Our (Sobered) Renovation Plan

In transition from dining room to office.

  • DH = Dear Husband
  • DD2 = Dear Second Daughter
  • DD1 = Dear First Daughter

Four months ago, I wrote a post about the renovations we have planned to take on. DH’s home business office has long been too small for him, and an overflow of equipment and boxes has gradually spilled over into other parts of the house. So the plan is to move his office into the larger living room and dining room space, create a small living room out of his current office, and to have a combined dining room/sitting area in what is now the family room. The project will involve selling and giving away a lot of old, worn, big furniture; buying some new, smaller furniture; installing a new floor; and purchasing things like lighting, shelving, cupboards, and blinds as well as the nuts and bolts to install them. Some of it will count as a business expense, but most won’t.

Embarrassing post (but not too embarrassing)

I’m a little embarrassed by that post I wrote four months ago. After three years of intense debt-repayment, my long dormant inner shopaholic woke up, and our discussions and plans for new flooring and furniture released pent up waves of endorphin rush. “It was SO LOVELY to be able to think, talk, and plan in this way!” I wrote. “I was high on visions of tile, hardwood, and leather furniture. I don’t even care how shallow that sounds!” I’m not too embarrassed though. It was an honest snapshot of where I was at, and that’s what this blog is all about. Not how we should be thinking, feeling, and acting – but about how we actually do think, feel, and act as we navigate our way out of debt.

From renovation high to sober calculation

Over the past four months, some new realities have sobered our renovation high. For one thing, we have committed to taking on the expenses of DD2’s room and board for the next two years as she studies and trains at her university downtown. For another, there is still the possibility of a loss of income due to union action at my work. So our approach to our renovations has become more practical and calculated.

  • Instead of installing two new floors, we’re going to install one – in what will be the new dining room. The new living room? We’ll have our old carpet cleaned and keep on using it. That’s about $500 not spent.
  • Instead of having the new dining room floor installed by a contractor – something that we thought would be wise to do because DH’s business has been so busy – we’re going to devote two week-ends to DH installing it himself. That’s about $1,250 not spent.
  • Instead of buying a sectional leather sofa for the new living room, we’re going to buy a fabric sectional that can be pulled out into a bed. That’s about $750 not spent.
  • Instead of doing everything at once, we’re going to take things on in stages. That will prolong the doses of chaos that come with renovations, but it will also take away the rush factor. I find in general that when things are rushed, they cost more.

So there’s at least $2,500 that we are not prepared to spend anymore. And that, my friends, is what sobriety in renovation planning can do for you.

Good-bye, Piano

“I can’t start to move my office until we sell the piano,” DH said about a month ago – just before we put it up on Kijiji. It was a reality that pulled at my heart strings, but I recognized that we wouldn’t have room for the piano with the changes we’re making. And nobody has played it on a regular basis for years. I have always harboured a romanticized ideal of piano playing, and I put each of our daughters through lessons – a form of torture for them – until each one quit. DD1 had a renewed interest in her early twenties, but she lives on the west coast now. I would love to take up the piano again (I took lessons as a child), but I can’t see having time for it until I’m able to retire. We’ll miss the piano at Christmas time, when someone in the extended family traditionally plays carols and we all sing . . . But I realize that it doesn’t make sense to keep it for a once-a-year tradition.  Two days ago, it was moved out to another home in the neighbourhood. “We’ll get another one some day,” DH said. I’m going to hold him to that.

tphoto_2_2

Let the renovations begin!

And so, it has started. Yesterday, we carried the dining room table and chairs to their new place in what is now a gong show of a family room in transition. DH removed the hanging dining room lamp (which would have been a head-bump waiting to happen if he’d left it there for any time) and installed a flat office light fixture. He has set up a work station where the piano was in the living room. Excess stuff – some to be sold at a garage sale, some to be given away, some to be sold on Kijiji – is filling up DD2’s old room and will soon fill up the garage too. I have picked a garage sale date of mid-September, and two of my friends from church are going to haul their excess stuff over too, so we’ll make an event of it. I’m going to see if my neighbours would like to make it a whole street garage sale.

It feels great to be getting this thing going. For months, our house has endured what to me seems like the restless agitation of late pregnancy. Now there is movement, and the promise that every piece of furniture, every bit of business equipment, and every box will find its proper place. There will be the relief of purging excess. There will be a welcome fresh start. Our frugal, practical calculations don’t dull the anticipation of change. It’s time to deliver!


Have you ever had to part with something that had an idealized value for you? Have you ever renovated frugally? Your comments are welcome.

 

 

Decision to Take on A Significant Expense While on Journey out of Debt

The infamous bride doll. A symbol to keep or sell? 

  • DD2 = Dear Second Daughter
  • DH = Dear Husband
  • DD3 = Dear Third Daughter

Over the last two months, I’ve referred a few times to a significant new expense that we would soon be taking on. I clearly didn’t want to give the details about it though, and I’d follow up the reference with a coy “more on that later”. Well, “later” has come.

DD2 is going to start living with 3 housemates in a rented apartment downtown. She’s moving out today. DH and I are going to pay for her rent, utilities, and food. I hear a stern frugal voice asking, “What are you doing THAT for? How does that make sense when you’ve still got six figures in mortgage debt to pay off?”

I’ll answer that voice. (Is it yours? Or is it mine?)

Suburban commuting blues

We live in a west-of-city suburb that is a significant distance (about 30 km – 18.5 miles) from the downtown area where DD2’s university is located. Buses from here to there are not bad, but DD2 has more than her studies going on. She’s a varsity athlete, and her training schedule is intense. It requires her to get to facilities in an east-of-city suburb and in the south-east end of the city. In the winter, when snow storms slow traffic down, it can take her as long as two hours for a one-way trip to her training.

