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. | 8 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

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

I was the kind of kid who got horribly homesick. I have no idea why, but I remember it being terrifying to spend the night away from home. Maybe it was because we moved so much when I was young (15 times by the time I was twelve), or perhaps I was just a mommy’s boy, or I might have just been normal.

I must have been eight or nine years-old when The Tutu first sent me away to Summer camp for a week. What a mess. I must have written letters home every day.

She would encourage me to engage in all the activities and make friends, but it took time.

“When you stop writing I will know you’re finally enjoying yourself”, she said.

She was right and the letters eventually stopped.

So never fear if things have been a little quiet around here, dear readers. Updates are in the works and things are good. I actually have 5 posts in various states of completion, but am working so much I’ve been too pooped to finish any of them.

This morning in the shower I remembered that quote from The Tutu and thought it explained things nicely and wanted to share it with you.

More soon,
the Dad

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

Wow — already?!

I can hardly believe it has been a year since we started on the road to financial peace. First, a thank you to all of you who follow our journey and offer encouragement. To those of you doing it with us, HIGH FIVE!

So how are we doing? It’s been 12 months since we started this journey and this blog.

For 12 months we have

• Lived on less than we make
• Maintained a small emergency fund
• Operated our finances on a budget
• Borrowed NOTHING
• Paid down our debt

Looking at our debt chart we have paid down about 38% of our total debt or around $18,000. If you’ve been following us for a while you know that’s around 20% shy of where I wanted us to be. Nonetheless, we are on our way to debt freedom.

I have some observations after a year of following Dave Ramsey’s advice; some surprise me.

• Making a budget every month has become easy, but still takes about the same amount of time.
  I mean, it’s downright SIMPLE now. The mechanics of filling out the line items, adding in the unusual things for the month, chatting about it, and printing the final budget to hang on the fridge are second nature. Still, it takes about an hour each month.
• Emergency budget committee meetings still happen almost every month.
  This one surprises me and maybe it’s because we’re getting complacent, but nearly every month we have to get together at least once to cover a screw-up or unexpected event.
• Homemade bread is awesome.
  The Wife is out of control in the kitchen. Homemade meals every day. Homemade bread, yogurt and granola. She even made our own almond milk.
• Kids’ commissions need their own line item and can really add up.
  Okay, listen to me. Don’t underestimate this one. It’s all great teaching the kids to be Dave Ramsey fanatics like us, but those commission payments can get pricey! Budget them in.
• It gets BORING.
  Seriously. The months when we can send two thousand dollars to our debt are awesome, but when it’s only three or four hundred for a couple months in a row I start to lose interest (pun not intended).

This year I am down right antsy. Antsy, I say! I want out and I want out now. The freelance work I picked up recently is in high gear and should be done in about two weeks. The pizza delivery work is surprisingly hard to come by, but applications are in. The kids start full-time school in the Fall and The Wife should be able to double her hours.

It’s a marathon, you say? Not a sprint? Well, staying the course for the long haul is really… long! Nonetheless, it’s the only option. Getting out of debt ain’t easy. It’s just worth it.

Or so I hear.

Thanks again for sticking with us, everyone.
the Dad

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

If it were tangible, is this what momentum would feel like? In my soul 2010 already tastes like a great year.

It’s hard to put my finger on why, but after starting 2009 at the bottom and watching our lives turn around, 2010 seems to stretch ahead of us full of promise and I’m excited.

This year I want to connect with The Wife even more, be a better friend and colleague, and pay off debt. Those are quite general goals, but the specifics are posts unto themselves. Instead of elaborating, I want to pass on some of my inspiration.

Today I share with you three blog posts that helped get me in the mood to embrace this year.

Don’t be an intolerant doofus

First, from One Writer’s World: A New Year, A New Goal.

This really hit home with me as I found myself becoming less and less tolerant of others instead of more accepting. Less tolerant of stupidity which really is just another way of saying less tolerant of people who do not think and act the way I believe is right — or, don’t think and act like me.

I have made a conscious effort to allow myself to enjoy people’s views, statements and differences. It has already made me not only happier, but a better friend, colleague and, perhaps, person.

