Friday, October 16, 2009

Yes Virginia, You CAN Blow Your Entire Emergency Fund in a Day

Wow! Talk about a weekend! I guess it all started with a dishwasher. Our dishwasher was having trouble. I said, let's repair it. Dh said, I need a new tool and I can fix it. Father in Law says lets look to see what kind of tool he needs. Wait I can fix it with this tool. Oops, I broke your dishwasher. $365.

I say, I have some work to do on Monday while school is out. Take kids to daycare. Service engine light illuminates. Car in shop $900.

New dishwasher installed. Push button. Nothing happens. Open up. Food stains inside. Uh-oh don't shop at Best Buy. Don't buy open box even if Best Buy says is new.

No more dishwashers. We will give you floor model. Ok, says DH. No way, say I. +$35 for 10 % discount.

Window men come to replace windows (planned for months). Window man say, can't fix this one the casing is rotten through. Call repair man first then we replace. $???

This little demo is just a reminder that $1000 won't always cut it.... we havent even gotten the hospital bills yet, oy!!

Thursday, October 15, 2009

The Half-Way Point

You can go anywhere online and find a ton of tips about what to do if you are in debt and want to start paying it down. You can also find plenty of advice on how to save and invest your money once you are out of debt. But, what about those at the mid-way point? Is there a big difference between someone starting out and someone who has half of their debt paid off?

The simple answer is YES! If you are still in debt but have paid off a significant portion there are still things you have to look out for. This is also where your motivation will start to wear off. Here are some tips to make sure you don’t start to backslide.

1. Don’t increase your spending. This is the first thing you will probably be tempted to do. “Oh, well now I can afford that $25 extra to get more channels on cable. I still have $75 to put toward my next debt.” Sure it is just $25, but the next thing you know there will be another “extra” you will want and that whole hondo will be history!

2. Don’t lose your motivation. If you are now several years into paying off debt, the intensity has probably worn off. When I get like this I do things like check my credit score to see how many more points I have gained. You could also start some kind of spreadsheet to track how much you have left to go. Have a yard sale so you can add an extra chunk one month. Do anything that keeps you focused on the end result which is becoming debt free.

3. Do consider saving more. This may almost sound contradictory to what I said in number one, but this money won’t be going anywhere. You will have it when you need it. Now that I am halfway through paying off my debt I am going to start putting $100 a month in savings to give that a little boost.

4. Repeat this mantra. They’re in debt up to their eyeballs. From the commercial, this little saying has kept me from feeling like I am lacking something when I don’t spend like everyone else. Now that my debt is down a lot and I do have that “extra” money left over after paying regular bills it is hard not to want to start spending again.

5. Give yourself a pat on the back. No matter how far you have come or how far you have to go, if you are making progress that is something to be proud of. Celebrate this! Just don’t blow your snowball cash doing so! J

Sunday, August 30, 2009

It Just Doesn't Make Sense

I think I posted a few months ago about my budget being messed up. I did not have enough money to cover something and had no idea where the money went. It was just gone. I didn't spend it, not that I had recorded anyway. Well, I think I found it. But, again, it makes no sense. This month I have an extra $200 in my account. It makes NO sense. I have zeroed out my budget twice now. Well, this month I took that money and put it in savings. I am going to just hold on to it until the end of this month to see if something comes out of my account that I have forgotten about or something.

I really do a good job of tracking my spending, so this is all just really strange. The thing is the last time I said I thought it had something to do with daycare and the actual amount is exactly one week's worth of a daycare payment. So, either next week, two payments will come out at once or I just overbudgeted the month when I thought I was missing a payment. Who knows.... what I do know is right now I have exactly what I am supposed to have in my account. So if anything strange happens this month I will know for certain that aliens are taking or depositing money in my account. Yeah, I said aliens. :)

Anyway, in other news, I have stopped the snowball while replacing the money that went to clean our vents out and prescription meds. We still owe $306 to that account. So, we are not too far off. I think we should have the cash by the end of this month. I also just realized we will get our "extra" check in October. I always use that check to put an extra payment into that account as well as some of our others.

