Pantry Update and Dark Clouds

First, a hundred apologies for the lack of posts recently.  In addition to the usual Lack of Time, there was the fun 48-hour period earlier this week where our DSL went belly-up. 

Second, you can see from the numbers on the right that our mortgage has gone down some more (YAY!).  Just how much it's gone down depends on when the last time was you looked at it. 

Third, the past two weeks' worth of grocery updates.  Here's what we bought:

January 22:
Meijer -- $3.18 (including an "illegal" bottle of store-brand diet soda. So sue me.)
Aldi -- $11.48 (including canned corn, milk, salad, green pepper, tortilla chips for all of our Mexican meals, and granola bars for Ellen's Wednesday-morning-rush breakfasts)

January 29:
Meijer -- $5.34 (bread, bananas, yogurt)
Aldi -- $7.44 (green pepper, milk, two types of crackers for all the soup we've been having)

Grand total:  $27.44 for two weeks' worth of food.

I can also say that our freezers are looking barren, and all of our pizza-related foods (pizza rolls, frozen pizzas, etc.) are gone.  I can see the back wall of the pantry in places where I couldn't before.  We've had soup as a meal for at least 50% of our dinners the past three weeks, but Ellen comes up with such wonderful variations, that it doesn't get old.  Not sure what she'll cook up this week, but surely it'll be warm, filling, and unexpected.

Fourth, the bad news ...

You all know what a rainy day account is, right?  It's that money you have set aside so when you get that proverbial "rainy day" in your life (transmission dies, need a new furnace, or, God forbid, you lose your job), you've got some money to live on until the storm passes and the sun shines again in your life ... metaphorically speaking. 

Well, at least for Ellen and I, we're starting to see storm clouds on the horizon.  If you live in Indiana, you know our government has drastically cut funding to schools in what is quite possibly an attempt to just plain get them to fail.  In the district where we both work, they're already facing a $1.4 million deficit, and it's only going to get worse.  We know there are cuts coming, and that they'll be announced in the next couple of weeks.  What we don't know is where those cuts will come, or how deep they'll be.  There's a very real chance that one or the other of us (or both) will lose our jobs.  My wife, at least, is guaranteed employment until August because of her contract.  With me being non-certified, they can cut me at, literally, a moment's notice. 

It doesn't help that I'm the librarian and my wife is the music teacher, some of the first things to go when times are tight.

For that reason, I've temporarily stopped putting all our extra money toward the mortgage, and am now throwing it all toward our Rainy Day account, which is, thankfully, just over $5,700.  It's not a ton of money, but as we continue socking the money away, it will provide a greater and greater cushion.  Plus, if we've judged wrong and this storm blows right on past us, the money is still sitting there, just waiting to take a hefty knock out of one of our debts. 

Therein lies the problem with our plan (or a problem, however you want to look at it) -- if we put our extra money toward our debts, it's locked; we can't get it out again.  If we put it into a savings account, it's accessible, but we're still paying on our debts month in and month out.  Quite the catch-22. 

So for now, our posts will change somewhat.  We'll still post about frugality.  We'll still talk about our money-saving tips.  We'll still let you know what color the back wall of our pantry is (there's a rumor it's white, but once I can see it clearly, I'll let you know for sure).  But we'll also let you know how our rainy day account is going, and how any potential change in employment will impact our plan to be debt free within the next 38 months.  Because, while the road to being debt-free may have taken an unexpected turn, we know that the road we're on still leads inexorably to that destination, and that we will get there if we stay on the road.  It may take an extra ten or twenty months, or even longer, but our goal is the same; only the circumstances have changed.

As always, we are thrilled to have all of you along for the ride with us.  If you have any comments (or know where our school district can raise an immediate $1.4 million), please leave them below.

Memberships: Are they worth it?

Paying money to spend money.  That has always been a difficult concept for me.  Although it seems counter-intuitive, we're asked to do that on a fairly regular basis.  Here is a look at some memberships that can cost money, and how we decided whether or not it would be worth it to us.

Costco/Sam's Club - When Jason and I first got married, one of the first things we did (after the honeymoon) was borrow a guest card from his mom and check out our local Sam's club.  We actually did this as we checked out just about every local grocery store we thought we might be visiting.  We kept a notebook of items we'd probably purchase regularly, and wrote down the prices for each.  We discovered that most of what we would buy we could get much cheaper at Aldi, and Aldi doesn't charge a membership fee.  If we had 8 children, the bulk pricing might make sense for us.  Until the octuplets arrive, however, we won't be spending money on membership fees for groceries.