She has wanted to live downtown since she finished high school 3 years ago. But at that time, we were still new to our journey out of debt, and she was, frankly, a disaster with money. She would have to stay home and stick out the hours of commuting by bus. There would be stress for her and for the household as a result, but we’ve done it.

Our changing financial landscape

Fast forward to today, and the landscape has changed. In June, we reached an amazing milestone in our trek towards debt-freedom: We finished paying off all $102,000 of our consumer and business debts – not to mention $29,000 in regular mortgage payments. That milestone was doubly significant because it meant that we had passed the half way mark for our total debt. Our original grand total of $257,000 was down to a $128,000 mortgage. And as for DD2 – “a disaster with money”? She has also changed. DD2 gave me permission to write a two-part series about her money-smarts transformation a couple of months ago over at Fruclassity. Check it out to get a sense of what we’ve dealt with and done. She is ready to take on the responsibilities involved in living away from home.

High stress and prayer

Our decision for the move came after an episode of stress that was intense enough to frustrate me to an extent I can’t put into words and to bring DH to his knees in prayer. (Who dealt better with that one?) His suggestion of supporting DD2 in moving out shocked me. Was this DH? The tough parent? The brick wall? The one who drew the hard lines? There was nothing hard in his manner as he explained his idea. “It’s the best thing for [DD2],” he said simply. I brought up the negative impact it would have on our debt-repayment plans. “Somehow, I just think it’s all going to work out,” he said. Yes – DH. The logical, careful, rational one.

The shell-shocked look on DD2’s face when we offered the suggestion is not one I’ll forget soon. “How can you do that when you still have your debt?” she was considerate enough to ask. We assured her that it would all work out for us and that we were doing what we thought was best for her. I managed to convey more confidence in the plan than I felt. In truth, I was torn.

DD2 has been in a state of incredulous happiness leading up to today. Such a weight lifted! All of those hours on the bus – gone! Going to school, and going to her training, and going to competitions will now be so much easier! And she’s eager to set up her own place. She’s been preparing. She sold her hedgehog on E-Bay. She gave DD3 a bunch of her clothes (which is just fine by DD3). She’s thrown out bags of garbage. She’s given me items to sell at a garage sale. She’s started looking for part-time work downtown. (Her current job is near us.) She’s doing everything I could hope she would do.

My angst and Laurie’s (aka The Frugal Farmer’s) support

“How are you doing?” asked Laurie, with whom I co-host Fruclassity, in an e-mail at that time. I told her how unsettled I felt about our decision and how inconsistent it seemed with our goals to become debt-free. Laurie, not one to be reserved in expressing her faith, responded with a depth of true concern to my angst. She said that although I feared our plan would throw us off “by thwarting your financial efforts . . . in reality, what it’s going to do is make things better than ever, financially and otherwise. Sometimes God’s plans don’t make sense to us b/c we can’t see the long-term big picture . . . All of this doesn’t make sense to you now but if you’ll get on board attitude-wise . . . it has the potential to bless your family immensely in the long run. This is what I feel in my spirit.”

My husband believed in this plan. My daughter was thrilled by it. My Fruclassity blogging partner confirmed it. I got on board for real.

The numbers

On a strictly rational basis, let’s take a look at what this move is going to entail:

First of all, DH figures that with what we will save in food, car insurance for DD2, gas, and utilities, we will end up saving about $200 per month on our own homefront.

Furthermore, let’s consider interest payments. Although our interest rates have been very low, they’ve still added up. 3 years ago, we were paying:

  • $40 interest per month on Debt #1
  • $40 interest per month on Debt #2
  • $200 interest per month on Debt #3
  • $380 interest per month on the mortgage

That’s a grand total of $660 per month in interest payments on our debts. (Ouch!) Now, on the other hand, we’re paying less than half of that amount in interest on our mortgage – $300 per month. Based on our changed interest payments alone, we are in a much better position to afford the expense of our daughter’s living downtown now than we were only a couple of years ago.

Another furthermore, DH has had his best business year to date. (His year ends August 31.) “My gross revenues this year are higher than the gross income of my highest paid year in high-tech,” he told me recently. What a sense of redemption that news brought! For well over a decade, we’ve accepted a significantly lower income than we earned in those high-tech boom days. Gross revenues aren’t quite the same as a gross income. Factor in expenses, and the resulting take-home pay is not equivalent. But it’s very encouraging nonetheless. So in terms of income too, we are in a better position to take on this kind of expense.

And for a last furthermore, we have earned more income in the two months since we made that decision than we EVER have before in a two month period. DH’s business went ballistic in June. It was his highest earning month in six years of business. A whopping 35% higher than his second highest month. And July has been lucrative too because of continued strong business combined with my summer school earnings. If we were to put all excess income over these last two months in a mattress, we’d be able to draw from it enough to pay for DD2’s new living situation for the two years we have offered her.

What about that doll?

When DD2 cleaned out her room a couple of days ago, I noticed the bride doll still on her dresser. “Are you going to take this with you?” I asked her. “No,” she said. “We  can just put it at the end of the driveway. Someone will take it.” I took it, saying I would sell it at that garage sale I keep saying I’m going to have.

But maybe I should keep it. You see, that doll has symbolic value. It represents everything I did wrong as a parent in terms of teaching money wisdom to DD2. I bought it when she was 5 years old and we were at the store buying a birthday present for her friend. After selecting a porcelain doll for Erin, DD2 wailed. She wanted one too! She wanted the bride doll! On her back, legs kicking, screaming at the top of her lungs . . . and me with an infant DD3 attached in a sling. Ugh! I bought that doll because DD2 raised a fuss, and she learned her lesson well. She raised plenty of fusses over the years. Until DH and I got on the same page and set the boundaries necessary for our debt-repayment to go into high gear. So hard! So worth it. But what to do with the doll? Keep it as a symbol of DD2’s progress? Sell it as a symbolic good riddance to the bad old days?

