MM’s Money

September 6, 2008

Site Stuff

Filed under: History,Site Stuff — mmsmoney @ 4:11 pm
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So I’m really new to this blogging thing. As you can see from my posting history, I wrote some stuff, set it aside and then said, Screw it – I’m gonna publish. And there it went into the public. Just Like That.

I’m a neophyte, so the process of getting stuff built on this site will take some time and be ugly for a while, I’m sure! 

First – Blogroll. I’ve already been helped immeasurably by several PF websites. Since I’m gonna focus on PF for this blog, I’m going to be filling by blogroll with the links I first found valuable as I begin my PF journey. Then I’ve got some links that are what I read while goofing off at work (non-PF). Plus some that I admire, find funny and so on.

Second – Site Design. Themes? Whatever. I chose the Red Ink looking pen because that’s what I have – a lot of Red Ink.

Third – Disclosure, Anonymity, Etc. I struggle with this one (see first paragraph). Part of my journey is sharing and not hiding financial matters. Getting stuff out in the open is healthy and beneficial – so why not out in the world wide open? I’ll try not to be so specific as to embarrass myself or my family while preserving the truth factor that makes everything more valuable in reading/enjoying a blog.

disclosure – all that in “Third” being said, I already went back (since publishing them like 10 minutes ago) and edited/deleted some identifying information. SO much for full Truthiness ( (c) Steve Colbert (maybe?))

Fourth – Grammar, Spelling, Colloquialisms, Etc. Full disclosure again – I have my degree in English, so you’d think I could write/spell/use proper sentence structure/verb tenses etc, right? Truth is, I just don’t care about that stuff – it’s silly, but a slight point of pride not to pay attention to my tendencies to overuse parentheticals, … and slang. So you get what you pay for in my blog – and right now it’s free. That reminds me – I’ll be adding an English Major’s Money to my blogroll! That is a great blog!

Last – Goals. I plan to post as frequently as needed to stay on track with my budgeting, debt reduction, PF education. Ha! How’s that for a firm, quantifiable goal!

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Family

Filed under: Debt,History,Planning,Relationships — mmsmoney @ 3:36 pm
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So my mom & my sister are AWESOME. I knew that but didn’t take advantage of several points of their awesomeness until I took advantage of letting Mom lend me money to keep from being homeless as noted above.

Big Sis is a financial genius. Seriously – she had her debt years in college where she racked up debts, but after graduation with a finance/business degree, she got on it and paid it all off. But they were ED LOANS not CC debt like me – even then she was smarter! Since then, she and her DH have built a very strong financial house and I really admire that. While I knew they were doing well and had some ‘mad skilz’ in the PF world, it was too embarrassing (i thought at the time) to solicit her advice/help on getting our junk in order. If I had talked to her in 2002/2003 about our amazing ability to spend 8K per month with nothing to show for it but parties on the lake and hangovers (ahem, I am all growed up now and we don’t do that with our baby in tow!), how today could be different!! But I didn’t get over my reluctance to show my knickers till it was too late. Then mom & sis stepped in & bailed me out.

We lost my dad in several years ago – when he and mom were way too young to think they would ever not be there for each other. They had a relatively stable financial world prior to his illness and death, but he was seriously UNDERINSURED for the responsibilities my mom was left to handle alone. She was/is a teacher, making a lot less money than she deserves, and at the time, my brothers were still young. So she had to figure out how to keep them all afloat on her income. Dad’s insurance after the payment of medical bills and other debts was less than 100K – she put money into her house & into her retirement. She then put chunks into college funds for brothers 1 & 2 and $7500 into a wedding account for me (Big Sis had gotten married the year before dad died and $7500 was how much they had spent on her big affair – seems inexpensive in todays Wedding-Industrial-Complex terms!).

By the way, Our family doesn’t PAY for kid’s college – mom & dad paid the tuition bill, but both sis and I paid for all else – room, board, books, spending money, transportation, etc. So both brothers had a good amount after the power of compounding interest for 6 years and got themselves educated at State U. So some future planning was performed. My sis and Brother In Law (BIL) then stepped in to help her budget and plan for the future. She received payments from Social Security for each of my brothers til they turned 18 – but mom lived on her salary alone, putting that money aside in savings, investments and retirement. she amassed a fair amount in a relatively short time so she was in a position to help us out.

Since my sister is a savvy PF/Investment sort – oh, and BIL too – she and mom and DH and I sat down and figured out my financial world and what it would take to not be homeless, not default on the HEL and other collections. Did I say how awesome they are?

