Coming Clean (Admitting My Mistakes) - Part II

Continued from my last post. (See explanations of #1 and #2 in last post.)

1. I Used Our Credit Card

2. I Didn't Pay Attention To Our Finances

3. I Didn't Pay As Much As Planned To Our Debts (Debt Snowball)

When I examined this category further I was pleasantly surprised that I hadn't done as badly as I first thought.

At first glance, I looked at how much we had paid to our HEL (Home Equity Line of Credit) and I saw that we had not paid more than $200 for most months. This had put me in a big panic because I knew that our target snowball payment for debts has always been at least $1,100 for every month. I was shocked to think we had been underpaying by about $900 every month. I thought to myself "how can I even admit this?". Then I remembered that we only recently paid off our last credit card. Before that we were supposed to only pay $200 to the HEL and the other $900+ was to the credit card. This made me feel MUCH better.

Then I actually added up all the figures (see below). What I found out (to my happy surprise) is that we actually paid more than we had planned to debt for every month except June. And even with the June shortfall (that I tried to make up for in July) - when you add all the debt payments for the year, we ended up paying $975 more than we had budgeted for.

Now, as outlined in #1, we did make some unplanned charges, but overall I am happy that at least in this category we didn't do too badly.

ACTUAL DEBT PAYMENTS
Aug - $1,272 CC + $120 HEL = $1,392
July - $4,000 HEL + $120 HEL = $4,120
June - $26 CC = $26
May - $362 CC + $200 HEL + $10 CC + $6 CC + $79 CC + $10 CC = $667
Apr - $1,889 CC + $200 HEL + $109 CC = $2,198
Mar - $22 CC + $159 CC + $38 CC + $53 CC + $900 CC + $200 HEL = $1,372
Feb - $402 CC + $500 CC + $160 CC + $200 HEL = $1,262
Jan - $200 HEL + $907 CC + $72 CC + $200 CC + $190 CC = $1,569

BUDGET/ACTUAL COMPARISON (Debt Payments)
July - $2,850/$4,120 = + $1,270
June - $1,800/$26 = - $1,774
May - $200/$667 = + $467
Apr - $2,089/$2,198 = + $109
Mar - $1,100/$1,372 = + $272
Feb - $1,100/$1,262 = + $162
Jan - $1,100/$1,569 = + $469
Overall = + $975

Coming Clean (Admitting My Mistakes) - Part I

Okay. Step Number 1 in getting back on track financially is to come clean and admit my mistakes. So, here goes:


1. I Used Our Credit Card
A couple of months ago we had finally paid off all of our credit cards, leaving only our (rather large) Home Equity Line of Credit (HELLoc) as our last debt, with a balance of $22,000. Then I somehow wandered off the financial path.

Here's how much I charged to our credit card over the past month or so (after it was at a zero balance). Drum roll please . . .

$1,481.00

Okay. I said it. That wasn't too hard. (Well, actually, it was!)

What wasn't too hard was charging that much once I got started.

Here's a breakdown of what I bought:

FL Clothes 07/27 WAL-MART 93.34
FL Clothes 07/27 CATHERINES 14.99
FL Clothes 07/27 FASHION BUG 193.34
FL Clothes 07/28 TARGET 60.49
FL Clothes 07/30 SAVAS' HALLMARK 50.40
Cat Doctor 08/07 MSPCA 440.28
School Sup 08/10 STAPLES 37.79
Jewel Biz 08/10 AC MOORE 28.74
Misc. 08/11 TARGET 144.89
Dining Out 08/12 BUGABOO CREEK 22.29
Schl Cloth 08/12 VARIED 150.00
Groceries 08/14 Mkt Bskt 200.00
Subtotal of Activity $1,481.00


2. I Didn't Pay Attention To Our Finances
The first day I used my credit card it was to purchase new clothes for myself for a trip I was taking. At that time I didn't know how much money we had in our checking account. Because of not knowing how much money I had available, I found it necessary to resort to using a credit card for the purchases. I had fallen into a pattern of NOT paying attention to our finances.

The same can be said of most of the above purchases. Either I didn't know how much money we had in our account so used the credit card to avoid having our account become overdrawn, or I knew we didn't have enough money in the account. All of the above expenses, were, after all, NOT budgeted for.