I was the one who really needed to be firm with those boundaries. And two months ago, I was the one who needed to be convinced that we were in a position to extend a little grace. And I am convinced. The proof is abundant. DH had it right. “Somehow” it’s all working out.


Have you ever struggled with a decision to spend as you’ve tried to make your way out of debt or towards financial freedom? Do you think we’re making the right move? What should I do with that doll?


At Fruclassity: Time Travel Therapy for Debtors. A post about how the yuppy phenomenon of the ’80s negatively impacted my money habits.


2 Nominations (Liebster & Sunshine) Warning: LOTS of Random Facts About Prudence

sunshine-blogger-award-300x300    &  liebster-award


Did you ever develop bad financial habits because of your conception of what was “cool”? Check out my post at Fruclassity about “Time Travel Therapy for Debtors”. Yuppy culture and The Big Chill had a negative impact on many areas of my personal finances – including grocery shopping! 


 

Two days ago, I opened up my e-mail to see a message from Laurie at the Frugal Farmer. She was nominating four bloggers for the Sunshine Blogger Award, and I was one. How nice!
Then I read a message from Kay at The Barefoot Minimalist. She directed me to her most recent post. “I hope you like it,” she said. “You’re one of the stars!” When I went to her site, I discovered that she had nominated three bloggers for the Liebster Award, and I was one. So how’s that for a Thursday morning?

Rules for Sunshine Blogger Award:

  • Thank the person who nominated you.
  • Answer the questions from the person who nominated you.
  • Nominate some other bloggers for this award.
  • Write the same number of questions for the bloggers you have nominated.
  • Notify the bloggers you have nominated.

Rules for Liebster Award:

  • Write a post about the fact that you’ve been nominated for the Liebster Award.
  • Answer the questions about yourself.
  • Nominate other blogs.

Let me begin by thanking Laurie and Kay. I never used to understand it when people said they had “online friends”. How was it really possible to be friends with someone over the internet? Well, I have discovered that it is indeed possible, and I am both honoured by your nominations and grateful for your friendship. I would love it if some day, we could get together IRL : )

My Answers to questions for Sunshine Blogger Award

#1: In your dream world, where would you live if you were financially independent?
Prudence: I would live in my own city, but my house would be located just outside the downtown section in an area with parks and close to water. It would be a moderate-sized old home that I would pay someone else to clean, in a neighbourhood in which I could walk or cycle everywhere and not need a car.
#2: Who is your favourite mentor?
Prudence: I try to be careful about not alienating people with “religious talk”, but my answer is Jesus Christ. Check out the Sermon on the Mount (Matthew 5-7) for the best mentorship to be found.
#3: What’s your favorite dessert?
Prudence: Carrot cake smothered in cream cheese icing. The best recipe I know of -for both the cake and the cream cheese icing – is the one in my old Moosewood Cookbook.
#4: What was your nickname growing up?
Prudence: I asked Laurie if I could plead the 5th on this one. I love my family dearly, but we had terrible nicknames for each other. My brother and I especially learned to hate our respective nicknames. I’ll use this question as an opportunity to encourage everyone to take a close look at the names you use to address those closest to you. It’s not “just a joke”, and it does mean something.
#5: What type of car would you own if money were no object?
Prudence: I’m not a real car person, but I would like to drive a Mini Cooper. (At my dream home from question #1, it would be OK to have a Mini Cooper in the driveway : )

My Answers to questions for Liebster Award

#1: How did you decide on the name of your blog?

Prudence: I wanted to be anonymous, and I thought of Mrs. Doubtfire and the way he/she combined two words to create a name. Debtfree was perfect. I talked with a colleague about what I wanted for a first name, and in response to her questions, I said I wanted a name that denoted wisdom. “Prudence” she said, without skipping a beat. And Prudence it is.

#2: Where does your blogging inspiration come from?

Prudence: It comes from real life experience. I was worried at first that I would run out of things to say about personal finances and getting out of debt, but I find that this area of life is connected to all other areas of life – so there is no running out of material.

#3: What is it that you love most about blogging?

Prudence: I love the interactions with people. There is a taboo on money talk in society, and so many of us have carried a secret shame about our finances – including our debts. Online, people open up. I love it when I read another person’s post and connect with it, and I love receiving comments from readers who connect with my posts. I’m convinced that personal finance blogs are the way our society is going to overcome our current record breaking levels of personal debt.

#4:  What is your favourite food?

Prudence: I LOVE food, and I am open to all kinds of it. If I have to choose a favourite, it’s Asian food. There’s an authentic Vietnamese restaurant in town that I don’t visit nearly as often as I used to before our journey out of debt began. Mmmmm…. Dangerous for me to think of it.

#5: What is your favourite thing to drink?

Prudence: I really like red beer : )

#6: What is an item you cannot live without?

Prudence: Uh … I know! Toe-nail clippers. My toenails become lethal weapons when they get too long – like now (because I can’t find my toe-nail clippers).

#7: What are eleven random facts about yourself?

