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. 

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.

I

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. 

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? 

The Guilt of Vacation Planning

It is some consolation to remind myself, as I sit here with a headache and blowing the most unbecoming stuff out of my nose, that I will be laying on a beach in Jamaica in 8 months.

The Royal Decameron resort we stayed at in 2008 - I can't find my original pics buried on the computer so forgive the stock I plundered off their site!

After Mike's last deployment, we did a make-up honeymoon to Jamaica.  It was seriously one of the best times of my life.  We stayed at the Royal Decameron, a cute 3-star all-inclusive resort on the north side of the island. 

We talked extensively before this deployment about how to maximize the income and we both agreed that a vacation was in order.  Our trips in recent years have strictly involved family visits and weekend getaways, but there hasn't been room for anything else.  Perhaps this is why I've been fretting all along about whether a real vacation is a fiscally responsible thing to do.

I booked our last vacation right after the economy crashed in 2008 and I got an amazing deal - $2,500 for 5 nights + airfare.  By the time we added two day trips, souvenirs, and gas to get to the airport, the trip was $3,000.  For a comparable vacation today, I knew four years of inflation and a bump in resort star ratings would put the price somewhere around $4,000-5,000. 

They had cute little cottages - it's awesome to not share walls!

It is so very hard when you're on a limited budget to "treat" yourself to something on this magnitude.  It feels luxurious to be planning a major vacation when we struggle with our normal finances. All the while I keep thinking of how else we could spend this money - a valuable nest egg for savings, a future down payment on a home, a good start on replacing our truck, or kicking off retirement savings.

But I've come to the conclusion that the hesitation I have now is insignificant compared to the regret I would feel if we didn't go.  

Amid the penny-pinching and thriftiness, there's also this thing called life one is supposed to be living.  You only get one chance to live your days to the fullest.  Your savings account and 401k may be golden, but if you have a pile of regrets and what-ifs, it's not going to emotionally matter that much.

One of the beachfront bars we hung out at.  Instead of bar stools, they had swings

So here are the rationalizations I've come up with to reassure myself that just because I'm not rich doesn't mean Mike and I don't deserve a vacation.  Ready?

1. Taking a true vacation like this once every few years is far from irresponsible.  It would be one thing if we did this every year while sacrificing finances elsewhere.  Or we were stretching ourselves by putting this on a credit card.  But no, Mike's deployment is the very reason we have the extra income to pay for this out of pocket and in full.  
   
   
2. We will probably always be a couple who can only afford something nice like this every five years.  It's comforting to know that we can plan to treat ourselves far in advance. If we squirreled away only $50 a paycheck, in five years we'd have thousands of dollars to play with for our next vacation.
    
3. There is no reason people don't deserve some R & R every so often.  In fact, it's widely reported that Americans would be far healthier and happier if we took more vacations.  We chronically miss the boat when it comes to balancing work and play.
    
4. Our vacation budget of $4,500 is 1/7th or 16% of Mike's deployment income.  So it's not like we taking an inappropriate chunk of his well-earned money.  And you'd better believe this keeps a fire under my butt to not screw up all of the other goals we have.   

This was the Quiet Pool - adults only, had to keep conversation to a minimum.  So nice.

With these reasons firmly mind (and still a touch of reservation), I closed my eyes and booked our Jamaican vacation for Christmas today.  For 6 nights + airfare, my bill is  $4,760.

Read on here to see what $5,000 will get us for a week!  

Have you ever felt guilty about spending money on a vacation?    

Plans for Deployment Income

Relatively soon, our entire income situation is going to drastically change.  With Mike off in another time zone for the rest of the year, he'll be earning deployment money.  All of sudden, our monthly budget will increase by about $3,000.

Before you go ape crazy with jealousy, this money comes with a price tag.  For Mike, a 100+ degree location, camel spiders, limited communication, living out of tents, and John Wayne toilet paper (rough, tough, and doesn't take crap from no one).  For Jennie, complete responsibility for our finances, dateless weddings and family events, full management of condo and catbox cleaning, and the general suckiness of not having a spouse around.

