Life as a Two-Income Family

Do you know how positively weird it is to have two steady incomes?!

Years of holding our budget together with duct tape and curses made us feel like we'd never find stable financial ground.  When you watch your debt reduction stagnate, your student loan interest accumulate, health issues become delayed, and thoughts of retirement savings languish with no end in sight, it's easy to become jaded about your economic future.

But a new window was opened to us in January when Mike started a full-time job working with individuals with developmental and intellectual disabilities. 

The job has definitely changed the landscape of our finances.  At $10.25 an hour, paychecks run about $750 every two weeks.  But with time and half for anything over 40 hours, overtime can bump those up to $950.  It's a bit of a range, but no matter what, we have a baseline of $1,500 each month coming in from Mike.

Keep in mind that when Mike was going to school full time, he received $1,600 a month for his GI Bill.  So when you really crunch the numbers, we come out even every month.  No move to another income bracket.  But it will make a significant difference in the long run as Mike obviously can't be a perpetual student.

As for his classes, he has dropped down to part time so he's not working around the clock.  He will still collect a bit of his GI Bill, but it will only be a couple hundred bucks each month.  Actually, the lovely Department of Education made a calculation error, gave us a double payment when they weren't supposed to, and now have to "garnish" his future GI Bill installments so we can "pay it back."  So the GI Bill isn't a factor in our finances right now.  And that's fine, since it's not a permanent income source anyways. 

My magazine job continues to hold at $872 every two weeks.  I actually received a 2% cost of living raise last fall, but alas, when social security went up, it ate the exact amount of my raise.  Not too pleased about that, but honestly, I wasn't impressed with the raise to begin with. 

So on average, we're working with a total of $3,200 each month to take care of these: 

Car loan            $203.91
Student loans   $430 (total*)
Internet              $70
Phone               $91
Electricity         $100
Gas                  $15-35
Water               $40
Rent                 $785
Health              $150 (massage + chiro)

We're over $1,850 with fixed expenses, which isn't bad, considering we've got $1,300 for food, supplies, gas, savings, and entertainment.  To be honest though, I've lost all track of what we're spending on those areas each month; couldn't even hazard a guess if you asked me.  Making it a goal to track all of May! 

*Keeping an eye on the future, Mike has one student loan that is currently in deferment.  Right now, it would be $250, but since he's working on his degree, the loan is still going up and that monthly payment will only increase by the time he's done.  

Combined with the strides we made with Mike's recent deployment income, our new budget situation allows us to look at our finances in totally new ways.  Looking forward to sharing our progress with you! 

What's new in your financial world? 

Microwave Went Bust - Replace or Repair?

It is with great brevity that I announce the Morton-Wood household suffered the loss of their 3-year-old microwave. The appliance served dutifully in the face of reheating leftovers, melting butter, steaming frozen vegetables, and baking potatoes.  It is survived by a toaster, waffle iron, and a crockpot.

Boo, it really chaffs me that our microwave is caput.  Three years isn't an acceptable amount of time to just die on us already.  We were pretty gentle with it too - no microwave casseroles here!

Now begins the great debate of how do I spend my money to restore a microwave in my kitchen (which after two weeks without one, we have determined we do need).

I see several options: 

Replace: When we bought our current model, it was $30.  I've honestly had no complaints.  Because we just reheat stuff with it and bake the occasional potato, the size is appropriate for our needs.  With three years of inflation, it will cost me $54.99 to get the same exact appliance.

The drawback is that in another 3 years, I would likely run into the same problem.  Some of the reviews online said the microwave only lasted them a year.  Not cool.   

The landfill waste this creates also really bothers me.  Even if you have to replace your microwave every 5 years starting in your 20s, you'd be buying and throwing away over 12 microwaves if you lived into your 80s!

Repair: Our local Sears offers appliance repair.  Their online estimate quotes me at $48.99 for labor - parts not included.  It may be that I only need a $2 part and this would be a good deal. 

But I know nothing about the inner workings of a microwave, what the common problems are, and how much replacement parts could run. There's no way I can estimate how much money a repair will cost, though I imagine I could walk into Sears and ask them to take a stab at what the problem is before actually fixing it.   