Prudence: Really? Kay said, “Just let it free flow.” So here goes:

  1. I climbed Mount Kilimanjaro. Made it to the snow, but not the peak (altitude sickness). BEAUTIFUL!
  2. I LOVE Jane Austen.
  3. I have a really hard time doing push-ups.
  4. I can say some things in the Somali language because I work at a very multi-cultural school, and some of our Somali staff teach me. I can say: Good morning; Good afternoon; Good noon hour (something we just don’t say in English); Good evening; Happy New Year; Happy Eid; I’m tired; I’m hungry; I’m eating breakfast; Yes.
  5. My favourite book from my childhood was Anne of Green Gables.
  6. I went to a garden party at Buckingham Palace when I was 20 years old. (My dad worked as a research scientist for the government, and he had a one year work term in Hertfordshire, England. I think he got the invitation because he was working as a Commonwealth guest of the British government. As the youngest of their children, I was living with mom and dad in England after my first year of university, so I got to go.)
  7. My favourite summer job as a teen was as a day camp counselor for children aged 3-6.
  8. I self-published two children’s books and sold about 5,000 copies. (That life came to an abrupt end when I had to return to full-time work after DH lost his job. I have hundreds of copies that I’d like to donate. Anyone know of a good venue?)
  9. One Sunday after church, I fell into a conversation with two other women. We just could not stop talking, and we closed the place down. “Let’s get together at my place this Friday,” said one of the women. That was three years ago, and we’ve been getting together almost every week since – including last night.
  10. I’ve always done sports. I’m no champion – more of a jack of all trades. These are the sports I’ve competed in or done regularly: basketball, volleyball, track and field (high jump and 3000 m), cross-country running, cross-country skiing, competitive swimming, rowing, aerobics, cardio kickboxing. (Cardio kickboxing is what I do now, and I wrote about it at Fruclassity just this week in a post about the question of gym memberships for the frugal-minded.)
  11. I would love to time travel.

#8. If you could live anywhere in the world where would it be?

Prudence: In Jane Austen’s house. (Village of Chawton in Hampshire.)

#9. If you could meet anyone from history, alive or dead, who would it be?

Prudence: Jesus. I’d time travel to the Sermon on the Mount.

#10. What is your favorite outdoor activity?

This is a tough one . . . I think it’s hiking.

#11. Where do you see yourself in 5 years?

Prudence: Location-wise? Right where I am. Financially? Both debt-free and financially-free.

There you go! That’s more information than you ever wanted to know about me! Thanks again to Laurie and Kay.

Now for my nominations:

For the Sunshine Blogger Award, I nominate Laura Harris of Piggy Bank Dreams and Jennifer of Wanderlust Wallet.  Laura is a personal finance coach whose focus is a combination of practical finance and personal development. Jennifer blogs about her frugal living as an American expat living with her husband in Switzerland and traveling all over Europe.

For the Liebster Award, I nominate Brian of Debt Discipline and Hannah from Unplanned Finance. Brian and his wife have succeeded in paying off $109,000 in credit card debt and in saving up a whopping emergency fund. Just recently, Brian lost the job he’d had for 20 years. His journey continues, and he shares it with humility and honesty. Hannah’s life hit her at high speed shortly after her husband left his job to go back to school and she became pregnant with their first baby. Nothing like a baby to bring reality home! Hannah and her husband are establishing a foundation for their family’s future with frugal choices. I love the honesty of her blog.

The personal finance community provides such a great network of support. Let’s keep on blogging!


Your comments are welcome.


Millennial Masters Student’s Thesis Becomes Uber-Frugal Cookbook

Masters thesis on food stamps recipients

Almost a year ago, I read a post on Get Rich Slowly by April Dykman entitled How to eat on $4/day. Her article told the story of Leanne Brown, a student who, in preparing the thesis for her Masters in Food Studies, focused upon the plight of food stamps recipients in the U.S. Was it possible for them to eat good food on $4 per day? In her efforts to answer that question, Brown created a cookbook: Good and Cheap

Eager to reduce my family’s grocery budget as part of our debt-reduction efforts, and inspired by Brown’s initiative, I purchased a copy of the book. A few months later, psyched by the delicious dishes we were enjoying – and even more so by the significant drop in our grocery bills – I included the permanent link to Brown’s book that you see to the right under the heading “Featured Money Saver”. (No, I don’t get paid for it.)  I approached Brown about the possibility of an interview, and she accepted, saying the best time would be upon the launch of her book’s second edition. The new and improved version of Good and Cheap is now available, and Leanne Brown, extremely busy at this time, graciously spoke with me about it.  

Click here to continue reading.

Part 2 of Our Journey out of Debt: Let the Savings Begin!

DH and I enjoy a fabulous meal (paid with gift card given by DD1) to celebrate the completion of Part 1 and the launch of Part 2 of our journey out of debt.

  • DH = Dear Husband
  • DD1 = Dear First Daughter
  • DD2 = Dear Second Daughter

A quick recap of Part 1: “Baby steps” #1 & #2

If you’ve been following this blog for any amount of time, you know that DH and I started our journey out of debt after reading Dave Ramsey’s The Total Money Makeover. Just so you know, I don’t get paid to say that, and I don’t agree with every opinion Ramsey has; he’s far more right wing than I am. The simple truth is that his book worked its magic for us in a powerful way, and for that he has won my respect and gratitude.

Ramsey calls his 7 steps towards financial freedom “baby steps”. For us, Step #1 wasn’t really a step at all.

#1 – Save $1,000 as a mini-emergency fund.

We already had that amount of money on hand, so no problem. When it came to Step #2, however, there was nothing “baby” about it.

#2 – Pay off all debt but the house.

We had $21,000 in consumer debt, and $81,000 in business debt for a grand total of $102,000 non-mortgage debt. It took us exactly 3 years and 2 weeks to pay it off. I still have to pinch myself on that one. We paid it off!

What are the next steps?

Here are the remaining steps according to Ramsey’s plan:

#3 – Save up an emergency fund to cover 3-6 months in expenses in case of a loss of income.

