From the depths of debt to a cash based existence

Ouch. The good news is I still have my part-time job, but the bad news is that I don’t know for how much longer.

The impact to my budget and debt-payoff goals would be severe.

The company I work for is going through some financial difficulties related to financing. If I lose my job, I’ll probably have to take on something much less lucrative, at least for a while that could mean a doubling of my work hours for about the same pay.

Since that can’t happen, I’ve been working madly to try to trim our expenses in case I end up out of work. I don’t work enough hours to qualify for unemployment, as far as I know, and staying home with the kids is my number 1 priority. I take them to school and I pick them up, and I won’t give up the time I have with them, because in about 8 years it will all be gone as they reach college age.

The thing is, I don’t want to sell anything, but if that’s what it takes, I’ll do it. However, my husband seems to be taking the future possible joblessness seriously, and he’s started to mention ways he can bring in some extra cash.

I’m spending my days when I’m home and the kids are at school working on some side income jobs.  Mostly working on a few websites I’ve got going to try to bring them up to snuff and pull in a few dollars.

I would love to use this money to get out of debt, because right now, my websites are bringing me about $100 a month. If I can increase this by 10, I will be able to quit worrying about my job income. If I can increase this by 20, I would be able to re-implement my serious get-out-of-debt plan where I was on the road to being completely debt free.

I would also be able to stay home permanently. I really don’t like driving to the office, even though I only do it once or twice a week these days.

I am trying to decide if I want to track this other income activity here on this site, or if I’m going to stick to strictly talking about my debt payoff journey here. I’m not sure, but the site is A Financial Journey and I think it would fit in with the theme. Still, it’s a decision I haven’t made.

I said the following at one point here on the site, and it turned out to be so true. Although my rates haven’t changed, more than one of my friend’s credit cards had favorable rates that were supposedly "locked in" and which subsequently jumped nearly 20%. Therefore, despite the lower interest rate, American Express remains the focus of my debt payoff plan. Once it is gone, I will start work on another debt. (Which will either be my RV or my home.)

The thing is, I would like to pay off the camper before the American Express bill because the interest rate is so much more favorable. However, with the current state of the economy and the ever-changing nature of credit card agreements, I worry that my American Express credit card terms will change drastically and unexpectedly and I’ll lose that lovely 3.99% interest rate until the balance is paid off….

I have friends who are dealing with unscrupulous credit card companies right now and I have little faith in them myself these days. My biggest fear is that before the new credit card agreement rules go into effect later in the year, many credit card companies might try to take advantage of as many loopholes in the credit card agreements as possible to keep from having customers locked in with very favorable terms long-term.

Okay, so there’s actually a lot to report about this month, because I’ve made quite a few changes in my life that have had financial impact.

My debt repayment has been drastically slowed because I’ve cut my work hours. I went from working 3 days each week to 2 days each week, and I’m working towards quitting my job entirely and staying home to improve my family’s home life.

I have NOT accumulated any additional debt. My cash based living experiment continues to work well, but as yet, I won’t be able to actually quit my job for quite some time. I’m down to about 16 – 20 hours a week. I want to go to about 11 hours a week, but the budget just won’t allow for that yet so I’m still picking up some extra work hours from home through the week. (I work from home about 50% of the time for my job as it stands right now.) The 11 hours would allow for 2 days of work while the kids are at school.

So that’s where I’m at.

There is some bad news in all this. Last year my husband was receiving a miscellaneous payment from his employer that related to a health insurance rebate of some kind. That payment stopped on the first January 2010 paycheck. I knew it was only for the one year, but when I had reduced my hours from 3 days to 2 days, this money helped cover that gap. Now I don’t have that nearly $200 per month of income and it’s seriously hurting my budget.

Steps I’ve taken to ease the crunch

Got rid of caller ID and call waiting = $6 per month savings

Turned off the data package for my smartphone (I don’t have cell service at home anyway so the only place I could use this was when I was taking the kids to and from school so this wasn’t a big hardship for me) = $31.00 per month savings

Downgraded my satellite TV package = $22.00 per month savings

That’s $59.00 per month and I’m still looking for other cuts I can make.

I’m going to reduce my grocery budget but it won’t be by much, because I’ve always been pretty efficient with that anyway.

I’m about to read “America’s Cheapest Family” and see what tips they have but I don’t hold out much hope that I can reduce things any further than I already have.

Unfortunately, to pay off my debt faster, the only choice for me is more income, and that’s not on my agenda just yet. I need to take care of family and home first. However, I am still paying as much as possible and still have payoff of debt as my overriding financial goal.

Come bonus time for my husband (and he’s been assured that bonuses are coming) I plan to use that to pay off as much as possible of the only credit card debt I still have.

