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.

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.

The Ordinary Family ... or Not

As I've said before, our family is very complicated. Wes has 3 children from 2 previous marriages. I have 3 children from a previous marriage. We're what is becoming the new normal family. The Brady Bunch of the new millenium, if you will. Our family stretches out like this:
YL (Young Lady) 18: In college near Nashville, TN
YL 17: Lives with her mom ner Memphis, TN and goes to high school
YL 14: Lives with us, goes to high school
YL 12: Lives with us, goes to middle school
YL 10: Lives with us, goes to elementary school
YM (Young Man) 10: Lives in South GA with his mom and goes to elementary school

We live in the Atlanta, GA area. We are "Wealthy" according to the government's determination. I make roughly $40,000 a year and Wes makes triple that on an average year. HOLY COW, that's $160,000 gross salary. How in the heck are we in so much debt?

I've read many of the other personal finance blogs and I'm absolutely in awe. How people manage to make it on what they do, is astounding to me.... and then, I look at our numbers again ... and our children... and I remember. Our financial reality is far far different than some people.

Our financial reality includes $27,624 per year in child support and a 28% tax burden (yep, that's $44,800). This brings our real income down to about $87,576. Still not too bad, right?
So, how the heck does a family that clears $87,000 a year end up where we are now? Well... it takes effort!!

Annual expenditures
$13,044 - Mortgage
$9,400 - All utilities & telephone expenses
$9,100 - Groceries and household
$9,000 - Back Taxes
$6,500 - Health Insurance
$6,000 - My 401K (Maxed at 15% of my income)
$5,000 - Travel expenses to visit YM 10 (he lives 4 hours away and we see him every other weekend)
$5,000 - Gas (auto)
$3,900 - Wes' discretionary budget
$2,600 - My discretionary budget
$2,050 - Auto Insurance
$2,500 - Auto Repair and Home Repair
$2,000 - Clothing
$1,500- Dry Cleaning (work clothing and ROTC uniform)
$1,416 - Student Loan
$1,000 - Medical copays and prescriptions
$876 - Gym Membership

This leaves roughly $6,690 per year to pay extra toward the $70,000 in tax debt that continues to accrue interest daily. None of these numbers reflect entertainment, Christmas gifts, birthday gifts, last minute emergency trips, major home repairs, or any other number of things that come up in a year's time.

Yes, we could cut out the Gym membership, but this is something that Wes uses, on average, 4 times a week and I use twice a week. We're both overweight and working to improve our health. This is an expense we are not willing to cut.

I sat down with Wes last week to see where we can cut corners and limit our spending. He just smiles and hugs me and goes along with the discussion for my sake, but the truth is, cutting spending is not the real problem. Our only expenses that aren't really required have been cut down to almost nothing. I've been tracking and tweaking and adjusting for over a year now. When I get frustrated because I can't understand how we make SO much money, and still have so little at the end of the day, I go back and look at these numbers again. For a little while, it definitely does help me to understand that we're working at it, even if we're not gaining a lot of ground.

*Experiment #1 - Yesterday's spending
$25.01 on gas

Acquiring Things

I'll be the first to admit that I'm very obsessive about spreadsheets. I love them. If I could tweak and adjust and toy with everything in my life and get it "just right" the way i can with the formulas in my spreadsheet, I'd never be stressed. Oh look... that thought train just went right off the rails.... onward...

I tweaked our budget yesterday to find out just how low our spending can realistically go. Let me just say WOW. We can almost live on half of what our income was, if we just try. So why haven't we done that? Well, because it means sacrifice and planning.

Not only sacrifice and planning, but WORK. It means remembering to thaw the roast the night before, every time it's on the menu. It means keeping accurate stock of what you have in the kitchen... or the bathroom... or knowing just how long that pair of socks can really last before replacing them.

I'm very guilty of acquiring things. Not because we're wealthy or because we need them... but because I was poor for my entire life and many times left behind everything I owned at the whims of a gypsy mother. Now that we're fairly stable, the habit of buying things for my family just because I can is very ingrained. My first personal goal is going to be to combat that habit. I'm dragging it out in the open and staring it in the face. That is going to make living more sensibly much easier.

I think......