The Weight of Money

This weekend, the partner and I brainstormed a bit to figure out how to work the numbers so that we can stay afloat for a while longer. So far the current plan is to reduce fixed expenses as much as possible, reduce variable expenses as much as possible, and stop eating (oh wait, that’s not a serious idea.. but one we considered just the same).

We’re planing on bringing in $500+ less per month than we were before. I worked up the number for all of our fixed expenses that must be paid - mortgage, debt payments, utilities, insurance, etc — and that alone came out to more than what will be coming in. That didn’t take into consideration anything like food or gasoline. So, I think that was what the partner needed to see; finally my testament to the severity of our current situation finally made a little more sense. So one step is that we’re trimming where we can.

Yesterday I made a call.. in fact, I made a lot of calls.

I called our internet company because our rate had gone from 19.99/month to 39.99/month. I did my best to argue that down but didn’t get anywhere. But I did get the concession that I could call back in 90 days to re-request the lower rate; originally the woman had said I had to wait 6 months to call. So, that date is on my calendar to call back. Savings: $0/month

I call my home phone company. Their rate had been creeping up and it was already on my to-do list, now I had motivation to do it. This was the longest call of the day, probably taking about an hour to complete. While I was on hold, twice I forgot who it was I was calling. But I argued a bit and got the rate reduced along with some extra I really didn’t care about. Savings: $6/month

Balance Transfer. I don’t care much for credit card games, but I needed to get our monthly debt payments down a little bit. I actually called all four of our companies. The company with the best rate (5%) never spams us with offers but I called to see what they could do. They had the same offer as everyone else, but without a cap on the balance transfer fee — next call! Ended up transferring the balance from our highest interest rate card (17%) to our second lowest card (7%). This is a temporary band aid, it doesn’t really help us get above ground, as it just lets us continue treading water. But, it’s what we’re going to do for now. Savings: $300/month

We’ll also emptying our local storage shed and moving all of those items to Bowie. Savings: $145/month

We’d already canceled our plans to attend an annual camping event that is happening this weekend. We also nixed the idea of driving the daughter down to a soccer tournament 5 hours away as well. Luckily, we did find someone else for her to go with and my mom volunteered to send money with her — otherwise, the daughter would still be staying home as the cost would be too much even without the hotel stays.

When I looked at our numbers last month, I realized how much I’d been wasting on eating out. I’m please to say that we have basically eliminated that expense - having spent less than $20 eating out in the past 3 weeks - once a small special occasion funded by bake cookie sales and the other when we were out all day from 10am - 10pm and failed to plan ahead to bring food with. We’re getting much better at making sure to bring food with us while we are out.

Our dinners are getting much less elaborate and so far that has the support of everyone in the household. Eggs are a pretty big part of our diet now thanks to our 9 laying hens. We’re also doing more meatless meals and bean dishes. But, this also means that the quality of our meals is going down a little, so I’m trying to figure out how to still eat as cheaply as possible while still eating healthy.

To increase income, the partner plans to sell off more of his ’stuff’ - this should work out to about $500/month in income for the next few months. And I’ll get more help from him for working on business stuff which should also bring in about $500/month in income as well. And the partner is working on his resume and looking for other employment options. A 15% pay cut hurts but losing his job will hurt even more and it seems obvious that is a probability on the horizon.

Also, clearing out debt is topping the priority list as well. We realize that we may end up using credit in the near future if pushed to it. But we also realize that debt has to be eliminated for us to make any real financial progress in the future.

How much of a hardship would instantly losing 15% of your income pose? How would you react if you were already struggling to make ends meet and had finally worked out a way to barely squeak by, how would this news affect you then?

I’m not really sure what my answers are because I’m still in shock. Come Monday, the partner’s company is striking 15% off everyone’s salary as yet another last-ditch effort to help them survive their financial crisis. The good news is supposed to be that we he still has a job, but at the moment, that isn’t cheering me up every much. 15% is a substantial chunk of our monthly budget that was already stretched way too thin. Also, I’d finally worked out a plan that trimmed off all the fat and kept us just within our means, and that was by cutting out everything I could think to cut. Now what?

