Getting out debt in JANUARY, 2012!! - Page 6

[trekkingirl]

laohaire thanks so much for your post. It's been slow going and we have sacrificed so much already! It's good to hear you are getting somewhere. That means I can too!

[AnkaJones]

Okay, I'm revealing my newbie-ness at all this, but what is a sinking fund?

[trekkingirl]

sinking fund is a stash of money that prevents you from sinking. For example every march I have to pay $180 for the registration on my car. In the past I would be turned upside down and stuck with late fees while I scraped together enough money to pay this. With sinking funds in place it's ready when I need it just by putting a little aside each month for this expense.

Furniture replacement

car replacement

clothes replacement

an unexpected dental visit

etc

etc 

[mylilmonkeys]

laohaire - Thank you for posting!  I'm feeling a little in limbo at the moment, because we are waiting for our tax return to buy a new to us van.  Almost every penny of our monthly savings goals are going to this, and I wish I could be putting that money into our FFEF.  But buying the much needed van must come first.  Your story is inspiring to me to just keep plugging away.  

[laohaire]

Yeah, keep plugging :)

A sinking fund is money set aside for specific things.

For example, I have a life insurance policy, let's say it's $160 a year. Instead of having a hard month when the bill comes due, I put money into it every month.

There's also categories that aren't fixed costs but you can guess you might need: like medical/dental (even just for copays), or auto maintenance (oil changes or repair).

I keep track of each category. So if I've got $100 in my auto maintenance fund and I can add $12 to it, I mark that it's at $112 now. And if I withdraw $55 from it to cover whatever, then I adjust the amount.

I think it has an advantage over having just a lump of savings sitting around. Sure, you could just say "well, I've got $1000 in my fund for whatever I need it for." But I think having a purpose for each dollar keeps you focused. Of course if we had a big emergency we would take money out of other categories to cover it if we needed. (Thankfully we never had to). But otherwise it really helped me have a really good feel for where we were. Having $1000 or $2000 or whatever doesn't mean anything unless you know you could cover all the expenses you can foresee: you know the life insurance policy is all set, that you have the amount of your medical deductible set aside in case you have to run it up, that you have $500 sitting around just for the car when you realize you need a whole new set of tires, and so on. Conversely it helps motivate you when you realize you've got nothing set aside for your next dentist appointment, or you only have $200 to buy heating fuel to get you through the winter.

So for me, it provides context for the money, and it really helps. If you are going to spend some money on extras like vacation, you can have a fund for that too, and you know it's ok to use it. Or you know you really shouldn't because if you landed in the hospital you have nothing to cover your deductible. So it helps you prioritize and understand a lot more clearly what you have. If you have $4k in your savings account, you might think - hey! Let's go to Disney! Cause you do have the money - but do you really?

[esg]

laohaire, I always like to hear/read success stories. Hopefully I can start on mine soon!

[lilacvioletiris]

laohaire, thank you so much for a success story!  The sinking fund is exactly what I am trying to convince DH of.  We created separate savings accounts on ingdirect.com so I could see "car repair 400" and know that the fund needs $400 so we can buy new tires or "professional dues 300" and know that when they come up for renewal in May I will have the money for them instead of having a "I don't think we have money for food, since it is the last category we can "borrow" from on our budget."  Last night hearing DR talk about the Four Walls and how people "below the line" in the budget where the money runs out don't get paid was inspiring to remind me that I must take care of food, shelter/utilities, transportation and clothing first before I pay back creditors, even though I want to, it won't be best for my family.  I am still wearing clothes I bought 4 years ago and have a crisis each time I need a new pair of pants or a shirt because I really don't have "clothing" in my budget right now.  Need to talk to DH about that, tonight.

[laohaire]

I kept thinking about what I posted because I felt like I wasn't able to put my finger on what changed. A year ago I saw no end. But at some point the process speeded up - and it was not because I got a raise.

