Tuesday, January 31, 2012

Decluttering Dilemma

I'm running into a bit of a dilemma in my decluttering mission.  I'm trying to find the balance between having the things we need to be as self sufficient as possible, and keeping things that are rarely used.  I have so many baking pans and kitchen appliances that some have been relegated to a shelf in the garage.  This is where my canning pots, angel food cake pan, and huge tub of 100+ cookie cutters live.  I would love to say, "They're rarely used, I'll just toss them!" But then what do I do when I want to can jam and apple sauce?  Is it really necessary to own an enormous pressure cooker?  No... but it sure does come in handy when I'm making stock out of a turkey carcass.  And do I need to own 100 mason jars?  Of course not, but when I need one it sure is nice to have a variety of sizes on hand.

There seems to be a pretty fine line between having enough, and having too much.  It's a pretty individual decision on where that line falls, and I guess I'm just trying to figure out where the line is for me.

Here is the shelf in all its disorganized cluttered glory, I'll try to update later with what decision I come to.

Sunday, January 29, 2012

Goals and Spending Plan

Sunday seems like a good day to sit down with a cup of tea and contemplate the week.  I tend to overwhelm myself with long term goals and planning, I think I need to slow myself down and plan things one step (or week) at a time.

Nick is far away in jolly ol' England this week.  Sadly his 99 year old grandfather Jack passed away, just 6 months shy of his 100th birthday.  My mother in law generously offered to pay for Nick's plane ticket, so he seized the opportunity to spend some time with family.

While he is away I am going to try to have a no-spend week!  I have a tendency when it's just me and the kids to spend money just for something to do.  I'll grab a coffee, order pizza, swing by McDonald's, stop by the dollar store to pick up some craft supplies... I am pretty good at wasting money just for the sake of wasting it.  So this week I am having none of it!  While my budget is $0, Nick's is $400.  Hopefully he won't spend it all, but the money is there in case it's needed.

The exception to the no-spend is renewing my vehicle registration ($84.95), and paying the cell phone bill today ($120.75).  Other than that we can make do.

Aside from not spending money this week, I want to bring in at least $50 selling things around the house.  I've already decluttered and sold quite a bit, so I'm digging deep on this one, but I'm sure it can be done.

And as for decluttering, I want to work on the living room, bedroom, and baking shelf in the garage.  In preparation for our upcoming move I'm trying to be ruthless about what we truly need and use, and what we just keep for the sake of having it around.

Why I will NEVER buy a new car again

As part of our bankruptcy, we let our 2008 Hyundai Entourage van go.  We could have chosen to keep it and continue to make our monthly payments, but let me tell you that I am super excited about actually OWNING the vehicle that we're driving rather than OWING on it.  It far outweighs the pros of having a newer vehicle for me, and I wonder how I could have ever thought it was a good idea to buy a brand new car.

Here's a little calculation to prove my point.
The original purchase price of our previous van was $43,478.60.  We financed it at 0% interest, with $0 down.
Over the four years that we owned the vehicle we made a total $25,362.40 in payments which left a remaining balance of $18,116.20.  We also put in a total of $2,356.87 in repairs.  So over the course of the 49 months we owned our van we paid about $566 per month to drive it.  And the kicker - with its condition and mileage, it's only worth about $12,000-$14,000.  So factoring in the depreciation, the REAL cost of ownership was approximately $650 per month.  Now remember this is not a luxury vehicle, this is a people-hauling utilitarian mini van.

Our current vehicle is a 1993 Toyota Previa with 288,000km on it.  We paid $1200 for it, and had to put $2600 worth of repairs into it.  So the current cost to us is $3800.  If we have to put an average of $100 worth of repairs into it monthly, and we drive it for 24 months, it will cost us $258 per month, and that's not even factoring in what we could potentially sell it for at the end of those 24 months.  It also doesn't take into account that the cost of insuring it is HALF of what our newer van cost.  A savings of $400 per MONTH.  $4800 per year!

Now what would I rather do with $4800?  Save it towards retirement, save it for my children's education, save it towards my dream home, go on a dream vacation - LIVE DEBT FREE BELOW MY MEANS.  It can be done, it WILL be done.

Saturday, January 28, 2012

A new beginning

I have really wrestled back and forth with how to write this post, and whether I should even write it at all.  Much has happened since I last updated almost two months ago, and it left me questioning if I really wanted to put it out there.  In the end I decided that it's something that should be put out there, because I don't think enough people are candid with their finances, which leads to so many feeling like they are alone in their situations.

We declared bankruptcy.  Phew - scary thing to say, and scary thing to go through.  I'm sure that you can all appreciate that this was not an easy decision to make, so let me enlighten you as to the reasons we ultimately decided it was necessary.

Back in mid-December I lost my job.  It was a surprise, but not really.  I had spoken with my boss back in November about the future of my position, knowing that our current project would be wrapping up and my job would become obsolete.  She assured me that they had a plan in place and wanted to keep me on.  Unfortunately, the plan did not come to fruition and the work dried up.  I have still been told that they want to find a position for me, but when and if that will happen remains to be seen.  Being that I am a mother of three small children, finding a position that earns $1500-$3000 per month after expenses is not particularly easy.  So now we're down to one income.

Then we had the issue of our 2010 taxes which we still had not filed.  We knew that we would owe money, but as to the amount I was scared to even hazard a guess.  We finally quit procrastinating, and when the number came in, I just about fell over.  We owed $1600 in corporate taxes, Nick owed $5500, and I owed $2000.  I stayed up until the next day crunching numbers trying to figure out how we could even afford a monthly payment plan for the taxes, and I just couldn't.  We had reached the tipping point where we could no longer sustain our monthly payments, let alone make any headway on paying down our debt.

Nick and I both just looked at each other with heavy sighs, threw up our hands, and said, "Something's gotta give!"  We called the bankruptcy trustee the next day.  At this point we hadn't solidified in our minds this was the route we were going to take, but we wanted to know our options.

As it turned out there was another factor we hadn't considered: Our House.  Our home has been an ongoing saga and a constant reminder of the bad decision we made when we bought it.  We are upside down on our mortgage with no hope of selling, and the thought of trying to wait out the market was a constant black cloud over our heads.  Our trustee told us we could let the house go with the bankruptcy.  We hadn't even considered that before, but as soon as he said that, we knew what we had to do.

Now I know that not everyone agrees with bankruptcy, and I know that not everyone agrees with foreclosure.  I will admit to being one of those people that perhaps judged these options too harshly.  I want to remind you though that these options exist for a reason.  This is giving us the opportunity to have a future... without the bankruptcy, I don't know how long we would be treading water, trying desperately to get ahead but not really getting anywhere.

I want to make it clear that this does not mean we get to just "walk away" from our debt.  We will be making payments for the next 21-24 months.  We are "allowed" to make $4059 per month, after that amount everything else we make we will owe 50% towards the bankruptcy (our current monthly payment is $645).  This also does not absolve the debt we owe to my mother in law, to the tune of $45,000, it also does not absolve our corporate taxes, or my own personal taxes (Nick is declaring bankruptcy, I am not).  So we are far from out of the woods.  But there is hope, and there is a light at the end of the tunnel, and for that I am thankful.

I am thankful for finally having some breathing room.  I am thankful for the opportunity to show that our past mistakes do not reflect who we are TODAY.  There are drastic changes ahead for us... I hope that you'll stick with me along our path to financial redemption.