The Weight of Money

There isn’t anything to talk about when there isn’t any money in the account. For the first time in 2 years, our personal account will have a balance less than $1,000 - maybe even less than $400 if I drag my feet on an account transfer. This freaks me out, to me, it’s the equivalent of being flat out broke. Right now, I’m worried about filling the gas tank and going to the grocery store. Sigh.

One-plus year of not making quite enough has finally caught up with us. We’ve been able to skate by, somehow, each month but that has run out. I need to figure out what I’m going to do about it, but I’m at a loss because I’m out of options. I was hoping for a raise to come in last month and it never did. Last week, we finally got paperwork about a raise (I don’t think it’s going to be back dated, or is that call pro-rated, for a July 1 start as it has in previous years) but it wasn’t anything to be comfortable with. So, what was going to be a slight boost, didn’t come when we really needed it, and as it is, we’re probably only close to breaking even now - which doesn’t make up for the fact that, based on the way our budgeting is supposed to work, our account is facing a $4,000 deficit.

Sigh - I’d love to post more, but lately, it’s been too frustrating to face the numbers - even for me, someone who usually finds comfort in the reality that the only way to solve the problem is to truly understand it. I understand the problem, but don’t see any solutions on the horizon, other than starting busting my butt 24/7 (something thats not remotely possible with a newborn in the house). I need to do something though… maybe posting about it will help get me motivated.

Every time I run the budget numbers, I have to face the reality that I’m making poor choices. You’d think a month or two of doing this would prompt me to change habits, but it hasn’t. It’s all about food, actually, and eating out far more than I should. 75% of our dining out budget it my fault and its often just the daughter and I. We’re talking about $300/month that could be saved just by staying home and eating at home — we could really use an extra $300/month.

I need to do some serious personal reflection to figure out where this constant eating out obsession is coming from. It is basically a daily occurrence, usually between the hours from noon - 4:00 p.m. This month it could be contributed to the fact that a $50/month for groceries is a pathetic attempt at saving money — if I don’t feel like there is any food in the house, I go out to eat. The most likely reason is that I’ve been moderately depressed the past few months and haven’t been taking care of kitchen duties - like keeping the kitchen clean enough to cook in and grocery shopping.

Its time to get food spending back on track and also own up to the fact that I’m really hurting our family’s finances. Steps to fix this, off the top of my head, include:

1. Tell the partner about my eating-out spending — he knows that I eat out a lot, though I still try to obscure the fact and will give vauge answers about whether we’ve eaten or not. Also, because I manage the budget numbers, he usually doesn’t really see just how much I’ve spent eating out or doesn’t realize how it impacts our budget. This isn’t a good pattern to be in and it certainly doesn’t lend to a trusting, honest relationship that we try to maintain. And it adds to the guilt I feel about eating out in the first place.

2. Make a food plan for the week — I do this about once every other month. It really helps us keep spending in check and the house stocked with food for a week or two. However, I always dread this task, even though it can be so simple. So each week, by grocery shopping day, I must make a plan for that week. If I don’t have one, I need to just pick a week from my Saving Dinner cookbook and use that.

3. Make a grocery list and go shopping — This may sound silly, but the grocery store is the most stressful place in the world to me. For many years I avoided it altogether (difficult to do as a single parent). The past several years, I’ve mostly gotten over it, but I still drag my feet when it comes time to go shopping. Also, when were short on funds, it’s very difficult for me to go and spend money on food when I feel like we don’t really have it. Of course, not doing that just means I’ll send twice as much, or more, eating out when the cupboards are bare.

4. Make sure there are easy lunch and snack items available - I’m home all day, most days, so I need to be sure that I don’t just buy food for dinner. If I can’t instantly find lunch in the kitchen, I’ll run out and get something. The majority of my spending is on lunch or pre-dinner meals (around 3pm).

5. Find a way to hold myself accountable — I’m still not sure about how to do this. Perhaps I’ll just post a weekly report on how often we’ve eaten out (including how much was spent) and whether is was a family meal or just me avoiding the kitchen.

