The D-Word

Debt is the only four-letter word no one talks about unless we are griping about the current state of political affairs.  But we all feel the sinking in our hearts, that punch in the gut, the hopelessness when we hear that word.  Debt.  The calculator starts running in my head subconsciously when I hear the word debt, when I swipe my ATM card at the gas station or the store.  I am human living in a consumerist society.  Everywhere I go, I am not encouraged to save and pay off debt but to spend and consume more.  I am enticed by sales, promotions, BOGOs, Groupons, and in some weird way, I feel like by spending more on these items, I am actually saving.

It all began when we moved to Seattle and Duane's only income for four months was unemployment.  I make a modest living, but my paycheck covers the bills and that is it: water, gas, rent, food, mortgage, electricity, student loans, retirement fund (I will address this in a separate blog and why it goes in this category, but think about it for now), and daycare.  It doesn't even begin to pay the health or car insurance, Pocky's annual vet visit, medical bills, haircuts, dog food and medicine, clothing and diapers for August, cell phone payments, and it certainly doesn't put a dent in the credit card bills or any kind of entertainment fees.  Duane and I were sitting in the apartment hot tub a few weeks ago adding up our bills.  We try to talk about our situation as much as we can; we talk about our struggles, successes, ideas, and we give each other positive and negative feedback about what worked and what didn't.  As I talked about in my blog last night, this was the first step for us, to remove the taboo and the nature of talking about debt as if it's a dirty word.  You aren't going to make it go away if you don't even acknowledge it.

I check the Craigslist "free" column regularly and saw a free photo shoot if only August would model very expensive christening dresses.  Not only did we not have to buy the dress, but we didn't pay for a professional photo shoot as well.

The first thing we had to do to start paying down debt, was identify our priorities as I mentioned in the "Are You Ready" blog.  Once we could identify what was a necessity--and this is an important distinction to make since we once thought TV was a necessity--we could begin removing payments from our monthly outflow.  TV used to be a big part of our life but when we moved here, if it didn't directly contribute to our ability to eat, sleep, or get to work, it wasn't a necessity.  The problem with moderation when you've been living in excess for so long is that if you don't scale back a lot, it will be easy to return to the previous spending volumes once you are debt free.  It doesn't work like that, just like a lot of people who lose a bunch of weight by dieting regain the weight because they don't make a lifestyle change.  That's what this is about.  This is your new reality.

What did this mean for us?  What did we cut out?

I began making baby food for August because the jars were expensive and they weren't organic.  It only took me a few hours and I made enough for all three months she was eating purees.

This is the running list we keep on  the fridge to make shopping easier.  By the way, a lot of things on this list we now make at home.

• impulse purchases like Starbucks, gum, magazines

  

  This is the dog park we take Pocky to.

• haircuts for me (Duane has to get his hair cut for the military, but he chooses the $9 place)
• entertainment like restaurants, movies, television (we have hundreds of DVDs we can watch and just started by watching seasons of shows like all 11 seasons of Frazier).  We also started finding free things to do like going for walks, swimming in the local pool, and the dog park
• At $8 per pack, Duane cut out smoking
• We carpool as much as we can and sometimes use public transportation.  We also consolidate our errands by keeping a dry erase board on the fridge and plan out trips for the week so driving is minimized.  When one of us has to go to the base, we make sure we do any shopping at the commissary or the BX until the next time we will be there.  The same is true for Sam's Club.
• new cars--my car just registered 180,000 miles and Duane's is at about 75,000.  We aren't ignoring we will need a new car soon, but with fertility treatments and buying a house in the next year, we realize it is smart to wait until it is time; now is not the time since my car runs.

August playing in the fountains at a local park during the hot summer

• new items for August--everything comes from Craigslist, is a gift, homemade or borrowed.  We are also grounded in what she needs and not what we want.
• things we can make cheaper than buying or repurpose things we already have (wrinkle spray, baby food, wrapping paper, milk cartons and food containers for gardening, etc)
• we began using the library, youtube, hulu, and borrowing or swapping things from friends when we can instead of buying them (equipment, clothing for August, DVDs and books)



Duane is making salsa to can. It took all night, but we won't buy salsa the rest of the year.

