Make an actual budget, Catch up on bills and Pay off CC debt

The story is not very exciting, we have at least three times before caught up and worked ahead, twice we paid off all of our credit cards even and then got back into the same mess again.

Time #1 - In getting ready to get married I was not paying much attention to my finances and pretty much forgot to pay about 2 months of bills leading up to our wedding, then we put about 2k on our credit card while on our honeymoon, came back and within a week had the realization that we were totally broke, we were able to catch up on the bills with our wedding money. A real downer to start off with looking back on it.

Time #2 - Had to do complete brake/rotor/calipar job on my SUV I was driving at the time (before I started doing my own work) cost about $1000, then within the next month and a half the transmission went out of the same SUV ($1200) and then I lost my job 2 weeks before christmas. It took me 6 months to find a new job, I worked odds and ends for family to buy groceries, got a little bit of help from parents on both sides, but ended up maxing out everything just to pay to live. Was only making about 25k/year when this happened

Time #3 - Had just paid off all of our credit cards from time #2 and our dog hurt her leg, had to pay about $1200 in medical bills getting it fixed (remember our dog is our child, we know we pay more than most people would justify), then after that we had already put money back on our credit cards so we said what the heck, want to go out to eat. Over the next couple months we $10 and $20'ed our way into about 4k worth of debt.

Pretty much all of these things are not something that should have set us back as far as they did, the second one hit us really hard with me not having a job, we ended up having to move out of the state for me to get a job, really stressful times then, but looking back they have led us to a much better place. The last time I had $1000 in a savings account we were not going to touch it for anything and then we overspent in our main checking account on just $20 here and $20 there, and realized we were going to bounce the account and didn't have enough for groceries for the next two weeks before I got paid again, so I transferred like $400 into our checking from our emergency fund, then we found a really good deal on something that made me transfer another $100 out, we promised we would refill the account the next paycheck, but you know how that goes.

I think this time can be different though, for one, we have a budget that accounts for every dollar, and my wife and I are trying very much to commit to only buying if we have the cash already set aside. The problem we have had for the last few years has not been using credit cards, but in spending money that should have gone to bills thinking that we would make it up somewhere, then the end of the month comes and we blew 2 weeks worth of paychecks and we are now behind struggling to try and catch up. We spend alot of time talking and avoiding creditors calling which is very stressful for the both of us.

Are you planning on using the envelope system? Because your situation seems perfect for it. Now that you have a budget you fund each envelope. I think that might help you not spend more because when you run out of money you stop buying things in that category.

Hmmm. I agree with emoore that the envelope system might be really useful to you. Much as you insist this is not a credit card problem, it might be worth it to put the active ones in a ziploc bag of water in the freezer for a month or two, just as an experiment, live solely on a bunch of cash in envelopes from your paycheck, send absolutely every other cent to debt and/or efund as soon as you get paid, and see whether it makes a difference in helping you keep ahead of the game. Make the envelopes as generous as your budget outlines, above, so you don't feel too deprived without the cards.

When I look at this, I think, "Gee, if they had just had an emergency fund of about $4000, and replenished it each time, they could have handled #1, the car repairs in #2, and the medical bills in #3 easily without getting thrown off." And I wonder how big your e-fund is right now, and what if something else happened to you guys tomorrow? This makes me wonder if, once the mortgage is back up to date, maybe you shouldn't take the snowball $277 and the $100 per month, and whatever else you can scrimp and save in the next couple of months, and build up 1000 untouchable dollars ASAP. Then do the snowball to the credit cards. Have any of those balances changed since your first post, by the way? Any progress we can celebrate?

If you really really have trouble keeping your hands off the efund, maybe you should think about setting up a 6-month CD at ING with every $1000 you build up. That way you can't just transfer it over for "trivial" things, but if you need to pay a hospital bill or something serious, you don't pay too much of a penalty in interest.

The thing is, I've found from personal experience, discipline is like any other skill -- sports, music, whatever. You have to practice in order to build it up, month by month, day by day, even hour by hour. It's hard at first but gets easier as you see progress.

