Debt Sux

Just sucking it up and moving on to kill $31,500 of student loans.

my kid on money

He started saving when he was around 4 years old. We got him 3 saving boxes: 1 for savings, 1 for giving, and 1 for spending.

It all worked for a few months, until he discovered spending when he entered Kindergarten. They had a “student store” that sold candies and popcorn.

Spending mistakes and lessons

He bought all right. He sometimes blew his week’s allowance on candy, but shared about 75% of what he bought with his friends at school. While that was nice, I always talked with him about his purchases by asking him why he bought them, why he spent his week’s allowance on them, why he decided to give most of them away, etc etc.

In the beginning, I was such a helicopter mom and was talking to him about the benefits of delayed gratification, the health benefits of not eating a lot of sugar, blah, blah, blah. In the end, I realized that I can only go so much with that. He will have to learn the money aspect of it through experience. The earlier he makes financial mistakes, the better. He has years ahead of him to correct them and turn his financial life around.

Not too long after that, he said that he blew his money for an hour of fun and the excitement didn’t last long. Hurrah! (thought bubble of this mama)

The school also stopped the student store. I don’t know why but I’m glad they did. I don’t have anything against it but I wish that they sold healthy snacks…although, that would be no fun for the kids.

Save, save, and save some more

Before student store closed, my son was already saving most of his allowance. Some weeks he would spend 50% of it, some weeks it went straight to his piggy bank. The savings boxes was repurposed when we got him a real piggy. He was even able to purchase an $8 plane toy that he was wanting so bad. He spent a few days deciding on a toy to get and whether he’d be happy to get it now or later.

I take him to the bank every 6 weeks or so to deposit his stashed cash. At this time, he has about $93 saved. At the end of each month, I tell him how much interest the bank gave him. For a long time, he was only getting pennies and it got more real to him when they increased to 2 cents. He was so amazed by the concept of compound interest. Who doesn’t?

Recently, I borrowed a book from the library called Show Me The Money. It’s about the history of money, economics, has topics about spending, saving and investing, among other things. We’re having so much fun reading through the pages. We even spent a good half hour inspecting bank notes. The book is for everyone, and the way topics are presented is interesting for my child as it has pictures, timelines and high-level information. I had always wondered why the stock market is described either as bullish or bearish. It’s because bears attack downward and bulls attack upward.


via Amazon

I skip some topics that are too complex/boring for his age. He saw a picture on compound interest, and he just truly loves it. I showed to him what his money will be like in 1, 2, 3 years if he kept saving all of his allowance. It blew his mind that he’d be close to $800 by end of year 3.

How does he get his money?

Our allowance method for him is 50 cents per year of age. As he’s 6 now, he’s getting $3/week. He tried to get a 25 cents increase as he was 6.5 when we introduced the method, but no. Nice try, though. :-)

We don’t pay him for chores. When he’s older and more able to do tasks that offload my husband or me, he’d get something fair and reasonable.

Going forward

There have been a few dinner topics we had where he mentioned what he was saving for, then realized later he didn’t want them. As of today, he’s just saving. When he wants some toy that we’re not willing to buy for him, we ask if he’d like to pay with his savings instead. A $30 toy can mean A LOT if you take it from $90 savings account. This way he starts truly evaluating his choices. Most of the time, he doesn’t get them and he quickly forgets about it.

And I’ve mentioned to him a few times that he could start saving for a house, overseas travel (maybe if he wants to take a gap year), investing, college, or a car, something big for his future. Although that’s waaay well into the future, we all know that it’s never too early to start saving.

Still, in so many ways, he’s a kid. He has the gimmies from time to time. He whines and cries at times, but luckily, he has been such a good sport when we say no to him. I feel guilty sometimes especially when I know that his peers have them. He has been involved in a group at school that’s into some card game, and I’m still surprised that he has never asked us to get those for him. I saw a kid that had a binder of them. I don’t know whether our early introduction to finances to him helped with that. I sure would like to think so. He knows why we don’t have a fancy car like his friends’s families or our neighbors. He knows we do spend on certain things, like travel, and we do so with purpose and end up with quality experience/products.

Yet, I still worry. I don’t know what he’ll be like when he’s older. People change. I can only hope for the best and guide him when he needs it.


oh car

No, it’s not broken. It’s still working fine. We had the car serviced for a few things, including a scheduled oil change, and of course it came back with “suggested” maintenance work.

I wrinkle my nose at the list. Too many items sound so old, dirty and worn out. Husband says, let’s get an electric car. None of this maintenance for oil change, fluid flush, etc. Makes sense, but we don’t have the money for a new car. When I say “new”, it means new to us and not brand-spanking new. We’re not getting a new car; we just like talking about it.

So here’s what will happen: We’ll review the list, prioritize the items according to safety and functionality, then plan when to have them done. If the cost is not ridiculous, we could have them all done at the same time. As far we know, the items that matter to us will cost us around $400. So, we just might get those done simultaneously before the weather starts going bad.

