So Sick of Debt

I did - I was bad … but I’m not sorry! I spent $115 on a gorgeous felt rabbit toy and baby blanket for a friend, who is due to deliver any day now. For that princely sum, the gift will be wrapped (as per my wrap selection) and arrive by courier in two days time. I feel like it was worth it. What often used to happen was that I spent days searching the shops for something to give, before struggling down to the post office and trying to find a presentable way to send the item. Often I would never get it done and the special time would come and go with nothing done on my behalf. I don’t sned many gifts - I don’t give my girlfriends one every birthday or anything like that.

But now and then I like to splash out on something really special for my friends or family. I have made room in the budget for this and to do it online meant it was done in a jiffy. To me, this is the aspect of carrying low and/or no debt that I like most - the ability to allocate funds to be extravagant or generous when I really want to.

My friends went through a lot of heartache to get pregnant and this is SUCH a momentous occasion. I am so, so happy for them :).

Millionaire Mommy Next Door has invited readers and other bloggers to participate in a 30-day abundance exercise. The basis for the challenge is the same principle that guides The Secret, the bestseller that talks about creating abundance via the Law of Attraction (ie that you attract what you want into your life, whether that be good or bad things).

I don’t think I’m much of a fan of The Secret, if only because it doesn’t really say anything specific. But reading it does create a good feeling in the reader about what’s possible in life, and that can be a strong motivating force. I have long believed that your attitude can make a big difference to what you attract into your life (though I’m not sure it works as specifically as really wanting a diamond necklace so much that you will eventually have it!).

That said, not long after I read The Secret, I decided to give its principles a go. Specifically I wanted to attract more money into my life. I regulate my money very tightly, so I couldn’t see where some random cheque was going to come from. Three nights in a row, I spent 20 minutes in our spare room - I picked a very specific number based on the plans I had and basically I meditated positive feelings about money. I imagined having that $55,000 and the things I would do with it.
After three days, $125 appeared in my account. I had no clue where it came from. I checked with the bank, and it turned out it was a sweetener the government gives to parents who have fully immunised their children. I usually am well aware of such things, so this was a nice surprise. So I kept the meditation up for two more nights. On the Friday, we received an unexpected cheque in the mail for $55 from a lottery syndicate. We didn’t know we’d won anything until then.

Now I’m not saying those things wouldn’t have happened anyway, but it was pretty mindblowing that both things happened in just those few days I was asking the universe for money! 

Interestingly enough, I stopped doing the meditations that Friday. Who knows what that says about my feelings about money. Needless to say, I haven’t attracted a $55,000 lump sum into my life. But then that wasn’t what I meditated or asked for (ie a lump sum). I just asked for the amount. What would have happened if I’d kept going each night? Maybe I would have been snowflaked $55,000!

In any case, I’m always one for imagining how I’d spend my money, so I’m going to participate in MMND’s latest blog challenge. The idea is to blog daily about an amount you’d like to attract into your life, and what you would spend it on. The amount doubles daily and you can’t repeat an item you’d like over the course of the month.

Next the plan is to mention the things you are grateful for on that particular day.

Thirdly, MMND is going to document a novel idea for how to make the amount of money, and I’ll see how I go with that part of the challenge too.

I’m running a day behind MMND, so here goes:

DAY 1: $100

What I’d spend it on:

• a comfortably cuddly new doona to wrap my family in each morning

How I could afford it:

• Do an extra shift at my part-time job (a bit of a cop-out but it’s going to get harder so I’ll start with an easy way!)

What I’m grateful for today:

• The staff at my little boy’s non-profit kindy, who came to help at a working bee today
• My husband’s kind nature
• Being able to wear just a shirt and jeans at this time of year (winter in Australia!) because of our beautiful sunny climate

So thre you go. Join in if you feel like it by posting a comment at Millionaire Mommy Next Door or by blogging about it. By day 30, the amount to spend is $53 billion! Sounds a bit ridiculous - I thought of changing the starting point to make the end point smaller, but why not plan how to spend $53 billion? I’m sure together we’ll be able to think of a lot of good things we could do for ourselves and others.