6. Keep snacks in the car at all times — I just bought several snack items that I can keep in my car for the moments that I’m suddenly starving. Rarely are my trips away from the house that a snack won’t tide me over until we get home. The partner has always been good at this and it’s time I follow his lead.

I expect to see positive progress in April that will encourage me to make even more progress in the following months. I also expect to see a slight increase in our grocery spending as I’ll probably buy extra convenience foods that will make eating at home easier until it’s a settled pattern.

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).

Last year started out nice and slow and ramped up to an almost unimaginable pace. There are so many things that I was going to work towards that got pushed aside by minor emergencies and new obligations striving for my attention. Before I get started planning for 2008, I wanted to see just how we finished out the year. After some major procrastination, I finally closed out our November and December budgets and the picture ain’t pretty - more on that in a bit. First, lets look at our 2007 goals:

• Goal: Increase Savings for Home Purchase to $20,000 by July 2007. Meeting this goal was my biggest financial-ego boost for the year. We dropped about $8,000 - $9,000 on all the costs with buying and closing on the house and we still had another $10,000 sitting in savings after the fact. This was a major stretch for us and I’m proud that we made it happen.
• Goal: Reduce Credit Card Debt to $10,000 by December 2007. We’re about $5,000 short of this goal for the year. $2,000 of this total is my fault since I replaced my laptop when it died on credit instead of pulling from savings. Also, we’ve taken a 6-9 month break on beating back debt as we do what we can to keep our heads above water.
• Goal: Buy a house in July 2007 Success! We are the proud home owners of an old (137 years) farm house with just an acre of property. It was less house and land than we wanted at a pricer higher than we really wanted to pay. Despite those things, it is working out and we managed to stay within a reasonable commuting distance for the partner. The majority of the houses we were considering were much further out and now, having lived with the commute, we are very appreciative of the house we have.
• Goal: Increase retirement investments to 15% of income by December 2007. I’m a little embarrassed to say that I’m not sure where we are at with this goal. I think that the partner is still contributing only 6% of his income to retirement. I expanded my home business to be my only income source but did not put anything into an individual retirement account. This is something we need to get a handle on for 2008.
• Goal: Increase Passive Income to $200/month. We’ve managed to accumulate about $50-$75/month in passive income. I don’t see this increasing anytime soon.

Overall, I think we did a pretty good job in 2007. The last 6 months have been a serious stretch as we started to resonate with those crying “house poor” from time to time. But, even though our budget has been hit pretty hard with the new housing costs, we’re still well fed and clothed and not standing on a corner with a tin cup in hand.

Here are some numbers on our total spending for 2007:

• Credit Card Debt: $4,951 or 9.3% of spending
• Student Loan Debt: $3,805 or 5.7% of spending
• Utilities: $3,829 or 7.1% of spending
• Housing: $20,803 or 38.8% of spending
• Groceries: $4,098 or 7.7% of spending
• Eating Out: $2,933 or 5.5% of spending
• Transportation*: $6,401 or 11.9% of spending

*Transportation includes gasoline (about 8% of total spending), insurance, repairs, and fees.

The above numbers only reflect spending from our personal account. Items that are automatically deducted from income, such as retirement and health insurance, are not included.

Reviewing last years goals’ progress and our annual spending (especially the percentages) prepares accurate and reasonable numbers for spending and savings for 2008. As I emerge from several months of serious financial neglect, I have a lot of work ahead of me to get us back on track to be in a position to pursue goals of any type. As I mentioned, November and December were ugly months, fiscally speaking. I chose to continue spending without considering the impact it would have on our budget, and didn’t follow through with the partner to mange his spending as well. As it turns out, we closed out the year $3,000 short - which is almost an entire month’s worth of bills and spending. I’m frantically working to correct this and get our numbers in order for 2008.

2007 is basically over in my book, time keeps rushing past and there is no slowing down in sight. As I start thinking about 2008, I’m starting to panic — just a little. I feel like we’re teetering on some major financial obstacles that I don’t think we’ll be able to skirt around as we have this year. Basically, there are five major expenses simmering under the surface and 2008 looks like the boiling point. As I reflect on the goals that did or did not happen this year, I need to get a very thorough action plan in place for what we are going to do about next year. Time to get off the procrastination wagon.

