Monthly Archives: November 2014

Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chaos to order, confusion to clarity. It can turn a meal into a feast, a house into a home, a stranger into a friend Melody Beattie

No matter what your spiritual beliefs, the holidays can be an opportunity to refocus on what truly matters to your family. It’s also a good time to set some gift guidelines for yourself and your extended family, then practice being grateful for whatever you receive.

Create Traditions of Thanks

This year we’ll have a record number of people at our holiday gathering, and are excited to start some new family traditions. Here are some ideas we’ll be using:

  • Thanksgiving Tablecloth – Take a simple tablecloth or sheet, make a creative grid with fabric markers, then let the kids/guests sketch out their thank yous, leaving room for future years.
  • Cupboard Collage – Make a collage on the inside of your pantry to note everything for which you are thankful. You can incorporate cards you have received.
  • Community Gratitude Tree – Work with your family to make colorful gratitude cards for each other, then tie them in a streetside tree. Share your gratitude by leaving out some extra supplies for them to add their own gratitude notes. (Depending on the weather we might make one inside…)
  • Manifestation List – Rather than a wish list, create a manifestation list to note what you would like to bring into your life, whether it be money, joy, relaxation, or something you have always dreamed of.

Practice Gratitude

One of the ways we like to remind ourselves of all I have to be thankful for is by writing personal thank-yous for any occasion that warrants one. Sending your appreciation via email can do the trick, but don’t underestimate the power of personal mail. Plus, kids learn gratitude by watching us practice it.

In our experience, giving thanks on a daily basis is the best way to expand your abundance perspective. Your acts of gratitude can be big or small, personal or public, but the key is to act. A purse-sized notepad does the trick just fine, or you can log on to gratitudelog.com. We are most thankful this year that Miel’s family has recently relocated to Portland after more than a decade in Washington, DC.

Happy Thanksgiving!

Darcy

How to Limit Your Spending During the Festive Period

While Christmas may actually only consist of one day, the truth is that the festive season lasts for weeks on end, but if you don’t have a solid plan, your finances may not.

As expectations increase, people find themselves spending more than they can afford in order to make this Christmas extra special. With gifts to buy for the whole family, a delicious five-course meal to prepare, and not to mention stocking up on Christmas treats and nibbles, your budget can soon be stretched to the same degree as those special turkey pants you wear on the big day.

But don’t feel helpless just yet, there is plenty of time to make a difference with your spending habits and still have a wonderful holiday.

Write expenses down

It may not sound like the most exciting thing to do, but writing down every Christmas expense you have will keep you on track with your budget. Often you don’t realise how much you are spending, especially if you have been buying bits and bobs for the last few months. Didn’t realise you’d spent $20 on Christmas chocolate for the kids? Write it down to avoid frittering away the budget.

Underestimate your budget

Even if you actually spend $425 for Christmas, it is always better to over budget and work it out as if you’ve spent $500. This will enable you to have some extra money left over just in case something goes wrong and you need emergency funds, as opposed to being left with nothing.

Limit to one item

If you have children, you will be familiar with the plethora of toys they demand every year, only to leave most of them unopened on the floor while they fall in love with the chosen one. Instead of buying your children multiple presents, simply purchase the one they would like the most. This avoids any wasted money and teaches your children to be more appreciative for what they have.

Utilize the power of the sales

Unless you can hop into a time machine and go back to January, the sales may seem useless to you. But did you know that many retailers have pre-Christmas online sales, such as Black Friday and Cyber Monday where you can find items with significant price reductions. Get online today and see what you can find!

Use cashback websites

Want to earn money for shopping? Simply register for free on a cashback site and continue shopping through their portal to earn a percentage of your shop back.

We’re Broke But Not Busted

Holger FlickrI never thought that I would need to feel broke before I could authentically write about our family finances (and hopefully help other in the process). Yet, that seems to be the case.

We’ve suddenly found ourselves in debt for the first time. Our true financial situation dawned on me when I realized that we were overdrawn. I had gone to meet Kevin in Old Town for lunch and our debit card was rejected. It shocked both us, but the truth is that we had each been in denial.

