My cheese has been moved.

Last week things at work took a huge shift; a majority of my colleagues signed union cards and filed their intent to vote on organized representation with the National Labor Board.

I’m not going to debate the idea of union vs. non-union work here, but as a jack-of-all-trades whose position is impossible to classify, organizing is not in my favor at all. The two most likely outcomes I see are either a strict narrowing of my duties and a pay decrease of about 50% or an elimination of my position.

The entire union process, as I understand it, can take 6 weeks to several months or even years to complete should it be voted in. This means for us an undefined period of uncertainty followed by a potential large cut in pay.

The Wife and I sat and talked several times since the announcement and have decided to shift into emergency mode. Our current, and final, debt stands at $13,000 and we were on-track to pay it off by the end of the year. Instead, this month I sent in the minimum payment and put the rest (what would have been our “snowball” payment) into our savings or emergency fund.

Readers know we have a small, $1,000, emergency fund that has saved us and kept us going for nearly 18 months of this journey to become debt free. With the potential elimination of my position or reduction in pay we are going to boost that emergency fund up as high as we can until my employment is stable again.

But what is stable? And how high is high?

If the vote fails and things settle back to “normal” at work we will immediately pull everything but $1,000 out of savings again and throw it at the debt. We will have lost barely any time and will pay just a couple hundred more dollars in interest.

If, on the other hand, my career ends up changing either by taking on a new role, changing companies or starting up an entirely new venture, then “stable” may be defined as simply regular and reliable paychecks we can count on again.

The Wife is willing to take less risk than I am so she leans toward 6 months of living expenses while I am okay with 3 months. So, of course, we will compromise and do 6 months [sic]. We are in complete agreement on what to do if we hit that number and we still find ourselves in job-limbo: we will start throwing extra money at the debt again until either the debt is gone or work is stable.

I am amazed how clear it becomes when working together with your spouse with both of your priorities in-sync. It does not remove all fear from an uncertain situation, but it gives you control over the part of your world directly in front of you. “The power to change the things I can.” That alone puts the fear of change into perspective and puts logic and reason in charge instead of emotion.

What this financial plan has really created for us is a fantastic set of tools for communicating with each other and understanding each other’s needs. By focusing on our finances regularly we were able to see an on-coming train and prepare for the safety and security of our family with enough time to get through just fine.

Plus I have tremendous faith in The Wife as a woman, wife and mother, and she reciprocates that faith in me. There is no doubt at our house that something will be killed and dragged home every day.

Time to go find my cheese.

the Dad

© the Dad, Climbing Out, 2010. | 7 comments

The kids and I had such a ball the other day that I want to share it with you. Specifically with those of you who, like me, have never taken part in that great American past-time: garage sale-ing.

Like it or not, the kids are along for this ride.

The kids have been living the get-out-of-debt dream with us for almost a year and a half now. They have adapted beautifully to our family’s new financial values.

They earn their own money each week and we coach them through saving, spending and giving. Very rarely is there any drama or whining about buying something. If you don’t have the money, you can’t buy it. If mom and dad don’t have the money, they don’t buy it either.

It makes sense, of course, to make the most of the spending money we do allocate ourselves. The Wife watches for sales, we minimize the use of paper products and other disposables, and I brew my own beer, for example. But there are dozen of other ways to stretch a dollar.

I have never made the time to visit garage sales.

For some reason I’ve never had an interest in going to garage sales. We have held our own, but most of the people who show up aren’t very pleasant so it never occurs to me to go out and be one of them.

Last weekend, however, with nary a nickel in the budget the kids and I really needed to get out of the house. They had a few dollars in their spend envelopes so I threw them in the car and we headed out looking for those hand-drawn poster boards in the nice end of town.

At each stop the kids got more excited about finding fun things for nearly nothing. A doll for fifty cents, a toy for free (just because they’re so cute). The kids learned quickly the price difference between new and used.

It was also a learning experience for me. People were really pleased to see well-behaved kids with manners show up and walk around their stuff. I didn’t buy anything, nor had I intended to, but when I do get around to replacing my tools I am definitely going to check yard sales first.

Teachable moments popped up everywhere.

In addition to getting past my own disinterest in looking at other people’s used junk, I got to see some interesting sides to the kids. One wanted to buy something at every stop, the other held back until the end.

They also were forced to walk to up to strangers and talk prices as well as conduct transactions. We learned about value and quality with more than one discussion about what will last and what won’t.

At the end of the day they spent about $2.50 each. The best find? A Baskin Robbins ice cream cake maker. We got it home, washed it up and I made a standard ice cream base. The kids then flavored it and sat there hand-cranking their new toy. It worked great and we all ate the results. Hours of entertainment for 50 cents.

