I love all the comments I've been getting. THANK YOU. So my question for all of you, "Is it better to save or pay off debt?".
I'm not paying interest on the credit card debt. I pay off the BofA card every month and the Citibank card has a 0% interest 'til 4/08. The HEL has a 7.25% interest rate.
I'm saving $300 every two weeks and have about 2 months of worth of budgeted expenses in our EF. EF is also used to pay for homeowners insurance, property taxes, etc. since I don't escrow insurance/taxes with our mortgage company. I also pay our car insurance in one lump sum. I need to make sure that I have at least $3,800 saved up for all the "big" bills.
Archive for December, 2007
I love all the comments I've been getting. THANK YOU. So my question for all of you, "Is it better to save or pay off debt?".
Update: Despite my "reminding" dh about our finances and no more spending. He still puts a bid on golf clubs on eBay. I really don't understand him. He says that they're a good deal but there are always good deals on eBay. I know that he gets a "rush" from spending money but this is ridiculous. Plus, we live in Denver, you can't golf here for at least another 6 months.
I was hoping that by making my finances transparent that I would be able to control myself. I realized that I can, but I'm not the only one in the house that makes decisions.
My christmas spending came right in on budget. I'm making a lot of presents for friends so my expenses were pretty low. I also keep my grocery shopping on budget by using coupons and shopping at Walmart, etc. But....
DH has been begging for a PSP so he finally bought one. His justification was that we were going to have extra money from the HEL and we could afford it. I kept telling him that the HEL was to pay old credit card bills ($3,000) but instead will have to be used to pay current credit card bills (BofA $3,738), which means that we will have to pay the $3,000 with our tax refund, OT, etc. We have until 4/08 before we start getting interest on that balance.
I also didn't want to go on our vacation since we had to spend an extra $540 that I didn't budget. But he wants to go since he took the time off from work.
So we're way over budget this month. I know that we're going to do one more grocery shopping trip before we leave so we'll be over in food. We'll also be over in kids since I still need to pay clarinet rental and tae kwon do. There are also still utility bills that need to be paid.
I think I'll do a mid-month forecast of where we're going to end up. This will compare our original budget to revised budget (forecast) and actual expenses.
Didn't spend any money on the 11th or 12th but the 13th was awful.
Insurance - $103 (monthly life insurance premiums for both of us)
Trip - $540 (going home to HI on Xmas Day and had to buy a few airline tickets that weren't originally budgeted - usually fly very cheap since DH works for an airline)
McDonald's - $13 (lunch for the boys)
Kids - $76 (prepay lunch for DS, winter jacket for baby, and black tie for DS concert)
Groceries - $128 ($78 at WM and $50 for Costco membership fee)
I didn't put in a budget for trips this month only because we normally don't have to buy any airline tickets since we can fly standby for a nominal fee. But the flights were full coming and going to Hawaii so we had to buy a few tickets to get us in and out of Hawaii. Tickets from Maui to Honolulu ($180), taxes for tickets on Hawaiian Airlines using credit card miles (credit card is good for something) and ticket on Hawaiian Airlines. Hawaiian airline tickets from Honolulu to Las Vegas. We'll fly for free from Las Vegas back home to Denver. But since we're getting in to Vegas at midnight we had to get a hotel room for and a car rental. The consumer electronics show (148,000 out-of-town attendees) is in Vegas while we're there, so finding a cheap hotel room was impossible. We ended up getting a room in Downtown and had to get a car.
We're flying on my dh's pass from Denver to Maui on 12/25 but really need to get to Honolulu, so we had to buy tickets on another airline to get to Honolulu.
I've also got money set aside for our trip to Hawaii that's not in my December budget. We usually pay cash for everything since our only expenses are food and souvenirs.
Also, thanks for the comments on Mvelopes. I took a quick tour of the tool and it's really similar to what I already use in excel. I've been using a budgeting/tracking spreadsheet for years that I made so I can budget my monthly categories, project cash inflow and outflow, etc. My only problem is self-control. UUUGGGGHHHH.
I was housebound on Sunday. Didn't want to take the baby out in the snow since he's recovering from a cold. So I didn't spend any money on Sunday.
But Monday is a different story.
Food $100 (monthly Costco run)
Xmas $185 (gift cards for friends/family)
Personal $229 (dh HAD TO BUY a new PSP game system; it's his bday tomorrow plus he's having surgery to remove a cyst so he wanted a treat)
H&R Block has an easy to use tax estimator that I love. I plugged in our income for this year and we should be getting a really good refund. DH had two surgeries on his right shoulder last year because of work related injuries so he was on disability for half of this year while recovering from his surgery.
If anyone is interested the website is http://www.hrblock.com/taxes/tax_calculators/index.html.
I was busy all day yesterday getting the house ready for friends to come over for dinner and a sleep over (had to cancel sleepover because of weather - friends live about an hour away). I also had to make dinner and bake a bunch of cookies for our bake sale at church today. So I asked hubby to get some lunch at Del Taco (using our fundraiser discount card). He also stopped by at Walmart and bought the baby a Leapfrog Leapster system!!! So our discretionary expenses were rather high yesterday.