We had a brief family meeting tonight about it and I’m really worried. I’m worried because I feel like I’m the only one that really sees what a giant issue this is. Tomorrow, the partner and I will sit down with the numbers because he says he needs to see them to understand the severity of the situation. The severity is, that a 15% reduction in income isn’t wiping out ‘luxuries’ (those were already wiped out), it wipes out gas money, grocery money, the electric bill, the heating bill. This isn’t a matter of eating out less, sadly.

Okay, sigh, breath. This will work out, somehow, this will work out. I need to go sew because I need my sewing business to not only bring in no only my conservative estimates to help us get by, but now it also needs to cover this short fall we’re facing too.

Sometimes it’s easy to get caught up in the things you want. Sometimes, your brain plays tricks and makes you think that getting what you want is a good idea even when it isn’t — especially when it comes down to money. We’ve made and need to make several purchases for our house and garden this month. Thinking about our current purchasing needs, the partner started wondering if he could get a good deal on a few items purchased in bulk - specifically some EMT. We need some for the vertical garden support, but suddenly he was asking me about how many poles we’d need if we finally got a shade structure we’d been considering for a couple years.

The shade structure idea wasn’t an out-of-the-blue thought. We’ve been discussing getting a good structure for several years and somehow manage to talk ourselves out of it each time. We have a big party coming up in a couple weeks where we could certainly use a nice sized structure - but is that reason enough to get one? He almost had me convinced and those lovely little “Buy It Now” buttons on ebay can be awfully tempting sometimes. But, before clicking that button, my mind started to wonder about some of the details.

I’m a bargain hunter - I hate to pay extra for anything I think I can get for less somewhere else. Considering shipping costs, I’ve began wondering if we couldn’t get some of the structure elements cheaper, closer to home. This threw a kink in the whirlwind of activity - not so much because I was questioning the savings, but because I was taking longer look at the situation. What started out as a conversation about getting a bulk discount on EMT had turned into definite plans to buy the kit and the EMT without even knowing if a discount was possible. Having the shade structure for the party would be great, but having the cash to pay for everything would be even better and thats where the problem comes in.

I can justify needed expenses that are necessary. We have to get vertical supports up for the crops (now!) and I don’t mind forking over cash to make that happen. However, we don’t *need* a new shade structure for the party - no matter how nice it’d be to have. Also, we’re currently looking at options for buying another vehicle - one with 4-doors and a/c - and now is not the time for buying frivolous items. Once I started adding up the shelter details, all I could see was that adding up to the 6-month or 12-month increase in auto insurance we’ll be paying for a 4th vehicle.

It’s easy to get pulled along by ideas, but sometimes you still need to hit the breaks and really look at the situation. We may end up with a shade shelter, but it’ll get a lot more consideration than the 2 hours of talk we gave it last night. Also, before we make that decision, we’ll need to finally decide if we’re going to get another older car for the cash we can spare, or it we’re going to add a car payment to our already tight budget. I’m already leaning toward the first option, but am not sure the partner is on board with that idea just yet so we gotta talk it out a bit more first.

I get very uppity about money and bills. Sometimes I wonder if I spend too much time fussing over some of these little details. But when someone is trying to come between me and my money, I take notice and action. We’ve been going through lots of homeowner stress the past two weeks and have dropped lot of money on repair and treatment products in the mean time. I don’t really mind the money spent since it’s been to fix things that needed fixed, but it makes me much less tolerant of any unexpected bills that show up at the same time.

Our house has a 30+ year old boiler that supplies our heat and hot water. On Saturday or Sunday last week, we suddenly had no hot water. This isn’t really a big deal since the partner is pretty good at fixing things; the complicated part is figuring out what is wrong. But, it threw a kink in our regularly schedule programming. At this time, we also noticed we were finally almost out of fuel (see below) and thought that might be contributing to the problem, but turns out that it was just a coincidence and we managed to solve the broken boiler before solving the lack of oil.