However, I have to call my insurance company tomorrow. I got a letter this weekend saying that one full day that I was in the hospital along with the day I was discharged was deemed "not medically necessary" because they did not turn in any physician logs or treatment sheets for those days. I don't know if it is just a matter of the hospital submitting extra paperwork or what, but obviously it was medically necessary or I wouldn't have been there!!! The hospital I use is actually really good about this kind of thing though. They will cut 60% of your bill if the insurance does not pay it. Of course they charged me $125 for a $10 pack of diapers once so, uh, yeah, I guess 60% isn't that great a deal after all, ha ha!

I am so glad to have had an emergency fund though. I was going to say I don't know what we would have done, but yeah I do. We would have been putting all of this on a credit card. I am SO glad we didn't have to do that!!

Saturday, August 15, 2009

Disaster Strikes Again!

Can I just say I am SO glad I bumped up my emergency fund? I added an extra thousand to it from our tax refund this year and thank God I did, because I am about to have to tap into it.

I haven't been around this month because I have been SICK! It started out as bronchitis and turned into ASTHMA! I didn't know you could just "get" asthma. I thought it was something you were born with. I also never realized how serious it could be. I thought it just made you short of breath. I didn't know it could land you in the hospital for a week. That is where I just got back from.

So, over the last 3 weeks I have spent at least $300 on medications. We paid $500 to have our ventilation system cleaned out (the worst vent that was full of mold was directly over my head in bed each night). And, I have no idea how much 6 nights in the hospital with two doctors, the respiratory department, an xray, cat scan, blood gas, respiratory test, and meds for all that will cost. But, you know me! I have a plan!

I have used all of our grocery money for the meds and other things so we are going to have to pull money now to eat. I am going to take only what I absolutely have to take out. After this month is done, I will start putting the money back into our emergency fund using the debt snowball money. Once that is paid back up I am going to go back to the debt snowball. Hopefully by the time I get the bills from the hospital and doctors I will have my car paid off. This way I can pay the hospital bills from the emergency fund and start the process again. But, if the car is paid off this will not take as long (hopefully about 2 months) before things are back to normal.

This is the first time it has not upset me to tap into our extra money. I feel good about it because I have a plan, and the best part is the money was there when we needed it! I think this is the first big crisis we have been through where I didn't have to worry about money! If you haven't started an emergency fund yet DO IT NOW!!! You never know what is going to happen. If anyone had told me I would get asthma as an adult I would have called them crazy.

** As far as how I am doing, I am still having trouble but at least am out of the hospital and able to go back to work on Monday. I am doing EVERYTHING I have been told to get better and then some because if I lose anymore time from work now I will be docked as I am out of days.

Tuesday, July 28, 2009

Well It is Done :(

I blew every bit of my snowball this month. It was not ALL due to the budget mess up. Actually half was due to the budget screw up and the other half was because we are SICK around here. I have a pretty severe case of bronchitis that apparently required 4 different medications and my daughter was put on a prescription decongestant. All together those 5 scripts were $103!!! Yes that is with insurance... two actually. I haven't gotten the bill for the visit yet. I think it should be less than usual because we shared a room.... that is not going to happen though.

Anyway, I probably could have found a way to pull this money from some other little sub account I have somewhere, but I thought it was important that it came from a place that matters to me the most. I want it to SINK in that I HAVE to be more careful. I still haven't figured out exactly what I did though. I was wrong about it being something with the daycare checks. They have all cleared as normal. So it was something else. However we took a vacation this month and had a money saved specifically for that and we made a lot of purchases while on vacation so it is almost impossible for me to go back and find out exactly what happened.

I guess all I can do now is try to do better this month and from here on out. I am also considering going back to contributing to my 403b again. I have not been since the baby was born due to the high cost of daycare, but I think it is about time to start up again just not quite as much as before. I get so sick now when I those chart showing what would happen if you were to save so much for say 5 years and then quit early on in life... like say around 20 years old. I WISH I had done that then.... if you are 18-20 and reading this PLEASE put that money away for yourself!!! On a good note my retirement account is beginning to recover quite a bit. I knew it would happen which is why I WISH like heck I had been able to contribute these down months, but what can I do now?