When we first started on our Journey to Financial Peace in February 2007 I checked our checking account balance every day. I also tracked all money that came into and out of our house. I had a detailed budget. I funded our cash envelopes every month. I read the Carnival of Personal Finance. I ready many PF blogs.

Basically, over the past several weeks, I have failed to pay enough attention to our finances.


3. I Didn't Pay As Much As Planned To Our Debts (Debt Snowball)

This one is a doozie. I just started digging into it and I am shocked and depressed. I'll give all the details in my next post. :(

How I Plan To Get Back On Track Financially

The last few months have not been the best for my family in terms of sticking to a budget, using cash envelopes, throwing extra money to our debt snowball, and not using credit cards.

If you've been reading my blog you know that we started our "Journey To Financial Peace" in February 2007 when we discovered Dave Ramsey and discovered that we were $44,000 in debt, not including our home mortgage. Since then we have paid off more than $22,000. At one point we thought we might be able to be debt free by the end of this year - but due to some bad financial planning and decision making during the past few months, this now seems unlikely.

Here's how I plan to get back on track:

- Come Clean (Admit My Mistakes)
The first thing I am going to do is to figure out just how badly I screwed up. This means making a list of all the mistakes I've made. This means figuring out exactly how much we charged to our credit card, how much less we actually saved compared to how much we planned to save, and how much less we paid to our debts (snowballed) than we had planned. It won't be fun and it won't be pretty, but it is the first step to getting back on track.

- Forgive Myself
Life happens and things don't always go as planned. Everyone makes mistakes. The important thing is to admit them, learn from them, and move pasts them.

- Examine Each Mistake & Make A Plan To Avoid It In The Future
Next I am going to go down the list and examine each financial mistake that I've made. I'm going to think about why it happened. And I'm going to come up with a plan to keep it from happening again in the future.

I think the effort invested in following these steps will be like money in the bank. Wish me luck!

Here is an update of the money I have spent so far in August. I added these amounts to the amounts I previously posted last week, so the totals are up to date as of today.

Below each category I gave some explanations of the spending.


AUTO GAS 08/12/08 HESS -$30.33
AUTO GAS 08/07/08 HESS -$38.04
AUTO GAS 08/11/08 EASTON AUTO SE -$57.05
subtotal: $125.42 + previous: $49.50 = $174.92
total budget amount: $350
(*Doing fine in this category.)

CASH CLOTHING 08/11/08 DOLLAR TREE -$7.30
CASH CLOTHING 08/11/08 DOLLAR TREE -$16.80
CASH CLOTHING 08/11/08 WAL-MART -$63.59
CASH CLOTHING 08/09/08 CVS -$17.64
(note: school supplies)
subtotal: $105.33 + previous: $0 = $105.33
total budget amount: $100
(*Have already gone over budget by $5.33. This category was underfunded for some reason. I'm not sure how I thought I could do the back to school clothing and supplies shopping for 3 kids for $100. I will need to adjust this budget amount for next year's budget.)

CASH GROCERY 08/11/08 ROCHE BROS -$40.03
CASH GROCERY 08/11/08 WALGREEN -$7.35
CASH GROCERY 08/09/08 PRICERITE -$78.57
subtotal: $125.90 + previous: $101.13 = $227.03
budget: $400
(*I am a little over half of my budget in this category with a little more than half the month left. I'm a little worried because my parents will be coming in a few days to stay with us for a month and that could mean trouble for the grocery budget if I'm not very careful.)

CASH SPENDING 08/11/08 REDBOX DVD 012 -$6.30
CASH SPENDING 08/11/08 PURCHASE ON JE -$5.00
CASH SPENDING 08/11/08 ATM Withdrawal-$40.00
CASH SPENDING 08/08/08 PURCHASE ON JE -$5.00
CASH SPENDING 08/08/08 PURCHASE ON JE -$5.00
subtotal: $61.30 + previous: $100 = $161.30
budget: $200
(*Under in this category so far, but I'm still worried. Didn't take out the cash I was supposed to at the beginning of the month, so we have been using the debit. Need to study budget and take out the cash for what we have left to spend for the month.)

DINING OUT 08/11/08 CHATEAU NORTON -$67.55
DINING OUT 08/08/08 BURGER KING -$11.20
subtotal: $78.75 + previous: $122.17 = $200.92
budget: $120
(*This has been a difficult category for us lately. We need to cut back as we are already over budget by more than $80 and the month is only almost half over!)