Netflix - If you borrow movies from your local movie rental store regularly, Netflix might make sense to you.  We're great friends with a family of five who live in a very small house.  Finding room to store DVD's doesn't make a lot of sense for them, and Netflix is a very cost-effective entertainment source.  For us, we get movies from the lbirary.  If we really love a movie, we'll ask for it on our amazon wish list, and we'll probably get it for Christmas or our birthday.

Store Discount - Our favorite bookstore charges $25/year for their discount card.  The card saves you at least 10% on most purchases, and more when they have a special going.  However, we never spend that $250/year it would take to make it worth it for us.  Again, we get most of our books at the library.  If we really want something, we can usually get it at amazon for a cheaper price, with free shipping, and we don't even have to leave the house (or pay the membership fee).

AAA - A few years ago, our little old red car (which we still have) started having trouble.  It would sometimes decide it was too cold or too tired to actually start when we needed to get somewhere.  After that happened more than once, we decided it was time to get AAA.  Between the towing service, the discounts, and the travel packages, we have definitely come out ahead on our membership fees.  Like any insurance, part of what you pay for is the ability to not worry  if something goes wrong.  For us, this fee is definitely worth it.

Library - Okay, so the library isn't exactly a place you expect to pay money.  However, it is well worth it to take advantage of this membership.  If I see or hear about a book or film I'd like to know more about, I go to my library website, find it, put it on hold, and have it delivered to my local library.  It's difficult for me to look around at the life I have now and try to find some aspect of it that hasn't been enriched by our library system in one way or another.  This is not a request.  It's a demand.  If you haven't gone in a while, GO TO THE LIBRARY.  You'll be glad you did.

To summarize, look at what you spend (or don't spend) in membership costs carefully.  Don't just consider if it "might" save you money.  Ask yourself, "Will this definitely save you money?"

Did a forget I membership worth considering?  Let us know in the comment section below.

A Quick Experiment to Try On Your Own

Sitting here and thinking about our debt (as I often do), I got to wondering about a very basic question -- how much in interest do we pay every month? 

Now, we all know about interest -- it's what gets paid for someone using someone else's money.  The bank pays you interest (though not very much) for you leaving your money with them.  But flip the interest coin over, and there's you, paying someone else (the mortgage company, the government, the credit card company) to use their money.  Odds are you're paying much more out in interest than you're ever receiving.

But how much in interest, exactly, are you paying out every month?  We all look at our "minimum monthly payment" or the total amount we pay, but rarely do we take the time to compute how much of that total amount is being paid just for the privilege of having borrowed someone else's money.

So, I decided to figure it out for us, looking at how much we've paid here in January 2010 because we were too impatient to save for some large expenses (because, let's face it, if we have the ability to pay off these debts, then instead, we could have waited and saved the money to pay cash in the first place -- we just didn't want to take the time to do so).

First is the mortgage.  Going to the website (a great thing to do on a regular basis, just to keep tabs on things), I see that for our last regular mortgage payment on January 1, we paid $487.65 in interest.  Now, if you consider that, as I write this, the balance is still somewhere north of $98,000, that's not a great amount, but if you look at that in every-day run-of-the-mill numbers, that's kind of scary.  (What would your significant other/parent/sibling/friend say if they knew you went out and dropped almost $500 on something which vanished as soon as you paid for it?)

Now, the student loan.  Thankfully, since the balance is lower (just a hair over $22,000), and the rate is lower, the interest paid is much less -- only $66.55.  Still not great, but the amount of a really nice (at least for us) restaurant meal and movie ... but without the full stomach and feeling of satisfaction.

So, grand total we're paying in interest every month?  $554.20. 

Your turn.  Go on and figure this out, exactly -- no guessing or assuming.  Be honest with yourself -- you deserve that much.  Go on, do your calculations.  I'll wait ...

Good.  Now that you've done that, it's time for the painful step -- put it into terms you can understand.

I just got my paycheck from church for being music director, and after taxes (and all those fun government fees) and other deductions, I got $557.55.  What does that mean?  It means that for the first two weeks of this year, I kept our church's music ministries alive, attended meetings, worked with soloists and groups, networked, tried to recruit people to the choir, selected music, practiced, performed -- and ended up with only $3.35.  Nearly one whole paycheck went just to interest!  It's even worse if I had chosen to use my paycheck from being a school librarian -- the interest would have swallowed one of those checks whole and still been hungry!

This then, my friends, is why my wife and I are so very anxious to get out of debt.  Right now, I'm spending twenty-four weeks of the year working one of my jobs, just to pay the interest on our loans; I have to work even longer to pay the actual required payment with principal and interest (just over 34 weeks).  This journey then is not just about money -- it's about freedom: the loans disappear, and so does this form of monetary bondage.

