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September 2017: PF Mistakes & The Battle vs. Shame/Judgment

  • DH = dear husband
  • DD2 = dear second daughter

Overall progress from June 2012 to September 2017

DH and I have been on a journey out of all debt since June of 2012. We started off with:

  • $21,000 in consumer debt
  • $81,000 in business debt
  • $155,000 in mortgage debt
  • A grand total debt of $257,000

Since that time, we have:

  • paid off all consumer debt
  • paid off all business debt
  • paid $87,000 off of our mortgage
  • Remaining debt – $68,000

Mistake = lower payment in September

For the first 3 years of our trek to debt-freedom, we kept our mortgage payments low and steady as we tackled our smaller debts first. Now that we have no other debt besides the mortgage, we put as much as we can against it each month. DH runs a home business, and so our monthly income varies. To accommodate this reality, our strategy in attacking the mortgage has been to give ourselves some flexibility.

The terms of our mortgage allow us to pay off extra each month to a maximum of doubling our regular payment. We can also make one lump sum payment off of the principal each year.

Every month, we try to double our mortgage payment – which for us means putting down $3,000. If we can’t manage a double payment, we put down as much extra as we can. That means that each month a few days before the payment is made, DH communicates to the bank how much our extra payment will be.

Only for September, he forgot about the long weekend. So he missed the deadline to make the extra payment. For the first time since June of 2015, when we became debt-free except for the mortgage, we paid our basic amount of $1,500.

But that’s OK …

I always like to see our debt numbers go down as much as possible each month, so while it was disappointing, DH’s mistake was OK on three different fronts:

  1. The closer we get to ZERO, the more confidence we have in our overall finances. The great thing about confidence is that it allows us to take mistakes in stride with a not-a-big-deal attitude …
  2. … because it’s not a big deal. We will be making a lump sum payment for the year in December, and any money we put aside in September that didn’t go towards that monthly payment will go towards the big payment …
  3. … only we didn’t end up having any extra for September because of over $1,500 worth of van repairs.

So it actually worked out very well.

My discretionary account: hard to release judgment

The other subplot developing in these monthly reports is about progress in my discretionary debt payoff. DH and I give ourselves a generous discretionary allowance each month, and he is way better at managing his than I am at managing mine. While he has saved and even invested from his, I have gone into debt with mine. Ugh!

Willpower hasn’t been the answer, so in the last couple of months, I’ve been trying what I call no-judgment-tracking of my discretionary spending. I just deleted the mark of C that I originally included in the subtitle for this section. I’m SO programmed to evaluate! Releasing judgment is not as easy as it sounds. My goal here is simply to track – NOT to evaluate or come up with better strategies or to seek advice. None of the above works. I know! (This is a very stubborn issue.) My hope is that a heightened awareness of my discretionary spending will lead to my successful management of it – in the black instead of the red.

No-judgment-tracking for September

First item of awareness: I really have a hard time keeping a steady log of my discretionary expenditures. It’s not from forgetting or not having time for it. It’s from shame. But what does shame come from? Judgment! I’ll do my best to stare down that shame – AND the judgment behind it – through October. For now, despite my digging around to fill in the blanks, I can only work with an incomplete record of my September spending.

Some day, I’ll be brave enough to include actual dollar amounts, but for now, here is where the money went:

  • pizza party at a mini high school reunion (We all chipped in.)
  • birthday celebration for DD2
  • birthday gift for DD2
  • tip for hairdresser
  • tip for restaurant server (The meal itself was covered by a gift card given to us.)
  • wedding shower expenses (3 aunts chipped in – and DH & I split my portion. Thank you Kalie and Kay. Your comments led to my discussion with DH about this!)
  • wedding shower gift (Some of us chipped in. DH and I split my portion.)
  • 2 breakfasts bought because I woke up too late to eat before work
  • 2 lunches bought because I woke up too late to prepare a lunch before work
  • took a friend out for dinner to celebrate her birthday
  • baby shower gift
  • charitable giving
  • airport parking
  • several (I’m going to guess 7 ) snacks

For extra detail, you might remember that we give ourselves our allowance when my first pay comes through each month. For October, that won’t be until the 13th, so I had to make sure my September money held out. It didn’t. But the good news is that I was owed some money for a boost that we gave ourselves in the summer (which allowed me to take a trip to Washington DC). So I was still able to move forward.

I put another $200 against my discretionary debt. After 2 months, from an original $1,669, it’s down to $1,286.

More on shame & judgment

You know, when I look at that list of expenditures from September, I find myself thinking there’s not much for me to be ashamed of. I have noticed before that there’s a shame spiral. You make a mistake (like wake up late), submit to the consequences (like pay for breakfast and lunch), go into some denial (don’t track that spending). And since you’re now functioning less mindfully, it’s easier to add to the denial (like buy snacks – and don’t track that spending either).  In its hidden state, all that you’re in denial about becomes more dreadful. It takes some bracing to shine a light on it … but when you do, it becomes smaller – less powerful.

I’m hoping to gain more confidence in my discretionary money management so that when I make mistakes, I can have the same not-a-big-deal attitude that we had with DH’s mortgage mistake. Shame and judgment won’t be part of that confidence building.


Do you find it difficult to track your spending? Do shame and denial play a role in that difficulty? Your comments are welcome.


Image courtesy of Pixabay

Letter To Student, Raised Below Poverty Line, at Threshold of Middle Class

FS = former student

I’m a high school teacher, and this past summer I was very honoured to be invited to the wedding of a former student (I’ll call her FS). Even in her rebellious teen years, FS knew how to work hard. A co-op student in the school library for 3 semesters, she always loved books. After graduating from high school, FS worked as a custodian for 3 years before finally chasing her dream and  enrolling in library studies at college.

While pursuing her diploma, FS has worked part-time at the library of a government department downtown, and she has a great chance of being hired there full-time once she graduates next spring from college. FS recently came into her old high school to give me an update on her life: Just before she graduates, she’ll have a baby!

FS grew up below the poverty line, and so did her husband. She has given me permission to write this post – which is a letter of financial advice to her. I write it with a great belief in and hope for her future.