I encourage you who have avoided it to brave the oddballs, stick a five in your pocket and head out early one Saturday morning. The discussions and lessons we got in return were worth a lot more than that.

the Dad

mentioned in this post:

• Sowing little financial seeds at bedtime
• Our first budget and the Dad sells his testicles
• Sum sum Summertime

© the Dad, Climbing Out, 2010. | 3 comments

The Wife has taken dance classes since she was two and danced professionally into her twenties. I, on the other hand, had almost no paid hobbies growing up. With those differences, it should probably be no surprise that we need an Emergency Budget Meeting about the kids’ upcoming dance recital.

To The Wife it is expected that we budget for costumes and recital tickets and, hey, I’m cool with that. My kids rocking a stage? Awesome. It’s all the other things that are starting to freak me out; maybe I need some perspective from other parents.

It’s not just costumes and tickets, honey.

What caught me off guard at first was the video. You can’t tape your kids yourself, but you are welcome to pay for the video the studio shoots for you. I should have remembered this one, we ran into it two years ago. I don’t mind paying for quality, but listen, they pan all over the place and you’re lucky if you can spot your own kids in that mess.

Next, photos. Two 5x7s of your little dancer and a group shot. Hmm. Can’t I just pull out our point-and-shoot for free? Judging by the video policy, maybe not.

Commemorative t-shirts! What the hell? I know, I’m being a caveman here, but really? The Wife (who I hope chimes in) says this is the way the studio raises money and she’s happy to support them. My feeling is I support them every month when I pay the $35 per child tuition plus the annual sign up fee.

Lastly, dinner. The Wife totally caved on this one and agreed to come home for a nice dinner instead of taking the family out after the recital. I should probably do the cooking, I’m thinking, to make up for being a tightwad.

I wanna blow $300 too.

So there you have it. Not counting the monthly tuition to class, this recital thing is going to dent the budget by about $300 and last night’s Emergency Budget Meeting remains unfinished.

Listen, I love my kids. I adore them. Perhaps I’m just feeling surprised and beat up as line-item after line-item shows up for this thing like a mechanic calling throughout the day to tell you he found another thing wrong with the car.

The great part of an EBM is that The Wife and I can communicate about this stuff. Especially since any kind of money talk used to completely scare the poop out of her. She’s ready and willing to bring this stuff up and talk about it openly; that’s what budgeting together does for a family. Thanks, Dave Ramsey.

And the truth is, I love watching her dance.

the Dad

© the Dad, Climbing Out, 2010. | 10 comments

How the Dad ended up with a ridiculous commute.

Way back in 1996 a friend asked if I was interested in renting his house. The current renters were bailing on him and he knew I wasn’t happy with my living situation.

I was one of several roommates in a pretty small place about 20 miles from work. The thought of a whole house (with a yard!) to myself was very enticing. My own kitchen, a real garage, in a real neighborhood.

The catch? It was more than 60 miles from work.

I remember thinking how crazy that sounded, but my friend suggested I try the drive; that it wasn’t that bad. It wasn’t, or so I convinced myself, and I moved in. Not many people were making that commute and I could do it in about 50 minutes one-way.

One thing led to another and I purchased my first house. It was a few miles FURTHER out, larger, and in a nicer neighborhood. That was when The Wife and I met and got married. She moved out “to the country” with me and we commuted together as the years passed.

The only constant is change, even way out in the country.

Meanwhile more people moved out to the same suburb and the commute began changing. What once took 50 minutes was now regularly 70 to 75 minutes. Housing prices were rising and the neighborhood was changing for the worse.

We sold the house near the peak of the market (not that we knew that) and bought another shortly after the birth of our first offspring. This house is even further away. More people moved to the area and the drive to work changed again.

Today my commute takes 90 minutes each way or 3 hours per day. The new house is worth nearly $100,000 less than what we owe on it in spite of putting nearly 40% down.

And so I find myself blinking and looking around asking, “What the hell am I doing?” Three hours each day in the car is not how I envisioned my life. Not my life as a husband, as a father, creatively, nor professionally. Yet there is no clean way out of it today. Jobs closer to home pay half what my current employer does and moving does not make sense with home values so low.

It’s a situation of my own making, but created by a series of haphazard and rationalized decisions. I think this is the same type of unintentional lifestyle that led us deeply into debt, but we may just have to wait this one out.

Now that we’re here, what are our options?