#4 – Increase your investment in retirement to 15% of your gross household income.

#5 – If you have children, save up for their post-secondary education.

#6 – Pay off your mortgage early.

#7 – Build wealth and give generously.

Where do we stand?

Are we prone to a loss of income?

“It’s really hard for Canadians to save up an emergency fund,” said a friend of ours not too long ago. The number one motivation for Americans to save an emergency fund is to cover unexpected medical expenses. For Canadians, health care is largely free (if you don’t count our higher taxes). Furthermore, in my case, if sickness or injury prevented me from doing my job, I would have built-in access to long-term disability insurance.

The one thing that could put a stop to my income is union action – and as it happens, that remains an ongoing possibility. Then there’s the fact that DH’s business is entirely vulnerable. Bad health would mean zero income for him. New expense on the horizon: We are going to invest in disability insurance for him, something we’ve perhaps foolishly put off until the business debt was paid off. We used to have an “It won’t happen to us,” attitude, but not anymore. 6 years of DH’s under/unemployment brought us levels of financial stress that we never want to see again. We know that “it” can happen to us – just like “it” can happen to anyone. We’re going to save an emergency fund.

How is our retirement looking?

Before his career crisis in the early millennium, DH invested regularly for his retirement, taking advantage of his employer’s match program. But for well over a decade, he hasn’t invested a cent. We aren’t too stressed about our retirement though, because I have a great pension plan. I went to Mr. Money Mustache’s Forum a few months ago to seek advice for our retirement investments, given our situation. Many people responded, and I remember one guy saying something like, “If you’re a Canadian teacher, you’ve got it made. $50,000 per year in your retirement – is that right? Any Mustachian can easily live on that.” (A Mustachian – or “badass” – is someone who subscribes to MMM’s extreme frugality and quest for early financial independence.)

I understand that it wouldn’t be wise for us to rely completely upon my pension plan, but it does give us a fabulous foundation for retirement. DH plans to start adding to his retirement investments to the tune of 15% of his gross income once the emergency fund is in place.

What about our children’s post-secondary education?

We started to invest in RESPs (Registered Education Savings Plan) for our three daughters when they were young. It ends up being enough to cover about half of their undergraduate university expenses if they live at home. Each daughter covers the remaining expenses with income from part-time jobs and any scholarships, grants, or bursaries that she can get. DD1 graduated 2 years ago debt-frree. In the case of DD2, who is about half way through her undergraduate degree (debt-free so far), there’s a new expense on the horizon – a big one – but I’ll save that for later. For now, I’ll just say that our basic investment in our children’s education has already been taken care of for our two eldest, and it’s ongoing for our youngest who is still in high school.

And our mortgage?

I find it interesting when people say that they’re debt-free even when they have a mortgage. A mortgage is definitely a debt, but it’s one of those “good debts” – and most of us don’t feel any urgency about it. I do. Maybe it’s a stage-of-life thing. If DH and I were in our 30s, we might be more comfortable with the $128,000 we still have owing on our house, thinking “It will get paid off eventually . . . ” I hit 50 two years ago, and “eventually . . .” doesn’t do it for me anymore. I know a few superstars who paid off their mortgages in their 30s, and if I could go back in time, I like to think I’d be one of them. But since we can only go forward in time, we’re aiming for June of 2019. Not a superstar achievement, but it would still put us in the minority. 59% of Canadians retire while still in debt. We plan not to.

Building wealth and giving?

For me, the gold standard for giving is 10% of gross income, and we haven’t done that since the plunge in DH’s income over a decade ago. Even though our income is once again very healthy, we’ve been focused on debt-reduction, and our giving has been low. We have increased it since paying off the last of the business debt, but it still falls far short of the amount I feel right about. I can only hope that as we continue to build wealth we will also increase our giving.

Here we go!

So there it is: our game plan for Part 2. We only paid off all non-mortgage debt a few weeks ago, but already we’re noticing a strange abundance. When DH and I prepare our budget each month, we have to go through it two or three times, cutting here and there to get it to balance. But when we prepared July’s budget, we had to go over it again for a different reason. We were left with a surplus after our first draft. That has NEVER happened before. A hint of things to come? I don’t know. This stage is new for us, and we’ll take it as it comes. Here we go!


Do you consider your mortgage to be a debt? Do you find it difficult to balance savings with debt-repayment? Are you able to give as much as you’d like to? Your comments are welcome.

OK, this is added for Kay’s benefit. (See her comment below.)

ttphoto_18

These are called “Sliders”: Baked Baguette/Crab Meat/Buttered Lobster/Confit of Duck/Beef Strips/

Believe it or not, this plate was an appetizer. And we each ordered it! Then I had lamb and DH had fillet mignon. SO full!

Personal Finance and Race: An Interview with Kassandra

Like many people, I was deeply shaken by a combination of sorrow, rage, and incredulous horror after the massacre at Emanuel AME Church in Charleston South Carolina last month. At a social event I had attended before news of the killings had reached me, I talked with a black colleague about her experience of racism in her teaching career. “Are you sure that’s what it was?” I asked in disbelief, certain that she had misunderstood people’s attitudes or unfriendliness as racist when it was all really just a reflection of their personalities. After all, hadn’t we moved on as a society? While absorbing the shock of the news the next morning, I had a wake-up call, and I believed what my colleague had told me.  
Rev. Norvel Goff, who led the first service at Emanuel after the shootings, said, “…the only way evil can triumph is for good folks to sit down and do nothing.” In response to his call to do something, I reached out to Kassandra.  A former PF blogger many might recognize, Kassandra has moved on in her career, and despite her preference to maintain some privacy and anonymity now, she was willing to be interviewed about the sensitive topic of race for this post. 