Last time Mike deployed (four years ago), we were far less savvy with our finances.  We used our income boost to pay double rent, make double student loan payments, eliminate one student loan altogether, and treat ourselves to a week-long vacation in Jamaica.  It wasn't irresponsible, but we were living in the financial present with little thought to when Mike came back.

Not this time, no sir and ma'am.  I am going to squeeze every penny out of this windfall and create a good foundation we can capitalize on once our income goes back to normal.  After many discussions, we've come up with a game plan, of which I will be the sole keeper to perpetuate and maximize.

Honor Family Debt. This debt originated years ago when Mike was stationed in England and some lousy bank decided to wrongfully repossess his car.  Talk about taking advantage of our military.  A parental unit kindly handled the situation in Mike's absence but was forced to tell off the evil financial institution with their checkbook. Said gracious giver of genetics assures us this debt is not a priority, but it certainly is for us.  It holds the #1 spot on our to-do list and the payoff will be accompanied by a good bottle of wine.  Amount unspecified for internet eyes.

Exterminate ALL Credit Card Debt.  I am waiting for the day when I can say that all of our credit cards are at zero.  The price for the feat is around $7,000 between all of our cards.  Not a number I'm proud of, but $5,000 is all on one card that we weren't working on in 2011 (as if that's any comfort or excuse, but there it is).

Polish Off the Car Loan. We owe the bank just under $9,000 for the Mazda.  Not only would it be awesome to own the car free and clear, but it will free up $200 a month to be rerouted elsewhere.

Save Up for a Vacation.  After the last deployment, Mike and I took a memorable vacation to Jamaica.  We booked right after the economy crashed and made off like bandits, but inflation is a lot like karma.  We've been going back and forth with a travel agency over a couple of options, but current estimates put us at around $4,000 for airfare and a week at an all-inclusive Caribbean resort.   Fuller post to come!

St. Lucia, one of our top picks

Now, you may be adding up these numbers and wondering how exactly we're going to meet these goals.  Keep in mind that I still get my usual salary (and likely summer teaching income), but there's one less person to feed, use electricity, take showers, or go out to eat with. 

I can create savings by taking advantage of these small decreases in our regular bills.  For example, our water bill is around $80 every two months.  If it drops down to $60, I can move $20 in savings.  That doesn't look like much on it's own, but if I do that for 8+ months, that's $80 that I didn't break a sweat to set aside and that's just with one bill!           

I also intend to create a food pantry for us out of our lowered grocery bills.  This is something we've never been able to get off of the ground and it hurts us in the long run.  So every time I go to the store, I'll be on the hunt for non-perishables like rice, pasta, canned beans and tomatoes, baking supplies, juice, and cereal.  Same will go with household supplies like laundry and dish detergent.  

  
Realistically, we may not be able to meet all of these goals.  In the span that Mike is gone, there is still $785 a month for rent, medical bills, routine doctor appointments, regular car maintenance, and summer activities/trips that still need to be accounted for.

It will also be tempting for me to increase our standard of living since there won't be as much pressure to count pennies.  I'll have to resist upgrading food products or going on shopping trips.  Those little splurges could add up and compromize one of our goals.  I will need to be ever mindful to focus on maximizing our savings, but I think it's completely doable with a little mental elbow grease. 

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?

The Difference Between Planning and Banking

First off, thanks to all who gave feedback about the nature of the blog.  It really helps me to know that the readers I have enjoy what I create.  Hopefully when my work schedule isn't so demanding and this term of teaching is over, I will be back with renewed energy and increased posting frequency!  xoxoxoxx to all

After several weeks of adjusting to some recent news, I can now admit that Mike and I had been pursuing some job opportunities in another part of the state.  There was an opportunity for Mike that we learned about this summer, and we've been sitting on this knowledge for several months between the job actually opening, the application process, and the interview.

Long, disappointing story short, the job was given to someone else.  I had even applied to a position and it also didn't go through.

