When I woke up this morning, the temperature was -29°F, actual, not wind chill. That was -41°F. The car wouldn’t start, and the hot water to the kitchen sink was frozen. And the furnace has kicked on five minutes after it shuts off for the past two days.
We budget $160 every paycheck to save towards the gas and electric bill. Based on our past usage, that should even out to the total yearly amount we pay, but the past 30 days has been extraordinary, and I don’t know if that is going to cover it without a subsidy (coming from the debt snow ball money, of course.) Our house is horribly insulated, and that’s one of the things we want to change after we get our debts retired, but we don’t want to create more debt doing it. We keep the thermostat between 62 and 64, much to the chagrin of anybody and everybody. The wood stove in the back of the house helps, but given the weather this year, we’re almost out of wood and it’s only the middle of January.
On the plus side, the high tomorrow will be 26ºF, so a 55 degree difference in a day.
Gah, the furnace just kicked on again!
Mrs. Micah at Finance for a Freelance Life has a good explanation of a Debt Snowball, and also of Snowflaking; taking what you have left over in your budget and using it towards your snowball. We haven’t done this yet, but my gas budget is accumulating a surplus, so I might try it instead of adjusting it downwards.
They advocate going for the highest interest first, instead of the smallest amount, but, “Your biggest goal here is to stick with it.”
Besides being well-written, I’m also a little envious that I didn’t think of the title Bring Out Your Debt myself.
“Don’t live in fear of your debt,” she says, which is very true. We both used to agonize about our debt and how we would pay our bills. Now that we know what is coming in and how it’s going out, it does not seem insurmountable anymore.
Getting Started on a Debt Snowball.
Last week I tried to estimate our tax return (boy, do I know how to have fun…) and it came out to where we would get back just enough in Federal to cover what we owed in State. I was aiming to not owe or get anything back, but for some reason, I owe State income tax every year , except for last year.
But when I got my W-2, and our real mortgage statement, we’re going to end up getting almost $1000 back. I’m pleased with this even though it’s not the result I was aiming for, and happy I don’t owe tax, like Quicken kept warning me all year long. My wife seems to be all for getting that tax return money, sort of as a bonus, but I’d rather have the money throughout the year, as nice as that surprise income is.
Now I have to decide if I make any withholding adjustemts this year. My wife now works part-time, and her gross is just under the threshhold for having Federal withholding taken out. So we will likely end up owing this year unless I remove a deduction from my W-4 and things stay the same. But who knows what is going to happen to “stimulate” us this year? Do I go tinkering now and then again later? I think I will leave it alone until we get our credit card debt gone, then revisit the issue.
Another thing I intend on doing this year is to keep better track of our charitable contributions. I have our tithe, but other things like donations to Goodwill I never bothered to get receipts, and I now regret it, because those could have really added up last year. With our goal to get rid of junk this year, it could be even more. I’m going to try out It’s Deductible this year to see how easy it is to use, especially since it alleges to import directly into TurboTax.
How do you track your contributions?
The Simple Dollar had a recent post about frugality and binge buying. I’ve realized I’m very guilty of this, even now. Last week Woot! had a dvd recorder really cheap, and I thought “ours is having problems, this is a good deal, and we deserve it because we are saving money.” WRONG! Now we are just that much more behind in retiring our debt. This same mentality is what helped hold us into debt before: “we make good money, so buying this item (which we don’t likely need, nor will likely use more than once) won’t be a burden.”
I need to get some blinders on (and maybe quit checking Woot! every morning) if we’re going to make this work.
The Simple Dollar » Frugality and Binge Buying.
Over the weekend, my wife and I rearranged our front room. After I started going back to work, I moved my computer from my basement office up to the front room. The desk was too small (4 foot) and had not nearly enough storage space. So part of the rearrangement included a bigger desk top and a second file cabinet (to double as a base for the desk.) Once again, trying to get organized to save money ended up costing me sixty-five more dollars. I’m hoping it will pay off in the long run, especially for tracking tax-related expenses, which I have failed at miserably so far in life. But we are little bit closer to being organized, and now I almost feel like we can tackle the front closet and clear it out, and, in the process, recover a couple hanging files filled with ten year old bills and receipts that we never looked at, but we happily blew money on. Even though we don’t utilize the paper, we always seem to hoard it and then do one mass dump. How do yo organize your files, and do you cull them continuously, or wait until they refuse to work anymore?
