$4 slap in the face...

$4...

This is the balance in our home bank account right now. After getting cleaned out by the tax man, and being on permanent standstill for that loan we are probably not getting, we are cash crunched beyond belief.

Granted there is a paycheque from the hubby coming on Monday (which is late, and I don't know how much it will be - damned commission work!), but it is already allotted to other things, like say the utilities bill.

I am exceedingly frustrated right now. I feel like I am just drowning and can't seem to find my way out. I know I just need to breathe and regroup (which is what I'll be doing this weekend, as what else can you do with $4 in your bank account).

A little willpower...

So it is now boxing day and I am spending Christmas with family. Unfortunately, spending time with my mom requires that I go boxing day shopping. Don't get me wrong I love...I mean LOVE shopping, but old habits die hard and I am a little skeptical of my willpower to resist the sales. This will definitely be a test of my will to see if I can shop for an entire day without pulling out any plastic. I'll keep you posted on how I did. Cross your fingers for me.

On a happier note, for Christmas I received money that was specifically earmarked for a home renovation project that we have been working on (yeah), and... get this... one of my relatives couldn't think of a gift for me so they actually bought me diapers. Yep, diapers for my son. Sounds a little unorthodoxed, but the thought was that if my kids everything they want (which they do, they are so spoiled by their grandparents) that they should get something they need. Awesome!! From the hefty load of Huggies I will easily sail into spring without having to dish out for these necessities.

Month 3...

So it is now the 20th of the the 3rd month of this rollercoaster. Luckily for me I have made my extra $100 (yeah me!) and I don't think I have as much derailment with the credit cards as in the prior month (but the truth will come out next week).

Currently looking forward to maybe, just maybe, having my net debt balance go down.

Fingers crossed!

Paying to get out of bed...

So after completing that reconciliation of my credit cards, I went a little CRAZY and figured out how much interest I was being charged per day for the past month. The result...$41.

Yep, I am paying credit card companies $41 dollars a day to have the luxury to not own up to the purchases I have made over the past few years. Pretty hefty cost for denial.

I challenge anyone else to do this. Actually look at what your debt is costing you on a daily basis, I sure it will be more shocking then you realize.

Making Sense of My Mess...

So as I posted on Friday I was blindsighted by the movement (increase) of my debt. So I created a reconciliation that groups all entries into categories and makes more sense of where the money is bleeding. What I found was suprising.

Sure enough there was interest charges and vehicle repairs, but there were two big shocks from the breakdown. First off was gas. I thought we were spending a couple hundred bucks a month, but it turns out we were spending just shy of $900. Can you believe it? $900 in just 30 days!!!! Gas is a necessity in my world as it is an 8km drive to the end of the line for public transit, but I never thought it was that bad.

The second shocker was the $700 that was spent on Miscellaneous stuff. Between 2 credit cards we managed to charge just over $700 on items that were not necessary (ie. going out for lunch) or that I didn't even realize I had charged. How pathetic is that! There were actually a few charges that I swore I had paid cash for. Ouch!

Being more cognizant will hopefully put an end to this one. If the misc. stuff wasn't charged and gas was more in line with what I thought it was we would have actually could out ahead, although meagerly.

Well we can only learn from our mistakes, and hopefully I will not be repeating this post in early December.

Un-Happy Halloween...

So here it is - Halloween. I received my last credit card statement and went to update my ticker. To my unfortunate suprise, not only did my debt balance go up - but it was $713 dollars more then when I started this whole crusade.

I was completely dumbfounded. From further investigation it appears that the majority of the problem is that my interest charges are eating too much of a chunk into my monthly payments, the aforementioned car repairs, and my husband's continuous spending on his business card.

Something has got to give here as I am really discouraged right now! I know I just have to keep plugging away, but I am not even sure how. I guess I'm just a whole lotta talk!

You may have a point...

I received a comment the other day in regards to my post on my dismal attempt at getting my credit card interest rates lowered. The comment indicated as to whether the economy may be to blame for my lack of success. My response: probably.

This is one of the reasons I have not completely given up on this idea. As I indicated in my post I will likely try again once I have paid off more debt. Part of this is due to fact that hopefully the economy will turn around and my credit card people will trust me again.

However, one of the reasons I decided to call was because of the economic situation. I thought, just maybe, that the companies might be willing to toss me a few token percentage points as an incentive for me not to default on the entire balance (not that I would, but they don't know that). I guess I was wrong.

Thanks for the comment.

October 20th Update...

As most of you will already know, the 20th is the end of the month for my "Extra $100" challenge, as my credit cards bills cut off on this date.

