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Archive for April, 2024

Our Money Journey - Part 3

April 30th, 2024 at 05:30 pm

I will turn 45 this coming week. It has been fun to look back at our mistakes and progress over the last 25 years. Here is the last installment of our money journey. 

Age 40 – 45

Our forever home ended up not being our forever home. But only because we are planning to move out of state. (If we were going to stay in California, we wouldn’t ever leave this house.)

Upgrading our house also upgraded our mortgage and our monthly bills. We could mostly afford it. We were not living quite as paycheck to paycheck as we had about 2 months of bare bones expenses in the bank, but we also had $13,000 of credit card debt. From ages 40 – 43, that debt yo-yoed. We got our debt as low as $9000 and it ballooned up to almost $25000. Being $25000 in credit card debt was finally the kick in the pants we needed to address our debt and our spending habits. (Don’t ask us why it took so long because we can’t tell you… other than that we were dumb!)

2 years ago, we really started to make a concerted effort to get out of credit card debt. We started adequately funding our sinking funds and our retirement. We started cash flowing all of our expenses. We decided if we couldn’t cash flow it, we didn’t need it. (That was a huge adjustment to just swiping a credit card!) And we have made progress.  We currently owe about $8500 in credit card debt, down from a high of $24,907.  We have a plan to have it paid off by May 30. Most of that was through payments, not windfalls. We also changed our habits. I will get a stipend check on May 10th for about $1800 for coaching soccer that will all go towards debt. Then, on May 20th, I will get a retro check because our negotiated raise is back dated to July 1st, for around $4000. That too, will all go to debt. Lastly, because we sold our house, we won’t have a June house payment and half of our normal mortgage payment will finish paying off our credit card and the other half will go into savings.

2 years ago, we also started giving regularly to our church. Prior to that, our giving was very sporadic and only “when we had money”, which really translates into not very often. “Giving” is very important to us. We give monthly to our church, we purchase Christmas presents every year for two local charity organizations, we purchase and pack boxes for Samaritan’s Purse, and we volunteer regularly at our church.  We don’t think it is a coincidence that our financial fortunes started to turn when we made a concerted effort to be more generous with our time, treasures, and talents.

We only have a small emergency fund of $2000 right now, but we have 1 month of bare bones expenses in cash/sinking funds. We don’t have a big emergency fund (yet) but we aren’t living totally paycheck to paycheck either. Our debt continues to decrease, and our savings continues to increase.

After putting this all on paper, I see so many mistakes we’ve made, as well as a few bright spots along the way. I feel like most of our retirement mistakes were made earlier in our career, cashing out 401ks and pensions. Now, we are pushing hard to save enough for a comfortable retirement and are putting a good chunk of our pre-tax income into retirement every month because we are trying to play catch up. (I put 23% of my pre-tax income into retirement and The Husband was putting 19% (including his 401K match and profit sharing) but with his most recent raise it is now at 22%.) But I feel like our biggest credit card mistakes came in our late 30s and early 40s. We should have known better but we chose to keep our heads in the sand for far too long. However, as I’ve said many times before, we are making progress and we will get out of credit card debt!

It's been a rocky journey and we learned some difficult lessons. More than learning them, we’ve put them into practice. Hopefully this time next year, I can write another post explaining how we manage our finances now that we are credit card debt free and aggressively saving! This time next year we will be in a new state, with a new house, and paying new bills. It will be so interesting to see where we are.

It has been really fun and eye opening to look back at the choices and mistakes we’ve made over the last 25 years of our life. 

Our Money Journey - Part 2

April 24th, 2024 at 07:22 pm

Here is part 2 of our money journey.

At this point in our life, things changed a little bit because I went to work full-time in my profession as opposed to working part time in retail. In some ways, things improved, in others they stayed the same, and in yet others, they got worse.

Age 28 – 32

At this point, I went to work full-time as a teacher. We didn’t have to pay for day care as my mom watched our kids. But the kids were also getting older and getting involved in more activities.

This is when we pretty much stopped adding to our debt, as I was making more money, but we didn’t make much progress on it either.

We were able to pay cash for almost everything we needed or bought, but our payments towards debt were minimal. We made payments and, in fact, even made small dents in the debt, but we never really made much progress. We were treading water and still living paycheck to paycheck. We didn’t put any money into savings and were not actively contributing to our retirement, other than what was involuntarily taken out of my paycheck. The Husband was still working for the same large company and they did offer a pension plan the he was fully vested in.

Age 32 – 37

At this point, The Husband switched jobs. Leaving a stable company in the middle of the Great Recession was crazy in my book, but we prayed about it and really felt like it was the best option for our family.

He got a huge pay raise but took a cut in his vacation time. It was a trade-off we were willing to make.

Because he was fully vested in his pension at his old job, we decided to cash that out to pay off our credit card debt and be able to start fresh.

