Jana Says

My descent into debt, part 3

June 16, 2011 by Jana Leave a Comment

Although 2002-2006 were the lost years, the year that had the biggest impact on us as far as accruing debt is concerned was 2004. In that year, the following events happened:

We got married
My husband finished graduate school
I got a job with the State
My husband got a job
We bought a house
We got a dog
We bought a new-to-us car

That’s a lot to handle in one year. We didn’t buy a house that we couldn’t afford. We didn’t buy a car that we couldn’t afford. We both had full-time employment. What we weren’t prepared for was all of the additional costs of owning a house–the maintenance and repairs, the higher utility bills, the furniture, the longer commutes to work, not to mention the cost of the dog and the additional expense of a car payment (we had no car payment prior to buying the house. It’s a long, ridiculous story but I gave my little sister my paid for car and bought a new one). And the debt kept on coming and coming. Because we just kept buying and buying and buying. It was a leaky faucet that no caulk could contain.

It went on that way until November 2005 when we had had enough and took out a home equity loan to pay off our credit card bills. You would have thought that having to take out $25K of home equity would have been a wake-up call to stop spending. That should have been the moment where we said enough is enough. But it wasn’t. Nope, we then accrued another $10K or so after that. I don’t know how or on what but in March 2006, our debt totalled close to $60K, not including mortgage or student loans. Looking back and adding it properly, maybe it was only $50K. I can’t remember at this point. It was just a lot.

Then Easter Sunday, 2006 happened. Why is that so significant? That is the day I found out I was pregnant with our daughter. At that moment, everything changed. We finally realized we could no longer afford to keep going in the direction that we were going. Because later that year, we were going to have a small child that was going to be completely dependent on us and we needed to have the money to support her properly. She was not going to suffer because we were irresponsible and couldn’t manage our money.

That moment was the moment we stopped our descent into debt and began our ascent out of debt…

E-reader: yes or no?

June 14, 2011 by Jana 4 Comments

As I mentioned yesterday, while I was at the movie theater waiting for my husband, I was reading a book (Downtown Owl by Chuck Klosterman). A man said to me that I should get a Nook. Though it took me a minute to realize exactly what he was talking about, I then felt compelled to defend my choice not to have an e-reader. I stand by my decision (unless a Nook or a Kindle happen to fall into my lap for free) for several reasons:

I don’t want to pay for the reader itself. I am saving for an iPad and I’d rather put the money towards that. Money spent on an e-reader is money that takes away from the iPad.
I like holding an actual book. There is something wonderful about holding an actual book and turning the pages and using a bookmark that I just love.
I like that books don’t require batteries. I hate batteries. They are annoying and expensive and I usually forget that they need charging until it’s too late. I want to be able to read when I want to read, not when a battery tells me that I can.
I read in the bathroom. Yup, I admit it. I read in the bathroom. Sometimes, if a book is really good and my family won’t stop hounding me, I’ll pretend that I have to go to the bathroom so I can sneak in an extra chapter or 2. I wouldn’t want to risk the e-reader falling in the toilet.
I like that I can get books for free at the library. Sure, there are plenty of free e-books but from what I’ve seen, the books I like to read are not free. I’m not one for buying books anyway. I tend to read them once and then they just sit on a shelf. If someone wanted to borrow the e-book, I’d have to lend him the reader. And then what would I use? It doesn’t seem practical.

I guess I do see the upside to the Nook or the Kindle: they’re small, lightweight, easily fit in a purse or backpack, can (supposedly) be easy to read outside. But they still cost money and eventually, they’ll be outdated. You don’t get that with a book.

Do you have an e-reader or do you want one?

Breaking down–pet expenses

June 10, 2011 by Jana 1 Comment

Although I have not yet detailed my budget, I wanted to explain one of our budget categories–pet expenses.

We have 2 dogs who are very high maintenance breeds (bichon frise and bichon/poodle mix) as well as one outdoor cat. As they are members of the family, I have no problems spending the money but there are some months where I just marvel at the cost of having pets even after budgeting for them.

So what do our pet expenses look like? Here’s the breakdown:

Dog expenses
Dog food–this is purchased every 6-8 weeks and costs anywhere from $23-$45, depending on the size bag of dog food we buy. They eat Innova and our local pet store does not always have the larger sized bag, which lasts 8 weeks. We are on a frequent buyer program with the pet store where every 11th bag is free. Treats are typically from BJs and cost $5 for a box, which lasts about 4 months. Average cost–$25/month
Preventitive medication–this includes Frontline and Heartguard. This costs either $45 or $46 per month, depending on our bichon/poodle’s weight. Average cost–$46/month
Grooming–this costs $110 every 10-12 weeks. It’s a little pricy but they are high maintenance breeds (they should get groomed every 6-8 weeks), and the groomer does such an amazing job. Our groomer is a local business owner and, as we’ve have had poor experiences with other places, I’m not at all going to change where they go. We do give them baths in between and we need specialty shampoo due to the bichon/poodle’s sensitive skin and allergies; this costs approximately $15 bottle and we buy one about every 18 months. Average cost–$110/quarter
Day care–occassionally, we will put them in daycare. We typically do this only 3-5 times per year, when it’s necessary to get them out of the house (for instance, when we have our daughter’s birthday party). This is $38 for 1/2 day for the two dogs. Average cost–$38/quarter
Miscellaneous expenses–yearly vet visits, sick visits, dental cleanings, dog licenses, toys, special treats like gourmet coookies or ice cream (birthdays and major holidays only). It’s hard to get a gauge on the average cost of these expenses but when budgeting, we always go by how much it cost the previous year or, in the instance of toys and treats, we set a spending limit and fit our purchases to that. For the dental cleanings, the vet gives us an estimate cost prior to the visit, which is extremely helpful. Average cost–varies

