Thursday, February 02, 2012

No Money, Mo' Problems*

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I spend a lot of time worrying about money, talking about money, complaining about how broke I am, joking about living in a cardboard box... but very little time actually doing anything about my financial situation. Part of this is because I feel like there's not much I can do. I'm going to school full time and working as a teaching assistant, and I know that getting an additional part time job would defeat the purpose of being in an MFA program - that is, to spend all my spare time writing. And yet, with a wedding on the horizon and a bunch of credit cards floating around with increasing balances, something had to be done. Earlier this week, Nathan and I finally sat down and took a hard look at our finances. It wasn't pretty, but it was a big step in the right direction.

Credit card debt 

We each have a credit card and we each owe a lot on them. I consider all debt our debt (with the exception of student loans) because we used these cards for shared expenses, such as buying a new bed when we got to North Carolina, paying the bills while Nathan was job hunting, and purchasing more than a few bottles of wine (to help with the transition of starting over in a new place - very important). When we combined those totals, we were left with a number that was, quite frankly, terrifying.

Closer inspection revealed that my credit card has a 29.9% APR and Nathan's is only 11.9%. Even though my balance was lower, I was paying way more in interest each month. (This is something I probably should have realized much, much sooner, but ignorance is bliss - until you have to pay it back.) We decided to use our small amount of money in savings and pay off the bulk of my credit card immediately, since the interest I racked up each month really would soon surpass our savings. Our plan right now is to pay off my card completely in the next two or three months, and then begin making slow and steady payments on Nathan's card and bring that balance down to zero within two years. In the meantime, we're taking our credit cards out of our wallets and putting them in the lock box, using them only for future emergenices.

One checking account

For the last nine years, Nathan and I have maintained separate checking and savings accounts, with the exception of one joint savings account which usually hovered around $50, give or take. Each month, I would calculate all our expenses and split the total down the middle. He would give me his half of the money, I would put it into my account, and then I paid the bills. (I like being in charge of money.) This system worked well for us and we were one of those rare couples who almost never fought about money. It was great.

Now, however, things are different. We're bringing in so little money that we have to pay attention to every dollar we send out. Juggling multiple accounts was stressful and I was overdrafting on a monthly basis. We realized that it would be easier to combine accounts - maybe not forever, but definitely while our financial situation is so tenuous.

Since we still like our independence, we're only quasi-combining. Each month, we're going to put all our money (with the exception of $100 each, for personal incidentals) into a joint checking account, and we will use this money to pay the bills, buy the groceries, care for the dogs, and otherwise fund our lavish lifestyle (that was a joke). This is our first month with the new system and I hope it works. If not, I have no problem going back to our old system, as clunky as it was.

The simple life 

We've always been thrifty and frugal for the most part, but we're trying to be conscious of our spending and make the small changes necessary to avoid debt and save money. So far, we have decided to:
  • only go to the bar if it's someone's birthday or a special event, and drink only the cheapest of beers while there. 
  • host and attend more potlucks, house parties, and game board nights. Being broke doesn't mean we can't be social. 
  • eat all our meals at home. I have a bad habit of dragging Nathan to the Mellow Mushroom because it is a craving that cannot be tamed. Well, it's time to tame it. 
  • less expensive beer at home and more boxed wine. This one is easier for me than for Nathan. 
  • look for wedding venues in North Carolina in addition to Long Island. This is a big one and I'll write more about it later, but planning a long distance wedding has a lot of hidden expenses. Most of our guests will have to travel no matter what so it makes more sense to ask them to come to us. 
Basic stuff, but I'm hoping it adds up. I really don't like being in debt.

So that's the update on my sporadic Adventures in Debt series. The moral of this round is: know your credit card's APR, don't stick with money habits if they no longer make sense, and get married in a cheap place so you can spend more money on booze. I'll post a follow up next month and let you know how things are working out.

(*I actually went back and searched my archives to see if I had used this clever title before, and was shocked to see that I hadn't. Better late than never!)

17 comments:

  1. It sounds like you have a solid plan of attack. I think the best thing that I did was to pay off my credit card debt a couple of years ago because the interest was killing me. It took a while and it took making some sacrifices, but it was the right thing to do. M. and I have a joint credit card now and we use it a lot because of the points, but we pay it off every month. Our other cards we might use once a month for something small and then pay it off during that cycle.

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    1. I was REALLY shocked when I realized how much interest I was paying. More than I was putting into my savings each month, which just felt so hopeless! I can't wait to get rid of that debt. Goal is before the wedding.

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  2. Sitting down and dealing with finances is never fun--but I'm glad you guys were able to find ways to combat some of the debt & living expenses! Besides, who doesn't love a good potluck? I lived for those back in the MFA days :)

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    1. I went to one last night and it was lovely! I'm also going to be better about baking bread and making hummus. These are two things I love and they are cheap and easy to make at home!

