Tuesday, February 28, 2017

February 2017 Debt Update: $68,505.35

It's already that time again! This post will be short and sweet - our total debt, including credit card, student loans, and a car loan, is down to $68,505.35.

While we were excited to see our debt go down again, we were disappointed to spend more than the extra amount we had coming in from my husband's recent raise. I did keep track of these expenses, which was an improvement, and almost all of them were necessary, but I am tired of spending money. I was motivated to return to our law school days where we tried to spend as little as possible on extras. We do make room to spend for things like kids swimming lessons (but on a scholarship), baseball, and annual memberships to the zoo and discovery center for quality of life, but beyond that, if there's a way we can do without it, we will try not to buy when possible.

So far I am excited about what our summer is shaping up to look like. As I mentioned above, our kids will be in swimming lessons and baseball, but another local opportunity came up for our family to learn more about farming (raising chicks, milking cows, pasture management, etc.) for free. A local family is training other families in these skills in exchange for watching their farm while they are gone. I'm super-thrilled to be part of the program, not just for the skills learned, but also for getting a chance to work with this wonderful family. We are also hoping to travel down to Texas for a week to visit my sister and her family and signed our kids up for one week of free Vacation Bible School as well. 

That's it for now! Spring will be busy, but I hope to be able to post pictures of my gardening efforts here soon!

Wednesday, February 15, 2017

How our low-one-income family pays off $10,000 a year in debt

There are many days where I feel like we are not making progress fast enough toward our hefty student loans and car loan, but I realized recently that when you crunch the numbers, we are putting 28% of our take-home income toward debt each month. Even with the hefty interest we have to pay (it used to total over $3,000 a year - ouch!) we have still managed to lower our overall debt by $10,000 in one year. It may not be as exciting as the stories where people pay off triple this amount in the same time, but we will take what we can get.

You can read more about our current budget here, but as of this post, we only have about $3,500 a month in take-home pay to work with. Out of this, we tithe $422, so our working budget is really about $3,100. With four children, our family is classified as "low-income" according to the Federal guidelines of having an annual income of less than 200% of the Federal poverty level. It's tempting at times to throw up our hands and say it's too hard, but we believe that it is possible to make a significant dent in our debt each year even with a limited budget.

Here are 10 tips which have helped us knock off our debt:

1. Keep your expenses as low as possible (without killing yourself). You can see how we budget our paychecks here.

2. Take advantage of low income tax advantages and use as much of that tax return to put toward your debt.

3. Budget for expenses you know will happen so that you will not be caught off guard. We allocate the two extra paychecks my husband gets a year for other expenses such as home repairs/improvement, children's activities, clothing, and more.

4. Keep a list of wants vs. needs. I like to call it the "Ma Ingalls" approach, but essentially, it seemed that Laura Ingalls Wilder's family often did not buy something until they had the money for it, and then would stock up on as much as they could afford of that item. This was for financial as well as practical purposes - seasonally, certain things were more available at certain times of the year. Instead of the steady stream of consumerism we have today where there are sales every other day, it is important to look at what you or your family need and when the sale and funds line up, to purchase those items.

5. Consider becoming a one-car family. Our decision to do so has helped us to save on car insurance and gas as well as reducing our risk of auto repairs.

6. Track your progress. I created a spreadsheet  which lays out where we will be each month if we pay a certain amount toward debt each month. In the months where it feels like we will never get there, I always look at this chart to remind myself of where we will be if we just keep plugging along.

7. This goes without saying, but eating out, having cable, and paying for smartphones are three things we choose to mostly forgo while we are on this debt-repayment journey. It would cost about $100 for our six-person family to eat out a couple times a month, about that much for cable, and that much for smartphones too - saying no to these three categories saves us $300 a month!

8. Be intentional about how you spend gift money. I try to save up my gift money to purchase tools that will allow me to sew, do renovations and build furniture that would otherwise be out of our reach.

9. When you pay off student loans, if possible pay off the highest interest group first. We qualify for Income-Based Repayment for our federal student loans, and while we make a small monthly minimum payment that is evenly applied across all loan categories, we put the rest toward the loan group with the highest interest.

10. Make a list of things you can do to improve your home that don't cost little to no money. Cleaning, organizing, and making small affordable improvements to your home can help you have a much higher sense of well-being.

How have you found success in taking on debt with limited funds? I'd love to hear in the comments!

Monday, February 13, 2017

How we refinished our coffee table

This has been a long time coming, but we are finally finished re-finishing our coffee table. And by finished, I mean, we will never re-do this table - ever again!

I won't mislead you and say it was such an easy job - straightforward, yes, easy . . . nope.

This is what our coffee table looked like after we had given it a makeover the first time. It came into our family as a Craigslist purchase for $25 when my husband was in law school. We had painted the top and bottom with a nice navy blue paint, and left the rope trim around the edge the original orangey-pine color. I really didn't mind the navy - I loved it at the time we had painted it, but after a couple of years of boys using it as a race-track and banging surface, it was beginning to look chippy in a bad sort of way.

The other reason I grew tired of the navy blue paint was because I felt like color schemes automatically had to coordinate with it. I like being able to change things up, and craved a more rustic wood-toned look.