I urge you to try this for yourself, and then if you're so inclined, share your results with us in the comments section. 

The Great Pantry Experiment, day 15

Fifteen days in, and we just finished off our second of three meals of pumpkin pancakes.  This experiment has given us some very interesting new meals, and there's still plenty of food in the pantry and freezer.  We made another stop at the grocery tonight and got the following:

4 avocados  -- $4.00
1 bag of carrots -- $1.00
2 bags of salad -- $2.00
1 bag of potatoes -- $1.00
2 loaves of bread -- $2.00
1 bag of flour -- $1.74
1 bag of soup crackers -- $0.00

Total -- $11.74
Experiment total -- $22.57

Well, they were having a special -- 10 items for $10, and get the 11th item free, so we took the crackers free since we've got some soup meals coming up.  We also got a few other non-grocery items (trash bags, deodorant, face lotion, and wet wipes for wiping down the cats' litter box).  With the purchase tonight, we won't have to buy fruit, yogurt, or bread until February.  It would have been nice to have that total be a little lower, but it still is far less than we usually would have spent on groceries in this same amount of time.

Also on the good news front, you can see that our debt amount dropped by around $500 or so between both the mortgage and student loans.  There's another $210 which is wending its way through cyberspace to attack the mortgage, and another $556 or so will be following first thing next week.  Chipping away at these loans in these small couple-hundred-dollar increments can sometimes make it feel like the loans will never go away completely, but deep down I know that this is the right way to get it done.  I'm just anticipating the day when I can triumphantly announce here that we've payed off our first $5,000, our first $10,000.

So, for now, we'll celebrate passing the $3,300-paid-off mark, and look forward to more milestones in the near future.  Anyone out there have some milestone, some accomplishment they want to share?  By all means, post it in the comments section below and let us all share in your happiness! 

How to Pay Off $125,000

One of our friends who follows the blog asked us a question today:

I divided the amount of debt you have by 40 months, and figure you have to retire about $3100 each month if you were to do it evenly. You're almost two months into your project, so I thought you'd have almost $6000 gone by now, but you have a different approach. How exactly is your plan working, like I wonder if you're going to be getting rid of huge chunks of debt in a couple of months?

Excellent question.  I'll do the best I can to answer, and hope it will satisfy.

First, let me address the questions a little bit.  First, we're not quite two months into our little (large) "experiment" -- we're actually 47 days, so if, as you say, we ought to be paying off $3100 each month to do it evenly, we should only have about $4900 paid off.  Granted, we're still behind by that reckoning, but not as bad as we could be. 

Second, the past couple of weeks have been a low time for our income.  Most of the extra money we're putting toward the mortgage comes from my income -- private lessons, hours working in the school library, and being music director at church.  For the weeks before and after Christmas, I taught no lessons, so there was no money coming in.  Ditto my hours at school. 

Third (actually part of "second", but I'll put it separately), our income is not consistent, and therefore, we won't be paying off the loans "evenly".  Parts of our income are very consistent -- my wife's paycheck from school, my paycheck from church.  Those monies primarily take care of our regular monthly expenses.  It's the inconsistent monies -- my private lessons, hours at school, royalty checks from my compositions, and other random monies which always seem to just appear when we least expect them -- which will be doing the lion's share of paying off the debt.  The timing of these monies determines when and how much gets paid off.  For example, I'm expecting a royalty check before the end of the month, which will (hopefully) let us take another thousand or so off the loans. 

Fourth, as we pay down more of the principal on both loans, more of the regular monthly payment will go toward paying off even more principal instead of paying more interest.  That means that as we near the finish line, the principal should be decreasing ever faster.

Fifth -- and this is the biggie -- a large part of this is going on faith.  The numbers all look good in my spreadsheets, but spreadsheets aren't real life.  I can attempt to account for any unforeseen expenses which might arrive, but life has a way of throwing a wrench into things.  By the same token, I can't account for any unforeseen income which may appear out of nowhere.  I wouldn't put much faith in such things if I hadn't seen them happen to us over and over.  The very nice income I get for being music director at church appeared completely out of nowhere just over a year ago.  New piano students come on board all the time.  My royalty checks for my composing usually manage to exceed my expectations.  In short -- while the spreadsheets say it will all happen, that's no guarantee, so we're still going on faith that it all will work out.

Now, I'm always looking for ways to improve my plan, so if you see any gaping holes or potential problems -- or even things you agree with wholeheartedly -- please let me know in the comments section.