Go to bed with your wife even if it’s ridiculously early

Rachel at Small Notebook hit home with something I’ve been struggling with since getting married: How a Night Owl Became an Early Bird and Liked It.

That is SO me. The Wife has, more than once, berated me for not coming to bed with her for days or weeks while I stay up late working or, more often than not, working until 9:30 then needing to “wind down” with a 2-hour long movie.

Most recently she told me she wanted a husband, not a roommate. Needless to say, I took Rachel’s post to heart. It will be a tough (and some weeks, impossible) change, but I’ve had roommates before and never really liked ‘em. Plus, The Wife is really hot.

Debt is dumber than ever

Lastly I thoroughly enjoyed How Debt Fools People from Phillip Brewer.

I love his excellent succinct treatise which, at its core, speaks to the opportunity cost of taking on debt and the danger of not calculating risk when lured by a low monthly payment.

So today I am energized and excited. I feel like we spent 2009 pushing back on a huge boulder that is now rolling in earnest. It is moving with a force that is bumping into other aspects of our lives and its momentum is infectious.

Cheers, 2010, you don’t scare me. In fact I couldn’t be happier to meet you.

the Dad

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

Isn’t it interesting how we attach significance to some numbers? Turning 40 is over the hill. $99 is a much better deal than $100. 5 miles over the speed limit is okay.

As this decade ends today I find myself weighed down with the importance of looking back ten years at where I was, what I did and, maybe more importantly, what I didn’t know.

Certainly nothing makes this ten year span more important than any other, but what the heck. Let’s just decide to attach significance to it anyway, shall we?

Ten years ago I

• just bought my first house. 4br, 3b, 1,800ft2, $129,000
• had known The Wife for 8 months
• smoked
• had never heard of intra-uterine insemination
• had about $2,000 in consumer debt
• worked in the exact same building & job, but the company name was different
• weighed 30 pounds less
• had just brewed my first batch of beer – it was awful
• hosted a New Year’s party at my new house with friends I will not see tonight. Most because they moved away, some because we are no longer friends.
• drove a paid-for pickup with 60k miles
• wish I had heard of Dave Ramsey

Kind of interesting to look back.

What were you like 10 years ago?

the Dad

© the Dad, Climbing Out, 2009. | 10 comments

Oh. My. God.

After ten months (TEN MONTHS!) of financial responsibility… no, financial PERFECTION, today I screwed the pooch.

Actually, I screwed the pooch more than a week ago when I ignored our budget and decided things were going even better than I thought they were… and gave away the farm.

October was a rollercoaster of events and by the time November rolled around I was really ready for a calm month and a nice fat snowball payment. No little extras popped up and The Wife even brought home a fatter check that we had budgeted for.

So when the end of the month rolled around and I prepared to make our snowball payment, I found more than expected in our checking account.

“Well, of course, it was a pretty good month, wasn’t it!”

So I sent nearly the whole thing off to our debt. Um. Enthusiastic, yes. Smart? Well, I left no buffer in our account and today we paid dearly for that.

Seven, count ‘em seven, items posted to our account before today’s paycheck went through. Seven overdrafts. Seven overdraft fees.

Overdraft fees.

We haven’t seen those in nearly a year. Had I stuck to our original snowball amount we would have been fine. What does Dave Ramsey say? “Children do what feels good. Adults devise a plan and stick to it.”

I went with my emotion, my excitement in paying off debt, instead of analyzing a situation that had obviously changed. For that we are paying dearly. Overdrafts at Wells Fargo go for $35 each.

The Wife was brave enough to go to the bank, apologize for her idiot husband and get them to reverse some of the overdraft fees, but not all. What a trooper.

There are some fundamental questions this debacle raises. Where was the communication between The Wife and the Dad? Why had the extra money not been addressed together in a budget committee meeting? Were the seven items this morning expected and if not, why not?

We will sit down together this weekend, hold hands and answer those questions, shore up our financial defenses and I will keep my debt-paying in-check. Seeing a negative balance, a negative balance, in our checking account today triggers a visceral response that nearly brings me to tears.

Today, I stand before you a humbled man. There is always tomorrow. Another month. Another budget. Another chance to get it right.

the Dad

© the Dad, Climbing Out, 2009. | 12 comments

I have tried to find the tone for this post for a week now, but have to admit it is hard to land squarely on the side of happiness or condemnation.