Upgrade: If I ever wanted to upgrade my microwave, now would be the time.  The questions is what else would I be looking for and how much am I willing to spend?

The problem with upgrades is that they're always more expensive.  When I look at the top-of-the-line microwaves at Target or Walmart, they're running between $100-160.  They're usually much larger than I need and have options I'll never use. 

I don't need bells and whistles - I need a microwave that will last a good number of years.  Do they even exist anymore?  My mom still has the microwave she bought when I was 2.  Apparently GE was a good brand back in the 80s, but barely anything is designed to last long anymore.

What would you recommend?  How's your microwave treating you?

2011: The Year of Slow Financial Progress

To be honest, I don't think we made many gains in 2011. 

Fluctuating income was our biggest stumbling block.  We often knew what the government owed us from the GI Bill and drill pay, but it was a matter of when it would come in.  You simply can't plan well for an ever-moving paydate, especially when it could be a 2-week window overlapping into the next month.  Problematic, I tell you.    

The Successes

The initiation of Meatless Mondays was a grand success.  After we found a revolving staple of vegetarian recipes, it was easy to include them on a weekly basis.  We actually look forward to these dishes. 

• Being more mindful of our meat consumption has also affected our other recipes.  I now routinely halve the amount of meat, particularly in soups or pasta dishes. It's also easier to stick to the 4-6oz of meat per person rule.  I wouldn't say this has lowered our grocery bill, but it has freed up money to buy better quality ingredients (more organics + free-range meats).

We paid off our furniture store credit card, just over a $1,000 balance.  This permanently eliminates a monthly payment as we have no other furniture needs at this time. 

While it had a roving balance, we consistently paid off our Firestone credit card in full.  Over $2,000 went on it in 2011 (all for the truck, sigh), but we ended up at $0 several months before the year ended.

The Not-So-Sures

We bought a car.  We made a purchase we haven't regretted and our lovely little Mazda 6 will last for another 10 years.  The downside is that we're paying $200 a month on a $10,000 loan.  We needed the car, no doubts about it, I just don't like having to take on so much debt to ensure transportation.  But it is what it is and I love that car!

We voluntarily raised our rent from $750 to $785 so we could add a garage.  This is much cheaper than renting a storage unit, but that's also over $400 we're paying extra annually.  

We also added to Mike's student debt as he was a student for most of the year ($10k +).  He didn't qualify for Guard tuition assistance because we missed the application cutoff by the time we made the decision late in 2010.  This is a necessary investment given employers' relunctance to hire non-degreed veterans, but it's one I hope we'll get a return on and, more importantly, can pay off.

We started using our savings account this year.  We never got to a place where we had a true emergency fund (3+ months of your bills), but it was an ok start.  On the upshot, once money is moved to savings, we are VERY relunctant to take it out.  That's a good mindset we can capitalize on.

The Not-So-Goods

We still have credit card debt.  $6,500 in fact.  $5,000 of that is all on one card, which we had excluded from our goals last year.  Unfortunately, the two bank cards that were our primary targets frequently were paid off but shortly had balances again.  They currently have $700 a piece.  Not pleased.

Slooooowww progress was made on our student loan debt.  I lowered two of mine by 6% and 4%.  Unfortunately, I'm on an interest-only payment for my federal loans and I quite depressingly only lowered the total by 1%.  On a $25,000+ loan, that's pennies. 

We didn't do a good job tracking what when in and what went out.  I can tell you from our bills how much we paid in total for water, rent, or internet, but I wasn't tracking groceries, gas, restaurants, or supplies.   

2012 and Beyond

This year will be highly unusual with Mike gone for half of the year overseas.  That also translates to a huge influx in income as he'll make in 6 months what I do in a year.  We're still evaluating our goals for 2012, but debt reduction will continue to be at the top of the list.

How did you fair last year?  What were your successes?

A Visit to the Vet

As any pet owner knows, your endearing and lovable fur baby is an ongoing expense.

Seriously not staged ... as if you could stage cats ...