The tipping point was a check that I had written for our new nanny. We’re sharing the expense with Miel, but since she had left her check book in D.C. when she moved, it was up to me to sign off on the first two weeks of care (which I still believe is one of the best moves ever and I don’t care how badly I need to cut the budget to still afford the care…more on that topic very soon). The check obviously didn’t sync up with Hubby’s payday, and we were suddenly in trouble.

Yet, our financial situation is more complicated than a bounced check. I can only explain with three factors:

  1. Our home has drained our savings
  2. We haven’t cut costs enough since I left my City salary
  3. Life with three active kids is expensive

1) I already shared a fair amount of detail in my recent post about feeling underwater, but there’s still a “story behind that story.” When we decided to put on a new roof for $10k and spend $4k trying to make our basement dry, we agreed to take out a line of credit loan on our home to pay for it. Yet, somehow we had a misunderstanding. We had talked about it and agreed that we would spend the money that we had earned from AirBnB to pay down the loan faster. So, I took out money from that account and paid down $4k of the loan (even though I had originally hoped that it would be our vacation fund…) Then, in an inexplicable lapse in judgement, Hubby decided that we needed to pay off the the entire loan from our savings. To make matters worse, he didn’t see that I had already written the $4k check (just above in the ledger!) and so he actually overpaid the loan and overdrew our account (prior to the bounced check). Whew. Talk about a SNAFU. My only explanation is wishful thinking.

2) As extremely frustrated as I was about the situation, I didn’t have the heart to get mad though. Since I felt at fault for the random overspending that seems to plague me. Yes, we have a budget, but somehow there’s always some completely justified expense that comes up. That month we had several unplanned expenses. The truth is that I need to start earning a real income in order for us to continue our current lifestyle.

3) We love our kids pure and deep. We do our best not to spoil them or bribe them (although few parents can truly claim either). We don’t indulge in impulse spending, but even the planned stuff truly adds up. Yet we have a weak spot for the experiential expenses. At the moment, if we’re honest, we probably can’t afford all the extracurricular activities our kids are involved in (as much as it pains me to admit it). Somehow we sign them up before we’ve actually put it in the budget, and then it’s like “whoops” and we shrug, knowing how much they each grow through social learning. Plus, after all those activities, our kids get really hungry. Lately it feels like we can’t control our food/snack bill, and Teagan is just starting to truly chow down.

We have soooo much to be grateful for though, starting with the fact that we didn’t explode at each other when we realized we had drained our accounts. All our Money Honey talks have strengthened our financial resolve, even if we don’t seem to have gotten any savvier. Second, I was able to ask for a personal loan of $5k from my Aunt Carol (who initially helped us in invest in the cabins, and lent us money on one other occasion…thankfully the banks can’t compete with interest rates). Third, I feel like actually feeling the pain of being in debt is probably the best motivator for helping me adjust my spending habits. I’m also feeling more resourceful and creative than I have in a long while, and I have complete faith that I can help my family get out of debt fast.

Have you ever been broke?

What motivated you to get out of debt?

Darcy

Bad Money Habits That Lead to Big Trouble

If your relatives or close friends constantly complain about their personal finances or always experience money problems, you might vow with every ounce of your strength to never be in their situation. However, a secret to making sure your finances remain on the right track is learning how to recognize small money habits that can trigger serious money problems.

The truth of the matter is, the majority of us don’t have a manual for managing our personal finances. A lot of what we know about money is through trial and error. As young adults, we make a bunch of costly mistakes. And then we spend the next few years recouping from these mistakes. But you don’t have to learn smart money management the hard way.

Here’s a rundown of seemingly small bad money habits that can cause long-term financial problems.

1. Not budgeting your money

You may feel that budgeting money is optional, and rather than balance your checkbook and create a spending plan at the beginning of each month, you might go with the flow and hope for the best. This approach might work for now, but it can gradually cause problems with your personal finances.

If you don’t have a budget or spending plan, there’s no way to know for sure where your money goes. The risk of overspending is higher if you don’t budget. But understandably, budget might be an ugly word as it implies restrictions. However, if you take a look at your income, and compare this with your expenses, you’ll know with certainty how much you have available for extra spending each month, such as recreation, transportation and miscellaneous shopping. As a result, you’re less likely to overspend on non-essentials.

2. Keeping up with the Joneses

You may be independent and have a mind of your own, but when it comes to personal finances, you might fall for a common trap: keeping up with the Joneses — or more specifically, your relatives, your coworkers, your friends or your neighbors.

