Saturday, October 4, 2014

Financial Stress and Surprises

Why is it that fall surprises me each year? There's always a part of me that's sad the warmth and sunshine of summer is diminishing and gloves, hats, and scarves must reluctantly be pulled from the depths of the closet. Mike and I succumbed to watching a movie last night wrapped in a blanket (which the cats were all in favor of). The weather forecast even has the dreaded F word in it this weekend - flurries.

This year has been nuts on our financial front. Let me attempt to recap months of what we've been up to!

2013 Progress 

I never gave a summary for last year, but we called it The Year of the Car. We had my Mazda 6 and our 1999 Ford F150 truck. Given its age and gas mileage, we wanted to replace the truck and began saving to buy a used vehicle. Mike got a promotion last summer from a floater to a program coordinator, so one of his paychecks satisfied rent, the other went into savings for the truck replacement. We were shooting for the end of the year - Christmas basically - to save up enough. We were aiming for $6,000-8,000 so we weren't buying a junker we'd have to upgrade in only a few years.
Clearly photos stolen off the internet and not our actual cars, but these are the models
Well, it turned out a coworker was selling her Subaru that summer for almost EXACTLY what we already had in savings. Mike grew up with Subarus and I learned all sorts of things about brand loyalty, lol. I had reservations about buying an older car (2001), but it was in good shape and the previous owners had taken good care of it. Mike may also have pulled a Puss-in-Boots and given me a pleading look ... We plunked down $3,800 for it, immediately spent $800 replacing the timing belt (which we knew going into the purchase) and the water pump.
Add some rust on the rear panels and this is what we've got
Having unexpectedly bought a car ahead of schedule, we had to revisit our savings goals. We decided the Mazda loan, which is a monthly payment of $200, needed to be squashed. We continued saving Mike's checks as before and were able to put $2,500 on the loan at Christmas. That effort cut the remaining balance in half - totally felt awesome!

January - August 2014 

We had such nice goals laid out for this year (looks wistful). With about $2,000 left on the Mazda loan, we figured we could kill it off within a few months. Hahaha ....  

First there was the vet visit in January. We took the cats in for their routine appointment and found both of them needed dental work. $750 out. But the cats are getting older (they're 8 this month!) and we hadn't had any big bills in our entire time of having them, aside from the initial neuter and front declaw.

As most of you experienced, we had a super bad winter. Once the snow melted from the cars, we were flabbergasted to find a HUGE crack in the Subaru windshield at the very bottom near the heating element - it ran almost the whole length of the windshield! Complete replacement, no insurance help - $300

That was followed by taxes. We owed $300 and it was about $200 to file at H&R Block.  Pffft.

I also needed a new bike. I was hoping to make my old one work, particularly with having lost so much weight and being stronger. Alas, my cruiser model was cumbersome and sucked all of the joy out of biking. New hybrid bike (after discount for trade-in) - $300.

Well past having bought the Subaru, we still needed to sell the truck. To remedy a check engine light (didn't want to scare off potential buyers), we took it into Firestone (never again). They "repaired" a hose and did an oil change - $300 and a block later, the check engine light turned back on. I should have turned around right then and there and make them fix it for free ...

Only a few weeks later, we took the Mazda in for an oil change (to a local shop with mechanics we trust). Because they're awesome, they told us the tires were going bald. Clearly Mike and I have been too busy to deal with car maintenance, which left both of feeling quite bashful. Upgraded from summar performance to touring tires so the damn thing will actually drive in the snow - $525 for four tires. 

At the beginning of the year, I unexpectedly won a trip from my company for our version of employee of the year. It was a very generous package where I got two plane tickets, two nights in a hotel, and an extra day of vacation. We chose Vegas and scheduled the trip for May so we had time to save up. I meticulously planned out everything and budgeted $800 for our share of food and entertainment. I even allotted $5 a piece to put in the slot machines so we could say we gambled, lol.$HomepageHeroImage$&crop=12,1039,4938,1682&anchor=2481,1880
We stayed at the Mandarin Oriental, which is the middle building with the fan on top
It was almost perfect except that I had been waffling on getting show tickets, the only reason being that they weren't in the budget and I was getting worried about how much we were spending in the first place. We weren't expecting to take a trip on this scale this year so it hadn't originally been in the plans to devote this much on vacation fun. But I eventually caved in and bought discount Cirque du Soleil tickets for $200 - best decision ever! It was breathtaking and magical and everything people rave about. Trip total: $1,000.


