this road. We're proof that it works (right at $19K paid off in one year...and that was with some major bumps in the road). We'll be here to encourage you. We'll be here taking those steps with you.

I promise...you can do it. And you will be a better person, steward of your money, and parent because of it. And who wouldn't want that?

Friday, February 4, 2011

Gaining Control - The Fifth Step to Owning Your Money - More Cuts


After slamming you with lots of information last week in this series, I took a break to post some other items. Now that you have mentally wrapped your mind around what your finances really look like, have put together a budget, have brainstormed some income ideas and have made some cuts, let's move on....

So you've made the basic cuts now. You're feeling better about cruising along. But you'd still like more wiggle room AND you'd still like more to send to your creditors. Because you know, the more you send them, the shorter time that you'll have to make these sacrifices.

There are more extreme measures you can take. Here are just a few suggestions:
  • Cancel your tv subscription altogether. Between movie boxes (free or $1), Hulu (free), and Netflix (just $10) you can spend $11 to get a lot of quality entertainment for only a fraction of what you're currently paying. And although it will be strange to have the silence initially, you might just learn that you have more fun without it (game night, go outside, play with toys, read a book, talk, etc).
  • Learn some new tricks for common items. (google this, there are hundreds of blog posts and articles about it online).
  • Sell the car that you have a payment on and downgrade to a used, reliable car. If your vehicle is already paid for but gets really poor mileage, think about making the change for that reason.
  • Do minor repairs on your cars at home. Change the oil, tune up, hoses, etc. You can do it! I'll bet if you google it, you'll find some instructions (possibly a video) specific to your car!
  • Cut your hair at home. Do your nails at home.
  • Give up your pets. They are expensive little creatures.
  • Give up your vices (smoking, alcohol, etc cost a LOT of money).
  • Downsize your home. Of course it is difficult in most places to sell a home right now, but if you are confident that yours will sell in your area or that you can find a renter, downsize your home so that you can buy or rent something more affordable. And the smaller it is, the less utilities, etc it will cost.
Some of these just really not be for you. But you'd be surprised what you can become accustomed to if you give it a try.

Photo credit: lusi

Thursday, February 3, 2011

Our Financial Status - Update #16 - January 2011

If I were to tell you that January was a rough month, it would be an understatement. I mean, we had food, clothing, and shelter, and for that, I am grateful and should consider myself one of the wealthiest people on earth.

But it just came down too close for my taste. We had to access the emergency fund to make it happen. I'm glad it is there for that purpose, because in the past we would have resorted to using the credit cards for that $800 we took out of the emergency fund. We did spend $139 on the credit card for doctor's appointments and pharmacy visits.

INCOME:
We were $1721 under budget in the income category. Yep. Ouch. Seriously.


UNDER BUDGET:
Gas/Fuel:
$5 under budget. I have no idea how we did this, as we are NEVER under budget here, but it is nice to know we can do it!
Auto Service/Parts: $30 under budget. Hooray! That means that for now, we are $90 below the rolling budget, which would be awesome if we needed a small repair and had made room like this in the budget. However, we don't need repairs right now because as you can see above, we are well below our income budget!
Eating Out: $54 under budget. HOORAY! This really should have been less, but I caved. Twice. Once I had a really bad day at work and needed food away from the office and with friends. So I spent $6 at a Mexican place for stress relief with Chip's blessing (I only thought it fair to ask since we were buckling down so much). Also, once we spent $23 at Wendy's because it is one of Patrick's favorite places to eat and we hadn't eaten anywhere but home for a while and we made the conscious decision to eat there. The others were just no excuse choices. So all in all, not too bad. I'm still very proud of us since this is one of our weakest spots.
Home Services: $41 under budget. Hooray! Nothing owed this month!
Home Supplies: $5 under budget. No purchases this month.
Childcare: $265 under budget, it's exactly what we expected. This is the savings that we're getting from Patrick not being in after school care while Chip is not employed. Once Chip goes back to work we'll have this expense again, so I'm not changed it right now...it just doesn't roll from month to month.
Clothing: Spent $0 this month, giving us $71 in the rolling budget.