One of the chief disappointments with the outcome was either of these jobs would have been a financial golden ticket for us.  Salaries twice as high as they are now, job security, steady opportunities for pay raises and advancement. 

However, Mike and I set us up for even greater disappointment.  You see kids, there's a world of difference between planning for and banking on something.

Banking is much like gambling - it's risky, there are no guarantees, and the house usually wins.

Planning is a responsible approach - you mitigate future risk by your actions today. 

When it comes to finances, you should be planning as much as possible.  Planning applies to your savings account, 401k and other retirement investments, medical expenses, and vacations.

Banking, however, is disastrous.  Banking is making financial decisions today based on something that has a high probability of not happening.  Banking is what Clark Griswold does in Christmas Vacation: he puts a downpayment on a pool because he's banking on a large Christmas bonus that never materializes.

Mike and I knew we were edging past planning and into banking during these last months of uncertainty.  There were so many factors in the air that we began to lose sight a little.  We were dealing with the possibility of a complicated move, where one of us had to stay in order to fulfill some obligations.  That meant apartment shopping and two rents to consider.  There's a deployment in 2012 that was an unaccounted factor.  I'm still knee-deep in medical testing that hasn't yielded any answers yet.

We did two things that we regret.  First, we took Mike's classes down from full to part time, anticipating he might have to pick up on short notice and go.  This cut his GI in half, removing $700 of our income each month.

This resulted in us backing off of reducing our debt aggressively.  We were back to treading water, not moving forward.  This was due to both the lessened income, but also a growing mindset that our income problems could soon disappear altogether. 

This is precisely the problem with banking.  And I would recommend you avoid it all at costs because you could be making decisions that end up hurting you.

We came out of this with little more than a scrape, honestly.  And with a good lesson learned to boot.  In fact, we took what we had been hoarding in our savings account and eliminated 2 credits cards to make up for lost time.  So not a major foul.

The situation also caused us to look more deeply at our finances.  We know that my salary will be fairly static.  I make just over $26k and that's not likely to change in the next year.  We also know that Mike's GI Bill won't change provided he's taking 2 classes every term.  Since he won't be done with school until 2014 (the deployment will push things back a bit), we can reasonably say we'll be pulling in $46,000 annually for some time. 

This leads us to several conclusions.  We need to continue being creative with our money to get rid of debt.  We also have to find some way of funding a savings account with what is already coming in.

It's also made us consider if Cedar Rapids may not be the place for us to settle.  We moved to the area with the intention that we'd be here for 2-5 years, gain some financial security, and then go to the next spot.  Clearly we were ready to move with these job prospects.

However, the only problem we've had here is getting Mike a job.  That's it.  We like the distance from family (2 hrs is a nice buffer) and we're clearly in love with Dubuque.  We can drive 5 hours and hit Chicago, the Twin Cities, St. Louis, or Kansas City.  The bike trails and parks are excellent.  There are cultural options each week and we've yet to explore Iowa City 20 minutes away.

So who knows.  Once upon a time, it was common to have a 5-year plan.  You could reasonably set goals based on this time frame.  No longer, my friends, no longer.

Mike and I have limited our planning to 2012 and 2014 respectively.  Next year will be an unusual one for us.  With Mike deployed, he'll earn in 6 months what I do in a year.  That clearly is a financial windfall and you'd better believe we have some distinct plans for the income.  We are going to capitalize on this with every ounce of energy we've got.  

Next year will also mark my 2-year anniversary with the magazine.  Should I get a pay raise, it might help me establish what I can expect for salary increases in the years to come.

2014 is when Mike gets done with school and will be on the market again.  If he were to find a job, and one that he liked, it would be mighty hard to leave the area and terribly easy to talk about buying a home.  

Now, we aren't banking on that.  Who know what the economy will do in the next three years.  There's a very real chance that Mike will finish with classes, look for jobs, and be without any income at all for an extended period of time.  You can bet I'm planning for that now when I think about our savings account.