I will probably wait to make a decision on my contributions until the end of August which is when I will see my raise for this year. I have decided that as soon as my car is paid off I am going to start another auto withdrawl into my emergency fund account to start a kind of car replacement fund. Lots up plans for the upcoming months!!

Sunday, July 19, 2009

No Snowball this month!

I messed up somewhere. My checking account does not have enough money in it to cover what is left to come out this month. I don't know what I did, but I have a feeling it has to do with daycare. My daycare checks generally come out of my account the Monday after I write them. However this last week nothing came out on Monday. So that means I have 3 weeks left to go and not nearly the money to cover it.

Now, I DO have money to cover it, but I will have to take it out of our Annual expenses account which must be paid back. So my car which should have been paid off two months from now will probably take a little longer.

This has made me realize that I need to pay my daycare differently. Instead of just leaving the money in there I will transfer it after writing each check. When the check clears I will mark it off. I also need to keep better tabs on the checks. Since this is the only thing I write a check for, I don't pay attention to the numbers or the dates, but this is obviously an issue that I didn't realize.

What most likely happened was one month a check had not cleared and I thought it had so I started my budget over at zero instead of holding that money out. That is a little hard to believe though because that would leave a lot of extra money in my account.... so I am not quite sure what is going on. But, I now see this as an area where I need to make some changes.

So now I have to go back and see what is left to be paid in all categories this month and subtract how much is left in checking to see how much I owe back to my checking account. I will have take that amount out of the savings account and put it back when I get paid next week. I am really frustrated with myself over this, but it just goes to show that I am getting to comfortable with things and not paying attention.

Friday, July 17, 2009

What Order Should These Go In?

Dave Ramsey has a good plan with his baby steps, but I almost wish he would write a follow up book for some variations on the plan. For example, here are his steps:

$1,000 to start an Emergency Fund

Pay off all debt using the Debt Snowball

3 to 6 months of expenses in savings

Invest 15% of household income into Roth IRAs and pre-tax retirement

College funding for children

Pay off home early

Build wealth and give! Invest in mutual funds and real estate

Okay, so I am getting close to finishing step 2, and I have a little more than $1000 in savings but no where near my 3 to 6 months worth. However, I need to do some other things as well, for example:

Get my Master's Degree

Possibly get Board Certified (will cost me $2000 which is paid back to me whether I pass or not and if I pass I get $6000 a year for so many years... don't remember exactly how many)

Buy a home

I will have a child in college in 7 years.

So, in what order do I put these things? Getting my Master's will earn more income for me and will help me put other plans into effect. We have really outgrown our living space and need a slightly bigger house (we do not own currently) Board Certification is probably something I should use my next tax refund money on.... And, we have $500 in an account for my oldest child's college right now. The good thing about her though is that I only have to include my income on her FASFA because my husband is her step dad. That will probably help her get grants. BUT, I also need to start putting away for retirement too.

My thought is this....
Use tax refund to get Board Certified next year

Save 3 to 6 months living expenses and tap it each semester to pay Master's Degree tuition, BUT pay it back just like when we were debt snowballing

Invest the 15% of income in IRA

And, with what is left we should know how much we have to go toward a home.

Pray that my oldest child qualifies for grants because she will probably be in college at this point.

And, start saving for the other two because they likely won't qualify.

What are your thoughts on this plan? What order would you place them in?

Thursday, July 16, 2009

So, I Made Some Decisions

I can't believe it has been four months since I have posted anything. I am a bad bad blogger!!

What I decided about the car...
I am paying on the car as soon as I get the money. I found that it doesn't really matter when I pay it, the interest does not change, except that I pay a little less each time I pay on the car because the principle is going down. Also, this keeps me from saying... well, I guess I can tap into that cash in the car snowball fund. If I just go ahead and pay it toward the car it is gone and can't be spent on anything else... more about that at the bottom.