One of our in-progress projects was replacing our ancient oil tank with a newer tank. We’d placed all our oil deliveries on hold so that we could run the tank empty and switch them out. However, while we’d finally run low enough to make the switch, the heat, broken boiler, and the impending baby arrival made us rethink that plan and decide that late fall would be better timing. So, we called our oil company for a delivery and let them know we hadn’t switched tanks yet.

The oil company insisted that the tank had to be inspected before they’d deliver oil. This made no sense and I argued about it being the same tank they’d been filling, but they insisted and I finally shrugged it off and agreed. We had a tech out that afternoon. The tech takes two seconds, a quick swipe of his hand on the underside of our tank, and fails it. Crap! Then, he gives the partner a $50 bill for the inspection - what?! No one said anything to me about charging me $50 for the inspection — I was pissed and immediately called to refuse to pay it. The reasoning: no one told me that there would be a charge for the inspection. Had they mentioned it upfront, I would have hemmed and hawed until the dropped the inspection requirement in general. It also didn’t improve my spirits that we now had to switch out tanks.

Fuel oil companies are very competitive with each other and there is nothing holding me to this particular company. Also, because we’d had our oil deliveries on hold for so long and were still on monthly budget billing, we have a sizable credit with them that I was more than willing to take elsewhere. I immediately called the company and got an agreeable CSR on the phone who was a bit stubborn at first but quickly realized I was much more stubborn. She wasn’t able to cancel the charge, but she gave me an extra $50 credit on our account to cover it - problem solved.

The tech that failed our tank said that they probably wouldn’t be a charge for the to reinspect the new tank that we now had to put in. This wasn’t the case when it came time (the next day) for that inspection. But, the person on the phone did let me know about the charge ahead of time and I was going to let it go. That was until the oil company dropped the ball…

When the new tank passed inspection, a delivery should have been ordered right then. The tech called in the passed inspection as he was supposed to, but a delivery order wasn’t placed. Around 4pm this afternoon (on a Friday) I noticed we still didn’t have oil and called to find out if the truck was running late. Since I called so late, I was told there was nothing they could do and it’d be Monday, maybe, before a delivery could be made. Also, I was told that I have to call back first thing on Monday to make sure an order is placed (why do I have to call again?) and that it may still be another day or so after that since they only travel to my area once or twice a week during the summer - most customers use oil for heating only and they reduce their trucks and staff in the summer.

So, considering this issue too - I’m going to write a letter about the entire ordeal to the company and will expect some sort of corrective action (in financial form) for this entire ordeal. In the meantime, I’m thankful that I’ve got such a talented partner and know that we’ll have hot water even with an empty oil tank over the weekend - of course, I don’t need to let the fuel oil company know that.

For the past three days, counting today, my bank’s website has been down! The only thing I get is an error message, no friendly notice that they’re working on the problem or anything like that, just a technical, auto-generated error message. On day 1, this error didn’t bother me as I assumed it’d be fixed promptly. However, on day 3, I’m getting pretty upset that they haven’t made enough progress to at least let customers know whats going on.

I don’t like not having online access to my accounts. i don’t like that I feel my only option is to call them and I’ve got a million other things that need done instead. I don’t *need* access to my account at the moment, though I did want to schedule two upcoming payments and looking to see if our tax returns or stimulus package amounts have been deposited. Luckily, I know we’re covered in instances like this and I don’t have to stress over the fact I can’t get into my account. However, I’ve now lost all patience with the situation and want to know when this situation will be resolved.

Oh, and you know the saying “when it rains, it pours”? Oh so true and maybe I’ll have some fun updates this weekend or next week with how life just gets more and more exciting here every day. In the meantime, if someone wants to buy the partner and I two new cars, I won’t complain.