So the lesson of the story here?  Recognize the difference between if and when with your finances.  If could leave you down a path of regret. 

$1600 Gone in a Flash

This is an odd week for me.

I just finished 8 weeks of teaching two film classes. It was a busy two months, teaching back-to-back nights in different cities.  But it was a good run – I had engaged students, taught 4 new movies that were well received, and the responses on the essay test really blew me away. 

So final grades are in, the textbook resumes its spot on the bookshelf, and my prep materials are safely stowed away for future reference.

What makes this an unusual end to a class is that I was scheduled to start teaching a literature class this week as well. 

Note the past tense.

I learned a few days ago that not enough students registered for my class and so it was canceled.  This is standard university policy – it’s just not cost effective to pay an instructor to teach less than 10 students. 

Now I’ve taught close to 50 classes, but this is the first time I’ve ever had one canceled.  This leaves me with a lot of mixed feelings. 

The bonus to this situation is the amount of time I gain back – 40 hours in the classroom, 16 hours of driving, and however many hours spent grading and emailing.  We’ve got a lot going on in our life right now, so having another free evening is not a small thing.

However, there are some definite downsides.

The first is a teaching-related concern.  I’ve taught literature a handful of times, twice before at this particular university.  I made few changes between the original courses as I was still feeling the ropes, but I was ready on the 3^rd run to make adjustments. Add to this a recent university directive to add more “rigor” to gen ed courses and I was eager to get creative.

So I changed the course.  The reading list stayed virtually the same, but I redistributed the points across different assignments.  I went from 1 presentation, 1 midterm, and 1 final paper to 1 small presentation, 1 midterm, 2 responses, a final PowerPoint presentation, and no paper.

You may not be interested in my teaching methods, but here’s the thing – students have access to your syllabus prior to registering for the course.  On my old format, I clearly had enough students to hold class.  But under the new format, I did not.

There may be a number of factors why this course didn’t fly – it’s fall and students want to concentrate more on major classes, not many this term needed to fulfill a gen ed requirement, literature isn’t very popular in the first place, ect …

But I do wonder if my changes had anything to do with it.  I was excited to teach with the new assignments/activities, knowing they would enhance students’ understanding of literature and let us cover a great range of authors and topics.   

I wouldn't suggest I'm as awesome as Mr. Keating, but I'm a big fan of making literature accessible

I don’t regret the changes – if I get to teach this course again, I will stick to my new design.  I just wish I knew why there wasn’t enough interest.

But this is life as a college instructor – classes get canceled, it happens.  However, because I’m hired from term to term, I do not know when I will be teaching again next.  It might be again in October (another movies class), but nothing has been decided yet.        

The other thing that this cancelation has caused is lost income.  Though I’d signed my contract, redesigned the class, prepared all of the materials, and had my syllabus turned in, no students = no pay.

I would never say that it wasn’t worth it.  I have a fantastic literature course ready to deploy when the time is right.  But I can’t deny that we had plans for my pay.  It was to fuel debt reduction, nothing earth shattering, but that’s a good chunk of change that disappeared with only a few days’ notice.

I love teaching.  I make my bread and butter in publishing, but teaching is a natural state of being for me.  If the structure of higher education and the economy allowed it, I would work as an instructor full time, but such is not the case for our times (and the explanation would take up another post).  Hopefully another opportunity will come, but for the next few months, I will lay my teaching hat aside. 

Screwy Finances Yet Again

So remember our recent bout of debt slashing?  We were flying high on our little burst of income, happily checking off items on our financial goal list.

The tables have turned yet again and we're now back to Square One.

(source)

I feel like we're in this cul-de-sac of financial repetitiveness, a merry-go-round I'd gladly exit if I could.

The dealio is that Mike was supposed to be on another month of orders during August.  So we threw all of that extra money he was earning at debt and a small pittance into savings, thinking we'd get to that with our surplus for this month.

Just kidding.

At the last minute, Mike's orders were canceled.  Yep, no warning, you can go home now.  While that's nice for us on a personal note because this summer has been completely hijacked, it also means Mike won't be earning money at all this entire month.

