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

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

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

This whole get-out-of-debt nonsense has really screwed me up, you know that? I mean, really. When was the last time someone handed you $2,000 and you said, “no, thanks”?

Not long ago I mentioned some freelance work coming up. It’s a fun, challenging project, but one for which there has been little time lately.

It is for a dear friend and is not on a strict deadline. Nonetheless, I want to get it done sooner rather than later. I am shooting for the end of February. It should net around $3,000 toward our debt and I look forward to making that payment.

But the bulk of the work remains to be done. Like, 90% of it. So, although I have been keeping track of my hours we are in Happy Meal land on the balance sheet, you know what I’m saying?

Imagine my surprise when my friend hands me $2,000 a couple weeks ago.

“I need the expenses for 2009.”

Whoa. But, dude, I don’t borrow money.

“You’re not borrowing money, it’s for the project.”

Yeah, but it kinda feels like a loan, you know? So we put it aside it its own account where it sits untouched until the job is done. In fact, it will be the start of moving our finances to a new bank, but that’s another post that has nothing to do with this loan / pre-payment / friendship-risker.

I am trying to decide if it has taken on a weird connotation now; a strange specter of debt. I understand that it was business money that does not affect my friend in anyway, but my emotional connection to money, loans, debt and the interplay with relationships has changed so drastically that I feel a certain discomfort with the situation.

That is leading to lots of clear communication with my friend that, in the worst case, will end in me simply handing his cash back. I’m not sure I’m handling it right, but that will just make me get the project done even quicker. I wonder what you all think of it.

Plus the hole in my pocket is starting to stink.

the Dad

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

I cringed as my phone rang at work. It was a call from a colleague, Larry, who has an amazing ability to suck time and air from any situation.

“Hey, what computer is 172.168.00.55? Is it important?”

That’s the LDAP, our directory server, the most important computer in the place. Why do you ask?

“Someone left a page up in here and it’s down.”

Someone left a page up in here and it’s down. I don’t understand what that means.

“I’m in the office and there’s a screen up with a bunch of of computers on it and they all have green dots except that one, it has a red dot and says ‘not connected’.”

I’m like, you’re freaking kidding me, right. That’s like saying all the stereo equipment is working except for the CD player that’s not plugged into the wall. Nothing is really wrong, you just have to plug that one in if you want to see its status.

But the sowing of fear, uncertainty and doubt (FUD)… or Drama, is some people’s default reaction. It puts others off their footing. It creates an imaginary smoke screen. It is a practice so common place in our culture and media it amazes and almost entertains me.

The same thing can happen with our finances, both on the income and the expense side of things. I certainly have been guilty of using drama to get my way in the past:

“With the rattle in the door, the big 150,000 mile service coming up and the tire tread showing on the front, that car is falling apart! I just don’t feel safe in it anymore. We should start looking for a more reliable car.”

How many of us have been guilty of that. Fix the freaking car. Remove the drama and we’re left with a rattle that doesn’t matter, a service due anyway and two new tires. The rest is just drama; FUD.

“I would pay that debt off, but the smart thing is to hoard our money right now. Look around. The economy is failing. Unemployment is at a record high. I know a guy who got fired just last week!”

Really. And you’re sitting there with $7,000 in the bank, a $5,000 car loan and no indication at all that your job is in jeopardy. If you had a paid-for car and $2,000 in the bank would you borrow $5,000 on the car to stick in the bank? Calm down. Pay the freaking car off.

Drama justifying a fear-based decision. We are funny creatures, aren’t we?

Hanging up on the call and shaking my head, I remind myself to speak clearly and honestly without hidden agendas both at work and home. To check my motives.

Life with a plan, clear goals, working together with a loving spouse — these things are the antidote.

Spare the drama. Sow no FUD.

the Dad

© the Dad, Climbing Out, 2009. | 7 comments

This Summer we got more serious about our backyard garden than ever before. Most everything we planted actually grew too.

Peppers, tomatoes, pumpkins, cantaloupe, basil, rosemary, chives, blackberries and holy-crap-it’s-trying-to-take-over-the-world mint. That stuff sends out runners and pops up everywhere!

The best part was watching the kids experience the joy of planting, watering, watching. Seeing those first little leaves poke out of the ground. Finally eating the harvest.

For their fifth birthday we planted a few new seeds of our own. Like it or not, our kids are along for the debt-free ride. Mom and dad misbehaved with money in the past and now we all are learning a new way to live.

One of their gifts was The Super Red Racer, a story about Junior who wants to buy a new bike. Junior goes on to discover that work creates money and ends up helping at a neighboring farm.

He feeds chickens, milks cows and slops pigs and, of course, earns money toward his bike.

The kids were riveted by the story. They watch The Wife and me go to work every day and we have explained why we do, but last night I swear I saw the emotional switch connecting work to money flip in at least one pair of eyes. It was amazing.

The neatest moment came as we finished the story and closed the book. There was a moment of quiet and I started to stand up when one of the kids stopped me and said, very seriously, “Daddy, are there any farms around here?”

I burst out laughing and hugged her. It was a wonderful moment that reminded me how weighty parenthood’s responsibilities are.

We are sowing seeds in fertile ground. It’s awesome and humbling to watch them take root and start to grow.

Take my word for it, though, never plant mint in anything but a pot.

the Dad

© the Dad, Climbing Out, 2009. | 5 comments

Halloween may still be a month away, but there’s a whole lot of death going around in our home.

Not so much death-death as death-talk; as in, how big a party does The Wife get to have when I croak? Turns out, if I get walloped by a bus it’s going to be a huge one!

