Christmas is Coming!

Wow, it's been awhile since I last posted.... Things kind of got away from me but I since I paid off another loan this week I thought I'd better get back to posting on a regular basis.

We paid off the truck last month which as I've said was a great feeling.  At the moment we're working on the next loan down the list which is the first gate loan.  We have just paid that loan off so in January we'll be working on the second gate loan.

Quick list review:

• The Truck: DONE!
• Gate 1: DONE!
• Gate 2: $2628
• Gate 3: $2798
• Gate 4: $4909
• ECSI: $5290
• K Loan: $10710
• FSA Loan:: $23000

Christmas Mishaps

So... Christmas time is always interesting.  And by interesting I mean I spend too much money.  Let's start in the beginning, shall we?

I wanted a tablet.  In order to buy the tablet I told Kristi I would sell some board games in order to pay for it.  I would also look for the best deal I could find, which naturally came on Black Friday.  I did a bunch of research and decided to purchase the ASUS Transformer with a Keyboard Dock (so it becomes a little netbook).  On Black Friday the tablet was $250 and the dock was $100, totally $350.  

I sold a slew of games and ended making $360 give or take a dollar so I had the whole thing paid for.  Great!  I was buying something I wanted without going into debt, definitely on the right track.

However, I ended up overspending for the month because I bought a second, smaller tablet for Kristi.  I also bought a bunch of accessories/cases for both tablets, memory cards, and cables.  Furthermore, I went in with Adam, Kristi's brother and my new brother-in-law for a second present for Kristi, her new Kitchenaid Stand Mixer.  So, what was originally supposed to be a zero sum purchase ended up being a -$600 or so venture.... ooops...

While this obviously wasn't ideal, it turned out to be not that bad in the end.  We had the benefit of John's rent ($300) and Adam paying me half of the mixer ($100) so it actually wasn't the end of the world.  The problem is that what I'm doing now is justifying my bad spending in December.  I will use this month as a lesson in overspending and falling short of my goals.  We could have put more towards the Loan List, but the money got spent on things.  Lesson learned.

Paid off the Truck!

A few weeks ago we paid off the truck!  I know I said I'd post after it happened, but my life has been busy the last few weeks and I haven't had time to sit down and post about it.

I'm very happy to be making progress towards our goal of being debt free.  Paying off the truck was a wonderful experience.  We drove down to Salem on Friday afternoon, October 30th.  The traffic was surprisingly light and we made good time.  We drove straight to Oregon Community Credit Union and plopped down the final $941 dollars left on the loan in cash.  The teller smiled and congratulated us on paying the loan off and wished us luck with the debt snowball.  There were cookies and candy in the lobby, too, so we helped ourselves to some while we waited in line.

The title to the truck arrived in the mail about a week later.  This is the first time I've ever had the title to a vehicle I bought myself.  It was a very gratifying experience.  I'm not sure I can adequately describe it, but I felt power and ownership over my life.  You might think that buying my house or some of the other things I own would have given me the same feeling, but this is really the first major purchase since I've had my new job and since we've been married, so it felt different.  I realize that we "bought" the truck last year before our marriage, but since we didn't actually own it (the bank did), paying off the loan felt like purchasing it and now I own it.  It's in my name.  It feels great.

November's Budget

I promised I'd go into detail on our budget at the beginning of each month and so here I am.  Most of the Total Money Makeover is about discipline, self-control, and sticking to your well laid plans.  This involves sticking to a budget each month so that all the extra money is focused on your debts.

I'd like to state that we are in remarkably great shape compared to the average person on Ramsey's plan, at least in my opinion.  Kristi and I have began the habit of listening to his radio show podcast on the way to work and it seems to us that most people are in a much worse situation than us.  For example, we have $0 credit card debt, whereas many people seem to have ten, twenty, or fifty or more thousand dollars in credit card debt alone.  A lot of people also seem to have giant car/truck payments, a home equity credit line, or even a second mortgage on their home.  I feel lucky, honestly, that up to this point we've been relatively responsible with our money.

That's not to say I was responsible all the time.  In college, and while I lived on my own, I wasn't always the best handler of my money.  I spent money on all kinds of things, and usually there was always too much month and not enough money.  Because I was irresponsible, I racked up some credit card debt, to the tune of about $2500 or so.  Again, not a crazy amount, but still more than I ever plan on having again.