I thought the job would be fairly simple and cheap (I already had Citristrip on hand as well as stain). I wasn't sure about what to do about the crevices around the edge of the top, but figured I would see what I could do as I went along. 

The Citristrip worked pretty well on the flat surfaces, but things got a little frustrating in the crevices. I moved the coffee table out to the garage to work on it when I could, but because we had one lone lightbulb out there and cold weather, I had a hard time staying motivated to work on it during the evening hours I had available. Eventually, I got most of the paint off, and started to sand it with our power sander. But even that proved to be frustrating, and eventually, I asked my husband if he would help. I was grateful that he didn't mind sanding (I hate it, by the way!) and spent a few hours on a weekend getting the wood down to the original grain.

Once we got it stripped and sanded, we moved the table down to the basement where I could work on staining it. Each step felt like a leap of faith - painting the lower portion white was not hard, just tedious with the rope trim and working over dark paint. Then came the decisions about stain. I decided to do an initial wash of Minwax Weathered Oak, followed by a mixture of Weathered Oak and English Chestnut. After that, I did a light wash of gray paint mixed 50/50 with water and made sure to wipe it off as soon as I painted it on, and then I did a final coat of English Chestnut on its own to darken it up a little. I finished it off with a couple of coats of Minwax Polyurethane finish in semi-gloss, didn't like the gloss or the brush marks, and then did a final coat of Minwax Wipe-On poly in satin. 

Working under the fluorescent lights made it hard to evaluate how the stain actually looked. I mean, what ever looks good under fluorescent lighting? But once I had done that last coat of poly I knew I was done with it, and we brought it upstairs this past Sunday.

Once in place, I was really happy with how it turned out. We have been living without a coffee table for a couple of months now, and it made our living room feel like a living room again. 

Thursday, February 9, 2017

What the Super Bowl reminded me about the importance of saving

Before I begin, allow me to share a full disclaimer first: I did not watch the Superbowl this weekend due to a couple of factors. The main one is that we had planned to go to a Superbowl party to watch with friends, but then one of our sons started to get really sick with a cold. We weren't sure if it was the flu (it turned out to be RSV), but it was nasty enough to warrant us staying away from a place where other people's kids would be around. The second factor is that we could not watch at home because our television was broken by our kids a few months ago and we haven't replaced it yet.

Even though I didn't get to see the game, however, I heard it was pretty exciting and involved Atlanta having a lead over the Patriots which they then lost. My husband thought that Atlanta go too comfortable with their lead and didn't fight for the game like they would have if it were tighter.

As tax season comes upon us and many of us (including myself) will be getting returns, I realized that we all have tendencies to think like a team who has a generous lead when our financial situation is more comfortable. We are still in the throes of paying off debt, so most of our return would have gone toward student loans, but I had planned to set aside a little for extra expenses or maybe something we have been wanting and couldn't afford.

I soon realized, however, that it is very easy to spend money, and rather than give up part of our lead, I think we will be saving that extra money as much as we can. Unexpected expenses can sneak up on you when you aren't looking. Due to our son's respiratory illness and testing as well as a couple of doctor visits for my husband, we have already accrued well over $600 worth of medical expenses in the first six weeks of the year! We will pay for that with our HSA, but the experience reminded me that now is not the time to be comfortable when it comes to finances. Even though we have an HSA, we could have other expenses come up like car or home repair bills.

* Edited: Shortly after posting this, I went downstairs to do laundry and noticed that our sewer had backed up. Thank you, real life, for confirming my inclination to save!

Tuesday, January 31, 2017

January 2017 Update: $69,229.70

After the whirl of December, I was hoping that January would be a little easier in terms of expenses. Nothing major came up, but we had to purchase some homeschooling curriculum, vitamins, a carbon monoxide detector, pay for a headlight that went out, and buy a last minute birthday gift. It all adds up, but thankfully we were still able to pay our planned payments toward our loans. This month, our total debt dropped to $69,229.70. 

It may not seem like our debt dropped as much as it should have given our regular payment, but let me explain why: at the end of the month, I pay off our credit card, but even with that I continue to use it for groceries, gas, or whatever else we need. These accrue as new pending charges that I am not allowed to pay off until they are moved over to actual charges. This month, the "pending charges" were around $69. We have money in our bank account to pay for those, but we can't. To me, they aren't really debt, but because they are on a credit card I want to count them as debt for transparency's sake.

One of my favorite deals that I got this month was a bed for our almost six-year-old son. He was still sleeping in a toddler bed, but I found a twin bed, with mattress, bedsprings, frame, and headboard, for $25 on a local private Facebook group. It is a group of friends who sell to other friends, so I know that it's come from a good, clean home. I've also gotten another number of good deals on there - two matching wingback chairs for $10 (I need to recover these!), a media stand for $10, and even a creme brulee set with torch for $3! (And yes, I consider creme brulee to be a necessity in our house!)