PS: MMND admitted this experiment might challenge our usually frugal habits. I mean, many of us avoid the stores to avoid temptation. Will it do more harm than good to think of all these things we can’t afford (yet!)? Maybe, but I’m willing to give it a try anyway.

Hubby went grocery shopping this morning and I just happened to check our balance just now. Yikes, we spent $235 on our weekly food shop (though admittedly we didn’t shop properly at all last week)!

I’m sensing (based on other bloggers’ published food bills) that for a family of three adults and a kid, $235 seems very high. And it is, even by my regular budgeted $200 max standards. But even that $200 figure seems much higher than other people’s.

For one thing, I’m not sure that the currencies/food prices in the US and Australia stack up in a similar way. Also, from what I’ve read and seen, in Australia we generally don’t seem to buy as much cheap, processed food as some Americans (not all!). This focus on lots of fruit and vegetables, and fresh meat or seafood, might account for our higher food budget. Or we might just be a family of piggies!

The other thing is, we don’t eat out at night except on very special occasions, so we spend a little more on making nice meals at home. And in Australia, we don’t have a coupon system. We just check catalogues for the specials if we want to cut our food budgets.

Am I just justifying our food spending? Well yeah, a bit. I keep meaning to work on a way to cut our grocery spending but it never seems to happen. I think my focus is on other ways of cutting debt, and at the moment this is in the too-hard basket. That’s OK, because my hubby is going to step up to the plate. He is going to watch the budget a little more closely next week, and also says he wants to start planning meals a week in advance to ensure we only buy what we need (he’s the cook in our house). So I really am happy to leave this part of our budget and lifestyle in his hands.

Well, with the good comes the bad. My financial tracking has clearly been down the tube this past month. I just worked out my money in/out for the month, and my net worth has fallen in real dollar terms. Here’s why:

• I paid the venue deposit on behalf of the graduation committee I’m on, because we hadn’t sorted out the account access yet and the venue had to be paid to hold the date. One month later, we are finally getting account access - and my cheque will be sorted out today. Of course the $550 came out of my e-fund. I won’t make that mistake again. I always knew my money was coming back, because only I had the account statements showing the current balance and I was the oly one with alll the items needed to access the account. But it’s taken a long while to get the signatories changed and has cost me a little bit in interest too. Not good. Worse, it left me without the resources to fix up my other mistakes (see below).
• We overspent on the party. I’ve alluded to this already, but it was worse than I thought. It was mainly due to miscommunication between my husband and I about how much he was paying for things he’d organised; and because I spent too much on alcohol we didn’t need or use. Drink, anyone? We’ll have a full fridge for a loooong time. But this can be good too, because we have a ready stock if we go to a dinner party, someone comes over unexpectedly, or we need a gift for someone.
• I haven’t billed the university for more than 24 hours of work I’ve done for them over the past semester! And it’s nearly the end of the financial year. At $30/hour, what’s wrong with me? I have to get a form to someone and then get a password to log on to do it. I think I’ve been more focused on the car debt and not taking care of the bigger financial picture. Consequently, I have about $800 on my credit card that I’m now getting close to having to pay interest on. In my defence, the vast bulk of that is the money for our relative’s recent function. So it was a budgeted expense that was going to be paid by my work at the uni. I’ll rocket that pay claim in today too.

So what am I going to do? Well, I’ve put my usual $500 car payment towards the credit card instead, and when the cheque comes from the grad committee, I’ll put that towards the car loan. I’ll use the money from the uni to pay off the last of the credit card debt, and then worry about whether there’s ANY left for the emergency fund.

I guess this is a lesson to me. Money isn’t money until it is in your pocket. And, DON”T TOUCH YOUR EMERGENCY FUND UNLESS THERE’S AN EMERGENCY (Duh!).