Due to recent events and the never ending unexpected expenses, I’m in a bit of a funk and doubt I’ll be posting much until it passes. What a shame, too, since I felt like I was starting to get back in the swing of things. Hopefully this will pass soon and I can finally get to post some on the joys of small business ownership and the trials of going from a service-only business to one with product for sale.

I’ve written about my car many times with a somewhat bittersweet emotional attachment. I thoroughly love my car and had I never moved away from Wisconsin, I would never have a reason to complain about it. It’s one fault is terribly obvious during Maryland summers - it doesn’t have air conditioning. Even when baking in July, I still realize that I am very passionate about my car and our adventurous 9-year relationship.

I’m afraid that relationship has come to an end - all that the fault of an outside party. I was in an accident today that caused significant damage to my poor car. I was driving towards home, almost at the stoplight near my house, when a truck ran into me as he was turning left out of a parking lot. Since the light was red, a large work truck had left a gap so that he could make his turn. He didn’t see me coming along in the left-turn lane. I can say that I was probably fortunate that there was no oncoming traffic and I was able to swerve somewhat when I saw him heading toward me, this probably save me some additional injury and more sever damage to my car, but it was still enough that the car is no longer drivable.

We got out of the way of traffic, called for a police collision report, and exchanged all the necessary information. It wasn’t until I got home (just a mile from the accident) and further contemplated the damage that the impact of this accident struck me. My car is 10 years old and has 155,000+ miles on it. I’m certain the damage exceeds the value of my car and I’m already preparing myself for the fact that the other driver’s insurance company will most likely claim that my car is totaled and just offer me the value of my car (which is only about $2,000). This won’t be enough to fix the car, nor will it be enough to replace it either.

So, right now, I’m taking it easy as my body is starting to show some aches and pains from the impact. And I’m trying to not totally fall into despair over my car. Also, I’m trying to figure out what I need to know to get the maximum value for my car as well, since I’m 95% certain that the insurance company will total it out.

Other posts on the fun of owning your vehicles outright and making decisions based on that.

For some reason, I’m sitting here dreaming about what I’d do if I won the lottery. There is a lot of irony in this situation, mostly due to the fact that I don’t play the lottery but still spend lots of time thinking of what I’d do if I did. A good friend of mine, of sound financial means, plays consistently because he finds that spending $1 to dream about what he’d so with the winnings is worth it. I guess I’m taking the more frugal route and dreaming for free. :)

I spent some time looking over the net at lottery winning stories - these are mostly news stories that love to focus on the many winners that have lost their winnings. The articles would have been much more interesting if they didn’t all refer back to the same handful of people. I appreciate the point they’re trying to make, though, that small lottery winnings ($1 million dollars) doesn’t last long if you’re not prepared and that if you were unhappy before winning, money probably won’t solve your problems.

So, since I spend so much time dreaming about what I’d do, I thought I’d write it out as a handy reference in case it ever does happen. Many of the steps I have in mind coincide with the popular advice given by financial advisers.

1. Re-check the winning numbers. I often misread things and would want to be sure that I was indeed seeing what I thought I was seeing. This may sounds silly, but I can see me getting swept up in the excitement and showing up at the lottery office with a non-winning ticket.
2. Celebrate in silence. Perhaps I’m just overly cautious, but I wouldn’t want to tell anyone. In fact, I’d have to figure out how to not let the daughter know either as I wouldn’t want her to start dreaming up crazy ideas or spreading it to her friends. Also, I’m sure the partner and I would need to take some time to discuss the issue and make sure we’re both on similar pages.
3. Find and visit a lawyer and accountant/adviser. Before doing anything, I’d want to consider all the financial, legal, and tax implications involved. I’d head to these meetings with my “wish lists” already prepared and discuss practical steps and plans.
4. Take suggested actions before claiming the winnings. This includes a lot of things like unlisted numbers, setting up trusts or accounts as needed, and whatever else the accountants/advisers suggest doing in preparation for a sudden influx of money.