We have been doing lots of projects on our home lately and I hope to update you on some of them this coming month. We have tried to keep costs down as we go along, so many projects involve painting or other inexpensive improvements. We turned a wall off the entry from our garage into a mudroom, and I'm putting the final touches on that his week before I share what I did, but here's a sneak peek:

I have been working on a console for our living room sofa. It is approaching being done - I just need to add some x-details at the end and then have my husband sand it. I love building, but hate sanding! Thankfully, my husband likes the sanding! Poor guy, he worked for two hours on this coffee table last weekend too!

I have also been into making homemade bread lately after my mom surprised me with a Zojirushi bread maker for Christmas. I have been very impressed so far with the quality of the bread turned out by this machine. I've made homemade bread before but the texture was always crumbly and dry. This has a beautifully moist texture and light, airy crumb. I'm hoping to slowly work my way into making all of our family's bread.

Another thing we've been making is homemade pasta. I don't know why I got the itch, but for some reason I felt like I needed to work with dough. I own a pasta machine, but lately I've just been making the dough and rolling it out by hand and cutting fettucine noodles out of it. My kids love to help me pull out the noodles.

This week I am hoping to start some seeds for winter sowing, including parsley, Swiss chard, leeks, and marigolds. What are you working on?

Sunday, January 1, 2017

December 2016 Update: $69,862.93

Well, the end of the year has finally arrive, and I'm happy to report that we finally broke the $70,000 mark, even if it was just barely! Earlier on in December, I started plugging in bank balances, credit card balances, and other amounts left to pay into a spreadsheet that I use, and realized that we were spending more than I thought we would. I went through everything we had purchased and talked with my husband about it, and we both quickly agreed to try to spend as little as possible on "non-necessities" as possible so that we could stay on budget for the rest of the month. 

In the month of the year that most people spend the most money, this wasn't easy, but we had already purchased our gifts and were on target for everything else.

This coming year, we hope to get down to $57,000. With our monthly interest accruing at about $250 a month right now, that means we have to pay a lot more than $13,000 to get to this place, but I feel hopeful that we can get there.

Wednesday, December 28, 2016

Our new budget for 2017

I haven't posted on our budget in awhile, but given that both our income and our expenses have changed, I thought it would be good to update here. This past year we were blessed to receive a $5,000 raise and then my husband got a new position in the same company, and found out that they approved another roughly $5,500 raise. Sometimes it feels small given that our health insurance premiums are also increasing (again), but truly we are grateful to have more money to direct. So currently, our annual income sits at $60,650 a year.

Because we work for the state, we are committed to contributing 6% of his salary to the retirement fund. We also opted to take advantage of their health care plan, and while I haven't included these expenses in past budgets, I decided to include them here so that you can get a feeling for where all the money goes, including monthly taxes.

We get two paychecks a month, but because we are on a 26-paycheck schedule, twice a year we get three paychecks. These extra paychecks do not have contributions for healthcare taken out - those are only on the other 24 paychecks, so these two extra checks are usually higher than the others.

We try to live on the two paychecks we get every month, and when we get 3 paychecks, the extra money goes into savings for irregular expenses like sports fees, swimming lessons, home improvement/repair needs, clothing, homeschooling purchases and other expenses.

Here is our monthly gross from two paychecks:

Deductions taken from 2 paychecks (1 month's average income):
Taxes (Social security, disability, state and federal) - $442
Healthcare and dental premiums - $288
Retirement - $280
Personal contribution to HSA - $150
Total Deductions: $1160

After our deductions, we have a take-home pay of $3504. Here is how we budget it:
Tithe - $461
Mortgage, property taxes, and homeowners insurance - $675
Security system - $37
Water, sewage and garbage - $75
Gas and electric - $132
Cell phones - $52
Internet - $55
Gasoline - $55
Groceries - $400
Car registration and membership fees - $20
YMCA - $54*
Home Care - $20 (for things like toiletries or air filters, hardware store runs, etc.)
Life and auto insurance - $108
Student Loan - $665
Auto Loan - $294
Emergency Fund - $300
Special Savings - $75
Christmas/birthday fund - $25

A few things I would like to point out about this year's focus:
* We have added in a gym membership. I am happy to workout at home, but my husband's preferred way to workout is to swim, and our local YMCA offers a family membership for $54 a month. Many places charge $5 per swim, so to us, it made sense to purchase a membership that we could all use for the same price, and we could have access to fitness classes, machines, and a pool for our kids to practice swimming during the long cold winter we have here (or the hot summers!).
* We are saving some of our extra money to build up our emergency fund. At some point we may decide to put it toward debt, but as homeowners we feel like our current fund is just too low. We don't plan on having this category indefinitely, but it hopefully will build up our fund in a year or so to free us to more aggressively pay down our debt. That said, I am excited that we can now increase our student loan payment from $465 a month to $665/month for the time being.
* Special savings is a category to use for something we normally can't afford but would like to save up for. I like to call it the sanity fund :).
If you break down the percentage of our take-home income that goes toward debt, it works out to be about 27%. 

So that is our budget! Some people break out in hives over the "B" word, but I've always enjoyed planning out what we are going to do with our money and then checking to see if we made our goals. I don't really set massive goals that I don't think we can reach but rather look at what we actually have coming in and what's realistic for our family and stage of life.

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