An ‘A-HA Moment’… 5 years too late.

I’ve really started stressing about what we’ll do about money leading up to and after the baby arrives.  You think to yourself, “Geez Kristy, you’ve had 5 years where you were trying to conceive to get your shit together moneywise.  Why aren’t you prepared?”  The simple answer is because we were thinking short-sightedly* instead of planning for a future that included more than just the two of us.

Looking back, there are a number of mistakes that we’ve made financially including having too many open lines of credit for big purchases then not paying them off, not socking enough away in savings / retirement / rainy day, and buying stuff we may not have needed at the time with money we didn’t have.  I’m ashamed to say it, but we’re perilously close to being the people that Obama is bailing out.  We’re one medical emergency or other similar disaster away from fiscal ruin. 

In hindsight, we probably overpaid on our house, too.  We rolled the closing costs into the mortgage and didn’t have to make a down payment because we used Ben’s VA certificate.   Home values in the Central Ohio area have been falling recently and I’m worried that we now owe more on our house than what it’s worth.  Quite frankly, I’m too afraid to look into the matter and don’t want to spend the $$ right now to get the house appraised.  With all the projects we have going on right now that have various areas of the house in disrepair I doubt we’d get a fair value.   My goal is to get enough projects done by December 31, 2009 to be able to schedule a home appraisal in the first quarter of next year.

I have no idea how our monthly budget is going to be impacted by the arrival of a baby, but I know there will BE an impact.  I learned a few months ago that while I’m out of the office on maternity leave that I will be making 60% of my SALARY only – no sales commissions will be included (per the short-term disability people, not my employer).  Many weeks my check is 1/4 to 1/2 salary and the remainer is made up of commission so those weeks off will be kind of painful for us.  To add insult to injury, the federal government will still take out all the requisite taxes on that 60%, leaving me with probably less than 45% of my normal salary and 20 – 25% of a normal take home pay check.  Way to screw working mothers, America!  Before I even qualify for short-term disability (maternity leave) I have to be off work for 10 days.  Coincidentally, 10 days is all that I receive a year for paid time off so I will be left with zero vacation or sick days once I come back.  The good news (if you can call it that) is that I will be paid normal salary for those 2 weeks I’m on vacation  so I will only get shorted for the 4 weeks remaining on the maternity leave.  Still, it’s going to be a blow to my budget which I’m trying to prepare for now. 

Yesterday, I had a revelation… I can’t deal with this financial uncertainty any longer.  I started reading a TON of personal finance /debt reduction blogs yesterday to see how other people have dealt with their debt.  I also made a list of all the debt we have – good (mortgage / student loans) and bad (credit cards) – to get a handle on where we stand.  I’m also a procrastinator so sometimes my monthly bills have been late by a day or two, which resulted in either late charges or interest rate increases or both.  I was able to call my credit card companies and get my rates adjusted, simply by asking.  One went from 19.99% APR to 6.15% APR.  I’m also scheduling the payment of my monthly bills ahead of time through my online bill pay service so that I don’t have to pay late fees / incur inflated interest rates again. 

One of the coolest tools I found was http://mint.com.  I got so frustrated by my Quicken yesterday that I almost had a meltdown.  Somehow, my savings balance reflected that we had $3,300 more than we actually had and I couldn’t get it reconciled for the life of me.  Mint allows me to pull all my stuff together into one place and analyze all of our spending.  A cool thing about Mint, especially since I’m a visual person, is that you can do fun graphs and charts.  I’ll do a full overview of why I love it later…

I knew that Ben and I spent a lot of money on eating out, but had NO idea of just how badly it impacted our budget.  I categorized for ‘groceries’, ‘Kris Dining’, ‘Ben Dining’, ‘Us Dining’ to figure out where the $$ was going exactly and was APPALLED by the numbers.  A whopping TWENTY PERCENT of the money we spent in February was on food-related items – close to $1,000.  That was a huge wake up call for me.  I could have easily put that $$ towards debt reduction, slapped it into savings, or put it in my emergency fund.  We’re being completely wasteful, not to mention lazy.  The only GOOD thing is that it’s not a fixed cost in our budget, but is one that can be easily halved with some careful planning, dedication, and foresight.  I can easily cut out close to $500 in unnecessary spending. 