While mom didn’t set an interest rate on the 10K, I plan to get from my sister the rate of return on average investments so when I do get to pay her back, I will match the rate of return on her portfolio (of the period til I do start to pay her back).  Some might quibble with this, but both DH and I insist on not shorting HER retirement because we are stupid stupid people.

So that’s the family background – – and hindsight is 20/20 I can honestly say I am very very very sorry I didn’t take note of the talent in my own family while we were sinking in big debt and bad choices.

How Did We Get Here? Part 2

Filed under: Debt,History,Planning — mmsmoney @ 3:34 pm
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My family’s debt. Is. Ugly. So in the interests of full disclosure – especially since my first post makes it sound like I put all our issues on hubbies shoulders (these are real numbers as of last week):

Personal Loan (Credit Union – 18.65% interest): $ 1,983.15
401K #1 loan – (9.5% interest):                           $ 2,933.92
401K #2 loan – (9.5% interest):                           $ 4,434.83
Mom Loan:                                                         $10,000.00
Home Equity Loan (6%):                                      $16,650.00
                                                                          $36,001.90

Ahem. Yuck – so I can trace the origins of the Personal Loan to consolidating my college debts – and I am 34! 13 years OUT of college! I was so disfunctional in the excesses and bad spending of 2004 – 2006, I used 401k loans to makeup household expenses. Seriously bad bad bad. at that point, I guess I thought it was better to mortgage the future than to fess up to the issue of the day and get DH and I on the same page financially. Seriously – we could have buckled down then and averted the 2007/2008 disasters.

Mom loan I addressed above – the strings & terms: family counselling (done – and VERY BENEFICIAL) and repayment when she retires…which is in 5 or so years. She didn’t define an interest rate, but I am going to pay her back (at minimum) at the rate of return she earns on her other retirement accounts – see my next post about how I know what she earns on her retirement accounts. It’ll tell you what an idiot I am/was re: not taking advantages of the resources available to me…

Home Equity Loan: Yeah, this one’s bad – we consolidated some of my CC debt and DH’s business debt into an equity loan on our HOUSE. WHich we almost LOST because we couldn’t pay our FIRST MORTGAGE. Which, though not included in the list above since we’ll deal with all these first, is at $133K owed. Purchase value was $142K, current market value is $210K, but you and I can’t count on that and why oh why did Citi give us that loan?! This one has a 5 year repayment plan. Anyhow. moving on.

NO vehicle debt, NO cc debt (other than that which is rolled into the loans above). True confession – but not a surprise: I am a bad bad risk, since I would regularly not pay the dang bills, so we have none (no credit cards) other than DH’s contractor credit accounts with Lowes/Home Depot/and the electrical supply house. Sometime soon, after full buffering, I plan to apply for and fund a secured card to get my credit scores back on track.

So there it is. The Debt. Here are the minimum payments:
Personal Loan: $93 per payperiod, so I’ve budgeted the monthly average amount $201.50 per month
401K 1 & 2: $44.65 and $124.99 per payperiod, so $367.55 per month – auto deducted from paycheck, so not appearing in budget (I think that’s what I read as advice in another forum)
Mom: None – yet.
HEL (so apropos!): $370 per month

So out of my net income, we pay $944.05 per month. God GAWD. That’s just $200 less than our mortgage. Maxed Out (that canadian tv show) would beat us over the head & shoulders with DH’s 2 by 4’s! I used this AWESOME spreadsheet (http://www.vertex42.com/Calculators/debt-reduction-calculator.html) – found through http://consumerist.com/ to establish our plan.

Our plan for debt snowballing is to take care of the high-interest loans first, then tackle Mom (heh! that’s funny sounding) & Citi. By adding $50 per payment on the personal loan, I’ll pay it off 4 months early – in March of 2009. The ‘issue’ with the 401K loans is that they can’t be paid incrementally – they need to be cleared in full. So once the personal loan is clear, I will budget the min payment on that plus the extra $50 per pay period to an account to accumulate the payoff amounts. This will clear the first in October 2009, and the second gets cleared in December 2009. That frees up A LOT OF CASH. By January 2010, we’ll be throwing $1039 at the Home Equity Loan!! Clearing it (if all goes to plan) at the start of 2011. Yes – three years from now we will be getting there!