• Buy a family/commuting car. We need a vehicle that is better suited for commuting than the small SUV the partner is currently driving or my stick shift vehicle. The mpg on the SUV isn’t the greatest, but the issue is mostly that it’s falling apart, slowly and surely — I’m pretty sure I said this last year too and the new commute is hastening it’s demise. Also, it’s a two door family car and we’re finding that just isn’t enough any more. So, we need a new (to us), four-door, family/commuting car. The reason my car doesn’t fit this bill is that its two-doors, manual transmission, and has no a/c. The manual transmission doesn’t lend itself to low-stress, stop and go commute driving, and while the lack of a/c has been a standard in all of our vehicles (and our home), the partner has reached the end of the line for putting up with that.
• Buy a truck. We both need new vehicles (partially explained above and left somewhat vague intentionally) and the truck is to replace my car. We need to be able to haul stuff and my car can’t do it and the SUV is dying. We do have a utility van, but we often need to haul stuff and people and the van only seats two. Now, it may end up being another SUV type vehicle, even though I don’t care for those very much, as long as it has a hitch and the ability to pull a trailer. Whatever it is, it’ll be my new get-around-town vehicle, as the new car should be more suitable for commuting. Despite my long-stated reluctance to get a larger vehicle, I’m starting to accept this idea; though I’ll still mourn the lost off my little compact car.
• Build a shop. Even though this big-ticket item fell off my fall agenda, the need for it hasn’t decreased. It’s not an optional choice, though the need for two new vehicles makes it a financially more painful one. Now, I can ramble on about the differences between needs and want, but the end result is that a shop is a must have and another year without one is not acceptable. Hopefully the partner and I will find time to evaluate our outdoor space a bit more and figure out what the bare minimum is for the initial structure (with plans to build on more as finances allow). We already have a few required elements that are already having a pretty serious impact on the price — as in the need for a two story shop (not just one with some attic space) — and we need to figure out how to get the minimum erected and hope to do more on our own as time and resources allow.
• Orthodontia for the daughter. I’ve been putting this off for the past two months, but we’ll need to get started. I’ve finally decided to continue with our current providers, versus finding someone new, and just need to bite the bullet and sign the agreement to part with several thousand dollars over the next year or so. Maybe we’ll be able to drag it out a bit longer than usual to make it a little more manageable.
• Medical Expenses. Looks like there are some upcoming medical expenses that we probably won’t be able to avoid next year. The non-insured amounts are still somewhat vague, but it’ll still be significant compared to the less than $100 we spent on medical expenses this year.

Oh boy, looks like I’ve got some work cut out for me in making these things happen. Winning the lottery looks more and more appealing every day as I struggle to figure out how to make these things happen. Luckily, my business is expanding rapidly at the moment and next year looks even more promising for new avenues of income.

Quick review of my progress on last month’s goals:

1. enter spending/earnings into budget weekly (not monthly) - Failed
2. develop savings plan for workshop by 09/30/07 - Failed
3. list at least 2 items on ebay (no listing fees this month, I think) - Failed
4. spend no more than $150 eating out - Success, we spent just under $150.00
5. setup monthly family budget meetings to just discuss where we are at - I discussed this idea with the family, but we’ve not started it yet.
6. update and reassess our quarterly progress towards our 2007 goals. - Complete

It looks like I managed a near 50% completion rate, if I consider that talking about family budget meetings as a success. I’m still falling behind on entering budget numbers and it’s hurting us this month since we’re looking at a $2,000 shortage (thanks to being over budget $1,000 last and short $1,000 this month). I gotta go work some number magic and figure out how we’re going to make it work.

Looks like house repairs will get put on hold for a while (thank goodness) and we’ll only manage repairs on one vehicle if needed. We got hit pretty hard last month with repairs on two vehicles at once. Part of me thinks that it what the emergency fund is for, but I still don’t like using it.

