Tuesday, November 10, 2009

Debt

So I used to post every time I started Weight Watchers. Similarly, I posted every time we started Dave Ramsey budgeting lifestyle. And inevitably I'd be into it for about a week and then you'd never hear from me about it again.

So, in hopes of breaking tradition I am blogging about budgeting and how THIS TIME, we're doing it and going to be successful.

For the last year or so, we've been operating under "new baby mindset" and basically just getting by. We don't plan a lot when we go grocery shopping, and John often finds himself at the grocery store at 10:00 at night because we're out of diapers. We eat out every single night (or get take-out and bring it home) because the food prep and clean up is exhausting for 2 people who don't get home until 6:00 or after.

There's no planning involved in operating our lives, only in-the-moment survival.

We even strayed from our trusty cash-only system that had served us well for long time. And subsequently our money is disappearing each month before our very eyes. And we choose to ignore it, operating in survival mode instead.

Well, funny thing about suddenly realizing you're 6 months pregnant...money starts becoming more and more of an issue. And then you start to worry about it and get scared about things. And then, medical bills start piling up. The medical bills are literally sucking us dry. Between numerous co-pays, prescriptions, ER trips (for me...migraines before, violent stomach bugs twice since being pregnant)...they are sucking the life out of our savings and our credit cards. I have done a terrible job of keeping up with all things medical bills-related, and probably have overpaid in deductibles and co-insurance this year.

I've started a new system for keeping track of medical bills and you can bet your bottom that next year I'll be watching everything like a hawk.

Leah recently posted a blog about admitting some of her weaknesses on her blog, because often times we look to our blog friends for advice or support and it can be overwhelming when everyone posts their happy-go-lucky life and you end up thinking you're the only person who's not perfect out there. Well, this blog is my version of Leah's. We already know my number one vice is bad language. Well, here's your next confession:

We are in debt. And even though there is a plan, there is a big chunk in taxes coming back next year, there is a light at the end of the tunnel...we are still in debt. We have a SMALL savings that could last us maybe 2 months for the most important bills we have to pay if something were to happen. But with a mortgage, 2 car payments, student loan, CREDIT CARDS, and medical bills...month after month it's just easier to avoid than make a plan to deal with it.

In 6 months we will have two babies in daycare. And with the way we're living right now, we can't afford that. Literally can't afford it. Plus, early in the year one hospital visit will cost my entire health plan deductible. There will be more diapers, more wipes, more laundry detergent, more toys, more pacifiers, more formula, more baby food. It's just so overwhelming I can't even explain it.

And I have to say that we are not, by any means, big spenders. Other than the house and our cars that we foolishly bought brand new a few years ago, we don't ever go out and spend money on big purchases without paying cash for them. We have a broken down, 12-year-old TV in our bedroom, and our flat screen in the living room was paid for entirely through Christmas bonus and gifts 3 years ago. Colt's furniture was a big expense, but something we planned for. Other than that...we've bought nothing we can't afford. Ok, maybe some vacation expenses but I don't regret that either!

So how did we end up here? Brand new cars started it. Fertility treatments compounded it. And while we definitely aren't house-poor or upside down, but we probably could have been wiser when we bought our home. And of course, you plan and save as you can for adoption expenses but those added up, too (not that I would go back and change a thing...I'd rather live in debt forever than go back and change those decisions!).

So, here we are. We have a plan, we survived the initial discussions. We are current on our medical bills. And now we have to go back to our Dave Ramsey baby steps, we have to chip away at the debt piece by piece. We're borrowing baby furniture for the new baby, buying a few reasonable items for the new guest room/playroom. I'm learning how to CLIP COUPONS. And we'll once again try to eat more at home.

That's our reality. We're having trouble with money. YIKES! We haven't really had trouble with money before, I feel like we've always been pretty responsible. But I see a way out, and there's no one I'd rather work with than John to head that way. I hope none of you are in debt, but I know there has to be some people who find themselves in similar situations! Any tips of the budgeting trade you'd like to share would be awesome. Just wanted to share our particular struggle as it's dominating my mind these days. There may be more posts about couponing in the future!

12 comments:

uncomplicateme said...

Oh Jessica. Dear sweet Jessica. It seems that in addition to sharing a fervent love of college football, and sweet chunkey monkey boys, it seems we can also put a tick mark next to having debt in common. *sigh* I ranted on a post recently about my work-outside-the-home needs and how it's really necessary because of our finances. But I didn't get into specifics of our debt. We have the same things you do... the mortgage, the two car payments, the one kid in daycare, the student loans, the credit cards... We don't over buy for the most part. Yet somehow, bit by bit we've ended up in this scary-no-good-very-bad place. And we had this big Coming To Jesus about it a few months ago and hopped ourselves on the Dave Ramsey wagon.