Later in the summer, Ajax, whose interest in human food never wanes, decided to vomit 12 times in an hour. Rushed him off to the vet and after much testing, determined he probably ate something off the floor and got sick. But between x-rays, fluids, antibiotics, and the exam, that set us back $400. We love our cats, but we sweep our kitchen now a lot more.

In that six-month period, we put ZERO extra money on the Mazda loan. Sigh ...

Good news, we were able to pay for all of those unexpected expenses largely out of pocket. Sure, we put some bills on the credit card a few days ahead of payday and then immediately took care of the charges, but none of these required us to go into debt.  We tried to keep this in mind and be thankful about our financial situation rather than disappointed we set what seemed like a reasonable goal and were never able to work on it.

August 2014 

Midpoint of the year and if our finances hadn't been turbulent enough, Mike got a significant promotion at work. He had only been a program coordinator for a year, so we weren't thinking about the next level quite yet. But a position for a program director opened, he was volun-told to apply for it, and got it! It was whirlwind, we had many reservations, we tried our best to not get excited about the implications, and then had to shock ourselves into reality when Mike landed a salaried position.

What was his pay raise, might you wonder? $10,000.

Ok, that's a projection, because it's oddly hard to compare your hourly rate (which includes overtime) to an annual salary. What we know is that his typical hourly check without overtime averaged $850 (so around $1700 a month). After his raise, a single pay period is a static $1,200.  \That's about a 30% increase in funds.

It makes our heads spin. Seriously. The promotion happened in the middle of August, so September was the first month we've been at this new income level. We're just trying to get a feel for it before we make concrete goals.

For example, our bad car luck has continued. We were going to gleefully use Mike's first check to kill off that resilient Mazda loan. But we had to first take in the Subaru for a check engine light. $750 later, we got the oxygen sensors replaced and new CV boots, which resulted in an alignment on top of that. And we're told our brakes have 10% and 25% left on them, meaning we need to take care of those before winter driving conditions are here. 

Looking Ahead

Even though I'm all for taking openly about finances, our new situation makes me a little self-conscious. I don't want anyone to think we're all of sudden rich or swimming in a ton of disposable income. 

We have some serious financial deficiencies we need to remedy with Mike's income:
  • Neither of us has retirement savings started. I know, not good, keenly aware of that. I made a vow to myself that by the time I turned 30, I would have that figured out. Well, I turned 30 in April, Mike turned 31 this summer, and time is ticking.
  • Mike needs to be on my health insurance. He has access to the VA, but you've seen the headlines and they won't see him for anything but near death. He deserves preventive care and since the VA can't deliver at this time, we need to do that through my private plan. While he's already on my vision and dental, he's overdue for both. New glasses and hopefully just a cleaning need to be scheduled stat.
  • The damn Mazda loan. As of today, October 4, the balance is $297.42. Seriously, so frickin' close!!!!!! 
  • Mike's student loan is currently in deferment. Now that he has a regular schedule (no evenings!), he can look into resuming his schooling. But in case he doesn't or there's a complication, that loan will come into play in December. Its payment would be $250 a month (prior to salary adjusted payments, which we haven't explored yet). It was one of the reasons we were in such a rush to take care of the Mazda loan, as prior to the promotion, having an additional $250 monthly payment would have really hurt us.
We have some big discussions ahead of us about making sure we remain on solid footing. In addition to retirement planning and healthcare, our student loan debt situation is a big drain on our budget (over $400 a month for mine, not including the one Mike has in deferment). We also have a (loose) 5-year goal of buying a home, which means saving for a down payment. And sometime in the future, there will be a point where our cars need to be replaced again. Hopefully not in the next 5-7 years, but you really never know.

Having spent so many years with financial insecurity, we take NOTHING for granted and never want to become compliant about our money. If one of us got laid off tomorrow, we would be in a scary place, just as you would. The best we can do is keep a tight eye on our budget, be aggressive with debt, and minimize unplanned expenses.