You know how some things just make you cock your head to the side in a gooey blend of disbelief, empathy and mild-confusion? Not in a superior manner — instead, you want to be happy for someone, but can’t see around the enormous elephant in the room.

Friends of ours are in a similar, though slightly-closer-to-shore, financial boat. They have about $10,000 of debt and drank the Dave Ramsey cool-aid along with us last Spring. They didn’t hit as hard a bottom as we did, though, and their progress has been fairly spotty. Well, just different from ours.

Nonetheless, they seem to be enjoying the improved communication and peace that comes from doing a written budget. They are in their third month of Financial Peace University.

My head-cocking moment came a week ago when the husband sent me a text message with a picture of a brand-new $1,200 iMac. I’m like, whaaat?

The computer they had at home had been “acting up” and all their stuff was on it and they needed to get to their budgeting spreadsheets and it had just become unusable…

They “needed to get to their budget…”

“No biggie, we didn’t finance it, we just used the money from our upcoming garage sale plus pulled some from our $1,000 emergency fund.”

Head-cock.

“This thing is amazing! It’s the first state-of-the-art computer I’ve ever owned, you know, I’ve always had hand-me-downs and pieced together machines. It’s nice to have something new.”

Nod. Nod.

“Anyway, we’ll fill the emergency fund up with the money from the garage sale and we really had to do this.”

Never has it been so clear to me that personal finance is really personal. These friends have a set of priorities and values and it would be ridiculous for me to judge them.

Still, I know we would not feel comfortable making the move they made, but the more I think about it the more I realize “this” is our finances and “that” is theirs. It seems bizarre that we are ingesting the same material and message and have reached different conclusions. Maybe we haven’t reached different conclusions, just different priorities.

Or maybe it’s a healthy dose of fear, uncertainty and doubt put to good use to get a new toy.

Either way they had their garage sale last weekend and we took a few things over to sell as well. I think they took in about $600 and I’m happy for them.

I’m grateful for The Wife and our focus. I don’t need to understand anyone else’s.

the Dad

© the Dad, Climbing Out, 2009. | 10 comments

We’re not going to make it.

The wife and I have been running the numbers and talking it over for about a month and we realize that unless we take extreme measures or a financial windfall drops in our laps, we are not going to make our goal of Debt-freedom by our tenth anniversary next October.

Like accepting Darth Vader is Luke’s father, it’s demoralizing and takes the wind out of my sails, folks.

”A goal is a dream with a deadline.” said Napoleon Hill and I gotta be honest, unless The Wife and I can drum up another grand each month, we ain’t gonna make ours.

Can you hear that? The deflating of my spirit? You see, math can be downright fun, gosh darn it, when the stuff to the right of the equal sign fits what we want! Today the numbers look like this:

• Remaining debt: $32,400
• Remaining time: 12 months

---

• Payment per month: $2,700

Currently we are sending about $2,000 toward debt each month. Those of you who have been reading Climbing Out for a while know how we got here and that cutting another $700 out of the budget is unlikely… so that leaves the income to work on.

Can we generate another $700 each month to reach an arbitrary, albeit emotionally important, goal like next October? Or is it unrealistic?

I’m not sure. Some days I think we can conquer the world and others I’m simply grateful for how far we’ve come.

One thing I know: I. Am. Tired. Sundays have truly become a day-of-rest at the Climbing Out household. I think the kids are as ready as we are to just throttle back and relax after watching Mom and Dad kicking it all week. I am full time with a commute that pushes three hours. The Wife works 6 days each week part time and wrangles the crumb-snatchers the rest of the time. Understandably, not much gas left in her tank after that.

So where does that leave us? I have some freelance work I am doing that will help to the tune of about $3,000, but am finding it hard to make time for it. Other than that I think we may have to accept a new time-line. Debt-free in May 2011 seems more likely than October 2010.

Getting out of debt isn’t easy, it’s just worth it.

I believe that. We’ll keep going. We’ve done it the other way and it sucks.

At least Darth turned out to be a good guy in the end.

the Dad

© the Dad, Climbing Out, 2009. | 14 comments