Broke

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Broke is a relative term. Us, broke? How can we be broke with over $18,000 in the bank and a net worth of almost $400,000?

Because despite that net worth we’ve still got about $620,000 in debt, including house; two kids to get through college right now, not later; and only a bit over a decade before retirement. The only way we’d see any of that net worth today is if we gave up our house and our retirement accounts. So I’m living like I’m broke, which brings me to how I got on this journey.

A year of no shopping! No more clothes, shoes, bags, or jewelry. That led me to realize that our troubles were much worse than the occasional shopping spree. I was spending upwards of $2400 a month on groceries. So no personal fashion shopping has been the easy part. The serious part has been living on a budget, paying off credit card debt, and setting aside money to cash flow college.

But now as spring approaches my closet is looking kind of sad. Everything is black. The t-shirts are kind of ratty. I’ve got white blouses I’ll never wear because I never wear white blouses. My jeans are sad. My little Eileen Fisher pants are losing their elastic — for the third time.  I’ve replaced the insoles on one pair of flats two times already. Whine.

I need to stop complaining. I’ve got over $18,000 in the bank and a net worth of nearly $400,000.

 

 

Woke II

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I’ve been blogging here for a few months. And the post that means the most to me is Woke. Click here for the link. I talked about feeling like I had just woken up on the railroad tracks.

I feel like a drunk who just woke up in a car parked on top of a railroad crossing. My previous reality seemed so sensible. Go to a store, plunk down a credit card. Harbor a fantasy that I could easily pay for all this.

Every month when I opened the credit card statements I was in a bit of shock that all those little charges, many $10, $20, $30, could add up to thousands. And our $10,000 net monthly income never seemed to have quite enough to cover what we had incurred. So I paid as much as I could, but not all.

And that bit got added to the previous bit and folded into the next bit., which eventually added up to tens of thousands.

Today I got a call from Bloomingdale’s to tell me about their friends and family sale, no doubt because I distinguished myself as someone who spends an insane amount with their credit card.  I was nice to the young woman calling, but thinking inside myself, no way. No way. No way am I going shopping when I don’t need anything. I am done with that. I am focusing on every single penny. I’m like a crazy person who makes herself drive by Ace Hardware when I really truly absolutely want to stop and buy some hostas and soil and herbs and maybe some more azaleas. No, I’m not  stopping at Ace and I’m not coming to your friends and family sale.

But I just thanked her politely for letting me know and ended the call. Likely she is suffering too.

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Caveat: many of those clothes i got on impulse at Bloomingdale’s  were by Eileen Fisher. They are great, amazing staples of my wardrobe, which make it super easy for me to go a year without shopping for clothes and such. So at least in my profligacy I did make some wise choices.

Hello Savings

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I have never in my life been able to save money, no matter how much I made. I have always been either (1) in my 20s too broke to have anything at all, (2) in my 30s not paying attention when I was for a nearly a decade a millionaire thanks to an inheritance or (3) post 2008 catching up to pay for everything I spent the month or months or years before. And that slowly and inexorably led to being in debt to the tune of $661,000.

I’ve now got my debt down to $641,000 but more importantly I’ve got $13,000 in a college fund and about $400 in another savings account and a bit over $8,000 to pay for the rest of the coming month’s expenses, having already just now paid nearly $5,000 toward credit cards.

Yeah, those are some big numbers, but the point is that I’ve turned things around. Instead of playing catch up, I’m ahead of the curve. Even if your income is a tenth of mine, you can do the same.

The key is budgeting — planning, before every month begins, what is going to happen to every single dollar, rather than wondering where all those dollars went. (Thank you, Dave Ramsey.)  The integral part of this is patience, not putting every bit of money to past debt but setting enough aside to have money for upcoming expenses.

I’m a scholar, academic, brainiac, etc. but this was such a revelation to me: keep money in the bank to pay cash for the month ahead. Hello!!!!

 

 

April Groceries

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Three months into this journey: $35,000 paid down in debt; $13,000 saved for current college costs. Great, right? Yes, of course!

