In the past 8 weeks we have been hustling; hard. I’ve picked up two new side jobs — one tending bar and one doing freelance visual effects while The Wife has worked diligently turning last year’s October debacle into a pillar of savings.

In the last two months we have added four grand to our emergency fund and paid the bare minimum on our remaining debt.

By this time tomorrow we’ll know if we will need it to live on while I look for my new career or if we get to drop it on the last credit card.

Thanks for hanging with us. You’ll be the first to know.

the Dad

Update: No: 135, Yes: 87. Sigh of relief and tomorrow morning $4,000 goes right on to our last debt!!

© the Dad, Climbing Out, 2010. | 9 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. | 12 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. | 7 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

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

Not long ago I was becoming frustrated with our progress on Baby Step 2. I am painfully impatient to get out of debt. Just ask The Wife.

Yet it’s a long road. Most people who follow the plan we are doing need 18 – 24 months to become debt-free. I’m afraid we’re going to need more.

What does ole Ramsey say? “Children want it now, adults devise a plan and stick to it.”

>sigh<

Last year we gained real traction for the first time when we got our tax return. It was around $6,000 and suddenly we felt like we were really moving. Cards were cut up, accounts were closed; we were doing a total money makeover for real.

We buckled down and embraced our plan. I changed my W4 withholdings to increase our take-home pay by ( $6,000/12 ) $500 per month and we put that to use for our debt snowball.

Let me tell you: THAT IS SCARY. Well, it’s not scary in March when you do it, but it’s deathly frightening the year after; when you’re walking from your car to the CPA’s office to find out whether you owe or not.

How close did we get to having the right amount withheld for 2009?

What do you think our accountant said when the 1099s, W2s, statements, and deductions were all mashed into this year’s new and improved tax tables?

A seven thousand dollar refund. Seriously.

WHAT THE HECK IS GOING ON? I asked her to double check the numbers — twice. Nope. It was real and the return was right.

I headed off to HR the next day and upped our exemptions again. Maybe this time we’ll get closer to our goal of +/- $1,000. That’s most interest-free money I’m willing to loan the government and the most I’m willing to cough up on short notice.

In the mean time, this year we get to throw $9,000 at our debt! (NINE THOUSAND? Oh yeah, I got the first $2k from that freelance work I told you about). That takes us from 38% paid off up to 58%.

TALK ABOUT TRACTION!

You certainly cannot call it planned, but it sure is nice to have an unexpected boost. Don’t ask me how to get your exemptions right. The tax tables are obviously some kind of weird voodoo.

The real story is that we never thought about using the money for something else. Two years ago we would have bought stuff, taken a vacation, or frittered it away. Today we have no question about what to do with found money. We have our steps. We know which one we’re on.

Save Strong,
the Dad

© the Dad, Climbing Out, 2010. | 13 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

I’ve been using Gillette Fusion blades since they came out and the Mach 3s before that. Why? Because they sent me a free handle, unsolicited, when they first produced the dang things.

I think they came with one or two cartridges too. However, at $25 per refill package they had become a painful slice of the weekly budget. I was done.

A quick Google search led to a post on the Art of Manliness that gave me the guts to order a Merkur Razor for $35 and 10 blades for 25 cents each.

Twenty-five cents! Let me tell you: I haven’t looked back since.

This morning as I was shaving I realized how much a wet shave with a safety razor is like baby step 2, getting out of debt.

Compared to the old Gillette, shaving with the Merkur is harder, takes longer, and requires paying attention. Although second nature now, at first just learning to hold the thing was weird, getting the angle right to my face, getting used to the mechanics of changing the blade and working up a lather…

Like getting out of debt, it was a new way of operating. Like living on a budget, paying cash and spending less than we make.

It has another thing in common with becoming debt-free. It is worth it. Not just the cost savings (which are substantial), but the quality of shave.

Sometimes we stumble and need our emergency fund (like when I nicked my philtrum the other day), but at the end I expect everything will be…

wait for it…

smooth.

the Dad

© the Dad, Climbing Out, 2010. | 22 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