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

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. | 11 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

Last night I realized that with a $48k debt snowball, like a hostage situation, Stockholm syndrome eventually sets in.

We have become comfortable with our method, level of focus and debt-reduction. Yes, we have three debts left, but we are making steady progress and have a plan. Mechanically, the system has found a groove: income is earned, payments are made, debt goes down.

In a way, when you have gotten used to living on a budget and spending less than you make, you can buckle down, do the work and forget the “whys” of getting away from credit card companies.

Then they remind you.

Last night I received a statement for our largest debt. Usually I barely look at them, but the “minimum due” caught my eye right away. It has been the same for ages, but had been raised quite a bit!

“They raised our rate when I closed the account to new charges!”, I thought. Even though I specifically asked if closing the account would affect our rate at all. Paging down the statement, sure enough, our APR had gone from 16% to 23%. This is in addition to the rate increase of last October on our third largest debt.

I took a breath, grabbed the phone and waited on hold ready to uncork on whoever answered.

Of course, it wasn’t worth my time in the end. The rate increase was across the board, I was told, and had nothing to do with closing the account. There was no opt-ing out or reversing it. That’s just they way it is. Although they did offer us a personal loan at 18% instead which I declined.

My dislike for the credit industry is matched now only by my apathy for their business methodology.

Nonetheless, with our plummeting FICO score in hand (I think we’re at 680 now, via: creditkarma), I will try to get a lower interest rate personal loan from our local credit union or regional bank and move our business there.

I’m not sure it will be worth it, but as it stands now 63% of the payment to that card will go to interest this month. That change will extend our debt snowball by nearly four months and even a small fee would be worth paying to stay on track, I think.

Did I mention I applied at a Pizza joint to be a driver? Seriously. I’ll let you know how that goes.

In the mean time, thanks for the reminder, Wells Fargo. I hate you too.

the Dad

© the Dad, Climbing Out, 2010. | 12 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