Our car is 15 years old. I have a teenager! :-) We’ve owned it for 3 years now and it has never given us headaches. So I like to care for it because it has been so nice to us. :-) I surely feel its age when I drive it. Some weird sound has started to come from somewhere, the door locks work intermittently, but overall a safe car to drive.

We’re quite certain that we’ll get a new car in the not-so-distant future, but I hope it will be after the student loan is paid off. We’re hoping to get an electric car as we mostly do city driving. For long distances, we could rent. We search on Craigslist and on local dealers’ websites to see what’s out there, and to prepare for in case our car dies suddenly. Though we could get a tax rebate on an EV, I cringe about insurance. I expect the cost to insure cars 0-5 years old would be between $750 and $1000 a year. Am I right? Our old car costs us $620/year on insurance. I really don’t understand why car insurance in this country is expensive.

We’re quite lucky, in that if our car dies and we have no way to replace it, Trimet is reliable. We live a block from a bus stop, and husband can take the 20-min ride to work. The supermarket and school are 10 blocks away. We bike and walk to both places now when time and weather permit. Not having a car is not going to impede our daily lives from moving forward. If we need to rent, there are options: RelayRides, GetAround, ZipCar and Car2Go.

How old is your car and, if you would be so inclined, how much is your annual insurance? It would help us, I promise!


october is

1. When we visit a pumpkin patch
2. When husband visits his dad
3. When we start eating pumpkin-based food until Thanksgiving

I like fall, but the imminent arrival of winter limits my desire to like it even more. Winter tends to drive me crazy because everyone just wants to hermit in their houses for months, including me.

Anyway, it’s obvious from my list above that there’s nothing financially significant in October to prepare for. It will be a quiet month. Oh gee, I hope so. With August and September being expensive, the checking and savings accounts need to stop bleeding. That said, I hope to get some serious mindfulness on money.

We have grown our pumpkins this year (thanks to our neighbors who gave us planters), but we’ll still visit Sauvie Island for some Halloween/Fall-related activities for the fun of it. I might consider doing a corn maze.

Husband will be going for an overnight weekend visit to his ailing dad. Accommodation and car rental are free courtesy of credit card rewards (thank you!), so he’ll only spend on his food and possibly his dad’s if he’s up for going out at all.

I’m looking forward to eating pumpkin pies and sipping fall-themed coffee flavors. I haven’t bought coffee in so long, I’m almost forgetting what they taste like.

I’m still on the fence about hosting a pre-Halloween party this year. We hosted one last year. It was fun, and I’m not certain why I’m not feeling up for it this year. Hmmm…something to think about.

Financially, we should do great this month because I don’t see any significant spending on the horizon. One good news is that the salary reduction our department has undergone since May will end this month. So back to regular programming come November. We’ll get ~$200 back in our budget. Yip yip!

Here’s the anticipated breakdown of where money will go in this lovely fall month.

Fixed Expenses = 33%
This only covers mortgage, utilities and childcare. Our utility bills are 95% fixed because we chose equal pay for electricity and gas.

Variables = 18.65%
Here is where the party happens—food, allowance, and petrol/gas. We’ve also budgeted some money for our kid’s second language online tutor. I’m hoping that we keep ourselves to this limit. If not, 20% would be fine.

Debt = 24.88%
Yup, if we can pay more than this allocation in October, the better.

Investment = 3.34%
Thanks to debt, this is so little.

Savings = 12.44%
We still have a few goals we’re working on for the rest of the year that need some catching up. The target is to complete the goals by mid-December. I see November and December as our big catch-up months for savings goals; but for now, this is enough.

Buffer = 7.73%
The rest will be our buffer, in hopes that this will prevent us from carrying unplanned expenses over to November. This has been a problem and we’re working on fixing it. It would be lovely if at the end of the month it simply ends up going towards debt payment. Positive vibes for me please!

What’s your October going to be like?


2014 q3 update

Wow, 3/4 of the year is gone. How did that happen?

In trying to create a habit of reviewing our goals’ progress on a quarterly basis, I’m writing this up. Every now and then, I’d look at my archives and it helps with realizing how and why some things fail to happen, or fail to happen on time, and, conversely, what happened that brought them to fruition. Can I say “happen” one more time? :-)

Okay, so first up is the #1 Emergency Fund $5,200. Well, this is not going in the direction I want it to go and I blame the house paint job! We had planned on painting our house’s exterior in late October, but due to our painter’s calendar that went on limbo, we were put ahead of the others. If we stuck with our place in the queue, it would already be raining in Portland. Sometimes it sucks being under someone else’s mercy, particularly if it’s the weather. Anyway, the plan was to keep saving for this project using September and October cash flow. Because of the change, we had to pull money from our e-fund to top up what we’ve saved so far. So for the rest of the year, we’ll just have to work on replenishing all of that.

#2 Airfare fund $6,000. This was completed in early summer and we used a good chunk of it to pay for tickets. The rest of it was used to pay outstanding card balance.