Earlier this year, I established goals for 2007 to help the partner and I work together toward something and help us stretch a little to see what is possible.

We completed our first quarter review in march, totally missed the second quarter review, and are now summing up our third quarter progress.

Goal: Increase Savings for Home Purchase to $20,000 by July 2007. 2007 Plan of action - increase current savings from $300/month to $700/month - this comes at the cost of scaling back our debt reduction. The additional $500/month will come from ebay sales.

Progress: I think we met this goal in terms of sheer numbers, but not through savings deposits of $1,200 a month. The partner did contribute $3,000 from his personal accounts (tool and ebay sales) that would cover the $500/month ebay sales. Also, as the house purcahse got closer, many housing costs arrived before clothing (inspections, surveys, etc) and we just paid for those out of budget instead of out of savings.

Overall, I’d say that we met this goal!

Goal: Reduce Credit Card Debt to $10,000 by December 2007. Plan of action - this will be worked out in quarterly steps with a credit card debt load of $13,000 in March, $12,000 in June, $11,000 in September, and $10,000 in December.

Progress: Our current debt is $16,000, and not on schedule. We added about $3,000 in purchases since March and have not made real progress towards reducing debt as we juggle housing costs/repairs. We should re-focus on this goal throughout the end of the year and perhaps set a minimum goal of making sure our year does not end with more credit card debt than we started with.

Goal: Buy a house in July 2007: The house should have a minimum of 5 acres of land, a house sound enough to live in, preexisting outbuildings, and no restrictions on the construction of structures or the maintenance of livestock.

Progress: We’ve purchased a house with less than one acre of land (as alluded to in march). It is indeed sound enough to live in, has two outbuilding, though too small to do anything more than store a few items, and I’ll be calling today to find out about any possible building restrictions we may have (I expect there to be none).

Goal: Increase retirement investments to 15% of income by December 2007. Plan of action – increase to 5% in April, 10% in August, 15% in December.

Progress: We’ve not made any more progress on this and need to revisit this issue. The partner’s contributions are still at 6%, I believe. And mine are nonexisitant since I no longer work outside the home.

Goal: Increase Passive Income to $200/month. Plan of action - expand internet revenue and investments. Also, build passive income into the purchase of the new home in leasing out property or space.

Progress: In March I re-clarified this to include $200/month of alternative income. I’m am surpassing this goal by nearly 100% through sewing and other small jobs.

Overall: We’re doing good, especially since I didn’t give enough advanced financial consideration into the cost of repairs we’d incur with the new house. We knew these expenses would happen, but I didn’t factor them into our annual goals and our progress toward debt reduction and retirement savings goals have been affected by this.

The habit of setting monthly goals has fallen aside over the summer. Since it helped me stay on track and provided motivation to make improvements (versus just keeping my head above water), I’m going to start up again. September’s are pretty basic to help us get back on track:

1. enter spending/earnings into budget weekly (not monthly)
2. develop savings plan for workshop by 09/30/07
3. list at least 2 items on ebay (no listing fees this month, I think)
4. spend no more than $150 eating out
5. setup monthly family budget meetings to just discuss where we are at
6. update and reassess our quarterly progress towards our 2007 goals.

These six goals seem manageable, hopefully a successful month will help me stretch a little more for next month’s goals.

Since the move into our new house, finding time to manage budget items has been difficult. It’s not so much the lack of time, but a lack of motivation and prioritization. When things are not going well, we’re often reluctant to face and deal with those problems. Hiding from problems and letting them slide is so much easier than facing reality and taking action to solve them. Unfortunately, most problems escalate and what would have been solved by just a little attention and dedication in the beginning becomes a giant ordeal when left alone to fester for too long. Luckily, I don’t think we’ve reached that point yet.

Back in June, I discussed quitting my job, a difficult and unpopular idea for most readers. The idea of signing on a house on day and leaving your job the next isn’t all that logical. But, for mostly emotional health reasons, I made that leap with personal faith that I’d figure out how to make it work. Now it’s time to face the reality of how I’m making it work, or not.

