Wednesday, June 18, 2008

Goodbye, of sorts

This has not been a very well tended or long lived blog, but I need to take a break from blogging for a while. Not sure if I will come back to this or eventually delete it. Thank you to those of you who have stopped by and commented. I always appreciate hearing from people. Take care!

Wednesday, June 11, 2008

Responsible Credit Card Use

I just read the most thought-provoking post by Mike at Living the Cheap Life. In it, he makes the case for responsible credit card use as a way to earn rewards and take advantage of "float". He says that Dave Ramsey is wrong when he says there is no such thing as responsible credit card use. Well, I left an earful for Mike in his comments!

I want to share here what I wrote:

My two cents: Yes, Dave Ramsey’s solutions can sound very “one size fits all”, when of course, there are responsible credit card users. My argument against credit card use is a societal argument. Mike, you and the other credit card users who are getting rewards back, are not going to like what I have to say. While I don’t know the exact numbers and I don’t have the research to back up this up, I believe it is common knowledge that more people struggle with credit cards then master them. Given this fundamental truth, I believe that “responsible” users help the credit card companies perpetuate the myth that consumer credit can be a good thing. I am going to arbitrarily use the 80/20 rule here and make up an analogy to go with it! If heroin pushers offered “rewards” for using their drug, 20% of people would use heroin, reap rewards and suffer no ill effects. 80% of people would use heroin and become addicted and suffer all the horrible repercussions thereof. And the heroin pushers would laugh all the way to the bank. As a society, we have decided that a population of heroin addicts is not a good thing and we have outlawed heroin. I think consumer credit is exactly the same thing. I will go even further and say that the 20% who are being “rewarded” under this system are as responsible as the pushers are for the degradation of the 80%. There is personal choice and then there is social responsibility. I truly believe that consumer credit is a societal issue that this nation needs to address. Yes, fat chance, I know, especially as I seem to be the only person in the universe to hold this opinion!

I know this probably sounds crazy to most people, but nonetheless, this is my blog and this is where I get to express my opinion! I want to go one step further and ask you to substitute the word "heroin" for the word "credit card" everytime you see this phrase: "responsible credit card use". Hmmm, "responsible heroin use". If there is such a thing, I am pretty sure that it is pretty rare.

Anyway, tell me what you think!

Monday, June 2, 2008

Where's my instant gratification?

Oh lordy, I am too old to be this silly. When I started this blog two weeks ago, I was so gung ho to finally be conquering my debt! I have been diligently frugal, have found a second job, have made $185 in snowflakes, earned 185 points at MySurvey, filled out my debt calculator fifty ways till Sunday, and I think I should have more to show for it!

But I don't. And my grown up side knows that this is just the beginning. No matter how much I've done in the last two weeks, it's what I do over the next two years that is going to make a difference in my financial picture.

Of course, all the good things I did were off-set by some pretty dumb amnesia on my part too. Wells Fargo allows us to receive a cash advance based on a direct deposit that we receive every month. They don't let you do it forever, but irregardless, I don't want to do it. They take their $500 back plus another $50 fee for allowing us to advance our deposit early. Last month I took a $400 advance. It's getting pulled out of our checking account tomorrow and the last thing in the world I want to do is incur another advance this month. Add to that the fact that my daughter is celebrating her 18th birthday tonight and graduating from high school tomorrow and you can see where the next two weeks can get a little expensive.

We are celebrating very cheaply, but even so, it adds up. Her big gift for both occasions is her own camera cell phone and three months of service (flat rate, of course!).

So, between the cost of re-paying Wells Fargo and the gift/celebration expenses, we are already flat-out broke until the next payday. I'm going to list a doll today, but who knows if she will sell quickly. Interested parties can keep their eye on today. And I think the stimulus check will be here soon. That will help. It's actually needed to pay our 2007 taxes, but that's another story!

Thursday, May 29, 2008

I'm a Carnie!

