The Plan, Part I

Here’s what we’ve done so far. First, I did the thing that I’ve been avoiding since Sara started driving bus: I made a budget. When she switched jobs I was so scared that we’d stepped over the line from making more than we need to needing more than we make that I did a classic ostrich and simply pretended the problem didn’t exist. Yes, I absolutely did that. I decided that our situation was bad and I’d just feel better not knowing how bad it was. As plans go, this one turned out to be less than stellar. And it seemed so promising in the beginning. After about half an hour of number gathering and some math, math, math, I had the truth. We make more than we need. And by a larger margin than a year ago. This was probably more painful than if we’d discovered we were coming up short each month. It just proves that we’re in this situation by our own doing. We let that sink in for awhile. Then we made our plan to get out.

Our plan is this simple: spend less, earn more and organize.

Spend less is easy. Sara and I found things in the budget we could reduce, and we both agreed not to spend a penny on anything that we haven’t budgeted for. For the next year, I will not purchase a single cup of coffee, cookie, pretzel or other delicious treat from the café at work. Sara will not make another stop at Dunkin Donuts for a missed breakfast or McDonalds for an easy dinner. When I go grocery shopping, (that’s right. I do all the grocery shopping around here. Wanna make something of it?) I will not pick up a cup of popcorn chicken when I walk in or an extra candy bar or soda at the checkout, and I will only buy what’s on the list. I will not spend any money on geocaching this year, including renewing my membership on the website. Sara will not spend any money on crafts, unless it’s with money earned by selling crafts or with earned store credit at the yarn store. We will not be going to the movies or going out to dinner. Or breakfast or lunch. (Except for one evening out with friends with whom we’ve been trying to get together for over a year. But that’s it!)

We’ve canceled our Netflix subscription. The library down the road has plenty of movies for free. We’ve canceled our cable service. There’s nothing good on anyway. Haven’t you heard all the writers are on strike? We’re switching our telephone service to our cable company to save $45 a month. The thermostat is set to a constant 50 degrees. These past few days of unseasonably warm weather, it barely even came on at all. All those peeps out there who set theirs to 70? Yeah, they were burnin’ oil. To the tune of almost 3 bucks a gallon. Fifty degrees is not cold, people! Put on a sweater! And the electric bill? Holy crap if it’s not cut in half next month I’ll eat some kind of hat. I turn lights off in the house now like a nervous habit. We actually shut down the computer now when we’re at work or sleeping. We used to keep a fan on in the kid’s room at night so there’d be some kind of background noise to drown out the sound of the television and let them get to sleep. Now: no TV, no need for the fan. Then there’s other possibilities like tinkering with the car insurance to lower our payments temporarily. Dammit, my parents were masters at stretching dollars. I learned from the best. And every time I tell the girls to shut off a light now I think, wow, I’m my dad. Ah, the circle of life.

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2 responses to “The Plan, Part I

  1. Hiya! We were in a similar position of needing to take draconian measures to get a hold on the finances five or so years ago. We had several large unexpected bills that broadsided us along with long term debt that was a constant albatross for us to wear.

    You’ve made the first important step – realization of the problem (no longer in denial) and a resolve to do something about it.

    Some things that we did that made a huge difference that you might consider:

    1) Consolidate your debt if possible while simultaneously negotiating a lower rate. Many credit card companies can open “consolidation accounts” which are basically credit cards without the physical cards. You then shift all your cards to the one account. American Express is a good source for consolidation accounts.

    2) If consolidation is not possible, then “ladder” your accounts. Take all your credit card accounts and rank them by APR from highest to lowest. Pay as much as you can afford to the highest APR card first while paying only the minimum on the others. Once the first card is paid off, close it and shift the large payment to #2 in line until it’s paid off, still paying only the min on those below it. Continue for all cards until debt-free. While your brain might quail at the thought of only paying the minimum on most of your cards, you’ll find this method will save you the most $$$ in interest charges over time (do the math in a spreadsheet and you’ll see I’m right).

    3) Refinance your mortgage. We did that a few years ago and it was a great $$$ saver for us. While maintaining the same time-frame, we shaved $150 off our monthly payment. Interest rates have recently hit the 5-6% range again. Strike while the iron’s hot!

  2. One note on #2 above. In addition to laddering, contact each of the credit cards and demand (yes, demand) a lower rate from each. Threaten to close the account if necessary. You’ll find they will often haggle with you down to a lower rate.

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