So Mom – she’s at the end of the list by her choice, wanting us to get the rest of our debts settled before addressing our loan. What a gal! She’s widowed (we lost my dad 9 years ago) and she is a teacher – and SO UNDERPAID it’s ridiculous. That she was able to lend us this money is amazing on several fronts. More on her later! We’ll start repaying her as soon as the HEL is paid off, March 2011 and will repay at a slightly lower than the snowball rate at that point – $1000 per month to include interest, so total to be paid will be slightly more than $14K. Only fair to have her money working for her while it is in our possession!

other notes: part of my total compensation at my job is participation in the annual bonus program – 10% of my salary is available as a bonus to be paid in March/April based on the company’s success (or not) the prior year. I have NOT included any bonus payments in our debt repayment plan at this point – because that money is at risk and could vary significantly. This year we weren’t paid a penny, and I had COUNTED on that money, which coincided with that disaster of the above post!! But the year before, we got 120% of our pool – which helped settle the baby debt and lil one was not repossessed by the hospital OR the anesthesiologist (who knew pain-free childbirth could be so financially painful)! So that year, the bonus I banked (well, I didn’t bank it) was (pre-!@#$) $9K!** So potentially (and I can’t start counting on it), I could clear the personal loan, Fidelity 1 & 2 by June of 2009! And that would accelerate everything. Again, chickens/hatching blah blah, but that’s in my hip pocket and DH and I are both firmly on board with applying that money (if I get it) to debt repayment.

** another bad choice in a world of bad choices – medical debt is much ‘better’ on the Credit Report than collections! I should have done a payment plan with those creditors and got current with the CCs & other bills. But hindsight is 20/20 and I didn’t know that factor till Big Sis (more on her next post) stepped in to educate me.**

So this was the ‘show your knickers’ post (my dad’s term for sharing dirty laundry/full confession). Hope I can meet these goals! Will keep y’all posted…

How Did We Get Here? Part 1

Filed under: History,Relationships — mmsmoney @ 3:29 pm
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Our story – DH is an independent tradesperson, working primarily as a subcontractor. For years (2002 through 2006) during the housing buildup/bubble, whatever you want to call it, he was high on the hog, earning $4000+ per month, mostly *sigh* cash that went out as soon as it came in on a variety of fun/toys/entertainment. I’ll say that I enjoyed the benies of all that, but was still the primary wage earner, since my salary was paying the mortgage, utilities etc. He wasn’t ‘accountable’ for his earnings and we were getting into debt because by the time the bills rolled in for the necessary expenses, all his income was gone (how did we live like that?!?) and I’d be forced to borrow against next month to pay for this. AND to top it off, I was very reluctant to reign in the spending or communicate what our family needs were and insist that we put those first. So in 2006, we welcomed our daughter and my insurance didn’t cover a LOT of that expense, plus taking 3 mos. off maternity leave at 2/3 pay, plus all the new costs that a baby entails, our debts ballooned. And houses weren’t being built and DHs income started to decline – not quickly enough that we saw a radical shift, but enough that at the end of Summer 2007, I was so behind on EVERYTHING, I seriously was close to nervous breakdown about the finances.

So I started what some might say is nagging about the budget and our family’s future. Mentally scheduling a weekly talk about finances, asking him what money he would be able to save and ‘worrying’ out loud about denying lil one a future (losing the roof over her head – we were that close!) and how in the world would we save for college? It took a long time for DH to get it – that I wasn’t trying to make him feel bad, but that the reality was, we couldn’t keep living like this! Even though we were on the edge of disaster, he didn’t feel the ned to plan our money or budget and resisted ‘complying’ with the budget I was trying to follow.

In late 2007/early 2008, he was only working about 1/2 time and he finally had that AHA moment – that we had to communicate, coordinate and cooperate for our family. Specifically, he had paid out money for material for a job ($2800 cash) and I had planned on paying that money toward our late mortgage payment. The mortgage catchup payment bounced, and guess what? The general contractor (GC) wasn’t meeting the build schedule and the owner didn’t pay any invoices until the GC caught up – so DH’s invoice for the materials didn’t get paid for 90 days. We borrowed from my very generous mother to avoid foreclosure and to get almost right (April 08). So between what we owe my mother, the 4+ years of head-in-the-sand, we have almost $40K of outstanding debt and need to get our S%*& together… And it really took that 2 by 4 to the head for DH to get it. We struggled through the summer paying out still a little faster than we were taking in and we’re trying to make a go of it with YNAB as a cornerstone of our get-well plan – three weeks in and hopeful!

I highly recommend family counselling (my mother did put that as a condition of her loan) to address setting common goals.  One thing I learned was my husband was seriously depressed and that his behavior was a lot of anger at himself for not being the provider he thought he should be – but his actions were exaccerbating the problems and being completely counter-productive. We also had to reconsider his business model – paying money out of our pocket for his jobs put us all at risk. Since then, he’s turned down jobs that were too big for our budget (those where he’d have to buy materials/equipment) and we’re trying to figure out a way for him to be successful in the new (awful) economy.

So there we are – struggling to adjust to living within a budget, building an emergency fund, coping with HIGH debt payments. More on the debt in another post!

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