#3 Travel Fund $3,000. This will be completed in the first week of October, but we’ve decided to increase it to $4,000 because of our 4-day layover in Tokyo. We don’t expect to spend $1,000 in 4 days but I’d like to be prepared. It doesn’t hurt to have that extra cash to kick start another goal for 2015 to be linked to this fund.

#4 Bring down debt under $20,000. With increasing our weekly payments, this goal is very close to achieving. In fact, we forecast that we’ll be in the low $18k range by year end. Hurrah!

#5 Christmas and insurance renewals $3,000. At this time, we’re only aiming for $2,700 because we already used $300 in July for the semi-annual car insurance renewal. Like most of our goals, this is going to be met before end of year.

—-

This year’s goals are going well, except for the e-fund. I had a very emotional discussion with my spouse about this. This fund suffers when we make decisions that are not based on our financial capacity. He’s learning to curb his spontaneity, and it’s not easy when you used to just out-of-nowhere decide to go on a trip and now he can’t. While I’m the CFO of the family, it’s not always easy dealing with the emotions that go with financial decisions. I have my contribution to this failure too, such as shopping for our boy at Boden, Tea and Hanna Anderson.

We’ve already drafted next year’s goals and laid out the monthly plan in a spreadsheet. Side note: I wish Mint had a feature to do future budgets. Anyway, we talked about the goals over this weekend and devised a more manageable budget, which provides a bit of wiggle room for spontaneous spending so we avoid carry-overs. We’re hoping this would work. Despite budgeting for so many years, we still find ourselves adjusting it and ourselves to come up with one that works.

Upcoming expense is car maintenance. I don’t know if we can make it happen by Christmas. We’re looking at ~$400 for the work we want done.

Overall, September has been a good month. We saved some, we got house painted, we paid some card balance there, we argued, I cried, we ate not-so-expensive meals cooked at home, kept our house relatively neat, spent a lot of time worrying about our kid, spent money on tutoring (another post to come maybe), and I dreaded the coming of winter.

How’s your September?


when debt is not yours

It’s difficult to shell out your money for it, right?

Warning, this post is a tad emotional. Maybe because it’s Friday.

It was difficult to motivate myself to pay more to the debt because it isn’t mine. Because I know that paying more would mean that I’d be contributing to it.

We have joint finances—our paychecks go to one checking account and everything flows out of that, i.e. bills, savings, food, etc. The debt, though, well, that was another story.

Maybe it’s easier for others to accept debt as a way of life and move forward. Maybe for others it’s not a big deal to share the load and pay more to get rid of it faster. But not me. It took me so long to commit.

It was hard to justify taking money from my salary that I earned from my no-debt education to pay for my spouse’s student debt.

My goals in life didn’t factor doing that. I had big plans to build my wealth as I got older.

But I met someone who I truly love, who had to get into debt so he could earn his degree. He didn’t have the opportunities that I had. He didn’t have parents who had the capability to pay for his education.

As a partner, do I simply accept that some years of our life together would mean putting my wealth-building goals in the back-burner to help this person who I chose to be with pay off his debt?

It took me so long to figure this out, but the answer is yes.

I’m not the kind of person who chooses to be with someone for money. And, because I don’t hurry when I’m making up my mind, it took me so long to realize that that also applies to money in the red and not just in the black.

The person I love is not irresponsible, and that in itself matters and makes a difference in my choice to be with him. Even if he was financially irresponsible, people can change. My wealth building goals in life don’t just include me, it includes him too. The wealth I want to have is a means to a life I want to share with him. Even if I have a massive amount of money, it wouldn’t be as enjoyable if not shared with him. Cheesy I know, yet it’s true.

For better or for worse, right? There’s a lot more to relationships. To be shallow about it, this debt is the worse I’ve dealt with so far in our relationship. It’s true. There’s nothing outside of this financial worse-ness that I’m dealing with. Maybe to some people, that’s really bad; but for me, there are plenty of things that could be worse.

I’m honest to say that I resented it. Part of me still resents it, the ego part. The resentment stems from the fact that my needs are not being taken care of—the wealth-building need. Boy, do I have a spoiled-brat attitude on that! You wouldn’t want to be in the vicinity of when I start rattling about that.

But the thing is, I want to stop rattling about it. I want to stop resenting it. My hope is that tackling the debt with him will help alleviate the egoistic pull of my desires and wants, at least for a while. I argued that my wealth-building goal is not entirely selfish, but ignoring my spouse’s needs in favor of my own desires is selfish.

At the end of the day, my goals in life aren’t just focused on money. I’m continuously working on being a better person in as many aspects of my life as I can. Before I go to sleep, I don’t calculate the money I saved or spent but the amount and quality of time I spent with them. There’s a whole other level of regret when I don’t do well on the latter.

My wealth-building goals will come to fruition. I mean, it’s happening right now, just not fast enough for me. I’m learning to be okay with that. When we’ve paid off the student loan, I’d be there celebrating it with him. I don’t think I’ll even consider it as a success on my part. I’d just be so happy to see a load off of my husband’s back. And a big smile radiating happiness. That’s enough.


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