Two Homes, Two Financial Relationships, One Child

Wes and I were blessed with three children each, before we found our way to one another. In his past life, he was what The Millionaire Next Door terms a High Income, Low Net Worth UAW (Under Accumulator of Wealth). He was married to a woman who shared his (then) money values. He earned a lot, they spent a lot.

Over the last couple of years, our family has been making slow but steady progress toward becoming more frugal. However, his ex-wife's household hasn't undergone those same changes. YM10 lives with Wes' former wife and only gets to see us on his bi-weekly visitations. So, he hasn't been engaged in our family conversations (that occur on an almost daily basis) about how we're being more responsible with our money. He only gets to participate in this every-other-weekend. Having two parents, in two different households, with two different sets of values when it comes to money, YM10 has a few problems when it comes to realistic spending expectations.

Admittedly, the expectations he has have been reinforced over time by both parents. In the beginning, very little thought was put into the cost and we often spent $500 to $1000 on visitation weekends without realizing it. Spending a family day going to Dave and Buster's ($200) before going out to a sit down dinner ($120) before going to the drive in movie ($50) was fairly common for us. As a result, YM10 has an almost constant case of the "spends" when he is with us.

We still do fun family things, like buy Six Flags season passes and take the family to Renaissance festivals. But, instead of spending money like water when we get there, we tend to pack a cooler full of drinks, or bring the refillable bottles, to keep from spending $2.50 per can of soda. We also pack lunches or purchase family meal plans for a reasonable fee. We take our grill and lawn chairs to the drive-in theater for a frugal but fun night out. All of the children still get family time and they still get to do fun things, we just plan our spending now.

But, while the 3 children who live in our household have made gradual changes with Wes and me, YM10 hasn't had that opportunity. When at the Renaissance Festival, he didn't understand why Wes wasn't spending $50 on swords like he used to, or why we didn't just hand each child $40 to spend on whatever they wanted. He is upset when Wes tells him that they are not going waste money going to the batting cages, but suggests they play ball in the front yard together instead. He doesn't understand why Wes is no longer keeping up with the tradition of buying a toy for him every time they're together.

He often uses phrases like "My mom said you have enough money to do X, Y, or Z, so why can't I have W?" Teaching good spending habits to a child whose daily living environment is about spending and keeping up with a lifestyle, rather than spending time connecting as a family in ways that don't cost anything, is very difficult. Right now, our goal isn't as lofty as teaching him good financial sense. Right now, we just want him to realize that we're not being careful with money because we're poor, but because we are no longer a family that is wasteful of our resources.

How do you do this? How do you teach a ten year old little boy who has everything he has ever asked for that when he goes to Daddy's house, not getting what he wants all the time doesn't mean that Daddy is poor or just being stingy?

10 Ways To Reduce Spending Painlessly

Where Can You Reduce Spending Without Pain? This is the first question that many people ask when they realize they need to get their financial acts together. Just like with dieting, when you drastically alter your lifestyle to reduce spending, the changes will not last. You'll get tired of having to sacrifice and go back to your previous handling of money.

Here are some of the more popular ways to reduce spending without impacting your daily life too much.

1. Get rid of the Sirius or XM Radio - Unless you are in an area where there is no radio reception or you're on the road a lot and make tons of use of it, get rid of the satellite radio. It's a slow drain on your finances.

2. Newspaper or Magazine subscriptions - Spending money every week or month for magazines and newspapers you don't read is a waste of your resources (and the environment's). You can read most of the local newspapers and magazines online. You can also read them at the local library, often with a much larger selection of reading materials. * Exception - Sunday paper for the coupons :)

3. Cable Package - Remove services you don't use. Figure out how many hours a month you're watching the television and divide that by the amount you're paying for cable per month. Is this really worth it?

4. Cook Once Eat Twice - Double your recipe once a week to freeze for a quick meal later in the week. This will make it easier to resist the urge to eat out when you're tired or rushed.