I am happy to report - as mentioned in an earlier post. That I have succeeded for the current month. As you would have read in earlier posts I managed to sell my cell phone plan and accumulate my $100 in one go.

2 months down - 34 months to go. Also please remember to provide suggestions for this challenge. It's only going to get harder from here.

Trying to shed some extra pounds...

I decided that since I didn't receive a balance transfer offer this month that maybe I could try to reduce my credit card interest rates by calling the companies and simply asking.

Although many debt smarties recommend this as an alternative, it did not work for me! First off I asked. No dice.

Then I threatened to move my debt to another provider. I was told to go ahead.

Then I asked to speak to a manager and I was told they could give me a "payment holiday" for a month, or lower my minimum monthly payment, but no reduction in interest! AHHHHHH!

This is frustrating as I have had one of these cards for 10 years with not one late or missed payment.

Oh well. I guess it is back to the drawing board. Can't say I didn't try. Maybe after I pay some of the debt down I can try again.

The Balance Transfer Trade Trick...

Okay, so we have all heard that one of the keys to reducing your debt is transferring the balance to a low rate or promotional rate credit card to reduce your monthly interest. Pretty good plan, but sometimes we don't have any credit room, or we can't/don't want to open another credit card to acheive this. Here's a little trick to bring your rate down (after exhausting other options, like just calling the company).

When your credit card company offers a balance transfer (even if your card is maxed) do the following:

a.) Take every spare penny that you have (credit line, upcoming mortgage payment, anything!) and make sure you can part with it for about a week.

b.) Put all of this money on the credit card with the low transfer rate.

c.) Wait until the money has been applied. If it is a bank credit card, you can sometimes speed up the process by physically making the payment at a branch.

d.) Write one of the handy dandy cheques that come with the transfer offer to yourself and put in the bank.

e.) Put the money you spent back to where it belongs.

Voila! Whatever money you managed to put on your card is now traded from your high interest rate to a low promotional rate. This may only be short lived (due to length of promotion, or low amount of money that you managed to scrounge up in step a) but even any reprieve in interest costs will help to pay down the amount faster and reduce your interest charges.

After the amount is paid off (or the promotion runs out), try the traditional standbys to reduce your rate, and if all else fails, repeat the above process ensuring that you maximize the amount of money that you put on your card.

I Thought Gas Prices Were Bad...

So everyone is complaining about gas prices - what about car repairs!!!! I got hit today with a ridiculous amount for car repairs. After wiping out my emergency fund, I still have a bill over $1000!! Most of that is labor.

Don't get me wrong, we take good care of our vehicle, but this will definitely be a setback as you can probably guess where the $1000 went. (Credit Card #2)

Feeling pretty bitter right now. This just wiped out a third of my monthly payments!!!

What Have You Done With My Husband...

I mentioned yesterday that the hubby has added a new income stream to our little home, but today I thought I was going to pass out.

In an effort to keep him "in the loop" on our finances I was in our home office preparing the monthly report as I had described in an earlier post. After finding out what I was working on he actually decided he wanted to talk about the issue. And I mean actually listen to what I had to say!

The final verdict:

a.) He agreed there was a problem that we needed to fix and agreed to cut out all unnecessary purchases until we had things under control.

b.) We talked about the consolidation loan concept and why I don't really want one right now, and especially why I DO NOT want to add it to our home equity. And he listened!!! However, he did remind me that compared to ourselves a year or so ago, we have actually been getting better with the frivolous spending. A large portion of our debt would likely be gone if we were not paying for landscaping and the final additions (ie. driveway) to our newer home. Considering that he does have a point, we compromised to get a consolidation loan, but only for the amount of the home renovation/completion costs. This will not cover all of our debt, but we can bring our receipts and records to the bank to back up the amount (as opposed to just consumer spending), it will be a more reasonable amount so we are more likely to get approved, and all the good stuff like a lower interest rate. He agreed that everything else was our own misdoings and we will need to deal with that on our own, but the loan should make the whole project just a little more manageable. Besides, if they say no we are in no worse position than we are now. Oh yeah and he agreed - NO HOME EQUITY LOAN!!!

c.) To top it all off, he is going to go to the bank to handle the loan for us! I know we are in this together, but this is a huge step for him. He will singlehandedly need to sit with our banker and own up to our debts and make a plan. Of course, I get final veto, but it means that he is being responsible for our debt and not just putting the problem on me to fix. I am really impressed about this. My little man is growing up!!!!!! Besides, if I don't have to take time off work to do this, my boss will surely be pleased.

d.) We got to talking about our goals A.D. (after debt). We had always chirped about what we want before, but never in a "I would like to put a coupld hundred away every month to do X."