• clothes, shoes, coats, new purchases for us: chances are, we had some older, less attractive version of what we needed in the garage or in a box.  What we didn't have, we have been going to the thrift store on holidays when the store is 50% off--we got a name brand suit coat for Duane with tags attached--it was a $200 sport coat for $10

• food items I can make like bread, jams, ketchup, barbecue sauce, pickles, spice blends, marinades, whipped cream, salsa, salads, pizza items such as dough and sauce, chutneys, pasta, (I will also address this in a future blog, but for now start thinking what you can make at home)

We made this pie from apples we canned during the fall when we had company over and needed a dessert on the fly.

• We are very careful about fees.  We called all of our credit card companies and asked them to renegotiate a lower interest rate, I consolidated my student loans, we called the cell phone company and got a discount for being government employees, we always ask for a military discount, we keep track of doctor bills and make sure the insurance has paid what they are supposed to (because surprise--a lot of times they aren't getting it right!).  Side note about the insurance, you really have to do research and learn about your policies.  They are very confusing and if you don't you will never know if they are paying and coding things properly.  And they care zero if they owe you money--they won't track you down.
• We've worked closely with our accountant who itemized everything and helps us prepare what to save receipts for the following year.  He normally charges $300 for a return like ours, but gets it done all via scan, email and phone and charges us $96 for being military.  If you need a tax professional, let me know.  He rocks and knows tax law like no one else.  It might be time you stop filing the 1040EZ and start itemizing, especially if you own a house, pay a lot of interest and childcare, use IRAs or 401Ks, or donate to charity (like church or donate itmes to thrift stores when cleaning the attic--you can deduct that!). 



Insurance can be confusing and one item coded or billed wrong can cost you hundreds or thousands and if you don't pay it, can affect your credit. This is one month of fertility drugs.  Can you imagine if they were off by a few hundred dollars?

• We also learned about taxes and what we can deduct.  This is a pain in the ass.  I'm not going to lie.  Along with learning about your insurance coverage, this is the worst part of this whole venture.  Give me 250 pounds of tomatoes to can on a hot summer night with no air conditioning and I'd rather do that than learn about tax law and insurance.  That said, we now pay into a dependant care account to help offset August's $1,100/month daycare tuition.  Of that, we can deposit $5,000 per year, tax free into an account for childcare.  It's only half, but it saves about $500 per year alone.  That's about $40 per month! There are also Health Spending Accounts if you know your deductables are going to be so much per year.  Why not have it deducted monthly and pay for those bills at the pre-income tax level?

It took us a few hours to pick and shell these peas, but we turned it into a family event and had a better time than if we were watching TV.

There are a lot more ways we've learned to save-I haven't even touched on canning, gardening and joining a CSA.  That will come later.  All I wanted to do tonight was introduce you to the possibilities of how you can start making that paradigm shift.  Looking at it on paper feels overwhelming and our plan might not be the plan for you.  These are all things we've added one at a time over the past year and a half.  And honestly, like losing weight, you don't just cut everything out cold turkey--you cut out the things you know you can commit to, like sweets and junk food.  And you resolve to work out a few days per week.  You don't start training for a marathon and eat only 1200 calories per day in the beginning.  It isn't sustainable and you will fail.  When you start seeing results, you will know what to cut out next.  It will come naturally.  Don't be afraid to begin--that's usually the hardest part.

I'm not saying sell everything and go live in a van down by the river.  Just start freeing yourself from the dirty word Debt by recognizing what is a need and what is a want and finding less expensive ways to fulfill your wants.  It's amazing how good it feels when you stop paying the minimums and actually start making a dent in your debt.   You'll be less inclined to say so many four-letter words when you get your statements in the mail too.  The best part is the sense you've accomplished something and not paid someone money holding you hostage for something you could have done yourself.

We bought this swing on ebay and attach it to the tree right outside our patio door.  It's a fun, free way to play with August.