I still don't know if I understand the whole of what happened, but I think a large part of it was plugging leaks. When I got on the ship, so to speak, there were leaks, and I had to spend a good year bailing out. And it's hard to feel like you've made any progress when there's still water in the boat. But at some point the leaks were plugged and suddenly we were getting somewhere. Maybe not super-fast but getting anywhere feels incredible after you've felt like you were sinking.

One of the leaks were just prior spending habits. We were never spendy - we're just not like that. But even non-spendy people can really spend way too much when they aren't careful. If we went out to eat in a restaurant once a week - hardly out of control by American standards - heck, that's half the month's grocery budget right there. That was probably our biggest single leak. We plugged that baby, but it wasn't like us stopping going out to eat suddenly got us out of the water. It took time, because the effects were spread out. Us going out to eat for a couple of years meant we had no buffer in savings, for example, so when things came up, they hurt. Slowly, slowly, we rebuilt the buffer, and at some point things just changed.

Another (smaller) leak I could think of was our auto insurance policy. When we were making our monthly payments, we had to add $6 "processing fee" for each payment. We were on a 10-month payment plan, so that was $60 a year we paid for the privilege of owing them money every month. Our payment was $60-ish a month, so I started paying them $75, figuring I could eliminate the last payment and save a whopping $6. At some point I started paying them $100 a month. Then when I paid it off (2 or 3 months early) I put $100 a month into a sinking fund for the insurance. When the next bill came due, I had most of it saved up. I coughed up the extra $200 and paid it off in full. Not only did I save $60 that year, but they, to my surprise, gave me 3% off the annual total for paying in full. That wasn't a ton of money (around $18) but on the other hand, I was paying $78 a year to insurance, for nothing. $78 is like a 13% surcharge. That's a leak, folks.

And here's another way it suddenly starts catching up to you in a good way once you plug it - I never stopped putting aside the $100 a month for auto insurance. I paid it off in November. I'm going to have next year's full premium saved in 6 months. When that time comes, suddenly I'm going to have 6 months (until my next bill) with $100 extra that I don't need to set aside for the insurance. $100 extra a month to savings or to paying off my mortgage is going to be a big deal. For example my regular monthly payment to my mortgage pays down only $151 of the principal - an extra $100 on top of that is going to go a VERY long way.

I do want to add that I don't think we HAD an extra $40 a month we could throw to this at first. That's why I started with $15, and that was an adjustment by itself. But as our savings very, very slowly expanded, I felt like we could free up another $25. So I just wanted to explain that while, yes, we are fortunate enough to have that extra money and not everyone does, it was a process to get there, and even the initial $15 a month was painful.

I figured our progress was going to be a lot more linear - it took me a year to save up $1000, therefore I thought it would take me 10 years to save up $10k. But there was a curve. Maybe even an exponential curve - I don't know yet, I'm still relatively early on in the process. So, sorry to go on and on, I am just pretty analytical and felt dissatisfied with my previous vague explanations.

[mylilmonkeys]

laohaire - 2 years ago, our car insurance came due on an "extra" paycheck period, so we did the same thing, paid it in full.  I was able to use that money that would usually go to a payment to snowball on our other debts.  While I hadn't set up a fund initially, by the time the insurance was due again, we had freed up enough money to start our sinking fund about 4 months in advance.  It was just a small stretch to cover the full amount again.  This year I have a fund.  Since we bought a much newer car recently, we had to pay the difference, and I've had to increase payments to the fund by about $5, but far less painful than making a monthly payment with interest!  

I agree, there was a definite tipping point where our process went from seemingly impossible, to a ball rolling down hill.  We are still very low income for the size of our family, but we don't feel desperate anymore!  In just a few more months, we'll have two fully paid for reliable vehicles, our sinking funds fully funded, and be making good progress on our   cc bv FFEF.

[esg]

That's one of my goals this year - to pay off the auto insurance instead of doing monthly payments.

So, today I asked my sister (who lives with me) if she could help with the remainder of the mortgage and low and behold she said yes.

It's usually the hardest thing in the world to get her help on bills but she said yes which means I can begin to breathe since I should be making double starting in 2 weeks!!