The budget, I've found, has really helped me stay focused, and instead of spending money frivolously and on impulse, it's made me examine my purchases more closely.  The first thing that pops into my mind is board and video games.  There are several games I know I would have bought in the past that I have refrained from buying because it's not in the budget and because I have a goal to work toward.  I plan on saving a portion of my budgeted money each month to buy things for me, and I'll write a post about some of those things in the coming weeks.

Now, to the budget:

Pets - $35.00

• We dropped this budget down to $35 mainly because we no longer have to buy a bag of dog food each month.  A bag of food for Kitty lasts a very long time, so we will adjust the budget during the months we have to buy a bag for her.  The same is true for liter, as we usually buy it when it's on sale at Costco and we stock up.  
• We plan on buying Sam a new bed and some new toys this month with the money.
• Any money at the end of the month gets put into a larger pet fund that would be used for bigger purchases or vet visits.

Clothing - $50.00

• This is a budget item that is a little different from the rest.  Sometimes this is used, and sometimes it's not.  For example, in October we overspent the budget buying costumes for Halloween, mainly because we didn't think about costumes at the beginning of the month.  We use this for any and all clothing purchases.
• What differentiates this from the other categories is that it's a rollover budget.  Any money unspent is added to the category for next month.  So if we don't spend any money in November, we'll have $100 to spend in December, and so on.

Recreation - $125.00

• This drops from $180 in October since we don't have Halloween and we aren't hosting Wine and Dine.  Recreation covers pretty much everything we do for fun.  Whether that's buying a Groupon, going to a movie, or going wine tasting, this has us covered.  We overspent in October, so this month we'll make a more concerted effort to stay on budget.  We'll be helped by having family in town for one weekend and won't be going out and spending money.
  

Personal - $150.00

• This budget covers our household expenses like toothpaste, dish soap, and the like.  It also covers personal wants like boardgames and supplies (for me) and tea cups and books (for Kristi).  We use this budget up regularly at Costco buying our supplies in bulk.  
• Each month we get a "Personal 25" so that we can buy things we want individually.  This helps us in 2 ways: It lets us buy a little something here and there for each of us so we can prevent splurge spending.  It also let's us save up for things we want down the road.  I want to get a tablet, so in a few months of saving I'll be able to get one.  I can easily get one tomorrow, but I'd have to not pay down debt as much to do it, so with the slow trickle of savings I can get something I want without sacrificing our ultimate goal of being debt free.

Food - $400.00

• This, along with our Transportation budget are the two largest budgets.  We usually spend about $250-$300 on our food each month since we plan our meals (most of the time) and can buy food in bulk and on sale in order to stay on budget.  This budget also covers any food I buy for lunches at work since we have a full kitchen it's super easy to buy a bunch of lunch foods and store it at work to make during my lunch breaks.
• This month we have increased the budget to cover Thanksgiving purchases. Mainly delicious jellied cranberry sauce, not that whole-berry blasphemy.  And a turkey, I guess. A big one. For the leftovers.

Transportation - $300.00

• This is our other main budget area.  We have been able to cut this down significantly since Kristi started school again since we can carpool to work again which greatly reduces our transportation costs.  Softball is over as well which has cut out 1-2 long trips a week out of my driving and saved a lot on the gas budget.  
• We also incorporate maintenance and parking into this budget, so sometimes this budget will be four, five, six hundred dollars when we know there is a maintenance need like oil change, new tires, etc.

November Budget Total: $1060

At the end of the month I'll post an accurate breakdown of our expenses and how we stayed on budget.  I'm hoping that being out in the open with the budget will help us stay on track, as I really don't want to be writing how we went over budget each month because that won't help us progress towards our debt freedom.

October Debt Process, October Budget

October Snowball Progress

I plan to update each time we make a payment on a debt and to update the remaining.  This is the first of such updates. 

This month, as the previous list of debts indicated, we paid money toward the truck.  $1,420 to be exact.  As I said in my post about Riley, this is less than our goal of around $2,000 towards debts each month.

After the payment processes, we’ll have just about $940 left to pay on the truck, which we’ll finish up in November.  This is very exciting as not only will we own the truck, we’ll be able to adjust our insurance on it down from full coverage, which the bank requires for the loan, which will save us some money each month.  It may not be much, but every dollar counts when it’s going towards debts.