But the current challenge is still groceries. Last month I tried a mixture of cash and debit, but I lost track and I think groceries and booze gobbled up maybe two grand more than expected. (yeah, crazy rich broke people)

So this month I will try something new: Start of the month, withdraw one grand in small bills. Give the fella two hundred. (He’s got the okay to put another two hundred on the debit card, half of which should be gasoline. Still to be seen how that works. I think he is underestimating.)

That leaves me with $800 in cash for groceries and pocket money for coffee or lunch here and there. So here’s my new experiment. I’m going to go out and buy all the dry goods I think we’ll need for the month. Really! Wow. First the booze: big litres of pinot grigio and some regular bottles of malbec for well under $200. Then mega cans of tomatoes and beans, bags of Pete’s coffee, loads of pasta and sauce, lots of tofu and seitan, boxes of cereal and loaves of bread that I’ll freeze.

It looks like that may add up to $670, leaving me $130 to get perishables like milk, fruit, and some veggies. There may be no room for a latte.  In May the CSA kicks in, which will bring me more produce than I know what to do with. But that’s another story.

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Image: detail of  https://www.dwell.com/article/a-restored-midcentury-jewel-by-richard-neutra-hits-the-market-at-dollar13.5m-f2463167/6377225811484147712

Heated Talk

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I made the fella sit down with me yesterday for a monthly budget meeting. I laid out what our fixed costs are and then said, here’s what’s malleable: how much for groceries, booze, barbers, lawn care, gasoline? Fella zeroes in on one kids’ voice lessons. Why are we doing this, he asks? Because, I answer, these are music lessons. Do we need to have a purpose for music lessons? And then I get all defensive. Maybe we can quit the lawn care and you can start mowing the lawn. Or we’ll quit the monthly house cleaning and you can scrub a toilet for the first time in your life.

And it kept getting worse. Then I got us back on track. How much do you want for your pocket money? I don’t want us to put anything more on cards. And he pushes against that because, oh, it’s so inconvenient to use cash. So we compromised with him using half his allowance via debit card.

Jesus friggin christ. It will be a miracle if we get out of this mess when we are not on the same page.

But I do believe in miracles.

 

Obsessing

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I’ve been hyper focused on getting out of debt for almost three months now. Benefit: down more than $20,000 in debt. Downside: I’m hardly getting any work done.

I spend most any spare time drawing up spreadsheets that astonish me with their detailed power and demonstrate how I can be a millionaire again in a few years. I never before could make a decent spreadsheet and now I’ve got a life-changing one.

When I need to be working on my current book or preparing for class, I’m listening to Dave Ramsey podcasts, secretly, because it would blow my lefty cool to be associated with this evangelist preaching to the masses. But still I’m hooked.

I’m a bit OCD, to put it mildly. This is a curse and a blessing. I can hyper focus for an intense but short time. So as much as I am worried that my obsession is too much, I’m also worried that it will suddenly vanish.

I hope this time it is different.

Image: detail of Piet Mondrian, Oostzijdse Mill with Extended Blue, Yellow and Purple Sky, 1907-8. https://www.theartsdesk.com/visual-arts/mondrian-turner-contemporary-tate-liverpool

 

Forget about regrets

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If only I had known thirty years ago what I know now. Blah blah blah.

No one knows what one will know going forward. NOW it’s a matter of attending to the moment with no regrets and with fearsome resolve.

And a fat check helps.

I just spent a whole day finishing a spreadsheet on my debt-getting-out-of future. It’s good, even with the plan to cash flow two kids’ college.

Now that I’ve actually started paying attention to what we’re spending and actually budgeting (which my former self poo poohed), my obsessiveness in detailing things yields that I will be totally out of non house debt by October 2020 and may actually be out of house debt three years later.

The trick is to have enough time, after paying off the debt, to sock into retirement accounts sufficiently to live well after retirement. The good part is that even with a decade post-debt-payoff we can pour enough into retirement to live really well thereafter.

Yes, it would have been ten times better to have figured this out ten years ago, but that me wasn’t paying attention then. This me is.

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My past fear of planning for retirement was I think rooted in avoiding the brute fact of mortality. which I do in fact regret. But that this kept me in financial insanity is, to be tautological, totally insane.