November 9, 2009

Out of the Red

The first step in getting out of debt is living within your means. We won’t do ourselves any good working out budgets, clipping coupons, or cutting out Starbucks if at the end of the day we still spend more than we have.

It seems like a basic principle, but in these times it seems to come up much more often than it should. For my husband and me, we’re barely making ends meet. That means if an unexpected expense arises, we often have a hard time finding a way to pay for it.

This very problem is how our credit card debt has snowballed into the current abominable snowman. Things like… “let’s put some of these Christmas gifts on the credit card and we’ll pay it off in January.” Then in January the triple-the-usual gas bill comes. Or, “we deserve a vacation, we’ll just put a couple of nights at a hotel on the card and work it off in the next month”, but in the next month the car needs new tires. There’s always something. Always. It’s emotionally and financially exhausting.

What’s even scarier for me is when those credit card purchases aren’t luxuries, but necessities. Over the past year there have been more than a couple of occasions where after the bills there wasn’t enough left even for groceries. First the difference came from savings, then there was no place else to go but to the credit card.

So the plan is no more credit cards. And we mean it this time. If we don’t have enough money to go out to eat, we stay in. If we don’t have enough for groceries, we bust out the ramen noodles and dig out the old cans of tuna from the back of the cupboard. If we want to do something special, we work extra to save up ahead of time. It’s way more fun to work towards something than to have to pay it off after the fun is over.

Today begins a new credit card as back-up free era!

November 5, 2009

My Dowry

There’s a longstanding historical marriage tradition called a dowry. A dowry is the money, goods, estate, and other assets that a bride brings to a marriage. For instance, my dowry consisted of a 1979 Mercury Zephyr station wagon and a box of old dishes and silverware. Luckily, the tradition has fallen to the wayside in modern times and us poor girls are still able to land an acceptable husband.

Relationships headed down the road of long-term commitment eventually have to have the money talk. The talk is usually not shocking – I mean you can guess a guy’s financial security pretty easily by looking at things like whether he’s driving a brand new BMW or a 1986 Plymouth Reliant, or if he’s taking you to dinner at Taco Bell or Jeff Ruby’s. But the real significant, life altering financial information lurks behind those superficial indicators. The BMW is probably not paid for while the Reliant is. Your taco’s are being paid in cash while your steak is going on a credit card. Looks can be very deceiving.

The concept of a dowry has been reversed. Instead of looking at the assets each is bringing to the relationship you’re looking at the debt each is bringing. Take school loans as an example. It is not uncommon for a college student to be paying their own way through school, accruing debts in average of around $27,000 with debts of over $100,000 not unheard of. That’s almost a starter-home. Not to mention the credit card balances racked up to pay for living expenses and bar tabs. Not to mention the car payments. Not to mention the credit ratings that have been wrecked with years of “I’ll worry about that later” attitudes towards bill management.

Personally I had spent my entire young life focused on money management. I knew I was going to have to pay my own way through college so I saved from the time of my first baby-sitting job. I graduated with less than half of the average debt load and was pretty darn proud of it. Then I met and fell in love with a nice young man. He had about 8 times my student debt. Ouch. Combined together, super ouch. There’s no way I can be accused of marrying for the money. It felt like all of my hard work, all of the sacrificing was for nothing. I should have been partying instead of working Saturdays nights.

So my dowry from my husband consisted of debt. Student loan debt, credit card debt, and a credit rating that would make a great bowling score. Of course I’m not perfect. I’ve had my financial missteps, but for all of my careful calculating I feel like the credit gods royally screwed me on this one.

What’s a girl to do? Fall out of love? Try to find a more suitable financial match?

He’s awfully cute. 

November 2, 2009

Saving, A Plan of Attack

After some consultation with some of the leading internet/media icons of money management it seems one of our first steps in creating a financially stable future is to be prepared for the unexpected. That is, to have enough money saved to cover unexpected surprises (a car repair) or tragic events (meteor through the roof). Currently the majority of our back-up emergency fund comes in the form of change collected in mason jars. And don’t think I haven’t had moments where I thought to myself, “Well there is that $40 or so in change, if things really got desperate.”

Apparently this is not the way normal, financially responsible adults manage money. So we are establishing ways to gain back some digits in our savings account that pre-wedding, pre-house rehab, and pre-laid off husband had been relatively healthy.

Saving is not easy. It requires not spending. For those of us who are meticulously dividing out each paycheck between bills and hoping to have enough left over for a 6-pack of beer the concept of saving is quite foreign. But my husband and I understand the importance, so we have accepted the challenge and formulated a battle plan.