Thankfully we can pay our mortgage and make financial progress in spite of my drive, but I worry at times about the opportunity cost of 3 lost hours each day. Missed opportunities in my creativity, my marriage and my parenting.

I hear about people with 5 minute commutes and I cannot even imagine what that would be like.

Getting out of debt has readjusted so many priorities in our lives and this may be the next big one to change. Thankfully when we are debt-free there will be another option to selling our house and moving closer to work: taking a lower-paying job closer to home.

Have you had success winning with your commute? Have you moved closer to work or quit a job to be closer to home?

Cheers,
the Dad

© the Dad, Climbing Out, 2010. | 9 comments

No parent wouldn’t love to replace that scoop immediately. It’s human nature. We all have been there.

We want to restore balance, make things right, put them back the way they were as quickly as possible.

Maybe Things Don’t Need to Be Restored

Focusing our lives on becoming debt-free shines a painful light on this simple aspect of our nature; it’s ridiculous to think we are entitled to our things.

I’m not saying don’t buy the kid an ice cream, I’m saying you and I are not kids. Things break, get stolen, wear out and you know what? We are not entitled to a new one!

This was an eye-opening lesson for me to re-learn lately. I’ve caught myself at times trying to make sure things are “at least where we had it”, “as good as it was”, “fair”. Have you ever had those thoughts? Once we stepped back and took a hard look at the financial poop we were floating in I realized how that sounded: petty and entitled.

How am I Supposed to React Instead?

I think the simple replacement for such emotion might be gratitude.

If I stop considering myself the owner of things, but instead as a steward, entitlement almost goes away completely, doesn’t it?

I remember driving home from the airport my senior year of high school and my dad telling me that my truck had been taken while I was gone. One day it was there, the next it was gone. Right out of our driveway.

“Wow. Well, it wasn’t my truck anyway, it was God’s. He was just letting me use it.”, was my response. Wow. Where did that guy go?

Somehow I lost sight of that belief over the last 20 years, but striving for financial peace is reminding me what the important things are. I don’t own my marriage, but I am one of its stewards and I can choose how I care for it. I certainly don’t own my children, but I will be the steward of their youth. If I approach our money the same way financial decisions become incredibly clear.

I am going to shed any feelings of entitlement and get back to being a good steward of the things entrusted to me.

By-the-way, as we pulled into the driveway that day 20 years ago my truck was indeed gone, but in its place was a brand new red sports car. I’m still not sure how my parents managed to pull that one off, but it made for a great end to high school.

What if the right attitude gets you a new scoop of ice cream every time?

the Dad

© the Dad, Climbing Out, 2010. | 5 comments

I believe our perceptions of money, debt and even contentment (i.e.: happiness) have become so healthy as The Wife and I sear the lessons of becoming debt-free into our psyches.

All of our family and friends support our goal and some have even dug in and are applying the same principles that bring us such peace. But a recent offer from very kind, loving family members highlights one of the red flags we have come to watch for.

I’m not sure I ever mentioned interest rates when I first tallied up our debts for you, but they are high. The cards run from 14% – 32%. I suppose I should write “ran” as all but the last big one are paid off.

Why I Don’t Care About Credit Card Interest Rates

There was a time when I really cared about those big interest rates, but I haven’t in a long time. When you crush your lifestyle and pay debt down interest rates just don’t matter.

Here’s a real example. One of our cards had a balance of almost $7,000 and an APR of 32%. We could have spent a lot of time worrying about such a malicious interest rate, yelling at people, surfing balances all over the place, but you know what we did instead? We paid the freaking thing off! And we did that in 12 months in our debt snowball.

32% of $7k is $2,240/year if we left the whole balance there. But we snowballed it aggressively so realistically we’re talking about 32% on an average of 50% of $7k for a total of about $1,120 in interest paid on our highest APR.

Why Borrowing Money from Family is Stupid

Now back to the well-meaning offer from family. With kind hearts we were offered a loan to pay off all our remaining debt at an interest rate of 7%. At first glance this is wonderful, right? 32% vs. 7% ? C’mon, no brainer, right?!

Wrong.

Here are the reasons we would never accept this loan (I mean, beside the fact that we will never borrow money again):

• we have learned that debt changes the relationship to the creditor
• if an income-crisis were to occur, the debt gets paid last after the necessities
• 32% is a lot more motivating that 7%
• 7% of $7k is $490. Since we paid $1,120 in interest we are only talking about $630 and that’s hardly worth our relationship with anyone let alone a dear family member

Loaning Money to Family Could Have One Benefit

I would also never consider loaning money to anyone again (that includes co-signing on a loan).