There’s the food, litter or pickup baggies, collars/leashes, and toys (or outfits if you’re that kind of owner ... which we are not ...).

Then there’s the vet.

We recently took our kitties in for their annual vet visit.  I’m not a stickler for precise yearly visits as our cats are in-door only.  We take them in every 1.5 years or so.

We hadn’t gone to the vet since we moved last May so I first had to find a new provider.  An internet search directed me to an animal hospital on our side of town and with a military discount – score!

One of the problems with the vet, just like human doctors, is that you really can’t budget properly until you’ve established yourself with a place and know what to expect.

I decided to budget $300 to get Ajax and Draco up to speed on exams and shots.

I was pleasantly surprised to have majorly overbudgeted for our visit.

For one cat, our bill totaled:

·        Wellness Exam:                   $38.13

·        Annual Vaccine (FVRCP):  $17.61

·        Rabies Shot (1 year):          $19.13

That brought our total for 2 cats to $149.74 and then we got a military discount of $7.49 off (not major, but every little bit helps!).

All in all, we paid $142.25 for the cats.  Given that we don’t have to bring them back for another year, that’s quite the deal.

Except that we did.  My adorable fuzzer Draco has been peeing outside of the box lately.  He's always had accidents here and there, but it was starting to be every day and in our laundry.  I suspected he had a kitty UTI so we took in him.

Turns out I was right.  He was just getting over one, which makes me feel bad we didn't get him in sooner, but now we've got some antibiotics.

I knew this visit would be expensive.  Here's our tab:

Office Visit:                        $44.81

Cystocentesis:                    $18.45

Lab Work:                          $32.91

Pills:                                   $22.04

With tax + our military discount, we racked up $113.76.

Totally worth it, since cats can die from untreated UTIs.  But unexpected nonetheless.  Will be keeping an eye on Draco over the next few weeks.  

We also found a plug-in diffuser that has some hormone that calms cats and helps to prevent accidents.  It's called Feliway and it's made a big difference.  We had our first accident in about three weeks and it was a very small piddle.  The cats are strangely more cuddly too, which is not a complaint!

How much do you usually spent at the vet?

Lowering Our Utility Bill by 20%

Back in April, I wrote about our utility bill and peak hours.

Since then, we've lowered our energy usage by over 20%.

Here's what our electricity consumption has been:

May - 693 kwh / 28 days = 24.750 kwh per day
June - 681 kwh / 32 days = 21.281 kwh per day
July - 539 kwh / 30 days = 17.967 kwh per day

How'd we do it?  One simple trick.

We only ran the laundry machines and dish washer on the weekends or after 8pm during the week.

(source)

Seriously, that's it.  It's all about the peak hours, man.  Ours run from 7am-8pm, so it doesn't make sense to pay more to do laundry doing those hours when you can do it for cheaper in the evening or on weekends.

Now, this isn't a hard and fast rule.  A handful of loads totally sneak in during the day once in a while, but we still lowered our energy use by a respectable amount.

I'll be interested to see how the next few months go.  With Mike not at home all day and I only run the air for a short period at night on miserably hot days, our kilowatts should continue to fall.

The savings to our actual utility bill, however, are not so straight forward.

Read Date	Total Usage (kWh)	Billed Amount†	Days Billing Period	Average Cost per Day	Average Use per Day
06/11	539	$87.95	30	$2.93	17.97
05/11	681	$106.94	32	$3.34	21.28
04/11	693	$89.05	28	$3.18	24.75

What happened here is that we voluntarily changed our utility rate to be higher. 

You've probably picked up on our whole "Go Green" thing.  Well, Alliant (our energy company) just started a renewable energy program called Second Nature.  

You can select to have 20, 50, or 100% of your power come from renewable energy sources.  The catch is that you have to pay a slightly higher rate because harvesting clean energy is more costly (at this point in time).

(source)

I was super excited about this opportunity.  For commercial buildings, these are called Renewable Energy Credits and help a business to offset their carbon footprint.  Now it's available to the residential market.

We selected the 100% option.  As renters, we don't have the opportunity to install geothermal or throw up solar panels.  This is the easiest way for us to support clean energy.