Also, we plan to make the trip to Salem to the Oregon Community Credit Union (the closest branch of the bank that our car loan is through) to pay the final $940 and be done with it.  I think it will be valuable and important to pay the final payments on each debt (whenever possible) in person for the sense of accomplishment and pride in our achievement.  I know it doesn’t seem important, but I feel like taking the final step in person will provide a much better sense of fulfillment.  We plan on doing that next week, so stay tuned for that report!

October Budget

I’ve been meaning to write a post about our Monthly Budget for some time now, but the end of the month is coming quickly so I won’t bother with a full post this month, but I will outline the budget we’ve lived under this month.

Typically our total spending money for the month is about $1,000 to $1,100.  This amount fluctuates up and down depending on the planned and unplanned activities over the course of a month.  Each month we sit down and see where we’ll be spending money and plan accordingly.  Unfortunately we didn’t adequately account for Halloween so we’ve over spent a bit on our clothing budget this month for our costumes.  I think also the trauma of re-homing Riley caused us to not want to cook and we ate out more, which literally ate up our Recreation budget.  However, being able to adjust the budget each month helps us to plan for events like holidays/birthdays so we’re not constantly overspending or eating out all the time since we have a budget to live within.

Budget

Pets                     $50.00          (food, toys, etc)

Clothing               $50.00          (sundries, clothes)

Recreation           $150.00        (eating out, movies, date nights)

Personal              $150.00        (household items, toiletries, etc)

Food                   $300.00        (breakfast/lunch/dinner items)

Transportation     $300.00        (gasoline mostly, parking, maintenance)

That is a typical budget we work from.  I’ll post a full overview of November’s budget next week so I can report at the end of the month on how we did.  Currently we’re not doing that great with October, having gone over budget in a few categories, but we’re still overall on track with our budget (we can shift some money from unspent categories to cover the over spending in others, but we try to avoid that since we’re overspending). I’ll post a recap of October next week as well. 

The Financial Impact of Re-Homing Riley

When we made the decision to re-home Riley, we didn't make the decision because of any financial considerations, but because it was the best decision for us, for him, for Samson, and for our family going forward.  However, looking back at the last year plus with Riley, and looking at our finances going forward, it's hard not to realize the added financial burden a second dog brings and how not having a second dog going forward will help us get debt free sooner.

When Riley and Sam had their latest and last fight, it caused a lot of heartache, a lot of stress, and a financial mini-emergency we weren't expecting, but we were prepared for.  Riley was injured during the fight and had to go to the emergency vet.  The visit cost around $200 which ate into our debt snowball for the month.  After the vet visit, we sought the help of an animal behaviorist.  We,  in our hearts, knew what the outcome was going to be, but I believe we both were denying it and had to hear it from a professional.  We called the Oregon Humane Society and they sent out their behaviorist to evaluate if Sam and Riley could continue living together and if their relationship could be rehabilitated.

The behaviorist was going to cost $350 for the appointment.  We had seeen signs of the relationship deteriorating and sought the services of a trainer in the past, but when he came to the house it was clear to us he didn't really know how to help us.  We were burned on that, so we decided the OHS behaviourist was the way to go, because after all you get what you pay for in all aspects of life.

After a 3 hour appointment of observation and interaction of the dogs individually and together, the behaviorist told us what we were expecting, but didn't want to hear.  The dogs would probably never be best friends, but they could live together if 1. They were kept in separate rooms and 2. When together each wore a muzzle to prevent any biting if they fought again.  In short, it would require careful management for the rest of their lives.

This wasn't acceptable to us for a number of reasons.  We didn't want to manage our dogs, we wanted a home with dogs living in peace.  We also didn't want to have to worry about Riley snapping and fighting other dogs at dog parks and gatherings, which he had done with increasing frequency in the last few months.  We also didn't want to have to keep one dog in a crate or in another room when we were home because that felt cruel to us.  We were scared too that the dogs would hurt each other again, and may injure each other even worse in the future.  And finally, we thought of the children we plan on having in a few years.  We didn't want to risk the dogs fighting and having a child get hurt because of it.  So after considering the alternatives, we decided to re-home Riley.  It was most definitely the toughest decision we've had to make as a couple.