5. iTunes – Set a budget for music, just like everything else. iTunes can rack up tons of charges without you even realizing it. Don't mindlessly pay for downloads on impulse.

6. Movies – Movies are getting more expensive every day. Heading out to a movie occasionally may not break the bank, but if you're a regular movie buff, you may want to try these alternatives:

1. Check them out at the library

2. Wait for 2^nd run at the dollar theater

3. Get a Netflix account instead of buying DVDs

   1. On the other hand, if you have Netflix but never use the service (don’t return the movies to get new ones or don’t watch them in a timely manner), cancel it and check out the DVDs for free at the library.

4. Watch free movies On Demand from your cable company.

   1. They also have paid movie rentals too, which isn't as good as free, but is cheaper than driving out to rent one or doing to the movies theater.

7. Books - I am a book lover! We have a ton of books. Books on shelves, and in boxes, and probably a few tossed on the bedside tables. But, books are expensive, especially new ones. If you're an avid reader, try these frugal alternatives to buying new books.

   1. Check out the library

   2. Start a local book swap group with your friends

   3. Use Swaptree.com or Paperbackswap.com

   4. If you have to buy, go to used book stores, not new

8. Fast Food – Very few people really enjoy eating fast food instead of home cooked meals. Most of us eat it because it's fast and easy. Some ways to combat the need to stop for fast food:

1. Finger Food Night

   1. Chop up fresh fruit and veggies and combine them with dips.

   2. Make Ants on a Log (celery with peanut butter and raisins on top) your kids will love this!

   3. Make english muffin pizzas.

2. Breakfast for dinner – No meal is much easier than pancakes and eggs, or sausage, egg and cheese sandwiches. Breakfast for dinner is also fun for the kids.

3. Recipes for quick easy meals – Gather a few recipes for quick and easy meals for those days you're really not up for being experimental

   1. Publix has an entire series on 30 minute meals. Some of them are fabulous.

9. Cancel Unused Gym Memberships – You know the one. The gym membership you signed up for in January when you were on a resolution health kick. The one you only use once a month when the automatic draft comes out of your account and you remember that you really should get some use out of. That $40 a month membership full of good intentions is draining your wallet of $300 a year! Dump it and go for a walk.

10. Switch to fee free bank accounts – The $7 for that Bank of America account, and $12 for that money market account are not doing you any favors. Try these free bank acounts to lighten the dings you take to the wallet every month:

    1. Ingdirect.com

    2. Wamu Free Checking

    3. Wachovia

    4. There are dozens, do your own research and find the fee free accounts that are best for you. Worst case, you can put an end to those fees. Best case, you get an account that earns you interest on the money you have there.

What about you? What are some of the ways you can think of to reduce your spending painlessly?

We're Not Getting Stimulated

Or are we? There has been much discussion over the internet and in coffee shops and homes around the country about the Economic Stimulus Package. When are the checks arriving? What to do with them? Are they even a good idea? Gather Little By Little posted about it recently and his post has a lot of fabulous information... but it also created questions for me.

Wes and I owe about $40,000 in federal back taxes. We know we're not getting a payout from this plan. Or are we? Both of my exes owe over $10,000 in back child support. From what I understand, if you owe back support, the stimulus check will be offset. Does that mean that the money that isn't paid to the exes will be sent to me instead? Does that mean what if the IRS does offset the stimulus package for either ex, will they also apply that offset directly to my back taxes instead of sending it to me as child support? It'll be interesting to see how it plays out.

Only One Week Left...

To sign up for Revolution Money Exchange and make a fast $25 for signing up. Revolution Money Exchange is an alternative to Paypal, started up by the former execs at AOL. If you sign up using the link below, you'll make $25 and I'll get a $10 referral bonus. This is how I'll be sending all of my virtual payments from here on out.

Hump Day - And Emotional NON-Spending

Well, yesterday was not my most frugal day ever. I did have to spend $100 on an ER copay to make sure that YL12's leg was not broken. YAY that it wasn't! Afterward, we were so hungry that we were mildly faint (we got to the ER at 7:15 and hadn't had breakfast.. it was 10:00 before we left) so I spent $8.00 on breakfast. But, that was it.