Now, my plan of action and my wish lists are two separate things. Since I’ve spent so much time dreaming about winning the lottery, I find it worthwhile to chart out some of those ideas. Plus, I like the idea of having this list already in order before visiting financial professionals so that we can better prepare for how lottery winnings will fit in our current plans. I know that I would want to keep the majority of my simple living practices intact, but I also know a huge influx of cash would have a very big impact on that and recognize that it may have a bigger impact on me than I want. So, my wish list is as follows, not necessarily in prioritized order.

• Secure retirement. The first thing I want covered is retirement - and lets assume this is a serious payout (more than a couple million dollars) and that retirement begins upon collection. There will be a lot of factors that affect this - such as any home purchase decisions or lifestyle changes, but I’d want to be sure that the first thing I do is ensure that this money is going to last. This includes investment planning appropriate to risk levels and return needs. I’m sure a good adviser can provide us with lots of options and scenarios to consider.
• Get the house we want. This one is a little trickier. Lately, most my lottery fantasies involve fixing the house I’m in, but I also realize that if I got a major windfall, that I’d give up on making this house what it isn’t and invest energy and money into a home with more possibility. I’m still love old houses but I’m also concerned about a few health and environmental aspects (such as lead paint) that come with them. The partner and I would have to decide on location and what we really want in a house. If we can find an old farmhouse on a huge plot of land (for farming and animal raising) then we’d probably still go that route. But, I’d also consider having our own house built as well if need be - but I’d retain the look and feel of an old house, including small rooms and functional space. Also, one of my dreams is running a farm bed and breakfast and traditional arts and crafts teaching center.
• Provide cash gifts to family. First, we wouldn’t even tell family about winning the lottery until this was decided with professional help. Would we want to do a equal amount to all family members (we’re talking siblings and parents/grandparents) or would we make this a more variable amount? The partner has two siblings and one living parent; I have a living parent, grandparent and three step-siblings. The biggest challenge for me would be that I would be comfortable providing a one-time gift to one of my siblings that I’m close to, but not the others. However, I don’t think that would go over all that well and I’d probably provide equal gifts to my other two siblings even though I don’t really have any contact with them. I also have a step-mother and I know that I would not provide her with anything, mostly due to residual frustrations over the way my father’s estate was handled when he passed away. I would struggle with gifts to my mother because of her lack of money sense and her overblown sense of entitlement.
• Provide tax-positive donations to charities. This isn’t a given and I’ll honestly say that I would be interested in this for the tax implications. I’m jut not altruistic enough to want to hand out money. The partner and I would have to discuss which organization we’d consider supporting and we wouldn’t consider any outside solicitations for funds. I can see us running into a problem if one of us doesn’t support the organizations that the other picks - we may cancel each other out and not donate anything.
• Clothes and furniture shopping. This feels like such an indulgent thought, but since I constantly struggle to buy new clothes - I’d look forward to getting a new wardrobe of clothes. I don’t imagine I’d be out buying $500 jeans, but I would finally be able to walk into my closet and honestly be happy to find something to wear. I’d also buy furniture because everything we own is a free gift from someone and I’d like to have furniture that I picked out.
• Hire personal staff. This sounds cheesy when I write it out, but I’d be all over hiring someone to clean the house and do laundry. I hate those tasks and would happily dish them out to someone else. Also, if we get the farm thing going, we’d be hiring staff to help with farm duties anyways — and thats not even based on a wealth-position, we’d just need the help getting things done (and our farm would be run as a business too). Additionally, I’ve always wanted a large family (7 kids or so) and would hopefully still continue on that path and would probably hire a care provider as well. But this person would not be a typical nanny, because whats the point of having kids if you don’t want to care for them? Instead, this would just be an extra set of hands to make daily activities easier. But then again, maybe we’d never get around to do any of this.
• Buy new vehicles. Living with old cars has it’s joys, but I’d love that I could use wealth to purchase energy efficient vehicles that would suit our needs. We’d probably still be interested in older vehicles for farm vehicles and maybe even some horse drawn equipment as well.