Dear Former Student,

Thank you for indulging me and letting me write this letter of advice to you. You are at such a critical time of life – just starting your marriage, just about to start your career, just about to become a mom! The decisions you make now and the habits you form now will have powerful ripple effects into your future – for better or for worse. And I’m hoping better!

I don’t know if you’re aware of how amazing your accomplishments so far have been.

You grew up in challenging circumstances – with a single mom on disability, a distant dad, limited resources … You left home as a teen and made your living through part-time jobs as you finished high school. In your social life, you had more than enough drama, and you acted out plenty of rebellion – as many teens do without anything close to your excuse.

But hiccups and all, you kept moving forward. You worked for 3 years to save as much money as you could before going to college to pursue your dream career. You’re on your way to secure employment – with benefits, a good salary, and high job satisfaction at a place where people value your work ethic. And you met a young man – with a tender heart and a steady character and a great love for you – and you’re starting a family together.

Wow. Wow. And wow!

It will be challenging to start up your career and your family at the same time, but you’ve got a plan, and since you’re someone who stubbornly makes things happen, I believe it will all work out. You’ll have the full-time job. Your husband will be the main care-giver and work part-time on weekends. You’ve already got your breast-milk pump. All set.

You are on your way to the middle class. Welcome. And beware.

First of all, I say “beware” because old patterns die hard. Growing up, you and your husband both had to deal with hardships that were beyond your control. Your troubles were not of your making, but they were your reality. It can be very hard to release an expectation of adversity. It can be very strange to embrace hope. So watch out for old patterns of thought and reaction and habit that you might not even be conscious of. The ones that will try to keep you rooted in struggle. The ones that will work to sabotage your forward progress. Be on the alert for them, and be ready to challenge them and face them down.

And then there are the people in your life who won’t be comfortable with the changes they will see in you. They are used to you being a struggler against the odds who is ultimately stuck. But that’s not who you are. You are a struggler against the odds who is moving in a radically new direction. People don’t like “new”, so be prepared for the efforts of some of your friends to pull you back to the place where they first knew you – where they’re comfortable with you being. Your “new” will be an insecurity for them. A threat. And some might feel entitled to your financial support. Be prepared to assert boundaries.

“the middle class is filled with people who blow their privilege”

Another reason I say “beware” is that the middle class is filled with people who blow their privilege by maxing out through debt. I should know. The marketing machine of Buy-now-pay-later! because You-deserve-it! and Owning-this-will-make-you-a-winner! is extremely powerful.. Very smart people do very dumb things with their money all of the time.

Right now, you say you are living like your mother because she is the “best teacher for how to use the least money to provide the most comfort and stability.” Keep following her example for as long as possible – even when you’ve got that great full-time job. In partnership with your husband, get a solid grip on your numbers. What is your take-home pay? What are your expenses? Create a plan to build your wealth through savings – right from the get-go. If you can only save 3% of your take-home pay, great! If you can save 10%, better! If you can save 30% or even more, why not? Make it a no-brainer. A thing you do by automatic default. Save.

The secret to financial health is to live below your means.

Don’t buy on credit. Use short-term savings to purchase all consumer goods in full. Don’t get a car loan. Save a small car-payment’s worth every month until you can buy your (used) car outright – and then drive it for as many years as possible – while saving for the next one.

When the time comes to buy a house, don’t max out on the mortgage. Choose a home that you can pay off in 15 years by putting no more than 25% of your take-home income towards regular payments. Don’t rely solely on your work’s pension plan for your retirement savings. Invest long-term in your own financial freedom.

“The company you keep will rub off on you – for better or for worse.”

Find role models, and learn from them. Learn from couples who have been happily married for many years. Learn from families that function well. Learn from people who manage their money wisely. Spend time with people who have built their lives on a firm foundation. The company you keep will rub off on you – again, for better or for worse.

FS, I believe that you are undergoing a remarkable transformation. And the life that you provide for your child will be very different from the childhood you experienced. Your hard work, your perseverance, your proactive measures to make things work, and your wonderful choice of life partner all combine to spell out good things. I promise you that a wisely planned, intentional financial management strategy will play into all other aspects of your life – from marriage to parenting to work to social life – for the better.

So all the best to you. Here’s to your family, your career, your future. Here’s to the firm foundation upon which you’ll build your life. And here’s to the day when people seeking life wisdom seek you.

Your old teacher,

PD


Your comments are welcome.


 

Guest Post: Getting Out of My First Debt Pitfall

Meet Josh Wilson, a personal finance blogger who runs the site Famiy Faith Finance.  Josh is a Millennial who is working to become his generation’s personal finance thought leader. Josh dreams of a day when all Millennials can thrive through financial literacy and patience.

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Getting stuck in a debt pitfall

Getting stuck in a debt pitfall happens to plenty of people. It is easy to fall into one, but it can be extremely difficult to get out of it. If you happen to be one of these people, just know that you are not alone! 

Some of the most common debt pitfalls stem from car payments, large mortgages, credit card debt, and student loan debt. If you were to ask any stranger about these, they would likely say they had one or more of them. They are some of the most common sources of debt. The thing is, sometimes they are a necessity. After all, most people need a vehicle to commute to work, a place to live, and an education. However, sometimes debt pitfalls happen when people just want to buy something with the plastic in their wallets.

I have had my own experience with debt pitfalls. Two of them came from credit card debt and student loan debt where I was stuck deep, with a long road ahead. Let’s take a look at my situation and what I did to make it better.

Student Loan Debt

When I graduated from college, I carried a student loan balance of $31,000. That is a hefty amount and about in line with the average that a student graduates with today – give or take. I was ashamed of this debt, but I had no choice but to accept it. After all, if I was going to work in my field, then I needed a degree to help secure a job. So, I went to school. Since I did not have significant savings for it in any form, I had to fly solo and take out student loans. Hence the student loan debt.

Fast forward to today: I have paid down most of my student loan debt, but how did I do it? Out of college, I was lucky enough to get a job in my field, so I could handle regular payments. That wasn’t quite enough however, so I looked for any side hustle I could find to supplement my income – which led to mowing lawns, freelancing in IT, and even selling baked goods! I know, it sounds like a lot, and it was.

