Lately: balancing life and becoming debt free

In case you noticed, I haven't been on top of posting monthly updates on our debt repayment lately. Partly because we haven't been making too much progress in that department and partly because we've been trying to find a new money system that works for us, figure out exactly how much income we'll have with me back working, reevaluate our expenses and make adjustments in our budget accordingly.

A few things have put a halt in the short term on our debt repayment:

1) Fluctuating income. While I'm earning a bit more money working than I was collecting maternity employment insurance, my salary is just about 10K less than what I was making at my previous job to start and most of the additional is offset by increased child care expenses with 3 kids and it being summer break as well as pension plan contributions which I didn't have previously. The pension contributions are a HUGE bonus for the long term, especially since my employer will match them. In the short term it means less money in the budget than previously. Before making any concrete changes to our budget or financial plan, we're waiting on my probation period at work to end at which time I'll also receive a small raise. This will give us some real leverage if we plan on refinancing or consolidating debt. 

2) Fluctuating expenses. I don't know whether it is being outside all day or just my new reality with 3 growing gentleman but our grocery bill has gone up exponentially in the past couple of months. Our utility bills have also been higher.

3) Unexpected expenses. I've mentioned before that we decided against having an emergency fund since we'd rather put all of our additional money to pay down our high interest debt. At the beginning of the summer our A/C motor burned out. Luckily a friend of a family member was able to come and fix it for just the cost of the part since we let him borrow our extension ladder from time to time but we'll likely have to replace the unit in the next few years. More recently, we got an even bigger blow. One side of our roof is looking particularly bad. We're hoping we can put replacement off until next spring so we can use our tax return to help with the expense but it's entirely possible we won't be able to wait until then so we're slowly trying to put aside what we can from R's overtime money. I know we could get financing if we needed to but the mere thought of taking on more debt weighs heavily. Lastly, my car is in need of a tune up and brake job which I put off earlier this year when I took my car in for servicing and ended up walking out with a $600 bill. I'm anticipating about the same expense this time around so have put about $400 aside so far (on my visa) to cover this expense.  

I've been thinking a lot lately about how our budget allocations are a reflection of our family values. There are some areas where I feel happy with the proportion spent and other categories I feel could use some re-alignment. While some of this alignment can be done in the short term, some will have longer timelines or will only become possible with an increase in income.

Month 18: Debt Repayment Update

Well we didn't make it under the 50K threshold in April for the second month as anticipated/hoped but we're slowly creeping there. Since last month, we are down $400 which puts our debt at:

$50,923

This was my first month off work but I did receive a full pay early in the month along with my vacation pay.

Additional expenses this month were for convenience meals since my freezer meals ran out after a week and with the cesarean I still wasn't feeling able to do a lot of prep. Also, medications - a ton of them for myself and asthma/allergy medication for the boys. Most of this that isn't over the counter we'll receive compensation for through R's benefits. Other unanticipated expenses were for hospital parking, formula for few days we had to supplement, extra child care since R was working 6 days/week and I still wasn't able to manage on my own, a few items for opening our trailer, and additional groceries due to my increased hunger from breastfeeding!

Where we have had some savings this month has been for gas. My $40 tank has lasted 3 weeks so far and I expect will last another week. Also, though the overall grocery bill has gone up, I've been able to dedicate time to scouring the flyers to price match and use coupons which has made for big savings. I hadn't been making this a priority the past few months.

I've been contemplating doing something with our cable for at least the summer to save a bit there but we'll see. Now that I've received my first maternity e.i. payment we'll be able to put our maternity leave budget plan in to action and see what tweaks are necessary.

Month 17: Debt Repayment Update

After going back in the red in February, we filed our tax return earlier this month which was definitely a boost at getting back on track. Since last month, we are back down $718 which leaves:

$51,323

Typically in previous years we've used at least half of the return to pay off debt and another portion for renovations. This year with the tax return, we allocated just under 1/3 to debt so far and splurged on a new counter and dishwasher for the kitchen (more on that to come).

I actually retained about 1/3 of our tax return this year in my bank account. I'm still working right now but with DH's work being slow and my being off work so imminent, we didn't want to be in a bind and have to potentially use credit to pay bills during April while we wait on my first Employment Insurance payment. It is my hope that some, if not most of it, will still be able to go toward debt and that next month we'll finally be under the $50K threshold!