With the pay raise, we were able to travel more and start doing major home renovations. We were able to pay for these all with cash. We charged a lot on our credit card each month but had no problem paying the balance in full every month.

Although we were living within our means, we were JUST living within our means. We did contribute to our retirements, but we didn’t put anything in savings for “today”. We didn’t save for a rainy day and were still living paycheck to paycheck. This would eventually come back to bite us when we decided to remodel the kitchen at our old house.

Up to this point, all of the remodeling we had done was paid for in full by the end of the project. We were able to cash flow everything. We didn’t understand how expensive a kitchen remodel would really be. We charged everything, just as we had done in years past, but everything was so expensive, that we couldn’t pay it off each month. And the balance started to grow.

It grew to over $13000. (Small aside here. We also had a balance on another credit card that we were paying off slow and steady. The balance had gotten down to a little over $4000 so I took money that should have gone towards our kitchen remodel and put it towards paying off the other card. It didn’t change our debt total, just the way our debt was structured.)

For us, this really became a period of two steps forward and one step back.

At the end of our kitchen remodel, we decided to sell our house. (There were many factors that played into this decision, I swear!) We were back in credit card debt, still had virtually no savings, and had learned nothing from cashing out a small 401k and a large pension. We sacrificed out future to payoff our past and still wound up in the same situation because there was no work involved in paying off our debt. We had no discipline and did not change any of our behaviors.

Stay tuned for part three and the (likely) final installment of our money journey.

Our Money Journey - Part 1

April 19th, 2024 at 04:33 pm

Years ago, I was reading another, now defunct, blog and I loved a post she wrote. As she just took a walk down memory lane, she wrote about life and her financial journey; I thought I’d do the same for my upcoming 45th birthday.

She only wrote about her last decade; I think I’ll write about my last two and half decades. This is going to be long so I will split it into a few separate posts.  I’ll write about ages 20 – 27 and then from 28 – 37 and 38 – 45.

At age 20, I was living at home and attending community college. My parents couldn’t afford to help me financially, so I was on the hook for all college expenses myself. (*Note, I was able to live at home, rent-free and that in itself is a form of major help!) I played soccer and my coach there really liked me and helped me to get a full-ride athletic scholarship.  I lived at school from ages 21 – 22 and left college debt free. At the same time, The Husband lived at home and worked at a crummy job that paid tuition reimbursement, so he also left college debt free.

Age 22 – 25

I moved home when my athletic eligibility ran out, not because I couldn’t have finished my education, but because I was so homesick, I was ready to be home. By this time, my dad had retired and ironically made more money retired than he made working so he was able to help me financially with the rest of my school.

While I was away at school, The Husband graduated college and got a job working in IT for a large, Bay Area-based company. It was close to home and the most money he had ever made.

Also, 5 months after moving back home, The Husband and I got married. We got married on the (relatively) cheap… before it was trendy to do so. We spent $7500 on our entire wedding: dress/tux, venue, DJ, flowers, food, photographer, everything. However, we didn’t have the money to do that at the time. We cashed out a small 401K The Husband had had to pay for the wedding.

We moved in with my parents while I finished college and got my credential.

We also had our first child.

Age 25 – 27

We lived with my parents for just over two years.

Then we bought our first house. We had no money in savings and no down payment. No problem, right?

We borrowed $6000 from my sister and her husband to “have in the bank” as savings when we bought our house.

At this time mortgage companies were doing lots of shady things and because we had good credit, we qualified for a 0% down, interest only, variable rate loan. In fact, we had two loans: one at 80% and one at 20%, both interest only.

When we bought our home, we didn’t buy more than we could afford, however, we had all these new bills we’d never had to pay before and I was only working retail 50%. I worked 2 days one week and three days the next. Any money we needed over and above our earnings was put on the credit card.

Our credit cards were nearly maxed out and we were living paycheck to paycheck. We had to pay my sister and brother-in-law back and money was tight. We were never late on any bills and never went over the limit on our credit card, but our financial situation was rough!

Stay tuned for part 2 of our money journey… I know you are riveted and can’t wait. 😊

April Debt Update

April 16th, 2024 at 07:23 pm

This debt update is based on our most recent credit card statement which posted on 4/16/24. I do this mid-month because our credit card closes on the 15th. I can't wait until we are credit card debt free! Once we are credit card debt free, I will start doing updates at the beginning of the month. We still have other debts. Recently, we bought a car so now we have a car payment, we are also in the process of moving and will still have a mortgage. Once we move and are fully settled, I will do new debt updates based on those debts as well as savings updates on our savings progress. But those updates are a while off because I have still have credit card debt and we haven’t moved yet!

As always, we are not paying off our debt as fast as I would like, but I am happy to say that our debt decreased again; not by as much as I would have liked this month, but it never does. However, a decrease is a decrease!