While establishing more income is one of the simplest ways to crawl out of a student debt pitfall, there are other ways to speed up the process. One is student loan refinancing. I refinanced my debt when I had about $12,000 left. Refinancing my student loan debt was the best thing I could have done because it dropped my interest rate which saved money and gave me better flexibility with my finances. Successfully making student loan payments (with the help of my side hustles!) was a big factor in my ability to refinance. I’m still working on it, but it’s less of a problem now. I have only $5,000 left to pay!

Credit Card Debt

While I had student loan debt, I also had credit card debt which was to the tune of $1,500. This credit card debt was racked up during college, and it definitely plagued me after college. I was not happy about my credit card debt. While it may not seem like a lot today, it was a big deal for me at the time. I did not have the $1,500 on hand, and I knew I needed to make a change before getting stuck in the minimum payment cycle.

I decided to search for a balance transfer credit card that offered an introductory rate of 0 percent APR for the first year. Long story short, I was approved for one, so I transferred that $1,500 to a new card and saved money on interest (just like student loan refinancing!). There are other ways to reduce your rates, but this one was my solution.

I would suggest that you do this if you carry a balance on one of your cards. The trick here is to make sure you pay the amount you transfer off before you reach that introductory offer expiration. In my case, my side hustles helped me to pay the card off in full before the expiration. 

Kiss Your Debt Pitfall Goodbye

Now is the time for you to kiss your debt pitfall goodbye. I knew that I did not want to be stuck in debt forever, and this meant that I needed to make changes. Some of those changes were easier than others, but they all allowed me to get to where I am today.

While I still have a little bit of debt to pay off, it is nowhere near what it used to be and I am thankful for that. Here are couple takeaways for kissing your debt pitfall goodbye:

  • Find new sources of income.
  • Look into reducing your interest rates!

Are you stuck in a “debt pitfall”? Have you ever been? Your comments are welcome.


Image courtesy of Flickr.

Visions of FIR (no E for early)

Reading at the camp site. One of my favourite things.

DH = dear husband

Anniversary glamping

DH and I went camping over the weekend – hence the late post. (Sorry.) For a few years now, we’ve been celebrating our anniversary with a semi glamping (glamorous camping) experience. Nothing fancy about the tent or the sleeping bags, but lots of fancy food. If you’ve ever gone camping, you know that just about any food is extra delicious when prepared and eaten in the great outdoors. So  imagine our salmon fillets Friday night and our beef tenderloin Saturday night. Mmmmm….

Camping nostalgia

Camping is one of those things I associate with family life. I camped with my parents and four siblings as a child, and I started to camp again after I had become a mom. Our three children are far apart in age – covering just over a decade – so for many, many years, we spent two weeks every summer at the camp ground. And it was always my favourite part of the year.

When part-time work and social life took over for our youngest a few years ago, our camping trips came to a stop. There’s a nostalgia about those days for our daughters, and almost every year we make a day trip to the lake. But our family camping days are in the past.

DH and our 3 daughters (& dog) silhouetted with canoe and lawn chairs during a day trip this summer.

Camping for our anniversary

3 years ago, DH said he wanted to celebrate our anniversary by going to the resort where we had spent our brief honeymoon. We’d gone for an overnight trip for our anniversaries of 2010 and 2011, but after we’d started our journey out of debt in 2012, we couldn’t justify the expense of the get-away. “Get away”, however,  is exactly what DH wanted to do. He runs a home business, and it’s hard for him to separate completely from work while he’s in the house. So he argued for the expensive resort stay. In our old days of bad financial management, I would have supported DH’s wish. But those days were behind us, so I didn’t.

And that’s why DH came up with the idea of camping. It would be a get-away, but at a fraction of the resort cost. We went, loved it, and a new tradition was born.

Camping without children

This past weekend was uncharacteristically gorgeous for mid-September. Our anniversary is actually October 2, but we choose what looks like the best weekend in September for our trip – and this was it. DH went ahead Thursday and set up the camp site, and he came back for me Friday afternoon. For 48 hours, it was sunshine, canoe paddling, swimming, reading, camp fires – and delicious food.

For some reason, I really loved this year’s trip. Perhaps it was because we didn’t go last year – a year of cold, rainy September weekends – and I didn’t realize how much I missed it until we went this time. I had a sort of “Ah-ha!” recognition that I truly love camping. Even without children.

Visions of FIR (Financial Independence/Retirement)

At one point, as we sat by the fire, DH said that in 2 years, I could be retired. In 2 years, we could go camping for a week or two in September if we wanted to. I told him that I wanted to learn how to do wilderness canoe camping – as he used to do in his single years. He said he knew of a lake where we could start to get me used to it. And we’ve decided that we’ll go in September of 2019.

At one point, a couple – maybe 5-10 years our senior – passed by our site on their Harley Davidson motorcycle, towing all of their camping paraphernalia behind them. I knew that DH, who has long dreamt of owning a Harley, was seeing the two of us on that motorcycle. “Do you think we could tow all of our camping equipment with a motorcycle like that?” I asked him. He said we could. “If you promise to drive slowly, you can drive me on a motorcycle some day,” I told him. DH lit up.

The lake was cold, but not too cold for a swim. Back when I was 13 and 14 years old, I swam competitively, and I still have the ability to swim well. As I free-styled across the beach front Saturday and Sunday, I remembered how much better it was to swim in lake water than pool water. “I want to do a triathlon,” I thought. “I’ll start training for real after I retire.” You heard it here first. My first triathlon in 2020? Stay tuned.

Looking forward

I’m so glad that we’re able to look forward to the future with a happy anticipation. I can tell you that when we were at the worst of our financial stress – when DH’s career was in limbo and we were maxed out in debt, and the relationship stresses seemed hopeless  – we were not looking forward to anything. We were either overwhelmed with the task of putting one foot in front of the other – or we were looking for escape.

It’s not like that now. We don’t want to escape. We want to press into the future – because it’s looking bright.


What are your visions of FIR – or FIRE? Your comments are welcome.


 

Frugal Move: No More Gym Membership

For me, having a gym membership meant I got to wear boxing gloves.