To read more, click here.


 

PF Progress Without Margin = Mess-up

Ever felt like you had a stone in the pit of your stomach after you messed up?

DH = Dear Husband

That moment you realized you’d messed up

Think of a time when you realized you had messed up. When you realized you had made a pretty glaring error in judgement. When you found yourself thinking, How did I let that happen? Why did I ignore all of the multiple indicators that should have led me a different way? Once you have your mess-up time in mind, can you call back the way you felt? That, my friends, is how I’m feeling now.

It was an error in judgement at work, and I won’t go into details. I’ll just say that I left work yesterday with the angst of a stone in my gut, went directly up to my room when I got home, and since everyone else was happily occupied, I was able to give way to the longing to stay there for the rest of the afternoon, through the evening, and overnight. I woke up this morning in the same clothes I’d worn in the afternoon. Silver lining? I had a great sleep.

Connection to debt-reduction? Margin

Have I painted a pathetic enough picture of my Friday night? And what’s the point in relation to debt reduction? Well, I’m trying to find one, and I think I’ve got it: I don’t think I would have made that error in judgement if I hadn’t been so swamped. End of school year wrap-up, graduation preparations, summer school co-op placements to find, two blog sites on the go – on top of household and family. Some people can take this kind of multiple-responsibility package in stride. But I can’t. And I know that about myself. So why didn’t I establish the boundaries that I know I need to function at my best?

I remember seeing a film entitled Margin about fifteen years ago. I can’t find it on Google – I only remember the title, and by now, there are so many videos and books using that word. The video I’m referring to is about 20 years old, and it focuses upon the widespread need in our culture to step back and simplify. The professor who narrates makes the point that when it comes to our collective management of time, we leave little to no margin. There is no time for the experience of anticipation. There is no time for reflection or rest. It’s just one task after another after another … And it’s not good.

When I consider what it is that propels me onto a margin-less treadmill, it’s ultimately consumerism – and debt. We work hard so that we can pay off what we purchased yesterday. We burn out, and we purchase for today as a means of self-medication. On credit. So that we need to work hard tomorrow to pay for it. And even though DH and I have this figured out now, and we’re not purchasing with a debt that our future selves will have to pay, we’re still left with the consequences and debt of our habits from the past. We’re making great headway. But even in our progress towards debt-freedom, we need margin. And I think that’s my point.

Tension between inspiration and nagging

Anyone trying to get out of debt has to change things up. Spend less, earn more, devote time to tracking and budgeting. That’s it in a nutshell, but within that nutshell, there are all kinds of variations. Reading about measures of extreme frugality can inspire me – but it can also have the effect of nagging at me. Why aren’t YOU cutting back more? Opportunities to take on additional paid work, in my case teaching summer school, can bring on encouraging windfalls and take out big chunks of debt – but again, there’s that nagging. You could teach night school or Saturday school and earn still more. Even with budgeting and tracking, there’s a continuum. No end of spreadsheets and analysis and finding ways to tweak the details.

Beware: self-defeating path ahead

If you’re invested in turning your personal finances around, you’ve probably experienced this tension between inspiration and nagging. Inherent in the whole effort is the danger of a self-defeating path:

  • You feel inspired to reach a new level (of frugality or income or analysis of your finances)
  • Once you attain that level, you get a nagging sense that it’s not enough  because others are doing more.
  • You either burn out or get defensive.
  • Burnout leads you to quit
  • Defensiveness makes you uninspired and stuck.

I don’t want to burn out, and I don’t want to wall myself in defenses. But I do want some margin. And of course, now that the regular school year is over, I have it. I can focus on summer school without doing double duty. I went into June knowing that I would be dealing with work overload, but I didn’t set myself up to manage it well. It’s just one month, I thought. I can do it. No. I couldn’t. At least not well. And I have this stone in the pit of my gut as a result. Regarding my mess-up at work, if I’d built in more margin for myself, it wouldn’t have happened. I’d have taken the time to consult, to research, to rework. But as it was, things were rushed and cramped. A recipe for messing up.

Right now, I’d like to self-medicate by dropping $150 or so on a 90-minute massage. That would work – for about 90 minutes. But I won’t do that. I’m not sure what I’ll do. I’m just glad I’ll have the margin necessary to figure it out. And by next Saturday, I promise I won’t be so glum.


Can you relate to that tight rope between inspiration and nagging? Do you manage to build margin in your life? Have you ever messed up and felt AWFUL about it?

 

 

 

Business Debt ELIMINATED! Debt-Free Except for the Mortgage

Cycling on our good old bikes

  • DH = Dear Husband
  • DD1 = Dear First Daughter

“I think we can do it . . . today.”

Last Saturday, DH came upstairs. He’d been working non-stop, a strange burst of business having recently erupted. I was getting my Saturday morning blog post ready to publish. “I think we can do it . . .” He paused, “. . . today.” I didn’t have to ask what “it” was. He was saying that we could pay off the business debt. The debt that was just shy of $81,000 in December of 2012. The debt that we had been paying off for over 30 months. The debt that I had really, REALLY wanted to pay off at the end of May to mark the 3rd anniversary of our journey out of all debt. The debt that I had resigned myself to having around for another couple of months. And now, only two weeks later, DH was saying we could do it.

In that surreal moment, I deliberately chose calm. “Are you sure?” I asked. “Maybe it would be a good idea to wait until the end of the month.” “Yeah,” DH agreed. I strongly suspected that he was calling my bluff. That he thought I’d say, “No, no! Let’s go now!” I was the impatient one after all. He was the measured, logical, careful one. “OK,” I said instead.

Silence . . . until DH broke it. “Let’s go now.”