Lunch - $10
Walmart - $03
Car - $39
Did pretty good this week on discretionary expenses. I made lunch and dinner pretty much every day instead of eating out like we normally would do. The only problem with cooking at home is that there are so many dishes to wash all the time.
We splurged at Albertson's last night. We bought King Crab Legs and Steak for about $33 for the whole family. DS didn't have a good day at school. He had given his ex-girlfriend another suicide note and she gave to the counselor, who in turned called me. Luckily, we were going to his therapist today and was able to get it all out in the open. So he needed a little lift. If we had that at a restaurant it would have been at least twice that amount if not more.
Albertson's - $49
Mortgage - $679
I'm also feeling pretty good aboutnot spending money. I'm not feeling deprived because I have a goal - to be a SAHM.
When I first decided to become a SAHM back in 2004, one of the first things I did was buy a few books on living on one income. One of my favorites, is Miserly Moms by Jonni McCoy. Her book had the most practical and doable ideas that I could follow. The other books were either to generalized or too extreme (i.e. advocating dumpster diving, etc.) for me. I also loved the way that she made me realize that I'm lowering my expenses by being frugal and not cheap and desperate. I'm remember feeling desperate for a while in the beginning. I really didn't think that we could be a one-income family. Not being able to buy whatever I wanted, whenever I wanted, was a little hard in the beginning.
Now that I'm trying to control my spending, I need to remember that I'm being frugal. By not spending, I'm able to continue my goal of being a SAHM until the baby is in the 1st grade.
Again, thanks for all the comments and ideas.
Yesterday was a great day. Didn't spend any money except for DS lunch at McDonald's before taking DS back to school. DS passed out twice the night before, so DH took him to the dr yesterday. We need to lower his Abilify dosage and get him checked out by a neurologist if he faints again.
McDonald's - $7
Dh is on vacation this week and next, so we go shopping. Dh still needed to buy more winter clothes for work (he works outdoors all year long) and with living in Denver, he needs clothes that can handle the cold. He bought new gloves and thermals at Bass Pro Shops.
Clothes - $67
Loan - $20 (extra principal payment on HEL - loan pymt taken directly from paycheck)
I still had some major caffeine withdrawal headaches so I had to break down and get a soda. Del Taco was near Bass Pro Shops, so I had a Steak and Egg Breakfast Burrito Combo Meal. YUMMMMM. I spent $5 out of my $20 meal allowance for the week.
Still no eating out. I had some major caffeine withdrawal headaches since I didn't have any soda. Usually when we go out to eat, I get a diet coke. I can still feel a little headache today but it's not as bad. Yesterday was Walmart day. Walmart is near Bed, Bath, and Beyond so we bought a cap rack (I was so sick and tired of baseball caps all over the house despite having a designated box for them), a shoe rack (kept tripping over all the shoes on the garage floor), and a shower liner. I also used our 20% off coupons. We definitely needed the cap rack, but the shoe rack and shower liner were dh's ideas.
Walmart - $67
BB&B - $41
Baby - $46 (shoes, boots, and diapers - outgrew his shoes in three months)
Christmas - $25
We did pretty good yesterday. Did not eat out at all like we normally would. Usually we would go to McDonald's after picking up DS from preschool (free - special ed preschool through public school district - speech development delays) and grab something to eat on the way to Aikido class. But instead, I made cheeseburgers for lunch and chicken wings for dinner.
Car - $3 (replace light bulb)
Coupons - $4 (from thecouponclippers.com)
Zoloft - $19 (90 day supply)
Prepaid phone - $10 (my prepaid phone top-up for low balance - minimum of $15 every 90 days to keep service)
DS Allowance - $20 (babysitting)
WD - $40 (eating out money - must last entire week)
Update: We used to have all of our phone/broadband/cable service through Comcast. If service went out, everything went out, so we switched over to satellite (long-term contract with Dish).
I'm going to start logging in my daily expenses, so keep the comments coming. It makes me feel like I'm being held accountable to someone. I'm also posting our daily expenses on a bulletin board at home for everyone to see.
12/1 - $313
Texaco Gas Bill - $209
Martial Arts - $25
Dish Network - $60
Groceries - $19
12/2 - $180
Prepaid Phone - $15 (ds' prepaid phone - only allowed $15 every 90 days)
Comcast Phone/Broadband - $84
DH Bday Dinner - $61
Carl's Jr. - $7
Groceries - $13
Update: HEL proceeds were paid to BofA card balance from previous month - $4,300. 0% interest card was balance transfers from BofA high balance was about $7,100. Balance is now $4,000 and was paid off with insurance proceeds and HEL loan. Also paid off OT protection and Linens and Things balance with HEL. We were lucky to be able to transfer credit card balances to 0% card but it's only delaying the inevitable. The HEL is going to be used to pay off the 0% interest rate card before the real interest rate kicks in, which is around May. We must stop our discretionary spending or else our debt will get out of control.