Our plan of attack is as follows.
• We will put $50 of each paycheck into savings as if it were a regular bill, with a due date and penalties if we don’t pay.
• We are not allowed to touch our savings account for anything short of disaster.
o Late night Taco Bell runs are not a disaster
o Concert tickets are not a disaster
o Root canals are a disaster
• We will each work one extra glorious shift a month which directly goes into savings.
o We will not complain about how much working extra sucks.
o The money cannot be used to purchase Taco Bell and/or beer on the way home from said shift.

The plan sounds great, huh? Updates to follow…

October 29, 2009

Investing in Underwear

My husband needs new boxers and socks desperately. We’re way beyond the point of a casual need for replacement where a seam is starting to spread, or the material is thinning, or even a little hole in the pinky toe area. Let me make this as clear as I can, there is really little point of him even wearing the boxers at all, any purpose of the boxers and their separation of skin from pant is not currently happening with the exception of the elastic band and a few shreds of fabric hanging on for dear life.

Now, along with the majority of U.S. citizens, when I am in the need for new underpants and socks I go to a large box store and acquire something in the under $10 range. My husband, however, discovered premiere boxers and socks a long time ago and has grown accustomed to paying $30 for each of these items.

After some newlywed arguments I am in fact convinced that the value lies with his Patagonia boxers. The current remaining shreds of underwear are the last survivors of approximately 5 to 6 years of extensive wear. The same is true for his wool, wicking, outdoorsmen caliber socks. Let’s get this out of the way; he is right, I am wrong.

The debate. Buy affordable socks and underwear that won’t last long, or buy expensive counterparts that will at the time significantly stretch our budget but in the end save us a considerable amount of money as well as be the environmentally responsible thing to do.

The fact that this even warrants a serious discussion in our home makes me sad, but really, I think this very debate on varying levels is happening constantly across the country, and is really at the root of a lot of our bigger problems. We can’t afford the lifestyles we want, so we do things short term and put off the inevitable long term consequences. This is true for how we treat our credit, it’s true for how we treat our environment, and it’s true for our purchasing habits.

The cycle has to end.

I guess if we aren’t able to invest in mutual funds, at least we can start with underpants.

October 26, 2009

They say timing is everything

My husband and I were married a little over a year ago. In fact, we returned home from our honeymoon just in time for the Lehman Brothers to file bankruptcy and thus erupting a volcano of economic turmoil. In the three months before that event my husband had graduated from college and we purchased a “fixer-upper”. Great timing, huh? Obviously we had been living in the wedding haze reserved for young lovers, ready to tackle the world arm in arm, waiting for all of our dreams to come to us on the conveyor belt of life. Oppsy.

Needless to say we had made some decisions that would at the very least have needed a little more deliberation if we had been paying attention to a crystal ball. My husband has only been able to find part-time employment which brings on a whole variety of issues. Our income is not what we expected, our marital dynamic is not what we expected, the progress on our house is not what we expected, our ability to make purchases is not what we expected, our ability to pay down debt is not what we expected, the stability of our life is not what we expected.

So how do we deal with all that? Obviously this would be short lived blog if I had that answer. The journey is the adventure, and maintaining happiness is the challenge.

October 19, 2009

Come along...

I would like to invite you along on a journey of financial turmoil. My husband and I are in a position that is not as uncommon as we're all pretending. We are both college graduates, we are young professionals; we're all in all, upstanding citizens. We're also broke and have trouble seeing the way out of a pit of bills, student loan debt, credit card debt, and a house we bought in need of lots of home improvement projects.

The objective of this blog is to provide a little group therapy, some hope, possibly inspiration, definitely comic relief, and above all else the knowledge that you are not alone. Someone else out there is struggling too. So come on along, we’ll cry together when we overdraw our checking accounts, we’ll high-five when we pay off credit cards, we’ll vent our anger at the credit system, we’ll laugh at the mess we’re in and courageously move forward one day at time. Or perhaps one paycheck at a time.

One thing I want to focus on is that money does not buy happiness. We all say that, and I truly believe that, but living that mantra has proved to be quite a bit more difficult. Recently I was watching a show that featured children in impoverished India. These children were in rags, running through streets buried in trash, their dark eyes filled with hunger, yet were laughing and playing with the biggest smiles on their faces like a fat kid at a pie eating contest. Where is this joy coming from? How dare I worry about money while they worry about clean water.

I want my life’s focus to be on happiness and love. I want to find ways to live better, with less. I want to not worry. I want to not want.

So our adventure ensues, to battle for financial security in an economic insecure time and to pursue the kind of joy only children who don’t pay bills seem to have.