(Photo from The Collage Images Group at Flickr)
Well, kind of! My post, Debt Elimination Stumbling Block #1, has been included in the 6th Carnival of Snowflaking! Thanks to Lisa at Greener Pastures for hosting. There are some good articles over there- I've been enjoying them this morning. If you are not familiar with Snowflaking, it is a terrific spin on Dave Ramsey's debt snowball concept. In addition to applying a snowball every month towards reducing your debt from smallest balance to largest, every little bit of found money (snowflakes) are applied to the debt too.
It may not seem like much of a plan, but consider this: Let's say that every month your bi-monthly paycheck is $3 more than you budgeted. $3 times 24 paychecks is $72! You could just let that $3 be absorbed into your general expenditures...or you could apply them to your debt. That $72 is worth even more that way because that is $72 less debt that could accrue interest. Where else are you going to get that kind of return for your money?
I'd love to say that I've already snowflaked "x" amount of dollars, but that is not the case. We are still just trying to adjust to having a budget! But we're getting there! It's because of great articles like this at Debt Non Sequitur or this one at Christian Debt Forum that I feel like debt elimination is something that even we can attain!

Thursday, May 22, 2008

Debt Elimination Stumbling Block #1: Chasing Butterflies

FreeMoneyFinance is a great blog. I really loved the post “How to Get Rich In Three Easy Steps”. Of course it is easy to get rich. It’s even easier to get thin- just eat less and exercise more. See? Only two easy steps to that one! Want to be more organized? Just de-clutter your space and use a calendar.

So…if it’s so easy, why is it so hard? I don’t like to get too bogged down in the “why” of things, preferring instead to be more hands-on, but I must agree with Socrates that “The unexamined life is not worth living.” If I don’t see the things that trip me up, then it’s likely that they will continue to trip me again and again. I need to discover what it is that gets in my way and either eliminate it or use it. I hope to add more posts in the future on this subject, so I am calling this post #1. We will see if there are more!

One of my biggest stumbling blocks is simple inattention. I am easily distracted. I always have been and if I were a Gen X-er instead of a tail-end Baby Boomer, I probably would have been diagnosed in grade school as having ADD. My son has it and I’m pretty sure I know where he got it! This is true for all of the areas in my life--finances, weight loss, home management. Referring to the metaphor in my last post, I chart a course and I begin it well and then, like a child, I blithely chase off the path, distracted by a butterfly.

What distracts me the most is my need to create. Sewing, doll making, drawing, altered arts, calligraphy- whatever it is, I tend to get completely lost in it. I’ll go like gang busters for a week at a time and only do the barest minimum in the rest of my life- dishes and work and maybe a little laundry. Everything else get neglected, but when I am done I have this beautiful thing that will, I hope, bring a smile into someone’s face. I love that I have this gift and that I am good at these things. I love making something out of nothing! I love sharing what I’ve made and getting positive strokes for my creations. It is the most wonderful thing to hear that something I made has given someone a little joy. The downside to this kind of existence is finishing an art project and facing an empty fridge, cranky children, a very messy house and sometimes, an overdrawn checking account. That would usually be the point where I would lay down and give up.

There would be no problem, I suppose, if my husband would just devote himself to all the necessary bits of life and allow me to frolic about in the woods making art! There are only two problems with that scenario: one, my husband has his own butterflies to chase and two, I’m such a control freak that I prefer to be either completely in charge or completely in chaos, while at the same time refusing to hand the reigns over to anyone else. I consider myself to be very fortunate to have a husband who is fine with that!

There have been periods of my life where I have decided that my creating was frivolous and selfish and that I needed to spend more time on worthwhile pursuits. So I would pack up all my materials and sigh, and think, “Maybe when I’m retired, I will have time for this kind of thing.” Then I would dutifully “take up my cross” and be frugal, fit and organized. At first, the drive to do these things well would be enough to sustain me, but after a few weeks, life would become lackluster. The day-in and day-out routine of maintaining a frugal, fit and organized family would wear on my soul. I would sit in my orderly home and watch my family pursue the things that they wanted to do (making messes all along the way), while denying myself the things that I wanted to do.

So, now I am a tiny bit wiser and I recognize that my need to create is exactly that- a need and not a want at all. The trick, of course, is how to balance it with the other priorities in my life. After all, what good is a path if you don’t enjoy the journey? The butterflies bring beauty and joy! How do I stay on my path and still catch my butterfly?

