Getting out of debt step 3: cut the lifestyle creep

Have you ever experienced lifestyle creep? I sure have. I was once a grad student living in this tiny room you see here on a $1000/month. The room was $545 a month so I lived on $455 for the whole month, including food, textbooks, clothes, and anything else I needed or wanted.

Yes, that's the Duchess of Cornwall. She toured my dorm when she visited Philadelphia while I was in grad school, and my hallmates and I even got to have tea with her! But back to lifestyle creep. It's not just having tea with royalty that inflated my ego and my desire to spend. My first job took me to one of the top ten most expensive zip codes in the U.S. and I immediately felt like I had to live up to it.

Fancy clothes. A fancy address. Fancy hair. Fancy makeup. One woman actually walked around the office asking how many of us got our eyebrows professionally done. The fancy kitchen to keep up with a now former friend who constantly has the newest, fanciest stuff (and also still has an eating disorder that she has no intention of doing anything about.) Fancy music lessons. And last but not least, a fancy housekeeper. There's only one person in my office who doesn't have one.

My lifestyle needs to take a few hints from the way it was during grad school. This means that the following "creepers" in our current budget will go:

1. Guitar lessons. I just told my guitar teacher I want to do lessons every-other week instead of every week. Monthly savings: $100

2. Eyebrow waxing. I'll be skipping this until I get back from Spain. Monthly savings: $60

3. Housekeeper. I need to learn to do my own cleaning. Monthly savings: $100.

4. Clothing. I regularly spend about $150/month. Thank you, eating disorder, for a body that constantly changes size. I can shop at the thrift shop instead of The Limited from now on. Monthly savings: $100

5. Extra charity. I sponsor a child but right now I have to take care of me. I can always sponsor one again later. Savings: $38/month

Total monthly savings: $398!!

So, friends, has lifestyle creep ever happened to you?

Could you eat this?

Today the Chief Engineer and I enjoyed some free fun by biking to the US Science and Engineering festival downtown.

The things to see were pretty standard. Lots of 3D printers, plenty of liquid nitrogen demonstrations (dip a bottle of coke in the stuff and it explodes!), hands on models of solar panels and deep-space telescopes. That sort of thing. There was just one thing I didn't expect.

Crickets for lunch, anyone? 

Plain crickets not your thing? We've got cajun! Parmesan and ranch, too! 

I couldn't stomach it. I had to go hug this guy instead. 

And then laugh at the fact that this is what you do when you're Walmart and you have a public image problem.

You bring the most fuel efficient truck in existence to show off how much you care about the community. And to advertise obnoxiously. It was pretty interesting, though.

So we got in a 20 mile bike ride, had some fun and enjoyed the day together, all without spending a penny. And without any cricket appetizers, thank you. 

Could you have stomached the crickets? What's the most unusual thing you've ever eaten?

A plan to get out of debt -- steps 1 and 2

Friday was keep-Zoe-from-freaking-out day. The realization of our impending debt settled in. It was time to start making a plan.

Step 1: Make sure we have cash when we need it. 

I sat down with the calendar and figured out how much debt we'll have and when. We are at risk of overdrafting our bank account as early as next week. At our worst point, it looks like we'll be $4400 in debt by September with our current bills before we're able to start paying back our debts. What to do?

I stopped by the bank that manages our loan for the kitchen (~$4000 balance). It's a line of credit which means we can borrow against it again without having to take out a new loan. So I took another $5000 out of the loan. The loan balance is now $9000.

Step 2: Find cheaper credit than our credit cards. 

The line of credit is currently at 1.99% interest. Yay! But in October it goes up to 14% interest. That's still better than credit card interest rates. We may be able to do a balance transfer onto a zero percent interest card before that happens. We'll have to see how much we can pay off before then.


We're taken care of for the moment and our mortgage checks won't bounce now. More steps of our plan tomorrow!

Have you ever made a plan to get out of debt? What worked for you? Any suggestions would be appreciated.



p.s.

For your viewing pleasure, here's the progress on the kitchen I wanted so badly that's gotten us into all this mess.

a new problem and a confession

For a long while I've whined about my inability to spend money wisely. I was never in credit card debt. I spent a lot, usually everything I made, but not more.

Until now. 

You see, dear reader, for a while I've been living a lie. I am about to be in debt. The bad kind of debt. I've never had this happen before. We are fortunate to have a high income, I am married to a frugal person, I felt financially protected. We had a comfortable bank account. 

Then this year I started making really dumb, really expensive decisions. I'm pretty much the one in the family who 'manages' the finances and makes the decisions so the blame rests squarely on my shoulders. Here's how it happened.

"Let's just take down this one wall to improve the condo..." became "I want to redo the countertops." Which became, "now we have to do the backsplash." Then the dishwasher broke. Then the heater. Then I wanted a new stove. To distract myself from the insanity of my own depression I encouraged us to go skiing a half dozen times this year and to take one ski vacation. "Let's go to Texas." Next, "Let's take our usual vacation with my aunt and uncle to Williamsburg. "  Then we thought we wanted kids, and I really panicked. 

"I have to do one last thing before I'm tied down by children," I said. "I want to study in Spain again. See there's this one-month program..." 