Because I haven’t carried debt on my credit card for some time, I haven’t had much cause to check the rate on it. Its now at 14.45 per cent!. And mine is supposed to be a low-rate card! In Australia, your interest rate doesn’t change if you are late paying, or if you are over limit, though you do have to pay fees in those circumstances. Basically, everyone with a certain card type pays the same rate. It’s just unfortunate that everyone’s card - and mortgage rates - seems to be on the way up. If I had credit card debt now, I’d definitely be motivated to seek an alternative card though.

If you are wondering about the rate, it’s high because Australia is actually in a very good economic state right now. The sub-prime issue in the US hasn’t made huge inroads to our markets here yet.

I guess the good part about the high rates is that I’ve got a 7% return on a sub-account to my main savings account. I have easy online access to it and can get it immediately by transferring it to the main savings account any time.

In other news, our Aussie dollar is closing in on the US dollar - soon we might be on par or higher! In 1996 when I came to the US on a holiday, the AUS:US exchange rate was about 76c:$1, but the Aus dollar has actually been down as low as nearly half the US one in the last few years. I think you’ll be seeing a lot more Aussie tourists visiting in the near future as it has become so much more affordable (unfortunately I won’t be among them anytime soon as I have other financial priorities right now, but I do plan to come back and see so much more).

Well, there really isn’t. We used up our fun  money on Thursday night when we took our son to the circus. That was quite good fun, but we went a little crazy on drinks, popcorn and doughnuts (which none of us needed!). he had a great time, but we could have been more responsible with our spending.

Then my husband over-spent on our grocery budget, but I couldn’t complain because he had obtained the recipe for a meal from the chef and owner of our favourite restaurant. We don’t go out often enough for him to know us as customers but a family friend works in the kitchen and we met the chef at a function. He offered it to us after finding out what big fans we are. Anyway, he made this duck meal, and it was heavenly. So we had a little bit of luxury at home. Unfortunately, buying a lot of the pastes and other items needed for the recipe made this week’s food budget expensive, but I guess they’ll last in the pantry for some time.

The upshot is that we are down to only a few dollars with 4 days in the week to go! Hopefully, we won’t need anything much till Thursday!

Well, we hosted our joint birthday party over the weekend and had a blast! It was a wonderful night with good music, plenty of food and good conversation with great friends. At least 20 friends flew in from other cities to attend. We have also had people staying in the house (my sister-in-law and a childhood friend of my husband’s), which has been interesting!

Because we have some very creative friends, two different bands played, and some firedancers we know put on a little show in our backyard. It was a really amazing night.

I actually didn’t do too badly in the hangover department because my son woke up at 2.30 am and I retired for the night to put him back to bed. However, the party continued till 4.30am!! Then a lot of guests came over again from around 8.30am for a `recovery breakfast’. Lucky we weren’t too sick to be up to greet them.

The only part that might be a bit scary is the budget. My husband had a mixup with some lighting I asked him to get, and bought a whole heap of lanterns we didn’t need. I need to see if I can take them back, though I’m a little worried the shop might only offer an exchange. Also, the food seemed to add up to a bit more than I expected. I also over-catered on alcohol and we should now have enough wine in the pantry to last us for a year or so (we don’t drink that often)!

Anyway, once all the receipts are collected I’ll assess the damage. I’ve had to do a bit of extra work as a favour to my boss over the past  week, so I will be bringing home a bit extra and that should cover any shortfall. Anyway, you only turn 30 once (even if mine was really weeks ago), so I don’t regret it causing a little extra financial pain.

Well, it turns out my hubby’s car needs more work and there is now way we will avoid eating in to our emergency fund. Funnily enough, after being so adamant I didn’t want to use that money no matter what, I finally realised that it’s OK to do so. That’s what it’s there for! I had been thinking I would rather put the repairs on the credit card and pay the bill off quickly - how weird is that?