My BEF is depleted but I'll put the $100 back in soon and pick up from there. Gah, I'm so glad today has turned out well.

[AnkaJones]

I'm really glad I asked about sinking funds!!!  I just set up an extra checking account at our bank yesterday which I'll use for that, and keep track of what is in what category on my budget/debt spreadsheet. 

Laohaire, what you said about plugging leaks really rings true for me, also.  When we first started a few months ago, I ran through my bank statement in preparation for writing my first ever budget.  I found about $100 in recurring payments that were from things I had signed up for a "trial period" and didn't know I had to cancel!  That's $1200 per year I was just throwing away.  No single one of them had been big enough to draw my eye, but $15 here and $15 there really adds up fast.  Then the eating out hole that you mentioned... for us it added up to $200/month (half of our current grocery budget).  So, just by drawing up a budget and meal planning, we saved $3600 per year.  I feel like such an idiot for going the way we had been for so long, but I'm thankful that it ended when it did.  I'm definately going to see about that auto insurance thing, though... DH didn't know if we were paying an extra fee or not, but we're gonna check into it.

As always, ladies, you are such an incredible resource.

Anka

Edited by AnkaJones - 1/25/12 at 4:57pm

[laohaire]

Originally Posted by AnkaJones 
  I feel like such an idiot for going the way we had been for so long, but I'm thankful that it ended when it did.

Tell me about it - years ago we were making significantly more money than today. Like, half again as much. We have NOTHING to show for it - n-o-t-h-i-n-g. We're better off today with 1/3 less income but our belts tightened, crazy as it sounds. Far better off.

I still kick myself... I mean, we could have had our student loan paid OFF in ONE year. And still had extra left over. If we'd only been halfway smart about it. KICK.

I tell myself over and over, if things get easy like that again, I WILL NOT FORGET. Good times makes it easy to just slack off and forget. I will treat good times like it was a very temporary respite - and if it's not, then I will have no debt and a pile of cash to show for it when the good times keep rolling.

[trekkingirl]

I noticed something that's driving me nuts and I have no idea what to do about it. DH has been doing the grocery shopping with me. We end up staying on budget,  that's not the problem. The problem is he gets a bunch of stuff that don't equal meals. He has cut back his spending to the point where this is really the only shopping opportunity he has. For example we spent $60 on groceries today and I have nothing to make for dinner. I can't tell him I'll just take care of it. If he has no means of shopping he'll just go blow our budget on something stupid.

[laohaire]

Meal planning.

I will list 7 dinners for the week, and write a list of exactly what I need to make them happen. Obviously I think about what we already have. We also are CSA members, so our veggies are the base of my plans. The meal plan doesn't have to be exciting - you can have the same 7 go-to dinners every week if you want. You can decide ahead of time what you are having on what day, or you can just see what you feel like each day, but you know your list.

Breakfast and lunch, I think about as well though I don't carve them in stone like dinners. So you figure you need your sandwiches or your soups or whatever, and make sure they are there.

DH does all the grocery shopping but I tell him exactly what to get. It's only fair - I do the cooking, so I am the one who knows what I need to make it happen.

[AnkaJones]

Trekingirl -- that sounds really annoying, but I'm glad you're able to be so sympathetic to your husband in the face of that annoyance!  Would his shopping urge be filled if you wrote shopping lists for each meal plan, then let him pick six "sets" of things?

Anka

[trekkingirl]

not really sure what you mean anka?

We tried meal planning when we had a house with a kitchen and while it was helpful I found it to be really rigid. But I guess budgeting is too. Perhaps my carefree days are over. IDK?

[lilacvioletiris]

laohaire, I kind of feel like my grocery trips don't always mean I have something to eat.  I have been trying to meal plan a least half of the evening meals for DH and me.  I buy the ingredients and then because I have to actually "make" the item, the ingredients sit in the cupboard and go uneaten.  I come home late and there is "nothing to eat".  I could eat potatoes with veggies, baked beans, and cottage cheese every night if my DH would let me.  He wants "variety" and honestly so do I but I don't always have time to cook variety.  I need to get better at that, because I have spent the food budget and I have little to show for it.