I cut all three girls' hair, so that saved at least $36 plus tip.. and that's the cheapest place. Wes repaired my laptop for free! Now I have a working laptop for book writing and web developing and blogging, and we don't have to replace it. $200 to $800 bullet dodged.

Yesterday was a bad day for us emotionally, with the money issues. We have been planning all along to buy YL18 a Macbook for her graduation gift. For a year, Wes has thought about how much he wanted her to have a Mac for school. However, our finances at this point will not allow for a $1000 gift. We are both very upset at this, but other than making an unwise financial decision to just wing it and spend the money, we aren't finding any good options. New snowflaking goal is a Mac for YL18 before she goes to college in the fall.

This is an ongoing mental battle for Wes and I (within ourselves and not with one another). We both want to be able to provide for our children the things they need, and make sure those things are good quality. But, we're also both moving into a more frugal mindset with each passing day. Sometimes it is a hard line to walk.

My Project

I've decided to get off the fence and go with my passion. I love helping people improve their household finances. Over the last several years, I've read a million and one finance articles. I started reading Yahoo! Finance, then MSN Money, MSNBC Business, CNN Money, and a ton of books. I've taken online accounting courses through a local university, and even pondered going back to school to get my degree in Finance.

From the point of reading that first Yahoo! Finance article, I became obsessed with getting our family's finances on the right track and maximizing our spending. Mostly, I focused on retirement research. After I opened my 401k with my employer and maxed out my contribution, I breathed a sigh of relief and went on about my business. My projections show that with a standard rate of return, if I work until I'm 65, we'll have enough in the retirement account to live on $120,000 a year for the rest of our lives and still leave money for the kids.

I realize that retirement is far more complicated than that, but knowing that I have at least a loose plan, I felt free to make changes in other areas of our lives. I created a budget for our family in excel. It's a complicated spreadsheet and covers lots of variables for 5 years. It also has a section that tracks debt reduction, and feeds right into the rest of the calculations. This spreadsheet has been shared with quite a few friends and relatives over the last year and it's been wildly successful!

I've tweaked and adjusted and learned more and implemented tips and tricks from other bloggers and sources until I have our finances rolling like a well oiled machine. And everything I need to manage our household finances on a monthly basis is contained in one 3 ring binder. Not too long ago, Wes was watching me process the weekly grocery list and manage our household finance tasks and had an epiphany.

I think everyone is aware that the economy is going down the tubes. For most of the people in our lives, this means radical changes in their household finances... but they don't know where to start. I'm going to help give people that start.

My new career path is Household Finance Coaching. I'm writing a book to go along with the organizational binder. I already have the binder in Beta form. I'm working with several test households to get real numbers in line. I'm building a new website, and am going to give this a whirl. I really am looking forward to making a difference.

:) And when the book is finished, I'm going to give away a free copy here.

Dodging a Bullet

Thursday, on my drive to work, my Overdrive Off light started blinking on the dash. While I was driving, I could feel the transmission repeatedly engaging and disengaging the Overdrive. Then, as I was pulling into the parking lot at the office, the check engine light came to life too.

SIGH... Just when I thought we were getting a handle on things, here we go again. The last time we had to have the transmission replaced on my Windstar was 2 1/2 years ago and, at $2600, it meant that Wes and I had to fore go our wedding reception. This time, I decided that I wasn't sinking another $2600 into a repair for an almost 9 year old car with 153,000 miles on it.

Yesterday, Wes dropped the van off at the repair shop and I headed on in to work in his car. When I got here, I went online and tried to line up financing for the new (used) car we were going to have to get. I filled out a couple of online apps and within 30 minutes had 3 offers for full auto financing at conventional rates. Thank goodness I've been working so hard to get our debts paid off and our credit score boosted.