We re-homed Riley on Wednesday to a nurse with a son.  He has a much larger yard all to himself, and a little boy to play with him all the time.  We know he will be happier as an only dog, and he has a boy to grow up with and love.  It was very sad, and Kristi and I both shed many tears the last few weeks as the day approached, but in the end we know it's the best decisions for all involved.

Since Riley has left the home Sam has been a new dog.  He has been better around other dogs, he has listened to commands more, and has definitely benefited from the extra attention we've showered on him since Riley has been gone.  We took him to the beach this weekend and he was excellent, always coming when called, played with other dogs, and made lots of new human friends.  This only reinforced the belief that we made the right decision.

Now, I said I'd talk about the financial impact of having a one dog versus two dog household.  First off, the food costs go down as Riley ate about 1/3 more food per day than Sam, which made us go through a bag of dog food about twice a month.  With just Sam, we'll be at less than one bag a month, and at $40/bag that adds up over the year.  Additionally, we'll need half as much flea medicine, which is quite expensive, too.  And also, the vet costs will go, too.

More important, though, than the monthly upkeep of Sam, is the freedom only having 1 dog affords us in daily life.  For example, it's much easier to take Sam with us than it was to take both Sam and Riley.  Also, it's much easier to have someone dogsit Sam than it would be to dogsit both Sam and Riley.  Sam is also much better when left to his own devices; he doesn't chew, doesn't damage the house, and doesn't eliminate in the house, either.  When we want to travel, having only Sam will allow us to either use a dog-friendly hotel or to board him cheaper than boarding Sam and Riley.  And finally, it's much easier to fit one dog on the bed than two dogs!

I know we will miss Riley, I know we will struggle with our decision, even when we know and can already see it's for the best, but we will be better for it, both financially and more importantly emotionally. 

The Loans

The List

1. The Truck
• $2,256
• Estimated Payoff Date (EPD): November 2011
• We decided to upgrade my truck from a 1993 GMC Sonoma to a 2001 Chevy S10.  It's bigger, it has 4WD, and it can get us, our stuff, and the dogs around easily.
2. Gate Loans
1. $2,604
2. $2,628 
3. $2,799
4. $4,978
• These are some small loans from Willamette that were mostly for living expenses and books.
3. ECSI
• $5,486
• This is a student loan from Willamette
4. Stafford Loan
• $10,942
• This is Kristi's loan for her MAT program at Willamette.
5. FSA
• $22,495
• This is several federal student loans consolidated into one loan payment.  Had I to do it over again I wouldn't have consolidated and kept them separate as they would have been smaller loans we could have paid off individually as time goes by to keep us motivated.  As it stands now this loan looms large at the end of trail. 

Grand Total: $54,000 and change

This is the goal: Debt Free in 2 years or less.  Piece of cake.

Each month is a new challenge, especially as the holidays approach.  Kristi and I recreate our budget each month based on upcoming events and past budget history.  For example, next month we'll increase our food budget because we'll be hosting Thanksgiving for Kristi's family and therefore will have to buy turkey and most of the food to make the side dishes.  In December we'll increase our Auto Expenses because of our planned trip to California to visit my family.  

However, the plan each month is to contribute about $2000 towards loans.  This includes their minimum payments and our Debt Snowball money.  The minimum payments are fixed, but the Debt Snowball will fluctuate each month depending on our budget and if any needs/emergencies pop up.  This month we had to take Riley to the vet, so our contribution will be about $1500 instead of $2000, but hopefully we'll average $2K and above.

As we work our way through the list I'll make a post when each debt is paid off and how we reacted to paying it off.  I'll also update the remaining debts and post a goal for the next pay off date.

Feel free to play the home game along with us as we begin our Oregon Trail to Debt Freedom.

Drinking the Kool-Aid

When Kristi first told me about Dave Ramsey and the "Total Money Makeover" I wasn't sold.  I thought that all the debt we had was "good" debt.  I had some debt on credit cards, but nothing crazy like the people I always see on TV or hear about in the news and on the radio with $10,000+ in debt on credit cards.  I didn't have crazy personal loans or lots of financed toys like motorcycles, but I also didn't really have any plan.  I didn't know I needed one.

Before this time I was working for the Oregon Social Learning Center and the University of Oregon doing psychology research.  The pay wasn't great but it was a fun job and I enjoyed what I was doing.  After a while though the hours began to dwindle and the fun evaporated.  I started looking for jobs more in line with my degree in Biochemistry, but I lacked the relevant lab experience and my overall job hunt effort wasn't great.  As my job satisfaction and income decreased, my debt increased and I became aware of my definite lack of savings and future plan. 