  • DH = dear husband
  • GF = good friend

“As a person in pursuit of frugality on my mission to kill all personal debt, I have a confession to make: I’m keeping my gym membership.” So I wrote at Fruclassity two years ago. “Not even for the gym that I can use at a discount through my work. I’m going to the more expensive one that DH goes to. The one that specializes in karate instruction for kids and first rate cardio kickboxing and bags & drills classes for adults.” I then went on to give 7 reasons why gym membership represented value-based spending for me.

Well, I’ve dropped my gym membership, and I’m left to answer to my 2015 self – the one with those 7 reasons.

Gloves on vs. gloves off

2015 Reason #1 – “Let’s start with the obvious one: I get to wear boxing gloves! Unlike DH, I am no black belt, but I have discovered a love for karate moves – however imperfect my execution of them. In my experience, there is no stress release like it.”

2017 Answer – My purpose in working out is to maintain a strong level of physical fitness. I don’t need to wear boxing gloves to do that.  I can go for a jog or a cycle or a hike – all with bare hands. Each one of these activities pumps up endorphins and decreases stress.

External vs. inner motivation

2015 Reason #2 “I slack off when I try to do physical fitness on my own … Even this past winter, I thought, ‘Now that I’m older and wiser, I’ll be able to motivate myself to work out 3-5 times a week on my own.’ Wrong again!”

2017 AnswerIn the past couple of years, I have become aware of a general and long-term deficit in my self-discipline. As I’ve worked on it, there have been positive ripple effects in my spending, eating, de-cluttering, and physical exercise. Since stopping my gym membership 3 weeks ago, I have been doing 4 or 5 workouts per week – actually a better rate than I achieved before. That inner motivation is no longer missing.

Scheduled vs. non-scheduled workouts

2015 Reason #3 – “I am more likely to work out if there are limited, scheduled class times. For over a year, I went to a gym … with multiple locations and a schedule that offers many options … It became easy to make excuses. ‘I can go to the next class,’ I’d think … With the more limited schedule of my current gym, I don’t have the option of making excuses. ‘Cardio kickboxing starts at 7:00! Time to go!'”

2017 Answer –  I like the freedom of being able to work out when it’s convenient. I have cycled in the morning, hiked in the afternoon, lifted weights in the evening, and run at night. And I appreciate the fact that my workouts now take less time. When I did classes, I would:

  • drive to the gym (15 min)
  • take the class (1 hour)
  • do some weights (20 min)
  • drive home (15 min)
  • shower (10 min)

That’s a grand total of 2 hours for every workout. Now, since no extra driving is involved, my workouts (especially for running) often come in under an hour. As for “excuses” – I haven’t had to make any.

“Excellent” vs. “adequate”

2015 Reason #4 – “I recognize and value the level of excellence I find at my gym … The instructors who teach our classes are National and World champions in karate, and the workouts they give are fantastic.”

2017 Answer – I recognize and value the meals produced by great chefs at fine restaurants – and the talent of actors, musicians, and comedians on stage – and the artistic gifting of painters and jewelers … But I almost never spend on these things. I’m in debt-reduction mode. In the same way, I don’t need to spend on excellence in fitness classes. Again, I’m in debt-reduction mode. My own workouts, while not “excellent”, are adequate. And “adequate” is just fine.

Supporting small business vs. DIY

2015 Reason #5 – “I’m happy to support gym staff in their area of expertise … I value independence, but I value interdependence even more. The staff at my gym are far better than I am at motivating me to become fit. I don’t mind relying upon them. And I’m glad that they can earn a living by fostering good health.”

2017 AnswerNow, while I’m still making my way towards debt-freedom, is not the time to play the role of benefactor. Not yet. Now is the time to DIY in as many areas of my life as possible. And I’m finding DIY fitness is now possible for me.

Overall fitness achieved via instructors vs. self

2015 Reason #6 – “I get overall physical fitness at my gym. Any one hour class involves flexibility, cardio and strength; it works out upper body, lower body, and core.”

2017 Answer – I’m getting all of the above on my own.

Together time with DH vs. separate workouts

2015 Reason #7 – “DH and I usually go to the gym together. Last week, on our way to a workout, DH said to me, ‘This is my favourite part of the evening – driving to the gym with you.’ Pretty sweet, don’t you think? Like many working couples, DH and I don’t have tons of time to spend together, but our shared trips to the gym have a bonding effect.”

2017 Answer – OK, I don’t have an answer to this one. In fact, I do notice that on many days, I hardly see DH. If I exercise right after work and he goes to the gym at 7:00, it means we spend almost no time together. Hmmm … DH and I will have to be intentional about making up for this change.

BONUS! Closed door → opened window

Two weeks ago I told a friend of mine (I’ll call her GF for “good friend”) that I had dropped my gym membership. “I’ve run, cycled, or hiked almost every day,” I told her, “but I haven’t done weights. I want to get that going – maybe at work …”

“You’ve dropped your gym membership?” GF asked, clearly getting an idea. She told me that she hadn’t been going to her gym at all, but that she didn’t want to stop her membership. “At my gym,” she told me, “each member is allowed to bring a guest any time.” GF said that she thought she would actually go to her gym if I went with her. “Would you like to come as my guest? For free?” she asked. Of course I did!

We started this past week, and our plan is to meet regularly at her gym – which is on my way home from work – every Tuesday and Thursday afternoon. I have access to weights for free, and she has built in the motivation she needs to make her workouts happen. Right after completing my draft of this post last night, I opened up an email message from GF. “Just want to thank you for helping me get to the gym.  I feel very good about it, and it is sweet to be there together.  Thank you my friend.” Win-win!


Do you DIY your physical fitness? Or do you have a gym membership that represents value-based spending for you? Your comments are welcome.


 

Report August 2017: No-Judgment Expense-Tracking

  • DH = dear husband
  • DD2 = dear second daughter
  • DD3 = dear third daughter

Report for August 2017

For our total debt, here’s a reminder of where we started in June of 2012:

  • Consumer Debt – $21,400
  • Business Debt – $80,800
  • Mortgage Debt – $155,000
  • Total Debt – $257,200
  • Emergency Fund – Non-existent
  • Investments – Not happening (except for my automatic pension contributions through work)

As of August 2017, our numbers were:

  • Consumer Debt – $0
  • Business Debt – $0
  • Mortgage Debt – $69,000
  • Total Debt – $69,000
  • Emergency Fund – Full (to see us through 3-6 months without income)
  • Investments – regularly investing 15% gross income (including my automatic pension contributions through work)

My Discretionary Debt

I confessed two weeks ago that despite the great progress DH and I are making together, my own discretionary account has been in the red for the past year. As I wrote, “It’s the place where all of my old bad, chaotic, thoughtless patterns with money continue to reside.”