JEWELRY BIZ 08/13/08 - USPS-$29.74
JEWELRY BIZ 08/07/08 ETSY.COM-$19.38
JEWLERY BIZ 08/07/08 ETSY.COM -$1.56
subtotal: $50.68 + previous: $0 = $50.68
budget: $0
(* I don't even have a budget category for this. I usually try to make all of my purchases for my jewelry businesses through my paypal account, which is where my profits from these businesses also collect. Sometimes I can't use paypal though, so I need to give a little thought as to how to handle this.)

PERSONAL/BRACES 08/08/08 Check # -$200.00
subtotal: $200.00 + previous: $0 = $200
budget: $100
(* Over budget by $100 this month but that is because we missed our appointment last month so had to pay for both. The end price is the same, so not really a big deal.)


Overall, things aren't looking too badly. The secret reason behind this, though, is that I have used a credit card for a few purchases. This was fueled by a vet appointment for our cat. The bill ended up being $440!! (The cat has a heart problem, and they did a full cardiac work up.) I hadn't planned on this expense, though in hind sight - I really should have been able to predict this.) At the time I was afraid we didn't have that much cash in our checking account so I used a credit card (that had a zero balance) to pay for this to be sure we didn't overdraw our checking account.

Then I got a little lazy. Our checking account has gotten low and I think I'll need to transfer over some money from savings. But I haven't done this yet. And I took DD2 shopping for school clothes last night and put all the charges on the credit card.

I will transfer the money from savings, get the total credit card balance, and pay the balance in full on line. But, I'm all too aware of what a slippery slope this can be . . .

Paying For Convenience

I just got back from a long weekend trip with my 3 sisters (to visit my parents). I had a great time. I also witnessed some of the interesting financial decisions of one of my sisters.

Sister #2 had more travel sized items than most local drug stores! Seriously. It was unbelievable. She had Mini Tide To Go Pen, Mini Downy Wrinkle Release, Mini Hairspray, Mini Shaving Cream, and lots more (that I can't think of right now). Just imagining how much these mini name brand items probably cost made me dizzy.

The same sister also had every kind of medicine imaginable. She had several options for an upset stomach, headache, bug bite, etc.

She also had the fancy aerosol spray sun block that I refuse to buy because of the outrageous price.

None of these things surprised me. She is a name brand shopper of pretty much everything. She likes the nicest (most expensive) toilet paper and paper towels. She uses the expensive name brand liquid laundry detergent. She buys name brand pain relievers and medicines. (She probably gets most of this from my mother, who is also very (name) brand loyal.) She buys individually wrapped snacks for her kids. She laughed at me when I said that baby wipes were a luxury not a necessity (once my kids were out of diapers).

She also bought several snacks at the airport to bring on the plane, including a bottle of water that cost $3.99. (I told her that I would have to be on the verge of dehydration in the desert to pay that much for water!) I'm sure the snacks were pricey too - flavored hummus and crackers (very yummy) and a few kinds of candies. I waited for my complimentary beverage and snack on board. (Okay, I tried a little of her crackers and dip.)

I know my sister well, so none of these things were surprising to me. What was a little surprising was how much value she placed on convenience. We were discussing vegetables and she was saying how she really liked these vegetables that come in a pouch that you can steam in your microwave in 20 seconds (carrots, I think). I say "oh". And told her that she knows I won't pay extra when I can buy a giant bag of regular ones for much less. Then she played the "convenience card" - saying that because she works (teacher), she doesn't have a lot of time for meal prep, and that it was worth a lot to her to be able to have those carrots ready in 20 seconds. I said "oh" (again), and just had to add that it really doesn't take very long to boil frozen vegetables. She said "yes it does". And I said "no it doesn't". (Yes, we were acting somewhat like 2 year olds!) Anyway, she either had a hard time believing that you can really boil frozen carrots in 4 minutes, or felt that saving 3 minutes and 40 seconds of time was worth a lot of money.

Anyway, it is clear that Sister #2 and I will probably never agree on finances. (And no, she is not financially well off, and does complain about a lack of money.)

I have a lot of room for improvement, but overpaying for convenience has not been one of my problems. :)

August 2008 Spending (so far)

Here's my attempt to get back on track - and start tracking my spending again. Clearly this month is not off to a great start, but just the act of writing down and tracking our spending should help a lot.

