financial planning Archive

Me and my money…what a complicated mess

Turns out that trying not to spend money is a whole lot easier said than done. So far I have gone off course though the money I set aside to save is still being saved and for me that is a step in the right direction. I decided against taking Dave Ramsey’s class since with my work schedule and the holidays, I know I couldn’t commit to full 13 week course which is a shame since I am sure there was something for me to learn despite having read his books.

So I am trying to be easy on myself and remind myself that Rome was not built in day but its hard because on paper I can make budgets that seem so reasonable, so doable yet the reality is shit always happens. I have tried the cash only route as well as sticking to the debit card but truthfully I have yet to find a system that works for me. I do find it works better to take cash with me when I go grocery shopping but carrying cash in general doesn’t always work.

Right now I am focusing on meeting my financial goals for the next two months which includes elder boy’s air fare for both Thanksgiving and Christmas break, paying off a couple sets of back taxes, setting aside cash for auto repairs since inspection time will be here soon and generally with a car as old as ours inevitably something needs to be fixed. There is also holiday related expenses which while we keep gift giving to a minimum and the Spousal Unit and I try not to do much for each other, our focus is on the kids and really on the little one. Lastly there is our trip to NYC to visit friends. I am also trying to stash away a few bucks to do some much needed work in the house since the wallpaper in girl child’s room needs to be replaced since it looks pretty bad.

So I have some goals and while I struggle with the occasional cup of coffee on the way home from work, I am trying to stay focused on meeting my goals. Once the year ends then we will set a new set of goals. I am sure my plans would make most financial folks cringe but I know me and after a year spent studying folks like Dave Ramsey and Suze Orman, its important for me to find a plan that is realistic to me.

So in case you cared, that’s what’s up with me and my money….besides I figured by sharing this it will help to keep me honest.

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Baring my soul…my financial soul

I spend a lot of time talking about money and debt but I have never disclosed exactly how much debt I have, in part because it feels like a private matter. Yet as I start to get serious about wanting to clean my financial house up, I am struck by the fact that most folks who choose to do financial housekeeping generally at some point are willing to share with others the level of debt they have.

If you are a long time reader, you know that I have grappled with the idea of filing bankruptcy. It’s a lovely idea but after looking at my debt distribution, bankruptcy may not be the best idea since the bulk of my debt is not dischargable in a bankruptcy…and as far as I am concerned the idea of completely trashing my credit without complete relief does not seem like a great idea.

So drum roll…the grand total of debt that the Spousal Unit and I have is $211,310.57! Yes, that is two hundred thousand dollars and no that does not include our mortgage. Actually $113,310.57 of that is my student loans, that is for both my undergraduate and graduate degrees. The other large portion is the $66,000 that is owed in back taxes. The early years of the Spousal Unit being self employed we were not as good with the taxes as we could have been and lets just say the penalty and interest rates the IRS charges actually makes Vinny the loan shark look like a bargain and that is a understatement. You start off owing Uncle Sam $5000 and it can grow to $10,000 real fast so you have a few bad years and what was a small sum becomes really unmanageable.

The remaining $32,000 is $12,000 remaining on the hubby’s student loans and a mere $20,000 in credit card and medical debt.

So that is where I am, suffice it to say I don’t have a spare $200,000 sitting around to pay these bills off and since our income started dropping two years ago, the picture is a tad bleak at times. Right now we are planning to take Dave Ramsey’s Financial Peace class, though having read his book, I am not sure we will be able to implement all his ideas exactly to move us along but I do think its a step in the right direction.

However thanks to the fact I am lowly non-profit servant, it looks like the US Dept of Education has some options aside from being in constant deferment where I might actually be able to get my loans paid off sooner rather than later…10 years versus the current 30 year plan I am on when I am not in deferment.

As for the IRS, they too have been willing to work with us since we have worked hard to not run up more debt and since they know all about us financially they realize we have no hidden funds. The IRS actually offers settlement programs and we are exploring those options since interest rates that accrue daily don’t get them any closer to getting the money from me.

As for the remaining debts, well that $20,000 is the only amount that could be legally discharged in bankruptcy but as we get serious with our not spending plans we are hoping this is where Dave Ramsey’s advice might help us as far as starting a debt snowball.