After the 3rd call from the finance departments, Wes called. The problem was a $2 sensor that the transmission place replaced for free... no labor or part cost. The owner said t hat if we refer one customer, we've done well for him. Can't beat that!

So, I've called back all of the finance places and thanked them for their time and told them we'll keep them in mind for when we replace our cars next year. WHEW... I'm glad we didn't have to go further in debt, but I'm glad to know that it's an option if we're desperate.

Snowflaking, sort of

I've probably said it too many times, but Wes and I aren't the most frugal of people. We are doing better, and every step in the right direction counts in the end. But we still have a long long way to go.

I've begun a little experiment. No matter what our other spending habits, whenever a bill or expenditure is less than planned, I snowflake the difference. If the gas bill is $140 and we budgeted $150, I'm sending that $10.00 snowflake, even if the electric bill was budgeted at $150 and really came in at $180.

So far, I don't notice a difference at all. We haven't come up short in other areas and this has been fairly painless. Since my experiment with tracking my expenses every single day failed miserably, I've decided that this approach may work better. We spend if it's there, but really tighten our belts when it isn't.

Anyone have advice on this? What other ways do you throw little bits at your debts without feeling the pain?

Stunned

OH WOW. This is going to be a short post but I definitely wanted to share. I followed a link posted last week by Cash Money Life. It was one of those nifty Get $25 Just For Signing Up links. (See the one below! Even better, click on it!) I'm always skeptical when it comes to these things. But, I gave it a whirl. After all, I haven't been steered wrong by my fellow bloggers yet.

I signed up, and immediately got credited $25 to my account. Poof, just that easy. I sent out a referral link and got $10 for the referral. Poof, just that easy.

The best part about Revolution Money Exchange is that they don't charge fees to send or receive money. I've always been hesitant to accept money on PayPal because of the percentage they charge to receive payments on a business account. So far, RME has done exactly what they've said they will. It's user friendly. I think I'm going to like it there.

Financial Goal

Until now, I have had a very vague idea of what I want to accomplish. Getting out of debt is only a portion of the equation. It's going to take a long time, but how do I get there? Not only that, but once I get there.. and max out my retirement savings.. and get my emergency fund.. what then?

I have a financial goal. My goal is $100 per day in passive income (or at least non-traditional employment generated income), 5 days a week. I have a few ideas to try. I'll post about them as I go along. I'm not sure what the parameters are yet and I may modify this goal/plan a dozen or so times in the coming weeks, but this is my starting point.

It's not enough for me to stay at home, but then I'll never be able to do that. Wes and I are unable to be approved for private medical insurance. Since my job provides medical insurance, I can't lower my hours to part time or quit to work from home.

So, what will I do with an additional $100 a day? Pay off the debts faster. Give extra money to Wes' daughters (one is in college and the other goes in the fall). Travel. Max out our personal retirement options. Save. Probably equal divisions in all of those categories. Maybe. I still have to map it on my spreadsheet.

How I Know I'm Making a Difference

Wes tells everyone about my blog! Correction, he nudges me when we're out with friends and says "Tell him what you write about." and "Dude, you're not going to believe our trip to the grocery store yesterday, tell him babe!" He is astounded when we load the entire back end of the mini-van with groceries from 3 stores and the total spent was $115. He reads my entries and sometimes looks puzzled, then asks "How do you know all this stuff?"

Our quality of life is the same, if not increasing, as it was before we started cutting out the frivolous spending. Some of the noticable changes have been:

• Drastically decreasing the amount of nights we eat dinner out has made the entire family, myself included, appreciate those special nights more.
• Making the grocery list and clipping my coupons has not only cut my grocery bills, but also my shopping time. I don't wander around the store anymore looking for what I need. I get the items on my list and I leave.
• My freezer and pantry are both filling up more every week with the stockpiling I'm able to do with The Grocery Game.
• We're starting to thin down the clutter in our home.
• The children are starting to learn more about conserving their resources and prioritization of spending.
• Wes thinks I'm brilliant and working miracles. I'll take it!