Tomorrow I plan to go to the bank to withdraw the cash to fund our cash envelopes for the rest of the month.

And, I read most of this week's Carnival of Personal Finance. That was certainly inspiring!

So, looks like things are starting to get back on track!


AUGUST 2008 SPENDING (as of 8/6/08)

AUTO GAS 08/05/08 SHELL Service-$20.02
AUTO GAS 08/01/08 EXXONMOBIL -$29.50
BUDGET TOTAL: $350
ACTUAL SUBTOTAL $49.50

CASH GROCERY 08/05/08 PRICERITE -$52.70
CASH GROCERY 08/02/08 CVS -$12.40
CASH GROCERY 08/01/08 CVS -$5.00
CASH GROCERY 08/01/08 HANNAFORD #0382 25 R -$31.03
BUDGET TOTAL: $400.00
ACTUAL SUBTOTAL $101.13

CASH SPEND MONEY 08/01/20 ATM Withdrawal -$100.00
BUDGET TOTAL: $200.00
ACTUAL SUBTOTAL $100.00

DINING OUT 08/06/08 Plant Depot-$20.40
DINING OUT 08/04/08 QDOBA 365 -$21.68
DINING OUT 08/04/08 MCDONALD'S F14536 71 -$15.81
DINING OUT 08/01/08 VISA DEBIT STARBUCKS USA -$4.73
BUDGET TOTAL: $120.00
ACTUAL SUBTOTAL $122.17

HOME MORTGAGE 08/04/2008 CitiMortgage. Ba -$2,328.77
BUDGET TOTAL: $2,328.00
ACTUAL SUBTOTAL $2,328.77

MISC 08/04/2008 NATIONAL EQUIP -$20.00
MISC 08/04/08 SIDELI - $79.95
BUDGET TOTAL: $0
ACTUAL SUBTOTAL $99.95

VACATION 08/05/08 Check #3754 -$122.00
VACATION 08/04/08 ALL THAT GLITZ -$59.36
VACATION 08/04/08 BROCKTONROXPRO -$26.00
VACATION 08/04/08 TARGET FT MYER -$29.66
BUDGET TOTAL: $0
ACTUAL SUBTOTAL $237.02

August 2008 Budget

August 2008 Expenses

AUTO-Excise Tax	$0
AUTO-Gas	$350
AUTO-Insurance	$138
AUTO-Maintenance	$0
CASH-Clothing	$100
CASH-Dining Out	$120
CASH-Gifts	$20
CASH-Grocery	$400
CASH-Kids Allowance	$50
CASH-Parties	$100
CASH-School Lunch	$0
CASH-Spending	$160
DEBT-Equity Loan	$2,850
DEBT-Visa	$0
HOME-Cable/Phone	$181
HOME-Electric	$220
HOME-Furnace	$5,000
HOME-Mortgage	$2,328
HOME-Oil	$0
HOME-Trash	$0
KIDS-Bball	$0
KIDS-Misc.	$0
KIDS-Piano	$264
KIDS-Preschool	$0
MISC.	$0
PERSONAL-Cell Ph	$0
PERSONAL-Contacts	$99
PERSONAL-Life Ins.	$0
PERSONAL-Newspap	$8
PERSONAL-Rx	$10
PERSONAL-Braces	$100
PERSONAL-BR Sport	$0
PERSONAL-Vacation	$0
TRANSFER-To Sav 2	$0
TOTAL	$12,498
INCOME	August
1st Paycheck	$2,588
1st Commission	$0
15th Paycheck	$2,588
Church Pay	$100
Babysitting Pay	$0
Other	$0
Transfer frm Savings	$7,500
TOTAL	$12,776
CASH FLOW	August
Beginning Balance	$0
'+ Income	$12,776
Subtotal	$12,776
'- Expenses	$12,498
Subtotal	$278
Save For Next Month	$278
Ending Balance	$0
SAVINGS FLOW	August
Beginning Balance	$17,742
'+ Transfer to Savings	$0
Subtotal	$17,742
'- Transfer fr Savings	$7,500
Subtotal	$10,242
Ending Balance	$10,242

August Budget?

It is August 4th - and we haven't completed our August budget yet! (yikes)

I'm back from vacation (had a GREAT time!) - and have a lot to do to get back on track.

I'll keep you posted! (And plan to catch up on all my PF blog reading!) :)