So, what have you learned from reading so far?  Yes, we f’d up.  Yes, we are typical lazy Americans.  Yes, I’ve had enough and am working on getting us out of this mess… without having to rely on the federal government to bail us out. 

What about you?  Any thoughts?

~k 

Yes DK, I know… that’s an adverb of the poorest character but this post is about content, not style 😉

Advertisements

4 Comments (+add yours?)

  1. Elisa@thrive
    Mar 11, 2009 @ 23:39:52

    K,

    Glad to hear you’re deciding to take control of your finances and saving! Financial independence is such an important goal, and it’s never too late to learn.

    Since you’re reading personal finance blogs, I thing getrichslowly.com is a wonderful place to start. JD Roth is an independent blogger who started a personal finance site because he was in tons of debt and wanted to clean up his financial life. He’s my favorite. But there’s loads of great ones out there.

    Wisebread (another great personal finance site) came out with a list of the top-ranked personal finance sites here http://www.wisebread.com/top-100-most-popular-personal-finance-blogs/

    So, those are some great ones to get you going.

    We’ve got a couple of finance experts on hand, all the time and we’d love to help you out if you’ve ever got questions or need some friendly encouragement!

    Shoot me an email anytime elisa@justthrive.com

    Happy Saving!

    Best,
    Elisa@Thrive

    Reply

  2. DarcKnyt
    Mar 12, 2009 @ 00:08:21

    Content is king, dear. 😉 I know you’ll do fine. It takes commitment and dedication but you can do it.

    Commitment and dedication for what? Eliminating adverbs from my blog or chugging away at getting my personal finances straight? 😉

    Remember, at least you’re both working. That seems a small blessing but with things the way they are, it’s big. Very big.

    Sometimes during our ‘woe-is-me’ moments it’s easy to forget to be thankful for the little things in life. Thanks for keeping me on track and balanced!

    Reply

  3. Sherri Cornelius
    Mar 12, 2009 @ 11:39:09

    I applaud you for taking an honest look at your finances. It’s scary. I can remember when DH and I were both working with no kids. We were always broke, and didn’t know why. It’s ridiculous what kinds of things I’ve learned to live without in order to stay home with my kids. Really, it’s too tight for comfort, but we’re making it, and it won’t be forever.

    I envy you that you were able to go out and buy a car, pay for insurance, and get it registered all using money you already had instead of having to borrow. We’re a little tight for that right now but achievable when my Explorer (sitting at 189,000 miles) finally gives up the ghost. I’m keeping up the maintenance on it now trying to head off the inevitable for at least another few months.

    I remember growing up we lived in a trailer in SW Penn; we didn’t have much but I had a very happy childhood and we weren’t deprived in any way, shape, or form. My parents moved out here to Ohio and started saving any and all money they could – socking it away for rainy days, large purchases, and paying for our college educations. I find myself wondering how I went so wrong? Ben and I are right about the age where Mom and Dad started their funding and I know it’s not too late for us.

    Wish us luck!

    Reply

  4. DarcsFalcon
    Mar 12, 2009 @ 18:01:33

    Well, at least you’re doing something about it now, right? I remember a few years ago I did a chart in MS Money and found that Darc and I had spent 3K eating out over a year and a half period. Course, that was for a family of 4 back then, but still, that was a lot of money to spend just feeding our faces.

    Yep – sounds like us except that it’s just the two of us racking up all that wasted money on stuff that’s not even around. I might be able to handle it better if we were spending it on tangible ‘stuff’ like DVDs or expensive perfume or magazine subscriptions we don’t even read. Would I spend $400+ a month on stupid stuff like that? Of course not. I’m glad I had this eye-opening experience NOW instead of later.

    I can count on you guys to keep me on the straight and narrow 🙂

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: