Tuesday, March 22, 2011

Vacation Planning

One of the hardest things about being budget conscious is that it can make you feel like you don’t deserve treats, like being social or going on trips.
Case in point – this weekend we went up to Cedar Falls to hang with some of our siblings, one of which was on leave from Afghanistan.  We splurged on a hotel room that was connected to the lounge we met at so we didn’t have to cut our time short driving back.
Between the hotel room + breakfast, gas, and lunch the next day, I’m pretty sure we coughed up $200 for a weekend.  At first I felt guilty.  I mean, $200 would be a great credit card payment.  But then Mike asked, “when was the last time we did anything for ourselves?”
Because I could not list a single outing or indulgence since last summer and we haven’t been out of town since Christmas, I decided to let it go.  Finances are about striking balance after all, not just cutting back.
But it got me thinking about vacation planning for this year.  Everyone deserves some time out of the house and we definitely have spring fever.
Any vacation can be easy on your pocket by planning ahead:
·         Research prices and comparison shop
·         Overbudget for gas prices ($5 a gallon anyone?)
·         Set a ballpark budget and stick to it within reason.  Or, know what you are comfortable spending and budget accordingly.
We have 4 trips in mind for 2011:
#1 – Effigy Mounds
Our first two outings are simple and cheap.  Effigy Mounds/Pike’s Peak near McGregor, IA is a great place to visit.  It is quintessential small-town Iowa combined with history and the all-important Mississippi.  It’s only 92 miles away.
Pike’s Peak is free to get into and Effigy Mounds has a nominal fee of $3 a person.  McGregor and nearby Prairie du Chien have very inexpensive hotels (we stayed in one once for $60 a night) and there are a plethora of camping options.
This would be a hiking trip as both state parks have some seriously awesome trails. That would be our entertainment.  Aside from gas, we’d need lodging and food.
#2 – Backbone State Park
Another weekend trip in the grand outdoors.  This park is free with tons of trails and a lake for swimming.  Camping is totally cheap ($9 a night), cabins are available for $50 a night, and the nearby town of Strawberry Point has some options.  Again, there’d be gas (this is 60 miles away) and food (picnic and grilling fixings).

#3 – Cahokia / St. Louis
Did you know there is a Native American pyramid on the Mississippi?  Yeah, neither did I.  Well, it’s not technically a pyramid, but google pictures and tell me that’s not what looks like is buried there.
Cahokia (http://en.wikipedia.org/wiki/Cahokia) is a mound site just east of St. Louis. Like Chicago, this is an almost 5+ hour trip so gas would be a major expense.  Cahokia State Park has camping plus the town of Cahokia has lodging.  There’s also St. Louis, which isn’t short on hotels.
This is one of those typical summer road trips.  I want to take our time getting there, stop at whatever strikes our fancy along the way, and just be outdoors as much as possible.
#4 – Chicago
The big one is Chicago in September or October.  I love Chicago – it’s my favorite city.  Mike has only been there sparingly and I want to show him my favorite museums.  Not to mention hunt for awesome food.  I literally have cravings to pop into Chi-town.  We’re using our 10-year anniversary as an excuse to spend a few days in town and give ourselves an official vacation.
The goal is to go for 4 days or so, some during the week.  Enough to get a sampling, but not go crazy with trying to hit everything up.  The Windy City is 250 miles away so gas would definitely have to be accounted for.
Possible tourist spots:
·        Science and Industry Museum: $46 for two adult tickets including submarine tour.  Or, if we go during the last week of September, they’re all free days (we’d still pay $16 for the sub tour).  $18 for parking, ouch.
·        Oriental Institute: Absolute must.  Free but would give $10 donation.
·        Sears Tower Skydeck: $34 for two adults (or we could just go to the restaurant and still get the fun elevator ride and beautiful views)
·        Boat tour on the river: around $30 a seat, depending on which one.
·        Adler Planetarium: $27 a head for the all-inclusive pass.  On September 15, they have an “After Dark” event with cocktails and appetizers.  You get to actually look through their telescope.  That’s $15 a person.
There’s also the amazing City Pass.  For $76 a person, you get tickets to the following:
·         Shedd Aquarium
·         The Field Museum
·         Skydeck Chicago
We’ve done the Field Museum and the Art Institute before, but even if we just did 4 out of the 5, we’d still save major bucks.
Food is a huge question mark.  I would definitely want a hotel with a mini-fridge and pack sandwiches for day trips.  But fancy restaurants featured on Food Network would definitely be hard to pass up.
I think the biggest factor would be a hotel and its price.  That could make a major difference on how much we want to vs. can afford to cram in.
#5 – Other summer expenses
·         A friend’s wedding an hour away + hotel for 2 nights
·         To be determined 4th of July plans
·        Mike’s birthday party (also July).  We’re renting a cabin for a weekend  and throwing a big bash.  Only 10 miles from our place and $50 a night.
·        A Wood family reunion.  In town, but they’re renting a banquet room so we have to pitch about $30 to go, which is perfectly acceptable.
·        Going to Platteville to visit my sister, which is only 1+ away.  But there are many temptations in Dubuque and Galena J
I think what we have in the works is really reasonable.  Two trips include very healthy activities and low-budget accommodations.  Chicago is a splurge but not inappropriate, particularly if we plan carefully.
Laying out what we’re facing this summer is really helpful for budgeting.  That way we can set limitations while still having the freedom to enjoy ourselves out and about.
We went to Jamaica 3 years ago and had a blast.  It was one of the most relaxing times of my life.  We would love to go back, but we’re realistic.  That kind of trip is several years away and only when we’re on more stable financial ground.  Until then, we’re going to exploit the heck out of the Midwest!
My #1 trip rule: PLAN.  It’s as simple as that.
Question of the Day: What trips are you planning for summer/fall?

Friday, March 18, 2011

The Scale Lies

So my monthly weight loss update is a wee bit behind.  Regrettably, there’s not much to report.
I was so excited in January because I’d lost 5 pounds and worked my fat percentage down.
February came through and was a bust.  I continued my walking and occasional Tae Bo/Biggest Loser routine to no avail and very aggravated arches.  Not only did I gain weight, but I climbed back up to my original starting point for both weight and fat. 
Hello Square One, you ugly jerk.
This level has continued through the beginning of March until I hopped on the scale this morning.
I magically lost 20 pounds since Monday!  I must be on a cocaine diet and not know it!

Clearly the scale needs a new battery.  Le sigh.
I had so hoped by my birthday (in twoish weeks) that I’d have lost 10 pounds.  I thought that was a modest goal for 3 months.  Last year, I did water aerobics for a semester and lost 10 pounds.  I thought I could replicate the same result.  Clearly not.  
Interestingly, I found my fitness journal from that time while cleaning.  While I may have lost weight, you know what?  The fat percentage was the same as it is now. Which means I only lost water weight, not “real weight.”
In a way, this makes me feel better that I haven’t been completely wasting my time these past months or sucking at getting healthy.  It just means it’s going to be harder than I thought. 
Can I blame the birth control now?
Anyways, I’ve decided to just put the scale away (for the time being).  Even weighing myself once a week was too much.  I’d fuss over it and not look forward to weigh ins.  I can’t fathom how people do that every day.
In the meantime, I’m going to continue walking, doing Tae Bo, weight lifting, and waiting for our bikes to arrive.  I also purchased a foot brace/arch support thing to wear at night, which has been giving me some relief.
I think with warmer weather, getting healthy should be easier.  I'll be able to bike, use our apartment’s outdoor pool, and go hiking.  Trying to shed pounds when your body is in hibernation mode is difficult, though I’m glad I’ve been making the effort.

Thursday, March 17, 2011

The $1,000 Tax Mistake

So this week we took a thick file folder in to get our taxes processed.  T'were our various incomes and forms simple, we would use The Box (software).  But that's not the case.  The past two years, we've used a local accountant and been perfectly satisfied.

Being in a new town this year, we didn't know of anyone and went with what we thought would be a good option: Jackson Hewitt Tax.

Big Flipping Mistake.

While they have same-day processing and took about 30 minutes, it cost us $400 <wince>

I know, we were aghast too.  That's a ridiculous amount when you can buy a tax program for 40 bux.