The number one piece of advice that I received was to track my discretionary spending faithfully. It’s exactly the advice I would have given – that I have given – to anyone struggling with debt. It’s what DH and I have been doing with our joint accounts for 5 years now. I have committed to tracking my discretionary spending many times, but I have always fallen off when I don’t want to face how out of control it’s become.

For the past two weeks, I’ve tracked faithfully. And it’s been a spendy two weeks! Ugh! I wanted to start off my fearless inventory with a really impressive account, but that’s not going to happen. Let me just say that there are times of the year when discretionary spending is high, and this is one of them – Back To School.  All 3 of our children will be heading to (post-secondary) class next week, and as a teacher, I headed back last week. Emotions happen at the end of every August. So does emotional spending.

Fearless tracking

Here’s how I’ve spent over the past two weeks. No numbers for now. Not that fearless yet. I had to push through a definite “this is out of control!” desire to stop tracking to make this account complete.

  • treated DD2 to lunch after we’d visited my mom in her seniors residence
  • treated DH to supper after he’d fixed my mom’s DVD player
  • dutch date with DH including lunch and museum (and about 50 km / 31 miles cycling)
  • supper with 3 childhood friends
  • flowers for the mom of one of these friends (whose health has become fragile)
  • lunch my first day back to work
  • treated DD3 to lunch when she came into work with me and helped me move furniture
  • treated DD3 and DH to pizza from a small authentic pizza place … because it just smelled so good when I walked past it (end-of-August emotions, people!)
  • hosted a Korean-dumpling making party with about 8 colleagues (I didn’t lead the charge – another teacher did. Hard work! So delicious.)

Looking ahead to September …

The good news is that for the first half of August, I spent next to nothing. These last 2 weeks therefore didn’t bring me deeper into debt. They did, however, bring me to within a dollar of zero – perhaps indicative of that old drive to max out. But for now, I don’t want to analyze things too much. My only commitment at this point to track with honesty. I’m dealing with a stubborn, stubborn issue here, and while I do want to get the better of it, the path of fierce willpower and resolve has failed me too many times. I’m taking the approach of awareness with no-judgment – one step at a time. And tracking is the first step.

“You’ve got to look at the month ahead,” DH coached me as September approached. “Think about what expenses there will be, and set aside money for those things first.” DD2’s birthday is in September. I’ll be hosting a wedding shower for one niece and buying her a gift. I’ll be buying a baby shower gift for another niece. “And remember,” DH cautioned, “we can take September’s discretionary money at the beginning of the month, but we won’t be able to give ourselves October’s allowance until you get your first pay – which will be almost mid-month. Plan for that.”

As I mentioned in my confessional two weeks ago, my personal debt was $1,669. After I took September’s allowance of $600, I paid $200 towards that line of credit, and it now sits at $1,479. (I am of course, paying some interest.) That leaves me with $400 for 6 weeks. Can I do it? Certainly not with the kind of lunch & treat frenzy of the past two weeks. But as I said, the past two “Back To School” weeks weren’t typical. Time to buckle up. I can’t promise victory, but I can promise honesty. Stay tuned!


I welcome your advice and insight (and even analysis). Feel free to offer it. Are there times of the year when you know you spend more?  


 

 

Money Blueprint: Awareness = Power to Change It

Our ’99 Dodge Caravan. In two years, we hope to cross the finish line to debt-freedom with it.

  • DH = Dear Husband
  • DD2 = Dear Second Daughter

J. Money’s post on T. Harv Eker’s Secrets of the Millionaire Mind

Last week, J. Money from Budgets Are $exy wrote about T. Harv Eker’s book Secrets of the Millionaire Mind. In his post, Jay emphasizes the importance of the “money blueprint” which each one of us acquires in childhood. According to Eker, the messages about money, spoken or unspoken, that we absorb in our growing years determine the way we will manage our finances as adults. For most of us, our money blueprint is a subconscious force.

“If your subconscious ‘financial blueprint’ is not ‘set’ for success,” writes Jay, “nothing you learn, nothing you know, and nothing you do will make much of a difference.”

The only thing that will make a difference is to become aware of your money blueprint – to take it out of subconsciousness and into consciousness. Only then will you be in a position to challenge it. And change it.

Serendipity: we knew our money blueprints

DH and I have been working our way out of the red for just over 5 years. In June of 2012, we began our journey out of a total debt of $257,000 – consumer, business, and mortgage debts included. As it happened, DH was reading The Secrets of the Millionaire Mind just at that time, and as  we prepared to eliminate our debt following Dave Ramsey’s strategy, he got me to read Eker’s chapter about the money blueprint concept. I’m so grateful for that coincidence! It meant that we were armed with an awareness that we wouldn’t otherwise have had when we started our trek to debt-freedom.

DH’s money blueprint – and mine

This is what I wrote in my second post ever – at the end of May 2012, one week before we officially started our journey out of debt: “DH recognized that for his father, money was always a problem – something to worry about … DH considered his own financial behaviour … and realized that … when things were good, he made spending decisions that brought us back to anxiety.  So for DH, homeostasis, when it came to money matters, was a state of worry requiring control.  That was familiar.  That’s what he subconsciously gravitated towards.”

As for my own money blueprint: “My parents were excellent managers of money … But the topic of money was politely side-stepped in my family.  It was discussed in vague terms if at all.  To me, it was only clear that there was a pot of money somewhere.  I saw that money came from the man … I learned, in my teens and early twenties, that there was money if I made enough of a fuss. As a young woman, I was a disaster financially.  All the good role-modelling of my parents was subverted … In rebellion against what I had considered austerity, I enjoyed material purchases that I couldn’t afford, yet I was repelled by the base details of managing finances … That’s what the future man would attend to.”