Ok, few updates:

Got our Sam's club membership yesterday, so starting next paycheck (Next friday) we will be buying our meats there, we will expand what we buy there as we find what we can use from there. This should help cut down our grocery spending some I am hoping (I am hoping to cut $100/month out).

Since I am now caught up on bills, I figured I would start posting my progress towards the $1000 emergency fund, and also the CC debt. I don't have the updated figures at the moment for the CC debt, but our starting point for the emergency fund is:

$99.11/$1000

I have a few checks due for side projects I have completed, so they should be going directly onto the emergency fund.

Also, just had several things happen in the last couple days that we were going to have to spend money on that we now don't have to:

1) The next checkup for our new puppy to get her third round of shots and stool checked was supposed to be $100 but we are going down to see the breeder we got her from and she told us she would just do it while we are there (She gives the shots, and she will send the stool sample to her vet), so thats going to be totally free.
2) Took my wifes car in today to get the check engine light fixed, the guy just called me a few minutes ago and said it was done, asked him how much it was going to be and he said "FREE", I guess he just had to reset the computer, only took him half an hour and no parts. (Making a note to have my wife bake some cookies or something for him)

So I am heading out on a mini vacation tomorrow, going hiking out in a national forest for 4 days, can't wait. And best of all, its going to cost a grand total of like $50 (Mostly gas), since we like to do primative camping and already have the gear, it costs almost nothing for trips like this.

So I haven't updated in a bit, wanted to post an update. I have some good, some bad, and some ugly.

The Good: I got in several checks from side projects, mostly smaller ones, but was very happy to get them. Also totally unexpected, we made bonus for our second quarter at work, all said and done, I got about $1500 between bonus and misc checks.

The Bad: I have been taking a real hard look at our finances and going back through stuff and found a few bills that were not paid, also I did catch up a week or so ago on our bills, but we were still paying like on the day they were due, I took a decent amount of the money I just got and have it to where I can pay the bills the day they come in, rather than the last possible day before we get a late fee. I am putting this under the bad category because I was really wanting to put the $1500 in the emergency fund and start paying off the credit cards, instead we are still basically broke, but totally paid up on everything until the end of the month (And I still have a paycheck coming in this month).

The Ugly: Its my mother-in-laws 50'th birthday, we always do big stuff for her, but this year I don't know what happened, we have blown at least $250 on going out to eat the last few days, plus the $100 or so on gifts for her. I don't begrudge her anything we have done for her, she has had a very rough couple of years just lately and she is an awesome person. It just happened at such a bad time financially for us, I couldn't even enjoy the meals we went out for, I was just thinking how we now have about $30 to live on for the next week and a half to stay in budget (And we don't have an emergency fund or anything to fall back on, so we have to live for that, no questions asked).

So besides that, a couple other things, I think we are going to end up coming out pretty positive for October, since all the bills are already paid, the next paycheck I am going to pay half of the mortgage for November and then dump a few hundred in the emergency fund I am hoping.

Also I have been reading "your money or your life", I am a bit over half way through, I am planning on actually going through and doing the steps in the book, I believe some of them will help, but I don't think this book is aimed at me in particular. I am hoping to start the tracking and graphing bits for November.

I hope you have groceries in your pantry since you only have 30 bucks to live on until payday.

You should start tracking your finances today. It's only the 13th of the month. Why give yourself a "break" to spend like you want until November, when you can start tracking today. In fact, if you still have those receipts from the restaurants, you might as well put those in your spreadsheet and get started. Sandi_K and several others have great spreadsheets to use as templates, and you can rearrange yours as necessary. I would do a search for templates to see if you can find them.

Did you really find all of your past bills? I think it's coincidental that your past bills equaled exactly 1500 dollars that you received in side money. Are you sure there wasn't any extra that you could put in the emergency fund?