In all, I still like to think that I have fairly simple wishes. I would give up on improving our current house and would probably sell it “as is” because the work it needs is more than we could ever recover in renting or sale. Being able to buy a farm with a substantial amount of property (100+ acres) would be my biggest goal so that I don’t have to look over at the McMansions going in next door and can provide for our family’s food needs. Sustainability would still be a major factor and we’d be in a position to install alternative energy systems to allow us to live 100% off-grid. The bed and breakfast/traditional arts and craft school would be a wonderful thing. We could then continue working, doing what we love - working with our hands.

So, boston gal posted something about 2.25% interest rates — and it got me wondering at what point does it become worthwhile to refinance the house? What if you’re currently locked into a 3 year no-refinance clause that will cost you about $7,500 to break? I’m sure there is still a point that it becomes worthwhile, though whether or not we could qualify for the rate at which it becomes beneficial is a different story.

Possible or not, it still seems like a good number to know. Looking at the online calculator comparing 7.35% to 2.25% showed savings of about $600/month and that’d make each month much easier on us - but it’d take more than a year of that type of savings to recoup closing and penalty cost. Hmm, guess I should take the time and learn what that number is and what the out of pocket impact would be.

Edited to add: I did get the part that boston gal’s 2.25% rate was hypothetical mortgage rate — it just got me thinking that I don’t know at what rate it is worthwhile to consider refinancing our house and that is something I think responsible home owners should know.

Every once in a while a feeling or emotion about knocks me over and I want to run and act on it. The most common one is to take every penny we have and pay off our credit cards. Any time a chunk of money comes in, that is exactly what I want to do with it and occasionally I will. But, since we’ve bit into savings a lot lately for various things (car repairs are killing us), there isn’t really much there ship off to reduce our debt. But, I know that there are a few decent sized checks coming out way in the next few months (thanks to taxes mostly and October usually bring child support arrears). The second that money touches my hand, I want to hand it over to our credit card companies.

While everyone loves to talk about how important it is to pay off debt and how interest rates paid on debt is higher than what you’re probably getting in savings, they still seem to miss a major aspect of having savings — stuff happens! And when stuff happens, it sure helps me sleep better knowing that we can pay for it. If I took every dime we had in savings and chopped out our debt, I’d be left with an extra $300 a month and nothing in the bank to cover the next car repair, boiler break down, or more serious emergency. Sure, we could charge most any emergency that comes up, but then we’d be right back in that vicious cycle of debt. Also, at $300 a month, it’d take us almost a year just to put $3,000 back into savings. And of course, that assumes we don’t have somewhere else for that money to go.

Yeah, pay yourself first should always happen, but how do you work that out when what comes in doesn’t covered the required-to-go-out bills (and that doesn’t include things like food and gas)? Do you still throw a few hundred into your emergency fund when you’re not making enough to cover everything else? Doesn’t that emergency fund contribution just get drug out the next month when ends aren’t meeting?

I know I’m rambling a bit, call it the emotional stress of working to get finances back in order when you feel like you’ve done almost all you can to get back on top. We can’t trim anything else from our budget and I’m bringing in as much extra as I can — it just isn’t enough and it leaves me a little flustered and frustrated. Those checks that are coming later this year won’t be making it to our creditors, in fact, they’ll probably be here just in time to get us back to 0 and give us a few more months to get things back in balance. All I can do is hope July gets here with that the raise we’re counting on happens — but thats not sounds financial planning either.

Counting chicks before they hatched is always a dangerous financial plan. I can’t help thinking about the financial crunch the company has been experiencing and worrying that this might be a year were a COL raise may be all thats dished out. I have no reason, other than reasonable planning, to think this might happen, but it worries me just the same. And for planning purposes, it makes more sense to assume that worse case scenario than to hope for a better than average raise due to company concerns about losing valuable employees that are becoming less and less enchanted with their positions (and pay).