Our progress symbolized

We got on our bicycles. His is 20 years old. Mine is a double hand-me-down. It was my dad’s until he gave it to DD1 in 2006, and then mine since DD1 moved out west in 2011. We cycled to the bank and deposited that last $5,500 remaining on our business debt. Tim Hortons was just across the parking lot, but we didn’t even discuss the idea of indulging in a celebratory coffee or muffin. We cycled home. Slowly. A bit stunned. Chatting disjointedly about the beauty of the day. And what we had just done.

I think that so much of our excursion to the bank symbolizes our progress from having:

  • $21,000 in consumer debt
  • $81,000 in business debt
  • $155,000 in mortgage debt
  • a household debt-to-income ratio* of 254% – way above the record breaking Canadian average of 164%

– to having:

  • no consumer debt
  • no business debt
  • $128,000 in mortgage debt
  • a household debt-to-income ratio* of  113% – way below the record breaking Canadian average of 164%

We decided to cycle instead of drive over to the bank. Since starting our journey out of debt, we’ve become more attuned to the richness of simple pleasures. It was a beautiful sunny day, and a distance of 5 km (3 miles). Why would we drive? We weren’t cycling to save on gas. But we did save on gas. Our capacity to enjoy the simple things has developed with less travel and more soaking in the local scene. Less dining out and more slow home cooking. Fewer nights on the town for things like big screen movies, plays, concerts, and comedy clubs – and more nights at home playing board games, watching small screen movies, hanging out with friends and family.

Our bicycles are old. For many years, we continued to ride those bikes because of DH’s uncertain employment and low income. After DH’s home business got off the ground, we had the means to buy new – but we didn’t. Our debt-free mission has meant not only old bikes, but an old van. It turned 16 in January. It’s meant old furniture and old carpets – all thinning out, tearing, faded, and stained here and there, after 17 years of not-so-gentle use by a family of five with three growing children. We live in a neighbourhood where bikes, cars, furniture, and carpets are often new and shiny. We have chosen not to worry about keeping up with the Jonses. As long as it still functions, we choose old.

We made an event of it. DH and I almost never go to the bank together to deposit cheques. But this was a super significant milestone – not only debt-free except for the mortgage, but also a passing of the half-way point on our total debt. Our focus on debt reduction has heightened our awareness of our numbers when it comes to personal finances. I used to be the poster child for unconscious spending and chaotic money management. I honestly couldn’t have told you what our debts were for, how much they added up to, what bills we paid, what our groceries cost, how much we spent on gifts, how much we spent in restaurants and coffee shops … My head was entirely in the sand. But I’ve yanked it out, and I’m intentional about joining DH in looking at all the details. And as we address those details, the bigger picture comes into focus too, and we’re able to mark the milestones as we pass them.

We didn’t buy anything at Tim Hortons. Later, as we had planned in advance, we did indulge in some sparkling wine (left over from the New Year) and a wonderful meal at DH’s favourite restaurant. But Timmie’s wasn’t in our plans – so we didn’t go. It used to be that I would spend on impulse regularly. I haven’t completely eliminated that tendency, but in the last three years, I have spent far less on spontaneous urges to buy snacks and meals, and nothing on unplanned clothing or gift purchases. When we spend, it’s almost always because we’ve planned and budgeted for it.

DH and I cycled to the bank together. Our journey out of debt is something we have taken on together. I have a friend who often mentions that ever since DH and I started working on our finances, she has seen plenty of evidence of a better relationship overall. More joking, affection, respect. I have politely accepted her observations without necessarily believing them. But then DD1 – who has been living away from home for the last four years and only sees us once every six months or so – recently told me that she has noticed it too. Who knew that the drudgery of making budgets and tracking expenditures together would have a bonding impact?

Initial changes?

I’ve already noticed little changes. Someone asked me yesterday why I had chosen to teach summer school, and I said, “We want to pay off the mortgage before we retire.” Her response was, “Yep. That’s the smart thing to do. Get rid of that mortgage.” I always used to say something like, “We’re trying to get out of debt. My husband lost his job in the high-tech bust and we got ourselves into quite a debt hole.” The response would usually be a respectful and somewhat sympathetic nod of the head. So there’s been a shift. I’m no longer the object of sympathy. I’m “smart”.

About a year and half ago, a friend of DH’s shared a YouTube audio recording of Anthony de Mello, and we found it to be a great listen. One of the things de Mello said that has stuck with me was that happiness is not found in the acquisition of things. It’s found in the shedding of things. By “things”, he meant material goods, all kinds of dependencies, and limiting beliefs that we stubbornly cling to. Debt is one of those things that needs to be shed in a pursuit of happiness. Debt that is accumulated in a drive for “lifestyle” and material goods, in bondage to dependencies, and in a tenacious effort to support limiting beliefs. We’ve dropped a burden. And in the absence of that weight there’s a strange lightness. A bit of a giddiness. A new happiness.


Your comments are welcome.

* To calculate your debt-to-income ratio, divide your total debt (including mortgage) by your total take-home income (after taxes).

 

Reflections From My 90-Year Old Mother

Today’s preacher – on her 90th birthday last November

I sat down at the computer this morning, ready to write a post about a significant expense that is coming our way. I wrote about DH’s “brace-lift” over at Fruclassity a couple of days ago, and I was prepared to share an even more significant new expense today. But when I sat down, “my gut”, as Laurie put it in a recent post, told me not to. At least not today.

What I feel led to post today is a 7-minute audio recording of my mother. She is 90 years old, and I want to be like her when I grow up. She is frail, but she still volunteers on church committees and in the community, helping the elderly (!) and the physically and mentally challenged. She still hosts bridge parties and has a great network of friends.