Cat expenses
Our cat is technically a feral cat who I’ve been taking care of to spite my neighborhood home owner’s association. But now he’s part of the family. A cheap part of the family. He lives outside and won’t come close enough to me (yet) to let me put Frontline on him. He has been neutered and vaccinated (for free…long story). I built him a house out of a Rubbermaid tote and lined it with an old fleece blanket. He’s not interested in toys and we don’t need litter due to the whole living outside thing. He costs $11.50 every 3 months in dry food, $1.50 every few months in treats and approximately $15/month in wet food. I’m trying to get these costs down with coupons. I have not had much luck so far.

Total average expenses
$40/month in food and treats ($480/year)
$46/month in preventitive meds ($552/year)
$38/quarter in daycare
$110/quarter in grooming ($440/year)
$250/quarter in miscellaneous expenses ($1000/year)
Total–$2624/year

Pets are often one of the easiest budget categories to control, and if finances are an issue, there are lots of adjustments that can be made regarding the pets. There are so many variables that factor into taking care of a pet that it’s difficult to apply one situation to another. Our pet expenses are higher than some, lower than others. But for now, I just make sure that I budget properly. We are fortunate that we can afford to do this and should we ever be in a situation (again) where we are struggling, I would make the necessary changes. After looking at these faces, wouldn’t you?

My descent into debt, part 2

June 9, 2011 by Jana 1 Comment

If you missed part 1, read it here.

I was fired from my government job in February 2002. I was fortunate enough to find employment by May 2002. I was offered 2 jobs–one a temp-to-hire, the other full-time position. Being the practical person that I am, I opted for the full-time, even though it was lower paying and located in West Philadelphia. It was in my field, it was full-time and offered health insurance, and most of the staff was around my age. Sounded like a great idea, right? It was. Sort of.

It was also during this time that my then-boyfriend now husband decided to go back to graduate school full-time. This meant, in order for him to get in-state tuition (which was important due to the lack of financial aid during his first year), we had to move back to Delaware (where he’s from) so we could have an in-state residence. So we had to find an apartment that was still a)relatively safe and b)close enough to PA for my commute to be reasonable (we were living 20 minutes from my job). This small move not only cost us in moving expenses but our rent went up by $125 per month. Not a smart idea when you’re facing an income drop. And that’s when things really started to get bad.

I like to refer to 2002-2006 as the lost years. Prior to our move and my husband going back to school, we were doing really well, financially. Then, due to our lack of knowledge, entitlement attitude and unwillingness to compromise/learn about finances, we dug ourselves into a huge hole. In that time, we racked up an enormous amount of debt on G-d only knows what. I have spending amnesia during this period of time. I truly don’t know what we bought and, except for a few memories, we have nothing to show for it. I just remember getting paid, depositing my paycheck, paying rent and other bills and using the credit cards for the rest. I do know that we had fun, though. Dinners out, vacations, clothes, our honeymoon, assorted other wedding expenses (I did pay for his ring in cash!), plus basic living expenses. We ended the lost years with around $60K in debt including a car but not including our house. Yup, through all of this, we bought a house.

Stay tuned for part 3 to find out all about the car and the house…

A short vent about “fixed income”

June 6, 2011 by Jana 1 Comment

If there is one term in personal finance I loathe, it is this–fixed income.

Fixed income is technically defined as “income that does not change”. Fixed income is usually a term reserved to describe those who are retired, living on a pension/Social Security or those who are on some sort of government assistance, trying to make ends meet on a small monthly amount. It’s a pretty negative term, designed to conjure up images of those who are poor and suffering and facing the burden of increasing costs without any chance for their income increasing. Fine. I can accept that definition. And I can accept why news outlets love to use it.

However, there are so many more of us living on a fixed income who don’t fit that description. For instance, I live on a fixed income. How? Well, I am a salaried worker. I get no overtime (there is not even an option for overtime), no bonuses, no commission, and I haven’t gotten any sort of raise in 3 years. In fact, one year, I lost pay due to our state’s budget crisis. Every payday, I get the exact same amount of money. No more, no less. No choice to have more or less. That is my fixed income. My income doesn’t change to keep up with increasing costs, either. Because that is the only money I have coming in (unless I’m working my 2nd or 3rd jobs, which have variable income), that is what I have learned to live on. And I’m OK with that, too.

I’m not at all implying that those who are less fortunate or have a lower fixed income than me are at all undeserving of the attention that they receive. But I resent the manipulation and misleading use of an objective term to tug at the heartstrings, when, in truth, there are a lot more of us who fit that description.

I don’t want any special attention; I just want an accurate term.