Can you imagine putting a loved-one in the position of having to choose buying food and paying their water bill over paying you? No, thank you.

What about sitting down to a holiday dinner at your debtor’s and noticing the new drapes, computer, or silverware? How would that make you feel about your loan?

The only real benefit to loaning money to anyone is to drive them away completely. I guess if there were someone I never wanted to see again I would loan them $50. That might be a cheap price to pay in some cases!

How to Get Zero Interest On All Credit Cards

The real way to no interest is to get out. Get out of debt! Run like a crazy person from those sharks.

• Decide you are done and never borrow money again.
• Live on a budget beneath your means for the rest of your life.
• Keep an emergency fund.
• Work like crazy, sell all you can, and pay everything off.

Boom. Zero interest. Every time.

We are So Grateful for the Love of our Family

It is with huge gratitude that we declined the loan. We know it came from a position of love and a desire to help, but when you break down what can happen the risk far out weighs any minor APR benefit.

Don’t ever borrow from family, guys. It just isn’t worth it. Really. And I recommend you never loan anyone you care about money either…

Unless, you know… you never want to see them again.

the Dad

© the Dad, Climbing Out, 2010. | 4 comments

Daughter A is finally agreeing to wear some other clothes besides the “zoo shirt” she’s been living in and fleecey pants. It could be the 100F+ temperatures we’ve been having, but whatever! It’s so nice to see her legs.

A Surprise Shopping Trip

So, the other day I got a $10 off coupon from Kohl’s, a local big-box department store. I decided that I would pitch in a couple of bucks and take the girls shopping and get a couple items of clothing as a treat. Something Summer-y. We spent over half an hour trying on different clothes: pajamas, dresses, shorts… I only pulled things from the clearance rack to stay in the budget I had set for myself. We finally narrowed it down to four items that would only ask about $6 from my pocket.

As we stood at the register, the girls put their items on the counter and I opened my wallet. Inside I found another Kohl’s coupon for $10 off dated June 2010. I jokingly asked the cashier if he would take that one too! He called his manager and he said YES! He rang up Daughter A’s clothes and then applied the coupon, FREE! She had picked out items that totaled less than $10. Then he rang up Daughter P’s clothes and applied the other coupon, FREE! She, too, had picked out an outfit that totaled less than $10. Holy smokes! We walked out of there with two new outfits for FREE!

People probably want to help you win.

Being on a budget and working with cash has made things easier for me at the register. Either I have the money or I don’t. Decisions are easier since there is no cushion. It is what it is. It has made me less shy about asking for help too. I have asked the cashier at the grocery store to help me put things back when I go over budget. I asked Kohl’s about an expired coupon.

You never know until you ask. Stores want to keep you coming back. Even leaving with free clothes I now have a positive experience at Kohl’s and will likely go back.

Go ahead, just ask for the deal. You never know, they might say YES!

The Wife

© The Wife, Climbing Out, 2010. | 4 comments

Okay, there’s really nothing fun about buckling down and getting out of debt. Or is there?

No, there can’t be; it’s a barren, joyless trek through sacrifice with nothing but denial and self-discipline.

Ha! Haven’t you guys seen Mary Poppins? Spoonful of sugar, baby. Our family has had loads of fun while working this debt snowball. In fact it’s forced us to find free & low-cost things to do together that we wouldn’t have sought out back when we were brain-damaged.

But this post isn’t about cheap things to do while getting out of debt. I’ve written about some of those already. It’s about one little thing that I’ve held onto and refuse to budge on until we’re debt-free.

I think The Wife is about to strangle me, but I am holding on to my broken, crippled and ugly technology until we are through this thing. In fact, I’m framing them like badges of honor.

A five year-old first generation ipod nano that was given to me for free holds the Dave Ramsey podcasts I listen to on the commute. Its face is so scratched you cannot even read the screen when the sun hits it.

A microwave with its guts hanging out, seriously. The push-buttons stopped making contact with the electronic keypad below them a year ago. I tried to repair it several times and finally realized that simply yanking the keypad out and letting it hang there was easier.

A cellphone in pieces. My poor phone was crunched a year ago and its flip-open hinges began coming apart. Over time its performance got worse and worse. The front keypad and screen failed first. Now the inner screen works one out of ten times I open it. The Wife hollers at me while watching me trying to get the thing to work, “Just budget a new phone already!”

No way.

You know why? Every time I can’t read that ipod screen, every time I grab that dangling microwave keypad, every time I want to text someone with that crap phone I am reminded of our goals.

It’s hard to forget you are deeply in debt when you can’t update your Facebook status (insert ironic, wry smile here).