First, I’ll be honest and upfront - I have not tried to solve the jobless situation and the more it worries me, the more I stick my head in the sand and ignore it. Obviously, this isn’t the solution to the financial stress this decision has cause. Hopefully looking at the number will light a new fire to take care of things.

Because of of our budgeting methods (YNAB), we didn’t feel the loss of income until August. We had a loss of almost $2,000/month in income, leaving us with an earned income almost $3,000 - a pretty serious reduction of funds. The move adjusted certain expenses as well: Housing increased $300/month, Gasoline: increased $250/month, Utilities: decreased $220/month, personal spending has been mostly eliminated, everything else remained fairly constant.

Even though the numbers are pushing back against this decision, we’ve still been able to make ends meet. So far, for the year, here is how we’ve done staying within budget:

• Jan: under $90.28
• Feb: over $812.23
• Mar: over $355.90
• Apr: over $507.50
• May: over $646.96
• Jun: over $533.29
• Jul: over $310.71
• Aug: over $73.95

This actually shows that we’ve been improving in the past two months of staying within budget. It’s important to note that because we do zero-balance budgeting, anything over budget means we spent more than we had to spend. Because we spend last month’s income during the current month, there is always extra in the bank to cover these overages (though it is a bad habit). Of course, that means that we start out the next month short, a snowball effect of overages that takes a lot of work to correct.

We’ve been doing account transfers, mostly from the partner’s personal account to our joint account to add more available funds. These are mostly ebay funds that we’re just accumulating in his paypal account. I’m very happy to see that money enter the budget because it was something I had tried to count on earlier this year.

My personal business expenses took quite a chunk out of August’s budget, so much so that I decided to pull out cash from my personal savings to cover for it. At times it seems like a cash shuffling game, but it is helping us stay on track even without my previous income. The partner also received a raise in July which has helped ease the loss of my income.

Some issues we’re still facing: limited cash for emergencies, constant repairs being justified, and a honest need to get a workshop built asap, The workshop would will kill our cash reserves, something we’re not comfortable doing.

Other numbers for us to keep in mind:

Joint Savings: $6,500
Personal Savings: $5,000
Credit Card Debt: $16,000 (arg, it went up $3,000 in July)
Child Support Tax Intercept: $4,000 (this probably won’t be released until Oct/Nov)

Honestly, I still need to get a job. I’ve been offered one and have tried, unsuccessfully, to turn it down so far. However, seeing how hard it will be for us to take care of debt and house repairs - I think I need to rethink that decision. Also, I’ve been making more through my business, but mostly it’s just enough to cover all of our farmers/butcher market needs. I either need to get serious about making this work or find a job — right now, finding a job seems like a better option except that I’ve moved to the land of low-wage workers. I discussed getting a job with the partner and putting all but $200/month toward debt reduction. Perhaps, instead, we could deplete savings to eliminate debt and then use income from a job to rebuild savings. Options, options, options.

The Weight of Money is approaching it’s one year anniversary. In preparation, I’m gathering our net worth data and look to compare where we stood a year ago to today. The timing is great because I’m currently sending copies of all our accounts and statements to the mortgage broker to verify income and cash on hand, so no additional scrounging for numbers will be needed.

I’m please to say that we have a total of $29,800 in cash assets, $6,900 of which in in our retirement accounts, leaving $22,900 in cash/savings. This really cheers me up since I’ve been feeling stressed in the money department. We hit a money snag in our relationship recently in discussing cash available for home purchase and this help relieves some of the tension, on my part at least. Hopefully I can get in more detail later this week (the post is half written, at least).

Between now and the end of May, I’m currently juggling multiple projects varying from musical rehearsal, finishing 3-D sculptures for an upcoming art show, nonprofit planning, professional sewing, house hunting, and an ever increasing workload. Needless to say, it’s been a challenge keeping up with all of these items and our finances.

I’ve yet to compile April’s budget and haven’t entered spending for March. It is moments like these that I love living on last month’s income. I don’t have to stress too much because I know that there is money in the bank, even if I haven’t had a chance to budget for it yet. If we were counting on each paycheck, it’d be a much more stressful position.