And I feel like it's taken 2 months to really figure out what the problem is so that we can take care of it. We've made some small strides over the last 60 days, but the big strides we've made were mostly mental. We've stopped unnecessary spending. We're sticking to our budget (thank you Excel, without which my life would be incomplete :). We switched to Luvs to save money, and made sure to get the best deal possible on formula (sam's club giant can). We found a new home for a dog so that when we leave town we can cut the kennel bill in half. We just realized, like you probably are, that it wasn't so much that we were out of control, but we were SO FAR from where we want to be.

We realized that where we see ourselves in 30 years (retired, living in a swank house in the mountains and travelling all the time) isn't going to happen with the path that we're on. We needed to make our actions of today match our goals of tomorrow. And are our actions on track yet? HECK NO, but we're better.

j's always been up for clipping coupons, but I've been pretty lax about it. But now we're coupon FIENDS. We're actually travelling to multiple stores to find the best deals on the stuff we use. And trust me, from one house with two working parents to another, if we can get home late at night and make supper, you'll find a way. We used to eat out all.the.time and have cut back to only once or twice a week (lunches included).

I'm so eager to learn more tricks though. We definitely do not have it all figured out. I'm just so relieved to have an ally in our battle!! :) Thanks for coming out of the closet! ;o)

Now, tell me more about your cash system? j's always wanted to do this thing with cash in envelopes every month, but I can't wrap my mind around the organization of it.

GOOD FOR YOU GUYS! I can't wait to see how awesome you will do. Please keep us posted!

evawebdiva said...

Hey Jessica...I love thrift shopping! I know some people think that's scraping the bottom of the barrel but it is so fun and you can't believe what you can find! I have never owned Liz Wear or Ralph Lauren until I started thrift shopping. And with little ones, you just can't go wrong. Edmond has a few great stores! My fav is EARC on 15th between Broadway and Blvd. Saturdays are 1/2 off. Yeah, there are times where you can't find anything but not often. I'll share more if you're interested.

BB said...

All I have to say is... me too!

Some sites I am living and breathing by now:

http://www.moneysavingmom.com/money_saving_mom/

http://babycheapskate.blogspot.com/

www.coupons.com

The first one talks a lot about using your freezer if you are super busy (i.e. if you make a freeable dish, make twice as much and freeze half).

It is easy to just pretend it isn't there. Retail therapy is great, even if it is just groceries or baby wipes!

David said...

I'm impressed with the way you always put it all out there, Jessica. More of us should probably admit to our many failings! As far as the day-to-day tracking of finances I've had good luck with Mint.com. It's free, it's from the makers of Quicken (at least they bought it recently), and there is an iPhone app that gives all the same features of the site. Basically you give it all your user names and passwords for everything (a little scary at first!) and it automagically gets all of your banking, credit cards, 401ks, IRA,s and puts them all in front of you at the same time. It's really an awesome way to keep track of spending, saving, and budgets and see the big picture of your finances. I like that you can view trends of spending by month, year, etc.. and can compare with other people or yourself. Anyway, I love messing with all the data and trying not to spend so much on eating out. It will even send you alerts if you go over on budgeted items or if a category falls outside of 'normal' spending. Hope that helps!

Tabitha said...

Thanks for that honest and humble post! I think everyone has been in that boat at one time or another, you're not alone sister! I've been a coupon clipper for awhile now. I love using coupons but also be careful to not just buy something because you have a coupon. And also make sure it makes sense to buy the name brand. Sometimes its still cheaper to buy the generic than the name brand with a coupon. Do you have an Aldi's where you live? Its a super cheap grocery store that I LOVE! I save so much money there and their stuff is great quality. I also think using the envelope/cash system is a great idea. But the biggest thing is PRAYER! I have to pray a LOT for God to give me self control to not buy things I don't need. Let us know how it goes!

Karen said...

You're definitely not alone; debt is a huge problem in our country that nobody talked about until the economy crashed! We were in debt for a few years and then we got Dave Ramseyed and now our only debt is our mortgage. But I think that we've been married longer than you and I worked longer before I stayed home, so that played a part in our success. Nobody can really tell you what to do except God and Dave Ramsey (his angel), but I'm pretty sure D.R. would tell you to sell the cars and sell all of your non-essential stuff on ebay or craigslist. But most importantly pray, and take a leap of faith and tithe 10% of your income to your local church. It sounds crazy when you're in debt, but if you do it with the right attitude of faith, it works.

hope548 said...

I know how stressful money issues can be. It has always stressed me out to have a lot of debt.

Might I recommend cloth diapers to save some money? It may not be for you, but we have done it and it's saved a ton of money. If you ever want more information on them, I'd be happy to share.

I'm glad you have a plan and I hope all goes well!

not so zen momma said...

My friend just posted on couponing, made me think of you: http://themillerspot.blogspot.com/2009/11/cha-ching.html

momof2monsters said...