The best solution I have at the moment is to widen my path. If art making is built into my path, then it becomes easier to stay on it. That is where my etsy shop comes in. Learning the concept of snowflaking has really helped me to look at my shop in a new way. When I opened it in August 2007, I had the na├»ve idea that it would help me achieve financial freedom by someday allowing me to quit my full-time job. I know- don’t laugh! When it became obvious that I could never produce enough quality items with my own two little hardworking, overbooked hands to ever be able to live by them, I questioned its purpose and considered giving it up. I am so happy to discover that I don’t have to do that. The fees on etsy are so small that I needn’t worry about losing money in the endeavor and instead, the few sales I do make will still help me achieve financial freedom by helping me to get out of debt. Now, that is realistic and it provides me with fresh enthusiasm to eliminate my debt and make more dolls.

The other thing I am doing to help me stay focused on my journey, is grooming my path. By that I mean that I am putting a concerted effort right now into de-cluttering and re-organizing my workspace at home. Since my workspace is also our dining room, it is very important that I organize it in such a way that neither function crowds out the other. Too dining room-ish and I can’t function as an artist. Too studio-like and we can’t eat together as a family. I have a built-in desk along one wall, but often find myself working at the table instead. That has to change so that even if I have a project in progress, the table is still available to us for our meals. I believe that whatever the circumstance, we can adapt to it to allow us to still reach our goals.

The last step I am taking in improving my path is posting road signs. Gathering Little by Little had a great blog post about this today. I am a big believer in visual reminders. I especially love the power of words and am incorporating them into my path in a few different ways. First, I have started this blog and since I am already a regular blogger at Tender Arts, it won’t be hard to remember to check in here as well. Second, I will be posting little notes around the house to keep me on track. I am scheduling an email to come to me weekly to remind me to post new notes in new places so the old ones don’t “disappear” in a sea of familiarity. Third, I have long wanted to paint my favorite quote somewhere in my house. Given my renewed enthusiasm for getting out of debt, I think this is the perfect time to do so. Right over my desk at home, I am going to paint these wise words from Winston Churchill:

“Success isn’t final, failure isn’t fatal; it is the courage to continue that counts.”

to remind me that even if I do stray from the path in pursuit of a butterfly or two, it is important to get right back on it and keep going.

A veritable blizzard!

Yesterday I got hired at OSH! Part-time, evenings and weekends. By my estimation, I will be increasing our income by at least $400 per month. Wooooohhoooooo! So, here is what I will be doing with it:

  1. $200 added to my debt snowball.

  2. $200 into the emergency savings.

So excited! Speaking of excited, yesterday I found the most awesome free download! It is a Debt Reduction Calculator and you can download it here. You can enter in your credit card balances, the interest rate, the minimum payment and the amount of your snowball and it calculates a payment plan for you. Even better, you can tell it to calculate paying off the smallest balance first or the highest interest debt first, plus a couple of other options. Such a great tool!

I feel like yesterday I equipped myself (new job) for a long journey and then I found the treasure map (the calculator)! So....let's go!

Wednesday, May 21, 2008

First snowflakes!

Yay! I sold a couple of my dolls! Completely forgetting that my plan was to use snowflakes for the ES (emergency savings), I applied part of it to a credit card. The money order just arrived yesterday for the second doll, and that one I am definitely putting into savings!

Question, is...where? I don't want it to be easy to access. We have a savings account at Wells Fargo, but I can move that into checking with a few clicks of the mouse. I guess the credit union account would be a good place. We don't have an ATM or anything for that account so if I put money in there, I have to physically go to the credit union to get it back out.

It gives me butterflies to think about! Us? Saving? Get outa here!

Saturday, May 17, 2008

Things are better than I thought

Boy, it really pays to sit down with paper and pencil sometimes. I did it back in February and created our budget and it was really helpful. I think I planned too far in advance though. I'm thinking about trying PearBudget. Here's the thing about that, though: a spreadsheet is a spreadsheet is a spreadsheet, right? I've spent a lot of time tweaking mine on Excel and I'm pretty happy with its funcionality- it's my own fuctionality that is a problem!

But anyway, the main point is that we do bring in enough money to cover our needs and pay $700 each month towards our debt. The trick, of course, is sticking to the budget. This is the hardest part. All that discipline. It's hard enough for me, but I think it's twice as hard for my husband. One of the best things we've done is to open an additional bank account that is joint, but only he uses. I give him an allowance that he deposits into that account and he can use it for what he wants. It's not much, but it keeps me from agonizing over what I see as frivolous purchases- beer and tobacco. He's definitely the "nickel and dimer" in our family, so it's great to just hand him a chunk every payday and let him deal with his own bookkeeping.