The price tag?

A whopping $0.02 cents extra per kilowatt.

Before, we were averaging about 12.7 cents per kilowatt.  Now, it's about 15.7 cents per kilowatt.

That's why you see a jump from the April to May bills, as May was the first month with the new rate structure.

What this means is that from here on out, we'll be paying $20 extra a month to have clean energy.  

End result - we lowered our energy consumption by 20% only to raise our bill by 20%.

To some, this may seem odd to deliberately lower your usage just so you can afford to increase your bill.  But to us, it's all about the kind of impact you can make with a meager dollar.  $20, in this case.   

Would you ever volunteer to raise your energy bill to support renewable energy?

A Month Without a Car

As some of you may know, we have had only one car since last October.  Long story short, I totaled our car on a concrete overpass after being run off the road by an SUV who didn't stop.  That sounds a lot worse than it was - I was ok minus some whiplash.  Because the car was older and the entire suspension needed to be replaced, it was easy for the repairs to cost more than the car's value.

What ensued was a lengthy discussion about what our options were.  How would we replace the car?  Should we get another loan?  That didn't seem responsible given our current debt load.  Should we get another clunker for cheaper?  Been there, done that, only leads to repair after repair.

(source)

 

So we did something radical.  We decided to not replace it at all. 


In some places of the country, that's not radical.  But in Iowa, that's majorly crazy.  We're not a state set up for good mass transit or biking communities.  Not at least when you compare us to a metropolitan area.

But we made it work.  Since then, it's actually been surprisingly manageable.  With Mike still looking for work, I simply drive to the office every day and am mindful to let him have the truck every once in a while.  If something comes up, he'll either drop me off at work or I can come home lunch and switch.

This was all fine up until last week.  Turns out, Mike was called up on orders to work at the base in Des Moines.


For five weeks.


All of our "we're being awesome and have one car, save the planet!" ideas came to a screeching halt.  A month is a long time to not have a car.  Not at least when a grocery store and Walmart aren't within walking distance. 

(source)

So we considered the usual - rides with coworkers, navigating the bus system, or get a rental car.  All had some serious drawbacks financially or compatibility with my hours.

I then took a bold step and suggested that I just use the bike.  After all, one of the reasons we got them was so I could bike to work.  I had already done so a couple of times and was in the process of working my way up to doing every day.  This would just jumpstart that goal.

We agreed that was the most financially attractive option, as well as being good for my health.  We then set up some calls with friends and coworkers so I had backup rides in inclement weather and such.  

Now the problem with last-minute orders and a spouse without transportation for a month is that it generates some unexpected expenses:

• A month's worth of groceries and supplies for me to minimize carrying any by bike (no saddlebags yet)
• New/more professional biking gear for me.  Though I change into work clothes, I don't want to show up in the parking lot looking like a hobo.
• Start-up groceries for Mike, like breakfast, snack items, and toiletries
• An oil change and a full tank of gas.
• Accommodations for Mike.  (Yes, they can call you up and not pay for room and board.   Or food for that matter.)

Break out the credit cards.  Sigh.  That's what they're there for, emergencies, but it puts us behind once again on reducing them.  Luckily, Mike gets paid for his time and we're going to be very mindful of making sure the extra income goes right back to the cards.

The week on my end was decent but energy draining.  My ride to work is about 40 minutes one way and on a hilly bike trail.  If it was a flat stretch, it'd be easy.  But my thighs are getting a beating on the inclines. 

I made it in 4 days this week on my own - combating cold weather (48 degrees in May!?), humidity, gnats, rain, and hissing geese.

On Thursday, I just couldn't do it.  I got out of bed and balked at the idea of spending any more time on the bike.  Plus, my body was full of new and old pains.  So I broke down and took a cab.

(source)

Physically, I'm glad I gave my body a day off.  Financially, I know calling a cab won't be happening often.  $20 for 12 minutes and 6 miles.  And that was only one way.  I've had cheaper rides in Chicago and DC!  Luckily a coworker was kind enough to give me a lift home.

