The Weight of Money

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).

While our finances are improving slowly, we’re still struggling. Last month we were only over by $1,000 versus the $3,000 we were over in December and January. So, I’ve decided to take some pretty serious and drastic cuts to help us get back on the right side of $0 a little faster. A friend of mine just worked up a $40 weekly budget for her family and I decided to take that a few steps further — $50 for the entire month’s of groceries.

I went through our entire pantry and freezer stores and inventoried all of our food. I sat down with the list and worked out at least 27 dinners and plans for lunch and breakfast. Spending just $50 on a month’s worth of food is only possible because we have a well stocked kitchen and will only need a few items to fill out our menu. We’ll be lacking our usual fresh produce, but have enough frozen and canned goods to make up for it.

Shopping List:

• 2 gallons milk
• yogurt
• half n half
• 2 lb cheese
• 2 lb ground meat
• sugar
• lettuce
• cucumber
• potatoes
• carrots
• apples
• bananas

Breakfast: Biggest cost saver is that there will be no cold cereal this month.

• oatmeal
• pancakes
• waffles
• eggs
• no cold cereal

Meals: Nothing fancy and all meat portions will be small (as they should be).

• chicken, rice, broccoli (2x)
• chicken, corn, green beans, pasta (2x)
• falafel, pita, carrots (1x)
• pork fried rice (2x)
• pork chops, baked potatoes, broccoli (1x)
• chicken fried rice (2x)
• spaghetti, salad (2x)
• steak, baked potatoes, broccoli (1x)
• chicken noodle soup, salad (1x)
• ham and cheese omelets, biscuits (1x)
• chicken, peas, ramen noodles (2x)
• chicken parmeasan, salad (2x)
• chicken burritos (1x)
• tacos (1x)
• bean soup, salad (1x)
• potato soup, salad (1x)
• ham, cheese, broccoli quiche (1x)
• english muffin pizzas (2x)
• leftovers/sandwiches/fend for yourself (~2x)

Lunches: Most meals provide leftovers for lunch.

• leftovers
• sandwiches
• soup
• ravioli
• carrots
• apples
• bananas
• muffins

Desserts: This is the rare treat, not a daily menu item.

• Cake (we need to use leftover icing up)
• peach crisp from canned or frozen peaches

Other items of consideration: we’re feeding a family of three, we make our own bread for each meals, and all of our meat portions are smaller than the typical American serving (ie. serving sizes are appropriately sized). If we make this work, I can make a costco trip next month and re-stock essentials that we’ll be working through this month.

The partner’s work started a matching 401K program about a year or so ago and that prompted the partner to finally open an account. We’ve been putting in just enough to get the full match from the company even though we know we need to put in much more if retirement is ever going to be possible. Here is one area where a head in the sand approach is bad news and we know it (no one said personal finance bloggers always make the best financial decisions).

So, we just got notice that his company is going to stop doing this. The company has been struggling financially lately which puts a little extra stress on us because job security is something we’ve taken for granted. But there have been many changes at the company in the past few months that gave us the impression that they were finally getting things under control. To drop this program, out of the blue, implies to me that the situation is more serious than we assumed. The company has been laying off lots of folks lately — mostly a corrective action since they really hired too many people last year — the cuts have been to more overhead type positions (one was their first Chief Financial/Operating Officer that they hired just 6 months prior). We’re still pretty confident that cuts to the engineering department are highly unlikely since they need them to get and fill new contracts and bring in the money. I think the partner will be updating his resume, just in case.

Last night the partner asked if he should pull back his contributions for a while to give us a bit more cash on hand. It seems like a easy solution to help with our financial crunch, but we also both agreed that we’re too behind in retirement contributions to consider reducing them at this time. So, we’re losing “free” money from the company, but will still keep contributing anyways and hope to increase those contributions later this year. Having a few extra dollars today isn’t going to offset the pain we’ll feel if retirement is not a possibility.

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.

It’s been a little more than 2 months since my last phone call campaign to save money, more than three months since calling my credit card companies. Due to pure failure on my part, I needed to make this call but was a little hesitant. Thanks to Canadian Sadie of Cleaning House‘s comment, I finally build up enough courage to call (btw, Canadian Sadie, it’s time for you to take action too!).

I needed to call because I missed a credit card payment by pure fault of my own. I was hesitant because I called this company only a few months before for a missed payment, that time due to mail mix-ups related to moving. Knowing they’d granted the request last time made me very sheepish about abusing that consideration. But, as my mom always said, whats the worst they can say, no?

Call #1: With tail firmly tucked, I made the call and laid out the situation. The agent politely responded that due to my previous (and recent) request, he couldn’t help me at this time. I thanked him for checking and admitted that was the outcome that I expected. And then, for no apparent reason, he said “well, I’ve gone ahead and waived that missed payment and fee, but be aware that we will not be able to do that again.” What? Wow! That was rather unexpected and he got my thanks yet again and then I proceed to ask him about current balance transfer offers. More on that in a moment.

Call #2: In the last two months, our primary use credit card jacked their rate up 6%!!! This was absolutely unacceptable and I went ahead and called them too after resolving the missed payment with the previous call. I politely explained why I was calling, but also firmly commented on how this is unacceptable when my other cards had rates more than 50% less than theirs. I let them know that I was prepared to transfer the full balance to another card, but wanted to give them the chance to keep our business — because after 20 years of good business, that seemed only fair. She looked at the account, commented on how we have a perfect payment record, no late payments, and have been a long time customer, and agreed that recent increase makes no sense to her. But, the best she could do for us was send us some paperwork and make us jump through various hoops just to get our previous rate back. Sure, I’ll jump the hoops to drop our rate, but I’ll also transfer over the balance since that was her best offer.

Call #3: I called the first company back and processed the balance transfer based on the rates I was provided earlier (which improved once the late payment was waived). The rates were comparable with other offers we’ve received, but the biggest plus was that in terms of credit utilization, that card could absorb the entire balance of the other without flinching. I’ve been wanting to make this transfer for a while and am happy it’s done. We’ll save more than $1,000 in interest this year and I get the satisfaction of a silent ‘ha!’ to call #2 who didn’t think 20 years of service was worth more prompt attention.

Previous Make the Call Posts:
• Save Money: Make the Call
• Save Money: Make the Call II
• Save Money: Make the call III

Just make the call – whats the worst they can say? Whats the best they can say?

I just ran across a few comments on other sites implying an unfairness with how tax incentives are divided among those with and those without children. It seems the childless commenter isn’t too keen on the fact that there are several tax breaks that “reward” people for having children. Well, it’s true, my deductions and tax credits are greater because I have a child — is it enough to get rich on, not at all. In fact, I’d be much better off financially if I didn’t have children. But, I guess these comments get to me when you consider the long term financial health of our country — if people do not have children, then we won’t have an employment or income base for our economy.

I guess this is partial incentive to look up the financial implications for those countries facing negative growth and how they are dealing with the reality that having less kids means they country has less money. Of course, my plate is pretty full and I doubt I’ll get around to that anytime soon. Instead, I’m be happy that there are some financial relief for people who are reproducing and will keep quite about all the other complaints of support that should but don’t happen.