We cook a lot in the crock pot. gross as it sounds there are a few good things that can go in there and cook all day and be ready for you when you get home. we too ate out almost every night. now that we are a family of 5 and only on 1 income, we have to really start budgeting. its a scary thing to not know where the money is going to come from. i am even thinking about getting a job in the evenings. just have to really think about what we spend and then justify why we are spending the money. you will get it figured out. it takes planning and more planning. nothing wrong with clipping coupons. we do it. and double coupon day is even better. we buy store brand items most of the time. they are just as good and about half the price. bagged cereal is out staple. it will all work out. stick with it.

TXMom2B said...

I've been where you are. Luckily, it was before I was married, and it scared me straight, so to say, but we still have our struggles now. The ways I keep from going back into heavy debt are:

Jim cooks at night. We go cheap most of the time, with pasta sauce from a jar (some of them are actually really good!), a can of mushrooms and store-brand noodles. We cook some beef and sausage and keep it in the freezer so it is ready to add to the sauce when we warm it up. Super quick, easy, and cheap. We do that once a week.

I have a strict budget on baby stuff. Not diapers, as you can't restrict how many of those you buy, but stuff like toys, which I would go crazy on otherwise.

We just found a new home for one of our dogs. He was a money pit and we just couldn't afford 2 dogs.

Making a menu of what we'll eat for dinner, and then making a grocery list before I go shopping. It was such a hassle at first, but, when you know what you're going to cook, and you know the ingredients are there, it's harder to justify going out to eat.

More people than not are where you are, and those who aren't used to be and still worry about it happening again. Thanks for your honesty!!!

Monika said...

I just hopped over to see how your pregnancy was going and felt the need to comment on this post...babies are really only as expensive as you want them to be...it takes an attitude change, but you CAN be happy with less :).

I don't know for certain, but would guess that we make less than you guys...Dave works and I stay home with the boys...but we live within our means, our only debt is our mortgage and student loans.

Me not working means we don't have childcare payments. We cloth diaper, which means we've spent less than $400 total on diapers for 2 kids. I've never bought pacifiers or formula. Formula is obviously not optional for Colt (though ending soon, no?) but is there a reason not to breastfeed the next one? ...you also don't really ever /need/ baby food, you can just wait till they're old enough to start on table food. And babies also don't need toys...all that stuff is fine, but optional. Just because it's what you've been doing doesn't mean that you need to keep doing it or that one way is better than the other.

Medical bills suck. I'll totally give you that and there's not much you can do about it. We really tightened our belts last year in order to pay for Timothy's birth and then ended up still owing a bunch to the hospital afterward :-/.

Eating out was one thing that got cut when we had to make room for an extra $500 a month in our budget for prenatal expenses and it's tough, but healthier as well as cheaper! You can do once-a-month/freezer cooking and that helps with just being able to pull something out and heat it up instead of heading out to eat. Also I had a lot of trouble being able to get any cooking done when Ben was little and we ate out for pretty much the first 4 months and then slowly eased back into eating at home, but when Tim was born I had already figured out how to deal with kids and cooking (avoid time sensitive meals!) and I was able to get back into it much quicker.

I know it would be awful hard with the Holiday's coming up, but I think the best way to figure out a budget and start saving is to do a 'buy nothing' month where you only buy essentials for 30 days (you can google and see how it went for lots of other people)...it helps you see where you absentmindedly spend money, see what your baseline spending really is, and puts a big chunk of what you would have spent into savings (or paying down debt, for you).

Our supertight budget last year to avoid going into debt looked like this:

normal payments for--
(mortgage--we stopped paying the extra we normally pay every month,
electric--we probably could have cut down here but didn't worry about it,
natural gas--not much used during the summer,
water/trash--not much we can do to change this,
internet--we actually did go without internet for the first 6 months we were in the house because moving expenses were more than we had anticipated, but I didn't want to do that again if we could avoid it,
phone--we have the absolute lowest plan we could find,
student loans--nothing we can do about this,
insurance--not much we can do about this, but USAA has really low rates),
the new prenatal payment,
$50/week for gasoline (this was during the spike last summer),
$50/week for groceries for 3...we ate a lot of homemade bean burritos. I kept track of food and could look it up if you are interested. I wrote down the price of everything we bought every week and used that to make the shopping list for the next week and also to stock up a bit when the price was down and not buy when the price was high.

That left about $40 a month for all other spending--shower gifts, clothes, light bulbs, etc.

Leah said...

Jessica, I felt like I could have been writing this post. I feel your pain around debt. I also have the house, car, school loans. And after not being able to get pregnant, thousands and thousands of dollars worth of infertility treatment. Than, after being in so much debt, there is the adoption costs. Money was never going to be the factor of why I couldn't have kids. And then on top of it, there may be Kids. . . as in plural. It's all so scary!

I just want you to know you're so not alone. I commend you for looking into fixing it. You are giving me the motivation to try too.

Awesome post, and thanks so much for the shout out. It's true. . . We are all so not perfect. But I still think you are fabulous. :-D