Lest anyone be super alarmed, we thankfully have enough to cover everything and Mike will back in classes with his GI Bill reinstated in September.  

But it's switcharoos like these that make me question our previous actions, and that's no fun at all.  How was I to know it would have been better to throw a bunch in savings first and not at debt because we would be losing income on short notice?  

I know I shouldn't be hard on us - we don't have a crystal ball and you can only make a good decision based on the knowledge that you have at the time.  

But this is what I think is the most frustrating about our financial situation - it's never consistent. No matter how hard we try, half of our income can disappear or be delayed at any time.  You cannot be financially responsible if you can't PLAN for anything.

<takes a deep breath and eats a piece of chocolate>

Things will be alright, it's just another bump in the road.  Worse things could happen.  But believe me, it will be a happy day when we have incomes we can actually count on.

How Osama bin Laden Saved My Finances

Kapow!  Kablam!  Splat!

(source)

Those are the sounds of our debt being slashed, cut down, and eliminated.

And I have Osama bin Laden to thank for it. 

Let me explain.

The original reason Mike was called up on orders is because base security was raised after the bin Laden incident – just a precautionary move. The base couldn’t staff this required manning solely with area Guard members, hence a phone call to Mike.

So Mike has been on full orders for the military the last two months, all because we finally caught International Terrorist Numero Uno. 

That’s a full-time job that just landed in his lap. Which translates to a windfall in monthly income. All of a sudden, we had a surplus of several thousand dollars.

We resolved from the get-go to take that money and B-E AGGRESSIVE with our debt. No crazy purchases or shopping sprees here.

So far, we’ve paid off these accounts IN FULL:

·        KAPOW!  Leftover personal loan from February - $500     

·        BAM!  Credit union credit card - $400                           

·        KABLOOIE!  Bank credit card - $850

·        THAWP!  Firestone account - $1300

It makes me giddy to know we have eliminated 4 monthly payments - over $3,000 of debt that’s gone.  That’s huge!  That frees up around $200 in payments each month.   

(source)

We’re also taking out sizable chunks of our Furniture Row account. Even though there’s no interest and the monthly payment is $45, it’s still another obligation. We now have the balance under $1000 thanks to a recent $400 payment.

One of my other goals with our surplus was to close some of these accounts once they were paid off – you know, remove the temptation. I learned, however, that closing a credit line can actually HURT your credit score.

Believe it or not, your credit score can take a ding if you close out your oldest lines of credit. For example, I have a card leftover from a bank we’re no longer with. I thought because it's orphaned and has a high interest rate (14%+), that it would be good to cut it up.

Wrong!  Because that account has been open for over 8 years, it’s actually my oldest line of credit. I don’t fully understand the logic of it all, but it would be detrimental to close it. So it’s been designated the “god-forbid-we-have-a-$2,000-emergency” or “Jennie’s-traveling-for-work” card and is safely residing in the lock box.

We also added Mike to our credit union card. Without trying to embarrass the poor guy, I have a credit score 100 points higher than his, mostly because all of our bills are in my name. So we’re trying to bump his up by getting his name on a few more well-managed accounts.

This is the same reason we’re not closing out the Firestone card, as it’s solely in his name. It’s also very good for emergency repairs, which we all know how disastrous those can be on a budget.

As successful as this round of debt slashing has been, we only eliminated 40% of our credit card debt.  Mike has a card with 4 grand on it that needs some serious attention. That’s not comfortable at all to have hanging over our heads, but we knew this would be the year we cleaned up our credit card act. 

At some point in the future, we’d like to be as “off grid” as possible with credit cards. We learned some hard lessons in our early days and still  worry about our dependence on them when our income situation gets fouled up. But it’s an ongoing process to live  responsibly within your means.

There’s no one way of driving down debt. The best advice I can give is to just tackle it with as much force as you can muster, even if that’s $25. Make peace with your debt and own it before it owns you.