So there it is…I have laid my financial soul bare for all the world to see. I admit knowing there are friends and associates that read my blog I am a little nervous about this but truth is I need help. I need folks to know that  I struggle with money in part because for years I could not face the fact I had a shopping habit. On some level I see my situation as similar to someone dealing with a substance abuse issue though my drug of choice is consumption. In the early years of our marriage we could have easily been saving 20-30K a year and had we been doing that we could have better weathered the financial storms that really started stirring when we moved to Maine 7 years ago and became a hurricane 2 years ago. Instead I assumed we would make more and more money and in the first 5 years of marriage amassed a lovely collection of designer clothes and other useless trinkets. At one point I was like Sarah Jessica Parker’s character from Sex and the City…broke as hell but looked great. I mortgaged our financial future to have weekly hair appointments at upscale hair salons back in Chicago.

I have come a long way, and I am proud of it but I know I have a lot more work to do, to realize I don’t have to spend money. That the temporary fix I get from that $4 coffee is just that temporary, instead saving that money to pay off creditors is a much better idea.

Now with the holidays coming up, clearly the potential to get in a jam is there but we are looking at ways to have a frugal holiday, most likely by using layaway at area stores to buy for the kiddos. The upside of not having much extended family is that we only buy for our kids and send cards to everyone else. We are also planning on visiting family and friends soon. I realize many would consider this a splurge but its important to me that my daughter know our family and since folks are willing to put us up, we can find ways to travel on the cheap.

So now that I bared my financial soul, while I have no plans to become a financial/frugality blog, I will be writing more about my struggle to manage my money. I have written a budget for Oct that looks great, things would get paid, we would be working towards our financial goals and it’s not complete deprivation…I can still have an occasional mocha at the evil empire. The thing is I have to stick with it and that’s where I am going to need some help. Its sorta the baby steps to a no-spend lifestyle.

So if you have any ideas or thoughts or want to share your own struggles with money and how you overcame it, I would love to hear from you.

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Getting serious about the cash

I vent a lot about my financial woes here at BGIM, in part because in my day to day life outside of a small handful of folks, I really don’t discuss money at least my money or lack thereof. Granted I talk a lot about class issues especially as they relate to the middle and working class but there is a huge difference in talking class as a general topic or as it relates to my work versus a discussion about the dreary state of my finances.

For the past several years, I have watched our income slowly decline…its funny because I graduated with my masters degree in 2006 and when I started the grad school journey the plan was that our income should grow…only problem was that the Spousal Unit’s income started dropping in 2006 and in 2007 the US economy decided to thwart me and I ended up a casualty of the beginning of the recession when the school I was teaching at decided my department should be closed.

I have sat by for a few years praying and hoping that things would change instead they have only gotten worse. We made some changes to our budget since losing several thousands of dollars a month meant we had to cut back, yet through it all there was one line item that until recently I considered sacred. It was the one item I felt we could not give up. What is it? Full time childcare for the girl. Now I have mentioned over the time that my girl is high energy, I love her but I admit I have often been glad we get a break, the old saying absence make the heart grow fonder!

Well mini me aka girl child is now 4, and old enough to go to a traditional very pt preschool, its only 9 hours a week but she will still get some socializing in and I will get a few hours a week to myself. Now how is this going to work with our work schedules? Thankfully unless I am in a meeting, I can actually bring girl child to the office with me since after all, what’s in my office? Kids. At 4 she is old enough to hang out in some of the programming that is offered by my center and being the head cheese also known as the director, there is no one on site that I report to since everyone who works at the center reports to me. Definitely a good benefit.

The Spousal Unit has created a space in his office for girl child to hang out in when he is working and I am not available, also right now there are only two weeks a month that the Spousal Unit is super busy so the plan is to trade off watching her around our schedules. If I have meetings that are not when she is at preschool, he will watch her and when he is uber busy I will watch her.

I have to be honest this new plan is scary since I am not exactly a SAHM, I have a job but I also have no emergency fund and a stack of extra expenses coming up as well as some bills that need to be addressed. One of my creditors, in fact one of the most pressing ones has made me an offer and with the money saved from no longer paying for ft childcare we will be able to get this huge burden off our backs.

I admit when this idea hit me last year I eventually said no, but this year there is a sense that we no longer have the luxury of having ft childcare, not when we have work schedules that do allow for our daughter to be cared for at home.

So while I am nervous about this change, I am also excited to know we have a viable plan for changing our financial situation for the better despite not having an actual increase in salary. I am reminded that in tough financial times, sometimes we have to think out the box and look at what we really need versus what we really want. For too long I have said ft childcare was a need when for the past year its really been more of a want.

Is there anything in your budget that you think is a need but deep down you know its more of a want? If so what are you willing to change?

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