So Week 1 is officially over for me.  392 minutes or 6.5 hours of biking.  It's definitely a shock to the system and I need to stay on top of stretching and drinking water, but it's doable.  

I'm hoping that after 5 weeks, biking to work will simply become a part of my lifestyle.  I hope my body will soon realize that I'm doing something really good for it and it should start treating me nicely in return.  At any rate, I feel a level of pride committing to this when we could have (albeit irresponsibly) gotten a rental car.  

Here's to the next four weeks!

My Utility Bill Needs Help!

As I was paying my bills this morning, I started digging around my utility bill.  The winter months have averaged $135 while the summer bills were around $100.  I have been questioning lately whether this is an appropriate amount for 2 people in a 900 sqf condo (built in 2008).  I found a great chart online of our energy usage and costs since we moved in.

Read Date	Total Usage (kWh)	Billed Amount†	Days Billing Period	Average Cost per Day	Average Use per Day
03/11	1,088	$138.29	30	$4.61	36.27
02/11	1,052	$134.83	29	$4.65	36.28
01/11	1,110	$142.70	34	$4.20	32.65
12/10	703	$97.99	32	$3.06	21.97
11/10	620	$86.42	29	$2.98	21.38
10/10	630	$92.92	29	$3.20	21.72
09/10	709	$119.71	30	$3.99	23.63
08/10	827	$141.67	32	$4.43	25.84
07/10	638	$106.56	30	$3.55	21.27
06/10	473	$71.56	32	$2.24	14.78
10 Period Total	7,850	$1,132.65

I found this really informative.  We spend around $4 a day on electricity.  Wow.  What really blew me away is the total.  Over a grand shelled out for energy in 10 months.

I have no idea how these stacks up to other condo/apartment dwellers.  If I were feeling ambitious, I'd dig out our records for our other rentals and compare.  All I know is the year we lived in a Victorian house, we had bills in the winter that were over $500.  Yeah, we cried a lot over that. 

I think what's important here is that our energy usage tends to remain constant for 3 months at a time, correlating to the time of season.  What that means is that there are opportunities to decrease that amount.

Our energy usage in terms of appliances looks like this:

• Mike is at home all day, so obviously he has to use energy whereas other couples leave for 8 hours and that's it.  However, he's only using the computer and is good about keeping lights off and such.  He also tends to do laundry and run the dishwasher. 
• At night, I'm kind of a nazi about flipping off light switches.  As foodies, we probably use our oven way more than other people do so that probably makes a difference.  There's also the TV/DVD player for movie watching. 
• Constants: fridge, water heater, furnace, and for all intents and purposes, the computer.

My job has given me an enhanced understanding of energy and utility rates.  So I decided to look up what are Alliant Energy's peak hours.  Peak hours are a fun rating system by the utility company.  They charge up to 50% higher for energy used during these hours.  It varies around the country, just like utility rates, but these typically cover the afternoon hours / the hottest parts of the day.  Do you know what mine actually are?

7am-8pm. (Alliant Energy)

WTF? 

That's crazy.  Here I was thinking of putting cute signs on the dish washer and washing machine saying "don't use me between 12-4pm."  Just kidding.

This changes things considerably.  Obviously it's impossible to not use any energy during these hours.  And I'm not fond of keeping European eating hours.

To save energy, these is going to require a shift in activities.  I think the easiest and most effective change is to simply not run the dish washer and washing machine/dryer during the week (or before 8pm).  Luckily, off-peak hours include the entire weekend so that's easy enough to just save those tasks for then.  Once the weather is better, I also plan on making our patio a drying rack so that should help too.

I doubt we can adjust our cooking habits and Mike needs the computer during the day for school work and job hunting.  Perhaps we can come up with a plan to decrease the amount of hours the computer is actually on though. 

We'll give this a try starting from here on out and see if it makes a difference.  Will let you know! 

Question of the Day: How does your energy bill/usage compare?  How do you save money on your utility bill?

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?

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. 

A Confession and a Vent

So my attempts to blog regularly have been greatly squelched in the past few weeks.  In order to remedy this, I will start this entry with a grand confession:

January's finances bombed.