We did NOT have the formula for successful finances in marriage: “Carelessly in debt, I married a man who was always worried about money and anxiously wanting to control it. Mind you, he was in debt too. Eeeek!”

My old blueprint: contained (but stubborn!)

DH and I share accounts for the most part, and in partnership with him, I have mastered my chaotic-spendy-spoiled-child money blueprint. We’re on the same page with our bills, our budgets, our debt payments, our savings, and our investments. But as I wrote last week, in my discretionary account, I’m still battling the ghosts of my past. My discretionary account is the one that I don’t share with DH, and “It’s the place where all of my old bad, chaotic, thoughtless patterns with money continue to reside. I would really like to evict them all.”

(And I WILL evict them all! A big thanks to everyone who offered suggestions last week. I am keeping a fearless inventory of my discretionary expenditures, and I will report on my progress at the beginning of every month – starting next week with September.)

DH’s old blueprint: held in check

A year ago, for our remaining debt (mortgage), we passed the $100,000 milestone. Going from a 6-figure debt to a 5-figure debt was a big deal for us! We sort of floated on an adrenaline rush for a time, high on the vision of the finish line – actually in sight!

It was on that high that DH pulled up in our driveway at the end of August last year – in a new Dodge Journey. He bounded into the house full of happy energy. “Come on!” he said to me and to DD2, “Join me for a test drive.”

DD2 got a kick out of climbing into the shiny new vehicle. I felt dread. Comfortable seats, slick dashboard, smooth ride, delicious new car smell … But none of it had any power over me. All I could think of was DH’s old blueprint: “When things were good, he made spending decisions that brought us back to anxiety.” Things were good. Perhaps for DH, uncomfortably good. Splurging on this new car would empty our emergency fund and put us back to a state of worry – his point of homeostasis. “It’s just a test drive!” DH insisted.

But is wasn’t just a test drive. Our old ’99 Dodge Caravan was acting up. We wondered if we were getting to the point where it made more sense to replace it than to fix it up. My vote was to make our old van last as long as possible – and to get a used car 8-10 years-old when the time came. DH was clearly playing with the idea of replacing our van as a next step – with new.

Close call

“That was a close call,” DH said this week about that test drive. I asked him, “If I had been for the new Dodge Journey, do you think you would have been convinced to buy it?” DH nodded his head.

When our van acted up again this summer, we went through the same “Is it time?” questioning. But unlike last year, DH looked at used vehicles. A Dodge Caravan 2009 was what would have replaced our old ’99 – but it didn’t. DH had the starter replaced, and our old van works like a charm. A new gas tank and new brakes are in the near future. DH and I now both want to cross the finish line into debt-freedom driving our ’99 Dodge Caravan.

Want to get the better of your money blueprint? Do some digging to get it out of your subconscious, and face it head on!


Have you faced down a negative money blueprint with success? Did you enter adulthood with a good money blueprint? Your comments are welcome.


 

Dealing With My Financial Achilles’ Heel: Metaphor of Pipe, Valve, and Filter

Poor Achilles – shot in the one vulnerable part of his whole body.

DH = Dear husband

Great progress overall

If you’ve been following our journey out of debt for any amount of time, you have read several posts about my dismal performance with discretionary money. Overall, DH and I are making great progress towards debt-freedom. In 5 years, we have paid off nearly 3/4 of our total debt. We’ve also saved an emergency fund to see us through 3-6 months without income, and we’ve started to invest significantly. Dave Ramsey says it takes the average household 7 years to become completely debt-free (including mortgage-free) following his strategy, and we’re on solid track to be that household in 2 years.

A+, right? Yes … until you look at my discretionary account … where I’ve been in debt for over a year.

Financial Achilles’ heel: My discretionary account

DH and I decided to give each other a significant “allowance” as part of our effort to get our financial act together. Most of our household spending, for both needs and wants, comes from our joint accounts – groceries, gas, utilities, car repairs, property taxes, vacations … But for some of our spending, for both needs and wants, we each use our discretionary accounts – clothing, shampoo, meals out, gym memberships, gifts … The amount of our allowance? $600 per month.

I can already see the eyes rolling. “$600 per month is a LOT!” Yes, it is. It’s enough to do all of the above comfortably. It’s more than enough for DH, who is able to take snow-boarding trips and even invest from his discretionary account. And it’s enough for me, but I haven’t succeeded in managing it well. It’s the place where all of my old bad, chaotic, thoughtless patterns with money continue to reside. I would really like to evict them all.

Water pipe

Imagine a pipe through which water from a big tank flows. For this metaphor, the pipe is a person’s cash flow – let’s say mine – and the tank is my account. The water itself represents my purchase desires. The tank gets replenished on schedule every month.

  • tank = account
  • pipe = cash flow
  • water = purchase desires

Unimpeded, all water from the tank goes through the pipe and flows out the end point. In the same way, with no restrictions, all purchase desires that enter  my consciousness result in cash flowing out to buy, buy buy.

When the tank is emptied, water stops flowing through the pipe – unless there is a reserve tank which will have to be replenished eventually along with the regular one. In the same way, when my account is “drained”, the cash flow stops – unless I use credit as a “reserve tank.”

Valve

If a valve is applied to the water pipe, it can stop the flow, and prevent the tank from emptying. The problem is that some water is actually needed. In the same way, I could impose a “NO SPENDING MONTH” and prevent my account from going to (or below) zero. The problem is that my discretionary money covers some needs, so some cash flow has to happen. If I run out of dental floss, I have to buy it. Tricky.

As a solution, the valve can be set to allow only a certain amount of water through, so that the tank won’t empty before it’s replenished. For my account, I can take out only a certain amount for cash flow so that it won’t empty out before the next month’s allowance. So take out $300 for instance, and leave $300 in the account.

The problem with that water valve is that it was set to wide-open for so long, it won’t stay in place at any other setting. It keeps slipping out of place and going back to the fully-open mode. Try forcing it to stay in place, and it strains so that water actually leaks out. The “valve” on its own doesn’t work for me either. It keeps slipping back to my auto-pilot of maxing out. Besides, I know that other $300 is in that account – and I know that the “reserve tank” of credit is there too. My willpower can work against open cash flow – but its effectiveness is limited. One strain – a tough day at work or a bad night’s sleep – and there’s a money leak.