I am really not sure what has gotten into him, and I know it may fade as quickly as it came, but I will take what I can get as long as I can. If he has finally decided to work with me on this, instead of just letting things happen, we may have a shot at our end of August 2011 goal afterall.

Gold Star for the Hubby...

So it has been a good weekend. My husband has now managed to get a new job. However, when I say new, I mean additional. Yep that's right, another income stream into our household! Unfortunately, he doesn't start until the new year, but the good news is the job should pay for his business credit card debt (which if we remember is over half of the total debt) based on the three year pay 0ff plan. This means a little lighter on the cash flow, and if I can still allocate all or least the majority of the existing payments, it will be paid off even sooner. I know, I know, it should all be going to debt, but considering we will still be on track for "the plan" I don't see any reason why I can't take a couple hundred every month to pad the emergency fund and ease the strict grocery budget.

I am so excited for him. Plus, if we can dig ourselves out of this hole a little sooner, I will be ecstatic.

Christmas in September...

My budget got a nice little reprieve this week My husband's family has decided to draw names for the kids for Christmas, which now means that instead of the regular eight children (not including my own) that I have to buy for, I now only have to shop for two! Plus, they decided to put a cap on the present cost to make it "fair." WooooooHooooo!

Don't get me wrong I LOVE Christmas! And this is actually a little bit upsetting, as Christmas shopping, especially for children, is probably the best part. Every year my husband and I go to Toys R Us and spend hours trying out all the toys and deciding what to buy. It really makes you never want to grow up (if you ever really do).

However, this is a nice break on my tight budget. Plus, the money I save can go on my debt, or to the unexpected Christmas expenses that always seem to creep up, no matter how prepared you think you are!!

Beware - Month 1 credit card bills are coming!!

A Few Depressing Thoughts...

So I had a bit of a sobering experience yesterday. I actually sat down and thought about what I can't have because of my debts. It was really aggravating!! Due to the debt we have accumulated we have essentially locked up over $3000 a month (that is $36000 per year) that we are not allowed to touch for our past indiscretions. Talk about not moving forward!!

My husband and I want to a get a newer, more fuel efficient car. Without our debts this would be a piece of cake. But no dice.

I would like to cut back my working hours in exchange for more mommy hours. Not going to happen at this rate.

Trips? Nope. Basement renovations? Nada. New bedroom furniture? Not a chance. New pair of shoes? No - but maybe if I do a good job with this debt it could be worked out ;)

I know that it is always said to look at the positive side of things to motivate you to action, but apparently looking at the downside can also give you the swift kick that you need.

Beware "miser mode"...

So sometimes after you have scaled back as far as you can go, you can get used to not spending money, and actually "forget" how to spend money wisely. My friend refers to this phenomenon as "miser mode."

Let's use an example:

You need a pair of dress pants for work. You think to yourself "I don't want to be spending my money on pants I have debt to pay!!" But you know you need them. You go to the store, and buy the cheapest pair you can find, and you think that you've done a pretty good job because you have spent as little as possible. Problem is, they don't wash well, they don't wear well, and the hems fall about 5 seconds after you put them on. So in about 2 months you not only look unprofessional, but you need another pair of pants. So you start the cycle over again. In retrospect, however, you should have bit the bullet the first time, spent a little extra and bought a good quality pair. After all of the replacement pairs you would need to buy (not including any tailoring you did along the way), you likely spent more in the long run going the "cheap" route.

Moral of the story: Being money saavy is not always about spending the least, it's about making wise decisions with your money. For items that you expect to need for an extended period of time, or use on a fairly regular basis (staple clothing items, everyday electronics, appliances, etc.) remember that cheaper is not always better. Take the timet o research your purchases, buy good quality items and you will likely be happier (and in some cases spend less) in the long run.

Stats-
Credit cards to pay - 3
"Extra" earned -$100

That one was easy…

So, I have already accumulated my $100 for October (Yeah me!!). Turns out I was not maximizing my usage on my cell phone plan (which provides me with unlimited minutes anytime, anywhere in the city). So, I scaled down and managed to transfer/sell my plan to a friend whose family owns a business for $300. Plus, since I was also changing providers I received a $25 credit on my bill, a new phone, car charger, and activation fee for FREE! On top of all that my phone bill should be about $30 less per month. $360 in annual savings!

Yes, I know the value was $300, but as I indicated in other posts, I would consider this a windfall as it was not really planned. I took $100 for my debts, $100 for my meager emergency fund, and the final $100 is currently in limbo until my final bill with provider #1 and my first bill with provider #2 is settled. Everyone knows they always try to get you until the very end, so I have money sitting there to cover those expenses. If I don't use the $100 I'll reassess again.

At least it gives me a headstart to be thinking about November's scheme.