Oh yes, here little Miss Blogger said she would brutally capture our financial successes and failures and I've been hiding from my readers for two weeks.

So let's come clean.  This month ended up being a perfect storm of financial yuckiness.  Here's how it started.


November and December are expensive months, largely the fault of Thanksgiving and Christmas.  November in particular was a disaster.

Turkey Day warranted a long overdue visit to family in Kansas City, as well as the need to get the hell out of town.  It was a great trip, we really enjoyed it, and we have no regrets making it. But you can't escape that 13+ hours of driving will result in gas expenses.   

Preceding KS was a trip to Milwaukee (a 10-hour trip).  It was a leftover remnant of my illusion of going to PhD school.  I couldn't back out because I was an area chair (a leadership position) and I had signed up for it over a 1 1/2 years ago so there was no excuse for not planning for it.   Mike scored an amazing hotel deal ($50 for a Hilton!), and we packed sandwiches and breakfast.  Still, gas was gas.

Also sandwiched in November was a trade show that I attended for work.  Now, the company reimburses you for whatever you rack up, but the catch is, you have to have the capital available to do so in the first place.  I had previously gone to another show where the hotel was taken care of.  Not this time, so surprise!  $200 on the credit card for a one night stay at a chic downtown Chicago hotel.

November was a bad month.

December had Christmas, which if you've been reading this, you know we went to dedicated lengths to do homemade gifts.  While that was a great venture, it couldn't counteract the damage done in November.

So January comes around and we get down to the nitty-gritty of our finances.  We make specific goals.  We dedicate to getting rid of all of our credit card debt in 2011.  We want to start the year off right.  I become an expert bargain shopper. 

But January had a hidden snafu waiting for us. Mike's GI Bill.  Particularly, when it would show up.

If you're unfamiliar with the GI Bill, it's given to military members as kind of condolence that their military service disrupts the typical time one goes to college.  It's also to supplement living expenses the vet-turned-student needs but is now not generating income for.

Mike started classes the second week this month and we thought, even though the government is slow, surely the money will arrive by the end of January.  Just in time to replace the teaching salary I no longer have and to take care of February rent.

So we got confident.  I made a double car insurance payment ($86) and then slashed a credit card balance in half by throwing $100 on it.

The second week in, we learn that the GI Bill will show up in February.  Mid-February.

Being aggressive on those payments shorted us money for groceries.  And gee, guess how much went on the credit cards?  Yep, almost $200.  See the correlation?

So in addition to racking up the credit cards because of my decisions, we were also in the unfortunate situation of not having rent for February.  We sheepishly went into our credit union, asked for a personal loan in the exact amount of rent, received said loan, and promptly wrote a check to our property company, which has already been cashed.  

If that weren't enough, all of this has been compounded by a growing frustration on my part for not earning enough money.  I'm the one with the two degrees, and while I never expected to make good money by majoring in English, I did expect that I could take care of myself and husband.  No no no. 

I make $1600 a month after taxes and healthcare come out.  Rent is $750.  Making all of our other obligations and finding money for groceries, supplies, and gas has been a delicate and wearing dance.

It bothers me that I have a lovely job and I can't fully take care of our finances.  It bothers me that when Mike gets his GI Bill, it will double our income. It really bothers me that I left a highly stressful and unstable job/s teaching with much much better money and came to a more stable job where I still can't get ahead financially. 

In fact, my job is causing us to get behind.

I very much feel like one of those traditional middle-aged guys who's always been the breadwinner and then suddenly is not.  I unfortunately do not have the luxury of buying a fancy car or jet-setting off to Europe on a grand vacation.

No, I am 26, just a kid in numbers, but emotionally twice that.  And the reality of my responsibility in our two-member family, combined with the ridiculous pressure I put on myself, is wearing just as hard as our finances are.

2009 was a shit-tastic year for us.  I worked too hard and Mike couldn't find work.  We lived in an apartment that now is fondly referred to as Buzzard Gulch.  

2010 came in with mixed results.  We had a hard time saying much positive in our yearly newsletter.