Want to save money? Just ask!

It's amazing, but true. God helps those who help themselves. Here are some real examples of how we've saved money by simply asking.

Lower Interest Rates - When my grandparents were still alive, I would sometimes help them with their finances. They didn't really understand how credit card debt worked, and they were really being taking advantage of by the size of their interest rates. So, in one phone call, I was able to drop their rates by 4%. That might not seem like much, but it really added up over time.

Waive Late Fees - During our marriage, Jason and I have been late with one credit card payment. Since we have a good history with the company, I simply called and asked to see if we could skip the $25 fee for our mistake. The call representative didn't even need to ask her manager. In less than 5 minutes, the fee was gone. If you try this, and get a no, try asking for a supervisor.

Lower Your Monthly Costs - A few years ago, I got a glimpse of our telephone/DSL bill, and I was shocked how high the cost was. For DSL alone, we were paying $49.99/month. I called the company to see why it was so high. They said we could get the same services for the following year for $19.99/month for the year and $29.99 for the next two years if we agreed to stay with them during that time. That was our plan anyway, so it was a really easy way to save $840.

Negotiate Lower Service Fees - When it came time for our fuel pump to have a check-up before winter, I really wanted to go with the company who installed it without paying the fee they wanted to charge. So I called a couple of competitors to see who had a better rate. I found one willing to charge $30 less. I called my favorite company back, and they were happy to match the competitor's price. I've even had companies honor coupons from the yellow pages from other companies in order to get my business.

In each of these cases, we saved money for things we would have purchased anyway by simply asking. How have you asked for a savings? Let us know in the comment section below!

The Great Pantry Experiment -- Day 10

We're 10 days into our Pantry Experiment (see the original post for details), and we've made our first trip to the grocery store.  Here are the groceries we bought:

One gallon of milk -- $1.99
Two green peppers -- $1.69
One bag o' salad -- $0.99
A bunch o' bananas -- $1.36
A dozen yogurts -- $4.80

Total -- $10.83

Now, to be fair, we did also buy two big bags o' cat litter, but as we don't eat cat litter, and the alternative is to have cat excrement scattered about our house, we won't count it here.

We now actually have enough fruit in the house to last us for the next two weeks, and enough yogurts to last us until the end of January.  I can't say that our pantry is any noticeably emptier, but there are spots here and there where I can see shelving I hadn't seen in a while. 

One of the unexpected byproducts of this experiment is how much faster our shopping went on Friday night.  My wife and I are usually very fast shoppers anyway, but this shopping trip (the milk, peppers, and salad from Aldi, the rest from Meijer) was especially fast.  Why?  We found ourselves bypassing ... well, everything, all because we knew it wasn't on the "approved" list of things to buy.  On any normal shopping trip, we'd wander the aisles, looking for good deals and loss leaders, either for eating in the coming week, or else to stock up.  Knowing that we weren't doing any of that -- weren't, in fact, buying anything except one of the Approved Items -- meant we went in, went straight to the areas we needed to visit, then paid and left.  No dalliances in the frozen food aisles, no visiting the canned soups or rice packets in case they might be on sale -- just in and out. 

We're also finding some really good and interesting recipes because we're tossing together a little of whatever we have on hand.  Tonight we're taking a tub of frozen chili and adding ... well, I'm not sure what my wife is adding to it, but it will bulk up the chili, and let it last for two or three days instead of just one.  Meanwhile, we're taking that money we would have otherwise spent on groceries and attacking our mortgage (another $428 or so going against it this week), which is what this whole 40-month experiment is all about.

Anyone else taking the Pantry Challenge?  If so, share your experiences in the comments section.

How Much Is Too Much?

As I look at the numbers on the right of this blog, as I see the red one going ever lower and the green one creeping higher, I find myself more and more obsessed with them, and specifically with making the red one disappear entirely.  I find myself looking for more and more ways to throw extra money -- any extra money -- toward the loans: a dollar here, ten there, anything I can find.  As part of that, I find myself looking for other ways to earn extra money, all in the name of ridding us of these loans as soon as possible.

There are times, however, when I start to worry that I'm becoming too obsessed with it.  Right now, I work 25 hours a week as a school librarian; several hours of practice, rehearsals, and services for church; 6 hours of private piano lessons; and the hours I spend composing and arranging music.  All of these things bring in money, but I'm already at or past 40 hours on the week.  Despite that, there are many times where I think about taking on more work -- probably more private piano students -- to bring in more money, but that would be at the detriment of one of the other parts of my work.  Even if I could add in extra students and keep all my other jobs intact, those lessons would cut into the time I spend with my wife and cats, or with my family, or reading and relaxing, or ... well, you get the idea. 