This weekend, DH worked his first overtime of this year which was a bit of a relief. Looks like work is finally picking back up - and just in time. As I mentioned in my past couple of updates, usually the slowness doesn't last much past January but this year it seriously dragged on. We were okay because I was working and luckily roughly 1/3 of my earnings isn't strictly allocated but it was a wake up call that we should be better planning for things like this that come up and that taking on any additional debt/payments at this point would compromise our ability to cover our living expenses without relying on credit. If anything I guess it was good practice for the baby budget since my earnings will decrease by about 1/3.  

Month 16: Debt Repayment Update

A day late since today is the first day of March. I find I drag my feet on reporting on my goals when they aren't being achieved than when I'm on top of them but I think it is so important to also share the times when goals aren't met. February brought with it a number of additional expenses (some unforeseen) and a continuation of work being slow for DH with the cold temps and a lot of wind and precipitation. Since we've been getting tax forms, I also had the opportunity to correct some of our outstanding debt amounts that we received yearly statements for which adjusted the number upward by a few hundred dollars and accounts for a portion of our increase in debt. Since last month, we are up $1989 which leaves:

$52,041

Some of the expenses that came up this month:

Licence Plate Sticker Renewal (Happy Birthday to me!): $90

Car repair/maintenance: $600 - had anticipated $150 for oil change and inspection that was due but they found my water pump was cracked - alas the bill went up substantially. 
Kitchen plumbing issue: $80
Paint and painting supplies for the nursery: $250 

Also a number of birthday parties, school fundraisers, etc. Life. 

We're just waiting to receive a couple of documents in the mail in order to file our taxes but at the moment it looks like we'll be getting a decent tax return. This will help to get us back on track to paying off $10K this year. I've been thinking a lot about reframing our debt repayment in terms of building net worth. Wondering if this approach will motivate or trick us into paying debt down faster since we're essentially paying ourselves. 

Month 15: Debt Repayment Update

 So for January we are only down $236 which leaves:

$50,052

Still not below the $50K mark. January is always a month of catch up for us since DH doesn't get paid for almost 2 weeks over the holidays and then work is always slow to pick up for him afterwards. Especially slow this year due to the frigid temperatures. January is also when we go back to having CPP and EI payments deducted from our pay. DH usually pays these off by late summer if not earlier so for the last half of the year, there's a couple hundred dollars more on each pay. 

This month, a few unanticipated costs came up like DH having to pay a few hundred dollars in union dues. We were planning on paying these in February but the union called - no choice. We also made a few trips up north this month to visit DH's family which didn't cost too much aside from gas but still, the small things add up. 

We've been trying to make the most out of our last few months as a family of 4 - and doing a pretty good job at it might I add (DISNEY)! Once the baby is here, the boys will get a little less attention at least for the first little while so when friends of ours, who also have two boys, invited us up to Horseshoe Resort with them for the weekend, we jumped on the opportunity. They had already paid for the accommodations, had extra space, and took care of all the meals in exchange for us hosting them one weekend this summer at our family cottage in Temagami. DH took the boys this weekend as I've been battling a kidney infection and they had a blast skiing, swimming, and eating sugary breakfast cereals. DH has taken B out the last 2 years (since he was 3) to the local ski hill with a pair of child skis and boots we got off Kijiji for $20. This was N's first time on skis at 2 1/2 - so a year earlier than B. Apparently it went remarkably well. N was grinning ear to ear and B didn't need any one on one assistance at all from DH.  I'm sad I missed it but happy they had so much fun. They do like their daddy time. 

Planning ahead for when baby arrives, this month I also booked a local swimming pool for the boys' birthday party in May. I've posted before about how I feel about larger than life birthday parties. Both of my guys LOVE the water and with a newborn only a few weeks old, I know I won't be up to hosting parties for a 3 and 6 year old at home. Something has got to give but..combined party..and you know I'm DIYing it up with the food, decor, and fun. I also paid for B's summer baseball registration. I've been trying to pay as many additional costs in advance of being off work since my maternity leave budget is really lean and won't allow for large additional expenditures. In February I plan on buying paint for the nursery but really focusing on tackling the last of our credit card debt since I feel like there's a very good possibility this little guy will be coming early so the pay checks are limited. 

Month 14: Debt Repayment Update

Not quite below the $50K mark to close off 2013 but this month we did make some good progress and are down $675 which leaves:

$50,288

We're a long way from where we started at the beginning of 2013 ($59,860) and I'm happy to report we've paid off just under $10,000 of principal this year on our debt. 

Reviewing our year we made additional principal payments on our debt as follows:

I'm moderately optomistic we can maintain the same level of debt repayment next year, even with me being off for part of the year. 

Month 13: Debt Repayment Update

Feels nice to make it past the 1 year mark. This month we're down $587 which leaves:

$50,963

A lot of awesome things happened finance-wise for us this month. 