Note: I started this post a long time ago and I’m just now getting around to finishing it. :)

http://thehill.com/blogs/congress-blog/economy-a-budget/25427-pay-off-your-mortgage-early-for-a-fee-rep-marcia-fudge (I even left a comment back when it was freshly posted.)

I know I ranted already once on the blog, but I read this the other day and it hit me wrong. I already worry that there’s too much government interference in my life, but to know that they’re trying to take away all my responsibilities doesn’t sit well with me. I have the right to be stupid sometimes. In their effort to save people from lenders who might be trying to take advantage of others’ refusal to take responsibility for their own mistakes (such as not reading or understanding the fine print on a loan), they’re taking away my rights, little by little.

I do believe it’s unethical to offer loans to people and then encourage them to skim over the documents so they can be signed faster. However, I also believe this is where we have to be assertive and stand up for our rights to fully read and understand every contract we sign. … "Is legislation really the right answer when you don’t want to read your contract?" continues >

There are ways of working around a spouse who isn’t as enthused about paying off debt and living debt free in the future and I think I stumbled into one of them the other day.

After having my husband’s car die a horrible death a couple of weeks ago and having to buy another one (because my husband is/was positive this car could not be fixed for less than it would cost to buy another car) it occurred to me that I might just be going about my debt snowball all wrong. … "An alternative debt snowball method" continues >

I am rewarding myself today, for sticking to my budget and paying the budgeted extra on my debt this month. I bought a camera because my old one broke when I unintentionally knocked it to the floor. I’m also going out to eat with a friend today before we go walking in the local park (with the kids in tow).

Today, I feel good about the decision, but last night, I really struggled.

My problem is in defining at what point I should stop throwing every extra cent I have at my debt so that I can live a reasonably balanced life, buying what I need and occasionally, what I want.

Yes, you could take your lunch to work every day and save a ton of money. But do you have to, just because you’ve decided to live a cash based life and get completely out of debt?

… "Are rewards for successfully paying down debt a good idea?" continues >

Vigilance pays off.

Saturday morning my husband went to return a boat battery to Wal-mart because after only three uses, the battery wouldn’t hold a charge.

The clerk gladly refunded his money so he could exchange the battery for a new battery, but told my husband that there would be a core charge for the new battery.

My husband didn’t think anything of it, except to tell me (by cell phone) that he would need to find an old battery to turn in so he could get his $9.00 core charge back.

A $9.00 core charge on a replacement for a defective battery?

I don’t think so. … "Common sense living: Refuse to pay what you don’t owe" continues >

Getting and staying debt free is full of tough choices. Should you stay in and eat alone (and save money) or eat out with friends (and go into debt)? Buy birthday gifts for your friends (go into debt) or explain why you can’t give gifts this year (and save money)?

No matter what decision you ultimately make, you’ve had to make a tough choice.

These are actually quite minor choices when compared to the choice I’m talking about today.

I’ve been struggling with the problem of how to decide what’s most important to me and my family: pay down debt or save for emergencies. … "Tough choices: Pay down debt or save for emergencies?" continues >

I’m angry. I just spent the last few minutes watching more depressing news about the idiots in Washington. Spend, spend, spend. Apparently consumer spending is down and so financial experts are wondering if the government is going to have to spend even more money to keep the finances of the United States from falling apart. I’m sure glad someone knows how to throw money at a problem and make it go away.

Many of us have realized the necessity of paying down our debt, cutting out excessive spending–some of us are even trimming unnecessary spending (voluntarily or otherwise). We’re doing this because reality has caught up with us.

They want to save us, and that’s a nice sentiment—but we’re in a burning building and they’re drowning us in debt in their effort to put out the fire with spending!

Why can’t they see that they’re not helping us? I don’t believe we’ll ever get to a stable economy or reach any kind of equilibrium as long as the government is trying to take over the role of individuals as consumer, spending money we don’t have. … "Meltdown of common sense living" continues >

Allie is a close friend of mine who has also embraced the idea that now is the perfect time to get out of debt, let go of old spending habits, and start fresh with a cash-based life. She recently took a vacation, and this is her story of budgeting and saving success in an area where it’s often hard to impossible to keep spending under control.

Allie’s story

My Vacation

So it took some doing, but I was finally able to brow beat my husband into a mini-vacation during Spring Break. The kids were free. The husband had some vacation to burn. But really, we didn’t want to push too much into the short time we had. That’s why we went to the old standby…Gatlinburg, TN.

When I was discussing with Kate that my goal was to pay cash for as much of the vacation as possible, and that I’d found such a great deal online, she asked me to guest blog about it. So here’s what we did. … "How to take a real vacation on a tight budget" continues >