Filter

Unlike  a valve, a water filter isn’t simply “set” at a certain level. The filter is constantly adjusting, monitoring every drop of water that flows through the pipe. If a bit of dirt comes along, the filter takes it out of the stream. If some pesticide makes its way into the pipe, the filter removes the harmful chemical. In the same way, I can monitor the purchase desires that enter my consciousness, maintaining a constant awareness of them, and adjusting. Yes, that purse would make a great birthday present, but it’s too expensive. I’ll ask someone if they’d like to chip in with me. Hungry again?! Grab and handful of bean crisps from the bag in your desk before leaving work, and head straight home without even looking at a Tim Horton’s. Bring a snack as well as a lunch tomorrow.

The yoga factor

My youngest daughter has been trying yoga classes for the past few weeks. “They’re so kind!” she says of the instructors. “They’ll just come up and gently adjust my arm or tell me to lean more to the right. There’s no judgment.” I tried a yoga class earlier this week, and the same philosophy was evident. “There is no judgment,” the instructor said – a very reassuring thing for me as a non-yogi. The more practiced people in the class had greater flexibility and balance than I could manage. But sometimes as I focused and adjusted, and gained an awareness of which muscle groups I needed to activate, I could maintain a pose.

How will it all apply?

I’m going to apply this same non-judgment to my efforts at “filtering” with my discretionary fund. It’s at $1,669.32 in the red. I’ve tried the willpower method involved in setting limits – the “valve” approach – without success. Now I’ll temper it with the constant “filter” of focus, awareness, adjustments – and hopefully strike that elusive balance in the black with my discretionary account.


Do you have any insight on changing this kind of stubborn negative pattern? Your comments are welcome.


*Image courtesy of flickr

Elder Indebtedness on the Rise: Seniors of the Future, Be Proactive NOW

“Carrying Debt to the Grave? The Increasing Indebtedness of the Elderly”

Look what came to town last week: an international conference about debt among people aged 65+. What motivated the conference?

  • In Canada in 2012, 42.5% of seniors (aged 65 and over) still had debt.
  • This rate of senior indebtedness marked an increase of 55% since 1999.
  • The problem of debt among seniors crosses international borders.
  • People in different countries have been dealing with the issue, but there has been little international discussion about it.
  • Experts from Canada, the US, Portugal, and the Netherlands came together to share ideas.

What is causing indebtedness among seniors?

  • Gendered senior debt: Female seniors often don’t have a good pension. Many 65+ women who are single, divorced, or widowed are trying to get by on government benefits that don’t cover expenses.
  • Big mortgage: Many seniors are carrying a mortgage debt into their “golden years.”
  • Divorce: A recent Ohio state study indicates that divorce decreases personal wealth by 77% on average. Divorce is increasing among older people, leading many to resort to debt to make ends meet.
  • Illness: Health problems are often a double-edged sword for seniors. They can’t earn an income due to their illness, and this leaves them less able to meet the health care expenses related to their illness.
  • Taking on debt to help family members: Increasingly, seniors are supporting their adult children.
  • Elder abuse: Financial abuse of elders often involves bullying or manipulation by adult children. Many seniors who suffer from elder abuse cannot bring themselves to report it.

Avoid financial vulnerability in your senior years

Personal debt is going up overall, and more so among seniors than other age groups. The trend that saw a 55% increase in elder-debt from 1999 to 2012 continues. If you are “going with the flow” in your money management, there is a good chance you’re headed for golden years of financial vulnerability.

What can you do now to avoid it?

  • Women, don’t count on the prince. You are not going to be rescued from your finances via romantic love. Decide now that you will be your own hero. Whether you are married or not, whether you are perusing a career or are a stay-at-home mom, ensure that your future will be provided for (not just your husband’s).
  • Retiring with a mortgage? Think again. Crunch the numbers. Will your decreased retirement income allow you to carry this debt? Will your retirement lifestyle be compromised by it? Instead of bringing your mortgage with you into the future, consider renting – or downsizing to a house or condo that you can pay for outright.
  • Take care of your marriage. Nurture your relationship, and confront the issues that trouble you. Do not keep the peace. Do not grin and bear it – not even “for the kids.” One of the best gifts you can give to your marriage is to confront your spouse honestly. Will it be messy? Probably. But not as messy as the divorce that will explode later if you don’t. Do not assume that if you’ve made it this far, your’e home-free. People split up at all ages, and the financial impact for most is devastating. Nurture your marriage with both love and honesty. Learn to assert, listen, confront, and compromise. It’s ongoing. That’s what “happily ever after” is made of.
  • Face your mortality. I know people who assume that they will be able to earn an income until their dying day. “I love my work,” they say. “It isn’t even like work for me. It’s more like play. I don’t want to retire.” While it’s wonderful to find work you love, it’s terribly naive to count on being able to continue it through your senior years. There are examples of people who work right through their 60s, 70s, and even into their 80s, but there are far more examples of people who have to stop working in their senior years because of declining health.
  • Save for retirement. See above. Also, don’t count on the government looking after you. Government benefits are a great bonus, but they are not enough to cover all expenses through the senior years. Besides, they are not guaranteed. As governments deal with increasing national debts, they are stepping back from spending on social support. Adopt the mindset that you will finance your senior years.
  • Let your young children experience the consequences of their actions. When we step in to protect our children from the consequences of their actions – at least those they can withstand without harm – we rob them of the chance to develop strength and responsibility. They miss out on opportunities to gain resilience, to work towards their own solutions. They lose confidence. Allow their mistakes to help them grow up.
  • Let your adult children experience the consequences of their actions. One factor involved in the financial vulnerability of seniors is the debt many take on to help their adult children. Learn to love and support your adult children without bailing them out. Stand behind them as they face what life and their own actions throw at them. Don’t stand in front of them to shield them from it. And don’t weaken your finances in the mistaken belief that you’ll strengthen theirs. If you do, chances are they’ll be back for more the next time crisis visits. (Of course, there are circumstances when helping adult children financially is the best thing to do.)
  • Do not “save face.” Report anyone who is committing elder abuse. There is an oppressive compulsion to save face in so many families. The “shame” of family troubles – whether in the form of addiction, abuse, mental health, or broken relationships – is magnified as it is kept secret. If you know of elder abuse – financial or otherwise – brave the awkwardness and report it. Don’t “protect” the family secret.