Already 2011 is kicking us when we're already down.  I don't want January to set the tone for us this year.  

Now that I've just hurled a bunch of negativity at you, which I appreciate you letting me vent, know that we're pulling up our socks and taking on February with closed fists.

I've decided that as lovely as the credit card goal is, we're just not going to hit that in any way shape or form.  So we're realigning it to tackled 3 out of our 4 cards, which have $100, $500, and $950 on them respectively.  

Two are bank cards from different institutions.  I want to get rid of the big balance, which comes from a national bank, and then go to our credit union and ask them to consolidate the credit limits.  This allows us to dump said national bank, have the primary credit card at a better interest rate, and eliminate an entire payment.

The other goal will be to not depend on the GI Bill.  While it's going to amount to $1500 a month (and in one lump sum), I want to pretend it's not there.  Granted, half of it is needed for rent, but that other 700 clams, that's what I'm talking about.  I don't want to raise our living expenses to match this additional income.  I want to always be surprised when it shows up, and throw it at debt and savings.  

So that's where we stand.  On shaky ground and channeling disappointment into productivity.  But at the end of the day, I'm thankful it isn't worse.  I have a job, in my field even, a nice place to rent, a supportive partner, transportation, and healthcare.  We're not on foodstamps, we're not living in a hole, we don't have kids to feed or parents to house.  It could be a lot worse.  

In a twisted way, we're lucky.  And that's sometimes what you have to hang on to.

Our Financial Profile

Our Financial Profile

Jennie has a Master's degree in English and graduated in 2008.  Up until recently, she was employed as an adjunct instructor, teaching as many courses as she could round up across several colleges.  Her salary was constantly in flux, changing every 8 to 15 weeks.  

To achieve more stability (and significantly decrease levels of stress from constantly working on overload), she took a full-time job as a magazine writer in May.  This required a move and a drastically lower, yet more stable salary.

She makes $24,300 a year.  She also has been teaching one night class a week, receiving $1,650 per 8-week course.  

Mike has a AAA in graphic design and is in the Guard.  Like many others, he is unemployed and without benefits.  This has been a source of frustration for some time.  He is fortunate enough to be paid for his drill weekends, which contributes $250 a month.

We took a large gamble moving.  Jennie accepted a lower paying job, expecting that there would be another salary to counter it.  Neither of us anticipated that the one entry-level salary would actually be the primary income.  It is the reason that we've had to look so hard at our finances lately.  In one month's time, our monthly income permanently dropped by 60%.  We had to make some changes, and fast.

After you take out health insurance ($130 a month only for Jennie: medical, vision, and dental) and taxes ($265.75 a month), Jennie earns $1,629 a month from her magazine job, and has been receiving $761 a month for teaching.  

Add in Mike's drill, and we're working with approximately $2,640 a month.  

This could be pretty reasonable, until you look at what goes out in bills:

$750 condo rent

$90 cell phone plan 

$50 for internet (no cable)

$10-15 for gas heating

$90 for electricity

$80 for water (comes out every two months)

$45 car insurance

$510 student loan payments (spread between the two of us across 4 separate loans)

4 credit payments, variable but around $130 (2 separate, one joint, one department)

$45 to a furniture store

$45 to a medical bill (should be disappearing soon)

$60 to savings (or $30 a pay period)

So, this is our problem.  Our obligations and debt, subtracted just from Jennie's salary, leaves us with $200-$300 to cover gas, groceries, and supplies each two week period.  This is particularly difficult at the beginning of the month.  Jennie's teaching pay comes in just one a month, and is directly routed to rent.  Mike's drill pay comes in the second part of the month.

Overall, we are reasonable spenders.  We aren't name brand kind of people, we have only one car, and we really try to limit our consumption of useless goods.  We make a strong effort to buy environmentally sensitive products and natural foods when possible.  We love going out to eat, a habit that has been greatly (and thankfully) curbed as of late.

This is who we are financially.  In our upcoming posts, we'll be exploring our spending habits and debts in more detail.

Question of the day: Can you bring yourself to disclose your salary, even to a trusted friend or family member?  Why or why not?