At one of her church committee meetings, she presented the “opening reflection”. The church minister was so impressed with it that she asked my mom to present it to the whole congregation. In February, she did. Two of my sisters and I were able to attend the service, and we were so moved. So proud.

Do you  have 7 minutes? If you listen and are touched by her words, please leave a comment. I’ll share it with my mom.

(Click “Listen to the audio recording”. I tried to embed the recording, but it’s much clearer this way.)

 


Your comments are welcome. I’ll share them with my mom.

 

 

Monopoly and Debt Repayment

  • DD3 = Dear Third Daughter
  • DH = Dear Husband

DD3 vs. me

One of the byproducts of our more frugal lifestyle is that we stay in and do things like play board games more often. I tried to teach DD3, when we first ramped up the frequency of our Monopoly games, to DO something with her money. She would pass Go, collect $200 . . . and then just let that money sit there. She wouldn’t buy every property she landed on as I did. “You’ve got to buy more properties,” I explained, “to increase your chances of getting a full set so that you can put up houses and hotels. That’s how you win.” And when she finally did secure a full property set, she wouldn’t get houses as soon as she could afford them. I’d think to myself, She’s got all of those properties and all of that money, but it’s not doing her any good. For my part, I would max out in my house-buying, keeping just enough money aside in case I landed on one of DD3’s more dangerous properties. DD3, on the other hand, would take forever to spend $300 from her $2,000 stash for one house per space. Why not buy two? Why not three? You’ve got the money! I found it frustrating, but I kept my mouth shut. She would just have to learn the hard way.

My “bad luck”

Inevitably, things would go wrong. For me. The stash of cash I kept “just in case” would drain quickly in one unfortunate round:

  • A Chance card: “Pay poor tax of $15”.
  • The Luxury Tax space: $75.
  • A Community Chest card: “Pay hospital $100.”
  • The Go To Jail space (no $200 for passing Go this time). $50 to get out of jail.
  • Then – Arrgh! A landing  on DD3’s property with the house on it.

My cash already drained, I’d have to mortgage one of my properties. The beginning of the end for me. Just bad luck, I thought the first few times. But when bad luck keeps revisiting, you have to take a closer look. Maybe there was something to be learned from DD3’s stubborn insistence upon saving – her painfully measured way of spending. And maybe I needed to take a closer look at my own game. Why such a compulsion to spend as much as possible and to save as little as possible?

A close look at losing in real time

With a new awareness of DD3’s superior Monopoly wisdom, I played with her again a couple of times this past week. Same results! Only this time, I was conscious of each disastrous step in real time. Here are a couple of snapshots of my thinking:

  • Ugh! I didn’t buy a green property last time around, and here I am landing on one again. I’d have two now if I’d bought the first time. If I land on a green again next round, I’ll kick myself for not having taken advantage of this opportunity.
  • DD3 has 3 houses on each of her orange properties – and over $2,000 in cash. I have the advantage of owning more properties, but I only have $400. Still, I’d better buy some houses because I have to benefit from my property advantage.

In the end, I had to mortgage two of those green properties I felt compelled to buy. And when DD3 had hotels on her orange properties, I landed on one – cash strapped. Those houses I’d bought did nothing for me. It was game over.

Connections to my real money management?

I can see two connections between my modus operandi in Monopoly and my real life personal finances:

  1. My discretionary account is always bone dry by the end of each month. While DH manages to save a little from his discretionary allowance (exactly the same as mine) – to the point where he can go away for a week-end of snowboarding – I consistently spend it all, often cheating and borrowing from the next month before it arrives.
  2. My disagreement with DH last week stemmed from my greater desire to get rid of our money (in a positive way – by paying off debt) than to save it. I referred to our savings as “sucking my momentum”.

Soul searching

Mrs. Frugalwoods wrote an excellent post this past week about her former fear of spending. “Saving money isn’t the worst default position …” she noted. “The problem is that I was saving from a place of fear, not a place of strength.” If I try to identify the “place” from which I have rid myself of money throughout my whole life – clearly including the present – I would have to say it has been a place of panic. It’s even evident in my thoughts and advice on Monopoly.

  • “You’ve got to buy more . . . That’s how you win.”
  • I would max out in my house-buying …
  • … I’ll kick myself for not having taken advantage of this opportunity.
  • … I’d better buy some houses because I have to benefit from my property advantage.

These are not thoughts and words of calm confidence; there’s a tense compulsion to them. A fear that time and chance are going to pass me by. A dread that the future will provide no opportunity. Maybe I’ve got the youngest-of-5 syndrome? Make a mad dash to the counter to get a cookie before they’re all gone. I’ve got to mellow out. I’ve got to have more faith. More confidence that no mad dash is necessary – that there’s a cookie on the counter with my name on it, and it’s not going anywhere until I get there.

Looking ahead

We’re coming to a point in our “Total Money Makeover” (Dave Ramsey style), when savings will play just as great a role as paying off the mortgage – the last debt standing. There will be a hefty emergency fund to save. There will be greater investments towards our retirement. There will be short-term savings for cars, furnace, air-conditioning. All this in the face of soon-to-be greater expenses. (More on that later.) We will have to be measured in all aspects of our finances, and there will be no room for my panic.

Awareness is the first step to any positive outcome, and so I’m hopeful that I can get a handle on my money-ridding compulsion. I used to spend it all chaotically. In the last 3 years, I’ve thrown it against debt, hand over fist. I have to learn how to just hold it. Save it. Watch it grow. A few lessons from DD3, a few more games of Monopoly – it might just do the trick.


Does fear play a role in your management of finances? A fear of spending and a compulsion to save? A panic to spend and an aversion to saving? What’s your strategy in Monopoly? Your comments are welcome.