Lessons learned:
  • RESEARCH!  Do not just pick a place haphazardly.  Look for reviews online or get recommendations from friends.
  • Ask for prices before committing: Had we done this, we could have easily avoided this whole situation.
  • Watch for upcharges: Part of the reason our bill was so expensive is they charge per form.  We had 5 W-2s, which means they were around $90 a pop to file.  
  • Local accountants are less expensive than big boxes: When we've used local accountants, we've only paid between $100-200 for filing.  They were really good about explaining items, asking follow-up questions, and ensuring we got the maximum return amount.
  • Software is even cheaper: I've done the Turbo Tax thing before.  It was fine.  I guess I like knowing a real person has looked over my forms.  That being said, it's not worth $400 to file your taxes.  If you have basic forms and don't need to itemize, then do it online or with software.

If our bill wasn't steep enough, turns out we OWE the government $600.  The craptasticness of 2010 is serving up a final punch in the gut.  I have never had to pay for taxes, much less over $1,000 between processing and owing.

The fault, in part, lies with me.  As an adjunct, my income was "chunked," so to speak.  For the first half of the year, I pulled together income from two different colleges.  Unfortunately, the pay was low enough that they didn't take out federal taxes.  Apparently I don't understand the concept of allowances and didn't have enough selected.  This also happened to a part-time job that Mike had.
Over $20,000 of our $44,780 didn't have federal taxes taken out, hence the need to pony up to Uncle Sam.

So while unintentional, I learned I'd much rather have the maximum amount taken out of my paycheck than not enough.  I will be reviewing my Stamats allowance shortly and will make sure when I'm teaching again that my income is taxed.

Should you need clarification on allowances, HR Block has a helpful overview (which is not an endorsement): http://www.hrblock.com/free-tax-tips-calculators/tax-planning/filling-out-w4.html

Overall, I'm super glad we waited until after we had Mike's GI Bill file.  Otherwise, we literally could not have paid that processing fee and had to call up the IRS for a payment plan.  Now with one check, we'll be square with Lady Liberty.

Hope you all pay way less than we did for your taxes!
Question of the Day: What tax advice do you have to share?

Wednesday, March 9, 2011

Life is Not Like Chess

Indecision and I are become quite intimate.  We just received news that once again, a really good job for Mike has eluded us.  Back at Square One, which oddly looks like a trendy cafĂ© name or union station.  Alas, it’s the Capital of Indecision, a country with a certain penchant for elusiveness.

Mike’s options are clear at this point: remaining in school and continuing applying for jobs.  Avoid going stir crazy at home every day.

My path is not so clear.

We are going on 10 months in Cedar Rapids.  It’s clear that while my salary can “support” us, in the sense that bills are paid and we have food, we are nonetheless in a precarious position.  Our single-income state generates the following problems:
·         Prone to using credit cards as supplement income for basics
·         Inability to have a savings account
·         Eliminates even thinking about retirement planning
·         Complicates reducing our debt
·         Doesn’t provide room for little luxuries, like simple day trips or visiting family

If it weren’t for Mike’s GI Bill payments, we’d continue to have some serious financial problems.  While the money is being used wisely, it’s also not enough to address any of the above (except for credit cards).  It’s just keeping us floating a little more comfortably while we tread water.

As of late, I’ve been questioning how fiscally responsible it is to continue in my job.  I have the potential to earn more than I do now.  But is it worth the risk?  My mind has been sifting through scenarios as of late and none of them have really solidified what the next step is.  So here are some of my thoughts piecemealed together to form some semblance of coherence:

·        I should get my application in again to the Upper Iowa center in town.  It looks like the Waterloo commuting opportunity has dried up.  If I get my application in again, perhaps go in person, I might be able to land a few adjunct classes.  This would allow me to stay in my current job and earn a little on the side again.  This is the lowest risk option, but if played right, could lead to a full-time job.  What would happen if instead of an adjunct spot, they offered me a salaried position?  What if they only wanted me to adjunct for composition classes?
·        The whole teaching thing leads me to think of the bigger picture: whether I want to keep myself available for higher education and keep my teaching experience active.  For example, I passed by applying to a full-time teaching post at the local community college because the load was high (5-5), 80% would be composition classes, and no salary was listed. How badly do I want to work in higher education?
·        There are other jobs in the area I could apply to related to my degree.  ACT and Pearson both have positions available with $35-40k salaries.  But is it worth selling out my educational values (not contributing to standardized tests) to provide for my family better yet possibly get into a job which I may not like at all?
·        Leaving my job as of current could actually be detrimental for my future prospects.  Nationally, most editing jobs are looking for 3 years of field experience.  I have 10 months. Is a higher salary at another job worth having only one year as an editor on my resume?    
·        In lieu of my one year with the company, a raise would be appropriate since I have the same workload as my colleagues yet a lower title (read lower salary; I don’t give a hoot about status).  However, even if I did get a small raise, which is unlikely, that still doesn’t provide us with much more wiggle room. It would also be the top of the ladder since there aren’t any other positions to be promoted to. This means that ultimately, the job can’t keep me for the long haul. Doesn’t that mean I should just stick it out until Mike finishes school and we can be free of Iowa then, calling these the Lost Financial Years?

All of these lead me to one big question: what do I want to do with myself?

I have specialized degrees and qualifications.  I also have standards about how I want to live my life.  Neither of these are contributing to a 401K. 

So what’s a gal to do?  Sell out to live more comfortably and secure a better financial future, or stick with it and try to make it work?  Hope that Mike gets a great job after graduation and that I find a higher salary?  Who’s to say in this economy that this simple expectation will ever be a reality?  What if this is as good as it gets?

I just had a dear friend land her first job in her chosen field (gerontology, the elderly).  While she had to take a little pay cut, she will never be out of a job.  From this moment on, she will only become more marketable in her profession.  This is super exciting.

I, on the other hand, have my feet in two fields that are going through massive upheaving: publishing and education.  A future in either is quite a hazy prospect.  Given the way higher education is going, I’m deadly realistic about my chances of landing a full-time spot.  Having been in publishing for year, I’m not sure about how well I’d like my future days doing exclusively this.  I’m not sure if I have the gumption to stay innovative as the field digitally redefines itself, though writing for a food magazine would be heavenly.

My path used to be tidy and neat.  Go to grad school, go to PhD school, get a job, get tenure.  There were hundreds of predetermined checkpoints to meet, a clear ladder to get from Point A to Point B.  You knew what was expected and what could be a misstep.

Now I think my greatest problem is that I feel everything could be a misstep.  I’m not comfortable with this.  I loved playing chess.  It was a great game because you only had so many moves you could make, only so many moves your opponent could make.

Life is not like chess.  There are no more black and white squares to preplan for.  I know this is what life is about: the grand adventure into the unknown, your future is what you make of it, yada yada.  But financially, your future is defined by your ability to plan.  How’s that for being at odds?      

I had intended to make this blog post short.  In fact, it’s the same length as one of my unwritten features, which are due on Friday.  Either way, it was good to put these thoughts in writing.  It’s trite to say there aren’t any easy answers and I know and accept this.  It’s more difficult to admit that you want to do your best but don’t know how.

Sunday, March 6, 2011

Student Loan Debt

Warning, this post is filled with big, scary numbers. 

Let's be honest.  Mike and I have over $73,600 in student loans.  And it's still rising.

Given how we arrived at this point and that this represents 2 people's education, I'd say that's actually not a bad number.  Four specific factors contributed to this total amount.

1) We did not have the luxury of parents contributing to our college education (which is simply a factual statement).  Taking out loans was and is the only way we can afford it.  Complete reliance on loans is a surefire way to racket up your debt.   

2) While I worked 2-3 jobs at a time as a student, it was never enough to pay for college.  I also took high class loads and was in a ton of extra curricular activities that didn't leave much time for working.  So in addition to tuition + room (or later rent), we always took out extra for books and living expenses.  Treating a refund check like income is not advised.

3) I went to graduate school.  Even though I went to the same college as my undergrad, those two years cost the same as my 4 undergrad years.  And by that time, we weren't taking out extra for expenses.   

4) Mike is currently a student at a private college.  So our loan total isn't static.  We are continuing to take out loans as we speak.  