On summer school....
I DID teach it this summer and it was so awesome! I was expecting to teach English to younger kids, but ended up teacher Algebra to older kids and I LOVED it. I have never taught math to that age. I loved the subject matter and the kids were really cool and fun. Last year I had a group of hellions!!! The only problem came when I got paid... Over 1/3 of the money went to taxes, etc.!!!!!!!!!!! It honestly was NOT worth my time for the amount I got paid, but I learned some things about myself and will probably get it all back in a tax refund in January. Which by the way, WHERE is this year going??

Ok, so some other "info". My spending is OUT OF CONTROL. I guess it is not SO bad as I am not using credit. It is just that I am spending money that I should be using to pay off debt. And, I am not doing that. This is such a big deal to me for us to get out of debt so we can build up our big emergency fund and then buy a house, but I just can't seem to do it! Then I think maybe I am just beating myself up because there has not been a month that has passed since my last post that I have not paid $500 extra on my car. And most of the time it is MORE than that. All my summer school money went toward the car and after my next regular payment I will owe less than 1000 dollars on it. So, I am not sure what the deal is here.... On one hand, I am doing pretty well, but on the other hand it is getting to the point where things are REALLY tight at the end of the month. BUT, they are not getting put on credit and we somehow pull through every month.

Another decision I have made is that I am going to start saving a little each month starting now AND once the car is paid off I will add to that. Here are the reasons. I want to open an IRA at Vanguard which takes $3000 down. I have not been saving towards retirement since the baby was born due to the extra cost of daycare. But, now I see I have an extra $100 per month. So, my plan is to save up for the $3000 deposit then use $100 per month to pay toward retirment until my debt is gone in which case I will pay more into that. (Please remember I DO pay into manditory retirement every month so I am not doing NOTHING in that area.) Once my car is paid off I am going to put another $100 towards savings for a car replacement fund. It is eventually going to happen so I may as well start planning for it. Once my car is paid off we have two debts left both are under 5% interest so I feel okay doing this.

And finally, see when I don't post I have to do these long stupid ones, I am going to try to start posting monthly about my progress on everything. Hopefully this will help me be more accountable for my spending and financial decisions.

Saturday, April 18, 2009


Ugh, I have quite a few decisions to make soon. I am not exactly sure what I should do on the first one. The second decision is kind of a no brainer, but I still have options so I guess I have to decide what is most important... money vs. sanity!

Anyway, the first thing is snowballing my car payment. I will have my car paid off this year one way or another. I have a $366 snowball to add to my regular payment monthly now that my last debt has been paid off. However, I get part of the money about mid-month and the other half right when the payment is due. If I pay my extra money on the day my payment is due it all goes right to the principle. If I pay it half way through the month some of it goes to interest. My problem is, I don't really know how this works. I am not sure if I am better off paying one payment mid month and another on the due date, or doing it all at once. If I was making a huge payment then I could see doing it as soon as possible because it would lower the principle amount such that I would not owe as much interest. But, with only a small payment, I don't know which is the best option. If anyone has any experience with this, I would appreciate some info!

My other decision is whether or not to teach summer school this year. I have done so for the past few years because it seemed like a good deal to me... 4 hour days, $100 a day, for 20 days. I take home an extra $2000 for a little work during the summer.

However, this year they have made a few changes. It will be 35 days, 5 hours a day at $125 per day. Now, that is obviously more money, but it is also pretty much my entire summer. I was miserable last year, the kids are horrible, but how can I pass up that kind of money? With those rates I would take home an extra $4375! That would leave my car paid off and would probably go toward paying off my next loan as well. Obviously this is a decision no one can help me with, but I will probably still do it. It is really hard to pass up that kind of money. I don't care how miserable I am!!! We will see though, the 5 hours is not set in stone yet, and if it were only 4 hours a day, I would definitely do it. The problem with that extra hour added in is that I would not be able to get things done in the afternoon before picking my kids up from daycare. I am sure I will update on the situation as more info is available.

Also, if anyone has any info on the interest thing please comment!!

Wednesday, April 15, 2009

Getting too comfortable?