Here is our current credit card debt total:

            $8490.08 at 19.99% interest  

Our total credit card debt stands at: $8490.08 That’s still a lot of debt, but we have seen more progress in the last 20 months than we have seen in the last 9 years. All we can do is just keep plugging away. We are starting to see the light at the end of the tunnel and the light is getting bigger and brighter every month.

Plus side: Our debt decreased! We have the least amount of credit card debt that we have had in several years! We paid off $1111.10 of credit card debt (after interest); that amounts to almost 12% of our current debt. And we have paid off 66% of our total debt from our high of almost $25,000! The amount of interest we pay monthly has decreased by over $185 per month from its peak!

Down side: No matter how much debt we pay off, it’s never enough. Of course, interest, interest, interest – that will always be a down side, and we still have a ways to go before we are out of credit card debt! This is ended up being a spendy month and if it weren’t for The Husband’s extra paycheck, we would have paid down almost nothing from out debt.

Looking forward to: having the lowest credit card debt we have had in over 9 years and ontinued progress on our debt. Next month's total will be the lowest credit card debt we have had in probably 20 years where we actually have worked to pay off the debt as opposed to  cashing out a pension or 401k. We have paid off our debt through budgeting and hard work!  This feels like accomplishment! My district voted on our raise and now we are waiting for the county office to issue it and then to get our retro checks. Mine should be around $4000 and it will almost all go towards our debt! Those payments won’t be issued until late May, but I’m very excited to be able to use that towards debt. I will also get a small stipend for coaching soccer of about $1700 and that will all go towards our debt, too! My soccer stipend should come before our next billing cycle closes while my retro check will not come until after it closes.

I feel really good about our progress and am looking forward to knocking our credit card debt out in the next couple of months.

I hope your debt freedom journey is smooth, uneventful, and beyond successful!

Change is Coming

April 10th, 2024 at 06:22 pm

We put our house on the market 2 weeks ago. We had our first open house last weekend and are supposed to hear from our realtor regarding offers today.

Holy cow!

The idea to move started during and because of Covid. As I chose not to get the Covid shot, I was told I would lose my job and not be able to work in California. That has since changed, but the idea to move continued to grow.

We are very lucky that my husband's job has approved him to work fully remote and out of state. He will keep his same salary and in fact get a raise because we are moving to a state without a state imcome tax.

We are nervous. We are excited. We are scared.

Both my husband and I have lived our entire lives in California so leaving will be a big change. We will be leaving our family and friends, but our kids (both young adults) are moving with us and they are now the main catalyst for the move. 

We have no idea exactly how this is going to affect our finances, only that it will.

We will make a good chunk of money off of our house, somewhere in the neighborhood of $400,000 before commissions and fees. Our debt will be $5000 or less by the time, or not long after, escrow closes (I will receive my retro check on 5/20 and I get a stipend for coaching; those will be close to $6,000 combined), so we will finish paying that off. But other than that, the rest of the money will be sunk into a new home.

We are hoping to buy some land and have a mortgage smaller than what we have now. As of right now, it is undecided if I will work or not. There is a strong chance I will no longer work in education. I have also been offered a fully remote job, again making a California salary, but I don't know if is something I want to pursue or not.

Our lives are very up in the air right now so I am trying to keep a very tight lid on our finances. I am checking bank accounts and credit card accounts daily. I am constantly reworking the budget to see how much debt we could pay off or how much we can put into our home repair/furniture and appliances envelope, as we know those will be used in a move.

As of right now, everythis is still hypothetical. We need to make enough money off of our current house to make a move feasible so that depends on what sort of offers we get.  I guess we should know more tonight. 


April 2nd, 2024 at 07:22 pm

Last year when we filed our taxes, we received a pretty big state refund but had to pay an even bigger federal tax bill. The difference was a little under $1900 that we had to pay to the federal government. So, after we filed last year, we adjusted The Husband’s taxes so that we (hopefully) would not be in the same boat this year.

And it worked… sort of. We are still getting a refund from the state (just smaller) and we still owe the federal government (just less).

After the adjustments to our taxes, we started bringing home around $100 less per month, which kind of sucked (to be honest), but it was better than having to come up with all the money at once. We are very lucky to have some money in savings and not be living totally paycheck to paycheck, but it still hurt to have to dig into our savings.

I can’t remember all the exact numbers this year, but I know that the difference is a little over $1100 that we owe in taxes to the federal government. That’s a decrease of over $700 so I will take it. We have thought about adjusting our taxes even further but because of some possible “life” things coming up, we have decided to leave them as they are for now and we will pay whatever we have to pay next year. (Not because we need the money, but more because we don’t know what the future is going to look like and we feel like paying $1100 isn’t too bad.)

We were hoping we would owe the federal government very little so I’m bummed that we have to take the money out of savings to pay them, but still glad that it’s there. Taking $1100 out of savings puts a wrench in my goals, but we have to pay our taxes so it is what it is.

I’m glad to have our taxes done and filed. We have already mailed the check so we are done with taxes for another year.