This might not seem like a big deal, but it really depends on how far you’re willing to go to give the impression that you have more than you actually do. Maybe you live in a region where a lot of the residents are high earners, such as New York City or certain parts of California. If your friends or coworkers have disposable income to shop on a regular basis, eat out several times a week or take nice vacations, you might feel pressured to keep up with their lifestyle. This is a costly bad habit that can lead to serious debt, and if unable to reign in spending, a bankruptcy attorney might be the only hope for getting your finances back on track.

3. Cosigning a loan

If you have excellent credit, friends or relatives may hope to benefit from your high rating — but don’t let them. It might be difficult to say no if someone you care about asks you to cosign a loan for them. But at the end of the day, you have to protect yourself. Therefore, you need to be realistic about the situation. Cosigning a loan or credit card is a huge deal, and as cosigner you’re equally responsible for any debt or balance the other person incurs. This person might agree to make every monthly payment, but there are no guarantees. And if this person defaults, guess who’s responsible for the payment — you.

4. Shopping to feel better

If you had a bad day at work, got into a fight with your best friend or broke up with your boyfriend or girlfriend, a little retail therapy might boost your spirits. But if you get into a habit of shopping whenever you’re feeling down, this can lead to serious problems with your personal finances. You might slowly increase your credit card debt, or you might spend money designated for bills.

Treating yourself to something special might provide immediate happiness, but it doesn’t last. So, look for other ways to lift your spirits when you’re feeling sad — cheaper ways. Go for a walk, explore your creative side or call up a friend.

Maintaining control of your money can protect your finances. But to do this, you have to recognize habits that can complicate your personal finances and make it harder to reach goals.

Feeling Under Water

Underwater worldOur home is no longer truly “under water,” but the irony is that now I feel like it is. (See my previous Vent Tunnel).

We bought our home in June 2008, just a month before the market completely crashed. At the time we simply felt lucky that we were able to sell our starter home for such a profit. We bought for $195k, which was the median price in Portland back in 2004, and we sold for $265k. We felt like we put a lot of sweat equity into the yard and some cash into making it much energy efficient, but it was still a sweet return on investment.

We poured every penny of profit into our next home, which we bought for $422k at the height of the bubble. Even though it wasn’t a bargain, we felt very lucky to have managed the move when we did. Some of our neighbors who listed just after us had their homes sit on the market all summer never to sell, and two years later we saw a very similar house around the corner from our old place on the market for $190k. Boy am I glad we’re past those times.

In December 2010, just over a year after moving in, we decided to refinance, which required an appraisal. It came in very low, $372k, a full $50k below what we bought our place for. At the time we took this news in stride, simply feeling grateful for just owning (or rather being able to buy) our home during such unsteady financial times . We also didn’t plan on moving in the foreseeable future, so it didn’t feel like a problem as long as we were happy in our home and able to pay the mortgage.

In the years since, I’ve been glad to see the market improve but honestly haven’t given much thought to the value of our home. Yet, after going house shopping for Miel in early fall, we started seriously considering moving, even to the point of finding a four bedroom place near Irving Park that we felt would be perfect us. So, we started taking steps to list our place, but were stopped in our tracks.

We were honestly shocked when our Realtor informed us that our house should be listed for $450k (which still feels very conservative). Yet, the comparative market value is really hard run since there aren’t many home like ours so close-in (and the fact that there are still plenty of fixers in our neighborhood doesn’t help). Zillow puts our place at $497k, and we frankly feel it’s worth that.

It’s not the estimated of our home that makes me suddenly feel under water, it’s the fact that in order for us to keep our current mortgage we could only afford a place for around $430k, when had been hoping to buy for about $650k. Plus, we just put on a new roof for $10k and our other repairs and upgrades at least total that much. So, that’s why the idea of putting our place on the market for $450 feels like a slap in the face.

After a month, I’m finally able to move past this feeling of defeat (it didn’t help that after paying several thousand trying to make our basement dry, it flooded worse than ever with the rains…ugh). Now I’m feeling reinspired, and ready to get to work on some improvements that will in fact improve our home’s value.

Has your home ever been under water?

How did you get past that sinking feeling? 

Darcy