I got another contract extension for work until my due date which takes off a huge burden - especially over the holidays. 

We finished paying off one of our loans entirely (woohoo!).

DH has been working a bit of overtime which is always nice.

We paid for almost 2/3rds of our Disney Trip!

We put a serious dent in our Christmas shopping. 

After posting our updated monthly budget, Martina asked about our $400 allocation for groceries so I decided to make an honest effort to track my grocery expenditures more closely over the past month. I will have a post on that later this coming week! 

Ideally I'd love to be sitting below $50K by January 1st to start the year off in the 40K's but I have my doubts that we'll be able to knock off nearly $1000 in December of all months with our vacation, Christmas, and some unpaid time off for DH over the holidays and a few days this week (he is going in for surgery again tomorrow). Maybe a Christmas miracle? 

Hello Spring!

Thursday I turned in my major paper for my Masters and breathed a huge sigh of relief. With the exception of a final oral exam, I'm done. I actually can't believe I'm writing these words.

This weekend has been really special. After turning in my paper on Thursday, DH also had some good news. He got his tax return in the mail. We finally knocked off our first entire debt payment in "the Mission" which was our family loan and boy did it feel good. If Winter was all about getting back on track. We're there. I also got my first paycheque with my raise. This is an increase of about ($150) per pay. DH also had his first Saturday overtime shift of the year this weekend. In the finances department things are pretty great.

But I realize a lot of my recent blog posts have been focused on debt reduction and finances. That wasn't the only thing special about this weekend. We've spent a lot of time relaxing, reconnecting as a family, and resuming life in general. We didn't have any plans with extended family this weekend so it was just us and it was nice.

In my absence, DH did a good job of making sure we were all fed but we've been seriously missing quality home cooked meals. Thursday night I went to the grocery store and stocked up on groceries. I've been cooking up a storm all weekend and we've been feasting.

We've also been enjoying the nicer weather. Yesterday B and I washed all of the salt off my car while N napped in the afternoon. We washed it the old fashioned way with a pail of water and a couple cloths. B also learned how to ride his bike without training wheels this weekend. Took him 2 days and he is now zipping around. There is something to be said for readiness. We tried last summer since he was so good with his training wheels and he wasn't quite there yet so we let it go. I feel the same way about toilet training and alphabet writing. Pushing it before the child is developmentally can be more discouraging and challenging for both the parent and the child. This year he was more confident and determined than ever.

We put the trampoline back up in the backyard too.

And even got to starting a small outside project! - New house numbers (in progress) and a new doorbell ($25). Over the next couple of weeks once the weather gets a wee bit warmer we'll be painting the garage and front door.

Oh yeah.. and the bunny dropped by.

Happy Easter!

A debt breakthrough with a little help from the tax man!

I'm about neck deep in paper writing right now but I had to stop for a second because I am bursting with excitement to announce that we've had a break through. Our partial tax return coupled with a few regular debt payments was just the little boost that was needed to put some wind back into our debt paying sails. We're down another $2,257.

Leaves $56,000 my friends which means that since October, we've paid off about $8,000. 

By the April update we'll have our family loan 100% paid off and will be onto tackling the credit cards with some pretty big force. As I mentioned before, we're big fans of the snowball method of debt repayment. With our family loan paid off, we'll have extra money in addition to the money we're already paying on the credit cards. 

Side note: Twice this weekend the evil bank tried to squash our debt paying efforts. 

First, when I went into the bank to make a deposit into our bank account, the teller was insistent about letting me know that I was eligible for a no-fee reward credit card due to the certain type of account we hold and the fact that DH holds one that that institution. I respectfully declined (go me). The teller was flabbergasted. Couldn't understand why I wouldn't want a NO-FEE REWARDS CREDIT CARD to which I replied that we were trying to pay off our existing credit cards rather than taking more on. 

Secondly, we had gotten overdraft on our bank account awhile back thinking that we could exercise some control and use it as our emergency cushion. Turns out we couldn't (as we've learned from the past - but sometimes some of us humans have to make the same mistakes over again a few times to learn). "Emergencies" are really just to easy to justify and there is always the excuse of paying it back next week which never really happens and before we know it we've used up all the OD. For us, overdraft always leads to us operating as if the overdraft limit is the $0 rather than the actual $0.   

Yesterday DH called to cancel overdraft on our joint bank account. When the bank asked why, he had no trouble explaining the above to the customer service rep. Once she had taken care of removing it, she slyly asked if he was aware that he had a few 0% interest for 6 months balance transfers available for him for his credit card (which is currently maxed out might I add). So if we were to take her up on the offer, we'd be right back at square one. He declined and got the hell off the phone! 