So like I said, I've been living a lie. I talk about frugality and being cheap and efficient, meanwhile my wants have whittled our savings down to nothing. The remaining bills for kitchen renovations just came in. I did the math on all of our finances and with our typical spending we'll be somewhere between $3,000 and $5,000 in the hole by this summer IN ADDITION to the kitchen loan we already have. The new debt will likely come in the form of high-interest credit card debt. Assuming nothing else happens. That emergency fund I started to build will be gone. If my calculations are right it'll be December before we have enough saved to pay off everything and still leave enough to cover even one extra month's expenses.

Many of you know how much I adored my grandmother. A very frugal, very simple lady who retired at 60 with $300,000 to her name. She lived comfortably on that $300k until age 85. All I can think now is, how disappointed she would be in me. You don't need to tell me. I screwed up and I know it.

Where do I go from here? How do I get on track when I've never really been on track? I'm locked into the study abroad program so skipping out isn't an option. Serious suggestions are welcome. 

Another trip to the thrift shop

We made our last big trip to the thrift shop for a while (we hope!) as you can see here.

What all is here?

Bar stool that didn't fit under our table because I didn't measure first: $10

Hot/cold dip server from our wedding registry that we never used: $20

Two books we read and enjoyed: money well spent

Tree stand: got it free on freecycle

Blender/food processor combo: money well spent but it's too small for us now

Toolkit for a product I don't own (we bought the wrong one): $15

Blanket that was so static-y we couldn't use it: worth it for a while

Two baskets: free with presents

Quilt hoop from my wedding registry: $200

Total: $245 gone on 11 things that didn't work out for us.

One of which was the quilt hoop. I'd had such hopes that I would use it. But in the end I only quilted to stay connected to my deceased grandmother. I finally admitted to myself that I actually don't like quilting.

In total, it brings the Reckoning to

244 items decluttered

$3129 wasted on junk

At this point we're pretty much done the decluttering process. Yay!!  How should I celebrate? Hopefully now I can focus on learning to buy less stuff. Where are you in the decluttering process?

More stupid things I bought to make myself temporarily happy

Amazingly we found even more stuff to declutter this weekend. Unfortunately this batch was loaded with expensive stuff I never should've bought in the first place.

One pair of pants, four work blouses that are too worn to continue to wear at the office, and three pairs of shoes. I'm a recovering shoe addict, apparently. The black boots and the heels I bought because I was trying to be fashionable like Kate Middleton. I spent $130 for those two pairs together and all I got was blisters. Three shoes down and plenty left. Guess I'll have to count them at some point. After I find all of them.

Black boots plus nude heels: $130. Finding out that I wasn't a princess: priceless.

This pile of stuff included

1. An old keyboard that doesn't work with our laptops (free)
2. Cafeteria trays that I mentioned in a previous post
3. A creme brulee set my mother got me (free) 
4. Gloves that don't fit ($25 wasted)
5. Harry potter music for the cello (free from Mom)
6. A pile of old books (worth the money)
7. A grocery cart-like fruit basket (free from Mom)
8. Brown betty teapot, used twice ($25 wasted)
9. Pill case when I lost my first one and found it again ($3 wasted)
10. Small hydrapak, for storing water while on long bike rides ($50 wasted, I picked a style I hate)
11. Keen sandals ($70 wasted because they were the wrong size and I didn't return them)
12. Curling iron ($35 wasted)
13. Day planner ($16 wasted)
14. Barette ($5 wasted)

22 items gone, $359 down the drain. Sigh. 

What have you decluttered lately?

Just when I thought I couldn't declutter anymore

Clutter apparently never stops, even when you're a minimalist wannabe.

I thought we were done decluttering but we found a ton more stuff that were able to donate this weekend. The Chief Engineer cleaned out the linen closet for me! This was all the stuff we ended up with.

3 mismatched queen-size fitted sheets

2 mismatched flat sheets

1 full-size sheet set

1 queen-size sheet set

3 pillows

5 pillowcases

15 items! all gone, and the closet looks like this now.

End of month financial check-in

Another month down and it’s time to review the finances again.

All told we made some good progress this month. I finally settled on my priorities: kitchen loan gets top priority as it’s due in full by October. In tandem we fund the emergency fund until it’s full. Then we work on my student loan.  

We had two huge household problems this month that convinced me to put some serious effort into building an emergency fund. We had a very expensive furnace repair. Then we had some serious water damage into our bathroom from the unit above us. Fortunately this repair was paid for by the condo association because the leak wasn’t our fault. If it had been our fault we couldn’t have afforded the repair. Now I’m pretty scared that we don’t have an emergency fund.  

As a result, here’s where we stand.

Emergency fund goal: end of year	Kitchen Loan (1.99%) deadline: Oct 2014	Student Loan (2.65%) goal: end of year
Starting balance: $0 Goal: $20,000 Balance on 3/31: $2,520.88 $2520.88 saved so far 12.6% filled $0$20,000	Starting balance: $10,000.00 Balance on 3/31: $4,130.43 $5869.57 paid so far 58.7% paid off $0$10,000	Starting balance: $8,127.00 Balance on 3/31: $7,750.58  $376.42 paid so far 4.6% paid off $0$8127 Get a progress bar at DollarTimes.com

The next few months we will likely have to pull back our savings as we pay for the kitchen and then focus on rebuilding our very unhappy-looking checking account. But as I learn to spend less money on dumb little things I'm confident we can reach at least two of our three goals this year. I realize that we likely won't be able to make much of a dent in the student loan this year. But I'm okay with that because we'll have a good emergency fund set up by the end of the year.