So where is the balance?  How do you know when to say when?  Dave Ramsey in his Total Money Makeover says "live like no one else so one day you can live like no one else."  I know that paying off this debt will require hard work and sacrifice, but how much is too much?  Where is the line between working to pay off the debt and having no life outside of work?  Is it really worth an extra $50 a week to lose out on a couple of hours with my wife? 

These are the questions behind the money.  The numbers all look great on paper, but when you put them in the real world, you discover that two plus two may not really equal four, or it may equal four (with some reservations).  Maybe just the fact that I'm aware the potential problem exists will make it less likely I'll work too hard and forget to live my life.

Where do you draw the line between debt reduction and still having a life?  Put your thoughts in the comments section below. 

Frugal Staples

Keeping a well stocked pantry can be a huge asset in lowering your grocery bill. These pantry items are not only inexpensive, but they are healthy and easy to prepare.

Beans - Beans go with almost any cuisine and add bulk, protein, and flavor to your foods at a very low cost. We purchase ours at Aldi for $.59 a can. Specifically, black beans are an excellent source of fiber, iron, magnesium, phosphorus, and folate.

Oatmeal - Speaking of fiber, we have all heard how oatmeal can improve your cholesterol levels and your overall health. It's an excellent way to start a day and can make for a very satisfying snack. Avoid purchasing expensive and sugary envelopes. Purchase the large containers of oatmeal. Just add twice as much water as oatmeal and microwave until cooked to the desired texture. Add a handful of fruit, top with yogurt, or leftover crunchies such as cereal to make an excellent meal.

Peanut butter - We wait until they sell jars for a buck and buy like crazy. It has a very long shelf-life, is ready to eat in a moment, and is an excellent source of protein. It can be used in deserts, sandwiches, and even savory dishes. Using peanut butter instead of oil when preparing chicken tastes excellent with a little curry powder.

What other healthy, easy, and inexpensive foods are lurking in your pantry? Let us know in the comment section below.

Motivation

As I write this, it's Sunday evening, and that minute hand just keeps marching on around the clock.  In just about two hours, we'll have to go to bed and get up tomorrow to go to school.  After having the past two weeks off for Christmas vacation, 6:00 comes early.  Very early.

Now, don't get me wrong -- both my wife and I love our jobs, but however much we enjoy teaching children, it's hard to keep that in mind when the alarm is going off and the sun is nowhere to be seen.  By the same token, it's difficult to think about going off to earn money when all that we want to do is crawl further under the sheets and stay warm. 

So what gets us up and out the door in the morning?  Well, I suppose it's the knowledge that if we don't go, we'll get fired.  But it's also the knowledge of why we're working so hard to earn that money in the first place.  We have our goal in sight -- $120,000 in debt reduction.  Just knowing that every dollar we earn gets us closer to our goal of being debt free helps us get up in the cold and dark of a winter's morn and brave the rush hour traffic.

Motivation comes in many forms, and at least for now, this goal is ours.  What motivates you to go out and earn your daily dollar?  Share your motivations in the comments section below.

Penny Wise, Pound Foolish

There are a lot of clichés with no merit in reality. The adage “Penny-wise, pound-foolish,” is not one of them. A lot of my advice saves the sorts of pennies that turn into big bucks over time. However, there are some places in your life that saving is not really worth it.

Nutrition – You can definitely save a lot of money on groceries if you eat nothing but beans, rice, and occasionally ramen. However, it’s not a smart way to save money. You’ll spend more on medical bills when you develop rickets or scurvy than you ever could save. Plus, if you don’t give your body what it needs daily, your quality of life will diminish. When you don’t feel your best, you’re much more likely to splurge in other areas of your life to compensate.

Travel – For years, my husband and I dreamed of traveling to Hawaii. We kept putting it off for more practical (i.e. boring) goals. Finally, we decided the time would never be perfect, so this past July we went for it. We were wrong -- the time could be perfect. Those seven days were probably the best seven of our lives. We could have saved thousands of dollars by staying home, but that money was better invested in our happiness that it could have been in debt reduction.

Education – Whether going for your doctorate or going for your GED, the cost in time and money to further your education can be considerable. This is another area in your life where the money isn’t spent, but rather invested. The intangible benefits for your mind and spirit, coupled with the very tangible benefits in your career, make this a better use of your money than debt reduction. Besides, if you learn more about what you truly love, you almost always make money from it that you never expected.

What else in our lives takes precedence over debt reduction? Let us know in the comments section!