Household Budget Revisited

 Awhile back when this whole debt repayment project began, I posted our average monthly household budget. Since then, of course easing into some things, I’ve been working on reducing it to free up more money for debt repayment. So after having some time to test out feasibility…

Housing Expenses	Amount	Explanation
Mortgage	$1,521	We make weekly payments (DH gets paid weekly). Status: Unchanged.
Property Tax	$442 $410	Our city has quite high property taxes. We also have a fairly large lot by city standards, back onto "ravine", and are in a desirable location. Status: Our property assessment came back AND in January our property taxes went down by $32 per month.
House Insurance	$77	Status: Same.. but working on seeing what insurance company can do to lower our monthly insurance bills.
Water Bill	$30	This bill comes quarterly so this is a monthly average. Status: Unchanged.
Electricity Bill	$125	Average Status: Stay tuned for a post on this.. changes are on the horizon.
Natural Gas (furnace, stove, hot water heater)	$125	Average Status: Same as above.
Insurance (Car Insurance, Life Insurance)	$360 $390	Status: Our new car needed more coverage than the old one, which was a difference of $30/month. We’re working on seeing what our insurance provider can do to reduce these costs.
Investments
RESPs	$75	For both kids. It is not much but if we stay with this contribution, they would each have enough money for approx. 3 years of tuition at a local university. We’re comfortable knowing we could at least help them with this. We also want them to play some role in contributing to their own education. Status: Unchanged
TFSAs	$216 $0	DH and I each have one. This money is only used for “emergencies” and is therefore not a substantial amount. Status: We stopped contributing to TFSAs and instead transfer the money to credit card repayment each week. If an emergency arises, we’ll have access to credit to cover it.
Household Expenses
Home Phone, Cable TV, Internet, Cell phone	$230 $190	Note: Includes long distance package, some specialty tv channels, and a PVR (rent-to-own - $40 more over the term than to purchase flat out). Cellphone is a  smart phone on a pretty good student plan $60/month Status: Called customer loyalty department and got them to shave off $40/month since I noticed their fees were increasing.
Cell phone	$70	Note: Cellphone is a smart phone on a pretty good student plan $60/month – yes this is under my name too... Status: Unchanged.. patiently waiting until September when the contract is up.
Groceries	$520 $400	Includes all household cleaning supplies, diapers, personal hygiene items, etc. Status: Expect a post on this soon.
Gas	$465 $400	DH travels approx. 120km round trip to work. I travel about 30 km. Status: Got a new vehicle – now spend only about $20/week in gas. Nearly half of what I was spending before.
Childcare	$600	Family member watches kids (1 f/t, 1 p/t) Status: Unchanged
Debt payments	$1,540 $1,740	Some are interest only payments… sigh… Status: TFSA redirection.
Total Monthly Budget	$6,396 $6,153	Status: So far, we’ve dropped the monthly budget by $243. Hoping that we can make it down to $5800 by the end of the year.

Being proactive with debt repayment and cost minimization

Despite being not as far as we’d hoped with debt repayment this month we’ve been kicking ass in other areas. For starters, I got a 60 cent raise on my hourly wage. I also found out that my contract has been renewed for another 6 months, which will take me to September. My boss was also nice enough to renew my contract at the next pay scale up! I’m going to commit the additional earnings to debt repayment.

I say we’ve been kicking ass in other areas because this month some of the things we’ve done to reduce our costs/avoid expenses were:

- Borrowed a crockpot from a friend for a work party rather than buying a new one (kids broke ours). Expense avoided!

- Got our phone, internet, cable, wireless provider to shave $40/month off our bill simply by calling to ask saying that I noticed rates were going up.

- Rather than buying new energy efficient bulbs, we simply switched out the less efficient bulbs in areas we use frequently of the house with the more efficient bulbs and put the less efficient ones in rooms we don’t use frequently. Additional expense avoided.

- I phoned our water heater rental company to ask about our water heater since we assumed the lease when we bought our house 1.5 years ago and hadn’t given it any thought at all. Turns out it is 2 years old and highly efficient. I lowered the heat a notch so hopefully we’ll save a little energy there.

- Made an appointment to speak with our insurance provider about lowering our monthly payments (we have house, life and car insurance with the same provider)

This year I really want to make a dent in our utility bills. Each month we use between 500-600 kWh on average. Most of our usage is during non-peak times so we're saving there but we'll need to do a bit more in terms of cutting back on our actual usage in order to realize more significant savings. Realistically, 400 kWh would be fantastic. 

What are others doing?