I think I am getting a little too comfortable with my finances again.

The more bills that we pay the more room we have to "breathe". I know I am overspending, but it isn't really causing a big problem right now because I have the money to do it. However, I am using money that could be snowflaked to my debt.

  1. Snowball- using money from a paid off debt toward your next debt. You continue paying the minimums on all other debts and just work on one at a time this way.
  2. Snowflaking- bits of money you save from other areas in your budget which are then added to the monthly snowball amount to pay debt off faster.

For instance... this month we charged an additional $40 on our gym account! We have to charge $25 a month that is built into the monthly fee, but we went WAY over. Yikes!!

Then I bought some additional supplements that I could have done without... we won't talk about how much those were. So, you KNOW it was too much!!!

If I honestly looked at this month's budget and last month's I could probably find and easy $100 or more that could have gone to my snowflake efforts.

One thing fueling this is that DH gets a lot of overtime some weeks. I LOVE when that happens naturally, but I give him extra pocket money and a lot of times some of the rest goes to cover our overspending. (I feel he deserves the extra money for working the extra hours, but I sure don't!!)

I am going to start really working on this for the rest of this month and next. I want to try to actually track it and see what happens. I will let you know soon!

Oh, and I haven't been TOO bad. I paid an extra $100 on my car this month, I have $200 to add to the snowball payment at the end of this month, and I hope to add to that on Friday. BUT, think about how much I could have added to that if not for the overspending!! I probably could have made an entire car payment with the money I have overspent with!

I am going to do better though!!

Sunday, March 29, 2009

Two Years and Four Days

Two years ago, I bought 10,000 dollars worth of furniture. I really wanted to give our house a facelift, and I totally succeeded. I just put us in a lot of debt at the same time. Two years ago that decision or really lack of planning, caused me to start this blog. I have had LOTS of blogs before and since then, but this is the only one that still gets any posts.

I was reading back to some of my earliest posts and man was I lost!! I remember the first mistake I ever made. I had been reading Women and Money by Suze Orman and she said to pay off all debt at all costs (that is how I read it) then she talked about having an emergency fund. However, she never put any of the stuff in any order!! So, I took all the cash I had left from my tax refund and put it toward my debt. Of course soon enough we had an "emergency" which had to go on a credit card.

Anyway, it has been over two years now since I have put anything on "plastic". We did buy a used car last year, but I feel that we got a good deal and that vehicle is included in our debt that will be paid off in 3 years. When I say DEBT free, we will truly have no debt at all. I can't wait!!

I am getting ready to pay off my last credit card. Then it is on to vehicles and student loans. And, YES, it is the furniture that I will be paying off. The debt that started it all is about to be gone!

I am really proud of myself. I used the financial plan that I showed everyone how to create last summer to plan things out and I have stuck to it. I have faithfully snowballed the money. As soon as one debt was paid off the next debt got the money. I have made it a bill that I pay each month so there is no such thing as "extra" money. I follow a zero budget each month. Every penny is spent before I even get it. (In other words each dollar is spoken for so it can not be squandered.)

It has been much harder than I anticipated. I really thought when I started that I would have all my debt paid off in a couple of years. I thought with tax refunds and my teaching summer school we could do it faster. But, as you know life likes to throw curve balls. One of those just celebrated her first birthday a few days ago, by the way! We have also had some serious medical issues arise in the last year or so. So, we have had times when we had to put money into other things.

Also, early on my husband and I decided that we did not want to live a spartan lifestyle in order to pay off our debts. I am a firm believer in living your life while you can. But, that does not have to mean buying every single thing you want.

Anyway, I am sure that I will be picking up the pace of posting soon. I don't know, there is something about this time of year that gets it all started. And, then of course I have all summer "off".

Happy Birthday POW!!

Tuesday, February 24, 2009

Whoa! Moment

Hi, yes, it is me again, the woman who never posts. Well, I won't be doing much better any time soon, but I am sure this summer you will have more posts than you want. Ha ha. Anyway, we paid off a debt in full yesterday and as soon as we get some more bills from recent hospital visits we have endured we will probably pay off one more. If it is not paid off completely it will have a huge chunk taken out of it.

