The Weight of Money

I’m sure I’ve mentioned that I work from home running my own sewing business. The past 6 months have brought about a lot of new avenues for customers and items and I’ve crossed over from being a purely service based business (sewing up what people bring me) to a sewing and manufacturing business. I now have products that I sell locally to individuals and stores. This is a great plus, but it brings more complication to our finances.

Where you’re running a service only business, there isn’t really any outlay of cash up front. So far, I’ve only needed to keep myself stocked with thread and needles to meet my customers needs. Now that I’ve moved into making my own products, I’m constantly searching out the best prices on materials ad need to stock up on raw materials. That makes a month like February somewhat painful because I’ve no money set aside for these purchases and am mostly going on (positive) speculation that I’ll be able to sell everything I buy.

So far, I’ve already placed 4 orders for materials and I doubt that will be slowing down anytime soon. I have a large, upcoming customer order that is proving difficult to fill because it is difficult to get the materials that I need. I wish it were as easy as being able to walk down to the local fabric store and they’d have what I need in stock. But, I’m looking at a lot of specialty items that go for too much retail and too slow through wholesale or co-op orders. It’s frustrating trying to keep expenses down but still have the materials I need in the time that I need them.

On the other hand, it is also very nice to just take a few leaps of faith that turn out positive. I recently purchased enough material to make several bags (when I only really needed to make one) and have already sold them all. I like knowing that within a week of purchasing materials, the cost is already covered a few times over. This will certainly help me out as I continue to get more and more materials ordered, but won’t be quite enough to cover my entire spending for this month. Hopefully things will come in sooner than expected and I can fill the large customer order that should put me back in black, financially speaking; till then, I’ll be seeing a lot of red for a while.

It’s been a while since I talked about my efforts to improve my credit score, but I just wanted to chime in with a quick cheer that my score is now in the 700s! I’m so excited to see that, even if I know it’s a variable adjustment due to the fact that we just did a balance transfer over to another card. So, this my be a temporary jump into the 700s, but even if it is, I’m still happy.

Perhaps in 2.5 years* we’ll be in a position to get a better interest rate on our house because of improvements to my credit score — and hopefully to the partner’s as well if out debt management improves.

* If we refinance before that point, we’ll get dinged with a charge equal to 3% of our loan — basically, a clause that prohibits refinancing for a certain period of time. We could have skipped that clause and added almost a full percentage point to our interest rate - so we took it.

Oh Boy, January was not a pretty month. We started the month with deficit of $3,100, which is pretty much what we spend monthly. I was able to pull in some extra income here and there, but not enough to cover us. Instead, we threw some cash from savings in the account just as a buffer while we work on adjusting for the deficit (it has to be repaid, at some point soon). We knew we were hurting, but did that help us get ahead this month? Not at all.

Income: Since we budget using the previous month’s income and factor in the previous month’s deficit/surplus — we only had $150 available for January. Throwing in some savings as a buffer helped a little bit, but we still ended up $3,000 short for February (add another $2,000 to that for paying back savings). There were a couple expenses in January that made this a painful month — including two trips that the partner and I took separately even though we knew we couldn’t afford it (but, they are also trips that we take annually, so we should have planned better ahead of time).

Unexpected January Expenses:
- Car Repair: $790 bought me a new clutch and new front rotors and breaks.
- Travel: $170 for a women’s retreat I needed to attend
- Medical: $1,050 in orthodontic care (this was planned, but the reimbursement didn’t come through till Feb.)
- Gasoline: $500, about $200 more than last month, $100 more than usual.
- Personal Spending: $70, this was about $50 more than usual, but the partner also traveled in January.

This extra spending added about $2,300 more than our usual spending. On a month where we are still in the hole $3,000, that really hurts.

Sigh, I am still not seeing a light at the end of the tunnel right now. January was a 3 paycheck month, but still leaves February with less than our mortgage payment available to spend. I’m pulling in as much extra work as I can get, but it won’t cover us. The FSA will help some, but not enough. This is getting pretty frustrating because I’m out of places to cut corners. Basically, the only real solution I see is for the partner to liquidate another large machine, but I doubt that will happen (nor am I actually going to suggest that to him). I don’t think I can make up this shortfall because we’re counting pennies as it is.

Perhaps, it’s time to take a better look at our spending and see if we’re not being as honest with ourselves as we should be. February should be better because neither of us are taking any trips (which we knew we couldn’t afford, but took anyways), but I don’t think it’s going to be enough to get us by, much less cover the $1,500 we now owe our savings account (the money was transferred to cover the car repairs, a reasonable emergency fund use, but not to fix the problem - instead, it’s just giving our account a little more buffer since it’s much lower than it’s been for a year or so).

Winter brings dreams of spring and for some people, dreams of gardens and glossy seed catalogs. We jumped into this a little later than some, as we weren’t yet on the automatically mailing lists for any seed companies yet. But, we did some searching and decided one two companies to work with, at least until I read Get Rich Slowly’s recent gardening post. There a commenter left a tip that saved us $68!

For the non-gardening types, when you order a packet of seeds, you usually get more than you’ll use in a year or even three years. Luckily, if stored properly, seeds will last. But for folk just getting started, initial seed purchases can really add up.

For example, we spent a total of $47.20 on 32 packets of seeds. We purchased 22 super-tiny-packets from artisticgardens.com for a total of $11.20 and 10 packets from another seed catalog for $36.00. The packets from artisticgardens.com (also known as Le Jardin du Gourmet) will be enough for all of this years’ planting and most of next years as well. The packets from the other seed catalog will probably last us for 2-5 years.

While the cost per seed is slightly higher in the smaller packets, the savings for our first year of serious gardening justifies the cost. Also, this lets us try out some items to see if we like them or not. We may find that we don’t care for one of the plants we selected — I’d rather find that out with a $0.50 packet of seeds versus a $3.60 one. If we’d gone with our original plan, we would have spent another $68 in seeds. Thanks artisticgardens.comBekah for the tip!

Also, GRS discussed how they also pool resources with other gardeners to split the cost of seed orders. I’m hoping to take advantage of that idea next year when I have time for a little more advanced planning. However, looking at our gardening calendar this past week showed us that we needed to get moving on starting some plants asap and we just sat down and got it done.

Now bring on spring!

Just got a check in the mail reminding me how much I like the health care FSA. My only complaint is that the partner’s company has such a low cap on it ($1,500). But, I love knowing that we just processed a claim for 70% of our annual allocation when only 10% of our annual allocation has actually been collected so far. It’s nice that I don’t have to wait until the funds have actually accrued to make use of them.

When we set up the daughter’s second round of orthodontic care, we established a monthly payment plan for the next two years. I really didn’t want to add another $150 to our monthly budget, so I made an extra payment in January so that I could reduce the monthly payments to just $50 for the year and make an immediate claim against our FSA. Of course, this totally confused their billing department and it took way more explaining and re-explaining (ie. “you’ll be getting the same amount this year, just one large payment in January will make the monthly payments smaller”, rinse, repeat) than it should have. I expect our medical bills will exceed this years allocation, so we’re holding off until the middle of the year when we expect to see another decent size medical bill to use the remaining funds.

We also finally put in a claim for last years FSA as well, which we had limited to only several hundred since we weren’t sure we would use the full amount. I like that the claim was simple because we had one payment larger than our 2007 allocation and I didn’t need to add up all the smaller copays and fees. I wish I could say that this chunk of change will help us in our current fight to get back on top of a $3,000 deficit. While the orthodontic treatment was part of that overage in December, the reimbursement won’t go very far in correct the imbalance.