In order to get somewhere, you have to buckle down. If you only spent 1300 on bills, it doesn't mean that you get to spend the 200 dollars on fun. The 200 dollars has a purpose and that's to build up your emergency fund. I think you're on track, but there are a few things that you can tighten up and only you know what they are.

Its not going to be easy with groceries, but we keep a very well stocked pantry, we have a whole freezer of pre-made meals and meats, etc. I am more concerned with Milk, bread, and a few things like that. My actual biggest concern is for gas. My wife doesn't drive more than a few miles in a given week so she doesn't need gas, but I have to drive to work each day. One lucky thing, I had forgotten I keep a $20 in my backpack in my car so that can help a bit.

As for the old bills, I still have two that I am aware of, I have a bank account from years ago that I overdrew and never paid back, so I need to pay them back (My name is on some bank blacklist, so I can't open up a new account anywhere till I pay that one off, I think its just like $200 or something). I also got a letter about a month ago that we forgot to file quarterly taxes for my wife's business and I owe a $50 late fee. We have shut down her business a year or so ago and there isn't any income I will need to report and pay taxes on so that is a good thing.

Part 1 of the "Your money or your life" is finding out how much you have made total in your life, between that task and logging and figuring out how much your stuff is worth, I have been going back through the piles on my desk and thats when I found this stuff. I have had enough of a mess for long enough that I would just bury stuff on my desk and then get wrapped up in staying ahead of the collectors so I wouldn't deal with people who were not actively trying to collect.

I do feel I am making progress, but I also feel this is going to be a very long road.

Marcus:

You ARE making progress. Confronting the bad things you've done (or haven't done, like paying the taxes!) is hard, and it helps. Step 1 is absolutely getting current on your CURRENT bills.

If I were in your shoes, I'd take any extra cash right now, and sock it into savings, until you have $1500 or so. Then I would pay the IRS, then I would pay the checking account past-due bill.

You need a budget. You need to say NO to your MIL and frittering away hundreds of dollars on eating out. You need to say NO to your idea that "this month is shot, so I won't start until Nov. 1." You need to use CASH for things, until your spending addiction lightens up a bit.

Is your wife on board with this? Did she agree that you should be spending money on eating out while you still have past-due bills and not enough money for gas the rest of the month?

This is no way to live. Eventually, you will have other fallout, and maybe even a failed marriage if you keep this pattern up. Grow up and get real about this - hiding your head in the sand is doing you no favors.

Sandi

sandi_k wrote:

You need a budget. You need to say NO to your MIL and frittering away hundreds of dollars on eating out. You need to say NO to your idea that "this month is shot, so I won't start until Nov. 1." You need to use CASH for things, until your spending addiction lightens up a bit.

Is your wife on board with this? Did she agree that you should be spending money on eating out while you still have past-due bills and not enough money for gas the rest of the month?

This is great advice. Until you have an emergency fund (of some sort, even just $1,000) in the bank, no past-due bills, and can afford your must-have expenses (mortgage, food, etc.) as well as the minimums on your other bills/debts, you cannot afford to waste hundreds of dollars squiring your MIL around, even if she is turning 50.

It's great that you want to show her a good time in celebration of her birthday, but consider: in 5 or 10 years, will any of you remember where you went to eat, let alone every place you've gone this month? Probably not. Arguably, your MIL may not remember what you gave her for her birthday (I know I forget eventually, unless it's a hugely sentimental gift). It's pointless to spend money you don't have/can't afford on something that may not leave a lasting impression anyway. (Just to be clear - I'm not implying that your gifts are forgettable in nature, or that your MIL doesn't care enough to remember. But as JD says, if you have a lot of Stuff, eventually it blends together and loses meaning.)