Government policy vs. personal policy

I hope that the international conference on senior indebtedness last week was successful. I hope that the experts who participated will return to their respective countries with effective strategies to address the troubling trend. But I have more hope in the outcome that would result if the elders of the future – and that includes all of us under the age of 65 – committed themselves to personal policies against the grain of that trend.


What do you think? Is it the job of governments or of individuals to foster financial health for seniors? Both? What do you think should be done to address the growing trend of elder indebtedness and financial vulnerability?


*Image courtesy of Pixabay

Back to Prudence Debtfree (& Mourning Fruclassity)

I don’t usually write about my blog. I use my blog to write about the journey out of debt that my husband and I have trekked for the last 5 years. But every once in awhile, a shift happens for the blog itself, and I think it’s a good idea to explain it.

When I started writing as Prudence Debtfree in June 2012, I had three motivations:

  1. I love to write.
  2. I believed that writing about our debt-reduction would keep me accountable.
  3. I knew that debt-stress, although not talked about by anyone, was something many people faced, so I believed it was significant to share our experiences in overcoming it.

For the first couple of months, I wrote once per week essentially as a diary. I was completely unaware of the personal finance community. A radio interview with CBC Ottawa Morning in October of 2012 (no longer accessible) meant more readers, the occasional comment, and my growing awareness that there were other people writing about debt and finances in general.

Feeling pressured to monetize the blog

As I started to read and comment on other bloggers’ posts, I learned that some people were actually making money off of their blogs. I remember once reading this about blog-writing, “It doesn’t make sense if you’re not making cents.” I wasn’t sure how to go about it, but a seed was planted, and I allowed myself to feel a pressure to monetize.

As part of an effort to grow (and eventually monetize), in 2014 I started to include guest posts once per week. I learned that I loved to interview people! And I came to realize that everyone has a financial story to tell. The subjects of my guest posts were very often people I happened to know – colleagues from work in particular. A great side-benefit of this effort was that the people in my life started to open up to me more and more about their finances – and they continue to do so. One colleague sent me a message after the New Year saying, “… we paid off $10K of debt this year, so thank you for making that socially acceptable to talk about.” Yes!

Running up against my limited bandwidth

I couldn’t keep up with the twice-weekly posting schedule. I was burning out from it.

I’m no superwoman, and as I pursued the goal to monetize, I ran into three significant roadblocks:

  1. I work as a high school teacher and I have a family. Writing once per week was what I could manage happily. When I tried to do more – more writing, more learning about monetizing – I became stressed out.
  2. My tech-phobia and lack of business sense stressed me out even more.
  3. One of the ways bloggers monetize is through advertising, but since I’m writing about debt-reduction, there’s a conflict. There are very few products that I would feel right about advertising. (The Visa Debit card and books on debt-reduction are two things I would gladly advertise, but I don’t have a big enough audience to do that.)

Fruclassity

In July of 2014, I wrote “MMM’s Subculture of ‘Badassity’: Is It For Me?”. The answer to the question was “No.” Much as I admired extreme frugality advocates, I didn’t want to be one myself.  I loved it when I could pull off a badass move, but “… ultimately,” I wrote, “I have to conclude that I’m a mere visitor in the land of Badassity.”

The post proved to be significant because of a comment left by Laurie of The Frugal Farmer:

“Ok, LOVE this!!!!!! We live the same way, and I think we should figure out our own name for it. 🙂”

To which I responded:

“Thank you, Laurie. OK, so our subculture won’t have a swear word in it. Agreed? How about Fruclassity – for frugal yet classy?”

8 months later, in March of 2015, Fruclassity launched. I can’t adequately convey the “dream-come-true” rush I felt when Laurie and I started that site. It meant SO much to me.

  • First of all, it was an honour for me to partner with someone of Laurie’s stature on this new blog site.
  • Secondly, the core values that Laurie and I hashed out before launching were EXACTLY in line with everything I had come to believe about debt-reduction, financial health, individual differences, and the need to create safe spaces for people feeling vulnerable about their finances.
  • Laurie and I often expanded upon each other’s posts. There was good synergy happening.
  • A small but steady readership visited the blog. The comments section was rich with discussion.
  • Thanks to Laurie’s business know-how, it even made a bit of money.

But only a bit. Not enough for someone actually relying upon blog-income to make ends meet and pay off debt. I have a full-time job that has nothing to do with blogging. Laurie’s job is blogging.

This past week, we sold Fruclassity. “Congratulations!” some people commented. For me, it’s not a matter of congratulations. It’s a matter of practicality. And it’s not one that I like.

Back to Prudence Debtfree

So I’m in a bit of a state of mourning right now. Although I am completely convinced that it was the right and even necessary thing to do, it’s still a real loss for me.

While I was writing for Fruclassity, I found I couldn’t keep up a weekly post at Prudence Debtfree. I tried, but that limited bandwidth issue became apparent before too long, and I scaled back to monthly updates here. As of now, I’ll be posting once per week again.

So, the numbers for July:

Quick recap. In June of 2012, we had:

  • $21,400 in consumer debt
  • $80,800 in business debt
  • $155,000 in mortgage debt
  • Emergency fund – non-existant
  • Investments (besides my pension) – not happening

In July of 2017, we were down to:

  • NO consumer debt
  • NO business debt
  • $72,000 in mortgage debt
  • Emergency fund – full
  • Investments (besides my pension) – happening

Looking ahead …

I remember reading this blog advice once:”Nobody likes a negative Nancy.” I don’t mean to sound negative here! I’m just telling it like it is. In many ways, I’m back to where I started – writing once per week about our journey out of debt – on my non-monetized blog.

But it’s not really where I started. We’ve trekked over 2/3 of the way to debt-freedom, and we’re nearing the home stretch. I hope you’ll join me to the finish line.


Your comments are welcome. (In fact, they are particularly welcome this time.)


*Image courtesy of Pexels