Stats -
Credit Cards to pay - 3
Money earned this month - $100

Taking the Home out of Home Business…

So I received a comment relating to the “My Husband, My “Client”” concept. One of my good friends was indicating that one of the biggest debt problems was my husband disconnection between his expenses and income. My hubby works from home earning commission income and has a great deal of associated expenses (and over half of our combined debt on his “business” credit card, I might add). He does his job how he sees fit, and I handle all of the bills and finances.

My friend then indicated that I need to segregate his business from our household finances. She suggested doing this by providing a “salary” to the household from his commission income and the residual income would go to pay his operating expenses. His salary would be dependent on how much of his income is actually required to cover these expenses (ie. 45%) Based on this method she said it would help with the following:

a.) Determining if we are overspending on our household expenses. By removing his business debt and related operating payments to a separate accounting system (read: budget) I can determine if our household is actually balanced and operating properly. If not, cuts will need to be made here.

b.) Determining if the business is overspending by determining if the allotted % is actually covering his expenses and whether we have an overage or shortfall here. Budget may also need to be made.

c.) Requiring my husband to take more responsibility for the expenditures in his business. For this system to work he will need to know if he can make purchases, instead of just doing it and having me deal with the consequences by shuffling around his income and our household spending.

A huge lightbulb went on at this point. Why didn’t I think of this before!! It’s really a simple concept, but for some reason I just never got it.

Considering both the household and business are starting out in a negative position, I think it will logically take 6 months to a year to have each completely self-sustaining, but I am going to give it a go. Unfortunately, I will not be able to implement until October as I have already missed September.

I asked my friend how she got so smart. She responded, “It’s what Gail would have told you to do!” She’s probably right.

Stats -
Credit Cards to Pay off - 3
"Extra" this month (October) - $0 - I will think of something though.

The windfall trifecta...

So have you ever been fortunate enough to go to your mailbox and have an unannounced cheque show up! Cha-ching - you may be thinking, but what do you do with money that you were not expecting? It could be a rebate from your insurance company, a gift from Auntie Erna, or whatever, but sometimes luck changes and you get a little break (or a big break). How to deal with the money is what I call "The Windfall Trifecta." This is a way to keep you happy without just blowing the money. Basically allocate all windfalls (no matter the size) into 3 components.

a.) Debt - If you have debt you should put some money on there. Unless you are in dire straits putting the whole windfall is likely unsatisfying as you will feel like it never really happened. Especially for gift money. However, we must remember to give our debt monkey a little extra and loosen up our debt load a bit.

b.) Savings - Debt or no debt, save some of that money. Even if only $5 put that little gold nugget into a high interest savings account for a rainy day. It may not seem like much, but a few $5 allocations with a decent interest rate could amount to an emergency car repair very quickly. Plus, think how nice it will feel not to charge something unexpected.

If you have no debt, you can either double up the savings component or split between savings accounts (ie. emergency fund and your vacation fund)

c.) Spend it!! - Yeah, you heard me. Even a cup of Starbucks can really make your day if you have been diligent with your debt repayment plan. Besides, you only live once and if you put every cent away you'll never enjoy yourself. Grant yourself a little pleasure and it will take you much further and recharge your batteries for the uphill debt fight.

Note: Just because there are three categories does not mean that you need to split the money 3 ways. If you are drowning in your debt, it may be worth it put 75% or more on your debt, with a much lower amount allocated to savings and spending. A good key concept for windfall success - the spending amount should never be higher than any of the other two categories.

If your windfall is particularly big, remember to take the time to assess what you really need/want in the spending category. When you are dealing with bigger bucks, making wiser decisions will relieve some future cash strain while still feeling satisfying.

Cards to pay off - 3
Extra earned this month - $100 - Yep I did it, and with hardly a day to spare!!! The remaining $31 dollars came from a combination of my change jar, money in purses/wallets I hadn't used for a while (a whopping $17.43), and I returned an item that I had charged on my credit card (item was actually $21, but I figured that one was a stretch so I will only take credit for the remaining amount needed for September).

Note: Getting my mitts on $100 was really hard. I will definitely have to get creative in the next few months.

Be true to yourself...

So as you can see I have added a "Debt Destruction Chart" above my posts. This chart will detail how well, (or how pathetically), I am paying off my debt. It's one thing to see it as a number, it is another to see how ridiculously far you are from reaching your goals. I kinda like it. I might actually diversify it into all my different credit cards.

I love widgets!

I plan to update at the end of every month after statements are in, unless of course of a windfall.
On that note, see "The Windfall Trifecta" post tomorrow.


Stats-
Total Debt - Look at the chart!
Credit cards to pay off - 3
Earned this month - same as before