By this point Kristi and I were engaged, we had discovered the Good Neighbor Next Door program which allowed us to buy our first home, and I was still unhappy with my career.  I was thankful that I had employment, such as it was, considering the high unemployment rate and the declining economy, but I knew it could only last so long given my deteriorating happiness and paychecks.  In May of 2010 I found a posting for a sales/chemist position at Optimize Technologies.  I applied and had 2 interviews with the company before I was told that they had hired another person who had more experience in the lab.  Since I had 0 work experience in a lab, I could hardly blame them.  Still, it was a very low point for me since I thought I had the job locked up after I gave a great set of interviews, in my opinion.  However, life had chosen to bless me in other ways as we moved into our new house in June of 2010 and we were less than a year from our wedding date. 

After that low point I began to work closely with Paul, a close friend who had gone to business school and done the job hunt circuit before.  We worked on my resume, focused my job search with clear and defined goals, and he held me accountable each week for my progress.  I had a few interviews for other positions, one of which I turned down because I knew the company wasn't a fit for me personally and another that wasn't a fit for me financially. As the search continued my hours were cut down to a point at OSLC where I was no longer getting benefits, and it was at this point that Kristi mentioned Dave Ramsey.  When she mentioned the plan I was skeptical to say the least, but honestly I was simply afraid that my meager income wouldn't be enough to put a dent into our student loans and help us.  I was scared that I would be a failure and put our soon to be marriage at risk because I couldn't hold up my half of the bargain.  My greatest fear in life is to be helpless, and in all honestly I was feeling pretty helpless at this point.  Nonetheless, I agreed that we should give it a try, but I was never totally committed to it.  In fact, shortly after we started the program we bought my truck and took on a car loan.  Not an auspicious start, to say the least.

However, life has a funny way of working itself out if you roll with the punches.  Shortly after the dawn of 2011 I received an email from Optimize Technologies asking my to come back and interview again for a new position that had opened up.  I was ecstatic, but I was also guarded because I didn't want to get my hopes up to high and then end up disappointed again.  After the email I searched high and low for a public posting of their newly open position and couldn't find it anywhere.  My guard began to lower and I grew excited about the interview.  I practiced with Jeff and prepped for the interview by buying a new suit (on credit, gasp) and studying.  I interviewed for and was offered the position the same day, and I took it happily. 

My income more than doubled with my new position considering it was full time employment with a higher salary, and the heavy burden of not being able to help with the finances was lifted.  Since January of 2011 we have paid off more than $10,000 in debt, but still I wasn't committed wholly to the plan.  I never made saving a priority and we spent money that we didn't need to spend on various wants and desires.

Flash forward to last week.  I realized that we hadn't hit any of the goals we had set when we got back from our honeymoon.  First of all, it was entirely possible for us to have had the truck paid off by September, but we had fallen woefully behind.  In fact, we hadn't really made a large dent in our debts in the last two months.  We looked at our budgets and saw that our money just went here and there on it's own, we didn't have a plan to spend it wisely so it left on it's own accord.  We were no longer in control of our money as we had been when we cruised through 10K in debt even as our wedding approached.  Something had to change, and that something was me.

I read the Dave Ramsey's book, something I had been procrastinating for too long, and I realized that I was guilty of a lot of bad money behaviors.  I wasn't saving, like I've said, and more importantly I wasn't being careful with my money.  It seemed to walk away 5, 10, 20 dollars at a time to things I didn't need.  I was tired of seeing our plan at the beginning of the month go totally by the wayside at the end of the month.  There always seemed to be too much month and not enough left in our cash budget, which made us use the debit card, which dwindled our debt snowball fund.  Most importantly, I realized, as Ramsey says, "I was sick and tired of being sick and tired!"

I fully committed to the plan.  I made a spreadsheet with all of our debts and realistic targets for paying off each one if we contribute every spare dollar and cent we can find to paying them off.  The truck will be paid for in November, and other small loans will follow shortly after.  I believe we can be debt free in 2 years, except for the house, if we can attack the debt with single minded focus and resolve.  I'm ready, Kristi is ready, and we're both on the same page and committed which will make all the world of difference.