That being said however, I am wondering how it is we do end up in such financial holes. I think it's because of not having anything set aside for big expenses. If I budget a set amount for clothing and we don't buy clothing, it burns a hole until we spend it on something stupid- usually lunch and beers or something. You know- "Well, we have $50 in checking, we could just buy lunch." The problem with that is when the kids outgrow their jeans, we have no money to replace them, so we charge it or when we are maxed out, like now, we get a cash advance. That's a cycle from hell, for sure!

The major flaw in our budget is there is no room for savings. I know the experts say pay savings first, and I guess we do, in a way. Our IRA contributions come out of our paychecks. But we have no emergency fund. That is where I hope to use snowflakes. I do have a little etsy shop that I need to work to keep stocked, I am searching for a second job, I am thinking about marketing some of my skills in my community (calligraphy, sewing) and I've started doing surveys online. Once our debt (currently $20,000) gets paid down a bit, I will build our savings more aggressively. Oh, also, the $700 monthly that I have budgeted for debt reduction is just barely above the minimum payments. That's how tight our budget is! Otherwise, I would pay slightly less for debt reduction and pay some to savings.

So, in a nutshell:
  1. We must spend within our budget on each category
  2. We must use our snowball towards our debt
  3. We must gather snowflakes toward our savings for now

Okay, it's not good, but it's workable and that's the main thing. My biggest fear is that we had reached the point of not being able to meet our obligations. We can, but we cannot be lax about our spending AT ALL!

Thursday, May 15, 2008

Taking Stock

That seems like a good first step. I am not completely ignorant about where our money goes. I've kept better accounting in the last 17 months than I ever had before, but we still end up short. A lot. Obviously, the more we extend ourselves with credit, the shorter we come up with cash. All it takes is one cut in income or one unexpected expense to put us right over the edge. I would say that we are over the edge. I think we are at the point where we are going to be unable to meet all our monthly obligations.

I am actively seeking a second job. So far I've applied at eleven retail stores and I have only one interview. I find that so shocking because all of my job experience until the last seven years has been in retail. For seven years I've been in clerical work. How can twenty years of retail not have any value? I suppose it's a combination of a couple of things. First, the stores may truly not be hiring, but I have to say, it used to be that someONE was always hiring. Second, I'm afraid that my current wage may be frightening some potential employers. I need to make it clear that I am not looking to match my current wage! Minimum wage would be fine at this point. Also, I noticed that every retail establishment asks questions about my history as a welfare recipient. Is it a handicap that I don't have a history? Are they trying to hire welfare recipients so they can get tax credits? I need to research that.

Today is payday. I need to sit down with my spreadsheets and my budget and see where I am at. I will probably log in later to give an accounting.

Wednesday, May 14, 2008

Me: no dollars and no sense

So, here is the beginning of a new blog. This is a blog about my financial life. I don't love the idea of having two blogs, but I don't want to bore the readers of Tender Arts! They have been trained over the last three years to expect dollies and crafts and happier life moments. My financial state could scare them away for good!

I intend to be completely open about our state of affairs in the hope that seeing my situation in black and white will help me to stay on course with my budgeting efforts. I do find this embarrassing though, so we will see if my pride will let me "get naked" in public! Why attempt this? Why not write in a journal or keep a private file on my computer? Because I think there is strength in numbers. I have stumbled onto this site and I like what all these other bloggers are doing- sharing their struggles and triumphs as a means to teach and encourage themselves and their readers.

I work in a land surveyor's office and during the housing boom that is now sadly over, I saw a lot of people come and go that were splitting their lots in order to make a wad of cash. Like every endeavor, there are frugal ways to do it and extravagant ways to do it. I developed a catch phrase in our office when describing the foolish people that went about their split in the most expensive ways possible-I like to say that they have "more dollars than sense".

Well, I guess my husband and I must be that way too because even though we've had an amply adequate income, we now find ourselves maxed out on credit card debt, upside down on our mortgage and struggling to make our minimum payments. So, my goals with this blog are to
  1. learn effective ways to manage our money,
  2. share what I am learning,
  3. record my efforts to pay off our debts and build our savings.