I’m keeping all these busted things. They’re reminders of what we’re doing and why. They’re my iBadges of debt and I love them.

the Dad

UPDATE: A dear friend gave me an old phone from the same cell phone provider to use. The screens and keys work, but it’s old and awful… so I accept it.

© the Dad, Climbing Out, 2010. | 4 comments

We are getting debt-free and there are no ifs, ands, or buts. It makes decisions easy when you either have the money or don’t.

I go to the grocery store with cash. I let the cashier know what I have and I get her/him to buy in with me from the beginning so when the total gets close I have help making decisions about what goes back. Just today, I sold my first piece of jewelry to a local coin shop. I only got $5.50, but that went straight into my gas tank.

This summer feels rough, though. Maybe it’s like weight loss, it’s those last 5 pounds that’s the hardest right? It’s the last credit card that’s the hardest. I want what I want when I want it! I am tired of the scraping and scrimping and waiting. I want new shoes, I want to buy some new make-up, I want to send the girls to summer camp…

But, I will continue to be good. I will stay focused. I will stay in control. Because I am a big girl and I know that I will love the results. I know this is temporary. We will (hopefully) be debt-free by the end of the year and there will be some breathing room in our budget. We will fully fund our emergency fund in about 6-8 months and then, again, we will have more room.

Dear Daughter says, “When we are debt-free we can do whatever we want. Right?” Not exactly. I have learned my lesson. I am looking forward to having a slightly larger number next to “Blow Money” on the budget, but I am not gaining the weight back. I mean, going back in to debt. But, I am going to buy those shoes!

~ The Wife

© The Wife, Climbing Out, 2010. | 7 comments

This post is an example of what happens when companies put customer service last and the customer realizes there are other choices after all. Everyone who engages with customers (which pretty much means everyone) should be reading Seth Godin’s blog. That really is the sidebar to this post, but I think it’s so important I’m putting it right at the top.

I am consistently amazed by businesses that seem to go out of their way to make things more difficult for their clients. Not just slow, awkward or boring but down right more difficult.

The folks at Intuit, makers of finance software Quicken, seemed to do just that this Spring.
“We see you’ve been a longtime customer, but don’t upgrade to every new version we release; that just won’t do!”

A couple of months ago we got a notice from Quicken, the software we keep track of our finances with, that Quicken 2007 would no longer be supported. They release a new version every year or so with a $50 price tag, but we rarely see the need for new features. The version we are using works great.

In addition Quicken directly connects with our bank, Wells Fargo (we pay Wells AND Intuit a small monthly fee for this ability). Accounts are magically updated, transactions downloaded, and checks can be cut right from the software. It all works quite well and I am quite entrenched in that method of paying bills and balancing accounts.

Until now. The notice from Intuit says that although we will still be able to manually enter transactions, all online activity will be disabled until we buy Quicken 2010. There is probably a good reason, like they have undated a security encryption protocol and Quicken 2007 can’t read it, but the end result is the same: “If you want to keep the functionality you originally paid for you are going to have to pay us again.”

That was just the push we needed to bail on our big bank and its big bank fees.

So we made the plunge; one I had been putting off because it seemed too much hassle. We closed all accounts at our mega bank and opened a checking and savings account at our local credit union.

You know, it was easier than I thought.

It’s now been two pay-periods since making the switch and I love it. The credit union’s website is not as flashy and polished as the mega bank’s, but with their free bill pay service we can do everything we were able to out of Quicken.

We still have all the functionality, but none of the fees or advertisements.

Updating the check register in Quicken is now a two-step process (download the data, import into Quicken), but one I can live with. Especially considering we now aren’t paying a monthly fee to both the bank and the software maker! It probably takes an additional minute to balance the account… I can handle that.

Online bill paying is just as easy as shooting a check out of Quicken. In fact, it may be easier. I wasn’t sure I was going to like the online bill pay thing, but once I bought into the concept and really tried it for a billing cycle, I found I love it. The credit union sends emails letting me know a new bill has arrived. Then I check the budget to see when we are scheduled to make that payment and with one click I can pay it. Very nice.

One last account at the Mega-bank.

All that’s left at Wells is a Visa card. It’s our largest debt (currently about $15k) and will be the last one to be paid off. Here is where our debts stand as of this month.

So if you too are thinking about ditching your big bank and finding a local bank with a soul, I encourage you to give it a try! Get on their website and test drive their service. Go into their branch and do the same.

You may be blown away like we were and get reminded that banking and customer service can still go hand-in-hand after all.

the Dad

© the Dad, Climbing Out, 2010. | 11 comments