Instead, you could:
- invite your MIL/family/friends over for a potluck/nice dinner made at home. This would cost far less than eating out, and would likely be just as meaningful.
- give less expensive, more heartfelt gifts...an "IOU" book of services for her, for example (i.e. a month of lawn mowing, a weekend sightseeing nearby, a "get out of babysitting the [kids/neices/nephews/grandkids] free" card, etc.)...or something handmade that she would enjoy

You can always find some excuse to spend money....MIL only turns 50 once, it's Halloween so we need to decorate, it's Thanksgiving so we need to have people over for a huge dinner, it's Christmas so we need to buy gifts, it's a Saturday so things are on sale....the trick is reminding yourself of the reasons not to spend money until you can afford to have some "play" money for occasions like these (where it would be nicer/easier to just go out and spend money on something, but it's not vital for your day-to-day existence)

You can make graphs and read books day in and day out, but first you need to manage your cash flow. I am a huge numbers geek and I love tracking the numbers, but the numbers I'm tracking are how far my debt is decreasing and how far my savings are increasing...not how many checks might bounce because I overspent the past few days/weeks.

This ended up way longer than I expected...apologies for the novel. It does look like you're making progess, so stay focused and good luck!

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	Quote:
	I do feel I am making progress, but I also feel this is going to be a very long road.

It is a long road, and you're on your way. You're not the first person who has had to do this. We are all STILL doing the stuff that you are about to start doing, so don't think that we're all harping against you. We're not. We are all 100% behind you. We know you can do it, you just have to do it. Know what I mean?

Of course, now that I know you have a freezer full of pre-made meals you REALLY don't need to be spending 250 on going out. BUSTED! HA!!HA!!

I do agree with Sandi; get your emergency fund together and don't spend it! Then work on paying back the IRS and the bank. One step at a time. You can do it!

Its ok for you guys to harp on me for doing stupid stuff like going out to eat. My wife and I are good at rationalizing things and we are aware of this fact, posting my progress/mistakes on the board here is very good for me because before I do something I remember I have to report back here.

That being said, the whole thing with going out to eat several times with the gifts and such, that kind of hit me upside the head, I couldn't say no to the expectation, and I couldn't want to or enjoy being out because I knew we shouldn't be going out. My wife is onboard with getting out of debt, maybe not to the same degree as me, but we are on the same side thankfully.

I think the lesson to be learned here is needing to learn to say no to others, my wife and I discuss whether we should spend money on things and we can agree that it would be best to save the money for emergency fund, etc. However when the expectation was there, we didn't discuss it till I had the oh crap moment and realized we were about to overdraft the accounts.

BTW, I have no intentions on just blowing off the rest of the month since we messed up this far, when I mentioned earlier about starting the program from your money or your life the first of next month, I didn't mean I was holding off on everything until then. I have been tracking expenses, watching what we spend and trying to cut down, etc, and I will continue to do so. We are also working to integrate our new budget more each paycheck. I am waiting to start the program from your money or your life until the first of the month mostly because of time, I am working redoing my office at home, and trying to finish a couple more side projects (paying) before I jump in headfirst into a new program that will require alot of time.

Oh, just to be clear, I am not spending money redoing my office, I am taking a clue from the Zen Habits blog and Unclutter blog and I am getting rid of basically everything in my office as the more I look at it the more I realize I have a stuffed office of junk and I use about 2% of it. So I am going to be selling/donating basically everything I had in my office, I can't wait to see it all cleaned out.

I haven't updated in awhile so I wanted to add in an update...

Nothing big has happened in the last couple weeks, we caught up from our major overspending when my mother-in-law was out, our bills are still up to date, and I am getting alot of side work done.

Some upcoming things:
1) I have a $1000 invoice that should be paid sometime next week, I have no bills that this needs spent on, and my wife and I agree to take 100% of this and put it into our savings, this should take care of the first round on the emergency fund.
2) If I can get the hours in (And I am well on track to), I should be able to bill out $1000 ever two weeks through at least the end of the year on one of my side projects, we are both going to do everything in our willpower to not spend anything out of this checks and put them directly on credit card debt, I should be able to bill out an additional $4000 by year end.
3) I get paid in my full time job every other week, this means that twice a year I actually get 3 checks in a single month, I was just counting through the months and I see January is the next time I will get the extra paycheck, I am already trying to plan on spending that on credit card debt, I figure if we start now deciding these things it should be automatic when it gets here.
4) Part of my side business is building and hosting websites, and some of the stuff I have done over the last couple months is starting to pay off double, I have three new websites I will be building and hosting that are a direct result of customers I put live in the last couple months loving what I did for them and then recommending me to their friends.