So how do we feel about our debt?  It was necessary.  There's no way we would have gone to college otherwise.  Did we make some mistakes?  Yes.  Did we learn from them and now I'm advising my sister on how to avoid them?  Sure thing.  Is it uncomfortable to know that debt will be around for some time and hence our educations will end up costing thousands of dollars more than their actual price tag?  Absolutely. 

In the end though, it was worth it.  I was employed right out of grad school.  Both of the jobs I've held are related to my degree, which is an absolutely luxury.  Mike got a AAA that granted him junior status at his current college.  In a tough economy, he absolutely needs a BA since no one wants to count his military experience.  Higher education was our path to upward mobility, or at least to not have to work at McDonald's.

I could go into a long discussion about the true price of higher education and whether college is worth it for everyone and yada yada, but the fact is, this is our reality.  We made these decisions and that number is all on us.  For better or worse.  Until death or payoff do we part.   

So in preparation for taxes, I became curious about how well our student loan debt reduction is going.  We've been paying on these suckers for about 3 years now.  That's 4 payments every month, over $500 in total.  I keep tabs on the overall balance and how much interest accrues every month, but I'd never crunched the numbers to see how much we were actually paying the total down.

I almost cried when I saw how little progress we're actually make.  Here's our loan profiles for the last year.

  Jennie's federal loan
December 2010 balance: $24,216.33
Total 2010 payments: $2,405
Interest paid: $1481.22
Balance paid: $923.78
Loan lowered by 3.6%

Jennie's Iowa student loan
Balance: $22,444.19
Total payments: $1977
Interest paid: $1076.62
Balance paid: $900.38
Lowered by 3.8%

Jennie's Citibank loan
Balance: $13,3888
Total payments: $1420
Interest paid: $509.14
Balance paid: $910.86
Lowered by 6.3%

Mike's federal loan (prior to starting Upper Iowa)
Balance: $5,301.27
Total payments: $960.00
Interest paid: $420.62
Balance paid: $539.38 
Lowered by 9.2%

Yearly Totals:
Total payments: $6,762
Interest paid: $3,486.98
Balance paid: $3,274.40

Talk about a wake up call.  We paid more interest than we did on the balances.  We only reduced our total loan debt by 4.7%!

Part of this is because our interest rates are high, between 5-7% for each loan.  Second, my federal loan payment is an interest-only payment.  We can't afford to do the standard $325 a month, so I'm on the lowest payment because of our income.

So what's a couple on a limited income supposed to do?  Well, that sad news is nothing.  Not for this year at least.  We have so little wiggle room that this cannot be an issue or goal for us as long as we only have my income.  This makes me a little sad, because we really want to make better progress than a measly 4%.  But again, you can only do what you can only do.

They say student loan debt is good debt.  I say that's hogwash.  No debt is good debt, especially when it prevents you from doing other productive things with your money.  Like having a savings account, funding your retirement, purchasing a car, or fulfilling a down payment for a house.  All of which I feel our loans are preventing us from doing.  Just because student loan debt is less detrimental than credit card debt doesn't mean it's good.  Only less worse.

That being said, I try not to worry about this a lot.  2011 is the year to reduce our credit card debt.  2012 will be another year.  Even though we're having to increase the loan totals for Mike's schooling, we're only taking out what's needed for tuition.  And that loan payment is now in deferment, which we're taking advantage of.  That's a $75 commitment that can now be rerouted to credit cards.

The one thing we're certain of is that we don't want this debt to hang around into our 40s and 50s.  We're both resolved, when finances allow, to go after the loans aggressively.  For example, if Mike were able to get a $45,000 job, we could live on that and use my $24,000 to go directly to loans.  Seriously.  Doing that could eliminate that debt within 4-5 years.  That's comforting to know.

Funding education can be tricky.  All I can say is that there are smart ways to use loans.  Co-signers can significantly lower your interest rate, take only what you need for tuition/boarding, and always see who has the lowest interest rate.  

Lastly, open your mail!  Because I knew I was taking out large amounts, I literally did not open any loan mail for 4 years.  I kept it in a box and opened it at graduation.  Talk about sticker shock.  I wonder if I could have shaved off a few thousands dollars off my total if I had been more aware of my actions.

The best way to keep tabs on how much you owe is to actually keep tabs on how much you owe.