The rest of our debt will be paid off in 36 months or less. Oh, my goodness! Next month Picture of Wealth will turn 2. If I have been doing this for 2 years I can definitely stick it out for 3 more!! However that 36 months is what led to my Whoa! moment.

I was playing with my snowball calculator and just playing with some numbers. I took out the debt we just paid and just for fun, I took out the one that should soon be paid off. I ran the calculator with NO added payments even though we will be snowballing the money. The debt calculator said it would take 64 months to pay off the money!!! That is over 5 years. Subtracting 1 extra debt and adding no snowball money it would take over 5 years for us to be debt free.

So I added back the third debt since it is not actually paid off and ran the calculations again just to play and again I ran it with no snowball money added in. This time it took 60 months. My first thought was ???????? I just added a $5000 debt. How can it take less time to pay off? Then I realized... the $160 we are paying each month was now rolled into the calculations. That meant that as soon as that debt was paid off in the calculator it had "snowballed" the money to the next debt. Just doing that saved us 4 months worth of debt. Of course, those numbers don't mean anything because I did not add the debt we just paid off to the snowball. When I do that, AND as soon as we pay off debt number 2, we will be 36 months away from financial freedom!!!

We have a few more good things that will be happening in the next year or so though. I will probably teach summer school again $$$$$ We will get one out of daycare $$$$$$$$$$$$ and we will have 2 more tax returns in that time $$$$$$$$$$ I also put all overtime toward out debt. I would love to see us do it in 2 years!!!

We'll see!

Thursday, January 8, 2009

Don't Count Your Chickens!!

A little over a week ago I was deciding exactly how I was going to spend my tax refund. I hoped to pay off my smallest debt, put an extra $1000 in our emergency fund, and if there was any left at that point, I was going to pay it toward my next debt.

Approximately two days later I was in the hospital which lasted almost an entire week. Oops. While I do have insurance, I still will have to pay quite a bit for this I am sure. So, now my plan is to save all of that money so that when the final bills come in I will be able to pay the balance. This was not the plan for that money at all!!

The point here is that, while it is great to plan ahead, you have to remain flexible. This also is a great example of why an emergency fund is essential. Say, it was not close to the beginning of the year, perhaps in the middle of the summer, or as my luck would have it, they day after I spent the rest of my tax return! If this had happened at any other time of the year, I would need to use my emergency fund to pay for it. Even though I am bummed that the money I wanted to use to pay debt is going to have to pay more bills, I feel lucky that I will not have to deplete my emergency fund.

So, I guess you can count your chickens, but don't be upset if a few never hatch!

Wednesday, January 7, 2009


Since my last post over two months ago our economy has gotten even worse than it was. Because of my work on our finances, my family was able to make it through crazy gas prices with no problem and we are actually doing just fine now too. However, I feel like I haven't been doing as well as I could be. I think I can do even more.

I just ran my debt snowball calculator to find out where I am at. My next debt is due to be paid off in March, but the next not until April of 2010!! That is TOO long. I don't want it to take that long. In fact, I am setting a goal to have that debt paid off by the end of this year. To do that, I will have to work very hard and save everywhere that I can. Maybe even have a yard sale or two.

I think the point I am really getting at here though is that I am recommitting myself to fixing my finances. I haven't really stopped, but as the gas prices have gone down, we have not saved that money (I still budget it as gas money each month so I will have it when prices rise again.) I have used that money on eating out, buying things I don't need etc. I am still doing my debt snowball, but I am snowballing the bare minimum. Using only money from my other two paid off debts. Had I been using that extra gas money I would have probably paid over $500 extra toward my debt since prices went back down.

I also overspent on Christmas. We didn't go into any debt for the second year in a row. But, we did spend more than I would have liked. And, next year we will have another child to buy for (we didn't buy her much at all this year since she is so young).

Anyway, I hope that some of you might recommit with me. Are you slacking off a bit? How can you fix it? Or, are you still doing really well? How do you stay motivated? I would love to hear all about it.