Suze Orman
The Oprah Winfrey website is offering Suze Orman’s book 2009 Action Plan to download for free:
Suze Orman’s Free Book Download
I’ve read through chapter three so far, and there is some really good information in there. I didn’t pay much attention to the FICO score advice, since I don’t plan on ever using credit ever again, but the information on what to do about your credit cards, along with the overview of what has happened to get us into this mess, is a good read. I look forward to finishing this tonight.
Don’t assume that since this is from the Oprah Winfrey show that this is a women’s book; it’s not, it is applicable to everyone.
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We got the car back from the shop and it’s now running much better. They didn’t have time to find the oil leak, but the oxygen sensor and the spark plugs were replaced. And it only took one day and cost $226.50. So now we are about a month behind on our debt reduction plan schedule, but I’m staying upbeat about it. It seems like every time we get close there’s a roadblock, but I guess that is what life is all about.
Your thought for the day: A pessimist sees a glass that is half empty. An optimist sees a glass that is half full. But an engineer sees a vessel whose volume is exactly twice that which is required.
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If you are a numbers nerd, you’re going to be constantly tweaking your budget numbers, and if your spouse (assuming you have one) is not also a numbers nerd, it will drive them crazy. It’s very important that you sit down with them and discuss the amounts for each category, and not make heavy handed decisions on what should be spent. I was adamant that we should be able to get by on $250 a paycheck for groceries, easily. My wife was sure we couldn’t. So the first budget, we ran out of grocery money before the end of the second week. What do you do then? You blow your budget and that money has to come from somewhere else.
It’s one thing to estimate how much to budget for a category until you get some data, but it is another to force a category to be lower than you need to spend. Not that you want to spend, that you need to spend. Some categories are pretty inviolable: your rent or mortgage, insurance, gas for your car, etc. But others can vary, such as restaurants, clothing, blow. If you cut too deep, your better half will resent it, and either resent you, or ignore your stupid budget that isn’t workable. If you don’t put any money into clothing for too long, somebody is going to need shoes and, once again, you will have blown your budget. We actually set up a separate category for shoes (there’s five of us) that we save each paycheck and build up. Quicken’s
savings goals work pretty well for this.
Communication and give and take in the budget are important. If it’s all one-sided, you are destined to fail.
I’ve been trying to reflect on some of the things I do, or have done in the past, to save money and decide if they are frugal, or if I’ve gone over the edge into being a cheapskate.
One of the things that prompted this was my reading of The Millionaire Next Door
. Dr. Stanley’s found that a good percentage of millionaires bought a good, expensive (but reasonable) pair of shoes and then had them resoled several times. I have always bought cheap shoes, and, being cheap, they fall apart and I have to replace them. I used to think this was better than buying expensive shoes, but now I need to reconsider. If I can buy one good pair and get them resoled, in the end I will probably save money. The fact that I now budget money for shoes and could afford to buy more expensive shoes helps. I’ve never had a pair of shoes resoled, and I wonder if there is even anybody locally that can do it.
Another thing that I have always done is cut my own hair. I let it get longer in the winter to try and stay warm, and buzz it off (or even shave it completely) during the summer. I think I have been to a barber twice since I was sixteen. My mother-in-law was a hairdresser, and whenever I needed a haircut, she’d haul me to the shop and just do it. When she passed away, my hair got pretty long for awhile, and I just took care of it myself. This has worked out okay the past several years as I worked from home and didn’t have much in-person contact with customers or fellow employees, but now that I go to an office, I’m starting to wonder if I am being frugal or being cheap. Perhaps I’m being frugal, but to the detriment of my career. I’m not capable of cutting my hair any way except with a big pair of clippers. If I had a professional looking hair style, would it help me to advance?
One area that I am very stubborn about frugality is clothing. I am not paying $50 for a pair of blue jeans. I don’t think I could pay that much for a pair of dress pants. I can go to the Goodwill and get pants for $3-$5 and sometimes they still have the original tags on them!
What ways do you find yourself being cheap instead of frugal?
When I woke up this morning, the temperature was -29°F, actual, not wind chill. That was -41°F. The car wouldn’t start, and the hot water to the kitchen sink was frozen. And the furnace has kicked on five minutes after it shuts off for the past two days.