[laohaire]

When you crave variety that you don't have, what do you do?

If you order out... yeah, that's a bit of a problem. You could at least improve on that, though. Let's say you usually order out 2-3 times a week, you can promise yourself you will only do it once a week. You don't have to plan which day if you don't want; just get home and say "let's use our Order Out day tonight, whattaya say?"

Also, it is possible to build home-cooked variety into your meal planning, but obviously that takes more work. I mean, there's nothing stopping you from planning entirely different meals every week, if that's what you usually do - except the effort.

You could also do something like make a 4 week meal plan (and not necessarily all at once, you can build it over time). Having a meal once a month is pretty infrequent, so if you do 4 different weekly plans, then you can rotate those.

I said I start with my CSA vegetables, but I realized I also start with the sales. Both my local groceries put their weekly sales online, so I can browse through them when I make my list. I only buy sale meat, for example - so if pork chops are on sale, then we're having pork chops that week (along with whatever other meat on sale that week). Some sale meat is packaged in bigger quantities, so I'll buy it and put the remainder in the freezer for next week. I've got 3 different pork chop recipes I use, so even if we have chops every week, there's still a variety.

You can also subscribe to meal plans, and I would say they are frugal if you actually use them. www.cookingtf.com is the one I would recommend if you were interested. She tells you what's for dinner, gives you the recipes, gives you the shopping list as well (!), and also builds in reminders for any prep work you need (like soaking beans the night before, or taking out meat to thaw, or starting the crock pot in the morning).

I don't use her meal plans but I do use her recipes (and make my own meal plans) - they are terrific, yummy and healthy. But that brings me to another thought, and that is style of cooking. Before I got into local, seasonal food and traditional foods, I had a mishmash of recipes that called for all kinds of unrelated ingredients. So if I wanted to make a particular dish, I had to go out and buy three different things that just were not staples in my pantry (or very expensive that time of year - good luck getting asparagus and red bell peppers at the same time for cheap). But cooking from scratch and seasonally uses core ingredients in a way that is much more economical - while also still being fresh and exciting (you always get excited about the next food in the season).

Meal plans don't have to put what's for dinner a certain night in stone. You can just have a list of 6 or 7 dinners and decide each day what you feel like, then cross it off the list. But having at least a loose plan also helps because it eliminates the just-got-home-now-what? tizzy which can make you give up and order out.

Anyway, just some ideas.

ETA: I think that, bottom line, planning SOMETHING is better than not planning at all. Even if you are not planning cheap meals. Even if you order takeout or go out to eat sometimes. You are still going to save money when you plan than when you go the store every day or two (and grab impulse items each time as you go), and you are still going to save money when you decide to do takeout X times a week instead of Y. You don't have to be perfect by any means, but any type of planning will already get you somewhere, at least that is my own personal experience.

Edited by laohaire - 1/26/12 at 8:25am

[AnkaJones]

Originally Posted by trekkingirl 

not really sure what you mean anka?

We tried meal planning when we had a house with a kitchen and while it was helpful I found it to be really rigid. But I guess budgeting is too. Perhaps my carefree days are over. IDK?

Sorry, I should have been more clear.  My husband, when he goes shopping, has a similar thing going, so what I do is something like

Fish:  Salmon or Cod... but if you get Salmon, pick up some maple syrup, and if you get Cod, pick up some bacon.

Breakfast:  Bread or cerial.  If you pick up bread, please get some preserves.  If you pick up cerial, grab some soy milk.

and so on... obviously it would be tedious to do it for everything on the list, but this gives him enough freedom to pick stuff while at the same time lets him "shop".  We also have some standing buy parameters, like "If you see ground beef for <$1 per pound, buy five pounds for the freezer", "'never buy spice from the big grocery store... we get that from the ethnic store, etc."  That lets him feel like he's "shopping for a deal" when he's in the market.