ON BUDGET:
Auto Insurance: On new budget. After changing our method of payment (automatic withdrawal rather than a check) we were able to lower this budget by $5/month.
Mobile Phone: This actually showed up as one month's payment under budget, but that's because the payment cleared on December 31st and put December "over" budget by the same amount. So it's really a wash, so I'll put it "on budget" to reflect our true spending.
Television: Actually showed up as one month's payment over because February's payment cleared on the 31st. Actually spending for both months will balance out to "on budget."
Term Life Insurance: On budget.
Alarm Monitoring: No surprises.
Mortgage/HOA/Timeshare: On budget.


OVER BUDGET:
Electricity/Water: We were a mere $3 over budget, so I cannot count this one as too bad! =)
Groceries: $130 over budget. This one is a bit frustrating. We spent $130 on the 31st. And we could have waited to shop on February 1st. So I'm hoping this will show as under budget on February's grocery bill.
Doctor: $25 over for the month for office visits (Abigail had two ear infections, strep and severe bronchitis and also had a follow up to make sure she was not developing pneumonia). I will get reimbursed for one of those though via work. $96 over for a trip to the ER for a nasty rash that Patrick got over Christmas while visiting my mom. $? over for a nebulizer that we had to get to keep Abigail from developing pneumonia. We'll have to wait to see the bill for that thing after insurance deals with it.
Pharmacy: $34 over budget. See above for explanation.
Baby Supplies: $2 over budget. We were so "over" our rolling budget that I reset it to not roll. Then this month we spent $22 on a great deal for diapers, so we were over. It will start rolling again though and we'll quickly be under once again!
Hair Care: $10 over budget for the month because both of the guys got a haircare, but that still leaves me $63 under the rolling budget, so I'll be able to get my haircut SOMETIME once the income increases and still have some extra left!


ADDITIONAL COMMENTS:

The bad:
  • We only made the minimum payments this month on credit cards.
  • Our emergency fund is down to $700 right now from $1500.
  • We used the credit card for $139 to go to the doctor and get medicine for Abigail because the funds just were not there when we needed them but our little one was sick. We should have used the emergency fund instead.
  • I think I'm going to hold off tithing this month to restock the emergency fund because it is getting way too low for my taste. I've prayed about this and think it's an okay step to make for our current situation. Whenever we get our tax refund, I will back-pay our tithe (I'm not bargaining with God here, but it is what I have been praying about and this is the solution I think we were given).
The good:
  • We've got plans. They include: dropping full coverage insurance on both cars (it's justified and I'll discuss more in a later post), dropping Chip's term life insurance (he'll be getting a larger policy for much less through the National Guard), examining using Tri-Care vs my employer-based insurance. All of these will save us $$.
  • Chip will be going to MEPS tomorrow and find out details about when he will ship off to OCS. That will be full time income, which I will welcome. After the completion of OCS he will get a $10,000 commissioning bonus. That will be a HUGE chunk payment to debt. I can't wait to send that one off! Until OCS he will be drilling once monthly with a unit in Savannah, which will bring in a couple hundred dollars a month. It's not huge, but it will certainly help!
  • We're only waiting on one item to do our taxes. We should be receiving a refund. I'm estimating about $2000, but we'll see. Whatever it is, it is going into savings (after catching up with our tithe) until Chip has income again just to give us a cushion.
  • Still planning on doing an etsy shop I think. I've just got to see some money to get it rolling better!
  • If we had $1700 less income than expected and only had to pull $800 out of the emergency fund, that shows that we SHOULD be able to send about $900 over the minimum to credit cards once the income is back in place. Hmmm...that's something to think about.

Debt Paid off Since December 2010: $492.78
Debt Paid off Since October 14, 2009: $18,660.17
Change in Networth since December 2010: $91.97 (at least it is positive)
Change in Networth from October 14, 2009: + $35,116.32

How did you do this month? Were you stuck paying off Christmas bills or did you do it debt free like we did?
Whew...imagine if we had racked up Christmas bills!

 

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