In my last post I talked about finally getting our wills done. Sticking with our theme, today I sent off my first life insurance premium. Now if, in the next 15 years, I wake up on the wrong side of the dirt The Wife gets at least $900,000. I say “at least” because if the aforementioned bus is involved she’ll get another $150,000 or so (spring for the open bar all night, honey).

Should I happen to be traveling for work at the time… whoo hoo, another $100,000 gets tacked on. Break out the china, it’s gonna be a rager!

The bottom line: should I take a dirt nap The Wife will now receive enough money to invest in a decent mutual fund that will pay out the same or more than my salary in perpetuity thus replacing my income. I am officially worth the same alive or dead now. Actually, I guess I’m worth more dead since I’m certainly not going to work forever should I outlast the policy.

This brings up a new perspective on our lives and finances, however. Can you hear it? The clock is now ticking. We have 15 years to get our act together and I mean really together.

Why 15 years? First, I’ll admit that it was cheaper than longer coverage. Second, in 15 years the kids will be off to college. Third, the house will long since have been paid off and we should have savings and retirement well under way.

So if I’m worm food in 16 years and the insurance policy has run out, but the house is paid for, the kids are gone and The Wife has a couple hundred thousand in the bank I’m thinking she’ll be just fine. She may not throw that party, but she could if she wanted to.

It feels good to be getting these ducks in a row. For about twenty-five bucks a month I know my family will have no financial worries. By-the-way, The Wife’s policy is on its way too; it’s equal opportunity daisy-pushin’ around here.

Nonetheless, I’m keeping an eye open for that bus.

the Dad

© the Dad, Climbing Out, 2009. | 8 comments

It was chilly this morning. Finally. After weeks over 100F we were due for a little cooling off.

I opened all the west-facing windows to tempt the cool air in while I packed lunch, made coffee and thought about a conversation The Wife and I had last night on the back porch.

Is it a business or a hobby? What’s best for our family? When is it time to say “when”? Who should we ask for guidance?

Six years ago The Wife took a leap, left a desk job and opened her own business: a fitness studio. She had a passion for the work and it showed. Clients loved coming to her and the first year was a success.

In its second year we doubled not only the studio’s size, but our family’s size as well with the birth of our children. Those two events proved pivotal for the business. The Wife cut her hours back to be home with the babies.

We had raised the overhead and reduced the most valuable part of the workforce — you see where this is going.

The economy began slowing the following year and clients began falling by the wayside. At first slowly then in droves. We had four employees at the time and I remember the first month we paid payroll with my personal credit card.

We bought our way out of the lease and scaled back to a location less than half the size of the original studio. We sold more than half the equipment, cut advertising to nothing and said goodbye to the staff.

That was 18 months ago; a full year before we started our financial makeover.

Today The Wife works when the kids are in pre-school and the studio pays its own bills. Some months she brings home $1,000, some months nothing. The “nothing” months are pretty painful. The Wife went so far as to fill out applications at Home Depot and Barnes and Noble, but balked when I asked if that was really what she thought she was put on this planet to do.

Kindergarten starts next week and adds two things to the equation: a $560/mo reduction in tuition and a 60% increase in The Wife’s available time.

That brings us to last night’s discussion:

What should we do? The Wife loves the work, but not so much the business side of entrepreneurship. She is reading Tribes and Good to Great looking for inspiration and Guerrilla Marketing is on hold at the library. I think we are both worried we are wasting time and energy on a business going the wrong way, but it seems so clear that clients love working with The Wife and she is energized by the exchange.

I encouraged her to call Dave Ramsey and ask for a dollop of his common sense. My guess is he’ll say, “It’s okay if you don’t want to own and run the place. You can always work for someone else’s studio, but a business that’s not making any money is a hobby.”

The sun peeked over the horizon as I closed the front door and enjoyed the chilly air on the way to the car. Another beautiful morning, another chance to do the thing we were put here to do.

I just wonder what that is.

the Dad

© the Dad, Climbing Out, 2009. | 6 comments

The huge spot of missing hair you chopped off with kitchen shears in kindergarten, a pimple on the end of your nose as a teenager, the dent along the side of the car in college… some days we all plod-on hoping against, but nonetheless awaiting, the inevitable: someone to notice and say it out loud.

Living like no one else, paying off debt, spending less than one makes, all of it is supposed to garner a certain amount of ridicule and contempt. Yet thus far I found it almost easy to live with a plan, cut up the cards and look forward to a day of freedom from debt.

Today I finally got made fun of!

Not just a little criticism like the first friend faux pas, but genuine, point-your-finger-and-laugh, made fun of. I was starting to think I wasn’t doing this debt-free thing right.

To be fair I should note that a percentage-we-shall-not-name of our credit card debt came from work lunches taken in the past few years. I work in the kind of business where going out to lunch everyday (and taking clients with you) is not uncommon. Many a lunch was put on a credit card with a generous tip to be enjoyed by all.

When we started our Total Money Makeover in February eating out was one of the first things verboten. The Wife and I committed to leftovers and homemade lunches which caused a little concern for me at work, but I never took any flack for it.

Until today.

Bill filled his coffee cup and walked by my table in the employee kitchen. “Nice peanut butter and jelly sandwich!” he smirked loudly and kept on walking.

If only he had looked back. A huge smile burst across my face like a badge of honor as I turned to the colleague next to me, peanut butter and jelly in-hand, and said, “Finally!”

Way better than a pimple.

the Dad

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