As far as meal planning, it can be rigid or flexible, depending on how you do it.  We have a couple of meals picked out each week and assign each to a day, but then flex things around pretty regularly (e.g., this week Monday was supposed to be a little on the elaborate side with a new recipe, but I was exhausted so it wound up being an old standby recipe that I have ingredients in my pantry for, then we did the more elaborate thing another day.).  I think it's one of those things where you start out rigid, but as you gain fluency with meal planning it'll get more and more second nature.  You'll also eventually have the pantry to back up your go to meal choices, so shopping for your meal plan becomes less of a production.  For example, when we first started meal planning, I'd have to pick up every one of five ingredients for Chicken Adobo every time we did it.  Now we already have canned peppers in adobo in the pantry, frozen chicken breast in the freezer, rice in the pantry, onions and garlic hanging about etc... so we just pick up one or two ingredients if we want to make that.

Anka

[AnkaJones]

Originally Posted by lilacvioletiris 

laohaire, I kind of feel like my grocery trips don't always mean I have something to eat.  I have been trying to meal plan a least half of the evening meals for DH and me.  I buy the ingredients and then because I have to actually "make" the item, the ingredients sit in the cupboard and go uneaten.  I come home late and there is "nothing to eat".  I could eat potatoes with veggies, baked beans, and cottage cheese every night if my DH would let me.  He wants "variety" and honestly so do I but I don't always have time to cook variety.  I need to get better at that, because I have spent the food budget and I have little to show for it.

I totally feel you on this one.  It's hard to meal plan when both of you are working out of the home.  One thing I do is make and freeze, with Sunday being my big cooking day.  For example, if DH is making pizza, he'll make two and freeze one and bake one.  The frozen one is for next week.  If I'm making Adobo Chicken, I make twice what we need and it makes an appearance later in the week.  Meatloaf comes up a couple of times a month, where I'll make two loaves on Sunday and freeze both, then on Tuesday bake one, leftovers on Thursday, then the other one stays in the freezer for a couple of weeks or longer until everyone forgets we had meatloaf, then another Tuesday/Thursday thing.  So, if I'm going to have a busy week, on Sunday I'll make and freeze two meatloaves, a bake a couple loaves of bread, make chicken adobo for that night and another night's leftovers, and DH will make and freeze two pizzas, one of which is for Friday.  If you do this for long enough, you wind up with a freezer stash of things that you can make if you're tired.

Another thing I do is use Cook's Country 30 minute recipes... they come on the cards in the middle of each magazine, and every time I get a couple of cards that look like fun.  Cook's illustrated/cook's country really uses a lot of the same ingredients for  many of their recipes, so once I started cooking regularly from there, I wound up with a lot of their ingredients on standby so I go through them even if I just use part of it for any given recipe.  It allows us to change things up a bit, and their recipes are so explicit that you never wind up with a real disaster on your hands.  Plus, if people like it and it was easy, you can put it into your rotation of meals everyone likes!

Recently I found a chart of ideas for leftovers, which I'll (at this risk of making this post insanely long) excerpt from here:

Steak: slice very thin and serve on crusty bread with leaf lettuce and horseradish mayo (three parts mayo with one part prepared horseradish)

Pot roast: chop the meat or shred with a fork and stir into leftover gravy.  Serve over toast as an open-faced sandwich, or as a topping for baked potatos

Chili: reheat and serve over baked potatos -- add cheeze if interested.  Alternately, put chili in a baking pan and cover with cornbread batter.  Bake at 400 degrees until cornbread is done.

etc... it's a really long chart from a home ec book I took out of the local library.

Finally, nothing makes "variety" better than a couple of tastey snack type things, even if you're eating essentially the same entre.  So, if you can make or buy some dips or cheeses and serve them with crackers/chips/veggies, even if the entre is a little boring no one feels deprived.  I'm not above plating it pretty to make the repetition more palatable, either.

Anyway, good luck!  Meal planning took a lot of energy at the beginning, but as you get used to it and build your pantry, things get a ton easier.

Anka