I've learned so much already from all my other blogger friends, researching finance articles and reading books. When I started this blog, Wes said "I don't know why you read all this stuff, they all say the exact same things. Stop spending and start saving. What's so hard about that?" The way I really know I'm making a difference in our lives is that his tune has changed so completely.

First Paycheck

Yesterday, we got the FIRST check made out to Wes' new company. WHEW... I have to be honest, I was a bit panicked. The payment was 30 days overdue. Our savings account was officially down to one mortgage payment and 1/2 month worth of child support. To say that Momma was a little stressed might be the understatement of the year.

So, the check has been deposited. "Payroll" has been processed. The new Business ING Direct account has been established. This morning, I feel like we're getting a little more control going in our situation.

I was able to send in the debt payments that I usually send on the 15th of the month:
$450 for Federal Tax Debt
$300 for State Tax Debt
AND! I sent in my $14.36 Snowflake (Thanks PaidTwice!!!)

I'm now off to the thrift store to find costuming goodness for an upcoming costume party. This should be fun.

Hiccups and Money Stress

This weekend was a difficult one for me. I'm still trying to wrap my mind around the emotional relationship I have with money. I am relieved to have enough money saved that I can replace the tires on my car without worry. If the electric bill is more than expected, there is no financial crisis for us. If we forget to lay out something for dinner and we just decide to jump in the car and go to a restaurant, there is no big dilemma.

However, there really is. Or, there will be. Maybe.

Starting our own business was a great idea! We had enough money in the bank to cover 3 full months worth of expenses while Wes concentrated on contracting work, as well as looking for a "regular job" so that he kept all of his options open. Wes has already completed one contract and we've invoiced for (OMG) $10,000. He started another contract today, for a considerably larger amount. Why am I worried? Am I completely crazy?

Once again... Maybe.

The invoices have been sent out for the completed contract, but nothing has been paid. In 3 days, we will be at the "Net 30 Days" for the 1st invoice and I am nervous that it won't be paid on time, or at all if the company decides to be difficult. Ok, so even if that invoice doesn't get paid... Wes is still working on the 2nd contract! No problem! Except... that contract is "Net 45 Days" ... so, no paid invoice for 2 months. Ut oh... now we may have a problem. No money from our consulting company for 2 more months is a definite possibility.

Jumping in the car for that "no problems" dinner is suddenly seeming like the beginning of a possible problem. Wes doesn't seem worried. I have complete faith in him to provide for our family. I also have a job, but it barely covers the house payment and half of the utilities. So, if nothing else, I know we won't be homeless or starve. I am just SO emotionally attached to that number in the ING account. It causes me great amounts of distress to see that number going down.

Granted, we planned for this. It's been budgeted. We've looked at everything from every possible angle. We've discussed it. We both agreed to this course of action. So, why can't I get my head wrapped around the depletion of our savings to bring our dreams to fruition? Whew... I hope I work through it soon.

Surprise! Financial Windfalls

Today seems to be the day to discuss Financial Windfalls on the PF blogs. Over at We're In Debt, the King of Debt posted an interesting question about what you would do with a windfall of $500,000. And over at Get Rich Slowly, JD answers a question from a reader who wants to make sure he doesn't squander a windfall of $125,000.

I posted a response to the King of Debt's post, and as I thought about how I'd handle a $500,000 windfall, I was actually surprised by my decisions. I realize that my priorities are not really in line with conventional money wisdom. I don't necessarily want my money to work for me later. I want it to give me freedom NOW. I don't care to retire later. I want to travel while I'm young enough to enjoy it and even share those experiences with my children.

With that said, here is the way the breakdown worked out for me:
45% ($225,000) to pay off all back debt and the mortgage
24% ($120,000) directly into 529 accounts for college for the children at $20,000 per child.
23.2% ($116,000) to a high yield savings account for payment of child support for the next 8 years.
6.8% (34,000) to invest in a moderately aggressive portfolio
1% (5,000) Vacation



*Experiment #1 - Yesterday's spending
$91.55 for school lunches for the kids.