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  3. T. and I recently joined accounts after I came back from Germany (about a year post wedding). We have both our paychecks (his grad student one, my fellowship money) go into one joint family account, from which all bills are paid. We move some into a joint savings each month, and we figured out how much we could each get in allowance money each month, after the aforementioned items are taken care of. We then get to use our allowance money on whatever we want, we each get an equal share, and it's guilt free spending. I use mine for yoga classes and thrift store adventures, T. buys bikes on Craigslist, it's all good :)

    What I like best about our system now is that we both get the same amount of 'fun' money regardless of who brings what in. Although I bring in less with my fellowship, I stay at home and take care of our daughter full time and that carries a lot of value too. I like that we don't have his/hers accounts but that it's all a joint family pot from which everyone gets paid out; house, bills, us.

    Good luck with your new system! And with planning the wedding on a budget, I know how stressful that can get!

    S.

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    1. I was really resistant to combining accounts for a long time, but it just makes sense. I also like the idea of having the same amount of "fun" money. We're both contributing to our household by working and/or going to school full time and taking care of the house/dogs, so it shouldn't make a difference who makes more actual money. I like the way you phrased it - that caring for your child has a value that evens out the disparity in income. I completely agree!

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  4. Getting rid of your credit cards is key. That was a goal of mine about two years ago. I have to say that I love your blog because I can really identify with you. I too am a grad student, but am studying International Education. I have been part time for the entirety of my graduate career and work full time. KILLER to say the least. And though I am not a runner I am an avid cyclist and struggle find time in my schedule to get out and ride. Fortunately I have been able to live pretty comfortably though money is still something I stress and agonize over. Especially since last April when my boyfriend was laid off. One thing that I would definitely also suggest is and if you are able to swing it, would be to put away a little money from each paycheck directly into a savings account. Even if it is only $20 it's better than nothing. And then of course do whatever is in your power to stay away from that account! Good luck!

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    1. Thanks so much for the comment! I'm glad to know people can identify with my struggles. :) Once my high interest card is paid off (by the end of the semester, hopefully) we'll start making bigger payments on Nathan's and putting some money in savings. Credit card debt is so frustrating, especially since I had just paid off my balance before our move!

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  5. Open a new card with a 0% introductory interest rate, take the hit on the one time balance transfer fee, and then enjoy the free loan.

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    1. I thought about that, but the balance on my card is more manageable now that we paid off a big chunk at once. We should have the rest of it paid off in a few months and then I will never, ever, ever use it again. Ever!

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  6. Oh, dear. Money can be such a stressful topic to confront, but I think you are brave and honest to not only confront it but to write about it here. And let's be honest: booze is not a trivial item in the budget! I get it. I soooo get it, as I peruse the wine shelves every time I go shopping now, whether or not I have wine on the shopping list. But I like wine and mixed drinks, so last night I bought some fizzy water to make fun drinks, which I think (for me at least) turn out to be cheaper than wine.

    Good luck to you both, and be brave! You can do this. I am cheering for you, all the way from Texas. xo

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    1. I too consider a glass of wine one of the essential parts of my day. You cannot put a price on sanity. :)

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  7. I echo Kip's suggestion. I didn't even know 29.9% APR was legal. Get all that debt into one, low-interest place and pay the heck out of it! You can do it and I am proud of you for facing the music, even though it hurts. Debt-free feels amazing and Ican't wait to see you in that club!

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    1. I feel like it should definitely be illegal. It's criminal for sure! But knowing the ridiculous fees will help me not use the card for any trivial items in the future, so I guess that's a plus.

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  8. Preach it, sista!

    I have often felt the exact same way (there's nothing I can do about it - $$$) but I've never actually sat down and drawn up a plan of attack. This was actually very helpful for me to read. I need to wake up!

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  9. Dave and I got joint bank accounts before we were married. I still have my "old" account because my student loans were set up to automatically pay out of there and I didn't want to do more paperwork. I thought a joint account was the way to go and didn't even consider separate ones. I have married friends who have separate accounts and talk about "his bills" or "her bills" but really it is theirs together.

    Have you looked into a new credit card with 0% on balance transfers for x months? Dave did that when he bought my engagement ring but that was years ago.

    I did some calculations before and some restaurants/meals are cheaper to eat out than to cook it yourself. Usually at home you end up with more quantity though so some might even out. I also hosted a few dinner parties and realized the one I ended up sending $26/person because of all the appetizers and having some maybes that you buy for and they don't come so then you divide by a smaller number and end up spending a lot. Sigh. But people who came sure liked the tons of leftovers I sent with them. Potluck parties are good. The bar one I wouldn't have a problem with. I think I've gone to the bar/happy hours 3 times the past year. I'm glad you sat down and worked all this out. Sorry for my rambling comment.

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    1. Long, rambling comments are my favorite! :) It's always interesting to hear how other couples have dealt with the money issue. We keep talking about getting a credit card with a 0% balance transfer, but still haven't gotten around to it. Thanks for the reminder!

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