Anyway, things are a bit tight - there’s been a lot of little niggly items lately that have eaten into our budget, and despite only working one shift on my last pay cycle, last week I was determined to pay the full $500 off. We actually ended up going into the red by $7.70 in our operating account because of that (the account fees came due when I wasn’t expecting them) so I probably shouldn’t have pushed things so hard. However, what was worse was that we had our usual $6 monthly account fee, but there was also $18 in non-bank ATM fees! That’s terrible and we will have to get our act together - infact, I’m the worst culprit at this, so it’s my new challenge - ATM fees must be no more than $4 this month.

Anyway, hopefully everything will keep going well. Our home situation is SOOO good now. We are definitely staying and even my FIL is enjoying the new system. We all have our space and we all seem much happier!

My husband has just informed me that two front tyres for his 4×4 vehicle, plus repair/replacement of something called `cv boots’, is going to cost about $500!!! Yikes! Luckily, we do have a billpaying account but it is pretty low already this month and I also have annual car registration due! Something has to give … not sure whether I’ll be able to cover all bills this month without breaking into the emergency fund (at least for a while) but if so, that’s what it’s there for. The other alternative is to cut into debt repayments (but in my mind, this isn’t really an option :).

It’s taken a lot of effort to make our usual $500 debt repayment this week because I only did one shift at work (not my usual two). But we just had a quiet weekend at home to allow us to use our fun money towards debt. This is one reason I maintain a pretty substantial $150 fun/miscellaneous section in my weekly budget - it helps sometimes when other parts of the budget fall shorter than I’d like.

As for money generally, I am really trying hard to stay focused on my goals for this year and not worry too much about what will happen next year.  I already know my goals for 2009: I really want to boost our EF substantially, and begin our home deposit savings. I’d also like to start contributing a small amount to a managed fund, with the goal of slowly increasing the monthly contributions over time. My husband and I both also plan to begin salary sacrificing a bit extra into our retirement funds.  And I intend to get our wills sorted and invest in some life insurance for me.

All this will mean our lifestyle won’t change much when I start working, but it will be very exciting to move forward anyway. But for now, I must just focus on this last debt!!

Well I could be … or I could just be giving in to my usual consumer tendencies. It’s my week off and I’ve been itching to go out and start purchasing the items needed for our room and the office. Thing is, I promised myself I’d pay off our debt before I did any of this. Not only that, but our other priority is saving for our joint birthday party, so furniture should be right down on my wish list.

Sometimes, the way my focus drifts so easily, I start thinking maybe I don’t really want to be out of debt. You know, in the same way they say that some obese people are actually subconsciously terrified of being thin because they fear the attention that comes with being attractive and noticed by the opposite sex? Maybe I don’t want to be debt-free because then I’d really have the chance to plan ahead. Maybe I don’t trust myself. It’s easy being in debt, because you have no choice but to pay off what you owe and you don’t have to think about what else you’d be doing with your money.

I’m trying to think of reasons I might subconsciously want to delay paying off my debt. Well, first and most obviously, it’s a hell of a lot easier to be in debt and get what you want straight away! But what else … I’m wondering what my subsconscious thoughts are about money and debt, and if these have anything to do with my money mood swings. Here’s my initial thoughts:

Money is hard work.

You can’t trust in money. It’s easy to lose.

There’s never enough.

How will I know which house to buy, or how much to pay?

Should I spend money on fun things or start saving once the debt is gone?

How would I know if something was a good investment? What if I lost it all?

Those are just a few things I typed without censoring myself. I’m surprised … I guess I thought I was more confident about my ability to manage my money. I notice there aren’t really any positive comments there. Is this how I really feel or just how I feel today?

Maybe all this has nothing to do with why I have been close to sabotaging myself in the past few days. In any case, I might have to keep myself away from retail opportunities over the next week or so and wait for these consumer desires to wear off!