I had a talk with DH today about controlling our expenses. We know all the tricks of the trade, our problem is implementing it.
We bought a fundraiser discount card good until 6/08 that has a lot of BOGO free offers for a lot of fast food restaurants that we go to. Card can be used daily. We usually buy the Entertainment book in January when it's half off.
I use coupons when grocery shopping and do my shopping either at Walmart or at King Soopers (which has double coupons). I also buy coupons at www.thecouponclippers.com. I make a weekly meal plan and make a list before shopping but we usually end of eating out instead. I also stock up in items when on sale and with double coupons.
Clothes were extremely high this month. I needed a new winter coat and shoes (have to wear custom arch supports so had to buy shoes that are deep enough), dh needed new work shoes and clothes (works outside in wintry conditions). Clothing is usually pretty minimal - usually only buy clothes on sale or clearance at Kohl's or Macy's both using %off coupons.
Older ds had a nervous breakdown and cut himself last month. I ended up spoiling him to lift up his spirits. He knows that I won't do that again, or else this may become a pattern. We talked about the episodes with this therapist. I also had to buy a winter coat for ds. Kids'costs also include martial arts classes, instrument rental, school lunches, etc.
Medical bills ran high this month. Ds' new antipsychotic meds ran $140 for a 1 month supply. Plus speech therapy bills for younger ds, dr visit bills, meds, etc.
Utilities were high since it was one of those months were bills were due at the beginning of the month and at the end of the month, so basically paid two months of utilities.
Our savings accounts earns 4.75% at the credit union through my dh's work.
I hope I got everyone's concerns. I know that last month was really bad. I'm going to keep a tight rein everything. DH likes to pay with cc for everything since we earn frequent flyer miles. I need to convince him that we need to pay for everything with cash or debit card. If there's no money in the bank, we don't buy anything.
I know that we can get control of our expenses if we really want to do it. We need to make specific goals and track towards them. I have a monthly budget set-up but again, it kind of goes to the way side each month. We need to learn self-discipline.
1. STOP SPENDING ???
Of course that's easier said than done. We love to eat out all the time, whether it's fast food or a sit-down restaurant. A lot of times we eat on the run before going to martial arts, therapy, etc. But we also like to eat out just because. DS (14 y/o) suffers from depression and anxiety and regulary sees a psychiatrist and therapist, so eating out is kind of like family therapy for us.
2. Pay down debt.
3. Save for retirement.
We've got about $70k in retirement but that's about it. Since I quit work 4 years ago, retirement has really been put onto the back burner.
4. Continue saving $300/month for contingencies and big expenses (i.e. property taxes, insurance, etc.) Since we don't escrow our insurance/taxes I have to make sure that we save regularly for those. I've got about $1,000 in that account. I'm occasinally taking money out of that account to pay for car repairs, bills, etc. so that balance is always going up and down.
Here's a breakdown of our debt for November:
AmEx - $262.01 (to be paid off)
BofA - $2,469.62
Citibank - $4,000 0% interest (to be paid monthly with HEL proceeds until 0% ends)
HEL - $9,917.34 ($135/month includes extra payments towards principal)
LNT - $187.35 (supposed to be interest free for 6 months - WRONG - to be paid off )
Macy's -$84.32 (to be paid off)
US Bank Mortgage - $676.36/month ($107,000 balance approx - no monthly escrow - I pay insurance/taxes myself)
I usually pay off all credit card balances each month. With the exception of October, I was unable to pay off the BofA credit card. I took out a HEL at 7.25% to pay off the BofA card and the 0% Citicard. The current $2,500 BofA card balance are all new charges since I paid off the previous month's balance with the HEL.
We don't have any car payment since both of our cars have been paid years ago.
We've been a one-income for four years now, so you'd think we could adjust by now. Nope. We still live like we're living on two incomes.
DH is paid bi-weekly. His paycheck nets (after taxes, insurance, HEL pymt, and $300 savings) about $1,200. He does get paid for OT but only works OT occasionally.
DH's net paychecks for November totaled $2,389.81. Our expenses totaled $5,883.74. Can you see the problem?
Charity - 53
Christmas - 272
Clothes - 476
Debt - 108
Entertainment - 140
Food - 1,366
Gifts - 89
House - 892
Insurance - 103
Kids - 595
Medical - 783
Transportation - 225
Utilities - 782
Total - 5,884
I'm a 43 y/o SAHM with three kids, age 14, 3, and 41 (dh). I love to read up on celebrity gossip, fashion, organization tips, cooking, and financial advice.
In my previous life, I used to work in the world of finance preparing budgets and financial analysis for large corporations. My biggest financial challenge is keeping the family budget. Of course, we're up to our ears in debt like everybody else.
My current life consists of preschool, martial arts, cooking, cleaning, and therapy sessions for ds' depression and anxiety, and other ds' speech delays.
I live in a beautiful house in Colorado, and I'm originally from Los Angeles and Hawaii.