Also I have started keeping a notebook in my back pocket that I take everywhere and any time I spend a single cent I am recording it there, multi purchases I am breaking down in the notebook, this is in relation to one of the steps from "Your money or your life", I have only been doing this for a few days now, but I had a funny thing happen already. I was traveling yesterday and had to stop and get gas and use the bathroom, I finished filling up the car, wrote down the amount for gas, went in and used the bathroom and on my way out I was going to get my usual power drink I love and stopped and decided I didn't want to have to write it down in my notebook, I walked out very happy and empty handed.

So that leaves me with the last item, I have been working to try and calculate when I should be out of credit card debt, I want to have some very real goals to work towards, and looking at the sidework I already have sold and cleared to work on I calculate I should be able to be out of our credit card debt by March 1st.

This is a very early estimate, and it will require my wife and I to be much more responsible than we have been in the past, also it is relying on me not skipping a beat with the hours I am putting in to get this side project money. In the past where we are right now is where we normally make our worst mistakes, because we are now caught up and getting more money than we need for bills, in the past we would tend to start spending and then not keep track as its too easy to make ends meet and then we end up behind again. So time will tell if we can do better this time, but I am going in more armed than I have before and really hope to break the cycle this time.

I calculated that if you take 1000 dollars every pay period (or every two weeks) and put it towards your credit card bills, your debt should be cleared up by February 12th. That doesn't even count the double that you are billing on your three new clients. Step it up a notch, and you'll feel much better. Of course, I haven't seen an updated bills list. I'm working off your initial list that said you owed ~8900. That is not even counting extra money that you allot from your paycheck. I was using sidework payments only, so if you added some money from either your paycheck or your wife's paycheck, you should be doing really well.

I think you're doing great. Your notebook plan is keeping you from temptation, which is a good thing. The only other thing that I can think of offhand, is that you might fall into the Christmas trap, so if I were you, I would say that you're going to spend 300 (or x amount) dollars on Christmas and that's it. No extra stocking for the dog because Petsmart has them and they look cute. Your dog is fine with her regular dog food on Christmas morning. Plan now so you don't regret it later. It's also good to plan now so that when the perfume your wife wants goes on sale Nov. 26th, you know where to get it, and can save some $$.

Keep planning. You're doing much better. Smile

Christmas is something we do pretty well at each year, my wife typically makes almost all of our gifts, and we also do our shopping throughout the year, so we are actually almost done shopping. Our biggest thing to watch for is going out to eat while we are back home for the holidays (Remember the issue a couple weeks ago with my mother-in-law and blowing several hundred dollars, can't have a repeat of that).

My wife and I decided we were going to go together and buy one gift to share this year rather than buying a bunch of small presents we probably don't need, we are going to buy a new TV for the living room, our current one isn't fitting our needs and the color is starting to go bad, I am guessing we only have a few months before it goes bad altogether. So the current plan is we are going to split the cost of the TV out of our monthly allowance we have been setting aside, I am looking for a nice 32" HDTV, right now I am finding them for about $350 but I am hoping to find some lost leaders on the day after thanksgiving or something to get a better price.

Also with raw numbers, I have figured the middle of February as well for paying off the debt, but I am giving myself an extra couple weeks since it is likely I will lose time over Christmas and Thanksgiving since we do alot of traveling (We live in one state, my wifes family in a second state and my family in a third state, all in a triangle with a couple hours between each of them.

I am going to be posting updated numbers soon, I have an updated spreadsheet I have been working off from that is really helping me to see where the money is going in relation to what we have budgeted, etc.